<PAGE>   1
 
================================================================================
 
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
 
                            ------------------------
 
                                   FORM 10-K
 
              [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                      THE SECURITIES EXCHANGE ACT OF 1934
                  FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1997
 
                         COMMISSION FILE NUMBER 0-5641
 
                          CLEVETRUST REALTY INVESTORS
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
<TABLE>
<S>                                   <C>
            MASSACHUSETTS                           34-1085584
   (STATE OR OTHER JURISDICTION OF     (I.R.S. EMPLOYER IDENTIFICATION NO.)
    INCORPORATION OR ORGANIZATION)
 
    2001 CROCKER ROAD, SUITE 400,                     44145
            WESTLAKE, OHIO                          (ZIP CODE)
   (ADDRESS OF PRINCIPAL EXECUTIVE
               OFFICES)
</TABLE>
 
       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (440) 899-0909
        SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
          SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
 
                 SHARES OF BENEFICIAL INTEREST, $1.00 PAR VALUE
                                (TITLE OF CLASS)
 
     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ].
 
     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X].
 
     At December 2, 1997, 5,136,616 Shares of Beneficial Interest, par value
$1.00 per Share, were outstanding, and the aggregate market value of the Shares
of the Registrant held by non-affiliates (based upon the closing price of the
Registrant's Shares on December 2, 1997, which was $1.25) was approximately
$2,274,000. For purposes of this information, the outstanding Shares
beneficially owned by all Trustees and Officers of the Registrant, were deemed
to be the shares held by affiliates.
 
================================================================================
<PAGE>   2
 
                                     PART I
 
ITEM 1.  BUSINESS.
 
GENERAL
 
     CleveTrust Realty Investors (the "Trust") is a business trust organized in
Massachusetts which commenced operations in 1971. The Trust's assets are
composed principally of investments in real estate. The Trust directly manages
all of its improved properties. At September 30, 1997 the Trust had 9 full-time
employees.
 
     On September 24, 1996 the Board of Trustees of the Trust unanimously voted
to recommend a Plan for the Orderly Liquidation of the Trust (the "Plan").
Effective April 29, 1997 the shareholders approved the Plan. The Plan calls for
the sale of the Trust's properties during a period of approximately three years.
 
PORTFOLIO
 
     At September 30, 1997, the Trust's investment portfolio consisted primarily
of ownership interests in one multi-tenanted office building, two multi-tenanted
shopping centers, and one vacant restaurant (collectively, the "Properties").
Based on the announcement of the Plan, the Trust classified all of its
Properties as "Properties held for sale" at September 30, 1996, in accordance
with Statement of Financial Accounting Standards No. 121 "Accounting for the
Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of" ("SFAS
No. 121"). The Trust reviewed the carrying value of all the Properties at
September 30, 1997 and determined that two of the Trust's Properties had a
carrying value higher than the estimated fair value, less cost to sell.
Therefore a valuation reserve of $260,000 has been established. All of the
Properties owned by the Trust at September 30, 1997 were under contracts of
sale, and the contract prices were used in determining the estimated net sales
prices. One such contract was canceled effective December 1, 1997. See Item 2 of
Part I for allocation of the valuation reserve. The significant investment
portfolio activity of the last three fiscal years is discussed under Item 7 of
Part II below. Information pertaining to the operating revenues, operating
income or loss and total assets of the Trust for each of the last three fiscal
years is provided under Item 6 of Part II below.
 
     The Trust's primary business objective is to sell the Trust's assets for
the highest practical price. The proceeds from these sales will be distributed
to the Shareholders after establishment of reserves, believed by Management of
the Trust to be adequate to satisfy outstanding obligations of the Trust. In
order to sell the properties for the highest prices, the Trust reviewed its
operating strategy and implemented one intended to achieve the Trust's business
objective. The focus of this operating strategy has been to maximize funds from
operations from each of the Trust's Properties, thereby enhancing their value,
through (i) rental rate increases, to the extent that competitive conditions
permit; (ii) improvements in tenant retention; (iii) emphasis on expense
controls consistent with the proper maintenance of the Properties; and (iv)
strategic capital investments in order to increase the competitive position of
the Properties. The Trust strives to maintain operating expenses at its
Properties at the lowest practical levels given the need to adequately operate
and maintain its Properties, the majority of which were constructed in the
mid-1970's to mid-1980's. Maintenance has been emphasized because it is
considered critical to the appreciation of the Properties. Now that all of the
Properties are under contracts of sale, except the one on which the contract was
terminated, the Trust will focus its attention on finding a buyer for the
property and consummating the sales of the Properties.
 
     During the year ended September 30, 1997 the Trust completed the sale of
eleven of its Properties as follows: (i) $2,450,000 sale on October 7, 1996 of
the Littleton Bank Building, Littleton, Colorado, resulting in a gain of
$563,000; (ii) $20,000 sale on December 30, 1996 of a .23 acre land parcel
located in Dubuque, Iowa, resulting in a gain of $13,000; (iii) $5,950,000 sale
on January 21, 1997 of the Warren Plaza Shopping Center, Dubuque, Iowa,
resulting in a gain of $1,727,000; (iv) $3,475,000 sale on February 28, 1997 of
Triangle Square, Hilton Head, South Carolina, resulting in a gain of $2,650,000;
(v) $5,350,000 sale on March 12, 1997 of the Englewood Bank Building, Englewood,
Colorado, resulting in a gain of $2,317,000; (vi) $4,450,000 sale on April 28,
1997 of the Spring Village Shopping Center, Davenport, Iowa, resulting in a gain
of $679,000; (vii) $5,300,000 sale on June 2, 1997 of the Executive Club
Building, Denver, Colorado,
 
                                        1
<PAGE>   3
 
resulting in a gain of $3,463,000; (viii) $17,860,000 sale on August 1, 1997 of
Office Alpha and 14800 Quorum, both located in Dallas, Texas and Brookside
Office Building, Arlington, Texas, resulting in a gain of $5,175,000; and (ix)
$1,100,000 sale on September 5, 1997 of the Walnut Stemmons Office Park, Dallas,
Texas, resulting in a gain of $335,000.
 
     The remaining assets of the Trust were all under contracts of sale at
September 30, 1997. On December 8, 1997 the Trust completed a $3,150,000 sale of
the Petroleum Club Building, Tulsa, Oklahoma, which resulted in an estimated
gain of approximately $330,000 to be reported in the first quarter of fiscal
year 1998. The other contracts executed by the Trust are as follows: The vacant
restaurant located in Davenport, Iowa is under contract of sale for $642,500.
The Cannon West Shopping Center, Austin, Texas is under contract of sale for
$7,400,000. Tiffany Plaza, Ardmore, Oklahoma was under contract of sale for
$3,500,000, however, this contract was canceled by the buyer effective December
1, 1997. All of the existing contracts provide for due diligence periods, during
which time the buyer could cancel the contract at its option, as was done with
Tiffany Plaza. Additionally, after the completion of the due diligence period
the buyer will either place a non-refundable deposit with the Trust or cancel
the contract. Thereafter, should the buyer fail to complete the sale, these
deposits would be forfeited and retained by the Trust. Therefore, there is no
guarantee that these properties will actually be sold at the prices stated.
 
FINANCING AND LEVERAGE
 
     The Trust used borrowed funds in purchasing certain properties which the
Trust believes has helped to improve the Trust's return on investment in these
properties. At September 30, 1997 Cannon West Shopping Center was the only Trust
investment leveraged with long-term non-recourse individual mortgage financing.
The balance at September 30, 1997 of this debt was $5,561,000. It is currently
anticipated that this loan will be repaid through the funds generated in the
sale of this property.
 
TAXES
 
     Through fiscal 1992, the Trust qualified as a real estate investment trust
(a "REIT") as defined by Sections 856 through 860 of the Internal Revenue Code
of 1986, as amended (the "Code"). Effective April 1, 1993 the Trust
automatically failed to qualify as a REIT under the Code as on such date more
than 50% in value of the Trust's shares (after the application of certain
constructive ownership rules) were owned by five or fewer individuals.
 
     For the year ended September 30, 1997 the Trust recorded Federal income
taxes of $2,400,000 ($2,531,000 of current taxes, net of a deferred tax asset of
$131,000) and state income taxes of $314,000. In determining the federal income
taxes for the year ended September 30, 1997 the Trust utilized its total $10.2
million of net operating and capital loss carryforwards.
 
     As of September 30, 1997 the Trust has distributed $5.70 per share to
shareholders under the Plan. Under the Plan all distributions made to
shareholders are considered liquidating distributions and reported as return of
capital to shareholders to the extent of the individual shareholders' basis in
their shares. Shareholders are encouraged to consult their tax advisors for
information concerning the tax consequences of these distributions.
 
ITEM 2.  PROPERTIES.
 
GENERAL
 
     At September 30, 1997 the Trust had total invested assets of $12,658,000.
This total was all properties held for sale which included the following: one
office building with a carrying value of $2,579,000; three commercial properties
with a carrying value of $10,039,000; and one investment in land with a carrying
value of $40,000. Carrying value represents amounts included in the Trust's
Statement of Financial Condition at September 30, 1997 after depreciation and
the valuation reserve. Effective September 30, 1996 the Trust classified all
real estate owned as "Properties held for sale." Based on its review of the
properties at September 30, 1997 the Trust determined that two properties
required a valuation reserve, as the market
 
                                        2
<PAGE>   4
 
values, less cost to sell, of these properties were less than their carrying
value. Therefore a valuation reserve of $260,000 was established. All of the
properties owned by the Trust at September 30, 1997 were under contracts of
sale, and the contract prices were used in determining the estimated net sales
prices. The contract for Tiffany Plaza, Ardmore, Oklahoma was canceled by the
buyer effective December 1, 1997. See Part I, Item 1. Business -- Portfolio. On
December 8, 1997 the Trust completed the $3,150,000 sale of the Petroleum Club
Building located in Tulsa, Oklahoma. This sale resulted in a gain of
approximately $330,000 which will be reported in the first quarter of fiscal
1998.
 
     Management has from time to time undertaken a major renovation of a
Property in order to keep it competitive within its market. Since all
properties, except Tiffany Plaza, are currently under contracts of sale, there
are no major renovation projects currently under consideration.
 
     In the opinion of Management, all Properties in the Trust's portfolio are
adequately covered by insurance. Additionally, Management believes all
properties are suitable and adequate for their intended use.
 
     At September 30, 1997 only one of the Trust's properties was leveraged with
long-term non-recourse individual mortgage financing. The Cannon West Shopping
Center, Austin, Texas secures a $5,561,000 first mortgage loan.
 
PROPERTIES HELD FOR SALE
 
     The following table analyzes the properties held for sale at September 30,
1997 by type of property.
 
<TABLE>
<CAPTION>
                                           PERCENTAGE                                                      GROSS SALES
                                   YEAR      LEASED    SQUARE    TOTAL   ACCUMULATED  VALUATION  MORTGAGE  PRICE UNDER
          DESCRIPTION            ACQUIRED    (A)(B)    FOOTAGE   COST    DEPRECIATION  RESERVE     DEBT     CONTRACT
-------------------------------- --------  ----------  -------  -------  -----------  ---------  --------  -----------
<S>                              <C>       <C>         <C>      <C>      <C>          <C>        <C>       <C>
Office buildings
  Oklahoma:
    Petroleum Club Bldg. --
      Tulsa (C).................   1972       75%      115,000  $ 6,987    $ 4,408      $   0     $    0     $ 3,150
                                              ---      -------   ------     ------      -----       ----
         Total office
           buildings:...........               75      115,000    6,987      4,408          0          0
Commercial properties:
  Texas:
    Cannon West -- Austin (D)...   1987        95      123,000    8,510      2,174          0      5,561       7,400
  Iowa:
    Spring Village -- Davenport
      (E).......................   1987         0        9,500      916        167        183          0         643
  Oklahoma:
    Tiffany Plaza -- Ardmore
      (F).......................   1989        96      147,000    4,085        948          0          0         N/A
                                              ---      -------   ------     ------      -----       ----
Total commercial properties:....               92      279,500   13,511      3,289        183      5,561
Land:
  Ohio:
    Vacant land -- Akron........   1975       N/A          N/A      117        N/A         77          0          50
                                                                 ------     ------      -----       ----
Total properties held for
  sale..........................                                $20,615    $ 7,697        260     $5,561
                                                                 ======     ======      =====       ====
</TABLE>
 
---------------
 
(A) At September 30, 1997 the Trust had 73 tenants under lease in its office
     building and its commercial properties.
 
(B) The following lists individually those tenants who occupy 10,000 square feet
     or more at September 30, 1997:
 
                                        3
<PAGE>   5
 
<TABLE>
<CAPTION>
                                               EXPIRATION    SQUARE      ANNUAL
   PROPERTY                 TENANT                DATE       FOOTAGE    BASE RENT
---------------   --------------------------   ----------    -------    ---------
<S>               <C>                          <C>           <C>        <C>
Petroleum Club    Petroleum Club                4/30/2003     25,000    $ 157,000
Cannon West       Premiere Lady's Fitness       9/30/2001     15,000      100,000
Cannon West       H. E. Butt                   10/05/2001     50,000      250,000*
Tiffany Plaza     Orscheln Farm                 8/31/2001     30,000      102,000
Tiffany Plaza     Fleming Companies             3/20/2001     42,000       87,000*
Tiffany Plaza     C. R. Anthony                 3/07/2001     24,000       69,000*
                                                             -------     --------
                                                             186,000    $ 765,000
                                                             =======     ========
</TABLE>
 
      * Leases marked with an asterisk have additional rent provisions
        to be paid based on a percentage of the gross sales over a base
        sales figure.
 
