<PAGE> 1
[FINANCIAL HORIZONS LOGO]
INVESTMENT TRUST
GROWTH FUND
MUNICIPAL BOND FUND
GOVERNMENT BOND FUND
CASH RESERVE FUND
--------------------------
1997
SEMI-ANNUAL
REPORT
APRIL 30, 1997
FINANCIAL HORIZONS INVESTMENT TRUST
P.O. BOX 1492
THREE NATIONWIDE PLAZA
COLUMBUS, OH 43216-1492
APRIL 30, 1997
SEMI-ANNUAL REPORT
BULK RATE
U.S. POSTAGE
PAID
CLEVELAND, OHIO
PERMIT NO. 1702
FH-0012-M
<PAGE> 2
<TABLE>
<S> <C>
CONTENTS
2.......... Message to Shareholders
3-5........ Statement of Investments
Growth Fund
6-7........ Statement of Investments
Municipal Bond Fund
8-9........ Statement of Investments
Government Bond Fund
10-11...... Statement of Investments
Cash Reserve Fund
12......... Statements of Assets and Liabilities
13......... Statements of Operations
14-15...... Statements of Changes in
Net Assets
16-19...... Financial Highlights
20-22...... Notes to Financial Statements
</TABLE>
TOLL-FREE TELEPHONE ASSISTANCE
General account service and exchanges:
1-800-848-0920
TRUSTEES
Dimon R. McFerson -- Chairman
Columbus, Ohio
Dr. John C. Bryant
Wilmington, Ohio
Robert M. Duncan
Columbus, Ohio
Dr. Thomas J. Kerr, IV
Westerville, Ohio
OFFICERS
James F. Laird, Jr. -- Treasurer
Rae M. Pollina -- Secretary
Craig A. Alvey -- Assistant Treasurer
Charles S. Bath -- Assistant Treasurer
Craig A. Carver -- Assistant Treasurer
Edwin P. McCausland, Jr. -- Assistant Treasurer
Peter Neckermann -- Assistant Treasurer
Karen R. Tackett -- Assistant Treasurer
TRANSFER AGENT
Nationwide Investors Services, Inc.
Box 1492
Columbus, Ohio 43216-1492
CUSTODIAN
The Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263-0001
LEGAL COUNSEL
Druen, Dietrich, Reynolds & Koogler
One Nationwide Plaza
Columbus, Ohio 43215-2220
AUDITORS
KPMG Peat Marwick LLP
Two Nationwide Plaza
Columbus, Ohio 43215-2537
DISTRIBUTOR
Nationwide Advisory Services, Inc.
Three Nationwide Plaza
Columbus, Ohio 43215-2220
This report is for the information of shareholders of the Financial Horizons
Investment Trust's mutual funds. It may be used as sales literature only when
preceded or accompanied by a current prospectus which gives further details
about the Funds.
Financial Horizons and its logo are service marks of Nationwide(R) Life
Insurance Company.
1
<PAGE> 3
TO OUR SHAREHOLDERS
[PICTURE] Message to shareholders:
The early months of 1997 will be remembered as an exciting
one for investors and for our shareholders. The Dow Jones
Industrial Average (DJIA) set records early on, breaking
the 7000 barrier on March 12, 1997, then suffered a brief
market correction before rebounding to close at 7008.9 on
April 30, 1997, an increase of 16% from the October 31,
1996 close.
Economic growth jumped 5.6% in the first quarter on an annualized basis fueled
by a large inventory buildup, warm weather and the biggest surge in consumer
spending in nearly 10 years. At the same time, inflation was just 2.2%, down
from 2.6% during the fourth quarter of 1996. Few analysts are predicting that
this level of growth will continue throughout the year as Gross Domestic Product
(GDP) rates for the second quarter are expected to be in the 2-3% range.
The combination of low inflation, strong employment levels and consistent
consumer spending have continued the bull run on Wall Street. The American
economy is currently running at full capacity, and most consumers are optimistic
about their financial futures. This state of economic confidence has enabled the
political leadership in Washington to move forward with a balanced budget
proposal. Even without such a measure, it is estimated that the federal budget
deficit will drop to $75 billion this year, its lowest level in six years.
The financial markets have been buoyed by these events, and many analysts now
believe the economy can continue to reach new heights without triggering the
brakes of inflation.
This report features detailed information on each Financial Horizons Investment
Trust fund and comments from your funds' portfolio managers. The Financial
Horizons Growth Fund rose 1.9% for the six-months ended April 30, 1997, assuming
all dividends were reinvested. The investment objective of this Fund is to seek
long-term capital appreciation.
Financial Horizons Municipal Bond and Government Bond funds are appropriate for
investors seeking as high a level of income as is consistent with the
preservation of capital. The Municipal Bond Fund had a total return of 1.5% for
the six-months ended April 30, 1997, assuming all dividends were reinvested, and
the Government Bond Fund also rose 1.5% for the same period.
The total return on the Financial Horizons Cash Reserve Fund was 2.4% for the
six-months ended April 30, 1997, compared to the Consumer Price Index total
return of 1.1%.
To help you execute transactions on your Financial Horizons Investment Trust
funds, you may call our toll-free shareholder service number at 1-800-848-0920.
Your account representative will be happy to help you with new account
instructions, address changes, investment or redemption requests.
We appreciate your confidence, and thank you for choosing the funds of the
Financial Horizons Investment Trust.
Dimon R. McFerson, Chairman,
June 1997
2
<PAGE> 4
FINANCIAL HORIZONS INVESTMENT TRUST
GROWTH FUND
For the six month period ended April 30, 1997, the total return of the Growth
Fund was 1.9% compared to 14.7% for the S&P 500.
The market was volatile during the past six months. Stocks performed favorably
through January and then fell off their highs during March. Large capitalization
stocks again outperformed the smaller cap stocks. The Fund lagged the S&P 500
partially due to the fact that it has a smaller average market capitalization
than the index. The Fund's performance benefited from the outperformance of the
financial sector and its holdings in Merrill Lynch, Bear Stearns, Silicon Valley
Bancshares, and Morgan Stanley. Included in the Fund's financial holdings are
two credit card issuers, Capital One Financial and First USA. First USA accepted
a buyout offer from BANC ONE CORPORATION during January at a large premium to
its market value. Consequently, First USA was the Fund's top performing stock
and Capital One also outperformed the market. MCI Communications, another large
holding, also helped performance as the stock reacted favorably to a buyout
offer from British Telecom. Again, the Fund's large position in Intel has
benefited performance. Performance was hurt by large holdings in
Archer-Daniels-Midland and SPSS, Inc., a computer software company. Some of the
less liquid small cap holdings such as FileNet, TRO Learning and Northland
Cranberries had poor performance due to company specific issues and thus dragged
down the Fund's performance as well.
