<PAGE>
ADJUSTABLE RATE FUND
[PHOTO APPEARS HERE]
Chairman's Message
Dear Shareholder:
I am pleased to present this annual report of your Investors Trust Mutual Fund,
which covers the twelve month period ending October 31, 1995. Included with this
report is a discussion of the Fund's performance and an interview with the
Fund's Sub-Adviser. As an introduction to that report, I offer you my
perspective on the financial markets.
Financial Markets Perspective
What a difference a year makes! The dominant theme in the domestic financial
markets over the last twelve months seems to have been an increasing acceptance
of the so-called "Fed engineered soft landing." This refers to the idea that the
Federal Reserve's management of short-term interest rates via monetary policy
decisions has slowed the growth rate of the economy to a more sustainable, low-
inflation level, without pushing the economy into a recession. Comparing growth
rates on a year-over-year basis as of September 1995 and September 1994, the
Gross Domestic Product (GDP) growth rate was 3.3% this year, down from 4.4% a
year ago, and the Consumer Price Index (CPI) growth rate was 2.5% this year,
down from 3.0% last year.
This slower economic growth with lower inflation resulted in lower intermediate
and long-term interest rates, which helped produce above average stock and bond
market returns for the last twelve months. During this period, the stock market,
as measured by the S&P 500 Stock Index, had a total return of +26.41%, and the
bond market, as measured by the Lehman Brothers Aggregate Bond Index, had a
total return of +15.65%. As welcome as these market returns have been this year,
particularly in comparison to last year's below average returns, please
understand that they are well above average, and thus not sustainable on a long-
term basis.
(Continued on next page)
Annual Report--October 31, 1995
<PAGE>
Additional Information
If you are interested in additional information about the Investors Trust
Mutual Funds, please contact your Investors Trust Representative, or call
Investors Trust Services toll-free at 1-800-656-6626 and select option 2.
Thank you for investing with Investors Trust.
Sincerely,
[SIGNATURE OF PATRICK E. WELCH]
Patrick E. Welch
Chairman
<PAGE>
- -------------------------------------------------------------------------------
INVESTORS TRUST
ADJUSTABLE RATE FUND
Annual Report
October 31, 1995
TRUSTEES AND OFFICERS INVESTMENT ADVISER
PATRICK E. WELCH GNA CAPITAL MANAGEMENT, INC.
Trustee, Chairman of the Board, Seattle, Washington
President and CEO
PIERCE T. LINDBERG INVESTMENT SUB-ADVISER
Trustee STANDISH, AYER & WOOD, INC.
EDWARD R. MCMILLAN Boston, Massachusetts
Trustee
DOUGLAS H. PEDERSEN DISTRIBUTOR
Trustee GNA DISTRIBUTORS, INC.
GEOFFREY S. STIFF Seattle, Washington
Senior Vice President and Treasurer
CHARLES A. KAMINSKI COUNSEL
Senior Vice President GOODWIN, PROCTER & HOAR
VICTOR C. MOSES Boston, Massachusetts
Senior Vice President
THOMAS W. CASEY CUSTODIAN & TRANSFER AGENT
Vice President and Controller STATE STREET BANK AND TRUST COMPANY
EDWARD J. WILES, JR. Boston, Massachusetts
Vice President and Secretary
KARRI J. HARRINGTON INDEPENDENT ACCOUNTANTS
Assistant Secretary COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
This report is prepared for the shareholders of the Investors Trust Adjustable
Rate Fund. It is not authorized for use as an offer of sale or a solicitation
of an offer to buy shares of the Fund unless accompanied or preceded by the
Fund's current prospectus.
<PAGE>
(This page intentionally left blank)
<PAGE>
Investors Trust Adjustable Rate Fund 3
- -------------------------------------------------------------------------------
FROM THE ADVISER
----------------
GNA CAPITAL MANAGEMENT, INC.
For the twelve month period ended October 31, 1995, the two-year U. S.
Treasury yield fell from 6.82% to 5.61%, a decline of 1.21%. This caused bond
prices, which move in the opposite direction of yields, to rise during the
period. These bond price increases supplemented coupon interest income, so
that for the twelve month period, the unmanaged Lehman Brothers ARM Index
total return was +10.20%.
In spite of a declining interest rate environment, the Fund's SEC 30-day
yield rose from 4.49%/3.98% to 4.55%/4.02% (for Class A/B shares,
respectively) on the strength of upward adjusting mortgage interest rates that
had been restrained by annual increase limits (so-called annual caps) last
year. In the declining interest rate environment, the Fund's NAV (net asset
value) rose from $6.14/$6.14 to $6.39/$6.39 and the total return was
+9.20%/+8.39%. In comparison, the Morningstar Government Bond--ARM fund
average total return covering 61 funds was +1.58%.
The enclosed interview with the Fund's Sub-Adviser contains more information
about the Fund's performance and investment strategy.
[PERFORMANCE CHART APPEARS HERE]
Performance of a $10,000 investment since inception of the Investors Trust
Adjustable Rate Fund (9/93)
- ----------------------------------------------------------------------
MONTH ITARA ITARB LBARMI MGBARM
- ----------------------------------------------------------------------
Aug 1993 $10,000 $10,000 $10,000 $10,000
Sep 1993 $10,014 $ 9,997 $10,001 $10,016
Oct 1993 $10,026 $10,003 $10,005 $10,035
Nov 1993 $10,009 $ 9,981 $ 9,978 $10,032
Dec 1993 $10,072 $10,052 $10,053 $10,060
Jan 1994 $10,083 $10,057 $10,120 $10,098
Feb 1994 $10,021 $10,006 $10,088 $10,089
Mar 1994 $ 9,926 $ 9,889 $10,008 $10,053
Apr 1994 $ 9,850 $ 9,807 $ 9,955 $10,020
May 1994 $ 9,804 $ 9,756 $ 9,947 $ 9,990
Jun 1994 $ 9,791 $ 9,736 $ 9,969 $ 9,992
Jul 1994 $ 9,906 $ 9,844 $10,030 $10,026
Aug 1994 $ 9,926 $ 9,858 $10,079 $10,028
Sep 1994 $ 9,917 $ 9,843 $10,038 $ 9,993
Oct 1994 $ 9,876 $ 9,796 $10,030 $ 9,957
Nov 1994 $ 9,821 $ 9,735 $10,001 $ 9,870
Dec 1994 $ 9,863 $ 9,771 $10,054 $ 9,771
Jan 1995 $ 9,987 $ 9,888 $10,220 $ 9,758
Feb 1995 $10,127 $10,021 $10,426 $ 9,833
Mar 1995 $10,252 $10,138 $10,476 $ 9,887
Apr 1995 $10,326 $10,205 $10,587 $ 9,929
May 1995 $10,518 $10,387 $10,758 $10,024
Jun 1995 $10,560 $10,423 $10,803 $10,004
Jul 1995 $10,554 $10,410 $10,841 $10,016
Aug 1995 $10,642 $10,490 $10,908 $10,062
Sep 1995 $10,714 $10,555 $10,985 $10,061
Oct 1995 $10,785 $10,618 $11,053 $ 9,999
- ----------------------------------------------------------------------
Investors Trust Adjustable Rate Fund - A shares (ending value: $10,785)
Investors Trust Adjustable Rate Fund - B shares (ending value: $10,618)
Lehman Brothers ARM Index (ending value: $11,053)
Morningstar Govt. Bond - ARM Fund Average (ending value: $9,999)
Past performance is not indicative of future results. Investment returns and
principal will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost.
- -------------------------------------------------------------------------------
<PAGE>
4 Investors Trust Adjustable Rate Fund
- --------------------------------------------------------------------------------
FROM THE SUB-ADVISER
--------------------
STANDISH, AYER & WOOD, INC.
PORTFOLIO MANAGER: LORI DRISCOLL
WHAT HAPPENED IN THE MARKET OVER THE LAST 12 MONTHS (NOV 94-OCT 95)?
Over the past fiscal year ended October 31, 1995, bond yields have declined
substantially. The momentum of the bond rally was particularly strong in the
first half of this year as market expectations favored the "soft landing"
scenario. After the Federal Reserve lowered rates in July, the bond market
stabilized, awaiting further signs of an economic slowdown before another Fed
easing. Over the course of the year, the yield curve flattened fairly
significantly with longer Treasuries outperforming short Treasuries. Much of
the rally in longer Treasuries was driven by good inflation news and slower
growth prospects. With expectations of continued low inflation and moderate
growth for the second half of the year, bullish market sentiment picked up
again in October. Until recent uncertainty regarding the budget resolution,
inflation news had been generally favorable for bonds with the market bias
toward another Fed easing in the coming months.
WHAT HAPPENED IN THE FUND OVER THE LAST 12 MONTHS (NOV 94-OCT 95)?
Adjustable rate mortgages, in particular GNMA ARMs, have produced very
favorable returns in 1995. The ARM sector has benefited from several market
trends this year, most importantly, the decline in interest rates. As short-
term rates declined, there was significantly less risk that the coupon
adjustment of these mortgages would be restricted by their annual caps. In
fact, many of these securities, which were originated with "teaser rates", had
coupons that were resetting upward even as interest rates declined.
Additionally, the new issue supply of GNMA ARMs was considerably lower than
last year as borrowers opted for low coupon, thirty-year fixed rate mortgages.
With declining supply and reduced cap risk, ARM spreads narrowed versus
Treasuries. During the year, we swapped down in coupon, favoring the lower
coupon GNMA sector with a wider yield advantage over Treasuries, discount
prices and a slightly longer duration.
WHAT IS YOUR CURRENT MARKET OUTLOOK?
It appears the underlying economic fundamentals are modestly improving. With
the U.S. economy close to full utilization of resources, relatively high
consumer confidence and higher employment, it is unlikely that the current low
bond yields could be sustained for an extended period of time. However,
continued good inflation news remains a compelling factor that could drive
interest rates even lower in the near term. With a positive inflation outlook
and moderate growth, we expect the Fed could ease in the coming months and the
yield curve will likely steepen. In the interim, the bond market remains
vulnerable without a budget resolution. In the event of a prolonged delay, and
increasing concern over default risk, bond yields could temporarily drift
higher.
HOW IS THE FUND POSITIONED TO BENEFIT FROM YOUR CURRENT MARKET OUTLOOK?
The Fund is primarily invested in agency adjustable rate mortgages, favoring
GNMA ARMs. In a stable to moderately higher interest rate environment, these
ARMs tend to perform well as they provide a rising income advantage.
Conversely, when interest rates decline, the coupon adjustment downward of GNMA
ARMs is limited to 1%. In many cases, these securities were originated with low
"teaser rates" and will still reset upward in a falling rate
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Adjustable Rate Fund 5
- --------------------------------------------------------------------------------
environment. We believe the attractive yield advantage of GNMA ARMs, in
particular, and favorable market conditions will work to the Fund's benefit in
the months ahead.
ONE TYPE OF BONDS THAT THE FUND INVESTS IN ARE CALLED ASSET-BACKED SECURITIES
(ABS). PLEASE DESCRIBE THESE BONDS, AND DISCUSS THE ADVANTAGES OF INVESTING IN
THEM.
Asset-backed securities are generally bonds secured by assets such as credit
card receivables, auto loans, and home equity loans. The credit quality of the
bonds is most often determined by the amount of cash reserves and/or
subordination backing the senior classes. In the home equity loan market,
insurance guarantees are most commonly used to ensure timely payment of
principal and interest. Similar to other non-Treasury products, asset-backed
securities offer a yield advantage over Treasuries to compensate for the credit
risk. In many cases, these bonds are subject to early repayment of principal
(prepayments) which also affects the yield. Prepayment risk tends to be less
volatile in the asset-backed market, given that the smaller loan size of the
assets lessens the profitability for borrowers to refinance. The result is
relatively stable average lives which enhance the attractiveness of these bonds
versus other amortizing bonds. Typically we invest in the asset-backed
securities market to take advantage of the incremental yield while minimizing
the negative impact of prepayment risk.
THE FEDERAL BUDGET NEGOTIATIONS HAVE BEEN IN THE FINANCIAL NEWS RECENTLY. WHAT
IMPACT, IF ANY, ARE THESE NEGOTIATIONS LIKELY TO HAVE ON THE FUND?
The lack of a budget resolution has heightened concern over the potential of a
U.S. Treasury default. If the budget is not resolved or the Treasury is not
granted a temporary increase in the debt limit, there is a chance of default,
although there is a greater possibility that the Treasury will temporarily
garner funds from certain government trust funds. The impact of the budget
crisis on the Fund is primarily through the effect it has on market sentiment.
Recently, bond yields have increased amid growing concerns over default risk.
If the current political uncertainty and risk of a default continue, the bond
market is likely to have a more negative reaction, and interest rates could
drift higher over the short term, driving bond prices down. Ultimately, the
timing of a budget resolution remains uncertain, and the threat of US
Treasuries default has put a negative tone on the bond market.
- --------------------------------------------------------------------------------
<PAGE>
6 Investors Trust Adjustable Rate Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1995
<TABLE>
<CAPTION>
% OF NET PRINCIPAL MARKET
ASSETS AMOUNT ($) VALUE ($)
-------- ---------- ----------
<S> <C> <C> <C>
LONG TERM GOVERNMENT SECURITIES 98.2
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
ADJUSTABLE RATE MORTGAGES (a)(b)--60.6
4.500%, with a maturity date of November 20,
2024.......................................... 246,627 242,735
5.000%, with various maturity dates to
September 20, 2024............................ 704,971 698,105
5.500%, with various maturity dates to August
20, 2025...................................... 1,156,389 1,161,416
6.000%, with various maturity dates to June 20,
2024.......................................... 907,361 917,293
6.125%, with a maturity date of November 20,
2021.......................................... 32,596 33,181
6.500%, with various maturity dates to August
20, 2024...................................... 737,631 752,178
7.000%, with various maturity dates to December
20, 2023...................................... 627,412 639,176
----------
Total Governmental National Mortgage
Association
Adjustable Rate Mortgages
(Cost $4,352,521)........................ 4,444,084
----------
FEDERAL HOME LOAN MORTGAGE CORPORATION
ADJUSTABLE RATE MORTGAGES (a)(b)--19.8
6.230%, with a maturity date of June 1, 2024... 243,236 247,682
6.381%, with a maturity date of January 1,
2024.......................................... 150,167 152,702
6.851%, with a maturity date of January 1,
2023.......................................... 127,892 128,571
7.618%, with a maturity date of October 1,
2022.......................................... 103,777 105,723
7.899%, with a maturity date of August 1, 2023. 280,363 288,028
7.928%, with a maturity date of January 1,
2023.......................................... 161,543 165,608
7.969%, with a maturity date of August 1, 2023. 353,109 363,317
----------
Total Federal Home Loan Mortgage Corporation
Adjustable Rate Mortgages
(Cost $1,443,700)........................ 1,451,631
----------
UNITED STATES TREASURY NOTES--8.3
6.875%, with a maturity date of August 31,
1999.......................................... 450,000 466,524
7.500%, with a maturity date of November 15,
2001.......................................... 135,000 145,990
----------
Total United States Treasury Notes
(Cost $611,497)......................... 612,514
----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION PRINCIPAL
STRIP--4.8
Zero Coupon, with a maturity date of December
20, 2001
(Cost $339,005)......................... 375,000 349,102
----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
ADJUSTABLE RATE MORTGAGES (a)(b)--4.1
7.886%, with a maturity date of May 1, 2021
(Cost $294,405)......................... 297,379 301,793
----------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Adjustable Rate Fund 7
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1995, CONTINUED
<TABLE>
<CAPTION>
% OF NET PRINCIPAL MARKET
ASSETS AMOUNT ($) VALUE ($)
-------- ---------- ----------
<S> <C> <C> <C>
FEDERAL DEPOSIT INSURANCE CORPORATION REAL ESTATE
MORTGAGE INVESTMENT CONDUIT [REMIC] (b)--0.6
6.300%, with a maturity date of September 25,
2025
(Cost $43,889).......................... 43,902 43,875
----------
Total Long Term Government Securities
(Cost $7,085,017)....................... 7,202,999
----------
STRUCTURED NOTE 0.7
Ford Motor Credit Medium Term Notes, 5.965%,
July 12, 1996
[Five Year Treasury Index]
(Cost $50,000)........................... 50,000 49,572
----------
MONEY MARKET MUTUAL FUNDS 0.5
The Seven Seas Series Money Market Fund [Class
A]............................................ 20,201 20,201
The Seven Seas Series US Government Money
Market Fund................................... 20,178 20,178
----------
Total Money Market Mutual Funds
(Cost $40,379).......................... 40,379
----- ----------
SUMMARY
Total investment portfolio
(Cost $7,175,396) (Note 3).............. 99.4 7,292,950
Other assets and liabilities, net.............. 0.6 41,377
----- ----------
NET ASSETS....................................... 100.0 $7,334,327
===== ==========
</TABLE>
- --------
NOTES:
(a) The investments in mortgage-backed securities are interests in separate
pools of mortgages. All such issues which have similar coupon rates have
been aggregated for financial statement presentation purposes.
(b) Effective maturities for all securities (except for Federal National
Mortgage Association Principal Strip, the structured note, securities
issued by the United States Treasury, and money market mutual funds) are
expected to be shorter than indicated due to prepayments.
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
8 Investors Trust Adjustable Rate Fund
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1995
<TABLE>
<S> <C>
ASSETS
Investments, at market value (identified cost, $7,175,396) (Notes 2
and 3)............................................................ $7,292,950
Cash............................................................... 111
Receivables:
Fund shares sold................................................. 10,709
Dividends........................................................ 1,078
Interest......................................................... 52,158
Deferred organization costs (Note 2)............................... 35,376
Prepaid expenses (Note 2).......................................... 12,703
----------
Total assets....................................................... 7,405,085
----------
LIABILITIES
Payables:
Dividends........................................................ 7,886
Adviser (Note 4)................................................. 16,176
Accrued distribution fee (Note 4)................................ 3,838
Accrued management fee (Note 4).................................. 2,520
Other accrued expenses........................................... 40,338
----------
Total liabilities.................................................. 70,758
----------
NET ASSETS, AT MARKET VALUE........................................ $7,334,327
==========
NET ASSETS
Net assets consist of:
Accumulated distributions in excess of net investment income
(Note 2)........................................................ $ (7,886)
Accumulated net realized loss (Note 2)........................... (175,121)
Unrealized appreciation on investments (Notes 2 and 3)........... 117,554
Shares of beneficial interest (Note 2)........................... 7,399,780
----------
NET ASSETS, AT MARKET VALUE........................................ $7,334,327
==========
CLASS A:
NET ASSET VALUE and redemption price per share ($5,472,083 divided
by 856,850 outstanding shares of beneficial interest of no par $6.39
value)............................................................ =====
Maximum offering price per share (100/95.50 of $6.39).............. $6.69
=====
CLASS B:
NET ASSET VALUE and offering price per share ($1,862,244 divided by
291,483 outstanding shares of beneficial interest of no par $6.39
value)............................................................ =====
</TABLE>
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THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Adjustable Rate Fund 9
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED OCTOBER 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest............................................................ $ 417,887
Dividends........................................................... 16,741
---------
Total income........................................................ 434,628
---------
EXPENSES:
Management fee (Note 4)........................................... 29,643
Custodian fee..................................................... 70,984
Transfer agent fee................................................ 47,022
Distribution fees (Note 4)........................................ 30,927
Registration fees................................................. 22,208
Professional fees................................................. 15,241
Amortization for organization costs (Note 2)...................... 12,392
Shareholder reports............................................... 5,120
Insurance......................................................... 428
Trustees' fees and expenses....................................... 155
Other............................................................. 1,095
---------
Total expenses before reimbursement from Adviser.................... 235,215
Reimbursement for expenses from Adviser (Note 4).................... (148,971)
---------
Expenses, net....................................................... 86,244
---------
Net investment income............................................... 348,384
---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss from investment transactions (Notes 2 and 3).... (114,498)
Net increase in unrealized appreciation of investments during the
year............................................................. 399,103
---------
Net gain on investments............................................. 284,605
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................ $ 632,989
=========
</TABLE>
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THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
10 Investors Trust Adjustable Rate Fund
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FISCAL YEARS
ENDED OCTOBER 31,
----------------------
1995 1994
---------- ----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income................................ $ 348,384 $ 258,609
Net realized loss from investment transactions....... (114,498) (100,726)
Net increase in unrealized appreciation
(depreciation) of investments during the year....... 399,103 (272,309)
---------- ----------
Net increase (decrease) in net assets resulting from
operations............................................ 632,989 (114,426)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A ($.30 and $.23 per share).................. (255,493) (187,447)
Class B ($.25 and $.19 per share).................. (86,152) (50,364)
In excess of net investment income
Class A ($.01 per share)........................... -- (7,001)
Class B ($.01 per share)........................... -- (1,881)
Tax return of capital
Class A ($.01 per share)........................... -- (9,392)
Class B ($.01 per share)........................... -- (2,524)
Increase (decrease) in net assets from Fund share
transactions.......................................... (440,908) 2,667,073
---------- ----------
INCREASE (DECREASE) IN NET ASSETS...................... (149,564) 2,294,038
Net assets at beginning of year........................ 7,483,891 5,189,853
---------- ----------
NET ASSETS AT END OF YEAR (including accumulated
distributions in excess of net investment income of
$7,886 and $8,882, respectively)...................... $7,334,327 $7,483,891
========== ==========
</TABLE>
(CONTINUED)
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Adjustable Rate Fund 11
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
<TABLE>
<CAPTION>
FOR THE FISCAL YEARS ENDED OCTOBER 31,
--------------------------------------------
1995 1994
--------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- -------- -----------
<S> <C> <C> <C> <C>
FUND SHARE INFORMATION
Class A shares
Sold........................... 14,962 $ 92,790 41,810 $ 260,243
Issued in reinvestment of
distributions................. 40,886 255,434 32,056 201,637
Redeemed....................... (24,589) (155,685) (28,118) (174,968)
-------- ----------- -------- -----------
Net increase................... 31,259 $ 192,539 45,748 $ 286,912
======== =========== ======== ===========
Class B shares
Sold........................... 100,668 $ 621,653 610,681 $ 3,863,346
Issued in reinvestment of
distributions................. 12,183 75,951 7,589 47,212
Redeemed....................... (214,247) (1,331,051) (245,443) (1,530,397)
-------- ----------- -------- -----------
Net increase (decrease)........ (101,396) $ (633,447) 372,827 $ 2,380,161
======== =========== ======== ===========
</TABLE>
- --------
At October 31, 1995, GNA Corporation, the parent company of GNA Capital
Management Inc., the Fund's investment adviser (the "Adviser"), owned 842,942
shares of Class A and a nominal amount of Class B shares of the Fund.
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
12 Investors Trust Adjustable Rate Fund
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The financial highlights set forth below include selected data for a share
outstanding throughout each period and other performance information derived
from the financial statements.
<TABLE>
<CAPTION>
FOR THE FISCAL YEARS ENDED OCTOBER 31,
----------------------------------------------
CLASS A CLASS B
---------------------- ----------------------
1995 1994 1993+ 1995 1994 1993+
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD........................ $ 6.14 $ 6.49 $ 6.50 $ 6.14 $ 6.48 $ 6.50
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income (a)...... .31 .25 .03 .26 .21 .02
Net realized and unrealized
gains (losses) on investments. .24 (.35) (.01) .24 (.34) (.02)
------ ------ ------ ------ ------ ------
Total from Investment
Operations.................... .55 (.10) .02 .50 (.13) --
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS FROM
Net investment income.......... (.30) (.23) (.03) (.25) (.19) (.02)
In excess of net investment
income........................ -- (.01) -- -- (.01) --
Tax return of capital.......... -- (.01) -- -- (.01) --
------ ------ ------ ------ ------ ------
Total Distributions............ (.30) (.25) (.03) (.25) (.21) (.02)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD. $ 6.39 $ 6.14 $ 6.49 $ 6.39 $ 6.14 $ 6.48
====== ====== ====== ====== ====== ======
TOTAL RETURN (%) **............ 9.20 (1.49) .26 8.39 (2.07) .03
RATIOS/SUPPLEMENTAL DATA
Ratios (%):
Expenses, net, to average
daily net assets (a)......... .95 .95 .98* 1.70 1.70 1.61*
Net investment income to
average daily net assets..... 4.91 4.04 2.78* 4.18 3.48 2.57*
Portfolio turnover............ 53.07 115.55 0.34* 53.07 115.55 0.34*
Net Assets, end of period
(millions).................... $5.5 $5.1 $5.1 $1.8 $2.4 $0.1
(a) Reimbursement for expenses
from Adviser.................. $0.126 $0.120 $0.003 $0.124 $0.108 $0.003
Operating expenses ratio
excluding reimbursement for
expenses (%)................. 2.96 2.86 3.24* 3.71 3.51 3.58*
</TABLE>
- --------
+ For the period September 8, 1993 (commencement of operations) to October
31, 1993.
* Annualized
** A sales charge of 4.5% (maximum) was not reflected in total return
calculations for Class A. A contingent deferred sales charge of 5% the
first year, declining by 1% per year for five years, was not reflected in
total return calculations for Class B. Periods less than one year are not
annualized.
- -------------------------------------------------------------------------------
<PAGE>
Investors Trust Adjustable Rate Fund 13
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION. Investors Trust (the "Trust") is organized as a Massachusetts
Business Trust and is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company. The Trust is
a series of funds, currently comprised of five investment portfolios, four of
which commenced operations as of September 8, 1993 and one, the Government
Fund, which commenced operations as of April 22, 1987. These financial
statements report on the Adjustable Rate Fund (the "Fund"). Financial
statements for the other funds are presented separately.
Under the Trust's Multiple Class Distribution System (the "Multiple Class
Arrangement"), the Fund currently offers to the general public two classes of
shares of beneficial interest, no par value, which may be purchased at a price
equal to the next determined net asset value per share plus a sales charge
which, at the election of the purchaser, may be imposed (i) at the time of
purchase (Class A shares) or (ii) on a deferred basis (Class B shares). Class B
shares, including a pro rata portion of the shares received as distributions
with respect to such shares, will automatically convert to Class A shares of
the Fund at the end of eight years following the issuance of the Class B
shares.
2. SIGNIFICANT ACCOUNTING POLICIES. The policies described below are followed
consistently by the Fund in the preparation of its financial statements in
conformity with generally accepted accounting principles.
Securities Valuation. Long-term debt securities for which market quotations
are readily available are stated at market value. A security (including an
option) listed or traded on an exchange is valued at its last sale price prior
to the time when assets are valued. Lacking any sales on that day, the security
is valued at the mean between the current closing bid and asked prices. Other
securities are, in general, valued at the last bid quotation if there are
market quotations readily available, or in the absence of such market
quotations, then at the fair value thereof as determined by or under authority
of the Trustees of the Trust utilizing such pricing services as may be deemed
appropriate. Investments in certain long-term debt securities not traded in an
organized market are valued on the basis of valuations furnished by independent
pricing services or broker/dealers which utilize information with respect to
market transactions and other information in such securities or comparable
securities. Short-term investments are valued at original cost plus accreted
discount or accrued interest which approximates market value.
Securities Transactions and Related Investment Income. Sales and purchases are
accounted for on trade date. Realized securities gains or losses are determined
using the identified cost method for both financial and tax reporting purposes.
Interest income is accrued pro rata to maturity. Original issue discount is
accreted for financial and tax accounting purposes.
Securities Purchased on a When-Issued Basis. The Fund may enter into firm
commitment agreements ("TBA" or "when-issued" purchases) for the purchase of
securities at an agreed-upon price on a specified future date. The Fund will
not enter into such agreements for the purpose of investment leverage.
Liability for the purchase price and all the rights and risks of ownership of
the securities accrue to the Fund at the time it becomes obligated to purchase
the securities, although delivery and payment occur at a later date, generally
within 45 days (but not to exceed 120 days) of the date of the commitment to
purchase. Accordingly, if the market price of the security should decline, the
effect of the agreement would be to obligate the Fund to purchase the security
at a price above the current market price on the date of delivery and payment.
During the time the Fund is obligated to purchase such securities, it will
maintain with the Custodian a segregated account with U.S. government
securities
- --------------------------------------------------------------------------------
<PAGE>
14 Investors Trust Adjustable Rate Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED
or cash or cash equivalents (or a receivable for investments sold in connection
therewith) of an aggregate current value sufficient to make payment for the
securities.
Repurchase Agreements. The Fund may enter into repurchase agreements in order
to generate additional income. Each repurchase agreement entered into by the
Fund will provide that the value of the collateral underlying the repurchase
agreement will always be at least 102% of the repurchase price, including
accrued interest, except for repurchase agreements entered into with a
broker/dealer or bank whose unsecured debt is rated AAA or whose commercial
paper is rated A-1 by Standard and Poor's or P-1 by Moody's, in which case the
value of the collateral will always be at least 100% of the repurchase price,
including accrued interest. The Fund will not enter into a repurchase agreement
having more than seven days remaining to maturity if, as a result, such
agreements, together with any other securities which are not readily
marketable, would exceed 10% of the net assets of the Fund. In addition, not
more than one-third of the current market value of the Fund's total assets
shall constitute secured loans by the Fund under repurchase agreements.
Federal Income Taxes. As a Massachusetts Business Trust, the Fund is a
separate corporate taxpayer and determines its net investment income and
capital gains (or losses) and the amounts to be distributed to the Fund's
shareholders without regard to the income and capital gains (or losses) of the
other funds. It is the intent of the Fund to comply with the requirements of
the Internal Revenue Code which are applicable to regulated investment
companies and to distribute substantially all of its taxable income to its
shareholders. Accordingly, the Fund paid no federal taxes and no federal income
or excise tax provision was required. As of October 31, 1995, the Fund has net
tax basis capital loss carryforwards of $175,121, which may be applied against
any realized taxable gains until their expiration dates of October 31, 2002
($72,067) and October 31, 2003 ($103,054).
Distributions of Income and Gains. Net investment income is declared as
dividend to shareholders of record as of the close of business each day and is
paid to shareholders monthly. Distributions from net short-term gains are
declared and paid monthly. Long-term realized gains, in excess of any available
capital loss carryforward, would be taxable to the Fund if not distributed and,
therefore, will be declared and paid to its shareholders annually.
Capital Accounts. The Fund reports the undistributed net investment income
(accumulated net investment loss) and accumulated net realized gain (loss)
accounts on a basis approximating amounts available for future tax
distributions (or to offset future taxable realized gains when a capital loss
carryforward is available). Accordingly, the Fund may periodically make
reclassifications among certain capital accounts without impacting the net
asset value of the Fund.
Deferred Organization and Registration Costs. Costs incurred by the Fund in
connection with its organization and registration of shares have been deferred
and are being amortized over a 60 month period on a straight-line basis. Costs
incurred for subsequent registration of shares will be amortized on a straight-
line basis over the lesser of the duration of the registration period or 12
months.
Expenses. Expenses such as management fees, distribution fees, custodian fees,
transfer agent fees, and registration fees are charged directly to the Fund,
while indirect expenses, such as shareholder reports, professional fees,
trustee fees and expenses, and insurance are allocated among the funds
principally based on their relative net assets. Portfolio-level expenses are
allocated to each class of shares based upon the relative percentage of current
net assets of dividend-
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Adjustable Rate Fund 15
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED
eligible shares. All expenses that are directly attributable to a specific
class of shares, such as legal expenses and Trustees' fees incurred as a
result of issues relating solely to one class and distribution fees, are
allocated to that class.