        All leases listed on the table are subject to an annual
        adjustment in rent based on the increase or decrease in the
        operating expenses of the Property.
 
        The annual base rents of the tenants listed in the table equal
        34% of the current annual rental income of the properties owned
        by the Trust at September 30, 1997, and these tenants occupy
        186,000 square feet (54%) of the total 344,000 square feet
        currently occupied. The remaining 158,000 square feet are
        occupied by 67 tenants. The loss of rentals from any one of
        these leases, if the Trust was not be able to renew or replace
        it, would not have a significant effect on the Trust's
        operations.
 
(C) Petroleum Club Building.  The Petroleum Club Building located in Tulsa,
     Oklahoma was sold on December 8, 1997. The $3,150,000 sale resulted in a
     gain of approximately $330,000 which will be reported in the first quarter
     of fiscal year 1998.
 
(D) Cannon West Shopping Center.  The Cannon West Shopping Center is a
     grocery-anchored neighborhood strip center located in Austin, Texas. Cannon
     West's main tenants operate retail businesses. The Property is suitable and
     adequate for its use as a strip shopping center.
 
     Presently, the Trust has no plans for any significant renovations of the
     property beyond normal maintenance and repairs and tenant improvements done
     in conjunction with the leasing of space within the Property.
 
     The Trust owns this Property in fee simple, subject to a first mortgage
     loan, at a rate of 8.3%, which matures May 1, 2002. At September 30, 1997
     the balance of this loan was $5,561,000. By maturity $1,050,000 of
     scheduled amortization payments are required and therefore a balance of
     $4,511,000 will be due at maturity.
 
     The Cannon West Shopping Center is subject to a limited amount of direct
     competition in its immediate trade area. Although there are a number of
     grocery anchored shopping centers located in South Austin serving the
     south-side communities that are located along William Cannon Drive -- a
     major East-West highway serving the South Austin area -- Cannon West
     Shopping Center is the only retail shopping center located at the
     intersection of William Cannon Drive and Westgate Boulevard that serves the
     immediate surrounding neighborhoods.
 
     Occupancy for the fiscal years ended September 30, 1993 through 1997 was as
     follows: 93% in 1993; 75% in 1994; 82% in 1995; and 95% in 1996 and 1997.
     The average rental rate, including percentage rents, per occupied square
     foot during the same period was $7.05 in 1993; $8.38 in 1994; $9.01 in
     1995; $9.39 in 1996; and $10.51 in 1997.
 
     Cannon West has two tenants that occupy more than 10% of the Property. The
     first is H.E. Butt Grocery Store ("HEB"). Their annual base rent is
     $250,000. The lease also calls for tax, insurance and maintenance
     escalations and has a percentage rent clause. For 1997 the percentage rent
     paid was $114,000. This lease expires October 5, 2001 and has four
     five-year renewal options. In September, 1995
 
                                        4
<PAGE>   6
 
     the Trust was notified by HEB that they had purchased a parcel of land
     approximately one mile from Cannon West. As of September 30, 1997 the
     construction of a store had not yet begun. Should HEB complete construction
     and move it could affect Cannon West. The second tenant is Premiere Lady's
     Fitness Center, a health club and fitness center for women only. Their
     annual rent is $100,000. Their lease also calls for an annual adjustment
     based on increases or decreases in tax, insurance and maintenance expenses.
     This lease expires August 31, 2001.
 
     Based upon leases in place at September 30, 1997 lease expirations for the
     ten fiscal years ended September 30, 2007 are as follows:
 
<TABLE>
<CAPTION>
                                                                      ANNUAL       PERCENT OF
                                           NUMBER        TOTAL         BASE       GROSS ANNUAL
                                          OF LEASES     SQ. FT.       RENTS        BASE RENTS
                     YEAR                 EXPIRING      EXPIRING     EXPIRING      AT 9/30/97
        ------------------------------    ---------     --------     --------     ------------
        <S>                               <C>           <C>          <C>          <C>
        1998..........................       7            9,878      $141,204          13%
        1999..........................       7           11,292       143,038          13
        2000..........................       5           13,399       200,016          19
        2001..........................       5           20,810       180,948          17
        2002..........................       4           62,225       342,334          32
        2003..........................       1            2,373        54,620           6
        2004 -- 2007..................     NONE
</TABLE>
 
     The building and improvements are depreciated for tax purposes using the
     straight line method over 18 years. The depreciable tax basis was
     $3,524,000 at September 30, 1997. The 1996 real estate taxes were $152,150
     based on a millage rate of $2.379 per $100 of assessed value. The 1997 real
     estate taxes are not yet known.
 
(E) Spring Village Shopping Center.  On April 28, 1997 the Trust closed the sale
     of the Spring Village Shopping Center. The sales price was $4,450,000 and
     the Trust realized a gain of $679,000 on the sale. A 9,500 square foot
     restaurant parcel which was considered part of this property by the Trust
     was not sold. At September 30, 1997 this restaurant parcel was vacant. The
     Trust has executed a contract of sale for this parcel. The contract
     provides for "due diligence" during which time the buyer could cancel the
     contract at his option. After the completion of the due diligence period
     the buyer will either place a non-refundable deposit with the Trust or
     cancel the contract. Thereafter, should the buyer fail to complete the sale
     this deposit would be forfeited and retained by the Trust. However, no
     assurance may be given that this property will actually be sold at the
     contract price.
 
     The restaurant building and improvements are depreciated for tax purposes
     using the straight line method over 31-1/2 years. The depreciable tax basis
     was $507,000 at September 30, 1997. The 1997 real estate taxes are $34,540
     based on a millage rate of $34.536 per $1,000 of assessed value.
 
(F) Tiffany Plaza Shopping Center.  The Tiffany Plaza Shopping Center is a
     grocery-anchored neighborhood strip center located in Ardmore, Oklahoma.
     Tiffany Plaza's main tenants operate retail businesses. The Property is
     suitable and adequate for its use as a strip shopping center.
 
     The Trust has no plans for significant renovations of the Property beyond
     normal maintenance and repairs and tenant improvements done in conjunction
     with the leasing of space within the Property.
 
     The main competition for this center is a mall and a Wal-Mart center, both
     of which are located more than a mile from Tiffany Plaza.
 
     Occupancy for the fiscal years ended September 30, 1993 through 1997 was as
     follows: 92% in 1993; 97% in 1994; 95% in 1995; 98% in 1996; and 96% in
     1997. The average rental rate, including percentage rent, per occupied
     square foot during the same period was: $4.05 in 1993; $3.59 in 1994; $3.66
     in 1995; $3.93 in 1996; and $3.98 in 1997.
 
     Tiffany plaza has three tenants who occupy more than 10% of the Property.
     The first is Flemming Companies who operate a Buy-For-Less grocery store.
     The annual rent is $87,000. The lease also calls for
 
                                        5
<PAGE>   7
 
     tax, insurance and maintenance escalations and has a percentage rent
     clause. There was no percentage rent due for 1997. The lease expires March
     20, 2001. The second tenant is Orscheln Farm and Home Supply, Inc., who
     sell farm equipment and supplies. The annual rent is $102,000. The lease
     also calls for tax, insurance and maintenance escalations. The lease
     expires August 31, 2001. The third tenant is CR Anthony Company, a family
     clothing store. The annual rent is $69,000. The lease also calls for tax,
     insurance and maintenance escalations and has a percentage rent clause.
     There was $3,120 of percentage rent paid in 1997. The lease expires March
     7, 2001.
 
     Based upon leases in place at September 30, 1997 lease expirations for the
     ten fiscal years ended September 30, 2007 are as follows:
 
<TABLE>
<CAPTION>
                                               NUMBER      TOTAL                       PERCENT OF GROSS
                                              OF LEASES   SQ. FT.     ANNUAL BASE        ANNUAL BASE
                      YEAR                    EXPIRING    EXPIRING   RENTS EXPIRING    RENTS AT 9/30/97
    ----------------------------------------  ---------   --------   --------------   ------------------
    <S>                                       <C>         <C>        <C>              <C>
    1998....................................     4           8,108      $ 37,140               7%
    1999....................................     5          13,972        69,852              13
    2000....................................     2           9,192        48,588               9
    2001....................................     4         100,551       291,705              56
    2002....................................     2           4,000        61,236              12
    2003....................................   NONE
    2004....................................     1           5,108        14,928               3
    2005 -- 2007............................   NONE
</TABLE>
 
     The building and improvements are depreciated for tax purposes using the
straight line method over 31-1/2 years. The depreciable tax basis was $2,506,000
at September 30, 1997. The 1996 real estate taxes were $32,242 based on a
millage rate of $8.28 per $1000 of assessed value. The 1997 real estate taxes
are not yet known.
 
GEOGRAPHIC DISTRIBUTION
 
     The table below demonstrates the geographic distribution of the Trust's
properties and the percentages based on the properties owned by the Trust at
September 30, 1997:
 
<TABLE>
<CAPTION>
                                                                                  PERCENTAGE OF
                                                     NUMBER OF    PERCENTAGE OF   ASSETS BASED
                                                    INVESTMENTS   RENTAL INCOME      ON COST
                                                    -----------   -------------   -------------
        <S>                                         <C>           <C>             <C>
        Oklahoma:
          Tulsa...................................       1              34%             34%
          Ardmore.................................       1              21              20
        Iowa:
          Davenport...............................       1              --               4
        Texas:
          Austin..................................       1              45              41
        Ohio:
          Akron...................................       1              --               1
                                                       ---            ----            ----
                                                         5             100%            100%
                                                       ===            ====            ====
</TABLE>
 
ITEM 3.  LEGAL PROCEEDINGS
 
     The Trust is involved in a number of legal proceedings arising in the
normal course of its business activities, none of which, in the opinion of the
Management, is expected to have a material adverse effect on the financial
position or liquidity of the Trust.
 
                                        6
<PAGE>   8
 
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
 
     No matters were submitted to a vote of the Trust's Shareholders during the
fourth quarter of the fiscal year covered by this report.
 
                                    PART II
 
ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
 
MARKET PRICE RANGE
 
     The shares of the Trust are traded in the Nasdaq National Market (symbol
CTRIS). The table below contains the quarterly high and low closing bid prices
for such Shares.
 
<TABLE>
<CAPTION>
                   FISCAL 1997
--------------------------------------------------
        QUARTER ENDED             HIGH       LOW
-----------------------------    ------     ------
<S>                              <C>        <C>
December 31, 1996............     5-1/2      4-5/8
March 31, 1997...............    6-3/16      5-1/8
June 30, 1997................     6-1/2      2-3/4
September 30, 1997...........     3-7/8      1-1/8
</TABLE>
 
<TABLE>
<CAPTION>
                   FISCAL 1996
--------------------------------------------------
        QUARTER ENDED             HIGH       LOW
-----------------------------    ------     ------
<S>                              <C>        <C>
December 31, 1995............     5-1/8      3-7/8
March 31, 1996...............     5-1/8      4-7/8
June 30, 1996................         5      4-1/2
September 30, 1996...........        5-      4-1/4
</TABLE>
 
     The bid prices for the Trust's Shares shown in the table above are
interdealer prices and do not reflect retail mark ups, mark downs, or
commissions and may not be representative of actual transactions. As of December
2, 1997, there were approximately 1,125 record holders of the Shares.
 
DISTRIBUTIONS TO SHAREHOLDERS
 
<TABLE>
<CAPTION>
           FISCAL 1997                   AMOUNT
           PAYMENT DATE                PER SHARE
----------------------------------    ------------
<S>                                   <C>
May 16, 1997......................       $ 2.50
June 19, 1997.....................         1.10
August 19, 1997...................         2.10
                                          -----
                                         $ 5.70
                                          -----
</TABLE>
 
<TABLE>
<CAPTION>
           FISCAL 1997                   AMOUNT
           PAYMENT DATE                PER SHARE
----------------------------------       -----
<S>                                   <C>
October 20, 1995..................       $  .04
January 19, 1996..................          .04
April 19, 1996....................          .04
July 19, 1996.....................          .04
September 20, 1996................          .04
                                          -----
                                         $  .20
                                          -----
</TABLE>
 
     For a discussion of the tax classification of cash distributions see
Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Distributions.
 
