Investment Shares
Annual Report
Dated
November 30, 1995
January 31, 1996
Biltmore Money Market Fund
Biltmore Tax-Free Money Market Fund
Biltmore U.S. Treasury Money Market Fund
[LOGO OF WACHOVIA INVESTMENTS]
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PRESIDENT'S MESSAGE
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders of the Biltmore Money
Market Funds, Investment Shares, for the 12-month period ended November 30,
1995. This report includes a complete listing of your fund's investments and
complete financial information.
As a convenient way to pursue daily income on ready cash, Biltmore Money Market
Funds served as practical, versatile investments for shareholders throughout the
year. Please note the following highlights for each fund over the 12-month
period:
BILTMORE MONEY MARKET FUND
The fund's portfolio of high-quality money market securities provided
shareholders with dividends of $0.05 per share, while maintaining a stable share
value of $1.00.* The fund's net assets grew considerably over the 12-month
period, from $185.3 million to $291.7 million.
BILTMORE TAX-FREE MONEY MARKET FUND
The fund's portfolio of tax-free money market securities, which at the end of
the 12-month period were diversified across municipalities in 28 states,
provided shareholders with federally tax-free dividends of $0.03 per share**,
while maintaining a stable share value of $1.00.* The fund's net assets stood at
$136 million.
BILTMORE U.S. TREASURY MONEY MARKET FUND
Fund net assets more than doubled to reach $296 million as the fund's portfolio
of U.S. Treasury money market securities paid dividends of $0.05 per share,
while maintaining a stable share value of $1.00.*
Thank you for participating in the daily earning power of Biltmore Money Market
Funds. We'll continue to keep you up to date on your investment, and provide
your account with the highest level of service.
Sincerely,
John W. McGonigle
President
January 15, 1996
* Money market funds seek to maintain a stable net asset value of $1.00 per
share. There is no assurance that they will be able to do so. An investment
in the fund is neither insured nor guaranteed by the U.S. government.
** Income may be subject to the federal alternative minimum tax and state and
local taxes.
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BILTMORE MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
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Bank Notes--3.4%
$ 10,000,000 NationsBank, Charlotte, NC, 5.60%, 5/28/1996 $ 10,000,000
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Bankers Acceptance--2.7%
5,000,000 Bank of New York, 5.42%, 5/13/1996 4,876,544
3,000,000 NationsBank, Charlotte, NC, 5.585%, 9/4/1996 2,870,601
--------------
Total Bankers Acceptance 7,747,145
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Certificates Of Deposit--35.0%
10,000,000 ABN - AMRO Bank, 5.54% - 6.62%, 3/20/1996 - 11/6/1996 10,001,784
14,000,000 CIBC Bank, 5.80%, 1/22/1996 14,000,000
14,000,000 Deutsche Bank, 5.77% - 5.79%, 12/27/1995 - 1/12/1996 13,999,967
5,000,000 Morgan Guaranty, London, 5.80%, 4/4/1996 5,002,493
3,000,000 National Westminster Bank, USA, 5.74%, 2/6/1996 3,000,107
10,000,000 National Westminster, London, 5.75%, 3/6/1996 10,000,044
10,000,000 Rabobank, 5.75% - 5.79%, 1/29/1996 - 6/28/1996 10,002,208
13,000,000 Royal Bank of Scotland, 5.72%, 1/22/1996 12,999,727
15,000,000 Swiss Bank of New York, 5.79%, 1/5/1996 14,999,906
8,000,000 Union Bank of Switzerland, 7.35% - 7.51%, 12/29/1995 - 1/17/1996 8,011,418
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Total Certificates of Deposit 102,017,654
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(a) Commercial Paper--24.5%
CHEMICALS--4.1%
12,500,000 duPont E.I. de Nemours & Co., 5.38% - 5.50%, 8/2/1996 - 8/5/1996 12,039,139
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FINANCE--16.0%
11,000,000 Bell Atlantic Financial Services, 5.70%, 12/8/1995 10,987,808
12,000,000 Hanson Finance, PLC, 5.68%, 2/16/1996 11,854,213
10,800,000 Southwestern Bell Capital Corp., 5.60%, 2/2/1996 10,694,160
13,000,000 Transamerica Finance Group, Inc., 5.495% - 5.54%, 12/15/1995 -
4/4/1996 12,886,724
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Total 46,422,905
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FINANCE - AUTOMOTIVE--4.4%
13,000,000 Ford Motor Credit Corp., 5.65% - 5.67%, 12/12/1995 - 2/27/1996 12,916,889
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Total Commercial Paper 71,378,933
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</TABLE>
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BILTMORE MONEY MARKET FUND
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
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Corporate Bonds--7.0%
FINANCE - COMMERCIAL--6.3%
$ 4,405,000 American General Finance Corp., 5.00%, 6/17/1996 $ 4,381,406
14,000,000 NBD Bancorp Inc., 5.85% - 6.25%, 5/6/1996 - 6/5/1996 14,013,988
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Total 18,395,394
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FOOD & BEVERAGE--0.7%
2,000,000 Pepsico Inc., 7.875%, 8/15/1996 2,024,981
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Total Corporate Bonds 20,420,375
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(b) Notes - Variable--3.4%
FINANCE - COMMERCIAL--3.4%
10,000,000 First Union National Bank, 5.81%, 5/13/1996 10,000,000
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(c) Repurchase Agreements--23.6%
18,961,485 Goldman, Sachs & Co., 5.85%, dated 11/30/1995, due 12/1/1995 18,961,485
50,000,000 Nomura Securities International, Inc., 5.875%, dated 11/30/1995, due
12/1/1995 50,000,000
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Total Repurchase Agreements 68,961,485
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Total Investments, at amortized cost and value (d) $ 290,525,592
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</TABLE>
(a) Each issue shows the rate of discount at the time of purchase for discount
issues, or the coupon for interest bearing issues.
(b) Current rate and next reset date shown.
(c) The repurchase agreements are fully collateralized by U.S. government
and/or agency obligations based on market prices at the date of the
portfolio.
(d) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($291,677,352) at November 30, 1995.
The following acronym(s) are used throughout this portfolio:
PLC--Public Limited Company
(See Notes which are an integral part of the Financial Statements)
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BILTMORE MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
<TABLE>
<S> <C> <C>
Assets:
Investments in repurchase agreements $ 68,961,485
Investments in securities 221,564,107
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Total investments, at amortized cost and value $ 290,525,592
Income receivable 2,525,185
Deferred expenses 8,009
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Total assets 293,058,786
Liabilities:
Income distribution payable 1,277,800
Accrued expenses 103,634
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Total liabilities 1,381,434
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Net Assets for 291,677,352 shares outstanding $ 291,677,352
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Net Asset Value, Offering Price and Redemption Proceeds Per Share:
Institutional Shares: ($126,041,635 / 126,041,635 shares outstanding) $1.00
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Investment Shares: ($165,635,717 / 165,635,717 shares outstanding) $1.00
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</TABLE>
(See Notes which are an integral part of the Financial Statements)
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BILTMORE MONEY MARKET FUND
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1995
<TABLE>
<S> <C> <C> <C>
Investment Income:
Interest $ 15,568,611
Expenses:
Investment advisory fee $ 1,299,430
Administrative personnel and services fee 233,146
Custodian fees 50,910
Transfer and dividend disbursing agent fees and expenses 51,067
Trustees' fees 19,875
Auditing fees 15,999
Legal fees 18,114
Portfolio accounting fees 66,246
Distribution services fee--Investment Shares 475,563
Share registration costs 66,705
Printing and postage 25,458
Insurance premiums 6,473
Miscellaneous 28,410
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Total expenses 2,357,396
Waivers and reimbursements--
Waiver of investment advisory fee $ (894,267)
Waiver of distribution services fee--Investment Shares (66,795)
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Total waivers (961,062)
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Net expenses 1,396,334
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Net investment income $ 14,172,277
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</TABLE>
(See Notes which are an integral part of the Financial Statements)
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BILTMORE MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended November 30, 1995 1994
<S> <C> <C>
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Increase (Decrease) in Net Assets:
Operations--
Net investment income: $ 14,172,277 $ 6,331,857
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Distributions to Shareholders--
Distributions from net investment income
Institutional Shares (7,893,466) (5,146,447)
Investment Shares (6,278,811) (1,185,410)
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Change in net assets resulting from distributions
to shareholders (14,172,277) (6,331,857)
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Share Transactions--
Proceeds from sale of shares 552,837,429 479,663,256
Cost of shares redeemed (446,497,953) (481,257,539)
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Change in net assets resulting from share transactions 106,339,476 (1,594,283)
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Change in net assets 106,339,476 (1,594,283)
Net Assets:
Beginning of period 185,337,876 186,932,159
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End of period $ 291,677,352 $ 185,337,876
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</TABLE>
(See Notes which are an integral part of the Financial Statements)
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BILTMORE MONEY MARKET FUND
FINANCIAL HIGHLIGHTS--INSTITUTIONAL SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
Year Ended November 30, 1995 1994 1993 1992(a)
<S> <C> <C> <C> <C>
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NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations
Net investment income 0.06 0.04 0.03 0.02
Less distributions
Distributions from net investment income (0.06) (0.04) (0.03) (0.02)
--------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- -----------
Total Return (b) 5.75% 3.77% 3.05% 1.71%
Ratios to Average Net Assets
Expenses 0.38% 0.38% 0.25% 0.14%*
Net investment income 5.61% 3.74% 3.00% 3.38%*
Expense waiver/reimbursement (c) 0.34% 0.40% 0.56% 0.65%*
Supplemental Data
Net assets, end of period (000 omitted) $126,042 $129,233 $177,090 $84,698
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from June 2, 1992 (date of initial
public investment) to November 30, 1992.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
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BILTMORE MONEY MARKET FUND
FINANCIAL HIGHLIGHTS--INVESTMENT SHARES
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
Year Ended November 30, 1995 1994 1993 1992(a)
<S> <C> <C> <C> <C>
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NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations
Net investment income 0.05 0.03 0.03 0.01
Less distributions
Distributions from net investment income (0.05) (0.03) (0.03) (0.01)
--------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- -----------
Total Return (b) 5.40% 3.46% 2.74% 1.48%
Ratios to Average Net Assets
Expenses 0.72% 0.68% 0.55% 0.48%*
Net investment income 5.27% 3.44% 2.70% 3.44%*
Expense waiver/reimbursement (c) 0.40% 0.50% 0.66% 0.75%*
Supplemental Data
Net assets, end of period (000 omitted) $165,636 $56,105 $9,842 $3,106
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from June 2, 1992 (date of initial
public investment) to November 30, 1992.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
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BILTMORE TAX-FREE MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
Principal Credit
Amount Rating(b) Value
<C> <S> <C> <C>
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Short-Term Municipal Securities--99.5%
ALABAMA--5.1%
$ 2,395,000 Alabama, HFA, Weekly VRDNs Revenue Refunding Bonds (SouthTrust
Bank of Alabama LOC) A-1 $ 2,395,000
740,000 Alabama, HFA, Weekly VRDNs Revenue Refunding Bonds (Series
D)/(SouthTrust Bank of Alabama LOC) VMIG1 740,000
3,320,000 Birmingham, AL, Weekly VRDNs GO UT Refunding Bonds (Series
1992-A)/(First Alabama Bank LOC) VMIG1 3,320,000
435,000 Tuscaloosa County, AL, Port Authority Daily and Weekly VRDNs
Revenue Refunding Bonds (Capstone Hotel Ltd. Project)/(Series
A)/(SouthTrust Bank of Alabama LOC) P-1 435,000
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Total 6,890,000
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ARIZONA--3.0%
2,000,000 Arizona State Transportation Board Highway Revenue Bonds,
7.90%, 7/1/1996 AAA 2,089,056
2,000,000 Maricopa County, AZ, School District, 3.75% GO UT Refunding
Bonds (Series A), 7/1/1996 AA 2,000,000
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Total 4,089,056
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ARKANSAS--2.8%
3,100,000 Arkansas Hospital Equipment Finance Authority, Weekly VRDNs
Revenue Bonds (Credit Suisse LOC) AA+ 3,100,000
700,000 Fayetteville, AR, Public Facility, Weekly VRDNs Revenue
Refunding Bonds (Charter Vista Hospital)/(Mitsubishi Bank Ltd.
