PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Report of the Biltmore U.S. Treasury
Money Market Fund (the "Fund") for the six-month period ending May 31, 1994.
These pages provide you with complete financial information--including an
investment review by the portfolio manager and a complete list of
investments--for the Fund.
The Fund puts your money to work pursuing current income through a portfolio of
U.S. Treasury money market securities.
As you will see, assets in the Fund during the six-month reached nearly $98
million. During the six-month period, the Fund paid $0.02 per share in
dividends, while maintaining a stable share value of $1.00.*
Thank you for your confidence in the Fund. We'll continue to keep you up to date
on your investment, and provide your account with the highest level of service
possible.
Sincerely,
John W. McGonigle
President
July 15, 1994
* As a money market mutual fund, the Fund is managed to pursue a stable share
price of $1.00. Although there is no guarantee that it will do so. An
investment in the Fund is neither insured nor guaranteed by the U.S.
Government.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
BILTMORE U.S. TREASURY MONEY MARKET FUND
Increased inflation concerns prompted a sharp rise in short-term interest rates
during the period between November 30, 1993 and May 31, 1994. Fixed income
investors responded to the Federal Reserve Board's tightening of rates by
adopting defensive positions through investments in money market funds. Inflows
of nearly $30 billion into money market funds during the six-month period
resulted in a weighted average portfolio maturity of 44 days among all money
funds, the lowest average since October, 1990. The rising interest rate
environment also provided investors with the highest money market fund returns
since August, 1992.
The Fund's portfolio manager adopted a defensive investment strategy during the
period. This was accomplished by increasing liquidity in expectation of the next
adjustment in rates by the Federal Reserve Board, while shortening the maturity
of the portfolio's holdings. The average maturity of the Fund was slightly
greater than the IBC/Donoghue's Money Fund Report* average at November 30, 1993.
By May 31, 1994, however, the Fund's average maturity was in line with the
IBC/Donoghue's Money Fund Report average. Average maturity targets are
established based on expectations of the U.S. economy, the Fund's investment
adviser's market rate forecast, and the average maturity of the Fund versus a
peer group. The average maturity of the Fund will always be 90 days or less. The
Fund's average maturity at May 31, 1994 was 42 days.
Fund assets increased 19% during the six-month period, from $82.3 million to
$97.6 million. Also during the six-month period ended May 31, 1994, the Fund's
seven-day net yield for Institutional Shares increased from 2.81% to 3.68% and
from 2.51% to 3.38% for Investment Shares, as compared with the IBC/Donoghue's
Money Fund Report average of 3.38%.
** This index is unmanaged.
BILTMORE U.S. TREASURY MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- --------------
U.S. GOVERNMENT OBLIGATIONS--48.7%
- -------------------------------------------------------------------------------------------------
U.S. TREASURY BILLS
---------------------------------------------------------------------------------
$48,000,000 6/2/94-3/9/95 $47,526,283
--------------------------------------------------------------------------------- --------------
*REPURCHASE AGREEMENTS--51.6%
- -------------------------------------------------------------------------------------------------
22,341,830 Barclays De Zoete Wedd, Inc., 4.20%, dated 5/31/94, due 6/1/94 22,341,830
---------------------------------------------------------------------------------
20,000,000 Daiwa Securities America, Inc., 4.23%, dated 5/31/94, due 6/1/94 20,000,000
---------------------------------------------------------------------------------
4,000,000 Kidder, Peabody & Co., Inc., 4.20%, dated 5/31/94, due 6/1/94 4,000,000
---------------------------------------------------------------------------------
4,000,000 Morgan Stanley & Co., 4.20%, dated 5/31/94, due 6/1/94 4,000,000
--------------------------------------------------------------------------------- --------------
TOTAL REPURCHASE AGREEMENTS (NOTE 2B) 50,341,830
--------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS, AT AMORTIZED COST $97,868,113+
--------------------------------------------------------------------------------- --------------
</TABLE>
+ Also represents cost for federal tax purposes.
* The repurchase agreements are fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
Note: The categories of investments are shown as a percentage of net assets
($97,589,706) at
May 31, 1994.
(See Notes which are an integral part of the Financial Statements)
BILTMORE U.S. TREASURY MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------------------------
Investments in repurchase agreements (Note 2B) $50,341,830
- ---------------------------------------------------------------------------------
Investments in other securities (Note 2A) 47,526,283
- --------------------------------------------------------------------------------- --------------
Total investments, at amortized cost and value $97,868,113
- -------------------------------------------------------------------------------------------------
Interest receivable 5,890
- -------------------------------------------------------------------------------------------------
Deferred expenses (Note 2F) 11,131
- ------------------------------------------------------------------------------------------------- --------------
Total assets 97,885,134
- -------------------------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------------------------
Dividends payable 278,804
- ---------------------------------------------------------------------------------
Accrued expenses 16,624
- --------------------------------------------------------------------------------- --------------
Total liabilities 295,428
- ------------------------------------------------------------------------------------------------- --------------
NET ASSETS for 97,589,706 shares of beneficial interest outstanding $97,589,706
- ------------------------------------------------------------------------------------------------- --------------
NET ASSET VALUE, Offering Price, and Redemption Proceeds Per Share
- -------------------------------------------------------------------------------------------------
Institutional Shares ($77,912,233 / 77,912,233 shares of beneficial interest outstanding)
$1.00
- ------------------------------------------------------------------------------------------------- --------------
Investment Shares ($19,677,473 / 19,677,473 shares of beneficial interest outstanding)
$1.00
- ------------------------------------------------------------------------------------------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements).
BILTMORE U.S. TREASURY MONEY MARKET FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------
Interest income (Note 2C) $1,483,443
- ---------------------------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------------------------
Investment advisory fee (Note 4) $220,797
- --------------------------------------------------------------------------------------
Trustees' fees 2,711
- --------------------------------------------------------------------------------------
Administrative personnel and services fees (Note 4) 47,393
- --------------------------------------------------------------------------------------
Custodian fees (Note 4) 8,832
- --------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses (Note 4) 28,784
- --------------------------------------------------------------------------------------
Fund share registration costs 22,657
- --------------------------------------------------------------------------------------
Auditing fees 8,307
- --------------------------------------------------------------------------------------
Legal fees 8,621
- --------------------------------------------------------------------------------------
Printing and postage 23,041
- --------------------------------------------------------------------------------------
Portfolio accounting fees (Note 4) 28,201
- --------------------------------------------------------------------------------------
Insurance premiums 6,984
- --------------------------------------------------------------------------------------
Distribution services fee (Note 4) 37,290
- --------------------------------------------------------------------------------------
Miscellaneous 7,365
- -------------------------------------------------------------------------------------- -----------
Total expenses 450,983
- --------------------------------------------------------------------------------------
Deduct--
- --------------------------------------------------------------------------------------
Waiver of investment advisory fee (Note 4) $198,717
- -------------------------------------------------------------------------
Waiver of administrative personnel and services fees (Note 4) 25,319
- -------------------------------------------------------------------------
Waiver of distribution services fee (Note 4) 9,323
- -------------------------------------------------------------------------
Reimbursement of other operating expenses by Administrator (Note 4) 26,278 259,637
- ------------------------------------------------------------------------- ----------- -----------
Net expenses 191,346
- --------------------------------------------------------------------------------------------------- -------------
Net investment income $1,292,097
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements).
BILTMORE U.S. TREASURY MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1994* 1993
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------------------------
Net investment income $1,292,097 $1,900,006
- ----------------------------------------------------------------------------- ---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2C)--
- -----------------------------------------------------------------------------
Dividends to shareholders from net investment income
- -----------------------------------------------------------------------------
Institutional shares (1,038,878) (1,826,489)
- -----------------------------------------------------------------------------
Investment shares (253,219) (73,517)
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets resulting from distribution to shareholders (1,292,097) (1,900,006)
- ----------------------------------------------------------------------------- ---------------- ----------------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 3)--
- -----------------------------------------------------------------------------
Net proceeds from sale of shares 179,044,884 288,944,990
- -----------------------------------------------------------------------------
Cost of shares redeemed (163,749,538) (262,058,559)
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets from Fund share transactions 15,295,346 26,886,431
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets 15,295,346 26,886,431
- -----------------------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------------------
Beginning of period 82,294,360 55,407,929
- ----------------------------------------------------------------------------- ---------------- ----------------
End of period $97,589,706 $82,294,360
- ----------------------------------------------------------------------------- ---------------- ----------------
</TABLE>
* Six months ended May 31, 1994 (unaudited).
(See Notes which are an integral part of the Financial Statements).
BILTMORE U.S. TREASURY MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1994** 1993 1992*
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00
- ------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------
Net investment income 0.02 0.03 0.02
- ------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------------------------------------------------
Dividends to shareholders from net investment income (0.02) (0.03) (0.02)
- ------------------------------------------------------------------------------ ----------- --------- ---------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00
- ------------------------------------------------------------------------------ ----------- --------- ---------
TOTAL RETURN*** 1.51% 2.91% 1.90%
- ------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------------------------
Expenses 0.37%(a) 0.28% 0.17%(a)
- ------------------------------------------------------------------------------
Net investment income 2.98%(a) 2.87% 3.24%(a)
- ------------------------------------------------------------------------------
Expense waiver/reimbursement (b) 0.52%(a) 0.63% 0.71%(a)
- ------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $77,912 $65,353 $55,408
- ------------------------------------------------------------------------------
</TABLE>
* For the period from May 7, 1992 (date of initial public investment) to
November 30, 1992.
** Six months ended May 31, 1994 (unaudited).
*** Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 4).
(See Notes which are an integral part of the Financial Statements)
BILTMORE U.S. TREASURY MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
INVESTMENT SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED
NOVEMBER 30,
1994** 1993*
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00
- ------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------------
Net investment income 0.01 0.01
- ------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (0.01) (0.01)
- ------------------------------------------------------------------------------------------ ----------- ---------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00
- ------------------------------------------------------------------------------------------ ----------- ---------
TOTAL RETURN*** 1.36% 1.42%
- ------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------------------------------------
Expenses 0.67%(a) 0.65%(a)
- ------------------------------------------------------------------------------------------
Net investment income 2.68%(a) 2.50%(a)
- ------------------------------------------------------------------------------------------
Expense waiver/reimbursement (b) 0.62%(a) 0.73%(a)
- ------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $19,677 $16,941
- ------------------------------------------------------------------------------------------
</TABLE>
* For the period from May 12, 1993 (date of initial public investment) to
November 30, 1993.
** Six months ended May 31, 1994 (unaudited).
*** Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 4).
(See Notes which are an integral part of the Financial Statements)
BILTMORE U.S. TREASURY MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
The Biltmore Funds (the "Trust") is registered under the Investment Company Act
of 1940, as amended, (the "Act"), as an open-end, management investment company.
The Trust consists of eleven diversified portfolios. The financial statements
included herein are only those of the Biltmore U.S. Treasury Money Market Fund
(the "Fund"). The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held.
The Fund offers two classes of shares: Institutional Shares and Investment
Shares. Investment Shares are identical in all respects to Institutional Shares,
except that Investment Shares are sold pursuant to a distribution plan (the
"Plan") adopted in accordance with the Act's Rule 12b-1.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles (GAAP).
A. INVESTMENT VALUATIONS--U.S. government obligations are generally valued at
the mean between the over-the-counter bid and asked prices as furnished by
an independent pricing service. Short-term securities with remaining
maturities of sixty days or less at the time of purchase may be stated at
amortized cost, which approximates value.
B. REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System or to have segregated within the
custodian bank's vault, all securities held as collateral in support of
repurchase agreement investments. Additionally, procedures have been
established by the Fund to monitor, on a daily basis, the market value of
each repurchase agreement's underlying collateral to ensure the value at
least equals the principal amount of the repurchase agreement, including
accrued interest.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to guidelines established
by the Board of Trustees ("Trustees").
C. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code").
Distributions to shareholders are recorded on the ex-dividend date.
D. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its taxable income.
Accordingly, no provision for federal tax is necessary.
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. A Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
F. DEFERRED EXPENSES-- The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering the shares, have been deferred and are being
amortized using the straight-line method over a period of five years from
the Fund's commencement date.
G. OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. At May 31, 1994, capital paid-in aggregated $97,589,706.
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1994* 1993
<S> <C> <C>
INSTITUTIONAL SHARES
Shares sold 152,618,840 268,967,543
- --------------------------------------------------------------------------------
Shares redeemed (140,059,551) (259,022,528)
- -------------------------------------------------------------------------------- --------------- ---------------
Net change resulting from Institutional Shares transactions 12,559,289 9,945,015
- -------------------------------------------------------------------------------- --------------- ---------------
<CAPTION>
YEAR ENDED NOVEMBER 30,
1994* 1993**
<S> <C> <C>
INVESTMENT SHARES
Shares sold 26,426,044 19,977,447
- --------------------------------------------------------------------------------
Shares redeemed (23,689,987) (3,036,031)
- -------------------------------------------------------------------------------- --------------- ---------------
Net change resulting from Investment Shares transactions 2,736,057 16,941,416
- -------------------------------------------------------------------------------- --------------- ---------------
Total net change from Fund transactions 15,295,346 26,886,431
- -------------------------------------------------------------------------------- --------------- ---------------
</TABLE>
* Six months ended May 31, 1994.
** For the period from May 12, 1993 (date of initial public investment) to
November 30, 1993.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Wachovia Investment Management Group, the Fund's
investment adviser (the "Adviser"), receives for its services an annual
investment advisory fee equal to .50 of 1% of the Fund's average daily net
assets. The Adviser may voluntarily choose to waive a portion of its fee and
reimburse certain operating expenses of the Fund. The Adviser can modify or
terminate this voluntary waiver and reimbursement at any time at its sole
discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. The FAS fee is based on the
level of average aggregate net assets of the Trust and The Biltmore Municipal
Funds for the period. FAS may voluntarily choose to waive a portion of its fee
and reimburse certain operating expenses of the Fund. FAS can modify or
terminate this voluntary waiver and reimbursement at any time at its sole
discretion.
DISTRIBUTION PLAN--The Fund has adopted the Plan pursuant to Rule 12b-1 under
the Act. Under the terms of the Plan, the Fund will compensate Federated
Securities Corp. ("FSC"), the principal distributor, from the assets of the Fund
to finance activities intended to result in the sale of the Fund's Investment
Shares. The Plan provides that the Fund may incur distribution expenses up to
.40 of 1% of the average daily net assets of the Investment Shares, annually, to
compensate FSC.
TRANSFER AND DIVIDEND DISBURSING AGENT, ACCOUNTING AND CUSTODY FEES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent for
the Fund. The FServ fee is based on the size, type and number of accounts and
transactions made by shareholders.
FServ also maintains the Fund's accounting records. The fee is based on the
level of the Fund's average net assets for the period, plus out-of-pocket
expenses.
Wachovia Bank of North Carolina, N.A. is the Fund's custodian. The fee is based
on the level of the Fund's average net assets for the period, plus out-of-pocket
expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses $33,032 were borne initially by
FAS. The Fund has agreed to reimburse FAS for the organizational expenses during
the five year period following
May 14, 1992 (date the Fund first became effective). For the six months ended
May 31, 1994, the Fund paid $4,555 pursuant to this agreement.
Certain of the Officers of the Trust are Officers and Trustees of FAS, FSC and
FServ.
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
James A. Hanley John W. McGonigle
Malcolm T. Hopkins President and Treasurer
Samuel E. Hudgins Ronald M. Petnuch
J. Berkley Ingram, Jr. Vice President and Assistant Treasurer
D. Dean Kaylor Joseph M. Huber
Secretary
Mark A. Sheehan
Assistant Secretary
</TABLE>
Mutual funds are not obligations of or insured by any bank, nor are they insured
by the federal government or any of its agencies.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus, which contains facts
concerning its objective and policies, management fees, expenses and other
information.
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Report of the Biltmore Money Market Fund
(the "Fund") for the six-month period ending May 31, 1994. These pages provide
you with complete financial information--including an investment review by the
Fund's portfolio manager and a complete list of investments--for the Fund.
The Fund puts your cash to work by pursuing current income through a portfolio
of bank, corporate and government money market securities.
As you will see, assets in the Fund totaled nearly $157 million at the end of
the period. During the period, the Fund paid $0.02 per share in dividends, while
maintaining a stable share value of $1.00.*
Thank you for your confidence in the Fund. We'll continue to keep you up to date
on your investment, and provide your account with the highest level of service
possible.
Sincerely,
John W. McGonigle
President
July 15, 1994
* As a money market mutual fund, the Fund is managed to pursue a stable share
price of $1.00, although there is no guarantee that it will do so. An
investment in the Fund is neither insured nor guaranteed by the U.S.
Government.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
BILTMORE MONEY MARKET FUND (THE "FUND")
Increased inflation concerns prompted a sharp rise in short-term interest rates
during the period between November 30, 1993 and May 31, 1994. Fixed income
investors responded to the Federal Reserve Board's tightening of rates by
adopting defensive positions through investment in money market funds. Inflows
of nearly $30 billion into money market funds during the six-month period
resulted in a weighted average portfolio maturity of 44 days among all money
funds, the lowest average since October, 1990. The rising interest rate
environment also provided investors with the highest money market fund returns
since August, 1992.
The Fund's portfolio manager adopted a defensive investment strategy during the
period. This was accomplished by increasing liquidity and shortening maturities.
The Fund's portfolio mix of overnight investments and time deposits outperformed
comparable short-term holdings in U.S. Treasury issues, while providing the
liquidity necessary to maintain portfolio targets. The Fund's average maturity
was slightly greater than the IBC/Donoghue's Money Fund Report* average at the
beginning of the six-month period. By May 31, 1994, however, the average
maturity was in line with the IBC/Donoghue's Money Fund Report average. Average
maturity targets are established based on expectations of the U.S. economy, the
Fund's investment adviser's market rate forecast, and the average maturity of
the Fund versus a peer group. The average maturity of the Fund will always be 90
days or less. The Fund's average maturity at May 31, 1994 was 43 days.
Fund assets decreased 16% during the six-month period, from $186.9 million to
$156.8 million. Also during the six-month period ended May 31, 1994, the Fund's
seven-day net yield for Institutional Shares increased from 2.95% to 3.68%, and
from 2.65% to 3.38% for Investment Shares, as compared with the IBC/Donoghue's
Money Fund Report average of 3.45%.
* This index is unmanaged.
BILTMORE MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
*COMMERCIAL PAPER--28.3%
- ------------------------------------------------------------------------------------------------
BANKING--6.4%
--------------------------------------------------------------------------------
$ 5,000,000 NBD Bank, N.A., 3.31%, 6/20/94 $ 4,999,936
--------------------------------------------------------------------------------
5,000,000 Trust Company Bank, 4.95%, 11/15/94 4,970,904
-------------------------------------------------------------------------------- ---------------
Total 9,970,840
-------------------------------------------------------------------------------- ---------------
FINANCE--AUTOMOTIVE--3.8%
--------------------------------------------------------------------------------
6,000,000 Ford Motor Credit Corp., 4.33%, 6/10/94 5,993,520
-------------------------------------------------------------------------------- ---------------
FINANCE--FOOD & BEVERAGE--4.1%
--------------------------------------------------------------------------------
6,535,000 Bass Finance, 3.81%, 6/10/94 6,528,824
-------------------------------------------------------------------------------- ---------------
FINANCE--MISCELLANEOUS--7.0%
--------------------------------------------------------------------------------
6,000,000 BellSouth Capital Funding Corp., 3.77%, 6/22/94 5,986,875
--------------------------------------------------------------------------------
5,000,000 USAA Capital Corp., 4.27%, 6/1/94 5,000,000
-------------------------------------------------------------------------------- ---------------
Total 10,986,875
-------------------------------------------------------------------------------- ---------------
FOOD & BEVERAGE--7.0%
--------------------------------------------------------------------------------
5,000,000 Coca Cola Co., 4.33%, 7/19/94 4,971,267
--------------------------------------------------------------------------------
6,000,000 Sara Lee Corp., 3.77%, 6/6/94 5,996,875
-------------------------------------------------------------------------------- ---------------
Total 10,968,142
-------------------------------------------------------------------------------- ---------------
TOTAL COMMERCIAL PAPER 44,448,201
-------------------------------------------------------------------------------- ---------------
TIME DEPOSITS--40.5%
- ------------------------------------------------------------------------------------------------
6,000,000 ABN-AMRO Bank, 3.95%, 6/6/94 5,999,665
--------------------------------------------------------------------------------
5,000,000 Bank of Hawaii, 4.31%, 6/27/94 5,000,000
--------------------------------------------------------------------------------
5,000,000 Bank of New York, 5.00%, 11/15/94 5,000,000
--------------------------------------------------------------------------------
7,000,000 CIBC New York, 3.76%-3.95%, 6/6/94-6/22/94 6,999,257
--------------------------------------------------------------------------------
6,000,000 First Alabama Bank, 4.00%, 6/2/94 6,000,000
--------------------------------------------------------------------------------
5,000,000 First Union National Bank, 4.28%, 6/17/94 5,000,000
--------------------------------------------------------------------------------
6,000,000 NAT West, New York, 3.93%-4.19%, 6/30/94-8/31/94 5,996,868
--------------------------------------------------------------------------------
</TABLE>
BILTMORE MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
TIME DEPOSITS--CONTINUED
- ------------------------------------------------------------------------------------------------
$ 5,000,000 Norwest Bank, 4.31%, 6/17/94 $ 5,000,000
--------------------------------------------------------------------------------
5,000,000 Robobank, 4.47%, 10/27/94 4,989,078
--------------------------------------------------------------------------------
2,500,000 Royal Bank of Scotland, 3.63%, 6/1/94 2,500,000
--------------------------------------------------------------------------------
5,000,000 Societe Generale Bank, 3.80%, 6/6/94 5,000,007
--------------------------------------------------------------------------------
6,000,000 Toronto-Dominion Bank, 4.25%, 6/20/94 6,000,000
-------------------------------------------------------------------------------- ---------------
TOTAL TIME DEPOSITS 63,484,875
-------------------------------------------------------------------------------- ---------------
U.S. TREASURY BILLS--17.7%
- ------------------------------------------------------------------------------------------------
28,000,000 6/30/94-11/25/94 27,738,211
-------------------------------------------------------------------------------- ---------------
**REPURCHASE AGREEMENT--13.4%
- ------------------------------------------------------------------------------------------------
21,051,180 Barclays De Zoete Wedd, Inc., 4.20%, dated 5/31/94,
due 6/1/94 (Note 2B) 21,051,180
-------------------------------------------------------------------------------- ---------------
TOTAL INVESTMENTS, (AT AMORTIZED COST) $ 156,722,467+
-------------------------------------------------------------------------------- ---------------
</TABLE>
* Each issue shows the rate of discount at the time of purchase for discount
issues, or the coupon for interest bearing issues.
** The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
+ Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($156,787,220) at May 31, 1994.
(See Notes which are an integral part of the Financial Statements)
BILTMORE MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ------------------------------------------------------------------------------------------------
Investment in repurchase agreement (Note 2B) $ 21,051,180
- -------------------------------------------------------------------------------
Investments in other securities (Note 2A) 135,671,287
- ------------------------------------------------------------------------------- ---------------
Total investments, at amortized cost and value $ 156,722,467
- ------------------------------------------------------------------------------------------------
Interest receivable 396,361
- ------------------------------------------------------------------------------------------------
Prepaid/deferred expenses (Note 2F) 97,088
- ------------------------------------------------------------------------------------------------ ---------------
Total assets 157,215,916
- ------------------------------------------------------------------------------------------------
LIABILITIES:
- ------------------------------------------------------------------------------------------------
Dividends payable 428,696
- ------------------------------------------------------------------------------------------------ ---------------
NET ASSETS for 156,787,220 shares of beneficial interest outstanding $ 156,787,220
- ------------------------------------------------------------------------------------------------ ---------------
NET ASSET VALUE, Offering Price, and Redemption Proceeds Per Share:
- ------------------------------------------------------------------------------------------------
Institutional Shares (net assets of $120,016,049 / 120,016,049 shares of beneficial interest
outstanding) $1.00
- ------------------------------------------------------------------------------------------------ ---------------
Investment Shares (net assets of $36,771,171 / 36,771,171 shares of beneficial interest
outstanding) $1.00
- ------------------------------------------------------------------------------------------------ ---------------
(See Notes which are an integral part of the Financial Statements)
</TABLE>
BILTMORE MONEY MARKET FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------
Interest income (Note 2C) $ 2,735,406
- ---------------------------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------------------------
Investment advisory fee (Note 4) $ 401,042
- --------------------------------------------------------------------------------------
Trustees' fees 1,875
- --------------------------------------------------------------------------------------
Administrative personnel and services fees (Note 4) 86,619
- --------------------------------------------------------------------------------------
Custodian fees (Note 4) 16,042
- --------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses (Note 4) 14,838
- --------------------------------------------------------------------------------------
Fund share registration costs 17,542
- --------------------------------------------------------------------------------------
Auditing fees 4,422
- --------------------------------------------------------------------------------------
Legal fees 8,363
- --------------------------------------------------------------------------------------
Printing and postage 9,792
- --------------------------------------------------------------------------------------
Portfolio accounting fees (Note 4) 14,960
- --------------------------------------------------------------------------------------
Insurance premiums 4,163
- --------------------------------------------------------------------------------------
Distribution services fees (Note 4) 38,671
- --------------------------------------------------------------------------------------
Miscellaneous 5,677
- -------------------------------------------------------------------------------------- -----------
Total expenses 624,006
- --------------------------------------------------------------------------------------
Deduct--
- --------------------------------------------------------------------------------------
Waiver of investment advisory fee (Note 4) $ 280,730
- -------------------------------------------------------------------------
Waiver of administrative personnel and services fees (Note 4) 46,534
- -------------------------------------------------------------------------
Waiver of distribution services fees (Note 4) 9,668
- -------------------------------------------------------------------------
Reimbursement of other operating expenses by Administrator (Note 4) 26,456 363,388
- ------------------------------------------------------------------------- ----------- -----------
Net expenses 260,618
- --------------------------------------------------------------------------------------------------- -------------
Net investment income $ 2,474,788
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
BILTMORE MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1994* 1993
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------------------
Net investment income $ 2,474,788 $ 4,207,488
- ---------------------------------------------------------------------------- ---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2C)--
- ----------------------------------------------------------------------------
Dividends to shareholders from net investment income:
- ----------------------------------------------------------------------------
Institutional Shares (2,187,499) (4,068,438)
- ----------------------------------------------------------------------------
Investment Shares (287,289) (139,050)
- ---------------------------------------------------------------------------- ---------------- ----------------
Change in net assets resulting from distributions to
shareholders (2,474,788) (4,207,488)
- ---------------------------------------------------------------------------- ---------------- ----------------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 3)--
- ----------------------------------------------------------------------------
Net proceeds from sale of shares 286,107,498 523,338,578
- ----------------------------------------------------------------------------
Cost of shares redeemed (316,252,437) (424,210,993)
- ---------------------------------------------------------------------------- ---------------- ----------------
Change in net assets from Fund share transactions (30,144,939) 99,127,585
- ---------------------------------------------------------------------------- ---------------- ----------------
Change in net assets (30,144,939) 99,127,585
- ----------------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------------
Beginning of period 186,932,159 87,804,574
- ---------------------------------------------------------------------------- ---------------- ----------------
End of period $ 156,787,220 $ 186,932,159
- ---------------------------------------------------------------------------- ---------------- ----------------
*Six months ended May 31, 1994 (unaudited).
(See Notes which are an integral part of the Financial Statements)
</TABLE>
BILTMORE MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1994** 1993 1992*
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00
- -------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------
Net investment income 0.02 0.03 0.02
- -------------------------------------------------------------------------
LESS DISTRIBUTIONS
- -------------------------------------------------------------------------
Dividends to shareholders from net investment income (0.02) (0.03) (0.02)
- ------------------------------------------------------------------------- ----------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------------------------------------- ----------- --------- ---------
TOTAL RETURN*** 1.57% 3.05% 1.71%
- -------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------------------------------------
Expenses 0.28%(a) 0.25% 0.14%(a)
- -------------------------------------------------------------------------
Net investment income 3.08%(a) 3.00% 3.38%(a)
- -------------------------------------------------------------------------
Expense waiver/reimbursement (b) 0.42%(a) 0.56% 0.65%(a)
- -------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------------------------------------
Net assets, end of period (000 omitted) $120,016 $177,090 $84,698
- -------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from June 2, 1992 (date of initial public
investment) to November 30, 1992.
** Six months ended May 31, 1994 (unaudited).
*** Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 4).
(See Notes which are an integral part of the Financial Statements)
BILTMORE MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
INVESTMENT SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1994** 1993 1992*
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00
- -------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------
Net investment income 0.01 0.03 0.01
- -------------------------------------------------------------------------
LESS DISTRIBUTIONS
- -------------------------------------------------------------------------
Dividends to shareholders from net investment income (0.01) (0.03) (0.01)
- ------------------------------------------------------------------------- ----------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------------------------------------- ----------- --------- ---------
TOTAL RETURN*** 1.42% 2.74% 1.48%
- -------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------------------------------------
Expenses 0.58%(a) 0.55% 0.48%(a)
- -------------------------------------------------------------------------
Net investment income 2.96%(a) 2.70% 3.44%(a)
- -------------------------------------------------------------------------
Expense waiver/reimbursement (b) 0.52%(a) 0.66% 0.75%(a)
- -------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------------------------------------
Net assets, end of period (000 omitted) $36,771 $9,842 $3,106
- -------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from June 9, 1992 (date of initial public
investment) to November 30, 1992.
** Six months ended May 31, 1994 (unaudited).
*** Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 4).
(See Notes which are an integral part of the Financial Statements)
BILTMORE MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
The Biltmore Funds (the "Trust") is registered under the Investment Company Act
of 1940, as amended (the "Act"), as an open-end management investment company.
The Trust consists of eleven diversified portfolios. The financial statements
included herein are only those of the Biltmore Money Market Fund (the "Fund").
The financial statements of the other portfolios are presented separately. The
assets of each portfolio are segregated, and a shareholder's interest is limited
to the portfolio in which shares are held.
The Fund offers two classes of shares: Institutional Shares and Investment
Shares. Investment Shares are identical in all respects to Institutional Shares,
except that Investment Shares are sold pursuant to a distribution plan (the
"Plan") adopted in accordance with the Act's Rule 12b-1.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles (GAAP).
A. INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value
its portfolio securities is in accordance with Rule 2a-7 under the Act.
B. REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System or to have segregated within the
custodian bank's vault, all securities held as collateral in support of
repurchase agreement investments. Additionally, procedures have been
established by the Fund to monitor, on a daily basis, the market value of
each repurchase agreement's underlying collateral to ensure the value at
least equals the principal amount of the repurchase agreement, including
accrued interest.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to guidelines established
by the Board of Trustees ("Trustees"). Risks may arise from the potential
inability of counterparties to honor the terms of the repurchase agreement.
Accordingly, the Fund could receive less than the repurchase price on the
sale of collateral securities.
C. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code").
Distributions to shareholders are recorded on the ex-dividend date.
D. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its taxable income.
Accordingly, no provisions for federal tax are necessary.
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
F. DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering the shares, have been deferred and are being
amortized using the straight-line method over a period of five years from
the Fund's commencement date.
G. OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. At May 31, 1994, capital paid-in aggregated $156,787,220.
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1994* 1993
<S> <C> <C>
INSTITUTIONAL SHARES
Shares sold 241,775,360 508,765,112
- -------------------------------------------------------------------------------
Shares redeemed (298,849,373) (416,373,470)
- ------------------------------------------------------------------------------- --------------- ---------------
Net change resulting from Institutional Share transactions (57,074,013) 92,391,642
- ------------------------------------------------------------------------------- --------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1994* 1993
<S> <C> <C>
INVESTMENT SHARES
Shares sold 44,332,138 14,573,466
- -------------------------------------------------------------------------------
Shares redeemed (17,403,064) (7,837,523)
- ------------------------------------------------------------------------------- --------------- ---------------
Net change resulting from Investment Share transactions 26,929,074 6,735,943
- ------------------------------------------------------------------------------- --------------- ---------------
Total net change resulting from Fund transactions (30,144,939) 99,127,585
- ------------------------------------------------------------------------------- --------------- ---------------
</TABLE>
* Six months ended May 31, 1994
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Wachovia Investment Management Group, the Fund's
investment adviser (the "Adviser"), receives for its services an annual
investment advisory fee equal to .50 of 1% of the Fund's average daily net
assets. The Adviser may voluntarily choose to waive a portion of its fee and
reimburse certain operating expenses of the Fund. The Adviser can modify or
terminate this voluntary waiver and reimbursement at any time at its sole
discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. The FAS fee is based on the
level of average aggregate net assets of the Trust and The Biltmore Municipal
Funds for the period. FAS may voluntarily choose to waive a portion of its fee
and reimburse certain operating expenses of the Fund. FAS can modify or
terminate this voluntary waiver and reimbursement at any time at its sole
discretion.
DISTRIBUTION PLAN--The Trust has adopted the Plan pursuant to Rule 12b-1 under
the Act. Under the terms of the Plan, the Fund will compensate Federated
Securities Corp. ("FSC"), the principal distributor, from the net assets of the
Fund to finance activities intended to result in the sale of the Fund's
Investment Shares. The Plan provides that the Fund may incur distribution
expenses up to .40 of 1% of the average daily net assets of the Investment
Shares, annually, to compensate FSC.
TRANSFER AND DIVIDEND DISBURSING AGENT, ACCOUNTING AND CUSTODY FEES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent for
the Fund. The FServ fee is based on the size, type and number of accounts and
transactions made by shareholders.
FServ also maintains the Fund's accounting records. The fee is based on the
level of the Fund's average net assets for the period, plus out-of-pocket
expenses.
Wachovia Bank of North Carolina, N.A. is the Fund's custodian. The fee is based
on the level of the Fund's average net assets for the period, plus out-of-pocket
expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses ($65,357) were borne initially
by FAS. The Fund has agreed to reimburse FAS for the organizational expenses
during the five year period following June 2, 1992 (date the Fund first became
effective). For the six months ended May 31, 1994, the Fund paid $5,308 pursuant
to this agreement.
Certain of the Officers of the Trust are Officers and Trustees of FAS, FSC and
FServ.
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
James A. Hanley John W. McGonigle
Malcolm T. Hopkins President and Treasurer
Samuel E. Hudgins Ronald M. Petnuch
J. Berkley Ingram, Jr. Vice President and Assistant Treasurer
D. Dean Kaylor Joseph M. Huber
Secretary
Mark A. Sheehan
Assistant Secretary
</TABLE>
Mutual funds are not obligations of or insured by any bank, nor are they insured
by the federal government or any of its agencies.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus, which contains facts
concerning its objective and policies, management fees, expenses and other
information.
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Report of the Biltmore Tax-Free Money
Market Fund (the "Fund") for the six-month period ending May 31, 1994. These
pages provide you with complete financial information--including an investment
review by the Fund's portfolio manager and a complete list of investments--for
the Fund.
The Fund puts your money to work pursuing current, tax-free income* through a
portfolio of high quality money market securities. These securities are issued
by municipalities across the country.
As you'll see, assets in the Fund reached $131 million. During the period, the
Fund paid $0.01 per share in federally tax-free dividends, while maintaining a
stable share value of $1.00.**
Thank you for your confidence in the Fund. We'll continue to keep you up to date
on your investment, and provide your account with the highest level of service
possible.
Sincerely,
John W. McGonigle
President
July 15, 1994
* Income may be subject to the federal alternative minimum tax and state and
local taxes.
** As a money market mutual fund, the Fund is managed to pursue a stable share
price of $1.00, although there is no guarantee that it will do so. An
investment in the Fund is neither insured or guaranteed by the U.S.
Government.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
BILTMORE TAX-FREE MONEY MARKET FUND
The municipal bond market has been hampered by rising interest rates, a
strengthening economy and fears of higher inflation. As rates have moved higher,
municipal bond refundings and the steady inflow of new cash have abruptly
declined, further weakening the bond market. From November 30, 1993 to May 31,
1994, the IBC/Donoghue's Money Fund Report* had a total annualized return of
2.30%.
The Fund invests primarily in a diversified portfolio of municipal securities
maturing in 397 days or less, and the Fund's average maturity is 90 days or
less. The Fund had an average maturity of 43 days during the six-month period
ended May 31, 1994, versus 45 days for the IBC/Donoghue's Money Fund Report.
On May 31, 1994, the Fund had a seven-day net yield of 2.52% for Institutional
Shares and 2.22% for Investment Shares. Net assets of the Fund totaled $131
million, an increase from $83 million on November 30, 1993. At the end of the
six-month period, demand notes represented 62% of the Fund's portfolio, with
another 33% in general obligation market notes and 5% in tax-exempt commercial
paper.
* This index is unmanaged.
BILTMORE TAX-FREE MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- ---------- ---------------
SHORT-TERM MUNICIPAL SECURITIES--99.1%
- ------------------------------------------------------------------------------------
ALABAMA--8.8%
---------------------------------------------------------------------
$ 2,165,000 Alabama HFA Weekly VRDNs (SouthTrust Bank of Alabama LOC) A-1 $ 2,165,000
---------------------------------------------------------------------
4,700,000 Birmingham City, AL, Weekly VRDNs (First Alabama Bank LOC) SP-1+ 4,700,000
---------------------------------------------------------------------
3,200,000 Huntsville, AL, Health Care Authority, Weekly VRDNs
(Amsouth Bank LOC) A-1+ 3,200,000
---------------------------------------------------------------------
1,500,000 Mobile, AL, IDB Weekly VRDNs (Swiss Bank LOC) A-1+ 1,500,000
--------------------------------------------------------------------- ---------------
Total 11,565,000
--------------------------------------------------------------------- ---------------
ARKANSAS--2.8%
---------------------------------------------------------------------
775,000 Arkansas Hospital Equipment Finance Authority Weekly VRDNs (Credit
Suisse LOC) A-1+ 775,000
---------------------------------------------------------------------
725,000 Fayetteville, AR, Weekly VRDNs (Public Facility)/ (Mitsubishi Bank
Ltd LOC) VMIG1 725,000
---------------------------------------------------------------------
2,200,000 University of Arkansas Weekly VRDNs (Board of Trustees)/
(First Union LOC) A-1+ 2,200,000
--------------------------------------------------------------------- ---------------
Total 3,700,000
--------------------------------------------------------------------- ---------------
CALIFORNIA--1.5%
---------------------------------------------------------------------
1,000,000 San Francisco Unified School District, CA, 3.50%, 8/12/94 SP-1+ 1,000,860
---------------------------------------------------------------------
1,000,000 Visalia, CA, Weekly VRDNs (Convention Central Project)/ Mitsubishi
Ltd LOC) A-1+ 1,000,000
--------------------------------------------------------------------- ---------------
Total 2,000,860
--------------------------------------------------------------------- ---------------
CONNECTICUT--0.5%
---------------------------------------------------------------------
700,000 Connecticut State Economic Recovery Notes Weekly VRDNs (Series B) VMIG1 700,000
--------------------------------------------------------------------- ---------------
</TABLE>
BILTMORE TAX-FREE MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- ---------- ---------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA--0.8%
---------------------------------------------------------------------
$ 1,000,000 District of Columbia Hospital Revenue Weekly VRDNs
(Columbia Hospital For Women 1988 A)/(Mitsubishi
International LOC) VMIG1 $ 1,000,000
--------------------------------------------------------------------- ---------------
FLORIDA--7.1%
---------------------------------------------------------------------
2,500,000 Broward County, FL, HFA Weekly VRDNs (Welleby Apt. Project)/(Bank of
America N.T. & S.A. LOC) VMIG1 2,500,000
---------------------------------------------------------------------
4,100,000 Collier County, FL, HFA Monthly VRDNs (River Beach
Project)/(Morgan Guaranty LOC) VMIG1 4,100,000
---------------------------------------------------------------------
900,000 Florida Escambia County Facility Authority Weekly VRDNs (Florida
Convalescent Center Project)/(Toronto Dominion LOC) P-1 900,000
---------------------------------------------------------------------
850,000 Polk County, FL, IDA Weekly VRDNs (Florida Convalescent Center
Project)/(Toronto Dominion LOC) P-1 850,000
---------------------------------------------------------------------
1,000,000 St. Lucie County, FL, Weekly VRDNs (Florida Power & Light Project) P-1 1,000,000
--------------------------------------------------------------------- ---------------
Total 9,350,000
--------------------------------------------------------------------- ---------------
GEORGIA--10.6%
---------------------------------------------------------------------
2,000,000 Burke County, GA, Development Pollution Authority, 3.15%, 6/7/94
(Credit Suisse LOC) P-1 2,000,000
---------------------------------------------------------------------
4,000,000 Cobb County, GA, 3.50%, 12/30/94 SP-1 4,013,633
---------------------------------------------------------------------
5,000,000 De Kalb Private Hospital Authority, GA, (Engleston Childrens'
Hospital)/(Trust Company Bank LOC) A-1+ 5,000,000
---------------------------------------------------------------------
1,000,000 Housing Authority of Fulton County, GA, 3.10%, 8/1/94, (First Mutual
Savings--Florida--LOC) A-1+ 1,000,000
---------------------------------------------------------------------
1,895,000 Marietta, GA, HFA VRDNs (Falls at Bells Ferry)/(Guardian S&L LOC) VMIG1 1,895,000
--------------------------------------------------------------------- ---------------
Total 13,908,633
--------------------------------------------------------------------- ---------------
</TABLE>
BILTMORE TAX-FREE MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- ---------- ---------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
ILLINOIS--11.3%
---------------------------------------------------------------------
$ 1,000,000 Chicago, IL, GO Weekly VRDNs (Canadian Imperial Bank LOC) VMIG1 $ 1,000,000
---------------------------------------------------------------------
1,000,000 Illinois Development Finance Authority Revenue Weekly VRDNs (National
Westminster LOC) VMIG1 1,000,000
---------------------------------------------------------------------
1,500,000 Illinois Development Finance Authority Revenue Weekly VRDNs (LaSalle
National Bank LOC) AA- 1,500,000
---------------------------------------------------------------------
3,000,000 Illinois Development Finance Authority Revenue Weekly VRDNs (Northern
Trust Co. LOC) AA- 3,000,000
---------------------------------------------------------------------
5,200,000 Illinois State, 9.00%, 9/1/97 (pre-refunded 9/1/94) @ 102) AA- 5,390,052
---------------------------------------------------------------------
3,000,000 Illinois State, Weekly VRDNs (Toll Highway Authority)/
(Societe Generale LOC) VMIG1 3,000,000
--------------------------------------------------------------------- ---------------
Total 14,890,052
--------------------------------------------------------------------- ---------------
INDIANA--1.6%
---------------------------------------------------------------------
2,100,000 Indianapolis, IN, Weekly VRDNs (Canal Square Project)/
(Societe Generale LOC) VMIG1 2,100,000
--------------------------------------------------------------------- ---------------
IOWA--2.4%
---------------------------------------------------------------------
600,000 Indianola, IA, IDR Monthly VRDNs (HY-VEE Foods)/(Swiss Bank LOC) A-1+ 600,000
---------------------------------------------------------------------
2,500,000 Iowa State, 3.25%, 6/30/94 (Union Bank of Switzerland LOC) MIG1 2,500,771
--------------------------------------------------------------------- ---------------
Total 3,100,771
--------------------------------------------------------------------- ---------------
KANSAS--1.3%
---------------------------------------------------------------------
1,750,000 Burlington, KS, Pollution Control Revenue, 3.15%, 9/8/94
(Deutsche Bank LOC) AAA 1,750,000
--------------------------------------------------------------------- ---------------
KENTUCKY--0.8%
---------------------------------------------------------------------
1,000,000 City of Georgetown, KY, Educational Institution Weekly VRDNs (PNC
Bank, Kentucky, LOC) VMIG1 1,000,000
--------------------------------------------------------------------- ---------------
</TABLE>
BILTMORE TAX-FREE MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- ---------- ---------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
LOUISIANA--3.5%
---------------------------------------------------------------------
$ 1,500,000 Calcasieu Parish, LA, IDR Pollution Control Weekly VRDNs (National
Westminster Bank LOC) P-1 $ 1,500,000
---------------------------------------------------------------------
1,100,000 Lake Charles Harbor & Terminal District, LA, Weekly VRDNs (National
Westminster Bank LOC) P-1 1,100,000
---------------------------------------------------------------------
2,000,000 Louisiana State Sales Tax Revenue Daily VRDNs (FGIC Insured)/(Swiss
Bank LOC) VMIG1 2,000,000
--------------------------------------------------------------------- ---------------
Total 4,600,000
--------------------------------------------------------------------- ---------------
MAINE--1.5%
---------------------------------------------------------------------
2,000,000 Maine State Turnpike Authority, 3.15%, 10/3/94 MIG1 2,003,331
--------------------------------------------------------------------- ---------------
MARYLAND--5.3%
---------------------------------------------------------------------
6,000,000 Maryland Health Higher Education Facility Anne Arundel Hospital
Weekly VRDNs (Mellon Bank LOC) VMIG1 6,000,000
---------------------------------------------------------------------
1,000,000 Maryland State, 6.40%, 7/15/94 NR 1,004,774
--------------------------------------------------------------------- ---------------
Total 7,004,774
--------------------------------------------------------------------- ---------------
MASSACHUSETTS--4.6%
---------------------------------------------------------------------
6,000,000 Massachusetts State, Daily VRDNs (Series E) (ABN--AMRO LOC) VMIG1 6,000,000
--------------------------------------------------------------------- ---------------
MICHIGAN--3.6%
---------------------------------------------------------------------
4,600,000 Michigan State Hospital Finance Authority Revenue, 11.25%, 6/1/94
(Prerefunded) AAA 4,692,000
--------------------------------------------------------------------- ---------------
MISSISSIPPI--3.0%
---------------------------------------------------------------------
3,900,000 Perry County, MS, Daily VRDNs (Leaf River Forest Project)/(Credit
Suisse LOC) P-1 3,900,000
--------------------------------------------------------------------- ---------------
NORTH CAROLINA--1.9%
---------------------------------------------------------------------
2,500,000 North Carolina Eastern Municipal Power, 3.15%, 6/7/94 (UBS & Morgan
Guaranty LOC) A-1+ 2,500,000
--------------------------------------------------------------------- ---------------
</TABLE>
BILTMORE TAX-FREE MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- ---------- ---------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
OHIO--0.8%
---------------------------------------------------------------------
$ 1,000,000 Centerville, OH, Health Care Revenue Weekly VRDNs (PNC Bank LOC) VMIG1 $ 1,000,000
--------------------------------------------------------------------- ---------------
PENNSYLVANIA--2.3%
---------------------------------------------------------------------
2,000,000 Pennsylvania State University, 3.00%, 12/5/94 SP-1+ 2,002,692
---------------------------------------------------------------------
1,000,000 Sewickley Valley Hospital Authority, PA, 3.00%, 12/15/94 (PNC Bank
LOC) VMIG1 1,001,954
--------------------------------------------------------------------- ---------------
Total 3,004,646
--------------------------------------------------------------------- ---------------
RHODE ISLAND--1.5%
---------------------------------------------------------------------
2,000,000 Rhode Island State, 3.25%, 6/30/94 SP-1+ 2,000,767
--------------------------------------------------------------------- ---------------
TENNESSEE--9.2%
---------------------------------------------------------------------
2,000,000 Nashville, TN, Health & Education Weekly VRDNs (NationsBank LOC) A-1+ 2,000,000
---------------------------------------------------------------------
3,000,000 Nashville, TN, FHA Weekly VRDNs (NationsBank LOC) A-1+ 3,000,000
---------------------------------------------------------------------
1,000,000 Shelby County, TN, 6.10%, 8/1/94 (Prerefunded) AAA 1,006,095
---------------------------------------------------------------------
1,000,000 Shelby County, TN, 6.25%, 8/1/94 (Prerefunded) AAA 1,032,280
---------------------------------------------------------------------
5,000,000 Tennessee State, Weekly VRDNs SP-1 5,000,000
--------------------------------------------------------------------- ---------------
Total 12,038,375
--------------------------------------------------------------------- ---------------
TEXAS--6.9%
---------------------------------------------------------------------
1,000,000 Dallas, TX, 9.50%, 6/1/94 (Prerefunded) AAA 1,000,000
---------------------------------------------------------------------
1,000,000 Fort Worth, TX, 8.70%, 3/1/95 AAA 1,040,544
---------------------------------------------------------------------
1,000,000 Lower Neches Valley Authority Texan, 6-Month Put (Chevron Guaranty) A-1+ 1,000,000
---------------------------------------------------------------------
1,860,000 San Antonio, TX, Electric & Gas Revenue, 9.60%, 2/1/95 (Prerefunded) AAA 1,964,627
---------------------------------------------------------------------
4,000,000 Texas State, 3.25%, 8/31/94 SP-1+ 4,004,530
--------------------------------------------------------------------- ---------------
Total 9,009,701
--------------------------------------------------------------------- ---------------
</TABLE>
BILTMORE TAX-FREE MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
PRINCIPAL RATING:
AMOUNT MOODY'S
OR SHARES OR S&P* VALUE
<C> <S> <C> <C>
- ------------- --------------------------------------------------------------------- ---------- ---------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
VIRGINIA--1.1%
---------------------------------------------------------------------
$ 1,500,000 Harrisonburg, VA, HFA, yearly put (Rolling Brook Village
Apartments)/(Guardian S & L LOC) VMIG1 $ 1,500,000
--------------------------------------------------------------------- ---------------
WASHINGTON--2.3%
---------------------------------------------------------------------
3,000,000 Port Anacortes, WA, IDA, 2.70%, 8/9/94 P-1 3,000,000
--------------------------------------------------------------------- ---------------
WYOMING--2.1%
---------------------------------------------------------------------
2,700,000 Uinta County, WY, Pollution Control Revenue Daily VRDNs (Chevron
Guaranty) P-1 2,700,000
--------------------------------------------------------------------- ---------------
TOTAL SHORT-TERM MUNICIPAL BONDS 130,018,910
--------------------------------------------------------------------- ---------------
REGULATED INVESTMENT COMPANIES--0.2%
- ------------------------------------------------------------------------------------
265,813 Fidelity Tax-Exempt Money Market Fund Instruments
Portfolio (at net asset value)(Note 2A) 265,813
--------------------------------------------------------------------- ---------------
TOTAL INVESTMENTS, AT AMORTIZED COST $ 130,284,723+
--------------------------------------------------------------------- ---------------
</TABLE>
+ Also represents cost for federal tax purposes.