3. PURCHASES AND SALES OF SECURITIES. During the fiscal year ended October 31,
1995 purchases, sales and paydowns of U.S. Government and Agency securities,
excluding short-term securities and repurchase agreements, totalled
$3,749,284, $1,518,941 and $701,336, respectively. During the fiscal year
ended October 31, 1995, purchases, sales and paydowns of investment
securities, excluding U.S. Government and Agency securities, short-term
securities and repurchase agreements, totalled $24,111, $1,795,968 and
$143,056, respectively.
The aggregate cost of the investment portfolio for federal income tax
purposes was $7,175,396. At October 31, 1995, net unrealized appreciation for
all securities based on tax cost was $117,554. This consisted of aggregate
gross unrealized appreciation for all securities in which there was an excess
of market value over tax cost of $151,086 and aggregate gross unrealized
depreciation for all securities in which there was an excess of tax cost over
market value of $33,532.
4. MANAGEMENT, DISTRIBUTION AND TRUSTEES FEES. Under an Advisory agreement
between the Fund and the Adviser, the Fund agrees to pay the Adviser a fee
calculated at an annual rate of .40% of the average daily net assets. The
Adviser had agreed to reimburse the Classes for expenses incurred by the
Classes to the extent that such expenses exceed 0.95% (Class A) and 1.70%
(Class B) of average daily net assets during the fiscal year ended October 31,
1995. The expense reimbursement may be extended or modified by the Adviser.
The Advisory agreement also provides that if, in any fiscal year, the total of
certain specified expenses of the Fund exceed the expense limitations
applicable to the Fund imposed by the securities regulations of any state in
which it is then registered to sell shares, the Adviser will waive all or a
portion of its management fee equal to such excess. The Adviser is only
required to reimburse the Fund for any expenses which exceed state expense
limitations up to the amount of management fees paid or payable by the Fund
during such fiscal year. The total management fee for the fiscal year ended
October 31, 1995 was $29,643. The expenses reimbursed for the fiscal year
ended October 31, 1995 were $148,971 ($0.126 per share for Class A, $0.124 per
share for Class B). The reimbursement for expenses by the Adviser is being
offset by the payables to the Adviser monthly. Any amount due from the Adviser
in excess of the amounts due to the Adviser is settled in cash within 15 days
following month end.
The Adviser retained Standish, Ayer & Wood, Inc. (the "Sub-Adviser") to act
as portfolio manager of the Fund. As portfolio manager, the Sub-Adviser is
responsible for the actual investment management of the Fund's assets
(including the placement of brokerage orders), under the general supervision
of the Adviser and the Board of Trustees.
GNA Distributors, Inc. (the "Distributor") receives a monthly distribution
fee from the Fund calculated at the annual rate of .75% of the average daily
net assets of Class B shares pursuant to Rule 12b-1 of the Investment Company
Act of 1940, as amended. A shareholder servicing fee is also imposed on both
Class A and Class B of the Fund equal to specified costs incurred by the
Distributor, but in no event to exceed .25% of the average daily net assets of
the Fund. The shareholder servicing fee is in addition to the .75%
distribution fee. The Distributor has agreed that the .75% of average daily
net assets on Class B shares will only be assessed on any shareholders shares
for a limited period of time. Once Class B shares automatically convert to
Class A shares of the Fund, after eight years, such shareholders will be
subject only to the shareholder servicing fee of .25% maximum applicable to
Class A shares under the 12b-1 Plan.
- -------------------------------------------------------------------------------
<PAGE>
16 Investors Trust Adjustable Rate Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED
With respect to Class B shares, a contingent deferred sales charge
("withdrawal fee") of 5% the first year, declining by 1% per year for five
years, is imposed on any redemption which reduces the current value of the
account to an amount which is lower than the dollar amount of all payments
during the preceding five years. Withdrawal fees are paid to and retained by
the Distributor. These fees permit the Distributor to recover its sales-related
expenses (such as the 4% of the purchase price paid to dealers who sell Class B
shares of the Fund, printing fees, and marketing and advertising expenses). In
the event the Distributor is not fully reimbursed for such expenses incurred in
any fiscal year of the Fund, the Distributor shall be entitled to carryforward
such expenses to subsequent fiscal years for submission to the Fund for
payment, subject always to the .75% of Class B net assets annual maximum
expenditure allowed by the Funds Plan. The cumulative reimbursable amount is
increased by an interest factor which is intended to replicate the Distributors
cost of funds for financing advances made under the Plan. The Trustees or a
majority of the Fund's shareholders have the right, however, to terminate the
Plan and all payments thereunder at any time. The Fund will not be obligated to
reimburse the Distributor for carryover expenses subsequent to the Plans
termination or noncontinuance. The total amount of carryover expenses
outstanding since inception of the Plan as of October 31, 1995, for which the
Distributor intends to seek repayment is approximately $94,000.
Total distribution fees and shareholder servicing fees for the fiscal year
ended October 31, 1995 were $15,787 and $15,140 ($10,725 Class A, $4,415 Class
B), respectively.
The Fund pays each Trustee not affiliated with the Adviser its proportionate
share of : (1) an annual fee of $4,000; and (2) a fee of $500 for each meeting
of the Board of Trustees attended plus all reasonable expenses associated with
attendance at such meetings. The proportionate rate is allocated among the
Funds principally based on their relative net assets. No remuneration is paid
by the Trust to any Trustee or officer of the Fund who is affiliated with the
Adviser.
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Adjustable Rate Fund 17
- -------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Trustees of
Investors Trust Adjustable Rate Fund
We have audited the accompanying statement of assets and liabilities of
Investors Trust Adjustable Rate Fund including the investment portfolio, as of
October 31, 1995, and the related statement of operations for the fiscal year
then ended, and the statements of changes in net assets for each of the two
fiscal years in the period then ended and the financial highlights for each of
the two fiscal years in the period then ended and for the period September 8,
1993 (commencement of operations) to October 31, 1993. These financial
statements and financial highlights are the responsibility of the Fund'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 October 31, 1995 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
Investors Trust Adjustable Rate Fund as of October 31, 1995, the results of
its operations for the fiscal year then ended, the changes in its net assets
for each of the two fiscal years in the period then ended and the financial
highlights for each of the two fiscal years in the period then ended and for
the period September 8, 1993 (commencement of operations) to October 31, 1993
in conformity with generally accepted accounting principles.
Boston, Massachusetts [SIGNATURE OF COOPERS & LYBRAND L.L.P.]
December 18, 1995
- -------------------------------------------------------------------------------
<PAGE>
INVESTORS TRUST /SM/
MUTUAL FUNDS
For more information about the Investors Trust mutual funds and to
obtain a prospecuts containing complete information including fees and
expenses or a copy of the annual report for any of the funds shown
here, call us at 1-800-656-6626.
ADJUSTABLE RATE FUND
Investing primarily in adjustable rate securities including, but not limited to,
adjustable rate mortgage securities, this Fund seeks to produce a high level of
current income consistent with limiting fluctuations in the net value of the
Fund shares. Conservative investors seeking higher rates of return than those
offered by money market funds should consider the Adjustable Rate Fund.
Sub-Adviser: Standish, Ayer & Wood, Inc.
GOVERNMENT FUND
This Fund seeks to produce a high level of current income consistent with safety
of principal. The Fund will attempt to achieve its objective by investing
primarily in obligations issued or guaranteed by the U.S. Government or by its
agencies or instrumentalities. The government guarantee applies only to the
payment of principal and interest to the Fund and not to the value of the Fund's
shares, which will fluctuate and could be more or less than the purchaser's
cost.
Sub-Adviser: BlackRock Financial Management, Inc.
TAX FREE FUND
This Fund invests primarily in tax-exempt debt obligations and seeks to produce
a high level of income exempt from federal income tax as is consistent with
preservation of capital. This Fund invests primarily in investment-grade debt
obligations.
Sub-Adviser: Brown Brothers Harriman & Co.
VALUE FUND
This equity income fund seeks to provide an above-average level of dividend
income and long-term growth of capital by investing primarily in medium to large
capitalization companies with established operating histories and potential for
dividend growth.
Sub-Adviser: Duff & Phelps Investment Management Co.
GROWTH FUND
This Fund invests primarily in medium capitalization companies whose earnings
and/or assets are expected to grow at a rate above the average for the Standard
& Poor's 500 Stock Index over the long term.
Sub-Adviser: Value Line, Inc.
*State and local taxes may apply. For certain investors, a portion of the
income may be subject to the alternative minimum tax.
<PAGE>
[LOGO]
GNA Distributors, Inc.
Two Union Square . P.O. Box 450
Seattle, Washington 98111-0490
INVESTORS TRUST /SM/
MUTUAL FUNDS
ADJUSTABLE RATE FUND
ANNUAL REPORT
-----------------
October 31, 1995
The Investors Trust Family of Funds
is offered by GNA Distributors, Inc.
<PAGE>
GOVERNMENT FUND
Chairman's Message
Dear Shareholder:
I am pleased to present this annual report of your Investors Trust Mutual Fund,
which covers the twelve month period ending October 31, 1995. Included with this
report is a discussion of the Fund's performance and an interview with the
Fund's Sub-Adviser, BlackRock Financial Management. As an introduction to that
report, I offer you my perspective on the financial markets.
Financial Markets Perspective
What a difference a year makes! The dominant theme in the domestic financial
markets over the last twelve months seems to have been an increasing acceptance
of the so-called "Fed engineered soft landing." This refers to the idea that the
Federal Reserve's management of short-term interest rates via monetary policy
decisions has slowed the growth rate of the economy to a more sustainable, low-
inflation level, without pushing the economy into a recession. Comparing growth
rates on a year-over-year basis as of September 1995 and September 1994, the
Gross Domestic Product (GDP) growth rate was 3.3% this year, down from 4.4% a
year ago, and the Consumer Price Index (CPI) growth rate was 2.5% this year,
down from 3.0% last year.
This slower economic growth with lower inflation resulted in lower intermediate
and long-term interest rates, which helped produce above average stock and bond
market returns for the last twelve months. During this period, the stock market,
as measured by the S&P 500 Stock Index, had a total return of +26.41%, and the
bond market, as measured by the Lehman Brothers Aggregate Bond Index, had a
total return of +15.65%. As welcome as these market returns have been this year,
particularly in comparison to last year's below average returns, please
understand that they are well above average, and thus not sustainable on a long-
term basis.
(Continued on next page)
Annual Report--October 31, 1995
<PAGE>
Additional Information
I am pleased to announce the settlement of the shareholder class action lawsuit
against the Investors Trust Government Fund, GNA Distributors, GNA Securities,
GNA Capital Management and Weiss, Peck and Greer Advisers. A notice was mailed
on November 20, to the class (all shareholders of record during the period
between 1/1/92 and 11/8/94) by Gilardi & Co., the firm hired by the plaintiff's
counsel to administer the settlement. If you think you should have received this
notice and did not, please contact Gilardi & Co. at 1-800-654-5763.
Our decision to settle this suit was a business decision based on the cost
and time that would have been required to continue fighting it. GNA has reviewed
its investment philosophy and disclosure policy and does not agree with the
allegations in the suit which claim that investments in certain securities were
not properly disclosed. It is important to note that the net asset value and
assets of the Fund will not be impacted by the settlement.
The Fund's management and Trustees are pleased with the progress BlackRock
has made thus far in improving the Fund's NAV and performance. We are confident,
as we hope you are, in the Fund's ability to remain an important part of your
investment portfolio.
If you are interested in additional information about the Investors Trust Mutual
Funds, please contact your Investors Trust Representative, or call Investors
Trust Services toll-free at 1-800-656-6626 and select option 2.
I thank you for investing with Investors Trust.
Sincerely,
[SIGNATURE OF PATRICK E. WELCH]
Patrick E. Welch
Chairman
<PAGE>
- -------------------------------------------------------------------------------
INVESTORS TRUST
GOVERNMENT FUND
Annual Report
October 31, 1995
TRUSTEES AND OFFICERS INVESTMENT ADVISER
PATRICK E. WELCH GNA CAPITAL MANAGEMENT, INC.
Trustee, Chairman of the Board, Seattle, Washington
President and CEO
PIERCE T. LINDBERG INVESTMENT SUB-ADVISER
Trustee BLACKROCK FINANCIAL MANAGEMENT, INC.
EDWARD R. MCMILLAN New York, New York
Trustee
DOUGLAS H. PEDERSEN DISTRIBUTOR
Trustee GNA DISTRIBUTORS, INC.
GEOFFREY S. STIFF Seattle, Washington
Senior Vice President and Treasurer
CHARLES A. KAMINSKI COUNSEL
Senior Vice President GOODWIN, PROCTER & HOAR
VICTOR C. MOSES Boston, Massachusetts
Senior Vice President
THOMAS W. CASEY CUSTODIAN & TRANSFER AGENT
Vice President and Controller STATE STREET BANK AND TRUST COMPANY
EDWARD J. WILES, JR. Boston, Massachusetts
Vice President and Secretary
KARRI J. HARRINGTON INDEPENDENT ACCOUNTANTS
Assistant Secretary COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
This report is prepared for the shareholders of the Investors Trust Government
Fund. It is not authorized for use as an offer of sale or a solicitation of an
offer to buy shares of the Fund unless accompanied or preceded by the Fund's
current prospectus.
<PAGE>
(This page intentionally left blank)
<PAGE>
Investors Trust Government Fund 3
- --------------------------------------------------------------------------------
FROM THE ADVISER
----------------
GNA CAPITAL MANAGEMENT, INC.
Following a year (fiscal year ended October 31, 1994) of poor performance
compared to its market index benchmark and its peer group benchmark, the
Trustees and Officers of the Fund asked GNA Capital Management to review the
capabilities of other investment management firms to serve as sub-adviser for
the Fund. The extensive search process resulted in the Trustees' selection of
BlackRock Financial Management, Inc., as the new Sub-Adviser for the Fund.
BlackRock began managing the Fund on April 3, 1995. Therefore, the performance
results reported for this fiscal year represent five months of management by
Weiss Peck & Greer Advisers and seven months of management by BlackRock.
A special meeting of the shareholders was held on June 16, 1995, for the
purpose of approving the adoption of the sub-advisory agreement between GNA
Capital Management and BlackRock Financial Management. The shareholders present
by proxy at the meeting, who represented a majority of the outstanding shares
of each class, approved the new sub-advisory agreement by voting as follows:
. Class A Shares 1,684,950.763 (96.772%) in favor; 1,848.839 (.107%)
against and 54,343.542 (3.121%) abstaining;
. Class B Shares 65,127,561.062 (92.009%) in favor, 683,752.847 (.966%)
against and 4,972,505.774 (7.025%) abstaining.
MARKET AND FUND PERFORMANCE
For the twelve month period ended October 31, 1995, the 5-year Treasury Note
yield fell from 7.48% to 5.81%, a decline of 1.67%. This caused bond prices,
which move in the opposite direction of yields, to rise. Bond price increases
supplemented coupon interest income, so that for the twelve month period, the
unmanaged Lehman Brothers Government Bond Index total return was +15.38%.
In this environment, the Fund's NAV (net asset value) rose from $8.43/$8.42 to
$8.70/$8.71 (for Class A/B shares, respectively), the SEC 30-day yield fell
from 7.69%/7.30% to 5.24%/4.73%, and the total return was +11.77%/+11.19%. In
comparison, the Morningstar Government Bond-General fund average total return
which covers 347 funds was +12.25%. The enclosed interview with the Fund's Sub-
Adviser contains more information about the Fund's performance and investment
strategy.
FUND DISTRIBUTION RATE
The Fund follows a managed dividend distribution policy which allows payouts
to be somewhat constant, so that those shareholders receiving their dividends
in cash have some predictability to their monthly checks. While the Fund
maintained its dividend at the same level throughout 1995, the decline in
overall interest rates and changes in the portfolio to meet the Fund's long-
term performance objectives, have resulted in lower than anticipated income
from the portfolio. Because of this, the Fund expects to report a return of
capital of approximately $0.15 per share for the calendar year 1995.
- --------------------------------------------------------------------------------
<PAGE>
4 Investors Trust Government Fund
- -------------------------------------------------------------------------------
We recognize that many shareholders depend on a stable dividend to support
their monthly income. However, it is also important that the Fund's
distributions correspond to its taxable income. Over the long term, if the Fund
were to continue returning a high level of capital, the NAV and the overall
value of your investment would decrease. Rather than maintaining a distribution
rate in excess of the Fund's income, which forces all shareholders to receive a
return of capital, the dividend distribution rate will, in all likelihood, be
reduced sometime in 1996. You will receive advance notice of any change in the
Fund's distribution rate.
[PERFORMANCE CHART APPEARS HERE]
Performance of a $10,000 investment since inception of the Investors Trust
Government Fund A Shares (9/93)
MONTH ITGOVA LBGBI MCBG
---------------------------------------------------------
Aug 1993 $10,000 $10,000 $10,000
Sep 1993 $9,903 $10,038 $10,026
Oct 1993 $9,940 $10,076 $10,051
Nov 1993 $9,847 $9,965 $9,970
Dec 1993 $9,910 $10,004 $10,014
Jan 1994 $10,084 $10,141 $10,115
Feb 1994 $9,853 $9,926 $9,954
Mar 1994 $9,609 $9,703 $9,758
Apr 1994 $9,480 $9,626 $9,672
May 1994 $9,220 $9,614 $9,650
Jun 1994 $9,162 $9,592 $9,624
Jul 1994 $9,305 $9,768 $9,755
Aug 1994 $9,248 $9,770 $9,763
Sep 1994 $9,084 $9,632 $9,648
Oct 1994 $9,029 $9,626 $9,632
Nov 1994 $8,980 $9,608 $9,599
Dec 1994 $9,060 $9,667 $9,651
Jan 1995 $9,187 $9,847 $9,801
Feb 1995 $9,921 $10,058 $9,993
Mar 1995 $9,365 $10,122 $10,043
Apr 1995 $9,470 $10,254 $10,153
May 1995 $9,780 $10,668 $10,471
Jun 1995 $9,842 $10,750 $10,530
Jul 1995 $9,806 $10,710 $10,502
Aug 1995 $9,904 $10,835 $10,610
Sep 1995 $9,979 $10,939 $10,695
Oct 1995 $10,091 $11,106 $10,821
- ----------------------------------------------------------------------
Investors Trust Government Fund - A shares (ending value: ($10,091)
Lehman Brothers Government Bond Index (ending value: ($11,106)
Morningstar Government Bond - General Fund Average (ending value: $10,821)
- --------------------------------------------------------------------------------
Performance of a $10,000 investment since inception of the Investors Trust
Government Fund B Shares (4/87)
- --------------------------------------------------------------------------------
[PERFORMANCE CHART APPEARS HERE]
MONTH ITGOVB LBGBI MCBG
---------------------------------------------------------
Mar 1987 $10,000 $10,000 $10,000
Apr 1987 $10,014 $9,754 $9,730
May 1987 $9,946 $9,712 $9,690
Jun 1987 $10,064 $9,826 $9,805
Jul 1987 $10,010 $9,805 $9,803
Aug 1987 $9,920 $9,750 $9,751
Sep 1987 $9,654 $9,561 $9,555
Oct 1987 $10,130 $9,933 $9,841
Nov 1987 $10,202 $9,982 $9,914
Dec 1987 $10,338 $10,100 $10,024
Jan 1988 $10,668 $10,431 $10,326
Feb 1988 $10,805 $10,542 $10,434
Mar 1988 $10,746 $10,434 $10,351
Apr 1988 $10,708 $10,378 $10,317
May 1988 $10,614 $10,305 $10,262
Jun 1988 $10,890 $10,532 $10,454
Jul 1988 $10,851 $10,461 $10,424
Aug 1988 $10,859 $10,482 $10,432
Sep 1988 $11,060 $10,710 $10,618
Oct 1988 $11,240 $10,899 $10,772
Nov 1988 $11,142 $10,770 $10,687
Dec 1988 $11,065 $10,811 $10,690
Jan 1989 $11,223 $10,948 $10,807
Feb 1989 $11,156 $10,860 $10,756
Mar 1989 $11,161 $10,926 $10,789
Apr 1989 $11,383 $11,160 $10,968
May 1989 $11,654 $11,423 $11,193
Jun 1989 $11,928 $12,805 $11,469
Jul 1989 $12,120 $11,054 $11,654
Aug 1989 $12,025 $11,851 $11,524
Sep 1989 $12,078 $11,902 $11,574
Oct 1989 $12,318 $12,210 $11,810
Nov 1989 $12,447 $12,329 $11,913
Dec 1989 $12,518 $12,350 $11,961
Jan 1990 $12,441 $12,174 $11,828
Feb 1990 $12,486 $12,199 $11,868
Mar 1990 $12,532 $12,196 $11,882
Apr 1990 $12,451 $12,089 $11,783
May 1990 $12,759 $12,426 $12,076
Jun 1990 $12,932 $12,623 $12,246
Jul 1990 $13,136 $12,784 $12,405
Aug 1990 $13,055 $12,607 $12,273
Sep 1990 $13,149 $12,728 $12,367
Oct 1990 $13,248 $12,935 $12,518
Nov 1990 $13,469 $13,222 $12,769
Dec 1990 $13,651 $13,427 $12,963
Jan 1991 $13,827 $13,571 $13,091
Feb 1991 $13,941 $13,648 $13,161
Mar 1991 $14,012 $13,718 $13,220
Apr 1991 $14,133 $13,869 $13,345
May 1991 $14,215 $13,923 $13,408
Jun 1991 $14,220 $13,903 $13,391
Jul 1991 $14,406 $14,069 $13,564
Aug 1991 $14,694 $14,395 $13,840
Sep 1991 $14,952 $14,697 $14,099
Oct 1991 $15,113 $14,827 $14,234
Nov 1991 $15,210 $14,975 $14,353
Dec 1991 $15,538 $15,486 $14,780
Jan 1992 $15,433 $15,244 $14,555
Feb 1992 $15,510 $15,303 $14,622
Mar 1992 $15,394 $15,215 $14,547
Apr 1992 $15,441 $15,311 $14,641
May 1992 $15,698 $15,594 $14,875
Jun 1992 $15,905 $15,817 $15,068
Jul 1992 $16,229 $16,215 $15,338
Aug 1992 $16,360 $16,366 $15,474
Sep 1992 $16,474 $16,597 $15,636
Oct 1992 $16,283 $16,358 $15,441
Nov 1992 $16,251 $16,330 $15,426
Dec 1992 $16,437 $16,605 $15,645
Jan 1993 $16,702 $16,958 $15,901
Feb 1993 $16,912 $17,297 $16,135
Mar 1993 $16,969 $17,354 $16,187
Apr 1993 $17,119 $17,488 $16,286
May 1993 $17,138 $17,469 $16,277
Jun 1993 $17,495 $17,857 $16,539
Jul 1993 $17,549 $17,966 $16,613
Aug 1993 $17,825 $18,366 $16,872
Sep 1993 $17,754 $18,436 $16,916
Oct 1993 $17,826 $18,506 $16,959
Nov 1993 $17,630 $18,302 $16,822
Dec 1993 $17,732 $18,374 $16,895
Jan 1994 $18,014 $18,626 $17,067
Feb 1994 $17,590 $18,231 $16,795
Mar 1994 $17,160 $17,821 $16,465
Apr 1994 $16,918 $17,680 $16,318
May 1994 $16,442 $17,657 $16,281
Jun 1994 $16,328 $17,616 $16,237
Jul 1994 $16,572 $17,940 $16,458
Aug 1994 $16,461 $17,944 $16,472
Sep 1994 $16,158 $17,691 $16,279
Oct 1994 $16,047 $17,678 $16,251
Nov 1994 $15,969 $17,647 $16,196
Dec 1994 $16,100 $17,754 $16,283
Jan 1995 $16,296 $18,085 $16,537
Feb 1995 $16,563 $18,473 $16,860
Mar 1995 $16,631 $18,590 $16,945
Apr 1995 $16,807 $18,833 $17,131
May 1995 $17,346 $19,592 $17,667
Jun 1995 $17,445 $19,743 $17,766
Jul 1995 $17,370 $19,670 $17,720
Aug 1995 $17,534 $19,900 $17,901
Sep 1995 $17,655 $20,091 $18,045
Oct 1995 $17,843 $20,397 $18,258
----------------------------------------------------------------------
Investors Trust Government Fund - B shares (ending value: ($17,843)
Lehman Brothers Government Bond Index (ending value: ($20,397)
Morningstar Government Bond - General Fund Average (ending value: $18,258)
Past performance is not indicative of future results. Investment returns and
principal will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost.
- -------------------------------------------------------------------------------
<PAGE>
Investors Trust Government Fund 5
- --------------------------------------------------------------------------------
FROM THE SUB-ADVISER
--------------------
BLACKROCK FINANCIAL MANAGEMENT, INC.
PORTFOLIO MANAGERS: KEITH ANDERSON AND E.G. FISHER
MARKET OVERVIEW AND OUTLOOK
The dramatic rally in the capital markets changed the market landscape for
fixed income investors over the fiscal year ended October 31, 1995. As the
economy showed signs of a slowdown early in 1995, market participants endlessly
debated the direction of monetary policy and contested the likelihood that a
soft landing for the economy had been achieved. The specter of inflation
diminished as economic reports increasingly reflected slower economic growth
during the second quarter. With investor confidence in the value of fixed
income securities renewed, market demand accelerated.
The rally in the Treasury market began during the fourth quarter of 1994 and
continued through the third quarter of 1995. Over the past twelve months,
interest rates have fallen substantially. Yield levels on the five-year
Treasury declined from 7.48% to 5.81%, a decrease of 1.67%. During July and the
beginning of August, the rally was temporarily halted as strong economic data
dampened expectations for another reduction in the Fed funds target rate. As
the fourth calendar quarter began, the market for fixed income securities
appeared generally positive due to sluggish growth, low inflation and a
perceived Fed bias toward an ease, and by the end of October interest rates
returned to 1995 lows.
PORTFOLIO STRATEGIES
Consistent with BlackRock's emphasis on sector rotation and security
selection, there have been shifts in the Fund's portfolio holdings. The strong
performance of mortgage-backed securities relative to Treasuries was the most
significant factor affecting the Fund's performance over the past quarter. The
rally in Treasuries faltered upon signs of a recovering economy and the
accompanying potential for increased inflationary pressure. Investor concerns
over accelerating mortgage prepayments subsided and mortgage-backed security
prices appreciated.
The most significant shift in the Fund's portfolio has been an increased
allocation to the mortgage sector and a corresponding decrease in Treasury
exposure. On April 1, 1995, approximately 23% of the portfolio was invested in
mortgage-backed securities. By the end of October, this allocation was
increased to approximately 69%.
Purchases since April initially emphasized slight premium pass-throughs,
particularly seasoned issues which had already weathered several refinancing
cycles. These securities appeared cheap given actual prepayment experience as
well as projected refinancing. Mortgage purchases also included adjustable-rate
mortgages (ARMs) where a spike in supply created a favorable technical
environment for prospective buyers.
The Fund benefited from its bias toward slight premium coupon pass-throughs as
prepayment fears were allayed by the break in the Treasury market rally.
Premium coupon securities experienced significant price appreciation, rising to
levels that BlackRock believes are fairly rich given the potential for
underperformance should Treasury yields move lower. Therefore, BlackRock has
begun to lighten exposure to premiums in favor of lower coupon pass-throughs.
- --------------------------------------------------------------------------------
<PAGE>
6 Investors Trust Government Fund
- --------------------------------------------------------------------------------
Allocation to adjustable rate mortgages (ARMs) increased from less than 1% as
of April 1, 1995, to 17% as of October 31. Specifically, the Fund purchased
primarily GNMA ARMs, as these securities offered excellent value relative to
other short duration alternatives. During the past several weeks, GNMA ARMs
have rallied significantly, and we have been selling into the strength of
market demand.
While intermediate interest rates ended October near their lows for 1995, the
interim months reflected dramatic changes in the interest rate environment as
market participants reacted to the release of economic data, movements in the
dollar and changing expectations of Treasury supply. The positioning of the
Fund relative to its duration and yield curve exposure addressed these shifts
in the Treasury yield curve.
DURATION POSITIONING
The duration of the Fund was slightly longer than that of its benchmark, 4.25
years, as of October 31, 1995. This reflected a positive outlook for fixed
income securities due to slow growth, low inflation and the potential Fed
easing. The duration of the portfolio was shortened by almost a quarter of a
year by late July as data began to suggest stronger than anticipated economic
growth and dampened expectations of further monetary easing. This benefited the
Fund relative to its benchmark during the sell-off in August that took Treasury
yields to their highest levels of the quarter. Portfolio duration was extended
in September and October as the market gained back much of its lost ground due
to a rally in the dollar versus the yen and new economic data which suggested
the economy was not as robust as previously thought.
IN CLOSING
The outcome of the Federal budget battle may well determine the course of the
bond market for the remainder of 1995. The Federal Reserve appears biased to
ease but is apparently awaiting the outcome of the budget talks before
adjusting monetary policy as a reward for any fiscal restraint. Additionally,
uncertainty surrounding the potential default on payment of certain US
Government securities could also heighten investor concerns.
While we remain attuned to the possibility of a rejuvenated economy during the
fourth quarter of 1995, the possibility of accompanying inflationary pressure
and the ramifications of a default by the Federal Government, we believe that
the fixed income markets offer many pockets of value to investors in the coming
months.
