<PAGE>
Allocation Funds TABLE OF CONTENTS
- ------------------------------------------------------------------------
LETTER TO SHAREHOLDERS................................1
PERFORMANCE AT A GLANCE AND INVESTMENT ADVISOR COMMENTARY
Asset Allocation Fund.............................3
Index Allocation Fund............................10
U.S. Government Allocation Fund..................16
PORTFOLIOS OF INVESTMENTS
Asset Allocation Fund............................22
Index Allocation Fund............................41
U.S. Government Allocation Fund..................59
ALLOCATION FUNDS
Statement of Assets and Liabilities..............61
Statements of Operations.........................62
Statements of Changes in Net Assets..............64
Financial Highlights.............................66
Notes to Financial Statements....................74
Independent Auditors' Report.....................85
LIST OF ABBREVIATIONS................................86
NOT FDIC INSURED - NO BANK GUARANTEE - MAY LOSE VALUE
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ii
<PAGE>
LETTER TO SHAREHOLDERS Allocation Funds
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TO OUR SHAREHOLDERS
Thank you for investing in the Stagecoach Funds.
It's a pleasure to provide you with this Annual Report for the period ended
February 28, 1999. The report provides information about your investment over
the period, including economic and market trends, a performance summary, a
portfolio review and a strategic outlook.
The Stagecoach Funds experienced another year of significant growth, with net
assets increasing from $24 billion to $28 billion as of February 28, 1999. We
believe our success can be partly attributed to the confidence and support of
our shareholders generated by the continued positive performance of many of the
Funds. Of course, we'll continue to do our best to provide prudent management to
maintain that confidence.
For investors, 1998 was a challenging year. Stocks marched steadily upward
during the first and second quarters, only to surrender their gains in the third
quarter. We witnessed a sell-off in the stock market last summer that served as
an introduction to sharp market swings and volatility that we would see for the
remainder of the year. The stock market then set new highs by the end of
November, and broad stock indexes were propelled higher by a series of upbeat
earnings reports at the year's end. By the end of the period, stocks of
mid-sized and small companies showed signs of improvement after seeing
significant declines earlier in the fiscal year. Investors should note that
historically, stocks have returned 11% per year. Since 1995, however, stocks
have returned over 30% per year.
For the 11-month period ended February 28, 1999, stocks, as measured by the
S&P 500 Index* returned 13.93%. The U.S. Government bond market dropped 1.39% as
measured by the Lehman Brothers Long Government Bond Index,** and the U.S.
Treasury market rallied in response to the Federal Reserve Board's actions to
lower interest rates.
In early 1999, which marks the beginning of the eighth consecutive year of
economic expansion, the U.S. economy remains strong and the stock market is
riding the crest of another outstanding year. While the latest
1
<PAGE>
Allocation Funds LETTER TO SHAREHOLDERS
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signs of economic strength are positive, investors should manage their
expectations. The challenges of investing in today's markets make mutual funds
one of the most popular investment vehicles. Investors poured more than $409
billion into mutual funds for the 11-month period ending February 28, 1999,
according to Strategic Insight, an industry research firm.
Over the years, the Stagecoach Funds have built a reputation for innovation,
leadership and commitment to investors. The Asset Allocation Fund, Index
Allocation Fund and U.S. Government Allocation Fund are three of eight asset
allocation funds in the Stagecoach Fund family. Diversifying your investments in
the Allocation Funds may help you realize more balanced returns. Each Fund
offers a unique asset allocation strategy that can provide a solid foundation
for any investment portfolio. We understand that you have a variety of
investment options and we appreciate your confidence in selecting us to help you
meet your financial goals.
As always, we recommend that you continually review your investment portfolio
with your financial consultant to determine an appropriate mix of investments
based on changing market conditions and your investment objectives. Thank you
again for your continued investment with the Stagecoach Funds.
Sincerely,
/s/ Michael J. Hogan
Michael J. Hogan
Senior Vice President
Wells Fargo Bank,
Mutual Fund Group
/s/ R. Greg Feltus
R. Greg Feltus
Chairman and President of
Stagecoach Funds
* The "S&P 500 Index" is a trademark of Standard & 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 transporation
companies listed or traded on national exchanges or over-the-counter markets.
** The Lehman Brothers Long Government Bond Index is an unmanaged index
comprised of U.S. Treasury bonds with 20-year or longer maturities.
2
<PAGE>
PERFORMANCE AT A GLANCE Asset Allocation Fund
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ASSET ALLOCATION FUND
AVERAGE ANNUAL RETURNS (%) (as of February 28, 1999)(1)
- ----------------------------------------------------------------
EXCLUDING SALES CHARGES
- ----------------------------------------------------------
<TABLE>
<CAPTION>
11-MONTH 1-YEAR 5-YEAR 10-YEAR
<S> <C> <C> <C> <C>
CLASS A 13.69 17.84 16.54 14.34
CLASS B 12.98 16.99 15.85 13.73
CLASS C 12.97 16.98 15.85 13.73
</TABLE>
INCLUDING SALES CHARGES(2)
- ----------------------------------------------------------
<TABLE>
<CAPTION>
11-MONTH 1-YEAR 5-YEAR 10-YEAR
<S> <C> <C> <C> <C>
CLASS A 8.56 12.54 15.47 13.82
CLASS B 7.98 11.99 15.66 13.73
CLASS C 11.97 15.98 15.85 13.73
</TABLE>
GROWTH OF A $10,000 INVESTMENT*
- ----------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
STAGECOACH ASSET LEHMAN BROTHERS
ALLOCATION FUND U.S. TREASURY IBC TAXABLE MONEY
<S> <C> <C> <C> <C>
Class A Shares Bond Index Fund Average S&P 500 Index
Feb-89 $9,550 $10,000 $10,000 $10,000
Mar-89 $9,628 $10,107 $10,074 $10,233
Apr-89 $9,746 $10,364 $10,151 $10,765
May-89 $9,856 $10,745 $10,229 $11,200
Jun-89 $9,903 $11,359 $10,305 $11,137
Jul-89 $10,130 $11,628 $10,379 $12,142
Aug-89 $10,224 $11,317 $10,451 $12,380
Sep-89 $10,264 $11,350 $10,523 $12,329
Oct-89 $10,326 $11,808 $10,595 $12,043
Nov-89 $10,420 $11,915 $10,665 $12,289
Dec-89 $10,522 $11,894 $10,736 $12,584
Jan-90 $10,428 $11,465 $10,805 $11,739
Feb-90 $10,491 $11,432 $10,874 $11,890
Mar-90 $10,554 $11,385 $10,943 $12,205
Apr-90 $10,554 $11,113 $11,013 $11,901
May-90 $10,828 $11,629 $11,084 $13,061
Jun-90 $10,891 $11,896 $11,155 $12,973
Jul-90 $10,953 $12,009 $11,226 $12,931
Aug-90 $10,773 $11,503 $11,296 $11,762
Sep-90 $10,742 $11,636 $11,366 $11,190
Oct-90 $10,859 $11,902 $11,437 $11,142
Nov-90 $11,173 $12,399 $11,507 $11,862
Dec-90 $11,330 $12,644 $11,576 $12,193
Jan-91 $11,628 $12,793 $11,642 $12,724
Feb-91 $11,871 $12,850 $11,704 $13,634
Mar-91 $11,973 $12,901 $11,764 $13,964
Apr-91 $12,083 $13,065 $11,821 $13,997
May-91 $12,224 $13,053 $11,876 $14,601
Jun-91 $11,957 $12,957 $11,930 $13,932
Jul-91 $12,255 $13,150 $11,985 $14,582
Aug-91 $12,647 $13,603 $12,038 $14,927
Sep-91 $12,898 $14,032 $12,091 $14,677
Oct-91 $12,937 $14,063 $12,141 $14,874
Nov-91 $12,843 $14,142 $12,190 $14,275
Dec-91 $13,839 $14,984 $12,236 $15,908
Jan-92 $13,431 $14,514 $12,278 $15,611
Feb-92 $13,510 $14,599 $12,317 $15,814
Mar-92 $13,332 $14,439 $12,356 $15,506
Apr-92 $13,435 $14,424 $12,393 $15,961
May-92 $13,697 $14,825 $12,429 $16,040
Jun-92 $13,757 $15,040 $12,465 $15,801
Jul-92 $14,344 $15,666 $12,499 $16,446
Aug-92 $14,296 $15,774 $12,531 $16,110
Sep-92 $14,491 $16,023 $12,561 $16,299
Oct-92 $14,287 $15,687 $12,590 $16,355
Nov-92 $14,475 $15,747 $12,619 $16,912
Dec-92 $14,808 $16,178 $12,649 $17,120
Jan-93 $15,114 $16,639 $12,679 $17,263
Feb-93 $15,536 $17,195 $12,707 $17,498
Mar-93 $15,644 $17,238 $12,736 $17,867
Apr-93 $15,569 $17,371 $12,764 $17,435
May-93 $15,769 $17,428 $12,791 $17,902
Jun-93 $16,179 $18,165 $12,820 $17,954
Jul-93 $16,322 $18,457 $12,848 $17,882
Aug-93 $16,965 $19,199 $12,876 $18,560
Sep-93 $16,896 $19,267 $12,905 $18,418
Oct-93 $17,144 $19,405 $12,933 $18,799
Nov-93 $16,879 $18,909 $12,962 $18,620
Dec-93 $17,020 $18,969 $12,991 $18,845
Jan-94 $17,536 $19,424 $13,021 $19,486
Feb-94 $16,966 $18,628 $13,050 $18,957
Mar-94 $16,302 $17,810 $13,082 $18,131
Apr-94 $16,256 $17,600 $13,115 $18,363
May-94 $16,320 $17,484 $13,152 $18,664
Jun-94 $16,037 $17,318 $13,191 $18,207
Jul-94 $16,554 $17,905 $13,233 $18,805
Aug-94 $16,821 $17,772 $13,276 $19,576
Sep-94 $16,333 $17,213 $13,323 $19,097
Oct-94 $16,464 $17,152 $13,371 $19,526
Nov-94 $16,287 $17,254 $13,422 $18,815
Dec-94 $16,540 $17,519 $13,479 $19,094
Jan-95 $16,965 $17,969 $13,537 $19,589
Feb-95 $17,499 $18,478 $13,598 $20,352
Mar-95 $17,811 $18,638 $13,661 $20,951
Apr-95 $18,201 $18,970 $13,724 $21,568
May-95 $19,142 $20,425 $13,787 $22,428
Jun-95 $19,438 $20,663 $13,850 $22,949
Jul-95 $19,690 $20,333 $13,912 $23,709
Aug-95 $19,822 $20,784 $13,973 $23,769
Sep-95 $20,337 $21,167 $14,034 $24,771
Oct-95 $20,439 $21,759 $14,095 $24,683
Nov-95 $21,020 $22,303 $14,156 $25,765
Dec-95 $21,367 $22,896 $14,218 $26,261
Jan-96 $21,748 $22,896 $14,277 $27,154
Feb-96 $21,635 $21,790 $14,336 $27,407
Mar-96 $21,681 $21,356 $14,393 $27,670
Apr-96 $21,701 $21,000 $14,451 $28,077
May-96 $21,888 $20,891 $14,509 $28,798
Jun-96 $22,134 $21,336 $14,567 $28,908
Jul-96 $21,642 $21,344 $14,625 $27,630
Aug-96 $21,621 $21,077 $14,684 $28,213
Sep-96 $22,465 $21,659 $14,742 $29,798
Oct-96 $23,237 $22,510 $14,801 $30,621
Nov-96 $24,474 $23,262 $14,860 $32,933
Dec-96 $23,857 $22,692 $14,920 $32,281
Jan-97 $24,340 $22,531 $14,980 $34,295
Feb-97 $24,398 $22,540 $15,040 $34,566
Mar-97 $23,574 $21,963 $15,100 $33,149
Apr-97 $24,491 $22,492 $15,162 $35,124
May-97 $25,316 $22,744 $15,224 $37,271
Jun-97 $26,040 $23,183 $15,288 $38,929
Jul-97 $27,869 $24,544 $15,352 $42,024
Aug-97 $26,638 $23,862 $15,416 $39,671
Sep-97 $27,730 $24,518 $15,481 $41,841
Oct-97 $27,694 $25,344 $15,546 $40,443
Nov-97 $28,593 $25,681 $15,611 $42,316
Dec-97 $29,109 $26,113 $15,677 $43,043
Jan-98 $29,543 $26,643 $15,743 $43,517
Feb-98 $30,949 $26,451 $15,809 $46,654
Mar-98 $32,079 $26,507 $15,875 $49,043
Apr-98 $32,297 $26,605 $15,940 $49,543
May-98 $32,143 $27,113 $16,007 $48,691
Jun-98 $33,338 $27,742 $16,073 $50,668
Jul-98 $33,002 $27,625 $16,141 $50,131
Aug-98 $29,803 $28,871 $16,208 $42,887
Sep-98 $31,488 $29,928 $16,275 $45,636
Oct-98 $33,342 $29,476 $16,340 $49,342
Nov-98 $34,988 $29,703 $16,402 $52,332
Dec-98 $36,555 $29,641 $16,466 $55,409
Jan-99 $37,834 $29,907 $16,529 $57,725
Feb-99 $36,469 $28,436 $16,583 $59,520
</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.
3
<PAGE>
Asset Allocation Fund PERFORMANCE AT A GLANCE
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The accompanying chart compares the performance of the Stagecoach Asset
Allocation Fund Class A shares since inception of the predecessor fund with
the S&P 500 Index, the Lehman Brothers U.S. Treasury Bond Index, and the IBC
Taxable Money Fund Average. The chart assumes a hypothetical $10,000
investment in Class A shares and reflects all operating expenses and assumes
the maximum initial sales charge of 4.5%. 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 U.S. Treasury Bond
Index is an unmanaged index composed of U.S. Treasury bonds with 10 year or
longer maturities. The IBC Taxable Money Fund Average is an average of taxable
money market funds. 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
performance would have been lower.
4
<PAGE>
INVESTMENT ADVISOR COMMENTARY Asset Allocation Fund
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ASSET ALLOCATION FUND
The Asset Allocation Fund (the "Fund") seeks to earn over the long-term a high
level of total return, including net realized and unrealized capital gains and
net investment income, consistent with reasonable risk.
To improve our reporting process, we have changed the Fund's fiscal year-end
to February 28 from March 31. This change will not impact the performance or
objective of your investment. Our discussions will focus on the 11-month period
ended February 28, 1999.
The Fund is a professionally managed portfolio, advised by Wells Fargo Bank,
N.A. Barclays Global Fund Advisors serves as the Fund's investment sub-advisor.
The Fund can invest in stocks, bonds and cash. The proprietary investment model
used to manage the Fund's assets constantly monitors expected levels of risk and
return to determine the best mix of investments among the different asset
classes. This process diversifies investments across asset classes while
managing investors' exposure to risk.
PORTFOLIO DATA (as of February 28, 1999)
- ---------------------------------------------------------
<TABLE>
<S> <C>
AVERAGE COUPON OF BOND PORTFOLIO 7.09%
AVERAGE MATURITY OF BOND PORTFOLIO 23.50 years
AVERAGE DURATION OF BOND PORTFOLIO 12.19 years
</TABLE>
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
TOTAL NET ASSETS
($MM) 1,363.0 403.0 10.1
NET ASSET VALUE $25.65 $15.55 $15.59
</TABLE>
PERFORMANCE SUMMARY
As of February 28, 1999, the Fund's Class A share net asset value (NAV)
increased from $24.99 on March 31, 1998, to $25.65 on February 28, 1999. During
the 11-month period ended February 28, 1999, the Fund's Class A shares reported
a cumulative total return of 13.69%, excluding sales charges. The Fund's Class A
shares distributed $0.33 per share in dividend income and $2.31 per share of
capital gains were paid during the period. The Fund, which maintains its
greatest
percent-
5
<PAGE>
Asset Allocation Fund INVESTMENT ADVISOR COMMENTARY
- ------------------------------------------------------------------------
age of allocation in equity securities, remained competitive in comparison to
its three benchmarks. The S&P 500 Index(3) gained 13.93%, the Lehman Brothers
U.S. Treasury Bond Index(4) returned 6.24%, and the IBC Taxable Money Fund
Average(5) posted a 4.48% return over the period. A portion of the Fund's
performance can be attributed to low stock prices in August, which presented an
excellent buying opportunity for the Asset Allocation Fund, moving to its
highest allocation in stocks since its inception. Beginning in September 1998
and continuing through the close of the fiscal year on February 28, 1999, the
fund invested 80 percent of its assets in stocks and 20 percent in bonds; none
of its assets was invested in cash.
The Fund's performance was influenced by a number of factors, including strong
stock and bond market performance over the past year, low inflation, low
interest rates and budget surpluses. Overall, the fiscal year ended February 28,
1999, was a year of tremendous growth, volatility and opportunity. After getting
off to a record-breaking start, the second quarter of the fiscal year began with
great swings in the U.S. stock market. Fortunately, September brought
much-needed relief to the U.S. equity markets, which bounced back during fourth
quarter 1998, with the S&P 500 Index rising 21.3% by the end of the year. The
Federal Reserve Board reduced interest rates in the fourth quarter,
strengthening the U.S. economy and promoting investment in U.S. stocks.
During current market conditions, we believe that stocks continue to be a more
attractive investment than bonds, and we have weighted the portfolio
accordingly.
MODEL ALLOCATION CHANGES (during 11-month reporting period)
- ---------------------------------------------------------
<TABLE>
<CAPTION>
DATE STOCKS BONDS CASH
- ------------------------------- --------- --------- ---------
<S> <C> <C> <C>
APRIL 28, 1998 65% 35% 0%
JUNE 16, 1998 70% 30% 0%
AUGUST 5, 1998 75% 25% 0%
AUGUST 25, 1998 75% 20% 5%
SEPTEMBER 1, 1998 80% 20% 0%
</TABLE>
6
<PAGE>
INVESTMENT ADVISOR COMMENTARY Asset Allocation Fund
- ------------------------------------------------------------------------
PORTFOLIO REVIEW
Every day the Fund's proprietary investment model analyzes extensive financial
data from numerous sources to determine an appropriate asset allocation, and
recommends shifts in the Fund's investments based on changing economic
conditions. As opportunities arise among the three asset classes, the investment
model will shift Fund assets accordingly in 5% increments.
The composition of the Fund fluctuated five times during the 11-month
reporting period ended February 28, 1999. In April, the Fund was reallocated to
65% stocks and 35% bonds from a previous mix of 70% stocks and 30% bonds when
the model sought to take advantage of opportunities on the shorter end of the
yield curve, and to reduce exposure to a slumping U.S. equity market.
In June, the Fund was re-balanced to a recommended allocation of 70% stocks
and 30% bonds to take advantage of falling equity prices and a steady drop in
bond yields. As bond yields continued to decline, the Fund was reallocated twice
in August ending the month with an allocation of 75% stocks, 20% bonds and 5%
cash. Beginning in September 1998 and continuing through the close of the fiscal
year on February 28, 1999, the Fund allocated 80 percent of its assets in stocks
and 20 percent in bonds, with none of its assets allocated in cash.
With the exception of several months in the summer of 1998, stocks posted
outstanding returns in comparison to long-term bonds. Stocks outperformed bonds
by approximately 30% in the last two quarters of the fiscal year. Bonds returned
0.60% for the same period.
7
<PAGE>
Asset Allocation Fund INVESTMENT ADVISOR COMMENTARY
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TOP 10 HOLDINGS (as of February 28, 1999)
- ---------------------------------------------------------
<TABLE>
<CAPTION>
NAME % OF PORTFOLIO
<S> <C>
MICROSOFT CORPORATION 3.0%
GENERAL ELECTRIC COMPANY 2.7%
U.S. TREASURY BONDS 8.00%,
11/15/21 1.8%
INTEL CORPORATION 1.6%
MERCK & COMPANY INCORPORATED 1.6%
WAL MART STORES INCORPORATED 1.6%
PFIZER INCORPORATED 1.4%
EXXON CORPORATION 1.3%
U.S. TREASURY BONDS 8.75%,
8/15/20 1.3%
IBM CORPORATION 1.3%
</TABLE>
STRATEGIC OUTLOOK
We are in the eighth consecutive year of economic expansion and the last year
of this millennium. The U.S. economy remains strong, and the stock market is
riding the crest of another outstanding year. Strong employment, manufacturing,
and trade accentuate a continuation of U.S. economic growth in 1999. These
factors could potentially lead to accelerated inflation in the months to come,
and we believe future interest rate movements will be in an upward direction.
The Fund will continue to apply its quantitative strategies to allocate assets
among stocks, bonds, and cash, taking into consideration news and events that
affect the economy and companies in general. Overall, we feel that the Fund is
well positioned for the upcoming months and we expect it to produce solid,
long-term performance.
8
<PAGE>
INVESTMENT ADVISOR COMMENTARY Asset Allocation Fund
- ------------------------------------------------------------------------
1 Investment return and principal value of an investment will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than their
original cost. Figures quoted represent past performance, which is no
guarantee of future results.
The Fund's manager has voluntarily waived all or a portion of its management
fees or assumed responsibility for other expenses, which increases total
return to shareholders. Without these waivers and reimbursements, the Fund's
returns would have been lower. There is no guarantee such reductions will
continue.
Performance shown for Class A shares of the Stagecoach Asset Allocation Fund
for periods prior to January 2, 1992, reflects performance of the shares of
the Asset Allocation Fund for the Wells Fargo Investment Trust for Retirement
Programs, a predecessor portfolio with the same investment objective and
policies as the Stagecoach Asset Allocation Fund. Performance shown or
advertised for Class B shares of the Stagecoach Fund for periods prior to
January 1, 1995, reflects performance of the Class A shares of the Stagecoach
Fund, adjusted to reflect Class B share sales charges and expenses; for
periods prior to January 2, 1992, Class B share performance reflects
performance of the predecessor portfolio, adjusted to reflect Class B sales
charges and expenses. Performance shown or advertised for the Class C shares
of the Stagecoach Asset Allocation Fund for periods prior to April, 1998,
reflects performance of the Class B shares, adjusted for Class C share sales
charges and expenses.
2 For Class A shares, the maximum front-end sales charge is 4.50%. The maximum
contingent deferred sales charge for Class B shares is 5.00%. The maximum
contingent deferred sales charge for Class C shares is 1.00%.
3 The S&P 500 Index is a trademark of Standard & 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.
4 The Lehman Brothers U.S. Treasury Bond Index is an unmanaged index composed of
U.S. Treasury bonds with 10-year or longer maturities.
5 The IBC Taxable Money Fund Average is an average of money market funds whose
returns are subject to federal, state and local income taxes. The yields are
higher than those of tax-free funds because of the kinds of instruments in
which taxable funds can invest. The average is not available directly for
investment.
6 Represents recommended asset mix. Actual portfolio allocation may differ
depending on current market activity.