LOC) VMIG1 700,000
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Total 3,800,000
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CALIFORNIA--3.0%
4,000,000 Kern County, CA, 4.50% TRANs, GO Unlimited Notes,
7/2/1996 Sp1+ 4,013,465
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CONNECTICUT--1.0%
1,300,000 Connecticut State Economic Recovery Notes, Weekly VRDNs GO UT
Bonds (Series B)/(Industrial Bank of
Japan SPA) VMIG1 1,300,000
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</TABLE>
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BILTMORE TAX-FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
Principal Credit
Amount Rating(b) Value
<C> <S> <C> <C>
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Short-Term Municipal Securities--continued
DISTRICT OF COLUMBIA--0.7%
$ 900,000 District of Columbia, Weekly VRDNs Revenue Bonds
(Catholic University)/(Series A)/(Sanwa Bank Ltd. LOC) VMIG1 $ 900,000
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FLORIDA--14.8%
5,000,000 Broward County, FL, HFA, Weekly VRDNs Revenue Bonds (Welleby
Apartments Project)/(Security Pacific National Bank LOC) Aa3 5,000,000
5,100,000 Collier County, FL, HFA, Weekly VRDNs Revenue Bonds (River
Reach Project)/(Morgan Guaranty LOC) VMIG1 5,100,000
1,800,000 Escambia County, FL, Health Facility Authority, IDR, Monthly
VRDNs Refunding Bonds (Florida Convalescent Centers
Project)/(Series A)/(Toronto Dominion Bank LOC) P-1 1,800,000
3,000,000 Orange County, FL, School District, 4.50% TANs,
10/16/1996 Sp1+ 3,017,679
750,000 Polk County, FL, IDA, Monthly VRDNs Refunding Bonds (Florida
Convalescent Centers Project)/(Toronto Dominion Bank LOC) P-1 750,000
1,000,000 St. Lucie County, FL, 3.85% Revenue Refunding Bonds (Florida
Power & Light Co.), 12/13/1995 VMIG1 1,000,000
3,500,000 Southeast Volusia, FL, Hospital Revenue, Weekly VRDNs (Bert
Fish Medical Center Issue)/(SouthTrust Bank of
Alabama LOC) A-1 3,500,000
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Total 20,167,679
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GEORGIA--13.3%
3,000,000 Burke County, GA, Development Pollution Authority,
3.75% - 3.80% Revenue Refunding Bonds (Olglethorpe
Power Corp.Project)/(Series A)/(Credit Suisse of NY LOC),
1/3/1996 - 1/18/1996 P-1 3,000,000
5,100,000 De Kalb Private Hospital Authority, GA, Weekly VRDNs RANs
(Engleston Childrens' Hospital)/(Series B)/(Trust
Company Bank LOC) VMIG1 5,100,000
1,500,000 Georgia State, 6.75% GO UT Bonds (Series E), 12/1/1995 AAA 1,500,000
1,300,000 Georgia State, 8.40% GO UT Bonds (Series B), 4/1/1996 AAA 1,320,481
3,090,000 Georgia State, 7.25% GO UT Bonds, 9/1/1996 AAA 3,170,136
975,000 Macon Bibb County, GA, Urban Development Authority Revenue,
Weekly VRDNs Refunding Bonds (Hotel Investors Project)/(NBD
Bank LOC) A-1+ 975,000
</TABLE>
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BILTMORE TAX-FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
Principal Credit
Amount Rating(b) Value
<C> <S> <C> <C>
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Short-Term Municipal Securities--continued
GEORGIA--CONTINUED
$ 1,500,000 Marietta, GA, HFA, 5.25% Revenue Bonds (Falls at Bells
Ferry)/(Guardian S&L LOC), 1/15/1996 VMIG1 $ 1,500,000
500,000 Monroe County, GA, Development Authority Industrial
Development Revenue, Weekly VRDNs, Refunding Revenue Bonds
(NBD Bank LOC) AA- 500,000
1,000,000 Newton County, GA, IDA, Weekly VRDNs Refunding Bonds (John H.
Harland Co. Project)/(NationsBank of Georgia LOC) A-1 1,000,000
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Total 18,065,617
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ILLINOIS--12.3%
1,000,000 Chicago, IL, Weekly VRDNs GO Unlimited Notes (Series
B)/(Morgan Guaranty Trust) Sp1+ 1,000,000
500,000 Illinois Development Finance Authority Revenue, Weekly VRDNs
(Aurora Center Catholic High School)/(Northern Trust LOC) AA- 500,000
1,000,000 Illinois Development Finance Authority Revenue, Weekly VRDNs
Refunding Bonds (Catholic Charities Housing)/ (Series
B)/(National Westminster LOC) VMIG1 1,000,000
1,000,000 Illinois Development Finance Authority Revenue, Weekly VRDNs
(Lake Forest Academy Project)/(Northern Trust LOC) A-1+ 1,000,000
1,475,000 Illinois Development Finance Authority Revenue, Weekly VRDNs
(Little City Foundation Special Facilities)/(LaSalle National
Bank LOC) A-1+ 1,475,000
2,000,000 Illinois Development Finance Authority Revenue, Weekly VRDNs
(St. Ignatius College Prep.)/(Northern Trust LOC) A-1+ 2,000,000
1,625,000 Illinois Development Finance Authority Revenue, Weekly VRDNs
(St. Paul's House Project)/(LaSalle National Bank LOC) A-1+ 1,625,000
4,000,000 Illinois State Dedicated Tax Revenue Civic Center Bonds, 9.50%
(Revenue Bonds), 12/15/1995 AAA 4,129,373
3,000,000 Illinois State Toll Highway Authority, Weekly VRDNs
Revenue Refunding Bonds (Series B)/(MBIA Insured)/
(Societe Generale LOC) VMIG1 3,000,000
</TABLE>
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BILTMORE TAX-FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
Principal Credit
Amount Rating(b) Value
<C> <S> <C> <C>
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Short-Term Municipal Securities--continued
ILLINOIS--CONTINUED
$ 1,000,000 Orland Hills, IL, Multi-Family Mortgage, Weekly VRDNs Revenue
Refunding Bonds (LaSalle National Bank LOC) AA- $ 1,000,000
--------------
Total 16,729,373
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INDIANA--0.2%
300,000 Indianapolis, IN, Weekly VRDNs Revenue Refunding Bonds (Canal
Square Project)/(Societe Generale LOC) VMIG1 300,000
--------------
IOWA--0.4%
600,000 Indianola, IA, IDR, Monthly VRDNs (HY-VEE Foods)/ (Rabobank
Nederland LOC) A-1+ 600,000
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KANSAS--0.4%
500,000 Burlington, KS, Pollution Control, 3.60% Revenue Refunding
Bonds (KC Power & Light Project)/(Series B)/ (Deutsche Bank
A.G. LOC), 1/11/1996 AAA 500,000
--------------
KENTUCKY--0.6%
800,000 Georgetown, KY, Educational Institution, Weekly VRDNs Revenue
Bonds (Georgetown College Project)/(PNC Bank of Kentucky LOC) VMIG1 800,000
--------------
LOUISIANA--4.0%
1,700,000 Calcasieu Parish, LA, Weekly VRDNs Revenue Bonds (Citgo
Petroleum Corp.)/(Westdeutsche Landesbk LOC) Aa1 1,700,000
2,800,000 Lake Charles, LA, Harbor & Terminal District, Weekly VRDNs
Revenue Bonds (Citgo Petroleum Corp.)/
(Westdeutsche Landesbank LOC) P-1 2,800,000
900,000 Louisiana State Recovery District Sales Tax Revenue, Daily
VRDNs (FGIC Insured)/(Swiss Bank SPA) VMIG1 900,000
--------------
Total 5,400,000
--------------
MARYLAND--2.1%
2,800,000 Maryland State Health and Higher Education Facility, Weekly
VRDNs Revenue Bonds (North Arundel Hospital)/ (Series
B)/(Mellon Bank LOC) VMIG1 2,800,000
--------------
</TABLE>
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BILTMORE TAX-FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
Principal Credit
Amount Rating(b) Value
<C> <S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Short-Term Municipal Securities--continued
MASSACHUSETTS--2.2%
$ 3,000,000 Massachusetts Municipal Wholesale Electric Co., Weekly VRDNs
Power Supply System Revenue Refunding Bonds (Series
C)/(Canadian Imperial Bank LOC) A-1+ $ 3,000,000
--------------
MISSISSIPPI--1.0%
1,300,000 Jackson County, Mississippi PCR, Daily VRDNs Refunding Bond
(Chevron U.S.A. Income Project) VMIG1 1,300,000
--------------
MISSOURI--1.2%
1,700,000 Kansas City, MO, IDA, Weekly VRDNs (Mid America Health
Services)/(Mellon Bank LOC) A-1 1,700,000
--------------
NEW YORK--2.4%
1,000,000 New York, NY, Daily VRDNs, GO UT (Series E3)/(Morgan Guaranty
LOC) VMIG1 1,000,000
2,300,000 New York State Local Government Assistance Corporation, Weekly
VRDNs Revenue Refunding Bonds (Series F)/ (Toronto Dominion
Bank LOC) VMIG1 2,300,000
--------------
Total 3,300,000
--------------
NORTH CAROLINA--3.2%
2,500,000 North Carolina Eastern Municipal Power, 3.65% Revenue Bonds
(Series B)/(UBS & Morgan Guaranty LOC), 2/8/1996 A-1+ 2,500,000
1,795,000 Wake County, NC, 4.20% GO UT Refunding Bonds,
4/1/1996 AAA 1,795,277
--------------
Total 4,295,277
--------------
OHIO--0.7%
1,000,000 Centerville, OH, Healthcare Revenue, Weekly VRDNs (Bethany
Lutheran Village Project)/(PNC Bank of Ohio LOC) VMIG1 1,000,000
--------------
PENNSYLVANIA--2.2%
1,000,000 Pennsylvania State University, 5.50% GO Bonds (University
Project Notes)/(Series A), 12/21/1995 MIG1 1,000,208
2,000,000 Sewickley Valley Hospital Authority, PA, 5.00% Revenue
Refunding Bonds (Series B)/(PNC Bank LOC), 12/15/1995 VMIG1 2,000,223
--------------
Total 3,000,431
--------------
</TABLE>
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BILTMORE TAX-FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
Principal Credit
Amount Rating(b) Value
<C> <S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Short-Term Municipal Securities--continued
RHODE ISLAND--1.5%
$ 2,000,000 Rhode Island State, 4.50% TANs (Union Bank of
Switzerland LOC), 6/28/1996 MIG1 $ 2,009,412
--------------
TENNESSEE--8.1%
3,000,000 Metro Government Nashville & Davidson County, TN, IDB, Weekly
VRDNs Revenue Bonds (Arbor Crest)/(Series B)/ (NationsBank of
Georgia LOC) VMIG1 3,000,000
1,900,000 Metro Government Nashville & Davidson County, TN, Health and
Education Facilities Board, Weekly VRDNs Revenue Refunding
Bonds (West Meade Place Project)/ (NationsBank of Georgia LOC) A-1 1,900,000
2,150,000 Metropolitan Nashville Airport, Weekly VRDNs Revenue Refunding
Bonds (FGIC Insured)/(Societe Generale LOC) VMIG1 2,150,000
4,000,000 Tennessee State, Weekly VRDNs GO UT (Series B) MIG1 4,000,000
--------------
Total 11,050,000
--------------
TEXAS--7.3%
3,800,000 Lower Neches Valley Authority, TX, 3.75% Revenue Refunding
Bonds (Chevron USA, Inc. Project), 2/15/1996 A-1+ 3,800,000
2,950,000 San Antonio Texas Sewage, 7.25% (Revenue Bonds)
5/1/1996 AAA 3,051,548
3,000,000 Texas State, 4.75% TRANs (Series A) 8/30/1996 MIG1 3,014,648
--------------
Total 9,866,196
--------------
UTAH--0.8%
1,080,000 Salt Lake City, UT, 5.00% GO UT Bonds, 12/15/1996 AAA 1,094,256
--------------
VIRGINIA--1.6%
2,000,000 Harrisonburg, VA, HFA, 5.10% Revenue Bonds (Rolling Brook
Village Apartments)/(Guardian S&L LOC), 2/1/1996 VMIG1 2,000,000
200,000 Peninsula Ports Authority, VA, Daily VRDNs Revenue Refunding
Bonds (Port Facility-Shell Oil Co.) AAA 200,000
--------------
Total 2,200,000
--------------
WASHINGTON--2.9%
4,000,000 Port Anacortes, WA, IDA, 3.80% Revenue Refunding Bonds (Texaco
Project), 12/6/1995 P-1 4,000,000
--------------
</TABLE>
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BILTMORE TAX-FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
Principal
Amount Credit
or Shares Rating(b) Value
<C> <S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Short-Term Municipal Securities--continued
WYOMING--0.7%
$ 1,000,000 **Uinta County, WY, PCR, 3.75% (Chevron USA, Inc.
Project), 6/15/1996 AA $ 1,000,000
--------------
Total Short-Term Municipal Securities 135,170,762
--------------
Open-end Investment Companies--0.9%
1,223,170 Fidelity Tax-Exempt Money Market Fund Instruments Portfolio
(at net asset value) 1,223,170
--------------
Total Investments, at amortized cost and value (a) $ 136,393,932
--------------
</TABLE>
(a) Also represents cost for federal tax purposes.
(b) Current credit ratings are unaudited.
** Denotes variable rate security which shows current rate and next demand
date.
Note: The categories of investments are shown as a percentage of net assets
($136,007,129) at November 30, 1995.
The following acronyms are used throughout this portfolio:
FGIC--Financial Guaranty Insurance Co.