The Fund continues to invest in companies with good growth prospects at
reasonable valuations. During the period, the Fund initiated positions in
Alternative Resources Corporation and Schlumberger Ltd. A pullback in
Alternative Resources' stock price gave us the opportunity to invest in this
firm with long term fundamentals. As suggested in the last annual report, the
Fund intended to increase its weighting in the energy sector. We did this by
investing in Schlumberger on a pullback early in the period. This move has
already added to performance. Conversely, the Fund eliminated positions in Bob
Evans Farms, and United American Healthcare and Healthcare Services group due to
lack of clear growth opportunities for these companies. The Fund also took
advantage of the above average stock price appreciation in Intel, Merrill Lynch
and Silicon Valley Bancshares to trim back these positions.
The emphasis in selecting securities continues to be potential capital
appreciation rather than dividend income. Therefore, the Fund does not usually
generate meaningful distributable income other than through capital gains.
Although small-cap stocks are not a priority, the Fund will continue to take
advantage of the ability its size affords to hold these securities without
sacrificing liquidity.
Laura Klebe, MBA -- Portfolio Manager
3
<PAGE> 5
FINANCIAL HORIZONS INVESTMENT TRUST -- STATEMENT OF INVESTMENTS APRIL 30, 1997
(UNAUDITED)
GROWTH FUND
<TABLE>
<CAPTION>
------------------------------------------------------------
SHARES SECURITY VALUE
------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (94.6%)
AIRLINES (0.9%)
6,000 Skywest, Inc. $ 76,500
---------
BUSINESS SERVICES (5.5%)
10,000 Alternative Resource Corp.* 145,000
7,500 American Business Information* 142,500
6,600 Olsten Corp. 116,325
10,000 TRO Learning, Inc.* 83,750
---------
487,575
---------
CHEMICALS (1.4%)
4,000 Sigma-Aldrich Corp. 120,000
---------
COMPUTER EQUIPMENT (1.5%)
7,000 American Power Conversion Corp.* 134,750
---------
COMPUTERS-SERVICES & SOFTWARE (5.4%)
4,500 Filenet Corp.* 50,062
3,000 HBO & Company 160,500
10,000 SPSS, Inc.* 265,000
---------
475,562
---------
CONSUMER PRODUCTS (3.3%)
16,000 National Picture & Frame* 150,000
4,000 Newell Co. 140,000
---------
290,000
---------
CONTRACT MANUFACTURING (1.8%)
5,500 DII Group, Inc.* 163,625
---------
DENTAL (1.7%)
3,000 Dentsply International, Inc. 148,500
---------
DISTRIBUTION (1.8%)
4,725 Bergen Brunswig Corp., Class A 161,240
---------
DRUGS (4.8%)
4,000 Allergan, Inc. 107,000
4,000 Schering-Plough Corp. 320,000
---------
427,000
---------
ELECTRONICS (7.5%)
2,500 Intel Corp. 382,812
2,000 Motorola, Inc. 114,500
11,100 Woodhead Industries, Inc. 166,500
---------
663,812
---------
ENGINEERING AND CONSTRUCTION (1.2%)
2,000 Fluor Corp. 110,000
---------
<CAPTION>
------------------------------------------------------------
SHARES SECURITY VALUE
------------------------------------------------------------
<S> <C> <C>
FINANCIAL (14.7%)
3,827 Bear Stearns Companies, Inc. $ 116,723
4,500 Capital One Financial 162,563
3,200 First USA, Inc. 154,000
18,231 Gainsco, Inc. 159,521
3,500 Merrill Lynch & Co., Inc. 333,375
2,000 Morgan Stanley Group, Inc. 126,250
3,900 Silicon Valley Bancshares* 136,500
5,000 Standard Financial 114,375
---------
1,303,307
---------
FOOD & BEVERAGE (1.1%)
5,800 Grand Metropolitan PLC 48,467
1,500 Grand Metropolitan PLC ADR 51,375
---------
99,842
---------
FOOD-GRAIN & AGRICULTURE (3.6%)
14,056 Archer Daniels Midland Co. 258,279
5,500 Northland Cranberries, Class A 63,250
---------
321,529
---------
HEALTHCARE SERVICES (3.2%)
4,200 Apria Healthcare Group* 70,875
6,000 Columbia/HCA Healthcare Corp. 210,000
---------
280,875
---------
MACHINERY AND CAPITAL GOODS (4.3%)
3,000 Durco International, Inc. 74,625
2,000 Emerson Electric Co. 101,500
9,000 Zebra Technologies Corp.* 207,000
---------
383,125
---------
MEDICAL PRODUCTS (4.4%)
5,000 Biomet, Inc. 75,938
5,000 Boston Scientific* 241,250
10,000 Meridian Diagnositcs 71,250
---------
388,438
---------
OIL & GAS (5.1%)
1,300 Amoco Corp. 108,713
500 Royal Dutch Petroleum Co. 90,125
1,500 Schlumberger Ltd. 166,125
800 Texaco, Inc. 84,400
---------
449,363
---------
POLLUTION CONTROL (0.8%)
2,500 WMX Technologies, Inc. 73,438
---------
</TABLE>
4
<PAGE> 6
FINANCIAL HORIZONS INVESTMENT TRUST -- STATEMENT OF INVESTMENTS
(CONTINUED) APRIL 30, 1997
(UNAUDITED)
GROWTH FUND
<TABLE>
<CAPTION>
------------------------------------------------------------
SHARES SECURITY VALUE
------------------------------------------------------------
<S> <C> <C>
PRINTING & PUBLISHING (3.5%)
6,400 International Imaging Materials* $ 108,800
6,000 Merrill Corp. 139,500
2,800 Reader's Digest Assoc., Inc.,
Class B 61,600
-----------
309,900
-----------
RESTAURANTS (2.1%)
8,800 Wendy's International, Inc. 181,500
-----------
RETAIL (5.5%)
9,999 CUC International, Inc.* 211,229
3,000 Franklin Quest Co.* 63,375
5,000 Smart & Final, Inc. 96,875
6,000 Tractor Supply Company* 112,500
-----------
483,979
-----------
TELECOMMUNICATIONS (9.1%)
1,333 360 Communications Co.* 23,161
2,200 AT & T Corp. 73,700
2,712 Lucent Technologies, Inc. 160,347
9,800 MCI Communications Corp. 373,625
4,000 Sprint Corp. 175,500
-----------
806,333
-----------
TIRE & RUBBER (0.4%)
1,500 Cooper Tire & Rubber Co. 33,000
-----------
Total common stocks (cost
$5,856,894) 8,373,193
-----------
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------
PRINCIPAL SECURITY VALUE
------------------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT OBLIGATIONS (5.3%)
U.S. TREASURY BILLS
$ 475,000 4.99% through 5.37%, 7/10/97
through 10/02/97 (cost
$466,831) 466,822
-----------
Total investments (cost
$6,323,725) $ 8,840,015
===========
</TABLE>
- ---------------
The abbreviations in the above statement stand for the following:
PLC Public Limited Company
ADR American Depository Receipt
* Denotes a non-income producing security.
Cost also represents cost for Federal income tax purposes.
Portfolio holding percentages represent market value as a percent of net assets.
See accompanying notes to financial statements.
