[Investors Trust Logo here]
FAMILY OF FUNDS
ANNUAL REPORT
October 31, 1996
Dear Valued Shareholder: [PHOTO]
I am pleased to present this annual report which includes financial market
reviews, performance reviews, portfolio commentaries, and the financial
statements and financial highlights for each of the Investors Trust Mutual Funds
for the fiscal year ended October 31, 1996.
In September of this year the Adjustable Rate, Growth, Tax Free, and Value funds
all surpassed an important mutual fund milestone--a three-year performance
history. Organizations that rate or rank mutual funds typically require a three
year track record before recognizing funds in their rating systems.
Looking back at the U.S. fixed income and equity market performances over the
past three years helps reinforce the idea that successful investing requires
diversification and patience. Calendar year 1994 presented most fixed income and
domestic equity fund investors with negative total returns. Those who remained
invested throughout 1995 enjoyed some of the best fixed income and equity fund
total returns in history. The financial markets through the first ten months of
1996 have provided most fixed income fund investors with total returns in line
with historical averages and domestic equity fund investors with total returns
above the historical averages.
What does this mean to Investors Trust Mutual Funds shareholders? Variations in
fixed income and equity market total returns during the past three years
demonstrate the importance of appropriately diversifying investments and
aligning the objectives of your investments with your financial goals. Review
your financial goals and objectives at least annually and, if necessary, with
your investment representative's assistance, make adjustments to your investment
mix. As a service to shareholders, each Investors Trust Mutual Fund allows
exchanges to other Investors Trust Mutual Funds free of charge (although such
exchanges are taxable events). I encourage you to take advantage of this service
if your investment needs or goals have changed since first purchasing an
Investors Trust fund.
If you have questions about the information contained in this report, please
contact your investment representative or call Investors Trust Services at
1-800-656-6626 and press 2 on your phone at the prompt.
Thank you for investing with Investors Trust.
Sincerely,
/s/ Patrick E. Welch
- --------------------
Patrick E. Welch
Chairman
THE INVESTORS TRUST FAMILY OF FUNDS IS OFFERED BY GNA DISTRIBUTORS, INC.
<PAGE>
2 Investors Trust Mutual Funds
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TABLE OF CONTENTS
-----------------
PAGE
----
Chairman's Message................................................... 1
Table of Contents.................................................... 2
Listing of Trustees and Officers..................................... 3
Adviser's Market Review.............................................. 5
Sub-Adviser Commentaries and Performance Graphs
Adjustable Rate Fund............................................... 6
Government Fund.................................................... 8
Tax Free Fund...................................................... 11
Value Fund......................................................... 13
Growth Fund........................................................ 15
Notes to Performance................................................. 17
Investment Portfolios
Adjustable Rate Fund............................................... 18
Government Fund.................................................... 21
Tax Free Fund...................................................... 26
Value Fund......................................................... 35
Growth Fund........................................................ 38
Financial Statements................................................. 43
Financial Highlights................................................. 50
Notes to Financial Statements........................................ 52
Report of Independent Accountants.................................... 60
Tax Information...................................................... 61
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<PAGE>
Investors Trust Mutual Funds 3
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INVESTORS TRUST MUTUAL FUNDS
ADJUSTABLE RATE FUND o GOVERNMENT FUND o TAX FREE FUND o VALUE FUND o GROWTH
FUND
Annual Report
TRUSTEES AND OFFICERS
PATRICK E. WELCH
Trustee, Chairman of
the Board,
President and CEO
PIERCE T. LINDBERG
Trustee
EDWARD R. MCMILLAN
Trustee
DOUGLAS H. PEDERSEN
Trustee
GEOFFREY S. STIFF
Senior Vice President
and Treasurer
CHARLES A. KAMINSKI
Senior Vice President
VICTOR C. MOSES
Senior Vice President
THOMAS W. CASEY
Vice President
STEPHEN N. DEVOS
Vice President and
Controller
SCOTT A. CURTIS
Vice President
EDWARD J. WILES, JR.
Vice President and Secretary
KARRI J. HARRINGTON
Assistant Secretary
SUB-ADVISERS
ADJUSTABLE RATE FUND
STANDISH, AYER & WOOD, INC.
Boston, Massachusetts
GOVERNMENT FUND
BLACKROCK FINANCIAL
MANAGEMENT, INC.
New York, New York
TAX FREE FUND
BROWN BROTHERS HARRIMAN
& CO.
New York, New York
VALUE FUND
DUFF & PHELPS INVESTMENT
MANAGEMENT CO.
Chicago, Illinois
GROWTH FUND
VALUE LINE, INC.
New York, New York
ADVISER
GNA CAPITAL
MANAGEMENT, INC.
Seattle, Washington
DISTRIBUTOR
GNA DISTRIBUTORS, INC.
Seattle, Washington
COUNSEL
GOODWIN, PROCTER & HOAR
Boston, Massachusetts
CUSTODIAN & TRANSFER AGENT
STATE STREET BANK AND TRUST
COMPANY
Boston, Massachusetts
INDEPENDENT ACCOUNTANTS
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
This report is prepared for the shareholders of the Investors Trust Mutual
Funds. It is not authorized for use as an offer of sale or a solicitation of an
offer to buy shares of the Funds unless accompanied or preceded by the Trust's
current prospectus.
<PAGE>
4 Investors Trust Mutual Funds
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(This Page Intentionally Left Blank)
<PAGE>
Investors Trust Mutual Funds 5
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FINANCIAL MARKET REVIEW
GNA CAPITAL MANAGEMENT, INC., ADVISER
During the fiscal year ended October 31, 1996, the financial markets
continued to provide participants with a roller coaster ride that has
been characteristic of the markets for the last few years.
Market perception of the economy went from slowing growth in the first
few months, to accelerating growth for several months, to moderate growth
at the end of the period. Annualized quarterly GDP growth rates, in fact,
turned out to be +0.30%, +2.00%, +4.70%, and +2.20% for 4Q95--3Q96.
Intermediate and long maturity interest rates first declined, then rose,
then declined again, as investors believed inflation would rise and fall
with economic growth. Because of the close connection between inflation
expectations and interest rates, the bond market had a volatile year. The
5-year Treasury's yield started the period at 5.81%, declined to 5.13% in
mid-February, rose to 6.85% in mid-June, and then declined to 6.07% at
the end of the period. Bond prices move in the opposite direction of
interest rates and mirrored these moves.
Inflation, as measured by the change in the Consumer Price Index,
seemed to remain under control, ending the period at a year-over-year
rate of +3.00%, up only slightly from a year earlier. In this
environment, the bond market, as measured by the Lehman Brothers
Aggregate Bond Index, had a total return of +5.12%, as bond price
declines somewhat offset coupon income for the year.
In the equity market, stock prices were propelled higher by
expectations of increasing corporate profits. Major market indexes moved
to record highs periodically throughout the year. The Dow Jones
Industrial Average moved up from 4,755 at the beginning of the year to
6,029 at the end of the year, with the only real setback being a roughly
400 point correction during the May--July period. In this environment,
the broader stock market, as measured by the S&P 500 Stock Index, had a
total return of +24.08%, well above the long-term average. The averages
mask, however, immediate and precipitous declines in those companies'
stocks whose earnings disappointed Wall Street analysts' expectations.
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<PAGE>
6 Investors Trust Adjustable Rate Fund
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FROM THE ADJUSTABLE RATE FUND SUB-ADVISER
STANDISH, AYER & WOOD, INC.
PORTFOLIO MANAGER: LORI DRISCOLL
Q. WHAT HAPPENED IN THE MARKET DURING THE PAST TWELVE MONTHS?
A. Over the last 12 months, bond yields have fluctuated significantly.
During the first quarter of 1996, interest rates rose mostly in response
to stronger job growth, a pick up in retail sales and high consumer
confidence. With a modestly improving economic picture, the market
shifted from expectations of a Fed ease to a Fed tightening. Despite low
inflation levels, tight labor markets, combined with the economic
rebound, spurred inflationary fears. By mid-year the bearish market
sentiment began to turn. The Fed delayed any tightening moves until
further signs confirmed the strength of the recovery. As a result, the
market adjusted to a neutral Fed policy and yield levels peaked in
August. The subsequent decline in Treasury yields has been driven by
weaker job growth and continued low inflation.
Q. WHAT HAPPENED IN THE FUND DURING THE PAST SIX AND TWELVE MONTH
PERIOD?
A. Over the last year, adjustable rate mortgages ("ARMs") have benefited
from favorable market conditions. With fairly low new originations in
ARMs, there has been relatively minimal supply for the market to absorb.
Additionally, increased demand for floating rate products as rates rose
helped narrow spreads. Also enhancing returns has been declining
prepayment risk as higher interest rates diminished refinancing activity.
Finally, compared to 1994's extreme move, this year's moderate rise in
rates had little impact on the implicit cap risk (see Note (d) on page
20) in the ARM sector. Altogether, adjustable rate mortgage returns
benefited from slower prepayments and positive market technicals,
reflected by tighter yield spreads relative to Treasuries during the
year.
Q. WHAT IS YOUR CURRENT MARKET OUTLOOK?
A. Given the more recent indications of moderating economic growth and
continued good inflation news, lower interest rates could be sustained in
the near term. However, consumer spending is likely to pick up as the
holiday season approaches, particularly if consumer confidence remains
high. Constrained by an already tight labor market and relatively high
capacity utilization, any signs of strong economic growth could renew
inflation concerns. Additionally, some indications of recovery in global
economies could result in upward pressure on interest rates. Finally,
there has been sizeable foreign buying of U.S. Treasuries. The eventual
sale of these positions could result in higher yield levels in the coming
months.
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Investors Trust Adjustable Rate Fund 7
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Q. HOW HAVE YOU POSITIONED THE FUND TO BENEFIT FROM YOUR MARKET OUTLOOK?
A. Throughout the past year, the Adjustable Rate Fund has maintained its
ARM position with a slight bias toward the GNMA sector. Typically, GNMA
ARMs offer an attractive yield advantage over FHLMC and FNMA counterparts
to compensate investors for modestly greater cap risk. Given our
expectation of moderate rate moves in either direction until a clearer
economic picture emerges, today's level of cap risk in the ARM sector is
marginal. Under this scenario, adjustable rate mortgage returns should
benefit from stable to slightly tighter yield spreads.
In the fixed rate sector, we continue to find attractive
opportunities, particularly in home equity asset backed securities. These
bonds are AAA rated with minimal prepayment risk and short durations.
Seasoned premium pass-throughs also offer good value as they benefit from
slower prepayments. With fairly stable durations, we still find
attractive spread opportunities in this sector.
In the coming year, we expect the portfolio to continue to benefit
from its yield advantage in high quality spread products.
[graph goes here]
Performance of a $10,000 investment since inception of the Investors Trust
Adjustable Rate Fund (9/8/93)
<TABLE>
<CAPTION>
Lehman Brothers Investors Trust Investors Trust Morningstar Govt. Bond-
ARM Index Adjustable Rate Fund - A Shares Adjustable Rate Fund - B Shares ARM Fund Average
(ending value: $11,833) (ending value: $11,429) (ending value: $11,157) (ending value: $10,703)
<S> <C>
9/8/93 $10,000 $10,000 $10,000 $10,000
10/93 $10,005 $10,026 $10,003 $10,034
12/93 $10,053 $10,072 $10,052 $10,057
2/94 $10,088 $10,021 $10,006 $10,084
4/94 $ 9,955 $ 9,850 $ 9,807 $10,018
6/94 $ 9,969 $ 9,791 $ 9,736 $10,001
8/94 $10,079 $ 9,926 $ 9,858 $10,034
10/94 $10,030 $ 9,876 $ 9,796 $ 9,963
12/94 $10,054 $ 9,863 $ 9,771 $ 9,804
2/95 $10,426 $10,127 $10,021 $ 9,904
4/95 $10,587 $10,326 $10,205 $10,015
6/95 $10,803 $10,560 $10,423 $10,107
8/95 $10,908 $10,642 $10,490 $10,174
10/95 $11,053 $10,785 $10,618 $10,162
12/95 $11,232 $10,929 $10,746 $10,261
2/96 $11,335 $11,005 $10,802 $10,322
4/96 $11,370 $11,014 $10,781 $10,366
6/96 $11,484 $11,119 $10,886 $10,458
8/96 $11,610 $11,220 $10,966 $10,543
10/96 $11,833 $11,429 $11,157 $10,703
</TABLE>
Average Annual Total Return %
for the period ended October 31, 1996
Since
1 yr 3 yr Inception
Class A 5.81% 4.41% 4.28%
Class B 5.02% 3.69% 3.52%
Past Performance is not indicative of future results. See Notes to Performance
(page 17).
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<PAGE>
8 Investors Trust Government Fund
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FROM THE GOVERNMENT FUND SUB-ADVISER
BLACKROCK FINANCIAL MANAGEMENT, INC.
PORTFOLIO MANAGERS: KEITH ANDERSON AND ANDREW PHILLIPS
Q. WHAT HAPPENED IN THE MARKET OVER THE PAST TWELVE MONTHS?
A. Significant swings in the pace of U.S. economic growth influenced the
performance of the fixed income markets during the year ended October 31,
1996. Throughout the fourth quarter of 1995 and through the first six
weeks of 1996, weak inflationary data and sluggish retail demand spurred
two reductions of short term interest rates totaling 50 basis points
(0.50%) by the Federal Reserve to 5.25%. However, the economic climate
was altered significantly during mid-February, as data suggesting a
pick-up in growth caused market participants to consider the potential
for increased inflationary pressures.
Economic growth continued to accelerate during the second quarter of
1996, as the sharp decline in interest rates throughout 1995 further
stimulated spending and buoyed consumer confidence. Economic growth as
measured by Gross Domestic Product (GDP) was measured at an annualized
4.7% for the quarter, which led investors to believe that the Federal
Reserve would be forced to raise interest rates for the first time in
over a year to curb the pace of the economy. However, the pace of
economic growth has slowed during the past few months to the 2.0%-2.5%
level, which is considered the non-inflationary trendline pace for the
U.S. economic growth. Softer economic data and continued moderation in
the broad inflation measures during the third quarter allowed the Fed to
leave short term interest rates unchanged at their August and September
policy meetings.
Yields of most maturity Treasuries posted minimal net changes over
the past twelve months. As an example, the yield of the 5-Year Treasury
note ended October 1996 at 6.07%, 26 basis points higher than the October
31, 1995 closing yield of 5.81%. However, the modest net change in yield
levels masks considerable intra-year movements. After falling to a low of
5.13% in mid-February, the yield of the 5-year Treasury rose to 6.82% in
July in response to stronger economic data before rallying to 6.07% at
the end of the period. The market for mortgage-backed securities (MBS)
posted strong performance versus the broader investment grade bond market
during 1996. Prepayments, as measured by the MBA Refinancing Index,
displayed considerable stability as homeowners refinanced their mortgages
at a relatively stable rate. An equally important contributor to mortgage
performance was a strong technical environment, as new issue supply
declined from its May peak. Additionally, financial institution demand
for MBS increased in light of an overall scarcity of high quality fixed
income products with a yield advantage over Treasuries.
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<PAGE>
Investors Trust Government Fund 9
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Q. WHAT HAPPENED IN THE FUND DURING THE PAST SIX AND TWELVE MONTH
PERIODS?
A. The Fund entered the fiscal year with approximately a two-thirds
allocation to mortgage-backed securities and maintained this exposure
through the April 30 semi-annual period. During the past six months,
however, BlackRock has taken on a defensive outlook on the mortgage
market and the Fund's mortgage exposure has been reduced accordingly. The
most significant reduction occurred in the adjustable rate mortgage (ARM)
sector. After consistently maintaining between a 15% and 20% stake in
ARMs in the first half of the fiscal year, the Fund eliminated its
position over the past six months in response to price appreciation and
tightening yield spreads. Within the mortgage pass-through sector, the
Fund has emphasized seasoned pass-throughs over generic, or newly issued,
pass-throughs by doubling its seasoned pass-through allocation between
April 30, 1996 and October 31, 1996. The overall reduction in mortgage
securities has allowed for an increase in the Fund's allocation to
Treasuries and Agency bonds. In particular, the Fund has purchased 10-
and 20-year Small Business Administration Loans (SBAs) and FHA Project
Loans, both of which offer agency credit quality, attractive yield
spreads over Treasuries and relatively strong prepayment protection.
