<PAGE>
PORTFOLIO MANAGERS' LETTER
EXECUTIVE INVESTORS BLUE CHIP FUND
Dear Investor:
1997 was a very good year for the U.S. economy and financial markets. The
economy grew at an annual pace of 3.8%, with the unemployment rate falling to
its lowest level since the 1970's. Despite faster economic growth, inflation, as
measured by the Consumer Price Index, rose less than 2%, its smallest increase
in over ten years. Reflecting the strong economy, the Federal budget deficit
declined substantially and had almost been eliminated by year-end. Against this
backdrop, the Federal Reserve held monetary policy steady after one small
increase in the benchmark Federal funds rate in March.
Although both the U.S. bond and stock markets suffered setbacks at times during
the year, the combination of moderate growth and low inflation ultimately
provided a rewarding environment for investors. Long-term bond yields fell to
their lowest level in two years, while the broad stock market indices recorded
their third consecutive year of substantial gains. While many overseas markets
were buffeted by the economic crisis in Southeast Asia, U.S. markets remained
relatively stable or--in the case of the bond market--benefited from a "flight
to safety" as investors sought the security of the world's largest and most
efficient financial markets.
Returns in the equity market, as measured by the Standard & Poor's 500 Index,
were in double digits for an unprecedented third year in a row. Bullish equity
investor sentiment was sustained by an outlook for continued low inflation and
interest rates and solid economic growth. For 1997, Executive Investors Blue
Chip Fund returned 26.6% on a net asset value basis. In addition to a solid
absolute return, the Fund was in line with its peer group as measured by the
Lipper Growth and Income Average, which returned 27.1% for the year. For 1997,
the Fund declared dividends from net investment income of 19.0 cents per share
and made a capital gain distribution of $1.356 per share.
The Fund's performance in 1997 was bolstered by select investments in the
healthcare, financial and publishing sectors of the S&P 500 Index. While the
second half of the year was a difficult one for the technology sector, certain
technology stocks performed quite well over the full year. The Fund's
performance also benefited from select investments in the telecommunications
equipment area.
The fundamentals supporting performance of the healthcare sector remained in
place during the year. Demographics and continued demand for the best health
care in the world here in the United States generated above average returns for
innovative healthcare companies. Stocks in companies such as Eli Lilly,
Warner-Lambert, Pfizer and Medtronic all outperformed the S&P 500 Index in 1997.
The demographic trend supporting healthcare--the aging baby boomers--also
benefited the financial sector as more money flowed into investment and
retirement products. The retirement investment trend led to outsized gains in
the stocks of financial services companies such as Merrill Lynch and Travelers
Group as well as solid gains in the stocks of banks such as BankBoston and
BankAmerica. Supported by the growing demand for wireless telephone services
worldwide, stocks in companies like Ericsson and Nokia performed well in the
first half of the year. Newspaper publishers benefited from declining newsprint
prices and increased help wanted advertising, which generated above average
returns in the stock of Tribune Company. Finally, perennial performers like
Microsoft and General Electric contributed to the Fund's performance.
As the year entered the third quarter, concerns about the economic problems
facing Southeast Asia spilled over into the United States markets and had a
negative
1
<PAGE>
PORTFOLIO MANAGERS' LETTER (continued)
EXECUTIVE INVESTORS BLUE CHIP FUND
impact on the investment outlook for certain sectors.The most notable sector to
feel the impact was technology. Anticipating a slowdown in demand along with
possible competitive pricing pressures from less expensive sources, many
technology stocks retreated in the fourth quarter, generating underperformance
for the full year. The stocks in the Fund most directly affected by the Asian
situation, Motorola and Intel, subsequently underperformed. The concerns about
Asia also had an impact on the stocks of the major money center banks held by
the Fund, Chase Manhattan and Citicorp. Although Chase and Citicorp both
generated decent absolute returns, they underperformed the market. Companies
whose growth was driven by exports, most notably those in the capital goods
sector, were also affected by the Asian problem. AlliedSignal, Boeing, Lockheed
Martin and United Technologies were all impacted by the downturn in the Asian
economies and were all underperformers for the year.
While we continue to believe the fundamentals that pushed U.S. stock markets to
new highs remain in place, investors should remain aware of the risks associated
with investing in the stock markets. Stock markets tend to follow cycles and the
current upward cycle or bull market is now the longest in history. On a
technical basis, the length of the cycle could present some pressure against
continued gains in the short-term, but the current economic environment of
stable growth, low inflation and low interest rates provides positive support
for continued gains. The aging population, saving and investing for retirement,
adds another level of support for continued positive trends in the financial
markets. However, the impact of lower global economic growth, due to the turmoil
in the Asian economies and the possible impact on U.S. companies' profits, could
present a risk to U.S. equity investors.
As in the past, the investment strategy of the Executive Investors Blue Chip
Fund will be to search for equity opportunities on a company specific or bottom
up basis. However, the impact of major economic events, such as the current
Asian turmoil, will play a role in the final investment decision. The Fund will
continue to invest in companies that have a demonstrated record of consistent
profits and growth supported by solid management. The Fund will also continue to
take a long-term investment perspective on any investment under consideration.
Following 1997's strong performance, the outlook for U.S. financial markets
continues to be positive, although uncertainties do exist. In particular, we
believe that the economic problems in Southeast Asia will slow growth in the
U.S. However, it is unclear to what extent growth will be slowed and,
consequently, what the ultimate impact will be on the financial markets. On a
positive note, Southeast Asia's problems should result in lower inflation
worldwide. Uncertainty often leads to volatile markets. During such times,
investors are generally best served by focusing on long-term objectives and
maintaining a disciplined approach to investing.
As always, we appreciate the opportunity to serve your investment needs.
Sincerely,
/s/ Dennis T. Fitzpatrick
Dennis T. Fitzpatrick
Co-Portfolio Manager
/s/ Kimberly C. Speegle
Kimberly C. Speegle
Co-Portfolio Manager
January 30, 1998
2
<PAGE>
CUMULATIVE PERFORMANCE INFORMATION
EXECUTIVE INVESTORS BLUE CHIP FUND
Comparison of change in value of $10,000 investment in the Executive Investors
Blue Chip Fund and the Standard & Poor's 500 Index.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1997
<S> <C> <C>
Executive Investors Standard
Blue Chip Fund 500 Index
May-90 9,525 10,000
Dec-90 9,215 9,335
Dec-91 11,774 12,185
Dec-92 12,259 13,060
Dec-93 13,256 14,340
Dec-94 13,096 14,524
Dec-95 17,849 20,463
Dec-96 21,530 25,161
Dec-97 27,253 33,490
Average Annual Total Return*
N.A.V. Only S.E.C. Standardized
One Year 26.58% 20.54%
Five Years 17.33% 16.19%
Since Inception(5/17/90) 14.77% 14.04%
</TABLE>
THE GRAPH COMPARES A $10,000 INVESTMENT IN THE EXECUTIVE INVESTORS BLUE CHIP
FUND BEGINNING 5/17/90 (INCEPTION DATE) WITH A THEORETICAL INVESTMENT IN THE
STANDARD & POOR'S 500 INDEX. THE STANDARD & POOR'S 500 INDEX IS AN UNMANAGED
CAPITALIZATION-WEIGHTED INDEX OF 500 STOCKS DESIGNED TO MEASURE PERFORMANCE OF
THE BROAD DOMESTIC ECONOMY THROUGH CHANGES IN THE AGGREGATE MARKET VALUE OF SUCH
STOCKS, WHICH REPRESENT ALL MAJOR INDUSTRIES. IT IS NOT POSSIBLE TO INVEST
DIRECTLY IN THIS INDEX. IN ADDITION, THE INDEX DOES NOT TAKE INTO ACCOUNT FEES
AND EXPENSES. FOR PURPOSES OF THE GRAPH AND THE ACCOMPANYING TABLE, UNLESS
OTHERWISE INDICATED, IT HAS BEEN ASSUMED THAT THE MAXIMUM SALES CHARGE WAS
DEDUCTED FROM THE INITIAL $10,000 INVESTMENT IN THE FUND AND ALL DIVIDENDS AND
DISTRIBUTIONS WERE REINVESTED.
* AVERAGE ANNUAL TOTAL RETURN FIGURES (FOR THE PERIOD ENDED 12/31/97) INCLUDE
THE REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS. "N.A.V. ONLY" RETURNS ARE
CALCULATED WITHOUT SALES CHARGES. THE "S.E.C. STANDARDIZED" RETURNS SHOWN ARE
BASED ON THE MAXIMUM SALES CHARGE OF 4.75%. SOME OR ALL OF THE EXPENSES OF THE
FUND WERE WAIVED OR ASSUMED. IF SUCH EXPENSES HAD BEEN PAID BY THE FUND, THE
"S.E.C. STANDARDIZED" AVERAGE ANNUAL TOTAL RETURN FOR ONE YEAR, FIVE YEARS AND
SINCE INCEPTION WOULD HAVE BEEN 19.30%, 14.66% AND 12.24%, RESPECTIVELY.
RESULTS REPRESENT PAST PERFORMANCE AND DO NOT INDICATE FUTURE RESULTS.
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 THE
ORIGINAL COST. STANDARD & POOR'S 500 INDEX FIGURES FROM STANDARD & POOR'S AND
ALL OTHER FIGURES FROM EXECUTIVE INVESTORS MANAGEMENT COMPANY, INC.
3
<PAGE>
PORTFOLIO MANAGER'S LETTER
EXECUTIVE INVESTORS HIGH YIELD FUND
Dear Investor:
1997 was a very good year for the U.S. economy and financial markets. The
economy grew at an annual pace of 3.8%, with the unemployment rate falling to
its lowest level since the 1970's. Despite faster economic growth, inflation, as
measured by the Consumer Price Index, rose less than 2%, its smallest increase
in over ten years. Reflecting the strong economy, the Federal budget deficit
declined substantially and had almost been eliminated by year-end. Against this
backdrop, the Federal Reserve held monetary policy steady after one small
increase in the benchmark Federal funds rate in March.
Although both the U.S. bond and stock markets suffered setbacks at times during
the year, the combination of moderate growth and low inflation ultimately
provided a rewarding environment for investors. Long-term bond yields fell to
their lowest level in two years, while the broad stock market indices recorded
their third consecutive year of substantial gains. While many overseas markets
were buffeted by the economic crisis in Southeast Asia, U.S. markets remained
relatively stable or--in the case of the bond market--benefited from a "flight
to safety" as investors sought the security of the world's largest and most
efficient financial markets.