5
<PAGE> 7
FINANCIAL HORIZONS INVESTMENT TRUST
MUNICIPAL BOND FUND
In the face of volatile swings in interest rates, the municipal market produced
modest total returns over the past six months. Coupon return modestly exceeded
slight decreases in municipal prices over the period. For the six months, the
Bond Buyer 11 Index moved from a yield of 5.60% to 5.68%. Strong economic data
and a vigilant Federal Reserve, intent on keeping inflation in check, forced
rates higher at the end of the period. For the six-month period ended April 30,
1997, the Lehman Municipal Bond Index returned 2.0%, while the Fund returned
1.5%.
The Fund seeks to maximize income, while utilizing high quality issues averaging
"AA" credit quality. The Fund's average coupon approximates 5.80%, down
minimally from six months ago. Average maturity is 18.8 years, also down from
six months earlier. The Fund has shifted slightly toward discount bonds (those
bonds priced below $98 per $100 of par value) over the period, primarily as a
result of the rising interest rate environment. The weighting toward discounts
would benefit the fund if the market rallies. However, high income (high
coupons) and preservation of capital (high credit quality) is the chief focus of
management.
Indeed, the Fed appeared justified in raising the federal funds rate 25 basis
points at its March meeting. First Quarter Gross Domestic Product (GDP) growth
emerged at a staggering 5.6% and the nation's unemployment rate plunged to 4.9%.
Inflation, however, is still yet to emerge from the tightening labor and
consumer markets. A possible balanced-budget agreement excited the market in
late April, and the bond markets began a slight recovery. Currently the market
faces uncertainty over the Fed's next move. Overall, we continue to take a
long-term perspective and seek to increase income within the restraints of
maintaining high quality holdings whenever possible.
Alpha L. Benson, MBA -- Portfolio Manager
6
<PAGE> 8
FINANCIAL HORIZONS INVESTMENT TRUST -- STATEMENT OF INVESTMENTS APRIL 30, 1997
(UNAUDITED)
MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
------------------------------------------------------------
PRINCIPAL SECURITY VALUE
------------------------------------------------------------
<S> <C> <C>
LONG-TERM MUNICIPAL SECURITIES (99.1%)
ALABAMA (5.7%)
$1,000,000 Birmingham, Alabama General
Obligation Refunding Bonds,
Series 1992-B, 6.25%, 2016 $ 1,036,250
-----------
FLORIDA (5.2%)
1,000,000 Orlando, Florida Utilities
Commission Water and Electric
Subordinated Revenue Refunding
Bonds, Series 1993-A, 5.25%,
2014 948,750
ILLINOIS (16.2%)
1,000,000 Chicago Park District, Illinois
General Obligation Unlimited Tax
Park Bonds, Series 1996, 5.60%,
2021 958,750
1,000,000 Illinois Housing Development
Authority Homeowner Mortgage
Revenue Bonds, Series 1994-A-1,
6.45%, 2017 1,025,000
1,000,000 Illinois Regional Transportation
Authority, General Obligation
Refunding Bonds, Series 1996,
5.40%, 2015 952,500
-----------
2,936,250
-----------
NEVADA (5.4%)
1,000,000 Nevada State General Obligation,
Nevada Municipal Bond Bank
Project, Numbers 49 & 50, 5.50%,
2016 975,000
-----------
NEW JERSEY (6.0%)
1,000,000 New Jersey Turnpike Authority
Turnpike Revenue Bonds, Series
1991-C, 6.50%, 2016 1,076,250
-----------
NEW YORK (5.8%)
1,000,000 New York Local Government
Assistance Corporation, Series
1993-E, Refunding Bonds, 6.00%,
2014 1,041,250
-----------
NORTH CAROLINA (10.8%)
1,000,000 Charlotte-Mecklenburg Hospital
Authority, North Carolina Health
Care System Revenue Bonds,
Series 1992, 6.25%, 2020 1,022,500
1,000,000 North Carolina Medical Care
Commission Health Health Care
Revenue Bonds(Carolina Medicorp
Project), Series 1996, 5.125%,
2016 926,250
-----------
1,948,750
-----------
<CAPTION>
------------------------------------------------------------
PRINCIPAL SECURITY VALUE
------------------------------------------------------------
<S> <C> <C>
SOUTH CAROLINA (5.6%)
$1,000,000 South Carolina State Housing
Finance & Development Authority
Homeownership Mortgage Purchase
Bonds, Series 1994-A, 6.375%,
2016 $ 1,012,500
-----------
TENNESSEE (5.9%)
1,030,000 Nashville & Davidson County,
Tennessee General Obligation
Multi-Purpose Improvement Bonds,
Series 1994, 6.125%, 2014 1,063,475
-----------
TEXAS (15.8%)
1,000,000 Carrollton -- Farmers Branch
Independent School District,
Texas General Obligation School
Building Unlimited Tax Bonds,
Series 1995, 5.00%, 2016 915,000
1,000,000 Grand Prairie Independent School
District, Texas General
Obligation Unlimited Tax School
Building and Refunding Bonds,
Series 1996, 5.20%, 2017 931,250
1,000,000 Texas State Public Finance
Authority Building Revenue
Refunding, Series 1992-B, 5.75%,
2012 1,005,000
-----------
2,851,250
-----------
UTAH (5.6%)
1,000,000 Utah Housing Finance Agency,
Multi-family Housing Revenue
Refunding Bonds, (Cottonwood
Apartments Project), Issue 1995,
6.30%, 2015 1,011,250
-----------
VIRGINIA (5.9%)
900,000 Virginia Housing Development
Authority Commonwealth Mortgage
Bonds, Series 1992-C, Subseries
C-7, 6.30%, 2015 913,500
140,000 Virginia Housing Development
Authority Multi-Family Housing
Bonds, Series 1991-F, 7.10%,
2013 147,350
-----------
1,060,850
-----------
WASHINGTON (5.2%)
1,000,000 Seattle, Washington Limited Tax,
General Obligation Bonds, 1995,
5.125%, 2015 932,500
-----------
Total long-term municipal
securities (cost $17,983,458) $17,894,325
===========
</TABLE>
- ---------------
Cost also represents cost for Federal income tax purposes.
Portfolio holding percentages represent market value as a percentage of net
assets.
See accompanying notes to financial statements.
7
<PAGE> 9
FINANCIAL HORIZONS INVESTMENT TRUST
GOVERNMENT BOND FUND
The total return for the Financial Horizons Government Bond Fund for the
six-months ended April 30, 1997, was 1.5% compared to a total return of 1.4% for
its benchmark index, the Merrill Lynch Government Master Index.
The past six months has been a volatile period for the U.S. bond market. Early
in the period, rates fell as the economy grew slowly with little inflation.
Rates began to rise late in the year as investors became concerned that economic
growth and low unemployment would lead to inflationary pressures. The Federal
Reserve raised the federal funds rate by 25 basis points on March 25 and bond
yields reached their highs in April. The net change in interest rates was
approximately 50 basis points in intermediate rates and 35 basis points in long
rates. The Fund out-performed its benchmark due to the tightening of spreads in
the mortgage backed and agency sectors.