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Government Fund 7
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1995
<TABLE>
<CAPTION>
% OF NET PRINCIPAL MARKET
ASSETS AMOUNT ($) VALUE ($)
-------- ----------- --------------
<S> <C> <C> <C>
LONG-TERM GOVERNMENT SECURITIES 101.6
FEDERAL HOME LOAN MORTGAGE CORPORATION (a)
(b)--26.0
5.500%, with a maturity date of December
1, 2008.................................. 4,802,065 4,606,957
6.500%, with various maturity dates to
November 1, 2025 (d)..................... 146,897,153 142,581,315
7.000%, with various maturity dates to
October 1, 2025.......................... 111,230,063 110,741,434
7.500%, with various maturity dates to
September 1, 2010 (d).................... 30,673,175 31,267,314
8.000%, with various maturity dates to
October 1, 2025 (d)...................... 40,007 41,006
9.000%, with a maturity date of December
1, 2014.................................. 4,373,420 4,554,174
10.000%, with various maturity dates to
December 1, 2020......................... 896,754 972,251
10.500%, with various maturity dates to
August 1, 2019........................... 385,464 415,012
12.000%, with a maturity date of August 1,
2014..................................... 6,877 7,464
12.500%, with various maturity dates to
September 1, 2014........................ 177,625 204,282
13.000%, with a maturity date of January
1, 2013.................................. 47,625 52,965
--------------
Total Federal Home Loan Mortgage
Corporation
(Cost $292,983,025)................ 295,444,174
--------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
ADJUSTABLE RATE MORTGAGES (a) (b)--12.9
6.500%, with various maturity dates to
May 20, 2025............................. 121,530,636 123,164,007
7.500%, with various maturity dates to
June 20, 2025............................ 23,538,933 24,086,920
--------------
Total Government National Mortgage
Association
Adjustable Rate Mortgages
(Cost $145,638,745)................. 147,250,927
--------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (a)
(b)--11.1
7.000%, with various maturity dates to
November 1, 2010......................... 64,142,888 64,623,960
8.000%, with a maturity date of September
1, 2001.................................. 10,033,415 10,277,929
8.500%, with various maturity dates to
June 1, 2025 (d)......................... 357,761 370,615
9.000%, with various maturity dates to
July 1, 2021............................. 3,854,741 4,051,341
10.000%, with various maturity dates to
June 1, 2025............................. 42,999,381 47,044,655
10.500%, with a maturity date of April 1,
2016..................................... 44,807 49,260
--------------
Total Federal National Mortgage
Association
(Cost $124,732,855)................ 126,417,760
--------------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
8 Investors Trust Government Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1995, CONTINUED
<TABLE>
<CAPTION>
% OF NET PRINCIPAL MARKET
ASSETS AMOUNT ($) VALUE ($)
-------- ----------- --------------
<S> <C> <C> <C>
FEDERAL NATIONAL MORTGAGE ASSOCIATION
MEDIUM TERM NOTES--11.1
10.450%, with a maturity date of October
13, 2015................................. 10,000,000 14,183,900
11.875%, with a maturity date of May 19,
2000..................................... 40,000,000 49,106,000
12.000%, with a maturity date of November
13, 2000 (f)............................. 50,000,000 62,851,500
--------------
Total Federal National Mortgage
Association
Medium Term Notes
(Cost $120,542,600)................. 126,141,400
--------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (a)
(b)--10.3
7.000%, with various maturity dates to
October 15, 2025......................... 98,052,408 97,377,806
8.000%, with various maturity dates to
August 15, 2017.......................... 13,100,766 13,627,419
8.500%, with various maturity dates to
April 15, 2025........................... 1,750,443 1,831,628
9.000%, with a maturity date of May 15,
2013..................................... 322,801 343,683
9.500%, with various maturity dates to
December 15, 2017........................ 3,809,192 4,113,514
10.500%, with various maturity dates to
December 15, 2019........................ 135,536 150,075
12.500%, with a maturity date of April 15,
2015..................................... 16,326 19,092
--------------
Total Government National Mortgage
Association
(Cost $115,517,878)................ 117,463,217
--------------
UNITED STATES TREASURY NOTES--8.1
5.625%, with a maturity date of June 30,
1997 (e)................................. 2,730,000 2,730,000
5.875%, with a maturity date of June 30,
2000..................................... 150,000 150,375
6.000%, with a maturity date of August
31, 1997 (e)............................. 8,900,000 8,955,625
6.125%, with a maturity date of September
30, 2000................................. 19,500,000 19,740,630
6.250%, with a maturity date of August
31, 2000................................. 3,800,000 3,865,322
7.250%, with a maturity date of February
15, 1998................................. 9,950,000 10,279,544
8.000%, with a maturity date of October
15, 1996 (e)............................. 31,000,000 31,673,320
8.750%, with a maturity date of October
15, 1997................................. 5,500,000 5,812,785
8.875%, with a maturity date of November
15, 1997................................. 2,220,000 2,355,975
9.375%, with a maturity date of April 15,
1996 (e)................................. 6,960,000 7,075,258
--------------
Total United States Treasury Notes
(Cost $92,953,776)................. 92,638,834
--------------
UNITED STATES TREASURY BONDS--6.1
7.625%, with a maturity date of February
15, 2025................................. 28,210,000 32,750,117
10.625%, with a maturity date of August
15, 2015................................. 25,000,000 36,894,500
--------------
Total United States Treasury Bonds
(Cost $65,415,075)................. 69,644,617
--------------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Government Fund 9
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1995, CONTINUED
<TABLE>
<CAPTION>
% OF NET PRINCIPAL MARKET
ASSETS AMOUNT ($) VALUE ($)
-------- ----------- --------------
<S> <C> <C> <C>
FINANCING CORPORATION--3.8
9.650%, with a maturity date of November
2, 2018................................. 2,020,000 2,694,175
10.700%, with a maturity date of October
6, 2017................................. 28,165,000 40,724,900
--------------
Total Financing Corporation
(Cost $37,252,781)................ 43,419,075
--------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
ADJUSTABLE RATE MORTGAGES (a) (b)--3.5
6.330%, with a maturity date of April 1,
2019.................................... 693,334 693,009
6.525%, with a maturity date of January
1, 2025................................. 4,748,243 4,895,154
6.767%, with a maturity date of February
1, 2022................................. 1,481,994 1,497,778
6.832%, with a maturity date of October
1, 2021................................. 1,182,847 1,195,006
7.301%, with a maturity date of January
1, 2025................................. 30,773,824 31,754,893
--------------
Total Federal National Mortgage
Association
Adjustable Rate Mortgages
(Cost $39,789,881)................. 40,035,840
--------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
REAL ESTATE MORTGAGE INVESTMENT CONDUIT
[REMIC] (b) (c)--3.1
8.250%, with a maturity date of March
25, 2021
[Series 1991-G5 Class Z]................ 9,265,313 9,702,451
8.400%, with a maturity date of August
25, 2019
[Series 1989-54 Class E]................ 10,800,000 11,427,696
8.500%, with a maturity date of January
25, 2011
[Series 1991-160 Class VE].............. 6,452,800 6,821,771
9.500%, with a maturity date of December
25, 2018
[Series 1988-30 Class D]................ 6,594,225 7,064,063
--------------
Total Federal National Mortgage
Association
Real Estate Mortgage Investment Conduit
(Cost $33,670,842)................. 35,015,981
--------------
SMALL BUSINESS ADMINISTRATION NOTES (b)--
2.9
6.950%, with a maturity date of
September 1, 2015....................... 12,188,000 12,328,924
7.350%, with a maturity date of August
1, 2005................................. 12,580,000 13,037,990
8.100%, with a maturity date of March 1,
2015.................................... 4,933,020 5,312,246
8.500%, with a maturity date of January
1, 2015................................. 2,417,530 2,631,330
--------------
Total Small Business Administration Notes
(Cost $32,586,847)................ 33,310,490
--------------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
10 Investors Trust Government Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1995, CONTINUED
<TABLE>
<CAPTION>
% OF NET PRINCIPAL MARKET
ASSETS AMOUNT ($) VALUE ($)
-------- ----------- --------------
<S> <C> <C> <C>
FEDERAL HOME LOAN MORTGAGE CORPORATION
MULTICLASS MORTGAGE PARTICIPATION
CERTIFICATE (b) (c)--1.6
9.500%, with various maturity dates to
May 15, 2020
[Series 38 Class C]..................... 7,292,858 7,486,557
[Series 38 Class D]..................... 10,000,000 10,851,323
--------------
Total Federal Home Loan Moatgage
Corporation
Multiclass Mortgage Participation
Certificate
(Cost $18,153,655)................. 18,337,880
--------------
MULTIFAMILY PROJECT SECURITIES (b)--0.7
8.750%, with a maturity date of June 25,
2035.................................... 4,200,100 4,372,042
9.250%, with a maturity date of March 1,
2037.................................... 3,051,900 3,141,549
--------------
Total Multifamily Project Securities
(Cost $7,423,435).................... 7,513,591
--------------
FEDERAL HOME LOAN MORTGAGE CORPORATION
ADJUSTABLE RATE MORTGAGES (a) (b)--0.4
7.144%, with a maturity date of April 1,
2029
(Cost $4,926,376)................. 4,816,500 4,924,871
--------------
Total Long-Term Government Securities
(Cost $1,131,587,771)............. 1,157,558,657
--------------
REPURCHASE AGREEMENT 2.2
Repurchase agreement with Nikko
Securities Company, dated 10/31/95 at
5.90% to be repurchased at $24,604,032
on 11/1/95, collateralized by
$25,625,000 Federal National Mortgage
Association REMIC Series 1993-82 Class
D,
6.35%, 3/25/19, valued at $25,112,500.
(Cost $24,600,000)................... 24,600,000 24,600,000
--------------
FEDERAL HOME LOAN BANK DISCOUNT NOTE 0.5
5.460%, with a maturity date of February
29, 1996
(Cost $6,082,251)................. 6,195,000 6,082,251
----- --------------
SUMMARY
Total investment portfolio before
outstanding options purchased on futures
contracts
(Cost $1,162,270,022)................ 104.3 1,188,240,908
--------------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Government Fund 11
- -------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1995, CONTINUED
<TABLE>
<CAPTION>
% OF NET MARKET
ASSETS VALUE ($)
-------- --------------
<S> <C> <C>
OUTSTANDING OPTIONS PURCHASED ON
FUTURES CONTRACTS 0.1
Two hundred seventy two contracts of call options
purchased on United States Treasury Bonds at $114
expiring 2/17/96 (Premiums paid $766,632).......... 1,113,500
----- --------------
Total investments, including outstanding options
purchased on future contracts (Cost
$1,163,036,654) (Note 3)........................... 104.4 1,189,354,408
Other assets and liabilities, net................... (4.4) (50,212,131)
----- --------------
NET ASSETS............................................ 100.0 $1,139,142,277
===== ==============
</TABLE>
- --------
NOTES:
(a) The investments in mortgage-backed securities are interests in separate
pools of mortgages. All such issues which have similar coupon rates, have
been aggregated for financial statement presentation purposes.
(b) Effective maturites for all securities (except for repurchase agreements,
Federal National Mortgage Association Medium Term Notes, Financing
Corporation, and securities issued by the United States Treasury) are
expected to be shorter than indicated due to prepayments.
(c) Risks associated with Collateral Mortgage Obligations ("CMO's")--The net
asset value of the Fund is sensitive to interest rate fluctuations
associated with CMO's. CMO's are obligations collateralized by a portfolio
of mortgages or mortgage-related securities. Payments of principal and
interest on the mortgages are passed through to the holder of the CMO's on
the same schedule as they are received, although certain classes of CMO's
have priority over others with respect to the receipt of prepayments on
the mortgages. Therefore, an investment in CMO's may be subject to a
greater or lesser risk of prepayments than other types of mortgage-related
securities.
(d) To be announced ("TBA" Forward Commitment Transactions) securities (see
Note 2).
(e) Segregated as collateral for TBA Securities (see Note 2).
(f) Collateral for open futures and options contracts (see Note 3).
At October 31, 1995, open futures contracts purchased were as follows:
<TABLE>
<CAPTION>
EXPIRATION FACE UNREALIZED
PURCHASED DESCRIPTION DATE AMOUNT GAIN/(LOSS)
--------- -------------------------------------------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
2,624 US Treasury Note Futures Dec 95 $278,008,422 $ 6,089,236
============ ===========
</TABLE>
At October 31, 1995, open futures contracts sold short were as follows:
<TABLE>
<CAPTION>
SOLD
---------
<S> <C> <C>
598 US Treasury Bond Futures Dec 95 66,306,856 (3,707,242)
476 US Treasury Note Futures Dec 95 51,378,488 (1,719,349)
----- ------------ -----------
1,074 Net unrealized appreciation $117,685,344 $(5,426,591)
===== ============ ===========
Unrealized appreciation on futures contracts $ 662,645
===========
</TABLE>
- -------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
12 Investors Trust Government Fund
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1995
<TABLE>
<S> <C>
ASSETS
Investments, at market value (identified cost, $1,163,036,654)
(Notes 2 and 3)............................................... $1,189,354,408
Receivables:
Fund shares sold............................................. 211,323
Interest..................................................... 12,246,952
Investments sold............................................. 13,388
Investments sold, delayed delivery........................... 33,660,746
Prepaid expenses (Note 2)...................................... 68,801
--------------
Total assets................................................... 1,235,555,618
--------------
LIABILITIES
Payables:
Fund shares redeemed......................................... 1,584,043
Investments purchased........................................ 12,241,917
Investments purchased, delayed delivery...................... 77,618,385
Dividends.................................................... 2,160,157
Adviser (Note 4)............................................. 91,815
Daily variation margin on open futures contracts (Notes 2 and
3).......................................................... 131,328
Accrued distribution fee (Note 4)............................ 1,445,480
Accrued management fee (Note 4).............................. 589,043
Other accrued expenses and payables.......................... 551,173
--------------
Total liabilities.............................................. 96,413,341
--------------
NET ASSETS, AT MARKET VALUE.................................... $1,139,142,277
==============
NET ASSETS
Net assets consist of:
Accumulated distributions in excess of net investment income
(Note 2).................................................... $ (2,160,157)
Accumulated net realized loss................................ (196,362,686)
Unrealized appreciation on investments (Notes 2 and 3)....... 25,970,886
Unrealized appreciation on options purchased (Notes 2 and 3). 346,868
Unrealized appreciation on futures contracts (Notes 2 and 3). 662,645
Shares of beneficial interest................................ 1,310,684,721
--------------
NET ASSETS, AT MARKET VALUE.................................... $1,139,142,277
==============
CLASS A:
NET ASSET VALUE and redemption price per share ($26,888,750
divided by 3,089,166 outstanding shares of beneficial interest $8.70
of no par value).............................................. =====
Maximum offering price per share (100/95.50 of $8.70).......... $9.11
=====
CLASS B:
NET ASSET VALUE and offering price per share ($1,112,253,527
divided by 127,682,638 outstanding shares of beneficial $8.71
interest of no par value)..................................... =====
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Government Fund 13
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED OCTOBER 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest......................................................... $ 93,738,817
------------
EXPENSES:
Management fee (Note 4)........................................ 7,200,544
Distribution fees (Note 4)..................................... 11,058,477
Transfer agent fee............................................. 1,255,064
Shareholder reports............................................ 366,033
Custodian fee.................................................. 341,148
Professional fees.............................................. 187,094
Insurance...................................................... 70,567
Registration fees.............................................. 64,642
Trustees fees and expenses (Note 4)............................ 22,535
Other.......................................................... 307,312
------------
Total expenses................................................... 20,873,416
------------
Net investment income............................................ 72,865,401
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss from investment transactions................. (91,789,975)
Net realized gain from options purchased/written............... 3,752,499
Net realized loss from futures contracts....................... (19,046,779)
Net increase in unrealized appreciation of investments during
the year...................................................... 162,482,101
Net decrease in unrealized appreciation of options during the
year.......................................................... (103,818)
Net decrease in unrealized appreciation of futures during the
year.......................................................... (521,730)
------------
Net gain on investments.......................................... 54,772,298
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............. $127,637,699
============
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
14 Investors Trust Government Fund
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FISCAL YEARS
ENDED OCTOBER 31,
------------------------------
1995 1994
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income........................ $ 72,865,401 $ 88,505,316
Net realized loss from investment
transactions................................ (91,789,975) (71,597,715)
Net realized gain (loss) from options
purchased/written........................... 3,752,499 (7,111,572)
Net realized loss from futures contracts..... (19,046,779) (6,744,344)
Net increase in unrealized appreciation
(depreciation) of investments during the
year........................................ 162,482,101 (154,403,365)
Net increase (decrease) in unrealized
appreciation of option contracts during the
year........................................ (103,818) 3,220,560
Net increase (decrease) in unrealized
appreciation of futures contracts during the
year........................................ (521,730) 2,375,000
-------------- --------------
Net increase (decrease) in net assets resulting
from operations............................... 127,637,699 (145,756,120)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A ($.58 and $.70 per share).......... (1,526,928) (1,029,248)
Class B ($.52 and $.60 per share).......... (70,538,669) (87,476,068)
Net realized gains
Class A ($.03 per share)................... -- (13,371)
Class B ($.03 per share)................... -- (3,726,166)
Tax return of capital (Note 2)
Class A ($.11 and $.08 per share).......... (350,222) (213,792)
Class B ($.11 and $.11 per share).......... (15,756,626) (16,234,606)
Increase (decrease) in net assets from Fund
share transactions............................ (174,169,240) 184,228,159
-------------- --------------
DECREASE IN NET ASSETS......................... (134,703,986) (70,221,212)
Net assets at beginning of year................ 1,273,846,263 1,344,067,475
-------------- --------------
NET ASSETS AT END OF YEAR (including
accumulated distributions in excess of net
investment income of $2,160,157 and
$2,941,537, respectively)..................... $1,139,142,277 $1,273,846,263
============== ==============
</TABLE>
(CONTINUED)
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Government Fund 15
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
<TABLE>
<CAPTION>
FOR THE FISCAL YEARS ENDED OCTOBER 31,
------------------------------------------------------
1995 1994
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
FUND SHARE INFORMATION
Class A shares
Sold.................. 1,000,291 $ 8,609,994 2,602,180 $ 24,716,430
Issued in reinvestment
of distributions..... 88,729 756,378 53,488 482,602
Redeemed.............. (549,320) (4,698,858) (251,129) (2,232,483)
----------- ------------- ----------- -------------
Net increase.......... 539,700 $ 4,667,514 2,404,539 $ 22,966,549
=========== ============= =========== =============
Class B shares
Sold.................. 3,226,626 $ 27,416,014 28,961,065 $ 275,032,093
Issued in reinvestment
of distributions..... 5,183,091 44,126,875 6,172,102 57,099,358
Redeemed.............. (29,418,333) (250,379,643) (18,910,289) (170,869,841)
----------- ------------- ----------- -------------
Net increase
(decrease)........... (21,008,616) $(178,836,754) 16,222,878 $ 161,261,610
=========== ============= =========== =============
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
16 Investors Trust Government Fund
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS--CLASS A
The financial highlights set forth below include selected data for a Class A
share outstanding throughout each period and other information derived from the
financial statements.
<TABLE>
<CAPTION>
FOR THE FISCAL YEARS
ENDED OCTOBER 31,
----------------------
1995 1994 1993 +
------ ------ ------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.................... $ 8.43 $10.14 $10.32
------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income................................... .58 .70 .12
Net realized and unrealized gain (loss) on securities... .38 (1.60) (.18)
------ ------ ------
Total from Investment Operations........................ .96 (.90) (.06)
------ ------ ------
LESS DISTRIBUTIONS FROM
Net investment income................................... (.58) (.70) (.12)
Net realized gains...................................... -- (.03) --
Tax return of capital................................... (.11) (.08) --
------ ------ ------
Total Distributions..................................... (.69) (.81) (.12)
------ ------ ------
NET ASSET VALUE, END OF PERIOD.......................... $ 8.70 $ 8.43 $10.14
====== ====== ======
TOTAL RETURN (%) **..................................... 11.77 (9.17) (.60)
RATIOS/SUPPLEMENTAL DATA
Ratios (%):
Expenses to average daily net assets................... 1.01 .99 .95*
Net investment income to average daily net assets...... 6.78 7.09 6.81*
Portfolio turnover..................................... 315.71 128.82 75.96*
Net Assets, end of period (millions).................... $27 $22 $1
</TABLE>
- --------
+ For the period September 3, 1993 (commencement of operations) to October 31,
1993.
* Annualized.
** A sales charge of 4.5% (maximum) was not reflected in total return
calculations. Periods less than one year are not annualized.
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Government Fund 17
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS--CLASS B
The financial highlights set forth below include selected data for a Class B
share outstanding throughout each period and other information derived from
the financial statements.
<TABLE>
<CAPTION>
FOR THE FISCAL YEARS ENDED OCTOBER 31,
----------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 +
------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $ 8.42 $10.14 $ 9.95 $ 9.98 $ 9.54 $ 9.70 $ 9.71 $ 9.62 $10.00
------ ------ ------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income
(a).................... .51 .60 71 .73 .72 .81 .88 87 .42
Net realized and
unrealized gains
(losses) on securities. .41 (1.58) .20 .03 .56 (.11) (.01) .14 (.36)
------ ------ ------ ------ ------ ------ ------ ------ ------
Total from Investment
Operations............. .92 (.98) .91 .76 1.28 .70 .87 1.01 .06
------ ------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS FROM
Net investment income... (.52) (.60) (.71) (.73) (.72) (.81) (.88) (.87) (.42)
In excess of net
investment income...... -- -- (.01) -- -- -- -- -- --
Net realized gains...... -- (.03) -- (.06) (.11) -- -- (.05) (.02)
Tax return of capital... (.11) (.11) -- -- (.01) (.05) -- -- --
------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions..... (.63) (.74) (.72) (.79) (.84) (.86) (.88) (.92) (.44)
------ ------ ------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF
PERIOD................. $ 8.71 $ 8.42 $10.14 $ 9.95 $ 9.98 $ 9.54 $ 9.70 $ 9.71 $ 9.62
====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN (%) **..... 11.19 (9.98) 9.48 7.74 14.08 7.55 9.59 10.96 .69
RATIOS/SUPPLEMENTAL DATA
Ratios (%):
Expenses to average
daily net assets (a).. 1.76 1.76 1.73 1.64 1.81 1.59 .89 .50 .50*
Net investment income
to average daily net
assets................ 6.08 6.45 6.96 7.08 7.11 8.32 9.17 9.20 8.17*
Portfolio turnover..... 315.71 128.82 75.96 101.31 111.97 50.44 37.23 66.04 159.76*
Net Assets, end of
period (millions)...... $1,112 $1,252 $1,343 $786 $213 $72 $57 $35 $7
(a) Management fee
waived through
December 31, 1988.... -- -- -- -- -- -- $0.01 $0.06 $0.03
Reimbursement for
expenses from Adviser. -- -- -- -- -- $0.03 $0.10 $0.10 $0.20
Operating expenses
ratio including
reimbursement for
expenses and
management fees waived
(%)................... 1.76 1.76 1.73 1.64 1.81 1.95 2.08 3.00 5.75*
</TABLE>
- --------
+ For the period April 22, 1987 (commencement of operations) to October 31,
1987.
* Annualized.
** A contingent deferred sales charge of 5% the first year, declining by 1%
per year for five years, was not reflected in total return calculations.
Periods less than one year are not annualized.
- -------------------------------------------------------------------------------
<PAGE>
18 Investors Trust Government Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION. Investors Trust (the "Trust") is organized as a Massachusetts
Business Trust and is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company. The Trust is
a series of funds, currently comprised of five investment portfolios, four of
which commenced operations as of September 8, 1993 and one, the Government
Fund, which commenced operations as of April 22, 1987. These financial
statements report on the Government Fund, (the "Fund"). Financial statements
for the other funds are presented separately.
Under the Trust's Multiple Class Distribution System (the "Multiple Class
Arrangement"), the Fund currently offers to the general public two classes of
shares of beneficial interest, no par value, which may be purchased at a price
equal to the next determined net asset value per share plus a sales charge
which, at the election of the purchaser, may be imposed (i) at the time of
purchase (Class A shares) or (ii) on a deferred basis (Class B shares).
Class B shares, including a pro rata portion of the shares received as
distributions with respect to such shares, will automatically convert to Class
A shares of the Fund at the end of eight years following the issuance of the
Class B shares. The date of issuance for purposes of conversion of shares which
were held on September 7, 1993 shall be the original date of acquisition of
such shares.
2. SIGNIFICANT ACCOUNTING POLICIES. The policies described below are followed
consistently by the Fund in the preparation of its financial statements in
conformity with generally accepted accounting principles.
Securities Valuation. Long-term debt securities for which market quotations
are readily available are stated at market value. A security (including an
option) listed or traded on an exchange is valued at its last sale price prior
to the time when assets are valued. Lacking any sales on that day, the security
is valued at the mean between the current closing bid and asked prices. Other
securities are, in general, valued at the last bid quotation if there are
market quotations readily available, or in the absence of such market
quotations, then at the fair value thereof as determined by or under authority
of the Trustees of the Trust utilizing such pricing services as may be deemed
appropriate. Investments in certain long-term debt securities not traded in an
organized market are valued on the basis of valuations furnished by independent
pricing services or broker/dealers which utilize information with respect to
market transactions and other information in such securities or comparable
securities. Short-term investments are valued at original cost plus accreted
discount or accrued interest which approximates market value.
Futures Contracts. The Fund may purchase and sell interest rate futures
contracts ("futures contracts") as a hedge against changes in interest rates.
Upon the entering of a futures contract, the Fund is required to deposit with a
broker an amount ("initial margin") equal to a certain percentage of the
purchase price indicated in the futures contract. Subsequent payments
("variation margin") are made or received by the Fund each day, dependent on
the daily fluctuations in the value of the unrealized gains and losses by the
Fund. If the Fund enters into a closing transaction, the Fund will realize, for
book purposes, a gain or loss equal to the difference between the value of the
futures contract to sell and the futures contract to buy. The Fund may be
subject to risk upon entering into futures contracts resulting from the
imperfect correlation of prices between the futures and securities markets.
Options on Futures Contracts. The Fund may also purchase or write call and put
options on listed futures as a hedge against changes in interest rates. Options
are valued in accordance with the security valuation policies described above.
Transactions in options on futures contracts involve similar risks to those on
futures contracts.
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Government Fund 19
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED
Securities Transactions and Related Investment Income. Sales and purchases
are accounted for on trade date. Realized securities gains or losses are
determined using the identified cost method for both financial and tax
reporting purposes. Interest income is accrued pro rata to maturity. Original
issue discount is accreted for financial and tax accounting purposes.
Securities Purchased on a When-Issued Basis. The Fund may enter into firm
commitment agreements ("TBA" or "when-issued" purchases) for the purchase of
securities at an agreed-upon price on a specified future date. The Fund will
not enter into such agreements for the purpose of investment leverage.
Liability for the purchase price and all the rights and risks of ownership of
the securities accrue to the Fund at the time it becomes obligated to purchase
the securities, although delivery and payment occur at a later date, generally
within 45 days (but not to exceed 120 days) of the date of the commitment to
purchase. Accordingly, if the market price of the security should decline, the
effect of the agreement would be to obligate the Fund to purchase the security
at a price above the current market price on the date of delivery and payment.
During the time the Fund is obligated to purchase such securities, it will
maintain with the Custodian a segregated account with U.S. government
securities or cash or cash equivalents (or a receivable for investments sold
in connection therewith) of an aggregate current value sufficient to make
payment for the securities. At October 31, 1995, TBA securities in the Fund
totalled $44,026,280.
Repurchase Agreements. The Fund may enter into repurchase agreements in order
to generate additional income. Each repurchase agreement entered into by the
Fund will provide that the value of the collateral underlying the repurchase
agreement will always be at least 102% of the repurchase price, including
accrued interest, except for repurchase agreements entered into with a
broker/dealer or bank whose unsecured debt is rated AAA or whose commercial
paper is rated A-1+ by Standard and Poor's in which case the value of the
collateral will always be at least 100% of the repurchase price, including
accrued interest. The Fund will not enter into a repurchase agreement having
more than seven days remaining to maturity if, as a result, such agreements,
together with any other securities which are not readily marketable, would
exceed 10% of the net assets of the Fund. In addition, not more than one-third
of the current market value of the Fund's total assets shall constitute
secured "loans" by the Fund under repurchase agreements.
Federal Income Taxes. As a Massachusetts Business Trust, the Fund is a
separate corporate taxpayer and determines its net investment income and
capital gains (or losses) and the amounts to be distributed to the Fund's
shareholders without regard to the income and capital gains (or losses) of the
other funds. It is the intent of the Fund to comply with the requirements of
the Internal Revenue Code which are applicable to regulated investment
companies and to distribute substantially all of its taxable income to its
shareholders. Accordingly, the Fund paid no federal taxes and no federal
income or excise tax provision was required. Distributions in excess of
taxable income are deemed to be a return of capital. For Federal income tax
purposes, any futures contracts or options on futures contracts which remain
open at fiscal year-end are marked-to-market and the resultant net gain or
loss is included in Federal taxable income. As of October 31, 1995, the Fund
has net tax basis capital loss carryforwards of $195,153,413, which may be
applied against any realized taxable gains until their expiration dates of
October 31, 2002 ($87,661,793) and October 31, 2003 ($107,491,620).
Distributions of Income and Gains. The Fund will declare a distribution each
day in an amount based on periodic projections of its future net investment
income and will pay such distributions monthly. Consequently, the amount
- --------------------------------------------------------------------------------
<PAGE>
20 Investors Trust Government Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED
of each daily distribution may differ from actual net investment income.
Distributions from net short-term realized gains are declared and paid monthly.
Long-term realized gains in excess of any available capital loss carryforward
would be taxable to the Fund if not distributed and, therefore, will be
declared and paid to its shareholders annually.
Capital Accounts. The Fund reports the undistributed net investment income
(accumulated net investment loss) and accumulated net realized gain (loss)
accounts on a basis approximating amounts available for future tax
distributions (or to offset future taxable realized gains when a capital loss
carryforward is available). Accordingly, the Fund may periodically make
reclassifications among certain capital accounts without impacting the net
asset value of the Fund.
Prepaid Expenses. Costs incurred for registration of shares are amortized on a
straight-line basis over the lesser of, the duration of the registration period
or 12 months. Insurance costs are amortized on a straight-line basis over the
duration of the insurance period.
Expenses. Expenses such as management fees, distribution fees, custodian fees,
transfer agent fees, and registration fees are charged directly to the Fund,
while indirect expenses, such as shareholder reports, professional fees,
trustee fees and expenses, and insurance are allocated among the funds
principally based on their relative net assets. Portfolio-level expenses are
allocated to each class of shares based upon the relative percentage of current
net assets of dividend-eligible shares. All expenses that are directly
attributable to a specific class of shares, such as legal expenses and
Trustees' fees incurred as a result of issues relating solely to one class and
distribution fees, are allocated to that class.
3. PURCHASES AND SALES OF SECURITIES. During the fiscal year ended October 31,
1995 purchases, sales and paydowns of U.S. Government and Agency securities,
excluding short-term securities and repurchase agreements, totalled
$3,752,967,854, $3,941,030,309 and $33,191,251, respectively.
At October 31, 1995, the security pledged to cover margin requirements for
open futures contracts on United States Treasury Bonds and United States
Treasury Notes; and for open option contracts on United States Treasury Bond
futures is as follows:
<TABLE>
<CAPTION>
DESCRIPTION FACE VALUE MARKET VALUE
----------- ---------- ------------
<S> <C> <C>
Federal National Mortgage Association Medium Term
Note, 12.000%, 11/13/00........................... $2,500,000 $3,142,575
========== ==========
</TABLE>
Transactions in U.S. Treasury bond futures sold short were as follows:
<TABLE>
<CAPTION>
REALIZED
CONTRACTS FACE VALUE COST LOSS
--------- --------------- -------------- -----------
<S> <C> <C> <C> <C>
Outstanding at October
31, 1994............... 875 $ 87,986,719
Sold.................... 11,996 1,263,999,684
Closed.................. (11,797) (1,234,301,059) $1,250,835,772 $16,534,713
------- --------------- ============== ===========
Outstanding at October
31, 1995............... 1,074 $ 117,685,344
======= ===============
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Government Fund 21
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED
Transactions in U.S. Treasury bond futures purchased were as follows:
<TABLE>
<CAPTION>
REALIZED
CONTRACTS FACE VALUE PROCEEDS LOSS
--------- ------------- ------------ ----------
<S> <C> <C> <C> <C>
Outstanding at October 31,
1994..................... -- $ --
Purchased................. 6,228 668,015,250
Closed.................... (3,604) (390,006,828) $387,494,762 $2,512,066
------ ------------- ============ ==========
Outstanding at October 31,
1995..................... 2,624 $ 278,008,422
====== =============
</TABLE>
Transactions in options written on U.S. Treasury bond futures were as follows:
<TABLE>
<CAPTION>
FACE VALUE NET
COVERED BY PREMIUMS
WRITTEN OPTIONS RECEIVED
--------------- -----------
<S> <C> <C>
Outstanding at October 31, 1994................. $ 40,400,000 $ 644,438
Written......................................... 112,900,000 1,597,875
Terminated in closing purchase transactions..... (80,400,000) (977,938)
Exercised....................................... (72,900,000) (1,264,375)
------------ -----------
Outstanding at October 31, 1995................. $ -- $ --
============ ===========
</TABLE>
Transactions in options purchased on U.S. Treasury bond futures were as
follows:
<TABLE>
<CAPTION>
FACE VALUE NET
COVERED BY PREMIUMS
PURCHASED OPTIONS PAID
----------------- ------------
<S> <C> <C>
Outstanding at October
31, 1994............... $ -- $ --
Purchased............... 670,632,000 13,106,911
Terminated in closing
purchase transactions.. (629,024,000) (12,317,498)
Expired................. (10,600,000) (22,781)
------------- ------------
Outstanding at October
31, 1995............... $ 31,008,000 $ 766,632
============= ============
</TABLE>
The aggregate cost of the investment portfolio for federal income tax purposes
was $1,163,036,654. At October 31, 1995, net unrealized appreciation for all
securities based on tax cost was $26,317,754. This consisted of aggregate gross
unrealized appreciation for all securities in which there was an excess of
market value over tax cost of $27,095,629 and aggregate gross unrealized
depreciation for all securities in which there was an excess of tax cost over
market value of $777,875.