GO--General Obligation
HFA--Housing Finance Authority
IDA--Industrial Development Authority
IDB--Industrial Development Board
IDR--Industrial Development Revenue
LOC--Letter of Credit
MBIA--Municipal Bond Investors Assurance
PCR--Pollution Control Revenue
RANs--Revenue Anticipation Notes
SPA--Standby Purchase Agreement
TANs--Tax Anticipation Notes
TRANs--Tax Revenue Anticipation Notes
UT--Unlimited Tax
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
NOVEMBER 30, 1995
<TABLE>
<S> <C> <C>
Assets:
Total investments in securities, at amortized cost and value $ 136,393,932
Income receivable 1,148,791
Deferred expenses 6,258
--------------
Total assets 137,548,981
Liabilities:
Payable for investments purchased $ 1,100,556
Income distribution payable 375,237
Accrued expenses 66,059
------------
Total liabilities 1,541,852
--------------
Net Assets for 136,007,129 shares outstanding $ 136,007,129
--------------
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
Institutional Shares: ($80,273,956 / 80,273,956 shares outstanding) $1.00
--------------
Investment Shares: ($55,733,173 / 55,733,173 shares outstanding) $1.00
--------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE TAX-FREE MONEY MARKET FUND
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1995
<TABLE>
<S> <C> <C> <C>
Investment Income:
Interest $ 5,506,243
Expenses:
Investment advisory fee $ 713,058
Administrative personnel and services fee 128,145
Custodian fees 28,523
Transfer and dividend disbursing agent fees and expenses 50,050
Trustees' fees 11,026
Auditing fees 16,360
Legal fees 17,109
Portfolio accounting fees 51,609
Distribution services fee--Investment Shares 217,651
Share registration costs 43,912
Printing and postage 24,349
Insurance premiums 6,739
Miscellaneous 23,959
------------
Total expenses 1,332,490
------------
Waivers--
Waiver of investment advisory fee $ (658,480)
Waiver of distribution services fee--Investment Shares (35,392)
-----------
Total waivers (693,872)
------------
Net expenses 638,618
------------
Net investment income 4,867,625
------------
Net realized loss on investments (150,000)
------------
Change in net assets resulting from operations $ 4,717,625
------------
</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, 1995 1994
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets:
Operations--
Net investment income $ 4,867,625 $ 2,894,643
Net realized loss on investments ($150,000 net loss and $0 respec-
tively, as computed for federal income tax purposes) (150,000) --
--------------- ---------------
Change in net assets resulting from operations 4,717,625 2,894,643
--------------- ---------------
Distributions to Shareholders--
Distributions from net investment income
Institutional Shares (3,129,608) (2,150,380)
Investment Shares (1,738,017) (744,263)
--------------- ---------------
Change in net assets resulting from distributions to shareholders (4,867,625) (2,894,643)
--------------- ---------------
Share Transactions--
Proceeds from sale of shares 326,381,422 263,497,759
Cost of shares redeemed (327,061,311) (210,055,320)
--------------- ---------------
Change in net assets resulting from share transactions (679,889) 53,442,439
--------------- ---------------
Capital Contributions 150,000 --
--------------- ---------------
Change in net assets (679,889) 53,442,439
Net Assets:
Beginning of period 136,687,018 83,244,579
--------------- ---------------
End of period $ 136,007,129 $ 136,687,018
--------------- ---------------
</TABLE>
(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, 1995 1994 1993 1992(a)
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations
Net investment income 0.04 0.02 0.02 0.01
Less distributions
Distributions from net investment income (0.04) (0.02) (0.02) (0.01)
--------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- -----------
Total Return(b) 3.59% 2.42% 2.30% 1.49%
Ratios to Average Net Assets
Expenses 0.32% 0.38% 0.29% 0.16%*
Net investment income 3.55% 2.41% 2.28% 2.71%*
Expense waiver/reimbursement(c) 0.46% 0.45% 0.60% 0.78%*
Supplemental Data
Net assets, end of period (000 omitted) $80,274 $93,867 $59,269 $61,632
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 20, 1992 (date of initial
public investment) to November 30, 1992.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(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, 1995 1994 1993 1992(a)
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations
Net investment income 0.03 0.02 0.02 0.01
Less distributions
Distributions from net investment income (0.03) (0.02) (0.02) (0.01)
--------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- -----------
Total Return(b) 3.25% 2.11% 1.99% 1.29%
Ratios to Average Net Assets
Expenses 0.66% 0.68% 0.59% 0.50%*
Net investment income 3.19% 2.11% 1.98% 2.37%*
Expense waiver/reimbursement(c) 0.52% 0.55% 0.70% 0.88%*
Supplemental Data
Net assets, end of period (000 omitted) $55,733 $42,820 $23,976 $5,338
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 20, 1992 (date of initial
public investment) to November 30, 1992.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE U.S. TREASURY MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
U.S. Government Obligations--45.6%
U.S. TREASURY BILLS
$ 137,500,000 12/28/95-7/25/96 $ 135,058,361
--------------
(a)Repurchase Agreements--56.5%
14,000,000 CS First Boston Corp., 5.85%, dated 11/30/95, due 12/1/95 14,000,000
68,000,000 Daiwa Securities America, Inc., 5.90%, dated 11/30/95, due 12/1/95 68,000,000
71,186,609 Goldman Sachs & Co., 5.85%, dated 11/30/95, due 12/1/95 71,186,609
14,000,000 Nomura Securities International, Inc., 5.875%, dated 11/30/95,
due 12/1/95 14,000,000
--------------
Total Repurchase Agreements 167,186,609
--------------
Total Investments, at amortized cost and value (b) $ 302,244,970
--------------
</TABLE>
(a) The repurchase agreements are fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(b) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($296,095,311) at November 30, 1995.
(See Notes which are an integral part of the Financial Statements)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE U.S. TREASURY MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
<TABLE>
<S> <C> <C>
Assets:
Investments in repurchase agreements $ 167,186,609
Investments in securities 135,058,361
--------------
Total investments, at amortized cost and value $ 302,244,970
Income receivable 27,272
Deferred expenses 5,049
--------------
Total assets 302,277,291
Liabilities:
Payable for investments purchased 4,894,251
Income distribution payable 1,223,795
Accrued expenses 63,934
--------------
Total liabilities 6,181,980
--------------
Net Assets for 296,095,311 shares outstanding $ 296,095,311
--------------
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
Institutional Shares ($214,356,136 / 214,356,136 shares outstanding) $1.00
--------------
Investment Shares ($81,739,175 / 81,739,175 shares 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
YEAR ENDED NOVEMBER 30, 1995
<TABLE>
<S> <C> <C> <C>
Investment Income:
Interest $ 12,432,665
Expenses:
Investment advisory fee $ 1,060,343
Administrative personnel and services fee 190,189
Custodian fees 42,247
Transfer and dividend disbursing agent fees and expenses 51,264
Trustees' fees 9,585
Auditing fees 16,324
Legal fees 15,999
Portfolio accounting fees 51,936
Distribution services fee--Investment Shares 295,596
Share registration costs 42,554
Printing and postage 21,115
Insurance premiums 5,781
Miscellaneous 16,466
------------
Total expenses 1,819,399
Waivers and reimbursements--
Waiver of investment advisory fee $ (845,641)
Waiver of distribution services fee--Investment Shares (45,636)
-----------
Total waivers (891,277)
------------
Net expenses 928,122
-------------
Net investment income $ 11,504,543
-------------
</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, 1995 1994
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets:
Operations--
Net investment income $ 11,504,543 $ 3,653,910
--------------- ---------------
Distributions to Shareholders--
Distributions from net investment income
Institutional Shares (7,652,881) (2,707,306)
Investment Shares (3,851,662) (946,604)
--------------- ---------------
Change in net assets resulting from distributions to shareholders (11,504,543) (3,653,910)
--------------- ---------------
Share Transactions--
Proceeds from sale of shares 753,406,955 448,524,970
Cost of shares redeemed (591,239,232) (396,891,742)
--------------- ---------------
Change in net assets resulting from share transactions 162,167,723 51,633,228
--------------- ---------------
Change in net assets 162,167,723 51,633,228
Net Assets:
Beginning of period 133,927,588 82,294,360
--------------- ---------------
End of period $ 296,095,311 $ 133,927,588
--------------- ---------------
</TABLE>
(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, 1995 1994 1993 1992(a)
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations
Net investment income 0.06 0.04 0.03 0.02
Less distributions
Distributions from net investment income (0.06) (0.04) (0.03) (0.02)
--------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- -----------
Total Return (b) 5.66% 3.70% 2.91% 1.90%
Ratios to Average Net Assets
Expenses 0.32% 0.36% 0.28% 0.17%*
Net investment income 5.54% 3.72% 2.87% 3.24%*
Expense waiver/reimbursement (c) 0.40% 0.51% 0.63% 0.71%*
Supplemental Data
Net assets, end of period
(000 omitted) $214,356 $87,531 $65,353 $55,408
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 7, 1992 (date of initial public
investment) to November 30, 1992.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(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, 1995 1994 1993(a)
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00
Income from investment operations
Net investment income 0.05 0.03 0.01
Less distributions
Distributions from net investment income (0.05) (0.03) (0.01)
--------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00
--------- --------- -----------
Total Return (b) 5.30% 3.39% 1.42%
Ratios to Average Net Assets
Expenses 0.66% 0.66% 0.65%*
Net investment income 5.21% 3.42% 2.50%*
Expense waiver/reimbursement (c) 0.46% 0.61% 0.73%*
Supplemental Data
Net assets, end of period
(000 omitted) $81,739 $46,396 $16,941
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 12, 1993 (date of initial
public investment) to November 30, 1993.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE MONEY MARKET FUNDS
COMBINED NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1995
(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 portfolios. The financial statements included
herein are only those of Biltmore Money Market Fund ("Money Market Fund"),
Biltmore Tax-Free Money Market Fund ("Tax-Free Fund"), and Biltmore U.S.
Treasury Money Market Fund ("U.S. Treasury Fund"), (individually referred to as
the "Fund", or collectively as the "Funds"). 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 Funds offer 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 Rule 12b-1.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--The Funds' use of the amortized cost method to value
their portfolio securities in accordance with Rule 2a-7 under the Act.
Investments in other open-end investment companies are valued at net asset
value.
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 under repurchase
agreement transactions. Additionally, procedures have been established by
the Funds 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 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 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 Funds
could receive less than the repurchase price on the sale of collateral
securities.
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.
Income distributions and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally
accepted accounting principles. Tax-Free Fund has a permanent difference
due to the differing treatment of the capital contribution from Wachovia
Corporation related to the sale of the Orange County, CA bond security.
Amounts as of November 30, 1995, have been reclassified to reflect a
decrease in paid in capital of $150,000. Net investment income, net
realized gains, and net assets were not affected by this change.
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 income. Accordingly, no
provisions for federal tax are necessary.
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
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE MONEY MARKET FUNDS
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.
DEFERRED EXPENSES--The costs incurred by each Fund with respect to
registration of their shares in their first fiscal year, excluding the
initial expense of registering their shares, have been deferred and are
being amortized using the straight-line method not to exceed a period of
five years from each Fund's commencement date.
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.
<TABLE>
<CAPTION>
Money Market Fund Tax-Free Fund U.S. Treasury Fund
------------------------ ----------------------- --------------------------
Year Ended November 30, 1995 1994 1995 1994 1995 1994
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
INSTITUTIONAL SHARES
- ---------------------------
Shares sold 304,354,414 385,548,512 178,161,731 175,432,174 564,789,151 337,402,499
Shares redeemed (307,545,690) (433,405,663) (191,754,772) (140,833,740) (437,964,449) (315,224,009)
- --------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Net change resulting from
Institutional Share
transactions (3,191,276) (47,857,151) (13,593,041) 34,598,434 126,824,702 22,178,490
----------- ----------- ----------- ----------- ----------- -----------
INVESTMENT SHARES
- ---------------------------
Shares sold 248,483,015 94,114,744 148,219,691 88,065,585 188,617,803 111,122,471
Shares redeemed (138,952,263) (47,851,876) (135,306,539) (69,221,580) (153,274,782) (81,667,733)
- --------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Net change resulting from
Investment Share
transactions 109,530,752 46,262,868 12,913,152 18,844,005 35,343,021 29,454,738
----------- ----------- ----------- ----------- ----------- -----------
Net change resulting from
Shares redeemed (307,545,690) (433,405,663) (191,754,772) (140,833,740) (437,964,449) (315,224,009)
share transactions 106,339,476 (1,594,283) (679,889) 53,442,439 162,167,723 51,633,228
----------- ----------- ----------- ----------- ----------- -----------
</TABLE>
At November 30, 1995, capital paid-in aggregated $291,677,352, $136,007,129, and
$296,095,311 for Money Market Fund, Tax-Free Fund, and U.S. Treasury Fund,
respectively.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Wachovia Asset Management, the Funds' 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 any portion of its fee. The Adviser
can modify or terminate this voluntary waiver at any time at its sole
discretion.
CAPITAL CONTRIBUTION--On December 7, 1994, the Tax-Free Fund sold at amortized
cost an Orange County bond, with a $1,000,000 par value, to Wachovia
Corporation. In connection with this purchase, Wachovia Corporation is
considered to have made a capital contribution in the amount of $150,000 to
Tax-Free Fund, which represents the difference between the market value and
amortized cost of the security at the date of sale.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Funds
with certain administrative personnel and services. This 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.
DISTRIBUTION SERVICES FEE--Under the terms of the Plan, each Fund will
compensate Federated Securities Corp. ("FSC"), the principal distributor, from
its net assets to finance activities intended to result in the sale of
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE MONEY MARKET FUNDS
each Fund's Investment Shares. The Plan provides that each Fund may incur
distribution expenses up to .40 of 1% of the average daily net assets of its
Investment Shares, annually, to compensate FSC.
The distributor may voluntarily choose to waive any portion of its fee. The
distributor can modify or terminate this voluntary waiver at any time at its
sole discretion.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Funds for
which it receives a fee. This fee is based on the size, type, and number of
accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Funds' accounting records for
which it receives a fee. The fee is based on the level of each Fund's average
daily net assets for the period, plus out-of-pocket expenses.
CUSTODIAN FEES--Wachovia Bank of North Carolina, N.A. is the Funds' custodian
for which it receives a fee. The fee is based on the level of each Fund's
average daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses 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 became effective. For the
year ended November 30, 1995, pursuant to this agreement, the Funds paid FAS as
follows:
<TABLE>
<CAPTION>
Organizational
Initial Organizational Expenses
Fund Expenses Reimbursed
<S> <C> <C>
Money Market Fund $63,357 $18,578
Tax-Free Fund 59,661 16,746
U.S. Treasury Fund 33,032 13,665
</TABLE>
GENERAL--Certain of the Officers of the Trust are Officers and Directors or
Trustees of the above companies.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Trustees and Shareholders of
THE BILTMORE FUNDS:
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of Biltmore Money Market Fund, Biltmore Tax-Free
Money Market Fund and Biltmore U.S. Treasury Money Market Fund (portfolios of
The Biltmore Funds) as of November 30, 1995, and the related statements of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended and the financial highlights for
the periods presented therein. These financial statements and financial
highlights are the responsibility of the Funds' management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Biltmore Money Market Fund, Biltmore Tax-Free Money Market Fund and Biltmore
U.S. Treasury Money Market Fund of The Biltmore Funds at November 30, 1995, and
the results of its operations for the year then ended, changes in their net
assets for each of the two years in the period then ended, and the financial
highlights for the periods presented therein, in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
January 15, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TRUSTEES OFFICERS
<TABLE>
<S> <C>
James A. Hanley John W. McGonigle
Samuel E. Hudgins President and Treasurer
J. Berkley Ingram, Jr. Ronald M. Petnuch
D. Dean Kaylor Vice President and Assistant Treasurer
Charles S. Way, Jr. Peter J. Germain
Secretary
Gail Cagney
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves risk, including possible
loss of principal. Although money market funds seek to maintain a stable net
asset value of $1.00 per share, there is no assurance that they will be able to
do so.
