<PAGE>
MERRIMAN MERRIMAN INVESTMENT TRUST
FLEXIBLE BOND FUND 1200 Westlake Ave N., Suite 700
Seattle, WA 98109
MERRIMAN 1-800-423-4893
GROWTH & INCOME FUND 1-206-285-8877
MERRIMAN INVESTMENT MANAGER
CAPITAL APPRECIATION Merriman Investment
FUND Management Company
1200 Westlake Ave N., Suite 700
MERRIMAN Seattle, WA 98109
ASSET ALLOCATION
FUND CUSTODIAN AND
TRANSFER AGENT
MERRIMAN Firstar Trust Company
LEVERAGED GROWTH PO Box 701
FUND Milwaukee, WI 53201
1-800-224-4743
SEMI-ANNUAL REPORT FUND COUNSEL
Sullivan & Worcester
PERIOD ENDED Boston, Massachusetts
March 31, 1996
OFFICERS & TRUSTEES
PAUL A. MERRIMAN, President and Trustee
WILLIAM L. NOTARO, Executive Vice President
Secretary, Treasurer, and Trustee
DAVID A. EDERER, Trustee
Ben W. Reppond, Trustee
<PAGE>
Dear Fellow Shareholder:
I am pleased to present the March 31, 1996 Semi-Annual Report to Shareholders of
the Merriman Family of Mutual Funds. Included for your review are each Fund's
Financial Statements and Portfolios of Investments.
ON THE ECONOMY
During the fourth quarter of 1995 the Fed cut the discount rate 25 basis points
and most economists expected an additional cut in the first quarter of this
year. At the start of the year the prevailing view in the popular press was that
the first quarter of 1996 would see a sluggish economy, the Fed would keep
interest rates low until next fall's presidential election and a balanced
federal budget was likely. In reality, the first calendar quarter of 1996 was
one of the worst quarters ever for bonds, the economy grew faster than expected,
a balanced budget now seems unlikely until after the election and the Fed
doesn't seem to have any reason to cut interest rates further.
During this period there were plenty of signs to give hope to both the bulls and
bears. The consumer sector of the U.S. economy improved while spending on
capital goods slowed. Residential mortgage delinquencies were up for both the
fourth quarter of 1995 as well as the first quarter of 1996. Credit card
delinquencies hit a 10-year high, rising 21% from a year earlier in their
biggest jump in four years, and total credit card debt was up 10%. However, that
figure might not mean what it seems because grocery stores now commonly accept
credit cards and monthly totals may simply reflect spending that is paid off
each month.
In addition the U.S. stock market suffered two serious jolts. On December 18,
1995 the Dow Jones fell 101 points. But the unexpected piece of good news on
March 8 had the biggest impact on the stock and bond markets. The government
announced the economy had added 705,000 new non-agricultural jobs in February,
sending Wall Street into a panic that within minutes wiped out 3.3% of the value
of long-term treasury bonds and took a similar toll on stocks. The problem
seemed to be that traders in both bonds and stocks wanted more bad news in hopes
that the Fed would once again cut rates. Left to depend on the economy instead
of the Fed, traders and money managers bolted.
Still, investors seemed eager to beat down the doors of mutual fund companies,
which reached $3 trillion in assets for the first time. While the public seems
to have little concern for a major decline, we think the market is overpriced
and increasingly vulnerable to a serious correction. A great example of this
unusually high level of optimism is reflected in the price of Berkshire Hathaway
run by Warren Buffet. Berkshire is similar to a mutual fund in that it owns a
diversified portfolio of other public companies. The stock is a favorite of
wealthy investors at $33,000 a share but the price of admission is high.
Berkshire is comprised of a group of well-run low technology companies and is
priced at around 55 times its underlying 1995 earnings.
We also note, with some alarm, that the price to book value ratio of the
Standard & Poor's 400 Index is 50% higher than at the market peaks in 1929 and
1987. This means investors are paying very high prices for each dollar of
assets, another sign of over optimism. However, this may not mean what it seems.
These days, companies increasingly rely on human capital in place of physical
capital. Microsoft is a great example of this phenomenon, whereby the company's
greatest assets, brainy programmers and marketers, go home every night.
<PAGE>
Optimists hope all the new money coming into mutual funds from IRAs, 401k's and
other retirement plans will provide the demand to continue the equity market's
long upward trend. And as long as everybody continues to believe in stocks, that
could happen.
But for new investors and for those who have lived through major bear markets,
current conditions present a quandary. If we knew the future, we'd know exactly
what to do right now. But we can't know what's ahead and we have only the past
and common sense to guide us. We continue to believe investors will be best
prepared for the future by sticking to professionally managed portfolios with
worldwide diversification and the protection of market timing.
A LOOK AT THE MERRIMAN FUNDS OVER THE LAST SIX MONTHS
MERRIMAN FLEXIBLE BOND FUND
The Flexible Bond Fund invests in a broad spectrum of fixed-income securities.
Currently we are maintaining a balance of 35% in international bond funds, 25%
in high-yield bond funds and the balance in high-grade corporate bond funds. Our
goal is to be invested in each group during market advances and in T-bills,
money market funds and other cash equivalents during declining markets. The
Flexible Bond Fund was up 3.0% for the six months ending March 31, 1996. This
result compared to a gain of 3.5% for a similar balance of bonds without our
timing. The Flexible Bond Fund has a volatility of approximately half that of
international bond funds and approximately 40% less than U.S. corporate bond
funds. In fact, the volatility of our Flexible Bond Fund is lower than the
average four to six year (maturity) bond fund and therefore it may be most
appropriate to compare our performance to that group. Those funds were up 2.2%
for the six months.
MERRIMAN ASSET ALLOCATION FUND
The Asset Allocation Fund addresses questions of risk and return from two
perspectives. The first level of risk management is to reduce volatility by
spreading the investments among five major asset groups. Our present strategy is
to have 30% of the Fund's assets invested in domestic stock funds, 30% in
international stock funds, 15% in U.S. bond funds, 15% in international bond
funds and 10% in gold funds. The second level of risk management is the use of
timing models for each asset segment. The combination of asset allocation and
market timing will hopefully lead to reasonable returns at low risk. The Fund
returned 3.2% for the six month period ending March 31, 1996. This compared to a
gain of 7.5% for a portfolio using the same balance of assets on a buy-and-hold
basis. The Asset Allocation Fund has a volatility, measured by standard
deviation, approximately 12% lower than Morningstar's average asset allocation
fund.
