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August 31, 1999
[logo]
STAGECOACH FUNDS-registered trademark-
Semi-Annual Report
ALLOCATION Funds
Asset Allocation Fund
Index Allocation Fund
U.S. Government Allocation Fund
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Allocation Funds TABLE OF CONTENTS
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LETTER TO SHAREHOLDERS................................1
PERFORMANCE AT A GLANCE AND INVESTMENT ADVISOR COMMENTARY
Asset Allocation Fund.............................4
Index Allocation Fund............................10
U.S. Government Allocation Fund..................16
PORTFOLIOS OF INVESTMENTS
Asset Allocation Fund............................21
Index Allocation Fund............................44
U.S. Government Allocation Fund..................66
ALLOCATION FUNDS
Statement of Assets and Liabilities..............69
Statements of Operations.........................70
Statements of Changes in Net Assets..............72
Financial Highlights.............................76
Notes to Financial Statements....................88
SHAREHOLDERS' MEETING AND PROXY VOTING RESULTS.......99
LIST OF ABBREVIATIONS...............................101
NOT FDIC INSURED - NO BANK GUARANTEE - MAY LOSE VALUE
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ii
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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 the semi-annual report for the period
ended August 31, 1999. The report includes information about your investment
over the six-month period, including economic and market trends, a performance
summary, a portfolio review and a strategic outlook.
Several noteworthy events happened during the period, including the Dow Jones
Industrial Average surpassing 10,000 points for the first time in its 104-year
history in March, and the Federal Reserve Board (the "Fed") raising short-term
interest rates twice between February 28, 1999, and August 31, 1999.
Despite the interest rate increases during the period, the stock market
continued to be strong. Earnings for U.S. companies were robust, we had a budget
surplus, inflation and unemployment remained low, and Americans seemed confident
about the future. We were also in the midst of a prolonged bull market, which
made U.S. capital markets attractive to investors both at home and abroad.
Investors can expect some potential volatility toward the end of the year due to
Y2K concerns. While U.S. companies generally have been preparing for the Year
2000, the effects of the Year 2000 cannot be predicted.
The interest rate increases were good news for the bond markets, which had
discounted the Fed tightening in response to a strong economy before the rate
increases. The increases helped restore order to the bond market, which had seen
prices tumble and yields rise above 6% on the benchmark 30-year U.S. Treasury
bond. Higher bond yields briefly encouraged investors to switch from stocks to
the safety of bonds. With yields decreasing, calm and relative certainty
returned to both the stock and bond markets during the period.
The Asset Allocation Fund, Index Allocation Fund and U.S. Government
Allocation Fund are three of eight asset allocation funds within the Stagecoach
Fund family. Each Fund offers a unique asset allocation strategy that may
provide a solid foundation for any investment portfolio. As you read through
this report
1
<PAGE>
Allocation Funds LETTER TO SHAREHOLDERS
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and review the performance of the Funds in your portfolio, we encourage you to
keep long-term goals in mind when making investment decisions. We recommend that
you continually review your investment portfolio with your financial consultant
to determine an appropriate mix of investments to meet your ongoing needs.
Thank you again for your continued investment with the Stagecoach Funds.
Sincerely,
/s/ Michael J. Hogan
Michael J. Hogan
Executive Vice President,
Mutual Fund Group
Wells Fargo Bank, N.A.
/s/ R. Greg Feltus
R. Greg Feltus
Chairman and President
Stagecoach Funds, Inc.
2
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3
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PERFORMANCE AT A GLANCE Asset Allocation Fund
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ASSET ALLOCATION FUND
AVERAGE ANNUAL RETURNS (%) (as of August 31, 1999)(1)
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EXCLUDING SALES CHARGE
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<TABLE>
<CAPTION>
6-MONTH 1-YEAR 5-YEAR 10-YEAR
<S> <C> <C> <C> <C>
CLASS A 3.58 26.75 17.56 13.96
CLASS B 3.23 25.89 16.84 13.34
CLASS C 3.24 25.83 16.84 13.34
</TABLE>
INCLUDING SALES CHARGE(2)
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<TABLE>
<CAPTION>
6-MONTH 1-YEAR 5-YEAR 10-YEAR
<S> <C> <C> <C> <C>
CLASS A (2.36) 19.46 16.18 13.28
CLASS B (1.77) 20.89 16.64 13.34
CLASS C 2.24 24.83 16.84 13.34
</TABLE>
4
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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.
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. The Fund invests in a changing mix of S&P
500 stocks, long-term U.S. Treasury bonds, and money market instruments. The
Fund attempts to improve on the market's long-term risk-and-return tradeoff by
shifting its investments among asset classes in response to changes in the
investment environment.
PORTFOLIO DATA (as of August 31, 1999)
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<TABLE>
<S> <C>
WEIGHTED AVERAGE COUPON OF BOND
PORTFOLIO 6.97%
WEIGHTED AVERAGE MATURITY OF BOND
PORTFOLIO 23.99 years
ESTIMATED DURATION OF BOND PORTFOLIO 12.03 years
</TABLE>
FUND DATA (as of August 31, 1999)
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<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
TOTAL NET ASSETS
($MM) 1,340.0 490.5 19.8
NET ASSET VALUE $26.35 $15.98 $16.03
</TABLE>
PERFORMANCE SUMMARY
As of August 31, 1999, the Fund's Class A share net asset value (NAV)
increased from $25.65 on February 28, 1999 to $26.35 on August 31, 1999. During
the six-month period ended August 31, 1999, the Fund's Class A shares reported a
cumulative total return of 3.58%, excluding sales charges. The Fund remained
competitive in comparison to its three benchmarks. The
5
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Asset Allocation Fund INVESTMENT ADVISOR COMMENTARY
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S&P 500 Index(3) gained 7.32%, The Lehmen Brothers U.S. Treasury Bond Index(4)
returned (0.59%), and the IBC All Taxable Money Fund Average(5) posted a 4.43%
return over the six-month period.
The Fund's significant equity investment has allowed investors to capture the
gains of a strong equity market. Gradually, decreasing its investment in this
market locked in those gains and placed the Fund in a better position should
speculation about a stock market drop become a reality. The positioning of the
Fund during the period was clear: bonds were becoming an attractive investment
relative to stocks.
MODEL ALLOCATION CHANGES (during six-month reporting period)
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<TABLE>
<CAPTION>
DATE STOCKS BONDS CASH
---- ------ ----- ----
<S> <C> <C> <C>
MARCH 1999 75% 25% 0%
APRIL 1999 70% 30% 0%
MAY 1999 65% 35% 0%
JUNE 1999 60% 40% 0%
</TABLE>
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 percent increments.
At the end of the last reporting period, the Fund was overweighted in
equities: 80 percent of its assets were invested in large-cap stocks and 20
percent were invested in long-term government bonds. The Fund decreased its
equity allocation by 5 percent in each of the first four months of the period,
returning to its "normal" allocation of 60 percent stocks and 40 percent bonds
by the end of June.
Positive reports on jobs, manufacturing and housing during the period
indicated a healthy U.S. economy. These reports buoyed an already strong stock
market,
6
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INVESTMENT ADVISOR COMMENTARY Asset Allocation Fund
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but started the bond market on the slow but steady downward trend that defined
its performance during the first part of the period.
TOP 10 EQUITY HOLDINGS (as of August 31, 1999)
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<TABLE>
<CAPTION>
NAME % OF PORTFOLIO
<S> <C>
MICROSOFT CORPORATION 2.6%
GENERAL ELECTRIC COMPANY 2.0%
INTEL CORPORATION 1.5%
IBM CORPORATION 1.3%
CISCO SYSTEMS INCORPORATED 1.2%
WALMART STORES INCORPORATED 1.0%
LUCENT TECHNOLOGIES INCORPORATED 1.0%
EXXON CORPORATION 1.0%
MERCK & COMPANY 0.9%
CITIGROUP INCORPORATED 0.8%
</TABLE>
PORTFOLIO ALLOCATION(6)
(as of August 31, 1999)
- ----------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Bonds 40%
Stocks 60%
</TABLE>
STRATEGIC OVERVIEW
Despite the interest rate increases during the period, the stock market
continues to be strong. Earnings for U.S. companies are robust, inflation and
unemployment remain low, and Americans seem confident about the future. The
interest rate increases were good news for the bond market, which had discounted
the Fed tightening in response to a strong economy before the rate increases.
The increases helped restore order to the bond market, which had seen prices
tumble and yields rise above 6% on the benchmark 30-year U.S. Treasury bond.
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.
7
<PAGE>
Asset Allocation Fund INVESTMENT ADVISOR COMMENTARY
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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 5.75%. 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 comprised
of U.S. Treasury bonds with 10-year or longer maturities.
5 The IBC All 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.
8
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9
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Index Allocation Fund PERFORMANCE AT A GLANCE
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INDEX ALLOCATION FUND
AVERAGE ANNUAL RETURNS (%) (as of August 31, 1999)(1)
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EXCLUDING SALES CHARGE
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<TABLE>
<CAPTION>
6-MONTH 1-YEAR 5-YEAR 10-YEAR
<S> <C> <C> <C> <C>
CLASS A 6.69 37.99 21.28 15.59
CLASS B 6.28 37.01 20.37 14.80
CLASS C 6.28 36.99 20.39 14.81
</TABLE>
INCLUDING SALES CHARGE(2)
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<TABLE>
<CAPTION>
6-MONTH 1-YEAR 5-YEAR 10-YEAR
<S> <C> <C> <C> <C>
CLASS A 0.56 30.07 19.85 14.91
CLASS B 1.28 32.01 20.18 14.80
CLASS C 5.28 35.99 20.39 14.81
</TABLE>
10
<PAGE>
INVESTMENT ADVISOR COMMENTARY Index Allocation Fund
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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 in the Lehman Brothers U.S. Treasury Bond Index, and
money market instruments.
The Fund is a professionally managed portfolio, advised by Wells Fargo Bank,
N.A. Barclays Global Fund Advisors serves as investment sub-advisor.
FUND DATA (as of August 31, 1999)
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
TOTAL NET ASSETS
($MM) 97.2 19.1 78.8
NET ASSET VALUE $20.30 $25.03 $25.04
</TABLE>
PERFORMANCE SUMMARY
As of August 31, 1999, the Fund's Class A share net asset value was $20.30,
increasing $1.26 during the six-month reporting period from $19.04 on February
28, 1999. The Fund's Class A shares distributed $0.01 per share in dividend
income and no capital gains during this period.
During the six-month reporting period ended August 31, 1999, the Fund's
Class A shares reported a cumulative total return of 6.69%, excluding sales
charges. The Fund remained competitive relative to its three benchmarks, based
on the Fund's predominant allocation in S&P 500 Index securities. The S&P 500
Index(3) gained 7.32%, the Lehman Brothers U.S. Treasury Bond Index(4) returned
(0.59)%, and the IBC All Taxable Money Fund Average(5) posted a 4.43% return
over the six-month period.
The large-cap U.S. equity market was off to an exciting start at the beginning
of the period. The Dow Jones Industrial Average broke 10,000 in March. High U.S.
equity market returns could be traced to the health of the
11
<PAGE>
Index Allocation Fund INVESTMENT ADVISOR COMMENTARY
- ------------------------------------------------------------------------
U.S. economy, the solid performance of many Internet or "dot-com" stocks, and
the new role of the individual investor.
With low unemployment, economic expansion and the lessening global financial
turmoil, investors moved away from bonds into equities early in the period,
causing the bond market to tumble. Even the brief rally after the Federal
Reserve Board announced the first of two interest rate increases on June 30
could not improve the overall bond market performance.
We believe stocks continue to be a more attractive investment than bonds in
the current economic environment, and 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 six-month reporting period ended August 31, 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, stocks continue to be viewed as attractive investments for the Fund at
this time. We will continue to evaluate expected returns and economic conditions
through our quantitative investment model to provide an optimal asset mix.
12
<PAGE>
INVESTMENT ADVISOR COMMENTARY Index Allocation Fund
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TOP 10 EQUITY HOLDINGS (as of August 31, 1999)
- ---------------------------------------------------------
<TABLE>
<CAPTION>
NAME % OF PORTFOLIO
<S> <C>
MICROSOFT CORPORATION 4.1%
GENERAL ELECTRIC COMPANY 3.2%
INTEL CORPORATION 2.4%
IBM CORPORATION 2.0%
CISCO SYSTEMS INCORPORATED 1.9%
WAL MART STORES INCORPORATED 1.7%
LUCENT TECHNOLOGIES INCORPORATED 1.7%
EXXON CORPORATION 1.7%
MERCK & COMPANY 1.4%
CITIGROUP INCORPORATED 1.3%
</TABLE>
PORTFOLIO ALLOCATION(6)
(as of August 31, 1999)
- ----------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Stocks 100%
</TABLE>
STRATEGIC OUTLOOK
Despite the interest rate increases during the period, the stock market
continued to be strong. Earnings for U.S. companies were robust, we had a budget
surplus, inflation and unemployment remained low, and Americans seemed confident
about the future. The interest rate increases were good news for the bond
market, which had discounted the Fed's tightening in response to a strong
economy before the rate increases. The increases helped restore some order to
the bond market, which had seen prices tumble and yields rise above 6% on the
benchmark 30-year Treasury bond.
The Fund will continue to apply its quantitative strategies to allocate assets
among stocks, bonds and cash. In addition, news and events that affect the
economy and companies in general are all components that comprise the model.
Overall, we feel that the Fund is well positioned for the upcoming months and we
expect it to produce solid long-term performance.
13
<PAGE>
Index Allocation Fund INVESTMENT ADVISOR COMMENTARY
- ------------------------------------------------------------------------
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 reduces operating
expenses and 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 5.75%. 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 comprised
of U.S. Treasury bonds with 10-year or longer maturities.
5 The IBC All 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.
14
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15
<PAGE>
U.S. Government Allocation Fund PERFORMANCE AT A GLANCE
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U.S. GOVERNMENT ALLOCATION FUND
AVERAGE ANNUAL RETURNS (%) (as of August 31, 1999)(1)
- ----------------------------------------------------------------
EXCLUDING SALES CHARGE
- ----------------------------------------------------------
<TABLE>
6-MONTH 1-YEAR 5-YEAR 10-YEAR
<S> <C> <C> <C> <C>
CLASS A 0.04 0.90 5.54 7.10
CLASS B (0.23) 0.30 4.85 6.51
</TABLE>
INCLUDING SALES CHARGE(2)
- ----------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
6-MONTH 1-YEAR 5-YEAR 10-YEAR
CLASS A (4.46) (3.66) 4.57 6.61
CLASS B (5.11) (4.53) 4.59 6.51
</TABLE>
16
<PAGE>
INVESTMENT ADVISOR COMMENTARY U.S. Government Allocation Fund
- ------------------------------------------------------------------------
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.
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 August 31, 1999)
- ---------------------------------------------------------
<TABLE>
<S> <C>
WEIGHTED AVERAGE COUPON 4.37%
WEIGHTED AVERAGE MATURITY 3.62 years
ESTIMATED AVERAGE DURATION 2.95 years
</TABLE>
FUND DATA (as of August 31, 1999)
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A CLASS B
<S> <C> <C>
TOTAL NET ASSETS ($MM) 64.0 17.2
NET ASSET VALUE $14.48 $10.54
</TABLE>
PERFORMANCE SUMMARY
As of August 31, 1999, the Fund's Class A share net asset value was $14.48,
slightly decreasing during the six-month reporting period from $14.86 on
February 28, 1999. The Fund's Class A shares distributed $0.39 per share of
dividend income and no capital gains during this period.
The distribution rate for Class A shares of the Fund for the period ended
August 31, 1999, was 5.13% based on an annualization of August's monthly
dividend of $0.06 per share and the maximum offering price of $15.16 on August
31, 1999.
During the six-month reporting period ended August 31, 1999, the Fund's
Class A shares reported a cumulative total return of 0.04%, excluding sales
charges. Performances of the Fund's three benchmarks according to the portfolio
allocation were: the Lehman Brothers Bond Index(3) returned (0.59)%; the Lehman
Brothers U.S. Government Intermediate Bond Index(4)
17
<PAGE>
U.S. Government Allocation Fund INVESTMENT ADVISOR COMMENTARY
- ------------------------------------------------------------------------
returned 0.78%; and the IBC All Taxable Money Fund Average(5) posted a 4.43%
return over the six-month period.
Midway through the period, the bond market rallied due to positive inflation
news and a higher demand for quality securities, while lower interest rates
decreased the attractiveness of intermediate-term notes relative to cash.
MODEL ALLOCATION CHANGES (during 6-month reporting period)
- ---------------------------------------------------------
<TABLE>
<CAPTION>
DATE BONDS NOTES CASH
<S> <C> <C> <C>
MARCH 1999 0% 60% 40%
JUNE 1999 0% 100% 0%
JULY 1999 0% 80% 20%
AUGUST 1999 0% 60% 40%
</TABLE>
PORTFOLIO ALLOCATION(6)
(as of August 31, 1999)
- ----------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Cash 40%
Notes 60%
</TABLE>
MONTHLY DIVIDEND HISTORY
- ---------------------------------------------
<TABLE>
<CAPTION>
DATE CLASS A CLASS B
<S> <C> <C>
MARCH-99 $0.056 $0.034
APRIL-99 $0.066 $0.042
MAY-99 $0.058 $0.035
JUNE-99 $0.068 $0.044
JULY-99 $0.074 $0.048
AUGUST-99 $0.064 $0.041
</TABLE>
PORTFOLIO REVIEW
The Fund's investment policy is to invest in the 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 most
attractive mix by comparing the expected return, risk and correlation of
long-term, intermediate-term, and short-term Treasury securities.
During the six-month reporting period ended August 31, 1999, the Fund
experienced four asset allocation changes. The Fund ended in February 1999 with
a portfolio weighting of 20 percent bonds, 0 percent intermediate-term notes and
80 percent cash. Interest rates moved higher in February, and by March the model
called for a
18
<PAGE>
INVESTMENT ADVISOR COMMENTARY U.S. Government Allocation Fund
- ------------------------------------------------------------------------
move to 0 percent bonds, 60 percent intermediate-term notes and 40 percent cash.
The second allocation shift in June moved the portfolio to 100 percent
intermediate-term notes, prompted by anticipation of the Federal Reserve Board's
(the "Fed") interest rate increase. When the bond market rallied in July, the
allocation was changed to 80 percent intermediate-term notes and 20 percent
cash. Following the Fed's second interest rate increase in August, the model
called for a move out of intermediate-term notes and into cash, so the
allocation was changed to 60 percent intermediate-term notes and 40 percent
cash.
STRATEGIC OUTLOOK
The interest rate increases were good news for the bond market, which had
discounted the Fed's tightening in response to a strong economy before the rate
increases. The increases helped restore order to the bond market, which had seen
prices tumble and yields rise above 6% on the benchmark 30-year U.S. Treasury
bond. By the end of the period, the Fund maintained a positioning of 0 percent
bonds.
As a result, the Fund will continue to apply its process-driven strategy that
applies an asset allocation methodology 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.
19
<PAGE>
U.S. Government Allocation Fund INVESTMENT ADVISOR COMMENTARY
- ------------------------------------------------------------------------
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 comprised
of U.S. Treasury bonds with 10-year or longer maturities.
4 The Lehman Brothers U.S. Government Intermediate 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 All Data 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.