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.
Federated Securities Corp.
is the distributor of the Fund.
831-21
Cusip 090297201
Cusip 090297109
Cusip 090297888
CO1512-16(1/96)
Institutional Shares
Annual Report
Dated
November 30, 1995
January 31, 1996
Biltmore Money Market Fund
[LOGO OF WACHOVIA INVESTMENTS]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PRESIDENT'S MESSAGE
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders of Biltmore Money
Market Fund, Institutional Shares, for the 12-month period ended November 30,
1995. This report includes a listing of your fund's investments and complete
financial information.
During the 12-month period, the fund's portfolio of high-quality money market
securities provided shareholders with dividends of $0.06 per share. Of course,
the fund also maintained a stable share value of $1.00.* Reflecting increased
investor participation, the fund's net assets grew considerably over the
12-month period, from $185.3 million to $291.7 million.
Thank you for participating in the daily earning power of Biltmore Money Market
Fund. We'll continue to keep you up to date on your investment, and provide your
account with the highest level of service.
Sincerely,
John W. McGonigle
President
January 15, 1996
*Money market funds seek to maintain a stable net asset value of $1.00 per
share. There is no assurance that they will be able to do so. An investment in
the fund is neither insured nor guaranteed by the U.S. government.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Bank Notes--3.4%
$ 10,000,000 NationsBank, Charlotte, NC, 5.60%, 5/28/1996 $ 10,000,000
--------------
Bankers Acceptance--2.7%
5,000,000 Bank of New York, 5.42%, 5/13/1996 4,876,544
3,000,000 NationsBank, Charlotte, NC, 5.585%, 9/4/1996 2,870,601
--------------
Total Bankers Acceptance 7,747,145
--------------
Certificates Of Deposit--35.0%
10,000,000 ABN - AMRO Bank, 5.54% - 6.62%, 3/20/1996 - 11/6/1996 10,001,784
14,000,000 CIBC Bank, 5.80%, 1/22/1996 14,000,000
14,000,000 Deutsche Bank, 5.77% - 5.79%, 12/27/1995 - 1/12/1996 13,999,967
5,000,000 Morgan Guaranty, London, 5.80%, 4/4/1996 5,002,493
3,000,000 National Westminster Bank, USA, 5.74%, 2/6/1996 3,000,107
10,000,000 National Westminster, London, 5.75%, 3/6/1996 10,000,044
10,000,000 Rabobank, 5.75% - 5.79%, 1/29/1996 - 6/28/1996 10,002,208
13,000,000 Royal Bank of Scotland, 5.72%, 1/22/1996 12,999,727
15,000,000 Swiss Bank of New York, 5.79%, 1/5/1996 14,999,906
8,000,000 Union Bank of Switzerland, 7.35% - 7.51%, 12/29/1995 - 1/17/1996 8,011,418
--------------
Total Certificates of Deposit 102,017,654
--------------
(a) Commercial Paper--24.5%
CHEMICALS--4.1%
12,500,000 duPont E.I. de Nemours & Co., 5.38% - 5.50%, 8/2/1996 - 8/5/1996 12,039,139
--------------
FINANCE--16.0%
11,000,000 Bell Atlantic Financial Services, 5.70%, 12/8/1995 10,987,808
12,000,000 Hanson Finance, PLC, 5.68%, 2/16/1996 11,854,213
10,800,000 Southwestern Bell Capital Corp., 5.60%, 2/2/1996 10,694,160
13,000,000 Transamerica Finance Group, Inc., 5.495% - 5.54%, 12/15/1995 -
4/4/1996 12,886,724
--------------
Total 46,422,905
--------------
FINANCE - AUTOMOTIVE--4.4%
13,000,000 Ford Motor Credit Corp., 5.65% - 5.67%, 12/12/1995 - 2/27/1996 12,916,889
--------------
Total Commercial Paper 71,378,933
--------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE MONEY MARKET FUND
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Corporate Bonds--7.0%
FINANCE - COMMERCIAL--6.3%
$ 4,405,000 American General Finance Corp., 5.00%, 6/17/1996 $ 4,381,406
14,000,000 NBD Bancorp Inc., 5.85% - 6.25%, 5/6/1996 - 6/5/1996 14,013,988
--------------
Total 18,395,394
--------------
FOOD & BEVERAGE--0.7%
2,000,000 Pepsico Inc., 7.875%, 8/15/1996 2,024,981
--------------
Total Corporate Bonds 20,420,375
--------------
(b) Notes - Variable--3.4%
FINANCE - COMMERCIAL--3.4%
10,000,000 First Union National Bank, 5.81%, 5/13/1996 10,000,000
--------------
(c) Repurchase Agreements--23.6%
18,961,485 Goldman, Sachs & Co., 5.85%, dated 11/30/1995, due 12/1/1995 18,961,485
50,000,000 Nomura Securities International, Inc., 5.875%, dated 11/30/1995, due
12/1/1995 50,000,000
--------------
Total Repurchase Agreements 68,961,485
--------------
Total Investments, at amortized cost and value (d) $ 290,525,592
--------------
</TABLE>
(a) Each issue shows the rate of discount at the time of purchase for discount
issues, or the coupon for interest bearing issues.
(b) Current rate and next reset date shown.
(c) The repurchase agreements are fully collateralized by U.S. government
and/or agency obligations based on market prices at the date of the
portfolio.
(d) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($291,677,352) at November 30, 1995.
The following acronym(s) are used throughout this portfolio:
PLC--Public Limited Company
(See Notes which are an integral part of the Financial Statements)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
<TABLE>
<S> <C> <C>
Assets:
Investments in repurchase agreements $ 68,961,485
Investments in securities 221,564,107
--------------
Total investments, at amortized cost and value $ 290,525,592
Income receivable 2,525,185
Deferred expenses 8,009
--------------
Total assets 293,058,786
Liabilities:
Income distribution payable 1,277,800
Accrued expenses 103,634
--------------
Total liabilities 1,381,434
--------------
Net Assets for 291,677,352 shares outstanding $ 291,677,352
--------------
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
Institutional Shares: ($126,041,635 / 126,041,635 shares outstanding) $1.00
--------------
Investment Shares: ($165,635,717 / 165,635,717 shares outstanding) $1.00
--------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE MONEY MARKET FUND
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1995
<TABLE>
<S> <C> <C> <C>
Investment Income:
Interest $ 15,568,611
Expenses:
Investment advisory fee $ 1,299,430
Administrative personnel and services fee 233,146
Custodian fees 50,910
Transfer and dividend disbursing agent fees and expenses 51,067
Trustees' fees 19,875
Auditing fees 15,999
Legal fees 18,114
Portfolio accounting fees 66,246
Distribution services fee--Investment Shares 475,563
Share registration costs 66,705
Printing and postage 25,458
Insurance premiums 6,473
Miscellaneous 28,410
------------
Total expenses 2,357,396
Waivers and reimbursements--
Waiver of investment advisory fee $ (894,267)
Waiver of distribution services fee--Investment Shares (66,795)
-----------
Total waivers (961,062)
------------
Net expenses 1,396,334
-------------
Net investment income $ 14,172,277
-------------
</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, 1995 1994
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets:
Operations--
Net investment income: $ 14,172,277 $ 6,331,857
--------------- ---------------
Distributions to Shareholders--
Distributions from net investment income
Institutional Shares (7,893,466) (5,146,447)
Investment Shares (6,278,811) (1,185,410)
--------------- ---------------
Change in net assets resulting from distributions
to shareholders (14,172,277) (6,331,857)
--------------- ---------------
Share Transactions--
Proceeds from sale of shares 552,837,429 479,663,256
Cost of shares redeemed (446,497,953) (481,257,539)
--------------- ---------------
Change in net assets resulting from share transactions 106,339,476 (1,594,283)
--------------- ---------------
Change in net assets 106,339,476 (1,594,283)
Net Assets:
Beginning of period 185,337,876 186,932,159
--------------- ---------------
End of period $ 291,677,352 $ 185,337,876
--------------- ---------------
</TABLE>
(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, 1995 1994 1993 1992(a)
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations
Net investment income 0.06 0.04 0.03 0.02
Less distributions
Distributions from net investment income (0.06) (0.04) (0.03) (0.02)
--------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- -----------
Total Return (b) 5.75% 3.77% 3.05% 1.71%
Ratios to Average Net Assets
Expenses 0.38% 0.38% 0.25% 0.14%*
Net investment income 5.61% 3.74% 3.00% 3.38%*
Expense waiver/reimbursement (c) 0.34% 0.40% 0.56% 0.65%*
Supplemental Data
Net assets, end of period (000 omitted) $126,042 $129,233 $177,090 $84,698
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from June 2, 1992 (date of initial
public investment) to November 30, 1992.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(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, 1995 1994 1993 1992(a)
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations
Net investment income 0.05 0.03 0.03 0.01
Less distributions
Distributions from net investment income (0.05) (0.03) (0.03) (0.01)
--------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- -----------
Total Return (b) 5.40% 3.46% 2.74% 1.48%
Ratios to Average Net Assets
Expenses 0.72% 0.68% 0.55% 0.48%*
Net investment income 5.27% 3.44% 2.70% 3.44%*
Expense waiver/reimbursement (c) 0.40% 0.50% 0.66% 0.75%*
Supplemental Data
Net assets, end of period (000 omitted) $165,636 $56,105 $9,842 $3,106
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from June 2, 1992 (date of initial
public investment) to November 30, 1992.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1995
(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 portfolios. The financial statements included
herein are only those of Biltmore Money Market Fund (the "Fund"), a diversified
portfolio. 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 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.
INVESTMENT VALUATIONS--The Fund uses the amortized cost method to value its
portfolio securities in accordance with Rule 2a-7 under the Act.
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 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.
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.
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.
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.
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 its 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.
OTHER--Investment transactions are accounted for on the trade date.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE MONEY MARKET FUND
(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.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
Year Ended November 30, 1995 1994
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Institutional Shares
Shares sold 304,354,414 385,548,512
Shares redeemed (307,545,690) (433,405,663)
-------------- --------------
Net change resulting from Institutional Share transactions (3,191,276) (47,857,151)
-------------- --------------
<CAPTION>
Year Ended November 30, 1995 1994
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Investment Shares
Shares sold 248,483,015 94,114,744
Shares redeemed (138,952,263) (47,851,876)
-------------- --------------
Net change resulting from Investment Share transactions 109,530,752 46,262,868
-------------- --------------
Net change resulting from share transactions 106,339,476 (1,594,283)
-------------- --------------
</TABLE>
At November 30, 1995, capital paid-in aggregated $291,677,352.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Wachovia Asset Management, 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 any 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. This 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.
DISTRIBUTION SERVICES FEE--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.
The distributor may voluntarily choose to waive any portion of its fee. The
distributor can modify or terminate this voluntary waiver at any time at its
sole discretion.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Fund for
which it receives a fee. This fee is based on the size, type, and number of
accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
CUSTODIAN FEES--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
daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses of $65,357 were borne initially
by FAS.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE MONEY MARKET FUND
The Fund has agreed to reimburse FAS for the organizational expenses during the
five year period following the effective date. For the period ended November 30,
1995, the Fund paid $18,578 pursuant to this agreement.
GENERAL--Certain of the Officers of the Trust are Officers and Directors or
Trustees of the above companies.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Trustees and Shareholders of
THE BILTMORE FUNDS:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Biltmore Money Market Fund (one of the
portfolios comprising The Biltmore Funds) as of November 30, 1995, and the
related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended and
financial highlights for the periods presented therein. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Biltmore Money Market Fund of The Biltmore Funds at November 30, 1995, and the
results of its operations for the year then ended, changes in its net assets for
each of the two years in the period then ended, and financial highlights for the
periods presented therein, in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
January 15, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TRUSTEES OFFICERS
<TABLE>
<S> <C>
James A. Hanley John W. McGonigle
Samuel E. Hudgins President and Treasurer
J. Berkley Ingram, Jr. Ronald M. Petnuch
D. Dean Kaylor Vice President and Assistant Treasurer
Charles S. Way, Jr. Peter J. Germain
Secretary
Gail Cagney
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed
by any bank, and are not insured or guaranteed by the U.S. government,
the Federal Deposit Insurance Corporation, the Federal Reserve Board,
or any other government agency. Investment in mutual funds involves risk,
including possible loss of principal. Although money market funds seek
to maintain a stable net asset value of $1.00 per share, there is no
assurance that they will be able to do so.
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.
Federated Securities Corp.
is the distributor of the Fund.
831-16
Cusip 090297102
CO1512-05(1/96)
Institutional Shares
Annual Report
Dated
November 30, 1995
January 31, 1996
Biltmore Prime Cash Management Fund
[LOGO OF WACHOVIA INVESTMENTS]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PRESIDENT'S MESSAGE
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders of Biltmore Prime Cash
Management Fund, Institutional Shares, for the twelve-month period ended
November 30, 1995. This report includes a listing of your fund's investments and
complete financial information.
During the twelve month period, the fund's portfolio of high-quality money
market securities provided shareholders with dividends of $0.06 per share. Of
course, the fund also maintained a stable share value of $1.00.* The fund's net
assets grew by more than $63 million to reach $879 million on the last day of
the twelve month period.
Thank you for participating in the daily earning power of Biltmore Prime Cash
Management Fund. We'll continue to keep you up to date on your investment, and
provide your account with the highest level of service.
