<PAGE>
EMERALD MONEY MARKETS FOR INSTITUTIONS
PRIME FUND
TREASURY FUND
TAX-EXEMPT FUND
INSTITUTIONAL SHARES/SERVICE SHARES
INVESTMENT PORTFOLIOS OFFERED
BY EMERALD FUNDS
SEMI-ANNUAL REPORT
MAY 31, 1996
[Logo]
EMERALD
F U N D S
<PAGE>
The accompanying financial statements, as of May 31, 1996, have not been
audited, and accordingly, no opinion is expressed on them.
This report is not authorized for distribution to prospective investors unless
preceded or accompanied by a current prospectus for one of the Emerald Funds
discussed within.
Investments in the Prime, Treasury and Tax-Exempt Funds are neither insured nor
guaranteed by the U.S. Government, and yields will fluctuate. There can be no
assurance that the Funds will be able to maintain a stable net asset value of
$1.00 per share.
Barnett Capital Advisors, Inc. serves as investment advisor to the Emerald
Funds, is paid a fee for its services and is unaffiliated with Emerald Asset
Management, Inc., the Funds' distributor.
The service contractors for the Emerald Funds may from time to time voluntarily
waive fees or reimburse Fund expenses, which temporarily increases the return to
investors. These fee waivers and reimbursements may be discontinued at any time,
which would reduce performance results.
The Emerald Funds prospectuses contain more complete information, including
charges and expenses. Please read the prospectuses carefully before investing.
MUTUAL FUNDS
- - ARE NOT FDIC INSURED
- - HAVE NO BANK GUARANTEE
- - MAY LOSE VALUE
<PAGE>
ECONOMIC REPORT FROM THE INVESTMENT ADVISOR
- --------------------------------------------------------------------------------
THE ECONOMY: STRONGER THAN EXPECTED
Last winter, investors were concerned about the economy entering a recession.
Corporate profits were expected to flatten and perhaps fall below the high
levels achieved in 1995. But the first half of 1996 has essentially continued
the economic expansion into a sixth straight year. Gross Domestic Product -- a
measurement of the total value of goods and services produced in the U.S. --
rose 2.3% during the first quarter and would have been even higher had there not
been a strike at General Motors. Recession concerns, which were pervasive as
recently as three months ago, have dissipated, giving way to worries of renewed
inflation.
We do not believe that economic growth will accelerate further in the near
future. In fact, the recent increase in interest rates will likely reduce growth
in the second half of 1996. We expect economic growth for all of 1996 to average
about 2.5% -- a continued expansion, but at a slow-to-moderate rate.
INFLATION: EXCLUDING FOOD AND ENERGY, STILL MODEST
For the 12 months ended April 30, 1996, the Consumer Price Index rose 2.9%. In
comparison, the CPI rose 2.5% for the year ended December 31, 1995. However,
excluding food and energy price increases -- which we believe are temporary --
inflation is essentially unchanged.
Our expectation for modest economic growth implies that consumer demand will not
be strong enough to cause prices to rise significantly at the wholesale or
retail level. For each of the past five calendar years, the Consumer Price Index
has ranged from 2.7% to 3.1%. We believe inflation in 1996 will continue to fall
in that range.
INTEREST RATES: UP SHARPLY, BUT EXPECTED TO COOL
There was little change in short-term interest rates during the past six months.
However, intermediate- and long-term interest rates rose considerably. Driven by
market forces rather than the actions of the Federal Reserve Board, the yield on
a 10-year U.S. Treasury bond rose from 6.13% on November 30, 1995, to 7.00% on
May 31, 1996. Rising interest rates increase the cost of doing business and
create a volatile bond market.
We believe, however, that pressures on interest rates will subside as the
economy shows more noticeable signs of softening in the second half of the year.
Nevertheless, it is unlikely that the Federal Reserve will lower short-term
interest rates any time soon.
THE STOCK MARKET: TOUGH AS NAILS
Rising interest rates, downward revisions in corporate profits and inflation
fears would normally be enough to cause a stock market correction. But investors
seem to be looking beyond the current scenario. As overall corporate profit
growth slowed, the stocks of companies that exhibit sustained growth regardless
of economic conditions did the best on Wall Street. Typically, these companies
are not the Fortune 500, but rather the small to midsized businesses that have a
special niche in the market.
In addition, the market for initial public offerings was extremely brisk, as
investors sought to capitalize on new technology such as the Internet. However,
the IPO market's surging strength is often an indication that the overall stock
market is reaching full value. When this happens, the market is likely to react
quickly and negatively to unexpected developments such as higher interest rates
or significantly lower earnings reports. As a result, we expect -- and you
should expect -- some short-term volatility. However, we believe that the
long-term outlook for the market is excellent based on the economy's
slow-growth, low-inflation mode.
<PAGE>
- --------------------------------------------------------------------------------
PLEASE READ THE PORTFOLIO MANAGER INTERVIEWS TO
LEARN MORE ABOUT THE STRATEGIES USED TO MANAGE
EACH EMERALD FUND AND ITS PERFORMANCE DURING
THIS PERIOD. REMEMBER, INVESTMENT RETURNS AND
PRINCIPAL VALUE WILL VARY WITH MARKET
CONDITIONS. PAST PERFORMANCE IS NOT INDICATIVE
OF FUTURE RESULTS. ALTHOUGH THE PRIME, TREASURY
AND TAX-EXEMPT FUNDS SEEK TO MAINTAIN A STABLE
NET ASSET VALUE (NAV) OF $1.00 PER SHARE, THERE
IS NO ASSURANCE THAT THEY WILL BE ABLE TO DO SO.
<PAGE>
INTERVIEW (as of May 31, 1996)
- --------------------------------------------------------------------------------
EMERALD PRIME, TREASURY AND TAX-EXEMPT FUNDS*
PHOTO Ms. Lunsford is responsible for more than $2 billion in
assets as portfolio manager for the Emerald Short-Term
Jacqueline R. Fixed Income and Emerald Money Market Funds. Before
Lunsford, joining Barnett in 1988, she spent nine years as a money
C.F.A. manager with the First Kentucky Trust Company in
PORTFOLIO MANAGER Louisville, KY. Ms. Lunsford currently serves as
17 years of President of the Jacksonville Financial Analysts Society
investment and is a member of the Association for Investment
experience Management and Research and the Treasury Management
Association. She is a Chartered Financial Analyst and
holds a B.S. in Finance.
INVESTMENT GOAL
The Emerald Money Market Funds seek to provide a high
level of current income consistent with liquidity, the
preservation of capital and a stable net asset value.
Each Fund seeks its objective by investing in:
PRIME FUND
A broad range of U.S. Government, bank and corporate
short-term money- market obligations.
TREASURY FUND
Short-term U.S. Treasury securities and other government
obligations, which are guaranteed full faith and credit
by the U.S. Treasury, and repurchase agreements
collateralized by the same.
EMERALD TAX-EXEMPT FUND
Joseph M. Fahey, Jr., C.F.A.
PORTFOLIO MANAGER
Rodney Square Management Corp.,
a subsidiary of Wilmington Trust Company
INVESTMENT SUB-ADVISER
INVESTMENT GOAL
The Emerald Tax-Exempt Fund seeks to provide a high level
of current income consistent with liquidity, the
preservation of capital and a stable net asset value. The
Fund seeks its objective by investing in short-term
municipal obligations.
Investors may be subject to certain state and local taxes
and the federal alternative minimum tax.
- ---------------
* Investments in Emerald Prime, Treasury and Tax-Exempt Funds are neither
insured nor guaranteed by the U.S. Government, and yields will fluctuate.
Although these Funds seek to maintain a stable net asset value (NAV) of $1.00
per share, there is no assurance that they will be able to do so.
2
<PAGE>
EMERALD PRIME, TREASURY AND TAX-EXEMPT FUNDS (as of May 31, 1996)
- --------------------------------------------------------------------------------
WHAT FACTORS AFFECTED THE PERFORMANCE OF THE FUNDS, AND WHAT STRATEGIES WERE
EMPLOYED TO MAXIMIZE PERFORMANCE RESULTS?
Months of declining short-term interest rates came to an abrupt halt during the
first quarter of 1996. Short-term interest rates were pushed lower one last time
at the end of January as the Federal Reserve Board (Fed) lowered the Fed Funds
rate -- the rate banks charge each other for overnight loans -- another 25 basis
points (0.25 percentage points), but unexpectedly strong economic indicators in
February and March dashed hopes of further easing by the Fed. As a result the
short-term yield curve resumed its normal upward slope for prime issuance toward
the end of the first quarter, which has allowed us to increase yield by
extending the average maturities of the money market funds. For the preceding
several months the yield curve had been flat, which meant that money managers
did not receive higher yields for investing in securities with longer
maturities, as they normally would. The shift in the yield curve has also
sparked new issuance of one-year/quarterly callable notes, and the purchase of a
small position in these securities is also partially responsible for the Prime
Fund's higher returns and its longer average maturity.
WHAT FACTORS COULD AFFECT THE FUNDS IN THE MONTHS AHEAD?
Since the economy is continuing to show strength, many believe that the Fed may
decide to raise interest rates in the near future. However, since the fall
presidential election is so close, any increase will probably not be more than a
nominal 25 basis points and will likely come at the end of August, well in
advance of the election. If the economy does not slow in the second half of
1996, short-term rates could well rise another 25 basis points before year-end.
This potential rise in rates has not, as yet, been fully priced into the
short-term market, as issuers remain reluctant to pay investors higher rates.
However, many investors are refusing to purchase longer-term securities at their
current rates. Instead, we are placing our excess cash in either overnight or
other very short-term securities. This will cause the average maturities of the
money market funds to shorten, which we believe is beneficial, because then we
will be in the position to extend our average maturities and take advantage of
higher yields as they become available.
<TABLE>
<CAPTION>
SEC 7-DAY YIELDS AS OF MAY 31, 1996
INSTITUTIONAL SERVICE
SHARES SHARES
<S> <C> <C>
Prime Fund 5.17% 4.82%
Treasury Fund 4.81% 4.46%
Tax-Exempt Fund 3.34% 2.93%
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
During the periods indicated, fee waivers and expense reimbursements were in
effect. Had these waivers or reimbursements not been in effect, the SEC 7-day
yields would have been 4.80% for the Institutional Shares of the Treasury Fund
and 2.58% for the Service Shares of the Tax-Exempt Fund.
