<PAGE>
Message From The Chairman
- -------------------------------------------------------------------------------
Fellow Shareholders:
SUMMIT HIGH YIELD FUND/1/
The year ended May 31, 1998, was another outstanding year for investors in
high yield bonds/1/. The Salomon Brothers High Yield Index had a total return
of 13.96% during the period, once again handily outpacing the 10.99% return of
the Salomon Brothers Investment Grade Bond Index.
More importantly, the Summit High Yield Fund delivered excellent performance
during the period. Our 16.17% total return (without the sales charge) easily
outperformed the average total return of 13.29% earned by many other high
yield funds in Lipper Analytical Services' High Current Yield/2/ category for
the 12 months ended May 31, 1998. The Fund's performance for the period was
ranked #41 of 208 competing funds. In fact, as May 31, 1998 Lipper ranks the
Summit High Yield Fund's #1 among 100 current high yield funds since our June
1994 inception./2/
Your fund has now produced double-digit annual returns in its brief four year
history. While we remain optimistic that high yield bonds will continue to
deliver good returns relative to the risk associated with the asset class, it
is probably too much to expect a repeat of the Fund's first four years--truly
an exceptional time for high yield bonds.
OUR STRATEGY--NO CHANGES TO A SUCCESSFUL PROCESS
We have found that the asset size of a high yield fund is one factor that may
influence performance, at least to a certain degree. Our fund can be much more
agile in terms of changing risk profile, taking advantage of new
opportunities, and has little difficulty adjusting with timely movements their
exposure to overall market. In our view, once a fund reaches a certain level
of assets (over $1 billion), the "battleship," --becomes sort of an index for
the high yield market. Individual credit or bond selection, at that point, has
significantly less impact on the fund, and the fund's performance may be more
likely to be influenced by changes in general market conditions.
While we would like to grow the assets of the Summit High Yield Fund, we be-
lieve that our major strength is the selection of individual companies and
their related securities that have, in our view, exceptional relative value
within the high yield market. We believe this "bottom-up" approach to credit
portfolio management, combined with our traditional fully invested position,
has allowed us to perform exceedingly well in the Fund's four year existence.
As portfolio managers (and also fellow shareholders), we continue to pursue
our goal of increasing total returns in three ways. First, we seek to apply
sound, fundamental credit analysis to choose securities that have been
overlooked by other high yield investors. Second, the Fund seeks to invest in
securities of companies that are improving their financial profile and
therefore, we believe will benefit from improving credit quality. Third, the
Fund makes strategic "theme-oriented" moves to pursue opportunities in sectors
within the high yield market.
SUMMIT EMERGING MARKETS BOND FUND/3/--OUR NEWEST FUND
We believe that the emerging market bond sector offers a very attractive
investment opportunity that a long-term investor may find appealing. Our
newest fund--The Summit Emerging Markets Bond Fund/3/--offers a convenient
means to help capitalize on the world's developing economies, while seeking to
reduce international stock market risk. Emerging market stocks have fallen off
a cliff lately, pushed by investors seeking safer ground. Emerging market
bonds have slightly positive total returns in the first five months of 1998,
as measured by the Merrill Lynch Extended Emerging Markets Index*, up 1.20%,
while the more risky emerging market stocks have plunged.
-1-
<PAGE>
Message From The Chairman, Continued
- -------------------------------------------------------------------------------
The Summit Emerging Markets Bond Fund has produced a total return of 2.01% at
NAV year-to-date and we are optimistic that the landmark political and
economic reforms being made in emerging market economies may act as the
catalysts for increased business activity and demand for capital. In return
for potentially greater risks, emerging market bonds have potential to offer
higher yields than a typical U.S. high yield corporate bond. Potential capital
appreciation is also possible in this sector in a positive global economic
environment.
I would like to thank you for the trust and confidence you have placed in our
portfolio management team. Our responsibility is to you--our fellow
shareholder. As our performance would indicate, our Funds have had another
excellent year. Please drop me a line with comments or questions about any
aspect of our Funds.
Sincerely,
LOGO
/s/ Steven R. Sutermeister
Steven R. Sutermeister
Chairman
- ------
/1/Although the fund's yield may be higher than that of fixed income funds
that purchase higher-rated securities, the potentially higher yield is a
function of the greater risk that the fund's share price will decline.
/2/The Lipper ranking is based on total return for the period and does not
reflect a sales charge. As of May 31, 1998, the fund also ranked #1 among
100 high yield funds since inception and 41/208 for the 1 year period.
During the period for which this ranking is based, the fund waived fees. In
the absence of those waivers, the ranking may have been lower.
/3/International investing involves increased risk and volatility.
*Source: Merrill Lynch, 1998
Past performance is no guarantee of future results. Investment return and net
asset value will fluctuate so that an investor's shares when redeemed may be
worth more or less than the original cost.
This report is authorized for distribution only when preceded or accompanied
by prospectus. Read it carefully before investing.
-2-
<PAGE>
Message From The Chairman Summit High Yield Fund
- -------------------------------------------------------------------------------
Summit High Yield Fund
Salomon High Yield High Yield Shares High Yield Shares*
Market Index (w/out load) (w/load)
6/27/94 10,000 10,000 9,551
5/31/95 11,309 10,997 10,503
5/31/96 12,387 12,233 12,639
5/31/97 13,411 15,635 14,933
5/31/98 15,289 18,161 17,345
Average Annual Total Return
Since
Inception
Period Ended 5/31/98 1 Year (6/27/94)
High Yield w/out load 16.17% 16.41%
High Yield w/load* 10.97% 15.06%
*Reflects the maximum 4.50% sales charge.
The Fund's performance is measured against the Salomon 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 PRECEDED OR ACCOMPANIED
BY A CURRENT PROSPECTUS. READ IT CAREFULLY BEFORE INVESTING.
-3-
<PAGE>
Message From The Chairman Summit Emerging Markets Bond Fund
- -------------------------------------------------------------------------------
Summit Emerging Markets Bond Fund
J.P. Morgan Emerging
Markets Bond Index Emerging Markets Emerging Markets
EMBI+ Shares (w/out load) Shares* (w/load)
12/31/97 10,000 10,000 9,551
1/31/98 9,980 9,994 9,545
2/28/98 10,265 10,247 9,787
3/31/98 10,509 10,496 10,025
4/30/98 10,534 10,518 10,045
5/31/98 10,175 10,200 9,742
Average Annual Total Return*
Since
Inception
Period Ended 5/31/98 1 Year (12/31/97)
High Yield w/out load NA 2.01%
High Yield w/load* NA -2.57%
*Reflects the maximum 4.50% sales charge.
