________________________________________________________________________________
BLUE RIDGE TOTAL RETURN FUND
________________________________________________________________________________
a series of the Blue Ridge Funds Trust
Annual Report 1999
FOR THE YEAR ENDED NOVEMBER 30
INVESTMENT ADVISOR
Colonial Asset Management, Inc.
359 South Pine Street
Post Office Box 1724
Spartanburg, SC 29304
BLUE RIDGE TOTAL RETURN FUND
107 North Washington Street
Post Office Drawer 4365
Rocky Mount, North Carolina 27803-0365
1-800-525-3863
<PAGE>
Blue Ridge Total Return Fund
Letter to Shareholders:
Since assuming management of the Blue Ridge Total Return Fund on April 1,
1999, we have restructured the portfolio to meet the allocation guidelines we
have for the Fund. This allocation is a range of 75% to 80% stocks and 20% to
25% bonds/cash. In doing the restructuring, we have bought stocks that are on
our equity focus list, which we believe to be leaders in their respective
industries.
As of this writing, the recent tech-led rally continues to surprise
investors by its magnitude and duration. However, the breadth of the rally has
been poor, with a small number of stocks providing most of the gains. In fact,
about 60% of the New York Stock Exchange listed shares are down for the year.
Even some blue chips have seen their shares languish, as investors flock to
celebrity tech stocks. The Fund is relatively highly weighted in technology,
with about 25% of the value in that area.
Our outlook for 2000 is for the equity market averages to return to more
normal returns in the 10% - 12% range. This should be possible, even in the face
of probable further Fed tightening in the first quarter, due to continuing
growth in earnings. Although the Fed will likely raise interest rates in
February, inflation will, in all likelihood, remain benign. That will allow the
equity market to make further progress on the upside during the year, as
earnings growth stays in the 10% plus range. Any consolidation during the first
quarter will be viewed as a buying opportunity.
We will continue to participate in the equity markets through high quality,
large capitalization companies which we believe have good potential for earnings
growth, and which are dominant in their markets segments. We will continually
monitor the asset allocation to stay within the ranges specified above. Thank
you for your confidence as expressed in your investment in the Blue Ridge Total
Return Fund. We look forward to further success in the future.
Sincerely,
H. Walter Barre
Barry D. Wynn
Colonial Asset Management
<PAGE>
BLUE RIDGE TOTAL RETURN FUND
Performance Update - $10,000 Investment
For the period from April 1, 1999 (Commencement of Management by
Colonial Asset Management, Inc.) to November 30, 1999
----------------- ----------------------------------------
Blue Ridge 75% S&P 500 Total Return Index /
Total Return Fund 25% Lehman Brothers Aggregate Bond Index
----------------- ----------------------------------------
4/1/99 $10,000 $10,000
4/30/99 10,161 10,254
5/31/99 9,973 10,049
6/30/99 10,215 10,461
7/31/99 9,910 10,201
8/31/99 9,964 10,161
9/30/99 9,641 9,979
10/31/99 10,234 10,462
11/30/99 10,477 10,623
This graph depicts the performance of the Blue Ridge Total Return Fund versus a
combined index of 75% S&P 500 Total Return Index and 25% Lehman Brothers
Aggregate Bond Index. It is important to note that the Blue Ridge Total Return
Fund is a professionally managed mutual fund while the indexes are not available
for investment and are unmanaged. The comparison is shown for illustrative
purposes only.
Cumulative Total Return
--------------------
Since 4/1/99
--------------------
4.77%
--------------------
The graph assumes an initial $10,000 investment at April 1, 1999. All dividends
and distributions are reinvested. The period prior to April 1, 1999, during
which the Fund was advised by another investment advisor, is not shown in the
graph.
At November 30, 1999, the Blue Ridge Total Return Fund would have grown to
$10,477 - total investment return of 4.77% since April 1, 1999.
At November 30, 1999, a similar investment in the combined index of 75% S&P 500
Total Return Index and 25% Lehman Brothers Aggregate Bond Index would have grown
to $10,623 - total investment return of 6.23% since April 1, 1999.
