Brundage,
Story and Rose
Investment Trust
------------------------------
Annual Report
------------------------------
November 30, 1998
------------------------------
------------------------------
Short/Intermediate Term
------------------------------
Fixed-Income Fund
------------------------------
Equity Fund
------------------------------
------------------------------
------------------------------
[LOGO] BRUNDAGE
STORY & ROSE
Investment Counsel Since 1932
<PAGE>
Letter To Shareholders January 8, 1999
- --------------------------------------------------------------------------------
ECONOMIC & FINANCIAL MARKETS OUTLOOK
A year ago the Standard & Poor's 500 Index appreciated over 20% for the third
consecutive year. We doubted, in light of serious economic problems in many
areas of the world, that we could expect to enjoy a fourth consecutive year of
extraordinarily high returns. However, for the fiscal year ended November 30,
1998, the S&P 500 was up 23.7%, and for the calendar year it chalked up a total
rate of return of 28.6% -- a remarkable event considering that the stocks that
dominate this index were very generously valued at the beginning of 1998.
Although the year was a most rewarding one, the path had many twists and turns
and at times was treacherous. Late in July the index had risen to an all-time
high, up about 21% for the year. By early October it was actually down. On one
day, August 31st, 1,183 stocks on the New York Stock Exchange reached 52-week
lows, and the 300 largest U.S. companies had declined on average a stunning 42%
from their recent highs. The damage to Latin American, Japanese and South Asian
equities was substantially greater. When we look at the financial and economic
crises in those parts of the world and in other places, such as Russia, it is
easy to understand why our U.S. stock market declined in the face of so many
problems and uncertainties. Early repercussions included a severely worsening
trade deficit, disappointing corporate profitability and numerous big write-offs
in the banking sector -- with perhaps more serious woes to come.
What is less easy to understand is why, in the face of these problems and
numerous others -- gradually escalating tensions in the oil-rich Middle East,
escalating belligerency towards its neighbors by North Korea and a soap opera in
Washington, D.C. to name a few -- investor enthusiasm returned quickly to the
equity markets. Although it seems entirely implausible, it appears that a modest
gesture of accommodation on the part of the Federal Reserve was catalyst enough.
In scarcely more than a few weeks, the law of supply and demand drove many
liquid large capitalization stock market favorites to new all-time highs --
taking the Standard & Poor's 500 Index with them. It should be noted, however,
that most popular benchmarks are market capitalization weighted; the S&P 500 on
an unweighted basis achieved a calendar 1998 return of only about 7%. We discuss
this two-tier phenomenon in more detail in our review of the Equity Fund.
As we look forward into 1999, the fundamental factors which struck us a year ago
as being important have changed very little. The outlook for Japan and Asia is
perhaps a bit better than was the case a year ago, but there are no reassuring
signs that a meaningful improvement in their economies is yet underway. We
should remember that, although Southeast Asia, including China, represents a
small percentage of world economic activity, it has accounted for more than half
of the world's economic growth over recent years. Thus, this part of the world
is of vital importance to the profitability not only of multinational companies
but also of just about all businesses which compete with companies in this area.
In short, "Asian flu" is still a concern as is the observation that Latin
America seems to be sneezing pretty often of late.
Most worrisome, however, is the accelerating mania in the information technology
area, particularly in companies associated with the Internet. We have exceeded
the point where one can say simply that valuations are much too high; we have
long since entered the area where valuations have nothing whatsoever to do with
equity prices. It is said that "stocks are the only goods that are less
attractive the cheaper they get" and perhaps at times the opposite is true: Ever
higher valuations make stocks even more attractive and impel even higher prices.
The problem is, of course, that all "bubbles" or "manias" inevitably come to an
end. Thus, although the average company appears reasonably valued at the present
time, the excessive speculation in a few areas has carried so far that we are
concerned that the eventual denouement might send shivers through the entire
structure of the equity markets.
<PAGE>
EQUITY FUND
Had we been asked at the end of August 1998, when large-cap stocks (as measured
by the S&P 500 Index) were almost 20% below their highs for the year and
small-cap stocks (as measured by the Russell 2000 Index) were down 22%
year-to-date and 29% below their highs, if a 12% return for our fiscal year
would have been satisfactory, our answer would have been a resounding yes.
Nonetheless, in a tribute both to how much our own and the market's expectations
have become inflated, and to the resiliency of large capitalization stocks
sporting valuations unheard of in more than 100 years of public market history,
we find ourselves disappointed. This in spite of the fact that from the market
lows at the end of August, your Fund was up 17%, more than recovering from the
loss it incurred in the global market meltdown of late summer.
Essentially, our disappointment is borne out of frustration that, despite having
a portfolio of companies that is qualitatively superior to the market and
quantitatively less expensive (as measured by the S&P 500 Index and depicted in
the chart below), we nonetheless lagged that particular performance benchmark.
Essentially, our disciplined approach has prevented us from owning enough of
today's large capitalization "one decision stocks" to keep up with the S&P 500
Index which is dominated by those companies.
- --------------------------------------------------------------------------------
Equity S&P
Fund 500
- --------------------------------------------------------------------------------
5-Year Historical Earnings Growth 16.0% 12.0%
5-Year Sales Growth 20.0% 5.0%
Consensus Future Earnings Growth 15.0% 6.0%
1999 Est. P/E Ratio 21.1X 24.5X
Price to Book Ratio 3.6X 4.3X
Market Capitalization(Million) $41,878 $79,600
- --------------------------------------------------------------------------------
This is not to say that we do not find some of those "household names"
attractive; we do. In fact, during the last fiscal year, performance in your
Fund benefited from your ownership of Microsoft, Intel, COMPAQ and Applied
Materials in technology, Schering-Plough, American Home Products and Abbott
Laboratories in health care and American International Group, Fannie Mae and
American Express in financial services. However, our discipline of investing
capital productively in an economic sense as a means of earning stock market
returns has led us also to a number of high quality mid-sized companies which,
despite generally good underlying fundamentals, have not participated fully in
the market's recent advance.