The Fund's performance is measured against the J.P. Morgan EMBI+ Index an
Index which tracks total returns for traded external debt instruments in the
emerging markets. The instruments include external-currency-denominated Brady
bonds, loans and Eurobonds, as well as U.S. dollar local markets. 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 Emerging Markets 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 Emerging Markets Bond Fund will fluctuate so that the
shares, when redeemed, may be worth more or less than their original cost.
The Summit Emerging Markets Bond Fund is distributed by BISYS Fund Services.
International Investing involves increased risk and volatility.
-4-
<PAGE>
TABLE OF CONTENTS
Message From the Chairman
Page 1
Report of Independent Accounts
Page 6
Statement of Assets and Liabilities
Page 7
Statement of Operations
Page 8
Statements of Changes in Net Assets
Page 9
Schedule of Portfolio Investments
Page 10
Notes to Financial Statements
Page 15
Financial Highlights
Page 22
-5-
<PAGE>
Report of Independent Accountants
- -------------------------------------------------------------------------------
To the Shareholders and Trustees
Summit Investment Trust
In our opinion, the accompanying statements of assets and liabilities,
including the portfolios of investments, and the related statements of
operations and of changes in net assets, and the financial highlights present
fairly, in all material respects, the financial position of the Summit
Investment Trust, comprising the Summit High Yield Fund and the Summit
Emerging Markets Bond Fund, respectively (hereafter referred to as the
"Trust"), at May 31, 1998, the results of each of their operations for the
period then ended, the changes in each of their net assets for the periods
presented and the financial highlights for each of the periods presented, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included
confirmation of securities at May 31, 1998, by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
July 23, 1998
-6-
<PAGE>
SUMMIT INVESTMENT TRUST
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1998
<TABLE>
<CAPTION>
EMERGING
HIGH YIELD MARKETS
FUND BOND FUND
----------- -----------
<S> <C> <C>
ASSETS:
Investments, at value (Cost $54,045,275 and $25,479,777;
respectively)........................................... $54,471,090 $25,158,370
Interest receivable...................................... 1,408,312 726,157
Receivable for capital shares issued................... 5,822 --
Prepaid expenses....................................... 4,410 28,937
----------- -----------
Total Assets......................................... 55,889,634 25,913,464
----------- -----------
LIABILITIES:
Cash overdraft........................................... 39,294 --
Payable for capital shares redeemed...................... 166,638 --
Accrued expenses and other payables:
Investment advisory fees............................... 5,331 2,304
Administration fees.................................... 1,370 635
12b-1 fees............................................. 11,744 5,587
Fund Accounting fees................................... 674 516
Transfer agent fees.................................... 1,686 2,165
Custodian fees......................................... 2,000 2,392
Legal fees............................................. 5,979 3,753
Audit fees............................................. 5,908 5,716
Reg & Filing 24F2...................................... 1,635 7,737
Printing costs......................................... 3,965 2,987
Other.................................................. -- 204
----------- -----------
Total Liabilities.................................... 246,224 33,996
----------- -----------
NET ASSETS:
Capital.................................................. 53,600,753 26,050,522
Undistributed (distribution in excess of) net investment
income.................................................. 130,199 36,584
Accumulated undistributed net realized gains (losses)
from investment and foreign currency transactions....... 1,486,643 113,769
Net unrealized appreciation (depreciation) on investments
and assets and liabilities denominated in foreign
currencies.............................................. 425,815 (321,407)
----------- -----------
Net Assets........................................... $55,643,410 $25,879,468
=========== ===========
Outstanding units of beneficial interest................. 5,061,209 2,622,427
=========== ===========
Net asset value
Redemption price per share............................. $10.99 $9.87
=========== ===========
Maximum Sales Charge..................................... 4.50% 4.50%
=========== ===========
Maximum Offering Price--(100%/(100%-maximum sales charge)
of net asset value per share (adjusted to nearest
cent)).................................................. $11.51 $10.34
=========== ===========
</TABLE>
See notes to financial statements.
-7-
<PAGE>
SUMMIT INVESTMENT TRUST
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
EMERGING
MARKETS
HIGH YIELD BOND FUND
FUND FOR THE
FOR THE FIVE MONTH
YEAR ENDED PERIOD ENDED
MAY 31, 1998 MAY 31, 1998(A)
------------ ---------------
<S> <C> <C>
INVESTMENT INCOME:
Interest income................................... $4,947,735 $1,096,556
Dividend income................................... 45,813 --
---------- ----------
Total Income.................................... 4,993,548 1,096,556
---------- ----------
EXPENSES:
Investment advisory fees.......................... 434,032 77,180
Administration fees............................... 95,951 20,585
12b-1 fees........................................ 118,899 25,731
12b-1 fees--(Institutional Service Shares Class).. 1,041 --
Accounting fees................................... 40,780 21,215
Custodian fees.................................... 18,495 7,206
Transfer agent fees............................... 78,430 21,705
Trustees' fees.................................... 21,652 3,554
Organization costs................................ -- 4,319
Legal fees........................................ 52,717 6,873
Audit fees........................................ 7,836 5,155
Registration and filing fees...................... 43,737 20,059
Printing costs.................................... 41,178 11,372
Other............................................. 22,796 530
---------- ----------
Total expenses before voluntary reductions...... 977,544 225,484
Expenses voluntarily reduced.................... (206,181) (20,994)
---------- ----------
Total Expenses.................................. 771,363 204,490
---------- ----------
Net investment income............................. 4,222,185 892,066
---------- ----------
REALIZED/UNREALIZED GAINS ON INVESTMENTS:
Net realized gains (losses) on investment and
foreign currency transactions.................... 3,821,677 105,690
Net change in unrealized appreciation
(depreciation) on investments and assets
and liabilities denominated in foreign
currencies....................................... (1,467,951) (321,407)
---------- ----------
Net realized/unrealized gains (losses) on
investments...................................... 2,353,726 (215,717)
---------- ----------
Change in net assets resulting from operations.... $6,575,911 $ 676,349
========== ==========
</TABLE>
- --------
(a) Emerging Markets Bond Fund commenced operations on December 31, 1997.
