BRUNDAGE,
STORY AND ROSE
INVESTMENT
Annual Report
November 30, 1996
Short/Intermediate Term
Fixed-Income Fund
Equity Fund
Brundage, Story & Rose
Investment Counsel Since 1932
BRUNDAGE,
STORY AND ROSE
INVESTMENT TRUST
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Nationwide: (Toll Free) 800-543-8721
Cincinnati: 629-2000
BOARD OF TRUSTEES
Francis S. Branin, Jr.
Malcolm D. Clarke, Jr.
Cheryl L.Grandfield
Antoinette Geyelin Hoar
Jerome B. Lieber
William M.R. Mapel
James G. Pepper
Crosby R. Smith
Charles G. Watson
INVESTMENT ADVISER
Brundage, Story and Rose, LLC
One Broadway
New York, New York 10004
UNDERWRITER
Midwest Group Financial
Services, Inc.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
TRANSFER AGENT
MGF Service Corp.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
SHAREHOLDER SERVICES
Nationwide: (Toll Free) 800-320-2212
Cincinnati: 629-2070
<PAGE>
LETTER TO SHAREHOLDERS January 17, 1997
ECONOMIC AND FINANCIAL MARKETS OUTLOOK
ECONOMIC REVIEW
Looking back at 1996, we are struck by the irony of having had a good sense of
the direction of the economy, interest rates, inflation and corporate profits,
but being too conservative regarding our cautious optimism toward the equity
markets. Specifically, our forecast at the beginning of last year was for
economic growth close to its long-term sustainable rate of +2 1/2% and a
resulting improvement in corporate profits, but with upward pressure on
interest rates and inflation.
While hardly in an even fashion, growth for the full year looks to have come
in within the 2-3% range, the rate of inflation did accelerate to 3.3%, and
interest rates ended the year higher than where they began. On the other hand,
the equity market, driven by strong investor demand, was only briefly troubled
by higher rates and inflation; it delivered a second strong year, one of
well-above-average returns.
Our outlook for the economy in 1997 is straightforward: we think growth for
the year will again be in the 2-3% range, and that corporate profits will
improve but at a more moderate rate. We also see inflation continuing the
pattern of gradual acceleration in place since 1995, and we expect interest
rates to face upward pressure in the first half of the year, but likely end
the year at levels similar to those prevailing currently.
This forecast would result in an environment generally conducive to equity
investors and neutral to fixed income investors. In fact, it is very close to
the consensus view that has been nicknamed by a number of Wall Street pundits
as the "Goldilocks scenario" -- not too hot, not too cold, but just right for
the financial investor. Where our forecast differs from the consensus is that
we believe the progress to these "just right" results will be uneven and
fraught with volatility. In fact, we find it ironic that the much embraced
"Goldilocks" analogy ignores that in the story the poor girl awoke from her
complacent rest to confront a family of snarling, hungry bears.
CURRENT MARKET OUTLOOK
As was the case last year, understanding what events in 1997 have the
potential to upset consensus expectations will be just as important as
predicting what will actually happen in the economy. One potential negative
could be higher-than-expected inflation. Thus far, increasing energy costs
have only modestly permeated the broader price levels in our economy. As the
full effect of much higher energy prices begins to be felt, the market's focus
is likely at least temporarily to shift from the "core" inflation rate,
excluding food and energy, to the actual impact that energy prices are having
on the total inflation picture. Beyond this one economic uncertainty, our
concerns focus upon the overall equity market itself. Valuations are at very
high, if not unprecedented, levels as measured by most traditional statistical
benchmarks, and investor enthusiasm is becoming tinged with a speculative
bias.
Our nervousness regarding the short-term outlook for the equity market is
further increased by the fact that the Federal Reserve Board, as witnessed by
a speech that Chairman Alan Greenspan made in early December describing the
"irrational exuberance" of the markets, is fearful that further financial
asset inflation could eventually have negative repercussions for the real
economy.
If higher inflation, concerns about valuation and a pro-active Federal Reserve
Board occur simultaneously, it could be temporarily destabilizing to the stock
market and lead to the first period since 1994 when equity prices pause or
retrench in their relentless march upward. In many ways, while uncomfortable
for the equity investor in the short term, a small deflation in expectations
and a challenge to investors' complacency are pre-conditions to the long-term
health of the stock market.
<PAGE>
SHORT/INTERMEDIATE TERM FIXED-INCOME FUND
Interest rates on very short maturity money market issues fell during the
fiscal year ended November 30, 1996, but interest levels for longer maturity
notes and bonds drifted up about one quarter of a percentage point during the
year. As interest rates rise, bond prices decline. This environment produced
price declines for bonds with 3 and 5 year maturities of approximately 0.6%
and 1.7%, respectively. The total return (price change plus interest income)
of three year Treasury bonds for the fiscal year was 5.3%, while the longer
five year Treasury issues produced a lower 4.5%.
Your Fund's total return during the fiscal year was 5.65%. Comparison of this
return with the results for 3 and 5 year Treasury issues is appropriate, given
the Fund's average maturity of four years and its focus on 3 to 5 year issues.
The Fund's superior return resulted principally from its investment in
corporate bonds and mortgage-backed securities. Corporate bonds in the 3 to 5
year sector produced returns of 6.8% during the year while mortgage-backed
securities experienced even better results of 7.5%. Approximately 70% of your
Fund was invested in these two sectors through individual issues selected by
our portfolio managers.
The 30-day yield on the Fund at fiscal year-end was 5.80%. This compares
favorably to money market alternatives such as the 3 month Treasury Bill at
5.12% and to 3 year Treasury issues at 5.68%.
EQUITY FUND
In the Equity Fund, the year ended December 31, 1996 was another period of
extraordinary returns. Specifically, during the calendar year, your Fund was
up 19.28% after rising more than 27% in 1995. The S&P 500 Index returned
22.96% during 1996, while the average for Lipper General Equity Funds was
19.47%. For the fiscal year ended November 30, 1996, your Fund's total return
was 21.27%, versus 27.86% for the S&P 500 Index. Given our focus on
out-of-favor mid-sized companies and an ongoing effort to provide a measure of
defensiveness in the Fund against a more uncertain environment, we are pleased
to have performed comparably with the median results of other equity mutual
funds during 1996.
Looking back, performance was aided during the year by a continued
overweighting in technology and related issues as well as by an overweighting
in capital goods companies and, late in the year, by an increase in our
exposure to telecommunications companies. In addition, results in the Fund
were favorably impacted by a number of acquisitions of companies held in the
Fund including Loctite and PanEnergy amongst others.
