<PAGE>
Message From The Chairman Summit High Yield Fund
- --------------------------------------------------------------------------------
Dear Fellow Shareholders:
The 12 months ended May 31, 1996, was an excellent period for investors in high
yield bonds. The Salomon Brothers High Yield Market Index delivered a 9.53%
return during the period, more than twice the 4.37% return for the Salomon
Brothers Broad Investment Grade Bond Index.
Moreover, the Summit High Yield Fund delivered a particularly strong
performance during the period. Its 20.34% total return (without the sales
charge)* handily outpaced the average total return of 11.38% earned by other
high yield funds in Lipper Analytical Services' High Current Yield category for
the 12 months ended May 31, 1996. IN FACT, THE FUND'S PERFORMANCE FOR THE
PERIOD WAS FIFTH BEST AMONG THE 137 FUNDS IN ITS CATEGORY.1
While consistent 20% annual returns are probably too much to expect from any
fund or asset class, we remain convinced that high yield bonds will continue to
deliver good results relative to the risks they entail. This outlook is
supported by the performance of these bonds during the 15-year period through
1995. High yield bonds delivered 14.59% annual returns for the period, almost
equal to the 14.80% returns delivered by the S&P 500 Stock Index./2/ What's
more, the high yield bond market was only about half as volatile as the S&P 500
Stock Index during the same period.2
CURRENT FACTORS FAVOR HIGH YIELD BONDS
The high yield sector's strong performance reflects a number of factors that
currently favor high yield bonds. Investment bankers and other professionals
who help companies structure their high yield debt have become more aware of
credit quality in recent years. Many companies also have taken steps to cut
costs and increase profitability, enhancing the quality of their balance
sheets.
One result: The percentage of high yield issues rated BB or higher has climbed
from 17% in 1989 to 50% at the end of 1995./3/ Some of that change has come
about because better companies are issuing higher-quality debt in the first
place. In other cases, bonds' credit ratings have been upgraded as their
issuers' financial conditions have improved.
In addition, many institutional investors have increased their stake in the
high yield market, reflecting a growing realization that high yield bonds are a
separate asset class that can add diversification benefits to a portfolio.
While improved credit quality and increased demand have led to capital gains
for many high yield bonds, the bonds have also delivered high current income to
help compensate for their default risk. This combination has produced solid
total returns for investors in the sector.
KEY ELEMENTS OF OUR INVESTMENT STRATEGY
During the recent 12-month period, the Fund continued to benefit from excellent
individual security selection as well as rising demand from institutional
investors for high yield bonds. The Fund's performance also reflected our
attempts to maximize total returns by combining capital appreciation and
current income.
The Fund pursues its goal in three ways. First, we apply contrarian judgment to
choose securities that have been overlooked by other investors. Example: Eagle
Foods, an out-of-favor grocery store chain,
- ------
* With the 4.50% sales charge, the Fund's return for the period was 14.88%;
Institutional Shares returned 20.16%. Past performance is no guarantee of
future results.
/1/The rankings are based on total return and do not include the effect of a
sales charge. Past performance is no guarantee of future results. During the
period for which this ranking is based, the Fund waived fees. In the absence
of these waivers, the ranking may have been lower.
/2/Source: Chemical Securities, 1995 High Yield Annual Review
/3/Source: Chemical Securities, 1995 High Yield Annual Review
- --------------------------------------------------------------------------------
-1-
<PAGE>
Message From The Chairman Summit High Yield Fund
- --------------------------------------------------------------------------------
whose high yield bonds rose sharply in price as new management implemented a
plan that improved results at the once-struggling chain.
Second, the Fund invests in securities that we expect to benefit from improving
credit quality. One security that performed well during the period was Haynes
International, which supplies parts to the aerospace industry. The Fund bought
the company's bonds because we believed that Haynes' financial prospects would
benefit from improvements in that industry.
Third, the Fund makes strategic moves to capture improvements in sectors of the
high yield market. During the recent period, it seemed likely that continued
economic growth might nudge inflation and bond yields higher. Thus, the Fund
purchased a number of "cushion bonds" with relatively high current yields but
short maturities. Such bonds' prices aren't likely to fall as much as other
bond prices if interest rates rise.
The Fund also invested in issues of "early cyclical" companies in the paper and
other industries in the beginning of 1996. Those issues had suffered when the
economy slowed down and have since begun to show much better results, thanks to
rising demand for the issuers' products.