The Government Bond Fund continues to maintain exposure to the mortgage market
with approximately 35% in collateralized mortgage obligations (CMOs). These CMOs
are well-structured bonds which should continue to enhance the yield and the
return of the Fund. The Fund continues to hold positions in both callable and
non-callable agency notes. During the period, some callable agency notes were
sold to reduce fund volatility with the proceeds invested in U.S. Treasuries.
The remainder of the portfolio is invested in repurchase agreements for
liquidity.
Wayne T. Frisbee, CFA
Kimberly Bingle, CFA, FLMI
Gary Hunt, MBA
Portfolio Managers
8
<PAGE> 10
FINANCIAL HORIZONS INVESTMENT TRUST -- STATEMENT OF INVESTMENTS APRIL 30, 1997
(UNAUDITED)
GOVERNMENT BOND FUND
<TABLE>
<CAPTION>
------------------------------------------------------------
PRINCIPAL SECURITY VALUE
------------------------------------------------------------
<S> <C> <C>
MORTGAGE BACKED SECURITIES (36.3%)
$ 2,000,000 FHLMC (REMIC) Series 1313-G,
7.25%, 06/15/07 $ 2,010,880
3,000,000 FHLMC (REMIC) Series 1344-D,
6.00%, 08/15/07 2,746,770
1,289,219 FHLMC (REMIC) Series 31-E,
7.55%, 05/15/20 1,289,528
652,521 FHLMC (REMIC) Series 190-D,
9.20%, 10/15/21 677,285
4,000,000 FNMA (REMIC) Series 92-126,
8.00%, 07/25/02 4,086,700
250,814 FNMA (REMIC) Series 1991-68E,
8.35%, 10/25/03 250,998
385,051 FNMA (REMIC) Series 1989-86,
8.75%, 11/25/19 401,281
1,595,664 FNMA (REMIC) Series 90-7-B,
8.50%, 01/25/20 1,651,456
3,823,069 FNMA (REMIC) Series 1990-16D,
9.00%, 03/25/20 3,977,296
841,193 FNMA (REMIC) Series 1991-73A,
8.00%, 07/25/21 858,238
1,000,000 FNMA (REMIC) Series 93-203 PJ,
6.50%, 10/25/23 966,350
-----------
Total mortgage backed securities
(cost $18,743,627) 18,916,782
-----------
<CAPTION>
------------------------------------------------------------
PRINCIPAL SECURITY VALUE
------------------------------------------------------------
<S> <C> <C>
U. S. GOVERNMENT AND AGENCY LONG-TERM
OBLIGATIONS (56.2%)
$ 4,000,000 Federal Home Loan Banks,
6.36%, 03/21/01 $ 3,960,068
3,000,000 Federal Home Loan Mortgage
Corp., 7.445%, 04/14/04 3,000,696
1,000,000 Federal National Mortgage Assoc.,
7.26%, 10/05/05 989,140
15,000,000 Resolution Funding STRIPS,
0.00%, 04/15/06 8,144,235
10,000,000 Resolution Funding STRIPS,
0.00%, 07/15/13 3,139,890
6,000,000 U.S. Treasury Notes,
7.50%, 10/31/99 6,150,000
4,000,000 U.S. Treasury Notes,
5.625%, 11/30/00 3,887,500
-----------
Total U.S. government and agency
long-term obligations
(cost $29,151,127) 29,271,529
-----------
REPURCHASE AGREEMENT (8.0%)
4,153,000 Prudential Securities, 5.32%,
05/01/97, Collateralized by
$4,260,000 U.S. Treasury Notes,
6.375%, 09/30/01, market value
$4,241,639 (cost $4,153,000) 4,153,000
-----------
Total investments
(cost $52,047,754) $52,341,311
===========
</TABLE>
- ---------------
The abbreviations in the above statement stand for the following:
<TABLE>
<S> <C>
FHLMC Federal Home Loan Mortgage Corporation
FNMA Federal National Mortgage Association
REMIC Real Estate Mortgage Investment Conduit
</TABLE>
Cost also represents cost for Federal income tax purposes.
Portfolio holding percentages represent market value as a percentage of net
assets.
See accompanying notes to financial statements.
9
<PAGE> 11
FINANCIAL HORIZONS INVESTMENT TRUST
CASH RESERVE FUND
At April 30, 1997, the Financial Horizons Cash Reserve Fund had assets of $4.3
million. The average maturity was 39 days. Commercial paper accounted for
approximately 88% of the Fund followed by U.S. and Canadian Government
obligations at 9% and 3% , respectively.
Total return of the Fund was 2.4% for the six-month period, compared to the
Consumer Price Index total return of 1.1%. The 30 day effective yield was 4.95%.
March 1997 marked the beginning of the seventh year of expansion for the U.S.
economy. On March 25, 1997, the Federal Reserve raised short term interest
rates. This move, which is the first since January 1996, raised the target for
the Fed Funds rate to 5.50% from 5.25%. Future rate increases may be necessary
to contain inflationary pressures. Economic indicators suggest that the economy
continues to grow.
The Fund invests in only first tier money market instruments. An internal credit
review is completed on all issuers prior to investment.