4. MANAGEMENT, DISTRIBUTION AND TRUSTEES' FEES. Under an Advisory agreement
between the Fund and GNA Capital Management, Inc. (the "Adviser"), the Fund
agrees to pay the Adviser a fee calculated based upon the Fund's average daily
net assets equal to an annual rate of .65% of the first $500 million, .60% of
the next $250 million, .55% of the next $500 million, .50% of the next $250
million and .45% of average daily net assets over $1.5 billion. The Advisory
agreement also provides that if, in any fiscal year, the total of certain
specified expenses of the Fund
- --------------------------------------------------------------------------------
<PAGE>
22 Investors Trust Government Fund
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED
exceed the expense limitations applicable to the Fund imposed by the securities
regulations of any state in which it is then registered to sell shares, the
Adviser will waive all or a portion of its management fee equal to such excess.
The Adviser is only required to reimburse the Fund for any expenses which
exceed state expense limitations up to the amount of management fees paid or
payable by the Fund during such fiscal year. The total management fee for the
fiscal year ended October 31, 1995 was $7,200,544, which was equivalent to an
annual effective rate of .60%.
GNA Distributors, Inc., (the "Distributor") receives a monthly distribution
fee from the Fund calculated at the annual rate of .75% of the average daily
net assets of Class B shares pursuant to Rule 12b-1 of the Investment Company
Act of 1940, as amended. A shareholder servicing fee is also imposed on both
Class A and Class B shares of the Fund equal to specified costs incurred by the
Distributor, but in no event to exceed .25% of the average daily net assets of
the Fund. The shareholder servicing fee is in addition to the .75% distribution
fee. The Distributor has agreed that the .75% of average daily net assets on
Class B shares will only be assessed on any shareholder's shares for a limited
period of time. Once Class B shares automatically convert to Class A shares of
the Fund, after eight years, such shareholders will be subject only to the
shareholder servicing fee of .25% maximum applicable to Class A shares under
the 12b-1 Plan.
With respect to Class B shares, a contingent deferred sales charge
("withdrawal fee") of 5% the first year, declining by 1% per year for five
years, is imposed on any redemption which reduces the current value of the
account to an amount which is lower than the dollar amount of all payments
during the preceding five years. Withdrawal fees are paid to and retained by
the Distributor. These fees permit the Distributor to recover its sales-related
expenses (such as the 4% of the purchase price paid to dealers who sell Class B
shares of the Fund, printing fees, and marketing and advertising expenses). In
the event the Distributor is not fully reimbursed for such expenses incurred in
any fiscal year of the Fund, the Distributor shall be entitled to carryforward
such expenses to subsequent fiscal years for submission to the Fund for
payment, subject always to the .75% of Class B net assets annual maximum
expenditure allowed by the Fund's Plan. The cumulative reimbursable amount is
increased by an interest factor which is intended to replicate the
Distributor's cost of funds for financing advances made under the Plan. The
Trustees or a majority of the Fund's shareholders have the right, however, to
terminate the Plan and all payments thereunder at any time. The Fund will not
be obligated to reimburse the Distributor for carryover expenses subsequent to
the Plan's termination or noncontinuance. The total amount of carryover
expenses outstanding since inception of the Plan as of October 31, 1995, for
which the Distributor intends to seek repayment is approximately $39 million.
Total distribution fees and shareholder servicing fees for the fiscal year
ended October 31, 1995 were $8,792,620 and $2,265,857 ($44,509 Class A,
$2,221,348 Class B), respectively.
The Trust pays each Trustee not affiliated with the Adviser: (1) an annual fee
of $4,000; and (2) a fee of $500 for each meeting of the Board of Trustees
attended plus all reasonable expenses associated with attendance at such
meetings. These amounts are allocated among the funds principally based on
their relative net assets. No remuneration is paid by the Trust to any Trustee
or officer of the Fund who is affiliated with the Adviser.
5. CHANGE IN SUB-ADVISER. The Sub-Adviser, BlackRock Financial Management,
Inc., a registered investment adviser, was retained by the Adviser to act as
portfolio manager of the Fund by the Trust's Board of Trustees on March 17,
1995, effective April 1, 1995. The new sub-advisory agreement was approved by
vote of the shareholders of the Trust on June 16, 1995. As portfolio manager,
the Sub-Adviser is responsible for the actual investment
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Government Fund 23
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED
management of the Fund's assets (including the placement of brokerage orders),
under the general supervision of the Adviser and the Board of Trustees. Prior
to April 1, 1995, Weiss, Peck & Greer Advisers, Inc. served as the Fund's sub-
adviser.
6. CONTINGENCY. On September 19, 1994, a lawsuit was filed in the United
States District Court for the Southern District of California (The Court)
against the Fund, the Adviser, the Distributor, GNA Corporation, (the parent
company of the Adviser and the Distributor), and Weiss, Peck & Greer Advisers,
Inc. (the Fund's former sub-adviser) (Collectively the Defendants). The
lawsuit alleged, among other things, that in connection with the Fund's
investment in mortgage-backed securities known as "inverse floater IO's" and
"support PO's", the Fund failed to comply with its stated investment objective
and to disclose the Fund's investment therein. On October 23, 1995 the Court
preliminarily approved a settlement among the parties in the amount of $7.3
million. A final settlement hearing is scheduled for February 12, 1996.
Shareholders who owned shares between January 1, 1992 and November 8, 1994 may
be entitled to participate in this settlement fund. No portion of the
settlement fund is being paid for by the Trust or the Fund and, in
management's opinion the settlement of the litigation will have no impact on
the Fund's net asset value. The Defendants assert that the settlement was made
to avoid the expense and uncertainty of litigation and deny that the
Defendants engaged in any activities which were not properly disclosed or
authorized.
- -------------------------------------------------------------------------------
<PAGE>
24 Investors Trust Government Fund
- -------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Trustees of
Investors Trust Government Fund
We have audited the accompanying statement of assets and liabilities of
Investors Trust Government Fund including the investment portfolio, as of
October 31, 1995, and the related statement of operations for the fiscal year
then ended, and the statements of changes in net assets for each of the two
fiscal years in the period then ended and the financial highlights for each of
the periods indicated therein. These financial statements and financial
highlights are the responsibility of the Fund'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 October 31, 1995 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
Investors Trust Government Fund as of October 31, 1995, the results of its
operations for the fiscal year then ended, the changes in its net assets for
each of the two fiscal years in the period then ended and the financial
highlights for each of the periods indicated therein in conformity with
generally accepted accounting principles.
Boston, Massachusetts [SIGNATURE OF COOPERS & LYBRAND L.L.P.]
December 18, 1995
- -------------------------------------------------------------------------------
<PAGE>
INVESTORS TRUST /SM/
MUTUAL FUNDS
For more information about the Investors Trust mutual funds and to
obtain a prospecuts containing complete information including fees and
expenses or a copy of the annual report for any of the funds shown
here, call us at 1-800-656-6626
ADJUSTABLE RATE FUND
Investing primarily in adjustable rate securities including, but not limited to,
adjustable rate mortgage securities, this Fund seeks to produce a high level of
current income consistent with limiting fluctuations in the net value of the
Fund shares. Conservative investors seeking higher rates of return than those
offered by money market funds should consider the Adjustable Rate Fund.
Sub-Adviser: Standish, Ayer & Wood, Inc.
GOVERNMENT FUND
This Fund seeks to produce a high level of current income consistent with safety
of principal. The Fund will attempt to achieve its objective by investing
primarily in obligations issued or guaranteed by the U.S. Government or by its
agencies or instrumentalities. The government guarantee applies only to the
payment of principal and interest to the Fund and not to the value of the Fund's
shares, which will fluctuate and could be more or less than the purchaser's
cost.
Sub-Adviser: BlackRock Financial Management, Inc.
TAX FREE FUND
This Fund invests primarily in tax-exempt debt obligations and seeks to produce
a high level of income exempt from federal income tax as is consistent with
preservation of capital. This Fund invests primarily in investment-grade debt
obligations.
Sub-Adviser: Brown Brothers Harriman & Co.
VALUE FUND
This equity income fund seeks to provide an above-average level of dividend
income and long-term growth of capital by investing primarily in medium to large
capitalization companies with established operating histories and potential for
dividend growth.
Sub-Adviser: Duff & Phelps Investment Management Co.
GROWTH FUND
This Fund invests primarily in medium capitalization companies whose earnings
and/or assets are expected to grow at a rate above the average for the Standard
& Poor's 500 Stock Index over the long term.
Sub-Adviser: Value Line, Inc.
*State and local taxes may apply. For certain investors, a portion of the income
may be subject to the alternative minimum tax.
<PAGE>
[LOGO]
GNA Distributors, Inc.
Two Union Square . P.O. Box 450
Seattle, Washington 98111-6490
INVESTORS TRUST /SM/
MUTUAL FUNDS
GOVERNMENT FUND
ANNUAL REPORT
-----------------
October 31, 1995
The Investors Trust Family of Funds
is offered by GNA Distributors, Inc.
<PAGE>
TAX FREE FUND
[PHOTO APPEARS HERE]
Chairman's Message
Dear Shareholder:
I am pleased to present this annual report of your Investors Trust Mutual Fund,
which covers the twelve month period ending October 31, 1995. Included with this
report is a discussion of the Fund's performance and an interview with the
Fund's Sub-Adviser. As an introduction to that report, I offer you my
perspective on the financial markets.
Financial Markets Perspective
What a difference a year makes! The dominant theme in the domestic financial
markets over the last twelve months seems to have been an increasing acceptance
of the so-called "Fed engineered soft landing." This refers to the idea that the
Federal Reserve's management of short-term interest rates via monetary policy
decisions has slowed the growth rate of the economy to a more sustainable, low-
inflation level, without pushing the economy into a recession. Comparing growth
rates on a year-over-year basis as of September 1995 and September 1994, the
Gross Domestic Product (GDP) growth rate was 3.3% this year, down from 4.4% a
year ago, and the Consumer Price Index (CPI) growth rate was 2.5% this year,
down from 3.0% last year.
This slower economic growth with lower inflation resulted in lower intermediate
and long-term interest rates, which helped produce above average stock and bond
market returns for the last twelve months. During this period, the stock market,
as measured by the S&P 500 Stock Index, had a total return of +26.41%, and the
bond market, as measured by the Lehman Brothers Aggregate Bond Index, had a
total return of +15.65%. As welcome as these market returns have been this year,
particularly in comparison to last year's below average returns, please
understand that they are well above average, and thus not sustainable on a long-
term basis.
(Continued on next page)
Annual Report--October 31, 1995
<PAGE>
Additional Information
If you are interested in additional information about the Investors Trust
Mutual Funds, please contact your Investors Trust Representative, or call
Investors Trust Services toll-free at 1-800-656-6626 and select option 2.
Thank you for investing with Investors Trust.
Sincerely,
[SIGNATURE OF PATRICK E. WELCH]
Patrick E. Welch
Chairman
<PAGE>
- -------------------------------------------------------------------------------
INVESTORS TRUST
TAX FREE FUND
Annual Report
October 31, 1995
TRUSTEES AND OFFICERS INVESTMENT ADVISER
PATRICK E. WELCH GNA CAPITAL MANAGEMENT, INC.
Trustee, Chairman of the Board, Seattle, Washington
President and CEO
ROBERT E. JOHNSON INVESTMENT SUB-ADVISER
Trustee BROWN BROTHERS HARRIMAN & CO.
PIERCE T. LINDBERG New York, New York
Trustee
EDWARD R. MCMILLAN DISTRIBUTOR
Trustee GNA DISTRIBUTORS, INC.
GEOFFREY S. STIFF Seattle, Washington
Senior Vice President and Treasurer
CHARLES A. KAMINSKI COUNSEL
Senior Vice President GOODWIN, PROCTER & HOAR
VICTOR C. MOSES Boston, Massachusetts
Senior Vice President
THOMAS W. CASEY CUSTODIAN & TRANSFER AGENT
Vice President and Controller STATE STREET BANK AND TRUST COMPANY
EDWARD J. WILES, JR. Boston, Massachusetts
Vice President and Secretary
KARRI J. HARRINGTON INDEPENDENT ACCOUNTANTS
Assistant Secretary COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
This report is prepared for the shareholders of the Investors Trust Tax Free
Fund. It is not authorized for use as an offer of sale or a solicitation of an
offer to buy shares of the Fund unless accompanied or preceded by the Fund's
current prospectus.
<PAGE>
(This page intentionally left blank)
<PAGE>
Investors Trust Tax Free Fund 3
- --------------------------------------------------------------------------------
FROM THE ADVISER
----------------
GNA CAPITAL MANAGEMENT, INC.
For the twelve month period ended October 31, 1995, the 10-year AA-rated
General Obligation Municipal Bond yield fell from 5.79% to 4.83%, a decline of
0.96%. This caused bond prices, which move in the opposite direction of yields,
to rise during the period. Bond price increases supplemented coupon interest
income, so that for the twelve month period, the unmanaged Lehman Brothers 10-
year General Obligation Municipal Bond Index total return was +14.49%.
In this environment, the Fund's NAV (net asset value) increased from
$10.59/$10.60 to $11.31/$11.32 (for Class A/B shares, respectively), the SEC
30-day yield declined from 5.86%/6.14% to 5.46%/5.71%, and the total return was
+12.24%/+12.33%. In comparison, the Morningstar Municipal Bond-National fund
average total return which covers 457 funds was +12.24%.
The enclosed interview with the Fund's sub-adviser contains more information
about the Fund's performance and investment strategy.
The Fund uses a managed dividend distribution policy which allows the dividend
payouts to be somewhat constant, so that those shareholders receiving their
dividends in cash have some predictability to their monthly dividend checks. In
order to keep the dividend payouts in line with the income generated by the
Fund's portfolio, Fund management periodically reviews and adjusts the dividend
distribution rate. Because fluctuating financial markets nullify attempts to
make this review and adjustment process exact, the Fund's distributions will,
on occasion, include a tax return of capital. We anticipate a return of capital
for 1995 of approximately $0.01 per share.
[PERFORMANCE CHART APPEARS HERE]
Performance of a $10,000 investment since inception of the Investors Trust Tax
Free Fund (9/93)
- --------------------------------------------------------------------------------
MONTH ITTFA ITTFB LB10GOI MMBN
----- ----- ----- ------- ----
Aug 1993 $10,000 $10,000 $10,000 $10,000
Sep 1993 $10,030 $10,034 $10,125 $10,111
Oct 1993 $10,054 $10,043 $10,138 $10,127
Nov 1993 $ 9,971 $ 9,954 $10,065 $10,043
Dec 1993 $10,162 $10,147 $10,278 $10,226
Jan 1994 $10,283 $10,261 $10,408 $10,333
Feb 1994 $10,011 $ 9,983 $10,081 $10,093
Mar 1994 $ 9,725 $ 9,683 $ 9,710 $ 9,726
Apr 1994 $ 9,712 $ 9,673 $ 9,830 $ 9,763
May 1994 $ 9,835 $ 9,789 $ 9,908 $ 9,841
Jun 1994 $ 9,795 $ 9,743 $ 9,854 $ 9,795
Jul 1994 $ 9,965 $ 9,907 $10,012 $ 9,944
Aug 1994 $ 9,998 $ 9,940 $10,061 $ 9,972
Sep 1994 $ 9,884 $ 9,827 $ 9,918 $ 9,841
Oct 1994 $ 9,753 $ 9,697 $ 9,788 $ 9,690
Nov 1994 $ 9,620 $ 9,565 $ 9,597 $ 9,521
Dec 1994 $ 9,793 $ 9,737 $ 9,755 $ 9,713
Jan 1995 $10,032 $ 9,974 $ 9,998 $ 9,951
Feb 1995 $10,296 $10,236 $10,288 $10,203
Mar 1995 $10,427 $10,366 $10,447 $10,290
Apr 1995 $10,432 $10,371 $10,453 $10,301
May 1995 $10,742 $10,679 $10,784 $10,577
Jun 1995 $10,614 $10,561 $10,710 $10,496
Jul 1995 $10,659 $10,597 $10,863 $10,569
Aug 1995 $10,809 $10,746 $11,012 $10,675
Sep 1995 $10,814 $10,760 $11,088 $10,732
Oct 1995 $10,946 $10,892 $11,205 $10,869
- --------------------------------------------------------------------------------
Investors Trust Tax Free Fund -- A shares (ending value: $10,946)
Investors Trust Tax Free Fund -- B shares (ending value: $10,892)
Lehman Brothers 10-Year General Obligation Municipal Bond Index (ending
value: $11,205)
Morningstar Municipal Bond -- National Fund Average (ending value: $10,869)
Past performance is not indicative of future results. Investment returns and
principal will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost.
-------------------------------------------------------------------------------
<PAGE>
4 Investors Trust Tax Free Fund
- -------------------------------------------------------------------------------
FROM THE SUB-ADVISER
--------------------
BROWN BROTHERS HARRIMAN & CO.
PORTFOLIO MANAGER: BARBARA BRINKLEY
WHAT HAPPENED IN THE MARKET OVER THE LAST 12 MONTHS (NOV94-OCT95)?
Last year's fears of surging growth, rising inflation, and tighter monetary
policy have given way to a much friendlier fixed-income market environment in
1995. Municipal rates have fallen sharply amid slower economic activity,
receding inflation pressures, and easing monetary policy. While yields dropped
by 0.50% on one-year maturities, yields fell by 0.90% on intermediate and
longer maturities. As a result, the slope of the 1-30 year municipal yield
curve flattened to 1.95% from 2.35%.
The municipal market turned wary in the second quarter, beset by an array of
worries, including: a variety of potential tax reform proposals, the evolving
Orange County, California, bankruptcy, and strong competition from a surging
equity market. Some investors shifted to shorter maturities, which they
believed would be unaffected by enactment of any tax reform proposals. A
surprise has been the tepid level of investment demand, despite a high level
of coupon and maturity payments.
With the lowest interest rates in more than a year, municipalities have begun
to increase their number of bond issues to fund new construction projects and
to refund older, higher coupon debt. For the year, new issue long-term debt
(bonds with maturities of more than one year) was $142 billion, down $45.5
billion from last year, and replacing only 88% of the municipals that matured
in the period.
WHAT HAPPENED IN THE FUND OVER THE LAST 12 MONTHS (NOV94-OCT95)?
The Fund's total net assets grew from $19.3 million to $23.7 million,
reflecting a combination of new investments and higher market values. The
Fund's exposure to interest rate risk (duration) rose from 6.4 years at the
beginning of the fiscal year to an April high of 6.5 years. Our portfolio's
credit quality averaged high Aa, with more than 60% of the portfolio fully
backed by US Government securities held in escrow by a bond trustee. We
broadened our geographic diversification and concentrated our holdings in the
10-20 year maturity range, using call-protected premium coupons. As assets
grew, we added to many of our existing positions, thereby improving
marketability and minimizing operating costs. We managed our sales
transactions to incur no net capital gains tax liability. We do not use
derivatives.
WHAT IS YOUR CURRENT MARKET OUTLOOK?
In the coming quarters, we expect that US economic activity will improve,
inflation will remain low, monetary policy will remain stable, and a fiscal
policy will be adopted to reduce the deficit.
In our view, the municipal market is fairly pricing the economic fundamental
and tax reform uncertainties that are likely to persist in the coming months.
Tax reform worries will likely keep demand firm for intermediate municipals.
At the same time, longer maturities are already pricing in a level of tax
reform that is not probable and offer good long-term value.
- -------------------------------------------------------------------------------
<PAGE>
Investors Trust Tax Free Fund 5
- -------------------------------------------------------------------------------
HOW IS THE FUND POSITIONED TO BENEFIT FROM YOUR CURRENT MARKET OUTLOOK?
The portfolio is now positioned with a duration of 6.2 years, or 103% of
duration neutrality which is 6.0. In comparison, the duration of a par-priced,
10 year AA general obligation municipal bond was 7.9 years on 10/31/95. The
maturities of this portfolio are concentrated in the seven to 20 year range.
We believe this is the maturity area of greatest value relative to taxable
yields as it already prices in a level of tax reform that is not probable, it
locks in the high tax-free yields of the steepest part of the municipal yield
curve, and it will benefit from lower yields over time. Our average credit
quality is Aa+, with more than 60% of our portfolio backed by US Treasury
securities held in escrow. Our high credit quality and broad geographic
diversification are designed to protect against event risk which could arise
from a local economic or political development, or from a natural disaster.
Our average coupon is more than seven percent. We prefer call-protected
premium coupons for their greater tax-free yields to maturity, for their more
defensive characteristics, and for their avoidance of the unfavorable tax
effects of market-discount bonds.
WHAT ARE YOUR THOUGHTS ON CURRENT FEDERAL TAX REFORM PROPOSALS AND THEIR
LIKELY IMPACT ON THE FUND?
In our view, tax reform worries have been a major factor in shaping the
municipal yield curve and in provoking market wariness. After a summer hiatus,
Congressional rhetoric concerning various potential tax reforms heated up in
September as the Kemp commission began hearings. Some investors sought refuge
from tax reform worries by purchasing intermediate maturities which carry a
superior yield to short maturities, and which are seen as still safe in a
worst case tax reform outcome.
It appears that some kind of "Reform" is reasonably likely, but its character
and scope are apt to be a yet-to-be determined blend of attributes. However,
the revenue impact and the loss of popular deductions are powerful
disincentives for enactment of the more extreme proposals.
In our view, longer-intermediate maturities are already pricing in a level of
tax reform that is not probable and offer good long-term value.
- -------------------------------------------------------------------------------
<PAGE>
6 Investors Trust Tax Free Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1995
<TABLE>
<CAPTION>
% OF NET PRINCIPAL MARKET
ASSETS AMOUNT ($) VALUE ($)
-------- ---------- -----------
<S> <C> <C> <C>
LONG-TERM MUNICIPAL INVESTMENTS
ALABAMA 0.4
Birmingham Alabama North Medical Clinic Board
Revenue,
6.625%, April 1, 2000 *..................... 60,000 63,721
Jefferson County Alabama, 9.750%, October 1,
2004 [Series A] *........................... 25,000 31,999
-----------
95,720
-----------
ALASKA 0.2
North Slope Borough Alaska, 10.000%, June 30,
2001 *...................................... 30,000 37,994
-----------
ARIZONA 0.8
Maricopa County Arizona, 6.250%, July 1,
2002........................................ 175,000 192,141
-----------
ARKANSAS 1.6
Arkansas Housing Development Agency, 8.375%,
July 1, 2010 *.............................. 205,000 250,297
Pulaski County Arkansas Hospital Revenue,
9.250%, March 1, 2010 *..................... 105,000 135,898
-----------
386,195
-----------
CALIFORNIA 5.4
California State, 5.750%, April 25, 1996..... 100,000 100,939
California State, 8.750%, May 1, 2004........ 110,000 139,506
Sacramento California Municipal Utility
District Electric Revenue, 9.000%, April 1,
2013 [Series M] *........................... 595,000 773,982
San Diego California Hospital Revenue,
8.875%, February 1, 2011 *.................. 210,000 265,247
-----------
1,279,674
-----------
COLORADO 2.8
Denver Colorado City and County Single-Family
Mortgage Revenue [Series 1978A], 7.000%,
August 1, 2010 *............................ 415,000 461,372
Loveland Colorado, 8.875%, November 1,
2005 *...................................... 165,000 207,894
-----------
669,266
-----------
CONNECTICUT 4.4
Connecticut State Health and Educational
Facility Authority,
7.000%, July 1, 2012 *...................... 560,000 620,245
Connecticut State Housing Finance Authority,
6.050%, May 15, 2014........................ 410,000 411,677
-----------
1,031,922
-----------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Tax Free Fund 7
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1995, CONTINUED
<TABLE>
<CAPTION>
% OF NET PRINCIPAL MARKET
ASSETS AMOUNT ($) VALUE ($)
-------- ---------- -----------
<S> <C> <C> <C>
DELAWARE 1.0
Delaware Transportation Authority
Transportation Systems Revenue, 6.100%, July
1, 2002..................................... 110,000 118,719
Georgetown Delaware, 6.800%, June 1, 2021 **. 100,000 111,500
-----------
230,219
-----------
FLORIDA 7.5
Broward County Florida, 6.200%, January 1,
2007 [Series C]............................. 25,000 26,873
Dade County Florida Health Facilities
Authority Hospital Revenue, 6.400%, May 1,
2001 *...................................... 100,000 109,779
Florida State, Jacksonville Transportation
Authority,
5.900%, July 1, 2004........................ 200,000 215,528
Florida State, Broward County Expressway
Authority,
6.500%, July 1, 2003 [Series A]............. 675,000 698,908
Florida State, Broward County, 10.000%, July
1, 2014..................................... 235,000 352,667
Gainesville Florida Utilities Systems
Revenue,
8.125%, October 1, 2014 *................... 175,000 216,342
Jacksonville Florida Electric Authority
Revenue,
6.500%, October 1, 2003 [Series 10]......... 135,000 151,471
-----------
1,771,568
-----------
GEORGIA 2.5
Clarke County Georgia Hospital Authority
Revenue,
9.875%, January 1, 2006 *................... 80,000 107,544
Columbus Georgia Medical Center Hospital
Authority Revenue, 7.750%, July 1, 2010 *... 285,000 334,387
Gwinnett County Georgia Water and Sewage
Authority Water Revenue, 9.600%, October 1,
2004 *...................................... 115,000 152,872
-----------
594,803
-----------
HAWAII 1.0
Honolulu Hawaii City and County, 7.250%, July
1, 2002..................................... 200,000 229,744
-----------
IDAHO 2.2
Idaho Falls Idaho Electric Revenue, 10.375%,
April 1, 2013**............................. 350,000 510,573
-----------
ILLINOIS 6.9
Chicago Illinois Motor Fuel Tax Revenue,
6.500%, January 1, 2016 **.................. 20,000 21,872
Chicago Illinois Public Building Revenue,
7.500%, January 1, 2002 *................... 500,000 555,230
Chicago Illinois Wastewater Transmission
Revenue,
6.300%, January 1, 2012 **.................. 20,000 22,317
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
8 Investors Trust Tax Free Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1995, CONTINUED
<TABLE>
<CAPTION>
% OF NET PRINCIPAL MARKET
ASSETS AMOUNT ($) VALUE ($)
-------- ---------- -----------
<S> <C> <C> <C>
ILLINOIS, CONTINUED
Chicago Illinois Wastewater Transmission
Revenue,
7.200%, November 15, 2019 **................ 90,000 101,311
Des Plaines Illinois Hospital Facility
Revenue,
10.750%, January 1, 2014 **................. 115,000 154,803
Illinois State, 6.750%, April 1, 2005........ 50,000 52,805
Illinois State Sales Tax Revenue, 6.000%,
June 15, 2003 [Series S].................... 195,000 209,648
Schaumburg Illinois, 6.000%, December 1,
2005........................................ 430,000 458,530
Waukegan Illinois Water and Sewer Revenue,
7.500%, May 1, 2006 *....................... 50,000 59,844
-----------
1,636,360
-----------
INDIANA 3.8
Highland Indiana School Building Corporation,
7.000%, July 15, 2008 **.................... 400,000 458,480
Indiana Transportation Finance Authority
Highway Revenue,
6.900%, June 1, 2000 [Series A]............. 300,000 327,831
Indiana University Revenue, 10.125%, July 1,
2010 [Series N] **.......................... 35,000 44,646
Wawasee Community School Corporation Indiana
Participation Certificates, 7.650%, April 1,
2007 **..................................... 55,000 61,689
-----------
892,646
-----------
IOWA 4.7
Muscatine Iowa Electric Revenue, 9.700%,
January 1, 2013 *........................... 815,000 1,114,187
-----------
KENTUCKY 1.5
Kentucky State Turnpike Authority Economic
Development, 5.625%, July 1, 2010........... 355,000 363,051
-----------
LOUISIANA 2.2
Jefferson Parish Louisiana Hospital Service,
7.250%, January 1, 2009 *................... 465,000 526,668
-----------
MAINE 0.8
Maine Municipal Bond Bank Sewer and Water
Revenue,
7.200%, November 1, 2013 [Series A] **...... 100,000 115,363
Maine Municipal Bond Bank,
7.100%, November 1, 2007 [Series D] **...... 10,000 11,176
Maine Municipal Bond Bank,
7.200%, November 1, 2020 [Series B] **...... 65,000 73,915
-----------
200,454
-----------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Tax Free Fund 9
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1995, CONTINUED
<TABLE>
<CAPTION>
% OF NET PRINCIPAL MARKET
ASSETS AMOUNT ($) VALUE ($)
-------- ---------- -----------
<S> <C> <C> <C>
MASSACHUSETTS 4.2
Massachusetts Bay Transportation Authority
Massachusetts,
7.250%, March 1, 2003 [Series A]............ 100,000 112,696
Massachusetts State Port Authority Revenue,
13.000%, July 1, 2013 *..................... 365,000 613,977
Massachusetts State, 6.750%, August 1, 2009
[Series C].................................. 250,000 273,395
-----------
1,000,068
-----------
MICHIGAN 2.3
Michigan State Hospital Finance Authority
Revenue,
7.125%, May 1, 2009 *....................... 305,000 343,884
Michigan State Hospital Finance Authority
Revenue,
9.000%, May 1, 2008 *....................... 160,000 207,997
-----------
551,881
-----------
MINNESOTA 1.4
Rochester Minnesota Health Care Facilities
Revenue,
6.250%, November 15, 2014................... 300,000 313,026
Western Minnesota Municipal Power Agency,
Minnesota Power Supply, 10.250%, January 1,
2015 [Series A] **.......................... 25,000 29,406
-----------
342,432
-----------
MISSISSIPI 1.0
Mississippi State, 6.200%, February 1,
2008 *...................................... 225,000 242,003
-----------
MISSOURI 0.1
Lees Summit Missouri Water and Sewer Revenue,
10.000%, July 1, 2014 [Series 1984 A] **.... 20,000 24,600
-----------
NEVADA 0.7
Clark County Nevada School District, 8.250%,
May 1, 2000................................. 150,000 172,685
-----------
NEW HAMPSHIRE 0.8
New Hampshire Municipal Bond Bank,
7.000%, January 15, 2010 [Series A] **...... 150,000 167,556
New Hampshire Municipal Bond Bank State
Guaranteed,
6.800%, January 15, 2009 [Series B] **...... 25,000 27,736
-----------
195,292
-----------
NEW JERSEY 1.3
Atlantic County New Jersey Improvement
Authority Lease Revenue, 7.400%, March 1,
2012*....................................... 150,000 180,987
New Jersey Economic Development Authority
Market,
7.000%, July 1, 2004........................ 100,000 115,747
-----------
296,734
-----------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
10 Investors Trust Tax Free Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1995, CONTINUED
<TABLE>
<CAPTION>
% OF NET PRINCIPAL MARKET
ASSETS AMOUNT ($) VALUE ($)
-------- ---------- -----------
<S> <C> <C> <C>
NEW MEXICO 2.6
Farmington New Mexico Power Revenue,
9.875%, January 1, 2013 **.................. 400,000 537,708
Farmington New Mexico Utility Systems
Revenue,
9.875%, January 1, 2008 *................... 60,000 79,996
-----------
617,704
-----------
NEW YORK 6.0
New York City, 6.000%, August 1, 2006 *...... 300,000 315,240
New York State, 7.100%, March 1, 2004........ 50,000 56,303
New York State Dormitory Authority Revenue,
6.749%, May 15, 2011........................ 165,000 194,400
New York State Dormitory Authority Revenue,
7.375%, July 1, 2016 *...................... 185,000 216,339
New York State Environmental Facilities
Corporation,
6.800%, November 15, 2010................... 200,000 222,588
New York State Housing Finance Agency,
6.400%, November 1, 2003 [Series A] *....... 175,000 189,793
New York State Local Government Assistance,
6.750%, April 1, 2002 [Series A]............ 45,000 49,769
New York State Local Government Assistance,
7.250%, April 1, 2007....................... 100,000 112,799
New York State Local Government Assistance
Corporation,
6.000%, April 1, 2005 [Series C]............ 50,000 53,611
-----------
1,410,842
-----------
NORTH CAROLINA 1.2
North Carolina Municipal Power Agency Number
One Catawba, 10.500%, January 1, 2010 *..... 205,000 287,010
-----------
OHIO 2.2
Columbus Ohio, 5.250%, September 15, 2011.... 270,000 266,836
Columbus Ohio, 6.000%, July 1, 2008 [Series
2].......................................... 50,000 53,297
Ohio State Water Development Authority
Revenue,
7.000%, December 1, 2009 *.................. 190,000 212,701
-----------
532,834
-----------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Tax Free Fund 11
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1995, CONTINUED
<TABLE>
<CAPTION>
% OF NET PRINCIPAL MARKET
ASSETS AMOUNT ($) VALUE ($)
-------- ---------- -----------
<S> <C> <C> <C>
PENNSYLVANIA 5.1
Allegheny County Pennsylvania Hospital
Development Authority, 7.375%, July 1, 2012
[Series N] *................................ 150,000 172,611
Pennsylvania Intergovernmental Cooperative
Authority,
6.800%, June 15, 2012 **.................... 50,000 56,367
Pennsylvania State Turnpike Commission
Turnpike Revenue, 7.150%, December 1, 2011
[Series J] **............................... 25,000 28,944
Philadelphia Pennsylvania Hospitals and
Higher Education Facilities, 6.500%,
February 15, 2021 [Series A] **............. 325,000 364,195
Philadelphia Pennsylvania Hospitals Authority
Revenue,
9.875%, July 1, 2010 **..................... 170,000 234,738
Philadelphia Pennsylvania Regional Port
Authority Lease Revenue, 7.150%, August 1,
2020 **..................................... 30,000 33,526
Pittsburgh Pennsylvania Water and Sewer
Authority,
Water and Sewer, 7.250%, September 1,
2014 *...................................... 265,000 307,981
-----------
1,198,362
-----------
RHODE ISLAND 3.3
Convention Center Authority Rhode Island
Revenue,
6.300%, May 15, 2004 [Series A] **.......... 45,000 49,752
Convention Center Authority Rhode Island
Revenue,
6.700%, May 15, 2020 [Series A] **.......... 625,000 703,144
Rhode Island Depositors Economic Protection,
7.100%, August 1, 2018 [Series A] **........ 35,000 40,200
-----------
793,096
-----------
SOUTH CAROLINA 3.2
South Carolina State Public Service Authority
Revenue,
6.500%, July 1, 2024 [Series D]**........... 195,000 219,529
Spartanburg South Carolina Waterworks
Revenue,
6.000%, June 1, 2005........................ 500,000 532,500
-----------
752,029
-----------
TENNESSEE 0.4
Metropolitan Government Nashville and
Davidson,
9.600%, July 1, 2005 [Series N] *........... 65,000 88,473
-----------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
12 Investors Trust Tax Free Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1995, CONTINUED
<TABLE>
<CAPTION>
% OF NET PRINCIPAL MARKET
ASSETS AMOUNT ($) VALUE ($)
-------- ---------- -----------
<S> <C> <C> <C>
TEXAS 4.4
Arlington Texas Independent School District,
5.900%, February 15, 2003................... 350,000 373,002
Austin Texas Utility Systems Revenue,
7.250%, November 15, 2003................... 50,000 54,603
Austin Texas Utility Systems Revenue,
11.125%, November 15, 2009 **............... 35,000 43,710
Austin Texas Utility Systems Revenue,
9.500%, May 15, 2015 [Series A] **.......... 65,000 78,340
Austin Texas Utility Systems Revenue,
10.750%, May 15, 2015 **.................... 30,000 37,647
Gulf Coast Waste Disposal Authority Texas,
8.375%, June 1, 2005 *...................... 100,000 127,199
Houston Texas Water Systems Revenue,
7.300%, December 1, 2006 *.................. 100,000 120,905
Lamar University Texas Revenue, 7.000%, April
1, 2006 *................................... 35,000 41,126
San Antonio Texas Water Revenue, 7.125%, May
1, 2016 **.................................. 25,000 27,647
Texas A&M University Revenue, 9.400%, June 1,
2004 *...................................... 40,000 52,950
Texas A&M University Revenue, 9.400%, June 1,
2006 *...................................... 55,000 75,191
-----------
1,032,320
-----------
UTAH 1.2
Intermountain Power Agency Utah Power Supply,
7.200%, July 1, 2011 [Series A] **.......... 10,000 11,166
Utah State Municipal Finance Cooperative
Local Government Revenue, 7.000%, June 1,
2016 **..................................... 250,000 283,153
-----------
294,319
-----------
VIRGINIA 0.6
Richmond Virginia Metropolitan Authority
Expressway Revenue, 7.000%, October 15,
2013 *...................................... 115,000 130,404
-----------
WASHINGTON 4.7
Seattle Washington Municipality Metropolitan
Seattle,
6.875%, January 1, 2031 [Series T] **....... 40,000 44,655
Snohomish County Washington Public Utility
District Number 001, 6.375%, January 1,
2005 *...................................... 20,000 22,156
Washington State Public Power Supply Systems
Nuclear,
5.300%, July 1, 2009 [Series C]............. 750,000 712,845
Washington State Public Power Supply Systems
Nuclear,
7.200%, July 1, 2002 [Series B]............. 100,000 110,040
Washington State, 6.100%, February 1, 2005
[Series A].................................. 200,000 214,358
-----------
1,104,054
-----------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Tax Free Fund 13
- -------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1995, CONTINUED
<TABLE>
<CAPTION>
% OF NET PRINCIPAL MARKET
ASSETS AMOUNT ($) VALUE ($)
-------- ---------- -----------
<S> <C> <C> <C>
WEST VIRGINIA 1.6
West Virginia State Board Regents Revenue,
7.250%, April 1, 2014 [Series B] **......... 240,000 262,742
Wood County West Virginia Building Commission
Revenue, 6.625%, January 1, 2006 *.......... 115,000 124,162
-----------
386,904
----- -----------
Total Long-Term Municipal Investments
(Cost $23,040,929).................... 98.0 23,217,231
-----------
SHORT-TERM MUNICIPAL INVESTMENT 1.7
New York City, 3.900(a), August 1, 2022
(final maturity date)
(Cost $400,000)....................... 400,000 400,000
----- -----------
SUMMARY
Total municipal investment portfolio
(Cost $23,440,929).................... 99.7 23,617,231
Other assets and liabilities, net............ 0.3 75,743
----- -----------
NET ASSETS..................................... 100.0 $23,692,974
===== ===========
</TABLE>
- --------
* Escrowed to maturity: Bonds which are collateralized by U.S. Treasury
securities which are held in escrow by a trustee and used to pay principal
and interest on bonds so designed.