Looking forward, our growing caution toward the markets and our expectation
for only modest growth has led us to look for investments in traditionally
defensive areas, while we still find some of the fast growing,
technology-oriented companies to have compelling long-term valuations. We are
also finding that high-quality, mid-sized companies, which have again
significantly lagged their larger capitalization brethren, are more attractive
on both an absolute and relative basis.
SUMMARY
Given the uncertainties in the market outlook and high levels of valuation, we
feel that somewhat reduced common stock expectations for 1997 are warranted.
At the same time, the shorter end of the bond market looks fairly valued. We
feel that both Funds are very well structured to generate good relative
returns during 1997, and we continue to find attractive opportunities in both
the bond and stock markets.
Sincerely yours,
/s/ Malcolm D. Clarke, Jr.
Malcolm D. Clarke, Jr.
President
<PAGE>
<TABLE>
<CAPTION>
A REPRESENTATION OF THE GRAPHIC MATERIAL CONTAINED IN THE BRUNDAGE, STORY
AND ROSE INVESTMENT TRUST NOVEMBER 30, 1996 ANNUAL REPORT IS SET FORTH BELOW:
Comparison of the Change in Value of a $10,000 Investment in the Brundage,
Story and Rose Short/Intermediate Term Fixed-Income Fund and the Merrill Lynch
3-Year Treasury Index
MERRILL LYNCH 3-YEAR TREASURY INDEX: BSR SHORT/INTERMEDIATE TERM FIXED-INCOME FUND:
QTRLY QTRLY
DATE RETURN BALANCE DATE RETURN BALANCE
<S> <C> <C> <C> <C> <C>
01/01/91 10,000 01/01/91 10,000
03/31/91 2.00% 10,200 03/31/91 1.58% 10,158
06/30/91 1.80% 10,384 06/30/91 1.96% 10,357
09/30/91 4.44% 10,845 09/30/91 4.89% 10,864
12/31/91 4.69% 11,353 12/31/91 4.21% 11,322
03/31/92 -1.15% 11,223 03/31/92 -0.72% 11,240
06/30/92 3.84% 11,654 06/30/92 3.96% 11,685
09/30/92 4.37% 12,163 09/30/92 3.81% 12,130
12/31/92 -0.48% 12,105 12/31/92 -0.63% 12,054
03/31/93 3.12% 12,482 03/31/93 3.60% 12,488
06/30/93 1.45% 12,663 06/30/93 2.07% 12,747
09/30/93 1.69% 12,878 09/30/93 2.04% 13,007
12/31/93 0.42% 12,931 12/31/93 0.43% 13,063
03/31/94 -1.57% 12,728 03/31/94 -1.64% 12,848
06/30/94 -0.53% 12,661 06/30/94 -0.76% 12,751
09/30/94 0.78% 12,759 09/30/94 0.60% 12,828
12/31/94 -0.19% 12,734 12/31/94 -0.48% 12,766
03/31/95 4.22% 13,271 03/31/95 4.70% 13,366
06/30/95 4.27% 13,837 06/30/95 5.01% 14,036
09/30/95 1.55% 14,051 09/30/95 1.62% 14,263
12/31/95 3.17% 14,496 12/31/95 3.41% 14,749
03/31/96 -0.51% 14,423 03/31/96 -0.69% 14,647
06/30/96 0.57% 14,505 06/30/96 0.59% 14,734
09/30/96 1.64% 14,743 09/30/96 1.80% 14,999
11/30/96 2.53% 15,116 11/30/96 2.91% 15,435
Past performance is not predictive of future performance.
Brundage, Story and Rose Short/Intermediate Term Fixed-Income Fund
Average Annual Total Returns
<CAPTION>
1 Year 5 Year Since Inception*
<S> <C> <C>
5.65% 6.84% 7.62%
* The public offering of shares commenced on January 2, 1991.
</TABLE>
<TABLE>
<CAPTION>
Comparison of the Change in Value of a $10,000 Investment in the Brundage,
Story and Rose Equity Fund and the Standard & Poor's 500 Index
STANDARD & POOR'S 500 INDEX: BSR EQUITY FUND:
QTRLY QTRLY
DATE RETURN BALANCE DATE RETURN BALANCE
<S> <C> <C> <C> <C> <C>
01/01/91 10,000 01/01/91 10,000
03/31/91 14.53% 11,453 03/31/91 11.00% 11,100
06/30/91 -0.23% 11,427 06/30/91 -3.28% 10,736
09/30/91 5.35% 12,038 09/30/91 5.07% 11,280
12/31/91 8.38% 13,047 12/31/91 8.80% 12,273
03/31/92 -2.53% 12,717 03/31/92 -3.12% 11,890
06/30/92 1.90% 12,958 06/30/92 -0.74% 11,802
09/30/92 3.15% 13,367 09/30/92 4.82% 12,371
12/31/92 5.03% 14,039 12/31/92 1.69% 12,579
03/31/93 4.36% 14,651 03/31/93 2.35% 12,875
06/30/93 0.48% 14,721 06/30/93 0.25% 12,907
09/30/93 2.58% 15,101 09/30/93 3.70% 13,385
12/31/93 2.32% 15,452 12/31/93 3.63% 13,870
03/31/94 -3.79% 14,866 03/31/94 -5.21% 13,148
06/30/94 0.42% 14,928 06/30/94 0.06% 13,156
09/30/94 4.88% 15,657 09/30/94 7.20% 14,103
12/31/94 -0.02% 15,654 12/31/94 -2.18% 13,795
03/31/95 9.74% 17,178 03/31/95 7.22% 14,791
06/30/95 9.55% 18,818 06/30/95 5.08% 15,543
09/30/95 7.95% 20,314 09/30/95 8.57% 16,875
12/31/95 6.02% 21,537 12/31/95 4.01% 17,551
03/31/96 5.37% 22,693 03/31/96 2.08% 17,916
06/30/96 4.49% 23,711 06/30/96 5.60% 18,920
09/30/96 3.09% 24,444 09/30/96 1.42% 19,188
11/30/96 10.53% 27,017 11/30/96 9.22% 20,957
Past performance is not predictive of future performance.