* Please refer to the Appendix of the Statement of Additional Information for
an explanation of the credit ratings.
Note: The categories of investments are shown as a percentage of net assets
($131,242,102) at May 31, 1994.
BILTMORE TAX-FREE MONEY MARKET FUND
- --------------------------------------------------------------------------------
The following abbreviations are used throughout this portfolio:
GO--General Obligation
FGIC--Financial Guaranty Insurance Company
FHA--Federal Housing Authority
HFA--Housing Finance Authority
IDA--Industrial Development Authority
IDB--Industrial Development Board
IDR--Industrial Development Revenue
LOC--Letter(s) of Credit
VRDNs--Variable Rate Demand Notes
(See Notes which are an integral part of the Financial Statements)
BILTMORE TAX-FREE MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------------------------
Investments in securities, at amortized cost and value (Note 2A) $ 130,284,723
- -------------------------------------------------------------------------------------------------
Cash 7,932
- -------------------------------------------------------------------------------------------------
Interest receivable 1,164,378
- -------------------------------------------------------------------------------------------------
Deferred expenses (Note 2E) 49,888
- ------------------------------------------------------------------------------------------------- ---------------
Total assets 131,506,921
- -------------------------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------------------------
Payable to Adviser 264,819
- ------------------------------------------------------------------------------------------------- ---------------
NET ASSETS for 131,242,102 shares of beneficial interest outstanding $ 131,242,102
- ------------------------------------------------------------------------------------------------- ---------------
NET ASSET VALUE, Offering Price, and Redemption Proceeds Per Share:
- -------------------------------------------------------------------------------------------------
Institutional Shares ($93,273,581 / 93,273,581 shares of beneficial interest outstanding)
$1.00
- ------------------------------------------------------------------------------------------------- ---------------
Investment Shares ($37,968,521 / 37,968,521 shares of beneficial interest outstanding)
$1.00
- ------------------------------------------------------------------------------------------------- ---------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
BILTMORE TAX-FREE MONEY MARKET FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------
Interest income (Note 2B) $ 1,386,699
- ---------------------------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------------------------
Investment advisory fee (Note 4) $ 273,000
- --------------------------------------------------------------------------------------
Trustees' fees 1,718
- --------------------------------------------------------------------------------------
Administrative personnel and services fees (Note 4) 58,335
- --------------------------------------------------------------------------------------
Custodian fees (Note 4) 10,920
- --------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses (Note 4) 15,777
- --------------------------------------------------------------------------------------
Fund share registration costs 11,072
- --------------------------------------------------------------------------------------
Auditing fees 4,830
- --------------------------------------------------------------------------------------
Legal fees 8,382
- --------------------------------------------------------------------------------------
Printing and postage 11,704
- --------------------------------------------------------------------------------------
Portfolio accounting fees (Note 4) 16,180
- --------------------------------------------------------------------------------------
Insurance premiums 4,168
- --------------------------------------------------------------------------------------
Distribution services fee (Note 4) 63,520
- --------------------------------------------------------------------------------------
Miscellaneous 5,066
- -------------------------------------------------------------------------------------- -----------
Total expenses 484,672
- --------------------------------------------------------------------------------------
Deduct--
- --------------------------------------------------------------------------------------
Waiver of investment advisory fee (Note 4) $ 191,100
- -------------------------------------------------------------------------
Waiver of administrative personnel and services fees (Note 4) 31,039
- -------------------------------------------------------------------------
Waiver of distribution services fee (Note 4) 15,880
- -------------------------------------------------------------------------
Reimbursement of other operating expenses by Administrator (Note 4) 25,445 263,464
- ------------------------------------------------------------------------- ----------- -----------
Net expenses 221,208
- --------------------------------------------------------------------------------------------------- -------------
Net investment income $ 1,165,491
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
BILTMORE TAX-FREE MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
---------------------------------
1994* 1993
--------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ------------------------------------------------------------------------------
OPERATIONS--
- ------------------------------------------------------------------------------
Net investment income $ 1,165,491 $ 1,687,496
- ------------------------------------------------------------------------------ --------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2B)--
- ------------------------------------------------------------------------------
Dividends to shareholders from net investment income:
- ------------------------------------------------------------------------------
Institutional Shares (859,547) (1,400,375)
- ------------------------------------------------------------------------------
Investment Shares (305,944) (287,121)
- ------------------------------------------------------------------------------ --------------- ----------------
Change in net assets from distributions to shareholders (1,165,491) (1,687,496)
- ------------------------------------------------------------------------------ --------------- ----------------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 3)--
- ------------------------------------------------------------------------------
Proceeds from sale of shares 145,788,735 202,842,602
- ------------------------------------------------------------------------------
Cost of shares redeemed (97,791,212) (186,567,848)
- ------------------------------------------------------------------------------ --------------- ----------------
Change in net assets from Fund share transactions 47,997,523 16,274,754
- ------------------------------------------------------------------------------ --------------- ----------------
Change in net assets 47,997,523 16,274,754
- ------------------------------------------------------------------------------
NET ASSETS:
- ------------------------------------------------------------------------------
Beginning of period 83,244,579 66,969,825
- ------------------------------------------------------------------------------ --------------- ----------------
End of period $ 131,242,102 $ 83,244,579
- ------------------------------------------------------------------------------ --------------- ----------------
</TABLE>
* Six months ended May 31, 1994 (unaudited).
(See Notes which are an integral part of the Financial Statements)
BILTMORE TAX-FREE MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1994** 1993 1992*
<S> <C> <C> <C>
INVESTMENT SHARES
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------
Net investment income 0.01 0.02 0.01
- ----------------------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------
Dividends to shareholders from net investment income (0.01) (0.02) (0.01)
- ---------------------------------------------------------------------- ----------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------- ----------- --------- ---------
TOTAL RETURN*** 1.10% 2.30% 1.49%
- ----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------
Expenses 0.32%(a) 0.29% 0.16%(a)
- ----------------------------------------------------------------------
Net investment income 2.22%(a) 2.28% 2.71%(a)
- ----------------------------------------------------------------------
Expense waiver/reimbursement (b) 0.45%(a) 0.60% 0.78%(a)
- ----------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------
Net assets, end of period (000 omitted) $93,274 $59,269 $61,632
- ----------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from May 14, 1992 (date of initial public
investment) to November 30, 1992.
** Six months ended May 31, 1994 (unaudited).
*** Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 4).
(See Notes which are an integral part of the Financial Statements)
BILTMORE TAX-FREE MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
INVESTMENT SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1994** 1993 1992*
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------
Net investment income 0.01 0.02 0.01
- ----------------------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------
Dividends to shareholders from net investment income (0.01) (0.02) (0.01)
- ---------------------------------------------------------------------- ----------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------- ----------- --------- ---------
TOTAL RETURN*** 0.95% 1.99% 1.29%
- ----------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------
Expenses 0.62%(a) 0.59% 0.50%(a)
- ----------------------------------------------------------------------
Net investment income 1.92%(a) 1.98% 2.37%(a)
- ----------------------------------------------------------------------
Expense waiver/reimbursement (b) 0.55%(a) 0.70% 0.88%(a)
- ----------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------
Net assets, end of period (000 omitted) $37,969 $23,976 $5,338
- ----------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from May 20, 1992 (date of initial public
investment) to November 30, 1992.
** Six months ended May 31, 1994 (unaudited).
*** Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 4).
(See Notes which are an integral part of the Financial Statements)
BILTMORE TAX-FREE MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
The Biltmore Funds (the "Trust") is registered under the Investment Company Act
of 1940, as amended (the "Act"), as an open-end management investment company.
The Trust consists of eleven diversified portfolios. The financial statements
included herein are only those of the Biltmore Tax-Free Money Market Fund (the
"Fund"). The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held.
The Fund offers two classes of shares: Institutional Shares and Investment
Shares. Investment Shares are identical in all respects to Institutional Shares,
except that Investment Shares are sold pursuant to a distribution plan (the
"Plan") adopted in accordance with the Act's Rule 12b-1.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS--The Fund's use of the amortized cost method to value
its portfolio securities is in accordance with Rule 2a-7 under the Act.
Investments in other regulated investment companies are valued at net asset
value.
B. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code").
Distributions to shareholders are recorded on the ex-dividend date.
C. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its tax-exempt income.
Accordingly, no provisions for federal tax are necessary.
At November 30, 1993, the Fund, for federal tax purposes, had a capital
loss carryforward of $406, which will reduce the Fund's taxable income
arising from future net realized gain on investments, if any, to the extent
permitted by the Code, and thus will reduce the amount of the distributions
to shareholders which would otherwise be necessary to relieve the Fund of
any liability for federal tax. Pursuant to the Code, such capital loss
carryforward will expire in 2001.
D. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for
the securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
E. DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering the shares, have been deferred and are being
amortized using the straight-line method over a period of five years from
the Fund's commencement date.
F. OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. At May 31, 1994, capital paid-in aggregated $131,242,102.
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED
NOVEMBER 30,
------------------------------
INSTITUTIONAL SHARES 1994* 1993
- --------------------------------------------------------------------------------- ------------- ---------------
<S> <C> <C>
Shares sold 97,888,689 157,797,806
- ---------------------------------------------------------------------------------
Shares redeemed (63,883,671) (160,161,423)
- --------------------------------------------------------------------------------- ------------- ---------------
Net change resulting from Institutional Share transactions 34,005,018 (2,363,617)
- --------------------------------------------------------------------------------- ------------- ---------------
<CAPTION>
YEAR ENDED
NOVEMBER 30,
------------------------------
INVESTMENT SHARES 1994* 1993
- --------------------------------------------------------------------------------- ------------- ---------------
<S> <C> <C>
Shares sold 47,900,046 45,044,796
- ---------------------------------------------------------------------------------
Shares redeemed (33,907,541) (26,406,425)
- --------------------------------------------------------------------------------- ------------- ---------------
Net change resulting from Investment Share transactions 13,992,505 18,638,371
- --------------------------------------------------------------------------------- ------------- ---------------
Total net change resulting from Fund transactions 47,997,523 16,274,754
- --------------------------------------------------------------------------------- ------------- ---------------
</TABLE>
* Six months ended May 31, 1994.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Wachovia Investment Management Group, the Fund's
investment adviser (the "Adviser"), receives for its services an annual
investment advisory fee equal to .50 of 1% of the Fund's average daily net
assets. The Adviser may voluntarily choose to waive a portion of its fee and
reimburse certain operating expenses of the Fund. The Adviser can modify or
terminate this voluntary waiver and reimbursement at any time at its sole
discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. The FAS fee is based on the
level of average aggregate net assets of the Trust and The Biltmore Municipal
Funds for the period. FAS may voluntarily choose to waive a portion of its fee
and reimburse certain operating expenses of the Fund. FAS can modify or
terminate this voluntary waiver and reimbursement at any time at its sole
discretion.
DISTRIBUTION PLAN--The Trust has adopted the Plan pursuant to Rule 12b-1 under
the Act. Under the terms of the Plan, the Fund will compensate Federated
Securities Corp. ("FSC"), the principal distributor, from the net assets of the
Fund to finance activities intended to result in the sale of the Fund's
Investment Shares. The Plan provides that the Fund may incur distribution
expenses up to .40 of 1% of the average daily net assets of the Investment
Shares, annually, to compensate FSC.
TRANSFER AND DIVIDEND DISBURSING AGENT, ACCOUNTING AND CUSTODY FEES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent for
the Fund. The FServ fee is based on the size, type and number of accounts and
transactions made by shareholders.
FServ also maintains the Fund's accounting records. The fee is based on the
level of the Fund's average net assets for the period, plus out-of-pocket
expenses.
Wachovia Bank of North Carolina, N.A. is the Fund's custodian. The fee is based
on the level of the Fund's average net assets for the period, plus out-of pocket
expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses ($59,661) were borne initially
by FAS. The Fund has agreed to reimburse FAS for the organizational expenses
during the five year period following May 14, 1992 (date the Fund first became
effective). For the six months ended May 31, 1994, the Fund paid $5,183 pursuant
to this agreement.
Certain of the Officers of the Trust are Officers and Trustees of FAS, FSC, and
FServ.
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
James A. Hanley John W. McGonigle
Malcolm T. Hopkins President and Treasurer
Samuel E. Hudgins Ronald M. Petnuch
J. Berkley Ingram, Jr. Vice President and Assistant Treasurer
D. Dean Kaylor Joseph M. Huber
Secretary
Mark A. Sheehan
Assistant Secretary
</TABLE>
Mutual funds are not obligations of or insured by any bank, nor are they insured
by the federal government or any of its agencies.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus, which contains facts
concerning its objective and policies, management fees, expenses and other
information.
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I'm pleased to present the Semi-Annual Report to Shareholders of the Biltmore
Equity Fund (the "Fund") for the six-month period ended May 31, 1994. The Report
begins with a brief commentary on the stock market from the Fund's portfolio
manager. Following the commentary are a complete listing of the Fund's portfolio
of investments and its financial statements.
On your behalf, the Fund pursues growth of principal and income by investing in
a diversified portfolio of blue-chip stocks issued by some of America's largest
and best-known companies. At the end of the period, the Fund's portfolio
included such names as Nike Inc., General Electric Co., Baxter International,
Inc., Circuit City Stores, Inc., and Sara Lee Corp., to name just a few.
Dividends paid to the Fund's shareholders totaled $0.09 per share for the
six-month reporting period. Capital gains totaled $0.08 per share. During the
same time, total assets increased from $62.0 million to $70.3 million, and the
Fund's net asset value rose from $10.28 at the beginning of the period to $10.32
at the period's end.
Thank you for your confidence in the Biltmore Equity Fund. We look forward to
keeping you informed about your investment. As always, we welcome your comments
and suggestions.
Sincerely,
John W. McGonigle
President
July 15, 1994
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Repeated interest rate increases by the Federal Reserve Board and concerns about
corporate profitability over the first five months of this year touched off a
long-awaited correction in the equity markets. During the six-month period
between November 30, 1993 and May 31, 1994, the Standard & Poor's Corporation
Daily Stock Price Index of 500 Common Stocks (the "S&P 500" or the "Index")* had
a total return of 0.1%. The period was also characterized by volatility in the
equity market and a decline in the heavy flow of investor monies into mutual
funds.
Although many stocks in the S&P 500 advanced during the six-month period, the
return for the Index was constrained by the poor performances of stocks in the
consumer non-durables and utility sectors. During the six-month period ended May
31, 1994, the Biltmore Equity Fund (the "Fund") was overweighted in the
technology, capital goods, and materials and services sectors. These stocks have
been among the market's best performers during the past two years, and are
expected to continue to benefit from the dramatic expansion of emerging markets
and new economies around the world. In response to the higher interest rates,
the Fund's portfolio managers also adopted a slightly more defensive position by
increasing holdings of finance and utility stocks. These equities, which have
been hit especially hard by the market since February 1994, were less volatile
and brought the Fund's sector weightings more in line with the market.
On May 31, 1994, the Fund's largest holdings were Royal Dutch Petroleum (2.7%);
FMC Corp. (2.2%); the Federal National Mortgage Association (2.1%); Loews Corp.
(1.9%); and MAPCO (1.9%). At
May 31, the Fund had net assets of $70.3 million and a net asset value of $10.32
per share, and the Fund's 30-day SEC yield was 1.85%**.
* This index is unmanaged.
** Performance quoted represents past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
BILTMORE EQUITY FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- ----------------------------------------------------------------------------------- --------------
COMMON STOCKS--87.5%
- --------------------------------------------------------------------------------------------------
CAPITAL GOODS--8.1%
-----------------------------------------------------------------------------------
12,200 Ametek, Inc. $ 167,750
-----------------------------------------------------------------------------------
1,600 Browning-Ferris Industries, Inc. 46,400
-----------------------------------------------------------------------------------
2,100 Caterpillar, Inc. 224,437
-----------------------------------------------------------------------------------
1,100 Cooper Industries, Inc. 39,875
-----------------------------------------------------------------------------------
11,500 Dover Corp. 610,937
-----------------------------------------------------------------------------------
44 *Gardner Denver Machinery, Inc. 410
-----------------------------------------------------------------------------------
18,030 General Electric Co. 894,739
-----------------------------------------------------------------------------------
11,440 Giddings & Lewis Inc. 251,680
-----------------------------------------------------------------------------------
1,200 Halliburton Co. 36,450
-----------------------------------------------------------------------------------
29,490 Harsco Corp. 1,220,149
-----------------------------------------------------------------------------------
23,651 Honeywell, Inc. 742,050
-----------------------------------------------------------------------------------
17,785 Keystone International, Inc. 393,493
-----------------------------------------------------------------------------------
28,679 York International 1,032,444
----------------------------------------------------------------------------------- --------------
Total 5,660,814
----------------------------------------------------------------------------------- --------------
CONSUMER DURABLES--1.3%
-----------------------------------------------------------------------------------
3,800 Ford Motor Co. 219,450
-----------------------------------------------------------------------------------
15,000 LADD Furniture, Inc. 135,000
-----------------------------------------------------------------------------------
15,299 Stanley Works 592,836
----------------------------------------------------------------------------------- --------------
Total 947,286
----------------------------------------------------------------------------------- --------------
CONSUMER NON-DURABLES--25.1%
-----------------------------------------------------------------------------------
31,808 Abbott Laboratories 950,264
-----------------------------------------------------------------------------------
6,300 American Brands, Inc. 204,750
-----------------------------------------------------------------------------------
6,730 American Cyanamid Co. 350,801
-----------------------------------------------------------------------------------
9,987 American Home Products Co. 579,246
-----------------------------------------------------------------------------------
</TABLE>
BILTMORE EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- ----------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------------------
CONSUMER NON-DURABLES--CONTINUED
-----------------------------------------------------------------------------------
1,200 American Stores Co. $ 30,000
-----------------------------------------------------------------------------------
11,600 Avon Products, Inc. 682,950
-----------------------------------------------------------------------------------
3,600 Baxter International, Inc. 92,700
-----------------------------------------------------------------------------------
3,100 Becton, Dickinson & Co. 118,187
-----------------------------------------------------------------------------------
31,540 Bergen Brunswig Corp., Cl. A 559,835
-----------------------------------------------------------------------------------
14,680 Bristol-Myers Squibb Co. 801,895
-----------------------------------------------------------------------------------
4,400 Circuit City Stores, Inc. 85,250
-----------------------------------------------------------------------------------
8,326 Coca-Cola Co. 336,162
-----------------------------------------------------------------------------------
3,250 Columbia/HCA Healthcare Corp. 129,187
-----------------------------------------------------------------------------------
7,064 CPC International, Inc. 342,604
-----------------------------------------------------------------------------------
1,100 Donnelley (R.R.) & Sons, Co. 30,250
-----------------------------------------------------------------------------------
1,600 Dow Jones & Co. 58,200
-----------------------------------------------------------------------------------
9,735 Dun & Bradstreet Corp. 567,064
-----------------------------------------------------------------------------------
43,346 Fruit of the Loom, Inc., Cl. A 1,273,289
-----------------------------------------------------------------------------------
6,400 IBP Inc. 164,000
-----------------------------------------------------------------------------------
35,000 *International Dairy Queen Inc., Cl. A 621,250
-----------------------------------------------------------------------------------
35,562 Lee Enterprises, Inc. 1,142,429
-----------------------------------------------------------------------------------
3,300 Lilly (Eli) & Co. 189,337
-----------------------------------------------------------------------------------
11,200 Limited Inc. 197,400
-----------------------------------------------------------------------------------
15,238 Loews Corp. 1,356,182
-----------------------------------------------------------------------------------
22,800 Melville Corp. 926,250
-----------------------------------------------------------------------------------
10,300 Merck & Co. 314,150
-----------------------------------------------------------------------------------
10,887 Nike, Inc., Cl. B 642,333
-----------------------------------------------------------------------------------
17,280 PepsiCo, Inc. 622,080
-----------------------------------------------------------------------------------
3,600 Pfizer, Inc. 229,500
-----------------------------------------------------------------------------------
18,088 Philip Morris Cos., Inc. 890,834
-----------------------------------------------------------------------------------
7,854 Russell Corp. 234,638
-----------------------------------------------------------------------------------
2,000 Sara Lee Corp. 42,750
-----------------------------------------------------------------------------------
</TABLE>
BILTMORE EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- ----------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------------------
CONSUMER NON-DURABLES--CONTINUED
-----------------------------------------------------------------------------------
2,600 Sears, Roebuck & Co. $ 131,625
-----------------------------------------------------------------------------------
800 Service Corp., International 19,600
-----------------------------------------------------------------------------------
6,000 Stanhome, Inc. 204,000
-----------------------------------------------------------------------------------
15,396 Surgical Care Affiliates 203,997
-----------------------------------------------------------------------------------
10,077 *Toys R Us, Inc. 357,733
-----------------------------------------------------------------------------------
42,770 Unifi, Inc. 1,095,981
-----------------------------------------------------------------------------------
5,005 Unilever N.V. 525,525
-----------------------------------------------------------------------------------
4,700 Upjohn Co. 150,988
-----------------------------------------------------------------------------------
7,000 UST, Inc. 176,750
----------------------------------------------------------------------------------- --------------
Total 17,631,966
----------------------------------------------------------------------------------- --------------
ENERGY--11.1%
-----------------------------------------------------------------------------------
18,800 Amoco Corp. 1,106,850
-----------------------------------------------------------------------------------
17,200 Baker Hughes, Inc. 341,850
-----------------------------------------------------------------------------------
10,848 Coastal Corp. 306,456
-----------------------------------------------------------------------------------
8,000 Dresser Industries, Inc. 181,000
-----------------------------------------------------------------------------------
14,473 Exxon Corp. 882,853
-----------------------------------------------------------------------------------
21,510 MAPCO, Inc. 1,344,375
-----------------------------------------------------------------------------------
24,261 Phillips Petroleum Co. 788,482
-----------------------------------------------------------------------------------
17,467 Royal Dutch Petroleum Co. 1,866,786
-----------------------------------------------------------------------------------
16,028 Schlumberger, Ltd. 917,603
-----------------------------------------------------------------------------------
1,500 Unocal Corp. 41,438
----------------------------------------------------------------------------------- --------------
Total 7,777,693
----------------------------------------------------------------------------------- --------------
FINANCE--11.2%
-----------------------------------------------------------------------------------
14,226 AMBAC, Inc. 569,040
-----------------------------------------------------------------------------------
34,422 American Express Co. 950,908
-----------------------------------------------------------------------------------
9,676 American International Group, Inc. 903,497
-----------------------------------------------------------------------------------
1,200 Citicorp 47,400
-----------------------------------------------------------------------------------
18,479 Federal Home Loan Mortgage Corp. 1,071,782
-----------------------------------------------------------------------------------
</TABLE>
BILTMORE EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- ----------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------------------
FINANCE--CONTINUED
-----------------------------------------------------------------------------------
17,440 Federal National Mortgage Association $ 1,456,240
-----------------------------------------------------------------------------------
4,400 KeyCorp 143,000
-----------------------------------------------------------------------------------
6,884 Lehman Brothers Holdings 123,919
-----------------------------------------------------------------------------------
5,700 MBIA, Inc. 327,037
-----------------------------------------------------------------------------------
2,000 Morgan (J.P.) & Co., Inc. 132,000
-----------------------------------------------------------------------------------
10,916 *Providian Corp. 341,125
-----------------------------------------------------------------------------------
8,900 Salomon, Inc. 455,013
-----------------------------------------------------------------------------------
19,413 SunTrust Banks 956,090
-----------------------------------------------------------------------------------
6,600 Unitrin Inc. 269,362
-----------------------------------------------------------------------------------
1,000 Wells Fargo & Co. 156,875
----------------------------------------------------------------------------------- --------------
Total 7,903,288
----------------------------------------------------------------------------------- --------------
MATERIALS & SERVICES--11.3%
-----------------------------------------------------------------------------------
8,148 Aluminum Company of America 575,452
-----------------------------------------------------------------------------------
1,400 Ball Corp. 40,250
-----------------------------------------------------------------------------------
20,811 Crane Co. 538,485
-----------------------------------------------------------------------------------
7,231 Dow Chemical Co. 493,516
-----------------------------------------------------------------------------------
11,400 Equifax, Inc. 317,775
-----------------------------------------------------------------------------------
32,031 *FMC Corp. 1,545,496
-----------------------------------------------------------------------------------
23,263 Hanson PLC 447,813
-----------------------------------------------------------------------------------
6,362 International Paper Co. 440,568
-----------------------------------------------------------------------------------
5,400 Monsanto Co. 441,450
-----------------------------------------------------------------------------------
15,842 NCH Corp. 920,816
-----------------------------------------------------------------------------------
25,700 Potash Corp. Saskatchewan Inc. 664,987
-----------------------------------------------------------------------------------
60,434 Praxair, Inc. 1,231,343
-----------------------------------------------------------------------------------
15,152 Sonoco Products Co. 306,828
-----------------------------------------------------------------------------------
201 Tyco International, Ltd. 9,547
----------------------------------------------------------------------------------- --------------
Total 7,974,326
----------------------------------------------------------------------------------- --------------
</TABLE>
BILTMORE EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- ----------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------------------
FINANCE--CONTINUED
-----------------------------------------------------------------------------------
TECHNOLOGY--11.2%
-----------------------------------------------------------------------------------
13,863 American Telephone & Telegraph, Inc. $ 755,534
-----------------------------------------------------------------------------------
9,768 Avnet, Inc. 328,449
-----------------------------------------------------------------------------------
21,800 Boeing Co. 1,010,975
-----------------------------------------------------------------------------------
3,658 *Cisco Systems, Inc. 90,536
-----------------------------------------------------------------------------------
7,031 *Computer Sciences Corp. 304,970
-----------------------------------------------------------------------------------
5,200 *Cray Research, Inc. 107,900
-----------------------------------------------------------------------------------
26,800 *Digital Equipment Corp. 592,950
-----------------------------------------------------------------------------------
2,100 Ericsson (LM) Tel Co. Cl. B 105,525
-----------------------------------------------------------------------------------
11,964 General Motors Corp. Cl. E 420,236
-----------------------------------------------------------------------------------
7,602 Hewlett-Packard Co. 596,757
-----------------------------------------------------------------------------------
4,600 International Business Machines, Inc. 290,950
-----------------------------------------------------------------------------------
18,827 MCI Communications Corp. 451,848
-----------------------------------------------------------------------------------
12,272 *Microsoft Corp. 659,620
-----------------------------------------------------------------------------------
8,850 Northern Telecom Ltd. 275,456
-----------------------------------------------------------------------------------
6,800 *Novell, Inc. 120,700
-----------------------------------------------------------------------------------
11,300 Raytheon Co. 703,425
-----------------------------------------------------------------------------------
10,227 Xerox Corp. 1,027,814
----------------------------------------------------------------------------------- --------------
Total 7,843,645
----------------------------------------------------------------------------------- --------------
TRANSPORTATION--1.3%
-----------------------------------------------------------------------------------
1,995 Conrail, Inc. 109,476
-----------------------------------------------------------------------------------
16,442 Delta Air Lines, Inc. 750,166
-----------------------------------------------------------------------------------
2,300 Ryder System, Inc. 55,487
----------------------------------------------------------------------------------- --------------
Total 915,129
----------------------------------------------------------------------------------- --------------
UTILITIES--6.9%
-----------------------------------------------------------------------------------
10,983 *Airtouch Communications, Inc. 267,711
-----------------------------------------------------------------------------------
3,400 ALLTEL Corp. 88,825
-----------------------------------------------------------------------------------
16,396 BellSouth Corp. 975,562
-----------------------------------------------------------------------------------
</TABLE>
BILTMORE EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
OR SHARES VALUE
<C> <S> <C>
- ------------- ----------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------------------
UTILITIES--CONTINUED
-----------------------------------------------------------------------------------
5,400 Carolina Power & Light Co. 131,625
-----------------------------------------------------------------------------------
40,732 GTE Corp. $ 1,257,601
-----------------------------------------------------------------------------------
13,101 NYNEX Corp. 494,563
-----------------------------------------------------------------------------------
9,300 Pacific Gas & Electric Co. 238,313
-----------------------------------------------------------------------------------
12,386 Pacific Telesis Group 376,225
-----------------------------------------------------------------------------------
22,421 Pennsylvania Power & Light Co. 496,065
-----------------------------------------------------------------------------------
8,992 Scana Corp. 394,524
-----------------------------------------------------------------------------------
3,000 U.S. West, Inc. 120,375
----------------------------------------------------------------------------------- --------------
Total 4,841,389
----------------------------------------------------------------------------------- --------------
TOTAL COMMON STOCKS (IDENTIFIED COST $60,102,592) 61,495,536
----------------------------------------------------------------------------------- --------------
U.S. TREASURY OBLIGATIONS--1.6%
- --------------------------------------------------------------------------------------------------
U.S. TREASURY BILLS
-----------------------------------------------------------------------------------
$ 1,125,000 6/16/94 1,123,287
----------------------------------------------------------------------------------- --------------
**REPURCHASE AGREEMENT--10.2%
- --------------------------------------------------------------------------------------------------
7,200,544 PaineWebber, Inc., 4.20%, dated 5/31/94, due 6/1/94
(at amortized cost) (Note 2B) 7,200,544
----------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS (IDENTIFIED COST $68,426,423) $ 69,819,367+
----------------------------------------------------------------------------------- --------------
</TABLE>
* Non-income producing securities.
** The repurchase agreement is fully collateralized by U.S. Treasury obligations
based on market prices at the date of the portfolio.
+ The cost of investments for federal tax purposes amounts to $68,426,423. The
net unrealized appreciation of investments on a federal tax cost basis
amounts to $1,392,944, which is comprised of $3,915,371 appreciation and
$2,522,427 depreciation at May 31, 1994.
Note: The categories of investments are shown as a percentage of net assets
($70,302,718) at May 31, 1994.
(See Notes which are an integral part of the Financial Statements)
BILTMORE EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------------------------
Investment in repurchase agreement (Note 2B) $ 7,200,544
- ---------------------------------------------------------------------------------
Investments in other securities (Note 2A) 62,618,823
- --------------------------------------------------------------------------------- --------------
Total investments, at value (identified and tax cost $68,426,423) $ 69,819,367
- -------------------------------------------------------------------------------------------------
Cash 74,955
- -------------------------------------------------------------------------------------------------
Dividends and interest receivable 214,218
- -------------------------------------------------------------------------------------------------
Receivable for investments sold 189,998
- -------------------------------------------------------------------------------------------------
Receivable for Fund shares sold 179,497
- -------------------------------------------------------------------------------------------------
Deferred expenses (Note 2F) 17,904
- ------------------------------------------------------------------------------------------------- --------------
Total assets 70,495,939
- -------------------------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------------------------
Payable for investments purchased 166,705
- ---------------------------------------------------------------------------------
Payable for Fund shares redeemed 998
- ---------------------------------------------------------------------------------
Payable for daily variation margin on open futures contracts (Note 2G) 750
- ---------------------------------------------------------------------------------
Accrued expenses 24,768
- --------------------------------------------------------------------------------- --------------
Total liabilities 193,221
- ------------------------------------------------------------------------------------------------- --------------
NET ASSETS for 6,813,432 shares of beneficial interest outstanding $ 70,302,718
- ------------------------------------------------------------------------------------------------- --------------
NET ASSETS CONSIST OF:
- -------------------------------------------------------------------------------------------------
Paid-in capital $ 68,207,813
- -------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments (net of futures of $13,069) 1,406,013
- -------------------------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments 452,950
- -------------------------------------------------------------------------------------------------
Undistributed net investment income 235,942
- ------------------------------------------------------------------------------------------------- --------------
Total Net Assets $ 70,302,718
- ------------------------------------------------------------------------------------------------- --------------
NET ASSET VALUE and Redemption Proceeds Per Share:
($70,302,718 / 6,813,432 SHARES OF BENEFICIAL INTEREST OUTSTANDING) $10.32
- ------------------------------------------------------------------------------------------------- --------------
COMPUTATION OF OFFERING PRICE:
Offering Price Per Share (100/95.5 of $10.32)* $10.81
- ------------------------------------------------------------------------------------------------- --------------
</TABLE>
* See "What Shares Cost" in the prospectus.
(See Notes which are an integral part of the Financial Statements)
BILTMORE EQUITY FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- --------------------------------------------------------------------------------------------------
Interest income $ 146,583
- --------------------------------------------------------------------------------------------------
Dividend income 719,055
- -------------------------------------------------------------------------------------------------- -------------
Total income (Note 2C) 865,638
- --------------------------------------------------------------------------------------------------
EXPENSES:
- --------------------------------------------------------------------------------------------------
Investment advisory fee (Note 4) $ 223,355
- -------------------------------------------------------------------------------------
Trustees' fees 257
- -------------------------------------------------------------------------------------
Administrative personnel and services fees (Note 4) 37,500
- -------------------------------------------------------------------------------------
Custodian fees (Note 4) 6,382
- -------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses (Note 4) 14,980
- -------------------------------------------------------------------------------------
Fund share registration costs 9,315
- -------------------------------------------------------------------------------------
Auditing fees 7,939
- -------------------------------------------------------------------------------------
Legal fees 2,476
- -------------------------------------------------------------------------------------
Printing and postage 8,146
- -------------------------------------------------------------------------------------
Portfolio accounting fees (Note 4) 25,430
- -------------------------------------------------------------------------------------
Insurance premiums 2,596
- -------------------------------------------------------------------------------------
Miscellaneous 921
- ------------------------------------------------------------------------------------- -----------
Total expenses 339,297
- -------------------------------------------------------------------------------------
Deduct--
- -------------------------------------------------------------------------------------
Waiver of investment advisory fee (Note 4) $ 31,908
- --------------------------------------------------------------------------
Waiver of administrative personnel and services fees (Note 4) 3,250
- --------------------------------------------------------------------------
Reimbursement of other operating expenses
by Administrator (Note 4) 20,158 55,316
- -------------------------------------------------------------------------- --------- -----------
Net expenses 283,981
- -------------------------------------------------------------------------------------------------- -------------
Net investment income 581,657
- -------------------------------------------------------------------------------------------------- -------------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:
- --------------------------------------------------------------------------------------------------
Net realized gain (loss) on investment transactions (identified cost basis) 495,268
- --------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments 295,424
- -------------------------------------------------------------------------------------------------- -------------
Net realized and unrealized gain (loss) on investments 790,692
- -------------------------------------------------------------------------------------------------- -------------
Change in net assets resulting from operations $ 1,372,349
- -------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
BILTMORE EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
<S> <C> <C>
1994** 1993*
INCREASE (DECREASE) IN NET ASSETS:
- --------------------------------------------------------------------------------
OPERATIONS--
- --------------------------------------------------------------------------------
Net investment income $ 581,657 $ 758,251
- --------------------------------------------------------------------------------
Net realized gain (loss) on investment transactions ($495,268 and $473,233 net
gains respectively, as computed for federal tax purposes) 495,268 431,177
- --------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) of investments 295,424 1,110,589
- -------------------------------------------------------------------------------- --------------- ---------------
Change in net assets resulting from operations 1,372,349 2,300,017
- -------------------------------------------------------------------------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2C)--
- --------------------------------------------------------------------------------
Dividends to shareholders from net investment income (565,198) (538,768)
- --------------------------------------------------------------------------------
Distributions to shareholders from net realized gain on investment transactions (473,495) --
- -------------------------------------------------------------------------------- --------------- ---------------
Change in net assets from distributions to shareholders (1,038,693) (538,768)
- -------------------------------------------------------------------------------- --------------- ---------------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 3)--
- --------------------------------------------------------------------------------
Net proceeds from sale of shares 17,738,396 75,870,874
- --------------------------------------------------------------------------------
Net asset value of shares issued to shareholders electing to receive payment of
dividends in Fund shares 1,031,073 538,767
- --------------------------------------------------------------------------------
Cost of shares redeemed (10,797,646) (16,173,651)
- -------------------------------------------------------------------------------- --------------- ---------------
Change in net assets from Fund share transactions 7,971,823 60,235,990
- -------------------------------------------------------------------------------- --------------- ---------------
Change in net assets 8,305,479 61,997,239
- --------------------------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------------------------
Beginning of period 61,997,239 --
- -------------------------------------------------------------------------------- --------------- ---------------
End of period (including undistributed net investment income of $235,942 and
$219,483, respectively) $ 70,302,718 $ 61,997,239
- -------------------------------------------------------------------------------- --------------- ---------------
</TABLE>
* For the period from May 10, 1993 (date of initial public investment) to
November 30, 1993.
** Six months ended May 31, 1994 (unaudited).
(See Notes which are an integral part of the Financial Statements)
BILTMORE EQUITY FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED
NOVEMBER 30,
1994** 1993*
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.28 $ 10.00
- -------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------------
Net investment income 0.09 0.12
- -------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.12 0.25
- ------------------------------------------------------------------------------------------- ----------- ---------
Total from investment operations 0.21 0.37
- -------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- -------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (0.09) (0.09)
- -------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gain on
investment transactions (0.08) --
- ------------------------------------------------------------------------------------------- ----------- ---------
Total distributions (0.17) (0.09)
- ------------------------------------------------------------------------------------------- ----------- ---------
NET ASSET VALUE, END OF PERIOD $ 10.32 $ 10.28
- ------------------------------------------------------------------------------------------- ----------- ---------
TOTAL RETURN*** 2.07% 3.68%
- -------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------------------------------------------------------
Expenses 0.89%(a) 0.81%(a)
- -------------------------------------------------------------------------------------------
Net investment income 1.82%(a) 2.18%(a)
- -------------------------------------------------------------------------------------------
Expense waiver/reimbursement (b) 0.17%(a) 0.32%(a)
- -------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $70,303 $61,997
- -------------------------------------------------------------------------------------------
Portfolio turnover rate 19% 50%
- -------------------------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from May 10, 1993 (date of initial public
investment) to November 30, 1993.
** Six months ended May 31, 1994 (unaudited).
*** Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 4).
(See Notes which are an integral part of the Financial Statements)
BILTMORE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
The Biltmore Funds (the "Trust") is registered under the Investment Company Act
of 1940, as amended (the "Act"), as an open-end management investment company.
The Trust consists of eleven diversified portfolios. The financial statements
included herein present only those of the Biltmore Equity Fund (the "Fund"). The
financial statements of the other portfolios are presented separately. The
assets of each portfolio are segregated and a shareholder's interest is limited
to the portfolio in which shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles (GAAP).
A. INVESTMENT VALUATIONS--Listed equity securities are valued at the last
sales price reported on national securities exchanges. Unlisted securities,
short-term obligations and private placement securities are generally
valued at the prices provided by an independent pricing service. Short-term
securities with remaining maturities of sixty days or less at the time of
purchase may be stated at amortized cost, which approximates value.
B. REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System or to have segregated within the
custodian bank's vault, all securities held as collateral in support of
repurchase agreement investments. Additionally, procedures have been
established by the Fund to monitor, on a daily basis, the market value of
each repurchase agreement's underlying collateral to ensure the value at
least equals the principal amount of the repurchase agreement, including
accrued interest.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to guidelines established
by the Board of Trustees ("Trustees"). Risks may arise from the potential
inability of counterparties to honor the terms of the repurchase agreement.
Accordingly, the Fund could receive less than the repurchase price on the
sale of collateral securities.
C. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Dividend income and
distributions are recorded on the ex-dividend date. Interest income and
expenses are accrued daily. Bond premium and discount, if applicable, are
amortized as required by the Internal Revenue Code, as amended (the
"Code").
D. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its taxable income.
Accordingly, no provisions for federal tax are necessary.
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
F. DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering the shares, have been deferred and are being
amortized using the straight-line method over a period of five years from
the Fund's commencement date.
G. FUTURES--Upon entering into a financial futures contract with a broker, the
Fund is required to deposit in a segregated account an amount ("initial
margin") of cash or U.S. government securities equal to a percentage of the
contract value. The Fund agrees to receive from or pay to the broker an
amount of cash equal to a specific dollar amount times the difference
between the closing value and the price at which the contract was made. On
a daily basis, the value of the financial futures contract is determined
and any difference between such value and the original futures contract
value is reflected in the "daily variation margin" account. Daily variation
margin adjustments, arising from this "marking to market" process, are
recorded by the Fund as unrealized gains or losses.
The Fund may decide to close its position on a contract at any time prior
to the contract's expiration. When a contract is closed, the Fund
recognizes a realized gain or loss. Risks of entering into futures
contracts include the possibility that a change in the value of the
contract may not correlate with changes in the value of the underlying
securities.
At May 31, 1994, the Fund had outstanding futures contracts as set out
below:
<TABLE>
<CAPTION>
CONTRACTS NET UNREALIZED
EXPIRATION TO DELIVER/ APPRECIATION
DATE RECEIVE POSITION (DEPRECIATION)
<S> <C> <C> <C>
June 16, 1994 5 S&P 500 $ 13,069
</TABLE>
H. OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1994** 1993*
- ------------------------------------------------------------------------------- ------------ ------------
<S> <C> <C>
Shares sold 1,727,092 7,567,265
- -------------------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 99,688 52,851
- -------------------------------------------------------------------------------
Shares redeemed (1,044,358) (1,589,106)
- ------------------------------------------------------------------------------- ------------ ------------
Net change resulting from Fund share transactions 782,422 6,031,010
- ------------------------------------------------------------------------------- ------------ ------------
</TABLE>
* The period from May 10, 1993 (date of initial public investment) to November
30, 1993.
** Six months ended May 31, 1994.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Wachovia Investment Management Group, the Fund's
investment adviser (the "Adviser"), receives for its services an annual
investment advisory fee equal to .70 of 1% of the Fund's average daily net
assets. The Adviser may voluntarily choose to waive its fee and reimburse
certain operating expenses of the Fund. The Adviser can modify or terminate this
voluntary waiver and reimbursement at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. The FAS fee is based on the
level of average aggregate net assets of the Trust and The Biltmore Municipal
Funds for the period. FAS may voluntarily choose to waive a portion of its fee
and reimburse certain operating expenses of the Fund. FAS can modify or
terminate this voluntary waiver and reimbursement at any time at its sole
discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT, ACCOUNTING AND CUSTODY FEES--Federated
Services Company ("FSserv") serves as transfer and dividend disbursing agent for
the Fund. The FServ fee is based on the size, type and number of accounts and
transactions made by shareholders.
FServ also maintains the Fund's accounting records. The fee is based on the
level of the Fund's average net assets for the period, plus out-of-pocket
expenses.
Wachovia Bank of North Carolina, N.A. is the Fund's custodian. The fee is based
on the level of the Fund's average net assets for the period, plus out-of-pocket
expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses ($33,130) were borne initially
by FAS. The Fund has agreed to reimburse FAS for the organizational expenses
during the five-year period following April 3, 1993 (date the Fund first became
effective). For the six months ended May 31, 1994, the Fund paid $1,104 pursuant
to this agreement.
Certain of the Officers of the Trust are Officers and Trustees of FAS and FServ.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the six
months ended
May 31, 1994, were as follows:
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------------------------
PURCHASES $ 16,192,837
- -------------------------------------------------------------------------------------------------- --------------
SALES $ 10,506,701
- -------------------------------------------------------------------------------------------------- --------------
</TABLE>
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
James A. Hanley John W. McGonigle
Malcolm T. Hopkins President and Treasurer
Samuel E. Hudgins Ronald M. Petnuch
J. Berkley Ingram, Jr. Vice President and Assistant Treasurer
D. Dean Kaylor Joseph M. Huber
Secretary
Mark A. Sheehan
Assistant Secretary
</TABLE>
Mutual funds are not obligations of or insured by any bank, nor are they insured
by the federal government or any of its agencies. Investment in these shares
involves risk, including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus, which contains facts
concerning its objective and policies, management fees and other information.
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I'm pleased to present the Semi-Annual Report to Shareholders of the Biltmore
Fixed Income Fund (the "Fund") for the six-month period ended May 31, 1994. The
Report begins with a brief commentary on the bond market from the Fund's
portfolio manager. Following the commentary are a complete listing of the Fund's
portfolio of investments and its financial statements.
On your behalf, the Fund pursues a high level of total return through a
diversified portfolio of high-grade corporate bonds issued by some of America's
leading companies, as well as U.S. government bonds. At the end of the period,
the Fund's portfolio included such well-known corporate names as Coca Cola,
Motorola, Inc., Xerox Corp., and General Electric Capital Corp., to name just a
few.
Dividends paid to the Fund's shareholders totaled $0.27 per share for the
six-month reporting period. Capital gains totaled $0.06 per share.
While the Fund's net asset value began the period at $10.00, it ended the period
at $9.28, due to increased volatility in the financial markets early in the year
brought on by rising interest rates. Total Fund assets stood at $139.1 million
on the last day of the period.
We look forward to keeping you informed about your investment in the Fund. As
always, we welcome your comments and suggestions.
Sincerely,
John W. McGonigle
President
July 15, 1994
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
The bond market has been hampered by rising interest rates, a strengthening
economy and fears of higher inflation. As rates have moved higher, municipal
bond refundings and the steady flow of cash into bond mutual funds have also
declined, further weakening the bond market. From November 30, 1993 to May 31,
1994, the Lehman Brothers Aggregate Bond Index* had a total return that fell
3.13%.
The Biltmore Fixed Income Fund (the "Fund") maintained an average maturity in
line with the market until March, when interest rates began moving higher. At
that point, investment strategy for the Fund became more aggressive. By the end
of May, maturities were 15% greater than the market. The Fund's portfolio also
was overweighted in shorter and longer maturities, and underweighted in
intermediate maturities, to take advantage of a flattening of the yield curve.
On May 31, 1994, net assets totaled $139.1 million, down slightly from $140.3
million on
November 30, 1993. The net asset value per share of the Fund decreased during
the period from $10.00 to $9.28. The 30-day SEC yield increased from 4.39% to
5.74% during the period.** The Fund ended the period with an average duration of
5.48 years.
* This index is unmanaged.
** Performance quoted represents past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
BILTMORE FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
ASSET-BACKED SECURITIES--1.6%
- ------------------------------------------------------------------------------------------------
$ 653,422 Ford Credit Trust, 4.85%, 1/15/98 $ 645,660
--------------------------------------------------------------------------------
1,020,451 GMAC Grantor Trust, 4.00%, 9/15/98 1,000,042
--------------------------------------------------------------------------------
634,163 USAA Auto Loan Grantors Trust, 3.90%, 3/15/99 620,091
-------------------------------------------------------------------------------- ---------------
TOTAL ASSET-BACKED SECURITIES (IDENTIFIED COST, $2,312,009) 2,265,793
-------------------------------------------------------------------------------- ---------------
CORPORATE BONDS--26.8%
- ------------------------------------------------------------------------------------------------
BANKING--7.6%
--------------------------------------------------------------------------------
1,000,000 BankAmerica Corp., 6.00%, 7/15/97 974,120
--------------------------------------------------------------------------------
4,000,000 Bankers Trust NY Corp., 4.70%, 7/1/96 3,863,720
--------------------------------------------------------------------------------
1,500,000 Branch Banking & Trust Co., 4.75%, 5/15/96 1,455,660
--------------------------------------------------------------------------------
4,500,000 NationsBank Corp., 4.75%-5.375%, 8/15/96-4/15/2000 4,309,360
-------------------------------------------------------------------------------- ---------------
Total 10,602,860
-------------------------------------------------------------------------------- ---------------
BEVERAGES--0.6%
--------------------------------------------------------------------------------
350,000 Coca Cola Co., 7.875%, 9/15/98 361,477
--------------------------------------------------------------------------------
500,000 Pepsico, Inc., 7.625%, 12/18/98 508,065
-------------------------------------------------------------------------------- ---------------
Total 869,542
-------------------------------------------------------------------------------- ---------------
CHEMICALS--1.3%
--------------------------------------------------------------------------------
240,000 DuPont (E.I.) de Nemours & Co., 7.00%, 4/16/97 242,117
--------------------------------------------------------------------------------
1,672,000 Monsanto Co., 7.09%, 12/15/2000 1,629,481
-------------------------------------------------------------------------------- ---------------
Total 1,871,598
-------------------------------------------------------------------------------- ---------------
DRUGS--1.5%
--------------------------------------------------------------------------------
1,215,000 American Home Products, 6.875%, 4/15/97 1,219,824
--------------------------------------------------------------------------------
850,000 Pfizer, Inc., 6.50%, 2/1/97 847,433
-------------------------------------------------------------------------------- ---------------
Total 2,067,257
-------------------------------------------------------------------------------- ---------------
ELECTRONICS--0.5%
--------------------------------------------------------------------------------
605,000 Motorola, Inc., 8.40%, 8/15/2031 650,278
-------------------------------------------------------------------------------- ---------------
</TABLE>
BILTMORE FIXED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
CORPORATE BONDS--CONTINUED
- ------------------------------------------------------------------------------------------------
FINANCE--7.9%
--------------------------------------------------------------------------------
$ 670,000 Barclays American Corp., 9.125%, 12/1/97 $ 712,210
--------------------------------------------------------------------------------
2,330,000 Beneficial Corp., 6.15%-10.00%, 1/15/96-12/1/2021 2,433,348
--------------------------------------------------------------------------------
240,000 European Investment Bank, 4.905%, 11/21/94 239,479
--------------------------------------------------------------------------------
665,000 Exxon Capital Corp., 6.50%-7.875%, 4/15/96-7/15/99 660,239
--------------------------------------------------------------------------------
1,495,000 General Electric Capital Corp., 1.00%-9.50%, 8/24/95-5/1/2018 1,520,572
--------------------------------------------------------------------------------
1,000,000 IBM Credit Corp., 5.00%, 5/10/96 971,680
--------------------------------------------------------------------------------
315,000 International Bank for Reconstruction & Development, 9.00%,
11/15/95 328,394
--------------------------------------------------------------------------------
1,100,000 Nationwide Life Insurance Co., 6.50%, 2/15/2004 995,445
--------------------------------------------------------------------------------
1,000,000 Norwest Financial, Inc., 6.25%, 3/15/99 961,070
--------------------------------------------------------------------------------
630,000 TransAmerica Financial Corp., 9.25%, 6/30/97 669,847
--------------------------------------------------------------------------------
1,500,000 U.S. West Capital Funding, Inc., 8.00%, 10/15/96 1,534,755
-------------------------------------------------------------------------------- ---------------
Total 11,027,039
-------------------------------------------------------------------------------- ---------------
HOME FURNISHINGS--0.2%
--------------------------------------------------------------------------------
240,000 Armstrong World Industries, Inc., 9.75%, 4/15/2008 263,618
-------------------------------------------------------------------------------- ---------------
MISCELLANEOUS--1.3%
--------------------------------------------------------------------------------
770,000 Italy Republic, 6.875% Yankee Bond, 9/27/2023 641,903
--------------------------------------------------------------------------------
1,400,000 Korea Electric Power Corp., 6.375% Yankee Bond, 12/1/2003 1,214,626
-------------------------------------------------------------------------------- ---------------
Total 1,856,529
-------------------------------------------------------------------------------- ---------------
OFFICE EQUIPMENT--2.0%
--------------------------------------------------------------------------------
2,750,000 Xerox Corp., 7.01%, 4/30/99 2,706,963
-------------------------------------------------------------------------------- ---------------
OIL & GAS--0.3%
--------------------------------------------------------------------------------
350,000 Mobil Corp., 8.375%, 2/12/2001 367,469
-------------------------------------------------------------------------------- ---------------
POLLUTION CONTROL--1.5%
--------------------------------------------------------------------------------
2,000,000 Waste Management, Inc., 7.875%, 8/15/96 2,046,860
-------------------------------------------------------------------------------- ---------------
SECURITIES--0.7%
--------------------------------------------------------------------------------
1,080,000 Morgan Stanley Group, Inc., 5.65%, 6/15/97 1,038,528
-------------------------------------------------------------------------------- ---------------
</TABLE>
BILTMORE FIXED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
CORPORATE BONDS--CONTINUED
- ------------------------------------------------------------------------------------------------
UTILITIES--1.4%
--------------------------------------------------------------------------------
$ 2,000,000 Public Service Electric & Gas Co., 6.00%-7.125%, 11/1/97-1/1/98 $ 1,932,740
-------------------------------------------------------------------------------- ---------------
TOTAL CORPORATE BONDS (IDENTIFIED COST, $39,345,681) 37,301,281
-------------------------------------------------------------------------------- ---------------
U.S. GOVERNMENT AGENCIES--19.5%
- ------------------------------------------------------------------------------------------------
FEDERAL HOME LOAN BANKS--1.2%
--------------------------------------------------------------------------------
1,000,000 4.00%, 7/8/96 975,313
--------------------------------------------------------------------------------
750,000 7.75%, 2/26/97 769,365
-------------------------------------------------------------------------------- ---------------
Total 1,744,678
-------------------------------------------------------------------------------- ---------------
FEDERAL HOME LOAN MORTGAGE CORP.--2.3%
--------------------------------------------------------------------------------
37,406 12.50%, 2/1/2010-4/1/2014 42,876
--------------------------------------------------------------------------------
44,608 11.00%, 10/1/2010-10/1/2015 49,176
--------------------------------------------------------------------------------
7,550 10.00%, 1/1/2019-2/1/2019 8,010
--------------------------------------------------------------------------------
60,312 9.50%, 7/1/2016-2/1/2019 63,233
--------------------------------------------------------------------------------
5,866 9.00%, 9/1/2017-1/1/2019 6,042
--------------------------------------------------------------------------------
16,613 8.50%, 5/1/2017-8/1/2017 16,857
--------------------------------------------------------------------------------
193,960 8.00%, 1/1/2008-1/1/2019 193,927
--------------------------------------------------------------------------------
999,790 7.50%, 2/1/2023 973,225
--------------------------------------------------------------------------------
941,261 7.00%, 6/1/2008 916,552
--------------------------------------------------------------------------------
1,000,000 5.00%, 12/15/2000 988,125
-------------------------------------------------------------------------------- ---------------
Total 3,258,023
-------------------------------------------------------------------------------- ---------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--5.0%
--------------------------------------------------------------------------------
5,128 12.50%, 9/1/2013-8/1/2014 5,846
--------------------------------------------------------------------------------
9,234 10.00%, 1/1/2019-2/1/2019 9,889
--------------------------------------------------------------------------------
11,439 9.50%, 7/1/2016-2/1/2019 12,057
--------------------------------------------------------------------------------
6,453 9.00%, 1/1/2017-8/1/2018 6,677
--------------------------------------------------------------------------------
4,302 8.50%, 2/1/2017-2/1/2019 4,364
--------------------------------------------------------------------------------
93,161 8.00%, 11/1/2008-9/1/2009 92,605
--------------------------------------------------------------------------------
2,546,820 7.50%, 4/1/2007-1/1/2023 2,508,756
--------------------------------------------------------------------------------
</TABLE>
BILTMORE FIXED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
U.S. GOVERNMENT AGENCIES--CONTINUED
- ------------------------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--CONTINUED
--------------------------------------------------------------------------------
$ 2,600,000 6.05%, 6/30/2003 $ 2,389,946
--------------------------------------------------------------------------------
2,008,466 6.00%, 1/1/2009 1,862,210
-------------------------------------------------------------------------------- ---------------
Total 6,892,350
-------------------------------------------------------------------------------- ---------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION--10.0%
--------------------------------------------------------------------------------
67,898 12.25%, 8/15/2013-4/15/2014 76,555
--------------------------------------------------------------------------------
6,835 11.50%, 6/15/2013-12/15/2017 7,834
--------------------------------------------------------------------------------
146,064 11.00%, 8/15/2015-12/15/2015 165,143
--------------------------------------------------------------------------------
152,442 10.50%, 10/15/2000-8/15/2017 166,481
--------------------------------------------------------------------------------
18,875 10.00%, 1/15/2019-2/15/2019 20,207
--------------------------------------------------------------------------------
1,558,108 9.50%, 6/15/2001-11/15/2020 1,643,854
--------------------------------------------------------------------------------
2,546,524 9.00%, 5/15/2016-1/15/2021 2,641,106
--------------------------------------------------------------------------------
1,401,185 8.50%, 5/15/2016-6/15/2022 1,425,165
--------------------------------------------------------------------------------
2,668,139 8.00%, 2/15/2017-9/15/2022 2,651,586
--------------------------------------------------------------------------------
4,245,189 7.50%, 2/15/2022-1/15/2024 4,099,239
--------------------------------------------------------------------------------
959,900 7.00%, 6/15/2023 897,507
--------------------------------------------------------------------------------
64,799 5.50%, 8/15/98 63,222
-------------------------------------------------------------------------------- ---------------
Total 13,857,899
-------------------------------------------------------------------------------- ---------------
ISRAEL STATE U.S. GOVERNMENT--0.6%
--------------------------------------------------------------------------------
1,000,000 5.625%, 9/15/2003 879,490
-------------------------------------------------------------------------------- ---------------
PRIVATE EXPORT FUNDING CORP.--0.4%
--------------------------------------------------------------------------------
500,000 8.40%, 7/31/2001 527,660
-------------------------------------------------------------------------------- ---------------
TOTAL U.S. GOVERNMENT AGENCIES (IDENTIFIED COST, $27,923,225) 27,160,100
-------------------------------------------------------------------------------- ---------------
U.S. TREASURY OBLIGATIONS--48.9%
- ------------------------------------------------------------------------------------------------
U.S. TREASURY BONDS--25.8%
--------------------------------------------------------------------------------
1,176,000 9.375%, 2/15/2006 1,368,935
--------------------------------------------------------------------------------
530,000 8.125%, 5/15/2021 562,049
--------------------------------------------------------------------------------
28,383,000 7.875%, 2/15/2021 29,269,969
--------------------------------------------------------------------------------
</TABLE>
BILTMORE FIXED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
U.S. TREASURY OBLIGATIONS--CONTINUED
- ------------------------------------------------------------------------------------------------
U.S. TREASURY BONDS--CONTINUED
--------------------------------------------------------------------------------
$ 1,423,000 7.50%, 11/15/2016 $ 1,406,322
--------------------------------------------------------------------------------
3,495,000 7.125%, 2/15/2023 3,331,714
-------------------------------------------------------------------------------- ---------------
Total 35,938,989
-------------------------------------------------------------------------------- ---------------
U.S. TREASURY NOTES--23.1%
--------------------------------------------------------------------------------
1,095,000 9.125%, 5/15/99 1,201,938
--------------------------------------------------------------------------------
120,000 8.75%, 10/15/97 128,024
--------------------------------------------------------------------------------
1,530,000 8.00%, 10/15/96 1,589,762
--------------------------------------------------------------------------------
1,085,000 7.875%, 7/15/96-8/15/2001 1,129,949
--------------------------------------------------------------------------------
2,445,000 7.50%, 11/15/2001-5/15/2002 2,505,521
--------------------------------------------------------------------------------
1,215,000 6.50%, 11/30/1996 1,222,399
--------------------------------------------------------------------------------
750,000 6.375%, 8/15/2002 716,370
--------------------------------------------------------------------------------
7,895,000 6.25%, 2/15/2003 7,442,301
--------------------------------------------------------------------------------
1,545,000 6.00%, 10/15/99 1,488,747
--------------------------------------------------------------------------------
500,000 5.875%, 2/15/2004 455,390
--------------------------------------------------------------------------------
1,145,000 5.75%, 10/31/97-8/15/2003 1,046,646
--------------------------------------------------------------------------------
1,500,000 5.125%, 11/30/98 1,408,830
--------------------------------------------------------------------------------
1,500,000 4.375%, 11/15/96 1,438,590
--------------------------------------------------------------------------------
4,690,000 4.25%, 5/15/96 4,542,687
--------------------------------------------------------------------------------
5,850,000 3.875%, 8/31/95 5,733,000
-------------------------------------------------------------------------------- ---------------
Total 32,050,154
-------------------------------------------------------------------------------- ---------------
TOTAL U.S. TREASURY OBLIGATIONS (IDENTIFIED COST, $73,868,040) 67,989,143
-------------------------------------------------------------------------------- ---------------
</TABLE>
BILTMORE FIXED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
*REPURCHASE AGREEMENT--1.5%
- ------------------------------------------------------------------------------------------------
$ 2,092,375 PaineWebber, Inc., 4.20%, dated 5/31/94, due 6/1/94
(AT AMORTIZED COST) (NOTE 2B) $ 2,092,375
-------------------------------------------------------------------------------- ---------------
TOTAL INVESTMENTS (IDENTIFIED COST $145,541,330) $ 136,808,692+
-------------------------------------------------------------------------------- ---------------
</TABLE>
* The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
+ The cost of investments for federal tax purposes amounts to $145,541,330. The
net unrealized depreciation of investments on a federal tax cost basis amounts
to $8,732,638, which is comprised of $38,959 appreciation and $8,771,597
depreciation at May 31, 1994.
Note: The categories of investments are shown as a percentage of net assets
($139,074,358) at May 31, 1994.
(See Notes which are an integral part of the Financial Statements)
BILTMORE FIXED INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ------------------------------------------------------------------------------------------------
Investments in securities, at value (Notes 2A and 2B)
(identified and tax cost, $145,541,330) $ 136,808,692
- ------------------------------------------------------------------------------------------------
Receivable for investments sold 3,369,250
- ------------------------------------------------------------------------------------------------
Interest receivable 2,126,759
- ------------------------------------------------------------------------------------------------
Receivable for Fund shares sold 150,066
- ------------------------------------------------------------------------------------------------
Deferred expenses (Note 2F) 39,860
- ------------------------------------------------------------------------------------------------ ---------------
Total assets 142,494,627
- ------------------------------------------------------------------------------------------------
LIABILITIES:
- ------------------------------------------------------------------------------------------------
Payable for investments purchased $ 3,383,050
- ---------------------------------------------------------------------------------
Payable for Fund shares redeemed 15,330
- ---------------------------------------------------------------------------------
Accrued expenses 21,889
- --------------------------------------------------------------------------------- -------------
Total liabilities 3,420,269
- ------------------------------------------------------------------------------------------------ ---------------
NET ASSETS for 14,982,283 shares of beneficial interest outstanding $ 139,074,358
- ------------------------------------------------------------------------------------------------ ---------------
NET ASSETS CONSIST OF:
- ------------------------------------------------------------------------------------------------
Paid-in capital $ 149,429,974
- ------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments (8,732,638)
- ------------------------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments (1,692,525)
- ------------------------------------------------------------------------------------------------
Undistributed net investment income 69,547
- ------------------------------------------------------------------------------------------------ ---------------
Total Net Assets $ 139,074,358
- ------------------------------------------------------------------------------------------------ ---------------
NET ASSET VALUE and Redemption Proceeds Per Share:
($139,074,358 / 14,982,283 shares of beneficial interest outstanding) $9.28
- ------------------------------------------------------------------------------------------------ ---------------
COMPUTATION OF OFFERING PRICE:
Offering Price Per Share (100/95.5 of $9.28)* $9.72
- ------------------------------------------------------------------------------------------------ ---------------
</TABLE>
*See "What Shares Cost" in the prospectus.
(See Notes which are an integral part of the Financial Statements)
BILTMORE FIXED INCOME FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- --------------------------------------------------------------------------------------------------
Interest income (Note 2C) $ 4,388,057
- --------------------------------------------------------------------------------------------------
EXPENSES:
- --------------------------------------------------------------------------------------------------
Investment advisory fee (Note 4) $ 416,022
- -------------------------------------------------------------------------------------
Trustees' Fees 2,026
- -------------------------------------------------------------------------------------
Administrative personnel and services fee (Note 4) 74,597
- -------------------------------------------------------------------------------------
Custodian fees (Note 4) 13,867
- -------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses (Note 4) 14,246
- -------------------------------------------------------------------------------------
Fund share registration costs 11,604
- -------------------------------------------------------------------------------------
Auditing fees 7,568
- -------------------------------------------------------------------------------------
Legal fees 4,393
- -------------------------------------------------------------------------------------
Printing and postage 7,406
- -------------------------------------------------------------------------------------
Portfolio accounting fees (Note 4) 31,705
- -------------------------------------------------------------------------------------
Insurance premiums 2,526
- -------------------------------------------------------------------------------------
Miscellaneous 163
- ------------------------------------------------------------------------------------- -----------
Total expenses 586,123
- -------------------------------------------------------------------------------------
Deduct--
- --------------------------------------------------------------------------
Waiver of investment advisory fee (Note 4) $ 69,337
- --------------------------------------------------------------------------
Reimbursement of other operating expenses by
Administrator (Note 4) 24,493 93,830
- -------------------------------------------------------------------------- --------- -----------
Net expenses 492,293
- -------------------------------------------------------------------------------------------------- -------------
Net investment income 3,895,764
- -------------------------------------------------------------------------------------------------- -------------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:
- --------------------------------------------------------------------------------------------------
Net realized gain (loss) on investment transactions (identified cost basis) (1,665,870)
- --------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments (7,759,001)
- -------------------------------------------------------------------------------------------------- -------------
Net realized and unrealized gain/(loss) on investments (9,424,871)
- -------------------------------------------------------------------------------------------------- -------------
Change in net assets resulting from operations $ (5,529,107)
- -------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
BILTMORE FIXED INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
--------------------------------
1994** 1993*
--------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------------------------------
Net investment income $ 3,895,764 $ 4,138,174
- -------------------------------------------------------------------------------
Net realized gain (loss) on investment transactions ($1,665,870 net loss and
$893,605 net gain, respectively, as computed for federal tax purposes) (1,665,870) 866,743
- -------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) of investments (7,759,001) (973,637)
- ------------------------------------------------------------------------------- --------------- ---------------
Change in net assets resulting from operations (5,529,107) 4,031,280
- ------------------------------------------------------------------------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2C)--
- -------------------------------------------------------------------------------
Dividends to shareholders from net investment income (3,895,764) (4,059,588)
- -------------------------------------------------------------------------------
Distributions to shareholders from net realized gain on investment transactions (893,398) --
- -------------------------------------------------------------------------------
Distributions in excess of net investment income (9,039) --
- ------------------------------------------------------------------------------- --------------- ---------------
Change in net assets from distributions to shareholders (4,798,201) (4,059,588)
- ------------------------------------------------------------------------------- --------------- ---------------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 3)--
- -------------------------------------------------------------------------------
Net proceeds from sale of shares 20,139,164 150,258,206
- -------------------------------------------------------------------------------
Net asset value of shares issued to shareholders electing
to receive payment of dividends in Fund shares 4,728,488 4,052,129
- -------------------------------------------------------------------------------
Cost of shares redeemed (15,791,355) (13,956,658)
- ------------------------------------------------------------------------------- --------------- ---------------
Change in net assets from Fund share transactions 9,076,297 140,353,677
- ------------------------------------------------------------------------------- --------------- ---------------
Change in net assets (1,251,011) 140,325,369
- -------------------------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------------------------
Beginning of period 140,325,369 --
- ------------------------------------------------------------------------------- --------------- ---------------
End of period (including undistributed net investment income of $69,547 and
$78,586 respectively) $ 139,074,358 $ 140,325,369
- ------------------------------------------------------------------------------- --------------- ---------------
</TABLE>
*For the period from May 10, 1993 (date of initial public investment) to
November 30, 1993.
**Six months ended May 31, 1994 (unaudited).
(See Notes which are an integral part of the Financial Statements)
BILTMORE FIXED INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED
NOVEMBER 30,
<S> <C> <C>
1994** 1993*
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00 $ 10.00
- --------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------------
Net investment income 0.27 0.31
- --------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.66) (0.01)
- -------------------------------------------------------------------------------------- --------- ---------
Total from investment operations (0.39) 0.30
- --------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- --------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (0.27) (0.30)
- --------------------------------------------------------------------------------------
Distributions to shareholders from net realized gain on investment transactions (0.06) --
- -------------------------------------------------------------------------------------- --------- ---------
Total distributions (0.33) (0.30)
- -------------------------------------------------------------------------------------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 9.28 $ 10.00
- -------------------------------------------------------------------------------------- --------- ---------
TOTAL RETURN*** (3.94%) 3.02%
- --------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------------------------------------------------
Expenses 0.71 (a) 0.68%(a)
- --------------------------------------------------------------------------------------
Net investment income 5.62 (a) 5.44%(a)
- --------------------------------------------------------------------------------------
Expense waiver/reimbursement (b) 0.14 (a) 0.19%(a)
- --------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $139,074 $140,325
- --------------------------------------------------------------------------------------
Portfolio turnover rate 76% 149%
- --------------------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from May 10, 1993 (date of initial public
investment) to November 30, 1993.
** Six months ended May 31, 1994 (unaudited).
*** Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 4).
(See Notes which are an integral part of the Financial Statements)
BILTMORE FIXED INCOME FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1994
(UNAUDITED)
- -------------------------------------------------------------------------------
(1) ORGANIZATION
The Biltmore Funds (the "Trust") is registered under the Investment Company Act
of 1940, as amended (the "Act"), as an open-end management investment company.
The Trust consists of eleven diversified portfolios. The financial statements
included herein present only those of the Biltmore Fixed Income Fund (the
"Fund"). The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles (GAAP).
A. INVESTMENT VALUATIONS--U.S. government obligations are generally valued at
the mean between the over-the-counter bid and asked prices as furnished by
an independent pricing service. Corporate bonds (and other fixed income and
asset-backed securities) are valued at the last sale price reported on
national securities exchanges on that day, if available. Otherwise,
corporate bonds (and other fixed income and asset-backed securities) and
short-term obligations are valued at the prices provided by an independent
pricing service. Short-term securities with remaining maturities of sixty
days or less at the time of purchase may be stated at amortized cost, which
approximates value.
B. REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System or to have segregated within the
custodian bank's vault, all securities held as collateral in support of
repurchase agreement investments. Additionally, procedures have been
established by the Fund to monitor, on a daily basis, the market value of
each repurchase agreement's underlying collateral to ensure the value at
least equals the principal amount of the repurchase agreement, including
accrued interest.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to guidelines established
by the Board of Trustees ("Trustees"). Risks may arise from the potential
inability of counterparties to honor the terms of the repurchase agreement.
Accordingly, the Fund could receive less than the repurchase price on the
sale of collateral securities.
C. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discounts, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code").
Distributions to shareholders are recorded on the ex-dividend date.
Distributions are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles. These
distributions do not represent a return of capital for federal income tax
purposes.
D. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its taxable income.
Accordingly, no provisions for federal tax are necessary.
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
F. DEFERRED EXPENSES--Costs incurred by the Fund with respect to registration
of its shares in its first fiscal year, excluding the initial expense of
registering the shares, have been deferred and are being amortized using
the straight-line method over a period of five years from the Fund's
commencement date.
G. OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED
NOVEMBER 30,
---------------------------
1994** 1993*
------------ -------------
<S> <C> <C>
Shares sold 2,100,838 15,019,817
- -------------------------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 487,831 402,730
- -------------------------------------------------------------------------------------
Shares redeemed (1,637,613) (1,391,320)
- ------------------------------------------------------------------------------------- ------------ -------------
Net change resulting from Fund share transactions 951,056 14,031,227
- ------------------------------------------------------------------------------------- ------------ -------------
</TABLE>
* The period from May 10, 1993 (date of initial public investment) to November
30, 1993.
** Six months ended May 31, 1994.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Wachovia Investment Management Group, the Fund's
investment adviser (the "Adviser"), receives for its services an annual
investment advisory fee equal to .60 of 1% of the Fund's average daily net
assets. The Adviser may voluntarily choose to waive its fee and reimburse
certain operating expenses of the Fund. The Adviser can modify or terminate this
voluntary waiver and reimbursement at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. The FAS fee is based on the
level of average aggregate net assets of the Trust and The Biltmore Municipal
Funds for the period. FAS may voluntarily choose to waive a portion of its fee
and reimburse certain operating expenses of the Fund. FAS can modify or
terminate this voluntary waiver and reimbursement at any time at its sole
discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT, ACCOUNTING AND CUSTODY FEES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent for
the Fund. The FServ fee is based on the size, type and number of accounts and
transactions made by shareholders.
FServ also maintains the Fund's accounting records. The fee is based on the
level of the Fund's average net assets for the period, plus out-of-pocket
expenses.
Wachovia Bank of North Carolina, N.A. is the Fund's custodian. The fee is based
on the level of the Fund's average net assets for the period, plus out-of pocket
expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses ($31,369) were borne initially
by FAS. The Fund has agreed to reimburse FAS for the organizational expenses
during the five-year period following April 3, 1993 (date the Fund first became
effective). For the six months ended May 31, 1994, the Fund paid $2,091 pursuant
to this agreement.
Certain of the Officers of the Trust are Officers and Trustees of FAS and FServ.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the six
months ended
May 31, 1994, were as follows:
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------------------------
PURCHASES $ 113,751,178
- ------------------------------------------------------------------------------------------------- ---------------
SALES $ 102,353,902
- ------------------------------------------------------------------------------------------------- ---------------
</TABLE>
TRUSTEES OFFICERS
- ---------------------------------------------------------------------
<TABLE>
<S> <C>
James A. Hanley John W. McGonigle
Malcolm T. Hopkins President and Treasurer
Samuel E. Hudgins Ronald M. Petnuch
J. Berkley Ingram, Jr. Vice President and Assistant Treasurer
D. Dean Kaylor Joseph M. Huber
Secretary
Mark A. Sheehan
Assistant Secretary
</TABLE>
Mutual funds are not obligations of or insured by any bank, nor are they insured
by the federal government or any of its agencies. Investment in these shares
involves risk, including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus, which contains facts
concerning its objective and policies, management fees and other information.
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I'm pleased to present the Semi-Annual Report to Shareholders of the Biltmore
Equity Index Fund (the "Fund") for the six-month period ended May 31, 1994. The
Report begins with a brief commentary on the stock market from the Fund's
portfolio manager. Following the commentary are a complete listing of the Fund's
portfolio of investments and its financial statements.
On your behalf, the Fund pursues a total return that approximates that of the
Standard & Poor's 500 Composite Stock Price Index--a classic benchmark of stock
market performance. The Fund invests in a portfolio of blue-chip stocks issued
by some of America's largest, best-known companies. At the end of the period,
the Fund's portfolio included such names as Honeywell, Inc., Westinghouse
Electric Corp., General Motors Corp., Maytag Corp., Anheuser-Busch Companies,
Inc. and Blockbuster Entertainment Corp., to name a few.
Dividends paid to the Fund's shareholders totaled $0.11 per share for the
six-month reporting period. Capital gains totaled $0.02 per share. During the
same time, total assets increased from $149.3 million to $167.9 million.
While the Fund's net asset value began the period at $10.47, it ended the period
at $10.34, due to increased volatility in the financial markets early in the
year, brought on by rising interest rates.
Thank you for pursuing classic stock market performance through the Fund. We
look forward to keeping you informed about your investment. As always, we
welcome your comments and suggestions.
Sincerely,
John W. McGonigle
President
July 15, 1994
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Repeated interest rate increases by the Federal Reserve Board and concerns about
corporate profitability over the first five months of this year touched off a
long-awaited correction in the equity markets. During the six-month period
between November 30, 1993 and May 31, 1994, the Standard & Poor's 500 Composite
Stock Price Index (the "S&P 500" or the "Index")* had a total return of 0.1%.
The period was also characterized by volatility in the equity market and a
decline in the heavy flow of investor monies into mutual funds.
Although many stocks in the S&P 500 advanced during the six-month period, the
return for the Index was constrained by the poor performances of stocks in the
consumer non-durables and utility sectors. The Biltmore Equity Index Fund (the
"Fund") owned all 500 stocks in the S&P 500 as of May 31, 1994.
During the six-month period, the Fund's portfolio manager began using Index
futures contracts. This allowed the Fund to more closely track the performance
of the S&P 500, while simultaneously managing the cash position required to
handle cash flow into and out of the Fund. On May 31, 1994, the Fund had net
assets of $167.9 million, and a net asset value of $10.34 per share. The 30-day
SEC yield was 2.02%.**
* This index is unmanaged.
