<PAGE>
STAGECOACH FUNDS-Registered
Trademark-
Annual Report
EQUITY Funds
Balanced Fund
Diversified Equity Income Fund
Equity Index Fund
Equity Value Fund
Growth Fund
International Equity Fund
Small Cap Fund
Strategic Growth Fund
September 30, 1998
<PAGE>
Equity Funds TABLE OF CONTENTS
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LETTER TO SHAREHOLDERS................................1
INVESTMENT ADVISOR COMMENTARY AND PERFORMANCE AT A GLANCE
Balanced Fund.....................................3
Diversified Equity Income Fund....................8
Equity Index Fund................................13
Equity Value Fund................................17
Growth Fund......................................23
International Equity Fund........................28
Small Cap Fund...................................33
Strategic Growth Fund............................38
PORTFOLIOS OF INVESTMENTS
Balanced Fund....................................43
Diversified Equity Income Fund...................50
Equity Index Fund................................55
Equity Value Fund................................73
Growth Fund......................................80
International Equity Fund........................86
Small Cap Fund...................................92
Strategic Growth Fund............................98
STAGECOACH FUNDS
Statement of Assets and Liabilities.............106
Statements of Operations........................108
Statements of Changes in Net Assets.............112
Financial Highlights............................118
Notes to Financial Statements...................141
Independent Auditors' Report....................163
LIST OF ABBREVIATIONS...............................166
NOT FDIC INSURED - NO BANK GUARANTEE - MAY LOSE VALUE
i
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THIS PAGE IS INTENTIONALLY LEFT BLANK --
ii
<PAGE>
LETTER TO SHAREHOLDERS Equity Funds
- ------------------------------------------------------------------------
TO OUR SHAREHOLDERS
Thank you for your investment in the Stagecoach Funds.
We are pleased to present this Annual Report to you for the period ended
September 30, 1998. This report provides information about your investment,
including economic and market trends over the period as well as a performance
summary, portfolio review, and strategic outlook for each Fund.
During the six-month period ended September 30, 1998, global economic events
finally caught up with U.S. financial markets. Most acutely affected were
stocks, as measured by the S&P 500 Index,(1) with a decrease of 6.95%. By
contrast, fixed income securities performed well, due to a "flight to quality"
in which investors sought to invest in U.S. Treasury securities. For example,
government bonds returned 12.74% as measured by the Lehman Brothers Long
Government Bond Index during the period.(2)
Throughout the period, the continued uncertainty in Asia's financial markets
spread into global economies, such as Russia and Latin America. Thus far, there
has been minimal evidence of a slowdown in the U.S. economy. However, over the
past six months, pressure built on the Federal Reserve Board (the Fed) to ease
monetary policy, as there was the potential for global and financial strains to
affect the U.S. market. As a result, the Fed decreased a key short-term interest
rate once on September 29, 1998 and again on October 15, 1998. This signaled an
important change in policy meant to impact the economy and hopefully stimulate
growth.
According to the Investment Company Institute, during 1997, U.S. households
invested 65% of their total net purchases of financial products in mutual
funds.(3) Many of these investors have benefited from unprecedented growth in
the market with little exposure to significant declines. However, the large
swings we have seen recently will test conservative and aggressive investors
alike. It will become increasingly important to
1
<PAGE>
Equity Funds LETTER TO SHAREHOLDERS
- ------------------------------------------------------------------------
stay focused on the long-term, evaluate the investment risk of your portfolio,
and remain true to your investment plan.
In our ongoing commitment to provide you with quality investment options, we
introduced two new Stagecoach Funds during the past six months. We launched the
Corporate Bond Fund in April 1998 and the Strategic Income Fund in July 1998.
We encourage you to review this Annual Report as we believe you will find it
useful and informative. We also recommend that you continually review your
investment portfolio with your financial consultant to determine an appropriate
mix of investments to meet your ongoing needs. Thank you for your continued
investment with the Stagecoach Funds.
Sincerely,
[SIGNATURE]
Michael J. Hogan
Senior Vice President
Wells Fargo Bank,
Mutual Fund Group
[SIGNATURE]
R. Greg Feltus
Chairman and President of
Stagecoach Funds
1 The "S&P 500 Index" is a trademark of Standard and Poor's Corporation. 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.
2 The Lehman Brothers Long Government Bond Index is an unmanaged index composed
of U.S. Treasury bonds with 20-year or longer maturities.
3 Investment Company Institute, Mutual Fund Fact Book, 1998.
2
<PAGE>
PERFORMANCE AT A GLANCE Balanced Fund
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BALANCED FUND
AVERAGE ANNUAL RETURNS (as of September 30, 1998)(1)
- ----------------------------------------------------------------
EXCLUDING SALES CHARGE
- ----------------------------------------------------------
<TABLE>
<CAPTION>
SIX-MONTHS SINCE
AS OF INCEPTION
9/30/98 1-YEAR 5-YEAR (7/2/90)
<S> <C> <C> <C> <C>
CLASS A (6.63) 2.72 10.12 11.35
CLASS B (6.92) 2.05 9.37 10.59
INSTITUTIONAL CLASS (6.66) 2.85 10.23 11.42
</TABLE>
INCLUDING SALES CHARGE(2)
- ----------------------------------------------------------
<TABLE>
<CAPTION>
SIX-MONTHS SINCE
AS OF INCEPTION
9/30/98 1-YEAR 5-YEAR (7/2/90)
<S> <C> <C> <C> <C>
CLASS A (11.56) (2.68) 8.95 10.63
CLASS B (11.52) (2.42) 9.12 10.59
INSTITUTIONAL CLASS N/A N/A N/A N/A
</TABLE>
GROWTH OF A $10,000 INVESTMENT(3)
- ----------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
STAGECOACH BALANCED LEHMAN BROTHERS GOVERNMENT/ STAGECOACH BALANCED FUND -
FUND - CLASS A S&P 500 INDEX CORPORATE BOND INDEX INSTITUTIONAL CLASS
<S> <C> <C> <C> <C>
Inception $9,475 $10,000 $10,000 $10,000
Jul-90 $9,513 $9,968 $10,124 $10,040
Aug-90 $9,153 $9,067 $9,977 $9,660
Sep-90 $9,001 $8,626 $10,060 $9,500
Oct-90 $9,002 $8,589 $10,193 $9,501
Nov-90 $9,395 $9,144 $10,415 $9,916
Dec-90 $9,612 $9,399 $10,572 $10,145
Jan-91 $9,837 $9,808 $10,691 $10,382
Feb-91 $10,217 $10,510 $10,783 $10,783
Mar-91 $10,393 $10,764 $10,857 $10,969
Apr-91 $10,373 $10,790 $10,982 $10,948
May-91 $10,590 $11,255 $11,032 $11,177
Jun-91 $10,304 $10,740 $11,020 $10,875
Jul-91 $10,613 $11,240 $11,158 $11,201
Aug-91 $10,852 $11,506 $11,415 $11,453
Sep-91 $10,872 $11,314 $11,653 $11,474
Oct-91 $10,983 $11,466 $11,757 $11,591
Nov-91 $10,640 $11,004 $11,874 $11,230
Dec-91 $11,393 $12,262 $12,275 $12,024
Jan-92 $11,444 $12,034 $12,093 $12,079
Feb-92 $11,610 $12,190 $12,157 $12,253
Mar-92 $11,475 $11,953 $12,090 $12,111
Apr-92 $11,693 $12,304 $12,163 $12,341
May-92 $11,662 $12,364 $12,399 $12,308
Jun-92 $11,570 $12,180 $12,580 $12,211
Jul-92 $11,895 $12,678 $12,902 $12,555
Aug-92 $11,675 $12,418 $13,017 $12,322
Sep-92 $11,854 $12,564 $13,195 $12,511
Oct-92 $11,875 $12,607 $12,993 $12,533
Nov-92 $12,172 $13,037 $12,981 $12,847
Dec-92 $12,395 $13,197 $13,205 $13,082
Jan-93 $12,754 $13,307 $13,493 $13,461
Feb-93 $12,961 $13,488 $13,773 $13,679
Mar-93 $13,299 $13,773 $13,820 $14,036
Apr-93 $13,200 $13,440 $13,926 $13,932
May-93 $13,442 $13,800 $13,919 $14,187
Jun-93 $13,651 $13,840 $14,235 $14,407
Jul-93 $13,762 $13,784 $14,327 $14,524
Aug-93 $14,227 $14,307 $14,656 $15,016
Sep-93 $14,205 $14,198 $14,707 $14,992
Oct-93 $14,395 $14,491 $14,768 $15,193
Nov-93 $14,317 $14,353 $14,601 $15,110
Dec-93 $14,714 $14,527 $14,665 $15,530
Jan-94 $15,162 $15,021 $14,885 $16,002
Feb-94 $14,944 $14,613 $14,560 $15,772
Mar-94 $14,381 $13,976 $14,204 $15,178
Apr-94 $14,333 $14,155 $14,086 $15,127
May-94 $14,394 $14,387 $14,059 $15,191
Jun-94 $14,223 $14,035 $14,027 $15,011
Jul-94 $14,494 $14,496 $14,307 $15,297
Aug-94 $14,802 $15,090 $14,313 $15,622
Sep-94 $14,531 $14,721 $14,148 $15,336
Oct-94 $14,481 $15,052 $14,133 $15,284
Nov-94 $14,120 $14,504 $14,107 $14,903
Dec-94 $14,155 $14,719 $14,201 $14,939
Jan-95 $14,102 $15,100 $14,473 $14,884
Feb-95 $14,537 $15,688 $14,809 $15,343
Mar-95 $14,748 $16,150 $14,908 $15,565
Apr-95 $14,948 $16,625 $15,115 $15,776
May-95 $15,387 $17,289 $15,749 $16,240
Jun-95 $15,481 $17,690 $15,875 $16,339
Jul-95 $15,777 $18,276 $15,813 $16,652
Aug-95 $15,845 $18,322 $16,015 $16,723
Sep-95 $16,075 $19,095 $16,179 $16,965
Oct-95 $15,939 $19,026 $16,416 $16,865
Nov-95 $16,455 $19,861 $16,687 $17,367
Dec-95 $16,650 $20,243 $16,933 $17,585
Jan-96 $16,870 $20,932 $17,038 $17,818
Feb-96 $16,856 $21,126 $16,676 $17,818
Mar-96 $17,132 $21,329 $16,536 $18,109
Apr-96 $17,325 $21,643 $16,422 $18,328
May-96 $17,588 $22,199 $16,394 $18,606
Jun-96 $17,589 $22,283 $16,614 $18,607
Jul-96 $17,060 $21,298 $16,652 $18,062
Aug-96 $17,297 $21,748 $16,611 $18,312
Sep-96 $17,870 $22,970 $16,906 $18,911
Oct-96 $18,509 $23,604 $17,300 $19,588
Nov-96 $19,429 $25,386 $17,618 $20,563
Dec-96 $19,323 $24,883 $17,423 $20,467
Jan-97 $19,690 $26,436 $17,444 $20,856
Feb-97 $19,866 $26,645 $17,480 $21,042
Mar-97 $19,325 $25,553 $17,272 $20,475
Apr-97 $19,760 $27,076 $17,525 $20,919
May-97 $20,645 $28,730 $17,688 $21,857
Jun-97 $21,066 $30,008 $17,900 $22,313
Jul-97 $22,363 $32,394 $18,448 $23,690
Aug-97 $21,747 $30,580 $18,241 $23,036
Sep-97 $22,394 $32,253 $18,527 $23,723
Oct-97 $21,789 $31,175 $18,824 $23,098
Nov-97 $22,296 $32,619 $18,923 $23,636
Dec-97 $22,731 $33,180 $19,122 $24,102
Jan-98 $22,804 $33,545 $19,392 $24,160
Feb-98 $23,855 $35,963 $19,353 $25,296
Mar-98 $24,637 $37,805 $19,413 $26,140
Apr-98 $24,489 $38,190 $19,510 $25,963
May-98 $24,340 $37,533 $19,719 $25,805
Jun-98 $24,405 $39,057 $19,920 $25,882
Jul-98 $23,751 $38,643 $19,936 $25,207
Aug-98 $21,884 $33,059 $20,325 $23,222
Sep-98 $23,003 $35,178 $20,906 $24,400
</TABLE>
3
<PAGE>
Balanced Fund INVESTMENT ADVISOR COMMENTARY
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BALANCED FUND
The Stagecoach Balanced Fund ("the Fund") seeks to provide investors with both
capital appreciation and current income resulting in a high total investment
return consistent with prudent investment risk and a balanced investment
approach. The Fund invests in equity securities and debt instruments. This
flexibility provides portfolio managers with the ability to invest where
opportunities may arise.
Please note that we have changed the Fund's fiscal year-end to September 30
from March 31. We have made this change to improve our reporting process. This
change will not impact the performance or objective of your investment. Because
of the new year-end, this report is the second audited annual report we have
sent you over the last six months. Our discussions will focus on the most recent
period, although we may also comment on longer-term performance.
Rex Wardlaw and Gregg Giboney manage the equity portion of the Fund, while
Scott Smith manages the bond portion. Mr. Wardlaw brings 11 years of investment
experience to the Fund. He has specialized in value style investing and has been
managing investments at Wells Fargo and Wells Capital Management since 1993. Mr.
Wardlaw earned a BA in Chemistry from Northwest Nazarene College, and an MBA in
Finance from the University of Oregon. He is also a Chartered Financial Analyst.
Mr. Giboney has been in the securities industry for 12 years. He holds a BA from
Washington State University and an MBA from the University of Portland. Mr.
Giboney is a Chartered Financial Analyst and is a board member and past
President of the Portland Society of Financial Analysts.
Mr. Smith has over 12 years of experience in the securities industry,
specializing in intermediate, corporate and government bonds. Mr. Smith received
a BA from the University of San Diego and is a Chartered Financial Analyst.
PERFORMANCE SUMMARY
The Stagecoach Balanced Fund Class A posted a cumulative return of -6.63% for
the six-month
report-
<PAGE>
INVESTMENT ADVISOR COMMENTARY Balanced Fund
- ------------------------------------------------------------------------
ing period, excluding sales charges. Because the Fund invests in both stocks and
bonds, the performance will typically fall between the S&P 500 Index and the
Lehman Brothers Government/Corporate Bond Index, used for comparison in the
preceding chart. During the reporting period, the Fund's performance was closer
to the S&P 500 Index, which returned -6.95%, while the Lehman Brothers
Government/Corporate Bond Index returned 7.70%. While bonds added significant
performance to the Fund, the equity portion of the Fund underperformed during
the period due to exposure in several sectors including chemicals, basic
materials and financial stocks.
The Fund distributed $0.17 in dividend income for Class A shares over the
six-month period and no capital gains were distributed from the Fund during the
reporting period. Keep in mind that past performance is no guarantee of future
returns.
PORTFOLIO REVIEW (as of September 30, 1998)
- --------------------------------------------------
<TABLE>
<S> <C>
NUMBER OF ISSUES 95
PORTFOLIO TURNOVER RATIO (NOT ANNUALIZED) 32%
MEDIAN MARKET CAPITALIZATION $13.0B
</TABLE>
The utility sector performed well during the period as investors flocked to
the safety of these domestic securities, which represent 5% of the portfolio.
Steady gains were also achieved in the consumer staples sector, which included
companies that were less sensitive to the economy. For example, food retailers
like American Stores and Food Lion provided good performance for the Fund.
The financial sector was hurt by global concerns during the reporting period.
This had a strong impact on the Fund's performance, as financial stocks
represented 17% of the Fund's assets as of September 30, 1998. Although the
financial sector dipped in the second and third quarters, we believe that this
sector shows strength for the long-term. Historically, financial stocks have
performed well when interest rates decline.
5
<PAGE>
Balanced Fund INVESTMENT ADVISOR COMMENTARY
- ------------------------------------------------------------------------
TOP FIVE EQUITY INDUSTRY HOLDINGS (as of September 30, 1998)
- --------------------------------------------------
<TABLE>
<S> <C>
FINANCE 17%
ENERGY & RELATED 9%
MANUFACTURING-PROCESSING 6%
CAPITAL GOODS 5%
UTILITIES 5%
</TABLE>
Bond returns were strong in the declining interest rate environment due to
several steps we took to enhance the performance of the bond component of the
Fund. The duration of the Fund was extended to capture additional yield as
interest rates dropped; exposure to mortgage securities was minimized since
these securities are very sensitive to fluctuations in interest rates; and the
Fund reduced exposure to corporate bonds due to credit quality concerns. In
addition, both the equity and bond securities were managed to limit Asian market
exposure during the reporting period.
TOP TEN EQUITY HOLDINGS (as of September 30, 1998)
- --------------------------------------------------
<TABLE>
<S> <C>
IBM CORPORATION 2.3%
PROVIDIAN FINANCIAL CORPORATION 2.2%
HARTFORD FINANCIAL SERVICES GROUP 2.1%
PHILIP MORRIS COMPANIES INCORPORATED 2.0%
FREMONT GENERAL CORPORATION 1.9%
GTE CORPORATION 1.8%
MONTANA POWER COMPANY 1.7%
CINERGY CORPORATION 1.7%
ATLANTIC RICHFIELD 1.6%
TEXACO INCORPORATED 1.6%
</TABLE>
STRATEGIC OUTLOOK
The U.S. economy will continue to experience international financial strains,
as multi-national corporations will be affected by slower sales from abroad.
Despite weakened earnings forecasts for U.S. corporations, we will focus on
companies with solid fundamentals in sectors that have been strong during the
recent volatility.
6
<PAGE>
INVESTMENT ADVISOR COMMENTARY Balanced Fund
- ------------------------------------------------------------------------
Attractive stocks will include companies from sectors that are relatively
unexposed to a slowing economy, and are trading at discounts to the market.
While global markets continue to fluctuate, generally, we will avoid companies
that are dependent upon exports for the majority of their business. After
careful review and analysis, we believe that certain financial stocks have
minimal exposure to global problems, demonstrate good fundamentals, and offer
compelling values at current prices.
1 Performance shown for the Class A shares of the Stagecoach Balanced Fund for
periods prior to September 6, 1996 reflects performance of the Investor shares
of the Pacifica Balanced Fund, a predecessor portfolio with the same
investment objective and policies as the Stagecoach Balanced Fund. Performance
shown or advertised for the Class B and Institutional Class shares of the
Stagecoach Balanced Fund for periods prior to September 6, 1996 reflects
performance of the Investor shares of the predecessor portfolio, with expenses
of the Investor shares adjusted to reflect Class B and Institutional Class
sales charges and expenses, respectively.
Investment return and principal value of an investment will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than their
original cost. Figures quoted represent past performance, which is no
guarantee of future results.
The Fund's manager has voluntarily waived all or a portion of its management
fees or assumed responsibility for other expenses, which reduces operating
expenses and increases total return to shareholders. Without these reductions
the Fund's returns would have been lower.
2 For Class A shares, the maximum front-end sales charge is 5.25%. The maximum
sales charge for Class B shares is 5.00%. Class B share performance including
sales charge assumes the Class B share sales charge for the corresponding time
period. There are no sales charges for the Institutional Class shares.
3 The returns for Class B shares of the Fund will vary from the results shown
due to different expenses and load structures. The accompanying chart compares
the performance of the Stagecoach Balanced Fund Class A and Institutional
Class shares since inception of the predecessor portfolio with the S&P 500
Index and the Lehman Brothers Government/Corporate Bond Index. The chart
assumes a hypothetical $10,000 initial investment in Class A and Institutional
Class shares and reflects all operating expenses and, for Class A shares,
assumes the maximum initial sales charge of 5.25%. 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 in an unmanaged index. 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.
7
<PAGE>
Diversified Equity Income Fund PERFORMANCE AT A GLANCE
- ------------------------------------------------------------------------
DIVERSIFIED EQUITY INCOME FUND
AVERAGE ANNUAL RETURNS (as of September 30, 1998)(1)
- ----------------------------------------------------------------
EXCLUDING SALES CHARGE
- ----------------------------------------------------------
<TABLE>
<CAPTION>
SIX-MONTHS SINCE
AS OF INCEPTION
9/30/98 1-YEAR 5-YEAR (11/18/92)
<S> <C> <C> <C> <C>
CLASS A (12.78) (1.78) 13.82 13.94
CLASS B (13.12) (2.44) 13.15 13.25
</TABLE>
INCLUDING SALES CHARGE(2)
- ----------------------------------------------------------
<TABLE>
<CAPTION>
SIX-MONTHS SINCE
AS OF INCEPTION
9/30/98 1-YEAR 5-YEAR (11/18/92)
<S> <C> <C> <C> <C>
CLASS A (17.35) (6.94) 12.60 12.90
CLASS B (17.44) (7.08) 12.90 13.16
</TABLE>
GROWTH OF A $10,000 INVESTMENT(3)
----------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
STAGECOACH DIVERSIFIED EQUITY
INCOME FUND - CLASS A S&P 500 INDEX
<S> <C> <C>
Inception $9,475 $10,000
Nov-92 $9,560 $10,000
Dec-92 $9,770 $10,123
Jan-93 $9,874 $10,207
Feb-93 $9,884 $10,346
Mar-93 $10,132 $10,565
Apr-93 $9,989 $10,309
May-93 $10,276 $10,585
Jun-93 $10,289 $10,616
Jul-93 $10,337 $10,574
Aug-93 $10,750 $10,975
Sep-93 $10,663 $10,891
Oct-93 $11,002 $11,116
Nov-93 $10,798 $11,010
Dec-93 $10,975 $11,143
Jan-94 $11,331 $11,522
Feb-94 $11,123 $11,209
Mar-94 $10,624 $10,720
Apr-94 $10,764 $10,858
May-94 $10,963 $11,036
Jun-94 $10,777 $10,766
Jul-94 $11,119 $11,119
Aug-94 $11,511 $11,575
Sep-94 $11,302 $11,292
Oct-94 $11,262 $11,546
Nov-94 $10,857 $11,125
Dec-94 $10,983 $11,290
Jan-95 $11,055 $11,583
Feb-95 $11,524 $12,034
Mar-95 $11,866 $12,388
Apr-95 $12,153 $12,753
May-95 $12,472 $13,262
Jun-95 $12,590 $13,569
Jul-95 $12,891 $14,019
Aug-95 $12,984 $14,054
Sep-95 $13,452 $14,647
Oct-95 $13,306 $14,595
Nov-95 $14,004 $15,235
Dec-95 $14,297 $15,528
Jan-96 $14,618 $16,056
Feb-96 $14,897 $16,205
Mar-96 $15,176 $16,361
Apr-96 $15,435 $16,602
May-96 $15,693 $17,028
Jun-96 $15,650 $17,093
Jul-96 $14,815 $16,337
Aug-96 $15,335 $16,682
Sep-96 $16,063 $17,620
Oct-96 $16,183 $18,106
Nov-96 $17,273 $19,473
Dec-96 $17,458 $19,087
Jan-97 $17,447 $20,278
Feb-97 $17,667 $20,439
Mar-97 $16,906 $19,601
Apr-97 $17,092 $20,769
May-97 $18,536 $22,038
Jun-97 $19,206 $23,018
Jul-97 $20,528 $24,848
Aug-97 $19,861 $23,457
Sep-97 $20,740 $24,740
Oct-97 $19,918 $23,914
Nov-97 $20,458 $25,021
Dec-97 $20,987 $25,451
Jan-98 $20,876 $25,731
Feb-98 $22,360 $27,586
Mar-98 $23,356 $28,999
Apr-98 $23,122 $29,295
May-98 $22,703 $28,791
Jun-98 $22,795 $29,960
Jul-98 $21,547 $29,642
Aug-98 $19,076 $25,359
Sep-98 $20,371 $26,984
</TABLE>
8
<PAGE>
INVESTMENT ADVISOR COMMENTARY Diversified Equity Income Fund
- ------------------------------------------------------------------------
DIVERSIFIED EQUITY INCOME FUND
The Stagecoach Diversified Equity Income Fund ("the Fund") seeks to earn
current income and a growing stream of income over time, consistent with the
preservation of capital. The Fund invests in income-producing equity securities
and debt instruments, including common stocks and preferred and convertible
securities. Since the Fund offers a conservative approach to equity investing,
at least 90% of the Fund's equity portfolio will be invested in large company
stocks that are generally well-established in their industry and offer high
dividend potential.
Please note that we have changed the Fund's fiscal year-end to September 30
from March 31. We have made this change to improve our reporting process. This
change will not impact the performance or objective of your investment. Because
of the new year-end, this report is the second audited annual report we have
sent you over the last six months. Our discussions will focus on the most recent
period, although we may also comment on longer-term performance.
Allen Wisniewski and Rex Wardlaw manage the Fund. Mr. Wisniewski has over 13
years of experience in the securities industry, with a focus on equities. Mr.
Wisniewski received his BA and MBA in Economics and Finance from the University
of California at Los Angeles. He is a Chartered Financial Analyst and a member
of the Los Angeles Society of Financial Analysts. Mr. Wardlaw brings 11 years of
investment experience to the Fund. He specializes in value style investing and
has been managing investments at Wells Fargo since 1993. Mr. Wardlaw earned a BA
in Chemistry from Northwest Nazarene College, and an MBA in Finance from the
University of Oregon. He is also a Chartered Financial Analyst. Together, they
bring disciplined investment expertise to equity investing.
PERFORMANCE REVIEW
The Stagecoach Diversified Equity Income Fund Class A posted a cumulative
total return of -12.78% for the six-month reporting period, excluding sales
charges. This is below the S&P 500 Index, a broad-based stock index used for
comparison in the preceding chart. The S&P 500 Index returned -6.95% for the
9
<PAGE>
Diversified Equity Income Fund INVESTMENT ADVISOR COMMENTARY
- ------------------------------------------------------------------------
same period. The Fund's performance was impacted by the declining returns of
value stocks, which differ significantly from the growth stocks found in the S&P
500 Index.
The financial sector also affected the Fund's performance. This sector
represented 23% of the portfolio as of September 30, 1998. The gains achieved by
financial stocks early in the year were offset during the second and third
quarters due to increasing global concerns. Although the financial sector
declined in the second and third quarter, we believe that this sector shows
strength for the long-term. Historically, financial stocks have performed well
when interest rates decline.
The Fund distributed $0.16 in dividend income for Class A shares over the
six-month period and no capital gains were distributed from the Fund during the
reporting period. Keep in mind that past performance is no guarantee of future
returns.
PORTFOLIO REVIEW (as of September 30, 1998)
- --------------------------------------------------
<TABLE>
<S> <C>
NUMBER OF ISSUES 64
PORTFOLIO TURNOVER RATIO (NOT ANNUALIZED) 29%
MEDIAN MARKET CAPITALIZATION $10.3B
</TABLE>
The Fund's current allocation of 92% stocks contains many conservative stocks.
In fact, about 10% of the stocks in the portfolio are invested in Real Estate
Investment Trusts ("REITs"). One of the most conservative equity holdings in the
portfolio, REITs are categorized within the financial sector.
The Fund is designed specifically to generate a growing stream of income over
time through a diverse portfolio. The utility sector has been one of the best
performing sectors of the Fund and represented 12% of the Fund's assets as of
September 30, 1998. The current declining interest rate environment has been
favorable for utility stocks. During the third quarter, investors were moved
into more conservative investments, due to continued global concerns. This led
to the high performance of utility stocks. In addition, the fundamentals for
this industry remain positive with solid earnings forecasted and an improved
outlook for the industry. Duke Energy is an
10
<PAGE>
INVESTMENT ADVISOR COMMENTARY Diversified Equity Income Fund
- ------------------------------------------------------------------------
example of a successful utility stock in the top ten holdings of the Fund. This
company is an electric utility that has broadened into a diversified energy
company. It is currently growing faster than the electric utility industry and
has a better growth profile than its competitors.
TOP FIVE INDUSTRY HOLDINGS (as of September 30, 1998)
- ---------------------------------------------------------
<TABLE>
<S> <C>
FINANCE & RELATED 23%
UTILITIES 12%
GENERAL BUSINESS & RELATED 11%
ENERGY & RELATED 10%
AUTOMOBILE & RELATED 7%
</TABLE>
While utilities provided solid returns, the capital goods sector declined due
to overall concerns about international markets. The capital goods sector
includes companies that sell farm, aerospace, and defense equipment. While
domestic sales of these companies have remained relatively unchanged, a decline
in companies with sales in Asian and former Soviet block countries has hurt
exports. For example, John Deere, a farm equipment maker, was sold from the
portfolio as U.S. farmers were increasingly affected by weakness in foreign
markets.
TOP TEN EQUITY HOLDINGS (as of September 30, 1998)
- ---------------------------------------------------------
<TABLE>
<S> <C>
ALLTEL CORPORATION 3.3%
FREMONT GENERAL CORPORATION 3.1%
PHILIP MORRIS COMPANIES INCORPORATED 3.0%
ATLANTIC RICHFIELD 2.9%
HOUSEHOLD INTERNATIONAL INCORPORATED 2.8%
DUKE ENERGY CORPORATION 2.8%
SOUTHERN COMPANY 2.6%
ALLEGHENY TELEDYNE INCORPORATED 2.5%
EATON CORPORATION 2.4%
TEXACO INCORPORATED 2.4%
</TABLE>
STRATEGIC OUTLOOK
As the Fed moves toward additional cuts to key interest rates, this creates a
more positive environment for the
11
<PAGE>
Diversified Equity Income Fund INVESTMENT ADVISOR COMMENTARY
- ------------------------------------------------------------------------
equity market. This easing in interest rate policy should allow for economic
growth to continue at a moderate rate for the fourth quarter and into next year.
Based on this outlook, we plan to modestly reduce our positions in the utility
sector. As we see more stability in the markets, investors will start to
gravitate toward other sectors that offer more compelling value such as the
financial sector.
1 Performance shown for the Class B shares of the Stagecoach Diversified Equity
Income Fund for periods prior to January 1, 1995 reflects performance of the
Class A shares of the Fund, with expenses of the Class A shares adjusted to
reflect Class B sales charges and expenses.
Investment return and principal value of an investment will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than their
original cost. Figures quoted represent past performance, which is no
guarantee of future results.
The Fund's manager has voluntarily waived all or a portion of its management
fees or assumed responsibility for other expenses, which reduces operating
expenses and increases total return to shareholders. Without these reductions
the Fund's returns would have been lower.
2 For Class A shares, the maximum front-end sales charge is 5.25%. The maximum
sales charge for Class B shares is 5.00%. Class B share performance including
sales charge assumes the Class B share sales charge for the corresponding time
period.
3 The returns for Class B shares of the Fund will vary from the results shown
due to different expenses and load structures. The accompanying chart compares
the performance of the Stagecoach Diversified Equity Income Fund Class A
shares since inception of the predecessor portfolio with the S&P 500 Index.
The chart assumes a hypothetical $10,000 initial investment in Class A shares
and reflects all operating expenses and assumes the maximum initial sales
charge of 5.25%. 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 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.
12
<PAGE>
PERFORMANCE AT A GLANCE Equity Index Fund
- ------------------------------------------------------------------------
EQUITY INDEX FUND
AVERAGE ANNUAL RETURNS (as of September 30, 1998)(1)
- ----------------------------------------------------------------
EXCLUDING SALES CHARGE
- ----------------------------------------------------------
<TABLE>
<CAPTION>
SIX-MONTHS
AS OF
9/30/98 1-YEAR 5-YEAR 10-YEAR
<S> <C> <C> <C> <C>
CLASS A (7.22) 8.26 18.73 16.04
CLASS B (7.59) 7.48 18.07 15.33
</TABLE>
INCLUDING SALES CHARGE(2)
- ----------------------------------------------------------
<TABLE>
<CAPTION>
SIX-MONTHS
AS OF
9/30/98 1-YEAR 5-YEAR 10-YEAR
<S> <C> <C> <C> <C>
CLASS A (11.39) 3.40 17.64 15.51
CLASS B (12.21) 2.48 17.86 15.33
</TABLE>
GROWTH OF A $10,000 INVESTMENT(3)
----------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
STAGECOACH EQUITY INDEX
FUND - CLASS A S&P 500 INDEX
<S> <C> <C>
Jan-84 $9,550 $10,000
Feb-84 $9,636 $9,648
Mar-84 $9,655 $9,815
Apr-84 $9,712 $9,908
May-84 $9,770 $9,360
Jun-84 $9,837 $9,563
Jul-84 $9,903 $9,444
Aug-84 $9,970 $10,488
Sep-84 $9,961 $10,490
Oct-84 $9,980 $10,531
Nov-84 $9,865 $10,413
Dec-84 $10,085 $10,687
Jan-85 $10,763 $11,520
Feb-85 $10,925 $11,661
Mar-85 $10,973 $11,668
Apr-85 $10,906 $11,657
May-85 $11,546 $12,331
Jun-85 $11,708 $12,524
Jul-85 $11,670 $12,506
Aug-85 $11,556 $12,399
Sep-85 $11,183 $12,011
Oct-85 $11,651 $12,566
Nov-85 $12,434 $13,428
Dec-85 $13,026 $14,078
Jan-86 $13,064 $14,156
Feb-86 $14,019 $15,214
Mar-86 $14,717 $16,063
Apr-86 $14,516 $15,882
May-86 $15,280 $16,727
Jun-86 $15,519 $17,010
Jul-86 $14,650 $16,059
Aug-86 $15,729 $17,249
Sep-86 $14,545 $15,823
Oct-86 $15,251 $16,736
11/28/86 $15,242 $17,143
12/31/86 $15,213 $16,705
1/30/87 $17,104 $18,955
2/27/87 $17,753 $19,704
3/31/87 $18,183 $20,272
4/30/87 $17,973 $20,092
5/29/87 $18,135 $20,266
6/30/87 $19,024 $21,290
7/31/87 $19,921 $22,368
8/31/87 $20,657 $23,203
9/30/87 $20,198 $22,694
10/30/87 $15,901 $17,807
11/30/87 $14,621 $16,339
12/31/87 $15,700 $17,582
1/29/88 $16,340 $18,322
2/29/88 $17,075 $19,176
3/31/88 $16,541 $18,583
4/29/88 $16,703 $18,789
5/31/88 $16,827 $18,952
6/30/88 $17,572 $19,821
7/29/88 $17,486 $19,746
8/31/88 $16,894 $19,076
9/30/88 $17,591 $19,889
10/31/88 $18,050 $20,442
11/30/88 $17,792 $20,151
12/30/88 $18,078 $20,503
1/31/89 $19,367 $22,004
2/28/89 $18,880 $21,456
3/31/89 $19,291 $21,956
4/28/89 $20,265 $23,096
5/31/89 $21,048 $24,031
6/30/89 $20,924 $23,894
7/31/89 $22,748 $26,052
8/31/89 $23,159 $26,561
9/29/89 $23,044 $26,453
10/31/89 $22,500 $25,839
11/30/89 $22,939 $26,366
12/31/89 $23,464 $26,999
1/31/90 $21,889 $25,186
2/28/90 $22,146 $25,511
3/31/90 $22,719 $26,187
4/30/90 $22,137 $25,533
5/31/90 $24,257 $28,023
6/30/90 $24,076 $27,834
7/31/90 $23,990 $27,745
8/31/90 $21,812 $25,237
9/30/90 $20,752 $24,008
10/31/90 $20,647 $23,906
11/30/90 $21,946 $25,451
12/31/90 $22,538 $26,161
1/31/91 $23,483 $27,300
2/28/91 $25,126 $29,252
3/31/91 $25,690 $29,961
4/30/91 $25,728 $30,032
5/31/91 $26,778 $31,327
6/30/91 $25,556 $29,892
7/31/91 $26,711 $31,286
8/31/91 $27,313 $32,027
9/30/91 $26,845 $31,491
10/31/91 $27,179 $31,914
11/30/91 $26,081 $30,628
12/31/91 $29,013 $34,131
1/31/92 $28,449 $33,495
2/29/92 $28,793 $33,929
3/31/92 $28,219 $33,269
4/30/92 $29,015 $34,246
5/31/92 $29,130 $34,414
6/30/92 $28,684 $33,902
7/31/92 $29,822 $35,287
8/31/92 $29,195 $34,564
9/30/92 $29,512 $34,970
10/31/92 $29,589 $35,091
11/30/92 $30,569 $36,286
12/31/92 $30,926 $36,731
1/31/93 $31,152 $37,038
2/28/93 $31,556 $37,543
3/31/93 $32,188 $38,335
4/30/93 $31,396 $37,409
5/31/93 $32,198 $38,409
6/30/93 $32,264 $38,522
7/31/93 $32,105 $38,367
8/31/93 $33,288 $39,823
9/30/93 $33,009 $39,517
10/31/93 $33,658 $40,335
11/30/93 $33,309 $39,951
12/31/93 $33,681 $40,434
1/31/94 $34,794 $41,808
2/28/94 $33,834 $40,674
3/31/94 $32,341 $38,900
4/30/94 $32,731 $39,399
5/31/94 $33,233 $40,045
6/30/94 $32,407 $39,064
7/31/94 $33,438 $40,347
8/31/94 $34,767 $42,001
9/30/94 $33,903 $40,974
10/31/94 $34,628 $41,895
11/30/94 $33,355 $40,369
12/31/94 $33,821 $40,968
1/31/95 $34,661 $42,029
2/28/95 $35,985 $43,666
3/31/95 $37,010 $44,952
4/28/95 $38,058 $46,275
5/31/95 $39,539 $48,121
6/30/95 $40,414 $49,238
7/31/95 $41,717 $50,870
8/31/95 $41,793 $50,997
9/29/95 $43,503 $53,148
10/31/95 $43,328 $52,958
11/30/95 $45,169 $55,281
12/29/95 $45,995 $56,345
1/31/96 $47,515 $58,261
2/29/96 $47,925 $58,803
3/31/96 $48,349 $59,368
4/30/96 $49,017 $60,240
5/31/96 $50,219 $61,788
6/30/96 $50,373 $62,023
7/31/96 $48,118 $59,282
8/31/96 $49,078 $60,533
9/30/96 $51,792 $63,935
10/31/96 $53,170 $65,699
11/30/96 $57,112 $70,659
12/31/96 $55,957 $69,260
1/31/97 $59,369 $73,582
2/28/97 $59,783 $74,164
3/31/97 $57,295 $71,123
4/30/97 $60,657 $75,362
5/31/97 $64,284 $79,966
6/30/97 $67,139 $83,525
7/31/97 $72,349 $90,165
8/31/97 $68,262 $85,116
9/30/97 $71,926 $89,772
10/31/97 $69,479 $86,773
11/30/97 $72,611 $90,791
12/31/97 $73,800 $92,352
1/31/98 $74,575 $93,368
2/28/98 $79,900 $100,100
3/31/98 $83,928 $105,225
4/30/98 $84,728 $106,299
5/31/98 $83,212 $104,470
6/30/98 $86,587 $108,712
7/31/98 $85,618 $107,559
8/31/98 $73,223 $92,017
9/30/98 $77,870 $97,915
</TABLE>
13
<PAGE>
Equity Index Fund INVESTMENT ADVISOR COMMENTARY
- ------------------------------------------------------------------------
EQUITY INDEX FUND
The Stagecoach Equity Index Fund ("the Fund")
seeks to approximate the total average return of substantially all common stocks
comprising the Standard & Poor's 500 Index.(4) The Fund uses an innovative
statistical process known as "sampling". This approach attempts to achieve a 95%
correlation between the price and performance of the S&P 500 Index.
Please note that we have changed the Fund's fiscal year-end to September 30
from March 31. We have made this change to improve our reporting process. This
change will not impact the performance or objective of your investment. Because
of the new year-end, this report is the second audited annual report we have
sent you over the last six months. Our discussions will focus on the most recent
period, although we may also comment on longer-term performance.
The Equity Index Fund is sub-advised by Barclays Global Fund Advisors, one of
the largest providers of index products in the world.
PERFORMANCE SUMMARY
The Stagecoach Equity Index Fund Class A posted a -7.22% cumulative return for
the six-month reporting period, excluding sales charges. This is slightly behind
the S&P 500 Index, which returned -6.95% for the same period. Both the Fund and
its benchmark experienced returns that erased strong performance earlier in the
year. This was primarily due to growing international concerns, which created
unprecedented volatility in U.S. markets during the third quarter. Concerns over
earnings estimates for the third quarter weighed heavily on investors' minds,
given the outlook for the global economy.
The Fund distributed $0.33 dividend income for Class A shares and no capital
gains were distributed from the Fund during the reporting period. Keep in mind
that past performance is no guarantee of future returns.
14
<PAGE>
INVESTMENT ADVISOR COMMENTARY Equity Index Fund
- ------------------------------------------------------------------------
PORTFOLIO REVIEW (as of September 30, 1998)
- --------------------------------------------------
<TABLE>
<S> <C>
NUMBER OF ISSUES 504
PORTFOLIO TURNOVER RATIO (NOT ANNUALIZED) 3%
MEDIAN MARKET CAPITALIZATION $6.7B
</TABLE>
The Fund offers instant diversification across the most widely held
industrial, transportation, financial and utility stocks because it invests in
many of the stocks held in the S&P 500 Index. Large capitalization stocks found
in the portfolio did well during the reporting period as investors flocked to
the security of larger names and solid earnings growth.
TOP FIVE INDUSTRY HOLDINGS (as of September 30, 1998)
- ---------------------------------------------------------
<TABLE>
<S> <C>
FINANCE & RELATED 14%
CAPITAL GOODS 10%
MANUFACTURING-PROCESSING 10%
ENERGY & RELATED 8%
UTILITIES 7%
</TABLE>
TOP TEN EQUITY HOLDINGS (as of September 30, 1998)
- ---------------------------------------------------------
<TABLE>
<S> <C>
MICROSOFT CORPORATION 3.3%
GENERAL ELECTRIC COMPANY 3.2%
EXXON CORPORATION 2.1%
MERCK & COMPANY INCORPORATED 1.9%
INTEL CORPORATION 1.8%
COCA COLA COMPANY 1.7%
PFIZER INCORPORATED 1.7%
WAL MART STORES INCORPORATED 1.5%
IBM CORPORATION 1.5%
PHILIP MORRIS COMPANIES INCORPORATED 1.4%
</TABLE>
STRATEGIC OUTLOOK
Although international concerns will continue to impact economic growth here
and in other parts of the world, the outlook for domestic stocks is moderate for
the remainder of 1998. Large cap stocks appear to be
15
<PAGE>
Equity Index Fund INVESTMENT ADVISOR COMMENTARY
- ------------------------------------------------------------------------
undervalued relative to the beginning of the year due to the recent
profit-taking. And even with anticipated modest growth ahead, large companies
with a high degree of certainty and visibility should do well in the fourth
quarter and into 1999.
1 Performance shown for the Class A shares of the Stagecoach Equity Index Fund
reflects performance of the Stagecoach Corporate Stock Fund, a predecessor
portfolio with the same investment objective and policies as the Stagecoach
Equity Index Fund. Prior to January 1, 1992, performance shown or advertised
for the Class A shares of the Stagecoach Equity Index Fund reflects
performance of the Corporate Stock Fund of the Wells Fargo Investment Trust
for Retirement Programs, a predecessor portfolio of the Stagecoach Corporate
Stock Fund. Performance shown for the Class B shares of the Stagecoach Equity
Index Fund for periods prior to February 17, 1998 reflects performance of the
Class A shares of the Fund, with expenses of the Class A shares adjusted to
reflect Class B sales charges and expenses
Investment return and principal value of an investment will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than their
original cost. Figures quoted represent past performance, which is no
guarantee of future results.
The Fund's manager has voluntarily waived all or a portion of its management
fees or assumed responsibility for other expenses, which reduces operating
expenses and increases total return to shareholders. Without these reductions
the Fund's returns would have been lower.
2 For Class A shares, the maximum front-end sales charge is 4.50%. The maximum
sales charge for Class B shares is 5.00%. Class B share performance including
sales charge assumes the Class B share sales charge for the corresponding time
period.
3 The returns for Class B shares of the Fund vary from the date results shown
due to different expenses and load structures. The accompanying chart compares
the performance of the Stagecoach Equity Index Fund Class A shares since
inception of the predecessor portfolio with the S&P 500 Index. The chart
assumes a hypothetical $10,000 initial investment in Class A shares and
reflects all operating expenses and assumes the maximum initial sales charge
of 4.50%. 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 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.
4 "Standard & Poor's", "S&P" "S&P 500", Standard & Poor's 500 and 500 are
trademarks of McGraw-Hill, Inc. and have been licensed. The Fund is not
sponsored, endorsed, sold or promoted by Standard & Poor's and Standard &
Poor's makes no representation regarding the advisability of the Fund.