Brundage, Story and Rose Equity Fund
Average Annual Total Returns
<CAPTION>
1 Year 5 Years Since Inception*
<S> <C> <C>
21.27% 13.62% 13.33%
* The public offering of shares commenced on January 2, 1991.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BRUNDAGE, STORY AND ROSE INVESTMENT TRUST
STATEMENTS OF ASSETS AND LIABILITIES
November 30, 1996
SHORT/
INTERMEDIATE
TERM
FIXED-INCOME EQUITY
FUND FUND
<S> <C> <C>
ASSETS
Investments in securities:
At amortized cost (original cost $32,014,305 and
$19,040,386, respectively) $ 32,033,453 $ 19,040,386
============== ===============
At market value (Note 2).............................................. $ 32,471,011 $ 26,539,685
Investments in repurchase agreements (Note 2)............................ 642,000 931,000
Cash .................................................................... 128 696
Receivable for capital shares sold....................................... 4,857 14,983
Interest and principal paydowns receivable............................... 333,813 259
Dividends receivable..................................................... -- 32,992
Receivable for securities sold........................................... -- 112,737
Other assets............................................................. 1,276 1,109
-------------- ---------------
TOTAL ASSETS.......................................................... 33,453,085 27,633,461
-------------- ---------------
LIABILITIES
Payable for capital shares redeemed...................................... 26,602 53,169
Dividends payable........................................................ 24,217 --
Payable to affiliates (Note 4)........................................... 10,564 22,609
Other accrued expenses and liabilities................................... 15,151 17,561
-------------- ---------------
TOTAL LIABILITIES..................................................... 76,534 93,339
-------------- ---------------
NET ASSETS .............................................................. $ 33,376,551 $ 27,540,122
============== ===============
Net assets consist of:
Capital shares........................................................... $ 33,288,209 $ 17,729,308
Accumulated net realized gains (losses) from security transactions....... (349,216) 2,298,821
Undistributed net investment income...................................... -- 12,694
Net unrealized appreciation on investments............................... 437,558 7,499,299
-------------- ---------------
Net assets .............................................................. $ 33,376,551 $ 27,540,122
============== ===============
Shares of beneficial interest outstanding (unlimited number of shares
authorized, no par value) (Note 5).................................... 3,122,514 1,602,870
============== ===============
Net asset value, offering and redemption price per share (Note 2)........ $ 10.69 $ 17.18
============== ===============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BRUNDAGE, STORY AND ROSE INVESTMENT TRUST
STATEMENTS OF OPERATIONS
For the Year Ended November 30, 1996
SHORT/
INTERMEDIATE
TERM
FIXED-INCOME EQUITY
FUND FUND
<S> <C> <C>
INVESTMENT INCOME
Interest.............................................................. $ 2,138,069 $ 38,490
Dividends............................................................. -- 395,852
-------------- ---------------
TOTAL INVESTMENT INCOME............................................. 2,138,069 434,342
-------------- ---------------
EXPENSES
Investment advisory fees (Note 4)..................................... 162,321 164,902
Administrative services fees (Note 4)................................. 65,281 50,766
Accounting services fees (Note 4)..................................... 36,700 33,100
Professional fees..................................................... 19,147 19,147
Trustees' fees and expenses........................................... 14,832 14,832
Transfer agent and shareholder service fees (Note 4).................. 14,250 14,250
Registration fees..................................................... 10,281 11,385
Insurance expense..................................................... 9,834 7,180
Reports to shareholders............................................... 4,091 4,313
Custodian fees........................................................ 3,918 4,028
Pricing expense....................................................... 6,364 1,293
Postage and supplies.................................................. 5,442 1,613
Distribution expenses (Note 4)........................................ 1,702 1,297
Other expenses........................................................ 3,153 391
-------------- ---------------
TOTAL EXPENSES...................................................... 357,316 328,497
Fees waived by the Adviser (Note 4)................................... (145,018) --
-------------- ---------------
NET EXPENSES........................................................ 212,298 328,497
-------------- --------------
NET INVESTMENT INCOME ................................................... 1,925,771 105,845
-------------- --------------
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS
Net realized gains from security transactions......................... 164,007 2,298,821
Net change in unrealized appreciation/depreciation on investments..... (248,560) 2,561,218
-------------- ---------------
NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS ............... (84,553) 4,860,039
-------------- ---------------
NET INCREASE IN NET ASSETS FROM OPERATIONS .............................. $ 1,841,218 $ 4,965,884
============== ===============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BRUNDAGE, STORY AND ROSE INVESTMENT TRUST
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended November 30, 1996 and 1995
SHORT/INTERMEDIATE TERM
FIXED-INCOME FUND EQUITY FUND
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income....................... $ 1,925,771 $ 2,161,542 $ 105,845 $ 111,647
Net realized gains from security transactions 164,007 109,142 2,298,821 1,134,441
Net change in unrealized appreciation/depreciation
on investments............................ (248,560) 2,531,772 2,561,218 3,708,141
------------ -------------- ------------- --------------
