<PAGE>
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ANNUAL
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REPORT
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EQUITY
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FUNDS
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Balanced Fund
Diversified Equity
Income Fund
Equity Index Fund
Equity Value Fund
Growth Fund
International Equity Fund
Small Cap Fund
MARCH 31, 1998
<PAGE>
TABLE OF CONTENTS
LETTER TO SHAREHOLDERS 1
INVESTMENT ADVISER Q & A
Balanced Fund 3
Diversified Equity Income Fund 9
Equity Index Fund 15
Equity Value Fund 19
Growth Fund 25
International Equity Fund 30
Small Cap Fund 35
PORTFOLIOS OF INVESTMENTS
Balanced Fund 41
Diversified Equity Income Fund 47
Equity Index Fund 52
Equity Value Fund 67
Growth Fund 73
International Equity Fund 79
Small Cap Fund 84
STAGECOACH FUNDS
Statement of Assets and Liabilities 90
Statement of Operations 92
Statements of Changes in Net Assets 94
Financial Highlights 100
Notes to Financial Statements 115
Independent Auditors' Report 132
LIST OF ABBREVIATIONS 133
PROXY VOTING RESULTS 134
STAGECOACH FUNDS:
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- - ARE NOT FDIC INSURED
- - ARE NOT GUARANTEED BY WELLS FARGO BANK [NO FDIC]
- - ARE NOT DEPOSITS OR OBLIGATIONS OF WELLS FARGO
BANK
- - INVOLVE INVESTMENT RISK, INCLUDING POSSIBLE LOSS
OF PRINCIPAL
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LETTER TO SHAREHOLDERS
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TO OUR SHAREHOLDERS:
Thank you for your investment with the Stagecoach Funds.
The Annual and Semi-Annual Reports provide us with an opportunity to speak
directly to you. This year, we are pleased to announce strong returns in the
investment markets and a continued commitment to improving the Stagecoach Funds
to better serve you.
A review of three key indexes shows that returns for the period from April 1,
1997 through March 31, 1998 have been strong. Equities, as measured by the S&P
500 Index, returned 47.96%. Bonds, as measured by the Lehman Brothers Long
Government Bond Index, returned 20.71%. Money market funds, as measured by the
IBC/Donoghue Money Market Average, returned 4.89%.
Among the key drivers of these returns were strong corporate earnings, high
investor confidence and a positive inflation picture. The Federal Open Market
Committee of the Federal Reserve Board raised the federal funds target rate by
0.25% before the beginning of the reporting period. This was interpreted by
investors as a sign that the Fed was going to remain vigilant against inflation,
and long-term interest rates declined as a result, boosting the bond market. The
U.S. economy had been growing at a steady pace and inflationary pressures have
remained in check.
There is no guarantee that this positive environment will continue unabated,
although we remain optimistic about the long-term investment picture. We believe
that an understanding of the historical returns for the various asset classes,
as well as a realistic appraisal of the risks involved in investing, can help
you earn the financial growth you need to meet your goals. We are confident that
a carefully considered long-term plan can help you through short-term
uncertainty.
Our goal is to present a Family of Funds able to meet the increasingly
sophisticated needs of our investors. We are committed to reviewing the
investment options we offer shareholders. Stagecoach Funds has introduced the
Corporate Bond Fund and the Strategic Income Fund. We have also proposed the
consolidation of two Funds with similar investment objectives, the Intermediate
Bond and the Short-Intermediate U.S. Government Income Funds. These changes
follow the consolidation of the Overland Express and Stagecoach Fund families
and the introduction of our new "Plain English" prospectus and represent part of
our ongoing effort to meet your needs.
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1
<PAGE>
LETTER TO SHAREHOLDERS
The following pages provide commentary from the Portfolio Managers designed to
give you a clearer understanding of the returns earned over the period, the
investment policies pursued and what you can expect from your Funds. Please
discuss any questions you may have with your financial consultant.
We look forward to learning how we can better serve you in the future.
STAGECOACH FUNDS
MAY 1998
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. THE LEHMAN BROTHERS
LONG GOVERNMENT BOND INDEX IS AN UNMANAGED INDEX COMPOSED OF U.S. TREASURY BONDS
WITH 20-YEAR OR LONGER MATURITIES. THE IBC/DONOGHUE MONEY MARKET AVERAGE IS AN
AVERAGE OF 700 TAXABLE MONEY MARKET FUNDS.
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BALANCED FUND
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INVESTMENT ADVISER Q&A
WHAT WAS THE TOTAL RETURN FOR THE FUND FOR THE YEAR ENDED MARCH 31, 1998?
Class A shares of the Fund recorded a 27.49% total return for the period
exclusive of sales load. See the "Performance at a Glance" table for the total
returns for other share classes.
WHAT DROVE RETURNS FOR THE EQUITY PORTION OF THE PORTFOLIO?
The keys to the return for the equity portion of the portfolio have been stock
selection based on attention to underlying fundamentals and patience while
waiting for positive catalysts to have their effect on the stock's price. There
are several examples of how a catalyst can have a positive effect on stocks in
the portfolio. The merger of Alco and Alumax drove Alco's stock price from
around $35 to $45 in a single day. Another holding, Cabot Corp, introduced a new
product that caused the stock price to increase from nearly $20 to $30. These
were examples of solid companies that fit our criteria and that we held on to
until the catalysts and other market forces raised the price. Certain selected
industries performed well, including specialty chemicals, banks and financial
services companies. Two HMO stocks, Foundation Health and Cigna also performed
well. Consolidations in these industries, combined with our focus on undervalued
companies with strong management and potentially good catalysts, helped the Fund
earn good returns even in an environment where investors seemed to favor large
company growth stocks.
HOW DO STOCKS BECOME UNDERVALUED?
Wall Street often reacts to momentum. Many investors buy any stock that is
suddenly popular and sell any stock that has fallen out of favor, regardless of
the stock's underlying fundamentals. This often overwhelms a stock's natural
liquidity. A particular stock may have a natural liquidity of 10,000 shares a
day. That means that 10,000 shares can change hands easily without unduly
affecting the price. There may be 20 or 30 investors who hold more than 10,000
shares. A negative surprise, such as an earnings disappointment, may cause a
significant number of those 20 or 30 investors to sell their shares within a
short period, overwhelming the natural liquidity of the stock and driving the
price down. This creates a short-term misvaluation in which the stock price is
undervalued relative to the intrinsic value or the underlying asset value of the
company.
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BALANCED FUND
HOW DO YOU FIND UNDERVALUED STOCKS?
We look primarily for stocks with low price-to-earnings or low price-to-book
ratios. We also want to know if the company's stock is still declining, in other
words, is all the sentiment about the stock negative, or have one or two
analysts turned bullish? The analysts may have discovered a catalyst that could
turn the stock around. At this point, we talk to the company's management. We
want to know if management has equity incentives. If we find a compelling
valuation after the stock has fallen out of favor, it provides us with an
opportunity to accumulate it inexpensively. In the value approach, the ambition
is to own the stock before the rest of Wall Street recognizes the stock's value
and drives the price higher.
DESCRIBE THE QUANTITATIVE STEPS YOU USE IN IDENTIFYING STOCKS?
We typically take the universe of 8,600 stocks and eliminate stocks with a
market cap of less than $2 billion. The market cap is determined by multiplying
the current share price by the total number of outstanding shares of stock.
According to the prospectus, we can buy stock with cap values of less than $1
billion, but we typically do not. Then we narrow the field down further by
looking at the 20% with the lowest price-to-book or price-to-earnings ratios,
which leaves us with approximately 350 names. Next, we look for companies where
the earnings estimates have started to rise or where the latest earnings
surprise after several negative surprises has been positive. That narrows the
field to 85 or 90 names. Then the process becomes more qualitative. We rank the
candidates on an informal but rigorous risk and return basis from the best to
the worst and try to buy the ones that we think are best. Typically, we hold 45
to 60 issues in the portfolio.
DOES SECTOR ANALYSIS HAVE MUCH OF A ROLE, ESPECIALLY WHEN YOU GET DOWN TO THE
FINAL 85 OR 90 CANDIDATES?
Yes, sector analysis does come into play during the final step. Once we have the
final list of candidates ranked, we look at the sector breakdown of the S&P 500
and the Russell 1000 Value Indexes to be sure that we have not favored any
sector too much. We may double the sector weighting of the benchmark, but we do
not want to make large sector gambles. For example, if 45 out of the 85 names on
the list are in the financial sector, we will pick the best 20% of the financial
stocks on the list. We will fill out the portfolio with other non-financial
names from the list so that we have some diversification. This is not intended
to be a sector fund, but rather a diversified portfolio.
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BALANCED FUND
WHAT DROVE RETURNS FOR THE BOND PORTION?
The most significant factor driving total returns has been that long-term yields
have declined. Declining yields generally increase bond prices. In March 1997,
the Federal Reserve did raise the federal funds target rate by 25 basis points
(or 0.25%), but this was eventually accepted as a sign that inflation, which is
the primary influence on long-term rates, was going to remain in check. As a
result, after a brief increase, long-term yields began drifting downward. Yields
in the five-year range were as high as 6.70% early in the period, closed 1997 at
5.66% and remained in a narrow range for the remainder of the period. Another
positive factor during the second half of the period was spread changes. Spreads
measure the difference in yields between corporate bonds and Treasury bonds. If
corporate spreads narrow, this means that corporate yields are declining and
corporate bond prices are increasing. As of October 1997, corporate spreads had
actually widened following the Asian crisis but narrowed for the remainder of
the period.
HOW DID THE ALLOCATION CHANGE?
Before discussing the allocation, shareholders need to keep in mind that the
Balanced Fund is a conservative way of participating in the equity market. The
stock selection process used in the equity portfolio is generally more
conservative than, for example, a growth fund. Also, the prospectus mandates
that at least 30% of the portfolio must be invested in bonds to cushion any
equity market downturn. Generally, the stock and bond markets will react in the
opposite direction -- that is when stock prices go up, bond prices tend to go
down and vice versa. During this period, both parts of the portfolio did well.
The S&P 500 Index reached record valuations during the period and some extra
caution was warranted. Therefore, the allocation remained in the range of 60%
stocks and 40% bonds.
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BALANCED FUND
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PERFORMANCE AT A GLANCE
CLASS A SHARE PERFORMANCE AS OF 3/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 7/2/90
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
With Maximum 5.25% Sales Charge 20.75% 16.55% 11.91% 12.34%
- --------------------------------------------------------------------------------------------
Without Sales Charge 27.49% 18.66% 13.12% 13.12%
- --------------------------------------------------------------------------------------------
</TABLE>
CLASS B SHARE PERFORMANCE AS OF 3/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 7/2/90
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
With Maximum Contingent Deferred Sales
Charge(1) 21.64% 17.13% 12.10% 12.35%
- --------------------------------------------------------------------------------------------
Without Sales Charge 26.64% 17.85% 12.35% 12.35%
- --------------------------------------------------------------------------------------------
(1)Assumes 3/31/98 Redemption
</TABLE>
INSTITUTIONAL CLASS SHARE PERFORMANCE AS OF 3/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 7/2/90
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
This Fund has no Sales Charge 27.67% 18.86% 13.24% 13.20%
- --------------------------------------------------------------------------------------------
</TABLE>
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.
Average annual total returns represent the average annual change in value of an
investment over the indicated periods assuming reinvestment of dividends and
capital gains distributions. 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 portions of its fees or has reimbursed
expenses to the Fund, which has reduced operating expenses for shareholders.
Without this reduction, the Fund's returns would have been lower.
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BALANCED FUND
- --------------------------
GROWTH OF A $10,000 INVESTMENT
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
STAGECOACH BALANCED S&P LEHMAN BROS GOVT/ STAGECOACH BALANCED
FUND INSTITUTIONAL CLASS
FUND CLASS A SHARES 500 INDEX CORP BOND INDEX SHARES
<S> <C> <C> <C> <C>
Inception $9,475 $10,000 $10,000 $10,000
7/31/90 $9,513 $9,968 $10,124 $10,040
8/31/90 $9,153 $9,067 $9,977 $9,660
9/30/90 $9,001 $8,626 $10,060 $9,500
10/31/90 $9,002 $8,589 $10,193 $9,501
11/30/90 $9,395 $9,144 $10,415 $9,916
12/31/90 $9,612 $9,399 $10,572 $10,145
1/31/91 $9,837 $9,808 $10,691 $10,382
2/28/91 $10,217 $10,510 $10,783 $10,783
3/31/91 $10,393 $10,764 $10,857 $10,969
4/30/91 $10,373 $10,790 $10,982 $10,948
5/31/91 $10,590 $11,255 $11,032 $11,177
6/30/91 $10,304 $10,740 $11,020 $10,875
7/31/91 $10,613 $11,240 $11,158 $11,201
8/31/91 $10,852 $11,506 $11,415 $11,453
9/30/91 $10,872 $11,314 $11,653 $11,474
10/31/91 $10,983 $11,466 $11,757 $11,591
11/30/91 $10,640 $11,004 $11,874 $11,230
12/31/91 $11,393 $12,262 $12,275 $12,024
1/31/92 $11,444 $12,034 $12,093 $12,079
2/29/92 $11,610 $12,190 $12,157 $12,253
3/31/92 $11,475 $11,953 $12,090 $12,111
4/30/92 $11,693 $12,304 $12,163 $12,341
5/31/92 $11,662 $12,364 $12,399 $12,308
6/30/92 $11,570 $12,180 $12,580 $12,211
7/31/92 $11,895 $12,678 $12,902 $12,555
8/31/92 $11,675 $12,418 $13,017 $12,322
9/30/92 $11,854 $12,564 $13,195 $12,511
10/31/92 $11,875 $12,607 $12,993 $12,533
11/30/92 $12,172 $13,037 $12,981 $12,847
12/31/92 $12,395 $13,197 $13,205 $13,082
1/31/93 $12,754 $13,307 $13,493 $13,461
2/28/93 $12,961 $13,488 $13,773 $13,679
3/31/93 $13,299 $13,773 $13,820 $14,036
4/30/93 $13,200 $13,440 $13,926 $13,932
5/31/93 $13,442 $13,800 $13,919 $14,187
6/30/93 $13,651 $13,840 $14,235 $14,407
7/31/93 $13,762 $13,784 $14,327 $14,524
8/31/93 $14,227 $14,307 $14,656 $15,016
9/30/93 $14,205 $14,198 $14,707 $14,992
10/31/93 $14,395 $14,491 $14,768 $15,193
11/30/93 $14,317 $14,353 $14,601 $15,110
12/31/93 $14,714 $14,527 $14,665 $15,530
1/31/94 $15,162 $15,021 $14,885 $16,002
2/28/94 $14,944 $14,613 $14,560 $15,772
3/31/94 $14,381 $13,976 $14,204 $15,178
4/30/94 $14,333 $14,155 $14,086 $15,127
5/31/94 $14,394 $14,387 $14,059 $15,191
6/30/94 $14,223 $14,035 $14,027 $15,011
7/31/94 $14,494 $14,496 $14,307 $15,297
8/31/94 $14,802 $15,090 $14,313 $15,622
9/30/94 $14,531 $14,721 $14,148 $15,336
10/31/94 $14,481 $15,052 $14,133 $15,284
11/30/94 $14,120 $14,504 $14,107 $14,903
12/31/94 $14,155 $14,719 $14,201 $14,939
1/31/95 $14,102 $15,100 $14,473 $14,884
2/28/95 $14,537 $15,688 $14,809 $15,343
3/31/95 $14,748 $16,150 $14,908 $15,565
4/28/95 $14,948 $16,625 $15,115 $15,776
5/31/95 $15,387 $17,289 $15,749 $16,240
6/30/95 $15,481 $17,690 $15,875 $16,339
7/31/95 $15,777 $18,276 $15,813 $16,652
8/31/95 $15,845 $18,322 $16,015 $16,723
9/29/95 $16,075 $19,095 $16,179 $16,965
10/31/95 $15,939 $19,026 $16,416 $16,865
11/30/95 $16,455 $19,861 $16,687 $17,367
12/29/95 $16,650 $20,243 $16,933 $17,585
1/31/96 $16,870 $20,932 $17,038 $17,818
2/29/96 $16,856 $21,126 $16,676 $17,818
3/31/96 $17,132 $21,329 $16,536 $18,109
4/30/96 $17,325 $21,643 $16,422 $18,328
5/31/96 $17,588 $22,199 $16,394 $18,606
6/30/96 $17,589 $22,283 $16,614 $18,607
7/31/96 $17,060 $21,298 $16,652 $18,062
8/31/96 $17,297 $21,748 $16,611 $18,312
9/30/96 $17,870 $22,970 $16,906 $18,911
10/31/96 $18,509 $23,604 $17,300 $19,588
11/30/96 $19,429 $25,386 $17,618 $20,563
12/31/96 $19,323 $24,883 $17,423 $20,467
1/31/97 $19,690 $26,436 $17,444 $20,856
2/28/97 $19,866 $26,645 $17,480 $21,042
3/31/97 $19,325 $25,553 $17,272 $20,475
4/30/97 $19,760 $27,076 $17,525 $20,919
5/31/97 $20,645 $28,730 $17,688 $21,857
6/30/97 $21,066 $30,008 $17,900 $22,313
7/31/97 $22,363 $32,394 $18,448 $23,690
8/31/97 $21,747 $30,580 $18,241 $23,036
9/30/97 $22,394 $32,253 $18,527 $23,723
10/31/97 $21,789 $31,175 $18,824 $23,098
11/30/97 $22,296 $32,619 $18,923 $23,636
12/31/97 $22,731 $33,180 $19,122 $24,102
1/31/98 $22,804 $33,545 $19,392 $24,160
2/28/98 $23,855 $35,963 $19,353 $25,296
3/31/98 $24,637 $37,805 $19,413 $26,140
</TABLE>
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 is 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.
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DIVERSIFIED EQUITY INCOME FUND
- --------------------
INVESTMENT ADVISER Q&A
WHAT WAS THE TOTAL RETURN FOR THE FUND FOR THE YEAR ENDED MARCH 31, 1998?
Class A shares of the Fund recorded a 38.15% total return for the period
exclusive of sales load. See the "Performance at a Glance" table for the total
return for the other share class.
WHAT WERE SOME OF THE FACTORS LEADING TO THIS RETURN?
Stock price performance was driven by continued strong corporate earnings
growth, a benign inflation environment and declining long-term interest rates.
Price-to-earnings ratios, which compare a stock's price against its dividends,
have increased in part because investor confidence has increased cash flow into
the equity market. Cash flows increase demand and demand increases stock prices.
We do not expect the Fund to have a return this strong very often. It
demonstrates, however, that even a fairly conservative Fund can still capture
much of the market's upswings.
WHAT ELSE HAS INCREASED CASH FLOWS INTO THE EQUITY MARKET?
Some of the cash flow derived from new sources. For instance, some 401K plans
allow employees to make regular investments into the markets through payroll
deduction. Also, the population is aging and shifting focus from consumer
spending to investment as it prepares for retirement. The strength of the U.S.
dollar has attracted foreign investment, whereas in the past there may have been
more of an outflow. Additionally, the recent Federal Government budget surplus
has reduced new issuance of Treasury bonds, typically a prime competitor for
investors' dollars.
TO WHAT EXTENT HAVE THESE INCREASED CASH FLOWS LIFTED THE MARKET?
Increased cash flows raised price-to-earnings ratios, but in our opinion the
increase in equity valuations has been justified. We believe that the stock
market has historically been undervalued and can support higher valuations than
we have seen in the past. Corporate America has been extremely efficient in
productivity gains, as demonstrated by the double-digit earnings growth we have
seen for many companies throughout this decade.
DO YOU THINK THE CURRENT RATE OF PROFIT GROWTH WILL CONTINUE AND WHAT IS YOUR
STRATEGY IN CASE OF A SLOW-DOWN?
We think that the profit growth we have seen the last few years is
unsustainable. We do not think that corporate values have peaked, but rather
that the rate of growth is going to slow down. Therefore, we are making small
adjustments. We have increased our weighting in REITs (Real Estate Investment
Trusts) over the last few years because we think that the outlook for real
estate looks solid for the next few years. The average REIT in our portfolio
yields approximately 6%, so it fits in well from an income
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DIVERSIFIED EQUITY INCOME FUND
perspective. We have also increased our utility holdings because we believe that
most of the negative news that reduced utility stocks recently has run its
course and that these stocks are now undervalued. If corporate growth slows
down, utilities may look better in relation to the rest of the market than they
have in the recent past.
WHAT HAVE BEEN PROFITABLE INVESTMENTS FOR THE FUND?
A number of our financial sector holdings certainly helped the return, including
Household International Inc., which was a very solid performer during the last
twelve months. A purchase we made a year ago, Freemont General, has nearly
doubled. Chase Manhattan has been a good performer. Also some of our cyclical
consumer names, such as Ford and Maytag, which nearly doubled in price over the
last year, have performed well.
DID THE ASIAN CURRENCY CRISIS HURT THE FINANCIAL SECTOR? DID IT AFFECT THE FUND
IN GENERAL?
Yes, several banks with Asian exposure did suffer initially, but many, such as
Chase, rebounded and reached new highs. In general, the Fund is domestic-based
with only a modest amount of international holdings. Nevertheless, many large
U.S. companies do a portion of their business overseas so there has been some
impact to a number of the Fund's holdings. But it has not been significant. Many
of these firms do less than 5% of their business in Asia and the strength in
Europe has helped offset much of the downturn. The Asian crisis has more impact
on growth funds since the crisis may reduce the expected growth that technology
companies in particular have been expecting.
DO YOU USE QUANTITATIVE SCREENS SUCH AS PRICE-TO-EARNINGS RATIOS TO SELECT
STOCKS?
Certainly quantitative screens are important, but the valuation criteria is not
as strict as some value funds because we are also seeking high yield. It would
be very difficult to find enough yield in stocks comprising the bottom 20% of
the price-to-earnings universe, for example. We generally look for low
price-to-earnings ratios and compare expected growth rates relative to the given
industry. We also do some screening for dividend yield and price-to-book ratio,
but we do focus on more qualitative factors, such as quality of management or a
positive catalyst occurring for the company.
WHEN DO YOU SELL A STOCK? IS THE SELL DISCIPLINE VERY RIGID?
It is somewhat rigid. Success can cause us to sell a stock -- it may have grown
from a "value" stock to a "growth" stock. That would mean that the relative
yield has been reduced because the price has increased. Also, once the specific
catalyst we were anticipating has occurred and its impact is reflected in the
stock price, we may decide to sell. We may also decide to sell if we bought the
stock in part because we felt comfortable with the management team and that team
has left, or if business conditions have
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DIVERSIFIED EQUITY INCOME FUND
changed so that the positive catalyst is unlikely to occur or have its hoped for
effect.
HOW WOULD YOU DESCRIBE THIS FUND TO AN INVESTOR? WHAT SHOULD THEY EXPECT?
The total return of a portfolio consists of two components: yield and
appreciation. In recent years, the appreciation component has been more
significant, but historically, yield has played an important role in total
return. This Fund emphasizes the yield component more than most other equity
funds. We have been very fortunate with the returns we've enjoyed over the last
twelve months, but this Fund is well positioned if the environment becomes less
favorable. It has a much lower price-to-earnings ratio, a lower price-to-book
ratio and much lower volatility than the overall market. These are factors that
tend to cushion risk should the market not perform as well in the future. It is
a good fund for investors who are a little bit more conservative and might feel
more comfortable with a fixed income fund.
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<PAGE>
DIVERSIFIED EQUITY INCOME FUND
- ---------------------
PERFORMANCE AT A GLANCE
CLASS A SHARE PERFORMANCE AS OF 3/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE
11/18/92
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
With Maximum 5.25% Sales Charge 30.94% 23.09% 16.91% 17.10%
- -------------------------------------------------------------------------------------------
Without Sales Charge 38.15% 25.32% 18.18% 18.28%
- -------------------------------------------------------------------------------------------
</TABLE>
CLASS B SHARE PERFORMANCE AS OF 3/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE
11/18/92
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
With Maximum Contingent Deferred Sales
Charge(1) 32.29% 23.91% 17.30% 17.35%
- -------------------------------------------------------------------------------------------
Without Sales Charge 37.29% 24.56% 17.51% 17.44%
- -------------------------------------------------------------------------------------------
(1)Assumes 3/31/98 Redemption
</TABLE>
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.
Average annual total returns represent the average annual change in value of an
investment over the indicated periods assuming reinvestment of dividends and
capital gains distributions at net asset value. 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 portions of its fees or has reimbursed
expenses to the Fund, which has reduced operating expenses for shareholders.
Without this reduction, the Fund's returns would have been lower.
- ---------------------
12
<PAGE>
DIVERSIFIED EQUITY INCOME FUND
- --------------------------
GROWTH OF A $10,000 INVESTMENT
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
STAGECOACH DIVERSIFIED EQUITY
INCOME S&P 500
FUND CLASS A SHARES INDEX
<S> <C> <C>
Inception $9,475 $10,000
11/30/92 $9,560 $10,000
12/31/92 $9,770 $10,123
1/31/93 $9,874 $10,207
2/28/93 $9,884 $10,346
3/31/93 $10,132 $10,565
4/30/93 $9,989 $10,309
5/31/93 $10,276 $10,585
6/30/93 $10,289 $10,616
7/31/93 $10,337 $10,574
8/31/93 $10,750 $10,975
9/30/93 $10,663 $10,891
10/31/93 $11,002 $11,116
11/30/93 $10,798 $11,010
12/31/93 $10,975 $11,143
1/31/94 $11,331 $11,522
2/28/94 $11,123 $11,209
3/31/94 $10,624 $10,720
4/30/94 $10,764 $10,858
5/31/94 $10,963 $11,036
6/30/94 $10,777 $10,766
7/31/94 $11,119 $11,119
8/31/94 $11,511 $11,575
9/30/94 $11,302 $11,292
10/31/94 $11,262 $11,546
11/30/94 $10,857 $11,125
12/31/94 $10,983 $11,290
1/31/95 $11,055 $11,583
2/28/95 $11,524 $12,034
3/31/95 $11,866 $12,388
4/28/95 $12,153 $12,753
5/31/95 $12,472 $13,262
6/30/95 $12,590 $13,569
7/31/95 $12,891 $14,019
8/31/95 $12,984 $14,054
9/29/95 $13,452 $14,647
10/31/95 $13,306 $14,595
11/30/95 $14,004 $15,235
12/29/95 $14,297 $15,528
1/31/96 $14,618 $16,056
2/29/96 $14,897 $16,205
3/31/96 $15,176 $16,361
4/30/96 $15,435 $16,602
5/31/96 $15,693 $17,028
6/30/96 $15,650 $17,093
7/31/96 $14,815 $16,337
8/31/96 $15,335 $16,682
9/30/96 $16,063 $17,620
10/31/96 $16,183 $18,106
11/30/96 $17,273 $19,473
12/31/96 $17,458 $19,087
1/31/97 $17,447 $20,278
2/28/97 $17,667 $20,439
3/31/97 $16,906 $19,601
4/30/97 $17,092 $20,769
5/31/97 $18,536 $22,038
6/30/97 $19,206 $23,018
7/31/97 $20,528 $24,848
8/31/97 $19,861 $23,457
9/30/97 $20,740 $24,740
10/31/97 $19,918 $23,914
11/30/97 $20,458 $25,021
12/31/97 $20,987 $25,451
1/31/98 $20,876 $25,731
2/28/98 $22,360 $27,586
3/31/98 $23,356 $28,999
</TABLE>
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 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.
---------------------
13
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
- ---------------------
14
<PAGE>
EQUITY INDEX FUND
- --------------------
INVESTMENT ADVISER Q&A
WHAT WAS THE TOTAL RETURN FOR THE FUND FOR THE YEAR ENDED MARCH 31, 1998?
Class A shares of the Fund recorded a 46.48% total return for the period
exclusive of sales load. See the "Performance at a Glance" table for the total
return for the other share class.
WHAT WERE SOME OF THE FACTORS DRIVING RETURNS FOR THE S&P 500 INDEX DURING THE
PERIOD?
The stock market during the period continued its stellar performance, with the
S&P 500 Index posting a total return of 47.96%. As was the case the previous few
years, strong economic growth, low inflation, and solid earnings growth drove
these spectacular returns. The best performing sectors in the S&P 500 Index
included communications services, telephone and utilities. The worst performing
sectors included technology and basic materials, although technology stocks have
rebounded from their fall 1997 sell-off. Among other significant U.S. equity
market trends: Merger and acquisition activity experienced a third consecutive
record year, driving stock prices in the relevant industries higher. The
financial services sector alone accounted for more than 30% of all U.S.merger
activity.
WHAT WAS THE SECTOR BREAKDOWN OF THE S&P 500 AT THE END OF THE PERIOD?
The industry sector breakdown for the S&P 500 as of March 31, 1998 was as
follows:
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Basic Industries 6.87%
Capital Goods - Tech 15.97%
Capital Goods 2.37%
Consumer Growth Staple 20.23%
Consumer Cyclical 7.99%
Consumer Staples 7.07%
Credit Cyclical 4.09%
Energy 8.30%
Finance 15.72%
Transportation 0.79%
Utilities 10.60%
</TABLE>
WHAT IMPACT DID THE ASIAN CURRENCY CRISIS HAVE ON THE FUND?
The Fund is focused domestically and did not have any direct exposure to Asian
securities. Nevertheless, many U.S. companies listed on the S&P 500 Index either
have significant sales in Asia or they have targeted their future growth in
Asia. Many of these stocks suffered setbacks in October 1997, but many have
since rebounded. It is possible that the Asian crisis is not over and that
earnings disappointments may yet result.
---------------------
15
<PAGE>
EQUITY INDEX FUND
- ---------------------
PERFORMANCE AT A GLANCE
CLASS A SHARE PERFORMANCE AS OF 3/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE
1/25/84
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR 10 YEAR INCEPTION
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
With Maximum 4.50% Sales Charge 39.88% 29.38% 17.09% 16.20%
- -------------------------------------------------------------------------------------------
Without Sales Charge 46.48% 31.38% 17.63% 16.58%
- -------------------------------------------------------------------------------------------
</TABLE>
CLASS B SHARE PERFORMANCE AS OF 3/31/98
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
SINCE
1/25/84
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR 10 YEAR INCEPTION
- -------------------------------------------------------------------------------------------
With Maximum Contingent Deferred Sales
Charge(1) 40.56% 29.97% 16.91% 15.82%
- -------------------------------------------------------------------------------------------
Without Sales Charge 45.56% 30.56% 16.91% 15.82%
- -------------------------------------------------------------------------------------------
(1)Assumes 3/31/98 Redemption
</TABLE>
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.
Average annual total returns represent the average annual change in value of an
investment over the indicated periods assuming reinvestment of dividends and
capital gains distributions at net asset value. 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 portions of its fees or has reimbursed
expenses to the Fund, which has reduced operating expenses for shareholders.
