<PAGE>
EXECUTIVE INVESTORS LOGO
BLUE CHIP
HIGH YIELD
INSURED TAX EXEMPT
EXECUTIVE INVESTORS FUNDS
ANNUAL REPORT
DECEMBER 31, 1998
<PAGE>
MARKET OVERVIEW
EXECUTIVE INVESTORS TRUST
Dear Investor:
We are pleased to present the annual reports for the funds of the Executive
Investors Trust for the fiscal year ending December 31, 1998. Included are
Executive Investors Blue Chip Fund ("Blue Chip Fund"), Executive Investors High
Yield Fund ("High Yield Fund") and Executive Investors Insured Tax Exempt Fund
("Insured Tax Exempt Fund").
1998 will be remembered for the severe dislocation caused to the financial
markets by the currency crisis that began in Southeast Asia. Exacerbated by
highly leveraged hedge funds, emerging market problems spread to Russia, Latin
America and finally the U.S., culminating in a correction in the stock market
and a tremendous bond market rally. Long-term interest rates fell to 30-year
lows as investors sought the safety and liquidity of the U.S. bond market.
Responding to financial market tumult, the Federal Reserve lowered short-term
interest rates three times in eight weeks beginning in September. By year-end,
financial markets had stabilized and interest rates moved somewhat higher as the
"flight to safety" trend weakened.
Despite this turbulence, the U.S. economy grew at close to 4%, completing the
seventh year of the current expansion. The consumer propelled the economy,
buoyed by low unemployment, rising wages, low interest rates and stock market
gains. The rate of inflation, as measured by the Consumer Price Index, fell for
the third consecutive year, to 1.6%.
Substantial volatility meant varied returns among the financial markets. The
stock market staged a remarkable recovery from the third quarter correction,
ending the year with positive annual returns. Large-capitalization stocks were
the best performers, with growth stocks outpacing value stocks. International
markets also varied, with Europe providing the best returns, and emerging
markets the worst.
In the bond market, we saw a substantial decline in long-term Treasury yields.
This was prompted by the "flight to safety," slowing inflation and the U.S.
budget surplus. Among U.S. bond markets, the Treasury market was the best
performer. Other markets (mortgage-backed, corporate, high yield) had lower
returns due to a variety of factors that are discussed under specific Fund
performance.
While we continue to believe the fundamentals of the U.S. economy remain sound,
investors should remain aware of the risks associated with investing in the
stock market. The stock market tends to follow cycles, and the current upward
cycle or bull market, is now the longest in history. Equity investors should be
aware that some valuations appear to be high at this time, particularly in such
1
<PAGE>
MARKET OVERVIEW (continued)
EXECUTIVE INVESTORS TRUST
sectors as technology, as well as with many Internet-related companies. On a
technical basis, the length of the cycle could present some pressure against
continued gains in the short term. In addition, the impact of lower global
economic growth due to Asian economic turmoil, and its possible impact on U.S.
corporate profits, could also present a risk to U.S. equity investors. In
addition, investments in foreign markets involve currency risks as well as
country specific political and economic risks. Investors should be aware of
these risks and recognize that successful investing generally requires a
long-term commitment to the market.
As always, we appreciate the opportunity to serve your investment needs.
Sincerely,
/s/ Clark D. Wagner
Clark D. Wagner
Chief Investment Officer
January 29, 1999
2
<PAGE>
PORTFOLIO MANAGER'S LETTER
EXECUTIVE INVESTORS BLUE CHIP FUND
Dear Investor:
We are pleased to present the annual report for the Executive Investors Blue
Chip Fund ("Blue Chip Fund") for the fiscal year ending December 31, 1998.
For the year ended December 31, 1998, the Blue Chip Fund returned 17.8% on a net
asset value basis, compared to a 15.6% return for its Lipper Inc. peer group.
The Fund's positive performance for the period was due to its investments in the
technology, telecommunications, healthcare and consumer cyclical sectors.
Investments in the energy sector, along with a number of one-time, unforeseeable
events, had a negative effect on the Fund's return.
The Fund's relative performance was enhanced by a number of holdings in the
technology area. In particular, the Fund's positions in leading high-tech firms
such as Microsoft, Cisco Systems and Lucent Technologies, all generated above
average returns for the Fund. Despite the fact that the company had to cope with
the Federal Government's anti-trust suit, Microsoft continued to outpace its
competitors in the desktop computer software business. Strong fundamentals
including revenues, earnings and margin improvements continued to drive
Microsoft's stock to new levels. Both Cisco and Lucent benefited from the
increased need for bandwidth on all levels of communication.
Driven by the "graying of America" trend, the Fund's healthcare holdings
performed well in 1998. The Fund's positions in leading pharmaceutical companies
such as Pfizer and Warner-Lambert continued their solid performance. Pfizer
continues to have one of the strongest product pipelines in the industry, as
evidenced by the introduction of Viagra, a male impotence drug, which was one of
the major news events of the year.
Encouraged by a strong domestic economy, consumer demand was strong in the U.S.,
aiding the performance of leading consumer goods companies. AirTouch
Communications, a provider of wireless phone service domestically and abroad,
continued to benefit from the growth in the wireless telecommunications
industry. Time Warner, the cable television company, continued to benefit from
solid entertainment offerings and declining capital expenditures, all of which
led to an improved earnings outlook. The stocks of retailing giants like Home
Depot and Wal-Mart also continued to enjoy robust growth.
Most stocks in the energy sector did not keep up with the overall market for the
period. Oil companies were negatively affected by declining demand from emerging
markets and overproduction. As the major oil companies began to send signals
that they would be reducing exploration expenditures into the foreseeable
future, the stocks in companies such as Schlumberger and Kerr-McGee, both owned
by the Fund, suffered more than the general market.
3
<PAGE>
PORTFOLIO MANAGER'S LETTER (continued)
EXECUTIVE INVESTORS BLUE CHIP FUND
With the financial and economic difficulties in Asia and Russia, many large
money center banks and international brokerage houses were hurt in the third
quarter. Their share prices declined sharply due to their worldwide trading and
credit exposures. However, as the equity market rallied in the fourth quarter,
the Fund's holdings in financial services companies like Merrill Lynch, Morgan
Stanley Dean Witter, AIG and Citigroup, rebounded strongly.
Like many investment companies, the Fund's performance was negatively impacted
by investments in two firms that reported accounting discrepancies. Cendant,
which had been a Wall Street darling, fell on hard times when it was discovered
that the revenue numbers at CUC International, one of the companies merged into
Cendant, had been inflated. MedPartners, one of the nation's largest physician
practice management companies, was to merge with Phycor, another major player in
physician practice management. However, due to concerns regarding MedPartners'
accounting, Phycor called off the deal. Both events were unique and difficult to
foresee and had a negative impact on the Fund's performance.
As always we appreciate the opportunity to serve your investment needs.
Sincerely,
/s/ Dennis T. Fitzpatrick
Dennis T. Fitzpatrick
Vice President
and Portfolio Manager*
January 29, 1999
* Mr. Fitzpatrick became sole Portfolio Manager of the Fund on September 15,
1998.