Net increase in net assets from operations..... 1,841,218 4,802,456 4,965,884 4,954,229
------------ -------------- ------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income.................. (1,925,771) (2,161,542) (118,157) (97,033)
From net realized gains from security transactions -- -- (1,134,441) (835,887)
------------ -------------- ------------- --------------
Decrease in net assets from distributions to
shareholders................................ (1,925,771) (2,161,542) (1,252,598) (932,920)
------------ -------------- ------------- --------------
FROM CAPITAL SHARE TRANSACTIONS (NOTE 5):
Proceeds from shares sold................... 4,540,639 5,618,482 2,369,871 3,006,767
Net asset value of shares issued in reinvestment of
distributions to shareholders............. 1,615,646 1,847,043 1,235,320 920,285
Payments for shares redeemed................ (7,966,690) (10,224,592) (3,968,907) (2,578,708)
------------ -------------- ------------- --------------
Net increase (decrease) in net assets
from capital share transactions............. (1,810,405) (2,759,067) (363,716) 1,348,344
------------ -------------- ------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS ......... (1,894,958) (118,153) 3,349,570 5,369,653
NET ASSETS:
Beginning of year........................... 35,271,509 35,389,662 24,190,552 18,820,899
------------ -------------- ------------- --------------
End of year................................. $ 33,376,551 $ 35,271,509 $27,540,122 $24,190,552
============ ============== ============= ==============
UNDISTRIBUTED NET INVESTMENT INCOME ........... $ -- $ -- $ 12,694 $ 25,006
============ ============== ============= ==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BRUNDAGE, STORY AND ROSE INVESTMENT TRUST
SHORT/INTERMEDIATE TERM FIXED-INCOME FUND
FINANCIAL HIGHLIGHTS
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
NOV. 30, NOV. 30, NOV. 30, NOV. 30, NOV. 30,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year............ $ 10.73 $ 9.94 $ 10.77 $ 10.49 $ 10.43
---------- --------- ---------- --------- -----------
Income from investment operations:
Net investment income........................ 0.62 0.64 0.59 0.64 0.69
Net realized and unrealized
gains (losses) on investments.............. (0.04) 0.79 (0.79) 0.28 0.06
---------- --------- ---------- --------- -----------
Total from investment operations................ 0.58 1.43 (0.20) 0.92 0.75
---------- --------- ---------- --------- -----------
Less distributions:
Dividends from net investment income......... (0.62) (0.64) (0.59) (0.64) (0.69)
Distributions from net realized gains........ -- -- (0.04) -- --
---------- --------- ---------- --------- -----------
Total distributions............................. (0.62) (0.64) (0.63) (0.64) (0.69)
---------- --------- ---------- --------- -----------
Net asset value at end of year.................. $ 10.69 $ 10.73 $ 9.94 $ 10.77 $ 10.49
========== ========= ========== ========= ===========
Total return.................................... 5.65% 14.84% (1.98%) 9.00% 7.38%
========== ========= ========== ========= ===========
Net assets at end of year (000's)............... $ 33,377 $ 35,272 $ 35,390 $43,272 $32,025
========== ========= ========== ========= ===========
Ratio of expenses to average net assets(A) ..... 0.65% 0.60% 0.50% 0.50% 0.50%
Ratio of net investment income to average net assets 5.90% 6.21% 5.67% 5.95% 6.50%
Portfolio turnover rate......................... 40% 39% 57% 29% 24%
<FN>
(A) Absent fee waivers and/or expense reimbursements by the Adviser, the
ratios of expenses to average net assets would have been 1.09%, 1.09%,
1.06%, 1.11% and 1.30% for the years ended November 30, 1996, 1995, 1994,
1993, and 1992, respectively (Note 4).
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BRUNDAGE, STORY AND ROSE INVESTMENT TRUST
EQUITY FUND
FINANCIAL HIGHLIGHTS
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
NOV. 30, NOV. 30, NOV. 30, NOV. 30, NOV. 30,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year............ $ 14.91 $ 12.43 $ 12.70 $ 12.26 $ 10.85
---------- --------- ---------- --------- -----------
Income from investment operations:
Net investment income........................ 0.06 0.07 0.06 0.09 0.12
Net realized and unrealized
gains on investments....................... 2.97 3.02 0.11 0.76 1.40
---------- --------- ---------- --------- -----------
Total from investment operations................ 3.03 3.09 0.17 0.85 1.52
---------- --------- ---------- --------- -----------
Less distributions:
Dividends from net investment income......... (0.07) (0.06) (0.06) (0.10) (0.11)
Distributions from net realized gains........ (0.69) (0.55) (0.38) (0.31) --
---------- --------- ---------- --------- -----------
Total distributions............................. (0.76) (0.61) (0.44) (0.41) (0.11)
---------- --------- ---------- --------- -----------
Net asset value at end of year.................. $ 17.18 $ 14.91 $ 12.43 $ 12.70 $ 12.26
========== ========= ========== ========= ===========
Total return.................................... 21.27% 26.08% 1.35% 6.83% 14.39%
========== ========= ========== ========= ===========
Net assets at end of year (000's)............... $ 27,540 $ 24,191 $ 18,821 $ 19,150 $15,081
========== ========= ========== ========= ===========
Ratio of expenses to average net assets(A) ..... 1.30% 1.45% 1.50% 1.50% 1.50%
Ratio of net investment income to average net assets 0.42% 0.52% 0.51% 0.74% 1.05%
Portfolio turnover rate......................... 44% 42% 44% 45% 44%
Average commission rate ........................ $ 0.0490 -- -- -- --
<FN>
(A) Absent fee waivers by the Adviser, the ratios of expenses to average net
assets would have been 1.58% and 1.78% for the years ended November 30, 1993
and 1992, respectively.
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BRUNDAGE, STORY AND ROSE INVESTMENT TRUST
SHORT/INTERMEDIATE TERM FIXED-INCOME FUND
PORTFOLIO OF INVESTMENTS
November 30, 1996
PAR MARKET
VALUE INVESTMENT SECURITIES-- 97.3% RATE MATURITY VALUE
<S> <C> <C> <C> <C>
U.S. TREASURY OBLIGATIONS -- 27.6%
$ 1,000,000 U.S. Treasury Notes......................................... 5.000% 1/31/98 $ 994,375
