- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PRESIDENT'S MESSAGE
Dear Shareholder:
I am pleased to present your first Semi-Annual Report for the Biltmore Emerging
Markets Fund. This report covers the period from December 26, 1994, when the
Fund began operation, through May 31, 1995.
The report begins with a commentary on the emerging international marketplace by
the Fund's portfolio manager. Following the commentary are a complete listing of
the Fund's investments and its financial statements.
As its name indicates, the Biltmore Emerging Markets Fund invests in a highly
diversified portfolio of stocks issued by companies in "emerging" countries. The
economies of these countries--and, in turn, the companies located within these
countries--have the potential to grow at a high rate over time. At the end of
the reporting period, the Fund's portfolio was invested in companies located in
Argentina, Brazil, Chile, China, Greece, Hong Kong, India, Indonesia, Korea,
Malaysia, Mexico, Panama, Peru, the Philippines, Portugal, Taiwan, Thailand and
Turkey.
I am also pleased to report that the Fund rewarded shareholders with strong
performance over the period. Its net asset value increased from $10.00, on the
first day of the period, to $11.12 on May 31, 1995, the last day of the period.
The Fund's total return figures based on net asset value and offering price were
11.20% and 6.21%, respectively.* Total assets at the end of the period reached
$37.8 million.
Thank you for choosing the Biltmore Emerging Markets Fund to pursue long-term
growth opportunities around the world. We look forward to keeping you informed
about your investment as we provide you with the highest quality service. Of
course, we welcome your comments and suggestions.
Sincerely,
John W. McGonigle
President
June 15, 1995
* 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.
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- --------------------------------------------------------------------------------
BILTMORE EMERGING MARKETS FUND
The investment environment for emerging markets deteriorated throughout 1994,
culminating in the collapse of the Mexican peso. Shock waves from Mexico
undermined the stock markets of developing countries from Latin America to Asia,
putting an end to the strong flow of funds into emerging market funds. At the
same time, the rising interest rate environment in the United States in 1994,
and fears of the Federal Reserve Board's further raising interest rates in early
1995, put additional pressure on many developing countries during this period.
The total return of the IFC Investable Index* for this period was (5.3%).
The Biltmore Emerging Markets Fund did not suffer substantial losses following
the Mexican currency crisis. In fact, the portfolio managers of the Fund were
able to take advantage of the declines of many equities in emerging markets to
establish initial positions at attractive prices. Many of these equities have
since recovered much of their losses. A two-tiered, broadly diversified
investment philosophy further buffered the Fund from the markets' downturn.
On May 31, 1995, the Fund's investments were distributed along the following
geographical lines: 49% invested in Asia, another 36% in Latin America and 15%
in Europe. The largest country holdings were Brazil (10.5%), Hong Kong and China
(9.3%), Thailand (9.0%), Malaysia (8.7%) and Argentina (8.5%).
On May 31, 1995, the Fund's net assets totaled $37.8 million. The net asset
value per share was $11.12.
*This index is unmanaged.
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BILTMORE EMERGING MARKETS FUND
(A PORTFOLIO OF THE BILTMORE FUNDS)
- --------------------------------------------------------------------------------
SEMI-ANNUAL REPORT AND SUPPLEMENT TO PROSPECTUS DATED DECEMBER 10, 1994
The following information is a supplement to your Prospectus. It is being
furnished to update certain information presently contained in the Prospectus,
and to comply with regulations that require mutual fund companies to provide
their shareholders with current information.
We suggest that you keep this information for your records.
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
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C> <C>
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
</TABLE>
ANNUAL FUND OPERATING EXPENSES*
(As a percentage of projected average net assets)
<TABLE>
<S> <C> <C>
Management Fee 1.00%
12b-1 Fees None
Other Expenses 0.80%
Shareholder Servicing Agent Fee (1) 0.00%
Total Fund Operating Expenses 1.80%
</TABLE>
(1) The Fund has no present intention of paying or accruing the shareholder
servicing agent fee during the fiscal year ending November 30, 1995. If the
Fund were paying or accruing the shareholder servicing agent fee, the Fund
would be able to pay up to 0.25 of 1% of the Fund's average daily net assets
for the shareholder servicing agent fee. See "The Biltmore Funds
Information."