As a result, while we significantly outperformed the Russell 2000 return of
- -6.3% for the twelve months ended November 1998, we lagged the large-cap
benchmarks as represented by the S&P 500 and, to a lesser extent, the Dow Jones
Industrial Average. Relative to other equity mutual funds, we trailed modestly
the pure growth fund average return of 14.3%, but substantially outperformed the
8.0% general equity fund average. (Source: Lipper Analytical)
In terms of our positioning for the future as we look out into 1999, our crystal
ball is as cloudy as it has ever been. Our discipline tells us to shun the very
companies which, because of their strengths, exemplify our definition of good
long-term investments. Why? Simply put, from the standpoint of economic
valuation, at the prices they currently command in the stock market, their
underlying businesses cannot possibly generate real rates of return that are
attractive on either an absolute or a relative basis. Yet, that said, we are the
first to acknowledge that until this "Nifty-Fifty mania" ends, those are
precisely the stocks that will continue to lead the market. Given this
uncomfortable reality, our approach will stay the same. We will maintain our
positions in a few of the strongest of these large and very expensive companies,
as long as valuations stay within some semblance of reality, confident that
after this mania ends they will earn their way out of any decline from today's
over-exuberance. Meanwhile, we will focus our efforts most intensively on those
more attractively valued mid-sized enterprises which should prove to be good
investments in their own rights, without reliance upon investors' continued
uncritical enthusiasm for the stock market.
<PAGE>
SHORT/INTERMEDIATE TERM FIXED-INCOME FUND
Interest rates fell significantly across the yield curve during the fiscal year
ended November 30, 1998 as the Federal Reserve adopted a more accommodating
posture. U.S. Treasury bills, notes and bond rates declined by 70 to 130 basis
points, translating into substantial price gains for medium-term and longer-term
issues.
Treasuries appreciated in price during the fiscal year more than did comparable
maturity corporate and mortgage-backed issues. The total rate of return
(interest coupon plus/minus price change) of Treasury issues with 1-5 year
maturities was 8.21% during the fiscal year.
Corporate bond price changes, while positive, were held back due primarily to
concerns about what effect the weakness in Asia and Latin America would have on
corporate earnings. Lower rated non-investment grade bonds experienced price
declines in excess of 4% during the year. The one-to-five year investment grade
corporate bond total return during the year was 8.04%.
Mortgage-backed security (MBS) issues with 3to5 year average lives produced
total rates of return of 6.75% during the fiscal year. These issues were
negatively impacted by increasing prepayments from underlying mortgage pools
forcing MBS investors to reinvest cash flows at progressively lower yields as
interest rates declined during the fiscal year.
Your Fund's total rate of return for the fiscal year was 8.39% as compared with
money market alternatives such as three-month Treasury bills which provided a
5.62% return and the 8.73% return of the Merrill Lynch 3-Year Treasury Index.
The Fund achieved these results despite corporate and MBS holdings which were
maintained at approximately 75% of portfolio assets during the year.
Mortgage-backed holdings, cut back by 10 percentage points in portfolio
weighting in 1997, were trimmed further in 1998 to the current 20% in favor of
corporate issues. The yield on the Fund at fiscal year-end was 5.21% which
compared favorably to money market rates of approximately 4.75% and 2-to-5 year
Treasury yields of 4.50%.
Competitive portfolio returns relative to strong Treasury issue performance
resulted from good issue selection on the part of our specialist managers in the
corporate, MBS and asset-backed sectors. Individual issue evaluation as opposed
to interest rate forecasting continues to be our emphasis. Our current strategy
includes increasing our weightings in the now attractive MBS sector.
SUMMARY
We expect that inflation rates will remain low and that the deceleration of
corporate profits within a highly competitive and slowly growing economy will
continue throughout the year. If we are right, the environment for fixed-income
securities should continue to be good although this is already reflected in the
low level of bond yields. Our outlook for equities is cautious -- as it was a
year ago-- but we continue to feel that there are many good values available,
especially among smaller and mid-sized companies, and that longterm investors
should focus upon those areas in preference to highly popular and excessively
valued "Mega-Cap" companies at the present time.
Sincerely yours,
/s/ Malcolm D. Clarke, Jr.
Malcolm D. Clarke, Jr.
President
<PAGE>
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
----------------------------------------
Brundage, Story and Rose
Equity Fund
Average Annual Total Returns
1 Year 5 Years Since Inception*
11.96% 16.56% 14.45%
----------------------------------------
Past performance is not predictive of future performance.
<TABLE>
<CAPTION>
Brundage, Story
and Rose Standard & Poor's
Equity Fund 500 Index
<S> <C> <C>
1/91 10,000 10,000
3/91 11,100 11,453
6/91 10,736 11,427
9/91 11,280 12,038
12/91 12,273 13,047
3/92 11,890 12,717
6/92 11,802 12,958
9/92 12,371 13,367
12/92 12,579 14,039
3/93 12,875 14,651
6/93 12,907 14,721
9/93 13,385 15,101
12/93 13,870 15,452
3/94 13,148 14,866
6/94 13,156 14,928
9/94 14,103 15,657
12/94 13,795 15,654
3/95 14,791 17,178
6/95 15,543 18,818
9/95 16,875 20,314
12/95 17,551 21,537
3/96 17,916 22,693
6/96 18,920 23,711
9/96 19,188 24,444
12/96 20,934 26,482
3/97 20,587 27,192
6/97 24,236 31,939
9/97 26,143 34,331
12/97 26,642 35,317
3/98 29,342 40,244
6/98 29,492 41,573
9/98 25,818 37,437
11/98 29,090 42,936
</TABLE>
*The public offering of shares commenced on January 2, 1991.
