<PAGE>
EMERALD FUNDS SEMI-ANNUAL REPORT
EMERALD
INSTITUTIONAL MONEY
MARKET FUNDS
PRIME ADVANTAGE INSTITUTIONAL FUND - TREASURY ADVANTAGE INSTITUTIONAL FUND
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May 31, 1997
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[LOGO]
<PAGE>
EMERALD
INSTITUTIONAL MONEY
MARKET FUNDS
Prime Advantage Institutional Fund
Treasury Advantage Institutional Fund
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.
THE EMERALD FUNDS ARE NOT INSURED OR PROTECTED BY THE FDIC OR ANY OTHER
GOVERNMENT AGENCY, ARE NOT DEPOSITS OR OBLIGATIONS OF BARNETT BANK, ARE NOT
GUARANTEED BY THE BANK AND INVOLVE INVESTMENT RISK, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL.
Investments in the Prime Advantage and Treasury Advantage 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., under a sub-advisory agreement with Barnett
Bank N.A., serves as investment adviser 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 prospectus carefully before investing.
7/97
<PAGE>
BARNETT CAPITAL ADVISORS'
ECONOMIC OUTLOOK AND MARKET REVIEW
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THE ECONOMY: SURPRISING STRENGTH
The economy has been surprisingly strong in recent months, with Gross Domestic
Product (GDP) growing at an annual rate of 3.8% in the fourth quarter of 1996
and then accelerating further to 5.8% in the first quarter of 1997. Although the
economy slowed in the second quarter of 1997, the expansion, now in its seventh
year, continues.
Even though this economic expansion has shown surprising resiliency, it is
shorter thus far than the one immediately preceding it. The expansion
immediately before this one took place in the 1980s and lasted nearly eight
years.
In addition, the 1980s' expansion was nearly twice as strong as the current one
to date. In constant dollar terms, the total economic growth of that expansion,
which began in late 1982, was 34%. In contrast, the total growth thus far in
this expansion is 17%.* In terms of cumulative growth, the current expansion may
continue to grow for quite a while.
INFLATION: ACTUALLY FALLING DESPITE LOW UNEMPLOYMENT
Typically, as economic expansions persist, inflation pressures build. So far,
there has been no evidence of inflation in this expansion. In fact, for the 12
months ended May 31, 1997, the rate of inflation as measured by the Consumer
Price Index of 2.2% was actually less than the average rate of inflation thus
far in the expansion. Yet unemployment, around 5.0% at present, is nearly the
lowest it has been since 1973.
Why is inflation so low despite low unemployment? Lower rates of unemployment
are compatible with low inflation if workers are more productive. To be sure,
some of the strongest economic sectors, such as technology, have been those
where price pressures have been absent. Productivity also explains why corporate
profits continue to advance at a rate much faster than overall economic growth.
In fact, rather than viewing growth as a cause of higher inflation, the current
environment may be thought of as one where lower inflation helps stimulate
growth.
INTEREST RATES: A DECLINE BODES WELL FOR BONDS
Beginning December 1, 1996 the yield on the benchmark 30-year U.S. Treasury bond
rose from 6.35% to 7.20% in mid-April, easing to 6.90% by May 31. On March 25,
1997, the Federal Reserve Board raised short-term rates from 5.25% to 5.50%.
Although investors were wary of another Fed rate hike in May, it did not
materialize. At the time of the latter Fed decision, economic growth showed
signs of moderating, and inflation remained dormant.
One reason that long-term rates have stayed relatively high and the bond market
hasn't performed well is because of the traditional thinking that if the economy
is doing well, then inflation must be around the corner. This argument has been
made for quite some time, but it hasn't come to fruition.
Our outlook is fairly positive for long-term interest rates and the bond market.
First, we expect that economic growth will be slower than what we've seen in the
past few quarters. Second, we believe that inflation will remain in the 2.5% to
3% range. We see no inflation in the pipeline at the producer price level or
even at the raw materials level. As a result, we expect long-term interest rates
to decline between now and the end of 1997.
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*Source: Federal Reserve Board of St. Louis
<PAGE>
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FEDERAL BUDGET DEFICIT SHRINKS
The third reason that we see interest rates declining is the shrinking budget
deficit. For the fiscal year ending September 30, 1997, the budget deficit is
expected to be about $70 billion. It wasn't long ago that we were faced with
$300 billion deficits. As a percentage of GDP, the budget deficit is now below
1%. One of the byproducts of this prolonged economic expansion is increased tax
revenue as well as lower spending and financing requirements.