Without this reduction, the Fund's returns would have been lower.
- ---------------------
16
<PAGE>
EQUITY INDEX FUND
- --------------------------
GROWTH OF A $10,000 INVESTMENT
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
STAGECOACH EQUITY S&P 500
INDEX FUND CLASS A
SHARES INDEX
<S> <C> <C>
1/1/84 $9,550 $10,000
2/1/84 $9,636 $9,648
3/1/84 $9,655 $9,815
4/1/84 $9,712 $9,908
5/1/84 $9,770 $9,360
6/1/84 $9,837 $9,563
7/1/84 $9,903 $9,444
8/1/84 $9,970 $10,488
9/1/84 $9,961 $10,490
10/1/84 $9,980 $10,531
11/1/84 $9,865 $10,413
12/1/84 $10,085 $10,687
1/1/85 $10,763 $11,520
2/1/85 $10,925 $11,661
3/1/85 $10,973 $11,668
4/1/85 $10,906 $11,657
5/1/85 $11,546 $12,331
6/1/85 $11,708 $12,524
7/1/85 $11,670 $12,506
8/1/85 $11,556 $12,399
9/1/85 $11,183 $12,011
10/1/85 $11,651 $12,566
11/1/85 $12,434 $13,428
12/1/85 $13,026 $14,078
1/1/86 $13,064 $14,156
2/1/86 $14,019 $15,214
3/1/86 $14,717 $16,063
4/1/86 $14,516 $15,882
5/1/86 $15,280 $16,727
6/1/86 $15,519 $17,010
7/1/86 $14,650 $16,059
8/1/86 $15,729 $17,249
9/1/86 $14,545 $15,823
10/1/86 $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
</TABLE>
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 Equity Index
Fund Class A shares since inception of the predecessor Fund 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 performances would
have been lower.
---------------------
17
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
- ---------------------
18
<PAGE>
EQUITY VALUE FUND
- --------------------
INVESTMENT ADVISER Q&A
WHAT WAS THE TOTAL RETURN FOR THE FUND FOR THE YEAR ENDED MARCH 31, 1998?
Class A shares of the Fund recorded a 41.76% total return for the period
exclusive of sales load. See the "Performance at a Glance" table for the total
returns for other share classes.
WHAT DROVE RETURNS FOR THE PORTFOLIO?
The keys to the return have been stock selection based on attention to
underlying fundamentals and patience while waiting for positive catalysts to
have their effect on the stock's price. There are several examples of how a
catalyst can have a positive effect on stocks in the portfolio. The merger of
Alco and Alumax drove Alco's stock price from around $35 to $45 in a single day.
Another holding, Cabot Corp, introduced a new product that caused the stock
price to increase from nearly $10 to $20. These were examples of solid companies
that fit our criteria and that we held on to until the catalysts and other
market forces raised the price. Certain selected industries performed well,
including specialty chemicals, banks and financial services companies. Two HMO
stocks, Foundation Health and Cigna, also performed well. Consolidations in
these industries, combined with our focus on undervalued companies with
management and potentially good catalysts, helped the Fund earn good returns
even in an environment where investors seemed to favor large company growth
stocks.
HOW DO STOCKS BECOME UNDERVALUED?
Wall Street often reacts to momentum. Investors buy any stock that is suddenly
popular and sell any stock that has fallen out of favor, regardless of the
underlying fundamentals. This often overwhelms a stock's natural liquidity. For
example, a particular stock has a natural liquidity of 10,000 shares a day. That
means that 10,000 shares can change hands easily without unduly affecting the
price. There may be 20 or 30 investors who hold more than 10,000 shares. A
negative surprise, such as an earnings disappointment, may cause a significant
number of those 20 or 30 investors to sell their shares within a short period,
overwhelming the natural liquidity of the stock and driving the price down. This
creates a short-term misvaluation in which the stock price is undervalued
relative to the intrinsic value or the underlying asset value of the company.
HOW DO YOU FIND UNDERVALUED STOCKS?
We look primarily for stocks with low price-to-earnings or low price-to-book
ratios. We also want to know if the company's stock is still declining, in other
words, is all the sentiment about the stock negative, or have one or two
analysts turned bullish? The analysts may have discovered a catalyst that could
turn the stock around. At this point, we talk to management at the company. We
want to know if management has equity incentives. If we find a compelling
valuation
---------------------
19
<PAGE>
EQUITY VALUE FUND
after the stock has fallen out of favor, it provides us with an opportunity to
accumulate it inexpensively. In the value approach, the ambition is to own the
stock before the rest of Wall Street recognizes the stock's value and drives the
price higher.
DESCRIBE THE QUANTITATIVE STEPS YOU USE IN IDENTIFYING STOCKS?
We typically take the universe of 8,600 stocks and eliminate stocks with a
market cap of less than $2 billion. The market cap is determined by multiplying
the current share price by the total number of outstanding shares of stock.
According to the prospectus, we can buy stock with cap values of less than $1
billion, but we typically do not. Then we narrow the field down further by
looking at the 20% with the lowest price-to-book or price-to-earnings ratios,
which leaves us with approximately 350 names. Next, we look for companies where
the earnings estimates have started to rise or where the latest earnings
surprise after several negative surprises has been positive. That narrows the
field to 85 or 90 names. Then the process becomes more qualitative. We rank the
candidates on an informal but rigorous risk and return basis from the best to
the worst and try to buy the ones that we think are best. Typically, we hold 45
to 60 issues in the portfolio.
DOES SECTOR ANALYSIS HAVE MUCH OF A ROLE, ESPECIALLY WHEN YOU GET DOWN TO THE
FINAL 85 OR 90 CANDIDATES?
Yes, sector analysis does come into play during the final step. Once we have the
final list of candidates ranked, we look at the sector breakdown of the S&P 500
and the Russell 1000 Value Indexes to be sure that we have not favored any
sector too much. We may double the sector weighting of the benchmark, but we do
not want to make large sector gambles. For example, if 45 out of the 85 names on
the list are in the financial sector, we will pick the best 20% of the financial
stocks on the list. We will fill out the portfolio with other non-financial
names from the list so that we have some diversification. This is not intended
to be a sector fund, but rather a diversified portfolio.
DOES THE FUND HAVE A LARGE INTERNATIONAL EXPOSURE?
No, we try to keep the international exposure to less than 10%, typically as low
as 5%. The prospectus does allow us to invest up to 25% of the portfolio in
foreign assets. Our primary international exposure is through large companies
traded on the New York Stock Exchange in the form of American Depository
Receipts or similar instruments. Investors who really want international
exposure can achieve this by buying the International Equity Fund.
HAS THE ASIAN CRISIS AFFECTED THE FUND VERY MUCH?
No, not significantly. Some of the global companies we own, like IBM or Chase,
were impacted adversely during the fourth quarter of 1997, but they have come
back nicely in the first quarter of 1998. The impact on them was often more
perception than reality. Some companies did not have the hard assets
- ---------------------
20
<PAGE>
EQUITY VALUE FUND
or loans in Asia that many investors assumed. In fact we got some great
opportunities out of the reactions to the Asian crisis. We bought a little more
Chase, for example. It gave us a chance to buy John Deere fairly cheaply; people
mistakenly believed that company had a lot of Asian exposure. Actually, less
than 4% of John Deere's sales come out of Asia. We bought John Deere shares for
nearly $10 less than what they traded for at the end of the period.
WHAT ARE SOME OF THE THINGS THAT TELL YOU IT'S TIME TO SELL A STOCK?
Success can cause us to sell a stock -- it may have grown from a "value" stock
to a "growth" stock. That would mean that the relative yield has been reduced
because the price has increased. Also, once the specific catalyst we were
anticipating has occurred and its impact is reflected in the stock price, we may
decide to sell. We may also decide to sell if we bought the stock in part
because we felt comfortable with the management team and that team has left, or
if business conditions have changed so that the positive catalyst is unlikely to
occur or have its hoped for effect.
MANY INVESTORS HAVE INVESTED IN THE STOCK MARKET ONLY OVER THE PAST FEW YEARS
AND KNOW ONLY STRONG RETURNS. WHAT ADVICE DO YOU HAVE FOR THEM?
The market is trading near record valuations. There may be volatility ahead and
shareholders should not be whipsawed by good or bad news. The long term focus
has historically proven to be the best strategy and it does not pay for you to
trade in and out based on what the market is doing on a day to day basis. It
makes sense to have a five to ten year investment horizon. When you buy
something you believe is of good quality, whether it is a fund or a stock, your
instinct still sometimes tells you to sell because of the fear factor. But the
smartest response may be to buy more when everyone else is selling.
---------------------
21
<PAGE>
EQUITY VALUE FUND
- ---------------------
PERFORMANCE AT A GLANCE
CLASS A SHARE PERFORMANCE AS OF 3/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 7/2/90
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
With Maximum 5.25% Sales Charge 34.31% 26.73% 19.37% 16.65%
- -------------------------------------------------------------------------------------------
Without Sales Charge 41.76% 29.03% 20.66% 17.46%
- -------------------------------------------------------------------------------------------
</TABLE>
CLASS B SHARE PERFORMANCE AS OF 3/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 7/2/90
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
With Maximum Contingent Deferred Sales
Charge(1) 35.87% 27.58% 19.66% 16.67%
- -------------------------------------------------------------------------------------------
Without Sales Charge 40.87% 28.19% 19.86% 16.67%
- -------------------------------------------------------------------------------------------
(1)Assumes 3/31/98 Redemption.
</TABLE>
INSTITUTIONAL CLASS SHARE PERFORMANCE AS OF 3/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 7/2/90
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
This Share Class Has No Sales Charge 42.02% 29.24% 20.78% 17.53%
- -------------------------------------------------------------------------------------------
</TABLE>
Average annual total returns represent the average annual change in value of an
investment over the indicated periods assuming reinvestment of dividends and
capital gains distributions at net asset value. 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.
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 policies 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 the
Investor shares of the predecessor portfolio, with expenses of the Investor
shares adjusted to reflect Class B 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.
The Fund's manager has voluntarily waived portions of its fees or has reimbursed
expenses to the Fund, which has reduced operating expenses for shareholders.
Without this reduction, the Fund's returns would have been lower.
- ---------------------
22
<PAGE>
EQUITY VALUE FUND
- --------------------------
GROWTH OF A $10,000 INVESTMENT
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
STAGECOACH EQUITY STAGECOACH EQUITY
VALUE FUND S&P 500 VALUE FUND
INSTITUTIONAL CLASS
CLASS A SHARES INDEX SHARES
<S> <C> <C> <C>
Inception $9,475 $10,000 $10,000
7/31/90 $9,428 $9,968 $9,950
8/31/90 $8,404 $9,067 $8,870
9/30/90 $8,035 $8,626 $8,480
10/31/90 $7,950 $8,589 $8,390
11/30/90 $8,522 $9,144 $8,994
12/31/90 $8,818 $9,399 $9,306
1/31/91 $9,078 $9,808 $9,581
2/28/91 $9,655 $10,510 $10,190
3/31/91 $9,934 $10,764 $10,485
4/30/91 $9,828 $10,790 $10,373
5/31/91 $10,138 $11,255 $10,699
6/30/91 $9,654 $10,740 $10,188
7/31/91 $10,072 $11,240 $10,630
8/31/91 $10,315 $11,506 $10,886
9/30/91 $10,208 $11,314 $10,773
10/31/91 $10,276 $11,466 $10,846
11/30/91 $9,651 $11,004 $10,186
12/31/91 $10,651 $12,262 $11,241
1/31/92 $10,801 $12,034 $11,400
2/29/92 $11,002 $12,190 $11,611
3/31/92 $10,861 $11,953 $11,463
4/30/92 $11,123 $12,304 $11,739
5/31/92 $10,992 $12,364 $11,601
6/30/92 $10,781 $12,180 $11,379
7/31/92 $11,105 $12,678 $11,720
8/31/92 $10,731 $12,418 $11,325
9/30/92 $10,903 $12,564 $11,507
10/31/92 $11,035 $12,607 $11,647
11/30/92 $11,513 $13,037 $12,151
12/31/92 $11,774 $13,197 $12,426
1/31/93 $12,214 $13,307 $12,890
2/28/93 $12,412 $13,488 $13,100
3/31/93 $12,894 $13,773 $13,609
4/30/93 $12,684 $13,440 $13,387
5/31/93 $13,104 $13,800 $13,831
6/30/93 $13,262 $13,840 $13,997
7/31/93 $13,410 $13,784 $14,153
8/31/93 $14,033 $14,307 $14,811
9/30/93 $13,980 $14,198 $14,755
10/31/93 $14,214 $14,491 $15,002
11/30/93 $14,172 $14,353 $14,957
12/31/93 $14,814 $14,527 $15,634
1/31/94 $15,449 $15,021 $16,305
2/28/94 $15,293 $14,613 $16,141
3/31/94 $14,627 $13,976 $15,438
4/30/94 $14,688 $14,155 $15,501
5/31/94 $14,832 $14,387 $15,654
6/30/94 $14,525 $14,035 $15,330
7/31/94 $14,840 $14,496 $15,662
8/31/94 $15,312 $15,090 $16,160
9/30/94 $15,028 $14,721 $15,860
10/31/94 $14,943 $15,052 $15,771
11/30/94 $14,408 $14,504 $15,206
12/31/94 $14,560 $14,719 $15,367
1/31/95 $14,404 $15,100 $15,202
2/28/95 $14,963 $15,688 $15,792
3/31/95 $15,353 $16,150 $16,204
4/28/95 $15,772 $16,625 $16,646
5/31/95 $16,256 $17,289 $17,157
6/30/95 $16,361 $17,690 $17,268
7/31/95 $17,032 $18,276 $17,976
8/31/95 $17,098 $18,322 $18,045
9/29/95 $17,519 $19,095 $18,490
10/31/95 $17,137 $19,026 $18,100
11/30/95 $17,889 $19,861 $18,908
12/29/95 $18,084 $20,243 $19,112
1/31/96 $18,415 $20,932 $19,476
2/29/96 $18,650 $21,126 $19,724
3/31/96 $19,147 $21,329 $20,264
4/30/96 $19,534 $21,643 $20,689
5/31/96 $19,825 $22,199 $21,011
6/30/96 $19,659 $22,283 $20,836
7/31/96 $18,785 $21,298 $19,895
8/31/96 $19,243 $21,748 $20,380
9/30/96 $20,120 $22,970 $21,280
10/31/96 $21,106 $23,604 $22,339
11/30/96 $22,790 $25,386 $24,122
12/31/96 $22,883 $24,883 $24,213
1/31/97 $23,767 $26,436 $25,166
2/28/97 $24,137 $26,645 $25,540
3/31/97 $23,265 $25,553 $24,627
4/30/97 $23,942 $27,076 $25,344
5/31/97 $25,796 $28,730 $27,306
6/30/97 $26,799 $30,008 $28,380
7/31/97 $28,964 $32,394 $30,673
8/31/97 $27,914 $30,580 $29,578
9/30/97 $29,008 $32,253 $30,732
10/31/97 $27,501 $31,175 $29,137
11/30/97 $28,376 $32,619 $30,063
12/31/97 $29,136 $33,180 $30,862
1/31/98 $28,972 $33,545 $30,708
2/28/98 $31,202 $35,963 $33,072
3/31/98 $32,979 $37,805 $34,976
</TABLE>
THE RETURNS FOR B CLASS 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.
---------------------
23
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
- ---------------------
24
<PAGE>
GROWTH FUND
- --------------------
INVESTMENT ADVISER Q&A
WHAT WAS THE TOTAL RETURN FOR THE FUND FOR THE YEAR ENDED MARCH 31, 1998?
Class A shares of the Fund recorded a 34.65% total return for the period
exclusive of sales load. See the "Performance at a Glance" table for the total
returns for other share classes.
THERE WAS A LOT OF DISCUSSION DURING THE PERIOD ABOUT THE LARGE CAP GROWTH
SECTOR PERFORMING WELL. WAS THAT THE CASE?
It was a good period for large cap growth stocks, but it is important to realize
that the Fund is more focused on large cap growth stocks now than it was at the
beginning of the period. Starting in mid-1997, we made a concerted effort to
increase the average market capitalization of stocks in the Fund's portfolio.
(Capitalization is equal to the total number of outstanding shares of stock
multiplied by the stock price.) Previously, the Fund had more of a mid-cap
orientation. By December 1997, the average market cap had increased from about
$32 billion to $59 billion. During December 1997, we honed our stock selections.
By January 1, 1998 we were exactly where we wanted to be.
ARE ALL THE HOLDINGS NOW LARGE CAP?
No, we retain the flexibility to buy mid-cap stocks, but one of our most
critical and unwavering criteria is that companies must have market caps of at
least $5 billion, which does overlap somewhat with the mid-cap range. Typically,
we seldom go below $10 billion. We made changes in the prospectuses to define
capitalization sizes more clearly so that now Stagecoach Fund investors have a
very defined choice and clear style differences among our Equity Funds,
including the more aggressive Small Cap Fund.
DID THIS CHANGE CAUSE A LOT OF PORTFOLIO TURNOVER?
We had a 25% portfolio turnover in realigning the portfolio with the large cap
guidelines. For the full period we had approximately a 150% portfolio turnover,
which was more than it should be in a normal year. Typical growth funds
experience a turnover rate of approximately 100% per year. This is not a heavily
traded fund compared with an aggressive growth or small cap fund.
WHAT WERE THE FACTORS DRIVING THE FUND'S TOTAL RETURN?
The key was the consistency of large cap stocks. By consistency, we mean quarter
after quarter of good earnings. GE, which is the single largest position in the
Fund, has outperformed the market year to date in earnings. Some of our consumer
product companies put up excellent earnings. Gillette and Colgate are large
global franchises that consistently achieve expected or better than expected
earnings and contrive to improve operating margins.
---------------------
25
<PAGE>
GROWTH FUND
HOW DO YOU FIND GOOD GROWTH STOCKS?
We do this by using a series of quantitative screens to reduce the universe of
stocks to a manageable number, then really 'digging in deep' to do research. The
first screen is to eliminate companies with a market cap of $5 billion or less.
Next we look for a five-year historical growth rate of 15%, which is about the
average for the S&P 500 Index. Then we look for growth in earnings from 1997 to
1998 of 7% or more. We want a projected future growth rate of 8%. That gets us
from a universe of around 8,600 companies down to approximately 120 companies.
Then we look at valuation and other fundamental screens before adding names to
the portfolio.
HOW MANY COMPANIES ARE YOU USUALLY HOLDING?
Seventy-five. This seems to be a manageable number. Typically we have three
analysts and assign about 25 companies per analyst. This allows the analysts to
gain a real in-depth knowledge of the companies they have been assigned. One of
our investment beliefs is to "know your company" and our mantra is "avoid
losers". Certainly we would like to hit a homerun every time we select a stock
and get the companies that will have the best returns, but if you consistently
get base hits and avoid the strikeouts, you will perform well. That's what we
mean by "avoid losers" -- getting consistent performers that add something to
the portfolio.
AS YOU TOOK THE FINAL STEPS FROM ABOUT 120 COMPANIES DOWN TO 75, DID SECTORS
COME INTO PLAY?
Definitely. Part of what we do is to compare the sector breakdown of the
portfolio to the S&P 500 Index. We do not want to replicate the sector breakdown
of the S&P 500 Index, but we want to know where we have heavier or lower
concentrations. If we simply replicated the sector breakdown, we would also be
assuming nearly the same risk as the S&P 500 Index. A portfolio must assume more
risk relative to the S&P 500 Index if it hopes to outperform it.
THE S&P 500 INDEX HAS OUTPERFORMED THE GROWTH SECTOR RECENTLY. WILL THAT
CONTINUE?
Returns have been very strong across most equity sectors, but it is true that
the S&P 500 Index has outperformed the growth sector in recent years. This is
not unusual. Over time, growth sectors have typically outperformed other equity
sectors, but there always have been periods when the S&P 500 Index or the value
sector leads the way. Shareholders would be well served by keeping a long-term
perspective in mind. If they own an equity portfolio, they will likely want a
growth component for the times when the growth sector does outperform the rest
of the equity markets, which it has done on a long-term basis. It may be wise to
increase or decrease growth exposure in certain conditions, but we believe that
the growth sector is the center, the anchor to the equity portfolio.
- ---------------------
26
<PAGE>
GROWTH FUND
WHAT IS YOUR STRATEGY IN THE AFTERMATH OF THE ASIAN ECONOMIC CRISIS?
We are focusing on domestic companies. We reduced technology holdings because
they generally have the greatest exposure to Asia. We did the same in the
financial sector. We took some profits by selling holdings where we believed
there was serious unfavorable Asian exposure and moved into more domestically
oriented companies. We think that the Asian crisis isn't over. Its effect has
not shown up in earnings yet. Some technology companies have already made
earnings pre-announcements stating that demand is slower and we believe that
this is in reaction to Asia.
---------------------
27
<PAGE>
GROWTH FUND
- ---------------------
PERFORMANCE AT A GLANCE
CLASS A SHARE PERFORMANCE AS OF 3/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE
8/2/90
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
With Maximum 5.25% Sales Charge 27.61% 22.85% 16.08% 16.11%
- ----------------------------------------------------------------------------------------------
Without Sales Charge 34.65% 25.09% 17.33% 16.92%
- ----------------------------------------------------------------------------------------------
</TABLE>
CLASS B SHARE PERFORMANCE AS OF 3/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE
8/2/90
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
With Maximum Contingent Deferred Sales Charge(1) 28.83% 23.58% 16.43% 16.22%
- ----------------------------------------------------------------------------------------------
Without Sales Charge 33.83% 24.23% 16.65% 16.22%
- ----------------------------------------------------------------------------------------------
(1)Assumes 3/31/98 Redemption
</TABLE>
INSTITUTIONAL CLASS SHARE PERFORMANCE AS OF 3/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE
8/2/90
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR 5 YEAR INCEPTION
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
The Share Class Has No Sales Charge 34.86% 25.10% 17.34% 16.93%
- ----------------------------------------------------------------------------------------------
</TABLE>
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 such 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 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.
Average annual returns represent the average annual change in value of an
investment over the indicated periods assuming reinvestment of dividends and
capital gains distributions at net asset value. 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 portions of its fees or has reimbursed
expenses to the Fund, which has reduced operating expenses for shareholders.
Without this reduction, the Fund's returns would have been lower.
- ---------------------
28
<PAGE>
GROWTH FUND
- --------------------------
GROWTH OF A $10,000 INVESTMENT
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
STAGECOACH GROWTH STAGECOACH GROWTH
FUND S&P 500 FUND
INSTITUTIONAL CLASS
CLASS A SHARES INDEX SHARES
<S> <C> <C> <C>
Inception $9,475 $10,000 $10,000
8/31/90 $9,532 $9,096 $10,060
9/30/90 $9,551 $8,653 $10,080
10/31/90 $9,598 $8,617 $10,130
11/30/90 $9,636 $9,174 $10,170
12/31/90 $9,750 $9,429 $10,290
1/31/91 $10,119 $9,840 $10,680
2/28/91 $10,498 $10,543 $11,080
3/31/91 $10,621 $10,799 $11,210
4/30/91 $10,659 $10,824 $11,250
5/31/91 $11,095 $11,291 $11,710
6/30/91 $10,555 $10,774 $11,140
7/31/91 $11,095 $11,276 $11,710
8/31/91 $11,370 $11,543 $12,000
9/30/91 $11,256 $11,350 $11,880
10/31/91 $11,455 $11,503 $12,090
11/30/91 $10,963 $11,039 $11,570
12/31/91 $12,166 $12,302 $12,840
1/31/92 $12,109 $12,073 $12,780
2/29/92 $12,336 $12,229 $13,020
3/31/92 $12,094 $11,991 $12,764
4/30/92 $12,418 $12,343 $13,106
5/31/92 $12,580 $12,404 $13,277
6/30/92 $12,280 $12,219 $12,960
7/31/92 $12,864 $12,718 $13,577
8/31/92 $12,615 $12,458 $13,314
9/30/92 $12,803 $12,604 $13,512
10/31/92 $13,043 $12,648 $13,766
11/30/92 $13,534 $13,079 $14,284
12/31/92 $13,802 $13,239 $14,566
1/31/93 $14,150 $13,350 $14,934
2/28/93 $13,851 $13,532 $14,619
3/31/93 $14,126 $13,817 $14,909
4/30/93 $13,787 $13,483 $14,551
5/31/93 $14,106 $13,844 $14,888
6/30/93 $13,842 $13,885 $14,609
7/31/93 $13,742 $13,829 $14,504
8/31/93 $14,444 $14,353 $15,245
9/30/93 $14,440 $14,243 $15,241
10/31/93 $14,934 $14,538 $15,761
11/30/93 $14,581 $14,399 $15,389
12/31/93 $14,967 $14,573 $15,796
1/31/94 $15,546 $15,069 $16,407
2/28/94 $15,302 $14,660 $16,150
3/31/94 $14,426 $14,021 $15,225
4/30/94 $14,599 $14,201 $15,408
5/31/94 $14,589 $14,434 $15,397
6/30/94 $14,258 $14,080 $15,048
7/31/94 $14,698 $14,542 $15,512
8/31/94 $15,168 $15,138 $16,008
9/30/94 $14,977 $14,768 $15,807
10/31/94 $15,101 $15,100 $15,937
11/30/94 $14,639 $14,550 $15,450
12/31/94 $14,923 $14,766 $15,750
1/31/95 $14,997 $15,149 $15,828
2/28/95 $15,717 $15,738 $16,588
3/31/95 $16,052 $16,202 $16,941
4/28/95 $16,285 $16,679 $17,188
5/31/95 $17,039 $17,344 $17,983
6/30/95 $17,449 $17,747 $18,416
7/31/95 $17,961 $18,335 $18,956
8/31/95 $18,238 $18,381 $19,249
9/29/95 $18,864 $19,156 $19,909
10/31/95 $18,276 $19,088 $19,289
11/30/95 $19,003 $19,925 $20,056
12/29/95 $19,236 $20,309 $20,302
1/31/96 $19,660 $20,999 $20,749
2/29/96 $20,418 $21,194 $21,549
3/31/96 $20,463 $21,398 $21,597
4/30/96 $21,188 $21,712 $22,362
5/31/96 $21,746 $22,270 $22,951
6/30/96 $21,273 $22,355 $22,452
7/31/96 $19,955 $21,367 $21,061
8/31/96 $20,574 $21,818 $21,714
9/30/96 $21,632 $23,044 $22,790
10/31/96 $22,320 $23,680 $23,517
11/30/96 $23,782 $25,468 $25,057
12/31/96 $23,415 $24,964 $24,664
1/31/97 $24,883 $26,521 $26,211
2/28/97 $24,192 $26,731 $25,492
3/31/97 $23,331 $25,635 $24,594
4/30/97 $24,352 $27,163 $25,675
5/31/97 $25,956 $28,822 $27,379
6/30/97 $26,546 $30,105 $27,994
7/31/97 $28,822 $32,498 $30,402
8/31/97 $27,106 $30,678 $28,596
9/30/97 $28,207 $32,356 $29,755
10/31/97 $27,305 $31,276 $28,813
11/30/97 $27,732 $32,724 $29,273
12/31/97 $27,875 $33,287 $29,427
1/31/98 $28,372 $33,653 $29,938
2/28/98 $29,991 $36,079 $31,651
3/31/98 $31,416 $37,926 $33,169
</TABLE>
THE RETURNS FOR B CLASS 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 Fund
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.
---------------------
29
<PAGE>
INTERNATIONAL EQUITY FUND
- --------------------
INVESTMENT ADVISER Q&A
WHAT WAS THE TOTAL RETURN FOR THE FUND FOR THE PERIOD ENDED MARCH 31, 1998?
Class A shares of the Fund recorded a 10.52% total return from the launch of the
Fund in September through the end of the period, exclusive of sales load. See
the "Performance at a Glance" table for the total return for the other share
class.
THE FUND WAS INTRODUCED JUST PRIOR TO A VERY VOLATILE PERIOD, YET IT HAS DONE
WELL. WHAT CONTRIBUTED TO THIS RETURN?
We attribute the performance to several factors. First, we were intentionally
under exposed to Asia in the Fund's first quarter. We had only 10% of assets or
less in Japan with only 2-3% in Hong Kong. We had one Taiwanese company, which
actually did very well. We had no exposure to the most troubled countries in the
region. We perceived the currencies in Asia as being tremendously risky.
Interest rates had gone up substantially and in some countries this also led to
increased political risk, especially in Indonesia. Even after the economies
stabilized somewhat, we remained under exposed to Asia, although we did slightly
increase investment in Japan and Hong Kong. We are not invested in what we
consider the most troubled regions.
DID YOU INCREASE INVESTMENT IN HONG KONG BECAUSE YOU FELT THAT THE "BAD NEWS"
WAS OVER?
The risk in Hong Kong when we started the Fund was the currency. The economy had
already slowed down during the summer when the government raised interest rates
to stabilize the currency. As the currency concern abated, we increased our
investment.
WHAT WERE THE OTHER REASONS THE FUND DID WELL DURING THE PERIOD?
We made a strategic decision to keep a cash reserve so that when the markets did
collapse -- as they did in many regions in the fourth quarter of 1997, not just
in Asia -- we would be able to take advantage of falling prices. At the end of
September 1997 we had 40% of our assets in cash. At the end of October we had
30%, at the end of November 20% and at the end of December 10%. Today we are
essentially fully invested. If we had been fully invested when the Fund
launched, we would not have been positioned to take advantage of the falling
markets.
Another reason that we believe we performed well was our stock selection. Part
of our philosophy is to have a consistent and disciplined approach to stock
selection. We rank stocks based on growth prospects, valuations, management
capabilities, risk, and investor sentiment. We use both quantitative and
qualitative screens. We want to invest 25% of our assets in the ten most
attractive stocks in order to take advantage of the best potential performers.
IS THE QUALITY OF INFORMATION A PARTICULAR CONCERN IN INTERNATIONAL INVESTING?
Yes, getting information on international investments can be difficult but it is
- ---------------------
30
<PAGE>
INTERNATIONAL EQUITY FUND
getting easier for a variety of reasons, including modern technology, better
communications, more formalized accounting standards, more analysts around the
world and investor demand for better research on companies and countries. But
having said that, there still are problems. Some companies choose not to meet
U.S. accounting and disclosure standards, and we need to be aware of these
deviations. We may choose not to invest in a stock if the information risk is
too great.
IF YOU ARE UNDERWEIGHT IN ASIA, WHERE ARE YOU OVERWEIGHT?