3
<PAGE>
EMERALD PRIME FUND
- --------------------------------------------------------------------------------
Portfolio of Investments
May 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
S&P/MOODY'S MATURITY AMOUNT COST
RATINGS RATE DATE (000) (NOTE 2)
--------------- --------- --------- --------- --------------
<S> <C> <C> <C> <C> <C>
BANK NOTES -- 13.2%
DOMESTIC -- 11.9%
Bank of New York (Delaware), Variable Rate Bank
Note*........................................... A1/P1 5.88% 7/25/96 $ 38,000 $ 38,000,000
Huntington National Bank Variable Rate Bank
Note*........................................... A1/P1 5.39 6/3/96 35,000 35,000,000
Key Bank New York-Floating Rate Bank Note*........ A1/P1 5.26 6/3/96 75,000 74,949,201
NationsBank Corp-Variable Rate Bank Note*......... A1/P1 5.56 6/19/96 23,850 23,858,854
NationsBank Texas-Floating Rate Bank Note*........ A1/P1 5.37 6/3/96 35,000 34,999,584
Society National Bank Cleveland-Bank Note,
Callable 8/21/96 @ 100.......................... A1/P1 5.92 5/21/97 40,000 40,000,000
--------------
FOREIGN -- 1.3%
Abbey National Treasury Bank Note................. A1+/P1 5.05 3/3/97 28,000 27,948,550
--------------
TOTAL BANK NOTES (AMORTIZED COST -- $274,756,189)... 274,756,189
--------------
YANKEE CERTIFICATES OF
DEPOSIT -- 15.1%
Fuji Bank, Ltd., New York Branch.................. A1/P1 5.45 6/7/96 40,000 40,000,044
Fuji Bank, Ltd., New York Branch.................. A1/P1 5.46 7/3/96 40,000 40,000,332
Hong Kong Shanghai Bank, New York Branch, Callable
6/3/96 @ 100.................................... A1/P1 5.24 3/3/97 38,000 38,000,000
Sanwa Bank, Ltd., New York Branch................. A1+/P1 5.51 6/18/96 35,000 35,000,691
Sanwa Bank, Ltd., Chicago Branch.................. A1/P1 5.39 6/28/96 25,000 25,000,332
Sumitomo Bank, Ltd., New York Branch.............. A1/P1 5.44 6/3/96 40,000 40,000,000
Sumitomo Bank, Ltd., New York Branch.............. A1/P1 5.44 6/10/96 35,000 35,000,068
Sumitomo Bank, Ltd., New York Branch.............. A1/P1 5.41 6/24/96 20,000 20,000,116
Sumitomo Bank, Ltd., New York Branch.............. A1/P1 5.44 7/3/96 40,000 40,000,000
--------------
TOTAL YANKEE CERTIFICATES OF DEPOSIT (AMORTIZED COST
$313,001,583)..................................... 313,001,583
--------------
EURO CERTIFICATES OF DEPOSIT -- 1.7%
Sanwa Bank, Ltd., London Branch................... A1/P1 5.42 7/19/96 35,000 35,000,443
--------------
TOTAL EURO CERTIFICATES OF DEPOSIT (AMORTIZED COST
$35,000,443)...................................... 35,000,443
--------------
COMMERCIAL PAPER -- 25.6%
DOMESTIC -- 18.8%
ABN AMRO North American Finance................... A1+/P1 5.22 12/4/96 35,000 34,066,200
Bankers Trust Company............................. A1+/P1 5.28 12/30/96 40,000 38,768,000
Compagnie Bancaire................................ A1/P1 5.31 6/28/96 30,000 29,889,375
Countrywide Funding Corp.......................... A1/P2 5.30 6/20/96 30,000 29,924,917
Dynamic Funding Corp.............................. A2/P1 5.45 6/5/96 15,000 14,995,458
Dynamic Funding Corp.............................. A2/P1 5.42 6/6/96 37,819 37,801,918
Hitachi America - LTD............................. A1+/P1 5.36 8/7/96 19,000 18,816,122
Intl Nederlanden Funding.......................... A1+/P1 5.27 6/25/96 30,000 29,903,383
Mitsubishi Motors Inc............................. A1/P1 5.39 6/6/96 30,000 29,986,525
Sanwa Business Credit Inc......................... A2/P1 5.37 6/28/96 30,000 29,888,125
Sanwa Business Credit Inc......................... A2/P1 5.36 7/15/96 30,000 29,812,400
Sanwa Business Credit Inc......................... A2/P1 5.40 6/7/96 35,000 34,979,000
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
S&P/MOODY'S MATURITY AMOUNT COST
RATINGS RATE DATE (000) (NOTE 2)
--------------- --------- --------- --------- --------------
<S> <C> <C> <C> <C> <C>
DOMESTIC -- (CONTINUED)
Sigma Finance Inc. (d)............................ A1+/P1 5.35% 8/28/96 $ 31,000 $ 30,603,804
--------------
389,435,227
--------------
FOREIGN -- 6.8%
Abbey National Treasury........................... A1+/P1 5.35 11/29/96 30,000 29,201,957
Hanson Finance - PLC.............................. A1/P1 5.35 7/11/96 45,000 44,745,875
Hanson Finance - PLC.............................. A1/P1 5.35 7/22/96 29,000 28,788,824
Hanson Finance - PLC.............................. A1/P1 5.35 7/25/96 20,000 19,845,445
Yorkshire Building Society........................ A1/P1 5.32 10/28/96 20,000 19,565,533
--------------
142,147,634
--------------
TOTAL COMMERCIAL PAPER (AMORTIZED COST
$531,582,861)..................................... 531,582,861
--------------
CORPORATE OBLIGATIONS -- 26.2%
ABT 1996-A/Household CCMT - Variable Rate Note*
(d)............................................. A1+/P1 5.46 6/17/96 35,000 35,000,000
Beta Finance - Corporate Floating Rate Note*...... A1+/P1 5.40 6/3/96 40,000 40,000,000
C.S. First Boston Corp., - Extendable Variable
Rate Note*(b)................................... A1/P1 5.54 6/4/96 35,000 35,000,000
C.S. First Boston Corp., - Extendable.............
Variable Rate Note (b)*........................... A1/P1 5.45 6/4/96 15,000 15,000,000
Ford Motor Credit Corp., - Variable Rate Note*.... A1/P1 5.79 7/15/96 40,000 40,035,604
Merrill Lynch and Co. Medium Term Note (c)........ A1+/P1 6.00 5/12/97 31,000 31,000,000
Morgan Stanley - Variable Rate Note*.............. A1+/P1 5.54 6/15/96 50,000 50,000,000
PHH Corp - Floating Rate Note*.................... A1/P1 5.36 6/3/96 50,000 49,997,922
SMM Trust 1995 B - Variable Rate Note*............ A1+/P1 5.49 6/2/96 30,000 30,000,000
SMM Trust 1995 N - Variable Rate Note*............ A1+/P1 5.55 8/15/96 35,000 35,000,000
Steers 1994-1st USA Bank - Variable Rate Note*
(d)............................................. A1+/P1 5.44 6/17/96 50,000 50,000,000
Steers 1995-1st USA Bank - Variable Rate Note*
(d)............................................. A1+/P1 5.46 6/10/96 30,000 30,000,000
Steers/Merrill Lynch - Variable Rate Note* (d).... **F1/P1 5.48 6/18/96 65,000 64,999,880
Steers Series A3/Household - Variable Rate Note*
(d)............................................. A1+/P1 5.45 6/17/96 35,000 35,000,000
--------------
TOTAL CORPORATE OBLIGATIONS (AMORTIZED COST
$541,033,406)..................................... 541,033,406
--------------
MASTER NOTES -- 4.8%
Lehman Brothers plc, Foreign Master Note.......... A1/P2 5.54 6/3/96 50,000 50,000,000
Lehman Brothers plc, Foreign Master Note.......... A1/P2 5.54 7/3/96 50,000 50,000,000
--------------
TOTAL MASTER NOTES (AMORTIZED COST $100,000,000).... 100,000,000
--------------
TIME DEPOSITS -- 6.6%
Bank of Tokyo Mitsubishi Bank - London Branch..... A1+/P1 5.50 7/8/96 35,000 35,000,000
Bank of Tokyo Mitsubishi Bank - Grand Cayman
Branch.......................................... A1+/P1 5.53 7/11/96 35,000 35,000,000
Bank of Tokyo Mitsubishi Bank - London Branch..... A1/P1 5.44 8/16/96 25,000 25,000,000
South Trust Bank - Grand Cayman Branch, Variable
Rate Time Deposit*.............................. A1/P1 5.47 7/1/96 42,000 42,000,000
--------------
TOTAL TIME DEPOSITS (AMORTIZED COST $137,000,000)... 137,000,000
--------------
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
S&P/MOODY'S MATURITY AMOUNT COST
RATINGS RATE DATE (000) (NOTE 2)
--------------- --------- --------- --------- --------------
<S> <C> <C> <C> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 3.4%
Federal Home Loan Bank, Medium Term Note Callable
6/14/96 @ 100................................... AAA/Aaa 5.31% 3/14/97 $ 35,000 $ 35,000,000
Federal National Mortgage Assoc. Floating Rate
Note............................................ AAA/Aaa 5.46 10/4/96 35,000 34,995,295
--------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (AMORTIZED
COST $69,995,295)................................. 69,995,295
--------------
TOTAL INVESTMENTS IN SECURITIES (AMORTIZED COST
$2,002,369,777)................................... 2,002,369,777
--------------
REPURCHASE AGREEMENTS -- 9.7%
Fuji Securities, dated 5/31/96, with a maturity
value of $100,575,876 (Collateralized by
$222,588,000 various U.S. Government Agencies,
0.00% - 8.75%, 7/15/96 - 7/15/15, market value -
$102,541,765).................................. 5.36 6/3/96 100,531 100,530,972
Merrill Lynch Government Securities, Inc., dated
5/31/96 with a maturity value of $100,576,463
(Collateralized by $98,592,000 various U.S.
Government Agencies 0.00% - 7.00%, 8/15/20 -
3/15/24, market value - $102,544,066)........... 5.43 6/3/96 100,531 100,530,973
--------------
TOTAL REPURCHASE AGREEMENTS (AMORTIZED COST
$201,061,945)..................................... 201,061,945
--------------
TOTAL INVESTMENTS (AMORTIZED COST $2,203,431,722)(A)
-- 106.3%......................................... 2,203,431,722
PAYABLE TO BROKERS FOR SECURITIES PURCHASED --
(6.3%)............................................ (129,833,208)
--------------
NET ASSETS -- 100.0%................................ $2,073,598,514
--------------
--------------
</TABLE>
- ---------------
Percentages indicated are based on net assets of $2,073,598,514.
(a) Cost for federal income tax and financial reporting purposes are the same.
(b) Represents a restricted security.
(c) Convertible to Floating Rate Note on 7/12/96.
(d) 144a security which is restricted as to resale to institutional investors.
* Variable rate security. Maturity date reflects the next rate change date.
** Fitch Investors rating
PLC - Public Liability Company.
See Notes to Financial Statements.
6
<PAGE>
EMERALD PRIME FUND
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities
May 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities (amortized cost $2,002,369,777) ..... $2,002,369,777
Repurchase agreements (amortized cost $201,061,945) ........... 201,061,945
Cash .......................................................... 240,067
Interest receivable ........................................... 10,447,641
Receivable for capital shares issued .......................... 21,050,892
Receivable from brokers for investment securities sold ........ 215,611,087
Prepaid expenses and other .................................... 124,115
-------------
Total assets .................................................... 2,450,905,524
-------------
LIABILITIES:
Dividends payable ............................................. 8,938,002
Payable for capital shares redeemed ........................... 5,544,659
Payable to brokers for investment securities purchased ........ 361,652,259
Accrued expenses and other payables:
Investment Advisory fees .................................... 339,338
Administration fees ......................................... 113,322
Shareholder Processing and Services fees (Service Shares) ... 391,667
Combined Distribution and Service fees (Retail Shares) ...... 121,638
Custodian and transfer agent fees ........................... 82,618
Other ....................................................... 123,507
-------------
Total liabilities ............................................... 377,307,010
-------------
NET ASSETS ...................................................... $2,073,598,514
-------------
-------------
Shares Outstanding ($0.001 par value, unlimited number of shares
authorized):
Institutional Shares .......................................... 645,797,821
Service Shares ................................................ 886,994,853
Retail Shares ................................................. 540,813,893
-------------
Total Shares Outstanding ........................................ 2,073,606,567
-------------
-------------
Net Asset Value, Offering Price and Redemption Price per Share:
Institutional Shares .......................................... $ 1.00
Service Shares ................................................ 1.00
Retail Shares ................................................. 1.00
-------------
-------------
COMPOSITION OF NET ASSETS:
Shares of beneficial interest, at par ......................... $ 2,073,607
Additional paid-in capital .................................... 2,071,532,960
Accumulated net realized losses on investment transactions .... (8,053)
-------------
Net Assets, May 31, 1996 ........................................ $2,073,598,514
-------------
-------------
</TABLE>
- ------------
See Notes to Financial Statements.
7
<PAGE>
EMERALD PRIME FUND
- --------------------------------------------------------------------------------
Statement of Operations
For the six months ended May 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest ............................................................. $ 56,308,210
EXPENSES:
Investment Advisory fees ........................................... $ 2,267,527
Administration fees ................................................ 874,979
Shareholder Processing and Services fees (Service Shares) .......... 1,509,734
Shareholder Processing fees (Retail Shares) ........................ 233,621
Combined Distribution and Service fees (Retail Shares) ............. 1,051,183
Transfer agent fees and expenses ................................... 73,154
Custodian fees and expenses ........................................ 210,014
Legal fees ......................................................... 65,614
Audit fees ......................................................... 95,916
Reports to shareholders (Institutional Shares) ..................... 22,858
Reports to shareholders (Service Shares) ........................... 14,711
Reports to shareholders (Retail Shares) ............................ 132,147
Registration fees .................................................. 44,609
Trustees' fees ..................................................... 45,146
Insurance expense .................................................. 27,935
Other expenses ..................................................... 20,562
-----------
6,689,710
Less: Expense reimbursements ......................................... (60,507) 6,629,203
----------- ------------
Net Investment Income 49,679,007
REALIZED GAINS ON INVESTMENTS:
Net realized gains on securities transactions ...................... 883
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ................. $ 49,679,890
------------
------------
</TABLE>
- ------------
See Notes to Financial Statements.