** Prefunded: Bonds which are collateralized by U.S. Treasury securities which
are held in escrow and are used to pay principal and interest on the tax-
exempt issue and to retire the bonds at the earliest refunding date.
(a)Coupon rate is reset daily.
OTHER INFORMATION (UNAUDITED):
The composition of long-term municipal investments as a percentage of net
assets, is as follows:
<TABLE>
<CAPTION>
S&P/MOODY'S RATING % OF NET ASSETS
------------------ ---------------
<S> <C>
AAA or Aaa 68.4%
AA or Aa 19.6%
A 7.2%
BBB or Baa .8%
SP-1 or MIG1 .4%
Unrated securities of comparable
investment quality as above 1.6%
The Fund had insurance concentrations of 5% or greater as of October 31, 1995
(as a percentage of net assets) as follows:
MBIA 10.4%
AMBAC 5.1%
</TABLE>
- -------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
14 Investors Trust Tax Free Fund
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1995
<TABLE>
<S> <C>
ASSETS
Investments, at market value (identified cost, $23,440,929)
(Notes 2 and 3)................................................. $23,617,231
Cash............................................................. 58,594
Receivables:
Interest....................................................... 473,153
Adviser (Note 4)............................................... 34,327
Deferred organization costs (Note 2)............................. 35,376
Prepaid expenses (Note 2)........................................ 13,729
-----------
Total assets..................................................... 24,232,410
-----------
LIABILITIES
Payables:
Investments purchased.......................................... 428,124
Dividends...................................................... 30,865
Accrued distribution fee (Note 4).............................. 21,690
Accrued management fee (Note 4)................................ 11,677
Other accrued expenses......................................... 47,080
-----------
Total liabilities................................................ 539,436
-----------
NET ASSETS, AT MARKET VALUE...................................... $23,692,974
===========
NET ASSETS
Net assets consist of:
Accumulated distributions in excess of net investment income
(Note 2)...................................................... $ (30,865)
Accumulated net realized loss.................................. (176,365)
Unrealized appreciation on investments (Notes 2 and 3)......... 176,302
Shares of beneficial interest.................................. 23,723,902
-----------
NET ASSETS, AT MARKET VALUE...................................... $23,692,974
===========
CLASS A:
NET ASSET VALUE and redemption price per share ($16,025,446
divided by 1,417,127 outstanding shares of beneficial interest $11.31
of no par value)................................................ ======
Maximum offering price per share (100/95.50 of $11.31)........... $11.84
======
CLASS B:
NET ASSET VALUE and offering price per share ($7,667,528 divided
by 677,258 outstanding shares of beneficial interest of no par $11.32
value).......................................................... ======
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Tax Free Fund 15
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED OCTOBER 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest........................................................... $1,059,944
----------
EXPENSES:
Management fee (Note 4).......................................... 125,333
Distribution fees (Note 4)....................................... 98,096
Custodian fee.................................................... 90,050
Transfer agent fee............................................... 49,107
Registration fees................................................ 24,000
Professional fees................................................ 19,020
Amortization for organization costs (Note 2)..................... 12,392
Shareholder reports.............................................. 6,928
Insurance........................................................ 1,170
Trustees fees and expenses (Note 4).............................. 457
Other............................................................ 1,493
----------
Total expenses before reimbursement from Adviser................... 428,046
Reimbursement for expenses from Adviser (Note 4)................... (428,046)
----------
Expenses, net...................................................... --
----------
Net investment income.............................................. 1,059,944
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss from investments............................... (176,365)
Net increase in unrealized appreciation of investments during the
year............................................................ 1,523,607
----------
Net gain on investments............................................ 1,347,242
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............... $2,407,186
==========
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
16 Investors Trust Tax Free Fund
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FISCAL YEARS
ENDED OCTOBER 31,
------------------------
1995 1994
----------- -----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income.............................. $ 1,059,944 $ 751,057
Net realized loss from investment transactions..... (176,365) --
Net increase in unrealized appreciation
(depreciation) of investments
during the year................................... 1,523,607 (1,358,560)
----------- -----------
Net increase (decrease) in net assets resulting from
operations.......................................... 2,407,186 (607,503)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A ($.55 and $.45 per share)................ (757,133) (606,290)
Class B ($.55 and $.43 per share)................ (302,811) (144,767)
Distribution in excess of net investment income
(Note 2)
Class A ($.01 and $.11 per share)................ (5,654) (140,265)
Class B ($.01 and $.06 per share)................ (1,064) (30,625)
Increase in net assets from Fund share transactions.. 3,079,687 4,464,430
----------- -----------
INCREASE IN NET ASSETS............................... 4,420,211 2,934,980
Net assets at beginning of year...................... 19,272,763 16,337,783
----------- -----------
NET ASSETS AT END OF YEAR (including accumulated
distributions in excess of net investment income of
$30,865 and $27,072, respectively).................. $23,692,974 $19,272,763
=========== ===========
</TABLE>
(CONTINUED)
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Tax Free Fund 17
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
<TABLE>
<CAPTION>
FOR THE FISCAL YEARS ENDED OCTOBER 31,
------------------------------------------
1995 1994
--------------------- -------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- ------- ----------
<S> <C> <C> <C> <C>
FUND SHARE INFORMATION
Class A shares
Sold............................. 78,630 $ 880,743 33,197 $ 378,566
Issued in reinvestment of
distributions................... 2,699 29,828 1,304 14,343
Redeemed......................... (12,988) (139,636) (4,735) (52,224)
-------- ----------- ------- ----------
Net increase..................... 68,341 $ 770,935 29,766 $ 340,685
======== =========== ======= ==========
Class B shares
Sold............................. 324,101 $ 3,589,195 427,679 $4,797,363
Issued in reinvestment of
distributions................... 21,419 235,800 12,036 131,911
Redeemed......................... (139,086) (1,516,243) (73,573) (805,529)
-------- ----------- ------- ----------
Net increase..................... 206,434 $ 2,308,752 366,142 $4,123,745
======== =========== ======= ==========
</TABLE>
- --------
At October 31, 1995, Employers Reinsurance Corporation, a wholly-owned
financial subsidiary of General Electric Capital Services Corporation, owned
1,304,348 Class A shares of the Fund.
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
18 Investors Trust Tax Free Fund
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The financial highlights set forth below include selected data for a share
outstanding throughout each period and other performance information derived
from the financial statements.
<TABLE>
<CAPTION>
FOR THE FISCAL YEARS ENDED OCTOBER 31,
----------------------------------------------
CLASS A CLASS B
---------------------- ----------------------
1995 1994 1993 + 1995 1994 1993 +
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD........................ $10.59 $11.48 $11.50 $10.60 $11.48 $11.50
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income (a)...... .55 .45 .05 .55 .43 .06
Net realized and unrealized
gains (losses) on investments. .73 (.78) .01 .73 (.82) (.01)
------ ------ ------ ------ ------ ------
Total from Investment
Operations.................... 1.28 (.33) .06 1.28 (.39) .05
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS FROM
Net investment income.......... (.55) (.45) (.05) (.55) (.43) (.03)
Distributions in excess of net
investment income............. (.01) (.11) (.02) (.01) (.06) (.03)
Tax return of capital.......... -- -- (.01) -- -- (.01)
------ ------ ------ ------ ------ ------
Total Distributions............ (.56) (.56) (.08) (.56) (.49) (.07)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD. $11.31 $10.59 $11.48 $11.32 $10.60 $11.48
====== ====== ====== ====== ====== ======
TOTAL RETURN (%) **............ 12.24 (2.99) .54 12.33 (3.45) .43
RATIOS/SUPPLEMENTAL DATA
Ratios (%):
Expenses, net, to average
daily net assets (a)......... -- 0.77 1.15* -- 1.14 1.84*
Net investment income to
average daily net assets..... 5.01 4.08 2.73* 5.01 3.75 2.27*
Portfolio turnover............ 24.95 -- -- 24.95 -- --
Net Assets, end of period
(millions).................... $16.0 $14.3 $15.1 $7.7 $5.0 $1.2
(a) Reimbursement for expenses
from Adviser.................. $0.199 $0.094 $0.002 $0.287 $0.122 $0.003
Operating expenses ratio
excluding reimbursement for
expenses (%)................. 1.81 1.62 2.09* 2.56 2.30 2.48*
</TABLE>
- --------
+ For the period September 8, 1993 (commencement of operations) to October
31, 1993.
* Annualized
** A sales charge of 4.5% (maximum) was not reflected in total return
calculations for Class A. A contingent deferred sales charge of 5% the
first year, declining by 1% per year for five years, was not reflected in
total return calculations for Class B. Periods less than one year are not
annualized.
- -------------------------------------------------------------------------------
<PAGE>
Investors Trust Tax Free Fund 19
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION. Investors Trust (the "Trust") is organized as a Massachusetts
Business Trust and is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company. The Trust
is a series of funds, currently comprised of five investment portfolios, four
of which commenced operations as of September 8, 1993 and one, the Government
Fund, which commenced operations as of April 22, 1987. These financial
statements report on the Tax Free Fund (the "Fund"). Financial statements for
the other funds are presented separately.
Under the Trust's Multiple Class Distribution System (the "Multiple Class
Arrangement"), the Fund currently offers to the general public two classes of
shares of beneficial interest, no par value, which may be purchased at a price
equal to the next determined net asset value per share plus a sales charge
which, at the election of the purchaser, may be imposed (i) at the time of
purchase (Class A shares) or (ii) on a deferred basis (Class B shares). Class
B shares, including a pro rata portion of the shares received as distributions
with respect to such shares, will automatically convert to Class A shares of
the Fund at the end of eight years following the issuance of the Class B
shares.
2. SIGNIFICANT ACCOUNTING POLICIES. The policies described below are followed
consistently by the Fund in the preparation of its financial statements in
conformity with generally accepted accounting principles.
Securities Valuation. The Fund's municipal investments are appraised or
priced by an independent pricing service selected by GNA Capital Management,
Inc., the Fund's investment adviser (the "Adviser") and approved by the
Trustees of the Fund, which utilizes information with respect to bond
transactions in comparable securities and various relationships between
securities. Short-term investments are valued at original cost plus accreted
discount or accrued interest which approximates market value. If quotations
are not available, securities are valued by a method that the Trustees believe
accurately reflects fair value.
Securities Transactions and Related Investment Income. Sales and purchases
are accounted for on trade date. Realized securities gains or losses are
determined using the identified cost method for both financial and tax
reporting purposes. Interest income is accrued pro rata to maturity. All
premiums and original issue discount are amortized/accreted for financial and
tax accounting purposes.
Repurchase Agreements. The Fund may enter into repurchase agreements in order
to generate additional income. Each repurchase agreement entered into by the
Fund will provide that the value of the collateral underlying the repurchase
agreement will always be at least 102% of the repurchase price, including
accrued interest, except for repurchase agreements entered into with a
broker/dealer or bank whose unsecured debt is rated AAA or whose commercial
paper is rated A-1+ by Standard and Poor's, in which case the value of the
collateral will always be at least 100% of the repurchase price, including
accrued interest. The Fund will not enter into a repurchase agreement having
more than seven days remaining to maturity if, as a result, such agreements,
together with any other securities which are not readily marketable, would
exceed 15% of the net assets of the Fund. In addition, not more than one-third
of the current market value of the Fund's total assets shall constitute
secured "loans" by the Fund under repurchase agreements.
Federal Income Taxes. As a Massachusetts Business Trust, the Fund is a
separate corporate taxpayer and determines its net investment income and
capital gains (or losses) and the amounts to be distributed to the Fund's
shareholders without regard to the income and capital gains (or losses) of the
other funds. It is the intent of the
- -------------------------------------------------------------------------------
<PAGE>
20 Investors Trust Tax Free Fund
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED
Fund to comply with the requirements of the Internal Revenue Code which are
applicable to regulated investment companies and to distribute substantially
all of its taxable income to its shareholders. Accordingly, the Fund paid no
federal taxes and no federal income or excise tax provision was required. As
of October 31, 1995 the Fund has a net tax basis capital loss carryforward of
$176,365, which may be applied against any realized taxable gains until its
expiration date of October 31, 2003.
Distribution of Income and Gains. The Fund will declare a distribution each
day in an amount based on periodic projections of its future net investment
income and will pay such distributions monthly. Consequently, the amount of
each daily distribution may differ from actual net investment income.
Distributions from net short-term gains are declared and paid monthly. Long-
term realized gains in excess of any available capital loss carryforward would
be taxable to the Fund if not distributed and, therefore, will be declared and
paid to its shareholders annually.
Capital Accounts. The Fund reports the undistributed net investment income
(accumulated net investment loss) and accumulated net realized gain (loss)
accounts on a basis approximating amounts available for future tax
distributions (or to offset future taxable realized gains when a capital loss
carryforward is available). Accordingly, the Fund may periodically make
reclassifications among certain capital accounts without impacting the net
asset value of the Fund.
Deferred Organization and Registration Costs. Costs incurred by the Fund in
connection with its organization and registration of shares have been deferred
and are being amortized over a 60 month period on a straight-line basis. Costs
incurred for the subsequent registration of shares will be amortized on a
straight-line basis over the lesser of the duration of the registration period
or 12 months.
Expenses. Expenses such as management fees, distribution fees, custodian
fees, transfer agent fees, and registration fees are charged directly to the
Fund, while indirect expenses, such as shareholder reports, professional fees,
trustee fees and expenses, and insurance are allocated among the funds
principally based on their relative net assets. Portfolio-level expenses are
allocated to each class of shares based upon the relative percentage of
current net assets of dividend-eligible shares. All expenses that are directly
attributable to a specific class of shares, such as legal expenses and
Trustees' fees incurred as a result of issues relating solely to one class and
distribution fees, are allocated to that class.
3. PURCHASES AND SALES OF SECURITIES. During the fiscal year ended October 31,
1995 purchases and sales of municipal securities, excluding short-term
securities and repurchase agreements, totalled $8,680,423 and $5,089,700,
respectively.
The aggregate cost of the investment portfolio for federal income tax
purposes was $23,440,929. At October 31, 1995, net unrealized appreciation for
all securities based on tax cost was $176,302. This consisted of aggregate
gross unrealized appreciation for all securities in which there was an excess
of market value over tax cost of $291,335 and aggregate gross unrealized
depreciation for all securities in which there was an excess of tax cost over
market value of $115,033.
4. MANAGEMENT, DISTRIBUTION AND TRUSTEES' FEES. Under an Advisory agreement
between the Fund and the Adviser, the Fund agrees to pay the Adviser a fee
calculated based upon the Fund's average daily net assets, equal to an annual
rate of .60% of the first $20 million, .50% of the next $80 million and .45%
of average daily net assets in excess of $100 million. The Adviser had agreed
to reimburse the Fund for expenses incurred by the Fund to the extent that
such expenses exceed specified percentages of average daily net assets during
the fiscal year ended October
- -------------------------------------------------------------------------------
<PAGE>
Investors Trust Tax Free Fund 21
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED
31, 1995. The expense reimbursement may be extended or modified by the
Adviser. The Advisory agreement also provides that if, in any fiscal year, the
total of certain specified expenses of the Fund exceed the expense limitations
applicable to the Fund imposed by the securities regulations of any state in
which it is then registered to sell shares, the Adviser will waive all or a
portion of its management fee equal to such excess. The Adviser is only
required to reimburse the Fund for any expenses which exceed state expense
limitations up to the amount of management fees paid or payable by the Fund
during such fiscal year. The total management fee for the fiscal year ended
October 31, 1995 was $125,333. The expenses reimbursed for the fiscal year
ended October 31, 1995 were $428,046 ($0.199 per share for Class A, $0.287 per
share for Class B). The reimbursement for expenses by the Adviser is being
offset by the payables to the Adviser monthly. Any amount due from the Adviser
in excess of the amounts due to the Adviser is settled in cash within 15 days
following month end.
The Adviser retained Brown Brothers Harriman & Co. (the "Sub-Adviser") to act
as portfolio manager of the Fund. As portfolio manager, the Sub-Adviser is
responsible for the actual investment management of the Fund's assets
(including the placement of brokerage orders), under the general supervision
of the Adviser and the Board of Trustees.
GNA Distributors, Inc. (the "Distributor") receives a monthly distribution
fee from the Fund calculated at the annual rate of .75% of the average daily
net assets of Class B shares pursuant to Rule 12b-1 of the Investment Company
Act of 1940, as amended. A shareholder servicing fee is also imposed on both
Class A and Class B of the Fund equal to specified costs incurred by the
Distributor, but in no event to exceed .25% of the average daily net assets of
the Fund. The shareholder servicing fee is in addition to the .75%
distribution fee. The Distributor has agreed that the .75% of average daily
net assets on Class B shares will only be assessed on any shareholder's shares
for a limited period of time. Once Class B shares automatically convert to
Class A shares of the Fund, after eight years, such shareholders will be
subject only to the shareholder servicing fee of .25% maximum applicable to
Class A shares under the 12b-1 Plan.
With respect to Class B shares, a contingent deferred sales charge
("withdrawal fee") of 5% the first year, declining by 1% per year for five
years, is imposed on any redemption which reduces the current value of the
account to an amount which is lower than the dollar amount of all payments
during the preceding five years. Withdrawal fees are paid to and retained by
the Distributor. These fees permit the Distributor to recover its sales-
related expenses (such as the 4% of the purchase price paid to dealers who
sell Class B shares of the Fund, printing fees, and marketing and advertising
expenses). In the event the Distributor is not fully reimbursed for such
expenses incurred in any fiscal year of the Fund, the Distributor shall be
entitled to carryforward such expenses to subsequent fiscal years for
submission to the Fund for payment, subject always to the .75% of Class B net
assets annual maximum expenditure allowed by the Fund's Plan. The cumulative
reimbursable amount is increased by an interest factor which is intended to
replicate the Distributor's cost of funds for financing advances made under
the Plan. The Trustees or a majority of the Fund's shareholders have the
right, however, to terminate the Plan and all payments thereunder at any time.
The Fund will not be obligated to reimburse the Distributor for carryover
expenses subsequent to the Plan's termination or noncontinuance. The total
amount of carryover expenses outstanding since inception of the Plan as of
October 31, 1995, for which the Distributor intends to seek repayment is
approximately $296,000.
Total distribution fees and shareholder servicing fees for the fiscal year
ended October 31, 1995 were $45,287 and $52,809 ($36,748 Class A, $16,061
Class B), respectively.
The Trust pays each Trustee not affiliated with the Adviser: (1) an annual
fee of $4,000; and (2) a fee of $500 for each meeting of the Board of Trustees
attended plus all reasonable expenses associated with attendance at such
meetings. These amounts are allocated among the funds principally based on
their relative net assets. No remuneration is paid by the Trust to any Trustee
or officer of the Fund who is affiliated with the Adviser.
- -------------------------------------------------------------------------------
<PAGE>
22 Investors Trust Tax Free Fund
- -------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Trustees of
Investors Trust Tax Free Fund
We have audited the accompanying statement of assets and liabilities of
Investors Trust Tax Free Fund including the investment portfolio, as of
October 31, 1995, and the related statement of operations for the fiscal year
then ended, and the statements of changes in net assets for each of the two
fiscal years in the period then ended and the financial highlights for each of
the two fiscal years in the period then ended and for the period September 8,
1993 (commencement of operations) to October 31, 1993. These financial
statements and financial highlights are the responsibility of the Fund'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 October 31, 1995 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
Investors Trust Tax Free Fund as of October 31, 1995, the results of its
operations for the fiscal year then ended, the changes in its net assets for
each of the two fiscal years in the period then ended and the financial
highlights for each of the two fiscal years in the period then ended and for
the period September 8, 1993 (commencement of operations) to October 31, 1993
in conformity with generally accepted accounting principles.
Boston, Massachusetts [SIGNATURE OF COOPERS & LYBRAND L.L.P.]
December 18, 1995
- -------------------------------------------------------------------------------
<PAGE>
Investors Trust Tax Free Fund 23
- -------------------------------------------------------------------------------
TAX INFORMATION
Of the dividends paid by the Fund from net investment income for the fiscal
year ended October 31, 1995, 99.7% constituted exempt interest dividends for
regular federal income tax purposes.
Please consult a tax adviser if you have any questions about federal or state
income tax laws, or on how to prepare your tax returns. If you have specific
questions about your Fund account, please consult your investment
representative or call toll free 1-800-656-6626 and press #2.
- -------------------------------------------------------------------------------
<PAGE>
INVESTORS TRUST /SM/
MUTUAL FUNDS
For more information about the Investors Trust mutual funds and to
obtain a prospecuts containing complete information including fees and
expenses or a copy of the annual report for any of the funds shown
here, call us at 1-800-656-6626.
ADJUSTABLE RATE FUND
Investing primarily in adjustable rate securities including, but not limited to,
adjustable rate mortgage securities, this Fund seeks to produce a high level of
current income consistent with limiting fluctuations in the net value of the
Fund shares. Conservative investors seeking higher rates of return than those
offered by money market funds should consider the Adjustable Rate Fund.
Sub-Adviser: Standish, Ayer & Wood, Inc.
GOVERNMENT FUND
This Fund seeks to produce a high level of current income consistent with safety
of principal. The Fund will attempt to achieve its objective by investing
primarily in obligations issued or guaranteed by the U.S. Government or by its
agencies or instrumentalities. The government guarantee applies only to the
payment of principal and interest to the Fund and not to the value of the Fund's
shares, which will fluctuate and could be more or less than the purchaser's
cost.
Sub-Adviser: BlackRock Financial Management, Inc.
TAX FREE FUND
This Fund invests primarily in tax-exempt debt obligations and seeks to produce
a high level of income exempt from federal income tax as is consistent with
preservation of capital. This Fund invests primarily in investment-grade debt
obligations.
Sub-Adviser: Brown Brothers Harriman & Co.
VALUE FUND
This equity income fund seeks to provide an above-average level of dividend
income and long-term growth of capital by investing primarily in medium to large
capitalization companies with established operating histories and potential for
dividend growth.
Sub-Adviser: Duff & Phelps Investment Management Co.
GROWTH FUND
This Fund invests primarily in medium capitalization companies whose earnings
and/or assets are expected to grow at a rate above the average for the Standard
& Poor's 500 Stock Index over the long term.
Sub-Adviser: Value Line, Inc.
*State and local taxes may apply. For certain investors, a portion of the
income may be subject to the alternative minimum tax.
<PAGE>
[LOGO]
GNA Distributors, Inc.
Two Union Square . P.O. Box 490
Seattle, Washington 98111-0490
INVESTORS TRUST /SM/
MUTUAL FUNDS
TAX FREE FUND
ANNUAL REPORT
-----------------
October 31, 1995
The Investors Trust Family of Funds
is offered by GNA Distributors, Inc.
<PAGE>
VALUE FUND
[PHOTO APPEARS HERRE]
Chairman's Message
Dear Shareholder:
I am pleased to present this annual report of your Investors Trust Mutual Fund,
which covers the twelve month period ending October 31, 1995. Included with this
report is a discussion of the Fund's performance and an interview with the
Fund's Sub-Adviser. As an introduction to that report, I offer you my
perspective on the financial markets.
Financial Markets Perspective
What a difference a year makes! The dominant theme in the domestic financial
markets over the last twelve months seems to have been an increasing acceptance
of the so-called "Fed engineered soft landing." This refers to the idea that the
Federal Reserve's management of short-term interest rates via monetary policy
decisions has slowed the growth rate of the economy to a more sustainable, low-
inflation level, without pushing the economy into a recession. Comparing growth
rates on a year-over-year basis as of September 1995 and September 1994, the
Gross Domestic Product (GDP) growth rate was 3.3% this year, down from 4.4% a
year ago, and the Consumer Price Index (CPI) growth rate was 2.5% this year,
down from 3.0% last year.
This slower economic growth with lower inflation resulted in lower intermediate
and long-term interest rates, which helped produce above average stock and bond
market returns for the last twelve months. During this period, the stock market,
as measured by the S&P 500 Stock Index, had a total return of +26.41%, and the
bond market, as measured by the Lehman Brothers Aggregate Bond Index, had a
total return of +15.65%. As welcome as these market returns have been this year,
particularly in comparison to last year's below average returns, please
understand that they are well above average, and thus not sustainable on a long-
term basis.