Q. WHAT IS YOUR CURRENT MARKET OUTLOOK?
A. BlackRock maintains a positive view on the bond market. The rationale
behind the Fed's decision not to raise interest rates appears to focus on
the benign inflation data released during the third quarter. The decline
in September job growth after two significant increases further supported
the Fed's inaction. On balance, the outlook for moderate inflation
remains intact, suggesting that further declines in interest rates are
likely. In addition to the favorable fundamental backdrop, foreign demand
for U.S. bonds has increased due to the renewed attractiveness of the
U.S. bond market on a global basis.
Q. HOW HAVE YOU POSITIONED THE FUND TO BENEFIT FROM YOUR MARKET OUTLOOK?
A. As discussed above, the Fund has reduced the mortgage overweighting
that had been in place through much of 1996 as BlackRock has adopted a
less positive view of that sector. In addition to the tight yield spread
levels at which mortgages are currently trading, our anticipation of a
pick-up in interest rate volatility has led to the decision to
underweight the mortgages. The Fund's remaining mortgage holdings
emphasize seasoned securities, which are expected to provide more
prepayment stability should interest rates decline significantly.
Additionally, as of October 31, 1996 the Fund had taken a modestly
aggressive duration stance, reflecting BlackRock's positive views on
interest rates.
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<PAGE>
10 Investors Trust Government Fund
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[graph goes here]
Performance of a $10,000 investment since inception of the Investors Trust
Government Fund A Shares (9/8/93)
<TABLE>
<CAPTION>
Lehman Brothers Morningstar Government Bond - Investors Trust
Government Bond Index General Fund Average Government Fund - A Shares
(ending value: $11,674) (ending value: $11,294) (ending value: $10,592)
<S> <C>
9/8/93 $10,000 $10,000 $10,000
10/93 $10,076 $10,044 $ 9,940
12/93 $10,004 $10,005 $ 9,910
2/94 $ 9,926 $ 9,948 $ 9,853
4/94 $ 9,626 $ 9,666 $ 9,480
6/94 $ 9,592 $ 9,623 $ 9,162
8/94 $ 9,770 $ 9,759 $ 9,248
10/94 $ 9,626 $ 9,635 $ 9,029
12/94 $ 9,667 $ 9,656 $ 9,060
2/95 $10,058 $ 9,996 $ 9,321
4/95 $10,254 $10,156 $ 9,470
6/95 $10,750 $10,530 $ 9,842
8/95 $10,835 $10,612 $ 9,904
10/95 $11,106 $10,825 $10,091
12/95 $11,439 $11,094 $10,350
2/96 $11,274 $10,974 $10,255
4/96 $11,109 $10,844 $10,128
6/96 $11,233 $10,928 $10,189
8/96 $11,236 $10,939 $10,186
10/96 $11,674 $11,294 $10,592
</TABLE>
Average Annual Total Return %
for the period ended October 31, 1996
Since
1 yr 3yr Inception
Class A 4.80% 2.09% 1.79%
[graph goes here]
Performance of a $10,000 investment since inception of the Investors Trust
Government Fund B Shares (4/22/87)
Average Annual Total Return %
for the period ended October 31, 1996
Since
1 yr 3yr Inception
Class B 4.00% 1.35% 6.70%
<TABLE>
<CAPTION>
Lehman Brothers Morningstar Government Bond - Investors Trust
Government Bond Index General Fund Average Government Fund - B Shares
(ending value: $20,979) (ending value: $18,687) (ending value: $18,162)
<S> <C>
4/22/87 $10,000 $10,000 $10,000
10/31/87 $ 9,933 $ 9,839 $10,130
4/30/88 $10,378 $10,313 $10,708
10/31/88 $10,899 $10,767 $11,240
4/30/89 $11,160 $10,961 $11,383
10/31/89 $12,210 $11,794 $12,318
4/30/90 $12,089 $11,772 $12,451
10/31/90 $12,935 $12,495 $13,248
4/30/91 $13,869 $13,327 $14,133
10/31/91 $14,827 $14,217 $15,113
4/30/92 $15,311 $14,632 $15,441
10/31/92 $16,358 $15,431 $16,283
4/30/93 $17,488 $16,267 $17,119
10/31/93 $18,506 $16,917 $17,826
4/30/94 $17,680 $16,281 $16,918
10/31/94 $17,678 $16,230 $16,047
4/30/95 $18,833 $17,106 $16,807
10/31/95 $20,397 $18,234 $17,843
4/30/96 $20,403 $18,265 $17,801
10/31/96 $21,441 $19,023 $18,583
</TABLE>
Past performance is not indicative of future results. See Notes to Performance
(page 17).
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<PAGE>
Investors Trust Tax Free Fund 11
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FROM THE TAX FREE FUND SUB-ADVISER
BROWN BROTHERS HARRIMAN & CO.
PORTFOLIO MANAGER: BARBARA BRINKLEY
Q. WHAT HAPPENED IN THE MARKET DURING THE PAST TWELVE MONTHS?
A. Slow growth and falling interest rates at the end of 1995 planted the
seeds for a rebounding economy in the spring of 1996. Brisk economic
activity, tightening labor markets and rising oil prices heightened
inflationary concerns and provoked expectations of a more restrictive
monetary policy, causing bond prices to sink at mid-year. More recently,
the resultant rise in mortgage rates and burgeoning personal debt levels
have slowed consumer spending, while weaker government spending and a
widening trade gap have restrained GDP growth. As evidence of a slower
economic pace has unfolded, bond prices have rallied.
During our fiscal year, Aaa municipal yields first sank by 30-35
basis points through January; rose 55-65 basis points through June; then
fell by 25 basis points through October, 1996. For the fiscal period, Aaa
municipal yields are 5-10 basis points higher for 2-10 year maturities
and 5-10 basis points lower for maturities beyond 10 years.
Intermediate and longer maturity municipals performed well relative
to comparable maturity taxable securities. As tax reform worries
dissipated and modestly higher yields provoked strong investor demand for
tax-sheltered income, the yield ratios of municipals to treasuries
dropped to their lowest levels in a year.
Q. WHAT IS YOUR CURRENT MARKET OUTLOOK?
A. The U.S. economy is in the midst of a slowdown in real GDP growth,
from nearly 5% in the second quarter to less than 2% in the third and
fourth quarters, 1996. Consumer spending and government spending have
weakened after a second quarter surge, while a widening trade gap is also
restraining GDP. Resilient housing activity, and support from capital
spending and inventory investment, will cushion some of the slowdown we
expect in other sectors. Overall, inflation should remain around 3%.
Should growth muddle along at the 1%-2% pace we project, the Fed's next
move may be to ease monetary policy at some point in 1997.
Q. HOW HAVE YOU POSITIONED THE FUND TO BENEFIT FROM YOUR MARKET OUTLOOK?
A. The portfolio is now positioned with a duration that is moderately
longer than the portfolio's "neutral point" to benefit from the lower
interest rate environment we anticipate in the coming quarters. The
portfolio's duration is 6.6 years, or 110% of duration neutrality, which
is 6 years. Portfolio issues are concentrated in 7-20 year maturities to
lock in the high
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<PAGE>
12 Investors Trust Tax Free Fund
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tax free yields of the steepest part of the yield curve, and to benefit
from lower yields and from "rolling down the yield curve" over time. Our
average coupon is over 7%.
We prefer call-protected premium coupons for their greater tax-free
yields to maturity, and their more defensive characteristics. Further,
they avoid the unfavorable tax effects of market discount bonds. Our
average credit quality is Aa+, with over 65% of the portfolio backed by
U.S. Treasury securities held in escrow. Our high credit quality and
broad geographical diversification are designed to protect against "event
risk" that could arise from a local economic/political development or
from a natural disaster. We manage our sales transactions to avoid
incurring net capital gains tax liability. We have no derivatives or
alternative minimum tax bonds in the Fund's portfolio.
[graph goes here]
Performance of a $10,000 investment since inception of the Investors Trust
Tax Free Fund (9/8/93)
<TABLE>
<CAPTION>
Lehman Brothers 10-Year General Investors Trust Investors Trust Morningstar Municipal Bond -
Obligation Municipal Bond Index Tax Free Fund - A Shares Tax Free Fund - B Shares National Fund Average
(ending value: $11,775) (ending value: $11,621) (ending value: $11,582) (ending value: $11,396)
<S> <C>
9/8/96 $10,000 $10,000 $10,000 $10,000
10/93 $10,138 $10,054 $10,043 $10,128
12/93 $10,278 $10,162 $10,147 $10,226
2/94 $10,081 $10,011 $ 9,983 $10,094
4/94 $ 9,830 $ 9,712 $ 9,673 $ 9,763
6/94 $ 9,854 $ 9,795 $ 9,743 $ 9,795
8/94 $10,061 $ 9,998 $ 9,940 $ 9,973
10/94 $ 9,788 $ 9,753 $ 9,697 $ 9,689
12/94 $ 9,755 $ 9,793 $ 9,737 $ 9,711
2/95 $10,288 $10,296 $10,236 $10,202
4/95 $10,453 $10,432 $10,371 $10,299
6/95 $10,710 $10,614 $10,561 $10,495
8/95 $11,012 $10,809 $10,746 $10,673
10/95 $11,205 $10,946 $10,892 $10,870
12/95 $11,427 $11,289 $11,223 $11,148
2/96 $11,521 $11,339 $11,272 $11,148
4/96 $11,325 $11,096 $11,041 $10,963
6/96 $11,387 $11,211 $11,155 $11,061
8/96 $11,505 $11,406 $11,338 $11,154
10/96 $11,775 $11,621 $11,562 $11,396
</TABLE>
Average Annual Total Return %
for the period ended October 31, 1996
Since
1 yr 3yr Inception
Class A 6.13% 4.94% 4.88%
Class B 6.12% 4.80% 4.71%
Past performance is not indicative of future results. See Notes to Performance
(page 17).
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<PAGE>
Investors Trust Value Fund 13
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FROM THE VALUE FUND SUB-ADVISER
DUFF & PHELPS INVESTMENT MANAGEMENT
PORTFOLIO MANAGER: CARL FAUST
Q. WHAT HAPPENED IN THE MARKET DURING THE PAST TWELVE MONTHS?
A. The stock market experienced another good year with the S&P 500 up
24.2% for the year and 9.1% over the six months ended 10/31/96. The past
6 months could be characterized as a turbulent period in which the equity
markets experienced a flight to quality based on concerns regarding
economic growth and inflation. While the markets experienced a modest
correction, ranging from 3-9% in July, most markets recovered in August
and September as signs of slower economic growth became more evident.
Q. WHAT HAPPENED IN THE FUND DURING THE PAST SIX AND TWELVE MONTHS?
A. We have taken larger positions in companies for which we have a high
degree of confidence. These larger positions benefited the fund (General
Electric, Chase Manhattan).
The best and worst performing stocks held throughout the year:
12 Months 6 Months
- --------------------------------- -----------------------------------------
Best Worst Best Worst
- -------------- -------------- ----------------- ---------------------
Intel +57% MASCO +11% Intel +62% May Dept. Store -7%
Gillette +54% AMEX +15% Compaq +48% Pepsi -6%
MBNA +53% Mobil +15% MBNA +33% Halliburton -1%
GE +52% Exxon +16% Campbell +28% Mobil +1%
Q. WHAT IS YOUR CURENT MARKET OUTLOOK?
A. We expect growth will slow during the balance of 1996 leading to
slower profit growth in 1997. We also expect inflation to increase
modestly to 2.9% in 1996 from just 2.5% in 1995. The Federal Reserve may
be forced to raise interest rates in late 1996 or early 1997 based on
economic growth and higher inflation.
As this is written, the stock market is slightly under-valued
relative to the fixed income markets. We expect investors will continue
shifting toward high quality companies with consistent earnings growth
prospects as profit growth slows in 1997.
Q. HOW HAVE YOU POSITIONED THE FUND TO BENEFIT FROM YOUR MARKET OUTLOOK?
A. We have increased our overweighting in the defensive sector, mainly
in the drug and household product industries. Drug companies should
benefit from strong new product pipelines, favorable demographics and
less turmoil on the legislative front. We increased our
- --------------------------------------------------------------------------------
<PAGE>
14 Investors Trust Value Fund
- --------------------------------------------------------------------------------
overweighting in diversified chemical and industrial companies and moved
away from aluminum and steel companies.
We are underweighted in both energy and interest sensitive sectors.
Going forward, energy related stocks are unlikely to outperform the S&P
500 due to deregulation and unsustainable high energy prices. Within the
interest sensitive sector, we remain attracted to bank stocks. Chase
Manhattan remains a significant position in the fund and continues to
benefit from improving fundamentals and the merger with Chemical Bank.
Our emphasis on large capitalization, high quality companies with
consistent earnings growth prospects should continue delivering strong
relative performance. The portfolio should also benefit from a continued
reduction in the overall number of holdings and increased positions in
stocks in which we have the highest degree of confidence.
[graph goes here]
Performance of a $10,000 investment since inception of the Investors Trust
Value Fund (9/8/93)
<TABLE>
<CAPTION>
Standard & Poor's Investors Trust Value Investors Trust Value Morningstar Equity Income
500 Stock Index Fund-A Shares Fund-B Shares Fund Average
(ending value: $16,500) (ending value: $15,162) (ending value: $14,847) (ending value: $14,539)
<S> <C>
9/8/96 $10,000 $10,000 $10,000 $10,000
10/93 $10,128 $10,173 $10,187 $10,119
12/93 $10,156 $10,141 $10,147 $10,127
2/94 $10,213 $ 9,967 $ 9,960 $10,144
4/94 $ 9,895 $ 9,722 $ 9,690 $ 9,857
6/94 $ 9,808 $ 9,595 $ 9,561 $ 9,792
8/94 $10,545 $10,093 $10,044 $10,360
10/94 $10,527 $10,141 $10,075 $10,237
12/94 $10,288 $ 9,972 $ 9,902 $ 9,940
2/95 $10,966 $10,557 $10,469 $10,455
4/95 $11,619 $11,073 $10,964 $10,928
6/95 $12,361 $11,517 $11,383 $11,382
8/95 $12,808 $11,778 $11,641 $11,781
10/95 $13,297 $12,316 $12,140 $12,050
12/95 $14,139 $12,919 $12,724 $12,882
2/96 $14,766 $13,462 $13,232 $13,297
4/96 $15,127 $13,700 $13,460 $13,604
6/96 $15,581 $13,986 $13,732 $13,845
8/96 $15,203 $13,720 $13,457 $13,702
10/96 $16,500 $15,162 $14,847 $14,539
</TABLE>
Average Annual Total Return %
for the period ended October 31, 1996
Since
1 yr 3yr Inception
Class A 23.10% 14.23% 14.13%
Class B 22.30% 13.38% 13.37%
Past performance is not indicative of future results. See Notes to Performance
(page 17).
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Growth Fund 15
- --------------------------------------------------------------------------------
FROM THE GROWTH FUND SUB-ADVISER
VALUE LINE, INC.
PORTFOLIO MANAGER: ALAN HOFFMAN
Q. WHAT HAPPENED IN THE MARKET DURING THE PAST TWELVE MONTHS? WHAT
HAPPENED IN THE FUND DURING THE PAST SIX AND TWELVE MONTHS?
A. The defining characteristic of the equity markets over the last year
has been volatility. While stock prices have generally moved higher over
the period (recently setting new records for the major market indexes),
there have been a few significant downdrafts, including the technology
sell-off that commenced in the last quarter of 1995 and the overall
market correction of this past summer.
The Fund's performance reflected and amplified the general contour
of the market. Because of our overweighted position in technology stocks,
that sector helped the Fund significantly during periods of rising prices
and hurt us during market selloffs. On balance, our technology exposure
was a net positive over the past year.
Q. WHAT IS YOUR CURRENT MARKET OUTLOOK?
A. Recently released data support our forecast that the U.S. economy
will continue on a track of moderate growth and relatively low interest
and inflation rates. If there is a risk to this outlook, it's probably
that it's too optimistic: there's some evidence that the economy is
slowing, which could provoke the Federal Reserve to adopt a more
accommodative monetary posture. All of this, of course, suggests a
healthy environment for growth equities. And while we believe that the
long-term direction for stocks--especially the high-quality growth names
in which the Fund specializes--is up, market volatility will be a fact of
life for the foreseeable future.