20
<PAGE>
PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED) Asset Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK - 59.52%
AGRICULTURAL PRODUCTION - CROP - 0.05%
24,509 Pioneer Hi-Bred International Incorporated $ 827,022 $ 958,915
AMUSEMENT & RECREATION SERVICES - 0.01%
12,196 Harrah's Entertainment Incorporated+ $ 244,549 $ 274,410
APPAREL & ACCESSORY STORES - 0.31%
87,295 Gap Incorporated $ 1,560,270 $ 3,415,417
16,328 Kohl's Corporation+ 916,370 1,163,370
21,747 Limited Incorporated 503,645 823,668
14,761 Nordstrom Incorporated 426,846 417,921
1 Too Incorporated+ 8 13
----------- -------------
$ 3,407,139 $ 5,820,389
APPAREL & OTHER FINISHED PRODUCTS MADE FROM
FABRICS & SIMILAR MATERIALS - 0.04%
6,668 Liz Claiborne Incorporated $ 303,254 $ 245,049
12,292 V.F. Corporation 544,839 442,512
----------- -------------
$ 848,093 $ 687,561
AUTOMOTIVE DEALERS & GASOLINE - 0.02%
15,586 Autozone Incorporated+ $ 451,793 $ 371,142
AUTOMOTIVE REPAIR, SERVICES & PARKING - 0.01%
7,523 Ryder Systems Incorporated $ 242,756 $ 165,976
BUILDING CONSTRUCTION-GENERAL - 0.02%
6,233 Centex Corporation $ 185,041 $ 175,303
4,158 Kaufman & Broad Home Corporation 89,520 84,979
4,591 Pulte Corporation 98,393 106,167
----------- -------------
$ 372,954 $ 366,449
</TABLE>
21
<PAGE>
Asset Allocation Fund PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED)
- ------------------------------------------------------------------------
<TABLE>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
BUILDING MATERIALS, HARDWARE, GARDEN SUPPLY &
MOBILE HOME DEALERS - 0.61%
150,630 Home Depot Incorporated $ 4,999,857 $ 9,207,259
37,586 Lowes Companies 1,042,043 1,700,767
17,633 Sherwin Williams Company 517,969 429,804
----------- -------------
$ 6,559,869 $ 11,337,830
BUSINESS SERVICES - 5.11%
36,638 3Com Corporation+ $ 1,376,302 $ 909,080
6,287 Adobe Systems Incorporated 250,594 626,342
110,441 America Online Incorporated+ 9,477,529 10,084,644
5,374 Autodesk Incorporated 192,666 123,602
62,714 Automatic Data Processing Incorporated 1,809,912 2,465,444
23,670 BMC Software Incorporated+ 1,377,508 1,273,742
16,119 Cabletron Systems Incorporated+ 336,693 271,001
73,359 Cendant Corporation 1,804,101 1,315,877
14,686 Ceridian Corporation+ 331,970 411,208
54,705 Computer Associates International Incorporated
2,436,140 3,090,833
16,250 Computer Sciences Corporation+ 726,460 1,124,297
36,902 Compuware Corporation+ 1,400,529 1,113,979
8,179 De Luxe Corporation 269,654 278,597
13,310 Ecolab Incorporated 343,025 499,957
50,169 Electronic Data Systems Corporation 2,039,137 2,815,735
14,897 Equifax Incorporated 502,017 454,359
44,056 First Data Corporation 1,415,491 1,938,464
32,510 IMS Health Incorporated 638,032 898,089
28,234 Interpublic Group Company Incorporated 709,789 1,118,772
518,605 Microsoft Corporation+ 20,676,763 48,003,375
34,560 Novell Incorporated+ 321,100 818,640
18,047 Omnicom Group Incorporated 793,254 1,360,293
146,408 Oracle Corporation+ 2,757,051 5,343,892
26,966 Parametric Technology Company+ 584,799 377,524
23,803 PeopleSoft Incorporated+ 773,901 336,217
2,718 Shared Medical Systems Corporation 160,295 152,718
</TABLE>
22
<PAGE>
PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED) Asset Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
78,606 Sun Microsystems Incorporated+ $ 1,635,675 $ 6,249,177
27,035 Unisys Corporation+ 534,731 1,162,505
----------- -------------
$55,675,118 $ 94,618,363
CHEMICALS & ALLIED PRODUCTS - 7.03%
154,672 Abbott Laboratories $ 5,330,732 $ 6,708,898
23,499 Air Products and Chemicals Incorporated 907,315 798,966
5,748 Alberto-Culver Company 162,686 146,215
9,963 ALZA Corporation+ 351,220 501,886
133,262 American Home Products Corporation 5,555,119 5,530,373
51,832 Amgen Incorporated+ 1,485,742 4,311,775
11,675 Avery Dennison Corporation 540,248 640,666
26,828 Avon Products Incorporated 946,062 1,177,079
201,876 Bristol-Myers Squibb Company 9,514,415 14,207,023
23,746 Clorox Company 1,001,531 1,074,506
59,508 Colgate-Palmolive Company 2,195,230 3,183,678
22,369 Dow Chemical Company 2,026,331 2,541,678
99,126 Du Pont EI De Nemours Company 6,119,941 6,282,108
8,117 Eastman Chemical Company 479,777 376,933
111,978 Eli Lilly & Company 7,085,175 8,356,358
112,736 Gillette Company 5,509,447 5,256,316
6,115 Great Lakes Chemical Corporation 265,755 251,862
10,906 International Flavors & Fragrances Incorporated
503,487 444,419
239,936 Merck & Company Incorporated 12,680,152 16,120,700
63,947 Monsanto Company 2,925,507 2,625,824
35,458 Occidental Petroleum Corporation 903,884 768,995
394,683 Pfizer Incorporated 10,446,771 14,899,283
51,620 Pharmacia & Upjohn Incorporated 1,952,767 2,697,145
17,790 PPG Industries Incorporated 1,053,363 1,068,512
16,174 Praxair Incorporated 758,851 760,178
135,004 Procter & Gamble Company 10,388,956 13,399,147
21,797 Rohm & Haas Company 741,142 814,663
149,722 Schering-Plough Corporation 4,947,324 7,869,763
10,428 Sigma Aldrich Corporation 352,252 336,303
</TABLE>
23
<PAGE>
Asset Allocation Fund PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED)
- ------------------------------------------------------------------------
<TABLE>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
13,173 Union Carbide Corporation $ 611,527 $ 749,214
7,447 W.R. Grace & Company+ 114,465 142,424
86,469 Warner-Lambert Company 4,436,032 5,728,571
9,316 Watson Pharmaceuticals Incorporated+ 406,549 334,211
----------- -------------
$102,699,755 $ 130,105,672
COMMUNICATIONS - 5.25%
29,498 Alltel Corporation $ 1,291,981 $ 1,994,802
111,742 Ameritech Corporation 4,348,101 7,053,714
323,450 AT & T Corporation 10,844,889 14,555,250
157,827 Bell Atlantic Corporation 6,535,672 9,666,904
192,559 BellSouth Corporation 5,327,563 8,713,295
72,215 CBS Corporation+ 2,033,057 3,394,105
13,747 CenturyTel Incorporated 622,048 540,429
33,577 Clear Channel Communications Incorporated
1,701,852 2,352,488
75,283 Comcast Corporation 1,156,103 2,456,108
17,654 Frontier Corporation 450,154 740,365
98,814 GTE Corporation 4,818,301 6,781,111
189,157 MCI WorldCom Incorporated+ 7,442,836 14,328,643
61,604 Media One Group Incorporated+ 1,859,072 4,050,463
29,840 Nextel Communications Incorporated+ 950,296 1,725,125
199,614 SBC Communications Incorporated 7,142,607 9,581,472
88,049 Sprint Corporation (FON Group) 2,370,102 3,907,174
44,499 Sprint Corporation (PCS Group)+ 845,605 2,658,815
51,256 US West Incorporated 2,272,892 2,678,126
----------- -------------
$62,013,131 $ 97,178,389
DEPOSITORY INSTITUTIONS - 4.63%
17,219 AmSouth BanCorporation $ 553,752 $ 376,666
177,445 Bank of America Corporation 11,374,329 10,735,423
77,109 Bank of New York Company Incorporated 1,997,992 2,756,647
120,120 Bank One Corporation 5,739,107 4,819,815
30,155 BankBoston Corporation 1,292,571 1,400,323
31,524 BB & T Corporation 1,021,167 1,056,054
</TABLE>
24
<PAGE>
PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED) Asset Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
85,970 Chase Manhattan Corporation $ 4,990,930 $ 7,194,614
343,464 Citigroup Incorporated 11,553,790 15,262,682
15,960 Comerica Incorporated 872,763 830,917
27,144 Fifth Third Bancorp 1,371,498 1,798,290
98,526 First Union Corporation 4,930,726 4,088,829
67,552 Firstar Corporation 2,086,722 1,811,238
57,905 Fleet Financial Group Incorporated 2,065,565 2,305,343
5,799 Golden West Financial Corporation 489,063 526,622
23,713 Huntington Bancshares Incorporated 661,916 709,905
18,000 J.P. Morgan & Company Incorporated 2,020,458 2,325,375
45,462 KeyCorp 1,437,662 1,318,398
53,163 Mellon Bank Corporation 1,466,275 1,774,315
15,798 Mercantile Bancorp 843,079 871,852
64,218 National City Corporation 2,185,817 1,774,022
11,324 Northern Trust Corporation 775,098 960,417
30,694 PNC Bank Corporation 1,492,789 1,605,680
22,380 Regions Financial Corporation 794,738 790,294
10,840 Republic New York Corporation 589,085 752,025
16,539 SouthTrust Corporation 657,164 584,033
16,486 State Street Corporation 928,475 987,099
17,675 Summit Bancorp 834,389 589,903
32,475 Suntrust Banks Incorporated 2,346,420 2,088,548
27,198 Synovus Financial Corporation 583,980 513,3624
74,014 U.S. Bancorp 2,590,006 2,285,182
14,166 Union Planters Corporation 700,920 597,628
20,732 Wachovia Corporation 1,620,817 1,624,871
60,381 Washington Mutual Incorporated 2,385,933 1,917,097
168,124 Wells Fargo & Company# 5,330,480 6,693,437
----------- -------------
$80,585,476 $ 85,726,906
</TABLE>
25
<PAGE>
Asset Allocation Fund PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED)
- ------------------------------------------------------------------------
<TABLE>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
EATING & DRINKING PLACES - 0.37%
13,977 Darden Restaurants Incorporated $ 176,112 $ 218,391
138,071 McDonald's Corporation 3,621,967 5,712,688
15,639 Tricon Global Restaurants Incorporated+ 485,930 635,334
12,873 Wendy's International Incorporated 295,276 360,444
----------- -------------
$ 4,579,285 $ 6,926,857
ELECTRIC, GAS & SANITARY SERVICES - 1.60%
19,164 AES Corporation+ $ 717,596 $ 1,163,015
13,200 Allied Waste Industries Incorporated+ 237,006 168,300
14,090 Ameren Corporation 565,203 564,481
19,705 American Electric Power Company+ 906,245 715,538
15,504 Carolina Power & Light Company 592,099 563,958
21,918 Central & Southwest Corporation 537,874 495,895
16,375 Cinergy Corporation 559,002 497,391
11,506 CMS Energy Corporation 507,950 455,206
8,580 Columbia Energy Group 420,043 506,756
23,308 Consolidated Edison Company 890,859 1,025,552
9,809 Consolidated Natural Gas Company 532,222 624,711
15,517 Constellation Energy Group 451,055 459,691
19,670 Dominion Resources Incorporated 771,321 909,737
14,894 DTE Energy Company 514,875 587,382
36,905 Duke Energy Corporation 1,950,391 2,122,037
2,045 Eastern Enterprises 77,953 91,897
35,634 Edison International 940,574 904,213
25,313 Entergy Corporation 688,368 754,644
24,109 FirstEnergy Corporation 649,949 688,613
9,500 Florida Progress Corporation 401,605 445,313
18,481 FPL Group Incorporated 1,017,472 997,974
13,024 GPU Incorporated 485,818 444,444
11,455 New Century Energies Incorporated 553,621 413,812
19,502 Niagara Mohawk Holdings Incorporated+ 249,955 294,968
4,986 Nicor Incorporated 187,938 192,896
15,815 Northern States Power Company 415,353 372,6415
3,353 Oneok Incorporated 115,876 104,153
</TABLE>
26
<PAGE>
PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED) Asset Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
39,046 Pacific Gas & Electric Company $ 1,056,857 $ 1,183,582
30,524 PacifiCorp 687,096 623,834
19,681 PECO Energy Company 504,287 799,541
3,783 People's Energy Corporation 136,488 137,843
15,663 PP & L Resources Incorporated 351,067 438,564
22,510 Public Service Enterprise Group Incorporated
673,667 922,910
29,563 Reliant Energy Incorporated 723,174 818,526
24,586 Sempra Energy 664,431 548,575
11,324 Sonat Incorporated 461,456 409,079
71,053 Southern Company 1,751,680 1,922,872
28,160 Texas Utilities Company 1,104,327 1,138,720
22,300 Unicom Corporation 664,174 861,337
61,799 Waste Management Incorporated+ 3,116,234 1,347,991
43,654 Williams Companies Incorporated 1,227,780 1,800,727
----------- -------------
$29,060,941 $ 29,519,319
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT &
COMPONENTS, EXCEPT COMPUTER EQUIPMENT - 6.49%
11,200 ADC Telecommunications Incorporated+ $ 498,400 $ 415,100
14,515 Advanced Micro Devices Incorporated+ 350,742 300,279
8,770 Andrew Corporation+ 199,949 153,475
44,323 Emerson Electric Company 2,514,330 2,775,728
332,494 General Electric Company 24,619,974 37,343,232
17,137 General Instrument Corporation+ 353,779 842,926
337,213 Intel Corporation 12,902,562 27,714,693
14,677 LSI Logic Corporation+ 363,391 832,920
308,988 Lucent Technologies Incorporated 8,350,971 19,794,544
9,123 Maytag Corporation 330,941 571,328
25,046 Micron Technology Incorporated+ 912,340 1,867,492
61,296 Motorola Incorporated 3,728,438 5,654,556
17,116 National Semiconductor Corporation+ 425,385 482,457
4,388 National Service Industries Incorporated 202,192 140,416
7,000 Network Appliance Incorporated+ 368,899 459,813
134,946 Nortel Networks Corporation 3,323,485 5,541,220
</TABLE>
27
<PAGE>
Asset Allocation Fund PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED)
- ------------------------------------------------------------------------
<TABLE>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
14,700 QUALCOMM Incorporated+ $ 2,301,945 $ 2,825,156
34,244 Raytheon Company 1,782,075 2,332,873
7,851 Scientific-Atlanta Incorporated 152,620 402,364
39,605 Tellabs Incorporated+ 1,108,937 2,358,973
79,732 Texas Instruments Incorporated 2,018,005 6,543,007
5,935 Thomas & Betts Corporation 289,153 267,075
7,729 Whirlpool Corporation 431,438 546,3446
----------- -------------
$67,529,951 $ 120,165,971
ENGINEERING, ACCOUNTING, RESEARCH, MANAGEMENT &
RELATED SERVICES - 0.20%
16,929 Dun & Bradstreet Corporation $ 450,267 $ 443,328
4,703 EG & G Incorporated 103,510 149,614
7,852 Fluor Corporation 361,874 324,877
44,921 Halliburton Company 1,883,378 2,083,211
25,346 Paychex Incorporated 870,507 746,123
----------- -------------
$ 3,669,536 $ 3,747,153
FABRICATED METAL PRODUCTS, EXCEPT MACHINERY &
TRANSPORTATION EQUIPMENT - 0.35%
3,168 Ball Corporation $ 108,410 $ 142,362
9,754 Cooper Industries Incorporated 498,758 505,989
7,246 Crane Company 206,401 174,357
12,622 Crown Cork & Seal Company Incorporated 604,232 335,272
17,218 Fortune Brands Incorporated 589,991 645,675
25,517 Illinois Tool Works Incorporated 1,367,867 1,988,731
40,059 Lockheed Martin Corporation 1,968,902 1,482,183
34,481 Masco Corporation 820,580 976,243
6,146 Snap-On Incorporated 244,276 207,812
----------- -------------
$ 6,409,417 $ 6,458,624
</TABLE>
28
<PAGE>
PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED) Asset Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
FOOD & KINDRED PRODUCTS - 2.23%
3,801 Adolph Coors Company $ 129,088 $ 216,895
48,439 Anheuser-Busch Companies Incorporated 2,143,654 3,729,803
63,364 Archer Daniels Midland Company 1,182,405 823,737
28,554 Bestfoods Incorporated 1,416,346 1,402,715
44,511 Campbell Soup Company 2,269,520 1,966,830
250,794 Coca-Cola Company 16,972,204 15,000,616
42,735 Coca-Cola Enterprises Incorporated 1,265,951 1,215,277
49,975 ConAgra Incorporated 1,552,220 1,224,387
15,638 General Mills Incorporated 1,054,243 1,309,682
36,730 Heinz (H.J.) Company 1,821,863 1,714,832
9,823 Hercules Incorporated 446,415 319,861
14,339 Hershey Foods Corporation 866,450 768,033
41,352 Kellogg Company 1,725,691 1,470,580
150,101 PepsiCo Incorporated 5,444,627 5,122,197
13,850 Quaker Oats Company 693,031 925,353
32,603 Ralston-Ralston Purina Group 970,913 896,582
43,322 Seagrams Company Limited 1,596,538 2,298,774
11,920 Wm. Wrigley Jr. Company 917,407 933,485
----------- -------------
$42,468,566 $ 41,339,639
FOOD STORES - 0.25%
42,850 Albertson's Incorporated $ 1,772,970 $ 2,054,122
4,016 Great Atlantic & Pacific Tea Company 114,947 141,062
83,910 Kroger Company+ 1,719,143 1,940,419
15,285 Winn-Dixie Stores Incorporated 611,019 519,690
----------- -------------
$ 4,218,079 $ 4,655,293
FURNITURE & FIXTURES - 0.10%
8,713 Johnson Controls Incorporated $ 407,023 $ 595,751
28,810 Newell Rubbermaid Incorporated 1,103,048 1,181,210
----------- -------------
$ 1,510,071 $ 1,776,961
</TABLE>
29
<PAGE>
Asset Allocation Fund PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED)
- ------------------------------------------------------------------------
<TABLE>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
GENERAL MERCHANDISE STORES - 1.64%
11,311 Consolidated Stores Corporation+ $ 454,398 $ 182,390
44,941 Dayton Hudson Corporation 1,571,229 2,606,578
11,048 Dillards Incorporated 384,293 259,628
22,760 Dollar General Corporation 635,777 591,760
20,937 Federated Department Stores Incorporated+
917,471 963,102
7,354 Harcourt General Incorporated 373,936 322,197
26,540 J.C. Penney Company Incorporated 1,537,931 962,075
50,592 K Mart Corporation+ 641,919 635,562
34,204 May Department Stores Company 1,261,385 1,336,094
38,871 Sears, Roebuck and Company 1,942,920 1,457,662
32,784 TJX Companies Incorporated 577,273 946,638
452,325 Wal-Mart Stores Incorporated 9,975,141 20,043,652
----------- -------------
$20,273,673 $ 30,307,338
HEALTH SERVICES - 0.14%
58,140 Columbia HCA Healthcare Corporation $ 1,651,386 $ 1,431,697
11,125 HCR Manor Care Incorporated+ 365,602 217,633
42,886 HealthSouth Corporation+ 1,098,434 351,129
31,778 Tenet Healthcare Corporation+ 959,255 554,129
----------- -------------
$ 4,074,677 $ 2,554,588
HEAVY CONSTRUCTION OTHER THAN BUILDING
CONSTRUCTION-CONTRACTORS - 0.01%
4,279 Foster Wheeler Corporation $ 131,909 $ 55,360
6,072 McDermott International Incorporated 176,267 136,999
----------- -------------
$ 308,176 $ 192,359
HOME FURNITURE, FURNISHINGS & EQUIPMENT STORES - 0.18%
20,600 Best Buy Company Incorporated+ $ 1,360,125 $ 1,447,150
20,660 Circuit City Stores Incorporated 392,616 888,380
19,884 Tandy Corporation 386,910 939,519
----------- -------------
$ 2,139,651 $ 3,275,049
</TABLE>
30
<PAGE>
PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED) Asset Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGING
PLACES - 0.08%
25,357 Hilton Hotels Corporation $ 487,233 $ 310,623
24,934 Marriott International 766,843 853,990
19,110 Mirage Resorts Incorporated+ 444,265 249,624
----------- -------------
$ 1,698,341 $ 1,414,237
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER
EQUIPMENT - 5.69%
15,756 Apple Computer Incorporated+ $ 407,523 $ 1,028,079
37,692 Applied Materials Incorporated+ 1,220,004 2,678,488
32,885 Baker Hughes Incorporated 1,024,508 1,118,090
8,987 Black & Decker Corporation 394,741 472,941
2,462 Briggs & Stratton Corporation 115,314 149,874
7,648 Case Corporation 416,575 377,620
36,252 Caterpillar Incorporated 1,857,639 2,052,770
4,196 Cincinnati Milacron Incorporated 104,216 75,528
324,690 Cisco Systems Incorporated+ 7,193,605 22,018,041
172,518 Compaq Computer Corporation 4,961,205 4,000,261
3,990 Cummins Engine Company Incorporated 237,201 236,407
4,547 Data General Corporation+ 89,018 83,835
23,772 Deere & Company 1,202,828 924,137
257,847 Dell Computer Corporation+ 3,729,343 12,586,157