See notes to financial statements.
-8-
<PAGE>
SUMMIT INVESTMENT TRUST
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
EMERGING
HIGH YIELD HIGH YIELD MARKETS
FUND FUND BOND FUND
FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED FIVE MONTH
MAY 31, MAY 31, PERIOD ENDED
1998 1997 MAY 31, 1998(B)
----------- ----------- ---------------
<S> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income............ $ 4,222,185 $ 2,979,432 $ 892,066
Net realized gains (losses) on
investment and foreign currency
transactions.................... 3,821,677 2,908,478 105,690
Net change in unrealized
appreciation (depreciation) on
investments and assets and
liabilities denominated in
foreign currencies.............. (1,467,951) (160,322) (321,407)
----------- ----------- -----------
Change in net assets resulting
from operations.................. 6,575,911 5,727,588 676,349
----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
FROM:
Net investment income............ (4,184,950) (2,754,994) (857,402)
In excess of net investment
income.......................... -- (353,047) --
Net realized gains............... (3,955,064) (1,369,117) --
DISTRIBUTIONS TO INSTITUTIONAL
SERVICE SHAREHOLDERS FROM:
Net investment income............ (75,986)(a) (231,725)
In excess of net investment
income.......................... (3,718)(a) (48,995)
Net realized gains............... -- (100,079)
----------- ----------- -----------
Change in net assets from
shareholder distributions........ (8,219,718) (4,857,957) (857,402)
----------- ----------- -----------
CAPITAL TRANSACTIONS:
Proceeds from shares issued...... 45,870,906 8,216,321 25,207,058
Dividends reinvested............. 7,543,747 4,761,817 857,402
Cost of shares redeemed.......... (35,071,165) (5,304,586) (3,939)
----------- ----------- -----------
Change in net assets from capital
transactions..................... 18,343,488 7,673,552 26,060,521
----------- ----------- -----------
Change in net assets.............. 16,699,681 8,543,183 25,879,468
NET ASSETS:
Beginning of period.............. 38,943,729 30,400,546 --
----------- ----------- -----------
End of period.................... $55,643,410 $38,943,729 $25,879,468
=========== =========== ===========
SHARE TRANSACTIONS:
Issued........................... 4,047,983 733,390 2,537,918
Reinvested....................... 680,082 426,459 84,891
Redeemed......................... (3,106,428) (472,411) (382)
----------- ----------- -----------
Change in shares.................. 1,621,637 687,438 2,622,427
=========== =========== ===========
</TABLE>
- --------
(a) On July 31, 1997, Institutional Shares ceased operations and were
transferred to High Yield Shares.
(b) Emerging Markets Bond Fund commenced operations on December 31, 1997.
See notes to financial statements.
-9-
<PAGE>
SUMMIT INVESTMENT TRUST
SUMMIT HIGH YIELD FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
MAY 31, 1998
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------- -----------
<C> <S> <C>
CORPORATE BONDS (97.8%):
Communications (37.9%):
Cellular Telephone (4.1%):
1,000,000 Dobson Communications,
11.75%, 4/15/07........ $ 1,085,000
2,000,000 Triton Communications
LLC, 0.00%, 5/1/08
(e).................... 1,170,000
-----------
2,255,000
-----------
Data/Internet (4.6%):
1,000,000 Psinet Inc., 10.00%,
2/15/05**.............. 1,022,500
1,500,000 Teligent Inc., 11.50%,
12/1/07................ 1,530,000
-----------
2,552,500
-----------
Domestic--Retail Telecom (4.2%):
1,000,000 E. Spire Communications
Inc., 0.00%, 4/1/06,
(b).................... 785,000
2,625,000 Focal Communications
Corp., 0.00%,
2/15/08**, (c)......... 1,575,000
-----------
2,360,000
-----------
Domestic--Wholesale Telecom (2.1%):
1,000,000 Qwest Communications
International, 10.88%,
4/1/07**............... 1,145,000
-----------
International--Retail Telecom (4.9%):
1,000,000 Metronet Communications
Corp., 12.00%,
8/15/07................ 1,162,500
1,500,000 Versatel Telecom BV,
13.25%, 5/15/08**...... 1,552,500
-----------
2,715,000
-----------
International--Wholesale Telecom (9.2%):
1,000,000 Esprit Telecom, 11.50%,
12/15/07**............. 1,070,000
2,000,000 Facilicom International
Inc., 10.50%,
1/15/08**.............. 1,990,000
2,000,000 Viatel Inc., 11.25%,
4/15/08**.............. 2,080,000
-----------
5,140,000
-----------
Paging/Telegraph (4.5%):
1,000,000 Paging Network Do
Brazil SA, 13.50%,
6/6/05................. 955,000
1,500,000 Paging Network Inc.,
10.00%, 10/15/08....... 1,552,500
-----------
2,507,500
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
CORPORATE BONDS, CONTINUED:
Communications, continued:
Pay Phone Operators (4.3%):
1,500,000 Phonetel Technologies
Inc., 12.00%,
12/15/06............... $ 1,290,000
1,000,000 Talton Holdings Inc., 11.00%, 6/30/07................. 1,090,000
-----------
2,380,000
-----------
Total Communications............................................ 21,055,000
-----------
Energy/Mining (7.2%):
Distribution (1.7%):
1,000,000 Empire Gas Corp., 7.00%, 7/15/04 (d).................. 920,000
-----------
Oil/Gas Extraction (5.5%):
2,000,000 Abraxas Petroleum, 11.50%, 11/1/04**.................. 2,090,000
1,000,000 Costilla Energy Inc., 10.25%, 10/1/06**............... 1,005,000
-----------
3,095,000
-----------
Total Energy/Mining............................................. 4,015,000
-----------
Financial (1.8%):
Banking/Insurance (1.8%):
1,000,000 Arcadia Financial Ltd., 11.50%, 3/15/07............... 997,500
-----------
Manufacturing/Consumer Goods (15.9%):
Consumer Products (5.9%):
1,500,000 Derby Cycle Corp., 10.00%,
5/15/08**............................................ 1,492,500