These conditions extended the favorable performance of the high yield bond
market. High yield bond financing is one of the tools available in the American
capital market which has been used effectively to support a rapid pace of
business change. Instead of being used to hedge inflation, as they might have
been a decade ago, below investment grade bonds now are increasingly funding the
consolidation or early development of many different enterprises. As a group,
junk bond issuers had enormous operating and financial flexibility to work with.
These prevailing conditions supported credit sensitive bonds and the success of
many aggressive business plans. Starting with a record of attractive risk
adjusted returns, many crosscurrents within the high yield markets have kindled
huge investor demand. That demand led to record bond issuance of over $120
billion, surpassing the previous record set in 1996, of $73 billion. The default
rate has remained low, reflecting generally strong fundamentals and wide credit
availability. Nevertheless, companies that did encounter serious difficulties
saw their securities punished swiftly and severely.
During 1997, Executive Investors High Yield Fund returned 12.0% on a net asset
value basis compared to a return of 12.6% for the average high yield bond funds
as measured by Lipper Analytical Services, Inc. For 1997, the Fund declared
dividends from net investment income of 69.7 cents per share. The Fund continued
to benefit from tenders and calls of portfolio holdings in addition to those
reported last year. In reinvesting proceeds, our choices fairly consistently
avoided the most aggressive risk profiles that the market presented, both in
terms of credit and interest rate risks. This precaution was ultimately
unnecessary during the year just ended, as the market generally rewarded
aggressive business plans and costly consolidation strategies. The Fund was well
positioned with holdings in the competitive local exchange carrier segment of
the telecommunications market as the importance of that business became widely
apparent. A comparatively low concentration in long maturity deferred coupon
bonds dampened returns because this bond structure, while carrying risks,
accentuates appreciation of bonds when interest rates decline as they did last
year. Also, these bonds were used extensively to fund the types of growth,
"buildout" and industry consolidation transactions that did especially well in
1997.
The Fund avoided defaults and notable credit problems. Executive Investors High
Yield Fund's negligible exposure to emerging markets held back returns
4
<PAGE>
in the year's first half, and despite growing to only a very small level in the
third quarter, widely reported problems outside the U.S. did not have a material
effect on the Fund. In fact, because values of emerging markets bonds have been
thrown into disarray, we want to consider whether some opportunities might exist
amid the turmoil.
As the new year begins, we should acknowledge that uncertainties abound. We
believe that the domestic economy will be resilient but valuation levels,
especially of equities, will continue to influence the high yield bond market.
We expect to continue to see a large choice of new bond issues. In our view, by
avoiding extreme positions with regard to interest rates or market momentum, the
Fund has been positioned to prosper in a changeable environment. The very
success of most of the portfolio's investments creates another challenge, that
of replacing bonds which have met their objectives with successor values. To do
this, we focus our investment research on the basics of current holdings and of
investment prospects: big picture industry trends, management capability, and
the types of strategies/business plans that will work for bondholders.
Investors who buy bond funds--whether for income or total return--should be
aware that the value of their investment fluctuates as interest rates change. In
addition, the value of a fund can fluctuate based on changes in the credit
quality of the bonds it holds. In particular, high yield funds invest in
lower-rated debt obligations which are more sensitive than higher-rated
investments to adverse economic changes or individual corporate developments,
and thus can be subject to a higher incidence of default. Investors should be
aware of these risks and recognize that successful investing generally requires
a long-term commitment to the market.
Following 1997's strong performance, the outlook for U.S. financial markets
continues to be positive, although uncertainties do exist. In particular, we
believe that the economic problems in Southeast Asia will slow growth in the
U.S. However, it is unclear to what extent growth will be slowed and,
consequently, what the ultimate impact will be on the financial markets. On a
positive note, Southeast Asia's problems should result in lower inflation
worldwide. Uncertainty often leads to volatile markets. During such times,
investors are generally best served by focusing on long-term objectives and
maintaining a disciplined approach to investing.
As always, we appreciate the opportunity to serve your investment needs.
Sincerely,
/s/ George V. Ganter
George V. Ganter
Vice President
and Portfolio Manager
January 30, 1998
5
<PAGE>
CUMULATIVE PERFORMANCE INFORMATION
EXECUTIVE INVESTORS HIGH YIELD FUND
Comparison of change in value of $10,000 investment in the Executive Investors
High Yield Fund and the Credit Suisse First Boston High Yield Index.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1997
<S> <C> <C>
Executive Investors Credit Suisse First Boston
High Yield Fund High Yield Index
Jan-88 9,525 10,000
Dec-88 11,584 11,365
Dec-89 11,456 11,408
Dec-90 10,023 10,680
Dec-91 13,589 15,353
Dec-92 15,726 17,911
Dec-93 18,404 21,298
Dec-94 17,977 21,091
Dec-95 21,407 24,757
Dec-96 24,338 27,832
Dec-97 27,266 31,347
Average Annual Total Return*
N.A.V. Only S.E.C. Standardized
One Year 12.03% 6.76%
Five Years 11.64% 10.56%
Ten Years 11.09% 10.55%
S.E.C. 30-Day Yield 7.03%
</TABLE>
THE GRAPH COMPARES A $10,000 INVESTMENT IN THE EXECUTIVE INVESTORS HIGH YIELD
FUND BEGINNING 1/1/88 WITH A THEORETICAL INVESTMENT IN THE CREDIT SUISSE FIRST
BOSTON HIGH YIELD INDEX. THE CREDIT SUISSE FIRST BOSTON HIGH YIELD INDEX IS
DESIGNED TO MEASURE THE PERFORMANCE OF THE HIGH YIELD BOND MARKET. THE INDEX
CONSISTS OF 1,282 DIFFERENT ISSUES, 1,089 OF WHICH ARE CASH PAY, 150 ARE
ZERO-COUPON, 12 ARE STEP BONDS, 21 ARE PAYMENT-IN-KIND BONDS AND THE REMAINING
10 ARE IN DEFAULT. THE BONDS INCLUDED IN THE INDEX HAVE AN AVERAGE LIFE OF 8.2
YEARS, AN AVERAGE MATURITY OF 8.3 YEARS, AN AVERAGE DURATION OF 4.5 YEARS AND AN
AVERAGE COUPON OF 10.4%. IT IS NOT POSSIBLE TO INVEST DIRECTLY IN THIS INDEX. IN
ADDITION, THE INDEX DOES NOT TAKE INTO ACCOUNT FEES AND EXPENSES. FOR PURPOSES
OF THE GRAPH AND THE ACCOMPANYING TABLE, UNLESS OTHERWISE INDICATED, IT HAS BEEN
ASSUMED THAT THE MAXIMUM SALES CHARGE WAS DEDUCTED FROM THE INITIAL $10,000
INVESTMENT IN THE FUND AND ALL DIVIDENDS AND DISTRIBUTIONS WERE REINVESTED.
* AVERAGE ANNUAL TOTAL RETURN FIGURES (FOR THE PERIOD ENDED 12/31/97) INCLUDE
THE REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS. "N.A.V. ONLY" RETURNS ARE
CALCULATED WITHOUT SALES CHARGES. THE "S.E.C. STANDARDIZED" RETURNS SHOWN ARE
BASED ON THE MAXIMUM SALES CHARGE OF 4.75% (PRIOR TO 10/28/88, THE MAXIMUM
SALES CHARGE WAS 4.0%) AND ARE LOWER THAN THEY WOULD HAVE BEEN HAD THE SALES
CHARGE NOT BEEN INCREASED. SOME OR ALL OF THE EXPENSES OF THE FUND WERE WAIVED
OR ASSUMED. IF SUCH EXPENSES HAD BEEN PAID BY THE FUND, THE S.E.C.
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FOR ONE YEAR, FIVE YEARS AND TEN
YEARS WOULD HAVE BEEN 6.12%, 9.90% AND 9.38%, RESPECTIVELY, AND THE S.E.C.
30-DAY YIELD FOR DECEMBER 1997 WOULD HAVE BEEN 6.44%. RESULTS REPRESENT PAST
PERFORMANCE AND DO NOT INDICATE FUTURE RESULTS. 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 THE ORIGINAL COST. THE UNUSUALLY
HIGH CURRENT YIELDS OFFERED REFLECT THE SUBSTANTIAL RISKS ASSOCIATED WITH
INVESTMENTS IN HIGH YIELD BONDS. THE ISSUERS OF THE BONDS PAY HIGHER INTEREST
RATES BECAUSE THEY HAVE A GREATER LIKELIHOOD OF FINANCIAL DIFFICULTY, WHICH
COULD RESULT IN THEIR INABILITY TO REPAY THE BONDS FULLY WHEN DUE. PRICES OF
HIGH YIELD BONDS ARE ALSO SUBJECT TO GREATER FLUCTUATIONS. CREDIT SUISSE FIRST
BOSTON HIGH YIELD INDEX FIGURES FROM CREDIT SUISSE FIRST BOSTON CORPORATION
AND ALL OTHER FIGURES FROM EXECUTIVE INVESTORS MANAGEMENT COMPANY, INC.
6
<PAGE>
PORTFOLIO MANAGER'S LETTER
EXECUTIVE INVESTORS INSURED TAX EXEMPT FUND
Dear Investor:
1997 was a very good year for the U.S. economy and financial markets. The
economy grew at an annual pace of 3.8%, with the unemployment rate falling to
its lowest level since the 1970's. Despite faster economic growth, inflation, as
measured by the Consumer Price Index, rose less than 2%, its smallest increase
in over ten years. Reflecting the strong economy, the Federal budget deficit
declined substantially and had almost been eliminated by year-end. Against this
backdrop, the Federal Reserve held monetary policy steady after one small
increase in the benchmark Federal funds rate in March.
Although both the U.S. bond and stock markets suffered setbacks at times during
the year, the combination of moderate growth and low inflation ultimately
provided a rewarding environment for investors. Long-term bond yields fell to
their lowest level in two years, while the broad stock market indices recorded
their third consecutive year of substantial gains. While many overseas markets
were buffeted by the economic crisis in Southeast Asia, U.S. markets remained
relatively stable or--in the case of the bond market--benefited from a "flight
to safety" as investors sought the security of the world's largest and most
efficient financial markets.