Past performance is not a guarantee of future results. A mutual fund's share
price and investment return will vary with market conditions, and the principal
value of shares, when redeemed, may be worth more or less than the original
cost. Average annual returns are historical in nature and measure net investment
income and capital gain or loss from portfolio investments assuming
reinvestments of dividends.
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BLUE RIDGE TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS
November 30, 1999
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 75.86%
Aerospace & Defense - 1.28%
The Boeing Company ...................................................... 2,000 $ 81,250
----------
Beverages - 3.75%
PepsiCo, Inc. ........................................................... 3,000 103,687
The Coca-Cola Company ................................................... 2,000 134,625
----------
238,312
----------
Brewery - 1.53%
Anheuser-Busch Companies, Inc. .......................................... 1,300 97,256
----------
Chemicals - 0.76%
Air Products and Chemicals, Inc. ........................................ 1,500 48,562
----------
Computers - 3.00%
EMC Corporation ......................................................... 1,000 83,813
International Business Machines ......................................... 500 51,531
Seagate Technology, Inc. ................................................ 1,500 55,500
----------
190,844
----------
Computer Software and Services - 7.99%
(a)America Online, Inc. .................................................... 1,600 116,500
(a)At Home Corporation ..................................................... 1,000 48,500
(a)Cisco Systems, Inc. ..................................................... 2,300 205,131
(a)Microsoft Corporation ................................................... 1,500 136,570
----------
506,701
----------
Cosmetics & Personal Care - 3.62%
Colgate-Palmolive Company ............................................... 2,000 109,750
The Gillette Company .................................................... 3,000 120,375
----------
230,125
----------
Electronics - 3.74%
General Electric Company ................................................ 1,100 143,069
Hewlett-Packard Company ................................................. 1,000 94,750
----------
237,819
----------
Electronics - Semiconductor - 4.75%
Intel Corporation ....................................................... 2,000 153,375
Motorola, Inc. .......................................................... 1,300 148,525
----------
301,900
----------
Entertainment - 1.32%
The Walt Disney Company ................................................. 3,000 83,625
----------
Financial - Banks, Commercial - 1.71%
Wachovia Corporation .................................................... 1,400 108,675
----------
(Continued)
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BLUE RIDGE TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS
November 30, 1999
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Financial - Banks, Money Center - 3.96%
Bank of America ......................................................... 2,000 $ 117,000
Citigroup Inc. .......................................................... 2,500 134,687
----------
251,687
----------
Food - Processing - 2.37%
Campbell Soup Company ................................................... 2,000 89,250
Sara Lee Corporation .................................................... 2,500 61,250
----------
150,500
----------
Food - Wholesale - 1.57%
Wm. Wrigley Jr. Company ................................................. 1,200 99,825
----------
Foreign Securities - 3.84%
Koninklijke (Royal) Philips Electronics N.V. - ADR ...................... 952 113,764
Telefonaktiebolaget LM Ericsson - ADR ................................... 2,700 130,275
----------
244,039
----------
Household Products & Housewares - 1.79%
The Procter & Gamble Company ............................................ 1,050 113,400
----------
Insurance - Multiline - 1.95%
American International Group, Inc. ...................................... 1,200 123,900
----------
Medical - Biotechnology - 1.43%
Pfizer, Inc. ............................................................ 2,500 90,625
----------
Medical - Hospital Management & Services - 1.64%
United HealthCare Corporation ........................................... 2,000 103,875
----------
Medical Supplies - 1.96%
Johnson & Johnson ....................................................... 1,200 124,500
----------
Miscellaneous - Manufacturing - 1.20%
Minnesota Mining and Manufacturing Company .............................. 800 76,450
----------
Office & Business Equipment - 0.43%
Xerox Corporation ....................................................... 1,000 27,062
----------
Oil & Gas - Equipment & Services - 1.13%
Schlumberger Limited .................................................... 1,200 72,075
----------
Oil & Gas - International - 1.87%
Exxon Mobile Corporation ................................................ 1,500 118,969
----------
(Continued)
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BLUE RIDGE TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS
November 30, 1999
- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Pharmaceuticals - 3.95%
Bristol-Myers Squibb Company ............................................ 1,500 $ 109,594