* Total Fund Operating Expenses in the table above are estimated based on
average expenses expected to be incurred during the fiscal year ending
November 30, 1995. During the course of this period, expenses may be more or
less than the average amount shown.
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 assets and expenses,
see "The Biltmore Funds Information" and "Investing in the Fund."
<TABLE>
<S> <C> <C>
EXAMPLE 1 year 3 years
You would pay the following expenses on a $1,000 investment, assuming (1) 5% annual
return; (2) redemption at the end of each time period; and (3) payment of the maximum
sales load. As noted in the table above, the Fund charges no
redemption fees. $62 $99
</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, 1995.
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 EMERGING MARKETS FUND FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
Period Ended
May 31, 1995(a)*
(unaudited)
<S> <C>
- --------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $10.00
Income from investment operations
Net investment income 0.12
Net realized and unrealized gain (loss) on investments and
foreign currency transactions 1.00
-------
Total from investment operations 1.12
-------
Less distributions
Distributions from net investment income --
-------
NET ASSET VALUE, END OF PERIOD $11.12
-------
Total Return(b) 11.20%
Ratios to Average Net Assets
Expenses 1.80%(c)
Net investment income 2.93%(c)
Supplemental Data
Net assets, end of period (000 omitted) $37,881
Portfolio turnover 1%
</TABLE>
* Per share information presented is based upon the monthly average number of
shares outstanding due to the large subscriptions occuring at the end of the
period.
(a) Reflects operations for the period from December 26, 1994 (date of initial
public investment) to May 31, 1995.
(b) Based on net asset value, which does not reflect sales charges, if
applicable.
(c) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
C. Please delete the final sentence of the section "Purchases at Net Asset
Value" on page 12 of the Prospectus, and replace it with the following:
Trustees, officers, directors and employees of the Distributor and its
affiliates, and any bank or investment dealer who has a sales agreement with the
Distributor relating to the Fund, may also purchase shares at their net asset
value. Finally, effective July 31, 1995, purchases made by participants in
401(k) Defined Contribution Plans (each a "Delaware/Wachovia 401(k) Plan" or
"Plan") which have in excess of $1 million in assets and which offer investment
options that include certain Delaware Group Funds ("Eligible Delaware Funds")
and certain portfolios of the Trust, including the Fund ("Eligible Biltmore
Funds") will be made at net asset value, without the imposition of the sales
charge otherwise provided in the table above. "Eligible Biltmore Funds" refers
to the Fund, the Biltmore Balanced Fund, the Biltmore Equity Fund, the Biltmore
Fixed Income Fund, the Biltmore Special Values Fund, and the Investment Shares
class of the Biltmore Money Market Fund (the "Money Fund").
D. Please insert the following section after "Concurrent Purchases" and
before "Systematic Investment Program" on page 13 of the Prospectus:
RIGHT OF ACCUMULATION. Effective July 31, 1995, participants in a
Delaware/Wachovia 401(k) Plan may combine their holdings in shares of the
Eligible Delaware Funds and Eligible Biltmore Funds included in the Plan with
the dollar amount of new purchases, for a reduced sales charge, as shown in the
table in this prospectus under the section entitled 'What Shares Cost.'