8
<PAGE>
EMERALD PRIME FUND
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED MAY 31, NOVEMBER 30,
1996 1995
----------------- -----------------
(UNAUDITED)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations
Net investment income .................................................... $ 49,679,007 $ 86,983,774
Net realized gains on securities transactions ............................ 883 410,900
----------------- -----------------
Net increase in net assets resulting from operations ..................... 49,679,890 87,394,674
----------------- -----------------
Dividends to shareholders from net investment income
Institutional Shares ..................................................... (16,439,312) (28,634,317)
Service Shares ........................................................... (21,137,328) (42,688,668)
Retail Shares ............................................................ (12,102,367) (15,660,789)
----------------- -----------------
Total dividends to shareholders from net investment income ................. (49,679,007) (86,983,774)
----------------- -----------------
Distributions to shareholders from net realized gains
Institutional Shares ..................................................... (94,766) --
Service Shares ........................................................... (175,645) --
Retail Shares ............................................................ (88,464) --
----------------- -----------------
Total distributions to shareholders from net realized gains ................ (358,875) --
----------------- -----------------
Fund Share Transactions (at $1.00 per share)
Net proceeds from shares subscribed ...................................... 3,033,737,000 5,168,375,553
Net asset value of shares issued to shareholders in reinvestment of
dividends and distributions ............................................ 11,545,865 21,301,269
Cost of shares redeemed .................................................. (2,780,986,048) (4,836,350,261)
----------------- -----------------
Net increase in net assets from Fund share transactions .................. 264,296,817 353,326,561
----------------- -----------------
Total Increase ............................................................. 263,938,825 353,737,461
NET ASSETS:
Beginning of period ...................................................... 1,809,659,689 1,455,922,228
----------------- -----------------
End of period ............................................................ $ 2,073,598,514 $ 1,809,659,689
----------------- -----------------
----------------- -----------------
</TABLE>
- ------------
See Notes to Financial Statements.
9
<PAGE>
EMERALD TREASURY FUND
- --------------------------------------------------------------------------------
Portfolio of Investments
May 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
MATURITY AMOUNT COST
RATE DATE (000) (NOTE 2)
---------- --------- --------- -------------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS -- 39.1%
U.S. TREASURY NOTES -- 39.1%
U.S. Treasury Note.................................................. 6.13% 7/31/96 $ 100,000 $ 100,180,726
U.S. Treasury Note.................................................. 4.38 8/15/96 75,000 74,904,283
U.S. Treasury Note.................................................. 6.25 8/31/96 61,000 61,123,887
U.S. Treasury Note.................................................. 7.25 11/15/96 50,000 50,398,995
U.S. Treasury Note.................................................. 6.50 4/30/97 50,000 50,362,803
-------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(AMORTIZED COST $336,970,694)....................................... 336,970,694
-------------
REPURCHASE AGREEMENTS -- 60.8%
C.S. First Boston Corp., dated 5/31/96 with a maturity value of
$40,017,667 (Collateralized by $40,165,000 U.S. Treasury Notes,
6.88%, 3/31/97, market value - $41,001,973)....................... 5.30 6/3/96 40,000 40,000,000
J.P. Morgan Securities, dated 5/31/96 with a maturity value of
$110,049,271 (Collateralized by $113,835,438 Government National
Mortgage Assoc., 7.00% - 7.50%, 1/15/26 - 12/15/26, market value -
$112,221,200).................................................... 5.38 6/3/96 110,000 110,000,000
J.P. Morgan Securities, dated 4/17/96 with a maturity value of
$81,060,000 (Collateralized by $227,269,091 Government National
Assoc., 8.50% - 9.00%, 8/15/16 - 12/15/22, market value -
$82,218,286)..................................................... 5.30 6/3/96 80,000 80,000,000
Merrill Lynch Securities, Inc., dated 5/31/96 with a maturity value
of $106,732,209 (Collateralized by $510,680,000 various U.S.
Government Securities, 0.00% - 8.88%, 8/1/96 - 8/15/25, market
value - $108,819,666)............................................. 5.30 6/3/96 106,685 106,685,090
Morgan Stanley & Co., dated 5/31/96 with a maturity value of
$40,017,917 (Collateralized by $53,366,512 Government National
Mortgage Assoc., 7.00% - 8.00%, 1/15/08 - 11/15/25, market value -
$41,520,928)..................................................... 5.38 6/3/96 40,000 40,000,000
Sanwa BGK Securities, dated 5/31/96 with a maturity value of
$40,017,767 (Collateralized by $40,548,762 U.S. Treasury Notes
and Bonds, 5.63% - 8.75%, 5/15/97 - 11/15/24, market value
$40,800,692)..................................................... 5.33 6/3/96 40,000 40,000,000
Smith Barney, dated 5/31/96 with a maturity value of $106,732,387
(Collateralized by $102,537,000 various U.S. Government
Securities, 0.00% - 9.13%, 11/15/96 - 5/15/20, market value -
$108,819,426)..................................................... 5.32 6/3/96 106,685 106,685,090
-------------
TOTAL REPURCHASE AGREEMENTS (AMORTIZED COST $523,370,180)............. 523,370,180
-------------
TOTAL INVESTMENTS (AMORTIZED COST $860,340,874) (A) -- 99.9%.......... 860,340,874
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.1%......................... 1,225,393
-------------
NET ASSETS -- 100.0%.................................................. $ 861,566,267
-------------
-------------
</TABLE>
- ---------------
Percentages indicated are based on net assets of $861,566,267.
(a) Cost for federal income tax and financial reporting purposes are the same.
See Notes to Financial Statements.
10
<PAGE>
EMERALD TREASURY FUND
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities
May 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities (amortized cost $336,970,694) ............................. $ 336,970,694
Repurchase agreements (amortized cost $523,370,180) ................................. 523,370,180
Interest receivable ................................................................. 8,285,048
Receivable for capital shares issued ................................................ 8,406,238
Receivable from brokers for investment securities sold .............................. 487,653,347
Prepaid expenses and other .......................................................... 40,007
-------------
Total assets .......................................................................... 1,364,725,514
-------------
LIABILITIES:
Dividends payable ................................................................... 3,532,206
Payable for capital shares redeemed ................................................. 5,119,107
Payable to brokers for investment securities purchased .............................. 493,934,039
Accrued expenses and other payables:
Investment Advisory fees .......................................................... 166,515
Administration fees ............................................................... 61,167
Shareholder Processing and Services fees (Service Shares) ......................... 38,042
Combined Distribution and Service fees (Retail Shares) ............................ 168,877
Custodian and transfer agent fees ................................................. 67,517
Other ............................................................................. 71,777
-------------
Total liabilities ..................................................................... 503,159,247
-------------
NET ASSETS ............................................................................ $ 861,566,267
-------------
-------------
Shares Outstanding ($0.001 par value, unlimited number of shares authorized):
Institutional Shares ................................................................ 236,234,195
Service Shares ...................................................................... 580,211,046
Retail Shares ....................................................................... 45,648,346
-------------
Total Shares Outstanding .......................................................... 862,093,587
-------------
-------------
Net Asset Value, Offering Price and Redemption Price per Share:
Institutional Shares ................................................................ $ 1.00
Service Shares ...................................................................... 1.00
Retail Shares ....................................................................... 1.00
-------------
-------------
COMPOSITION OF NET ASSETS:
Shares of beneficial interst, at par ................................................ $ 862,093
Additional paid-in capital .......................................................... 861,231,494
Accumulated net realized losses on investment transactions .......................... (527,320)
-------------
Net Assets, May 31, 1996 .............................................................. $ 861,566,267
-------------
-------------
</TABLE>
- -------------
See Notes to Financial Statements.
11
<PAGE>
EMERALD TREASURY FUND
- --------------------------------------------------------------------------------
Statement of Operations
For the six months ended May 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest ........................................................... $ 23,867,086
EXPENSES:
Investment Advisory fees ........................................... $ 1,080,940
Administration fees ................................................ 428,764
Shareholder Processing fees (Retail Shares) ........................ 19,736
Shareholder Processing and Services fees (Service Shares) .......... 997,519
Combined Distribution and Service fees (Retail Shares) ............. 122,030
Transfer agent fees and expenses ................................... 53,750
Custodian fees and expenses ........................................ 102,632
Legal fees ......................................................... 28,258
Audit fees ......................................................... 42,219
Reports to shareholders (Institutional Shares) ..................... 7,544
Reports to shareholders (Service Shares) ........................... 10,655
Reports to shareholders (Retail Shares) ............................ 12,652
Trustees' fees ..................................................... 19,735
Registration fees .................................................. 12,401
Insurance expense .................................................. 13,538
Other expenses ..................................................... 25,883
-----------
2,978,256
Less: Expense reimbursements ......................................... (71,013) 2,907,243
----------- ------------
Net Investment Income: ............................................... 20,959,843
REALIZED LOSSES ON INVESTMENTS:
Net realized losses on securities transactions ..................... (219,518)
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ................. $ 20,740,325
------------
------------
</TABLE>
- ------------
See Notes to Financial Statements.
12
<PAGE>
EMERALD TREASURY FUND
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED
NOVEMBER 30,
1995
SIX MONTHS -----------------
ENDED
MAY 31, 1996
-----------------
(UNAUDITED)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations
Net investment income .................................................... $ 20,959,843 $ 42,840,635
Net realized losses on securities transactions ........................... (219,518) (195,517)
----------------- -----------------
Net increase in net assets resulting from operations ..................... 20,740,325 42,645,118
----------------- -----------------
Dividends to shareholders from net investment income
Institutional Shares ..................................................... (6,777,264) (13,077,345)
Service Shares ........................................................... (12,910,155) (27,761,370)
Retail Shares ............................................................ (1,272,424) (2,001,920)
----------------- -----------------
Total dividends to shareholders from net investment income ............... (20,959,843) (42,840,635)
----------------- -----------------
Fund Share Transactions (at $1.00 per Share)
Net proceeds from shares subscribed ...................................... 1,628,607,794 2,613,725,098
Net asset value of shares issued to shareholders in reinvestment of
dividends .............................................................. 1,951,675 3,365,762
Cost of shares redeemed .................................................. (1,579,821,509) (2,714,202,606)
----------------- -----------------
Net increase (decrease) in net assets from Fund share transactions ....... 50,737,960 (97,111,746)
----------------- -----------------
Total Increase (Decrease) ................................................ 50,518,442 (97,307,263)
NET ASSETS
Beginning of period ...................................................... 811,047,825 908,355,088
----------------- -----------------
End of period ............................................................ $ 861,566,267 $ 811,047,825
----------------- -----------------
----------------- -----------------
</TABLE>
- ------------
See Notes to Financial Statements.