<PAGE>
MERRIMAN CAPITAL APPRECIATION FUND
The Capital Appreciation Fund pursues appreciation of capital by investing in
U.S. and international growth, aggressive growth and small capitalization mutual
funds during (rising) markets. Currently, we are maintaining a balance of
approximately 65% in U.S. equities and 35% in international equities for the
Fund. If our timing models indicate a risk of loss is greater than the potential
for gain, we defend the principle of the portfolio by moving into money market
funds or other cash equivalents. For the six months ending March 31, 1996 the
average U.S. aggressive growth fund and international stock fund, as compiled
from Morningstar data, gained 7.4% while our Capital Appreciation Fund was up
1.3%. We underperformed mainly because two of our four timing systems generated
sell signals after the March 8, 1996 market tumble. The market subsequently
recovered, but we didn't benefit from the recovery as we remained 50% on the
sidelines for the rest of March. The Capital Appreciation Fund is approximately
37% less volatile than Morningstar's average growth fund as measured by standard
deviation.
MERRIMAN GROWTH & INCOME FUND
The Merriman Growth & Income Fund is comprised mainly of growth and income
mutual funds with the same balance of U.S. and international equities as in the
Capital Appreciation Fund. For the six months ending March 31, 1996 the Growth &
Income Fund was up 6.7% as compared to a gain of 10.6% for a similar portfolio
of Morningstar's average U.S. and international growth and income funds. The
Growth & Income Fund is approximately 47% less volatile than Morningstar's
average growth and income fund as measured by standard deviation.
MERRIMAN LEVERAGED GROWTH FUND
The Merriman Leveraged Growth Fund uses similar defensive strategies as the
other Funds except that when market conditions indicate, the Leveraged Growth
Fund may borrow up to $1 for each $2 of net assets for the purpose of making
additional investments. The Fund uses the same balance of U.S. and international
equities as the Capital Appreciation and Growth & Income Funds. During the six
months ending March 31, 1996 the Leveraged Growth Fund was up .2% versus a gain
of 8.0% for the average of Morningstar's growth fund, aggressive growth fund and
small company growth fund.
While both the stock and bond markets have generally been very productive the
last few years, a number of our indicators are warning of potential market
declines. While markets always feel safest after they have made a major advance
it is actually the point of greatest risk. We continue to do all we can to help
your investments participate in advancing markets while keeping an eye on the
responsibility for capital preservation. We appreciate your confidence in the
Merriman Mutual Funds and our defensive approach to investing.
Sincerely,
Paul A. Merriman
President
<PAGE>
MERRIMAN FLEXIBLE BOND FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1996
(UNAUDITED)
MARKET VALUE
SHARES (NOTE 2A)
------ ------------
HIGH-YIELD CORPORATE BOND FUNDS: 28.86%
----------------------------------------
55,689 Federated High Yield Trust..............................$ 500,084
41,820 Fidelity Advisor High Yield Fund ....................... 501,838
71,541 INVESCO Bond High Yield Fund ........................... 490,055
45,366 Liberty High Income Fund ............................... 502,654
48,640 Northeast Investors Trust Fund ......................... 506,831
-------
Total High-Yield Corporate Bond Funds
(Cost $2,305,000) ...................................... 2,501,462
---------
INTERNATIONAL BOND FUNDS: 33.82%
---------------------------------
36,328 Benham European Govt Bond Fund ......................... 417,414
43,367 Fidelity Global Bond Fund .............................. 418,929
32,858 G.T. Global High Income Fund ........................... 414,007
38,219 Liberty Federated Int'l Income Fund .................... 416,974
36,340 Scudder Emerging Markets Income Fund ................... 413,547
37,644 Scudder International Bond Fund ........................ 415,589
42,815 T. Rowe Price Int'l Bond Fund .......................... 434,572
-------
Total International Bond Funds
(Cost $2,981,924) ...................................... 2,931,032
---------
MONEY MARKET FUNDS: 33.34%
---------------------------
425,000 Babson Money Market Fund ............................... 425,000
429,201 Columbia Daily Income Fund ............................. 429,201
431,755 Dreyfus Institutional Money Market Fund ................ 431,755
419,464 Fidelity Cash Reserves ................................. 419,464
318,431 T. Rowe Price US Treasury Money Fund ................... 318,431
434,770 Strong Money Market Fund ............................... 434,770
430,848 Stein Roe Cash Reserves ................................ 430,848
-------
Total Money Market Funds
(Cost $2,889,469) ...................................... 2,889,469
---------
Principal
Amount
- ---------
SHORT-TERM DEMAND NOTES: 5.01%
-------------------------------
$98,400 American Family Financial Services,
5.1149%, 04/03/96....................................... 98,400
64,500 Pitney Bowes Inc.,
5.1139%, 04/03/96....................................... 64,500
271,700 Wisconsin Electric Power Company,
5.1549%, 04/03/96....................................... 271,700
-------
Total Short-Term Demand Notes
(Cost $434,600)......................................... 434,600
-------
Total Investment in Securities
(Cost $8,610,993) (a)..........................101.03 % 8,756,563
Liabilities in Excess
of other assets...............................(1.03)% (89,368)
----- -------
NET ASSETS....................................100.00 % $8,667,195
====== ==========
(a)Cost for federal income tax purposes is the same and
net unrealized appreciation consists of:
Gross unrealized appreciation $ 196,460
Gross unrealized depreciation (50,890)
-------
Net Unrealized Appreciation $ 145,570
=======
See Accompanying Notes to Financial Statements
<PAGE>
MERRIMAN GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1996
(UNAUDITED)
MARKET VALUE
SHARES (NOTE 2A)
------ ------------
DOMESTIC EQUITY FUNDS: 45.22%
------------------------------
23,946 Columbia Common Stock Fund..............................$ 470,057
16,565 Fidelity Growth & Income Fund .......................... 470,436
58,302 Founders Blue Chip Fund ................................ 426,767
21,464 INVESCO Value Equity Fund .............................. 468,782
27,694 Lexington Growth & Income Fund ......................... 466,370
22,991 T. Rowe Price Growth & Income Fund ..................... 461,668