E. Please insert the following paragraph as the sixth paragraph in the
section "Exchange Privilege," on page 15 of the Prospectus:
In addition to the exchange privilege described above, effective July 31, 1995,
participants in a Delaware/ Wachovia 401(k) Plan are, with respect to the Plan,
permitted to: (1) exchange all or part of their Class A shares of other Eligible
Delaware Funds, as well as Eligible Biltmore Funds, at net asset value; and (2)
exchange all or part of their Eligible Biltmore Fund shares into Class A shares
of the Eligible Delaware Funds, at net asset value, without payment of a
front-end sales charge. However, exchanges into the Eligible Delaware Funds from
the Money Fund will be made with the applicable front-end sales charge at the
time of the exchange (unless the Money Fund shares were acquired in an exchange
from an Eligible Delaware Fund or Eligible Biltmore Fund subject to a front-end
sales charge or reinvestment of dividends).
F. Please insert the following financial statements at the end of the
Prospectus, beginning on page 19. In addition, please add the heading
"Financial Statements" to the Table of Contents on page I of the
Prospectus, immediately before "Addresses."
BILTMORE EMERGING MARKETS FUND PORTFOLIO OF INVESTMENTS
MAY 31, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Common Stocks--67.9%
ARGENTINA--7.7%
11,000 Banco Frances Del Rio de la Plata, ADR $ 215,240
7,300 Buenos Aires Embotelladora, S.A., ADR 219,912
10,000 Ciadea, S.A. 52,000
35,000 Comercial del Plata 85,050
21,000 Molinos Rio de la Plata 117,600
53,528 Naviera Perez Companc, CIA, Class A 229,635
44,600 Naviera Perez Companc, CIA, Class B 190,246
235,000 Siderca, S.A. 169,898
6,600 Telecom Argentina Stet France, ADR 325,875
11,500 Telefonica de Argentina, ADR 308,550
22,300 Transportadora de Gas del Sur, ADR 245,780
37,300 YPF Sociedad Anonima, ADR 753,995
-------------
Total Argentina 2,913,781
-------------
BRAZIL--0.8%
12,000 Aracruz Celulose, ADR 136,500
275,000 Light Servicos de Electricidade, S.A. 90,000
12,000 Souza Cruz (CIA) 78,678
-------------
Total Brazil 305,178
-------------
CHILE--4.4%
3,350 Banco O'Higgins, ADR 70,769
6,275 Chilgener, S.A., ADR 193,046
2,800 Compania Cervecerias Unidas, S.A., ADR 70,700
2,800 Compania de Telefonos de Chile, ADR 247,985
3,500 Cristalerias de Chile, ADR 81,375
1,850 Embotelladora Andina, ADR 64,056
13,175 Empresas Nacional de Electricidade, ADR 331,202
7,200 Enersis, S.A., ADR 208,080
4,500 Laboratorio Chile, S.A., ADR 99,900
3,200 Madeco, S.A., ADR 92,800
6,300 Maderas Y Sinteticos Sociedad, ADR 116,550
2,000 Sociedad Quimica Minera de Chile, ADR 82,500
-------------
Total Chile 1,658,963
-------------
</TABLE>
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- --------------------------------------------------------------------------------
BILTMORE EMERGING MARKETS FUND PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Common Stocks--continued
CHINA--2.5%
450,000 Harbin Power Equipment $ 148,346
7,500 Huaneng Power International, Inc., ADR 127,500
750,000 Maanshan Iron & Steel 158,274
400,000 Qingling Motors 100,837
6,750 Shanghai Petrochemical Corp., ADR 229,500
10,000 Shanghai Tyre & Rubber 3,000
500,000 Yizheng Chemical Fibre 185,836
-------------
Total China 953,293
-------------
GREECE--4.2%
1,100 Aegek, S.A. 24,568
4,975 Alpha Credit Bank 260,694
2,000 Alpha Leasing, S.A. 50,661
800 Aluminum Co. of Greece 35,225
2,700 Commercial Bank of Greece 115,255
4,820 Delta Dairy 89,287
6,300 Ergo Bank 292,656
5,925 Hellenic Bottling 166,198
825 Hellenic Sugar Industries 12,466
3,600 Hellenic Technodomiki 79,926
1,300 Heracles General Cement 12,742
6,435 Intracom 80,792
6,600 Michaniki, S.A. 98,418