Q. HOW HAVE YOU POSITIONED THE FUND TO BENEFIT FROM YOUR MARKET OUTLOOK?
A. We are almost fully invested in stocks ranked 1 or 2 by the Value
Line Timeliness Ranking system, which has a 31-year record of identifying
stocks that, as a group, tend to outperform the broad market averages. In
terms of specific economic sectors, we have significant exposure to
financial services and the health-care/drug area, and we continue to
believe that high-tech stocks will form a structural foundation of the
portfolio, reflecting those companies' importance in worldwide economic
growth.
- --------------------------------------------------------------------------------
<PAGE>
16 Investors Trust Growth Fund
- --------------------------------------------------------------------------------
[graph goes here]
Performance of a $10,000 investment since inception of the Investors Trust
Growth Fund (9/8/93)
<TABLE>
<CAPTION>
Standard & Poor's Investors Trust Growth Investors Trust Growth Morningstar Growth
500 Stock Index Fund-A Shares Fund-B Shares Fund Average
(ending value: $16,500) (ending value: $15,632) (ending value: $15,288) (ending value: $15,190)
<S> <C>
9/8/93 $10,000 $10,000 $10,000 $10,000
10/93 $10,212 $10,212 $10,238 $10,128
12/93 $10,435 $10,424 $10,343 $10,156
2/94 $10,659 $10,624 $10,507 $10,213
4/94 $ 9,847 $ 9,800 $10,058 $ 9,895
6/94 $ 9,447 $ 9,400 $ 9,734 $ 9,808
8/94 $10,394 $10,323 $10,475 $10,545
10/94 $10,465 $10,382 $10,450 $10,527
12/94 $10,322 $10,228 $10,155 $10,288
2/95 $10,857 $10,739 $10,606 $10,966
4/95 $11,273 $11,143 $11,119 $11,619
6/95 $12,377 $12,212 $11,922 $12,361
8/95 $13,292 $13,103 $12,627 $12,808
10/95 $13,518 $13,316 $12,753 $13,297
12/95 $13,589 $13,364 $13,297 $14,139
2/96 $14,337 $14,077 $13,885 $14,766
4/96 $14,646 $14,374 $14,529 $15,127
6/96 $14,551 $14,267 $14,675 $15,581
8/96 $14,539 $14,243 $14,320 $15,203
10/96 $15,632 $15,288 $15,190 $16,500
</TABLE>
Average Annual Total Return %
for the period ended October 31, 1996
Since
1 yr 3yr Inception
Class A 15.64% 15.25% 15.24%
Class B 14.81% 14.40% 14.43%
Past performance is not indicative of future results. See Notes to Performance
(page 17).
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Mutual Funds 17
- --------------------------------------------------------------------------------
NOTES TO PERFORMANCE
Total returns assume changes in share price and reinvestment of dividends and
capital gains. Investment returns and principal values will fluctuate, so that
an investor's shares, when redeemed, may be worth more or less than the original
cost.
The total returns of classes A and B shown do not include any reduction for
the maximum applicable sales charges. If total returns included the effects of
these charges, the performance figures for each class would have been lower.
- --------------------------------------------------------------------------------
<PAGE>
18 Investors Trust Adjustable Rate Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996
<TABLE>
<CAPTION>
% OF NET PRINCIPAL MARKET
ASSETS AMOUNT ($) VALUE ($)
-------- ---------- ----------
<S> <C>
LONG-TERM GOVERNMENT AGENCY SECURITIES 85.3
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (A)(B)-4.8
9.000%, with various maturity dates to October 15, 2016
(Cost $338,271)............................................ 318,176 341,131
----------
FEDERAL HOME LOAN MORTGAGE CORPORATION (A)(B)-3.1
7.500%, with various maturity dates to September 1, 2000
(Cost $222,044)............................................ 217,757 221,907
----------
FEDERAL HOME LOAN MORTGAGE CORPORATION
ADJUSTABLE RATE MORTGAGES (A)(B)(D)-15.0
7.258%, with a maturity date of June 1, 2024...................... 201,667 205,952
7.351%, with a maturity date of January 1, 2023................... 125,426 126,857
7.610%, with a maturity date of January 1, 2023................... 107,162 110,494
7.812%, with a maturity date of August 1, 2023.................... 193,067 198,558
7.825%, with various maturity dates to January 1, 2024............ 180,726 184,874
7.987%, with a maturity date of August 1, 2023.................... 228,313 235,591
----------
Total Federal Home Loan Mortgage Corporation
Adjustable Rate Mortgages
(Cost $1,052,680).......................................... 1,062,326
----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
ADJUSTABLE RATE MORTGAGES (A)(B)(D)-6.8
4.131%, with a maturity date of April 1, 2026..................... 271,554 267,098
6.954%, with a maturity date of May 1, 2021....................... 206,502 211,728
----------
Total Federal National Mortgage Association
Adjustable Rate Mortgages
(Cost $471,409)............................................ 478,826
----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
ADJUSTABLE RATE MORTGAGES (A)(B)(D)-55.6
5.000%, with a maturity date of October 20, 2025.................. 558,358 556,873
5.500%, with a maturity date of November 20, 2024................. 243,284 244,425
6.000%, with various maturity dates to April 20, 2024............. 355,709 355,592
6.500%, with various maturity dates to August 20, 2025............ 1,004,372 1,016,503
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Adjustable Rate Fund 19
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996, CONTINUED
<TABLE>
<CAPTION>
% OF NET PRINCIPAL MARKET
ASSETS AMOUNT ($) VALUE ($)
-------- ---------- ----------
<S> <C>
7.000%, with various maturity dates to September 20, 2024......... 611,078 620,862
7.125%, with various maturity dates to August 20, 2024............ 617,748 630,445
7.250%, with various maturity dates to September 20, 2023......... 503,302 512,770
----------
Total Government National Mortgage Association
Adjustable Rate Mortgages
(Cost $3,806,202).......................................... 3,937,470
----------
Total Long-Term Government Agency Securities
(Cost $5,890,606).......................................... 6,041,660
----------
COLLATERALIZED MORTGAGE OBLIGATIONS 7.9
THE MONEY STORE HOME EQUITY TRUST (A)(B)(C)-2.0
6.850%, with a maturity date of June 15, 2019..................... 140,000 139,737
----------
RESOLUTION TRUST CORPORATION MORTGAGE PASS-THROUGHS (A)(B)(C)-5.9
8.000%, with a maturity date of September 25, 2021................ 227,609 229,885
9.000%, with a maturity date of September 25, 2028................ 187,617 193,011
----------
422,896
----------
Total Collateralized Mortgage Obligations
(Cost $559,723)............................................ 562,633
----------
ASSET-BACKED SECURITIES 4.8
Citibank Credit Card Master Trust, Zero Coupon February 7, 2003
[Certificate Series 1996 1 Class A]............................. 225,000 171,421
Household Finance Corporation, 5.800%, May 20, 2008
[1993-1 Class A2]............................................... 95,152 95,509
Equicon Loan Trust, 5.850%, November 18, 2012
[Series 1993-1 Class A]......................................... 74,818 74,070
----------
Total Asset-Backed Securities
(Cost $345,642)............................................ 341,000
----------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
20 Investors Trust Adjustable Rate Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996, CONTINUED
<TABLE>
<CAPTION>
% OF NET NUMBER MARKET
ASSETS OF SHARES VALUE ($)
-------- --------- ----------
<S> <C>
MONEY MARKET MUTUAL FUNDS 1.6
The Seven Seas Series Money Market Fund [Class A].................... 70,486 70,486
The Seven Seas Series US Government Money Market Fund................ 43,070 43,070
----------
Total Money Market Mutual Funds
(Cost $113,556)............................................... 113,556
-------- ----------
SUMMARY
Total investments
(Cost $6,909,527) (E)......................................... 99.6 7,058,849
Other assets and liabilities, net.................................... 0.4 26,477
-------- ----------
NET ASSETS................................................................ 100.0 $7,085,326
-------- ----------
-------- ----------
</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 may be shorter than indicated due
to prepayments.
(C) Risks associated with Collateralized Mortgage Obligations ("CMOs")--The
net asset value of the Fund is sensitive to interest rate fluctuations.
CMOs 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 CMOs as they are
received, but certain classes of CMOs have priority over others with
respect to the receipt of prepayments on the mortgages. Therefore, an
investment in a CMO may be subject to a greater or lesser risk of
prepayment than other types of mortgage-related securities and this
uncertainty results in greater price volatility.
(D) Risks associated with Adjustable Rate Mortgage securities ("ARMs")--Most
ARMs are subject to limits on coupon changes ("caps" and "floors"). Coupon
caps/floors limit the amount the coupon can adjust on coupon reset dates,
or over the life of the loan. If interest rates change quickly, an
adjustable rate mortgage's coupon adjustment may be constrained by its
periodic or lifetime limit. For example, if rates rise quickly, since the
coupon rate cannot reset to equal the market rates, or at least cannot do
so immediately, an investment in an ARM may be subject to a decline in
price, despite the fact that ARM securities are often represented to have
less price risk than fixed rate securities. Until, and if, the ARM's
coupon rate can adjust to equal current market rates, it will be subject
to price variations, despite being an "adjustable rate" security. This
exposure is called "cap risk". Conversely, an ARM may benefit from the
floor on its rate adjustments if market rates drop below the minimum rate
the ARM may pay.
(E) See Note 3 in the notes to financial statements for cost for federal
income tax purposes and related gross unrealized appreciation
(depreciation).
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Government Fund 21
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996
<TABLE>
<CAPTION>
% OF NET PRINCIPAL MARKET
ASSETS AMOUNT ($) VALUE ($)
-------- ----------- ------------
<S> <C>
LONG-TERM GOVERNMENT AND AGENCY SECURITIES 101.6
FEDERAL HOME LOAN MORTGAGE CORPORATION (A)(B)-27.6
4.500%, with a maturity date of November 15, 2020............. 2,000,000 1,686,240
5.500%, with a maturity date of December 1, 2008.............. 4,320,770 4,108,750
6.500%, with various maturity dates to February 1, 2026....... 113,299,057 111,523,995
7.500%, with various maturity dates to October 1, 2026........ 90,973,203 92,208,389
9.000%, with a maturity date of December 1, 2014.............. 3,507,071 3,684,318
10.000%, with various maturity dates to December 1, 2020....... 700,393 762,777
10.500%, with various maturity dates to August 1, 2019......... 253,264 278,456
12.000%, with a maturity date of August 1, 2014................ 6,599 7,215
12.500%, with various maturity dates to September 1, 2014...... 109,134 127,199
13.000%, with a maturity date of January 1, 2013............... 40,257 44,757
------------
Total Federal Home Loan Mortgage Corporation
(Cost $215,745,359)..................................... 214,432,096
------------
UNITED STATES TREASURY BONDS-11.4
6.750%, with a maturity date of August 15, 2026............... 10,050,000 10,169,294
11.625%, with a maturity date of November 15, 2002............. 61,500,000 78,268,590
------------
Total United States Treasury Bonds
(Cost $87,326,739)...................................... 88,437,884
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
REAL ESTATE MORTGAGE INVESTMENT CONDUITS [REMIC] (B)(C)-1.5
8.400%, with a maturity date of August 25, 2019
[Series 1989-54 Class E]
(Cost $10,892,957)...................................... 10,800,000 11,370,348
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (A)(B)-6.3
3.500%, with a maturity date of October 25, 2021.............. 14,200,000 11,386,625
6.500%, with various maturity dates to May 1, 2024............ 10,179,941 9,815,322
9.000%, with various maturity dates to July 1, 2021........... 3,090,977 3,272,021
10.000%, with various maturity dates to June 1, 2025........... 22,211,444 24,462,951
------------
Total Federal National Mortgage Association
(Cost $47,725,577)...................................... 48,936,919
------------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
22 Investors Trust Government Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996, CONTINUED
<TABLE>
<CAPTION>
% OF NET PRINCIPAL MARKET
ASSETS AMOUNT ($) VALUE ($)
-------- ----------- ------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION MEDIUM TERM NOTES-15.6
<S> <C>
10.450%, with a maturity date of October 13, 2015.............. 10,000,000 13,621,800
11.875%, with a maturity date of May 19, 2000.................. 40,000,000 47,195,600
12.000%, with a maturity date of November 13, 2000 (D)......... 50,000,000 60,273,500
------------
Total Federal National Mortgage Association
Medium Term Notes
(Cost $120,542,600)..................................... 121,090,900
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (A)(B)-13.1
6.500%, with various maturity dates to April 15, 2024......... 20,673,188 19,906,574
7.000%, with various maturity dates to April 15, 2026......... 38,124,552 37,481,176
8.000%, with various maturity dates to March 15, 2026......... 38,453,126 39,501,290
8.500%, with various maturity dates to March 15, 2023......... 825,864 861,233
9.000%, with a maturity date of May 15, 2013.................. 247,932 265,788
9.500%, with various maturity dates to December 15, 2017...... 3,073,743 3,349,189
10.500%, with various maturity dates to December 15, 2019...... 111,676 124,391
12.500%, with a maturity date of April 15, 2015................ 16,117 19,103
------------
Total Government National Mortgage Association
(Cost $100,523,354)..................................... 101,508,744
------------
FEDERAL HOME LOAN MORTGAGE CORPORATION
MULTICLASS MORTGAGE PARTICIPATION CERTIFICATE (B)(C)-0.4
9.500%, with a maturity date of January 15, 2019
[Series 38 Class C]
(Cost $3,584,463)....................................... 3,490,736 3,553,988
------------
FINANCING CORPORATION-5.4
9.650%, with a maturity date of November 2, 2018.............. 2,020,000 2,602,326
10.700%, with a maturity date of October 6, 2017............... 28,165,000 39,325,381
------------
Total Financing Corporation
(Cost $37,252,781)...................................... 41,927,707
------------
UNITED STATES TREASURY NOTES-5.7
6.500%, with various maturity dates to October 15, 2006
(Cost $43,343,026)...................................... 43,620,000 44,232,984
------------
SMALL BUSINESS ADMINISTRATION NOTES (B)-7.2
6.950%, with a maturity date of September 1, 2015............. 11,813,940 11,784,406
7.350%, with a maturity date of August 1, 2005................ 12,580,000 12,737,250
7.550%, with a maturity date of June 1, 2016.................. 8,393,000 8,608,071
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Government Fund 23
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996, CONTINUED
<TABLE>
<CAPTION>
% OF NET PRINCIPAL MARKET
ASSETS AMOUNT ($) VALUE ($)
-------- ----------- ------------
<S> <C>
7.600%, with a maturity date of May 1, 2016................... 4,000,000 4,090,000
7.700%, with a maturity date of July 1, 2016.................. 6,000,000 6,189,375
8.100%, with a maturity date of March 1, 2015................. 9,561,253 10,003,461
8.500%, with a maturity date of January 1, 2015............... 2,341,108 2,505,717
------------
Total Small Business Administration Notes
(Cost $55,424,616)...................................... 55,918,280
------------
FEDERAL HOUSING ADMINISTRATION PROJECT LOANS (B)(H)-6.6
7.875%, with various maturity dates to January 1, 2038........ 14,142,756 14,150,954
7.900%, with a maturity date of September 1, 2037............. 7,719,100 7,706,074
8.000%, with a maturity date of July 1, 2037.................. 5,680,346 5,708,748
8.250%, with a maturity date of September 1, 2034............. 5,271,183 5,398,846
8.500%, with various maturity dates to September 25, 2037..... 10,243,200 10,377,642
8.750%, with a maturity date of June 25, 2035................. 4,193,281 4,364,943
9.250%, with a maturity date of March 1, 2037................. 3,051,950 3,238,882
------------
Total Federal Housing Administration Project Loans
(Cost $50,179,047)...................................... 50,946,089
------------
NEW YORK CITY MORTGAGE LOAN TRUST (C)-0.8
6.750%, with a maturity date of June 25, 2006
(Cost $6,116,533)....................................... 6,314,043 6,289,379
------------
Total Long-Term Government and Agency Securities
(Cost $778,657,052)..................................... 788,645,318
------------
SHORT TERM INVESTMENTS 0.3
FEDERAL HOME LOAN BANK DISCOUNT NOTE-0.3
5.450% (G), with a maturity date of November 1, 1996
(Cost $2,495,000)....................................... 2,495,000 2,495,000
------------
Total Short Term Investments
(Cost $2,495,000)....................................... 2,495,000
-------- ------------
SUMMARY
Total investments before outstanding options written on futures
contracts (Cost $781,152,052) (E)............................ 101.9 791,140,318
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
24 Investors Trust Government Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996, CONTINUED
<TABLE>
<CAPTION>
% OF NET PRINCIPAL MARKET
ASSETS AMOUNT ($) VALUE ($)
-------- ----------- ------------
<S> <C>
OUTSTANDING OPTIONS WRITTEN ON FUTURES CONTRACTS 0.0
186 contracts of call options written on United States Treasury
Bond Futures at $114 expiring 11/16/96 (Premiums received
$210,994).................................................... (116,250)
------------
SUMMARY
Total investments, net of outstanding options written on
futures contracts............................................ 101.9 791,024,068
Other assets and liabilities, net.............................. (1.9) (14,718,513)
-------- ------------
NET ASSETS.......................................................... 100.0 $776,305,555
-------- ------------
-------- ------------
</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 may be shorter than indicated due
to prepayments.