1,000,000 Stuart Entertainment, 12.50%, 11/15/04................ 790,000
1,000,000 Werner Holdings Co. Inc., 10.00%, 11/15/07............ 1,040,000
-----------
3,322,500
-----------
Electric/HVAC (2.0%):
1,000,000 International Wire Group, 11.75%, 6/1/05.............. 1,100,000
-----------
Furniture & Fixtures (1.7%):
1,000,000 Macsaver Financial Services, 7.60%, 8/1/07............ 922,090
-----------
</TABLE>
Continued
-10-
<PAGE>
SUMMIT INVESTMENT TRUST
SUMMIT HIGH YIELD FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
MAY 31, 1998
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
CORPORATE BONDS, CONTINUED:
Manufacturing/Consumer Goods, continued:
Professional & Commercial Equipment (3.5%):
2,000,000 Anchor Lamina, 9.88%, 2/1/08**......................... $ 1,975,000
-----------
Textile/Apparel (2.8%):
1,500,000 Anvil Knitwear, 10.88%, 3/15/07........................ 1,545,000
-----------
Total Manufacturing/Consumer Goods............................... 8,864,590
-----------
Manufacturing/Trade (16.0%):
Auto/Related Products (2.8%):
1,500,000 Prestolite Electric Inc., 9.63%,
2/1/08**.............................................. 1,533,750
-----------
Chemicals (0.5%):
500,000 Tri Polyta Finance Inc., 11.38%, 12/1/03............... 280,000
-----------
Metals (2.9%):
1,500,000 Kaiser Aluminum & Chemicals, 12.75%, 2/1/03............ 1,595,625
-----------
Miscellaneous (5.7%):
500,000 IMO Industries Inc., 11.75%, 5/1/06.................... 570,000
1,000,000 International Knife & Saw Corp., 11.38%, 11/15/06...... 1,090,000
1,500,000 Numatics Inc., 9.63%, 4/1/08**......................... 1,526,250
-----------
3,186,250
-----------
Paper & Pulp (4.1%):
500,000 Florida Coast Paper, 12.75%, 6/1/03.................... 557,500
1,000,000 Indah Kiat Fin Mauritius, 10.00%, 7/1/07............... 705,000
1,000,000 Repap New Brunswick, 10.63%, 4/15/05................... 1,027,500
-----------
2,290,000
-----------
Total Manufacturing/Trade........................................ 8,885,625
-----------
Media (6.4%):
Cable/Pay TV/Other (0.7%):
500,000 TV Filme Inc., 12.88%, 12/15/04**...................... 452,500
-----------
Outdoor Advertising (3.7%):
2,000,000 Tri-State Outdoor Media, 11.00%, 5/15/08,**............ 2,032,500
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
CORPORATE BONDS, CONTINUED:
Media, continued:
Radio Broadcasting (2.0%):
1,000,000 Spanish Broadcasting System, 11.00%, 3/15/04**........ $ 1,092,500
-----------
Total Media..................................................... 3,577,500
-----------
Miscellaneous Services (7.8%):
General Merchandise (0.9%):
500,000 Pamida Inc., 11.75%, 3/15/03.......................... 522,500
-----------
Hotel/Gaming (4.9%):
1,000,000 Alliance Gaming Corp., 10.00%, 8/1/07................. 1,022,500
1,000,000 Argosy Gaming, 13.25%, 6/1/04......................... 1,130,000
500,000 Casino Magic--Louisiana Inc., 13.00%, 8/15/03......... 585,000
-----------
2,737,500
-----------
Other (2.0%):
1,000,000 Affinity Group Holdings Inc., 11.00%, 4/1/07.......... 1,080,000
-----------
Total Miscellaneous Services.................................... 4,340,000
-----------
Transportation (4.8%):
Air Transportation (1.0%):
500,000 CHC Helicopter, 11.50%, 7/15/02....................... 530,000
-----------
Shipping (1.5%):
750,000 Navigator Gas
Transport, 12.00%,
6/30/07**............ 858,750
-----------
Trucking/Warehousing (2.3%):
1,500,000 Ameritruck
Distribution,
12.25%, 11/15/05..... 862,500
500,000 Trism Inc., 10.75%,
12/15/00.......... 435,000
-----------
1,297,500
-----------
Total Transportation............................................ 2,686,250
-----------
Total Corporate Bonds........................................... 54,421,465
-----------
</TABLE>
Continued
-11-
<PAGE>
SUMMIT INVESTMENT TRUST
SUMMIT HIGH YIELD FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
MAY 31, 1998
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- --------------------- -----------
<C> <S> <C>
RIGHTS/WARRANTS (0.1%):
Communications (0.1%):
Network--Domestic (0.1%):
1,000 Metronet
Communication Corp.,
Warrants, expire
12/31/99............ $ 47,625
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------- -----------
<C> <S> <C>
RIGHTS/WARRANTS, CONTINUED:
Manufacturing/Consumer Goods (0.0%):
Consumer Products (0.0%):
2,000 Renaissance Cosmetics
Inc., Warrants, expire
8/15/01**............... $ 2,000
-----------
Total Rights/Warrants.............. 49,625
-----------
Total Investments
(Cost $54,045,275)(a)--97.9%...... 54,471,090
Other assets in excess of
liabilities--2.1%.................. 1,172,320
-----------
TOTAL NET ASSETS--100.0%........... $55,643,410
===========
</TABLE>
- --------
Percentages indicated are based on net assets of $55,643,410.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting purposes in excess of federal income tax purposes
of $112,500. Cost for federal income tax purposes differs from value by
net unrealized appreciation (depreciation) of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation......... $ 1,830,296
Unrealized depreciation......... $(1,516,981)
-----------
Net unrealized appreciation..... $ 313,315
===========
</TABLE>
(b) Interest rate increases to 12.75% on April 1, 2001.
(c) Interest rate increases to 12.13% on February 15, 2003.
(d) Interest rate increases to 12.88% on July 15, 1999.
(e) Interest rate increases to 11.00% on May 1, 2003.
** Security exempt from registration under Rule 144A of the Securities Act of
1933, as amended. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At May 31,
1998, the market value of Rule 144A securities amounted to $24,495,750 or
44% of net assets.
See notes to financial statements.