2,200 National Bank of Greece 125,797
3,350 Titan Cement Co. 129,942
-------------
Total Greece 1,574,627
-------------
HONG KONG--5.4%
165,000 Amoy Properties 148,249
60,000 Cheung Kong (Holdings) 296,151
27,000 China Light & Power 147,625
60,000 Citic Pacific Ltd. 155,909
42,000 Guoco Group 197,639
16,000 Hong Kong Electric 56,882
10,000 Hong Kong Telecommunications, ADR 213,750
20,800 HSBC Holdings 270,709
86,000 Hutchison Whampoa 434,708
5,000 Johnson Electric Holdings 11,150
</TABLE>
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- --------------------------------------------------------------------------------
BILTMORE EMERGING MARKETS FUND PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Common Stocks--continued
HONG KONG--CONTINUED
16,000 Sun Hung Kai Properties $ 115,833
-------------
Total Hong Kong 2,048,605
-------------
INDIA--1.6%
12,500 Arvind Mills, GDR 55,625
2,700 Bajaj Auto, GDR 79,988
2,500 Grasim Industries, GDR 67,500
2,500 Hindalco Industries, GDR 71,875
2,500 Indian Hotels Co. (The), GDR 45,000
3,000 Larsen & Toubro, GDR 58,500
2,000 Ranbaxy Laboratories, Ltd., GDR 48,250
3,500 Reliance Industries, GDR 63,000
150 Tata Electric Cos., GDR 59,400
12,000 Videocon International, GDR 42,000
-------------
Total India 591,138
-------------
INDONESIA--4.8%
125,000 Astra International 224,568
30,000 Bank Bali 71,413
75,000 Bank Dagang Nasional Indonesia 130,530
55,000 Barito Pacific Timber 66,697
29,500 Ciputra Development 66,247
33,000 H.M. Sampoerna 236,402
105,000 Indah Kiat Pulp & Paper 146,194
30,000 Indocement Tunggal 110,487
27,000 Indofoods Suksesi 117,932
4,100 Indosat, ADR 161,950
24,000 Kalbe Farma 101,594
18,000 Mayora Indah 71,749
22,500 Modern Photo Film 116,214
35,000 Semen Gresik 196,497
-------------
Total Indonesia 1,818,474
-------------
KOREA--0.6%
3,000 Hyundai Motor Co., GDR 63,000
4,700 Korea Electric Power Corp., ADR 105,163
1,600 Pohang Iron & Steel, ADR 45,200
-------------
Total Korea 213,363
-------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE EMERGING MARKETS FUND PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Common Stocks--continued
MALAYSIA--6.6%
10,000 Ammb Holdings, BHD $ 127,815
24,000 Genting, BHD 253,195
26,000 Hume Industries, BHD 148,752
42,500 Land & General, BHD 133,648
32,000 Leader Universal Holdings 111,666
26,000 Malayan Banking, BHD 214,161
45,000 Malaysian Int'l Shipping 144,248
29,500 Oyl Industries, BHD 215,460
27,000 Perusahaan Otomobl Nasional (Proton) 96,957
55,000 Renong, BHD 101,765
25,000 Resorts World, BHD 163,319
115,000 Sime Darby, BHD 326,638
21,000 Telekom Malaysia 161,047
43,000 Tenaga Nasional 177,967
12,000 UMW Holdings, BHD 32,380
13,000 UTD Engineers, BHD 85,981
-------------
Total Malaysia 2,494,999
-------------
MEXICO--5.9%
13,000 Alfa, S.A. 148,723
65,000 Cemex, S.A. de C.V. 198,911
115,000 Cifra, S.A. de C.V. 142,114
8,200 Desc, S.A. de C.V., ADR 103,525
11,000 Empresas ICA Sociedad Controladora, S.A. de C.V., ADR 77,000
5,500 Empresas La Moderna, S.A. de C.V., ADR 68,750
30,000 Fomento Economico Mexicano, S.A. de C.U. 70,244
25,000 Gruma, S.A. de C.V. 73,887
51,800 Grupo Carso, S.A. de C.V. 241,801
45,000 Grupo Financiero Banamex 67,024
6,600 Grupo Televisa, S.A. de C.V., ADR 107,250
50,000 Industrias Peneoles, S.A. 141,677
10,500 Kimberly Clark de Mexico, S.A. de C.V. 109,439
50,000 Organizacion Soriana, S.A. de C.V. 58,740
20,000 Telefonos de Mexico, S.A., ADR 564,360
10,560 Vitro Sociedad Anonima, ADR 89,760
-------------
Total Mexico 2,263,205
-------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE EMERGING MARKETS FUND PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Common Stocks--continued
PANAMA--0.2%
3,200 Pan American Beverage $ 86,592
-------------