Finally, the Fund held issues of companies in food, cable, energy and other
industries that historically have delivered relatively stable returns over
time, even if the economy suddenly slows down.
LOOKING AHEAD
We believe that the high yield market will continue to deliver solid returns
for the risks that investors in this sector take. Moreover, it seems likely
that the economy will continue to grow at a modest pace during the coming year,
providing significant opportunities for the Fund.
In closing, I would like to thank you for the trust and confidence you have
placed in our portfolio management team. As the #5 ranked high yield fund in
the country over the past 12 months, our Fund has had an excellent year. Please
feel free to call me with questions or comments about our Fund.
Sincerely,
/s/ Steven R. Sutermeister
Steven R. Sutermeister,
Chairman
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
DATES/VALUES
--------------------------------------------
FUND/INDEX NAME 06/27/94 05/31/95 05/31/96
===========================================================================
<S> <C> <C> <C>
- ---------------------------------------------------------------------------
Salomon High Yield Market Index 10,000 11,309 12,387
- ---------------------------------------------------------------------------
High Yield Shares
- ---------------------------------------------------------------------------
06/27/94 05/31/95 05/31/96
------------------------------------------------------
w/out load 10,000 10,997 13,233
------------------------------------------------------
w/load 9,551* 10,503* 12,639*
------------------------------------------------------
Institutional Service Shares
- ---------------------------------------------------------------------------
06/27/94 05/31/95 05/31/96
--------------------------------------------
10,000 10,997 13,214
--------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Avergae Annual Total Return
- --------------------------------------------------------------------------------
Since
Inception
1 Year (6/27/94)
<S> <C> <C>
- --------------------------------------------------------------------------------
High Yield Shares (w/out load) 20.34% 15.61%
- --------------------------------------------------------------------------------
High Yield Shares (w/load) 14.88%* 12.89%*
- --------------------------------------------------------------------------------
<CAPTION>
Since
Inception
1 Year (1/19/96)
<S> <C> <C>
- --------------------------------------------------------------------------------
Institutional Service Shares 20.16%** 15.52%**
- --------------------------------------------------------------------------------
</TABLE>
*Reflects 4.50% sales charge.
**Date for performance purposes commenced 6/27/94.
- --------------------------------------------------------------------------------
-2-
<PAGE>
Message From The Chairman Summit High Yield Fund
- --------------------------------------------------------------------------------
The Fund's performance is measured against the Salomon Brothers High Yield
Market Index, a broad-based index of the high yield bond market. The index is
unmanaged and does not reflect the deduction of expenses associated with a
mutual fund, such as investment management and fund accounting fees. The
performance of the Summit High Yield Fund reflects the deduction of fees for
these value-added services.
Past performance is not predictive of future performance and the composition of
the Fund's holdings is subject to change. Investment return and principal value
of the Summit High Yield Fund will fluctuate so that the shares, when redeemed,
may be worth more or less than their original cost.
During the period, investment advisory and administration fees were voluntarily
reduced, resulting in a higher total return than would have occurred if full
fees had been charged.
Although the Fund's yield may be significantly higher than that of other fixed-
income funds that purchase higher-rated securities, this yield is generally
accompanied by greater risk that the Fund's share price will decline. For
further information regarding this and other risks, please consult the
prospectus.
The Summit High Yield Fund is distributed by BISYS Fund Services.
This report is authorized for distribution only when accompanied or preceded by
a current prospectus.
- --------------------------------------------------------------------------------
-3-
<PAGE>
TABLE OF CONTENTS
Message From the Chairman
Page 1
Report of Independent Accountants
Page 5
Statement of Assets and Liabilities
Page 6
Statement of Operations
Page 7
Statements of Changes in Net Assets
Page 8
Schedule of Portfolio Investments
Page 9
Notes to Financial Statements
Page 11
Financial Highlights
Page 16
-4-
<PAGE>
Report of Independent Accountants Summit High Yield Fund
- -------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
Summit Investment Trust
We have audited the accompanying statement of assets and liabilities of the
Summit High Yield Fund, including the schedule of portfolio investments, as of
May 31, 1996, and the related statement of operations, statements of changes
in net assets, and the financial highlights for each of the periods presented.
These financial statements and financial highlights are the responsibility of
Summit Investment Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audit.
We conducted our audit 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 May 31, 1996 by correspondence with the custodian and brokers or
other auditing procedures where confirmations from brokers were not received.