-12-
<PAGE>
SUMMIT INVESTMENT TRUST
SUMMIT EMERGING MARKETS BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
MAY 31, 1998
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------ -----------
<C> <S> <C>
CORPORATE BONDS (96.7%):
Asia (11.4%):
Indonesia (9.1%):
1,000,000 APP International Finance, 11.75%, 10/1/05............ $ 875,000
1,000,000 DGS International Finance Co. BV, 10.00%, 6/1/07**.... 785,000
1,000,000 Tjiwi Kimia Finance, 10.00%, 8/1/04**................. 700,000
-----------
2,360,000
-----------
Israel (2.3%):
1,000,000 Barak I.T.C, 0.00%, 11/15/07** (b).................... 600,000
-----------
2,960,000
-----------
Caribbean (3.8%):
Dominican Republic (3.8%):
1,000,000 Tricom SA, 11.38%, 9/1/04**........................... 975,000
-----------
Eastern Europe (3.8%):
Poland (3.8%):
1,000,000 Netia Holdings BV, 10.25%, 11/1/07**.................. 997,500
-----------
Russia (2.6%):
1,000,000 Russia-Ian, Floating-Rate Note, currently 6.72%,
12/15/15**........................................... 661,250
-----------
1,658,750
-----------
Latin America (69.6%):
Argentina (23.0%):
1,000,000 Acindar Ind., 11.25%, 2/15/04......................... 1,037,500
1,000,000 Autopistas Del Sol SA, 10.25%, 8/1/09**............... 957,500
1,000,000 Cia International Telecom Cointel, 10.38%, 8/1/04..... 895,000
1,000,000 CTI Holdings SA, 0.00%,
4/15/08** (b)........................................ 572,500
1,000,000 Meastellone Herma Masher, 11.75%, 4/1/08**............ 1,017,500
1,000,000 Supercanal Holdings, 11.50%, 5/15/05**................ 980,000
500,000 Supermercad Norte, 10.88%, 2/9/04**................... 496,250
-----------
5,956,250
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------ -----------
<C> <S> <C>
CORPORATE BONDS, CONTINUED:
Brazil (24.7%):
1,000,000 Abril SA, 12.00%,
10/25/03**............. $ 1,027,500
1,000,000 Comtel Brasileira Ltd.,
10.75%, 9/26/04**...... 975,000
1,000,000 Espirito Santo Centrais
Electrias, 10.00%,
7/15/07................ 890,000
750,000 Globo Communicacoes,
10.63%, 12/5/08**...... 727,500
1,000,000 MRS Logistica SA,
10.63%, 8/15/05**...... 907,500
1,000,000 Paging Network DO Brazil
SA, 13.50%, 6/6/05..... 955,000
500,000 Tevecap SA, 12.63%,
11/26/04**............. 475,000
500,000 TV Filme Inc.TE Bond,
12.88%, 12/15/04**..... 452,500
-----------
6,410,000
-----------
Mexico (21.9%):
1,000,000 Consorcio Grupo Dina,
8.00%, 8/8/04,
Convertible Bond....... 845,000
1,000,000 Grupo Azucarero Mexico
SA, 11.50%, 1/15/05**.. 860,000
1,000,000 Grupo Industrial
Durango, 12.63%,
8/1/03................. 1,107,500
1,000,000 Grupo Televisa SA,
0.00%,
5/15/08 (d)............ 785,000
1,000,000 Innova S De R.L.,
12.88%, 4/1/07......... 1,040,000
1,000,000 TV Azteca SA, 10.50%,
2/15/07................ 1,027,500
-----------
5,665,000
-----------
18,031,250
-----------
North America (1.7%):
Canada (1.7%):
1,000,000 Microcell
Telecommunications,
0.00%, 10/15/07 (c).... 438,157
-----------
Western Europe (3.8%):
Greece (3.8%):
1,000,000 Fage Dairy Industries
SA, 9.00%, 2/1/07...... 972,000
-----------
Total Corporate Bonds............. 25,035,157
-----------
</TABLE>
Continued
-13-
<PAGE>
SUMMIT INVESTMENT TRUST
SUMMIT EMERGING MARKETS BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
MAY 31, 1998
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ------------------------------------------------------- -----------
<C> <S> <C>
INVESTMENT COMPANIES (0.5%):
North America (0.5%):
United States (0.5%):
123,213 Fountain Square Commercial Paper Fund.................. $ 123,213
-----------
Total Investment Companies....................................... 123,213
-----------
Total Investments
(Cost $25,479,777)(a)--97.2%.................................... 25,158,370
Other assets in excess of liabilities--2.8%...................... 721,098
-----------
TOTAL NET ASSETS--100.0%......................................... $25,879,468
===========
</TABLE>
- --------
Percentages indicated are based on net assets of $25,879,468.
(a) Cost for federal income tax purposes differs from value by net unrealized
appreciation (depreciation) as follows:
<TABLE>
<S> <C>
Unrealized appreciation........... $ 249,081
Unrealized depreciation........... $(570,488)
---------
Net unrealized depreciation....... $(321,407)
=========
</TABLE>
(b) Interest rate increases to 12.50% on November 15, 2002.
(c) Interest rate increases to 11.13% on October 15, 2002.
(d) Interest rate increases to 13.25% on May 15, 2001.
(e) Interest rate increases to 11.50% on May 15, 2003.
** Security exempt from registration under Rule 144A of the Securities Act of
1933, as amended. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At May 31,
1998, the market value of Rule 144A securities amounted to $14,167,500 or
55% of net assets.
See notes to financial statements.
-14-
<PAGE>
SUMMIT INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1998
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 an
Agreement and Declaration of Trust dated March 8, 1994, as amended. The Trust
is comprised of two managed investment portfolios, the Summit High Yield Fund
(the "High Yield Fund") and the Summit Emerging Markets Bond Fund (the
"Emerging Markets Fund"), collectively (the "Funds"), or individually (the
"Fund"). On July 31, 1997, the Institutional Service Shares of the Summit
High Yield Fund ceased operations and all outstanding shares were converted
to High Yield Shares; however, the Funds may still add an additional class.
On December 31, 1997, the Summit Emerging Markets Bond Fund commenced
operations.
The High Yield 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 Emerging Market Fund's investment objective is to provide high income and
capital appreciation. The Fund will invest primarily in government and
corporate debt securities of emerging market nations.
The Funds are authorized to issue an unlimited number of shares, which are
units of beneficial interest without par value.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by the
Funds 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 and disclosures. 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 price. Securities
traded in the "over-the-counter" market are valued at the last bid price
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. As approved by the
Board of Trustees, the Fund uses a pricing service or services in
determining the net asset value of shares of the Funds. Fixed income
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.