4
<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, 1998
EXECUTIVE INVESTORS
<S> <C> <C>
Blue Chip Fund S&P 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
Dec-98 32,108 42,980
Average Annual Total Return*
N.A.V. Only S.E.C. Standardized
One Year 17.81% 12.22%
Five Years 19.36% 18.20%
Since Inception (5/17/90) 15.12% 14.47%
</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 12/31/98) INCLUDE
THE REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS. "N.A.V. ONLY" RETURNS ARE
CALCULATED WITHOUT SALES CHARGES. "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 11.08%, 16.73% AND 12.31%, 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.
5
<PAGE>
PORTFOLIO OF INVESTMENTS
EXECUTIVE INVESTORS BLUE CHIP FUND
December 31, 1998
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000 OF
SHARES SECURITY VALUE NET ASSETS
- -------------------------------------------------------------------------------------
<C> <S> <C> <C>
COMMON STOCKS--96.3%
BASIC MATERIALS--2.1%
700 Alcoa, Inc. $ 52,194 $ 107
600 Du Pont (E.I.) de Nemours & Company 31,837 65
500 Ecolab, Inc. 18,094 37
- -------------------------------------------------------------------------------------
102,125 209
- -------------------------------------------------------------------------------------
CAPITAL GOODS--8.5%
800 Avery Dennison Corporation 36,050 74
1,500 General Electric Company 153,094 314
1,200 Ingersoll-Rand Company 56,325 115
400 Pitney-Bowes, Inc. 26,425 54
600 Textron, Inc. 45,562 93
800 Tyco International, Ltd. 60,350 124
800 Waste Management, Inc. 37,300 76
- -------------------------------------------------------------------------------------
415,106 850
- -------------------------------------------------------------------------------------
COMMUNICATION SERVICES--8.1%
1,100 *AirTouch Communications, Inc. 79,337 163
700 AT & T Corporation 52,750 108
900 Bell Atlantic Corporation 47,700 98
200 Century Telephone Enterprises, Inc. 13,500 28
700 GTE Corporation 47,206 97
748 *MCI WorldCom, Inc. 53,669 110
1,132 *Qwest Communications International, Inc. 56,600 116
800 SBC Communications, Inc. 42,900 88
- -------------------------------------------------------------------------------------
393,662 808
- -------------------------------------------------------------------------------------
CONSUMER CYCLICALS--7.7%
700 *Costco Companies, Inc. 50,531 104
1,000 Danaher Corporation 54,312 111
600 Home Depot, Inc. 36,713 75
1,400 Masco Corporation 40,250 83
600 McGraw-Hill Companies, Inc. 61,125 125
800 Tribune Company 52,800 108
1,000 Wal-Mart Stores, Inc. 81,437 167
- -------------------------------------------------------------------------------------
377,168 773
- -------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000 OF
SHARES SECURITY VALUE NET ASSETS
- -------------------------------------------------------------------------------------
<C> <S> <C> <C>
CONSUMER STAPLES--16.1%
700 Anheuser-Busch Companies, Inc. $ 45,937 $ 94
700 Bestfoods 37,275 76
300 *Chancellor Media Corporation 14,362 29
600 Coca-Cola Company 40,125 82
1,700 Coca-Cola Enterprises, Inc. 60,775 125
700 Comcast Corporation - Spec. Cl. "A" 41,081 84
900 General Mills, Inc. 69,975 143
1,000 Kellogg Company 34,125 70
1,400 PepsiCo, Inc. 57,312 118
1,200 Philip Morris Companies, Inc. 64,200 132
600 Procter & Gamble Company 54,787 112
800 Rite Aid Corporation 39,650 81
800 *Safeway, Inc. 48,750 100
1,500 *Tele-Communications, Inc. Liberty Media Group -
Ser. "A" 69,094 142
1,200 Time Warner, Inc. 74,475 153
400 Unilever, N.V. 33,175 68
- -------------------------------------------------------------------------------------
785,098 1,609
- -------------------------------------------------------------------------------------
ENERGY--4.9%
400 Chevron Corporation 33,175 68
1,300 Exxon Corporation 95,062 195
100 Mobil Corporation 8,712 18
500 Royal Dutch Petroleum Company 23,938 49
1,400 Sunoco, Inc. 50,488 104
1,000 Unocal Corporation 29,188 60
- -------------------------------------------------------------------------------------
240,563 494
- -------------------------------------------------------------------------------------
FINANCIAL--16.2%
200 American Express Company 20,450 42
837 American International Group, Inc. 80,875 166
639 BankAmerica Corporation 38,420 79
300 Bear Stearns Companies, Inc. 11,213 23
700 Charter One Financial, Inc. 19,425 40
800 Chase Manhattan Corporation 54,450 112
1,100 Citigroup, Inc. 54,450 112
700 Fannie Mae 51,800 106
800 First Union Corporation 48,650 100
800 Freddie Mac 51,550 106
- -------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
PORTFOLIO OF INVESTMENTS (continued)
EXECUTIVE INVESTORS BLUE CHIP FUND
December 31, 1998
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000 OF
SHARES SECURITY VALUE NET ASSETS
- -------------------------------------------------------------------------------------
<C> <S> <C> <C>
FINANCIAL (continued)
1,300 ITT Hartford Group, Inc. $ 71,338 $ 146
450 Jefferson-Pilot Corporation 33,750 69
1,600 MBNA Corporation 39,900 82
200 Merrill Lynch & Company, Inc. 13,350 27
200 Morgan Stanley, Dean Witter, Discover and Company 14,200 29
1,300 PNC Bank Corporation 70,363 144
300 Progressive Corporation 50,813 104
1,600 Wells Fargo Company 63,900 131
- -------------------------------------------------------------------------------------
788,897 1,618
- -------------------------------------------------------------------------------------
HEALTHCARE--10.8%
800 Abbott Laboratories 39,200 80
700 American Home Products Corporation 39,419 81
900 Becton Dickinson & Company 38,419 79
500 Bristol-Myers Squibb Company 66,906 137
400 Guidant Corporation 44,100 90
2,000 *Health Management Associates, Inc. - Cl. "A" 43,250 89
600 Johnson & Johnson 50,325 103
700 Merck & Company, Inc. 103,381 212
400 Pfizer, Inc. 50,175 103
700 Warner-Lambert Company 52,631 108
- -------------------------------------------------------------------------------------
527,806 1,082
- -------------------------------------------------------------------------------------
TECHNOLOGY--18.1%
1,000 Adobe Systems, Inc. 46,750 96
500 *Applied Materials, Inc. 21,344 44
1,200 *ASM Lithography Holding, N.V. 36,600 75
600 *Cisco Systems, Inc. 55,688 114
1,600 Compaq Computer Corporation 67,100 138
700 Intel Corporation 82,994 170
500 International Business Machines Corporation 92,375 189
2,100 *Lam Research Corporation 37,406 77
600 Lucent Technologies, Inc. 66,000 135
3,400 *Micron Electronics, Inc. 58,863 121
500 *Microsoft Corporation 69,344 142
800 Motorola, Inc. 48,850 100
1,200 *Newbridge Networks Corporation 36,450 75
2,400 *Sequent Computer Systems, Inc. 28,950 59
800 *Sterling Commerce, Inc. 36,000 74
- -------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
$10,000 OF
SHARES SECURITY VALUE NET ASSETS
- -------------------------------------------------------------------------------------
<C> <S> <C> <C>
TECHNOLOGY (continued)
1,800 *Symantec Corporation $ 39,150 $ 80
500 Xerox Corporation 59,000 121
- -------------------------------------------------------------------------------------
882,864 1,810
- -------------------------------------------------------------------------------------
TRANSPORTATION--1.0%
1,500 Burlington Northern Santa Fe Corporation 50,625 104
- -------------------------------------------------------------------------------------
UTILITIES--2.8%
400 Duke Energy Corporation 25,625 53
900 Enron Corporation 51,356 105
450 FPL Group, Inc. 27,731 57
1,400 PacifiCorp 29,488 60
- -------------------------------------------------------------------------------------
134,200 275
- -------------------------------------------------------------------------------------
TOTAL VALUE OF COMMON STOCKS (cost $3,191,708) 96.3% 4,698,114 9,632
OTHER ASSETS, LESS LIABILITIES 3.7 179,620 368
- -------------------------------------------------------------------------------------
NET ASSETS 100.0% $4,877,734 $10,000
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
</TABLE>
* Non-income producing
See notes to financial statements
9
<PAGE>
PORTFOLIO MANAGER'S LETTER
EXECUTIVE INVESTORS HIGH YIELD FUND
Dear Investor:
We are pleased to present the annual report for the Executive Investors High
Yield Fund ("High Yield Fund") for the fiscal year ending December 31, 1998.