23,434 SAFECO Income Fund ..................................... 479,685
22,142 Scudder Growth & Income Fund ........................... 474,051
15,887 Stein Roe Total Return Fund ............................ 465,009
-------
Total Domestic Equity Funds
(Cost $3,925,656) ...................................... 4,182,825
---------
INTERNATIONAL EQUITY FUNDS: 35.71%
-----------------------------------
24,838 Fidelity Int'l Growth & Income Fund .................... 453,550
67,840 G.T. Global Growth & Income Fund ....................... 447,741
35,557 INVESCO European Fund .................................. 503,134
15,682 Janus Worldwide Fund ................................... 494,781
16,406 Scudder Global Fund .................................... 464,128
30,644 T. Rowe Price European Stock Fund ...................... 469,768
36,344 T. Rowe Price International Stock Fund ................. 469,928
-------
Total International Equity Funds
(Cost $2,904,213) ...................................... 3,303,030
---------
MONEY MARKET FUNDS: 15.67%
---------------------------
466,152 Benham Government Agency Fund .......................... 466,152
464,485 Janus Money Market Portfolio ........................... 464,485
518,995 WPG Government Money Market Fund ....................... 518,995
-------
Total Money Market Funds
(Cost $1,449,632) ...................................... 1,449,632
---------
PRINCIPAL
AMOUNT
- ---------
SHORT-TERM DEMAND NOTES: 3.39%
$ 112,800 General Mills Inc.,
5.1000%, 04/03/96....................................... 112,800
90,000 Pitney Bowes Inc.,
5.1139%, 04/03/96....................................... 90,000
110,900 Wisconsin Electric Power Company,
5.1549%, 04/03/96....................................... 110,900
-------
Total Short-Term Demand Notes
(Cost $313,700)......................................... 313,700
-------
Total Investment in Securities
(Cost $8,593,201)(a)..............................99.99% 9,249,187
Other Assets,
Less Liabilities.................................0.01% 1,061
----- -----
NET ASSETS......................................100.00% $9,250,248
====== ==========
(a)Cost for federal income tax purposes is the same and
net unrealized appreciation consists of:
Gross unrealized appreciation $ 689,218
Gross unrealized depreciation (33,232)
------
Net Unrealized Appreciation $ 655,986
=======
See Accompanying Notes to Financial Statements
<PAGE>
MERRIMAN CAPITAL APPRECIATION FUND
PORTFOILIO OF INVESTMENTS
MARCH 31, 1996
(UNAUDITED)
MARKET VALUE
SHARES (NOTE 2A)
- ------ ------------
DOMESTIC EQUITY FUNDS: 46.98%
------------------------------
28,707 Federated Stock Trust ..................................$ 924,928
23,417 Scudder Development Fund ............................... 1,000,625
37,646 SteinRoe Capital Opportunity Fund ...................... 1,000,643
49,540 T. Rowe Price Capital Appreciation Fund ................ 707,431
45,822 T. Rowe Price New Horizon Fund ......................... 998,916
55,185 T. Rowe Price Small Cap Value Fund ..................... 966,281
35,774 20th Century Ultra Fund ................................ 950,164
45,189 USAA Growth Fund ....................................... 937,221
41,615 Weiss Peck Tudor Fund .................................. 1,035,372
---------
Total Domestic Equity Funds
(Cost $8,003,464) ...................................... 8,521,581
---------
INTERNATIONAL EQUITY FUNDS: 38.16%
-----------------------------------
75,702 Fidelity European Capital Appreciation Fund ............ 957,637
99,989 Lexington WW Emerging Markets Fund ..................... 1,181,875
55,500 Liberty Federated International Equity Fund ............ 952,937
63,102 T. Rowe Price European Stock Fund ...................... 967,358
100,784 T. Rowe Price New Asia Fund ............................ 910,078
37,078 Scudder Global Fund .................................... 1,048,943
54,745 Scudder Pacific Opportunity Fund ....................... 903,285
-------
Total International Equity Funds
(Cost $6,453,891) ...................................... 6,922,113
---------
MONEY MARKET FUNDS: 13.54%
---------------------------
945,788 Founders Money Market Fund ............................. 945,788
1,510,363 Value Line Cash Fund ................................... 1,510,363
---------
Total Money Market Funds
(Cost $2,456,151) ...................................... 2,456,151
---------
PRINCIPAL
AMOUNT
- ---------
SHORT-TERM DEMAND NOTES: 1.45%
-------------------------------
$ 76,300 General Mills Inc.,
5.1000%, 04/03/96....................................... 76,300
94,200 Pitney Bowes Inc.,
5.1139%, 04/03/96....................................... 94,200
94,600 Wisconsin Electric Power Company,
5.1549% 04/03/96........................................ 94,600
------
Total Short-Term Demand Notes
(Cost $265,100) ........................................ 265,100
-------
Total Investment in Securities
(Cost $17,178,606) (a).........................100.13 % 18,164,945
Liabilities in excess
of other assets............................. (0.13)% (24,435)
----- ------
NET ASSETS ....................................100.00% $18,140,510
====== ===========
(a) Cost for federal income tax purposes is the same
and net unrealized appreciation consists of:
Gross unrealized appreciation $ 1,026,854
Gross unrealized depreciation (40,515)
-------
Net Unrealized Appreciation $ 986,339
=======
See Accompanying Notes to Financial Statements
<PAGE>
MERRIMAN ASSET ALLOCATION FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1996
(UNAUDITED)
MARKET VALUE
SHARES (NOTE 2A)
- ------ ------------
DOMESTIC EQUITY FUNDS: 21.31%
------------------------------
31,546 Federated Stock Trust ..................................$ 1,016,404
25,976 Scudder Development Fund ............................... 1,109,976
42,628 Stein Roe Capital Opportunity Fund ..................... 1,133,056
55,692 T. Rowe Price Small Cap Value Fund ..................... 975,174
-------
Total Domestic Equity Funds
(Cost $3,616,237) ...................................... 4,234,610
---------
INTERNATIONAL EQUITY FUNDS: 31.71%
-----------------------------------
83,449 Fidelity European Capital Appreciation Fund............. 1,055,636
75,974 INVESCO European Fund .................................. 1,075,036
38,932 Scudder Global Fund .................................... 1,101,390
60,221 Scudder Pacific Opportunity Fund ....................... 993,643
70,110 T. Rowe Price European Stock Fund ...................... 1,074,779
110,862 T. Rowe Price New Asia Fund ............................ 1,001,086
---------
Total International Equity Funds