13
<PAGE>
EMERALD TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
Portfolio of Investments
May 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
MOODY'S/S&P MATURITY AMOUNT COST
RATINGS+ RATE DATE (000) (NOTE 2)
--------------- --------- --------- ----------- -------------
<S> <C> <C> <C> <C> <C>
MUNICIPAL SECURITIES -- 99.7%
ALABAMA -- 4.1%
Birmingham General Obligation Warrants, Series A (LC
First Alabama Bank)* .............................. VMIG1/Aa2 3.75% 6/7/96 $ 1,000 $ 1,000,000
A-1+/AA
Geneva County Industrial Development Board Revenue
Bonds, Brooks Ag. Co. Project (AMT) (LC First
Alabama Bank)* .................................... NR/NR 4.20 6/7/96 5,900 5,900,000
A-1+/AA-
Homewood Industrial Development Board Revenue Bonds,
Keebler Co. Project. (LC Bank of Nova Scotia)* .... NR/NR 3.85 6/7/96 560 560,000
-------------
NR/NR 7,460,000
-------------
CONNECTICUT -- 2.8%
Mashantucket Pequot Tribe Commercial Paper (LC Bank
of America) ....................................... P-1/NR 3.45 6/21/96 5,000 5,000,000
-------------
A-1+/NR
FLORIDA -- 1.7%
City of Jacksonville -- PCR Ref. Bonds Florida Power
& Light Co. Project ............................... P-1/A1 3.70 9/10/96 3,000 3,000,000
-------------
A-1+/AA-
GEORGIA -- 5.8%
Georgia Municipal Gas Authority, Gas Revenue Bonds
Southern Portfolio I Project Series D (LC
Wachovia) ......................................... NR/NR 3.70 10/18/96 7,200 7,200,000
A1+/AA+
Rockdale County Hospital Authority Revenue
Anticipation Certificates (LC Trust Company Bank,
Atlanta)* ......................................... VMIG1/Aa3 3.70 6/7/96 3,235 3,235,000
-------------
NR/NR
10,435,000
-------------
IDAHO -- 0.2%
Idaho Health Facilities Authority Revenue Bonds, St.
Lukes Regional Medical Center Project (LC Credit
Suisse, N.Y.)* .................................... VMIG1/Aa2 3.70 6/3/96 300 300,000
-------------
NR/NR
ILLINOIS -- 11.0%
Illinois Development Financing Authority Economic
Development Revenue Bonds, Addison 450 LP Project
(AMT) (LC American National Bank Trust,
Chicago)* ......................................... NR/Aa3 3.90 6/7/96 1,000 1,000,000
NR/NR
Illinois Education Fac. Auth. Commercial Paper Rev.
Notes Pooled Financing Program (LC Northern Trust
Co.) .............................................. P-1/NR 3.60 7/12/96 7,000 7,000,000
NR/NR
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
MOODY'S/S&P MATURITY AMOUNT COST
RATINGS+ RATE DATE (000) (NOTE 2)
--------------- --------- --------- ----------- -------------
<S> <C> <C> <C> <C> <C>
ILLINOIS -- (CONTINUED)
Illinois Health Facilities Authority Revolving Fund,
University of Chicago, Mandatory Put, 8/8/96 @
100 ............................................... VMIG1/Aaa 3.25% 8/6/96 $ 8,500 $ 8,500,000
A-1+/AA
Rockton Industrial Project Revenue Bonds, Specialty
Equipment Companies Inc. Project, Series 1994 (AMT)
(LC Barclays Bank)* ............................... NR/NR 4.00 6/7/96 3,300 3,300,000
-------------
A-1+/AA 19,800,000
-------------
INDIANA -- 6.7%
Evansville Industrial Development Revenue Bonds,
Keebler Co. Project (LC Bank of Nova Scotia)* ..... NR/NR 3.85 6/7/96 505 505,000
NR/NR
Gary Environmental Improvement Revenue Revenue Bonds,
U.S. Steel Corporation, Project (LC Bank of Nova
Scotia)* .......................................... P1/Aa3 3.85 6/3/96 1,000 1,000,000
A-1+/AA-
Indiana Development Fin. Authority Revenue Bonds, Mid
America Project, Series 1995 (LC Union Bank of
Switzerland)* ..................................... NR/NR 3.95 6/7/96 3,800 3,800,000
A-1+/AAA
Indiana Health Facilities Financing Authority Revenue
Bonds (LC Comerica Bank)* ......................... VMIG1/A1 3.75 6/7/96 5,000 5,000,000
NR/NR
Rockport Industrial Pollution Control Revenue Bonds,
Indiana Michigan Power Co Project-B (AMBAC Insured)
SBPA -- The Bank of New York* ..................... NR/NR 3.70 6/7/96 1,800 1,800,000
-------------
A-1/AAA 12,105,000
-------------
KENTUCKY -- 1.6%
Jefferson County Pollution Control Revenue Bond
Series 1992-A Louisville Gas & Electric Co.
Project ........................................... VMIGI/Aa2 3.70 10/9/96 1,700 1,700,000
A-1+/AA
Trimble County Pollution Control Revenue Bonds Series
1992A Louisville Gas & Electric Co. Project ....... VMIGI/Aa2 3.70 9/10/96 1,200 1,200,000
-------------
A-1+/AA 2,900,000
-------------
LOUISIANA -- 7.0%
Louisiana Public Facilities Authority Hospital
Revenue Bonds, Willis-Knighton Medical Center
Project (AMBAC Insured) SBPA -- Mellon Bank* ...... VMIG1/Aaa 3.70 6/7/96 8,500 8,500,000
A-1/AAA
Plaquemines Port Harbor & Terminal Dist. Marine
Terminal Facilities Rev. Ref. Electric Coal
Transfer Corp. .................................... P-1/A1 3.65 8/8/96 4,100 4,100,000
-------------
A-1+/AA- 12,600,000
-------------
MICHIGAN -- 5.1%
Michigan State Hospital Financing Authority Revenue
Bonds, Mt. Clemens Hospital (LC Comerica Bank)* ... VMIG1/A1 3.75 6/7/96 7,100 7,100,000
NR/NR
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
MOODY'S/S&P MATURITY AMOUNT COST
RATINGS+ RATE DATE (000) (NOTE 2)
--------------- --------- --------- ----------- -------------
<S> <C> <C> <C> <C> <C>
MICHIGAN -- (CONTINUED)
Michigan State Housing Development Authority Revenue
Bonds, Rental Housing, Series C Revenue (LC Credit
Suisse, N.Y.)* .................................... NR/NR 3.70% 6/7/96 $ 2,050 $ 2,050,000
-------------
A-1+/AA+ 9,150,000
-------------
MINNESOTA -- 0.7%
Becker Pollution Control Revenue, Series 1993A
Northern States Power Co. ......................... VMIG1/A2 3.70 9/11/96 1,300 1,300,000
-------------
A-1/A+
MISSISSIPPI -- 3.5%
Claiborne MS PRC, Southern Miss. Elect. Power, Gtd by VMIG1/Aa3
National Rural Utilities CFC ...................... A1+/AA- 3.75 8/16/96 2,400 2,400,000
Mississippi Hospital Equipment and Facilities
Authority Variable Rate Demand Revenue Bonds,
Mississippi Baptist Medical Center Project, Series
1990B (LC Sanwa Bank Ltd.)* ....................... VMIG1/Aa3 3.70 6/7/96 3,800 3,800,000
-------------
NR/NR 6,200,000
-------------
MISSOURI -- 1.1%
Missouri Housing Development Commission, Single
Family Mortgage Revenue Bonds, Series 1995D (AMT)
Mandatory Put 11/1/96 @ 100 ....................... NR/NR 4.20 11/1/96 2,000 2,000,000
-------------
A-1+/AAA
MONTANA -- 2.8%
Forsyth Pollution Control Revenue Bonds, PacificCorp
Project (LC Industrial Bank of Japan Ltd.)* ....... P-1/A1 3.95 6/3/96 5,000 5,000,000
-------------
A-1/A
NEVADA -- 6.6%
Clark County Pollution Control Revenue Bonds, Nevada
Power Co Project -- Series D (LC Societe
Generale)* ........................................ NR/NR 3.75 6/7/96 10,400 10,400,000
A-1+/AA-
Washoe County General Obligation LTD, (FGIC Insured)
Pre-funded 7/15/96 @ 102 .......................... NR/Aaa 7.13 7/15/96 1,500 1,534,662
-------------
NR/AAA 11,934,662
-------------
NORTH CAROLINA -- 7.2%
Mecklenburg County, General Obligation Series 1996C
Sub Series A* ..................................... VMIG1/Aaa 3.70 6/7/96 5,000 5,000,000
A-1/AAA
Union County Industrial Facilities and Pollution
Control Financing Authority Industrial Development
Revenue Bonds (LC Morgan Guaranty Trust)* ......... VMIG1/Aa1 3.70 6/7/96 7,900 7,900,000
-------------
NR/NR 12,900,000
-------------
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
MOODY'S/S&P MATURITY AMOUNT COST
RATINGS+ RATE DATE (000) (NOTE 2)
--------------- --------- --------- ----------- -------------
<S> <C> <C> <C> <C> <C>
OHIO -- 0.5%
Summit County Industrial Development Revenue Bonds,
Keebler Co. Project, Series 93 (LC Northern
Trust)* ........................................... NR/NR 3.85% 6/7/96 $ 995 $ 995,000
-------------
NR/NR
PENNSYLVANIA -- 3.3%
Lehigh County General Purpose Auth. Hospital Central
Svc. Cup. Asset Fin. (MBIA Insured) SBPA -- PNC ... NR/Aaa 3.50 6/21/96 5,900 5,900,000
-------------
A-1/AAA
SOUTH DAKOTA -- 2.9%
Lawrence County Pollution Control Revenue Bonds,
Homestead Mining Project (LC Bank of Nova
Scotia)* .......................................... P-1/Aa3 3.80 6/7/96 5,300 5,300,000
-------------
A-1+/AA-
TENNESSEE -- 0.8%
Sullivan County Industrial Development Board Revenue
Bonds, Modern Forge Co. Project, (AMT), Series 90
(LC Northern Trust)* .............................. NR/NR 4.00 6/7/96 1,500 1,500,000
-------------
A-1+/AA-
TEXAS -- 7.3%
Houston, General Obligation Series 1993E , Put
10/1/96 @ 100 ..................................... VMIG1/Aa 3.50 10/1/96 1,200 1,200,000
A-1+/AA-
Port Arthur Navigation District, Star Enterprises
Project (LC Swiss Bank)* .......................... NR/NR 3.80 6/7/96 1,400 1,400,000
A-1+/AA+
State of Texas Revenue Anticipation Note, Series
A ................................................. MIG1/NR 4.75 8/30/96 5,700 5,712,540
SP-1+/NR
Texas Public Finance Auth. Commercial Paper Notes ... P-1/NR 3.50 7/24/96 4,700 4,700,000
-------------
A-1+/NR 13,012,540
-------------
UTAH -- 5.0%
Intermountain Power Agency of Utah, Power Supply
Revenue, Series A, Callable 7/1/96 @ 102 (Pre-
refunded on 7/1/96 @102) .......................... NR/Aaa 7.75 6/3/96 1,925 1,969,063
NR/AA-
Intermountain Power -- V-R Power Supply Rev. Ref.
Bonds, Series 1995F (LC Bank of America) .......... VMIGI/Aa3 3.50 6/14/96 5,000 5,000,000
A-1+/AA-
Intermountain Power -- V-R Power Supply Rev. Ref.
Bonds, Series 1995F (LC Bank of America) .......... VMIGI/Aa3 3.70 9/9/96 2,000 2,000,000
-------------
A-1+/AA- 8,969,063
-------------
VIRGINIA -- 2.8%
Louisa County, Industrial Development Auth., Pooled
Fin. Prog. (LC NationsBank)* ...................... NR/NR 3.80 6/7/96 5,000 5,000,000
-------------
A-1/A+
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
MOODY'S/S&P MATURITY AMOUNT COST
RATINGS+ RATE DATE (000) (NOTE 2)
--------------- --------- --------- ----------- -------------
<S> <C> <C> <C> <C> <C>
WASHINGTON -- 2.2%
King County Sewer Rev. Bond Anticipation CP Notes ... P-1/NR 3.70% 8/26/96 $ 4,000 $ 4,000,000
-------------
A-1/NR
WISCONSIN -- 3.9%
City of Oak Creek Pollution Control Revenue Bonds,
Wisconsin Electric Power Co. Project* ............. P-1/Aa3 3.85 6/7/96 2,000 2,000,000
NR/AA
Pleasant Prairie Pollution Control Revenue Bonds,
Wisconsin Electric Power Co. Project, Series C* ... P-1/Aa3 3.75 6/7/96 5,000 5,000,000
-------------
A-1+/AA 7,000,000
-------------
WYOMING -- 3.1%
Sweetwater Cty -- PCR Ref. Bonds Series 1988A P-1/Aaa
Pacificorp Proj. (LC Union Bank of Switzerland)* .. A-1+/AAA 3.55 7/19/96 2,700 2,700,000
Sweetwater Cty -- Pcr Ref. Bond Series 1992 P-1/Aaa
Pacificorp Proj. (LC Union Bank of Switzerland)* .. A-1+/AAA 3.70 7/26/96 2,900 2,900,000
-------------
5,600,000
-------------
TOTAL MUNICIPAL SECURITIES (AMORTIZED COST
$179,361,265)(A) -- 99.7%............................ 179,361,265
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.3%.......... 558,448
-------------
NET ASSETS -- 100.0%
$ 179,919,713
-------------
-------------
</TABLE>
- ---------------
Percentages indicated are based on net assets of $179,919,713
(a) Cost for federal income tax and financial reporting purpose are the same.