750,000 U.S. Treasury Notes......................................... 5.875 10/31/98 753,516
1,250,000 U.S. Treasury Notes......................................... 6.250 5/31/00 1,269,141
1,000,000 U.S. Treasury Notes......................................... 6.250 2/15/03 1,018,125
2,000,000 U.S. Treasury Notes......................................... 5.750 8/15/03 1,979,376
1,000,000 U.S. Treasury Notes......................................... 7.250 5/15/04 1,075,938
1,000,000 U.S. Treasury Notes......................................... 7.500 2/15/05 1,094,375
1,000,000 U.S. Treasury Notes......................................... 6.500 8/15/05 1,030,625
- -------------- ------------
$ 9,000,000 TOTAL U.S. TREASURY OBLIGATIONS
- -------------- (Cost $9,102,310)...................................... $ 9,215,471
------------
U.S. GOVERNMENT AGENCY
MORTGAGE-BACKED SECURITIES -- 39.5%
$ 176,439 Federal Home Loan Mortgage Corp. GOLD #M-13854.............. 7.500% 5/01/97 $ 177,333
380,513 Federal Home Loan Mortgage Corp. GOLD #M-14868.............. 7.500 8/01/97 382,442
255,808 Federal Home Loan Mortgage Corp. GOLD #N-90875.............. 7.500 2/01/99 261,003
11,752 Government National Mortgage Assoc. #114468................. 9.500 7/15/99 12,218
685,061 Federal Home Loan Mortgage Corp. GOLD #G-50274.............. 7.500 6/01/00 697,194
15,609 Federal Home Loan Mortgage Corp. GNOME #200068.............. 8.000 3/01/02 16,039
55,389 Federal National Mortgage Assoc. DWARF #51935............... 8.000 4/01/02 56,990
26,393 Federal Home Loan Mortgage Corp. REMIC #1034-E.............. 8.400 1/15/05 26,469
1,000,000 Federal National Mortgage Assoc. REMIC #93-52E.............. 6.000 4/25/05 998,040
67,690 Federal Home Loan Mortgage Corp. #140094.................... 7.500 5/01/05 68,609
500,000 Federal Home Loan Mortgage Corp. REMIC #1404-D.............. 6.800 1/15/06 509,599
94,825 Federal National Mortgage Assoc. DWARF #50480............... 8.000 9/01/06 98,134
700,000 Federal National Mortgage Assoc. REMIC #92-24H.............. 7.500 11/25/06 722,490
728,982 Government National Mortgage Assoc. #362109................. 9.000 9/15/08 770,898
987,337 Federal National Mortgage Assoc. REMIC #93-4D............... 6.750 11/25/13 989,701
1,500,000 Federal Home Loan Mortgage Corp. REMIC #1523-PE............. 6.000 10/15/15 1,495,924
1,000,000 Federal National Mortgage Assoc. REMIC #93-20PE............. 5.900 5/25/16 993,539
1,000,000 Federal Home Loan Mortgage Corp. REMIC #1522-C.............. 6.000 8/15/16 998,660
1,000,000 Federal National Mortgage Assoc. REMIC #94-29PE............. 6.000 5/25/18 993,332
22,734 Government National Mortgage Assoc. #285639................. 9.000 2/15/20 24,362
1,000,000 Federal Home Loan Mortgage Corp. REMIC #1699-C.............. 6.200 2/15/24 1,002,230
917,169 Federal National Mortgage Assoc. #250322.................... 7.500 7/01/25 928,441
936,050 Government National Mortgage Assoc. #410063................. 7.500 7/15/25 949,698
- -------------- ------------
$ 13,061,751 TOTAL U.S. GOVERNMENT AGENCY
- -------------- MORTGAGE-BACKED SECURITIES
(Cost $13,103,791)..................................... $13,173,345
------------
<PAGE>
<CAPTION>
SHORT/INTERMEDIATE TERM FIXED-INCOME FUND (continued)
PAR MARKET
VALUE INVESTMENT SECURITIES-- 97.3% RATE MATURITY VALUE
<S> <C> <C> <C> <C>
OTHER MORTGAGE-BACKED SECURITIES -- 7.9%
$ 623,849 Advanta Home Equity Loan Trust #92-1A....................... 7.875% 9/25/08 $ 643,671
1,000,000 CMC Securities Corp. III #94-B.............................. 6.000 2/25/09 991,600
1,000,000 Bear Stearns Mortgage Securities, Inc. #96-3-A2............. 7.240 6/25/27 1,009,040
- -------------- ------------
$ 2,623,849 TOTAL OTHER MORTGAGE-BACKED SECURITIES
- -------------- (Cost $2,615,132) ..................................... $ 2,644,311
------------
ASSET-BACKED SECURITIES -- 4.0%
$ 266,112 Nissan Auto Receivables Trust #1994-A....................... 6.450% 9/15/99 $ 267,945
1,000,000 Circuit City Credit Card Master Trust #1994-2A.............. 8.000 11/15/99 1,053,155
- -------------- ------------
$ 1,266,112 TOTAL ASSET-BACKED SECURITIES
- -------------- (Cost $1,263,955)...................................... $ 1,321,100
------------
CORPORATE BONDS -- 18.3%
$ 700,000 General Motors Acceptance Corp. Medium Term Notes........... 7.600% 1/09/97 $ 701,505
200,000 Sears Roebuck & Co. Medium Term Notes....................... 7.440 1/15/97 200,466
100,000 Champion International Corp................................. 9.800 2/01/98 104,255
1,000,000 Smith Barney................................................ 5.500 1/15/99 990,058
1,000,000 Lehman Brothers, Inc........................................ 6.125 2/01/01 984,931
1,000,000 Ford Motor Credit Corp. Medium Term Notes................... 5.900 2/23/01 986,297
1,000,000 Quebec Province............................................. 8.800 4/15/03 1,122,120
1,000,000 Citicorp.................................................... 7.125 5/15/06 1,027,152
- -------------- ------------
$ 6,000,000 TOTAL CORPORATE BONDS
- -------------- (Cost $5,948,265)...................................... $ 6,116,784
------------
$ 31,951,712 TOTAL INVESTMENTS AT VALUE
============== (Cost $32,033,453) .................................... $32,471,011
------------
<CAPTION>
FACE MARKET
AMOUNT REPURCHASE AGREEMENTS(1)-- 1.9% VALUE
<S> <C> <C>
$ 642,000 Fifth Third Bank, 5.00%, dated 11/29/96, due 12/02/96,
- -------------- repurchase proceeds $642,268.............................................. $ 642,000
------------
$ 642,000 TOTAL REPURCHASE AGREEMENTS ................................................... $ 642,000
============== ------------
TOTAL INVESTMENTS AND REPURCHASE AGREEMENTS AT VALUE-- 99.2% .................. $33,113,011
OTHER ASSETS IN EXCESS OF LIABILITIES-- 0.8% .................................. 263,540
------------
NET ASSETS-- 100.0% ........................................................... $33,376,551
============
<FN>
(1) Repurchase agreements are fully collateralized by U.S. Government obligations.
DWARF -- A 15-year mortgage pool issued by FNMA. REMIC -- Real Estate Mortgage Investment Conduit.
GNOME -- A 15-year mortgage pool issued by FHLMC. GOLD -- A 30-year mortgage pool issued by FHLMC with a
shorter coupon payment delay period.