(Cost $5,909,164) ...................................... 6,301,570
---------
GOLD EQUITY FUNDS: 9.57%
-------------------------
21,382 Benham Gold Equity Index Fund .......................... 314,737
40,323 INVESCO Strategic Gold Portfolio ....................... 322,984
41,935 Lexington Gold Fund .................................... 317,871
20,363 Scudder Gold Fund ...................................... 320,520
143,172 United Services Gold Shares ............................ 310,683
29,279 USAA Gold Fund ......................................... 315,630
-------
Total Gold Equity Funds
(Cost $1,950,000)....................................... 1,902,425
---------
HIGH YIELD CORPORATE BOND FUNDS: 10.01%
----------------------------------------
77,029 Federated High Yield Trust ............................. 691,719
54,207 Liberty High Income Fund ............................... 600,611
66,827 Northeast Investors Trust .............................. 696,333
-------
Total High Yield Corporate Bond Funds
(Cost $1,837,672)....................................... 1,988,663
---------
INTERNATIONAL BOND FUNDS: 14.83%
---------------------------------
50,811 Benham European Gov't Bond Fund ........................ 583,822
46,130 G. T. Global High Income Fund .......................... 581,235
56,308 Liberty Federated Int'l Income Fund .................... 614,318
50,514 Scudder Emerging Markets Income Fund ................... 574,846
37,644 Scudder International Bond Fund ........................ 592,546
-------
Total International Bond Funds
(Cost $3,007,107)....................................... 2,946,767
---------
MONEY MARKET FUNDS: 8.69%
--------------------------
101,358 Benham Government Agency Fund .......................... 101,358
349,892 INVESCO Cash Reserves .................................. 349,892
84,810 Lexington Money Market Fund ............................ 84,810
1,052,087 20th Century Cash Reserves ............................. 1,052,087
53,948 United Services US Treasury Money Fund ................. 53,948
85,187 USAA Money Market Fund ................................. 85,187
------
Total Money Market Funds
(Cost $1,727,282)....................................... 1,727,282
---------
SHORT-TERM DEMAND NOTES: 3.77%
-------------------------------
$160,900 American Family Financial Services,
5.1149% 04/03/96........................................$ 160,900
95,400 Pitney Bowes Inc.,
5.1339%, 04/03/96....................................... 95,400
342,400 Southwestern Bell Corporation,
5.1139%, 04/03/96....................................... 342,400
149,200 Wisconsin Electric Power Company,
5.1549%, 04/03/96....................................... 149,200
-------
Total Short-Term Demand Notes
(Cost $747,900)......................................... 747,900
-------
Total Investment in Securities
(Cost $18,795,362) (a).......................... 99.89% 19,849,217
Other assets
less liabilities............................. 0.11% 22,154
---- ------
NET ASSETS......................................100.00% $19,871,371
====== ===========
(a) Cost for federal income tax purposes is the same and net unrealized
appreciation consists of:
Gross unrealized appreciation $ 1,183,801
Gross unrealized depreciation (129,946)
-------
Net Unrealized Appreciation $ 1,053,855
=========
See Accompanying Notes to Financial Statements
<PAGE>
MERRIMAN LEVERAGED GROWTH FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1996
(UNAUDITED)
MARKET VALUE
SHARES (NOTE 2A)
- ------ ---------
DOMESTIC EQUITY FUNDS: 67.99%
------------------------------
22,998 Federated Stock Trust...................................$ 741,007
34,996 Fidelity Disciplined Equity Fund ....................... 746,470
12,862 Fidelity Trend Fund .................................... 703,182
49,497 T. Rowe Price Capital Appreciation Fund ................ 706,823
33,266 T. Rowe Price New Horizons Fund ........................ 725,202
43,759 T. Rowe Price Small Cap Fund ........................... 766,218
16,984 Scudder Development Fund ............................... 725,728
28,184 SteinRoe Capital Opportunity Fund ...................... 749,118
26,859 SteinRoe Growth Stock Fund ............................. 704,504
65,906 20th Century Heritage Fund ............................. 759,234
28,442 20th Century Ultra Fund ................................ 755,414
34,192 USAA Growth Fund ....................................... 709,148
38,699 Value Line Fund ........................................ 740,695
23,239 Value Line Leveraged Growth Fund ....................... 711,822
-------
Total Domestic Equity Funds
(Cost $9,483,261)....................................... 10,244,565
----------
INTERNATIONAL EQUITY FUNDS: 51.79%
-----------------------------------
61,917 Fidelity European Capital App Fund ..................... 783,249
56,051 INVESCO European Fund .................................. 793,121
52,545 G.T. Global Emerging Markets Fund ...................... 783,974
23,690 Janus Worldwide Fund ................................... 747,414
65,762 Lexington Worldwide Emerging Markets Fund .............. 777,310
46,291 Liberty Federated Int'l Equity Fund .................... 794,812
51,618 T. Rowe Price European Stock Fund ...................... 791,300
86,226 T. Rowe Price New Asia Fund ............................ 778,623
27,599 Scudder Global Fund .................................... 780,766
46,837 Scudder Pacific Opportunity Fund ....................... 772,810
-------
Total International Equity Funds
(Cost $7,320,000)....................................... 7,803,379
---------
PRINCIPLE
AMOUNT
- ---------
SHORT-TERM DEMAND NOTES: 0.33%
-------------------------------
$ 17,300 American Family Financial Services,
5.1149%, 04/03/96.......................................$ 17,300
33,000 Wisconsin Electric Power Company,
5.1549%, 04/03/96....................................... 33,000
------
Total Short-Term Demand Notes
(Cost $50,300).......................................... 50,300
------
Total Investment in Securities
(Cost $16,853,561) (a)........................120.11% 18,098,244
Liabilities in excess,
of other assets.............................(20.11%) (3,030,514)
----- ----------
NET ASSETS....................................100.00% $15,067,730
====== ===========
(a) Cost for federal income tax purposes is the same and
net unrealized appreciation consists of:
Gross unrealized appreciation $ 1,282,425
Gross unrealized depreciation (37,742)
-------
Net Unrealized Appreciation $ 1,244,683
=========
See Accompanying Notes to Financial Statements
<PAGE>
<TABLE>
STATEMENTS OF ASSETS AND LIABILITIES
MARCH 31, 1996
