FINANCIAL
HORIZONS
INVESTMENT TRUST
GROWTH FUND
MUNICIPAL BOND FUND
GOVERNMENT BOND FUND
CASH RESERVE FUND
1998
SEMI-ANNUAL
REPORT
April 30, 1998
<PAGE>
CONTENTS
2 Message to Shareholders
3-4 Growth Fund
5-6 Municipal Bond Fund
7-8 Government Bond Fund
9-10 Cash Reserve Fund
11 Statements of Assets and Liabilities
12 Statements of Operations
13-14 Statements of Changes in
Net Assets
15-18 Financial Highlights
19-22 Notes to Financial Statements
TOLL-FREE TELEPHONE ASSISTANCE
General account service and exchanges:
1-800-848-0920
TRUSTEES
Dimon R. McFerson - Chairman
Columbus, Ohio
Dr. John C. Bryant
Cincinnati, Ohio
Robert M. Duncan
Columbus, Ohio
Dr. Thomas J. Kerr, IV
Westerville, Ohio
OFFICERS
James F. Laird, Jr. - Treasurer
David E. Simaitis - Secretary
Elizabeth A. Davin - Assistant Secretary
Patricia J. Smith - Assistant Secretary
Charles S. Bath - Assistant Treasurer
Craig A. Carver - Assistant Treasurer
Christopher A. Cray - Assistant Treasurer
Scott A. Englehart - 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
INDEPENDENT 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 registered federal service marks of
Nationwide(R) Life Insurance Company.
<PAGE>
APRIL 30, 1998
MESSAGE TO SHAREHOLDERS
Photo of: DIMON R. MCFERSON
CHAIRMAN
Our shareholders have much reason to be optimistic.
The U.S. economy has continued to exhibit healthy growth with declining
inflation. While the Federal Reserve Board had expressed some concern over
possible rising inflationary pressures, such elevations have yet to materialize
and interest rates have remained unchanged.
A strong economy and good employment growth have buoyed consumer confidence -
more and more Americans are achieving the goals they've set for themselves and
their families.
The stock market has been generous to investors, increasing by more than 20
percent for three years in a row. Volatility in the Asian markets may create
some shock waves that could affect markets here in the United States and
throughout the world. But the fundamental strength of the American economy
should continue to draw investors to our markets. These observations reinforce
our belief in the importance of maintaining a long-term investment strategy.
As you know, on May 11, 1998, the Financial Horizons Trust was dissolved. Two of
the funds from the Trust, the Financial Horizons Growth Fund (now the Mid Cap
Growth Fund), and the Financial Horizons Government Bond Fund (now the
Intermediate U.S. Government Bond Fund) became part of the Nationwide Family of
Funds offering.
Shareholders of the Financial Horizons Municipal Bond Fund were merged into the
Nationwide Tax-Free Fund, and shareholders in the Financial Horizons Cash
Reserve Fund were merged into the Nationwide Money Market Fund.
In addition to the expansion of the Nationwide funds, PortfolioSelectSM by
Nationwide was introduced. PortfolioSelect is a new retail portfolio of funds
from leading money management companies -- Fidelity, Dreyfus, Oppenheimer and
Nationwide. It allows Nationwide shareholders to centralize their investments
without sacrificing portfolio diversification, giving them more choice.
Nationwide Advisory Services has also introduced a new share-class structure.
Effective May 11, 1998, our current shareholders were automatically converted to
the new D class. Shares in the PortfolioSelect product are also available in A
or B classes. This new class structure allows us to offer our investors more
purchasing options.
FUND PERFORMANCE
For the six-month period ended April 30, 1998, the Financial Horizons Growth
Fund gained 18.68% and the Financial Horizons Government Bond Fund increased
3.44%. For the same period, the Financial Horizons Municipal Bond Fund returned
2.84%. Returns for these funds do not reflect sales charges. The Financial
Horizons Cash Reserve Fund, which has no sales charges, posted a total return of
2.49%.
On pages 3 through 9 of this report, you can read the comments of your funds'
portfolio managers that describe in detail important factors that explain each
fund's performance and unique characteristics.
Thank you for giving Nationwide Advisory Services, Inc. the opportunity to help
meet your investment needs.
For more information about the Nationwide funds or PortfolioSelect, please call
1-800-848-0920.
Dimon R. McFerson, Chairman,
April 1998
<PAGE>
FINANCIAL HORIZONS INVESTMENT TRUST
GROWTH FUND
For the six-month period ended April 30, 1998, the Financial Horizons Growth
Fund had a total return of 18.68% (without sales charge), compared with 22.47%
for the S&P 500 over the same period.
The six-month period was marked by two distinct directions in performance by the
Fund. The last two months of 1997 saw technology-related stocks significantly
underperform the market, due mainly to turmoil in Asia. Small- and mid-cap
stocks also underperformed large-cap stocks, due in part to the same sorts of
concerns arising from developments in Asia.
As part of the strategy to move this Fund toward growth, the technology
component has been increasing, and this, along with the Fund's traditional
interest in taking advantage of its size to invest in small-cap and mid-cap
names, hurt results during this period. However, the Fund continued to invest
according to these strategies, and beginning late in January 1998, both of these
sectors staged strong recoveries, and the Fund's performance this year-to-date
has been much more favorable. The strongest performance has come from Capital
One Financial, Boston Scientific, 360(0) Communications, Advent Software, and
BMC Software. A dramatic loss was incurred in Cendant Corp., which announced
the discovery of accounting irregularities on April 16, requiring a restatement
of earnings. So far, this seems to be the extent of the problem. By itself, this
caused a drop of over 1% in the price of the Fund.
On May 11, 1998, the Fund became known as the Na tion wide Mid Cap Growth Fund.
Its focus will now be primarily on investing in mid-cap stocks with a growth
orientation. As I have noted previously, the Fund has traditionally been
oriented toward these types of stocks, based on its size, so this will not be a
major change, except that it will now be policy rather than preference.
Similarly, the shift toward growth had already commenced, coinciding with my
resumption of management of this Fund last summer.