The Funds 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
Continued
-15-
<PAGE>
SUMMIT INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS, CONTINUED
MAY 31, 1998
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 securities than with respect to securities
for which external sources of quotations and last sale information are
more available.
FOREIGN CURRENCY TRANSLATION
The accounting records of the Trust are maintained in U.S. dollars.
Investment securities and other assets and liabilities of the Emerging
Markets Fund denominated in a foreign currency are translated into U.S.
dollars at the exchange rate on the date of valuation. Purchases and
sales of securities, income receipts and expense payments are translated
into U.S. dollars at the exchange rate on the dates of transactions.
The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchanges on investments from the
fluctuations arising from changes in market prices of securities held.
Such fluctuations are included with the net realized and unrealized gains
or losses from investments.
FOREIGN CURRENCY CONTRACTS
A forward currency contract ("forward") is an agreement between two
parties to buy and sell a currency at a set price on future date. The
market value of the forward fluctuates with changes in currency exchange
rates. The forward is marked-to-market daily and the change in market
value is recorded by a Fund as appreciation or depreciation. When the
forward is closed, the Fund records a realized gain or loss equal to the
fluctuations in value during the period the forward was open. A Fund
could be exposed to risk if a counterparty is unable to meet the terms of
a forward or if the value of the currency changes unfavorably.
Forward foreign exchange contracts may involve market or credit risk in
excess of the amounts reflected on the Fund's statement of assets and
liabilities. The gain or loss from the difference between the original
contracts and the amount realized upon the closing of such contracts is
included in net realized gains/losses from investment and foreign
currency transactions. No forward foreign exchange contracts were held at
May 31, 1998.
SECURITIES TRANSACTIONS AND RELATED INCOME:
Securities transactions are accounted for on the trade date. Interest
income is recognized on the accrual basis and includes, where applicable,
the amortization of premiums or accretion of discounts. Dividend income
is recorded on the ex-dividend date. Net realized gains and losses on
investments sold and on foreign currency transactions are recorded on the
basis of identified cost.
DIVIDENDS TO SHAREHOLDERS:
Dividends from net investment income are declared and paid monthly. Net
realized capital gains, if any, are declared and paid at least annually.
Continued
-16-
<PAGE>
SUMMIT INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS, CONTINUED
MAY 31, 1998
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 "book/tax"
differences are primarily due to differing treatments for organization
costs, market discount, and foreign currency transactions.
These "book/tax" differences are either considered temporary or permanent
in nature. To the extent these differences are permanent in nature, such
amounts are reclassified within the composition of net assets based on
their federal tax-basis treatment; temporary differences do not require
reclassifications. Dividends and distributions to shareholders which
exceed net investment income and net realized gains for financial
reporting purposes but not for tax purposes are reported as dividends in
excess of net investment income or distribution in excess of net realized
gains. To the extent they exceed net investment income and net realized
gains for tax purposes, they are reported as distribution of capital.
As of May 31, 1998, the following reclassifications have been made to
increase(decrease) such accounts with offsetting adjustments made to
paid-in-capital:
<TABLE>
<CAPTION>
ACCUMULATED ACCUMULATED NET
UNDISTRIBUTED NET REALIZED GAIN/(LOSS)
INVESTMENT INCOME ON INVESTMENTS
----------------- --------------------
<S> <C> <C>
High Yield Fund...................... $124,443 $(127,213)
Emerging Markets Fund................ $ 1,920 $ 8,079
</TABLE>
FEDERAL INCOME TAXES:
It is the policy of each 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.
INTERNATIONAL FUNDS:
The Emerging Markets Fund has a relatively large concentration of
securities invested in companies domiciled in the emerging markets. The
Fund may be more susceptible to the political, social and economic events
adversely affecting the emerging market companies than funds not so
concentrated.
OTHER:
Expenses directly attributable to a Fund are charged to that Fund, while
expenses which are attributable to both Funds are allocated among each
Fund based upon relative net assets or another appropriate method. Costs
incurred in connection with the organization and initial registration of
the Emerging Markets Fund have been deferred and are being amortized over
a twenty four month period, beginning with the Fund's commencement of
operations.
Continued
-17-
<PAGE>
SUMMIT INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS, CONTINUED
MAY 31, 1998
3. PURCHASES AND SALES OF PORTFOLIO SECURITIES:
Purchases and sales of securities (excluding short-term securities) for the
year ended May 31, 1998 are as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
High Yield Fund..................................... $252,632,269 $240,545,119
Emerging Markets Fund............................... $ 41,930,292 $ 17,796,163
</TABLE>
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 Funds. FSCM was organized principally for
purposes of sponsoring and managing the Trust pursuant to a joint venture
agreement (the "Joint Venture Agreement") between Carillon Advisers, Inc.
("Carillon"), an Ohio corporation, and Freeman Holding Company, Inc.
("Freeman"), a Delaware corporation. Under the Joint Venture Agreement,
Carillon serves as the general manager of the Adviser and is responsible for
maintaining its books of account and other financial records and for
preparing its quarterly financial statements. Carillon is a wholly-owned
subsidiary of Union Central Life, an Ohio mutual insurance company, which
owns as of May 31, 1998 approximately 53% of the High Yield Fund and 99% of
the Emerging Markets 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, as amended, and is a
member of the National Association of Securities Dealers, Inc.
Under the terms of the Investment Advisory Agreement between the Trust and
FSCM (the "Advisory Agreement"), FSCM is entitled to receive fees based on a
percentage of the average daily net assets of the Funds. Effective July 1,
1995, the investment advisory fee is based on the total return investment
performance of the High Yield 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 High Yield Fund's average daily net
assets. For the Emerging Markets Fund the advisory fee is paid monthly at an
annual rate of 0.75% B.P. 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 total
annual expenses of the High Yield Fund to 1.60% and the Emerging Markets to
2.00%. For the period ended May 31, 1998, FSCM received $262,141 and $61,669
of advisory fees after voluntarily waiving $171,891 and $15,511 of advisory
fees for the High Yield Fund and Emerging Markets Fund, respectively.