(C) Risks associated with Collateralized Mortgage Obligations ("CMOs")--The
net asset value of the Fund is sensitive to interest rate fluctuations.
CMOs 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 CMOs as they are
received, but certain classes of CMOs have priority over others with
respect to the receipt of prepayments on the mortgages. Therefore, an
investment in a CMO may be subject to a greater or lesser risk of
prepayment than other types of mortgage-related securities and this
uncertainty results in greater price volatility.
(D) Collateral for open futures and options contracts (Note 3).
(E) See Note 3 in notes to financial statements for cost for federal income
tax purposes and related gross unrealized appreciation (depreciation).
(F) At October 31, 1996, open futures contracts sold short were as follows:
<TABLE>
<CAPTION>
CONTRACTS EXPIRATION MARKET UNREALIZED
SOLD DESCRIPTION DATE VALUE DEPRECIATION
--------- ----------------------------------------------- ----------- ----------- ------------
<S> <C>
178 U.S. Treasury Bond Futures Dec. 96 $20,114,000 $ (882,598)
----------- ------------
----------- ------------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Government Fund 25
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996, CONTINUED
(G) Yield to maturity, unaudited.
(H) Federal Housing Administration ("FHA") project loans--These securities are
pass-throughs or participation certificates backed by the U.S. Department
of Housing and Urban Development ("HUD"). Although HUD insures the project
loan collateral, it does not guarantee timely payment of principal and
interest on the securities. Project loans held by the Fund are structured
as Construction Loan Certificates/Permanent Loan Certificates
("CLCs/PLCs"). The Fund purchases a project loan by committing to fund
construction costs on a monthly basis until the project is built (CLCs).
As of October 31, 1996, the Fund had project loan---CLC payables of
$22,762,906 as stated in the Statement of Assets and Liabilities. When
construction is completed, the Fund's cumulative monthly construction
financing payments are rolled into permanent mortgages on the buildings
(PLCs). As of October 31, 1996, the Fund held $16,726,525 of PLCs.
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
26 Investors Trust Tax Free Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996
<TABLE>
<CAPTION>
% OF NET PRINCIPAL MARKET
ASSETS AMOUNT ($) VALUE ($)
-------- ---------- -----------
<S> <C>
LONG-TERM MUNICIPAL INVESTMENTS 98.1
ALABAMA-0.3
Birmingham Alabama North Medical Clinic Board Revenue,
6.625%, April 1, 2000*.......................................... 75,000 80,382
-----------
ALASKA-0.1
North Slope Borough Alaska, 10.000%, June 30, 2001* (a)........... 30,000 36,766
-----------
ARIZONA-0.8
Maricopa County Arizona, 6.250%, July 1, 2002 (a)................. 175,000 189,700
-----------
ARKANSAS-2.8
Arkansas Housing Development Agency,
8.375%, July 1, 2010*........................................... 250,000 307,678
Arkansas Housing Development Agency,
8.375%, July 1, 2011*........................................... 205,000 267,697
Pulaski County Arkansas Hospital Revenue,
9.250%, March 1, 2010*.......................................... 105,000 135,051
-----------
710,426
-----------
CALIFORNIA-4.8
California State, 8.750%, May 1, 2004............................. 110,000 136,902
Sacramento California Municipal Utility District Electric Revenue,
9.000%, April 1, 2013 [Series M]*............................... 620,000 816,459
San Diego California Hospital Revenue,
8.875%, February 1, 2011*....................................... 210,000 268,739
-----------
1,222,100
-----------
COLORADO-3.4
Colorado Springs Utilities Revenue,
8.500%, November 15, 2011*...................................... 100,000 126,916
Denver Colorado City and County Single-Family Mortgage Revenue,
7.000%, August 1, 2010 [Series 1978A]*.......................... 475,000 537,097
Loveland Colorado, 8.875%, November 1, 2005*...................... 165,000 205,689
-----------
869,702
-----------
CONNECTICUT-4.9
Connecticut State Health and Educational Facility Authority,
7.000%, July 1, 2012*........................................... 725,000 816,154
Connecticut State Housing Finance Authority,
6.050%, May 15, 2014............................................ 410,000 417,987
-----------
1,234,141
-----------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Tax Free Fund 27
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996, CONTINUED
<TABLE>
<CAPTION>
% OF NET PRINCIPAL MARKET
ASSETS AMOUNT ($) VALUE ($)
-------- ---------- -----------
<S> <C>
DELAWARE-0.9
Delaware Transportation Authority Transportation Systems Revenue,
6.100%, July 1, 2002............................................ 110,000 117,913
Georgetown Delaware, 6.800%, June 1, 2001** (a)................... 100,000 109,382
-----------
227,295
-----------
FLORIDA-6.9
Broward County Florida General Obligation,
6.200%, January 1, 2007 [Series C].............................. 25,000 26,687
Dade County Florida Health Facilities Authority Hospital Revenue,
6.400%, May 1, 2001* (a)........................................ 100,000 108,297
Florida State, Turnpike-Department of Transportation, Broward
County Expressway, 10.000%, July 1, 2014........................ 235,000 352,808
Florida State, Department of General Services, Broward County
Expresssway Revenue, 6.500%, July 1, 2003 [Series A]............ 675,000 690,134
Florida State, Jacksonville Transportation Authority,
5.900%, July 1, 2004............................................ 200,000 213,032
Gainesville Florida Utilities Systems Revenue,
8.125%, October 1, 2014*........................................ 175,000 219,952
Jacksonville Florida Electric Authority Revenue,
6.500%, October 1, 2003 [Series 10]............................. 135,000 148,365
-----------
1,759,275
-----------
GEORGIA-2.3
Clarke County Georgia Hospital Authority Revenue,
9.875%, January 1, 2006* (a).................................... 80,000 105,286
Columbus Georgia Medical Center Hospital Authority Revenue,
7.750%, July 1, 2010*........................................... 285,000 341,276
Gwinnett County Georgia Water and Sewage Authority Water Revenue,
9.600%, October 1, 2004*........................................ 115,000 145,145
-----------
591,707
-----------
HAWAII-0.9
Honolulu Hawaii City and County,
7.250%, July 1, 2002............................................ 200,000 226,210
-----------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
28 Investors Trust Tax Free Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996, CONTINUED
<TABLE>
<CAPTION>
% OF NET PRINCIPAL MARKET
ASSETS AMOUNT ($) VALUE ($)
-------- ---------- -----------
IDAHO-2.4
<S> <C>
Idaho Falls Idaho Electric Revenue,
10.375%, April 1, 2007**........................................ 425,000 605,255
-----------
ILLINOIS-4.9
Chicago Illinois Motor Fuel Tax Revenue,
6.500%, January 1, 2001** (a)................................... 20,000 21,511
Chicago Illinois Public Building Revenue,
7.500%, January 1, 2002* (a).................................... 500,000 542,965
Chicago Illinois Wastewater Transmission Revenue,
6.300%, January 1, 2003** (a)................................... 20,000 21,983
Des Plaines Illinois Hospital Facility Revenue,
10.750%, July 1, 2002**......................................... 115,000 149,713
Schaumburg Illinois, 6.000%, December 1, 2005..................... 430,000 453,676
Waukegan Illinois Water and Sewer Revenue,
7.500%, May 1, 2006*............................................ 50,000 58,658
-----------
1,248,506
-----------
INDIANA-2.0
Highland Indiana School Building Corporation,
7.000%, January 15, 2002**...................................... 400,000 450,864
Indiana University Revenue,
10.125%, July 1, 2001 [Series N]**.............................. 35,000 43,167
-----------
494,031
-----------
IOWA-4.4
Muscatine Iowa Electric Revenue,
9.700%, January 1, 2013*........................................ 815,000 1,112,230
-----------
KENTUCKY-1.4
Kentucky State Turnpike Authority Economic Development,
5.625%, July 1, 2010 (a)........................................ 355,000 363,119
-----------
LOUISIANA-2.8
Jefferson Parish Louisiana Hospital Service,
7.250%, January 1, 2009*........................................ 625,000 706,756
-----------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Tax Free Fund 29
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996, CONTINUED
<TABLE>
<CAPTION>
% OF NET PRINCIPAL MARKET
ASSETS AMOUNT ($) VALUE ($)
-------- ---------- -----------
<S> <C>
MAINE-0.8
Maine Municipal Bond Bank, 7.100%, November 1, 1999 [Series D]**.. 10,000 10,964
Maine Municipal Bond Bank, 7.200%, November 1, 2000 [Series B]**.. 65,000 72,650
Maine Municipal Bond Bank Sewer and Water Revenue,
7.200%, November 1, 2001 [Series A]**........................... 100,000 113,522
-----------
197,136
-----------
MASSACHUSETTS-4.7
Massachusetts Bay Transportation Authority,
7.250%, March 1, 2003 [Series A] (a)............................ 100,000 109,944
Massachusetts State, 6.750%, August 1, 2009 [Series C] (a)........ 250,000 276,820
Massachusetts State Port Authority Revenue,
13.000%, July 1, 2013*.......................................... 475,000 800,674
-----------
1,187,438
-----------
MICHIGAN-2.4
Michigan State Hospital Finance Authority Revenue,
7.125%, May 1, 2009*............................................ 335,000 378,969
Michigan State Hospital Finance Authority Revenue,
9.000%, May 1, 2008*............................................ 170,000 220,539
-----------
599,508
-----------
MINNESOTA-1.4
Rochester Minnesota Health Care Facilities Revenue,
6.250%, November 15, 2014....................................... 300,000 316,245
Western Minnesota Municipal Power Agency, Minnesota Power Supply,
10.250%, January 1, 1999 [Series A]** (a)....................... 25,000 28,120
-----------
344,365
-----------
MISSISSIPI-1.0
Mississippi State, 6.200%, February 1, 2008*...................... 225,000 245,605
-----------
MISSOURI-0.1
Lees Summit Missouri Water and Sewer Revenue,
10.000%, July 1, 2000 [Series 1984 A]** (a)..................... 20,000 23,722
-----------
NEVADA-0.7
Clark County Nevada School District, 8.250%, May 1, 2000.......... 150,000 168,168
-----------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
30 Investors Trust Tax Free Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996, CONTINUED
<TABLE>
<CAPTION>
% OF NET PRINCIPAL MARKET
ASSETS AMOUNT ($) VALUE ($)
-------- ---------- -----------
<S> <C>
NEW HAMPSHIRE-0.1
New Hampshire Municipal Bond Bank State Guaranteed,
6.800%, January 15, 2000 [Series B]**........................... 25,000 27,236
-----------
NEW JERSEY-1.2
Atlantic County New Jersey Improvement Authority Lease Revenue,
7.400%, March 1, 2012* (a)...................................... 170,000 201,681
New Jersey Economic Development Authority Market,
7.000%, July 1, 2004 (a)........................................ 100,000 113,074
-----------
314,755
-----------
NEW MEXICO-2.6
Farmington New Mexico Power Revenue,
9.875%, July 1, 2005**.......................................... 400,000 538,568
Farmington New Mexico Utility Systems Revenue,
9.875%, January 1, 2008* (a).................................... 100,000 132,180
-----------
670,748
-----------
NEW YORK-7.2
New York City, 6.000%, August 1, 2006* (a)........................ 300,000 305,517
New York State, 7.100%, March 1, 2001**........................... 50,000 55,803
New York State Dormitory Authority Revenue,
7.375%, July 1, 2016*........................................... 315,000 370,371
New York State Dormitory Authority Revenue,
7.500%, May 15, 2011............................................ 165,000 192,758
New York State Environmental Facilities Corporation,
6.800%, November 15, 2010....................................... 200,000 226,560
New York State Housing Finance Agency,
6.400%, November 1, 2003 [Series A]*............................ 175,000 186,095
New York State Local Government Assistance,
6.750%, April 1, 2002 [Series A]................................ 45,000 48,961
New York State Local Government Assistance,
7.250%, April 1, 2007........................................... 350,000 391,800
New York State Local Government Assistance Corporation,
6.000%, April 1, 2005 [Series C]................................ 50,000 53,065
-----------
1,830,930
-----------
NORTH CAROLINA-3.8
North Carolina Municipal Power Agency Number One Catawba, 10.500%,
January 1, 2010*................................................ 685,000 954,993
-----------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Tax Free Fund 31
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996, CONTINUED
<TABLE>
<CAPTION>
% OF NET PRINCIPAL MARKET
ASSETS AMOUNT ($) VALUE ($)
-------- ---------- -----------
<S> <C>
OHIO-2.2
Columbus Ohio, 5.250%, September 15, 2011......................... 270,000 268,604
Columbus Ohio, 6.000%, July 1, 2008 [Series 2].................... 50,000 52,274
Ohio State Water Development Authority Revenue,
7.000%, December 1, 2009* (a)................................... 200,000 228,094
-----------
548,972
-----------
PENNSYLVANIA-5.4
Allegheny County Pennsylvania Hospital Development Authority,
7.375%, July 1, 2012 [Series N]*................................ 150,000 174,831
Pennsylvania Intergovernmental Cooperative Authority,
6.800%, June 15, 2002**......................................... 50,000 55,418
Pennsylvania State Turnpike Commission Turnpike Revenue,
7.150%, December 1, 2001 [Series J]** (a)....................... 25,000 28,390
Philadelphia Pennsylvania Hospitals and Higher Education
Facilities, 6.500%, February 15, 2002 [Series A]**.............. 325,000 358,459
Philadelphia Pennsylvania Hospitals Authority Revenue,
9.875%, July 1, 2005**.......................................... 170,000 228,033
Philadelphia Pennsylvania Regional Port Authority Lease Revenue,
7.150%, August 1, 2000** (a).................................... 30,000 32,820
Pittsburgh Pennsylvania Water and Sewer Authority, Water and
Sewer, 7.250%, September 1, 2014*............................... 425,000 493,863
-----------
1,371,814
-----------
PUERTO RICO-1.5
Puerto Rico Commonwealth Aqueduct and Sewer Authority Revenue,
10.250%, July 1, 2009*.......................................... 270,000 374,131
-----------
RHODE ISLAND-3.1
Convention Center Authority Rhode Island Revenue,
6.300%, May 15, 2001 [Series A]** (a)........................... 45,000 49,026
Convention Center Authority Rhode Island Revenue,
6.700%, May 15, 2001 [Series A]** (a)........................... 625,000 690,863
Rhode Island Depositors Economic Protection,
7.100%, August 1, 2001 [Series A]** (a)......................... 35,000 39,400
-----------
779,289
-----------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
32 Investors Trust Tax Free Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996, CONTINUED
<TABLE>
<CAPTION>
% OF NET PRINCIPAL MARKET
ASSETS AMOUNT ($) VALUE ($)
-------- ---------- -----------
<S> <C>
SOUTH CAROLINA-2.9
South Carolina State Public Service Authority Revenue,
6.500%, July 1, 2002 [Series D]** (a)........................... 195,000 217,021
Spartanburg South Carolina Waterworks Revenue,
6.000%, June 1, 2005............................................ 500,000 528,120
-----------
745,141
-----------
TENNESSEE-0.3
Metropolitan Government Nashville and Davidson,
9.600%, July 1, 2005 [Series N]*................................ 65,000 86,312
-----------
TEXAS-4.0
Arlington Texas Independent School District,
5.900%, February 15, 2003....................................... 350,000 369,271
Austin Texas Utility Systems Revenue,
7.250%, November 15, 2003....................................... 50,000 53,562
Austin Texas Utility Systems Revenue,
9.500%, May 15, 2000 [Series A]**............................... 65,000 75,718
Austin Texas Utility Systems Revenue,
10.750%, May 15, 2000**......................................... 30,000 36,146
Austin Texas Utility Systems Revenue,
11.125%, November 15, 1999**.................................... 35,000 41,746
Gulf Coast Waste Disposal Authority Texas,
8.375%, June 1, 2005*........................................... 100,000 123,102
Houston Texas Water Systems Revenue,
7.300%, December 1, 2006*....................................... 100,000 118,385
Lamar University Texas Revenue, 7.000%, April 1, 2006*............ 35,000 40,319
San Antonio Texas Water Revenue, 7.125%, May 1, 1999** (a)........ 25,000 27,074
Texas A&M University Revenue, 9.400%, June 1, 2004*............... 40,000 51,572
Texas A&M University Revenue, 9.400%, June 1, 2006*............... 55,000 73,284
-----------
1,010,179
-----------
UTAH-1.1
Intermountain Power Agency Utah Power Supply,
7.200%, July 1, 1999 [Series A]**............................... 10,000 10,930
Utah State Municipal Finance Cooperative Local Government Revenue,
7.000%, June 1, 2001** (a)...................................... 250,000 277,980
-----------
288,910
-----------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Tax Free Fund 33
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996, CONTINUED
<TABLE>
<CAPTION>
% OF NET PRINCIPAL MARKET
ASSETS AMOUNT ($) VALUE ($)
-------- ---------- -----------
<S> <C>
VIRGINIA-0.5
Richmond Virginia Metropolitan Authority Expressway Revenue,
7.000%, October 15, 2013* (a)................................... 115,000 126,816
-----------
WASHINGTON-4.4
Municipality of Metropolitan Seattle Sewer Revenue,
6.875%, January 1, 2000 [Series T]** (a)........................ 40,000 43,639
Snohomish County Washington Public Utility District
Number 001, 6.375%, January 1, 2005*............................ 20,000 21,697
Washington State, 6.100%, February 1, 2005 [Series A]............. 200,000 212,238
Washington State Public Power Supply Systems Nuclear,
5.300%, July 1, 2009 [Series C]................................. 750,000 726,420
Washington State Public Power Supply Systems Nuclear,
7.200%, July 1, 2002 [Series B]................................. 100,000 109,211
-----------
1,113,205
-----------
WEST VIRGINIA-0.7
Wood County West Virginia Building Commission Revenue,
6.625%, January 1, 2006* (a).................................... 165,000 178,604
-----------
Total Long-Term Municipal Investments
(Cost $24,573,477)......................................... 24,865,578
-------- -----------
SUMMARY
Total investments
(Cost $24,573,477) (b)..................................... 98.1 24,865,578
Other assets and liabilities, net................................. 1.9 487,506
-------- -----------
NET ASSETS............................................................. 100.0 $25,353,084
-------- -----------
-------- -----------
</TABLE>
- ------------
NOTES:
* Escrowed to maturity: Bonds which are collateralized by U.S. Treasury
securities which are held in escrow by a trustee and used to pay principal
and interest on such bonds.