Merck & Co., Inc. ....................................................... 1,800 141,300
----------
250,894
----------
Restaurants & Food Services - 1.78%
McDonald's Corporation .................................................. 2,500 112,813
----------
Retail - Department Stores - 2.00%
Wal-Mart Stores, Inc. ................................................... 2,200 126,775
----------
Retail - Specialty Line - 2.12%
The Home Depot, Inc. .................................................... 1,700 134,619
----------
Telecommunications Equipment - 2.30%
Lucent Technologies, Inc. ............................................... 2,000 146,125
----------
Transportation - Miscellaneous - 1.04%
United Parcel Service, Inc. ............................................. 1,000 66,063
----------
Utilities - Telecommunications - 4.08%
AT&T Corporation ........................................................ 1,500 83,906
Bell South Corporation .................................................. 2,000 92,375
MCI WorldCom, Inc. ...................................................... 1,000 82,688
----------
258,969
----------
Total Common Stocks (Cost $4,406,180) ......................................................... 4,818,234
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Interest Maturity
Principal Rate Date
- ------------------------------------------------------------------------------------------------------------------------------------
CORPORATE OBLIGATIONS - 15.34%
Bank of America ...................................... $ 50,000 6.875 % 02/15/2005 49,538
Bank of America ...................................... 50,000 6.125 % 07/15/2004 48,287
Bank of America ...................................... 50,000 7.750 % 11/10/2014 48,476
Bank of New York Co. ................................. 50,000 7.750 % 09/30/2014 49,293
Commercial Credit Company ............................ 50,000 6.250 % 01/01/2008 46,603
Duke Capital Corporation ............................. 100,000 6.250 % 07/15/2005 94,873
Ford Motor Credit Company ............................ 50,000 6.375 % 10/06/2000 49,932
Ford Motor Credit Company ............................ 50,000 6.000 % 01/14/2003 48,655
General Electric Capital Corporation ................. 50,000 7.500 % 09/22/2009 49,285
General Electric Capital Corporation ................. 50,000 7.250 % 10/13/2009 48,791
General Motors Acceptance Corporation ................ 50,000 6.000 % 02/01/2002 49,092
(Continued)
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BLUE RIDGE TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS
November 30, 1999
- ------------------------------------------------------------------------------------------------------------------------------------
Interest Maturity
Principal Rate Date
- ------------------------------------------------------------------------------------------------------------------------------------
CORPORATE OBLIGATIONS - (Continued)
General Motors Acceptance Corp. ....................... $ 50,000 6.150 % 04/05/2007 $ 46,807
Lehman Brothers Holdings .............................. 50,000 8.000 % 09/24/2014 49,375
Merrill Lynch & Company ............................... 50,000 6.000 % 11/15/2004 47,873
Proctor& Gamble Company ............................... 100,000 6.875 % 09/15/2009 99,450
SBC Communications .................................... 50,000 6.250 % 03/01/2005 48,375
The Walt Disney Company ............................... 50,000 6.375 % 03/30/2001 49,848
Wal-Mart Stores, Inc. ................................. 50,000 6.500 % 06/01/2003 49,751
----------
Total Corporate Obligations (Cost $1,003,867) ................................................. 974,304
----------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 8.54%
Federal Home Loan Bank ................................ 100,000 6.500 % 10/19/2009 98,380
United States Treasury Note ........................... 50,000 5.625 % 02/15/2006 48,477
United States Treasury Note ........................... 50,000 6.250 % 02/15/2007 49,883
United States Treasury Note ........................... 50,000 5.500 % 03/31/2003 49,117
United States Treasury Note ........................... 50,000 5.250 % 05/15/2004 48,305
United States Treasury Note ........................... 50,000 6.000 % 07/31/2002 49,977
United States Treasury Note ........................... 50,000 5.750 % 08/15/2003 49,398
United States Treasury Note ........................... 50,000 6.500 % 10/15/2006 50,570
United States Treasury Note ........................... 50,000 5.875 % 11/15/2005 49,180
United States Treasury Note ........................... 50,000 5.625 % 12/31/2002 49,406
----------
Total U.S. Government and Agency Obligations (Cost $558,150) .................................. 542,693
----------
----------
Shares
----------
INVESTMENT COMPANY - 0.64%
Evergreen Money Market Treasury Institutional Money
Market Fund Institutional Service Shares ................................ 40,402 40,402
(Cost $40,402) ----------
Total Value of Investments (Cost $6,008,599 (b)) ................................... 100.38 % $6,375,633
Liabilities in Excess of Other Assets .............................................. (0.38)% (24,374)
------ ----------
Net Assets .................................................................... 100.00 % $6,351,259
====== ==========
(Continued)
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BLUE RIDGE TOTAL RETURN FUND
PORTFOLIO OF INVESTMENTS
November 30, 1999
(a) Non-income producing investment.