16
<PAGE>
PERFORMANCE AT A GLANCE Equity Value Fund
- ------------------------------------------------------------------------
EQUITY VALUE FUND
AVERAGE ANNUAL RETURNS (as of September 30, 1998)(1)
- ----------------------------------------------------------------
EXCLUDING SALES CHARGE
- ----------------------------------------------------------
<TABLE>
<CAPTION>
SIX-MONTHS SINCE
AS OF INCEPTION
9/30/98 1-YEAR 5-YEAR (7/2/90)
<S> <C> <C> <C> <C>
CLASS A (17.27) (5.94) 14.31 13.68
CLASS B (17.54) (6.60) 13.55 12.91
CLASS C (17.57) (6.62) 13.54 12.91
INSTITUTIONAL CLASS (17.26) (5.83) 14.42 13.75
</TABLE>
INCLUDING SALES CHARGE(2)
- ----------------------------------------------------------
<TABLE>
<CAPTION>
SIX-MONTHS SINCE
AS OF INCEPTION
9/30/98 1-YEAR 5-YEAR (7/2/90)
<S> <C> <C> <C> <C>
CLASS A (21.63) (10.87) 13.08 12.94
CLASS B (21.66) (10.76) 13.32 12.91
CLASS C (18.39) (7.46) 13.54 12.91
INSTITUTIONAL CLASS N/A N/A N/A N/A
</TABLE>
GROWTH OF A $10,000 INVESTMENT(3)
- ----------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
STAGECOACH EQUITY STAGECOACH EQUITY
VALUE FUND - CLASS A S&P 500 INDEX VALUE FUND - INSTITUTIONAL CLASS
<S> <C> <C> <C>
Inception $9,475 $10,000 $10,000
Jul-90 $9,428 $9,968 $9,950
Aug-90 $8,404 $9,067 $8,870
Sep-90 $8,035 $8,626 $8,480
Oct-90 $7,950 $8,589 $8,390
Nov-90 $8,522 $9,144 $8,994
Dec-90 $8,818 $9,399 $9,306
Jan-91 $9,078 $9,808 $9,581
Feb-91 $9,655 $10,510 $10,190
Mar-91 $9,934 $10,764 $10,485
Apr-91 $9,828 $10,790 $10,373
May-91 $10,138 $11,255 $10,699
Jun-91 $9,654 $10,740 $10,188
Jul-91 $10,072 $11,240 $10,630
Aug-91 $10,315 $11,506 $10,886
Sep-91 $10,208 $11,314 $10,773
Oct-91 $10,276 $11,466 $10,846
Nov-91 $9,651 $11,004 $10,186
Dec-91 $10,651 $12,262 $11,241
Jan-92 $10,801 $12,034 $11,400
Feb-92 $11,002 $12,190 $11,611
Mar-92 $10,861 $11,953 $11,463
Apr-92 $11,123 $12,304 $11,739
May-92 $10,992 $12,364 $11,601
Jun-92 $10,781 $12,180 $11,379
Jul-92 $11,105 $12,678 $11,720
Aug-92 $10,731 $12,418 $11,325
Sep-92 $10,903 $12,564 $11,507
Oct-92 $11,035 $12,607 $11,647
Nov-92 $11,513 $13,037 $12,151
Dec-92 $11,774 $13,197 $12,426
Jan-93 $12,214 $13,307 $12,890
Feb-93 $12,412 $13,488 $13,100
Mar-93 $12,894 $13,773 $13,609
Apr-93 $12,684 $13,440 $13,387
May-93 $13,104 $13,800 $13,831
Jun-93 $13,262 $13,840 $13,997
Jul-93 $13,410 $13,784 $14,153
Aug-93 $14,033 $14,307 $14,811
Sep-93 $13,980 $14,198 $14,755
Oct-93 $14,214 $14,491 $15,002
Nov-93 $14,172 $14,353 $14,957
Dec-93 $14,814 $14,527 $15,634
Jan-94 $15,449 $15,021 $16,305
Feb-94 $15,293 $14,613 $16,141
Mar-94 $14,627 $13,976 $15,438
Apr-94 $14,688 $14,155 $15,501
May-94 $14,832 $14,387 $15,654
Jun-94 $14,525 $14,035 $15,330
Jul-94 $14,840 $14,496 $15,662
Aug-94 $15,312 $15,090 $16,160
Sep-94 $15,028 $14,721 $15,860
Oct-94 $14,943 $15,052 $15,771
Nov-94 $14,408 $14,504 $15,206
Dec-94 $14,560 $14,719 $15,367
Jan-95 $14,404 $15,100 $15,202
Feb-95 $14,963 $15,688 $15,792
Mar-95 $15,353 $16,150 $16,204
Apr-95 $15,772 $16,625 $16,646
May-95 $16,256 $17,289 $17,157
Jun-95 $16,361 $17,690 $17,268
Jul-95 $17,032 $18,276 $17,976
Aug-95 $17,098 $18,322 $18,045
Sep-95 $17,519 $19,095 $18,490
Oct-95 $17,137 $19,026 $18,100
Nov-95 $17,889 $19,861 $18,908
Dec-95 $18,084 $20,243 $19,112
Jan-96 $18,415 $20,932 $19,476
Feb-96 $18,650 $21,126 $19,724
Mar-96 $19,147 $21,329 $20,264
Apr-96 $19,534 $21,643 $20,689
May-96 $19,825 $22,199 $21,011
Jun-96 $19,659 $22,283 $20,836
Jul-96 $18,785 $21,298 $19,895
Aug-96 $19,243 $21,748 $20,380
Sep-96 $20,120 $22,970 $21,280
Oct-96 $21,106 $23,604 $22,339
Nov-96 $22,790 $25,386 $24,122
Dec-96 $22,883 $24,883 $24,213
Jan-97 $23,767 $26,436 $25,166
Feb-97 $24,137 $26,645 $25,540
Mar-97 $23,265 $25,553 $24,627
Apr-97 $23,942 $27,076 $25,344
May-97 $25,796 $28,730 $27,306
Jun-97 $26,799 $30,008 $28,380
Jul-97 $28,964 $32,394 $30,673
Aug-97 $27,914 $30,580 $29,578
Sep-97 $29,008 $32,253 $30,732
Oct-97 $27,501 $31,175 $29,137
Nov-97 $28,376 $32,619 $30,063
Dec-97 $29,136 $33,180 $30,862
Jan-98 $28,972 $33,545 $30,708
Feb-98 $31,202 $35,963 $33,072
Mar-98 $32,979 $37,805 $34,976
Apr-98 $32,634 $38,190 $34,591
May-98 $32,107 $37,533 $34,051
Jun-98 $31,956 $39,057 $33,884
Jul-98 $30,208 $38,643 $32,030
Aug-98 $25,947 $33,059 $27,509
Sep-98 $27,284 $35,178 $28,940
</TABLE>
17
<PAGE>
Equity Value Fund INVESTMENT ADVISOR COMMENTARY
- ------------------------------------------------------------------------
EQUITY VALUE FUND
The Stagecoach Equity Value Fund ("the Fund") seeks to provide investors with
long-term capital appreciation. The Fund invests in common stocks, debt
securities and foreign companies, implementing a value strategy that targets
"out of favor" stocks. Our portfolio managers believe these companies are
underpriced relative to market indicators, making them hidden opportunities for
capital appreciation.
Please note that we have changed the Fund's fiscal year-end to September 30
from March 31. We have made this change to improve our reporting process. This
change will not impact the performance or objective of your investment. Because
of the new year-end, this report is the second audited annual report we have
sent you over the last six months. Our discussions will focus on the most recent
period, although we may also comment on longer-term performance.
Rex Wardlaw, Allen Wisniewski and Gregg Giboney manage the Fund. Mr. Wardlaw
brings 11 years of investment experience to the Fund. He specializes in
value-style investing and has been managing investments at Wells Fargo and Wells
Capital Management since 1993. Mr. Wardlaw earned a BA in Chemistry from
Northwest Nazarene College, and an MBA in Finance from the University of Oregon.
He is also a Chartered Financial Analyst. Mr. Wisniewski has over 13 years of
experience in the securities industry, with a focus on equities. Mr. Wisniewski
received his BA and MBA in Economics and Finance from the University of
California at Los Angeles. He is a Chartered Financial Analyst and a member of
the Los Angeles Society of Financial Analysts. Mr. Giboney has been in the
securities industry for 12 years. He holds a BA from Washington State University
and an MBA from the University of Portland. Mr. Giboney is a Chartered Financial
Analyst and is a board member and past President of the Portland Society of
Financial Analysts. The fund managers work together to bring disciplined
investment expertise to equity investing.
18
<PAGE>
INVESTMENT ADVISOR COMMENTARY Equity Value Fund
- ------------------------------------------------------------------------
PERFORMANCE SUMMARY
The Stagecoach Equity Value Fund Class A posted a -17.27% cumulative return
for the six-month reporting period, excluding sales charges. This is below the
S&P 500 Index, a broad-based stock index used for comparison in the preceding
chart. The S&P 500 Index returned -6.95% for the same period.
During the period the Fund primarily invested in mid-to-small size companies,
which did not perform as well as many of the larger companies held in the S&P
500 Index. In fact, the average size of companies in the Fund was approximately
one-third the market capitalization of the overall S&P 500 Index. In addition,
the Fund's value investment style underperformed the S&P 500 Index. Stocks that
were more sensitive to the economy such as chemical, basic materials, and
financial stocks contributed to the Fund's lower performance.
The Fund distributed $0.09 in dividend income for Class A shares over the
six-month period and no capital gains were distributed from the Fund during the
reporting period. Keep in mind that past performance is no guarantee of future
returns.
PORTFOLIO REVIEW (as of September 30, 1998)
- --------------------------------------------------
<TABLE>
<S> <C>
NUMBER OF ISSUES 127
PORTFOLIO TURNOVER RATIO (NOT ANNUALIZED) 23%
MEDIAN MARKET CAPITALIZATION $10.3B
</TABLE>
The utility sector was one of the best performing sectors during the reporting
period and for the year as well. In a declining interest rate environment,
investors looked to the stability of utilities as an attractive place to invest,
causing the price to increase. Also, these securities have little foreign
exposure, making them more attractive in the current global market. Montana
Power was one of the top performers for the Fund. This company is primarily
known as an electric utility, however, it also owns a fiber-optic business unit
with significant poten-
19
<PAGE>
Equity Value Fund INVESTMENT ADVISOR COMMENTARY
- ------------------------------------------------------------------------
tial for expansion and profit. Montana Power would also like to be a provider of
long-distance services, and may even sell the power generation business.
The consumer staples sector also fared well for the Fund. Companies that fall
into this sector include tobacco manufacturers, food and drug marketers, and
food retailers. Historically, these types of companies perform well because of
steady demand, despite economic pressures.
TOP FIVE INDUSTRY HOLDINGS (as of September 30, 1998)
- ---------------------------------------------------------
<TABLE>
<S> <C>
FINANCE & RELATED 24%
ENERGY & RELATED 14%
CAPITAL GOODS 10%
UTILITIES 10%
MANUFACTURING-PROCESSING 9%
</TABLE>
The performance of the financial sector impacted the Fund's performance. This
sector represented 24% of the portfolio as of September 30, 1998. The gains
achieved by financial stocks early in the year were offset during the second and
third quarters due to increasing global concerns. Although financial companies
declined later in the year, we believe that this sector shows strength for the
long-term. Historically, financial stocks have performed well when interest
rates decline.
TOP TEN EQUITY HOLDINGS (as of September 30, 1998)
- ---------------------------------------------------------
<TABLE>
<S> <C>
HARTFORD FINANCIAL SERVICES CORPORATION 3.0%
FREMONT GENERAL CORPORATION 2.8%
MONTANA POWER COMPANY 2.7%
PHILIP MORRIS COMPANIES INCORPORATED 2.7%
WASTE MANAGEMENT INCORPORATED 2.7%
GTE CORPORATION 2.3%
IBM CORPORATION 2.3%
CIGNA CORPORATION 2.2%
FIRST UNION CORPORATION 2.0%
WASHINGTON MUTUAL INCORPORATED 1.9%
</TABLE>
20
<PAGE>
INVESTMENT ADVISOR COMMENTARY Equity Value Fund
- ------------------------------------------------------------------------
STRATEGIC OUTLOOK
Moderate economic growth sets the stage for additional cuts by the Federal
Reserve. This is a positive development pointing to, at a minimum, the potential
for improvement for many of the Fund's stocks that feature a relatively higher
level of economic sensitivity. We also see positive implications from a
weakening in the dollar, which is a good environment for exports and
commodities.
We will attempt to limit our international exposure until global markets
become more stable. As we focus on domestic stocks, the Fund will continue to
purchase stocks where valuations look attractive over the next 6-12 months. The
financial sector should continue to provide solid returns in the current
economic environment. We will also look for companies focused on domestic
markets such as food, retailers, defense stocks, and regional banks. We continue
to focus our attention on the core element of our discipline, selecting high
quality undervalued stocks.
1 Performance shown for the Class A shares of the Stagecoach Equity Value Fund
for periods prior to September 6, 1996 reflects performance of the Investor
shares of the Pacifica Equity Value Fund, a predecessor portfolio with the
same investment objective and polices as the Stagecoach Equity Value Fund.
Performance shown or advertised for the Class B shares of the Stagecoach
Equity Value Fund for periods prior to September 6, 1996 reflects performance
of Investor shares of the predecessor portfolio, with expenses of the Investor
shares adjusted to reflect Class B sales charges and expenses. Performance
shown or advertised for the Class C shares of the Stagecoach Equity Value Fund
for the periods prior to April 1, 1998 reflects performance of the Class B
shares, adjusted for Class C sales charges and expenses. Performance shown for
the Institutional Class shares of the Stagecoach Equity Value Fund for periods
prior to September 6, 1996 reflects the performance of the Institutional Class
shares of the predecessor portfolio.
Investment return and principal value of an investment will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than their
original cost. Figures quoted represent past performance, which is no
guarantee of future results.
The Fund's manager has voluntarily waived all or a portion of its management
fees or assumed responsibility for other expenses, which reduces operating
expenses and increases total return to shareholders. Without these reductions
the Fund's returns would have been lower.
2 For Class A shares, the maximum front-end sales charge is 5.25%. The maximum
sales charge for Class B shares is 5.00%. The maximum sales
21
<PAGE>
Equity Value Fund INVESTMENT ADVISOR COMMENTARY
- ------------------------------------------------------------------------
charge for Class C shares is 1.00%. Class B and C share performance including
sales charge assumes the sales charge for the corresponding time period. There
are no sales charges for the Institutional Class shares.
3 The returns for Class B and Class C shares of the Fund will vary from the
results shown due to different expenses and load structures. The accompanying
chart compares the performance of the Stagecoach Equity Value Fund Class A and
Institutional Class shares since inception of the predecessor portfolio with
the S&P 500 Index. The chart assumes a hypothetical $10,000 initial investment
in Class A and Institutional Class shares and reflects all operating expenses
and, for Class A shares, assumes the maximum initial sales charge of 5.25%.
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 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.
22
<PAGE>
PERFORMANCE AT A GLANCE Growth Fund
- ------------------------------------------------------------------------
GROWTH FUND
AVERAGE ANNUAL RETURNS (as of September 30, 1998)(1)
- ----------------------------------------------------------------
EXCLUDING SALES CHARGE
- ----------------------------------------------------------
<TABLE>
<CAPTION>
SIX-MONTHS SINCE
AS OF INCEPTION
9/30/98 1-YEAR 5-YEAR (8/2/90)
<S> <C> <C> <C> <C>
CLASS A (7.08) 3.49 15.12 14.77
CLASS B (7.45) 2.76 14.42 14.07
INSTITUTIONAL CLASS (7.10) 3.56 15.12 14.78
</TABLE>
INCLUDING SALES CHARGE(2)
- ----------------------------------------------------------
<TABLE>
<CAPTION>
SIX-MONTHS SINCE
AS OF INCEPTION
9/30/98 1-YEAR 5-YEAR (8/2/90)
<S> <C> <C> <C> <C>
CLASS A (11.95) (1.93) 13.89 14.02
CLASS B (12.08) (1.66) 14.19 14.07
INSTITUTIONAL CLASS N/A N/A N/A N/A
</TABLE>
GROWTH OF A $10,000 INVESTMENT(3)
- ----------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
S&P 500 INDEX STAGECOACH GROWTH STAGECOACH GROWTH
FUND - INSTITUTIONAL CLASS FUND - CLASS A
<S> <C> <C> <C>
Inception $10,000 $10,000 $9,475
Aug-90 $9,096 $10,060 $9,532
Sep-90 $8,653 $10,080 $9,551
Oct-90 $8,617 $10,130 $9,598
Nov-90 $9,174 $10,170 $9,636
Dec-90 $9,429 $10,290 $9,750
Jan-91 $9,840 $10,680 $10,119
Feb-91 $10,543 $11,080 $10,498
Mar-91 $10,799 $11,210 $10,621
Apr-91 $10,824 $11,250 $10,659
May-91 $11,291 $11,710 $11,095
Jun-91 $10,774 $11,140 $10,555
Jul-91 $11,276 $11,710 $11,095
Aug-91 $11,543 $12,000 $11,370
Sep-91 $11,350 $11,880 $11,256
Oct-91 $11,503 $12,090 $11,455
Nov-91 $11,039 $11,570 $10,963
Dec-91 $12,302 $12,840 $12,166
Jan-92 $12,073 $12,780 $12,109
Feb-92 $12,229 $13,020 $12,336
Mar-92 $11,991 $12,764 $12,094
Apr-92 $12,343 $13,106 $12,418
May-92 $12,404 $13,277 $12,580
Jun-92 $12,219 $12,960 $12,280
Jul-92 $12,718 $13,577 $12,864
Aug-92 $12,458 $13,314 $12,615
Sep-92 $12,604 $13,512 $12,803
Oct-92 $12,648 $13,766 $13,043
Nov-92 $13,079 $14,284 $13,534
Dec-92 $13,239 $14,566 $13,802
Jan-93 $13,350 $14,934 $14,150
Feb-93 $13,532 $14,619 $13,851
Mar-93 $13,817 $14,909 $14,126
Apr-93 $13,483 $14,551 $13,787
May-93 $13,844 $14,888 $14,106
Jun-93 $13,885 $14,609 $13,842
Jul-93 $13,829 $14,504 $13,742
Aug-93 $14,353 $15,245 $14,444
Sep-93 $14,243 $15,241 $14,440
Oct-93 $14,538 $15,761 $14,934
Nov-93 $14,399 $15,389 $14,581
Dec-93 $14,573 $15,796 $14,967
Jan-94 $15,069 $16,407 $15,546
Feb-94 $14,660 $16,150 $15,302
Mar-94 $14,021 $15,225 $14,426
Apr-94 $14,201 $15,408 $14,599
May-94 $14,434 $15,397 $14,589
Jun-94 $14,080 $15,048 $14,258
Jul-94 $14,542 $15,512 $14,698
Aug-94 $15,138 $16,008 $15,168
Sep-94 $14,768 $15,807 $14,977
Oct-94 $15,100 $15,937 $15,101
Nov-94 $14,550 $15,450 $14,639
Dec-94 $14,766 $15,750 $14,923
Jan-95 $15,149 $15,828 $14,997
Feb-95 $15,738 $16,588 $15,717
Mar-95 $16,202 $16,941 $16,052
Apr-95 $16,679 $17,188 $16,285
May-95 $17,344 $17,983 $17,039
Jun-95 $17,747 $18,416 $17,449
Jul-95 $18,335 $18,956 $17,961
Aug-95 $18,381 $19,249 $18,238
Sep-95 $19,156 $19,909 $18,864
Oct-95 $19,088 $19,289 $18,276
Nov-95 $19,925 $20,056 $19,003
Dec-95 $20,309 $20,302 $19,236
Jan-96 $20,999 $20,749 $19,660
Feb-96 $21,194 $21,549 $20,418
Mar-96 $21,398 $21,597 $20,463
Apr-96 $21,712 $22,362 $21,188
May-96 $22,270 $22,951 $21,746
Jun-96 $22,355 $22,452 $21,273
Jul-96 $21,367 $21,061 $19,955
Aug-96 $21,818 $21,714 $20,574
Sep-96 $23,044 $22,790 $21,632
Oct-96 $23,680 $23,517 $22,320
Nov-96 $25,468 $25,057 $23,782
Dec-96 $24,964 $24,664 $23,415
Jan-97 $26,521 $26,211 $24,883
Feb-97 $26,731 $25,492 $24,192
Mar-97 $25,635 $24,594 $23,331
Apr-97 $27,163 $25,675 $24,352
May-97 $28,822 $27,379 $25,956
Jun-97 $30,105 $27,994 $26,546
Jul-97 $32,498 $30,402 $28,822
Aug-97 $30,678 $28,596 $27,106
Sep-97 $32,356 $29,755 $28,207
Oct-97 $31,276 $28,813 $27,305
Nov-97 $32,724 $29,273 $27,732
Dec-97 $33,287 $29,427 $27,875
Jan-98 $33,653 $29,938 $28,372
Feb-98 $36,079 $31,651 $29,991
Mar-98 $37,926 $33,169 $31,416
Apr-98 $38,313 $33,399 $31,644
May-98 $37,654 $32,875 $31,146
Jun-98 $39,183 $34,506 $32,688
Jul-98 $38,768 $34,288 $32,475
Aug-98 $33,166 $29,418 $27,862
Sep-98 $35,292 $30,815 $29,191
</TABLE>
23
<PAGE>
Growth Fund INVESTMENT ADVISOR COMMENTARY
- ------------------------------------------------------------------------
GROWTH FUND
The Stagecoach Growth Fund ("the Fund") seeks to earn current income and
achieve long-term capital appreciation by investing primarily in common stocks
and preferred stocks, and debt securities that are convertible into common
stocks. The Fund maintains a large company emphasis and the majority of the
Fund's holdings consist of larger, established companies with market
capitalizations above $1 billion. These companies represent some of America's
best known firms with long histories of increasing earnings.
Please note that we have changed the Fund's fiscal year-end to September 30
from March 31. We have made this change to improve our reporting process. This
change will not impact the performance or objective of your investment. Because
of the new year-end, this report is the second audited annual report we have
sent you over the last six months. Our discussions will focus on the most recent
period, although we may also comment on longer-term performance.
Kelli Hill manages the Stagecoach Growth Fund. Ms. Hill has 15 years of
experience in the securities industry. Prior to joining Wells Fargo in 1987, Ms.
Hill worked as an institutional equity trader for E.F. Hutton. Ms. Hill holds a
BA from the University of Southern California and is a Chartered Financial
Analyst Level II candidate.
PERFORMANCE SUMMARY
The Stagecoach Growth Fund Class A posted a -7.08% cumulative return for the
six-month reporting period, excluding sales charges. This is slightly below the
Fund's benchmark, the S&P 500 Index, which returned -6.95% for the same period.
Even though the market favored large capitalization stocks during the reporting
period, the Fund and the benchmark declined in the third quarter, which resulted
in negative numbers at the end of September. In fact, year-to-date performance
for the Fund was up 17.27% through June 30, 1998.
The retail sector provided solid returns because it includes companies that
tend to be more resistant to
24
<PAGE>
INVESTMENT ADVISOR COMMENTARY Growth Fund
- ------------------------------------------------------------------------
swings in the economy. The Fund benefited from investing in several companies in
this sector including Wal-Mart, Home Depot, and Gap Stores.
The Fund distributed $0.05 in dividend income for Class A shares and no
capital gains were distributed from the Fund during the reporting period. Keep
in mind that past performance is no guarantee of future returns.
PORTFOLIO REVIEW (as of September 30, 1998)
- --------------------------------------------------
<TABLE>
<S> <C>
NUMBER OF ISSUES 84
PORTFOLIO TURNOVER RATIO (NOT ANNUALIZED) 18%
MEDIAN MARKET CAPITALIZATION $63.5B
</TABLE>
A sector that had good performance for the Fund was healthcare. The healthcare
sector, which includes drug companies such as Lilly, Pfizer and Bristol Myers,
offered consistent returns despite market volatility and showed strong gains for
the Fund.
TOP FIVE INDUSTRY HOLDINGS (as of September 30, 1998)
- ---------------------------------------------------------
<TABLE>
<S> <C>
FINANCE & RELATED 18%
MANUFACTURING-PROCESSING 12%
CAPITAL GOODS 10%
ENERGY & RELATED 9%
CONSUMER-DISCRETIONARY 6%
</TABLE>
The Fund was hurt by the performance of the consumer staples and aerospace
sectors. Companies selling consumer staples like Proctor & Gamble saw prices
fall during the period due to international exposure. The aerospace industry
declined due to the multinational nature of these companies. In light of the
weak outlook for this sector, the Fund's position in this industry was reduced
when positions in Honeywell were sold.
25
<PAGE>
Growth Fund INVESTMENT ADVISOR COMMENTARY
- ------------------------------------------------------------------------
TOP TEN EQUITY HOLDINGS (as of September 30, 1998)
- ---------------------------------------------------------
<TABLE>
<S> <C>
GENERAL ELECTRIC COMPANY 4.6%
MICROSOFT CORPORATION 3.6%
AMERICAN INTERNATIONAL GROUP INCORPORATED 2.7%
CISCO SYSTEMS INCORPORATED 2.5%
COCA COLA COMPANY 2.2%
WAL MART STORES INCORPORATED 2.0%
IBM CORPORATION 2.0%
EXXON CORPORATION 2.0%
SBC COMMUNICATIONS 1.9%
CHASE MANHATTAN CORPORATION 1.9%
</TABLE>
STRATEGIC OUTLOOK
Large cap equities appear to be undervalued, relative to the beginning of the
year, and even with anticipated modest growth ahead, companies with a high
degree of certainty and visibility should do well in the fourth quarter and into
1999. Sectors that have performed well are pharmaceuticals such as Bristol
Myers, Pfizer and Lilly. Drug companies have little exposure to the emerging
markets and these companies are set to do very well, which drives stock prices
higher.
We are cautious, but optimistic that large capitalization stocks will continue
to perform well through the end of the year. As always, we will continue to
focus on the companies with accelerated earnings that we believe to be
consistent and stable.
1 Performance shown for the Class A shares of the Stagecoach Growth Fund for
periods prior to January 1, 1992, reflects performance of the shares of the
Select Stock Fund of Wells Fargo Investment Trust for Retirement Programs, a
predecessor portfolio with the same investment objective and policies as the
Stagecoach Growth Fund. Performance shown or advertised for the Class B shares
of the Stagecoach Growth Fund for the periods January 1, 1992 to January 1,
1995 reflects performance of the Class A shares of Fund, with expenses of the
Class A shares adjusted to reflect Class B sales charges and expenses.
Performance shown or advertised for the Class B shares of the Stagecoach
Growth Fund for periods prior to January 1, 1992, reflects performance of the
shares of the predecessor portfolio, with expenses adjusted to reflect Class B
sales charges and expenses. Performance shown or advertised for Institutional
Class shares of the Stagecoach
26
<PAGE>
INVESTMENT ADVISOR COMMENTARY Growth Fund
- ------------------------------------------------------------------------
Growth Fund for the period prior to September 6, 1996 reflect the performance
of the Class A shares (as described above) adjusted for Institutional Class
share expenses
Investment return and principal value of an investment will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than their
original cost. Figures quoted represent past performance, which is no
guarantee of future results.
The Fund's manager has voluntarily waived all or a portion of its management
fees or assumed responsibility for other expenses, which reduces operating
expenses and increases total return to shareholders. Without these reductions
the Fund's returns would have been lower.
2 For Class A shares, the maximum front-end sales charge is 5.25%. The maximum
sales charge for Class B shares is 5.00%. Class B share performance including
sales charge assumes the Class B share sales charge for the corresponding time
period. There are no sales charges for the Institutional Class shares.
3 The returns for Class B shares of the Fund will vary from the results shown
due to different expenses and load structures. The accompanying chart compares
the performance of the Stagecoach Growth Fund Class A and Institutional Class
shares since inception of the predecessor portfolio with the S&P 500 Index.
The chart assumes a hypothetical $10,000 initial investment in Class A and
Institutional Class shares and reflects all operating expenses and, for Class
A shares, assumes the maximum initial sales charge of 5.25%. 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 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.
27
<PAGE>
International Equity Fund PERFORMANCE AT A GLANCE
- ------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
AVERAGE ANNUAL RETURNS (as of September 30, 1998)(1)
- ----------------------------------------------------------------
EXCLUDING SALES CHARGE
- ----------------------------------------------------------
<TABLE>
<CAPTION>
SIX-MONTHS SINCE
AS OF INCEPTION
9/30/98 1-YEAR (9/24/97)
<S> <C> <C> <C>
CLASS A (15.29) (7.22) (6.28)
CLASS B (15.53) (7.83) (6.89)
CLASS C (15.53) (7.83) (6.89)
</TABLE>
INCLUDING SALES CHARGE(2)
- ----------------------------------------------------------
<TABLE>
<CAPTION>
SIX-MONTHS SINCE
AS OF INCEPTION
9/30/98 1-YEAR (9/24/97)
<S> <C> <C> <C>
CLASS A (19.73) (12.10) (11.09)
CLASS B (19.75) (12.44) (10.55)
CLASS C (16.38) (8.75) (6.89)
</TABLE>
GROWTH OF A $10,000 INVESTMENT(3)
----------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
STAGECOACH INTERNATIONAL
MSCI EAFE INDEX EQUITY FUND - CLASS A
<S> <C> <C>
Inception $10,000 $9,475
09/97 $10,140 $9,560
10/97 $9,360 $9,001
11/97 $9,265 $9,077
12/97 $9,345 $9,164
01/98 $9,772 $9,372
02/98 $10,400 $10,007
03/98 $10,720 $10,472
04/98 $10,807 $10,661
05/98 $10,757 $10,652
06/98 $10,841 $10,803
07/98 $10,954 $10,927
08/98 $9,599 $9,183
09/98 $9,307 $8,870
</TABLE>
28
<PAGE>
INVESTMENT ADVISOR COMMENTARY International Equity Fund
- ------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
The Stagecoach International Equity Fund ("the Fund") seeks to earn total
return, with an emphasis on capital appreciation, over the long-term by
investing in equity securities of non-U.S. companies. Stock selection for the
Fund is driven by company fundamentals, not country allocation. Target companies
generally have a history of effective management, prudent financial and
accounting policies, and an ability to capitalize on a changing business
environment.
Please note that we have changed the Fund's fiscal year-end to September 30
from March 31. We have made this change to improve our reporting process. This
change will not impact the performance or objective of your investment. Because
of the new year-end, this report is the second audited annual report we have
sent you over the last six months. Our discussions will focus on the most recent
period, although we may also comment on longer-term performance.
Katherine Schapiro and Stacey Ho manage the International Equity Fund. Ms.
Schapiro has over 17 years of securities experience, with extensive
international investment expertise. Ms. Schapiro is a graduate of Stanford
University and a Chartered Financial Analyst. Ms. Ho has nine years of
experience in the securities industry and has dedicated her investment
management career to international money management. She received her BS degree
from San Diego State University, an MS from Stanford University and an MBA from
UCLA. Ms. Ho is working toward her Chartered Financial Analyst designation.
PERFORMANCE SUMMARY
The Stagecoach International Equity Fund Class A posted a -15.29% cumulative
return for the six-month reporting period, excluding sales charges. This is
below the benchmark for the Fund, the Morgan Stanley Capital Investment-Europe,
Australasia and Far East Index ("MSCI EAFE Index"), which returned -13.18% for
the same period. Although the Fund was ahead of its benchmark for the majority
of the year, most of the difference in performance occurred in the month of
August when the currency crisis spread from Southeast Asia to Russia, and
threatened Brazil. Stock markets around the world declined significantly during
the month. The
29
<PAGE>
International Equity Fund INVESTMENT ADVISOR COMMENTARY
- ------------------------------------------------------------------------
developed markets of Continental Europe and emerging markets of Eastern Europe
and Latin America were particularly affected.
The Fund did not distribute dividend income for Class A shares and no capital
gains were distributed from the Fund during the reporting period. Keep in mind
that past performance is no guarantee of future returns.
PORTFOLIO REVIEW (as of September 30, 1998)
- --------------------------------------------------
<TABLE>
<S> <C>
NUMBER OF ISSUES 72
PORTFOLIO TURNOVER RATIO (NOT ANNUALIZED) 21%
MEDIAN MARKET CAPITALIZATION $18.5B
</TABLE>
The Fund's performance can be attributed to key holdings in the portfolio.
Several of the Fund's core European holdings underperformed in the difficult
market environment late in the period. Of note were companies associated with
financial services, such as Amvescap and Union Bank of Switzerland, and those
with operations in Latin America, including Telefonica and Banco Santander.
Finally, although the Fund had only modest exposure to emerging markets, all
emerging markets stocks suffered materially in the period.
TOP HOLDINGS BY COUNTRY (as of September 30, 1998)
- ---------------------------------------------------------
<TABLE>
<S> <C>
GREAT BRITAIN 16%
FRANCE 12%
JAPAN 10%
NETHERLANDS 9%
GERMANY 5%
</TABLE>
Throughout the six-month period, the Fund remained overweighted in Continental
European markets, and underweighted in the stock markets of Asia, relative to
the MSCI EAFE Index. Economic conditions continued to worsen in the Asia Pacific
region, causing corporate earnings forecasts to decline and expectations of
recovery to be delayed. In contrast, European economies enjoyed improved
conditions as interest rates declined and consumer demand picked up.
Recognizing that European stocks were overvalued early in the summer, steps
were taken to reduce positions in several key holdings, including Ericsson and
30
<PAGE>
INVESTMENT ADVISOR COMMENTARY International Equity Fund
- ------------------------------------------------------------------------
Telefonica. Purchases were made primarily in defensive and domestic oriented
companies such as Superdiplo, a supermarket operator. Major holdings which did
well in the period included cellular services provider Vodafone, and retailers
Boots and Metro.
TOP TEN EQUITY HOLDINGS (as of September 30, 1998)
- ---------------------------------------------------------
<TABLE>
<S> <C>
VODAFONE GROUP PLC 3.2%
METRO AG 2.6%
AXA UAP 2.5%
GROUPE DANONE ADR 2.4%
NOVARTIS AG 2.4%
BOOTS CO PLC 2.3%
SONY CORPORATION 2.3%
NOKIA CORP ADR 2.1%
NEWS CORPORATION LIMITED 1.9%
GLAXO HOLDINGS PLC ADR 1.9%
</TABLE>
STRATEGIC OUTLOOK
The key to the market's recovery is containment of currency problems followed
by a return of investor confidence in global leadership and economic expansion.
It is important that Europe and the U.S. avoid recession and remain engines of
growth for the rest of the world. In addition, effective banking system reform
in Japan would help to improve investor confidence and speed recovery in Asian
economies.
While the recent market volatility is unsettling, it does not change our basic
approach to investing. We will maintain our disciplined investment strategy and
will continually assess the risk/reward prospects of the Fund's investments. We
are confident that the Fund's top holdings are financially strong as these
companies have solid management teams and are leaders in their industries.
1 Performance shown for the Class C shares of the Stagecoach International
Equity Fund for periods prior to April 1, 1998, reflects performance of the
Class B shares, adjusted for Class C shares charges and expenses.
Investment return and principal value of an investment will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than their
original cost. Figures quoted represent past performance, which is no
guarantee of future results. An investment in the Stagecoach International
Equity Fund presents certain additional risks
31
<PAGE>
International Equity Fund INVESTMENT ADVISOR COMMENTARY
- ------------------------------------------------------------------------
that may not be present in a mutual fund that invests largely in domestic
stocks. For example, investments in foreign and emerging markets present
special risks including: currency fluctuation, the potential for diplomatic
and political instability and liquidity risks, foreign taxation and
differences in auditing and other financial standards.
The Fund's manager has voluntarily waived all or a portion of its management
fees or assumed responsibility for other expenses, which reduces operating
expenses and increases total return to shareholders. Without these reductions
the Fund's returns would have been lower.
2 For Class A shares, the maximum front-end sales charge is 5.25%. The maximum
sales charge for Class B shares is 5.00%. The maximum sales charge for Class C
shares is 1.00%. Class B and Class C share performance with sales charge
assumes the sales charge for the corresponding time period.
3 The returns for Class B and Class C shares of the Fund will vary from the
results shown due to different expenses and load structures. The accompanying
chart compares the performance of the Stagecoach International Equity Fund
Class A shares since inception with the Morgan Stanley Capital
Investment-Europe, Australasia and Far East Index. The Index is an unmanaged
index comprised of common stocks sold on stock exchanges and over-the-counter
markets within the listed regions. The chart assumes a hypothetical $10,000
initial investment in Class A shares and reflects all operating expenses and
assumes the maximum initial sales charge of 5.25%. The Morgan Stanley Capital
Investment-Europe, Australasia and Far East Index presented here does not
incur expenses and is not available directly for investment. Had this Index
incurred operating expenses, its performances would have been lower.
32
<PAGE>
PERFORMANCE AT A GLANCE Small Cap Fund
- ------------------------------------------------------------------------
SMALL CAP FUND
AVERAGE ANNUAL RETURNS (as of September 30, 1998)(1)
- ----------------------------------------------------------------
EXCLUDING SALES CHARGE
- ----------------------------------------------------------
<TABLE>
<CAPTION>
SIX-MONTHS SINCE
AS OF INCEPTION
9/30/98 1-YEAR 3-YEAR (11/1/94)
<S> <C> <C> <C> <C>
CLASS A (30.29) (30.84) 5.65 17.78
CLASS B (30.50) (31.31) 5.02 17.06
CLASS C (30.54) (31.35) 5.00 17.04
INSTITUTIONAL CLASS (30.07) (30.45) 6.73 18.80
</TABLE>
INCLUDING SALES CHARGE(2)
- ----------------------------------------------------------
<TABLE>
<CAPTION>
SIX-MONTHS SINCE
AS OF INCEPTION
9/30/98 1-YEAR 3-YEAR (11/1/94)
<S> <C> <C> <C> <C>
CLASS A (33.95) (34.48) 3.77 16.18
CLASS B (33.97) (34.47) 4.10 16.57
CLASS C (31.23) (31.98) 5.00 17.04
INSTITUTIONAL CLASS N/A N/A N/A N/A
</TABLE>
GROWTH OF A $10,000 INVESTMENT(3)
- ----------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
STAGECOACH SMALL RUSSELL 2000 STAGECOACH SMALL CAP
CAP FUND - CLASS A INDEX FUND - INSTITUTIONAL CLASS
<S> <C> <C> <C>
Inception $9,475 $10,000 $10,000
Nov-94 $9,598 $9,596 $10,120
Dec-94 $9,996 $9,853 $10,560
Jan-95 $10,025 $9,729 $10,590
Feb-95 $10,574 $10,134 $11,170
Mar-95 $11,133 $10,307 $11,770
Apr-95 $11,446 $10,536 $12,100
May-95 $11,692 $10,717 $12,370
Jun-95 $12,924 $11,273 $13,670
Jul-95 $14,336 $11,923 $15,170
Aug-95 $14,364 $12,169 $15,200
Sep-95 $15,255 $12,387 $16,150
Oct-95 $14,781 $11,834 $15,650
Nov-95 $16,183 $12,331 $17,150
Dec-95 $16,903 $12,656 $17,910
Jan-96 $17,235 $12,642 $18,260
Feb-96 $18,230 $13,037 $19,320
Mar-96 $19,064 $13,303 $20,210
Apr-96 $21,603 $14,014 $22,910
May-96 $23,271 $14,566 $24,680
Jun-96 $21,518 $13,968 $22,830
Jul-96 $18,363 $12,748 $19,490
Aug-96 $20,324 $13,489 $21,580
Sep-96 $21,217 $14,016 $22,450
Oct-96 $19,790 $13,801 $20,930
Nov-96 $20,253 $14,369 $21,430
Dec-96 $20,886 $14,746 $22,110
Jan-97 $21,198 $15,041 $22,440
Feb-97 $19,289 $14,675 $20,430
Mar-97 $17,938 $13,982 $19,010
Apr-97 $16,974 $14,022 $18,000
May-97 $20,688 $15,582 $21,940
Jun-97 $22,370 $16,251 $23,730
Jul-97 $23,259 $17,006 $24,690
Aug-97 $23,996 $17,396 $25,470
Sep-97 $26,585 $18,669 $28,230
Oct-97 $24,676 $17,850 $26,210
Nov-97 $23,788 $17,733 $25,280
Dec-97 $23,203 $18,044 $24,668
Jan-98 $22,823 $17,759 $24,276
Feb-98 $24,356 $19,071 $25,921
Mar-98 $26,374 $19,857 $28,078
Apr-98 $26,302 $19,966 $28,013
May-98 $24,223 $18,890 $25,812
Jun-98 $24,964 $18,930 $26,618
Jul-98 $22,720 $17,396 $24,243
Aug-98 $17,027 $14,018 $18,174
Sep-98 $18,386 $15,116 $19,634
</TABLE>
33
<PAGE>
Small Cap Fund INVESTMENT ADVISOR COMMENTARY
- ------------------------------------------------------------------------
SMALL CAP FUND
The Stagecoach Small Cap Fund ("the Fund") seeks above-average, long-term
capital appreciation in order to provide investors with a rate of total return
exceeding that of the Russell 2000 Index, before fees and expenses, over a time
horizon of three to five years. The Fund invests in growth-oriented common
stocks with market capitalizations that fall between $100 million and $25
billion at the time of acquisition. Due to their relatively small size, the
Fund's investments may offer substantial growth potential but they also entail
greater risk than larger, more established companies.
Please note that we have changed the Fund's fiscal year-end to September 30
from March 31. We have made this change to improve our reporting process. This
change will not impact the performance or objective of your investment. Because
of the new year-end, this report is the second audited annual report we have
sent you over the last six months. Our discussions will focus on the most recent
period, although we may also comment on longer-term performance.
Jon Hickman and Kenneth Lee manage the Small Cap Fund. Mr. Hickman has over 16
years of experience in the investment management field and has a BA and an MBA
in Finance from Brigham Young University. Mr. Lee has seven years of experience
in the securities industry. He graduated from the University of California at
Davis with a double major in Economics and Organizational Studies. Mr. Lee has
an expertise in the technology and healthcare sectors. He is also a Certified
Financial Analyst Level II candidate.
PERFORMANCE REVIEW
The Stagecoach Small Cap Fund Class A posted a -30.29% cumulative return for
the six-month reporting period, excluding sales charges. This is below the
Fund's benchmark, the Russell 2000 Index, which returned -23.87% for the same
period. Both the Fund and the benchmark declined, confirming that small
capitalization stocks are not currently in favor. While a brief rally in July
seemed to renew interest in small stocks, the market volatility in August and
September kept small stocks down at the end of the reporting period. In
addi-
34
<PAGE>
INVESTMENT ADVISOR COMMENTARY Small Cap Fund
- ------------------------------------------------------------------------
tion, the markets focused on the stability of quarterly financial results,
rather than absolute growth. This caused the price of the aggressive growth
stocks in the portfolio to falter in the third quarter.
Despite efforts to avoid companies with international exposure, the Fund was
impacted by global economic turmoil, causing company earnings to suffer in the
second and third quarter. The Fund did not distribute dividend income for Class
A shares and no capital gains were distributed from the Fund during the
reporting period. Keep in mind that past performance is no guarantee of future
returns.
PORTFOLIO REVIEW (as of September 30, 1998)
- --------------------------------------------------
<TABLE>
<S> <C>
NUMBER OF ISSUES 105
PORTFOLIO TURNOVER RATIO (NOT ANNUALIZED) 110%
MEDIAN MARKET CAPITALIZATION $0.8B
</TABLE>
While most small cap stocks experienced volatility during the reporting
period, certain stocks performed well for the Fund. For example, Superior
Telecom, a company that lays cable for telephone companies, showed impressive
gains. Another company that contributed positive returns for the Fund was
Gemstar, which offers video previews on cable channels. This firm should
continue to provide high earnings growth as the number of cable channels
increases.
TOP FIVE INDUSTRY HOLDINGS (as of September 30, 1998)
- ---------------------------------------------------------
<TABLE>
<S> <C>
GENERAL BUSINESS & RELATED 18%
CONSUMER-DISCRETIONARY 10%
CONSUMER-BASIC 9%
MANUFACTURING-PROCESSING 9%
CAPITAL GOODS 9%
</TABLE>
The consumer staple sector posted gains during the reporting period. This
sector is less sensitive to the economy and fared well in the current
environment. Regis, a haircutting salon similar to SuperCuts, is an example of a
consumer staple security that added to the Fund's performance.