** Performance quoted represents past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
BILTMORE EQUITY INDEX FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
COMMON STOCKS--85.5%
- ------------------------------------------------------------------------------------------------
CAPITAL GOODS--4.3%
--------------------------------------------------------------------------------
638 Briggs & Stratton Corp. $ 48,169
--------------------------------------------------------------------------------
8,458 Browning-Ferris Industries, Inc. 245,282
--------------------------------------------------------------------------------
4,481 Caterpillar, Inc. 478,907
--------------------------------------------------------------------------------
1,476 Cincinnati Milacron Inc. 30,258
--------------------------------------------------------------------------------
766 *Clark Equipment Co. 49,311
--------------------------------------------------------------------------------
5,035 Cooper Industries, Inc. 182,519
--------------------------------------------------------------------------------
1,632 Cummins Engine Co., Inc. 69,972
--------------------------------------------------------------------------------
3,702 Deere & Co. 258,214
--------------------------------------------------------------------------------
2,518 Dover Corp. 133,769
--------------------------------------------------------------------------------
3,137 Eaton Corp. 172,535
--------------------------------------------------------------------------------
9,930 Emerson Electric Co. 605,730
--------------------------------------------------------------------------------
1,572 Foster Wheeler Corp. 59,146
--------------------------------------------------------------------------------
75,198 General Electric Co. 3,731,701
--------------------------------------------------------------------------------
1,498 Giddings & Lewis, Inc. 32,956
--------------------------------------------------------------------------------
2,255 Grainger (W.W.) Inc. 146,857
--------------------------------------------------------------------------------
5,920 Honeywell, Inc. 185,740
--------------------------------------------------------------------------------
4,974 Illinois Tool Works Inc. 202,690
--------------------------------------------------------------------------------
4,640 Ingersoll-Rand Co. 162,400
--------------------------------------------------------------------------------
1,712 PACCAR Inc. 84,744
--------------------------------------------------------------------------------
2,142 Parker-Hannifin Corp. 92,374
--------------------------------------------------------------------------------
1,846 Raychem Corp. 68,071
--------------------------------------------------------------------------------
15,476 Westinghouse Electric Corp. 201,188
--------------------------------------------------------------------------------
550 Zurn Industries, Inc. 11,619
-------------------------------------------------------------------------------- ---------------
Total 7,254,152
-------------------------------------------------------------------------------- ---------------
</TABLE>
BILTMORE EQUITY INDEX FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
CONSUMER DURABLES--3.7%
--------------------------------------------------------------------------------
1,637 Armstrong World Industries, Inc. $ 79,804
--------------------------------------------------------------------------------
637 Bassett Furniture Industries, Inc. 17,358
--------------------------------------------------------------------------------
3,693 Black & Decker Corp. 68,321
--------------------------------------------------------------------------------
3,441 Brunos, Inc. 25,162
--------------------------------------------------------------------------------
15,519 Chrysler Corp. 770,130
--------------------------------------------------------------------------------
3,684 Cooper Tire & Rubber Co. 97,626
--------------------------------------------------------------------------------
2,165 Dana Corp. 111,498
--------------------------------------------------------------------------------
4,970 Dillard Department Stores, Inc. 154,070
--------------------------------------------------------------------------------
2,569 Echlin, Inc. 69,684
--------------------------------------------------------------------------------
21,906 Ford Motor Co. 1,265,071
--------------------------------------------------------------------------------
31,322 General Motors Corp. 1,683,558
--------------------------------------------------------------------------------
5,477 Genuine Parts Co. 191,010
--------------------------------------------------------------------------------
6,613 Goodyear Tire and Rubber Co. 256,254
--------------------------------------------------------------------------------
1,120 Harnischfeger Industries, Inc. 21,700
--------------------------------------------------------------------------------
2,003 Jostens, Inc. 33,801
--------------------------------------------------------------------------------
1,428 Kaufman & Broad Home Corp. 23,205
--------------------------------------------------------------------------------
4,723 Maytag Corp. 87,966
--------------------------------------------------------------------------------
9,089 *McCaw Cellular Communications, Cl. A 468,083
--------------------------------------------------------------------------------
1,393 Morrison Knudsen Corp. 29,079
--------------------------------------------------------------------------------
2,185 National Services Industries, Inc. 55,991
--------------------------------------------------------------------------------
3,225 *Navistar International Corp. 53,616
--------------------------------------------------------------------------------
865 Outboard Marine Corp. 20,003
--------------------------------------------------------------------------------
2,684 Pep Boys-Manny, Moe & Jack 83,875
--------------------------------------------------------------------------------
1,213 Pulte Corp. 28,657
--------------------------------------------------------------------------------
613 SPX Corp. 9,272
--------------------------------------------------------------------------------
494 Skyline Corp. 8,769
--------------------------------------------------------------------------------
1,966 Stanley Works (The) 76,183
--------------------------------------------------------------------------------
</TABLE>
BILTMORE EQUITY INDEX FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
CONSUMER DURABLES--CONTINUED
--------------------------------------------------------------------------------
1,354 Timken Co. $ 44,344
--------------------------------------------------------------------------------
1,251 TRINOVA Corp. 43,785
--------------------------------------------------------------------------------
2,010 *Western Atlas, Inc. 85,927
--------------------------------------------------------------------------------
3,105 Whirlpool Corp. 166,506
-------------------------------------------------------------------------------- ---------------
Total 6,130,308
-------------------------------------------------------------------------------- ---------------
CONSUMER NON-DURABLES--27.5%
--------------------------------------------------------------------------------
36,069 Abbott Laboratories, Inc. 1,077,561
--------------------------------------------------------------------------------
1,268 Alberto-Culver Co., Cl. B 25,835
--------------------------------------------------------------------------------
11,161 Albertson's, Inc. 313,903
--------------------------------------------------------------------------------
2,917 Allergan Pharmaceuticals Inc. 72,196
--------------------------------------------------------------------------------
8,889 American Brands, Inc. 288,892
--------------------------------------------------------------------------------
3,961 American Cyanamid Co. 206,467
--------------------------------------------------------------------------------
3,256 American Greetings Corp., Cl. A 91,575
--------------------------------------------------------------------------------
13,669 American Home Products Co. 792,802
--------------------------------------------------------------------------------
6,256 American Stores Co. 156,400
--------------------------------------------------------------------------------
11,835 Anheuser-Busch Companies, Inc. 643,528
--------------------------------------------------------------------------------
14,378 Archer-Daniels-Midland Co. 346,869
--------------------------------------------------------------------------------
3,177 Avon Products, Inc. 187,046
--------------------------------------------------------------------------------
2,066 *Bally Entertainment Group 13,945
--------------------------------------------------------------------------------
2,291 Bard (C.R.), Inc. 54,411
--------------------------------------------------------------------------------
2,604 Bausch & Lomb, Inc. 128,898
--------------------------------------------------------------------------------
12,172 Baxter International, Inc. 313,429
--------------------------------------------------------------------------------
3,328 Becton, Dickinson & Co. 126,880
--------------------------------------------------------------------------------
3,601 *Beverly Enterprises, Inc. 48,613
--------------------------------------------------------------------------------
4,641 Block (H&R), Inc. 197,823
--------------------------------------------------------------------------------
9,936 Blockbuster Entertainment Corp. 280,692
--------------------------------------------------------------------------------
6,216 Borden, Inc. 83,139
--------------------------------------------------------------------------------
</TABLE>
BILTMORE EQUITY INDEX FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
CONSUMER NON-DURABLES--CONTINUED
--------------------------------------------------------------------------------
22,576 Bristol-Myers Squibb Co. $ 1,233,214
--------------------------------------------------------------------------------
3,045 Brown-Forman Corp., Cl. B 89,066
--------------------------------------------------------------------------------
771 Brown Group, Inc. 29,202
--------------------------------------------------------------------------------
4,198 Brunswick Corp. 103,901
--------------------------------------------------------------------------------
682 CBS, Inc. 178,002
--------------------------------------------------------------------------------
6,622 CPC International Inc. 321,167
--------------------------------------------------------------------------------
11,095 Campbell Soup Co. 409,128
--------------------------------------------------------------------------------
679 Capital Cities/ABC, Inc. 502,290
--------------------------------------------------------------------------------
4,526 Charming Shoppes, Inc. 42,997
--------------------------------------------------------------------------------
4,232 Circuit City Stores, Inc. 81,995
--------------------------------------------------------------------------------
2,387 Clorox Co. 122,632
--------------------------------------------------------------------------------
57,255 Coca-Cola Co. 2,311,671
--------------------------------------------------------------------------------
6,820 Colgate-Palmolive Co. 390,445
--------------------------------------------------------------------------------
14,775 Columbia HCA/Healthcare Corp. 587,306
--------------------------------------------------------------------------------
10,037 Comcast Corp., Cl. A 175,020
--------------------------------------------------------------------------------
1,893 Community Psychiatric Centers 27,449
--------------------------------------------------------------------------------
11,063 ConAgra, Inc. 319,444
--------------------------------------------------------------------------------
1,677 Coors (Adolph) Co. 33,121
--------------------------------------------------------------------------------
3,150 Dayton-Hudson Corp. 247,669
--------------------------------------------------------------------------------
2,070 Dial Corp. 94,185
--------------------------------------------------------------------------------
23,587 Disney (Walt) Co. (The) 1,020,138
--------------------------------------------------------------------------------
6,819 Donnelley (R.R.) & Sons Co. 187,523
--------------------------------------------------------------------------------
4,380 Dow Jones & Co., Inc. 159,323
--------------------------------------------------------------------------------
7,804 Dun & Bradstreet Corp. 454,583
--------------------------------------------------------------------------------
14,529 Eastman Kodak Co. 681,047
--------------------------------------------------------------------------------
1,626 Fleming Companies, Inc. 40,447
--------------------------------------------------------------------------------
6,467 Gannett Co., Inc. 341,943
--------------------------------------------------------------------------------
</TABLE>
BILTMORE EQUITY INDEX FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
CONSUMER NON-DURABLES--CONTINUED
--------------------------------------------------------------------------------
6,389 Gap, Inc. (The) $ 277,123
--------------------------------------------------------------------------------
7,017 General Mills, Inc. 384,181
--------------------------------------------------------------------------------
1,021 *Genesco, Inc. 3,701
--------------------------------------------------------------------------------
3,055 Gerber Products Co. 154,659
--------------------------------------------------------------------------------
2,632 Giant Food, Inc., Cl. A 56,588
--------------------------------------------------------------------------------
9,720 Gillette Co. 677,970
--------------------------------------------------------------------------------
1,685 Great Atlantic & Pacific Tea Co., Inc. 40,229
--------------------------------------------------------------------------------
1,473 Handleman Co. 15,834
--------------------------------------------------------------------------------
1,356 Harland (John H.) Co. 30,171
--------------------------------------------------------------------------------
1,406 Hartmarx Corp. 9,139
--------------------------------------------------------------------------------
3,865 Hasbro, Inc. 127,545
--------------------------------------------------------------------------------
11,148 Heinz (H.J.) Co. 380,425
--------------------------------------------------------------------------------
1,806 Helmerich & Payne 28,372
--------------------------------------------------------------------------------
3,976 Hershey Foods Corp. 170,968
--------------------------------------------------------------------------------
2,108 Hilton Hotels Corp. 117,258
--------------------------------------------------------------------------------
19,739 Home Depot, Inc. 890,722
--------------------------------------------------------------------------------
4,989 International Flavors & Fragrances, Inc. 192,076
--------------------------------------------------------------------------------
3,313 Interpublic Group of Cos., Inc. 107,673
--------------------------------------------------------------------------------
28,436 Johnson & Johnson 1,258,293
--------------------------------------------------------------------------------
17,995 K-Mart Corp. 269,925
--------------------------------------------------------------------------------
10,068 Kellogg Co. 527,311
--------------------------------------------------------------------------------
1,640 *King World Productions Inc. 65,600
--------------------------------------------------------------------------------
2,410 Knight-Ridder, Inc. 135,864
--------------------------------------------------------------------------------
4,727 *Kroger Co. 112,857
--------------------------------------------------------------------------------
4,280 Lehman Brothers Holdings 77,036
--------------------------------------------------------------------------------
12,900 Lilly (Eli) & Co. 740,138
--------------------------------------------------------------------------------
16,000 Limited, Inc. (The) 282,000
--------------------------------------------------------------------------------
</TABLE>
BILTMORE EQUITY INDEX FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
CONSUMER NON-DURABLES--CONTINUED
--------------------------------------------------------------------------------
3,584 Liz Claiborne, Inc. $ 78,400
--------------------------------------------------------------------------------
904 Long's Drug Stores, Inc. 29,832
--------------------------------------------------------------------------------
6,469 Loew's, Inc. 203,812
--------------------------------------------------------------------------------
1,201 Luby's Cafeterias, Inc. 28,224
--------------------------------------------------------------------------------
2,740 Manor Care, Inc. 70,897
--------------------------------------------------------------------------------
7,387 Mattell, Inc. 194,832
--------------------------------------------------------------------------------
10,951 May Department Stores Co. 424,351
--------------------------------------------------------------------------------
15,561 McDonald's Corp. 964,782
--------------------------------------------------------------------------------
2,176 McGraw-Hill, Inc. 143,616
--------------------------------------------------------------------------------
1,775 McKesson Corp. 147,103
--------------------------------------------------------------------------------
2,523 Medtronic, Inc. 207,517
--------------------------------------------------------------------------------
4,642 Melville Corp. 188,581
--------------------------------------------------------------------------------
1,624 Mercantile Stores Co., Inc. 56,840
--------------------------------------------------------------------------------
56,527 Merck & Co., Inc. 1,724,074
--------------------------------------------------------------------------------
654 Merideth Corp. 28,531
--------------------------------------------------------------------------------
2,151 Morton International Inc. 176,382
--------------------------------------------------------------------------------
1,296 *National Educational Corp. 7,128
--------------------------------------------------------------------------------
568 *National Intergroup, Inc. 10,224
--------------------------------------------------------------------------------
7,312 National Medical Enterprises, Inc. 119,734
--------------------------------------------------------------------------------
4,659 New York Times Co. (The), Cl. A 118,804
--------------------------------------------------------------------------------
3,334 Nike, Inc., Cl. B 196,706
--------------------------------------------------------------------------------
3,615 Nordstrom, Inc. 159,512
--------------------------------------------------------------------------------
1,915 Ogden Corp. 42,130
--------------------------------------------------------------------------------
643 Oshkosh B. Gosh, Inc. 8,038
--------------------------------------------------------------------------------
10,386 Penney (J.C.) Co., Inc. 530,984
--------------------------------------------------------------------------------
34,962 PepsiCo, Inc. 1,258,632
--------------------------------------------------------------------------------
4,590 Pet Inc. 81,473
--------------------------------------------------------------------------------
</TABLE>
BILTMORE EQUITY INDEX FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
CONSUMER NON-DURABLES--CONTINUED
--------------------------------------------------------------------------------
13,729 Pfizer, Inc. $ 875,224
--------------------------------------------------------------------------------
38,642 Philip Morris Cos., Inc. 1,903,118
--------------------------------------------------------------------------------
3,943 Pioneer Hi-Bred International Inc. 136,034
--------------------------------------------------------------------------------
2,062 Polaroid Corp. 64,437
--------------------------------------------------------------------------------
9,581 *Price/Costco Inc. 126,948
--------------------------------------------------------------------------------
30,083 Proctor & Gamble Co. 1,695,929
--------------------------------------------------------------------------------
2,982 Quaker Oats Co. 199,421
--------------------------------------------------------------------------------
4,578 Ralston Purina Co. 156,797
--------------------------------------------------------------------------------
3,723 Reebok International Ltd. 117,274
--------------------------------------------------------------------------------
3,883 Rite-Aid Corp. 78,145
--------------------------------------------------------------------------------
2,659 Rollins Environmental Services 12,298
--------------------------------------------------------------------------------
7,069 Rubbermaid Inc. 197,048
--------------------------------------------------------------------------------
1,804 Russell Corp. 53,895
--------------------------------------------------------------------------------
2,354 *Ryan's Family Steakhouses, Inc. 18,244
--------------------------------------------------------------------------------
2,543 Safety-Kleen Corp. 40,688
--------------------------------------------------------------------------------
2,046 St. Jude Medical Inc. 54,730
--------------------------------------------------------------------------------
21,004 Sara Lee Corp. 448,961
--------------------------------------------------------------------------------
8,508 Schering-Plough Corp. 555,147
--------------------------------------------------------------------------------
16,429 Seagram Co., Ltd. 486,709
--------------------------------------------------------------------------------
15,459 Sears, Roebuck & Co. 782,612
--------------------------------------------------------------------------------
3,699 Service Corp. International 90,625
--------------------------------------------------------------------------------
998 Shared Medical Systems Corp. 22,954
--------------------------------------------------------------------------------
1,790 *Shoney's Inc. 30,206
--------------------------------------------------------------------------------
775 Spring Industries, Inc. 23,638
--------------------------------------------------------------------------------
2,216 Stride Rite Corp. 30,193
--------------------------------------------------------------------------------
3,130 SuperValu Stores, Inc. 100,160
--------------------------------------------------------------------------------
9,739 Syntex Corp. 225,214
--------------------------------------------------------------------------------
</TABLE>
BILTMORE EQUITY INDEX FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
CONSUMER NON-DURABLES--CONTINUED
--------------------------------------------------------------------------------
8,138 Sysco Corp. $ 210,571
--------------------------------------------------------------------------------
3,234 TJX Companies, Inc. (The) 78,424
--------------------------------------------------------------------------------
19,818 *Tele-Communications, Inc., Cl. A 413,701
--------------------------------------------------------------------------------
2,436 Temple-Inland Inc. 121,496
--------------------------------------------------------------------------------
16,519 Time Warner Inc. 640,111
--------------------------------------------------------------------------------
5,669 Times Mirror Co. 183,534
--------------------------------------------------------------------------------
12,852 *Toys "R" Us, Inc. 456,246
--------------------------------------------------------------------------------
2,941 Tribune Co. 172,784
--------------------------------------------------------------------------------
9,154 UST Inc. 231,139
--------------------------------------------------------------------------------
7,060 Unilever N.V. 741,300
--------------------------------------------------------------------------------
7,115 U.S. Healthcare, Inc. 286,379
--------------------------------------------------------------------------------
2,474 United States Surgical Corp. 47,006
--------------------------------------------------------------------------------
7,658 Upjohn Co. 246,013
--------------------------------------------------------------------------------
2,841 V.F. Corp. 139,564
--------------------------------------------------------------------------------
101,314 Wal-Mart Stores, Inc. 2,380,879
--------------------------------------------------------------------------------
5,425 Walgreen Co. 221,747
--------------------------------------------------------------------------------
5,960 Warner-Lambert Co. 419,435
--------------------------------------------------------------------------------
4,375 Wendy's International, Inc. 76,016
--------------------------------------------------------------------------------
4,718 Whitman Corp. 71,949
--------------------------------------------------------------------------------
3,303 Winn-Dixie Stores, Inc. 149,461
--------------------------------------------------------------------------------
5,814 Woolworth (F.W.) Corp. 91,571
--------------------------------------------------------------------------------
5,131 Wrigley (Wm.), Jr. Co. 262,322
--------------------------------------------------------------------------------
1,503 *Zenith Electronics Corp. 15,218
-------------------------------------------------------------------------------- ---------------
Total 46,154,125
-------------------------------------------------------------------------------- ---------------
ENERGY--9.6%
--------------------------------------------------------------------------------
4,082 Amerada-Hess Corp. 202,059
--------------------------------------------------------------------------------
21,903 Amoco Corp. 1,289,539
--------------------------------------------------------------------------------
</TABLE>
BILTMORE EQUITY INDEX FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
ENERGY--CONTINUED
--------------------------------------------------------------------------------
2,643 Ashland Oil, Inc. $ 98,121
--------------------------------------------------------------------------------
7,024 Atlantic Richfield Co. 708,546
--------------------------------------------------------------------------------
6,189 Baker Hughes, Inc. 123,006
--------------------------------------------------------------------------------
5,744 Burlington Resources, Inc. 239,094
--------------------------------------------------------------------------------
14,354 Chevron Corp. 1,248,798
--------------------------------------------------------------------------------
4,590 Coastal Corp. 129,668
--------------------------------------------------------------------------------
4,094 Consolidated Natural Gas Co. 154,548
--------------------------------------------------------------------------------
7,693 Dresser Industries, Inc. 174,054
--------------------------------------------------------------------------------
2,928 Enserch Corp. 40,992
--------------------------------------------------------------------------------
54,733 Exxon Corp. 3,338,713
--------------------------------------------------------------------------------
3,613 Fluor Corp. 184,263
--------------------------------------------------------------------------------
5,029 Halliburton Co. 152,756
--------------------------------------------------------------------------------
2,276 Kerr-McGee Corp. 102,420
--------------------------------------------------------------------------------
1,461 Louisiana Land & Exploration Co. 59,901
--------------------------------------------------------------------------------
5,906 *Maxus Energy Corp. 27,315
--------------------------------------------------------------------------------
2,346 *McDermott International, Inc. 47,507
--------------------------------------------------------------------------------
17,607 Mobil Corp. 1,426,167
--------------------------------------------------------------------------------
394 NACCO Industries, Inc., Cl. A 22,359
--------------------------------------------------------------------------------
5,393 *Noram Energy Corp. 32,358
--------------------------------------------------------------------------------
13,437 Occidental Petroleum Co. 260,342
--------------------------------------------------------------------------------
4,273 Oryx Energy Co. 74,777
--------------------------------------------------------------------------------
5,256 Panhandle Eastern Corp. 104,463
--------------------------------------------------------------------------------
2,022 Pennzoil Co. 98,320
--------------------------------------------------------------------------------
11,514 Phillips Petroleum Co. 374,205
--------------------------------------------------------------------------------
1,787 Pittston Company 46,015
--------------------------------------------------------------------------------
10,489 Placer Dome Inc. 241,247
--------------------------------------------------------------------------------
23,631 Royal Dutch Petroleum Co. 2,525,563
--------------------------------------------------------------------------------
</TABLE>
BILTMORE EQUITY INDEX FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
ENERGY--CONTINUED
--------------------------------------------------------------------------------
3,958 Santa Fe Energy Resources, Inc. $ 35,622
--------------------------------------------------------------------------------
10,718 Schlumberger, Ltd. 613,606
--------------------------------------------------------------------------------
3,831 Sonat, Inc. 109,183
--------------------------------------------------------------------------------
4,694 Sun Co., Inc. 136,713
--------------------------------------------------------------------------------
7,454 Tenneco, Inc. 356,860
--------------------------------------------------------------------------------
11,409 Texaco, Inc. 724,472
--------------------------------------------------------------------------------
12,633 USX Marathon Corp. 216,340
--------------------------------------------------------------------------------
10,632 Unocal Corp. 293,709
--------------------------------------------------------------------------------
4,531 Williams Companies, Inc. (The) 127,434
-------------------------------------------------------------------------------- ---------------
Total 16,141,055
-------------------------------------------------------------------------------- ---------------
FINANCE--10.2%
--------------------------------------------------------------------------------
4,921 Aetna Life & Casualty Co. 266,349
--------------------------------------------------------------------------------
5,149 Ahmanson (H.F.) & Co. 96,544
--------------------------------------------------------------------------------
1,813 Alexander & Alexander Services 28,781
--------------------------------------------------------------------------------
21,399 American Express Co. 591,147
--------------------------------------------------------------------------------
9,551 American General Corp. 260,265
--------------------------------------------------------------------------------
13,992 American International Group, Inc. 1,306,503
--------------------------------------------------------------------------------
16,538 Banc One Corp. 551,956
--------------------------------------------------------------------------------
4,648 Bank of Boston Corp. 130,144
--------------------------------------------------------------------------------
15,752 BankAmerica Corp. 763,972
--------------------------------------------------------------------------------
3,599 Bankers Trust New York Corp. 253,280
--------------------------------------------------------------------------------
4,293 Barnett Banks, Inc. 198,015
--------------------------------------------------------------------------------
2,283 Beneficial Corp. 84,186
--------------------------------------------------------------------------------
4,567 Boatmen's Bancshares Inc. 152,994
--------------------------------------------------------------------------------
3,173 CIGNA Corp. 218,540
--------------------------------------------------------------------------------
8,076 Chase Manhattan Corp. 304,869
--------------------------------------------------------------------------------
11,111 Chemical Banking Corp. 426,385
--------------------------------------------------------------------------------
</TABLE>
BILTMORE EQUITY INDEX FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
FINANCE--CONTINUED
--------------------------------------------------------------------------------
3,863 Chubb Corp. $ 311,454
--------------------------------------------------------------------------------
17,004 Citicorp 671,658
--------------------------------------------------------------------------------
2,431 Continental Corp. 43,454
--------------------------------------------------------------------------------
5,755 CoreStates Financial Corp. 154,666
--------------------------------------------------------------------------------
7,494 Dean Witter Discover & Co. 292,266
--------------------------------------------------------------------------------
7,907 Federal Home Loan Mortgage Corp. 458,606
--------------------------------------------------------------------------------
12,044 Federal National Mortgage Association 1,005,674
--------------------------------------------------------------------------------
3,668 First Chicago Corp. 193,945
--------------------------------------------------------------------------------
3,521 First Fidelity Bancorporation 161,966
--------------------------------------------------------------------------------
3,647 First Interstate Bancorp. 291,760
--------------------------------------------------------------------------------
7,417 First Union Corp. 346,745
--------------------------------------------------------------------------------
6,047 Fleet/Norstar Financial Group, Inc. 232,810
--------------------------------------------------------------------------------
3,736 General Reinsurance Corp. 447,386
--------------------------------------------------------------------------------
2,821 Golden West Financial Corp. 111,429
--------------------------------------------------------------------------------
5,797 Great Western Financial Corp. 107,245
--------------------------------------------------------------------------------
4,132 Household International, Inc. 140,488
--------------------------------------------------------------------------------
2,218 Jefferson-Pilot Corp. 111,454
--------------------------------------------------------------------------------
10,802 KeyCorp 351,065
--------------------------------------------------------------------------------
4,139 Lincoln National Corp. 171,251
--------------------------------------------------------------------------------
6,546 MBNA Corp. 172,651
--------------------------------------------------------------------------------
3,233 Marsh & McLennan Cos., Inc. 281,271
--------------------------------------------------------------------------------
2,814 Mellon Bank Corp. 164,619
--------------------------------------------------------------------------------
9,245 Merrill Lynch & Co., Inc. 360,555
--------------------------------------------------------------------------------
8,493 Morgan (J.P.) & Co., Inc. 560,538
--------------------------------------------------------------------------------
7,079 NBD Bancorp, Inc. 210,600
--------------------------------------------------------------------------------
11,880 NationsBank Corp. 657,855
--------------------------------------------------------------------------------
13,615 Norwest Corp. 364,201
--------------------------------------------------------------------------------
</TABLE>
BILTMORE EQUITY INDEX FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
FINANCE--CONTINUED
--------------------------------------------------------------------------------
10,320 PNC Bank Corp. $ 316,050
--------------------------------------------------------------------------------
4,456 *Providian Corp. 139,250
--------------------------------------------------------------------------------
2,774 SAFECO Corp. 152,917
--------------------------------------------------------------------------------
1,862 St. Paul Companies, Inc. 144,538
--------------------------------------------------------------------------------
4,875 Salomon, Inc. 249,234
--------------------------------------------------------------------------------
4,141 Shawmut National Corp. 99,902
--------------------------------------------------------------------------------
5,474 SunTrust Banks, Inc. 269,595
--------------------------------------------------------------------------------
3,248 Torchmark Corp. 136,010
--------------------------------------------------------------------------------
3,410 Transamerica Corp. 182,009
--------------------------------------------------------------------------------
14,089 Travelers Corp. 461,415
--------------------------------------------------------------------------------
3,495 UNUM Corp. 163,828
--------------------------------------------------------------------------------
3,746 USF&G Corp. 45,888
--------------------------------------------------------------------------------
4,381 U.S. Bancorp 122,120
--------------------------------------------------------------------------------
998 USLIFE Corp. 36,427
--------------------------------------------------------------------------------
7,629 Wachovia Corp. 251,757
--------------------------------------------------------------------------------
2,458 Wells Fargo & Co. 385,599
-------------------------------------------------------------------------------- ---------------
Total 17,168,081
-------------------------------------------------------------------------------- ---------------
MATERIALS & SERVICES--8.6%
--------------------------------------------------------------------------------
5,030 Air Products & Chemicals, Inc. 212,517
--------------------------------------------------------------------------------
9,871 Alcan Aluminum Ltd. 228,267
--------------------------------------------------------------------------------
2,295 Alco Standard Corp. 133,110
--------------------------------------------------------------------------------
12,490 Allied-Signal, Inc. 438,711
--------------------------------------------------------------------------------
3,894 Aluminum Co. of America 275,014
--------------------------------------------------------------------------------
3,417 *Alza Corp. 84,998
--------------------------------------------------------------------------------
2,257 Bemis, Inc. 55,296
--------------------------------------------------------------------------------
4,677 Bethlehem Steel Corporation 90,032
--------------------------------------------------------------------------------
1,674 Boise Cascade Corp. 34,945
--------------------------------------------------------------------------------
</TABLE>
BILTMORE EQUITY INDEX FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
MATERIALS & SERVICES--CONTINUED
--------------------------------------------------------------------------------
1,387 Centex Corp. $ 33,808
--------------------------------------------------------------------------------
4,100 Champion International Co. 133,763
--------------------------------------------------------------------------------
9,173 Corning, Inc. 301,562
--------------------------------------------------------------------------------
1,324 Crane Co. 34,258
--------------------------------------------------------------------------------
3,889 *Crown Cork & Seal Co., Inc. 140,490
--------------------------------------------------------------------------------
4,032 Cyprus Amax Minerals Co. 116,928
--------------------------------------------------------------------------------
3,643 Deluxe Corp. 103,370
--------------------------------------------------------------------------------
12,075 Dow Chemical Co. 824,119
--------------------------------------------------------------------------------
29,856 Du Pont (E.I.) de Nemours & Co., Inc. 1,851,072
--------------------------------------------------------------------------------
4,922 Echo Bay Mines Ltd. 56,603
--------------------------------------------------------------------------------
2,780 Ecolab, Inc. 61,507
--------------------------------------------------------------------------------
4,235 Engelhard Corp. 113,816
--------------------------------------------------------------------------------
1,586 *FMC Corp. 76,525
--------------------------------------------------------------------------------
2,013 Fleetwood Enterprises, Inc. 42,273
--------------------------------------------------------------------------------
2,072 General Signal Corp. 63,714
--------------------------------------------------------------------------------
3,955 Georgia-Pacific Corp. 255,097
--------------------------------------------------------------------------------
1,130 Goodrich (B.F.) Co. 51,839
--------------------------------------------------------------------------------
4,106 Grace (W.R.) & Co. 171,426
--------------------------------------------------------------------------------
3,139 Great Lakes Chemical Corp. 173,037
--------------------------------------------------------------------------------
3,373 Harcourt Gen, Inc. 124,801
--------------------------------------------------------------------------------
1,869 Hercules, Inc. 196,946
--------------------------------------------------------------------------------
6,049 Homestake Mining Co. 117,955
--------------------------------------------------------------------------------
5,246 ITT Corp. 438,041
--------------------------------------------------------------------------------
5,116 Inco Ltd. 130,458
--------------------------------------------------------------------------------
1,776 Inland Steel Industries, Inc. 56,610
--------------------------------------------------------------------------------
5,439 International Paper Co. 376,651
--------------------------------------------------------------------------------
3,597 James River Corp. of Virginia 58,002
--------------------------------------------------------------------------------
</TABLE>
BILTMORE EQUITY INDEX FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
MATERIALS & SERVICES--CONTINUED
--------------------------------------------------------------------------------
7,092 Kimberly-Clark Corp. $ 400,698
--------------------------------------------------------------------------------
4,837 Louisiana-Pacific Corp. 163,853
--------------------------------------------------------------------------------
5,133 Marriott International, Inc. 145,007
--------------------------------------------------------------------------------
6,737 Masco Industries, Inc. 186,110
--------------------------------------------------------------------------------
2,603 Mead Corp. 116,484
--------------------------------------------------------------------------------
1,232 Milipore Corp. 64,988
--------------------------------------------------------------------------------
19,024 Minnesota Mining & Manufacturing Co. 970,224
--------------------------------------------------------------------------------
5,231 Monsanto Co. 427,634
--------------------------------------------------------------------------------
4,386 Moore Corp. Ltd. 81,689
--------------------------------------------------------------------------------
3,042 Nalco Chemical Co. 100,006
--------------------------------------------------------------------------------
3,470 Newell Co. 157,451
--------------------------------------------------------------------------------
3,763 Newmont Mining Corp. 155,694
--------------------------------------------------------------------------------
3,832 Nucor Corp. 257,223
--------------------------------------------------------------------------------
1,884 *Owens-Corning Fiberglass Corp. 59,817
--------------------------------------------------------------------------------
4,688 PPG Industries, Inc. 350,428
--------------------------------------------------------------------------------
5,116 Pall Corp. 72,903
--------------------------------------------------------------------------------
3,100 Phelps Dodge Corp. 172,050
--------------------------------------------------------------------------------
1,287 Potlatch Corp. 52,767
--------------------------------------------------------------------------------
5,902 Praxair, Inc. 120,253
--------------------------------------------------------------------------------
1,405 Premark International, Inc. 99,755
--------------------------------------------------------------------------------
4,502 *Promus Cos., Inc. (The) 171,639
--------------------------------------------------------------------------------
2,638 Reynolds Metals Co. 121,018
--------------------------------------------------------------------------------
2,981 Rohm & Haas Co. 181,468
--------------------------------------------------------------------------------
3,694 *Rowan Companies, Inc. 29,090
--------------------------------------------------------------------------------
3,263 Scott Paper Co. 155,808
--------------------------------------------------------------------------------
3,912 Sherwin-Williams Co. 123,228
--------------------------------------------------------------------------------
1,878 Snap-On Tools Corp. 65,965
--------------------------------------------------------------------------------
</TABLE>
BILTMORE EQUITY INDEX FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
MATERIALS & SERVICES--CONTINUED
--------------------------------------------------------------------------------
3,863 Stone Container Corp. $ 56,496
--------------------------------------------------------------------------------
2,443 Teledyne, Inc. 44,279
--------------------------------------------------------------------------------
2,042 Tyco International Finance 96,995
--------------------------------------------------------------------------------
3,245 USX-U.S. Steel Group 110,736
--------------------------------------------------------------------------------
3,076 Union Camp Corp. 145,341
--------------------------------------------------------------------------------
6,682 Union Carbide Corp. 180,414
--------------------------------------------------------------------------------
1,937 *Varity Corp. 70,943
--------------------------------------------------------------------------------
21,266 WMX Technologies, Inc. 582,157
--------------------------------------------------------------------------------
2,944 Westvaco Corp. 94,944
--------------------------------------------------------------------------------
9,038 Weyerhaeuser Co. 376,207
--------------------------------------------------------------------------------
3,981 Worthington Industries, Inc. 78,625
-------------------------------------------------------------------------------- ---------------
Total 14,497,948
-------------------------------------------------------------------------------- ---------------
NON-ENERGY--0.2%
--------------------------------------------------------------------------------
12,509 Amerian Barrick Resources Corp. 309,598
--------------------------------------------------------------------------------
4,581 ARMCO Inc. 26,913
--------------------------------------------------------------------------------
1,834 ASARCO Inc. 47,684
-------------------------------------------------------------------------------- ---------------
Total 384,195
-------------------------------------------------------------------------------- ---------------
PROCESS INDUSTRIES--0.2%
--------------------------------------------------------------------------------
2,562 Avery Dennison Corp. 74,298
--------------------------------------------------------------------------------
1,295 Ball Corp. 37,231
--------------------------------------------------------------------------------
3,632 Eastman Chemical Co. 174,790
--------------------------------------------------------------------------------
1,852 Federal Paper Board Co. 43,059
--------------------------------------------------------------------------------
881 First Mississippi Corp. 13,656
-------------------------------------------------------------------------------- ---------------
Total 343,034
-------------------------------------------------------------------------------- ---------------
TECHNOLOGY--10.9%
--------------------------------------------------------------------------------
4,013 *Advanced Micro Devices, Inc. 108,351
--------------------------------------------------------------------------------
5,029 Amdahl Corp. 33,317
--------------------------------------------------------------------------------
</TABLE>
BILTMORE EQUITY INDEX FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
--------------------------------------------------------------------------------
59,525 American Telephone & Telegraph Corp. $ 3,244,112
--------------------------------------------------------------------------------
5,952 *Amgen, Inc. 277,140
--------------------------------------------------------------------------------
4,624 AMP, Inc. 299,404
--------------------------------------------------------------------------------
1,104 *Andrew Corp. 39,744
--------------------------------------------------------------------------------
5,119 Apple Computer, Inc. 149,731
--------------------------------------------------------------------------------
1,056 Autodesk, Inc. 54,384
--------------------------------------------------------------------------------
6,188 Automatic Data Processing, Inc. 330,284
--------------------------------------------------------------------------------
5,087 *Biomet Inc. 49,598
--------------------------------------------------------------------------------
14,974 Boeing Co. 694,419
--------------------------------------------------------------------------------
1,947 *Ceridan Corp. 47,701
--------------------------------------------------------------------------------
11,146 *Cisco Systems, Inc. 275,864
--------------------------------------------------------------------------------
3,642 *COMPAQ Computer Corp. 430,667
--------------------------------------------------------------------------------
7,311 Computer Associates International, Inc. 304,320
--------------------------------------------------------------------------------
2,214 *Computer Sciences Corp. 96,032
--------------------------------------------------------------------------------
1,157 *Cray Research, Inc. 24,008
--------------------------------------------------------------------------------
4,848 *DSC Communications Corp. 107,868
--------------------------------------------------------------------------------
1,536 *Data General Corp. 11,520
--------------------------------------------------------------------------------
5,951 *Digital Equipment Corp. 131,666
--------------------------------------------------------------------------------
2,523 EG&G, Inc. 36,899
--------------------------------------------------------------------------------
1,489 E-Systems, Inc. 59,002
--------------------------------------------------------------------------------
2,740 General Dynamics Corp. 116,107
--------------------------------------------------------------------------------
1,758 Harris Corp. 83,285
--------------------------------------------------------------------------------
11,210 Hewlett-Packard Co. 879,985
--------------------------------------------------------------------------------
18,336 Intel Corp. 1,146,000
--------------------------------------------------------------------------------
2,025 *Intergraph Corp. 18,731
--------------------------------------------------------------------------------
25,498 International Business Machines Corp. 1,612,749
--------------------------------------------------------------------------------
1,781 Johnson Controls Inc. 87,269
--------------------------------------------------------------------------------
</TABLE>
BILTMORE EQUITY INDEX FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
--------------------------------------------------------------------------------
2,747 Lockheed Corp. $ 175,465
--------------------------------------------------------------------------------
3,648 Loral Corp. 130,416
--------------------------------------------------------------------------------
1,917 *Lotus Development Corp. 115,020
--------------------------------------------------------------------------------
1,107 *M/A Communications, Inc. 8,579
--------------------------------------------------------------------------------
23,632 MCI Communications Corp. 567,168
--------------------------------------------------------------------------------
3,377 Mallinckrodt Group, Inc. 100,466
--------------------------------------------------------------------------------
4,200 Martin-Marietta Corp. 182,700
--------------------------------------------------------------------------------
1,733 McDonnell-Douglas Corp. 208,610
--------------------------------------------------------------------------------
24,466 Motorola, Inc. 1,143,785
--------------------------------------------------------------------------------
4,889 *National Semiconductor Co. 94,724
--------------------------------------------------------------------------------
11,055 Northern Telecom, Ltd. 344,087
--------------------------------------------------------------------------------
2,154 Northrop-Grumman Corp. 76,198
--------------------------------------------------------------------------------
13,553 *Novell, Inc. 240,566
--------------------------------------------------------------------------------
12,557 *Oracle Systems Corp. 430,077
--------------------------------------------------------------------------------
1,937 Perkin-Elmer Corp. 56,415
--------------------------------------------------------------------------------
6,958 Pitney Bowes, Inc. 272,232
--------------------------------------------------------------------------------
5,976 Raytheon Co. 372,006
--------------------------------------------------------------------------------
9,717 Rockwell International Corp. 346,168
--------------------------------------------------------------------------------
1,643 Scientific-Atlanta, Inc. 61,407
--------------------------------------------------------------------------------
15,030 Sprint Corp. 571,140
--------------------------------------------------------------------------------
4,251 *Sun Microsystems 88,740
--------------------------------------------------------------------------------
2,815 TRW, Inc. 187,901
--------------------------------------------------------------------------------
4,978 *Tandem Computers, Inc. 57,247
--------------------------------------------------------------------------------
2,812 Tandy Corp. 105,099
--------------------------------------------------------------------------------
1,347 Tektronix, Inc. 38,221
--------------------------------------------------------------------------------
3,992 Texas Instruments, Inc. 320,358
--------------------------------------------------------------------------------
3,887 Textron, Inc. 217,672
--------------------------------------------------------------------------------
</TABLE>
BILTMORE EQUITY INDEX FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
--------------------------------------------------------------------------------
832 Thomas & Betts Corp. $ 52,520
--------------------------------------------------------------------------------
7,177 Unisys Corp. 78,947
--------------------------------------------------------------------------------
5,510 United Technologies Corp. 365,726
--------------------------------------------------------------------------------
4,581 Xerox Corp. 460,390
-------------------------------------------------------------------------------- ---------------
Total 18,220,207
-------------------------------------------------------------------------------- ---------------
TRANSPORTATION--1.6%
--------------------------------------------------------------------------------
3,332 *AMR Corp. 184,093
--------------------------------------------------------------------------------
3,913 Burlington Northern Inc. 218,150
--------------------------------------------------------------------------------
4,587 CSX Corp. 350,905
--------------------------------------------------------------------------------
3,506 Conrail Inc. 192,392
--------------------------------------------------------------------------------
1,561 Consolidated Freightways, Inc. 40,196
--------------------------------------------------------------------------------
2,207 Delta Air Lines, Inc. 100,694
--------------------------------------------------------------------------------
2,427 *Federal Express Corp. 185,666
--------------------------------------------------------------------------------
6,122 Norfolk Southern Corp. 389,512
--------------------------------------------------------------------------------
1,735 Roadway Services, Inc. 123,619
--------------------------------------------------------------------------------
3,377 Ryder Systems, Inc. 81,470
--------------------------------------------------------------------------------
8,070 Santa Fe Pacific Corp. 183,593
--------------------------------------------------------------------------------
1,077 *UAL (Allegis) Corp. 129,509
--------------------------------------------------------------------------------
9,036 Union Pacific Corp. 533,124
--------------------------------------------------------------------------------
2,600 U.S. Air Group, Inc. 17,550
--------------------------------------------------------------------------------
1,239 Yellow Corp. 23,309
-------------------------------------------------------------------------------- ---------------
Total 2,753,782
-------------------------------------------------------------------------------- ---------------
UTILITIES--8.7%
--------------------------------------------------------------------------------
21,669 *Airtouch Communications, Inc. 528,182
--------------------------------------------------------------------------------
8,135 American Electric Power Co., Inc. 235,915
--------------------------------------------------------------------------------
23,992 Ameritech Corp. 938,687
--------------------------------------------------------------------------------
6,400 Baltimore Gas & Electric Co. 145,600
--------------------------------------------------------------------------------
</TABLE>
BILTMORE EQUITY INDEX FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
UTILITIES--CONTINUED
--------------------------------------------------------------------------------
19,220 Bell Atlantic Corp. $ 1,025,867
--------------------------------------------------------------------------------
21,858 BellSouth Corp. 1,300,551
--------------------------------------------------------------------------------
7,086 Carolina Power & Light Co. 172,721
--------------------------------------------------------------------------------
8,305 Central & SouthWest Corp. 182,710
--------------------------------------------------------------------------------
2,229 Columbia Gas System, Inc. 64,084
--------------------------------------------------------------------------------
9,413 Commonwealth Edison Co. 234,148
--------------------------------------------------------------------------------
10,314 Consolidated Edison Co. 284,924
--------------------------------------------------------------------------------
6,482 Detroit Edison Co. 166,912
--------------------------------------------------------------------------------
7,378 Dominion Resources, Inc. 291,431
--------------------------------------------------------------------------------
9,031 Duke Power Co. 325,116
--------------------------------------------------------------------------------
999 Eastern Enterprises 23,726
--------------------------------------------------------------------------------
10,534 Enron Corp. 321,287
--------------------------------------------------------------------------------
10,190 Entergy Corp. 294,236
--------------------------------------------------------------------------------
8,274 FPL Group, Inc. 262,700
--------------------------------------------------------------------------------
41,654 GTE Corp. 1,286,067
--------------------------------------------------------------------------------
5,734 Houston Industries, Inc. 184,921
--------------------------------------------------------------------------------
6,258 Niagara Mohawk Power Corp. 103,257
--------------------------------------------------------------------------------
2,420 NICOR, Inc. 65,038
--------------------------------------------------------------------------------
2,942 Northern States Power Co. 120,254
--------------------------------------------------------------------------------
18,194 NYNEX Corp. 686,823
--------------------------------------------------------------------------------
6,726 Ohio Edison Co. 117,705
--------------------------------------------------------------------------------
1,174 Oneok, Inc. 19,077
--------------------------------------------------------------------------------
9,753 PECO Energy Co. 265,769
--------------------------------------------------------------------------------
2,508 PSI Resources, Inc. 55,176
--------------------------------------------------------------------------------
3,699 Pacific Enterprises 76,292
--------------------------------------------------------------------------------
19,073 Pacific Gas & Electric Co. 488,746
--------------------------------------------------------------------------------
18,548 Pacific Telesis Group 563,396
--------------------------------------------------------------------------------
</TABLE>
BILTMORE EQUITY INDEX FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
UTILITIES--CONTINUED
--------------------------------------------------------------------------------
12,286 Pacificorp $ 216,541
--------------------------------------------------------------------------------
1,535 People's Energy Corp. 42,788
--------------------------------------------------------------------------------
10,656 Public Service Enterprise Group, Inc. 295,704
--------------------------------------------------------------------------------
19,737 SCEcorp. 276,318
--------------------------------------------------------------------------------
28,204 Southern Co. 521,774
--------------------------------------------------------------------------------
26,423 Southwestern Bell Corp. 1,086,646
--------------------------------------------------------------------------------
9,826 Texas Utilities Co. 324,258
--------------------------------------------------------------------------------
1,779 Transco Energy Co. 27,130
--------------------------------------------------------------------------------
4,502 Union Electric Co. 151,380
--------------------------------------------------------------------------------
19,380 U.S. West, Inc. 777,623
-------------------------------------------------------------------------------- ---------------
Total 14,551,480
-------------------------------------------------------------------------------- ---------------
TOTAL COMMON STOCKS (IDENTIFIED COST $139,777,608) 143,598,367
-------------------------------------------------------------------------------- ---------------
SHORT-TERM U.S. TREASURY OBLIGATIONS--13.9%
- ------------------------------------------------------------------------------------------------
U.S. TREASURY BILLS--13.9%
--------------------------------------------------------------------------------
$ 23,342,000 6/16/94 23,304,186
-------------------------------------------------------------------------------- ---------------
**REPURCHASE AGREEMENT--0.3%
- ------------------------------------------------------------------------------------------------
509,092 PaineWebber, Inc., 4.20%, dated 5/31/94, due 6/1/94
(AT AMORTIZED COST) (NOTE 2B) 509,092
-------------------------------------------------------------------------------- ---------------
TOTAL INVESTMENTS (IDENTIFIED COST $163,590,886) $ 167,411,645+
-------------------------------------------------------------------------------- ---------------
</TABLE>
+ The cost of investments for federal tax purposes amounts to $163,590,886.
The net unrealized appreciation of investments on a federal tax basis
amounts to $3,820,759, which is comprised of $11,249,098 appreciation and
$7,428,339 depreciation at May 31, 1994.
* Non-income producing securities.
** The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
Note: The categories of investments are shown as a percentage of net assets
($167,948,882) at May 31, 1994.
(See Notes which are an integral part of the Financial Statements)
BILTMORE EQUITY INDEX FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ------------------------------------------------------------------------------------------------
Investments, at value (Notes 2A and 2B) (identified and tax cost, $163,590,886) $ 167,411,645
- ------------------------------------------------------------------------------------------------
Dividends and interest receivable 548,140
- ------------------------------------------------------------------------------------------------
Receivable for Fund shares sold 20,266
- ------------------------------------------------------------------------------------------------
Receivable for investments sold 2,075
- ------------------------------------------------------------------------------------------------
Deferred expenses (Note 2G) 41,752
- ------------------------------------------------------------------------------------------------ ---------------
Total assets 168,023,878
- ------------------------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------------
Payable for Fund shares redeemed $ 20,683
- -------------------------------------------------------------------------------------
Payable for daily variation margin on open futures contracts (Note 2F) 15,150
- -------------------------------------------------------------------------------------
Accrued expenses 39,163
- ------------------------------------------------------------------------------------- ---------
Total liabilities 74,996
- ------------------------------------------------------------------------------------------------ ---------------
NET ASSETS for 16,248,832 shares of beneficial interest outstanding $ 167,948,882
- ------------------------------------------------------------------------------------------------ ---------------
NET ASSETS CONSIST OF:
- ------------------------------------------------------------------------------------------------
Paid-in capital $ 163,239,033
- ------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments and
futures contracts (Note 2F) 3,587,198
- ------------------------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments 353,614
- ------------------------------------------------------------------------------------------------
Undistributed net investment income 769,037
- ------------------------------------------------------------------------------------------------ ---------------
Total Net Assets $ 167,948,882
- ------------------------------------------------------------------------------------------------ ---------------
NET ASSET VALUE, AND REDEMPTION PROCEEDS PER SHARE:
(net assets of $167,948,882/16,248,832 shares of beneficial interest outstanding) $10.34
- ------------------------------------------------------------------------------------------------ ---------------
COMPUTATION OF OFFERING PRICE:
Offering Price Per Share (100/95.5 of $10.34)* $10.83
- ------------------------------------------------------------------------------------------------ ---------------
</TABLE>
* See "What Shares Cost" in the prospectus.