                                        7
<PAGE>   9
 
ITEM 6.  SELECTED FINANCIAL DATA
 
<TABLE>
<CAPTION>
            YEAR ENDED SEPTEMBER 30,                1997      1996      1995      1994      1993
-------------------------------------------------  -------   -------   -------   -------   -------
                                                        (in thousands, except per share data)
<S>                                                <C>       <C>       <C>       <C>       <C>
OPERATIONS:
  Rental income..................................  $ 7,485   $10,368   $10,145   $ 9,650   $ 9,348
  Interest income................................      225        40        56        76       263
  Dividend income................................        0       225         0         0         0
     Other income................................      294        12        26        29        41
                                                   -------   -------   -------   -------   -------
Operating revenues...............................    8,004    10,645    10,227     9,755     9,652
Provision for valuation reserve..................   (1,348)    3,307         0         0         0
Operating expenses other than provision for
  valuation reserve..............................    9,772     9,398     9,631     9,870    10,384
Income (loss) before gains and taxes.............     (420)   (2,060)      596      (115)     (732)
Gains on sales of real estate....................   16,922        40     2,499       445       563
Gains on sales of securities.....................        0       632         0         0         0
Federal and state income taxes...................    2,714         0         0         0         0
Extraordinary items..............................        0         0       790       253       286
Net income (loss)................................   13,788    (1,388)    3,885       583       117
Cash distributions to shareholders...............   29,279     1,037       874       735       393
Per Share of Beneficial Interest:
  Income (loss) before gains and taxes...........  $ (0.08)  $ (0.40)  $  0.11   $ (0.02)  $ (0.22)
  Gains on sales of real estate..................     3.29      0.01      0.46      0.09      0.17
  Gains on sales of securities...................     0.00      0.12      0.00      0.00      0.00
  Federal and state income taxes.................    (0.53)     0.00      0.00      0.00      0.00
  Extraordinary items............................     0.00      0.00      0.14      0.05      0.09
                                                   -------   -------   -------   -------   -------
     Net income (loss)...........................  $  2.68   $ (0.27)  $  0.71   $  0.12   $  0.04
                                                   =======   =======   =======   =======   =======
  Cash distributions.............................  $  5.70   $  0.20   $  0.16   $  0.15   $  0.12
Weighted average number of Shares of Beneficial
  Interest outstanding...........................    5,138     5,186     5,459     4,959     3,292
</TABLE>
 
<TABLE>
<CAPTION>
                AT SEPTEMBER 30,                    1997      1996      1995      1994      1993
-------------------------------------------------  -------   -------   -------   -------   -------
                                                                   (in thousands)
<S>                                                <C>       <C>       <C>       <C>       <C>
FINANCIAL CONDITION:
Properties held for sale.........................  $12,918   $42,203   $   203   $     0   $     0
Valuation reserve................................     (260)   (3,307)        0         0         0
Investments in real estate.......................        0         0    40,739    45,380    49,394
Real estate mortgage loans.......................        0       119       303       236       150
Allowance for possible investment losses.........        0         0         0         0    (6,089)
Investments in securities........................        0         0       267         0         0
Cash and cash equivalents........................    4,612     1,490       188       251       315
Certificates of deposit..........................        0         0         0       500       500
Insurance settlement proceeds....................        0         0         0     3,341         0
Total assets.....................................   17,638    43,852    43,076    51,004    45,499
Mortgage notes payable...........................    5,561     9,563     9,266    11,111    17,126
Bank notes payable...............................        0     9,800     6,600    11,180     8,800
Shareholders' equity.............................    6,808    22,500    25,126    23,150    17,669
Number of Shares of Beneficial Interest
  outstanding at September 30....................    5,137     5,179     5,217     5,471     3,716
</TABLE>
 
                                        8
<PAGE>   10
 
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS.
 
FINANCIAL CONDITION
 
     Effective April 29, 1997 the shareholders of the Trust approved the Plan
for the Orderly Liquidation of the Trust. On September 24, 1996 the Board of
Trustees of the Trust had announced that they unanimously voted to recommend the
Plan to a vote of the shareholders. The Plan calls for the sale of the Trust's
properties during a period of approximately three years. Based on the Trustees'
action the Trust reclassified all of its properties to properties held for sale
at September 30, 1996, in accordance with Statement of Financial Accounting
Standards No. 121 "Accounting for the Impairment of Long-Lived Assets and
Long-Lived Assets to be Disposed of " ("SFAS No. 121"). The Trust reviewed the
carrying value of all the properties at September 30, 1996 and determined that
four of the Trust's properties had a carrying value higher than the estimated
fair value, less cost to sell. The Trust, therefore, established a valuation
reserve for these four properties which totaled $3,307,000. During the year
ended September 30, 1997, based on the sale prices offered and/or received for
the properties, the Trust reversed $1,348,000 of the valuation reserve
established at September 30, 1996. At September 30, 1997 the Trust determined
that two properties had a carrying value higher than the estimated fair value,
less cost to sell. Therefore, the valuation reserve was set at $260,000.
 
     During the three-year period ended September 30, 1997 the Trust's total
assets decreased 65% to $17,638,000. During this three-year period the carrying
value of the Trust's invested assets decreased 72% or $32,958,000 to
$12,658,000. During fiscal 1997 the Trust sold eleven properties which resulted
in gains totaling $16,922,000. (See PART I, Item 1 of this Form 10-K for details
of the individual sales.) In fiscal 1996 the Trust purchased the land on which
its Englewood Bank Building, located in Englewood, Colorado, was located. This
land, which was previously leased by the Trust, was purchased for a price of
$1,263,000. Also, the Trust purchased the 52,554 square foot Brookside Office
Building located in Arlington, Texas, for a purchase price of $2,202,000.
Additionally, during 1996 the Trust sold three improved properties. The first
was the sale during January and February of three condominium units located in
Davie, Florida, for a combined sales price of $138,000 which resulted in a gain
of $69,000. The second was the $600,000 sale of European Crossroads in Dallas,
Texas, which resulted in a loss of $313,000. The third was a $615,000 sale of
two of the five buildings comprising the Walnut Stemmons Office Park located in
Dallas, Texas, which resulted in a gain of $261,000. In fiscal 1995 the Trust
sold three improved properties. The first was the sale of the 197 room Quality
Hotel in St. Louis, Missouri for $2,650,000, which resulted in a gain of
$452,000. The second was the sale of the 124 unit Parkwood Place Apartments in
Greeley, Colorado for $2,595,000, which resulted in a gain of $1,859,000. The
third was the sale of the 51,000 square foot Walnut Hill West office building in
Dallas, Texas for $800,000 which resulted in a gain of $97,000. The result of
the two purchases during this three-year period was an increase of approximately
$3,465,000 to the carrying value of the Trust's portfolio of invested assets.
The result of all the sales during this three year period was a decrease of
approximately $34,377,000 to the carrying value of the Trust's portfolio of
invested assets. Additionally, the recording of $3,676,000 of depreciation, a
non-cash adjustment, reduced the carrying value during this three-year period.
Also, during this three-year period, the Trust made improvements to its existing
properties of $2,338,000 and received payments totaling $448,000 on real estate
mortgage loans.
 
     During the three-year period ended September 30, 1997 the Trust's mortgage
notes payable decreased 50% or $5,550,000 to $5,561,000. This resulted from
additional borrowings of $500,000 under one of the then existing mortgage loans,
amortization payments of $745,000, and repayments and paydowns $5,305,000. Of
this $5,305,000, the actual cash outlay by the Trust was $5,253,000 with $52,000
representing discounts obtained by the Trust. The Trust's bank notes payable
decreased $11,180,000 during the three-year period ended September 30, 1997, as
the Trust repaid in full the 1994 Credit Agreement. Effective February 6, 1997
the Trust terminated the 1994 Credit Agreement. The repayment in full and the
termination of the 1994 Credit Agreement were done in connection with the Plan.
 
     During the three-year period ended September 30, 1997 the Trust's
shareholders' equity decreased 71% or $16,342,000 to $6,808,000. This decrease
was primarily the result of the Trust spending $1,437,000 to repurchase 42,000
of the Trust's Shares in fiscal 1997, 38,000 of the Trust's Shares in fiscal
1996, and 253,553 of the Trust's Shares in fiscal 1995, and recording
$16,285,000 of net income and $31,190,000 of distributions
 
                                        9
<PAGE>   11
 
to shareholders during this three-year period. As a result of the Trust's total
debt being reduced approximately $16,730,000 and total shareholders' equity
decreasing $16,342,000, the Trust's debt to shareholders' equity ratio has
decreased to .82-to-1.00 at September 30, 1997 from .96-to-1.00 at September 30,
1994.
 
LIQUIDITY AND CAPITAL RESOURCES
 
     The Plan calls for the Trust to sell all of its assets, relieve all
liabilities, and distribute the remaining funds to the shareholders. In
accordance with the Plan the Trust successfully completed the sale of eleven of
its improved properties during the year ended September 30, 1997 (see PART I,
Item 1 of this Form 10-K for details on individual sales) and a vacant land
parcel. On December 8, 1997 the Trust completed a $3,150,000 sale of the
Petroleum Club Building which resulted in an estimated gain of approximately
$330,000 which will be reported in the first quarter of fiscal year 1998.
Additionally, the Trust had executed contracts of sale on the remaining three
improved properties. A vacant restaurant located in Davenport, Iowa is under
contract of sale for $642,500. The Cannon West Shopping Center located in
Austin, Texas is under contract of sale for $7,400,000. Tiffany Plaza located in
Ardmore, Oklahoma was under contract of sale for $3,500,000; however, the buyer
canceled the contract effective December 1, 1997. All of these contracts provide
for due diligence periods, during which time the buyer could cancel the contract
at his option, as was done with Tiffany Plaza. Additionally, after the
completion of the due diligence period the buyer will either place a
non-refundable deposit with the Trust or cancel the contract. Thereafter, should
the buyer fail to complete the sale, these deposits would be forfeited and
retained by the Trust. Therefore, there is no guarantee that these properties
will actually be sold at the prices stated.
 
     As a result of the sales during fiscal 1997, the Trust reduced its
liabilities by $10,522,000 and distributed $29,279,000 ($5.70 per share) to the
shareholders. The Trust estimates that it should distribute between $6.50 and
$7.00 per share when the liquidation has been completed.
 
     Management has from time to time undertaken a major renovation of a
Property in order to keep it competitive within its market. Currently, no
renovation projects are contemplated or in process.
 
     The Trust's cash flow from operations increased $766,000 (76%) when
comparing 1997 to 1996. The increase was primarily due to the net activity of
the following items:
 
     - In 1997 the Trust had a loss before gains and taxes of $420,000 for 1997
       compared to a loss before gains and taxes of $2,060,000 for 1996. There
       was no depreciation in 1997 while $1,830,000 was recorded in 1996. 1997
       included $4,064,000 of expenses related to compensation for officers in
       connection with the liquidation, while there were no such expenses in
       1996. Also, 1997 included the reversal of $1,348,000 of valuation
       reserve, while 1996 included the recording of a valuation reserve of
       $3,307,000.
 
     - Accrued expenses and other liabilities increased $1,209,000 in 1997
       compared to 1996 primarily as a result of the accrual of compensation due
       officers in connection with the liquidation.
 
     - Accrued federal and state income taxes increased $2,085,000 in 1997
       compared to 1996 primarily as a result of the substantial gains realized
       from the sales of real estate. The Trust previously had operating loss
       and capital loss carryforwards to offset taxable income, however; because
       of the liquidation the loss carryforwards were totally utilized and the
       Trust recorded both federal and state income tax liability.
 
     - Other assets decreased $2,979,000 from 1996 to 1997. Of this amount
       $1,918,000 represents the amount due the Trust on its sale of securities,
       which amount was received by the Trust on October 1, 1996. The balance of
       the reduction is primarily related to the reduction in prepaid expenses
       at September 30, 1996 at properties that were sold during 1997.
 
     For 1997 the net cash from investing activities was $44,627,000. As
previously discussed, the Trust sold eleven improved properties and a small land
parcel for total proceeds of $45,208,000. Additionally, the Trust expended
$700,000 for improvements to existing properties.
 
     For 1996 the net cash used in investing activities was $1,995,000. As
previously discussed, the Trust purchased land and a suburban office building
for a total of $3,465,000. The Trust also purchased securities for
 
                                       10
<PAGE>   12
 
$2,057,000. Additionally, the Trust expended $972,000 for improvements to
existing properties. Cash inflows included proceeds from the sale of three
condominiums, two small office buildings and a retail center totaling
$1,386,000, $2,929,000 from the sale of securities and $184,000 in real estate
mortgage loan repayments.
 
     In 1997 net cash used in financing activities totaled $43,282,000. The
Trust repaid $3,790,000 of first mortgage loans on properties sold and made
amortization payments on first mortgages of $212,000. Additionally, the Trust
repaid in full the 1994 Credit in the amount of $9,800,000. Also, the Trust made
distributions to shareholders of $29,279,000 ($5.70 per share) and repurchased
42,000 of its shares for $201,000.
 
     In 1996 net cash from financing activities totaled $2,286,000. Mortgage
notes payable amortization payments were $203,000 and the Trust borrowed an
additional $500,000 on one of its existing mortgage loans. Additionally, the
Trust borrowed $3,200,000 which was used in the purchase of property. Finally,
in 1996 the Trust made five distributions of $.04 per share to shareholders of
the Trust for a total of $1,037,000.
 
     At September 30, 1997 the Trust's last remaining debt obligation is the
$5,561,000 first mortgage loan on the Cannon West Shopping Center. This loan is
scheduled to mature May 7, 2002. However, it is currently anticipated that the
loan will be paid in full at the time of the sale of the Cannon West Shopping
Center, which is currently under a contract of sale for $7,400,000, although as
stated previously, there can be no guarantees that the sale will actually close.
 
RESULTS OF OPERATIONS
 
  Fiscal Year Comparison
 
     Income from real estate operations in 1997 increased $494,000 (14%) and
$918,000 (30%) as compared to 1996 and 1995, respectively. The increases were
primarily the net result of lower rental income in 1997 compared to both 1996
and 1995, lower real estate operating expenses in 1997 compared to both 1996 and
1995, and the fact that in 1997 there was no depreciation expense recorded while
depreciation expense was recorded for both 1996 and 1995. Rental income was
$2,883,000 (28%) lower in 1997 than 1996, and $2,660,000 (26%) lower in 1997
than 1995. Real estate operating expenses were $1,547,000 (31%) lower in 1997
than 1996, and $1,732,000 (33%) lower in 1997 than 1995. Depreciation expense in
1996 was $1,830,000 and $1,846,000 in 1995. The reasons for these variances in
rental income, real estate operating expenses and depreciation expense are
described below.
 