Sincerely,
John W. McGonigle
President
January 15, 1996
* Money market funds seek to maintain a stable net asset value of $1.00 per
share. There is no assurance that they will be able to do so. An investment in
the fund is neither insured nor guaranteed by the U.S. government.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE PRIME CASH MANAGEMENT FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Bank Notes--7.2%
$ 20,000,000 NationsBank Charlotte N.C., 5.60%, 5/28/1996 $ 20,000,000
43,500,000 NBD Bancorp Inc., 5.85%-6.25%, 5/6/1996-6/5/1996 43,552,617
--------------
Total Bank Notes 63,552,617
--------------
Bankers Acceptances--0.7%
6,000,000 NationsBank Charlotte N.C., 5.59%, 9/4/1996 5,741,202
--------------
Certificates of Deposits--35.9%
41,000,000 ABN Amro North America, 5.54%-5.80, 2/29/1996-11/6/1996 40,997,292
26,000,000 CIBC New York, 5.80%, 1/22/1996 26,000,000
41,000,000 Deutsche Bank A,G., 5.77%-5.79%, 12/27/1995-1/12/1996 40,999,980
34,000,000 Morgan Guaranty London, 5.76%, 1/22/1996 34,000,473
40,000,000 National Westminster Bank, 5.74%-5.81%, 1/30/1996-3/6/1996 40,000,402
26,000,000 Rabobank, 5.71%-5.79%, 4/26/1996-7/26/1996 26,003,074
10,000,000 Societe Generale, 5.63%, 12/13/1995 10,000,033
45,000,000 Swiss Bank Corp., 5.56%-5.72%, 3/6/1996-5/28/1996 45,000,000
25,000,000 Toronto Dominion Bank, 5.68%, 3/28/1996 24,999,856
28,000,000 Union Bank of Switzerland, 5.77%-7.51%, 12/28/1995-1/17/1996 28,012,248
--------------
Total Certificates of Deposit 316,013,358
--------------
(a) Commercial Paper--19.8%
CHEMICALS--1.7%
15,000,000 duPont E.I. de Nemours & Co., 5.50%, 8/5/1996 14,431,667
--------------
FINANCE--5.7%
26,000,000 Hanson Finance UK, 5.68%, 2/16/1996 25,684,128
25,000,000 Trans-America Corp., 5.66%, 2/16/1996 24,697,347
--------------
Total 50,381,475
--------------
FINANCE-AUTOMOTIVE--2.8%
25,000,000 Ford Motor Credit Corp., 5.67%, 2/27/1996 24,653,500
--------------
FINANCE-COMMERCIAL--6.8%
10,900,000 Cortez Capital, 5.75%, 12/15/1995 10,875,625
40,000,000 General Electric Capital Corp., 5.58%, 3/15/1996 39,349,000
10,000,000 Xerox Credit Corp., 5.42%, 6/28/1996 9,683,833
--------------
Total 59,908,458
--------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE PRIME CASH MANAGEMENT FUND
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
(a) Commercial Paper--continued
FINANCE-FOOD & BEVERAGE--2.8%
$ 25,000,000 Coca Cola Co., 5.67%, 12/8/1995 $ 24,972,438
--------------
Total Commercial Paper 174,347,538
--------------
Corporate Bonds--1.7%
FINANCE-COMMERCIAL--1.1%
10,000,000 American General Finance Corp., 5.00%, 6/17/1996 9,946,438
--------------
FINANCE-FOOD & BEVERAGE--.6%
5,000,000 Pepsico Inc., 7.875%, 8/15/1996 5,062,454
--------------
Total Corporate Bonds 15,008,892
--------------
(b) Notes--Variable--3.4%
FINANCE-COMMERCIAL--3.4%
30,000,000 First Union National Bank, 5.81%, 5/13/1996 30,000,000
--------------
(c) Repurchase Agreements--32.2%
100,000,000 First Boston Corp., 5.85%, dated 11/30/1995, due 12/1/1995 100,000,000
68,306,829 Goldman, Sachs & Co., 5.85%, dated 11/30/1995, due 12/1/1995 68,306,829
115,000,000 Nomura Securities International, Inc., 5.875%, dated 11/30/1995,
due 12/1/1995 115,000,000
--------------
Total Repurchase Agreements 283,306,829
--------------
Total Investments, at amortized cost and value $ 887,970,436
--------------
</TABLE>
(a) Each issue shows the rate of discount at the time of purchase for discount
issues, or the coupon for interest bearing issues.
(b) Current rate and next reset date shown.
(c) The repurchase agreements are 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
($879,603,395) at November 30, 1995.
(See Notes which are an integral part of the Financial Statements)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE PRIME CASH MANAGEMENT FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
<TABLE>
<S> <C> <C>
Assets:
Investments in repurchase agreements $ 283,306,829
Investments in securities 604,663,607
--------------
Total investments in securities, at amortized cost and value $ 887,970,436
Income receivable 6,354,449
Deferred expenses 146,555
--------------
Total assets 894,471,440
Liabilities:
Payable for investments purchased 10,000,000
Payable for shares redeemed 156,327
Income distribution payable 4,022,089
Payable to Bank 622,953
Accrued expenses 66,676
--------------
Total liabilities 14,868,045
--------------
Net Assets for 879,603,395 shares outstanding $ 879,603,395
--------------
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
$879,603,395 / 879,603,395 shares outstanding $1.00
--------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE PRIME CASH MANAGEMENT FUND
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1995
<TABLE>
<S> <C> <C> <C>
Investment Income:
Interest $ 52,094,916
Expenses:
Investment advisory fee $ 2,614,827
Administrative personnel and services fee 782,722
Custodian fees 124,511
Transfer and dividend disbursing agent fees and expenses 39,940
Trustees' fees 31,489
Auditing fees 14,884
Legal fees 23,000
Portfolio accounting fees 110,266
Share registration costs 119,673
Printing and postage 19,756
Insurance premiums 19,636
Miscellaneous 23,297
------------
Total expenses 3,924,001
Waivers and reimbursements--
Waiver of investment advisory fee $ (2,008,188)
Waiver of administrative personnel and services fee (346,917)
------------
Total waivers (2,355,105)
------------
Net expenses 1,568,896
-------------
Net investment income $ 50,526,020
-------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE PRIME CASH MANAGEMENT FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended November 30, 1995 1994*
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets:
Operations--
Net investment income $ 50,526,020 $ 25,109,913
-------------------- ---------------------
Distributions to Shareholders--
Distributions from net investment income (50,526,020) (25,109,913)
-------------------- ---------------------
Share Transactions--
Proceeds from sale of shares 2,119,577,815 1,747,708,257
Cost of shares redeemed (2,055,982,145) (931,700,532)
-------------------- ---------------------
Change in net assets resulting from share
transactions 63,595,670 816,007,725
-------------------- ---------------------
Change in net assets 63,595,670 816,007,725
Net Assets:
Beginning of period 816,007,725 0
-------------------- ---------------------
End of period $ 879,603,395 $ 816,007,725
-------------------- ---------------------
</TABLE>
*For the period from December 2, 1993 (date of initial public investment) to
November 30, 1994.
(See Notes which are an integral part of the Financial Statements)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE PRIME CASH MANAGEMENT FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
Year Ended November 30, 1995 1994(a)
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00
Income from investment operations
Net investment income 0.06 0.04
Less distributions
Distributions from net investment income (0.06) (0.04)
--------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00
--------- -----------
Total Return (b) 5.95% 4.02%
Ratios to Average Net Assets
Expenses 0.18% 0.18%*
Net investment income 5.80% 4.31%*
Expense waiver/reimbursement (c) 0.27% 0.28%*
Supplemental Data
Net assets, end of period (000 omitted) $879,603 $816,008
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from December 2, 1993 (date of initial
public investment) to November 30, 1994.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE PRIME CASH MANAGEMENT FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1995
(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 portfolios. The financial statements included
herein are only those of Biltmore Prime Cash Management Fund (the "Fund"), a
diversified portfolio. 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.
INVESTMENT VALUATIONS--The Fund uses the amortized cost method to value its
portfolio securities in accordance with Rule 2a-7 under the Act.
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 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.
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.
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.
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.
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 its 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.
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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE PRIME CASH MANAGEMENT FUND
Transactions in shares were as follows:
<TABLE>
<CAPTION>
Year Ended November 30, 1995 1994*
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Shares sold 2,119,577,815 1,747,708,257
Shares redeemed (2,055,982,145) (931,700,532)
---------------- ---------------
Net change resulting from share transactions 63,595,670 816,007,725
---------------- ---------------
</TABLE>
*For the period from December 2, 1993 (date of initial public investment) to
November 30, 1994.
At November 30, 1995, capital paid-in aggregated $879,603,395.
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Wachovia Asset Management, 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 any 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. This 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 AGENT AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Fund for
which it receives a fee. This fee is based on the size, type, and number of
accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
CUSTODIAN FEES--Wachovia Bank of North Carolina, N.A. is the Fund's custodian
for which it received a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses of $35,156 were borne initially
by FAS. The Fund has agreed to reimburse FAS for the organizational expenses
during the five year period following the effective date. For the year ended
November 30, 1995, the Fund paid $7,031 pursuant to this agreement.
GENERAL--Certain of the Officers of the Trust are Officers and Directors or
Trustees of the above companies.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Trustees and Shareholders of
THE BILTMORE FUNDS:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Biltmore Prime Cash Management Fund (one of the
portfolios comprising The Biltmore Funds) as of November 30, 1995, and the
related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended and the
financial highlights for the periods presented therein. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with general accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of November 30, 1995, by
correspondence with the custodian and brokers. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Biltmore Prime Cash Management Fund of The Biltmore Funds at November 30, 1995,
and the results of its operations for the year then ended, changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for the periods presented therein, in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
January 15, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TRUSTEES OFFICERS
<TABLE>
<S> <C>
James A. Hanley John W. McGonigle
Samuel E. Hudgins President and Treasurer
J. Berkley Ingram, Jr. Ronald M. Petnuch
D. Dean Kaylor Vice President and Assistant Treasurer
Charles S. Way, Jr. Peter J. Germain
Secretary
Gail Cagney
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves risk, including possible
loss of principal. Although money market funds seek to maintain a stable net
asset value of $1.00 per share, there is no assurance that they will be able to
do so.
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.
Federated Securities Corp.
is the distributor of the Fund.
831-22
Cusip 090297805
Institutional Shares
Annual Report
Dated
November 30, 1995
January 31, 1996
Biltmore Tax-Free
Money Market Fund
[LOGO OF WACHOVIA INVESTMENTS]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PRESIDENT'S MESSAGE
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders of Biltmore Tax-Free
Money Market Fund, Institutional Shares, for the 12-month period ended November
30, 1995. This report includes a listing of your fund's investments and complete
financial information.
During the 12-month period, the fund's portfolio of tax-free money market
securities provided shareholders with federally tax-free dividends of $0.04 per
share,* while maintaining a stable share value of $1.00.** At the end of the
12-month period, the fund's net assets, which were diversified across
municipalities in 28 states, stood at $136 million.
Thank you for participating in the daily earning power of Biltmore Tax-Free
Money Market Fund. We'll continue to keep you up to date on your investment, and
provide your account with the highest level of service.
Sincerely,
John W. McGonigle
President
January 15, 1996
* Income may be subject to the federal alternative minimum tax and state and
local taxes.
** Money market funds seek to maintain a stable net asset value of $1.00 per
share. There is no assurance that they will be able to do so. An investment
in the fund is neither insured nor guaranteed by the U.S. government.
BILTMORE TAX-FREE MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
Principal Credit
Amount Rating(b) Value
<C> <S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Short-Term Municipal Securities--99.4%
ALABAMA--5.1%
$ 2,395,000 Alabama, HFA, Weekly VRDNs Revenue Refunding Bonds (SouthTrust
Bank of Alabama LOC) A-1 $ 2,395,000
740,000 Alabama, HFA, Weekly VRDNs Revenue Refunding Bonds (Series
D)/(SouthTrust Bank of Alabama LOC) VMIG1 740,000
3,320,000 Birmingham, AL, Weekly VRDNs GO UT Refunding Bonds (Series
1992-A)/(First Alabama Bank LOC) VMIG1 3,320,000
435,000 Tuscaloosa County, AL, Port Authority Daily and Weekly VRDNs
Revenue Refunding Bonds (Capstone Hotel Ltd. Project)/(Series
A)/(SouthTrust Bank of Alabama LOC) P-1 435,000
--------------
Total 6,890,000
--------------
ARIZONA--3.0%
2,000,000 Arizona State Transportation Board Highway Revenue Bonds,
7.90%, 7/1/1996 AAA 2,089,056
2,000,000 Maricopa County, AZ, School District, 3.75% GO UT Refunding
Bonds (Series A), 7/1/1996 AA 2,000,000
--------------
Total 4,089,056
--------------
ARKANSAS--2.8%
3,100,000 Arkansas Hospital Equipment Finance Authority, Weekly VRDNs
Revenue Bonds (Credit Suisse LOC) AA+ 3,100,000
700,000 Fayetteville, AR, Public Facility, Weekly VRDNs Revenue
Refunding Bonds (Charter Vista Hospital)/(Mitsubishi Bank Ltd.