Karen G. Mader, MA
Portfolio Manager
10
<PAGE> 12
FINANCIAL HORIZONS INVESTMENT TRUST -- STATEMENT OF INVESTMENTS APRIL 30, 1997
(UNAUDITED)
CASH RESERVE FUND
<TABLE>
<CAPTION>
------------------------------------------------------------
PRINCIPAL SECURITY VALUE
------------------------------------------------------------
<S> <C> <C>
CANADIAN GOVERNMENT OBLIGATIONS (3.4%)
$150,000 Canadian Wheat Board, 5.30-5.32%,
06/03/97 (cost $149,269) $ 149,269
----------
COMMERCIAL PAPER (87.2%)
AGRICULTURE/FINANCE (3.7%)
161,000 Deere, John Capital, 5.61%, 07/17/97 159,068
----------
AUTO/FINANCE (3.7%)
160,000 Ford Motor Credit, 5.26%, 05/06/97 159,883
----------
BANKS (6.8%)
145,000 Morgan (J.P.) & Co., 5.57-5.60%,
07/17/97 143,263
160,000 National City Credit, 5.56-5.62%,
07/07/97 158,344
----------
301,607
----------
BROKER/DEALERS (14.7%)
160,000 Bear Stearns Company, 5.28%,
05/15/97 159,672
160,000 Goldman Sachs Group, 5.47-5.59%,
05/28/97 159,344
160,000 Merrill Lynch & Co., 5.65%, 07/23/97 157,916
160,000 Smith Barney, Inc., 5.50%, 05/20/97 159,535
----------
636,467
----------
CHEMICALS (3.5%)
154,000 PPG Industries, Inc., 5.50-5.54%,
05/15/97 153,671
----------
CONSUMER PRODUCTS (3.7%)
160,000 Clorox Co., 5.52%, 05/07/97 159,853
----------
CONSUMER SALES FINANCE (12.6%)
160,000 Avco Financial Services, 5.51%,
05/30/97 159,290
125,000 Beneficial Corp., 5.48%, 05/20/97 124,639
150,000 Commercial Credit Co., 5.50%,
05/14/97 149,702
112,000 Norwest Financial, 5.53%, 05/19/97 111,690
----------
545,321
----------
CORPORATE CREDIT UNIONS (3.3%)
144,000 U.S. Central Credit, 5.30-5.57%,
05/09/97 143,822
----------
<CAPTION>
------------------------------------------------------------
PRINCIPAL SECURITY VALUE
------------------------------------------------------------
<S> <C> <C>
DIVERSIFIED FINANCE (4%)
$162,000 GE Capital Corp., 5.65%, 07/28/97 $ 159,763
----------
ENTERTAINMENT (3.2%)
141,000 Walt Disney Company, 5.43%, 05/23/97 140,532
----------
FINANCE SERVICE/UTILITY (3.5%)
154,000 National Rural Utilities
Cooperative, 5.53%, 06/06/97 153,148
----------
FOOD & BEVERAGE (2.3%)
100,000 Heinz (H.J.) Company, 5.52%,
06/20/97 99,233
----------
INSURANCE (7.3%)
150,000 Metlife Funding Inc., 5.54%,
06/06/97 149,169
170,000 Principal Mutual Life Co., 5.50%,
05/09/97 169,792
----------
318,961
----------
OFFICE EQUIPMENT AND SUPPLY (3.4%)
150,000 Pitney Bowes Credit Corp., 5.49%,
05/28/97 149,382
----------
OIL & GAS (3.5%)
154,000 Chevron Oil Finance, 5.42%, 05/23/97 153,490
----------
PACKING/CONTAINERS (2.6%)
112,000 Bemis Co. Inc., 5.53%, 05/16/97 111,742
----------
PHARM/PERSONAL CARE (3.0%)
130,000 Schering Corp., 5.53%, 07/01/97 128,782
----------
PREMIUM FINANCE (2.4%)
103,000 A.I. Credit Corp., 5.31-5.50%,
05/01/97 103,000
----------
Total commercial paper
(cost $3,777,725) 3,777,725
----------
U.S. GOVERNMENT OBLIGATIONS (8.8%)
60,000 U.S. Treasury Bill, 5.14%, 06/26/97 59,521
175,000 U.S. Treasury Bill, 5.05%, 07/24/97 172,938
150,000 U.S. Treasury Bill, 5.15%, 08/21/97 147,597
----------
Total U.S. government obligations
(cost $380,056) 380,056
----------
Total investments
(cost $4,307,050) $4,307,050
==========
</TABLE>
- ---------------
Cost also represents cost for Federal income tax purposes.
Portfolio holding percentages represent market value as a percentage of net
assets.
See accompanying notes to financial statements.
11
<PAGE> 13
FINANCIAL HORIZONS INVESTMENT TRUST APRIL 30, 1997
(UNAUDITED)
STATEMENTS OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
MUNICIPAL GOVERNMENT CASH
GROWTH BOND BOND RESERVE
FUND FUND FUND FUND
<S> <C> <C> <C> <C>
ASSETS
Investments in securities, at value $8,840,015 $17,894,325 $52,341,311 $4,307,050
(cost $6,323,725, $17,983,458, $52,047,754, and, $4,307,050,
respectively)
Cash -- -- -- 34,905
Receivable for Fund shares sold -- 181 -- --
Receivable for investment securities sold 34,861 -- 3,973,010 --
Accrued interest and dividends receivable 6,423 327,523 485,512 --
--------------------------------------------------------------
TOTAL ASSETS 8,881,299 18,222,029 56,799,833 4,341,955
LIABILITIES
Bank loan 7,080 9,576 13,631 --
Payable for Fund shares redeemed 15,410 94,620 384,172 7,042
Payable for investment securities sold -- -- 4,153,000 --
Accrued management fees 4,641 9,634 27,737 1,408
Accrued transfer agent fees 1,122 2,252 7,762 167
Dividends payable 5 30,646 128,468 1,196
Other accrued expenses 3,886 15,823 23,626 7
--------------------------------------------------------------
TOTAL LIABILITIES 32,144 162,551 4,738,396 9,820
--------------------------------------------------------------
NET ASSETS $8,849,155 $18,059,478 $52,061,437 $4,332,135
==============================================================
NET ASSETS REPRESENTED BY:
Capital Shares, $1 par value, outstanding $ 469,298 $1,692,268 $ 4,843,762 $4,332,264
Capital paid in excess of par value 5,518,151 17,320,535 48,153,241 (113)
Net unrealized appreciation (depreciation) 2,516,290 (89,133) 293,557 --
Accumulated undistributed net realized gain (loss) 339,129 (864,192) (1,234,356) (5)
Accumulated undistributed (distributions in excess of) net 6,287
investment income -- 5,233 (11)
--------------------------------------------------------------
NET ASSETS $8,849,155 $18,059,478 $52,061,437 $4,332,135
==============================================================
Shares outstanding (unlimited number of shares authorized) 469,298 1,692,268 4,843,762 4,332,264
==============================================================
NET ASSET VALUE AND OFFERING PRICE PER SHARE* $ 18.86 $ 10.67 $ 10.75 $ 1.00
==============================================================
</TABLE>
* For the Growth Fund, the Municipal Bond Fund, and the Government Bond Fund,
the redemption price per share varies by the length of time shares are held.
See accompanying notes to financial statements.
12
<PAGE> 14
FINANCIAL HORIZONS INVESTMENT TRUST FOR THE SIX MONTHS ENDED APRIL 30, 1997
(UNAUDITED)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
MUNICIPAL GOVERNMENT CASH
GROWTH BOND BOND RESERVE
FUND FUND FUND FUND
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
INCOME:
Dividends $ 41,508 -- -- --
Interest 15,633 $557,519 $1,851,519 $114,483
Other -- -- 68,964 --
-------------------------------------------------------
Total income 57,141 557,519 1,920,483 114,483
EXPENSES:
Distribution fees 34,740 70,987 205,612 --
Investment management fees 30,108 62,490 178,192 8,454
Transfer agent fees 5,901 7,010 25,848 566
Professional services 1,196 2,823 7,611 557
Registration fees 1,108 1,497 2,677 1,287
Shareholders' reports 2,232 2,007 9,119 212
Custodian fees 1,230 8,232 5,703 2,237
Trustee fees and expenses 721 1,757 4,714 341
Other 215 968 1,847 174
-------------------------------------------------------
Total expenses before waived expenses 77,451 157,771 441,323 13,828
Total waived expenses 33,728 68,747 205,612 --
-------------------------------------------------------
Net expenses 43,723 89,024 235,711 13,828
-------------------------------------------------------
NET INVESTMENT INCOME $ 13,418 $468,495 $1,684,772 $100,655
=======================================================
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments $336,779 $ 86,743 $ 67,314 $ 1
Net change in unrealized appreciation (depreciation) of investments (171,904) (247,826) (964,705) --
-------------------------------------------------------
Net realized and unrealized gain (loss) on investments 164,875 (161,083) (897,391) 1
-------------------------------------------------------
NET INCREASE IN ASSETS RESULTING FROM OPERATIONS $178,293 $307,412 $ 787,381 $100,656
=======================================================
</TABLE>
See accompanying notes to financial statements.