We are overweight in Europe. Europe has an improving economy, rising earnings,
and falling interest rates. As we approach the monetary union, countries with
low interest rates have kept them low and countries with high rates have brought
them down. Also, there is increasing demand for stocks by investors and
institutions. Outside of the UK, Europeans have traditionally been under-
invested in stocks. Europeans are now increasing their holding in equities. In
Spain, for example, five years ago only 2% of household financial assets were
invested in stocks. Today it's 20%. That is compared to 60% in the U.S., so
there still is a long way to go.
HOW DO YOU SELECT STOCKS FOR THE FUND?
We use a multidimensional approach. One aspect is the quantitative bottom-up
stock selection process -- starting with the universe of stocks and screening
for valuation and growth prospects. Another aspect is the identification of
major trends extending over a multi-year period that are going to affect
countries and companies around the world. Those trends may be local to a country
or region, or global. For example, industry deregulation is a global trend that
affects the investment landscape, as is the trend towards wireless
communication. There is some focus on geographical sectors, but we are more
concerned with developing the "big picture". We want to be comfortable with the
risks we are taking. For example, we are highly invested in telecommunications
companies. But every time we examine that risk, we like the trends and numbers.
It's the right place at the right time. We also look at the diversification from
the geographical, industry and risk perspective.
TELL US ABOUT YOUR INVESTMENT STYLE. HOW WOULD YOU CHARACTERIZE IT?
We are more value oriented, but we do have a growth criterion that our companies
should be growing at least 10% or more per year. For us, growth can be relative
to the company's historical growth, relative to its region or its industry. For
example, there is a French stock that we are looking at that might be expensive
relative to French stocks, but may be inexpensive relative to other stocks in
its industry throughout the world. Companies need to have some competitive
advantage. It can be the regional franchise, the barriers to entry, or something
else in its favor. We are not going to buy a company just based on its concept;
there have to be very strong fundamentals.
---------------------
31
<PAGE>
INTERNATIONAL EQUITY FUND
- ---------------------
PERFORMANCE AT A GLANCE
CLASS A SHARE PERFORMANCE AS OF 3/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE
9/24/97
AVERAGE ANNUAL TOTAL RETURNS INCEPTION
<S> <C>
- -------------------------------------------------------------------------------------
With Maximum 5.25% Sales Charge 4.76%
- -------------------------------------------------------------------------------------
Without Sales Charge 10.52%
- -------------------------------------------------------------------------------------
</TABLE>
CLASS B SHARE PERFORMANCE AS OF 3/31/98
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
SINCE
9/24/97
AVERAGE ANNUAL TOTAL RETURNS INCEPTION
- -------------------------------------------------------------------------------------
With Maximum Contingent Deferred Sales Charge(1) 5.10%
- -------------------------------------------------------------------------------------
Without Sales Charge 10.10%
- -------------------------------------------------------------------------------------
(1)Assumes 3/31/98 Redemption
</TABLE>
Average annual total returns represent the average annual change in value of an
investment over the indicated periods assuming reinvestment of dividends and
capital gains distributions at net asset value. 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 portions of its fees or has reimbursed
expenses to the Fund, which has reduced operating expenses for shareholders.
Without this reduction, the Fund's returns would have been lower.
- ---------------------
32
<PAGE>
INTERNATIONAL EQUITY FUND
- --------------------------
GROWTH OF A $10,000 INVESTMENT
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
STAGECOACH INTERNATIONAL
EQUITY MSCI/EAFE INDEX
FUND CLASS A SHARES
<S> <C> <C>
Inception $ 9,475 $ 10,000
09/30/97 $ 9,560 $ 10,140
10/31/97 $ 9,001 $ 9,360
11/30/97 $ 9,077 $ 9,265
12/31/97 $ 9,164 $ 9,345
01/31/98 $ 9,372 $ 9,772
02/28/98 $ 10,007 $ 10,400
03/31/98 $ 10,472 $ 10,720
</TABLE>
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 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.
---------------------
33
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
- ---------------------
34
<PAGE>
SMALL CAP FUND
- --------------------
INVESTMENT ADVISER Q&A
WHAT WAS THE TOTAL RETURN FOR THE FUND FOR THE YEAR ENDED MARCH 31, 1998?
Class A shares of the Fund recorded a 47.03% total return for the period
exclusive of sales load. See the "Performance at a Glance" table for the total
returns for other share classes.
THE FUND, WHICH INVESTS IN SMALL CAPITALIZATION COMPANIES, DID VERY WELL DURING
THE PERIOD. WHAT DROVE THESE RETURNS?
The one-year period was very strong, but returns should not be looked at in
isolation. Part of why the return looks strong is that the first quarter of 1997
was a down period that now falls outside the one-year return. Shareholders
should take a longer view. January 1996 through June 1996 was a spectacular
period for small cap growth stocks. But starting with the fourth quarter of
1996, the market started to prefer large cap stocks. That trend picked up steam
during the first quarter of 1997. Anything in the small cap growth sector, and
even many large cap stocks, saw valuations drop. This sharp sell-off lasted
until April 1997, the beginning of the reporting period. The Fund did well
through mid-October when Asia's economic problems made people very nervous,
first about technology, then about anything considered growth, particularly
small cap. During the first quarter of 1998, people became less worried about
Asia and the market resumed its climb. The point is that examining a single
period might give a misleading impression.
WHAT WAS THE IMPACT OF THE ASIA FINANCIAL CRISIS?
Many industries counted on Asia to be a good growth engine. The business they do
in Asia is only a small part of their overall sales, but it is a big part of
their projected growth rate. That is why the Asian economy affected wireless and
cellular phone systems companies. Asia is only a small part of their business
today, but it is the target of much of their projected growth.
WHAT IS YOUR CURRENT OUTLOOK? IS ASIA STILL A BIG PROBLEM?
Inflation figures and corporate earnings are good, so investors have stopped
worrying about Asia for now. First quarter earnings numbers from the companies
most directly involved were good, but it was probably too early to see the
effects. The U.S. has had a very solid growth rate, Europe is on the upswing,
and Latin America and China still have investor sentiment on their side. There
are concerns, however. Investors are nervous about what earnings reports in the
second quarter of 1998 will show. As for the Fund's response to Asia, we have
been trying to focus our portfolio more domestically. We have concentrated in
technology, internet and software companies that do not do much business in
---------------------
35
<PAGE>
SMALL CAP FUND
Asia. For example, we have invested in companies trying to solve the year 2000
problem.
BY THE "YEAR 2000 PROBLEM" YOU ARE REFERRING TO COMPANIES THAT ARE TRYING TO
SOLVE THE PROBLEMS OF COMPUTER SYSTEMS THAT CANNOT TRACK DATES PAST THE TURN OF
THE CENTURY. IS THAT NECESSARILY A SHORT-TERM TYPE OF INVESTMENT?
No, solving the Year 2000 problem is just one part of their business. It's what
gets them in the door and helps build market share. Like many businesses
involved in new technologies and services, what is driving their growth is that
technology is a strategic necessity. If a bank has on-line banking service and
the bank down the street does not, the on-line bank has a competitive advantage.
Or, if a manufacturer has software to control inventory better and lower costs,
they are at a competitive advantage.
WHAT MAKES INTERNET STOCKS ATTRACTIVE?
Internet companies are in a position similar to what cable systems and the
wireless systems companies once were. They need to get customers and market
share before they can really make money. Some Internet-based companies could
start showing a profit tomorrow if they stopped spending money on marketing, but
there is a race for brand image. If they stop marketing, someone else is going
to come along and get the mind share. Internet stores can sell books, records,
videos, jeans, anything you don't have to touch or feel. For example, if someone
has found a new author at a bookstore and decided to get three or four more
books by the same author, it is easier to go to Amazon.com, look up the author
and be done with it. The Internet is very convenient when you know what you
want. We think that is where the Internet is going to be strong. There is also
talk about $1,000 or $500 personal computers reaching the market. That's going
to benefit the Internet companies as well.
DO YOU LOOK FOR INDUSTRY AND SECTOR TRENDS?
To a certain extent. We have some technical and research support that track the
relative strengths of different sectors. They look at things like
price-to-earnings ratios and growth rates relative to the sector and to the
market as a whole. If we find a sector where the ratios are low or one that has
been attracting investment, we will take a look to see what's going on there. We
buy stocks based on the attractiveness of a particular issue, however, not just
because a particular sector is momentarily "hot".
PRICE-TO-EARNINGS RATIOS HAVE REACHED HISTORICAL HIGHS. IS THAT A CONCERN?
The ratios for the S&P 500 Index have reached historical highs during the
period, but for our sector, they are not as high. Look at the Russell 2000
Growth Index and compare it to the S&P 500 Index. One of the reasons we continue
to think that 1998 will be a good year for
- ---------------------
36
<PAGE>
SMALL CAP FUND
the small cap growth sectors is that the valuations are cheaper and the earnings
growth is strong.
PORTFOLIO TURNOVER WAS 291% FOR THE YEAR. WAS THAT UNUSUALLY HIGH?
Yes, it was artificially high for several reasons. The Fund has had a steady
flow of new investors and we had a lot of money to invest. We sell any stock
whose capitalization, or the total value of all of its shares of stock
multiplied by its stock price, grows beyond the small capitalization range as
described in the prospectus. We also had to meet the so-called "short-short"
requirement of the IRS, which required that a Fund derive not more than 30% of
its gross income from gains on securities held 90 days or less. So if a Fund is
trading and buying and selling IPOs, and builds up a good short-term gain, it
also needs to take long-term gains to get the short-terms gains below 30%. That
rule has been eliminated. It was an artificial rule that created some otherwise
unnecessary turnover. We anticipate that portfolio turnover should be lower in
the future.
HOW MUCH OF THE PORTFOLIO DO YOU GENERALLY KEEP IN CASH?
Generally, about 4-5%. The cash position typically allows the Fund to meet
redemption requests and to take advantage of buying opportunities as they
present themselves. In the first quarter of 1998, however, the Fund was getting
strong cash flows at a time when we were feeling a bit cautious so cash built up
to 10% in March 1998.
---------------------
37
<PAGE>
SMALL CAP FUND
- ---------------------
PERFORMANCE AT A GLANCE
CLASS A SHARE PERFORMANCE AS OF 3/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 11/94
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR INCEPTION
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------
With Maximum 5.25% Sales Charge 39.32% 29.99% 31.99%
- ---------------------------------------------------------------------------------------
Without Sales Charge 47.03% 32.34% 34.08%
- ---------------------------------------------------------------------------------------
</TABLE>
CLASS B SHARE PERFORMANCE AS OF 3/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 11/94
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR INCEPTION
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------
With Maximum Contingent Deferred Sales Charge(1) 41.02% 30.94% 32.80%
- ---------------------------------------------------------------------------------------
Without Sales Charge 46.02% 31.52% 33.24%
- ---------------------------------------------------------------------------------------
(1)Assumes 3/31/98 Redemption
</TABLE>
CLASS C SHARE PERFORMANCE AS OF 3/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 11/94
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR INCEPTION
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------
With Maximum Contingent Deferred Sales Charge(1) 45.02% 31.52% 33.24%
- ---------------------------------------------------------------------------------------
Without Sales Charge 46.02% 31.52% 33.24%
- ---------------------------------------------------------------------------------------
(1)Assumes 3/31/98 Redemption
</TABLE>
INSTITUTIONAL CLASS SHARE PERFORMANCE AS OF 3/31/98
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SINCE 11/94
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 3 YEAR INCEPTION
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------
The Share Class Has No Sales Charge 47.70% 33.62% 35.28%
- ---------------------------------------------------------------------------------------
</TABLE>
Average annual total returns represent the average annual change in value of an
investment over the indicated periods assuming reinvestment of dividends and
capital gain distributions at net asset value. 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.
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.
The Fund's manager has voluntarily waived portions of its fees or has reimbursed
expenses to the Fund, which has reduced operating expenses for shareholders.
Without this reduction, the Fund's returns would have been lower.
- ---------------------
38
<PAGE>
SMALL CAP FUND
- --------------------------
GROWTH OF A $10,000 INVESTMENT
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
STAGECOACH SMALL CAP STAGECOACH SMALL CAP
FUND INSTITUTIONAL
FUND CLASS CLASS
A SHARES RUSSELL 2000 SHARES
<S> <C> <C> <C>
Inception $9,475 $10,000 $10,000
11/30/94 $9,598 $9,596 $10,120
12/31/94 $9,996 $9,853 $10,560
1/31/95 $10,025 $9,729 $10,590
2/28/95 $10,574 $10,134 $11,170
3/31/95 $11,133 $10,307 $11,770
4/28/95 $11,446 $10,536 $12,100
5/31/95 $11,692 $10,717 $12,370
6/30/95 $12,924 $11,273 $13,670
7/31/95 $14,336 $11,923 $15,170
8/31/95 $14,364 $12,169 $15,200
9/29/95 $15,255 $12,387 $16,150
10/31/95 $14,781 $11,834 $15,650
11/30/95 $16,183 $12,331 $17,150
12/29/95 $16,903 $12,656 $17,910
1/31/96 $17,235 $12,642 $18,260
2/29/96 $18,230 $13,037 $19,320
3/31/96 $19,064 $13,303 $20,210
4/30/96 $21,603 $14,014 $22,910
5/31/96 $23,271 $14,566 $24,680
6/30/96 $21,518 $13,968 $22,830
7/31/96 $18,363 $12,748 $19,490
8/31/96 $20,324 $13,489 $21,580
9/30/96 $21,217 $14,016 $22,450
10/31/96 $19,790 $13,801 $20,930
11/30/96 $20,253 $14,369 $21,430
12/31/96 $20,886 $14,746 $22,110
1/31/97 $21,198 $15,041 $22,440
2/28/97 $19,289 $14,675 $20,430
3/31/97 $17,938 $13,982 $19,010
4/30/97 $16,974 $14,022 $18,000
5/31/97 $20,688 $15,582 $21,940
6/30/97 $22,370 $16,251 $23,730
7/31/97 $23,259 $17,006 $24,690
8/31/97 $23,996 $17,396 $25,470
9/30/97 $26,585 $18,669 $28,230
10/31/97 $24,676 $17,850 $26,210
11/30/97 $23,788 $17,733 $25,280
12/31/97 $23,203 $18,044 $24,668
1/31/98 $22,823 $17,759 $24,276
2/28/98 $24,356 $19,071 $25,921
3/31/98 $26,374 $19,857 $28,078
</TABLE>
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% of the U.S. equity market. The Fund is a professional 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.
---------------------
39
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
- ---------------------
40
<PAGE>
BALANCED FUND
- -------------------------------------------------
PORTFOLIO OF INVESTMENTS - MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - 62.81%
AUTOMOBILE & RELATED - 1.44%
15,900 Chrysler Corp $ 525,743 $ 660,844
11,000 Ford Motor Co 334,785 712,938
------------ --------------
$ 860,528 $ 1,373,782
CAPITAL GOODS - 8.02%
11,900 Harris Corp $ 465,065 $ 620,288
10,800 Kennametal Inc 401,914 568,350
28,500 Lancaster Colony Corp 730,708 1,209,469
20,000 Maytag Corp 523,224 956,250
23,700 New Century Energies Inc 1,133,082 1,193,888
64,100 Waste Management Inc 1,723,091 1,975,081
30,000 Willamette Industries Inc 892,143 1,126,875
------------ --------------
$ 5,869,227 $ 7,650,201
COMPUTER SYSTEMS - 1.53%
14,000 International Business Machines Corp $ 741,405 $ 1,454,250
ELECTRICAL EQUIPMENT - 0.53%
20,000 Seagate Technology Inc+ $ 441,540 $ 505,000
ENERGY & RELATED - 10.79%
18,000 Atlantic Richfield Corp $ 1,063,166 $ 1,415,250
39,500 Cabot Corp 1,160,070 1,456,563
10,000 Mobil Corp 426,878 766,250
25,900 Montana Power Co 870,389 934,019
11,000 Phillips Petroleum Co 518,887 549,313
9,000 Royal Dutch Petroleum Co 228,733 511,313
21,000 TECO Energy Inc 510,510 593,250
20,000 Texaco Inc 725,370 1,205,000
20,250 Tidewater Inc 879,824 887,203
44,700 Valero Energy Corp 952,428 1,491,863
15,000 Williams Co Inc 402,140 480,000
------------ --------------
$ 7,738,395 $ 10,290,024
</TABLE>
---------------------
41
<PAGE>
BALANCED FUND
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
FINANCE & RELATED - 17.55%
19,500 American Bankers Insurance Group $ 220,016 $ 1,257,750
24,600 BankAmerica Corp 589,668 2,032,575
10,400 Chase Manhattan Bank 358,200 1,402,700
5,500 CIGNA Corp 1,036,732 1,127,500
38,263 Fremont General Corp 777,889 2,250,343
17,400 Hartford Financial Services Group 1,567,130 1,887,900
242,000 Mercury Financial Co+ 573,495 181,500
29,400 Providian Financial Corp 298,502 1,688,663
14,400 Royal Bank Of Canada 771,842 851,400
22,700 SAFECO Corp 1,047,038 1,240,697
16,000 Simon Debartolo Group Inc 538,672 548,000
18,000 Travelers Group Inc 233,104 1,080,000
16,500 Washington Mutual Inc 1,118,011 1,183,359
------------ --------------
$ 9,130,299 $ 16,732,387
FOOD & RELATED - 2.63%
25,000 American Stores Co $ 523,405 $ 650,000
33,600 Philip Morris Co Inc 627,548 1,400,700
14,500 RJR Nabisco Holdings Corp 518,828 454,031
------------ --------------
$ 1,669,781 $ 2,504,731
GENERAL BUSINESS & RELATED - 0.68%
7,500 General Electric Co $ 143,588 $ 646,406
HEALTHCARE - 1.16%
40,000 Foundation Health Systems Inc $ 1,038,824 $ 1,102,500
MANUFACTURING PROCESSING - 7.87%
30,900 Allegheny Teledyne Inc $ 780,367 $ 859,406
19,500 Alumax Inc+ 743,565 881,156
17,400 Deere & Co 910,508 1,077,713
18,000 Goodrich (B F) Co 805,299 919,125
17,850 Great Lakes Chemical Corp 865,363 963,900
22,000 Hercules Inc 994,218 1,086,250
</TABLE>
- ------------------------
42
<PAGE>
BALANCED FUND
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
17,200 Owens-Illinois Inc+ $ 494,703 $ 743,900
30,000 United Dominion Industries 721,971 973,125
------------ --------------
$ 6,315,994 $ 7,504,575
PHARMACEUTICALS - 0.69%
15,000 Pharmacia and Upjohn Inc $ 397,019 $ 656,250
RETAIL & RELATED - 2.64%
20,000 Costco Companies Inc+ $ 314,580 $ 1,070,000
57,900 Woolworth Corp+ 1,278,430 1,447,495
------------ --------------
$ 1,593,010 $ 2,517,495
SEMICONDUCTOR - 0.84%
14,000 Rockwell International Corp $ 590,755 $ 803,250
TELECOMMUNICATIONS - 2.20%
5,900 Bell Atlantic Corp $ 566,811 $ 604,750
25,000 GTE Corp 827,406 1,496,875
------------ --------------
$ 1,394,217 $ 2,101,625
TRANSPORTATION - 1.24%
19,900 CSX Corp $ 1,035,006 $ 1,184,050
UTILITIES - 3.00%
35,000 Cinergy Corp $ 1,087,820 $ 1,295,000
10,000 Duke Power Co 470,340 595,625
35,000 Southern Co 823,416 969,063
------------ --------------
$ 2,381,576 $ 2,859,688
TOTAL COMMON STOCKS $ 41,341,164 $ 59,886,214
</TABLE>
---------------------
43
<PAGE>
BALANCED FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
FOREIGN GOVERNMENTS - 3.17%
FOREIGN GOVERNMENTS - 3.17%
$ 1,300,000 Ontario, Province of 7.63 % 06/22/04 $ 1,397,500
1,500,000 Quebec, Province of 7.50 07/15/23 1,625,625
--------------
TOTAL FOREIGN GOVERNMENTS $ 3,023,125
(Cost $2,837,902)
CORPORATE BONDS & NOTES - 16.08%
BANK & FINANCE - 4.25%
$ 1,000,000 Associates Corp of America 6.32 % 02/28/00 $ 1,005,000
1,000,000 General Motors Acceptance Corp 6.88 07/15/01 1,018,750
1,000,000 Norwest Corp 7.13 04/01/00 1,021,250
1,000,000 NYNEX Credit Co 6.25 06/13/02 1,003,910
--------------
$ 4,048,910
INDUSTRIALS - 6.46%
$ 1,500,000 BP America Inc 9.38 % 11/01/00 $ 1,620,000
1,000,000 Chrysler Corp 7.40 08/01/97 1,043,230
1,000,000 Fort James Corp 6.88 09/15/07 1,015,000
1,000,000 Noram Energy Corp 6.50 02/01/08 990,000
1,500,000 Raytheon Co 5.95 03/15/01 1,494,375
1,000,000 Raytheon Co 7.20 08/15/27 1,042,500
--------------
$ 7,205,105
MISCELLANEOUS BONDS - 5.37%
$ 2,000,000 EOP Operating LP 6.38 % 02/15/03 $ 1,990,794
1,000,000 Philip Morris Co Inc 7.50 04/01/04 1,043,750
1,000,000 RJR Nabisco Inc 8.25 07/01/04 1,043,750
--------------
$ 4,078,294
TOTAL CORPORATE BONDS & NOTES $ 15,332,309
(Cost $15,179,132)
</TABLE>
- ------------------------
44
<PAGE>
BALANCED FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
U.S. GOVERNMENT AGENCY SECURITIES - 5.33%
FEDERAL HOME LOAN MORTGAGE CORPORATION - 0.50%
$ 47,716 FHLMC #22-0009 8.25 % 08/01/01 $ 48,596
188,319 FHLMC #291786 8.50 01/01/09 196,737
86,674 FHLMC #303407 8.50 12/01/02 89,059
129,115 FHLMC # 546103 10.50 08/01/19 141,522
--------------
$ 475,914
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 4.83%
$ 454,125 FNMA #190526 6.00 % 01/01/01 $ 452,481
434,820 FNMA #190588 6.50 01/01/09 437,733
3,382,497 FNMA #407932 7.00 12/01/27 3,416,559
185,968 FNMA #57843 8.00 06/01/08 192,986
88,988 FNMA #83785 8.00 08/01/18 92,989
7,891 FNMA #75336 9.50 02/01/09 8,395
--------------
$ 4,601,143
TOTAL U.S. GOVERNMENT AGENCY SECURITIES $ 5,077,057
(Cost $5,012,175)
U.S. TREASURY SECURITIES - 11.99%
U.S. TREASURY NOTES - 8.05%
$ 2,500,000 U.S. Treasury Notes 5.75 % 11/15/00 $ 2,507,025
3,500,000 U.S. Treasury Notes 6.25 02/15/03 3,585,855
1,000,000 U.S. Treasury Notes 6.63 06/30/01 1,028,280
500,000 U.S. Treasury Notes 7.50 02/15/05 549,765
--------------
$ 7,670,925
U.S. TREASURY BONDS - 3.94%
$ 3,000,000 U.S. Treasury Bonds 8.13 % 08/15/19 $ 3,753,270
--------------
TOTAL U.S. TREASURY SECURITIES $ 11,424,195
(Cost $11,089,720)
</TABLE>
---------------------
45
<PAGE>
BALANCED FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS - 0.75%
REPURCHASE AGREEMENTS - 0.75%
$ 85,000 Goldman Sachs Pooled Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 5.90 % 04/01/98 $ 85,000
633,000 JP Morgan Securities Inc Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 5.88 04/01/98 633,000
--------------
TOTAL SHORT-TERM INSTRUMENTS $ 718,000
(Cost $718,000)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $76,178,093)* (Notes 1 and 3) 100.13% $ 95,460,900
Other Assets and Liabilities, Net (0.13) (122,909)
------ --------------
TOTAL NET ASSETS 100.00% $ 95,337,991
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</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 $ 19,849,480
Gross Unrealized Depreciation (566,673)
------------
NET UNREALIZED APPRECIATION $ 19,282,807
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
- ------------------------
46
<PAGE>
DIVERSIFIED EQUITY INCOME FUND
- -------------------------------------------------
PORTFOLIO OF INVESTMENTS - MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - 96.58%
AEROSPACE - 2.59%
25,000 Lockheed Martin Corp $ 2,272,403 $ 2,812,500
45,000 Northrop Grumman Corp 4,864,139 4,834,688
------------ --------------
$ 7,136,542 $ 7,647,188
AUTOMOBILE & RELATED - 6.01%
80,000 Dana Corp $ 2,389,993 $ 4,655,000
105,000 Ford Motor Co 3,250,523 6,805,313
165,000 Genuine Parts Co 4,909,608 6,290,625
------------ --------------
$ 10,550,124 $ 17,750,938
BASIC INDUSTRIES - 2.83%
300,000 Allegheny Teledyne Inc $ 7,175,746 $ 8,343,750
CAPITAL GOODS - 6.45%
135,000 Harris Corp $ 5,516,932 $ 7,036,875
55,000 New Century Energies Inc 2,567,282 2,770,625
300,000 Waste Management Inc 7,885,501 9,243,750
------------ --------------
$ 15,969,715 $ 19,051,250
CONGLOMERATES - 2.58%
40,000 General Electric Co $ 1,163,536 $ 3,447,500
40,000 Loews Corp 3,327,449 4,170,000
------------ --------------
$ 4,490,985 $ 7,617,500
ELECTRICAL EQUIPMENT - 1.15%
135,000 Seagate Technology Inc+ $ 5,185,923 $ 3,408,750
</TABLE>
---------------------
47
<PAGE>
DIVERSIFIED EQUITY INCOME FUND
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
ENERGY & RELATED - 12.02%
95,000 Atlantic Richfield Corp $ 5,825,087 $ 7,469,375
45,000 El Paso Natural Gas Co 1,518,182 3,175,313
120,000 Phillips Petroleum Co 5,760,438 5,992,500
46,000 Royal Dutch Petroleum Co 1,158,636 2,613,375
120,000 Sonat Inc 4,967,828 5,220,000
90,000 Texaco Inc 4,959,163 5,422,500
175,000 Williams Co Inc 3,989,336 5,599,996
------------ --------------
$ 28,178,670 $ 35,493,059
FINANCE & RELATED - 22.77%
42,000 Bankers Trust N Y Corp $ 3,229,548 $ 5,053,125
55,000 Chase Manhattan Bank 5,463,675 7,418,125
44,000 CIGNA Corp 7,894,237 9,020,000
150,000 Fremont General Corp 4,500,660 8,821,875
42,000 Hartford Financial Services Group 3,783,639 4,557,000
80,000 Household International Inc 4,616,572 11,020,000
75,000 Kilroy Realty Corp 1,783,512 2,142,188
110,000 Royal Bank of Canada 5,771,726 6,503,750
115,000 SAFECO Corp 5,493,125 6,285,469
85,000 Security Capital Industrial Trust 1,531,613 2,178,125
60,000 Simon Debartolo Group Inc 1,970,256 2,055,000
50,000 SLM Holding Corp 1,994,250 2,181,250
------------ --------------
$ 48,032,813 $ 67,235,907
FOOD & RELATED - 3.94%
100,000 American Stores Co $ 2,191,406 $ 2,600,000
130,000 Philip Morris Co Inc 3,478,810 5,419,375
115,000 RJR Nabisco Holdings Corp 3,996,057 3,600,938
------------ --------------
$ 9,666,273 $ 11,620,313
INTERNATIONAL STOCKS - 2.11%
85,000 Philips Electronics NV (Netherlands) $ 5,240,298 $ 6,242,188
</TABLE>
- ------------------------
48
<PAGE>
DIVERSIFIED EQUITY INCOME FUND
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
MANUFACTURING PROCESSING - 14.49%
110,000 Deere & Co $ 5,908,675 $ 6,813,125
100,000 Eastman Kodak Co 6,844,038 6,487,500
60,000 Eaton Corp 5,464,003 5,711,250