* Variable rate security. Maturity date reflects the next rate change date.
+ The ratings provided consist of short-term and long-term ratings for both
Moody's and S&P. The first row consists of the short-term/long-term Moody's
ratings and the second consists of short-term/long-term S&P ratings.
AMBAC -- AMBAC Indemnity Corporation.
AMT -- Interest on securities subject to Federal Alternative Minimum Tax.
FGIC -- Financial Guaranty Insurance Corp.
LC -- Letter of credit.
MBIA -- Municipal Bond Insurance Association.
NR -- Not rated.
SBPA -- Standby Bond Purchase Agreement.
See Notes to Financial Statements.
18
<PAGE>
EMERALD TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities
May 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities (amortized cost $179,361,265) ....... $ 179,361,265
Cash .......................................................... 65,312
Interest receivable ........................................... 1,140,257
Receivable for capital shares issued .......................... 378,580
Receivable from brokers for investment securities sold ........ 5,466,334
Prepaid expenses and other .................................... 13,438
-------------
Total assets .................................................... 186,425,186
-------------
LIABILITIES:
Dividends payable ............................................. 524,922
Payable for capital shares redeemed ........................... 5,841,203
Accrued expenses and other payables:
Investment Advisory fees .................................... 23,785
Administration fees ......................................... 12,755
Shareholder Processing and Services fees (Service Shares) ... 21,224
Custodian and transfer agent fees ........................... 19,665
Other ....................................................... 61,919
-------------
Total liabilities ............................................... 6,505,473
-------------
NET ASSETS ...................................................... $ 179,919,713
-------------
-------------
Shares Outstanding ($0.001 par value, unlimited number of
shares authorized):
Institutional Shares .......................................... 133,623,985
Service Shares ................................................ 2,877,686
Retail Shares ................................................. 43,469,687
-------------
Total Shares Outstanding .................................... 179,971,358
-------------
-------------
Net Asset Value, Offering Price and Redemption Price per Share:
Institutional Shares .......................................... $ 1.00
Service Shares ................................................ 1.00
Retail Shares ................................................. 1.00
-------------
-------------
COMPOSITION OF NET ASSETS:
Shares of beneficial interest, at par ......................... $ 179,972
Additional paid-in capital .................................... 179,791,386
Accumulated net realized losses on investment transactions .... (51,645)
-------------
Net Assets, May 31, 1996 ........................................ $ 179,919,713
-------------
-------------
</TABLE>
- ------------
See Notes to Financial Statements.
19
<PAGE>
EMERALD TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
Statement of Operations
For the six months ended May 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest .................................... $ 3,467,874
EXPENSES:
Investment Advisory fees .................. $ 237,759
Administration fees ....................... 119,996
Shareholder Processing fees (Retail
Shares) ................................. 19,488
Shareholder Processing and Services fees
(Service Shares) ........................ 4,891
Combined Distribution and Service fees
(Retail Shares) ......................... 93,314
Transfer agent fees and expenses .......... 37,423
Custodian fees and expenses ............... 32,517
Reports to shareholders (Institutional
Shares) ................................. 7,836
Reports to shareholders (Service
Shares) ................................. 1,737
Reports to shareholders (Retail Shares) ... 11,906
Legal fees ................................ 6,106
Audit fees ................................ 10,598
Registration fees ......................... 11,648
Trustees' fees ............................ 4,744
Insurance expense ......................... 3,145
Other expenses ............................ 1,675
-----------
604,783
Less: Fee waivers and expense
reimbursements ............................ (118,239) 486,544
----------- -----------
Net Investment Income: ...................... 2,981,330
REALIZED LOSSES ON INVESTMENTS:
Net realized losses on securities
transactions ............................ (20,000)
-----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS ................................ $ 2,961,330
-----------
-----------
</TABLE>
- ------------
See Notes to Financial Statements.
20
<PAGE>
EMERALD TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED NOVEMBER 30,
MAY 31, 1996 1995
-------------- --------------
(UNAUDITED)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations
Net investment income ......................................................... $ 2,981,330 $ 6,967,330
Net realized losses on securities transactions ................................ (20,000) (903)
-------------- --------------
Net increase in net assets resulting from operations .......................... 2,961,330 6,966,427
-------------- --------------
Dividends to shareholders from net investment income
Institutional Shares .......................................................... (2,327,618) (5,722,875)
Service Shares ................................................................ (40,653) (95,436)
Retail Shares ................................................................. (613,059) (1,149,019)
-------------- --------------
Total dividends to shareholders from net investment income ...................... (2,981,330) (6,967,330)
-------------- --------------
Fund Share Transactions (at $1.00 per share)
Net proceeds from shares subscribed ........................................... 318,635,119 504,374,576
Net asset value of shares issued to shareholders in reinvestment of
dividends ................................................................... 503,958 1,626,585
Cost of shares redeemed ....................................................... (336,643,715) (513,562,638)
-------------- --------------
Net decrease in net assets from Fund share transactions ....................... (17,504,638) (7,561,477)
-------------- --------------
Total Decrease .................................................................. (17,524,638) (7,562,380)
NET ASSETS:
Beginning of period ........................................................... 197,444,351 205,006,731
-------------- --------------
End of period ................................................................. $ 179,919,713 $ 197,444,351
-------------- --------------
-------------- --------------
</TABLE>
- ------------
See Notes to Financial Statements.
21
<PAGE>
EMERALD FUNDS
- --------------------------------------------------------------------------------
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
NOTE 1 -- GENERAL
Emerald Funds (the "Trust") was organized as a Massachusetts business trust on
March 15, 1988. The Trust is registered under the Investment Company Act of
1940, as amended (the "Act"), as an open-end, management investment company. The
Trust operates as a series company currently comprising fifteen portfolios. The
accompanying financial statements and notes relate only to the Prime Fund,
Treasury Fund and Tax-Exempt Fund (the "Funds").
The investment objective of both the Prime and Treasury Funds is to seek to
provide a high level of current income consistent with liquidity, the
preservation of capital and a stable net asset value. The Prime Fund pursues its
objective by investing in a broad range of short-term government, bank and
corporate obligations. The Treasury Fund seeks to achieve its objective by
investing in obligations that the U.S. Treasury has issued or to which the U.S.
Treasury has pledged its full faith and credit to guarantee the payment of
principal and interest. The investment objective of the Tax-Exempt Fund is to
seek to provide a high level of current income that is exempt from federal
income taxes, consistent with liquidity, the preservation of capital and a
stable net asset value. The Fund invests in high quality debt obligations of
states, territories, and possessions of the United States and the District of
Columbia, and of their agencies, authorities, instrumentalities and political
sub-divisions ("municipal obligations"). Under normal circumstances, the Fund
invests 80% or more of its net assets in municipal obligations.
Barnett Banks Trust Company, N.A. ("Barnett") serves as the Funds'
investment adviser. Effective June 28, 1996, Barnett Capital Advisors, Inc. will
assume the investment advisory responsibilities of Barnett. Rodney Square
Management Corporation (the "Sub-Adviser"), a subsidiary of Wilmington Trust
Company, serves as the Tax-Exempt Fund's investment sub-adviser. Effective April
1, 1996, BISYS Fund Services Limited Partnership ("BISYS") became the Funds'
administrator. Emerald Asset Management, Inc. (the "Distributor") serves as the
distributor of the Funds' shares. BISYS is a wholly owned subsidiary and the
Distributor is an indirectly owned subsidiary of The BISYS Group, Inc.
The Prime Fund, Treasury Fund and Tax-Exempt Fund (collectively, the "money
market funds") each issue three classes of shares: Institutional Shares, Service
Shares and Retail Shares. Prior to April 1, 1996, the Institutional Shares were
referred to as Emerald Shares, the Service Shares were referred to as Emerald
Service Shares and the Retail Shares were referred to as Investor Shares.
Institutional Shares, Service Shares and Retail Shares are substantially the
same except that Service Shares bear the fees that are payable under a
Shareholder Processing and Services Plan (the "Service Plan") and Retail Shares
bear the fees that are payable under a Combined Distribution and Service Plan
(the "Combined Plan") adopted by the Board of Trustees pursuant to Rule 12b-1
under the Act and fees payable under a Shareholder Processing Plan (the
"Processing Plan"). In addition to fees paid pursuant to the Service Plan, the
Combined Plan and the Processing Plan, each class of shares of each Fund also
bears the expenses associated with the printing of their shareholder reports
applicable to the particular class.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Funds in the preparation of their financial statements. The policies are in
conformity with generally accepted accounting principles. The preparation of
financial statements requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses for the
period. Actual amounts could differ from those estimates.
A)Security Valuation:
The money market funds each value portfolio securities at amortized cost, which
approximates market value. The amortized cost method involves valuing a security
at cost on the date of purchase and thereafter assuming a constant amortization
to maturity of the difference between the principal amount due at maturity and
initial cost. In addition, the money market funds may not (a) purchase any
instrument with a remaining maturity greater than thirteen months unless such
instrument is subject to a demand feature,
22
<PAGE>
- --------------------------------------------------------------------------------
or (b) maintain a dollar-weighted average maturity which exceeds 90 days.
B)Securities Transactions and Investment Income:
Securities transactions are recorded on the trade date. Realized gains and
losses on the sales of investments are calculated on the identified cost basis.
Interest income, including accretion of discount and amortization of the premium
on investments, is accrued daily. Dividend income is recorded on the ex-dividend
date.
C)Dividends and Distributions to Shareholders:
Dividends from net investment income are declared daily to shareholders and are
paid monthly. Distributions of net realized gains, if any, will be paid at least
annually. However, to the extent that net realized gains of a Fund can be
reduced by any capital loss carryovers of that Fund, such gains will not be
distributed.
The amounts of dividends from net investment income and of distributions
from net realized gains are determined in accordance with federal income tax
regulations which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such amounts
are reclassified within the composition of net assets based on their federal
tax-basis treatment; temporary differences do not require reclassification.
Dividends and distributions to shareholders which exceed net investment income
and net realized capital gains for financial reporting purposes but not for tax
purposes are reported as dividends in excess of net investment income or net
distributions in excess of net realized gains. To the extent they exceed net
investment income and net realized gains for tax purposes, they are reported as
distributions of capital.
D)Repurchase Agreements:
The Trust's custodian and other banks acting in a sub-custodian capacity, take
possession of the collateral pledged for investments in repurchase agreements.
The underlying collateral is valued daily on a mark-to-market basis to determine
that the value, including accrued interest, exceeds the repurchase price. In the
event of the seller's default of the obligation to repurchase, the Funds have
the right to liquidate the collateral and apply the proceeds in satisfaction of
the obligation. Under certain circumstances, in the event of default or
bankruptcy by the other party to the agreement, realization and/or retention of
the collateral may be subject to legal proceedings.
E)Lending Securities:
If the Prime Fund or the Treasury fund lends its securities, the Fund receives
from the borrower collateral, in the form of cash or U.S. Treasury securities
or, in the case of the Prime Fund, securities of U.S. Government agencies or
instrumentalities or an irrevocable letter of credit issued by a bank that meets
the credit standards of the Prime Fund, in an amount at least equal at all times
to the market value of the securities loaned. The Fund continues to receive
interest on the securities loaned and may simultaneously earn interest on the
collateral held. The Fund records and values such collateral at its market value
on the date of receipt and marks-to-market such collateral on a daily basis
through maturity date. If the borrower defaults and the value of the collateral
declines or if bankruptcy proceedings are commenced with respect to the borrower
of the security, realization of the collateral by the Funds may be delayed or
limited.