(See Notes which are an integral part of the Financial Statements)
BILTMORE EQUITY INDEX FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------------
Dividend Income $ 2,011,452
- ----------------------------------------------------------------------------------------------------
Interest income 224,969
- ---------------------------------------------------------------------------------------------------- ------------
Total income (Note 2C) 2,236,421
- ----------------------------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------------
Investment advisory fee (Note 4) $ 237,407
- ----------------------------------------------------------------------------------------
Trustees' Fees 3,948
- ----------------------------------------------------------------------------------------
Administrative personnel and services fees (Note 4) 85,015
- ----------------------------------------------------------------------------------------
Custodian fees (Note 4) 6,227
- ----------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses (Note 4) 16,985
- ----------------------------------------------------------------------------------------
Fund share registration costs 18,513
- ----------------------------------------------------------------------------------------
Auditing fees 10,358
- ----------------------------------------------------------------------------------------
Legal fees 11,750
- ----------------------------------------------------------------------------------------
Printing and postage 9,531
- ----------------------------------------------------------------------------------------
Portfolio accounting fees (Note 4) 42,354
- ----------------------------------------------------------------------------------------
Insurance premiums 5,044
- ----------------------------------------------------------------------------------------
Miscellaneous 6,334
- ---------------------------------------------------------------------------------------- ----------
Total expenses 453,466
- ----------------------------------------------------------------------------------------
Deduct--
- ----------------------------------------------------------------------------------------
Waiver of investment advisory fee (Note 4) $ 39,568
- -----------------------------------------------------------------------------
Reimbursement of other expenses by Administrator (Note 4) 25,277 64,845
- ----------------------------------------------------------------------------- --------- ----------
Net expenses 388,621
- ---------------------------------------------------------------------------------------------------- ------------
Net investment income 1,847,800
- ---------------------------------------------------------------------------------------------------- ------------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS AND FUTURES CONTRACTS:
- ----------------------------------------------------------------------------------------------------
Net realized gain (loss) on investments and futures contracts (identified cost basis) 370,145
- ----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments and futures contracts (2,439,511)
- ---------------------------------------------------------------------------------------------------- ------------
Net realized and unrealized gain/(loss) on investments and futures contracts (2,069,366)
- ---------------------------------------------------------------------------------------------------- ------------
Change in net assets resulting from operations $ (221,566)
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
BILTMORE EQUITY INDEX FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1994** 1993*
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------------------------------
Net investment income $ 1,847,800 $ 2,120,028
- -------------------------------------------------------------------------------
Net realized gain (loss) on investment transactions ($370,145 and $255,390 net
gains respectively, as computed for federal tax purposes) 370,145 238,906
- -------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) of investments (2,439,511) 6,026,709
- ------------------------------------------------------------------------------- --------------- ---------------
Change in net assets resulting from operations (221,566) 8,385,643
- ------------------------------------------------------------------------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2C)--
- -------------------------------------------------------------------------------
Dividends to shareholders from net investment income (1,635,888) (1,562,902)
- -------------------------------------------------------------------------------
Distributions to shareholders from net realized gain on investment transactions (255,438) --
- ------------------------------------------------------------------------------- --------------- ---------------
Change in net assets from distributions to shareholders (1,891,326) (1,562,902)
- ------------------------------------------------------------------------------- --------------- ---------------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 3)--
- -------------------------------------------------------------------------------
Net proceeds from sale of shares 25,303,895 164,026,362
- -------------------------------------------------------------------------------
Net asset value of shares issued to shareholders electing to receive payment of
dividends in Fund shares 1,890,841 1,562,902
- -------------------------------------------------------------------------------
Cost of shares redeemed (6,398,688) (23,146,279)
- ------------------------------------------------------------------------------- --------------- ---------------
Change in net assets from Fund share transactions 20,796,048 142,442,985
- ------------------------------------------------------------------------------- --------------- ---------------
Change in net assets 18,683,156 149,265,726
- -------------------------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------------------------
Beginning of period 149,265,726 --
- ------------------------------------------------------------------------------- --------------- ---------------
End of period (including undistributed net investment income of $769,037 and
$557,126 respectively) $ 167,948,882 $ 149,265,726
- ------------------------------------------------------------------------------- --------------- ---------------
</TABLE>
* For the period from May 10, 1993 (date of initial public investment) to
November 30, 1993.
** Six months ended May 31, 1994 (unaudited).
(See Notes which are an integral part of the Financial Statements)
BILTMORE EQUITY INDEX FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED
NOVEMBER 30,
1994** 1993*
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.47 $ 10.00
- --------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------------
Net investment income 0.12 0.15
- --------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.12) 0.43
- -------------------------------------------------------------------------------------- --------- ---------
Total from investment operations 0.00 0.58
- --------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- --------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (0.11) (0.11)
- --------------------------------------------------------------------------------------
Distributions to shareholders from net realized gain on investment transactions (0.02) --
- -------------------------------------------------------------------------------------- --------- ---------
Total distributions (0.13) (0.11)
- -------------------------------------------------------------------------------------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 10.34 $ 10.47
- -------------------------------------------------------------------------------------- --------- ---------
TOTAL RETURN*** (0.04)% 5.80%
- --------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------------------------------------------------
Expenses 0.49 (a) 0.43%(a)
- --------------------------------------------------------------------------------------
Net investment income 2.33 (a) 2.54%(a)
- --------------------------------------------------------------------------------------
Expense waiver/reimbursement (b) 0.08 (a) 0.12%(a)
- --------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------
Net assets, end of period (000 omitted)
$167,949
$149,266
- --------------------------------------------------------------------------------------
Portfolio turnover rate 6% 9%
- --------------------------------------------------------------------------------------
</TABLE>
* For the period from May 10, 1993 (date of initial public investment) to
November 30, 1993.
** Six months ended May 31, 1994 (unaudited).
*** Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 4).
(See Notes which are an integral part of the Financial Statements)
BILTMORE EQUITY INDEX FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
The Biltmore Funds (the "Trust") is registered under the Investment Company Act
of 1940, as amended (the "Act"), as an open-end, management investment company.
The Trust consists of eleven diversified portfolios. The financial statements
included herein present only those of the Biltmore Equity Index Fund (the
"Fund"). The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles (GAAP).
A. INVESTMENT VALUATIONS--Listed equity securities are valued at the last
sales price reported on national securities exchanges. Unlisted securities,
short-term obligations and private placement securities are generally
valued at the prices provided by an independent pricing service. Short-term
securities with remaining maturities of sixty days or less at the time of
purchase may be stated at amortized cost, which approximates value.
B. REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System or to have segregated within the
custodian bank's vault, all securities held as collateral in support of
repurchase agreement investments. Additionally, procedures have been
established by the Fund to monitor, on a daily basis, the market value of
each repurchase agreement's underlying collateral to ensure the value at
least equals the principal amount of the repurchase agreement, including
accrued interest.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to guidelines established
by the Board of Trustees ("Trustees"). Risks may arise from the potential
inability of counterparties to honor the terms of the repurchase agreement.
Accordingly, the Fund could receive less than the repurchase price on the
sale of collateral securities.
C. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Dividend income and
distributions to shareholders are recorded on the ex-dividend date.
Interest income and expenses are accrued daily. Bond premium and discounts,
if applicable, are amortized as required by the Internal Revenue Code, as
amended (the "Code").
D. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its taxable income.
Accordingly, no provisions for federal income tax are necessary.
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
F. FUTURES CONTRACTS--Upon entering into a financial futures contract with a
broker, the Fund is required to deposit, in a segregated account, an amount
("initial margin") of cash or U.S. government securities equal to a
percentage of the contract value. The Fund agrees to receive from or pay to
the broker an amount of cash equal to a specific dollar amount times the
difference between the closing value and the price at which the contract
was made. On a daily basis, the value of the financial futures contract is
determined and any difference between such value and the original futures
contract value is reflected in the "daily variation margin" account. Daily
variation margin adjustments, arising from this "marking to market"
process, are recorded by the Fund as unrealized gains or losses.
The Fund may decide to close its position on a contract at any time prior
to the contract's expiration. When a contract is closed, the Fund
recognizes a realized gain or loss. Risks of entering into futures
contracts include the possibility that a change in the value of the
contract may not correlate with changes in the value of the underlying
securities.
At May 31, 1994, the Fund had outstanding futures contracts as set out
below:
<TABLE>
<CAPTION>
NET
CONTRACTS UNREALIZED
EXPIRATION TO DELIVER/ APPRECIATION
DATE RECEIVE POSITION (DEPRECIATION)
<S> <C> <C> <C>
6/16/94 101 S&P 500 $(233,561)
</TABLE>
G. DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering the shares, have been deferred and are being
amortized using the straight-line method over a period of five years from
the Fund's commencement date.
H. OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED
NOVEMBER 30
1994** 1993*
<S> <C> <C>
- -------------------------------------------------------------------------------------- ----------- -------------
Shares sold 2,430,732 16,360,663
- --------------------------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 179,528 153,909
- --------------------------------------------------------------------------------------
Shares redeemed (613,910) (2,262,090)
- -------------------------------------------------------------------------------------- ----------- -------------
Net change resulting from Fund share transactions 1,996,350 14,252,482
- -------------------------------------------------------------------------------------- ----------- -------------
</TABLE>
* The period from May 10, 1993 (date of initial public investment) to November
30, 1993.
** Six months ended May 31, 1994.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Wachovia Investment Management Group, the Fund's
investment adviser (the "Adviser"), receives for its services an annual
investment advisory fee equal to .30 of 1% of the Fund's average daily net
assets. The Adviser may voluntarily choose to waive a portion of its fee or
reimburse certain operating expenses of the Fund. The Adviser can modify or
terminate this voluntary waiver and reimbursement at any time at its sole
discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. The FAS fee is based on the
level of average aggregate net assets of the Trust and The Biltmore Municipal
Funds for the period. FAS may voluntarily choose to waive a portion of its fee
and reimburse certain operating expenses. FAS can modify or terminate this
voluntary waiver and reimbursement at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT, ACCOUNTING AND CUSTODY FEES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent for
the Fund. The FServ fee is based on the size, type and number of accounts and
transactions made by shareholders.
FServ also maintains the Fund's accounting records. The fee is based on the
level of the Fund's average net assets for the period, plus out-of-pocket
expenses.
Wachovia Bank of North Carolina, N.A. is the Fund's custodian. The fee is based
on the level of the Fund's average net assets for the period, plus out-of-pocket
expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses ($31,524) were borne initially
by FAS. The Fund has agreed to reimburse FAS for the organizational expenses
during the five year period following April 3, 1993 (date the Fund first became
effective). For the six months ended May 31, 1994, the Fund paid $2,140 pursuant
to this agreement.
Certain of the Officers of the Trust are Officers and Trustees of FAS and FServ.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the six
months ended
May 31, 1994, were as follows:
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------------------------
PURCHASES $ 10,130,813
- -------------------------------------------------------------------------------------------------- --------------
SALES $ 11,877,912
- -------------------------------------------------------------------------------------------------- --------------
</TABLE>
TRUSTEES OFFICERS
- -----------------------------------------------------------------------------
<TABLE>
<S> <C>
James A. Hanley John W. McGonigle
Malcolm T. Hopkins President and Treasurer
Samuel E. Hudgins Ronald M. Petnuch
J. Berkley Ingram, Jr. Vice President and Assistant Treasurer
D. Dean Kaylor Joseph M. Huber
Secretary
Mark A. Sheehan
Assistant Secretary
</TABLE>
Mutual funds are not obligations of or insured by any bank, nor are they insured
by the federal government or any of its agencies. Investment in these shares
involves risk, including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus, which contains facts
concerning its objective and policies, management fees and other information.
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I'm pleased to present the Semi-Annual Report to Shareholders of the Biltmore
Short-Term Fixed Income Fund (the "Fund") for the six-month period ended May 31,
1994. The Report begins with a brief commentary on the bond market from the
Fund's portfolio manager. Following the commentary are a complete listing of the
Fund's portfolio of investments and its financial statements.
On your behalf, the Fund pursues a high level of current income from a
diversified portfolio of short-term, high-grade bonds issued by some of
America's leading companies, as well as government agencies.
Dividends paid to the Fund's shareholders totaled $0.23 per share for the
six-month reporting period.
While the Fund's net asset value began the period at $9.91, it ended the period
at $9.68, due to increased volatility in the financial markets early in the year
brought on by rising interest rates. Total Fund assets stood at $145.6 million
on the last day of the reporting period.
We look forward to keeping you informed about your investment in the Fund. As
always, we welcome your comments and suggestions.
Sincerely,
John W. McGonigle
President
July 15, 1994
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
The bond market was hampered by rising interest rates, a strengthening economy
and fears of higher inflation. As rates moved higher, municipal bond refundings
and the steady flow of cash into bond mutual funds also declined, further
weakening the bond market. From November 30, 1993 to
May 31, 1994, the Merrill Lynch 1-3 Year U.S. Treasury Index* had a total return
that fell .35%.
Rates on shorter-term securities moved higher during the period, narrowing the
spread to longer maturities. The Fund's portfolio manager generally maintained a
position in line with the targeted average maturity of 1-1/2 years. Beginning in
March, 1994, the weighting of corporate bonds was increased in the Fund's
portfolio, as the spread widened between Treasury bonds and corporate issues.
The Fund had net assets of $145.6 million and a net asset value of $9.68 on May
31, 1994. The 30-day SEC yield increased from 3.30% to 4.75% during the
six-month period**. The average yield to maturity of the securities held in the
Fund was 5.69%, and the average maturity of the Fund's portfolio was
1.44 years.
* This index is unmanaged.
**Performance quoted represents past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
BILTMORE SHORT-TERM FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
ASSET-BACKED SECURITIES--4.9%
- ------------------------------------------------------------------------------------------------
$ 1,325,019 CIT Group Securitization, Series 1993-1, 4.70%, 6/15/2018 $ 1,288,992
--------------------------------------------------------------------------------
1,403,964 Ford Credit Grantor Trust, Series 1993-A, 4.85%, 1/15/98 1,387,284
--------------------------------------------------------------------------------
244,382 GMAC 1992-G, Grantor Trust 4.30%, 11/15/94 244,228
--------------------------------------------------------------------------------
572,791 GMAC 1993-A, Grantor Trust 4.15%, 3/15/98 565,987
--------------------------------------------------------------------------------
3,061,353 GMAC 1993-B, Grantor Trust 4.00%, 9/15/98 3,000,126
--------------------------------------------------------------------------------
461,323 Novus Home Equity Loan, Series 1993-1, 4.89%, 3/15/2003 462,620
--------------------------------------------------------------------------------
173,939 Shawmut National Grantor Trust, Series 1992-A, 5.55%, 11/15/97 173,231
-------------------------------------------------------------------------------- ---------------
TOTAL ASSET-BACKED SECURITIES (IDENTIFIED COST, $7,253,596) 7,122,468
-------------------------------------------------------------------------------- ---------------
COLLATERALIZED MORTGAGE OBLIGATIONS--1.5%
- ------------------------------------------------------------------------------------------------
553,080 Federal Home Loan Mortgage Corp., CMO, Series 1476A, 5.50%,
8/15/97 549,104
--------------------------------------------------------------------------------
1,571,615 Household Finance Corp., CMO, Series 1992A3, 5.80%, 4/20/2007 1,563,757
-------------------------------------------------------------------------------- ---------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(IDENTIFIED COST, $2,151,955) 2,112,861
-------------------------------------------------------------------------------- ---------------
CORPORATE BONDS--25.7%
- ------------------------------------------------------------------------------------------------
BANKING--5.4%
--------------------------------------------------------------------------------
2,000,000 Bankers Trust NY Corp., 4.70%, 7/1/96 1,931,860
--------------------------------------------------------------------------------
6,045,000 NationsBank Corp., 4.75%-5.375%, 12/1/95-8/15/96 5,890,986
-------------------------------------------------------------------------------- ---------------
Total 7,822,846
-------------------------------------------------------------------------------- ---------------
CONSUMER PRODUCTS--0.4%
--------------------------------------------------------------------------------
520,000 Philip Morris Cos., Inc., 8.70%, 8/1/94 522,829
-------------------------------------------------------------------------------- ---------------
FINANCE--9.7%
--------------------------------------------------------------------------------
2,880,000 Beneficial Corp., 9.15%, 7/31/95 2,985,379
--------------------------------------------------------------------------------
3,140,000 European Investment Bank, 4.905%, 11/21/94 3,133,186
--------------------------------------------------------------------------------
520,000 Ford Motor Credit Co., 8.00%, 6/1/94 520,000
--------------------------------------------------------------------------------
</TABLE>
BILTMORE SHORT-TERM FIXED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
CORPORATE BONDS--CONTINUED
- ------------------------------------------------------------------------------------------------
FINANCE--CONTINUED
--------------------------------------------------------------------------------
$ 4,640,000 IBM Credit Corp., 5.00%-6.125%, 11/15/94-5/10/96 $ 4,608,604
--------------------------------------------------------------------------------
785,000 ITT Financial Corp., 5.00%, 8/15/95 774,819
--------------------------------------------------------------------------------
2,090,000 Norwest Financial, Inc., 7.95%, 6/15/94 2,091,463
-------------------------------------------------------------------------------- ---------------
Total 14,113,451
-------------------------------------------------------------------------------- ---------------
FINANCIAL SERVICES--4.1%
--------------------------------------------------------------------------------
6,045,000 Merrill Lynch & Co., Inc., 5.00%-6.75%, 3/15/95-12/15/96 5,956,886
-------------------------------------------------------------------------------- ---------------
FOOD & BEVERAGE--2.3%
--------------------------------------------------------------------------------
3,500,000 PepsiCo, Inc., 4.60%-5.00%, 6/30/96-2/24/97 3,364,770
-------------------------------------------------------------------------------- ---------------
OIL & GAS--0.7%
--------------------------------------------------------------------------------
1,000,000 Shell Oil Co., 7.70%, 2/1/96 1,022,310
-------------------------------------------------------------------------------- ---------------
POLLUTION CONTROL--2.4%
--------------------------------------------------------------------------------
3,500,000 Waste Management, 7.875%, 8/15/96 3,582,005
-------------------------------------------------------------------------------- ---------------
UTILITIES--0.7%
--------------------------------------------------------------------------------
1,045,000 Virginia Electric & Power Co., 9.375%, 11/1/94 1,062,546
-------------------------------------------------------------------------------- ---------------
TOTAL CORPORATE BONDS (IDENTIFIED COST, $38,548,496) 37,447,643
-------------------------------------------------------------------------------- ---------------
U.S. TREASURY OBLIGATIONS--60.9%
- ------------------------------------------------------------------------------------------------
U.S. TREASURY NOTES
--------------------------------------------------------------------------------
4,000,000 6.50%, 5/15/97 4,015,640
--------------------------------------------------------------------------------
4,305,000 5.875%, 5/15/95 4,325,190
--------------------------------------------------------------------------------
9,155,000 5.50%, 2/15/95 9,176,423
--------------------------------------------------------------------------------
24,365,000 4.375%, 11/15/96 23,367,497
--------------------------------------------------------------------------------
12,875,000 4.25%, 10/31/94-5/15/96 12,571,572
--------------------------------------------------------------------------------
14,010,000 4.125%, 5/31/95-6/30/95 13,835,425
--------------------------------------------------------------------------------
4,000,000 4.00%, 1/31/96 3,885,640
--------------------------------------------------------------------------------
17,695,000 3.875%, 2/28/95-8/31/95 17,510,562
-------------------------------------------------------------------------------- ---------------
TOTAL U.S. TREASURY OBLIGATIONS (IDENTIFIED COST, $90,247,425) 88,687,949
-------------------------------------------------------------------------------- ---------------
</TABLE>
BILTMORE SHORT-TERM FIXED INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
U.S. GOVERNMENT AGENCIES--1.3%
- ------------------------------------------------------------------------------------------------
$ 2,000,000 Federal Home Loan Banks, 4.00%, 7/8/96
(IDENTIFIED COST, $1,950,156) $ 1,950,625
-------------------------------------------------------------------------------- ---------------
*VARIABLE RATE INSTRUMENTS--2.2%
- ------------------------------------------------------------------------------------------------
FINANCE
--------------------------------------------------------------------------------
3,140,000 General Electric Capital Corp., 8.52%, 12/15/94
(IDENTIFIED COST, $3,348,590) 3,188,387
-------------------------------------------------------------------------------- ---------------
**REPURCHASE AGREEMENT--2.3%
- ------------------------------------------------------------------------------------------------
3,417,466 PaineWebber, Inc., 4.20%, dated 5/31/94, due 6/1/94
(at amortized cost) (Note 2B) 3,417,466
-------------------------------------------------------------------------------- ---------------
TOTAL INVESTMENTS (IDENTIFIED COST, $146,917,684) $ 143,927,399+
-------------------------------------------------------------------------------- ---------------
</TABLE>
* Current rate and next demand date shown.
** The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
+ The cost of investments for federal tax purposes amounts to $146,917,684. The
net unrealized depreciation of investments on a federal tax basis amounts to
$2,990,285, which is comprised of $31,155 appreciation and $3,021,440
depreciation at May 31, 1994.
Note: The categories of investments are shown as a percentage of net assets
($145,616,242) at May 31, 1994.
The following abbreviation is used in this portfolio:
CMO--Collateralized Mortgage Obligation
(See Notes which are an integral part of the Financial Statements)
BILTMORE SHORT-TERM FIXED INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1994
(UNAUDITED)
- -----------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ------------------------------------------------------------------------------------------------
Investments in securities at amortized cost and value (Notes 2A and 2B)
(identified and tax cost, $146,917,684) $ 143,927,399
- ------------------------------------------------------------------------------------------------
Receivable for investments sold 11,114,595
- ------------------------------------------------------------------------------------------------
Interest receivable 1,474,337
- ------------------------------------------------------------------------------------------------
Receivable for Fund shares sold 24,161
- ------------------------------------------------------------------------------------------------
Deferred expenses (Note 2F) 44,081
- ------------------------------------------------------------------------------------------------ ---------------
Total assets 156,584,573
- ------------------------------------------------------------------------------------------------
LIABILITIES:
- ------------------------------------------------------------------------------------------------
Payable for investments purchased $ 10,921,383
- --------------------------------------------------------------------------------
Payable for Fund shares redeemed 9,880
- --------------------------------------------------------------------------------
Accrued expenses 37,068
- -------------------------------------------------------------------------------- --------------
Total liabilities 10,968,331
- ------------------------------------------------------------------------------------------------ ---------------
NET ASSETS for 15,041,931 shares of beneficial interest outstanding $ 145,616,242
- ------------------------------------------------------------------------------------------------ ---------------
NET ASSETS CONSIST OF:
- ------------------------------------------------------------------------------------------------
Paid-in capital $ 150,537,003
- ------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments (2,990,285)
- ------------------------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments (1,885,987)
- ------------------------------------------------------------------------------------------------
Accumulated distributions in excess of net investment income (Note 2C) (44,489)
- ------------------------------------------------------------------------------------------------ ---------------
Total Net Assets $ 145,616,242
- ------------------------------------------------------------------------------------------------ ---------------
NET ASSET VALUE, AND REDEMPTION PROCEEDS PER SHARE:
($145,616,242 / 15,041,931 SHARES OF BENEFICIAL INTEREST OUTSTANDING) $9.68
- ------------------------------------------------------------------------------------------------ ---------------
COMPUTATION OF OFFERING PRICE (100/95.5 of $9.68)* $10.14
- ------------------------------------------------------------------------------------------------ ---------------
</TABLE>
*See "What Shares Cost" in the prospectus.
(See Notes which are an integral part of the Financial Statements)
BILTMORE SHORT-TERM FIXED INCOME FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- --------------------------------------------------------------------------------------------------
Interest income (Note 2C) $ 3,765,250
- --------------------------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------------------
Investment advisory fee (Note 4) $ 414,564
- -------------------------------------------------------------------------------------
Trustees' fees 3,427
- -------------------------------------------------------------------------------------
Administrative personnel and services fees (Note 4) 81,181
- -------------------------------------------------------------------------------------
Custodian fees (Note 4) 15,075
- -------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses (Note 4) 17,791
- -------------------------------------------------------------------------------------
Fund share registration costs 13,574
- -------------------------------------------------------------------------------------
Auditing fees 9,008
- -------------------------------------------------------------------------------------
Legal fees 7,281
- -------------------------------------------------------------------------------------
Printing and postage 8,138
- -------------------------------------------------------------------------------------
Portfolio accounting fees (Note 4) 29,534
- -------------------------------------------------------------------------------------
Insurance premiums 3,860
- -------------------------------------------------------------------------------------
Miscellaneous 1,265
- ------------------------------------------------------------------------------------- -----------
Total expenses 604,698
- -------------------------------------------------------------------------------------
Deduct--
- -------------------------------------------------------------------------------------
Waiver of investment advisory fee (Note 4) $ 113,063
- ------------------------------------------------------------------------
Reimbursement of other operating expenses by Administrator (Note 4) 19,859 132,922
- ------------------------------------------------------------------------ ----------- -----------
Net expenses 471,776
- -------------------------------------------------------------------------------------------------- -------------
Net investment income 3,293,474
- -------------------------------------------------------------------------------------------------- -------------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:
- --------------------------------------------------------------------------------------------------
Net realized gain/(loss) on investment transactions (identified cost basis) (1,380,830)
- --------------------------------------------------------------------------------------------------
Net change in unrealized appreciation/(depreciation) of investments (1,922,857)
- -------------------------------------------------------------------------------------------------- -------------
Net realized and unrealized gain/(loss) on investments (3,303,687)
- -------------------------------------------------------------------------------------------------- -------------
Change in net assets resulting from operations $ (10,213)
- -------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
BILTMORE SHORT-TERM FIXED INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
<S> <C> <C>
1994** 1993*
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------------------------------
Net investment income $ 3,293,474 $ 4,214,527
- -------------------------------------------------------------------------------
Net realized gain/(loss) on investment transactions ($1,380,830 and $493,199
net loss respectively, as computed for federal tax purposes) (1,380,830) (505,157)
- -------------------------------------------------------------------------------
Change in unrealized appreciation/(depreciation) of investments (1,922,857) (1,067,428)
- ------------------------------------------------------------------------------- --------------- ---------------
Change in net assets resulting from operations (10,213) 2,641,942
- ------------------------------------------------------------------------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2C)--
- -------------------------------------------------------------------------------
Dividends to shareholders from net investment income (3,293,474) (4,050,941)
- -------------------------------------------------------------------------------
Distributions in excess of net investment income (208,075) --
- ------------------------------------------------------------------------------- --------------- ---------------
Change in net assets from distributions to shareholders (3,501,549) (4,050,941)
- ------------------------------------------------------------------------------- --------------- ---------------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 3)--
- -------------------------------------------------------------------------------
Net proceeds from sales of shares 19,039,672 169,877,616
- -------------------------------------------------------------------------------
Net asset value of shares issued to shareholders electing to receive payment of
dividends in Fund shares 3,494,896 4,049,570
- -------------------------------------------------------------------------------
Cost of shares redeemed (27,865,740) (18,059,011)
- ------------------------------------------------------------------------------- --------------- ---------------
Change in net assets from Fund share transactions (5,331,172) 155,868,175
- ------------------------------------------------------------------------------- --------------- ---------------
Change in net assets (8,842,934) 154,459,176
- -------------------------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------------------------
Beginning of period 154,459,176 --
- ------------------------------------------------------------------------------- --------------- ---------------
End of period (including undistributed net investment income of
$0 and $163,586, respectively) $ 145,616,242 $ 154,459,176
- ------------------------------------------------------------------------------- --------------- ---------------
</TABLE>
*For the period from May 10, 1993 (date of initial public investment) to
November 30, 1993.
**Six months ended May 31, 1994 (unaudited).
(See Notes which are an integral part of the Financial Statements)
BILTMORE SHORT-TERM FIXED INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1994** 1993*
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.91 $ 10.00
- --------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------
Net investment income 0.21 0.27
- --------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.21) (0.10)
- -------------------------------------------------------------------------------- ----------- ---------
Total from investment operations 0.00 0.17
- --------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- --------------------------------------------------------------------------------
Dividends to shareholders from net investment income (0.21) (0.26)
- --------------------------------------------------------------------------------
Distributions in excess of net investment income (0.02)(c) --
- -------------------------------------------------------------------------------- ----------- ---------
Total distributions (0.23) (0.26)
- -------------------------------------------------------------------------------- ----------- ---------
NET ASSET VALUE, END OF PERIOD $9.68 $9.91
- -------------------------------------------------------------------------------- ----------- ---------
TOTAL RETURN*** (0.03 %) 1.69%
- --------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------------------------------------------
Expenses 0.63 (a) 0.58%(a)
- --------------------------------------------------------------------------------
Net investment income 4.37 (a) 4.78%(a)
- --------------------------------------------------------------------------------
Expense waiver/reimbursement (b) 0.18 (a) 0.22%(a)
- --------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $145,616 $154,459
- --------------------------------------------------------------------------------
Portfolio turnover rate 62 % 73%
- --------------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from May 10, 1993 (date of initial public
investment) to November 30, 1993.
** Six months ended May 31, 1994 (unaudited).
*** Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 4).
(c) Distributions are determined in accordance with income tax regulations which
may differ from generally accepted accounting principles. These
distributions do not represent a return of capital for federal income tax
purposes.
(See Notes which are an integral part of the Financial Statements)
BILTMORE SHORT-TERM FIXED INCOME FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
The Biltmore Funds (the "Trust") is registered under the Investment Company Act
of 1940, as amended (the "Act"), as an open-end management investment company.
The Trust consists of eleven diversified portfolios. The financial statements
included herein present only those of the Biltmore Short-Term Fixed Income Fund
(the "Fund"). The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles (GAAP).
A. INVESTMENT VALUATIONS--U.S. government obligations are generally valued at
the mean between the over-the-counter bid and asked prices as furnished by
an independent pricing service. Corporate bonds (and other fixed-income and
asset backed securities) are valued at the last sale price reported on
national securities exchanges on that day, if available. Otherwise,
corporate bonds (and other fixed-income and asset backed securities) and
short-term obligations are valued at the prices provided by an independent
pricing service. Short-term securities with remaining maturities of sixty
days or less at the time of purchase may be stated at amortized cost, which
approximates value.
B. REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System or to have segregated within the
custodian bank's vault, all securities held as collateral in support of
repurchase agreement investments. Additionally, procedures have been
established by the Fund to monitor, on a daily basis, the market value of
each repurchase agreement's underlying collateral to ensure the value at
least equals the principal amount of the repurchase agreement, including
accrued interest.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to guidelines established
by the Board of Trustees ("Trustees"). Risks may arise from the potential
inability of counterparties to honor the terms of the repurchase agreement.
Accordingly, the Fund could receive less than the repurchase price on the
sale of collateral securities.
C. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount are amortized as required by
the Internal Revenue Code, as amended ("Code"). Distributions to
shareholders are recorded on the ex-dividend date.
Distributions are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles. These
distributions do not represent a return of capital for federal income tax
purposes.
D. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its taxable income.
Accordingly, no provisions for federal tax are necessary. At November 30,
1993, the Fund for federal tax purposes, had a capital loss carryforward of
$493,199 which will reduce the Fund's taxable income arising from future
net realized gain on investments, if any, to the extent permitted by the
Code, and thus will reduce the amount of the distributions to shareholders
which would otherwise be necessary to relieve the Fund of any liability for
federal tax. Pursuant to the Code, such capital loss carryforward will
expire in 2001.
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
F. DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering the shares, have been deferred and are being
amortized using the straight-line method over a period of five years from
the Fund's commencement date.
G. OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED
NOVEMBER 30,
1994** 1993*
<S> <C> <C>
- ------------------------------------------------------------------------------------ ------------- -------------
Shares sold 1,935,271 16,990,534
- ------------------------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 356,505 407,113
- ------------------------------------------------------------------------------------
Shares redeemed (2,835,918) (1,811,574)
- ------------------------------------------------------------------------------------ ------------- -------------
Net change resulting from Fund share transactions (544,142) 15,586,073
- ------------------------------------------------------------------------------------ ------------- -------------
</TABLE>
* The period from May 10, 1993 (date of initial public investment) to November
30, 1993.
** Six months ended May 31, 1994.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Wachovia Investment Management Group, the Fund's
investment adviser (the "Adviser"), receives for its services an annual
investment advisory fee equal to .55 of 1% of the Fund's average daily net
assets. The Adviser may voluntarily choose to waive a portion of its fee and
reimburse certain operating expenses of the Fund. The Adviser can modify or
terminate this voluntary waiver and reimbursement at any time at its sole
discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. The FAS fee is based on the
level of average aggregate net assets of the Trust and The Biltmore Municipal
Funds for the period. FAS may voluntarily choose to waive a portion of its fee
and reimburse certain operating expenses of the Fund. FAS can modify or
terminate this voluntary waiver and reimbursement at any time at its sole
discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT, ACCOUNTING AND CUSTODY FEES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent for
the Fund. The FServ fee is based on the size, type and number of accounts and
transactions made by shareholders.
FServ also maintains the Fund's accounting records. The fee is based on the
level of the Fund's average net assets for the period, plus out-of-pocket
expenses.
Wachovia Bank of North Carolina, N.A. is the Fund's custodian. The fee is based
on the level of the Fund's average net assets for the period, plus out-of-pocket
expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses ($34,484) were borne initially
by FAS. The Fund has agreed to reimburse FAS for the organizational expenses
during the five-year period following April 3, 1993 (date the Fund first became
effective). For the six months ended May 31, 1994, the Fund paid $1,150 pursuant
to this agreement.
Certain of the Officers of the Trust are Officers and Trustees of FAS and FServ.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the six
months ended May 31, 1994, were as follows:
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------------------------
PURCHASES $ 97,659,696
- -------------------------------------------------------------------------------------------------- --------------
SALES $ 90,002,086
- -------------------------------------------------------------------------------------------------- --------------
</TABLE>
TRUSTEES OFFICERS
- ----------------------------------------------------------------------
<TABLE>
<S> <C>
James A. Hanley John W. McGonigle
Malcolm T.Hopkins President and Treasurer
Samuel E. Hudgins Ronald M. Petnuch
J. Berkley Ingram, Jr. Vice President and Assistant Treasurer
D. Dean Kaylor Joseph M. Huber
Secretary
Mark A. Sheehan
Assistant Secretary
</TABLE>
Mutual funds are not obligations of or insured by any bank, nor are they insured
by the federal government or any of its agencies. Investment in these shares
involves risk, including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus, which contains facts
concerning its objective and policies, management fees and other information.
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I'm pleased to present the Semi-Annual Report to Shareholders of the Biltmore
Special Values Fund (the "Fund") for the six-month period ended May 31, 1994.
The Report begins with a brief commentary on the stock market from the Fund's
portfolio manager. Following the commentary are a complete listing of the Fund's
portfolio of investments and its financial statements.
On your behalf, the Fund invests in a diversified portfolio of small-company
stocks to help your investment grow over the long term. These stocks are
selected especially for their potential to grow in value.
Dividends paid to the Fund's shareholders totaled $0.01 per share for the
six-month reporting period. Capital gains totaled $0.28 per share. During the
same period, total assets increased from $12.1 million to $14.5 million.
While the Fund's net asset value began the period at $10.24, it ended the period
at $9.73, due to increased volatility in the financial markets early in the year
brought on by rising interest rates.
Thank you for pursuing your long term goals through Biltmore Special Values
Fund. We look forward to keeping you informed about your investment. As always,
we welcome your comments and suggestions.
Sincerely,
John W. McGonigle
President
July 15, 1994
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Repeated interest rate increases by the Federal Reserve Board and concerns about
corporate profitability during the first half of the year touched off a
long-awaited correction in the equity markets. During the period between
November 30, 1993 and May 31, 1994, the Russell 2000 Small Stock Index* had a
total return of 0.1%. The period was characterized by volatility in the equity
markets and a decline in the heavy flow of investor moneys into mutual funds. As
the cash inflows declined, so did interest in initial public offerings.
The Fund's portfolio manager utilized an investment strategy that concentrated
on capital preservation by acquiring equities selling below their estimated
intrinsic value. On May 31, 1994, the Fund's largest holdings were Potash Corp.
(2.1%), Joslyn Manufacturing Co. (2.1%), Capital Guaranty (2.0%), John Nuveen
Company (2.0%), and Lindsay Manufacturing (1.9%).
On May 31, 1994, the Fund's net assets totaled $14.5 million, up from $12.1
million on November 30, 1993. The net asset value per share decreased during the
period from $10.24 to $9.73, whereas the
30-day SEC yield on May 31, 1994 was 0.64%.**
* This index is unmanaged.
** Performance quoted represents past performance. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
BILTMORE SPECIAL VALUES FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- ----------------------------------------------------------------------------------- --------------
COMMON STOCKS--92.7%
- --------------------------------------------------------------------------------------------------
CAPITAL GOODS--11.9%
-----------------------------------------------------------------------------------
4,600 Harsco Corp. $ 190,325
-----------------------------------------------------------------------------------
8,600 * Lindsay Manufacturing Co. 277,350
-----------------------------------------------------------------------------------
10,000 Moore Products 147,500
-----------------------------------------------------------------------------------
6,500 Puerto Rican Cement 190,937
-----------------------------------------------------------------------------------
11,500 Sealright Co., Inc. 158,125
-----------------------------------------------------------------------------------
21,000 Sparton Corp. 123,375
-----------------------------------------------------------------------------------
3,500 Standex International Corp. 90,562
-----------------------------------------------------------------------------------
33,500 *Tyler Corp. Del 188,437
-----------------------------------------------------------------------------------
3,000 Velcro Indust. NV 174,000
-----------------------------------------------------------------------------------
23,000 Willcox & Gibbs, Inc. 135,125
-----------------------------------------------------------------------------------
1,500 York International Corp. 54,000
----------------------------------------------------------------------------------- --------------
Total 1,729,736
----------------------------------------------------------------------------------- --------------
COMMERCIAL SERVICES--1.6%
-----------------------------------------------------------------------------------
7,750 *Craig Corp. 96,875
-----------------------------------------------------------------------------------
11,250 *Craig Corp., Cl. A, Common Preference 130,781
----------------------------------------------------------------------------------- --------------
Total 227,656
----------------------------------------------------------------------------------- --------------
CONSUMER DURABLES--5.1%
-----------------------------------------------------------------------------------
2,000 Allen Organ Co. 72,000
-----------------------------------------------------------------------------------
17,000 Boston Acoustics, Inc. 272,000
-----------------------------------------------------------------------------------
7,800 Gencorp, Inc. 96,525
-----------------------------------------------------------------------------------
25,000 *Instrument Systems Corp. 171,875
-----------------------------------------------------------------------------------
3,000 WD 40 Co. 120,000
----------------------------------------------------------------------------------- --------------
Total 732,400
----------------------------------------------------------------------------------- --------------
CONSUMER NON-DURABLES--15.9%
-----------------------------------------------------------------------------------
3,000 *Associated Communications 71,250
-----------------------------------------------------------------------------------
</TABLE>
BILTMORE SPECIAL VALUES FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- ----------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------------------
CONSUMER NON-DURABLES--CONTINUED
-----------------------------------------------------------------------------------
4,500 BIC Corp. $ 126,562
-----------------------------------------------------------------------------------
4,500 *Carson, Pirie, Scott & Co. 83,250
-----------------------------------------------------------------------------------
16,000 Enquirer/Star Group, Inc., Cl. A 270,000
-----------------------------------------------------------------------------------
8,000 *Fabric Centers of America, Inc. 110,000
-----------------------------------------------------------------------------------
7,100 Hancock Fabrics, Inc. 55,912
-----------------------------------------------------------------------------------
3,100 House Fabrics, Inc. 18,212
-----------------------------------------------------------------------------------
10,000 *International Dairy Queen, Inc. 177,500
-----------------------------------------------------------------------------------
12,000 Joslyn Manufacturing Co. 294,000
-----------------------------------------------------------------------------------
4,100 Lee Enterprises, Inc. 131,712
-----------------------------------------------------------------------------------
17,500 Monk Austin, Inc. 214,375
-----------------------------------------------------------------------------------
7,500 Plenum Publishing Corp. 177,187
-----------------------------------------------------------------------------------
4,500 Pulitzer Publishing Co. 164,812
-----------------------------------------------------------------------------------
15,000 *Scotts Co., Cl. A 260,625
-----------------------------------------------------------------------------------
7,000 Texfi Industries, Inc. 24,500
-----------------------------------------------------------------------------------
6,248 *Vicorp Restaurants, Inc. 93,720
-----------------------------------------------------------------------------------
1,000 Weyco Group, Inc. 34,125
----------------------------------------------------------------------------------- --------------
Total 2,307,742
----------------------------------------------------------------------------------- --------------
ENERGY--1.6%
-----------------------------------------------------------------------------------
17,000 *Chiles Offshore Corp. 83,937
-----------------------------------------------------------------------------------
2,712 *Enterra Corp. 58,986
-----------------------------------------------------------------------------------
17,973 *Pride Petroleum Services, Inc. 90,988
----------------------------------------------------------------------------------- --------------
Total 233,911
----------------------------------------------------------------------------------- --------------
ENERGY-MINERALS--0.3%
-----------------------------------------------------------------------------------
5,000 *Global Natural Resources, Inc. 37,500
----------------------------------------------------------------------------------- --------------
FINANCE--25.4%
-----------------------------------------------------------------------------------
5,000 American Premier Underwriters 137,500
-----------------------------------------------------------------------------------
3,500 Berkley (W.R.) Corp. 135,625
-----------------------------------------------------------------------------------
</TABLE>
BILTMORE SPECIAL VALUES FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- ----------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------------------
FINANCE--CONTINUED
-----------------------------------------------------------------------------------
18,500 Capital Gty. Corp. $ 279,812
-----------------------------------------------------------------------------------
2,000 Capital Southwest Corp. 77,750
-----------------------------------------------------------------------------------
13,000 *Capsure Holdings Corp. 199,875
-----------------------------------------------------------------------------------
37,000 *Danielson Holding Co. 259,000
-----------------------------------------------------------------------------------
15,000 *Equus II Inc. 204,375
-----------------------------------------------------------------------------------
1,400 Fund American Enterprises 91,000
-----------------------------------------------------------------------------------
12,500 John Nuveen Co. 278,125
-----------------------------------------------------------------------------------
4,000 *Jupiter National, Inc. 174,000
-----------------------------------------------------------------------------------
22,000 Lawyers Title Corp. 258,500
-----------------------------------------------------------------------------------
7,000 Leucadia National Corp. 263,375
-----------------------------------------------------------------------------------
14,500 Mellon Participating Mortgage Trust 58,000
-----------------------------------------------------------------------------------
4,800 N S Bancorp, Inc. 144,600
-----------------------------------------------------------------------------------
5,000 Stewart Information Services Corp. 96,875
-----------------------------------------------------------------------------------
11,500 *Triad Guaranty 175,375
-----------------------------------------------------------------------------------
10,000 *United States Banknote Corp. 38,750
-----------------------------------------------------------------------------------
11,500 Uslico Corp. 221,375
-----------------------------------------------------------------------------------
17,200 Unico American Corp. 83,850
-----------------------------------------------------------------------------------
4,500 Unitrin, Inc. 183,656
-----------------------------------------------------------------------------------
500 Wesco Financial Corp. 58,250
-----------------------------------------------------------------------------------
8,050 *White Riv. Corp. 265,650
----------------------------------------------------------------------------------- --------------
Total 3,685,318
----------------------------------------------------------------------------------- --------------
HEALTH TECHNOLOGY--1.3%
-----------------------------------------------------------------------------------
7,000 St. Jude Medical 187,250
----------------------------------------------------------------------------------- --------------
INDUSTRIAL SERVICES--1.5%
-----------------------------------------------------------------------------------
15,000 *Nabors Industries, Inc. 101,250
-----------------------------------------------------------------------------------
9,000 *Cliffs Drilling Co. 114,750
----------------------------------------------------------------------------------- --------------
Total 216,000
----------------------------------------------------------------------------------- --------------
</TABLE>
BILTMORE SPECIAL VALUES FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- ----------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------------------
MATERIAL & SERVICES--17.4%
-----------------------------------------------------------------------------------
5,000 Avemco Corp. $ 78,125
-----------------------------------------------------------------------------------
11,000 *Charter Medical Corp. 272,250
-----------------------------------------------------------------------------------
4,000 Cleveland Cliffs, Inc. 141,000
-----------------------------------------------------------------------------------
4,000 Engel Homes, Inc. 40,000
-----------------------------------------------------------------------------------
8,500 First Mississippi Corp. 131,750
-----------------------------------------------------------------------------------
5,800 Forest City Enterprises 213,150
-----------------------------------------------------------------------------------
16,000 Furon Co. 248,000
-----------------------------------------------------------------------------------
8,500 *Lunar Corp. 109,437
-----------------------------------------------------------------------------------
3,800 NCH Corp. 220,875
-----------------------------------------------------------------------------------
6,600 New Jersey Steel Corp. 110,550
-----------------------------------------------------------------------------------
10,223 *Oceaneering International, Inc. 123,953
-----------------------------------------------------------------------------------
11,500 Potash Corp. Saskatchewan, Inc. 297,562
-----------------------------------------------------------------------------------
7,200 Ryland Group, Inc. 130,500
-----------------------------------------------------------------------------------
22,000 *Saatchi & Saatchi 132,000
-----------------------------------------------------------------------------------
8,000 *Sealed Air Corp. 220,000
-----------------------------------------------------------------------------------
2,000 Twentieth Century Industry 31,750
-----------------------------------------------------------------------------------
1,500 *U.S. Home Corp. 26,625
----------------------------------------------------------------------------------- --------------
Total 2,527,527
----------------------------------------------------------------------------------- --------------
NON-ENERGY MINERALS--1.6%
-----------------------------------------------------------------------------------
10,000 Medusa Corp. 225,000
----------------------------------------------------------------------------------- --------------
PROCESS INDUSTRIES--0.8%
-----------------------------------------------------------------------------------
6,500 *Alltrista Corp. 122,290
----------------------------------------------------------------------------------- --------------
TECHNOLOGY--7.7%
-----------------------------------------------------------------------------------
13,500 *Astrosystems, Inc. 55,687
-----------------------------------------------------------------------------------
13,500 *Dynatech Corp. 246,375
-----------------------------------------------------------------------------------
5,500 *Ceridian Corp. 134,750
-----------------------------------------------------------------------------------
23,000 *Esco Electronics Corp. 241,500
-----------------------------------------------------------------------------------
</TABLE>
BILTMORE SPECIAL VALUES FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
OR SHARES VALUE
<C> <S> <C>
- ------------- ----------------------------------------------------------------------------------- --------------
COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
-----------------------------------------------------------------------------------
19,000 Geodynamics Corp. $ 147,250
-----------------------------------------------------------------------------------
5,000 Gerber Scientific, Inc. 74,375
-----------------------------------------------------------------------------------
5,000 *Itel Corp. New 145,625
-----------------------------------------------------------------------------------
13,100 Penril Datacomm Networks 69,593
----------------------------------------------------------------------------------- --------------
Total 1,115,155
----------------------------------------------------------------------------------- --------------
TRANSPORTATION--0.6%
-----------------------------------------------------------------------------------
13,000 OMI Corp. 84,500
----------------------------------------------------------------------------------- --------------
TOTAL COMMON STOCKS (IDENTIFIED COST, $13,525,025) 13,431,985
----------------------------------------------------------------------------------- --------------
PREFERRED STOCKS--1.7%
- --------------------------------------------------------------------------------------------------
1,800 Catellus Development Corp. 90,000
-----------------------------------------------------------------------------------
3,000 Cliffs Drilling Co. 81,375
-----------------------------------------------------------------------------------
5,000 *Sunshine Mng. Co. 46,250
-----------------------------------------------------------------------------------
1,500 *U.S. Home Corp. 27,188
----------------------------------------------------------------------------------- --------------
TOTAL PREFERRED STOCKS (IDENTIFIED COST, $507,541) 244,813
----------------------------------------------------------------------------------- --------------
**REPURCHASE AGREEMENT--9.4%
- --------------------------------------------------------------------------------------------------
$ 1,368,701 PaineWebber Inc., 4.20%, dated 5/31/94, due 6/1/94 (at amortized cost) (Note 2B) 1,368,701
----------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS (IDENTIFIED COST, $15,401,267) $ 15,045,499+
----------------------------------------------------------------------------------- --------------
</TABLE>
* Non-income producing securities.