(Continued on next page)
Annual Report--October 31, 1995
<PAGE>
Additional Information
If you are interested in additional information about the Investors Trust
Mutual Funds, please contact your Investors Trust Representative, or call
Investors Trust Services toll-free at 1-800-656-6626 and select option 2.
Thank you for investing with Investors Trust.
Sincerely,
[SIGNATURE OF PATRICK E. WELCH]
Patrick E. Welch
Chairman
<PAGE>
- -------------------------------------------------------------------------------
INVESTORS TRUST
VALUE FUND
Annual Report
October 31, 1995
TRUSTEES AND OFFICERS INVESTMENT ADVISER
PATRICK E. WELCH GNA CAPITAL MANAGEMENT, INC.
Trustee, Chairman of the Board, Seattle, Washington
President and CEO
PIERCE T. LINDBERG INVESTMENT SUB-ADVISER
Trustee DUFF & PHELPS INVESTMENT MANAGEMENT,
EDWARD R. MCMILLAN INC.
Trustee Chicago, Illinois
DOUGLAS H. PEDERSEN
Trustee DISTRIBUTOR
GEOFFREY S. STIFF GNA DISTRIBUTORS, INC.
Senior Vice President and Treasurer Seattle, Washington
CHARLES A. KAMINSKI
Senior Vice President COUNSEL
VICTOR C. MOSES GOODWIN, PROCTER & HOAR
Senior Vice President Boston, Massachusetts
THOMAS W. CASEY
Vice President and Controller CUSTODIAN & TRANSFER AGENT
EDWARD J. WILES, JR. STATE STREET BANK AND TRUST COMPANY
Vice President and Secretary Boston, Massachusetts
KARRI J. HARRINGTON
Assistant Secretary INDEPENDENT ACCOUNTANTS
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
This report is prepared for the shareholders of the Investors Trust Value
Fund. It is not authorized for use as an offer of sale or a solicitation of an
offer to buy shares of the Fund unless accompanied or preceded by the Fund's
current prospectus.
<PAGE>
(This page intentionally left blank)
<PAGE>
Investors Trust Value Fund 3
- -------------------------------------------------------------------------------
FROM THE ADVISER
----------------
GNA CAPITAL MANAGEMENT, INC.
A special meeting of the shareholders was held on September 8, 1995, for the
purpose of approving the adoption of a successor sub-advisory agreement between
GNA Capital Management and Duff & Phelps Investment Management. The new
agreement was necessary due to a proposed merger of Duff & Phelps Corporation,
the parent of Duff & Phelps Investment Management, with PM Holdings, Inc., and
Phoenix Securities Group, Inc. The shareholders present by proxy at the
meeting, representing a majority of the outstanding shares of each class,
approved the new sub-advisory agreement by voting as follows:
. Class A Shares 336,814.644 (96.46%) in favor, none (0%) against, and
12,371.046 (3.54%) abstaining;
. Class B Shares 691,367.901 (90.16%) in favor, 17,690.213 (2.31%) against,
and 57,773.780 (7.53%) abstaining.
MARKET AND FUND PERFORMANCE
For the twelve month period ended October 31, 1995, stock prices, as measured
by the S&P 500 Index, rose from 472.35 to 581.50, a gain of more than 23%.
These stock price increases were augmented by dividend income, so that for the
twelve month period, the unmanaged S&P 500 Index total return was +26.41%.
In this environment, the Fund's NAV (net asset value) increased from
$7.51/$7.50 to $8.95/$8.93 (for Class A/B shares, respectively), and the total
return was +21.45%/+20.50%. In comparison, the Morningstar Equity-Income fund
average total return which covers 113 funds was +17.92%.
The enclosed interview with the Fund's Sub-Adviser contains more information
about the Fund's performance and investment strategy.
[PERFORMANCE CHART APPEARS HERE]
Performance of a $10,000 investment since inception of the Investors Trust Value
Fund (9/93)
- --------------------------------------------------------------------------------
MONTH ITVA ITVB S&P500 MEI
----- ---- ---- ------ ---
Aug 1993 $10,000 $10,000 $10,000 $10,000
Sep 1993 $10,040 $10,067 $ 9,926 $10,006
Oct 1993 $10,173 $10,187 $10,127 $10,108
Nov 1993 $10,093 $10,107 $10,032 $ 9,943
Dec 1993 $10,141 $10,147 $10,156 $10,102
Jan 1994 $10,208 $10,200 $10,496 $10,374
Feb 1994 $ 9,967 $ 9,960 $10,213 $10,119
Mar 1994 $ 9,574 $ 9,556 $ 9,768 $ 9,723
Apr 1994 $ 9,722 $ 9,690 $ 9,895 $ 9,826
May 1994 $ 9,789 $ 9,757 $10,057 $ 9,915
Jun 1994 $ 9,595 $ 9,561 $ 9,808 $ 9,763
Jul 1994 $ 9,837 $ 9,789 $10,133 $10,012
Aug 1994 $10,093 $10,044 $10,545 $10,329
Sep 1994 $ 9,925 $ 9,873 $10,291 $10,145
Oct 1994 $10,141 $10,075 $10,527 $10,206
Nov 1994 $ 9,831 $ 9,766 $10,140 $ 9,836
Dec 1994 $ 9,972 $ 9,902 $10,288 $ 9,921
Jan 1995 $10,231 $10,145 $10,556 $10,115
Feb 1995 $10,557 $10,469 $10,966 $10,436
Mar 1995 $10,731 $10,626 $11,290 $10,667
Apr 1995 $11,073 $10,964 $11,619 $10,899
May 1995 $11,414 $11,289 $12,078 $11,237
Jun 1995 $11,517 $11,383 $12,361 $11,359
Jul 1995 $11,832 $11,695 $12,773 $11,638
Aug 1995 $11,778 $11,641 $12,808 $11,752
Sep 1995 $12,289 $12,140 $13,344 $12,141
Oct 1995 $12,316 $12,140 $13,296 $12,018
- --------------------------------------------------------------------------------
Investors Trust Value Fund -- A shares (ending value: $12,316)
Investors Trust Value Fund -- B shares (ending value: $12,140)
Standard & Poor's 500 Stock Index (ending value: $13,296)
Morningstar Equity Income Fund average (ending value: $12,018)
Past performance is not indicative of future results. Investment returns and
principal will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost.
-------------------------------------------------------------------------------
<PAGE>
4 Investors Trust Value Fund
- -------------------------------------------------------------------------------
FROM THE SUB-ADVISER
--------------------
DUFF & PHELPS INVESTMENT MANAGEMENT
PORTFOLIO MANAGER: CARL FAUST
WHAT HAPPENED IN THE MARKET OVER THE LAST 12 MONTHS (NOV94-OCT95)?
The S&P 500 total return was +26.41% for the 12 months. The market
experienced an explosive rally into record high territory over this period of
time. Higher stock prices were primarily the result of two factors: falling
interest rates and strong corporate profits. Interest rates have fallen
dramatically as the bond market has rallied in response to a "soft landing"
economic scenario (slowing economic growth with low inflation).
WHAT HAPPENED IN THE FUND OVER THE LAST 12 MONTHS (NOV94-OCT95)?
For the 12 month period, the Fund's total return was 21.45%/20.50% (for the
Class A/B shares, respectively). In general, lower quality stocks outpaced
high quality stocks over the year, hurting the Value Fund's relative
performance because of its high quality focus. This was the result of a fairly
strong economy and a very robust corporate profit environment over this time.
However, over the past couple of months there has been a noticeable shift
toward higher quality issues due to expectations for slower earnings growth
going forward.
WHAT IS YOUR CURRENT MARKET OUTLOOK?
. Economic growth is expected to increase moderately in the second half of 1995
following particular weakness in the second quarter. We project economic
growth of 3.2% in 1995, considerably slower than 1994 growth of 4.1%. For
1996, we anticipate a further deceleration in growth to 2%.
. Inflation should remain at a moderate 3% level in 1995. We expect inflation
will trend higher to 3.5% in 1996 due to moderate pressure of higher capacity
utilization rates and labor constraints.
. We anticipate corporate profit growth will decelerate to 16% in 1995 from a
remarkably high 40% jump in 1994. 1996 profit growth is expected to be 8-10%.
. We believe that increased concerns about deceleration in earnings growth
caused the flight to higher quality stocks over the past couple of months. We
anticipate that this trend will continue as earnings momentum continues to
slow in 1996.
HOW IS THE FUND POSITIONED TO BENEFIT FROM YOUR CURRENT MARKET OUTLOOK?
. The Value Fund, which has an expected earnings growth rate that exceeds the
market, should benefit as earnings growth for the market decelerates. We feel
that investors are likely to seek stocks with more stable and consistent
earnings growth in this environment. With its focus on high quality issues,
the Fund should benefit from earnings growth greater than the market.
. We are modestly overweighted in the cyclical sector. Within this sector, we
have increased the portfolio's position in stocks which we feel should
benefit from lower short-term interest rates. Although earnings expectations
for some of these stocks have been reduced due to slower anticipated economic
growth, we feel that these stocks
- -------------------------------------------------------------------------------
<PAGE>
Investors Trust Value Fund 5
- -------------------------------------------------------------------------------
currently represent good value. Historically, these stocks have begun to
outperform the market, while expected earnings are still being revised
downward as the market anticipates the beneficial impact of lower interest
rates.
.We remain underweighted in the defensive sector as we believe that valuation
levels are generally full. Our portfolios are slightly overweighted in the
interest-sensitive sector although this is solely due to our overweighting in
financials which have been strong performers. Within the interest-sensitive
sector, we are substantially underweighted in utilities due to concerns about
fundamentals. We remain underweighted in the energy sector, and we recently
decreased our petroleum exposure as we initiated a position in energy
service.
.Our most significant overweighting is the technology sector where
fundamentals for most companies remain bright.
TECHNOLOGY STOCKS HAVE GOTTEN A LOT OF ATTENTION IN THE FINANCIAL PRESS
RECENTLY. WHAT ARE YOUR THOUGHTS ON THIS SECTOR?
We are overweighted in technology, where we have a very positive long-term
outlook, but are somewhat cautious near-term. While many of the companies have
excellent outlooks as the use of technology becomes more prominent in our
society, many of these companies are selling at high valuations. We are trying
to be very selective and own those stocks with good positive outlooks but
which are not selling at excessive valuations. One example would be Compaq
Computer Co., which we recently added to the Fund. Compaq is one of the lower
selling technology stocks on a valuation basis, yet we believe they have an
attractive outlook. We expect Compaq to benefit from a strong Christmas
selling season as well as from the impact of the introduction of Windows 95.
THERE HAVE BEEN ARTICLES IN THE FINANCIAL PRESS RECENTLY SAYING THAT THE STOCK
MARKET MAY BE OVERVALUED AND THEREFORE DUE FOR A CORRECTION. WHAT DO YOU
THINK?
.The stock market appears to be fairly priced relative to the competitive
returns in the fixed income markets. During 1995, the equity markets have
benefited from a nearly perfect environment: an expanding economy, low
inflation, decreasing interest rates, and rising earnings. As we approach
1996, earnings growth appears to be slowing, which could place some pressure
on selected segments of the market.
.A dramatic increase in interest rates could be the catalyst for a correction,
but given our current outlook for the economy and inflation, we do not expect
interest rates to move in that manner. Therefore we do not anticipate a major
correction in the market during the next 6 months.
- -------------------------------------------------------------------------------
<PAGE>
6 Investors Trust Value Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1995
<TABLE>
<CAPTION>
% OF NET NUMBER MARKET
ASSETS OF SHARES VALUE ($)
-------- --------- -----------
<S> <C> <C> <C>
COMMON STOCKS
BASIC INDUSTRIES 4.2
Chemicals
duPont (EI) deNemours & Company................ 3,100 193,363
Nalco Chemical Company......................... 8,400 252,000
PPG Industries, Incorporated................... 7,900 335,750
-----------
781,113
-----------
CAPITAL GOODS 7.8
Construction & Mining Equipment--1.2%
Caterpillar, Incorporated...................... 3,900 218,888
-----------
Electrical Equipment--4.3%
General Electric Company....................... 8,700 550,275
Premier Industrial Corporation................. 10,100 251,237
-----------
801,512
-----------
Industrial Machinery--1.2%
Illinois Tool Works, Incorporated.............. 3,800 220,875
-----------
Pollution Control--1.1%
Pall Corporation............................... 8,000 195,000
-----------
1,436,275
-----------
CONGLOMERATES 1.4
Pitney Bowes, Incorporated..................... 6,100 266,113
-----------
CONSUMER BASICS 15.0
Drugs & Health Care--9.3%
Abbott Labs.................................... 12,600 500,850
American Home Products Corporation............. 5,500 487,438
Pfizer, Incorporated........................... 10,300 590,962
US Healthcare, Incorporated.................... 3,900 150,150
-----------
1,729,400
-----------
Food & Beverages--3.9%
Coca-Cola Company.............................. 2,400 172,500
CPC International, Incorporated................ 6,100 404,887
Kellogg Company................................ 1,900 137,275
-----------
714,662
-----------
Household Products--1.8%
Procter & Gamble Company....................... 4,100 332,100
-----------
2,776,162
-----------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Value Fund 7
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1995, CONTINUED
<TABLE>
<CAPTION>
% OF NET NUMBER MARKET
ASSETS OF SHARES VALUE ($)
-------- --------- -----------
<S> <C> <C> <C>
CONSUMER DURABLE GOODS 4.8
Automobiles--2.1%
Ford Motor Company............................ 13,700 393,875
-----------
Household Appliances & Home Furnishings--2.7%
Masco Corporation............................. 9,700 272,813
Whirlpool Corporation......................... 4,300 227,900
-----------
500,713
-----------
894,588
-----------
CONSUMER NON-DURABLE GOODS 7.1
Cosmetics & Toiletries--2.2%
Gillette Company.............................. 3,900 188,663
International Flavors......................... 4,700 226,775
-----------
415,438
-----------
Photography--1.2%
Eastman Kodak Company......................... 3,400 212,925
-----------
Retail Trade--3.7%
May Department Stores Company................. 7,900 310,075
Walgreen Company.............................. 13,200 376,200
-----------
686,275
-----------
1,314,638
-----------
CONSUMER SERVICES 2.0
Hotels & Restaurants--1.1%
McDonald's Corporation........................ 4,700 192,700
-----------
Leisure Time--0.9%
Disney (Walt) Company......................... 3,000 172,875
-----------
365,575
-----------
ENERGY 8.3
Gas Exploration--0.9%
Enron Corporation............................. 4,800 165,000
-----------
International Oil--6.5%
Exxon Corporation............................. 7,200 549,900
Mobil Corporation............................. 5,100 513,825
Royal Dutch Petroleum Company................. 1,200 147,450
-----------
1,211,175
-----------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
8 Investors Trust Value Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1995, CONTINUED
<TABLE>
<CAPTION>
% OF NET NUMBER MARKET
ASSETS OF SHARES VALUE ($)
-------- --------- -----------
<S> <C> <C> <C>
ENERGY, CONTINUED
Petroleum Services--0.9%
Halliburton Company............................ 4,100 170,150
-----------
1,546,325
-----------
FINANCE 15.8
Banks--7.8%
First Chicago Corporation...................... 6,400 434,400
Morgan (J.P.) & Company, Incorporated.......... 5,700 439,612
National City Corporation...................... 10,400 321,100
NationsBank Corporation........................ 3,900 256,425
-----------
1,451,537
-----------
Financial Services--6.1%
American Express Company....................... 12,700 515,937
Federal National Mortgage Association.......... 3,700 388,037
MBNA Corporation............................... 6,100 224,938
-----------
1,128,912
-----------
Insurance--1.9%
Marsh & McLennan Companies, Incorporated....... 4,300 352,063
-----------
2,932,512
-----------
GENERAL BUSINESS 3.7
Office Furnishings & Supplies--1.1%
Alco Standard Corporation...................... 2,300 203,550
-----------
Publishing--2.6%
Donnelley (R.R.) & Sons Company................ 13,300 485,450
-----------
689,000
-----------
TECHNOLOGY 15.9
Aerospace--2.5%
Raytheon Company............................... 10,800 471,150
-----------
Computers & Business Equipment--7.3%
AMP, Incorporated.............................. 9,100 357,175
AT&T Corporation............................... 4,000 256,000
Compaq Computer Corporation (a)................ 9,000 501,750
Hewlett Packard Company........................ 2,500 231,562
-----------
1,346,487
-----------
Electronics--0.8%
Intel Corporation.............................. 2,000 139,750
-----------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Value Fund 9
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1995, CONTINUED
<TABLE>
<CAPTION>
% OF NET NUMBER MARKET
ASSETS OF SHARES VALUE ($)
-------- ---------- -----------
<S> <C> <C> <C>
TECHNOLOGY, CONTINUED
Software--5.3%
Automatic Data Processing, Incorporated..... 6,700 479,050
General Motors Corporation [Class E]........ 7,800 367,575
Microsoft Corporation (a)................... 1,400 140,000
-----------
986,625
-----------
2,944,012
-----------
TRANSPORTATION 1.7
Railroads & Equipment
Union Pacific Corporation................... 4,800 313,800
-----------
UTILITIES 8.1
Electric Utilities--1.8%
Duke Power Company.......................... 7,700 344,575
-----------
Telephone--6.3%
Ameritech Corporation....................... 9,100 491,400
Bell Atlantic Corporation................... 5,200 330,850
US West, Incorporated....................... 7,100 338,137
-----------
1,160,387
-----------
1,504,962
----- -----------
Total Common Stocks
(Cost $15,152,046)................... 95.8 17,765,075
-----------
<CAPTION>
PRINCIPAL
AMOUNT ($)
----------
<S> <C> <C> <C>
SHORT TERM GOVERNMENT SECURITY 1.1
United States Treasury Bill, 5.12%, (b)
November 16, 1995
(Cost $199,573)...................... 200,000 199,573
-----------
MONEY MARKET MUTUAL FUNDS 3.8
The Seven Seas Series Money Market Fund
[Class A].................................. 349,089 349,089
The Seven Seas Series US Government Money
Market Fund................................ 349,148 349,148
-----------
Total Money Market Mutual Funds
(Cost $698,237)...................... 698,237
----- -----------
SUMMARY
Total investment portfolio
(Cost $16,049,856) (Note 3).......... 100.7 18,662,885
Other assets and liabilities, net........... (0.7) (130,052)
----- -----------
NET ASSETS.................................... 100.0 $18,532,833
===== ===========
</TABLE>
- --------
NOTES:
(a) Non-income producing securities.
(b) Yield to maturity (unaudited).
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
10 Investors Trust Value Fund
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1995
<TABLE>
<S> <C>
ASSETS
Investments, at market value (identified cost, $16,049,856) (Notes
2 and 3).......................................................... $18,662,885
Cash............................................................... 77
Receivables:
Fund shares sold................................................. 100,085
Dividends........................................................ 40,181
Investments sold................................................. 166,208
Deferred organization costs (Note 2)............................... 35,376
Prepaid expenses (Note 2).......................................... 13,807
-----------
Total assets....................................................... 19,018,619
-----------
LIABILITIES
Payables:
Fund shares redeemed............................................. 752
Investments purchased............................................ 402,447
Dividends........................................................ 89
Adviser (Note 4)................................................. 8,460
Accrued distribution fee (Note 4)................................ 19,506
Accrued management fee (Note 4).................................. 12,229
Other accrued expenses........................................... 42,303
-----------
Total liabilities.................................................. 485,786
-----------
NET ASSETS, AT MARKET VALUE........................................ $18,532,833
===========
NET ASSETS
Net assets consist of:
Undistributed net investment income (Note 2)..................... $ 19,703
Accumulated net realized gain.................................... 166,720
Unrealized appreciation on investments (Notes 2 and 3)........... 2,613,029
Shares of beneficial interest (Note 2)........................... 15,733,381
-----------
NET ASSETS, AT MARKET VALUE........................................ $18,532,833
===========
CLASS A:
NET ASSET VALUE and redemption price per share ($4,082,887 divided
by 456,247 outstanding shares of beneficial interest of no par $8.95
value)............................................................ =====
Maximum offering price per share (100/95.50 of $8.95).............. $9.37
=====
CLASS B:
NET ASSET VALUE and offering price per share ($14,449,946 divided
by 1,617,449 outstanding shares of beneficial interest of no par $8.93
value)............................................................ =====
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Value Fund 11
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED OCTOBER 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends.......................................................... $ 416,089
Interest........................................................... 30,999
----------
Total income....................................................... 447,088
----------
EXPENSES:
Management fee (Note 4).......................................... 117,557
Distribution fees (Note 4)....................................... 113,823
Custodian fee.................................................... 65,457
Transfer agent fee............................................... 63,989
Registration fees................................................ 23,433
Professional fees................................................ 22,993
Shareholder reports.............................................. 13,004
Amortization for organization costs (Note 2)..................... 12,392
Insurance........................................................ 780
Trustees' fees and expenses...................................... 368
Other............................................................ 6,372
----------
Total expenses before reimbursement from Adviser................... 440,168
Reimbursement for expenses from Adviser (Note 4)................... (157,786)
----------
Expenses, net...................................................... 282,382
----------
Net investment income.............................................. 164,706
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from investment transactions (Notes 2 and 3)... 259,945
Net increase in unrealized appreciation of investments during the
year............................................................ 2,455,927
----------
Net gain on investments............................................ 2,715,872
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............... $2,880,578
==========
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
12 Investors Trust Value Fund
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FISCAL YEARS
ENDED OCTOBER 31,
------------------------
1995 1994
----------- -----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income.............................. $ 164,706 $ 101,724
Net realized gain (loss) from investment
transactions...................................... 259,945 (86,157)
Net increase in unrealized appreciation of
investments during the year....................... 2,455,927 110,548
----------- -----------
Net increase in net assets resulting from operations. 2,880,578 126,115
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A ($.15 and $.09 per share)................ (66,092) (35,890)
Class B ($.09 and $.05 per share)................ (128,160) (26,979)
----------- -----------
Increase in net assets from Fund share transactions.. 4,609,102 8,395,920
----------- -----------
INCREASE IN NET ASSETS............................... 7,295,428 8,459,166
Net assets at beginning of year...................... 11,237,405 2,778,239
----------- -----------
NET ASSETS AT END OF YEAR (including undistributed
net investment income of $19,703 and $44,507,
respectively)....................................... $18,532,833 $11,237,405
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
FOR THE FISCAL YEARS ENDED OCTOBER 31,
-------------------------------------------
1995 1994
-------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
-------- ---------- --------- ----------
<S> <C> <C> <C> <C>
FUND SHARE INFORMATION
Class A shares
Sold............................ 81,551 $ 672,875 146,020 $1,080,912
Issued in reinvestment of
distributions.................. 8,245 65,700 4,809 35,418
Redeemed........................ (68,803) (554,145) (10,210) (75,690)
-------- ---------- --------- ----------
Net increase.................... 20,993 $ 184,430 140,619 $1,040,640
======== ========== ========= ==========
Class B shares
Sold............................ 836,647 $6,719,785 1,060,561 $7,848,301
Issued in reinvestment of
distributions.................. 15,288 122,526 3,553 26,120
Redeemed........................ (297,365) (2,417,639) (70,459) (519,141)
-------- ---------- --------- ----------
Net increase.................... 554,570 $4,424,672 993,655 $7,355,280
======== ========== ========= ==========
</TABLE>
- --------
At October 31, 1995, GNA Corporation, the parent company of GNA Capital
Management Inc., the Fund's investment adviser (the "Adviser"), owned 275,226
Class A and a nominal amount of Class B shares of the Fund.
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Value Fund 13
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The financial highlights set forth below include selected data for a share
outstanding throughout each period and other performance information derived
from the financial statements.
<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED OCTOBER 31,
----------------------------------------------
CLASS A CLASS B
---------------------- ----------------------
1995 1994 1993+ 1995 1994 1993+
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD....................... $ 7.51 $ 7.63 $ 7.50 $ 7.50 $7.64 $ 7.50
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income (loss)
(a).......................... .14 .13 .01 .07 .08 (.01)
Net realized and unrealized
gains (losses) on
investments.................. 1.45 (.16) .12 1.45 (.17) .15
------ ------ ------ ------ ------ ------
Total from Investment
Operations................... 1.59 (.03) .13 1.52 (.09) .14
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS FROM
Net investment income......... (.14) (.09) -- (.07) (.05) --
Distributions in excess of net
investment income............ (.01) -- -- (.02) -- --
------ ------ ------ ------ ------ ------
Total Distributions........... (.15) (.09) -- (.09) (.05) --
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF
PERIOD....................... $ 8.95 $ 7.51 $ 7.63 $ 8.93 $7.50 $ 7.64
====== ====== ====== ====== ====== ======
TOTAL RETURN (%) **........... 21.45 (0.32) 1.73 20.50 (1.10) 1.87
RATIOS/SUPPLEMENTAL DATA
Ratios (%):
Expenses, net, to average
daily net assets (a)........ 1.35 1.35 1.42* 2.10 2.10 2.04*
Net investment income (loss)
to average daily net assets. 1.71 1.92 0.73* .94 1.09 (1.07)*
Portfolio turnover........... 27.41 14.53 6.04* 27.41 14.53 6.04*
Net Assets, end of period
(millions)................... $ 4.1 $ 3.2 $ 2.2 $ 14.4 $ 8.0 $ 0.5
(a) Reimbursement for expenses
from Adviser.................. $0.086 $0.165 $0.008 $0.083 $0.163 $0.002
Operating expenses ratio
excluding reimbursement for
expenses (%)................ 2.43 3.55 6.37* 3.18 4.02 6.38*
</TABLE>
- --------
+ For the period September 8, 1993 (commencement of operations) to October
31, 1993.
* Annualized
** A sales charge of 4.5% (maximum) was not reflected in total return
calculations for Class A. A contingent deferred sales charge of 5% the
first year, declining by 1% per year for five years, was not reflected in
total return calculations for Class B. Periods less than one year are not
annualized.
- -------------------------------------------------------------------------------
<PAGE>
14 Investors Trust Value Fund
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION. Investors Trust (the "Trust") is organized as a Massachusetts
Business Trust and is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company. The Trust
is a series of funds, currently comprised of five investment portfolios, four
of which commenced operations as of September 8, 1993 and one, the Government
Fund, which commenced operations as of April 22, 1987. These financial
statements report on the Value Fund (the "Fund"). Financial statements for the
other funds are presented separately.
Under the Trust's Multiple Class Distribution System (the "Multiple Class
Arrangement"), the Fund currently offers to the general public two classes of
shares of beneficial interest, no par value, which may be purchased at a price
equal to the next determined net asset value per share plus a sales charge
which, at the election of the purchaser, may be imposed (i) at the time of
purchase (Class A shares) or (ii) on a deferred basis (Class B shares). Class
B shares, including a pro rata portion of the shares received as distributions
with respect to such shares, will automatically convert to Class A shares of
the Fund at the end of eight years following the issuance of the Class B
shares.
2. SIGNIFICANT ACCOUNTING POLICIES. The policies described below are followed
consistently by the Fund in the preparation of its financial statements in
conformity with generally accepted accounting principles.
Securities Valuation. The Fund values investment securities at market value
based on the last quoted sales price as reported by the principal securities
exchange on which the security is traded. If no sale is reported, the mean
between the last bid and asked price is used and in the absence of a market
qoute, securities are valued using such methods as the Trustees believe would
reflect fair market value. Short-term investments are valued at original cost
plus accreted discount or accrued income which approximates market value.
Securities Transactions and Related Investment Income. Sales and purchases
are accounted for on trade date. Realized securities gains or losses are
determined using the identified cost method for both financial and tax
reporting purposes. Dividend income is recorded on the ex-dividend date.
Interest income is accrued pro rata to maturity. Original issue discount is
accreted for financial and tax accounting purposes.
Repurchase Agreements. The Fund may enter into repurchase agreements in order
to generate additional income. Each repurchase agreement entered into by the
Fund will provide that the value of the collateral underlying the repurchase
agreement will always be at least 102% of the repurchase price, including
accrued interest, except for repurchase agreements entered into with a
broker/dealer or bank whose unsecured debt is rated AAA or whose commercial
paper is rated A-1+ by Standard and Poor's, in which case the value of the
collateral will always be at least 100% of the repurchase price, including
accrued interest. The Fund will not enter into a repurchase agreement having
more than seven days remaining to maturity if, as a result, such agreements,
together with any other securities which are not readily marketable, would
exceed 10% of the net assets of the Fund. In addition, not more than one-third
of the current market value of the Funds total assets shall constitute secured
loans by the Fund under repurchase agreements.
Federal Income Taxes. As a Massachusetts Business Trust, the Fund is a
separate corporate taxpayer and determines its net investment income and
capital gains (or losses) and the amounts to be distributed to the Funds
shareholders without regard to the income and capital gains (or losses) of the
other funds. It is the intent of the Fund to comply with the requirements of
the Internal Revenue Code which are applicable to regulated investment
- -------------------------------------------------------------------------------
<PAGE>
Investors Trust Value Fund 15
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED
companies and to distribute substantially all of its taxable income to its
shareholders. Accordingly, the Fund paid no federal taxes and no federal
income or excise tax provision was required.
Distribution of Income and Gains. Distributions of net investment income are
declared and paid quarterly. Distributions from net short-term realized gains
are declared and paid quarterly. Long-term realized gains in excess of any
available capital loss carryforward would be taxable to the Fund if not
distributed and, therefore, will be declared and paid to its shareholders
annually.
Capital Accounts. The Fund reports the undistributed net investment income
(accumulated net investment loss) and accumulated net realized gain (loss)
accounts on a basis approximating amounts available for future tax
distributions (or to offset future taxable realized gains when a capital loss
carryforward is available). Accordingly, the Fund may periodically make
reclassifications among certain capital accounts without impacting the net
asset value of the Fund.
Deferred Organization and Registration Costs. Costs incurred by the Fund in
connection with its organization and registration of shares have been deferred
and are being amortized over a 60 month period on a straight-line basis. Costs
incurred for subsequent registration of shares will be amortized on a
straight-line basis over the lesser of the duration of the registration period
or 12 months.
Expenses. Expenses such as management fees, distribution fees, custodian
fees, transfer agent fees, and registration fees are charged directly to the
Fund, while indirect expenses, such as shareholder reports, professional fees,
trustee fees and expenses, and insurance are allocated among the funds
principally based on their relative net assets. Portfolio-level expenses are
allocated to each class of shares based upon the relative percentage of
current net assets of dividend-eligible shares. All expenses that are directly
attributable to a specific class of shares, such as legal expenses and
Trustees' fees incurred as a result of issues relating solely to one class and
distribution fees, are allocated to that class.
3. PURCHASES AND SALES OF SECURITIES. During the fiscal year ended October 31,
1995 purchases and sales of equity securities, excluding short-term securities
and repurchase agreements, totalled $8,628,579 and $3,748,996, respectively.
The aggregate cost of the investment portfolio for federal income tax
purposes was $16,049,856. At October 31, 1995, net unrealized appreciation for
all securities based on tax cost was $2,613,029. This consisted of aggregate
gross unrealized appreciation for all securities in which there was an excess
of market value over tax cost of $2,770,450 and aggregate gross unrealized
depreciation for all securities in which there was an excess of tax cost over
market value of $157,421.