JOHN M. SCHAFFNER - PORTFOLIO MANAGER
<PAGE>
<TABLE>
FINANCIAL HORIZONS INVESTMENT TRUST GROWTH FUND - STATEMENT OF INVESTMENTS -
APRIL 30, 1998 (UNAUDITED)
<CAPTION>
SHARES SECURITY VALUE
<S> <C> <C>
COMMON STOCKS ( 97.5%)
BUSINESS SERVICES ( 14.9%)
15,000 ABR Information Services* $ 434,063
10,000 Alternative Resources Corp.* 198,750
7,500 American Business Information, Inc.,
Class A* 101,250
7,500 American Business Information, Inc.,
Class B* 106,875
8,700 Covance, Inc.* 186,506
5,000 Envoy Corp.* 210,625
5,500 Manpower, Inc. 242,344
2,000 Sterling Commerce, Inc.* 85,125
-----------
1,565,538
-----------
CHEMICALS (3.2%)
5,200 Millipore Corp. 179,400
4,000 Sigma-Aldrich Corp. 159,500
-----------
338,900
-----------
COMPUTER EQUIPMENT (1.2%)
4,000 American Power Conversion Corp.* 128,750
-----------
COMPUTER SERVICES AND SOFTWARE (23.7%)
5,000 Advent Software, Inc* 213,125
4,000 BMC Software, Inc.* 374,250
10,000 First Data Corp. 338,750
15,500 Gartner Group, Inc.* 513,438
6,000 HBO & Company 358,875
5,000 Radiant Systems* 112,500
10,000 SPSS, Inc.* 250,000
6,000 Sungard Data System, Inc.* 213,750
10,000 Template Software, Inc.* 116,250
-----------
2,490,938
-----------
CONSUMER PRODUCTS (1.8%)
4,000 Newell Co. 193,250
-----------
DENTAL (1.9%)
6,000 Dentsply International, Inc. 197,250
-----------
DISTRIBUTION (2.5%)
5,906 Bergen Brunswig Corp., Class A 267,985
-----------
DRUGS (10.2%)
4,000 Allergan, Inc. 166,250
200 Allergan Specialty Therapeutics, Inc.,
Class A* 2,075
3,800 Eli Lilly & Co. 264,338
8,000 Schering-Plough Corp. 641,000
-----------
1,073,663
-----------
ELECTRONICS (1.6%)
6,000 Microchip Technology* 170,250
-----------
FINANCIAL (10.1%)
4,103 Banc One Corp. 241,308
4,500 Capital One Financial Corp. 432,281
3,000 Silicon Valley Bancshares* 195,750
6,000 TCF Financial Corp. 195,375
-----------
1,064,714
-----------
<PAGE>
<CAPTION>
SHARES SECURITY VALUE
<S> <C> <C>
COMMON STOCKS (CONTINUED)
MACHINERY & CAPITAL GOODS (4.4%)
15,000 Sun Hydraulics $ 221,250
7,000 Zebra Technologies Corp.* 271,250
-----------
492,500
-----------
MEDICAL PRODUCTS AND SUPPLIES (4.9%)
5,000 Biomet, Inc. 150,000
5,000 Boston Scientific, Inc.* 361,563
-----------
511,563
-----------
OIL & GAS (3.5%)
5,000 Anadarko Petroleum Corp. 366,250
-----------
PRINTING & PUBLISHING (1.4%)
9,600 PAXAR Corp.* 142,200
-----------
RETAIL (2.4%)
9,999 Cendant Corp.* 249,975
-----------
TELECOMMUNICATIONS (12.2%)
9,333 360(0) Communications Co.* 285,240
9,100 Cincinnati Bell, Inc. 348,072
9,000 WorldCom, Inc.* 385,031
-----------
1,018,343
-----------
TOTAL COMMON STOCKS (cost $6,534,314) 10,272,069
-----------
TOTAL INVESTMENTS (cost $6,534,314) $10,272,069
===========
- -----------------
* Denotes a non-income producing security. 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.
</TABLE>
<PAGE>
FINANCIAL HORIZONS INVESTMENT TRUST
MUNICIPAL BOND FUND
For the six-month period ended April 30, 1998, the Bond Buyer 11 Index moved
from a yield of 5.28% to 5.25%, a 0.03% decline. Municipals under performed
Treasuries during the period. The 30-year Treasury yield declined 0.19%. The
Financial Horizons Municipal Bond Fund returned 2.84% for the six-month
period ended April 30, 1998 (without sales charge), while the Lehman Brothers
Municipal Bond Index, the Fund's benchmark, re turned 2.77%.
The Fund is not currently being marketed to new investors. Net assets ended the
period at $16 million. The Fund seeks to maximize income by having a long
maturity schedule while employing high-quality issues. The average credit rating
is "AA."
The returns for the municipal market and the Fund were not spectacular.
Historically, low interest rates and hefty new issuance of Municipal bonds
during the period kept returns low. The U.S. economy remained exceptionally
healthy with low inflation, therefore the Federal Reserve saw no need to raise
interest rates. The Asian financial crisis, which produced the flight to quality
from the equity securities into treasury securities in the fourth quarter of
1997 continued to plague the equity market. As a result, the bond markets held
their value. Issuers taking advantage of the low rates increased issuance by 60%
for the first four months of the calendar when compared to the same period for
1997.
Supply outpaced demand during the latter part of the period. Municipal bonds
cheapened in relation to Treasuries and were considered to be attractive.
However, at current levels, an investor isn't being compensated enough to
extend maturity or reduce quality.