35
<PAGE>
Small Cap Fund INVESTMENT ADVISOR COMMENTARY
- ------------------------------------------------------------------------
The telecommunications and technology sectors contributed to the Fund's
negative performance as global markets fell. Telecommunication companies with
international exposure such as Pacific Gateway provided declining returns. The
technology sector, which includes Internet and software companies, slowed due to
concerns about international stability.
TOP TEN EQUITY HOLDINGS (as of September 30, 1998)
- ---------------------------------------------------------
<TABLE>
<S> <C>
REGIS CORPORATION 2.2%
PAREXEL INTERNATIONAL CORPORATION 2.1%
SUPERIOR TELECOM INCORPORATED 1.9%
HA-LO INDUSTRIES, INCORPORATED 1.8%
GEMSTAR INTERNATIONAL GROUP LIMITED 1.8%
AMERICAN ITALIAN PASTA COMPANY 1.7%
TMP WORLDWIDE INCORPORATED 1.7%
RENAL CARE GROUP, INCORPORATED 1.7%
INTERNATIONAL TELECOMMUNICATION DATA SYSTEMS,
INCORPORATED 1.6%
ZALE CORPORATION 1.6%
</TABLE>
STRATEGIC OUTLOOK
We expect slower economic growth, but the economy will benefit from an easing
in monetary policy by the Fed. While we believe that earnings growth will be
good and valuations are at record lows, we are likely to continue to experience
increased market volatility. We must also be conscious of the impact that
international events may have on our own economy. We will continue to employ our
disciplined investment process in search of companies with good fundamentals,
and are hoping that the next few months will provide some buying opportunities
for the Fund.
We continue to favor technology, healthcare and consumer staples sectors. In
the technology sector, we will focus on software and information technology,
based on the low valuation of these stocks. Within the healthcare sector, we are
emphasizing pharmaceutical and service-related sectors, while avoiding long-term
care. Finally, we continue to favor the consumer staples sector for its
defensive characteristics.
36
<PAGE>
INVESTMENT ADVISOR COMMENTARY Small Cap Fund
- ------------------------------------------------------------------------
1 Performance shown for the Class A shares of the Stagecoach Small Cap Fund for
periods prior to September 16, 1996, reflects performance of the shares of the
Small Capitalization Growth Fund for BRP Employment Retirement Plans (an
unregistered bank collective investment fund), a predecessor portfolio with
the same investment objective and policies as the Stagecoach Small Cap Fund.
Performance shown or advertised for the Class B, Class C and Institutional
Class shares of the Stagecoach Small Cap Fund for periods prior to September
16, 1996, reflects performance of shares of the predecessor portfolio, with
expenses adjusted to reflect Class B, Class C and Institutional Class shares,
respectively.
Investment return and principal value of an investment will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than their
original cost. Figures quoted represent past performance, which is no
guarantee of future results. There may be some additional risks associated
with investments in smaller and/or newer companies because their shares tend
to be less liquid than securities of larger companies. Further, shares of
small and new companies are generally more sensitive to purchase and sales
transactions and changes in the issuer's financial condition and, therefore,
the prices of such stocks may be more volatile than those of larger company
stocks.
The Fund's manager has voluntarily waived all or a portion of its management
fees or assumed responsibility for other expenses, which reduces operating
expenses and increases total return to shareholders. Without these reductions
the Fund's returns would have been lower.
2 For Class A shares, the maximum front-end sales charge is 5.25%. The maximum
sales charge for Class B shares is 5.00%. The maximum sales charge for Class C
shares is 1.00%. Class B and C share performance including sales charge
assumes the sales charge for the corresponding time period. There are no sales
charges for the Institutional Class shares.
3 The returns for Class B and Class C shares of the Fund will vary from the
results shown due to different expenses and load structures.
The accompanying chart compares the performance of the Stagecoach Small Cap
Fund Class A and Institutional Class shares since inception of the predecessor
portfolio with the Russell 2000 Index. The chart assumes a hypothetical
$10,000 initial investment in Class A and Institutional Class shares and
reflects all operating expenses and, for Class A shares, assumes the maximum
initial sales charge of 5.25%. The Russell 2000 Index is an unmanaged index of
the 2000 smallest stocks (by market value) in the Russell 3000 Index. It
currently represents 7% of the U.S. equity market, while the Russell 3000
comprises approximately 98% if the U.S. equity market. 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.
37
<PAGE>
Strategic Growth Fund PERFORMANCE AT A GLANCE
- ------------------------------------------------------------------------
STRATEGIC GROWTH FUND
AVERAGE ANNUAL RETURNS (as of September 30, 1998)(1)
- ----------------------------------------------------------------
EXCLUDING SALES CHARGE
- ----------------------------------------------------------
<TABLE>
<CAPTION>
YEAR-TO-DATE SINCE
AS OF INCEPTION
9/30/98 1-YEAR 5-YEAR (1/20/93)
<S> <C> <C> <C> <C>
CLASS A (16.73) (27.37) 8.21 12.98
CLASS B (17.18) (27.85) 7.43 11.98
CLASS C (17.19) (27.88) 7.42 11.97
</TABLE>
INCLUDING SALES CHARGE(2)
- ----------------------------------------------------------
<TABLE>
<CAPTION>
YEAR-TO-DATE SINCE
AS OF INCEPTION
9/30/98 1-YEAR 5-YEAR (1/20/93)
<S> <C> <C> <C> <C>
CLASS A (21.12) (31.18) 7.05 11.93
CLASS B (21.32) (31.48) 7.13 11.88
CLASS C (18.02) (28.61) 7.42 11.97
</TABLE>
GROWTH OF A $10,000 INVESTMENT(3)
----------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
STAGECOACH STRATEGIC
GROWTH FUND - CLASS A S&P 500 INDEX
<S> <C> <C>
Inception $9,475 $10,000
Jan-93 $9,494 $10,084
Feb-93 $9,712 $10,221
Mar-93 $10,224 $10,437
Apr-93 $10,138 $10,184
May-93 $11,154 $10,457
Jun-93 $11,266 $10,488
Jul-93 $11,295 $10,445
Aug-93 $12,045 $10,842
Sep-93 $12,817 $10,759
Oct-93 $12,826 $10,981
Nov-93 $12,408 $10,876
Dec-93 $12,939 $11,008
Jan-94 $13,616 $11,382
Feb-94 $13,635 $11,073
Mar-94 $12,322 $10,591
Apr-94 $12,420 $10,726
May-94 $12,410 $10,902
Jun-94 $11,518 $10,635
Jul-94 $11,822 $10,984
Aug-94 $12,939 $11,435
Sep-94 $12,900 $11,155
Oct-94 $13,518 $11,406
Nov-94 $13,175 $10,990
Dec-94 $13,486 $11,153
Jan-95 $13,283 $11,442
Feb-95 $14,024 $11,888
Mar-95 $14,724 $12,239
Apr-95 $14,958 $12,598
May-95 $15,424 $13,101
Jun-95 $17,312 $13,405
Jul-95 $18,905 $13,849
Aug-95 $19,077 $13,883
Sep-95 $19,554 $14,469
Oct-95 $18,935 $14,417
Nov-95 $19,357 $15,050
Dec-95 $19,219 $15,341
Jan-96 $19,528 $15,862
Feb-96 $20,431 $16,010
Mar-96 $20,511 $16,163
Apr-96 $23,196 $16,401
May-96 $24,144 $16,822
Jun-96 $22,350 $16,886
Jul-96 $19,379 $16,140
Aug-96 $20,568 $16,481
Sep-96 $22,179 $17,407
Oct-96 $21,128 $17,887
Nov-96 $21,906 $19,238
Dec-96 $21,203 $18,857
Jan-97 $21,998 $20,035
Feb-97 $19,638 $20,192
Mar-97 $17,957 $19,362
Apr-97 $17,727 $20,518
May-97 $20,847 $21,767
Jun-97 $21,272 $22,744
Jul-97 $23,494 $24,553
Aug-97 $23,793 $23,178
Sep-97 $26,188 $24,448
Oct-97 $24,438 $23,631
Nov-97 $23,506 $24,725
Dec-97 $22,842 $25,151
Jan-98 $22,236 $25,427
Feb-98 $24,181 $27,261
Mar-98 $25,760 $28,656
Apr-98 $25,737 $28,949
May-98 $23,517 $28,451
Jun-98 $24,868 $29,606
Jul-98 $23,140 $29,292
Aug-98 $17,441 $25,059
Sep-98 $19,020 $26,666
</TABLE>
38
<PAGE>
INVESTMENT ADVISOR COMMENTARY Strategic Growth Fund
- ------------------------------------------------------------------------
STRATEGIC GROWTH FUND
The Stagecoach Strategic Growth Fund (the "Fund") seeks to provide investors
with an above average level of long-term capital appreciation. The Fund invests
in equity securities of companies expected to experience strong growth in
revenues, earnings and assets. Managed with a mid-cap emphasis, at least 65% of
the Fund's assets will be invested in companies with market capitalizations that
fall between the range of $470 million and $11.3 billion at the time the stock
is bought.
Please note that we have changed the Fund's fiscal year-end to September 30
from December 31. We have made this change to improve our reporting process.
This change will not impact the performance or objective of your investment.
Because of the new year-end, this report is the second audited annual report we
have sent you over the last nine months. Our discussions will focus on the most
recent period, although we may also comment on longer-term performance.
Jon Hickman and Chris Greene manage the Strategic Growth Fund. Mr. Hickman has
over sixteen years of experience in the investment management field and has a BA
and an MBA in Finance from Brigham Young University. Mr. Greene has 7 years of
experience in the securities industry. Prior to joining the Wells Capital
Management in 1997, Mr. Greene worked as an analyst for Hambrecht & Quist. He
graduated with a BA in Economics from Claremont McKenna College.
PERFORMANCE SUMMARY
The Stagecoach Strategic Growth Fund Class A posted a -16.73% cumulative
return for the nine-month reporting period, excluding sales charges. This is
below the S&P 500 Index, a broad-based stock index used for comparison in the
preceding chart. The S&P 500 Index returned 6.01% for the same period. The
Fund's focus on mid-to-small cap stocks was the primary reason for its
underperformance. The S&P 500 was supported by the performance of the largest
stocks within the Index. In the current environment, investors are looking for
stability and liquidity, smaller stocks do
39
<PAGE>
Strategic Growth Fund INVESTMENT ADVISOR COMMENTARY
- ------------------------------------------------------------------------
not offer the same type of flexibility as larger stocks, and therefore did not
perform as well in the current environment.
Despite efforts to avoid companies with international exposure, the Fund was
impacted by global economic turmoil, which caused investors to fear that
earnings might falter in the second and third quarters. The Fund did not
distribute dividend income for Class A shares and no capital gains were
distributed during the reporting period. Keep in mind that past performance is
no guarantee of future returns.
PORTFOLIO REVIEW (as of September 30, 1998)
- --------------------------------------------------
<TABLE>
<S> <C>
NUMBER OF ISSUES 107
PORTFOLIO TURNOVER RATIO (NOT ANNUALIZED) 339%
MEDIAN MARKET CAPITALIZATION $1.3B
</TABLE>
The weak performance of several sectors impacted the Fund's returns. The
financial sector dropped during the third quarter, erasing gains from earlier in
the year. In addition, the retail, transportation and technology sectors
experienced a slowdown in growth as a result of global unrest.
Currently, the Fund holds significant positions in information technology
service stocks. These companies help corporations improve the flow of
information, enhance systems and prepare for Year 2000 issues. The Fund's
largest holding, Metamor Worldwide, is an example of a company that has excelled
in this sector. Metamor shows good earnings growth, the potential for expansion
and strong financial fundamentals.
TOP FIVE INDUSTRY HOLDINGS (as of September 30, 1998)
- ---------------------------------------------------------
<TABLE>
<S> <C>
GENERAL BUSINESS & RELATED 24%
FINANCE & RELATED 12%
MANUFACTURING-PROCESSING 12%
CONSUMER-DISCRETIONARY 11%
CAPITAL GOODS 9%
</TABLE>
In response to the current economic environment, the Fund has continued
shifting assets away from underperforming, small cap stocks toward mid-size
40
<PAGE>
INVESTMENT ADVISOR COMMENTARY Strategic Growth Fund
- ------------------------------------------------------------------------
companies as a defensive move to capture additional returns. During the
reporting period, the Fund purchased securities of companies such as Charles
Schwab and RiteAid to take advantage of opportunities in the mid-cap range.
The Fund's portfolio turnover ratio is a result of the shift into mid-cap
stocks. A change in certain investment policies earlier in the year allowed us
more flexibility to invest in larger companies. To take advantage of the
opportunity, we incurred some additional turnover.
TOP TEN EQUITY HOLDINGS (as of September 30, 1998)
- ---------------------------------------------------------
<TABLE>
<S> <C>
METAMOR WORLDWIDE INCORPORATED 3.7%
ADMINISTAFF INCORPORATED 3.4%
COMPUWARE CORPORATION 3.1%
KEANE INCORPORATED 2.7%
INFORMATION MANAGEMENT RESOURCES, INCORPORATED 2.5%
PACIFIC GATEWAY EXCHANGE 2.1%
CENTOCOR, INCORPORATED 2.0%
CHARLES SCHWAB CORPORATION 1.9%
HA-LO INDUSTRIES, INCORPORATED 1.8%
CHANCELLOR MEDIA CORPORATION 1.8%
</TABLE>
STRATEGIC OUTLOOK
The global situation has caused uncertainty in domestic markets, and investors
have felt more comfortable with large capitalization, moderate growth stocks,
than aggressive, high growth stocks. The lack of popularity has contributed to
the Fund's underperformance, however we feel that the Fed's recent reduction in
interest rates may signal a change in investor psychology. Lower rates indicate
a good environment for all companies, not just large corporations. By shifting
the portfolio into mid-cap stocks, we will take advantage of the growth that we
anticipate as a result of the drop in interest rates, and the potential for
additional cuts in November or December. We believe that the fundamentals
continue to look good, and we see opportunity in the current environment.
It may be difficult to completely avoid international exposure in today's
global marketplace, however we will
41
<PAGE>
Strategic Growth Fund INVESTMENT ADVISOR COMMENTARY
- ------------------------------------------------------------------------
attempt to avoid companies with exposure to foreign economies. We have increased
our focus on domestic companies in the healthcare, information technology, and
telecommunications sectors and will continue to do so until foreign markets
stabilize. We will continue to search out companies with a solid earnings
outlook.
1 Performance shown for the Class A shares of the Stagecoach Strategic Growth
Fund reflects performance of the Class A shares of the Overland Express
Strategic Growth Fund (the accounting survivor of a merger of the Funds on
December 12, 1997). Performance shown or advertised for the Class C shares of
the Stagecoach Fund for the period from July 1, 1993, to December 12, 1997,
reflects performance of the Class D shares of the Overland Fund; for periods
prior to July 1, 1993, Class C share performance of the Stagecoach Fund
reflects performance of the Class A shares of the Overland Fund adjusted to
reflect the sales charges and expenses of the Class C shares. Performance
shown or advertised for the Class B shares of the Stagecoach Fund reflects
performance of the Class D shares of the Overland Fund. For period prior to
July 1, 1993, Class B share performance of the Stagecoach Fund reflects
performance of the Class A shares of the Overland Fund adjusted to reflect
sales chares and expenses of the Class B shares.
Investment return and principal value of an investment will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than their
original cost. Figures quoted represent past performance, which is no
guarantee of future results. There may be some additional risks associated
with investments in smaller and/or newer companies because their shares tend
to be less liquid than securities of larger companies. Further, shares of
small and new companies are generally more sensitive to purchase and sales
transactions and changes in the issuer's financial condition and, therefore,
the prices of such stocks may be more volatile than those of larger company
stocks.
The Fund's manager has voluntarily waived all or a portion of its management
fees or assumed responsibility for other expenses, which reduces operating
expenses and increases total return to shareholders. Without these reductions
the Fund's returns would have been lower.
2 For Class A shares, the maximum front-end sales charge is 5.25%. The maximum
sales charge for Class B shares is 5.00%. The maximum sales charge for Class C
shares is 1.00%. Class B and Class C share performance with sales charge
assumes the sales charge for the corresponding time period.
3 The accompanying chart compares the performance of the Stagecoach Strategic
Growth Fund Class A shares since inception of the predecessor portfolio with
the S&P 500 Index. The chart assumes a hypothetical $10,000 initial investment
in Class A shares and reflects all operating expenses and assumes the maximum
initial sales charge of 5.25%. 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 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.
42
<PAGE>
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998 Balanced Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - 56.30%
AUTOMOBILE & RELATED - 1.54%
10,600 Chrysler Corporation $ 350,495 $ 507,475
6,600 Eaton Corporation 598,097 413,738
6,000 Ford Motor Company 120,918 281,625
------------ --------------
$ 1,069,510 $ 1,202,838
CAPITAL GOODS - 5.32%
15,000 Ameritech Corporation $ 733,613 $ 710,625
7,500 General Electric Company 143,588 596,718
12,000 Lancaster Colony Corporation 307,666 369,000
12,000 Maytag Corporation 323,528 573,000
14,200 New Century Energies Incorporated 683,629 691,362
24,900 Waste Management Incorporated 914,303 1,196,755
------------ --------------
$ 3,106,327 $ 4,137,460
COMPUTER SYSTEMS - 2.30%
14,000 International Business Machines Corporation $ 741,405 $ 1,792,000
CONSUMER - DISCRETIONARY - 2.30%
13,900 Consolidated Stores Corporation+ $ 350,548 $ 272,788
7,600 DuPont (E.I.) de Nemours and Company 576,791 426,550
80,000 Food Lion Incorporated Class B 767,182 780,000
19,100 Toys R Us Incorporated+ 569,474 309,180
------------ --------------
$ 2,263,995 $ 1,788,518
ELECTRICAL EQUIPMENT - 0.48%
15,000 Seagate Technology Incorporated+ $ 331,155 $ 375,938
ENERGY & RELATED - 8.52%
18,000 Atlantic Richfield Corporation $ 1,063,166 $ 1,276,875
9,500 Cabot Corporation 348,739 236,905
10,000 Mobil Corporation 426,878 759,375
11,000 Phillips Petroleum Company 518,887 496,375
9,000 Royal Dutch Petroleum Company 228,733 428,625
</TABLE>
43
<PAGE>
Balanced Fund PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
20,000 Texaco Incorporated $ 725,369 $ 1,253,750
11,000 Transocean Offshore Incorporated 350,780 381,562
16,000 USX - Marathon Group 583,707 567,000
44,700 Valero Energy Corporation 952,427 888,413
12,000 Williams Companies Incorporated 321,711 345,000
------------ --------------
$ 5,520,397 $ 6,633,880
FINANCE & RELATED - 16.85%
19,500 American Bankers Insurance Group $ 220,016 $ 828,750
10,000 BankAmerica Corporation 242,441 601,250
20,800 Chase Manhattan Corporation 358,200 899,600
16,500 CIGNA Corporation 1,036,732 1,091,063
9,600 First Chicago NBD Corporation 860,531 657,600
17,500 First Union Corporation 1,065,878 895,781
31,000 Fremont General Corporation 682,942 1,488,000
34,800 Hartford Financial Services Group 1,567,130 1,650,825
20,000 Providian Financial Corporation 194,784 1,696,250
11,900 Safeco Corporation 548,888 496,081
16,000 Simon Property Group Incorporated 538,672 476,000
19,100 SLM Holding Corporation 867,385 619,556
18,000 Citigroup Incorporated+ 233,104 675,000
30,750 Washington Mutual Incorporated 1,398,243 1,037,813
------------ --------------
$ 9,814,946 $ 13,113,569
FOOD & RELATED - 3.02%
25,000 American Stores Company $ 523,405 $ 804,688
33,600 Philip Morris Companies Incorporated 627,548 1,547,700
------------ --------------
$ 1,150,953 $ 2,352,388
GENERAL BUSINESS & RELATED - 0.91%
15,900 Allegheny Teledyne Incorporated $ 401,925 $ 283,219
31,200 Corrections Corporation of America+ 638,313 423,150
------------ --------------
$ 1,040,238 $ 706,369
</TABLE>
44
<PAGE>
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998 Balanced Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
MANUFACTURING PROCESSING - 5.55%
6,626 Aluminum Company of America $ 364,696 $ 470,446
11,200 Fort James Corporation 365,195 367,500
8,000 Magna International Incorporated Class A 595,340 465,000
30,000 Montana Power Company 1,060,771 1,340,625
17,200 Owens-Illinois Incorporated+ 494,703 430,000
16,100 TECO Energy Incorporated 391,391 459,856
20,250 Tidewater Incorporated 879,824 420,188
20,000 United Dominion Industries Limited 481,314 362,500
------------ --------------
$ 4,633,234 $ 4,316,115
PHARMACEUTICALS - 0.97%
15,000 Pharmacia and Upjohn Incorporated $ 397,019 $ 752,813
RETAIL & RELATED - 1.10%
18,000 Costco Companies Incorporated+ $ 283,122 $ 852,750
TELECOMMUNICATIONS - 2.50%
11,800 Bell Atlantic Corporation $ 566,811 $ 571,563
25,000 GTE Corporation 827,406 1,375,000
------------ --------------
$ 1,394,217 $ 1,946,563
UTILITIES - 4.94%
35,000 Cinergy Corporation $ 1,087,820 $ 1,338,750
10,000 Duke Energy Corporation 470,340 661,875
12,300 Northern States Power Company 334,376 345,169
35,000 Southern Company 823,416 1,030,313
10,000 Texas Utilities Company 439,824 465,625
------------ --------------
$ 3,155,776 $ 3,841,732
TOTAL COMMON STOCKS $ 34,902,294 $ 43,812,933
</TABLE>
45
<PAGE>
Balanced Fund PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
CORPORATE BONDS & NOTES - 19.69%
BANK & FINANCE - 6.01%
$ 1,500,000 American Telephone & Telegraph Capital
Corporation 6.60 % 05/15/05 $ 1,582,500
1,000,000 Associates Corporation of America 6.32 02/28/00 1,018,750
1,000,000 General Motors Acceptance Corporation 6.88 07/15/01 1,047,500
1,000,000 Lehman Brothers Holding 7.38 05/15/04 1,026,250
--------------
$ 4,675,000
CONSUMER PRODUCTS - 1.31%
$ 1,000,000 Time Warner Incorporated 6.88 % 06/15/18 $ 1,018,750
INDUSTRIALS - 8.29%
$ 1,500,000 BP America Incorporated 9.38 % 11/01/00 $ 1,635,000
1,000,000 Chrysler Corporation 7.40 08/01/2097 1,101,130
1,000,000 News America Incorporated 6.70 05/21/04 1,051,250
1,000,000 Noram Energy Corporation 6.50 02/01/08 1,055,000
1,000,000 Raytheon Company 7.20 08/15/27 1,096,250
500,000 Raytheon Corporation MTN 5.95 03/15/01 510,625
--------------
$ 6,449,255
MISCELLANEOUS BONDS - 2.70%
$ 1,000,000 EOP Operating LP 6.38 % 02/15/03 $ 1,016,250
1,000,000 RJR Nabisco Incorporated 8.25 07/01/04 1,073,750
--------------
$ 2,090,000
TRANSPORTATION - 1.40%
$ 1,000,000 Union Pacific Company 7.25 % 11/01/08 $ 1,091,250
--------------
TOTAL CORPORATE BONDS & NOTES $ 15,324,255
(Cost $14,653,250)
</TABLE>
46
<PAGE>
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998 Balanced Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
U.S. GOVERNMENT AGENCY SECURITIES - 8.58%
FEDERAL HOME LOAN MORTGAGE CORPORATION - 0.53%
$ 31,722 FHLMC #220009 8.25 % 08/01/01 $ 32,356
171,322 FHLMC #291786 8.50 01/01/09 177,892
75,820 FHLMC #303407 8.50 12/01/02 77,700
111,427 FHLMC #546103 10.50 08/01/19 122,178
--------------
$ 410,126
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 8.05%
$ 376,013 FNMA #190526 6.00 % 01/01/01 $ 377,193
387,255 FNMA #190588 6.50 01/01/09 396,193
3,160,549 FNMA #407932 7.00 12/01/27 3,249,329
152,658 FNMA #57843 8.00 06/01/08 159,251
7,605 FNMA #75336 9.50 02/01/09 8,049
73,262 FNMA #83785 8.00 08/01/18 77,028
2,000,000 FNMA TBA 6.00 10/01/28 1,997,500
--------------
$ 6,264,543
TOTAL U.S. GOVERNMENT AGENCY SECURITIES $ 6,674,669
(Cost $6,528,245)
U.S. TREASURY SECURITIES - 12.75%
U.S. TREASURY BONDS - 7.06%
$ 1,000,000 U.S. Treasury Bonds 5.63 % 02/15/06 $ 1,078,280
1,500,000 U.S. Treasury Bonds 6.00 02/15/26 1,678,125
2,000,000 U.S. Treasury Bonds 8.13 08/15/19 2,739,680
--------------
$ 5,496,085
</TABLE>
47
<PAGE>
Balanced Fund PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
U.S. TREASURY SECURITIES (CONTINUED)
U.S. TREASURY NOTES - 5.69%
$ 1,000,000 U.S. Treasury Notes 6.13 % 08/15/07 $ 1,119,370
500,000 U.S. Treasury Notes 6.25 02/15/03 537,655
1,000,000 U.S. Treasury Notes 6.50 08/15/05 1,124,060
1,000,000 U.S. Treasury Notes 6.63 06/30/01 1,057,190
500,000 U.S. Treasury Notes 7.50 02/15/05 584,845
--------------
$ 4,423,120
TOTAL U.S. TREASURY SECURITIES $ 9,919,205
(Cost $9,233,439)
</TABLE>
48
<PAGE>
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998 Balanced Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS - 4.17%
REPURCHASE AGREEMENTS - 4.17%
$ 1,374,000 Goldman Sachs Pooled Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 5.45 % 10/01/98 $ 1,374,000
1,873,000 JP Morgan Securities Incorporated Repurchase
Agreement - 102% Collateralized by U.S.
Government Securities 5.30 10/01/98 1,873,000
--------------
TOTAL SHORT-TERM INSTRUMENTS $ 3,247,000
(Cost $3,247,000)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $68,564,228)* (Notes 1 and 3) 101.49% $ 78,978,062
Other Assets and Liabilities, Net (1.49) (1,155,689 )
------ --------------
TOTAL NET ASSETS 100.00% $ 77,822,373
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</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 $ 13,659,579
Gross Unrealized Depreciation (3,245,745)
--------------
NET UNREALIZED APPRECIATION $ 10,413,834
--------------
--------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
49
<PAGE>
Diversified Equity Income Fund PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - 91.52%
AUTOMOBILE & RELATED - 7.06%
100,000 Dana Corporation $ 3,277,756 $ 3,731,250
90,000 Eaton Corporation 7,770,742 5,641,875
60,000 Ford Motor Company 1,263,237 2,816,250
140,000 Genuine Parts Company 4,151,116 4,208,750
------------ --------------
$ 16,462,851 $ 16,398,125
CAPITAL GOODS - 6.40%
25,000 General Electric Company $ 808,718 $ 1,989,063
135,000 Harris Corporation 5,516,932 4,320,000
105,000 New Century Energies Incorporated 4,901,955 5,112,187
98,000 USEC Incorporated+ 1,396,500 1,512,875
40,000 Waste Management Incorporated 1,283,572 1,922,500
------------ --------------
$ 13,907,677 $ 14,856,625
CONSUMER - DISCRETIONARY - 2.71%
65,000 Consolidated Stores Corporation+ $ 1,497,650 $ 1,275,625
65,000 DuPont (E.I.) de Nemours and Company 3,674,232 3,648,125
25,000 Estee Lauder Automatic Common Exchange Securities Trust,
"TRACES" 1,521,875 1,375,000
------------ --------------
$ 6,693,757 $ 6,298,750
ENERGY & RELATED - 10.36%
95,000 Atlantic Richfield Corporation $ 5,825,087 $ 6,739,062
65,000 Phillips Petroleum Company 3,039,013 2,933,125
46,000 Royal Dutch Petroleum Company 1,158,636 2,190,750
90,000 Texaco Incorporated 4,959,163 5,641,875
120,000 USX - Marathon Group 3,962,745 4,252,500
80,000 Williams Companies Incorporated 1,877,075 2,300,000
------------ --------------
$ 20,821,719 $ 24,057,312
</TABLE>
50
<PAGE>
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998 Diversified Equity Income Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
FINANCE & RELATED - 23.19%
95,000 Banc One Corporation $ 4,397,375 $ 4,049,375
42,000 Bankers Trust N Y Corporation 3,229,548 2,478,000
65,000 Charles E. Smith Residential Realty Incorporated 1,763,550 1,974,375
100,000 Chase Manhattan Corporation 4,955,150 4,325,000
85,000 CIGNA Corporation 4,974,456 5,620,625
110,000 Duke Realty Investments Incorporated 2,459,100 2,550,625
40,000 Equity Residential Properties Trust 1,639,900 1,687,500
84,000 Hartford Financial Services Group 3,783,638 3,984,750
73,000 Highwoods Properties Incorporated 2,378,805 2,025,750
85,000 Indymac Mortgage Holdings Incorporated 1,715,549 1,721,250
120,000 Kilroy Realty Corporation 2,786,417 2,760,000
50,000 Post Properties Incorporated 1,793,713 1,928,125
85,000 Prologis Trust 1,531,612 1,923,125
70,000 Simon Property Group Incorporated 2,303,355 2,082,500
120,000 SLM Holding Corporation 4,694,200 3,892,500
78,000 Spieker Properties Incorporated 2,234,106 2,866,500
105,000 St Paul Companies Incorporated 3,562,414 3,412,500
135,000 Washington Mutual Incorporated 5,696,251 4,556,250
------------ --------------
$ 55,899,139 $ 53,838,750
FOOD & RELATED - 4.99%
145,000 American Stores Company $ 3,379,488 $ 4,667,188
150,000 Philip Morris Companies Incorporated 4,396,198 6,909,375
------------ --------------
$ 7,775,686 $ 11,576,563
GENERAL BUSINESS & RELATED - 10.89%
325,000 Allegheny Teledyne Incorporated $ 7,846,904 $ 5,789,062
105,000 Arden Realty Group Incorporated 2,885,588 2,342,812
150,000 Fremont General Corporation 4,500,660 7,200,000
175,000 Household International Incorporated 3,823,462 6,562,500
40,000 Loews Corporation 3,327,449 3,375,000
------------ --------------
$ 22,384,063 $ 25,269,374
</TABLE>
51
<PAGE>
Diversified Equity Income Fund PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
HEALTHCARE - 1.69%
75,000 American Home Products Corporation $ 1,618,505 $ 3,928,125
INTERNATIONAL STOCKS - 1.20%
52,000 Philips Electronics NV (Netherlands) $ 3,036,365 $ 2,775,500
MANUFACTURING - PROCESSING - 6.46%
38,000 Baxter International Incorporated $ 1,517,395 $ 2,261,000
90,000 El Paso Energy Corporation 1,518,182 2,919,375
70,000 Hercules Incorporated 3,203,148 2,104,375
100,000 Kimberly-Clark Corporation 4,645,439 4,050,000
50,000 Northrop Grumman Corporation 5,403,501 3,650,000
------------ --------------
$ 16,287,665 $ 14,984,750
RETAIL & RELATED - 0.86%
45,000 Sears Roebuck & Company $ 2,218,950 $ 1,988,438
TELECOMMUNICATIONS - 1.78%
75,000 GTE Corporation $ 4,370,423 $ 4,125,000
TRANSPORTATION - 2.35%
130,000 CSX Corporation $ 6,809,637 $ 5,468,125
UTILITIES - 11.58%
160,000 Alltel Corporation $ 4,572,257 $ 7,580,000
97,000 Duke Energy Corporation 4,395,371 6,420,187
120,000 Sonat Incorporated 4,967,828 3,585,000
205,000 Southern Company 4,503,500 6,034,688
70,000 Texas Utilities Company 2,844,825 3,259,375
------------ --------------
$ 21,283,781 $ 26,879,250
TOTAL COMMON STOCKS $199,570,218 $ 212,444,687
</TABLE>
52
<PAGE>
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998 Diversified Equity Income Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
CONVERTIBLE PREFERRED STOCKS - 2.10%
34,500 Amerus Life Holding Preferred $ 1,068,881 $ 836,625
33,700 Texas Utilities Company 1,685,000 1,895,625
47,700 Union Pacific Capital Trust 2,385,000 2,146,500
------------ --------------
TOTAL PREFERRED STOCKS $ 5,138,881 $ 4,878,750
</TABLE>
53
<PAGE>
Diversified Equity Income Fund PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
U.S. TREASURY SECURITIES - 4.10%
$ 9,000,000 U.S. Treasury Notes 5.75 % 04/30/03 $ 9,525,960
(Cost $9,073,828)
SHORT-TERM INSTRUMENTS - 2.43%
REPURCHASE AGREEMENTS - 2.43%
$ 4,789,000 Goldman Sachs Pooled Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 5.45 % 10/01/98 $ 4,789,000
854,000 JP Morgan Securities Incorporated Repurchase
Agreement - 102% Collateralized by U.S.