Long-term municipal bond yields ended 1997 near their lowest level since the
mid-1970's. Most of the decline in yields occurred during the second half of the
year as the bond market benefited from low inflation in the U.S. and instability
in Southeast Asia. Low yields spurred issuance of $220 billion of municipal
bonds during 1997, the third largest volume of supply in the market's history.
This supply kept municipal bond yields higher than they might have been
otherwise. As a result, municipal bonds ended the year somewhat cheap relative
to taxable bonds, laying the groundwork for strong performance in 1998.
During 1997, Executive Investors Insured Tax Exempt Fund's shares had a total
return on a net asset value basis of 10.3%. This return compares favorably to
the average return of 8.4% for insured municipal bond funds as reported by
Lipper Analytical Services, Inc. For 1997, the Fund declared dividends from
investment income of 67.2 cents per share and made a capital gain distribution
of 12.1 cents per share.
Fund performance during 1997 was driven primarily by two factors. First, a
substantial percentage of the Fund's assets was invested in noncallable bonds.
Most municipal bonds are callable which means that issuers can buy--or
call--bonds from investors if interest rates fall. This limits the price
appreciation of callable bonds when interest rates fall as they did in 1997. In
contrast, noncallable bonds have unlimited potential to increase in price. Our
holdings of noncallable bonds contributed significantly to the Fund's total
return. Second, the Fund enhanced total return by taking advantage of short-term
trading opportunities, particularly by purchasing relatively cheap new issues.
Investors who buy bond funds--whether for income or total return--should be
aware that the value of their investment fluctuates as interest rates change.
For example, a 50 basis point (or .5%) increase in yield on a twenty-year
municipal bond results in roughly a 6% decrease in that bond's price. In each of
the last five years, twenty-year municipal bond yields have fluctuated by more
than 50 basis points. In addition, while the Fund's municipal bonds are insured
as to timely payment of principal and interest, the insurance does not protect
the bonds against changes in market value. Investors should be aware of these
risks and recognize that successful investing generally requires a long-term
commitment to the market.
Following 1997's strong performance, the outlook for U.S. financial markets
continues to be positive, although uncertainties do exist. In particular, we
believe
7
<PAGE>
PORTFOLIO MANAGER'S LETTER (continued)
EXECUTIVE INVESTORS INSURED TAX EXEMPT FUND
that the economic problems in Southeast Asia will slow growth in the U.S.
However, it is unclear to what extent growth will be slowed and, consequently,
what the ultimate impact will be on the financial markets. On a positive note,
Southeast Asia's problems should result in lower inflation worldwide.
Uncertainty often leads to volatile markets. During such times, investors are
generally best served by focusing on long-term objectives and maintaining a
disciplined approach to investing.
As always, we appreciate the opportunity to serve your investment needs.
Sincerely,
/s/ Clark D. Wagner
Clark D. Wagner
Chief Investment Officer
and Portfolio Manager
January 30, 1998
8
<PAGE>
CUMULATIVE PERFORMANCE INFORMATION
EXECUTIVE INVESTORS INSURED TAX EXEMPT FUND
Comparison of change in value of $10,000 investment in the Executive Investors
Insured Tax Exempt Fund and the Lehman Brothers Municipal Bond Index.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1997
<S> <C> <C>
Executive Investors Lehman Brothers Municipal
Insured Tax Exempt Fund Bond Index
Jul-90 9,375 10,000
Dec-90 9,901 10,286
Dec-91 11,188 11,536
Dec-92 12,412 12,552
Dec-93 14,366 14,093
Dec-94 13,798 13,365
Dec-95 16,631 15,697
Dec-96 17,313 16,364
Dec-97 19,098 17,868
Average Annual Total Return*
N.A.V. Only S.E.C. Standardized
One Year 10.30% 5.05%
Five Years 9.00% 7.94%
Since Inception (7/26/90) 9.80% 9.09%
S.E.C. 30-Day Yield 4.29%
</TABLE>
THE GRAPH COMPARES A $10,000 INVESTMENT IN THE EXECUTIVE INVESTORS INSURED TAX
EXEMPT FUND BEGINNING 7/26/90 (INCEPTION DATE) WITH A THEORETICAL INVESTMENT IN
THE LEHMAN BROTHERS MUNICIPAL BOND INDEX. THE LEHMAN BROTHERS MUNICIPAL BOND
INDEX IS A TOTAL RETURN PERFORMANCE BENCHMARK FOR THE LONG-TERM INVESTMENT GRADE
TAX-EXEMPT BOND MARKET. RETURNS AND ATTRIBUTES FOR THE INDEX ARE CALCULATED
SEMI-MONTHLY USING APPROXIMATELY 21,000 MUNICIPAL BONDS WHICH ARE PRICED BY
MULLER DATA CORP. THE INDEX DOES NOT TAKE INTO ACCOUNT FEES AND EXPENSES OR COST
OF INSURANCE OF THE BONDS HELD BY AN INSURED TAX-EXEMPT BOND FUND. IT IS NOT
POSSIBLE TO INVEST DIRECTLY IN THE LEHMAN BROTHERS MUNICIPAL BOND INDEX. FOR
PURPOSES OF THE GRAPH AND THE ACCOMPANYING TABLE, UNLESS OTHERWISE INDICATED, IT
HAS BEEN ASSUMED THAT THE MAXIMUM SALES CHARGE WAS DEDUCTED FROM THE INITIAL
$10,000 INVESTMENT IN THE FUND AND ALL DIVIDENDS AND DISTRIBUTIONS WERE
REINVESTED.
* AVERAGE ANNUAL TOTAL RETURN FIGURES (FOR THE PERIOD ENDED 12/31/97) INCLUDE
THE REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS. "N.A.V. ONLY" RETURNS ARE
CALCULATED WITHOUT SALES CHARGES. THE "S.E.C. STANDARDIZED" RETURNS SHOWN ARE
BASED ON THE MAXIMUM SALES CHARGE OF 4.75%. SOME OR ALL OF THE EXPENSES OF THE
FUND WERE WAIVED OR ASSUMED. IF SUCH EXPENSES HAD BEEN PAID BY THE FUND, THE
"S.E.C. STANDARDIZED" AVERAGE ANNUAL TOTAL RETURN FOR ONE YEAR, FIVE YEARS AND
SINCE INCEPTION WOULD HAVE BEEN 4.10%, 6.78% AND 7.69%, RESPECTIVELY, AND THE
S.E.C. 30-DAY YIELD FOR DECEMBER 1997 WOULD HAVE BEEN 3.37%. RESULTS REPRESENT
PAST PERFORMANCE AND DO NOT INDICATE FUTURE RESULTS. 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 THE ORIGINAL COST. LEHMAN
BROTHERS MUNICIPAL BOND INDEX FIGURES FROM LEHMAN BROTHERS, INC. AND ALL OTHER
FIGURES FROM EXECUTIVE INVESTORS MANAGEMENT COMPANY, INC.
9
<PAGE>
PORTFOLIO OF INVESTMENTS
EXECUTIVE INVESTORS BLUE CHIP FUND
December 31, 1997
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000 OF
SHARES SECURITY VALUE NET ASSETS
- -------------------------------------------------------------------------------------
<C> <S> <C> <C>
COMMON STOCKS--89.5%
BASIC MATERIALS--2.8%
100 Aluminum Company of America $ 7,037 $ 19
200 Dow Chemical Company 20,300 54
600 Du Pont (E.I.) de Nemours & Company 36,037 97
500 Monsanto Company 21,000 56
300 Morton International, Inc. 10,312 28
200 Sigma-Aldrich Corporation 7,950 21
- -------------------------------------------------------------------------------------
102,636 275
- -------------------------------------------------------------------------------------
CAPITAL GOODS--9.8%
400 AlliedSignal, Inc. 15,575 42
500 *American Power Conversion Corporation 11,812 32
300 Avery Dennison Corporation 13,425 36
600 Boeing Company 29,362 79
300 Corning, Inc. 11,137 30
300 Emerson Electric Company 16,931 45
1,400 General Electric Company 102,725 276
850 Ingersoll-Rand Company 34,425 92
200 Lockheed Martin Corporation 19,700 53
600 Textron, Inc. 37,500 101
500 Thomas & Betts Corporation 23,625 63
500 Tyco International, Ltd. 22,531 60
700 *USA Waste Services, Inc. 27,475 74
- -------------------------------------------------------------------------------------
366,223 983
- -------------------------------------------------------------------------------------
COMMUNICATION SERVICES--5.2%
900 *AirTouch Communications, Inc. 37,406 100
400 Bell Atlantic Corporation 36,400 98
400 BellSouth Corporation 22,525 60
600 GTE Corporation 31,350 84
100 *Intermedia Communications, Inc. 6,075 16
800 *LCI International, Inc. 24,600 66
500 SBC Communications, Inc. 36,625 98
- -------------------------------------------------------------------------------------
194,981 522
- -------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000 OF
SHARES SECURITY VALUE NET ASSETS
- -------------------------------------------------------------------------------------
<C> <S> <C> <C>
CONSUMER CYCLICALS--8.3%
600 *Cendant Corporation $ 20,625 $ 55
600 Chrysler Corporation 21,112 57
300 *Costco Companies, Inc. 13,387 36
500 *Federated Department Stores, Inc. 21,531 58
600 Hilton Hotels Corporation 17,850 48
600 Home Depot, Inc. 35,325 95
500 *Lear Corporation 23,750 64
250 Masco Corporation 12,719 34
600 Mattel, Inc. 22,350 60
200 McGraw-Hill Companies, Inc. 14,800 40
500 Ogden Corporation 14,094 38
400 *Staples, Inc. 11,100 30
500 Tribune Company 31,125 83
200 Unifi, Inc. 8,137 22
1,000 Wal-Mart Stores, Inc. 39,437 106
- -------------------------------------------------------------------------------------
307,342 826
- -------------------------------------------------------------------------------------
CONSUMER STAPLES--14.1%
500 American Stores Company 10,281 28
500 Anheuser-Busch Companies, Inc. 22,000 59
400 *Apollo Group, Inc. 18,900 51
400 Clorox Company 31,625 85
500 Coca-Cola Company 33,312 89
600 ConAgra, Inc. 19,687 53
300 CPC International, Inc. 32,325 87
600 Felcor Suite Hotels, Inc. 21,300 57
400 Fort James Corporation 15,300 41
300 Gillette Company 30,131 81
1,000 *Host Marriott Corporation 19,625 53
400 Kimberly-Clark Corporation 19,725 53
1,100 PepsiCo, Inc. 40,081 107
800 Philip Morris Companies, Inc. 36,250 97
600 Procter & Gamble Company 47,887 128
200 Rite Aid Corporation 11,738 31
- -------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
PORTFOLIO OF INVESTMENTS
EXECUTIVE INVESTORS BLUE CHIP FUND
December 31, 1997
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000 OF
SHARES SECURITY VALUE NET ASSETS
- -------------------------------------------------------------------------------------
<C> <S> <C> <C>
CONSUMER STAPLES (continued)
213 *Safeway, Inc. $ 13,472 $ 36
300 *Tele-Communications, Inc. Liberty Media Group -
Series "A" 10,875 29
600 Time Warner, Inc. 37,200 100
400 Unilever N.V. 24,975 67