ALPHA L. BENSON, MBA - PORTFOLIO MANAGER
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HORIZONS INVESTMENT TRUST MUNICIPAL BOND FUND -
STATEMENT OF INVESTMENTS - APRIL 30, 1998 (UNAUDITED)
PRINCIPAL SECURITY VALUE
<S> <C> <C>
LONG-TERM MUNICIPAL SECURITIES (98.9%)
ALABAMA (6.7%)
$1,000,000 Birmingham, Alabama General
Obligation Refunding Bonds,
Series 1992-B, 6.25%, 04/01/16 $1,068,750
----------
FLORIDA (6.3%)
1,000,000 Orlando, Florida Utilities Commission
Water and Electric Subordinated
Revenue Refunding Bonds,
Series 1993-A, 5.25%, 10/01/14 1,001,250
----------
ILLINOIS (19.4%)
1,000,000 Chicago, Illinois Park District General
Obligation Unlimited Bonds,
5.60%, 01/01/21 1,022,500
1,000,000 Illinois Housing Development Authority
Homeowner Mortgage Revenue
Bonds, Series 1994-A-1,
6.45%, 08/01/17 1,068,750
1,000,000 Illinois Regional Transportation Authority,
General Obligation Refunding Bonds,
Series 1996, 5.40%, 06/01/15 1,011,250
----------
3,102,500
----------
NEVADA (6.4%)
1,000,000 Nevada State General Obligation Limited Tax Bonds
Municipal Bond Bank Project,
Nos. 49 & 50, Series 1995-A,
5.50%, 11/01/16 1,022,500
----------
NEW JERSEY (7.0%)
1,000,000 New Jersey Turnpike Authority, Turnpike
Revenue Bonds, Series 1991-C,
6.50%, 01/01/16 1,126,250
----------
NEW YORK (6.8%)
1,000,000 New York Local Government Assistance
Corporation, Refunding Bonds,
Series 1993-E, 6.00%, 04/01/14 1,080,000
----------
NORTH CAROLINA (2.8%)
425,000 Charlotte-Mecklenburg Hospital Authority,
North Carolina Health Care System
Revenue Bonds, Series 1992,
6.25%, 01/01/20 452,094
----------
SOUTH CAROLINA (6.6%)
1,000,000 South Carolina State Housing Finance &
Development Authority Homeownership
Mortgage Purchase Bonds,
Series 1994-A,
6.375%, 07/01/16 1,053,750
----------
TEXAS (18.7%)
1,000,000 Carrollton - Farmers Branch Independent
School District, Texas General Obligation
School Building Unlimited Tax Bonds,
Series 1995, 5.00%, 02/15/16 973,750
1,000,000 Grand Prairie Independent School District,
Texas General Obligation Unlimited Tax
School Building and Refunding Bonds,
Series 1996, 5.20%, 02/15/17 992,500
1,000,000 Texas State Public Finance Authority
Building Revenue Refunding,
Series 1992-B, 5.75%, 02/01/12 1,028,750
----------
2,995,000
----------
<PAGE>
<CAPTION>
PRINCIPAL SECURITY VALUE
<S> <C> <C>
LONG-TERM MUNICIPAL SECURITIES (CONTINUED)
UTAH (6.5%)
$1,000,000 Utah Housing Finance Agency,
Multi-Family Housing Revenue
Refunding Bonds, (Cottonwoods
Apartment Project), Issue 1995,
6.30%, 07/01/15 $ 1,038,750
----------
VIRGINIA (5.9%)
900,000 Virginia Housing Development Authority
Commonwealth Mortgage Bonds, Series
1992-C, Subseries C-7,
6.30%, 01/01/15 941,625
----------
WASHINGTON (6.3%)
1,000,000 Seattle, Washington Limited Tax, General
Obligation Bonds, Series 1995,
5.125%, 07/01/15 1,001,250
----------
TOTAL LONG-TERM MUNICIPAL SECURITIES
(cost $15,288,455) $15,883,719
===========
- -------------------
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.
Distribution of investments by industry, as a percentage of total investment in
securities at value, is as follows:
<CAPTION>
INDUSTRY MARKET VALUE PERCENT
<S> <C> <C>
County/City/School Districts $ 1,966,250 12.4%
Hospitals 452,094 2.9%
Housing 4,102,875 25.8%
Miscellaneous 3,131,250 19.7%
Political Subdivisions - City/County 3,081,250 19.4%
State Territories and Possessions 1,022,500 6.4%
Transportation 1,126,250 7.1%
Water, Sewer, and Combined Utilities 1,001,250 6.3%
----------- ------
$15,883,719 100.0%
=========== ======
</TABLE>
<PAGE>
FINANCIAL HORIZONS INVESTMENT TRUST
GOVERNMENT BOND FUND
The Financial Horizons Investment Trust Government Bond Fund's total return for
the six-month period ended April 30, 1998, was 3.44% (without sales charge) as
sum ing all dis tri bu tions were reinvested. The total return for the 12-month
period also ended April 30, 1998, was 10.93% (without sales charge).
The total return for the Merrill Lynch Government Master Index, the Fund's
benchmark, for the six-month and 12-month periods ended April 30, 1998, was
3.59% and 11.03%, respectively.
The economy continued to perform exceptionally well in this six-month period
with scant evidence of inflation. This conundrum has left Federal Reserve mem
bers on hold as they continue to wait for signs of a slowing economy or pick up
in inflation before acting. The result of this is a range-bound Treasury market.
Intermediate Treasury yields fell slightly during this period finishing in a
range of 5.56%-5.67%, while the 30-year Treasury yield declined to 5.95% from
6.15%.
The Government Bond Fund performed well during this period by keeping assets
invested in spread product, which performed well given the range-bound Treasury
market. Also, the returns attributable to Fund holdings of long zero-coupon
securities was favorable.
Activity during the period was limited to several Treasury trades as the Fund's
holdings looked to be appropriate for the environment.
Fund holdings consist of 63% in Treasuries and Agencies, 36% in Collateralized
Mortgage Obligations (CMOs), and 1% in Repurchase Agreements. The CMO hold ings
are well-struc tured bonds which should continue to enhance the yield and the
return of the Fund.