THE STOCK MARKET: RECORDS CONTINUE TO FALL
After suffering a 10 percent pullback in late March/early April, the stock
market bounced back quickly to reach record territory by the end of May. The
reasons for the rebound: a slowing economy, falling long-term interest rates,
dormant inflation and the Fed's decision not to raise short-term interest rates
a second time.
BIG COMPANIES CONTINUE TO LEAD
Since 1994, large-capitalization stocks have outperformed small and midcap
stocks. The largest 25 companies in the Standard & Poors 500 Index continue to
trade at a 20% premium to the market average. A number of factors have benefited
these large multinational companies. First, tremendous inflows into the stock
market have favored the most liquid stocks. Second, these large multinational
companies have been able to maintain strong profit growth rates because of their
success at slashing costs.
From this point forward, however, the larger companies are forecasted to have
slower profit growth. At some point, investors will turn to smaller companies to
achieve double-digit profit growth.
A CAUTIOUS APPROACH
Over the short term, we have concerns about the stock market. In terms of
valuation measures such as price-to-earnings, price-to-book value and dividend
yield, the stock market is in record territory. Corporate profit growth is
decelerating. Given these factors, we should be prepared for more volatility.
2
<PAGE>
INTERVIEW (as of May 31, 1997)
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EMERALD PRIME ADVANTAGE INSTITUTIONAL AND TREASURY ADVANTAGE INSTITUTIONAL
FUNDS*
Jacqueline R. Lunsford,
INVESTMENT MANAGER
19 years of
investment experience
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 ADVANTAGE INSTITUTIONAL FUND
A broad range of U.S. Government, bank and corporate short-term money-market
obligations.
TREASURY ADVANTAGE INSTITUTIONAL 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.
WHAT FACTORS AFFECTED THE PERFORMANCE OF THE MONEY MARKET FUNDS?
Mixed economic indicators and the uncertainty of when and if the Federal Reserve
Board would push interest rates higher kept short-term rates fairly stable
during much of the period. When the Fed raised rates 0.25% on March 25, 1997,
investors initially believed that the move would be just one of several. Since
the average maturities of the Funds were fairly short at the end of March, they
were able to extend their maturities and quickly take advantage of the rate
increase. The Fed chose not to increase rates a second time at its May meeting,
and it is now felt that they will take no further action over the summer months.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
EMERALD PRIME EMERALD TREASURY
INSTITUTIONAL INSTITUTIONAL
ADVANTAGE FUND ADVANTAGE FUND
<S> <C> <C>
QUARTER ENDING
6/30/97 1.38% 1.31%
6 MONTH PERIOD ENDING
5/31/97 2.72% 2.61%
12 MONTH PERIOD ENDING
11/30/96 5.29% 5.13%
11/30/95 5.76% 5.65%
11/30/94 3.83% 3.73%
11/30/93 3.31% 2.96%
11/30/92 4.00% 3.73%
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS. THE INVESTMENT RETURN AND
NAV WILL FLUCTUATE, SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH
MORE OR LESS THAN THE ORIGINAL COST.
- ---------------
* Investments in the Emerald Prime Advantage Institutional and Treasury
Advantage Institutional 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.
3
<PAGE>
EMERALD PRIME ADVANTAGE INSTITUTIONAL AND TREASURY ADVANTAGE INSTITUTIONAL FUNDS
(as of May 31, 1997)
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WHAT FACTORS COULD AFFECT THE FUNDS IN THE MONTHS AHEAD?
The main factor affecting the Funds, of course, will be the direction of
interest rates. Currently, the continuing strength of the economy has not
precipitated a commensurate increase in inflation, and the Fed seems inclined to
just watch the situation for now. Any indications of inflation pressures would
most likely cause the Fed to push rates higher later in the year. Our strategy
will continue to keep maturities shorter than average, since yields on longer
maturities are not significantly higher -- and in some cases are actually lower
- -- than yields on shorter maturity securities.
Persistently large cash balances held by money market managers industry-wide,
combined with low issuance, continues to contribute to the low interest-rate
environment. This is especially true in the Treasury market, where a decrease in
the government's Treasury bill issuance has caused those rates to decline
sharply over the past few months. In the absence of Fed action, it is likely
that rates paid on short-term instruments will actually decline rather than
remain stable due to these supply/demand factors.
<TABLE>
<CAPTION>
SEC 7-DAY YIELDS AS OF MAY 31, 1997
<S> <C>
Prime Advantage Institutional Fund 5.51%
Treasury Advantage Institutional Fund 5.21%
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RESULTS.