LOC) VMIG1 700,000
--------------
Total 3,800,000
--------------
CALIFORNIA--3.0%
4,000,000 Kern County, CA, 4.50% TRANs, GO Unlimited Notes,
7/2/1996 Sp1+ 4,013,465
--------------
CONNECTICUT--1.0%
1,300,000 Connecticut State Economic Recovery Notes, Weekly VRDNs GO UT
Bonds (Series B)/(Industrial Bank of Japan SPA) VMIG1 1,300,000
--------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE TAX-FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
Principal Credit
Amount Rating(b) Value
<C> <S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Short-Term Municipal Securities--continued
DISTRICT OF COLUMBIA--0.7%
$ 900,000 District of Columbia, Weekly VRDNs Revenue Bonds
(Catholic University)/(Series A)/(Sanwa Bank Ltd. LOC) VMIG1 $ 900,000
--------------
FLORIDA--14.8%
5,000,000 Broward County, FL, HFA, Weekly VRDNs Revenue Bonds (Welleby
Apartments Project)/(Security Pacific National Bank LOC) Aa3 5,000,000
5,100,000 Collier County, FL, HFA, Weekly VRDNs Revenue Bonds (River
Reach Project)/(Morgan Guaranty LOC) VMIG1 5,100,000
1,800,000 Escambia County, FL, Health Facility Authority, IDR, Monthly
VRDNs Refunding Bonds (Florida Convalescent Centers
Project)/(Series A)/(Toronto Dominion Bank LOC) P-1 1,800,000
3,000,000 Orange County, FL, School District, 4.50% TANs,
10/16/1996 Sp1+ 3,017,679
750,000 Polk County, FL, IDA, Monthly VRDNs Refunding Bonds (Florida
Convalescent Centers Project)/(Toronto Dominion Bank LOC) P-1 750,000
1,000,000 St. Lucie County, FL, 3.85% Revenue Refunding Bonds (Florida
Power & Light Co.), 12/13/1995 VMIG1 1,000,000
3,500,000 Southeast Volusia, FL, Hospital Revenue, Weekly VRDNs (Bert
Fish Medical Center Issue)/(SouthTrust Bank of
Alabama LOC) A-1 3,500,000
--------------
Total 20,167,679
--------------
GEORGIA--13.3%
3,000,000 Burke County, GA, Development Pollution Authority, 3.75%-3.80%
Revenue Refunding Bonds (Olglethorpe Power
Corp. Project)/(Series A)/(Credit Suisse of NY LOC),
1/3/1996-1/18/1996 P-1 3,000,000
5,100,000 De Kalb Private Hospital Authority, GA, Weekly VRDNs RANs
(Engleston Childrens' Hospital)/(Series B)/(Trust
Company Bank LOC) VMIG1 5,100,000
1,500,000 Georgia State, 6.75% GO UT Bonds (Series E), 12/1/1995 AAA 1,500,000
1,300,000 Georgia State, 8.40% GO UT Bonds (Series B), 4/1/1996 AAA 1,320,481
3,090,000 Georgia State, 7.25% GO UT Bonds, 9/1/1996 AAA 3,170,136
975,000 Macon Bibb County, GA, Urban Development Authority Revenue,
Weekly VRDNs Refunding Bonds (Hotel Investors Project)/(NBD
Bank LOC) A-1+ 975,000
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE TAX-FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
Principal Credit
Amount Rating(b) Value
<C> <S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Short-Term Municipal Securities--continued
GEORGIA--CONTINUED
$ 1,500,000 Marietta, GA, HFA, 5.25% Revenue Bonds (Falls at Bells
Ferry)/(Guardian S&L LOC), 1/15/1996 VMIG1 $ 1,500,000
500,000 Monroe County, GA, Development Authority Industrial
Development Revenue, Weekly VRDNs, Refunding Revenue Bonds
(NBD Bank LOC) AA- 500,000
1,000,000 Newton County, GA, IDA, Weekly VRDNs Refunding Bonds (John H.
Harland Co. Project)/(NationsBank of Georgia LOC) A-1 1,000,000
--------------
Total 18,065,617
--------------
ILLINOIS--12.3%
1,000,000 Chicago, IL, Weekly VRDNs GO Unlimited Notes (Series
B)/(Morgan Guaranty Trust) Sp1+ 1,000,000
500,000 Illinois Development Finance Authority Revenue, Weekly VRDNs
(Aurora Center Catholic High School)/(Northern Trust LOC) AA- 500,000
1,000,000 Illinois Development Finance Authority Revenue, Weekly VRDNs
Refunding Bonds (Catholic Charities Housing)/ (Series
B)/(National Westminster LOC) VMIG1 1,000,000
1,000,000 Illinois Development Finance Authority Revenue, Weekly VRDNs
(Lake Forest Academy Project)/(Northern Trust LOC) A-1+ 1,000,000
1,475,000 Illinois Development Finance Authority Revenue, Weekly VRDNs
(Little City Foundation Special Facilities)/(LaSalle National
Bank LOC) A-1+ 1,475,000
2,000,000 Illinois Development Finance Authority Revenue, Weekly VRDNs
(St. Ignatius College Prep.)/(Northern Trust LOC) A-1+ 2,000,000
1,625,000 Illinois Development Finance Authority Revenue, Weekly VRDNs
(St. Paul's House Project)/(LaSalle National Bank LOC) A-1+ 1,625,000
4,000,000 Illinois State Dedicated Tax Revenue Civic Center Bonds, 9.50%
(Revenue Bonds), 12/15/1995 AAA 4,129,373
3,000,000 Illinois State Toll Highway Authority, Weekly VRDNs
Revenue Refunding Bonds (Series B)/(MBIA Insured)/
(Societe Generale LOC) VMIG1 3,000,000
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE TAX-FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
Principal Credit
Amount Rating(b) Value
<C> <S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Short-Term Municipal Securities--continued
ILLINOIS--CONTINUED
$ 1,000,000 Orland Hills, IL, Multi-Family Mortgage, Weekly VRDNs Revenue
Refunding Bonds (LaSalle National Bank LOC) AA- $ 1,000,000
--------------
Total 16,729,373
--------------
INDIANA--0.2%
300,000 Indianapolis, IN, Weekly VRDNs Revenue Refunding Bonds (Canal
Square Project)/(Societe Generale LOC) VMIG1 300,000
--------------
IOWA--0.4%
600,000 Indianola, IA, IDR, Monthly VRDNs (HY-VEE Foods)/ (Rabobank
Nederland LOC) A-1+ 600,000
--------------
KANSAS--0.4%
500,000 Burlington, KS, Pollution Control, 3.60% Revenue Refunding
Bonds (KC Power & Light Project)/(Series B)/ (Deutsche Bank
A.G. LOC), 1/11/1996 AAA 500,000
--------------
KENTUCKY--0.6%
800,000 Georgetown, KY, Educational Institution, Weekly VRDNs Revenue
Bonds (Georgetown College Project)/(PNC Bank of Kentucky LOC) VMIG1 800,000
--------------
LOUISIANA--4.0%
1,700,000 Calcasieu Parish, LA, Weekly VRDNs Revenue Bonds (Citgo
Petroleum Corp.)/(Westdeutsche Landesbank LOC) Aa1 1,700,000
2,800,000 Lake Charles, LA, Harbor & Terminal District, Weekly VRDNs
Revenue Bonds (Citgo Petroleum Corp.)/
(Westdeutsche Landesbank LOC) P-1 2,800,000
900,000 Louisiana State Recovery District Sales Tax Revenue, Daily
VRDNs (FGIC Insured)/(Swiss Bank SPA) VMIG1 900,000
--------------
Total 5,400,000
--------------
MARYLAND--2.1%
2,800,000 Maryland State Health and Higher Education Facility, Weekly
VRDNs Revenue Bonds (North Arundel Hospital)/ (Series
B)/(Mellon Bank LOC) VMIG1 2,800,000
--------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE TAX-FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
Principal Credit
Amount Rating(b) Value
<C> <S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Short-Term Municipal Securities--continued
MASSACHUSETTS--2.2%
$ 3,000,000 Massachusetts Municipal Wholesale Electric Co., Weekly VRDNs
Power Supply System Revenue Refunding Bonds (Series
C)/(Canadian Imperial Bank LOC) A-1+ $ 3,000,000
--------------
MISSISSIPPI--1.0%
1,300,000 Jackson County, Mississippi PCR, Daily VRDNs Refunding Bond
(Chevron U.S.A. Income Project) VMIG1 1,300,000
--------------
MISSOURI--1.2%
1,700,000 Kansas City, MO, IDA, Weekly VRDNs (Mid America Health
Services)/(Mellon Bank LOC) A-1 1,700,000
--------------
NEW YORK--2.4%
1,000,000 New York, NY, Daily VRDNs, GO UT (Series E3)/(Morgan Guaranty
LOC) VMIG1 1,000,000
2,300,000 New York State Local Government Assistance Corporation, Weekly
VRDNs Revenue Refunding Bonds (Series F)/ (Toronto Dominion
Bank LOC) VMIG1 2,300,000
--------------
Total 3,300,000
--------------
NORTH CAROLINA--3.2%
2,500,000 North Carolina Eastern Municipal Power, 3.65% Revenue Bonds
(Series B)/(UBS & Morgan Guaranty LOC), 2/8/1996 A-1+ 2,500,000
1,795,000 Wake County, NC, 4.20% GO UT Refunding Bonds,
4/1/1996 AAA 1,795,277
--------------
Total 4,295,277
--------------
OHIO--0.7%
1,000,000 Centerville, OH, Healthcare Revenue, Weekly VRDNs (Bethany
Lutheran Village Project)/(PNC Bank of Ohio LOC) VMIG1 1,000,000
--------------
PENNSYLVANIA--2.2%
1,000,000 Pennsylvania State University, 5.50% GO Bonds (University
Project Notes)/(Series A), 12/21/1995 MIG1 1,000,208
2,000,000 Sewickley Valley Hospital Authority, PA, 5.00% Revenue
Refunding Bonds (Series B)/(PNC Bank LOC), 12/15/1995 VMIG1 2,000,223
--------------
Total 3,000,431
--------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE TAX-FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
Principal Credit
Amount Rating(b) Value
<C> <S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Short-Term Municipal Securities--continued
RHODE ISLAND--1.5%
$ 2,000,000 Rhode Island State, 4.50% TANs (Union Bank of
Switzerland LOC), 6/28/1996 MIG1 $ 2,009,412
--------------
TENNESSEE--8.1%
3,000,000 Metro Government Nashville & Davidson County, TN, IDB, Weekly
VRDNs Revenue Bonds (Arbor Crest)/(Series B)/ (NationsBank of
Georgia LOC) VMIG1 3,000,000
1,900,000 Metro Government Nashville & Davidson County, TN, Health and
Education Facilities Board, Weekly VRDNs Revenue Refunding
Bonds (West Meade Place Project)/ (NationsBank of Georgia LOC) A-1 1,900,000
2,150,000 Metropolitan Nashville Airport, Weekly VRDNs Revenue Refunding
Bonds (FGIC Insured)/(Societe Generale LOC) VMIG1 2,150,000
4,000,000 Tennessee State, Weekly VRDNs GO UT (Series B) MIG1 4,000,000
--------------
Total 11,050,000
--------------
TEXAS--7.3%
3,800,000 Lower Neches Valley Authority, TX, 3.75% Revenue Refunding
Bonds (Chevron USA, Inc. Project), 2/15/1996 A-1+ 3,800,000
2,950,000 San Antonio Texas Sewage, 7.25% (Revenue Bonds)
5/1/1996 AAA 3,051,548
3,000,000 Texas State, 4.75% TRANs (Series A) 8/30/1996 MIG1 3,014,648
--------------
Total 9,866,196
--------------
UTAH--0.8%
1,080,000 Salt Lake City, UT, 5.00% GO UT Bonds, 12/15/1996 AAA 1,094,256
--------------
VIRGINIA--1.6%
2,000,000 Harrisonburg, VA, HFA, 5.10% Revenue Bonds (Rolling Brook
Village Apartments)/(Guardian S&L LOC), 2/1/1996 VMIG1 2,000,000
200,000 Peninsula Ports Authority, VA, Daily VRDNs Revenue Refunding
Bonds (Port Facility-Shell Oil Co.) AAA 200,000
--------------
Total 2,200,000
--------------
WASHINGTON--2.9%
4,000,000 Port Anacortes, WA, IDA, 3.80% Revenue Refunding Bonds (Texaco
Project), 12/6/1995 P-1 4,000,000
--------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE TAX-FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
Principal
Amount Credit
or Shares Rating(b) Value
<C> <S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Short-Term Municipal Securities--continued
WYOMING--0.7%
$ 1,000,000 **Uinta County, WY, PCR, 3.75% (Chevron USA, Inc.
Project), 6/15/1996 AA $ 1,000,000
--------------
Total Short-Term Municipal Securities 135,170,762
--------------
Open-end Investment Companies--0.9%
1,223,170 Fidelity Tax-Exempt Money Market Fund Instruments Portfolio
(at net asset value) 1,223,170
--------------
Total Investments, at amortized cost and value (a) $ 136,393,932
--------------
</TABLE>
(a) Also represents cost for federal tax purposes.
(b) Current credit ratings are unaudited.
** Denotes variable rate security which shows current rate and next demand
date.
Note: The categories of investments are shown as a percentage of net assets
($136,007,129) at November 30, 1995.
The following acronyms are used throughout this portfolio:
FGIC--Financial Guaranty Insurance Co.