13
<PAGE> 15
FINANCIAL HORIZONS INVESTMENT TRUST
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
GROWTH FUND MUNICIPAL BOND FUND
SIX MONTHS YEAR ENDED SIX MONTHS YEAR ENDED
ENDED APRIL 30, OCTOBER 31, ENDED APRIL 30, OCTOBER 31,
1997 1996 1997 1996
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 13,418 $ 2,285 $ 468,495 $1,051,197
Net realized gain on investments 336,779 456,661 86,743 249,540
Net change in unrealized appreciation (depreciation) of
investments (171,904) 995,019 (247,826) (275,812)
--------------------------------------------------------------
Net increase in net assets resulting from operations 178,293 1,453,965 307,412 1,024,925
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (2,768) -- (468,495) (1,051,197)
In excess of net investment income -- -- -- (301)
Net realized gain from investment transactions (455,746) (819,732) -- --
--------------------------------------------------------------
Decrease in net assets from distributions to to
shareholders (458,514) (819,732) (468,495) (1,051,498)
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 264,571 896,371 115,400 83,672
Net asset value of shares issued to shareholders from
reinvestment of dividends 453,044 806,112 270,442 617,827
Cost of shares redeemed (683,543) (835,073) (2,665,131) (5,980,992)
--------------------------------------------------------------
Increase (decrease) in net assets derived from capital
share transactions 34,072 867,410 (2,279,289) (5,279,493)
--------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (246,149) 1,501,643 (2,440,372) (5,306,066)
NET ASSETS -- BEGINNING OF PERIOD 9,095,304 7,593,661 20,499,850 25,805,916
--------------------------------------------------------------
NET ASSETS -- END OF PERIOD $ 8,849,155 $9,095,304 $18,059,478 $20,499,850
==============================================================
Undistributed net realized gain (loss) on investments
included in net assets at end of period $ 339,129 $ 458,096 $ (864,192) $(950,935)
==============================================================
Undistributed (distributions in excess of) net investment
income included in net assets at end of period $ 6,287 $ (4,363) $ -- $ (301)
==============================================================
SHARE ACTIVITY:
Shares sold 13,630 48,331 10,687 7,850
Reinvestment of dividends 23,486 46,328 25,125 57,620
Shares redeemed (35,054) (45,321) (247,039) (559,944)
==============================================================
Net increase (decrease) in number of shares 2,062 49,338 (211,227) (494,474)
==============================================================
</TABLE>
See accompanying notes to financial statements.
14
<PAGE> 16
FINANCIAL HORIZONS INVESTMENT TRUST
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
GOVERNMENT BOND FUND CASH RESERVE FUND
SIX MONTHS YEAR ENDED SIX MONTHS YEAR ENDED
ENDED APRIL 30, OCTOBER 31, ENDED APRIL 30, OCTOBER 31,
1997 1996 1997 1996
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 1,684,772 $ 3,989,258 $ 100,655 $ 202,483
Net realized gain (loss) on investments 67,314 746,770 1 (3)
Net change in unrealized appreciation (depreciation) of
investments (964,705) (1,785,043) -- --
---------------------------------------------------------------
Net increase in net assets resulting from operations 787,381 2,950,985 100,656 202,480
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (1,680,583) (3,988,214) (100,655) (202,483)
In excess of net investment income -- -- (11) (8)
Paid in capital -- -- -- (105)
---------------------------------------------------------------
Decrease in net assets from distributions to shareholders (1,680,583) (3,988,214) (100,666) (202,596)
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 126,566 452,449 134,170 280,277
Net asset value of shares issued to shareholders from
reinvestment of dividends 847,622 2,053,433 93,337 186,091
Cost of shares redeemed (6,756,278) (11,921,797) (138,113) (373,733)
---------------------------------------------------------------
Increase (decrease) in net assets derived from capital
share transactions (5,782,090) (9,415,915) 89,394 92,635
---------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (6,675,292) (10,453,144) 89,384 92,519
NET ASSETS -- BEGINNING OF PERIOD 58,736,729 69,189,873 4,242,751 4,150,232
---------------------------------------------------------------
NET ASSETS -- END OF PERIOD $52,061,437 $58,736,729 $ 4,332,135 $4,242,751
===============================================================
Undistributed net realized loss on investments included in
net assets at end of period $(1,234,356) $(1,301,670) $ (5) $ (6)
===============================================================
Undistributed (distributions in excess of) net investment
income included in net assets at end of period 5,233 1,044 (11) (8)
===============================================================
SHARE ACTIVITY:
Shares sold 11,686 40,874 134,170 280,277
Reinvestment of dividends and distributions 78,192 188,895 93,337 186,091
Shares redeemed (622,816) (1,101,948) (138,113) (373,733)
===============================================================
Net increase (decrease) in number of shares (532,938) (872,179) 89,394 92,635
===============================================================
</TABLE>
See accompanying notes to financial statements.
15
<PAGE> 17
FINANCIAL HORIZONS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS GROWTH FUND
ENDED APRIL 30, YEARS ENDED OCTOBER 31,
1997 1996 1995 1994 1993 1992
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE -- BEGINNING OF PERIOD $ 19.47 $18.17 $15.11 $14.17 $12.46 $11.99
Net investment income (loss) 0.04 0.01 (0.01) 0.03 0.08 0.22
Net realized gain (loss) and unrealized appreciation
(depreciation) 0.35 3.28 3.23 0.95 1.73 0.43
----------------------------------------------------------------------
Total from investment operations 0.39 3.29 3.22 0.98 1.81 0.65
Dividends from net investment income (0.01) - - (0.04) (0.10) (0.18)
Distributions in excess of net investment income - - (0.01) - - -
Distributions from net realized gain from investment
transactions (0.99) (1.99) (0.15) - - -
----------------------------------------------------------------------
Total distributions (1.00) (1.99) (0.16) (0.04) (0.10) (0.18)
----------------------------------------------------------------------
Net increase (decrease) in net asset value (0.61) 1.30 3.06 0.94 1.71 0.47
----------------------------------------------------------------------
NET ASSET VALUE -- END OF PERIOD $ 18.86 $19.47 $18.17 $15.11 $14.17 $12.46
======================================================================
Total Return 1.86% 19.41% 21.57% 6.92% 14.59% 5.42%
Net Assets, End of Period (000) $ 8,849 $9,095 $7,594 $6,787 $5,165 $3,095
Ratio of expenses to average net assets 0.94%* 1.44% 1.47% 1.59% 1.44% 1.27%
Ratio of expenses to average net assets** 1.67%* 1.69% 1.72% 1.90% 2.03% 2.02%
Ratio of net investment income (loss) to average net
assets 0.29%* 0.03% (0.05%) 0.21% 0.63% 1.45%
Ratio of net investment income (loss) to average net
assets** (0.44%)* (0.22%) (0.30%) (0.82%) 0.05% 0.70%
Portfolio turnover 6.50% 17.19% 29.19% 14.14% 12.98% 12.14%
Average commission rate paid*** 6.0000(cents) 5.9080(cents) - - - -
</TABLE>
- ---------------
* Ratios are annualized for periods of less than one year. Total return is not
annualized.