9
<PAGE>
Index Allocation Fund PERFORMANCE AT A GLANCE
- ------------------------------------------------------------------------
INDEX ALLOCATION FUND
AVERAGE ANNUAL RETURNS (%) (as of February 28, 1999)(1)
- ----------------------------------------------------------------
EXCLUDING SALES CHARGE
- ----------------------------------------------------------
<TABLE>
<CAPTION>
11-MONTH 1-YEAR 5-YEAR 10-YEAR
<S> <C> <C> <C> <C>
CLASS A 12.60 18.06 20.02 15.55
CLASS B 11.88 17.26 19.13 14.76
CLASS C 11.88 17.25 19.14 14.77
</TABLE>
INCLUDING SALES CHARGE(2)
- ----------------------------------------------------------
<TABLE>
<CAPTION>
11-MONTH 1-YEAR 5-YEAR 10-YEAR
<S> <C> <C> <C> <C>
CLASS A 7.52 12.74 18.93 15.02
CLASS B 6.88 12.26 18.93 14.76
CLASS C 10.88 16.25 19.14 14.77
</TABLE>
GROWTH OF A $10,000 INVESTMENT*
- ----------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
STAGECOACH INDEX LEHMAN BROTHERS IBC TAXABLE
ALLOCATION FUND - U.S. TREASURY MONEY FUND
<S> <C> <C> <C> <C>
Class A Shares Bond Index Average S&P 500 Index
Feb-89 $9,550 $10,000 $10,000 $10,000
Mar-89 $9,619 $10,107 $10,074 $10,233
Apr-89 $9,732 $10,364 $10,151 $10,765
May-89 $9,827 $10,745 $10,229 $11,200
Jun-89 $9,846 $11,359 $10,305 $11,137
Jul-89 $10,079 $11,628 $10,379 $12,142
Aug-89 $10,156 $11,317 $10,451 $12,380
Sep-89 $10,195 $11,350 $10,523 $12,329
Oct-89 $10,204 $11,808 $10,595 $12,043
Nov-89 $10,293 $11,915 $10,665 $12,289
Dec-89 $10,381 $11,894 $10,736 $12,584
Jan-90 $10,282 $11,465 $10,805 $11,739
Feb-90 $10,332 $11,432 $10,874 $11,890
Mar-90 $10,422 $11,385 $10,943 $12,205
Apr-90 $10,376 $11,113 $11,013 $11,901
May-90 $10,670 $11,629 $11,084 $13,061
Jun-90 $10,720 $11,896 $11,155 $12,973
Jul-90 $10,769 $12,009 $11,226 $12,931
Aug-90 $10,595 $11,503 $11,296 $11,762
Sep-90 $10,564 $11,636 $11,366 $11,190
Oct-90 $10,667 $11,902 $11,437 $11,142
Nov-90 $10,970 $12,399 $11,507 $11,862
Dec-90 $11,116 $12,644 $11,576 $12,193
Jan-91 $11,383 $12,793 $11,642 $12,724
Feb-91 $11,599 $12,850 $11,704 $13,634
Mar-91 $11,696 $12,901 $11,764 $13,964
Apr-91 $11,801 $13,065 $11,821 $13,997
May-91 $11,932 $13,053 $11,876 $14,601
Jun-91 $11,670 $12,957 $11,930 $13,932
Jul-91 $11,955 $13,150 $11,985 $14,582
Aug-91 $12,343 $13,603 $12,038 $14,927
Sep-91 $12,498 $14,032 $12,091 $14,677
Oct-91 $12,585 $14,063 $12,141 $14,874
Nov-91 $12,394 $14,142 $12,190 $14,275
Dec-91 $13,415 $14,984 $12,236 $15,908
Jan-92 $13,047 $14,514 $12,278 $15,611
Feb-92 $13,127 $14,599 $12,317 $15,814
Mar-92 $12,937 $14,439 $12,356 $15,506
Apr-92 $13,076 $14,424 $12,393 $15,961
May-92 $13,297 $14,825 $12,429 $16,040
Jun-92 $13,316 $15,040 $12,465 $15,801
Jul-92 $13,855 $15,666 $12,499 $16,446
Aug-92 $13,773 $15,774 $12,531 $16,110
Sep-92 $13,961 $16,023 $12,561 $16,299
Oct-92 $13,866 $15,687 $12,590 $16,355
Nov-92 $14,174 $15,747 $12,619 $16,912
Dec-92 $14,413 $16,178 $12,649 $17,120
Jan-93 $14,652 $16,639 $12,679 $17,263
Feb-93 $15,030 $17,195 $12,707 $17,498
Mar-93 $15,254 $17,238 $12,736 $17,867
Apr-93 $15,000 $17,371 $12,764 $17,435
May-93 $15,280 $17,428 $12,791 $17,902
Jun-93 $15,475 $18,165 $12,820 $17,954
Jul-93 $15,500 $18,457 $12,848 $17,882
Aug-93 $16,049 $19,199 $12,876 $18,560
Sep-93 $15,917 $19,267 $12,905 $18,418
Oct-93 $16,212 $19,405 $12,933 $18,799
Nov-93 $16,045 $18,909 $12,962 $18,620
Dec-93 $16,220 $18,969 $12,991 $18,845
Jan-94 $16,738 $19,424 $13,021 $19,486
Feb-94 $16,275 $18,628 $13,050 $18,957
Mar-94 $15,632 $17,810 $13,082 $18,131
Apr-94 $15,728 $17,600 $13,115 $18,363
May-94 $15,879 $17,484 $13,152 $18,664
Jun-94 $15,533 $17,318 $13,191 $18,207
Jul-94 $16,015 $17,905 $13,233 $18,805
Aug-94 $16,484 $17,772 $13,276 $19,576
Sep-94 $16,039 $17,213 $13,323 $19,097
Oct-94 $16,191 $17,152 $13,371 $19,526
Nov-94 $15,872 $17,254 $13,422 $18,815
Dec-94 $16,109 $17,519 $13,479 $19,094
Jan-95 $16,502 $17,969 $13,537 $19,589
Feb-95 $17,060 $18,478 $13,598 $20,352
Mar-95 $17,437 $18,638 $13,661 $20,951
Apr-95 $17,863 $18,970 $13,724 $21,568
May-95 $18,685 $20,425 $13,787 $22,428
Jun-95 $19,113 $20,663 $13,850 $22,949
Jul-95 $19,710 $20,333 $13,912 $23,709
Aug-95 $19,741 $20,784 $13,973 $23,769
Sep-95 $20,535 $21,167 $14,034 $24,771
Oct-95 $20,443 $21,759 $14,095 $24,683
Nov-95 $21,303 $22,303 $14,156 $25,765
Dec-95 $21,700 $22,896 $14,218 $26,261
Jan-96 $22,363 $22,896 $14,277 $27,154
Feb-96 $22,536 $21,790 $14,336 $27,407
Mar-96 $22,733 $21,356 $14,393 $27,670
Apr-96 $22,955 $21,000 $14,451 $28,077
May-96 $23,271 $20,891 $14,509 $28,798
Jun-96 $23,437 $21,336 $14,567 $28,908
Jul-96 $22,706 $21,344 $14,625 $27,630
Aug-96 $22,849 $21,077 $14,684 $28,213
Sep-96 $23,833 $21,659 $14,742 $29,798
Oct-96 $24,553 $22,510 $14,801 $30,621
Nov-96 $25,977 $23,262 $14,860 $32,933
Dec-96 $25,399 $22,692 $14,920 $32,281
Jan-97 $26,524 $22,531 $14,980 $34,295
Feb-97 $26,633 $22,540 $15,040 $34,566
Mar-97 $25,696 $21,963 $15,100 $33,149
Apr-97 $26,792 $22,492 $15,162 $35,124
May-97 $27,851 $22,744 $15,224 $37,271
Jun-97 $28,831 $23,183 $15,288 $38,929
Jul-97 $30,926 $24,544 $15,352 $42,024
Aug-97 $29,401 $23,862 $15,416 $39,671
Sep-97 $30,772 $24,518 $15,481 $41,841
Oct-97 $29,997 $25,344 $15,546 $40,443
Nov-97 $31,288 $25,681 $15,611 $42,316
Dec-97 $31,793 $26,113 $15,677 $43,043
Jan-98 $32,101 $26,643 $15,743 $43,517
Feb-98 $34,335 $26,451 $15,809 $46,654
Mar-98 $36,000 $26,507 $15,875 $49,043
Apr-98 $36,307 $26,605 $15,940 $49,543
May-98 $35,651 $27,113 $16,007 $48,691
Jun-98 $37,047 $27,742 $16,073 $50,668
Jul-98 $36,637 $27,625 $16,141 $50,131
Aug-98 $31,341 $28,871 $16,208 $42,887
Sep-98 $33,297 $29,928 $16,275 $45,636
Oct-98 $35,988 $29,476 $16,340 $49,342
Nov-98 $38,124 $29,703 $16,402 $52,332
Dec-98 $40,239 $29,641 $16,466 $55,409
Jan-99 $41,857 $29,907 $16,529 $57,725
Feb-99 $40,537 $28,436 $16,583 $59,520
</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.
10
<PAGE>
PERFORMANCE AT A GLANCE Index Allocation Fund
- ------------------------------------------------------------------------
The accompanying chart compares the performance of the Stagecoach Index
Allocation Fund Class A shares since inception of the predecessor fund with
the S&P 500 Index, the Lehman Brothers U.S. Treasury Bond Index, and the IBC
Taxable Money Fund Average. The chart assumes a hypothetical $10,000
investment in Class A shares and reflects all operating expenses and assumes
the maximum initial sales charge of 4.5%. The S&P 500 Index is an unmanaged
index of 500 widely held common stocks representing, among others, industrial,
financial, utility and transportation companies listed or traded on national
exchanges or over-the-counter markets. The Lehman Brothers U.S. Treasury Bond
Index is an unmanaged index composed of U.S. Treasury bonds with 10 year or
longer maturities. The IBC Taxable Money Fund Average is an average of taxable
money market funds. The Fund is a professionally managed mutual fund. The
indexes presented here do not incur expenses and are not available directly
for investment. Had these indexes incurred operating expenses, their
performance would have been lower.
11
<PAGE>
Index Allocation Fund INVESTMENT ADVISOR COMMENTARY
- ------------------------------------------------------------------------
INDEX ALLOCATION FUND
The Index Allocation Fund (the "Fund") seeks to earn over the long-term a high
level of total return, that is, income and capital appreciation combined,
consistent with the assumption of reasonable risk, by pursuing an "asset
allocation" strategy whereby its investments are allocated, based on changes in
market conditions, among three asset classes: common stocks in the S&P 500
Index, U.S. Treasury Bonds and money market instruments.
To improve our reporting process, we have changed the Fund's fiscal year-end
to February 28 from March 31. This change will not impact the performance or
objective of your investment. Our discussions will focus on the 11-month period
ended February 28, 1999.
The Fund is a professionally managed portfolio, advised by Wells Fargo Bank,
N.A. Barclays Global Fund Advisors serves as investment sub-advisor.
PORTFOLIO DATA (as of February 28, 1999)
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
TOTAL NET ASSETS
($MM) 92.7 12.6 67.4
NET ASSET VALUE $19.04 $23.55 $23.56
</TABLE>
PERFORMANCE SUMMARY
As of February 28, 1999, the Fund's Class A share net asset value was $19.04,
increasing $1.49 during the 11-month reporting period from $17.55 on March 31,
1998. The Fund's Class A shares distributed $0.03 per share in dividend income
and $0.65 per share in capital gains during this period.
During the 11-month reporting period ended February 28, 1999, the Fund's Class
A shares reported a cumulative total return of 12.60%, excluding sales charges.
The Fund remained competitive in comparison to its three benchmarks, based on
the Fund's predominant allocation in the S&P 500 Index securities. The S&P 500
Index(3) gained 13.93%, the Lehman Brothers U.S. Treasury Bond Index(4) returned
6.24%, and the IBC Taxable Money Fund Average(5) posted a 4.48% return over the
11-month period. A portion of the Fund's performance
12
<PAGE>
INVESTMENT ADVISOR COMMENTARY Index Allocation Fund
- ------------------------------------------------------------------------
can be attributed to a strong fourth quarter in U.S. markets, with the S&P 500
Index rising 21.3% by the end of the year.
The Fund has performed as expected, remaining competitive with the S&P 500
Index. Stock returns for the first part of the reporting period were well above
historical norms. Concerns about Asia's financial and economic woes impacted
U.S. corporate earnings by the middle of the reporting period, but the Federal
Reserve Board reduced interest rates in the fourth quarter, strengthening the
U.S. economy and promoting investment in U.S. stocks.
We believe stocks continue to be a more attractive investment than bonds in
the current economic environment, and we have weighted the portfolio
accordingly.
PORTFOLIO REVIEW
Every day the Fund's proprietary investment model analyzes extensive financial
data from numerous sources to determine an appropriate asset allocation and to
recommend shifts in the Fund's investments based on changing economic
conditions. As opportunities arise among the three asset classes, the investment
model will shift Fund assets accordingly in 5% increments.
We manage the allocation of investments in the Fund's portfolio based on the
assumption that the Fund's normal allocation is 100% stocks and no bonds. This
is not a target allocation, but a measure of the level of risk tolerance for the
Fund.
During the 11-month reporting period ended February 28, 1999, the Fund
maintained an asset allocation of 100% stocks and no bonds. The Fund's portfolio
is comprised predominately of stocks that make up the S&P 500 Index, including
some of the biggest corporations in the U.S. Investors tend to favor the
relatively consistent earnings that these stocks traditionally offer in
comparison to small-capitalization stocks.
Given the strong performance of U.S. markets and renewed faith in the U.S.
economy and investment in U.S. stocks, stocks continue to be viewed as
attractive investments for the Fund at this time. We will continue
13
<PAGE>
Index Allocation Fund INVESTMENT ADVISOR COMMENTARY
- ------------------------------------------------------------------------
to evaluate expected returns and economic conditions through our quantitative
investment model to provide an optimal asset mix.
TOP 10 HOLDINGS (as of February 28, 1999)
- ---------------------------------------------------------
<TABLE>
<CAPTION>
NAME % OF PORTFOLIO
<S> <C>
MICROSOFT CORPORATION 3.70%
GENERAL ELECTRIC COMPANY 3.2%
INTEL CORPORATION 2.0%
WAL MART STORES INCORPORATED 1.9%
MERCK & COMPANY INCORPORATED 1.9%
PFIZER INCORPORATED 1.7%
EXXON CORPORATION 1.6%
IBM CORPORATION 1.6%
COCA COLA COMPANY 1.5%
CISCO SYSTEMS INCORPORATED 1.5%
</TABLE>
STRATEGIC OUTLOOK
We are in the eighth consecutive year of economic expansion and the last year
of this millennium. The U.S. economy remains strong, and the stock market is
riding the crest of another outstanding year. Strong employment, manufacturing,
and trade accentuate a continuation of U.S. economic growth in 1999. These
factors could potentially lead to accelerated inflation in the months to come,
and we believe future interest rate movements will be in an upward direction.
The Fund will continue to apply its quantitative strategies to allocate assets
among stocks, bonds, and cash, taking into consideration news and events that
affect the economy and companies in general. Overall, we feel that the Fund is
well positioned for the upcoming months and we expect it to produce solid
long-term performance.
14
<PAGE>
INVESTMENT ADVISOR COMMENTARY Index Allocation Fund
- ------------------------------------------------------------------------
1 Investment return and principal value of an investment will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than their
original cost. Figures quoted represent past performance, which is no
guarantee of future results.
The Fund's manager has voluntarily waived all or a portion of its management
fees or assumed responsibility for other expenses, which increases total
return to shareholders. Without these waivers and reimbursements, the Fund's
returns would have been lower. There is no guarantee such reductions will
continue.
Performance shown for Class A shares of the Stagecoach Index Allocation Fund,
reflects performance of the Class A shares of the Overland Express Index
Allocation Fund, (the accounting survivor of a merger of the Funds on December
12, 1997). Performance shown or advertised for the Class B and Class C shares
of the Stagecoach Fund reflects performance of the Class D shares of the
Overland Fund adjusted to reflect sales charges and expenses of the Class B
and Class C shares, respectively. For periods prior to July 1, 1993, Class B
and Class C share performance of the Stagecoach Fund reflects performance of
the Class A shares of the Overland Fund adjusted to reflect the sales charges
and expenses of the Class B and Class C shares respectively.
2 For Class A shares, the maximum front-end sales charge is 4.50%. The maximum
contingent deferred sales charge for Class B shares is 5.00%. The maximum
contingent deferred sales charge for Class C shares is 1.00%.
3 The S&P 500 Index is a trademark of Standard & 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.
4 The Lehman Brothers U.S. Treasury Bond Index is an unmanaged index composed of
U.S. Treasury bonds with 10-year or longer maturities.
5 The IBC Taxable Money Fund Average is an average of money market funds whose
returns are subject to federal, state and local income taxes. The yields are
higher than those of tax-free funds because of the kinds of instruments in
which taxable funds can invest. The average is not available directly for
investment.
6 Represents recommended asset mix. Actual portfolio allocation may differ
depending on current market activity.
15
<PAGE>
U.S. Government Allocation Fund PERFORMANCE AT A GLANCE
- ------------------------------------------------------------------------
U.S. GOVERNMENT ALLOCATION FUND
AVERAGE ANNUAL RETURNS (%) (as of February 28, 1999)(1)
- ----------------------------------------------------------------
EXCLUDING SALES CHARGE
- ----------------------------------------------------------
<TABLE>
<CAPTION>
11-MONTH 1-YEAR 5-YEAR 10-YEAR
<S> <C> <C> <C> <C>
CLASS A 3.78 4.04 4.84 7.98
CLASS B 3.12 3.27 4.18 7.38
</TABLE>
INCLUDING SALES CHARGE(2)
- ----------------------------------------------------------
<TABLE>
<CAPTION>
11-MONTH 1-YEAR 5-YEAR 10-YEAR
<S> <C> <C> <C> <C>
CLASS A (0.88) (0.63) 3.88 7.49
CLASS B (1.88) (1.72) 3.93 7.38
</TABLE>
GROWTH OF A $10,000 INVESTMENT*
- ----------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
STAGECOACH U.S. LEHMAN BROTHERS IBC TAXABLE LEHMAN BROTHERS
GOVERNMENT ALLOCATION U.S. TREASURY MONEY FUND U.S. TREASURY
<S> <C> <C> <C> <C>
Fund Class A Shares Bond Index Average Note Index
Feb-89 $9,550 $10,000 $10,000 $10,000
Mar-89 $9,576 $10,107 $10,074 $10,051
Apr-89 $9,774 $10,364 $10,151 $10,254
May-89 $10,015 $10,745 $10,229 $10,449
Jun-89 $10,342 $11,359 $10,305 $10,717
Jul-89 $10,523 $11,628 $10,379 $10,939
Aug-89 $10,368 $11,317 $10,451 $10,788
Sep-89 $10,403 $11,350 $10,523 $10,838
Oct-89 $10,652 $11,808 $10,595 $11,068
Nov-89 $10,730 $11,915 $10,665 $11,175
Dec-89 $10,756 $11,894 $10,736 $11,207
Jan-90 $10,592 $11,465 $10,805 $11,135
Feb-90 $10,626 $11,432 $10,874 $11,174
Mar-90 $10,609 $11,385 $10,943 $11,186
Apr-90 $10,506 $11,113 $11,013 $11,147
May-90 $10,678 $11,629 $11,084 $11,385
Jun-90 $10,756 $11,896 $11,155 $11,534
Jul-90 $10,833 $12,009 $11,226 $11,695
Aug-90 $10,833 $11,503 $11,296 $11,651
Sep-90 $10,945 $11,636 $11,366 $11,755
Oct-90 $11,057 $11,902 $11,437 $11,921
Nov-90 $11,203 $12,399 $11,507 $12,099
Dec-90 $11,315 $12,644 $11,576 $12,267
Jan-91 $11,427 $12,793 $11,642 $12,393
Feb-91 $11,470 $12,850 $11,704 $12,464
Mar-91 $11,505 $12,901 $11,764 $12,531
Apr-91 $11,617 $13,065 $11,821 $12,660
May-91 $11,668 $13,053 $11,876 $12,730
Jun-91 $11,643 $12,957 $11,930 $12,740
Jul-91 $11,780 $13,150 $11,985 $12,879
Aug-91 $12,082 $13,603 $12,038 $13,122
Sep-91 $12,357 $14,032 $12,091 $13,347
Oct-91 $12,469 $14,063 $12,141 $13,499
Nov-91 $12,530 $14,142 $12,190 $13,657
Dec-91 $13,270 $14,984 $12,236 $13,997
Jan-92 $12,830 $14,514 $12,278 $13,857
Feb-92 $12,857 $14,599 $12,317 $13,900
Mar-92 $12,719 $14,439 $12,356 $13,843
Apr-92 $12,706 $14,424 $12,393 $13,967
May-92 $13,024 $14,825 $12,429 $14,175
Jun-92 $13,167 $15,040 $12,465 $14,381
Jul-92 $13,726 $15,666 $12,499 $14,661
Aug-92 $13,774 $15,774 $12,531 $14,814
Sep-92 $13,964 $16,023 $12,561 $15,023
Oct-92 $13,670 $15,687 $12,590 $14,838
Nov-92 $13,736 $15,747 $12,619 $14,774
Dec-92 $14,098 $16,178 $12,649 $14,968
Jan-93 $14,459 $16,639 $12,679 $15,249
Feb-93 $14,963 $17,195 $12,707 $15,476
Mar-93 $14,948 $17,238 $12,736 $15,532
Apr-93 $15,052 $17,371 $12,764 $15,655
May-93 $15,103 $17,428 $12,791 $15,609
Jun-93 $15,741 $18,165 $12,820 $15,839
Jul-93 $16,023 $18,457 $12,848 $15,869
Aug-93 $16,688 $19,199 $12,876 $16,108
Sep-93 $16,728 $19,267 $12,905 $16,174
Oct-93 $16,902 $19,405 $12,933 $16,213
Nov-93 $16,485 $18,909 $12,962 $16,132
Dec-93 $16,559 $18,969 $12,991 $16,198
Jan-94 $16,894 $19,424 $13,021 $16,359
Feb-94 $16,248 $18,628 $13,050 $16,130
Mar-94 $15,754 $17,810 $13,082 $15,896
Apr-94 $15,532 $17,600 $13,115 $15,794
May-94 $15,494 $17,484 $13,152 $15,805
Jun-94 $15,440 $17,318 $13,191 $15,808
Jul-94 $15,690 $17,905 $13,233 $16,014
Aug-94 $15,723 $17,772 $13,276 $16,060
Sep-94 $15,480 $17,213 $13,323 $15,929
Oct-94 $15,449 $17,152 $13,371 $15,933
Nov-94 $15,351 $17,254 $13,422 $15,860
Dec-94 $15,402 $17,519 $13,479 $15,911
Jan-95 $15,665 $17,969 $13,537 $16,169
Feb-95 $16,060 $18,478 $13,598 $16,478
Mar-95 $16,175 $18,638 $13,661 $16,569
Apr-95 $16,366 $18,970 $13,724 $16,760
May-95 $16,878 $20,425 $13,787 $17,232
Jun-95 $16,988 $20,663 $13,850 $17,347
Jul-95 $16,942 $20,333 $13,912 $17,354
Aug-95 $17,086 $20,784 $13,973 $17,494
Sep-95 $17,227 $21,167 $14,034 $17,610
Oct-95 $17,399 $21,759 $14,095 $17,807
Nov-95 $17,548 $22,303 $14,156 $18,024
Dec-95 $17,699 $22,896 $14,218 $18,205
Jan-96 $17,743 $22,896 $14,277 $18,361
Feb-96 $17,569 $21,790 $14,336 $18,165
Mar-96 $17,524 $21,356 $14,393 $18,076
Apr-96 $17,427 $21,000 $14,451 $18,024
May-96 $17,352 $20,891 $14,509 $18,015
Jun-96 $17,540 $21,336 $14,567 $18,193
Jul-96 $17,567 $21,344 $14,625 $18,248
Aug-96 $17,558 $21,077 $14,684 $18,271
Sep-96 $17,820 $21,659 $14,742 $18,505
Oct-96 $18,216 $22,510 $14,801 $18,807
Nov-96 $18,456 $23,262 $14,860 $19,032
Dec-96 $18,315 $22,692 $14,920 $18,930
Jan-97 $18,338 $22,531 $14,980 $19,000
Feb-97 $18,358 $22,540 $15,040 $19,028
Mar-97 $18,132 $21,963 $15,100 $18,916
Apr-97 $18,390 $22,492 $15,162 $19,128
May-97 $18,538 $22,744 $15,225 $19,277
Jun-97 $18,740 $23,183 $15,288 $19,441
Jul-97 $19,133 $24,544 $15,353 $19,804
Aug-97 $19,024 $23,862 $15,419 $19,725
Sep-97 $19,219 $24,518 $15,483 $19,940
Oct-97 $19,439 $25,344 $15,549 $20,173
Nov-97 $19,459 $25,681 $15,615 $20,220
Dec-97 $19,590 $26,113 $15,682 $20,386
Jan-98 $19,777 $26,643 $15,749 $20,659
Feb-98 $19,781 $26,451 $15,811 $20,632
Mar-98 $19,830 $26,507 $15,879 $20,694
Apr-98 $19,892 $26,605 $15,944 $20,791
May-98 $20,000 $27,113 $16,011 $20,935
Jun-98 $20,079 $27,742 $16,076 $21,075
Jul-98 $20,072 $27,625 $16,144 $21,157
Aug-98 $20,404 $28,871 $16,212 $21,576
Sep-98 $20,594 $29,928 $16,278 $22,096
Oct-98 $20,603 $29,476 $16,343 $22,140
Nov-98 $20,657 $29,703 $16,405 $22,058
Dec-98 $20,693 $29,641 $16,469 $22,142
Jan-99 $20,771 $29,907 $16,532 $22,239
Feb-99 $20,579 $28,436 $16,586 $21,915
</TABLE>
* The returns for Class B shares of the Fund will vary from the results shown
due to different expenses and load structures.