(b) Aggregate cost for financial reporting and federal income tax purposes is the same. Unrealized appreciation
(depreciation) of investments for financial reporting and federal income tax purposes is as follows:
Unrealized appreciation ....................................................................... $ 542,589
Unrealized depreciation ....................................................................... (175,555)
----------
Net unrealized appreciation .................................................... $ 367,034
==========
The following acronym is used in this portfolio:
ADR - American Depository Receipt
See accompanying notes to financial statements
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BLUE RIDGE TOTAL RETURN
STATEMENT OF ASSETS AND LIABILITIES
November 30, 1999
ASSETS
Investments, at value (cost $6,008,599) ........................................................... $6,375,633
Income receivable ................................................................................. 28,363
Receivable for investments sold ................................................................... 21,451
Due from advisor (note 2) ......................................................................... 3,051
----------
Total assets ................................................................................. 6,428,498
----------
LIABILITIES
Accrued expenses .................................................................................. 20,558
Payable for investment purchases .................................................................. 56,340
Other payables .................................................................................... 341
----------
Total liabilities ............................................................................ 77,239
----------
NET ASSETS
(applicable to 545,063 NL class shares outstanding; unlimited
shares of no par value beneficial interest authorized) ........................................... $6,351,259
==========
NET ASSET VALUE, REDEMPTION AND OFFERING PRICE PER NL CLASS SHARE
($6,351,259 / 545,063 shares) ..................................................................... $11.65
==========
NET ASSETS CONSIST OF
Paid-in capital ................................................................................... $6,014,875
Undistributed net investment oincome .............................................................. 9,875
Accumulated net realized loss on investments ...................................................... (40,525)
Net unrealized oappreciation on investments ....................................................... 367,034
----------
$6,351,259
==========
See accompanying notes to financial statements
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BLUE RIDGE TOTAL RETURN
STATEMENT OF OPERATIONS
Year ended November 30, 1999
INVESTMENT INCOME
Income
Interest ....................................................................................... $ 42,092
Dividends ...................................................................................... 41,774
---------
Total income ............................................................................. 83,866
---------
Expenses
Investment advisory fees (note 2) .............................................................. 35,061
Fund administration fees (note 2) .............................................................. 4,140
Custody fees ................................................................................... 3,346
Registration and filing administration fees (note 2) ........................................... 1,140
Fund accounting fees (note 2) .................................................................. 18,000
Audit fees ..................................................................................... 8,500
Legal fees ..................................................................................... 5,683
Securities pricing fees ........................................................................ 3,355
Shareholder recordkeeping fees ................................................................. 6,000
Shareholder servicing expenses ................................................................. 3,389
Registration and filing expenses ............................................................... 3,445
Printing expenses .............................................................................. 3,490
Trustee fees and meeting expenses .............................................................. 4,810
Other operating expenses ....................................................................... 1,863
---------
Total expenses ........................................................................... 102,222
---------
Less:
Expense reimbursements (note 2) ..................................................... (19,096)
Investment advisory fees waived (note 2) ............................................ (24,879)
---------
Net expenses ............................................................................. 58,247
---------
Net investment income ............................................................... 25,619
---------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized loss from investment transactions ...................................................... (37,982)
oDecrease in unrealizedo depreciation on investments ................................................ 422,894
---------
Net realized and unrealized ogain on investments ............................................... 384,912
---------
Net oincrease in net assets resulting from operations .................................... $ 410,531
=========
See accompanying notes to financial statements
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BLUE RIDGE TOTAL RETURN
STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------------