During the periods indicated, fee waivers and/or reimbursements were in effect.
Without these waivers and/or reimbursements, performance would have been lower.
Had these waivers or reimbursements not been in effect, the SEC 7-day yield
would have been 5.47% for the Prime Advantage Institutional Fund and 5.16% for
the Treasury Advantage Institutional Fund.
4
<PAGE>
EMERALD PRIME ADVANTAGE INSTITUTIONAL FUND
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Portfolio of Investments
May 31, 1997 (Unaudited)
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<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
MOODY'S/S&P MATURITY AMOUNT COST
RATINGS RATE DATE (000) (NOTE 2)
--------------- --------- --------- ---------- -------------
<S> <C> <C> <C> <C> <C>
BANK NOTES -- 3.5%
DOMESTIC -- 3.5%
MBNA America Bank -- Variable Rate Bank Note
(amortized cost $5,000,000).................... P-1/F-1+** 5.68% 6/13/97 $5,000,000 $ 5,000,000
-------------
CERTIFICATES OF DEPOSIT -- DOMESTIC -- 10.4%
Old Kent Bank, Grand Rapids...................... P-1/A-1 5.60 6/3/97 5,000,000 5,000,000
South Trust Bank Variable Rate*.................. P-1/A-1 5.65 6/2/97 5,000,000 4,999,124
Union Bank of California......................... P-1/A-1 5.55 7/16/97 5,000,000 5,000,000
-------------
TOTAL CERTIFICATES OF DEPOSIT -- DOMESTIC
(AMORTIZED COST $14,999,124)..................... 14,999,124
-------------
CERTIFICATES OF DEPOSIT --
YANKEE -- 10.4%
Abbey National Treasury plc, New York Branch*.... P-1/A-1+ 5.65 6/2/97 5,000,000 4,997,892
Canadian Imperial Bank of Commerce, New York
Branch......................................... P-1/A-1+ 5.61 6/23/97 5,000,000 4,999,911
National Bank of Canada, New York Branch......... P-1/A-1 5.48 6/12/97 5,000,000 4,999,999
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TOTAL CERTIFICATES OF DEPOSIT -- YANKEE
(AMORTIZED COST $14,997,802)..................... 14,997,802
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COMMERCIAL PAPER -- 44.0%
DOMESTIC -- 30.2%
American Honda Finance Corp...................... P-1/F-1** 5.60 6/16/97 4,100,000 4,090,433
Banker's Trust Company........................... P-1/A-1+ 5.43 10/6/97 5,000,000 4,904,221
C.S. First Boston Corp........................... P-1/A-1+ 5.62 7/9/97 5,000,000 4,970,339
Chrysler Financial Corp.......................... D-1**/A-1 5.72 7/22/97 5,000,000 4,959,483
Countrywide Funding Corp......................... F-1**/A-1 5.57 7/17/97 5,000,000 4,964,414
Daewoo International (America) Corp. (LC Credit
Suisse Bank)................................... P-1/A-1+ 5.60 6/19/97 5,000,000 4,986,000
Mitsubishi Motors Credit of America, Inc. (LC
Bank of Tokyo Mitsubishi Bank, Ltd.)........... P-1/A-1 5.60 6/10/97 5,000,000 4,993,000
Morgan Stanley................................... P-1/A-1+ 5.58 6/10/97 5,000,000 4,993,026
Sanwa Business Credit, Inc....................... P-1/D-1** 5.60 6/30/97 5,000,000 4,977,444
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43,838,360
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FOREIGN -- 13.8%
Akzo Nobel NV.................................... P-1/A-1 5.64 7/24/97 5,000,000 4,958,483
Minolta Corp..................................... P-1/A-1 5.62 6/24/97 5,000,000 4,982,047
Nacional Financiera SNC (LC Societe Generale
Bank).......................................... P-1/A-1+ 5.71 7/22/97 5,000,000 4,959,554
Pearson, Inc..................................... P-1/A-1 5.58 7/2/97 5,000,000 4,975,975
-------------
19,876,059
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TOTAL COMMERCIAL PAPER (AMORTIZED COST
$63,714,419)..................................... 63,714,419
-------------
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
MOODY'S/S&P MATURITY AMOUNT COST
RATINGS RATE DATE (000) (NOTE 2)
--------------- --------- --------- ---------- -------------
<S> <C> <C> <C> <C> <C>
CORPORATE OBLIGATIONS -- 21.1%
Dean Witter Discover -- Variable Rate Medium Term
Note*.......................................... P-1/A-1 5.79% 6/18/97 $5,000,000 $ 5,004,364
Goldman Sachs & Co., Variable Rate Promissory
Note*.......................................... P-1/A-1+ 5.69 6/9/97 5,000,000 5,000,000
Merrill Lynch & Co., -- Variable Rate Medium Term
Note*.......................................... P-1/A-1+ 5.65 6/16/97 5,000,000 5,000,000
Sigma Finance, Inc., -- Medium Term Note (b)..... P-1/A-1+ 5.80 3/3/98 5,000,000 5,000,000
Toyota Motor Credit Corp., Medium Term Note...... P-1/A-1+ 13.64 3/9/98 5,200,000 5,492,642