16
<PAGE>
PERFORMANCE AT A GLANCE U.S. Government Allocation Fund
- ------------------------------------------------------------------------
The accompanying chart compares the performance of the Stagecoach U.S.
Government Allocation Fund Class A shares since inception of the predecessor
fund with the Lehman Brothers U.S. Treasury Bond Index, the Lehman Brothers
U.S. Treasury Note Index, and the IBC Taxable Money Fund Average. The chart
assumes a hypothetical $10,000 initial investment in Class A shares and
reflects all operating expenses and assumes the maximum initial sales charge
of 4.5%. The Lehman Brothers U.S. Treasury Bond Index is an unmanaged index
composed of U.S. Treasury bonds with 10 year or longer maturities. The Lehman
Brothers U.S. Treasury Note Index is an unmanaged index of U.S. Treasury notes
with 2 to 10 year maturities. The IBC Taxable Money Fund Average is an average
of taxable money market funds. The Fund is a professionally managed mutual
fund. The indexes presented here do not incur expenses and are not available
directly for investment. Had these indexes incurred operating expenses, their
performances would have been lower.
17
<PAGE>
U.S. Government Allocation Fund INVESTMENT ADVISOR COMMENTARY
- ------------------------------------------------------------------------
U.S. GOVERNMENT ALLOCATION FUND
The U.S. Government Allocation Fund (the "Fund") seeks over the long-term a
high level of total return, including net realized and unrealized capital gains
and net investment income, consistent with reasonable risk.
To improve our reporting process, we have changed the Fund's fiscal year-end
to February 28 from March 31. The change will not impact the performance or
objective of your investment. Our discussions will focus on the 11-month period
ended February 28, 1999.
The Fund is a professionally managed portfolio, advised by Wells Fargo Bank,
N.A. Barclays Global Fund Advisors serves as investment sub-advisor.
PORTFOLIO DATA (as of February 28, 1999)
- ---------------------------------------------------------
<TABLE>
<S> <C>
AVERAGE COUPON 1.21%
AVERAGE MATURITY 4.63 years
AVERAGE DURATION 2.44 years
</TABLE>
<TABLE>
<CAPTION>
CLASS A CLASS B
<S> <C> <C>
TOTAL NET ASSETS ($MM) 74.7 18.7
NET ASSET VALUE $14.86 $10.81
</TABLE>
PERFORMANCE SUMMARY
As of February 28, 1999, the Fund's Class A share net asset value was $14.86,
slightly decreasing during the 11-month period from $14.87 on March 31, 1998.
The Fund's Class A shares distributed $0.57 per share of dividend income and no
capital gains were paid out during this period.
The distribution rate for Class A shares of the Fund for the period ended
February 28, 1999, was 3.45% based on an annualization of February's monthly
dividend of $0.04 per share and the maximum offering price of $15.56 on February
28, 1999.
During the 11-month reporting period ended February 28, 1999, the Fund's Class
A shares reported a cumulative total return of 3.78%, excluding sales charges.
Performances of the Fund's three benchmarks according to the portfolio
allocation are: the Lehman Brothers U.S.
18
<PAGE>
INVESTMENT ADVISOR COMMENTARY U.S. Government Allocation Fund
- ------------------------------------------------------------------------
Treasury Bond Index(3) returned 6.24%; the Lehman Brothers Intermediate Treasury
Bond Index(4) returned 5.38%; and the IBC Taxable Money Fund Average(5) posted a
4.48% return over the 11-month period.
During August and September--two of the market's most active months of
1998--the U.S. Government Allocation Fund's shorter-term investments led to good
performance. Nonetheless, longer-term securities posted stronger performance
during the same time period. The Fund did not perform as well as its benchmark
for the fiscal year that ended February 28, 1999.
MODEL ALLOCATION CHANGES (during 11-month reporting period)
- ---------------------------------------------------------
<TABLE>
<CAPTION>
DATE BONDS NOTES CASH
<S> <C> <C> <C>
APRIL 1998 0% 40% 60%
AUGUST 1998 10% 10% 80%
NOVEMBER 1998 20% 0% 80%
</TABLE>
PORTFOLIO ALLOCATION(6)
(as of February 28, 1999)
- ----------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Cash 80%
Bonds 20%
</TABLE>
MONTHLY DIVIDEND HISTORY
U.S. Government Allocation Fund INVESTMENT ADVISOR COMMENTARY
- ------------------------------------------------------------------------
- ---------------------------------------------
<TABLE>
<CAPTION>
CLASS CLASS
DATE A B
<S> <C> <C>
APRIL-98 $0.057 $0.035
MAY-98 $0.061 $0.038
JUNE-98 $0.059 $0.037
JULY-98 $0.064 $0.040
AUGUST-98 $0.055 $0.035
SEPTEMBER-98 $0.050 $0.030
OCTOBER-98 $0.047 $0.027
NOVEMBER-98 $0.040 $0.023
DECEMBER-98 $0.046 $0.027
JANUARY-99 $0.047 $0.027
FEBRUARY-99 $0.041 $0.024
</TABLE>
PORTFOLIO REVIEW
The Fund's investment policy is to invest in a combination of long-term
Treasury bonds, intermediate-term Treasury notes, and money market securities
that offer the optimum balance of risk and return. The Fund selects the
19
<PAGE>
most attractive mix by comparing the expected return, risk and correlation of
long-term, intermediate-term, and short-term Treasury securities.
During the 11-month reporting period ended February 28, 1999, the Fund
experienced three asset allocation changes. In April, the Fund was reallocated
to 0% bonds, 40% notes and 60% cash. The Fund maintained this asset allocation
until August, when it was reallocated to 10% bonds, 10% notes and 80% cash to
take advantage of opportunities on the shorter end of the yield curve. Another
allocation change to 20% bonds and 80% cash occurred in November 1998.
STRATEGIC OUTLOOK
We are in the eighth consecutive year of economic expansion and the last year
of this millennium. The U.S. economy remains strong, and the stock market is
riding the crest of another outstanding year. Strong employment, manufacturing,
and trade accentuate a continuation of U.S. economic growth in 1999. These
factors could potentially
INVESTMENT ADVISOR COMMENTARY U.S. Government Allocation Fund
- ------------------------------------------------------------------------
lead to accelerated inflation in the months to come, and we believe future
interest rate movements will be in an upward direction.
As a result, the Fund will continue to apply its process-driven strategy that
applies asset allocation technology to manage its fixed-income securities
portfolio. The Fund will take advantage of yield spread opportunities between
long-term U.S. government bonds, intermediate-term government notes and money
market instruments to benefit from a stable interest rate environment. Overall,
we feel that the Fund is well-positioned for the upcoming months and we expect
it to produce solid long-term performance.
20
<PAGE>
INVESTMENT ADVISOR COMMENTARY U.S. Government Allocation Fund
- ------------------------------------------------------------------------
1 Investment return and principal value of an investment will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than their
original cost. Figures quoted represent past performance, which is no
guarantee of future results.
The Fund's manager has voluntarily waived all or a portion of its management
fees or assumed responsibility for other expenses, which increases total
return to shareholders. Without these waivers and reimbursements, the Fund's
returns would have been lower. There is no guarantee such reductions will
continue.
Performance shown for the Class A shares of the Stagecoach U.S. Government
Allocation Fund for periods prior to January 2, 1992, reflects performance of
the shares of the Fixed Income Strategy Fund of Wells Fargo Investment Trust
for Retirement Programs, a predecessor portfolio with the same investment
objective and policies as the Stagecoach Fund. Performance shown or advertised
for Class B shares of the Stagecoach Fund for periods between January 2, 1992,
and January 1, 1995, reflects performance of the Class A shares of the
Stagecoach Fund adjusted to reflect sales charges and expenses of the Class B
shares; for periods prior to January 2, 1992, performance shown or advertised
for Class B shares of the Stagecoach Fund reflects performance of the
predecessor portfolio with expenses adjusted to reflect Class B share sales
charges and expenses.
2 For Class A shares, the maximum front-end sales charge is 4.50%. The maximum
contingent deferred sales charge for Class B shares is 5.00%.
3 The Lehman Brothers U.S. Treasury Bond Index is an unmanaged index composed of
U.S. Treasury bonds with 10-year or longer maturities.
4 The Lehman Brothers Intermediate Treasury Bond Index is an unmanaged index of
public obligations of the U.S. Treasury with a remaining maturity from 1 up to
(but not including) 10 years. 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.
5 The IBC Taxable Money Fund Average is an average of money market funds whose
returns are subject to federal, state and local income taxes. The yields are
higher than those of tax-free funds because of the kinds of instruments in
which taxable funds can invest. The average is not available directly for
investment.
6 Represents recommended asset mix. Actual portfolio allocation may differ
depending on current market activity.
21
<PAGE>
Asset Allocation Fund PORTFOLIO OF INVESTMENTS - FEBRUARY 28, 1999
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - 81.47%
AEROSPACE - 0.91%
143,431 Boeing Company $ 6,083,509 $ 5,100,765
18,228 General Dynamics Corporation 680,438 1,101,655
56,433 Lockheed Martin Corporation 2,490,566 2,126,819
48,451 Raytheon Company Class B 2,460,996 2,589,100
27,586 Rockwell International Corporation 1,079,404 1,225,853
32,433 United Technologies Corporation 2,251,896 4,017,638
------------ --------------
$ 15,046,809 $ 16,161,830
AUTOMOBILE & RELATED - 1.08%
173,554 Ford Motor Company $ 5,421,921 $ 10,293,922
93,890 General Motors Corporation 5,324,287 7,751,793
22,416 Goodyear Tire & Rubber Company 1,226,693 1,036,740
8,025 Pep Boys-Manny Moe & Jack 205,743 146,455
------------ --------------
$ 12,178,644 $ 19,228,910
BEVERAGE, BREWING AND DISTRIBUTION - 2.28%
5,332 Adolph Coors Company Class B $ 158,256 $ 317,587
68,621 Anheuser-Busch Incorporated 2,791,052 5,262,373
353,440 Coca-Cola Company 20,464,426 22,598,070
56,369 Coca-Cola Enterprises Incorporated 1,646,245 1,747,439
210,495 Pepsico Incorporated 6,912,553 7,919,874
56,679 Seagram Company Limited 2,022,106 2,628,489
------------ --------------
$ 33,994,638 $ 40,473,832
CAPITAL GOODS - 5.47%
158,248 Ameritech Corporation $ 5,489,683 $ 10,345,463
31,507 AMP Incorporated 1,289,923 1,675,779
12,607 Andrew Corporation+ 276,126 190,680
53,101 Applied Materials Incorporated+ 1,490,320 2,953,743
12,665 Black & Decker Corporation 517,352 617,419
3,424 Briggs & Stratton Corporation 154,432 167,134
25,143 Browning-Ferris Industries Incorporated 849,896 792,005
10,636 Case Corporation 553,153 207,402
</TABLE>
22
<PAGE>
PORTFOLIO OF INVESTMENTS - FEBRUARY 28, 1999 Asset Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
51,572 Caterpillar Incorporated $ 2,334,036 $ 2,349,749
14,915 Cooper Industries Incorporated 738,168 652,530
34,401 Deere & Company 1,584,208 1,124,483
32,184 Dover Corporation 913,943 1,094,255
6,564 EG & G Incorporated 136,449 173,945
63,262 Emerson Electric Company 3,233,719 3,633,610
10,984 Fluor Corporation 541,974 386,500
6,027 Foster Wheeler Corporation 205,778 75,338
24,233 Freeport McMoran Copper & Gold Incorporated Class B 577,446 228,699
469,742 General Electric Company 29,089,159 47,120,994
43,240 Guidant Corporation 1,058,265 2,464,680
6,891 Harnischfeger Industries Incorporated 232,776 52,975
11,591 Harris Corporation 436,855 360,770
35,972 Illinois Tool Works Incorporated 1,652,604 2,473,075
23,748 Ingersoll-Rand Company 867,493 1,128,030
19,038 Interpublic Group Companies Incorporated 789,078 1,424,280
9,732 Navistar International Corporation+ 190,764 418,475
16,180 New Century Energies Incorporated 781,962 656,300
24,306 Omnicom Group 1,007,070 1,610,273
15,739 Parker Hannifin Corporation 541,715 584,310
23,613 Paychex Incorporated 1,215,800 1,000,600
7,182 Perkin-Elmer Corporation 421,904 680,495
39,198 Pitney Bowes Incorporated 1,454,514 2,476,824
8,564 Snap-On Incorporated 307,475 241,933
6,919 Tektronix Incorporated 236,867 134,920
8,235 Thomas & Betts Corporation 379,443 343,297
9,132 Timken Company 250,179 161,522
36,788 Unisys Corporation+ 585,342 1,096,742
13,711 W W Grainger Incorporated 580,353 610,140
82,485 Waste Management Incorporated 3,935,601 4,031,454
16,030 Willamette Industries Incorporated 515,685 584,093
------------ --------------
$ 67,417,510 $ 96,324,916
</TABLE>
23
<PAGE>
Asset Allocation Fund PORTFOLIO OF INVESTMENTS - FEBRUARY 28, 1999
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
COMPUTER SOFTWARE - 6.10%
131,426 America Online Incorporated+ $ 10,436,923 $ 11,688,700
6,746 Autodesk Incorporated 244,000 270,683
30,022 BMC Software Incorporated+ 1,806,588 1,227,149
24,535 Compuware Corporation+ 1,915,142 1,372,427
238,987 Intel Corporation 15,028,878 28,663,503
357,446 Microsoft Corporation+ 21,849,448 53,661,580
24,028 National Semiconductor Corporation+ 552,686 252,294
139,448 Oracle Systems Corporation+ 3,596,037 7,791,657
38,209 Parametric Technology Corporation+ 815,606 587,463
33,576 Peoplesoft Incorporated+ 1,094,422 633,747
35,354 Seagate Technology Incorporated+ 1,005,551 1,023,055
27,265 Silicon Graphics Incorporated+ 537,475 434,535
14,283 Tandy Corporation 482,082 794,492
------------ --------------
$ 59,364,838 $ 108,401,285
COMPUTER SYSTEMS - 5.98%
51,560 3COM Corporation+ $ 2,085,550 $ 1,620,918
9,504 Adobe Systems Incorporated 397,979 382,535
20,599 Advanced Micro Devices+ 471,600 368,207
19,396 Apple Computer Incorporated+ 501,350 675,223
23,075 Cabletron Systems Incorporated+ 561,553 187,484
226,394 Cisco Systems Incorporated+ 8,299,920 22,144,163
243,112 Compaq Computer Corporation 5,633,410 8,569,698
77,304 Computer Associates International Incorporated 2,997,199 3,246,768
22,831 Computer Sciences Corporation+ 958,718 1,521,115
6,660 Data General Corporation+ 123,800 91,990
182,617 Dell Computer Corporation+ 3,992,857 14,632,187
70,770 Electronic Data Systems Corporation 2,856,417 3,290,805
72,002 EMC Corporation+ 1,875,018 7,371,205
22,471 Gateway 2000 Incorporated+ 1,254,489 1,633,360
148,753 Hewlett Packard Company 7,878,731 9,882,777
133,777 International Business Machines Corporation 12,112,435 22,742,090
</TABLE>
24
<PAGE>
PORTFOLIO OF INVESTMENTS - FEBRUARY 28, 1999 Asset Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
50,784 Novell Incorporated+ $ 597,256 $ 983,940
33,772 Solectron Corporation+ 1,576,436 1,509,185
54,622 Sun Microsystems Incorporated+ 1,798,134 5,315,403
------------ --------------
$ 55,972,852 $ 106,169,053
CONSUMER - BASIC - 2.25%
9,472 Allergan Incorporated $ 331,755 $ 771,968
12,543 Alza Corporation+ 378,729 657,724
8,112 Bausch & Lomb Incorporated 339,990 489,255
16,184 Biomet Incorporated 364,107 593,750
15,577 Clorox Company 1,068,396 1,842,954
42,065 Colgate-Palmolive Company 2,639,817 3,570,267
70,380 ConAgra Incorporated 1,955,711 2,120,198
33,310 Corning Incorporated 1,251,900 1,782,085
56,040 CVS Corporation 1,660,573 2,970,120
24,228 Humana Incorporated+ 598,458 423,990
10,397 Mallinckrodt Incorporated 362,553 321,657
37,218 McKesson HBOC Incorporated 2,682,493 2,530,824
6,404 Millipore Corporation 222,427 178,512
349,120 Philip Morris Companies Incorporated 13,187,611 13,659,320
34,864 Pioneer Hi Bred International Incorporated 1,033,229 817,125
44,966 Ralston-Purina Group 1,201,562 1,211,272
46,782 RJR Nabisco Holdings Corporation 1,238,442 1,277,733
3,769 Shared Medical System Corporation 207,152 192,219
12,245 St. Jude Medical Incorporated+ 416,834 307,655
17,426 Supervalu Incorporated 315,694 419,313
48,116 Sysco Corporation 920,432 1,359,277
8,478 Tupperware Corporation 257,161 148,365
26,869 UST Incorporated 812,044 794,315
16,695 Wm. Wrigley Jr Company 1,161,560 1,552,635
------------ --------------
$ 34,608,630 $ 39,992,533
</TABLE>
25
<PAGE>
Asset Allocation Fund PORTFOLIO OF INVESTMENTS - FEBRUARY 28, 1999
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
CONSUMER-DISCRETIONARY - 2.64%
8,057 Alberto-Culver Company Class B $ 200,217 $ 193,368
80,472 Allied Signal Incorporated 2,745,507 3,329,529
22,116 AutoZone Incorporated+ 629,606 774,060
37,833 Avon Products Incorporated 1,133,823 1,574,799
9,900 Brown-Forman Corporation Class B 477,682 652,780
13,988 Brunswick Corporation 361,597 298,119
10,311 Ceridian Corporation+ 452,109 738,525
11,082 Cooper Tire & Rubber Company 257,583 218,870
5,672 Cummins Engine Company Incorporated 307,077 232,552
26,761 Dollar General Corporation 948,862 801,157
22,208 Fred Meyer Incorporated+ 1,055,113 1,426,864
10,464 Fruit of the Loom Incorporated Class A+ 286,767 132,762
26,016 Genuine Parts Company 820,992 778,854
159,132 Gillette Company 6,976,160 8,533,454
10,257 Harcourt General Incorporated 489,353 469,899
18,866 Hasbro Incorporated 554,251 698,042
36,214 Hilton Hotels Corporation 608,823 572,634
15,300 International Flavors & Fragrances Incorporated 727,312 630,169
5,268 Jostens Incorporated 121,910 123,469
22,792 Kohls Corporation+ 1,283,737 1,572,648
9,391 Liz Claiborne Incorporated 378,736 316,359
36,083 Marriott International 965,925 1,298,988
41,493 Mattel Incorporated 1,341,868 1,094,378
12,961 Maytag Corporation 404,943 726,625
23,506 Newell Company 866,837 999,005
41,221 Nike Incorporated Class B 1,711,305 2,210,475
11,303 PACCAR Incorporated 455,265 473,313
6,493 Polaroid Corporation 276,053 155,020
7,904 Reebok International Limited+ 255,286 127,452
21,724 Rubbermaid Incorporated 630,586 718,250
5,433 Russell Corporation 157,111 105,944
2,677 Springs Industries Incorporated Class A 121,922 89,010
21,942 Tricon Global Restaurants Incorporated+ 605,762 1,360,404
17,233 TRW Incorporated 863,399 814,259
</TABLE>
26
<PAGE>
PORTFOLIO OF INVESTMENTS - FEBRUARY 28, 1999 Asset Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
92,453 Tyco International Limited $ 4,040,361 $ 6,881,970
17,275 V. F. Corporation 671,064 831,359
10,974 Whirlpool Corporation 615,950 477,369
94,134 Xerox Corporation 3,279,135 5,195,020
------------ --------------
$ 38,079,989 $ 47,627,754
ELECTRONICS - 0.80%
12,609 KLA-Tencor Corporation+ $ 695,536 $ 653,304
20,566 LSI Logic Corporation+ 560,008 533,430
33,532 Micron Technology Incorporated+ 1,223,934 1,932,282
86,129 Motorola Incorporated 5,058,836 6,050,562
55,969 Texas Instruments Incorporated 2,391,692 4,991,735
------------ --------------
$ 9,930,006 $ 14,161,313
ENERGY & RELATED - 4.46%
13,034 Amerada Hess Corporation $ 686,152 $ 591,418
17,382 Anadarko Petroleum Corporation 569,254 478,005
14,193 Apache Corporation 484,531 282,973
11,046 Ashland Incorporated 497,766 491,547
46,177 Atlantic Richfield Corporation 3,137,905 2,522,419
46,309 Baker Hughes Incorporated 1,280,871 833,562
25,612 Burlington Resources Incorporated 1,016,674 829,189
93,620 Chevron Corporation 6,521,684 7,197,038
12,034 Columbia Energy Group 496,052 607,717
2,980 Eastern Enterprises 105,464 114,544
11,452 Eastman Chemical Company 677,866 540,390
348,578 Exxon Corporation 19,397,757 23,202,223
63,225 Halliburton Company 2,306,395 1,786,106
7,471 Helmerich & Payne Incorporated 181,495 121,871
6,877 Kerr McGee Corporation 400,655 196,424
111,865 Mobil Corporation 7,267,147 9,305,770
49,916 Occidental Petroleum Corporation 1,220,018 751,860
15,248 Oryx Energy Company+ 292,878 158,198
36,677 Phillips Petroleum Company 1,558,588 1,418,941
40,989 Reliant Energy Incorporated 962,206 1,099,018
</TABLE>
27
<PAGE>
Asset Allocation Fund PORTFOLIO OF INVESTMENTS - FEBRUARY 28, 1999
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
12,387 Rowan Companies Incorporated+ $ 257,129 $ 106,838
307,531 Royal Dutch Petroleum Company ADR 14,052,310 13,492,923
78,410 Schlumberger Limited 4,563,007 3,807,786
14,566 Sigma Aldrich Corporation 443,089 384,178
13,527 Sunoco Incorporated 478,699 411,728
76,782 Texaco Incorporated 3,909,911 3,575,162
22,461 Thermo Electron Corporation+ 798,214 310,243
36,566 Union Pacific Resources Group Incorporated 846,443 326,809
34,827 Unocal Corporation 1,224,313 981,686
42,420 USX - Marathon Group 1,163,825 877,564
10,620 W.R. Grace & Company+ 152,508 142,706
61,522 Williams Companies Incorporated 1,515,341 2,276,314
------------ --------------
$ 78,466,147 $ 79,223,150
ENTERTAINMENT & LEISURE - 2.01%
101,436 CBS Corporation $ 2,606,051 $ 3,740,453
14,858 Harrah's Entertainment Incorporated+ 340,988 247,943
10,657 King World Productions+ 242,190 281,744
26,189 Mirage Resorts Incorporated+ 642,890 510,686