Government Securities 5.30 10/01/98 854,000
--------------
TOTAL SHORT-TERM INSTRUMENTS $ 5,643,000
(Cost $5,643,000)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $219,425,927)* (Notes 1 and 3) 100.15% $ 232,492,397
Other Assets and Liabilities, Net (0.15) (352,738)
------ --------------
TOTAL NET ASSETS 100.00% $ 232,139,659
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</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 $ 31,945,049
Gross Unrealized Depreciation (18,878,579)
--------------
NET UNREALIZED APPRECIATION $ 13,066,470
--------------
--------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
54
<PAGE>
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998 Equity Index Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - 99.18%
AEROSPACE - 0.75%
66,079 Boeing Company $ 1,021,188 $ 2,267,336
12,830 Lockheed Martin Corporation 460,855 1,293,424
12,874 Rockwell International Corporation 289,406 465,073
------------ --------------
$ 1,771,449 $ 4,025,833
AUTOMOBILE & RELATED - 1.15%
42,191 Chrysler Corporation $ 704,993 $ 2,019,894
10,769 Dana Corporation 226,420 401,818
79,386 Ford Motor Company 1,248,862 3,726,180
------------ --------------
$ 2,180,275 $ 6,147,892
BEVERAGE BREWING AND DISTRIBUTION - 2.27%
161,552 Coca-Cola Company $ 1,828,522 $ 9,309,434
97,570 Pepsico Incorporated 989,732 2,872,217
------------ --------------
$ 2,818,254 $ 12,181,651
CAPITAL GOODS - 10.08%
9,434 Advanced Micro Devices+ $ 195,893 $ 175,119
12,482 American Electric Power Incorporated 366,367 609,278
72,004 Ameritech Corporation 1,010,189 3,411,189
14,395 AMP Incorporated 400,193 514,621
5,760 Andrew Corporation+ 18,468 76,320
8,670 Apple Computer Incorporated+ 328,453 330,544
24,004 Applied Materials Incorporated+ 337,519 606,101
3,100 Autodesk Incorporated 62,468 81,375
6,176 Black & Decker Corporation 138,264 257,076
1,552 Briggs & Stratton Corporation 30,269 63,826
12,058 Browning-Ferris Industries Incorporated 334,018 364,754
4,954 Case Corporation 219,390 107,749
24,012 Caterpillar Incorporated 330,012 1,070,035
101,789 Cisco Systems Incorporated+ 1,288,066 6,291,833
35,719 Computer Associates International Incorporated 212,947 1,321,603
</TABLE>
55
<PAGE>
Equity Index Fund PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
10,172 Computer Sciences Corporation $ 190,140 $ 554,374
7,944 Cooper Industries Incorporated 303,085 323,718
3,240 Data General Corporation+ 74,662 35,235
16,191 Deere & Company 269,490 489,778
14,608 Dover Corporation 128,840 451,022
3,026 EG & G Incorporated 57,586 68,463
32,158 Electronic Data Systems Corporation 1,307,265 1,067,244
28,964 Emerson Electric Company 637,393 1,803,009
5,426 Fluor Corporation 148,677 222,805
2,732 Foster Wheeler Corporation 63,485 37,565
11,919 Freeport McMoran Copper & Gold Incorporated Class B 327,338 141,538
10,169 Gateway 2000 Incorporated+ 590,048 530,059
8,256 General Dynamics Corporation 95,556 414,348
213,141 General Electric Company 3,518,821 16,958,031
2,868 General Signal Corporation 80,772 97,333
3,166 Harnischfeger Industries Incorporated 79,665 35,617
5,216 Harris Corporation 98,531 166,912
28,090 HBO & Company 666,808 811,099
16,328 Illinois Tool Works Incorporated 230,831 889,876
10,632 IMS Health Incorporated 291,695 658,519
10,801 Ingersoll-Rand Company 155,918 409,763
8,900 Interpublic Group Companies Incorporated 230,948 480,044
5,681 KLA Instruments Corporation+ 426,293 141,315
6,168 Maytag Corporation 132,755 294,522
26,513 Minnesota Mining & Manufacturing Company 983,312 1,953,677
10,792 National Semiconductor Corporation+ 175,835 104,548
4,597 Navistar International+ 126,245 104,007
23,068 Novell Incorporated+ 552,803 282,583
10,912 Omnicom Group 429,131 491,040
17,228 Parametric Technology Corporation+ 356,188 173,357
7,304 Parker Hannifin Corporation 105,935 216,837
3,171 Perkin-Elmer Corporation 126,166 217,808
17,852 Pitney Bowes Incorporated 228,995 974,050
22,166 Raytheon Company Class B 696,894 1,195,579
</TABLE>
56
<PAGE>
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998 Equity Index Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
5,196 Scientific-Atlanta Incorporated $ 32,602 $ 109,765
12,546 Silicon Graphics Incorporated+ 400,299 117,619
3,859 Snap-On Incorporated 87,726 118,905
24,800 Sun Microsystems Incorporated+ 199,674 1,235,350
3,285 Tektronix Incorporated 68,145 50,917
12,689 Tellabs Incorporated+ 335,910 505,181
25,520 Texas Instruments Incorporated 379,838 1,346,180
3,643 Thomas & Betts Corporation 118,540 138,662
4,076 Timken Company 60,670 61,649
4,100 Tupperware Corporation 65,028 48,175
6,384 W W Grainger Incorporated 113,968 268,926
36,946 Waste Management Incorporated 1,682,106 1,775,717
7,272 Willamette Industries Incorporated 248,935 208,616
------------ --------------
$ 22,954,063 $ 54,062,760
COMPUTER SOFTWARE - 4.45%
28,726 First Data Corporation $ 835,090 $ 675,061
67,748 Hewlett Packard Company 1,171,976 3,586,410
161,206 Microsoft Corporation+ 2,763,315 17,742,735
63,749 Oracle Systems Corporation+ 305,180 1,856,690
------------ --------------
$ 5,075,561 $ 23,860,896
COMPUTER SYSTEMS - 3.33%
23,275 3Com Corporation+ $ 1,090,158 $ 699,705
108,164 Compaq Computer Corporation 778,980 3,420,686
61,085 International Business Machines Corporation 3,750,497 7,818,880
85,866 Lucent Technologies Incorporated 1,615,375 5,930,121
------------ --------------
$ 7,235,010 $ 17,869,392
CONSUMER - BASIC - 4.25%
4,350 Allergan Incorporated $ 115,250 $ 253,931
5,703 ALZA Corporation+ 156,741 247,368
3,668 Bausch & Lomb Incorporated 110,743 144,427
16,032 Becton Dickinson & Company 136,918 659,316
</TABLE>
57
<PAGE>
Equity Index Fund PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
18,856 Bestfoods $ 280,813 $ 913,337
7,350 Biomet Incorporated 70,989 254,953
29,728 Campbell Soup Company 353,402 1,491,974
6,772 Clorox Company 130,974 558,690
19,346 Colgate-Palmolive Company 367,920 1,325,201
31,390 ConAgra Incorporated 355,299 845,568
15,172 Corning Incorporated 309,181 446,626
25,188 CVS Corporation 543,135 1,103,549
10,402 General Mills Incorporated 341,448 728,140
2,543 Great Atlantic & Pacific Tea Company 91,312 61,668
9,322 Hershey Foods Corporation 162,192 637,974
10,978 Humana Incorporated+ 306,879 179,765
26,770 Kellogg Company 503,252 881,737
16,740 Kroger Company+ 138,978 837,000
4,854 Mallinckrodt Incorporated 100,303 98,597
2,900 Millipore Corporation 54,655 55,281
15,968 Pioneer Hi Bred International Incorporated 279,199 419,160
9,080 Quaker Oats Company 218,554 535,720
20,710 Ralston-Purina Group 258,802 605,767
30,576 Sara Lee Corporation 501,872 1,651,104
47,972 Schering-Plough Corporation 476,729 4,968,100
1,762 Shared Medical System Corporation 54,681 93,716
5,453 St Jude Medical Incorporated+ 136,868 126,101
7,904 Supervalu Incorporated 105,633 184,262
22,084 Sysco Corporation 163,556 520,354
12,665 United Healthcare Corporation 595,627 443,275
5,050 United States Surgical 415,311 210,522
12,140 UST Incorporated 186,744 358,889
9,736 Winn-Dixie Stores Incorporated 161,282 362,058
7,610 Wm. Wrigley Jr Company 124,549 577,884
------------ --------------
$ 8,309,791 $ 22,782,014
</TABLE>
58
<PAGE>
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998 Equity Index Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
CONSUMER - DISCRETIONARY - 6.38%
4,414 Adobe Systems Incorporated $ 204,685 $ 153,111
2,359 Adolph Coors Company Class B 48,197 108,367
3,768 Alberto-Culver Company Class B 34,307 88,077
36,956 Allied Signal Incorporated 451,985 1,307,319
11,898 AMR Corporation+ 404,031 659,595
9,943 AutoZone Incorporated+ 271,310 244,846
17,216 Avon Products Incorporated 170,810 483,124
12,764 Boston Scientific Corporation+ 359,225 655,751
4,458 Brown-Forman Corporation Class B 97,657 267,480
6,469 Brunswick Corporation 118,600 83,693
55,679 Cendant Corporation+ 1,326,872 647,268
4,796 Ceridian Corporation+ 149,612 275,171
6,500 Circuit City Stores Incorporated 98,498 216,531
7,088 Consolidated Stores Corporation+ 309,424 139,102
5,250 Cooper Tire & Rubber Company 67,508 94,500
2,484 Cummins Engine Company Incorporated 85,327 73,899
7,018 Dillards Incorporated Class A 163,269 198,697
11,778 Dollar General Corporation 430,635 313,589
73,822 DuPont (E.I.) de Nemours and Company 1,622,521 4,143,260
13,753 Federated Department Stores Incorporated+ 375,092 500,265
4,719 Fruit of the Loom Incorporated Class A+ 128,958 71,080
43,714 General Motors Corporation 1,735,247 2,390,609
11,680 Genuine Parts Company 211,739 351,130
73,486 Gillette Company 1,083,740 2,810,840
10,276 Goodyear Tire & Rubber Company 292,063 527,930
4,626 Harcourt General Incorporated 111,313 223,783
6,712 Harrah's Entertainment Incorporated+ 48,624 89,354
16,193 Hilton Hotels Corporation 201,800 276,293
7,063 International Flavors & Fragrances Incorporated 154,961 233,079
16,405 J C Penney Company Incorporated 512,952 737,200
31,960 K Mart Corporation+ 607,391 381,523
4,800 King World Productions+ 55,715 125,400
10,298 Kohls Corporation+ 587,814 401,622
14,902 Limited Incorporated 317,454 326,913
</TABLE>
59
<PAGE>
Equity Index Fund PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
4,292 Liz Claiborne Incorporated $ 129,728 $ 112,397
2,590 Longs Drug Stores Corporation 45,538 104,086
16,708 Marriott International 200,636 398,904
19,182 Mattel Incorporated 221,142 537,096
11,792 Mirage Resorts Incorporated+ 321,060 197,516
10,400 Newell Company 170,789 479,050
18,800 Nike Incorporated Class B 162,842 692,075
10,000 Nordstrom Incorporated 157,893 247,500
5,070 PACCAR Incorporated 85,119 208,821
4,250 Pep Boys-Manny Moe & Jack 73,472 56,844
2,909 Polaroid Corporation 101,234 71,452
3,804 Reebok International Limited+ 85,915 51,592
9,804 Rubbermaid Incorporated 192,490 234,683
2,370 Russell Corporation 50,904 62,213
22,624 Seagram Company Limited 480,401 649,026
16,802 Service Corporation International 214,463 535,564
1,265 Springs Industries Incorporated Class A 43,585 43,959
6,618 Tandy Corporation 137,163 354,063
20,940 TJX Companies Incorporated 126,780 372,994
18,250 Toys R Us Incorporated+ 417,170 295,422
10,013 Tricon Global Restaurants Incorporated+ 86,730 390,507
8,036 TRW Incorporated 211,852 356,598
6,610 USAir Group Incorporated+ 251,924 334,631
8,998 Venator Group Incorporated+ 229,147 78,170
7,932 VF Corporation 161,608 294,476
23,311 Viacom Incorporated Class B+ 823,262 1,352,038
53,608 Warner Lambert Company 456,364 4,047,404
4,954 Whirlpool Corporation 199,032 232,838
21,432 Xerox Corporation 549,668 1,816,362
------------ --------------
$ 19,227,247 $ 34,208,682
ELECTRICAL EQUIPMENT - 0.07%
15,896 Seagate Technology Incorporated+ $ 456,186 $ 398,393
</TABLE>
60
<PAGE>
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998 Equity Index Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
ENERGY & RELATED - 7.79%
5,953 Amerada Hess Corporation $ 235,993 $ 343,414
62,780 Amoco Corporation 1,399,184 3,382,272
4,950 Ashland Incorporated 185,911 228,937
21,040 Atlantic Richfield Corporation 960,860 1,492,525
20,798 Baker Hughes Incorporated 353,843 435,458
11,636 Burlington Resources Incorporated 465,969 434,895
42,746 Chevron Corporation 1,376,420 3,593,336
1,364 Eastern Enterprises 37,920 57,458
5,206 Eastman Chemical Company 216,584 262,578
160,051 Exxon Corporation 3,924,259 11,233,580
11,837 FPL Group Incorporated 397,429 824,891
28,671 Halliburton Company 523,341 818,915
3,400 Helmerich & Payne Incorporated 43,655 71,400
3,083 Kerr-McGee Corporation 121,682 140,276
51,080 Mobil Corporation 1,417,210 3,878,888
7,072 Oryx Energy Company+ 186,136 91,493
3,167 Pennzoil Company 210,351 111,043
17,119 Phillips Petroleum Company 344,023 772,495
5,839 Rowan Companies Incorporated+ 48,452 65,324
140,284 Royal Dutch Petroleum Company 2,440,778 6,681,025
35,630 Schlumberger Limited 943,920 1,792,634
6,624 Sigma-Aldrich Corporation 126,933 191,268
6,132 Sun Company Incorporated 211,886 196,224
35,414 Texaco Incorporated 904,196 2,220,015
10,482 Thermo Electron Corporation+ 425,683 157,885
16,595 Union Pacific Resources Group Incorporated 325,938 204,326
15,760 Unocal Corporation 340,795 571,300
18,922 USX - Marathon Group 450,576 670,548
27,583 Williams Companies Incorporated 365,671 793,011
4,997 W.R. Grace & Company 60,499 62,150
------------ --------------
$ 19,046,097 $ 41,779,564
</TABLE>
61
<PAGE>
Equity Index Fund PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
ENTERTAINMENT & LEISURE - 0.87%
33,202 Tele-Communication Incorporated Class A+ $ 440,473 $ 1,299,028
133,782 Walt Disney Company 1,522,040 3,386,357
------------ --------------
$ 1,962,513 $ 4,685,385
FINANCE & RELATED - 13.78%
9,486 Aetna Incorporated $ 777,948 $ 659,277
54,912 Allstate Corporation 633,235 2,289,144
30,172 American Express Corporation 836,246 2,342,102
22,677 Associates First Capital Corporation 809,938 1,479,674
45,888 Banc One Corporation 1,567,560 1,955,976
49,148 Bank of New York Incorporated 440,568 1,345,427
44,712 BankAmerica Corporation 883,800 2,688,309
19,250 BankBoston Corporation 336,331 635,250
6,430 Bankers Trust N Y Corporation 416,126 379,370
18,476 BB&T Corporation 599,803 553,125
7,409 Bear Stearns & Company Incorporated 421,141 229,216
4,286 Capital One Financial Corporation 531,336 443,601
17,465 Charles Schwab Corporation 467,165 687,684
55,860 Chase Manhattan Corporation 1,039,865 2,415,945
11,048 Chubb Corporation 292,842 696,024
14,047 CIGNA Corporation 307,392 928,858
29,532 Citicorp 1,148,880 2,744,630
10,282 Comerica Incorporated 259,292 563,582
20,322 Conseco Incorporated 749,151 621,091
7,065 Countrywide Credit Industries Incorporated 235,908 294,081
44,400 Federal Home Loan Mortgage Corporation 533,908 2,195,025
67,822 Federal National Mortgage Association 712,414 4,357,564
18,813 First Chicago NBD Corporation 430,890 1,288,691
63,373 First Union Corporation 1,367,908 3,243,905
18,590 Fleet Financial Group Incorporated 648,364 1,365,203
16,514 Franklin Resources Incorporated 883,161 495,420
4,963 General Re Corporation 391,610 1,007,489
3,750 Golden West Financial 102,631 306,797
9,826 Guidant Corporation 286,354 729,580
</TABLE>
62
<PAGE>
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998 Equity Index Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
7,149 H F Ahmanson & Company $ 182,939 $ 396,770
6,894 H&R Block Incorporated 143,313 285,239
15,438 Hartford Financial Services Group 209,183 732,340
32,022 Household International Incorporated 366,588 1,200,825
6,954 Jefferson-Pilot Corporation 94,383 420,717
11,628 JP Morgan & Company Incorporated 579,198 984,020
28,844 KeyCorp 472,685 832,871
7,737 Lehman Brothers Holdings 423,410 218,570
6,580 Lincoln National Corporation 214,370 541,205
16,748 Marsh & McLennan Companies Incorporated 468,569 833,213
6,348 MBIA Incorporated 339,397 340,808
32,843 MBNA Corporation 138,440 940,131
17,008 Mellon Bank Corporation 312,903 936,503
9,620 Mercantile Bancorporation 539,333 465,368
22,626 Merrill Lynch & Company Incorporated 339,472 1,071,907
7,428 MGIC Investment Corporation 232,511 273,908
6,000 Moore Corporation Limited 144,526 63,375
39,301 Morgan Stanley Dean Witter Discover 969,074 1,692,399
21,511 National City Corporation 1,007,889 1,418,382
62,723 NationsBank Corporation+ 1,383,852 3,355,680
7,337 Northern Trust Corporation 508,206 500,750
49,554 Norwest Corporation 487,128 1,774,653
19,657 PNC Bank Corporation 539,877 884,565
6,240 Providian Financial Corporation 50,619 529,230
7,072 Republic New York Corporation 207,652 279,344
9,266 Safeco Corporation 192,486 386,276
11,173 SLM Holding Corporation 547,969 362,424
15,328 St Paul Companies Incorporated 377,036 498,160
10,556 State Street Corporation 539,239 575,962
11,647 Summit Bancorp 582,277 436,763
12,791 Sunamerica Incorporated 480,384 780,251
13,800 SunTrust Banks Incorporated 206,929 855,600
17,244 Synovus Financial Corporation 372,142 340,569
9,200 Torchmark Corporation 146,088 330,625
4,165 Transamerica Corporation 182,632 441,490
75,211 Travelers Group Incorporated+ 935,466 2,820,413
</TABLE>
63
<PAGE>
Equity Index Fund PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
48,608 U.S. Bancorp $ 753,303 $ 1,728,622
9,054 UNUM Corporation 259,036 449,871
13,442 Wachovia Corporation 674,830 1,145,931
25,366 Washington Mutual Incorporated 749,310 856,103
5,611 Wells Fargo & Company 493,874 1,991,905
------------ --------------
$ 35,960,285 $ 73,915,778
FOOD & RELATED - 2.65%
16,088 Albertson's Incorporated $ 208,614 $ 870,763
17,930 American Stores Company 161,942 577,122
39,241 Archer-Daniels-Midland Company 330,281 657,287
9,302 Darden Restaurants Incorporated 62,533 148,832
23,889 H J Heinz Company 459,795 1,221,325
44,966 McDonald's Corporation 768,113 2,683,908
158,914 Philip Morris Companies Incorporated 2,166,202 7,319,976
21,229 RJR Nabisco Holdings Corporation 561,199 534,705
8,659 Wendy's International Incorporated 115,594 192,122
------------ --------------
$ 4,834,273 $ 14,206,040
GENERAL BUSINESS & RELATED - 4.80%
12,872 Allegheny Teledyne Incorporated $ 242,701 $ 229,282
16,640 American General Corporation 383,582 1,062,880
4,750 American Greetings Corporation Class A 89,195 187,922
68,675 American International Group Incorporated 1,058,969 5,287,975
11,016 Aon Corporation 402,379 710,532
19,708 Automatic Data Processing 352,093 1,473,173
10,542 Cabletron Systems Incorporated+ 290,305 118,598
46,962 CBS Corporation 1,114,224 1,138,828
16,212 Clear Channel Communications Incorporated+ 600,598 770,069
24,163 Comcast Corporation Class A 527,678 1,134,151
5,296 Deluxe Corporation 188,705 150,605
6,095 Dow Jones & Company Incorporated 237,268 283,417
9,704 Equifax Incorporated 308,772 346,311
9,671 FDX Corporation+ 338,808 436,404
</TABLE>
64
<PAGE>
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998 Equity Index Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
18,598 Gannett Company Incorporated $ 423,829 $ 996,155
8,682 Hasbro Incorporated 117,931 256,119
2,500 Jostens Incorporated 64,784 51,875
5,176 Knight-Ridder Incorporated 140,240 230,332
7,526 Loews Corporation 420,761 635,006
6,516 McGraw-Hill Incorporated 214,202 516,393
3,492 Meredith Corporation 30,174 111,744
8,556 Mortan International Incorporated 105,980 187,162
2,827 National Service Industries Incorporated 72,260 90,111
12,506 New York Times Company Class A 190,633 343,915
24,765 Norfolk Southern Corporation 343,247 719,733
8,841 Provident Companies Incorporated 321,671 298,384
9,254 RR Donnelley & Sons Company 207,724 325,625
10,692 Textron Incorporated 191,633 648,202
39,234 Time Warner Incorporated 1,340,154 3,435,427
5,852 Times Mirror Company Class A 154,696 310,887
8,022 Tribune Company 169,856 403,607
15,056 United Technologies Corporation 419,167 1,150,843
32,845 US West Incorporated 658,591 1,722,310
------------ --------------
$ 11,722,810 $ 25,763,977
HEALTHCARE - 3.90%
85,864 American Home Products Corporation $ 1,209,461 $ 4,497,127
42,150 Columbia HCA Healthcare Corporation 1,097,761 845,634
27,111 Healthsouth Corporation+ 580,998 286,360
72,423 Lilly (Eli) & Company 1,105,052 5,671,626
85,437 Pfizer Incorporated 1,173,266 9,050,982
20,134 Tenet Healthcare Corporation+ 377,087 578,853
------------ --------------
$ 5,543,625 $ 20,930,582
INTERNATIONAL STOCKS - 0.48%
41,860 Unilever NV $ 753,018 $ 2,563,925
</TABLE>
65
<PAGE>
Equity Index Fund PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
MANUFACTURING PROCESSING - 9.86%
1,874 Aeroquip-Vickers Incorporated $ 52,210 $ 53,877
15,284 Air Products & Chemicals Incorporated 244,293 454,699
14,930 Alcan Aluminum Limited 286,557 349,922
12,263 Aluminum Company of America 416,814 870,672
16,600 Amgen Incorporated+ 602,346 1,254,337
31,772 Anheuser-Busch Incorporated 627,409 1,715,688
6,370 Apache Corporation 228,889 170,796
7,263 Armco Incorporated+ 64,050 36,315
2,637 Asarco Incorporated 66,312 50,433
7,700 Avery Dennison Corporation 124,845 336,394
1,991 Ball Corporation 64,439 70,183
24,457 Barrick Gold Corporation 721,581 489,140
15,408 Battle Mountain Gold Company 131,319 93,411
18,350 Baxter International Incorporated 414,178 1,091,825
3,544 Bemis Company Incorporated 45,356 124,261
8,521 Bethlehem Steel Corporation+ 131,532 70,298
4,791 BF Goodrich Company 138,763 156,606
3,712 C R Bard Incorporated 84,786 136,880
8,777 Cardinal Health Incorporated 566,281 906,225
10,893 Cincinnati Financial Corporation 507,880 334,960
2,692 Cincinnati Milacron Inc+ 60,127 41,558
8,151 Crown Cork & Seal Company 239,976 218,039
6,293 Cyprus Amax Minerals 164,608 83,382
82,876 Dell Computer Corporation+ 369,629 5,449,097
14,705 Dow Chemical Company 795,209 1,256,358
11,232 Dun & Bradstreet Corporation 208,454 303,264
21,075 Eastman Kodak Company 839,472 1,629,361
4,688 Eaton Corporation 165,189 293,879
8,500 Ecolab Incorporated 64,688 241,719
32,566 EMC Corporation+ 373,451 1,862,368
9,472 Engelhard Corporation 81,683 167,536
17,238 Fifth Third Bancorp 512,232 991,185
2,267 FMC Corporation+ 82,966 116,892
14,026 Fort James Corporation 530,145 460,228
11,358 Fortune Brands Incorporated 256,742 336,481
</TABLE>
66
<PAGE>
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998 Equity Index Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
9,971 Fred Meyer Incorporated+ $ 483,823 $ 387,623
3,900 Great Lakes Chemical Corporation 190,647 151,613
7,101 HCR Manor Care+ 138,514 208,148
6,206 Hercules Incorporated 123,479 186,568
13,790 Homestake Mining Company 194,556 167,204
8,304 Honeywell Incorporated 191,628 531,975
13,886 Huntington Bancshares Incorporated 435,148 348,886
9,060 IKON Office Solutions 186,321 65,119
10,838 Inco Limited 272,484 111,089
20,131 International Paper Company 559,311 938,608
7,769 ITT Industries Incorporated 90,726 263,175
87,973 Johnson & Johnson 1,557,541 6,883,887
5,534 Johnson Controls Incorporated 95,134 257,331
36,488 Kimberly-Clark Corporation 611,567 1,477,764
4,034 McDermott International Incorporated 101,594 108,666
6,818 Mead Corporation 115,125 200,705
39,190 Monsanto Company 385,659 2,209,336
495 NACCO Industries Incorporated Class A 19,539 49,500
4,350 Nalco Chemical Company 121,422 128,325
10,230 Newmont Mining Corporation 328,207 248,077
4,419 Northrop Grumman Corporation 229,474 322,587
5,726 Nucor Corporation 106,815 232,619
24,051 Occidental Petroleum Corporation 665,560 517,096
10,056 Owens-Illinois Incorporated+ 373,147 251,400
8,150 Pall Corporation 104,333 180,828
3,820 Phelps Dodge Corporation 117,466 199,356
16,563 Placer Dome Incorporated 257,278 228,776
11,570 PPG Industries Incorporated 295,477 631,288
10,294 Praxair Incorporated 183,595 336,485
87,787 Procter & Gamble Company 1,491,196 6,227,390
4,756 Progressive Corporation Ohio 519,864 536,239
5,500 Raychem Corporation 118,180 134,062
13,974 Regions Financial 492,987 506,557
4,720 Reynolds Metals Company 231,344 239,835
12,027 Rohm & Haas Company 169,312 334,501
5,446 Sealed Air Corporation+ 295,959 173,591
</TABLE>
67
<PAGE>
Equity Index Fund PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
15,654 Sempra Energy $ 430,492 $ 407,982
11,372 Sherwin Williams Company 108,355 245,919
6,741 Stone Container Corporation+ 147,486 58,141
3,696 Temple-Inland Incorporated 128,096 176,946
11,114 Tenneco 442,385 365,373
38,136 Tyco International Limited 1,459,649 2,107,014
4,582 Union Camp Corporation 189,685 180,416
8,929 Union Carbide Corporation 149,651 385,063
16,471 Unisys Corporation+ 392,247 374,715
5,690 USX - US Steel Group 156,700 135,849
6,689 Westvaco Corporation 133,991 160,536
6,475 Worthington Industries Incorporated 78,248 80,937
------------ --------------
$ 25,935,808 $ 52,873,369
MEDICAL EQUIPMENT & SUPPLIES - 0.82%
101,016 Abbott Laboratories $ 985,043 $ 4,387,882
PHARMACEUTICALS - 3.46%
65,098 Bristol-Myers Squibb Company $ 1,717,417 $ 6,762,055
78,155 Merck & Company Incorporated 2,287,095 10,125,957
33,267 Pharmacia and Upjohn Incorporated 1,052,314 1,669,588
------------ --------------
$ 5,056,826 $ 18,557,600
RETAIL & RELATED - 3.84%
14,084 Costco Companies Incorporated+ $ 286,373 $ 667,230
28,584 Dayton-Hudson Corporation 270,766 1,021,878
25,726 Gap Incorporated 182,847 1,357,047
96,120 Home Depot Incorporated 672,883 3,796,740
15,110 May Department Stores Company 340,508 778,165
30,708 Medtronic Incorporated 218,382 1,777,225
16,864 Rite Aid Corporation 230,796 598,672
25,591 Sears Roebuck & Company 537,578 1,130,802
</TABLE>
68
<PAGE>
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998 Equity Index Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
146,964 Wal Mart Stores Incorporated $ 2,105,075 $ 8,027,909
32,460 Walgreen Company 207,047 1,430,269
------------ --------------
$ 5,052,255 $ 20,585,937
SEMICONDUCTORS - 2.17%
109,985 Intel Corporation $ 1,076,888 $ 9,431,214
9,252 LSI Logic Corporation+ 335,045 116,806
13,894 Micron Technology Incorporated+ 268,294 422,899
39,072 Motorola Incorporated 877,781 1,667,886
------------ --------------
$ 2,558,008 $ 11,638,805
SHELTER & RELATED - 1.27%
2,577 Armstrong World Industries Incorporated $ 105,367 $ 137,870
3,754 Boise Cascade Corporation 140,159 95,023
3,908 Centex Corporation 40,604 134,826
6,298 Champion International Corporation 210,992 197,206
13,864 Coastal Corporation 170,556 467,910
5,447 Columbia Energy Group 150,793 319,330
6,299 Consolidated Natural Gas Company 251,306 343,296
4,524 Crane Company 36,638 106,314
12,840 Dominion Resources Incorporated 415,971 572,985
21,494 Enron Corporation 514,160 1,135,152
16,084 Entergy Corporation 371,990 494,583
2,446 Fleetwood Enterprises Incorporated 40,942 73,839
6,035 Georgia-Pacific Corporation 211,339 275,347
2,627 Kaufman & Broad Home Corporation 34,016 61,570
7,212 Louisiana-Pacific Corporation 108,989 146,945
22,920 Lowe's Company Incorporated 154,752 729,143
22,172 Masco Corporation 332,117 545,986
3,493 Owens Corning Fiberglass Corporation 89,033 113,741
1,871 Potlatch Corporation 66,992 63,731
2,776 Pulte Corporation 23,405 68,186
</TABLE>
69
<PAGE>
Equity Index Fund PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
5,810 Stanley Works $ 101,678 $ 172,848
13,062 Weyerhaeuser Company 426,488 551,053
------------ --------------
$ 3,998,287 $ 6,806,884
TELECOMMUNICATIONS - 2.99%
101,580 Bell Atlantic Corporation $ 2,246,345 $ 4,920,281
9,889 General Instrument Corporation+ 180,127 213,850
63,031 GTE Corporation 1,781,991 3,466,705
115,510 MCI Worldcom Incorporated+ 2,521,435 5,645,551
39,858 Media One Group Incorporated+ 576,643 1,771,190
------------ --------------
$ 7,306,541 $ 16,017,577
TRANSPORTATION - 0.66%
31,008 Burlington Northern Santa Fe $ 401,861 $ 992,256
14,310 CSX Corporation 321,584 601,914
4,984 Delta Air Lines Incorporated 345,417 484,694
21,564 Laidlaw Incorporated 197,258 203,510
4,856 Ryder System Incorporated 128,676 120,793
21,841 Southwest Airlines Company 279,244 436,820
16,210 Union Pacific Corporation 503,543 690,951
------------ --------------
$ 2,177,583 $ 3,530,938
UTILITIES - 7.11%
37,444 Airtouch Communications Incorporated+ $ 744,088 $ 2,134,308
17,926 Alltel Corporation 648,157 849,244
9,023 Ameren Corporation 329,928 378,402
118,538 American Telephone & Telegraph Corporation 3,460,659 6,927,064
7,884 Anadarko Petroleum Corporation 266,165 309,940
12,636 Ascend Communication Incorporated+ 612,427 574,938
9,685 Baltimore Gas & Electric Company 204,887 323,237
64,808 BellSouth Corporation 1,506,067 4,876,802
9,900 Carolina Power & Light Company 233,105 457,256
13,942 Central & South West Corporation 278,941 398,218
</TABLE>
70
<PAGE>
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998 Equity Index Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
10,371 Cinergy Corporation $ 226,187 $ 396,691
15,364 Consolidated Edison Incorporated 379,808 800,849
9,452 Detroit Energy Company 213,003 427,112
23,624 Duke Energy Corporation 588,446 1,563,614
23,712 Edison International 427,157 609,102
15,128 First Energy Corporation 338,528 469,914
10,994 Frontier Corporation 249,004 300,961
8,327 GPU Incorporated 255,679 353,898
19,061 Houston Industries Incorporated 356,100 593,274
17,612 NEXTEL Communications Class A+ 594,202 355,542
12,267 Niagara Mohawk Power Corporation+ 207,856 188,605
3,200 NICOR Incorporated 66,298 132,600
9,866 Northern States Power Company 183,739 276,865
42,782 Northern Telecom Limited 1,124,175 1,369,024
2,060 Oneok Incorporated 38,246 70,040
19,500 PacifiCorp 374,854 374,156
14,518 PECO Energy Company 324,438 530,814
2,294 Peoples Energy Corporation 54,452 82,584
24,953 PG&E Corporation 628,189 796,936
10,976 PP & L Resources Incorporated 283,385 284,004
15,171 Public Services Enterprise Group 410,306 596,410
120,278 SBC Communications Incorporated 1,604,412 5,344,854
7,184 Sonat Incorporated 178,261 214,622
45,657 Southern Company 658,369 1,344,028
28,200 Sprint Corporation 876,025 2,030,400
18,315 Texas Utilities Company 684,045 852,792
14,194 Unicom Corporation 481,717 530,501
------------ --------------
$ 20,091,305 $ 38,119,601
TOTAL COMMON STOCKS $223,012,113 $ 531,901,357
</TABLE>
71
<PAGE>
Equity Index Fund PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS - 1.01%
U.S. TREASURY BILLS - 1.01%
$ 600,000 U.S. Treasury Bills 4.63 %# 12/24/98 $ 594,120
791,000 U.S. Treasury Bills 4.94 # 11/12/98 787,130
3,753,000 U.S. Treasury Bills 4.95 # 10/22/98 3,741,780
134,000 U.S. Treasury Bills 4.96 # 10/08/98 133,866
155,000 U.S. Treasury Bills 4.98 # 10/15/98 154,691
--------------
TOTAL SHORT-TERM INSTRUMENTS $ 5,411,587
(Cost $5,411,641)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $228,423,754)* (Notes 1 and 3) 100.19% $ 537,312,944
Other Assets and Liabilities, Net (0.19) (1,035,845)
------ --------------
TOTAL NET ASSETS 100.00% $ 536,277,099
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
+ NON-INCOME EARNING SECURITIES.
# YIELD TO MATURITY.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL
STATEMENT PURPOSES AND NET UNREALIZED APPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 322,740,992
Gross Unrealized Depreciation (13,851,802)
--------------
NET UNREALIZED APPRECIATION $ 308,889,190
--------------
--------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
72
<PAGE>
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998 Equity Value Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - 94.68%
AUTOMOBILE & RELATED - 1.56%
64,300 Chrysler Corporation $ 2,126,118 $ 3,078,363
29,000 Ford Motor Company 584,437 1,361,188
------------ --------------
$ 2,710,555 $ 4,439,551
CAPITAL GOODS - 9.84%
103,600 Ameritech Corporation $ 5,068,785 $ 4,908,050
28,000 Atmel Corporation+ 212,251 253,750
10,000 B/E Aerospace Incorporated+ 300,000 220,000
7,500 Bell & Howell Company+ 208,575 194,530
10,500 COHU Incorporated 409,250 173,250
15,500 Foster Wheeler Corporation 205,336 213,125
40,000 General Electric Company 955,182 3,182,500
90,000 Lancaster Colony Corporation 2,260,674 2,767,500
5,000 Libbey Incorporated 180,425 147,500
75,000 Maytag Corporation 2,002,311 3,581,250
87,000 New Century Energies Incorporated 4,186,155 4,235,812
8,500 Pillowtex Corporation 283,932 249,688
157,000 Waste Management Incorporated 5,820,449 7,545,812
15,000 Wyman Gordon Company+ 308,815 215,625
24,000 Zygo Corporation+ 385,499 157,500
------------ --------------
$ 22,787,639 $ 28,045,892
COMPUTER SYSTEMS - 2.25%
50,000 International Business Machines Corporation $ 2,661,925 $ 6,400,000
CONSUMER - BASIC - 0.14%
4,000 Beckman Coulter Incorporated $ 240,943 $ 206,500
8,500 Schweitzer-Mauduit International Incorporated 310,448 184,875
------------ --------------
$ 551,391 $ 391,375
</TABLE>
73
<PAGE>
Equity Value Fund PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
CONSUMER - DISCRETIONARY - 4.32%
6,000 Borg-Warner Automotive Incorporated $ 333,019 $ 222,375
86,600 Consolidated Stores Corporation+ 2,183,991 1,699,525
47,850 DuPont (E.I.) de Nemours and Company 3,631,509 2,685,580
539,000 Food Lion Incorporated Class B 5,168,890 5,255,250
17,000 Intermet Corporation 309,245 215,688
22,000 Quaker Fabric Corporation+ 341,000 103,125
5,000 Seaway Food Town Incorporated 77,500 69,375
15,000 Syms Corporation+ 189,090 155,625
117,700 Toys R Us Incorporated+ 3,509,273 1,905,269
------------ --------------
$ 15,743,517 $ 12,311,812
ELECTRICAL EQUIPMENT - 1.70%
90,000 Seagate Technology Incorporated+ $ 1,618,153 $ 2,255,625
130,000 Technitrol Incorporated 1,383,786 2,600,000
------------ --------------
$ 3,001,939 $ 4,855,625
ENERGY & RELATED - 13.60%
50,000 Atlantic Richfield Corporation $ 2,953,240 $ 3,546,875
8,000 BJ Services Company+ 149,980 130,000
92,000 Cabot Corporation 3,377,265 2,294,250
4,500 Cliffs Drilling Company+ 147,185 88,875
70,000 Exxon Corporation 2,344,594 4,913,125
30,000 Mallon Resources Corporation+ 285,000 258,750
60,000 Mobil Corporation 2,118,677 4,556,250
59,500 Phillips Petroleum Company 2,806,708 2,684,937
40,000 Royal Dutch Petroleum Company 1,195,160 1,905,000
17,000 Swift Energy Company+ 340,833 164,688
118,000 TECO Energy Incorporated 2,868,580 3,370,375
45,000 Texaco Incorporated 1,420,898 2,820,937
68,200 Transocean Offshore Incorporated 2,174,839 2,365,688
95,500 USX - Marathon Group 3,483,860 3,384,280
</TABLE>
74
<PAGE>
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998 Equity Value Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
214,000 Valero Energy Corporation $ 4,529,293 $ 4,253,250
70,000 Williams Companies Incorporated 1,876,651 2,012,500
------------ --------------
$ 32,072,763 $ 38,749,780
FINANCE & RELATED - 23.79%
100,000 American Bankers Insurance Group $ 1,158,776 $ 4,250,000
20,000 Amresco Capital Trust Incorporated 287,188 193,750
55,000 BankAmerica Corporation 1,314,872 3,306,875
54,080 Chase Manhattan Corporation 930,320 2,338,960
93,000 CIGNA Corporation 5,773,578 6,149,625
5,250 CNB Bancshares Incorporated 211,718 240,188
8,500 Colonial Properties Trust 256,041 240,655
140,000 Edwards A G & Sons Incorporated 2,437,881 4,243,750
59,000 First Chicago NBD Corporation 5,289,134 4,041,500
109,000 First Union Corporation 4,460,275 5,579,438
181,200 Hartford Financial Services Group 8,159,807 8,595,675
9,000 HCC Insurance Holdings Incorporated 166,669 174,375
6,000 Imperial Bancorp+ 177,213 90,750
13,500 Indymac Mortgage Holdings Incorporated 303,904 273,375
11,500 Kilroy Realty Corporation 303,965 264,500
60,000 Providian Financial Corporation 610,596 5,088,750
22,000 Reliance Group Holdings Incorporated 290,607 309,375
72,000 Republic New York Corporation 1,498,933 2,844,000
74,300 Safeco Corporation 3,427,088 3,097,380
9,000 Sierrawest Bancorp 326,553 203,625
83,500 Simon Property Group Incorporated 2,811,195 2,484,125
117,000 SLM Holding Corporation 5,313,145 3,795,188
62,062 St Paul Companies Incorporated 2,172,775 2,017,015
65,000 Travelers Group Incorporated+ 466,375 2,437,500
163,200 Washington Mutual Incorporated 7,399,694 5,508,000
------------ --------------
$ 55,548,302 $ 67,768,374
</TABLE>
75
<PAGE>
Equity Value Fund PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
FOOD & RELATED - 4.32%
145,000 American Stores Company $ 3,035,749 $ 4,667,187
165,800 Philip Morris Companies Incorporated 4,183,537 7,637,163
------------ --------------
$ 7,219,286 $ 12,304,350
GENERAL BUSINESS & RELATED - 5.10%
100,000 Allegheny Teledyne Incorporated $ 2,527,437 $ 1,781,250
10,000 Champion Enterprises Incorporated+ 238,283 232,500
10,000 Chartwell Re Corporation 322,897 279,375
220,100 Corrections Corporation of America+ 4,692,164 2,985,105
24,100 Dollar Thrifty Automotive Group Incorporated+ 453,365 280,163
18,000 Elder Beerman Stores Corporation+ 416,593 312,750
164,339 Fremont General Corporation 4,059,464 7,888,272
8,000 Gleason Corporation 202,000 128,500
5,000 Professionals Group Incorporated+ 216,250 130,000
10,000 Selective Insurance Group 259,125 191,250
17,000 Tropical Sportswear International+ 228,659 316,625
------------ --------------
$ 13,616,237 $ 14,525,790
HEALTHCARE - 0.34%
72,900 Foundation Health Systems Incorporated+ $ 2,006,230 $ 683,438
14,100 Sierra Health Services Incorporated+ 340,875 277,594
------------ --------------
$ 2,347,105 $ 961,032
MANUFACTURING PROCESSING - 9.36%
31,387 Aluminum Company of America $ 1,726,954 $ 2,228,477
8,500 Black Hills Corporation 203,028 228,438
1,750 Carpenter Technology Corporation 96,355 63,984
5,500 Cleveland Cliffs Incorporated 243,288 214,500
35,000 Eastman Kodak Company 2,137,760 2,705,938
40,200 Eaton Corporation 3,642,952 2,520,038
69,700 Fort James Corporation 2,272,687 2,287,031
14,000 Gibson Greeting Incorporated+ 375,094 284,375
</TABLE>
76
<PAGE>
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998 Equity Value Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
8,500 IPSCO Incorporated $ 226,500 $ 153,000
70,000 Johnson Controls Incorporated 2,080,926 3,255,000
48,600 Magna International Incorporated Class A 3,616,696 2,824,875
7,500 Motive Power Industries Incorporated+ 201,338 175,313
8,000 Novel Denim Holdings Limited+ 209,188 94,000
8,000 NUI Corporation 209,195 184,000
160,000 Owens-Illinois Incorporated+ 1,582,378 4,000,000
3,500 Southdown Incorporated 197,610 157,500
25,000 Tesoro Petroleum Corporation+ 404,888 326,563
117,000 Tidewater Incorporated 5,083,428 2,427,750
8,000 Toll Brothers Incorporated+ 225,480 183,500
130,000 United Dominion Industries Limited 2,837,768 2,356,250
------------ --------------
$ 27,573,513 $ 26,670,532
PHARMACEUTICALS - 1.06%
60,000 Pharmacia and Upjohn Incorporated $ 1,588,076 $ 3,011,250
RETAIL & RELATED - 4.10%
95,000 Costco Companies Incorporated+ $ 1,408,375 $ 4,500,625
90,000 Rite Aid Corporation 1,331,900 3,195,000
90,000 Sears Roebuck & Company 3,257,400 3,976,875
------------ --------------
$ 5,997,675 $ 11,672,500
SHELTER & RELATED - 0.11%
35,000 Dal-Tile International Incorporated+ $ 304,050 $ 317,188
TELECOMMUNICATIONS - 3.42%
68,600 Bell Atlantic Corporation $ 3,295,191 $ 3,322,813
116,700 GTE Corporation 4,597,358 6,418,500
------------ --------------
$ 7,892,549 $ 9,741,313
TRANSPORTATION - 0.03%
5,000 US Freightways Corporation $ 160,419 $ 99,375
</TABLE>
77
<PAGE>
Equity Value Fund PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
UTILITIES - 9.63%
100,000 Cinergy Corporation $ 2,838,307 $ 3,825,000
54,000 Duke Energy Corporation 2,539,836 3,574,125
173,000 Montana Power Company 6,009,236 7,730,938
109,700 Northern States Power Company 2,982,195 3,078,456
12,000 Northwest Natural Gas Company 312,330 331,875
14,000 Public Service Company of North Carolina 302,697 323,750
185,000 Southern Company 4,352,337 5,445,938
67,300 Texas Utilities Company 2,960,016 3,133,656
------------ --------------
$ 22,296,954 $ 27,443,738
TOTAL COMMON STOCKS $224,073,895 $ 269,709,477
</TABLE>
78
<PAGE>
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998 Equity Value Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS - 4.22%
REPURCHASE AGREEMENTS - 4.22%
$ 5,483,000 Goldman Sachs Pooled Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 5.45 % 10/01/98 $ 5,483,000
880,000 HSBC Securities Incorporated Repurchase
Agreement - 102% Collateralized by U.S.
Government Securities 5.35 10/01/98 880,000
2,574,000 JP Morgan Securities Incorporated Repurchase
Agreement - 102% Collateralized by U.S.