** Prerefunded: Bonds which are collateralized by U.S. Treasury securities
which are held in escrow and are used to pay principal and interest on the
tax-exempt issue and to retire the bonds at the earliest refunding date.
(a) The security is insured by either FGIC, MBIA, or AMBAC.
(b) See Note 3 in notes to financial statements for cost for federal income
tax purposes and related unrealized appreciation (depreciation).
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
34 Investors Trust Tax Free Fund
- --------------------------------------------------------------------------------
OTHER INFORMATION (UNAUDITED):
The composition of long-term municipal investments as a percentage of net
assets, is as follows:
S&P/MOODY'S RATING % OF NET ASSETS
--------------------------------- ---------------
AAA or Aaa 71.5%
AA or Aa 18.5%
A 3.8%
BBB or Baa 0.8%
Unrated securities of comparable
investment quality as above 3.5%
The Fund had insurance concentrations of 5% or greater as of October 31,
1996 (as a percentage of net assets) as follows:
MBIA 8.7%
AMBAC 7.6%
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Value Fund 35
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996
<TABLE>
<CAPTION>
% OF NET NUMBER MARKET
ASSETS OF SHARES VALUE ($)
-------- ---------- -----------
<S> <C>
COMMON STOCKS 99.6
BASIC INDUSTRIES-7.7
CHEMICALS-7.7%
DuPont (EI) deNemours & Company................................ 18,800 1,743,700
Morton International, Incorporated............................. 10,300 405,563
PPG Industries, Incorporated................................... 14,800 843,600
-----------
2,992,863
-----------
CAPITAL GOODS-9.9
AGRICULTURAL MACHINERY-1.3%
Deere & Company................................................ 12,500 521,875
-----------
ELECTRICAL EQUIPMENT-8.6%
Emerson Electric Company....................................... 17,300 1,539,700
General Electric Company....................................... 18,900 1,828,575
-----------
3,368,275
-----------
3,890,150
-----------
CONGLOMERATES-3.8
Minnesota Mining & Manufacturing Company....................... 19,300 1,478,863
-----------
CONSUMER BASICS-26.9
DRUGS & HEALTH CARE-16.9%
American Home Products Corporation............................. 20,100 1,231,125
Bristol Myers Squibb Company................................... 13,500 1,427,625
Eli Lilly & Company............................................ 22,500 1,586,250
Pfizer, Incorporated........................................... 14,700 1,216,425
Schering Plough Corporation.................................... 18,100 1,158,400
-----------
6,619,825
-----------
FOOD & BEVERAGES-4.7%
Campbell Soup Company.......................................... 5,900 472,000
CPC International, Incorporated................................ 10,100 796,637
PepsiCo, Incorporated.......................................... 18,800 556,950
-----------
1,825,587
-----------
HOUSEHOLD PRODUCTS-5.3%
Kimberly Clark Corporation..................................... 12,700 1,184,275
Procter & Gamble Company....................................... 8,900 881,100
-----------
2,065,375
-----------
10,510,787
-----------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
36 Investors Trust Value Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996, CONTINUED
<TABLE>
<CAPTION>
% OF NET NUMBER MARKET
ASSETS OF SHARES VALUE ($)
-------- ---------- -----------
<S> <C>
CONSUMER NON-DURABLE GOODS-11.2
COSMETICS & TOILETRIES-5.4%
Avon Products, Incorporated.................................... 19,500 1,057,875
Gillette Company............................................... 14,100 1,053,975
-----------
2,111,850
-----------
PHOTOGRAPHY-2.1%
Eastman Kodak Company.......................................... 10,500 837,375
-----------
RETAIL TRADE-3.7%
May Department Stores Company.................................. 21,100 999,613
Walgreen Company............................................... 11,900 449,225
-----------
1,448,838
-----------
4,398,063
-----------
ENERGY-9.1
INTERNATIONAL OIL-8.1%
Exxon Corporation.............................................. 6,400 567,200
Mobil Corporation.............................................. 5,000 583,750
Royal Dutch Petroleum Company.................................. 5,700 942,637
Texaco, Incorporated........................................... 10,600 1,077,225
-----------
3,170,812
-----------
PETROLEUM SERVICES-1.0%
Halliburton Company............................................ 6,900 390,713
-----------
3,561,525
-----------
FINANCE-12.3
BANKS-9.1%
Chase Manhattan Corporation.................................... 22,400 1,920,800
National City Corporation...................................... 37,700 1,635,237
-----------
3,556,037
-----------
FINANCIAL SERVICES-2.3%
American Express Company....................................... 8,100 380,700
MBNA Corporation............................................... 13,650 515,287
-----------
895,987
-----------
INSURANCE-0.9%
American International Group, Incorporated..................... 3,500 380,188
-----------
4,832,212
-----------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Value Fund 37
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996, CONTINUED
<TABLE>
<CAPTION>
% OF NET NUMBER MARKET
ASSETS OF SHARES VALUE ($)
-------- ---------- -----------
<S> <C>
GENERAL BUSINESS-0.9
NEWSPAPERS-0.9%
Gannett Company, Incorporated.................................. 4,800 364,200
-----------
SHELTER-3.0
CONSTRUCTION MATERIALS-3.0%
Masco Corporation.............................................. 37,000 1,160,875
-----------
TECHNOLOGY-14.8
AEROSPACE-3.8%
Boeing Company................................................. 15,600 1,487,850
-----------
COMPUTERS & BUSINESS EQUIPMENT-5.6%
Cisco Systems, Incorporated (a)................................ 9,100 563,062
Compaq Computer Corporation (a)................................ 6,100 424,713
Pitney Bowes, Incorporated..................................... 21,400 1,195,725
-----------
2,183,500
-----------
ELECTRONICS-2.5%
Intel Corporation.............................................. 9,000 988,875
-----------
SOFTWARE-2.9%
Microsoft Corporation (a)...................................... 5,300 727,425
Oracle Systems Corporation (a)................................. 10,000 423,124
-----------
1,150,549
-----------
5,810,774
-----------
Total Common Stocks (Cost $33,955,195)......................... 39,000,312
-----------
MONEY MARKET MUTUAL FUNDS 1.9
The Seven Seas Series US Government Money Market Fund.......... 100 100
The Seven Seas Series Money Market Fund [Class A].............. 723,950 723,950
-----------
Total Money Market Mutual Funds
(Cost $724,050)......................................... 724,050
-------- -----------
SUMMARY
Total investments
(Cost $34,679,245) (b).................................. 101.5 39,724,362
Other assets and liabilities, net.............................. (1.5) (573,319)
-------- -----------
NET ASSETS.......................................................... 100.0 $39,151,043
-------- -----------
-------- -----------
</TABLE>
- ------------
NOTES:
(a) Non-income producing security.
(b) See Note 3 in notes to financial statements for cost for federal income tax
purposes and related gross unrealized appreciation (depreciation).
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
38 Investors Trust Growth Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996
<TABLE>
<CAPTION>
% OF NET NUMBER MARKET
ASSETS OF SHARES VALUE ($)
-------- ---------- -----------
<S> <C>
COMMON STOCKS 94.9
BASIC INDUSTRIES-6.1
CHEMICALS-4.3%
Airgas, Incorporated (a)....................................... 20,000 452,500
Millipore Corporation.......................................... 8,000 280,000
Monsanto Company............................................... 10,000 396,250
Praxair, Incorporated.......................................... 9,000 398,250
-----------
1,527,000
-----------
CONSTRUCTION-0.8%
Texas Industries, Incorporated................................. 5,000 283,750
-----------
CONTAINERS & GLASS-1.0%
Sealed Air Corporation (a)..................................... 9,600 373,200
-----------
2,183,950
-----------
CAPITAL GOODS-4.1
AGRICULTURAL MACHINERY-0.8%
Deere & Company................................................ 7,200 300,600
-----------
CONSTRUCTION & MINING EQUIPMENT-1.4%
Dover Corporation.............................................. 10,000 513,750
-----------
ELECTRICAL EQUIPMENT-1.0%
Boston Scientific Corporation (a).............................. 6,300 342,562
-----------
INDUSTRIAL MACHINERY-0.9%
Thermo Electron Corporation.................................... 9,000 328,500
-----------
1,485,412
-----------
CONGLOMERATES-1.6
Danaher Corporation............................................ 13,600 555,900
-----------
CONSUMER BASICS-18.7
DRUGS & HEALTH CARE-14.6%
Amgen, Incorporated (a)........................................ 8,000 490,500
Genzyme Corporation (a)........................................ 12,000 276,000
HBO & Company.................................................. 5,200 312,650
HealthCare Compare Corporation (a)............................. 6,500 286,000
Invacare Corporation........................................... 14,000 392,000
Johnson & Johnson.............................................. 6,400 315,200
Medtronic, Incorporated........................................ 8,000 515,000
Merck & Company, Incorporated.................................. 4,000 296,500
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Growth Fund 39
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996, CONTINUED
<TABLE>
<CAPTION>
% OF NET NUMBER MARKET
ASSETS OF SHARES VALUE ($)
-------- ---------- -----------
<S> <C>
Omnicare, Incorporated......................................... 10,200 277,950
Oxford Health Plans, Incorporated (a).......................... 8,600 391,300
Pfizer, Incorporated........................................... 5,600 463,400
Schering Plough Corporation.................................... 6,000 384,000
Stryker Corporation............................................ 16,000 476,000
U.S. Surgical Corporation...................................... 8,700 364,312
-----------
5,240,812
-----------
FOOD & BEVERAGES-1.7%
Coca-Cola Company.............................................. 6,800 343,400
PepsiCo, Incorporated.......................................... 9,300 275,513
-----------
618,913
-----------
HOUSEHOLD PRODUCTS-1.2%
Tupperware Corporation......................................... 8,400 431,550
-----------
RETAIL GROCERY-1.2%
Great Atlantic & Pacific Tea, Incorporated..................... 13,800 414,000
-----------
6,705,275
-----------
CONSUMER DURABLE GOODS-2.5
AUTOMOBILES-1.6%
Harley Davidson, Incorporated.................................. 12,200 550,525
-----------
HOUSEHOLD APPLIANCES & HOME FURNISHINGS-0.9%
Black & Decker Corporation..................................... 8,800 328,900
-----------
879,425
-----------
CONSUMER NON-DURABLE GOODS-9.1
APPAREL & TEXTILES-1.8%
Albany International Corporation............................... 13,100 294,750
Nike, Incorporated............................................. 6,000 353,250
-----------
648,000
-----------
COSMETICS & TOILETRIES-1.2%
Gillette Company............................................... 6,000 448,500
-----------
RETAIL TRADE-6.1%
CompUSA, Incorporated (a)...................................... 8,000 370,000
Dollar General Corporation..................................... 11,337 314,602
Gap, Incorporated.............................................. 10,800 313,200
Home Depot, Incorporated....................................... 7,500 410,625
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
40 Investors Trust Growth Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996, CONTINUED
<TABLE>
<CAPTION>
% OF NET NUMBER MARKET
ASSETS OF SHARES VALUE ($)
-------- ---------- -----------
<S> <C>
Kohl's Corporation (a)......................................... 11,200 403,200
Petsmart, Incorporated (a)..................................... 13,600 367,200
-----------
2,178,827
-----------
3,275,327
-----------
CONSUMER SERVICES-4.1
HOTELS & RESTAURANTS-4.1%
Applebee's International, Incorporated......................... 13,000 316,875
Hilton Hotels Corporation...................................... 10,800 328,050
La Quinta Inns, Incorporated................................... 19,800 396,000
McDonald's Corporation......................................... 9,800 434,875
-----------
1,475,800
-----------
FINANCE-12.9
BANKS-6.6%
Bank of Boston Corporation..................................... 6,000 384,000
Citicorp....................................................... 3,500 346,500
Fifth Third Bancorp............................................ 9,000 563,625
Star Banc Corporation.......................................... 5,400 486,000
Zions Bancorporation........................................... 6,400 579,200
-----------
2,359,325
-----------
FINANCIAL SERVICES-2.5%
Finova Group, Incorporated..................................... 9,000 555,750
Green Tree Financial Corporation............................... 9,000 356,625
-----------
912,375
-----------
INSURANCE-3.8%
American International Group, Incorporated..................... 3,600 391,050
MGIC Investment Corporation.................................... 7,600 521,550
SunAmerica, Incorporated....................................... 12,000 450,000
-----------
1,362,600
-----------
4,634,300
-----------
GENERAL BUSINESS-9.5
BUSINESS SERVICES-7.5%
CUC International, Incorporated (a)............................ 18,000 441,000
First Data Corporation......................................... 4,500 358,875
FIserv, Incorporated (a)....................................... 14,800 567,950
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Growth Fund 41
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996, CONTINUED
<TABLE>
<CAPTION>
% OF NET NUMBER MARKET
ASSETS OF SHARES VALUE ($)
-------- ---------- -----------
<S> <C>
Manpower, Incorporated......................................... 8,000 227,000
Olsten Corporation............................................. 13,800 276,000
Omnicom Group.................................................. 8,000 398,000
Robert Half International, Incorporated (a).................... 10,300 413,287
-----------
2,682,112
-----------
COMMUNICATION SERVICES-0.2%
Loral Space & Communications (a)............................... 5,000 79,375
-----------
OFFICE FURNISHINGS & SUPPLIES-1.8%
Danka Business Systems......................................... 9,400 372,475
Staples, Incorporated (a)...................................... 13,500 251,437
-----------
623,912
-----------
3,385,399
-----------
TECHNOLOGY-24.6
AEROSPACE-1.0%
McDonnell Douglas Corporation.................................. 6,600 359,700
-----------
COMPUTERS & BUSINESS EQUIPMENT-9.0%
3Com Corporation (a)........................................... 12,000 811,500
Cabletron Systems, Incorporated (a)............................ 4,000 249,500
Ceridian Corporation (a)....................................... 8,000 397,000
Cisco Systems, Incorporated (a)................................ 5,600 346,500
Dell Computer Corporation (a).................................. 6,000 488,250
EMC Corporation Massachusetts (a).............................. 13,500 354,375
Hewlett Packard Company........................................ 5,600 247,100
Sun Microsystems, Incorporated (a)............................. 5,400 329,400
-----------
3,223,625
-----------
ELECTRONICS-4.1%
Avnet, Incorporated............................................ 6,000 302,250
Checkpoint Systems, Incorporated (a)........................... 18,500 413,938
Intel Corporation.............................................. 4,000 439,500
Newbridge Networks Corporation (a)............................. 10,000 316,250
-----------
1,471,938
-----------
SOFTWARE-6.6%
America Online, Incorporated (a)............................... 30,000 813,750
Computer Associates International, Incorporated................ 6,750 399,094
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
42 Investors Trust Growth Fund
- --------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
OCTOBER 31, 1996, CONTINUED
<TABLE>
<CAPTION>
% OF NET NUMBER MARKET
ASSETS OF SHARES VALUE ($)
-------- ---------- -----------
<S> <C>
Microsoft Corporation (a)...................................... 2,500 343,125
Oracle Systems Corporation (a)................................. 9,000 380,812
Parametric Technology Corporation (a).......................... 9,000 439,875
-----------
2,376,656
-----------
TELECOMMUNICATION EQUIPMENT-3.9%
ADC Telecommunications, Incorporated (a)....................... 8,000 547,000
Andrew Corporation (a)......................................... 6,750 329,063
Tellabs, Incorporated (a)...................................... 6,000 510,750
-----------
1,386,813
-----------
8,818,732
-----------
TRANSPORTATION-0.9
RAILROADS & EQUIPMENT-0.9%
Wisconsin Central Transportation Corporation (a)............... 9,000 324,000
-----------
UTILITIES-0.8
TELEPHONE-0.8%
Cincinnati Bell, Incorporated.................................. 6,000 296,250
-----------
Total Common Stocks
(Cost $25,358,154)...................................... 34,019,770
-----------
MONEY MARKET MUTUAL FUNDS 5.1
The Seven Seas Series US Government Money Market Fund.......... 534,112 534,112
The Seven Seas Series Money Market Fund [Class A].............. 1,295,182 1,295,182
-----------
Total Money Market Mutual Funds
(Cost $1,829,294)....................................... 1,829,294
-------- -----------
SUMMARY
Total investments
(Cost $27,187,448) (b).................................. 100.0 35,849,064
Other assets and liabilities, net.............................. 0.0 (11,055)
-------- -----------
NET ASSETS.......................................................... 100.0 $35,838,009
-------- -----------
-------- -----------
</TABLE>
- ------------
NOTES:
(a) Non-income producing security.