For the year ended December 31, 1998, Executive Investors High Yield Fund
returned .9% on a net asset value basis compared to a -.4% return for its Lipper
Inc. peer group. After several years of strong returns, the high yield market
produced modest returns in 1998. The primary factors that drove the Fund's
performance were a deterioration in the high yield market as a result of the
"flight to quality," and a perceived credit squeeze. This deterioration trend
abated in the fourth quarter of 1998. On the positive side, the Fund's limited
exposure to emerging market debt and its focus on higher-rated junk bonds helped
its performance, relative to its peer group.
Through the early part of 1998, the financial markets saw a continuation of the
positive characteristics exhibited in 1997. The financial system remained
supportive, despite widespread emerging markets worries. The equity market
continued its strong performance - the ultimate expression of investor
confidence. This stock market strength and the abundance of initial public
offerings brought to market provided high yield issuers with a source of
financial flexibility and contributed to the positive performance of some
issues. Concerns about Asia led the Treasury market to rally early in 1998.
Within the high yield market, its long-term historical track record and set of
positive fundamentals also encouraged investing. This, in turn, drove issuance
to a record pace. High yield bonds were, and are, a comparatively attractive
source of capital for funding merger and acquisition activity and other
aggressive business plans.
In the second quarter, fear of the Asian contagion and projections of slower
economic growth conflicted with the frenetic pace of issuance, and caused
quality spreads to widen as investors began to resist the lower yields that they
were being asked to accept. In the high yield market, performance leadership
shifted to the "upper tier" bonds (relatively stronger junk bond issues) from
the "middle tier" bonds (those judged to rank lower -- but not lowest -- in
credit strength) where it had been through the first quarter. Extremely
aggressive deals, "lower tier issues," deferred pay (zero coupon) bonds and
emerging market debt underperformed the market.
During the third quarter, several severe shocks to the world financial system
caused risk to be both reassessed and shunned by investors. The Russian default
and wider difficulties in emerging markets also negatively impacted the domestic
high yield and investment grade bond markets, as well as the equity markets.
Temporarily, the high yield market experienced severe liquidity concerns and
stratification, which caused upper tier issues to outperform lower tier issues.
However, in late October, the market reopened for business as the Fed signaled
its determination to prevent a world credit
10
<PAGE>
crunch, and the few bond deals sold during this turbulent time provided their
investors with especially handsome returns.
The Fund's strong relative performance reflects its long-term investment
approach, a credit and quality orientation, and its positioning to avoid
dependence on perpetual bull markets. The Fund benefited from diversification
across industry and structure, low exposure to emerging markets, but especially
from its preference for stable to improving companies. While the Fund must
accept the inherent risks of the high yield market, it often shuns the more
speculative investments that carry the greatest level of risk.
As this is written, a variety of market conditions appear to make high yield
bonds attractive investments. These include buoyant domestic economic activity
and a lack of inflation, as well as a lull in U.S. Treasury demands for capital.
To be fair, the valuation level is -- and will likely continue to be --
influenced by concerns about the eventual trade effects from recessions
elsewhere. These concerns have caused the previously mentioned flight to
quality. A well thought out portfolio strategy provides one with both the
opportunity to weather market turbulence and a good entry point into investments
such as the Fund.
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 29, 1999
11
<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 CS First Boston High Yield Index.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1998
EXECUTIVE INVESTORS CS FIRST BOSTON
<S> <C> <C>
High Yield Fund High Yield Index
Jan-89 $9,525 $10,000
Dec-89 9,419 12,319
Dec-90 8,241 14,001
Dec-91 11,172 14,054
Dec-92 12,929 13,157
Dec-93 15,132 18,914
Dec-94 14,780 22,065
Dec-95 17,600 26,237
Dec-96 20,010 25,983
Dec-97 22,417 30,498
Dec-98 22,610 30,675
Average Annual Total Return*
N.A.V. Only S.E.C. Standardized
One Year .86% (3.89%)
Five Years 6.36% 7.32%
Ten Years 9.03% 8.50%
S.E.C. 30-Day Yield 8.34%
</TABLE>
THE GRAPH COMPARES A $10,000 INVESTMENT IN THE EXECUTIVE INVESTORS HIGH YIELD
FUND BEGINNING 1/1/89 WITH A THEORETICAL INVESTMENT IN THE CS FIRST BOSTON
HIGH YIELD INDEX. THE CS FIRST BOSTON HIGH YIELD INDEX IS DESIGNED TO MEASURE
THE PERFORMANCE OF THE HIGH YIELD BOND MARKET. THE INDEX CONSISTS OF 1,568
DIFFERENT ISSUES, 1,371 OF WHICH ARE CASH PAY, 142 ARE ZERO-COUPON, 15 ARE
STEP BONDS, 7 ARE PAYMENT-IN-KIND BONDS AND THE REMAINING 33 ARE IN DEFAULT.
THE BONDS INCLUDED IN THE INDEX HAVE AN AVERAGE LIFE OF 8.2 YEARS, AN AVERAGE
MATURITY OF 8.2 YEARS, AN AVERAGE DURATION OF 4.8 YEARS AND AN AVERAGE COUPON
OF 10.0%. 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 12/31/98) 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
TEN YEARS WOULD HAVE BEEN (4.47%), 6.70% AND 7.52%, RESPECTIVELY AND THE
S.E.C. YIELD FOR DECEMBER 1998 WOULD HAVE BEEN 7.74%. 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. CS FIRST BOSTON
HIGH YIELD INDEX FIGURES FROM CS FIRST BOSTON CORPORATION AND ALL OTHER
FIGURES FROM EXECUTIVE INVESTORS MANAGEMENT COMPANY, INC.