(UNAUDITED)
<CAPTION>
MERRIMAN MERRIMAN MERRIMAN MERRIMAN
MERRIMAN GROWTH & CAPITAL ASSET LEVERAGED
FLEXIBLE BOND INCOME APPRECIATION ALLOCATION GROWTH
FUND FUND FUND FUND FUND
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Assets
Investments in securities, at market value
(identified cost $8,610,993, $8,593,201,
$17,178,606, $18,795,362 and $16,853,561
respectively) (Note 2) $8,756,563 $9,249,187 $18,164,945 $19,849,217 $18,098,244
Dividends and interest receivable 52,833 18,391 11,004 58,834 3,578
Deferred organization expenses -- -- -- -- 2,022
--------- --------- ---------- ---------- ----------
Total assets 8,809,396 9,267,578 18,175,949 19,908,051 18,103,844
--------- --------- ---------- ---------- ----------
Liabilities
Loan payable to custodian bank -- -- -- -- 3,000,000
Accrued management fees 7,403 9,810 19,229 21,136 23,751
Other accrued expenses 7,031 7,520 16,210 15,544 12,363
Distributions payable 127,767 -- -- -- --
------- ----- ------ ------ ---------
Total liabilities 142,201 17,330 35,439 36,680 3,036,114
------- ------ ------ ------ ---------
Net Assets
(Applicable to 851,780, 835,222, 1,730,218, 1,780,078
and 1,305,672 shares of beneficial interest with no
par value, unlimited number of shares authorized) $8,667,195 $9,250,248 $18,140,510 $ 19,871,371 $15,067,730
========== ========== =========== ============ ===========
Pricing of Shares
Net asset value, offering and redemption price
per share
$ 8,667,195 / 851,780 shares $ 10.18
==========
$ 9,250,248 / 835,222 shares $ 11.08
==========
$18,140,510 / 1,730,218 shares $ 10.48
===========
$19,871,371 / 1,780,078 shares $ 11.16
============
$15,067,730 / 1,305,672 shares $ 11.54
===========
Net assets
At March 31, 1996, net assets consisted of:
Paid-in capital $8,574,181 $8,202,956 $16,569,401 $ 17,805,205 $14,014,856
Undistributed net investment income 30,120 20,671 (20,283) 98,607 (19,255)
Accumulated net realized gain (loss) (82,676) 370,635 605,053 913,704 (172,554)
Unrealized appreciation on investments 145,570 655,986 986,339 1,053,855 1,244,683
--------- --------- --------- ----------- -----------
$8,667,195 $9,250,248 $18,140,510 $ 19,871,371 $15,067,730
========== ========== =========== ============ ===========
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
<TABLE>
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 1996
(UNAUDITED)
<CAPTION>
MERRIMAN MERRIMAN MERRIMAN MERRIMAN
MERRIMAN GROWTH & CAPITAL ASSET LEVERAGED
FLEXIBLE BOND INCOME APPRECIATION ALLOCATION GROWTH
FUND FUND FUND FUND FUND
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Investment income
Interest $ 8,387 $ 8,711 $ 10,147 $ 11,592 $ 9,986
Dividends 353,481 267,659 493,561 554,242 288,942
------- ------- ------- ------- -------
Total investment income 361,868 276,370 503,708 565,834 298,928
------- ------- ------- ------- -------
Expenses
Management fees (Note 3) 43,230 57,709 123,201 131,384 74,948
Accounting services 8,706 8,965 20,228 21,960 9,958
Custodian fees 1,810 1,739 3,254 4,183 2,286
Transfer agent fees 6,972 8,134 20,496 20,817 8,054
Interest expense (Note 4) -- -- -- -- 99,893
Professional services 1,372 2,699 5,430 4,640 2,384
Registration fees 1,663 1,978 5,639 5,300 3,535
Insurance and other 128 136 329 311 137
Printing 338 309 693 818 375
Trustees fees 249 258 535 574 168
Amortization of organization expenses -- -- -- -- 871
------ ------ -------- ------ ------
Total expenses 64,468 81,927 179,805 189,987 202,609
------ ------ ------- ------- -------
Net investment income 297,400 194,443 323,903 375,847 96,319
------- ------- ------- ------- ------
Realized and Unrealized gain (loss)
on investments
Net realized gain (loss) from security transactions 46,037 530,442 702,884 763,317 (276,525)
Capital gain distributions from regulated investment
companies 2,057 186,383 967,509 381,207 578,756
Decrease in unrealized appreciation of
investments (93,237) (319,621) (1,836,205) (890,475) (170,199)
------- -------- ---------- -------- --------
Net realized and unrealized gain (loss) on investments (45,143) 397,204 (165,812) 254,049 132,032
------- ------- -------- ------- -------
Net increase in net assets resulting from
operations $ 252,257 $ 591,647 $ 158,091 $ 629,896 $ 228,351
========== ========== ========== =========== ==========
</TABLE>
See Accompany Notes to Financial Statements
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
Merriman Flexible Bond Fund Merriman Growth & Income Fund
---------------------------- -----------------------------
<CAPTION>
Six Months Ended Year Ended Six Months Ended Year Ended
March 31, 1996 September 30, March 31, 1996 September 30,
(Unaudited) 1995 (Unaudited) 1995
----------- ---- ----------- ----
<S> <C> <C> <C> <C>
Operations:
Net investment income $ 297,400 $ 477,393 $ 194,443 $ 204,709
Net realized gain on investments 46,037 12,563 530,442 145,339
Capital gain distributions from regulated investment
companies 2,057 -- 186,383 55,403
Net increase (decrease) in unrealized appreciation
on investments (93,237) 242,467 (319,621) 975,607
------- ------- -------- -------
Net increase in net assets resulting from operations 252,257 732,423 591,647 1,381,058
Distributions to shareholders:
Distributions from net realized gain on investments -- -- (547,216) (772,792)
Distributions from net investment income (298,231) (481,041) (217,137) (183,504)
Capital share transactions:
Increase (decrease) in net assets resulting from capital
share transactions (Note 5) 121,098 (2,201,254) 74,659 (1,777,320)
------- ---------- ------ ----------
Total increase (decrease) 75,124 (1,949,872) (98,047) (1,352,558)
Net assets
Beginning of period 8,592,071 10,541,943 9,348,295 10,700,853
End of period * $8,667,195 $ 8,592,071 $9,250,248 $ 9,348,295
========== =========== ========== ===========
* Including undistributed net investment income of: $ 30,120 $ 30,951 $ 20,671 $ 43,365
========== =========== ========== ===========
</TABLE>
<TABLE>
MERRIMAN CAPITAL MERRIMAN ASSET
APPRECIATION FUND ALLOCATION FUND
----------------- ---------------
<CAPTION>
Six Months Ended Year Ended Six Months Ended Year Ended
March 31, 1996 September 30, March 31, 1996 September 30,
(Unaudited) 1995 (Unaudited) 1995
----------- ---- ----------- ----
<S> <C> <C> <C> <C>
Operations:
Net investment income $ 323,903 $ 183,702 $ 375,847 $ 519,782
Net realized gain on investments 702,884 696,597 763,317 150,214
Capital gain distributions from regulated investment
companies 967,509 131,629 381,207 64,624
Net increase (decrease) in unrealized appreciation
on investments (1,836,205) 2,343,249 (890,475) 1,105,563
---------- --------- -------- ---------