21,889 Dover Corporation 717,450 846,831
102,888 EMC Corporation+ 1,684,687 6,173,280
15,963 Gateway Incorporated+ 876,251 1,547,413
8,266 Harris Corporation 348,303 216,982
103,219 Hewlett-Packard Company 6,146,160 10,876,702
184,483 IBM Corporation 9,801,807 22,979,664
16,910 Ingersoll-Rand Company 698,555 1,075,899
11,500 Lexmark International Group Incorporated+ 770,041 905,625
40,885 Minnesota Mining and Manufacturing Company
3,569,592 3,863,632
12,820 Pall Corporation 281,744 254,798
11,179 Parker-Hannifin Corporation 449,243 489,081
</TABLE>
31
<PAGE>
Asset Allocation Fund PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED)
- ------------------------------------------------------------------------
<TABLE>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
27,406 Pitney Bowes Incorporated $ 1,176,904 $ 1,616,954
22,874 Seagate Technology Incorporated+ 606,863 759,131
19,472 Silicon Graphics Incorporated+ 280,083 222,711
25,776 Solectron Corporation+ 1,224,258 2,016,972
9,181 Stanley Works 391,807 242,149
6,579 Timken Company 204,181 115,544
48,923 United Technologies Corporation 2,010,983 3,235,033
----------- -------------
$54,192,632 $ 105,240,629
INSURANCE AGENTS, BROKERS & SERVICE - 0.16%
26,168 Aon Corporation $ 995,880 $ 873,357
17,207 Humana Incorporated+ 402,232 155,938
26,646 Marsh & McLennan Companies Incorporated
1,353,765 1,940,162
----------- -------------
$ 2,751,877 $ 2,969,457
INSURANCE CARRIERS - 1.90%
14,399 Aetna Incorporated $ 1,204,258 $ 1,119,522
26,850 AFLAC Incorporated 1,313,068 1,206,572
82,188 Allstate Corporation 3,388,982 2,696,794
25,629 American General Corporation 1,444,869 1,819,659
157,400 American International Group Incorporated 8,898,321 14,589,013
16,690 Chubb Corporation 1,158,860 954,459
20,768 CIGNA Corporation 1,244,476 1,865,226
17,029 Cincinnati Financial Corporation 723,992 674,774
32,348 Conseco Incorporated 1,300,616 776,352
23,234 Hartford Financial Services Group 1,047,514 1,055,695
10,852 Jefferson-Pilot Corporation 559,831 724,371
20,554 Lincoln National Corporation 771,962 963,469
11,224 Loews Corporation 1,099,009 881,084
10,198 MBIA Incorporated 648,258 529,021
11,212 MGIC Investment Corporation 616,814 487,021
7,365 Progressive Corporation 832,539 751,230
13,982 Safeco Corporation 647,378 498,109
23,246 St. Paul Companies Incorporated 905,102 745,325
</TABLE>
32
<PAGE>
PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED) Asset Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
13,860 Torchmark Corporation $ 472,712 $ 395,010
17,723 United Healthcare Corporation 910,760 1,077,780
24,322 UnumProvident Corporation 1,187,934 877,112
6,628 Wellpoint Health Networks Incorporated+ 573,819 483,015
----------- -------------
$30,951,074 $ 35,170,613
LOCAL & SUBURBAN TRANSIT & INTERURBAN HIGHWAY
PASSENGER TRANSPORTATION - 0.01%
33,978 Laidlaw Incorporated $ 439,794 $ 212,363
LUMBER & WOOD PRODUCTS, EXCEPT FURNITURE - 0.01%
11,306 Louisiana-Pacific Corporation $ 237,489 $ 209,161
MEASURING, ANALYZING, & CONTROLLING INSTRUMENTS;
PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS - 1.26%
6,811 Allergan Incorporated $ 250,412 $ 680,249
5,829 Bausch & Lomb Incorporated 247,479 385,078
29,437 Baxter International Incorporated 1,556,875 1,974,119
25,293 Becton, Dickinson and Company 734,464 711,366
11,515 Biomet Incorporated 284,123 411,661
40,169 Boston Scientific Corporation+ 1,181,997 1,363,235
5,378 C. R. Bard Incorporated 177,452 250,749
13,495 Danaher Corporation 612,149 792,831
32,825 Eastman Kodak Company 2,280,105 2,410,586
7,277 Eaton Corporation 615,115 713,146
30,841 Guidant Corporation+ 882,351 1,809,981
12,846 Honeywell Incorporated 933,742 1,458,021
8,932 KLA-Tencor Corporation+ 419,782 561,041
7,486 Mallinckrodt Incorporated 257,473 240,020
59,306 Medtronic Incorporated 3,411,491 4,640,694
4,663 Millipore Corporation 166,173 176,028
10,356 PE Corp - PE Biosystems Group 313,444 712,622
4,757 Polaroid Corporation 209,150 129,034
8,771 St. Jude Medical Incorporated+ 291,020 317,949
4,998 Tektronix Incorporated 178,925 166,184
</TABLE>
33
<PAGE>
Asset Allocation Fund PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED)
- ------------------------------------------------------------------------
<TABLE>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
15,780 Thermo Electron Corporation+ $ 522,790 $ 250,508
67,132 Xerox Corporation 2,749,772 3,205,553
----------- -------------
$18,276,284 $ 23,360,655
METAL MINING - 0.15%
4,052 ASARCO Incorporated $ 103,191 $ 84,586
38,838 Barrick Gold Corporation 771,889 752,486
9,551 Cyprus Amax Minerals Company 178,028 161,770
17,063 Freeport-McMoran Copper & Gold Incorporated - Class B+
370,941 274,074
24,271 Homestake Mining Company 230,921 206,304
18,546 Inco Limited Company 364,197 380,193
16,450 Newmont Mining Corporation 515,882 336,197
6,055 Phelps Dodge Corporation 415,410 338,702
31,614 Placer Dome Incorporated 423,752 327,995
----------- -------------
$ 3,374,211 $ 2,862,307
MINING & QUARRYING OF NONMETALLIC MINERALS, EXCEPT
FUELS - 0.02%
8,100 Vulcan Materials Company $ 390,963 $ 345,263
MISCELLANEOUS MANUFACTURING INDUSTRIES - 0.56%
4,186 Armstrong World Industries Incorporated $ 284,706 $ 203,283
20,163 Hasbro Incorporated 427,233 492,733
3,872 Jostens Incorporated 91,772 77,924
41,739 Mattel Incorporated 1,396,638 889,562
874 NACCO Industries Incorporated 83,604 68,063
84,412 Tyco International Limited 4,275,903 8,551,990
----------- -------------
$ 6,559,856 $ 10,283,555
</TABLE>
34
<PAGE>
PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED) Asset Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
MISCELLANEOUS RETAIL - 0.44%
22,067 Costco Wholesale Corporation+ $ 947,570 $ 1,649,508
39,838 CVS Corporation 1,338,108 1,660,747
4,074 Longs Drug Stores Incorporated 111,928 128,076
37,300 Office Depot Incorporated+ 841,966 389,319
26,417 Rite Aid Corporation 825,082 488,714
46,782 Staples Incorporated+ 891,154 1,017,509
25,824 Toys 'R' Us Incorporated+ 743,007 356,694
101,756 Walgreen Company 1,660,915 2,359,467
----------- -------------
$ 7,359,730 $ 8,050,034
MOTION PICTURES - 0.72%
7,440 King World Productions Incorporated+ $ 177,696 $ 283,650
121,274 Time Warner Incorporated 4,023,339 7,193,064
209,371 Walt Disney Company+ 6,322,351 5,810,045
----------- -------------
$10,523,386 $ 13,286,759
NONDEPOSITORY CREDIT INSTITUTIONS - 1.39%
45,810 American Express Company $ 3,922,333 $ 6,298,875
73,752 Associates First Capital Corporation 2,402,355 2,530,616
20,054 Capital One Financial Corporation 801,618 757,038
11,435 Countrywide Credit Industries Incorporated 444,417 367,349
104,276 Federal National Mortgage Association 5,500,317 6,478,147
70,547 Freddie Mac 2,800,344 3,633,170
48,944 Household International Incorporated 1,818,498 1,847,636
81,208 MBNA Corporation 1,542,013 2,004,823
14,453 Providian Financial Corporation 454,964 1,121,914
16,757 SLM Holding Corporation 793,551 740,450
----------- -------------
$20,480,410 $ 25,780,018
</TABLE>
35
<PAGE>
Asset Allocation Fund PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED)
- ------------------------------------------------------------------------
<TABLE>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
OIL & GAS EXTRACTION - 0.76%
12,275 Anadarko Petroleum Corporation $ 396,842 $ 417,350
10,899 Apache Corporation 368,565 495,904
32,780 Atlantic Richfield Company 2,383,532 2,882,591
18,208 Burlington Resources Incorporated 759,235 761,322
71,638 Enron Corporation 1,614,417 2,999,841
5,278 Helmerich & Payne Incorporated 150,853 145,475
8,868 Kerr-McGee Corporation 526,920 496,608
33,218 Nabisco Group Holdings Corporation 590,231 589,619
8,822 Rowan Companies Incorporated+ 229,280 164,310
55,609 Schlumberger Limited 3,790,837 3,711,901
26,085 Union Pacific Resources Group Incorporated
565,899 467,900
30,942 USX-Marathon Group Incorporated 977,699 963,070
----------- -------------
$12,354,310 $ 14,095,891
PAPER & ALLIED PRODUCTS - 0.48%
5,544 Bemis Incorporated $ 224,411 $ 210,325
5,959 Boise Cascade Corporation 200,271 216,759
9,811 Champion International Corporation 481,996 539,605
22,431 Fort James Corporation 865,503 723,400
13,934 IKON Office Solutions Incorporated 324,722 155,016
41,844 International Paper Company 1,848,315 1,969,283
54,242 Kimberly-Clark Corporation 2,597,163 3,088,404
10,503 Mead Corporation 322,842 391,893
3,030 Potlatch Corporation 130,970 117,034
5,769 Temple-Inland Incorporated 324,153 357,678
17,605 Tenneco Incorporated 734,335 354,301
10,442 Westvaco Corporation 315,506 273,450
11,399 Willamette Industries Incorporated 369,289 451,685
----------- -------------
$ 8,739,476 $ 8,848,833
</TABLE>
36
<PAGE>
PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED) Asset Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
PERSONAL SERVICES - 0.05%
10,047 H & R Block Incorporated $ 399,262 $ 558,865
26,746 Service Corporation International 907,381 369,429
----------- -------------
$ 1,306,643 $ 928,294
PETROLEUM REFINING & RELATED INDUSTRIES - 3.08%
9,285 Amerada Hess Corporation $ 502,955 $ 576,250
7,648 Ashland Incorporated 372,078 294,926
66,614 Chevron Corporation 5,175,279 6,145,142
21,891 Coastal Corporation 635,543 948,154
64,972 Conoco Incorporated 1,361,563 1,746,119
246,787 Exxon Corporation 15,583,631 19,465,325
79,563 Mobil Corporation 5,671,816 8,145,262
25,794 Phillips Petroleum Company 1,181,091 1,315,494
217,935 Royal Dutch Petroleum Company 11,204,258 13,484,728
9,489 Sunoco Incorporated 365,655 308,985
54,402 Texaco Incorporated 3,031,784 3,454,527
24,817 Unocal Corporation 930,095 1,039,212
----------- -------------
$46,015,748 $ 56,924,124
PRIMARY METAL INDUSTRIES - 0.28%
23,150 Alcan Aluminum Limited $ 671,697 $ 761,056
37,453 Alcoa Incorporated 1,322,591 2,418,059
19,984 Allegheny Teledyne Incorporated 489,714 373,451
11,290 Bethlehem Steel Corporation+ 114,379 86,792
13,068 Engelhard Corporation 251,169 260,543
8,976 Nucor Corporation 449,877 417,945
6,702 Reynolds Metals Company 401,595 424,321
9,136 USX-U.S. Steel Group Incorporated 289,964 246,672
9,776 Worthington Industries Incorporated 173,184 146,640
----------- -------------
$ 4,164,170 $ 5,135,479
</TABLE>
37
<PAGE>
Asset Allocation Fund PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED)
- ------------------------------------------------------------------------
<TABLE>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
PRINTING, PUBLISHING & ALLIED INDUSTRIES - 0.54%
7,179 American Greetings Corporation $ 274,070 $ 198,769
9,391 Dow Jones & Company Incorporated 453,829 471,898
28,539 Gannett Company Incorporated 1,606,178 1,938,868
8,015 Knight-Ridder Incorporated 407,697 432,309
20,225 McGraw-Hill Incorporated 702,031 1,045,380
5,543 Meredith Corporation 185,791 192,273
18,210 New York Times Company 539,633 711,328
13,571 R.R. Donnelley & Sons Company 516,681 425,790
7,440 Times Mirror Company 432,272 429,660
12,129 Tribune Company 701,709 1,131,787
70,371 Viacom Incorporated+ 1,494,122 2,959,980
----------- -------------
$ 7,314,013 $ 9,938,042
RAILROAD TRANSPORTATION - 0.28%
47,893 Burlington Northern Santa Fe Corporation $ 1,501,705 $ 1,388,897
22,252 CSX Corporation 1,125,508 972,134
10,909 Kansas City Southern Industries Incorporated
615,385 505,223
38,763 Norfolk Southern Corporation 1,238,267 1,015,106
25,331 Union Pacific Corporation 1,480,062 1,233,303
----------- -------------
$ 5,960,927 $ 5,114,663
RUBBER & MISCELLANEOUS PLASTICS PRODUCTS - 0.17%
8,044 Cooper Tire & Rubber Company $ 176,451 $ 152,836
16,019 Goodyear Tire & Rubber Company 969,906 899,066
28,749 Nike Incorporated 1,354,059 1,329,641
5,512 Reebok International Limited+ 182,648 65,111
8,606 Sealed Air Corporation+ 498,920 505,603
6,153 Tupperware Corporation 175,182 138,827
----------- -------------
$ 3,357,166 $ 3,091,084
</TABLE>
38
<PAGE>
PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED) Asset Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES &
SERVICES - 0.74%
11,519 Bear Stearns Companies Incorporated $ 596,292 $ 479,478
82,934 Charles Schwab Corporation 977,285 3,275,893
25,842 Franklin Resources Incorporated 1,295,624 928,697
11,704 Lehman Brothers Holdings Incorporated 683,079 629,090
37,266 Merrill Lynch & Company Incorporated 2,665,880 2,780,975
58,080 Morgan Stanley Dean Witter & Company 3,403,113 4,983,990
14,487 Paine Webber Group Incorporated 614,880 568,615
----------- -------------
$10,236,153 $ 13,646,738
SOCIAL SERVICES - 0.10%
17,592 Georgia-Pacific Corporation $ 515,854 $ 727,869
20,356 Weyerhaeuser Company 995,549 1,145,025
----------- -------------
$ 1,511,403 $ 1,872,894
STONE, CLAY, GLASS & CONCRETE PRODUCTS - 0.12%
24,563 Corning Incorporated $ 1,050,276 $ 1,633,440
5,672 Owens Corning 214,857 159,525
15,340 Owens-Illinois Incorporated+ 564,198 379,665
----------- -------------
$ 1,829,331 $ 2,172,630
TEXTILE MILL PRODUCTS - 0.12%
7,431 Fruit of the Loom Incorporated+ $ 207,352 $ 52,017
3,915 Russell Corporation 114,213 65,576
92,193 Sara Lee Corporation 2,345,001 2,045,532
1,972 Springs Industries Incorporated 93,437 74,074
----------- -------------
$ 2,760,003 $ 2,237,199
</TABLE>
39
<PAGE>
Asset Allocation Fund PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED)
- ------------------------------------------------------------------------
<TABLE>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
TOBACCO PRODUCTS - 0.53%
245,331 Philip Morris Incorporated $10,364,322 $ 9,184,579
1 RJ Reynolds Tobacco Holdings Incorporated 29 27
18,123 UST Incorporated 530,781 574,273
----------- -------------
$10,895,132 $ 9,758,879
TRANSPORTATION BY AIR - 0.22%
15,750 AMR Corporation+ $ 972,086 $ 923,344
14,444 Delta Air Lines Incorporated 774,454 733,936
30,226 FDX Corporation+ 901,913 1,282,716
51,733 Southwest Airlines Company 551,061 863,294
7,740 US Airways Group Incorporated+ 492,625 238,489
----------- -------------
$ 3,692,139 $ 4,041,779
TRANSPORTATION EQUIPMENT - 1.50%
56,255 Allied Signal Incorporated $ 2,193,571 $ 3,445,619
98,869 Boeing Company 4,580,314 4,480,002
9,697 Brunswick Corporation 266,490 247,880
17,042 Dana Corporation 745,619 742,392
56,623 Delphi Automotive Systems Corporation 864,390 1,061,681
3,682 Fleetwood Enterprises Incorporated 126,329 75,021
3,386 FMC Corporation+ 240,481 197,234
123,116 Ford Motor Company 4,384,371 6,417,422
18,653 General Dynamics Corporation 927,622 1,175,139
66,025 General Motors Corporation 3,351,233 4,365,903
18,441 Genuine Parts Company 611,572 532,484
8,617 Goodrich (B.F.) Company 363,298 318,291
9,211 ITT Industries Incorporated 291,195 311,447
6,866 Navistar International Corporation 158,483 333,859
7,068 Northrop Grumman Corporation 722,512 512,430
7,999 PACCAR Incorporated 383,615 440,945
19,433 Rockwell International Corporation 779,795 1,148,976
</TABLE>
40
<PAGE>
PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED) Asset Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
15,383 Textron Incorporated $ 993,085 $ 1,242,177
12,255 TRW Incorporated 670,593 667,897
----------- -------------
$22,654,568 $ 27,716,799
WATER TRANSPORTATION - 0.15%
62,108 Carnival Corporation $ 2,696,021 $ 2,775,451
WHOLESALE TRADE-DURABLE GOODS - 0.78%
9,633 Grainger (W.W.) Incorporated $ 441,419 $ 419,638
136,786 Johnson & Johnson 8,881,418 13,986,368
5,845 Pep Boys - Manny, Moe & Jack 139,174 85,118
----------- -------------
$ 9,462,011 $ 14,491,124
WHOLESALE TRADE-NONDURABLE GOODS - 0.58%
7,068 Brown-Forman Corporation $ 380,404 $ 415,245
27,503 Cardinal Health Incorporated 1,747,071 1,753,316
27,701 McKesson HBOC Incorporated 2,076,522 862,194
50,298 Safeway Incorporated+ 2,760,511 2,342,001
12,440 Supervalu Incorporated 246,949 279,900
33,923 Sysco Corporation 712,105 1,106,738
58,142 Unilever Nv 3,956,229 4,004,530
----------- -------------
$11,879,791 $ 10,763,924
TOTAL COMMON STOCK $824,234,728 $1,101,270,030
</TABLE>
41
<PAGE>
Asset Allocation Fund PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED)
- ------------------------------------------------------------------------
<TABLE>
U.S. TREASURY SECURITIES - 40.05%
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
U.S. TREASURY BILLS - 0.68%
$ 672,000 U.S. Treasury Bills 4.86%@ 11/04/99 $ 666,443
11,933,000 U.S. Treasury Bills 4.50@ 09/23/99 11,900,184
-------------
$ 12,566,627
U.S. TREASURY BONDS - 39.37%
$20,050,000 U.S. Treasury Bonds 6.75% 08/15/26 $ 20,980,520
20,475,000 U.S. Treasury Bonds 7.63 11/15/22 23,363,817
18,850,000 U.S. Treasury Bonds 8.50 02/15/20 23,105,952
20,650,000 U.S. Treasury Bonds 6.63 02/15/27 21,324,428
21,700,000 U.S. Treasury Bonds 7.25 08/15/22 23,788,624
20,450,000 U.S. Treasury Bonds 6.38 08/15/27 20,510,737
38,825,000 U.S. Treasury Bonds 7.13 02/15/23 42,034,275
66,250,000 U.S. Treasury Bonds 8.00 11/15/21 78,050,450
28,000,000 U.S. Treasury Bonds 8.13 08/15/21 33,346,320
21,600,000 U.S. Treasury Bonds 7.88 02/15/21 25,052,544
22,775,000 U.S. Treasury Bonds 7.50 11/15/24 25,867,389
27,675,000 U.S. Treasury Bonds 6.00 02/15/26 26,351,858
21,950,000 U.S. Treasury Bonds 8.75 05/15/20 27,540,446
46,950,000 U.S. Treasury Bonds 8.75 08/15/20 58,973,426
23,400,000 U.S. Treasury Bonds 6.50 11/15/26 23,747,256
23,150,000 U.S. Treasury Bonds 6.88 08/15/25 24,531,824
43,950,000 U.S. Treasury Bonds 6.13 11/15/27 42,686,438
45,875,000 U.S. Treasury Bonds 6.25 08/15/23 45,022,184
25,900,000 U.S. Treasury Bonds 7.63 02/15/25 29,849,750
21,000,000 U.S. Treasury Bonds 6.13 08/15/29 21,177,240
21,700,000 U.S. Treasury Bonds 5.25 11/15/28 18,807,824
21,500,000 U.S. Treasury Bonds 5.50 08/15/28 19,255,830
23,350,000 U.S. Treasury Bonds 5.25 02/15/29 20,424,012
27,475,000 U.S. Treasury Bonds 8.13 05/15/21 32,682,337
-------------
$ 728,475,481
TOTAL U.S. TREASURY SECURITIES $ 741,042,108
(Cost $764,597,361)
</TABLE>
42
<PAGE>
PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED) Asset Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
<C> <S> <C> <C> <C> <C>
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $1,588,832,091)* 99.57% $1,842,312,139
Other Assets and Liabilities, Net 0.43 8,030,184
------ -------------
TOTAL NET ASSETS 100.00% $1,850,342,323
====== =============
- ------------------------------------------------------------------------------------------------------
</TABLE>
+ NON-INCOME EARNING SECURITIES.