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 audit provides 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
Summit High Yield Fund as of May 31, 1996, and the results of its operations
and the changes in its net assets and the financial highlights for the periods
presented in conformity with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Columbus, Ohio
July 16, 1996
-5-
<PAGE>
SUMMIT HIGH YIELD FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investments, at value (Cost $27,549,472).......................... $29,603,560
Interest receivable............................................... 839,558
Unamortized organization costs.................................... 381
-----------
Total Assets.................................................. 30,443,499
-----------
LIABILITIES:
Accrued expenses and other payables:
Investment advisory fees........................................ 124
Administration fees............................................. 1,241
12b-1 fees (High Yield shares).................................. 5,986
12b-1 fees (Institutional Service shares)....................... 38
Custodian and accounting fees................................... 1,411
Legal and audit fees............................................ 13,225
Transfer agent fees............................................. 5,253
Printing costs.................................................. 14,532
Other........................................................... 1,143
-----------
Total Liabilities............................................. 42,953
-----------
NET ASSETS:
Capital........................................................... 27,583,681
Undistributed net investment income............................... 7,287
Net unrealized appreciation on investments........................ 2,054,088
Accumulated undistributed net realized gains on investment
transactions..................................................... 755,490
-----------
Net Assets.................................................... $30,400,546
===========
Net Assets
High Yield shares............................................... $28,627,871
Institutional Service shares.................................... 1,772,675
-----------
Total........................................................... $30,400,546
===========
Outstanding units of beneficial interest (shares)
High Yield shares............................................... 2,591,388
Institutional Service shares.................................... 160,746
-----------
Total........................................................... 2,752,134
===========
Net asset value
Redemption price per share--High Yield shares................... $11.05
Offering and Redemption price per share--Institutional Service
shares......................................................... $11.03
===========
Maximum Sales Charge--High Yield shares........................... 4.50%
===========
Maximum Offering Price--High Yield shares (100%/(100%-Maximum
Sales Charge) of net asset value adjusted to nearest cent)
per share........................................................ $11.57
===========
</TABLE>
See notes to financial statements.
-6-
<PAGE>
SUMMIT HIGH YIELD FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MAY 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income..................................................... $3,015,442
Dividend income..................................................... 2,750
----------
Total Income...................................................... 3,018,192
----------
EXPENSES:
Investment advisory fees............................................ 238,006
Administration fees................................................. 54,750
12b-1 fees--High Yield shares....................................... 67,104
12b-1 fees--Institutional Service shares (a)........................ 820
Custodian and accounting fees....................................... 46,695
Legal and audit fees................................................ 61,064
Organization costs.................................................. 5,319
Trustees' fees...................................................... 29,024
Transfer agent fees................................................. 36,415
Registration and filing fees........................................ 24,093
Printing costs...................................................... 30,886
Other............................................................... 21,624
Expenses waived..................................................... (178,330)
----------
Total Expenses.................................................... 437,470
----------
Net investment income............................................... 2,580,722
----------
REALIZED/UNREALIZED GAINS ON INVESTMENTS:
Net realized gains on investment transactions....................... 1,021,588
Net change in unrealized appreciation on investments................ 1,498,333
----------
Net realized/unrealized gains on investments........................ 2,519,921
----------
Change in net assets resulting from operations...................... $5,100,643
==========
</TABLE>
- ------
(a) For the period from January 19, 1996 to May 31, 1996.
See notes to financial statements.
-7-
<PAGE>
SUMMIT HIGH YIELD FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR FROM JUNE 27, 1994
ENDED TO
MAY 31, 1996 MAY 31, 1995(A)
------------ ------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income......................... $ 2,580,722 $ 2,169,841
Net realized gains (losses) on investment
transactions................................. 1,021,588 (199,151)
Net change in unrealized appreciation on
investments.................................. 1,498,333 555,755
----------- -----------
Change in net assets resulting from operations. 5,100,643 2,526,445
----------- -----------
DISTRIBUTIONS TO HIGH YIELD SHAREHOLDERS FROM:
Net investment income......................... (2,515,712) (2,169,771)
Net realized gains............................ (66,947)
DISTRIBUTIONS TO INSTITUTIONAL SHAREHOLDERS FROM(B):
Net investment income......................... (52,460)
In excess of net investment income............ (5,333)
----------- -----------
Change in net assets from shareholder
distributions................................ (2,640,452) (2,169,771)
----------- -----------
CAPITAL TRANSACTIONS:
Proceeds from shares issued................... 3,568,045 25,414,219
Dividends reinvested.......................... 2,865,386 1,904,681
Cost of shares redeemed....................... (6,168,600) (50)
----------- -----------
Change in net assets from capital
transactions................................. 264,831 27,318,850
----------- -----------
Change in net assets.......................... 2,725,022 27,675,524
NET ASSETS:
Beginning of period........................... 27,675,524
----------- -----------
End of period................................. $30,400,546 $27,675,524
=========== ===========
SHARE TRANSACTIONS:
Sold.......................................... 333,322 2,542,739
Reinvested.................................... 272,922 194,929
Redeemed...................................... (591,773) (5)
----------- -----------
Change in shares............................... 14,471 2,737,663
=========== ===========
</TABLE>
- ------
(a) Period from commencement of operations.