300 Walt Disney Company 29,719 80
- -------------------------------------------------------------------------------------
526,408 1,412
- -------------------------------------------------------------------------------------
ENERGY--10.5%
250 Amoco Corporation 21,281 57
500 Atlantic Richfield Company 40,063 107
300 Baker Hughes, Inc. 13,088 35
600 Chevron Corporation 46,200 124
500 Dresser Industries, Inc. 20,969 56
400 Exxon Corporation 24,475 66
50 Kerr-McGee Corporation 3,166 8
500 Mobil Corporation 36,094 97
1,000 Royal Dutch Petroleum Company 54,188 145
400 Schlumberger, Ltd. 32,200 86
400 Texaco, Inc. 21,750 58
900 Tosco Corporation 34,031 91
1,600 Williams Companies, Inc. 45,400 122
- -------------------------------------------------------------------------------------
392,905 1,052
- -------------------------------------------------------------------------------------
FINANCIAL--15.4%
300 Allstate Corporation 27,263 73
200 American Express Company 17,850 48
325 American International Group, Inc. 35,344 95
300 BankAmerica Corporation 21,900 59
500 BankBoston Corporation 46,969 126
200 Chubb Corporation 15,125 41
300 Citicorp 37,931 102
600 Conseco, Inc. 27,263 73
800 Fannie Mae 45,650 122
800 First Union Corporation 41,000 110
- -------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000 OF
SHARES SECURITY VALUE NET ASSETS
- -------------------------------------------------------------------------------------
<C> <S> <C> <C>
FINANCIAL (continued)
400 Freddie Mac $ 16,775 $ 45
300 Jefferson-Pilot Corporation 23,363 63
300 Marshall & Ilsley Corporation 18,638 50
300 Merrill Lynch & Company, Inc. 21,881 59
1,100 Money Store, Inc. 23,100 62
300 Morgan Stanley, Dean Witter, Discover and Company 17,738 48
300 NationsBank Corporation 18,244 49
1,400 Norwest Corporation 54,075 145
600 Travelers Group, Inc. 32,325 87
600 USF&G Corporation 13,238 35
200 Wachovia Corporation 16,225 43
- -------------------------------------------------------------------------------------
571,897 1,535
- -------------------------------------------------------------------------------------
HEALTHCARE--10.6%
250 Abbott Laboratories 16,391 44
300 Baxter International, Inc. 15,131 41
700 Bristol-Myers Squibb Company 66,238 178
400 Eli Lilly and Company 27,850 75
500 *Health Management Associates, Inc. - Class "A" 12,625 34
400 Johnson & Johnson 26,350 71
800 *MedPartners, Inc. 17,900 48
600 *Medtronic, Inc. 31,388 84
600 Merck & Company, Inc. 63,750 171
500 Pfizer, Inc. 37,281 100
1,000 Pharmacia & Upjohn, Inc. 36,625 98
400 United Healthcare Corporation 19,875 53
200 Warner-Lambert Company 24,800 66
- -------------------------------------------------------------------------------------
396,204 1,063
- -------------------------------------------------------------------------------------
TECHNOLOGY--9.8%
500 *Adaptec, Inc. 18,563 50
1,000 *Cadence Design Systems, Inc. 24,500 66
600 *Cisco Systems, Inc. 33,450 90
700 Comdisco, Inc. 23,406 63
</TABLE>
13
<PAGE>
PORTFOLIO OF INVESTMENTS
EXECUTIVE INVESTORS BLUE CHIP FUND
December 31, 1997
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
AMOUNT
INVESTED
SHARES OR FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- -------------------------------------------------------------------------------------
<C> <S> <C> <C>
100 Eastman Kodak Company $ 6,081 $ 16
400 Hewlett-Packard Company 25,000 67
400 Intel Corporation 28,100 75
400 International Business Machines Corporation 41,825 112
200 *Microsoft Corporation 25,850 69
500 Motorola, Inc. 28,531 77
200 Raytheon Company 10,100 27
300 *Sterling Commerce, Inc. 11,531 31
700 *Sun Microsystems, Inc. 27,913 75
600 *Synopsys, Inc. 21,450 58
400 *Tellabs, Inc. 21,150 57
700 *Transcrypt International, Inc. 17,413 47
- -------------------------------------------------------------------------------------
364,863 980
- -------------------------------------------------------------------------------------
TRANSPORTATION--.6%
100 Burlington Northern Santa Fe Corporation 9,294 25
200 *US Airways Group, Inc. 12,500 34
- -------------------------------------------------------------------------------------
21,794 59
- -------------------------------------------------------------------------------------
UTILITIES--2.4%
600 Consolidated Edison, Inc. 24,600 66
300 Duke Energy Corporation 16,613 45
450 FPL Group, Inc. 26,634 71
600 Sierra Pacific Resources 22,500 60
- -------------------------------------------------------------------------------------
90,347 242
- -------------------------------------------------------------------------------------
TOTAL VALUE OF COMMON STOCKS (cost $2,437,986) 3,335,600 8,949
- -------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--8.0%
$ 300M Ciesco, L.P., 5.95%, 1/7/98 (cost $299,703) 299,703 804
- -------------------------------------------------------------------------------------
TOTAL VALUE OF INVESTMENTS (cost $2,737,689) 97.5% 3,635,303 9,753
OTHER ASSETS, LESS LIABILITIES 2.5 91,998 247
- -------------------------------------------------------------------------------------
NET ASSETS 100.0% $3,727,301 $10,000
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
</TABLE>
* Non-income producing
See notes to financial statements
14
<PAGE>
PORTFOLIO OF INVESTMENTS
EXECUTIVE INVESTORS HIGH YIELD FUND
December 31, 1997
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- -------------------------------------------------------------------------------------
<C> <S> <C> <C>
CORPORATE BONDS--90.2%
AEROSPACE/DEFENSE--.6%
$ 100M Moog, Inc., 10%, 2006 $ 107,000 $ 56
- -------------------------------------------------------------------------------------
APPAREL/TEXTILES--3.9%
300M Pillowtex Corp., 10%, 2006 322,500 168
400M Westpoint Stevens, Inc., 9.375%, 2005 420,000 218
- -------------------------------------------------------------------------------------
742,500 386
- -------------------------------------------------------------------------------------
AUTOMOTIVE--1.6%
300M Cambridge Industries, Inc., 10.25%, 2007 (Note 4) 313,500 163
- -------------------------------------------------------------------------------------
BUILDING MATERIALS--3.5%
350M American Architectural Products Corp., 11.75%,
2007 (Note 4) 355,250 185
299M ISP Holdings, Inc., 9.75%, 2002 317,314 165
- -------------------------------------------------------------------------------------
672,564 350
- -------------------------------------------------------------------------------------
CHEMICALS--4.0%
300M Harris Chemical North America, Inc., 10.25%, 2001 317,250 165
400M Huntsman Polymers Corp., 11.75%, 2004 453,000 235
- -------------------------------------------------------------------------------------
770,250 400
- -------------------------------------------------------------------------------------
CONSUMER PRODUCTS--4.5%
300M Commemorative Brands, Inc., 11%, 2007 300,750 156
300M Herff Jones, Inc., 11%, 2005 327,000 170
250M Syratech Corp., 11%, 2007 233,750 121
- -------------------------------------------------------------------------------------
861,500 447
- -------------------------------------------------------------------------------------
CONTAINERS/PACKAGING--4.0%
325M Plastic Containers, Inc., 10%, 2006 344,500 179
400M Radnor Holdings, Inc., 10%, 2003 417,000 217
- -------------------------------------------------------------------------------------
761,500 396
- -------------------------------------------------------------------------------------
DURABLE GOODS MANUFACTURING--1.1%
200M Fairfield Manufacturing, Inc., 11.375%, 2001 211,500 110
- -------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
PORTFOLIO OF INVESTMENTS
EXECUTIVE INVESTORS HIGH YIELD FUND
December 31, 1997
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- -------------------------------------------------------------------------------------
<C> <S> <C> <C>
ELECTRICAL EQUIPMENT--3.5%
$ 200M Amphenol Corp., 9.875%, 2007 $ 211,000 $ 110
350M Essex Group, Inc., 10%, 2003 362,250 188
100M Thermadyne Holdings Corp., 10.75%, 2003 103,250 54
- -------------------------------------------------------------------------------------
676,500 352
- -------------------------------------------------------------------------------------
ENERGY--7.8%
300M Falcon Drilling Co., Inc., 12.50%, 2005 343,965 179
400M Giant Industries, Inc., 9.75%, 2003 411,000 214
400M Stone Energy Corp., 8.75%, 2007 410,500 213
300M United Meridian Corp., 10.375%, 2005 333,000 173
- -------------------------------------------------------------------------------------
1,498,465 779
- -------------------------------------------------------------------------------------
FINANCIAL--.6%
100M Terra Nova Holdings PLC, 10.75%, 2005 111,500 58
- -------------------------------------------------------------------------------------
FOOD/BEVERAGE/TOBACCO--3.9%
400M Fleming Companies, Inc., 10.50%, 2004 (Note 4) 421,000 219
300M Van de Kamps, Inc., 12%, 2005 336,000 175
- -------------------------------------------------------------------------------------
757,000 394
- -------------------------------------------------------------------------------------
GAMING/LODGING--2.8%
250M Casino America, Inc., 12.50%, 2003 272,500 142
250M Grand Casinos, Inc., 10.125%, 2003 270,000 140
- -------------------------------------------------------------------------------------
542,500 282
- -------------------------------------------------------------------------------------
HEALTHCARE--5.0%
200M Dade International, Inc., 11.125%, 2006 220,000 114
400M Integrated Health Services, Inc., 9.25%, 2008
(Note 4) 409,500 213
300M Tenet Healthcare Corp., 10.125%, 2005 327,000 170
- -------------------------------------------------------------------------------------
956,500 497
- -------------------------------------------------------------------------------------
MEDIA (CABLE TV/BROADCASTING)--8.8%
650M Echostar Communications Corp., 0%-12.875%, 2004 594,750 309