76,057 Tele-Communication Incorporated
Class A+ 1,799,388 4,777,330
175,390 Time Warner Incorporated 5,165,612 11,312,655
49,949 Viacom Incorporated Class B+ 2,146,998 4,414,243
293,870 Walt Disney Company 8,184,471 10,340,551
------------ --------------
$ 21,128,588 $ 35,625,605
FINANCE & RELATED - 13.13%
20,531 Aetna Incorporated $ 1,716,671 $ 1,520,577
117,836 Allstate Corporation 4,180,829 4,418,850
64,878 American Express Corporation 4,729,720 7,039,263
36,240 American General Corporation 1,806,209 2,654,580
176,343 American International Group Incorporated 10,834,197 20,092,081
24,543 AON Corporation 1,250,964 1,446,503
</TABLE>
28
<PAGE>
PORTFOLIO OF INVESTMENTS - FEBRUARY 28, 1999 Asset Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
101,190 Associates First Capital Corporation $ 2,916,953 $ 4,110,844
167,994 Banc One Corporation 7,110,053 9,029,678
248,172 Bank America Corporation 13,419,793 16,208,734
108,468 Bank of New York Incorporated 2,349,164 3,789,601
42,418 BankBoston Corporation 1,607,351 1,715,278
13,704 Bankers Trust NY Corporation 1,331,298 1,192,248
41,594 BB & T Corporation 1,338,408 1,575,373
17,060 Bear Stearns & Company Incorporated 896,048 730,398
9,434 Capital One Financial Corporation 1,141,919 1,204,014
57,578 Charles Schwab Corporation 1,209,320 4,293,160
121,331 Chase Manhattan Corporation 5,988,208 9,660,981
23,487 Chubb Corporation 1,481,395 1,403,348
29,693 CIGNA Corporation 1,613,426 2,330,901
24,138 Cincinnati Financial Corporation 1,061,824 846,339
325,780 Citigroup Incorporated 14,093,873 19,139,575
22,348 Comerica Incorporated 1,037,238 1,480,555
45,285 Conseco Incorporated 1,782,483 1,355,720
16,111 Countrywide Credit Industries Incorporated 600,567 610,204
24,188 Dun & Bradstreet Corporation 595,426 828,439
97,392 Federal Home Loan Mortgage Corporation 3,246,083 5,733,954
148,729 Federal National Mortgage Association 6,763,370 10,411,030
38,348 Fifth Third Bancorp 1,677,469 2,533,365
141,378 First Union Corporation 6,195,952 7,537,215
31,606 Firstar Corporation 2,938,422 2,647,003
81,639 Fleet Financial Group Incorporated 2,584,118 3,505,375
36,470 Franklin Resources Incorporated 1,863,828 1,160,202
8,205 Golden West Financial 594,670 770,757
14,502 H&R Block Incorporated 585,013 658,028
33,619 Hartford Financial Services Group 1,311,996 1,817,527
69,365 Household International Incorporated 2,197,428 2,817,953
30,484 Huntington Bancshares Incorporated 941,423 967,867
15,242 Jefferson Pilot Corporation 687,780 1,033,598
25,132 JP Morgan & Company Incorporated 2,523,022 2,800,647
63,904 KeyCorp 1,746,949 2,060,904
16,711 Lehman Brothers Holdings 939,895 885,683
</TABLE>
29
<PAGE>
Asset Allocation Fund PORTFOLIO OF INVESTMENTS - FEBRUARY 28, 1999
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
14,527 Lincoln National Corporation $ 974,385 $ 1,375,525
37,005 Marsh & McLennan Companies Incorporated 1,664,020 2,620,417
14,300 MBIA Incorporated 861,565 880,344
109,328 MBNA Corporation 1,653,794 2,651,204
37,549 Mellon Bank Corporation 1,717,070 2,539,251
21,736 Mercantile Bancorporation 1,183,166 991,705
50,572 Merrill Lynch & Company Incorporated 2,934,607 3,881,401
15,802 MGIC Investment Corporation 766,649 538,256
12,691 Moore Corporation Limited 212,678 133,256
82,887 Morgan Stanley Dean Witter & Company 4,179,447 7,501,274
47,516 National City Corporation 2,934,058 3,320,181
15,957 Northern Trust Corporation 1,097,411 1,426,157
43,283 PNC Bank Corporation 1,889,077 2,253,421
10,410 Progressive Corporation 1,166,454 1,337,685
19,484 Provident Companies Incorporated 707,656 638,101
20,347 Providian Financial Corporation 507,434 2,077,937
31,120 Regions Financial Corporation 1,094,681 1,182,560
15,466 Republic New York Corporation 725,469 700,803
19,626 Safeco Corporation 844,688 788,720
23,931 SLM Holding Corporation 1,144,709 1,026,042
33,995 St. Paul Companies Incorporated 1,203,168 1,100,588
23,114 State Street Corporation 1,273,757 1,772,555
25,072 Summit Bancorp 1,204,351 968,406
45,517 SunTrust Banks Incorporated 2,863,246 3,092,311
38,338 Synovus Financial Corporation 822,895 912,924
20,217 Torchmark Corporation 600,672 672,215
17,944 Transamerica Corporation 832,785 1,302,062
104,274 U.S. Bancorporation 3,100,383 3,369,354
18,443 Union Planters Corporation 927,037 833,393
19,902 UNUM Corporation 829,277 890,615
29,152 Wachovia Corporation 2,043,793 2,479,742
85,217 Washington Mutual Incorporated 3,118,875 3,408,680
232,005 Wells Fargo & Company** 6,386,339 8,526,184
------------ --------------
$176,356,351 $ 233,211,621
</TABLE>
30
<PAGE>
PORTFOLIO OF INVESTMENTS - FEBRUARY 28, 1999 Asset Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
FOOD & RELATED - 2.17%
35,319 Albertson's Incorporated $ 1,410,540 $ 2,013,183
39,546 American Stores Company 841,349 1,334,678
85,449 Archer-Daniels-Midland Company 1,586,811 1,292,416
41,115 Bestfoods 1,794,395 1,929,835
64,352 Campbell Soup Company 2,840,979 2,586,145
20,262 Darden Restaurants Incorporated 245,144 445,764
21,964 General Mills Incorporated 1,402,461 1,772,220
5,596 Great Atlantic & Pacific Tea Company 150,671 176,624
52,036 H J Heinz Company 2,290,864 2,832,710
20,577 Hershey Foods Corporation 1,066,917 1,280,918
58,286 Kellogg Company 2,303,165 2,156,582
36,852 Kroger Company+ 1,114,609 2,383,864
97,073 McDonald's Corporation 4,809,909 8,251,205
19,594 Quaker Oats Company 886,873 1,070,322
69,814 Safeway Incorporated+ 3,837,888 4,031,759
131,224 Sara Lee Corporation 2,972,596 3,567,653
18,083 Wendy's International Incorporated 394,399 432,862
21,378 Winn-Dixie Stores Incorporated 799,926 936,624
------------ --------------
$ 30,749,496 $ 38,495,364
GENERAL BUSINESS & RELATED - 1.86%
28,419 Allegheny Teledyne Incorporated $ 664,506 $ 586,142
10,251 American Greetings Corporation Class A 364,250 242,821
86,794 Automatic Data Processing 2,200,585 3,450,062
122,645 Cendant Corporation+ 3,102,038 2,031,308
36,088 Clear Channel Communications Incorporated+ 1,450,024 2,165,280
53,023 Comcast Corporation Class A 1,424,209 3,761,319
11,648 Deluxe Corporation 376,391 394,576
13,538 Dow Jones & Company Incorporated 613,965 636,286
21,256 Equifax Incorporated 703,891 802,414
21,187 FDX Corporation+ 1,141,143 2,023,359
63,643 First Data Corporation 2,072,432 2,434,345
40,482 Gannett Company Incorporated 1,966,019 2,570,607
</TABLE>
31
<PAGE>
Asset Allocation Fund PORTFOLIO OF INVESTMENTS - FEBRUARY 28, 1999
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
11,328 Knight-Ridder Incorporated $ 517,526 $ 568,524
16,331 Loews Corporation 1,451,676 1,276,880
14,138 McGraw-Hill Incorporated 860,755 1,547,227
7,612 Meredith Corporation 218,706 256,905
17,564 Morton International Incorporated 518,449 634,500
6,049 National Service Industries Incorporated 252,618 194,324
26,355 New York Times Company Class A 662,024 817,005
19,560 RR Donnelley & Sons Company 733,452 669,930
37,158 Service Corporation International 1,142,308 571,304
63,085 Staples Incorporated+ 1,152,807 1,855,093
22,753 Textron Incorporated 1,283,113 1,774,734
11,479 Times Mirror Company Class A 611,634 640,672
17,079 Tribune Company 855,964 1,132,551
------------ --------------
$ 26,340,485 $ 33,038,168
HEALTHCARE - 2.10%
189,046 American Home Products Corporation $ 6,825,209 $ 11,248,237
36,546 Amgen Incorporated+ 1,986,978 4,563,682
7,790 C R Bard Incorporated 252,267 439,161
36,978 Cardinal Health Incorporated 2,068,115 2,669,349
92,850 Columbia HCA Healthcare Corporation 2,899,698 1,659,694
15,752 HCR Manor Care+ 485,834 352,451
60,521 Healthsouth Corporation+ 1,478,845 703,557
46,002 IMS Health Incorporated 908,907 1,633,071
210,784 Schering-Plough Corporation 5,636,082 11,790,730
44,628 Tenet Healthcare Corporation+ 1,256,444 878,614
26,876 United Healthcare Corporation 1,403,942 1,325,323
------------ --------------
$ 25,202,321 $ 37,263,869
MANUFACTURING PROCESSING - 6.35%
4,154 Aeroquip-Vickers Incorporated $ 183,066 $ 235,220
25,632 AES Corporation+ 934,082 953,190
33,367 Air Products & Chemicals Incorporated 1,184,126 1,071,915
32,872 Alcan Aluminum Limited 949,889 799,201
52,810 Alcoa Incorporated 1,704,389 2,138,805
</TABLE>
32
<PAGE>
PORTFOLIO OF INVESTMENTS - FEBRUARY 28, 1999 Asset Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
5,770 Asarco Incorporated $ 151,639 $ 81,501
16,754 Avery Dennison Corporation 671,073 899,480
10,715 B. F. Goodrich Company 420,331 365,649
4,437 Ball Corporation 147,714 185,799
53,761 Barrick Gold Corporation 1,152,194 950,898
33,844 Battle Mountain Gold Company 219,062 114,224
7,621 Bemis Company Incorporated 283,555 259,590
16,756 Bethlehem Steel Corporation+ 205,523 147,662
56,553 Boston Scientific Corporation+ 1,560,630 1,498,655
85,400 Carnival Corporation Class A 3,687,458 3,800,300
17,673 Crown Cork & Seal Company 844,388 490,426
13,416 Cyprus Amax Minerals 283,109 150,930
17,668 Danaher Corporation 778,936 852,481
31,813 Dow Chemical Company 2,718,447 3,129,604
161,520 DuPont (E. I.) de Nemours and Company 8,615,186 8,287,995
46,564 Eastman Kodak Company 3,156,246 3,081,955
10,291 Eaton Corporation 794,371 713,938
18,659 Ecolab Incorporated 412,395 744,028
20,856 Engelhard Corporation 414,382 371,498
4,818 FMC Corporation+ 336,669 246,621
31,551 Fort James Corporation 1,207,144 942,586
24,741 Fortune Brands Incorporated 821,224 745,323
8,582 Great Lakes Chemical Corporation 406,100 334,162
13,760 Hercules Incorporated 649,146 380,980
23,607 Homestake Mining Company 330,168 216,889
18,099 Honeywell Incorporated 1,164,775 1,265,799
19,700 IKON Office Solutions 534,080 278,263
24,302 Inco Limited 578,901 306,813
44,224 International Paper Company 1,977,423 1,857,408
14,981 ITT Industries Incorporated 438,903 585,195
192,822 Johnson & Johnson 11,164,669 16,462,178
12,207 Johnson Controls Incorporated 509,357 750,731
77,830 Kimberly-Clark Corporation 3,470,176 3,677,468
8,439 McDermott International Incorporated 239,818 168,253
14,875 Mead Corporation 440,833 452,758
5,780 Milacron Incorporated 139,710 102,956
</TABLE>
33
<PAGE>
Asset Allocation Fund PORTFOLIO OF INVESTMENTS - FEBRUARY 28, 1999
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
57,626 Minnesota Mining & Manufacturing Company $ 4,591,350 $ 4,267,926
87,521 Monsanto Company 3,290,677 3,987,676
1,202 Nacco Industries Incorporated Class A 100,860 105,776
9,535 Nalco Chemical Company 343,126 268,172
23,467 Newmont Mining Corporation 792,022 404,806
9,910 Northrop Grumman Corporation+ 889,426 617,517
12,647 Nucor Corporation 647,915 563,582
21,523 Owens-Illinois Incorporated+ 793,203 515,207
17,929 Pall Corporation 404,173 379,871
8,389 Phelps Dodge Corporation 554,839 406,867
36,306 Placer Dome Incorporated 620,814 397,097
25,556 PPG Industries Incorporated 1,379,525 1,330,509
22,824 Praxair Incorporated 971,045 797,414
190,264 Procter & Gamble Company 12,591,166 17,028,628
11,476 Raychem Corporation 423,056 261,796
9,320 Reynolds Metals Company 562,798 398,430
24,093 Rohm & Haas Company 681,501 752,906
12,060 Sealed Air Corporation+ 669,888 612,045
34,658 Sempra Energy 864,167 727,818
24,883 Sherwin Williams Company 654,089 598,747
8,038 Temple-Inland Incorporated 424,691 481,778
24,605 Tenneco Incorporated 1,040,351 736,612
91,850 Unilever NV 4,864,651 6,653,384
9,981 Union Camp Corporation 511,212 667,479
18,621 Union Carbide Corporation 802,322 819,324
12,827 USX-US Steel Group 415,820 324,683
117,842 Warner Lambert Company 4,732,507 8,138,463
14,672 Westvaco Corporation 431,782 328,286
13,684 Worthington Industries Incorporated 252,981 173,616
------------ --------------
$101,183,244 $ 112,845,742
</TABLE>
34
<PAGE>
PORTFOLIO OF INVESTMENTS - FEBRUARY 28, 1999 Asset Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
MEDICAL EQUIPMENT & SUPPLIES - 0.80%
217,688 Abbott Laboratories $ 6,606,690 $ 10,108,887
41,105 Baxter International Incorporated 1,969,777 2,892,764
35,618 Becton Dickinson & Company 911,851 1,193,203
------------ --------------
$ 9,488,318 $ 14,194,854
PHARMACEUTICALS - 5.03%
142,469 Bristol-Myers Squibb Company $ 11,099,168 $ 17,942,190
157,703 Lilly (Eli) & Company 8,182,280 14,932,503
341,542 Merck & Company Incorporated 15,696,546 27,921,059
186,075 Pfizer Incorporated 12,063,001 24,550,270
72,953 Pharmacia and Upjohn Incorporated 2,773,467 3,971,379
------------ --------------
$ 49,814,462 $ 89,317,401
RETAIL & RELATED - 3.67%
14,463 Circuit City Stores Incorporated $ 497,054 $ 784,618
15,900 Consolidated Stores Corporation+ 654,380 400,480
31,125 Costco Companies Incorporated+ 1,092,015 2,499,727
63,178 Dayton-Hudson Corporation 1,789,049 3,952,574
15,462 Dillards Incorporated Class A 512,109 384,617
29,553 Federated Department Stores Incorporated+ 1,160,313 1,124,860
83,180 Gap Incorporated 1,793,949 5,380,706
36,574 J C Penney Company Incorporated 2,006,365 1,321,235
71,097 K-Mart Corporation+ 940,091 1,244,198
32,904 Limited Incorporated 732,491 1,168,092
5,672 Longs Drug Stores Corporation 141,434 205,255
33,560 May Department Stores Company+ 1,664,800 1,988,430
81,787 Medtronic Incorporated 3,937,773 5,776,207
21,469 Nordstrom Incorporated 561,061 864,127
37,217 Rite Aid Corporation 1,026,918 1,539,853
55,078 Sears Roebuck & Company 2,520,380 2,237,544
46,102 TJX Companies Incorporated 655,163 1,316,788
37,805 Toys "R" Us Incorporated+ 1,133,245 533,995
</TABLE>
35
<PAGE>
Asset Allocation Fund PORTFOLIO OF INVESTMENTS - FEBRUARY 28, 1999
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
322,992 Wal-Mart Stores Incorporated $ 12,122,647 $ 27,898,434
143,222 Walgreen Company 1,959,035 4,583,104
------------ --------------
$ 36,900,272 $ 65,204,844
SHELTER & RELATED - 1.55%
5,815 Armstrong World Industries Incorporated $ 375,125 $ 286,025
8,248 Boise Cascade Corporation 284,345 256,204
8,611 Centex Corporation 219,252 316,992
13,808 Champion International Corporation 655,432 510,896
30,692 Coastal Corporation 776,092 982,144
9,982 Crane Company 247,728 273,881
47,522 Enron Corporation 1,950,365 3,088,930
35,569 Entergy Corporation 966,941 1,004,824
5,065 Fleetwood Enterprises Incorporated 159,554 164,296
12,678 Georgia-Pacific Corporation 726,656 928,664
211,419 Home Depot Incorporated 5,934,390 12,619,072
5,809 Kaufman & Broad Home Corporation 114,391 130,703
15,872 Louisiana-Pacific Corporation 378,700 291,648
50,662 Lowe's Company Incorporated 1,185,434 3,004,890
48,851 Masco Corporation 1,018,576 1,282,339
7,902 Owens Corning Fiberglass Corporation 303,268 251,382
4,245 Potlatch Corporation 183,206 147,248
6,308 Pulte Corporation 120,138 151,786
12,886 Stanley Works 473,707 313,291
28,670 Weyerhaeuser Company 1,338,006 1,598,353
------------ --------------
$ 17,411,306 $ 27,603,568
TELECOMMUNICATIONS - 5.91%
82,073 Airtouch Communications Incorporated+ $ 3,191,584 $ 7,473,773
258,990 American Telephone & Telegraph Corporation 12,591,938 21,269,554
29,982 Ascend Communication Incorporated+ 1,434,650 2,306,740
222,621 Bell Atlantic Corporation 8,461,407 12,786,794
22,159 General Instrument Corporation+ 405,264 648,151
188,545 Lucent Technologies Incorporated 8,276,501 19,149,102
</TABLE>
36
<PAGE>
PORTFOLIO OF INVESTMENTS - FEBRUARY 28, 1999 Asset Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
262,882 MCI Worldcom Incorporated+ $ 9,243,305 $ 21,687,765
87,126 Media One Group Incorporated+ 2,321,830 4,748,367
39,050 Nextel Communications Class A+ 1,247,253 1,173,941
10,980 Scientific-Atlanta Incorporated 216,044 356,164
61,830 Sprint Corporation (FON Group) 2,911,609 5,305,787
59,807 Sprint Corporation (PCS Group)+ 896,778 1,913,824
27,933 Tellabs Incorporated+ 1,295,505 2,236,386
72,153 U.S. West Incorporated 2,890,989 3,846,657
------------ --------------
$ 55,384,657 $ 104,903,005
TRANSPORTATION - 0.73%
26,293 AMR Corporation+ $ 1,428,015 $ 1,457,618
67,427 Burlington Northern Santa Fe 1,973,962 2,233,519
31,475 CSX Corporation 1,514,450 1,235,394
23,925 Dana Corporation 962,514 903,169
20,540 Delta Air Lines Incorporated 1,027,399 1,249,089
47,791 Laidlaw Incorporated 573,875 367,393
54,561 Norfolk Southern Corporation 1,616,218 1,531,118
10,444 Ryder Systems Incorporated 311,180 281,988
48,478 Southwest Airlines Company 689,334 1,460,400
35,609 Union Pacific Corporation 1,929,729 1,669,172
12,605 US Air Group Incorporated+ 678,199 597,162
------------ --------------
$ 12,704,875 $ 12,986,022
UTILITIES - 4.19%
39,456 Alltel Corporation $ 1,542,165 $ 2,362,428
19,761 Ameren Corporation 782,019 737,332
27,604 American Electric Power Incorporated 1,198,736 1,149,017
21,627 Baltimore Gas & Electric Company 603,722 554,192
280,473 BellSouth Corporation 6,950,005 12,971,876
21,772 Carolina Power & Light Company 787,743 868,159
30,716 Central & South West Corporation 765,599 762,141
22,948 Cinergy Corporation 738,218 669,795
33,587 Consolidated Edison Incorporated 1,194,463 1,570,192
13,812 Consolidated Natural Gas Company 694,941 758,797
</TABLE>
37
<PAGE>
Asset Allocation Fund PORTFOLIO OF INVESTMENTS - FEBRUARY 28, 1999
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
20,886 Detroit Energy Company $ 689,552 $ 824,997
28,182 Dominion Resources Incorporated 1,110,511 1,088,530
52,016 Duke Energy Corporation 2,471,480 2,958,410
50,784 Edison International 1,228,263 1,294,992
34,197 First Energy Corporation 869,048 1,000,262
26,083 FPL Group Incorporated 1,325,446 1,341,644
24,795 Frontier Corporation 612,947 891,070
18,434 GPU Incorporated 652,616 735,056
138,443 GTE Corporation 6,354,145 8,981,490
27,287 Niagara Mohawk Power Corporation+ 364,558 399,072
6,930 NICOR Incorporated 238,231 264,639
22,119 Northern States Power Company 561,506 570,947
93,595 Northern Telecom Limited 4,200,186 5,434,360
4,643 Oneok Incorporated 140,353 125,071
42,912 PacifiCorp 935,110 769,734
32,302 PECO Energy Company 830,529 1,144,702
5,184 Peoples Energy Corporation 174,960 175,932
55,037 PG & E Corporation 1,498,796 1,733,666
21,930 PP & L Resources Incorporated 509,458 559,215
32,905 Public Services Enterprise Group 974,518 1,250,390
280,498 SBC Communications Incorporated 9,002,936 14,831,332
15,928 Sonat Incorporated 637,084 403,178
100,223 Southern Company 2,384,286 2,511,839
39,624 Texas Utilities Company 1,541,156 1,681,544
31,326 Unicom Corporation 908,884 1,114,030
------------ --------------
$ 55,474,170 $ 74,490,031
TOTAL COMMON STOCKS $1,023,198,608 $1,446,944,670
</TABLE>
38
<PAGE>
PORTFOLIO OF INVESTMENTS - FEBRUARY 28, 1999 Asset Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
U.S. TREASURY SECURITIES - 17.77%
U.S. TREASURY BONDS - 17.77%
$ 9,800,000 U.S. Treasury Bonds 5.25 % 11/15/28 $ 9,236,500
5,600,000 U.S. Treasury Bonds 5.50 08/15/28 5,404,000
9,675,000 U.S. Treasury Bonds 6.00 02/15/26 9,934,967
16,450,000 U.S. Treasury Bonds 6.13 11/15/27 17,208,181
18,875,000 U.S. Treasury Bonds 6.25 08/15/23 19,898,403
8,050,000 U.S. Treasury Bonds 6.38 08/15/27 8,685,226
8,400,000 U.S. Treasury Bonds 6.50 11/15/26 9,195,396
8,750,000 U.S. Treasury Bonds 6.63 02/15/27 9,735,775
4,550,000 U.S. Treasury Bonds 6.75 08/15/26 5,133,674
9,750,000 U.S. Treasury Bonds 6.88 08/15/25 11,127,188
18,925,000 U.S. Treasury Bonds 7.13 02/15/23 22,032,864
10,400,000 U.S. Treasury Bonds 7.25 08/15/22 12,223,224
9,875,000 U.S. Treasury Bonds 7.50 11/15/24 12,067,546
8,175,000 U.S. Treasury Bonds 7.63 11/15/22 10,005,464
9,400,000 U.S. Treasury Bonds 7.63 02/15/25 11,658,914
8,700,000 U.S. Treasury Bonds 7.88 02/15/21 10,847,769
25,250,000 U.S. Treasury Bonds 8.00 11/15/21 31,972,813
14,599,000 U.S. Treasury Bonds 8.13 08/15/19 18,504,232
9,475,000 U.S. Treasury Bonds 8.13 05/15/21 12,116,156
9,700,000 U.S. Treasury Bonds 8.13 08/15/21 12,419,007
7,950,000 U.S. Treasury Bonds 8.50 02/15/20 10,464,187
5,650,000 U.S. Treasury Bonds 8.75 05/15/20 7,616,878
17,050,000 U.S. Treasury Bonds 8.75 08/15/20 23,022,785
11,165,000 U.S. Treasury Bonds 8.88 02/15/19 15,098,876
--------------
TOTAL U.S. TREASURY SECURITIES $ 315,610,025
(Cost $295,321,877)
</TABLE>
39
<PAGE>
Asset Allocation Fund PORTFOLIO OF INVESTMENTS - FEBRUARY 28, 1999
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS - 0.53%
U.S. TREASURY BILLS - 0.53%
$ 6,628,000 U.S. Treasury Bill 4.31 %# 04/01/99 $ 6,602,731
2,875,000 U.S. Treasury Bill 4.52 # 05/13/99 2,848,521
--------------
TOTAL SHORT-TERM INSTRUMENTS $ 9,451,252
(Cost $9,452,461)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $1,327,972,946)* (Notes 1 and 3) 99.77% $1,772,005,947
Other Assets and Liabilities, Net 0.23 4,027,108
------ --------------
TOTAL NET ASSETS 100.00% $1,776,033,055
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
** SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $6,386,339.
+ NON-INCOME EARNING SECURITIES.