Year ended Period ended
November 30, November 30,
1999 1998(b)
- ------------------------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS
Operations
Net investment income .............................................................. $ 25,619 $ 1,229
Net realized loss from investment transactions ..................................... (37,982) (2,543)
(Decrease) increase in unrealized depreciation on investments ...................... 422,894 (55,860)
---------- ----------
Net increase (decrease) in net assets resulting from operations ................ 410,531 (57,174)
---------- ----------
Distributions to shareholders from
Net investment income .............................................................. (15,744) (1,229)
---------- ----------
Capital share transactions
Increase in net assets resulting from capital share transactions (a) ............... 4,324,065 1,690,810
---------- ----------
Total increase in net assets .............................................. 4,718,852 1,632,407
NET ASSETS
Beginning of period ..................................................................... 1,632,407 0
---------- ----------
End of period (including undistributed net investment income ............................ $6,351,259 $1,632,407
of $9,875 in 1999) ========== ==========
(a) A summary of capital share activity follows:
----------------------------------------------------------------------------
Year ended Period ended
November 30, 1999 November 30, 1998 (b)
Shares Value Shares Value
----------------------------------------------------------------------------
Shares sold ........................................... 547,703 $6,133,477 155,940 $1,690,441
Shares issued for reinvestment
of distributions ................................. 1,441 15,745 107 1,229
---------- ---------- ---------- ----------
549,144 6,149,222 156,047 1,691,670
Shares redeemed ....................................... (160,051) (1,825,157) (77) (860)
---------- ---------- ---------- ----------
Net increase ..................................... 389,093 $4,324,065 155,970 $1,690,810
========== ========== ========== ==========
(b) For the period from December 1, 1997 (initial seed date) to November 30, 1998.
See accompanying notes to financial statements
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BLUE RIDGE TOTAL RETURN
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
- ------------------------------------------------------------------------------------------------------------------------------------
Year ended Period ended
November 30, November 30,
1999 1998(a)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ................................................. $10.47 $10.00
Income from investment operations
Net investment income ..................................................... 0.05 0.02
Net realized and unrealized gain on investments ........................... 1.16 0.47 (d)
---------- ----------
Total from investment operations ..................................... 1.21 0.49 (b)
---------- ----------
Distributions to shareholders from
Net investment income ..................................................... (0.03) (0.02)
---------- ----------
Net asset value, end of period ....................................................... $11.65 $10.47
========== ==========
Total return ......................................................................... 11.58 % 4.86 %
========== ==========
Ratios/supplemental data
Net assets, end of period ...................................................... $6,351,259 $1,632,407
========== ==========
Ratio of expenses to average net assets
Before expense reimbursements and waived fees ............................. 2.60 % 1.65 % (c)
After expense reimbursements and waived fees .............................. 1.48 % 1.58 % (c)
Ratio of net investment income (loss) to average net assets
Before expense reimbursements and waived fees ............................. (0.47)% 0.03 % (c)
After expense reimbursements and waived fees .............................. 0.65 % 0.10 % (c)
Portfolio turnover rate ........................................................ 85.51 % 116.16 %
(a) For the priod from December 15, 1997 (commencement of operations) to November 30, 1998.
(b) Includes undistributed net investment income of $0.00 per share and undistributed net realized gains and unrealized gains of
$0.00 per share, from December 1, 1997 (initial seed date) through December 15, 1997 (commencement of operations).
(c) Annualized.
(d) The amount shown in this caption for a share outstanding does not correspond with the aggregate net realized and unrealized
gain (loss) on security transactions for the period ended November 30, 1998 due to the timing of sales and repurchases of fund
shares in relation to fluctuating market values of the investments of the fund. Net realized and unrealized loss of
investments includes gains of $0.82 per share due to market appreciation during the period and losses of $0.35 due to market
depreciation during the period.
See accompanying notes to financial statements
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<PAGE>
BLUE RIDGE TOTAL RETURN FUND
NOTES TO FINANCIAL STATEMENTS
November 30, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION
The Blue Ridge Total Return Fund (the "Fund") is a diversified
series of shares of beneficial interest of the Blue Ridge Funds
Trust (the "Trust"). The Trust, an open-ended investment company,
was organized on September 30, 1997 as a Delaware Business Trust
and is registered under the Investment Company Act of 1940, as
amended. The investment objective of the Fund is to seek total
return from a combination of capital appreciation and current
income. The Fund began operations on December 15, 1997. The
following is a summary of significant accounting policies followed
by the Fund.