300M Grupo Televisa, SA, 11.875%, 2006 339,000 176
- -------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- -------------------------------------------------------------------------------------
<C> <S> <C> <C>
MEDIA (CABLE TV/BROADCASTING) (continued)
$ 300M Rogers Cablesystems, Inc., 10%, 2005 $ 331,500 $ 172
400M TCI Satellite Entertainment, Inc., 10.875%, 2007
(Note 4) 420,000 218
- -------------------------------------------------------------------------------------
1,685,250 875
- -------------------------------------------------------------------------------------
MEDIA (OTHER)--4.4%
300M Garden State Newspapers, Inc., 12%, 2004 336,000 175
200M Garden State Newspapers, Inc., 8.75%, 2009 (Note
4) 200,750 104
300M Outdoor Systems, Inc., 8.875%, 2007 314,250 163
- -------------------------------------------------------------------------------------
851,000 442
- -------------------------------------------------------------------------------------
MINING/METALS--8.4%
400M Euramax International PLC, 11.25%, 2006 434,500 226
200M Gulf States Steel, Inc., 13.50%, 2003 205,000 107
240M UCAR Global Enterprises, Inc., 12%, 2005 270,300 141
300M Wells Aluminum Corp., 10.125%, 2005 319,500 166
400M Wheeling-Pittsburgh Corp., 9.25%, 2007 (Note 4) 386,000 201
- -------------------------------------------------------------------------------------
1,615,300 841
- -------------------------------------------------------------------------------------
MISCELLANEOUS--2.4%
100M Allied Waste North America, Inc., 10.25%, 2006 110,000 57
350M Kindercare Learning Centers, Inc., 9.50%, 2009 348,250 181
- -------------------------------------------------------------------------------------
458,250 238
- -------------------------------------------------------------------------------------
PAPER/FOREST PRODUCTS--3.8%
350M Riverwood International, 10.25%, 2006 347,812 181
350M S.D. Warren Co., Inc., 12%, 2004 386,750 201
- -------------------------------------------------------------------------------------
734,562 382
- -------------------------------------------------------------------------------------
REAL ESTATE/CONSTRUCTION--.8%
150M Continental Homes Holding Corp., 10%, 2006 161,250 84
- -------------------------------------------------------------------------------------
RETAIL - GENERAL MERCHANDISE--1.5%
300M Big 5 Corp., 10.875%, 2007 (Note 4) 298,500 155
- -------------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
PORTFOLIO OF INVESTMENTS
EXECUTIVE INVESTORS HIGH YIELD FUND
December 31, 1997
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
AMOUNT
PRINCIPAL INVESTED
AMOUNT FOR EACH
OR $10,000 OF
SHARES SECURITY VALUE NET ASSETS
- -------------------------------------------------------------------------------------
<C> <S> <C> <C>
TELECOMMUNICATIONS--11.6%
$ 450M American Communications Services, Inc., 0%-13%,
2005 $ 356,625 $ 185
500M Brooks Fiber Properties, Inc., 0%-10.875%, 2006 416,250 216
500M Comcast Cellular Holdings, Inc., 9.50%, 2007 522,500 272
400M McCaw International, Ltd., 0%-13%, 2007 236,000 123
200M Netia Holdings BV, 10.25%, 2007 (Note 4) 191,500 100
200M Powertel, Inc., 0%-12%, 2006 144,000 75
200M Qwest Communications International, 0%-9.47%,
2007 (Note 4) 136,500 71
200M Qwest Communications International, Inc.,
10.875%, 2007 227,000 118
- -------------------------------------------------------------------------------------
2,230,375 1,160
- -------------------------------------------------------------------------------------
TRANSPORTATION--1.7%
300M Moran Transportation Co., 11.75%, 2004 334,500 174
- -------------------------------------------------------------------------------------
TOTAL VALUE OF CORPORATE BONDS (cost $16,404,410) 17,351,766 9,021
- -------------------------------------------------------------------------------------
COMMON STOCKS--.1%
MEDIA (CABLE TV/BROADCASTING)
1,000 *Echostar Communications Corp. - Class "A" (cost
$0) 16,750 9
- -------------------------------------------------------------------------------------
PREFERRED STOCKS--2.3%
PAPER/FOREST PRODUCTS
9,000 S.D. Warren Co., Inc., 14%, Series "B" (cost
$249,750) 441,000 229
- -------------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
AMOUNT
WARRANTS INVESTED
OR FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- -------------------------------------------------------------------------------------
<C> <S> <C> <C>
WARRANTS--.5%
GAMING/LODGING--.0%
200 *Goldriver Finance Corp., Liquidating Trust $ 200 $ --
- -------------------------------------------------------------------------------------
MINING/METALS--.0%
200 *Gulf State Steel Acquistion Corp. (expiring
4/15/03) (Note 4) 2 --
- -------------------------------------------------------------------------------------
PAPER/FOREST PRODUCTS--.2%
9,000 *S.D. Warren Co., Inc. (expiring 12/15/06) (Note
4) 45,000 23
- -------------------------------------------------------------------------------------
TELECOMMUNICATIONS--.3%
450 *American Communications Services, Inc. (expiring
11/1/05) (Note 4) 47,250 25
400 *McCaw International, Ltd. (expiring 4/15/07)
(Note 4) 1,000 1
- -------------------------------------------------------------------------------------
48,250 26
- -------------------------------------------------------------------------------------
TOTAL VALUE OF WARRANTS (cost $0) 93,452 49
- -------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--2.8%
$ 500M United States Treasury Note, 7%, 2006 (cost
$534,875) 540,001 281
- -------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--2.3%
350M Ford Motor Credit Corp., 6.12%, 1/9/98 349,524 182
100M Lubrizol Corp., 6.35%, 1/5/98 99,929 52
- -------------------------------------------------------------------------------------
TOTAL VALUE OF SHORT-TERM CORPORATE NOTES (cost
$449,453) 449,453 234
- -------------------------------------------------------------------------------------
TOTAL VALUE OF INVESTMENTS (cost $17,638,488) 98.2% 18,892,422 9,823
OTHER ASSETS, LESS LIABILITIES 1.8 341,315 177
- -------------------------------------------------------------------------------------
NET ASSETS 100.0% $19,233,737 $10,000
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
</TABLE>
* Non-income producing
See notes to financial statements
19
<PAGE>
PORTFOLIO OF INVESTMENTS
EXECUTIVE INVESTORS INSURED TAX EXEMPT FUND
December 31, 1997
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- --------------------------------------------------------------------------------------
<C> <S> <C> <C>
MUNICIPAL BONDS--102.2%
ALABAMA--1.7%
$ 250M Coffee Cnty. Public Bldg. Authority, 6.10%,
9/1/2016 $ 270,937 $ 167
- --------------------------------------------------------------------------------------
ARIZONA--3.3%
250M Maricopa County Development Authority Hosp. Facs.
Rev., 7%, 12/1/2016 311,875 193
200M Maricopa County Uni. Sch. Dist. Gen. Oblig. #80
(Chandler), 6.25%, 7/1/2011 231,500 143
- --------------------------------------------------------------------------------------
543,375 336
- --------------------------------------------------------------------------------------
CALIFORNIA--13.3%
Los Angeles County, Calif. Transportation Comm.
Sales Tax Revenue:
100M 6.75%, 7/1/2001* 110,375 68
100M 6.90%, 7/1/2001* 110,875 68
500M Irwindale Cmnty. Redev. Agency, 5%, 8/1/2017 492,500 304
250M San Francisco City & County Parking Auth., 7%,
6/1/2012 292,187 180
500M San Francisco City & County Redev. Agy. (Moscone
Ctr.), 6.75%, 7/1/2015 567,500 350
250M San Jose Redevelopment Agency, 6%, 8/1/2015 283,750 175
250M Santa Ana Fin. Auth. Lease Rev., 6.25%, 7/1/2015 291,250 180
- --------------------------------------------------------------------------------------
2,148,437 1,325
- --------------------------------------------------------------------------------------
COLORADO--2.5%
350M Roaring Fork General Obligation, 6.60%,
6/15/2004* 398,562 246
- --------------------------------------------------------------------------------------
CONNECTICUT--2.7%
400M Connecticut Special Tax Oblig. Rev., 6.10%,
10/1/2011 436,000 269
- --------------------------------------------------------------------------------------
DELAWARE--.9%
130M Delaware Cnty. Hosp. Auth. (Ball Memorial Hosp.),
6.625%, 8/1/2006 142,837 88
- --------------------------------------------------------------------------------------
FLORIDA--5.4%
335M Cocoa Water & Sewer Revenue, 5.75%, 10/1/2017 358,031 221
500M Pensacola Airport Revenue, 5.60%, 10/1/2017 525,000 324
- --------------------------------------------------------------------------------------
883,031 545
- --------------------------------------------------------------------------------------
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- --------------------------------------------------------------------------------------
<C> <S> <C> <C>
GEORGIA--.7%
$ 100M Cherokee County Water & Sewer Auth. Rev., 7.10%,
8/1/2000* $ 109,250 $ 67
- --------------------------------------------------------------------------------------
ILLINOIS--11.3%
500M Chicago Board of Education, 6.25%, 12/1/2012 575,625 356
500M Chicago General Obligation, 6%, 1/1/2010 547,500 338
500M Illinois Dev. Fin. Auth. (Rockford School 205),
6.55%, 2/1/2009 585,000 361
100M Will County School District General Obligation,
7.10%, 12/1/2009 123,250 76
- --------------------------------------------------------------------------------------
1,831,375 1,131
- --------------------------------------------------------------------------------------
INDIANA--3.0%
500M Marion Cnty. Conv. & Rec. Facs. Auth., 5%,
6/1/2017 488,125 301
- --------------------------------------------------------------------------------------
MAINE--1.7%
250M Maine Municipal Bond Bank, 6.50%, 11/1/2014 280,710 173
- --------------------------------------------------------------------------------------
MASSACHUSETTS--3.4%
500M Mass. Bay Transportation Authority Gen. Sys.