180,000 Goodrich (B F) Co 7,225,542 9,191,250
70,000 Great Lakes Chemical Corp 3,424,301 3,780,000
120,000 Hercules Inc 5,525,248 5,925,000
150,000 United Dominion Industries 3,349,726 4,865,625
------------ --------------
$ 37,741,533 $ 42,773,750
MEDICAL EQUIPMENT & SUPPLIES - 1.49%
80,000 Baxter International Inc $ 3,174,012 $ 4,410,000
PHARMACEUTICALS - 1.62%
50,000 American Home Products Corp $ 1,991,874 $ 4,768,750
REAL ESTATE INVESTMENT TRUSTS - 3.63%
78,700 Arden Realty Inc $ 2,228,194 $ 2,242,950
45,000 Highwoods Properties Inc 1,575,000 1,589,063
85,000 INMC Mortgage Holdings Inc 1,715,550 2,125,000
20,000 Post Properties Inc 626,600 798,750
45,000 Smith (Chars E) Residential Realty Inc 1,107,350 1,496,250
60,000 Spieker Properties Inc 1,626,088 2,475,000
------------ --------------
$ 8,878,782 $ 10,727,013
RETAIL & RELATED - 2.09%
104,700 Rite Aid Corp $ 1,682,597 $ 3,585,975
45,000 Sears Roebuck & Co 2,218,950 2,584,688
------------ --------------
$ 3,901,547 $ 6,170,663
TELECOMMUNICATIONS - 2.37%
160,000 Alltel Corp $ 4,572,257 $ 6,990,000
</TABLE>
---------------------
49
<PAGE>
DIVERSIFIED EQUITY INCOME FUND
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
TRANSPORTATION - 3.37%
120,000 CSX Corp $ 6,230,362 $ 7,140,000
50,000 Union Pacific Corp 2,736,998 2,809,375
------------ --------------
$ 8,967,360 $ 9,949,375
UTILITIES - 5.07%
135,000 Duke Power Co $ 6,185,963 $ 8,040,937
250,000 Southern Co 5,456,475 6,921,875
------------ --------------
$ 11,642,438 $ 14,962,812
TOTAL COMMON STOCKS $222,496,892 $ 285,163,206
CONVERTIBLE PREFERRED STOCK - 0.86%
47,700 Union Pacific Capital Trust 6.25% $ 2,385,000 $ 2,540,025
WARRANTS - 0.00%
3,956 Security Capital Group expires 9/18/98+ $ 13,104
(Cost $31,153)
</TABLE>
- ------------------------
50
<PAGE>
DIVERSIFIED EQUITY INCOME FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS - 3.18%
REPURCHASE AGREEMENTS - 3.18%
$ 3,184,000 Goldman Sachs Pooled Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 5.90% 4/1/98 $ 3,184,000
6,220,000 JP Morgan Securities Inc Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 5.88 4/1/98 6,220,000
--------------
TOTAL SHORT-TERM INSTRUMENTS $ 9,404,000
(Cost $9,404,000)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $234,317,045)* (Notes 1 and 3) 100.62% $ 297,120,335
Other Assets and Liabilities, Net (0.62) (1,844,386)
------ --------------
TOTAL NET ASSETS 100.00% $ 295,275,949
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</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 $ 65,442,764
Gross Unrealized Depreciation (2,639,474)
------------
NET UNREALIZED APPRECIATION $ 62,803,290
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
---------------------
51
<PAGE>
EQUITY INDEX FUND
- -------------------------------------------------
PORTFOLIO OF INVESTMENTS - MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - 99.10%
23,775 3Com Corp+ $ 1,112,235 $ 854,414
51,158 Abbott Laboratories 983,176 3,852,837
4,914 Adobe Systems Inc 226,283 222,051
9,534 Advanced Micro Devices+ 197,756 277,082
1,874 Aeroquip-Vickers Inc 52,210 108,341
9,986 Aetna Inc 806,280 833,207
7,349 Ahmanson (H F) & Co 186,881 569,548
7,892 Air Products & Chemicals Inc 250,019 654,050
33,763 Airtouch Communications Inc+ 544,466 1,652,277
3,768 Alberto-Culver Co Class B 34,307 114,689
16,388 Albertson's Inc 207,148 862,419
15,230 Alcan Aluminium Ltd 292,093 475,938
12,272 Allegheny Teledyne Inc 224,282 341,315
4,350 Allergan Inc 115,250 165,300
217 Allergan Specialty Therapeutics Inc+ 1,899 2,631
37,756 Allied Signal Inc 457,185 1,585,752
28,656 Allstate Corp 645,465 2,634,561
12,390 Alltel Corp 382,837 541,288
11,494 Aluminum Co of America 336,568 790,931
5,703 ALZA Corp+ 156,741 255,566
6,153 Amerada Hess Corp 243,083 358,797
9,223 Ameren Corp 336,638 388,519
12,682 American Electric Power Inc 372,004 637,271
31,072 American Express Corp 845,336 2,852,798
16,940 American General Corp 384,644 1,095,806
4,950 American Greetings Corp Class A 92,718 227,700
43,482 American Home Products Corp 1,204,395 4,147,096
46,917 American International Group Inc 1,057,174 5,908,610
18,230 American Stores Co 162,750 473,980
73,204 Ameritech Corp 1,010,945 3,619,023
17,600 Amgen Inc+ 637,304 1,071,400
32,590 Amoco Corp 1,443,828 2,814,961
14,695 AMP Inc 406,160 643,825
6,099 AMR Corp+ 412,756 873,301
</TABLE>
- ------------------------
52
<PAGE>
EQUITY INDEX FUND
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
4,042 Anadarko Petroleum Corp $ 272,915 $ 278,898
6,060 Andrew Corp+ 19,037 120,064
32,772 Anheuser-Busch Inc 641,133 1,517,753
11,216 Aon Corp 409,647 726,236
6,370 Apache Corp 228,889 234,098
8,570 Apple Computer Inc+ 327,021 235,675
24,404 Applied Materials Inc+ 340,486 861,766
38,273 Archer-Daniels-Midland Co 336,159 839,614
7,263 Armco Inc+ 64,050 42,670
2,677 Armstrong World Industries Inc 108,796 231,728
2,737 ASARCO Inc 68,854 73,044
5,050 Ashland Inc 189,645 285,956
108,728 AT & T Corp 2,765,477 7,135,275
21,440 Atlantic Richfield Corp 973,934 1,685,720
3,200 Autodesk Inc 64,362 138,000
20,008 Automatic Data Processing 350,254 1,361,795
10,143 AutoZone Inc+ 276,810 343,594
6,900 Avery Dennison Corp 74,848 368,288
8,808 Avon Products Inc 168,120 687,024
11,306 Baker Hughes Inc 268,100 455,067
1,991 Ball Corp 64,439 65,205
9,885 Baltimore Gas & Electric Co 208,984 323,116
42,244 Banc One Corp 1,308,707 2,671,933
25,174 Bank of New York Inc 445,851 1,581,242
46,412 BankAmerica Corp 878,698 3,834,792
9,725 BankBoston Corp 338,993 1,072,181
6,530 Bankers Trust N Y Corp 420,818 785,641
3,812 Bard (C R) Inc 86,792 140,091
24,957 Barrick Gold Corp 736,792 539,695
15,408 Battle Mountain Gold Co 131,319 98,226
3,668 Bausch & Lomb Inc 110,743 167,582
18,750 Baxter International Inc 422,637 1,033,594
14,714 Bay Networks Inc+ 665,937 399,117
9,538 BB&T Corp 619,303 645,603
8,216 Becton Dickinson & Co 139,128 559,202
51,940 Bell Atlantic Corp 2,277,578 5,323,850
66,308 BellSouth Corp 1,520,121 4,479,934
</TABLE>
---------------------
53
<PAGE>
EQUITY INDEX FUND
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
3,544 Bemis Co Inc $ 45,356 $ 159,923
3,506 Beneficial Corp 107,412 435,840
9,628 Bestfoods 281,043 1,125,273
7,621 Bethlehem Steel Corp+ 120,234 103,360
7,450 Biomet Inc+ 71,796 223,500
6,376 Black & Decker Corp 142,246 338,327
6,994 Block (H & R) Inc 144,881 332,652
66,879 Boeing Co 1,024,864 3,486,068
3,754 Boise Cascade Corp 140,159 135,379
13,064 Boston Scientific Corp+ 365,375 881,820
1,652 Briggs & Stratton Corp 31,885 75,682
66,498 Bristol-Myers Squibb Co 1,724,207 6,936,573
4,658 Brown-Forman Corp Class B 101,123 256,190
13,258 Browning-Ferris Industries Inc 366,567 432,542
6,669 Brunswick Corp 122,375 232,581
10,436 Burlington Northern Santa Fe 399,038 1,085,344
11,836 Burlington Resources Inc 470,615 567,388
10,542 Cabletron Systems Inc+ 290,305 153,518
30,628 Campbell Soup Co 361,608 1,738,139
7,366 Cardinal Health Inc 427,140 649,589
10,100 Carolina Power & Light Co 237,490 457,025
5,054 Case Corp 223,805 344,304
24,912 Caterpillar Inc 337,122 1,371,717
47,662 CBS Corp+ 1,134,446 1,617,529
54,279 Cendant Corp+ 1,295,895 2,150,805
3,908 Centex Corp 37,882 148,993
14,242 Central & South West Corp 284,150 380,974
5,096 Ceridian Corp+ 156,079 274,866
6,398 Champion International Corp 214,304 347,491
7,106 Charming Shoppes Inc+ 90,134 33,754
28,180 Chase Manhattan Bank 988,500 3,800,778
43,946 Chevron Corp 1,394,146 3,529,413
44,291 Chrysler Corp 728,123 1,840,845
11,348 Chubb Corp 286,699 889,400
4,949 CIGNA Corp 318,388 1,014,545
3,631 Cincinnati Financial Corp 509,082 454,783
2,692 Cincinnati Milacron Inc 60,127 85,808
</TABLE>
- ------------------------
54
<PAGE>
EQUITY INDEX FUND
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
10,571 Cinergy Corp $ 229,209 $ 391,127
6,600 Circuit City Stores Inc 99,692 282,150
68,113 Cisco Systems Inc+ 1,195,801 4,657,226
30,532 Citicorp 1,161,430 4,335,544
6,541 Clear Channel Communications Inc+ 441,718 641,018
6,872 Clorox Co 125,742 588,845
7,082 Coastal Corp 174,156 461,215
165,452 Coca-Cola Co 1,805,323 12,812,189
10,832 Cognizant Corp 320,059 621,486
19,746 Colgate-Palmolive Co 366,009 1,710,497
3,698 Columbia Gas System Inc 153,741 287,520
43,350 Columbia HCA Healthcare Corp 1,110,536 1,398,038
23,363 Comcast Corp Class A 486,643 825,006
7,055 Comerica Inc 266,788 746,507
101,342 Compaq Computer Corp 514,985 2,622,224
36,519 Computer Associates International Inc 210,794 2,108,972
10,372 Computer Sciences Corp+ 187,434 570,460
31,590 ConAgra Inc 350,619 1,014,829
12,581 Conseco Inc 461,040 712,399
15,764 Consolidated Edison Inc+ 389,000 736,967
6,399 Consolidated Natural Gas Co 255,181 369,142
7,188 Consolidated Stores Corp+ 313,792 308,635
8,144 Cooper Industries Inc 309,440 484,059
5,250 Cooper Tire & Rubber Co 67,508 124,688
2,459 Coors (Adolph) Co Class B 50,302 86,065
13,248 CoreStates Financial Corp 417,568 1,189,008
15,472 Corning Inc 313,967 684,636
14,184 Costco Companies Inc+ 281,324 758,844
7,265 Countrywide Credit Industries Inc 242,589 386,407
3,116 Crane Co 37,756 165,148
8,551 Crown Cork & Seal Co 242,667 457,479
14,610 CSX Corp 326,885 869,295
2,584 Cummins Engine Co Inc 88,521 142,443
11,504 CVS Corp 453,044 868,552
6,293 Cyprus Amax Minerals 164,608 104,621
7,000 Dana Corp 145,733 407,313
10,302 Darden Restaurants Inc 67,791 160,325
</TABLE>
---------------------
55
<PAGE>
EQUITY INDEX FUND
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
3,240 Data General Corp+ $ 74,662 $ 57,308
14,642 Dayton-Hudson Corp 272,773 1,288,496
16,891 Deere & Co 274,116 1,046,186
43,728 Dell Computer Corp+ 381,509 2,962,572
4,984 Delta Air Lines Inc 345,417 589,358
5,396 Deluxe Corp 192,177 177,731
9,865 Digital Equipment Corp+ 952,991 516,063
7,418 Dillards Inc Class A 170,956 274,002
45,194 Disney (Walt) Co 1,498,751 4,824,460
12,940 Dominion Resources Inc 418,902 543,480
9,754 Donnelley (R R) & Sons Co 217,466 400,524
14,908 Dover Corp 131,020 566,504
15,205 Dow Chemical Co 820,731 1,478,686
6,395 Dow Jones & Co Inc 248,691 338,535
11,739 Dresser Industries Inc 208,413 564,206
7,882 DSC Communications Corp+ 86,143 143,354
9,752 DTE Energy Co 218,906 383,376
24,124 Duke Power Co 600,233 1,436,886
11,432 Dun & Bradstreet Corp 231,589 390,832
75,722 DuPont (E I) de Nemours 1,638,715 5,149,096
1,364 Eastern Enterprises 37,920 58,652
5,206 Eastman Chemical Co 213,765 351,080
21,775 Eastman Kodak Co 865,996 1,412,653
5,188 Eaton Corp 178,855 493,833
4,171 Echlin Inc 79,750 218,717
8,600 Ecolab Inc 62,906 249,400
25,512 Edison International 456,103 749,415
3,026 EG & G Inc 57,586 87,943
33,166 EMC Corp+ 376,465 1,254,089
29,664 Emerson Electric Co 645,117 1,933,722
9,672 Engelhard Corp 83,081 183,768
21,294 Enron Corp 461,843 987,509
16,284 Entergy Corp 373,931 484,449
10,004 Equifax Inc 317,631 365,146
164,972 Exxon Corp 3,989,489 11,156,232
9,771 FDX Corp 337,348 694,962
46,500 Federal Home Loan Mortgage Corp 554,385 2,205,844
</TABLE>
- ------------------------
56
<PAGE>
EQUITY INDEX FUND
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
70,992 Federal National Mortgage Association $ 717,039 $ 4,490,244
14,053 Federated Department Stores Inc+ 383,154 728,121
10,330 Fifth Third Bancorp 401,291 883,215
19,513 First Chicago NBD Corp 444,930 1,719,583
28,626 First Data Corp 831,728 930,345
43,212 First Union Corp 950,503 2,452,281
15,428 First Energy Corp 344,645 475,375
18,190 Fleet Financial Group Inc 589,318 1,547,287
2,446 Fleetwood Enterprises Inc 40,942 113,892
5,626 Fluor Corp 153,270 279,894
2,467 FMC Corp+ 89,088 193,660
80,286 Ford Motor Co 1,887,251 5,203,536
13,926 Fort James Corp 525,195 637,985
11,458 Fortune Brands Inc 256,984 456,888
2,732 Foster Wheeler Corp 63,485 83,497
12,137 FPL Group Inc 403,840 779,802
12,919 Freeport McMoRan Copper & Gold Inc Class B 354,316 257,573
10,994 Frontier Corp 249,004 357,992
4,919 Fruit of the Loom Inc Class A+ 134,364 150,644
18,998 Gannett Co Inc 432,453 1,365,481
26,926 Gap Inc 189,000 1,211,670
4,228 General Dynamics Corp 97,479 364,137
219,031 General Electric Co 3,533,138 18,877,734
9,889 General Instrument Corp+ 180,127 207,051
10,602 General Mills Inc 346,327 805,752
47,357 General Motors Corp 1,872,174 3,193,638
5,263 General Re Corp 409,340 1,161,149
3,368 General Signal Corp 93,177 157,454
11,980 Genuine Parts Co 216,406 456,738
6,235 Georgia-Pacific Corp 217,407 403,716
4,000 Giant Food Inc Class A 91,101 154,500
37,493 Gillette Co 1,081,030 4,449,950
3,850 Golden West Financial 104,510 368,878
4,791 Goodrich (B F) Co 138,763 244,640
10,476 Goodyear Tire & Rubber Co 297,041 793,557
8,527 GPU Inc 261,679 377,320
4,997 Grace W.R. & Co 267,107 418,186
</TABLE>
---------------------
57
<PAGE>
EQUITY INDEX FUND
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
3,292 Grainger (W W) Inc $ 116,660 $ 338,459
2,543 Great Atlantic & Pacific Tea Co 91,312 76,926
4,000 Great Lakes Chemical Corp 223,826 216,000
9,101 Green Tree Financial Corp 308,452 258,810
64,031 GTE Corp 1,796,726 3,833,856
10,126 Guidant Corp 294,810 742,995
17,532 Halliburton Co 324,155 879,887
4,726 Harcourt General Inc 113,506 261,702
2,100 Harland (John H) Co 51,059 32,681
3,266 Harnischfeger Industries Inc 81,771 111,656
6,712 Harrah's Entertainment Inc+ 48,624 164,864
5,316 Harris Corp 100,191 277,097
7,869 Hartford Financial Services Group 202,817 853,787
8,482 Hasbro Inc 105,302 299,521
14,095 HBO & Co 668,129 850,986
26,363 Healthsouth Corp+ 560,709 739,812
24,589 Heinz (H J) Co 471,540 1,435,383
3,300 Helmerich & Payne Inc 40,531 103,125
6,506 Hercules Inc 128,547 321,234
9,522 Hershey Foods Corp 159,167 682,013
69,648 Hewlett Packard Co 1,185,259 4,413,942
16,793 Hilton Hotels Corp 208,878 535,277
48,910 Home Depot Inc 665,534 3,298,368
9,790 Homestake Mining Co 152,783 106,466
8,504 Honeywell Inc 195,427 703,175
7,188 Household International Inc 250,461 990,147
19,061 Houston Industries Inc 356,100 548,004
10,978 Humana Inc+ 306,879 272,392
12,806 Huntington Bancshares Inc 441,429 466,619
8,860 IKON Office Solutions 179,248 306,224
16,728 Illinois Tool Works Inc 234,585 1,083,138
11,138 Inco Ltd 278,392 208,141
11,101 Ingersoll-Rand Co 159,441 532,154
3,300 Inland Steel Industries Inc 90,959 91,163
109,495 Intel Corp 779,621 8,547,453
65,043 International Business Machines Corp 4,014,872 6,756,342
7,263 International Flavors & Fragrances 155,286 342,269
</TABLE>
- ------------------------
58
<PAGE>
EQUITY INDEX FUND
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
20,231 International Paper Co $ 559,397 $ 947,064
8,400 Interpublic Group Cos Inc 194,664 521,850
7,969 ITT Industries Inc 92,443 303,320
4,703 Jefferson-Pilot Corp 90,605 418,273
89,973 Johnson & Johnson 1,557,908 6,596,146
5,634 Johnson Controls Inc 96,753 341,913
2,600 Jostens Inc 67,345 62,400
32,660 K Mart Corp 620,611 545,014
2,627 Kaufman & Broad Home Corp 34,016 85,542
27,470 Kellogg Co 511,352 1,184,644
3,183 Kerr-McGee Corp 125,462 221,417
29,344 KeyCorp 478,138 1,109,570
37,188 Kimberly-Clark Corp 617,676 1,864,049
4,900 King World Productions+ 56,717 143,325
5,681 KLA Instruments Corp+ 426,293 217,298
5,676 Knight-Ridder Inc 152,975 317,147
17,040 Kroger Co+ 136,387 787,035
22,064 Laidlaw Inc 201,645 350,266
6,837 Lehman Brothers Holdings 350,921 511,920
74,223 Lilly (Eli) & Co 1,112,900 4,425,546
18,185 Limited Inc 384,276 521,682
6,880 Lincoln National Corp 222,168 583,940
4,492 Liz Claiborne Inc 135,422 224,039
13,030 Lockheed Martin Corp 465,400 1,465,875
7,726 Loews Corp 431,824 805,436
2,590 Longs Drug Stores Corp 45,538 78,833
7,312 Louisiana-Pacific Corp 110,101 170,004
11,710 Lowe's Co Inc 156,620 821,896
9,452 LSI Logic Corp+ 342,320 238,663
43,533 Lucent Technologies Inc 1,577,600 5,566,782
4,854 Mallinckrodt Inc 100,303 191,733
4,301 Manor Care Inc 44,840 159,137
8,504 Marriott International Inc 53,644 316,243
8,504 Marriott International Inc Class A 52,034 304,550
11,332 Marsh & McLennan Companies Inc 463,220 989,425
11,086 Masco Corp 332,117 659,617
19,482 Mattel Inc 222,418 771,974
</TABLE>
---------------------
59
<PAGE>
EQUITY INDEX FUND
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
15,510 May Department Stores Co $ 348,050 $ 984,885
6,368 Maytag Corp 137,255 304,470
6,548 MBIA Inc 349,759 507,470
33,543 MBNA Corp 138,071 1,201,259
3,734 McDermott International Inc 88,925 154,261
46,066 McDonald's Corp 772,221 2,763,960
6,616 McGraw-Hill Inc 217,348 503,230
46,642 MCI Communications 697,787 2,308,779
7,018 Mead Corp 118,337 251,332
31,408 Medtronic Inc 215,829 1,629,290
17,008 Mellon Bank Corp 307,018 1,080,008
8,751 Mercantile Bancorporation 494,145 479,664
2,462 Mercantile Stores Co Inc 102,012 165,416
80,155 Merck & Co Inc 2,287,790 10,289,898
3,592 Meredith Corp 31,039 151,313
22,326 Merrill Lynch & Co Inc 263,618 1,853,058
7,628 MGIC Investment Corp 238,811 501,064
14,094 Micron Technology Inc+ 270,627 409,607
163,004 Microsoft Corp+ 2,597,646 14,588,858
2,900 Millipore Corp 54,655 100,775
27,313 Minnesota Mining & Manufacturing Co 1,003,095 2,490,604
11,992 Mirage Resorts Inc+ 326,704 291,556
52,480 Mobil Corp 1,434,451 4,021,280
39,690 Monsanto Co 385,040 2,063,880
6,000 Moore Corp Ltd 144,526 99,750
11,928 Morgan (J P) & Co Inc 592,337 1,602,080
39,601 Morgan St Dean Witter Discover 960,484 2,885,923
8,956 Mortan International Inc 110,313 293,869
39,972 Motorola Inc 885,611 2,423,303
595 NACCO Industries Inc Class A 22,972 79,730
4,450 Nalco Chemical Co 123,998 180,503
14,320 National City Corp 448,784 1,049,835
10,892 National Semiconductor+ 176,106 228,051
2,927 National Service Industries Inc 74,739 172,144
63,251 NationsBank Corp 1,325,345 4,613,370
4,997 Navistar International+ 151,564 174,895
6,453 New York Times Co Class A 197,864 451,710
</TABLE>
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60
<PAGE>
EQUITY INDEX FUND
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
10,700 Newell Co $ 174,155 $ 518,281
10,430 Newmont Mining Corp 330,788 318,767
9,667 Niagara Mohawk Power Corp+ 168,355 125,671
3,200 NICOR Inc 66,298 135,200
19,400 Nike Inc Class B 161,584 858,450
5,150 Nordstrom Inc 162,390 328,634
25,265 Norfolk Southern Corp 348,856 944,279
4,933 Northern States Power Co 181,476 291,047
35,074 Northern Telecom Ltd 471,692 2,266,657
7,437 Northern Trust Corp 515,124 555,916
4,519 Northrop Grumman Corp 233,366 485,510
50,554 Norwest Corp 488,426 2,101,151
23,368 Novell Inc+ 560,504 250,476
5,926 Nucor Corp 109,033 322,597
22,651 Occidental Petroleum Corp 630,186 663,957
10,812 Omnicom Group 424,350 508,840
2,060 ONEOK Inc 38,246 83,945
65,649 Oracle Systems Corp+ 302,635 2,072,047
7,072 Oryx Energy Co+ 186,136 183,872
3,593 Owens Corning Fiberglass Corp 91,088 129,123
9,356 Owens-Illinois Inc+ 340,538 404,647
5,170 PACCAR Inc 86,562 307,938
5,593 Pacific Enterprises 224,978 228,264
19,800 PacifiCorp 380,066 487,575
8,550 Pall Corp 108,384 183,825
17,028 Parametric Technology Corp+ 349,392 567,245
7,504 Parker Hannifin Corp 108,710 384,580
14,918 PECO Energy Co 332,879 330,061
16,705 Penney (J C) Co Inc 515,518 1,264,360
3,167 Pennzoil Co 210,351 204,667
2,394 Peoples Energy Corp 56,639 87,082
4,150 Pep Boys-Manny Moe & Jack 71,317 96,228
101,528 Pepsico Inc 1,002,818 4,333,977
3,171 Perkin-Elmer Corp 122,051 229,303
86,520 Pfizer Inc 1,070,189 8,624,963
29,353 PG&E Corp 726,684 968,649
33,967 Pharmacia and Upjohn Inc 1,069,131 1,486,056
</TABLE>
---------------------
61
<PAGE>
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<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
3,920 Phelps Dodge Corp $ 119,560 $ 253,085
162,214 Philip Morris Co Inc 2,174,714 6,762,296
17,619 Phillips Petroleum Co 352,967 879,849
4,424 Pioneer Hi Bred International Inc 168,178 431,617
19,352 Pitney Bowes Inc 240,866 971,229
16,063 Placer Dome Inc 250,440 211,831
20,457 PNC Bank Corp 556,775 1,226,141
3,009 Polaroid Corp 104,775 132,396
1,971 Potlatch Corp 70,259 84,876
11,076 PP & L Resources Inc 285,972 261,671
11,870 PPG Industries Inc 296,677 806,418
10,594 Praxair Inc 188,051 544,929
89,887 Procter & Gamble Co 1,496,417 7,584,216
4,856 Progressive Corp Ohio 530,823 654,043
6,340 Providian Financial Corp 51,221 364,154
15,571 Public Services Enterprise Group 420,724 589,752
1,438 Pulte Corp 24,105 66,867
9,280 Quaker Oats Co 223,005 531,280
7,170 Ralston-Purina Group 276,614 760,020
5,800 Raychem Corp 124,643 241,063
22,666 Raytheon Corp Class B 701,998 1,323,128
3,804 Reebok International Ltd 85,915 116,022
3,636 Republic New York Corp 213,515 484,952
4,920 Reynolds Metals Co 239,744 302,273
17,264 Rite Aid Corp 234,419 591,292
13,974 Rockwell International Corp 312,129 801,758
4,109 Rohm & Haas Co 173,205 424,511
5,839 Rowan Co Inc+ 48,452 169,331
143,484 Royal Dutch Petroleum Co 2,463,191 8,151,685
10,004 Rubbermaid Inc 195,697 285,114
2,470 Russell Corp 52,759 66,227
5,156 Ryder System Inc 136,930 195,928
9,466 SAFECO Corp 195,564 517,376
4,000 Safety-Kleen Corp 103,618 113,500
32,076 Sara Lee Corp 515,098 1,976,684
122,678 SBC Communication Inc 1,613,634 5,351,829
48,972 Schering-Plough Corp 468,822 4,000,400
</TABLE>
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62
<PAGE>
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<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
33,262 Schlumberger Ltd $ 807,705 $ 2,519,597
17,765 Schwab (Charles) Corp 474,980 675,070
5,296 Scientific-Atlanta Inc 33,115 103,603
16,396 Seagate Technology Inc+ 469,372 413,999
23,824 Seagram Co Ltd 500,201 909,779
26,191 Sears Roebuck & Co 544,582 1,504,346
16,902 Service Corp International 215,285 717,279
1,662 Shared Medical System Corp 47,469 130,259
11,572 Sherwin Williams Co 110,035 410,806
6,724 Sigma-Aldrich Corp 128,780 250,469
12,546 Silicon Graphics Inc+ 396,556 174,860
4,059 Snap-On Inc 92,209 185,192
7,384 Sonat Inc 181,977 321,204
46,157 Southern Co 663,278 1,277,972
14,661 Southwest Airlines Co 279,092 433,416
1,365 Springs Industries Inc Class A 46,634 74,990
28,800 Sprint Corp 890,337 1,949,400
6,153 St Jude Medical Inc+ 149,797 205,741
5,606 St Paul Co Inc 159,429 499,635
6,010 Stanley Works 104,970 335,058
10,756 State Street Corp 547,548 732,080
6,741 Stone Container Corp 147,486 84,263
11,747 Summit Bancorp 587,174 588,084
4,807 Sun Co Inc 153,733 196,486
25,100 Sun Microsystems Inc+ 194,618 1,047,141
13,091 Sunamerica Inc 491,801 626,732
14,100 SunTrust Banks Inc 203,556 1,062,788
4,052 Supervalu Inc 108,241 188,925
11,696 Synovus Financial Corp 378,567 434,214
22,884 Sysco Corp 167,851 586,403
6,918 Tandy Corp 143,540 325,146
3,386 Tektronix Inc 70,229 151,078
33,902 Tele-Communication Inc Class A+ 447,353 1,054,140
12,128 Tellabs Inc+ 293,327 814,092
3,796 Temple-Inland Inc 131,114 235,827
20,434 Tenet Healthcare Corp+ 379,580 742,010
11,414 Tenneco 454,640 487,235
</TABLE>
---------------------
63
<PAGE>
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<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
36,714 Texaco Inc $ 928,612 $ 2,212,019
26,120 Texas Instruments Inc 382,189 1,413,745
16,498 Texas Utilities Co 607,179 648,578
10,992 Textron Inc 196,184 846,384
10,082 Thermo Electron Corp+ 412,859 407,061
3,643 Thomas & Betts Corp 118,540 233,152
38,649 Time Warner Inc 1,232,972 2,782,728
5,952 Times Mirror Co Class A 157,273 377,208
4,176 Timken Co 62,120 141,201
10,920 TJX Companies Inc 130,955 494,130
9,400 Torchmark Corp 148,905 430,638
19,150 Toys R Us Inc+ 433,744 575,697
4,165 Transamerica Corp 174,779 485,223
76,710 Travelers Group Inc 955,126 4,602,600
8,222 Tribune Co 173,664 579,651
10,113 Tricon Global Restaurants Inc+ 84,739 304,016
8,236 TRW Inc 216,745 454,010
4,100 Tupperware Corp 65,029 109,163
38,236 Tyco International Ltd+ 1,459,803 2,088,642
16,436 U.S. Bancorp 754,515 2,050,391
32,332 U.S. West Inc+ 643,094 1,770,177
40,658 U.S. West Media Group+ 606,167 1,412,866
14,494 Unicom Corp 492,140 507,290
42,860 Unilever NV 761,501 2,941,268
4,682 Union Camp Corp 193,644 279,750
8,229 Union Carbide Corp 113,955 412,479
16,510 Union Pacific Corp 507,545 927,656
16,995 Union Pacific Resources Group Inc 331,376 405,756
16,671 Unisys Corp+ 396,933 316,749
12,565 United Healthcare Corp 588,683 813,584
5,050 United States Surgical 415,311 166,650
15,556 United Technologies Corp 417,221 1,436,013
16,460 Unocal Corp 352,529 636,796
9,254 UNUM Corp 262,251 510,705
6,110 USAir Group Inc+ 208,021 452,904
7,475 USF & G Corp 215,656 186,408
12,340 UST Inc 188,681 397,965
</TABLE>
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<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
19,322 USX - Marathon Group $ 460,647 $ 726,990
5,790 USX - US Steel Group 158,830 218,573
8,132 VF Corp 161,611 427,438
23,611 Viacom Inc Class B+ 827,028 1,269,091
3,063 Vlasic Foods International Inc+ 16,513 78,293
13,742 Wachovia Corp 676,993 1,165,493
150,764 Wal Mart Stores Inc 2,122,370 7,660,696
32,960 Walgreen Co 200,711 1,159,780
18,236 Warner Lambert Co 452,485 3,105,819
17,244 Washington Mutual Inc 756,359 1,236,718
30,422 Waste Management Inc 815,834 937,378
5,811 Wells Fargo & Co 508,263 1,924,894
8,859 Wendy's International Inc 117,673 197,666
3,601 Western Atlas Inc+ 85,692 278,627
6,789 Westvaco Corp 135,919 208,762
13,362 Weyerhaeuser Co 435,529 754,953
5,054 Whirlpool Corp 202,466 346,515
7,472 Willamette Industries Inc 255,785 280,667
28,383 Williams Co Inc 367,281 908,256
9,936 Winn-Dixie Stores Inc 163,814 460,782
8,998 Woolworth Corp+ 229,147 224,950
67,826 WorldCom Inc+ 1,770,174 2,920,757
6,475 Worthington Industries Inc 78,249 117,359
7,810 Wrigley (Wm) Jr Co 126,719 638,468
21,832 Xerox Corp 550,497 2,323,705
------------ --------------
TOTAL COMMON STOCKS $212,394,805 $ 577,460,085
</TABLE>
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<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
U.S. TREASURY SECURITIES - 1.07%
U.S. TREASURY BILLS - 1.07%
$ 150,000 U.S. Treasury Bills**(F) 5.05% 06/25/98 $ 148,211
50,000 U.S. Treasury Bills(F) 5.32 04/02/98 49,986
3,785,000 U.S. Treasury Bills(F) 5.32 04/16/98 3,776,373
2,252,000 U.S. Treasury Bills(F) 5.32 04/23/98 2,244,325
--------------
TOTAL U.S. TREASURY SECURITIES $ 6,218,895
(Cost $6,219,565)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $218,614,370)* (Notes 1 and 3) 100.17% $ 583,678,980
Other Assets and Liabilities, Net (0.17) (986,154)
------ --------------
TOTAL NET ASSETS 100.00% $ 582,692,826
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
+ NON-INCOME EARNING SECURITIES.