** Ratios calculated as if no expenses were waived.
*** Represents the total amount of commissions paid in portfolio equity
transactions divided by the total number of shares purchased and sold by the
Fund for which commissions were charged.
See accompanying notes to financial statements.
16
<PAGE> 18
FINANCIAL HORIZONS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS MUNICIPAL BOND FUND
ENDED APRIL 30, YEARS ENDED OCTOBER 31,
1997 1996 1995 1994 1993 1992
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE -- BEGINNING OF PERIOD $ 10.77 $ 10.76 $ 9.86 $ 11.75 $ 10.64 $ 10.61
Net investment income 0.26 0.48 0.50 0.49 0.56 0.61
Net realized gain (loss) and unrealized appreciation
(depreciation) (0.10) 0.01 0.90 (1.62) 1.22 0.07
---------------------------------------------------------------------------
Total from investment operations 0.16 0.49 1.40 (1.13) 1.78 0.68
Dividends from net investment income (0.26) (0.48) (0.50) (0.49) (0.56) (0.61)
Distributions from net realized gain from investment
transactions - - - (0.27) (0.11) (0.04)
---------------------------------------------------------------------------
Total distributions (0.26) (0.48) (0.50) (0.76) (0.67) (0.65)
---------------------------------------------------------------------------
Net increase (decrease) in net asset value (0.10) 0.01 0.90 (1.89) 1.11 0.03
---------------------------------------------------------------------------
NET ASSET VALUE -- END OF PERIOD $ 10.67 $ 10.77 $ 10.76 $ 9.86 $ 11.75 $ 10.64
===========================================================================
Total Return 1.49% 4.72% 14.50% (10.11%) 17.18% 6.56%
Net Assets, End of Period (000) $18,059 $20,500 $25,806 $26,412 $25,828 $14,641
Ratio of expenses to average net assets 0.93%* 1.36% 1.35% 1.27% 1.01% 0.65%
Ratio of expenses to average net assets** 1.64%* 1.61% 1.60% 1.57% 1.61% 1.62%
Ratio of net investment income (loss) to average net
assets 4.88%* 4.53% 4.82% 4.58% 4.81% 5.65%
Ratio of net investment income (loss) to average net
assets** 4.17%* 4.28% 4.57% 4.28% 4.11% 4.68%
Portfolio turnover 9.98% 38.80% 60.79% 69.67% 46.95% 57.98%
</TABLE>
- ---------------
* Ratios are annualized for periods of less than one year. Total return is not
annualized.
** Ratios calculated as if no expenses were waived.
See accompanying notes to financial statements.
17
<PAGE> 19
FINANCIAL HORIZONS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS GOVERNMENT BOND FUND
ENDED APRIL 30, YEARS ENDED OCTOBER 31,
1997 1996 1995 1994 1993 1992
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE -- BEGINNING OF PERIOD $ 10.92 $ 11.07 $ 10.12 $ 11.31 $ 11.00 $ 10.81
Net investment income 0.33 0.68 0.68 0.58 0.63 0.89
Net realized gain (loss) and unrealized appreciation
(depreciation) (0.17) (0.15) 0.95 (1.10) 0.50 0.25
--------------------------------------------------------------------------
Total from investment operations 0.16 0.53 1.63 (0.52) 1.13 1.14
Dividends from net investment income (0.33) (0.68) (0.68) (0.58) (0.66) (0.89)
Distributions from net realized gain from investment
transactions - - - (0.09) (0.16) (0.06)
--------------------------------------------------------------------------
Total distributions (0.33) (0.68) (0.68) (0.67) (0.82) (0.95)
--------------------------------------------------------------------------
Net increase (decrease) in net asset value (0.17) (0.15) 0.95 (1.19) 0.31 0.19
--------------------------------------------------------------------------
NET ASSET VALUE -- END OF PERIOD $ 10.75 $ 10.92 $ 11.07 $ 10.12 $ 11.31 $ 11.00
==========================================================================
Total Return 1.48% 5.01% 16.68% (4.75%) 10.76% 10.93%
Net Assets, End of Period (000) $52,061 $58,737 $69,190 $70,218 $84,602 $64,249
Ratio of expenses to average net assets 0.86%* 0.84% 0.89% 1.28% 1.00% 0.65%
Ratio of expenses to average net assets** 1.61%* 1.59% 1.58% 1.58% 1.61% 1.66%
Ratio of net investment income to average net assets 6.15%* 6.26% 6.42% 5.42% 5.55% 8.18%
Ratio of net investment income to average net
assets** 5.40%* 5.51% 5.73% 5.12% 4.93% 7.17%
Portfolio turnover 19.93% 21.04% 140.55% 174.40% 143.63% 87.67%
</TABLE>
- ---------------
* Ratios are annualized for periods of less than one year. Total return is not
annualized.
** Ratios calculated as if no expenses were waived.
See accompanying notes to financial statements.
18
<PAGE> 20
FINANCIAL HORIZONS INVESTMENT TRUST
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS CASH RESERVE FUND
ENDED APRIL 30, YEARS ENDED OCTOBER 31,
1997 1996 1995 1994 1993 1992
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE -- BEGINNING OF PERIOD $ 1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Net investment income 0.02 0.05 0.05 0.03 0.02 0.03
Dividends from net investment income (0.02) (0.05) (0.05) (0.03) (0.02) (0.03)
--------------------------------------------------------------------------
Net increase (decrease) in net asset value - - - - - -
--------------------------------------------------------------------------
NET ASSET VALUE -- END OF PERIOD $ 1.00 $1.00 $1.00 $1.00 $1.00 $1.00
==========================================================================
Total Return 2.39% 4.97% 5.41% 3.08% 2.05% 3.07%
Net Assets, End of Period (000) $ 4,332 $4,243 $4,150 $3,950 $2,788 $2,538
Ratio of expenses to average net assets 0.65%* 0.65% 0.65% 0.84% 1.17% 1.06%
Ratio of expenses to average net assets** 0.65%* 0.65% 0.65% 1.06% 2.20% 1.82%
Ratio of net investment income to average net assets 4.76%* 4.86% 5.29% 3.14% 2.04% 3.02%
Ratio of net investment income to average net
assets** 4.76%* 4.86% 5.29% 2.92% 0.79% 2.28%
</TABLE>
- ---------------
* Ratios are annualized for periods of less than one year. Total return is not
annualized.
** Ratios calculated as if no expenses were waived.
See accompanying notes to financial statements.