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
-----------------------------------------
Brundage, Story and Rose
Short/Intermediate Term Fixed-Income Fund
Average Annual Total Returns
1 Year 5 Years Since Inception*
8.39% 6.45% 7.51%
-----------------------------------------
Past performance is not predictive of future performance.
<TABLE>
<CAPTION>
Brundage, Story
and Rose
Short/Intermediate Merrill Lynch
Term 3 Year
Fixed-Income Fund Treasury Index
<S> <C> <C>
1/91 10,000 10,000
3/91 10,158 10,200
6/91 10,357 10,384
9/91 10,864 10,845
12/91 11,322 11,353
3/92 11,240 11,223
6/92 11,685 11,654
9/92 12,130 12,163
12/92 12,054 12,105
3/93 12,488 12,482
6/93 12,747 12,663
9/93 13,007 12,878
12/93 13,063 12,931
3/94 12,848 12,728
6/94 12,751 12,661
9/94 12,828 12,759
12/94 12,766 12,734
3/95 13,366 13,271
6/95 14,036 13,837
9/95 14,263 14,051
12/95 14,749 14,496
3/96 14,647 14,423
6/96 14,734 14,505
9/96 14,999 14,743
12/96 15,352 15,060
3/97 15,323 15,071
6/97 15,764 15,452
9/97 16,178 15,833
12/97 16,523 16,131
3/98 16,774 16,365
6/98 17,107 16,629
9/98 17,710 17,392
11/98 17,739 17,397
</TABLE>
*The public offering of shares commenced on January 2, 1991.
<PAGE>
<TABLE>
<CAPTION>
BRUNDAGE, STORY AND ROSE INVESTMENT TRUST
STATEMENTS OF ASSETS AND LIABILITIES
November 30, 1998
===============================================================================================================
Short/
Intermediate
Term
Fixed-Income Equity
Fund Fund
- ---------------------------------------------------------------------------------------------------------------
ASSETS
Investment securities:
<S> <C> <C>
At amortized cost (original cost $35,949,087 and $25,092,244, respectively) .. $35,985,430 $25,092,244
=========== ===========
At market value (Note 2) ..................................................... $36,793,505 $37,402,044
Investments in repurchase agreements (Note 2) ................................... 2,154,000 3,939,000
Cash ............................................................................ 6,928 5,501
Interest and principal paydowns receivable ...................................... 391,754 520
Dividends receivable ............................................................ -- 44,581
Receivable for capital shares sold .............................................. 750 6,550
Other assets .................................................................... 10,538 11,643
----------- -----------
TOTAL ASSETS ................................................................. 39,357,475 41,409,839
----------- -----------
LIABILITIES
Dividends payable ............................................................... 28,827 --
Payable for capital shares redeemed ............................................. 56,819 63,001
Payable for securities purchased ................................................ -- 612,313
Payable to affiliates (Note 4) .................................................. 14,031 32,058
Other accrued expenses and liabilities .......................................... 22,037 15,942
----------- -----------
TOTAL LIABILITIES ............................................................ 121,714 723,314
----------- -----------
NET ASSETS ...................................................................... $39,235,761 $40,686,525
=========== ===========
Net assets consist of:
Paid-in capital ................................................................. $38,188,209 $25,851,284
Undistributed net investment income ............................................. -- 16,192
Accumulated net realized gains from security transactions ....................... 239,477 2,509,249
Net unrealized appreciation on investments ...................................... 808,075 12,309,800
----------- -----------
Net assets ...................................................................... $39,235,761 $40,686,525
=========== ===========
Shares of beneficial interest outstanding (unlimited number of shares
authorized, no par value) (Note 5) ........................................... 3,578,511 2,090,124
=========== ===========
Net asset value, offering price and redemption price per share (Note 2) ......... $ 10.96 $ 19.47
=========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
BRUNDAGE, STORY AND ROSE INVESTMENT TRUST
STATEMENTS OF OPERATIONS
For the Year Ended November 30, 1998
======================================================================================================
Short/
Intermediate
Term
Fixed-Income Equity
Fund Fund
- ------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
<S> <C> <C>
Interest ........................................................... $ 2,369,781 $ 106,898
Dividends .......................................................... -- 432,244
----------- -----------
TOTAL INVESTMENT INCOME ........................................ 2,369,781 539,142
----------- -----------
EXPENSES
Investment advisory fees (Note 4) .................................. 190,291 251,720
Administrative services fees (Note 4) .............................. 76,377 77,735
Accounting services fees (Note 4) .................................. 36,000 32,400
Professional fees .................................................. 16,623 16,623
Transfer agent and shareholder service fees (Note 4) ............... 14,400 14,400
Trustees' fees and expenses ........................................ 12,989 12,989
Insurance expense .................................................. 10,006 9,841
Reports to shareholders ............................................ 7,850 9,331
Postage and supplies ............................................... 8,305 7,322
Registration fees .................................................. 7,835 7,319
Custodian fees ..................................................... 4,317 3,728
Pricing expense .................................................... 6,673 1,308