Net increase in net assets resulting from operations 158,091 3,355,177 629,896 1,840,183
Distributions to shareholders:
Distributions from net realized gain on investments (1,893,566) (1,568,532) (446,499) (1,493,203)
Distributions from net investment income (405,764) (143,190) (300,168) (522,635)
Capital share transactions:
Decrease in net assets resulting from capital
share transactions (Note 5) (1,923,221) (5,017,157) (2,644,348) (7,175,623)
- ---------- ---------- ---------- ----------
Total decrease (4,064,460) (3,373,702) (2,761,119) (7,351,278)
Net assets
Beginning of period 22,204,970 25,578,672 22,632,490 29,983,768
---------- ---------- ---------- ----------
End of period * $18,140,510 $22,204,970 $19,871,371 $22,632,490
=========== =========== =========== ===========
* Including undistributed net investment income of: $ (20,283) $ 61,578 $ 98,607 $ 22,928
=========== =========== =========== ===========
</TABLE>
See Accompany Notes to Financial Statements
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
Merriman Leveraged Growth Fund
------------------------------
<CAPTION>
Six Months Ended Year Ended
March 31, 1996 September 30,
(Unaudited) 1995
----------- ----
<S> <C> <C>
Operations:
Net investment income (loss) $ 96,319 $ (48,768)
Net realized gain (loss) on investments (276,525) 180,865
Capital gain distributions from regulated investment
companies 578,756 84,827
Net increase (decrease) in unrealized appreciation
on investments (170,199) 1,414,882
-------- ---------
Net increase in net assets resulting from operations 228,351 1,631,806
Distributions to shareholders:
Distributions from net investment income (115,574) --
Distributions from net realized gain on investments (633,886) (227,723)
Capital share transactions:
Increase in net assets resulting from
capital share transactions (Note 5) 5,902,509 2,822,845
- --------- ---------
Total increase 5,381,400 4,226,928
Net assets
Beginning of period 9,686,330 5,459,402
--------- ---------
End of period * $15,067,730 $9,686,330
=========== ==========
* Including undistributed net investment income of: $(19,255) $ --
======== ========
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
<TABLE>
MERRIMAN LEVERAGED GROWTH FUND
STATEMENTS OF CASH FLOW
<CAPTION>
Six Months Ended Year Ended
March 31, 1996 September 30,
(Unaudited) 1995
----------- ----
<S> <C> <C>
INCREASE (DECREASE) IN CASH Cash flows from operating activities:
Dividends and interest received $ 323,631 $ 103,585
Operating expenses paid 207,134 (170,054)
Net proceeds from disposition of short-term investments 310,386 5,175,724
Purchases of portfolio securities (27,315,601) (16,666,208)
Proceeds from disposition of portfolio securities 22,311,931 5,020,702
---------- ---------
Net cash used for operating activities (4,162,519) (6,536,251)
---------- ----------
Cash flows from financing activities:
Proceeds from capital shares sold 5,907,490 3,834,146
Payments on capital shares redeemed (723,553) (1,292,318)
Cash dividends paid * (21,444) (5,551)
Net increase (decrease) in loan payable to custodian bank (1,000,000) 4,000,000
---------- ---------
Net cash provided by financing activities 4,162,493 6,536,277
Net change in cash (26) 26
Cash at beginning of period 26 --
--------- ---------
Cash at end of period $ -- $ 26
========== ============
Reconciliation of net increase in net assets resulting from
operations to net
cash used for operating activities:
Net increase in net assets resulting from operations $ 228,351 $ 1,631,806
------------ ------------
Adjustments to reconcile net increase in net assets from
operations to net
cash used for operating activities:
Increase in investment in securities (4,411,919) (8,179,975)
(Increase) decrease in dividends and interest receivable 24,703 (21,137)
Decrease in deferred organization expenses 871 1,737
Increase in accrued management fee 13,841 9,910
Increase (decrease) in other accrued expenses (18,366) 21,408
------- ------
Total adjustments (4,390,870) (8,168,057)
---------- ----------
Net cash used for operating activities $(4,162,519) $(6,536,251)
=========== ===========
<FN>
* Non-cash financing activities included herein consist of reinvestment of distributions to shareholders of $728,016 and
$223,529, respectively.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
<TABLE>
MERRIMAN MUTUAL FUNDS
FINANCIAL HIGHLIGHTS
FLEXIBLE BOND FUND
(for a share outstanding throughout the period)
Year Ended September 30,
<CAPTION>
1996(a) 1995 1994 1993 1992 1991
------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.23 $ 9.94 $ 10.97 $ 10.78 $ 10.19 $ 9.84
------- ------- ------- ------- ------- -------
Income from investment operations
Net investment income 0.32 0.55 0.42 0.52 0.66 0.60
Net gains or losses on securities
(realized and unrealized) (0.01) 0.29 (0.37) 0.65 0.59 0.37
----- ---- ----- ---- ---- ----
Total from investment operations 0.31 0.84 0.05 1.17 1.25 0.97
---- ---- ---- ---- ---- ----
Less distributions:
From investment income (0.36) (0.55) (0.42) (0.52) (0.66) (0.62)
From realized capital gains -- -- (0.66) (0.46) -- --
Total distributions (0.36) (0.55) (1.08) (0.98) (0.66) (0.62)
----- ----- ----- ----- ----- -----
Net asset value, end of period $ 10.18 $ 10.23 $ 9.94 $ 10.97 $ 10.78 $ 10.19
======= ======= ======= ======= ======= =======
Total return 3.02% 8.63% 0.36% 11.61% 12.65% 10.14%
Net assets end of period ($000) $ 8,667 $ 8,592 $10,542 $12,917 $11,175 $11,085
Ratio of expenses to average net assets 1.49%* 1.50% 1.50% 1.54% 1.51% 1.55%
Ratio of net income to average net assets 6.88%* 5.17% 3.89% 4.91% 6.26% 6.03%
Portfolio turnover rate 45.56% 291.46% 472.49% 272.87% 2.92% 202.06%
</TABLE>
<TABLE>
GROWTH & INCOME FUND
(for a share outstanding throughout the period)
Year Ended September 30,
<CAPTION>
1996 (a) 1995 1994 1993 1992 1991
-------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.32 $ 10.86 $ 10.92 $ 11.58 $ 11.37 $ 10.49
------- ------- ------- ------- ------- -------
Income from investment operations
Net investment income 0.22 0.24 0.11 0.11 0.19 0.27
Net gains or losses on securities
(realized and unrealized) 0.50 1.29 (0.04) 0.44 0.21 1.00
---- ---- ----- ---- ---- ----
Total from investment operations 0.72 1.53 0.07 0.55 0.40 1.27
---- ---- ---- ---- ---- ----
Less distributions:
From investment income (0.27) (0.21) (0.13) (0.09) (0.19) (0.27)
From realized capital gains (0.69) (0.86) -- (1.12) -- (0.12)
----- ----- ----- -----
Total distributions (0.96) (1.07) ( 0.13) (1.21) (0.19) (0.39)
----- ----- - ---- ----- ----- -----
Net asset value, end of period $ 11.08 $ 11.32 $ 10.86 $ 10.92 $ 11.58 $ 11.37
======= ======= ======= ======= ======= =======