  1997 -- 1996
 
     Income from real estate operations increased $494,000 (14%) from 1996 to
1997. Rental income decreased $2,883,000 (28%) from 1996 to 1997. Real estate
operating expenses were $1,547,000 (31%) lower in 1997 than 1996. The decrease
in rental income and the decrease in real estate operating expense both were
primarily due to the sale of properties throughout 1997, as described
previously. The Trust recorded no depreciation in 1997 because all properties
were reclassified to properties held for sale at September 30, 1996. Interest
expense was $807,000 (45%) lower in 1997 compared to 1996, as a result of the
repayment of two first mortgage loans on properties sold and the $9,800,000 1994
Credit Agreement, which was terminated February 6, 1997. General and
administrative expenses were $4,558,000 (621%) higher in 1997 than 1996,
primarily as a result of the Trust recording $198,000 of expenses related to the
Plan, and $4,064,000 of accrued compensation for the officers of the Trust (See
NOTE G to the Notes to Financial Statements included in this Form 10-K). In 1997
the Trust reversed $1,348,000 of the valuation reserve of $3,307,00 provided in
1996.
 
     In 1997 the Trust recorded gains on the sales of real estate totaling
$16,922,000 as a result of the sale of eleven properties. (See PART I, Item 1 of
this Form 10-K for details of the individual sales.) In 1996 the Trust reported
net gains on the sales of real estate totaling $40,000 on the sale of four
properties. These sales are described in detail under the 1996 -- 1995 analysis
below.
 
                                       11
<PAGE>   13
 
     In 1996 the Trust recorded gains on the sales of securities of $632,000.
There were no gains on the sales of securities for 1997. For 1997 the Trust
recorder $2,714,000 of federal and state income tax expense. There was no
federal or state income tax expense for 1996.
 
  1996 -- 1995
 
     Income from real estate operations increased $424,000 (14%) from 1995 to
1996. Rental income increased $223,000 (2%) from 1995 to 1996. Real estate
operating expenses were $185,000 lower in 1996 than 1995. The increase in rental
income was primarily due to an increase in occupancy (91% at September 30, 1996
versus 81.5% at September 30, 1995) and an increase in average rental rates
($9.14 per occupied square foot at September 30, 1996 versus $8.61 per occupied
square foot at September 30, 1995). The decrease in real estate operating
expenses was primarily due to the sales during 1995 of the 124 unit Parkwood
Place Apartments located in Greeley, Colorado and the 51,000 square foot Walnut
Hill West office building located in Dallas, Texas, as well as the March, 1996
sale of the European Crossroads, an office/retail complex located in Dallas,
Texas. During 1996 the Trust received $225,000 of dividend income on securities
owned. There was no dividend income reported in 1995. At September 30, 1996, in
accordance with the Plan, the Trust made a provision for valuation reserve of
$3,307,000. There was no provision made in 1995.
 
     In 1996 the Trust recorded net gains on the sales of real estate totaling
$40,000 as the result of four sales. The sales were as follows: (i) In January
and February, 1996 the sale of three condominium units located in Davie, Florida
for a combined sale of $138,000, resulting in a total gain of $69,000; (ii)
March, 1996 $600,000 sale of the European Crossroads located in Dallas, Texas,
which resulted in a loss of $313,000; (iii) April, 1996 $115,000 sale of 7.42
acres of vacant land located in Akron, Ohio, which resulted in a gain of
$23,000; and (iv) September, 1996 $615,000 sale of two of the five buildings of
the Walnut Stemmons Office Park located in Dallas, Texas, which resulted in a
gain of $261,000. In 1995 the Trust reported gains on the sales of real estate
totaling $2,499,000 on the sales of four properties.
 
     In 1996 the Trust recorded gains on the sales of securities of $632,000.
There were no gains on the sales of securities for 1995. For 1996 there were no
extraordinary items. In 1995 the Trust settled at a discount a $1,017,000 first
mortgage loan on its office building located in Englewood, Colorado. This
settlement resulted in an extraordinary income item of $52,000. In January 1994
the Trust's Petroleum Club Building located in Tulsa, Oklahoma sustained a major
fire. In July, 1994 the Trust and its insurance company agreed on a settlement
of $6,025,000. The Trust has completed all necessary repairs and building
improvements. Upon completion of the work there was $738,000 of the settlement
which had not been expended. The Trust recorded this $738,000 as an
extraordinary income item in fiscal 1995.
 
DISTRIBUTIONS
 
     For 1995 the Trust paid distributions to its shareholders of $874,000 or
$.16 per share. For the shareholders these distributions were classified for tax
purposes as dividends.
 
     For 1996 the Trust paid distributions to its shareholders of $1,037,000 or
$.20 per share. For the shareholders the $.04 per share paid in October, 1995
was classified for tax purposes as dividends. The $.04 ($.16 total) per share
paid in January, April, July, and September, 1996 was classified for tax
purposes as return of capital.
 
     For 1997 the Trust paid liquidating distributions to its shareholders of
$29,279,000 or $5.70 per share. For the shareholders the $5.70 per share paid
will be considered return of capital up to the shareholder's individual basis in
the Trust's shares and then capital gains thereafter.
 
INCOME TAXES
 
     For the year ended September 30, 1997 the Trust recorded Federal income
taxes of $2,400,000 ($2,531,000 of current taxes, net of a deferred tax asset of
$131,000) and state income taxes of $314,000. In determining the federal income
taxes the Trust utilized the total $10.2 million of net operating and capital
loss
 
                                       12
<PAGE>   14
 
carryforwards. There were no federal or state income taxes recorded for either
the year ended September 30, 1996 or 1995.
 
     At September 30, 1996 the Trust had net deferred tax assets of
approximately $3,048,000. As was the case at September 30, 1995 the Trust has
established a valuation allowance equal to its net tax assets as there is doubt
as to whether the net deferred tax asset will be realized.
 
OTHER
 
     Inflation, which has been at relatively low rates for the past three years,
has had an immaterial impact on the Trust's operations during the three-year
period ended September 30, 1997.
 
ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
 
     Not applicable.
 
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
 
     The response to this Item is submitted in a separate section of this
report. See Item 14 of this report for information concerning financial
statements and schedules filed with this report. The quarterly financial data
required by this item is included as Note K of the Notes to Financial
Statements.
 
ITEM 9.  DISAGREEMENT ON ACCOUNTING AND FINANCIAL DISCLOSURE.
 
     There has not been any change in the Trust's independent auditors, nor have
there been any disagreements concerning accounting principles, auditing
procedures, or financial statement disclosure within the twenty four (24) months
prior to the date of the most recent financial statements presented in this
report.
 
                                       13
<PAGE>   15
 
                                    PART III
 
ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
 
TRUSTEES OF THE REGISTRANT
 
     Based upon information received from the respective Trustees as of November
15, 1997, the following information with respect to each person is furnished:
 
<TABLE>
<CAPTION>
                                        POSITION(S) WITH THE TRUST, PRINCIPAL OCCUPATION,
       NAME (AGE) OF TRUSTEE               BUSINESS EXPERIENCE AND OTHER DIRECTORSHIPS
-----------------------------------  --------------------------------------------------------
<S>                                  <C>
Howard Amster
(50)(a)............................  Trustee of the Trust since December, 1992; Investment
                                     Consultant with Everen Securities, Inc. (securities,
                                     investments), Director of Astrex, Inc. (distributor of
                                     electronic components).
Robert H. Kanner
(50)(b)............................  Trustee of the Trust since December, 1992; President,
                                     Chairman and a Director of Pubco Corporation (computer
                                     printer supplies, manufacturing, and specialty
                                     construction products). Until June 27, 1996, President,
                                     Chairman and a Director of Bobbie Brooks, Incorporated
                                     and Chairman and a Director of Aspen Imaging
                                     International, Inc., which companies were merged into
                                     Pubco Corporation on that date. Director of Riser Foods,
                                     Inc. (food distribution).
John C. Kikol
(53)...............................  Trustee of the Trust since 1982; President of the Trust
                                     since 1974; Chairman of the Trust since February, 1995.
Leighton A. Rosenthal
(82)(c)............................  Trustee of the Trust since October, 1991; President LARS
                                     Aviation, Inc. (private aircraft charters), Cleveland,
                                     Ohio.
John C. Weil
(57)(d)............................  Trustee of the Trust since June, 1991; President Clayton
                                     Management Co. (bookkeeping and investment management
                                     services), St. Louis, Missouri. Director of Cliffs
                                     Drilling (oil service), Oglebay Norton Company (lake
                                     shipping, mining and manufacturing), Physicians
                                     Insurance Company of Ohio (medical malpractice
                                     insurance) and Todd Shipyards, Inc. (ship building and
                                     repair company).
</TABLE>
 
---------------
(a) Chairman of the Audit Committee
(b) Chairman of the Investment Committee
(c) Chairman of the Nominating Committee
(d) Chairman of Compensation Committee
 
     Each Trustee is a member of all of the Committees of the Trust, except that
Mr. Kikol does not serve on the Compensation Committee.
 
     Except as otherwise indicated in the above table, each Trustee has had the
principal occupation or former occupation indicated for more than five years.
 
                                       14
<PAGE>   16
 
EXECUTIVE OFFICERS OF THE REGISTRANT
 
<TABLE>
<CAPTION>
                                        POSITION(S) WITH THE TRUST, PRINCIPAL OCCUPATION,
            NAME (AGE)                     BUSINESS EXPERIENCE AND OTHER DIRECTORSHIPS
-----------------------------------  --------------------------------------------------------
<S>                                  <C>
John C. Kikol (53).................  Chairman; Chairman of the Board of Trustees since 1995;
                                     Trustee of the Trust since 1982; President of the Trust
                                     since 1974; Secretary since 1997
Michael R. Thoms (49)..............  Vice President and Treasurer of the Trust since 1987
Brian D. Griesinger (36)...........  Vice President -- Management of the Trust since 1989
</TABLE>
 
ITEM 11.  EXECUTIVE COMPENSATION
 
SUMMARY COMPENSATION OF EXECUTIVE OFFICERS
 
     The following table sets forth the compensation awarded to, earned by or
paid to the four executive officers of the Trust at September 30, 1997 whose
total salary and bonus exceeded $100,000 for the year ended September 30, 1997.
 
<TABLE>
<CAPTION>
                                                                                  LONG-TERM
                                                                                 COMPENSATION
                             FISCAL                       PAYMENTS               ------------
    NAME AND PRINCIPAL        YEAR      BASE    BONUSES  IN LIEU OF   INCENTIVE    OPTIONS      ALL OTHER
         POSITION            ENDED     SALARY     (1)    OPTIONS (2)  BONUS (3)  GRANTED (4)   COMPENSATION
--------------------------- --------  --------  -------  -----------  ---------  ------------  ------------
<S>                         <C>       <C>       <C>      <C>          <C>        <C>           <C>
John C. Kikol..............  9/30/97  $170,250  $64,990   $ 384,250   $ 413,470         --       $  9,516
  Chairman, President        9/30/96   135,000   47,000          --          --         --         15,151
  & Chief Executive Officer  9/30/95   135,000   47,000          --          --      3,000         13,197
Michael R. Thoms...........  9/30/97    88,000   27,050     124,660          --         --          7,119
  Vice President, Treasurer  9/30/96    76,000   16,000          --          --         --          6,517
  & Chief Financial Officer  9/30/95    76,000   16,000          --          --      1,000          6,330
Brian D. Griesinger........  9/30/97    92,750   28,420     123,270     103,370         --          7,119
  Vice President --          9/30/96    80,000   17,000          --          --         --          7,024
  Management                 9/30/95    78,750   20,000          --          --      1,000          6,628
Raymond C. Novinc (6)......  9/30/97    96,080   23,340     124,660          --         --          7,119
  Vice President,
  Secretary,                 9/30/96    80,000   12,000          --          --         --          6,456
  and Counsel                9/30/95    80,000   10,000          --          --      1,000          6,271
</TABLE>
 
---------------
 
(1) As a result of the adoption of the Plan, the supplemental pension plan for
     the four officers listed, was terminated. The 1996 & 1997 contributions
     were distributed directly to the officers as a bonus in the year ended
     September 30, 1997 as follows: Mr. Kikol -- $17,990; Mr. Thoms -- $11,050;
     Mr. Griesinger -- $11,420; and Mr. Novinc -- $11,340.
 
(2) Under the employment agreements, each of the four officers listed waived all
     rights to unexercised stock options. In lieu of the options the officers
     will receive payments based upon liquidating distributions to the Trust's
     shareholders, including a gross up amount (See Employment
     Agreements -- Salary, Bonus and Other Compensation for further details of
     these payments). The amounts shown represents the payments made during
     1997.
 
(3) Mr. Kikol's Employment Agreement provides for participation in an incentive
     compensation program for officers of the Trust (See Employment
     Agreement -- Incentive Compensation Program, for details of these
     payments). The amounts shown represent payments made in 1997 under this
     program.
 
(4) All four officers waived all rights with respect to options granted under
     the Trust's 1992 Stock Option Plan in their Amended and Restated Employment
     Agreements, effective September 1, 1996, between the Trust and the
     individual officer. See Employment Agreements.
 
                                       15
<PAGE>   17
 
(5) For fiscal 1997, for Mr. Kikol the amount represents the premium paid
     ($2,400) by the Trust for a "key man" insurance policy for the benefit of
     the Chief Executive Officer and his designated heirs and pension plan
     contributions ($7,119). For the other three officers the amount shown
     represents only pension plan contributions.
 
(6) Effective October 31, 1997 Mr. Novinc's employment by the Trust ended. Mr.
     Novinc and the Trust entered into a consulting agreement. Under the
     consulting agreement Mr. Novinc will supply legal services in connection
     with the sale of the remaining properties of the Trust upon the request of
     Mr. Kikol.
 