Rev., 5.80%, 3/1/2013 555,075 343
- --------------------------------------------------------------------------------------
MICHIGAN--1.9%
1,000M Howell Public Schools General Obligation, 7.40%,
5/1/2006*+ 315,000 195
- --------------------------------------------------------------------------------------
MISSOURI--5.1%
200M Liberty Sewer System Revenue, 6.15%, 2/1/2015 222,750 138
500M Missouri State Health & Educational Facilities
Auth. (BJC Health System), 6.75%, 5/15/2010 599,375 370
- --------------------------------------------------------------------------------------
822,125 508
- --------------------------------------------------------------------------------------
NEBRASKA--1.5%
250M Douglas Cnty. Hosp. Auth. No. 1, 5.125%, 9/1/2017 250,625 155
- --------------------------------------------------------------------------------------
NEW JERSEY--3.3%
485M New Jersey Housing & Mortgage Fin. Rev., 6.55%,
10/1/2010 531,075 328
- --------------------------------------------------------------------------------------
NEW YORK--2.0%
290M New York City Municipal Water Fin. Auth. Rev.,
5.875%, 6/15/2001* 323,350 200
- --------------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
PORTFOLIO OF INVESTMENTS
EXECUTIVE INVESTORS INSURED TAX EXEMPT FUND
December 31, 1997
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- --------------------------------------------------------------------------------------
<C> <S> <C> <C>
NORTH CAROLINA--4.2%
$ 225M New Hanover Cnty. Cert. of Partic., 5%, 12/1/2017 $ 221,906 $ 137
430M North Carolina Central Univ. Hsg. Rev., 5.75%,
11/1/2015 457,413 283
- --------------------------------------------------------------------------------------
679,319 420
- --------------------------------------------------------------------------------------
OHIO--1.6%
250M Lorain County Hosp. Rev. (Catholic Healthcare
Partners), 5.625%, 9/1/2014 263,750 163
- --------------------------------------------------------------------------------------
OKLAHOMA--3.6%
500M Grand River Dam Authority Revenue, 6.25%,
6/1/2011 580,625 359
- --------------------------------------------------------------------------------------
OREGON--3.3%
500M Oregon State Dept. of Administrative Services
Cert. of Partic., 5.65%, 5/1/2012 536,875 332
- --------------------------------------------------------------------------------------
PENNSYLVANIA--8.8%
250M Easton Area Joint Swr. Auth., 5%, 12/1/2014 248,438 153
525M Erie General Obligation, 5.75%, 5/15/2013 557,813 345
200M Jeannette School District General Obligation,
6.65%, 6/1/2001* 216,250 134
350M Philadelphia Water & Wastewater Rev., 6.25%,
8/1/2012 402,938 249
- --------------------------------------------------------------------------------------
1,425,439 881
- --------------------------------------------------------------------------------------
PUERTO RICO--6.6%
400M Puerto Rico Commonwealth Hwy. & Transn. Auth.
Rev., 6.25%, 7/1/2014 468,500 289
545M Puerto Rico Indl. Tourist Edl. Med. & Env. Ctl.
Facs., 6.25%, 7/1/2016 602,906 372
- --------------------------------------------------------------------------------------
1,071,406 661
- --------------------------------------------------------------------------------------
RHODE ISLAND--1.4%
200M Rhode Island Convention Center Authority, 6.70%,
5/15/2001* 219,750 136
- --------------------------------------------------------------------------------------
TEXAS--9.0%
505M Austin Utility System Rev., 6%, 11/15/2013 571,913 353
500M Harris County General Obligation, 6.50%,
8/15/2013 591,365 365
250M Houston Water Conveyance System Cert. of Partic.,
6.25%, 12/15/2012 287,500 178
- --------------------------------------------------------------------------------------
1,450,778 896
- --------------------------------------------------------------------------------------
TOTAL VALUE OF MUNICIPAL BONDS (cost $14,939,143) 16,557,831 10,225
- --------------------------------------------------------------------------------------
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- --------------------------------------------------------------------------------------
<C> <S> <C> <C>
SHORT-TERM TAX EXEMPT INVESTMENTS--2.5%
NEW YORK
$ 400M New York City General Obligation Adjustable Rate
Note, 5.00%**
(cost $400,000) $ 400,000 $ 247
- --------------------------------------------------------------------------------------
TOTAL VALUE OF MUNICIPAL INVESTMENTS (cost
$15,339,143) 104.7% 16,957,831 10,472
EXCESS OF LIABILITIES OVER OTHER ASSETS (4.7) (764,882) (472)
- --------------------------------------------------------------------------------------
NET ASSETS 100.0% $16,192,949 $10,000
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
</TABLE>
* Municipal bonds which have been prerefunded are shown maturing at the
prerefunded call date.
** Interest rates on adjustable rate notes are determined and reset daily by the
issuer. Interest rate shown is the rate in effect at December 31, 1997.
+ Zero coupon bond issued at a discount. The interest rate shown represents the
rate of discount on date purchased.
See notes to financial statements
23
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
EXECUTIVE INVESTORS TRUST
December 31, 1997
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
BLUE CHIP HIGH YIELD INSURED TAX
FUND FUND EXEMPT FUND
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investment in securities:
At identified cost................... $2,737,689 $17,638,488 $15,339,143
---------- ----------- -----------
---------- ----------- -----------
At value (Note 1A)................... $3,635,303 $18,892,422 $16,957,831
Cash................................... 114,391 43,090 37,075
Receivables:
Interest and dividends............... 3,852 361,757 228,014
Trust shares sold.................... 16,323 59,670 14,375
---------- ----------- -----------
Total Assets........................... 3,769,869 19,356,939 17,237,295
---------- ----------- -----------
LIABILITIES
Payables:
Trust shares redeemed................ 16,423 1,267 --
Investment securities purchased...... 10,885 -- 970,247
Dividend payable..................... 9,290 94,319 66,533
Accrued expenses....................... 5,206 19,647 4,206
Accrued advisory fee................... 764 7,969 3,360
---------- ----------- -----------
Total Liabilities...................... 42,568 123,202 1,044,346
---------- ----------- -----------
NET ASSETS............................. $3,727,301 $19,233,737 $16,192,949
---------- ----------- -----------
---------- ----------- -----------
NET ASSETS CONSIST OF:
Capital paid in........................ $2,821,104 $22,872,541 $14,573,666
Undistributed net investment income.... 1,396 138,897 595
Accumulated net realized gain (loss) on
investment transactions.............. 7,187 (5,031,635) --
Net unrealized appreciation in value of
investments.......................... 897,614 1,253,934 1,618,688
---------- ----------- -----------
Total.................................. $3,727,301 $19,233,737 $16,192,949
---------- ----------- -----------
---------- ----------- -----------
SHARES OF BENEFICIAL INTEREST
OUTSTANDING.......................... 171,916 2,373,660 1,123,382
---------- ----------- -----------
---------- ----------- -----------
NET ASSET VALUE AND REDEMPTION PRICE
PER SHARE
(Net assets divided by trust shares
outstanding)......................... $ 21.68 $ 8.10 $ 14.41
---------- ----- -----------
---------- ----- -----------
MAXIMUM OFFERING PRICE PER SHARE
(Net asset value/.9525)*............. $ 22.76 $ 8.50 $ 15.13
---------- ----- -----------
---------- ----- -----------
</TABLE>
* On purchases of $100,000 or more, the sales charge is reduced.