(b) See Note 3 in notes to financial statements for cost for federal income tax
purposes and related gross unrealized appreciation (depreciation).
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Mutual Funds 43
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
<TABLE>
<CAPTION>
ADJUSTABLE
RATE GOVERNMENT TAX FREE VALUE GROWTH
FUND FUND FUND FUND FUND
---------- ------------ ----------- ----------- -----------
<S> <C>
ASSETS
Investments at market value
(identified cost $6,909,527,
$781,152,052, $24,573,477,
$34,679,245 and $27,187,448,
respectively) (Notes 2 and 3)....... $7,058,849 $791,140,318 $24,865,578 $39,724,362 $35,849,064
Cash.................................. 37 8,343 42,129 27 107
Receivables:
Fund shares sold................. -- 12,182 15,002 20,657 8,481
Dividends........................ 495 -- -- 38,479 20,284
Interest......................... 44,328 13,139,876 510,978 -- --
Investments sold................. -- 18,310 -- -- 310,827
Adviser (Note 4)................. -- -- 6,060 -- --
Deferred organization costs
(Note 2)............................ 22,929 -- 22,929 22,929 22,929
Prepaid expenses...................... 9,187 30,167 10,940 7,975 8,819
---------- ------------ ----------- ----------- -----------
Total assets.......................... 7,135,825 804,349,196 25,473,616 39,814,429 36,220,511
---------- ------------ ----------- ----------- -----------
LIABILITIES
Payables:
Fund shares redeemed............. -- 2,110,484 -- 28,964 6,134
Investments purchased............ -- -- 34,157 549,712 295,797
Project loans payable............ -- 22,762,906 -- -- --
Dividends........................ 10,566 1,280,667 32,476 -- --
Adviser (Note 4)................. 16,573 37,252 -- 1,332 465
Options written outstanding at
market value (premiums received
$210,994) (Note 3)............. -- 116,250 -- -- --
Daily variation margin on open
futures contracts (Notes 2
and 3)......................... -- 74,084 -- -- --
Accrued distribution fee and
shareholder service fee
(Note 4)....................... 5,213 829,714 22,249 33,962 32,304
Accrued management fee
(Note 4)....................... 2,404 416,759 12,114 26,001 24,196
Other accrued expenses........... 15,743 415,525 19,536 23,415 23,606
---------- ------------ ----------- ----------- -----------
Total liabilities..................... 50,499 28,043,641 120,532 663,386 382,502
---------- ------------ ----------- ----------- -----------
NET ASSETS............................ $7,085,326 $776,305,555 $25,353,084 $39,151,043 $35,838,009
---------- ------------ ----------- ----------- -----------
---------- ------------ ----------- ----------- -----------
(continued)
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
44 Investors Trust Mutual Funds
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
OCTOBER 31, 1996, CONTINUED
<TABLE>
<CAPTION>
ADJUSTABLE
RATE GOVERNMENT TAX FREE VALUE GROWTH
FUND FUND FUND FUND FUND
---------- ------------ ----------- ----------- -----------
<S> <C>
NET ASSETS CONSIST OF (Note 2):
Undistributed (accumulated
distributions in excess of) net
investment income (loss)....... $ 5,778 $ (1,280,667) $ 98,471 $ -- $ --
Accumulated net realized gains
(losses)....................... (201,421) (200,317,153) (176,173) 3,192,378 (444,919)
Unrealized appreciation
(depreciation) on:
Investments (Note 3)........... 149,322 9,988,266 292,101 5,045,117 8,661,616
Options contracts (Note 3)..... -- 94,744 -- -- --
Futures contracts (Note 3)..... -- (882,598) -- -- --
Shares of beneficial interest.... 7,131,647 968,702,963 25,138,685 30,913,548 27,621,312
---------- ------------ ----------- ----------- -----------
NET ASSETS............................ $7,085,326 $776,305,555 $25,353,084 $39,151,043 $35,838,009
---------- ------------ ----------- ----------- -----------
---------- ------------ ----------- ----------- -----------
CLASS A:
NET ASSETS............................ $5,716,731 $ 29,089,852 $16,168,645 $ 5,833,420 $ 8,221,647
---------- ------------ ----------- ----------- -----------
---------- ------------ ----------- ----------- -----------
Outstanding shares of beneficial
interest (No par value)............. 892,360 3,430,652 1,415,605 538,603 624,874
Net asset value and redemption price
per share........................... $ 6.41 $ 8.48 $ 11.42 $ 10.83 $ 13.16
Maximum offering price per share
(100/95.5 of net asset value per
share).............................. $ 6.71 $ 8.88 $ 11.96 $ 11.34 $ 13.78
CLASS B:
NET ASSETS............................ $1,368,595 $747,215,703 $ 9,184,439 $33,317,623 $27,616,362
---------- ------------ ----------- ----------- -----------
---------- ------------ ----------- ----------- -----------
Outstanding shares of beneficial
interest (No par value)............. 213,553 88,035,826 803,108 3,088,365 2,146,351
Net asset value, offering and
redemption price per share
(Note 4)............................ $ 6.41 $ 8.49 $ 11.44 $ 10.79 $ 12.87
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
Investors Trust Mutual Funds 45
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
FOR THE FISCAL YEAR ENDED OCTOBER 31, 1996
<TABLE>
<CAPTION>
ADJUSTABLE
RATE GOVERNMENT TAX FREE VALUE GROWTH
FUND FUND FUND FUND FUND
---------- ------------ ----------- ----------- -----------
<S> <C>
INVESTMENT INCOME:
Interest.................................. $ 449,677 $ 71,074,981 $ 1,347,773 $ 756 $ 51,386
Dividends................................. 11,093 -- -- 642,114 336,734
---------- ------------ ----------- ----------- -----------
Total Income.............................. 460,770 71,074,981 1,347,773 642,870 388,120
---------- ------------ ----------- ----------- -----------
EXPENSES:
Management fee (Note 4)............... 29,290 5,871,824 144,121 219,848 226,411
Distribution fees--Class B (Note 4)... 12,974 6,955,987 65,843 168,697 158,897
Shareholder servicing fees (Note 4):
Class A............................ 4,757 10,269 29,133 6,064 8,890
Class B............................ 2,104 811,242 15,601 19,891 23,350
Transfer agent fee.................... 46,727 1,071,262 52,332 77,045 79,163
Custodian fee......................... 72,209 428,032 90,472 76,613 74,894
Amortization of organization costs
(Note 2)........................... 12,447 -- 12,447 12,447 12,447
Registration fees..................... 19,575 -- 20,915 23,540 23,279
Shareholder reports................... 1,394 178,173 5,956 11,069 12,250
Professional fees..................... 1,240 135,495 3,653 3,768 3,966
Insurance............................. 509 72,284 1,545 1,502 1,489
Trustees' fees and expenses........... 51 5,285 180 241 265
Other................................. -- 321,817 -- 5,881 6,622
---------- ------------ ----------- ----------- -----------
Total expenses before reimbursement from
Adviser................................. 203,277 15,861,670 442,198 626,606 631,923
Reimbursement of expenses from Adviser
(Note 4)................................ (120,599) -- (442,198) (86,354) (90,565)
---------- ------------ ----------- ----------- -----------
Expenses, net............................. 82,678 15,861,670 -- 540,252 541,358
---------- ------------ ----------- ----------- -----------
Net investment income (loss).............. 378,092 55,213,311 1,347,773 102,618 (153,238)
---------- ------------ ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) from:
Investment transactions (Notes 2 and
3)................................. (12,778) 5,292,635 192 3,192,415 (243,412)
Option contracts...................... -- (1,289,801) -- -- --
Futures contracts..................... -- (7,988,014) -- -- --
Net increase (decrease) in unrealized
appreciation (depreciation) during the
year from:
Investment transactions............... 31,768 (15,982,620) 115,799 2,432,088 4,436,873
Option contracts...................... -- (252,124) -- -- --
Futures contracts..................... -- (1,545,243) -- -- --
---------- ------------ ----------- ----------- -----------
Net realized and unrealized gain (loss) on
investments............................. 18,990 (21,765,167) 115,991 5,624,503 4,193,461
---------- ------------ ----------- ----------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS.............................. $ 397,082 $ 33,448,144 $ 1,463,764 $ 5,727,121 $ 4,040,223
---------- ------------ ----------- ----------- -----------
---------- ------------ ----------- ----------- -----------
</TABLE>
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
46
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
ADJUSTABLE RATE FUND
-----------------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
---------------- ----------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income (loss)..................................................... $ 378,092 $ 348,384
Net realized gain (loss) from:
Investment transactions........................................................ (12,778) (114,498)
Option contracts............................................................... -- --
Futures contracts.............................................................. -- --
Net increase (decrease) in unrealized appreciation (depreciation) during the year
from:
Investment transactions........................................................ 31,768 399,103
Option contracts............................................................... -- --
Futures contracts.............................................................. -- --
---------------- ----------------
Net increase in net assets resulting from operations.............................. 397,082 632,989
---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS FROM (NOTE 2):
Net investment income
Class A........................................................................ (298,845) (255,493)
Class B........................................................................ (79,247) (86,152)
Distributions in excess of net investment income
Class A........................................................................ -- --
Class B........................................................................ -- --
Net realized gains
Class A........................................................................ -- --
Class B........................................................................ -- --
Tax return of capital
Class A........................................................................ -- --
Class B........................................................................ -- --
---------------- ----------------
Total distributions to shareholders.............................................. (378,092) (341,645)
---------------- ----------------
Increase (decrease) in net assets from operations, net of distributions to
shareholders................................................................... 18,990 291,344
---------------- ----------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Mutual Funds 47
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GOVERNMENT FUND TAX FREE FUND VALUE FUND
- ----------------------------------- ----------------------------------- -----------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995 OCTOBER 31, 1996 OCTOBER 31, 1995 OCTOBER 31, 1996 OCTOBER 31, 1995
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
<S> <C>
$ 55,213,311 $ 72,865,401 $ 1,347,773 $ 1,059,944 $ 102,618 $ 164,706
5,292,635 (91,789,975) 192 (176,365) 3,192,415 259,945
(1,289,801) 3,752,499 -- -- -- --
(7,988,014) (19,046,779) -- -- -- --
(15,982,620) 162,482,101 115,799 1,523,607 2,432,088 2,455,927
(252,124) (103,818) -- -- -- --
(1,545,243) (521,730) -- -- -- --
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
33,448,144 127,637,699 1,463,764 2,407,186 5,727,121 2,880,578
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
(1,692,150) (1,526,928) (789,946) (757,133) (42,207) (66,092)
(52,573,700) (70,538,669) (428,491) (302,811) (80,140) (128,160)
-- -- -- (5,654) (2,142) --
-- -- -- (1,064) (4,066) --
-- -- -- -- (35,364) --
-- -- -- -- (131,342) --
(258,257) (350,222) -- -- -- --
(8,023,827) (15,756,626) -- -- -- --
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
(62,547,934) (88,172,445) (1,218,437) (1,066,662) (295,261) (194,252)
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
(29,099,790) 39,465,254 245,327 1,340,524 5,431,860 2,686,326
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
</TABLE>
GROWTH FUND
- -----------------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
- ---------------- ----------------
$ (153,238) $ (58,950)
(243,412) 342,457
-- --
-- --
4,436,873 3,431,356
-- --
-- --
- ---------------- ----------------
4,040,223 3,714,863
- ---------------- ----------------
-- --
-- --
-- --
-- --
-- --
-- --
-- --
-- --
- ---------------- ----------------
-- --
- ---------------- ----------------
4,040,223 3,714,863
- ---------------- ----------------
(CONTINUED)
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
48
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS, CONTINUED
<TABLE>
<CAPTION>
ADJUSTABLE RATE FUND
-----------------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
---------------- ----------------
<S> <C>
SHARE TRANSACTIONS:
Proceeds from sale of shares
Class A........................................................................ $ 27,226 $ 92,790
Class B........................................................................ 389,371 621,653
Reinvestment of distributions
Class A........................................................................ 295,536 255,434
Class B........................................................................ 71,484 75,951
Cost of shares redeemed
Class A........................................................................ (96,085) (155,685)
Class B........................................................................ (955,523) (1,331,051)
---------------- ----------------
Net increase (decrease) in net assets resulting from share transactions
Class A........................................................................ 226,677 192,539
Class B........................................................................ (494,668) (633,447)
---------------- ----------------
Total.......................................................................... (267,991) (440,908)
---------------- ----------------
INCREASE (DECREASE) IN NET ASSETS................................................. (249,001) (149,564)
Net assets at beginning of year................................................... 7,334,327 7,483,891
---------------- ----------------
NET ASSETS AT END OF YEAR......................................................... $7,085,326 $7,334,327
---------------- ----------------
---------------- ----------------