@ YIELD TO MATURITY.
# SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $5,330,480.
* 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 $328,390,946
Gross Unrealized Depreciation (74,910,898)
---
NET UNREALIZED APPRECIATION $253,480,048
===
</TABLE>
The accompanying notes are an integral part of these financial statements.
43
<PAGE>
Index Allocation Fund PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED)
- ------------------------------------------------------------------------
<TABLE>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK - 96.67%
AGRICULTURAL PRODUCTION - CROP - 0.08%
4,202 Pioneer Hi-Bred International Incorporated $ 125,219 $ 164,403
AMUSEMENT & RECREATION SERVICES - 0.03%
2,185 Harrah's Entertainment Incorporated+ $ 45,937 $ 49,163
APPAREL & ACCESSORY STORES - 0.51%
14,984 Gap Incorporated $ 209,220 $ 586,249
2,799 Kohl's Corporation+ 162,599 199,429
3,676 Limited Incorporated 79,384 139,229
2,452 Nordstrom Incorporated 64,771 69,422
----------- -------------
$ 515,974 $ 994,329
APPAREL & OTHER FINISHED PRODUCTS MADE FROM FABRICS & SIMILAR MATERIALS - 0.06%
1,149 Liz Claiborne Incorporated $ 50,440 $ 42,226
2,085 V. F. Corporation 82,767 75,060
----------- -------------
$ 133,207 $ 117,286
AUTOMOTIVE DEALERS & GASOLINE - 0.03%
2,625 Autozone Incorporated+ $ 75,314 $ 62,508
AUTOMOTIVE REPAIR, SERVICES & PARKING - 0.01%
1,288 Ryder Systems Incorporated $ 40,166 $ 28,417
BUILDING CONSTRUCTION-GENERAL - 0.03%
1,046 Centex Corporation $ 26,564 $ 29,419
846 Kaufman & Broad Home Corporation 17,073 17,290
804 Pulte Corporation 13,230 18,593
----------- -------------
$ 56,867 $ 65,302
</TABLE>
44
<PAGE>
PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED) Index Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
BUILDING MATERIALS, HARDWARE, GARDEN SUPPLY & MOBILE HOME DEALERS - 0.99%
25,747 Home Depot Incorporated $ 729,664 $ 1,573,785
6,430 Lowes Companies 154,732 290,958
3,052 Sherwin Williams Company 86,271 74,393
----------- -------------
$ 970,667 $ 1,939,136
BUSINESS SERVICES - 8.31%
6,296 3Com Corporation+ $ 295,791 $ 156,220
1,084 Adobe Systems Incorporated 48,657 107,994
18,926 America Online Incorporated+ 1,623,093 1,728,180
1,068 Autodesk Incorporated 41,420 24,564
10,696 Automatic Data Processing Incorporated 268,102 420,487
4,067 BMC Software Incorporated+ 233,964 218,855
2,885 Cabletron Systems Incorporated+ 84,183 48,504
12,511 Cendant Corporation 337,430 224,416
2,472 Ceridian Corporation+ 55,592 69,216
9,399 Computer Associates International Incorporated
385,647 531,044
2,776 Computer Sciences Corporation+ 113,413 192,065
6,432 Compuware Corporation+ 245,535 194,166
1,420 De Luxe Corporation 46,443 48,369
2,246 Ecolab Incorporated 51,485 84,365
8,548 Electronic Data Systems Corporation 354,309 479,757
2,543 Equifax Incorporated 81,991 77,562
7,507 First Data Corporation 274,922 330,308
5,600 IMS Health Incorporated 95,991 154,700
4,874 Interpublic Group Company Incorporated 115,758 193,132
88,832 Microsoft Corporation+ 2,976,325 8,222,512
5,891 Novell Incorporated+ 74,222 139,543
3,092 Omnicom Group Incorporated 135,660 233,060
25,044 Oracle Corporation+ 517,579 914,106
4,602 Parametric Technology Corporation+ 102,911 64,428
4,132 Peoplesoft Incorporated+ 128,801 58,365
431 Shared Medical Systems Corporation 23,957 24,217
</TABLE>
45
<PAGE>
Index Allocation Fund PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED)
- ------------------------------------------------------------------------
<TABLE>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
13,458 Sun Microsystems Incorporated+ $ 271,160 $ 1,069,911
4,723 Unisys Corporation+ 76,040 203,089
----------- -------------
$ 9,060,381 $ 16,213,135
CHEMICALS & ALLIED PRODUCTS - 11.42%
26,456 Abbott Laboratories $ 829,065 $ 1,147,529
3,978 Air Products & Chemicals Incorporated 146,472 135,252
1,023 Alberto-Culver Company 27,090 26,023
1,716 ALZA Corporation+ 53,753 86,444
22,860 American Home Products Corporation 842,901 948,690
8,852 Amgen Incorporated+ 258,522 736,376
2,018 Avery Dennison Corporation 82,848 110,738
4,550 Avon Products Incorporated 143,745 199,631
34,588 Bristol-Myers Squibb Company 1,335,897 2,434,131
4,008 Clorox Company 144,820 181,362
10,080 Colgate-Palmolive Company 310,560 539,280
3,860 Dow Chemical Company 333,474 438,593
17,012 Dupont E I De Nemours Company 1,037,794 1,078,136
1,416 Eastman Chemical Company 81,894 65,756
19,156 Eli Lilly & Company 996,150 1,429,517
19,311 Gillette Company 876,287 900,375
1,083 Great Lakes Chemical Corporation 49,405 44,606
1,853 International Flavors & Fragrances Incorporated
87,606 75,510
41,126 Merck & Company Incorporated 1,955,328 2,763,153
11,036 Monsanto Company 429,867 453,166
5,992 Occidental Petroleum Corporation 149,376 129,952
67,578 Pfizer Incorporated 1,415,735 2,551,070
8,780 Pharmacia & Upjohn Incorporated 333,299 458,755
3,033 PPG Industries Incorporated 167,414 182,170
2,716 Praxair Incorporated 127,121 127,652
23,106 Procter & Gamble Company 1,552,812 2,293,271
3,732 Rohm & Haas Company 118,865 139,484
25,610 Schering-Plough Corporation 666,220 1,346,126
1,774 Sigma Aldrich Corporation 56,783 57,212
</TABLE>
46
<PAGE>
PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED) Index Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
2,294 Union Carbide Corporation $ 103,286 $ 130,471
1,218 W.R. Grace & Company+ 17,587 23,294
14,859 Warner-Lambert Company 596,528 984,409
1,700 Watson Pharmaceuticals Incorporated+ 74,430 60,988
----------- -------------
$15,402,934 $ 22,279,122
COMMUNICATIONS - 8.53%
5,139 Alltel Corporation $ 214,141 $ 347,525
19,113 Ameritech Corporation 666,324 1,206,508
55,415 AT & T Corporation 1,667,282 2,493,675
26,978 Bell Atlantic Corporation 1,020,913 1,652,403
32,988 BellSouth Corporation 814,795 1,492,707
12,375 CBS Corporation+ 316,212 581,625
2,433 CenturyTel Incorporated 109,331 95,647
5,807 Clear Channel Communications Incorporated
276,925 406,853
12,858 Comcast Corporation 175,003 419,492
3,025 Frontier Corporation 75,130 126,861
16,931 GTE Corporation 796,752 1,161,890
32,430 MCI WorldCom Incorporated+ 1,210,266 2,456,573
10,511 Media One Group Incorporated+ 255,912 691,098
5,143 Nextel Communications Incorporated+ 173,301 297,330
34,175 SBC Communications Incorporated 1,096,563 1,640,400
15,032 Sprint Corporation (FON Group) 375,378 667,045
7,679 Sprint Corporation (PCS Group)+ 127,752 458,820
8,768 US West Incorporated 337,379 458,128
----------- -------------
$ 9,709,359 $ 16,654,580
DEPOSITORY INSTITUTIONS - 7.53%
3,150 AmSouth BanCorporation $ 102,701 $ 68,906
30,334 Bank of America Corporation 1,682,104 1,835,207
13,248 Bank of New York Company Incorporated 294,210 473,616
20,530 Bank One Corporation 922,817 823,766
5,163 BankBoston Corporation 198,665 239,757
5,451 BB & T Corporation 181,528 182,609
</TABLE>
47
<PAGE>
Index Allocation Fund PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED)
- ------------------------------------------------------------------------
<TABLE>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
14,662 Chase Manhattan Corporation $ 755,906 $ 1,227,026
58,816 Citigroup Incorporated 1,755,225 2,613,636
2,758 Comerica Incorporated 136,068 143,588
4,711 Fifth Third Bancorp 200,650 312,104
16,855 First Union Corporation 744,115 699,483
11,593 Firstar Corporation 356,932 310,837
9,973 Fleet Financial Group Incorporated 323,668 397,050
945 Golden West Financial Corporation 74,057 85,818
4,067 Huntington Bancshares Incorporated 117,681 121,756
7,830 KeyCorp 222,630 227,070
9,146 Mellon Bank Corporation 213,400 305,248
2,702 Mercantile Bancorp 150,173 149,117
3,085 J.P. Morgan & Company Incorporated 321,684 398,543
10,918 National City Corporation 341,220 301,610
1,938 Northern Trust Corporation 136,270 164,367
5,276 PNC Bank Corporation 229,632 276,001
3,839 Regions Financial Corporation 136,621 135,565
1,880 Republic New York Corporation 92,809 130,425
2,900 SouthTrust Corporation 115,431 102,406
2,849 State Street Corporation 156,887 170,584
2,976 Summit Bancorp 147,378 99,324
5,546 Suntrust Banks Incorporated 348,005 356,677
4,731 Synovus Financial Corporation 103,223 89,298
2,455 Union Planters Corporation 119,962 103,570
12,669 U.S. Bancorp 362,245 391,155
3,552 Wachovia Corporation 247,401 278,388
10,303 Washington Mutual Incorporated 378,731 327,120
28,767 Wells Fargo & Company# 802,212 1,145,286
----------- -------------
$12,472,241 $ 14,686,913
</TABLE>
48
<PAGE>
PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED) Index Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
EATING & DRINKING PLACES - 0.61%
2,409 Darden Restaurants Incorporated $ 26,046 $ 37,641
23,660 McDonald's Corporation 595,049 978,933
2,626 Tricon Global Restaurants Incorporated+ 78,667 106,681
2,161 Wendy's International Incorporated 48,441 60,508
----------- -------------
$ 748,203 $ 1,183,763
ELECTRIC, GAS & SANITARY SERVICES - 2.59%
3,286 AES Corporation+ $ 122,945 $ 199,419
2,300 Allied Waste Industries Incorporated+ 41,297 29,325
2,442 Ameren Corporation 96,818 97,833
3,368 American Electric Power Company+ 147,033 122,301
2,607 Carolina Power & Light Company 93,232 94,830
3,698 Central & Southwest Corporation 90,328 83,667
2,729 Cinergy Corporation 89,361 82,893
2,100 CMS Energy Corporation 92,309 83,081
1,484 Columbia Energy Group 68,273 87,649
3,958 Consolidated Edison Company 136,816 174,152
1,669 Consolidated Natural Gas Company 91,803 106,294
2,656 Constellation Energy Group 73,128 78,684
3,335 Dominion Resources Incorporated 127,887 154,244
2,504 DTE Energy Company 79,384 98,752
6,385 Duke Energy Corporation 304,917 367,138
405 Eastern Enterprises 15,978 18,200
6,139 Edison International 143,825 155,777
4,283 Entergy Corporation 112,635 127,687
4,131 FirstEnergy Corporation 103,563 117,992
1,700 Florida Progress Corporation 71,874 79,688
3,093 FPL Group Incorporated 148,706 167,022
2,208 GPU Incorporated 79,252 75,348
1,991 New Century Energies Incorporated 95,443 71,925
3,177 Niagara Mohawk Holdings Incorporated+ 38,278 48,052
888 Nicor Incorporated 33,046 34,355
2,633 Northern States Power Company 66,765 62,040
530 Oneok Incorporated 17,592 16,463
</TABLE>
49
<PAGE>
Index Allocation Fund PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED)
- ------------------------------------------------------------------------
<TABLE>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
6,630 Pacific Gas & Electric Company $ 172,294 $ 200,972
5,102 PacifiCorp 109,142 104,272
3,398 PECO Energy Company 85,466 138,044
598 People's Energy Corporation 20,518 21,790
2,707 PP & L Resources Incorporated 62,455 75,796
3,857 Public Service Enterprise Group Incorporated 109,248 158,137
5,092 Reliant Energy Incorporated 117,753 140,985
4,179 Sempra Energy 104,838 93,244
1,917 Sonat Incorporated 87,201 69,252
12,129 Southern Company 279,796 328,241
4,962 Texas Utilities Company 192,361 200,651
3,796 Unicom Corporation 102,007 146,621
10,587 Waste Management Incorporated+ 523,738 230,929
7,478 Williams Companies Incorporated 189,977 308,468
----------- -------------
$ 4,739,282 $ 5,052,213
ELECTRONIC & OTHER ELECTRICAL EQUIPMENT & COMPONENTS, EXCEPT COMPUTER EQUIPMENT - 10.56%
2,000 ADC Telecommunications Incorporated+ $ 89,000 $ 74,125
2,504 Advanced Micro Devices Incorporated+ 67,558 51,802
1,417 Andrew Corporation+ 40,147 24,798
7,581 Emerson Electric Company 399,971 474,760
56,957 General Electric Company 3,642,328 6,396,983
2,977 General Instrument Corporation+ 60,283 146,431
57,722 Intel Corporation 2,120,107 4,744,027
2,445 LSI Logic Corporation+ 73,555 138,754
52,870 Lucent Technologies Incorporated 1,221,560 3,386,984
1,587 Maytag Corporation 46,774 99,386
4,380 Micron Technology Incorporated+ 190,244 326,584
10,504 Motorola Incorporated 670,037 968,994
2,911 National Semiconductor Corporation+ 80,858 82,054
690 National Service Industries Incorporated 28,110 22,080
1,200 Network Appliance Incorporated+ 63,064 78,825
23,118 Nortel Networks Corporation 520,745 949,283
2,600 QUALCOMM Incorporated+ 407,147 499,688
</TABLE>
50
<PAGE>
PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED) Index Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
5,835 Raytheon Company $ 308,602 $ 397,509
1,347 Scientific-Atlanta Incorporated 27,117 69,034
6,826 Tellabs Incorporated+ 185,111 406,574
13,676 Texas Instruments Incorporated 318,975 1,122,287
1,007 Thomas & Betts Corporation 50,385 45,315
1,362 Whirlpool Corporation 73,227 96,276
----------- -------------
$10,684,905 $ 20,602,553
ENGINEERING, ACCOUNTING, RESEARCH, MANAGEMENT & RELATED SERVICES - 0.33%
2,851 Dun & Bradstreet Corporation $ 70,230 $ 74,661
751 EG & G Incorporated 14,294 23,891
1,360 Fluor Corporation 76,066 56,270
7,674 Halliburton Company 302,826 355,882
4,312 Paychex Incorporated 146,535 126,935
----------- -------------
$ 609,951 $ 637,639
FABRICATED METAL PRODUCTS, EXCEPT MACHINERY & TRANSPORTATION EQUIPMENT - 0.57%
518 Ball Corporation $ 15,352 $ 23,278
1,602 Cooper Industries Incorporated 81,628 83,104
1,228 Crane Company 30,459 29,549
2,116 Crown Cork & Seal Company Incorporated 104,554 56,206
2,936 Fortune Brands Incorporated 103,233 110,100
4,400 Illinois Tool Works Incorporated 212,608 342,925
6,846 Lockheed Martin Corporation 312,564 253,302
5,912 Masco Corporation 126,936 167,384
1,172 Snap-On Incorporated 44,299 39,628
----------- -------------
$ 1,031,633 $ 1,105,476
</TABLE>
51
<PAGE>
Index Allocation Fund PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED)
- ------------------------------------------------------------------------
<TABLE>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
FOOD & KINDRED PRODUCTS - 3.62%
610 Adolph Coors Company $ 16,278 $ 34,808
8,254 Anheuser-Busch Companies 351,924 635,558
10,731 Archer Daniels Midland Company 198,040 139,503
4,926 Bestfoods Incorporated 210,509 241,990
7,576 Campbell Soup Company 329,107 334,765
42,913 Coca Cola Company 2,519,836 2,566,734
7,362 Coca Cola Enterprises Incorporated 219,963 209,357
8,590 ConAgra Incorporated 245,416 210,455
2,631 General Mills Incorporated 173,723 220,346
6,287 Heinz (H.J.) Company 277,055 293,524
1,755 Hercules Incorporated 83,960 57,147
2,456 Hershey Foods Corporation 128,178 131,550
7,076 Kellogg Company 284,781 251,640
25,686 PepsiCo Incorporated 847,961 876,535
2,356 Quaker Oats Company 104,806 157,410
5,668 Ralston-Ralston Purina Group 152,340 155,870
7,421 Seagrams Company Limited 285,835 393,777
2,023 Wm. Wrigley Jr. Company 131,814 158,426
----------- -------------
$ 6,561,526 $ 7,069,395
FOOD STORES 0.41%
7,362 Albertson's Incorporated $ 274,621 $ 352,916
730 Great Atlantic & Pacific Tea Company 21,030 25,641
14,192 Kroger Company+ 264,138 328,190
2,637 Winn-Dixie Stores Incorporated 97,920 89,658
----------- -------------
$ 657,709 $ 796,405
FURNITURE & FIXTURES - 0.15%
1,500 Johnson Controls Incorporated $ 67,505 $ 102,563
4,851 Newell Rubbermaid Incorporated 170,898 198,891
----------- -------------
$ 238,403 $ 301,454
</TABLE>
52
<PAGE>
PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED) Index Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
GENERAL MERCHANDISE STORES - 2.66%
1,904 Consolidated Stores Corporation+ $ 79,747 $ 30,702
7,667 Dayton Hudson Corporation 215,988 444,686
1,868 Dillards Incorporated 60,965 43,898
3,833 Dollar General Corporation 110,997 99,658
3,592 Federated Department Stores Incorporated+ 137,945 165,232
1,268 Harcourt General Incorporated 61,257 55,554
8,565 K Mart Corporation+ 111,573 107,598
5,856 May Department Stores Company 197,894 228,750
4,602 J.C. Penney Company Incorporated 252,345 166,823
6,637 Sears, Roebuck & Company 328,008 248,888
5,634 TJX Companies Incorporated 78,941 162,682
77,388 Wal-Mart Stores Incorporated 1,459,490 3,429,256
----------- -------------
$ 3,095,150 $ 5,183,727
HEALTH SERVICES - 0.22%
9,977 Columbia HCA Healthcare Corporation $ 317,262 $ 245,684
1,942 HCR Manor Care Incorporated+ 59,412 37,990
7,293 HealthSouth Corporation+ 176,891 59,711
5,329 Tenet Healthcare Corporation+ 150,630 92,924
----------- -------------
$ 704,195 $ 436,309
HEAVY CONSTRUCTION OTHER THAN BUILDING CONSTRUCTION-CONTRACTORS - 0.02%
696 Foster Wheeler Corporation $ 25,498 $ 9,005
1,088 McDermott International Incorporated 31,632 24,548
----------- -------------
$ 57,130 $ 33,553
HOME FURNITURE, FURNISHINGS & EQUIPMENT STORES - 0.29%
3,600 Best Buy Company Incorporated+ $ 237,692 $ 252,900
3,482 Circuit City Stores Incorporated 62,438 149,726
3,392 Tandy Corporation 53,958 160,272
----------- -------------
$ 354,088 $ 562,898
</TABLE>
53
<PAGE>
Index Allocation Fund PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED)
- ------------------------------------------------------------------------
<TABLE>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
HOTELS, ROOMING HOUSES, CAMPS & OTHER LODGING
PLACES - 0.13%