See notes to financial statements
24
<PAGE>
STATEMENT OF OPERATIONS
EXECUTIVE INVESTORS TRUST
Year Ended December 31, 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
BLUE CHIP HIGH YIELD INSURED TAX
FUND FUND EXEMPT FUND
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Income:
Interest............................. $ 8,875 $1,686,525 $ 867,758
Dividends (Note 1F).................. 40,206 58,033 --
Consent fees......................... -- 40,485 --
--------- ---------- -----------
Total income........................... 49,081 1,785,043 867,758
--------- ---------- -----------
Expenses (Notes 1 and 3):
Advisory fee......................... 29,330 180,560 156,479
Distribution plan expenses........... 14,666 90,280 78,240
Shareholder servicing costs.......... 4,354 23,525 8,835
Professional fees.................... 4,148 15,830 10,870
Custodian fees....................... 4,307 5,809 3,800
Reports and notices to
shareholders....................... 1,403 8,163 3,052
Other expenses....................... 1,484 4,199 7,063
--------- ---------- -----------
Total expenses......................... 58,692 328,366 268,339
Less: Expenses waived or assumed....... (35,406) (108,372) (147,178)
Custodian fees paid indirectly.... (2,314) (2,766) (3,800)
--------- ---------- -----------
Net expenses........................... 21,972 217,228 117,361
--------- ---------- -----------
Net investment income.................. 27,109 1,567,815 750,397
--------- ---------- -----------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS (Note 2):
Net realized gain on investments....... 226,701 63,758 133,949
Net unrealized appreciation of
investments.......................... 399,894 437,713 663,898
--------- ---------- -----------
Net gain on investments................ 626,595 501,471 797,847
--------- ---------- -----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS...................... $ 653,704 $2,069,286 $ 1,548,244
--------- ---------- -----------
--------- ---------- -----------
</TABLE>
See notes to financial statements
25
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
EXECUTIVE INVESTORS TRUST
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
BLUE CHIP FUND
----------------------
YEAR ENDED DECEMBER 31 1997 1996
- --------------------------------------- ---------- ----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income................ $ 27,109 $ 22,997
Net realized gain (loss) on
investments........................ 226,701 118,654
Net unrealized appreciation
(depreciation) of investments...... 399,894 199,645
---------- ----------
Net increase in net assets
resulting from operations........ 653,704 341,296
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income................ (27,075) (24,266)
Net realized gains................... (219,514) (118,654)
---------- ----------
Total distributions................ (246,589) (142,920)
---------- ----------
TRUST SHARE TRANSACTIONS (a)
Proceeds from shares sold............ 1,122,087 602,423
Value of distributions reinvested.... 236,032 137,288
Cost of shares redeemed.............. (198,168) (204,360)
---------- ----------
Net increase from trust share
transactions....................... 1,159,951 535,351
---------- ----------
Net increase in net assets......... 1,567,066 733,727
NET ASSETS
Beginning of year.................... 2,160,235 1,426,508
---------- ----------
End of year+......................... $3,727,301 $2,160,235
---------- ----------
---------- ----------
+Includes undistributed net investment
income of............................. $ 1,396 $ 1,362
---------- ----------
---------- ----------
(a)TRUST SHARES ISSUED AND REDEEMED
Sold................................. 52,260 34,030
Issued for distributions
reinvested......................... 10,913 7,503
Redeemed............................. (8,947) (11,252)
---------- ----------
Net increase in trust shares......... 54,226 30,281
---------- ----------
---------- ----------
</TABLE>
See notes to financial statements
26
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
INSURED
HIGH YIELD FUND TAX EXEMPT FUND
------------------------ ------------------------
1997 1996 1997 1996
- --------------------------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income................ $ 1,567,815 $ 1,513,831 $ 750,397 $ 722,050
Net realized gain (loss) on
investments........................ 63,758 (139,925) 133,949 120,145
Net unrealized appreciation
(depreciation) of investments...... 437,713 707,493 663,898 (215,936)
----------- ----------- ----------- -----------
Net increase in net assets
resulting from operations........ 2,069,286 2,081,399 1,548,244 626,259
----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income................ (1,582,847) (1,455,005) (751,800) (722,005)
Net realized gains................... -- -- (133,949) (120,145)
----------- ----------- ----------- -----------
Total distributions................ (1,582,847) (1,455,005) (885,749) (842,150)
----------- ----------- ----------- -----------
TRUST SHARE TRANSACTIONS (a)
Proceeds from shares sold............ 3,853,833 2,505,007 1,477,036 3,948,019
Value of distributions reinvested.... 697,365 618,840 521,972 520,606
Cost of shares redeemed.............. (2,577,220) (2,649,367) (1,876,983) (2,186,795)
----------- ----------- ----------- -----------
Net increase from trust share
transactions....................... 1,973,978 474,480 122,025 2,281,830
----------- ----------- ----------- -----------
Net increase in net assets......... 2,460,417 1,100,874 784,520 2,065,939
NET ASSETS
Beginning of year.................... 16,773,320 15,672,446 15,408,429 13,342,490
----------- ----------- ----------- -----------
End of year+......................... $19,233,737 $16,773,320 $16,192,949 $15,408,429
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
+Includes undistributed net investment
income of............................ $ 138,897 $ 153,929 $ 595 $ 1,998
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
(a)TRUST SHARES ISSUED AND REDEEMED
Sold................................. 485,416 322,959 105,445 286,274
Issued for distributions
reinvested......................... 87,700 79,911 37,083 37,872
Redeemed............................. (324,689) (341,193) (134,047) (159,446)
----------- ----------- ----------- -----------
Net increase in trust shares......... 248,427 61,677 8,481 164,700
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
See notes to financial statements
27
<PAGE>
NOTES TO FINANCIAL STATEMENTS
EXECUTIVE INVESTORS TRUST
1. SIGNIFICANT ACCOUNTING POLICIES--The Trust, a Massachusetts business trust,
is registered under the Investment Company Act of 1940 (the "1940 Act") as a
diversified, open-end management investment company. The Trust consists of
unlimited shares of beneficial interest of the Blue Chip Fund, the High Yield
Fund, and the Insured Tax Exempt Fund, and accounts separately for the assets,
liabilities and operations of each Fund. The objective of each Fund is as
follows:
BLUE CHIP FUND seeks high total investment return consistent with the
preservation of capital.
HIGH YIELD FUND primarily seeks high current income and secondarily seeks
capital appreciation.
INSURED TAX EXEMPT FUND seeks to provide a high level of interest income which
is exempt from federal income tax.
A. Security Valuation--Except as provided below, a security listed or traded on
an exchange or the Nasdaq Stock Market is valued at its last sale price on the
exchange where the security is principally traded, and lacking any sales, the
security is valued at the mean between the closing bid and asked prices. Each
security traded in the over-the-counter market (including securities listed on
exchanges whose primary market is believed to be over-the-counter) is valued at
the mean between the last bid and asked prices based upon quotes furnished by a
market maker for such securities. Securities for which market quotations are not
readily available and other assets are valued on a consistent basis at fair
value as determined in good faith by or under the direction of the Trust's
officers in a manner specifically authorized by the Board of Trustees of the
Fund.
Securities in the Blue Chip and High Yield Funds may also be priced by a pricing
service. The pricing service uses quotations obtained from investment dealers or
brokers, and other available information in determining value.
The municipal bonds in which the Insured Tax Exempt Fund invests are traded
primarily in the over-the-counter markets. Such securities are valued daily at
their fair value on the basis of valuations provided by a pricing service
approved by the Board of Trustees. The pricing service considers security type,
rating, market condition and yield data, as well as market quotations and prices
provided by market makers. "When Issued Securities" are reflected in the assets
of the Fund as of the date the securities are purchased.
The municipal bonds held by the Insured Tax Exempt Fund are insured as to
payment of principal and interest by the issuer or under insurance policies
written by independent insurance companies. The Fund may retain any insured
municipal bond which is in default in the payment of principal or interest until
the default has been cured or the principal and interest outstanding are paid by
an issuer of any letter of credit or other guarantee supporting such municipal
bond. In such case, it is the Fund's policy to value the defaulted bond daily
based upon the value of a comparable bond which is insured and not in default.
In selecting a comparable bond, the Fund will consider security type, rating,
market condition and yield. The Fund may invest up to 20% of its assets in
portfolio securities not covered by the insurance feature.
B. Federal Income Taxes--No provision has been made for federal income taxes on
net income or capital gains since it is the policy of the Trust to continue to
comply with the special provisions of the Internal Revenue Code applicable to
investment companies and to make sufficient distributions of income and capital
gains (in excess of any available
28
<PAGE>
capital loss carryovers), to relieve it from all, or substantially all, federal
income taxes. At December 31, 1997, the High Yield Fund had capital loss
carryovers of $5,031,635 of which $3,364,392 expires in 1998, $1,286,892 expires
in 1999, $211,168 expires in 2003, $109,463 expires in 2004 and $59,720 expires
in 2005.
C. Expense Allocation--Expenses directly charged or attributable to a Fund are
paid from the assets of that Fund. General expenses of the Trust are allocated
among and charged to the assets of each Fund on a fair and equitable basis,
which may be based on the relative assets of each Fund or the nature of the
services performed and relative applicability to each Fund.
D. Distributions to Shareholders--Dividends from net investment income to the
shareholders of the High Yield Fund and the Insured Tax Exempt Fund are
generally declared daily and paid monthly. Dividends from net investment income
of the Blue Chip Fund are generally declared and paid quarterly. Distributions
from net realized capital gains, if any, are declared and paid annually.
Income dividends and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
capital loss carryforwards and post-October capital losses.
E. Use of Estimates--The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenue and expense during the reporting period. Actual results could differ
from those estimates.
F. Other--Security transactions are accounted for on the date the securities are
purchased or sold. Cost is determined, and gains and losses are based, on the
identified cost basis for both financial statement and federal income tax
purposes. Interest income and estimated expenses are accrued daily. Dividend
income is recorded on the ex-dividend date. Shares of stock received in lieu of
cash dividends on certain preferred stock holdings are recognized as dividend
income and recorded at the market value of the shares received. During the year
ended December 31, 1997, the High Yield Fund recognized $33,459 of dividend
income from these taxable "payment-in-kind" distributions. The Funds' custodian
has provided credits in the amount of $8,880 against custodian charges based on
the uninvested cash balances of the Funds.
2. SECURITY TRANSACTIONS--For the year ended December 31, 1997, purchases and
sales of securities other than short-term tax exempt investments and short-term
corporate notes, were as follows:
<TABLE>
<CAPTION>
BLUE CHIP HIGH YIELD INSURED TAX
FUND FUND EXEMPT FUND
---------- ---------- -----------
<S> <C> <C> <C>
Cost of purchases...................... $5,256,970 $9,947,735 $19,869,087
---------- ---------- -----------
---------- ---------- -----------
Proceeds of sales...................... $4,281,528 $8,609,769 $19,192,979
---------- ---------- -----------
---------- ---------- -----------
</TABLE>
29
<PAGE>
NOTES TO FINANCIAL STATEMENTS
EXECUTIVE INVESTORS TRUST
At December 31, 1997, aggregate cost and net unrealized appreciation of
securities for federal income tax purposes were as follows:
<TABLE>
<CAPTION>
BLUE CHIP HIGH YIELD INSURED TAX
FUND FUND EXEMPT FUND
---------- ----------- -----------
<S> <C> <C> <C>
Aggregate cost......................... $2,737,823 $17,638,488 $15,339,143
---------- ----------- -----------
---------- ----------- -----------
Gross unrealized appreciation.......... $ 913,718 $ 1,297,653 $ 1,618,688
Gross unrealized depreciation.......... 16,238 43,719 --
---------- ----------- -----------
Net unrealized appreciation............ $ 897,480 $ 1,253,934 $ 1,618,688
---------- ----------- -----------
---------- ----------- -----------
</TABLE>
3. ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES--Certain officers and
trustees of the Trust are officers and directors of its investment adviser,
Executive Investors Management Company, Inc. ("EIMCO"), its underwriter,
Executive Investors Corporation ("EIC"), its transfer agent, Administrative Data
Management Corp. ("ADM") and/or First Financial Savings Bank, S.L.A. ("FFS"),
custodian of the Trust's Individual Retirement Accounts. Officers and trustees
received no remuneration from the Trust for serving in such capacities. Their
remuneration (together with certain other expenses of the Trust) was paid by
EIMCO or First Investors Corporation ("FIC"), an affiliated dealer. Effective
January 1, 1998, independent trustees will be remunerated by the Funds.