# YIELD TO MATURITY.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL
STATEMENT PURPOSES AND NET UNREALIZED APPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 497,814,392
Gross Unrealized Depreciation (53,781,391)
--------------
NET UNREALIZED APPRECIATION $ 444,033,001
--------------
--------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
40
<PAGE>
PORTFOLIO OF INVESTMENTS - FEBRUARY 28, 1999 Index Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS - 98.73%
AEROSPACE - 1.10%
16,885 Boeing Company $ 805,175 $ 600,473
2,099 General Dynamics Corporation 77,761 126,858
6,646 Lockheed Martin Corporation 304,321 250,470
5,735 Raytheon Company Class B 301,512 306,464
3,249 Rockwell International Corporation 134,258 144,377
3,833 United Technologies Corporation 286,406 474,813
------------ --------------
$ 1,909,433 $ 1,903,455
AUTOMOBILE & RELATED - 1.31%
20,376 Ford Motor Company $ 582,437 $ 1,208,552
11,016 General Motors Corporation 645,403 909,509
2,681 Goodyear Tire & Rubber Company 152,246 123,995
1,078 Pep Boys-Manny Moe & Jack 32,988 19,674
------------ --------------
$ 1,413,074 $ 2,261,730
BEVERAGE, BREWING AND DISTRIBUTION - 2.76%
610 Adolph Coors Company Class B $ 16,278 $ 36,333
8,054 Anheuser-Busch Incorporated 337,461 617,640
41,613 Coca-Cola Company 2,426,770 2,660,630
6,662 Coca-Cola Enterprises Incorporated 195,585 206,522
24,786 Pepsico Incorporated 812,584 932,573
6,621 Seagram Company Limited 245,349 307,049
------------ --------------
$ 4,034,027 $ 4,760,747
CAPITAL GOODS - 6.62%
18,613 Ameritech Corporation $ 625,875 $ 1,216,825
3,718 AMP Incorporated 160,090 197,750
1,517 Andrew Corporation+ 42,383 22,945
6,211 Applied Materials Incorporated+ 193,605 345,487
1,457 Black & Decker Corporation 56,015 71,029
377 Briggs & Stratton Corporation 17,365 18,402
2,982 Browning-Ferris Industries Incorporated 96,796 93,933
1,298 Case Corporation 70,614 25,310
</TABLE>
41
<PAGE>
Index Allocation Fund PORTFOLIO OF INVESTMENTS - FEBRUARY 28, 1999
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
6,021 Caterpillar Incorporated $ 281,506 $ 274,332
1,702 Cooper Industries Incorporated 85,774 74,463
4,026 Deere & Company 194,079 131,600
3,742 Dover Corporation 111,936 127,228
751 EG & G Incorporated 14,294 19,902
7,481 Emerson Electric Company 393,749 429,690
1,260 Fluor Corporation 72,457 44,335
796 Foster Wheeler Corporation 28,904 9,950
2,869 Freeport McMoran Copper & Gold Incorporated Class B 77,890 27,075
55,357 General Electric Company 3,426,145 5,552,999
5,082 Guidant Corporation 118,352 289,674
866 Harnischfeger Industries Incorporated 34,090 6,657
1,316 Harris Corporation 51,365 40,960
4,200 Illinois Tool Works Incorporated 198,024 288,750
2,823 Ingersoll-Rand Company 106,595 134,093
2,387 Interpublic Group Companies Incorporated 108,533 178,577
1,191 Navistar International Corporation+ 24,667 51,213
1,891 New Century Energies Incorporated 91,303 76,704
2,892 Omnicom Group 120,601 191,595
1,807 Parker Hannifin Corporation 65,394 67,085
2,808 Paychex Incorporated 143,619 118,989
890 Perkin-Elmer Corporation 62,095 84,328
4,574 Pitney Bowes Incorporated 171,733 289,020
972 Snap-On Incorporated 37,274 27,459
850 Tektronix Incorporated 31,925 16,575
1,007 Thomas & Betts Corporation 50,385 41,979
1,121 Timken Company 32,960 19,828
4,323 Unisys Corporation+ 62,343 128,879
1,576 W W Grainger Incorporated 67,064 70,132
9,687 Waste Management Incorporated 480,234 473,452
1,844 Willamette Industries Incorporated 65,489 67,190
------------ --------------
$ 8,073,522 $ 11,346,394
</TABLE>
42
<PAGE>
PORTFOLIO OF INVESTMENTS - FEBRUARY 28, 1999 Index Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
COMPUTER SOFTWARE - 7.40%
15,426 America Online Incorporated+ $ 1,225,459 $ 1,371,950
768 Autodesk Incorporated 28,595 30,815
3,667 BMC Software Incorporated+ 218,737 149,889
3,116 Compuware Corporation+ 240,026 174,300
28,161 Intel Corporation 2,018,171 3,377,560
42,066 Microsoft Corporation+ 2,523,686 6,315,158
2,911 National Semiconductor Corporation+ 80,858 30,566
16,363 Oracle Systems Corporation+ 495,201 914,283
4,602 Parametric Technology Corporation+ 103,581 70,755
3,932 Peoplesoft Incorporated+ 126,851 74,217
4,163 Seagate Technology Incorporated+ 142,654 120,467
3,213 Silicon Graphics Incorporated+ 69,234 51,207
1,646 Tandy Corporation 48,868 91,559
------------ --------------
$ 7,321,921 $ 12,772,726
COMPUTER SYSTEMS - 7.23%
6,096 3COM Corporation+ $ 290,688 $ 191,643
1,084 Adobe Systems Incorporated 48,657 43,630
2,504 Advanced Micro Devices+ 67,981 44,759
2,305 Apple Computer Incorporated+ 59,990 80,243
2,785 Cabletron Systems Incorporated+ 85,199 22,628
26,605 Cisco Systems Incorporated+ 969,301 2,602,302
28,737 Compaq Computer Corporation 697,018 1,012,979
9,099 Computer Associates International Incorporated 373,291 382,158
2,676 Computer Sciences Corporation+ 107,629 178,289
824 Data General Corporation+ 19,094 11,382
21,526 Dell Computer Corporation+ 391,020 1,724,770
8,248 Electronic Data Systems Corporation 339,338 383,532
8,444 EMC Corporation+ 212,495 864,455
2,635 Gateway 2000 Incorporated+ 155,377 191,532
17,422 Hewlett Packard Company 1,001,012 1,157,474
15,784 International Business Machines Corporation 1,454,235 2,683,280
5,991 Novell Incorporated+ 76,105 116,075
</TABLE>
43
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Index Allocation Fund PORTFOLIO OF INVESTMENTS - FEBRUARY 28, 1999
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
3,892 Solectron Corporation+ $ 181,676 $ 173,924
6,379 Sun Microsystems Incorporated+ 230,271 620,755
------------ --------------
$ 6,760,377 $ 12,485,810
CONSUMER - BASIC - 2.74%
1,095 Allergan Incorporated $ 38,310 $ 89,243
1,440 Alza Corporation+ 40,559 75,510
919 Bausch & Lomb Incorporated 37,929 55,427
1,861 Biomet Incorporated 39,592 68,275
2,004 Clorox Company 144,820 237,098
4,940 Colgate-Palmolive Company 301,470 419,283
8,290 ConAgra Incorporated 237,588 249,735
3,926 Corning Incorporated 165,288 210,040
6,508 CVS Corporation 190,904 344,924
2,884 Humana Incorporated+ 66,563 50,470
1,189 Mallinckrodt Incorporated 45,995 36,785
4,606 McKesson HBOC Incorporated 331,044 313,208
719 Millipore Corporation 29,562 20,042
41,117 Philip Morris Companies Incorporated 1,599,306 1,608,703
5,268 Ralston-Purina Group 140,512 141,907
5,450 RJR Nabisco Holdings Corporation 144,628 148,853
431 Shared Medical System Corporation 23,957 21,980
1,476 St. Jude Medical Incorporated+ 52,162 37,085
2,075 Supervalu Incorporated 37,677 49,930
5,626 Sysco Corporation 105,003 158,935
1,039 Tupperware Corporation 37,853 18,183
3,182 UST Incorporated 97,491 94,068
1,923 Wm. Wrigley Jr Company 122,695 178,839
------------ --------------
$ 4,030,908 $ 4,628,523
CONSUMER-DISCRETIONARY - 3.19%
923 Alberto-Culver Company Class B $ 24,731 $ 22,152
9,451 Allied Signal Incorporated 350,365 391,035
2,625 AutoZone Incorporated+ 75,314 91,875
4,450 Avon Products Incorporated 138,611 185,230
</TABLE>
44
<PAGE>
PORTFOLIO OF INVESTMENTS - FEBRUARY 28, 1999 Index Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
1,114 Brown-Forman Corporation Class B $ 53,042 $ 73,454
1,601 Brunswick Corporation 45,221 34,120
1,186 Ceridian Corporation+ 51,989 84,947
1,339 Cooper Tire & Rubber Company 30,606 26,445
683 Cummins Engine Company Incorporated 39,390 28,003
3,167 Dollar General Corporation 114,689 94,812
2,658 Fred Meyer Incorporated+ 130,951 170,777
1,270 Fruit of the Loom Incorporated Class A+ 38,144 16,113
3,070 Genuine Parts Company 97,294 91,908
18,711 Gillette Company 839,495 1,003,377
1,168 Harcourt General Incorporated 56,829 53,509
2,171 Hasbro Incorporated 64,135 80,327
4,412 Hilton Hotels Corporation 81,309 69,765
1,753 International Flavors & Fragrances Incorporated 83,610 72,202
573 Jostens Incorporated 13,474 13,430
2,599 Kohls Corporation+ 148,329 179,330
1,149 Liz Claiborne Incorporated 49,039 38,707
4,244 Marriott International 117,259 152,784
4,866 Mattel Incorporated 160,384 128,340
1,487 Maytag Corporation 40,609 83,365
2,789 Newell Company 99,058 118,533
4,832 Nike Incorporated Class B 237,238 259,115
1,299 PACCAR Incorporated 58,063 54,395
807 Polaroid Corporation 33,984 19,267
1,029 Reebok International Limited+ 38,462 16,593
2,489 Rubbermaid Incorporated 65,592 82,293
683 Russell Corporation 19,089 13,319
286 Springs Industries Incorporated Class A 14,789 9,510
2,626 Tricon Global Restaurants Incorporated+ 73,483 162,812
1,983 TRW Incorporated 104,281 93,697
10,848 Tyco International Limited 456,244 807,498
1,985 V. F. Corporation 78,027 95,528
</TABLE>
45
<PAGE>
Index Allocation Fund PORTFOLIO OF INVESTMENTS - FEBRUARY 28, 1999
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
1,262 Whirlpool Corporation $ 67,862 $ 54,897
11,036 Xerox Corporation 376,683 609,049
------------ --------------
$ 4,567,674 $ 5,582,513
ELECTRONICS - 0.97%
1,444 KLA-Tencor Corporation+ $ 93,605 $ 74,817
2,445 LSI Logic Corporation+ 73,555 63,417
4,180 Micron Technology Incorporated+ 181,527 240,873
10,104 Motorola Incorporated 639,383 709,805
6,538 Texas Instruments Incorporated 285,128 583,108
------------ --------------
$ 1,273,198 $ 1,672,020
ENERGY & RELATED - 5.40%
1,503 Amerada Hess Corporation $ 84,336 $ 68,199
2,090 Anadarko Petroleum Corporation 69,421 57,475
1,630 Apache Corporation 59,543 32,498
1,270 Ashland Incorporated 59,804 56,515
5,400 Atlantic Richfield Corporation 384,840 294,975
5,475 Baker Hughes Incorporated 165,903 98,550
3,037 Burlington Resources Incorporated 132,788 98,323
10,947 Chevron Corporation 789,435 841,550
1,384 Columbia Energy Group 63,320 69,892
405 Eastern Enterprises 15,978 15,567
1,316 Eastman Chemical Company 77,010 62,099
41,039 Exxon Corporation 2,318,454 2,731,658
7,474 Halliburton Company 294,558 211,140
934 Helmerich & Payne Incorporated 26,535 15,235
777 Kerr McGee Corporation 49,991 22,193
13,174 Mobil Corporation 894,039 1,095,912
5,792 Occidental Petroleum Corporation 146,057 87,242
1,894 Oryx Energy Company+ 41,110 19,650
4,314 Phillips Petroleum Company 191,133 166,898
4,792 Reliant Energy Incorporated 109,246 128,485
1,523 Rowan Companies Incorporated+ 36,917 13,135
36,204 Royal Dutch Petroleum Company ADR 1,722,085 1,588,450
</TABLE>
46
<PAGE>
PORTFOLIO OF INVESTMENTS - FEBRUARY 28, 1999 Index Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
9,221 Schlumberger Limited $ 574,499 $ 447,795
1,674 Sigma Aldrich Corporation 54,180 44,152
1,539 Sunoco Incorporated 54,491 46,843
9,017 Texaco Incorporated 475,328 419,854
2,745 Thermo Electron Corporation+ 107,856 37,915
4,289 Union Pacific Resources Group Incorporated 113,436 38,333
4,099 Unocal Corporation 154,889 115,540
5,192 USX-Marathon Group 145,343 107,410
1,318 W. R. Grace & Company+ 18,784 17,710
7,178 Williams Companies Incorporated 178,020 265,586
------------ --------------
$ 9,609,329 $ 9,316,779
ENTERTAINMENT & LEISURE - 2.44%
11,875 CBS Corporation $ 293,019 $ 437,891
2,185 Harrah's Entertainment Incorporated+ 45,937 36,462
1,221 King World Productions+ 27,474 32,280
3,104 Mirage Resorts Incorporated+ 81,004 60,528
9,054 Tele-Communication Incorporated Class A+ 193,371 568,704
20,757 Time Warner Incorporated 581,933 1,338,827
5,806 Viacom Incorporated Class B+ 227,900 513,105
34,621 Walt Disney Company 942,854 1,218,226
------------ --------------
$ 2,393,492 $ 4,206,023
FINANCE & RELATED - 15.92%
2,365 Aetna Incorporated $ 202,903 $ 175,158
13,851 Allstate Corporation 481,313 519,413
7,621 American Express Corporation 528,538 826,879
4,267 American General Corporation 201,562 312,558
20,819 American International Group Incorporated 1,235,528 2,372,065
2,922 AON Corporation 146,156 172,215
12,239 Associates First Capital Corporation 351,985 497,209
19,730 Banc One Corporation 870,157 1,060,488
29,234 Bank America Corporation 1,600,972 1,909,346
12,848 Bank of New York Incorporated 279,685 448,877
4,963 BankBoston Corporation 189,916 200,691
</TABLE>
47
<PAGE>
Index Allocation Fund PORTFOLIO OF INVESTMENTS - FEBRUARY 28, 1999
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
1,657 Bankers Trust NY Corporation $ 169,141 $ 144,159
4,951 BB & T Corporation 162,572 187,519
1,962 Bear Stearns & Company Incorporated 106,257 84,017
1,061 Capital One Financial Corporation 131,564 135,410
6,728 Charles Schwab Corporation 142,952 501,657
14,262 Chase Manhattan Corporation 723,250 1,135,612
2,796 Chubb Corporation 175,051 167,061
3,515 CIGNA Corporation 185,548 275,928
2,858 Cincinnati Financial Corporation 130,640 100,209
38,311 Citigroup Incorporated 1,673,353 2,250,771
2,658 Comerica Incorporated 130,140 176,093
5,278 Conseco Incorporated 214,971 158,010
1,940 Countrywide Credit Industries Incorporated 69,752 73,478
2,851 Dun & Bradstreet Corporation 70,230 97,647
11,498 Federal Home Loan Mortgage Corporation 388,353 676,945
17,419 Federal National Mortgage Association 791,678 1,219,330
4,511 Fifth Third Bancorp 186,919 298,008
16,655 First Union Corporation 723,588 887,920
3,931 Firstar Corporation 363,512 329,221
9,573 Fleet Financial Group Incorporated 307,001 411,041
4,289 Franklin Resources Incorporated 228,957 136,444
945 Golden West Financial 69,707 88,771
1,735 H&R Block Incorporated 64,594 78,726
3,962 Hartford Financial Services Group 154,246 214,196
8,174 Household International Incorporated 261,925 332,069
3,598 Huntington Bancshares Incorporated 114,182 114,237
1,757 Jefferson Pilot Corporation 77,558 119,147
2,985 JP Morgan & Company Incorporated 308,111 332,641
7,730 KeyCorp 217,956 249,293
1,924 Lehman Brothers Holdings 106,363 101,972
1,672 Lincoln National Corporation 105,442 158,318
4,336 Marsh & McLennan Companies Incorporated 192,339 307,043
1,640 MBIA Incorporated 98,391 100,963
13,532 MBNA Corporation 218,381 328,151
4,423 Mellon Bank Corporation 202,825 299,105
2,702 Mercantile Bancorporation 150,173 123,279
</TABLE>
48
<PAGE>
PORTFOLIO OF INVESTMENTS - FEBRUARY 28, 1999 Index Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
5,950 Merrill Lynch & Company Incorporated $ 341,169 $ 456,663
1,807 MGIC Investment Corporation 85,310 61,551
1,544 Moore Corporation Limited 31,015 16,212
9,733 Morgan Stanley Dean Witter & Company 472,791 880,837
5,559 National City Corporation 341,414 388,435
1,838 Northern Trust Corporation 127,229 164,271
5,076 PNC Bank Corporation 218,253 264,269
1,199 Progressive Corporation 136,631 154,072
2,329 Provident Companies Incorporated 85,372 76,275
2,344 Providian Financial Corporation 59,972 239,381
3,739 Regions Financial Corporation 133,058 142,082
1,780 Republic New York Corporation 88,418 80,656
2,351 Safeco Corporation 106,178 94,481
2,844 SLM Holding Corporation 138,721 121,937
4,004 St. Paul Companies Incorporated 143,824 129,630
2,749 State Street Corporation 149,322 210,814
2,976 Summit Bancorp 148,262 114,948
5,346 SunTrust Banks Incorporated 334,549 363,194
4,531 Synovus Financial Corporation 99,219 107,894
2,421 Torchmark Corporation 70,561 80,498
2,064 Transamerica Corporation 97,649 149,769
12,269 U.S. Bancorporation 346,978 396,442
2,255 Union Planters Corporation 112,058 101,898
2,291 UNUM Corporation 92,578 102,522
3,452 Wachovia Corporation 238,951 293,636
10,003 Washington Mutual Incorporated 366,504 400,120
27,267 Wells Fargo & Company** 740,455 1,002,062
------------ --------------
$ 20,812,778 $ 27,483,839
FOOD & RELATED - 2.62%
4,139 Albertson's Incorporated $ 158,176 $ 235,923
4,599 American Stores Company 99,583 155,216
10,020 Archer-Daniels-Midland Company 194,991 151,553
4,826 Bestfoods 203,487 226,520
7,576 Campbell Soup Company 325,619 304,460
</TABLE>
49
<PAGE>
Index Allocation Fund PORTFOLIO OF INVESTMENTS - FEBRUARY 28, 1999
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
2,409 Darden Restaurants Incorporated $ 26,046 $ 52,998
2,631 General Mills Incorporated 173,723 212,289
630 Great Atlantic & Pacific Tea Company 17,614 19,884
6,087 H J Heinz Company 267,443 331,361
2,456 Hershey Foods Corporation 128,178 152,885
6,876 Kellogg Company 277,656 254,412
4,338 Kroger Company+ 126,978 280,614
11,380 McDonald's Corporation 554,662 967,300
2,256 Quaker Oats Company 98,784 123,234
8,224 Safeway Incorporated+ 452,277 474,936
15,466 Sara Lee Corporation 343,762 420,482
2,161 Wendy's International Incorporated 48,441 51,729
2,437 Winn-Dixie Stores Incorporated 90,058 106,770
------------ --------------
$ 3,587,478 $ 4,522,566
GENERAL BUSINESS & RELATED - 2.27%
3,343 Allegheny Teledyne Incorporated $ 86,176 $ 68,949
1,172 American Greetings Corporation Class A 38,065 27,762
10,196 Automatic Data Processing 248,007 405,291
14,411 Cendant Corporation+ 390,629 238,682
4,458 Clear Channel Communications Incorporated+ 179,543 267,480
6,279 Comcast Corporation Class A 159,626 445,417
1,320 Deluxe Corporation 43,072 44,715
1,557 Dow Jones & Company Incorporated 67,070 73,179
2,443 Equifax Incorporated 78,500 92,223
2,532 FDX Corporation+ 141,918 241,806
7,507 First Data Corporation 272,925 287,143
4,757 Gannett Company Incorporated 230,750 302,070
1,302 Knight-Ridder Incorporated 61,046 65,344
1,881 Loews Corporation 181,645 147,071
1,595 McGraw-Hill Incorporated 93,233 174,553
932 Meredith Corporation 25,752 31,455
2,016 Morton International Incorporated 64,024 72,828
690 National Service Industries Incorporated 28,110 22,166
</TABLE>
50
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PORTFOLIO OF INVESTMENTS - FEBRUARY 28, 1999 Index Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
3,100 New York Times Company Class A $ 77,300 $ 96,100
4,102 Pioneer Hi Bred International Incorporated 121,478 96,140
2,330 RR Donnelley & Sons Company 85,448 79,803
4,669 Service Corporation International 145,554 71,786
7,929 Staples Incorporated+ 152,604 233,162
2,721 Textron Incorporated 164,665 212,238
1,387 Times Mirror Company Class A 70,123 77,412
1,967 Tribune Company 91,111 130,437
------------ --------------
$ 3,298,374 $ 4,005,212
HEALTHCARE - 2.54%
22,260 American Home Products Corporation $ 793,891 $ 1,324,470
4,276 Amgen Incorporated+ 239,130 533,966
892 C R Bard Incorporated 27,975 50,287
4,400 Cardinal Health Incorporated 243,281 317,625
10,877 Columbia HCA Healthcare Corporation 363,239 194,426
1,842 HCR Manor Care+ 56,992 41,215
7,093 Healthsouth Corporation+ 175,158 82,456
5,400 IMS Health Incorporated 100,421 191,700
24,810 Schering-Plough Corporation 612,708 1,387,809
5,229 Tenet Healthcare Corporation+ 148,169 102,946
3,185 United Healthcare Corporation 165,525 157,060
------------ --------------
$ 2,926,489 $ 4,383,960
MANUFACTURING PROCESSING - 7.71%
521 Aeroquip-Vickers Incorporated $ 25,650 $ 29,502
3,086 AES Corporation+ 112,739 114,761
3,878 Air Products & Chemicals Incorporated 143,375 124,581
3,847 Alcan Aluminum Limited 126,240 93,530
6,072 Alcoa Incorporated 208,335 245,916
667 Asarco Incorporated 19,437 9,421
1,918 Avery Dennison Corporation 76,526 102,973
1,237 B. F. Goodrich Company 51,186 42,213
518 Ball Corporation 15,352 21,691
6,280 Barrick Gold Corporation 146,081 111,078
</TABLE>
51
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- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
3,964 Battle Mountain Gold Company $ 26,603 $ 13,379
864 Bemis Company Incorporated 34,212 29,430
2,245 Bethlehem Steel Corporation+ 25,675 19,784
6,604 Boston Scientific Corporation+ 188,816 175,006
10,100 Carnival Corporation Class A 437,479 449,450
2,116 Crown Cork & Seal Company 104,554 58,719
1,571 Cyprus Amax Minerals 36,585 17,674
2,216 Danaher Corporation 99,144 106,922
3,760 Dow Chemical Company 321,821 369,890
18,986 DuPont (E. I.) de Nemours and Company 1,034,670 974,219