12
<PAGE>
PORTFOLIO OF INVESTMENTS
EXECUTIVE INVESTORS HIGH YIELD FUND
December 31, 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- --------------------------------------------------------------------------------------
<C> <S> <C> <C>
CORPORATE BONDS--90.7%
AEROSPACE/DEFENSE--1.6%
$ 300M Moog, Inc., 10%, 2006 $ 309,000 $ 163
- --------------------------------------------------------------------------------------
APPAREL/TEXTILES--4.3%
300M Pillowtex Corp., 10%, 2006 322,500 170
500M Polymer Group, Inc., 9%, 2007 497,500 262
- --------------------------------------------------------------------------------------
820,000 432
- --------------------------------------------------------------------------------------
AUTOMOTIVE--8.4%
400M Aftermarket Technology Corp., 12%, 2004 422,000 223
300M Cambridge Industries, Inc., 10.25%, 2007 235,500 124
250M Cooperative Computing, Inc., 9%, 2008 226,250 119
200M Exide Corp., 10%, 2005 200,000 106
500M Special Devices, Inc., 11.375%, 2008 + 511,250 270
- --------------------------------------------------------------------------------------
1,595,000 842
- --------------------------------------------------------------------------------------
BUILDING MATERIALS--1.6%
350M American Architectural Products Corp., 11.75%,
2007 306,250 162
- --------------------------------------------------------------------------------------
CHEMICALS--2.3%
400M Huntsman Polymers Corp., 11.75%, 2004 430,000 227
- --------------------------------------------------------------------------------------
CONSUMER PRODUCTS--4.0%
300M Commemorative Brands, Inc., 11%, 2007 234,000 123
300M Herff Jones, Inc., 11%, 2005 325,500 172
250M Syratech Corp., 11%, 2007 205,000 108
- --------------------------------------------------------------------------------------
764,500 403
- --------------------------------------------------------------------------------------
CONTAINERS/PACKAGING--6.7%
325M Plastic Containers, Inc., 10%, 2006 339,625 179
400M Radnor Holdings, Inc., 10%, 2003 404,000 213
500M Tekni-Plex, Inc., 9.25%, 2008 524,375 277
- --------------------------------------------------------------------------------------
1,268,000 669
- --------------------------------------------------------------------------------------
DURABLE GOODS/MANUFACTURING--3.6%
500M Columbus McKinnon Corp., 8.50%, 2008 470,000 248
200M Fairfield Manufacturing, Inc., 11.375%, 2001 206,500 109
- --------------------------------------------------------------------------------------
676,500 357
- --------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
PORTFOLIO OF INVESTMENTS (continued)
EXECUTIVE INVESTORS HIGH YIELD FUND
December 31, 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- --------------------------------------------------------------------------------------
<C> <S> <C> <C>
ENERGY--4.1%
$ 400M Giant Industries, Inc., 9.75%, 2003 $ 394,000 $ 208
400M Stone Energy Corp., 8.75%, 2007 389,500 205
- --------------------------------------------------------------------------------------
783,500 413
- --------------------------------------------------------------------------------------
ENTERTAINMENT/LEISURE--2.1%
400M Outboard Marine Corp., 10.75%, 2008 + 392,000 207
- --------------------------------------------------------------------------------------
GAMING/LODGING--1.5%
250M Casino America, Inc., 12.50%, 2003 278,437 147
- --------------------------------------------------------------------------------------
HEALTHCARE--6.7%
200M Dade International, Inc., 11.125%, 2006 222,500 117
250M Fisher Scientific International, Inc., 9%, 2008 250,000 132
400M Integrated Health Services, Inc., 9.25%, 2008 375,500 198
400M Tenet Healthcare Corp., 8.625%, 2007 420,000 222
- --------------------------------------------------------------------------------------
1,268,000 669
- --------------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS--.7%
200M Corning Consumer Products, Inc., 9.625%, 2008 142,000 75
- --------------------------------------------------------------------------------------
MEDIA (CABLE TV/BROADCASTING)--7.1%
500M Diva Systems Corp., 0%-12.625%, 2008 + 188,750 100
500M Echostar Communications Corp., 0%-12.875%, 2004 513,750 271
300M Grupo Televisa, SA, 11.875%, 2006 298,125 157
300M Rogers Cablesystems, Inc., 10%, 2005 337,500 178
- --------------------------------------------------------------------------------------
1,338,125 706
- --------------------------------------------------------------------------------------
MEDIA (OTHER)--4.5%
300M Garden State Newspapers, Inc., 12%, 2004 330,000 174
200M Garden State Newspapers, Inc., 8.75%, 2009 202,000 107
300M Outdoor Systems, Inc., 8.875%, 2007 315,750 167
- --------------------------------------------------------------------------------------
847,750 448
- --------------------------------------------------------------------------------------
MINING/METALS--7.0%
400M Euramax International PLC, 11.25%, 2006 402,000 212
250M WCI Steel, Inc., 10%, 2004 249,375 132
300M Wells Aluminum Corp., 10.125%, 2005 289,500 153
400M Wheeling-Pittsburgh Corp., 9.25%, 2007 378,000 199
- --------------------------------------------------------------------------------------
1,318,875 696
- --------------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
AMOUNT
INVESTED
PRINCIPAL FOR EACH
AMOUNT $10,000 OF
OR SHARES SECURITY VALUE NET ASSETS
- --------------------------------------------------------------------------------------
<C> <S> <C> <C>
MISCELLANEOUS--2.6%
$ 500M Kindercare Learning Centers, Inc., 9.50%, 2009 $ 500,000 $ 264
- --------------------------------------------------------------------------------------
PAPER/FOREST PRODUCTS--3.9%
350M Riverwood International Corp., 10.25%, 2006 351,313 185
350M S.D. Warren Co., Inc., 12%, 2004 382,375 202
- --------------------------------------------------------------------------------------
733,688 387
- --------------------------------------------------------------------------------------
REAL ESTATE/CONSTRUCTION--.8%
400M Cathay International, Ltd., 13%, 2008 + 154,000 81
- --------------------------------------------------------------------------------------
RETAIL - FOOD/DRUG--1.3%
250M Stater Brothers Holdings, Inc., 9%, 2004 242,500 128
- --------------------------------------------------------------------------------------
RETAIL - GENERAL MERCHANDISE--1.6%
300M Big 5 Corp., 10.875%, 2007 304,500 161
- --------------------------------------------------------------------------------------
TELECOMMUNICATIONS--12.6%
500M 21st Century Telecom Group, Inc., 0%-12.25%, 2008 211,250 111
500M Comcast Cellular Holdings, Inc., 9.50%, 2007 535,000 282
450M E. Spire Communications, Inc., 0%-13%, 2005 307,125 162
500M McCaw International, Ltd., 0%-13%, 2007 267,500 141
250M Netia Holdings B.V., 10.25%, 2007 213,125 112
250M Netia Holdings B.V., 0%-11.25%, 2007 143,125 75
400M Powertel, Inc., 0%-12%, 2006 292,000 154
200M Qwest Communications International, Inc.,
0%-9.47%, 2007 154,500 81
500M RCN Corp., 0%-11%, 2008 275,000 145