The Investment Advisory Agreement provides as compensation to EIMCO an annual
fee, payable monthly, at the rate of 1% on the first $200 million of each Fund's
average daily net assets, .75% on the next $300 million, declining by .03% on
each $250 million thereafter, down to .66% on average daily net assets over $1
billion. The total advisory fees earned by EIMCO from all Funds was $366,369 of
which $229,636 was waived. In addition, expenses of $24,614 were assumed by
EIMCO.
For the year ended December 31, 1997, EIC, as underwriter of the Trust, received
$27,495 in commissions from the sale of Trust shares, after allowing $190,853 to
other dealers. Shareholder servicing costs included $28,462 in transfer agent
fees accrued to ADM and $2,919 in IRA custodian fees accrued to FFS.
Pursuant to a Distribution Plan adopted under Rule 12b-1 of the 1940 Act, each
Fund is authorized to pay a fee equal to .50% of its average net assets on an
annualized basis each fiscal year, payable quarterly. The fee consists of a
distribution fee and a service fee. The service fee is paid for the ongoing
servicing of clients who are shareholders of that Fund. Total distribution plan
fees accrued to EIC amounted to $183,186 (of which $36,706 was waived).
4. RULE 144A SECURITIES--Under Rule 144A, certain restricted securities are
exempt from the registration requirements of the Securities Act of 1933 and may
only be resold to qualified institutional investors. At December 31, 1997, the
High Yield Fund held fourteen 144A securities with an aggregate value of
$3,225,752. These securities represent 16.8% of the Fund's net assets and are
valued as set forth in Note 1A.
30
<PAGE>
5. CONCENTRATION OF CREDIT RISK--The High Yield Fund's investment in high yield
securities, whether rated or unrated, may be considered speculative and subject
to greater market fluctuations and risk of loss of income and principal than
lower yielding, higher rated, fixed income securities. The risk of loss due to
default by the issuer may be significantly greater for the holders of high
yielding securities, because such securities are generally unsecured and are
often subordinated to other creditors of the issuer.
31
<PAGE>
FINANCIAL HIGHLIGHTS
EXECUTIVE INVESTORS TRUST
The following table sets forth the per share operating performance data for a
share of beneficial interest outstanding, total return, ratios to average net
assets and other supplemental data for each year indicated.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
P E R S H A R E D A T A
---------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS LESS DISTRIBUTIONS
NET ASSET --------------------------------------- FROM
VALUE NET REALIZED --------------------
--------- NET AND UNREALIZED TOTAL FROM NET NET
BEGINNING INVESTMENT GAIN (LOSS) ON INVESTMENT INVESTMENT REALIZED TOTAL
OF YEAR INCOME INVESTMENTS OPERATIONS INCOME GAIN DISTRIBUTIONS
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BLUE CHIP FUND
1993..................... $ 13.78 $.23 $ .88 $ 1.11 $.23 $.59 $ .82
1994..................... 14.07 .24 (.41) (.17) .22 .93 1.15
1995..................... 12.75 .30 4.30 4.60 .29 .74 1.03
1996..................... 16.32 .22 3.13 3.35 .24 1.07 1.31
1997..................... 18.36 .19 4.68 4.87 .19 1.36 1.55
- ------------------------------------------------------------------------------------------------------------------
HIGH YIELD FUND
1993..................... $ 7.43 $.72 $ .50 $ 1.22 $.76 $ -- $ .76
1994..................... 7.89 .70 (.87) (.17) .74 -- .74
1995..................... 6.98 .70 .58 1.28 .67 -- .67
1996..................... 7.59 .72 .28 1.00 .70 -- .70
1997..................... 7.89 .68 .23 .91 .70 -- .70
- ------------------------------------------------------------------------------------------------------------------
INSURED TAX EXEMPT FUND
1993..................... $ 12.83 $.71 $ 1.27 $ 1.98 $.72 $.32 $ 1.04
1994..................... 13.77 .68 (1.23) (.55) .69 -- .69
1995..................... 12.53 .72 1.80 2.52 .73 .28 1.01
1996..................... 14.04 .66 (.10) .56 .67 .11 .78
1997..................... 13.82 .67 .71 1.38 .67 .12 .79
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
* Calculated without sales charges.
+ Net of expenses waived or assumed (Note 3).
++ Average commision rate (per share of security) as required by amended
disclosure requirements effective in 1996.
See notes to financial statements
32
<PAGE>
The following table sets forth the per share operating performance data for a
share of beneficial interest outstanding, total return, ratios to average net
assets and other supplemental data for each year indicated.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
R A T I O S / S U P P L E M E N T A L D A T A
-----------------------------------------------------------------------------------------
---------
RATIO TO AVERAGE NET
ASSETS BEFORE
RATIO TO AVERAGE EXPENSES
NET ASSETS+ WAIVED OR ASSUMED
NET ASSET -------------------- --------------------
VALUE TOTAL NET NET PORTFOLIO AVERAGE
--------- RETURN NET ASSETS INVESTMENT INVESTMENT TURNOVER ++
END * END OF YEAR EXPENSES INCOME EXPENSES INCOME RATE COMMISSION
OF YEAR (%) (IN THOUSANDS) (%) (%) (%) (%) (%) RATE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BLUE CHIP FUND
1993..................... $ 14.07 8.13 $ 956 .50 1.63 2.30 (.17) 47 $ --
1994..................... 12.75 (1.21) 1,041 .50 1.82 2.54 (.22) 89 --
1995..................... 16.32 36.30 1,427 .50 1.99 2.20 .29 33 --
1996..................... 18.36 20.62 2,160 .75 1.33 2.28 (.20) 50 .0689
1997..................... 21.68 26.58 3,727 .75 .92 2.03 (.36) 163 .0651
- -------------------------------------------------------------------------------------------------------------------------------
HIGH YIELD FUND
1993..................... $ 7.89 17.04 $14,231 1.34 9.49 1.95 8.88 89 $ --
1994..................... 6.98 (2.32) 15,142 1.33 9.45 1.88 8.90 53 --
1995..................... 7.59 19.08 15,672 1.35 9.52 1.90 8.97 69 --
1996..................... 7.89 13.69 16,773 1.22 9.38 1.82 8.78 27 --
1997..................... 8.10 12.03 19,234 1.22 8.68 1.82 8.08 49 --
- -------------------------------------------------------------------------------------------------------------------------------
INSURED TAX EXEMPT FUND
1993..................... $ 13.77 15.74 $ 9,447 .50 5.29 1.68 4.11 97 $ --
1994..................... 12.53 (3.95) 10,363 .50 5.39 1.80 4.09 215 --
1995..................... 14.04 20.53 13,342 .50 5.35 1.74 4.11 147 --
1996..................... 13.82 4.11 15,408 .75 4.85 1.71 3.89 116 --
1997..................... 14.41 10.30 16,193 .75 4.80 1.71 3.84 126 --
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Calculated without sales charges.
+ Net of expenses waived or assumed (Note 3).
++ Average commision rate (per share of security) as required by amended
disclosure requirements effective in 1996.
See notes to financial statements
33
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Trustees of
Executive Investors Trust
We have audited the accompanying statement of assets and liabilities, including
the portfolios of investments, of the Blue Chip, High Yield and Insured Tax
Exempt Funds (comprising Executive Investors Trust), as of December 31, 1997,
the related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended, and
financial highlights for each of the five years in the period then ended. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1997, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Blue Chip, High Yield and Insured Tax Exempt Funds at December 31, 1997, and the
results of their operations, changes in their net assets and financial
highlights for the periods presented, in conformity with generally accepted
accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
January 30, 1998
34
<PAGE>
EXECUTIVE INVESTORS TRUST
TRUSTEES
- -------------------------------------------
JAMES J. COY (Emeritus)
ROGER L. GRAYSON
GLENN O. HEAD
KATHRYN S. HEAD
REX R. REED
HERBERT RUBINSTEIN
NANCY S. SCHAENEN
JAMES M. SRYGLEY
JOHN T. SULLIVAN
ROBERT F. WENTWORTH
OFFICERS
- -------------------------------------------
GLENN O. HEAD
President
GEORGE V. GANTER
Vice President
PATRICIA D. POITRA
Vice President
CLARK D. WAGNER
Vice President
CONCETTA DURSO
Vice President and Secretary
JOSEPH I. BENEDEK
Treasurer
CAROL LERNER BROWN
Assistant Secretary
GREGORY R. KINGSTON
Assistant Treasurer
MARK S. SPENCER
Assistant Treasurer
SHAREHOLDER INFORMATION
- -------------------------------------------
INVESTMENT ADVISER
EXECUTIVE INVESTORS
MANAGEMENT COMPANY, INC.
95 Wall Street
New York, NY 10005
UNDERWRITER
EXECUTIVE INVESTORS CORPORATION
95 Wall Street
New York, NY 10005
CUSTODIAN
THE BANK OF NEW YORK
48 Wall Street
New York, NY 10286
TRANSFER AGENT
ADMINISTRATIVE DATA
MANAGEMENT CORP.
581 Main Street
Woodbridge, NJ 07095-1198
LEGAL COUNSEL
KIRKPATRICK & LOCKHART LLP
1800 Massachusetts Avenue, N.W.
Washington, DC 20036
AUDITORS
TAIT, WELLER & BAKER
Eight Penn Center Plaza
Philadelphia, PA 19103
It is the Trust's practice to mail only one copy of its annual and semi-annual
reports to any address at which more than one shareholder with the same last
name has indicated that mail is to be delivered. Additional copies of the
reports will be mailed if requested by any shareholder in writing or by calling
800-423-4026. The Trust will ensure that separate reports are sent to any
shareholder who subsequently changes his or her mailing address.
This report is authorized for distribution only to existing shareholders, and,
if given to prospective shareholders, must be accompanied or preceded by the
Trust's prospectus.
35
<PAGE>
EXECUTIVE INVESTORS TRUST
95 WALL STREET
NEW YORK, NY 10005
EIHY107
The words "BULK RATE U.S. POSTAGE PAID PERMIT NO. 7379" appear in a box to the
right of a circle containing the words "MAILED FROM ZIP CODE 11201" which
appears to the right of the above language in the printed piece.
Vertically reading from bottom to top in the center of the page the words
"EXECUTIVE INVESTORS" appear.
EXECUTIVE
INVESTORS
TRUST
Blue Chip Fund
High Yield Fund
Insured Tax Exempt Fund
ANNUAL
REPORT
DECEMBER 31, 1997