PORTFOLIO MANAGERS:
WAYNE T. FRISBEE, CFA
GARY R. HUNT, MBA
<PAGE>
<TABLE>
FINANCIAL HORIZONS INVESTMENT TRUST GOVERNMENT BOND FUND
- STATEMENT OF INVESTMENTS - APRIL 30, 1998 (UNAUDITED)
<CAPTION>
PRINCIPAL SECURITY VALUE
<S> <C> <C>
MORTGAGE BACKED SECURITIES (35.8%)
$2,000,000 FHLMC (REMIC) Series 1313-G,
7.25%, 06/15/07 $2,049,860
3,000,000 FHLMC (REMIC) Series 1344-D,
6.00%, 8/15/07 2,941,530
1,289,219 FHLMC (REMIC) Series 31-E,
7.55%, 05/15/20 1,327,359
500,189 FHLMC (REMIC) Series 190-D,
9.20%, 10/15/21 531,116
3,486,204 FNMA (REMIC) Series 92-126-VB,
8.00%, 07/25/02 3,611,498
283,300 FNMA (REMIC) Series 1989-86,
8.75%, 11/25/19 300,549
1,225,318 FNMA (REMIC) Series 1990-7-B,
8.50%, 01/25/20 1,290,326
2,710,747 FNMA (REMIC) Series 1990-16D,
9.00%, 03/25/20 2,811,907
617,534 FNMA (REMIC) Series 1991-73A,
8.00%, 07/25/21 637,385
-----------
TOTAL MORTGAGE BACKED SECURITIES
(cost $14,876,950) 15,501,530
-----------
U.S. GOVERNMENT AND
AGENCY OBLIGATIONS (62.7%)
4,000,000 FHLMC Debenture 6.80%, 08/22/05 4,204,200
4,000,000 FHLMC Global Notes
6.75%, 05/30/06 4,205,144
3,000,000 FNMA 7.65%, 03/10/05 3,288,222
1,000,000 FNMA MT, 7.26%, 10/05/05 1,001,308
10,000,000 Resolution Funding STRIPS,
0.00%, 04/15/06 6,278,690
10,000,000 Resolution Funding STRIPS,
0.00%, 07/15/13 3,944,290
3,000,000 U.S. Treasury Bond,
12.75%, 11/15/10 4,250,626
-----------
TOTAL U.S. GOVERNMENT AND AGENCY
OBLIGATIONS (cost $25,787,577) 27,172,480
-----------
<PAGE>
<CAPTION>
PRINCIPAL SECURITY VALUE
REPURCHASE AGREEMENT (2.7%)
$352,000 UBS SECURITIES 5.46%, due 05/01/98
Collateralized by $271,000 U.S. Treasury Bond,
due 05/15/17, market value $360,091
(cost $352,000) $ 352,000
------------
TOTAL INVESTMENTS (cost $41,016,527) $ 43,026,010
============
- -------------------
The abbreviations in the above statement stand for the following:
FHLMC Federal Home Loan Mortgage Corporation
FNMA Federal National Mortgage Association
REMIC Real Estate Mortgage Investment Conduit
STRIPS Separated Trading of Registered Interest and Principal of Securities
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.
</TABLE>
<PAGE>
FINANCIAL HORIZONS INVESTMENT TRUST
CASH RESERVE FUND
For the six-month period ended April 30, 1998, the Financial Horizons Cash
Reserve Fund had net assets of $4.2 million with an average maturity of 33 days.
The Fund's total return for the same period was 2.49%, while its benchmark, the
Consumer Price Index, returned 0.50%. There are no sales charges in this Fund.
First tier commercial paper accounted for 96% of the portfolio, followed by U.S.
Government/Agency securities at 4%. Portfolio weightings were the highest in
those industries which offered higher spreads. The top two sectors were
Broker/Dealers at 14.7%, and Consumer Sales Finance at 14.2%. The largest
outstanding for any one issuer was 4.0%.
For the six-month period ended April 30, 1998, the Federal Reserve held interest
rates steady. Economic indicators continued to point to an expanding economy
with both low inflation and unemployment. Going forward, the Federal Reserve
will assess the impact that the Asian financial crisis is having on the U.S.
growth rate. Fed officials may decide to increase rates if the economy fails to
show any signs of slowing down.
The Financial Horizons Cash Reserve Fund continued to invest in only first tier
money market instruments.
KAREN G. MADER, MA - PORTFOLIO MANAGER
<PAGE>
<TABLE>
FINANCIAL HORIZONS INVESTMENT TRUST CASH RESERVE FUND
- STATEMENT OF INVESTMENTS - APRIL 30, 1998 (UNAUDITED)
PRINCIPAL SECURITY VALUE
<S> <C> <C>
COMMERCIAL PAPER (95.7%)
AGRICULTURE/FINANCE (3.8%)
$ 160,000 John Deere Capital Corp.,
5.49%, 06/03/98 $ 159,195
----------
AUTO/FINANCE (7.1%)
160,000 Ford Motor Credit Co.,
5.50%, 05/22/98 159,487
141,000 General Motors, 5.51%, 05/19/98 140,612
----------
300,099
----------
BANKS (3.8%)
160,000 J.P. Morgan & Co.,
5.50%, 06/15/98 158,900
----------
BROKER/DEALER (14.7%)
150,000 Bear Stearns Co., 5.50%, 05/29/98 149,358
160,000 Goldman Sachs Group,
5.50%, 05/28/98 159,340
152,000 Merrill Lynch & Co.,
5.49%, 07/16/98 150,238
160,000 Morgan Stanley Group,
5.49%, 07/22/98 157,999
----------
616,935
----------
CHEMICALS (3.8%)
160,000 PPG Industries, 5.51%, 06/30/98 158,531
----------
CONSUMER SALES FINANCE (14.2%)
170,000 American Express Credit Corp.,
5.49-5.50%, 05/22/98 169,455
123,000 Assoc. Corp. of N.A.,
5.51%, 05/11/98 122,812
146,000 Avco Financial Services, Inc.,
5.53%, 06/09/98 145,124
160,000 Norwest Corp.,
5.48-5.51%, 05/20/98 159,537
----------
596,928
----------
DATA SERVICES (3.9%)
164,000 First Data Corp., 5.50%, 06/09/98 163,023
----------
DIVERSIFIED FINANCE (3.5%)
150,000 GE Capital Corp., 5.48%, 06/19/98 148,881
----------
ELECTRICAL EQUIPMENT (3.8%)
160,000 Johnson Controls, Inc.,
5.52%, 05/29/98 159,313
----------
ENTERTAINMENT (3.6%)
150,000 Walt Disney Co., 5.50%, 05/01/98 150,000
----------
FINANCIAL SERVICES/UTILITIES (3.7%)
157,000 National Rural Utilities Cooperative,
5.45%, 07/09/98 155,360
----------
FOOD & BEVERAGE (3.8%)
160,000 Heinz "HJ" Co., 5.48%, 06/02/98 159,221
----------
HEAVY EQUIPMENT/FINANCE (3.8%)
160,000 Catepillar Financial Services, Inc.,
5.50-5.51%, 05/12/98 159,731
----------
INSURANCE (4.0%)
170,000 MetLife Funding Inc.,
5.52%, 06/08/98 169,009
----------
LEASE FINANCIAL (3.3%)
140,000 IBM Credit Corp. Note,
5.50%, 05/15/98 139,701
----------
<PAGE>
<CAPTION>
PRINCIPAL SECURITY VALUE
COMMERCIAL PAPER (CONTINUED)
PACKAGING & CONTAINERS (3.7%)
$160,000 Bemis Co., Inc., 5.55%, 05/26/98$ 159,402
----------
PHARMACEUTICALS & PERSONAL CARE (7.7%)
160,000 Becton Dickinson & Co.,
5.48%, 05/07/98 159,864
165,000 Schering Corp., 5.48%, 05/12/98 164,724
----------
324,588
----------
PRINTING & PUBLISHING (3.5%)
148,000 McGraw-Hill Cos., 5.47%, 06/12/98 147,056
----------
TOTAL COMMERCIAL PAPER (cost $4,025,873) 4,025,873
----------
U.S. GOVERNMENT AND AGENCY
OBLIGATIONS (4.3%)
120,000 Federal Home Loan Mortgage,
5.41%, 05/15/98 119,748
63,000 U.S. Treasury Bills,
4.94%, 08/06/98 62,161