4,412 Hilton Hotels Corporation $ 81,805 $ 54,047
4,344 Marriott International 123,104 148,782
3,404 Mirage Resorts Incorporated+ 85,929 44,465
----------- -------------
$ 290,838 $ 247,294
INDUSTRIAL & COMMERCIAL MACHINERY & COMPUTER
EQUIPMENT - 9.24%
2,705 Apple Computer Incorporated+ $ 77,128 $ 176,501
6,411 Applied Materials Incorporated+ 205,439 455,582
5,675 Baker Hughes Incorporated 170,365 192,950
1,557 Black & Decker Corporation 61,412 81,937
377 Briggs & Stratton Corporation 17,365 22,950
1,298 Case Corporation 70,614 64,089
6,221 Caterpillar Incorporated 292,343 352,264
652 Cincinnati Milacron Incorporated 15,601 11,736
55,610 Cisco Systems Incorporated+ 1,113,354 3,771,053
29,637 Compaq Computer Corporation 725,614 687,208
783 Cummins Engine Company Incorporated 44,618 46,393
824 Data General Corporation+ 19,160 15,193
4,026 Deere & Company 195,252 156,511
44,152 Dell Computer Corporation+ 443,844 2,155,170
3,742 Dover Corporation 115,884 144,769
17,588 EMC Corporation+ 262,362 1,055,280
2,735 Gateway Incorporated+ 161,905 265,124
1,416 Harris Corporation 54,374 37,170
17,622 Hewlett-Packard Company 1,045,375 1,856,918
31,568 IBM Corporation 1,534,682 3,932,189
2,923 Ingersoll-Rand Company 112,839 185,976
2,000 Lexmark International Group Incorporated+ 133,920 157,500
7,020 Minnesota Mining and Manufacturing Company
601,437 663,390
2,165 Pall Corporation 49,923 43,029
1,907 Parker-Hannifin Corporation 69,022 83,431
</TABLE>
54
<PAGE>
PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED) Index Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
4,674 Pitney Bowes Incorporated $ 182,354 $ 275,766
3,963 Seagate Technology Incorporated+ 137,742 131,522
3,213 Silicon Graphics Incorporated+ 66,741 36,749
4,492 Solectron Corporation+ 212,651 351,499
1,575 Stanley Works 58,085 41,541
1,021 Timken Company 30,895 17,931
8,438 United Technologies Corporation 336,714 557,963
----------- -------------
$ 8,619,014 $ 18,027,284
INSURANCE AGENTS, BROKERS & SERVICE - 0.26%
4,483 Aon Corporation $ 153,166 $ 149,620
2,784 Humana Incorporated+ 63,767 25,230
4,536 Marsh & McLennan Companies Incorporated 212,034 330,278
----------- -------------
$ 428,967 $ 505,128
INSURANCE CARRIERS - 3.08%
2,465 Aetna Incorporated $ 210,587 $ 191,654
4,600 AFLAC Incorporated 237,176 206,713
14,051 Allstate Corporation 496,825 461,048
4,367 American General Corporation 208,834 310,057
26,923 American International Group Incorporated 1,342,937 2,495,426
2,796 Chubb Corporation 175,051 159,896
3,515 CIGNA Corporation 192,647 315,691
2,858 Cincinnati Financial Corporation 129,949 113,248
5,578 Conseco Incorporated 224,412 133,872
3,962 Hartford Financial Services Group 157,404 180,023
1,857 Jefferson-Pilot Corporation 84,511 123,955
3,544 Lincoln National Corporation 114,995 166,125
1,881 Loews Corporation 183,503 147,659
1,740 MBIA Incorporated 104,632 90,263
1,907 MGIC Investment Corporation 88,719 82,835
1,299 Progressive Corporation 150,597 132,498
2,351 Safeco Corporation 106,178 83,754
4,004 St. Paul Companies Incorporated 144,391 128,378
2,321 Torchmark Corporation 68,892 66,149
</TABLE>
55
<PAGE>
Index Allocation Fund PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED)
- ------------------------------------------------------------------------
<TABLE>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
3,085 United Healthcare Corporation $ 159,270 $ 187,607
4,091 UnumProvident Corporation 182,812 147,532
1,200 Wellpoint Health Networks Incorporated+ 103,293 87,450
----------- -------------
$ 4,867,615 $ 6,011,833
LOCAL & SUBURBAN TRANSIT & INTERURBAN HIGHWAY PASSENGER TRANSPORTATION - 0.02%
5,626 Laidlaw Incorporated $ 72,894 $ 35,163
LUMBER & WOOD PRODUCTS, EXCEPT FURNITURE - 0.02%
1,897 Louisiana-Pacific Corporation $ 44,531 $ 35,095
MEASURING, ANALYZING, & CONTROLLING INSTRUMENTS; PHOTOGRAPHIC, MEDICAL & OPTICAL GOODS -
2.05%
1,195 Allergan Incorporated $ 47,319 $ 119,351
1,019 Bausch & Lomb Incorporated 46,163 67,318
5,076 Baxter International Incorporated 256,062 340,409
4,392 Becton, Dickinson & Company 103,881 123,525
1,961 Biomet Incorporated 43,220 70,106
6,804 Boston Scientific Corporation+ 196,769 230,911
892 C.R. Bard Incorporated 29,581 41,590
2,316 Danaher Corporation 105,572 136,065
5,654 Eastman Kodak Company 394,015 415,216
1,245 Eaton Corporation 98,951 122,010
5,182 Guidant Corporation+ 124,086 304,119
2,184 Honeywell Incorporated 150,926 247,884
1,544 KLA-Tencor Corporation+ 98,680 96,983
1,289 Mallinckrodt Incorporated 49,355 41,329
10,165 Medtronic Incorporated 509,295 795,411
819 Millipore Corporation 32,652 30,917
1,780 PE Corporation - PE Biosystems Group 56,273 122,486
807 Polaroid Corporation 33,984 21,890
1,476 St. Jude Medical Incorporated+ 52,162 53,505
850 Tektronix Incorporated 31,925 28,263
</TABLE>
56
<PAGE>
PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED) Index Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
2,745 Thermo Electron Corporation+ $ 105,454 $ 43,577
11,536 Xerox Corporation 404,315 550,843
----------- -------------
$ 2,970,640 $ 4,003,708
METAL MINING - 0.25%
667 ASARCO Incorporated $ 18,159 $ 13,924
6,780 Barrick Gold Corporation 154,612 131,363
1,471 Cyprus Amax Minerals 33,862 24,915
2,769 Freeport-McMoran Copper & Gold Incorporated+
75,106 44,477
4,435 Homestake Mining Company 53,577 37,698
3,254 Inco Limited Company 85,682 66,707
2,885 Newmont Mining Corporation 102,103 58,962
967 Phelps Dodge Corporation 67,902 54,090
5,569 Placer Dome Incorporated 95,384 57,777
----------- -------------
$ 686,387 $ 489,913
MINING & QUARRYING OF NONMETALLIC MINERALS, EXCEPT
FUELS - 0.03%
1,400 Vulcan Materials Company $ 67,574 $ 59,675
MISCELLANEOUS MANUFACTURING INDUSTRIES - 0.90%
732 Armstrong World Industries Incorporated $ 48,483 $ 35,548
3,406 Hasbro Incorporated 68,012 83,234
673 Jostens Incorporated 15,584 13,544
7,266 Mattel Incorporated 226,189 154,857
129 NACCO Industries Incorporated 8,392 10,045
14,383 Tyco International Limited 700,955 1,457,177
----------- -------------
$ 1,067,615 $ 1,754,405
</TABLE>
57
<PAGE>
Index Allocation Fund PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED)
- ------------------------------------------------------------------------
<TABLE>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
MISCELLANEOUS RETAIL - 0.71%
3,775 Costco Wholesale Corporation+ $ 136,516 $ 282,181
6,808 CVS Corporation 207,663 283,809
652 Longs Drug Stores Incorporated 18,077 20,497
6,500 Office Depot Incorporated+ 146,780 67,844
4,572 Rite Aid Corporation 120,172 84,582
8,029 Staples Incorporated+ 155,507 174,631
4,433 Toys 'R' Us Incorporated+ 139,640 61,230
17,412 Walgreen Company 234,272 403,740
----------- -------------
$ 1,158,627 $ 1,378,514
MOTION PICTURES - 1.16%
1,221 King World Productions Incorporated+ $ 27,474 $ 46,550
20,757 Time Warner Incorporated 615,584 1,231,149
35,821 Walt Disney Company+ 985,584 994,033
----------- -------------
$ 1,628,642 $ 2,271,732
NONDEPOSITORY CREDIT INSTITUTIONS - 2.26%
7,821 American Express Company $ 553,513 $ 1,075,388
12,639 Associates First Capital Corporation 371,167 433,676
3,483 Capital One Financial Corporation 147,323 131,483
1,940 Countrywide Credit Industries Incorporated 69,752 62,323
17,819 Federal National Mortgage Association 828,049 1,107,005
12,098 Freddie Mac 431,439 623,047
8,374 Household International Incorporated 271,100 316,119
13,932 MBNA Corporation 230,311 343,946
2,444 Providian Financial Corporation 72,212 189,715
2,844 SLM Holding Corporation 138,029 125,668
----------- -------------
$ 3,112,895 $ 4,408,370
</TABLE>
58
<PAGE>
PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED) Index Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
OIL & GAS EXTRACTION - 1.24%
2,190 Anadarko Petroleum Corporation $ 73,112 $ 74,460
1,930 Apache Corporation 68,640 87,815
5,600 Atlantic Richfield Company 402,235 492,450
3,137 Burlington Resources Incorporated 137,010 131,166
12,332 Enron Corporation 281,068 516,403
834 Helmerich & Payne Incorporated 25,433 22,987
1,475 Kerr-McGee Corporation 91,068 82,600
5,650 Nabisco Group Holdings Corporation 100,186 100,288
1,423 Rowan Companies Incorporated+ 36,233 26,503
9,521 Schlumberger Limited 592,958 635,527
4,289 Union Pacific Resources Group Incorporated 112,360 76,933
5,392 USX-Marathon Group Incorporated 150,286 167,825
----------- -------------
$ 2,070,589 $ 2,414,957
PAPER & ALLIED PRODUCTS - 0.78%
964 Bemis Incorporated $ 38,134 $ 36,572
1,041 Boise Cascade Corporation 37,784 37,866
1,688 Champion International Corporation 84,258 92,840
3,802 Fort James Corporation 154,721 122,615
2,489 IKON Office Solutions Incorporated 76,379 27,690
7,187 International Paper Company 320,769 338,238
9,238 Kimberly-Clark Corporation 448,629 525,989
1,802 Mead Corporation 55,745 67,237
472 Potlatch Corporation 21,490 18,231
1,017 Temple-Inland Incorporated 60,752 63,054
3,001 Tenneco Incorporated 128,421 60,395
1,758 Westvaco Corporation 54,143 46,037
1,944 Willamette Industries Incorporated 69,030 77,030
----------- -------------
$ 1,550,255 $ 1,513,794
</TABLE>
59
<PAGE>
Index Allocation Fund PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED)
- ------------------------------------------------------------------------
<TABLE>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
PERSONAL SERVICES - 0.08%
1,735 H & R Block Incorporated $ 65,888 $ 96,508
4,669 Service Corporation International 145,156 64,490
----------- -------------
$ 211,044 $ 160,998
PETROLEUM REFINING & RELATED INDUSTRIES - 4.99%
1,603 Amerada Hess Corporation $ 89,636 $ 99,486
1,270 Ashland Incorporated 59,804 48,974
11,347 Chevron Corporation 833,235 1,046,761
3,670 Coastal Corporation 94,555 158,957
11,118 Conoco Incorporated 150,437 298,796
42,239 Exxon Corporation 2,417,810 3,331,601
13,574 Mobil Corporation 937,274 1,389,638
4,414 Phillips Petroleum Company 196,105 225,114
37,304 Royal Dutch Petroleum Company 1,787,397 2,308,185
1,639 Sunoco Incorporated 57,600 53,370
9,317 Texaco Incorporated 493,431 591,629
4,199 Unocal Corporation 158,879 175,832
----------- -------------
$ 7,276,163 $ 9,728,343
PRIMARY METAL INDUSTRIES - 0.45%
3,947 Alcan Aluminum Limited $ 128,950 $ 129,758
6,472 Alcoa Incorporated 227,738 417,849
3,443 Allegheny Teledyne Incorporated 88,432 64,341
2,145 Bethlehem Steel Corporation+ 24,279 16,490
2,172 Engelhard Corporation 44,967 43,304
1,555 Nucor Corporation 82,624 72,405
1,140 Reynolds Metals Company 72,857 72,176
1,571 USX-U.S. Steel Group Incorporated 50,649 42,416
1,527 Worthington Industries Incorporated 28,933 22,904
----------- -------------
$ 749,429 $ 881,643
</TABLE>
60
<PAGE>
PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED) Index Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
PRINTING, PUBLISHING & ALLIED INDUSTRIES - 0.87%
1,172 American Greetings Company $ 37,558 $ 32,450
1,557 Dow Jones & Company Incorporated 68,221 78,239
4,857 Gannet Company Incorporated 242,337 329,972
1,402 Knight-Ridder Incorporated 66,330 75,620
3,390 McGraw-Hill Incorporated 104,076 175,221
932 Meredith Corporation 25,752 32,329
3,100 New York Times Company 79,298 121,094
2,330 R.R. Donnelley & Sons Company 85,448 73,104
1,287 Times Mirror Company 67,858 74,324
2,067 Tribune Company 97,614 192,876
12,012 Viacom Incorporated+ 248,244 505,254
----------- -------------
$ 1,122,736 $ 1,690,483
RAILROAD TRANSPORTATION - 0.45%
8,159 Burlington Northern Santa Fe Corporation $ 245,551 $ 236,611
3,797 CSX Corporation 190,983 165,881
1,900 Kansas City Southern Industries Incorporated
108,938 87,994
6,575 Norfolk Southern Corporation 203,778 172,182
4,272 Union Pacific Corporation 252,844 207,992
----------- -------------
$ 1,002,094 $ 870,660
RUBBER & MISCELLANEOUS PLASTICS PRODUCTS - 0.27%
1,339 Cooper Tire & Rubber Company $ 30,606 $ 25,441
2,681 Goodyear Tire & Rubber Company 152,246 150,471
4,932 Nike Incorporated 243,128 228,105
929 Reebok International Limited+ 35,070 10,974
1,493 Sealed Air Corporation+ 87,526 87,713
1,039 Tupperware Corporation 37,853 23,441
----------- -------------
$ 586,429 $ 526,145
</TABLE>
61
<PAGE>
Index Allocation Fund PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED)
- ------------------------------------------------------------------------
<TABLE>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
SECURITY & COMMODITY BROKERS, DEALERS, EXCHANGES & SERVICES - 1.20%
1,962 Bear Stearns Companies Incorporated $ 105,140 $ 81,668
14,256 Charles Schwab Corporation 181,116 563,111
4,389 Franklin Resources Incorporated 232,091 157,730
2,024 Lehman Brothers Holdings Incorporated 111,737 108,790
6,450 Merrill Lynch & Company Incorporated 382,135 481,331
9,933 Morgan Stanley Dean Witter & Company 498,759 852,376
2,500 Paine Webber Group Incorporated 107,407 98,124
----------- -------------
$ 1,618,385 $ 2,343,130
SOCIAL SERVICES - 0.16%
3,018 Georgia-Pacific Corporation $ 94,290 $ 124,870
3,494 Weyerhaeuser Company 177,910 196,537
----------- -------------
$ 272,200 $ 321,407
STONE, CLAY, GLASS & CONCRETE PRODUCTS - 0.19%
4,226 Corning Incorporated $ 181,985 $ 281,029
961 Owens Corning 37,291 27,027
2,757 Owens-Illinois Incorporated+ 101,201 68,235
----------- -------------
$ 320,477 $ 376,291
TEXTILE MILL PRODUCTS - 0.19%
1,170 Fruit Of The Loom Incorporated+ $ 35,214 $ 8,190
683 Russell Corporation 19,089 11,440
15,766 Sara Lee Corporation 352,373 349,807
286 Springs Industries Incorporated 14,787 10,742
----------- -------------
$ 421,463 $ 380,179
TOBACCO PRODUCTS - 0.86%
42,017 Philip Morris Incorporated $ 1,644,079 $ 1,573,010
3,082 UST Incorporated 94,432 97,660
----------- -------------
$ 1,738,511 $ 1,670,670
</TABLE>
62
<PAGE>
PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED) Index Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
TRANSPORTATION BY AIR - 0.35%
2,688 AMR Corporation+ $ 145,649 $ 157,584
2,452 Delta Air Lines Incorporated 116,934 124,592
5,164 FDX Corporation+ 147,452 219,147
8,808 Southwest Airlines Company 83,503 146,983
1,309 US Airways Group Incorporated+ 68,021 40,333
----------- -------------
$ 561,559 $ 688,639
TRANSPORTATION EQUIPMENT - 2.44%
9,651 Allied Signal Incorporated $ 364,689 $ 591,124
16,985 Boeing Company 820,965 769,633
1,601 Brunswick Corporation 45,437 40,926
2,936 Dana Corporation 116,777 127,900
9,809 Delphi Automotive Systems Corporation 149,188 183,919
642 Fleetwood Enterprises Incorporated 21,436 13,081
552 FMC Corporation+ 43,352 32,154
21,076 Ford Motor Company 623,802 1,098,587
3,199 General Dynamics Corporation 151,017 201,537
11,316 General Motors Corporation 562,904 748,271
3,170 Genuine Parts Company 100,441 91,534
1,537 Goodrich (B. F.) Company 63,758 56,773
1,518 ITT Industries Incorporated 44,078 51,327
1,191 Navistar International Corporation+ 27,417 57,912
1,240 Northrop Grummman Corporation 115,279 89,900
1,399 PACCAR Incorporated 62,957 77,120
3,349 Rockwell International Corporation 139,986 198,010
2,621 Textron Incorporated 161,811 211,645
2,083 TRW Incorporated 108,989 113,523
----------- -------------
$ 3,724,283 $ 4,754,876
WATER TRANSPORTATION - 0.25%
10,700 Carnival Corporation $ 465,053 $ 478,156
</TABLE>
63
<PAGE>
Index Allocation Fund PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED)
- ------------------------------------------------------------------------
<TABLE>
SHARES SECURITY NAME COST VALUE
<C> <S> <C> <C> <C> <C>
COMMON STOCK (CONTINUED)
WHOLESALE TRADE-DURABLE GOODS - 1.27%
1,676 Grainger (W. W.) Incorporated $ 71,380 $ 73,011
23,401 Johnson & Johnson 1,386,048 2,392,749
878 Pep Boys - Manny, Moe & Jack 27,227 12,785
----------- -------------
$ 1,484,655 $ 2,478,545
WHOLESALE TRADE-NONDURABLE GOODS - 0.94%
1,214 Brown-Forman Corporation $ 59,251 $ 71,323
4,700 Cardinal Health Incorporated 265,034 299,625
4,806 McKesson HBOC Incorporated 341,469 149,587
8,624 Safeway Incorporated+ 472,719 401,555
2,075 Supervalu Incorporated 37,677 46,688
5,826 Sysco Corporation 110,732 190,072
9,881 Unilever Nv 567,746 680,553
----------- -------------
$ 1,854,628 $ 1,839,403
TOTAL COMMON STOCK $130,136,633 $ 188,566,112
</TABLE>
64
<PAGE>
PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED) Index Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
U.S. TREASURY SECURITIES - 3.33%
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
U.S. TREASURY BILLS - 3.33%
$5,414,000 U.S. Treasury Bills 4.50%@ 09/23/99 $ 5,398,960
1,117,000 U.S. Treasury Bills 4.86@ 11/04/99 1,107,762
-------------
TOTAL U.S. TREASURY SECURITIES $ 6,506,722
(Cost $6,506,891)
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $136,643,524)* 99.96% $ 195,072,834
Other Assets and Liabilities, Net 0.04 79,128
------ -------------
TOTAL NET ASSETS 100.00% $ 195,151,962
====== =============
- ------------------------------------------------------------------------------------------------------
</TABLE>
+ NON-INCOME EARNING SECURITIES.