A. Security Valuation - The Fund's investments in securities are
carried at value. Securities listed on an exchange or quoted
on a national market system are valued at the last sales price
as of 4:00 p.m. New York time on the day of valuation. Other
securities traded in the over-the-counter market and listed
securities for which no sale was reported on that date are
valued at the most recent bid price. Securities for which
market quotations are not readily available, if any, are
valued by using an independent pricing service or by following
procedures approved by the Board of Trustees. Short-term
investments are valued at cost which approximates value.
B. Federal Income Taxes - No provision has been made for federal
income taxes since substantially all taxable income has been
distributed to shareholders. It is the policy of the Fund to
comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies and to make
sufficient distributions of taxable income to relieve it from
all federal income taxes.
Net investment income (loss) and net realized gains (losses)
may differ for financial statement and income tax purposes
primarily because of losses incurred subsequent to October 31,
which are deferred for income tax purposes. The character of
distributions made during the year from net investment income
or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to
the timing of dividend distributions, the fiscal year in which
amounts are distributed may differ from the year that the
income or realized gains were recorded by the Fund.
C. Investment Transactions - Investment transactions are recorded
on the trade date. Realized gains and losses are determined
using the specific identification cost method. Interest income
is recorded daily on the accrual basis. Dividend income is
recorded on the ex-dividend date.
D. Distributions to Shareholders - The Fund generally declares
dividends quarterly, payable in March, June, September and
December, on a date selected by the Trust's Trustees. In
addition, distributions may be made annually in December out
of net realized gains through October 31 of that year.
Distributions to shareholders are recorded on the ex-dividend
date. The Fund may make a supplemental distribution subsequent
to the end of its fiscal year ending November 30.
E. Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the amount of assets, liabilities, expenses and
revenues reported in the financial statements. Actual results
could differ from those estimates.
(Continued)
<PAGE>
BLUE RIDGE TOTAL RETURN FUND
NOTES TO FINANCIAL STATEMENTS
November 30, 1999
F. Options Transactions - The Fund may write put and call options
only if such options are considered to be covered. A written
call option is considered to be covered when the writer of the
call option owns throughout the option period the security on
which the option is written. A written put option is
considered covered when the writer of the put has deposited
and maintained in a segregated account throughout the option
period sufficient cash or other liquid assets in an amount
equal to or greater than the exercise price of the put option.
The Fund may purchase put options and purchase call options
only to close open positions.
When the Fund writes a covered call or put option, an amount
equal to the premium received is included in the statement of
assets and liabilities as a liability. The amount of the
liability is subsequently marked-to-market to reflect the
current market value of the option. If an option expires on
its stipulated expiration date or if the Fund enters into a
closing purchase transaction, a gain or loss is realized. If a
written call option is exercised, a gain or loss is realized
for the sale of the underlying security and the proceeds from
the sales are increased by the premium originally received. If
a written put option is exercised, the cost of the security
acquired is decreased by the premium originally received. As
writer of an option, the Fund has no control over whether the
underlying securities are subsequently sold (call) or
purchased (put) and, as a result, bears the market risk of an
unfavorable change in the price of the security underlying the
written option.
When the Fund purchases a call or put option, an amount equal
to the premium paid is included in the Fund's statement of
assets and liabilities as an investment, and is subsequently
marked-to-market to reflect the current market value of the
option. If an option expires on the stipulated expiration date
or if the Fund enters into a closing sale transaction, a gain
or loss is realized. If the Fund exercises a call the cost of
the security acquired is increased by the premium paid for the
call. If a Fund exercises a put option, a gain or loss is
realized from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium
originally paid. Written and purchased options are non-income
producing securities.