EMPLOYMENT AGREEMENTS
 
     In connection with the adoption of the Plan by the Trustees, the
Compensation Committee of the Board of Trustees approved the Amended and
Restated Employment Agreements, effective as of September 1, 1996, between the
Trust and the four executive officers of the Trust, Mr. Kikol, Chairman and
President, Mr. Thoms, Vice President and Treasurer, Mr. Griesinger, Vice
President -- Management, and Mr. Novinc, Vice President, Secretary and Counsel.
Mr. Kikol's Agreement was subject to shareholder approval, which such approval
was granted by the shareholders effective April 29, 1997.
 
     Purpose.  The Trust entered into the Employment Agreements in order to
induce the officers to remain in their positions throughout the liquidation
process in order to provide continuity and to maximize the liquidating
distributions to the shareholders. In Mr. Kikol's case the agreement provides
incentives by tying his compensation to the aggregate amount of distributions to
shareholders.
 
     Salary, Bonus and Other Compensation.  The Employment Agreements provide
that commencing January 1, 1997 the Trust will pay base salaries to the officers
as follows: Mr. Kikol -- $182,000 per year in semi-monthly installments; Mr.
Thoms -- $92,000 per year in semi-monthly installments; Mr. Griesinger --
$97,000 per year in semi-monthly installments; and Mr. Novinc -- $92,000 in
semi-monthly installments.
 
     Under the Employment Agreements, the officers waived all rights to
unexercised stock options to purchase Shares of Beneficial Interest of the Trust
granted to them under the Trust's 1992 Incentive Stock Option Plan. In lieu of
such options, the Trust will pay to the officers amounts based upon the
liquidating distributions to the Trust's shareholders from time to time (the
"Payments'), including a gross up amount (the "Gross Up Amount") that, when
added to the Payments, will allow the officers to retain a net amount after
payment of all federal, state and local income taxes equal to the net amount of
the Payments. The Payments and Gross Up Amount are paid to the officers at the
same time as liquidating distributions are made to shareholders. The Payments
are designed to compensate the officers in amounts similar to the liquidating
distributions that they would receive if they exercised the options prior to
such distributions. The Payments are net of the exercise price of the respective
options, and the Gross Up Amount is paid in recognition of the fact that the
officers would have been able to apply capital loss carryforwards to any capital
gains they would have recognized on the sale of Shares of Beneficial Interest
acquired through exercise of the incentive stock options. The Trust believes
that it will not be economically disadvantaged by payment of the Gross Up Amount
because the Trust expects to be able to deduct for federal income tax purposes
the full amount of Payments and the Gross Up Amount, whereas it would not be
entitled to any deduction upon exercise of incentive stock options.
 
INCENTIVE COMPENSATION PROGRAM
 
     Mr. Kikol's Employment Agreement also provides for participation in an
incentive compensation program for officers of the Trust (the "Incentive
Compensation Program"). Under the Incentive Compensation Program, an incentive
compensation pool is created for distribution to certain key employees. The
amount to be allocated to the pool is calculated based on amounts otherwise
available to be paid by the Trust as liquidating distributions to its
shareholders. The amount allocated to the pool will be the sum of: (a) 10% of
all amounts otherwise available for distribution between $4.75 and $5.50 per
share; and (b) 15% of all amounts otherwise available for distribution in excess
of $5.50 per Share. For purposes of computing the amount payable to the pool,
liquidating distributions when made are reduced to their present value as of
 
                                       16
<PAGE>   18
 
January 1, 1997 using a discount rate of 10%. The amounts will be allocable to
the pool and available for distribution to the key employees at the same time,
and from time to time , as liquidating distributions are made to shareholders.
Mr. Kikol is entitled to receive not less than 80% of amounts distributed from
the pool.
 
     If the Trust continues to hold properties at the end of the Liquidation
Period, the value of such properties will be considered a deemed distribution to
shareholders as of the end of the Liquidation Period in order to complete the
determination of all present valued liquidating distributions made during the
liquidation process. The Trust will then have the option of (i) allocating to
the pool an amount based on the deemed distribution of unsold properties
(reduced to a present value number and based on the 10%/15% formula described
above) or (ii) making an in kind allocation to the pool of an ownership interest
in the remaining unsold properties equal in value to the amount described in
(i).
 
     If Mr. Kikol is terminated by the Trust (a) during 1998 and he has failed
to sell at least three Trust properties before the end of calendar year 1997 or
(b) during 1999 or thereafter and he has failed to sell at least three Trust
properties during calendar year 1998, Mr. Kikol is entitled to an immediate cash
payment of $250,000 in lieu of any participation in the pool. If Mr. Kikol's
employment is terminated during 1997 or during the periods indicated above and
he has not failed to sell the required number of Trust properties as described
above, Mr. Kikol will be entitled to payments from the pool when pool
distributions are made, as if his employment had not been terminated. It should
be noted that the property sale requirements listed have all been met. If Mr.
Kikol's employment is terminated because of his death or disability he or his
personal representative, as the case may be, will be entitled to receive
distributions from the pool to the extent that prior pool distributions have not
taken into account such present valued liquidating distributions. If Mr. Kikol
is terminated for misappropriation of Trust funds or property in the amount of
$25,000 or more, or if he voluntarily terminates his employment with the Trust
other than because of a material change in his duties, he forfeits any right to
payment from the pool.
 
     Certain Benefits.  The Employment Agreements provide for the continuation
of certain plan benefits currently provided to the officers, including health
and accident insurance, retirement, group life insurance and similar plan
benefits. The officers are also entitled to payment or reimbursement of business
expenses. Mr. Kikol is also entitled to the use of an automobile, the payment of
club dues and the payment of premiums on an insurance policy on his life.
 
     Termination of Agreements.  The Employment Agreements may be terminated by
either the Trust or the officers at any time and for any reason without prior
notice to the other. If terminated (i) by the Trust (except on the grounds of
the officers' misappropriation of Trust funds or property) or (ii) by the death
or disability of the officer or (iii) by the officer because of a material
change in his duties, the Employment Agreement provides for a severance payment
to the officers as follows: Mr. Kikol -- $546,000; Mr. Thoms -- $184,000; Mr.
Griesinger -- $136,406 plus $1,010 per month for each month of employment
starting October 1, 1997 until his termination up to a maximum payment of
$194,000; and Mr. Novinc -- $184,000. Such severance payments will be paid only
if the officer delivers to the Trust prior to such payment, a release of all
claims against the Trust. The Employment Agreement automatically terminates upon
the death or disability of the officer. This severance payment is in addition to
any payment to which the officers may be entitled under the Incentive
Compensation Program described previously. On October 24, 1997 the Trustees
prepaid the severance payments to each of these four officers, after obtaining
the required releases. By prepaying the severance, the payments will be shown as
an expense on the Trust's 1997 tax return thus reducing the 1997 federal income
tax obligations, which the Trustees deemed was in the best interest of all the
shareholders.
 
     Payment of Legal Fees.  The Employment Agreements provide for the payment
of the officers' legal fees and expenses under certain circumstances, including
the failure of the Trust to comply with its obligations under the Employment
Agreements or in the event the Trust or any other person takes action to declare
the Employment Agreements void and unenforceable or institutes litigation to
deny or recover form the officers the benefits intended to be provided under the
Employment Agreements.
 
     Excise Tax Gross Up Payment.  If amounts payable to Mr. Kikol under his
Employment Agreement become subject to the excise tax imposed by Section 4999 of
the Internal Revenue Code, he is entitled to a
 
                                       17
<PAGE>   19
 
gross up payment such that, after the payment of the excise tax and any federal,
state or local income taxes on such gross up payment, he retains a net amount
equal to the amount he would if retained from payments under the Employment
Agreement had the excise tax not been applicable.
 
     Management Agreement.  Mr. Kikol's Employment Agreement provides that, if
so requested by the Trust by means of 90 days advance written notice, Mr. Kikol
will manage the remaining unsold properties of the Trust, if any, upon
completion of the liquidation process, for an annual management fee equal to
five percent of the "gross property income" of such properties (i.e. gross
rental receipts without reduction for customary on-site expenses or reasonable
travel expenses related to such property) pursuant to a separate management
agreement. Mr. Kikol's duties under such an agreement would be, among others, to
attend to routine operational obligations associated with property management,
administrative matters, investor relations and public company duties. All salary
and benefits payable to Mr. Kikol under the Employment Agreement (other than
those which become payable prior to its termination) will cease at the
commencement of the term of the management agreement. Either party may terminate
such management services upon 90 days advance written notice to the other.
 
     The Trust compensated all Trustees (other than Mr. Kikol, who does not
receive fees for services as a Trustee) at a rate of $8,000 per annum which was
paid in quarterly installments of $2,000, said sum being in lieu of all meeting
and other fees. Effective October 1, 1997 the Trustees agreed to waive the
$8,000 annual fee. However, all Trustees will continue to be reimbursed for
actual expenses incurred in connection with meetings attended or extended
services provided.
 
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
 
     The following table sets forth, as of November 15, 1997, information
furnished to the Trust with respect to the beneficial ownership of the Trust's
Shares of Beneficial Interest by each shareholder or group of shareholders known
to the Trust to be the beneficial owner of more than five (5%) percent of the
Trust's outstanding Shares of Beneficial Interest, each present Trustee, each
executive officer of the Trust, and all present Trustees and executive officers
of the Trust as a group.
 
                                       18
<PAGE>   20
 
<TABLE>
<CAPTION>
                BENEFICIAL OWNER, TRUSTEE, OFFICER                     NUMBER OF SHARES      PERCENT
                  OR NUMBER OF PERSONS IN GROUP                     BENEFICIALLY OWNED(A)    OF CLASS
------------------------------------------------------------------  ----------------------   --------
<S>                                                                 <C>                      <C>
Howard Amster (Beneficial owner and Trustee)(b)...................           788,868           15.4%
23811 Chagrin Blvd., Chagrin Plaza East
Suite 200
Beachwood, Ohio 44122
Robert H. Kanner (Beneficial owner and Trustee)(c)................         1,300,000            25.3
3830 Kelley Avenue
Cleveland, Ohio 44114
John C. Kikol (Trustee and officer)(d)............................            70,479             1.4
2001 Crocker Road, Suite 400
Westlake, Ohio 44145
Leighton A. Rosenthal (Beneficial owner and Trustee)..............           393,000             7.7
The Halle Building, Suite 310
1228 Euclid Avenue
Cleveland, Ohio 44115
John D. Weil (Beneficial owner and Trustee)(e)....................           745,000            14.5
200 North Broadway, Suite 825
St. Louis, Missouri 63102-2573
Brian D. Griesinger (Officer).....................................             7,000            *
2001 Crocker Road, Suite 400
Westlake, Ohio 44145
Michael R. Thoms (Officer)(d).....................................            28,055            *
2001 Crocker Road, Suite 400
Westlake, Ohio 44145
7 present Trustees and officers listed above......................         3,317,468            64.6
</TABLE>
 
---------------
 
* Less than one percent.
 
(a) Except as noted, in each case the beneficial owner has sole voting and sole
    investment power.
 
(b) Includes 400 Shares of Beneficial Interest held by Tamra F. Gould (Mr.
    Amster's wife) in which Mr. Amster disclaims any beneficial interest.
    Excludes 27,600 Shares of Beneficial Inter held by Sonia Amster (Mr.
    Amster's mother) in which Mr. Amster disclaims any beneficial interest.
 
(c) The shares shown as being held by Robert H. Kanner are owned by a trust of
    which Mr. Kanner is the sole beneficiary. Mr. Kanner is not a trustee of
    such trust and has neither investment not voting power in such shares.
    Trustees of such trust are Stephen R. Kalette and Eleonora Grmek who have an
    address of 3830 Kelly Avenue, Cleveland, Ohio 44114. Excludes 5,000 Shares
    of Beneficial Interest held by Buckeye Business Products Bargaining Unit
    Pension Trust of which Mr. Kanner is a trustee but not a participant.
 
(d) Includes 14,934 Shares of Beneficial Interest held in a trust in which
    Messrs. Kikol and Thoms are Trustees with all voting and investment power
    and have an interest as beneficiaries (with respect to a portion of the
    trust's assets). The Shares of Beneficial Interest held by all Trustees and
    officers as a group in the table have been adjusted to eliminate the
    duplication of beneficial ownership.
 
(e) Includes 25,000 Shares of Beneficial Interest held in the name of a family
    trust of which Mr. Weil is the trustee. Also includes 100,000 Shares of
    Beneficial Interest held in the name of Richard K. Weil (the father of Mr.
    Weil), 25,000 Shares of Beneficial Interest held in the name of Victoria L.
    Weil (the daughter of Mr. Weil) and 225,000 Shares of Beneficial Interest in
    the aggregate held by Richard K. Weil Jr., Mark S. Weil and Paula K. Weil
    (siblings of Mr. Weil), the beneficial ownership of which he disclaims.
 
ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
 
     None.
 
                                       19
<PAGE>   21
 
                                    PART IV
 
ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
 
     (a) The following documents are filed as a part of this Report:
 
          (1) The Financial Statements listed on the List of Financial
     Statements and Financial Statement Schedules are filed as a separate
     section of this Report.
 
          (2) The Financial Statement Schedules listed on the List of the
     Financial Statements and Financial Statement Schedules are filed as a
     separate section of this Report.
 
          (3) The exhibits required by Item 601 of Regulation S-K and identified
     on the Exhibit Index contained in this Report.
 
     (b) No Reports on Form 8-K were filed during the last quarter of the period
covered by this Report.
 
     (c) The exhibits being filed with this Report are identified on the Exhibit
Index contained in this Report.
 
     (d) The Financial Statement Schedules are filed as a separate section of
this Report.
 