@ YIELD TO MATURITY.
# SECURITY OF AN AFFILIATE OF THE FUND WITH A COST OF $802,212.
* COST FOR FEDERAL INCOME TAX PURPOSES IS THE SAME FOR FINANCIAL
STATEMENT PURPOSES AND NET UNREALIZED APPRECIATION CONSISTS OF:
<TABLE>
<S> <C>
Gross Unrealized Appreciation $65,551,758
Gross Unrealized Depreciation (7,122,448)
---
NET UNREALIZED APPRECIATION $58,429,310
===
</TABLE>
The accompanying notes are an integral part of these financial statements.
65
<PAGE>
U.S. Government Allocation Fund PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTEREST MATURITY
PRINCIPAL SECURITY NAME RATE DATE VALUE
<C> <S> <C> <C> <C> <C>
U.S. TREASURY SECURITIES - 99.68%
U.S. TREASURY BILLS - 40.42%
$ 76,000 U.S. Treasury Bills 4.61%@ 11/04/99 $ 75,371
16,554,000 U.S. Treasury Bills 4.91@ 11/26/99 16,363,795
16,432,000 U.S. Treasury Bills 4.45@ 09/23/99 16,387,753
-------------
$ 32,826,919
U.S. TREASURY BONDS - 16.98%
$ 750,000 U.S. Treasury Bonds 8.25% 05/15/05 $ 761,715
1,400,000 U.S. Treasury Bonds 12.00 05/15/05 1,786,288
2,400,000 U.S. Treasury Bonds 11.63 11/15/04 2,976,384
3,100,000 U.S. Treasury Bonds 9.38 02/15/06 3,618,475
3,800,000 U.S. Treasury Bonds 10.75 08/15/05 4,647,286
-------------
$ 13,790,148
U.S. TREASURY NOTES - 42.28%
$3,300,000 U.S. Treasury Notes 6.50% 08/15/05 $ 3,360,852
3,300,000 U.S. Treasury Notes 6.88 05/15/06 3,428,403
3,800,000 U.S. Treasury Notes 7.50 02/15/05 4,043,428
4,500,000 U.S. Treasury Notes 7.88 11/15/04 4,856,490
5,700,000 U.S. Treasury Notes 6.50 05/15/05 5,808,642
6,100,000 U.S. Treasury Notes 5.88 11/15/05 6,027,532
7,000,000 U.S. Treasury Notes 5.63 02/15/06 6,818,420
-------------
$ 34,343,767
TOTAL U.S. TREASURY SECURITIES $ 80,960,834
(Cost $82,055,943)
</TABLE>
66
<PAGE>
PORTFOLIO OF INVESTMENTS - AUGUST 31, 1999 (UNAUDITED) U.S. Government
Allocation Fund
- ------------------------------------------------------------------------
<TABLE>
<C> <S> <C> <C> <C> <C>
TOTAL INVESTMENTS IN SECURITIES
</TABLE>
<TABLE>
<C> <S> <C> <C>
(Cost $82,055,943)* 99.68% $ 80,960,834
Other Assets and Liabilities, Net 0.32 260,942
------ -------------
TOTAL NET ASSETS 100.00% $ 81,221,776
====== =============
- ------------------------------------------------------------------------------------------------------
</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 $1,789
Gross Unrealized Depreciation (1,096,898)
---
NET UNREALIZED DEPRECIATION $(1,095,109)
===
</TABLE>
The accompanying notes are an integral part of these financial statements.
67
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
68
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) - AUGUST 31, 1999 Allocation
Funds
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSET INDEX U.S. GOVERNMENT
ALLOCATION ALLOCATION ALLOCATION
FUND FUND FUND
<S> <C> <C> <C>
ASSETS
INVESTMENTS:
In securities, at market value (see
cost below) $1,842,312,139 $195,072,834 $ 80,960,834
Cash 5,675 5,429 4,384
RECEIVABLES:
Dividends and Interest 8,233,153 253,412 612,342
Fund shares sold 3,683,128 659,689 15,274
Organization expenses, net of
amortization 266 0 1,444
Prepaid expenses 0 14,103 0
TOTAL ASSETS 1,854,234,361 196,005,467 81,594,278
LIABILITIES
Variation margin on futures contract 23,250 15,500 0
Payables:
Distribution to shareholders 358 0 47,537
Fund shares redeemed 1,040,814 50,434 85,359
Due to distributor (Note 2) 1,210,908 455,770 8,129
Due to adviser (Note 2) 1,273,894 174,585 76,942
Accrued Expenses 304,340 157,216 154,535
Other Payables 38,474 0 0
TOTAL LIABILITIES 3,892,038 853,505 372,502
TOTAL NET ASSETS
$1,850,342,323 $195,151,962 $ 81,221,776
NET ASSETS CONSIST OF:
Paid-in capital $1,335,946,949 $130,795,634 $106,249,518
Undistributed net investment income
(loss) 6,861,691 (363,784) 0
Undistributed net realized gain
(loss) on investments 253,889,760 6,361,176 (23,932,633)
Net unrealized appreciation
(depreciation) of investments 253,480,048 58,429,310 (1,095,109)
Net unrealized appreciation
(depreciation) of futures 163,875 (70,374) 0
TOTAL NET ASSETS $1,850,342,323 $195,151,962 $ 81,221,776
COMPUTATION OF NET ASSET VALUE AND OFFERING PRICE PER SHARE
Net assets - Class A $1,340,041,845 $ 97,240,203 $ 63,990,755
Shares outstanding - Class A 50,846,833 4,789,395 4,418,019
Net asset value per share - Class A $ 26.35 $ 20.30 $ 14.48
Maximum offering price per share -
Class A $ 27.96(1) $ 21.54(1) $ 15.16(2)
Net assets - Class B $ 490,489,126 $ 19,076,950 $ 17,231,021
Shares outstanding - Class B 30,690,754 762,207 1,634,619
Net asset value and offering price
per share - Class B $ 15.98 $ 25.03 $ 10.54
Net assets - Class C $ 19,811,352 $ 78,834,809 N/A
Shares outstanding - Class C 1,235,651 3,148,244 N/A
Net asset value and offering price
per share - Class C $ 16.03 $ 25.04 N/A
INVESTMENT AT COST (NOTE 3) $1,588,832,091 $136,643,524 $ 82,055,943
- -----------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<C> <S>
(1) MAXIMUM OFFERING PRICE IS COMPUTED AS 100/94.25 OF NET ASSET
VALUE.
(2) MAXIMUM OFFERING PRICE IS COMPUTED AS 100/95.5 OF NET ASSET
VALUE. ON INVESTMENTS OF $50,000 OR MORE THE OFFERING PRICE
IS REDUCED.
The accompanying notes are an integral part of these financial
statements.
</TABLE>
69
<PAGE>
Allocation Funds STATEMENTS OF OPERATIONS
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSET ALLOCATION FUND
--------------------------------------
(UNAUDITED)
FOR THE SIX FOR THE ELEVEN
MONTHS ENDED MONTHS ENDED
AUGUST 31, 1999 FEBRUARY 28, 1999
<S> <C> <C>
INVESTMENT INCOME
Dividends $ 8,423,853 $ 16,351,828
Interest 19,490,548 22,227,037
TOTAL INVESTMENT INCOME 27,914,401 38,578,865
EXPENSES (NOTE 2)
Advisory fees 3,198,567 5,217,515
Administration fees 1,121,598 1,057,283
Shareholder servicing fees 2,816,559 4,529,595
Portfolio accounting fees 219,034 358,355
Transfer agency fees 1,190,953 2,114,566
Distribution fees 1,678,967 2,163,298
Organization costs 756 1,371
Legal and audit fees 90,410 110,720
Registration fees 49,037 126,021
Directors' fees 508 2,317
Shareholder reports 165,822 271,637
Other 55,592 72,531
TOTAL EXPENSES 10,587,803 16,025,209
Less:
Waived fees and reimbursed expenses (89,740) (44,800)
Net Expenses 10,498,063 15,980,409
NET INVESTMENT INCOME (LOSS) 17,416,338 22,598,456
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on sale of
investments 235,248,511 142,835,083
Net change in unrealized appreciation
(depreciation) of investments (190,552,953) 44,504,574
Net unrealized appreciation
(depreciation) of futures 163,875 0
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS 44,859,433 187,339,657
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 62,275,771 $ 209,938,113
- --------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
70
<PAGE>
STATEMENTS OF OPERATIONS Allocation Funds
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDEX ALLOCATION FUND U.S. GOVERNMENT ALLOCATION FUND
----------------------------------------- -----------------------------------------
(UNAUDITED) (UNAUDITED)
FOR THE SIX FOR THE ELEVEN FOR THE SIX FOR THE ELEVEN
MONTHS ENDED MONTHS ENDED MONTHS ENDED MONTHS ENDED
AUGUST 31, 1999 FEBRUARY 28, 1999 AUGUST 31, 1999 FEBRUARY 28, 1999
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends $ 1,268,913 $ 2,060,542 $ 0 $ 0
Interest 73,719 79,573 2,787,066 4,613,424
TOTAL INVESTMENT INCOME 1,342,632 2,140,115 2,787,066 4,613,424
EXPENSES (NOTE 2)
Advisory fees 673,046 1,008,438 218,828 434,501
Administration fees 115,443 100,844 51,428 60,830
Shareholder servicing fees 121,867 152,329 131,296 260,700
Portfolio accounting fees 50,231 85,087 38,094 72,504
Transfer agency fees 112,965 201,687 61,714 121,661
Distribution fees 467,717 664,814 63,334 110,865
Organization costs 0 0 1,362 2,471
Legal and audit fees 4,185 32,749 4,049 28,340
Registration fees 4,342 31,981 4,234 24,779
Directors' fees 920 2,591 499 2,591
Shareholder reports 22,238 40,474 1,597 39,704
Other 1,986 27,281 2,139 14,615
TOTAL EXPENSES 1,574,940 2,348,275 578,574 1,173,561
Less:
Waived fees and reimbursed expenses (5,720) (24,758) (8,941) (52,895)
Net Expenses 1,569,220 2,323,517 569,633 1,120,666
NET INVESTMENT INCOME (LOSS) (226,588) (183,402) 2,217,433 3,492,758
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on sale of
investments 1,847,058 8,684,372 (1,859,368) 508,359
Net change in unrealized appreciation
(depreciation) of investments 9,549,907 9,193,064 (333,113) (588,263)
Net unrealized appreciation
(depreciation) of futures (70,374) 0 0 0
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS 11,326,591 17,877,436 (2,192,481) (79,904)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $11,100,003 $17,694,034 $ 24,952 $ 3,412,854
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
71
<PAGE>
Allocation Funds STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSET ALLOCATION FUND
--------------------------------------------------------------
(UNAUDITED)
FOR THE SIX FOR THE ELEVEN FOR THE
MONTHS ENDED MONTHS ENDED YEAR ENDED
AUGUST 31, 1999 FEBRUARY 28, 1999 MARCH 31, 1998
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) $ 17,416,338 $ 22,598,456 $ 38,685,284
Net realized gain (loss) on sale of
investments 235,248,511 142,835,083 107,023,056
Net change in unrealized appreciation
(depreciation) of investments and
financial futures (190,389,078) 44,504,574 266,073,223
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 62,275,771 209,938,113 411,781,563
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (11,512,453) (17,033,688) (35,147,512)
CLASS B (2,095,567) (2,432,608) (3,537,772)
CLASS C (63,153) (15,634)(1) N/A
From net realized gain on sale of
investments
CLASS A 0 (114,145,484) (82,707,854)
CLASS B 0 (31,172,331) (13,021,038)
CLASS C 0 (540,952)(1) N/A
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 55,553,661 101,471,242 124,090,392
Reinvestment of dividends - Class A 11,322,422 135,550,735 120,926,511
Cost of shares redeemed - Class A (128,270,599) (216,463,258) (224,954,049)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A (61,394,516) 20,558,719 20,062,854
Proceeds from shares sold - Class B 104,519,873 141,646,232 147,505,581
Reinvestment of dividends - Class B 2,025,948 33,599,069 16,241,731
Cost of shares redeemed - Class B (29,053,731) (47,391,618) (19,143,117)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B 77,492,090 127,853,683 144,604,195
Proceeds from shares sold - Class C 11,265,312 10,142,395(1) N/A
Reinvestment of dividends - Class C 50,655 527,615(1) N/A
Cost of shares redeemed - Class C (1,708,871) (555,033)(1) N/A
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS C 9,607,096 10,114,977(1) N/A
INCREASE (DECREASE) IN NET ASSETS 74,309,268 203,124,795 442,034,436
NET ASSETS:
Beginning net assets 1,776,033,055 1,572,908,260 1,130,873,824
ENDING NET ASSETS $1,850,342,323 $1,776,033,055 $1,572,908,260
ENDING BALANCE OF UNDISTRIBUTED NET
INVESTMENT INCOME $ 6,861,691 $ 3,116,526 $ 0
- --------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
72
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS Allocation Funds
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDEX ALLOCATION FUND
--------------------------------------------------------------------------------------
(UNAUDITED)
FOR THE SIX FOR THE ELEVEN FOR THE THREE FOR THE
MONTHS ENDED MONTHS ENDED MONTHS ENDED YEAR ENDED
AUGUST 31, 1999 FEBRUARY 28, 1999 MARCH 31, 1998 DECEMBER 31, 1997
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) $ (226,588) $ (183,402) $ 6,593 $ 1,656,589
Net realized gain (loss) on sale of
investments 1,847,058 8,684,372 (5,156) 12,775,977
Net change in unrealized appreciation
(depreciation) of investments and
financial futures 9,479,533 9,193,064 17,255,641 8,758,372
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 11,100,003 17,694,034 17,257,078 23,190,938
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (63,660) (148,741) (63,008) (1,312,200)
CLASS B 0 0 0 0(2)
CLASS C 0 0 0 (344,406)
From net realized gain on sale of
investments
CLASS A 0 (3,122,516) 0 (8,070,952)
CLASS B 0 (343,110) 0 0(2)
CLASS C 0 (2,072,172) 0 (4,429,345)
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 5,564,652 10,094,262 3,920,461 13,097,927
Reinvestment of dividends - Class A 48,404 2,652,183 141,708 7,755,142
Cost of shares redeemed - Class A (7,154,928) (20,080,414) (2,572,600) (7,305,205)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A (1,541,872) (7,333,969) 1,489,569 13,547,864
Proceeds from shares sold - Class B 6,398,995 9,165,489 2,711,120 349,731(2)
Reinvestment of dividends - Class B 0 325,031 0 0(2)
Cost of shares redeemed - Class B (639,908) (1,079,572) 0 0(2)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B 5,759,087 8,410,948 2,711,120 349,731(2)
Proceeds from shares sold - Class C 12,599,073 19,392,127 5,805,673 20,805,099
Reinvestment of dividends - Class C 249 1,486,208 10,699 3,210,184
Cost of shares redeemed - Class C (5,287,433) (13,595,784) (1,944,342) (5,001,988)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS C 7,311,889 7,282,551 3,872,030 19,013,295
INCREASE (DECREASE) IN NET ASSETS 22,565,447 20,367,025 25,266,789 41,944,925
NET ASSETS:
Beginning net assets 172,586,515 152,219,490 126,952,701 85,007,776
ENDING NET ASSETS $195,151,962 $172,586,515 $152,219,490 $126,952,701
ENDING BALANCE OF UNDISTRIBUTED NET
INVESTMENT INCOME $ (363,784) $ (388,558) $ (56,415) $ 0
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
73
<PAGE>
Allocation Funds STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT ALLOCATION FUND
--------------------------------------------------------------
(UNAUDITED)
FOR THE SIX FOR THE ELEVEN FOR THE
MONTHS ENDED MONTHS ENDED YEAR ENDED
AUGUST 31, 1999 FEBRUARY 28, 1999 MARCH 31, 1998
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss) $ 2,217,433 $ 3,492,758 $ 4,797,597
Net realized gain (loss) on sale of
investments (1,859,368) 508,359 1,537,644
Net change in unrealized appreciation
(depreciation) of investments and
financial futures (333,113) (588,263) 1,998,550
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 24,952 3,412,854 8,333,791
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
CLASS A (1,806,886) (2,966,379) (4,378,902)
CLASS B (410,547) (526,379) (418,695)
CLASS C N/A N/A N/A
From net realized gain on sale of
investments
CLASS A 0 0 0
CLASS B 0 0 0
CLASS C N/A N/A N/A
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold - Class A 1,538,055 8,860,280 12,501,406
Reinvestment of dividends - Class A 1,528,642 2,744,535 3,688,770
Cost of shares redeemed - Class A (12,066,297) (19,793,519) (23,411,657)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS A (8,999,600) (8,188,704) (7,221,481)
Proceeds from shares sold - Class B 1,781,593 7,538,052 8,698,249
Reinvestment of dividends - Class B 352,604 458,923 316,321
Cost of shares redeemed - Class B (3,102,462) (3,448,416) (2,377,863)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS B (968,265) 4,548,559 6,636,707
Proceeds from shares sold - Class C N/A N/A N/A
Reinvestment of dividends - Class C N/A N/A N/A
Cost of shares redeemed - Class C N/A N/A N/A
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL SHARE
TRANSACTIONS - CLASS C N/A N/A N/A
INCREASE (DECREASE) IN NET ASSETS (12,160,346) (3,720,049) 2,951,420
NET ASSETS:
Beginning net assets 93,382,122 97,102,171 94,150,751
ENDING NET ASSETS $81,221,776 $93,382,122 $97,102,171
ENDING BALANCE OF UNDISTRIBUTED NET
INVESTMENT INCOME $ 0 $ 0 $ 0
- --------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
74
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
75
<PAGE>
Allocation Funds FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
ASSET ALLOCATION FUND
CLASS A
-------------------------
(UNAUDITED) ELEVEN
SIX MONTHS MONTHS
ENDED ENDED
AUGUST 31, FEBRUARY 28,
1999 1999 (1)
<S> <C> <C>
- ---------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $25.65 $24.99
--------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.28 0.38
Net realized and unrealized gain (loss) on investments 0.64 2.92
--------- ---------
TOTAL FROM INVESTMENT OPERATIONS 0.92 3.30
LESS DISTRIBUTIONS:
Dividends from net investment income (0.22) (0.33)
Distributions from net realized gain 0.00 (2.31)
--------- ---------
TOTAL FROM DISTRIBUTIONS (0.22) (2.64)
--------- ---------
NET ASSET VALUE, END OF PERIOD $26.35 $25.65
========= =========
TOTAL RETURN (NOT ANNUALIZED)* 3.58% 13.69%
RATIO/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $1,340,042 $1,362,827
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 0.94% 0.92%
Ratio of net investment income to average net assets 2.02% 1.65%
Portfolio turnover 33% 31%
- ---------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived fees
and reimbursed expenses 0.95% N/A
Ratio of net investment income to average net assets prior
to waived fees and reimbursed expenses 2.01% 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
SEPTEMBER 30.