(b) For the period from January 19, 1996 to May 31, 1996.
See notes to financial statements.
-8-
<PAGE>
SUMMIT HIGH YIELD FUND
SCHEDULE OF INVESTMENTS
MAY 31, 1996
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- -------------------------------------------------------- -----------
<C> <S> <C>
CORPORATE BONDS (96.6%):
Consumer (8.5%):
Consumer Goods & Services (3.3%):
1,000,000 Renaissance Cosmetics, Inc.,
13.75%, 8/15/01........................................ $ 1,000,000
-----------
Food Processors (5.2%):
1,000,000 Foodbrands America,
10.75%, 5/15/06........................................ 1,017,500
1,000,000 PM Holdings Corp.,
0.00%, 9/1/00 (b)...................................... 558,750
-----------
1,576,250
-----------
Total Consumer.................................................. 2,576,250
-----------
Energy (6.6%):
Oil/Gas Exploration (4.9%):
1,000,000 Mesa Capital Corp.,
12.75%, 6/30/98 ....................................... 1,000,000
500,000 Trans Texas Gas Corp.,
11.50%, 6/15/02........................................ 486,250
-----------
1,486,250
-----------
Oilfield Service (1.7%):
500,000 Energy Ventures, Inc.,
10.25%, 3/15/04........................................ 518,750
-----------
Total Energy.................................................... 2,005,000
-----------
Financial Sector (2.5%):
Leasing (2.5%):
1,000,000 Tiphook Finance,
7.13%, 5/1/98.......................................... 750,000
-----------
Total Financial Sector.......................................... 750,000
-----------
Manufacturing (37.1%):
Apparel/Textile (6.5%):
500,000 CMI Industries,
9.50%, 10/1/03......................................... 390,000
1,000,000 Synthetic Industries, Inc.,
12.75%, 12/1/02........................................ 1,055,000
500,000 Tultex Corp.,
10.63%, 3/15/05 ....................................... 518,125
-----------
1,963,125
-----------
Auto & Related (6.0%):
1,000,000 Great Dane Holdings,
14.50%, 1/1/06......................................... 960,000
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
CORPORATE BONDS, CONTINUED:
Manufacturing, continued:
Auto & Related, continued:
1,000,000 Venture Holdings,
9.75%, 4/1/04......................................... $ 875,000
-----------
1,835,000
-----------
Chemical (3.3%):
1,000,000 Carlisle Plastics, Inc.,
10.25%, 6/15/97....................................... 1,001,250
-----------
General Industrial (11.6%):
1,000,000 Haynes International, Inc.,
13.50%, 8/15/99....................................... 1,000,000
500,000 IMO Industries,
11.75%, 5/1/06**...................................... 518,750
1,000,000 International Wire,
11.75%, 6/1/05........................................ 995,000
1,000,000 Terex Corp.,
13.75%, 5/15/02....................................... 1,025,000
-----------
3,538,750
-----------
Information Services/Technology (3.4%):
1,000,000 Computervision Industries Corp.,
11.38%, 8/15/99....................................... 1,040,000
-----------
Paper Products (6.3%):
500,000 Florida Coast Paper,
12.75%, 6/1/03........................................ 511,250
1,000,000 Gaylord Container Corp.,
12.75%, 5/15/05....................................... 1,051,250
10,000 S.D. Warren Co.,*
14.00%, 12/15/06***................................... 350,000
-----------
1,912,500
-----------
Total Manufacturing............................................ 11,290,625
-----------
Service (26.5%):
Gaming/Hotels (9.4%):
500,000 Casino Magic Finance,
11.50%, 10/15/01...................................... 525,000
500,000 Harveys Casino Resorts,
10.63%, 6/1/06........................................ 503,750
500,000 Majestic Star Casino,
12.75%, 5/15/03....................................... 526,250
500,000 Riviera Holdings,
11.00%, 12/31/02...................................... 490,000
</TABLE>
Continued
-9-
<PAGE>
SUMMIT HIGH YIELD FUND
SCHEDULE OF INVESTMENTS, CONTINUED
MAY 31, 1996
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