5,454 Eastman Kodak Company 381,000 360,987
1,245 Eaton Corporation 98,951 86,372
2,146 Ecolab Incorporated 47,611 85,572
2,472 Engelhard Corporation 53,225 44,033
552 FMC Corporation+ 43,352 28,256
3,702 Fort James Corporation 151,880 110,597
2,936 Fortune Brands Incorporated 101,981 88,447
983 Great Lakes Chemical Corporation 44,795 38,276
1,755 Hercules Incorporated 83,960 48,592
4,035 Homestake Mining Company 50,320 37,072
2,084 Honeywell Incorporated 141,398 145,750
2,389 IKON Office Solutions 76,680 33,745
2,854 Inco Limited 79,367 36,032
5,184 International Paper Company 243,347 217,728
1,718 ITT Industries Incorporated 47,452 67,109
22,701 Johnson & Johnson 1,316,448 1,938,098
1,400 Johnson Controls Incorporated 61,140 86,100
9,138 Kimberly-Clark Corporation 435,274 431,771
988 McDermott International Incorporated 29,060 19,698
1,702 Mead Corporation 52,823 51,805
652 Milacron Incorporated 15,601 11,614
6,820 Minnesota Mining & Manufacturing Company 584,622 505,106
10,536 Monsanto Company 408,408 480,047
129 Nacco Industries Incorporated Class A 8,392 11,352
1,079 Nalco Chemical Company 41,057 30,347
</TABLE>
52
<PAGE>
PORTFOLIO OF INVESTMENTS - FEBRUARY 28, 1999 Index Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
2,885 Newmont Mining Corporation $ 104,490 $ 49,766
1,140 Northrop Grumman Corporation+ 108,676 71,036
1,455 Nucor Corporation 76,846 64,838
2,657 Owens-Illinois Incorporated+ 98,131 63,602
2,065 Pall Corporation 48,314 43,752
967 Phelps Dodge Corporation 67,876 46,900
4,269 Placer Dome Incorporated 81,948 46,692
3,033 PPG Industries Incorporated 167,414 157,906
2,716 Praxair Incorporated 127,121 94,890
22,406 Procter & Gamble Company 1,474,425 2,005,337
1,392 Raychem Corporation 56,658 31,755
1,140 Reynolds Metals Company 72,857 48,735
2,852 Rohm & Haas Company 77,858 89,125
1,393 Sealed Air Corporation+ 81,242 70,695
4,079 Sempra Energy 102,942 85,659
2,952 Sherwin Williams Company 83,218 71,033
917 Temple-Inland Incorporated 53,374 54,963
2,901 Tenneco Incorporated 125,868 86,849
10,767 Unilever NV 546,874 779,935
1,147 Union Camp Corporation 62,210 76,706
2,294 Union Carbide Corporation 103,286 100,936
1,471 USX-US Steel Group 48,308 37,235
13,859 Warner Lambert Company 524,884 957,137
1,758 Westvaco Corporation 54,143 39,335
1,627 Worthington Industries Incorporated 30,881 20,643
------------ --------------
$ 12,212,468 $ 13,300,105
MEDICAL EQUIPMENT & SUPPLIES - 0.97%
25,656 Abbott Laboratories $ 783,078 $ 1,191,401
4,876 Baxter International Incorporated 239,854 343,149
4,192 Becton Dickinson & Company 96,450 140,432
------------ --------------
$ 1,119,382 $ 1,674,982
</TABLE>
53
<PAGE>
Index Allocation Fund PORTFOLIO OF INVESTMENTS - FEBRUARY 28, 1999
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
PHARMACEUTICALS - 6.09%
16,794 Bristol-Myers Squibb Company $ 1,271,770 $ 2,114,994
18,556 Lilly (Eli) & Company 947,179 1,757,021
40,126 Merck & Company Incorporated 1,853,540 3,280,301
21,926 Pfizer Incorporated 1,321,101 2,892,862
8,580 Pharmacia and Upjohn Incorporated 321,599 467,074
------------ --------------
$ 5,715,189 $ 10,512,252
RETAIL & RELATED - 4.45%
1,741 Circuit City Stores Incorporated $ 62,438 $ 94,449
1,904 Consolidated Stores Corporation+ 79,747 47,957
3,575 Costco Companies Incorporated+ 120,216 287,117
7,467 Dayton-Hudson Corporation 202,951 467,154
1,768 Dillards Incorporated Class A 58,550 43,979
3,492 Federated Department Stores Incorporated+ 134,098 132,914
9,756 Gap Incorporated 186,735 631,091
4,302 J C Penney Company Incorporated 239,111 155,410
8,365 K-Mart Corporation+ 107,905 146,388
3,876 Limited Incorporated 87,739 137,598
652 Longs Drug Stores Corporation 18,077 23,594
3,904 May Department Stores Company+ 192,661 231,312
9,865 Medtronic Incorporated 482,589 696,716
2,552 Nordstrom Incorporated 66,823 102,718
4,372 Rite Aid Corporation 115,335 180,892
6,437 Sears Roebuck & Company 319,752 261,503
5,434 TJX Companies Incorporated 72,685 155,209
4,433 Toys "R" Us Incorporated+ 140,039 62,615
37,994 Wal-Mart Stores Incorporated 1,332,537 3,281,732
16,812 Walgreen Company 217,744 537,984
------------ --------------
$ 4,237,732 $ 7,678,332
</TABLE>
54
<PAGE>
PORTFOLIO OF INVESTMENTS - FEBRUARY 28, 1999 Index Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
SHELTER & RELATED - 1.88%
732 Armstrong World Industries Incorporated $ 49,973 $ 36,005
941 Boise Cascade Corporation 33,618 29,230
1,046 Centex Corporation 26,564 38,506
1,588 Champion International Corporation 79,942 58,756
3,570 Coastal Corporation 91,383 114,240
1,128 Crane Company 27,881 30,950
5,566 Enron Corporation 237,223 361,790
4,183 Entergy Corporation 109,595 118,170
642 Fleetwood Enterprises Incorporated 21,436 20,825
1,459 Georgia-Pacific Corporation 87,623 106,872
24,847 Home Depot Incorporated 665,606 1,483,055
846 Kaufman & Broad Home Corporation 17,073 19,035
1,897 Louisiana-Pacific Corporation 44,531 34,857
5,930 Lowe's Company Incorporated 124,386 351,723
5,712 Masco Corporation 121,111 149,940
961 Owens Corning Fiberglass Corporation 37,291 30,572
472 Potlatch Corporation 21,490 16,373
704 Pulte Corporation 10,940 16,940
1,475 Stanley Works 55,651 35,861
3,394 Weyerhaeuser Company 170,970 189,216
------------ --------------
$ 2,034,287 $ 3,242,916
TELECOMMUNICATIONS - 7.16%
9,609 Airtouch Communications Incorporated+ $ 352,525 $ 875,020
30,477 American Telephone & Telegraph Corporation 1,408,339 2,502,924
3,688 Ascend Communication Incorporated+ 186,049 283,745
26,178 Bell Atlantic Corporation 973,909 1,503,599
2,877 General Instrument Corporation+ 56,361 84,152
22,210 Lucent Technologies Incorporated 875,657 2,255,703
30,930 MCI Worldcom Incorporated+ 1,063,502 2,551,725
10,211 Media One Group Incorporated+ 235,828 556,500
4,843 Nextel Communications Class A+ 161,959 145,593
1,247 Scientific-Atlanta Incorporated 24,333 40,450
</TABLE>
55
<PAGE>
Index Allocation Fund PORTFOLIO OF INVESTMENTS - FEBRUARY 28, 1999
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
7,266 Sprint Corporation (FON Group) $ 333,709 $ 623,514
6,979 Sprint Corporation (PCS Group)+ 103,694 223,328
3,313 Tellabs Incorporated+ 167,933 265,247
8,468 U.S. West Incorporated 317,837 451,450
------------ --------------
$ 6,261,635 $ 12,362,950
TRANSPORTATION - 0.88%
3,088 AMR Corporation+ $ 162,332 $ 171,191
7,959 Burlington Northern Santa Fe 239,157 263,642
3,697 CSX Corporation 186,186 145,107
2,836 Dana Corporation 111,505 107,059
2,452 Delta Air Lines Incorporated 116,934 149,112
5,526 Laidlaw Incorporated 72,609 42,481
6,375 Norfolk Southern Corporation 198,134 178,898
1,188 Ryder Systems Incorporated 37,607 32,076
5,672 Southwest Airlines Company 77,186 170,869
4,172 Union Pacific Corporation 247,628 195,563
1,409 US Air Group Incorporated+ 69,729 66,751
------------ --------------
$ 1,519,007 $ 1,522,749
UTILITIES - 5.08%
4,639 Alltel Corporation $ 179,010 $ 277,760
2,342 Ameren Corporation 92,790 87,386
3,268 American Electric Power Incorporated 142,930 136,031
2,556 Baltimore Gas & Electric Company 70,063 65,498
32,988 BellSouth Corporation 781,904 1,525,695
2,507 Carolina Power & Light Company 89,273 99,967
3,598 Central & South West Corporation 87,906 89,275
2,729 Cinergy Corporation 89,361 79,653
3,958 Consolidated Edison Incorporated 135,284 185,037
1,669 Consolidated Natural Gas Company 91,803 91,691
2,404 Detroit Energy Company 75,362 94,958
3,335 Dominion Resources Incorporated 127,480 128,814
6,085 Duke Energy Corporation 285,160 346,084
5,939 Edison International 138,763 151,445
</TABLE>
56
<PAGE>
PORTFOLIO OF INVESTMENTS - FEBRUARY 28, 1999 Index Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCKS (CONTINUED)
4,031 First Energy Corporation $ 100,716 $ 117,907
3,093 FPL Group Incorporated 148,706 159,096
2,925 Frontier Corporation 69,595 105,117
2,208 GPU Incorporated 79,252 88,044
16,331 GTE Corporation 755,020 1,059,474
3,177 Niagara Mohawk Power Corporation+ 38,137 46,464
788 NICOR Incorporated 29,199 30,092
2,633 Northern States Power Company 66,765 67,964
10,959 Northern Telecom Limited 482,374 636,307
530 Oneok Incorporated 17,592 14,277
5,002 PacifiCorp 107,370 89,723
3,798 PECO Energy Company 94,238 134,592
598 Peoples Energy Corporation 20,518 20,295
6,430 PG & E Corporation 166,020 202,545
2,607 PP & L Resources Incorporated 59,335 66,479
3,857 Public Services Enterprise Group 109,248 146,566
32,975 SBC Communications Incorporated 1,029,409 1,743,553
1,917 Sonat Incorporated 87,201 48,524
11,729 Southern Company 269,183 293,958
4,762 Texas Utilities Company 184,105 202,087
3,696 Unicom Corporation 97,873 131,439
------------ --------------
$ 6,398,945 $ 8,763,797
TOTAL COMMON STOCKS $121,510,719 $ 170,390,380
</TABLE>
57
<PAGE>
Index Allocation Fund PORTFOLIO OF INVESTMENTS - FEBRUARY 28, 1999
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
SHORT-TERM INSTRUMENTS - 1.46%
U.S. TREASURY BILLS - 1.46%
$ 1,559,000 U.S. Treasury Bill 4.31 %# 04/01/99 $ 1,553,090
979,000 U.S. Treasury Bill 4.52 # 05/13/99 969,983
--------------
TOTAL SHORT-TERM INSTRUMENTS $ 2,523,073
(Cost $2,523,331)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $124,034,050)* (Notes 1 and 3) 100.19% $ 172,913,453
Other Assets and Liabilities, Net (0.19) (326,938)
------ --------------
TOTAL NET ASSETS 100.00% $ 172,586,515
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
** SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $740,755.
+ NON-INCOME EARNING SECURITIES.
# YIELD TO MATURITY.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL
STATEMENT PURPOSES AND NET UNREALIZED APPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 55,836,537
Gross Unrealized Depreciation (6,957,134)
--------------
NET UNREALIZED APPRECIATION $ 48,879,403
--------------
--------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
58
<PAGE>
PORTFOLIO OF INVESTMENTS - FEBRUARY 28, 1999 U.S. Government Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
U.S. TREASURY SECURITIES - 19.04%
U.S. TREASURY BONDS - 19.04%
$ 1,700,000 U.S. Treasury Bonds 6.13 % 11/15/27 $ 1,778,353
1,800,000 U.S. Treasury Bonds 6.25 08/15/23 1,897,596
1,550,000 U.S. Treasury Bonds 6.50 11/15/26 1,696,770
1,500,000 U.S. Treasury Bonds 6.88 08/15/25 1,711,875
1,400,000 U.S. Treasury Bonds 7.63 11/15/22 1,713,474
1,400,000 U.S. Treasury Bonds 8.00 11/15/21 1,772,750
1,400,000 U.S. Treasury Bonds 8.13 05/15/21 1,790,250
1,350,000 U.S. Treasury Bonds 8.50 02/15/20 1,776,937
1,400,000 U.S. Treasury Bonds 8.75 08/15/20 1,890,434
1,300,000 U.S. Treasury Bonds 8.88 02/15/19 1,758,042
17,786,481
--------------
TOTAL U.S. TREASURY SECURITIES $ 17,786,481
(Cost $18,539,406)
SHORT-TERM INSTRUMENTS - 81.03%
U.S. TREASURY BILLS - 81.03%
$75,647,000 U.S. Treasury Bill 4.31 %# 04/01/99 $ 75,357,967
310,000 U.S. Treasury Bill 4.52 # 05/13/99 307,145
--------------
TOTAL SHORT-TERM INSTRUMENTS $ 75,665,112
(Cost $75,674,183)
</TABLE>
59
<PAGE>
U.S. Government Allocation Fund PORTFOLIO OF INVESTMENTS - FEBRUARY 28, 1999
- ------------------------------------------------------------------------
<TABLE>
<C> <S> <C> <C> <C> <C>
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $94,213,589)* (Notes 1 and 3) 100.07% $ 93,451,593
Other Assets and Liabilities, Net (0.07) (69,471 )
------ --------------
TOTAL NET ASSETS 100.00% $ 93,382,122
------ --------------
------ --------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
# YIELD TO MATURITY.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME AS FOR FINANCIAL
STATEMENT PURPOSES AND NET UNREALIZED DEPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $ 0
Gross Unrealized Depreciation (761,996)
--------------
NET UNREALIZED DEPRECIATION $ (761,996)
--------------
--------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
60
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES - FEBRUARY 28, 1999 Allocation Funds
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S.
ASSET INDEX GOVERNMENT
ALLOCATION ALLOCATION ALLOCATION
FUND FUND FUND
<S> <C> <C> <C>
ASSETS
INVESTMENTS:
In securities, at market value (see cost below) $1,772,005,947 $172,913,453 $ 93,451,593
Cash 5,757 4,856 4,389
RECEIVABLES:
Dividends and Interest 4,356,512 222,475 179,330
Fund shares sold 2,752,499 306,748 316,669
Organization expenses, net of amortization 1,022 0 2,805
Prepaid expenses 44,967 0 0
TOTAL ASSETS 1,779,166,704 173,447,532 93,954,786
LIABILITIES
Payables:
Distribution to shareholders 0 0 248,850
Fund shares redeemed 686,382 179,147 67,457
Due to distributor (Note 2) 1,093,413 355,095 8,210
Due to adviser (Note 2) 1,148,024 138,205 76,004
Other 205,830 188,570 172,143
TOTAL LIABILITIES 3,133,649 861,017 572,664
TOTAL NET ASSETS $1,776,033,055 $172,586,515 $ 93,382,122
NET ASSETS CONSIST OF:
Paid-in capital $1,310,242,279 $119,266,530 $116,217,383
Undistributed net investment income (loss) 3,116,526 (73,536) 0
Undistributed net realized gain (loss) on
investments 18,641,249 4,514,118 (22,073,265)
Net unrealized appreciation (depreciation) of
investments 444,033,001 48,879,403 (761,996)
TOTAL NET ASSETS $1,776,033,055 $172,586,515 $ 93,382,122
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE
PER SHARE
Net assets - Class A $1,362,966,040 $ 92,655,262 $ 74,727,700
Shares outstanding - Class A 53,143,536 4,865,671 5,029,449
Net asset value per share - Class A $ 25.65 $ 19.04 $ 14.86
Maximum offering price per share - Class A(1) $ 26.86 $ 19.94 $ 15.56
Net assets - Class B $ 402,990,599 $ 12,567,531 $ 18,654,422
Shares outstanding - Class B 25,918,699 533,664 1,725,074
Net asset value and offering price per share -
Class B $ 15.55 $ 23.55 $ 10.81
Net assets - Class C $ 10,076,416 $ 67,363,722 N/A
Shares outstanding - Class C 646,262 2,859,363 N/A
Net asset value and offering price per share -
Class C $ 15.59 $ 23.56 N/A
INVESTMENT AT COST (NOTE 3) $1,327,972,946 $124,034,050 $ 94,213,589
- -------------------------------------------------------------------------------------------------------
</TABLE>
(1) 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.
61
<PAGE>
Allocation Funds STATEMENTS OF OPERATIONS
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSET ALLOCATION FUND
-----------------------------
FOR THE
ELEVEN FOR THE
MONTHS ENDED YEAR ENDED
FEB. 28, MARCH 31,
1999 1998
<S> <C> <C>
INVESTMENT INCOME
Dividends $ 16,351,828 $ 12,275,848
Interest 22,227,037 40,153,342
TOTAL INVESTMENT INCOME 38,578,865 52,429,190
EXPENSES (NOTE 2)
Advisory fees 5,217,515 4,754,399
Administration fees 1,057,283 826,553
Shareholder servicing fees 4,529,595 4,016,149
Portfolio accounting fees 358,355 103,995
Transfer agency fees 2,114,566 1,874,203
Distribution fees 2,163,298 1,704,239
Organization costs 1,371 1,500
Legal and audit fees 110,720 89,661
Registration fees 126,021 119,062
Directors' fees 2,317 4,213
Shareholder reports 271,637 206,000
Other 72,531 50,992
TOTAL EXPENSES 16,025,209 13,750,966
Less:
Waived fees and reimbursed expenses (44,800) (7,060)
Net Expenses 15,980,409 13,743,906
NET INVESTMENT INCOME (LOSS) 22,598,456 38,685,284
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on sale of
investments 142,835,083 107,023,056
Net change in unrealized appreciation
(depreciation) of investments 44,504,574 266,073,223
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS 187,339,657 373,096,279
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $209,938,113 $411,781,563
- --------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
62
<PAGE>
STATEMENTS OF OPERATIONS Allocation Funds
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT
INDEX ALLOCATION FUND ALLOCATION FUND
--------------------------- -------------------------
FOR THE FOR THE FOR THE
ELEVEN THREE ELEVEN
MONTHS MONTHS MONTHS FOR THE
ENDED ENDED ENDED YEAR ENDED
FEB. 28, MARCH 31, FEB. 28, MARCH 31,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends $ 2,060,542 $ 490,640 $ 0 $ 0
Interest 79,573 53,339 4,613,424 5,944,916
TOTAL INVESTMENT INCOME 2,140,115 543,979 4,613,424 5,944,916
EXPENSES (NOTE 2)
Advisory fees 1,008,438 236,106 434,501 467,948
Administration fees 100,844 22,424 60,830 56,777
Shareholder servicing fees 152,329 31,681 260,700 280,721
Portfolio accounting fees 85,087 21,910 72,504 23,326
Transfer agency fees 201,687 47,221 121,661 131,004
Distribution fees 664,814 147,686 110,865 108,466
Organization costs 0 12,575 2,471 2,689
Legal and audit fees 32,749 7,801 28,340 44,184
Registration fees 31,981 11,343 24,779 41,535
Directors' fees 2,591 1,103 2,591 4,218
Shareholder reports 40,474 9,863 39,704 83,566
Other 27,281 3,326 14,615 11,732
TOTAL EXPENSES 2,348,275 553,039 1,173,561 1,256,166
Less:
Waived fees and reimbursed expenses (24,758) (15,653) (52,895) (108,847)
Net Expenses 2,323,517 537,386 1,120,666 1,147,319
NET INVESTMENT INCOME (LOSS) (183,402) 6,593 3,492,758 4,797,597
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on sale of
investments 8,684,372 (5,156) 508,359 1,537,644
Net change in unrealized appreciation
(depreciation) of investments 9,193,064 17,255,641 (588,263) 1,998,550
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS 17,877,436 17,250,485 (79,904) 3,536,194
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $17,694,034 $17,257,078 $3,412,854 $8,333,791
- ------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
63
<PAGE>
Allocation Funds STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSET ALLOCATION FUND
----------------------------------------------------
FOR THE ELEVEN FOR THE FOR THE SIX
MONTHS ENDED YEAR ENDED MONTHS ENDED
FEB. 28, 1999 MARCH 31, 1998 MARCH 31, 1997
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) $ 22,598,456 $ 38,685,284 $ 22,799,885
Net realized gain (loss) on sale of
investments 142,835,083 107,023,056 16,581,561
Net change in unrealized appreciation
(depreciation) of investments 44,504,574 266,073,223 16,935,058
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 209,938,113 411,781,563 56,316,504
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (17,033,688) (35,147,512) (21,499,154)
CLASS B (2,432,608) (3,537,772) (1,300,731)
CLASS C (15,634)(1) N/A N/A
From net realized gain on sale of
investments
CLASS A (114,145,484) (82,707,854) (77,923,468)
CLASS B (31,172,331) (13,021,038) (5,356,143)
CLASS C (540,952)(1) N/A N/A
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 101,471,242 124,090,392 43,986,740
Reinvestment of dividends - Class A 135,550,735 120,926,511 99,267,295
Cost of shares redeemed - Class A (216,463,258) (224,954,049) (113,370,104)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A 20,558,719 20,062,854 29,883,931
Proceeds from shares sold - Class B 141,646,232 147,505,581 28,861,527
Reinvestment of dividends - Class B 33,599,069 16,241,731 6,539,212
Cost of shares redeemed - Class B (47,391,618) (19,143,117) (5,436,423)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B 127,853,683 144,604,195 29,964,316
Proceeds from shares sold - Class C 10,142,395(1) N/A N/A
Reinvestment of dividends - Class C 527,615(1) N/A N/A
Cost of shares redeemed - Class C (555,033)(1) N/A N/A
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS C 10,114,977(1) N/A N/A
INCREASE (DECREASE) IN NET ASSETS 203,124,795 442,034,436 10,085,255
NET ASSETS:
Beginning net assets 1,572,908,260 1,130,873,824 1,120,788,569
ENDING NET ASSETS $1,776,033,055 $1,572,908,260 $1,130,873,824
ENDING BALANCE OF UNDISTRIBUTED NET
INVESTMENT INCOME $ 3,116,526 $ 0 $ 0
- -------------------------------------------------------------------------------------------------
</TABLE>
(1) THIS CLASS OF SHARES COMMENCED OPERATIONS ON APRIL 1, 1998.