Total return 6.69% 15.41% 0.62% 4.86% 3.52% 12.37%
Net assets end of period ($000) $ 9,250 $ 9,348 $10,701 $16,778 $21,554 $19,859
Ratio of expenses to average net assets 1.78%* 1.76% 1.90% 1.69% 1.60% 1.71%
Ratio of net income to average net assets 4.22%* 2.10% 0.87% 0.93% 1.64% 2.47%
Portfolio turnover rate 54.08% 78.64% 240.27% 200.67% 90.71% 148.99%
</TABLE>
(a) Six Months Ended March 31, 1996 (Unaudited)
* Annualized
<PAGE>
<TABLE>
MERRIMAN MUTUAL FUNDS
FINANCIAL HIGHLIGHTS(continued)
CAPITAL APPRECIATION FUND
(for a share outstanding throughout the period)
Year Ended September 30,
<CAPTION>
1996 (a) 1995 1994 1993 1992 1991
-------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.69 $ 10.82 $ 11.63 $ 11.52 $ 11.43 $ 9.78
------- ------- ------- ------- ------- -------
Income from investment operations
Net investment income 0.18 0.09 0.19 -- 0.27 0.22
Net gains or losses on securities
(realized and unrealized) (0.07) 1.56 (0.38) 1.29 0.09 1.66
----- ---- ----- ---- ---- ----
Total from investment operations 0.11 1.65 (0.19) 1.29 0.36 1.88
---- ---- ----- ---- ---- ----
Less distributions:
From investment income (0.23) (0.07) (0.16) (0.04) (0.27) (0.23)
From realized capital gains (1.09) (0.71) (0.46) (1.14) -- --
----- ----- ----- -----
Total distributions (1.32) (0.78) (0.62) (1.18) (0.27) (0.23)
----- ----- ----- ----- ----- -----
Net asset value, end of period $ 10.48 $ 11.69 $ 10.82 $ 11.63 $ 11.52 $ 11.43
======= ======= ======= ======= ======= =======
Total return 1.34% 16.43% (1.64)% 11.69% 3.14% 19.49%
Net assets end of period ($000) $18,141 $22,205 $25,579 $39,037 $43,704 $45,629
Ratio of expenses to average net assets 1.83%* 1.78% 1.58% 1.51% 1.46% 1.48%
Ratio of net income to average net assets 3.29%* 0.80% 1.70% 0.04% 2.48% 1.73%
Portfolio turnover rate 141.98% 146.40% 344.25% 241.90% 122.09% 118.51%
</TABLE>
<TABLE>
ASSET ALLOCATION FUND
(for a share outstanding throughout the period)
Year Ended September 30,
<CAPTION>
1996 (a) 1995 1994 1993 1992 1991
-------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.21 $ 11.22 $ 11.97 $ 10.74 $ 10.82 $ 10.04
------- ------- ------- ------- ------- -------
Income from investment operations
Net investment income 0.19 0.25 0.19 0.10 0.31 0.32
Net gains or losses on securities
(realized and unrealized) 0.16 0.62 0.15 1.76 (0.08) 0.78
---- ---- ---- ---- ----- ----
Total from investment operations 0.35 0.87 0.34 1.86 0.23 1.10
---- ---- ---- ---- ---- ----
Less distributions:
From investment income (0.16) (0.25) (0.20) (0.10) (0.31) (0.32)
From realized capital gains (0.24) (0.63) (0.89) (0.53) -- --
----- ----- ----- -----
Total distributions (0.40) (0.88) ( 1.09) (0.63) (0.31) (0.32)
----- ----- - ---- ----- ----- -----
Net asset value, end of period $ 11.16 $ 11.21 $ 11.22 $ 11.97 $ 10.74 $ 10.82
======= ======= ======= ======= ======= =======
Total return 3.24% 8.49% 2.91% 18.11% 2.13% 11.17%
Net assets end of period ($000) $19,871 $22,632 $29,984 $29,492 $26,508 $28,350
Ratio of expenses to average net assets 1.81%* 1.76% 1.56% 1.52% 1.52% 1.52%
Ratio of net income to average net assets 3.58%* 2.11% 1.63% 0.85% 2.87% 3.03%
Portfolio turnover rate 115.05% 288.45% 449.55% 225.96% 132.56% 311.62%
</TABLE>
(a) Six Months Ended March 31, 1996 (Unaudited)
* Annualized
<PAGE>
<TABLE>
MERRIMAN MUTUAL FUNDS
FINANCIAL HIGHLIGHTS (continued)
LEVERAGED GROWTH FUND
(for a share outstanding throughout the period)
Year Ended September 30,
<CAPTION>
1996 (a) 1995 1994 1993 1992
-------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 12.30 $ 10.42 $ 10.41 $ 10.04 $ 10.00
------- ------- ------- ------- -------
Income from investment operations
Net investment income 0.11 0.18 0.07 0.06 0.04
Net gains on securities
(realized and unrealized) (0.11) 2.11 0.03 0.37 --
----- ---- ---- ----
Total from investment operations -- 2.29 0.10 0.43 0.04
----- ---- ---- ---- ----
Less distributions:
From investment income (0.12) (0.07) (0.09) (0.06) --
From realized capital gains (0.64) (0.34) -- -- --
----- ----- ----- ----- ----
Total distributions (0.76) (0.41) (0.09) (0.06) --
----- ----- ----- -----
Net asset value, end of period $ 11.54 $ 12.30 $ 10.42 $ 10.41 $ 10.04
======= ======= ======= ======= =======
Total return 0.24% 22.85% 0.91% 4.32% 0.40%
Net assets end of period ($000) $15,068 $ 9,686 $ 5,459 $ 5,879 $ 3,577
Ratio of expenses to average net assets 3.37%* 2.82% 2.06% 2.03% 2.08%*
Ratio of net income to average net assets 1.60%* -0.68% 0.62% 0.65% 1.09%*
Portfolio turnover rate 158.96% 87.50% 379.64% 130.68% 0.00%
</TABLE>
(a) Six Months Ended March 31, 1996 (Unaudited)
*Annualized
<TABLE>
Information relating to outstanding debt during the fiscal period shown below.
<CAPTION>
Average Average Number
Amount of Debt Amount Of Debt of Shares Average Amount of
Outstanding at Outstanding Outstanding Debt per Share
Period ended End of Period During the Period During the Period During the Period
- ------------ ------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
March 31, 1996 $3,000,000 $1,915,246 1,032,802 $1.85
September 30, 1995 $4,000,000 $ 779,589 656,687 $1.19
</TABLE>
<PAGE>
MERRIMAN INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 -- ORGANIZATION
Merriman Flexible Bond Fund, Merriman Growth & Income Fund, Merriman Capital
Appreciation Fund, Merriman Asset Allocation Fund, and Merriman Leveraged Growth
Fund (the "Funds") are separate series of Merriman Investment Trust (the
"Trust") which is registered under the Investment Company Act of 1940, as
amended, as a diversified open-end management company. The Trust was organized
in 1987 as a Massachusetts Business Trust and may issue an unlimited number of
shares of beneficial interest without par value in separate classes of "funds."
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed in the preparation of the Trust's financial statements. The policies
are in conformity with generally accepted accounting principles.
A. Security Valuation. Investments in equity securities are valued at the last
reported sales price, unless there are no transactions in which case they are
valued at the last reported bid price. Investments in fixed-income securities
are stated on the basis of valuations provided by a pricing service which
uses information with respect to transactions in securities, quotations from
securities dealers, market transactions in comparable securities, and various
relationships between securities to determine value. Short-term debt
securities are valued at amortized cost, which approximates market value.
Investments in regulated investment companies (mutual funds) are valued at
the net asset value per share.