(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.
76
<PAGE>
FINANCIAL HIGHLIGHTS Allocation Funds
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
ASSET ALLOCATION FUND (CONT.)
CLASS A (CONT.)
-------------------------------------------------------
SIX MONTHS NINE MONTHS
YEAR ENDED ENDED ENDED YEAR ENDED YEAR ENDED
MARCH 31, MARCH 31, SEPT. 30, DEC. 31, DEC. 31,
1998 1997 (2) 1996 (3) 1995 1994
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $20.30 $21.24 $20.74 $16.73 $18.80
--------- --------- --------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment
income (loss) 0.69 0.41 0.57 0.74 0.77
Net realized and
unrealized gain (loss)
on investments 6.37 0.65 0.50 4.07 (1.31)
--------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT
OPERATIONS 7.06 1.06 1.07 4.81 (0.54)
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.69) (0.41) (0.57) (0.74) (0.77)
Distributions from net
realized gain (1.68) (1.59) 0.00 (0.06) (0.76)
--------- --------- --------- --------- ---------
TOTAL FROM DISTRIBUTIONS (2.37) (2.00) (0.57) (0.80) (1.53)
--------- --------- --------- --------- ---------
NET ASSET VALUE, END OF
PERIOD $24.99 $20.30 $21.24 $20.74 $16.73
========= ========= ========= ========= =========
TOTAL RETURN (NOT
ANNUALIZED)* 36.08% 4.94% 5.14% 29.18% (2.82)%
RATIO/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $1,305,848 $1,041,622 $1,057,346 $1,077,935 $896,943
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 0.95%(4) 0.92%(4) 0.90%(4) 0.84% 0.84%
Ratio of net investment
income to average net
assets 2.99%(4) 3.91%(4) 3.53%(4) 3.81% 4.30%
Portfolio turnover 51%(4) 5%(4) 1%(5) 15% 49%
- -------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses N/A 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 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
SEPTEMBER 30.
(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.
77
<PAGE>
Allocation Funds FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
ASSET ALLOCATION FUND (CONT.)
CLASS B
-------------------------------------
(UNAUDITED) ELEVEN
SIX MONTHS MONTHS
ENDED ENDED YEAR ENDED
AUGUST 31, FEBRUARY 28, MARCH 31,
1999 1999 (1) 1998
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $15.55 $15.16 $12.29
--------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.10 0.13 0.29
Net realized and unrealized gain (loss) on
investments 0.40 1.77 3.89
--------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS 0.50 1.90 4.18
LESS DISTRIBUTIONS:
Dividends from net investment income (0.07) (0.11) (0.29)
Distributions from net realized gain 0.00 (1.40) (1.02)
--------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.07) (1.51) (1.31)
--------- --------- ---------
NET ASSET VALUE, END OF PERIOD $15.98 $15.55 $15.16
========= ========= =========
TOTAL RETURN (NOT ANNUALIZED)* 3.23% 12.98% 35.16%
RATIO/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $490,489 $402,484 $267,060
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 1.63% 1.62% 1.60%(6)
Ratio of net investment income to average net
assets 1.36% 0.91% 2.15%(6)
Portfolio turnover 33% 31% 51%(6)
- ------------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to
waived fees and reimbursed expenses 1.65% 1.63% N/A
Ratio of net investment income to average net
assets prior to waived fees and reimbursed
expenses 1.34% 0.90% 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
SEPTEMBER 30.
(4) THIS CLASS OF SHARES COMMENCED OPERATIONS ON JANUARY 1, 1995.
(5) THIS CLASS OF SHARES COMMENCED OPERATIONS ON APRIL 1, 1998.
(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.
78
<PAGE>
FINANCIAL HIGHLIGHTS Allocation Funds
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
ASSET ALLOCATION FUND (CONT.)
CLASS B (CONT.) CLASS C
--------------------------------- ------------------------
(UNAUDITED) ELEVEN
SIX MONTHS NINE MONTHS SIX MONTHS MONTHS
ENDED ENDED YEAR ENDED ENDED ENDED
MARCH 31, SEPT. 30, DEC. 31, AUGUST 31, FEBRUARY 28,
1997 (2) 1996 (3) 1995 (4) 1999 1999 (5)
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $12.84 $12.50 $10.00 $15.59 $15.16
--------- --------- --------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment
income (loss) 0.19 0.28 0.22 0.10 0.08
Net realized and
unrealized gain (loss)
on investments 0.41 0.34 2.53 0.41 1.82
--------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT
OPERATIONS 0.60 0.62 2.75 0.51 1.90
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.19) (0.28) (0.22) (0.07) (0.07)
Distributions from net
realized gain (0.96) 0.00 (0.03) 0.00 (1.40)
--------- --------- --------- --------- ---------
TOTAL FROM DISTRIBUTIONS (1.15) (0.28) (0.25) (0.07) (1.47)
--------- --------- --------- --------- ---------
NET ASSET VALUE, END OF
PERIOD $12.29 $12.84 $12.50 $16.03 $15.59
========= ========= ========= ========= =========
TOTAL RETURN (NOT
ANNUALIZED)* 4.62% 4.96% 27.72% 3.24% 12.97%
RATIO/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $89,252 $63,443 $26,271 $19,811 $10,065
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 1.53%(6) 1.14%(6) 1.53% 1.64% 1.64%
Ratio of net investment
income to average net
assets 3.30%(6) 3.37%(6) 2.71% 1.39% 0.69%
Portfolio turnover 5%(6) 1%(7) 15% 33% 31%
- ----------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 1.58%(6) 1.56%(6) 1.76% 1.68% 1.85%
Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses 3.25%(6) 2.95%(6) 2.48% 1.35% 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 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 CLASS OF SHARES COMMENCED OPERATIONS ON APRIL 1, 1998.
(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.
79
<PAGE>
Allocation Funds FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
INDEX ALLOCATION FUND
CLASS A
-------------------------
(UNAUDITED) ELEVEN
SIX MONTHS MONTHS
ENDED ENDED
AUGUST 31, FEBRUARY 28,
1999 1999 (1)
<S> <C> <C>
- ---------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $19.04 $17.55
--------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.01 0.03
Net realized and unrealized gain (loss) on investments 1.26 2.14
--------- ---------
TOTAL FROM INVESTMENT OPERATIONS 1.27 2.17
LESS DISTRIBUTIONS:
Dividends from net investment income (0.01) (0.03)
Distributions from net realized gain 0.00 (0.65)
--------- ---------
TOTAL FROM DISTRIBUTIONS (0.01) (0.68)
--------- ---------
NET ASSET VALUE, END OF PERIOD $20.30 $19.04
========= =========
TOTAL RETURN (NOT ANNUALIZED)* 6.69% 12.60%
RATIO/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $97,240 $92,692
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 1.27% 1.29%
Ratio of net investment income to average net assets 0.13% 0.19%
Portfolio turnover 6% 12%
- ---------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived fees
and reimbursed expenses 1.27% N/A
Ratio of net investment income to average net assets prior
to waived fees and reimbursed expenses 0.13% 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 DECEMBER 31 TO MARCH 31.
The accompanying notes are an integral part of these financial statements.
80
<PAGE>
FINANCIAL HIGHLIGHTS Allocation Funds
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
INDEX ALLOCATION FUND (CONT.)
CLASS A (CONT.)
-----------------------------------------------------
THREE
MONTHS
ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
MARCH 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1998 (2) 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $15.51 $13.99 $13.76 $10.67 $11.90
--------- --------- --------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment
income (loss) 0.01 0.28 0.29 0.28 0.31
Net realized and
unrealized gain (loss)
on investments 2.04 3.23 2.02 3.42 (0.39)
--------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT
OPERATIONS 2.05 3.51 2.31 3.70 (0.08)
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.01) (0.28) (0.29) (0.28) (0.31)
Distributions from net
realized gain 0.00 (1.71) (1.79) (0.33) (0.84)
--------- --------- --------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.01) (1.99) (2.08) (0.61) (1.15)
--------- --------- --------- --------- ---------
NET ASSET VALUE, END OF
PERIOD $17.55 $15.51 $13.99 $13.76 $10.67
========= ========= ========= ========= =========
TOTAL RETURN (NOT
ANNUALIZED)* 13.23% 25.18% 17.04% 34.71% (0.68)%
RATIO/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $92,733 $80,512 $60,353 $52,007 $40,308
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 1.31% 1.26% 1.31% 1.30% 1.30%
Ratio of net investment
income to average net
assets 0.30% 1.82% 2.06% 2.07% 2.41%
Portfolio turnover 6% 80% 67% 47% 50%
- -----------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 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 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 MARCH 31.
The accompanying notes are an integral part of these financial statements.
81
<PAGE>
Allocation Funds FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
INDEX ALLOCATION FUND (CONT.)
CLASS B
------------------------------------
(UNAUDITED) ELEVEN THREE
SIX MONTHS MONTHS MONTHS
ENDED ENDED ENDED
AUGUST 31, FEBRUARY 28, MARCH 31,
1999 1999 (2) 1998 (3)
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $23.55 $21.81 $19.31
--------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.06) (0.07) (0.01)
Net realized and unrealized gain (loss) on
investments 1.54 2.61 2.51
--------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS 1.48 2.54 2.50
LESS DISTRIBUTIONS:
Dividends from net investment income 0.00 0.00 0.00
Distributions from net realized gain 0.00 (0.80) 0.00
--------- --------- ---------
TOTAL FROM DISTRIBUTIONS 0.00 (0.80) 0.00
--------- --------- ---------
NET ASSET VALUE, END OF PERIOD $25.03 $23.55 $21.81
========= ========= =========
TOTAL RETURN (NOT ANNUALIZED)* 6.28% 11.88% 12.95%
RATIO/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $19,077 $12,512 $3,322
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 2.03% 2.04% 2.06%
Ratio of net investment income to average net
assets (0.63)% (0.57)% (0.43)%
Portfolio turnover 6% 12% 0%
- -----------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to
waived fees and reimbursed expenses 2.04% 2.26% 4.03%
Ratio of net investment income to average net
assets prior to waived fees and reimbursed
expenses (0.64)% (0.79)% (2.40)%
- -----------------------------------------------------------------------------------------
</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.
82
<PAGE>
FINANCIAL HIGHLIGHTS Allocation Funds
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
INDEX ALLOCATION FUND (CONT.)
CLASS B
(CONT.) CLASS C (1)
--------- ---------------------------------------------
(UNAUDITED) ELEVEN THREE
PERIOD SIX MONTHS MONTHS MONTHS
ENDED ENDED ENDED ENDED YEAR ENDED
DEC. 31, AUGUST 31, FEBRUARY 28, MARCH 31, DEC. 31,
1997 (4) 1999 1999 (2) 1998 (3) 1997
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $18.99 $23.56 $21.82 $19.32 $17.42
--------- --------- --------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment
income (loss) 0.00 (0.06) (0.10) (0.02) 0.20
Net realized and
unrealized gain (loss)
on investments 0.32 1.54 2.64 2.52 4.00
--------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT
OPERATIONS 0.32 1.48 2.54 2.50 4.20
LESS DISTRIBUTIONS:
Dividends from net
investment income 0.00 0.00 0.00 0.00 (0.20)
Distributions from net
realized gain 0.00 0.00 (0.80) 0.00 (2.10)
--------- --------- --------- --------- ---------
TOTAL FROM DISTRIBUTIONS 0.00 0.00 (0.80) 0.00 (2.30)
--------- --------- --------- --------- ---------
NET ASSET VALUE, END OF
PERIOD $19.31 $25.04 $23.56 $21.82 $19.32
========= ========= ========= ========= =========
TOTAL RETURN (NOT
ANNUALIZED)* 1.69% 6.28% 11.88% 13.00% 24.07%
RATIO/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $356 $78,835 $67,400 $56,164 $46,084
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 2.05% 2.02% 2.05% 2.05% 2.02%
Ratio of net investment
income to average net
assets (0.17)% (0.62)% (0.56)% (0.44)% 1.00%
Portfolio turnover 80% 6% 12% 0% 80%
- -------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 15.17% 2.02% 2.06% 2.09% 2.05%
Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses (13.29)% (0.62)% (0.57)% (0.48)% 0.97%
- -------------------------------------------------------------------------------------
</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.
83
<PAGE>
Allocation Funds FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
INDEX ALLOCATION FUND (CONT.)
CLASS C (1) (CONT.)
----------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31, DEC. 31, DEC. 31,
1996 1995 1994
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $17.10 $13.26 $14.75
--------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.22 0.20 0.25
Net realized and unrealized gain (loss) on
investments 2.54 4.24 (0.45)
--------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS 2.76 4.44 (0.20)
LESS DISTRIBUTIONS:
Dividends from net investment income (0.22) (0.20) (0.25)
Distributions from net realized gain (2.22) (0.40) (1.04)
--------- --------- ---------
TOTAL FROM DISTRIBUTIONS (2.44) (0.60) (1.29)
--------- --------- ---------
NET ASSET VALUE, END OF PERIOD $17.42 $17.10 $13.26
========= ========= =========
TOTAL RETURN (NOT ANNUALIZED)* 16.37% 33.72% (1.38)%
RATIO/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $24,655 $16,075 $9,798
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 2.05% 2.05% 2.01%
Ratio of net investment income to average net
assets 1.35% 1.30% 1.75%
Portfolio turnover 67% 47% 50%
- ---------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to
waived fees and reimbursed expenses 2.20% 2.17% 2.20%
Ratio of net investment income to average net
assets prior to waived fees and reimbursed
expenses 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 SEPTEMBER 30 TO MARCH 31.
(4) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO
SEPTEMBER 30.
(5) THIS CLASS OF SHARES COMMENCED OPERATIONS ON 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.
84
<PAGE>
FINANCIAL HIGHLIGHTS Allocation Funds
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
U.S. GOVERNMENT ALLOCATION FUND
CLASS A
--------------------------------------------------------------------------------
(UNAUDITED) ELEVEN
SIX MONTHS MONTHS SIX MONTHS NINE MONTHS
ENDED ENDED YEAR ENDED ENDED ENDED YEAR ENDED YEAR ENDED
AUGUST 31, FEBRUARY 28, MARCH 31, MARCH 31, SEPT. 30, DEC. 31, DEC. 31,
1999 1999 (2) 1998 1997 (3) 1996 (4) 1995 1994
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $14.86 $14.87 $14.32 $14.48 $14.98 $13.76 $15.71
--------- --------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment
income (loss) 0.39 0.57 0.77 0.42 0.59 0.79 0.87
Net realized and
unrealized gain (loss)
on investments (0.38) (0.01) 0.55 (0.16) (0.50) 1.22 (1.95)
--------- --------- --------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT
OPERATIONS 0.01 0.56 1.32 0.26 0.09 2.01 (1.08)
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.39) (0.57) (0.77) (0.42) (0.59) (0.79) (0.87)
Distributions from net
realized gain 0.00 0.00 0.00 0.00 0.00 0.00 0.00
--------- --------- --------- --------- --------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.39) (0.57) (0.77) (0.42) (0.59) (0.79) (0.87)
--------- --------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF
PERIOD $14.48 $14.86 $14.87 $14.32 $14.48 $14.98 $13.76
========= ========= ========= ========= ========= ========= =========
TOTAL RETURN (NOT
ANNUALIZED)* 0.04% 3.78% 9.36% 1.75% 0.69% 14.91% (6.99)%
RATIO/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $63,991 $74,547 $82,958 $86,930 $98,741 $135,577 $140,066
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 1.15% 1.17% 1.16%(5) 1.00%(5) 1.12%(5) 1.04% 1.01%
Ratio of net investment
income to average net
assets 5.15% 4.15% 5.21%(5) 5.70%(5) 5.45%(5) 5.41% 5.94%
Portfolio turnover 186% 152% 62%(5) 113%(5) 31%(6) 292% 112%
- --------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 1.16% 1.22% 1.26%(5) 1.31%(5) 1.20%(5) 1.07% 1.08%
Ratio of net investment
income to average net
assets prior to waived
fees and reimbursed
expenses 5.14% 4.10% 5.11%(5) 5.39%(5) 5.37%(5) 5.38% 5.87%
- --------------------------------------------------------------------------------------------------------------
</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 SEPTEMBER 30 TO MARCH 31.