----------
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS
(cost $181,909) 181,909
----------
TOTAL INVESTMENTS (cost $4,207,782) $4,207,782
==========
Cost also represents cost for federal income tax purposes. Portfolio holding
percentages represent value as a percentage of net assets.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF ASSETS AND LIABILITIES
APRIL 30, 1998 (UNAUDITED)
<CAPTION>
MUNICIPAL GOVERNMENT CASH
GROWTH BOND BOND RESERVE
FUND FUND FUND FUND
<S> <C> <C> <C> <C>
ASSETS
Investments in securities, at value
(cost $6,534,314, $15,288,455, $41,016,527
and $4,207,782 respectively) $ 10,272,069 $ 15,883,719 $ 43,026,010 $ 4,207,782
Cash -- -- 19,802 1,418
Receivable for fund shares sold 325 200 8,500 125
Receivable for investment securities sold 353,031 -- 4,626,916 --
Accrued interest and dividends receivable 1,619 244,037 475,404 --
Withholding tax reclaim receivable 129 -- -- --
- ------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 10,627,173 16,127,956 48,156,632 4,209,325
LIABILITIES
Bank loan 3,405 97,679 -- --
Payable for fund shares redeemed (101) 4,572 31,470 820
Payable for investment securities purchased 82,120 -- 4,623,020 --
Accrued management fees 5,702 8,625 23,360 1,355
Accrued transfer agent fees 922 859 4,308 87
Dividends payable 23 26,002 97,959 1,189
Other accrued expenses 3,938 4,807 20,877 775
- ------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 96,009 142,544 4,800,994 4,226
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS $ 10,531,164 $ 15,985,412 $ 43,355,638 $ 4,205,099
========================================================================================================================
NET ASSETS REPRESENTED BY:
Capital shares, $1 par value, outstanding $ 477,195 $ 1,431,730 $ 3,854,280 $ 4,205,217
Capital paid in excess of par value 5,288,296 14,688,205 38,149,183 (113)
Net unrealized appreciation 3,737,755 595,264 2,009,483 --
Accumulated undistributed net realized gain (loss) 1,033,377 (729,787) (660,423) (5)
Accumulated undistributed net investment
income (loss) (5,459) -- 3,115 --
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS $ 10,531,164 $ 15,985,412 $ 43,355,638 $ 4,205,099
========================================================================================================================
Shares outstanding (unlimited number of shares authorized) 477,195 1,431,730 3,854,280 4,205,217
========================================================================================================================
NET ASSET VALUE AND OFFERING PRICE PER SHARE* $ 22.07 $ 11.17 $ 11.25 $ 1.00
========================================================================================================================
* 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.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1998 (UNAUDITED)
<CAPTION>
MUNICIPAL GOVERNMENT CASH
GROWTH BOND BOND RESERVE
FUND FUND FUND FUND
<S> <C> <C> <C> <C>
INCOME:
Dividends $ 28,212 $ -- $ -- $ --
Interest 6,200 460,144 1,498,639 114,993
Other -- -- 17,396 --
- ------------------------------------------------------------------------------------------------------------------------
Total income 34,412 460,144 1,516,035 114,993
EXPENSES:
Distribution fees 36,761 61,845 171,645 --
Investment management fees 31,864 53,597 148,760 8,152
Transfer agent fees 5,286 4,771 18,535 374
Professional services 1,195 2,121 7,245 539
Registration fees 1,971 1,784 3,693 1,450
Shareholders' reports -- -- 2,336 --
Custodian fees 2,147 4,488 4,818 2,610
Trustee fees and expenses 664 1,342 4,638 378
Other 69 913 2,812 89
- ------------------------------------------------------------------------------------------------------------------------
Total expenses before waived expenses 79,957 130,861 364,482 13,592
Total waived expenses (36,761) (61,845) (171,646) --
- ------------------------------------------------------------------------------------------------------------------------
Net expenses 43,196 69,016 192,836 13,592
- ------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) $ (8,784) $ 391,128 $ 1,323,199 $ 101,401
========================================================================================================================
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on investments $ 1,032,058 $ 61,866 $ 543,208 --
Net change in unrealized appreciation
(depreciation) of investments 683,195 20,167 (280,074) --
- ------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on investments 1,715,253 82,033 263,134 --
- ------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN ASSETS RESULTING FROM OPERATIONS $ 1,706,469 $ 473,161 $ 1,586,333 $ 101,401
========================================================================================================================
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
GROWTH FUND MUNICIPAL BOND FUND
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1998 OCTOBER 31, APRIL 30, 1998 OCTOBER 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income (loss) $ (8,784) $ 19,747 $ 391,128 $ 909,305
Net realized gain on investments 1,032,058 1,768,865 61,866 159,282
Net change in unrealized appreciation
of investments 683,195 366,366 20,167 416,404
- ------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 1,706,469 2,154,978 473,161 1,484,991
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income -- (14,409) (391,128) (909,305)
Net realized gain from investment transactions (1,767,546) (455,746) -- --
- ------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (1,767,546) (470,155) (391,128) (909,305)
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 165,576 509,644 42,958 127,500
Net asset value of shares issued to shareholders from
reinvestment of dividends 1,739,837 464,389 225,776 531,645
Cost of shares redeemed (853,879) (2,213,453) (1,186,802) (4,913,234)
- ------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets derived from capital