F)Expenses:
The Trust accounts separately for the assets, liabilities and operations of each
Fund. Direct expenses of a Fund are charged to that Fund while general Trust
expenses are allocated among the Trust's respective portfolios.
The investment income and expenses of a Fund (other than expenses incurred
under the Service Plan, the Combined Plan, the Processing Plan, and the reports
to shareholders expenses) and realized and unrealized gains and losses on
investments of a Fund are allocated to separate classes of shares based upon
their relative net asset value on the date income is earned or expenses and
realized and unrealized gains and losses are incurred.
All costs incurred by the Funds in connection with the organization of the
Trust and the initial public offering of shares of the Funds, principally
23
<PAGE>
- --------------------------------------------------------------------------------
professional fees and printing costs, have been deferred. Upon commencement of
investment operations of each Fund, the deferred organization expenses are being
amortized on a straight-line basis over a period of five years.
G)Federal Income Taxes:
For federal income tax purposes, each Fund is treated as a separate entity for
the purpose of determining its qualification as a regulated investment company
under the Internal Revenue Code (the "Code"). It is the policy of each Fund to
meet the requirements of the Code applicable to regulated investment companies,
including the requirement that it distribute substantially all of its taxable
income to shareholders. Therefore, no federal income tax provision is required.
At November 30, 1995, the following Funds had the following capital loss
carryovers:
<TABLE>
<CAPTION>
EXPIRATION
AMOUNT DATE
---------- -----------
<S> <C> <C>
Treasury Fund.................. $ 4,829 2000
40,894 2001
70,799 2002
195,517 2003
----------
$ 312,039
----------
----------
Tax-Exempt Fund................ $ 8,643 1997
14,779 1998
2,875 2000
1,015 2001
3,430 2002
903 2003
----------
$ 31,645
----------
----------
</TABLE>
These capital loss carryovers may be used to offset any future realized
gains on securities transactions to the extent provided in the regulations under
the Code. To the extent utilized, each Fund will reduce amounts otherwise
payable to shareholders from net realized gains.
NOTE 3 -- AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into Investment Advisory Agreements with Barnett, an
Administration Agreement with BISYS and a Distribution Agreement with the
Distributor. In addition, Barnett has entered into a Sub-Advisory Agreement with
the Sub-Adviser with respect to the Tax-Exempt Fund.
As investment adviser, Barnett manages the investments of each Fund except
the Tax-Exempt Fund and is responsible for all purchases and sales of each
Fund's portfolio securities (except the Tax-Exempt Fund's). The Sub-Adviser has
similar responsibilities for the Tax-Exempt Fund, subject to the general
supervision of both the Board of Trustees and Barnett. For its services, Barnett
is entitled to receive a fee based on each Fund's average daily net assets at
the following annual rates:
<TABLE>
<S> <C>
Prime Fund.......................... 0.25%
Treasury Fund....................... 0.25%
Tax-Exempt Fund..................... 0.25%
</TABLE>
Barnett has agreed to pay the Sub-Adviser a sub-advisory fee at an annual
rate of 0.15% of average daily net assets of the Tax-Exempt Fund. Barnett has
also agreed to waive a portion of its fee from the Tax-Exempt Fund equal to
0.10% of the average daily net assets of the Fund. For the six months ended May
31, 1996, Barnett waived fees of $94,514 for the Tax-Exempt Fund.
Barnett has voluntarily agreed to limit the fees it receives from the Prime
Fund and the Treasury Fund to the following annual rates: 0.25% of each Fund's
first $600 million of average daily net assets, 0.23% of the $400 million of
each Fund's average daily net assets, 0.21% of the next $1 billion of each of
the Fund's average daily net assets and 0.19% of each Fund's average daily net
assets in excess of $2 billion. There were no fees waived by Barnett for the
Prime Fund or Treasury Fund for the six months ended May 31, 1996.
As administrator, BISYS assists in supervising the operations of the Funds.
For its services, BISYS is entitled to a fee, accrued daily and payable monthly,
at the effective annual rate of 0.0775% of the first $5 billion of the Trust's
aggregate net assets, 0.07% of the next $2.5 billion, 0.065% of the next $2.5
billion and 0.05% of all assets exceeding $10 billion. In the event the
aggregate average daily net assets falls below $3 billion, the fee will be
increased to 0.08% of the aggregate average daily net assets of the Trust. Prior
to April 1, 1996, Concord Holding Corporation ("Concord")(the prior
administrator), also a wholly owned subsidiary of The BISYS Group, Inc.,
received a fee at the effective annual rate of 0.10% of each of the Prime Fund
and Treasury Fund's first $600 million of daily net assets, 0.09% of the next
$400 million of daily net assets, 0.08% of the next
24
<PAGE>
- --------------------------------------------------------------------------------
$1 billion of daily net assets and 0.07% of each Fund's daily net assets in
excess of $2 billion; and 0.15% of the Tax-Exempt Fund's daily net assets.
Under the Processing Plan with respect to Retail Shares of the Funds,
institutions (including BISYS) that have entered into agreements with the
Distributor ("Service Organizations") agree to provide various shareholder and
administrative support services to the shareholders of Retail Shares. For their
services, Service Organizations are entitled to a fee ("Shareholder Processing
Fee") accrued daily and paid monthly at an annual rate of 0.25% of the
respective average daily net assets of Retail Shares.
Barnett, BISYS and the Sub-Adviser have voluntarily agreed to reimburse Fund
expenses with respect to each money market fund to the extent a Fund's ordinary
operating expenses (including fees payable to Barnett, the Sub-Adviser and BISYS
and excluding fees payable under the Service Plan, the Combined Plan and the
Processing Plan) exceed 0.40% of such Fund's average daily net assets. This
voluntary reimbursement may be terminated at any time. For the six months ended
May 31, 1996, Barnett and BISYS each agreed to reimburse expenses in the amount
of $60,507 to the Prime Fund and $71,013 to the Treasury Fund for expenses in
excess of this limitation. For the six months ended May 31, 1996, BISYS and the
Sub-Adviser reimbursed expenses in the amount of $23,725 for the Tax-Exempt
Fund, pursuant to this voluntary agreement.
Under the Service Plan, institutions ("Service Organizations") agree to
provide support services to their clients who are beneficial owners of Service
Shares of the money market funds. For these services, the Funds agreed to pay
the Service Organizations an annual fee which may not exceed 0.35% of the
average daily net asset value of each Fund's Service Shares owned by the Service
Organization's clients. These payments are borne solely by Service Shares.
Services are provided by Service Organizations which may include Barnett, BISYS
and their affiliates. For the six months ended May 31, 1996, the Prime Fund,
Treasury Fund and Tax-Exempt Fund incurred expenses of $1,509,734, $997,519 and
$4,891, respectively, pursuant to the Service Plan, substantially all of which
was earned by Barnett and its affiliates.
The Funds have each adopted the Combined Plan. Under the Combined Plan, each
Fund may make payments to the Distributor and Service Organizations for
distribution and shareholder liaison services provided to Retail shareholders.
Under the Combined Plan, payments by each Fund may not exceed an annual rate of
0.25% of the average daily net assets of Retail Shares. For the six months ended
May 31, 1996, the Prime Fund, Treasury Fund and Tax-Exempt Fund paid fees of
$1,051,183, $122,030 and $93,314, respectively pursuant to the Combined Plan.
Certain officers of the Trust are "affiliated persons" (as defined in the
Act) of BISYS or the Distributor. Each Trustee receives an annual fee of $14,000
and a meeting fee of $1,500 per meeting for services relating to all of the
portfolios constituting the Trust. For the six months ended May 31, 1996, the
Funds incurred the following legal expenses of a law firm, a partner of which
serves as Secretary to the Trust:
<TABLE>
<S> <C>
Prime Fund................................... $ 65,614
Treasury Fund................................ 28,258
Tax-Exempt Fund.............................. 6,106
</TABLE>
25
<PAGE>
- --------------------------------------------------------------------------------
NOTE 4 -- CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Funds are summarized
below:
PRIME FUND (000 OMITTED)
(AT $1.00 PER SHARE):
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED NOVEMBER, 30
MAY 31, 1995
1996 ------------
-----------
(UNAUDITED)
<S> <C> <C>
Institutional Shares
Shares sold................. 1,626,197 2,397,638
Shares issued to
shareholders in
reinvestment of dividends
and distributions......... -- 1
Shares redeemed............. (1,443,036) (2,348,560)
----------- ------------
Net increase in Institutional
Shares....................... 183,161 49,079
----------- ------------
Service Shares
Shares sold................. 1,059,043 2,305,635
Shares issued to
shareholders in
reinvestment of dividends
and distributions......... 1,598 5,644
Shares redeemed............. (1,075,477) (2,243,151)
----------- ------------
Net increase (decrease) in
Service Shares............... (14,836) 68,128
----------- ------------
Retail Shares
Shares sold................. 348,497 465,103
Shares issued to
shareholders in
reinvestment of dividends
and distributions......... 9,948 15,656
Shares redeemed............. (262,473) (244,639)
----------- ------------
Net increase in Retail
Shares....................... 95,972 236,120
----------- ------------
Total increase in Fund
shares....................... 264,297 353,327
----------- ------------
----------- ------------
</TABLE>
TREASURY FUND (000 OMITTED)
(AT $1.00 PER SHARE):
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED NOVEMBER, 30
MAY 31, 1994
1996 ------------
-----------
(UNAUDITED)
<S> <C> <C>
Institutional Shares
Shares sold................. 588,972 778,340
Shares issued to
shareholders in
reinvestment of dividends
and distributions......... -- --
Shares redeemed............. (589,220) (825,813)
----------- ------------
Net decrease in Institutional
Shares....................... (248) (47,473)
----------- ------------
Service Shares
Shares sold................. 897,669 1,705,061
Shares issued to
shareholders in
reinvestment of dividends
and distributions......... 686 1,364
Shares redeemed............. (843,952) (1,772,681)
----------- ------------
Net increase (decrease) in
Service Shares............... 54,403 (66,256)
----------- ------------
Retail Shares
Shares sold................. 141,967 130,324
Shares issued to
shareholders in
reinvestment of dividends
and distributions......... 1,266 2,002
Shares redeemed............. (146,650) (115,709)
----------- ------------
Net increase (decrease) in
Retail Shares................ (3,417) 16,617
----------- ------------
Total increase (decrease) in
Fund shares.................. 50,738 (97,112)
----------- ------------
----------- ------------
</TABLE>
26
<PAGE>
- --------------------------------------------------------------------------------
TAX-EXEMPT FUND (000 OMITTED)
(AT $1.00 PER SHARE):
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED NOVEMBER 30,
MAY 31, 1995
1996 ------------
-----------
(UNAUDITED)
<S> <C> <C>
Institutional Shares
Shares sold................. 237,079 411,931
Shares issued to
shareholders in
reinvestment of dividends
and distributions......... -- 458
Shares redeemed............. (259,833) (418,892)
----------- ------------
Net decrease in Institutional
Shares....................... (22,754) (6,503)
----------- ------------
Service Shares
Shares sold................. 536 1,051
Shares issued to
shareholders in
reinvestment of dividends
and distributions......... 5 20
Shares redeemed............. (518) (2,244)
----------- ------------
Net increase (decrease) in
Service Shares............... 23 (1,173)
----------- ------------
Retail Shares
Shares sold................. 81,020 91,392
Shares issued to
shareholders in
reinvestment of dividends
and distributions......... 499 1,149
Shares redeemed............. (76,292) (92,426)
----------- ------------
Net increase in Retail
Shares....................... 5,227 115
----------- ------------
Total decrease in Fund
shares....................... (17,504) (7,561)
----------- ------------
----------- ------------
</TABLE>
NOTE 5 -- CONCENTRATION OF CREDIT RISK
The Prime Fund and Tax-Exempt Fund invest substantially all of their assets in a
diversified portfolio of high quality U.S. dollar denominated money market
instruments as disclosed in the Portfolio of Investments by security type or, in
the case of the Tax-Exempt Fund, by state of issuer.