PERU--4.7%
125,000 Backus & Johnston 300,267
120,000 Banco de Credito 259,267
11,474 Banco Wiese, ADR 96,095
6,265 Cementos Lima 108,855
383,300 CPT Telefonica Del Peru 658,544
28,000 Minas Buenaventura 158,803
45,841 Southern Peru Copper 205,442
-------------
Total Peru 1,787,273
-------------
PHILIPPINES--2.9%
200,000 Ayala Land, Inc. 217,054
350,000 JG Summit Holdings, Inc. 113,953
28,000 Manila Electric Co. 243,500
175,000 Petron Corp. 144,138
2,500 Philippine Long Distance Tele Co., ADR 179,687
6,000 Philippine National Bank 70,930
30,000 San Miguel Corp. 123,256
-------------
Total Philippines 1,092,518
-------------
PORTUGAL--4.0%
29,500 Banco Comercial Portugues 391,283
6,600 Banco Espirito Santo 107,099
5,300 Banco Portugues de Investimentos 97,042
2,200 Banco Totta & Acores 48,265
5,400 Cimpor Ciment Port 86,429
2,300 Jeronimo Martins 115,908
500 Modelo Continente Sgps. 46,363
1,650 Radio Marconi 68,738
3,000 Soares da Costa 59,405
13,600 Sonae Investimentos 332,491
7,300 Soporcel 179,266
-------------
Total Portugal 1,532,289
-------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE EMERGING MARKETS FUND PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Common Stocks--continued
TAIWAN--0.3%
4,000 Asia Cement, GDR $ 84,000
2,000 China Steel Corp., GDR 44,000
-------------
Total Taiwan 128,000
-------------
THAILAND--7.5%
22,500 Bangkok Bank 246,151
50,000 Finance One Public Co. Ltd. 334,279
12,000 Italian Thai Development 124,473
100,000 Krung Thai Bank PLC 358,590
9,500 Land & Houses Company 190,924
20,000 PTT Exploration & Prd 211,062
12,500 Shinawatra Computer & Comms 322,202
4,200 Siam Cement Co. 269,222
56,000 Telecomasia 212,156
22,000 Thai Airways International PLC 46,353
35,000 Thai Farmers Bank 336,441
20,000 TPI Polene PLC 133,711
4,000 United Communications Industries, Ltd. 60,616
-------------
Total Thailand 2,846,180
-------------
TURKEY--3.8%
25,000 Adana Cimento 15,670
240,000 Akbank 66,860
65,000 Aksa 66,396
250,000 Brisa 84,156
80,000 Erciyas Biracilik 122,577
650,000 Eregli Demir Celik 93,558
258,000 KOC Holdings 224,716
20,000 Migros 67,324
205,000 Netas 72,577
125,000 Olmuksa 41,352
210,000 Petkim 156,007
475,000 Petrol Ofisi 145,097
335,000 T Garanti Bankasi 85,548
60,000 Tofas Otomobil Fabrikasi 47,140
180,000 Tupras 40,534
4,800 Usas 25,630
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE EMERGING MARKETS FUND PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Common Stocks--continued
TURKEY--CONTINUED
525,000 Yapi Kredi Bankasi $ 74,347
-------------
Total Turkey 1,429,489
-------------
Total Common Stocks (identified cost, $23,817,753) 25,737,967
-------------
Preferred Stocks--7.9%
BRAZIL--7.9%
11,500,000 Banco Bradesco, S.A. 98,843
890,000 Banco Itau, S.A. 249,031
490,000 Brasmotor, S.A. 106,369
850,000 Centrais Eletricas Brasileiras, Class B (Eletrobras) 237,332
550,000 Centrais Eletricas Brasileiras, Class A (Eletrobras) 152,727
544,500 Cia Cervejaria Brahma 175,977
5,433,000 Cia Energetica de Minas Gerais (CEMIG) 125,124
1,980,000 Cia Vale Rio Doce 300,218
260,000 Iochpe Maxion, S.A. 108,871
3,000,000 Lojas Americanas 65,785
9,200,000 Petroleo Ipiranga (CIA) 116,241
3,800,000 Petroleo Brasileiras (Petrobras) 360,839
9,800,000 Telecomunicacoes Brasileiras, S.A. (Telebras) 343,424
2,250,000 Telecomunicacoes de Sao Paulo, S.A. (Telesp) 283,489
252,000,000 Usinas Siderurgicas de Minas Gerais (Usiminas) 281,076
-------------
Total Preferred Stocks (identified cost, $2,947,859) 3,005,346
-------------
Closed-end Investment Companies--7.0%
44,500 India Fund, Inc. 495,063
35,600 Korea Fund, Inc. 783,200
26,000 Korean Investment Fund, Inc. 315,250
20,000 Morgan Stanley India Investment Fund 220,000
27,700 ROC Taiwan Fund 294,313