GO--General Obligation
HFA--Housing Finance Authority
IDA--Industrial Development Authority
IDB--Industrial Development Board
IDR--Industrial Development Revenue
LOC--Letter of Credit
MBIA--Municipal Bond Investors Assurance
PCR--Pollution Control Revenue
RANs--Revenue Anticipation Notes
SPA--Standby Purchase Agreement
TANs--Tax Anticipation Notes
TRANs--Tax Revenue Anticipation Notes
UT--Unlimited Tax
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
NOVEMBER 30, 1995
<TABLE>
<S> <C> <C>
Assets:
Total investments in securities, at amortized cost and value $ 136,393,932
Income receivable 1,148,791
Deferred expenses 6,258
--------------
Total assets 137,548,981
Liabilities:
Payable for investments purchased $ 1,100,556
Income distribution payable 375,237
Accrued expenses 66,059
------------
Total liabilities 1,541,852
--------------
Net Assets for 136,007,129 shares outstanding $ 136,007,129
--------------
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
Institutional Shares: ($80,273,956 / 80,273,956 shares outstanding) $1.00
--------------
Investment Shares: ($55,733,173 / 55,733,173 shares outstanding) $1.00
--------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE TAX-FREE MONEY MARKET FUND
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1995
<TABLE>
<S> <C> <C> <C>
Investment Income:
Interest $ 5,506,243
Expenses:
Investment advisory fee $ 713,058
Administrative personnel and services fee 128,145
Custodian fees 28,523
Transfer and dividend disbursing agent fees and expenses 50,050
Trustees' fees 11,026
Auditing fees 16,360
Legal fees 17,109
Portfolio accounting fees 51,609
Distribution services fee--Investment Shares 217,651
Share registration costs 43,912
Printing and postage 24,349
Insurance premiums 6,739
Miscellaneous 23,959
------------
Total expenses 1,332,490
------------
Waivers--
Waiver of investment advisory fee $ (658,480)
Waiver of distribution services fee--Investment Shares (35,392)
-----------
Total waivers (693,872)
------------
Net expenses 638,618
------------
Net investment income 4,867,625
------------
Net realized loss on investments (150,000)
------------
Change in net assets resulting from operations $ 4,717,625
------------
</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, 1995 1994
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets:
Operations--
Net investment income $ 4,867,625 $ 2,894,643
Net realized loss on investments ($150,000 net loss and $0 respec-
tively, as computed for federal income tax purposes) (150,000) --
--------------- ---------------
Change in net assets resulting from operations 4,717,625 2,894,643
--------------- ---------------
Distributions to Shareholders--
Distributions from net investment income
Institutional Shares (3,129,608) (2,150,380)
Investment Shares (1,738,017) (744,263)
--------------- ---------------
Change in net assets resulting from distributions to shareholders (4,867,625) (2,894,643)
--------------- ---------------
Share Transactions--
Proceeds from sale of shares 326,381,422 263,497,759
Cost of shares redeemed (327,061,311) (210,055,320)
--------------- ---------------
Change in net assets resulting from share transactions (679,889) 53,442,439
--------------- ---------------
Capital Contributions 150,000 --
--------------- ---------------
Change in net assets (679,889) 53,442,439
Net Assets:
Beginning of period 136,687,018 83,244,579
--------------- ---------------
End of period $ 136,007,129 $ 136,687,018
--------------- ---------------
</TABLE>
(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, 1995 1994 1993 1992(a)
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations
Net investment income 0.04 0.02 0.02 0.01
Less distributions
Distributions from net investment income (0.04) (0.02) (0.02) (0.01)
--------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- -----------
Total Return(b) 3.59% 2.42% 2.30% 1.49%
Ratios to Average Net Assets
Expenses 0.32% 0.38% 0.29% 0.16%*
Net investment income 3.55% 2.41% 2.28% 2.71%*
Expense waiver/reimbursement(c) 0.46% 0.45% 0.60% 0.78%*
Supplemental Data
Net assets, end of period (000 omitted) $80,274 $93,867 $59,269 $61,632
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 20, 1992 (date of initial
public investment) to November 30, 1992.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(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, 1995 1994 1993 1992(a)
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations
Net investment income 0.03 0.02 0.02 0.01
Less distributions
Distributions from net investment income (0.03) (0.02) (0.02) (0.01)
--------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- -----------
Total Return(b) 3.25% 2.11% 1.99% 1.29%
Ratios to Average Net Assets
Expenses 0.66% 0.68% 0.59% 0.50%*
Net investment income 3.19% 2.11% 1.98% 2.37%*
Expense waiver/reimbursement(c) 0.52% 0.55% 0.70% 0.88%*
Supplemental Data
Net assets, end of period (000 omitted) $55,733 $42,820 $23,976 $5,338
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 20, 1992 (date of initial
public investment) to November 30, 1992.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE TAX-FREE MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1995
(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 portfolios. The financial statements included
herein are only those of Biltmore Tax-Free Money Market Fund (the "Fund"), a
diversified portfolio. 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 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.
INVESTMENT VALUATIONS--The Fund uses the amortized cost method to value its
portfolio securities in accordance with Rule 2a-7 under the Act.
Investments in other open-end investment companies are valued at net asset
value.
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.
Income distributions and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally
accepted accounting principles. The Fund has a permanent difference due to
the differing treatment of the capital contribution from Wachovia
Corporation related to the sale of the Orange County, CA bond security.
Amounts as of November 30, 1995, have been reclassified to reflect a
decrease in paid in capital of $150,000. Net investment income, net
realized gains, and net assets were not affected by this change.
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.
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.
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 its 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.
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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE TAX-FREE MONEY MARKET FUND
Transactions in shares were as follows:
<TABLE>
<CAPTION>
Year Ended November 30, 1995 1994
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Institutional Shares
Shares sold 178,161,731 175,432,174
Shares redeemed (191,754,772) (140,833,740)
-------------------- --------------------
Net change resulting from Institutional Share transactions (13,593,041) 34,598,434
-------------------- --------------------
<CAPTION>
Year Ended November 30, 1995 1994
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Investment Shares
Shares sold 148,219,691 88,065,585
Shares redeemed (135,306,539) (69,221,580)
-------------------- --------------------
Net change resulting from Investment Share transactions 12,913,152 18,844,005
-------------------- --------------------
Net change resulting from share transactions (679,889) 53,442,439
-------------------- --------------------
</TABLE>
At November 30, 1995, capital paid-in aggregated $136,007,129.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Wachovia Asset Management, 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 any portion of its fee. The Adviser
can modify or terminate this voluntary waiver at any time at its sole
discretion.
CAPITAL CONTRIBUTION--On December 7, 1994, the Fund sold at amortized cost an
Orange County bond, with a $1,000,000 par value, to Wachovia Corporation. In
connection with this purchase, Wachovia Corporation is considered to have made a
capital contribution in the amount of $150,000 to the Fund, which represents the
difference between the market value and amortized cost of the security at the
date of sale.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. This 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.
DISTRIBUTION SERVICES FEE--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.
The distributor may voluntarily choose to waive any portion of its fee. The
distributor can modify or terminate this voluntary waiver at any time at its
sole discretion.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Fund, for
which it receives a fee. This fee is based on the size, type, and number of
accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
CUSTODIAN FEES--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
daily net assets for the period, plus out-of-pocket expenses.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE TAX-FREE MONEY MARKET FUND
ORGANIZATIONAL EXPENSES--Organizational expenses of $59,661 were borne initially
by FAS. The Fund has agreed to reimburse FAS for the organizational expenses
during the five year period following the Fund's effective date. For the year
ended November 30, 1995, the Fund paid $16,746 pursuant to this agreement.
GENERAL--Certain of the Officers of the Trust are Officers and Directors or
Trustees of the above companies.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Trustees and Shareholders of
THE BILTMORE FUNDS:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Biltmore Tax-Free Money Market Fund (one of the
portfolios comprising The Biltmore Funds) as of November 30, 1995, and the
related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended and
financial highlights for the periods presented therein. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Biltmore Tax-Free Money Market Fund of The Biltmore Funds at November 30, 1995,
and the results of its operations for the year then ended, changes in its net
assets for each of the two years in the period then ended, and financial
highlights for the periods presented therein, in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
January 15, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TRUSTEES OFFICERS
<TABLE>
<S> <C>
James A. Hanley John W. McGonigle
Samuel E. Hudgins President and Treasurer
J. Berkley Ingram, Jr. Ronald M. Petnuch
D. Dean Kaylor Vice President and Assistant Treasurer
Charles S. Way, Jr. Peter J. Germain
Secretary
Gail Cagney
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed
by any bank, and are not insured or guaranteed by the U.S. government, the
Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves risk, including possible
loss of principal. Although money market funds seek to maintain a stable net
asset value of $1.00 per share, there is no assurance that they will be able to
do so.
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.
Federated Securities Corp.
is the distributor of the Fund.
831-18
Cusip 090297300
CO1512-06(1/96)
Institutional Shares
Annual Report
Dated
November 30, 1995
January 31, 1996
Biltmore U.S. Treasury
Money Market Fund
[LOGO OF WACHOVIA INVESTMENTS]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PRESIDENT'S MESSAGE
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders of Biltmore U.S.
Treasury Money Market Fund, Institutional Shares, for the 12-month period ended
November 30, 1995. This report includes a listing of your fund's investments and
complete financial information.
During the 12-month period, the fund's portfolio of U.S. Treasury money market
securities--some of the most secure investments available*--provided
shareholders with dividends of $0.06 per share. Of course, the fund also
maintained a stable share value of $1.00.** Reflecting increased investor
participation, fund net assets more than doubled to reach $296 million.
Thank you for participating in the daily earning power of Biltmore U.S. Treasury
Money Market Fund. We'll continue to keep you up to date on your investment, and
provide your account with the highest level of service.
Sincerely,
John W. McGonigle
President
January 15, 1996
* While the payment of principal and interest on these securities is guaranteed
by the U.S. government, fund shares are not insured or guaranteed by any
government agency.
** Money market funds seek to maintain a stable net asset value of $1.00 per
share. There is no assurance that they will be able to do so. An investment
in the fund is neither insured nor guaranteed by the U.S. government.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE U.S. TREASURY MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
U.S. Government Obligations--45.6%
U.S. TREASURY BILLS
$ 137,500,000 12/28/95-7/25/96 $ 135,058,361
--------------
(a)Repurchase Agreements--56.5%
14,000,000 CS First Boston Corp., 5.85%, dated 11/30/95, due 12/1/95 14,000,000
68,000,000 Daiwa Securities America, Inc., 5.90%, dated 11/30/95, due 12/1/95 68,000,000
71,186,609 Goldman Sachs & Co., 5.85%, dated 11/30/95, due 12/1/95 71,186,609
14,000,000 Nomura Securities International, Inc., 5.875%, dated 11/30/95,
due 12/1/95 14,000,000
--------------
Total Repurchase Agreements 167,186,609
--------------
Total Investments, at amortized cost and value (b) $ 302,244,970
--------------
</TABLE>
(a) The repurchase agreements are fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(b) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($296,095,311) at November 30, 1995.
(See Notes which are an integral part of the Financial Statements)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE U.S. TREASURY MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
<TABLE>
<S> <C> <C>
Assets:
Investments in repurchase agreements $ 167,186,609
Investments in securities 135,058,361
--------------
Total investments, at amortized cost and value $ 302,244,970
Income receivable 27,272
Deferred expenses 5,049
--------------
Total assets 302,277,291
Liabilities:
Payable for investments purchased 4,894,251
Income distribution payable 1,223,795
Accrued expenses 63,934
--------------
Total liabilities 6,181,980
--------------
Net Assets for 296,095,311 shares outstanding $ 296,095,311
--------------
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
Institutional Shares ($214,356,136 / 214,356,136 shares outstanding) $1.00
--------------
Investment Shares ($81,739,175 / 81,739,175 shares 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
YEAR ENDED NOVEMBER 30, 1995
<TABLE>
<S> <C> <C> <C>
Investment Income:
Interest $ 12,432,665
Expenses:
Investment advisory fee $ 1,060,343
Administrative personnel and services fee 190,189
Custodian fees 42,247
Transfer and dividend disbursing agent fees and expenses 51,264
Trustees' fees 9,585
Auditing fees 16,324
Legal fees 15,999
Portfolio accounting fees 51,936
Distribution services fee--Investment Shares 295,596
Share registration costs 42,554
Printing and postage 21,115
Insurance premiums 5,781
Miscellaneous 16,466
------------
Total expenses 1,819,399
Waivers and reimbursements--
Waiver of investment advisory fee $ (845,641)
Waiver of distribution services fee--Investment Shares (45,636)
-----------
Total waivers (891,277)
------------
Net expenses 928,122
-------------
Net investment income $ 11,504,543
-------------
</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, 1995 1994
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets:
Operations--
Net investment income $ 11,504,543 $ 3,653,910
--------------- ---------------
Distributions to Shareholders--
Distributions from net investment income
Institutional Shares (7,652,881) (2,707,306)
Investment Shares (3,851,662) (946,604)
--------------- ---------------
Change in net assets resulting from distributions to shareholders (11,504,543) (3,653,910)
--------------- ---------------
Share Transactions--
Proceeds from sale of shares 753,406,955 448,524,970
Cost of shares redeemed (591,239,232) (396,891,742)
--------------- ---------------
Change in net assets resulting from share transactions 162,167,723 51,633,228
--------------- ---------------
Change in net assets 162,167,723 51,633,228
Net Assets:
Beginning of period 133,927,588 82,294,360
--------------- ---------------
End of period $ 296,095,311 $ 133,927,588
--------------- ---------------
</TABLE>
(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, 1995 1994 1993 1992(a)
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations
Net investment income 0.06 0.04 0.03 0.02
Less distributions
Distributions from net investment income (0.06) (0.04) (0.03) (0.02)
--------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- -----------
Total Return (b) 5.66% 3.70% 2.91% 1.90%
Ratios to Average Net Assets
Expenses 0.32% 0.36% 0.28% 0.17%*
Net investment income 5.54% 3.72% 2.87% 3.24%*
Expense waiver/reimbursement (c) 0.40% 0.51% 0.63% 0.71%*
Supplemental Data
Net assets, end of period
(000 omitted) $214,356 $87,531 $65,353 $55,408
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 7, 1992 (date of initial public
investment) to November 30, 1992.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(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, 1995 1994 1993(a)
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00
Income from investment operations
Net investment income 0.05 0.03 0.01
Less distributions
Distributions from net investment income (0.05) (0.03) (0.01)
--------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00
--------- --------- -----------
Total Return (b) 5.30% 3.39% 1.42%
Ratios to Average Net Assets
Expenses 0.66% 0.66% 0.65%*
Net investment income 5.21% 3.42% 2.50%*
Expense waiver/reimbursement (c) 0.46% 0.61% 0.73%*
Supplemental Data
Net assets, end of period
(000 omitted) $81,739 $46,396 $16,941
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 12, 1993 (date of initial
public investment) to November 30, 1993.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE U.S. TREASURY MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1995
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 portfolios. The financial statements included
herein are only those of Biltmore U.S. Treasury Money Market Fund (the "Fund"),
a diversified portfolio. 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.
INVESTMENT VALUATIONS--The Fund uses the amortized cost method to value its
portfolio securities in accordance with Rule 2a-7 under the Act.