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BRUNDAGE, STORY AND ROSE INVESTMENT TRUST
EQUITY FUND
PORTFOLIO OF INVESTMENTS
November 30, 1996
MARKET
COMMON STOCK -- 96.4% SHARES VALUE
<S> <C> <C>
FINANCIAL AND INSURANCE -- 12.3%
American Express Co...................................................... 13,500 $ 705,375
American International Group............................................. 5,750 661,250
Federal National Mortgage Assoc.......................................... 22,700 936,375
General Re Corp.......................................................... 2,500 421,875
J.P. Morgan & Company, Inc............................................... 7,000 660,625
---------------
$ 3,385,500
---------------
HEALTH CARE -- 10.7%
Abbot Laboratories....................................................... 16,500 $ 919,875
Merck & Co., Inc......................................................... 7,000 581,000
Physicians Health Services Class A*...................................... 5,100 76,500
Schering-Plough Corp..................................................... 7,200 513,000
Smithkline Beecham PLC-ADR............................................... 12,400 854,050
---------------
$ 2,944,425
---------------
INDUSTRIAL -- 10.3%
AlliedSignal, Inc........................................................ 8,000 $ 586,000
Illinois Tool Works, Inc................................................. 7,000 600,250
Thermo Electron Corp.*................................................... 25,500 924,375
York International Corp.................................................. 14,000 735,000
---------------
$ 2,845,625
---------------
ENERGY AND RESOURCES -- 10.0%
Amoco Corp............................................................... 6,500 $ 504,563
Mobil Corp............................................................... 5,000 605,000
Noble Affiliates, Inc.................................................... 5,500 259,187
PanEnergy Corp........................................................... 18,000 792,000
Royal Dutch Petroleum Co................................................. 3,500 594,563
---------------
$ 2,755,313
---------------
TELECOMMUNICATIONS -- 8.0%
AT&T Corp................................................................ 18,700 $ 733,975
Airtouch Communications, Inc.*........................................... 29,900 766,188
Cabletron Systems, Inc.*................................................. 13,000 524,875
ECI Telecommunications, Ltd.............................................. 8,100 162,000
---------------
$ 2,187,038
---------------
HOUSEHOLD PRODUCTS -- 7.6%
Colgate-Palmolive Co..................................................... 5,500 $ 509,437
Gillette Co.............................................................. 7,000 516,250
International Flavors & Fragrances, Inc.................................. 11,000 500,500
Tupperware Corp.......................................................... 10,500 556,500
---------------
$ 2,082,687
---------------
<PAGE>
<CAPTION>
EQUITY FUND (continued)
MARKET
COMMON STOCK -- 96.4% SHARES VALUE
<S> <C> <C>
COMPUTER SYSTEMS AND SOFTWARE -- 5.7%
Adobe Systems, Inc....................................................... 12,600 $ 497,700
Sequent Computer Systems, Inc.*.......................................... 31,000 523,125
VeriFone, Inc.*.......................................................... 16,500 556,875
---------------
$ 1,577,700
---------------
ELECTRICAL EQUIPMENT -- 4.9%
General Electric Co...................................................... 4,000 $ 416,000
Molex, Inc. Class A...................................................... 26,312 927,498
---------------
$ 1,343,498
---------------
BASIC AND SPECIALTY CHEMICALS -- 4.3%
Avery-Dennison Corp...................................................... 8,000 $ 565,000
Ecolab, Inc.............................................................. 11,600 450,950
Great Lakes Chemical Co.................................................. 3,000 160,875
---------------
$ 1,176,825
---------------
RETAILING -- 3.5%
AutoZone, Inc.*.......................................................... 19,500 $ 480,187
Price/Costco, Inc.*...................................................... 21,000 488,250
---------------
$ 968,437
---------------
FOOD AND BEVERAGES -- 3.4%
PepsiCo, Inc............................................................. 14,300 $ 427,212
Sysco Corp............................................................... 15,000 511,875
---------------
$ 939,087
---------------
UTILITIES-TELEPHONE -- 3.1%
BellSouth Corp........................................................... 6,600 $ 266,475
GTE Corp................................................................. 13,000 583,375
---------------
$ 849,850
---------------
LEISURE TIME -- 2.2%
The Walt Disney Co....................................................... 4,000 $ 295,000
Viacom, Inc. Class B*.................................................... 8,000 302,000
---------------
$ 597,000
---------------
ELECTRONICS -- 2.0%
Motorola, Inc............................................................ 10,000 $ 553,750
---------------
CONTAINERS -- 1.8%
Sonoco Products Co....................................................... 18,500 $ 504,125
---------------
TRUCKING & LEASING -- 1.5%
Landstar System, Inc.*................................................... 17,400 $ 400,200
---------------
PAPER AND FOREST PRODUCTS -- 1.5%
Willamette Industries, Inc............................................... 6,000 $ 408,000
---------------
AEROSPACE/DEFENSE -- 1.4%
Boeing Co................................................................ 4,000 $ 397,500
---------------
<PAGE>
<CAPTION>
EQUITY FUND (continued)
MARKET
COMMON STOCK -- 96.4% SHARES VALUE
<S> <C> <C>
UTILITIES-ELECTRIC -- 1.2%
Montana Power Co......................................................... 16,000 $ 344,000
---------------
ELECTRONICS/SEMICONDUCTORS -- 1.0%
Intel Corp............................................................... 2,200 $ 279,125
---------------
TOTAL COMMON STOCK
(Cost $19,040,386).................................................. $ 26,539,685
---------------
<CAPTION>
FACE MARKET
REPURCHASE AGREEMENTS(1) -- 3.4% AMOUNT VALUE
<S> <C> <C>
Fifth Third Bank, 5.00%, dated 11/29/96, due 12/02/96,
repurchase proceeds $931,388........................................ $ 931,000 $ 931,000
-------------- ---------------
TOTAL REPURCHASE AGREEMENTS ............................................. $ 931,000 $ 931,000
============== ---------------
TOTAL INVESTMENTS AND REPURCHASE AGREEMENTS AT VALUE-- 99.8% ............ $ 27,470,685
OTHER ASSETS IN EXCESS OF LIABILITIES-- 0.2% ............................ 69,437
---------------
NET ASSETS-- 100.0% ..................................................... $ 27,540,122
===============
<FN>
* Non-income producing securities.
(1) Repurchase agreements are fully collateralized by U.S. Government obligations.
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
BRUNDAGE, STORY AND ROSE INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS
November 30, 1996
1. ORGANIZATION
Brundage, Story and Rose Investment Trust (the Trust) was organized as an Ohio
business trust on October 1, 1990. The Trust offers two series of shares to
investors: the Brundage, Story and Rose Short/Intermediate Term Fixed-Income
Fund and the Brundage, Story and Rose Equity Fund (collectively, the Funds).
The Trust commenced operations on December 3, 1990, when Brundage, Story and
Rose, LLC (the Adviser) purchased the initial 5,000 shares of each Fund at $10
per share. The public offering of shares commenced on January 2, 1991.
The Brundage, Story and Rose Short/Intermediate Term Fixed-Income Fund (the
Bond Fund) seeks to provide a higher and more stable level of income than a
money market fund with more principal stability than a mutual fund investing
in intermediate and long-term fixed-income securities. The Bond Fund invests
primarily in short and intermediate-term fixed-income securities.