24,200 Taiwan Fund, Inc. 544,500
-------------
Total Closed-End Investment Companies (identified cost, $2,612,018) 2,652,326
-------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE EMERGING MARKETS FUND PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
*Repurchase Agreement--17.7%
$ 6,689,079 Daiwa Securities America, Inc., 6.125%, dated 5/31/1995, due 6/1/1995 (at
amortized cost) $ 6,689,079
-------------
Total Investments (identified cost, $36,066,709) $ 38,084,718+
-------------
</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 for federal tax purposes amounts to $36,066,709. The net unrealized
appreciation of investments on a federal tax basis amounts to $2,018,009,
which is comprised of $130,080 depreciation and $2,148,089 appreciation at May
31, 1995.
The following abbreviations are used in this portfolio:
ADR--American Depository Receipts
GDR--Global Depository Receipts
Note: The categories of investments are shown as a percentage of net assets
($37,881,187) at May 31, 1995.
(See Notes which are an integral part of the Financial Statements)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE EMERGING MARKETS FUND
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1995 (UNAUDITED)
<TABLE>
<S> <C> <C>
Assets:
Investments in repurchase agreements $ 6,689,079
Investments in securities 31,395,639
-------------
Total investments in securities, at amortized cost and value
(identified and tax cost, $36,066,709) $ 38,084,718
Cash 5,060
Interest-bearing demand deposit 2,726,959
Income receivable 44,503
Receivable for shares sold 2,934,776
Receivable for investments sold 1,175
-------------
Total assets 43,797,191
Liabilities:
Payable for investments purchased 5,907,841
Payable for shares redeemed 350
Accrued expenses 7,813
-------------
Total liabilities 5,916,004
-------------
Net Assets for 3,405,343 shares outstanding $ 37,881,187
-------------
Net Assets Consists of:
Paid in capital $ 35,716,281
Net unrealized appreciation (depreciation) of investments and foreign
currency transactions 2,017,891
Accumulated net realized gain (loss) on investments and foreign currency transactions (42,515)
Undistributed net investment income 189,530
-------------
Total Net Assets $ 37,881,187
-------------
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
Net Asset Value Per Share ($37,881,187 / 3,405,343 shares outstanding) $11.12
-------------
Offering Price Per Share (100/95.50 of $11.12)* $11.64
-------------
</TABLE>
* See `What Shares Cost' in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE EMERGING MARKETS FUND STATEMENT OF OPERATIONS
PERIOD ENDED MAY 31, 1995* (UNAUDITED)
<TABLE>
<S> <C> <C>
Investment Income:
Interest $ 186,769
Dividends 119,354
------------
Total investment income 306,123
Expenses:
Investment advisory fee $ 64,774
Administrative personnel and services fee 5,839
Transfer agent and dividend disbursing agent fees and expenses 1,796
Trustees' fees 243
Legal fees 541
Custodian fees 35,626
Portfolio accounting fees 4,515
Printing and postage 1,808
Insurance premiums 415
Miscellaneous 1,036
---------
Total expenses 116,593
------------
Net investment income 189,530
------------
Realized and Unrealized Gain (Loss) on Investments:
Net realized gain (loss) on investments and foreign currency transactions (identified cost) (42,515)
Net change in unrealized appreciation (depreciation) of investments and foreign currency
transactions 2,017,891
------------
Net realized and unrealized gain (loss) on investments 1,975,376
------------
Change in net assets resulting from operations $ 2,164,906
------------
</TABLE>
*For the period from December 26, 1994 (date of initial public investment) to
May 31, 1995.