The Prime Fund had the following concentrations by industry sector at May
31, 1996 (as a percentage of total investments):
<TABLE>
<CAPTION>
% OF
INDUSTRY CLASS PORTFOLIO
- --------------------------------------------- -----------
<S> <C>
Banks -- International....................... 22.7%
Financial Services........................... 15.4
Banks -- Regional............................ 11.4
Brokerage Services........................... 10.5
Repurchase Agreements........................ 9.1
Finance Companies............................ 6.6
Leasing...................................... 4.3
Industrial Goods and Equipment............... 4.2
Banks -- Money Center........................ 3.5
Automobiles.................................. 3.2
U.S. Government Agency Securities............ 3.2
Financial Services -- Diversified............ 2.9
Financial Services -- Mortgage............... 2.2
Computers.................................... 0.8
-----
100.0%
-----
-----
</TABLE>
At May 31, 1996, the Tax-Exempt Fund had the following concentrations by
industry sector (as a percentage of total investments):
<TABLE>
<CAPTION>
TAX-EXEMPT TAX-EXEMPT
INDUSTRY CLASS FUND
- ------------------------------------------ -------------
<S> <C>
Pollution Control & Waste Management...... 17.4%
Health & Medical Facilities............... 16.8
Commercial Paper.......................... 12.7
Industrial Development Revenue............ 10.4
General Obligations....................... 8.4
Revenue................................... 6.1
Education Facilities...................... 3.9
Power Projects............................ 3.9
Tax Revenue Anticipation Notes............ 3.2
Public Facilities......................... 2.8
Consumer Goods & Services................. 2.3
Sewer Projects............................ 2.2
Futures................................... 2.1
Pre-Refunded Securities................... 2.0
Equipment Leasing......................... 1.8
Home Building and Land Development........ 1.1
Housing Developments...................... 1.1
Utility Projects.......................... 1.1
Electronics............................... 0.7
-----
100.0%
-----
-----
</TABLE>
27
<PAGE>
EMERALD PRIME FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS YEARS ENDED
ENDED ------------------------------------------------------
MAY 31, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1996 1995 1994 1993 1992
----------- ------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
INSTITUTIONAL SHARES:
NET ASSET VALUE, BEGINNING OF
PERIOD................................... $ 1.0002 $ 1.0000 $ 0.9999 $ 1.0001 $ 1.0000
----------- ------------ ------------ ------------ ------------
Income from investment operations:
Net Investment Income.................... 0.0262 0.0566 0.0390 0.0316 0.0407
Net realized gains (losses) on
securities............................. 0.0000 0.0002 (0.0028) (0.0001) 0.0001
----------- ------------ ------------ ------------ ------------
Total income from investment
operations............................. 0.0262 0.0568 0.0362 0.0315 0.0408
----------- ------------ ------------ ------------ ------------
Less dividends and distributions:
Dividends from net Investment Income..... (0.0262) (0.0566) (0.0390) (0.0316) (0.0407)
Distributions from net realized gains on
securities............................. (0.0002) (0.0000) (0.0000) (0.0001) (0.0000)
----------- ------------ ------------ ------------ ------------
Total dividends and distributions........ (0.0264) (0.0566) (0.0390) (0.0317) (0.0407)
----------- ------------ ------------ ------------ ------------
Voluntary capital contribution............. 0.0000 0.0000 0.0029 0.0000 0.0000
----------- ------------ ------------ ------------ ------------
Net change in net asset value.............. (0.0002) 0.0002 0.0001 (0.0002) 0.0001
----------- ------------ ------------ ------------ ------------
NET ASSET VALUE, END OF PERIOD............. $ 1.0000 $ 1.0002 $ 1.0000 $ 0.9999 $ 1.0001
----------- ------------ ------------ ------------ ------------
----------- ------------ ------------ ------------ ------------
Total return............................... 2.67%++ 5.81% 3.97% 3.21% 4.14%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s)......... $ 645,795 $ 462,726 $ 413,541 $ 510,683 $1,947,016
Ratio of expenses to average net
assets................................. 0.38%+ 0.37% 0.37% 0.35% 0.37%
Ratio of net investment income to average
net assets............................. 5.23%+ 5.66% 3.92% 3.21% 3.84%
Ratio of expenses to average net
assets*................................ 0.38%+ 0.39% (a) (a) (a)
Ratio of net investment income to average
net assets*............................ 5.23%+ 5.64% (a) (a) (a)
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
(a) There were no waivers or reimbursements during the period.
+ Annualized.
++ Unannualized.
See Notes to Financial Statements.
28
<PAGE>
EMERALD PRIME FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS YEARS ENDED
ENDED MAY ------------------------------------------------------
31, 1996 NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
----------- 1995 1994 1993 1992
(UNAUDITED) ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
SERVICE SHARES:
NET ASSET VALUE, BEGINNING OF
PERIOD................................... $ 1.0002 $ 1.0000 $ 0.9999 $ 1.0001 $ 1.0000
----------- ------------ ------------ ------------ ------------
Income from investment operations:
Net investment income.................... 0.0245 0.0536 0.0355 0.0281 0.0371
Net realized gains (losses) on
securities............................. 0.0000 0.0002 (0.0028) (0.0001) 0.0001
----------- ------------ ------------ ------------ ------------
Total income from investment
operations............................. 0.0245 0.0538 0.0327 0.0280 0.0372
----------- ------------ ------------ ------------ ------------
Less dividends and distributions:
Dividends from net investment income..... (0.0245) (0.0536) (0.0355) (0.0281) (0.0371)
Distributions from net realized gains on
securities............................. (0.0002) (0.0000) (0.0000) (0.0001) (0.0000)
----------- ------------ ------------ ------------ ------------
Total dividends and distributions........ (0.0247) (0.0536) (0.0355) (0.0282) (0.0371)
----------- ------------ ------------ ------------ ------------
Voluntary capital contribution............. 0.0000 0.0000 0.0029 0.0000 0.0000
----------- ------------ ------------ ------------ ------------
Net change in net asset value.............. (0.0002) 0.0002 0.0001 (0.0002) 0.0001
----------- ------------ ------------ ------------ ------------
NET ASSET VALUE, END OF PERIOD............. $ 1.0000 $ 1.0002 $ 1.0000 $ 0.9999 $ 1.0001
----------- ------------ ------------ ------------ ------------
----------- ------------ ------------ ------------ ------------
Total return............................... 2.50%++ 5.49% 3.61% 2.85% 3.78%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s)......... $ 886,991 $ 902,006 $ 833,667 $ 619,149 $ 548,622
Ratio of expenses to average net
assets................................. 0.72%+ 0.72% 0.72% 0.71% 0.72%
Ratio of net investment income to average
net assets............................. 4.90%+ 5.31% 3.59% 2.80% 3.54%
Ratio of expenses to average net
assets*................................ 0.72%+ 0.74% (a) (a) (a)
Ratio of net investment income to average
net assets*............................ 4.90%+ 5.29% (a) (a) (a)
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
(a) There were no waivers or reimbursements during the period.
+ Annualized.
++ Unannualized.
See Notes to Financial Statements.
29
<PAGE>
EMERALD PRIME FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS YEARS ENDED
ENDED ------------------------------------------------------
MAY 31, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1996 1995 1994 1993 1992
----------- ------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
RETAIL SHARES:
NET ASSET VALUE, BEGINNING OF
PERIOD................................... $ 1.0002 $ 1.0000 $ 0.9999 $ 1.0001 $ 1.0000
----------- ------------ ------------ ------------ ------------
Income from investment operations:
Net investment income.................... 0.0236 0.0515 0.0339 0.0266 0.0356
Net realized gains (losses) on
securities............................. 0.0000 0.0002 (0.0028) (0.0001) 0.0001
----------- ------------ ------------ ------------ ------------
Total income from investment
operations............................. 0.0236 0.0517 0.0311 0.0265 0.0357
----------- ------------ ------------ ------------ ------------
Less dividends and distributions:
Dividends from net investment income..... (0.0236) (0.0515) (0.0339) (0.0266) (0.0356)
Distributions from net realized gains on
securities............................. (0.0002) (0.0000) (0.0000) (0.0001) (0.0000)
----------- ------------ ------------ ------------ ------------
Total dividends and distributions........ (0.0238) (0.0515) (0.0339) (0.0267) (0.0356)
----------- ------------ ------------ ------------ ------------
Voluntary capital contribution............. 0.0000 0.0000 0.0029 0.0000 0.0000
----------- ------------ ------------ ------------ ------------
Net change in net asset value.............. (0.0002) 0.0002 0.0001 (0.0002) 0.0001
----------- ------------ ------------ ------------ ------------
NET ASSET VALUE, END OF PERIOD............. $ 1.0000 $ 1.0002 $ 1.0000 $ 0.9999 $ 1.0001
----------- ------------ ------------ ------------ ------------
----------- ------------ ------------ ------------ ------------
Total return............................... 2.41%++ 5.27% 3.44% 2.70% 3.62%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s)......... $ 540,812 $ 444,928 $ 208,714 $ 181,155 $ 96,730
Ratio of expenses to average net
assets................................. 0.90%+ 0.90% 0.88% 0.86% 0.87%
Ratio of net investment income to average
net assets............................. 4.71%+ 5.13% 3.40% 2.63% 3.33%
Ratio of expenses to average net
assets*................................ 0.92%+ 0.93% (a) (a) (a)
Ratio of net investment income to average
net assets*............................ 4.70%+ 5.10% (a) (a) (a)
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
(a) There were no waivers or reimbursements during the period.
+ Annualized.
++ Unannualized.
See Notes to Financial Statements.
30
<PAGE>
EMERALD TREASURY FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS YEARS ENDED
ENDED ------------------------------------------------------
MAY 31, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1996 1995 1994 1993 1992
----------- ------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
INSTITUTIONAL SHARES:
NET ASSET VALUE, BEGINNING OF PERIOD............. $ 0.9996 $ 0.9999 $ 1.0000 $ 1.0000 $ 1.0000
----------- ------------ ------------ ------------ ------------
Income from investment operations:
Net investment income.......................... 0.0249 0.0548 0.0368 0.0291 0.0368
Net realized losses on securities.............. (0.0002) (0.0003) (0.0001) 0.0000 0.0000
----------- ------------ ------------ ------------ ------------
Total income from investment operations........ 0.0247 0.0545 0.0367 0.0291 0.0368
----------- ------------ ------------ ------------ ------------
Less dividends and distributions:
Dividends from net investment income........... (0.0249) (0.0548) (0.0368) (0.0291) (0.0368)
----------- ------------ ------------ ------------ ------------
Net change in net asset value.................... (0.0002) (0.0003) (0.0001) 0.0000 0.0000
----------- ------------ ------------ ------------ ------------
NET ASSET VALUE, END OF PERIOD................... $ 0.9994 $ 0.9996 $ 0.9999 $ 1.0000 $ 1.0000
----------- ------------ ------------ ------------ ------------
----------- ------------ ------------ ------------ ------------
Total return..................................... 2.52%++ 5.62% 3.74% 2.95% 3.75%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s)............... $ 236,090 $ 236,392 $ 283,920 $ 501,377 $ 452,170
Ratio of expenses to average net assets........ 0.40%+ 0.40% 0.39% 0.40% 0.38%
Ratio of net investment income to average net
assets....................................... 4.99%+ 5.49% 3.73% 2.91% 3.74%
Ratio of expenses to average net assets*....... 0.41%+ 0.42% (a) (a) (a)
Ratio of net investment income to average net
assets*...................................... 4.98%+ 5.46% (a) (a) (a)
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
(a) There were no waivers or reimbursements during the period.
+ Annualized.
++ Unannualized.
See Notes to Financial Statements.