- --------------------------------------------------------------------------------------
2,398,625 1,263
- --------------------------------------------------------------------------------------
TRANSPORTATION--1.7%
300M Moran Transportation Co., 11.75%, 2004 322,500 170
- --------------------------------------------------------------------------------------
TOTAL VALUE OF CORPORATE BONDS (cost $17,961,416) 17,193,750 9,070
- --------------------------------------------------------------------------------------
COMMON STOCKS--.3%
MEDIA (CABLE TV/BROADCASTING)
1,000 *Echostar Communications Corp. - Cl. "A" (cost
$0) 48,375 26
- --------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
PORTFOLIO OF INVESTMENTS (continued)
EXECUTIVE INVESTORS HIGH YIELD FUND
December 31, 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
SHARES, AMOUNT
WARRANTS INVESTED
OR FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- --------------------------------------------------------------------------------------
<C> <S> <C> <C>
PREFERRED STOCKS--2.5%
PAPER/FOREST PRODUCTS
9,000 S.D. Warren Co., Inc., 14%, Series "B" (cost
$249,750) $ 468,000 $ 247
- --------------------------------------------------------------------------------------
WARRANTS--.4%
GAMING/LODGING--.0%
200 *Goldriver Finance Corp., Liquidating Trust 200 --
- --------------------------------------------------------------------------------------
MEDIA (CABLE TV/BROADCASTING)--.1%
1,500 *Diva Systems Corp. (expiring 3/1/08) + 24,000 13
- --------------------------------------------------------------------------------------
MINING/METALS--.0%
200 *Gulf State Steel Acquisition Corp. (expiring
4/15/03) + 2 --
- --------------------------------------------------------------------------------------
PAPER/FOREST PRODUCTS--.2%
9,000 *S.D. Warren Co., Inc. (expiring 12/15/06) + 45,000 24
- --------------------------------------------------------------------------------------
TELECOMMUNICATIONS--.1%
450 *E. Spire Communications, Inc. (expiring
11/1/05) + 6,750 4
400 *McCaw International, Ltd. (expiring 4/15/07) + 1,000 --
- --------------------------------------------------------------------------------------
7,750 4
- --------------------------------------------------------------------------------------
TOTAL VALUE OF WARRANTS (cost $0) 76,952 41
- --------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--3.0%
$ 500M United States Treasury Note, 7%, 2006 (cost
$534,875) 569,531 300
- --------------------------------------------------------------------------------------
SHORT-TERM CORPORATE NOTES--1.0%
200M Ford Motor Credit Corp., 4.96%, 1/7/99 (cost
$199,850) 199,850 105
- --------------------------------------------------------------------------------------
TOTAL VALUE OF INVESTMENTS (cost $18,945,891) 97.9% 18,556,458 9,789
OTHER ASSETS, LESS LIABILITIES 2.1 399,229 211
- --------------------------------------------------------------------------------------
NET ASSETS 100.0% $18,955,687 $10,000
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
</TABLE>
* Non-income producing
+ See Note 4
See notes to financial statements
16
<PAGE>
PORTFOLIO MANAGER'S LETTER
EXECUTIVE INVESTORS INSURED TAX EXEMPT FUND
Dear Investor:
We are please to present the annual report for the Executive Investors Insured
Tax Exempt Fund ("Insured Tax Exempt Fund") for the fiscal year ending December
31, 1998.
During 1998, the Insured Tax Exempt Fund had a total return on a net asset value
basis of 7.4%, outperforming its Lipper Inc. peer group by 208 basis points
(2.08%). The principal factors affecting the Fund's performance were falling
interest rates and the near-record issuance of municipal bonds.
As was the case with other financial markets, 1998 was a unique year for the
municipal bond market. Despite an 80 basis point (.8%) decline in 30-year
Treasury bond rates, long-term municipal bond yield fell only 15 basis points.
New issue supply overwhelmed demand as fiscally strong municipalities issued a
record amount of "new money" bonds and refunding volume soared in response to
historically low rates. 1998's $284 billion of issuance was the second largest
in the market's history, surpassed only by 1993's total of $292 billion. Supply
cheapened municipal bonds relative to Treasuries, with long-term insured
municipal bonds yielding more than Treasury bonds, a relationship previously
seen only in the mid-1980s, when tax reform legislation threatened municipal
bonds with the loss of their tax-exempt status. Nonetheless, in early October
long-term municipal bond yields reached their lowest level since the 1960s, and
municipal bonds had greater after-tax returns (for those in higher tax brackets)
for the year than those of most taxable bonds.
The Fund's performance benefited from several factors. First, the Fund's assets
include substantial holdings of non-callable bonds. Most municipal bonds are
callable, which means that issuers can buy back (or call) bonds from investors
if interest rates fall. This limits the price appreciation when interest rates
fall, as they did in 1998. In contrast, non-callable bonds have an unlimited
potential to increase in price. Our large holdings of non-callable bonds allowed
the Fund to maintain a long duration relative to those of other funds as
long-term municipal bond yields fell to 30-year lows. The Fund also benefited
from numerous trading opportunities that were created by heavy new issue supply
and strong retail demand. Lastly, the Fund was substantially fully invested
throughout the year, which maximized current income and helped total return to
the extent interest rates fell.
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 29, 1999
17
<PAGE>
This page intentionally left blank.
18
<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, 1998
EXECUTIVE INVESTORS LEHMAN BROTHERS
<S> <C> <C>
Insured Tax Exempt Fund Municipal Bond Index
Jul-90 $9,525 $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 15,716
Dec-96 17,315 16,384
Dec-97 19,098 17,889
Dec-98 20,510 19,049
Average Annual Total Return*
Class A Shares N.A.V. Only S.E.C. Standardized
One Year 7.39% 2.28%
Five Years 7.38% 6.34%
Since Inception (7/26/90) 9.51% 8.89%
S.E.C. 30-Day Yield 3.56%
</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 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 12/31/98) 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 1.35%, 5.17% AND 7.53%, RESPECTIVELY, AND THE
S.E.C. 30-DAY YIELD FOR DECEMBER 1998 WOULD HAVE BEEN 2.68%. 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.
19
<PAGE>
PORTFOLIO OF INVESTMENTS
EXECUTIVE INVESTORS INSURED TAX EXEMPT FUND
December 31, 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- --------------------------------------------------------------------------------------
<C> <S> <C> <C>
MUNICIPAL BONDS--104.2%
ALABAMA--1.6%
$ 250M Coffee Cnty. Public Bldg. Authority, 6.10%,
9/1/2016 $ 276,250 $ 163
- --------------------------------------------------------------------------------------
ARIZONA--4.6%
250M Maricopa County Development Authority Hosp. Facs.