4. MANAGEMENT, DISTRIBUTION AND TRUSTEES' FEES. Under an Advisory agreement
between the Fund and the Adviser, the Fund agrees to pay the Adviser a fee
calculated based upon the Fund's average daily net assets, equal to an annual
rate of .80% of the first $100 million and .70% of average daily net assets in
excess of $100 million. The Adviser had agreed to reimburse the Classes for
expenses incurred by the Classes to the extent that such expenses exceed 1.35%
(Class A) and 2.10% (Class B) of average daily net assets during the fiscal
year ended October 31, 1995. The Advisory agreement also provides that if, in
any fiscal year, the total of certain specified expenses of the Fund exceed
the expense limitations applicable to the Fund imposed by the securities
regulations of any state in which it is then registered to sell shares, the
Adviser will waive all or a portion of its management fee equal to such
excess.
- -------------------------------------------------------------------------------
<PAGE>
16 Investors Trust Value Fund
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED
The Adviser is only required to reimburse the Fund for any expenses which
exceed state expense limitations up to the amount of management fees paid or
payable by the Fund during such fiscal year. The total management fee for the
fiscal year ended October 31, 1995 was $117,557. The expenses reimbursed for
the fiscal year ended October 31, 1995 were $157,786 ($0.086 per share for
Class A, $0.083 per share for Class B). The reimbursement for expenses by the
Adviser is being offset by the payables to the Adviser monthly. Any amount due
from the Adviser in excess of the amounts due to the Adviser is settled in
cash within 15 days following month end.
The Adviser retained Duff & Phelps Investment Management, Inc. (the "Sub-
Adviser") to act as portfolio manager of the Fund. As portfolio manager, the
Sub-Adviser is responsible for the actual investment management of the Fund's
assets (including the placement of brokerage orders), under the general
supervision of the Adviser and the Board of Trustees.
GNA Distributors, Inc. (the "Distributor") receives a monthly distribution
fee from the Fund calculated at the annual rate of .75% of the average daily
net assets of Class B shares pursuant to Rule 12b-1 of the Investment Company
Act of 1940, as amended. A shareholder servicing fee is also imposed on both
Class A and Class B of the Fund equal to specified costs incurred by the
Distributor, but in no event to exceed .25% of the average daily net assets of
the Fund. The shareholder servicing fee is in addition to the .75%
distribution fee. The Distributor has agreed that the .75% of average daily
net assets on Class B shares will only be assessed on any shareholders shares
for a limited period of time. Once Class B shares automatically convert to
Class A shares of the Fund, after eight years, such shareholders will be
subject only to the shareholder servicing fee of .25% maximum applicable to
Class A shares under the 12b-1 Plan.
With respect to Class B shares, a contingent deferred sales charge
(withdrawal fee) of 5% the first year, declining by 1% per year for five
years, is imposed on any redemption which reduces the current value of the
account to an amount which is lower than the dollar amount of all payments
during the preceding five years. Withdrawal fees are paid to and retained by
the Distributor. These fees permit the Distributor to recover its sales-
related expenses (such as the 4% of the purchase price paid to dealers who
sell Class B shares of the Fund, printing fees, and marketing and advertising
expenses). In the event the Distributor is not fully reimbursed for such
expenses incurred in any fiscal year of the Fund, the Distributor shall be
entitled to carryforward such expenses to subsequent fiscal years for
submission to the Fund for payment, subject always to the .75% of Class B net
assets annual maximum expenditure allowed by the Funds Plan. The cumulative
reimbursable amount is increased by an interest factor which is intended to
replicate the Distributors cost of funds for financing advances made under the
Plan. The Trustees or a majority of the Funds shareholders have the right,
however, to terminate the Plan and all payments thereunder at any time. The
Fund will not be obligated to reimburse the Distributor for carryover expenses
subsequent to the Plans termination or noncontinuance. The total amount of
carryover expenses outstanding since inception of the Plan as of October 31,
1995, for which the Distributor intends to seek repayment is approximately
$484,000.
Total distribution fees and shareholder servicing fees for the fiscal year
ended October 31, 1995 were $83,141 and $30,682 ($7,512 Class A, $23,170 Class
B), respectively.
The Trust pays each Trustee not affiliated with the Adviser : (1) an annual
fee of $4,000; and (2) a fee of $500 for each meeting of the Board of Trustees
attended plus all reasonable expenses associated with attendance at such
meetings. These amounts are allocated among the funds principally based on
their relative net assets. No remuneration is paid by the Trust to any Trustee
or officer of the Fund who is affiliated with the Adviser.
- -------------------------------------------------------------------------------
<PAGE>
Investors Trust Value Fund 17
- -------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Trustees of
Investors Trust Value Fund
We have audited the accompanying statement of assets and liabilities of
Investors Trust Value Fund including the investment portfolio, as of October
31, 1995, and the related statement of operations for the fiscal year then
ended, and the statements of changes in net assets for each of the two fiscal
years in the period then ended and the financial highlights for each of the
two fiscal years in the period then ended and for the period September 8, 1993
(commencement of operations) to October 31, 1993. These financial statements
and financial highlights are the responsibility of the Fund'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 October 31, 1995 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
Investors Trust Value Fund as of October 31, 1995, the results of its
operations for the fiscal year then ended, the changes in its net assets for
each of the two fiscal years in the period then ended and the financial
highlights for each of the two fiscal years in the period then ended and for
the period September 8, 1993 (commencement of operations) to October 31, 1993
in conformity with generally accepted accounting principles.
Boston, Massachusetts [SIGNATURE OF COOPERS & LYBRAND L.L.P.]
December 18, 1995
- -------------------------------------------------------------------------------
<PAGE>
INVESTORS TRUST /SM/
MUTUAL FUNDS
For more information about the Investors Trust mutual funds and to
obtain a prospecuts containing complete information including fees and
expenses or a copy of the annual report for any of the funds shown
here, call us at 1-800-656-6626.
ADJUSTABLE RATE FUND
Investing primarily in adjustable rate securities including, but not limited to,
adjustable rate mortgage securities, this Fund seeks to produce a high level of
current income consistent with limiting fluctuations in the net value of the
Fund shares. Conservative investors seeking higher rates of return than those
offered by money market funds should consider the Adjustable Rate Fund.
Sub-Adviser: Standish, Ayer & Wood, Inc.
GOVERNMENT FUND
This Fund seeks to produce a high level of current income consistent with safety
of principal. The Fund will attempt to achieve its objective by investing
primarily in obligations issued or guaranteed by the U.S. Government or by its
agencies or instrumentalities. The government guarantee applies only to the
payment of principal and interest to the Fund and not to the value of the Fund's
shares, which will fluctuate and could be more or less than the purchaser's
cost.
Sub-Adviser: BlackRock Financial Management, Inc.
TAX FREE FUND
This Fund invests primarily in tax-exempt debt obligations and seeks to produce
a high level of income exempt from federal income tax as is consistent with
preservation of capital. This Fund invests primarily in investment-grade debt
obligations.
Sub-Adviser: Brown Brothers Harriman & Co.
VALUE FUND
This equity income fund seeks to provide an above-average level of dividend
income and long-term growth of capital by investing primarily in medium to large
capitalization companies with established operating histories and potential for
dividend growth.
Sub-Adviser: Duff & Phelps Investment Management Co.
GROWTH FUND
This Fund invests primarily in medium capitalization companies whose earnings
and/or assets are expected to grow at a rate above the average for the Standard
& Poor's 500 Stock Index over the long term.
Sub-Adviser: Value Line, Inc.
*State and local taxes may apply. For certain investors, a portion of the income
may be subject to the alternative minimum tax.
<PAGE>
[LOGO]
GNA Distributors, Inc.
Two Union Square . P.O. Box 450
Seattle, Washington 98111-0490
INVESTORS TRUST /SM/
MUTUAL FUNDS
VALUE FUND
ANNUAL REPORT
-----------------
October 31, 1995
The Investors Trust Family of Funds
is offered by GNA Distributors, Inc.
<PAGE>
GROWTH FUND
Chairman's Message
Dear Shareholder:
I am pleased to present this annual report of your Investors Trust Mutual Fund,
which covers the twelve month period ending October 31, 1995. Included with this
report is a discussion of the Fund's performance and an interview with the
Fund's Sub-Adviser. As an introduction to that report, I offer you my
perspective on the financial markets.
Financial Markets Perspective
What a difference a year makes! The dominant theme in the domestic financial
markets over the last twelve months seems to have been an increasing acceptance
of the so-called "Fed engineered soft landing." This refers to the idea that the
Federal Reserve's management of short-term interest rates via monetary policy
decisions has slowed the growth rate of the economy to a more sustainable, low-
inflation level, without pushing the economy into a recession. Comparing growth
rates on a year-over-year basis as of September 1995 and September 1994, the
Gross Domestic Product (GDP) growth rate was 3.3% this year, down from 4.4% a
year ago, and the Consumer Price Index (CPI) growth rate was 2.5% this year,
down from 3.0% last year.
This slower economic growth with lower inflation resulted in lower intermediate
and long-term interest rates, which helped produce above average stock and bond
market returns for the last twelve months. During this period, the stock market,
as measured by the S&P 500 Stock Index, had a total return of +26.41%, and the
bond market, as measured by the Lehman Brothers Aggregate Bond Index, had a
total return of +15.65%. As welcome as these market returns have been this year,
particularly in comparison to last year's below average returns, please
understand that they are well above average, and thus not sustainable on a long-
term basis.
(Continued on next page)
Annual Report--October 31, 1995
<PAGE>
Additional Information
If you are interested in additional information about the Investors Trust
Mutual Funds, please contact your Investors Trust Representative, or call
Investors Trust Services toll-free at 1-800-656-6626 and select option 2.
Thank you for investing with Investors Trust.
Sincerely,
[SIGNATURE OF PATRICK E. WELCH]
Patrick E. Welch
Chairman
<PAGE>
- -------------------------------------------------------------------------------
INVESTORS TRUST
GROWTH FUND
Annual Report
October 31, 1995
TRUSTEES AND OFFICERS INVESTMENT ADVISER
PATRICK E. WELCH GNA CAPITAL MANAGEMENT, INC.
Trustee, Chairman of the Board, Seattle, Washington
President and CEO
PIERCE T. LINDBERG INVESTMENT SUB-ADVISER
Trustee VALUE LINE, INC.
EDWARD R. MCMILLAN New York, New York
Trustee
DOUGLAS H. PEDERSEN DISTRIBUTOR
Trustee GNA DISTRIBUTORS, INC.
GEOFFREY S. STIFF Seattle, Washington
Senior Vice President and Treasurer
CHARLES A. KAMINSKI COUNSEL
Senior Vice President GOODWIN, PROCTER & HOAR
VICTOR C. MOSES Boston, Massachusetts
Senior Vice President
THOMAS W. CASEY CUSTODIAN & TRANSFER AGENT
Vice President and Controller STATE STREET BANK AND TRUST COMPANY
EDWARD J. WILES, JR. Boston, Massachusetts
Vice President and Secretary
KARRI J. HARRINGTON INDEPENDENT ACCOUNTANTS
Assistant Secretary COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
This report is prepared for the shareholders of the Investors Trust Growth
Fund. It is not authorized for use as an offer of sale or a solicitation of an
offer to buy shares of the Fund unless accompanied or preceded by the Fund's
current prospectus.
<PAGE>
(This page intentionally left blank)
<PAGE>
Investors Trust Growth Fund 3
- -------------------------------------------------------------------------------
FROM THE ADVISER
----------------
GNA CAPITAL MANAGEMENT, INC.
For the twelve month period ended October 31, 1995, stock prices, as measured
by the S&P 500 Index, rose from 472.35 to 581.50, a gain of more than 23%.
These stock price increases were augmented by dividend income, so that for the
twelve month period the unmanaged S&P 500 Index total return was +26.41%.
In this environment, the Fund's NAV (net asset value) increased from
$8.81/$8.74 to $11.39/$11.21 (for Class A/B shares, respectively), and the
total return was +29.17%/+28.26%. In comparison, the Morningstar Growth fund
average total return which covers 720 funds was +22.21%.
The enclosed interview with the Fund's Sub-Adviser contains more information
about the Fund's performance and investment strategy.
[PERFORMANCE LOGO APPEARS HERE]
Performance of a $10,000 investment since inception of the Investors Trust
Growth Fund (9/93)
- ----------------------------------------------------------------------
MONTH ITGROA ITGROB S&P500 MG
- ----------------------------------------------------------------------
Aug 1993 $10,000 $10,000 $10,000 $10,000
Sep 1993 $10,400 $10,412 $ 9,926 $10,107
Oct 1993 $10,212 $10,212 $10,127 $10,236
Nov 1993 $10,047 $10,047 $10,032 $10,034
Dec 1993 $10,435 $10,424 $10,156 $10,333
Jan 1994 $10,788 $10,765 $10,496 $10,653
Feb 1994 $10,659 $10,624 $10,213 $10,489
Mar 1994 $ 9,847 $ 9,824 $ 9,768 $ 9,992
Apr 1994 $ 9,847 $ 9,800 $ 9,895 $10,036
May 1994 $ 9,812 $ 9,765 $10,057 $10,065
Jun 1994 $ 9,447 $ 9,400 $ 9,808 $ 9,722
Jul 1994 $ 9,657 $ 9,610 $10,133 $ 9,986
Aug 1994 $10,394 $10,323 $10,545 $10,463
Sep 1994 $10,251 $10,180 $10,291 $10,280
Oct 1994 $10,465 $10,382 $10,527 $10,433
Nov 1994 $10,180 $10,097 $10,140 $10,036
Dec 1994 $10,322 $10,228 $10,288 $10,041
Jan 1995 $10,394 $10,299 $10,556 $10,207
Feb 1995 $10,857 $10,739 $10,966 $10,594
Mar 1995 $11,106 $10,976 $11,290 $10,891
Apr 1995 $11,273 $11,143 $11,619 $11,106
May 1995 $11,581 $11,439 $12,078 $11,418
Jun 1995 $12,377 $12,212 $12,361 $11,909
Jul 1995 $13,244 $13,055 $12,773 $12,496
Aug 1995 $13,292 $13,103 $12,808 $12,597
Sep 1995 $13,743 $13,542 $13,344 $12,949
Oct 1995 $13,518 $13,316 $13,296 $12,740
- ----------------------------------------------------------------------
Investors Trust Growth Fund - A shares (ending value: $13,518)
Investors Trust Growth Fund - B shares (ending value: $13,316)
Standard & Poor's 500 Stock Index (ending value: $13,296)
Morningstar Growth Fund Average (ending value: $12,740)
Past performance is not indicative of future results. Investment returns and
principal will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost.
- -------------------------------------------------------------------------------
<PAGE>
4 Investors Trust Growth Fund
- -------------------------------------------------------------------------------
FROM THE SUB-ADVISER
--------------------
VALUE LINE, INC.
ALAN HOFFMAN, SENIOR PORTFOLIO MANAGER
WHAT HAPPENED IN THE MARKET OVER THE LAST 12 MONTHS (NOV94-OCT95)?
In the year ended October 31, 1995, the broad stock-market averages performed
quite well. The returns of the smaller-cap NASDAQ Composite and the Dow Jones
Industrial were both up by 33.23% and 24.92% respectively. The Fund's
benchmark, the Standard & Poor's 500 Index, rose 26.41%.
WHAT HAPPENED IN THE FUND OVER THE LAST 12 MONTHS (NOV94-OCT95)?
The Fund outperformed its benchmark with fiscal total returns of 29.17% and
28.26% for the A/B shares, respectively. A good part of that superior return
is attributable to its overweighting in technology stocks. In general,
financial and health-care stocks also contributed to the fund's
outperformance.
WHAT IS YOUR CURRENT MARKET OUTLOOK?
Stocks have been fluctuating since the summer, with a slight upside bias. We
expect this base-building to continue for awhile, perhaps into early 1996.
Growth should resume thereafter, although probably not at the accelerated pace
witnessed in the first half of 1995. We clearly do not project a protracted
bear market in the foreseeable future.
HOW IS THE FUND POSITIONED TO BENEFIT FROM YOUR CURRENT MARKET OUTLOOK?
The Fund currently holds slightly more cash than usual, both as a hedge
against downside volatility during the current period of market hesitance and
as a buying reserve to accumulate selected issues on dips. The Fund's
overweighting of technology stocks remains intact, and we're looking a bit
more closely at financial-services issues.
TECHNOLOGY STOCKS HAVE GOTTEN A LOT OF ATTENTION IN THE FINANCIAL PRESS
RECENTLY. WHAT ARE YOUR THOUGHTS ON THIS SECTOR?
There is no question that technology is a volatile sector, and investors
should approach these stocks only in terms of a very long holding period. Over
that long-term period, however, the contribution to corporate and personal
productivity resulting from use of such technological tools as computers,
telecommunications devices and integrated circuits should continue (and
possibly accelerate) far into the future. Moving foward, this scenario makes
these stocks an attractive holding for the Fund.
THERE HAVE BEEN ARTICLES IN THE FINANCIAL PRESS RECENTLY SAYING THAT THE STOCK
MARKET MAY BE OVERVALUED AND THEREFORE DUE FOR A CORRECTION. WHAT ARE YOUR
THOUGHTS ON THIS?
In a sense, there's been a kind of rolling correction since summer, and some
stocks are down 30% or more from their 52-week highs. While a 5%-10%
correction in the broad stock market is perhaps possible, we believe that with
the economy growing at a moderate pace, inflation well under control and
interest rates stable and potentially declining, it's not likely.
- -------------------------------------------------------------------------------
<PAGE>
Investors Trust Growth Fund 5
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1995
<TABLE>
<CAPTION>
% OF NET NUMBER MARKET
ASSETS OF SHARES VALUE ($)
-------- --------- -----------
<S> <C> <C> <C>
COMMON STOCKS
BASIC INDUSTRIES 8.7
CHEMICALS--6.4%
Airgas, Incorporated (a)....................... 10,000 266,250
Cabot Corporation.............................. 4,000 190,000
Great Lakes Chemical Corporation............... 2,600 174,525
Millipore Corporation.......................... 4,900 173,338
Praxair, Incorporated.......................... 9,000 243,000
Union Carbide Corporation...................... 6,400 242,400
-----------
1,289,513
-----------
CONTAINERS & GLASS--1.2%
Sealed Air Corporation (a)..................... 9,600 253,200
-----------
GOLD--0.3%
Firstmiss Gold, Incorporated (a)............... 3,542 63,761
-----------
STEEL--0.8%
Timken Company................................. 4,000 161,000
-----------
1,767,474
-----------
CAPITAL GOODS 3.0
AGRICULTURAL MACHINERY--0.5%
Deere & Company................................ 1,200 107,250
-----------
INDUSTRIAL MACHINERY--2.5%
Idex Corporation............................... 6,000 226,500
Thermo Electron Corporation (a)................ 6,000 276,000
-----------
502,500
-----------
609,750
-----------
CONGLOMERATES 2.0
Danaher Corporation............................ 6,800 210,800
Premark International, Incorporated............ 4,200 194,250
-----------
405,050
-----------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
6 Investors Trust Growth Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1995, CONTINUED
<TABLE>
<CAPTION>
% OF NET NUMBER MARKET
ASSETS OF SHARES VALUE ($)
-------- --------- -----------
<S> <C> <C> <C>
CONSUMER BASICS 18.3
DRUGS & HEALTH CARE--14.6%
Amgen, Incorporated (a)........................ 4,000 192,000
HBO & Company.................................. 2,600 183,950
Healthcare Compare Corporation (a)............. 6,500 240,500
Invacare Corporation........................... 7,000 176,750
Johnson & Johnson.............................. 1,600 130,400
Medtronic, Incorporated........................ 8,000 462,000
Merck & Company, Incorporated.................. 3,000 172,500
Mylan Labs, Incorporated....................... 12,000 228,000
Omnicare, Incorporated......................... 5,100 184,875
Pfizer, Incorporated........................... 5,600 321,300
Schering Plough Corporation.................... 6,000 321,750
St. Jude Medical, Incorporated (a)............. 3,300 175,725
Stryker Corporation............................ 4,000 180,500
-----------
2,970,250
-----------
FOOD & BEVERAGES--2.9%
Canandaigua Wine, Incorporated [Class A] (a)... 3,400 163,200
Coca-Cola Company.............................. 3,400 244,375
Sysco Corporation.............................. 6,000 182,250
-----------
589,825
-----------
RETAIL GROCERY--0.8%
Casey's General Stores, Incorporated........... 6,600 151,800
-----------
3,711,875
-----------
CONSUMER DURABLE GOODS 1.5
HOUSEHOLD APPLIANCES & HOME FURNISHINGS--0.7%
Black & Decker Corporation..................... 4,400 149,050
-----------
MOBILE HOMES--0.8%
Clayton Homes, Incorporated.................... 6,300 165,375
-----------
314,425
-----------
CONSUMER NON-DURABLE GOODS 4.7
COSMETICS & TOILETRIES--1.4%
Gillette Company............................... 6,000 290,250
-----------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Growth Fund 7
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1995, CONTINUED
<TABLE>
<CAPTION>
% OF NET NUMBER MARKET
ASSETS OF SHARES VALUE ($)
-------- --------- -----------
<S> <C> <C> <C>
RETAIL TRADE--3.3%
Dollar General Corporation..................... 9,070 222,216
Kohl's Corporation (a)......................... 2,800 127,050
Office Depot, Incorporated (a)................. 5,000 143,125
Staples, Incorporated (a)...................... 6,750 179,719
-----------
672,110
-----------
962,360
-----------
CONSUMER SERVICES 0.7
LEISURE TIME
Disney (Walt) Company.......................... 2,300 132,538
-----------
FINANCE 10.7
BANKS--4.3%
Bank of Boston Corporation..................... 6,000 267,000
Fifth Third Bancorp............................ 3,000 201,750
First Mississippi Corporation.................. 10,000 205,000
Star Banc Corporation.......................... 3,400 188,275
-----------
862,025
-----------
FINANCIAL SERVICES--4.9%
American Express Company....................... 4,000 162,500
Ceridian Corporation (a)....................... 4,000 174,000
CUC International, Incorporated (a)............ 6,000 207,750
First Data Corporation......................... 1,586 104,868
FIserv, Incorporated (a)....................... 7,400 190,550
Green Tree Financial Corporation............... 6,000 159,750
-----------
999,418
-----------
INSURANCE--1.5%
AFLAC, Incorporated............................ 3,700 150,775
SunAmerica, Incorporated....................... 2,500 155,625
-----------
306,400
-----------
2,167,843
-----------
GENERAL BUSINESS 6.3
BROADCASTING--1.5%
Capital Cities ABC, Incorporated............... 2,500 296,562
-----------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
8 Investors Trust Growth Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1995, CONTINUED
<TABLE>
<CAPTION>
% OF NET NUMBER MARKET
ASSETS OF SHARES VALUE ($)
-------- --------- -----------
<S> <C> <C> <C>
BUSINESS SERVICES--2.1%
Olsten Corporation............................. 4,600 177,100
Omnicom Group.................................. 4,000 255,500
-----------
432,600
-----------
COMMUNICATION SERVICES--1.0%
Andrew Corporation (a)......................... 4,500 190,125
-----------
OFFICE FURNISHINGS & SUPPLIES--1.7%
Alco Standard Corporation...................... 2,200 194,700
Danka Business Systems......................... 4,700 157,450
-----------
352,150
-----------
1,271,437
-----------
TECHNOLOGY 30.0
AEROSPACE--1.6%
Loral Corporation.............................. 5,000 148,125
McDonnell Douglas Corporation.................. 2,200 179,850
-----------
327,975
-----------
COMPUTERS & BUSINESS EQUIPMENT--8.1%
3Com Corporation (a)........................... 6,000 282,000
Applied Materials, Incorporated (a)............ 6,000 300,750
Cabletron Systems, Incorporated (a)............ 2,000 157,250
Cisco Systems, Incorporated (a)................ 2,800 217,000
Dell Computer Corporation (a).................. 6,000 279,750
EMC Corporation Massachusetts (a).............. 13,500 209,250
International Business Machines................ 1,900 184,775
-----------
1,630,775
-----------
ELECTRONICS--14.6%
ADC Telecommunications, Incorporated (a)....... 8,000 320,000
Arrow Electronics, Incorporated (a)............ 3,100 157,325
Avnet, Incorporated............................ 3,000 151,125
DSC Communications Corporation (a)............. 5,000 185,000
Integrated Device Technology (a)............... 8,000 152,000
Intel Corporation.............................. 2,000 139,750
Logicon, Incorporated.......................... 9,100 208,162
Micron Technology, Incorporated................ 2,500 176,562
Motorola, Incorporated......................... 3,000 196,875
Novellus Systems, Incorporated (a)............. 2,500 172,188
Tellabs, Incorporated (a)...................... 4,000 136,000
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Growth Fund 9
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1995, CONTINUED
<TABLE>
<CAPTION>
% OF NET NUMBER MARKET
ASSETS OF SHARES VALUE ($)
-------- ---------- -----------
<S> <C> <C> <C>
ELECTRONICS, CONTINUED
Teradyne, Incorporated (a).................. 6,000 200,250
Texas Instruments, Incorporated............. 2,900 197,925
Unitrode Corporation (a).................... 6,100 163,938
Vishay Intertechnology, Incorporated (a).... 6,194 218,338
Watkins Johnson Company..................... 4,000 192,500
-----------
2,967,938
-----------
SOFTWARE--5.7%
America Online, Incorporated (a)............ 2,500 200,000
Computer Associates International,
Incorporated............................... 4,500 247,500
Microsoft Corporation (a)................... 2,500 250,000
Oracle Systems Corporation (a).............. 6,000 261,750
Parametric Technology Corporation (a)....... 3,000 201,000
-----------
1,160,250
-----------
6,086,938
----- -----------
Total Common Stocks
(Cost $13,204,947)................... 85.9 17,429,690
-----------
<CAPTION>
PRINCIPAL
AMOUNT ($)
----------
<S> <C> <C> <C>
SHORT TERM GOVERNMENT SECURITY 7.4
Federal National Mortgage Association
Discount Note, 5.62%, (b) November 15, 1995
(Cost $1,496,722).................... 1,500,000 1,496,722
-----------
MONEY MARKET MUTUAL FUNDS 8.0
The Seven Seas Series Money Market Fund
[Class A].................................. 807,994 807,994
The Seven Seas Series US Government Money
Market Fund................................ 821,054 821,054
-----------
Total Money Market Mutual Funds
(Cost $1,629,048).................... 1,629,048
----- -----------
SUMMARY
Total investment portfolio (Cost
$16,330,717) (Note 3)...................... 101.3 20,555,460
Other assets and liabilities, net........... (1.3) (258,273)
----- -----------
NET ASSETS.................................... 100.0 $20,297,187
===== ===========
</TABLE>
- --------
NOTES:
(a) Non-income producing securities.
(b) Yield to maturity (unaudited).
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
10 Investors Trust Growth Fund
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1995
<TABLE>
<S> <C>
ASSETS
Investments, at market value (identified cost, $16,330,717) (Notes
2 and 3)......................................................... $20,555,460
Cash.............................................................. 140,082
Receivables:
Fund shares sold................................................ 120,214
Dividends....................................................... 17,825
Investments sold................................................ 327,447
Adviser (Note 4)................................................ 1,979
Deferred organization costs (Note 2).............................. 35,376
Prepaid expenses (Note 2)......................................... 14,010
-----------
Total assets...................................................... 21,212,393
-----------
LIABILITIES
Payables:
Fund shares redeemed............................................ 706
Investments purchased........................................... 837,391
Accrued distribution fee (Note 4)............................... 20,722
Accrued management fee (Note 4)................................. 13,092
Other accrued expenses.......................................... 43,295
-----------
Total liabilities................................................. 915,206
-----------
NET ASSETS, AT MARKET VALUE....................................... $20,297,187
===========
NET ASSETS
Net assets consist of:
Accumulated net realized loss (Note 2).......................... $ (201,507)
Unrealized appreciation on investments (Notes 2 and 3).......... 4,224,743
Shares of beneficial interest (Note 2).......................... 16,273,951
-----------
NET ASSETS, AT MARKET VALUE....................................... $20,297,187
===========
CLASS A:
NET ASSET VALUE and redemption price per share ($5,985,888 divided
by 525,778 outstanding shares of beneficial interest of no par $11.38
value)........................................................... ======
Maximum offering price per share (100/95.50 of $11.38)............ $11.92
======
CLASS B:
NET ASSET VALUE and offering price per share ($14,311,299 divided
by 1,276,847 outstanding shares of beneficial interest of no par $11.21
value)........................................................... ======
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Growth Fund 11
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED OCTOBER 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends.......................................................... $ 193,787
Interest........................................................... 12,938
----------
Total Income....................................................... 206,725
----------
EXPENSES:
Management fee (Note 4).......................................... 114,802
Distribution fees (Note 4)....................................... 104,093
Custodian fee.................................................... 69,690
Transfer agent fee............................................... 64,880
Registration fees................................................ 24,739
Professional fees................................................ 13,771
Shareholder reports.............................................. 12,854
Amortization for organization costs (Note 2)..................... 12,392
Insurance........................................................ 723
Trustees' fees and expenses...................................... 364
Other............................................................ 4,526
----------
Total expenses before reimbursement from Adviser................... 422,834
Reimbursement for expenses from Adviser (Note 4)................... (157,159)
----------
Expenses, net...................................................... 265,675
----------
Net investment loss................................................ (58,950)
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from investment transactions (Notes 2 and 3)... 342,457
Net increase in unrealized appreciation of investments during the
year............................................................ 3,431,356
----------
Net gain on investments............................................ 3,773,813
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............... $3,714,863
==========
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
12 Investors Trust Growth Fund
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FISCAL YEARS
ENDED OCTOBER 31,
------------------------
1995 1994
----------- -----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment loss................................ $ (58,950) $ (30,508)
Net realized gain (loss) from investment
transactions...................................... 342,457 (467,565)
Net increase in unrealized appreciation of
investments during the year....................... 3,431,356 721,496
----------- -----------
Net increase in net assets resulting from operations. 3,714,863 223,423
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Distributions in excess of net realized gains
Class A ($.08 per share)......................... -- (36,226)
Class B ($.08 per share)......................... -- (40,950)
Increase in net assets from Fund share transactions.. 6,543,064 6,040,708
----------- -----------
INCREASE IN NET ASSETS............................... 10,257,927 6,186,955
Net assets at beginning of year...................... 10,039,260 3,852,305
----------- -----------
NET ASSETS AT END OF YEAR............................ $20,297,187 $10,039,260
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
FOR THE FISCAL YEARS ENDED OCTOBER 31,
------------------------------------------
1995 1994
-------------------- --------------------
SHARES AMOUNT SHARES AMOUNT
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
FUND SHARE INFORMATION
Class A shares
Sold............................. 76,934 $ 808,948 103,949 $ 898,639
Issued in reinvestment of
distributions................... -- -- 4,406 36,086
Redeemed......................... (25,720) (252,247) (8,976) (77,513)
-------- ---------- -------- ----------
Net increase..................... 51,214 $ 556,701 99,379 $ 857,212
======== ========== ======== ==========
Class B shares
Sold............................. 851,970 $8,349,943 733,137 $6,308,900
Issued in reinvestment of
distributions................... -- -- 4,743 38,653
Redeemed......................... (245,024) (2,363,580) (136,001) (1,164,057)
-------- ---------- -------- ----------
Net increase..................... 606,946 $5,986,363 601,879 $5,183,496
======== ========== ======== ==========
</TABLE>
- --------
At October 31, 1995, GNA Corporation, the parent company of GNA Capital
Management Inc., the Fund's investment adviser (the "Adviser"), owned 356,355
Class A and a nominal amount of Class B shares of the Fund.