Government Securities 5.30 10/01/98 2,574,000
3,090,000 Morgan Stanley & Company Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 5.35 10/01/98 3,090,000
--------------
TOTAL SHORT-TERM INSTRUMENTS $ 12,027,000
(Cost $12,027,000)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $236,100,895)* (Notes 1 and 3) 98.90% $ 281,736,477
Other Assets and Liabilities, Net 1.10 3,141,054
------ --------------
TOTAL NET ASSETS 100.00% $ 284,877,531
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</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 $ 69,062,126
Gross Unrealized Depreciation (23,426,544)
--------------
NET UNREALIZED APPRECIATION $ 45,635,582
--------------
--------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
79
<PAGE>
Growth Fund PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - 98.12%
AEROSPACE - 0.19%
20,084 Boeing Company $ 1,165,092 $ 689,132
AUTOMOBILE & RELATED - 0.53%
41,200 Ford Motor Company $ 2,098,806 $ 1,933,825
BEVERAGE BREWING AND DISTRIBUTION - 2.20%
140,920 Coca-Cola Company $ 9,397,345 $ 8,120,515
CAPITAL GOODS - 9.77%
148,014 Cisco Systems Incorporated+ $ 3,589,628 $ 9,149,115
213,142 General Electric Company 15,207,256 16,958,110
63,308 Intel Corporation 5,239,708 5,428,660
243,194 Telefonaktiebolaget Ericsson (LM) -
Sponsored ADR 3,931,658 4,468,690
------------ --------------
$ 27,968,250 $ 36,004,575
COMPUTER SOFTWARE - 4.07%
34,286 Hewlett Packard Company $ 2,295,242 $ 1,815,015
119,908 Microsoft Corporation+ 8,577,385 13,197,374
------------ --------------
$ 10,872,627 $ 15,012,389
COMPUTER SYSTEMS - 3.45%
60,000 Compaq Computer Corporation $ 1,970,922 $ 1,897,500
57,762 International Business Machines Corporation 6,391,659 7,393,536
49,492 Lucent Technologies Incorporated 2,191,722 3,418,040
------------ --------------
$ 10,554,303 $ 12,709,076
CONSUMER - BASIC - 4.32%
38,700 Bestfoods $ 1,884,345 $ 1,874,530
82,614 Colgate-Palmolive Company 4,304,375 5,659,059
72,200 Sara Lee Corporation 4,243,930 3,898,800
43,200 Schering-Plough Corporation 3,250,545 4,473,900
------------ --------------
$ 13,683,195 $ 15,906,289
</TABLE>
80
<PAGE>
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998 Growth Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
CONSUMER - DISCRETIONARY - 5.58%
151,506 Allied Signal Incorporated $ 4,106,070 $ 5,359,525
45,900 Consolidated Stores Corporation+ 2,086,021 900,788
68,076 DuPont (E.I.) de Nemours and Company 4,362,897 3,820,766
78,076 Gillette Company 2,656,946 2,986,407
33,500 Mattel Incorporated 1,375,657 938,000
159,350 Service Corporation International 5,456,787 5,079,281
17,300 Xerox Corporation 1,697,388 1,466,175
------------ --------------
$ 21,741,766 $ 20,550,942
ENERGY & RELATED - 8.91%
60,673 Chevron Corporation $ 5,067,620 $ 5,100,324
103,978 Exxon Corporation 6,644,787 7,297,956
51,048 FPL Group Incorporated 2,737,518 3,557,408
50,474 Mobil Corporation 3,639,919 3,832,869
108,216 Royal Dutch Petroleum Company 5,830,968 5,153,787
39,776 Schlumberger Limited 3,109,713 2,001,230
56,654 Texaco Incorporated 3,097,686 3,551,498
80,630 Williams Companies Incorporated 2,008,203 2,318,113
------------ --------------
$ 32,136,414 $ 32,813,185
ENTERTAINMENT & LEISURE - 0.68%
99,200 Walt Disney Company $ 3,154,656 $ 2,511,000
FINANCE & RELATED - 18.00%
130,127 American International Group Incorporated $ 7,277,555 $ 10,019,779
89,696 Allstate Corporation 3,875,673 3,739,202
87,838 Banc One Corporation 4,362,644 3,744,095
60,164 Charles Schwab Corporation 1,779,616 2,368,958
158,060 Chase Manhattan Corporation 8,593,441 6,836,095
73,800 Conseco Incorporated 3,094,041 2,255,513
131,560 Federal Home Loan Mortgage Corporation 4,667,390 6,503,998
78,076 Federal National Mortgage Association 4,739,525 5,016,383
4,900 General Re Corporation 1,161,594 994,700
8,000 Guidant Corporation 616,880 594,000
</TABLE>
81
<PAGE>
Growth Fund PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
40,600 Sunamerica Incorporated $ 2,024,199 $ 2,476,600
118,526 Household International Incorporated 4,538,937 4,444,725
170,800 Standard & Poor's Depositary Receipt 17,253,874 17,336,200
------------ --------------
$ 63,985,369 $ 66,330,248
FOOD & RELATED - 2.60%
28,400 McDonald's Corporation $ 1,738,061 $ 1,695,125
125,697 Philip Morris Companies Incorporated 5,163,800 5,789,918
45,000 Safeway Incorporated+ 1,997,037 2,086,875
------------ --------------
$ 8,898,898 $ 9,571,918
GENERAL BUSINESS & RELATED - 2.27%
46,500 Clear Channel Communications Incorporated+ $ 2,110,820 $ 2,208,750
70,680 Gannett Company Incorporated 4,359,480 3,785,798
11,648 Tribune Company 483,591 586,040
23,500 United Technologies Corporation 2,159,764 1,796,281
------------ --------------
$ 9,113,655 $ 8,376,869
HEALTHCARE - 4.79%
123,200 American Home Products Corporation $ 4,527,694 $ 6,452,600
45,654 Lilly (Eli) & Company 3,183,995 3,575,279
20,000 Medtronic Incorporated 1,156,950 1,157,500
60,890 Pfizer Incorporated 4,741,721 6,450,534
------------ --------------
$ 13,610,360 $ 17,635,913
INTERNATIONAL STOCKS - 0.32%
46,000 News Corporation Limited ADR (Australia)+ $ 1,275,304 $ 1,178,750
MANUFACTURING PROCESSING - 12.38%
74,000 AES Corporation+ $ 2,987,759 $ 2,742,625
89,316 Aluminum Company of America 5,652,076 6,341,436
71,622 Baxter International Incorporated 3,315,433 4,261,509
167,788 Danaher Corporation 3,775,838 5,033,640
</TABLE>
82
<PAGE>
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998 Growth Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
118,300 EMC Corporation+ $ 4,322,420 $ 6,765,281
48,000 Honeywell Incorporated 3,685,632 3,075,000
58,302 Johnson & Johnson 3,865,695 4,562,132
82,658 Monsanto Company 3,080,657 4,659,845
53,144 Procter & Gamble Company 4,318,587 3,769,903
79,900 Tyco International Limited 4,167,296 4,414,475
------------ --------------
$ 39,171,393 $ 45,625,846
MEDICAL EQUIPMENT & SUPPLIES - 0.77%
65,072 Abbott Laboratories $ 2,309,070 $ 2,826,565
PHARMACEUTICALS - 3.31%
59,592 Bristol-Myers Squibb Company $ 5,804,634 $ 6,190,119
46,400 Merck & Company Incorporated 4,939,482 6,011,700
------------ --------------
$ 10,744,116 $ 12,201,819
RETAIL & RELATED - 4.08%
103,720 Dayton-Hudson Corporation $ 2,970,058 $ 3,707,990
26,708 Gap Incorporated 834,628 1,408,847
63,600 Home Depot Incorporated 2,209,548 2,512,200
135,552 Wal Mart Stores Incorporated 5,634,350 7,404,528
------------ --------------
$ 11,648,584 $ 15,033,565
TELECOMMUNICATIONS - 5.20%
55,714 American Telephone & Telegraph Corporation $ 3,091,754 $ 3,255,787
90,652 Bell Atlantic Corporation 4,202,129 4,390,956
81,046 GTE Corporation 3,774,571 4,457,530
100,324 MCI Worldcom Incorporated+ 4,265,696 4,903,349
32,288 Telecom Italia SPA - Sponsored ADR 2,120,156 2,163,296
------------ --------------
$ 17,454,306 $ 19,170,918
</TABLE>
83
<PAGE>
Growth Fund PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
UTILITIES - 4.70%
105,886 Edison International $ 2,766,228 $ 2,719,947
34,000 Houston Industries Incorporated 1,000,409 1,058,250
68,835 Northern Telecom Limited 3,767,248 2,202,720
130,836 PG&E Corporation 3,998,899 4,178,575
161,004 SBC Communications Incorporated 4,971,756 7,154,615
------------ --------------
$ 16,504,540 $ 17,314,107
TOTAL COMMON STOCKS $327,488,049 $ 361,517,446
</TABLE>
84
<PAGE>
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998 Growth Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS - 1.64%
REPURCHASE AGREEMENTS - 1.64%
$ 6,039,000 Goldman Sachs Pooled Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 5.45 % 10/01/98 $ 6,039,000
(Cost $6,039,000)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $333,527,049)* (Notes 1 and 3) 99.76% $ 367,556,446
Other Assets and Liabilities, Net 0.24 880,220
------ --------------
TOTAL NET ASSETS 100.00% $ 368,436,666
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</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 $ 51,879,424
Gross Unrealized Depreciation (17,850,027)
--------------
NET UNREALIZED APPRECIATION $ 34,029,397
--------------
--------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
85
<PAGE>
International Equity Fund PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK - 88.09%
AUSTRALIA - 1.90%
160,000 News Corporation Limited (Media - Broadcasting &
Publishing) $ 1,005,182 $ 1,030,992
AUSTRIA - 0.99%
6,000 OMV AG - (Oil & Gas) $ 812,096 $ 537,324
BERMUDA - 0.27%
15,000 Central European Media Enterprises Limited - (Media
Broadcasting & Publishing)+ $ 433,124 $ 144,375
BRAZIL - 0.50%
40,000 Aracruz Celulose SA ADR - (Forest Products & Paper) $ 727,686 $ 272,500
CANADA - 1.87%
10,000 Potash Corporation of Saskatchewan Incorporated -
(Chemicals) $ 788,261 $ 527,696
12,000 Royal Bank of Canada - (Banking) 640,433 484,956
------------ --------------
$ 1,428,694 $ 1,012,652
FINLAND - 2.10%
14,500 Nokia Corp ADR - (Communications) $ 653,957 $ 1,137,344
FRANCE - 12.08%
3,400 Alcatel - (Communications) $ 573,540 $ 302,098
14,500 Axa - (Insurance) 1,400,205 1,327,166
4,000 Canal Plus - (Media - Broadcasting & Publishing) 780,242 971,310
25,000 Groupe Danone ADR - (Beverages, Food & Tobacco) 775,000 1,307,813
6,000 Suez Lyonnaise des Eaux - (Diversified) 1,079,933 1,021,322
20,000 Thomson CSF - (Aerospace & Defense) 812,129 610,192
8,000 Total SA - Series B - (Oil & Gas) 922,569 1,007,707
------------ --------------
$ 6,343,618 $ 6,547,608
</TABLE>
86
<PAGE>
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998 International Equity Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
GERMANY - 5.07%
3,500 Adidas Solomon AG - (Textiles, Clothing & Fabrics) $ 487,148 $ 401,022
3,088 Allianz AG - (Insurance) 696,022 957,058
20,000 Metro AG - (Retailers) 969,544 1,391,686
------------ --------------
$ 2,152,714 $ 2,749,766
GREAT BRITAIN - 16.07%
145,000 Amvescap PLC - (Financial Services) $ 971,329 $ 832,257
15,000 Arm Holdings PLC ADR - (Electronics)+ 569,317 675,000
42,857 Bass PLC - (Beverages, Food & Tobacco) 584,974 513,461
73,000 Boots Company PLC - (Retailers) 1,057,823 1,256,688
77,000 British Aerospace PLC - (Aerospace & Defense) 670,692 467,151
40,000 British Petroleum Company PLC - (Oil & Gas) 568,485 611,784
18,000 Glaxo Wellcome PLC ADR - (Pharmaceuticals) 796,618 1,028,250
95,000 Select Appointments Holdings PLC - (Commercial Services) 921,927 865,336
13,000 Smithkline Beecham PLC ADR - (Pharmaceuticals) 599,937 711,750
150,791 Vodafone Group PLC - (Communications) 852,455 1,750,216
------------ --------------
$ 7,593,557 $ 8,711,893
GREECE - 1.13%
25,553 Hellenic Telecommunication Organization SA -
(Communications) $ 644,073 $ 612,196
HONG KONG - 1.43%
15,000 HSBC Holdings PLC - (Financial Services) $ 378,637 $ 274,892
95,000 Hutchison Whampoa Ltd - (Industrial - Diversified) 556,213 500,223
------------ --------------
$ 934,850 $ 775,115
HUNGARY - 1.20%
30,000 Magyar Tavkozlesi RT ADR - (Communications) $ 568,392 $ 650,625
</TABLE>
87
<PAGE>
International Equity Fund PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
IRELAND - 3.41%
14,000 Elan Corporation PLC - (Pharmaceuticals)+ $ 732,287 $ 986,313
10,000 Ryanair Holdings PLC ADR - (Airlines)+ 250,000 342,500
82,400 Ryanair Holdings PLC - (Airlines)+ 461,979 520,916
------------ --------------
$ 1,444,266 $ 1,849,729
ISRAEL - 0.90%
20,000 Koor Industries Limited - (Communications) $ 414,388 $ 327,500
20,000 Tefron Limited - (Textiles, Clothing & Fabrics)+ 370,412 157,500
------------ --------------
$ 784,800 $ 485,000
ITALY - 3.06%
118,000 ENI SpA - (Oil & Gas) $ 748,368 $ 722,656
14,000 Telecom Italia SpA ADR - (Communications) 923,040 938,000
------------ --------------
$ 1,671,408 $ 1,660,656
JAPAN - 10.37%
24,000 Canon Incorporated - (Electronics) $ 705,731 $ 488,393
20,000 Honda Motor Company Limited - (Automotive) 725,948 609,756
61,000 Marui Company Limited - (Retailers) 985,630 887,306
19,000 Meitec Corporation - (Computer Software & Processing) 623,250 411,768
100 Nippon Telegraph & Telephone Corporation -
(Communications) 884,800 730,972
10,000 Secom Company Limited - (Commercial Services) 683,287 624,449
10,000 Seven Eleven Japan Company Limited - (Retailers) 711,384 611,960
18,000 Sony Corporation - (Electronics) 1,658,292 1,254,922
------------ --------------
$ 6,978,322 $ 5,619,526
</TABLE>
88
<PAGE>
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998 International Equity Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
MEXICO - 0.97%
34,000 Grupo Elektra S.A. de CV GDR - (Retailers) $ 560,548 $ 136,000
22,000 Panamerican Beverages Incorporated Class A - (Beverages,
Food & Tobacco) 825,126 391,875
------------ --------------
$ 1,385,674 $ 527,875
NETHERLANDS - 8.58%
12,000 Equant NV - (Computer Software & Processing)+ $ 471,340 $ 552,000
30,000 Koninklijke Ahold NV - (Food Retailers) 838,424 895,986
16,000 Philips Electronics NV ADR - (Electronics) 1,266,411 854,000
13,000 Royal Dutch Petroleum - (Oil & Gas) 706,965 619,125
19,700 STMicroelectronics NV - (Electronics)+ 1,461,911 913,859
13,000 Unilever NV CVA - (Industrial - Diversified) 699,743 817,898
------------ --------------
$ 5,444,794 $ 4,652,868
NEW ZEALAND - 0.21%
81,900 Tranz Rail Holdings Limited - (Transportation) $ 456,063 $ 111,090
NORWAY - 0.72%
24,000 Petroleum Geo-Services ASA - (Oil & Gas)+ $ 767,927 $ 392,330
PORTUGAL - 2.22%
35,000 EDP - Electricidade de Portugal SA - (Electric Utilities) $ 666,251 $ 804,482
11,000 Portugal Telecom SA - (Communications) 496,891 399,936
------------ --------------
$ 1,163,142 $ 1,204,418
SINGAPORE - 0.90%
120,000 Development Bank of Singapore Limited (Foreign) -
(Financial Services) $ 711,755 $ 484,356
</TABLE>
89
<PAGE>
International Equity Fund PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
SPAIN - 5.03%
48,000 Banco Bilbao Vizcaya SA - (Banking) $ 486,018 $ 513,566
48,000 Banco Santander SA - (Banking) 738,726 741,634
23,000 Superdiplo SA - (Retailers) 597,556 598,212
24,000 Telefonica de Espana - (Communications) 758,704 875,093
------------ --------------
$ 2,581,004 $ 2,728,505
SWEDEN - 2.48%
30,000 OM Gruppen AB - (Financial Services) $ 705,108 $ 516,942
45,000 Telefonaktiebolaget LM Ericsson ADR - (Communications) 1,020,716 826,875
------------ --------------
$ 1,725,824 $ 1,343,817
SWITZERLAND - 4.63%
300 Nestle SA (Registered)- (Beverages, Food & Tobacco) $ 446,649 $ 596,831
800 Novartis AG (Registered)- (Pharmaceuticals) 1,259,737 1,282,370
3,231 UBS AG (Registered)- (Banking) 874,357 630,184
------------ --------------
$ 2,580,743 $ 2,509,385
TOTAL COMMON STOCKS $ 50,993,664 $ 47,751,945
PREFERRED STOCKS - 1.99%
BRAZIL - 0.94%
3,511,630 Telecommunicacoes de Sao Paulo SA - (Communications) $ 714,242 $ 509,538
GERMANY - 1.05%
1,200 SAP AG - Vorzug - (Computer Software & Processing) $ 319,602 $ 569,358
------------ --------------
TOTAL PREFERRED STOCKS $ 1,033,844 $ 1,078,896
</TABLE>
90
<PAGE>
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998 International Equity Fund
- ------------------------------------------------------------------------
<TABLE>
<C> <S> <C> <C> <C> <C>
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $52,027,510)* 90.08% $ 48,830,841
(Notes 1 and 3)
Other Assets and Liabilities, Net 9.92 5,378,506
------ --------------
TOTAL NET ASSETS 100.00% $ 54,209,347
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</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 $ 5,057,783
Gross Unrealized Depreciation (8,254,452)
--------------
NET UNREALIZED DEPRECIATION $ (3,196,669)
--------------
--------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
91
<PAGE>
Small Cap Fund PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - 93.00%
ADVERTISING - 3.48%
50,125 Ha-Lo Industries Incorporated+ $ 1,653,329 $ 1,466,156
42,000 TMP Worldwide Incorporated+ 1,163,985 1,378,125
------------ --------------
$ 2,817,314 $ 2,844,281
CAPITAL GOODS - 9.06%
9,250 Aspect Telecommunications Corporation+ $ 254,872 $ 222,000
31,591 B/E Aerospace Incorporated+ 967,173 695,002
26,600 Comverse Technology Incorporated+ 1,175,240 1,087,275
12,800 Concentric Network Corporation+ 321,829 268,800
11,500 Legato Systems Incorporated+ 514,943 590,812
29,000 Maxwell Technologies Incorporated+ 830,043 609,000
46,420 Media Arts Group Incorporated+ 874,109 423,583
17,419 Micrel Incorporated+ 533,589 461,604
32,000 Pacific Gateway Exchange+ 1,273,751 1,184,000
15,750 PMC - Sierra Incorporated+ 766,267 502,030
33,500 Siebel Systems Incorporated+ 819,529 961,030
27,000 Tekelec+ 630,219 411,750
------------ --------------
$ 8,961,564 $ 7,416,886
COMPUTER SOFTWARE - 4.66%
14,750 Aspen Technology Incorporated+ $ 392,488 $ 394,562
32,750 Cotelligent Group Incorporated+ 812,635 575,172
67,500 JDA Software Group Incorporated+ 1,127,571 932,344
19,000 Lycos Incorporated+ 602,799 642,438
20,500 Micromuse Incorporated+ 517,726 366,438
27,250 Software AG Systems Incorporated+ 662,830 463,250
45,250 Technisource Incorporated+ 498,310 441,188
------------ --------------
$ 4,614,359 $ 3,815,392
COMPUTER SYSTEMS - 1.17%
70,500 Power Integrations Incorporated+ $ 771,375 $ 956,156
</TABLE>
92
<PAGE>
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998 Small Cap Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
CONSUMER - BASIC - 9.47%
53,500 American Italian Pasta Company+ $ 1,813,330 $ 1,404,375
87,500 Capital Senior Living Corporation+ 1,164,970 896,875
35,250 Henry Schein Incorporated+ 1,463,946 1,224,938
36,450 Jones Pharma Incorporated 1,321,062 1,047,938
33,500 Kendle International Incorporated+ 809,125 1,097,125
28,500 Maxxim Medical Incorporated+ 814,675 732,094
52,641 Renal Care Group Incorporated+ 1,451,972 1,348,925
------------ --------------
$ 8,839,080 $ 7,752,270
CONSUMER - DISCRETIONARY - 10.21%
29,991 99 Cents Only Stores+ $ 1,139,064 $ 1,186,519
21,500 Amerisource Corporation Class A+ 1,239,106 1,170,405
16,500 CKE Restaurants Incorporated 583,600 490,875
9,250 CMG Information Services Incorporated+ 449,109 492,562
24,500 Computer Horizons Corporation+ 676,129 610,969
50,750 Cornell Corrections Incorporated+ 1,016,280 596,312
50,750 Equity Corporation International+ 1,142,895 1,141,875
38,609 Goody's Family Clothing Incorporated+ 991,728 463,308
50,750 Information Management Resources Incorporated+ 1,349,216 1,256,063
42,500 Maxwell Shoe Company Incorporated+ 754,250 504,688
36,750 United Road Services Incorporated+ 491,145 438,703
------------ --------------
$ 9,832,522 $ 8,352,279
ELECTRICAL EQUIPMENT - 1.75%
30,807 Gemstar International Group Limited+ $ 1,153,276 $ 1,428,675
ENERGY & RELATED - 2.30%
36,000 BJ Services Company+ $ 660,679 $ 585,000
29,750 Ensco International Incorporated 417,960 321,672
35,500 Marine Drilling Company Incorporated+ 822,984 408,250
34,000 Veritas DGC Incorporated+ 636,077 567,375
------------ --------------
$ 2,537,700 $ 1,882,297
</TABLE>
93
<PAGE>
Small Cap Fund PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
ENTERTAINMENT & LEISURE - 1.50%
69,118 Family Golf Centers Incorporated+ $ 1,724,266 $ 1,226,845
FINANCE & RELATED - 5.06%
28,500 Amresco Incorporated+ $ 925,375 $ 213,750
17,250 CMAC Investment Corporation 1,138,642 750,375
51,000 Community First Bankshares Incorporated 1,264,652 905,250
32,250 Golf Trust of America Incorporated 1,066,092 959,438
33,000 Kilroy Realty Corporation+ 898,522 759,000
4,750 SEI Investments Company 318,374 330,125
14,000 Telebanc Financial Corporation+ 204,605 225,750
------------ --------------
$ 5,816,262 $ 4,143,688
GENERAL BUSINESS & RELATED - 17.74%
41,500 Actuate Software Corporation+ $ 666,569 $ 440,938
39,302 Administaff Incorporated+ 1,588,053 1,255,208
20,000 Amdocs Limited+ 280,000 226,250
22,250 American Disposal Services+ 900,986 866,359
57,250 Avis Rent A Car Incorporated+ 1,833,397 1,234,453
16,250 Bindview Development Corporation+ 170,038 327,030
29,500 Cambridge Tech Partners Incorporated+ 873,323 658,219
33,239 Capstar Broadcasting Corporation Class A+ 586,200 513,127
40,178 Convergys Corporation+ 552,861 600,159
69,500 Daou Systems Incorporated+ 1,615,788 399,625
28,250 Emmis Broadcasting Corporation Class A+ 1,172,735 1,066,438
16,250 Excite Incorporated+ 557,224 663,203
13,000 International Integration Incorporated+ 156,000 203,125
45,000 Metamor Worldwide Incorporated+ 1,536,975 1,237,500
57,750 NBTY Incorporated+ 1,064,581 454,780
43,500 Parexel International Corporation+ 1,353,181 1,696,500
44,500 Smart Modular Technologies Incorporated+ 750,673 915,030
38,750 Staffmark Incorporated+ 1,320,496 707,188
27,000 Veterinary Centers of America+ 507,913 492,750
25,250 Wackenhut Corrections Corporation+ 699,993 560,234
------------ --------------
$ 18,186,986 $ 14,518,116
</TABLE>
94
<PAGE>
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998 Small Cap Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
HEALTHCARE - 1.55%
49,000 Covance Incorporated+ $ 1,113,059 $ 1,270,938
MANUFACTURING PROCESSING - 9.22%
23,000 Bon-Ton Stores Incorporated+ $ 352,475 $ 172,500
26,000 CSG Systems International Incorporated+ 1,088,951 1,150,500
28,000 CSK Auto Parts+ 654,882 637,000
45,562 FirstFed Financial Corporation+ 1,162,680 777,402
25,750 Metzler Group Incorporated+ 854,206 881,938
48,500 Ocular Sciences Incorporated+ 1,439,661 1,018,500
25,000 Pairgain Technologies Incorporated+ 485,301 203,125
38,750 Pharmacyclics Incorporated+ 909,519 644,219
26,700 Policy Management Systems Corporation+ 1,155,394 1,081,350
5,500 Sepracor Incorporated+ 256,478 361,625
24,038 Twinlab Corporation+ 919,135 615,974
------------ --------------
$ 9,278,682 $ 7,544,133
PHARMACEUTICALS - 2.22%
13,000 Coulter Pharmaceutical Incorporated+ $ 325,000 $ 323,375
27,500 Medicis Pharmaceutical Corporation+ 1,186,644 1,089,688
6,250 MedImmune Incorporated+ 282,559 404,688
------------ --------------
$ 1,794,203 $ 1,817,751
RETAIL & RELATED - 5.73%
45,000 Barbeques Galore Limited - Sponsored ADR+ $ 495,000 $ 202,500
16,250 Barnes & Noble Incorporated+ 437,705 438,750
34,750 Cost Plus Incorporated+ 1,105,908 925,219
57,750 Regis Corporation 1,662,053 1,819,125
50,842 Zale Corporation+ 1,523,576 1,302,826
------------ --------------
$ 5,224,242 $ 4,688,420
SHELTER & RELATED - 0.69%
27,000 Brookdale Living Communities Incorporated+ $ 659,310 $ 567,000
</TABLE>
95
<PAGE>
Small Cap Fund PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
TELECOMMUNICATIONS - 4.01%
49,000 Applied Micro Circuits Corporation+ $ 1,113,156 $ 728,875
14,250 L-3 Communications Corporation+ 344,738 565,547
22,000 Level One Communications Incorporated+ 702,047 442,750
31,950 Superior Telecom Incorporated 1,253,764 1,545,581
------------ --------------
$ 3,413,705 $ 3,282,753
TRANSPORTATION - 1.54%
34,000 Atlantic Coast Airlines Incorporated+ $ 1,009,066 $ 794,750
47,259 Midway Airlines Corporation+ 1,008,631 466,683
------------ --------------
$ 2,017,697 $ 1,261,433
UTILITIES - 1.64%
46,250 International Telecommunication Data Systems Incorporated+ $ 1,166,353 $ 1,341,250
------------ --------------
TOTAL COMMON STOCKS $ 89,921,955 $ 76,110,563
</TABLE>
96
<PAGE>
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998 Small Cap 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%
$ 2,085,000 Goldman Sachs Pooled Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 5.45 % 10/01/98 $ 2,085,000
201,000 HSBC Securities Incorporated Repurchase
Agreement - 102% Collateralized by U.S.
Government Securities 5.35 10/01/98 201,000
270,000 JP Morgan Securities Incorporated Repurchase
Agreement - 102% Collateralized by U.S.
Government Securities 5.30 10/01/98 270,000
879,000 Morgan Stanley & Company Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 5.35 10/01/98 879,000
--------------
TOTAL SHORT-TERM INSTRUMENTS $ 3,435,000
(Cost $3,435,000)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $93,356,955)* (Notes 1 and 3) 97.20% $ 79,545,563
Other Assets and Liabilities, Net 2.80 2,288,761
------ --------------
TOTAL NET ASSETS 100.00% $ 81,834,324
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</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 $ 3,808,650
Gross Unrealized Depreciation (17,620,042)
--------------
NET UNREALIZED DEPRECIATION $ (13,811,392)
--------------
--------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
97
<PAGE>
Strategic Growth Fund PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - 100.07%
ADVERTISING - 1.77%
80,000 Ha-Lo Industries Incorporated+ $ 1,940,303 $ 2,340,000
BIOTECHNOLOGY - 1.19%
42,500 Arterial Vascular Engineering Incorporated+ $ 1,836,875 $ 1,572,500
CAPITAL GOODS - 9.09%
15,000 Galileo International Incorporated $ 518,250 $ 566,250
70,000 Learning Company Incorporated+ 2,015,223 1,386,875
32,558 Micrel Incorporated+ 941,115 862,787
75,000 Pacific Gateway Exchange+ 2,889,376 2,775,000
55,000 Siebel Systems Incorporated+ 1,396,295 1,577,812
45,000 Sterling Commerce Incorporated+ 1,693,650 1,558,125
40,000 Tekelec+ 662,188 610,000
35,000 Tellabs Incorporated+ 1,643,125 1,393,438
10,000 Yahoo Incorporated+ 918,594 1,295,000
------------ --------------
$ 12,677,816 $ 12,025,287
COMPUTER SOFTWARE - 6.40%
110,000 Actuate Software Corporation+ $ 1,725,844 $ 1,168,750
85,000 Aris Corporation+ 2,160,802 1,657,500
70,000 Bindview Development Corporation+ 845,000 1,408,750
25,000 BMC Software Incorporated+ 1,238,125 1,501,563
200,000 Daou Systems Incorporated+ 3,816,209 1,150,000
60,000 Micromuse Incorporated+ 1,479,070 1,072,500
25,000 Quadramed Corporation+ 722,500 503,125
------------ --------------
$ 11,987,550 $ 8,462,188
COMPUTER SYSTEMS - 1.19%
116,157 Power Integrations Incorporated+ $ 1,074,323 $ 1,575,379
</TABLE>
98
<PAGE>
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998 Strategic Growth Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
CONSUMER - BASIC - 5.46%
50,000 Eclipsys Corporation+ $ 756,563 $ 1,143,750
60,000 Health Management Associates Incorporated Class A+ 1,141,100 1,095,000
65,000 Laser Vision Centers Incorporated+ 864,175 771,875
40,000 Pharmaceutical Product Development+ 940,500 1,120,000
50,000 Sunrise Assisted Living Incorporated+ 1,675,461 1,715,625
45,000 Theratech Incorporated+ 407,250 410,625
40,000 Total Renal Care Holdings Incorporated+ 1,437,004 960,000
------------ --------------
$ 7,222,053 $ 7,216,875
CONSUMER - DISCRETIONARY - 10.91%
24,000 99 Cents Only Stores+ $ 908,422 $ 949,500
45,000 Circuit City Stores Incorporated 1,801,450 1,499,062
40,000 CKE Restaurants Incorporated 1,558,628 1,190,000
10,000 Comair Holdings Incorporated 320,268 287,500
145,000 Cultural Access Worldwide Incorporated+ 1,717,813 661,563
135,000 Information Management Resources Incorporated+ 3,295,460 3,341,250
60,000 Profit Recovery Group Incorporated+ 1,530,938 1,875,000
50,000 Quintiles Transnational Corporation+ 2,497,209 2,187,500
40,000 Railworks Corporation+ 476,125 315,000
10,000 Republic Services Incorporated Class A+ 203,100 195,000
20,000 Ross Stores Incorporated 846,250 572,500
30,000 TJX Companies Incorporated 698,406 534,375
20,000 Tommy Hilfiger Corporation+ 1,335,709 820,000
------------ --------------
$ 17,189,778 $ 14,428,250
ELECTRICAL EQUIPMENT - 0.79%
15,000 Lexmark International Group Incorporated Class A+ $ 819,338 $ 1,039,688
</TABLE>
99
<PAGE>
Strategic Growth Fund PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
ENERGY & RELATED - 2.90%
50,000 Diamond Offshore Drilling Incorporated $ 1,344,925 $ 1,300,000
55,000 Friede Goldman International Incorporated+ 1,259,688 866,250
25,000 Global Industries Limited+ 303,125 289,063
80,000 R&B Falcon Corporation+ 1,016,300 960,000
25,000 Veritas DGC Incorporated+ 1,363,757 417,187
------------ --------------
$ 5,287,795 $ 3,832,500
ENTERTAINMENT & LEISURE - 1.34%
100,000 Family Golf Centers Incorporated+ $ 2,019,064 $ 1,775,000
FINANCE & RELATED - 11.78%
40,000 CCA Prison Realty Trust $ 812,812 $ 720,000
65,000 Charles Schwab Corporation 2,344,056 2,559,375
50,000 City National Corporation 1,858,832 1,565,625
75,000 Coinstar Incorporated+ 695,255 464,062
20,000 Conseco Incorporated 699,326 611,250
30,000 Countrywide Credit Industries Incorporated 1,294,175 1,248,750
32,500 Envoy Corporation+ 826,250 710,938
27,500 Guidant Corporation 1,942,577 2,041,875
10,000 Northern Trust Corporation 731,875 682,500
20,000 Providian Financial Corporation 1,625,763 1,696,250
35,000 SLM Holding Corporation 1,425,225 1,135,312
50,000 Sovereign Bancorp 862,500 665,625
13,000 Star Banc Corporation 884,780 859,625
15,000 Zions Bancorporation 680,625 612,188
------------ --------------
$ 16,684,051 $ 15,573,375
GENERAL BUSINESS & RELATED - 24.18%
140,000 Administaff Incorporated+ $ 5,089,688 $ 4,471,250
40,000 Applied Graphics Technologies Incorporated+ 520,000 500,000
60,817 Cambridge Tech Partners Incorporated+ 2,438,694 1,356,979
30,000 Capstar Broadcasting Corporation Class A+ 485,550 463,125
50,000 Carrier Access Corporation+ 691,249 893,750
</TABLE>
100
<PAGE>
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998 Strategic Growth Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
70,000 Chancelor Media Corporation+ $ 2,585,640 $ 2,336,250
75,000 Convergys Corporation+ 1,144,329 1,120,313
74,538 Cunningham Graphics International Incorporated+ 1,392,522 913,090
35,000 Excite Incorporated+ 879,600 1,428,438
75,000 Fvc.com Incorporated+ 740,625 703,125
60,000 Gartner Group Incorporated Class A+ 1,996,875 1,252,500
80,000 International Integration Incorporated+ 1,254,625 1,250,000
20,000 Intuit Incorporated+ 936,250 931,250
180,000 Metamor Worldwide Incorporated+ 5,710,564 4,950,000
50,000 Parexel International Corporation+ 1,477,832 1,950,000
70,000 Peoplesoft Incorporated+ 2,751,250 2,283,750
20,000 Phoenix International Limited+ 349,021 375,000
65,000 Preview Travel Incorporated+ 1,268,065 1,186,250
100,000 Smart Modular Technologies Incorporated+ 1,718,688 2,056,250
20,000 Syntel Incorporated+ 436,876 445,000
110,000 Teletech Holdings Incorporated+ 1,403,750 1,106,875
------------ --------------
$ 35,271,693 $ 31,973,195
HEALTHCARE - 0.57%
10,000 Access Health Incorporated+ $ 300,234 $ 368,750
125,000 Somnus Medical Technologies Incorporated+ 1,378,563 390,625
------------ --------------
$ 1,678,797 $ 759,375
MANUFACTURING PROCESSING - 11.68%
15,000 AES Corporation+ $ 525,701 $ 555,938
65,000 Centocor Incorporated+ 2,504,375 2,575,625
70,000 Compuware Corporation+ 3,392,358 4,121,250
100,000 Keane Incorporated Domestic Equity Securities+ 4,922,445 3,512,500
35,000 Ocular Sciences Incorporated+ 1,006,875 735,000
35,000 Office Depot Incorporated+ 1,113,463 785,312
45,000 Safeskin Corporation+ 1,738,928 1,420,312
</TABLE>
101
<PAGE>
Strategic Growth Fund PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
40,000 Weatherford International Incorporated+ $ 885,368 $ 865,000
25,000 Xilinx Incorporated+ 925,708 875,000
------------ --------------
$ 17,015,221 $ 15,445,937
MEDICAL EQUIPMENT & SUPPLIES - 1.12%
38,000 Biomatrix Incorporated+ $ 1,497,422 $ 1,482,000
PHARMACEUTICALS - 0.74%
15,000 MedImmune Incorporated+ $ 868,750 $ 971,250
RETAIL & RELATED - 2.22%
25,000 Barnes & Noble Incorporated+ $ 819,073 $ 675,000
30,000 Pacific Sunwear of California+ 673,438 667,500
45,000 Rite Aid Corporation 1,689,854 1,597,500
------------ --------------
$ 3,182,365 $ 2,940,000
SHELTER & RELATED - 1.76%
111,000 Brookdale Living Communities Incorporated+ $ 2,010,313 $ 2,331,000
TELECOMMUNICATIONS - 0.28%
15,000 Intermedia Communications Incorporated+ $ 404,688 $ 368,438
TRANSPORTATION - 2.19%
85,000 Atlantic Coast Airlines Incorporated+ $ 2,364,992 $ 1,986,875
91,917 Midway Airlines Corporation+ 1,622,804 907,680
------------ --------------
$ 3,987,796 $ 2,894,555
</TABLE>
102
<PAGE>
PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998 Strategic Growth Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
UTILITIES - 2.51%
10,000 Ascend Communication Incorporated+ $ 394,752 $ 455,000
20,000 Frontier Corporation 574,326 547,500
40,000 International Telecommunication Data Systems Incorporated+ 1,039,438 1,160,000
22,500 K N Energy Incorporated 1,170,000 1,153,125
------------ --------------
$ 3,178,516 $ 3,315,625
TOTAL COMMON STOCKS $147,834,507 $ 132,322,417
</TABLE>
103
<PAGE>
Strategic Growth Fund PORTFOLIO OF INVESTMENTS - SEPTEMBER 30, 1998
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS - 1.95%
REPURCHASE AGREEMENTS - 1.95%
$ 2,580,000 Goldman Sachs Pooled Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 5.45 % 10/01/98 $ 2,580,000
(Cost $2,580,000)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $150,414,507)* (Notes 1 and 3) 102.02% $ 134,902,417
Other Assets and Liabilities, Net (2.02) (2,670,265)
------ --------------
TOTAL NET ASSETS 100.00% $ 132,232,152
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</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 $ 8,064,285
Gross Unrealized Depreciation (23,576,375)
--------------
NET UNREALIZED DEPRECIATION $ (15,512,090)
--------------
--------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
104
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
105
<PAGE>
Equity Funds STATEMENT OF ASSETS AND LIABILITIES - SEPTEMBER 30, 1998
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
DIVERSIFIED
EQUITY
BALANCED INCOME
FUND FUND
<S> <C> <C>
ASSETS
INVESTMENTS:
In securities, at market value (see
cost below) $78,978,062 $232,492,397
Cash 7,226 11,360
Cash denominated in foreign currencies
(cost $785,274) 0 0
RECEIVABLES:
Dividends and interest 497,321 931,876
Recoverable foreign withholding taxes 0 0
Fund shares sold 17,000 50,029
Investment securities sold 1,059,258 889,420
Organization expenses, net of
amortization 26,594 4,574
Prepaid expenses 16,679 11,545
TOTAL ASSETS 80,602,140 234,391,201
LIABILITIES
Variation margin on futures contracts 0 0
Payables:
Investment securities purchased 1,973,750 545,226
Distribution to shareholders 590,950 1,271,100
Fund shares redeemed 45,036 68,152
Due to distributor (Note 2) 89,055 137,535
Due to adviser (Note 2) 64,317 196,382
Other 16,659 33,147
TOTAL LIABILITIES 2,779,767 2,251,542
TOTAL NET ASSETS $77,822,373 $232,139,659
NET ASSETS CONSIST OF:
Paid-in capital $59,163,709 $188,444,526
Undistributed net investment income
(loss) 0 0
Undistributed net realized gain (loss)
on investments and foreign currency
transactions 8,244,830 30,628,663
Net unrealized appreciation
(depreciation) of investments and
translation of assets and
liabilities in foreign currencies 10,413,834 13,066,470
Net unrealized appreciation
(depreciation) of futures 0 0
TOTAL NET ASSETS $77,822,373 $232,139,659
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE
Net assets - Class A $30,832,772 $170,743,856
Shares outstanding - Class A 2,521,575 10,418,569
Net asset value per share - Class A $ 12.23 $ 16.39
Maximum offering price per share - Class
A $ 12.91(1) $ 17.30(1)
Net assets - Class B $10,516,173 $ 61,395,803
Shares outstanding - Class B 951,157 3,998,724
Net asset value and offering price per
share - Class B $ 11.06 $ 15.35
Net assets - Class C N/A N/A
Shares outstanding - Class C N/A N/A
Net asset value and offering price per
share - Class C N/A N/A
Net assets - Institutional Class $36,473,428 N/A
Shares outstanding - Institutional Class 2,992,129 N/A
Net asset value and offering price per
share - Institutional Class $ 12.19 N/A
INVESTMENT AT COST (NOTE 3) $68,564,228 $219,425,927
- -------------------------------------------------------------------------
</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) MAXIMUM OFFERING PRICE IS COMPUTED AS 100/95.5 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.
106
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES - SEPTEMBER 30, 1998 Equity Funds
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY EQUITY INTERNATIONAL
INDEX VALUE GROWTH EQUITY SMALL CAP
FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C>
ASSETS
INVESTMENTS:
In securities, at market value (see
cost below) $537,312,944 $281,736,477 $367,556,446 $48,830,841 $79,545,563
Cash 5,790 12,674 18,592 5,940,779 6,752
Cash denominated in foreign currencies
(cost $785,274) 0 0 0 781,064 0
RECEIVABLES:
Dividends and interest 685,711 560,697 501,946 60,758 29,164
Recoverable foreign withholding taxes 0 0 0 47,159 0
Fund shares sold 144,239 44,094 24,784 54,781 46,719
Investment securities sold 0 3,794,971 5,042,009 810,230 2,799,048
Organization expenses, net of
amortization 0 25,010 4,241 43,651 31,260
Prepaid expenses 12,104 113,496 31,876 10,960 5,775
TOTAL ASSETS 538,160,788 286,287,419 373,179,894 56,580,223 82,464,281
LIABILITIES
Variation margin on futures contracts 157,500 0 0 0 0
Payables:
Investment securities purchased 0 0 3,770,867 1,990,262 407,583
Distribution to shareholders 1,239,846 951,987 366,555 0 0
Fund shares redeemed 84,319 81,239 17,573 76,416 15,900
Due to distributor (Note 2) 29,171 132,117 209,613 171,831 32,770
Due to adviser (Note 2) 282,807 217,638 301,996 101,629 46,293
Other 90,046 26,907 76,624 30,738 127,411
TOTAL LIABILITIES 1,883,689 1,409,888 4,743,228 2,370,876 629,957
TOTAL NET ASSETS $536,277,099 $284,877,531 $368,436,666 $54,209,347 $81,834,324
NET ASSETS CONSIST OF:
Paid-in capital $205,079,428 $214,611,776 $278,041,701 $58,752,817 $103,539,904
Undistributed net investment income
(loss) (376) 0 (81,686) (92,417) (267,578)
Undistributed net realized gain (loss)
on investments and foreign currency
transactions 22,390,607 24,630,173 56,447,254 (1,259,077) (7,626,610)
Net unrealized appreciation
(depreciation) of investments and
translation of assets and
liabilities in foreign currencies 308,889,190 45,635,582 34,029,397 (3,191,976) (13,811,392)
Net unrealized appreciation
(depreciation) of futures (81,750) 0 0 0 0
TOTAL NET ASSETS $536,277,099 $284,877,531 $368,436,666 $54,209,347 $81,834,324
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE
Net assets - Class A $518,778,041 $ 43,679,435 $305,308,849 $23,850,784 $10,899,269
Shares outstanding - Class A 7,989,580 2,925,643 14,908,126 2,547,908 610,122
Net asset value per share - Class A $ 64.93 $ 14.93 $ 20.48 $ 9.36 $ 17.86
Maximum offering price per share - Class
A $ 67.99(2) $ 15.76(1) $ 21.61(1) $ 9.88(1) $ 18.85(1)
Net assets - Class B $ 17,499,058 $ 73,342,697 $ 48,772,420 $30,061,920 $13,071,086
Shares outstanding - Class B 269,101 5,997,579 3,356,339 3,232,061 741,179
Net asset value and offering price per
share - Class B $ 65.03 $ 12.23 $ 14.53 $ 9.30 $ 17.64
Net assets - Class C N/A $ 1,239,445 N/A $ 296,643 $ 1,425,740
Shares outstanding - Class C N/A 101,384 N/A $ 31,899 80,873
Net asset value and offering price per
share - Class C N/A $ 12.23 N/A $ 9.30 $ 17.63
Net assets - Institutional Class N/A $166,615,954 $ 14,355,397 N/A $56,438,229
Shares outstanding - Institutional Class N/A 11,166,492 597,795 N/A 3,131,665
Net asset value and offering price per
share - Institutional Class N/A $ 14.92 $ 24.01 N/A $ 18.02
INVESTMENT AT COST (NOTE 3) $228,423,754 $236,100,895 $333,527,049 $52,027,510 $93,356,955
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
GROWTH
FUND
<S> <C>
ASSETS
INVESTMENTS:
In securities, at market value (see
cost below) $134,902,417
Cash 6,052
Cash denominated in foreign currencies
(cost $785,274) 0
RECEIVABLES:
Dividends and interest 22,266
Recoverable foreign withholding taxes 0
Fund shares sold 18,635
Investment securities sold 5,214,218
Organization expenses, net of
amortization 0
Prepaid expenses 8,457
TOTAL ASSETS 140,172,045
LIABILITIES
Variation margin on futures contracts 0
Payables:
Investment securities purchased 7,446,140
Distribution to shareholders 0
Fund shares redeemed 201,947
Due to distributor (Note 2) 96,319
Due to adviser (Note 2) 112,079
Other 83,408
TOTAL LIABILITIES 7,939,893
TOTAL NET ASSETS $132,232,152
NET ASSETS CONSIST OF:
Paid-in capital $161,675,616
Undistributed net investment income
(loss) (1,571,853)
Undistributed net realized gain (loss)
on investments and foreign currency
transactions (12,359,521)
Net unrealized appreciation
(depreciation) of investments and
translation of assets and
liabilities in foreign currencies (15,512,090)
Net unrealized appreciation
(depreciation) of futures 0
TOTAL NET ASSETS $132,232,152
COMPUTATION OF NET ASSET VALUE AND OFFER
Net assets - Class A $ 94,388,065
Shares outstanding - Class A 5,680,394
Net asset value per share - Class A $ 16.62
Maximum offering price per share - Class
A $ 17.54(1)
Net assets - Class B $ 20,336,734
Shares outstanding - Class B 1,009,055
Net asset value and offering price per
share - Class B $ 20.15
Net assets - Class C $ 17,507,353
Shares outstanding - Class C 869,468
Net asset value and offering price per
share - Class C $ 20.14
Net assets - Institutional Class N/A
Shares outstanding - Institutional Class N/A
Net asset value and offering price per
share - Institutional Class N/A
INVESTMENT AT COST (NOTE 3) $150,414,507
- ---------------------------------------------------------------------
</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) MAXIMUM OFFERING PRICE IS COMPUTED AS 100/95.5 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.
107
<PAGE>
Equity Funds STATEMENTS OF OPERATIONS - SEPTEMBER 30, 1998
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED FUND
---------------------------
FOR THE SIX
MONTHS
ENDED FOR THE
SEPT. 30, YEAR ENDED
1998 MARCH 31, 1998
<S> <C> <C>
INVESTMENT INCOME
Dividends (net of foreign tax
withholding of $30,187 for the
International Equity Fund) $ 603,782 $ 1,051,880
Interest 1,181,256 2,698,526
TOTAL INVESTMENT INCOME (LOSS) 1,785,038 3,750,406
EXPENSES (NOTE 2)
Advisory fees 272,110 558,729
Administration fees 31,746 57,317
Custody fees 7,574 15,551
Shareholder servicing fees 113,379 232,760
Portfolio accounting fees 38,708 78,934
Transfer agency fees 44,800 86,476
Distribution fees 41,400 64,554
Organization costs 4,544 14,178
Legal and audit fees 15,862 28,037
Registration fees 20,558 28,448
Directors' fees 2,242 4,704
Shareholder reports 15,041 29,209
Other 9,385 33,760
TOTAL EXPENSES 617,349 1,232,657
Less:
Waived fees and reimbursed expenses (26,647) (237,225)
Net Expenses 590,702 995,432
NET INVESTMENT INCOME (LOSS) 1,194,336 2,754,974
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain (loss) from:
Investments 1,325,963 12,381,862
Foreign currency transactions 0 0
Net change in unrealized appreciation
(depreciation) of:
Investments (8,868,973) 7,449,221
Translation of assets and
liabilities in foreign currencies 0 0
Futures 0 0
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS (7,543,010) 19,831,083
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $(6,348,674) $22,586,057
- ------------------------------------------------------------------------
</TABLE>
(1) INCLUDES AMOUNTS ALLOCATED FROM THE MASTER PORTFOLIO PRIOR TO DECEMBER 15,
1997.
The accompanying notes are an integral part of these financial statements.
108
<PAGE>
STATEMENTS OF OPERATIONS - SEPTEMBER 30, 1998 Equity Funds
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
DIVERSIFIED EQUITY INCOME EQUITY VALUE
FUND EQUITY INDEX FUND (1) FUND
---------------------------- ------------------------------ ------------
FOR THE SIX FOR THE SIX FOR THE SIX
MONTHS ENDED FOR THE MONTHS ENDED FOR THE MONTHS ENDED
SEPT. 30, YEAR ENDED SEPT. 30, YEAR ENDED SEPT. 30,
1998 MARCH 31, 1998 1998 MARCH 31, 1998 1998
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends (net of foreign tax
withholding of $30,187 for the
International Equity Fund) $ 3,627,785 $ 6,086,085 $ 4,417,583 $ 8,272,213 $ 3,358,432
Interest 304,334 609,752 396,094 160,555 270,550
TOTAL INVESTMENT INCOME (LOSS) 3,932,119 6,695,837 4,813,677 8,432,768 3,628,982
EXPENSES (NOTE 2)
Advisory fees 676,905 1,198,624 731,501 1,926,520 843,996
Administration fees 94,766 148,167 204,820 306,855 118,160
Custody fees 28,125 50,571 0 0 28,190
Shareholder servicing fees 406,143 718,959 731,502 1,412,899 421,998
Portfolio accounting fees 57,909 109,428 89,353 49,394 64,592
Transfer agency fees 189,533 335,515 409,641 695,928 153,870
Distribution fees 249,670 463,795 44,042 171,564 303,577
Organization costs 1,304 11,292 0 0 4,273
Legal and audit fees 27,862 27,948 18,642 44,214 15,862
Registration fees 19,052 35,433 25,560 44,050 29,080
Directors' fees 2,242 4,858 2,242 4,218 2,242
Shareholder reports 51,486 65,766 20,055 52,714 20,055
Other 11,129 19,526 7,535 25,231 5,514
TOTAL EXPENSES 1,816,126 3,189,882 2,284,893 4,733,587 2,011,409
Less:
Waived fees and reimbursed expenses (199) (150,357) (163,280) (288,393) (4,770)
Net Expenses 1,815,927 3,039,525 2,121,613 4,445,194 2,006,639
NET INVESTMENT INCOME (LOSS) 2,116,192 3,656,312 2,692,064 3,987,574 1,622,343
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain (loss) from:
Investments 10,658,254 26,201,980 11,326,049 20,385,976 (1,310,567)
Foreign currency transactions 0 0 0 0 0
Net change in unrealized appreciation
(depreciation) of:
Investments (49,736,820) 47,022,615 (56,175,420) 162,925,340 (63,146,441)
Translation of assets and
liabilities in foreign currencies 0 0 0 0 0
Futures 0 0 (207,200) 125,450 0
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS (39,078,566) 73,224,595 (45,056,571) 183,436,766 (64,457,008)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $(36,962,374) $76,880,907 $(42,364,507) $ 187,424,340 $(62,834,665)
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
FOR THE
YEAR ENDED
MARCH 31, 1998
<S> <C>
INVESTMENT INCOME
Dividends (net of foreign tax
withholding of $30,187 for the
International Equity Fund) $ 4,931,884
Interest 986,120
TOTAL INVESTMENT INCOME (LOSS) 5,918,004
EXPENSES (NOTE 2)
Advisory fees 1,382,295
Administration fees 170,979
Custody fees 46,169
Shareholder servicing fees 691,148
Portfolio accounting fees 116,948
Transfer agency fees 217,027
Distribution fees 251,030
Organization costs 13,333
Legal and audit fees 33,596
Registration fees 36,401
Directors' fees 4,735
Shareholder reports 31,893
Other 23,658
TOTAL EXPENSES 3,019,212
Less:
Waived fees and reimbursed expenses (95,512)
Net Expenses 2,923,700
NET INVESTMENT INCOME (LOSS) 2,994,304
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain (loss) from:
Investments 43,722,211
Foreign currency transactions 0
Net change in unrealized appreciation
(depreciation) of:
Investments 49,101,105
Translation of assets and
liabilities in foreign currencies 0
Futures 0
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS 92,823,316
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $95,817,620
- --------------------------------------------------------------------
</TABLE>
(1) INCLUDES AMOUNTS ALLOCATED FROM THE MASTER PORTFOLIO PRIOR TO DECEMBER 15,
1997.
(2) FOR THE PERIOD FROM SEPTEMBER 24, 1997 (COMMENCEMENT OF OPERATIONS) TO
MARCH 31, 1998.
The accompanying notes are an integral part of these financial statements.