Rev. (Samaritan Hlth. Svcs.), 7%, 12/1/2016 314,375 186
145M Maricopa County Uni. Sch. Dist. Gen. Oblig. #80
(Chandler), 6.25%, 7/1/2011 169,831 101
1,000M Sedona Wastewater Municipal Rev., Zero Coupon,
7/1/2022 302,500 179
- --------------------------------------------------------------------------------------
786,706 466
- --------------------------------------------------------------------------------------
CALIFORNIA--8.6%
250M San Francisco City & County Parking Auth., 7%,
6/1/2012 296,875 176
500M San Francisco City & County Redev. Agy. (Moscone
Ctr.), 6.75%, 7/1/2015 572,500 339
250M San Jose Redevelopment Agency, 6%, 8/1/2015 287,812 170
250M Santa Ana Fin. Auth. Lease Rev., 6.25%, 7/1/2015 294,687 174
- --------------------------------------------------------------------------------------
1,451,874 859
- --------------------------------------------------------------------------------------
COLORADO--2.4%
350M Roaring Fork General Obligation, 6.60%,
6/15/2004* 398,562 236
- --------------------------------------------------------------------------------------
CONNECTICUT--5.6%
400M Connecticut Special Tax Oblig. Rev., 6.10%,
10/1/2004* 448,000 265
500M Connecticut State Dev. Auth. Rev., Life Care
Facs. (Seabury Proj.), 5%, 9/1/2021 492,500 291
- --------------------------------------------------------------------------------------
940,500 556
- --------------------------------------------------------------------------------------
FLORIDA--8.1%
1,000M Boca Raton Cmnty. Redev. Agy. Tax Rev., Zero
Coupon, 3/1/2015 458,750 271
335M Cocoa Water & Sewer Revenue, 5.75%, 10/1/2007* 367,662 218
500M Pensacola Airport Revenue, 5.60%, 10/1/2017 540,000 319
- --------------------------------------------------------------------------------------
1,366,412 808
- --------------------------------------------------------------------------------------
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- --------------------------------------------------------------------------------------
<C> <S> <C> <C>
GEORGIA--2.8%
$ 500M Carrol City, County Hosp. Auth. Rev. Antic. Ctf.
(Tanner Med. Ctr.), 4.75%, 7/1/2018 $ 480,625 $ 284
- --------------------------------------------------------------------------------------
ILLINOIS--11.0%
500M Chicago Board of Education, 6.25%, 12/1/2012 585,625 346
500M Chicago General Obligation, 6%, 7/1/2005* 561,875 332
500M Illinois Dev. Fin. Auth. (Rockford School #205),
6.55%, 2/1/2009 586,875 347
100M Will County School District General Obligation,
7.10%, 12/1/2009 122,875 73
- --------------------------------------------------------------------------------------
1,857,250 1,098
- --------------------------------------------------------------------------------------
MAINE--1.7%
250M Maine Municipal Bond Bank, 6.50%, 11/1/2014 279,688 165
- --------------------------------------------------------------------------------------
MARYLAND--3.3%
1,000M Baltimore General Obligation, Zero Coupon,
10/15/2011 557,500 330
- --------------------------------------------------------------------------------------
MASSACHUSETTS--3.3%
500M Mass. Bay Transportation Authority Gen. Sys.
Rev., 5.80%, 3/1/2013 561,875 332
- --------------------------------------------------------------------------------------
MICHIGAN--2.0%
1,000M Howell Public Schools General Obligation, Zero
Coupon, 5/1/2006* 338,750 200
- --------------------------------------------------------------------------------------
MISSOURI--5.0%
200M Liberty Sewer System Revenue, 6.15%, 2/1/2015 226,750 134
500M Missouri State Health & Educational Facilities
Auth. (BJC Health System), 6.75%, 5/15/2010 613,125 363
- --------------------------------------------------------------------------------------
839,875 497
- --------------------------------------------------------------------------------------
NEW JERSEY--3.1%
485M New Jersey Housing & Mortgage Fin. Rev., 6.55%,
10/1/2010 524,406 310
- --------------------------------------------------------------------------------------
NEW YORK--2.0%
290M New York City Municipal Water Fin. Auth. Rev.,
5.875%, 6/15/2001* 330,963 196
- --------------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
PORTFOLIO OF INVESTMENTS (continued)
EXECUTIVE INVESTORS INSURED TAX EXEMPT FUND
December 31, 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- --------------------------------------------------------------------------------------
<C> <S> <C> <C>
NORTH CAROLINA--5.1%
$ 430M North Carolina Central Univ. Hsg. Rev., 5.75%,
11/1/2015 $ 469,775 $ 278
400M Winston Salem State Univ. Rev. Hsg. & Dining
System, 5%, 1/1/2017 400,500 237
- --------------------------------------------------------------------------------------
870,275 515
- --------------------------------------------------------------------------------------
OHIO--1.6%
250M Lorain County Hosp. Rev. (Catholic Healthcare
Partners), 5.625%, 9/1/2014 270,313 160
- --------------------------------------------------------------------------------------
OKLAHOMA--3.5%
500M Grand River Dam Authority Revenue, 6.25%,
6/1/2011 588,750 348
- --------------------------------------------------------------------------------------
OREGON--3.2%
500M Oregon State Dept. of Administrative Services
Cert. of Partic., 5.65%, 5/1/2012 550,000 325
- --------------------------------------------------------------------------------------
PENNSYLVANIA--6.4%
525M Erie General Obligation, 5.75%, 5/15/2007* 572,250 338
100M Jeannette School District General Obligation,
6.65%, 6/1/2001* 107,000 63
350M Philaldelphia Water & Wastewater Rev., 6.25%,
8/1/2012 410,813 243
- --------------------------------------------------------------------------------------
1,090,063 644
- --------------------------------------------------------------------------------------
PUERTO RICO--6.4%
400M Puerto Rico Commonwealth Hwy. & Transn. Auth.
Rev., 6.25%, 7/1/2014 472,000 279
545M Puerto Rico Indl. Tourist Edl. Med. & Env. Ctl.
Facs., 6.25%, 7/1/2016 609,719 361
- --------------------------------------------------------------------------------------
1,081,719 640
- --------------------------------------------------------------------------------------
RHODE ISLAND--1.3%
200M Rhode Island Convention Center Authority, 6.70%,
5/15/2001* 217,250 129
- --------------------------------------------------------------------------------------
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
AMOUNT
INVESTED
FOR EACH
PRINCIPAL $10,000 OF
AMOUNT SECURITY VALUE NET ASSETS
- --------------------------------------------------------------------------------------
<C> <S> <C> <C>
TEXAS--8.7%
$ 505M Austin Utility System Rev., 6%, 11/15/2013 $ 578,838 $ 342
500M Harris County General Obligation, 6.50%,
8/15/2013 596,250 353
250M Houston Water Conveyance System Cert. of Partic.,
6.25%, 12/15/2012 294,063 174
- --------------------------------------------------------------------------------------
1,469,151 869
- --------------------------------------------------------------------------------------
WASHINGTON--2.9%
500M King County Public Hospital District #002 General
Obligation, 5%, 12/1/2028 486,250 288
- --------------------------------------------------------------------------------------
TOTAL VALUE OF MUNICIPAL BONDS (cost $15,839,264) 17,615,007 10,418
- --------------------------------------------------------------------------------------
SHORT-TERM TAX EXEMPT INVESTMENTS--.6%
NEW YORK
100M New York City General Obligation, Adjustable Rate
Note, 5.15% (cost $100,000)** 100,000 59
- --------------------------------------------------------------------------------------
TOTAL VALUE OF INVESTMENTS (cost $15,939,264) 104.8% 17,715,007 10,477
EXCESS OF LIABILITIES OVER OTHER ASSETS (4.8) (805,812) (477)
- --------------------------------------------------------------------------------------
NET ASSETS 100.0% $16,909,195 $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, 1998.