(See Notes which are an integral part of the Financial Statements)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE EMERGING MARKETS FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Period Ended
May 31, 1995*
<S> <C>
(unaudited)
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
<S> <C>
Increase (Decrease) in Net Assets:
Operations--
Net investment income $ 189,530
Net realized gain (loss) on investments and foreign currency transactions
($42,515 net loss as computed for federal tax purposes) (42,515)
Net change in unrealized appreciation (depreciation) of investments and foreign
currency transactions 2,017,891
------------------
Change in net assets resulting from operations 2,164,906
------------------
Distributions to Shareholders--
Distributions from net investment income --
------------------
Share Transactions--
Proceeds from sale of shares 38,180,573
Cost of shares redeemed (2,464,292)
------------------
Change in net assets resulting from share transactions 35,716,281
------------------
Change in net assets 37,881,187
Net Assets:
Beginning of period --
------------------
End of period (including undistributed net investment income of $189,530) $ 37,881,187
------------------
</TABLE>
*For the period from December 26, 1994 (date of initial public investment) to
May 31, 1995.
(See Notes which are an integral part of the Financial Statements)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE EMERGING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1995 (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 twelve diversified portfolios. The financial statements
included herein present only those of Biltmore Emerging Markets 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.
A. INVESTMENT VALUATIONS--Listed equity securities and investments in
closed-end investment companies are valued at the last sale price reported
on national securities exchanges. Unlisted securities and short-term
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 valued at amortized cost, which
approximates fair market value.
B. REPURCHASE AGREEMENTS--It is the policy of the Fund to require a 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 under repurchase agreement transactions.
Additionally, procedures have been established by the Fund to monitor, on a
daily basis, the market value of each repurchase agreement's collateral to
ensure that the value of collateral at least equals the repurchase price to
be paid under the repurchase agreement transaction.
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 the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"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. FOREIGN CURRENCY TRANSLATION--The accounting records of the Fund are
maintained in U.S. dollars. All assets and liabilities denominated in
foreign currencies ("FC") are translated into U.S. dollars based on the
rate of exchange of such FCs against the U.S. dollar on the date of
valuation. Purchases and sales of securities, income and expenses are
translated at the rate of exchange quoted on the respective date that such
transactions are recorded. Differences between income and expense amounts
recorded and collected or paid are adjusted when reported by the custodian
bank. The Fund does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of FCs, currency gains or losses
realized between the trade and settlement dates on securities transactions,
the difference between the amount of dividends, interest, and foreign
withholding taxes recorded on the Fund's books, and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from changes in the value of
assets and liabilities other than investments in securities at fiscal year
end, resulting from changes in the exchange rate.