Carillon, with offices at 1876 Waycross Road, Cincinnati, Ohio 45240, serves
as investment sub-adviser (the "Sub-Adviser") to the Funds pursuant to an
Investment Sub-Advisory Agreement with the Adviser dated September 18, 1996
(the "Sub-Advisory Agreement"). Under the Sub-Advisory Agreement, Carillon
provides, subject to the Adviser's direction, a portion of the investment
advisory services for which the Adviser is responsible pursuant to the
Advisory Agreement relating to the Funds. Under the Sub-Advisory Agreement,
the Sub-Adviser receives from the Adviser an annual fee in the amount of
$150,000 for the Funds. If the Sub-Adviser renders services to the Adviser
under the Sub-Advisory Agreement for a period of less
Continued
-18-
<PAGE>
SUMMIT INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS, CONTINUED
MAY 31, 1998
than twelve months, the Sub-Adviser is entitled to a pro-rata portion of such
fee, or such other fees as shall be agreed to by the Adviser and the Sub-
Adviser, not to exceed the equivalent of the pro-rata portion of such fee. In
the event that the amount payable as the Sub-Adviser's fees exceeds the
amount of advisory fees paid to the Adviser pursuant to the Advisory
Agreement, the difference will be shared equally by the Adviser's general
partners, Freeman and Carillon, or paid by FSCM.
BISYS Fund Services (the "Administrator"), an indirect, wholly-owned
subsidiary of The BISYS Group, Inc. ("BISYS") serves as the administrator,
manager, and distributor to the Trust.
Certain officers of the Trust are affiliated with BISYS or with FSCM. Such
officers are not paid any fees directly by the Funds or the Trust for serving
as officers of the Trust.
Under the terms of the Management and Administration Agreement between the
Trust and BISYS, BISYS' fees are computed daily and paid monthly as a
percentage of the average daily net assets of the Funds at an annual rate of
0.20%. For the period ended May 31, 1998, BISYS received $71,895 and $15,279
of administration fees after voluntarily waiving $24,056 and $5,306 of
administration fees for the High Yield Fund and Emerging Markets Fund,
respectively.
BISYS receives fees for providing distribution and shareholder services under
the Distribution Agreement between the Trust and BISYS and the Trust's
Distribution and Shareholder Service Plan (the "Plan") pursuant to Rule 12b-1
under the 1940 Act. Under the Plan, the Funds pay BISYS a fee not to exceed,
on an annual basis, 0.25% of the average daily net assets of the Funds 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, 1998, BISYS received $109,706 and $25,554 of Rule 12b-1 distribution
fees after waiving $10,234 and $177 of Rule 12b-1 distribution fees for the
High Yield Fund and Emerging Markets Fund, respectively. In addition, BISYS
has the right, as principal underwriter, to purchase Fund shares at their net
asset value and to sell such shares to the public, or to dealers who have
entered into selected dealer agreements with the Distributor, in both cases
against orders for such shares. BISYS may sell such shares at the public
offering price, which is net asset value plus a maximum sales charge of 4.50%
or, in the case of sales to dealers, at the public offering price less a
concession determined by BISYS which may not exceed the amount of the sales
charge or the underwriting discount. For the year ended May 31, 1998, BISYS
received $161,179 and $2,909 from commissions earned on sales of the High
Yield Fund and Emerging Markets Fund, respectively, $136,793 and $1,620 of
which was reallowed to unaffiliated broker/dealers, respectively.
BISYS 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 also serves as fund accountant for the Trust.
Under the terms of the Fund Accounting Agreement between the Trust and BISYS,
the fund accountant is entitled to receive fees computed daily and paid
monthly as a percentage of the average daily net assets of the Funds at an
annual rate of 0.03% (but not less than $30,000
Continued
-19-
<PAGE>
SUMMIT INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS, CONTINUED
MAY 31, 1998
per year), and is reimbursed for certain out-of-pocket expenses incurred in
providing such fund accounting services. Transfer agent and fund accounting
fees for the period ended May 31, 1998 were $119,210 and $42,920, for the
High Yield Fund and the Emerging Markets Fund, respectively.
5. CAPITAL SHARE TRANSACTIONS
Transactions in capital shares for the Fund were as follows:
<TABLE>
<CAPTION>
SUMMIT HIGH YIELD FUND
-------------------------
FOR THE FOR THE
YEAR YEAR
ENDED ENDED
MAY 31, MAY 31,
1998 1997
------------ -----------
<S> <C> <C>
CAPITAL TRANSACTIONS:
HIGH YIELD SHARES:
Proceeds from shares issued..................... $ 44,901,158 $ 4,256,939
Dividends reinvested............................ 7,475,727 4,423,689
Shares redeemed................................. (29,628,147) (3,409,061)
------------ -----------
Change in net assets from High Yield Shares
transactions................................. $ 22,748,738 $ 5,271,567
============ ===========
INSTITUTIONAL SERVICE SHARES: (A)
Proceeds from shares issued..................... $ 969,749 $ 3,959,382
Dividends reinvested............................ 68,019 338,128
Shares redeemed................................. (5,443,018) (1,895,525)
------------ -----------
Change in net assets from Institutional
Service Shares transactions.................. $ (4,405,250) $ 2,401,985
============ ===========
SHARE TRANSACTIONS:
HIGH YIELD SHARES:
Issued.......................................... 3,964,100 379,660
Reinvested...................................... 674,217 396,115
Redeemed........................................ (2,641,732) (302,538)
------------ -----------
Change in High Yield Shares................... 1,996,585 473,237
============ ===========
INSTITUTIONAL SERVICE SHARES: (A)
Issued.......................................... 83,883 353,730
Reinvested...................................... 5,865 30,344
Redeemed........................................ (464,696) (169,873)
------------ -----------
Change in Institutional Service Shares........ (374,948) 214,201
============ ===========
</TABLE>
--------
(a) On July 31, 1997, Institutional Service Shares ceased operations and were
transferred to High Yield Shares.
Continued
-20-
<PAGE>
SUMMIT INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS, CONTINUED
MAY 31, 1998
6. FEDERAL TAX INFORMATION (UNAUDITED)
Capital Gain Distributions
During the period ended May 31, 1998 the Funds declared mid term capital gain
distributions and long term capital gain distributions as follows:
<TABLE>
<CAPTION>
MID-TERM LONG-TERM
28% 20%
---------- ----------
<S> <C> <C>
High Yield Fund......................................... $2,020,746 $1,934,318
</TABLE>
POST OCTOBER LOSS DEFERRAL:
Foreign currency losses incurred after October 31, within the Emerging
Markets Fund's fiscal year are deemed to arise on the first business day of
the following fiscal year for tax purposes. The Fund has incurred and will
elect to defer such foreign currency losses of $8,079.