U.S. Leasing Capital Corp., Variable Rate Medium
Term Note*..................................... P-1/A-1 5.91 7/7/97 5,000,000 5,005,262
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TOTAL CORPORATE OBLIGATIONS (AMORTIZED COST
$30,502,268)..................................... 30,502,268
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MASTER NOTES -- 3.5%
Lehman Brothers plc, Master Note (amortized cost
$5,000,000).................................... D-1**/A-1 5.77 6/6/97 5,000,000 5,000,000
-------------
REPURCHASE AGREEMENTS -- 7.1%
Fuji Securities, Inc., dated 5/30/97, with a
maturity value of $10,318,481 (collateralized
by $10,575,000 U.S. Treasury Notes and Bills,
0.00% -- 6.75%, 11/6/97 -- 2/15/07, market
value -- $10,520,792) (amortized cost
$10,313,651)................................... 5.62 6/2/97 10,313,651 10,313,651
-------------
TOTAL INVESTMENTS (AMORTIZED COST
$144,527,264)(a) -- 100.0%..................... 144,527,264
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.0%).... (69,193)
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TOTAL NET ASSETS -- 100.0%......................... $ 144,458,071
-------------
-------------
</TABLE>
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Percentages indicated are based on net assets of $144,458,071.
(a) Cost for federal income tax and financial reporting purposes are the same.
(b) 144a security which is restricted as to resale to institutional investors.
* Variable rate security. Rate presented represents rate in effect at May 31,
1997. Maturity date reflects the next rate change date.
** Duff Phelps or Fitch Investors ratings.
LC - Letter of Credit.
plc - Public Limited Company.
See Notes to Financial Statements.
6
<PAGE>
EMERALD TREASURY ADVANTAGE INSTITUTIONAL FUND
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Portfolio of Investments
May 31, 1997 (Unaudited)
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<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
MOODY'S/S&P MATURITY AMOUNT COST
RATINGS RATE DATE (000) (NOTE 2)
--------------- --------- --------- ------------ -------------
<S> <C> <C> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS -- 56.1%
U.S. TREASURY BILLS -- 3.4%
U.S. Treasury Bill............................... Aaa/AAA* NA 10/16/97 $ 6,000,000 $ 5,882,637
-------------
U.S. TREASURY NOTES -- 52.7%
U.S. Treasury Note**............................. Aaa/AAA* 6.75% 5/31/97 10,000,000 10,000,353
U.S. Treasury Note**............................. Aaa/AAA* 6.13 5/31/97 20,000,000 20,000,392
U.S. Treasury Note............................... Aaa/AAA* 5.63 6/30/97 10,000,000 10,002,977
U.S. Treasury Note............................... Aaa/AAA* 5.88 7/31/97 10,000,000 10,007,994
U.S. Treasury Note............................... Aaa/AAA* 6.50 8/15/97 5,000,000 5,009,478
U.S. Treasury Note***............................ Aaa/AAA* 6.00 8/31/97 20,000,000 20,020,123
U.S. Treasury Note............................... Aaa/AAA* 5.75 9/30/97 5,000,000 5,003,292
U.S. Treasury Note............................... Aaa/AAA* 5.38 11/30/97 10,000,000 9,984,995
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90,029,604
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TOTAL U.S. GOVERNMENT OBLIGATIONS (AMORTIZED COST
$95,912,241)..................................... 95,912,241
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REPURCHASE AGREEMENTS -- 43.1%
Prudential Bache, dated 5/30/97 with a maturity
value of $40,018,533 (collateralized by
$46,530,195 Government National Mortgage
Association, 6.00% -- 10.00%, 1/1/00 --
5/20/97, market value -- $40,800,202).......... 5.56 6/2/97 40,000,000 40,000,000
Smith Barney, dated 5/30/97 with a maturity value
of $33,766,121 (collateralized by $34,933,000
U.S. Treasury Bill, 9/11/97, market value --
$34,425,878).................................. 5.55 6/2/97 33,750,511 33,750,511
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TOTAL REPURCHASE AGREEMENTS (AMORTIZED COST
$73,750,511)..................................... 73,750,511
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TOTAL INVESTMENTS (AMORTIZED COST
$169,662,752) (a) -- 99.2%....................... 169,662,752
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.8%...... 1,322,319
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TOTAL NET ASSETS -- 100.0%......................... $ 170,985,071
-------------
-------------
</TABLE>
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Percentages indicated are based on net assets of $170,985,071.