CORPORATE BONDS, CONTINUED:
Service, continued:
Gaming/Hotels, continued:
1,000,000 Santa Fe Hotel, Inc.,
11.00%, 12/15/00...................................... $ 795,000
-----------
2,840,000
-----------
Grocery (2.8%):
1,000,000 Eagle Food Centers,
8.63%, 4/15/00........................................ 860,000
-----------
Health Care (3.2%):
1,000,000 Regency Health Services,
9.88%, 10/25/02....................................... 975,000
-----------
Media & Cable (6.3%):
1,000,000 Chancellor Broadcasting,
9.38%, 10/1/04........................................ 940,000
1,000,000 Helicon Group, Inc.,
9.00%, 11/1/03 (c).................................... 987,500
-----------
1,927,500
-----------
Retail Stores (3.1%):
1,000,000 Parisian, Inc.,
9.88%, 7/15/03........................................ 952,500
-----------
Other Services (1.7%):
500,000 The Knoll Group, Inc.,
10.88%, 3/15/06**..................................... 510,000
-----------
Total Service.................................................. 8,065,000
-----------
Transportation (13.6%):
Air Transportation/Related (8.6%):
1,000,000 Airplanes Pass Through Trust,
10.88%, 3/15/19....................................... 1,060,000
500,000 CHC Helicopter,
11.50%, 7/15/02....................................... 472,500
1,000,000 SC International,
13.00%, 10/1/05....................................... 1,085,000
-----------
2,617,500
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
CORPORATE BONDS, CONTINUED:
Transportation, continued:
Trucking/Other (5.0%):
1,000,000 Ameritruck Distribution,
12.25%, 11/15/05..................................... $ 988,750
500,000 TNT Transport PLC, TNT USA,
11.50%, 4/15/04...................................... 517,500
-----------
1,506,250
-----------
Total Transportation.......................................... 4,123,750
-----------
Utilities (1.8%):
Telecommunications (1.8%):
1,000,000 Intermedia Communications,
0.00%, 5/15/01 (d)................................... 557,500
-----------
Total Utilities............................................... 557,500
-----------
Total Corporate Bonds......................................... 29,368,125
-----------
WARRANTS (0.1%):
Broadcast, Radio & Television (0.0%):
200 American Telecastings, 5 Warrant Package, Expire
6/15/99.............................................. 7,400
-----------
Consumer (0.1%):
2,000 Renaissance Cosmetics, Inc., Warrants, Expire 8/15/01. 45,000
-----------
Hotels/Gaming (0.0%):
500 Boomtown Warrants, Expire 11/98....................... 5
-----------
Total Warrants................................................ 52,405
-----------
INVESTMENT COMPANIES (0.6%):
183,030 Fountain Square Money Market Fund..................... 183,030
-----------
Total Investment Companies.................................... 183,030
-----------
TOTAL INVESTMENTS
(Cost--$27,549,472)(a)......................................... $29,603,560
===========
</TABLE>
- ------
Percentages indicated are based on net assets of $30,400,546.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation........... $2,146,750
Unrealized depreciation........... (92,662)
----------
Net unrealized appreciation....... $2,054,088
==========
</TABLE>
(b) Interest rate increases to 11.50% on September 1, 2000.
(c) Interest rate increases to 11.00% on November 1, 1996.
(d) Interest rate increases to 12.50% on May 15, 2001.
* Represents paid-in-kind securities.
** Represents private placement securities.
*** 1 warrant attached to each preferred share.
See notes to financial statements.
-10-
<PAGE>
SUMMIT INVESTMENT TRUST
SUMMIT HIGH YIELD FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1996
1.ORGANIZATION:
Summit Investment Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "1940 Act") as an open-end management
investment company established as a Massachusetts business trust under a
Declaration of Trust dated March 8, 1994. The Trust is currently comprised
of one investment portfolio, the Summit High Yield Fund (the "Fund").