109
<PAGE>
Equity Funds STATEMENTS OF OPERATIONS - SEPTEMBER 30, 1998
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH FUND
-----------------------------
FOR THE SIX
MONTHS ENDED FOR THE
SEPT. 30, YEAR ENDED
1998 MARCH 31, 1998
<S> <C> <C>
INVESTMENT INCOME
Dividends (net of foreign tax
withholding of $30,187 for the
International Equity Fund) $ 2,909,098 $ 5,386,703
Interest 246,334 993,157
TOTAL INVESTMENT INCOME (LOSS) 3,155,432 6,379,860
EXPENSES (NOTE 2)
Advisory fees 969,698 1,798,109
Administration fees 147,762 238,706
Custody fees 35,254 68,468
Shareholder servicing fees 629,096 1,150,658
Portfolio accounting fees 73,051 138,969
Transfer agency fees 288,851 525,161
Distribution fees 201,166 435,733
Organization costs 1,354 31,337
Legal and audit fees 17,548 27,884
Registration fees 31,086 53,828
Directors' fees 2,242 4,858
Shareholder reports 55,146 126,493
Other 8,036 20,183
TOTAL EXPENSES 2,460,290 4,620,387
Less:
Waived fees and reimbursed expenses (2,291) (44,284)
Net Expenses 2,457,999 4,576,103
NET INVESTMENT INCOME (LOSS) 697,433 1,803,757
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain (loss) from:
Investments 14,581,218 88,713,098
Foreign currency transactions 0 0
Net change in unrealized appreciation
(depreciation) of:
Investments (43,668,473) 23,366,043
Translation of assets and
liabilities in foreign currencies 0 0
Futures 0 0
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS (29,087,255) 112,079,141
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $(28,389,822) $113,882,898
- --------------------------------------------------------------------------
</TABLE>
(1) INCLUDES AMOUNTS ALLOCATED FROM THE MASTER PORTFOLIO PRIOR TO DECEMBER 15,
1997.
(2) FOR THE PERIOD FROM SEPTEMBER 24, 1997 (COMMENCEMENT OF OPERATIONS) TO
MARCH 31, 1998.
The accompanying notes are an integral part of these financial statements.
110
<PAGE>
STATEMENTS OF OPERATIONS - SEPTEMBER 30, 1998 Equity Funds
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
STRATEGIC
GROWTH
INTERNATIONAL EQUITY SMALL CAP FUND (1) FUND (1)
--------------------------- ---------------------------- ------------
FOR THE SIX FOR THE FOR THE SIX FOR THE NINE
MONTHS ENDED PERIOD MONTHS ENDED FOR THE MONTHS ENDED
SEPT. 30, ENDED SEPT. 30, YEAR ENDED SEPT. 30,
1998 MARCH 31, 1998 (2) 1998 MARCH 31, 1998 1998
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends (net of foreign tax
withholding of $30,187 for the
International Equity Fund) $ 472,748 $ 305,762 $ 101,745 $ 121,924 $ 291,948
Interest 114,344 222,992 171,921 391,013 238,790
TOTAL INVESTMENT INCOME (LOSS) 587,092 528,754 273,666 512,937 530,738
EXPENSES (NOTE 2)
Advisory fees 322,140 257,439 298,707 397,069 724,409
Administration fees 31,788 22,395 34,849 41,139 99,526
Custody fees 37,381 48,209 23,856 23,391 47,381
Shareholder servicing fees 79,470 63,265 124,461 165,077 362,204
Portfolio accounting fees 31,854 30,249 40,061 67,282 74,973
Transfer agency fees 44,503 35,428 42,741 52,991 202,834
Distribution fees 145,788 116,955 73,646 69,222 410,426
Organization costs 10,027 10,301 5,602 16,062 3,777
Legal and audit fees 25,387 21,116 11,020 42,175 27,800
Registration fees 20,055 20,603 33,593 36,732 49,594
Directors' fees 2,306 2,369 2,242 4,846 3,344
Shareholder reports 15,041 15,452 9,026 15,075 77,794
Other 1,504 1,546 8,891 12,101 23,594
TOTAL EXPENSES 767,244 645,327 708,695 943,162 2,107,656
Less:
Waived fees and reimbursed expenses (96,382) (111,696) (167,451) (307,888) (5,065)
Net Expenses 670,862 533,631 541,244 635,274 2,102,591
NET INVESTMENT INCOME (LOSS) (83,770) (4,877) (267,578) (122,337) (1,571,853)
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain (loss) from:
Investments (506,391) (680,014) (10,366,907) 10,463,062 (6,336,849)
Foreign currency transactions (60,276) (12,396) 0 0 0
Net change in unrealized appreciation
(depreciation) of:
Investments (9,565,044) 6,368,376 (22,514,409) 12,044,947 (17,512,709)
Translation of assets and
liabilities in foreign currencies 3,787 905 0 0 0
Futures 0 0 0 0 0
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS (10,127,924) 5,676,871 (32,881,316) 22,508,009 (23,849,558)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $(10,211,694) $5,671,994 $(33,148,894) $22,385,672 $(25,421,411)
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
FOR THE
YEAR ENDED
DEC. 31,
1997
<S> <C>
INVESTMENT INCOME
Dividends (net of foreign tax
withholding of $30,187 for the
International Equity Fund) $ 173,507
Interest 200,416
TOTAL INVESTMENT INCOME (LOSS) 373,923
EXPENSES (NOTE 2)
Advisory fees 853,705
Administration fees 162,175
Custody fees 49,596
Shareholder servicing fees 133,881
Portfolio accounting fees 80,941
Transfer agency fees 229,667
Distribution fees 652,975
Organization costs 15,455
Legal and audit fees 40,980
Registration fees 52,848
Directors' fees 4,198
Shareholder reports 71,126
Other 9,854
TOTAL EXPENSES 2,357,401
Less:
Waived fees and reimbursed expenses (6,776)
Net Expenses 2,350,625
NET INVESTMENT INCOME (LOSS) (1,976,702)
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain (loss) from:
Investments 27,263,706
Foreign currency transactions 0
Net change in unrealized appreciation
(depreciation) of:
Investments (4,721,950)
Translation of assets and
liabilities in foreign currencies 0
Futures 0
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS 22,541,756
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $20,565,054
- --------------------------------------------------------------------------------
</TABLE>
(1) INCLUDES AMOUNTS ALLOCATED FROM THE MASTER PORTFOLIO PRIOR TO DECEMBER 15,
1997.
(2) FOR THE PERIOD FROM SEPTEMBER 24, 1997 (COMMENCEMENT OF OPERATIONS) TO
MARCH 31, 1998.
The accompanying notes are an integral part of these financial statements.
111
<PAGE>
Equity Funds STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED FUND
------------------------------------------------
FOR THE SIX FOR THE FOR THE SIX
MONTHS ENDED YEAR ENDED MONTHS ENDED
SEPT. 30, MARCH 31, MARCH 31,
1998 1998 1997
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) $ 1,194,336 $ 2,754,974 $ 1,585,315
Net realized gain (loss) on sale of
investments and foreign currency
transactions 1,325,963 12,381,862 5,673,146
Net unrealized appreciation
(depreciation) of investments and
translation of assets and liabilities
in foreign currencies (8,868,973) 7,449,221 957,295
Net unrealized appreciation
(depreciation) of futures 0 0 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (6,348,674) 22,586,057 8,215,756
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (446,512) (995,417) (524,249)
CLASS B (104,689) (87,737) (785)
CLASS C N/A N/A N/A
INSTITUTIONAL CLASS (643,135) (1,671,820) (1,028,637)
From net realized gain on sale of
investments
CLASS A 0 (3,617,920) (505,037)
CLASS B 0 (567,992) (331)
CLASS C N/A N/A N/A
INSTITUTIONAL CLASS 0 (5,890,499) (1,013,783)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 1,780,827 5,461,758 1,158,984
Reinvestment of dividends - Class A 428,485 4,463,706 812,743
Cost of shares redeemed - Class A (3,594,469) (10,215,448) (4,580,742)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A (1,385,157) (289,984) (2,609,015)
Proceeds from shares sold - Class B 2,843,163 8,275,611 304,255
Reinvestment of dividends - Class B 83,450 614,957 452
Cost of shares redeemed - Class B (669,280) (357,160) (1,579)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B 2,257,333 8,533,408 303,128
Proceeds from shares sold - Class C N/A N/A N/A
Reinvestment of dividends - Class C N/A N/A N/A
Cost of shares redeemed - Class C N/A N/A N/A
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS C N/A N/A N/A
Proceeds from shares sold -
Institutional Class 2,656,634 6,665,487 3,125,636
Reinvestment of dividends -
Institutional Class 634,353 7,260,006 1,651,464
Cost of shares redeemed -
Institutional Class (14,135,771) (23,971,016) (25,197,171)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS (10,844,784) (10,045,523) (20,420,071)
INCREASE (DECREASE) IN NET ASSETS (17,515,618) 7,952,573 (17,583,024)
NET ASSETS:
Beginning net assets 95,337,991 87,385,418 104,968,442
ENDING NET ASSETS $ 77,822,373 $ 95,337,991 $ 87,385,418
- ---------------------------------------------------------------------------------------------
</TABLE>
(1) THIS CLASS OF SHARES COMMENCED OPERATIONS ON FEBRUARY 17, 1998.
The accompanying notes are an integral part of these financial statements.
112
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS Equity Funds
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
DIVERSIFIED EQUITY INCOME FUND EQUITY INDEX
---------------------------------------------- -----------------------------
FOR THE SIX FOR THE FOR THE SIX FOR THE SIX FOR THE
MONTHS ENDED YEAR ENDED MONTHS ENDED MONTHS ENDED YEAR ENDED
SEPT. 30, MARCH 31, MARCH 31, SEPT. 30, MARCH 31,
1998 1998 1997 1998 1998
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) $ 2,116,192 $ 3,656,312 $ 1,611,261 $ 2,692,064 $ 3,987,574
Net realized gain (loss) on sale of
investments and foreign currency
transactions 10,658,254 26,201,980 3,721,967 11,326,049 20,385,976
Net unrealized appreciation
(depreciation) of investments and
translation of assets and liabilities
in foreign currencies (49,736,820) 47,022,615 2,318,759 (56,175,420) 162,925,340
Net unrealized appreciation
(depreciation) of futures 0 0 0 (207,200) 125,450
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (36,962,374) 76,880,907 7,651,987 (42,364,507) 187,424,340
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (1,747,341) (3,113,133) (1,444,267) (2,683,558) (3,987,950)
CLASS B (368,851) (543,179) (166,994) (8,506) 0(1)
CLASS C N/A N/A N/A N/A N/A
INSTITUTIONAL CLASS N/A N/A N/A N/A N/A
From net realized gain on sale of
investments
CLASS A 0 (7,465,528) (8,166,226) 0 (12,945,620)
CLASS B 0 (2,354,505) (1,285,280) 0 0(1)
CLASS C N/A N/A N/A N/A N/A
INSTITUTIONAL CLASS N/A N/A N/A N/A N/A
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 8,850,203 64,556,264 35,798,695 34,673,947 72,404,299
Reinvestment of dividends - Class A 1,453,903 10,009,274 9,310,171 2,520,476 16,700,188
Cost of shares redeemed - Class A (34,097,957) (55,531,440) (22,697,752) (53,713,482) (87,341,942)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A (23,793,851) 19,034,098 22,411,114 (16,519,059) 1,762,545
Proceeds from shares sold - Class B 5,932,196 30,400,244 17,492,675 16,483,152 3,707,259(1)
Reinvestment of dividends - Class B 267,182 2,742,890 1,383,252 1,719 0(1)
Cost of shares redeemed - Class B (6,463,251) (7,439,195) (2,435,546) (1,324,968) (6,364)(1)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B (263,873) 25,703,939 16,440,381 15,159,903 3,700,895(1)
Proceeds from shares sold - Class C N/A N/A N/A N/A N/A
Reinvestment of dividends - Class C N/A N/A N/A N/A N/A
Cost of shares redeemed - Class C N/A N/A N/A N/A N/A
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS C N/A N/A N/A N/A N/A
Proceeds from shares sold -
Institutional Class N/A N/A N/A N/A N/A
Reinvestment of dividends -
Institutional Class N/A N/A N/A N/A N/A
Cost of shares redeemed -
Institutional Class N/A N/A N/A N/A N/A
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS N/A N/A N/A N/A N/A
INCREASE (DECREASE) IN NET ASSETS (63,136,290) 108,142,599 35,440,715 (46,415,727) 175,954,210
NET ASSETS:
Beginning net assets 295,275,949 187,133,350 151,692,635 582,692,826 406,738,616
ENDING NET ASSETS $232,139,659 $295,275,949 $187,133,350 $536,277,099 $582,692,826
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
FOR THE SIX
MONTHS ENDED
MARCH 31,
1997
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) $ 2,055,606
Net realized gain (loss) on sale of
investments and foreign currency
transactions 4,668,147
Net unrealized appreciation
(depreciation) of investments and
translation of assets and liabilities
in foreign currencies 32,614,123
Net unrealized appreciation
(depreciation) of futures 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 39,337,876
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (2,055,606)
CLASS B N/A
CLASS C N/A
INSTITUTIONAL CLASS N/A
From net realized gain on sale of
investments
CLASS A (9,940,251)
CLASS B N/A
CLASS C N/A
INSTITUTIONAL CLASS N/A
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 29,911,449
Reinvestment of dividends - Class A 12,250,397
Cost of shares redeemed - Class A (33,204,510)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A 8,957,336
Proceeds from shares sold - Class B N/A
Reinvestment of dividends - Class B N/A
Cost of shares redeemed - Class B N/A
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B N/A
Proceeds from shares sold - Class C N/A
Reinvestment of dividends - Class C N/A
Cost of shares redeemed - Class C N/A
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS C N/A
Proceeds from shares sold -
Institutional Class N/A
Reinvestment of dividends -
Institutional Class N/A
Cost of shares redeemed -
Institutional Class N/A
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS N/A
INCREASE (DECREASE) IN NET ASSETS 36,299,355
NET ASSETS:
Beginning net assets 370,439,261
ENDING NET ASSETS $406,738,616
- ---------------------------------------------------------------------
</TABLE>
(1) THIS CLASS OF SHARES COMMENCED OPERATIONS ON FEBRUARY 17, 1998.
The accompanying notes are an integral part of these financial statements.
113
<PAGE>
Equity Funds STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY VALUE FUND
----------------------------------------------
FOR THE SIX FOR THE FOR THE SIX
MONTHS ENDED YEAR ENDED MONTHS ENDED
SEPT. 30, MARCH 31, MARCH 31,
1998 1998 1997
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) $ 1,622,343 $ 2,994,304 $ 1,380,130
Net realized gain (loss) on sale of
investments and foreign currency
transactions (1,310,567) 43,722,211 15,163,623
Net unrealized appreciation
(depreciation) of investments and
translation of assets and liabilities
in foreign currencies (63,146,441) 49,101,105 15,837,356
Net unrealized appreciation
(depreciation) of futures 0 0 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (62,834,665) 95,817,620 32,381,109
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (273,664) (393,180) (111,000)
CLASS B (140,370) (144,346) (1,028)
CLASS C (1,933)(1) N/A N/A
INSTITUTIONAL CLASS (1,206,376) (2,611,274) (1,113,606)
From net realized gain on sale of
investments
CLASS A 0 (4,313,021) (165,769)
CLASS B 0 (4,087,973) (864)
CLASS C 0(1) N/A N/A
INSTITUTIONAL CLASS 0 (22,663,930) (1,716,939)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 8,134,009 29,437,145 3,128,244
Reinvestment of dividends - Class A 213,784 4,317,886 222,206
Cost of shares redeemed - Class A (7,270,482) (9,521,581) (3,807,382)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A 1,077,311 24,233,450 (456,932)
Proceeds from shares sold - Class B 22,457,036 62,552,854 2,636,307
Reinvestment of dividends - Class B 79,373 4,158,508 973
Cost of shares redeemed - Class B (6,080,120) (2,617,789) (10,349)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B 16,456,289 64,093,573 2,626,931
Proceeds from shares sold - Class C 1,535,006(1) N/A N/A
Reinvestment of dividends - Class C 134(1) N/A N/A
Cost of shares redeemed - Class C (72,905)(1) N/A N/A
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS C 1,462,235(1) N/A N/A
Proceeds from shares sold -
Institutional Class 9,738,442 22,877,852 13,701,832
Reinvestment of dividends -
Institutional Class 516,248 20,970,848 1,877,441
Cost of shares redeemed -
Institutional Class (33,188,018) (57,008,149) (55,593,181)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS (22,933,328) (13,159,449) (40,013,908)
INCREASE (DECREASE) IN NET ASSETS (68,394,501) 136,771,470 (8,572,006)
NET ASSETS:
Beginning net assets 353,272,032 216,500,562 225,072,568
ENDING NET ASSETS $284,877,531 $353,272,032 $216,500,562
- -------------------------------------------------------------------------------------------
</TABLE>
(1) THIS CLASS OF SHARES COMMENCED OPERATIONS ON APRIL 1, 1998.
The accompanying notes are an integral part of these financial statements.
114
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS Equity Funds
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND
-----------------------------
FROM SEPT
GROWTH FUND 24, 1997
---------------------------------------------- (COMMENCEMENT
OF
FOR THE SIX FOR THE FOR THE SIX FOR THE SIX OPERATIONS)
MONTHS ENDED YEAR ENDED MONTHS ENDED MONTHS ENDED TO
SEPT. 30, MARCH 31, MARCH 31, SEPT. 30, MARCH 31,
1998 1998 1997 1998 1998
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) $ 697,433 $ 1,803,757 $ 993,606 $ (83,770) $ (4,877)
Net realized gain (loss) on sale of
investments and foreign currency
transactions 14,581,218 88,713,098 10,102,690 (566,667) (692,410)
Net unrealized appreciation
(depreciation) of investments and
translation of assets and liabilities
in foreign currencies (43,668,473) 23,366,043 11,068,414 (9,561,257) 6,369,281
Net unrealized appreciation
(depreciation) of futures 0 0 0 0 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (28,389,822) 113,882,898 22,164,710 (10,211,694) 5,671,994
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (736,408) (1,725,390) (921,552) 0 (3,770)
CLASS B 0 (6,702) 0 0 0
CLASS C N/A N/A N/A 0(1) N/A
INSTITUTIONAL CLASS (39,683) (134,752) (77,222) N/A N/A
From net realized gain on sale of
investments
CLASS A 0 (46,453,276) (769,667) 0 0
CLASS B 0 (6,167,386) (47,154) 0 0
CLASS C N/A N/A N/A 0(1) N/A
INSTITUTIONAL CLASS 0 (3,047,106) (54,088) N/A N/A
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 13,601,157 85,211,489 44,283,158 4,983,799 25,718,301
Reinvestment of dividends - Class A 907,114 47,015,949 1,571,703 0 2,483
Cost of shares redeemed - Class A (50,586,473) (99,180,720) (35,197,194) (3,434,398) (1,507,284)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A (36,078,202) 33,046,718 10,657,667 1,549,401 24,213,500
Proceeds from shares sold - Class B 4,861,311 25,116,094 11,003,396 4,873,415 31,759,206
Reinvestment of dividends - Class B 383 6,089,528 47,228 0 0
Cost of shares redeemed - Class B (5,006,990) (5,920,292) (1,557,385) (2,128,140) (1,867,827)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B (145,296) 25,285,330 9,493,239 2,745,275 29,891,379
Proceeds from shares sold - Class C N/A N/A N/A 369,928(1) N/A
Reinvestment of dividends - Class C N/A N/A N/A 0(1) N/A
Cost of shares redeemed - Class C N/A N/A N/A (16,666)(1) N/A
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS C N/A N/A N/A 353,262(1) N/A
Proceeds from shares sold -
Institutional Class 804,633 4,254,007 4,135,758 N/A N/A
Reinvestment of dividends -
Institutional Class 28,818 1,899,742 66,661 N/A N/A
Cost of shares redeemed -
Institutional Class (3,493,596) (10,544,641) (4,289,351) N/A N/A
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS (2,660,145) (4,390,892) (86,932) N/A N/A
INCREASE (DECREASE) IN NET ASSETS (68,049,556) 110,289,442 40,359,001 (5,563,756) 59,773,103
NET ASSETS:
Beginning net assets 436,486,222 326,196,780 285,837,779 59,773,103 0
ENDING NET ASSETS $368,436,666 $436,486,222 $326,196,780 $ 54,209,347 $59,773,103
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) THIS CLASS OF SHARES COMMENCED OPERATIONS ON APRIL 1, 1998.
The accompanying notes are an integral part of these financial statements.
115
<PAGE>
Equity Funds STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALL CAP FUND
---------------------------------------------
FOR THE SIX
FOR THE SIX FOR THE MONTHS
MONTHS ENDED YEAR ENDED ENDED
SEPT. 30, MARCH 31, MARCH 31,
1998 1998 (1) 1997
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) $ (267,578) $ (122,337) $ 16,522
Net realized gain (loss) on sale of
investments and foreign currency
transactions (10,366,907) 10,463,062 (1,454,225)
Net unrealized appreciation
(depreciation) of investments and
translation of assets and liabilities
in foreign currencies (22,514,409) 12,044,947 (3,802,835)
Net unrealized appreciation
(depreciation) of futures 0 0 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (33,148,894) 22,385,672 (5,240,538)
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A 0 (1,626) 0
CLASS B 0 0 0
CLASS C 0 0(3) N/A
INSTITUTIONAL CLASS 0 (24,243) 0
From net realized gain on sale of
investments
CLASS A 0 (827,508) 0
CLASS B 0 (782,027) 0
CLASS C 0 0(3) N/A
INSTITUTIONAL CLASS 0 (4,562,220) 0
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 3,220,859 15,154,524 3,967,857
Reinvestment of dividends - Class A 211 803,796 0
Cost of shares redeemed - Class A (2,987,647) (5,282,878) (556,553)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A 233,423 10,675,442 3,411,304
Proceeds from shares sold - Class B 4,724,111 12,825,169 2,296,961
Reinvestment of dividends - Class B 0 771,233 0
Cost of shares redeemed - Class B (1,390,665) (1,640,518) (163,976)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B 3,333,446 11,955,884 2,132,985
Proceeds from shares sold - Class C 370,791 2,366,421(3) N/A
Reinvestment of dividends - Class C 0 8,555(3) N/A
Cost of shares redeemed - Class C (777,530) (132,433)(3) N/A
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS C (406,739) 2,242,543(3) N/A
Proceeds from shares sold -
Institutional Class 19,609,948 53,985,405 12,246,405
Reinvestment of dividends -
Institutional Class 0 4,269,897 0
Cost of shares redeemed -
Institutional Class (20,068,534) (21,247,255) (2,987,916)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS (458,586) 37,008,047 9,258,489
INCREASE (DECREASE) IN NET ASSETS (30,447,350) 78,069,964 9,562,240
NET ASSETS:
Beginning net assets 112,281,674 34,211,710 24,649,470
ENDING NET ASSETS $ 81,834,324 $112,281,674 $34,211,710
- ------------------------------------------------------------------------------------------
</TABLE>
(1) PROCEEDS FROM SHARES SOLD INCLUDES $3,163,650 FOR CLASS A SHARES, AND
$2,277,136 FOR CLASS C SHARES AS A RESULT OF THE CONSOLIDATION OF THE
OVERLAND EXPRESS SMALL CAP STRATEGY FUND.
(2) PROCEEDS FROM SHARES SOLD INCLUDES $37,967,719 FOR CLASS A SHARES, AND
$22,688,669 FOR CLASS B SHARES AS A RESULT OF THE CONSOLIDATION OF THE
OVERLAND EXPRESS STRATEGIC GROWTH FUND.
(3) THIS CLASS OF SHARES COMMENCED OPERATIONS ON DECEMBER 15, 1997.
The accompanying notes are an integral part of these financial statements.
116
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS Equity Funds
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
STRATEGIC GROWTH FUND
----------------------------------------------
FOR THE NINE FOR THE FOR THE
MONTHS ENDED YEAR ENDED YEAR ENDED
SEPT. 30, DEC. 31, DEC. 31,
1998 1997 (2) 1996
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) $ (1,571,853) $ (1,976,702) $ (1,450,885)
Net realized gain (loss) on sale of
investments and foreign currency
transactions (6,336,849) 27,263,706 12,997,935
Net unrealized appreciation
(depreciation) of investments and
translation of assets and liabilities
in foreign currencies (17,512,709) (4,721,950) (4,523,410)
Net unrealized appreciation
(depreciation) of futures 0 0 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (25,421,411) 20,565,054 7,023,640
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A 0 0 0
CLASS B 0 0(3) N/A
CLASS C 0 0 0
INSTITUTIONAL CLASS N/A N/A N/A
From net realized gain on sale of
investments
CLASS A 0 (32,094,549) (941,378)
CLASS B 0 0(3) N/A
CLASS C 0 (12,310,107) (415,927)
INSTITUTIONAL CLASS N/A N/A N/A
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 105,704,155 227,568,030 154,071,907
Reinvestment of dividends - Class A 0 24,933,472 728,971
Cost of shares redeemed - Class A (141,270,390) (219,015,611) (86,486,498)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A (35,566,235) 33,485,891 68,314,380
Proceeds from shares sold - Class B 6,613,663 23,193,050(3) N/A
Reinvestment of dividends - Class B 0 0(3) N/A
Cost of shares redeemed - Class B (5,513,461) (422,099)(3) N/A
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B 1,100,202 22,770,951(3) N/A
Proceeds from shares sold - Class C 24,644,890 221,398,643 110,701,166
Reinvestment of dividends - Class C 0 6,423,494 176,740
Cost of shares redeemed - Class C (45,817,020) (233,237,347) (83,911,395)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS C (21,172,130) (5,415,210) 26,966,511
Proceeds from shares sold -
Institutional Class N/A N/A N/A
Reinvestment of dividends -
Institutional Class N/A N/A N/A
Cost of shares redeemed -
Institutional Class N/A N/A N/A
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS N/A N/A N/A
INCREASE (DECREASE) IN NET ASSETS (81,059,574) 27,002,030 100,947,226
NET ASSETS:
Beginning net assets 213,291,726 186,289,696 85,342,470
ENDING NET ASSETS $132,232,152 $213,291,726 $186,289,696
- -------------------------------------------------------------------------------------------
</TABLE>
(1) PROCEEDS FROM SHARES SOLD INCLUDES $3,163,650 FOR CLASS A SHARES, AND
$2,277,136 FOR CLASS C SHARES AS A RESULT OF THE CONSOLIDATION OF THE
OVERLAND EXPRESS SMALL CAP STRATEGY FUND.
(2) PROCEEDS FROM SHARES SOLD INCLUDES $37,967,719 FOR CLASS A SHARES, AND
$22,688,669 FOR CLASS B SHARES AS A RESULT OF THE CONSOLIDATION OF THE
OVERLAND EXPRESS STRATEGIC GROWTH FUND.
(3) THIS CLASS OF SHARES COMMENCED OPERATIONS ON DECEMBER 15, 1997.
The accompanying notes are an integral part of these financial statements.
117
<PAGE>
Equity Funds FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
BALANCED FUND (1)
CLASS A
-----------------------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED
SEPT. 30, MARCH 31, MARCH 31,
1998 (2) 1998 1997 (3)
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $13.28 $12.01 $11.46
------------- ------------ ------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.17 0.38 0.19
Net realized and unrealized gain
(loss) on investments (1.05) 2.76 0.74
------------- ------------ ------------
TOTAL FROM INVESTMENT OPERATIONS (0.88) 3.14 0.93
LESS DISTRIBUTIONS:
Dividends from net investment income (0.17) (0.38) (0.19)
Distributions from net realized gain 0.00 (1.49) (0.19)
Tax return of capital 0.00 0.00 0.00
------------- ------------ ------------
TOTAL FROM DISTRIBUTIONS (0.17) (1.87) (0.38)
------------- ------------ ------------
NET ASSET VALUE, END OF PERIOD $12.23 $13.28 $12.01
------------- ------------ ------------
------------- ------------ ------------
TOTAL RETURN (NOT ANNUALIZED)* (6.63)% 27.49% 8.15%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $30,833 $34,952 $31,632
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to average net
assets 1.28% 1.12% 1.05%
Ratio of net investment income (loss)
to average net assets 2.66% 2.91% 3.20%
Portfolio turnover 32% 67% 43%
- -------------------------------------------------------------------------------------------
Ratio of expenses to average net assets
prior to waived fees and reimbursed
expenses 1.33% 1.40% 1.30%
Ratio of net investment income (loss) to
average net assets prior to waived
fees and reimbursed expenses 2.61% 2.63% 2.95%
- -------------------------------------------------------------------------------------------
</TABLE>
* TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
** PER SHARE DATA BASED UPON AVERAGE MONTHLY SHARES OUTSTANDING.
(1) THE FUND OPERATED AS A SERIES OF PACIFICA FUNDS TRUST FROM ITS
COMMENCEMENT OF OPERATIONS UNTIL IT WAS REORGANIZED AS A SERIES OF
STAGECOACH FUNDS, INC. ON SEPTEMBER 6, 1996. IN CONJUNCTION WITH THE
REORGANIZATION, EXISTING INVESTOR SHARES WERE CONVERTED INTO CLASS A
SHARES OF THE FUND AND WFB ASSUMED INVESTMENT ADVISORY
RESPONSIBILITIES. PRIOR TO APRIL 1, 1996, THE FUND WAS ADVISED BY
FIRST INTERSTATE CAPITAL MANAGEMENT, INC. ("FICM"). IN CONNECTION WITH
THE MERGER OF FIRST INTERSTATE BANCORP INTO WELLS FARGO & CO. ON APRIL
1, 1996, FICM WAS RENAMED WELLS FARGO INVESTMENT MANAGEMENT, INC.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM MARCH 31 TO SEPTEMBER 30.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(4) THIS CLASS OF SHARES COMMENCED OPERATIONS ON SEPTEMBER 6, 1996.
118
<PAGE>
FINANCIAL HIGHLIGHTS Equity Funds
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
CLASS A (CONT.) BALANCED FUND (1) (CONT.)
CLASS B
---------------------------------- ----------------------------------------------
SIX MONTHS SIX MONTHS PERIOD
YEAR ENDED YEAR ENDED YEAR ENDED ENDED YEAR ENDED ENDED ENDED
SEPT. 30, SEPT. 30, SEPT. 30, SEPT. 30, MARCH 31, MARCH 31, SEPT. 30,
1996 1995 1994 1998 (2) 1998 1997 (3) 1996 (4)
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $11.84 $11.67 $12.71 $12.00 $10.79 $10.24 $10.00
---------- ---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.36 0.46** 0.43** 0.11 0.19 0.08 0.00
Net realized and
unrealized gain (loss)
on investments 0.89 0.68** (0.13)** (0.94) 2.55 0.72 0.24
---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT
OPERATIONS 1.25 1.14 0.30 (0.83) 2.74 0.80 0.24
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.35) (0.47) (0.46) (0.11) (0.19) (0.08) 0.00
Distributions from net
realized gain (1.28) (0.50) (0.88) 0.00 (1.34) (0.17) 0.00
Tax return of capital 0.00 0.00 0.00 0.00 0.00 0.00 0.00
---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (1.63) (0.97) (1.34) (0.11) (1.53) (0.25) 0.00
---------- ---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD $11.46 $11.84 $11.67 $11.06 $12.00 $10.79 $10.24
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL RETURN (NOT
ANNUALIZED)* 10.51% 10.62% 2.30% (6.92)% 26.64% 7.84% 2.40%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $32,640 $89,034 $108,290 $10,516 $9,145 $297 $2
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 1.31% 1.03% 1.09% 1.93% 1.82% 1.70% 0.00%
Ratio of net investment
income (loss) to average
net assets 2.98% 4.05% 3.55% 2.02% 2.15% 2.48% 3.09%
Portfolio turnover 131% 90% 35% 32% 67% 43% 131%
- ----------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 1.48% 1.05% 1.11% 2.09% 2.29% 7.85% 0.66%
Ratio of net investment
income (loss) to average
net assets prior to waived
fees and reimbursed
expenses 2.81% 4.03% 3.53% 1.86% 1.68% (3.67)% 2.43%
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
* TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
** PER SHARE DATA BASED UPON AVERAGE MONTHLY SHARES OUTSTANDING.
(1) THE FUND OPERATED AS A SERIES OF PACIFICA FUNDS TRUST FROM ITS
COMMENCEMENT OF OPERATIONS UNTIL IT WAS REORGANIZED AS A SERIES OF
STAGECOACH FUNDS, INC. ON SEPTEMBER 6, 1996. IN CONJUNCTION WITH THE
REORGANIZATION, EXISTING INVESTOR SHARES WERE CONVERTED INTO CLASS A
SHARES OF THE FUND AND WFB ASSUMED INVESTMENT ADVISORY
RESPONSIBILITIES. PRIOR TO APRIL 1, 1996, THE FUND WAS ADVISED BY
FIRST INTERSTATE CAPITAL MANAGEMENT, INC. ("FICM"). IN CONNECTION WITH
THE MERGER OF FIRST INTERSTATE BANCORP INTO WELLS FARGO & CO. ON APRIL
1, 1996, FICM WAS RENAMED WELLS FARGO INVESTMENT MANAGEMENT, INC.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM MARCH 31 TO SEPTEMBER 30.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(4) THIS CLASS OF SHARES COMMENCED OPERATIONS ON SEPTEMBER 6, 1996.
119
<PAGE>
Equity Funds FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
BALANCED FUND (1)
(CONT.)
INSTITUTIONAL CLASS
----------------------
SIX MONTHS
ENDED YEAR ENDED
SEPT. 30, MARCH 31,
1998 (2) 1998
<S> <C> <C>
- -----------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $13.26 $12.00
---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.19 0.40
Net realized and unrealized gain (loss) on investments (1.07) 2.74
---------- ----------
TOTAL FROM INVESTMENT OPERATIONS (0.88) 3.14
LESS DISTRIBUTIONS:
Dividends from net investment income (0.19) (0.40)
Distributions from net realized gain 0.00 (1.48)
Tax return of capital 0.00 0.00
---------- ----------
TOTAL FROM DISTRIBUTIONS (0.19) (1.88)
---------- ----------
NET ASSET VALUE, END OF PERIOD $12.19 $13.26
---------- ----------
---------- ----------
TOTAL RETURN (NOT ANNUALIZED)* (6.66)% 27.67%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $36,473 $51,241
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 1.18% 0.99%
Ratio of net investment income (loss) to average net assets 2.76% 3.05%
Portfolio turnover 32% 67%
- -----------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived fees and
reimbursed expenses 1.23% 1.21%
Ratio of net investment income (loss) to average net assets prior to
waived fees and reimbursed expenses 2.71% 2.83%
- -----------------------------------------------------------------------------------------------
</TABLE>
* TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
(1) THE FUND OPERATED AS A SERIES OF PACIFICA FUNDS TRUST FROM ITS
COMMENCEMENT OF OPERATIONS UNTIL IT WAS REORGANIZED AS A SERIES OF
STAGECOACH FUNDS, INC. ON SEPTEMBER 6, 1996. IN CONJUNCTION WITH THE
REORGANIZATION, EXISTING INVESTOR SHARES WERE CONVERTED INTO CLASS A
SHARES OF THE FUND AND WFB ASSUMED INVESTMENT ADVISORY
RESPONSIBILITIES. PRIOR TO APRIL 1, 1996, THE FUND WAS ADVISED BY
FIRST INTERSTATE CAPITAL MANAGEMENT, INC. ("FICM"). IN CONNECTION WITH
THE MERGER OF FIRST INTERSTATE BANCORP INTO WELLS FARGO & CO. ON APRIL
1, 1996, FICM WAS RENAMED WELLS FARGO INVESTMENT MANAGEMENT, INC.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM MARCH 31 TO SEPTEMBER 30.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(4) THIS CLASS OF SHARES COMMENCED OPERATIONS ON OCTOBER 1, 1995.
(5) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO SEPTEMBER 30.
120
<PAGE>
FINANCIAL HIGHLIGHTS Equity Funds
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
BALANCED FUND (1)
(CONT.) DIVERSIFIED EQUITY INCOME FUND
INSTITUTIONAL CLASS CLASS A
(CONT.) ----------------------------------------------
---------------------- NINE
SIX MONTHS SIX MONTHS SIX MONTHS MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED ENDED ENDED
MARCH 31, SEPT. 30, SEPT. 30, MARCH 31, MARCH 31, SEPT. 30,
1997 (3) 1996 (4) 1998 (2) 1998 1997 (3) 1996 (5)
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $11.45 $11.84 $18.97 $14.52 $14.73 $13.34
---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.21 0.40 0.16 0.28 0.14 0.25
Net realized and
unrealized gain (loss)
on investments 0.74 0.89 (2.58) 5.15 0.64 1.39
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT
OPERATIONS 0.95 1.29 (2.42) 5.43 0.78 1.64
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.21) (0.40) (0.16) (0.28) (0.14) (0.25)
Distributions from net
realized gain (0.19) (1.28) 0.00 (0.70) (0.85) 0.00
Tax return of capital 0.00 0.00 0.00 0.00 0.00 0.00
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.40) (1.68) (0.16) (0.98) (0.99) (0.25)
---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD $12.00 $11.45 $16.39 $18.97 $14.52 $14.73
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
TOTAL RETURN (NOT
ANNUALIZED)* 8.27% 10.80% (12.78)% 38.15% 5.25% 12.35%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $55,456 $72,327 $170,744 $223,540 $154,502 $134,648
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 0.95% 0.94% 1.17% 1.12% 1.10% 1.10%
Ratio of net investment
income (loss) to average
net assets 3.30% 3.29% 1.74% 1.67% 1.91% 2.57%
Portfolio turnover 43% 131% 29% 59% 33% 43%
- ----------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 1.18% 1.11% 1.17% 1.19% 1.17% 1.26%
Ratio of net investment
income (loss) to average
net assets prior to waived
fees and reimbursed
expenses 3.07% 3.12% 1.74% 1.60% 1.84% 2.41%
- ----------------------------------------------------------------------------------------------------
</TABLE>
* TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
(1) THE FUND OPERATED AS A SERIES OF PACIFICA FUNDS TRUST FROM ITS
COMMENCEMENT OF OPERATIONS UNTIL IT WAS REORGANIZED AS A SERIES OF
STAGECOACH FUNDS, INC. ON SEPTEMBER 6, 1996. IN CONJUNCTION WITH THE
REORGANIZATION, EXISTING INVESTOR SHARES WERE CONVERTED INTO CLASS A
SHARES OF THE FUND AND WFB ASSUMED INVESTMENT ADVISORY
RESPONSIBILITIES. PRIOR TO APRIL 1, 1996, THE FUND WAS ADVISED BY
FIRST INTERSTATE CAPITAL MANAGEMENT, INC. ("FICM"). IN CONNECTION WITH
THE MERGER OF FIRST INTERSTATE BANCORP INTO WELLS FARGO & CO. ON APRIL
1, 1996, FICM WAS RENAMED WELLS FARGO INVESTMENT MANAGEMENT, INC.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM MARCH 31 TO SEPTEMBER 30.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(4) THIS CLASS OF SHARES COMMENCED OPERATIONS ON OCTOBER 1, 1995.
(5) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO SEPTEMBER 30.
121
<PAGE>
Equity Funds FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
DIVERSIFIED EQUITY INCOME FUND
(CONT.)
CLASS A (CONT.)
----------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31, DEC. 31, DEC. 31,
1995 1994 1993
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $10.76 $11.08 $10.29
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.35 0.33 0.30
Net realized and unrealized gain (loss) on investments 2.86 (0.32) 0.96
---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 3.21 0.01 1.26
LESS DISTRIBUTIONS:
Dividends from net investment income (0.35) (0.33) (0.30)
Distributions from net realized gain (0.28) 0.00 (0.17)
Tax return of capital 0.00 0.00 0.00
---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.63) (0.33) (0.47)
---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $13.34 $10.76 $11.08
---------- ---------- ----------
---------- ---------- ----------
TOTAL RETURN (NOT ANNUALIZED)* 30.17% 0.08% 12.33%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $79,977 $45,178 $26,704
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 1.10% 1.06% 0.46%
Ratio of net investment income (loss) to average net
assets 3.02% 3.16% 3.51%
Portfolio turnover 70% 62% 46%
- -----------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 1.31% 1.34% 1.66%
Ratio of net investment income (loss) to average net assets
prior to waived fees and reimbursed expenses 2.81% 2.88% 2.31%
- -----------------------------------------------------------------------------------------------
</TABLE>
* TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
(1) THE FUND CHANGED ITS FISCAL YEAR-END FROM MARCH 31 TO SEPTEMBER 30.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO SEPTEMBER 30.
(4) THIS CLASS OF SHARES COMMENCED OPERATIONS ON JANUARY 1, 1995.
122
<PAGE>
FINANCIAL HIGHLIGHTS Equity Funds
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
DIVERSIFIED EQUITY INCOME FUND (CONT.)
CLASS B
----------------------------------------------------------
NINE
SIX MONTHS SIX MONTHS MONTHS
ENDED YEAR ENDED ENDED ENDED YEAR ENDED
SEPT. 30, MARCH 31, MARCH 31, SEPT. 30, DEC. 31,
1998 (1) 1998 1997 (2) 1996 (3) 1995 (4)
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $17.77 $13.60 $13.79 $12.49 $10.00
---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.09 0.15 0.08 0.17 0.20
Net realized and
unrealized gain (loss)
on investments (2.42) 4.82 0.60 1.30 2.75
---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT
OPERATIONS (2.33) 4.97 0.68 1.47 2.95
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.09) (0.15) (0.08) (0.17) (0.20)
Distributions from net
realized gain 0.00 (0.65) (0.79) 0.00 (0.26)
Tax return of capital 0.00 0.00 0.00 0.00 0.00
---------- ---------- ---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.09) (0.80) (0.87) (0.17) (0.46)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD $15.35 $17.77 $13.60 $13.79 $12.49
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
TOTAL RETURN (NOT
ANNUALIZED)* (13.12)% 37.29% 4.91% 11.76% 29.64%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $61,396 $71,736 $32,632 $17,045 $5,339
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 1.86% 1.77% 1.74% 1.74% 1.73%
Ratio of net investment
income (loss) to average
net assets 1.07% 1.02% 1.29% 2.01% 2.40%
Portfolio turnover 29% 59% 33% 43% 70%
- ----------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 1.86% 1.83% 1.87% 2.08% 2.57%
Ratio of net investment
income (loss) to average
net assets prior to waived
fees and reimbursed
expenses 1.07% 0.96% 1.16% 1.67% 1.56%
- ----------------------------------------------------------------------------------------
</TABLE>
* TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
(1) THE FUND CHANGED ITS FISCAL YEAR-END FROM MARCH 31 TO SEPTEMBER 30.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO SEPTEMBER 30.
(4) THIS CLASS OF SHARES COMMENCED OPERATIONS ON JANUARY 1, 1995.
123
<PAGE>
Equity Funds FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
EQUITY INDEX FUND
CLASS A
----------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED
SEPT. 30, MARCH 31, MARCH 31,
1998 (1) 1998 1997 (2)
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $70.32 $49.60 $46.24
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.33 0.48 0.25
Net realized and unrealized gain (loss) on investments (5.39) 22.31 4.61
---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS (5.06) 22.79 4.86
LESS DISTRIBUTIONS:
Dividends from net investment income (0.33) (0.48) (0.25)
Distributions from net realized gain 0.00 (1.59) (1.25)
Tax return of capital 0.00 0.00 0.00
---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.33) (2.07) (1.50)
---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $64.93 $70.32 $49.60
---------- ---------- ----------
---------- ---------- ----------
TOTAL RETURN (NOT ANNUALIZED)* (7.22)% 46.48% 10.63%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $518,778 $578,882 $406,739
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 0.71% 0.89%(5) 0.97%(5)
Ratio of net investment income (loss) to average net
assets 0.94% 0.80%(5) 1.02%(5)
Portfolio turnover 3% 4%(6) 2%(6)
- -----------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 0.77% 0.95%(5) 1.07%(5)
Ratio of net investment income (loss) to average net assets
prior to waived fees and reimbursed expenses 0.88% 0.74%(5) 0.92%(5)
- -----------------------------------------------------------------------------------------------
</TABLE>
* TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
(1) THE FUND CHANGED ITS FISCAL YEAR-END FROM MARCH 31 TO SEPTEMBER 30.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO SEPTEMBER 30.
(4) THIS CLASS OF SHARES COMMENCED OPERATIONS ON FEBRUARY 17, 1998.