(a) Cost for federal income tax and financial reporting purposes are the same.
* Implied rating.
** Security matured on a weekend. Actual cash settlement was 6/2/97.
*** Security matured on a weekend. Actual cash settlement will be 9/2/97.
NA Not applicable.
See Notes to Financial Statements.
7
<PAGE>
EMERALD INSTITUTIONAL MONEY MARKET FUNDS
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Statements of Assets and Liabilities
May 31, 1997 (Unaudited)
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<TABLE>
<CAPTION>
PRIME TREASURY
ADVANTAGE ADVANTAGE
INSTITUTIONAL INSTITUTIONAL
FUND FUND
-------------- --------------
<S> <C> <C>
ASSETS:
Investment in securities, at value (amortized cost $134,213,613 and
$95,912,241) ................................................................ $ 134,213,613 $ 95,912,241
Repurchase agreements (amortized cost $10,313,651 and $73,750,511) ............ 10,313,651 73,750,511
Interest and dividends receivable ............................................. 670,452 2,127,949
Prepaid expenses and other assets ............................................. 15,731 18,896
-------------- --------------
Total assets .................................................................... 145,213,447 171,809,597
-------------- --------------
LIABILITIES:
Dividends payable ............................................................. 713,345 776,482
Accrued expenses and other liabilities:
Investment Advisory fees .................................................... 2,779 1,623
Administration fees ......................................................... 815 945
Custodian and transfer agent fees ........................................... 14,835 22,303
Audit fees .................................................................. 8,324 5,081
Other liabilities ........................................................... 15,278 18,092
-------------- --------------
Total liabilities ............................................................... 755,376 824,526
-------------- --------------
NET ASSETS ...................................................................... $ 144,458,071 $ 170,985,071
-------------- --------------
-------------- --------------
Shares Outstanding ($0.001 par value, unlimited number of shares authorized): ... 144,467,785 171,069,248
-------------- --------------
-------------- --------------
Net Asset Value, Offering Price and Redemption Price per share: ................. $ 1.00 $ 1.00
-------------- --------------
-------------- --------------
COMPOSITION OF NET ASSETS:
Shares of beneficial interest, at par ......................................... $ 144,468 $ 171,069
Additional paid-in capital .................................................... 144,323,318 170,887,913
Accumulated net realized losses on investment transactions .................... (9,715) (73,911)
-------------- --------------
Net Assets, May 31, 1997 ........................................................ $ 144,458,071 $ 170,985,071
-------------- --------------
-------------- --------------
</TABLE>
- ------------
See Notes to Financial Statements.
8
<PAGE>
EMERALD INSTITUTIONAL MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
Statements of Operations
For the six months ended May 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRIME TREASURY
ADVANTAGE ADVANTAGE
INSTITUTIONAL INSTITUTIONAL
FUND FUND
------------ ------------
<S> <C> <C>
INVESTMENT INCOME:
Interest ............................................................................. $ 3,774,579 $ 4,702,027
------------ ------------
EXPENSES:
Advisory fees....................................................................... 67,491 87,455
Administration fees................................................................. 33,747 43,729
Transfer agent fees and expenses.................................................... 9,603 11,362
Custodian fees and expenses......................................................... 11,494 15,122
Legal fees.......................................................................... 8,201 10,776
Audit fees.......................................................................... 2,432 3,183
Reports to shareholders............................................................. 18,499 22,888
Registration fees................................................................... 132 1,602
Trustees' fees...................................................................... 3,391 3,936
Insurance expense................................................................... 1,770 1,761
Other expenses...................................................................... 3,562 4,742
------------ ------------
Gross Expenses........................................................................ 160,322 206,556
Less: Expense reimbursements.......................................................... (24,572) (30,817)
Expenses paid by third parties.................................................... (677) (737)
------------ ------------
Net Expenses.......................................................................... 135,073 175,002
------------ ------------
Net Investment Income................................................................. 3,639,506 4,527,025
------------ ------------
REALIZED GAINS (LOSSES) ON INVESTMENTS:
Net realized gains (losses) on securities transactions.............................. 57 (29,186)
------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................................. $ 3,639,563 $ 4,497,839
------------ ------------
------------ ------------
</TABLE>
- ------------
See Notes to Financial Statements.