                                       20
<PAGE>   22
 
                                   SIGNATURES
 
     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
 
<TABLE>
    <S>                          <C>
    Dated: December 16, 1997     CLEVETRUST REALTY INVESTORS
                                 By:  /s/  Michael R. Thoms
                                      Michael R. Thoms
                                      Vice President and
                                 Treasurer
</TABLE>
 
     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant and
in the capacities and on the date indicated:
 
<TABLE>
<CAPTION>
             SIGNATURE                                  TITLE                          DATE
------------------------------------     ------------------------------------   ------------------
<C>                                      <S>                                    <C>
 
        * /s/ JOHN C. KIKOL              Chairman of the Board of Trustees,     December 16, 1997
------------------------------------       President and Principal Executive
           John C. Kikol                   Officer
 
        /s/ MICHAEL R. THOMS             Vice President, Treasurer              December 16, 1997
------------------------------------       Principal Financial Officer and
          Michael R. Thoms                 Principal Accounting Officer
 
        * /s/ HOWARD AMSTER              Trustee                                December 16, 1997
------------------------------------
           Howard Amster
 
       * /s/ ROBERT H. KANNER            Trustee                                December 16, 1997
------------------------------------
          Robert H. Kanner
 
    * /s/ LEIGHTON A. ROSENTHAL          Trustee                                December 16, 1997
------------------------------------
       Leighton A. Rosenthal
 
         * /s/ JOHN D. WEIL              Trustee                                December 16, 1997
------------------------------------
            John D. Weil
 
     * /s/ BY: MICHAEL R. THOMS                                                 December 16, 1997
------------------------------------
          Michael R. Thoms
          Attorney-in-Fact
</TABLE>
 
                                       21
<PAGE>   23
 
                           ANNUAL REPORT ON FORM 10-K
 
                PART IV, ITEM 14 (A) (1) AND (2) AND ITEM 14 (D)
 
         LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
 
                         YEAR ENDED SEPTEMBER 30, 1997
 
                          CLEVETRUST REALTY INVESTORS
 
                                 WESTLAKE, OHIO
<PAGE>   24
 
                 FORM 10-K -- PART IV, ITEM 14 (A) (1) AND (2)
 
                          CLEVETRUST REALTY INVESTORS
 
         LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
 
FINANCIAL STATEMENTS:
 
     The following financial statements of CleveTrust Realty Investors are
included in Part II, Item 8:
 
        Statement of Financial Condition -- September 30, 1997 and 1996
 
        Statement of Operations -- Years ended September 30, 1997, 1996 and 1995
 
        Statement of Cash Flows -- Years ended September 30, 1997, 1996 and 1995
 
        Statement of Changes in Shareholders' Equity -- Years ended September
30, 1997, 1996 and 1995
 
        Notes to Financial Statements
 
FINANCIAL STATEMENT SCHEDULES:
 
     The following financial statement schedules of CleveTrust Realty Investors
are included in Part IV, Item 14 (d):
 
        Schedule III -- Real Estate and Accumulated Depreciation.
 
     All other schedules for which provision is made in the applicable
regulations of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable and, therefore, have been omitted.
 
                                       F-1
<PAGE>   25
 
                         REPORT OF INDEPENDENT AUDITORS
 
Trustees and Shareholders
CleveTrust Realty Investors
Westlake, Ohio
 
     We have audited the accompanying statement of financial condition of
CleveTrust Realty Investors as of September 30, 1997 and 1996, and the related
statements of operations, changes in shareholders' equity and cash flows for
each of the three years in the period ended September 30, 1997. Our audits also
included the financial statement schedule listed in the Index at Item 14(a).
These 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 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 are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of CleveTrust Realty Investors
at September 30, 1997 and 1996, and the results of its operations and its cash
flows for each of the three years in the period ended September 30, 1997 in
conformity with generally accepted accounting principles. Also, in our opinion,
the related financial statement schedule, when considered in relation to the
basic financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.
 
                                          ERNST & YOUNG LLP
 
November 21, 1997
Cleveland, Ohio
 
                                       F-2
<PAGE>   26
 
                       STATEMENTS OF FINANCIAL CONDITION
 
                          CLEVETRUST REALTY INVESTORS
 
<TABLE>
<CAPTION>
                                                                             SEPTEMBER 30,
                                                                          --------------------
                                                                           1997         1996
                                                                          -------     --------
                                                                             (in thousands)
<S>                                                                       <C>         <C>
                                ASSETS
Invested assets -- Notes A, C and D:
  Properties held for sale............................................    $12,918     $ 42,203
  Less: Valuation reserve.............................................        260        3,307
                                                                          -------      -------
                                                                           12,658       38,896
  Real estate mortgage loans..........................................          0          119
                                                                          -------      -------
                                                                           12,658       39,015
Cash and cash equivalents -- Note A...................................      4,612        1,490
Other assets..........................................................        368        3,347
                                                                          -------      -------
                                                                          $17,638     $ 43,852
                                                                          =======      =======
                             LIABILITIES
Mortgage notes payable -- Note E......................................    $ 5,561     $  9,563
Bank notes payable -- Note F..........................................          0        9,800
Accrued interest on notes payable -- Note F...........................          0           14
Accrued federal and state income taxes -- Note B......................      2,085            0
Accrued expenses and other liabilities -- Note G......................      3,184        1,975
                                                                          -------      -------
                                                                           10,830       21,352
                         SHAREHOLDERS' EQUITY
Shares of Beneficial Interest, par value $1 per Share -- Note H:
     Authorized -- Unlimited Issued and outstanding shares
     (9/30/97 -- 5,136,616; 9/30/96 -- 5,179,143).....................      5,137        5,179
Additional paid-in capital............................................      9,412       38,850
Accumulated deficit...................................................     (7,741)     (21,529)
                                                                          -------      -------
                                                                            6,808       22,500
                                                                          -------      -------
                                                                          $17,638     $ 43,852
                                                                          =======      =======
</TABLE>
 
                       See notes to financial statements.
 
                                       F-3
<PAGE>   27
 
                            STATEMENTS OF OPERATIONS
 
                          CLEVETRUST REALTY INVESTORS
 
<TABLE>
<CAPTION>
                                                                   YEARS ENDED SEPTEMBER 30,
                                                                -------------------------------
                                                                 1997        1996        1995
                                                                -------     -------     -------
                                                                (in thousands, except per share
                                                                             data)
<S>                                                             <C>         <C>         <C>
Income
Real estate operations:
  Rental income.............................................    $ 7,485     $10,368     $10,145
  Less:
     Real estate operating expenses.........................      3,513       5,060       5,245
     Depreciation expenses..................................          0       1,830       1,846
                                                                -------     -------     -------
                                                                  3,513       6,890       7,091
                                                                -------     -------     -------
Income from real estate operations..........................      3,972       3,478       3,054
Interest income.............................................        225          40          56
Dividend income.............................................          0         225           0
Other.......................................................        294          12          26
                                                                -------     -------     -------
                                                                  4,491       3,755       3,136
Expenses
Interest:
  Mortgage notes payable -- Note E..........................        673         888         988
  Bank notes payable........................................        294         886         789
                                                                -------     -------     -------
                                                                    967       1,774       1,777
General and Administrative -- Note G........................      5,292         734         763
Provision for valuation reserve -- Note A...................     (1,348)      3,307           0
                                                                -------     -------     -------
                                                                  4,911       5,815       2,540
                                                                -------     -------     -------
Income (loss) before net gains on sales of real estate,
  gains on sales of securities, income taxes and
  extraordinary items.......................................       (420)     (2,060)        596
Net gains on sales of real estate -- Note D.................     16,922          40       2,499
Gains on sales of securities................................          0         632           0
Federal and state income taxes -- Note B....................     (2,714)          0           0
                                                                -------     -------     -------
Income (loss) before extraordinary items....................     13,788      (1,388)      3,095
Extraordinary items.........................................          0           0         790
                                                                -------     -------     -------
          Net income (loss).................................    $13,788     $(1,388)    $ 3,885
                                                                =======     =======     =======
Per share of beneficial interest -- Note A:
Income (loss) before net gains on sales of real estate,
  gains on sales of securities, income taxes and
  extraordinary items.......................................    $ (0.08)    $ (0.40)    $  0.11
Net gains on sales of real estate...........................       3.29        0.01        0.46
Gains on sales of securities................................       0.00        0.12        0.00
Federal and state income taxes..............................      (0.53)       0.00        0.00
                                                                -------     -------     -------
Income (loss) before extraordinary items....................       2.68       (0.27)       0.57
Extraordinary items.........................................       0.00        0.00        0.14
                                                                -------     -------     -------
          Net income (loss) per share.......................    $  2.68     $ (0.27)    $  0.71
                                                                =======     =======     =======
Weighted average number of Shares of
  Beneficial Interest outstanding...........................      5,138       5,186       5,459
                                                                =======     =======     =======
</TABLE>
 
                       See notes to financial statements.
 
                                       F-4
<PAGE>   28
 
                            STATEMENTS OF CASH FLOWS
 
                          CLEVETRUST REALTY INVESTORS
 
<TABLE>
<CAPTION>
                                                                  YEARS ENDED SEPTEMBER 30,
                                                               --------------------------------
                                                                 1997        1996        1995
                                                               --------     -------     -------
                                                                        (in thousands)
<S>                                                            <C>          <C>         <C>
Cash flow from operating activities:
Net income (loss)..........................................    $ 13,788     $(1,388)    $ 3,885
Non-cash revenues and expenses included in income:
  Depreciation.............................................           0       1,830       1,846
  Provision for (reverse) valuation reserve................      (1,348)      3,307           0
  Decrease in accrued interest on notes payable............         (14)         (9)         (4)
  Increase (decrease) in accrued expenses and other
     liabilities...........................................       1,209         (86)       (134)
  Increase in accrued federal and state income taxes.......       2,085           0           0
  Decrease (increase) in other assets......................       2,979      (1,971)        (80)
Reconciliation to net cash flow from operating activities:
  Net gains on sales of real estate........................     (16,922)        (40)     (2,499)
  Gains on sales of securities.............................           0        (632)          0
  Extraordinary items......................................           0           0        (790)
                                                                 ------      ------      ------
          Cash flow from operating activities..............       1,777       1,011       2,224
Cash flow from investing activities
Equity investments:
  Improvements to existing properties......................        (700)       (972)       (666)
  Purchase of property.....................................           0      (3,465)          0
  Proceeds from properties sold............................      45,208       1,386       5,545
  Net insurance proceeds...................................           0           0         738
Real estate mortgage loans:
  Repayments...............................................         119         184         145
Investments in securities:
  Securities purchased.....................................           0      (2,057)       (240)
  Proceeds from sales of securities........................           0       2,929           0
                                                                 ------      ------      ------
  Net cash from (used in) investing activities.............      44,627      (1,995)      5,522
Cash flow from financing activities:
Mortgage notes payable:
  Principal amortization payments..........................        (212)       (203)       (330)
  Principal repayments.....................................      (3,790)          0      (1,463)
  Principal borrowings.....................................           0         500           0
Bank notes payable:
  Principal amortization payments..........................           0           0         (31)
  Principal repayments.....................................      (9,800)          0      (4,549)
  Principal borrowings.....................................           0       3,200           0
Certificate of Deposit.....................................           0           0         500
Distributions to shareholders..............................     (29,279)     (1,037)       (874)
Shares repurchased and subsequently retired................        (201)       (174)     (1,062)
                                                                 ------      ------      ------
  Net cash (used in) from financing activities.............     (43,282)      2,286      (7,809)
                                                                 ------      ------      ------
Increase (decrease) in cash and cash equivalents...........       3,122       1,302         (63)
Balance at beginning of year...............................       1,490         188         251
                                                                 ------      ------      ------
Balance at end of year.....................................    $  4,612     $ 1,490     $   188
                                                                 ======      ======      ======
</TABLE>
 
                       See notes to financial statements.
 
                                       F-5
<PAGE>   29
 
                 STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
 
                          CLEVETRUST REALTY INVESTORS
                 YEARS ENDED SEPTEMBER 30, 1997, 1996, AND 1995
 
<TABLE>
<CAPTION>
                                            SHARES OF   ADDITIONAL                 UNREALIZED       TOTAL
                                            BENEFICIAL   PAID-IN     ACCUMULATED    GAINS ON    SHAREHOLDERS'
                                            INTEREST     CAPITAL       DEFICIT     SECURITIES      EQUITY
                                            ---------   ----------   -----------   ----------   -------------
                                                                     (in thousands)
<S>                                         <C>         <C>          <C>           <C>          <C>
Balance October 1, 1994...................   $ 5,471     $ 39,794     $ (22,115)      $  0         $23,150
Net income for the year ended September
  30, 1995................................                                3,885                      3,885
Cash distributions declared and paid
  -- $.16 per share.......................                                 (874)                      (874)
Shares repurchased and subsequently
  retired
  -- Note H...............................      (254)        (808)                                  (1,062)
Change in unrealized gains on
  securities..............................                                              27              27
                                             -------     --------     ---------       ----         -------
Balance September 30, 1995................     5,217       38,986       (19,104)        27          25,126
Net (loss) for the year ended September
  30, 1996................................                               (1,388)                    (1,388)
Cash distributions declared and paid
  -- $.20 per share.......................                               (1,037)                    (1,037)
Shares repurchased and subsequently
  retired
  -- Note H...............................       (38)        (136)                                    (174)
Change in unrealized gains on
  securities..............................                                             (27)            (27)
                                             -------     --------     ---------       ----         -------
Balance September 30, 1996................     5,179       38,850       (21,529)         0          22,500
Net income for the year ended September
  30, 1997................................                               13,788                     13,788
Cash liquidating distributions declared
  and paid -- $5.70 per share.............                (29,279)                                 (29,279)
Shares repurchased and subsequently
  retired
  -- Note H...............................       (42)        (159)                                    (201)
                                             -------     --------     ---------       ----         -------
Balance September 30, 1997................   $ 5,137     $  9,412     $  (7,741)      $  0         $ 6,808
                                             =======     ========     =========       ====         =======
</TABLE>
 
                                       F-6
<PAGE>   30
 
                         NOTES TO FINANCIAL STATEMENTS
 
                          CLEVETRUST REALTY INVESTORS
                 YEARS ENDED SEPTEMBER 30, 1997, 1996 AND 1995
 
NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
     CleveTrust Realty Investors is a business trust organized in the State of
Massachusetts, headquartered in Ohio. The Trust's primary business objective was
the ownership and operation of improved real estate. On September 24, 1996 the
Trustees of the Trust unanimously voted to recommend a Plan for the Orderly
Liquidation of the Trust (the "Plan"). Effective April 29, 1997 the shareholders
of the Trust approved the Plan. Accordingly, the Trust's primary business
objective is to sell all of its assets, discharge all of its liabilities, and
distribute the balance of the funds to the shareholders. The Trust anticipates
completing the sale of its four properties in 1998 and will then complete the
Plan.
 