E. 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 income. Accordingly, no
provisions for federal tax are necessary. However, federal taxes may be
imposed on the Fund upon the disposition of certain investments in passive
foreign investment companies. Withholding taxes on foreign dividends have
been provided for in accordance with the Fund's understanding of the
applicable countries tax rules and rates.
F. 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.
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 not to exceed 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 shares were as follows:
<TABLE>
<CAPTION>
Period Ended
May 31, 1995*
<S> <C>
- ---------------------------------------------------------------------------------------------------------
Shares sold 3,650,880
Shares redeemed (245,537)
------------------
Net change resulting from share transactions 3,405,343
------------------
</TABLE>
*For the period from December 26, 1994 (date of initial public investment) to
May 31, 1995.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Wachovia Investment Management Group, the Fund's
investment adviser (the "Adviser"), is entitled to receive for its services an
annual investment advisory fee equal to 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.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES, PORTFOLIO ACCOUNTING
AND CUSTODIAN FEES--Federated Services Company ("FServ") serves as transfer and
dividend disbursing agent for the Fund for which it receives a fee. The fee is
based on the size, type, and number of accounts and transactions made by
shareholders.
FServ also maintains the Fund's accounting records for which it receives a fee.
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 for which it
receives a fee. The fee is based on the level of the Fund's average net assets
for the period, plus out-of-pocket expenses.
SHAREHOLDER SERVICES FEE--Under the terms of a Shareholder Services Agreement
with FAS, the Fund will pay FAS up to 0.25 of 1% of average daily net assets of
the Fund for the period. This fee is to obtain services for shareholders and to
maintain shareholder accounts.
ORGANIZATIONAL EXPENSES--Organizational expenses incurred by the Fund will be
borne initially by FAS and are estimated to be $30,000. The Fund has agreed to
reimburse FAS for such organizational expenses during the five year period
following December 10, 1994 (the date the Fund became effective).
GENERAL--Certain of the Officers of the Trust are Officers and Directors or
Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended May 31, 1995, were as follows:
<TABLE>
<S> <C>
Purchases $ 29,503,019
-------------
Sales $ 130,612
-------------
</TABLE>
(6) CONCENTRATION OF CREDIT RISK
The Fund invests in equity and fixed income securities of non-U.S. issuers.
Although the Fund maintains a diversified investment portfolio, the political or
economic developments within a particular country or region may have an adverse
effect on the ability of foreign domiciled issuers to meet their obligations.
Additionally, political or economic developments may have an effect on the
liquidity and volatility of portfolio securities and currency holdings.
At May 31, 1995, the portfolio was diversified within the following industries:
<TABLE>
<S> <C> <C> <C>
Agriculture 0.1% Holding Cos.--Diversified 2.9%
Basic Industries 4.2 Metals 0.4
Beverages 1.4 Miscellaneous 4.8
Broadcasting 1.2 Oil 0.5
Capital Goods 3.1 Packaging & Containers 0.2
Chemicals 0.4 Publishing 0.9
Consumer Basics 3.5 Real Estate 0.9
Consumer Durable Goods 1.7 Retail 0.4
Consumer Non-Durables 1.6 Shelter 5.4
Consumer Services 2.0 Technology 2.1
Energy 2.8 Telecommunications 8.0
Engineering & Construction 0.7 Textiles 0.1
Finance 18.4 Tire & Rubber 0.2
Food Processing 0.2 Tobacco 0.6
Forest Products & Paper 0.5 Utilities 5.7
Healthcare & Cosmetics 0.1
</TABLE>
G. Please replace the references to Kirkpatrick & Lockhart on page 10 and the
outside back cover with Kirkpatrick & Lockhart LLP.
H. Please replace the references to Piper & Marbury on page 10 and the
outside back cover with Piper & Marbury L.L.P.