9
<PAGE>
EMERALD INSTITUTIONAL MONEY MARKET FUNDS
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRIME ADVANTAGE TREASURY ADVANTAGE
INSTITUTIONAL FUND INSTITUTIONAL FUND
-------------------------------- -------------------------------
SIX MONTHS SIX MONTHS
ENDED MAY 31, YEAR ENDED ENDED MAY 31, YEAR ENDED
1997 NOVEMBER 30, 1997 NOVEMBER 30,
(UNAUDITED) 1996 (UNAUDITED) 1996
--------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations
Net investment income ...................... $ 3,639,506 $ 6,632,019 $ 4,527,025 $ 7,141,837
Net realized gains (losses) on securities
transactions ............................. 57 32 (29,186) (39,042)
--------------- --------------- -------------- ---------------
Net increase in net assets resulting from
operations ............................... 3,639,563 6,632,051 4,497,839 7,102,795
--------------- --------------- -------------- ---------------
Dividends to shareholders from net investment
income ..................................... (3,639,506) (6,632,019) (4,527,025) (7,141,837)
--------------- --------------- -------------- ---------------
Fund Share Transactions
Net proceeds from shares subscribed ........ 207,086,854 393,024,147 111,068,838 288,670,400
Cost of shares redeemed .................... (195,672,444) (391,069,443) (86,913,164) (274,622,989)
--------------- --------------- -------------- ---------------
Net increase in net assets from Fund share
transactions ............................. 11,414,410 1,954,704 24,155,674 14,047,411
--------------- --------------- -------------- ---------------
Total Increase ............................... 11,414,467 1,954,736 24,126,488 14,008,369
NET ASSETS:
Beginning of period ........................ 133,043,604 131,088,868 146,858,583 132,850,214
--------------- --------------- -------------- ---------------
End of period .............................. $ 144,458,071 $ 133,043,604 $ 170,985,071 $ 146,858,583
--------------- --------------- -------------- ---------------
--------------- --------------- -------------- ---------------
</TABLE>
- ------------
See Notes to Financial Statements.
10
<PAGE>
EMERALD INSTITUTIONAL MONEY MARKET 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 Advantage
Institutional Fund and Treasury Advantage Institutional Fund (the "Funds"),
respectively. The investment objective of the Funds is to provide a high level
of current income consistent with the maintenance of liquidity, the preservation
of capital and a stable net asset value. The Prime Advantage Institutional Fund
pursues its objective by investing in a broad range of short-term government,
bank and corporate obligations. The Treasury Advantage Institutional 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.
Barnett Capital Advisors, Inc. ("Barnett"), a wholly owned subsidiary of
Barnett Banks, Inc., serves as the Funds' investment adviser. BISYS Fund
Services Limited Partnership d/b/a BISYS Fund Services, Inc. ("BISYS") serves as
the Funds' administrator. BISYS also serves as the Funds' Fund Accountant and
Transfer Agent. 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.
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 results could differ from those estimates.
A)Security Valuation:
Portfolio securities are valued 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 Funds may not (a) purchase any instrument with a remaining
maturity greater than thirteen months unless such instrument is subject to a
demand feature, 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 premium on
investments, is accrued daily.
C)Dividends and Distributions to Shareholders:
Dividends from net investment income are declared daily and are paid monthly to
shareholders. 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. Dividends and distributions are recorded by the Funds on the
ex-dividend date.
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
11
<PAGE>
- --------------------------------------------------------------------------------
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 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 either of the Funds lends its securities, the Fund receives collateral from
the borrower, in the form of cash or U.S. Treasury securities or, in the case of
the Prime Advantage Institutional 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 Advantage Institutional Fund, in an
amount at least equal at all times to the market value of the securities loaned.
The Funds continue to receive interest on the securities loaned and may
simultaneously earn interest on the collateral held. Each 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.