19
<PAGE> 21
FINANCIAL HORIZONS INVESTMENT TRUST APRIL 30, 1997
(UNAUDITED)
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Financial Horizons Investment Trust (Trust), is a diversified, open-end
investment management company organized under the laws of Massachusetts by a
Declaration of Trust dated May 9, 1988. The Trust offers shares in four separate
mutual funds and is registered under the Investment Company Act of 1940.
(a) Security Valuation
----------------------
(1) Growth Fund, Municipal Bond Fund and Government Bond Fund:
Securities traded on a national securities exchange are valued at
the last sale price on the principal exchange, or if the securities
are traded only in the over-the-counter market, they are valued at
the last quoted sale price, or if there is no sale, at the quoted
bid price. Securities for which market quotations are not readily
available are valued at fair value in accordance with procedures
authorized by the Board of Trustees.
(2) Cash Reserve Fund: Securities are valued at amortized cost, which
approximates market value, in accordance with Rule 2a-7 of the
Investment Company Act of 1940, as amended.
The value of a repurchase agreement generally equals the purchase price
paid by the Fund (cost) plus the interest accrued to date. The seller,
under the repurchase agreement, is required to maintain the market value
of the underlying collateral at not less than the value of the repurchase
agreement. Securities subject to repurchase agreements are held by the
Federal Reserve/Treasury book-entry system or by the Fund's custodian or
an approved sub-custodian.
(b) Security Transactions and Investment Income
-----------------------------------------------
Security transactions are recorded on the trade date. Dividend income is
recorded on the ex-dividend date; interest income, including the pro rata
amortization of premium and discount where applicable, is recorded on an
accrual basis.
(c) Federal Income Taxes
------------------------
The Trust's policy is to comply with the requirements of the Internal
Revenue Code that are applicable to regulated investment companies and to
distribute all its taxable income to shareholders. To the extent net
realized gains are offset through the application of a capital loss
carryover, they will not be distributed to shareholders but will be
retained by the Trust.
As of October 31, 1996, the Municipal and Government Bond Funds had net
capital loss carry forwards of $950,935, and $1,301,670, respectively,
available to offset future capital gains, which will expire in 6 to 7
years.
(d) Dividends to Shareholders
-----------------------------
(1) Growth Fund:
Dividends are paid semi-annually and are recorded on the ex-dividend
date.
(2) Municipal Bond Fund, Government Bond Fund, and Cash Reserve Fund:
Dividends are declared daily and paid monthly from net investment
income.
Distributable net realized capital gains are declared and distributed at
least annually for all funds.
20
<PAGE> 22
FINANCIAL HORIZONS INVESTMENT TRUST APRIL 30, 1997
(UNAUDITED)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Dividends and distributions to shareholders are determined in accordance
with federal income tax regulations which may differ from generally
accepted accounting principles. These "book/tax" differences are
considered either permanent or temporary in nature. In accordance with
AICPA Statement of Position 93-2, permanent differences are reclassified
within the capital accounts based on their nature for federal income tax
purposes; temporary differences do not require reclassification.
Dividends and distributions that exceed net investment income and net
realized gains for financial reporting purposes but not for tax purposes
are reported as dividends in excess of net investment income and net
realized gains. To the extent distributions exceed current and
accumulated earnings and profits, they are reported as distributions of
paid-in-capital. These reclassifications have no effect upon the net
asset value of the respective funds.
Accordingly, as of April 30, 1997, undistributed net investment income
and capital paid in excess of par value have been adjusted by the
following amounts:
<TABLE>
<CAPTION>
CAPITAL
PAID IN
UNDISTRIBUTED NET EXCESS OF
INVESTMENT INCOME PAR VALUE
<S> <C> <C>
Municipal Bond Fund $(301) $ 301
Cash Reserve Fund (8) 8
</TABLE>
(e) Expenses
------------
Direct expenses of a fund are allocated to that fund. General expenses of
the Trust are allocated to the funds based upon each fund's relative
average net assets.
(f) Use of Estimates
--------------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the period. Actual results could differ from those estimates.
2. TRANSACTIONS WITH AFFILIATES
As investment manager for the funds, Nationwide Advisory Services, Inc. (NAS),
(formerly Nationwide Financial Services, Inc.), an affiliated company, earns an
annual fee of .65% based on the average daily net assets of the Growth Fund,
Municipal Bond Fund and Government Bond Fund and .40% of the average daily net
assets of the Cash Reserve Fund.
NAS also receives fees for distribution pursuant to a Rule 12b-1 Distribution
Plan approved by the Board of Trustees. These fees are based on average daily
net assets of the Growth Fund, the Municipal Bond Fund, and the Government Bond
Fund at an annual rate of .75%. During the six months ended April 30, 1997, NAS
waived distribution fees for the Growth, Municipal Bond, and Government Bond
Funds totaling $33,728, $68,747, and $205,612, respectively, or $.144, $.077 and
$.081 per average share outstanding.
21
<PAGE> 23
FINANCIAL HORIZONS INVESTMENT TRUST APRIL 30, 1997
(UNAUDITED)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NAS also receives fees as principal underwriter from contingent deferred sales
charges (CDSC) ranging from 5% to 1%, imposed on redemptions which cause the
current value of an account to fall below the total purchase payments made
during the past six years. During the six months ended April 30, 1997, NAS
received fees of $6,524, $32,405, $7,827, and $1,509 on the Growth, Municipal
Bond, Government Bond, and Cash Reserve Funds, respectively. Additionally, the
Government Bond Fund retained fees (CDSC) of $68,964 pursuant to NASD guidelines
which limit sales charges payable to underwriters. These fees are reported as
"other income."
A subsidiary of NAS (Nationwide Investors Services, Inc.) acts as transfer and
dividend disbursing agent for the funds.
3. BANK LOANS
The Trust has an unsecured bank line of credit of $6,000,000. Borrowings under
this arrangement bear interest at the federal funds rate plus .50%. These
interest costs are included in custodian fees in the Statements of Operations.
No compensating balances are required.
4. INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding U.S. Government and
short-term securities) and purchases and sales of U.S. Government Obligations
for the six months ended April 30, 1997 are summarized as follows:
<TABLE>
<CAPTION>
SECURITIES U.S. GOV'T. OBLIGATIONS
PURCHASES SALES PURCHASES SALES
<S> <C> <C> <C> <C>
Growth Fund $ 563,080 $ 710,519 $ 654,295 $ 863,762
Municipal Bond Fund 1,906,490 3,996,505 -- --
Government Bond Fund -- -- 9,996,719 11,354,924
Cash Reserve Fund -- -- 540,918 326,000
</TABLE>
Realized gains and losses have been computed on the first-in, first-out basis.
Included in net unrealized appreciation (depreciation) at April 30, 1997, are
the following components:
<TABLE>
<CAPTION>
NET
GROSS GROSS UNREALIZED
UNREALIZED UNREALIZED APPRECIATION
GAINS LOSSES (DEPRECIATION)
<S> <C> <C> <C>
Growth Fund $2,834,761 $(318,471) $2,516,290
Municipal Bond Fund 179,832 (268,965) (89,133)
Government Bond Fund 526,910 (233,353) 293,557
</TABLE>
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