share transactions 1,051,534 (1,239,420) (918,068) (4,254,089)
- ------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS 990,457 445,403 (836,035) (3,678,403)
NET ASSETS - BEGINNING OF PERIOD 9,540,707 9,095,304 16,821,447 20,499,850
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS - END OF PERIOD $10,531,164 $ 9,540,707 $ 15,985,412 $ 16,821,447
========================================================================================================================
Undistributed net realized gain
(loss) on investments included in net assets at end of period $ 1,033,377 $ 1,768,865 $ (729,787) $ (791,653)
========================================================================================================================
Undistributed net investment income (loss) included
in net assets at end of period $ (5,459) $ 3,325 -- --
========================================================================================================================
SHARE ACTIVITY:
Shares sold 7,608 24,523 3,805 11,782
Reinvestment of dividends 92,348 24,012 20,055 48,845
Shares redeemed (39,894) (98,638) (105,498) (450,753)
- ------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in number of shares 60,062 (50,103) (81,638) (390,126)
========================================================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
GOVERNMENT BOND FUND CASH RESERVE FUND
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1998 OCTOBER 31, APRIL 30, 1998 OCTOBER 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 1,323,199 $ 3,192,002 $ 101,401 $ 205,070
Net realized gain on investments 543,208 90,839 -- 1
Net change in unrealized appreciation (depreciation)
of investments (280,074) 1,031,295 -- --
- ------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 1,586,333 4,314,136 101,401 205,071
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (1,314,021) (3,191,909) (101,401) (205,070)
- ------------------------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions to shareholders (1,314,021) (3,191,909) (101,401) (205,070)
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sale of shares 106,755 362,854 140,943 162,276
Net asset value of shares issued to shareholders from
reinvestment of dividends 670,019 1,610,983 93,802 189,391
Cost of shares redeemed (6,242,329) (13,283,912) (80,435) (543,630)
- ------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets derived from capital
share transactions (5,465,555) (11,310,075) 154,310 (191,963)
- ------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (5,193,243) (10,187,848) 154,310 (191,962)
NET ASSETS - BEGINNING OF PERIOD 48,548,881 58,736,729 4,050,789 4,242,751
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS - END OF PERIOD $ 43,355,638 $ 48,548,881 $ 4,205,099 $ 4,050,789
========================================================================================================================
Undistributed net realized loss on investments
included in net assets at end of period $ (660,423) $ (1,210,831) $ (5) $ (5)
========================================================================================================================
Undistributed net investment income included in
net assets at end of period $ 3,115 $ 1,137 -- --
========================================================================================================================
SHARE ACTIVITY:
Shares sold 9,472 33,267 140,943 162,276
Reinvestment of dividends 59,527 147,681 93,802 189,391
Shares redeemed (553,576) (1,218,791) (80,435) (543,630)
- ------------------------------------------------------------------------------------------------------------------------
Net (decrease) in number of shares (484,577) (1,037,843) (154,310) (191,963)
========================================================================================================================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING
<CAPTION>
GROWTH FUND
YEARS ENDED OCTOBER 31,
SIX MONTHS ENDED
APRIL 30, 1998
(UNAUDITED) 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE--
BEGINNING OF PERIOD $ 22.87 $ 19.47 $ 18.17 $ 15.11 $ 14.17 $ 12.46
Net investment income (loss) (0.02) 0.04 0.01 (0.01) 0.03 0.08
Net realized gain (loss) and
unrealized appreciation
(depreciation) 3.55 4.38 3.28 3.23 0.95 1.73
- ------------------------------------------------------------------------------------------------------------------------
Total from investment operations 3.53 4.42 3.29 3.22 0.98 1.81
Dividends from net
investment income -- (0.03) -- -- (0.04) (0.10)
Distributions in excess of net
investment income -- -- -- (0.01) -- --
Distributions from net realized
gain on investment transactions (4.33) (0.99) (1.99) (0.15) -- --
- ------------------------------------------------------------------------------------------------------------------------
Total distributions (4.33) (1.02) (1.99) (0.16) (0.04) (0.10)
- ------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net
asset value (0.80) 3.40 1.30 3.06 0.94 1.71
- ------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE--
END OF PERIOD $ 22.07 $ 22.87 $ 19.47 $ 18.17 $ 15.11 $ 14.17
=========================================================================================================================
Total return (excluding
sales charges) 18.68%(a) 23.66% 19.41% 21.57% 6.92% 14.59%
Net assets, end of period (000) $ 10,531 $ 9,541 $ 9,095 $ 7,594 $ 6,787 $ 5,165
Ratio of expenses to average
net assets 0.88% (b) 0.96% 1.44% 1.47% 1.59% 1.44%
Ratio of expenses to average
net assets* 1.63% (b) 1.70% 1.69% 1.72% 1.90% 2.03%
Ratio of net investment income
(loss) to average net assets (0.18%)(b) 0.20% 0.03% (0.05%) 0.21% 0.63%
Ratio of net investment income
(loss) to average net assets* (0.93%)(b) (0.54%) (0.22%) (0.30%) (0.82%) 0.05%
Portfolio turnover 20.32% 40.69% 17.19% 29.19% 14.14% 12.98%
Average commission rate paid** 5.3137(cent) 5.8006(cent) 5.9080(cent) -- -- --
- --------------------
* 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.
(a) Not annualized.