(5) THIS RATIO INCLUDES ACTIVITY OF THE MASTER PORTFOLIO PRIOR TO DECEMBER
15, 1997.
(6) THE PORTFOLIO TURNOVER FOR AND AVERAGE COMMISSION RATE PAID INCLUDE
ACTIVITY OF THE MASTER PORTFOLIO PRIOR TO DECEMBER 15, 1997.
(7) THE PORTFOLIO TURNOVER FOR THE CORPORATE STOCK MASTER PORTFOLIO FROM
ITS INCEPTION ON APRIL 28, 1996 TO SEPTEMBER 30, 1996, WAS 3%. THE
INFORMATION SHOWN REFLECTS THE STAND-ALONE PERIOD ONLY.
124
<PAGE>
FINANCIAL HIGHLIGHTS Equity Funds
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
EQUITY INDEX FUND (CONT.)
CLASS A (CONT.)
---------------------------------------------- CLASS B
NINE ----------------------
MONTHS SIX MONTHS PERIOD
ENDED YEAR ENDED YEAR ENDED YEAR ENDED ENDED ENDED
SEPT. 30, DEC. 31, DEC. 31, DEC. 31, SEPT. 30, MARCH 31,
1996 (3) 1995 1994 1993 1998 (1) 1998 (4)
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $41.45 $31.42 $33.00 $31.40 $70.41 $65.18
---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.42 0.59 0.63 0.59 0.04 (0.01)
Net realized and
unrealized gain (loss)
on investments 4.79 10.65 (0.50) 2.19 (5.38) 5.24
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT
OPERATIONS 5.21 11.24 0.13 2.78 (5.34) 5.23
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.42) (0.59) (0.63) (0.59) (0.04) 0.00
Distributions from net
realized gain 0.00 (0.62) (1.08) (0.59) 0.00 0.00
Tax return of capital 0.00 0.00 0.00 0.00 0.00 0.00
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.42) (1.21) (1.71) (1.18) (0.04) 0.00
---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD $46.24 $41.45 $31.42 $33.00 $65.03 $70.41
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
TOTAL RETURN (NOT
ANNUALIZED)* 12.60% 35.99% 0.42% 8.91% (7.59)% 8.02%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $370,439 $327,208 $236,265 $258,327 $17,499 $3,811
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 1.01%(5) 0.96% 0.97% 0.97% 1.45% 1.45%
Ratio of net investment
income (loss) to average
net assets 1.28%(5) 1.59% 1.92% 1.81% 0.14% (0.19)%
Portfolio turnover 1%(7) 6% 7% 5% 3% 4%
- ----------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 1.08%(5) 1.00% 1.00% 0.99% 1.58% 1.64%
Ratio of net investment
income (loss) to average
net assets prior to waived
fees and reimbursed
expenses 1.21%(5) 1.55% 1.89% 1.79% 0.01% (0.38)%
- ----------------------------------------------------------------------------------------------------
</TABLE>
* TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
(1) THE FUND CHANGED ITS FISCAL YEAR-END FROM MARCH 31 TO SEPTEMBER 30.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO SEPTEMBER 30.
(4) THIS CLASS OF SHARES COMMENCED OPERATIONS ON FEBRUARY 17, 1998.
(5) THIS RATIO INCLUDES ACTIVITY OF THE MASTER PORTFOLIO PRIOR TO DECEMBER
15, 1997.
(6) THE PORTFOLIO TURNOVER FOR AND AVERAGE COMMISSION RATE PAID INCLUDE
ACTIVITY OF THE MASTER PORTFOLIO PRIOR TO DECEMBER 15, 1997.
(7) THE PORTFOLIO TURNOVER FOR THE CORPORATE STOCK MASTER PORTFOLIO FROM
ITS INCEPTION ON APRIL 28, 1996 TO SEPTEMBER 30, 1996, WAS 3%. THE
INFORMATION SHOWN REFLECTS THE STAND-ALONE PERIOD ONLY.
125
<PAGE>
Equity Funds FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
EQUITY VALUE FUND (1)
CLASS A
----------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED
SEPT. 30, MARCH 31, MARCH 31,
1998 (2) 1998 1997 (3)
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $18.15 $14.43 $12.66
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.09 0.17 0.08
Net realized and unrealized gain (loss) on investments (3.22) 5.58 1.89
---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS (3.13) 5.75 1.97
LESS DISTRIBUTIONS:
Dividends from net investment income (0.09) (0.17) (0.08)
Distributions from net realized gain 0.00 (1.86) (0.12)
Tax return of capital 0.00 0.00 0.00
---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.09) (2.03) (0.20)
---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $14.93 $18.15 $14.43
---------- ---------- ----------
---------- ---------- ----------
TOTAL RETURN (NOT ANNUALIZED)* (17.27)% 41.76% 15.63%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $43,679 $52,392 $20,798
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 1.09% 1.07% 1.05%
Ratio of net investment income (loss) to average net
assets 1.06% 1.03% 1.14%
Portfolio turnover 23% 50% 45%
- -----------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 1.09% 1.16% 1.12%
Ratio of net investment income (loss) to average net assets
prior to waived fees and reimbursed expenses 1.06% 0.94% 1.07%
- -----------------------------------------------------------------------------------------------
</TABLE>
* TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
** PER SHARE DATA BASED UPON AVERAGE MONTHLY SHARES OUTSTANDING.
(1) THE FUND OPERATED AS A SERIES OF PACIFICA FUNDS TRUST FROM ITS
COMMENCEMENT OF OPERATIONS UNTIL IT WAS REORGANIZED AS A SERIES OF
STAGECOACH FUNDS, INC. ON SEPTEMBER 6, 1996. IN CONJUNCTION WITH THE
REORGANIZATION, EXISTING INVESTOR SHARES WERE CONVERTED INTO CLASS A
SHARES OF THE FUND AND WFB ASSUMED INVESTMENT ADVISORY
RESPONSIBILITIES. PRIOR TO APRIL 1, 1996, THE FUND WAS ADVISED BY
FIRST INTERSTATE CAPITAL MANAGEMENT, INC. ("FICM"). IN CONNECTION WITH
THE MERGER OF FIRST INTERSTATE BANCORP INTO WELLS FARGO & CO. ON APRIL
1, 1996, FICM WAS RENAMED WELLS FARGO INVESTMENT MANAGEMENT, INC.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM MARCH 31 TO SEPTEMBER 30.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(4) THIS CLASS OF SHARES COMMENCED OPERATIONS ON SEPTEMBER 6, 1996.
126
<PAGE>
FINANCIAL HIGHLIGHTS Equity Funds
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
EQUITY VALUE FUND (1) (CONT.)
CLASS B
CLASS A (CONT.) ----------------------------------------------
---------------------------------- SIX MONTHS SIX MONTHS PERIOD
YEAR ENDED YEAR ENDED YEAR ENDED ENDED YEAR ENDED ENDED ENDED
SEPT. 30, SEPT. 30, SEPT. 30, SEPT. 30, MARCH 31, MARCH 31, SEPT. 30,
1996 1995 1994 1998 (2) 1998 1997 (3) 1996 (4)
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $13.27 $12.36 $13.17 $14.86 $11.81 $10.34 $10.00
---------- ---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.20 0.24** 0.20** 0.02 0.05 0.01 0.00
Net realized and
unrealized gain (loss)
on investments 1.60 1.63** 0.74** (2.63) 4.57 1.57 0.34
---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT
OPERATIONS 1.80 1.87 0.94 (2.61) 4.62 1.58 0.34
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.19) (0.25) (0.21) (0.02) (0.05) (0.01) 0.00
Distributions from net
realized gain (2.22) (0.71) (1.54) 0.00 (1.52) (0.10) 0.00
Tax return of capital 0.00 0.00 0.00 0.00 0.00 0.00 0.00
---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (2.41) (0.96) (1.75) (0.02) (1.57) (0.11) 0.00
---------- ---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD $12.66 $13.27 $12.36 $12.23 $14.86 $11.81 $10.34
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL RETURN (NOT
ANNUALIZED)* 14.27% 16.58% 7.49 % (17.54)% 40.87% 15.31% 3.40%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $18,453 $170,406 $168,852 $73,343 $72,428 $2,542 $0
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 1.18% 0.96% 0.99% 1.81% 1.76% 1.70% 0.00%
Ratio of net investment
income (loss) to average
net assets 1.73% 1.97% 1.60% 0.36% 0.42% 0.34% 1.83%
Portfolio turnover 91% 75% 41% 23% 50% 45% 91%
- ----------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 1.22% 0.98% 1.01% 1.81% 1.83% 2.19% N/A
Ratio of net investment
income (loss) to average
net assets prior to waived
fees and reimbursed
expenses 1.69% 1.95% 1.58% 0.36% 0.35% (0.15)% N/A
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
* TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
** PER SHARE DATA BASED UPON AVERAGE MONTHLY SHARES OUTSTANDING.
(1) THE FUND OPERATED AS A SERIES OF PACIFICA FUNDS TRUST FROM ITS
COMMENCEMENT OF OPERATIONS UNTIL IT WAS REORGANIZED AS A SERIES OF
STAGECOACH FUNDS, INC. ON SEPTEMBER 6, 1996. IN CONJUNCTION WITH THE
REORGANIZATION, EXISTING INVESTOR SHARES WERE CONVERTED INTO CLASS A
SHARES OF THE FUND AND WFB ASSUMED INVESTMENT ADVISORY
RESPONSIBILITIES. PRIOR TO APRIL 1, 1996, THE FUND WAS ADVISED BY
FIRST INTERSTATE CAPITAL MANAGEMENT, INC. ("FICM"). IN CONNECTION WITH
THE MERGER OF FIRST INTERSTATE BANCORP INTO WELLS FARGO & CO. ON APRIL
1, 1996, FICM WAS RENAMED WELLS FARGO INVESTMENT MANAGEMENT, INC.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM MARCH 31 TO SEPTEMBER 30.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(4) THIS CLASS OF SHARES COMMENCED OPERATIONS ON SEPTEMBER 6, 1996.
127
<PAGE>
Equity Funds FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
EQUITY VALUE FUND (1) (CONT.)
CLASS C INSTITUTIONAL CLASS
---------- ----------------------
PERIOD SIX MONTHS
ENDED ENDED YEAR ENDED
SEPT. 30, SEPT. 30, MARCH 31,
1998 (2) 1998 (3) 1998
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $14.86 $18.15 $14.43
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.02 0.10 0.20
Net realized and unrealized gain (loss) on investments (2.63) (3.23) 5.58
---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS (2.61) (3.13) 5.78
LESS DISTRIBUTIONS:
Dividends from net investment income (0.02) (0.10) (0.20)
Distributions from net realized gain 0.00 0.00 (1.86)
Tax return of capital 0.00 0.00 0.00
---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.02) (0.10) (2.06)
---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $12.23 $14.92 $18.15
---------- ---------- ----------
---------- ---------- ----------
TOTAL RETURN (NOT ANNUALIZED)* (17.57)% (17.26)% 42.02%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $1,239 $166,616 $228,452
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 1.83% 0.97% 0.95%
Ratio of net investment income (loss) to average net
assets 0.41% 1.17% 1.18%
Portfolio turnover 23% 23% 50%
- -----------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 2.84% 0.97% 0.98%
Ratio of net investment income (loss) to average net assets
prior to waived fees and reimbursed expenses (0.60)% 1.17% 1.15%
- -----------------------------------------------------------------------------------------------
</TABLE>
* TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
(1) THE FUND OPERATED AS A SERIES OF PACIFICA FUNDS TRUST FROM ITS
COMMENCEMENT OF OPERATIONS UNTIL IT WAS REORGANIZED AS A SERIES OF
STAGECOACH FUNDS, INC. ON SEPTEMBER 6, 1996. IN CONJUNCTION WITH THE
REORGANIZATION, EXISTING INVESTOR SHARES WERE CONVERTED INTO CLASS A
SHARES OF THE FUND AND WFB ASSUMED INVESTMENT ADVISORY
RESPONSIBILITIES. PRIOR TO APRIL 1, 1996, THE FUND WAS ADVISED BY
FIRST INTERSTATE CAPITAL MANAGEMENT, INC. ("FICM"). IN CONNECTION WITH
THE MERGER OF FIRST INTERSTATE BANCORP INTO WELLS FARGO & CO. ON APRIL
1, 1996, FICM WAS RENAMED WELLS FARGO INVESTMENT MANAGEMENT, INC.
(2) THIS CLASS OF SHARES COMMENCED OPERATIONS ON APRIL 1, 1998.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM MARCH 31 TO SEPTEMBER 30.
(4) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(5) THIS CLASS OF SHARES COMMENCED OPERATIONS ON OCTOBER 1, 1995.
(6) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO SEPTEMBER 30.
128
<PAGE>
FINANCIAL HIGHLIGHTS Equity Funds
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
EQUITY VALUE FUND (1)
(CONT.) GROWTH FUND
INSTITUTIONAL CLASS CLASS A
(CONT.) ----------------------------------------------------------
---------------------- NINE
SIX MONTHS SIX MONTHS SIX MONTHS MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED ENDED ENDED YEAR ENDED
MARCH 31, SEPT. 30, SEPT. 30, MARCH 31, MARCH 31, SEPT. 30, DEC. 31,
1997 (4) 1996 (5) 1998 (3) 1998 1997 (4) 1996 (6) 1995
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $12.65 $13.27 $22.09 $19.20 $17.91 $17.26 $14.10
---------- ---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.09 0.22 0.05 0.11 0.06 0.07 0.19
Net realized and
unrealized gain (loss)
on investments 1.89 1.61 (1.61) 6.18 1.34 2.00 3.87
---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT
OPERATIONS 1.98 1.83 (1.56) 6.29 1.40 2.07 4.06
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.08) (0.23) (0.05) (0.11) (0.06) (0.07) (0.19)
Distributions from net
realized gain (0.12) (2.22) 0.00 (3.29) (0.05) (1.35) (0.71)
Tax return of capital 0.00 0.00 0.00 0.00 0.00 0.00 0.00
---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.20) (2.45) (0.05) (3.40) (0.11) (1.42) (0.90)
---------- ---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD $14.43 $12.65 $20.48 $22.09 $19.20 $17.91 $17.26
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL RETURN (NOT
ANNUALIZED)* 15.73% 14.58% (7.08)% 34.65% 7.86% 12.45% 28.90%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $193,161 $206,620 $305,309 $365,405 $283,468 $254,498 $178,488
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 0.95% 0.87% 1.08% 1.12% 1.14% 1.18% 1.18%
Ratio of net investment
income (loss) to average
net assets 1.25% 1.69% 0.42% 0.53% 0.65% 0.56% 1.23%
Portfolio turnover 45% 91% 18% 137% 40% 83% 100%
- ----------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 0.99% 0.92% 1.08% 1.13% N/A 1.19% 1.21%
Ratio of net investment
income (loss) to average
net assets prior to waived
fees and reimbursed
expenses 1.21% 1.64% 0.42% 0.52% N/A 0.55% 1.20%
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
* TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
(1) THE FUND OPERATED AS A SERIES OF PACIFICA FUNDS TRUST FROM ITS
COMMENCEMENT OF OPERATIONS UNTIL IT WAS REORGANIZED AS A SERIES OF
STAGECOACH FUNDS, INC. ON SEPTEMBER 6, 1996. IN CONJUNCTION WITH THE
REORGANIZATION, EXISTING INVESTOR SHARES WERE CONVERTED INTO CLASS A
SHARES OF THE FUND AND WFB ASSUMED INVESTMENT ADVISORY
RESPONSIBILITIES. PRIOR TO APRIL 1, 1996, THE FUND WAS ADVISED BY
FIRST INTERSTATE CAPITAL MANAGEMENT, INC. ("FICM"). IN CONNECTION WITH
THE MERGER OF FIRST INTERSTATE BANCORP INTO WELLS FARGO & CO. ON APRIL
1, 1996, FICM WAS RENAMED WELLS FARGO INVESTMENT MANAGEMENT, INC.
(2) THIS CLASS OF SHARES COMMENCED OPERATIONS ON APRIL 1, 1998.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM MARCH 31 TO SEPTEMBER 30.
(4) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(5) THIS CLASS OF SHARES COMMENCED OPERATIONS ON OCTOBER 1, 1995.
(6) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO SEPTEMBER 30.
129
<PAGE>
Equity Funds FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
GROWTH FUND (CONT.)
CLASS B
CLASS A (CONT.) ----------
---------------------- SIX MONTHS
YEAR ENDED YEAR ENDED ENDED
DEC. 31, DEC. 31, SEPT. 30,
1994 1993 1998 (1)
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $14.75 $13.88 $15.70
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.22 0.23 (0.02)
Net realized and unrealized gain (loss) on investments (0.27) 0.93 (1.15)
---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS (0.05) 1.16 (1.17)
LESS DISTRIBUTIONS:
Dividends from net investment income (0.22) (0.23) 0.00
Distributions from net realized gain (0.38) (0.06) 0.00
Tax return of capital 0.00 0.00 0.00
---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.60) (0.29) 0.00
---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $14.10 $14.75 $14.53
---------- ---------- ----------
---------- ---------- ----------
TOTAL RETURN (NOT ANNUALIZED)* (0.29)% 8.44% (7.45)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $113,525 $112,236 $48,772
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 1.11% 0.93% 1.79%
Ratio of net investment income (loss) to average net
assets 1.51% 1.72% (0.29)%
Portfolio turnover 71% 55% 18%
- -----------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 1.15% 1.11% 1.79%
Ratio of net investment income (loss) to average net assets
prior to waived fees and reimbursed expenses 1.47% 1.54% (0.29)%
- -----------------------------------------------------------------------------------------------
</TABLE>
* TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
(1) THE FUND CHANGED ITS FISCAL YEAR-END FROM MARCH 31 TO SEPTEMBER 30.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO SEPTEMBER 30.
(4) THIS CLASS OF SHARES COMMENCED OPERATIONS ON JANUARY 1, 1995.
130
<PAGE>
FINANCIAL HIGHLIGHTS Equity Funds
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
CLASS B (CONT.) GROWTH FUND (CONT.)
---------------------------------------------- INSTITUTIONAL CLASS
NINE ----------------------
SIX MONTHS MONTHS SIX MONTHS
YEAR ENDED ENDED ENDED YEAR ENDED ENDED YEAR ENDED
MARCH 31, MARCH 31, SEPT. 30. DEC. 31, SEPT. 30, MARCH 31,
1998 1997 (2) 1996 (3) 1995 (4) 1998 (1) 1998
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $13.64 $12.74 $12.29 $10.00 $25.91 $22.52
---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) (0.01) 0.00 (0.01) 0.05 0.07 0.17
Net realized and
unrealized gain (loss)
on investments 4.38 0.94 1.42 2.79 (1.90) 7.25
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT
OPERATIONS 4.37 0.94 1.41 2.84 (1.83) 7.42
LESS DISTRIBUTIONS:
Dividends from net
investment income 0.00 0.00 0.00 (0.05) (0.07) (0.17)
Distributions from net
realized gain (2.31) (0.04) (0.96) (0.50) 0.00 (3.86)
Tax return of capital 0.00 0.00 0.00 0.00 0.00 0.00
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (2.31) (0.04) (0.96) (0.55) (0.07) (4.03)
---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD $15.70 $13.64 $12.74 $12.29 $24.01 $25.91
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
TOTAL RETURN (NOT
ANNUALIZED)* 33.83% 7.36% 11.89% 28.47% (7.10)% 34.86%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $52,901 $23,010 $12,832 $4,682 $14,355 $18,180
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 1.79% 1.86% 1.93% 1.87% 1.02% 0.99%
Ratio of net investment
income (loss) to average
net assets (0.15)% (0.06)% (0.12)% 0.43% 0.48% 0.65%
Portfolio turnover 137% 40% 83% 100% 18% 137%
- ----------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 1.80% 1.89% 2.03% 2.21% 1.04% N/A
Ratio of net investment
income (loss) to average
net assets prior to waived
fees and reimbursed
expenses (0.16)% (0.09)% (0.22)% 0.09% 0.46% N/A
- ----------------------------------------------------------------------------------------------------
</TABLE>
* TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
(1) THE FUND CHANGED ITS FISCAL YEAR-END FROM MARCH 31 TO SEPTEMBER 30.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO SEPTEMBER 30.
(4) THIS CLASS OF SHARES COMMENCED OPERATIONS ON JANUARY 1, 1995.
131
<PAGE>
Equity Funds FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
GROWTH FUND (CONT.)
INSTITUTIONAL CLASS
(CONT.)
----------------------
SIX MONTHS PERIOD
ENDED ENDED
MARCH 31, SEPT. 30,
1997 (3) 1996 (4)
<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
Tax return of capital 0.00 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%
- -----------------------------------------------------------------------------------------------
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>
* TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
(1) THE FUND COMMENCED OPERATIONS ON SEPTEMBER 24, 1997.
(2) THE FUND COMMENCED OPERATIONS ON SEPTEMBER 16, 1996.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(4) THIS CLASS OF SHARES COMMENCED OPERATIONS ON SEPTEMBER 6, 1996.
(5) THE FUND CHANGED ITS FISCAL YEAR-END FROM MARCH 31 TO SEPTEMBER 30.
(6) THIS CLASS OF SHARES COMMENCED OPERATIONS ON APRIL 1, 1998.
(7) THIS RATIO INCLUDES ACTIVITY OF THE MASTER PORTFOLIO PRIOR TO DECEMBER
15, 1997.
(8) THE PORTFOLIO TURNOVER FOR AND AVERAGE COMMISSION RATE PAID INCLUDE
ACTIVITY OF THE MASTER PORTFOLIO PRIOR TO DECEMBER 15, 1997.
132
<PAGE>
FINANCIAL HIGHLIGHTS Equity Funds
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND (1) SMALL CAP FUND (2)
CLASS A CLASS B CLASS C CLASS A
---------------------- ---------------------- ---------- ----------------------
SIX MONTHS PERIOD SIX MONTHS PERIOD PERIOD SIX MONTHS
ENDED ENDED ENDED ENDED ENDED ENDED YEAR ENDED
SEPT. 30, MARCH 31, SEPT. 30, MARCH 31, SEPT. 30, SEPT. 30, MARCH 31,
1998 (5) 1998 1998 (5) 1998 1998 (6) 1998 (5) 1998
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $11.05 $10.00 $11.01 $10.00 $11.01 $25.62 $18.98
---------- ---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.00 0.02 (0.03) (0.01) (0.03) (0.09) (0.06)
Net realized and
unrealized gain (loss)
on investments (1.69) 1.03 (1.68) 1.02 (1.68) (7.67) 8.76
---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT
OPERATIONS (1.69) 1.05 (1.71) 1.01 (1.71) (7.76) 8.70
LESS DISTRIBUTIONS:
Dividends from net
investment income 0.00 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 (2.06)
Tax return of capital 0.00 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 (2.06)
---------- ---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD $9.36 $11.05 $9.30 $11.01 $9.30 $17.86 $25.62
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL RETURN (NOT
ANNUALIZED)* (15.29)% 10.52% (15.53)% 10.10% (15.53)% (30.29)% 47.03%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $23,857 $26,770 $30,070 $33,003 $297 $10,899 $15,611
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 1.75% 1.75% 2.40% 2.40% 2.40% 1.36% 1.22%(7)
Ratio of net investment
income (loss) to average
net assets 0.10% 0.35% (0.56)% (0.31)% (1.15)% (0.82)% (0.43)%(7)
Portfolio turnover 21% 12% 21% 12% 21% 110% 291%(8)
- ----------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 2.06% 2.20% 2.70% 2.84% 2.66% 1.49% 1.57%(7)
Ratio of net investment
income (loss) to average
net assets prior to waived
fees and reimbursed
expenses (0.21)% (0.10)% (0.86)% (0.75)% (1.41)% (0.95)% (0.78)%(7)
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
* TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
(1) THE FUND COMMENCED OPERATIONS ON SEPTEMBER 24, 1997.
(2) THE FUND COMMENCED OPERATIONS ON SEPTEMBER 16, 1996.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(4) THIS CLASS OF SHARES COMMENCED OPERATIONS ON SEPTEMBER 6, 1996.
(5) THE FUND CHANGED ITS FISCAL YEAR-END FROM MARCH 31 TO SEPTEMBER 30.
(6) THIS CLASS OF SHARES COMMENCED OPERATIONS ON APRIL 1, 1998.
(7) THIS RATIO INCLUDES ACTIVITY OF THE MASTER PORTFOLIO PRIOR TO DECEMBER
15, 1997.
(8) THE PORTFOLIO TURNOVER FOR AND AVERAGE COMMISSION RATE PAID INCLUDE
ACTIVITY OF THE MASTER PORTFOLIO PRIOR TO DECEMBER 15, 1997.
133
<PAGE>
Equity Funds FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
SMALL CAP FUND (1)
CLASS A (CONT.) CLASS B
---------------------- ----------
SIX MONTHS PERIOD SIX MONTHS
ENDED ENDED ENDED
MARCH 31, SEPT. 30, SEPT. 30,
1997 (2) 1996 1998 (3)
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $22.45 $22.01 $25.38
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.01) 0.00 (0.18)
Net realized and unrealized gain (loss) on investments (3.46) 0.44 (7.56)
---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS (3.47) 0.44 (7.74)
LESS DISTRIBUTIONS:
Dividends from net investment income 0.00 0.00 0.00
Distributions from net realized gain 0.00 0.00 0.00
Tax return of capital 0.00 0.00 0.00
---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS 0.00 0.00 0.00
---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $18.98 $22.45 $17.64
---------- ---------- ----------
---------- ---------- ----------
TOTAL RETURN (NOT ANNUALIZED)* (15.46)% 2.00% (30.50)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $3,107 $96 $13,071
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 1.10%(5) 1.03%(5) 2.11%
Ratio of net investment income (loss) to average net
assets (0.23)%(5) (0.59)%(5) (1.56)%
Portfolio turnover 69%(6) 10%(6) 110%
- -----------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 2.80%(5) 38.54%(5) 2.13%
Ratio of net investment income (loss) to average net assets
prior to waived fees and reimbursed expenses (1.93)%(5) (38.10)%(5) (1.58)%
- -----------------------------------------------------------------------------------------------
</TABLE>
* TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
(1) THE FUND COMMENCED OPERATIONS ON SEPTEMBER 16, 1996.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM MARCH 31 TO SEPTEMBER 30.
(4) THIS CLASS OF SHARES COMMENCED OPERATIONS ON DECEMBER 15, 1997.
(5) THIS RATIO INCLUDES ACTIVITY OF THE MASTER PORTFOLIO PRIOR TO DECEMBER
15, 1997.
(6) THE PORTFOLIO TURNOVER FOR AND AVERAGE COMMISSION RATE PAID INCLUDE
ACTIVITY OF THE MASTER PORTFOLIO PRIOR TO DECEMBER 15, 1997.
134
<PAGE>
FINANCIAL HIGHLIGHTS Equity Funds
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
SMALL CAP FUND (1) (CONT.)
CLASS B (CONT.) CLASS C INSTITUTIONAL CLASS
---------------------------------- ---------------------- ----------------------
SIX MONTHS PERIOD SIX MONTHS PERIOD SIX MONTHS
YEAR ENDED ENDED ENDED ENDED ENDED ENDED YEAR ENDED
MARCH 31, MARCH 31, SEPT. 30, SEPT. 30, MARCH 31, SEPT. 30, MARCH 31,
1998 1997 (2) 1996 1998 (3) 1998 (4) 1998 (3) 1998
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $18.93 $22.46 $22.02 $25.38 $21.77 $25.77 $19.01
---------- ---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) (0.11) (0.04) 0.00 (0.18) (0.08) (0.02) 0.00
Net realized and
unrealized gain (loss)
on investments 8.61 (3.49) 0.44 (7.57) 3.69 (7.73) 8.84
---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT
OPERATIONS 8.50 (3.53) 0.44 (7.75) 3.61 (7.75) 8.84
LESS DISTRIBUTIONS:
Dividends from net
investment income 0.00 0.00 0.00 0.00 0.00 0.00 (0.01)
Distributions from net
realized gain (2.05) 0.00 0.00 0.00 0.00 0.00 (2.07)
Tax return of capital 0.00 0.00 0.00 0.00 0.00 0.00 0.00
---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (2.05) 0.00 0.00 0.00 0.00 0.00 (2.08)
---------- ---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD $25.38 $18.93 $22.46 $17.63 $25.38 $18.02 $25.77
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL RETURN (NOT
ANNUALIZED)* 46.02% (15.72)% 2.00% (30.54)% 16.58% (30.07)% 47.70%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $15,320 $1,905 $0 $1,426 $2,495 $56,438 $78,856
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 1.92%(5) 1.75%(5) 0.00% 2.11% 2.10% 0.76% 0.75%(5)
Ratio of net investment
income (loss) to average
net assets (1.13)%(5) (0.85)%(5) 0.00% (1.56)% (1.17)% (0.21)% 0.01%(5)
Portfolio turnover 291%(6) 69%(6) 10%(6) 110% 291% 110% 291%(6)
- ----------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 2.21%(5) 3.55%(5) 0.00% 2.71% 2.66% 1.21% 1.26%(5)
Ratio of net investment
income (loss) to average
net assets prior to waived
fees and reimbursed
expenses (1.42)%(5) (2.65)%(5) 0.00% (2.16)% (1.73)% (0.66)% (0.50)%(5)
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
* TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
(1) THE FUND COMMENCED OPERATIONS ON SEPTEMBER 16, 1996.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM MARCH 31 TO SEPTEMBER 30.
(4) THIS CLASS OF SHARES COMMENCED OPERATIONS ON DECEMBER 15, 1997.
(5) THIS RATIO INCLUDES ACTIVITY OF THE MASTER PORTFOLIO PRIOR TO DECEMBER
15, 1997.
(6) THE PORTFOLIO TURNOVER FOR AND AVERAGE COMMISSION RATE PAID INCLUDE
ACTIVITY OF THE MASTER PORTFOLIO PRIOR TO DECEMBER 15, 1997.
135
<PAGE>
Equity Funds FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
SMALL CAP FUND (1)
INSTITUTIONAL CLASS
(CONT.)
----------------------
SIX MONTHS PERIOD
ENDED ENDED
MARCH 31, SEPT. 30,
1997 (3) 1996
<S> <C> <C>
- -----------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $22.45 $22.01
---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.02 0.00
Net realized and unrealized gain (loss) on investments (3.46) 0.44
---------- ----------
TOTAL FROM INVESTMENT OPERATIONS (3.44) 0.44
LESS DISTRIBUTIONS:
Dividends from net investment income 0.00 0.00
Distributions from net realized gain 0.00 0.00
Tax return of capital 0.00 0.00
---------- ----------
TOTAL FROM DISTRIBUTIONS 0.00 0.00
---------- ----------
NET ASSET VALUE, END OF PERIOD $19.01 $22.45
---------- ----------
---------- ----------
TOTAL RETURN (NOT ANNUALIZED)* (15.32)% 2.00%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $29,200 $24,553
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 0.75%(6) 1.60%(6)
Ratio of net investment income (loss) to average net assets 0.16%(6) (1.15)%(6)
Portfolio turnover 69%(7) 10%(7)
- -----------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived fees and
reimbursed expenses 1.65%(6) 1.63%(6)
Ratio of net investment income (loss) to average net assets prior to
waived fees and reimbursed expenses (0.74)%(6) (1.18)%(6)
- -----------------------------------------------------------------------------------------------
</TABLE>
* TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
(1) THE FUND COMMENCED OPERATIONS ON SEPTEMBER 16, 1996.
(2) PERIODS PRIOR TO DECEMBER 31, 1997 HAVE BEEN RESTATED TO GIVE EFFECT
TO THE CONVERSION RATIOS APPLIED IN THE CONSOLIDATION OF OVERLAND
EXPRESS FUNDS, INC. AND STAGECOACH FUNDS, INC. SEE NOTE 1.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(4) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO SEPTEMBER 30.
(5) THIS CLASS OF SHARES COMMENCED OPERATIONS ON JANUARY 20, 1993.
(6) THIS RATIO INCLUDES ACTIVITY OF THE MASTER PORTFOLIO PRIOR TO DECEMBER
15, 1997.
(7) THE PORTFOLIO TURNOVER FOR AND AVERAGE COMMISSION RATE PAID INCLUDE
ACTIVITY OF THE MASTER PORTFOLIO PRIOR TO DECEMBER 15, 1997.
(8) THE PORTFOLIO TURNOVER FOR AND AVERAGE COMMISSION RATE PAID BY THE
CAPITAL APPRECIATION MASTER PORTFOLIO FROM ITS INCEPTION ON FEBRUARY
20, 1996 TO DECEMBER 31, 1996, WERE 137% AND $0.0781, RESPECTIVELY.
THE INFORMATION SHOWN REFLECTS THE STAND-ALONE PERIOD ONLY.
136
<PAGE>
FINANCIAL HIGHLIGHTS Equity Funds
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
STRATEGIC GROWTH FUND (2)
CLASS A
----------------------------------------------------------------------
NINE
MONTHS PERIOD
ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED ENDED
SEPT. 30, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1998 (4) 1997 1996 1995 1994 1993 (5)
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $19.96 $26.42 $24.12 $19.06 $18.93 $14.34
---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) (0.14) (0.07) (0.04) (0.06) (0.16) (0.04)
Net realized and
unrealized gain (loss)
on investments (3.20) 2.48 2.54 8.12 0.96 5.27
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT
OPERATIONS (3.34) 2.41 2.50 8.06 0.80 5.23
LESS DISTRIBUTIONS:
Dividends from net
investment income 0.00 0.00 0.00 0.00 0.00 (0.04)
Distributions from net
realized gain 0.00 (8.87) (0.20) (3.00) (0.47) (0.59)
Tax return of capital 0.00 0.00 0.00 0.00 (0.00) (0.01)
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS 0.00 (8.87) (0.20) (3.00) (0.67) (0.64)
---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD $16.62 $19.96 $26.42 $24.12 $19.06 $18.93
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
TOTAL RETURN (NOT
ANNUALIZED)* (16.73)% 7.73% 10.32% 42.51% 4.23% 36.56%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $94,388 $148,122 $131,226 $59,016 $26,744 $25,413
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 1.27% 1.18%(6) 1.24%(6) 1.28% 1.20% 0.66%
Ratio of net investment
income (loss) to average
net assets (0.90)% (0.96)%(6) (0.82)%(6) (0.76)% (0.81)% (0.01)%
Portfolio turnover 339% 256%(7) 10%(8) 171% 149% 182%
- ----------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 1.27% 1.18%(6) 1.27%(6) 1.38% 1.55% 1.64%
Ratio of net investment
income (loss) to average
net assets prior to waived
fees and reimbursed
expenses (0.90)% (0.96)%(6) (0.85)%(6) (0.86)% (1.16)% (0.99)%
- ----------------------------------------------------------------------------------------------------
</TABLE>
* TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
(1) THE FUND COMMENCED OPERATIONS ON SEPTEMBER 16, 1996.
(2) PERIODS PRIOR TO DECEMBER 31, 1997 HAVE BEEN RESTATED TO GIVE EFFECT
TO THE CONVERSION RATIOS APPLIED IN THE CONSOLIDATION OF OVERLAND
EXPRESS FUNDS, INC. AND STAGECOACH FUNDS, INC. SEE NOTE 1.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(4) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO SEPTEMBER 30.
(5) THIS CLASS OF SHARES COMMENCED OPERATIONS ON JANUARY 20, 1993.
(6) THIS RATIO INCLUDES ACTIVITY OF THE MASTER PORTFOLIO PRIOR TO DECEMBER
15, 1997.
(7) THE PORTFOLIO TURNOVER FOR AND AVERAGE COMMISSION RATE PAID INCLUDE
ACTIVITY OF THE MASTER PORTFOLIO PRIOR TO DECEMBER 15, 1997.
(8) THE PORTFOLIO TURNOVER FOR AND AVERAGE COMMISSION RATE PAID BY THE
CAPITAL APPRECIATION MASTER PORTFOLIO FROM ITS INCEPTION ON FEBRUARY
20, 1996 TO DECEMBER 31, 1996, WERE 137% AND $0.0781, RESPECTIVELY.
THE INFORMATION SHOWN REFLECTS THE STAND-ALONE PERIOD ONLY.
137
<PAGE>
Equity Funds FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
STRATEGIC GROWTH
FUND (1)
CLASS B
----------------------
NINE
MONTHS PERIOD
ENDED ENDED
SEPT. 30, DEC. 31,
1998 (3) 1997 (4)
<S> <C> <C>
- -----------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $24.33 $23.68
---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.29) (0.02)
Net realized and unrealized gain (loss) on investments (3.89) 0.67
---------- ----------
TOTAL FROM INVESTMENT OPERATIONS (4.18) 0.65
LESS DISTRIBUTIONS:
Dividends from net investment income 0.00 0.00
Distributions from net realized gain 0.00 0.00
Tax return of capital 0.00 0.00
---------- ----------
TOTAL FROM DISTRIBUTIONS 0.00 0.00
---------- ----------
NET ASSET VALUE, END OF PERIOD $20.15 $24.33
---------- ----------
---------- ----------
TOTAL RETURN (NOT ANNUALIZED)* (17.18)% 2.74%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $20,337 $23,562
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 1.93% 1.89%
Ratio of net investment income (loss) to average net assets (1.56)% (1.63)%
Portfolio turnover 339% 256%
- -----------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived fees and
reimbursed expenses 1.93% 1.89%
Ratio of net investment income (loss) to average net assets prior to
waived fees and reimbursed expenses (1.56)% (1.63)%
- -----------------------------------------------------------------------------------------------
</TABLE>
* TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
(1) PERIODS PRIOR TO DECEMBER 31, 1997 HAVE BEEN RESTATED TO GIVE EFFECT
TO THE CONVERSION RATIOS APPLIED IN THE CONSOLIDATION OF OVERLAND
EXPRESS FUNDS, INC. AND STAGECOACH FUNDS, INC. SEE NOTE 1.
(2) THIS CLASS OF SHARES COMMENCED OPERATIONS AS CLASS D SHARES ON JULY 1,
1993. THESE SHARES WERE RENAMED AS CLASS C SHARES IN CONJUNCTION WITH
THE CONSOLIDATION OF OVERLAND EXPRESS FUNDS, INC. AND STAGECOACH
FUNDS, INC. SEE NOTE 1.
(3) THIS FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31, TO SEPTEMBER
30.
(4) THIS CLASS OF SHARES COMMENCED OPERATIONS ON DECEMBER 15, 1997.
(5) THIS RATIO INCLUDES ACTIVITY OF THE MASTER PORTFOLIO PRIOR TO DECEMBER
15, 1997.
(6) THE PORTFOLIO TURNOVER FOR AND AVERAGE COMMISSION RATE PAID INCLUDE
ACTIVITY OF THE MASTER PORTFOLIO PRIOR TO DECEMBER 15, 1997.
(7) THE PORTFOLIO TURNOVER FOR THE CAPITAL APPRECIATION MASTER PORTFOLIO
FROM ITS INCEPTION ON FEBRUARY 20, 1996 TO DECEMBER 31, 1996, WAS
137%. THE INFORMATION SHOWN REFLECTS THE STAND-ALONE PERIOD ONLY.
138
<PAGE>
FINANCIAL HIGHLIGHTS Equity Funds
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
STRATEGIC GROWTH FUND (1) (CONT.)
CLASS C (2)
----------------------------------------------------------------------
NINE
MONTHS PERIOD
ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED ENDED
SEPT. 30, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1998 (3) 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $24.32 $32.42 $29.84 $23.74 $23.75 $21.53
---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) (0.29) (0.45) (0.11) (0.23) (0.34) (0.62)
Net realized and
unrealized gain (loss)
on investments (3.89) 3.17 2.93 10.03 1.16 3.60
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT
OPERATIONS (4.18) 2.72 2.82 9.80 0.82 2.98
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 (10.82) (0.24) (3.70) (0.57) (0.76)
Tax return of capital 0.00 0.00 0.00 0.00 (0.26) 0.00
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS 0.00 (10.82) (0.24) (3.70) (0.83) (0.76)
---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD $20.14 $24.32 $32.42 $29.84 $23.74 $23.75
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
TOTAL RETURN (NOT
ANNUALIZED)* (17.19)% 6.98% 9.46% 41.54% 3.46% 13.84%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $17,507 $41,608 $55,063 $26,326 $15,335 $11,932
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 1.94% 1.93%(5) 2.00%(5) 2.02% 1.95% 0.61%
Ratio of net investment
income (loss) to average
net assets (1.57)% (1.70)%(5) (1.58)%(5) (1.49)% (1.56)% (1.00)%
Portfolio turnover 339% 256%(6) 10%(7) 171% 149% 182%
- ----------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 1.94% 1.94%(5) 2.02%(5) 2.09% 2.23% 2.14%
Ratio of net investment
income (loss) to average
net assets prior to waived
fees and reimbursed
expenses (1.57)% (1.71)%(5) (1.60)%(5) (1.56)% (1.84)% (2.53)%
- ----------------------------------------------------------------------------------------------------
</TABLE>
* TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
(1) PERIODS PRIOR TO DECEMBER 31, 1997 HAVE BEEN RESTATED TO GIVE EFFECT
TO THE CONVERSION RATIOS APPLIED IN THE CONSOLIDATION OF OVERLAND
EXPRESS FUNDS, INC. AND STAGECOACH FUNDS, INC. SEE NOTE 1.
(2) THIS CLASS OF SHARES COMMENCED OPERATIONS AS CLASS D SHARES ON JULY 1,
1993. THESE SHARES WERE RENAMED AS CLASS C SHARES IN CONJUNCTION WITH
THE CONSOLIDATION OF OVERLAND EXPRESS FUNDS, INC. AND STAGECOACH
FUNDS, INC. SEE NOTE 1.
(3) THIS FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31, TO SEPTEMBER
30.
(4) THIS CLASS OF SHARES COMMENCED OPERATIONS ON DECEMBER 15, 1997.
(5) THIS RATIO INCLUDES ACTIVITY OF THE MASTER PORTFOLIO PRIOR TO DECEMBER
15, 1997.
(6) THE PORTFOLIO TURNOVER FOR AND AVERAGE COMMISSION RATE PAID INCLUDE
ACTIVITY OF THE MASTER PORTFOLIO PRIOR TO DECEMBER 15, 1997.
(7) THE PORTFOLIO TURNOVER FOR THE CAPITAL APPRECIATION MASTER PORTFOLIO
FROM ITS INCEPTION ON FEBRUARY 20, 1996 TO DECEMBER 31, 1996, WAS
137%. THE INFORMATION SHOWN REFLECTS THE STAND-ALONE PERIOD ONLY.
139
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
140
<PAGE>
NOTES TO FINANCIAL STATEMENTS Equity Funds
- ------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Stagecoach Funds, Inc. (the "Company") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end series
management investment company. The Company commenced operations on January 1,
1992, and is currently comprised of thirty-three separate series. These
financial statements represent the Balanced, Diversified Equity Income, Equity
Index, Equity Value, Growth, International Equity, Small Cap and Strategic
Growth Funds (each, a "Fund", collectively, the "Funds"), each a diversified
series of the Company.
Prior to December 12, 1997, the Stagecoach Diversified Equity Income, Equity
Index, Growth, and Strategic Growth Funds were known as the "Diversified
Income", "Corporate Stock", "Growth and Income" and "Aggressive Growth" Funds,
respectively.
At a meeting held on July 23, 1997, the Boards of Directors of Overland
Express Funds, Inc. ("Overland") and the Company approved a consolidation
agreement providing for the transfer of the assets and liabilities of each
Overland fund to a corresponding fund of the Company in exchange for shares of
designated classes of the corresponding Stagecoach fund (the "Consolidation").
The Consolidation was subsequently approved by Overland shareholders. As a
result of this Consolidation, effective at the close of business on December 12,
1997, the Stagecoach Small Cap Fund and Stagecoach Aggressive Growth Fund
acquired all of the assets and assumed all of the liabilities of the Overland
Small Cap Strategy Fund and the Overland Strategic Growth Fund, respectively.
The Stagecoach Strategic Growth Fund retained Overland accounting and
performance history. Historical share data was restated to give effect to the
conversion ratios of 0.69721936 for Class A shares and 0.69679054 for Class D
shares which were renamed Class C shares in conjunction with the Consolidation.