-21-
<PAGE>
SUMMIT HIGH YIELD FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
HIGH YIELD SHARES
-----------------------------------
FOR THE
PERIOD
YEAR YEAR YEAR JUNE 27,
ENDED ENDED ENDED 1994 TO
MAY 31, MAY 31, MAY 31, MAY 31,
1998 1997 1996 1995(A)
------- ------- ------- --------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.... $ 11.32 $ 11.05 $ 10.11 $ 10.00
------- ------- ------- -------
INVESTMENT ACTIVITIES:
Net investment income................. 1.01 0.99 1.01 0.83
Net realized and unrealized gains
(losses) on investments.............. 0.70 0.90 0.95 0.11
------- ------- ------- -------
Total from Investment Activities.... 1.71 1.89 1.96 0.94
------- ------- ------- -------
DISTRIBUTIONS:
Net investment income................. (1.01) (0.99) (1.01) (0.83)
In excess of net investment income.... (0.13)
Net realized gains.................... (1.03) (0.50) (0.01)
------- ------- ------- -------
Total Distributions................. (2.04) (1.62) (1.02) (0.83)
------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD.......... $ 10.99 $ 11.32 $ 11.05 $ 10.11
======= ======= ======= =======
Total Return (excludes sales charges)... 16.17% 18.15% 20.34% 9.97%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period (000)..... $55,643 $34,707 $28,628 $27,676
Ratio of expenses to average net
assets............................... 1.60% 1.60% 1.60% 1.56%(c)
Ratio of net investment income to
average
net assets........................... 8.81% 8.73% 9.42% 9.13%(c)
Ratio of expenses to average net
assets*.............................. 2.03% 2.32% 2.24% 1.61%(c)
Ratio of net investment income to
average
net assets*.......................... 8.38% 8.01% 8.78% 9.08%(c)
Portfolio turnover (d)................ 518.74% 271.68% 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) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
See notes to financial statements.
-22-
<PAGE>
SUMMIT HIGH YIELD FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INSTITUTIONAL SERVICE SHARES
--------------------------------
FOR THE
FOR THE PERIOD
PERIOD YEAR JANUARY 19,
ENDED ENDED 1996 TO
JULY 31, MAY 31, MAY 31,
1997(E) 1997 1996(A)
-------- ------- -----------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.......... $11.30 $11.03 $10.59
------ ------ ------
INVESTMENT ACTIVITIES:
Net investment income....................... 0.18 1.04 0.40
Net realized and unrealized gains (losses)
on investments............................. 0.42 0.87 0.47
------ ------ ------
Total from Investment Activities.......... 0.60 1.91 0.87
------ ------ ------
DISTRIBUTIONS:
Net investment income....................... (0.18) (1.04) (0.40)
In excess of net investment income.......... (0.01) (0.10) (0.03)
Net realized gains.......................... (0.50)
------ ------ ------
Total Distributions....................... (0.19) (1.64) (0.43)
------ ------ ------
NET ASSET VALUE, END OF PERIOD................ $11.71 $11.30 $11.03
====== ====== ======
Total Return (excludes sales charges)......... 5.31%(b) 18.40% 20.16%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period (000)........... $ -- $4,237 $1,773
Ratio of expenses to average net assets..... 1.49%(c) 1.43% 1.52%(c)
Ratio of net investment income to average
net assets................................. 8.91%(c) 8.89% 9.86%(c)
Ratio of expenses to average net assets*.... 2.20%(c) 2.32% 2.76%(c)
Ratio of net investment income to average
net assets*................................ 8.20%(c) 8.01% 8.62%(c)
Portfolio turnover (d)...................... 518.74% 271.68% 187.61%
</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) On January 19, 1996 the Fund issued a second series of shares designated
as Institutional Service Shares.
(b) Not annualized.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
(e) The Institutional Service Shares class ceased operations on July 31, 1997,
and all Institutional Service Shares class shares were exchanged for the
shares of the shares of the High Yield Shares class.
See notes to financial statements.
-23-
<PAGE>
SUMMIT EMERGING MARKETS BOND FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE
FIVE MONTH
PERIOD ENDED
MAY 31,
1998(A)
------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............................. $ 10.00
-------
INVESTMENT ACTIVITIES:
Net investment income.......................................... 0.35
Net realized and unrealized gains (losses) on investments...... (0.15)
-------
Total from Investment Activities............................. 0.20
-------
DISTRIBUTIONS:
Net investment income.......................................... (0.33)
-------
Total Distributions.......................................... (0.33)
-------
NET ASSET VALUE, END OF PERIOD................................... $ 9.87
=======
Total Return (excludes sales charges)............................ 2.01%(b)
RATIOS/SUPPLEMENTAL DATA:
Net Assets at end of period (000).............................. $25,879
Ratio of expenses to average net assets........................ 2.00%(c)
Ratio of net investment income to average net assets........... 8.67%(c)
Ratio of expenses to average net assets*....................... 2.20%(c)
Ratio of net investment income to average net assets*.......... 8.47%(c)
Portfolio turnover............................................. 85.69%
</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.
See notes to financial statements.
-24-
<PAGE>
-----------------------------------
TRUSTEES AND OFFICERS
Steven R. Sutermeister, Chairman and Trustee
James F. Smith, President and Trustee
Theodore H. Emmerich, Trustee
Frederick Moss, Trustee
Bruce H. Olson, Trustee
Gregory A. Sullivan, Vice President
Craig C. Rudesill, Secretary
Nimish Bhatt, Treasurer
-----------
Investment Adviser
First Summit Capital Management
1876 Waycross Road
Cincinnati, Ohio 45240
Administrator and Distributor
BISYS Fund Services
3435 Stelzer Road
Columbus, Ohio 43219-3035
Legal Counsel
Stradley, Ronon, Stevens & Young, LLP
2600 Commerce Square
Philadelphia, PA 19103-7098
Auditors
PricewaterhouseCoopers LLP
100 East Broad Street
Columbus, Ohio 43215
7/98
-----------------------------------
-----------------------------------
LOGO
SUMMIT
INVESTMENT
TRUST
HIGH YIELD FUND
EMERGING MARKETS BOND FUND
MANAGED BY
FIRST SUMMIT CAPITAL MANAGEMENT
ANNUAL REPORT
TO
SHAREHOLDERS
MAY 31, 1998
-----------------------------------