The Brundage, Story and Rose Equity Fund (the Equity Fund) seeks to provide
protection and enhancement of capital, current income and growth of income.
The Equity Fund invests primarily in common stocks and securities convertible
into common stock.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the Trust's significant accounting policies:
Securities valuation -- The Funds' portfolio securities are valued as of the
close of the regular session of trading on the New York Stock Exchange
(currently 4:00 p.m., Eastern time). Portfolio securities listed on stock
exchanges and securities traded in the over-the-counter market are valued at
the last sale price as of the close of business on the day the securities are
being valued. Securities not traded on a particular day, or for which the last
sale price is not readily available, are valued at the closing bid price
quoted by brokers that make markets in the securities. U.S. Government and
agency obligations, asset-backed securities and corporate bonds are valued at
their most recent bid price as obtained from one or more of the major market
makers for such securities or are valued at an estimated fair value obtained
from an independent pricing service based upon such factors as maturity,
coupon, issuer and type of security. If market quotations are not readily
available, securities may be valued at fair value as determined in good faith
by the Adviser consistent with procedures established by the Board of
Trustees.
Repurchase agreements -- Repurchase agreements, which are collateralized by
U.S. Government obligations, are valued at cost which, together with accrued
interest, approximates market. Collateral for repurchase agreements is held in
safekeeping in the customer-only account of the Funds' custodian at the
Federal Reserve Bank. At the time each Fund enters into a repurchase
agreement, the seller agrees that the value of the underlying securities,
including accrued interest, will be equal to or exceed the face amount of the
repurchase agreement. Each Fund enters into repurchase agreements only with
institutions deemed to be creditworthy by the Adviser, including the Funds'
custodian, banks having assets in excess of $10 billion and primary U.S.
Government securities dealers.
Share valuation -- The net asset value of each Fund is calculated daily by
dividing the total value of that Fund's assets, less liabilities, by the
number of shares outstanding. The offering and redemption price per share of
each Fund are equal to the net asset value per share.
Investment income -- Interest income is accrued as earned. Dividend income is
recorded on the ex-dividend date. Discounts and premiums on securities
purchased are accreted/amortized in accordance with income tax regulations
which approximate generally accepted accounting principles.
Distributions to shareholders -- Dividends arising from net investment income
for the Bond Fund are declared daily and paid monthly. Dividends arising from
net investment income for the Equity Fund are declared and paid quarterly.
With respect to each Fund, net realized short-term capital gains, if any, may
be distributed throughout the year and net realized long-term capital gains,
if any, are distributed at least once each year. Income distributions and
capital gain distributions are determined in accordance with income tax
regulations.
Security transactions -- Security transactions are accounted for on the trade
date. Securities sold are valued on a specific identification basis.
<PAGE>
Securities traded on a to-be-announced basis -- The Bond Fund frequently
trades portfolio securities on a "to-be-announced" (TBA) basis. In a TBA
transaction, the Fund has committed to purchase securities for which all
specific information is not yet known at the time of the trade, particularly
the face amount and maturity date in mortgage-backed and asset-backed
securities transactions. Securities purchased on a TBA basis are recorded on
the trade date, however, they are not settled until they are delivered to the
Fund, normally 15 to 45 days later. These transactions are subject to market
fluctuations and their current value is determined in the same manner as for
other portfolio securities. When effecting such transactions, assets of a
dollar amount sufficient to make payment for the portfolio securities to be
purchased are placed in a segregated account on the trade date.
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 at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Federal income tax -- It is each Fund's policy to comply with the special
provisions of the Internal Revenue Code available to regulated investment
companies. As provided therein, in any fiscal year in which a Fund so
qualifies and distributes at least 90% of its taxable net income, the Fund
(but not the shareholders) will be relieved of federal income tax on the
income distributed. Accordingly, no provision for income taxes has been made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also each Fund's intention to declare as dividends
in each calendar year at least 98% of its net investment income (earned during
the calendar year) and 98% of its net realized capital gains (earned during
the fiscal year ended November 30) plus undistributed amounts from prior
years.
The following information is based upon federal income tax cost of portfolio
investments (excluding repurchase agreements) as of November 30, 1996:
<TABLE>
<CAPTION>
BOND EQUITY
FUND FUND
<S> <C> <C>
Gross unrealized appreciation......................... $ 543,250 $ 7,821,106
Gross unrealized depreciation......................... (105,692) (321,807)
-------------- ---------------
Net unrealized appreciation........................... $ 437,558 $ 7,499,299
============== ===============
Federal income tax cost............................... $ 32,033,453 $ 19,040,386
============== ===============
</TABLE>
As of November 30, 1996, the Bond Fund had a capital loss carryforward of
$349,216 for federal income tax purposes, which expires on November 30, 2002.
This capital loss carryforward may be utilized in future years to offset net
realized capital gains prior to distributing such gains to shareholders.
3. INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities of investment securities,
other than short-term investments, amounted to $12,782,462 and $14,422,361,
respectively, for the Bond Fund and $10,925,003 and $12,556,961, respectively,
for the Equity Fund during the year ended November 30, 1996.
4. TRANSACTIONS WITH AFFILIATES
Certain Trustees and officers of the Trust are principals of the Adviser.
Certain officers of the Trust are officers of MGF Service Corp. (MGF), the
administrative services agent, shareholder servicing and transfer agent, and
accounting services agent for the Trust, and of Midwest Group Financial
Services, Inc., the exclusive underwriter of the Funds' shares.
At November 30, 1996, the Adviser, principals of the Adviser and certain
employee benefit plans of the Adviser collectively owned 16% and 34% of the
shares of beneficial interest outstanding of the Bond Fund and the Equity
Fund, respectively.
ADVISORY AGREEMENT
Each Fund's investments are managed by the Adviser pursuant to the terms of an
Advisory Agreement. Under the Advisory Agreement, the Bond Fund and the Equity
Fund each pay the Adviser a fee, computed and accrued daily and paid monthly,
at an annual rate of 0.50% and 0.65%, respectively, of average daily net
assets.
In order to reduce the operating expenses of the Bond Fund, the Adviser
voluntarily waived $145,018 of its investment advisory fees during the year
ended November 30, 1996.