At the time of the Consolidation, the Equity Index, Small Cap, and Strategic
Growth Funds, structured as "feeder" Funds in a "master-feeder" structure, were
restructured to invest directly in a portfolio of securities, rather than to
invest in portfolio securities through a "master" portfolio. The corresponding
Corporate Stock, Small Cap and Capital Appreciation Master Portfolios (the
"Master Portfolios") distributed all of their assets, net of their assumed
liabilities, in-kind to their interest holders and wound up their affairs (the
"Dissolution"). The Dissolution occurred at the close of business on December
12, 1997.
At a special shareholders meeting on July 16, 1996, the Shareholders of
Pacifica Funds Trust ("Pacifica") approved a plan of reorganization providing
141
<PAGE>
Equity Funds NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------
for the transfer of the assets and liabilities of each Pacifica portfolio to a
corresponding fund of the Company in exchange for shares of designated classes
of the corresponding Stagecoach fund. As a result of this reorganization,
effective September 6, 1996, the Stagecoach Balanced and Equity Value Funds were
established to acquire all of the assets and assume all of the liabilities of
the Pacifica Balanced and Equity Value Funds, respectively (collectively, the
"Predecessor Funds"). Additionally, the Stagecoach Growth Fund (previously known
as the "Growth and Income Fund") acquired all of the assets and assumed all of
the liabilities of the Pacifica Growth Fund. These acquisitions were
accomplished in separate tax-free exchanges for shares of the respective Fund.
All performance and financial data for the Balanced and Equity Value Funds for
periods prior to September 6, 1996 refers to the Predecessor Funds.
Each of the Funds offers Class A and Class B shares. Additionally, the
Balanced, Equity Value, Growth and Small Cap Funds offer Institutional Class
shares. The Equity Value, International Equity, Small Cap and Strategic Growth
Funds also offer C shares. The Class C shares of the Equity Value and
International Equity Funds commenced operations on April 1, 1998. The separate
classes of shares differ principally in the applicable sales charges (if any),
distribution fees, shareholder servicing fees and transfer agency fees.
Shareholders of each class also bear certain expenses that pertain to that
particular class. All shareholders bear the common expenses of the Fund and earn
income from the portfolio pro rata based on the average daily net assets of each
class, without distinction between share classes. Dividends are determined
separately for each class based on income and expenses allocable to each class.
Realized gains are allocated to each class pro rata based on the net assets of
each class on the date of distribution. No class has preferential dividend
rights. Differences in per share dividend rates generally result from the
relative weightings of pro rata income and realized gain allocations and from
differences in separate class expenses, including distribution, shareholder
servicing and transfer agency fees.
The following significant accounting policies are consistently followed by the
Company in the preparation of its financial statements, and such policies are in
conformity with generally accepted accounting principles ("GAAP") for investment
companies.
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
142
<PAGE>
NOTES TO FINANCIAL STATEMENTS Equity Funds
- ------------------------------------------------------------------------
INVESTMENT POLICY AND SECURITY VALUATION
All securities are valued at the close of each business day. Securities for
which the primary market is a national or foreign recognized securities or
commodities exchange or the National Association of Securities Dealers Automated
Quotation ("NASDAQ") National Market are valued at the last reported sales price
on the day of valuation. The market values of securities denominated in foreign
currencies are translated into U.S. dollars using the closing rates of exchange
in effect on the day of valuation. Debt securities are generally traded in the
over-the-counter market and are valued at a price deemed best to reflect fair
value as quoted by dealers who make markets in those securities or by an
independent pricing source. U.S. Government obligations are valued at the last
reported bid price. In the absence of any sale of such securities on the
valuation date and in the case of other securities, excluding money market
instruments maturing in 60 days or less, the valuations are based on latest
quoted bid prices. Debt securities maturing in 60 days or less are valued at
amortized cost. The amortized cost method involves valuing a security at its
cost, plus accretion of discount or minus amortization of premium over the
period until maturity, which approximates market value. Securities for which
quotations are not readily available are valued at fair value as determined by
policies set by the Company's Board of Directors.
FOREIGN CURRENCY TRANSLATION
The accounting records of the International Equity Fund are maintained in U.S.
dollars. Assets, including investment securities, and liabilities denominated in
foreign currency are translated into U.S. dollars at the prevailing rates of
exchange at the date of valuation. Purchases and sales of securities, income and
expenses are translated at the prevailing rate of exchange on the respective
dates of such transactions. Reported net realized foreign exchange gains or
losses arise from sales of foreign currencies, currency gains or losses realized
between the trade and settlement dates on securities transactions, and the
difference between the amounts of dividends, interest and foreign withholding
taxes recorded on the Fund's books and the U.S. dollar equivalent of the amounts
actually paid or received. Net unrealized foreign exchange gains and losses
arise from changes in the fair value of assets and liabilities other than
investments in securities, at fiscal period-end, resulting from changes in
exchange rates.
The changes in net assets arising from changes in exchange rates and the
changes in net assets resulting from changes in market prices of securities at
fiscal period-end are not separately presented. Such changes are recorded with
net
143
<PAGE>
Equity Funds NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------
realized and unrealized gain from investments. However, gains and losses from
certain foreign currency transactions are treated as ordinary income for U.S.
Federal income tax purposes.
SECURITY TRANSACTIONS AND INCOME RECOGNITION
INTERNATIONAL EQUITY FUND -- Securities transactions are recorded on a trade
date basis. Interest income is accrued daily. Dividend income and other
distributions from portfolio securities are recorded on the ex-dividend date,
except, if the ex-dividend date has passed, certain dividends from foreign
securities are recorded as soon as the Fund is informed of the ex-dividend date.
Dividend income is recorded net of foreign taxes withheld where recovery of such
taxes is not assured. Withholding taxes on foreign dividends have been provided
for in accordance with the Fund's understanding of the applicable countries' tax
rules and rates. Realized gains or losses are reported on the basis of
identified cost of securities delivered. Bond discounts are accreted and
premiums are amortized under provisions of the Internal Revenue Code of 1986, as
amended (the "Code").
FUNDS OTHER THAN INTERNATIONAL EQUITY FUND -- Securities transactions are
recorded on a trade date basis. 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 under provisions of the Internal Revenue
Code of 1986, as amended (the "Code").
REPURCHASE AGREEMENTS
Transactions involving purchases of securities under agreements to resell such
securities ("repurchase agreements") are treated as collateralized financing
transactions and are recorded at their contracted resale amounts. These
repurchase agreements, if any, are detailed in each Fund's 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 held by the Funds are collateralized by instruments such as U.S.
Treasury or federal agency obligations.
144
<PAGE>
NOTES TO FINANCIAL STATEMENTS Equity Funds
- ------------------------------------------------------------------------
FUTURES CONTRACTS
The Equity Index Fund has purchased futures contracts to gain exposure to
market changes. This procedure may be more efficient or cost effective than
actually buying the securities. A futures contract is an agreement between
parties to buy or sell a security at a set price on a future date. Upon entering
into such a contract, the Fund is required to pledge to the broker an amount of
cash, U.S. Government obligations or other high-quality debt securities equal to
the minimum "initial margin" requirements of the exchange on which the futures
contract is traded. Pursuant to the contract, the Fund agrees to receive from or
pay to the broker an amount of cash equal to the daily fluctuation in the value
of the contract. Such receipts or payments are known as "variation margin" and
are recorded by the Fund as unrealized gains or losses. When the contract is
closed, the Fund records a realized gain or loss equal to the difference between
the value of the contract at the time it was opened and the value at the time it
was closed. Pursuant to regulations and/or published positions of the Securities
and Exchange Commission("SEC"), the Fund is required to segregate highly liquid
securities as permitted by the SEC in connection with futures transactions in an
amount generally equal to the entire value of the underlying contracts. Risks of
entering into futures contracts include the possibility that there may be an
illiquid market and that a change in the value of the contract may not correlate
with changes in the value of the underlying securities. On September 30, 1998,
the Equity Index Fund held the following futures contracts:
<TABLE>
<CAPTION>
NOTIONAL NET
EXPIRATION CONTRACT UNREALIZED
CONTRACTS TYPE DATE VALUE DEPRECIATION
- --------------------------------------------------------------------
<S> <C> <C> <C> <C>
S & P 500
20 Index December 1998 $5,130,000 $ (81,750)
</TABLE>
The Equity Index Fund has pledged to brokers U.S. Treasury bills for initial
margin requirements with a par value of $600,000.
TBA PURCHASE COMMITMENTS
The Balanced Fund may enter into "TBA" (to be announced) purchase commitments
to purchase securities for a fixed price at a future date beyond customary
settlement time. The Fund holds, and maintains until the settlement date, cash
or high-quality debt obligations in an amount sufficient to meet the purchase
price. TBA purchase commitments are considered securities in themselves, and
involve a risk of loss if the value of the security to be purchased declines
prior to the settlement date. Unsettled TBA purchase commitments are valued at
the current market value of the underlying securities, generally
145
<PAGE>
Equity Funds NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------
according to the procedures described under "Security Valuation" above. At
September 30, 1998, the Balanced Fund held TBA purchase commitments with an
aggregate cost basis of $1,973,750.
Although the Fund generally enters into TBA purchase commitments with the
intention of acquiring securities for its portfolio, the Fund may dispose of a
commitment prior to settlement if the Fund's adviser deems it appropriate to do
so.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends to shareholders from net investment income, if any, are declared and
distributed quarterly, with the exception of the International Equity and Small
Cap Funds. Dividends to shareholders from net investment income of the
International Equity and Small Cap Funds, if any, are declared and distributed
annually. Any distributions to shareholders from net realized capital gains are
declared and distributed at least annually.
FEDERAL INCOME TAXES
Each Fund is treated as a separate entity for federal income tax purposes. It
is the policy of each Fund of the Company to continue to qualify as a regulated
investment company by complying with the provisions applicable to regulated
investment companies, as defined in the Code, and to make distributions of
substantially all of its investment company taxable income and any net realized
capital gains (after reduction for capital loss carryforwards) sufficient to
relieve it from all, or substantially all, federal income taxes. Accordingly, no
provision for federal income taxes was required at September 30, 1998. The
following Funds had net capital loss carryforwards at September 30, 1998:
<TABLE>
<CAPTION>
YEAR CAPITAL LOSS
FUND EXPIRES CARRYFORWARDS
- ---------------------------------------------------------------------------
<S> <C> <C>
International Equity 2006 $ 714,722
Small Cap Fund 2007 14,934,069
Strategic Growth Fund 2004 3,168,815
2005 2.470,830
2006 6,336,849
</TABLE>
Due to the timing of dividend distributions and the differences in accounting
for income and realized gains (losses) for financial statement and federal
income tax purposes, the fiscal year in which amounts are distributed may differ
from the year in which the income and realized gains (losses) were recorded by a
Fund. The differences between the income or gains distributed on a book versus
tax
146
<PAGE>
NOTES TO FINANCIAL STATEMENTS Equity Funds
- ------------------------------------------------------------------------
basis are shown as excess distributions of net investment income and net
realized gain on sales of investments in the accompanying Statements of Changes
in Net Assets. The amount of distributions from net investment income and net
realized capital gains are determined in accordance with federal income tax
regulations, which may differ from GAAP. These "book/tax" differences are either
considered temporary or permanent in nature. To the extent that these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment; temporary
differences do not require reclassifications.
DEFERRED ORGANIZATION COSTS
Certain costs incurred in connection with the organization of the Funds and
their initial registration with the Securities and Exchange Commission and with
the various states are amortized on a straight-line basis over 60 months from
the date each Fund commenced operations.
2. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into separate advisory contracts on behalf of the
Funds with WFB. Pursuant to the contracts, WFB has agreed to provide the Funds
with daily portfolio management. Under the contracts with the Funds, WFB is
entitled to be paid a monthly advisory fee at the following annual rates:
<TABLE>
<CAPTION>
% OF AVERAGE DAILY
FUND NET ASSETS
- -------------------------------------------------------------------------
<S> <C>
Balanced Fund 0.60
Diversified Equity Income Fund 0.50
Equity Index Fund 0.25
Equity Value Fund 0.50
Growth Fund
Daily net assets up to $250 million 0.50
Daily net assets between $250 million and $500
million 0.40
Daily net assets in excess of $500 million 0.30
International Equity Fund 1.00
Small Cap Fund 0.60
Strategic Growth 0.50
</TABLE>
On August 1, 1998, Wells Capital Management Incorporated ("WCM"), a
wholly-owned subsidiary of WFB, began acting as investment sub-advisor to the
Funds, with the exception of the Equity Index Fund. WCM is entitled to receive
from WFB, as compensation for its sub-advisory services, a monthly fee at the
annual rate of 0.25% of each Fund's average daily net assets up to $200 million,
147
<PAGE>
Equity Funds NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------
0.20% for the next $200 million and 0.15% of each Fund's average daily net
assets in excess of $400 million. WCM's minimum annual fee is $120,000 for each
Fund. This minimum annual fee does not increase the advisory fees paid by the
Funds to WFB.
Prior to December 15, 1997, the Equity Index, Small Cap and Strategic Growth
Funds did not directly retain an investment adviser because each Fund invested
all of its assets in a separate Master Portfolio which, in turn, retained WFB as
investment adviser. Advisory fees were charged to the Small Cap and Capital
Appreciation Master Portfolios at the same rate as listed above. Advisory fees
were charged to the Corporate Stock Master Portfolio, into which the Equity
Index Fund invested, at an annual rate of 0.50% of the first $250 million of its
average daily net assets, 0.40% of the next $250 million, and 0.30% of its
average daily net assets in excess of $500 million.
Barclays Global Fund Advisors ("BGFA"), a wholly-owned subsidiary of Barclays
Global Investors, N.A. ("BGI") and indirect subsidiary of Barclays Bank PLC,
acts as sub-adviser to the Equity Index Fund. BGFA is entitled to receive from
WFB, as compensation for its sub-advisory services, a monthly fee at the annual
rate of 0.02% of the Fund's average daily net assets up to $200 million and
0.01% of its average daily net assets in excess of $200 million. Prior to
November 1, 1997, BGFA was entitled to receive a monthly fee at the annual rate
of 0.08% of the Corporate Stock Master Portfolio's average daily net assets plus
an annual payment of $40,000.
The Company has entered into contracts on behalf of each Fund (other than the
Equity Index Fund, for which BGI serves as custodian and the International
Equity Fund, for which Investor's Bank and Trust Company, "IBT", serves as
custodian) with WFB, whereby WFB is responsible for providing custody and
portfolio accounting services for the Funds. Pursuant to the contracts, WFB is
entitled to certain transaction charges plus a monthly fee for custody services
at the annual rate of 0.0167% of the average daily net assets of each Fund. For
portfolio accounting services, WFB is entitled to a monthly base fee from each
Fund of $2,000 plus an annual fee of 0.07% of the first $50 million of each
Fund's average daily net assets, 0.045% of the next $50 million, and 0.02% of
each Fund's average daily net assets in excess of $100 million. WFB has engaged
IBT to perform certain sub-accounting services for the International Equity
Fund. For providing such services, IBT is entitled to fees and reimbursement of
expenses from WFB, which are payable out of the fees received by WFB for
portfolio accounting services. Prior to December 15, 1997, WFB was entitled to
compensation for its custodial and portfolio accounting services to the Small
148
<PAGE>
NOTES TO FINANCIAL STATEMENTS Equity Funds
- ------------------------------------------------------------------------
Cap and Capital Appreciation Master Portfolios at the same rates as listed
above. Additionally, prior to December 15, 1997, the Equity Index Fund did not
pay portfolio accounting fees.
BGI, a wholly-owned subsidiary of Barclays Global Investors Holdings Inc.,
acts as custodian to the Equity Index Fund. BGI is not entitled to receive
compensation for its custodial services to the Fund so long as BGFA is entitled
to receive compensation for providing investment sub-advisory services. Prior to
December 15, 1997, BGI acted as custodian to the Corporate Stock Master
Portfolio in which the Fund invested. BGI was not entitled to receive
compensation for its custodial services for the same reason as listed above.
IBT has been retained to act as custodian for the International Equity Fund.
For domestic and global custody services, IBT is entitled to a fee based upon
security holdings and transaction charges.
The Company has entered into a contract on behalf of the Funds with WFB,
whereby WFB provides transfer agency services for the Funds. Under the transfer
agency contract, WFB is entitled to receive transfer agency fees at an annual
rate of 0.14% of the average daily net assets of the Diversified Equity Income,
Equity Index and International Equity Funds, 0.14% of the Class A and Class B
shares of the Balanced, Equity Value, Growth, Small Cap and Strategic Growth
Funds, 0.14% of the Class C shares of the Equity Value, Small Cap and Strategic
Growth Funds and 0.06% of the average daily net assets of the Institutional
Class shares of the Balanced, Equity Value, Growth and Small Cap Funds.
The transfer agency fees paid on behalf of the Funds for the six months ended
September 30, 1998 were as follows:
<TABLE>
<CAPTION>
INSTITUTIONAL
FUND CLASS A CLASS B CLASS C CLASS
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balanced Fund $ 23,521 $ 7,259 N/A $ 14,020
Equity Value Fund 36,082 55,299 $ 653 61,836
Growth Fund 246,231 37,615 N/A 5,005
Small Cap Fund 10,126 10,931 1,466 20,218
Strategic Growth Fund* 145,640 26,255 30,939 N/A
</TABLE>
* REPRESENTS NINE MONTHS ENDED SEPTEMBER 30, 1998.
The transfer agency fees paid on behalf of the Diversified Equity Income,
Equity Index and International Equity Funds are disclosed in the Statement of
Operations.
149
<PAGE>
Equity Funds NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------
The transfer agency fees paid on behalf of the Funds for the year ended March
31, 1998 were as follows:
<TABLE>
<CAPTION>
INSTITUTIONAL
FUND CLASS A CLASS B CLASS C CLASS
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balanced Fund $ 47,890 $ 5,665 N/A $ 32,921
Equity Value Fund 49,218 40,297 N/A 127,512
Growth Fund 458,239 54,415 N/A 12,507
Small Cap Fund 12,115 10,394 $ 911* 29,571
Strategic Growth Fund** 165,790 1,461* 62,416 N/A
</TABLE>
* THIS CLASS OF SHARES COMMENCED OPERATIONS ON DECEMBER 15, 1997.
** REPRESENTS THE YEAR ENDED DECEMBER 31, 1997.
The transfer agency fees paid on behalf of the Diversified Equity Income,
Equity Index and International Equity Funds are disclosed in the Statement of
Operations.
The Company has entered into contracts on behalf of the Funds with WFB,
whereby WFB has agreed to provide shareholder services for the Funds. Pursuant
to the contracts, WFB is entitled to receive shareholder servicing fees at an
annual rate of 0.30% of the average daily net assets of the Diversified Equity
Income Fund and the Class A and Class B shares of the Growth Fund, 0.25% of the
average daily net assets of the Equity Index and International Equity Funds and
each of the classes of the Balanced, Equity Value, Small Cap and Strategic
Growth Funds, and 0.25% of the average daily net assets of the Institutional
Class shares of the Growth Fund. Prior to December 15, 1997, the Class A shares
of the Strategic Growth Fund were not charged shareholder servicing fees.
The shareholder servicing fees paid on behalf of the Funds for the six months
ended September 30, 1998 were as follows:
<TABLE>
<CAPTION>
INSTITUTIONAL
FUND CLASS A CLASS B CLASS C CLASS
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balanced Fund $ 42,001 $ 12,963 N/A $ 58,415
Equity Value Fund 64,434 98,749 $ 1,166 257,649
Growth Fund 527,638 80,603 N/A 20,855
Small Cap Fund 18,081 19,519 2,619 84,242
Strategic Growth Fund* 260,072 46,883 55,249 N/A
</TABLE>
* REPRESENTS NINE MONTHS ENDED SEPTEMBER 30, 1998.
150
<PAGE>
NOTES TO FINANCIAL STATEMENTS Equity Funds
- ------------------------------------------------------------------------
The shareholder servicing fees paid on behalf of the Funds for the year ended
March 31, 1998 were as follows:
<TABLE>
<CAPTION>
INSTITUTIONAL
FUND CLASS A CLASS B CLASS C CLASS
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balanced Fund $ 85,517 $ 10,072 N/A $ 137,171
Equity Value Fund 87,889 71,959 N/A 531,300
Growth Fund 981,942 116,604 N/A 52,112
Small Cap Fund 21,635 18,547 $ 1,627* 123,268
Strategic Growth Fund** 15,403 2,610* 115,868 N/A
</TABLE>
* THIS CLASS OF SHARES COMMENCED OPERATIONS ON DECEMBER 15, 1997.
** REPRESENTS THE YEAR ENDED DECEMBER 31, 1997.
The shareholder servicing fees paid on behalf of the Diversified Equity
Income, Equity Index and International Equity Funds are disclosed in the
Statement of Operations.
The Company has entered into administration agreements on behalf of the Funds
whereby WFB as administrator and Stephens Inc. ("Stephens") as co-administrator
provide each Fund with administration services. For these services, WFB and
Stephens are entitled to receive monthly fees at the annual rates of 0.03% and
0.04%, respectively, of each Fund's average daily net assets, with the exception
of the International Equity Fund from which WFB and Stephens receive 0.06% and
0.04%, respectively. WFB has engaged IBT to perform certain sub-administration
services for the International Equity Fund. For providing such services, IBT is
entitled to an annual base fee of approximately $42,500 plus a net asset fee at
the annual rate of 0.05% of the first $75 million of average daily net assets,
0.025% of the next $50 million, and 0.01% of the average daily net assets in
excess of $125 million.
Prior to February 1, 1998, WFB and Stephens were entitled to receive from the
Funds, with the exception of the International Equity Fund, monthly fees at the
annual rates of 0.04% and 0.02%, respectively, of each Fund's average daily net
assets.
The Company has adopted Distribution Plans for Class A, Class B and Class C
shares of the Funds pursuant to Rule 12b-1 under the 1940 Act (each, a "Plan").
The Plans for the Class A shares of the Diversified Equity Income and Growth
Funds provide that each such Fund may defray all or part of the cost of
preparing, printing and distributing prospectuses and other promotional
materials by paying for costs incurred on an annual basis of up to 0.05% of the
average daily net assets attributable to such shares. The Plans for the Class A
shares of the remaining Funds, with the exception of the Equity Index Fund,
provide that the Funds may pay to Stephens, as compensation for distribution-
151
<PAGE>
Equity Funds NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------
related services or as reimbursement for distribution-related expenses, a
monthly fee at an annual rate of up to 0.10% of the average daily net assets
attributable to their Class A shares. Prior to December 15, 1997, the Plan for
the Class A shares of the Strategic Growth Fund provided that the Fund pay to
Stephens up to 0.25% of its average daily net assets attributable to the Class A
shares as compensation for distribution-related services.
Under the Plan for Class B shares of the Funds, each Fund may pay to Stephens,
as compensation for distribution-related services or as reimbursement for
distribution-related expenses, a monthly fee at an annual rate of 0.70% of the
average daily net assets attributable to the Class B shares of the Diversified
Equity Income and Growth Funds, and 0.75% of the average daily net assets
attributable to the Class B shares of the Balanced, Equity Index, Equity Value,
International Equity, Small Cap and Strategic Growth Funds.
Under the Plan for the Class C shares of the Equity Value, International
Equity, Small Cap and Strategic Growth Funds, each Fund may pay to Stephens, as
compensation for distribution-related services or as reimbursement for
distribution-related expenses, a monthly fee at an annual rate of 0.75% of the
average daily net assets attributable to its Class C shares.
Each Fund may participate in joint distribution activities with other Funds,
in which event, expenses reimbursed out of the assets of one of the Funds may be
attributable, in part, to the distribution-related activities of another Fund.
Generally, the expenses of joint distribution activities are allocated among the
Funds in proportion to their relative net asset sizes.
The distribution fees paid on behalf of the Funds for the six months ended
September 30, 1998 were as follows:
<TABLE>
<CAPTION>
FUND CLASS A CLASS B CLASS C
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Balanced Fund $ 2,513 $ 38,887 N/A
Diversified Equity Income Fund 7,960 241,710 N/A
Equity Index Fund 0 44,042 N/A
Equity Value Fund 3,832 296,248 $ 3,497
Growth Fund 13,093 188,073 N/A
International Equity Fund 14,252 130,873 663
Small Cap Fund 7,233 58,556 7,857
Strategic Growth Fund* 104,029 140,650 165,747
</TABLE>
* REPRESENTS NINE MONTHS ENDED SEPTEMBER 30, 1998.
152
<PAGE>
NOTES TO FINANCIAL STATEMENTS Equity Funds
- ------------------------------------------------------------------------
The distribution fees paid on behalf of the Funds for the year ended March 31,
1998 were as follows:
<TABLE>
<CAPTION>
FUND CLASS A CLASS B CLASS C
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Balanced Fund $ 34,207 $ 30,347 N/A
Diversified Equity Income Fund 93,368 370,427 N/A
Equity Index Fund 170,172 1,392* N/A
Equity Value Fund 35,155 215,875 N/A
Growth Fund 163,657 272,076 N/A
International Equity Fund*** 11,206 105,749 N/A
Small Cap Fund 8,654 55,686 $ 4,882**
Strategic Growth Fund**** 297,542 7,829** 347,604
</TABLE>
* REPRESENTS THE PERIOD FROM FEBRUARY 17 TO MARCH 31, 1998.
** THIS CLASS OF SHARES COMMENCED OPERATIONS ON DECEMBER 15, 1997.
*** REPRESENTS THE PERIOD FROM SEPTEMBER 24, 1997 TO MARCH 31, 1998.
**** REPRESENTS THE YEAR ENDED DECEMBER 31, 1997.
The registration fees paid on behalf of the Funds for the six months ended
September 30, 1998 were as follows:
<TABLE>
<CAPTION>
INSTITUTIONAL
FUND CLASS A CLASS B CLASS C CLASS
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balanced Fund $ 8,023 $ 5,014 N/A $ 7,521
Diversified Equity Income
Fund 15,041 4,011 N/A N/A
Equity Index Fund 20,289 5,271 N/A N/A
Equity Value Fund 7,020 7,020 $ 5,014 10,026
Growth Fund 15,041 7,020 N/A 9,025
Small Cap Fund 8,023 8,023 7,521 10,026
Strategic Growth Fund* 28,628 8,998 11,968 N/A
</TABLE>
* REPRESENTS NINE MONTHS ENDED SEPTEMBER 30, 1998.
The registration fees paid on behalf of the International Equity Fund are
disclosed in the Statement of Operations.
153
<PAGE>
Equity Funds NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------
The registration fees paid on behalf of the Funds for the year ended March 31,
1998 were as follows:
<TABLE>
<CAPTION>
INSTITUTIONAL
FUND CLASS A CLASS B CLASS C CLASS
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balanced Fund $ 8,152 $ 7,370 N/A $ 12,926
Diversified Equity Income
Fund 26,876 8,557 N/A N/A
Equity Index Fund 43,700 350* N/A N/A
Equity Value Fund 11,575 9,595 N/A 15,231
Growth Fund 33,534 7,453 N/A 12,841
Small Cap Fund 9,628 9,623 $ 4,398** 13,083
Strategic Growth Fund*** 33,505 466** 18,877 N/A
</TABLE>
* REPRESENTS THE PERIOD FROM FEBRUARY 17 TO MARCH 31, 1998.
** THIS CLASS OF SHARES COMMENCED OPERATIONS ON DECEMBER 15, 1997.
*** REPRESENTS THE YEAR ENDED DECEMBER 31, 1997.
The registration fees paid on behalf of the International Equity Fund are
disclosed in the Statement of Operations.
WAIVED FEES AND REIMBURSED EXPENSES
All amounts shown as waived fees and reimbursed expenses on the Statement of
Operations, for the period ended September 30, 1998 were waived by WFB. With the
exception of the Small Cap Fund, the amounts shown as waived fees and reimbursed
expenses on the Statement of Operations for the year ended March 31, 1998, were
waived by WFB. Stephens reimbursed $17,129 and WFB waived $290,759 of the
expenses for the Small Cap Fund. Waived fees and reimbursed expenses continue at
the discretion of WFB and Stephens. WFB and Stephens agreed to waive or
reimburse all or a portion of their respective fees charged to, or expenses paid
by, certain Funds to ensure that the total Fund operating expenses did not
exceed, on an annual basis, 1.13% of the average daily net assets of the
Institutional Class shares of the Growth Fund, and 1.05%, 1.70%, and 0.95% of
the average daily net assets of the Class A, Class B, and Institutional Class
shares, respectively, of the Balanced and Equity Value Funds, through August 31,
1997.
Certain officers and one director of the Company are also officers of
Stephens. As of September 30, 1998, Stephens owned 8 shares of the Balanced,
13,157 shares of the Diversified Equity Income, 2 shares of the Equity Index, 11
shares of the Equity Value, 133 shares of the Growth, 7 shares of the
International Equity, 7 shares of the Small Cap and 6,046 shares of the
Strategic Growth Funds.
154
<PAGE>
NOTES TO FINANCIAL STATEMENTS Equity Funds
- ------------------------------------------------------------------------
Stephens has retained $4,996,575 as sales charges from the proceeds of Class A
shares sold, $1,968,295 from the proceeds of Class B shares redeemed and $51,470
from the proceeds of Class C shares redeemed by the Company for the period ended
September 30, 1998. Wells Fargo Securities Inc., a subsidiary of WFB, received
$3,420,377 as sales charges from the proceeds of Class A shares sold, $869,438
from the proceeds of Class B shares redeemed and $0 from the proceeds of Class C
shares redeemed by the Company for the period ended September 30, 1998.
3. INVESTMENT PORTFOLIO TRANSACTIONS
Purchases and sales of investments, exclusive of short-term securities
(securities with maturities of one year or less at purchase date), for each Fund
for the six months ended September 30, 1998, were as follows:
AGGREGATE PURCHASES AND SALES
<TABLE>
<CAPTION>
PURCHASES AT SALES
FUND COST PROCEEDS
- -------------------------------------------------------------------------
<S> <C> <C>
Balanced Fund $ 27,852,451 $ 39,326,237
Diversified Equity Income Fund 75,560,880 97,349,253
Equity Index Fund 17,622,404 19,055,970
Equity Value Fund 74,139,542 82,255,525
Growth Fund 73,212,804 104,926,174
International Equity Fund 13,925,777 11,984,598
Small Cap Fund 104,325,193 100,809,456
Strategic Growth Fund* 621,566,137 663,874,651
</TABLE>
* REPRESENTS NINE MONTHS ENDED SEPTEMBER 30, 1998.
Purchases and sales of investments, exclusive of short-term securities
(securities with maturities of one year or less at purchase date), for each Fund
for the year ended March 31, 1998, were as follows:
AGGREGATE PURCHASES AND SALES
<TABLE>
<CAPTION>
PURCHASES AT SALES
FUND COST PROCEEDS
- -------------------------------------------------------------------------
<S> <C> <C>
Balanced Fund $ 59,989,806 $ 71,031,318
Diversified Equity Income Fund 170,717,885 135,998,607
Equity Index Fund* 21,944,928 33,317,383
Equity Value Fund 171,191,430 130,196,045
Growth Fund 502,732,111 508,685,640
International Equity Fund** 56,467,495 4,939,125
Small Cap Fund* 182,144,573 225,761,878
Strategic Growth Fund*** 555,512,922 587,880,324
</TABLE>
155
<PAGE>
Equity Funds NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------
* INCLUDES ACTIVITY OF THE MASTER PORTFOLIO FOR THE PERIOD FROM APRIL 1, 1997
TO DECEMBER 12, 1997.
** REPRESENTS THE PERIOD FROM SEPTEMBER 24, 1997 TO MARCH 31, 1998.
*** REPRESENTS THE YEAR ENDED DECEMBER 31, 1997 AND INCLUDES ACTIVITY OF THE
MASTER PORTFOLIO PRIOR TO DECEMBER 12, 1997.
4. CAPITAL SHARE TRANSACTIONS
As of September 30, 1998, there were over 242 billion shares of $0.001 par
value capital stock authorized by the Company. As of September 30, 1998, each
Fund was authorized to issue 500 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
NINE
MONTHS FOR THE FOR THE SIX
ENDED YEAR ENDED MONTHS ENDED
SEPT. 30, MARCH 31, MARCH 31,
1998 1998 1997
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 136,211 420,213 94,369
Shares issued in reinvestment of
dividends -- Class A 32,525 358,753 67,767
Shares redeemed -- Class A (278,356) (780,989) (376,563)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS A (109,620) (2,023) (214,427)
Shares sold -- Class B 240,973 709,400 27,480
Shares issued in reinvestment of
dividends -- Class B 7,017 55,037 42
Shares redeemed -- Class B (58,649) (30,145) (149)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS B 189,341 734,292 27,373
Shares sold -- Institutional Class 206,009 515,727 255,508
Shares issued in reinvestment of
dividends -- Institutional Class 48,235 584,536 137,837
Shares redeemed -- Institutional
Class (1,127,605) (1,857,018) (2,085,655)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- INSTITUTIONAL CLASS (873,361) (756,755) (1,692,310)
</TABLE>
156
<PAGE>
NOTES TO FINANCIAL STATEMENTS Equity Funds
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
DIVERSIFIED EQUITY INCOME FUND
-------------------------------------------
FOR THE SIX
MONTHS
ENDED FOR THE FOR THE SIX
SEPT. 30, YEAR ENDED MONTHS ENDED
1998 MARCH 31, 1998 MARCH 31, 1997
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 485,816 3,839,513 2,361,971
Shares issued in reinvestment of
dividends -- Class A 77,639 593,094 632,053
Shares redeemed -- Class A (1,927,115) (3,291,833) (1,492,299)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS A (1,363,660) 1,140,774 1,501,725
Shares sold -- Class B 345,133 1,936,277 1,234,345
Shares issued in reinvestment of
dividends -- Class B 15,221 172,544 100,491
Shares redeemed -- Class B (398,481) (471,375) (171,202)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS B (38,127) 1,637,446 1,163,634
</TABLE>
<TABLE>
<CAPTION>
EQUITY INDEX FUND
-------------------------------------------
FOR THE SIX
MONTHS FOR THE SIX
ENDED FOR THE MONTHS ENDED
SEPT. 30, YEAR ENDED MARCH 31,
1998 MARCH 31, 1998 1997 (1)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 494,311 1,208,808 595,967
Shares issued in reinvestment of
dividends -- Class A 35,262 271,192 256,416
Shares redeemed -- Class A (772,265) (1,447,968) (663,522)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS A (242,692) 32,032 188,861
Shares sold -- Class B(2) 234,359 54,217 N/A
Shares issued in reinvestment of
dividends -- Class B(2) 24 0 N/A
Shares redeemed -- Class B(2) (19,407) (92) N/A
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS B(2) 214,976 54,125 N/A
</TABLE>
(1) ACTIVITY FOR THIS PERIOD IS REFLECTED AS CLASS A FOR PURPOSES OF THIS TABLE
ONLY.
(2) THE CLASS B SHARES COMMENCED OPERATIONS ON FEBRUARY 17, 1998.
157
<PAGE>
Equity Funds NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY VALUE FUND
-------------------------------------------
FOR THE SIX
MONTHS FOR THE SIX
ENDED FOR THE MONTHS ENDED
SEPT. 30, YEAR ENDED MARCH 31,
1998 MARCH 31, 1998 1997 (1)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 463,645 1,745,819 239,630
Shares issued in reinvestment of
dividends -- Class A 11,979 268,337 16,068
Shares redeemed -- Class A (436,216) (569,633) (272,081)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS A 39,408 1,444,523 (16,383)
Shares sold -- Class B 1,570,146 4,530,419 215,907
Shares issued in reinvestment of
dividends -- Class B 5,398 315,926 85
Shares redeemed -- Class B (450,579) (188,855) (871)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS B 1,124,965 4,657,490 215,121
Shares sold -- Class C(1) 107,237 N/A N/A
Shares issued in reinvestment of
dividends -- Class C(1) 9 N/A N/A
Shares redeemed -- Class C(1) (5,862) N/A N/A
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS C(1) 101,384 N/A N/A
Shares sold -- Institutional Class 563,560 1,371,556 919,441
Shares issued in reinvestment of
dividends -- Institutional Class 28,899 1,303,132 136,028
Shares redeemed -- Institutional Class (2,016,105) (3,471,865) (3,998,514)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- INSTITUTIONAL CLASS (1,423,646) (797,177) (2,943,045)
</TABLE>
(1) THE CLASS C SHARES COMMENCED OPERATIONS ON APRIL 1, 1998.
158
<PAGE>
NOTES TO FINANCIAL STATEMENTS Equity Funds
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH FUND
-------------------------------------------
FOR THE SIX
MONTHS
ENDED FOR THE FOR THE SIX
SEPT. 30, YEAR ENDED MONTHS ENDED
1998 MARCH 31, 1998 MARCH 31, 1997
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 611,479 4,014,428 2,263,021
Shares issued in reinvestment of
dividends -- Class A 40,424 2,345,049 83,226
Shares redeemed -- Class A (2,282,051) (4,584,881) (1,793,908)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS A (1,630,148) 1,774,596 552,339
Shares sold -- Class B 307,172 1,647,233 788,072
Shares issued in reinvestment of
dividends -- Class B 24 428,282 3,523
Shares redeemed -- Class B (320,594) (392,158) (112,577)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS B (13,398) 1,683,357 679,018
Shares sold -- Institutional Class 30,917 166,286 180,805
Shares issued in reinvestment of
dividends -- Institutional Class 1,096 80,772 3,005
Shares redeemed -- Institutional Class (135,901) (420,946) (189,127)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- INSTITUTIONAL CLASS (103,888) (173,888) (5,317)
</TABLE>
159
<PAGE>
Equity Funds NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND
---------------------------
FROM SEPT. 24,
FOR THE SIX 1997
MONTHS (COMMENCEMENT
ENDED OF OPERATIONS)
SEPT. 30, TO
1998 MARCH 31, 1998
- ------------------------------------------------------------------------------------
<S> <C> <C>
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 444,360 $2,572,693
Shares issued in reinvestment of dividends -- Class A 0 257
Shares redeemed -- Class A (319,683) (149,719)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING -- CLASS
A 124,677 2,423,231
Shares sold -- Class B 438,879 3,186,964
Shares issued in reinvestment of dividends -- Class B 0 0
Shares redeemed -- Class B (203,894) (189,888)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING -- CLASS
B 234,985 2,997,076
Shares sold -- Class C(1) 33,350 N/A
Shares issued in reinvestment of dividends -- Class
C(1) 0 N/A
Shares redeemed -- Class C(1) (1,451) N/A
NET INCREASE (DECREASE) IN SHARES OUTSTANDING -- CLASS
C(1) 31,899 N/A
</TABLE>
(1) THE CLASS C SHARES COMMENCED OPERATIONS ON APRIL 1, 1998.
160
<PAGE>
NOTES TO FINANCIAL STATEMENTS Equity Funds
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALL CAP FUND
-------------------------------------------
FOR THE SIX
MONTHS FOR THE
ENDED YEAR ENDED FOR THE SIX
SEPT. 30, MARCH 31, MONTHS ENDED
1998 1998 (1) MARCH 31, 1997
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 136,456 634,259 185,292
Shares issued in reinvestment of
dividends -- Class A 8 34,764 0
Shares redeemed -- Class A (135,740) (223,310) (25,880)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS A 724 445,713 159,412
Shares sold -- Class B 201,571 538,236 108,204
Shares issued in reinvestment of
dividends -- Class B 0 33,568 0
Shares redeemed -- Class B (63,939) (68,877) (7,585)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS B 137,632 502,927 100,619
Shares sold -- Class C(2) 15,556 103,665 N/A
Shares issued in reinvestment of
dividends -- Class C(2) 0 393 N/A
Shares redeemed -- Class C(2) (32,995) (5,746) N/A
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS C(2) (17,439) 98,312 N/A
Shares sold -- Institutional Class 957,486 2,243,301 579,679
Shares issued in reinvestment of
dividends -- Institutional Class 0 183,755 0
Shares redeemed -- Institutional Class (886,274) (902,272) (137,779)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- INSTITUTIONAL CLASS 71,212 1,524,784 441,900
</TABLE>
(1) "SHARES SOLD" INCLUDES 137,123 FOR CLASS A SHARES AND 99,909 FOR CLASS C
SHARES AS A RESULT OF THE CONSOLIDATION OF THE OVERLAND SMALL CAP STRATEGY
FUND.
(2) THIS CLASS OF SHARES COMMENCED OPERATIONS ON DECEMBER 15, 1997.
161
<PAGE>
Equity Funds NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
STRATEGIC GROWTH FUND
-------------------------------------------
FOR THE
NINE
MONTHS FOR THE FOR THE
ENDED YEAR ENDED YEAR ENDED
SEPT. 30, DEC. 31, DEC. 31,
1998 1997 (1) 1996 (2)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 5,216,652 9,450,816 5,734,498
Shares issued in reinvestment of
dividends -- Class A 0 1,180,296 26,926
Shares redeemed -- Class A (6,958,044) (8,176,548) (3,240,135)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS A (1,741,392) 2,454,564 2,521,289
Shares sold -- Class B 263,347 986,522 N/A
Shares issued in reinvestment of
dividends -- Class B 0 0 N/A
Shares redeemed -- Class B (222,796) (18,018) N/A
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS B 40,551 968,504 N/A
Shares sold -- Class C 1,028,552 7,044,117 3,347,233
Shares issued in reinvestment of
dividends -- Class C 0 249,166 5,316
Shares redeemed -- Class C (1,869,893) (7,280,888) (2,536,604)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS C (841,341) 12,395 815,945
</TABLE>
(1) "SHARES SOLD" INCLUDES 2,038,293 FOR CLASS A SHARES AND 964,883 FOR CLASS B
SHARES AS A RESULT OF THE CONSOLIDATION OF THE OVERLAND STRATEGIC GROWTH
FUND.
(2) FIGURES HAVE BEEN RESTATED TO GIVE EFFECT TO THE CONVERSION RATIOS APPLIED
IN THE CONSOLIDATION. SEE NOTE 1.
5. REORGANIZATION OF SMALL CAP FUND
The Small Cap Master Portfolio was 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 Fund continues to
manage its investments in a manner identical in all material respects to the
operation of the Collective Investment Fund.
162
<PAGE>
INDEPENDENT AUDITORS' REPORT Equity Funds
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INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors
Stagecoach Funds, Inc.:
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of the Balanced Fund, Diversified
Equity Income Fund, Equity Index Fund, Equity Value Fund, Growth Fund,
International Equity Fund, Small Cap Fund, and Strategic Growth Fund (eight of
the funds comprising Stagecoach Funds, Inc.) as of September 30, 1998, and the
related statements of operations for the six months ended September 30, 1998 and
the year ended March 31, 1998 (for all funds except the International Equity
Fund which is for the six months ended September 30, 1998 and the period from
September 24, 1997 (commencement of operations) to March 31, 1998, and the
Strategic Growth Fund which is for the nine months ended September 30, 1998 and
the year ended December 31, 1997), the statements of changes in net assets for
the six months ended September 30, 1998, the year ended March 31, 1998, and the
six months ended March 31, 1997 (for all funds except the International Equity
Fund which is for the six months ended September 30, 1998 and the period from
September 24, 1997 to March 31, 1998, and the Strategic Growth Fund which is for
the nine months ended September 30, 1998 and the years ended December 31, 1997
and 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 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 required 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
September 30, 1998, 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 September 30, 1998,
the results of their operations, the changes in their net assets, and their
financial highlights for the periods indicated herein, except as noted above, in
conformity with generally accepted accounting principles.
[KPMG PEAT MARWICK LLP SIGNATURE]
San Francisco, California
October 30, 1998
163
<PAGE>
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164
<PAGE>
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165
<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
FRN -- Floating Rate Notes
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
MTN -- Medium Term Note
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>
166
<PAGE>
Wells Fargo Bank, N.A. provides investment advisory services, shareholder
services and/or certain other services for the Stagecoach Funds. Wells
Capital Management Incorporated ("WCM") provides investment sub-advisory
services for certain Stagecoach Funds. The Funds are distributed by STEPHENS
INC., Member NYSE/SIPC. Wells Fargo Bank, N.A. and WCM are not affiliated
with Stephens Inc.
This report and the financial statements contained herein are submitted for
the general information of the shareholders of the Stagecoach Funds. If this
report is used for promotional purposes, distribution of the report must be
accompanied or preceded by a current prospectus. For a prospectus containing
more complete information, including charges and expenses, call
1-800-222-8222. Read the prospectus carefully before you invest or send money.
STAGECOACH FUNDS-Registered
Trademark-
P.O. Box 7066
San Francisco, CA 94120-7066
DATED MATERIAL
PLEASE EXPEDITE
SC EQ SAR (11/98)