(2) THIS CLASS OF SHARES COMMENCED OPERATIONS ON DECEMBER 15, 1997.
The accompanying notes are an integral part of these financial statements.
64
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS Allocation Funds
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT ALLOCATION
INDEX ALLOCATION FUND FUND
---------------------------------------------- -----------------------------
FOR THE FOR THE FOR THE
ELEVEN THREE FOR THE ELEVEN FOR THE
MONTHS ENDED MONTHS ENDED YEAR ENDED MONTHS ENDED YEAR ENDED
FEB. 28, MARCH 31, DEC. 31, FEB. 28, MARCH 31,
1999 1998 1997 1999 1998
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) $ (183,402) $ 6,593 $ 1,656,589 $ 3,492,758 $ 4,797,597
Net realized gain (loss) on sale of
investments 8,684,372 (5,156) 12,775,977 508,359 1,537,644
Net change in unrealized appreciation
(depreciation) of investments 9,193,064 17,255,641 8,758,372 (588,263) 1,998,550
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 17,694,034 17,257,078 23,190,938 3,412,854 8,333,791
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (148,741) (63,008) (1,312,200) (2,966,379) (4,378,902)
CLASS B 0 0 0(2) (526,379) (418,695)
CLASS C 0 0 (344,406) N/A N/A
From net realized gain on sale of
investments
CLASS A (3,122,516) 0 (8,070,952) 0 0
CLASS B (343,110) 0 0(2) 0 0
CLASS C (2,072,172) 0 (4,429,345) N/A N/A
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 10,094,262 3,920,461 13,097,927 8,860,280 12,501,406
Reinvestment of dividends - Class A 2,652,183 141,708 7,755,142 2,744,535 3,688,770
Cost of shares redeemed - Class A (20,080,414) (2,572,600) (7,305,205) (19,793,519) (23,411,657)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A (7,333,969) 1,489,569 13,547,864 (8,188,704) (7,221,481)
Proceeds from shares sold - Class B 9,165,489 2,711,120 349,731(2) 7,538,052 8,698,249
Reinvestment of dividends - Class B 325,031 0 0(2) 458,923 316,321
Cost of shares redeemed - Class B (1,079,572) 0 0(2) (3,448,416) (2,377,863)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B 8,410,948 2,711,120 349,731(2) 4,548,559 6,636,707
Proceeds from shares sold - Class C 19,392,127 5,805,673 20,805,099 N/A N/A
Reinvestment of dividends - Class C 1,486,208 10,699 3,210,184 N/A N/A
Cost of shares redeemed - Class C (13,595,784) (1,944,342) (5,001,988) N/A N/A
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS C 7,282,551 3,872,030 19,013,295 N/A N/A
INCREASE (DECREASE) IN NET ASSETS 20,367,025 25,266,789 41,944,925 (3,720,049) 2,951,420
NET ASSETS:
Beginning net assets 152,219,490 126,952,701 85,007,776 97,102,171 94,150,751
ENDING NET ASSETS $172,586,515 $152,219,490 $126,952,701 $ 93,382,122 $ 97,102,171
ENDING BALANCE OF UNDISTRIBUTED NET
INVESTMENT INCOME $ (388,558) $ (56,415) $ 0 $ 0 $ 0
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
FOR THE SIX
MONTHS ENDED
MARCH 31,
1997
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) $ 2,874,874
Net realized gain (loss) on sale of
investments 1,030,525
Net change in unrealized appreciation
(depreciation) of investments (2,042,135)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 1,863,264
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (2,697,855)
CLASS B (177,019)
CLASS C N/A
From net realized gain on sale of
investments
CLASS A 0
CLASS B 0
CLASS C N/A
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 3,383,948
Reinvestment of dividends - Class A 2,218,226
Cost of shares redeemed - Class A (16,500,755)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A (10,898,581)
Proceeds from shares sold - Class B 1,811,816
Reinvestment of dividends - Class B 128,252
Cost of shares redeemed - Class B (1,026,305)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B 913,763
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
INCREASE (DECREASE) IN NET ASSETS (10,996,428)
NET ASSETS:
Beginning net assets 105,147,179
ENDING NET ASSETS $ 94,150,751
ENDING BALANCE OF UNDISTRIBUTED NET
INVESTMENT INCOME $ 0
- ---------------------------------------------------------------------
</TABLE>
(1) THIS CLASS OF SHARES COMMENCED OPERATIONS ON APRIL 1, 1998.
(2) THIS CLASS OF SHARES COMMENCED OPERATIONS ON DECEMBER 15, 1997.
The accompanying notes are an integral part of these financial statements.
65
<PAGE>
Allocation Funds FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
ASSET ALLOCATION FUND
CLASS A
----------------------------------------------
ELEVEN
MONTHS NINE
ENDED SIX MONTHS MONTHS
FEBRUARY YEAR ENDED ENDED ENDED
28, MARCH 31, MARCH 31, SEPT. 30,
1999 (1) 1998 1997 (2) 1996 (3)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $24.99 $20.30 $21.24 $20.74
---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(loss) 0.38 0.69 0.41 0.57
Net realized and unrealized gain
(loss)
on investments 2.92 6.37 0.65 0.50
---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 3.30 7.06 1.06 1.07
LESS DISTRIBUTIONS:
Dividends from net investment income (0.33) (0.69) (0.41) (0.57)
Distributions from net realized gain (2.31) (1.68) (1.59) 0.00
---------- ---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (2.64) (2.37) (2.00) (0.57)
---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $25.65 $24.99 $20.30 $21.24
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
TOTAL RETURN (NOT ANNUALIZED)* 13.69% 36.08% 4.94% 5.14%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $1,362,966 $1,305,848 $1,041,622 $1,057,346
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to average net
assets 0.92% 0.95%(4) 0.92%(4) 0.90%(4)
Ratio of net investment income to
average
net assets 1.65% 2.99%(4) 3.91%(4) 3.53%(4)
Portfolio turnover 31% 51%(4) 5%(4) 1%(5)
- ----------------------------------------------------------------------------------------
Ratio of expenses to average net assets
prior to waived fees and reimbursed
expenses N/A N/A N/A N/A
Ratio of net investment income to
average net assets prior to waived
fees and reimbursed expenses N/A N/A N/A N/A
- ----------------------------------------------------------------------------------------
</TABLE>
* TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
(1) THE FUND CHANGED ITS FISCAL YEAR-END FROM MARCH 31 TO FEBRUARY 28.
(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 MARCH 31.
(4) THIS RATIO INCLUDES ACTIVITY OF THE MASTER PORTFOLIO PRIOR TO DECEMBER
15, 1997.
(5) THE PORTFOLIO TURNOVER FOR THE ASSET ALLOCATION MASTER PORTFOLIO FROM
ITS INCEPTION ON APRIL 28, 1996 TO SEPTEMBER 30, 1996, WAS 28%. THE
INFORMATION SHOWN REFLECTS THE STAND-ALONE PERIOD ONLY.
The accompanying notes are an integral part of these financial statements.
66
<PAGE>
FINANCIAL HIGHLIGHTS Allocation Funds
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
ASSET ALLOCATION FUND (CONT.)
CLASS B
----------------------------------
ELEVEN
CLASS A (CONT.) MONTHS
---------------------- ENDED SIX MONTHS
YEAR ENDED YEAR ENDED FEBRUARY YEAR ENDED ENDED
DEC. 31, DEC. 31, 28, MARCH 31, MARCH 31,
1995 1994 1999 (1) 1998 1997 (2)
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $16.73 $18.80 $15.16 $12.29 $12.84
---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment
income(loss) 0.74 0.77 0.13 0.29 0.19
Net realized and
unrealized gain (loss)
on investments 4.07 (1.31) 1.77 3.89 0.41
---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT
OPERATIONS 4.81 (0.54) 1.90 4.18 0.60
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.74) (0.77) (0.11) (0.29) (0.19)
Distributions from net
realized gain (0.06) (0.76) (1.40) (1.02) (0.96)
---------- ---------- ---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.80) (1.53) (1.51) (1.31) (1.15)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD $20.74 $16.73 $15.55 $15.16 $12.29
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
TOTAL RETURN (NOT
ANNUALIZED)* 29.18% (2.82)% 12.98% 35.16% 4.62%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $1,077,935 $896,943 $402,991 $267,060 $89,252
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 0.84% 0.84% 1.62% 1.60%(4) 1.53%(4)
Ratio of net investment
income to average
net assets 3.81% 4.30% 0.91% 2.15%(4) 3.30%(4)
Portfolio turnover 15% 49% 31% 51%(4) 5%(4)
- ----------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses N/A N/A 1.63% N/A 1.58%(4)
Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses N/A N/A 0.90 N/A 3.25%(4)
- ----------------------------------------------------------------------------------------
</TABLE>
* TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
(1) THE FUND CHANGED ITS FISCAL YEAR-END FROM MARCH 31 TO FEBRUARY 28.
(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 MARCH 31.
(4) THIS RATIO INCLUDES ACTIVITY OF THE MASTER PORTFOLIO PRIOR TO DECEMBER
15, 1997.
(5) THE PORTFOLIO TURNOVER FOR THE ASSET ALLOCATION MASTER PORTFOLIO FROM
ITS INCEPTION ON APRIL 28, 1996 TO SEPTEMBER 30, 1996, WAS 28%. THE
INFORMATION SHOWN REFLECTS THE STAND-ALONE PERIOD ONLY.
The accompanying notes are an integral part of these financial statements.
67
<PAGE>
Allocation Funds FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
ASSET ALLOCATION FUND (CONT.)
CLASS C
CLASS B (CONT.) ----------
---------------------- ELEVEN
NINE MONTHS
MONTHS ENDED
ENDED YEAR ENDED FEBRUARY
SEPT. 30, DEC. 31, 28,
1996 (2) 1995 (3) 1999 (4)
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $12.50 $10.00 $15.16
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(loss) 0.28 0.22 0.08
Net realized and unrealized gain (loss)
on investments 0.34 2.53 1.82
---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 0.62 2.75 1.90
LESS DISTRIBUTIONS:
Dividends from net investment income (0.28) (0.22) (0.07)
Distributions from net realized gain 0.00 (0.03) (1.40)
---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.28) (0.25) (1.47)
---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $12.84 $12.50 $15.59
---------- ---------- ----------
---------- ---------- ----------
TOTAL RETURN (NOT ANNUALIZED)* 4.96% 27.72% 12.97%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $63,443 $26,271 $10,076
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 1.14%(6) 1.53% 1.64%
Ratio of net investment income to average
net assets 3.37%(6) 2.71% 0.69%
Portfolio turnover 1%(7) 15% 31%
- -----------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 1.56 (6) 1.76% 1.85%
Ratio of net investment income to average net assets prior
to waived fees and reimbursed expenses 2.95 (6) 2.48% 0.48%
- -----------------------------------------------------------------------------------------------
</TABLE>
* TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
(1) THE FUND CHANGED ITS FISCAL YEAR-END FROM MARCH 31 TO FEBRUARY 28.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO SEPTEMBER 30.
(3) THIS CLASS OF SHARES COMMENCED OPERATIONS ON JANUARY 1, 1995.
(4) THIS CLASS OF SHARES COMMENCED OPERATIONS ON APRIL 1, 1998.
(5) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO MARCH 31.
(6) THIS RATIO INCLUDES ACTIVITY OF THE MASTER PORTFOLIO PRIOR TO DECEMBER
15, 1997.
(7) THE PORTFOLIO TURNOVER FOR THE ASSET ALLOCATION MASTER PORTFOLIO FROM
ITS INCEPTION ON APRIL 28, 1996 TO SEPTEMBER 30, 1996, WAS 28%. THE
INFORMATION SHOWN REFLECTS THE STAND-ALONE PERIOD ONLY.
The accompanying notes are an integral part of these financial statements.
68
<PAGE>
FINANCIAL HIGHLIGHTS Allocation Funds
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
INDEX ALLOCATION FUND
CLASS A
----------------------------------------------------------------------
ELEVEN
MONTHS THREE
ENDED MONTHS
FEBRUARY ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
28, MARCH 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1999 (1) 1998 (5) 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $17.55 $15.51 $13.99 $13.76 $10.67 $11.90
---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment
income(loss) 0.03 0.01 0.28 0.29 0.28 0.31
Net realized and
unrealized gain (loss)
on investments 2.14 2.04 3.23 2.02 3.42 (0.39)
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT
OPERATIONS 2.17 2.05 3.51 2.31 3.70 (0.08)
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.03) (0.01) (0.28) (0.29) (0.28) (0.31)
Distributions from net
realized gain (0.65) 0.00 (1.71) (1.79) (0.33) (0.84)
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.68) (0.01) (1.99) (2.08) (0.61) (1.15)
---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD $19.04 $17.55 $15.51 $13.99 $13.76 $10.67
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
TOTAL RETURN (NOT
ANNUALIZED)* 12.60% 13.23% 25.18% 17.04% 34.71% (0.68)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $92,655 $92,733 $80,512 $60,353 $52,007 $40,308
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 1.29% 1.31% 1.26% 1.31% 1.30% 1.30%
Ratio of net investment
income to average
net assets 0.19% 0.30% 1.82% 2.06% 2.07% 2.41%
Portfolio turnover 12% 0% 80% 67% 47% 50%
- ----------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses N/A 1.32% 1.29% 1.44% 1.35% 1.38%
Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses N/A 0.29% 1.79% 1.93% 2.02% 2.33%
- ----------------------------------------------------------------------------------------------------
</TABLE>
* TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
(1) THE FUND CHANGED ITS FISCAL YEAR-END FROM MARCH 31 TO FEBRUARY 28.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO SEPTEMBER 30.
(3) THIS CLASS OF SHARES COMMENCED OPERATIONS ON JANUARY 1, 1995.
(4) THIS CLASS OF SHARES COMMENCED OPERATIONS ON APRIL 1, 1998.
(5) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO MARCH 31.
(6) THIS RATIO INCLUDES ACTIVITY OF THE MASTER PORTFOLIO PRIOR TO DECEMBER
15, 1997.
(7) THE PORTFOLIO TURNOVER FOR THE ASSET ALLOCATION MASTER PORTFOLIO FROM
ITS INCEPTION ON APRIL 28, 1996 TO SEPTEMBER 30, 1996, WAS 28%. THE
INFORMATION SHOWN REFLECTS THE STAND-ALONE PERIOD ONLY.
The accompanying notes are an integral part of these financial statements.
69
<PAGE>
Allocation Funds FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
INDEX ALLOCATION FUND (CONT.)
CLASS B
----------------------------------
ELEVEN
MONTHS THREE
ENDED MONTHS PERIOD
FEBRUARY ENDED ENDED
28, MARCH 31, DEC. 31,
1999 (2) 1998 (3) 1997 (4)
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $21.81 $19.31 $18.99
---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(loss) (0.07) (0.01) 0.00
Net realized and unrealized gain (loss)
on investments 2.61 2.51 0.32
---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 2.54 2.50 0.32
LESS DISTRIBUTIONS:
Dividends from net investment income 0.00 0.00 0.00
Distributions from net realized gain (0.80) 0.00 0.00
---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.80) 0.00 0.00
---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $23.55 $21.81 $19.31
---------- ---------- ----------
---------- ---------- ----------
TOTAL RETURN (NOT ANNUALIZED)* 11.88% 12.95% 1.69%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $12,568 $3,322 $356
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 2.04% 2.06% 2.05%
Ratio of net investment income to average
net assets (0.57)% (0.43)% (0.17)%
Portfolio turnover 12% 0% 80%
- -----------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived
fees and reimbursed expenses 2.26% 4.03% 15.17%
Ratio of net investment income to average net assets prior
to waived fees and reimbursed expenses (0.79)% (2.40)% (13.29)%
- -----------------------------------------------------------------------------------------------
</TABLE>
* TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
(1) THIS CLASS OF SHARES COMMENCED OPERATIONS AS CLASS D SHARES ON JULY 1,
1993. THESE SHARES WERE RENAMED AS CLASS C SHARES IN CONJUNCTION WITH
THE CONSOLIDATION OF OVERLAND EXPRESS FUNDS, INC. AND STAGECOACH
FUNDS, INC. ON DECEMBER 15, 1997.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM MARCH 31 TO FEBRUARY 28.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO MARCH 31.
(4) THIS CLASS OF SHARES COMMENCED OPERATIONS ON DECEMBER 15, 1997.
The accompanying notes are an integral part of these financial statements.
70
<PAGE>
FINANCIAL HIGHLIGHTS Allocation Funds
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
INDEX ALLOCATION FUND (CONT.)
CLASS C (1)
----------------------------------------------------------------------
ELEVEN
MONTHS THREE
ENDED MONTHS
FEBRUARY ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
28, MARCH 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1999 (2) 1998 (3) 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $21.82 $19.32 $17.42 $17.10 $13.26 $14.75
---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment
income(loss) (0.10) (0.02) 0.20 0.22 0.20 0.25
Net realized and
unrealized gain (loss)
on investments 2.64 2.52 4.00 2.54 4.24 (0.45)
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT
OPERATIONS 2.54 2.50 4.20 2.76 4.44 (0.20)
LESS DISTRIBUTIONS:
Dividends from net
investment income 0.00 0.00 (0.20) (0.22) (0.20) (0.25)
Distributions from net
realized gain (0.80) 0.00 (2.10) (2.22) (0.40) (1.04)
---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.80) 0.00 (2.30) (2.44) (0.60) (1.29)
---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD $23.56 $21.82 $19.32 $17.42 $17.10 $13.26
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
TOTAL RETURN (NOT
ANNUALIZED)* 11.88% 13.00% 24.07% 16.37% 33.72% (1.38)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $67,364 $56,164 $46,084 $24,655 $16,075 $9,798
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 2.05% 2.05% 2.02% 2.05% 2.05% 2.01%
Ratio of net investment
income to average
net assets (0.56)% (0.44)% 1.00% 1.35% 1.30% 1.75%
Portfolio turnover 12% 0% 80% 67% 47% 50%
- ----------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 2.06% 2.09% 2.05% 2.20% 2.17% 2.20%
Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses (0.57)% (0.48)% 0.97% 1.20% 1.18% 1.56%
- ----------------------------------------------------------------------------------------------------
</TABLE>
* TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
(1) THIS CLASS OF SHARES COMMENCED OPERATIONS AS CLASS D SHARES ON JULY 1,
1993. THESE SHARES WERE RENAMED AS CLASS C SHARES IN CONJUNCTION WITH
THE CONSOLIDATION OF OVERLAND EXPRESS FUNDS, INC. AND STAGECOACH
FUNDS, INC. ON DECEMBER 15, 1997.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM MARCH 31 TO FEBRUARY 28.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO MARCH 31.
(4) THIS CLASS OF SHARES COMMENCED OPERATIONS ON DECEMBER 15, 1997.
The accompanying notes are an integral part of these financial statements.
71
<PAGE>
Allocation Funds FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
U.S. GOVERNMENT ALLOCATION FUND
CLASS A
----------------------------------------------
ELEVEN
MONTHS NINE
ENDED SIX MONTHS MONTHS
FEBRUARY YEAR ENDED ENDED ENDED
28, MARCH 31, MARCH 31, SEPT. 30,
1999 (1) 1998 1997 (2) 1996 (3)
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $14.87 $14.32 $14.48 $14.98
---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(loss) 0.57 0.77 0.42 0.59
Net realized and unrealized gain (loss)
on investments (0.01) 0.55 (0.16) (0.50)
---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS 0.56 1.32 0.26 0.09
LESS DISTRIBUTIONS:
Dividends from net investment income (0.57) (0.77) (0.42) (0.59)
Distributions from net realized gain 0.00 0.00 0.00 0.00
---------- ---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.57) (0.77) (0.42) (0.59)
---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $14.86 $14.87 $14.32 $14.48
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
TOTAL RETURN (NOT ANNUALIZED)* 3.78% 9.36% 1.75% 0.69%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $74,728 $82,958 $86,930 $98,741
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 1.17% 1.16%(5) 1.00%(5) 1.12%(5)
Ratio of net investment income to average
net assets 4.15% 5.21%(5) 5.70%(5) 5.45%(5)
Portfolio turnover 152% 62%(5) 113%(5) 31%(6)
- -----------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior
to waived fees and reimbursed expenses 1.22% 1.26%(5) 1.31%(5) 1.20%(5)
Ratio of net investment income to average net
assets prior to waived fees and reimbursed
expenses 4.10% 5.11%(5) 5.39%(5) 5.37%(5)
- -----------------------------------------------------------------------------------------------
</TABLE>
* TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
(1) THE FUND CHANGED ITS FISCAL YEAR-END FROM MARCH 31 TO FEBRUARY 28.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO SEPTEMBER 30.
(4) THIS CLASS OF SHARES COMMENCED OPERATIONS ON JANUARY 1, 1995.
(5) THIS RATIO INCLUDES ACTIVITY OF THE MASTER PORTFOLIO PRIOR TO DECEMBER
15, 1997.
(6) THE PORTFOLIO TURNOVER FOR THE U.S. GOVERNMENT ALLOCATION MASTER
PORTFOLIO FROM ITS INCEPTION ON APRIL 28, 1996 TO SEPTEMBER 30, 1996,
WAS 87%. THE INFORMATION SHOWN REFLECTS THE STAND-ALONE PERIOD ONLY.
The accompanying notes are an integral part of these financial statements.
72
<PAGE>
FINANCIAL HIGHLIGHTS Allocation Funds
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
U.S. GOVERNMENT ALLOCATION FUND (CONT.)
CLASS B
----------------------------------------------------------
ELEVEN
CLASS A (CONT.) MONTHS NINE
---------------------- ENDED SIX MONTHS MONTHS
YEAR ENDED YEAR ENDED FEBRUARY YEAR ENDED ENDED ENDED YEAR ENDED
DEC. 31, DEC. 31, 28, MARCH 31, MARCH 31, SEPT. 30, DEC. 31,
1995 1994 1999 (1) 1998 1997 (2) 1996 (3) 1995 (4)
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $13.76 $15.71 $10.82 $10.42 $10.54 $10.91 $10.00
---------- ---------- ---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment
income(loss) 0.79 0.87 0.34 0.49 0.27 0.36 0.49
Net realized and
unrealized gain (loss)
on investments 1.22 (1.95) (0.01) 0.40 (0.12) (0.37) 0.91
---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT
OPERATIONS 2.01 (1.08) 0.33 0.89 0.15 (0.01) 1.40
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.79) (0.87) (0.34) (0.49) (0.27) (0.36) (0.49)
Distributions from net
realized gain 0.00 0.00 0.00 0.00 0.00 0.00 0.00
---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL FROM DISTRIBUTIONS (0.79) (0.87) (0.34) (0.49) (0.27) (0.36) (0.49)
---------- ---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF
PERIOD $14.98 $13.76 $10.81 $10.82 $10.42 $10.54 $10.91
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
TOTAL RETURN (NOT
ANNUALIZED)* 14.91% (6.99)% 3.12% 8.64% 1.42% 0.11% 14.11%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $135,577 $140,066 $18,654 $14,144 $7,221 $6,406 $4,077
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 1.04% 1.01% 1.84% 1.82%(5) 1.61%(5) 1.92%(5) 1.65%
Ratio of net investment
income to average
net assets 5.41% 5.94% 3.41% 4.40%(5) 5.12%(5) 4.60%(5) 4.31%
Portfolio turnover 292% 112% 152% 62%(5) 113%(5) 31%(6) 292%
- ----------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 1.07% 1.08% 1.95% 2.08%(5) 2.28%(5) 2.21%(5) 2.36%
Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses 5.38% 5.87% 3.30% 4.14%(5) 4.45%(5) 4.31%(5) 3.60%
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
* TOTAL RETURNS DO NOT INCLUDE ANY SALES CHARGES.