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Growth Fund 13
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The financial highlights set forth below include selected data for a share
outstanding throughout each period and other performance information derived
from the financial statements.
<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED OCTOBER 31,
----------------------------------------------
CLASS A CLASS B
--------------------- ----------------------
1995 1994 1993+ 1995 1994 1993+
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD....................... $ 8.81 $ 8.69 $ 8.50 $ 8.74 $ 8.70 $ 8.50
INCOME FROM INVESTMENT
OPERATIONS
Net investment income (loss)
(a).......................... .01 (.01) -- (.05) (.04) --
Net realized and unrealized
gains on investments......... 2.56 .21 .19 2.52 .16 .20
------ ------ ------ ------ ------ ------
Total from Investment
Operations................... 2.57 .20 .19 2.47 .12 .20
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS FROM
Distributions in excess of net
realized gains............... -- (.08) -- -- (.08) --
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF
PERIOD....................... $11.38 $ 8.81 $ 8.69 $11.21 $ 8.74 $ 8.70
====== ====== ====== ====== ====== ======
TOTAL RETURN (%) **........... 29.17 2.48 2.24 28.26 1.67 2.35
RATIOS/SUPPLEMENTAL DATA
Ratios (%):
Expenses, net, to average
daily net assets (a)........ 1.35 1.34 1.39* 2.10 2.09 1.86*
Net investment income (loss)
to average daily net assets. 0.10 (0.11) (0.30)* (0.66) (0.82) (1.38)*
Portfolio turnover........... 73.74 100.41 46.31* 73.74 100.41 46.31*
Net Assets, end of period
(millions)................... $6.0 $4.2 $3.3 $14.3 $5.8 $0.6
(a) Reimbursement for expenses
from Adviser................. $0.100 $0.182 $0.006 $0.082 $0.176 $0.001
Operating expenses ratio
excluding reimbursement for
expenses (%)................. 2.44 3.53 4.83* 3.19 4.06 5.04*
</TABLE>
- --------
+ For the period September 8, 1993 (commencement of operations) to October
31, 1993.
* Annualized
** A sales charge of 4.5% (maximum) was not reflected in total return
calculations for Class A. A contingent deferred sales charge of 5% the
first year, declining by 1% per year for five years, was not reflected in
total return calculations for Class B. Periods less than one year are not
annualized.
- -------------------------------------------------------------------------------
<PAGE>
14 Investors Trust Growth Fund
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION. Investors Trust (the "Trust") is organized as a Massachusetts
Business Trust and is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company. The Trust
is a series of funds, currently comprised of five investment portfolios, four
of which commenced operations as of September 8, 1993 and one, the Government
Fund, which commenced operations as of April 22, 1987. These financial
statements report on the Growth Fund (the "Fund"). Financial statements for
the other funds are presented separately.
Under the Trust's Multiple Class Distribution System (the "Multiple Class
Arrangement"), the Fund currently offers to the general public two classes of
shares of beneficial interest, no par value, which may be purchased at a price
equal to the next determined net asset value per share plus a sales charge
which, at the election of the purchaser, may be imposed (i) at the time of
purchase (Class A shares) or (ii) on a deferred basis (Class B shares). Class
B shares, including a pro rata portion of the shares received as distributions
with respect to such shares, will automatically convert to Class A shares of
the Fund at the end of eight years following the issuance of the Class B
shares.
2. SIGNIFICANT ACCOUNTING POLICIES. The policies described below are followed
consistently by the Fund in the preparation of its financial statements in
conformity with generally accepted accounting principles.
Securities Valuation. The Fund values investment securities at market value
based on the last quoted sales price as reported by the principal securities
exchange on which the security is traded. If no sale is reported, the mean
between the last bid and asked price is used and in the absence of a market
quote, securities are valued using such methods as the Trustees believe would
reflect fair market value. Short-term investments are valued at original cost
plus accreted discount or accrued interest which approximates market value.
Securities Transactions and Related Investment Income. Sales and purchases
are accounted for on trade date. Realized securities gains or losses are
determined using the identified cost method for both financial and tax
reporting purposes. Dividend income is recorded on the ex-dividend date.
Interest income is accrued pro rata to maturity. Original issue discount is
accreted for financial and tax accounting purposes.
Repurchase Agreements. The Fund may enter into repurchase agreements in order
to generate additional income. Each repurchase agreement entered into by the
Fund will provide that the value of the collateral underlying the repurchase
agreement will always be at least 102% of the repurchase price, including
accrued interest, except for repurchase agreements entered into with a
broker/dealer or bank whose unsecured debt is rated AAA or whose commercial
paper is rated A-1+ by Standard and Poor's, in which case the value of the
collateral will always be at least 100% of the repurchase price, including
accrued interest. The Fund will not enter into a repurchase agreement having
more than seven days remaining to maturity if, as a result, such agreements,
together with any other securities which are not readily marketable, would
exceed 10% of the net assets of the Fund. In addition, not more than one-third
of the current market value of the Fund's total assets shall constitute
secured "loans" by the Fund under repurchase agreements.
Federal Income Taxes. As a Massachusetts Business Trust, the Fund is a
separate corporate taxpayer and determines its net investment income and
capital gains (or losses) and the amounts to be distributed to the Fund's
shareholders without regard to the income and capital gains (or losses) of the
other funds. It is the intent of the Fund to comply with the requirements of
the Internal Revenue Code which are applicable to regulated investment
- -------------------------------------------------------------------------------
<PAGE>
Investors Trust Growth Fund 15
- -------------------------------------------------------------------------------
companies and to distribute substantially all of its taxable income to its
shareholders. Accordingly, the Fund paid no federal taxes and no federal
income or excise tax provision was required. As of October 31, 1995, the Fund
has a net tax basis capital loss carryforward of $201,507, which may be
applied against any realized taxable gains until its expiration date of
October 31, 2002.
Distribution of Income and Gains. Distributions of net investment income are
declared and paid annually. Distributions from net short-term realized gains
are declared and paid annually. Long-term realized gains in excess of any
available capital loss carryforward would be taxable to the Fund if not
distributed and, therefore, will be declared and paid to its shareholders
annually.
Capital Accounts. The Fund reports the undistributed net investment income
(accumulated net investment loss) and accumulated net realized gain (loss)
accounts on a basis approximating amounts available for future tax
distributions (or to offset future taxable realized gains when a capital loss
carryforward is available). Accordingly, the Fund may periodically make
reclassifications among certain capital accounts without impacting the net
asset value of the Fund. As a result, the net investment loss for fiscal 1995
has been charged to shares of beneficial interest since such loss is not
available as a net operating loss carryforward by the Fund.
Deferred Organization and Registration Costs. Costs incurred by the Fund in
connection with its organization and registration of shares have been deferred
and are being amortized over a 60 month period on a straight-line basis. Costs
incurred for subsequent registration of shares will be amortized on a
straight-line basis over the lesser of the duration of the registration period
or 12 months.
Expenses. Expenses such as management fees, distribution fees, custodian
fees, transfer agent fees, and registration fees are charged directly to the
Fund, while indirect expenses, such as shareholder reports, professional fees,
trustee fees and expenses, and insurance are allocated among the funds
principally based on their relative net assets. Portfolio-level expenses are
allocated to each class of shares based upon the relative percentage of
current net assets of dividend-eligible shares. All expenses that are directly
attributable to a specific class of shares, such as legal expenses and
Trustees' fees incurred as a result of issues relating solely to one class and
distribution fees, are allocated to that class.
3. PURCHASES AND SALES OF SECURITIES. During the fiscal year ended October 31,
1995 purchases and sales of equity securities, excluding short-term securities
and repurchase agreements, totalled $14,253,158 and $9,408,317, respectively.
The aggregate cost of the investment portfolio for federal income tax
purposes was $16,330,717. At October 31, 1995, net unrealized appreciation for
all securities based on tax cost was $4,224,743. This consisted of aggregate
gross unrealized appreciation for all securities in which there was an excess
of market value over tax cost of $4,429,951 and aggregate gross unrealized
depreciation for all securities in which there was an excess of tax cost over
market value of $205,208.
4. MANAGEMENT, DISTRIBUTION AND TRUSTEES' FEES. Under an Advisory agreement
between the Fund and the Adviser, the Fund agrees to pay the Adviser a fee
calculated based upon the Fund's average daily net assets, equal to an annual
rate of .80% of the first $100 million and .70% of average daily net assets in
excess of $100 million. The Adviser had agreed to reimburse the Classes for
expenses incurred by the Classes to the extent that such expenses exceed 1.35%
(Class A) and 2.10% (Class B) of average daily net assets during the fiscal
year ended October 31,
- -------------------------------------------------------------------------------
<PAGE>
16 Investors Trust Growth Fund
- -------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED
1995. The Advisory agreement also provides that if, in any fiscal year, the
total of certain specified expenses of the Fund exceed the expense limitations
applicable to the Fund imposed by the securities regulations of any state in
which it is then registered to sell shares, the Adviser will waive all or a
portion of its management fee equal to such excess. The Adviser is only
required to reimburse the Fund for any expenses which exceed state expense
limitations up to the amount of management fees paid or payable by the Fund
during such fiscal year. The total management fee for the fiscal year ended
October 31, 1995 was $114,802. The expenses reimbursed for the fiscal year
ended October 31, 1995 were $157,159 ($0.100 per share for Class A, $0.082 per
share for Class B). The reimbursement for expenses by the Adviser is being
offset by the payables to the Adviser monthly. Any amount due from the Adviser
in excess of the amounts due to the Adviser is settled in cash within 15 days
following month end.
The Adviser retained Value Line, Inc. (the "Sub-Adviser") to act as portfolio
manager of the Fund. As portfolio manager, the Sub-Adviser is responsible for
the actual investment management of the Fund's assets (including the placement
of brokerage orders), under the general supervision of the Adviser and the
Board of Trustees.
GNA Distributors, Inc. (the "Distributor") receives a monthly distribution
fee from the Fund calculated at the annual rate of .75% of the average daily
net assets of Class B shares pursuant to Rule 12b-1 of the Investment Company
Act of 1940, as amended. A shareholder servicing fee is also imposed on both
Class A and Class B of the Fund equal to specified costs incurred by the
Distributor, but in no event to exceed .25% of the average daily net assets of
the Fund. The shareholder servicing fee is in addition to the .75%
distribution fee. The Distributor has agreed that the .75% of average daily
net assets on Class B shares will only be assessed on any shareholder's shares
for a limited period of time. Once Class B shares automatically convert to
Class A shares of the Fund, after eight years, such shareholders will be
subject only to the shareholder servicing fee of .25% maximum applicable to
Class A shares under the 12b-1 Plan.
With respect to Class B shares, a contingent deferred sales charge
("withdrawal fee") of 5% the first year, declining by 1% per year for five
years, is imposed on any redemption which reduces the current value of the
account to an amount which is lower than the dollar amount of all payments
during the preceding five years. Withdrawal fees are paid to and retained by
the Distributor. These fees permit the Distributor to recover its sales-
related expenses (such as the 4% of the purchase price paid to dealers who
sell Class B shares of the Fund, printing fees, and marketing and advertising
expenses). In the event the Distributor is not fully reimbursed for such
expenses incurred in any fiscal year of the Fund, the Distributor shall be
entitled to carryforward such expenses to subsequent fiscal years for
submission to the Fund for payment, subject always to the .75% of Class B net
assets annual maximum expenditure allowed by the Fund's Plan. The cumulative
reimbursable amount is increased by an interest factor which is intended to
replicate the Distributor's cost of funds for financing advances made under
the Plan. The Trustees or a majority of the Fund's shareholders have the
right, however, to terminate the Plan and all payments thereunder at any time.
The Fund will not be obligated to reimburse the Distributor for carryover
expenses subsequent to the Plan's termination or noncontinuance. The total
amount of carryover expenses outstanding since inception of the Plan as of
October 31, 1995, for which the Distributor intends to seek repayment is
approximately $449,000.
Total distribution fees and shareholder servicing fees for the fiscal year
ended October 31, 1995 were $71,718 and $32,375 ($10,686 Class A, $21,689
Class B), respectively.
The Trust pays each Trustee not affiliated with the Adviser: (1) an annual
fee of $4,000; and (2) a fee of $500 for each meeting of the Board of Trustees
attended plus all reasonable expenses associated with attendance at such
meetings. These amounts are allocated among the funds principally based on
their relative net assets. No remuneration is paid by the Trust to any Trustee
or officer of the Fund who is affiliated with the Adviser.
- -------------------------------------------------------------------------------
<PAGE>
Investors Trust Growth Fund 17
- -------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Trustees of Investors Trust Growth Fund
We have audited the accompanying statement of assets and liabilities of
Investors Trust Growth Fund including the investment portfolio, as of October
31, 1995, and the related statement of operations for the fiscal year then
ended, and the statements of changes in net assets for each of the two fiscal
years in the period then ended and the financial highlights for each of the
two fiscal years in the period then ended and for the period September 8, 1993
(commencement of operations) to October 31, 1993. These financial statements
and financial highlights are the responsibility of the Fund'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 October 31, 1995 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
Investors Trust Growth Fund as of October 31, 1995, the results of its
operations for the fiscal year then ended, the changes in its net assets for
each of the two fiscal years in the period then ended and the financial
highlights for each of the two fiscal years in the period then ended and for
the period September 8, 1993 (commencement of operations) to October 31, 1993
in conformity with generally accepted accounting principles.
Boston, Massachusetts [SIGNATURE OF COOPERS & LYBRAND L.L.P.]
December 18, 1995
- -------------------------------------------------------------------------------
<PAGE>
INVESTORS TRUST /SM/
MUTUAL FUNDS
For more information about the Investors Trust mutual funds and to
obtain a prospecuts containing complete information including fees and
expenses or a copy of the annual report for any of the funds shown
here, call us at 1-800-656-6626
ADJUSTABLE RATE FUND
Investing primarily in adjustable rate securities including, but not limited to,
adjustable rate mortgage securities, this Fund seeks to produce a high level of
current income consistent with limiting fluctuations in the net value of the
Fund shares. Conservative investors seeking higher rates of return than those
offered by money market funds should consider the Adjustable Rate Fund.
Sub-Adviser: Standish, Ayer & Wood, Inc.
GOVERNMENT FUND
This Fund seeks to produce a high level of current income consistent with safety
of principal. The Fund will attempt to achieve its objective by investing
primarily in obligations issued or guaranteed by the U.S. Government or by its
agencies or instrumentalities. The government guarantee applies only to the
payment of principal and interest to the Fund and not to the value of the Fund's
shares, which will fluctuate and could be more or less than the purchaser's
cost.
Sub-Adviser: BlackRock Financial Management, Inc.
TAX FREE FUND
This Fund invests primarily in tax-exempt debt obligations and seeks to produce
a high level of income exempt from federal income tax as is consistent with
preservation of capital. This Fund invests primarily in investment-grade debt
obligations.
Sub-Adviser: Brown Brothers Harriman & Co.
VALUE FUND
This equity income fund seeks to provide an above-average level of dividend
income and long-term growth of capital by investing primarily in medium to large
capitalization companies with established operating histories and potential for
dividend growth.
Sub-Adviser: Duff & Phelps Investment Management Co.
GROWTH FUND
This Fund invests primarily in medium capitalization companies whose earnings
and/or assets are expected to grow at a rate above the average for the Standard
& Poor's 500 Stock Index over the long term.
Sub-Adviser: Value Line, Inc.
*State and local taxes may apply. For certain investors, a portion of the income
may be subject to the alternative minimum tax.
<PAGE>
[LOGO]
GNA Distributors, Inc.
Two Union Square . P.O. Box 450
Seattle, Washington 98111-6490
INVESTORS TRUST/SM/
MUTUAL FUNDS
GROWTH FUND
ANNUAL REPORT
-----------------
October 31, 1995
The Investors Trust Family of Funds
is offered by GNA Distributors, Inc.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
ANNUAL REPORT OF THE INVESTORS TRUST ADJUSTABLE RATE FUND AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 01
<NAME> INVESTORS TRUST ADJUSTABLE RATE CLASS A
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 7,175,396
<INVESTMENTS-AT-VALUE> 7,292,950
<RECEIVABLES> 63,945
<ASSETS-OTHER> 48,190
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7,405,085
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 70,758
<TOTAL-LIABILITIES> 70,758
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 7,399,780
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 7,886
<ACCUMULATED-NET-GAINS> (175,121)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 117,554
<NET-ASSETS> 7,334,327
<DIVIDEND-INCOME> 16,741
<INTEREST-INCOME> 417,887
<OTHER-INCOME> 0
<EXPENSES-NET> 86,244
<NET-INVESTMENT-INCOME> 348,384
<REALIZED-GAINS-CURRENT> (114,498)
<APPREC-INCREASE-CURRENT> 399,103
<NET-CHANGE-FROM-OPS> 632,989
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 341,645
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 115,630
<NUMBER-OF-SHARES-REDEEMED> 238,836
<SHARES-REINVESTED> 53,069
<NET-CHANGE-IN-ASSETS> (149,564)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (76,559)
<OVERDISTRIB-NII-PRIOR> 8,882
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 29,643
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 235,215
<AVERAGE-NET-ASSETS> 5,307,067
<PER-SHARE-NAV-BEGIN> 6.14
<PER-SHARE-NII> 0.31
<PER-SHARE-GAIN-APPREC> 0.24
<PER-SHARE-DIVIDEND> 0.30
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 6.39
<EXPENSE-RATIO> 0.95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
ANNUAL REPORT OF THE INVESTORS TRUST ADJUSTABLE RATE FUND AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 02
<NAME> INVESTORS TRUST ADJUSTABLE RATE CLASS B
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 7,175,396
<INVESTMENTS-AT-VALUE> 7,292,950
<RECEIVABLES> 63,945
<ASSETS-OTHER> 48,190
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 7,405,085
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 70,758
<TOTAL-LIABILITIES> 70,758
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 7,399,780
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 7,886
<ACCUMULATED-NET-GAINS> (175,121)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 117,554
<NET-ASSETS> 7,334,327
<DIVIDEND-INCOME> 16,741
<INTEREST-INCOME> 417,887
<OTHER-INCOME> 0
<EXPENSES-NET> 86,244
<NET-INVESTMENT-INCOME> 348,384
<REALIZED-GAINS-CURRENT> (114,498)
<APPREC-INCREASE-CURRENT> 399,103
<NET-CHANGE-FROM-OPS> 632,989
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 341,645
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 115,630
<NUMBER-OF-SHARES-REDEEMED> 238,836
<SHARES-REINVESTED> 53,069
<NET-CHANGE-IN-ASSETS> (149,564)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (76,559)
<OVERDISTRIB-NII-PRIOR> 8,882
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 29,643
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 235,215
<AVERAGE-NET-ASSETS> 2,103,389
<PER-SHARE-NAV-BEGIN> 6.14
<PER-SHARE-NII> 0.26
<PER-SHARE-GAIN-APPREC> 0.24
<PER-SHARE-DIVIDEND> 0.25
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 6.39
<EXPENSE-RATIO> 1.70
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE ANNUAL REPORT OF THE INVESTORS TRUST GOVERNMENT FUND AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 03
<NAME> INVESTORS TRUST GOVERNMENT FUND CLASS A
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 1,163,036,654
<INVESTMENTS-AT-VALUE> 1,189,354,408
<RECEIVABLES> 46,132,409
<ASSETS-OTHER> 68,801
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,235,555,618
<PAYABLE-FOR-SECURITIES> 12,241,917
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 84,171,424
<TOTAL-LIABILITIES> 96,413,341
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 1,310,684,721
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 2,160,157
<ACCUMULATED-NET-GAINS> (196,362,686)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 26,980,399
<NET-ASSETS> 1,139,142,277
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 93,738,817
<OTHER-INCOME> 0
<EXPENSES-NET> 20,873,416
<NET-INVESTMENT-INCOME> 72,865,401
<REALIZED-GAINS-CURRENT> (107,084,255)
<APPREC-INCREASE-CURRENT> 161,856,553
<NET-CHANGE-FROM-OPS> 127,637,699
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 72,065,597
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 16,106,848
<NUMBER-OF-SHARES-SOLD> 4,226,917
<NUMBER-OF-SHARES-REDEEMED> 29,967,653
<SHARES-REINVESTED> 5,271,820
<NET-CHANGE-IN-ASSETS> 134,703,986
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (83,299,005)
<OVERDISTRIB-NII-PRIOR> 2,941,537
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7,200,544
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 20,873,416
<AVERAGE-NET-ASSETS> 23,234,874
<PER-SHARE-NAV-BEGIN> 8.43
<PER-SHARE-NII> 0.58
<PER-SHARE-GAIN-APPREC> 0.38
<PER-SHARE-DIVIDEND> 0.58
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.11
<PER-SHARE-NAV-END> 8.70
<EXPENSE-RATIO> 1.01
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE ANNUAL REPORT OF THE INVESTORS TRUST GOVERNMENT FUND AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 04
<NAME> INVESTORS TRUST GOVERNMENT FUND CLASS B
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 1,163,036,654
<INVESTMENTS-AT-VALUE> 1,189,354,408
<RECEIVABLES> 46,132,409
<ASSETS-OTHER> 68,801
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,235,555,618
<PAYABLE-FOR-SECURITIES> 12,241,917
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 84,171,424
<TOTAL-LIABILITIES> 96,413,341
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 1,310,684,721
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 2,160,157
<ACCUMULATED-NET-GAINS> (196,362,686)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 26,980,399
<NET-ASSETS> 1,139,142,277
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 93,738,817
<OTHER-INCOME> 0
<EXPENSES-NET> 20,873,416
<NET-INVESTMENT-INCOME> 72,865,401
<REALIZED-GAINS-CURRENT> (107,084,255)
<APPREC-INCREASE-CURRENT> 161,856,553
<NET-CHANGE-FROM-OPS> 127,637,699
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 72,065,597
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 16,106,848
<NUMBER-OF-SHARES-SOLD> 4,226,917
<NUMBER-OF-SHARES-REDEEMED> 29,967,653
<SHARES-REINVESTED> 5,271,820
<NET-CHANGE-IN-ASSETS> 134,703,986
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (83,299,005)
<OVERDISTRIB-NII-PRIOR> 2,941,537
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 7,200,544
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 20,873,416
<AVERAGE-NET-ASSETS> 1,171,978,933
<PER-SHARE-NAV-BEGIN> 8.42
<PER-SHARE-NII> 0.51
<PER-SHARE-GAIN-APPREC> 0.41
<PER-SHARE-DIVIDEND> 0.52
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.11
<PER-SHARE-NAV-END> 8.71
<EXPENSE-RATIO> 1.76
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE ANNUAL REPORT OF THE INVESTORS TRUST TAX FREE FUND AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 05
<NAME> INVESTORS TRUST TAX FREE FUND CLASS A
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 23,440,929
<INVESTMENTS-AT-VALUE> 23,617,231
<RECEIVABLES> 507,480
<ASSETS-OTHER> 107,699
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 24,232,410
<PAYABLE-FOR-SECURITIES> 428,124
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 111,312
<TOTAL-LIABILITIES> 539,436
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 23,723,902
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 30,865
<ACCUMULATED-NET-GAINS> (176,365)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 176,302
<NET-ASSETS> 23,692,974
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,059,944
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 1,059,944
<REALIZED-GAINS-CURRENT> (176,365)
<APPREC-INCREASE-CURRENT> 1,523,607
<NET-CHANGE-FROM-OPS> 2,407,186
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,059,944
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 6,718
<NUMBER-OF-SHARES-SOLD> 400,731
<NUMBER-OF-SHARES-REDEEMED> 152,074
<SHARES-REINVESTED> 24,118
<NET-CHANGE-IN-ASSETS> 4,420,211
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 27,072
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 125,333
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 428,046
<AVERAGE-NET-ASSETS> 15,084,404
<PER-SHARE-NAV-BEGIN> 10.59
<PER-SHARE-NII> 0.55
<PER-SHARE-GAIN-APPREC> 0.73
<PER-SHARE-DIVIDEND> 0.55
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.01
<PER-SHARE-NAV-END> 11.31
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE ANNUAL REPORT OF THE INVESTORS TRUST TAX FREE FUND AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 06
<NAME> INVESTORS TRUST TAX FREE FUND CLASS B
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 23,440,929
<INVESTMENTS-AT-VALUE> 23,617,231
<RECEIVABLES> 507,480
<ASSETS-OTHER> 107,699
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 24,232,410
<PAYABLE-FOR-SECURITIES> 428,124
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 111,312
<TOTAL-LIABILITIES> 539,436
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 23,723,902
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 30,865
<ACCUMULATED-NET-GAINS> (176,365)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 176,302
<NET-ASSETS> 23,692,974
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,059,944
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 1,059,944
<REALIZED-GAINS-CURRENT> (176,365)
<APPREC-INCREASE-CURRENT> 1,523,607
<NET-CHANGE-FROM-OPS> 2,407,186
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,059,944
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 6,718
<NUMBER-OF-SHARES-SOLD> 400,731
<NUMBER-OF-SHARES-REDEEMED> 152,074
<SHARES-REINVESTED> 24,118
<NET-CHANGE-IN-ASSETS> 4,420,211
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 27,072
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 125,333
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 428,046
<AVERAGE-NET-ASSETS> 6,045,936
<PER-SHARE-NAV-BEGIN> 10.60
<PER-SHARE-NII> 0.55
<PER-SHARE-GAIN-APPREC> 0.73
<PER-SHARE-DIVIDEND> 0.55
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.01
<PER-SHARE-NAV-END> 11.32
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE ANNUAL REPORT OF THE INVESTORS TRUST VALUE FUND AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 07
<NAME> INVESTORS TRUST VALUE FUND CLASS A
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 16,049,856
<INVESTMENTS-AT-VALUE> 18,662,885
<RECEIVABLES> 306,474
<ASSETS-OTHER> 49,260
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 19,018,619
<PAYABLE-FOR-SECURITIES> 402,447
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 83,339
<TOTAL-LIABILITIES> 485,786
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 15,733,381
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 19,703
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 166,720
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,613,029
<NET-ASSETS> 18,532,833
<DIVIDEND-INCOME> 416,089
<INTEREST-INCOME> 30,999
<OTHER-INCOME> 0
<EXPENSES-NET> 282,382
<NET-INVESTMENT-INCOME> 164,706
<REALIZED-GAINS-CURRENT> 259,945
<APPREC-INCREASE-CURRENT> 2,455,927
<NET-CHANGE-FROM-OPS> 2,880,578
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 194,252
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 918,198
<NUMBER-OF-SHARES-REDEEMED> 366,168
<SHARES-REINVESTED> 23,533
<NET-CHANGE-IN-ASSETS> 7,295,428
<ACCUMULATED-NII-PRIOR> 44,507
<ACCUMULATED-GAINS-PRIOR> (93,225)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 117,557
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 440,168
<AVERAGE-NET-ASSETS> 3,542,695
<PER-SHARE-NAV-BEGIN> 7.51
<PER-SHARE-NII> 0.14
<PER-SHARE-GAIN-APPREC> 1.45
<PER-SHARE-DIVIDEND> 0.14
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.01
<PER-SHARE-NAV-END> 8.95
<EXPENSE-RATIO> 1.35
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE ANNUAL REPORT OF THE INVESTORS TRUST VALUE FUND AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 08
<NAME> INVESTORS TRUST VALUE FUND CLASS B
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 16,049,856
<INVESTMENTS-AT-VALUE> 18,662,885
<RECEIVABLES> 306,474
<ASSETS-OTHER> 49,260
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 19,018,619
<PAYABLE-FOR-SECURITIES> 402,447
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 83,339
<TOTAL-LIABILITIES> 485,786
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 15,733,381
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 19,703
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 166,720
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 18,532,833
<DIVIDEND-INCOME> 416,089
<INTEREST-INCOME> 30,999
<OTHER-INCOME> 0
<EXPENSES-NET> 282,382
<NET-INVESTMENT-INCOME> 164,706
<REALIZED-GAINS-CURRENT> 259,945
<APPREC-INCREASE-CURRENT> 2,455,927
<NET-CHANGE-FROM-OPS> 2,880,578
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 194,252
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 918,198
<NUMBER-OF-SHARES-REDEEMED> 366,168
<SHARES-REINVESTED> 23,533
<NET-CHANGE-IN-ASSETS> 7,295,428
<ACCUMULATED-NII-PRIOR> 44,507
<ACCUMULATED-GAINS-PRIOR> (93,225)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 117,557
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 440,168
<AVERAGE-NET-ASSETS> 11,103,638
<PER-SHARE-NAV-BEGIN> 7.50
<PER-SHARE-NII> 0.07
<PER-SHARE-GAIN-APPREC> 1.45
<PER-SHARE-DIVIDEND> 0.07
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.02
<PER-SHARE-NAV-END> 8.93
<EXPENSE-RATIO> 2.10
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE ANNUAL REPORT OF THE INVESTORS TRUST GROWTH FUND AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 09
<NAME> INVESTORS TRUST GROWTH FUND CLASS A
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 16,330,717
<INVESTMENTS-AT-VALUE> 20,555,460
<RECEIVABLES> 467,465
<ASSETS-OTHER> 189,468
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 21,212,393
<PAYABLE-FOR-SECURITIES> 837,391
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 77,815
<TOTAL-LIABILITIES> 915,206
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 16,273,951
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 201,507
<ACCUMULATED-NET-GAINS> 4,224,743
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 20,297,187
<DIVIDEND-INCOME> 193,787
<INTEREST-INCOME> 12,938
<OTHER-INCOME> 0
<EXPENSES-NET> 422,834
<NET-INVESTMENT-INCOME> (58,950)
<REALIZED-GAINS-CURRENT> 342,457
<APPREC-INCREASE-CURRENT> 3,431,356
<NET-CHANGE-FROM-OPS> 3,714,863
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 928,904
<NUMBER-OF-SHARES-REDEEMED> 270,744
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 10,257,927
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (542,099)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 114,802
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 422,834
<AVERAGE-NET-ASSETS> 4,792,727
<PER-SHARE-NAV-BEGIN> 8.81
<PER-SHARE-NII> 0.01
<PER-SHARE-GAIN-APPREC> 2.56
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.38
<EXPENSE-RATIO> 1.35
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE ANNUAL REPORT OF THE INVESTORS TRUST GROWTH FUND AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 10
<NAME> INVESTORS TRUST GROWTH FUND CLASS B
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 16,330,717
<INVESTMENTS-AT-VALUE> 20,555,460
<RECEIVABLES> 467,465
<ASSETS-OTHER> 189,468
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 21,212,393
<PAYABLE-FOR-SECURITIES> 837,391
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 77,815
<TOTAL-LIABILITIES> 915,206
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 16,273,951
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 201,507
<ACCUMULATED-NET-GAINS> 4,224,743
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 20,297,187
<DIVIDEND-INCOME> 193,787
<INTEREST-INCOME> 12,938
<OTHER-INCOME> 0
<EXPENSES-NET> 422,834
<NET-INVESTMENT-INCOME> (58,950)
<REALIZED-GAINS-CURRENT> 342,457
<APPREC-INCREASE-CURRENT> 3,431,356
<NET-CHANGE-FROM-OPS> 3,714,863
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 928,904
<NUMBER-OF-SHARES-REDEEMED> 270,744
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 10,257,927
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (542,099)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 114,802
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 422,834
<AVERAGE-NET-ASSETS> 9,585,522
<PER-SHARE-NAV-BEGIN> 8.74
<PER-SHARE-NII> (0.05)
<PER-SHARE-GAIN-APPREC> 2.52
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.21
<EXPENSE-RATIO> 2.10
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