(F) YIELD TO MATURITY.
** THESE U.S. TREASURY BILLS ARE HELD IN A SEGREGATED ACCOUNT FOR MARGIN
REQUIREMENTS ON FUTURES CONTRACTS. AS OF 3/31/98 THE NOTIONAL
CONTRACTUAL VALUE OF THE LONG FUTURES CONTRACTS WAS $5,552,500. SEE
NOTE 1.
* 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 $369,553,487
Gross Unrealized Depreciation (4,488,877)
------------
NET UNREALIZED APPRECIATION $365,064,610
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
- ------------------------
66
<PAGE>
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- -------------------------------------------------
PORTFOLIO OF INVESTMENTS - MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - 96.89%
AEROSPACE - 0.08%
10,000 BE Aerospace Inc+ $ 300,000 $ 281,250
AUTOMOBILE & RELATED - 2.12%
90,000 Chrysler Corp $ 2,975,904 $ 3,740,625
57,600 Ford Motor Co 1,736,906 3,733,200
------------ --------------
$ 4,712,810 $ 7,473,825
BASIC INDUSTRIES - 1.41%
178,800 Allegheny Teledyne Inc $ 4,515,522 $ 4,972,875
CAPITAL GOODS - 8.69%
8,000 DT Industries $ 293,000 $ 307,000
66,000 Harris Corp 2,576,588 3,440,250
58,400 Kennametal Inc 2,183,989 3,073,300
120,000 Lancaster Colony Corp 3,005,991 5,092,500
9,000 Libbey Inc 341,165 335,250
100,200 Maytag Corp 2,631,354 4,790,813
139,100 New Century Energies Inc 6,650,284 7,007,163
8,000 Pillowtex Corp 248,198 387,500
160,000 Willamette Industries Inc 4,660,421 6,010,000
17,000 Zygo Corporation 292,618 246,491
------------ --------------
$ 22,883,608 $ 30,690,267
COMPUTER SYSTEMS - 1.47%
50,000 International Business Machines Corp $ 2,661,925 $ 5,193,750
ELECTRICAL EQUIPMENT - 2.35%
7,500 Cohu Inc $ 318,500 $ 285,000
100,000 Seagate Technology Inc+ 1,745,440 2,525,000
140,000 Technitrol Inc 1,480,229 5,486,250
------------ --------------
$ 3,544,169 $ 8,296,250
</TABLE>
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<PAGE>
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<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
ENERGY & RELATED - 15.70%
50,000 Atlantic Richfield Corp $ 2,953,240 $ 3,931,250
8,500 Black Hills Corp 203,028 197,094
230,000 Cabot Corp 7,049,828 8,481,250
70,000 Exxon Corp 2,344,594 4,733,750
20,000 Mallon Resources Corp+ 181,875 186,250
60,000 Mobil Corp 2,118,677 4,597,500
152,000 Montana Power Co 5,108,073 5,481,500
12,000 Northwest Natural Gas 312,330 337,500
8,000 NUI Corp 209,195 219,000
59,500 Phillips Petroleum Co 2,806,708 2,971,281
14,000 Public Services Co of North Carolina+ 302,697 287,000
40,000 Royal Dutch Petroleum Co 1,195,160 2,272,500
14,000 Swift Energy Co 287,028 238,875
118,000 TECO Energy Inc 2,868,580 3,333,500
20,000 Tesoro Petroleum Corp+ 325,200 357,500
49,780 Texaco Inc 1,571,829 2,999,245
117,000 Tidewater Inc 5,083,428 5,126,063
214,000 Valero Energy Corp 4,529,293 7,142,250
80,000 Williams Co Inc 2,144,744 2,560,000
------------ --------------
$ 41,595,507 $ 55,453,308
FINANCE & RELATED - 27.36%
100,000 American Bankers Insurance Group $ 1,158,776 $ 6,450,000
90,000 BankAmerica Corp 2,000,610 7,436,250
27,040 Chase Manhattan Bank 930,320 3,647,020
31,000 CIGNA Corp 5,773,578 6,355,000
5,000 CNB Bancshares Inc 211,718 244,063
150,000 Edwards A G & Sons Inc 2,606,651 6,562,500
80,000 First Union Corp 1,969,173 4,540,000
164,339 Fremont General Corp 4,059,464 9,665,187
90,600 Hartford Financial Services Group 8,159,807 9,830,100
12,000 HCC Insurance Holdings Inc 219,351 276,000
11,500 Kilroy Realty Corp 303,965 328,469
1,075,000 Mercury Financial Co+ 2,547,547 806,250
68,000 Providian Financial Corp 685,243 3,905,750
</TABLE>
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68
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<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
22,000 Reliance Group Holdings Inc $ 290,607 $ 420,750
41,900 Republic New York Corp 1,744,592 5,588,413
129,100 Royal Bank of Canada 6,684,894 7,633,038
111,500 SAFECO Corp 5,142,938 6,094,172
83,500 Simon Debartolo Group Inc 2,811,195 2,859,875
13,500 South Pacific Funding Corp+ 199,785 207,563
65,000 Travelers Group Inc 466,375 3,900,000
110,000 USF & G Corp 2,172,775 2,743,125
96,800 Washington Mutual Inc 6,558,995 6,942,375
7,500 Wilshire Financial Services Corp+ 150,000 189,375
------------ --------------
$ 56,848,359 $ 96,625,275
FOOD & RELATED - 3.11%
145,000 American Stores Co $ 3,035,749 $ 3,770,000
116,100 Philip Morris Co Inc 2,113,537 4,839,919
76,000 RJR Nabisco Holdings Corp 2,718,820 2,379,750
------------ --------------
$ 7,868,106 $ 10,989,669
GENERAL BUSINESS & RELATED - 4.88%
6,000 Borg-Warner Automotive Inc $ 333,019 $ 384,750
10,000 Cellstar Corp+ 272,813 320,000
11,000 Central Vermont Public Service 156,035 163,625
7,000 Cleveland Cliffs Inc 309,378 376,250
40,000 General Electric Co 955,182 3,447,500
12,000 Gleason Corp 303,000 420,750
17,000 Intermet Corp 309,245 382,500
10,000 Quacker Fabric Corp 250,000 255,000
9,500 Schweitzer-Mauduit International Inc 350,598 327,750
8,500 Standard Commercial Corp 152,448 135,469
343,500 Waste Management Inc 9,238,504 10,584,094
15,000 Wyman Gordon Company 308,815 343,125
6,000 York Group Inc 168,401 111,000
------------ --------------
$ 13,107,438 $ 17,251,813
</TABLE>
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<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
HEALTHCARE - 1.43%
170,000 Foundation Health Systems Inc $ 4,428,165 $ 4,685,625
9,400 Sierra Health Services Inc+ 340,875 374,825
------------ --------------
$ 4,769,040 $ 5,060,450
MANUFACTURING PROCESSING - 13.48%
90,800 Alumax Inc+ $ 3,462,073 $ 4,103,025
89,000 Deere & Co 4,658,579 5,512,438
35,000 Eastman Kodak Co 2,137,760 2,270,625
93,000 Goodrich (B F) Co 4,162,077 4,748,813
107,100 Great Lakes Chemical Corp 5,192,179 5,783,400
94,000 Hercules Inc 4,248,021 4,641,250
10,500 IPSCO INC 281,414 342,563
80,000 Johnson Controls Inc 2,360,389 4,855,000
8,500 Novel Denim Holdings Ltd+ 220,375 232,688
197,300 Owens-Illinois Inc+ 1,951,269 8,533,225
5,300 Southdown Inc+ 296,943 369,344
24,000 Tropical Sportswear International+ 322,812 339,000
160,000 United Dominion Industries 3,560,866 5,190,000
10,000 Wellman Inc 212,313 216,250
10,500 Zurn Industries Inc 343,247 497,438
------------ --------------
$ 33,410,317 $ 47,635,059
PHARMACEUTICALS - 0.74%
60,000 Pharmacia and Upjohn Inc $ 1,588,076 $ 2,625,000
REAL ESTATE & RELATED - 0.59%
13,000 Champion Enterprises Inc+ $ 307,805 $ 346,938
8,700 Chartwell Real Estate Corp 283,224 294,713
13,500 INMC Mortgage Holdings Inc 303,904 337,500
5,000 Professionals Insurance Co+ 216,250 208,750
10,000 Selective Insurance Group+ 259,125 268,750
12,400 Toll Brothers Inc+ 349,494 348,750
5,500 Vesta Insurance Group Inc 314,093 294,938
------------ --------------
$ 2,033,895 $ 2,100,339
</TABLE>
- ------------------------
70
<PAGE>
EQUITY VALUE FUND
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
RETAIL & RELATED - 6.26%
105,000 Costco Companies Inc+ $ 1,555,625 $ 5,617,500
100,000 Rite Aid Corp 1,481,100 3,425,000
90,000 Sears Roebuck & Co 3,257,400 5,169,375
12,000 Syms Corp 145,785 169,500
309,300 Woolworth Corp+ 6,836,254 7,732,500
------------ --------------
$ 13,276,164 $ 22,113,875
TELECOMMUNICATIONS - 2.18%
34,300 Bell Atlantic Corp $ 3,295,191 $ 3,515,750
70,000 GTE Corp 2,314,373 4,191,250
------------ --------------
$ 5,609,564 $ 7,707,000
TRANSPORTATION - 1.63%
92,200 CSX Corp $ 4,794,290 $ 5,485,900
8,000 USFreightways Corp 251,169 288,000
------------ --------------
$ 5,045,459 $ 5,773,900
UTILITIES - 3.41%
100,000 Cinergy Corp $ 2,838,307 $ 3,700,000
54,000 Duke Power Co 2,539,836 3,216,375
185,000 Southern Co 4,352,344 5,122,188
------------ --------------
$ 9,730,487 $ 12,038,563
TOTAL COMMON STOCKS $233,500,446 $ 342,282,468
(Cost $233,500,445)
</TABLE>
---------------------
71
<PAGE>
EQUITY VALUE FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS - 3.06%
REPURCHASE AGREEMENTS - 3.06%
$ 3,671,000 Goldman Sachs Pooled Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 5.90% 04/01/98 $ 3,671,000
1,465,000 HSBC Securities Inc Repurchase Agreement - 102%
Collateralized by U.S. Government Securities 5.85 04/01/98 1,465,000
678,000 JP Morgan Securities Inc Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 5.88 04/01/98 678,000
5,009,000 Morgan Stanley & Co Repurchase Agreement - 102%
Collateralized by U.S. Government Securities 5.90 04/01/98 5,009,000
--------------
TOTAL SHORT-TERM INSTRUMENTS $ 10,823,000
(Cost $10,823,000)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $244,323,445)* (Notes 1 and 3) 99.95% $ 353,105,468
Other Assets and Liabilities, Net 0.05 166,564
------ --------------
TOTAL NET ASSETS 100.00% $ 353,272,032
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</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 $111,269,443
Gross Unrealized Depreciation (2,487,420)
------------
NET UNREALIZED APPRECIATION $108,782,023
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
- ------------------------
72
<PAGE>
GROWTH FUND
- -------------------------------------------------
PORTFOLIO OF INVESTMENTS - MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - 96.75%
AEROSPACE - 1.87%
40,984 Boeing Co $ 2,407,034 $ 2,136,291
33,979 Lockheed Martin Corp 3,765,203 3,822,638
24,000 United Technologies Corp 2,202,238 2,215,500
------------ --------------
$ 8,374,475 $ 8,174,429
AUTOMOBILE & RELATED - 1.49%
85,844 Danaher Corp $ 3,778,926 $ 6,518,779
BASIC INDUSTRIES - 4.13%
91,416 Aluminum Co of America $ 5,745,178 $ 6,290,564
84,514 Colgate-Palmolive Co 4,302,189 7,321,025
84,558 Monsanto Co 3,107,269 4,397,016
------------ --------------
$ 13,154,636 $ 18,008,605
BEVERAGE BREWING AND DISTRIBUTION - 3.28%
144,220 Coca-Cola Co $ 9,590,281 $ 11,168,036
73,710 Pepsico Inc 2,751,226 3,146,496
------------ --------------
$ 12,341,507 $ 14,314,532
COMMERCIAL SERVICES - 1.59%
163,050 Service Corp International $ 5,546,161 $ 6,919,434
COMPUTER SOFTWARE - 2.86%
139,408 Microsoft Corp+ $ 9,936,690 $ 12,477,016
</TABLE>
---------------------
73
<PAGE>
GROWTH FUND
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
COMPUTER SYSTEMS - 5.77%
100,976 Cisco Systems Inc+ $ 3,530,824 $ 6,904,234
121,000 EMC Corp+ 4,394,077 4,575,313
35,086 Hewlett Packard Co 2,342,951 2,223,575
59,062 International Business Machines Corp 6,531,813 6,135,065
41,696 Lucent Technologies Inc 3,513,440 5,331,876
------------ --------------
$ 20,313,105 $ 25,170,063
ENERGY & RELATED - 9.14%
59,076 Amoco Corp $ 5,273,447 $ 5,102,690
36,600 Anadarko Petroleum Corp 2,016,326 2,525,400
141,678 Exxon Corp 9,020,645 9,580,975
50,048 FPL Group Inc 2,676,296 3,215,584
51,674 Mobil Corp 3,717,896 3,959,520
110,716 Royal Dutch Petroleum Co 5,956,103 6,290,053
40,676 Schlumberger Ltd 3,166,579 3,081,207
58,054 Texaco Inc 3,166,116 3,497,754
82,530 Williams Co Inc 2,034,249 2,640,950
------------ --------------
$ 37,027,657 $ 39,894,133
ENTERTAINMENT & LEISURE - 0.83%
33,800 Disney (Walt) Co $ 3,201,392 $ 3,608,150
FINANCE & RELATED - 16.19%
49,648 Allstate Corp $ 4,276,446 $ 4,564,513
119,118 American International Group Inc 9,198,704 15,001,423
97,338 Banc One Corp 4,813,353 6,156,629
101,630 Chase Manhattan Bank 10,729,556 13,707,346
126,900 Conseco Inc 5,182,018 7,185,713
90,760 Federal Home Loan Mortgage Corp 2,252,365 4,305,428
68,576 Federal National Mortgage Association 4,025,868 4,337,432
66,342 Household International Inc 6,210,472 9,138,611
105,142 MBNA Corp 2,538,474 3,765,398
66,664 Schwab (Charles) Corp 1,949,459 2,533,232
------------ --------------
$ 51,176,715 $ 70,695,725
</TABLE>
- ------------------------
74
<PAGE>
GROWTH FUND
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
FOOD & RELATED - 2.34%
6,300 Bestfoods $ 416,384 $ 736,313
169,997 Philip Morris Co Inc 6,266,777 7,086,750
38,900 Sara Lee Corp 2,235,526 2,397,213
------------ --------------
$ 8,918,687 $ 10,220,276
GENERAL BUSINESS & RELATED - 6.43%
69,676 DuPont (E I) de Nemours $ 4,451,254 $ 4,737,968
26,978 General Electric Co 16,059,601 19,562,666
75,478 Kimberly-Clark Corp 3,656,804 3,783,335
------------ --------------
$ 24,167,659 $ 28,083,969
HEALTHCARE - 4.11%
63,100 American Home Products Corp $ 4,618,307 $ 6,018,163
34,954 Lilly (Eli) & Co 2,405,320 2,084,132
62,290 Pfizer Inc 4,805,625 6,209,534
44,200 Schering-Plough Corp 3,318,502 3,610,588
------------ --------------
$ 15,147,754 $ 17,922,417
MANUFACTURING PROCESSING - 7.61%
155,106 Allied Signal Inc $ 4,083,978 $ 6,514,452
110,500 Fort James Corp 4,785,702 5,062,281
73,700 Honeywell Inc 5,665,735 6,094,069
82,202 Johnson & Johnson 5,417,545 6,026,434
76,944 Procter & Gamble Co 6,239,213 6,492,150
55,800 Tyco International Ltd+ 2,843,196 3,048,075
------------ --------------
$ 29,035,369 $ 33,237,461
MEDICAL EQUIPMENT & SUPPLIES - 2.24%
43,486 Abbott Laboratories $ 3,079,074 $ 3,275,039
118,322 Baxter International Inc 5,217,274 6,522,500
------------ --------------
$ 8,296,348 $ 9,797,539
</TABLE>
---------------------
75
<PAGE>
GROWTH FUND
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
MULTIMEDIA - 1.38%
72,380 Gannett Co Inc $ 4,451,982 $ 5,202,313
11,948 Tribune Co 483,075 842,334
------------ --------------
$ 4,935,057 $ 6,044,647
PHARMACEUTICALS - 4.82%
86,192 Bristol-Myers Squibb Co $ 8,360,495 $ 8,990,903
75,100 Merck & Co Inc 7,264,948 9,640,963
38,400 Smithkline Beecham Plc 1,876,444 2,402,400
------------ --------------
$ 17,501,887 $ 21,034,266
RETAIL & RELATED - 5.39%
47,000 Consolidated Stores Corp+ $ 2,140,737 $ 2,018,063
53,060 Dayton-Hudson Corp 2,997,192 4,669,280
27,408 Gap Inc 843,522 1,233,360
53,738 Gillette Co 3,383,480 6,378,029
32,600 Home Depot Inc 2,264,802 2,198,463
138,752 Wal Mart Stores Inc 5,739,635 7,050,336
------------ --------------
$ 17,369,368 $ 23,547,531
SEMICONDUCTORS - 1.16%
64,808 Intel Corp $ 5,361,489 $ 5,059,075
TELECOMMUNICATIONS - 12.52%
87,414 AT & T Corp $ 4,581,029 $ 5,736,544
145,276 Bell Atlantic Corp 12,507,537 14,890,790
172,497 Ericsson Telefonaktiebolaget L M Class B 4,947,140 8,204,389
82,946 GTE Corp 3,835,324 4,966,392
46,300 MCI Communications 2,218,662 2,291,850
60,435 Northern Telecom Ltd 3,238,082 3,905,612
46,408 Portugal Telecom SA - Sponsored 2,040,809 2,433,520
164,804 SBC Communication Inc 5,022,812 7,189,575
</TABLE>
- ------------------------
76
<PAGE>
GROWTH FUND
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
33,688 Telecom Italia SPA - Sponsored $ 2,210,708 $ 2,676,091
34,740 Tellabs Inc 2,131,803 2,331,923
------------ --------------
$ 42,733,906 $ 54,626,686
UTILITIES - 1.60%
103,886 Edison International $ 2,706,620 $ 3,051,651
118,536 PG&E Corp 3,594,794 3,911,688
------------ --------------
$ 6,301,414 $ 6,963,339
TOTAL COMMON STOCKS $344,620,202 $ 422,318,072
</TABLE>
---------------------
77
<PAGE>
GROWTH FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS - 3.40%
REPURCHASE AGREEMENTS - 3.40%
$ 6,938,000 Goldman Sachs Pooled Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 5.90% 04/01/98 $ 6,938,000
7,900,000 JP Morgan Securities Inc Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 5.88 04/01/98 7,900,000
--------------
TOTAL SHORT-TERM INSTRUMENTS $ 14,838,000
(Cost $14,838,000)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $359,458,202)* (Notes 1 and 3) 100.15% $ 437,156,072
Other Assets and Liabilities, Net (0.15) (669,850)
------ --------------
TOTAL NET ASSETS 100.00% $ 436,486,222
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</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 $ 79,942,659
Gross Unrealized Depreciation (2,244,789)
------------
NET UNREALIZED APPRECIATION $ 77,697,870
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
- ------------------------
78
<PAGE>
INTERNATIONAL EQUITY FUND
- -------------------------------------------------
PORTFOLIO OF INVESTMENTS - MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK - 95.62%
AUSTRALIA - 0.94%
85,000 News Corporation Limited (Media - Broadcasting &
Publishing) $ 550,670 $ 561,986
AUSTRIA - 1.29%
6,000 OMV AG (Oil & Gas) $ 812,096 $ 773,360
BRAZIL - 2.59%
60,000 Aracruz Celulose SA ADR (Forest Products & Paper) $ 1,034,428 $ 900,000
5,000 Telecomunicacoes Brasileiras SAADR (Communications) 543,095 649,063
------------ --------------
$ 1,577,523 $ 1,549,063
CANADA - 3.99%
10,000 Potash Corporation of Saskatchewan Inc (Chemicals) $ 788,261 $ 906,386
25,000 Royal Bank of Canada (Banking) 1,325,154 1,479,292
------------ --------------
$ 2,113,415 $ 2,385,678
FINLAND - 1.44%
8,000 Nokia Corp ADR (Communications) $ 720,972 $ 863,500
FRANCE - 10.05%
9,000 Axa UAP (Insurance) $ 799,625 $ 926,773
4,000 Canal Plus (Media -Broadcasting & Publishing) 780,242 750,199
10,000 France Telecom SA (Communications)+ 349,132 527,463
25,000 Groupe Danone ADR (Entertainment & Leisure) 775,000 1,203,124
20,000 Rhone - Poulenc SA ADR (Chemicals) 861,392 1,007,500
8,000 SGS-Thomson Microelectronics NV (Electronics)+ 629,010 628,695
8,000 Total SA - Series B (Oil & Gas) 922,569 960,668
------------ --------------
$ 5,116,970 $ 6,004,422
</TABLE>
---------------------
79
<PAGE>
INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
GERMANY - 7.74%
6,000 Adidas Salomon AG (Textiles, Clothing & Fabrics) $ 808,692 $ 1,064,003
3,088 Allianz AG (Insurance) 696,022 932,576
19,000 Commerzbank AG (Banking) 729,418 686,299
10,000 Metro AG (Retailers) 471,019 441,239
1,200 SAP AG - Vorzug (Computer Software & Processing) 319,602 510,345
3,500 SGL Carbon AG (Chemicals) 526,702 387,598
9,000 Siemens AG (Electronics) 590,686 602,486
------------ --------------
$ 4,142,141 $ 4,624,546
GREAT BRITAIN - 16.23%
120,000 Amvescap PLC (Financial Services) $ 813,302 $ 1,298,147
42,857 Bass PLC (Restaurants) 584,974 821,744
73,000 Boots Co PLC (Retailers) 1,057,823 1,169,891
40,000 British Petroleum Co PLC (Oil & Gas) 568,485 577,400
18,000 Glaxo Holdings PLC ADR (Pharmaceuticals) 796,618 974,250
58,067 Reuters Group PLC (Financial Services) 770,666 626,218
95,000 Select Appointments Holdings PLC (Commercial Services) 921,927 1,151,790
100,000 Shire Pharmaceuticals Group PLC (Pharmaceuticals)+ 628,465 687,283
13,000 Smithkline Beecham PLC ADR (Pharmaceuticals) 599,937 813,313
150,791 Vodafone Group PLC ADR (Communications) 852,455 1,578,209
------------ --------------
$ 7,594,652 $ 9,698,245
HONG KONG - 3.80%
400,000 China Telecom (Hong Kong) Limited (Communucations)+ $ 759,349 $ 810,520
19,000 HSBC Holdings PLC (Financial Services) 547,364 581,178
125,000 Hutchison Whampoa Ltd (Industrial - Diversified) 882,159 879,250
------------ --------------
$ 2,188,872 $ 2,270,948
HUNGARY - 1.25%
24,000 Matav RT (Media - Broadcasting & Publishing)+ $ 449,970 $ 747,000
</TABLE>
- ------------------------
80
<PAGE>
INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
IRELAND - 3.17%
14,000 Elan Corporation (Pharmaceuticals)+ $ 732,287 $ 913,311
82,400 Ryanair Holdings PLC (Airlines)+ 461,979 610,213
10,000 Ryanair Holdings PLC ADR (Airlines)+ 250,000 370,000
------------ --------------
$ 1,444,266 $ 1,893,524
ISRAEL - 0.83%
20,000 Koor Industries Ltd ADR (Communications) $ 414,388 $ 495,000
ITALY - 3.21%
118,000 ENI SpA (Oil & Gas) $ 748,368 $ 803,981
14,000 Telecom Italia SpA ADR (Communications) 923,040 1,112,125
------------ --------------
$ 1,671,408 $ 1,916,106
JAPAN - 10.99%
50,000 Ajinomoto Co (Food) $ 527,526 $ 434,940
24,000 Canon Inc (Electronics) 705,731 541,726
20,000 Honda Motor Co Ltd (Automotive) 725,948 719,904
41,000 Marui Co Ltd (Retailers) 689,299 630,289
100 Nippon Telegraph & Telephone Corp (Communications) 884,800 832,389
7,000 Orix Corp (Financial Services) 509,624 475,586
10,000 Secom Co Ltd (Commercial Services) 683,287 611,168
7,000 Seven Eleven Japan Co Ltd (Retailers) 525,560 479,786
14,000 Sony Corp (Electronics) 1,312,198 1,186,342
56,000 The Nomura Securities Company Ltd (Financial Services) 753,814 659,310
------------ --------------
$ 7,317,787 $ 6,571,440
</TABLE>
---------------------
81
<PAGE>
INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
MEXICO - 3.00%
34,000 Grupo Elektra S.A. de CV GDR (Retailers) $ 560,548 $ 520,625
22,000 Panamerican Beverages Inc Class A (Food) 825,126 882,750
20,000 TV Azteca SA ADR (Media - Broadcasting & Publishing)+ 453,700 392,500
------------ --------------
$ 1,839,374 $ 1,795,875
NETHERLANDS - 4.67%
16,000 Philips Electronics NV ADR (Electronics) $ 1,266,411 $ 1,175,000
13,000 Royal Dutch Petroleum (Oil & Gas) 706,965 738,563
13,000 Unilever NV (Industrial - Diversified) 699,743 876,779
------------ --------------
$ 2,673,119 $ 2,790,342
NEW ZEALAND - 0.48%
81,900 Tranz Rail Holdings Ltd (Transportation) $ 456,063 $ 289,779
NORWAY - 1.17%
12,000 Petroleum Geo-Services ASA (Oil & Gas)+ $ 767,927 $ 700,416
PORTUGAL - 2.04%
28,000 EDP-Electricidade de Portugal SA (Electric Utilities) $ 488,134 $ 649,771
11,000 Portugal Telecom SA (Communications) 496,891 572,160
------------ --------------
$ 985,025 $ 1,221,931
SPAIN - 5.76%
16,000 Banco Bilbao Vizcaya SA (Banking) $ 488,873 $ 751,032
24,000 Banco Santander SA (Banking) 741,855 1,195,334
34,000 Telefonica de Espana (Communications) 1,075,488 1,498,499
------------ --------------
$ 2,306,216 $ 3,444,865
SWEDEN - 2.47%
31,000 Telefonaktiebolaget LM Ericsson ADR (Communications) $ 1,426,737 $ 1,474,438
</TABLE>
- ------------------------
82
<PAGE>
INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
SWITZERLAND - 6.96%
700 Nestle SA (Food) $ 1,011,695 $ 1,337,568
800 Novartis AG - Registered Shares (Pharmaceuticals) 1,259,737 1,415,823
4,000 Schweizerischer Bankverein - Registered Shares (Banking) 1,143,671 1,406,377
------------ --------------
$ 3,415,103 $ 4,159,768
UNITED STATES - 1.55%
15,000 Central European Media Enterprises Ltd (Media -
Broadcasting & Publishing)+ $ 433,125 $ 436,875
20,000 Tefron Ltd (Textiles, Clothing & Fabrics)+ 370,412 487,500
------------ --------------
$ 803,537 $ 924,375
TOTAL COMMON STOCKS $ 50,788,231 $ 57,156,607
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $50,788,231)* (Notes 1 and 3) 95.62% $ 57,156,607
Other Assets and Liabilities, Net 4.38 2,616,496
------ --------------
TOTAL NET ASSETS 100.00% $ 59,773,103
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</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 $ 8,103,934
Gross Unrealized Depreciation (1,735,558)
------------
NET UNREALIZED APPRECIATION $ 6,368,376
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
---------------------
83
<PAGE>
SMALL CAP FUND
- -------------------------------------------------
PORTFOLIO OF INVESTMENTS - MARCH 31, 1998
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - 93.94%
ADVERTISING - 2.34%
40,125 HA-LO Industries inc+ $ 1,316,230 $ 1,401,867
38,500 TMP Worldwide Incorporated+ 917,305 1,227,188
------------ --------------
$ 2,233,535 $ 2,629,055
AEROSPACE - 1.28%
51,091 BE Aerospace Incorporated $ 1,339,193 $ 1,436,934
CAPITAL GOODS - 2.32%
63,000 Advanced Digital Information Corp+ $ 1,198,643 $ 992,250
28,500 PMC - Sierra Inc 999,242 1,083,000
7,500 Sanmina Corp+ 585,843 524,531
------------ --------------
$ 2,783,728 $ 2,599,781
COMPUTER SOFTWARE - 11.74%
9,500 Citrix Systems Inc+ $ 444,917 $ 514,781
30,500 Cotelligent Group Inc 771,230 903,563
43,500 Dataworks Corp 878,392 1,147,313
10,000 Dset Corp+ 160,000 186,875
22,500 Excite+ 1,111,813 1,146,094
55,801 Infinium Software Inc+ 779,113 1,112,532
26,000 Lycos Inc+ 1,088,897 1,150,500
38,000 Manugistics Group Inc+ 1,456,925 2,130,375
32,500 Micromuse Inc+ 575,923 792,188
15,500 Platinum Technologies Inc+ 413,979 399,125
46,000 Security Dynamics Technologies Inc+ 1,626,072 1,891,750
49,500 Vantive Corp+ 1,335,082 1,809,844
------------ --------------
$ 10,642,343 $ 13,184,940
</TABLE>
- ------------------------
84
<PAGE>
SMALL CAP FUND
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
COMPUTER SYSTEMS - 4.21%
25,000 Arbor Software Corp+ $ 1,009,450 $ 1,153,125
53,000 Daou Systems+ 1,337,450 1,036,813
15,000 Exodus Communications Inc+ 225,000 420,000
29,500 Maxwell Technologies Inc+ 851,096 854,578
13,000 Novellus Systems Inc+ 539,825 562,250
53,000 Power Integrations Inc+ 461,375 702,250
------------ --------------
$ 4,424,196 $ 4,729,016
ELECTRICAL EQUIPMENT - 0.21%
5,500 Uniphase Corp+ $ 211,998 $ 231,344
ENERGY & RELATED - 4.30%
47,000 Dawson Production Services+ $ 1,247,795 $ 593,375
46,500 Marine Drilling Co Inc+ 1,133,801 1,005,563
15,500 National -Oilwell Inc 490,729 508,594
49,500 Pride International Inc+ 1,418,492 1,181,813
30,500 Veritas Digicon Inc+ 1,233,758 1,542,156
------------ --------------
$ 5,524,575 $ 4,831,501
ENTERTAINMENT & LEISURE - 1.43%
25,079 Family Golf Centers Inc+ $ 849,615 $ 1,015,700
42,500 Hollywood Entertainment Corp+ 479,833 595,000
------------ --------------
$ 1,329,448 $ 1,610,700
FINANCE & RELATED - 6.27%
28,500 Amresco Inc+ $ 925,375 $ 933,375
21,000 CMAC Investment Corp 1,426,023 1,401,750
24,000 Community First Bankshares Inc 1,209,713 1,224,000
27,500 Firstfed Finanacial Corp 1,113,229 1,151,563
36,500 Golf Trust of America 1,082,499 1,145,188
30,500 Kilroy Realty Corp 839,816 871,156
12,000 Waddle & Reed Financial Inc+ 276,000 312,000
------------ --------------
$ 6,872,655 $ 7,039,032
</TABLE>
---------------------
85
<PAGE>
SMALL CAP FUND
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
FOOD & RELATED - 3.56%
22,500 American Italian Pasta Co $ 749,063 $ 812,813