31
<PAGE>
EMERALD TREASURY FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS YEARS ENDED
ENDED ------------------------------------------------------
MAY 31, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1996 1995 1994 1993 1992
----------- ------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
SERVICE SHARES:
NET ASSET VALUE, BEGINNING OF PERIOD............. $ 0.9996 $ 0.9999 $ 1.0000 $ 1.0000 $ 1.0000
----------- ------------ ------------ ------------ ------------
Income from investment operations:
Net investment income.......................... 0.0232 0.0513 0.0331 0.0256 0.0333
Net realized losses on securities.............. (0.0002) (0.0003) (0.0001) 0.0000 0.0000
----------- ------------ ------------ ------------ ------------
Total income from investment operations........ 0.0230 0.0510 0.0330 0.0256 0.0333
----------- ------------ ------------ ------------ ------------
Dividends from net investment income............. (0.0232) (0.0513) (0.0331) (0.0256) (0.0333)
----------- ------------ ------------ ------------ ------------
Net change in net asset value.................... (0.0002) (0.0003) (0.0001) 0.0000 0.0000
----------- ------------ ------------ ------------ ------------
NET ASSET VALUE, END OF PERIOD................... $ 0.9994 $ 0.9996 $ 0.9999 $ 1.0000 $ 1.0000
----------- ------------ ------------ ------------ ------------
----------- ------------ ------------ ------------ ------------
Total return..................................... 2.34%++ 5.25% 3.36% 2.59% 3.39%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s)............... $ 579,856 $ 525,609 $ 591,991 $ 403,809 $ 372,691
Ratio of expenses to average net assets........ 0.75%+ 0.75% 0.74% 0.75% 0.73%
Ratio of net investment income to average net
assets....................................... 4.63%+ 5.13% 3.38% 2.56% 3.30%
Ratio of expenses to average net assets*....... 0.76%+ 0.77% (a) (a) (a)
Ratio of net investment income to average net
assets*...................................... 4.62%+ 5.11% (a) (a) (a)
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
(a) There were no waivers or reimbursements during the period.
+ Annualized.
++ Unannualized.
See Notes to Financial Statements.
32
<PAGE>
EMERALD TREASURY FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS YEARS ENDED
ENDED ------------------------------------------------------
MAY 31, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1996 1995 1994 1993 1992
----------- ------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
RETAIL SHARES:
NET ASSET VALUE, BEGINNING OF PERIOD............. $ 0.9996 $ 0.9999 $ 1.0000 $ 1.0000 $ 1.0000
----------- ------------ ------------ ------------ ------------
Income from investment operations:
Net investment income.......................... 0.0224 0.0498 0.0316 0.0241 0.0318
Net realized losses on securities.............. (0.0002) (0.0003) (0.0001) 0.0000 0.0000
----------- ------------ ------------ ------------ ------------
Total income from investment operations........ 0.0222 0.0495 0.0315 0.0241 0.0318
----------- ------------ ------------ ------------ ------------
Dividends from net investment income............. (0.0224) (0.0498) (0.0316) (0.0241) (0.0318)
----------- ------------ ------------ ------------ ------------
Net change in net asset value.................... (0.0002) (0.0003) (0.0001) 0.0000 0.0000
----------- ------------ ------------ ------------ ------------
NET ASSET VALUE, END OF PERIOD................... $ 0.9994 $ 0.9996 $ 0.9999 $ 1.0000 $ 1.0000
----------- ------------ ------------ ------------ ------------
----------- ------------ ------------ ------------ ------------
Total return..................................... 2.26%++ 5.10% 3.21% 2.44% 3.23%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s)............... $ 45,620 $ 49,047 $ 32,444 $ 21,362 $ 3,762
Ratio of expenses to average net assets........ 0.90%+ 0.90% 0.90% 0.90% 0.88%
Ratio of net investment income to average net
assets....................................... 4.49%+ 4.98% 3.13% 2.42% 3.12%
Ratio of expenses to average net assets*....... 0.96%+ 1.04% 1.00% (a) (a)
Ratio of net investment income to average net
assets*...................................... 4.43%+ 4.84% 3.03% (a) (a)
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
(a) There were no waivers or reimbursements during the period.
+ Annualized.
++ Unannualized.
See Notes to Financial Statements.
33
<PAGE>
EMERALD TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS YEARS ENDED
ENDED ------------------------------------------------------
MAY 31, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1996 1995 1994 1993 1992**
----------- ------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
INSTITUTIONAL SHARES
NET ASSET VALUE, BEGINNING OF PERIOD............. $ 0.9996 $ 0.9999 $ 0.9999 $ 0.9998 $ 0.9998
----------- ------------ ------------ ------------ ------------
Income from investment operations:
Net investment income.......................... 0.0163 0.0355 0.0242 0.0214 0.0290
Net realized and unrealized gains (losses) on
securities................................... 0.0001 (0.0003) 0.0000 0.0001 0.0000
----------- ------------ ------------ ------------ ------------
Total from investment operations............... 0.0164 0.0352 0.0242 0.0215 0.0290
----------- ------------ ------------ ------------ ------------
Dividends from net investment income............. (0.0163) (0.0355) (0.0242) (0.0214) (0.0290)
----------- ------------ ------------ ------------ ------------
Net change in net asset value.................... 0.0001 (0.0003) 0.0000 0.0001 0.0000
----------- ------------ ------------ ------------ ------------
NET ASSET VALUE, END OF PERIOD................... $ 0.9997 $ 0.9996 $ 0.9999 $ 0.9999 $ 0.9998
----------- ------------ ------------ ------------ ------------
----------- ------------ ------------ ------------ ------------
Total return..................................... 1.64%++ 3.61% 2.45% 2.16% 2.94%
Ratios/supplemental data:
Net assets, end of period (000s)............... $ 133,586 $ 156,353 $ 162,856 $ 147,525 $ 158,692
Ratio of expenses to average net assets........ 0.38%+ 0.40% 0.40% 0.40% 0.40%
Ratio of net investment income to average net
assets....................................... 3.25%+ 3.53% 2.42% 2.13% 2.88%
Ratio of expenses to average net assets*....... 0.48%+ 0.52% 0.46% 0.56% 0.57%
Ratio of net investment income to average net
assets*...................................... 3.15%+ 3.41% 2.36% 1.97% 2.71%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
** Effective April 22, 1992, Rodney Square Management Corporation, a subsidiary
of Wilmington Trust Company, became the Fund's investment Sub-Adviser.
+ Annualized.
++ Unannualized.
See Notes to Financial Statements.
34
<PAGE>
EMERALD TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS YEARS ENDED
ENDED ------------------------------------------------------
MAY 31, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1996 1995 1994 1993 1992**
----------- ------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
SERVICE SHARES:
NET ASSET VALUE, BEGINNING OF PERIOD............. $ 0.9996 $ 0.9999 $ 0.9999 $ 0.9998 $ 0.9998
----------- ------------ ------------ ------------ ------------
Income from investment operations:
Net investment income.......................... 0.0145 0.0319 0.0206 0.0179 0.0255
Net realized and unrealized gains (losses) on
securities................................... 0.0001 (0.0003) 0.0000 0.0001 0.0000
----------- ------------ ------------ ------------ ------------
Total income from investment operations........ 0.0146 0.0316 0.0206 0.0180 0.0255
----------- ------------ ------------ ------------ ------------
Dividends from net investment income............. (0.0145) (0.0319) (0.0206) (0.0179) (0.0255)
----------- ------------ ------------ ------------ ------------
Net change in net asset value.................... 0.0001 (0.0003) 0.0000 0.0001 0.0000
----------- ------------ ------------ ------------ ------------
NET ASSET VALUE, END OF PERIOD................... $ 0.9997 $ 0.9996 $ 0.9999 $ 0.9999 $ 0.9998
----------- ------------ ------------ ------------ ------------
----------- ------------ ------------ ------------ ------------
Total return..................................... 1.46%++ 3.24% 2.08% 1.80% 2.58%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s)............... $ 2,877 $ 2,855 $ 4,028 $ 487 $ 111
Ratio of expenses to average net assets........ 0.75%+ 0.75% 0.75% 0.75% 0.75%
Ratio of net investment income to average net
assets....................................... 2.90%+ 3.19% 2.17% 1.75% 2.65%
Ratio of expenses to average net assets*....... 0.85%+ 1.20% 1.59% 0.92% 0.92%
Ratio of net investment income to average net
assets*...................................... 2.80%+ 2.74% 1.33% 1.58% 2.48%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
** Effective April 22, 1992, Rodney Square Management Corporation, a subsidiary
of Wilmington Trust Company, became the Fund's investment Sub-Adviser.
+ Annualized.
++ Unannualized.
See Notes to Financial Statements.
35
<PAGE>
EMERALD TAX-EXEMPT FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS YEARS ENDED
ENDED ------------------------------------------------------
MAY 31, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
1996 1995 1994 1993 1992**
----------- ------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
RETAIL SHARES:
NET ASSET VALUE, BEGINNING OF PERIOD............. $ 0.9996 $ 0.9999 $ 0.9999 $ 0.9998 $ 0.9998
----------- ------------ ------------ ------------ ------------
Income from investment operations:
Net investment income.......................... 0.0138 0.0305 0.0192 0.0164 0.0240
Net realized and unrealized gains (losses) on
securities................................... 0.0001 (0.0003) 0.0000 0.0001 0.0000
----------- ------------ ------------ ------------ ------------
Total income from investment operations........ 0.0139 0.0302 0.0192 0.0165 0.0240
----------- ------------ ------------ ------------ ------------
Dividends from net investment income............. (0.0138) (0.0305) (0.0192) (0.0164) (0.0240)
----------- ------------ ------------ ------------ ------------
Net change in net asset value.................... 0.0001 (0.0003) 0.0000 0.0001 0.0000
----------- ------------ ------------ ------------ ------------
NET ASSET VALUE, END OF PERIOD................... $ 0.9997 $ 0.9996 $ 0.9999 $ 0.9999 $ 0.9998
----------- ------------ ------------ ------------ ------------
----------- ------------ ------------ ------------ ------------
Total return..................................... 1.38%++ 3.09% 1.94% 1.65% 2.43%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s)............... $ 43,457 $ 38,243 $ 38,123 $ 45,609 $ 16,477
Ratio of expenses to average net assets........ 0.90%+ 0.90% 0.90% 0.90% 0.90%
Ratio of net investment income to average net
assets....................................... 2.72%+ 3.04% 1.90% 1.62% 2.21%
Ratio of expenses to average net assets*....... 1.00%+ 1.15% 1.02% 1.06% 1.07%
Ratio of net investment income to average net
assets*...................................... 2.62%+ 2.79% 1.78% 1.46% 2.04%
</TABLE>
- ---------------
* During the period, certain fees were voluntarily reduced and/or reimbursed.
If such voluntary fee reductions and/or reimbursements had not occurred, the
ratios would have been as indicated.
** Effective April 22, 1992, Rodney Square Management Corporation, a subsidiary
of Wilmington Trust Company, became the Fund's investment Sub-Adviser.
+ Annualized.
++ Unannualized.
See Notes to Financial Statements.
36
<PAGE>
EMERALD FUNDS
- --------------------------------------------------------------------------------
Results of Special Shareholder Meeting (Unaudited)
- --------------------------------------------------------------------------------
On May 29, 1996, a special meeting of the shareholders of Emerald Funds was
held to consider the election of six Trustees and the ratification of the
selection of Price Waterhouse LLP as independent accountant for each Fund of
Emerald Funds.
ELECTION OF TRUSTEES--The shareholders of Emerald Funds were requested to
vote for the election of the following individuals to serve as Trustees of
Emerald Funds. The shareholders of Emerald Funds approved each nominee. The
results of such solicitation are as follows:
<TABLE>
<CAPTION>
NOMINEE IN FAVOR OPPOSED ABSTAIN
- ------------------------ --------------- --------- ------------
<S> <C> <C> <C>
Chesterfield H. Smith 3,183,864,467 451,748 21,214,851
Albert D. Ernest 3,183,942,639 373,575 21,214,851
Raynor E. Bowditch 3,183,907,618 408,597 21,214,851
John G. Grimsley 3,183,932,453 383,761 21,214,851
Mary Doyle 3,183,935,679 380,535 21,214,851
Harvey R. Holding 3,183,898,180 418,034 21,214,851
</TABLE>
RATIFICATION OF INDEPENDENT AUDITORS--The shareholders of Emerald Funds
ratified the appointment of Price Waterhouse LLP as independent accountant for
Emerald Funds for the fiscal year ending November 30, 1996 as follows:
<TABLE>
<CAPTION>
IN FAVOR OPPOSED ABSTAIN
--------------- ------------ ------------
<S> <C> <C> <C>
3,179,623,280 12,798,546 13,077,645
</TABLE>
37
<PAGE>
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<PAGE>
EMMMSAN96