     Use of Estimates:  The preparation of financial statements requires
Management to make estimates and assumptions that affect amounts reported in the
financial statements and accompanying notes. Such estimates and assumptions
could change in the future as more information becomes known, which could affect
the amounts reported and disclosed herein.
 
     Income Recognition:  Rental income from improved properties is generally
recorded as it accrues. Interest on mortgage loans is recognized as income as it
accrues during the period the loans are outstanding except where collection of
interest is considered doubtful. Contingent rents and interest are recognized as
income when determinable. Accrual of income is suspended on any investment when
the collection of rent, principal, or interest is doubtful.
 
     Real Estate:  In accordance with Statement of Financial Accounting
Standards No. 121 "Accounting for the Impairment of Long-Lived Assets and
Long-Lived Assets to be Disposed of," the Trust's properties held for sale are
reported in the Trust's financial statements at the lower of carrying value or
estimated fair value, less cost to sell. A valuation reserve, of $260,000 and
$3,307,000, was established at September 30, 1997 and 1996, respectively, for
certain properties to reduce the carrying value to their estimated fair value,
less cost to sell.
 
     Depreciation:  In accordance with the Plan, properties held for sale were
not depreciated in fiscal year 1997. Previously, depreciation on equity
investments was computed by the straight-line method at rates based upon the
expected economic lives of the assets which range from 31 to 40 years for
buildings, 5 to 40 years for other property and the specific length of the
tenant lease for tenant improvements. Additionally, one building and its
permanent improvements were depreciated over a life of 55 years.
 
     Repairs and Capital Improvements:  Expenditures for repairs and maintenance
which do not add to the value or prolong the useful life of property owned are
charged to expense as incurred; those expenditures for improvements which do add
to the value or extend the useful life are capitalized.
 
     Cash and Cash Equivalents:  The Trust defines cash and cash equivalents as
cash in bank accounts and investments in marketable securities, primarily
short-term government securities, with original maturities of three months or
less.
 
     Income Taxes:  Deferred income taxes are recognized for temporary
differences between the financial reporting basis of assets and liabilities and
their respective tax basis and for operating and capital loss and tax credit
carryforwards based on enacted tax rates expected to be in effect when such
amounts are realized or settled. However, deferred tax assets are recognized
only to the extent that it is more likely than not that they will be realized
based on consideration of available evidence including tax planning strategies
and other factors. The effects of changes in tax laws or rates on deferred tax
assets and liabilities are recognized in the period that includes the enactment
date.
 
     Net Income Per Share:  Net income per Share of Beneficial Interest has been
computed using the weighted average number of Shares of Beneficial Interest
outstanding each year.
 
     Reclassification:  Certain items in previously issued financial statements
have been reclassified to conform to the 1997 method of presentation.
 
                                       F-7
<PAGE>   31
 
NOTE B -- INCOME TAXES
 
     For the fiscal year ended September 30, 1997 the Trust recorded Federal
income taxes of $2,400,000 ($2,531,000 of current taxes, of which $400,000 has
been paid at September 30, 1997, net of a deferred tax asset of $131,000) and
state income taxes of $314,000. The Trust had no income tax expense for either
of the years ended September 30, 1996 or 1995. No taxes were paid during the
year ended September 30, 1996.
 
     The Trust's deferred tax assets and liabilities at September 30, 1997 and
1996 are as follows:
 
<TABLE>
<CAPTION>
                                                                      1997      1996
                                                                      -----    ------
                                                                      (in thousands)
        <S>                                                           <C>      <C>
        Deferred tax assets:
          Properties held for sale -- valuation reserve.............  $  88    $1,124
          Net operating and capital loss carryforwards..............    -0-     3,456
          Other.....................................................    546       -0-
        Deferred tax liabilities:
          Depreciation..............................................   (503)   (1,489)
          Other.....................................................    -0-       (43)
                                                                      -----    -------
                                                                        131     3,048
        Valuation allowance.........................................    -0-    (3,048)
                                                                      -----    -------
                  Net deferred tax asset............................  $ 131    $  -0-
                                                                      =====    =======
</TABLE>
 
     For the fiscal year ended September 30, 1996 the Trust maintained a
valuation reserve equal to its net deferred tax asset as there was doubt as to
whether the net deferred tax asset will be realized.
 
     The $546,000 other deferred asset represents expenses totaling $1,607,000
which were accrued and expensed in the financial statements for the year ended
September 30, 1997, but will not be deducted in determining the taxable income
for tax year 1997. These expenses were $1,576,000 of severance pay, incentive
bonus pool and payments in lieu of options (see NOTE -- G for further
information concerning these expenses) and $31,000 of state taxes.
 
     A reconciliation between the income tax expense that would have resulted
from applying federal statutory rates to pretax income and federal income taxes
recorded is as follows:
 
<TABLE>
<CAPTION>
                                                           9/30/97     9/30/96     9/30/95
                                                           -------     -------     -------
                                                                   (in thousands)
        <S>                                                <C>         <C>         <C>
        Expected income tax expense at
          Federal statutory tax rate.....................  $5,611       $(472)     $1,321
        State income taxes (net of federal benefit)......     207          --          --
        Increase (decrease) in taxes resulting from:
          Effect of temporary differences................     352        (853)       (535) 
          (Recognized) unrecognized net operating loss
             carryforward................................  (3,456)      1,325        (786) 
                                                           -------     ------      ------
                  Income Tax Expense.....................  $2,714       $ -0-      $  -0-
                                                           =======     ======      ======
</TABLE>
 
     In determining the federal income taxes for the fiscal year ended September
30, 1997 the Trust utilized the total $10.2 million of net operating and capital
loss carryforwards.
 
                                       F-8
<PAGE>   32
 
NOTE C -- PROPERTIES
 
     The following is a summary of the Trust's properties held for sale and
related indebtedness at September 30, 1997:
 
<TABLE>
<CAPTION>
                                                     VALUATION
                                                      RESERVE                   INCOME FROM
                           TOTAL    ACCUMULATED   ----------------   CARRYING   REAL ESTATE    AMOUNT OF
       CLASSIFICATION      COST     DEPRECIATION                      VALUE     OPERATIONS    INDEBTEDNESS
    --------------------  -------   -----------   (in thousands $)   --------   -----------   ------------
    <S>                   <C>       <C>           <C>                <C>        <C>           <C>
    Office Bldg.:
      Tulsa, OK.........  $ 6,987     $ 4,408           $-0-         $  2,579     $   232        $  -0-
    Commercial
      Austin, TX........    8,510       2,174            -0-            6,336         885         5,561
      Davenport, IA.....      916         167            183              566         (36)          -0-
      Ardmore, OK.......    4,085         948            -0-            3,137         458           -0-
    Land................      117         -0-             77               40          (2)          -0-
                          -------      ------           ----          -------      ------        ------
    Total...............  $20,615     $ 7,697           $260         $ 12,658     $ 1,537        $5,561
                          =======      ======           ====          =======      ======        ======
</TABLE>
 
     Following is a summary of activity with regards to the properties for the
three years ended September 30, 1997:
 
<TABLE>
<CAPTION>
                                                                       1996
                                                        1997     ----------------    1995
                                                       -------   (in thousands $)   -------
        <S>                                            <C>       <C>                <C>
        Balance, beginning of year...................  $38,896       $ 40,942       $45,380
        Improvements to existing properties..........      700            972           666
        Purchase of properties.......................      -0-          3,465           -0-
        Sales of properties -- Note D................  (29,985)        (1,346)       (3,258)
        Valuation reserve............................    3,047         (3,307)          -0-
        Depreciation.................................      -0-         (1,830)       (1,846)
                                                       -------        -------       -------
        Balance, end of year.........................  $12,658       $ 38,896       $40,942
                                                       =======        =======       =======
</TABLE>
 
     On February 20, 1996 the Trust completed the purchase of the land on which
its Englewood Bank Building was located. This land, which was previously leased
by the Trust, was purchased for a price of $1,263,000.
 
     On March 28, 1996 the Trust purchased a 52,554 square foot suburban office
building located in Arlington, Texas for a purchase price of $2,202,000.
 
NOTE D -- REAL ESTATE SALES
 
     The fiscal 1997 gains on sales of real estate totaling $16,922,000 include
the following: (i) $563,000 which represents the gain on the October 7, 1996,
$2,450,000 sale of the Littleton Bank Building, Littleton, Colorado; (ii)
$13,000 which represents the gain on the December 30, 1996, $20,000 sale of a
 .23 acre land parcel located in Dubuque, Iowa; (iii) $1,727,000 which represents
the gain on the January 21, 1997, $5,950,000 sale of the Warren Plaza Shopping
Center, Dubuque, Iowa; (iv) $2,650,000 which represents the gain on the February
28, 1997, $3,475,000 sale of Triangle Square, Hilton Head, South Carolina; (v)
$2,317,000 which represents the gain on the March 12, 1997, $5,350,000 sale of
the Englewood Bank Building, Englewood, Colorado; (vi) $679,000 which represents
the gain on the April 28, 1997, $4,450,000 sale of the Spring Village Shopping
Center, Davenport, Iowa; (vii) $3,463,000 which represents the gain on the June
2, 1997, $5,300,000 sale of the Executive Club Building, Denver, Colorado;
(viii) $5,175,000 which represents the gain on the August 1, 1997, $17,860,000
sale of Office Alpha, 14800 Quorum, both of which are located in Dallas, Texas,
and the Brookside Office Building, Arlington, Texas: and (ix) $335,000 which
represents the gain on the September 5, 1997, $1,100,000 sale of the Walnut
Stemmons Office Park, Dallas, Texas.
 
     The fiscal 1996 net gains on sales of real estate totaling $40,000 include
the following: (i) $69,000 which represents the gain the Trust realized on its
January and February, 1996 sales of three condominium units located in Davie,
Florida for a combined sales price of $138,000; (ii) a loss of $313,000 the
Trust realized on
 
                                       F-9
<PAGE>   33
 
its March, 1996 $600,000 sale of the European Crossroads office/retail complex
on 11.5 acres of land located in Dallas, Texas; (iii) $23,000 represents the
gain the Trust realized on its April, 1996 $115,000 sale of 7.42 acres of vacant
land located in Akron, Ohio; and (iv) $261,000 represents the gain the Trust
realized on its September, 1996 $615,000 sale of two of the five buildings
comprising the Walnut Stemmons Office Park located in Dallas, Texas.
 
     The fiscal 1995 gains on sales of real estate totaling $2,499,000 include
the following: (i) $452,000 which represents the gain the Trust realized on its
February, 1995 $2,650,000 sale of the 197 room Quality Hotel located at the
airport in St. Louis, Missouri; (ii) $1,859,000 represents the gain the Trust
realized on its March, 1995 $2,595,000 sale of the 124 unit Parkwood Place
Apartments located in Greeley, Colorado; (iii) $97,000 represents the gain the
Trust realized on its March, 1995 $800,000 sale of the 51,000 square foot Walnut
Hill West office building located in Dallas, Texas; and (iv) $91,000 represents
the gain the Trust realized on its May, 1995 $212,000 sale of 17.7697 acres of
vacant land located in Akron, Ohio. The Trust received a purchase money mortgage
for the total $212,000 purchase price in connection with the sale.
 
NOTE E -- MORTGAGE NOTE PAYABLE
 
     At September 30, 1997 the one mortgage note payable of the Trust is a
non-recourse mortgage. The following data pertains to the mortgage note payable
as of September 30, 1997.
 
<TABLE>
<CAPTION>
                               BOOK VALUE
                                 OF THE
                               INVESTMENT
           MORTGAGE             SECURING                              BASE INTEREST
         NOTE PAYABLE           THE DEBT           MATURITY               RATE
        --------------         ----------         -----------         -------------
                 (in thousands)
        <S>                    <C>                <C>                 <C>
            $5,561               $6,336           May 7, 2002             8.300%
</TABLE>
 
     Required payments on the Trust's remaining mortgage note payable for the
succeeding five years are as follows:
 
<TABLE>
<CAPTION>
       YEAR ENDING
      SEPTEMBER 30,       PRINCIPAL          INTEREST          TOTAL
      -------------       ---------       --------------       ------
                                          (in thousands)
      <S>                 <C>             <C>                  <C>
      1998.....            $   197             $451            $  648
      1999.....                213              435               648
      2000.....                231              417               648
      2001.....                252              396               648
      2002.....              4,668              222             4,890
</TABLE>
 
     In connection with the October 7, 1996 sale of the Littleton Bank Building,
the Trust repaid in full the $1,208,000 first mortgage loan, which was secured
by the Littleton Bank Building. In connection with the August 2, 1997 sale of
the 14800 Quorum Building, the Trust repaid in full the $2,582,000 first
mortgage loan, which was secured by the 14800 Quorum Building.
 