Between the date of organization and the date of commencement of operations
of the Fund (June 27, 1994), the Trust had no operations other than those
relating to organizational matters, including the issuance on May 24, 1994
of 10,000 shares at $10.00 per share, to The Union Central Life Insurance
Company ("Union Central Life").
The Fund's investment objective is high current income with capital
appreciation as a secondary goal. The Fund invests primarily in lower-
quality, intermediate to long-term corporate bonds.
The Fund is authorized to issue an unlimited number of shares, which are
units of beneficial interest with par value of $0.001 per share. The Fund is
authorized to issue two classes of shares, High Yield and Institutional
Service. The High Yield shares are subject to an initial sales charge
imposed at the time of purchase, in accordance with the Fund's prospectus.
Each class of shares has identical rights and privileges except with respect
to voting rights on matters affecting a single class of shares and the
exchange privileges of each class of shares.
2.SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by
the Fund in the preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles. The preparation of
financial statements 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 for
the period. Actual results could differ from those estimates.
SECURITIES VALUATION:
Securities which are traded on stock exchanges are valued at the last
sales price as of the close of the New York Stock Exchange (the
"Exchange"), or lacking any sales, at the closing bid prices. Securities
traded only in the "over-the-counter" market are valued at the last bid
prices quoted by brokers that make markets in the securities at the close
of trading on the Exchange. Fixed income securities are generally traded
in the over-the-counter market. Securities and assets for which market
quotations are not readily available or not obtained from a pricing
service are valued at fair value as determined in good faith by the Board
of Trustees, although the actual calculations may be made by persons
acting pursuant to the direction of the Trustees. The Fund uses a pricing
service or services in determining the net asset value of the Fund. Debt
securities with a remaining maturity of 60 days or less are valued on an
amortized cost basis, which the Trustees have determined reflects fair
value.
Continued
-11-
<PAGE>
SUMMIT INVESTMENT TRUST
SUMMIT HIGH YIELD FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
MAY 31, 1996
The Fund may invest its assets in intermediate to long-term, high yield,
medium and lower-quality, fixed income securities. Because the market for
lower-rated securities may be thinner and less active than for higher-
rated securities, there may be market price volatility for these
securities and limited liquidity in the resale market. If market
quotations are not readily available for the Fund's lower-rated or non-
rated securities, these securities will be valued by a method that the
Trustees believe accurately reflects fair value. Judgment plays a greater
role in valuing lower-rated debt securities than with respect to
securities for which external sources of quotations and last sale
information are more available.
SECURITIES TRANSACTIONS AND RELATED INCOME:
Securities transactions are accounted for on the date the security is
purchased or sold (trade date). Interest income is recognized on the
accrual basis and includes, where applicable, the pro rata amortization
of premium or discount. Dividend income is recorded on the ex-dividend
date. Gains or losses realized on sales of securities are determined by
comparing the identified cost of the security lot sold with the net sales
proceeds.
DIVIDENDS TO SHAREHOLDERS:
Dividends from net investment income are declared and paid monthly.
Distributable net realized capital gains, if any, are declared and
distributed at least annually.
Dividends from net investment income and from net realized capital gains
are determined in accordance with income tax regulations which may differ
from generally accepted accounting principles. These differences are
primarily due to differing treatments for organization costs and
deferrals of certain losses.
FEDERAL INCOME TAXES:
It is the policy of the Fund to continue to qualify as a regulated
investment company by complying with the provisions available to certain
investment companies, as defined in applicable sections of the Internal
Revenue Code, and to make distributions of net investment income and net
realized capital gains sufficient to relieve it from all, or
substantially all, Federal income taxes.
OTHER:
All expenses in connection with the Trust's organization and registration
under the 1940 Act and the Securities Act of 1933 were paid by the Fund.
Such expenses are being amortized over a period of two years commencing
with the date of the initial public offering. In the event that any of
the initial shares of the fund are redeemed during the amortization
period by any holder thereof, the redemption proceeds will be reduced by
any unamortized organizational expenses of the trust in the same
proportion as the number of said shares being redeemed bears to the
number of initial shares that are outstanding at the time of redemption.
Other operating expenses of the Trust are prorated to the Fund on the
basis of relative net assets.
Continued
-12-
<PAGE>
SUMMIT INVESTMENT TRUST
SUMMIT HIGH YIELD FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
MAY 31, 1996
3.PURCHASES AND SALES OF SECURITIES:
Purchases and sales of securities for the Fund (excluding short-term
securities) for the year ended May 31, 1996 were $54,041,391 and $48,633,003
respectively.