(b) Annualized.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING
<CAPTION>
MUNICIPAL BOND FUND
YEARS ENDED OCTOBER 31,
SIX MONTHS ENDED
APRIL 30, 1998
(UNAUDITED) 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE--
BEGINNING OF PERIOD $ 11.12 $ 10.77 $ 10.76 $ 9.86 $ 11.75 $ 10.64
Net investment income (loss) 0.27 0.53 0.48 0.50 0.49 0.56
Net realized gain (loss) and
unrealized appreciation
(depreciation) 0.05 0.35 0.01 0.90 (1.62) 1.22
- -------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.32 0.88 0.49 1.40 (1.13) 1.78
Dividends from net
investment income (0.27) (0.53) (0.48) (0.50) (0.49) (0.56)
Distributions from net realized
gain on investment transactions -- -- -- -- (0.27) (0.11)
- -------------------------------------------------------------------------------------------------------------------------
Total distributions (0.27) (0.53) (0.48) (0.50) (0.76) (0.67)
- -------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net
asset value 0.05 0.35 0.01 0.90 (1.89) 1.11
- -------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE--
END OF PERIOD $ 11.17 $ 11.12 $ 10.77 $ 10.76 $ 9.86 $ 11.75
=========================================================================================================================
Total return (excluding
sales charges) 2.84%(a) 8.37% 4.72% 14.50% (10.11%) 17.18%
Net assets, end of period (000) $ 15,985 $ 16,821 $ 20,500 $ 25,806 $ 26,412 $ 25,828
Ratio of expenses to average
net assets 0.84% (b) 0.85% 1.36% 1.35% 1.27% 1.01%
Ratio of expenses to average
net assets* 1.59% (b) 1.59% 1.61% 1.60% 1.57% 1.61%
Ratio of net investment income
to average net assets 4.74% (b) 4.85% 4.53% 4.82% 4.58% 4.81%
Ratio of net investment income
to average net assets* 3.99% (b) 4.11% 4.28% 4.57% 4.28% 4.11%
Portfolio turnover 0.00% 14.09% 38.80% 60.79% 69.67% 46.95%
- -------------------
* Ratios calculated as if no expenses were waived.
(a) Not annualized.
(b) Annualized.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING
<CAPTION>
GOVERNMENT BOND FUND
YEARS ENDED OCTOBER 31,
SIX MONTHS ENDED
APRIL 30, 1998
(UNAUDITED) 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE--
BEGINNING OF PERIOD $ 11.19 $ 10.92 $ 11.07 $ 10.12 $ 11.31 $ 11.00
Net investment income (loss) 0.32 0.66 0.68 0.68 0.58 0.63
Net realized gain (loss) and
unrealized appreciation
(depreciation) 0.06 0.27 (0.15) 0.95 (1.10) 0.50
- -------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.38 0.93 0.53 1.63 (0.52) 1.13
Dividends from net
investment income (0.32) (0.66) (0.68) (0.68) (0.58) (0.66)
Distributions from net realized
gain from investment transactions -- -- -- -- (0.09) (0.16)
- -------------------------------------------------------------------------------------------------------------------------
Total distributions (0.32) (0.66) (0.68) (0.68) (0.67) (0.82)
- -------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net
asset value 0.06 0.27 (0.15) 0.95 (1.19) 0.31
- -------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE--
END OF PERIOD $ 11.25 $ 11.19 $ 10.92 $ 11.07 $ 10.12 $ 11.31
=========================================================================================================================
Total return (excluding
sales charges) 3.44%(a) 8.84% 5.01% 16.68% (4.75%) 10.76%
Net assets, end of period (000) $ 43,356 $ 48,549 $ 58,737 $ 69,190 $ 70,218 $ 84,602
Ratio of expenses to average
net assets 0.84%(b) 0.85% 0.84% 0.89% 1.28% 1.00%
Ratio of expenses to average
net assets* 1.59%(b) 1.60% 1.59% 1.58% 1.58% 1.61%
Ratio of net investment income
to average net assets 5.74%(b) 6.04% 6.26% 6.42% 5.42% 5.55%
Ratio of net investment income
to average net assets* 4.99%(b) 5.29% 5.51% 5.73% 5.12% 4.93%
Portfolio turnover 31.04% 52.10% 21.04% 140.55% 174.40% 143.63%
- ---------------------
* Ratios calculated as if no expenses were waived.
(a) Not annualized.
(b) Annualized.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING
<CAPTION>
CASH RESERVE FUND
YEARS ENDED OCTOBER 31,
SIX MONTHS ENDED
APRIL 30, 1998
(UNAUDITED) 1997 1996 1995 1994 1993
<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 (loss) 0.02 0.05 0.05 0.05 0.03 0.02
Dividends from net
investment income (0.02) (0.05) (0.05) (0.05) (0.03) (0.02)
- -------------------------------------------------------------------------------------------------------------------------
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
2.49%(a) 4.93% 4.97% 5.41% 3.08% 2.05%
Net assets, end of period (000) $ 4,205 $ 4,051 $ 4,243 $ 4,150 $ 3,950 $ 2,788
Ratio of expenses to average
net assets 0.67%(b) 0.69% 0.65% 0.65% 0.84% 1.17%
Ratio of expenses to average
net assets* 0.67%(b) 0.69% 0.65% 0.65% 1.06% 2.20%
Ratio of net investment income
to average net assets 4.98%(b) 4.82% 4.86% 5.29% 3.14% 2.04%
Ratio of net investment income
to average net assets* 4.98%(b) 4.82% 4.86% 5.29% 2.92% 0.79%
- ---------------------
* Ratios calculated as if no expenses were waived.
(a) Not annualized.
(b) Annualized.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS - (UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Financial Horizons Investment Trust (Trust), is a diversified, open-end
investment 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
which are 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 quoted sale price, or if no sale, at the prior day's
valuation as provided by an independent pricing agent. Securities
traded in the over-the-counter (OTC) market are valued at the last
quoted sale price, or if no sale, the quoted bid price. U.S.
Government securities are valued at the quoted bid price. Bonds are
valued by a combination of daily quotes and matrix evaluations.
Securities for which reliable market quotations are not available,
or for which an independent pricing agent does not provide a value
or provides a value that does not represent fair value in the
judgment of the Fund's investment adviser, are valued at fair value
in accordance with procedures authorized by the Boards 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 amortization
of premium and discount where applicable, is recorded on an accrual basis.
(C) FEDERAL INCOME TAXES
Each Fund'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 Fund.
As of October 31, 1997, the Municipal and Government Bond funds had net
capital loss carry forwards of $791,653 and $1,210,831 respectively,
available to offset future capital gains, which will expire in 5 to 6
years.
(D) DIVIDENDS TO SHAREHOLDERS
(1) Growth Fund:
Dividends from net investment income are paid semi-annually and are
recorded on the ex-dividend date.