10,500 Beringer Wine Estate Holdings Inc+ 408,188 542,063
25,000 Dominick's Supermarkets Inc 1,118,085 1,137,500
47,000 Richfood Holdings Inc 1,326,382 1,504,000
------------ --------------
$ 3,601,718 $ 3,996,376
GENERAL BUSINESS & RELATED - 22.58%
24,302 Administaff Inc+ $ 1,025,507 $ 1,046,505
20,500 American Disposal Services+ 757,375 773,875
29,500 American West Airlines Inc+ 649,496 755,938
56,500 Avis Rent A Car Inc+ 1,921,160 1,832,719
81,000 Capital Senior Living Corp 1,107,282 1,123,875
47,000 Cornell Corrections Inc+ 974,105 1,151,500
28,000 CSG Systems International Inc+ 1,148,899 1,267,000
26,000 CSK Auto Corp+ 520,000 585,000
39,000 CulturalAccessWorldwide Inc+ 514,313 619,125
68,000 Equity Corp International+ 1,487,303 1,627,750
41,473 First Consulting Group 669,047 855,381
10,500 Fund Tech Inc+ 136,500 189,000
42,500 Industrial Distribution Group Inc+ 852,812 794,219
86,000 Information Resources Inc+ 1,188,052 1,397,500
42,500 Innova Corp 712,030 658,750
68,420 Media Arts Group+ 954,326 1,351,295
29,500 Metamor Worldwide Inc+ 988,276 1,108,094
13,500 Micrel Inc+ 394,634 512,156
23,500 PC Connection Inc+ 411,250 499,375
51,000 Pegasus Systems Inc+ 931,592 1,313,250
201,500 Philip Services Corp+ 2,620,821 2,103,156
45,500 SOS Staffing Services Inc 1,138,754 1,205,750
31,300 Staffmark Inc+ 1,080,397 1,283,300
45,092 Zale Corp+ 1,089,079 1,302,021
------------ --------------
$ 23,273,010 $ 25,356,534
</TABLE>
- ------------------------
86
<PAGE>
SMALL CAP FUND
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
HEALTHCARE - 7.89%
53,000 BMJ Medical Management Inc+ $ 378,486 $ 380,938
46,000 Covance Inc+ 984,614 1,129,875
44,600 Genesis Health Ventures Inc+ 1,484,037 1,254,375
21,000 Henry Schein Inc+ 837,432 871,500
27,704 Integrated Health Services 1,013,718 1,089,114
36,200 Jones Medical Industries Inc 1,326,104 1,309,988
17,905 Kendle International Inc+ 470,753 416,291
29,500 Orthodontic Centers of America Inc+ 621,064 639,781
27,000 Renal Care Group+ 1,027,950 1,026,000
18,500 Sierra Health Services Inc 693,110 737,688
------------ --------------
$ 8,837,268 $ 8,855,550
MANUFACTURING PROCESSING - 5.96%
12,500 Columbia Sportswear Co+ $ 225,000 $ 264,063
35,587 Hexcel Corp 928,518 978,643
21,500 NBTY Corp+ 1,044,188 1,306,125
46,500 Ocular Sciences Inc 1,247,129 1,482,188
77,500 Pairgain Technologies Inc+ 1,480,146 1,860,000
33,000 Tefron Ltd ADR+ 714,784 804,375
------------ --------------
$ 5,639,765 $ 6,695,394
MEDICAL EQUIPMENT & SUPPLIES - 1.93%
50,500 Kaynar Technologies Inc+ $ 1,336,100 $ 1,407,688
26,500 Maxxim Medical Inc+ 647,330 760,219
------------ --------------
$ 1,983,430 $ 2,167,907
PHARMACEUTICALS - 5.27%
33,000 Agouron Pharmaceuticals Inc $ 1,178,969 $ 1,249,875
25,500 Medicis Pharmaceutical Corp+ 1,097,084 1,112,438
28,000 Parexel International Corp+ 887,206 875,000
41,000 Pharmacyclics Inc 957,155 1,194,125
100,000 Pharmerica Inc 1,322,290 1,487,500
------------ --------------
$ 5,442,704 $ 5,918,938
</TABLE>
---------------------
87
<PAGE>
SMALL CAP FUND
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
RETAIL & RELATED - 4.73%
45,000 Barbeques Galore Ltd - Sponsored ADR+ $ 495,000 $ 427,500
24,000 Duane Reade Inc+ 444,779 613,500
42,750 Gadzooks+ 980,312 956,531
55,500 Nautica Enterprises+ 1,495,119 1,706,625
53,500 Regis Corp 1,380,319 1,605,000
------------ --------------
$ 4,795,529 $ 5,309,156
SEMICONDUCTOR - 2.51%
31,500 Applied Micro Circuits Corp+ $ 630,985 $ 708,750
32,500 ATMI Inc+ 958,750 983,125
45,000 Burr-Brown Corp 1,195,290 1,125,000
------------ --------------
$ 2,785,025 $ 2,816,875
SHELTER & RELATED - 0.78%
25,000 Brookdale Living Communities Inc+ $ 498,777 $ 631,250
21,500 Newmark Homes Corp 225,750 239,188
------------ --------------
$ 724,527 $ 870,438
TELECOMMUNICATIONS - 2.83%
26,581 Nice Systems Limited $ 1,127,000 $ 1,222,726
46,700 Superior Telecom Inc+ 1,401,805 1,949,725
------------ --------------
$ 2,528,805 $ 3,172,451
TRANSPORTATION - 1.80%
35,500 Atlas Air Inc+ $ 830,238 $ 1,155,969
46,000 Midway Airlines Corp+ 969,434 868,250
------------ --------------
$ 1,799,672 $ 2,024,219
TOTAL COMMON STOCKS $ 96,773,124 $ 105,476,141
</TABLE>
- ------------------------
88
<PAGE>
SMALL CAP FUND
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS - 5.57%
REPURCHASE AGREEMENTS - 5.57%
$ 577,000 Goldman Sachs Pooled Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 5.90 % 04/01/98 $ 577,000
1,318,000 HSBC Securities Inc Repurchase Agreement - 102%
Collateralized by U.S. Government Securities 5.85 04/01/98 1,318,000
3,549,000 JP Morgan Securities Inc Repurchase Agreement -
102% Collateralized by U.S. Government
Securities 5.88 04/01/98 3,549,000
811,000 Morgan Stanley & Co Repurchase Agreement - 102%
Collateralized by U.S. Government Securities 5.90 04/01/98 811,000
--------------
TOTAL SHORT-TERM INSTRUMENTS $ 6,255,000
(Cost $6,255,000)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $103,028,124)* (Notes 1 and 3) 99.51% $ 111,731,141
Other Assets and Liabilities, Net 0.49 550,533
------ --------------
TOTAL NET ASSETS 100.00% $ 112,281,674
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
+ NON-INCOME EARNING SECURITIES.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL
STATEMENT PURPOSES AND NET UNREALIZED APPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 12,031,271
Gross Unrealized Depreciation (3,328,254)
------------
NET UNREALIZED APPRECIATION $ 8,703,017
------------
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
---------------------
89
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES - MARCH 31, 1998
<TABLE>
<CAPTION>
DIVERSIFIED
EQUITY
BALANCED INCOME
FUND FUND
<S> <C> <C>
- -------------------------------------------------------------------------
ASSETS
INVESTMENTS:
In securities, at market value (see
cost below) $95,460,900 $297,120,335
Cash 1,774 1,154
Cash denominated in foreign currencies
(cost $843,800) 0 0
Variation margin on futures contracts 0 0
Receivables:
Dividends and interest 571,520 810,791
Recoverable foreign withholding taxes 0 0
Fund shares sold 62,581 160,628
Investment securities sold 9,455 1,020,746
Organization expenses, net of
amortization 31,138 5,877
Prepaid expenses 10,745 20,039
TOTAL ASSETS 96,148,113 299,139,570
LIABILITIES
Payables:
Investment securities purchased 0 2,385,000
Distribution to shareholders 610,711 1,001,071
Fund shares redeemed 7,162 28,608
Loss on foreign currency forward
contracts 0 0
Due to sponsor and distributor (Note
2) 86,446 160,732
Due to adviser (Note 2) 81,078 254,851
Other 24,725 33,359
TOTAL LIABILITIES 810,122 3,863,621
TOTAL NET ASSETS $95,337,991 $295,275,949
NET ASSETS CONSIST OF:
Paid-in capital $69,136,317 $212,502,250
Undistributed net investment income
(loss) 0 0
Undistributed net realized gain (loss)
on investments and foreign currency
transactions 6,918,867 19,970,409
Net unrealized appreciation of
investments and translation of
assets and liabilities in foreign
currencies 19,282,807 62,803,290
Net unrealized appreciation of futures 0 0
TOTAL NET ASSETS $95,337,991 $295,275,949
COMPUTATION OF NET ASSET VALUE
AND OFFERING PRICE PER SHARE
Net assets - Class A $34,951,858 $223,540,388
Shares outstanding - Class A 2,631,195 11,782,229
Net asset value per share - Class A $ 13.28 $ 18.97
Maximum offering price per share - Class
A $ 14.02(1) $ 20.02(1)
Net assets - Class B $ 9,145,088 $ 71,735,561
Shares outstanding - Class B 761,816 4,036,851
Net asset value and offering price per
share - Class B $ 12.00 $ 17.77
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 $51,241,045 N/A
Shares outstanding - Institutional Class 3,865,490 N/A
Net asset value and offering price per
share - Institutional Class $ 13.26 N/A
INVESTMENT AT COST (NOTE 3) $76,178,093 $234,317,045
- -------------------------------------------------------------------------
</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.
- ------------------------
90
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES - MARCH 31, 1998
<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) $583,678,980 $353,105,468 $437,156,072 $57,156,607 $111,731,141
Cash 0 970 1,831 2,798,920 1,726
Cash denominated in foreign currencies
(cost $843,800) 0 0 0 838,324 0
Variation margin on futures contracts 24,000 0 0 0 0
Receivables:
Dividends and interest 622,124 494,956 518,464 108,555 14,266
Recoverable foreign withholding taxes 0 0 0 10,678 0
Fund shares sold 365,098 881,819 167,212 261,980 89,362
Investment securities sold 55,506 0 0 0 1,092,234
Organization expenses, net of
amortization 0 29,283 5,595 53,678 36,864
Prepaid expenses 5,735 42,850 13,571 6,821 0
TOTAL ASSETS 584,751,443 354,555,346 437,862,745 61,235,563 112,965,593
LIABILITIES
Payables:
Investment securities purchased 221,421 0 0 1,170,851 428,688
Distribution to shareholders 1,083,520 810,996 586,173 0 0
Fund shares redeemed 7,407 49,941 80,324 54,373 8,074
Loss on foreign currency forward
contracts 0 0 0 2,048 0
Due to sponsor and distributor (Note
2) 290,530 126,631 242,927 101,353 28,625
Due to adviser (Note 2) 311,415 270,267 353,892 103,795 68,008
Other 144,324 25,479 113,207 30,040 150,524
TOTAL LIABILITIES 2,058,617 1,283,314 1,376,523 1,462,460 683,919
TOTAL NET ASSETS $582,692,826 $353,272,032 $436,486,222 $59,773,103 $112,281,674
NET ASSETS CONSIST OF:
Paid-in capital $206,438,584 $218,549,269 $316,913,667 $54,104,879 $100,838,360
Undistributed net investment income
(loss) (376) 0 (3,028) (8,647) 0
Undistributed net realized gain (loss)
on investments and foreign currency
transactions 11,064,558 25,940,740 41,877,713 (692,410) 2,740,297
Net unrealized appreciation of
investments and translation of
assets and liabilities in foreign
currencies 365,064,610 108,782,023 77,697,870 6,369,281 8,703,017
Net unrealized appreciation of futures 125,450 0 0 0 0
TOTAL NET ASSETS $582,692,826 $353,272,032 $436,486,222 $59,773,103 $112,281,674
COMPUTATION OF NET ASSET VALUE
AND OFFERING PRICE PER SHARE
Net assets - Class A $578,881,679 $ 52,391,641 $365,404,984 $26,769,904 $ 15,610,760
Shares outstanding - Class A 8,232,272 2,886,235 16,538,274 2,423,231 609,398
Net asset value per share - Class A $ 70.32 $ 18.15 $ 22.09 $ 11.05 $ 25.62
Maximum offering price per share - Class
A $ 73.63(2) $ 19.16(1) $ 23.31(1) $ 11.66(1) $ 27.04(1)
Net assets - Class B $ 3,811,147 $ 72,427,996 $ 52,901,042 $33,003,199 $ 15,320,352
Shares outstanding - Class B 54,125 4,872,614 3,369,737 2,997,076 603,547
Net asset value and offering price per
share - Class B $ 70.41 $ 14.86 $ 15.70 $ 11.01 $ 25.38
Net assets - Class C N/A N/A N/A N/A $ 2,494,759
Shares outstanding - Class C N/A N/A N/A N/A 98,312
Net asset value and offering price per
share - Class C N/A N/A N/A N/A $ 25.38
Net assets - Institutional Class N/A $228,452,395 $ 18,180,196 N/A $ 78,855,803
Shares outstanding - Institutional Class N/A 12,590,138 701,683 N/A 3,060,453
Net asset value and offering price per
share - Institutional Class N/A $ 18.15 $ 25.91 N/A $ 25.77
INVESTMENT AT COST (NOTE 3) $218,614,370 $244,323,445 $359,458,202 $50,788,231 $103,028,124
- ----------------------------------------------------------------------------------------------------------------------------
</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.
---------------------
91
<PAGE>
STATEMENT OF OPERATIONS - FOR THE YEAR ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
BALANCED DIVERSIFIED EQUITY
FUND INCOME FUND
<S> <C> <C>
- -----------------------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends (net of foreign tax withholding of $30,483 for
the International Equity Fund) $ 1,051,880 $ 6,086,085
Interest 2,698,526 609,752
TOTAL INVESTMENT INCOME 3,750,406 6,695,837
EXPENSES (NOTE 2)
Advisory fees 558,729 1,198,624
Administration fees 57,317 148,167
Custody fees 15,551 50,571
Shareholder servicing fees 232,760 718,959
Portfolio accounting fees 78,934 109,428
Transfer agency fees 86,476 335,515
Distribution fees 64,554 463,795
Organization costs 14,178 11,292
Legal and audit fees 28,037 27,948
Registration fees 28,448 35,433
Directors' fees 4,704 4,858
Shareholder reports 29,209 65,766
Other 33,760 19,526
TOTAL EXPENSES 1,232,657 3,189,882
Less:
Waived fees and reimbursed expenses (237,225) (150,357)
Net Expenses 995,432 3,039,525
NET INVESTMENT INCOME (LOSS) 2,754,974 3,656,312
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS
Net realized gain (loss) from:
Investments 12,381,862 26,201,980
Foreign currency transactions 0 0
Net change in unrealized appreciation of:
Investments 7,449,221 47,022,615
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 19,831,083 73,224,595
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 22,586,057 $ 76,880,907
- -----------------------------------------------------------------------------------------------
</TABLE>
(1) INCLUDES AMOUNTS ALLOCATED FROM THE MASTER PORTFOLIO PRIOR TO DECEMBER 15,
1997. SEE NOTE 1.
(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.
- ------------------------
92
<PAGE>
STATEMENT OF OPERATIONS - FOR THE YEAR ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
EQUITY INTERNATIONAL
INDEX EQUITY EQUITY SMALL CAP
FUND (1) VALUE FUND GROWTH FUND FUND (2) FUND (1)
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends (net of foreign tax
withholding of $30,483 for the
International Equity Fund) $ 8,272,213 $ 4,931,884 $ 5,386,703 $ 305,762 $ 121,924
Interest 160,555 986,120 993,157 222,992 391,013
TOTAL INVESTMENT INCOME 8,432,768 5,918,004 6,379,860 528,754 512,937
EXPENSES (NOTE 2)
Advisory fees 1,926,520 1,382,295 1,798,109 257,439 397,069
Administration fees 306,855 170,979 238,706 22,395 41,139
Custody fees 0 46,169 68,468 48,209 23,391
Shareholder servicing fees 1,412,899 691,148 1,150,658 63,265 165,077
Portfolio accounting fees 49,394 116,948 138,969 30,249 67,282
Transfer agency fees 695,928 217,027 525,161 35,428 52,991
Distribution fees 171,564 251,030 435,733 116,955 69,222
Organization costs 0 13,333 31,337 10,301 16,062
Legal and audit fees 44,214 33,596 27,884 21,116 42,175
Registration fees 44,050 36,401 53,828 20,603 36,732
Directors' fees 4,218 4,735 4,858 2,369 4,846
Shareholder reports 52,714 31,893 126,493 15,452 15,075
Other 25,231 23,658 20,183 1,546 12,101
TOTAL EXPENSES 4,733,587 3,019,212 4,620,387 645,327 943,162
Less:
Waived fees and reimbursed expenses (288,393) (95,512) (44,284) (111,696) (307,888)
Net Expenses 4,445,194 2,923,700 4,576,103 533,631 635,274
NET INVESTMENT INCOME (LOSS) 3,987,574 2,994,304 1,803,757 (4,877) (122,337)
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS
Net realized gain (loss) from:
Investments 20,385,976 43,722,211 88,713,098 (680,014) 10,463,062
Foreign currency transactions 0 0 0 (12,396) 0
Net change in unrealized appreciation
of:
Investments 162,925,340 49,101,105 23,366,043 6,368,376 12,044,947
Translation of assets and
liabilities in foreign currencies 0 0 0 905 0
Futures 125,450 0 0 0 0
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS 183,436,766 92,823,316 112,079,141 5,676,871 22,508,009
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 187,424,340 $ 95,817,620 $113,882,898 $ 5,671,994 $ 22,385,672
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) INCLUDES AMOUNTS ALLOCATED FROM THE MASTER PORTFOLIO PRIOR TO DECEMBER 15,
1997. SEE NOTE 1.
(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.
---------------------
93
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
BALANCED FUND
----------------------------------------------
FOR THE FOR THE SIX FOR THE
YEAR ENDED MONTHS ENDED YEAR ENDED
MARCH 31, MARCH 31, SEPT. 30,
1998 1997 1996
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) $ 2,754,974 $ 1,585,315 $ 3,996,707
Net realized gain (loss) on sale of
investments and foreign currency
transactions 12,381,862 5,673,146 11,895,904
Net unrealized appreciation
(depreciation) of investments and
translation of assets and
liabilities in foreign currencies 7,449,221 957,295 3,445,959
Net unrealized appreciation of futures 0 0 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 22,586,057 8,215,756 19,338,570
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (995,417) (524,249) (1,030,389)
CLASS B (87,737) (785) 0
CLASS C N/A N/A N/A
INSTITUTIONAL CLASS (1,671,820) (1,028,637) (2,871,649)
In excess of net investment income
CLASS A 0 0 0
CLASS B 0 0 0
CLASS C N/A N/A N/A
INSTITUTIONAL CLASS 0 0 (23,043)
From net realized gain on sale of
investments
CLASS A (3,617,920) (505,037) (3,380,108)
CLASS B (567,992) (331) 0
CLASS C N/A N/A N/A
INSTITUTIONAL CLASS (5,890,499) (1,013,783) (8,265,228)
In excess of net realized gain on sale
of investments
CLASS A 0 0 0
CLASS B 0 0 0
CLASS C N/A N/A N/A
INSTITUTIONAL CLASS 0 0 0
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 5,461,758 1,158,984 15,479,177
Reinvestment of dividends - Class A 4,463,706 812,743 4,242,084
Cost of shares redeemed - Class A (10,215,448) (4,580,742) (76,589,659)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A (289,984) (2,609,015) (56,868,398)
Proceeds from shares sold - Class B 8,275,611 304,255 1,549
Reinvestment of dividends - Class B 614,957 452 0
Cost of shares redeemed - Class B (357,160) (1,579) 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B 8,533,408 303,128 1,549
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 6,665,487 3,125,636 115,568,034
Reinvestment of dividends -
Institutional Class 7,260,006 1,651,464 10,566,690
Cost of shares redeemed -
Institutional Class (23,971,016) (25,197,171) (57,101,263)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS (10,045,523) (20,420,071) 69,033,461
INCREASE (DECREASE) IN NET ASSETS 7,952,573 (17,583,024) 15,934,765
NET ASSETS:
Beginning net assets 87,385,418 104,968,442 89,033,677
ENDING NET ASSETS $ 95,337,991 $ 87,385,418 $104,968,442
- -------------------------------------------------------------------------------------------
</TABLE>
(1) THE CLASS B SHARES COMMENCED OPERATIONS ON FEBRUARY 17, 1998.
The accompanying notes are an integral part of these financial statements.
- ---------------------
94
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
DIVERSIFIED EQUITY INCOME FUND EQUITY INDEX
---------------------------------------------- -----------------------------
FOR THE FOR THE SIX FOR THE NINE FOR THE FOR THE SIX
YEAR ENDED MONTHS ENDED MONTHS ENDED YEAR ENDED MONTHS ENDED
MARCH 31, MARCH 31, SEPT. 30, MARCH 31, MARCH 31,
1998 1997 1996 1998 1997
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) $ 3,656,312 $ 1,611,261 $ 2,107,805 $ 3,987,574 $ 2,055,606
Net realized gain (loss) on sale of
investments and foreign currency
transactions 26,201,980 3,721,967 7,772,450 20,385,976 4,668,147
Net unrealized appreciation
(depreciation) of investments and
translation of assets and
liabilities in foreign currencies 47,022,615 2,318,759 2,900,227 162,925,340 32,614,123
Net unrealized appreciation of futures 0 0 0 125,450 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 76,880,907 7,651,987 12,780,482 187,424,340 39,337,876
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (3,113,133) (1,444,267) (1,963,354) (3,987,950) (2,055,606)
CLASS B (543,179) (166,994) (144,451) 0(1) N/A
CLASS C N/A N/A N/A N/A N/A
INSTITUTIONAL CLASS N/A N/A N/A N/A N/A
In excess of net investment income
CLASS A 0 0 0 0 0
CLASS B 0 0 0 0(1) N/A
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 (7,465,528) (8,166,226) 0 (12,945,620) (9,940,251)
CLASS B (2,354,505) (1,285,280) 0 0(1) N/A
CLASS C N/A N/A N/A N/A N/A
INSTITUTIONAL CLASS N/A N/A N/A N/A N/A
In excess of net realized gain on sale
of investments
CLASS A 0 0 0 0 0
CLASS B 0 0 0 0(1) N/A
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 64,556,264 35,798,695 67,375,546 72,404,299 29,911,449
Reinvestment of dividends - Class A 10,009,274 9,310,171 1,611,353 16,700,188 12,250,397
Cost of shares redeemed - Class A (55,531,440) (22,697,752) (24,014,045) (87,341,942) (33,204,510)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A 19,034,098 22,411,114 44,972,854 1,762,545 8,957,336
Proceeds from shares sold - Class B 30,400,244 17,492,675 11,955,056 3,707,259(1) N/A
Reinvestment of dividends - Class B 2,742,890 1,383,252 90,711 0(1) N/A
Cost of shares redeemed - Class B (7,439,195) (2,435,546) (1,314,702) (6,364)(1) N/A
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B 25,703,939 16,440,381 10,731,065 3,700,895(1) N/A
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 108,142,599 35,440,715 66,376,596 175,954,210 36,299,355
NET ASSETS:
Beginning net assets 187,133,350 151,692,635 85,316,039 406,738,616 370,439,261
ENDING NET ASSETS $295,275,949 $187,133,350 $151,692,635 $582,692,826 $406,738,616
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
FOR THE NINE
MONTHS ENDED
SEPT. 30,
1996
<S> <C>
- -------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) $ 3,383,203
Net realized gain (loss) on sale of
investments and foreign currency
transactions 7,781,779
Net unrealized appreciation
(depreciation) of investments and
translation of assets and
liabilities in foreign currencies 30,469,349
Net unrealized appreciation of futures 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 41,634,331
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (3,383,203)
CLASS B N/A
CLASS C N/A
INSTITUTIONAL CLASS N/A
In excess of net investment income
CLASS A 0
CLASS B N/A
CLASS C N/A
INSTITUTIONAL CLASS N/A
From net realized gain on sale of
investments
CLASS A 0
CLASS B N/A
CLASS C N/A
INSTITUTIONAL CLASS N/A
In excess of net realized gain on sale
of investments
CLASS A 0
CLASS B N/A
CLASS C N/A
INSTITUTIONAL CLASS N/A
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 50,105,623
Reinvestment of dividends - Class A 3,297,986
Cost of shares redeemed - Class A (48,423,346)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A 4,980,263
Proceeds from shares sold - Class B N/A
Reinvestment of dividends - Class B N/A
Cost of shares redeemed - Class B N/A
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B N/A
Proceeds from shares sold - 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 43,231,391
NET ASSETS:
Beginning net assets 327,207,870
ENDING NET ASSETS $370,439,261
- --------------------------------------------------------------------------------
</TABLE>
(1) THE CLASS B SHARES COMMENCED OPERATIONS ON FEBRUARY 17, 1998.
The accompanying notes are an integral part of these financial statements.
---------------------
95
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
EQUITY VALUE FUND
----------------------------------------------
FOR THE FOR THE SIX FOR THE
YEAR ENDED MONTHS ENDED YEAR ENDED
MARCH 31, MARCH 31, SEPT. 30,
1998 1997 1996
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) $ 2,994,304 $ 1,380,130 $ 3,943,333
Net realized gain (loss) on sale of
investments and foreign currency
transactions 43,722,211 15,163,623 27,944,178
Net unrealized appreciation
(depreciation) of investments and
translation of assets and
liabilities in foreign currencies 49,101,105 15,837,356 17,614,459
Net unrealized appreciation of futures 0 0 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 95,817,620 32,381,109 49,501,970
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (393,180) (111,000) (271,396)
CLASS B (144,346) (1,028) 0
CLASS C N/A N/A N/A
INSTITUTIONAL CLASS (2,611,274) (1,113,606) (3,536,140)
In excess of net investment income
CLASS A 0 0 0
CLASS B 0 0 0
CLASS C N/A N/A N/A
INSTITUTIONAL CLASS 0 0 (152,875)
From net realized gain on sale of
investments
CLASS A (4,313,021) (165,769) (3,065,374)
CLASS B (4,087,973) (864) 0
CLASS C N/A N/A N/A
INSTITUTIONAL CLASS (22,663,930) (1,716,939) (33,389,091)
In excess of net realized gain on sale
of investments
CLASS A 0 0 0
CLASS B 0 0 0
CLASS C N/A N/A N/A
INSTITUTIONAL CLASS 0 0 0
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 29,437,145 3,128,244 65,541,864
Reinvestment of dividends - Class A 4,317,886 222,206 3,103,800
Cost of shares redeemed - Class A (9,521,581) (3,807,382) (184,207,991)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A 24,233,450 (456,932) (115,562,327)
Proceeds from shares sold - Class B 62,552,854 2,636,307 26
Reinvestment of dividends - Class B 4,158,508 973 0
Cost of shares redeemed - Class B (2,617,789) (10,349) 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B 64,093,573 2,626,931 26
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 22,877,852 13,701,832 190,586,130
Reinvestment of dividends -
Institutional Class 20,970,848 1,877,441 32,111,369
Cost of shares redeemed -
Institutional Class (57,008,149) (55,593,181) (61,556,058)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS (13,159,449) (40,013,908) 161,141,441
INCREASE (DECREASE) IN NET ASSETS 136,771,470 (8,572,006) 54,666,234
NET ASSETS:
Beginning net assets 216,500,562 225,072,568 170,406,334
ENDING NET ASSETS $353,272,032 $216,500,562 $225,072,568
- -------------------------------------------------------------------------------------------
</TABLE>
(1) "PROCEEDS FROM SHARES SOLD" INCLUDES $628,555 FOR CLASS A AND $17,334,017
FOR THE INSTITUTIONAL CLASS AS A RESULT OF THE MERGER OF THE PACIFICA
GROWTH FUND. SEE NOTE 1.
The accompanying notes are an integral part of these financial statements.
- ---------------------
96
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INTERNATIONAL
EQUITY FUND
-----------
FROM SEPT.