4.RELATED PARTY TRANSACTIONS:
First Summit Capital Management ("FSCM" or the "Adviser"), a joint venture
having its principal offices at 1876 Waycross Road, Cincinnati, Ohio 45240,
is the investment adviser to the Fund. FSCM was organized principally for
purposes of sponsoring and managing the Trust pursuant to a Joint Venture
Agreement between Carillon Advisers, Inc. ("Carillon"), an Ohio corporation,
and Freeman Holding Company, Inc. ("Freeman"), a Delaware corporation.
Carillon is a wholly-owned subsidiary of Union Central Life, an Ohio mutual
insurance company, which owns more than 96% of the shares of the Fund.
Freeman is the parent corporation of Freeman Securities Company, Inc., a New
Jersey corporation which is registered as a broker-dealer under the
Securities Exchange Act of 1934 and a member of the National Association of
Securities Dealers, Inc.
Under the terms of the Investment Advisory Agreement, FSCM is entitled to
receive fees based on a percentage of the average net assets of the Fund.
FSCM has agreed to limit the investment advisory fee for the first year of
the Fund's operations to an annual rate of 0.35% of the Fund's average net
assets. Effective July 1, 1995, the investment advisory fee is based on the
total return investment performance of the Fund for the prior twelve-month
period relative to the percentage change in the Salomon Brothers High Yield
Market Index for the same period. The advisory fee is paid monthly at an
annual rate which varies between 0.35% and 1.15% of the Fund's average daily
net assets. The adviser has agreed to waive a portion of its advisory fee so
as to limit the Fund's total expenses to 1.60%. For the year ended May 31,
1996, FSCM voluntarily reduced $164,637 of investment advisory fees.
BISYS Fund Services Limited Partnership d/b/a BISYS Fund Services ("BISYS")
is an Ohio limited partnership. BISYS Fund Services Ohio, Inc. ("BISYS
Ohio"), and BISYS are subsidiaries of The BISYS Group, Inc.
Certain officers of the Trust are affiliated with BISYS or with FSCM. Such
officers are not paid any fees directly by the Fund for serving as officers
of the Trust.
BISYS serves the Trust as manager and administrator. Under the terms of the
Management and Administration Agreement, BISYS' fees are computed daily as a
percentage of the average net assets of the Fund at an annual rate of 0.20%.
For the year ended May 31, 1996, BISYS voluntarily reduced $13,693 of
administration fees.
Continued
-13-
<PAGE>
SUMMIT INVESTMENT TRUST
SUMMIT HIGH YIELD FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
MAY 31, 1996
BISYS also serves as distributor of the Fund's shares. BISYS receives fees
for providing distribution services under the Distribution Agreement (the
"Plan") pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, the Fund
shall pay BISYS a fee not to exceed, on an annual basis, 0.25% of the
average daily net assets of certain shares of the Fund for payments BISYS
makes to financial institutions, including FSCM, and broker/dealers, and for
expenses BISYS and any of its affiliates incur for providing distribution or
shareholder service assistance. For the year ended May 31, 1996, BISYS
received $11,717 from commissions earned on sales of shares of the Fund,
$1,167 of which was reallowed to affiliated broker/dealers.
BISYS Ohio, serves as the Trust's transfer agent and is entitled to receive
fees based upon a contractually specified amount per shareholder with
specified minimum per portfolio amounts and surcharges. In addition, the
transfer agent is reimbursed for certain out-of-pocket expenses incurred in
providing transfer agency services. BISYS Ohio, also serves as fund
accountant for the Trust. Under the terms of the Fund Accounting Agreement,
the fund accountant is entitled to receive fees based on a percentage of the
average net assets of the Fund and is reimbursed for certain out-of-pocket
expenses incurred in providing such fund accounting services. Transfer agent
and fund accounting fees for the year ended May 31, 1996 totaled $83,110.