See notes to financial statements
23
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
EXECUTIVE INVESTORS TRUST
December 31, 1998
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
BLUE CHIP HIGH YIELD INSURED TAX
FUND FUND EXEMPT FUND
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investment in securities:
At identified cost................... $ 3,191,708 $18,945,891 $15,939,264
----------- ----------- -----------
----------- ----------- -----------
At value (Note 1A)................... $ 4,698,114 $18,556,458 $17,715,007
Cash................................... 186,622 207,120 47,717
Receivables:
Interest and dividends............... 3,353 408,186 216,037
Trust shares sold.................... -- 31,935 1,012
Investment securities sold........... 41,219 -- 1,077,464
----------- ----------- -----------
Total Assets........................... 4,929,308 19,203,699 19,057,237
----------- ----------- -----------
LIABILITIES
Payables:
Trust shares redeemed................ 866 128,552 --
Investment securities purchased...... 36,308 -- 2,052,570
Distributions payable................ 9,439 84,441 91,458
Accrued expenses....................... 2,997 27,078 --
Accrued advisory fee................... 1,964 7,941 4,014
----------- ----------- -----------
Total Liabilities...................... 51,574 248,012 2,148,042
----------- ----------- -----------
NET ASSETS............................. $ 4,877,734 $18,955,687 $16,909,195
----------- ----------- -----------
----------- ----------- -----------
NET ASSETS CONSIST OF:
Capital paid in........................ $ 3,371,555 $20,898,424 $15,133,452
Undistributed net investment income.... -- 113,939 --
Accumulated net realized loss on
investment transactions.............. (227) (1,667,243) --
Net unrealized appreciation
(depreciation) of investments........ 1,506,406 (389,433) 1,775,743
----------- ----------- -----------
Total.................................. $ 4,877,734 $18,955,687 $16,909,195
----------- ----------- -----------
----------- ----------- -----------
SHARES OF BENEFICIAL INTEREST
OUTSTANDING.......................... 196,409 2,531,463 1,161,674
----------- ----------- -----------
----------- ----------- -----------
NET ASSET VALUE AND REDEMPTION PRICE
PER SHARE (Net assets divided by
trust shares outstanding)............ $ 24.83 $ 7.49 $ 14.56
----------- ----- -----------
----------- ----- -----------
MAXIMUM OFFERING PRICE PER SHARE (Net
asset value/.9525)*.................. $ 26.07 $ 7.86 $ 15.29
----------- ----- -----------
----------- ----- -----------
</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, 1998
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
BLUE CHIP HIGH YIELD INSURED TAX
FUND FUND EXEMPT FUND
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Income:
Interest............................. $ 10,803 $1,875,082 $ 886,534
Dividends............................ 50,439 418 --
Miscellaneous income................. -- 31,750 --
--------- ---------- -----------
Total income........................... 61,242 1,907,250 886,534
--------- ---------- -----------
Expenses (Notes 1 and 3):
Advisory fee......................... 43,487 195,205 167,864
Distribution plan expenses........... 21,744 97,601 83,931
Shareholder servicing costs.......... 5,585 25,878 9,409
Professional fees.................... 3,849 15,492 12,606
Custodian fees....................... 6,465 5,487 5,967
Reports and notices to shareholders.. 2,645 9,081 5,105
Other expenses....................... 1,971 11,964 7,362
--------- ---------- -----------
Total expenses......................... 85,746 360,708 292,244
Less: Expenses waived or assumed....... (39,741) (117,122) (158,705)
Custodian fees paid indirectly.... (5,860) (3,287) (1,665)
--------- ---------- -----------
Net expenses........................... 40,145 240,299 131,874
--------- ---------- -----------
Net investment income.................. 21,097 1,666,951 754,660
--------- ---------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (Note 2):
Net realized gain on investments....... 104,448 126,660 270,022
Net unrealized appreciation
(depreciation) of investments........ 608,792 (1,643,367) 157,055
--------- ---------- -----------
Net gain (loss) on investments......... 713,240 (1,516,707) 427,077
--------- ---------- -----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS...................... $ 734,337 $ 150,244 $ 1,181,737
--------- ---------- -----------
--------- ---------- -----------
</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 1998 1997
- --------------------------------------- ---------- ----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income................ $ 21,097 $ 27,109
Net realized gain on investments..... 104,448 226,701
Net unrealized appreciation
(depreciation) of investments...... 608,792 399,894
---------- ----------
Net increase in net assets
resulting from operations........ 734,337 653,704
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income................ (22,710) (27,075)
Net realized gains................... (111,862) (219,514)
---------- ----------
Total distributions................ (134,572) (246,589)
---------- ----------
TRUST SHARE TRANSACTIONS(a)
Proceeds from shares sold............ 1,201,975 1,122,087
Reinvestment of distributions........ 123,620 236,032
Cost of shares redeemed.............. (774,927) (198,168)
---------- ----------
Net increase from trust share
transactions....................... 550,668 1,159,951
---------- ----------
Net increase (decrease) in net
assets........................... 1,150,433 1,567,066
NET ASSETS
Beginning of year.................... 3,727,301 2,160,235
---------- ----------
End of year+......................... $4,877,734 $3,727,301
---------- ----------
---------- ----------
+Includes undistributed net investment
income of............................. -- $ 1,396
---------- ----------
---------- ----------
(a)TRUST SHARES ISSUED AND REDEEMED
Sold................................. 53,050 52,260
Issued for distributions
reinvested......................... 5,026 10,913
Redeemed............................. (33,583) (8,947)
---------- ----------
Net increase in trust shares......... 24,493 54,226
---------- ----------
---------- ----------
</TABLE>
See notes to financial statements
26
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
INSURED
HIGH YIELD FUND TAX EXEMPT FUND
------------------------ ------------------------
1998 1997 1998 1997
- --------------------------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income................ $ 1,666,951 $ 1,567,815 $ 754,660 $ 750,397
Net realized gain on investments..... 126,660 63,758 270,022 133,949
Net unrealized appreciation
(depreciation) of investments...... (1,643,367) 437,713 157,055 663,898
----------- ----------- ----------- -----------
Net increase in net assets
resulting from operations......... 150,244 2,069,286 1,181,737 1,548,244
----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income................ (1,691,909) (1,582,847) (755,255) (751,800)
Net realized gains................... -- -- (270,196) (133,949)
----------- ----------- ----------- -----------
Total distributions................ (1,691,909) (1,582,847) (1,025,451) (885,749)
----------- ----------- ----------- -----------
TRUST SHARE TRANSACTIONS(a)
Proceeds from shares sold............ 3,991,914 3,853,833 2,842,251 1,477,036
Reinvestment of distributions........ 702,882 697,365 647,163 521,972
Cost of shares redeemed.............. (3,431,181) (2,577,220) (2,929,454) (1,876,983)
----------- ----------- ----------- -----------
Net increase from trust share
transactions....................... 1,263,615 1,973,978 559,960 122,025
----------- ----------- ----------- -----------
Net increase (decrease) in net
assets............................ (278,050) 2,460,417 716,246 784,520
NET ASSETS
Beginning of year.................... 19,233,737 16,773,320 16,192,949 15,408,429
----------- ----------- ----------- -----------
End of year+......................... $18,955,687 $19,233,737 $16,909,195 $16,192,949
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
+Includes undistributed net investment
income of............................ $ 113,939 $ 138,897 -- $ 595
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
(a)TRUST SHARES ISSUED AND REDEEMED
Sold................................. 505,647 485,416 194,643 105,445
Issued for distributions
reinvested......................... 89,636 87,700 44,423 37,083
Redeemed............................. (437,480) (324,689) (200,774) (134,047)
----------- ----------- ----------- -----------
Net increase in trust shares......... 157,803 248,427 38,292 8,481
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
See notes to financial statements
27
<PAGE>
NOTES TO FINANCIAL STATEMENTS
EXECUTIVE INVESTORS TRUST
1. SIGNIFICANT ACCOUNTING POLICIES--Executive Investors Trust (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 (each a "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 to provide 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 or market where the security is principally traded, and lacking any
sales, the security is valued at the mean between the closing bid and asked
prices. Securities traded in the over-the-counter ("OTC") market (including
securities listed on exchanges whose primary market is believed to be OTC) are
valued at the mean between the last bid and asked prices based upon quotes
furnished by a market maker for such securities. Securities may also be priced
by a pricing service. The pricing service uses quotations obtained from
investment dealers or brokers, information with respect to market transactions
in comparable securities, 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. Short-term debt
securities that mature in 60 days or less are valued at amortized cost.