Undistributed (accumulated distributions in excess of) net investment income
(loss) at end of year........................................................... $ 5,778 $ (7,886)
---------------- ----------------
---------------- ----------------
FUND SHARE INFORMATION:
Shares sold
Class A........................................................................ 4,278 14,962
Class B........................................................................ 60,938 100,668
Shares issued upon reinvestment of distributions
Class A........................................................................ 46,300 40,886
Class B........................................................................ 11,196 12,183
Shares redeemed
Class A........................................................................ (15,068) (24,589)
Class B........................................................................ (150,064) (214,247)
---------------- ----------------
Increase (decrease) in Fund shares outstanding
Class A........................................................................ 35,510 31,259
---------------- ----------------
---------------- ----------------
Class B........................................................................ (77,930) (101,396)
---------------- ----------------
---------------- ----------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Mutual Funds 49
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GOVERNMENT FUND TAX FREE FUND VALUE FUND
- ----------------------------------- ----------------------------------- -----------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995 OCTOBER 31, 1996 OCTOBER 31, 1995 OCTOBER 31, 1996 OCTOBER 31, 1995
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
<S> <C>
$ 11,137,901 $ 8,609,994 $ 309,165 $ 880,743 $ 1,029,337 $ 672,875
9,242,327 27,416,014 2,631,898 3,589,195 18,661,475 6,719,785
902,225 756,378 23,330 29,828 79,393 65,700
31,218,929 44,126,875 317,971 235,800 204,072 122,526
(9,198,287) (4,698,858) (351,480) (139,636) (319,837) (554,145)
(377,040,027) (250,379,643) (1,516,101) (1,516,243) (4,468,090) (2,417,639)
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
2,841,839 4,667,514 (18,985) 770,935 788,893 184,430
(336,578,771) (178,836,754) 1,433,768 2,308,752 14,397,457 4,424,672
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
(333,736,932) (174,169,240) 1,414,783 3,079,687 15,186,350 4,609,102
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
(362,836,722) (134,703,986) 1,660,110 4,420,211 20,618,210 7,295,428
1,139,142,277 1,273,846,263 23,692,974 19,272,763 18,532,833 11,237,405
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
$ 776,305,555 $1,139,142,277 $ 25,353,084 $ 23,692,974 $ 39,151,043 $ 18,532,833
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
$ (1,280,667) $ (2,160,157) $ 98,471 $ (30,865) $ -- $ 19,703
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
1,317,620 1,000,291 27,357 78,630 106,358 81,551
1,073,669 3,226,626 231,317 324,101 1,904,118 836,647
106,174 88,729 2,058 2,699 8,436 8,245
3,657,994 5,183,091 28,018 21,419 21,842 15,288
(1,082,308) (549,320) (30,937) (12,988) (32,438) (68,803)
(44,378,475) (29,418,333) (133,485) (139,086) (455,044) (297,365)
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
341,486 539,700 (1,522) 68,341 82,356 20,993
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
(39,646,812) (21,008,616) 125,850 206,434 1,470,916 554,570
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
- ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
</TABLE>
GROWTH FUND
-----------------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
---------------- ----------------
$ 1,707,031 $ 808,948
14,887,732 8,349,943
-- --
-- --
(528,656) (252,247)
(4,565,508) (2,363,580)
---------------- ----------------
1,178,375 556,701
10,322,224 5,986,363
---------------- ----------------
11,500,599 6,543,064
---------------- ----------------
15,540,822 10,257,927
20,297,187 10,039,260
---------------- ----------------
$ 35,838,009 $ 20,297,187
---------------- ----------------
---------------- ----------------
$ -- $ --
---------------- ----------------
---------------- ----------------
142,429 76,934
1,254,875 851,970
-- --
-- --
(43,333) (25,720)
(385,371) (245,024)
---------------- ----------------
99,096 51,214
---------------- ----------------
---------------- ----------------
869,504 606,946
---------------- ----------------
---------------- ----------------
- --------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
50
- --------------------------------------------------------------------------------
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>
INCOME FROM INVESTMENT OPERATIONS DISTRIBUTIONS TO SHAREHOLDERS
-------------------------------------- ----------------------------------------------
NET ASSET NET NET REALIZED TOTAL IN EXCESS NET IN EXCESS OF
VALUE AT INVESTMENT AND UNREALIZED FROM NET OF NET REALIZED NET REALIZED
PERIOD BEGINNING INCOME GAINS (LOSSES) INVESTMENT INVESTMENT INVESTMENT CAPITAL CAPITAL
ENDED OF PERIOD (LOSS) ON INVESTMENTS OPERATIONS INCOME INCOME GAINS GAINS
-------------- --------- ---------- -------------- ---------- ---------- ---------- -------- ------------
<S> <C>
ADJUSTABLE RATE FUND
Class A Oct-31-96 $ 6.39 $ 0.33 $ 0.03 $ 0.36 $(0.34) $-- $-- $--
Oct-31-95 6.14 0.31 0.24 0.55 (0.30) -- -- --
Oct-31-94 6.49 0.25 (0.35) (0.10) (0.23) (0.01) -- --
Oct-31-93(a) 6.50 0.03 (0.01) 0.02 (0.03) -- -- --
------------------------------------------------------------------------------------------------------------------
Class B Oct-31-96 6.39 0.28 0.03 0.31 (0.29) -- -- --
Oct-31-95 6.14 0.26 0.24 0.50 (0.25) -- -- --
Oct-31-94 6.48 0.21 (0.34) (0.13) (0.19) (0.01) -- --
Oct-31-93(a) 6.50 0.02 (0.02) -- (0.02) -- -- --
- ----------------------------------------------------------------------------------------------------------------------------
GOVERNMENT FUND
Class A Oct-31-96 8.70 0.62 (0.22) 0.40 (0.54) -- -- --
Oct-31-95 8.43 0.58 0.38 0.96 (0.58) -- -- --
Oct-31-94 10.14 0.70 (1.60) (0.90) (0.70) -- (0.03) --
Oct-31-93(a) 10.32 0.12 (0.18) (0.06) (0.12) -- -- --
------------------------------------------------------------------------------------------------------------------
Class B Oct-31-96 8.71 0.55 (0.22) 0.33 (0.48) -- -- --
Oct-31-95 8.42 0.51 0.41 0.92 (0.52) -- -- --
Oct-31-94 10.14 0.60 (1.58) (0.98) (0.60) -- (0.03) --
Oct-31-93 9.95 0.71 0.20 0.91 (0.71) (0.01) -- --
Oct-31-92 9.98 0.73 0.03 0.76 (0.73) -- (0.06) --
- ----------------------------------------------------------------------------------------------------------------------------
TAX FREE FUND
Class A Oct-31-96 11.31 0.62 0.05 0.67 (0.56) -- -- --
Oct-31-95 10.59 0.55 0.73 1.28 (0.55) (0.01) -- --
Oct-31-94 11.48 0.45 (0.78) (0.33) (0.45) (0.11) -- --
Oct-31-93(a) 11.50 0.05 0.01 0.06 (0.05) (0.02) -- --
------------------------------------------------------------------------------------------------------------------
Class B Oct-31-96 11.32 0.62 0.06 0.68 (0.56) -- -- --
Oct-31-95 10.60 0.55 0.73 1.28 (0.55) (0.01) -- --
Oct-31-94 11.48 0.43 (0.82) (0.39) (0.43) (0.06) -- --
Oct-31-93(a) 11.50 0.06 (0.01) 0.05 (0.03) (0.03) -- --
- ----------------------------------------------------------------------------------------------------------------------------
VALUE FUND
Class A Oct-31-96 8.95 0.05 1.99 2.04 (0.09) (0.00) (0.07) --
Oct-31-95 7.51 0.14 1.45 1.59 (0.15)(f) -- (f) -- --
Oct-31-94 7.63 0.13 (0.16) (0.03) (0.09) -- -- --
Oct-31-93(a) 7.50 0.01 0.12 0.13 -- -- -- --
------------------------------------------------------------------------------------------------------------------
Class B Oct-31-96 8.93 0.04 1.93 1.97 (0.04) (0.00) (0.07) --
Oct-31-95 7.50 0.07 1.45 1.52 (0.09)(f) -- (f) -- --
Oct-31-94 7.64 0.08 (0.17) (0.09) (0.05) -- -- --
Oct-31-93(a) 7.50 (0.01) 0.15 0.14 -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------
GROWTH FUND
Class A Oct-31-96(e) 11.38 0.00 1.78 1.78 -- -- -- --
Oct-31-95 8.81 0.01 2.56 2.57 -- -- -- --
Oct-31-94 8.69 (0.01) 0.21 0.20 -- -- -- (0.08)
Oct-31-93(a) 8.50 -- 0.19 0.19 -- -- -- --
------------------------------------------------------------------------------------------------------------------
Class B Oct-31-96(e) 11.21 (0.09) 1.75 1.66 -- -- -- --
Oct-31-95 8.74 (0.05) 2.52 2.47 -- -- -- --
Oct-31-94 8.70 (0.04) 0.16 0.12 -- -- -- (0.08)
Oct-31-93(a) 8.50 -- 0.20 0.20 -- -- -- --
</TABLE>
TAX
PERIOD RETURN TOTAL
ENDED OF CAPITAL DISTRIBUTIONS
-------------- ---------- -------------
ADJUSTABLE RATE FUND
Class A Oct-31-96 $-- $ (0.34)
Oct-31-95 -- (0.30)
Oct-31-94 (0.01) (0.25)
Oct-31-93(a) -- (0.03)
--------------
Class B Oct-31-96 -- (0.29)
Oct-31-95 -- (0.25)
Oct-31-94 (0.01) (0.21)
Oct-31-93(a) -- (0.02)
- ------------------------
GOVERNMENT FUND
Class A Oct-31-96 (0.08) (0.62)
Oct-31-95 (0.11) (0.69)
Oct-31-94 (0.08) (0.81)
Oct-31-93(a) -- (0.12)
--------------
Class B Oct-31-96 (0.07) (0.55)
Oct-31-95 (0.11) (0.63)
Oct-31-94 (0.11) (0.74)
Oct-31-93 -- (0.72)
Oct-31-92 -- (0.79)
- ------------------------
TAX FREE FUND
Class A Oct-31-96 -- (0.56)
Oct-31-95 -- (0.56)
Oct-31-94 -- (0.56)
Oct-31-93(a) (0.01) (0.08)
--------------
Class B Oct-31-96 -- (0.56)
Oct-31-95 -- (0.56)
Oct-31-94 -- (0.49)
Oct-31-93(a) (0.01) (0.07)
- ------------------------
VALUE FUND
Class A Oct-31-96 -- (0.16)
Oct-31-95 -- (0.15)
Oct-31-94 -- (0.09)
Oct-31-93(a) -- --
--------------
Class B Oct-31-96 -- (0.11)
Oct-31-95 -- (0.09)
Oct-31-94 -- (0.05)
Oct-31-93(a) -- --
- ------------------------
GROWTH FUND
Class A Oct-31-96(e) -- --
Oct-31-95 -- --
Oct-31-94 -- (0.08)
Oct-31-93(a) -- --
--------------
Class B Oct-31-96(e) -- --
Oct-31-95 -- --
Oct-31-94 -- (0.08)
Oct-31-93(a) -- --
- ------------
(a) For the period September 8, 1993 (commencement of operations) to October
31,1993.
(b) Annualized.
(c) Total returns are historical and assume changes in share price and
reinvestment of dividends and capital gains. The maximum applicable sales
charge on Class A shares of each Fund was not reflected in total return
calculations. A contingent deferred sales charge on Class B shares of each
Fund of 5% the first year, declining by 1% per year for five years, was not
reflected in total return calculations. Had the adviser not absorbed a
portion of expenses, total return would have been lower. Periods less than
one year are not annualized.
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Mutual Funds 51
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIOS AND SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
RATIOS TO AVERAGE
DAILY NET ASSETS (%) (b)
NET INCREASE NET ASSET ---------------------------------
(DECREASE) VALUE AT INVESTMENT NET ASSETS, REIMBURSEMENT
IN NET ASSET END TOTAL NET GROSS INCOME PORTFOLIO END OF PERIOD OF EXPENSES
VALUE OF PERIOD RETURN (%) (c) EXPENSES EXPENSES (LOSS), NET TURNOVER (%) (MILLIONS) FROM ADVISOR
- ------------ --------- -------------- -------- -------- ----------- ------------ ------------- -------------
<S> <C>
$ 0.02 $ 6.41 5.81 0.95 2.55 5.35 39.49 $ 5.7 $ 0.098
0.25 6.39 9.20 0.95 2.96 4.91 53.07 5.5 0.126
(0.35) 6.14 (1.49) 0.95 2.86 4.04 115.55 5.1 0.120
(0.01) 6.49 0.26 0.98 3.24 2.78 0.34 5.1 0.003
- ----------------------------------------------------------------------------------------------------------------------------
0.02 6.41 5.02 1.70 3.51 4.58 39.49 1.4 0.109
0.25 6.39 8.39 1.70 3.71 4.18 53.07 1.8 0.124
(0.34) 6.14 (2.07) 1.70 3.51 3.48 115.55 2.4 0.108
(0.02) 6.48 0.03 1.61 3.58 2.57 0.34 0.1 0.003
- ----------------------------------------------------------------------------------------------------------------------------
(0.22) 8.48 4.80 0.90 0.90 6.59 334.41 29.1 N/A
0.27 8.70 11.77 1.01 1.01 6.78 315.71 27.0 N/A
(1.71) 8.43 (9.17) 0.99 0.99 7.09 128.82 22.0 N/A
(0.18) 10.14 (0.60) 0.95 0.95 6.81 75.96 1.0 N/A
- ----------------------------------------------------------------------------------------------------------------------------
(0.22) 8.49 4.00 1.69 1.69 5.77 334.41 747.2 N/A
0.29 8.71 11.19 1.76 1.76 6.08 315.71 1,112.0 N/A
(1.72) 8.42 (9.98) 1.76 1.76 6.45 128.82 1,252.0 N/A
0.19 10.14 9.48 1.73 1.73 6.96 75.96 1,343.0 N/A
(0.03) 9.95 7.74 1.64 1.64 7.08 101.31 786.0 N/A
- ----------------------------------------------------------------------------------------------------------------------------
0.11 11.42 6.13 -- 1.52 5.42 5.76 16.2 0.172
0.72 11.31 12.24 -- 1.81 5.01 24.95 16.0 0.199
(0.89) 10.59 (2.99) 0.77 1.62 4.08 -- 14.3 0.094
(0.02) 11.48 0.54 1.15 2.09 2.73 -- 15.1 0.002
- ----------------------------------------------------------------------------------------------------------------------------
0.12 11.44 6.12 -- 2.26 5.43 5.76 9.2 0.257
0.72 11.32 12.33 -- 2.56 5.01 24.95 7.7 0.287
(0.88) 10.60 (3.45) 1.14 2.30 3.75 -- 5.0 0.122
(0.02) 11.48 0.43 1.84 2.48 2.27 -- 1.2 0.003
- ----------------------------------------------------------------------------------------------------------------------------
1.88 10.83 23.10 1.35 1.73 1.03 100.02 5.8 0.018
1.44 8.95 21.45 1.35 2.43 1.71 27.41 4.1 0.086
(0.12) 7.51 (0.32) 1.35 3.55 1.92 14.53 3.2 0.165
0.13 7.63 1.73 1.42 6.37 0.73 6.04 2.2 0.008
- ----------------------------------------------------------------------------------------------------------------------------
1.86 10.79 22.30 2.10 2.40 0.23 100.02 33.3 0.050
1.43 8.93 20.50 2.10 3.18 0.94 27.41 14.4 0.083
(0.14) 7.50 (1.10) 2.10 4.02 1.09 14.53 8.0 0.163
0.14 7.64 1.87 2.04 6.38 (1.07) 6.04 0.5 0.002
- ----------------------------------------------------------------------------------------------------------------------------
1.78 13.16 15.64 1.35 1.70 0.03 40.89 8.2 0.043
2.57 11.38 29.17 1.35 2.44 0.10 73.74 6.0 0.100
0.12 8.81 2.48 1.34 3.53 (0.11) 100.41 4.2 0.182
0.19 8.69 2.24 1.39 4.83 (0.30) 46.31 3.3 0.006
- ----------------------------------------------------------------------------------------------------------------------------
1.66 12.87 14.81 2.10 2.41 (0.73) 40.89 27.6 0.037
2.47 11.21 28.26 2.10 3.19 (0.66) 73.74 14.3 0.082
0.04 8.74 1.67 2.09 4.06 (0.82) 100.41 5.8 0.176
0.20 8.70 2.35 1.86 5.04 (1.38) 46.31 0.6 0.001
</TABLE>
AVERAGE
COMMISSION
RATE (d)
----------
N/A
N/A
N/A
N/A
- ---------
N/A
N/A
N/A
N/A
- ---------
N/A
N/A
N/A
N/A
- ---------
N/A
N/A
N/A
N/A
N/A
- ---------
N/A
N/A
N/A
N/A
- ---------
N/A
N/A
N/A
N/A
- ---------
$0.050
N/A
N/A
N/A
- ---------
$0.050
N/A
N/A
N/A
- ---------
$0.050
N/A
N/A
N/A
- ---------
$0.050
N/A
N/A
N/A
- ------------
(d) For fiscal years beginning on or after September 1, 1995, a fund is required
to disclose its average commission rate per share of security trades on
which commissions are charged.