     Total interest expense on mortgage notes payable did not differ materially
from interest paid.
 
NOTE F -- BANK NOTES PAYABLE
 
     On January 21, 1997 the Trust repaid in full the revolving line of credit
("1994 Credit") issued by National City Bank of Cleveland ("NCB") and
Manufacturer's and Traders Trust Company of Buffalo, New York ("M&T"). Effective
February 6, 1997 the Trust terminated the 1994 Credit.
 
     Total interest expense on bank notes payable did not differ materially from
interest paid.
 
NOTE G -- GENERAL AND ADMINISTRATIVE EXPENSES
 
     Included in the general and administrative expenses for the year ended
September 30, 1997 was $198,000 of expense related to the Plan for the Orderly
Liquidation of the Trust. Additionally, in connection with the Plan, the Trust
will make severance payments to the officers and employees of the Trust upon
their termination. The defined obligations total $1,250,000, which was accrued
and expensed. Of this amount $90,000 was paid during the year and $1,160,000 was
accrued at September 30, 1997 Certain other payments, including the additional
compensation to be paid the officers as a result of their waiving all rights to
unexercised options (See NOTE H), will be made depending on the Trust's ability
to achieve defined distributions to shareholders. Based on the Trust's estimate
that total distributions will be between $6.50 and
 
                                      F-10
<PAGE>   34
 
$7.00 per share, the Trust accrued and expensed $2,814,000 for these payments.
Of this amount $1,274,000 was paid during the year and $1,540,000 was accrued at
September 30, 1997.
 
NOTE H -- SHARES OF BENEFICIAL INTEREST
 
     On October 9, 1996 the Trust repurchased 42,527 of its Shares of Beneficial
Interest for $201,000 in an open market purchase. These shares were retired by
the Trust.
 
     On December 7, 1995 the Trust repurchased 38,000 of its Shares of
Beneficial Interest for $174,000 in an open market purchase. These shares were
retired by the Trust.
 
     On August 21, 1995 the Trust mailed an Offer to purchase for cash an
aggregate of 500,000 Shares of Beneficial Interest for a price of $4.00 per
share to each shareholder of the Trust. The Offer ended September 22, 1995 and
at its conclusion 239,553 shares were purchased and retired by the Trust. In
addition to the $4.00 per share the Trust incurred costs of $56,000 in
connection with the Offer.
 
     On April 17, 1995 the Trust repurchased 14,000 of its Shares of Beneficial
Interest for $48,000 in an open market purchase. These shares were retired by
the Trust.
 
     In connection with the Plan, the four primary officers of the Trust
executed new employment contracts effective September 1, 1996. As part of these
contracts the officers waived all rights with respect to unexercised options. In
return, additional compensation will be paid to the officers, based on a
calculation of a minimum threshold of the distributions to the Shareholders
during the liquidation period. (See NOTE G)
 
NOTE I -- PENSION PLAN
 
     The Trust has a defined contribution pension plan covering all full-time
employees of the Trust. Contributions are determined as a set percentage of each
covered employee's annual cash compensation. Contributions by the Trust are
accrued during the year and paid prior to the filing of the Trust's federal
income tax return for said year. For fiscal 1997 the Trust accrued $42,000 for
contributions to the pension plan (for fiscal 1996 -- $30,000 and fiscal
1995 -- $24,000).
 
NOTE J -- SUBSEQUENT EVENT (UNAUDITED)
 
     On December 8, 1997 the Trust completed a $3,150,000 sale of the Petroleum
Club Building located in Tulsa, Oklahoma. This sale resulted in a gain of
approximately $330,000 which will be reported in the first quarter of fiscal
year 1998.
 
NOTE K -- QUARTERLY FINANCIAL DATA (UNAUDITED)
 
     Summarized quarterly financial data for the years ended September 30, 1997
and 1996 is as follows:
 
<TABLE>
<CAPTION>
                   QUARTER ENDED                      DEC. 31      MAR. 31      JUNE 30      SEPT. 30
  ------------------------------------------------    --------     --------     --------     ---------
                                                           (in thousands, except per share data)
  <S>                                                 <C>          <C>          <C>          <C>
  1997
    Operating revenues............................     $2,514       $2,412       $1,815       $  1,263
    Income (loss) before gains and taxes..........        520          382        1,201         (2,523)
    Net Income....................................      1,096        6,976        3,890          1,826
    Income (loss) before gains and taxes per
       share(1)...................................        .10          .07          .23           (.48)
    Net income per share(1).......................        .21         1.35          .76            .36
  1996
    Operating revenues............................     $2,638       $2,657       $2,693       $  2,657
    Operating income (loss).......................        331          316          258         (2,965)
    Net Income (loss).............................        331           72          281         (2,072)
    Operating income (loss) per share(1)..........        .06          .06          .05           (.57)
    Net Income (Loss) per share(1)................        .06          .01          .06           (.40)
</TABLE>
 
---------------
 
(1) Per Share calculations for each of the quarters is based on a weighted
average number of shares outstanding for each period and, therefore, the sum of
the quarters may not necessarily equal full-year amounts.
 
                                      F-11
<PAGE>   35
 
            SCHEULE III -- REAL ESTATE AND ACCUMULATED DEPRECIATION
 
                          CLEVETRUST REALTY INVESTORS
                            AS OF SEPTEMBER 30, 1997
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                          INITIAL COST TO                      AMOUNT AT WHICH CARRIED AT
                                                               TRUST                               SEPTEMBER 30, 1997
                                                        --------------------    COST OF     ---------------------------------
               DESCRIPTION                ENCUMBRANCES   LAND   IMPROVEMENTS  IMPROVEMENTS   LAND   IMPROVEMENTS  TOTAL(1)(4)
----------------------------------------- ------------  ------  ------------  ------------  ------  ------------  -----------
<S>                                       <C>           <C>     <C>           <C>           <C>     <C>           <C>
Office Buildings:
 Petroleum Club Bldg Tulsa, OK...........        $0     $  648    $  3,306       $3,033     $  648    $  6,339      $ 6,987
Commercial Properties:
 Cannon West Austin, TX..................     5,561        874       6,758          878        874       7,636        8,510
 Spring Village Davenport, IA............         0        172         744            0        172         744          916(3)
 Tiffany Plaza Ardmore, OK...............         0        684       2,847          554        684       3,401        4,085
 Vacant Land Akron, OH...................         0        117           0            0        117           0          117(3)
                                              -----      -----      ------        -----      -----       -----       ------
       Totals............................    $5,561     $2,495    $ 13,655       $4,465     $2,495    $ 18,120      $20,615
                                              =====      =====      ======        =====      =====       =====       ======
 
<CAPTION>
 
                                             ACCUMULATED    CONSTRUCTION    DATE    DEPRECIATION
               DESCRIPTION                 DEPRECIATION(2)   COMPLETED    ACQUIRED    LIVES(5)
-----------------------------------------  ---------------  ------------  --------  ------------
<S>                                       <C>               <C>           <C>       <C>
Office Buildings:
 Petroleum Club Bldg Tulsa, OK...........      $ 4,408           1963       1972
Commercial Properties:
 Cannon West Austin, TX..................        2,174           1981       1987
 Spring Village Davenport, IA............          167           1980       1987
 Tiffany Plaza Ardmore, OK...............          948           1975       1989
 Vacant Land Akron, OH...................            0            N/A       1975
                                                ------
       Totals............................      $ 7,697
                                                ======
</TABLE>
 
                                      F-12
<PAGE>   36
 
<TABLE>
<CAPTION>
                                                                  YEARS ENDED SEPTEMBER 30,
                                                               --------------------------------
                                                                 1997        1996        1995
                                                               --------     -------     -------
                                                                        (in thousands)
<S>                                                            <C>          <C>         <C>
(1) Reconciliation of real estate:
     Balance of real estate at October 1, 1996, 1995 and
       1994, respectively..................................    $ 66,151     $63,485     $71,028
     Additions during period:
       Cost of Improvements................................         700         972         666
       Purchase of Property................................           0       3,465           0
                                                               --------     -------     -------
     Total Additions.......................................         700       4,437         666
                                                               --------     -------     -------
                                                                 66,851      67,922      71,694
     Less carrying amount of real estate sold or
     disposed..............................................      46,236       1,771       8,209
                                                               --------     -------     -------
     Balance of real estate at September 30, 1996, 1995 and
       1994, respectively..................................    $ 20,615     $66,151     $63,485
                                                               ========     =======     =======
(2) Reconciliation of accumulated depreciation:
     Balance of accumulated depreciation at October 1,
       1995, 1994 and 1993, respectively...................    $ 23,948     $22,543     $25,648
     Additions charged to expenses.........................           0       1,830       1,846
                                                               --------     -------     -------
                                                                 23,948      24,373      27,494
     Accumulated depreciation on real estate sold or
       disposed............................................      16,251         425       4,951
                                                               --------     -------     -------
     Balance of accumulated depreciation at September 30,
       1996, 1995 and 1994, respectively...................    $  7,697     $23,948     $22,543
                                                               ========     =======     =======
</TABLE>
 
(3) On September 24, 1996 the Trustees of the Trust unanimously voted to
     recommend a Plan for the Orderly Liquidation of the Trust (the "Plan").
     Since the Trust had previously adopted Statement of Financial Accounting
     Standards No. 121 "Accounting for the Impairment of Long-Lived Assets and
     Long-Lived Assets to be Disposed of" ("SFAS No. 121") the Trust, effective
     September 30, 1996, classified all real estate owned as Property held for
     sale. In accordance with this classification the Trust reviewed the fair
     value of all of its property. The Trust has established a valuation reserve
     against two of its properties as follows:
 
<TABLE>
        <S>                                                    <C>          <C>         <C>
        Vacant restaurant parcel, Davenport, IA............    $183,000
        Vacant Land -- Akron, OH...........................      77,000
                                                               --------
             Total Valuation reserve.......................    $260,000
                                                               ========
</TABLE>
 
(4) The Trust's aggregate cost for federal income tax purposes at September 30,
     1997 was $20,096,000. The Trust's federal income tax return for the year
     ended September 30, 1997 has not yet been filed.
 
(5) For 1997 the Properties were classified as properties held for sale. As
     such, there was no depreciation recorded for 1997.
 
                                      F-13
<PAGE>   37
 
                          CLEVETRUST REALTY INVESTORS
 
          ANNUAL REPORT ON FORM 10-K FOR YEAR ENDED SEPTEMBER 30, 1997
 
                                 EXHIBIT INDEX
 
<TABLE>
<CAPTION>
 "ASSIGNED"
EXHIBIT NO*                   DESCRIPTION                           LOCATION OF EXHIBIT
------------     -------------------------------------    ---------------------------------------
<C>              <S>                                      <C>
    (2)          Plan of Liquidation (Resolution          Incorporated by reference to Exhibit
                 adopted by the Board of Trustees,        (2) to Form 10-Q for the quarter ended
                 September 24, 1996                       June 30, 1997
   (3)(A)        Second Amended and Restated              Incorporated by reference to Exhibit
                 Declaration of Trust.                    (3) to Registration Statement on Form
                                                          S-2, File Number, 33-46552.
   (3)(B)        By-Laws                                  Incorporated by reference to Exhibit
                                                          (3) to Report on Form 10-K for the
                                                          fiscal year ended September 30, 1986.
                                                          (File No. 0-5641)
   (4)(1)        Deed of Trust and Security Agreement     Incorporated by reference to Exhibit
                 made as of May 28, 1987 between          (4) to Report on Form 10-K for the
                 CleveTrust Realty Investors and The      fiscal year ended September 30, 1987.
                 Northwestern Mutual Life Insurance       (File No. 0-5641)
                 Company.
   (4)(2)        Promissory Note dated May 28, 1987 in    Incorporated by reference to Exhibit
                 the amount of $6,500,000 with respect    (4) to Report on Form 10-K for the
                 to the Deed of Trust and Security        fiscal year ended September 30, 1987.
                 Agreement made as of May 28, 1987        (File No. 0-5641)
                 between CleveTrust Realty Investors
                 and the Northwestern Mutual Life
                 Insurance Company
Exhibits (10)(1) through (10)(3) represent Management contracts
  (10)(1)        Amended and Restated Employment          Incorporated by reference to Exhibit
                 Agreement effective as of September      (10) to Form 10-K/A for the fiscal year
                 1, 1996 between CleveTrust Realty        ended September 30, 1996
                 Investors and John C. Kikol.
  (10)(2)        Amended and Restated Employment          Incorporated by reference to Exhibit
                 Agreement effective as of September      (10) to Form 10-K/A for the fiscal year
                 1, 1996 between CleveTrust Realty        ended September 30, 1996
                 Investors and Michael R. Thoms.
  (10)(3)        Amended and Restated Employment          Incorporated by reference to Exhibit
                 Agreement effective as of September      (10) to Form 10-K/A for the fiscal year
                 1, 1996 between CleveTrust Realty        ended September 30, 1996
                 Investors and Brian D. Griesinger.
    (11)         Computation of net income (loss) per     Filed herewith electronically
                 share of beneficial interest.
    (24)         Power of Attorney.                       Filed herewith electronically
    (27)         Financial Data Schedule.                 Filed herewith electronically
</TABLE>
 
* Exhibits 9, 12, 13, 16, 18, 19, 21, 22, 23, and 28 are either inapplicable to
  the Trust or require no answer.
 
                                      F-14