(4) THE FUND CHANGED ITS FISCAL YEAR-END FROM DECEMBER 31 TO
SEPTEMBER 30.
(5) THIS CLASS OF SHARES COMMENCED OPERATIONS ON 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.
85
<PAGE>
Allocation Funds FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
<TABLE>
<CAPTION>
U.S. GOVERNMENT ALLOCATION
FUND (CONT.)
CLASS B
--------------------------
(UNAUDITED) ELEVEN
SIX MONTHS MONTHS
ENDED ENDED
AUGUST 31, FEBRUARY 28,
1999 1999 (1)
<S> <C> <C>
- ----------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $10.81 $10.82
--------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.24 0.34
Net realized and unrealized gain (loss) on investments (0.27) (0.01)
--------- ---------
TOTAL FROM INVESTMENT OPERATIONS (0.03) 0.33
LESS DISTRIBUTIONS:
Dividends from net investment income (0.24) (0.34)
Distributions from net realized gain 0.00 0.00
--------- ---------
TOTAL FROM DISTRIBUTIONS (0.24) (0.34)
--------- ---------
NET ASSET VALUE, END OF PERIOD $10.54 $10.81
========= =========
TOTAL RETURN (NOT ANNUALIZED)* (0.23)% 3.12%
RATIO/SUPPLEMENTAL DATA:
Net assets, end of period (000s) $17,231 $18,620
RATIOS TO AVERAGE NET ASSETS (ANNUALIZED):
Ratio of expenses to average net assets 1.84% 1.84%
Ratio of net investment income to average net assets 4.54% 3.41%
Portfolio turnover 186% 152%
- ----------------------------------------------------------------------------------------
Ratio of expenses to average net assets prior to waived fees
and reimbursed expenses 1.89% 1.95%
Ratio of net investment income to average net assets prior
to waived fees and reimbursed expenses 4.49% 3.30%
- ----------------------------------------------------------------------------------------
</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.
86
<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 (CONT.)
--------------------------------------------
SIX MONTHS NINE MONTHS
YEAR ENDED ENDED ENDED YEAR ENDED
MARCH 31, MARCH 31, SEPT. 30, DEC. 31,
1998 1997 (2) 1996 (3) 1995 (4)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING
OF PERIOD $10.42 $10.54 $10.91 $10.00
--------- --------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment
income (loss) 0.49 0.27 0.36 0.49
Net realized and
unrealized gain (loss)
on investments 0.40 (0.12) (0.37) 0.91
--------- --------- --------- ---------
TOTAL FROM INVESTMENT
OPERATIONS 0.89 0.15 (0.01) 1.40
LESS DISTRIBUTIONS:
Dividends from net
investment income (0.49) (0.27) (0.36) (0.49)
Distributions from net
realized gain 0.00 0.00 0.00 0.00
--------- --------- --------- ---------
TOTAL FROM DISTRIBUTIONS (0.49) (0.27) (0.36) (0.49)
--------- --------- --------- ---------
NET ASSET VALUE, END OF
PERIOD $10.82 $10.42 $10.54 $10.91
========= ========= ========= =========
TOTAL RETURN (NOT
ANNUALIZED)* 8.64% 1.42% 0.11% 14.11%
RATIO/SUPPLEMENTAL DATA:
Net assets, end of period
(000s) $14,144 $7,221 $6,406 $4,077
RATIOS TO AVERAGE NET ASSETS
(ANNUALIZED):
Ratio of expenses to
average net assets 1.82%(5) 1.61%(5) 1.92%(5) 1.65%
Ratio of net investment
income to average net
assets 4.40%(5) 5.12%(5) 4.60%(5) 4.31%
Portfolio turnover 62%(5) 113%(5) 31%(6) 292%
- --------------------------------------------------------------------------
Ratio of expenses to average
net assets prior to waived
fees and reimbursed
expenses 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 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.
87
<PAGE>
Allocation Funds NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Stagecoach Funds, Inc. (the "Company") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end series
management investment company. The Company commenced operations on January 1,
1992, and currently offers 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 Overland Express
Funds, 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
88
<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").
FUTURES CONTRACTS
The Asset Allocation and Index Allocation Funds have purchased futures
contracts to gain exposure to market changes. This procedure may be more
efficient or cost effective than actually buying the securities. A futures
contract is an agreement between parties to buy or sell a security at a set
price on a future date. Upon entering into such a contract, a Fund is required
to pledge to the broker an amount of cash, U.S. Government obligations or other
high-quality debt securities equal to the minimum "initial margin" requirements
of the exchange on which the futures contract is traded. Pursuant to the
contract, the Fund agrees to receive from or pay to the broker an amount of cash
equal to the daily fluctuation in the value of the contract. Such receipts or
payments are known as "variation margin" and are recorded by the Fund as
unrealized gains or losses. When the contract is closed, the Fund records a
realized gain or loss
89
<PAGE>
Allocation Funds NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------
equal to the difference between the value of the contract at the time it was
opened and the value at the time it was closed. Pursuant to regulations and/or
published positions of the Securities and Exchange Commission ("SEC"), the Fund
is required to segregate highly liquid securities as permitted by the SEC in
connection with futures transactions in an amount generally equal to the entire
value of the underlying contracts. Risks of entering into futures contracts
include the possibility that there may be an illiquid market and that a change
in the value of the contract may not correlate with changes in the value of the
underlying securities. On August 31, 1999, the Funds held the following futures
contracts:
<TABLE>
<CAPTION>
NET
UNREALIZED
NOTIONAL APPRECIATION/
CONTRACTS TYPE EXPIRATION DATE CONTRACT VALUE (DEPRECIATION)
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
Asset Allocation 15 S & P 500 Index September 1999 $4,949,250 $163,875
Index Allocation 10 S & P 500 Index September 1999 $3,299,500 $(70,374)
</TABLE>
The Asset Allocation Fund has pledged to brokers U.S. Treasury bills for
initial margin requirements with a par value of $400,000. The Index Allocation
Fund has pledged to brokers U.S. Treasury bills for initial margin requirements
with a par value of $200,000.
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
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 August 31, 1999.
The U.S. Government Allocation Fund had estimated net capital loss
carryforwards at August 31, 1999 of $21,360,981, $712,094 and $1,859,558 which
will expire in the years 2002, 2004 and 2007, respectively. The
90
<PAGE>
NOTES TO FINANCIAL STATEMENTS Allocation Funds
- ------------------------------------------------------------------------
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 an advisory contract on behalf of the Funds with
Wells Fargo Bank, N.A. ("WFB"). Pursuant to the contract, WFB has agreed to
provide the Funds with daily portfolio management. Under the contract 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 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.
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
91
<PAGE>
Allocation Funds NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------
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.
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. On June 3, 1999,
WFB and Forum Accounting Services ("Forum") entered into an agreement, whereby
WFB desires that Forum performs certain fund accounting services for WFB with
respect to each Fund and Class thereof. A fixed monthly fee, and a basis point
fee of 0.0025% of the average annual daily net assets of each Fund will also be
charged. The Company, on behalf of the applicable Fund, reimburses Forum for all
out-of-pocket and ancillary expenses reasonably incurred in providing the
services described in the Sub Fund Accounting Agreement. On August 2, 1999,
Forum began providing services for the U.S. Government Allocation and Asset
Allocation Funds.
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.
On July 17, 1999, Boston Financial Data Services ("BFDS") replaced WFB as the
transfer agent for the Company. Under the transfer agency contract, BFDS is
entitled to receive, on a monthly basis, transfer agency fees based on the
number of accounts and transactions of each Fund. WFB will continue to provide
sub-transfer agency services to the Funds. Prior to July 17, 1999 the Company
had entered into a contract on behalf of the Funds with WFB, whereby WFB
provided transfer agency services for the Funds. Under the transfer agency
contract, WFB was 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.
92
<PAGE>
NOTES TO FINANCIAL STATEMENTS Allocation Funds
- ------------------------------------------------------------------------
Shareholder servicing fees paid on behalf of the Funds for the six months
ended August 31, 1999 were as follows:
<TABLE>
<CAPTION>
FUND CLASS A CLASS B CLASS C
<S> <C> <C> <C>
- ---------------------------------------------------------------------------
Asset Allocation Fund $2,102,608 $694,329 $19,622
Index Allocation Fund 5,462 20,834 95,571
U.S. Government Allocation Fund 104,153 27,143 N/A
</TABLE>
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.
On March 25, 1999, the Company entered into an Administration Agreement with
WFB on behalf of the Funds. Under the Administration Agreement, WFB will act as
sole Administrator of the Funds and is entitled to receive monthly fees at an
annual rate of 0.15% of the average daily net assets of the Funds. Prior to
March 25, 1999, the Company had entered into administration agreements on behalf
of the Funds whereby WFB as administrator and Stephens Inc. ("Stephens") as
co-administrator provide the Funds with administrative services. For these
services, WFB and Stephens are entitled to receive monthly fees at the annual
rates of 0.03% and 0.04%, respectively, of each Fund's average daily net assets.
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.
93
<PAGE>
Allocation Funds NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------
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 six months ended August
31, 1999 were as follows:
<TABLE>
<CAPTION>
FUND CLASS A CLASS B CLASS C
<S> <C> <C> <C>
- --------------------------------------------------------------------------
Asset Allocation Fund $ 0 $1,620,101 $ 58,866
Index Allocation Fund 118,508 62,501 286,708
U.S. Government Allocation Fund 0 63,334 N/A
</TABLE>
The registration fees paid on behalf of the Funds for the six months ended
August 31, 1999 were as follows:
<TABLE>
<CAPTION>
FUND CLASS A CLASS B CLASS C
<S> <C> <C> <C>
- -------------------------------------------------------------------------------
Asset Allocation Fund $4,976 $39,738 $4,323
Index Allocation Fund 920 920 2,502
U.S. Government Allocation Fund 1,822 2,412 N/A
</TABLE>
WAIVED FEES AND REIMBURSED EXPENSES
All amounts shown as waived fees and reimbursed expenses on the Statement of
Operations, for the six months ended August 31, 1999 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 August 31, 1999, Stephens owned 141 shares of the Asset
Allocation Fund, 250,332 shares of the Index Allocation Fund and 122 shares of
the U.S. Government Allocation Fund.
Stephens has retained approximately $1,627,054 as sales charges from the
proceeds of Class A shares sold, $1,163,079 from the proceeds of Class B shares
redeemed and $39,864 from the proceeds of Class C shares redeemed by the Company
for the six months ended August 31, 1999. A third party financing agent has
retained approximately $520,711 from the proceeds of Class B shares
94
<PAGE>
NOTES TO FINANCIAL STATEMENTS Allocation Funds
- ------------------------------------------------------------------------
redeemed by the Company for the six months ended August 31, 1999. Wells Fargo
Securities Inc., a subsidiary of WFB, received $1,260,446 as sales charges from
the proceeds of Class A shares sold, $48,971 from the proceeds of Class B shares
redeemed and $0 from the proceeds of Class C shares redeemed by the Company for
the six months ended August 31, 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 six months ended August 31, 1999 were as follows:
AGGREGATE PURCHASES AND SALES
<TABLE>
<CAPTION>
FUND PURCHASE AT COST SALES PROCEEDS
<S> <C> <C>
- --------------------------------------------------------------------------------
Asset Allocation Fund $568,701,382 $550,640,643
Index Allocation Fund 10,783,226 4,003,992
U.S. Government Allocation Fund 98,549,978 66,003,609
</TABLE>
4. CAPITAL SHARE TRANSACTIONS
As of August 31, 1999, there were over 242 billion shares of $0.001 par value
capital stock authorized by the Company. As of August 31, 1999, the Funds were
each authorized to issue 500 million shares of $0.001 par value capital stock
for each class of shares.
95
<PAGE>
Allocation Funds NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------
Capital share transactions for the Funds were as follows:
<TABLE>
<CAPTION>
ASSET ALLOCATION FUND
<S> <C> <C> <C>
-----------------------------------------------
<CAPTION>
(UNAUDITED)
FOR THE SIX FOR THE ELEVEN FOR THE YEAR
MONTHS ENDED MONTHS ENDED ENDED
AUGUST 31,1999 FEBRUARY 28, 1999 MARCH 31, 1998
- ------------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
<S> <C> <C> <C>
Shares sold -- Class A 2,072,572 3,967,005 5,404,941
Shares issued in reinvestment of
dividends -- Class A 423,056 5,460,934 5,339,741
Shares redeemed -- Class A (4,792,331) (8,542,275) (9,806,181)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS A (2,296,703) 885,664 938,501
Shares sold -- Class B 6,440,490 9,161,518 10,545,390
Shares issued in reinvestment of
dividends -- Class B 124,323 2,236,282 1,176,235
Shares redeemed -- Class B (1,792,758) (3,093,434) (1,371,398)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS B 4,772,055 8,304,366 10,350,227
Shares sold -- Class C(1) 691,310 648,391 N/A
Shares issued in reinvestment of
dividends -- Class C(1) 3,099 35,062 N/A
Shares redeemed -- Class C(1) (105,020) (37,191) N/A
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS C(1) 589,389 646,262 N/A
</TABLE>
(1) THIS CLASS OF SHARES COMMENCED OPERATIONS ON APRIL 1, 1998.
96
<PAGE>
NOTES TO FINANCIAL STATEMENTS Allocation Funds
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDEX ALLOCATION FUND
<S> <C> <C> <C> <C>
------------------------------------------------------------------
<CAPTION>
(UNAUDITED)
FOR THE SIX FOR THE ELEVEN FOR THE THREE FOR THE YEAR
MONTHS ENDED MONTHS ENDED MONTHS ENDED ENDED
AUGUST 31,1999 FEBRUARY 28, 1999 MARCH 31, 1998 MARCH 31, 1997
- -------------------------------------------------------------------------------------------------
SHARES ISSUED AND
<S> <C> <C> <C> <C>
REDEEMED:
Shares sold -- Class A 273,502 571,737 240,942 850,777
Shares issued in
reinvestment of
dividends -- Class A 2,360 147,971 9,136 496,833
Shares redeemed --
Class A (352,138) (1,138,366) (155,356) (470,768)
NET INCREASE (DECREASE)
IN SHARES
OUTSTANDING -- CLASS A (76,276) (418,658) 94,722 876,842
Shares sold --
Class B(1) 253,675 415,134 133,842 18,462
Shares issued in
reinvestment of
dividends --
Class B(1) 0 14,619 0 0
Shares redeemed --
Class B(1) (25,132) (48,393) 0 0
NET INCREASE (DECREASE)
IN SHARES
OUTSTANDING --
CLASS B(1) 228,543 381,360 133,842 18,462
Shares sold 1 Class C 499,257 860,963 283,850 1,061,333
Shares issued in
reinvestment of
dividends -- Class C 10 66,796 554 164,916
Shares redeemed --
Class C (210,386) (641,920) (96,724) (255,583)
NET INCREASE (DECREASE)
IN SHARES
OUTSTANDING -- CLASS C 288,881 285,839 187,680 970,666
</TABLE>
(1) THIS CLASS OF SHARES COMMENCED OPERATIONS ON DECEMBER 15, 1997.
97
<PAGE>
Allocation Funds NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT ALLOCATION FUND
<S> <C> <C> <C>
-----------------------------------------------
<CAPTION>
(UNAUDITED)
FOR THE SIX FOR THE ELEVEN FOR THE YEAR
MONTHS ENDED MONTHS ENDED ENDED
AUGUST 31,1999 FEBRUARY 28, 1999 MARCH 31, 1998
- ------------------------------------------------------------------------------------------------
SHARES ISSUED AND REDEEMED:
<S> <C> <C> <C>
Shares sold -- Class A 104,617 591,991 846,076
Shares issued in reinvestment of
dividends -- Class A 104,371 183,684 251,276
Shares redeemed -- Class A (820,418) (1,324,622) (1,591,400)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING 1 CLASS A (611,430) (548,947) (494,048)
Shares sold -- Class B 166,476 692,988 806,213
Shares issued in reinvestment of
dividends -- Class B 33,096 42,193 29,518
Shares redeemed -- Class B (290,027) (316,931) (221,982)
NET INCREASE (DECREASE) IN SHARES
OUTSTANDING -- CLASS B (90,455) 418,250 613,749
</TABLE>
5. SUBSEQUENT EVENTS
On March 25, 1999, the Board of Directors of the Company approved the
reorganization of the Funds into new portfolios of Wells Fargo Funds Trust. The
reorganization is part of a larger plan to consolidate the Company with the
Norwest Advantage Funds following last November's merger of the parent companies
of their respective advisors -- Wells Fargo & Company and Norwest Corporation.
98
<PAGE>
SHAREHOLDERS' MEETING AND PROXY VOTING RESULTS Allocation Funds
- ------------------------------------------------------------------------
SHAREHOLDERS' MEETING AND PROXY VOTING RESULTS (UNAUDITED)
The required majority of shareholders of each Fund voted to approve the
reorganization of their Fund into a Fund of the Wells Fargo Funds Trust. The
reorganization is part of a larger plan to consolidate the Stagecoach Fund
family and the Norwest Advantage Fund family after the merger of Wells Fargo &
Company and Norwest Corporation in November, 1998. Under the reorganization,
each of the Allocation Funds listed below will transfer all of its assets and
liabilities to a corresponding Wells Fargo Funds Trust Fund.
<TABLE>
<CAPTION>
FUND FOR AGAINST ABSTAIN
<S> <C> <C> <C>
- ---------------------------------------------------------------------------
Asset Allocation 41,069,374 1,777,129 3,833,086
Index Allocation 4,528,654 130,660 252,866
U.S. Government Allocation 3,425,353 179,702 339,142
</TABLE>
99
<PAGE>
THIS PAGE IS INTENTIONALLY LEFT BLANK --
100
<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
CTF -- Common Trust Fund
DW&P -- Department of Water & Power
DWR -- Department of Water Resources
EDFA -- Education Finance Authority
FGIC -- Financial Guaranty Insurance Corporation
FHA -- Federal Housing Authority
FHLB -- Federal Home Loan Bank
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
LLC -- Limited Liability Corporation
LOC -- Letter of Credit
LP -- Limited Partnership
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
PLC -- Private Placement
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>
101
<PAGE>
Wells Fargo Bank, N.A. provides investment advisory services, shareholder
services and/ or certain other services for the Stagecoach Funds. Wells
Capital Management Incorporated ("WCM") provides investment sub-advisory
services for certain Stagecoach Funds. The Funds are distributed by STEPHENS
INC., Member NYSE/SIPC. Wells Fargo Bank, N.A. and WCM are not affiliated
with Stephens Inc.
This report and the financial statements contained herein are submitted for
the general information of the shareholders of the Stagecoach Funds. If this
report is used for promotional purposes, distribution of the report must be
accompanied or preceded by a current prospectus. For a prospectus containing
more complete information, including charges and expenses, call
1-800-260-5969. Read the prospectus carefully before you invest or send
money.
-C- Stagecoach Funds
STAGECOACH FUNDS-Registered Trademark-
P.O. Box 7066
San Francisco, CA 94120-7066
DATED MATERIAL
PLEASE EXPEDITE
LOGO SAR002 (10/99)