B. Federal Income Taxes. It is the Fund's policy to comply with the require-
ments of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Therefore, no federal income or excise tax provision is required.
C. Income Recognition. Dividend income and distributions to shareholders are
recorded on the ex-dividend date or when the transfer agent is notified in
the case of investment company holdings. Interest income is accrued daily.
D. Security Transactions. Security transactions are recorded on the trade
date. Realized gains and losses from security transactions are determined
using the identified cost basis.
E. Dividends and Distributions to Shareholders. Net investment income , if any,
is declared as a dividend to shareholders as of the last business day (ex-
dividend date) of March, June, September and December. Net gains realized
from security transactions, if any, are normally distributed to shareholders
at the end of December.
Net income and capital gains distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
post-October losses.
F. Deferred Organization Expenses. All expenses incurred in connection with the
organization and the registration of the Merriman Leveraged Growth Fund were
paid by the Manager and were reimbursed by the Fund. These expenses are being
amortized to operations on a straight line basis over five years.
NOTE 3 -- INVESTMENT MANAGEMENT AGREEMENT
Merriman Investment Management Company (the "Manager") receives investment
advisory fees from the Funds. As compensation for its services, the Manager is
paid a fee which is calculated at an annual rate based on the average daily net
assets of each Fund as follows:
Flexible Bond All Other
Fund Funds
---- -----
On the first $250 million 1.000% 1.250%
On the next $250 million .875% 1.125%
On all above $500 million .750% 1.000%
The Manager has agreed to limit each Fund's expenses. In the event that a Fund's
expenses exceed any such limitations, the Manager either waives its fees and/or
reimburses such fund to the extent required to conform to such limitations.
Currently, the maximum expense which each Fund may incur, expressed as a
percentage of average net assets, is 2.5% of the first $30 million, 2% of the
next $70 million, and 1.5% of all over $100 million.
The Manager has voluntarily reduced the expense limit to 2% of the first $15
million in net assets, 1.5% on the next $35 million, and 1% of net assets over
$50 million for the Merriman Capital Appreciation Fund, the Merriman Asset
Allocation Fund, and the Merriman Growth & Income Fund, to 2% of the first $15
million in net assets, 1.5% of the next $15 million in net assets, and 1% of net
assets over $30 million for the Merriman Leveraged Growth Fund (exclusive of
interest expense), and to 1.5% on the first $30 million in net assets and 1.0%
of net assets over $30 million for the Merriman Flexible Bond Fund.
There were no reimbursements made for the six months ending March 31, 1996.
Certain trustees and officers of the trust are also officers of the Manager.
NOTE 4 -- BANK LINE OF CREDIT
The Merriman Leveraged Growth Fund pays $12,000 per year to maintain an
unsecured $6,000,000 bank line of credit; borrowings under this arrangement bear
interest at the bank's prime rate. No compensating balances are required.
Balance outstanding at March 31, 1996 was $3,000,000.
<PAGE>
Merriman Investment Trust
Notes to Financial Statements
NOTE 5 -- CAPITAL SHARES
At March 31, 1996, there were an unlimited number of no par value shares of
beneficial interest authorized. Transactions in capital shares were as follows:
<TABLE>
MERRIMAN FLEXIBLE BOND FUND MERRIMAN GROWTH & INCOME FUND
--------------------------- -----------------------------
<CAPTION>
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30, March 31, SEPTEMBER 30,
1996 1995 1996 1995
---- ---- ---- ----
SHARES VALUE SHARES VALUE SHARES VALUE SHARES VALUE
------ ----- ------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold........... 94,427 $ 986,247 85,525 $ 858,774 23,533 $ 256,073 27,581 $ 292,106
Shares issued in
reinvestment of
distributions...... 15,601 161,997 45,669 457,165 70,400 751,154 94,189 948,647
------ ------- ------ ------- ------ ------- ------ -------
110,028 1,148,244 131,194 1,315,939 93,933 1,007,227 121,770 1,240,753
Shares redeemed....... (98,536)(1,027,146) (351,861) (3,517,193) (84,236) (932,568) (281,992) (3,018,073)
------- ---------- -------- ---------- ------- -------- -------- ----------
Net increase (decrease) 11,492 $ 121,098 (220,667) $(2,201,254) 9,697 $ 74,659 (160,222) $(1,777,320)
====== ========= ======== =========== ===== ======== ======== ===========
</TABLE>
<TABLE>
MERRIMAN CAPITAL APPRECIATION FUND MERRIMAN ASSET ALLOCATION FUND
---------------------------------- ------------------------------
<CAPTION>
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30, MARCH 31, SEPTEMBER 30,
1996 1995 1996 1995
---- ---- ---- ----
SHARES VALUE SHARES VALUE SHARES VALUE SHARES VALUE
------ ----- ------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold ...........106,064 $1,142,388 135,309 $1,440,890 86,968 $ 958,374 231,323 $ 2,500,130
Shares issued in
reinvestment of
distributions ......222,748 2,265,357 169,521 1,696,910 68,146 731,955 190,417 1,976,772
------- --------- ------- --------- ------ ------- ------- ---------
328,812 3,407,745 304,830 3,137,800 155,114 1,690,329 421,740 4,476,902
Shares redeemed ......(498,342) (5,330,966) (768,304) (8,154,957) (393,917) (4,334,677)(1,075,304)(11,652,525)
-------- ---------- -------- ---------- -------- ---------- ---------- -----------
Net decrease .........(169,530) $(1,923,221) (463,474) $ (5,017,157) (238,803)$(2,644,348) (653,564)$(7,175,623)
======== =========== ======== ============ ======== =========== ======== ===========
</TABLE>
MERRIMAN LEVERAGED GROWTH FUND
------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MARCH 31, SEPTEMBER 30,
1996 1995
SHARES VALUE SHARES VALUE
------ ----- ------ -----
<S> <C> <C> <C> <C>
Shares sold........... 515,490 $5,898,046 357,815 $ 3,840,009
Shares issued in
reinvestment of
distributions...... 65,476 728,016 22,023 223,529
------ ------- ------ -------
580,966 6,626,062 379,838 4,063,538
Shares redeemed....... (62,888) (723,553) (116,048) (1,240,693)
------- -------- -------- ----------
Net increase.......... 518,078 $5,902,509 263,790 $ 2,822,845
======= ========== ======= ===========
</TABLE>
NOTE 6 -- PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, other than short-term investments and money
market funds, for the six months ended March 31, 1996 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
--------- -----
<S> <C> <C>
Merriman Flexible Bond Fund..............$ 3,461,978 $ 5,995,214
Merriman Growth & Income Fund............. 4,430,621 6,275,982
Merriman Capital Appreciation Fund........24,787,751 30,086,671
Merriman Asset Allocation Fund............21,405,806 26,252,988
Merriman Leveraged Growth Fund............27,315,601 22,311,931
</TABLE>