Distribution expenses (Note 4) ..................................... 471 500
Other expenses ..................................................... 1,829 --
----------- -----------
TOTAL EXPENSES ................................................. 393,966 445,216
Fees waived by the Adviser (Note 4) ................................ (146,587) --
----------- -----------
NET EXPENSES ................................................... 247,379 445,216
----------- -----------
NET INVESTMENT INCOME ................................................. 2,122,402 93,926
----------- -----------
REALIZED AND UNREALIZED GAINS ON INVESTMENTS
Net realized gains from security transactions ...................... 619,402 2,509,249
Net change in unrealized appreciation/depreciation on investments .. 337,491 1,698,676
----------- -----------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS ...................... 956,893 4,207,925
----------- -----------
NET INCREASE IN NET ASSETS FROM OPERATIONS ............................ $ 3,079,295 $ 4,301,851
=========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
BRUNDAGE, STORY AND ROSE INVESTMENT TRUST
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended November 30, 1998 and 1997
===============================================================================================================================
Short/Intermediate Term
Fixed-Income Fund Equity Fund
----------------------------- -----------------------------
Year Year Year Year
Ended Ended Ended Ended
November 30, November 30, November 30, November 30,
1998 1997 1998 1997
- --------------------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS:
<S> <C> <C> <C> <C>
Net investment income ................................... $ 2,122,402 $ 1,970,130 $ 93,926 $ 106,761
Net realized gains (losses) from security transactions .. 619,402 (30,709) 2,509,249 3,535,218
Net change in unrealized appreciation/depreciation
on investments ...................................... 337,491 33,026 1,698,676 3,111,825
------------ ------------ ------------ ------------
Net increase in net assets from operations ................. 3,079,295 1,972,447 4,301,851 6,753,804
------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income .............................. (2,122,402) (1,970,130) (91,102) (106,087)
From net realized gains from security transactions ...... -- -- (3,535,218) (2,298,821)
------------ ------------ ------------ ------------
Decrease in net assets from distributions to
shareholders ............................................ (2,122,402) (1,970,130) (3,626,320) (2,404,908)
------------ ------------ ------------ ------------
FROM CAPITAL SHARE TRANSACTIONS (Note 5):
Proceeds from shares sold ............................... 4,423,714 6,910,347 3,608,905 3,894,667
Net asset value of shares issued in reinvestment of
distributions to shareholders ....................... 1,717,736 1,580,414 3,581,991 2,352,415
Payments for shares redeemed ............................ (4,515,399) (5,216,812) (2,522,915) (2,793,087)
------------ ------------ ------------ ------------
Net increase in net assets
from capital share transactions ......................... 1,626,051 3,273,949 4,667,981 3,453,995
------------ ------------ ------------ ------------
NET INCREASE IN NET ASSETS ................................. 2,582,944 3,276,266 5,343,512 7,802,891
NET ASSETS:
Beginning of year ....................................... 36,652,817 33,376,551 35,343,013 27,540,122
------------ ------------ ------------ ------------
End of year ............................................. $ 39,235,761 $ 36,652,817 $ 40,686,525 $ 35,343,013
============ ============ ============ ============
UNDISTRIBUTED NET INVESTMENT INCOME ........................ $ -- $ -- $ 16,192 $ 13,368
============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
<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
- ---------------------------------------------------------------------------------------------------------------------------
Years Ended November 30,
----------------------------------------------------------------
1998 1997 1996 1995 1994
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year .................. $ 10.69 $ 10.69 $ 10.73 $ 9.94 $ 10.77
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income .............................. 0.60 0.62 0.62 0.64 0.59
Net realized and unrealized
gains (losses) on investments .................. 0.27 -- (0.04) 0.79 (0.79)
-------- -------- -------- -------- --------
Total from investment operations ................... 0.87 0.62 0.58 1.43 (0.20)
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income ............... (0.60) (0.62) (0.62) (0.64) (0.59)
Distributions from net realized gains .............. -- -- -- -- (0.04)
-------- -------- -------- -------- --------
Total distributions ................................... (0.60) (0.62) (0.62) (0.64) (0.63)
-------- -------- -------- -------- --------
Net asset value at end of year ........................ $ 10.96 $ 10.69 $ 10.69 $ 10.73 $ 9.94
======== ======== ======== ======== ========
Total return .......................................... 8.39% 6.03% 5.65% 14.84% (1.98%)
======== ======== ======== ======== ========
Net assets at end of year (000's) ..................... $ 39,236 $ 36,653 $ 33,377 $ 35,272 $ 35,390
======== ======== ======== ======== ========
Ratio of net expenses to average net assets(A) ........ 0.65% 0.65% 0.65% 0.60% 0.50%
Ratio of net investment income to average net assets .. 5.58% 5.88% 5.90% 6.21% 5.67%
Portfolio turnover rate ............................... 90% 46% 40% 39% 57%
</TABLE>
(A) Absent fee waivers and/or expense reimbursements by the Adviser, the ratios
of expenses to average net assets would have been 1.04%, 1.07%, 1.09%,
1.09% and 1.06% for the years ended November 30, 1998, 1997, 1996, 1995 and
1994, respectively (Note 4).