NOTE 2 - INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS
Pursuant to an investment advisory agreement, Colonial Asset
Management (the "Manager") provides the Fund with a continuous
program of supervision of the Fund's assets, including the
composition of its portfolio, and furnishes advice and
recommendations with respect to investments, investment policies
and the purchase and sale of securities. Colonial Asset Management
became the Fund's advisor on April 1, 1999. Prior to that date,
Blue Ridge Advisors, Inc. served as the Fund's Advisor. As
compensation for its services, from December 1, 1998 to March 31,
1999 the Blue Ridge Advisors, Inc. received a fee at the annual
rate of 1.65% of the first $20 million of the average daily net
assets of the Fund and 1.20% of average daily net assets over $20
million. As compensation for its services, beginning April 1,
1999, the Manager receives a fee at the annual rate of 0.750% of
the Fund's average daily net assets up to and including $20
million, 0 .625% of the Fund's average daily net assets on the
next $30 million, and 0.500% of the Fund's average daily net
assets over $50 million. From December 1, 1998 to March 31, 1999,
the Manager voluntarily waived a portion of its fee to limit total
Fund operating expenses to 1.65% of the average daily net assets
of the Fund. Beginning April 1, 1999 the Manager intends to
voluntarily waive a portion of its fee to limit total Fund
operating expenses to 1.45%. There can be no assurance that the
foregoing voluntary fee waiver will continue. The manager has
voluntarily waived a portion of its fee amounting to $24,879
($0.07 per share) and has reimbursed expenses totaling $19,096 for
the year ended November 30, 1999.
(Continued)
<PAGE>
BLUE RIDGE TOTAL RETURN FUND
NOTES TO FINANCIAL STATEMENTS
November 30, 1999
The Fund's administrator, The Nottingham Company (the
"Administrator"), provides administrative services to and is
generally responsible for the overall management and day-to-day
operations of the Fund pursuant to an accounting and
administrative agreement with the Trust. The Administrator was
compensated by the Manager and not directly by the Fund from
December 1, 1998 to March 31,1999. Beginning April 1, 1999 as
compensation for its services, the Administrator receives a fee at
the annual rate of 0.125% of the Fund's first $50 million of
average daily net assets, 0.10% of average daily net assets of the
Fund's next $50 million of average daily net assets, and 0.075% of
average daily net assets over $100 million. The Administrator also
receives a monthly fee of $2,000 for accounting and recordkeeping
services. The Administrator also charges the Fund for certain
expenses involved with the daily valuation of portfolio
securities.
North Carolina Shareholder Services, LLC (the "Transfer Agent")
serves as the Fund's transfer, dividend paying, and shareholder
servicing agent. The Transfer Agent, subject to the authority of
the Board of Trustees, provides transfer agency services pursuant
to an agreement with the Administrator, which has been approved by
the Trust. The Transfer Agent maintains the records of each
shareholder's account, answers shareholder inquiries concerning
accounts, processes purchases and redemptions of the Fund shares,
acts as dividend and distribution disbursing agent, and performs
other shareholder servicing functions.
Capital Investment Group, Inc. (the "Distributor") serves as the
Fund's principal underwriter and distributor. The Distributor may
sell Fund shares to or through qualified securities dealers or
others. With respect to the Class NL shares, the Distributor
receives no compensation from the Fund. Certain Trustees and
officers of the Trust are also officers of the Manager, the
Distributor or the Administrator.
NOTE 3 - COVERED CALL OPTIONS
The Fund's activity in written options for the year ended November
30, 1999 was as follows:
Number of Contracts
Contracts Premium
--------- -------
Options outstanding at beginning of period 16 $ 4,898
Options expired prior to exercise 16 (4,898)
----- -------
Options outstanding at end of period 0 $ 0
===== =======
NOTE 4 - PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than short-term
investments, aggregated $7,569,503 and $2,938,991, respectively,
for the year ended November 30, 1999.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees of Blue Ridge Funds Trust and Shareholders of Blue
Ridge Total Return Fund:
We have audited the accompanying statement of assets and liabilities Blue Ridge
Total Return Fund(The "Fund")(a portfolio of Blue Ridge Funds Trust), including
the portfolio of investments, as of November 30, 1999 and the related statement
of operations for the year then ended, the statement of changes in net assets,
and the financial highlights for each of the two years then ended. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
November 30, 1999, by correspondence with the custodian and brokers; where
replies were not received from brokers, we performed other auditing procedures.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Blue
Ridge Total Return Fund as of November 30, 1999, the results of its
operationsfor the year then ended, the changes in its net assets, and the
financial highlights for each of the two years in the period then ended, in
conformity with generally accepted accounting principles.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
December 17, 1999