(2) Municipal Bond Fund, Government Bond Fund, and Cash Reserve Fund:
Dividends from net investment income 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.
<PAGE>
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
Dividends and distributions to shareholders are determined in accordance
with 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 October 31, 1997, undistributed net investment income,
Undistributed net realized gains and capital paid in excess of par value
have been adjusted. Negative amounts represent credits and positive
amounts represent debits. The adjustments are as follows:
<TABLE>
<CAPTION>
CAPITAL PAID IN
UNDISTRIBUTED NET UNDISTRIBUTED NET EXCESS OF
INVESTMENT INCOME REALIZED GAINS PAR VALUE
<S> <C> <C> <C>
Growth Fund $(2,350) $2,350 $ --
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 EXPENSES
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, 1998, NAS
waived distribution fees for the Growth, Municipal Bond, and Government Bond
funds totaling $36,761, $61,845, and $171,646, respectively, or $.159, $.085 and
$.085 per average share outstanding.
NAS, principal underwriter, also receives fees 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, 1998, NAS
received fees of $1,837, $7,965, and $8,668 on the Growth, Municipal Bond, and
Government Bond Funds, respectively. Additionally, the Government Bond Fund
retained fees (CDSC) of $17,396 pursuant to NASD guidelines which limit sales
charges payable to underwriters. These fees are reported as "other income."
Nationwide Investors Services, Inc., a subsidiary of NAS, acts as transfer and
dividend disbursing agent for the funds.
<PAGE>
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
3. BANK LOANS
The Trust has an unsecured bank line of credit of $6,000,000 for overdraft
protection and temporary emergency borrowing purposes. Borrowings under this
arrangement bear interest at the Federal Funds rate plus .50%. 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, 1998, are summarized as follows:
<TABLE>
<CAPTION>
U.S. GOVT.
SECURITIES OBLIGATIONS
----------------------------------------------------------------
PURCHASES SALES PURCHASES SALES
<S> <C> <C> <C> <C>
Growth Fund $1,961,501 $2,640,822 $ 1,328,311 $ 1,698,193
Municipal Bond Fund -- 838,404 -- --
Government Bond Fund -- 1,498,979 13,993,833 17,078,910
Cash Reserve Fund -- -- 1,341,462 1,403,000
</TABLE>
Realized gains and losses have been computed on the specific identification
basis. Included in net unrealized appreciation at April 30, 1998, are the
following components:
<TABLE>
GROSS GROSS NET
UNREALIZED UNREALIZED UNREALIZED
APPRECIATION DEPRECIATION APPRECIATION
<CAPTION>
<S> <C> <C> <C>
Growth Fund $3,831,883 $(94,128) $3,737,755
Municipal Bond Fund 595,264 -- 595,264
Government Bond Fund 2,009,483 -- 2,009,483
</TABLE>
5. SUBSEQUENT EVENT
The transaction described below was effective May 9, 1998.
At a meeting of the Board of Trustees on November 7, 1997, the Board authorized
a Special Meeting of Shareholders to be held on February 16, 1998. At this
Special Meeting, shareholders approved an Agreement and Plan of Reorganization
between Financial Horizons Investment Trust and Nationwide Investing Foundation
III ("New Trust"), at which time Nationwide Investing Foundation and Nationwide
Investing Foundation II also reorganized into the New Trust. The transactions
approved by the shareholders at this meeting were the following:
(a) The transfer of the assets and liabilities of the Financial Horizons
Growth Fund to the Nationwide Mid Cap Growth Fund series of the New Trust in
exchange for Class D shares of the Mid Cap Growth Fund, to be distributed to
shareholders of the Growth Fund.
(b) The transfer of the assets and liabilities of the Financial Horizons
Cash Reserve Fund to the Nationwide Money Market Fund series of the New Trust in
exchange for shares of the Money Market Fund, to be distributed to shareholders
of the Cash Reserve Fund.
(c) The transfer of the assets and liabilities of the Financial Horizons
Government Bond Fund to the Nationwide Long-Term U.S.Government Bond Fund series
of the New Trust in exchange for Class D shares of the Long-Term U.S. Government
Bond Fund, to be distributed to shareholders of the Government Bond Fund.
<PAGE>
(d) The transfer of the assets and liabilities of the Financial Horizons
Municipal Bond Fund to the Nationwide Tax-Free Income Fund series of the New
Trust in exchange for Class D shares of the Tax-Free Income Fund, to be
distributed to shareholders of the Municipal Bond Fund.
The results of the shareholder voting at the Special Meetings for FHIT on
February 16, 1998 are as follows:
<TABLE>
<CAPTION>
Withheld/
Fund For Against Abstained
<S> <C> <C> <C>
Growth Fund 202,688 1,305 13,455
Municipal Bond Fund 3,342,575 0 0
Government Bond Fund 2,254,526 26,224 140,828
Cash Reserve Fund 829,923 740 29,671
</TABLE>
All assets of the FHIT Funds were transferred and all liabilities were assumed
by the appropriate series of the New Trust on May 8, 1998, as voted by the
shareholders at the Special Meetings held on February 6, 1998. Upon completion
of such transactions, the shares of the applicable series of the New Trust
received by the FHIT Funds were distributed to shareholders of those Funds in
complete liquidation on May 8, 1998.
All of the capital gain distributions paid to shareholders of the Growth Fund in
connection with the reorganization of the Fund is taxed at the 20% rate for
federal income tax purposes. All of the income distributions paid from January
1, 1998, through May 9, 1998, to shareholders of the Municipal Bond Fund are
exempt from federal income tax.
<PAGE>
FINANCIAL
HORIZONS
INVESTMENT TRUST
GROWTH FUND
MUNICIPAL BOND FUND
GOVERNMENT BOND FUND
CASH RESERVE FUND
1998
SEMI-ANNUAL
REPORT
April 30, 1998
<PAGE>
FINANCIAL HORIZONS INVESTMENT TRUST
P.O. BOX 1492
THREE NATIONWIDE PLAZA
COLUMBUS OH 43216-1492
April 30, 1998
Semi-Annual Report
FH-0012-P
BULK RATE
U.S. POSTAGE
PAID
BERWYN,IL
Permit No. 150