GROWTH FUND 24, 1997
---------------------------------------------- (COMMENCEMENT
OF
FOR THE FOR THE SIX FOR THE NINE OPERATIONS)
YEAR ENDED MONTHS ENDED MONTHS ENDED TO
MARCH 31, MARCH 31, SEPT. 30, MARCH 31,
1998 1997 1996 (1) 1998
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) $ 1,803,757 $ 993,606 $ 907,579 $ (4,877)
Net realized gain (loss) on sale of
investments and foreign currency
transactions 88,713,098 10,102,690 14,694,253 (692,410)
Net unrealized appreciation
(depreciation) of investments and
translation of assets and
liabilities in foreign currencies 23,366,043 11,068,414 10,252,699 6,369,281
Net unrealized appreciation of futures 0 0 0 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 113,882,898 22,164,710 25,854,531 5,671,994
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (1,725,390) (921,552) (902,578) (3,770)
CLASS B (6,702) 0 0 0
CLASS C N/A N/A N/A N/A
INSTITUTIONAL CLASS (134,752) (77,222) (11,005) N/A
In excess of net investment income
CLASS A 0 0 0 0
CLASS B 0 0 0 0
CLASS C N/A N/A N/A N/A
INSTITUTIONAL CLASS 0 0 0 N/A
From net realized gain on sale of
investments
CLASS A (46,453,276) (769,667) (14,220,794) 0
CLASS B (6,167,386) (47,154) (490,320) 0
CLASS C N/A N/A N/A N/A
INSTITUTIONAL CLASS (3,047,106) (54,088) 0 N/A
In excess of net realized gain on sale
of investments
CLASS A 0 0 (2,238,898) 0
CLASS B 0 0 (358,700) 0
CLASS C N/A N/A N/A N/A
INSTITUTIONAL CLASS 0 0 0 N/A
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 85,211,489 44,283,158 92,986,116 25,718,301
Reinvestment of dividends - Class A 47,015,949 1,571,703 17,197,210 2,483
Cost of shares redeemed - Class A (99,180,720) (35,197,194) (40,873,885) (1,507,284)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A 33,046,718 10,657,667 69,309,441 24,213,500
Proceeds from shares sold - Class B 25,116,094 11,003,396 8,483,020 31,759,206
Reinvestment of dividends - Class B 6,089,528 47,228 848,356 0
Cost of shares redeemed - Class B (5,920,292) (1,557,385) (1,258,949) (1,867,827)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B 25,285,330 9,493,239 8,072,427 29,891,379
Proceeds from shares sold - Class C N/A N/A N/A N/A
Reinvestment of dividends - Class C N/A N/A N/A N/A
Cost of shares redeemed - Class C 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
Proceeds from shares sold -
Institutional Class 4,254,007 4,135,758 17,995,025 N/A
Reinvestment of dividends -
Institutional Class 1,899,742 66,661 0 N/A
Cost of shares redeemed -
Institutional Class (10,544,641) (4,289,351) (341,372) N/A
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS (4,390,892) (86,932) 17,653,653 N/A
INCREASE (DECREASE) IN NET ASSETS 110,289,442 40,359,001 102,667,757 59,773,103
NET ASSETS:
Beginning net assets 326,196,780 285,837,779 183,170,022 0
ENDING NET ASSETS $436,486,222 $326,196,780 $285,837,779 $59,773,103
- -----------------------------------------------------------------------------------------------------------
</TABLE>
(1) "PROCEEDS FROM SHARES SOLD" INCLUDES $628,555 FOR CLASS A AND $17,334,017
FOR THE INSTITUTIONAL CLASS AS A RESULT OF THE MERGER OF THE PACIFICA
GROWTH FUND. SEE NOTE 1.
The accompanying notes are an integral part of these financial statements.
---------------------
97
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SMALL CAP FUND
---------------------------------------------------------
FOR THE SIX
FOR THE MONTHS FROM SEPT. 16, 1996
YEAR ENDED ENDED (COMMENCEMENT OF
MARCH 31, MARCH 31, OPERATIONS) TO
1998 (1) 1997 SEPT. 30, 1996
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) $ (122,337) $ 16,522 $ (12,636)
Net realized gain (loss) on sale of
investments and foreign currency
transactions 10,463,062 (1,454,225) 58,619
Net unrealized appreciation
(depreciation) of investments and
translation of assets and
liabilities in foreign currencies 12,044,947 (3,802,835) 460,905
Net unrealized appreciation of futures 0 0 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 22,385,672 (5,240,538) 506,888
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (1,626) 0 0
CLASS B 0 0 0
CLASS C 0(2) N/A N/A
INSTITUTIONAL CLASS (24,243) 0 0
In excess of net investment income
CLASS A 0 0 0
CLASS B 0 0 0
CLASS C 0(2) N/A N/A
INSTITUTIONAL CLASS 0 0 0
From net realized gain on sale of
investments
CLASS A (827,508) 0 0
CLASS B (782,027) 0 0
CLASS C 0(2) N/A N/A
INSTITUTIONAL CLASS (4,562,220) 0 0
In excess of net realized gain on sale
of investments
CLASS A 0 0 0
CLASS B 0 0 0
CLASS C 0(2) N/A N/A
INSTITUTIONAL CLASS 0 0 0
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 15,154,524 3,967,857 94,136
Reinvestment of dividends - Class A 803,796 0 0
Cost of shares redeemed - Class A (5,282,878) (556,553) 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A 10,675,442 3,411,304 94,136
Proceeds from shares sold - Class B 12,825,169 2,296,961 25
Reinvestment of dividends - Class B 771,233 0 0
Cost of shares redeemed - Class B (1,640,518) (163,976) 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B 11,955,884 2,132,985 25
Proceeds from shares sold - Class C 2,366,421(2) N/A N/A
Reinvestment of dividends - Class C 8,555(2) N/A N/A
Cost of shares redeemed - Class C (132,433)(2) N/A N/A
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS C 2,242,543(2) N/A N/A
Proceeds from shares sold -
Institutional Class 53,985,405 12,246,405 24,103,344
Reinvestment of dividends -
Institutional Class 4,269,897 0 0
Cost of shares redeemed -
Institutional Class (21,247,255) (2,987,916) (54,923)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - INSTITUTIONAL CLASS 37,008,047 9,258,489 24,048,421
INCREASE (DECREASE) IN NET ASSETS 78,069,964 9,562,240 24,649,470
NET ASSETS:
Beginning net assets 34,211,710 24,649,470 0
ENDING NET ASSETS $112,281,674 $34,211,710 $24,649,470
- ------------------------------------------------------------------------------------------------------
</TABLE>
(1) INCLUDES AMOUNTS RELATED TO THE CONSOLIDATION OF THE OVERLAND EXPRESS SMALL
CAP STRATEGY FUND. SEE NOTE 1.
(2) THE CLASS C SHARES COMMENCED OPERATIONS ON DECEMBER 15, 1997.
The accompanying notes are an integral part of these financial statements.
- ---------------------
98
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
---------------------
99
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
BALANCED FUND (2)
----------------------------------
CLASS A
----------------------------------
SIX MONTHS
YEAR ENDED ENDED YEAR ENDED
MARCH 31, MARCH 31, SEPT. 30,
1998 1997 (3) 1996
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $12.01 $11.46 $11.84
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.38 0.19 0.36
Net realized and unrealized gain (loss) on investments 2.76 0.74 0.89
---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 3.14 0.93 1.25
LESS DISTRIBUTIONS:
Dividends from net investment income (0.38) (0.19) (0.35)
Distributions from net realized gain (1.49) (0.19) (1.28)
---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (1.87) (0.38) (1.63)
---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $13.28 $12.01 $11.46
---------- ---------- ----------
---------- ---------- ----------
TOTAL RETURN (NOT ANNUALIZED) 27.49% 8.15% 10.51%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $34,952 $31,632 $32,640
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 1.12% 1.05% 1.31%
Ratio of net investment income (loss) to average net
assets 2.91% 3.20% 2.98%
Portfolio turnover 67% 43% 131%
Average commission rate paid (1) $0.05 $0.08 $0.06
- --------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 1.40% 1.30% 1.48%
Ratio of net investment income (loss) to average net
assets prior to waived fees and reimbursed expenses 2.63% 2.95% 2.81%
- --------------------------------------------------------------------------------------------
</TABLE>
* PER SHARE DATA BASED UPON AVERAGE MONTHLY SHARES OUTSTANDING.
(1) FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
(2) THE FUND OPERATED AS A SERIES OF PACIFICA FUNDS TRUST FROM ITS
COMMENCEMENT OF OPERATIONS UNTIL IT WAS REORGANIZED AS A SERIES OF
STAGECOACH FUNDS, INC. ON SEPTEMBER 6, 1996. IN CONJUNCTION WITH THE
REORGANIZATION, EXISTING INVESTOR SHARES WERE CONVERTED INTO CLASS A
SHARES OF THE FUND 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.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(4) THE CLASS B SHARES COMMENCED OPERATIONS ON SEPTEMBER 6, 1996.
The accompanying notes are an integral part of these financial statements.
- ---------------------
100
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
BALANCED FUND (2) (CONT.)
----------------------------------------------------------------------
CLASS B
CLASS A (CONT.) ----------------------------------
---------------------------------- SIX MONTHS PERIOD
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED ENDED ENDED
SEPT. 30, SEPT. 30, SEPT. 30, MARCH 31, MARCH 31, SEPT. 30,
1995 1994 1993 1998 1997 (3) 1996 (4)
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $11.67 $12.71 $11.18 $10.79 $10.24 $10.00
---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.46* 0.43* 0.44* 0.19 0.08 0.00
Net realized and
unrealized gain (loss)
on investments 0.68* (0.13)* 1.72* 2.55 0.72 0.24
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT
OPERATIONS 1.14 0.30 2.16 2.74 0.80 0.24
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.47) (0.46) (0.43) (0.19) (0.08) 0.00
Distributions from net
realized gain (0.50) (0.88) (0.20) (1.34) (0.17) 0.00
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.97) (1.34) (0.63) (1.53) (0.25) 0.00
---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD $11.84 $11.67 $12.71 $12.00 $10.79 $10.24
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
TOTAL RETURN (NOT
ANNUALIZED) 10.62% 2.30% 19.83% 26.64% 7.84% 2.40%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $89,034 $108,290 $104,434 $9,145 $297 $2
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 1.03% 1.09% 1.01% 1.82% 1.70% 0.00%
Ratio of net investment
income (loss) to average
net assets 4.05% 3.55% 3.62% 2.15% 2.48% 3.09%
Portfolio turnover 90% 35% 60% 67% 43% 131%
Average commission rate
paid (1) N/A N/A N/A $0.05 $0.08 $0.06
- ----------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 1.05% 1.11% 1.06% 2.29% 7.85% 0.66%
Ratio of net investment
income (loss) to average
net assets prior to waived
fees and reimbursed
expenses 4.03% 3.53% 3.57% 1.68% (3.67)% 2.43%
- ----------------------------------------------------------------------------------------------------
</TABLE>
* PER SHARE DATA BASED UPON AVERAGE MONTHLY SHARES OUTSTANDING.
(1) FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
(2) THE FUND OPERATED AS A SERIES OF PACIFICA FUNDS TRUST FROM ITS
COMMENCEMENT OF OPERATIONS UNTIL IT WAS REORGANIZED AS A SERIES OF
STAGECOACH FUNDS, INC. ON SEPTEMBER 6, 1996. IN CONJUNCTION WITH THE
REORGANIZATION, EXISTING INVESTOR SHARES WERE CONVERTED INTO CLASS A
SHARES OF THE FUND 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.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(4) THE CLASS B SHARES COMMENCED OPERATIONS ON SEPTEMBER 6, 1996.
The accompanying notes are an integral part of these financial statements.
---------------------
101
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
BALANCED FUND (2) (CONT.)
----------------------------------
INSTITUTIONAL CLASS
----------------------------------
SIX MONTHS
YEAR ENDED ENDED YEAR ENDED
MARCH 31, MARCH 31, SEPT. 30,
1998 1997 (3) 1996 (4)
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $12.00 $11.45 $11.84
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.40 0.21 0.40
Net realized and unrealized gain (loss) on investments 2.74 0.74 0.89
---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 3.14 0.95 1.29
LESS DISTRIBUTIONS:
Dividends from net investment income (0.40) (0.21) (0.40)
Distributions from net realized gain (1.48) (0.19) (1.28)
---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (1.88) (0.40) (1.68)
---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $13.26 $12.00 $11.45
---------- ---------- ----------
---------- ---------- ----------
TOTAL RETURN (NOT ANNUALIZED) 27.67% 8.27% 10.80%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $51,241 $55,456 $72,327
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 0.99% 0.95% 0.94%
Ratio of net investment income (loss) to average net
assets 3.05% 3.30% 3.29%
Portfolio turnover 67% 43% 131%
Average commission rate paid (1) $0.05 $0.08 $0.06
- --------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 1.21% 1.18% 1.11%
Ratio of net investment income (loss) to average net
assets prior to waived fees and reimbursed expenses 2.83% 3.07% 3.12%
- --------------------------------------------------------------------------------------------
</TABLE>
(1) FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
(2) THE FUND 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.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(4) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON OCTOBER 1,
1995.
(5) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO SEPTEMBER 30.
The accompanying notes are an integral part of these financial statements.
- ---------------------
102
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
DIVERSIFIED EQUITY INCOME FUND
----------------------------------------------------------------------
CLASS A
----------------------------------------------------------------------
NINE
SIX MONTHS MONTHS
YEAR ENDED ENDED ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31, SEPT. 30, DEC. 31, DEC. 31, DEC. 31,
1998 1997 (3) 1996 (5) 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $14.52 $14.73 $13.34 $10.76 $11.08 $10.29
---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.28 0.14 0.25 0.35 0.33 0.30
Net realized and
unrealized gain (loss)
on investments 5.15 0.64 1.39 2.86 (0.32) 0.96
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT
OPERATIONS 5.43 0.78 1.64 3.21 0.01 1.26
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.28) (0.14) (0.25) (0.35) (0.33) (0.30)
Distributions from net
realized gain (0.70) (0.85) 0.00 (0.28) 0.00 (0.17)
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.98) (0.99) (0.25) (0.63) (0.33) (0.47)
---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD $18.97 $14.52 $14.73 $13.34 $10.76 $11.08
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
TOTAL RETURN (NOT
ANNUALIZED) 38.15% 5.25% 12.35% 30.17% 0.08% 12.33%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $223,540 $154,502 $134,648 $79,977 $45,178 $26,704
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 1.12% 1.10% 1.10% 1.10% 1.06% 0.46%
Ratio of net investment
income (loss) to average
net assets 1.67% 1.91% 2.57% 3.02% 3.16% 3.51%
Portfolio turnover 59% 33% 43% 70% 62% 46%
Average commission rate
paid (1) $0.06 $0.08 $0.08 N/A N/A N/A
- ----------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 1.19% 1.17% 1.26% 1.31% 1.34% 1.66%
Ratio of net investment
income (loss) to average
net assets prior to waived
fees and reimbursed
expenses 1.60% 1.84% 2.41% 2.81% 2.88% 2.31%
- ----------------------------------------------------------------------------------------------------
</TABLE>
(1) FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
(2) THE FUND 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.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(4) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON OCTOBER 1,
1995.
(5) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO SEPTEMBER 30.
The accompanying notes are an integral part of these financial statements.
---------------------
103
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
DIVERSIFIED EQUITY
INCOME FUND (CONT.)
----------------------
CLASS B
----------------------
SIX MONTHS
YEAR ENDED ENDED
MARCH 31, MARCH 31,
1998 1997 (2)
<S> <C> <C>
- ------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $13.60 $13.79
---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.15 0.08
Net realized and unrealized gain (loss) on investments 4.82 0.60
---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 4.97 0.68
LESS DISTRIBUTIONS:
Dividends from net investment income (0.15) (0.08)
Distributions from net realized gain (0.65) (0.79)
---------- ----------
TOTAL FROM DISTRIBUTIONS (0.80) (0.87)
---------- ----------
NET ASSET VALUE, END OF PERIOD $17.77 $13.60
---------- ----------
---------- ----------
TOTAL RETURN (NOT ANNUALIZED) 37.29% 4.91%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $71,736 $32,632
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 1.77% 1.74%
Ratio of net investment income (loss) to average net assets 1.02% 1.29%
Portfolio turnover 59% 33%
Average commission rate paid (1) $0.06 $0.08
- ------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived fees and
reimbursed expenses 1.83% 1.87%
Ratio of net investment income (loss) to average net assets prior
to waived fees and reimbursed expenses 0.96% 1.16%
- ------------------------------------------------------------------------------------------
</TABLE>
(1) FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO SEPTEMBER 30.
(4) THE CLASS B SHARES COMMENCED OPERATIONS ON JANUARY 1, 1995.
(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 AND AVERAGE COMMISSION RATE PAID BY THE
CORPORATE STOCK MASTER PORTFOLIO FROM ITS INCEPTION ON APRIL 28, 1996
TO SEPTEMBER 30, 1996, WERE 3% AND $.0265 RESPECTIVELY. THE
INFORMATION SHOWN REFLECTS THE STAND-ALONE PERIOD ONLY.
The accompanying notes are an integral part of these financial statements.
- ---------------------
104
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
DIVERSIFIED EQUITY EQUITY INDEX FUND
INCOME FUND (CONT.) ----------------------------------------------
----------------------
CLASS B (CONT.) CLASS A
---------------------- ----------------------------------------------
NINE NINE
MONTHS SIX MONTHS MONTHS
ENDED YEAR ENDED YEAR ENDED ENDED ENDED YEAR ENDED
SEPT. 30, DEC. 31, MARCH 31, MARCH 31, SEPT. 30, DEC. 31,
1996 (3) 1995 (4) 1998 1997 (2) 1996 (3) 1995
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $12.49 $10.00 $49.60 $46.24 $41.45 $31.42
---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.17 0.20 0.48 0.25 0.42 0.59
Net realized and
unrealized gain (loss)
on investments 1.30 2.75 22.31 4.61 4.79 10.65
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT
OPERATIONS 1.47 2.95 22.79 4.86 5.21 11.24
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.17) (0.20) (0.48) (0.25) (0.42) (0.59)
Distributions from net
realized gain 0.00 (0.26) (1.59) (1.25) 0.00 (0.62)
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.17) (0.46) (2.07) (1.50) (0.42) (1.21)
---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD $13.79 $12.49 $70.32 $49.60 $46.24 $41.45
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
TOTAL RETURN (NOT
ANNUALIZED) 11.76% 29.64% 46.48% 10.63% 12.60% 35.99%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $17,045 $5,339 $578,882 $406,739 $370,439 $327,208
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 1.74% 1.73% 0.89 (5) 0.97 (5) 1.01 (5) 0.96%
Ratio of net investment
income (loss) to average
net assets 2.01% 2.40% 0.80 (5) 1.02 (5) 1.28 (5) 1.59%
Portfolio turnover 43% 70% 4 (6) 2 (6) 1 (7) 6%
Average commission rate
paid (1) $0.08 N/A $0.03(6) $0.03(6) $0.02(7) N/A
- ----------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 2.08% 2.57% 0.95 (5) 1.07 (5) 1.08 (5) 1.00%
Ratio of net investment
income (loss) to average
net assets prior to waived
fees and reimbursed
expenses 1.67% 1.56% 0.74 (5) 0.92 (5) 1.21 (5) 1.55%
- ----------------------------------------------------------------------------------------------------
</TABLE>
(1) FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO SEPTEMBER 30.
(4) THE CLASS B SHARES COMMENCED OPERATIONS ON JANUARY 1, 1995.
(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 AND AVERAGE COMMISSION RATE PAID BY THE
CORPORATE STOCK MASTER PORTFOLIO FROM ITS INCEPTION ON APRIL 28, 1996
TO SEPTEMBER 30, 1996, WERE 3% AND $.0265 RESPECTIVELY. THE
INFORMATION SHOWN REFLECTS THE STAND-ALONE PERIOD ONLY.
The accompanying notes are an integral part of these financial statements.
---------------------
105
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
EQUITY INDEX FUND (CONT.)
----------------------------------
CLASS B
CLASS A (CONT.) ----------
---------------------- PERIOD
YEAR ENDED YEAR ENDED ENDED
DEC. 31, DEC. 31, MARCH 31,
1994 1993 1998 (3)
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $33.00 $31.40 $65.18
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.63 0.59 (0.01)
Net realized and unrealized gain (loss) on investments (0.50) 2.19 5.24
---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 0.13 2.78 5.23
LESS DISTRIBUTIONS:
Dividends from net investment income (0.63) (0.59) 0.00
Distributions from net realized gain (1.08) (0.59) 0.00
---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (1.71) (1.18) 0.00
---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $31.42 $33.00 $70.41
---------- ---------- ----------
---------- ---------- ----------
TOTAL RETURN (NOT ANNUALIZED) 0.42% 8.91% 8.02%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $236,265 $258,327 $3,811
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 0.97% 0.97% 1.45%
Ratio of net investment income (loss) to average net
assets 1.92% 1.81% (0.19)%
Portfolio turnover 7% 5% 4%
Average commission rate paid (1) N/A N/A $0.03
- --------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 1.00% 0.99% 1.64%
Ratio of net investment income (loss) to average net
assets prior to waived fees and reimbursed expenses 1.89% 1.79% (0.38)%
- --------------------------------------------------------------------------------------------
</TABLE>
* PER SHARE DATA BASED UPON AVERAGE MONTHLY SHARES OUTSTANDING.
(1) FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
(2) THE FUND OPERATED AS A SERIES OF PACIFICA FUNDS TRUST FROM ITS
COMMENCEMENT OF OPERATIONS UNTIL IT WAS REORGANIZED AS A SERIES OF
STAGECOACH FUNDS, INC. ON SEPTEMBER 6, 1996. IN CONJUNCTION WITH THE
REORGANIZATION, EXISTING INVESTOR SHARES WERE CONVERTED INTO CLASS A
SHARES OF THE FUND 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.
(3) THE CLASS B SHARES COMMENCED OPERATIONS ON FEBRUARY 17, 1998.
(4) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
The accompanying notes are an integral part of these financial statements.
- ---------------------
106
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
EQUITY VALUE FUND (2)
----------------------------------------------------------------------
CLASS A
----------------------------------------------------------------------
SIX MONTHS
YEAR ENDED ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31, SEPT. 30, SEPT. 30, SEPT. 30, SEPT. 30,
1998 1997 (4) 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $14.43 $12.66 $13.27 $12.36 $13.17 $10.73
---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.17 0.08 0.20 0.24* 0.20* 0.21*
Net realized and
unrealized gain (loss)
on investments 5.58 1.89 1.60 1.63* 0.74* 2.75*
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT
OPERATIONS 5.75 1.97 1.80 1.87 0.94 2.96
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.17) (0.08) (0.19) (0.25) (0.21) (0.23)
Distributions from net
realized gain (1.86) (0.12) (2.22) (0.71) (1.54) (0.29)
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (2.03) (0.20) (2.41) (0.96) (1.75) (0.52)
---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD $18.15 $14.43 $12.66 $13.27 $12.36 $13.17
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
TOTAL RETURN (NOT
ANNUALIZED) 41.76% 15.63% 14.27% 16.58% 7.49% 28.22%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $52,392 $20,798 $18,453 $170,406 $168,852 $140,551
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 1.07% 1.05% 1.18% 0.96% 0.99% 0.98%
Ratio of net investment
income (loss) to average
net assets 1.03% 1.14% 1.73% 1.97% 1.60% 1.73%
Portfolio turnover 50% 45% 91% 75% 41% 82%
Average commission rate
paid (1) $0.05 $0.08 $0.06 N/A N/A N/A
- ----------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 1.16% 1.12% 1.22% 0.98% 1.01% 0.99%
Ratio of net investment
income (loss) to average
net assets prior to waived
fees and reimbursed
expenses 0.94% 1.07% 1.69% 1.95% 1.58% 1.72%
- ----------------------------------------------------------------------------------------------------
</TABLE>
* PER SHARE DATA BASED UPON AVERAGE MONTHLY SHARES OUTSTANDING.
(1) FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
(2) THE FUND OPERATED AS A SERIES OF PACIFICA FUNDS TRUST FROM ITS
COMMENCEMENT OF OPERATIONS UNTIL IT WAS REORGANIZED AS A SERIES OF
STAGECOACH FUNDS, INC. ON SEPTEMBER 6, 1996. IN CONJUNCTION WITH THE
REORGANIZATION, EXISTING INVESTOR SHARES WERE CONVERTED INTO CLASS A
SHARES OF THE FUND 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.
(3) THE CLASS B SHARES COMMENCED OPERATIONS ON FEBRUARY 17, 1998.
(4) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
The accompanying notes are an integral part of these financial statements.
---------------------
107
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
EQUITY VALUE FUND (2) (CONT.)
----------------------------------
CLASS B
----------------------------------
SIX MONTHS PERIOD
YEAR ENDED ENDED ENDED
MARCH 31, MARCH 31, SEPT. 30,
1998 1997 (3) 1996 (4)
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $11.81 $10.34 $10.00
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.05 0.01 0.00
Net realized and unrealized gain (loss) on investments 4.57 1.57 0.34
---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 4.62 1.58 0.34
LESS DISTRIBUTIONS:
Dividends from net investment income (0.05) (0.01) 0.00
Distributions from net realized gain (1.52) (0.10) 0.00
---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (1.57) (0.11) 0.00
---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $14.86 $11.81 $10.34
---------- ---------- ----------
---------- ---------- ----------
TOTAL RETURN (NOT ANNUALIZED) 40.87% 15.31% 3.40%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $72,428 $2,542 $0
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 1.76% 1.70% 0.00%
Ratio of net investment income (loss) to average net
assets 0.42% 0.34% 1.83%
Portfolio turnover 50% 45% 91%
Average commission rate paid (1) $0.05 $0.08 $0.06
- --------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 1.83% 2.19% N/A
Ratio of net investment income (loss) to average net
assets prior to waived fees and reimbursed expenses 0.35% (0.15)% N/A
- --------------------------------------------------------------------------------------------
</TABLE>
(1) FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
(2) THE FUND 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.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(4) THE CLASS B SHARES COMMENCED OPERATIONS ON SEPTEMBER 6, 1996.
(5) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON OCTOBER 1,
1995.
(6) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO SEPTEMBER 30.
The accompanying notes are an integral part of these financial statements.
- ---------------------
108
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
GROWTH FUND
EQUITY VALUE FUND (2) (CONT.) ----------------------------------
---------------------------------- CLASS A
INSTITUTIONAL CLASS ----------------------------------
---------------------------------- NINE
SIX MONTHS SIX MONTHS MONTHS
YEAR ENDED ENDED YEAR ENDED YEAR ENDED ENDED ENDED
MARCH 31, MARCH 31, SEPT. 30, MARCH 31, MARCH 31, SEPT. 30,
1998 1997 (3) 1996 (5) 1998 1997 (3) 1996 (6)
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $14.43 $12.65 $13.27 $19.20 $17.91 $17.26
---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) 0.20 0.09 0.22 0.11 0.06 0.07
Net realized and
unrealized gain (loss)
on investments 5.58 1.89 1.61 6.18 1.34 2.00
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT
OPERATIONS 5.78 1.98 1.83 6.29 1.40 2.07
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.20) (0.08) (0.23) (0.11) (0.06) (0.07)
Distributions from net
realized gain (1.86) (0.12) (2.22) (3.29) (0.05) (1.35)
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (2.06) (0.20) (2.45) (3.40) (0.11) (1.42)
---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD $18.15 $14.43 $12.65 $22.09 $19.20 $17.91
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
TOTAL RETURN (NOT
ANNUALIZED) 42.02% 15.73% 14.58% 34.65% 7.86% 12.45%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $228,452 $193,161 $206,620 $365,405 $283,468 $254,498
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 0.95% 0.95% 0.87% 1.12% 1.14% 1.18%
Ratio of net investment
income (loss) to average
net assets 1.18% 1.25% 1.69% 0.53% 0.65% 0.56%
Portfolio turnover 50% 45% 91% 137% 40% 83%
Average commission rate
paid (1) $0.05 $0.08 $0.06 $0.05 $0.08 $0.07
- ----------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 0.98% 0.99% 0.92% 1.13% N/A 1.19%
Ratio of net investment
income (loss) to average
net assets prior to waived
fees and reimbursed
expenses 1.15% 1.21% 1.64% 0.52% N/A 0.55%
- ----------------------------------------------------------------------------------------------------
</TABLE>
(1) FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
(2) THE FUND 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.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(4) THE CLASS B SHARES COMMENCED OPERATIONS ON SEPTEMBER 6, 1996.
(5) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON OCTOBER 1,
1995.
(6) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO SEPTEMBER 30.
The accompanying notes are an integral part of these financial statements.
---------------------
109
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
GROWTH 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 $14.10 $14.75 $13.88
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.19 0.22 0.23
Net realized and unrealized gain (loss) on investments 3.87 (0.27) 0.93
---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 4.06 (0.05) 1.16
LESS DISTRIBUTIONS:
Dividends from net investment income (0.19) (0.22) (0.23)
Distributions from net realized gain (0.71) (0.38) (0.06)
---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.90) (0.60) (0.29)
---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $17.26 $14.10 $14.75
---------- ---------- ----------
---------- ---------- ----------
TOTAL RETURN (NOT ANNUALIZED) 28.90% (0.29)% 8.44%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $178,488 $113,525 $112,236
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 1.18% 1.11% 0.93%
Ratio of net investment income (loss) to average net
assets 1.23% 1.51% 1.72%
Portfolio turnover 100% 71% 55%
Average commission rate paid (1) N/A N/A N/A
- --------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 1.21% 1.15% 1.11%
Ratio of net investment income (loss) to average net
assets prior to waived fees and reimbursed expenses 1.20% 1.47% 1.54%
- --------------------------------------------------------------------------------------------
</TABLE>
(1) FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO SEPTEMBER 30.
(4) THE CLASS B SHARES COMMENCED OPERATIONS ON JANUARY 1, 1995.
(5) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON SEPTEMBER 6,
1996.
The accompanying notes are an integral part of these financial statements.
- ---------------------
110
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
GROWTH FUND (CONT.)
----------------------------------------------------------------------------------
CLASS B
---------------------------------------------- INSTITUTIONAL CLASS
NINE ----------------------------------
SIX MONTHS MONTHS SIX MONTHS PERIOD
YEAR ENDED ENDED ENDED YEAR ENDED YEAR ENDED ENDED ENDED
MARCH 31, MARCH 31, SEPT. 30, DEC. 31, MARCH 31, MARCH 31, SEPT. 30,
1998 1997 (2) 1996 (3) 1995 (4) 1998 1997 (2) 1996 (5)
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $13.64 $12.74 $12.29 $10.00 $22.52 $21.01 $20.03
---------- ---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) (0.01) 0.00 (0.01) 0.05 0.17 0.09 0.02
Net realized and
unrealized gain (loss)
on investments 4.38 0.94 1.42 2.79 7.25 1.57 0.97
---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT
OPERATIONS 4.37 0.94 1.41 2.84 7.42 1.66 0.99
LESS DISTRIBUTIONS:
Dividends from net
investment income 0.00 0.00 0.00 (0.05) (0.17) (0.09) (0.01)
Distributions from net
realized gain (2.31) (0.04) (0.96) (0.50) (3.86) (0.06) 0.00
---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (2.31) (0.04) (0.96) (0.55) (4.03) (0.15) (0.01)
---------- ---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD $15.70 $13.64 $12.74 $12.29 $25.91 $22.52 $21.01
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL RETURN (NOT
ANNUALIZED) 33.83% 7.36% 11.89% 28.47% 34.86% 7.92% 3.41%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $52,901 $23,010 $12,832 $4,682 $18,180 $19,719 $18,508
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 1.79% 1.86% 1.93% 1.87% 0.99% 1.01% 0.96%
Ratio of net investment
income (loss) to average
net assets (0.15)% (0.06)% (0.12)% 0.43% 0.65% 0.78% 1.27%
Portfolio turnover 137% 40% 83% 100% 137% 40% 83%
Average commission rate
paid (1) $0.05 $0.08 $0.07 N/A $0.05 $0.08 $0.07
- ----------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 1.80% 1.89% 2.03% 2.21% N/A N/A 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% N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO SEPTEMBER 30.