** The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
+ The cost for federal tax purposes amounts to $15,401,267. The net unrealized
depreciation of investments on a federal tax basis amounts to $355,768,
which is comprised of $479,874 appreciation and $835,642 depreciation at May
31, 1994.
Note: The categories of investments are shown as a percentage of net assets
($14,494,550) at May 31, 1994.
(See Notes which are an integral part of the Financial Statements)
BILTMORE SPECIAL VALUES FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------------------------
Investments in securities (Notes 2A and 2B)
(identified and tax cost $15,401,267) $ 15,045,499
- --------------------------------------------------------------------------------------------------
Receivable for investments sold 25,001
- --------------------------------------------------------------------------------------------------
Dividends and interest receivable 14,852
- --------------------------------------------------------------------------------------------------
Receivable for Fund shares sold 7,250
- --------------------------------------------------------------------------------------------------
Deferred expenses (Note 2F) 4,855
- -------------------------------------------------------------------------------------------------- --------------
Total assets 15,097,457
- --------------------------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------------
Payable for investments purchased $ 571,748
- -------------------------------------------------------------------------------------
Accrued expenses 31,159
- ------------------------------------------------------------------------------------- -----------
Total liabilities 602,907
- -------------------------------------------------------------------------------------------------- --------------
NET ASSETS for 1,489,815 shares of beneficial interest outstanding $ 14,494,550
- -------------------------------------------------------------------------------------------------- --------------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------------------------
Paid-in capital $ 14,911,144
- --------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments (355,768)
- --------------------------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments (114,105)
- --------------------------------------------------------------------------------------------------
Undistributed net investment income 53,279
- -------------------------------------------------------------------------------------------------- --------------
Total Net Assets $ 14,494,550
- -------------------------------------------------------------------------------------------------- --------------
NET ASSET VALUE, AND REDEMPTION PROCEEDS PER SHARE:
($14,494,550 / 1,489,815 shares of beneficial interest outstanding) $9.73
- -------------------------------------------------------------------------------------------------- --------------
COMPUTATION OF OFFERING PRICE (100/95.5 of $9.73)* $10.19
- -------------------------------------------------------------------------------------------------- --------------
</TABLE>
*See "What Shares Cost" in the prospectus.
(See Notes which are an integral part of the Financial Statements)
]BILTMORE SPECIAL VALUES FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ------------------------------------------------------------------------------------------------------
Interest income $ 22,242
- ------------------------------------------------------------------------------------------------------
Dividend income 132,522
- ------------------------------------------------------------------------------------------------------ ----------
Total income (Note 2C) 154,764
- ------------------------------------------------------------------------------------------------------
EXPENSES:
- ------------------------------------------------------------------------------------------------------
Investment advisory fee (Note 4) $ 52,539
- ------------------------------------------------------------------------------------------
Trustees' fees 269
- ------------------------------------------------------------------------------------------
Administrative personnel and services fees (Note 4) 37,500
- ------------------------------------------------------------------------------------------
Custodian fees (Note 4) 1,314
- ------------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses (Note 4) 13,562
- ------------------------------------------------------------------------------------------
Fund share registration costs 7,200
- ------------------------------------------------------------------------------------------
Auditing fees 8,414
- ------------------------------------------------------------------------------------------
Legal fees 2,386
- ------------------------------------------------------------------------------------------
Printing and postage 4,675
- ------------------------------------------------------------------------------------------
Portfolio accounting fees (Note 4) 29,765
- ------------------------------------------------------------------------------------------
Insurance premiums 1,103
- ------------------------------------------------------------------------------------------
Miscellaneous 1,065
- ------------------------------------------------------------------------------------------ ----------
Total expenses 159,792
- ------------------------------------------------------------------------------------------
Deduct--
- ------------------------------------------------------------------------------------------
Waiver of investment advisory fee (Note 4) $ 26,269
- -------------------------------------------------------------------------------
Waiver of administrative personnel and services fees (Note 4) 30,452
- -------------------------------------------------------------------------------
Reimbursement of other operating expenses by Administrator (Note 4) 20,197 76,918
- ------------------------------------------------------------------------------- --------- ----------
Net expenses 82,874
- ------------------------------------------------------------------------------------------------------ ----------
Net investment income 71,890
- ------------------------------------------------------------------------------------------------------ ----------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:
- ------------------------------------------------------------------------------------------------------
Net realized gain/(loss) on investment transactions (identified cost basis) (114,095)
- ------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation/(depreciation) of investments (318,755)
- ------------------------------------------------------------------------------------------------------ ----------
Net realized and unrealized gain/(loss) on investments (432,850)
- ------------------------------------------------------------------------------------------------------ ----------
Change in net assets resulting from operations $ (360,960)
- ------------------------------------------------------------------------------------------------------ ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
BILTMORE SPECIAL VALUES FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED
NOVEMBER 30,
1994** 1993*
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ---------------------------------------------------------------------------------
OPERATIONS--
- ---------------------------------------------------------------------------------
Net investment income (loss) $ 71,890 $ (2,114)
- ---------------------------------------------------------------------------------
Net realized gain/(loss) on investment transactions
($114,095 net loss and $333,969 net gain respectively, as computed
for federal tax purposes) (114,095) 333,969
- ---------------------------------------------------------------------------------
Change in unrealized depreciation/(appreciation) of investments (318,755) (37,013)
- --------------------------------------------------------------------------------- -------------- --------------
Change in net assets resulting from operations (360,960) 294,842
- --------------------------------------------------------------------------------- -------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2C)--
- ---------------------------------------------------------------------------------
Dividends to shareholders from net investment income (18,611) --
- ---------------------------------------------------------------------------------
Distributions to shareholders from net realized gain on investment transactions (333,979) --
- --------------------------------------------------------------------------------- -------------- --------------
Change in net assets from distributions to shareholders (352,590) --
- --------------------------------------------------------------------------------- -------------- --------------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 3)--
- ---------------------------------------------------------------------------------
Net proceeds from sale of shares 3,195,612 13,082,211
- ---------------------------------------------------------------------------------
Net asset value of shares issued to shareholders electing
to receive payment of distributions in Fund shares 351,961 --
- ---------------------------------------------------------------------------------
Cost of shares redeemed (411,221) (1,305,305)
- --------------------------------------------------------------------------------- -------------- --------------
Change in net assets from Fund share transactions 3,136,352 11,776,906
- --------------------------------------------------------------------------------- -------------- --------------
Change in net assets 2,422,802 12,071,748
- ---------------------------------------------------------------------------------
NET ASSETS:
- ---------------------------------------------------------------------------------
Beginning of period 12,071,748 --
- --------------------------------------------------------------------------------- -------------- --------------
End of period (including undistributed net investment income
of $53,279) $ 14,494,550 $ 12,071,748
- --------------------------------------------------------------------------------- -------------- --------------
</TABLE>
* For the period from May 10, 1993 (date of initial public investment) to
November 30, 1993.
** Six months ended May 31, 1994 (unaudited).
(See Notes which are an integral part of the Financial Statements)
BILTMORE SPECIAL VALUES FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED
NOVEMBER 30,
1994** 1993*
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.24 $ 10.00
- -------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------------
Net investment income (loss) 0.05 (0.002)
- -------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.27) 0.242
- ------------------------------------------------------------------------------------- ----------- ---------
Total from investment operations (0.22) 0.24
- -------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- -------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (0.01) --
- -------------------------------------------------------------------------------------
Distributions to shareholders from net realized gain on investment transactions (0.28) --
- ------------------------------------------------------------------------------------- ----------- ---------
Total distributions (0.29) --
- ------------------------------------------------------------------------------------- ----------- ---------
NET ASSET VALUE, END OF PERIOD $ 9.73 $ 10.24
- ------------------------------------------------------------------------------------- ----------- ---------
TOTAL RETURN*** (2.17%) 2.40%
- -------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------------------------------------------------
Expenses 1.26%(a) 1.25%(a)
- -------------------------------------------------------------------------------------
Net investment income (loss) 1.09%(a) (0.03%)(a)
- -------------------------------------------------------------------------------------
Expense waiver/reimbursement (b) 1.17%(a) 1.79%(a)
- -------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $14,495 $12,072
- -------------------------------------------------------------------------------------
Portfolio turnover rate 39% 68%
- -------------------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from May 10, 1993 (date of initial public
investment) to November 30, 1993.
** Six months ended May 31, 1994 (unaudited).
*** Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 4).
(See Notes which are an integral part of the Financial Statements)
BILTMORE SPECIAL VALUES FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
The Biltmore Funds (the "Trust") is registered under the Investment Company Act
of 1940, as amended (the "Act"), as an open-end management investment company.
The Trust consists of eleven diversified portfolios. The financial statements
included herein present only those of the Biltmore Special Values Fund (the
"Fund"). The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles (GAAP).
A. INVESTMENT VALUATIONS--Listed equity securities are valued at the last
sales price reported on national securities exchanges. Unlisted securities,
short-term obligations and private placement securities are generally
valued at the prices provided by an independent pricing service. Short-term
securities with remaining maturities of sixty days or less at the time of
purchase may be stated at amortized cost, which approximates value.
B. REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System or to have segregated within the
custodian bank's vault, all securities held as collateral in support of
repurchase agreement investments. Additionally, procedures have been
established by the Fund to monitor, on a daily basis, the market value of
each repurchase agreement's underlying collateral to ensure the value at
least equals the principal amount of the repurchase agreement, including
accrued interest.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to guidelines established
by the Board of Trustees ("Trustees"). Risks may arise from the potential
inability of counterparties to honor the terms of the repurchase agreement.
Accordingly, the Fund could receive less than the repurchase price on the
sale of collateral securities.
C. INVESTMENT INCOME EXPENSES AND DISTRIBUTIONS--Dividend income and
distributions to shareholders are recorded on the ex-dividend date.
Interest income and expenses are accrued daily. Bond premium and discount,
if applicable, are amortized as required by the Internal Revenue Code, as
amended ("Code").
D. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its taxable income.
Accordingly, no provisions for federal tax are necessary.
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
F. DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering the shares, have been deferred and are being
amortized using the straight-line method over a period of five years from
the Fund's commencement date.
G. OTHER--Investment transactions are accounted for on the trade date.
H. During the six months ended May 31, 1994, the Fund adopted Statement of
Position 93-2 Determination, Disclosure, and Financial Statement
Presentation of Income, Capital Gain, and Return of Capital Distributions
by Investment Companies ("SOP 93-2"). Accordingly, permanent book and tax
differences have been reclassified to paid-in-capital. The Fund
reclassified $2,114 from undistributed net investment income to
paid-in-capital in accordance with SOP 93-2. Net investment income, net
realized gains, and net assets were not affected by this change.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED
NOVEMBER 30,
----------------------
1994** 1993*
- ----------------------------------------------------------------------------------------- --------- -----------
<S> <C> <C>
Shares sold 317,656 1,307,697
- -----------------------------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 34,992 --
- -----------------------------------------------------------------------------------------
Shares redeemed (41,261) (129,269)
- ----------------------------------------------------------------------------------------- --------- -----------
Net change resulting from Fund share transactions 311,387 1,178,428
- ----------------------------------------------------------------------------------------- --------- -----------
</TABLE>
* For the period from May 10, 1993 to November 30, 1993 (date of initial public
investment).
** Six months ended May 31, 1994.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Wachovia Investment Management Group, the Fund's
investment adviser (the "Adviser"), receives for its services an annual
investment advisory fee equal to .80 of 1% of the Fund's average daily net
assets. The Adviser may voluntarily choose to waive a portion of its fee and
reimburse certain operating expenses of the Fund. The Adviser can modify or
terminate this voluntary waiver and reimbursement at any time at its sole
discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. The FAS fee is based on the
level of average aggregate net assets of the Trust and The Biltmore Municipal
Funds for the period. FAS may voluntarily choose to waive a portion of its fee
and reimburse certain operating expenses of the Fund. FAS can modify or
terminate this voluntary waiver and reimbursement at any time at its sole
discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT, ACCOUNTING AND CUSTODY FEES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent for
the Fund. The FServ fee is based on the size, type and number of accounts and
transactions made by shareholders.
FServ also maintains the Fund's accounting records. The FServ fee is based on
the level of the Fund's average net assets for the period, plus out-of-pocket
expenses.
Wachovia Bank of North Carolina, N.A. is the Fund's custodian. The fee is based
on the level of the Fund's average net assets for the period, plus out-of-pocket
expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses ($31,492) were borne initially
by FAS. The Fund has agreed to reimburse FAS for the organizational expenses
during the five-year period following April 3, 1993 (date the Fund first became
effective). For the six months ended May 31, 1994, the Fund paid $2,176 pursuant
to this agreement.
Certain of the Officers of the Trust are Officers and Trustees of FAS and FServ.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the six
months ended May 31, 1994, were as follows:
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------------
PURCHASES $ 7,570,951
- --------------------------------------------------------------------------------------------------- -------------
SALES $ 4,758,393
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
TRUSTEES OFFICERS
- ------------------------------------------------------------------------
<TABLE>
<S> <C>
James A. Hanley John W. McGonigle
Malcolm T. Hopkins President and Treasurer
Samuel E. Hudgins Ronald M. Petnuch
J. Berkley Ingram, Jr. Vice President and Assistant Treasurer
D. Dean Kaylor Joseph M. Huber
Secretary
Mark A. Sheehan
Assistant Secretary
</TABLE>
Mutual funds are not obligations of or insured by any bank, nor are they insured
by the federal government or any of its agencies. Investment in these shares
involves risk, including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus, which contains facts
concerning its objective and policies, management fees and other information.
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I'm pleased to present the Semi-Annual Report to Shareholders of the Biltmore
Balanced Fund (the "Fund") for the six-month period ended May 31, 1994. The
Report begins with a brief commentary on the stock and bond markets from the
Fund's portfolio manager. Following the commentary are a complete listing of the
Fund's portfolio of investments and its financial statements.
On your behalf, the Fund pursues a popular investment objective--long-term
growth of principal and current income--by investing in a quality combination of
stocks and bonds. The Fund invests in a portfolio of blue-chip stocks issued by
some of America's largest, best-known companies, as well as high-quality
corporate bonds and government bonds.
Dividends paid to the Fund's shareholders totaled $0.15 per share for the
six-month reporting period. Capital gains totaled $0.04 per share. During the
same time, total assets increased from $166.3 million to $183.9 million.
While the Fund's net asset value began the period at $10.33, it ended the period
at $10.07, due to increased volatility in the financial markets early in the
year brought on by rising interest rates.
Thank you for choosing the Fund for a balanced approach to investing. We look
forward to keeping you informed about your investment in Biltmore Balanced Fund.
As always, we welcome your comments and suggestions.
Sincerely,
John W. McGonigle
President
July 15, 1994
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Rising interest rates and mixed signals about the strength of the economy
restrained both the stock and bond markets during the six-month period ending
May 31, 1994. During that period, the Standard & Poor's Corporation Daily Stock
Price Index of 500 Common Stocks (the "S&P 500" or the "Index")* had a total
return of 0.1%, while the Lehman Brothers Aggregate Bond Index* had a total
return that fell 3.13%.
The Fund's portfolio allocation of 53.0% in equities, 37.6% in bonds and 8.4% in
cash remained fairly consistent throughout the six-month period. Among equity
holdings, the S&P 500 was constrained by the poor performances of stocks in the
consumer non-durable and utility sectors. During the six-month period, the
equity component of the Fund was overweighted in the technology, capital goods
and materials and services sectors. These stocks have been among the market's
best performers during the past two years, and are expected to continue to
benefit from the dramatic expansion of emerging markets and in new economies
around the world. The Fund's largest equity holdings at May 31, 1994, were
Federal National Mortgage Association (2.6%); MAPCO Inc. (2.4%); Philip Morris
(2.4%); Praxair (2.3%); and Harsco Corp. (2.2%).
The bond component of the Fund maintained an average maturity in line with the
market until March, when interest rates began moving higher. At that point, the
Fund's investment strategy became more aggressive. By the end of May, maturities
were 15% greater than the market. The Fund's portfolio also was overweighted in
shorter and longer maturities, and underweighted in intermediate maturities, to
take advantage of a flattening of the yield curve.
On May 31, 1994, Fund assets were $183.9 million, compared to $166.3 million on
November 30, 1993. The Fund's net asset value was $10.07 per share at the end of
the six-month period, with a 30-day SEC yield of 3.52%.** The average duration
for the fixed-income portion of the Fund was 5.70 years.
* This index is unmanaged.
** Performance quoted represents past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
BILTMORE BALANCED FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--53.0%
- ------------------------------------------------------------------------------------------------
CAPITAL GOODS--4.1%
--------------------------------------------------------------------------------
5,301 Browning Ferris Industries, Inc. $ 153,729
--------------------------------------------------------------------------------
45,722 General Electric Co. 2,268,954
--------------------------------------------------------------------------------
14,698 Giddings & Lewis, Inc. 323,356
--------------------------------------------------------------------------------
51,910 Harsco Corp. 2,147,776
--------------------------------------------------------------------------------
27,785 Honeywell, Inc. 871,754
--------------------------------------------------------------------------------
27,117 Keystone International, Inc. 599,964
--------------------------------------------------------------------------------
33,543 York International Corp. 1,207,548
-------------------------------------------------------------------------------- ---------------
Total 7,573,081
-------------------------------------------------------------------------------- ---------------
CONSUMER DURABLES--0.4%
--------------------------------------------------------------------------------
1,833 Chrysler Corp. 90,963
--------------------------------------------------------------------------------
11,002 Echlin Inc. 298,429
--------------------------------------------------------------------------------
5,151 Ford Motor Co. 297,470
-------------------------------------------------------------------------------- ---------------
Total 686,862
-------------------------------------------------------------------------------- ---------------
CONSUMER NON-DURABLES--15.3%
--------------------------------------------------------------------------------
64,883 Abbott Laboratories 1,938,380
--------------------------------------------------------------------------------
7,488 American Brands, Inc. 243,360
--------------------------------------------------------------------------------
7,925 American Cyanamid Co. 413,091
--------------------------------------------------------------------------------
24,049 American Home Products Co. 1,394,842
--------------------------------------------------------------------------------
14,846 American Stores Co. 371,150
--------------------------------------------------------------------------------
8,648 Avon Products, Inc. 509,151
--------------------------------------------------------------------------------
11,187 Becton, Dickinson & Co. 426,504
--------------------------------------------------------------------------------
60,196 Bergen Brunswig Corp., Cl. A 1,068,479
--------------------------------------------------------------------------------
35,750 Bristol-Myers Squibb Co. 1,952,844
--------------------------------------------------------------------------------
883 *Cabletron Systems, Inc. 87,417
--------------------------------------------------------------------------------
</TABLE>
BILTMORE BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
CONSUMER NON-DURABLES--CONTINUED
--------------------------------------------------------------------------------
3,902 Coca-Cola Co. $ 157,543
--------------------------------------------------------------------------------
12,714 CPC International, Inc. 616,629
--------------------------------------------------------------------------------
67,245 Fruit of the Loom, Inc. Cl. A 1,975,322
--------------------------------------------------------------------------------
70,715 IBP Inc. 1,812,072
--------------------------------------------------------------------------------
35,008 *International Dairy Queen, Inc., Cl. A 621,392
--------------------------------------------------------------------------------
27,003 Lee Enterprises, Inc. 867,471
--------------------------------------------------------------------------------
14,903 Loews Corp. 1,326,367
--------------------------------------------------------------------------------
6,832 May Department Stores Co. 264,740
--------------------------------------------------------------------------------
7,484 Melville Corp. 304,038
--------------------------------------------------------------------------------
30,505 Merck & Co. Inc. 930,402
--------------------------------------------------------------------------------
8,972 Nike, Inc., Cl. B 529,348
--------------------------------------------------------------------------------
44,709 PepsiCo, Inc. 1,609,524
--------------------------------------------------------------------------------
46,870 Philip Morris Cos., Inc. 2,308,347
--------------------------------------------------------------------------------
3,912 Pioneer Hi-Bred International, Inc. 134,964
--------------------------------------------------------------------------------
7,371 Russell Corp. 220,209
--------------------------------------------------------------------------------
13,562 Service Corp., International 332,269
--------------------------------------------------------------------------------
23,756 Stanley Works 920,545
--------------------------------------------------------------------------------
5,893 Supervalu, Inc. 188,576
--------------------------------------------------------------------------------
49,205 Surgical Care Affiliates 651,966
--------------------------------------------------------------------------------
43,104 *Toys R Us, Inc. 1,530,192
--------------------------------------------------------------------------------
27,223 Unifi, Inc. 697,589
--------------------------------------------------------------------------------
15,073 Unilever N.V. 1,582,665
--------------------------------------------------------------------------------
11,714 Universal Corp. 207,924
-------------------------------------------------------------------------------- ---------------
Total 28,195,312
-------------------------------------------------------------------------------- ---------------
ENERGY--6.0%
--------------------------------------------------------------------------------
16,202 Amoco Corp. 953,893
--------------------------------------------------------------------------------
9,453 Ashland Oil Co. 350,943
--------------------------------------------------------------------------------
</TABLE>
BILTMORE BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
ENERGY--CONTINUED
--------------------------------------------------------------------------------
6,893 British Petroleum, PLC $ 484,233
--------------------------------------------------------------------------------
3,836 Chevron Corp. 333,732
--------------------------------------------------------------------------------
24,478 Coastal Corp. 691,503
--------------------------------------------------------------------------------
28,980 Exxon Corp. 1,767,780
--------------------------------------------------------------------------------
3,425 Halliburton Co. 104,034
--------------------------------------------------------------------------------
37,376 MAPCO, Inc. 2,336,000
--------------------------------------------------------------------------------
10,015 Mobil Corp. 811,215
--------------------------------------------------------------------------------
27,740 Phillips Petroleum Co. 901,550
--------------------------------------------------------------------------------
12,708 Royal Dutch Petroleum Co. 1,358,167
--------------------------------------------------------------------------------
16,428 Schlumberger, Ltd. 940,503
-------------------------------------------------------------------------------- ---------------
Total 11,033,553
-------------------------------------------------------------------------------- ---------------
FINANCE--8.0%
--------------------------------------------------------------------------------
16,647 AMBAC, Inc. 665,880
--------------------------------------------------------------------------------
17,038 American Express Co. 470,675
--------------------------------------------------------------------------------
20,107 American International Group, Inc. 1,877,491
--------------------------------------------------------------------------------
4,237 Citicorp 167,362
--------------------------------------------------------------------------------
9,176 EXEL, Ltd. 386,539
--------------------------------------------------------------------------------
24,016 Federal Home Loan Mortgage Corp. 1,392,928
--------------------------------------------------------------------------------
29,976 Federal National Mortgage Association 2,502,996
--------------------------------------------------------------------------------
16,915 First Tennessee National Corp. 715,716
--------------------------------------------------------------------------------
11,825 Huntington Bancshares, Inc. 311,884
--------------------------------------------------------------------------------
4,958 KeyCorp 161,135
--------------------------------------------------------------------------------
3,408 Lehman Brothers Holdings 61,337
--------------------------------------------------------------------------------
16,291 MBIA, Inc. 934,696
--------------------------------------------------------------------------------
4,580 Morgan Stanley Group, Inc. 273,655
--------------------------------------------------------------------------------
40,287 *Providian Corp. 1,258,969
--------------------------------------------------------------------------------
3,233 Salomon, Inc. 165,287
--------------------------------------------------------------------------------
</TABLE>
BILTMORE BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
FINANCE--CONTINUED
--------------------------------------------------------------------------------
6,838 SouthTrust Corp. $ 144,453
--------------------------------------------------------------------------------
40,200 SPDR Trust 1,841,663
--------------------------------------------------------------------------------
19,366 Travelers, Inc. 634,237
--------------------------------------------------------------------------------
4,020 Unitrin, Inc. 164,066
--------------------------------------------------------------------------------
3,893 Wells Fargo & Co. 610,714
-------------------------------------------------------------------------------- ---------------
Total 14,741,683
-------------------------------------------------------------------------------- ---------------
MATERIALS & SERVICES--6.0%
--------------------------------------------------------------------------------
5,691 Air Products & Chemical 240,445
--------------------------------------------------------------------------------
17,578 Aluminum Company of America 1,241,446
--------------------------------------------------------------------------------
5,255 Ball Corp. 151,081
--------------------------------------------------------------------------------
39,294 Crane Co. 1,016,732
--------------------------------------------------------------------------------
36,892 *FMC Corp. 1,780,039
--------------------------------------------------------------------------------
20,635 International Paper Co. 1,428,974
--------------------------------------------------------------------------------
8,276 NCH Corp. 481,042
--------------------------------------------------------------------------------
31,327 Potash Corp. Saskatchewan Inc. 810,586
--------------------------------------------------------------------------------
110,496 Praxair, Inc. 2,251,356
--------------------------------------------------------------------------------
37,821 Sonoco Products Co. 765,875
--------------------------------------------------------------------------------
18,023 Tyco International, Ltd. 856,093
-------------------------------------------------------------------------------- ---------------
Total 11,023,669
-------------------------------------------------------------------------------- ---------------
TECHNOLOGY--7.2%
--------------------------------------------------------------------------------
35,493 American Telephone & Telegraph, Inc. 1,934,368
--------------------------------------------------------------------------------
26,353 Avnet, Inc. 886,120
--------------------------------------------------------------------------------
22,363 Boeing Co. 1,037,084
--------------------------------------------------------------------------------
1,652 *Cisco Systems, Inc. 40,887
--------------------------------------------------------------------------------
38,923 *Computer Sciences Corp. 1,688,285
--------------------------------------------------------------------------------
12,382 Comsat Corp. 281,690
--------------------------------------------------------------------------------
5,915 *Conner Peripherals, Inc. 90,204
--------------------------------------------------------------------------------
</TABLE>
BILTMORE BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
--------------------------------------------------------------------------------
16,291 General Motors Corp. Cl. E $ 572,221
--------------------------------------------------------------------------------
14,238 Hewlett-Packard Co. 1,117,683
--------------------------------------------------------------------------------
2,557 Intel Corp. 159,812
--------------------------------------------------------------------------------
11,118 Loral Corp. 397,469
--------------------------------------------------------------------------------
47,209 MCI Communications Corp. 1,133,016
--------------------------------------------------------------------------------
13,802 *Microsoft Corp. 741,858
--------------------------------------------------------------------------------
4,676 Molex, Inc. 167,167
--------------------------------------------------------------------------------
18,851 *Novell, Inc. 334,605
--------------------------------------------------------------------------------
9,355 Raytheon Co. 582,349
--------------------------------------------------------------------------------
6,693 Sundstrand Corp. 315,408
--------------------------------------------------------------------------------
9,246 *Synoptics Communications, Inc. 190,121
--------------------------------------------------------------------------------
14,042 Xerox Corp. 1,411,221
--------------------------------------------------------------------------------
4,676 *Zebra Technologies Corp., Cl. A 139,111
-------------------------------------------------------------------------------- ---------------
Total 13,220,679
-------------------------------------------------------------------------------- ---------------
TRANSPORTATION--1.0%
--------------------------------------------------------------------------------
23,367 Burlington Northern Inc. 1,302,710
--------------------------------------------------------------------------------
11,157 Delta Air Lines, Inc. 509,038
--------------------------------------------------------------------------------
2,337 GATX Corp. 93,480
-------------------------------------------------------------------------------- ---------------
Total 1,905,228
-------------------------------------------------------------------------------- ---------------
UTILITIES--5.0%
--------------------------------------------------------------------------------
36,021 ALLTEL Corp. 941,049
--------------------------------------------------------------------------------
11,346 Ameritech Corp. 443,912
--------------------------------------------------------------------------------
5,453 Bellsouth Corp. 324,453
--------------------------------------------------------------------------------
40,614 Carolina Power & Light Co. 989,966
--------------------------------------------------------------------------------
60,519 GTE Corp. 1,868,524
--------------------------------------------------------------------------------
3,893 NICOR, Inc. 104,624
--------------------------------------------------------------------------------
31,211 NYNEX Corp. 1,178,215
--------------------------------------------------------------------------------
</TABLE>
BILTMORE BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
UTILITIES--CONTINUED
--------------------------------------------------------------------------------
26,502 Pacific Gas & Electric Co. $ 679,114
--------------------------------------------------------------------------------
53,850 Pennsylvania Power & Light Co. 1,191,431
--------------------------------------------------------------------------------
20,191 Scana Corp. 885,880
--------------------------------------------------------------------------------
10,382 Southwestern Bell Corp. 426,960
--------------------------------------------------------------------------------
3,000 U.S. West, Inc. 120,375
-------------------------------------------------------------------------------- ---------------
Total 9,154,503
-------------------------------------------------------------------------------- ---------------
TOTAL COMMON STOCKS (IDENTIFIED COST $96,061,308) 97,534,570
-------------------------------------------------------------------------------- ---------------
CORPORATE BONDS--11.8%
- ------------------------------------------------------------------------------------------------
ASSET-BACKED SECURITIES--1.1%
--------------------------------------------------------------------------------
$ 1,585,407 USAA Auto Loan Grantors Trust, 3.90%, (Series 1993-1) 3/15/99 1,550,227
--------------------------------------------------------------------------------
489,081 World Omni Leasing, 4.60%, 5/17/99 473,033
-------------------------------------------------------------------------------- ---------------
Total 2,023,260
-------------------------------------------------------------------------------- ---------------
FINANCE--7.2%
--------------------------------------------------------------------------------
1,280,000 American General Finance Corp., 5.43%, 2/4/99 1,184,883
--------------------------------------------------------------------------------
1,600,000 Associates Corp. of North America, 6.875%, 1/15/97 1,599,984
--------------------------------------------------------------------------------
1,750,000 Banque Parabas N.Y., 6.875%, 3/1/2009 1,518,650
--------------------------------------------------------------------------------
650,000 First Colony Corp., 6.625%, 8/1/2003 595,615
--------------------------------------------------------------------------------
1,600,000 Franklin Universal Trust, 5.625%, 9/1/98 1,519,088
--------------------------------------------------------------------------------
1,500,000 General American Life Insurance Co., 7.625%, 1/15/2024 1,318,590
--------------------------------------------------------------------------------
775,000 General Electric Capital Corp., 8.00%, 2/1/97 798,862
--------------------------------------------------------------------------------
1,680,000 Landeskreditbank Baden, 7.625%, 2/1/2023 1,593,665
--------------------------------------------------------------------------------
2,000,000 Nationwide Life Insurance Co., 6.50%, 2/15/2004 1,809,900
--------------------------------------------------------------------------------
1,403,066 Prudential Home Mortgage Securities, 6.75%, 12/25/2023 1,383,774
-------------------------------------------------------------------------------- ---------------
Total 13,323,011
-------------------------------------------------------------------------------- ---------------
INDUSTRIAL--0.4%
--------------------------------------------------------------------------------
775,000 Wal-Mart Stores, Inc., 6.125%, 10/1/99 738,025
-------------------------------------------------------------------------------- ---------------
</TABLE>
BILTMORE BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
CORPORATE BONDS--CONTINUED
- ------------------------------------------------------------------------------------------------
RAILS--0.2%
--------------------------------------------------------------------------------
$ 400,000 Union Pacific Railroad, 6.44%, 1/15/98 $ 392,616
-------------------------------------------------------------------------------- ---------------
TECHNOLOGY--0.8%
--------------------------------------------------------------------------------
1,620,000 MCI Communications Corp., 7.75%, 3/23/2025 1,510,974
-------------------------------------------------------------------------------- ---------------
MISCELLANEOUS--2.1%
--------------------------------------------------------------------------------
1,000,000 International American Development Bank, 8.50% Yankee Bond,
5/1/2001 1,059,200
--------------------------------------------------------------------------------
1,750,000 Korea Electrical Power Corp., 6.375% Yankee Bond, 12/1/2003 1,518,283
--------------------------------------------------------------------------------
1,500,000 Italy Rep, 6.875% Yankee Bond, 9/27/2023 1,250,460
-------------------------------------------------------------------------------- ---------------
Total 3,827,943
-------------------------------------------------------------------------------- ---------------
TOTAL CORPORATE BONDS (IDENTIFIED COST $23,615,132) 21,815,829
-------------------------------------------------------------------------------- ---------------
U.S. GOVERNMENT AGENCIES--5.5%
- ------------------------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--1.3%
--------------------------------------------------------------------------------
1,251,150 0.00%, 9/25/2018 REMIC 1,153,795
--------------------------------------------------------------------------------
295,636 7.50%, 4/1/2007 293,880
--------------------------------------------------------------------------------
635,122 8.00%, 6/1/2022 631,743
--------------------------------------------------------------------------------
383,768 8.00%, 1/1/2023 381,726
-------------------------------------------------------------------------------- ---------------
Total 2,461,144
-------------------------------------------------------------------------------- ---------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION--2.3%
--------------------------------------------------------------------------------
479,824 7.50%, 3/15/2023 463,327
--------------------------------------------------------------------------------
953,197 7.00%, 5/15/2023 891,239
--------------------------------------------------------------------------------
501,534 7.00%, 8/15/2023 468,935
--------------------------------------------------------------------------------
2,751,675 6.50%, 4/15/2024 2,479,947
-------------------------------------------------------------------------------- ---------------
Total 4,303,448
-------------------------------------------------------------------------------- ---------------
MISCELLANEOUS--1.9%
--------------------------------------------------------------------------------
1,500,000 U.S. Department of Veteran Affairs, 6.75%, 6/15/98 REMIC 1,476,563
--------------------------------------------------------------------------------
</TABLE>
BILTMORE BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
U.S. GOVERNMENT AGENCIES--CONTINUED
- ------------------------------------------------------------------------------------------------
MISCELLANEOUS--CONTINUED
--------------------------------------------------------------------------------
$ 2,000,000 Federal Home Loan Bank, 4.587%, 8/27/98 $ 1,940,000
-------------------------------------------------------------------------------- ---------------
Total 3,416,563
-------------------------------------------------------------------------------- ---------------
TOTAL U.S. GOVERNMENT AGENCIES (IDENTIFIED COST $10,668,566) 10,181,155
-------------------------------------------------------------------------------- ---------------
U.S. TREASURY OBLIGATIONS--20.3%
- ------------------------------------------------------------------------------------------------
U.S. TREASURY NOTES--13.1%
--------------------------------------------------------------------------------
1,455,000 8.875%, 7/15/95 1,507,977
--------------------------------------------------------------------------------
1,000,000 8.50%, 5/15/95 1,028,590
--------------------------------------------------------------------------------
1,635,000 7.875%, 4/15/98 1,705,256
--------------------------------------------------------------------------------
2,025,000 7.875%, 11/15/99 2,120,236
--------------------------------------------------------------------------------
1,165,000 7.50%, 1/31/96 1,195,395
--------------------------------------------------------------------------------
1,905,000 7.50%, 11/15/2001 1,951,730
--------------------------------------------------------------------------------
1,660,000 7.375%, 5/15/96 1,701,234
--------------------------------------------------------------------------------
1,575,000 6.375%, 1/15/2000 1,540,539
--------------------------------------------------------------------------------
2,100,000 6.375%, 8/15/2002 2,005,836
--------------------------------------------------------------------------------
2,490,000 5.75%, 8/15/2003 2,253,450
--------------------------------------------------------------------------------
775,000 5.50%, 9/30/97 752,843
--------------------------------------------------------------------------------
1,890,000 5.375%, 5/31/98 1,808,484
--------------------------------------------------------------------------------
4,500,000 5.00%, 6/30/94 4,503,510
-------------------------------------------------------------------------------- ---------------
Total 24,075,080
-------------------------------------------------------------------------------- ---------------
U.S. TREASURY BONDS--7.2%
--------------------------------------------------------------------------------
11,652,000 8.125%, 8/15/2019 12,311,037
--------------------------------------------------------------------------------
798,000 8.00%, 11/15/2021 837,653
-------------------------------------------------------------------------------- ---------------
Total 13,148,690
-------------------------------------------------------------------------------- ---------------
TOTAL U.S TREASURY OBLIGATIONS (IDENTIFIED COST $39,251,002) 37,223,770
-------------------------------------------------------------------------------- ---------------
</TABLE>
BILTMORE BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
**REPURCHASE AGREEMENT--8.4%
- ------------------------------------------------------------------------------------------------
$ 15,368,948 PaineWebber, Inc., 4.20%, dated 5/31/94, due 6/1/94
(AT AMORTIZED COST)(NOTE 2B) $ 15,368,948
-------------------------------------------------------------------------------- ---------------
TOTAL INVESTMENTS (IDENTIFIED COST $184,964,956) $ 182,124,272+
-------------------------------------------------------------------------------- ---------------
</TABLE>
* Non-income producing securities.
** The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
+ The cost for federal tax purposes amounts to $184,964,956. The net
unrealized depreciation of investments on a federal tax basis amounts to
$2,840,684, which is comprised of $4,520,941 appreciation and $7,361,625
depreciation at May 31, 1994.
Note: The categories of investments are shown as a percentage of net assets
($183,927,167) at May 31, 1994.
The following abbreviation is used throughout this portfolio:
REMIC--Real Estate Mortgage Investment Conduit
(See Notes which are an integral part of the Financial Statements)
BILTMORE BALANCED FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------------------------
Investments in securities, at value (Notes 2A and 2B)
(identified and tax cost: $184,964,956) $ 182,124,272
- -------------------------------------------------------------------------------------------------
Interest receivable 1,062,665
- -------------------------------------------------------------------------------------------------
Receivable for investments sold 412,414
- -------------------------------------------------------------------------------------------------
Dividends receivable 295,755
- -------------------------------------------------------------------------------------------------
Receivable for Fund shares sold 182,466
- -------------------------------------------------------------------------------------------------
Deferred expenses (Note 2F) 55,412
- ------------------------------------------------------------------------------------------------- ---------------
Total assets 184,132,984
- -------------------------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------------------------
Payable for investments purchased $ 202,228
- ------------------------------------------------------------------------------------
Payable to Bank 500
- ------------------------------------------------------------------------------------
Accrued expenses 3,089
- ------------------------------------------------------------------------------------ -----------
Total liabilities 205,817
- ------------------------------------------------------------------------------------------------- ---------------
NET ASSETS for 18,267,725 shares of beneficial interest outstanding $ 183,927,167
- ------------------------------------------------------------------------------------------------- ---------------
NET ASSETS CONSIST OF:
- -------------------------------------------------------------------------------------------------
Paid-in capital $ 183,676,570
- -------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments (2,840,684)
- -------------------------------------------------------------------------------------------------
Accumulated undistributed net realized gain (loss) on investments 2,070,493
- -------------------------------------------------------------------------------------------------
Undistributed net investment income 1,020,788
- ------------------------------------------------------------------------------------------------- ---------------
Total Net Assets $ 183,927,167
- ------------------------------------------------------------------------------------------------- ---------------
NET ASSET VALUE and Redemption Proceeds Per Share:
($183,927,167 / 18,267,725 SHARES OF BENEFICIAL INTEREST OUTSTANDING) $10.07
- ------------------------------------------------------------------------------------------------- ---------------
COMPUTATION OF OFFERING PRICE:
Offering Price Per Share (100/95.5 of $10.07)* $10.54
- ------------------------------------------------------------------------------------------------- ---------------
</TABLE>
* See "What Shares Cost" in the prospectus.
(See Notes which are an integral part of the Financial Statements)
BILTMORE BALANCED FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- --------------------------------------------------------------------------------------------------
Interest income $ 2,481,447
- --------------------------------------------------------------------------------------------------
Dividend income 1,175,881
- -------------------------------------------------------------------------------------------------- -------------
Total income (Note 2C) 3,657,328
- --------------------------------------------------------------------------------------------------
EXPENSES:
- --------------------------------------------------------------------------------------------------
Investment advisory fee (Note 4) $ 629,228
- --------------------------------------------------------------------------------------
Trustees' fees 2,465
- --------------------------------------------------------------------------------------
Administrative personnel and services fees (Note 4) 96,601
- --------------------------------------------------------------------------------------
Custodian fees (Note 4) 17,976
- --------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses (Note 4) 6,386
- --------------------------------------------------------------------------------------
Fund share registration costs 13,337
- --------------------------------------------------------------------------------------
Auditing fees 6,722
- --------------------------------------------------------------------------------------
Legal fees 6,615
- --------------------------------------------------------------------------------------
Printing and postage 5,861
- --------------------------------------------------------------------------------------
Portfolio accounting fees (Note 4) 13,878
- --------------------------------------------------------------------------------------
Insurance premiums 1,181
- --------------------------------------------------------------------------------------
Miscellaneous 2,451
- -------------------------------------------------------------------------------------- ----------
Total expenses 802,701
- --------------------------------------------------------------------------------------
Deduct--
- ---------------------------------------------------------------------------
Waiver of investment advisory fee (Note 4) $ 66,840
- ---------------------------------------------------------------------------
Reimbursement of other operating expenses by Administrator (Note 4) 23,210 90,050
- --------------------------------------------------------------------------- --------- ----------
Net expenses 712,651
- -------------------------------------------------------------------------------------------------- -------------
Net investment income 2,944,677
- -------------------------------------------------------------------------------------------------- -------------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:
- --------------------------------------------------------------------------------------------------
Net realized gain (loss) on investment transactions (identified cost basis) 2,098,898
- --------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments (6,664,722)
- -------------------------------------------------------------------------------------------------- -------------
Net realized and unrealized gain on investments (4,565,824)
- -------------------------------------------------------------------------------------------------- -------------
Change in net assets resulting from operations $ (1,621,147)
- -------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
BILTMORE BALANCED FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1994** 1993*
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------------------------------
Net investment income $ 2,944,677 $ 2,908,320
- -------------------------------------------------------------------------------
Net realized gain (loss) on investment transactions ($2,098,898 and $669,807
net gains, respectively, as computed for federal income tax purposes) 2,098,898 641,512
- -------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) of investments (6,664,722) 3,824,038
- ------------------------------------------------------------------------------- --------------- ---------------
Change in net assets resulting from operations (1,621,147) 7,373,870
- ------------------------------------------------------------------------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2C)--
- -------------------------------------------------------------------------------
Dividends to shareholders from net investment income (2,600,888) (2,231,320)
- -------------------------------------------------------------------------------
Distributions to shareholders from net realized gain on investment transactions (669,917) --
- ------------------------------------------------------------------------------- --------------- ---------------
Change in net assets from distributions to shareholders (3,270,805) (2,231,320)
- ------------------------------------------------------------------------------- --------------- ---------------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 3)--
- -------------------------------------------------------------------------------
Proceeds from sale of shares 41,170,554 165,403,137
- -------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment
of dividends declared 3,263,097 2,231,320
- -------------------------------------------------------------------------------
Cost of shares redeemed (21,885,285) (6,506,254)
- ------------------------------------------------------------------------------- --------------- ---------------
Change in net assets from Fund share transactions 22,548,366 161,128,203
- ------------------------------------------------------------------------------- --------------- ---------------
Change in net assets 17,656,414 166,270,753
- -------------------------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------------------------
Beginning of period 166,270,753 --
- ------------------------------------------------------------------------------- --------------- ---------------
End of period (including undistributed net investment income of $1,020,788 and
$677,000, respectively) $ 183,927,167 $ 166,270,753
- ------------------------------------------------------------------------------- --------------- ---------------
</TABLE>
* For the period from May 10, 1993 (date of initial public investment) to
November 30, 1993.