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
BRUNDAGE, STORY AND ROSE INVESTMENT TRUST
EQUITY FUND
FINANCIAL HIGHLIGHTS
===========================================================================================================================
Per Share Data for a Share Outstanding Throughout Each Year
- ---------------------------------------------------------------------------------------------------------------------------
Years Ended November 30,
----------------------------------------------------------------
1998 1997 1996 1995 1994
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year .................. $ 19.40 $ 17.18 $ 14.91 $ 12.43 $ 12.70
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income .............................. 0.04 0.06 0.06 0.07 0.06
Net realized and unrealized
gains on investments ........................... 2.01 3.65 2.97 3.02 0.11
-------- -------- -------- -------- --------
Total from investment operations ...................... 2.05 3.71 3.03 3.09 0.17
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income ............... (0.04) (0.06) (0.07) (0.06) (0.06)
Distributions from net realized gains .............. (1.94) (1.43) (0.69) (0.55) (0.38)
-------- -------- -------- -------- --------
Total distributions ................................... (1.98) (1.49) (0.76) (0.61) (0.44)
-------- -------- -------- -------- --------
Net asset value at end of year ........................ $ 19.47 $ 19.40 $ 17.18 $ 14.91 $ 12.43
======== ======== ======== ======== ========
Total return .......................................... 11.96% 23.98% 21.27% 26.08% 1.35%
======== ======== ======== ======== ========
Net assets at end of year (000's) ..................... $ 40,687 $ 35,343 $ 27,540 $ 24,191 $ 18,821
======== ======== ======== ======== ========
Ratio of net expenses to average net assets ........... 1.15% 1.19% 1.30% 1.45% 1.50%
Ratio of net investment income to average net assets .. 0.24% 0.34% 0.42% 0.52% 0.51%
Portfolio turnover rate ............................... 50% 49% 44% 42% 44%
</TABLE>
See accompanying notes to financial statements.
<PAGE>
SHORT/INTERMEDIATE TERM FIXED-INCOME FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1998
================================================================================
Par Market
Value INVESTMENT SECURITIES -- 93.8% Rate Maturity Value
- --------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- 25.4%
$ 200,000 U.S. Treasury Notes .......... 6.625% 7/31/01 $ 209,813
300,000 U.S. Treasury Notes .......... 5.875 11/30/01 310,312
2,950,000 U.S. Treasury Notes .......... 6.625 3/31/02 3,125,156
1,550,000 U.S. Treasury Notes .......... 7.500 2/15/05 1,775,719
500,000 U.S. Treasury Notes .......... 6.500 5/15/05 549,062
1,000,000 U.S. Treasury Notes .......... 6.500 8/15/05 1,100,938
1,750,000 U.S. Treasury Notes .......... 6.125 8/15/07 1,908,048
1,000,000 U.S. Treasury Notes .......... 4.750 11/15/08 1,001,563
- ------------ ------------
$ 9,250,000 TOTAL U.S. TREASURY OBLIGATIONS
- ------------ (Amortized Cost $9,575,334) $ 9,980,611
------------
U.S. GOVERNMENT AGENCY
MORTGAGE-BACKED SECURITIES -- 19.8%
$ 59,281 FHLMC GOLD #N-90875 .......... 7.500% 2/01/99 $ 59,830
3,042 GNMA #114468 ................. 9.500 7/15/99 3,079
263,291 FHLMC GOLD #G-50274 .......... 7.500 6/01/00 265,784
7,008 FHLMC GNOME #200068 .......... 8.000 3/01/02 7,136
26,077 FNMA DWARF #51935 ............ 8.000 4/01/02 26,714
671,285 FNMA REMIC #93-52E ........... 6.000 4/25/05 671,855
51,503 FHLMC GOLD #140094 ........... 7.500 5/01/05 52,577
500,000 FHLMC REMIC #1404-D .......... 6.800 1/15/06 505,532
52,847 FNMA DWARF #50480 ............ 8.000 9/01/06 54,411
700,000 FNMA REMIC #92-24H ........... 7.500 11/25/06 709,027
500,180 GNMA #362109 ................. 9.000 9/15/08 526,973
1,086,504 FHLMC REMIC #1523-PE ......... 6.000 10/15/15 1,088,666
527,013 FNMA REMIC #93-20PE .......... 5.900 5/25/16 526,174
652,309 FHLMC REMIC #1522-C .......... 6.000 8/15/16 654,227
1,000,000 FNMA REMIC #94-29PE .......... 6.000 5/25/18 1,002,400
9,674 GNMA #285639 ................. 9.000 2/15/20 10,364
1,000,000 FHLMC REMIC #1699-C .......... 6.200 2/15/24 1,006,760
562,706 FNMA REMIC #250322 ........... 7.500 8/01/25 578,369
- ------------ ------------
$ 7,672,720 TOTAL U.S. GOVERNMENT AGENCY MORTGAGE-BACKED
- ------------ SECURITIES (Amortized Cost $7,633,466) $ 7,749,878
------------
OTHER MORTGAGE-BACKED SECURITIES -- 3.2%
$ 304,665 Advanta Home Equity Loan
Trust #92-1A ................. 7.875% 9/25/08 $ 309,985
940,564 CMC Securities Corp. III #94-B 6.000 2/25/09 940,893
- ------------ ------------
$ 1,245,229 TOTAL OTHER MORTGAGE-BACKED SECURITIES
- ------------ (Amortized Cost $1,241,373) $ 1,250,878
------------
ASSET-BACKED SECURITIES -- 8.5%
$ 1,000,000 Circuit City Credit Card
Trust #94-2-A ................ 8.000% 11/15/99 $ 1,025,970
1,000,000 J.C. Penney Credit Card
Trust #B-A ................... 8.950 10/15/01 1,033,819
1,225,000 First Bank Corporate Card
Trust #97-1-A ................ 6.400 2/15/03 1,260,880
- ------------ ------------
$ 3,225,000 TOTAL ASSET-BACKED SECURITIES
- ------------ (Amortized Cost $3,254,407) $ 3,320,669
------------
<PAGE>
SHORT/INTERMEDIATE TERM FIXED-INCOME FUND
PORTFOLIO OF INVESTMENTS (Continued)
================================================================================
Par Market
Value INVESTMENT SECURITIES -- 93.8% Rate Maturity Value
(Continued)
- --------------------------------------------------------------------------------
CORPORATE BONDS -- 36.9%
$ 210,000 Homeside Lending, Inc. ....... 6.875% 5/15/00 $ 213,106
1,000,000 Lehman Brothers, Inc. ........ 6.125 2/01/01 995,456
1,000,000 Ford Motor Credit Co.