Continued
-14-
<PAGE>
SUMMIT INVESTMENT TRUST
SUMMIT HIGH YIELD FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
MAY 31, 1996
5.CAPITAL SHARE TRANSACTIONS
Transactions in capital shares for the Fund were as follows:
<TABLE>
<CAPTION>
SUMMIT HIGH YIELD
BOND FUND
-----------------
FOR THE YEAR
ENDED
MAY 31,
1996
-----------------
<S> <C>
CAPITAL TRANSACTIONS:
HIGH YIELD SHARES:
Proceeds from shares isssued............................... $ 573,171
Dividends reinvested....................................... 2,820,631
Shares redeemed............................................ (4,848,104)
-----------
Change in net assets from High Yield share transactions.. $(1,454,302)
===========
INSTITUTIONAL SERVICE SHARES (A):
Proceeds from shares isssued............................... $ 2,994,874
Dividends reinvested....................................... 44,755
Shares redeemed............................................ (1,320,496)
-----------
Change in net assets from Institutional Service share
transactions............................................ $ 1,719,133
===========
SHARE TRANSACTIONS:
HIGH YIELD SHARES:
Issued..................................................... 54,443
Reinvested................................................. 268,810
Redeemed................................................... (469,528)
-----------
Change in High Yield shares.............................. (146,275)
===========
INSTITUTIONAL SERVICE SHARES (A):
Issued..................................................... 278,879
Reinvested................................................. 4,112
Redeemed................................................... (122,245)
-----------
Change in Institutional Service shares................... 160,746
===========
</TABLE>
- ------
(a) For the period from January 19, 1996 (commencement of operations) to May
31, 1996.
6.FEDERAL INCOME TAXES (UNAUDITED):
For federal income tax purposes, the Fund had no capital loss carryforwards,
as of May 31, 1996.
-15-
<PAGE>
SUMMIT HIGH YIELD FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INSTITUTIONAL
HIGH YIELD SERVICE
SHARES SHARES
---------- ---------------------
YEAR FOR THE PERIOD FOR THE PERIOD
ENDED FROM JANUARY 19, 1996 FROM JUNE 27, 1994
MAY 31, TO TO
1996 MAY 31, 1996(D) MAY 31, 1995(A)
---------- --------------------- ------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD................. $ 10.11 $10.59 $ 10.00
------- ------ -------
INVESTMENT ACTIVITIES:
Net investment income.... 1.01 0.40 0.83
Net realized and
unrealized gains on
investments............. 0.95 0.47 0.11
------- ------ -------
Total from Investment
Activities............ 1.96 0.87 0.94
------- ------ -------
DISTRIBUTIONS:
Net investment income.... (1.01) (0.40) (0.83)
In excess of net
investment income....... (0.03)
Net realized gains....... (0.01)
------- ------ -------
Total Distributions.... (1.02) (0.43) (0.83)
------- ------ -------
NET ASSET VALUE, END OF
PERIOD.................... $ 11.05 $11.03 $ 10.11
======= ====== =======
Total Return (excludes
sales charges)............ 20.34% 20.16%(b) 9.97%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of
period (000)............ $28,628 $1,773 $27,676
Ratio of expenses to
average net assets...... 1.60% 1.52%(c) 1.56%(c)
Ratio of net investment
income to average net
assets.................. 9.42% 9.86%(c) 9.13%(c)
Ratio of expenses to
average net assets*..... 2.24% 2.76%(c) 1.61%(c)
Ratio of net investment
income to average net
assets*................. 8.78% 8.62%(c) 9.08%(c)
Portfolio turnover....... 187.61% 187.61% 158.36%
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
(d) On January 19, 1996, the Fund issued a second series of shares and
designated such shares as "Institutional Service" shares.
See notes to financial statements.
-16-
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<PAGE>
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================================================================================
TRUSTEES AND OFFICERS
Steven R. Sutermeister, Chairman and Trustee
James F. Smith, Trustee
Theodore H. Emmerich, Trustee
Frederick Moss, Trustee
Bruce H. Olson, Trustee
Scott A. Englehart, Secretary and Treasurer
-----------
Investment Adviser
First Summit Capital Management
1876 Waycross Road
Cincinnati, Ohio 45246
Administrator and Distributor
BISYS Fund Services
3435 Stelzer Road
Columbus, Ohio 43219-3035
Legal Counsel
Stradley Ronon Stevens & Young
2600 Commerce Square
Philadelphia, PA 19103-7098
Auditors
Coopers & Lybrand L.L.P.
100 East Broad Street
Columbus, Ohio 43215
================================================================================
================================================================================
[LOGO OF SUMMIT HIGH YIELD FUND]
A PORTFOLIO OF SUMMIT INVESTMENT TRUST
MANAGED BY
FIRST SUMMIT CAPITAL MANAGEMENT
ANNUAL REPORT
TO
SHAREHOLDERS
MAY 31, 1996
================================================================================