** Six months ended May 31, 1994 (unaudited)
(See Notes which are an integral part of the Financial Statements)
BILTMORE BALANCED FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1994** 1993*
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.33 $ 10.00
- --------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------------------------------------------
Net investment income 0.16 0.19
- --------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.23) 0.29
- -------------------------------------------------------------------------------- ----------- ---------
Total from investment operations (0.07) 0.48
- --------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- --------------------------------------------------------------------------------
Dividends to shareholders from net investment income (0.15) (0.15)
- --------------------------------------------------------------------------------
Distributions to shareholders from net realized gain
on investment transactions (0.04) --
- -------------------------------------------------------------------------------- ----------- ---------
Total distributions (0.19) (0.15)
- -------------------------------------------------------------------------------- ----------- ---------
NET ASSET VALUE, END OF PERIOD $ 10.07 $ 10.33
- -------------------------------------------------------------------------------- ----------- ---------
TOTAL RETURN*** (0.80)% 4.89%
- --------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------------------------------------------
Expenses 0.79%(b) 0.75%(b)
- --------------------------------------------------------------------------------
Net investment income 3.28%(b) 3.30%(b)
- --------------------------------------------------------------------------------
Expense waiver/reimbursement (a) 0.10%(b) 0.19%(b)
- --------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Net assets, end of period (000 omitted)
$183,927
$166,271
- --------------------------------------------------------------------------------
Portfolio turnover rate 47% 60%
- --------------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from May 10, 1993 (date of initial public
investment) to November 30, 1993.
** Six months ended May 31, 1994 (unaudited).
*** Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 4).
(b) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
BILTMORE BALANCED FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
The Biltmore Funds (the "Trust") is registered under the Investment Company Act
of 1940, as amended (the "Act"), as an open-end management investment company.
The Trust consists of eleven diversified portfolios. The financial statements
included herein present only those of the Biltmore Balanced Fund (the "Fund").
The financial statements of the other portfolios are presented separately. The
assets of each portfolio are segregated and a shareholder's interest is limited
to the portfolio in which shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles (GAAP).
A. INVESTMENT VALUATIONS--Listed equity securities, corporate bonds and other
fixed-income securities are valued at the last sales price reported on
national securities exchanges. Unlisted securities and bonds are generally
valued at the price provided by an independent pricing service. Short-term
securities with remaining maturities of sixty days or less at the time of
purchase may be stated at amortized cost, which approximates value.
B. REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System or to have segregated within the
custodian bank's vault, all securities held as collateral in support of
repurchase agreement investments. Additionally, procedures have been
established by the Fund to monitor, on a daily basis, the market value of
each repurchase agreement's underlying collateral to ensure the value at
least equals the principal amount of the repurchase agreement, including
accrued interest.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to guidelines established
by the Board of Trustees ("Trustees"). Risks may arise from the potential
inability of counterparties to honor the terms of a repurchase agreement.
Accordingly, the Fund could receive less than the repurchase price on the
sale of collateral securities.
C. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Dividend income and
distributions are recorded on the ex-dividend date. Interest income and
expenses are accrued daily. Bond premium and discount, if applicable, are
amortized as required by the Internal Revenue Code, as amended ("Code").
D. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its taxable income.
Accordingly, no provisions for federal income tax are necessary.
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
F. DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering the shares, have been deferred and are being
amortized using the straight-line method over a period of five years from
the Fund's commencement date.
G. OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
---------------------------
1994** 1993*
- ------------------------------------------------------------------------------- ------------ -------------
<S> <C> <C>
Shares sold 4,006,083 16,510,934
- -------------------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 316,726 220,914
- -------------------------------------------------------------------------------
Shares redeemed (2,149,709) (637,223)
- ------------------------------------------------------------------------------- ------------ -------------
Net change resulting from Fund share transactions 2,173,100 16,094,625
- ------------------------------------------------------------------------------- ------------ -------------
</TABLE>
* The period from May 10, 1993 (date of initial public investment) to November
30, 1993.
** Six months ended May 31, 1994.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Wachovia Investment Management Group, the Fund's
investment adviser (the "Adviser"), receives for its services an annual
investment advisory fee equal to .70 of 1% of the Fund's average daily net
assets. The Adviser may voluntarily choose to waive its fee and reimburse
certain operating expenses of the Fund. The Adviser can modify or terminate this
voluntary waiver and reimbursement at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. The FAS fee is based on the
level of average aggregate net assets of the Trust and The Biltmore Municipal
Funds for the period. FAS may voluntarily choose to waive its fee and
reimburse certain operating expenses of the Fund. FAS can modify or terminate
this voluntary waiver and reimbursement at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT, ACCOUNTING AND CUSTODY FEES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent for
the Fund. The FServ fee is based on the size, type and number of accounts and
transactions made by shareholders.
FServ also maintains the Fund's accounting records. The fee is based on the
level of the Fund's average net assets for the period, plus out-of-pocket
expenses.
Wachovia Bank of North Carolina, N.A. is the Fund's custodian. The fee is based
on the level of the Fund's average net assets for the period, plus out-of pocket
expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses ($31,904) were borne initially
by FAS. The Fund has agreed to reimburse FAS for the organizational expenses
during the five-year period following April 3, 1993 (date the Fund first became
effective). For the six months ended May 31, 1994, the Fund paid $1,064,
pursuant to this agreement.
Certain of the Officers of the Trust are Officers and Trustees of FAS and FServ.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the six
months ended May 31, 1994, were as follows:
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------------------------
PURCHASES $ 96,090,672
- -------------------------------------------------------------------------------------------------- --------------
SALES $ 73,858,924
- -------------------------------------------------------------------------------------------------- --------------
</TABLE>
<TABLE>
<CAPTION>
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
<S> <C>
James A. Hanley John W. McGonigle
Malcolm T. Hopkins President and Treasurer
Samuel E. Hudgins Ronald M. Petnuch
J. Berkley Ingram, Jr. Vice President and Assistant Treasurer
D. Dean Kaylor Joseph M. Huber
Secretary
Mark A. Sheehan
Assistant Secretary
</TABLE>
Mutual funds are not obligations of or insured by any bank, nor are they insured
by the federal government or any of its agencies. Investment in these
shares involves risk, including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus, which contains facts
concerning its objective and policies, management fees and other information.
BILTMORE QUANTITATIVE EQUITY FUND
(A PORTFOLIO OF THE BILTMORE FUNDS)
- --------------------------------------------------------------------------------
SEMI-ANNUAL REPORT AND SUPPLEMENT TO PROSPECTUS DATED JANUARY 18, 1994
A. Please delete the "Summary of Fund Expenses" table on page 1 of the
Prospectus and replace it with the following table:
SUMMARY OF FUND EXPENSES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)................................. 4.50%
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of offering price)...................... None
Contingent Deferred Sales Charge (as a percentage of original purchase price or redemption proceeds, as
applicable)............................................................................................... None
Redemption Fees (as a percentage of amount redeemed, if applicable)......................................... None
Exchange Fee................................................................................................ None
ANNUAL FUND OPERATING EXPENSES*
(As a percentage of projected average net assets)
Management Fee (after waiver) (1)........................................................................... 0.60%
12b-1 Fees.................................................................................................. None
Other Expenses (after waiver) (2)........................................................................... 0.32%
Shareholder Servicing Fees (3)............................................................... 0.00%
Total Fund Operating Expenses (after waiver) (4)................................................... 0.92%
</TABLE>
(1) The estimated management fee has been reduced to reflect the anticipated
voluntary waiver by the investment adviser. The adviser can terminate this
voluntary waiver at any time at its sole discretion. The maximum management
fee is 0.70%.
(2) Other Expenses are estimated to be 0.34%, absent the anticipated voluntary
waiver by the administrator. The administrator may terminate this voluntary
waiver at any time at its sole discretion.
(3) As of the date of this prospectus, the Fund is not paying or accruing
shareholder servicing agent fees. The Fund will not pay or accrue
shareholder servicing agent fees until a separate class of shares has been
created for certain trust and institutional investors, including qualified
employee benefit plans. At that point, the Fund will be able to pay up to
0.25 of 1% of the Fund's average daily net assets for shareholder servicing
agent fees. See "The Biltmore Funds Information."
(4) Total Fund Operating Expenses are estimated to be at 1.04%, absent the
anticipated voluntary waivers by the investment adviser and administrator.
* Since the Fund does not have an operating history, the percentages indicated
as Annual Fund Operating Expenses are based on the Fund's projected fees and
estimated expenses for the fiscal year ending November 30, 1994. The table
should not be considered a representation of past or future expenses. Actual
expenses may be greater or less than those shown in this table.
THE PURPOSE OF THIS TABLE IS TO ASSIST AN INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT A SHAREHOLDER OF THE FUND WILL BEAR, EITHER
DIRECTLY OR INDIRECTLY. FOR MORE COMPLETE DESCRIPTIONS OF THE VARIOUS COSTS AND
EXPENSES, SEE "THE BILTMORE FUNDS INFORMATION" AND "INVESTING IN THE FUND."
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years
<S> <C> <C>
You would pay the following expenses on a $1,000 investment, assuming (1) 5% annual return and
(2) redemption at the end of each time period. As noted in the table above, the Fund charges no
redemption fees................................................................................ $54 $73
</TABLE>
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. THIS
EXAMPLE IS BASED ON ESTIMATED DATA FOR THE FUND'S FISCAL YEAR ENDING NOVEMBER
30, 1994.
B. Please insert the following Financial Highlights table as page 2 of the
Prospectus following the "Summary of Fund Expenses" table and before the
section entitled "General Information." In addition, please add the
heading "Financial Highlights" to the Table of Contents on page I after
the heading "Summary of Fund Expenses."
BILTMORE QUANTITATIVE EQUITY FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1994*
<S> <C>
- ----------------------------------------------------------------------------------------------- -----------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- -----------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------------------------------------------------------------
Net investment income 0.03
- -----------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments (0.21)
- ----------------------------------------------------------------------------------------------- -----------------
Total from investment operations (0.18)
- -----------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- -----------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income 0.00
- ----------------------------------------------------------------------------------------------- -----------------
NET ASSET VALUE, END OF PERIOD $ 9.82
- ----------------------------------------------------------------------------------------------- -----------------
TOTAL RETURN** (1.80%)
- -----------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------------------------------------------------
Expenses 0.92%(b)
- -----------------------------------------------------------------------------------------------
Net investment income 1.61%(b)
- -----------------------------------------------------------------------------------------------
Expense waiver/reimbursement (a) 0.10%(b)
- -----------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $90,622
- -----------------------------------------------------------------------------------------------
Portfolio turnover rate 23%
- -----------------------------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from March 28, 1994 (date of initial
public investment) to May 31, 1994 (unaudited).
** Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 4).
(b) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
C. Please add the following as a final paragraph under the section entitled
"Portfolio Turnover" on page 7 of the Prospectus:
"From March 28, 1994 (date of initial public investment) to May 31, 1994, the
Fund's portfolio turnover rate was 23%."
D. Please replace the reference to "The South Carolina National Bank" which
appears on page 8 of the Prospectus, in the "Adviser's Background"
subsection, with "Wachovia Bank of South Carolina, N.A."
E. Please replace the section entitled "Administrative Services" which
appears on pages 9 and 10 of the Prospectus and replace it with the
following:
"ADMINISTRATIVE SERVICES. Federated Administrative Services, Pittsburgh,
Pennsylvania, a subsidiary of Federated Investors, provides the Fund with the
administrative personnel and services necessary to operate the Fund. Such
services include the preparation of filings with the Securities and Exchange
Commission and other regulatory authorities, assistance with respect to meetings
of the Trustees, shareholder servicing and accounting services, and other
administrative services. Federated Administrative Services provides these
services at an annual rate, computed and payable daily, as specified below:
<TABLE>
<CAPTION>
AVERAGE AGGREGATE DAILY NET
MAXIMUM ASSETS OF THE BILTMORE FUNDS
ADMINISTRATIVE FEE AND THE BILTMORE MUNICIPAL FUNDS
<C> <S>
0.150 of 1% on the first $250 million
0.125 of 1% on the next $250 million
0.100 of 1% on the next $250 million
0.075 of 1% on assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year for the Fund and each of
the other portfolios of The Biltmore Funds shall aggregate at least $75,000.
Federated Administrative Services may choose voluntarily to waive or reimburse a
portion of its fee at any time."
F. Please add the following as the third sentence of the first paragraph of
the subsection entitled "Voting Rights" on page 18 of the Prospectus:
"As of July 15, 1994 the Wachovia Banks and their various affiliates and
subsidiaries, acting in various capacities for numerous accounts, were the owner
of record of certain shares of the Fund, and therefore may be deemed to control
the Fund and be able to affect the outcome of certain matters presented for a
vote of shareholders."
G. Please insert the following financial statements at the end of the
Prospectus beginning on page 21. In addition, please add the heading
"Financial Statements" to the Table of Contents on page I of the
Prospectus immediately before "Addresses"
BILTMORE QUANTITATIVE EQUITY FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------- --------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--95.9%
- ------------------------------------------------------------------------------------------------
CAPITAL GOODS--4.5%
---------------------------------------------------------------------------------
22,939 Cummins Engine, Inc. $ 983,510
---------------------------------------------------------------------------------
8,800 Deere & Co. 613,800
---------------------------------------------------------------------------------
49,842 General Electric Co. 2,473,409
--------------------------------------------------------------------------------- ---------------
Total 4,070,719
--------------------------------------------------------------------------------- ---------------
CONSUMER DURABLES--5.0%
---------------------------------------------------------------------------------
4,700 Briggs & Stratton Corp. 354,850
---------------------------------------------------------------------------------
15,764 Centex Corp. 384,248
---------------------------------------------------------------------------------
37,004 Chrysler Corp. 1,836,324
---------------------------------------------------------------------------------
14,632 Echlin, Inc. 396,893
---------------------------------------------------------------------------------
11,113 Ford Motor Co. 641,776
---------------------------------------------------------------------------------
5,286 Goodyear Tire and Rubber Co. 204,832
---------------------------------------------------------------------------------
13,000 Leggett & Platt, Inc. 487,500
---------------------------------------------------------------------------------
13,000 Maytag Corp. 242,125
--------------------------------------------------------------------------------- ---------------
Total 4,548,548
--------------------------------------------------------------------------------- ---------------
CONSUMER NON-DURABLES--26.5%
---------------------------------------------------------------------------------
10,370 Abbott Laboratories 309,804
---------------------------------------------------------------------------------
12,083 American Cyanamid Co. 629,826
---------------------------------------------------------------------------------
53,466 American Stores Co. 1,336,650
---------------------------------------------------------------------------------
9,629 *Amgen, Inc. 448,350
---------------------------------------------------------------------------------
6,702 Anheuser-Busch Cos., Inc. 364,421
---------------------------------------------------------------------------------
10,554 Becton, Dickinson & Co. 402,371
---------------------------------------------------------------------------------
42,384 Bergen Brunswig Corp. Class A 752,316
---------------------------------------------------------------------------------
</TABLE>
BILTMORE QUANTITATIVE EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------- --------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
CONSUMER NON-DURABLES--CONTINUED
---------------------------------------------------------------------------------
50,000 Circuit City Stores, Inc. $ 968,750
---------------------------------------------------------------------------------
6,136 Colgate-Palmolive Co. 351,286
---------------------------------------------------------------------------------
15,589 CPC International, Inc. 756,067
---------------------------------------------------------------------------------
25,292 Gap, Inc. 1,097,040
---------------------------------------------------------------------------------
15,000 Gerber Products Co. 759,375
---------------------------------------------------------------------------------
14,500 Glaxo Holdings PLC 235,625
---------------------------------------------------------------------------------
59,801 IBP Inc. 1,532,401
---------------------------------------------------------------------------------
19,257 Johnson & Johnson 852,122
---------------------------------------------------------------------------------
32,756 Lilly (Eli) & Co. 1,879,375
---------------------------------------------------------------------------------
7,000 Mattel, Inc. 184,625
---------------------------------------------------------------------------------
40,500 Mercantile Stores, Inc. 1,417,500
---------------------------------------------------------------------------------
8,000 Nordstrom, Inc. 353,000
---------------------------------------------------------------------------------
34,340 Penney (J.C.) Inc. 1,755,633
---------------------------------------------------------------------------------
43,140 Pepsico, Inc. 1,553,040
---------------------------------------------------------------------------------
28,319 Philip Morris Cos., Inc. 1,394,711
---------------------------------------------------------------------------------
14,986 Premark International, Inc. 1,064,006
---------------------------------------------------------------------------------
13,300 Procter & Gamble Co. 749,787
---------------------------------------------------------------------------------
17,935 Schering-Plough Corp. 1,170,259
---------------------------------------------------------------------------------
5,758 Unilever N.V. 604,590
---------------------------------------------------------------------------------
9,629 V.F. Corp. 473,025
---------------------------------------------------------------------------------
14,000 Winn Dixie Stores, Inc. 633,500
--------------------------------------------------------------------------------- ---------------
Total 24,029,455
--------------------------------------------------------------------------------- ---------------
CONSUMER SERVICE--4.2%
---------------------------------------------------------------------------------
1,000 Capital Cities/ABC, Inc. 739,750
---------------------------------------------------------------------------------
3,021 CBS, Inc. 788,481
---------------------------------------------------------------------------------
8,873 McKesson Corp. 735,350
---------------------------------------------------------------------------------
51,912 Morrison Restaurants, Inc. 1,168,020
---------------------------------------------------------------------------------
</TABLE>
BILTMORE QUANTITATIVE EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------- --------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
CONSUMER SERVICE--CONTINUED
---------------------------------------------------------------------------------
21,806 National Medical Enterprises, Inc. $ 357,073
--------------------------------------------------------------------------------- ---------------
Total 3,788,674
--------------------------------------------------------------------------------- ---------------
ENERGY--8.4%
---------------------------------------------------------------------------------
12,460 Amoco Corp. 733,583
---------------------------------------------------------------------------------
16,000 Chevron Corp. 1,392,000
---------------------------------------------------------------------------------
25,800 Coastal Corp. 728,850
---------------------------------------------------------------------------------
13,121 Equitable Resources, Inc. 451,034
---------------------------------------------------------------------------------
21,145 Exxon Corp. 1,289,845
---------------------------------------------------------------------------------
16,897 MAPCO, Inc. 1,056,063
---------------------------------------------------------------------------------
14,608 Mobil Corp. 1,183,248
---------------------------------------------------------------------------------
27,942 Sun, Inc. 813,811
--------------------------------------------------------------------------------- ---------------
Total 7,648,434
--------------------------------------------------------------------------------- ---------------
FINANCE--16.2%
---------------------------------------------------------------------------------
24,921 AFLAC, Inc. 834,853
---------------------------------------------------------------------------------
29,000 Chase Manhattan Corp. 1,094,750
---------------------------------------------------------------------------------
49,559 Comdisco, Inc. 1,028,349
---------------------------------------------------------------------------------
38,892 DQE 1,234,821
---------------------------------------------------------------------------------
12,272 GATX Corp. 490,880
---------------------------------------------------------------------------------
33,865 General Public Utilities Corp. 969,386
---------------------------------------------------------------------------------
49,747 Huntington Bancshares Inc. 1,312,077
---------------------------------------------------------------------------------
24,756 KeyCorp 804,570
---------------------------------------------------------------------------------
24,826 Merrill Lynch & Co., Inc. 968,214
---------------------------------------------------------------------------------
22,044 Morgan Stanley Group, Inc. 1,317,129
---------------------------------------------------------------------------------
10,478 PHH Corp. 385,066
---------------------------------------------------------------------------------
27,942 Signet Banking Corp. 1,166,578
---------------------------------------------------------------------------------
51,258 SouthTrust Corp. 1,082,825
---------------------------------------------------------------------------------
17,800 Transamerica Corp. 950,075
---------------------------------------------------------------------------------
</TABLE>
BILTMORE QUANTITATIVE EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ------------- --------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
FINANCE--CONTINUED
---------------------------------------------------------------------------------
29,476 USLife Corp. $ 1,075,874
--------------------------------------------------------------------------------- ---------------
Total 14,715,447
--------------------------------------------------------------------------------- ---------------
MATERIALS & SERVICES--8.7%
---------------------------------------------------------------------------------
8,300 Armstrong World Industries, Inc. 404,625
---------------------------------------------------------------------------------
10,000 Ball Corp. 287,500
---------------------------------------------------------------------------------
27,281 Banta Corp. 913,913
---------------------------------------------------------------------------------
23,977 Ennis Business Forms, Inc. 332,681
---------------------------------------------------------------------------------
12,649 Grace (W.R.) & Co. 528,096
---------------------------------------------------------------------------------
11,044 Hercules, Inc. 1,163,762
---------------------------------------------------------------------------------
28,000 Kaydon Corp. 603,750
---------------------------------------------------------------------------------
7,835 Kimberly Clark Corp. 442,677
---------------------------------------------------------------------------------
25,723 Louisiana Pacific Corp. 871,367
---------------------------------------------------------------------------------
10,478 Monsanto Co. 856,577
---------------------------------------------------------------------------------
36,500 Pope & Talbot, Inc. 862,313
---------------------------------------------------------------------------------
28,036 Praxair, Inc. 571,233
--------------------------------------------------------------------------------- ---------------
Total 7,838,494
--------------------------------------------------------------------------------- ---------------
TECHNOLOGY--9.1%
---------------------------------------------------------------------------------
16,800 *Advanced Micro Devices, Inc. 453,600
---------------------------------------------------------------------------------
11,455 *Compaq Computer Corp. 1,354,554
---------------------------------------------------------------------------------
18,478 Computer Associates International, Inc. 769,147
---------------------------------------------------------------------------------
6,891 Intel Corp. 430,687
---------------------------------------------------------------------------------
11,115 Lockheed Corp. 709,971
---------------------------------------------------------------------------------
23,788 Martin Marietta Corp. 1,034,778
---------------------------------------------------------------------------------
38,467 Micron Technology Inc. 1,293,453
---------------------------------------------------------------------------------
58,700 *Quantum Corp. 961,212
---------------------------------------------------------------------------------
19,738 Raytheon Co. 1,228,691
--------------------------------------------------------------------------------- ---------------
Total 8,236,093
--------------------------------------------------------------------------------- ---------------
</TABLE>
BILTMORE QUANTITATIVE EQUITY FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
OR SHARES VALUE
- ------------- --------------------------------------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------------------
TRANSPORTATION--1.4%
---------------------------------------------------------------------------------
6,500 Burlington Northern Inc. $ 362,375
---------------------------------------------------------------------------------
4,059 *Federal Express Corp. 310,513
---------------------------------------------------------------------------------
12,500 Kansas City Southern Industries Inc. 565,625
--------------------------------------------------------------------------------- ---------------
Total 1,238,513
--------------------------------------------------------------------------------- ---------------
UTILITIES--11.9%
---------------------------------------------------------------------------------
47,671 Ameritech Corp. 1,865,128
---------------------------------------------------------------------------------
28,000 BellSouth Corp. 1,666,000
---------------------------------------------------------------------------------
11,705 Duke Power Co. 421,380
---------------------------------------------------------------------------------
8,835 New England Electric System 311,434
---------------------------------------------------------------------------------
14,254 Scana Corp. 625,394
---------------------------------------------------------------------------------
31,057 Southern Co. 574,554
---------------------------------------------------------------------------------
37,193 Southwestern Bell Corp. 1,529,562
---------------------------------------------------------------------------------
68,004 Sprint Corp. 2,584,152
---------------------------------------------------------------------------------
43,706 Williams Cos., Inc. 1,229,231
--------------------------------------------------------------------------------- ---------------
Total 10,806,835
--------------------------------------------------------------------------------- ---------------
TOTAL COMMON STOCKS (IDENTIFIED COST $87,803,150) 86,921,212
--------------------------------------------------------------------------------- ---------------
**REPURCHASE AGREEMENT--3.8%
- ------------------------------------------------------------------------------------------------
$ 3,451,667 PaineWebber, Inc., 4.2%, dated 5/31/94, due 6/01/94
(at amortized cost)(Note 2B) 3,451,667
--------------------------------------------------------------------------------- ---------------
TOTAL INVESTMENTS (IDENTIFIED COST $91,254,817) $ 90,372,879+
--------------------------------------------------------------------------------- ---------------
</TABLE>
* Non-income producing.
** The repurchase agreement is fully collateralized by U.S. Treasury obligations
based on market prices at the date of the portfolio.
+ The cost of investments for federal tax purposes amounts to $91,254,817. The
net unrealized depreciation of investments on a federal tax basis amounts to
$881,938, which is comprised of $2,895,209 appreciation and $3,777,147
depreciation at May 31, 1994.
Note: The categories of investments are shown as a percentage of net assets
($90,621,690) at May 31, 1994.
(See Notes which are an integral part of the Financial Statements)
BILTMORE QUANTITATIVE EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------------------------
Investments in securities, at value (Notes 2A and 2B)
(identified and tax cost, $91,254,817) $ 90,372,879
- -------------------------------------------------------------------------------------------------
Dividends receivable 259,706
- -------------------------------------------------------------------------------------------------
Receivable for Fund shares sold 20,000
- -------------------------------------------------------------------------------------------------
Interest receivable 403
- ------------------------------------------------------------------------------------------------- ---------------
Total assets 90,652,988
- -------------------------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------------
Accrued expenses $ 31,298
- -------------------------------------------------------------------------------------- ---------
Total liabilities 31,298
- ------------------------------------------------------------------------------------------------- ---------------
NET ASSETS for 9,230,163 shares of beneficial interest outstanding $ 90,621,690
- ------------------------------------------------------------------------------------------------- ---------------
NET ASSETS CONSIST OF:
- -------------------------------------------------------------------------------------------------
Paid-in capital $ 92,323,815
- -------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments (881,938)
- -------------------------------------------------------------------------------------------------
Accumulated undistributed net realized gain (loss) on investments (1,077,181)
- -------------------------------------------------------------------------------------------------
Undistributed net investment income 256,994
- ------------------------------------------------------------------------------------------------- ---------------
Total Net Assets $ 90,621,690
- ------------------------------------------------------------------------------------------------- ---------------
NET ASSET VALUE AND REDEMPTION PROCEEDS PER SHARE:
($90,621,690 / 9,230,163 shares of beneficial interest outstanding) $9.82
- ------------------------------------------------------------------------------------------------- ---------------
OFFERING PRICE PER SHARE: (100/95.5 OF $9.82)* $10.28
- ------------------------------------------------------------------------------------------------- ---------------
</TABLE>
* See "What Shares Cost" in the prospectus.
(See Notes which are an integral part of the Financial Statements)
BILTMORE QUANTITATIVE EQUITY FUND
STATEMENT OF OPERATIONS
PERIOD ENDED MAY 31, 1994*
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ----------------------------------------------------------------------------------------------------
Interest income $ 23,903
- ----------------------------------------------------------------------------------------------------
Dividend income 379,512
- ---------------------------------------------------------------------------------------------------- ------------
Total income (Note 2C) 403,415
- ----------------------------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------------------------------
Investment advisory fee (Note 4) $ 111,407
- ----------------------------------------------------------------------------------------
Trustees' fees 1,163
- ----------------------------------------------------------------------------------------
Administrative personnel and services fees (Note 4) 16,115
- ----------------------------------------------------------------------------------------
Custodian fees (Note 4) 3,183
- ----------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses (Note 4) 5,204
- ----------------------------------------------------------------------------------------
Legal fees 2,596
- ----------------------------------------------------------------------------------------
Printing and postage 4,673
- ----------------------------------------------------------------------------------------
Portfolio accounting fees (Note 4) 13,553
- ----------------------------------------------------------------------------------------
Insurance premiums 1,636
- ----------------------------------------------------------------------------------------
Miscellaneous 2,806
- ---------------------------------------------------------------------------------------- ----------
Total expenses 162,336
- ----------------------------------------------------------------------------------------
Deduct--
- ----------------------------------------------------------------------------------------
Waiver of investment advisory fee (Note 4) $ 15,915
- ----------------------------------------------------------------------------------------
Net expenses 146,421
- ---------------------------------------------------------------------------------------------------- ------------
Net investment income 256,994
- ---------------------------------------------------------------------------------------------------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ----------------------------------------------------------------------------------------------------
Net realized gain (loss) on investment transactions (identified cost basis) (1,077,181)
- ----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments (881,938)
- ---------------------------------------------------------------------------------------------------- ------------
Net realized and unrealized gain (loss) on investments (1,959,119)
- ---------------------------------------------------------------------------------------------------- ------------
Change in net assets resulting from operations $ (1,702,125)
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
* For the period from March 28, 1994 (date of initial public investment) to May
31, 1994.
(See Notes which are an integral part of the Financial Statements)
BILTMORE QUANTITATIVE EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1994*
(UNAUDITED)
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------------------------------------------
Net investment income $ 256,994
- -----------------------------------------------------------------------------------------------
Net realized gain (loss) on investment transactions ($1,077,181 net loss as computed for
federal income tax purposes) (1,077,181)
- -----------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) of investments (881,938)
- ----------------------------------------------------------------------------------------------- -----------------
Change in net assets resulting from operations (1,702,125)
- ----------------------------------------------------------------------------------------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2C)--
- -----------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income --
- ----------------------------------------------------------------------------------------------- -----------------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 3)--
- -----------------------------------------------------------------------------------------------
Proceeds from sale of shares 97,171,384
- -----------------------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of dividends declared --
- -----------------------------------------------------------------------------------------------
Cost of shares redeemed (4,847,569)
- ----------------------------------------------------------------------------------------------- -----------------
Change in net assets from Fund share transactions 92,323,815
- ----------------------------------------------------------------------------------------------- -----------------
Change in net assets 90,621,690
- -----------------------------------------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------------------------------------
Beginning of period --
- ----------------------------------------------------------------------------------------------- -----------------
End of period (including undistributed net investment income of $256,994) $ 90,621,690
- ----------------------------------------------------------------------------------------------- -----------------
</TABLE>
* For the period from March 28, 1994 (date of initial public investment) to May
31, 1994.
(See Notes which are an integral part of the Financial Statements)
BILTMORE QUANTITATIVE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
The Biltmore Funds (the "Trust") is registered under the Investment Company Act
of 1940, as amended, (the "Act"), as an open-end management investment company.
The Trust consists of eleven diversified portfolios. The financial statements
included herein present only those of the Biltmore Quantitative Equity Fund (the
"Fund"). The financial statements of the other portfolios are presented
separately. The assets of each portfolio are segregated and a shareholder's
interest is limited to the portfolio in which shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles (GAAP).
A. INVESTMENT VALUATIONS--Listed equity securities are valued at the last sale
price reported on national securities exchanges. Unlisted securities,
short-term obligations and private placement securities are generally
valued at the price provided by an independent pricing service. Short-term
securities with remaining maturities of sixty days or less at the time of
purchase may be stated at amortized cost, which approximates value.
B. REPURCHASE AGREEMENTS--It is the policy of the Fund to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System or to have segregated within the
custodian bank's vault, all securities held as collateral in support of
repurchase agreement investments. Additionally, procedures have been
established by the Fund to monitor, on a daily basis, the market value of
each repurchase agreement's underlying collateral to ensure the value at
least equals the principal amount of the repurchase agreement, including
accrued interest.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to guidelines established
by the Board of Trustees ("Trustees"). Risks may arise from the potential
inability of counterparties to honor the terms of the repurchase agreement.
Accordingly, the Fund could receive less than the repurchase price on the
sale of collateral securities.
C. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Dividend income and
distributions to shareholders are recorded on the ex-dividend date.
Interest income and expenses are accrued daily. Bond premium and discount
if applicable, are amortized as required by the Internal Revenue Code, as
amended (the "Code").
D. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its tax-exempt income.
Accordingly, no provisions for federal tax are necessary.
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
F. DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering the shares, have been deferred and are being
amortized using the straight-line method over a period of five years from
the Fund's commencement date.
G. OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
PERIOD ENDED
MAY 31, 1994*
- ----------------------------------------------------------------------------------------------- -----------------
<S> <C>
Shares sold 9,726,000
- -----------------------------------------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared --
- -----------------------------------------------------------------------------------------------
Shares redeemed (495,837 )
- ----------------------------------------------------------------------------------------------- -----------------
Net change resulting from Fund share transactions 9,230,163
- ----------------------------------------------------------------------------------------------- -----------------
</TABLE>
* For the period from March 28, 1994 (date of initial public investment) to May
31, 1994.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Wachovia Investment Management Group, the Fund's
investment adviser (the "Adviser"), receives for its services an annual
investment advisory fee equal to .70 of 1% of the Fund's average daily net
assets. The Adviser may voluntarily choose to waive a portion of its fee. The
Adviser can modify or terminate this voluntary waiver at any time at its sole
discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. The FAS fee is based on the
level of average aggregate net assets of the Trust and The Biltmore Municipal
Funds for the period. FAS may voluntarily choose to waive a portion of its fee
and reimburse certain operating expenses of the Fund. FAS can modify or
terminate this voluntary waiver and reimbursement at any time at its sole
discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT, ACCOUNTING AND CUSTODY FEES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent for
the Fund. The FServ fee is based on the size, type and number of accounts and
transactions made by shareholders.
FServ also maintains the Fund's accounting records. The fee is based on the
level of the Fund's average net assets for the period, plus out-of-pocket
expenses.
Wachovia Bank of North Carolina, N.A. is the Fund's custodian. The fee is based
on the level of the Fund's average net assets for the period, plus out-of pocket
expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses incurred by the Fund will be
borne initially by FAS and are estimated at $29,500. The Fund has agreed to
reimburse FAS for the organizational expenses during the five year period
following January 18, 1994 (date the Fund first became effective). For the
period ended May 31, 1994, the Fund paid $833, pursuant to this agreement.
Certain of the Officers of the Trust are Officers and Trustees of FAS and FServ.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended May 31, 1994 were as follows:
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------------------------
PURCHASES $ 109,263,168
- ------------------------------------------------------------------------------------------------- ---------------
SALES $ 20,382,837
- ------------------------------------------------------------------------------------------------- ---------------
</TABLE>
33188--Proof of 7/20/94--Financial Press (412) 321-0440
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Report of the Biltmore Money Market
Funds (the "Funds")* for the six-month period ending May 31, 1994.
You're putting your cash to work in the Biltmore Money Market Fund, the Biltmore
Tax-Free Money Market Fund, or the Biltmore U.S. Treasury Money Market Fund. As
a result, you're pursuing current income. Interest rates are finally on the
rise, which means that the Funds have the opportunity to seek higher yields.
These pages provide you with complete financial information--including an
investment review by the portfolio manager and a complete list of
investments--for each Fund. As you'll see, assets in the Funds continued to
grow, totaling $386 million at the end of the period. Net assets in the Biltmore
Money Market Fund totaled $157 million, while Biltmore Tax-Free Money Market
Fund reached nearly $131 million in assets. Biltmore U.S. Treasury Money Market
Fund assets stood at $98 million.
Thank you for your confidence in the Funds. We'll continue to keep you up to
date on your investment, and provide your account with the highest level of
service possible.
Sincerely,
John W. McGonigle
President
July 15, 1994
*As money market mutual funds, the Funds are managed to pursue a stable share
price of $1.00, although there is no guarantee that they will do so. An
investment in the Funds is neither insured nor guaranteed by the U.S.
Government.
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
BILTMORE MONEY MARKET FUND
Increased inflation concerns prompted a sharp rise in short-term interest rates
during the period between November 30, 1993 and May 31, 1994. Fixed income
investors responded to the Federal Reserve Board's tightening of rates by
adopting defensive positions through investment in money market funds. Inflows
of nearly $30 billion into money market funds during the six-month period
resulted in a weighted average portfolio maturity of 44 days among all money
funds, the lowest average since October, 1990. The rising interest rate
environment also provided investors with the highest money market fund returns
since August, 1992.
The Fund's portfolio manager adopted a defensive investment strategy during the
period. This was accomplished by increasing liquidity and shortening maturities.
The Fund's portfolio mix of overnight investments and time deposits outperformed
comparable short-term holdings in U.S. Treasury issues, while providing the
liquidity necessary to maintain portfolio targets. The Fund's average maturity
was slightly greater than the IBC/Donoghue's Money Fund Report* average at the
beginning of the six-month period. By May 31, 1994, however, the average
maturity was in line with the IBC/Donoghue's Money Fund Report average. Average
maturity targets are established based on expectations about the U.S. economy,
the Fund's investment adviser's market rate forecast, and the average maturity
of the Fund versus a peer group. The average maturity of the Fund will always be
90 days or less. The Fund's average maturity at May 31, 1994 was 43 days.
Fund assets decreased 16% during the six-month period, from $186.9 million to
$156.8 million. Also during the six-month period ended May 31, 1994, the Fund's
seven-day net yield for Institutional Shares increased from 2.95% to 3.68%, and
from 2.65% to 3.38% for Investment Shares, as compared with the IBC/Donoghue's
Money Fund Report average of 3.45%.
BILTMORE TAX-FREE MONEY MARKET FUND
The municipal bond market has been hampered by rising interest rates, a
strengthening economy and fears of higher inflation. As rates have moved higher,
municipal bond refundings and the steady inflow of new cash have abruptly
declined, further weakening the bond market. From November 30, 1993 to May 31,
1994, the IBC/Donoghue's Money Fund Report had a total annualized return of
2.30%.
The Fund invests in a diversified portfolio of municipal securities maturing in
397 days or less, and the Fund's average maturity is 90 days or less. The Fund
had an average maturity of 43 days during the six-month period ended May 31,
1994, versus 45 days for the IBC/Donoghue's Money Fund Report.
*This index is unmanaged.
On May 31, 1994, the Fund had a seven-day net yield of 2.52% for Institutional
Shares and 2.22% for Investment Shares. Net assets of the Fund totaled $131.2
million, an increase from $83.2 million on November 30, 1993. At the end of the
six-month period, demand notes represented 62% of the Fund's portfolio, with
another 33% in general obligation market notes and 5% in tax-exempt commercial
paper.
BILTMORE U.S. TREASURY MONEY MARKET FUND
The Fund's portfolio manager adopted a defensive investment strategy during the
period. This was accomplished by increasing liquidity in expectation of the next
adjustment in rates from the Federal Reserve Board while shortening the maturity
of the portfolio's holdings.
The average maturity of the Fund was slightly greater than the IBC/Donoghue's
Money Fund Report average at November 30, 1993. By May 31, 1994, however, the
Fund's average maturity was in line with the IBC/Donoghue's Money Fund Report
average. Average maturity targets are established based on expectations of the
U.S. economy, the Fund's investment adviser's market rate forecast, and the
average maturity of the Fund versus a peer group. The average maturity of the
Fund will always be 90 days or less.
Fund assets increased 19% during the six-month period, from $80.2 million to
$97.6 million. Also during the six-month period ended May 31, 1994, the Fund's
seven-day net yield for Institutional Shares increased from 2.81% to 3.68% and
from 2.51% to 3.38% for Investment Shares, as compared with the IBC/Donoghue's
Money Fund Report average of 3.38%. The Fund's average maturity at May 31, 1994
was 42 days.
BILTMORE MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
*COMMERCIAL PAPER--28.3%
- ------------------------------------------------------------------------------------------------
BANKING--6.4%
--------------------------------------------------------------------------------
$ 5,000,000 NBD Bank, N.A., 3.31%, 6/20/94 $ 4,999,936
--------------------------------------------------------------------------------
5,000,000 Trust Company Bank, 4.95%, 11/15/94 4,970,904
-------------------------------------------------------------------------------- ---------------
Total 9,970,840
-------------------------------------------------------------------------------- ---------------
FINANCE--AUTOMOTIVE--3.8%
--------------------------------------------------------------------------------
6,000,000 Ford Motor Credit Corp., 4.33%, 6/10/94 5,993,520
-------------------------------------------------------------------------------- ---------------
FINANCE--FOOD & BEVERAGE--4.1%
--------------------------------------------------------------------------------
6,535,000 Bass Finance, 3.81%, 6/10/94 6,528,824
-------------------------------------------------------------------------------- ---------------
FINANCE--MISCELLANEOUS--7.0%
--------------------------------------------------------------------------------
6,000,000 BellSouth Capital Funding Corp., 3.77%, 6/22/94 5,986,875
--------------------------------------------------------------------------------
5,000,000 USAA Capital Corp., 4.27%, 6/1/94 5,000,000
-------------------------------------------------------------------------------- ---------------
Total 10,986,875
-------------------------------------------------------------------------------- ---------------
FOOD & BEVERAGE--7.0%
--------------------------------------------------------------------------------
5,000,000 Coca Cola Co., 4.33%, 7/19/94 4,971,267
--------------------------------------------------------------------------------
6,000,000 Sara Lee Corp., 3.77%, 6/6/94 5,996,875
-------------------------------------------------------------------------------- ---------------
Total 10,968,142
-------------------------------------------------------------------------------- ---------------
TOTAL COMMERCIAL PAPER 44,448,201
-------------------------------------------------------------------------------- ---------------
TIME DEPOSITS--40.5%
- ------------------------------------------------------------------------------------------------
6,000,000 ABN-AMRO Bank, 3.95%, 6/6/94 5,999,665
--------------------------------------------------------------------------------
5,000,000 Bank of Hawaii, 4.31%, 6/27/94 5,000,000
--------------------------------------------------------------------------------
5,000,000 Bank of New York, 5.00%, 11/15/94 5,000,000
--------------------------------------------------------------------------------
7,000,000 CIBC New York, 3.76%-3.95%, 6/6/94-6/22/94 6,999,257
--------------------------------------------------------------------------------
6,000,000 First Alabama Bank, 4.00%, 6/2/94 6,000,000
--------------------------------------------------------------------------------
5,000,000 First Union National Bank, 4.28%, 6/17/94 5,000,000
--------------------------------------------------------------------------------
</TABLE>
BILTMORE MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- -------------- -------------------------------------------------------------------------------- ---------------
<C> <S> <C>
TIME DEPOSITS--CONTINUED
- ------------------------------------------------------------------------------------------------
$ 6,000,000 NAT West, New York, 3.93%-4.19%, 6/30/94-8/31/94 $ 5,996,868
--------------------------------------------------------------------------------
5,000,000 Norwest Bank, 4.31%, 6/17/94 5,000,000
--------------------------------------------------------------------------------
5,000,000 Robobank, 4.47%, 10/27/94 4,989,078
--------------------------------------------------------------------------------
2,500,000 Royal Bank of Scotland, 3.63%, 6/1/94 2,500,000
--------------------------------------------------------------------------------
5,000,000 Societe Generale Bank, 3.80%, 6/6/94 5,000,007
--------------------------------------------------------------------------------
6,000,000 Toronto-Dominion Bank, 4.25%, 6/20/94 6,000,000
-------------------------------------------------------------------------------- ---------------
TOTAL TIME DEPOSITS 63,484,875
-------------------------------------------------------------------------------- ---------------
U.S. TREASURY BILLS--17.7%
- ------------------------------------------------------------------------------------------------
28,000,000 6/30/94-11/25/94 27,738,211
-------------------------------------------------------------------------------- ---------------
REPURCHASE AGREEMENT--13.4%
- ------------------------------------------------------------------------------------------------
21,051,180 Barclays De Zoete Wedd, Inc., 4.20%, dated 5/31/94, due 6/1/94 (Note 2B) 21,051,180
-------------------------------------------------------------------------------- ---------------
TOTAL INVESTMENTS, (AT AMORTIZED COST) $ 156,722,467+
-------------------------------------------------------------------------------- ---------------
</TABLE>
* Each issue shows the rate of discount at the time of purchase for discount
issues, or the coupon for interest bearing issues.