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, 1996, the Funds had the following capital loss carryovers:
<TABLE>
<CAPTION>
EXPIRATION
AMOUNT DATE
--------- -----------
<S> <C> <C>
Prime Advantage Institutional
Fund............................. $ 11,311 2002
2,314 2001
---------
$ 13,625
---------
---------
Treasury Advantage Institutional
Fund............................. $ 39,042 2004
</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, the Funds will reduce amounts otherwise
payable to shareholders from net realized gains.
H)Other:
The Funds maintain a cash balance with their custodian and receive a reduction
of their custody fees and expenses for the amount of interest earned on such
uninvested cash balances. For financial reporting purposes for the six months
ended May 31, 1997, custodian fees and expenses and expenses paid by third
parties were increased by $677 and $737 for the Prime Advantage Institutional
Fund and Treasury Advantage Institutional Fund, respectively. There was no
effect on net investment income. The Funds
12
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could have invested such cash amounts in an income-producing asset if they had
not agreed to a reduction of fees or expenses under the expense offset
arrangement with their custodian.
NOTE 3 -- AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into an Investment Advisory Agreement with Barnett, an
Administration Agreement and Transfer Agent Agreement with BISYS and a
Distribution Agreement with the Distributor. BISYS' fees for serving as Fund
Accountant to the Funds are included as part of the Administration fee. The
Funds pay BISYS' out-of-pocket accounting expenses.
The Trust has agreed to pay Barnett a fee at an annual rate of 0.15% of the
average daily net assets of each of the Funds. Such fees are accrued daily and
paid monthly. Barnett is responsible for all purchases and sales of each Fund's
portfolio securities, subject to the general supervision of the Board of
Trustees. As Administrator, BISYS assists in supervising the operations of the
Funds. For its services, BISYS is entitled to receive a fee at an 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. Such fees are accrued daily and paid monthly. The
Distributor does not receive a fee under the Distribution Agreement.
For its services as Transfer Agent, BISYS received fees in the amounts of
$9,603 and $11,362 respectively, for the Prime Advantage Institutional Fund and
the Treasury Advantage Institutional Fund for the six months ended May 31, 1997.
Barnett has voluntarily agreed to reimburse Fund expenses with respect to
each Fund to the extent a Fund's ordinary operating expenses exceed 0.20% of
such Fund's average daily net assets. This voluntary reimbursement may be
terminated at any time by Barnett. As a result of such expense limitations,
Barnett agreed to reimburse $24,572 and $30,817 to the Prime Advantage
Institutional Fund and Treasury Advantage Institutional Fund, respectively, for
the six months ended May 31, 1997.
Certain officers of the Trust are "affiliated persons" (as defined in the
1940 Act) of BISYS or the Distributor. Effective March 1, 1997 each Trustee is
entitled to recieve an annual fee of $15,000 plus $2,000 for each regular or
special meeting attended for services relating to all the portfolios of the
Trust. Prior to March 1, 1997, each Trustee was entitled to receive an annual
fee of $14,000 plus a meeting fee of $1,500 per meeting. For the six months
ended May 31, 1997, the Prime Advantage Institutional Fund and Treasury
Advantage Institutional Fund incurred legal fees of $8,201 and $10,776,
respectively, earned by a law firm, a partner of which serves as Secretary to
the Trust:
NOTE 4 -- CAPITAL SHARE TRANSACTIONS
Because each Fund has maintained a $1.00 net asset value per share from
inception, the number of shares sold, shares issued to shareholders in
reinvestment of dividends and distributions, and shares redeemed are equal to
the dollar amounts shown in the Statements of Changes in Net Assets for the
corresponding capital share transactions.