<PAGE>
ADMINISTRATIVE SERVICES AGREEMENT
Under the terms of the Administrative Services Agreement with the Trust, MGF
supplies non-investment related statistical and research data, internal
regulatory compliance services and executive and administrative services for
the Funds. MGF supervises the preparation of tax returns, reports to
shareholders of the Funds, reports to and filings with the Securities and
Exchange Commission and state securities commissions, and materials for
meetings of the Board of Trustees. For these services, MGF receives a monthly
fee based on each Fund's average daily net assets.
TRANSFER AGENT AND SHAREHOLDER SERVICE AGREEMENT
Under the terms of the Transfer, Dividend Disbursing, Shareholder Service and
Plan Agency Agreement with the Trust, MGF maintains the records of each
shareholder's account, answers shareholders' inquiries concerning their
accounts, processes purchases and redemptions of each Fund's shares, acts as
dividend and distribution disbursing agent and performs other shareholder
service functions. For these services, MGF receives a monthly fee based on the
number of shareholder accounts in each Fund. In addition, each Fund pays
out-of-pocket expenses including, but not limited to, postage and supplies.
ACCOUNTING SERVICES AGREEMENT
Under the terms of the Accounting Services Agreement with the Trust, MGF
calculates the daily net asset value per share and maintains the financial
books and records of each Fund. For these services, MGF receives a monthly fee
from each Fund. In addition, each Fund pays certain out-of-pocket expenses
incurred by MGF in obtaining valuations of such Fund's portfolio securities.
PLAN OF DISTRIBUTION
The Trust has a plan of distribution (the Plan) under which each Fund may
incur or reimburse the Adviser for expenses related to the distribution and
promotion of capital shares. The annual limitation for payment of such
expenses under the Plan is 0.25% of the average daily net assets of each Fund.
5. CAPITAL SHARE TRANSACTIONS
Proceeds and payments on capital shares sold and redeemed as shown in the
Statements of Changes in Net Assets are the result of the following capital
share transactions for the years ended November 30, 1996 and 1995:
<TABLE>
<CAPTION>
BOND FUND EQUITY FUND
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Shares sold.................................... 430,192 540,529 157,706 228,968
Shares issued in reinvestment
of distributions to shareholders............ 152,952 177,844 85,211 76,457
Shares redeemed................................ (748,745) (991,151) (262,040) (197,103)
------------ -------------- ------------- --------------
Net increase (decrease) in shares outstanding (165,601) (272,778) (19,123) 108,322
Shares outstanding, beginning of year.......... 3,288,115 3,560,893 1,621,993 1,513,671
------------ -------------- ------------- --------------
Shares outstanding, end of year................ 3,122,514 3,288,115 1,602,870 1,621,993
============ ============== ============= ==============
</TABLE>
<PAGE>
Report of Independent Public Accountants
To the Shareholders and Board of Trustees
of the Brundage, Story and Rose Investment Trust:
We have audited the accompanying statements of assets and liabilities of the
Brundage, Story and Rose Short/Intermediate Term Fixed-Income Fund and the
Brundage, Story and Rose Equity Fund (formerly the Brundage, Story and Rose
Growth & Income Fund) of the Brundage, Story and Rose Investment Trust (an
Ohio business trust), including the portfolios of investments, as of November
30, 1996, the related statements of operations for the year then ended, and
the statements of changes in net assets and the financial highlights for the
periods indicated thereon. These financial statements and financial highlights
are the responsibility of the Trust's management. Our responsibility is to
express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of November 30, 1996, by correspondence with the custodian. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Brundage, Story and Rose Short/Intermediate Term Fixed-Income Fund and the
Brundage, Story and Rose Equity Fund of the Brundage, Story and Rose
Investment Trust as of November 30, 1996, the results of their operations for
the year then ended, and the changes in their net assets and the financial
highlights for the periods indicated thereon, in conformity with generally
accepted accounting principles.
Cincinnati, Ohio,
December 30, 1996
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000868662
<NAME> BRUNDAGE, STORY AND ROSE INVESTMENT TRUST
<SERIES>
<NUMBER> 1
<NAME> EQUITY FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1996
<INVESTMENTS-AT-COST> 19,971,386
<INVESTMENTS-AT-VALUE> 27,470,685
<RECEIVABLES> 160,971
<ASSETS-OTHER> 696
<OTHER-ITEMS-ASSETS> 1,109
<TOTAL-ASSETS> 27,633,461
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 93,339
<TOTAL-LIABILITIES> 93,339
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 17,729,308
<SHARES-COMMON-STOCK> 1,602,870
<SHARES-COMMON-PRIOR> 1,621,993
<ACCUMULATED-NII-CURRENT> 12,694
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,298,821
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 7,499,299
<NET-ASSETS> 27,540,122
<DIVIDEND-INCOME> 395,852
<INTEREST-INCOME> 38,490
<OTHER-INCOME> 0
<EXPENSES-NET> 328,497
<NET-INVESTMENT-INCOME> 105,845
<REALIZED-GAINS-CURRENT> 2,298,821
<APPREC-INCREASE-CURRENT> 2,561,218
<NET-CHANGE-FROM-OPS> 4,965,884
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 118,157
<DISTRIBUTIONS-OF-GAINS> 1,134,441
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 157,706
<NUMBER-OF-SHARES-REDEEMED> 262,040
<SHARES-REINVESTED> 85,211
<NET-CHANGE-IN-ASSETS> 3,349,570
<ACCUMULATED-NII-PRIOR> 25,006
<ACCUMULATED-GAINS-PRIOR> 1,134,441
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 164,902
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 328,497
<AVERAGE-NET-ASSETS> 25,372,984
<PER-SHARE-NAV-BEGIN> 14.91
<PER-SHARE-NII> .06
<PER-SHARE-GAIN-APPREC> 2.97
<PER-SHARE-DIVIDEND> .07
<PER-SHARE-DISTRIBUTIONS> .69
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.18
<EXPENSE-RATIO> 1.30
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000868662
<NAME> BRUNDAGE, STORY AND ROSE INVESTMENT TRUST
<SERIES>
<NUMBER> 2
<NAME> SHORT/INTERMEDIATE TERM FIXED-INCOME FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-START> DEC-01-1995
<PERIOD-END> NOV-30-1996
<INVESTMENTS-AT-COST> 32,675,453
<INVESTMENTS-AT-VALUE> 33,113,011
<RECEIVABLES> 338,670
<ASSETS-OTHER> 128
<OTHER-ITEMS-ASSETS> 1,276
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</TABLE>