(e) Per share amounts were calculated under a methodology using the monthly
average of shares outstanding during the period.
(f) Certain amounts have been reclassified to conform with current year
presentations.
- --------------------------------------------------------------------------------
<PAGE>
52 Investors Trust Mutual Funds
- --------------------------------------------------------------------------------
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 (the
"Funds"), four of which commenced operations as of September 8, 1993 the
Adjustable Rate Fund, the Tax Free Fund, the Value Fund and the Growth Fund, and
one, the Government Fund, which commenced operations as of April 22, 1987.
Under the Trust's Multiple Class Distribution System (the "Multiple Class
Arrangement"), the Funds currently offer 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 Funds at the end of eight years following the issuance of the
Class B shares. The date of issuance for purposes of conversion of shares in the
Government Fund which were held on September 7, 1993 shall be the original date
of acquisition of such shares.
2. SIGNIFICANT ACCOUNTING POLICIES. The preparation of the Funds' financial
statements in accordance with generally accepted accounting principles, requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. The following is a
summary of significant accounting policies followed consistently by the Funds.
SECURITIES VALUATION. Securities (including options) listed or traded on an
exchange or quoted on NASDAQ are valued at their last sale prices prior to the
time when assets are valued. Lacking any sales on that day, securities are
valued at the mean between the current closing bid and asked prices. Other
securities for which market quotations are readily available are valued at the
mean of the bid and asked quotations quoted prior to the time when assets are
valued ("market value"). Certain securities (including most tax-exempt debt
obligations) are valued primarily utilizing such pricing services as may be
deemed appropriate. The pricing services utilize information with respect to
market transactions, quotations from dealers and various relationships among
securities in determining value and may provide prices determined as of times
prior to the close of the New York Stock Exchange. Investments in certain
long-term debt securities not traded in an organized market are valued primarily
based on market quotations provided by recognized dealers of such securities.
Other securities for which market quotations are not readily available, such as
restricted securities, or where pricing occurs during periods of market
disruption, are valued in good faith by or under the authority of the Trustees
of the Trust. Short-term investments maturing within 60 days 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 as of trade date. Realized securities gains or losses are
determined using the identified cost method for both financial and tax
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Mutual Funds 53
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED
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. All premiums on securities
in the Tax Free Fund are amortized for financial and tax accounting purposes.
FUTURES CONTRACTS. Each of the Funds may purchase and sell futures contracts,
subject to certain limitations. The Government Fund uses interest rate futures
contracts as a hedge against changes in interest rates. Upon entering into a
futures contract, each Fund is required to deposit with a broker an amount
("initial margin") equal to a certain percentage of the face amount of 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. Each Fund may purchase and sell listed call and
put options on futures contracts. The Government Fund uses options on interest
rate futures contracts as a hedge against changes in interest rates. Options are
valued in accordance with the security valuations policies described above.
Transactions in options on futures contracts involve similar risks to those on
futures contracts.
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS. Each 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. A 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 a 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 the 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
segregate with the Custodian U.S. government securities, cash or cash
equivalents (or a receivable for investment sold in connection therewith) of an
aggregate current value sufficient to make payment for the securities.
REPURCHASE AGREEMENTS. Each Fund may enter into repurchase agreements in
order to generate additional income. Each repurchase agreement entered into by a
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. A 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
- --------------------------------------------------------------------------------
<PAGE>
54 Investors Trust Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED
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, each 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 Funds to comply with the requirements of the Internal
Revenue Code which are applicable to regulated investment companies and to
distribute substantially all of their taxable income to their shareholders.
Accordingly, the Funds paid no federal taxes and no federal income or excise tax
provisions were required. 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, 1996, the Funds had net tax basis capital loss
carryforwards which may be applied against taxable gains until their expiration
date as follows:
EXPIRATION
DATES
FUND AMOUNT OCTOBER 31,
- ------------------------------------------ ------------ -----------
Adjustable Rate Fund...................... $ 72,067 2002
114,498 2003
14,856 2004
Government Fund........................... 87,661,793 2002
107,525,597 2003
1,748,819 2004
Tax Free Fund............................. 176,173 2003
Growth Fund............................... 201,507 2002
243,412 2004
DISTRIBUTION OF INCOME AND GAINS. The Government and Tax Free Funds will
declare a distribution each day in an amount based on periodic projections of
their future net investment income and will pay such distributions monthly.
Consequently, the amount of each daily distribution may differ from actual net
investment income. Net investment income for the Adjustable Rate Fund is
declared as dividends to shareholders of record as of the close of business each
day and is paid to shareholders monthly. Distributions of net investment income
are declared and paid, quarterly for the Value Fund and annually for the Growth
Fund. Distributions from net short-term realized gains are declared and paid,
annually. During any particular year, net realized gains from investment
transactions in excess of any available capital loss carryforwards, would be
taxable to the Funds if not distributed and, therefore, will be declared and
paid to their shareholders annually.
CAPITAL ACCOUNTS. The Funds report 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).
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Mutual Funds 55
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED
Accordingly, the Funds may periodically make reclassifications among certain
capital accounts without impacting the net asset values of the Funds.
DEFERRED ORGANIZATIONAL AND REGISTRATION COSTS. Costs incurred by a Fund in
connection with its organization and registration of shares have been deferred
and are being amortized on a straight-line basis over a period 60 months from
commencement of investment operations. 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 each
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 average 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. The cost of purchases and the proceeds
from sales and paydowns of investments other than U.S. Government and agency
securities, short term investments and options, for the fiscal year ended
October 31, 1996 were as follows:
FUND PURCHASES SALES PAYDOWNS
- ---------------------------------- ----------- ----------- --------
Adjustable Rate Fund.............. $ 1,040,844 $ 57,270 $133,435
Tax Free Fund..................... 3,163,620 1,396,281 --
Value Fund........................ 42,477,688 26,426,690 --
Growth Fund....................... 22,978,051 10,581,445 --
The cost of purchases and the proceeds from sales and paydowns of long-term
U.S. Government and agency securities, for the fiscal year ended October 31,
1996, were as follows:
FUND PURCHASES SALES PAYDOWNS
- ------------------------- -------------- -------------- -----------
Adjustable Rate Fund..... $ 2,698,026 $ 2,777,943 $ 1,094,069
Government Fund.......... 3,211,045,385 3,499,386,818 68,232,279
Value Fund............... 61,850 502,115 --
- --------------------------------------------------------------------------------
<PAGE>
56 Investors Trust Mutual Funds
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED
Transactions in options written on U.S. Treasury bond futures for the
Government Fund were as follows:
NUMBER OF NET
CONTRACTS OF PREMIUMS
WRITTEN OPTIONS RECEIVED
--------------- --------
Outstanding at October 31,1995................... -- $ --
Written.......................................... 235 263,617
Terminated in closing purchase transactions...... (49) (52,623)
------ --------
Outstanding at October 31,1996................... 186 $210,994
------ --------
------ --------
At October 31, 1996 the security pledged to cover margin requirements for open
futures contracts on United States Treasury Bonds and for open option contracts
on United States Treasury Bond Futures for the Government Fund was as follows:
DESCRIPTION FACE VALUE MARKET VALUE
- -------------------------------------------------- ---------- ------------
Federal National Mortgage Association Medium Term
Note, 12.000%, 11/13/00......................... $2,500,000 $3,013,675
---------- ------------
---------- ------------
Aggregate federal income tax cost and gross unrealized appreciation
(depreciation) of investments for each Fund at October 31, 1996 was as follows:
<TABLE>
<CAPTION>
FEDERAL GROSS GROSS NET
INCOME UNREALIZED UNREALIZED UNREALIZED
FUND TAX COST APPRECIATION (DEPRECIATION) APPRECIATION
- ------------------------------------------- ------------ ------------ -------------- ------------
<S> <C> <C> <C> <C>
Adjustable Rate Fund....................... $ 6,909,785 $ 172,292 $ (23,228) $ 149,064
Government Fund............................ 785,320,850 13,173,237 (7,353,769) 5,819,468
Tax Free Fund.............................. 24,573,477 378,030 (85,929) 292,101
Value Fund................................. 34,691,453 5,077,167 (44,258) 5,032,909
Growth Fund................................ 27,187,448 9,492,489 (830,873) 8,661,616
</TABLE>
4. MANAGEMENT, DISTRIBUTION AND TRUSTEES' FEES. Under Advisory agreements
between the Funds and GNA Capital Management, Inc. ("the Adviser"), each Fund
agrees to pay the Adviser a fee based on its average daily net assets as
follows:
ADJUSTABLE RATE FUND. The Adviser's fee is calculated at an annual rate of
.40% of the average daily net assets.
GOVERNMENT FUND. The Adviser's fee is 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.
For the fiscal year
- --------------------------------------------------------------------------------
<PAGE>
Investors Trust Mutual Funds 57
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, CONTINUED
ended October 31, 1996, the Adviser's fee was equivalent to an annual effective
rate of .62% of the Fund's average daily net assets.
TAX FREE FUND. The Adviser's fee is 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. For the fiscal year ended October 31, 1996, the Adviser's fee was
equivalent to an annual effective rate of .58% of the Fund's average daily net
assets.
VALUE FUND. The Adviser's fee is 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.
GROWTH FUND. The Adviser's fee is 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 has agreed to reimburse the Classes of the following Funds, for
expenses incurred by the Classes to the extent that such expenses exceed the
following percentages of average daily net assets during the fiscal year ended
October 31, 1996:
FUND CLASS A CLASS B
- --------------------------------------------- ------- -------
Adjustable Rate Fund......................... 0.95% 1.70%
Value Fund................................... 1.35% 2.10%
Growth Fund.................................. 1.35% 2.10%
The Adviser did not reimburse any expenses of the Government Fund, but
reimbursed all of the expenses of the Tax Free Fund during the fiscal year ended
October 31, 1996.
The expense reimbursement may be extended or modified by the Adviser. 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 Funds' Advisory agreements also provide that if, in any fiscal year, the
total of certain specified expenses of any of the Funds exceed the expense
limitations applicable to the Funds imposed by the securities regulations of any
state in which they are 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 Funds for any expenses which exceed state expense
limitations up to the amount of management fees paid or payable by the Funds
during such fiscal year.
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<PAGE>
58 Investors Trust Mutual Funds
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NOTES TO FINANCIAL STATEMENTS, CONTINUED
The Adviser has retained the following portfolio managers (the "Sub-Advisers")
for the Funds. These Sub-Advisers are 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.
FUND SUB-ADVISER
- ------------------------------------ -----------------------------------------
Adjustable Rate Fund................ Standish, Ayer & Wood, Inc.
Government Fund..................... BlackRock Financial Management, Inc.
Tax Free Fund....................... Brown Brothers Harriman & Co.
Value Fund.......................... Duff & Phelps Investment Management, Inc.
Growth Fund......................... Value Line, Inc.
GNA Distributors, Inc. (the "Distributor") receives monthly distribution fees
from the Funds 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. Shareholder servicing fees are also imposed on both Class A
and Class B shares of the Funds equal to specified costs incurred by the
Distributor, but in no event to exceed .25% of the average daily net assets of
each of the Funds with respect to each class. The shareholder servicing fees are
in addition to the .75% distribution fees imposed on Class B. 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 Funds, 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
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<PAGE>
Investors Trust Mutual Funds 59
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NOTES TO FINANCIAL STATEMENTS, CONTINUED
total amounts of carryover expenses outstanding since inception of the Plan as
of October 31, 1996 for which the Distributor intends to seek repayment from the
Funds are as follows:
FUND AMOUNT
- ---------------------------------------------------- -----------
Government Fund..................................... $27,432,834
Tax Free Fund....................................... 357,069
Value Fund.......................................... 778,494
Growth Fund......................................... 730,091
Each 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
Funds to any Trustee or officer of the Funds who is affiliated with the Adviser.
5. SHARES OF BENEFICIAL INTEREST. At October 31, 1996 GNA Corporation, the
parent company of the Funds' Adviser, owned the following number of Class A
shares and a nominal amount of Class B shares of the Funds:
CLASS A
FUND SHARES
- ------------------------------------------------------ -------
Adjustable Rate Fund.................................. 888,726
Value Fund............................................ 280,001
Growth Fund........................................... 356,355
At October 31, 1996, Employers Reinsurance Corporation, a wholly-owned
financial subsidiary of General Electric Capital Services Corporation, an
affiliate of GNA Corporation, owned 1,304,348 Class A shares of the Tax Free
Fund.
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<PAGE>
60 Investors Trust Mutual Funds
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Trustees of Investors Trust:
We have audited the accompanying statements of assets and liabilities of each
of the series of Investors Trust (in this report comprised of the Adjustable
Rate Fund, the Government Fund, the Tax Free Fund, the Value Fund and the Growth
Fund (the "Funds")) including the investment portfolios, as of October 31, 1996,
and the related statements of operations for the fiscal year then ended, 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 Funds' 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, 1996 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Funds enumerated above as of October 31, 1996, the results of their operations
for the fiscal year then ended, the changes in their 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 /s/ COOPERS & Lybrand L.L.P.
December 11, 1996
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<PAGE>
Investors Trust Mutual Funds 61
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TAX INFORMATION, UNAUDITED
Of the dividends paid by the Tax Free Fund from net investment income for the
fiscal year ended October 31, 1996, 100% constituted exempt interest dividends
for regular federal income tax purposes.
For the fiscal year ended October 31, 1996, the Value Fund paid a long-term
capital gain distribution of $0.05 per share, with an ex-dividend date of
December 21, 1995.
For the fiscal year ended October 31, 1996, 99.3% and 97.8% of the applicable
dividends distributed by the Growth and Value Funds, respectively, qualifies for
the dividends-received deduction for corporate shareholders.
Please consult a tax adviser if you have any question 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.
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<PAGE>
[GNA LOGO HERE] GNA DISTRIBUTORS, INC.
A GE CAPITAL SERVICES COMPANY
Two Union Square o P.O. Box 490
Seattle, Washington 98111-0490
--------------------------------------------------------------------------
BULK RATE
U.S. POSTAGE
PAID
PERMIT #1193
RICHMOND, VA
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[INVESTORS TRUST LOGO HERE]
FAMILY OF FUNDS
ANNUAL REPORT
-------------
October 31, 1996
ADJUSTABLE RATE FUND
GOVERNMENT FUND
TAX FREE FUND
VALUE FUND
GROWTH FUND
THE INVESTORS TRUST FAMILY OF FUNDS
IS OFFERED BY GNA DISTRIBUTORS, INC.