Medium Term Notes ............ 5.900 2/23/01 1,011,734
1,000,000 General Motors Acceptance Corp. 6.000 2/01/02 1,013,632
1,200,000 Waste Management, Inc. ....... 6.625 7/15/02 1,238,239
1,000,000 Merrill Lynch & Co., Inc. .... 6.000 2/12/03 1,010,386
1,000,000 Asian Development Bank ....... 5.750 5/19/03 1,053,296
1,000,000 Sears Roebuck Acceptance Corp.
Medium Term Notes ............ 6.760 6/25/03 1,041,123
1,000,000 Salomon Smith Barney
Holdings, Inc. ............... 6.625 11/15/03 1,024,717
1,300,000 Household Finance Corp. ...... 5.875 9/25/04 1,311,133
1,000,000 Chilgener S.A ................ 6.500 1/15/06 900,617
1,000,000 GTE Southwest, Inc. .......... 6.230 1/01/07 1,039,946
500,000 PepsiCo, Inc. ................ 5.700 11/01/08 499,364
850,000 National Rural Utilities
Cooperative Finance Corp. .... 5.750 11/01/08 848,480
1,280,000 Lucent Technologies, Inc. .... 5.500 11/15/08 1,290,241
- ------------ ------------
$ 14,340,000 TOTAL CORPORATE BONDS
- ------------ (Amortized Cost $14,280,850) $ 14,491,470
------------
$ 35,732,949 TOTAL INVESTMENT SECURITIES
============ (Amortized Cost $35,985,430) $ 36,793,506
------------
================================================================================
Face Market
Amount REPURCHASE AGREEMENTS(1) -- 5.5% Value
- --------------------------------------------------------------------------------
$ 2,154,000 Fifth Third Bank, 4.75%, dated
============ 11/30/98, due 12/01/98, repurchase
proceeds $2,154,284 .......... $ 2,154,000
------------
TOTAL INVESTMENT SECURITIES AND
REPURCHASE AGREEMENTS -- 99.3% $ 38,947,506
OTHER ASSETS IN EXCESS OF LIABILITIES-- 0.7% 288,255
------------
NET ASSETS -- 100.0% ......... $ 39,235,761
============
(1) Repurchase agreements are fully collateralized by U.S. Government
obligations.
FHLMC - Federal Home Loan Mortgage Corporation.
FNMA - Federal National Mortgage Association.
GNMA - Government National Mortgage Association.
DWARF - A 15-year mortgage pool issued by FNMA.
GNOME - A 15-year mortgage pool issued by FHLMC.
REMIC - Real Estate Mortgage Investment Conduit.
GOLD - A 30-year mortgage pool issued by FHLMC with a shorter coupon payment
delay period.
See accompanying notes to financial statements.
<PAGE>
EQUITY FUND
PORTFOLIO OF INVESTMENTS
November 30, 1998
================================================================================
Market
COMMON STOCKS -- 91.9% Shares Value
- --------------------------------------------------------------------------------
FINANCIAL SERVICES -- 17.2%
American Express Co. ............................. 11,500 $ 1,150,719
American International Group, Inc. ............... 11,287 1,060,978
BankBoston Corp. ................................. 18,000 749,250
Chubb Corp. ...................................... 15,400 1,078,962
Citigroup, Inc. .................................. 16,000 803,000
Fannie Mae ....................................... 20,700 1,505,925
J.P. Morgan & Co., Inc. .......................... 6,000 641,250
------------
6,990,084
------------
CAPITAL GOODS -- 16.0%
AlliedSignal, Inc. ............................... 22,000 968,000
Avery Dennison Corp. ............................. 25,200 1,208,025
The Boeing Co. ................................... 17,800 723,125
Illinois Tool Works, Inc. ........................ 8,400 533,925
Molex, Inc. - Class A ............................ 42,306 1,364,368
Thermo Electron Corp.* ........................... 47,000 793,125
Waste Management, Inc. ........................... 21,500 921,813
------------
6,512,381
------------
TECHNOLOGY -- 10.7%
Applied Materials, Inc.* ......................... 11,200 434,000
Compaq Computer Corp. ............................ 23,000 747,500
First Data Corp. ................................. 10,000 266,875
Hewlett-Packard Co. .............................. 10,100 633,775
Intel Corp. ...................................... 4,000 430,500
Microsoft Corp.* ................................. 3,500 427,000
Motorola, Inc. ................................... 7,000 434,000
Northern Telecom Limited ......................... 10,000 466,875
QUALCOMM, Inc.* .................................. 9,400 515,825
Siebel Systems, Inc.* ............................ 68 1,649
------------
4,357,999
------------
CONSUMER CYCLICALS -- 8.4%
AutoZone, Inc.* .................................. 26,700 804,338
Catalina Marketing Corp.* ........................ 19,000 1,106,750
H&R Block, Inc. .................................. 20,600 925,712
Nike, Inc. - Class B ............................. 14,700 588,000
------------
3,424,800
------------
HEALTH CARE -- 8.3%
Abbott Laboratories .............................. 25,000 1,200,000
American Home Products Corp. ..................... 14,800 788,100
Schering-Plough Corp. ............................ 7,000 744,625
Smithkline Beecham PLC - ADR ..................... 10,500 639,844
------------
3,372,569
------------
<PAGE>
EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
================================================================================
Market
COMMON STOCKS -- 91.9% (Continued) Shares Value
- --------------------------------------------------------------------------------
CONSUMER STAPLES -- 8.1%
Colgate-Palmolive Co. ............................ 3,800 $ 325,375
McDonald's Corp. ................................. 12,500 875,781
PepsiCo, Inc. .................................... 17,300 669,294
Sysco Corp. ...................................... 30,000 808,125
The Walt Disney Co. .............................. 10,000 321,875
Young Broadcasting, Inc. - Class A* .............. 8,000 285,000
------------
3,285,450
------------
ENERGY -- 7.2%
Apache Corp. ..................................... 35,000 805,000
Exxon Corp. ...................................... 6,000 450,375
Mobil Corp. ...................................... 10,000 861,875
Noble Affiliates, Inc. ........................... 32,700 827,719