(4) THE CLASS B SHARES COMMENCED OPERATIONS ON JANUARY 1, 1995.
(5) THE INSTITUTIONAL CLASS SHARES COMMENCED OPERATIONS ON SEPTEMBER 6,
1996.
The accompanying notes are an integral part of these financial statements.
---------------------
111
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY
FUND (2)
----------------------
CLASS A CLASS B
--------- ---------
PERIOD PERIOD
ENDED ENDED
MARCH 31, MARCH 31,
1998 1998
<S> <C> <C>
- ----------------------------------------------------------
NET ASSET VALUE, BEGINNING OF
PERIOD $10.00 $10.00
--------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income (loss) 0.02 (0.01)
Net realized and unrealized
gain (loss) on investments 1.03 1.02
--------- ---------
TOTAL FROM INVESTMENT OPERATIONS 1.05 1.01
LESS DISTRIBUTIONS:
Dividends from net investment
income 0.00 0.00
Distributions from net
realized gain 0.00 0.00
--------- ---------
TOTAL FROM DISTRIBUTIONS 0.00 0.00
--------- ---------
NET ASSET VALUE, END OF PERIOD $11.05 $11.01
--------- ---------
--------- ---------
TOTAL RETURN (NOT ANNUALIZED) 10.52% 10.10%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $26,770 $33,003
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to average
net assets 1.75% 2.40%
Ratio of net investment income
(loss) to average net assets 0.35% (0.31)%
Portfolio turnover 12% 12%
Average commission rate paid (1) $0.08 $0.08
- ----------------------------------------------------------
Ratio of expenses to average net
assets prior to waived fees
and reimbursed expenses 2.20% 2.84%
Ratio of net investment income
(loss) to average net assets
prior to waived fees and
reimbursed expenses (0.10)% (0.75)%
- ----------------------------------------------------------
</TABLE>
(1) FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
(2) THE FUND COMMENCED OPERATIONS ON SEPTEMBER 24, 1997.
(3) THE FUND COMMENCED OPERATIONS ON SEPTEMBER 16, 1996.
(4) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(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.
The accompanying notes are an integral part of these financial statements.
- ---------------------
112
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
SMALL CAP FUND (3)
--------------------------------------------------------------------------
CLASS A CLASS B
----------------------------------- -----------------------------------
SIX SIX
YEAR MONTHS PERIOD YEAR MONTHS PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, SEPT. 30, MARCH 31, MARCH 31, SEPT. 30,
1998 1997 (4) 1996 1998 1997 (4) 1996
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $18.98 $22.45 $22.01 $18.93 $22.46 $22.02
--------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) (0.06) (0.01) 0.00 (0.11) (0.04) 0.00
Net realized and
unrealized gain (loss)
on investments 8.76 (3.46) 0.44 8.61 (3.49) 0.44
--------- --------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT
OPERATIONS 8.70 (3.47) 0.44 8.50 (3.53) 0.44
LESS DISTRIBUTIONS:
Dividends from net
investment income 0.00 0.00 0.00 0.00 0.00 0.00
Distributions from net
realized gain (2.06) 0.00 0.00 (2.05) 0.00 0.00
--------- --------- --------- --------- --------- ---------
TOTAL FROM DISTRIBUTIONS (2.06) 0.00 0.00 (2.05) 0.00 0.00
--------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF
PERIOD $25.62 $18.98 $22.45 $25.38 $18.93 $22.46
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
TOTAL RETURN (NOT
ANNUALIZED) 47.03% (15.46)% 2.00% 46.02% (15.72)% 2.00%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $15,611 $3,107 $96 $15,320 $1,905 $0
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 1.22%(5) 1.10%(5) 1.03%(5) 1.92%(5) 1.75%(5) 0.00%
Ratio of net investment
income (loss) to average
net assets (0.43)%(5) (0.23)%(5) (0.59)%(5) (1.13)%(5) (0.85)%(5) 0.00%
Portfolio turnover 291%(6) 69%(6) 10%(6) 291%(6) 69%(6) 10%(6)
Average commission rate
paid (1) $0.05(6) $0.08(6) $0.08(6) $0.05(6) $0.08(6) $0.08(6)
- ----------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 1.57%(5) 2.80%(5) 38.54%(5) 2.21%(5) 3.55%(5) 0.00%
Ratio of net investment
income (loss) to average
net assets prior to waived
fees and reimbursed
expenses (0.78)%(5) (1.93)%(5) (38.10)%(5) (1.42)%(5) (2.65)%(5) 0.00%
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
(2) THE FUND COMMENCED OPERATIONS ON SEPTEMBER 24, 1997.
(3) THE FUND COMMENCED OPERATIONS ON SEPTEMBER 16, 1996.
(4) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(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.
The accompanying notes are an integral part of these financial statements.
---------------------
113
<PAGE>
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
SMALL CAP FUND (2) (CONT.)
------------------------------------------------
INSTITUTIONAL CLASS
CLASS C -----------------------------------
--------- SIX
PERIOD YEAR MONTHS PERIOD
ENDED ENDED ENDED ENDED
MARCH 31, MARCH 31, MARCH 31, SEPT. 30,
1998 (3) 1998 1997 (4) 1996
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF
PERIOD $21.77 $19.01 $22.45 $22.01
--------- --------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income (loss) (0.08) 0.00 0.02 0.00
Net realized and unrealized
gain (loss) on investments 3.69 8.84 (3.46) 0.44
--------- --------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS 3.61 8.84 (3.44) 0.44
LESS DISTRIBUTIONS:
Dividends from net investment
income 0.00 (0.01) 0.00 0.00
Distributions from net
realized gain 0.00 (2.07) 0.00 0.00
--------- --------- --------- ---------
TOTAL FROM DISTRIBUTIONS 0.00 (2.08) 0.00 0.00
--------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $25.38 $25.77 $19.01 $22.45
--------- --------- --------- ---------
--------- --------- --------- ---------
TOTAL RETURN (NOT ANNUALIZED) 16.58% 47.70% (15.32)% 2.00%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $2,495 $78,856 $29,200 $24,553
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to average
net assets 2.10% 0.75%(5) 0.75%(5) 1.60%(5)
Ratio of net investment income
(loss) to average net assets (1.17)% 0.01%(5) 0.16%(5) (1.15)%(5)
Portfolio turnover 291% 291%(6) 69%(6) 10%(6)
Average commission rate paid (1) $0.05 $0.05(6) $0.08(6) $0.08(6)
- ------------------------------------------------------------------------------------
Ratio of expenses to average net
assets prior to waived fees
and reimbursed expenses 2.66% 1.26%(5) 1.65%(5) 1.63%(5)
Ratio of net investment income
(loss) to average net assets
prior to waived fees and
reimbursed expenses (1.73)% (0.50)%(5) (0.74)%(5) (1.18)%(5)
- ------------------------------------------------------------------------------------
</TABLE>
(1) FOR FISCAL YEARS BEGINNING ON OR AFTER SEPTEMBER 1, 1995, A FUND IS
REQUIRED TO DISCLOSE ITS AVERAGE COMMISSION RATE PER SHARE FOR
SECURITY TRADES ON WHICH COMMISSIONS ARE CHARGED. THIS AMOUNT MAY VARY
FROM PERIOD TO PERIOD AND FUND TO FUND DEPENDING ON THE MIX OF TRADES
EXECUTED IN VARIOUS MARKETS WHERE TRADING PRACTICES AND COMMISSION
RATE STRUCTURES MAY DIFFER.
(2) THE FUND COMMENCED OPERATIONS ON SEPTEMBER 16, 1996.
(3) THE CLASS C SHARES COMMENCED OPERATIONS ON DECEMBER 15, 1997.
(4) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(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.
The accompanying notes are an integral part of these financial statements.
- ---------------------
114
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Stagecoach Funds, Inc. (the "Company") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end series
management investment company. The Company commenced operations on January 1,
1992, and currently offers thirty-three separate series. These financial
statements represent the Balanced, Diversified Equity Income, Equity Index,
Equity Value, Growth, International Equity and Small Cap Funds (each, a "Fund",
collectively, the "Funds"), each a diversified series of the Company.
Prior to December 12, 1997, the Diversified Equity Income, Equity Index and
Growth Funds were known as the "Diversified Income", "Corporate Stock", and
"Growth and Income" 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 acquired all of the assets and assumed all of the
liabilities of the Overland Small Cap Strategy Fund. The Stagecoach Small Cap
Fund issued 237,032 shares, valued at $5,180,522, to the Overland Small Cap
Strategy Fund. At the date of the Consolidation, the components of net assets
for each Fund were as follows:
<TABLE>
<CAPTION>
OVERLAND
SMALL CAP STAGECOACH
STRATEGY SMALL CAP
DECEMBER 12, 1997 FUND FUND
<S> <C> <C>
- ------------------------------------------------------------------------------------------------
Paid-in Capital $ 5,440,786 $ 76,193,325
Undistributed Net Investment Income (Loss) 0 (81,086)
Undistributed Net Realized Gain (Loss) 45,444 291,994
Unrealized Appreciation (Depreciation) (305,708) (4,012,261)
------------ ------------
Total Net Assets $ 5,180,522 $ 72,391,972
------------ ------------
------------ ------------
</TABLE>
The combined net assets for the Stagecoach Small Cap Fund immediately after the
Consolidation were $77,572,494. The acquisition was accomplished in a tax-free
exchange for shares of the Stagecoach Small Cap Fund.
---------------------
115
<PAGE>
NOTES TO FINANCIAL STATEMENTS
At the time of the Consolidation, the Equity Index and Small Cap 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 and Small Cap Master Portfolios (the "Master Portfolios") distributed all
of their assets, net of their assumed liabilities, in-kind to their
interestholders and wound up their affairs (the "Dissolution"). The Dissolution
occurred at the close of business on December 12, 1997. The following amounts of
income and expense were allocated from the Master Portfolios to their
corresponding feeder Funds for the period from April 1, 1997 to December 12,
1997:
<TABLE>
<CAPTION>
FUND DIVIDENDS INTEREST EXPENSES
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
Equity Index Fund $ 5,967,766 $ 98,297 $ 1,555,695
Small Cap Fund 45,153 225,581 244,810
</TABLE>
At a special shareholders meeting on July 16, 1996, the Shareholders of Pacifica
Funds Trust ("Pacifica") approved a plan of reorganization providing for the
transfer of the assets and liabilities of each Pacifica portfolio to a
corresponding fund of the Company in exchange for shares of designated classes
of the corresponding Stagecoach fund. As a result of this reorganization,
effective September 6, 1996, the Stagecoach Balanced and Equity Value Funds were
established to acquire all of the assets and assume all of the liabilities of
the Pacifica Balanced and Equity Value Funds, respectively (collectively, the
"Predecessor Funds"). Additionally, the Stagecoach Growth 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 and Small Cap 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.
Real-
- ---------------------
116
<PAGE>
NOTES TO FINANCIAL STATEMENTS
ized 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.
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 System 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. Purchase 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
---------------------
117
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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
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
- ---------------------
118
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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.
FOREIGN CURRENCY FORWARD CONTRACTS
A foreign currency forward contract ("Forward") is an obligation to purchase or
sell a specific currency for an agreed price at a future date. A Forward
generally has no deposit requirement and is traded at a net price without
commission. The International Equity Fund currently enters into a Forward for
the purchase or sale of a security denominated in a foreign currency in order to
"lock in" the U.S. dollar price of the security. The value of the Forward
fluctuates with changes in currency exchange rates. The Forward is
marked-to-market daily and the change in value is recorded by the Fund as an
unrealized gain or loss. When the Forward is closed, the Fund records a realized
gain or loss equal to the difference between the value at the time the contract
was opened and the value at the time the contract was closed. Forwards do not
eliminate fluctuations in the prices of the Fund's portfolio securities or in
foreign exchange rates, or prevent loss if the prices of these securities should
decline. On March 31, 1998 the International Equity Fund held the following open
foreign currency forward contracts:
<TABLE>
<CAPTION>
FOREIGN
CURRENCY U.S. DOLLAR U.S. DOLLAR
SETTLEMENT UNITS U.S. DOLLAR VALUE AT NET UNREALIZED
CURRENCY DATE PURCHASED PROCEEDS 3/31/98 (DEPRECIATION)
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
PURCHASE CONTRACTS
British Pound 04/01/98 195,225 $ 329,286 $ 327,238 $(2,048)
</TABLE>
At March 31, 1998, the Fund had sufficient cash and/or securities to cover any
commitments under these contracts.
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, a 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
---------------------
119
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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, the Fund may be
required to segregate cash or high quality money market instruments 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 March 31, 1998, the Equity Index Fund held the
following futures contracts:
<TABLE>
<CAPTION>
NOTIONAL
EXPIRATION CONTRACT NET UNREALIZED
CONTRACTS TYPE DATE VALUE APPRECIATION
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
20 S&P 500 Index June 1998 $5,552,500 $125,450
</TABLE>
The Equity Index Fund has pledged to brokers U.S. Treasury bills for initial
margin requirements with a par value of $150,000.
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 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 March 31, 1998.
Due to the timing of dividend distributions and the differences in accounting
for income and realized gains (losses) for financial statement and federal
income tax purposes, the fiscal year in which amounts are distributed may differ
from the year in which the income and realized gains (losses) were recorded by a
Fund. The differences between the income or gains distributed on a book versus
tax basis are shown as excess distributions of net investment income and net
realized gain on sales of investments in the accompanying Statements of Changes
in Net Assets. The amount of distributions from net investment income and net
realized capital
- ---------------------
120
<PAGE>
NOTES TO FINANCIAL STATEMENTS
gains are determined in accordance with federal income tax regulations, which
may differ from GAAP. These "book/tax" differences are either considered
temporary or permanent in nature. To the extent that these differences are
permanent in nature, such amounts are reclassified within the capital accounts
based on their federal tax-basis treatment; temporary differences do not require
reclassifications.
ORGANIZATION 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 NET
FUND 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
</TABLE>
Prior to December 15, 1997, the Equity Index and Small Cap 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 Master Portfolio at the
same rate as listed above. Advisory fees were charged to the Corporate Stock
Master Portfolio 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
---------------------
121
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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
Cap Master Portfolio 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 to it.
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,
- ---------------------
122
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Growth and Small Cap Funds, 0.14% of the Class C shares of the Small Cap Fund
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 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
</TABLE>
* REPRESENTS THE PERIOD FROM DECEMBER 15, 1997 TO MARCH 31, 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.
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 and Small Cap Funds, and 0.25% of the
average daily net assets of the Institutional Class shares of the Growth Fund.
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
</TABLE>
* REPRESENT THE PERIOD FROM DECEMBER 15, 1997 TO MARCH 31, 1998.
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
ser-
---------------------
123
<PAGE>
NOTES TO FINANCIAL STATEMENTS
vices, 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 separate Distribution Plans for Class A and Class B
shares of the Funds and the Class C shares of the Small Cap Fund 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-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.
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 up to 0.70% of
the average daily net assets attributable to the Class B shares of the
Diversified Equity Income and Growth Funds, and up to 0.75% of the average daily
net assets attributable to the Class B shares of the Balanced, Equity Index,
Equity Value, International Equity and Small Cap Funds.
Under the Plan for the Class C shares of the Small Cap Fund, the 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 up to
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.
- ---------------------
124
<PAGE>
NOTES TO FINANCIAL STATEMENTS
The distribution fees paid on behalf of the Funds for the year ended March 31,
1998 were as follows:
<TABLE>
<CAPTION>
CLASS
FUND CLASS A CLASS B 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
</TABLE>
* REPRESENT THE PERIOD FROM DECEMBER 15, 1997 TO MARCH 31, 1998.
** REPRESENTS THE PERIOD FROM FEBRUARY 17 TO MARCH 31, 1998.
*** REPRESENTS THE PERIOD FROM SEPTEMBER 24, 1997 TO MARCH 31, 1998.
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
</TABLE>
* REPRESENTS THE PERIOD FROM DECEMBER 15, 1997 TO MARCH 31, 1998.
** REPRESENTS THE PERIOD FROM FEBRUARY 17 TO MARCH 31, 1998.
The registration fees paid on behalf of the International Equity Fund are
disclosed in the Statement of Operations.
WAIVED FEES AND REIMBURSED EXPENSES
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,
---------------------
125
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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 March 31, 1998, Stephens owned 8 shares of the Balanced, 13,112 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,
and 7 shares of the Small Cap Funds.
Stephens has retained $5,404,593 as sales charges from the proceeds of Class A
shares sold, $1,120,619 from the proceeds of Class B shares redeemed and $12,732
from the proceeds of Class C shares redeemed by the Company for the year ended
March 31, 1998. Wells Fargo Securities Inc., a subsidiary of WFB, received
$4,508,566 as sales charges from the proceeds of Class A shares sold, $840,060
from the proceeds of Class B shares redeemed and $0 from the proceeds of Class C
shares redeemed by the Company for the year ended March 31, 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 year ended March 31, 1998, were as follows:
<TABLE>
<CAPTION>
AGGREGATE PURCHASES AND SALES
---------------------------------------
PURCHASES SALES
FUND AT 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
</TABLE>
*** REPRESENTS THE PERIOD FROM SEPTEMBER 24, 1997 TO MARCH 31, 1998.
**** INCLUDES ACTIVITY OF THE MASTER PORTFOLIO FOR THE PERIOD FROM APRIL 1, 1997
TO DECEMBER 12, 1997.
4. CAPITAL SHARE TRANSACTIONS
As of March 31, 1998, there were over 108 billion shares of $0.001 par value
capital stock authorized by the Company. As of March 31, 1998, each Fund was
authorized to issue 100 million shares of $0.001 par value capital stock for
each class of shares.
- ---------------------
126
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Capital share transactions for the Funds were as follows:
<TABLE>
<CAPTION>
BALANCED FUND
------------------------------------------------------------
FOR THE FOR THE SIX FOR THE
YEAR ENDED MONTHS ENDED YEAR ENDED
MARCH 31, 1998 MARCH 31, 1997 SEPT. 30, 1996
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 420,213 94,369 1,412,249
Shares issued in reinvestment of
dividends -- Class A 358,753 67,767 371,899
Shares redeemed -- Class A (780,989) (376,563) (6,456,262)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS A (2,023) (214,427) (4,672,114)
Shares sold -- Class B 709,400 27,480 151
Shares issued in reinvestment of
dividends -- Class B 55,037 42 0
Shares redeemed -- Class B (30,145) )(149 0
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS B 734,292 27,373 151
Shares sold -- Institutional Class 515,727 255,508 10,145,092
Shares issued in reinvestment of
dividends -- Institutional Class 584,536 137,837 925,429
Shares redeemed -- Institutional Class (1,857,018) (2,085,655) (4,755,966)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- INSTITUTIONAL CLASS (756,755) (1,692,310) 6,314,555
</TABLE>
<TABLE>
<CAPTION>
DIVERSIFIED EQUITY INCOME FUND
------------------------------------------------------------
FOR THE FOR THE SIX FOR THE NINE
YEAR ENDED MONTHS ENDED MONTHS ENDED
MARCH 31, 1998 MARCH 31, 1997 SEPT. 30, 1996
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 3,839,513 2,361,971 4,715,975
Shares issued in reinvestment of
dividends -- Class A 593,094 632,053 115,316
Shares redeemed -- Class A (3,291,833) (1,492,299) (1,685,966)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS A 1,140,774 1,501,725 3,145,325
Shares sold -- Class B 1,936,277 1,234,345 901,549
Shares issued in reinvestment of
dividends -- Class B 172,544 100,491 6,895
Shares redeemed -- Class B (471,375) (171,202) (100,188)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS B 1,637,446 1,163,634 808,256
</TABLE>
---------------------
127
<PAGE>
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
EQUITY INDEX FUND
------------------------------------------------------------
FOR THE SIX FOR THE NINE
FOR THE YEAR ENDED MONTHS ENDED MONTHS ENDED
MARCH 31, 1998 (1) MARCH 31, 1997 (2) SEPT. 30, 1996 (2)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 1,208,808 595,967 1,149,288
Shares issued in reinvestment of
dividends -- Class A 271,192 256,416 76,212
Shares redeemed -- Class A (1,447,968) (663,522) (1,107,285)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS A 32,032 188,861 118,215
Shares sold -- Class B 54,217 N/A N/A
Shares issued in reinvestment of
dividends -- Class B 0 N/A N/A
Shares redeemed -- Class B ) (92 N/A N/A
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS B 54,125 N/A N/A
</TABLE>
(1) THE CLASS B SHARES COMMENCED OPERATIONS ON FEBRUARY 17, 1998.
(2) ACTIVITY FOR THIS PERIOD IS REFLECTED AS CLASS A FOR PURPOSES OF THIS TABLE
ONLY.
<TABLE>
<CAPTION>
EQUITY VALUE FUND
--------------------------------------------------------
FOR THE YEAR FOR THE SIX FOR THE
ENDED MONTHS ENDED YEAR ENDED
MARCH 31, 1998 MARCH 31, 1997 SEPT. 30, 1996
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 1,745,819 239,630 2,375,877
Shares issued in reinvestment of
dividends -- Class A 268,337 16,068 248,462
Shares redeemed -- Class A (569,633) (272,081) (14,009,327)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS A 1,444,523 (16,383) (11,384,988)
Shares sold -- Class B 4,530,419 215,907 3
Shares issued in reinvestment of
dividends -- Class B 315,926 85 0
Shares redeemed -- Class B (188,855) )(871 0
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS B 4,657,490 215,121 3
Shares sold -- Institutional Class 1,371,556 919,441 18,333,654
Shares issued in reinvestment of
dividends -- Institutional Class 1,303,132 136,028 2,574,515
Shares redeemed -- Institutional Class (3,471,865) (3,998,514) (4,577,809)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- INSTITUTIONAL CLASS (797,177) (2,943,045) 16,330,360
</TABLE>
- ---------------------
128
<PAGE>
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
GROWTH FUND
------------------------------------------------------------
FOR THE SIX FOR THE NINE
FOR THE YEAR ENDED MONTHS ENDED MONTHS ENDED
MARCH 31, 1998 MARCH 31, 1997 SEPT. 30, 1996 (3)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 4,014,428 2,263,021 5,108,374
Shares issued in reinvestment of
dividends -- Class A 2,345,049 83,226 1,005,634
Shares redeemed -- Class A (4,584,881) (1,793,908) (2,246,108)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS A 1,774,596 552,339 3,867,900
Shares sold -- Class B 1,647,233 788,072 653,910
Shares issued in reinvestment of
dividends -- Class B 428,282 3,523 69,929
Shares redeemed -- Class B (392,158) (112,577) (97,407)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS B 1,683,357 679,018 626,432
Shares sold -- Institutional Class 166,286 180,805 897,195
Shares issued in reinvestment of
dividends -- Institutional Class 80,772 3,005 0
Shares redeemed -- Institutional Class (420,946) (189,127) (16,307)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- INSTITUTIONAL CLASS (173,888) (5,317) 880,888
</TABLE>
(3) "SHARE SOLD" INCLUDES 36,809 FOR CLASS A AND 865,446 FOR THE INSTITUTIONAL
CLASS, AS A RESULT OF THE MERGER OF THE PACIFICA GROWTH FUND.
<TABLE>
<CAPTION>
INTERNATIONAL
EQUITY FUND
--------------
FROM SEPTEMBER
24, 1997
(COMMENCEMENT
OF OPERATIONS)
TO MARCH 31,
1998
- --------------------------------------------------------
<S> <C>
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A $2,572,693
Shares issued in reinvestment of
dividends -- Class A 257
Shares redeemed -- Class A (149,719)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS A 2,423,231
Shares sold -- Class B 3,186,964
Shares issued in reinvestment of
dividends -- Class B 0
Shares redeemed -- Class B (189,888)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS B 2,997,076
</TABLE>
---------------------
129
<PAGE>
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
SMALL CAP FUND
--------------------------------------------------------
FROM SEPT. 16,
FOR THE 1996
YEAR ENDED FOR THE SIX (COMMENCEMENT OF
MARCH 31, MONTHS ENDED OPERATIONS) TO
1998 (4) MARCH 31, 1997 SEPT. 30, 1996
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 634,259 185,292 4,273
Shares issued in reinvestment of
dividends -- Class A 34,764 0 0
Shares redeemed -- Class A (223,310) (25,880) 0
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS A 445,713 159,412 4,273
Shares sold -- Class B 538,236 108,204 1
Shares issued in reinvestment of
dividends -- Class B 33,568 0 0
Shares redeemed -- Class B (68,877) (7,585) 0
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS B 502,927 100,619 1
Shares sold -- Class C(5) 103,665 N/A N/A
Shares issued in reinvestment of
dividends -- Class C(5) 393 N/A N/A
Shares redeemed -- Class C(5) (5,746) N/A N/A
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS C(5) 98,312 N/A N/A
Shares sold -- Institutional Class 2,243,301 579,679 1,096,256
Shares issued in reinvestment of
dividends -- Institutional Class 183,755 0 0
Shares redeemed -- Institutional Class (902,272) (137,779) (2,487)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- INSTITUTIONAL CLASS 1,524,784 441,900 1,093,769
</TABLE>
(4) "SHARES SOLD" INCLUDES AMOUNTS RELATED TO THE CONSOLIDATION OF THE
STAGECOACH SMALL CAP AND OVERLAND SMALL CAP STRATEGY FUNDS.
(5) THIS CLASS OF SHARES COMMENCED OPERATIONS ON DECEMBER 15, 1997.
- ---------------------
130
<PAGE>
NOTES TO FINANCIAL STATEMENTS
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.
6. SUBSEQUENT EVENTS
The Funds, with the exception of the Equity Index Fund, have changed their
fiscal year-ends to September 30. The Equity Index Fund has changed its fiscal
year-end to February 28.
---------------------
131
<PAGE>
INDEPENDENT AUDITORS' REPORT
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
STAGECOACH FUNDS, INC.:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of the Balanced Fund, Diversified Equity Income
Fund, Equity Index Fund, Equity Value Fund, Growth Fund, International Equity
Fund and Small Cap Fund (seven of the funds comprising Stagecoach Funds, Inc.)
as of March 31, 1998, and the related statement of operations for the year then
ended of the Balanced Fund, Diversified Equity Income Fund, Equity Index Fund,
Equity Value Fund, Growth Fund and Small Cap Fund, and the International Equity
Fund for the period from September 24, 1997 (commencement of operations) to
March 31, 1998, the statements of changes in net assets of the Balanced Fund and
Equity Value Fund for the year ended March 31, 1998, the six months ended March
31, 1997, and the year ended September 30, 1996, the Diversified Equity Income
Fund, Equity Index Fund and Growth Fund for the year ended March 31, 1998, the
six months ended March 31, 1997, and the nine months ended September 30, 1996,
the Small Cap Fund for the year ended March 31, 1998, the six months ended March
31, 1997, and the period from September 16, 1996 (commencement of operations) to
September 30, 1996, and the International Equity Fund for the period from
September 24, 1997 (commencement of operations) to March 31, 1998, 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 require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 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 March 31, 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.
[SIG]
[KPMG Peat Marwick LLP]
SAN FRANCISCO, CALIFORNIA
MAY 1, 1998
- ---------------------
132
<PAGE>
LIST OF ABBREVIATIONS
The following is a list of common abbreviations for terms and entities which may
have appeared in this report.
<TABLE>
<S> <C> <C>
ABAG -- Association of Bay Area Governments
ADR -- American Depository Receipts
AMBAC -- American Municipal Bond Assurance Corporation
AMT -- Alternative Minimum Tax
ARM -- Adjustable Rate Mortgages
BART -- Bay Area Rapid Transit
CDA -- Community Development Authority
CDSC -- Contingent Deferred Sales Charge
CGIC -- Capital Guaranty Insurance Company
CGY -- Capital Guaranty Corporation
CMT -- Constant Maturity Treasury
COFI -- Cost of Funds Index
CONNIE LEE -- Connie Lee Insurance Company
COP -- Certificate of Participation
CP -- Commercial Paper
DW&P -- Department of Water & Power
DWR -- Department of Water Resources
EDFA -- Education Finance Authority
FGIC -- Financial Guaranty Insurance Corporation
FHA -- Federal Housing Authority
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
FSA -- Financial Security Assurance, Inc
GNMA -- Government National Mortgage Association
GO -- General Obligation
HFA -- Housing Finance Authority
HFFA -- Health Facilities Financing Authority
IDA -- Industrial Development Authority
LIBOR -- London Interbank Offered Rate
LOC -- Letter of Credit
MBIA -- Municipal Bond Insurance Association
MFHR -- Multi-Family Housing Revenue
MUD -- Municipal Utility District
PCFA -- Pollution Control Finance Authority
PCR -- Pollution Control Revenue
PFA -- Public Finance Authority
PSFG -- Public School Fund Guaranty
RAW -- Revenue Anticipation Warrants
RDA -- Redevelopment Authority
RDFA -- Redevelopment Finance Authority
R&D -- Research & Development
SFMR -- Single Family Mortgage Revenue
TBA -- To Be Announced
TRAN -- Tax Revenue Anticipation Notes
USD -- Unified School District
V/R -- Variable Rate
</TABLE>
---------------------
133
<PAGE>
STAGECOACH FUNDS
- -----------------------------------------
SHAREHOLDERS' MEETING AND PROXY VOTING RESULTS
The following proposal was passed by the required majority of shareholders of
the indicated Predecessor Fund at Special Shareholders' meetings held on
November 20, (as adjourned to) November 26, and December 5, 1997, for the
purpose of voting on the proposal.
To approve a proposed Agreement and Plan of Consolidation providing for the
transfer of the assets and stated liabilities of specific Overland portfolios to
corresponding investment portfolios of Stagecoach Funds, Inc., in exchange for
shares of equal value of designated classes of the Stagecoach Funds.
SMALL CAP STRATEGY
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
- -----------------------------------
254,849 17,079 13,313
</TABLE>
- ---------------------
134
<PAGE>
Wells Fargo provides investment advisory services, shareholder services, and
certain other services for the Stagecoach Funds. The Funds are sponsored and
distributed by STEPHENS INC., Member NYSE/SIPC. Wells Fargo is not affiliated
with Stephens Inc.
This report and the financial statements contained herein are submitted for the
general information of the shareholders of the Stagecoach Funds. If this report
is used for promotional purposes, distribution of the report must be accompanied
or preceded by a current prospectus. For a prospectus containing more complete
information, including charges and expenses, call 1-800-222-8222. Read the
prospectus carefully before you invest or send money.
SC EQ R (5/98)
<TABLE>
<S> <C>
STAGECOACH
FUNDS-REGISTERED TRADEMARK-
P.O. Box 7066
San Francisco, CA 94120-7066
DATED MATERIAL
PLEASE EXPEDITE
</TABLE>
[LOGO]
-C- 1998 Stagecoach Funds
<PAGE>