13
<PAGE>
EMERALD PRIME ADVANTAGE INSTITUTIONAL FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEARS ENDED
MAY 31, ---------------------------------------------------------
1997 NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
(UNAUDITED)* 1996 1995 1994 1993
----------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD.......................................... $ 0.9999 $ 0.9999 $ 0.9999 $ 1.0000 $ 1.0017
----------- ------------ ------------ ------------ ------------
Income from investment operations:
Net investment income........................... 0.0269 0.0516 0.0561 0.0377 0.0304
Net realized gains (losses) on securities....... -- -- -- (0.0038) 0.0005***
----------- ------------ ------------ ------------ ------------
Total income from investment operations......... 0.0269 0.0516 0.0561 0.0339 0.0309
----------- ------------ ------------ ------------ ------------
Less dividends and distributions:
Dividends from net investment income............ (0.0269) (0.0516) (0.0561) (0.0377) (0.0304)
Distributions from net realized gains on
securities.................................... -- -- -- -- (0.0022)
----------- ------------ ------------ ------------ ------------
Total dividends and distributions............... (0.0269) (0.0516) (0.0561) (0.0377) (0.0326)
----------- ------------ ------------ ------------ ------------
Increase due to voluntary capital contribution
from Sub-Adviser................................ -- -- -- 0.0037 --
----------- ------------ ------------ ------------ ------------
Net change in net asset value..................... -- -- -- (0.0001) (0.0017)
----------- ------------ ------------ ------------ ------------
NET ASSET VALUE, END OF PERIOD.................... $ 0.9999 $ 0.9999 $ 0.9999 $ 0.9999 $ 1.0000
----------- ------------ ------------ ------------ ------------
----------- ------------ ------------ ------------ ------------
Total return...................................... 2.72%++ 5.29% 5.76% 3.83% 3.31%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s)................ $144,458 $133,044 $131,089 $131,758 $111,769
Ratio of expenses to average
net assets.................................... 0.20%+ 0.35% 0.40% 0.40% 0.40%
Ratio of net investment income to average net
assets........................................ 5.38%+ 5.16% 5.60% 3.80% 3.03%
Ratio of expenses to average net assets**....... 0.22%+ 0.35% 0.46% 0.44% 0.44%
Ratio of net investment income to average net
assets**...................................... 5.36%+ 5.16% 5.54% 3.76% 3.00%
</TABLE>
- ---------------
* Effective December 1, 1996, Rodney Square Management Corporation no longer
serves as Sub-Adviser to the Fund.
** 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. During the period, the Fund received
credits from its custodian for interest earned on uninvested cash balances
which were used to offset custodian fees and expenses. The ratios were not
affected.
*** Net realized gain per share is the direct result of a decrease in
outstanding shares between 11/30/92 and the date of the gain distribution.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
14
<PAGE>
EMERALD TREASURY ADVANTAGE INSTITUTIONAL FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEARS ENDED
MAY 31, ------------------------------------------------------
1997 NOVEMBER 30, NOVEMBER 30, NOVEMBER 30, NOVEMBER 30,
(UNAUDITED)* 1996 1995 1994 1993
----------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD..................................... $ 0.9996 $ 1.0000 $ 1.0015 $ 0.9999 $ 0.9999
----------- ------------ ------------ ------------ ------------
Income from investment operations:
Net investment income...................... 0.0258 0.0501 0.0551 0.0367 0.0292
Net realized gains (losses) on
securities............................... (0.0001) (0.0004) (0.0006) 0.0016 --
----------- ------------ ------------ ------------ ------------
Total income from investment operations.... 0.0257 0.0497 0.0545 0.0383 0.0292
----------- ------------ ------------ ------------ ------------
Less dividends and distributions:
Dividends from net investment income....... (0.0258) (0.0501) (0.0551) (0.0367) (0.0292)
Distributions from net realized gains on
securities............................... -- -- (0.0009) -- --
----------- ------------ ------------ ------------ ------------
Total dividends and distributions.......... (0.0258) (0.0501) (0.0560) (0.0367) (0.0292)
----------- ------------ ------------ ------------ ------------
Net change in net asset value................ (0.0001) (0.0004) (0.0015) 0.0016 --
----------- ------------ ------------ ------------ ------------
NET ASSET VALUE, END OF PERIOD............... $ 0.9995 $ 0.9996 $ 1.0000 $ 1.0015 $ 0.9999
----------- ------------ ------------ ------------ ------------
----------- ------------ ------------ ------------ ------------
Total return................................. 2.61%++ 5.13% 5.74% 3.73% 2.96%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000s)........... $ 170,985 $ 146,859 $ 132,850 $ 126,771 $ 166,410
Ratio of expenses to average net assets.... 0.20%+ 0.37% 0.40% 0.40% 0.40%
Ratio of net investment income to average
net assets............................... 5.16%+ 5.00% 5.54% 3.61% 2.92%
Ratio of expenses to average net
assets**................................. 0.22%+ 0.37% 0.45% 0.44% 0.42%
Ratio of net investment income to average
net assets**............................. 5.14%+ 5.00% 5.50% 3.57% 2.90%
</TABLE>
- ---------------
* Effective December 1, 1996, Rodney Square Management Corporation no longer
serves as Sub-Adviser to the Fund.
** 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. During the period, the Fund received
credits from its custodian for interest earned on uninvested cash balances
which were used to offset custodian fees and expenses. The ratios were not
affected.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements.
15
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END-0210
PA/TA 5/97 SEMI