------------
2,944,969
------------
BASIC MATERIALS -- 6.5%
du Pont (E. I.) de Nemours and Co. ............... 10,000 587,500
Ecolab, Inc. ..................................... 34,000 1,051,875
Sonoco Products Co. .............................. 20,220 605,336
Willamette Industries, Inc. ...................... 11,300 394,794
------------
2,639,505
------------
COMMUNICATION SERVICES -- 4.8%
AirTouch Communications, Inc.* ................... 17,400 995,063
AT&T Corp. ....................................... 15,500 965,844
Leap Wireless International, Inc.* ............... 1,750 10,062
------------
1,970,969
------------
TRANSPORTATION -- 3.0%
Landstar System, Inc.* ........................... 29,500 1,209,500
------------
UTILITIES -- 1.7%
Duke Energy Corp. ................................ 11,090 693,818
------------
TOTAL COMMON STOCKS (Cost $25,092,244) $ 37,402,044
------------
================================================================================
Face Market
REPURCHASE AGREEMENTS(1) -- 9.7% Amount Value
- --------------------------------------------------------------------------------
Fifth Third Bank, 4.75%, dated 11/30/98, due
12/01/98, repurchase proceeds $3,939,520 ......... $3,939,000 $ 3,939,000
========== ------------
TOTAL COMMON STOCKS AND REPURCHASE AGREEMENTS -- 101.6% $ 41,341,044
LIABILITIES IN EXCESS OF OTHER ASSETS -- (1.6%) .. (654,519)
------------
NET ASSETS -- 100.0% ............................. $ 40,686,525
============
* Non-income producing security.
(1) Repurchase agreements are fully collateralized by U.S. Government
obligations.
ADR - American Depository Receipt.
See accompanying notes to financial statements.
<PAGE>
BRUNDAGE, STORY AND ROSE INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS
November 30, 1998
================================================================================
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. 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 Funds' 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). Securities which are traded on stock
exchanges or are quoted by NASDAQ are valued at the last reported sale price or,
if not traded on a particular day, at the closing bid price. Securities traded
in the overthe-counter market, and which are not quoted by NASDAQ, are valued at
the last sale price, if available, otherwise, at the last quoted bid price. 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 on the basis of prices
provided by an independent pricing service giving consideration to such factors
as maturity, coupon, issuer and type of security. Securities for which market
quotations are not readily available are valued at fair value as determined in
good faith in accordance with consistently applied procedures established by and
under the general supervision of 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 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 trade date.
Securities sold are valued on a specific identification basis.
<PAGE>
Securities traded on a to-be-announced basis -- The Bond Fund periodically
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.
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 income 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, 1998:
- --------------------------------------------------------------------------------
Bond Equity
Fund Fund
- --------------------------------------------------------------------------------
Gross unrealized appreciation ............... $ 871,048 $ 13,184,611
Gross unrealized depreciation ............... (68,912) (964,536)
------------ ------------
Net unrealized appreciation ................. $ 802,136 $ 12,220,075
============ ============
Federal income tax cost ..................... $ 35,991,369 $ 25,181,969
============ ============
- --------------------------------------------------------------------------------
The difference between the federal income tax cost of portfolio investments and
the financial statement cost is due to certain timing differences in the
recognition of capital losses under income tax regulations and generally
accepted accounting principles.
3. Investment Transactions
Cost of purchases and proceeds from sales and maturities of investment
securities, other than short-term investments, amounted to $33,412,456 and
$33,121,921, respectively, for the Bond Fund and $18,157,064 and $19,113,759,
respectively, for the Equity Fund, during the year ended November 30, 1998.
4. Transactions with Affiliates
Certain Trustees and officers of the Trust are principals of the Adviser.
Certain officers of the Trust are officers of Countrywide Fund Services, Inc.
(CFS), the administrative services agent, shareholder servicing and transfer
agent, and accounting services agent for the Trust, and of CW Fund Distributors,
Inc., the exclusive underwriter of the Funds' shares.
As of November 30, 1998, the Adviser, principals of the Adviser and certain
employee benefit plans of the Adviser were, collectively, a significant
shareholder of record of each Fund.
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.
<PAGE>
In order to reduce the operating expenses of the Bond Fund, the Adviser
voluntarily waived $146,587 of its investment advisory fees during the year
ended November 30, 1998.
ADMINISTRATIVE SERVICES AGREEMENT
Under the terms of an Administrative Services Agreement with the Trust, CFS
supplies non-investment related statistical and research data, internal
regulatory compliance services and executive and administrative services for the
Funds. CFS 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, CFS receives a monthly fee from each Fund at an
annual rate of 0.20% on each Fund's respective average daily net assets up to
$50 million; 0.175% on such net assets between $50 and $100 million; and 0.15%
on such net assets in excess of $100 million, subject to a $1,000 minimum
monthly fee from each Fund.