Securities for which market quotations are not readily available and any 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 Trust.
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
28
<PAGE>
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 capital loss carryovers), to relieve it from
all, or substantially all, federal income taxes. At December 31, 1998, the High
Yield Fund had capital loss carryovers of $1,667,243 of which $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 generally 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.
29
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
EXECUTIVE INVESTORS TRUST
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. For the year ended December 31,
1998, The Bank of New York, custodian for the Funds, has provided total credits
in the amount of $10,812 against custodian charges based on the uninvested cash
balances of the Funds.
2. SECURITY TRANSACTIONS--For the year ended December 31, 1998, purchases and
sales of securities other than short-term tax exempt investments and short-term
securities, were as follows:
<TABLE>
<CAPTION>
Cost of Proceeds
Fund Purchases of Sales
- --------------------------------------- ----------- -----------
<S> <C> <C>
Blue Chip Fund......................... $ 4,474,665 $ 3,825,391
High Yield Fund........................ 8,916,205 7,779,950
Insured Tax Exempt Fund................ 29,599,839 28,943,143
</TABLE>
At December 31, 1998, aggregate cost and net unrealized appreciation
(depreciation) of securities for federal income tax purposes were as follows:
<TABLE>
<CAPTION>
Gross Gross Net Unrealized
Aggregate Unrealized Unrealized Appreciation
Fund Cost Appreciation Depreciation (Depreciation)
- --------------------------------------- ----------- ------------ ------------ --------------
<S> <C> <C> <C> <C>
Blue Chip Fund......................... $ 3,192,422 $ 1,530,965 $ 25,273 $ 1,505,692
High Yield Fund........................ 18,945,891 465,876 855,309 (389,433)
Insured Tax Exempt Fund................ 15,939,264 1,780,518 4,775 1,775,743
</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. Trustees of the Trust
who are not "interested persons" of the Trust as defined in the 1940 Act are
remunerated by the Funds. For the year ended December 31, 1998, total trustee
fees accrued by the Funds amounted to $795.
30
<PAGE>
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 $406,556 of
which $243,054 was waived. In addition, expenses of $31,859 were assumed by
EIMCO.
For the year ended December 31, 1998, EIC, as underwriter of the Trust, received
$29,218 in commissions from the sale of Trust shares, after allowing $224,441 to
other dealers. Shareholder servicing costs included $27,431 in transfer agent
fees accrued to ADM and $2,808 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 daily 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. For the year ended
December 31, 1998, total distribution plan fees accrued to EIC amounted to
$203,276 (of which $40,655 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, 1998, the
High Yield Fund held nine 144A securities with an aggregate value of $1,322,752.
These securities represent 7.0% of the Fund's net assets and are valued as set
forth in Note 1A.
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
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
1998................................... 21.68 .11 3.74 3.85 .12 .58 .70
- -------------------------------------------------------------------------------------------------------------------
HIGH YIELD FUND
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
1998................................... 8.10 .67 (.60) .07 .68 -- .68
- -------------------------------------------------------------------------------------------------------------------
INSURED TAX EXEMPT FUND
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
1998................................... 14.41 .66 .39 1.05 .66 .24 .90
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
* Calculated without sales charges.
+ Net of expenses waived or assumed (Note 3).
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
--------- RETURN NET ASSETS INVESTMENT INVESTMENT TURNOVER
END * END OF YEAR EXPENSES INCOME EXPENSES INCOME RATE
OF YEAR (%) (IN MILLIONS) (%) (%) (%) (%) (%)
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BLUE CHIP FUND
1994......................... $ 12.75 (1.21) $ 1 .50 1.82 2.54 (.22) 89
1995......................... 16.32 36.30 1 .50 1.99 2.20 .29 33
1996......................... 18.36 20.62 2 .75 1.33 2.28 (.20) 50
1997......................... 21.68 26.58 4 .75 .92 2.03 (.36) 163
1998......................... 24.83 17.81 5 1.00 .55 1.84 (.29) 96
- --------------------------------------------------------------------------------------------------------------------
HIGH YIELD FUND
1994......................... $ 6.98 (2.32) $ 15 1.33 9.45 1.88 8.90 53
1995......................... 7.59 19.08 16 1.35 9.52 1.90 8.97 69
1996......................... 7.89 13.69 17 1.22 9.38 1.82 8.78 27
1997......................... 8.10 12.03 19 1.22 8.68 1.82 8.08 49
1998......................... 7.49 .86 19 1.25 8.54 1.83 7.96 41
- --------------------------------------------------------------------------------------------------------------------
INSURED TAX EXEMPT FUND
1994......................... $ 12.53 (3.95) $ 10 .50 5.39 1.80 4.09 215
1995......................... 14.04 20.53 13 .50 5.35 1.74 4.11 147
1996......................... 13.82 4.11 15 .75 4.85 1.71 3.89 116
1997......................... 14.41 10.30 16 .75 4.80 1.71 3.84 126
1998......................... 14.56 7.39 17 .80 4.50 1.73 3.57 172
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
* Calculated without sales charges.
+ Net of expenses waived or assumed (Note 3).
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, 1998,
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 the
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, 1998, by correspondence with the custodian and brokers. Where
brokers have not replied to our confirmation requests, we have carried out other
appropriate auditing procedures. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Blue Chip, High Yield and Insured Tax Exempt Funds as of December 31, 1998, and
the results of their operations for the year then ended, changes in their 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, in conformity
with generally accepted accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
January 29, 1999
34
<PAGE>
EXECUTIVE INVESTORS TRUST
TRUSTEES
- --------------------------------
JAMES J. COY (Emeritus)
GLENN O. HEAD
KATHRYN S. HEAD
LARRY R. LAVOIE
REX R. REED
HERBERT RUBINSTEIN
NANCY S. SCHAENEN
JAMES M. SRYGLEY
JOHN T. SULLIVAN
ROBERT F. WENTWORTH
OFFICERS
- --------------------------------
GLENN O. HEAD
President
DENNIS T. FITZPATRICK
Vice 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
35
<PAGE>
EXECUTIVE INVESTORS TRUST
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.
36