(1) THE FUND CHANGED ITS FISCAL YEAR-END FROM MARCH 31 TO FEBRUARY 28.
(2) THE FUND CHANGED ITS FISCAL YEAR-END FROM SEPTEMBER 30 TO MARCH 31.
(3) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO SEPTEMBER 30.
(4) THIS CLASS OF SHARES COMMENCED OPERATIONS ON JANUARY 1, 1995.
(5) THIS RATIO INCLUDES ACTIVITY OF THE MASTER PORTFOLIO PRIOR TO DECEMBER
15, 1997.
(6) THE PORTFOLIO TURNOVER FOR THE U.S. GOVERNMENT ALLOCATION MASTER
PORTFOLIO FROM ITS INCEPTION ON APRIL 28, 1996 TO SEPTEMBER 30, 1996,
WAS 87%. THE INFORMATION SHOWN REFLECTS THE STAND-ALONE PERIOD ONLY.
The accompanying notes are an integral part of these financial statements.
73
<PAGE>
Allocation Funds 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-one separate series. These financial
statements represent the Asset Allocation, Index Allocation and U.S. Government
Allocation Funds (each, a "Fund", collectively, the "Funds"), each a diversified
series of the Company.
Effective at the close of business on December 12, 1997, the Funds of Overland
Express, Inc. were consolidated into the Company in a tax-free exchange for
shares of designated classes of the corresponding Stagecoach fund. Also, at the
close of business on December 12, 1997, funds structured as a "feeder" fund in a
"master-feeder" structure were restructured to invest directly in a portfolio of
securities, rather than to invest in a portfolio of securities through a
"master" portfolio. Effective on September 6, 1996 the Pacifica Funds Trust was
consolidated into the Company in a tax-free exchange for shares of designated
classes of the corresponding Stagecoach fund.
Each Fund offers Class A and Class B shares. The Asset Allocation and Index
Allocation Funds also offer Class C shares. The separate classes of shares
differ principally in the applicable sales charges, distribution fees and
shareholder servicing fees. Shareholders of each class also bear certain
expenses that pertain to that particular class. All shareholders bear the common
expenses of the Fund and earn income from the portfolio pro rata based on the
average daily net assets of each class, without distinction between share
classes. Dividends are determined separately for each class based on income and
expenses allocable to each class. Realized gains are allocated to each class pro
rata based on the net assets of each class on the date of distribution. No class
has preferential dividend rights. Differences in per share dividend rates
generally result from the relative weightings of pro rata income and realized
gain and loss allocations and from differences in separate class expenses,
including distribution and shareholder servicing 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
74
<PAGE>
NOTES TO FINANCIAL STATEMENTS Allocation Funds
- ------------------------------------------------------------------------
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, are valued at the last reported sales
price 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.
SECURITY TRANSACTIONS AND INCOME RECOGNITION
Securities transactions are recorded on a trade date basis. 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").
DISTRIBUTIONS TO SHAREHOLDERS
Dividends to shareholders from net investment income of the Asset Allocation
and Index Allocation Funds, if any, are declared and distributed quarterly.
Dividends to shareholders from net investment income of the U.S. Government
Fund, if any, are declared daily and distributed monthly. Any distributions to
shareholders from net realized capital gains are declared and distributed at
least annually.
FEDERAL INCOME TAXES
Each Fund is treated as a separate entity for federal income tax purposes. It
is the policy of each Fund of the Company to continue to qualify as a regulated
investment company by complying with the provisions applicable to regulated
investment companies, as defined in the Code, and to make distributions of
75
<PAGE>
Allocation Funds NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------
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 February 28, 1999.
The U.S. Government Allocation Fund had estimated net capital loss
carryforwards at February 28, 1999 of $21,360,981, $712,094 and $190 which will
expire in the years 2002, 2004 and 2007, respectively. The Company's Board of
Directors intends to offset net capital gains with each capital loss
carryforward, and no capital gain distribution shall be made until each such
carryforward has been fully utilized or expires.
Due to the timing of dividend distributions and the differences in accounting
for income and realized gains (losses) for financial statement and federal
income tax purposes, the fiscal year in which amounts are distributed may differ
from the year in which the income and realized gains (losses) were recorded by a
Fund. The differences between the income or gains distributed on a book versus
tax basis are shown as excess distributions of net investment income and net
realized gain on sales of investments in the accompanying Statements of Changes
in Net Assets. The amount of distributions from net investment income and net
realized capital gains are determined in accordance with federal income tax
regulations, which may differ from GAAP. These "book/tax" differences are either
considered temporary or permanent in nature. To the extent that these
differences are permanent in nature, such amounts are reclassified within the
capital accounts based on their federal tax-basis treatment; temporary
differences do not require reclassifications.
DEFERRED ORGANIZATION COSTS
Certain costs incurred in connection with the organization of the Funds and
their initial registration with the Securities and Exchange Commission and with
the various states are amortized on a straight-line basis over 60 months from
the date each Fund commenced operations.
2. AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
The Company has entered into separate advisory contracts on behalf of the
Funds with Wells Fargo Bank, N.A. ("WFB"). Pursuant to the contracts, WFB has
agreed to provide the Funds with daily portfolio management. Under the contracts
with the Asset Allocation and U.S. Government Allocation Funds, WFB is entitled
to be paid a monthly advisory fee at an annual rate of 0.50% of the Funds'
average daily net assets up to $250 million, 0.40% of the next $250 million, and
0.30% of the Funds' average daily net assets in excess of $500 million. Under
the contract with the Index Allocation Fund, WFB is entitled to
76
<PAGE>
NOTES TO FINANCIAL STATEMENTS Allocation Funds
- ------------------------------------------------------------------------
be paid a monthly advisory fee at the annual rate of 0.70% of the Fund's average
daily net assets up to $500 million, and 0.60% of the Fund's average daily net
assets in excess of $500 million.
Prior to December 15, 1997, the Asset Allocation and U.S. Government
Allocation 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 Master
Portfolios at the same rates as listed above.
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 Funds. BGFA is entitled to receive from WFB, as
compensation for its sub-advisory services to the Asset Allocation and Index
Allocation Funds, a monthly fee at the annual rate of 0.15% of each such Fund's
average daily net assets up to $900 million and 0.10% of the average daily net
assets in excess of $900 million. For its sub-advisory services to the U.S.
Government Allocation Fund, BGFA is entitled to receive a monthly fee at the
annual rate of 0.05% of the Fund's average daily net assets up to $75 million,
0.04% for the next $75 million and 0.03% of the Fund's average daily net assets
in excess of $150 million.
Prior to November 1, 1997, BGFA was entitled to an annual fee of $60,000 and a
monthly fee at the annual rate of 0.20% of the Index Allocation Fund's average
daily net assets. Additionally, the predecessor Master Portfolios were
sub-advised by BGFA. BGFA was entitled to an annual payment of $40,000 from the
U.S. Government Allocation Master Portfolio and a monthly fee at the annual rate
of 0.20% and 0.15% of the average daily net assets of the Asset Allocation and
U.S. Government Allocation Master Portfolios, respectively.
The Company has entered into contracts on behalf of each Fund with WFB,
whereby WFB is responsible for providing portfolio accounting services for the
Funds. Pursuant to the contracts 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. Prior to
December 15, 1997, the Funds were not charged for portfolio accounting services.
BGI, a wholly-owned subsidiary of Barclays Global Investors Holdings Inc.,
acts as custodian to the Funds. BGI will not be entitled to receive compensation
for its services as custodian to the Funds so long as BGFA is entitled to
receive fees for providing investment sub-advisory services to the Funds. Prior
to December 15, 1997, BGI was custodian to the predecessor Master Portfolios and
was not entitled to compensation for its custodial services for the same reasons
as listed above.
77
<PAGE>
Allocation Funds NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------
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 Funds.
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 Class A and Class B
shares of the Asset Allocation and U.S. Government Allocation Funds and 0.25% of
the average daily net assets of the Class B shares of the Index Allocation Fund
and Class C shares of the Asset Allocation and Index Allocation Funds.
Shareholder servicing fees paid on behalf of the Funds for the eleven months
ended February 28, 1999 were as follows:
<TABLE>
<CAPTION>
FUND CLASS A CLASS B CLASS C
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Asset Allocation Fund $3,612,860 $ 908,653 $ 8,082
Index Allocation Fund 0 17,207 135,122
U.S. Government Allocation Fund 214,449 46,251 N/A
</TABLE>
Shareholder servicing fees paid on behalf of the Funds for the year ended
March 31, 1998 were as follows:
<TABLE>
<CAPTION>
FUND CLASS A CLASS B CLASS C
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Asset Allocation Fund $3,523,348 $ 492,801 N/A
Index Allocation Fund* 0 1,066 $ 30,615
U.S. Government Allocation Fund 252,309 28,412 N/A
</TABLE>
* REPRESENTS THE PERIOD FROM JANUARY 1, 1998 TO MARCH 31, 1998.
The Company has adopted a Shareholder Administrative Servicing Plan (the
"Administrative Servicing Plan") on behalf of the Class A shares of the Index
Allocation Fund. Pursuant to the Administrative Servicing Plan, the Fund may
enter into administrative servicing agreements with administrative servicing
agents who are dealers/holders of record, or that otherwise have a servicing
relationship with the beneficial owners of the Fund's Class A shares.
Administrative servicing agents are entitled to receive a fee which will not
exceed 0.25%, on an annualized basis, of the average daily net assets of the
Class A shares of the Fund. In no case will a shareholder be charged both 12b-1
and Administrative Servicing fees. These fees are classified as distribution
fees on the Statement of Operations.
The Company has entered into administration agreements on behalf of the Funds
whereby WFB as administrator and Stephens Inc. ("Stephens") as co-administrator
provide each Fund with administration services. For these services, WFB and
Stephens are entitled to receive monthly fees at the annual
78
<PAGE>
NOTES TO FINANCIAL STATEMENTS Allocation Funds
- ------------------------------------------------------------------------
rates of 0.03% and 0.04%, respectively, of each Fund's average daily net assets.
Prior to February 1, 1998, WFB and Stephens were entitled to receive monthly
fees at the annual rates of 0.04% and 0.02%, respectively, of each Fund's
average daily net assets.
The Company has adopted separate Distribution Plans for Class A and Class B
shares of the Funds and for Class C shares of the Index Allocation Fund pursuant
to Rule 12b-1 under the 1940 Act (each, a "Plan"). The Plan for Class A shares
of the Asset Allocation and U.S. Government Allocation Funds provides 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 each such Fund's average daily net
assets attributable to the Class A shares. The Class A Plan for the Asset
Allocation and U.S. Government Allocation Funds provides only for the
reimbursement of actual expenses.
The Plan for Class A shares of the Index Allocation Fund provides that the
Fund may pay to Stephens, as compensation for distribution-related services or
as reimbursement for distribution-related expenses, up to 0.25% of its average
daily net assets attributable to the Class A shares.
Under the Plan for Class B shares of the Funds and Class C shares of the Asset
Allocation and Index Allocation 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 Asset
Allocation and U.S. Government Allocation Funds, and 0.75% of the average daily
net assets attributable to the Class B shares of the Index Allocation Fund and
Class C shares of the Asset Allocation and Index Allocation Funds.
Each Fund may participate in joint distribution activities with other Funds,
in which event, expenses reimbursed out of the assets of one of the Funds may be
attributable, in part, to the distribution-related activities of another Fund.
Generally, the expenses of joint distribution activities are allocated among the
Funds in proportion to their relative net asset sizes.
Distribution fees paid on behalf of the Funds for the eleven months ended
February 28, 1999 were as follows:
<TABLE>
<CAPTION>
DISTRIBUTION DISTRIBUTION DISTRIBUTION
FEES FEES CLASS FEES
FUND CLASS A B CLASS C
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Asset Allocation Fund $ 18,862 $2,120,190 $ 24,246
Index Allocation Fund 207,827 51,621 405,366
U.S. Government Allocation Fund 2,946 107,919 N/A
</TABLE>
79
<PAGE>
Allocation Funds NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------
Distribution fees paid on behalf of the Funds for the year ended March 31,
1998 were as follows:
<TABLE>
<CAPTION>
DISTRIBUTION DISTRIBUTION DISTRIBUTION
FEES FEES CLASS FEES
FUND CLASS A B CLASS C
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Asset Allocation Fund $ 557,702 $1,146,537 N/A
Index Allocation Fund* 52,642 3,199 $ 91,845
U.S. Government Allocation Fund 42,041 66,425 N/A
</TABLE>
* REPRESENTS THE PERIOD FROM JANUARY 1, 1998 TO MARCH 31, 1998.
The registration fees paid on behalf of the Funds for the eleven months ended
February 28, 1999 were as follows:
<TABLE>
<CAPTION>
REGISTRATION REGISTRATION REGISTRATION
FEES FEES CLASS FEES CLASS
FUND CLASS A B C
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Asset Allocation Fund $ 45,273 $ 72,253 $ 8,495
Index Allocation Fund 8,044 10,631 13,306
U.S. Government Allocation Fund 16,735 8,044 N/A
</TABLE>
The registration fees paid on behalf of the Funds for the year ended March 31,
1998 were as follows:
<TABLE>
<CAPTION>
REGISTRATION REGISTRATION REGISTRATION
FEES FEES CLASS FEES CLASS
FUND CLASS A B C
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Asset Allocation Fund $ 101,999 $ 17,063 N/A
Index Allocation Fund* 3,699 4,931 $ 2,713
U.S. Government Allocation Fund 25,793 15,742 N/A
</TABLE>
* REPRESENTS THE PERIOD FROM JANUARY 1, 1998 TO MARCH 31, 1998.
WAIVED FEES AND REIMBURSED EXPENSES
All amounts shown as waived fees and reimbursed expenses on the Statement of
Operations, for the eleven months ended February 28, 1999 and period ended March
31, 1998, were waived by WFB. Waived fees and reimbursed expenses continue at
the discretion of WFB and Stephens.
Certain officers and one director of the Company are also officers of
Stephens. As of February 28, 1999, Stephens owned 141 shares of the Asset
Allocation Fund, 241,364 shares of the Index Allocation Fund and 120 shares of
the U.S. Government Allocation Fund.
Stephens has retained approximately $4,412,758 as sales charges from the
proceeds of Class A shares sold, $2,029,699 from the proceeds of Class B shares
redeemed and $83,605 from the proceeds of Class C shares redeemed by the Company
for the eleven months ended February 28, 1999. Wells Fargo Securities Inc., a
subsidiary of WFB, received $3,174,895 as sales charges from
80
<PAGE>
NOTES TO FINANCIAL STATEMENTS Allocation Funds
- ------------------------------------------------------------------------
the proceeds of Class A shares sold, $785,202 from the proceeds of Class B
shares redeemed and $0 from the proceeds of Class C shares redeemed by the
Company for the eleven months ended February 28, 1999.
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 eleven months ended February 28, 1999 were as follows:
AGGREGATE PURCHASES AND SALES
<TABLE>
<CAPTION>
PURCHASES AT SALES
FUND COST PROCEEDS
- -------------------------------------------------------------------------
<S> <C> <C>
Asset Allocation Fund $518,226,797 $509,722,692
Index Allocation Fund 21,171,526 18,775,233
U.S. Government Allocation Fund 39,859,766 50,683,254
</TABLE>
Purchases and sales of investments, exclusive of short-term securities
(securities with maturities of one year or less at purchase date), for each Fund
for the year ended March 31, 1998 were as follows:
AGGREGATE PURCHASES AND SALES
<TABLE>
<CAPTION>
PURCHASES AT SALES
FUND COST PROCEEDS
- -------------------------------------------------------------------------
<S> <C> <C>
Asset Allocation Fund $741,595,736 $677,435,873
Index Allocation Fund* 9,708,385 245,915
U.S. Government Allocation Fund 34,456,430 103,419,336
</TABLE>
* REPRESENTS THE PERIOD FROM JANUARY 1, 1998 TO MARCH 31, 1998.
4. CAPITAL SHARE TRANSACTIONS
As of February 28, 1999, there were over 242 billion shares of $0.001 par
value capital stock authorized by the Company. As of February 28, 1999, the
Funds were each authorized to issue 500 million shares of $0.001 par value
capital stock for each class of shares.
81
<PAGE>
Allocation Funds NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------
Capital share transactions for the Funds were as follow:
<TABLE>
<CAPTION>
ASSET ALLOCATION FUND
----------------------------------------
FOR THE FOR THE
ELEVEN YEAR FOR THE SIX
MONTHS ENDED ENDED MONTHS ENDED
FEBRUARY 28, MARCH 31, MARCH 31,
1999 1998 1997
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 3,967,005 5,404,941 2,045,161
Shares issued in reinvestment of
dividends -- Class A 5,460,934 5,339,741 4,753,733
Shares redeemed -- Class A (8,542,275) (9,806,181) (5,260,733)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING --
CLASS A 885,664 938,501 1,538,161
Shares sold -- Class B 9,161,518 10,545,390 2,222,248
Shares issued in reinvestment of
dividends -- Class B 2,236,282 1,176,235 518,569
Shares redeemed -- Class B (3,093,434) (1,371,398) (419,149)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING --
CLASS B 8,304,366 10,350,227 2,321,668
Shares sold -- Class C(1) 648,391 N/A N/A
Shares issued in reinvestment of
dividends -- Class C(1) 35,062 N/A N/A
Shares redeemed -- Class C(1) (37,191) N/A N/A
NET INCREASE (DECREASE) IN SHARES OUTSTANDING --
CLASS C(1) 646,262 N/A N/A
</TABLE>
(1) THIS CLASS OF SHARES COMMENCED OPERATIONS ON APRIL 1, 1998.
82
<PAGE>
NOTES TO FINANCIAL STATEMENTS Allocation Funds
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDEX ALLOCATION FUND
--------------------------------------------
FOR THE
FOR THE ELEVEN THREE FOR THE
MONTHS ENDED MONTHS ENDED YEAR ENDED
FEBRUARY 28, MARCH 31, DECEMBER 31,
1999 1998 1997
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 571,737 240,942 850,777
Shares issued in reinvestment of
dividends -- Class A 147,971 9,136 496,833
Shares redeemed -- Class A (1,138,366) (155,356) (470,768)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING --
CLASS A (418,658) 94,722 876,842
Shares sold -- Class B(1) 415,134 133,842 18,462
Shares issued in reinvestment of
dividends -- Class B(1) 14,619 0 0
Shares redeemed -- Class B(1) (48,393) 0 0
NET INCREASE (DECREASE) IN SHARES OUTSTANDING --
CLASS B(1) 381,360 133,842 18,462
Shares sold -- Class C 860,963 283,850 1,061,333
Shares issued in reinvestment of
dividends -- Class C 66,796 554 164,916
Shares redeemed -- Class C (641,920) (96,724) (255,583)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING --
CLASS C 285,839 187,680 970,666
</TABLE>
(1) THIS CLASS OF SHARES COMMENCED OPERATIONS ON DECEMBER 15, 1997.
83
<PAGE>
Allocation Funds NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT ALLOCATION FUND
--------------------------------------------
FOR THE ELEVEN FOR THE
MONTHS ENDED YEAR ENDED FOR THE SIX
FEBRUARY 28, MARCH 31, MONTHS ENDED
1999 1998 MARCH 31, 1997
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHARES ISSUED AND REDEEMED:
Shares sold -- Class A 591,991 846,076 231,132
Shares issued in reinvestment of
dividends -- Class A 183,684 251,276 151,317
Shares redeemed -- Class A (1,324,622) (1,591,400) (1,126,961)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING --
CLASS A (548,947) (494,048) (744,512)
Shares sold -- Class B 692,988 806,213 169,717
Shares issued in reinvestment of
dividends -- Class B 42,193 29,518 12,022
Shares redeemed -- Class B (316,931) (221,982) (96,322)
NET INCREASE (DECREASE) IN SHARES OUTSTANDING --
CLASS B 418,250 613,749 85,417
</TABLE>
84
<PAGE>
INDEPENDENT AUDITORS' REPORT Allocation Funds
- ------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors
Stagecoach Funds, Inc.:
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of the Asset Allocation Fund, Index
Allocation Fund, and U.S. Government Allocation Fund (three of the funds
comprising Stagecoach Funds, Inc.) as of February 28, 1999, and the related
statements of operations for the Asset Allocation Fund and U.S. Government
Allocation Fund for the eleven months ended February 28, 1999, and the year
ended March 31, 1998, and for the Index Allocation Fund for eleven months ended
February 28, 1999 and the three months ended March 31, 1998, the statements of
changes in net assets for the Asset Allocation Fund and U.S. Government Income
Fund for the eleven months ended February 28, 1999, the year ended March 31,
1998, and the six months ended March 31, 1997, and for the Index Allocation Fund
for the eleven months ended February 28, 1999, the three months ended March 31,
1998 and the year ended December 31, 1997 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.
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
February 29, 1999, 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 February 28, 1999,
the results of their operations, the changes in their net assets, and their
financial highlights for the periods indicated herein, in conformity with
generally accepted accounting principles.
[LOGO]
San Francisco, California
April 2, 1999
85
<PAGE>
LIST OF ABBREVIATIONS
- ------------------------------------------------------------------------
The following is a list of common abbreviations for terms and entities which
may have appeared in this report.
<TABLE>
<S> <C> <C>
ABAG -- Association of Bay Area Governments
ADR -- American Depository Receipts
AMBAC -- American Municipal Bond Assurance Corporation
AMT -- Alternative Minimum Tax
ARM -- Adjustable Rate Mortgages
BART -- Bay Area Rapid Transit
CDA -- Community Development Authority
CDSC -- Contingent Deferred Sales Charge
CGIC -- Capital Guaranty Insurance Company
CGY -- Capital Guaranty Corporation
CMT -- Constant Maturity Treasury
COFI -- Cost of Funds Index
CONNIE LEE -- Connie Lee Insurance Company
COP -- Certificate of Participation
CP -- Commercial Paper
DW&P -- Department of Water & Power
DWR -- Department of Water Resources
EDFA -- Education Finance Authority
FGIC -- Financial Guaranty Insurance Corporation
FHA -- Federal Housing Authority
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
FRN -- Floating Rate Notes
FSA -- Financial Security Assurance, Inc
GNMA -- Government National Mortgage Association
GO -- General Obligation
HFA -- Housing Finance Authority
HFFA -- Health Facilities Financing Authority
IDA -- Industrial Development Authority
LIBOR -- London Interbank Offered Rate
LOC -- Letter of Credit
MBIA -- Municipal Bond Insurance Association
MFHR -- Multi-Family Housing Revenue
MUD -- Municipal Utility District
MTN -- Medium Term Note
PCFA -- Pollution Control Finance Authority
PCR -- Pollution Control Revenue
PFA -- Public Finance Authority
PSFG -- Public School Fund Guaranty
RAW -- Revenue Anticipation Warrants
RDA -- Redevelopment Authority
RDFA -- Redevelopment Finance Authority
R&D -- Research & Development
SFMR -- Single Family Mortgage Revenue
TBA -- To Be Announced
TRAN -- Tax Revenue Anticipation Notes
USD -- Unified School District
V/R -- Variable Rate
</TABLE>
86