TRANSFER AGENT AND SHAREHOLDER SERVICE AGREEMENT
Under the terms of the Transfer, Dividend Disbursing, Shareholder Service and
Plan Agency Agreement with the Trust, CFS 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, CFS receives a monthly fee at an annual
rate of $19.50 per shareholder account from the Bond Fund and $15.00 per
shareholder account from the Equity Fund, subject to a $1,200 minimum monthly
fee from 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, CFS
calculates the daily net asset value per share and maintains the financial books
and records of each Fund. For these services, CFS receives a monthly fee, based
on current asset levels, of $3,000 from the Bond Fund and $2,700 from the Equity
Fund. In addition, each Fund pays certain out-of-pocket expenses incurred by CFS
in obtaining valuations of such Fund's portfolio securities.
PLAN OF DISTRIBUTION
The Trust has adopted a plan of distribution (the Plan) under which each Fund
may directly incur or reimburse the Adviser for expenses related to the
distribution and promotion of Fund 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, 1998 and 1997.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Bond Fund Equity Fund
------------------------- -------------------------
Year Year Year Year
Ended Ended Ended Ended
November 30, November 30, November 30, November 30,
1998 1997 1998 1997
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold ............................ 409,114 651,578 195,597 226,359
Shares issued in reinvestment
of distributions to shareholders .... 158,469 149,272 208,604 154,343
Shares redeemed ........................ (417,652) (494,784) (135,661) (161,988)
---------- ---------- ---------- ----------
Net increase in shares outstanding ..... 149,931 306,066 268,540 218,714
Shares outstanding, beginning of year .. 3,428,580 3,122,514 1,821,584 1,602,870
---------- ---------- ---------- ----------
Shares outstanding, end of year ........ 3,578,511 3,428,580 2,090,124 1,821,584
========== ========== ========== ==========
- ---------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Report of Independent Public Accountants
================================================================================
Arthur Andersen LLP [LOGO]
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 of the Brundage, Story and Rose Investment
Trust (an Ohio business trust), including the portfolios of investments, as of
November 30, 1998, the related statements of operations for the year then ended,
the statements of changes in net assets for each of the two years in the period
then ended 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, 1998, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
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, 1998, the results of their operations for the year then
ended, and the changes in their net assets for each of the two years in the
period then ended and the financial highlights for each of the five years in the
period then ended in conformity, with generally accepted accounting principles.
/s/ Arthur Andersen LLP
Cincinnati, Ohio,
December 30, 1998
<PAGE>
BRUNDAGE,
STORY AND ROSE
INVESTMENT TRUST
- ----------------------------------------
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202-4094
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
- ----------------------------------------
CW Fund Distributors, Inc.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202-4094
TRANSFER AGENT
- ----------------------------------------
Countrywide Fund Services, Inc.
P.O. Box 5354
Cincinnati, Ohio 45201-5354
SHAREHOLDER SERVICES
- ----------------------------------------
Nationwide: (Toll Free) 800-320-2212
<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-30-1998
<PERIOD-END> NOV-30-1998
<INVESTMENTS-AT-COST> 29,031,244
<INVESTMENTS-AT-VALUE> 41,341,044
<RECEIVABLES> 51,651
<ASSETS-OTHER> 5,501
<OTHER-ITEMS-ASSETS> 11,643
<TOTAL-ASSETS> 41,409,839
<PAYABLE-FOR-SECURITIES> 612,313
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 111,001
<TOTAL-LIABILITIES> 723,314
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 25,851,284
<SHARES-COMMON-STOCK> 2,090,124
<SHARES-COMMON-PRIOR> 1,821,584
<ACCUMULATED-NII-CURRENT> 16,192
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,509,249
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 12,309,800
<NET-ASSETS> 40,686,525
<DIVIDEND-INCOME> 432,244
<INTEREST-INCOME> 106,898
<OTHER-INCOME> 0
<EXPENSES-NET> 445,216
<NET-INVESTMENT-INCOME> 93,926
<REALIZED-GAINS-CURRENT> 2,509,249
<APPREC-INCREASE-CURRENT> 1,698,676
<NET-CHANGE-FROM-OPS> 4,301,851
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 91,102
<DISTRIBUTIONS-OF-GAINS> 3,535,218
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 195,597
<NUMBER-OF-SHARES-REDEEMED> 135,661
<SHARES-REINVESTED> 208,604
<NET-CHANGE-IN-ASSETS> 5,343,512
<ACCUMULATED-NII-PRIOR> 13,368
<ACCUMULATED-GAINS-PRIOR> 3,535,218
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 251,720
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 445,216
<AVERAGE-NET-ASSETS> 38,740,815
<PER-SHARE-NAV-BEGIN> 19.40
<PER-SHARE-NII> .04
<PER-SHARE-GAIN-APPREC> 2.01
<PER-SHARE-DIVIDEND> .04
<PER-SHARE-DISTRIBUTIONS> 1.94
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 19.47
<EXPENSE-RATIO> 1.15
<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-30-1998
<PERIOD-END> NOV-30-1998
<INVESTMENTS-AT-COST> 38,139,430
<INVESTMENTS-AT-VALUE> 38,947,505
<RECEIVABLES> 392,504
<ASSETS-OTHER> 6,928
<OTHER-ITEMS-ASSETS> 10,538
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<PER-SHARE-NAV-BEGIN> 10.69
<PER-SHARE-NII> .60
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<EXPENSE-RATIO> .65
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