** The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
+ Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($156,787,220) at May 31, 1994.
(See Notes which are an integral part of the Financial Statements)
BILTMORE MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ------------------------------------------------------------------------------------------------
Investment in repurchase agreement (Note 2B) $ 21,051,180
- -------------------------------------------------------------------------------
Investments in other securities (Note 2A) 135,671,287
- ------------------------------------------------------------------------------- ---------------
Total investments, at amortized cost and value $ 156,722,467
- ------------------------------------------------------------------------------------------------
Interest receivable 396,361
- ------------------------------------------------------------------------------------------------
Prepaid/deferred expenses (Note 2F) 97,088
- ------------------------------------------------------------------------------------------------ ---------------
Total assets 157,215,916
- ------------------------------------------------------------------------------------------------
LIABILITIES:
- ------------------------------------------------------------------------------------------------
Dividends payable 428,696
- ------------------------------------------------------------------------------------------------ ---------------
NET ASSETS for 156,787,220 shares of beneficial interest outstanding $ 156,787,220
- ------------------------------------------------------------------------------------------------ ---------------
NET ASSET VALUE, Offering Price, and Redemption Proceeds Per Share:
- ------------------------------------------------------------------------------------------------
Institutional Shares (net assets $120,016,049 / 120,016,049 shares of beneficial interest
outstanding) $1.00
- ------------------------------------------------------------------------------------------------ ---------------
Investment Shares (net assets $36,771,171 / 36,771,171 shares of beneficial
interest outstanding) $1.00
- ------------------------------------------------------------------------------------------------ ---------------
(See Notes which are an integral part of the Financial Statements)
</TABLE>
BILTMORE MONEY MARKET FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------
Interest income (Note 2C) $ 2,735,406
- ---------------------------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------------------------
Investment advisory fee (Note 4) $ 401,042
- --------------------------------------------------------------------------------------
Trustees' fees 1,875
- --------------------------------------------------------------------------------------
Administrative personnel and services fees (Note 4) 86,619
- --------------------------------------------------------------------------------------
Custodian fees (Note 4) 16,042
- --------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses (Note 4) 14,838
- --------------------------------------------------------------------------------------
Fund share registration costs 17,542
- --------------------------------------------------------------------------------------
Auditing fees 4,422
- --------------------------------------------------------------------------------------
Legal fees 8,363
- --------------------------------------------------------------------------------------
Printing and postage 9,792
- --------------------------------------------------------------------------------------
Portfolio accounting fees (Note 4) 14,960
- --------------------------------------------------------------------------------------
Insurance premiums 4,163
- --------------------------------------------------------------------------------------
Distribution services fee (Note 4) 38,671
- --------------------------------------------------------------------------------------
Miscellaneous 5,677
- -------------------------------------------------------------------------------------- -----------
Total expenses 624,006
- --------------------------------------------------------------------------------------
Deduct--
- --------------------------------------------------------------------------------------
Waiver of investment advisory fee (Note 4) $ 280,730
- -------------------------------------------------------------------------
Waiver of administrative personnel and services fees (Note 4) 46,534
- -------------------------------------------------------------------------
Waiver of distribution services fee (Note 4) 9,668
- -------------------------------------------------------------------------
Reimbursement of other operating expenses by Administrator (Note 4) 26,456 363,388
- ------------------------------------------------------------------------- ----------- -----------
Net expenses 260,618
- --------------------------------------------------------------------------------------------------- -------------
Net investment income $ 2,474,788
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
BILTMORE MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1994* 1993
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------------------
Net investment income $ 2,474,788 $ 4,207,488
- ---------------------------------------------------------------------------- ---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2C)--
- ----------------------------------------------------------------------------
Dividends to shareholders from net investment income:
- ----------------------------------------------------------------------------
Institutional Shares (2,187,499) (4,068,438)
- ----------------------------------------------------------------------------
Investment Shares (287,289) (139,050)
- ---------------------------------------------------------------------------- ---------------- ----------------
Change in net assets resulting from distributions to shareholders (2,474,788) (4,207,488)
- ---------------------------------------------------------------------------- ---------------- ----------------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 3)--
- ----------------------------------------------------------------------------
Proceeds from sale of shares 286,107,498 523,338,578
- ----------------------------------------------------------------------------
Cost of shares redeemed (316,252,437) (424,210,993)
- ---------------------------------------------------------------------------- ---------------- ----------------
Change in net assets from Fund share transactions (30,144,939) 99,127,585
- ---------------------------------------------------------------------------- ---------------- ----------------
Change in net assets (30,144,939) 99,127,585
- ----------------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------------
Beginning of period 186,932,159 87,804,574
- ---------------------------------------------------------------------------- ---------------- ----------------
End of period $ 156,787,220 $ 186,932,159
- ---------------------------------------------------------------------------- ---------------- ----------------
</TABLE>
*Six months ended May 31, 1994 (unaudited).
(See Notes which are an integral part of the Financial Statements)
BILTMORE MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
INVESTMENT SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1994** 1993 1992*
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------
Net investment income 0.01 0.03 0.01
- ----------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------------
Dividends to shareholders from net investment income (0.01) (0.03) (0.01)
- ---------------------------------------------------------------------------- ----------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------- ----------- --------- ---------
TOTAL RETURN*** 1.42% 2.74% 1.48%
- ----------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------
Expenses 0.58%(a) 0.55% 0.48%(a)
- ----------------------------------------------------------------------------
Net investment income 2.96%(a) 2.70% 3.44%(a)
- ----------------------------------------------------------------------------
Expense waiver/reimbursement (b) 0.52%(a 0.66% 0.75%(a)
- ----------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------
Net assets, end of period (000 omitted)
$36,771 $9,842 $3,106
- ----------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from June 9, 1992 (date of initial public
investment) to November 30, 1992.
** Six months ended May 31, 1994 (unaudited).
*** Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 4).
(See Notes which are an integral part of the Financial Statements)
BILTMORE MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
<S> <C> <C> <C>
1994** 1993 1992*
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------
Net investment income 0.02 0.03 0.02
- ----------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------------
Dividends to shareholders from net investment income (0.02) (0.03) (0.02)
- ---------------------------------------------------------------------------- ----------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------- ----------- --------- ---------
TOTAL RETURN*** 1.57% 3.05% 1.71%
- ----------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------
Expenses 0.28%(a) 0.25% 0.14%(a)
- ----------------------------------------------------------------------------
Net investment income 3.08%(a) 3.00% 3.38%(a)
- ----------------------------------------------------------------------------
Expense waiver/reimbursement (b) 0.42%(a) 0.56% 0.65%(a)
- ----------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------
Net assets, end of period (000 omitted) $120,016 $177,090 $84,698
- ----------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from June 2, 1992 (date of initial public
investment) to November 30, 1992.
** Six months ended May 31, 1994 (unaudited).
*** Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 4).
(See Notes which are an integral part of the Financial Statements)
BILTMORE TAX-FREE MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ------------- --------------------------------------------------------------------- ---------- ---------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--99.1%
- ------------------------------------------------------------------------------------
ALABAMA--8.8%
---------------------------------------------------------------------
$ 2,165,000 Alabama HFA Weekly VRDNs (SouthTrust Bank of
Alabama LOC) A-1 $ 2,165,000
---------------------------------------------------------------------
4,700,000 Birmingham City, AL, Weekly VRDNs (First Alabama Bank LOC) SP-1+ 4,700,000
---------------------------------------------------------------------
3,200,000 Huntsville, AL, Health Care Authority, Weekly VRDNs (Amsouth Bank
LOC) A-1+ 3,200,000
---------------------------------------------------------------------
1,500,000 Mobile, AL, IDB Weekly VRDNs (Swiss Bank LOC) A-1+ 1,500,000
--------------------------------------------------------------------- ---------------
Total 11,565,000
--------------------------------------------------------------------- ---------------
ARKANSAS--2.8%
---------------------------------------------------------------------
775,000 Arkansas Hospital Equipment Finance Authority Weekly VRDNs (Credit
Suisse LOC) A-1+ 775,000
---------------------------------------------------------------------
725,000 Fayetteville, AR, Weekly VRDNs (Public Facility)/
(Mitsubishi Bank L.T.D. LOC) VMIG1 725,000
---------------------------------------------------------------------
2,200,000 University of Arkansas Weekly VRDNs (Board of Trustees)/
(First Union LOC) A-1+ 2,200,000
--------------------------------------------------------------------- ---------------
Total 3,700,000
--------------------------------------------------------------------- ---------------
CALIFORNIA--1.5%
---------------------------------------------------------------------
1,000,000 San Francisco Unified School District, CA, 3.50%, 8/12/94 SP-1+ 1,000,860
---------------------------------------------------------------------
1,000,000 Visalia, CA, Weekly VRDNs (Convention Central Project)/ (Mitsubishi
L.T.D. LOC) A-1+ 1,000,000
--------------------------------------------------------------------- ---------------
Total 2,000,860
--------------------------------------------------------------------- ---------------
CONNECTICUT--0.5%
---------------------------------------------------------------------
700,000 Connecticut State Economic Recovery Notes Weekly VRDNs (Series B) VMIG1 700,000
--------------------------------------------------------------------- ---------------
</TABLE>
BILTMORE TAX-FREE MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ------------- --------------------------------------------------------------------- ---------- ---------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA--0.8%
---------------------------------------------------------------------
$ 1,000,000 District of Columbia Hospital Revenue Weekly VRDNs
(Columbia Hospital For Women 1988A)/(Mitsubishi
International LOC) VMIG1 $ 1,000,000
--------------------------------------------------------------------- ---------------
FLORIDA--7.1%
---------------------------------------------------------------------
2,500,000 Broward County, FL, HFA Weekly VRDNs (Welleby Apt. Project)/(Bank of
America N.T. & S.A. LOC) VMIG1 2,500,000
---------------------------------------------------------------------
4,100,000 Collier County, FL, HFA Monthly VRDNs (River Beach
Project)/(Morgan Guaranty LOC) VMIG1 4,100,000
---------------------------------------------------------------------
900,000 Florida Escambia County Facility Authority Weekly VRDNs
(Florida Convalescent Center Project)/
(Toronto Dominion LOC) P-1 900,000
---------------------------------------------------------------------
850,000 Polk County, FL, IDA Weekly VRDNs (Florida
Convalescent Center Project)/(Toronto Dominion LOC) P-1 850,000
---------------------------------------------------------------------
1,000,000 St. Lucie County, FL, Weekly VRDNs (Florida Power & Light project) P-1 1,000,000
--------------------------------------------------------------------- ---------------
Total 9,350,000
--------------------------------------------------------------------- ---------------
GEORGIA--10.6%
---------------------------------------------------------------------
2,000,000 Burke County, GA, Development Pollution Authority, 3.15%, 6/7/94
(Credit Suisse LOC) P-1 2,000,000
---------------------------------------------------------------------
4,000,000 Cobb County, GA, 3.50%, 12/30/94 SP-1 4,013,633
---------------------------------------------------------------------
5,000,000 De Kalb Private Hospital Authority, GA, (Engleston
Childrens' Hospital)/(Trust Company Bank LOC) A-1+ 5,000,000
---------------------------------------------------------------------
1,000,000 Housing Authority of Fulton County, GA, 3.10%, 8/1/94 (First Mutual
Savings--Florida--LOC) A-1+ 1,000,000
---------------------------------------------------------------------
1,895,000 Marietta, GA, HFA VRDNs (Falls at Bells Ferry)/(Guardian S&L LOC) VMIG1 1,895,000
--------------------------------------------------------------------- ---------------
Total 13,908,633
--------------------------------------------------------------------- ---------------
</TABLE>
BILTMORE TAX-FREE MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ------------- --------------------------------------------------------------------- ---------- ---------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
ILLINOIS--11.3%
---------------------------------------------------------------------
$ 1,000,000 Chicago, IL, GO Weekly VRDNs (Canadian Imperial Bank LOC) VMIG1 $ 1,000,000
---------------------------------------------------------------------
1,000,000 Illinois Development Finance Authority Revenue Weekly VRDNs (National
Westminster LOC) VMIG1 1,000,000
---------------------------------------------------------------------
1,500,000 Illinois Development Finance Authority Revenue Weekly VRDNs (LaSalle
National Bank LOC) AA- 1,500,000
---------------------------------------------------------------------
3,000,000 Illinois Development Finance Authority Revenue Weekly VRDNs (Northern
Trust Co. LOC) AA- 3,000,000
---------------------------------------------------------------------
5,200,000 Illinois State, 9.00%, 9/1/97 (prerefunded 9/1/94 @ 102) AA- 5,390,052
---------------------------------------------------------------------
3,000,000 Illinois State, Weekly VRDNs (Toll Highway Authority)/
(Societe Generale LOC) VMIG1 3,000,000
--------------------------------------------------------------------- ---------------
Total 14,890,052
--------------------------------------------------------------------- ---------------
INDIANA--1.6%
---------------------------------------------------------------------
2,100,000 Indianapolis, IN, Weekly VRDNs (Canal Square Project)/ (Societe
Generale LOC) VMIG1 2,100,000
--------------------------------------------------------------------- ---------------
IOWA--2.4%
---------------------------------------------------------------------
600,000 Indianola, IA, IDR Monthly VRDNs (HY-VEE Foods)/ (Swiss Bank LOC) A-1+ 600,000
---------------------------------------------------------------------
2,500,000 Iowa State, 3.25%, 6/30/94 (Union Bank of Switzerland LOC) MIG1 2,500,771
--------------------------------------------------------------------- ---------------
Total 3,100,771
--------------------------------------------------------------------- ---------------
KANSAS--1.3%
---------------------------------------------------------------------
1,750,000 Burlington, KS, Pollution Control Revenue, 3.15%, 9/8/94 (Deutsche
Bank LOC) AAA 1,750,000
--------------------------------------------------------------------- ---------------
KENTUCKY--0.8%
---------------------------------------------------------------------
1,000,000 City of Georgetown, KY, Educational Institution Weekly VRDNs (PNC
Bank, Kentucky, LOC) VMIG1 1,000,000
--------------------------------------------------------------------- ---------------
</TABLE>
BILTMORE TAX-FREE MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ------------- --------------------------------------------------------------------- ---------- ---------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
LOUISIANA--3.5%
---------------------------------------------------------------------
$ 1,500,000 Calcasieu Parish, LA, IDR Pollution Control Weekly VRDNs (National
Westminster Bank LOC) P-1 $ 1,500,000
---------------------------------------------------------------------
1,100,000 Lake Charles Harbor & Terminal District, LA, Weekly VRDNs (National
Westminster Bank LOC) P-1 1,100,000
---------------------------------------------------------------------
2,000,000 Louisiana State Sales Tax Revenue Daily VRDNs (FGIC
Insured)/(Swiss Bank LOC) VMIG1 2,000,000
--------------------------------------------------------------------- ---------------
Total 4,600,000
--------------------------------------------------------------------- ---------------
MAINE--1.5%
---------------------------------------------------------------------
2,000,000 Maine State Turnpike Authority, 3.15%, 10/3/94 MIG1 2,003,331
--------------------------------------------------------------------- ---------------
MARYLAND--5.3%
---------------------------------------------------------------------
6,000,000 Maryland Health Higher Education Facility Anne Arundel Hospital
Weekly VRDNs (Mellon Bank LOC) VMIG1 6,000,000
---------------------------------------------------------------------
1,000,000 Maryland State, 6.40%, 7/15/94 NR 1,004,774
--------------------------------------------------------------------- ---------------
Total 7,004,774
--------------------------------------------------------------------- ---------------
MASSACHUSETTS--4.6%
---------------------------------------------------------------------
6,000,000 Massachusetts State, Daily VRDNs (Series E) (ABN-- AMRO LOC) VMIG1 6,000,000
--------------------------------------------------------------------- ---------------
MICHIGAN--3.6%
---------------------------------------------------------------------
4,600,000 Michigan State Hospital Finance Authority Revenue, 11.25%, 6/1/94
(Prerefunded) AAA 4,692,000
--------------------------------------------------------------------- ---------------
MISSISSIPPI--3.0%
---------------------------------------------------------------------
3,900,000 Perry County, MS, Daily VRDNs (Leaf River Forest
Project)/(Credit Suisse LOC) P-1 3,900,000
--------------------------------------------------------------------- ---------------
NORTH CAROLINA--1.9%
---------------------------------------------------------------------
2,500,000 North Carolina Eastern Municipal Power, 3.15%, 6/7/94 (UBS & Morgan
Guaranty LOC) A-1+ 2,500,000
--------------------------------------------------------------------- ---------------
</TABLE>
BILTMORE TAX-FREE MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ------------- --------------------------------------------------------------------- ---------- ---------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
OHIO--0.8%
---------------------------------------------------------------------
$ 1,000,000 Centerville, OH, Healthcare Revenue Weekly VRDNs (PNC Bank LOC) VMIG1 $ 1,000,000
--------------------------------------------------------------------- ---------------
PENNSYLVANIA--2.3%
---------------------------------------------------------------------
2,000,000 Pennsylvania State University, 3.00%, 12/5/94 SP-1+ 2,002,692
---------------------------------------------------------------------
1,000,000 Sewickley Valley Hospital Authority, PA, 3.00%, 12/15/94 (PNC Bank
LOC) VMIG1 1,001,954
--------------------------------------------------------------------- ---------------
Total 3,004,646
--------------------------------------------------------------------- ---------------
RHODE ISLAND--1.5%
---------------------------------------------------------------------
2,000,000 Rhode Island State, 3.25%, 6/30/94 SP-1+ 2,000,767
--------------------------------------------------------------------- ---------------
TENNESSEE--9.2%
---------------------------------------------------------------------
2,000,000 Nashville, TN, Health & Education Weekly VRDNs
(NationsBank LOC) A-1+ 2,000,000
---------------------------------------------------------------------
3,000,000 Nashville, TN, FHA Weekly VRDNs (NationsBank LOC) A-1+ 3,000,000
---------------------------------------------------------------------
1,000,000 Shelby County, TN, 6.10%, 8/1/94 (Prerefunded) AAA 1,006,095
---------------------------------------------------------------------
1,000,000 Shelby County, TN, 6.25%, 8/1/94 (Prerefunded) AAA 1,032,280
---------------------------------------------------------------------
5,000,000 Tennessee State, Weekly VRDNs SP-1 5,000,000
--------------------------------------------------------------------- ---------------
Total 12,038,375
--------------------------------------------------------------------- ---------------
TEXAS--6.9%
---------------------------------------------------------------------
1,000,000 Dallas, TX, 9.50%, 6/1/94 (Prerefunded) AAA 1,000,000
---------------------------------------------------------------------
1,000,000 Fort Worth, TX, 8.70%, 3/1/95 AAA 1,040,544
---------------------------------------------------------------------
1,000,000 Lower Neches Valley Authority Texan, 6-Month Put,
(Chevron Guaranty) A-1+ 1,000,000
---------------------------------------------------------------------
1,860,000 San Antonio, TX, Electric & Gas Revenue, 9.60%, 2/1/95 (Prerefunded) AAA 1,964,627
---------------------------------------------------------------------
4,000,000 Texas State, 3.25%, 8/31/94 SP-1+ 4,004,530
--------------------------------------------------------------------- ---------------
Total 9,009,701
--------------------------------------------------------------------- ---------------
</TABLE>
BILTMORE TAX-FREE MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
PRINCIPAL RATING:
AMOUNT MOODY'S
OR SHARES OR S&P* VALUE
- ------------- --------------------------------------------------------------------- ---------- ---------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------
VIRGINIA--1.1%
---------------------------------------------------------------------
$ 1,500,000 Harrisonburg, VA, HFA, yearly put (Rolling Brook Village
Apartments)/(Guardian S&L LOC) VMIG1 $ 1,500,000
--------------------------------------------------------------------- ---------------
WASHINGTON--2.3%
---------------------------------------------------------------------
3,000,000 Port Anacortes, WA, IDA, 2.70%, 8/9/94 P-1 3,000,000
--------------------------------------------------------------------- ---------------
WYOMING--2.1%
---------------------------------------------------------------------
2,700,000 Uinta County, WY, Pollution Control Revenue Daily VRDNs (Chevron
Guaranty) P-1 2,700,000
--------------------------------------------------------------------- ---------------
TOTAL SHORT-TERM MUNICIPAL BONDS 130,018,910
--------------------------------------------------------------------- ---------------
REGULATED INVESTMENT COMPANIES--0.2%
- ------------------------------------------------------------------------------------
265,813 Fidelity Tax-Exempt Money Market Fund Instruments
Portfolio (at net asset value) (Note 2A) 265,813
--------------------------------------------------------------------- ---------------
TOTAL INVESTMENTS, AT AMORTIZED COST $ 130,284,723+
--------------------------------------------------------------------- ---------------
</TABLE>
+ Also represents cost for federal tax purposes.
* Please refer to the Appendix of the Statement of Additional Information for an
explanation of the credit ratings.
Note: The categories of investments are shown as a percentage of net assets
($131,242,102) at May 31, 1994.
The following abbreviations are used throughout this portfolio:
GO--General Obligation
FGIC--Financial Guaranty Insurance Company
FHA--Federal Housing Authority
HFA--Housing Finance Authority
IDA--Industrial Development Authority
IDB--Industrial Development Board
IDR--Industrial Development Revenue
LOC--Letter(s) of Credit
VRDNs--Variable Rate Demand Notes
(See Note which are an integral part of the Financial Statements)
BILTMORE TAX-FREE MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
- -------------------------------------------------------------------------------------------------
Investments in securities, at amortized cost and value (Note 2A) $ 130,284,723
- -------------------------------------------------------------------------------------------------
Cash 7,932
- -------------------------------------------------------------------------------------------------
Interest receivable 1,164,378
- -------------------------------------------------------------------------------------------------
Deferred expenses (Note 2F) 49,888
- ------------------------------------------------------------------------------------------------- ---------------
Total assets 131,506,921
- -------------------------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------------------------
Payable to Adviser 264,819
- ------------------------------------------------------------------------------------------------- ---------------
NET ASSETS for 131,242,102 shares of beneficial interest outstanding $ 131,242,102
- ------------------------------------------------------------------------------------------------- ---------------
NET ASSET VALUE, Offering Price, and Redemption Proceeds Per Share:
- -------------------------------------------------------------------------------------------------
Institutional Shares ($93,273,581 / 93,273,581 shares of beneficial interest outstanding) $1.00
- ------------------------------------------------------------------------------------------------- ---------------
Investment Shares ($37,968,521 / 37,968,521 shares of beneficial interest outstanding) $1.00
- ------------------------------------------------------------------------------------------------- ---------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
BILTMORE TAX-FREE MONEY MARKET FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------
Interest income (Note 2C) $ 1,386,699
- ---------------------------------------------------------------------------------------------------
EXPENSES:
- --------------------------------------------------------------------------------------
Investment advisory fee (Note 4) $ 273,000
- --------------------------------------------------------------------------------------
Trustees' fees 1,718
- --------------------------------------------------------------------------------------
Administrative personnel and services fees (Note 4) 58,335
- --------------------------------------------------------------------------------------
Custodian fees (Note 4) 10,920
- --------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses (Note 4) 15,777
- --------------------------------------------------------------------------------------
Fund share registration costs 11,072
- --------------------------------------------------------------------------------------
Auditing fees 4,830
- --------------------------------------------------------------------------------------
Legal fees 8,382
- --------------------------------------------------------------------------------------
Printing and postage 11,704
- --------------------------------------------------------------------------------------
Portfolio accounting fees (Note 4) 16,180
- --------------------------------------------------------------------------------------
Insurance premiums 4,168
- --------------------------------------------------------------------------------------
Distribution services fees (Note 4) 63,520
- --------------------------------------------------------------------------------------
Miscellaneous 5,066
- -------------------------------------------------------------------------------------- -----------
Total expenses 484,672
- --------------------------------------------------------------------------------------
Deduct--
- --------------------------------------------------------------------------------------
Waiver of investment advisory fee (Note 4) $ 191,100
- -------------------------------------------------------------------------
Waiver of administrative personnel and services fees (Note 4) 31,039
- -------------------------------------------------------------------------
Waiver of distribution services fees (Note 4) 15,880
- -------------------------------------------------------------------------
Reimbursement of other operating expenses by Administrator (Note 4) 25,445 263,464
- ------------------------------------------------------------------------- ----------- -----------
Net expenses 221,208
- --------------------------------------------------------------------------------------------------- -------------
Net investment income $ 1,165,491
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
BILTMORE TAX-FREE MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
----------------------------------
1994* 1993
---------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------------------------
Net investment income $ 1,165,491 $ 1,687,496
- ----------------------------------------------------------------------------- ---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2C)--
- -----------------------------------------------------------------------------
Dividends to shareholders from net investment income:
- -----------------------------------------------------------------------------
Institutional Shares (859,547) (1,400,375)
- -----------------------------------------------------------------------------
Investment Shares (305,944) (287,121)
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets resulting from distributions to shareholders (1,165,491) (1,687,496)
- ----------------------------------------------------------------------------- ---------------- ----------------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 3)--
- -----------------------------------------------------------------------------
Proceeds from sale of shares 145,788,735 202,842,602
- -----------------------------------------------------------------------------
Cost of shares redeemed (97,791,212) (186,567,848)
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets from Fund share transactions 47,997,523 16,274,754
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets 47,997,523 16,274,754
- -----------------------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------------------
Beginning of period 83,244,579 66,969,825
- ----------------------------------------------------------------------------- ---------------- ----------------
End of period $ 131,242,102 $ 83,244,579
- ----------------------------------------------------------------------------- ---------------- ----------------
</TABLE>
* Six months ended May 31, 1994 (unaudited).
(See Notes which are an integral part of the Financial Statements)
BILTMORE TAX-FREE MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
INVESTMENT SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1994** 1993 1992*
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------
Net investment income 0.01 0.02 0.01
- ----------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------------
Dividends to shareholders from net investment income (0.01) (0.02) (0.01)
- ---------------------------------------------------------------------------- ----------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------- ----------- --------- ---------
TOTAL RETURN*** 0.95% 1.99% 1.29%
- ----------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------
Expenses 0.62%(a) 0.59% 0.50%(a)
- ----------------------------------------------------------------------------
Net investment income 1.92%(a) 1.98% 2.37%(a)
- ----------------------------------------------------------------------------
Expense waiver/reimbursement (b) 0.55%(a) 0.70% 0.88%(a)
- ----------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------
Net assets, end of period (000 omitted) $37,969 $23,976 $5,338
- ----------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from May 20, 1992 (date of initial public
investment) to November 30, 1992.
** Six months ended May 31, 1994 (unaudited).
*** Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 4).
(See Notes which are an integral part of the Financial Statements)
BILTMORE TAX-FREE MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1994** 1993 1992*
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------
Net investment income 0.01 0.02 0.01
- ----------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------------
Dividends to shareholders from net investment income (0.01) (0.02) (0.01)
- ---------------------------------------------------------------------------- ----------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------- ----------- --------- ---------
TOTAL RETURN*** 1.10% 2.30% 1.49%
- ----------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------
Expenses 0.32%(a) 0.29% 0.16%(a)
- ----------------------------------------------------------------------------
Net investment income 2.22%(a) 2.28% 2.71%(a)
- ----------------------------------------------------------------------------
Expense waiver/reimbursement (b) 0.45%(a) 0.60% 0.78%(a)
- ----------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------
Net assets, end of period (000 omitted) $93,274 $59,269 $61,632
- ----------------------------------------------------------------------------
</TABLE>
* Reflects operations for the period from May 14, 1992 (date of initial public
investment) to November 30, 1992.
** Six months ended May 31, 1994 (unaudited).
*** Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 4).
(See Notes which are an integral part of the Financial Statements)
BILTMORE U.S. TREASURY MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- -------------- --------------------------------------------------------------------------------- --------------
<C> <S> <C>
U.S. GOVERNMENT OBLIGATIONS--48.7%
- -------------------------------------------------------------------------------------------------
U.S. TREASURY BILLS
---------------------------------------------------------------------------------
$ 48,000,000 6/2/94-3/9/95 $ 47,526,283
--------------------------------------------------------------------------------- --------------
*REPURCHASE AGREEMENTS--51.6%
- -------------------------------------------------------------------------------------------------
22,341,830 Barclays De Zoete Wedd, Inc., 4.20%, dated 5/31/94, due 6/1/94 22,341,830
---------------------------------------------------------------------------------
20,000,000 Daiwa Securities America, Inc., 4.23%, dated 5/31/94,
due 6/1/94 20,000,000
---------------------------------------------------------------------------------
4,000,000 Kidder, Peabody & Co., Inc., 4.20%, dated 5/31/94, due 6/1/94 4,000,000
---------------------------------------------------------------------------------
4,000,000 Morgan Stanley & Co., 4.20%, dated 5/31/94, due 6/1/94 4,000,000
--------------------------------------------------------------------------------- --------------
TOTAL REPURCHASE AGREEMENTS (NOTE 2B) 50,341,830
--------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS, AT AMORTIZED COST $ 97,868,113+
--------------------------------------------------------------------------------- --------------
</TABLE>
+ Also represents cost for federal tax purposes.
* The repurchase agreements are fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
Note: The categories of investments are shown as a percentage of net assets
($97,589,706) at May 31, 1994.
(See Notes which are an integral part of the Financial Statements)
BILTMORE U.S. TREASURY MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------------------------
Investments in repurchase agreements (Note 2B) $ 50,341,830
- ---------------------------------------------------------------------------------
Investments in other securities (Note 2A) 47,526,283
- --------------------------------------------------------------------------------- --------------
Total investments, at amortized cost and value $ 97,868,113
- -------------------------------------------------------------------------------------------------
Interest receivable 5,890
- -------------------------------------------------------------------------------------------------
Deferred expenses (Note 2F) 11,131
- ------------------------------------------------------------------------------------------------- --------------
Total assets 97,885,134
- -------------------------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------------------------
Dividends payable 278,804
- ---------------------------------------------------------------------------------
Accrued expenses 16,624
- --------------------------------------------------------------------------------- --------------
Total liabilities 295,428
- ------------------------------------------------------------------------------------------------- --------------
NET ASSETS for 97,589,706 shares of beneficial interest outstanding $ 97,589,706
- ------------------------------------------------------------------------------------------------- --------------
NET ASSET VALUE, Offering Price, and Redemption Proceeds Per Share:
- -------------------------------------------------------------------------------------------------
Institutional Shares ($77,912,233 / 77,912,233 shares of beneficial interest outstanding)
$1.00
- ------------------------------------------------------------------------------------------------- --------------
Investment Shares ($19,677,473 / 19,677,473 shares of beneficial interest outstanding)
$1.00
- ------------------------------------------------------------------------------------------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
BILTMORE U.S. TREASURY MONEY MARKET FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------------------------
Interest income (Note 2C) $ 1,483,443
- ---------------------------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------------------------
Investment advisory fee (Note 4) $ 220,797
- --------------------------------------------------------------------------------------
Trustees' fees 2,711
- --------------------------------------------------------------------------------------
Administrative personnel and services fees (Note 4) 47,393
- --------------------------------------------------------------------------------------
Custodian fees (Note 4) 8,832
- --------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses (Note 4) 28,784
- --------------------------------------------------------------------------------------
Fund share registration costs 22,657
- --------------------------------------------------------------------------------------
Auditing fees 8,307
- --------------------------------------------------------------------------------------
Legal fees 8,621
- --------------------------------------------------------------------------------------
Printing and postage 23,041
- --------------------------------------------------------------------------------------
Portfolio accounting fees (Note 4) 28,201
- --------------------------------------------------------------------------------------
Insurance premiums 6,984
- --------------------------------------------------------------------------------------
Distribution services fees (Note 4) 37,290
- --------------------------------------------------------------------------------------
Miscellaneous 7,365
- -------------------------------------------------------------------------------------- -----------
Total expenses 450,983
- --------------------------------------------------------------------------------------
Deduct--
- --------------------------------------------------------------------------------------
Waiver of investment advisory fee (Note 4) $ 198,717
- -------------------------------------------------------------------------
Waiver of administrative personnel and services fees (Note 4) 25,319
- -------------------------------------------------------------------------
Waiver of distribution services fees (Note 4) 9,323
- -------------------------------------------------------------------------
Reimbursement of other operating expenses by Administrator (Note 4) 26,278 259,637
- ------------------------------------------------------------------------- ----------- -----------
Net expenses 191,346
- --------------------------------------------------------------------------------------------------- -------------
Net investment income $ 1,292,097
- --------------------------------------------------------------------------------------------------- -------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
BILTMORE U.S. TREASURY MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
1994* 1993
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------------------------
Net investment income $ 1,292,097 $ 1,900,006
- ----------------------------------------------------------------------------- ---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2C)--
- -----------------------------------------------------------------------------
Dividends to shareholders from net investment income:
- -----------------------------------------------------------------------------
Institutional shares (1,038,878) (1,826,489)
- -----------------------------------------------------------------------------
Investment shares (253,219) (73,517)
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets from distributions to shareholders (1,292,097) (1,900,006)
- ----------------------------------------------------------------------------- ---------------- ----------------
FUND SHARE (PRINCIPAL) TRANSACTIONS (NOTE 3)--
- -----------------------------------------------------------------------------
Net proceeds from sale of shares 179,044,884 288,944,990
- -----------------------------------------------------------------------------
Cost of shares redeemed (163,749,538) (262,058,559)
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets from Fund share transactions 15,295,346 26,886,431
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets 15,295,346 26,886,431
- -----------------------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------------------
Beginning of period 82,294,360 55,407,929
- ----------------------------------------------------------------------------- ---------------- ----------------
End of period $ 97,589,706 $ 82,294,360
- ----------------------------------------------------------------------------- ---------------- ----------------
</TABLE>
*Six months ended May 31, 1994 (unaudited).
(See Notes which are an integral part of the Financial Statements)
BILTMORE U.S. TREASURY MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
INVESTMENT SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED
NOVEMBER 30,
1994** 1993*
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00
- ------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------------------------------------
Net investment income 0.01 0.01
- ------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (0.01) (0.01)
- ------------------------------------------------------------------------------------------ ----------- ---------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00
- ------------------------------------------------------------------------------------------ ----------- ---------
TOTAL RETURN*** 1.36% 1.42%
- ------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------------------------------------
Expenses 0.67%(a) 0.65%(a)
- ------------------------------------------------------------------------------------------
Net investment income 2.68%(a) 2.50%(a)
- ------------------------------------------------------------------------------------------
Expense waiver/reimbursement (b) 0.62%(a) 0.73%(a)
- ------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $19,677 $16,941
- ------------------------------------------------------------------------------------------
</TABLE>
* For the period from May 12, 1993 (date of initial public investment) to
November 30, 1993.
** Six months ended May 31, 1994 (unaudited).
*** Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 4).
(See Notes which are an integral part of the Financial Statements)
BILTMORE U.S. TREASURY MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED
NOVEMBER 30,
1994** 1993 1992*
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------------------------------
Net investment income 0.02 0.03 0.02
- ----------------------------------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------------------------------
Dividends to shareholders from net investment income (0.02) (0.03) (0.02)
- ---------------------------------------------------------------------------- ----------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------- ----------- --------- ---------
TOTAL RETURN*** 1.51% 2.91% 1.90%
- ----------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------------------------------
Expenses 0.37%(a) 0.28% 0.17%(a)
- ----------------------------------------------------------------------------
Net investment income 2.98%(a) 2.87% 3.24%(a)
- ----------------------------------------------------------------------------
Expense waiver/reimbursement (b) 0.52%(a) 0.63% 0.71%(a)
- ----------------------------------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------
Net assets, end of period (000 omitted) $77,912 $65,353 $55,408
- ----------------------------------------------------------------------------
</TABLE>
* For the period from May 7, 1992 (date of initial public investment) to
November 30, 1992.
** Six months ended May 31, 1994 (unaudited).
*** Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
(a) Computed on an annualized basis.
(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 4).
(See Notes which are an integral part of the Financial Statements)
BILTMORE MONEY MARKET FUNDS
COMBINED NOTES TO FINANCIAL STATEMENTS
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
The Biltmore Funds (the "Trust") is registered under the Investment Company Act
of 1940, as amended (the "Act"), as an open-end, management investment company.
The Trust consists of eleven diversified portfolios (individually referred to as
the "Fund", or collectively as the "Funds"). The financial statements included
herein present only those of the Biltmore Money Market Fund (Money Market Fund),
the Biltmore Tax-Free Money Market Fund (Tax-Free Fund), and the Biltmore U.S.
Treasury Money Market Fund (U.S. Treasury Fund), each of which presently offers
two classes of shares: Institutional Shares and Investment Shares. The financial
statements of the other portfolios are presented separately.
Investment Shares are identical in all respects to Institutional Shares, except
that Investment Shares are sold pursuant to a distribution plan (the "Plan")
adopted in accordance with the Act's Rule 12b-1. The assets of each portfolio
are segregated and a shareholder's interest is limited to the portfolio in which
shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by each Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles (GAAP).
A. INVESTMENT VALUATIONS--The Funds' use of the amortized cost method to value
its portfolio securities is in accordance with Rule 2a-7 under the Act.
Investments in other regulated investment companies are valued at net asset
value.
B. REPURCHASE AGREEMENTS--It is the policy of the Funds to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System or to have segregated within the
custodian bank's vault, all securities held as collateral in support of
repurchase agreement investments. Additionally, procedures have been
established by the Funds to monitor, on a daily basis, the market value of
each repurchase agreement's underlying collateral to ensure the value at
least equals the principal amount of the repurchase agreement, including
accrued interest.
The Funds will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Funds' adviser to be creditworthy pursuant to guidelines established
by the Board of Trustees ("Trustees"). Risks may arise from the potential
inability of counterparties to honor the terms of the repurchase agreement.
Accordingly, the Funds could receive less than the repurchase price on the
sale of collateral securities.
C. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code").
Distributions to shareholders are recorded on the ex-dividend date.
D. FEDERAL TAXES--It is the Funds' policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of their taxable income.
Accordingly, no provisions for federal tax are necessary.
At November 30, 1993, the Tax-Free Fund, for federal tax purposes, had a
capital loss carryforward of $406, which will reduce the Fund's taxable
income arising from future net realized gain on investments, if any, to the
extent permitted by the Code, and thus will reduce the amount of
distributions to shareholders which would otherwise be necessary to relieve
the Fund of any liability for federal tax. Pursuant to the Code, such
capital loss carryforward will expire in 2001.
E. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Funds may engage in
when-issued or delayed delivery transactions. The Funds record when-issued
securities on the trade date and maintain security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
F. DEFERRED EXPENSES--The costs incurred by each Fund with respect to the
registration of its shares in its first fiscal year, excluding the initial
expense of registering the shares, have been deferred and are being
amortized using the straight-line method over a period of five years from
each Fund's commencement date.
G. OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value) for each
class of shares. At May 31, 1994, capital paid-in for the Money Market Fund, the
Tax-Free Fund and the U.S. Treasury Fund aggregated $156,787,220, $131,242,102
and $97,589,706, respectively. Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
MONEY MARKET FUND TAX-FREE FUND
YEAR ENDED NOVEMBER 30, YEAR ENDED NOVEMBER 30,
1994* 1993 1994* 1993
<S> <C> <C> <C> <C>
INSTITUTIONAL SHARES
<S> <C> <C> <C> <C>
Shares sold 241,775,360 508,765,112 97,888,689 157,797,806
- -----------------------------------------------------
Shares redeemed (298,849,373) (416,373,470) (63,883,671) (160,161,423)
- ----------------------------------------------------- ------------ ------------ ------------ ------------
Net change resulting from Institutional Share
transactions (57,074,013) 92,391,642 34,005,018 (2,363,617)
- ----------------------------------------------------- ------------ ------------ ------------ ------------
</TABLE>
<TABLE>
<CAPTION>
U.S. TREASURY FUND
YEAR ENDED NOVEMBER 30,
1994* 1993
<S> <C> <C>
INSTITUTIONAL SHARES
Shares sold 152,618,840 268,967,543
- -------------------------------------------------------------------------------------
Shares redeemed (140,059,551) (259,022,528)
- ------------------------------------------------------------------------------------- ------------ ------------
Net change resulting from Institutional Share transactions 12,559,289 9,945,015
- ------------------------------------------------------------------------------------- ------------ ------------
</TABLE>
* For the six months ended May 31, 1994.
<TABLE>
<CAPTION>
MONEY MARKET FUND TAX-FREE FUND
YEAR ENDED NOVEMBER 30, YEAR ENDED NOVEMBER 30,
1994* 1993 1994* 1993
<S> <C> <C> <C> <C>
INVESTMENT SHARES
Shares sold 44,332,138 14,573,466 47,900,046 45,044,796
- ---------------------------------------------------------
Shares redeemed (17,403,064) (7,837,523) (33,907,541) (26,406,425)
- --------------------------------------------------------- ----------- ----------- ----------- -----------
Net change resulting from Investment Share transactions 26,929,074 6,735,943 13,992,505 18,638,371
- --------------------------------------------------------- ----------- ----------- ----------- -----------
Total net change resulting from Fund transactions (30,144,939) 99,127,585 47,997,523 16,274,754
- --------------------------------------------------------- ----------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
U.S. TREASURY FUND
YEAR ENDED NOVEMBER 30,
1994* 1993**
<S> <C> <C>
INVESTMENT SHARES
Shares sold 26,426,044 19,977,447
- -------------------------------------------------------------------------------------
Shares redeemed (23,689,987) (3,036,031)
- ------------------------------------------------------------------------------------- ------------ ------------
Net change resulting from Investment Share transactions 2,736,057 16,941,416
- ------------------------------------------------------------------------------------- ------------ ------------
Total net change from Fund transactions 15,295,346 26,886,431
- ------------------------------------------------------------------------------------- ------------ ------------
</TABLE>
* For the six months ended May 31, 1994.
** For the period from May 12, 1993 (date of initial public investment) to
November 30, 1993.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Wachovia Investment Management Group, the Trust's
investment adviser (the "Adviser"), receives for its services an annual
investment advisory fee equal to .50 of 1% of each Fund's average daily net
assets. The Adviser may voluntarily choose to waive a portion of its fee and
reimburse certain operating expenses of the Funds. The Adviser can modify or
terminate the voluntary waiver and reimbursement at any time at its sole
discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Funds
with certain administrative personnel and services. The FAS fee is based on the
level of average aggregate net assets of the Trust and The Biltmore Municipal
Funds for the period. FAS may voluntarily choose to waive a portion of its fee
and reimburse certain operating expenses of the Funds. FAS can modify or
terminate this voluntary waiver and reimbursement at any time at its sole
discretion.
DISTRIBUTION PLAN--The Trust has adopted the Plan pursuant to Rule 12b-1 under
the Act. Under the terms of the Plan, the Funds will compensate Federated
Securities Corp. ("FSC"), the principal distributor, from the net assets of the
Funds to finance activities intended to result in the sale of the Funds'
Investment Shares. The Plan provides that the Funds may incur distribution
expenses up to .40 of 1% of the average daily net assets of the Investment
Shares, annually, to compensate FSC.
TRANSFER AND DIVIDEND DISBURSING AGENT, ACCOUNTING AND CUSTODY FEES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent for
the Funds. The FServ fee is based on the size, type and number of accounts and
transactions made by shareholders.
FServ also maintains the Funds' accounting records. The FServ fee is based on
the level of each Fund's average net assets for the period, plus out-of-pocket
expenses.
Wachovia Bank of North Carolina, N.A. is the Funds' custodian. The fee is based
on the level of each Fund's average net assets for the period, plus
out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses of the Money Market Fund,
Tax-Free Fund, and U.S. Treasury Fund of $65,357, $59,661 and $33,032,
respectively, were borne initially by FAS. The Funds have agreed to reimburse
FAS for the organizational expenses during the five-year period following the
date that each Fund's registration statement first became effective. For the six
months ended May 31, 1994, the Money Market Fund, Tax-Free Fund, and U.S.
Treasury Fund paid $5,308, $5,183, and $4,555, respectively pursuant to this
agreement.
Certain of the Officers of the Trust are Officers and Trustees of FAS, FSC and
FServ.
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
James A. Hanley John W. McGonigle
Malcolm T. Hopkins President and Treasurer
Samuel E. Hudgins Ronald M. Petnuch
J. Berkley Ingram, Jr. Vice President and Assistant Treasurer
D. Dean Kaylor Joseph M. Huber
Secretary
Mark A. Sheehan
Assistant Secretary
</TABLE>
Mutual funds are not obligations of or insured by any bank, nor are they insured
by the federal government or any of its agencies.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Funds prospectus, which contains facts
concerning its objective and policies, management fees, expenses and other
information.