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 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.
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.
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.
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.
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 its 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.
OTHER--Investment transactions are accounted for on the trade date.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE U.S. TREASURY MONEY MARKET FUND
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.
Transactions in shares were as follows:
<TABLE>
<CAPTION>
Year Ended November 30, 1995 1994
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Institutional Shares
Shares sold 564,789,151 337,402,499
Shares redeemed (437,964,449) (315,224,009)
-------------- --------------
Net change resulting from Institutional Share
transactions 126,824,702 22,178,490
-------------- --------------
<CAPTION>
Year Ended November 30, 1995 1994
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Investment Shares
Shares sold 188,617,803 111,122,471
Shares redeemed (153,274,782) (81,667,733)
-------------- --------------
Net change resulting from Investment Share
transactions 35,343,021 29,454,738
-------------- --------------
Net change resulting from share transactions 162,167,723 51,633,228
-------------- --------------
</TABLE>
At November 30, 1995, capital paid-in aggregated $296,095,311.
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Wachovia Asset Management, 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 any 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. This 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.
DISTRIBUTION SERVICES FEE--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.
The distributor may voluntarily choose to waive any portion of its fee. The
distributor can modify or terminate this voluntary waiver at any time at its
sole discretion.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Fund for
which it receives a fee. This fee is based on the size, type, and number of
accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
CUSTODIAN FEES--Wachovia Bank of North Carolina, N.A. is the Fund's custodian.
The fee is based on the level of the Fund's average daily net assets for the
period, plus out-of-pocket expenses.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE U.S. TREASURY MONEY MARKET FUND
ORGANIZATIONAL EXPENSES--Organizational expenses of $33,032 were borne initially
by FAS. The Fund has agreed to reimburse FAS for the organizational expenses
during the five year period following the effective date. For the year ended
November 30, 1995, the Fund paid $13,665 pursuant to this agreement.
GENERAL--Certain of the Officers of the Trust are Officers and Directors or
Trustees of the above companies.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Trustees and Shareholders of
THE BILTMORE FUNDS:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Biltmore U.S. Treasury Money Market Fund (one
of the portfolios comprising The Biltmore Funds) as of November 30, 1995, and
the related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended and the
financial highlights for the periods presented therein. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Biltmore U.S. Treasury Money Market Fund of The Biltmore Funds at November 30,
1995, and the results of its operations for the year then ended, changes in its
net assets for each of the two years in the period then ended, and the financial
highlights for the periods presented therein, in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
January 15, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TRUSTEES OFFICERS
<TABLE>
<S> <C>
James A. Hanley John W. McGonigle
Samuel E. Hudgins President and Treasurer
J. Berkley Ingram, Jr. Ronald M. Petnuch
D. Dean Kaylor Vice President and Assistant Treasurer
Charles S. Way, Jr. Peter J. Germain
Secretary
Gail Cagney
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves risk, including possible
loss of principal. Although money market funds seek to maintain a stable net
asset value of $1.00 per share, there is no assurance that they will be able to
do so.
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.
Federated Securities Corp.
is the distributor of the Fund.
831-17
Cusip 090297706
CO1512-07(1/96)
ANNUAL REPORT
DATED
November 30, 1995
JANUARY 31, 1996
BILTMORE
BALANCED FUND
WACHOVIA INVESTMENTS
MAKE YOURSELF COMFORTABLE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PRESIDENT'S MESSAGE
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders of Biltmore Balanced
Fund for the twelve-month period ended November 30, 1995. This report begins
with a brief commentary on the stock and bond markets from your fund's portfolio
manager. Following the commentary is a complete listing of the fund's
investments and its financial statements.
On your behalf, Biltmore Balanced Fund pursues a popular investment
objective--long-term growth and current income--by investing in a quality
combination of stocks and bonds. At the end of the period, 57% of the fund's
assets were invested in blue-chip stocks issued by some of America's largest,
best-known companies. The bond portion of the portfolio was diversified among
U.S. Treasury obligations (21.2%), corporate bonds (10.7%), government agency
bonds (9.2%), and a repurchase agreement (1.4%).
Consistent with a very favorable economic environment, stocks and bonds
performed extremely well during the reporting period. As a result, Biltmore
Balanced Fund delivered strong performance. The fund achieved total return
figures based on net asset value and maximum offering price of 26.32% and
20.61%, respectively,* and paid $0.38 in dividends per share and $0.16 in
capital gains per share, while its share price increased by $1.99. Fund net
assets grew by $13 million to end the period at $207 million.
Thank you for selecting Biltmore Balanced Fund to pursue your financial goals
through a diversified portfolio of stocks and bonds. We look forward to keeping
you informed about your investment and we welcome your comments and suggestions.
Sincerely,
John W. McGonigle
President
January 15, 1996
* 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
The economy completed its long awaited "soft landing" during the fiscal year.
Despite several interest rate increases in 1994 and early 1995, the economy
demonstrated surprising strength at the outset of the fiscal year. By the second
quarter of 1995, however, economic growth became increasingly sluggish. The slow
growth continued until mid-summer, when the economy rebounded, aided by a slight
interest rate reduction in July. Despite the resurgence, inflation remained in
check, with producer and consumer price increases below 3% annual rates.
On November 30, 1995, the Fund's portfolio was 57% in equities, 41% in bonds and
2% in cash. Among equity holdings, the Fund continued to concentrate on those
sectors benefiting from the dramatic expansion of emerging markets and new
economies around the world. In anticipation of lower interest rates, the Fund
maintained a maturity distribution for the bond component of the portfolio that
was slightly longer than the market. The Fund's portfolio manager also adjusted
sector weights as spreads changed between corporate and Treasury bonds.
During the twelve-month period ended November 30, 1995, the Fund had a total
return of 26.32% based on net asset value and 20.61% based on the maximum
offering price.* On November 30, 1995, the Fund had net assets of $207.4
million, and a net asset value of $11.92 per share. As of November 30, 1995, the
Fund's 30-day SEC yield was 2.98% based on net asset value and 2.84% based on
the maximum offering price.* The average duration for the fixed income portion
of the Fund was 4.70 years.
*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
GROWTH OF $10,000 INVESTED IN BILTMORE BALANCED FUND
The graph below illustrates the hypothetical investment of $10,000 in the
Biltmore Balanced Fund (the "Fund") from May 7, 1993 (start of performance) to
November 30, 1995 compared to the S&P 500 Index+ and the Lehman Brothers
Aggregate Bond Index+.
"Graphic representation "F" omitted. See Appendix."
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF, OR
GUARANTEED BY, ANY BANK AND ARE NOT FEDERALLY INSURED.
*Represents a hypothetical investment of $10,000 in the Fund after deducting
the maximum sales charge of 4.50% ($10,000 investment minus $450 sales charge
= $9,550). The Fund's performance assumes the reinvestment of all dividends
and distributions. The S&P 500 Index and the Lehman Brothers Aggregate Bond
Index have been adjusted to reflect reinvestment of dividends on securities in
the indices.
**Total return quoted reflects all applicable sales charges and contingent
deferred sales charges.
Total return for shareholders purchasing shares of the Fund at net asset value
without a sales charge, including accounts purchasing shares through the Trust
Divisions of the Wachovia Banks, is 26.32% for the year ended November 30,
1995, as reflected in the "Financial Highlights" section of the Fund's
prospectus, and 11.43% for the period from May 7, 1993 (start of performance)
through November 30, 1995.
+The S&P 500 Index and the Lehman Brothers Aggregate Bond Index are not
adjusted to reflect sales loads, expenses, or other fees that the SEC
requires to be reflected in the Fund's performance. These indices are
unmanaged.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE BALANCED FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Common Stocks--57.4%
CAPITAL GOODS--4.5%
6,395 Browning-Ferris Industries, Inc. $ 192,649
48,171 General Electric Co. 3,239,500
30,306 Giddings & Lewis, Inc. 477,319
41,174 Harsco Corp. 2,429,266
30,626 Honeywell, Inc. 1,458,563
32,551 York International Corp. 1,456,657
--------------
Total 9,253,954
--------------
CONSUMER DURABLES--2.7%
14,817 Bandag, Inc. 729,737
96,847 *Ford Motor Co. 2,735,928
27,204 Goodyear Tire and Rubber 1,152,769
32,941 Hasbro, Inc. 1,004,700
--------------
Total 5,623,134
--------------
CONSUMER NON-DURABLES--12.8%
36,585 Abbott Laboratories 1,486,266
20,020 American Greetings Corp. 545,545
16,660 American Home Products Co. 1,520,225
12,582 American Stores Co. 330,277
9,355 Becton, Dickinson & Co. 652,511
35,321 Bristol-Myers Squibb Co. 2,834,510
17,104 CPC International, Inc. 1,175,900
39,546 Fingerhut Companies, Inc. 499,268
33,726 *Fruit Of The Loom, Inc., Class A 653,441
16,230 IBP Inc. 1,014,375
8,558 Loews Corp. 1,313,653
6,536 Melville Corp. 203,433
42,806 Merck & Co., Inc. 2,648,621
55,245 PepsiCo., Inc. 3,052,286
48,410 Philip Morris Cos., Inc. 4,247,978
9,385 Russell Corp. 249,876
39,467 Sara Lee Corp. 1,272,811
45,550 Sbarro, Inc. 1,019,181
39,328 Service Corp., International 1,597,700
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE BALANCED FUND
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Common Stocks--continued
CONSUMER NON-DURABLES--CONTINUED
10,119 Toys R Us, Inc. $ 235,267
--------------
Total 26,553,124
--------------
ENERGY--5.8%
14,244 Amoco Corp. 965,031
7,415 Chevron Corp. 366,116
41,086 Coastal Corp. 1,366,109
15,662 Exxon Corp. 1,211,847
44,978 Mapco. Inc. 2,417,568
5,397 Mobil Corp. 563,312
45,726 Phillips Petroleum Co. 1,520,390
14,987 Royal Dutch Petroleum Co. 1,923,956
26,148 Schlumberger, Ltd. 1,660,398
--------------
Total 11,994,727
--------------
FINANCE--7.5%
19,140 AMBAC, Inc. 844,552
27,478 American International Group, Inc. 2,466,150
9,603 Chubb Corp. 933,892
10,119 Citicorp 715,919
11,090 Dow Jones & Co., Inc. 425,579
20,904 Federal Home Loan Mortgage Corp. 1,609,608
26,186 Federal National Mortgage Association 2,867,367
4,120 First Tennessee National Corp. 249,260
30,311 KeyCorp 1,117,718
2,699 Legg Mason, Inc. 80,295
21,320 MBIA, Inc. 1,641,640
3,626 Morgan Stanley Group, Inc. 312,743
42,473 Providian Corp. 1,704,229
4,988 Raymond James Financial 112,854
11,165 Salomon, Inc. 406,127
3,069 United Asset Management Corp. 115,471
--------------
Total 15,603,404
--------------
MATERIALS & SERVICES--8.4%
34,282 Columbia / HCA Healthcare Corp. 1,769,808
11,670 Crane Co. 398,239
19,757 Donnelley (R.R.) & Sons Co. 758,175
35,659 Ecolab, Inc. 1,025,196
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE BALANCED FUND
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Common Stocks--continued
MATERIALS & SERVICES--CONTINUED
29,608 FMC Corp. $ 2,187,291
18,290 International Paper Co. 697,306
12,667 Knight Ridder, Inc. 817,021
8,010 Lee Enterprises, Inc. 333,416
32,149 Potash Corp. Saskatchewan, Inc. 2,222,300
92,186 Praxair, Inc. 2,684,917
12,009 R.P. Scherer Corp. 532,899
65,853 Sonoco Products Co. 1,646,325
14,185 Times Mirror Co. 461,013
52,198 Tyco International, Ltd. 1,637,712
--------------
Total 17,171,618
--------------
NON-ENERGY MINERALS--0.5%
6,189 Georgia-Pacific Corp. 481,195
6,775 Inland Steel Industries, Inc. 176,997
24,801 LTV Corp. 359,615
--------------
Total 1,017,807
--------------
PROCESS INDUSTRIES--0.8%
11,403 Kimberly Clark Corp. 876,606
15,040 Sigma-Aldrich 740,720
--------------
Total 1,617,326
--------------
PRODUCER MANUFACTURING--0.7%
23,575 Tecumseh Products Co. 1,249,475
5,890 Thermo Electron Corp. 291,555
--------------
Total 1,541,030
--------------
TECHNOLOGY--9.3%
10,530 American Telephone & Telegraph, Inc. 694,980
27,532 Avnet, Inc. 1,294,004
11,865 *Bay Networks, Inc. 533,925
18,989 *Cabletron Systems, Inc. 1,576,087
16,709 Cisco Systems, Inc. 1,405,645
31,840 Computer Associate International, Inc. 2,085,520
27,461 *Computer Sciences Corp. 1,997,788
11,575 General Motors Corp., Class E 584,537
26,010 Hewlett-Packard Co. 2,155,579
20,835 Intel Corp. 1,268,331
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE BALANCED FUND
<TABLE>
<CAPTION>
Principal
Amount
or Shares Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Common Stocks--continued
TECHNOLOGY--CONTINUED
20,276 Linear Technology Corp $ 917,489
65,471 MCI Communications Corp. 1,751,349
2,425 Microsoft Corp. 211,278
8,360 Molex, Inc., Class A 261,250
11,653 Motorola, Inc. 713,746
14,007 Xerox Corp. 1,920,710
--------------
Total 19,372,218
--------------
TRANSPORTATION--1.9%
24,925 CSX Corp. 2,184,053
25,060 *Canadian National Railway Co. 375,900
20,375 Conrail, Inc. 1,423,703
--------------
Total 3,983,656
--------------
UTILITIES--2.5%
11,044 ALLTEL Corp. 325,798
10,230 Bellsouth Corp. 397,691
37,755 GTE Corp. 1,609,307
3,462 NICOR, Inc. 87,848
12,195 NYNEX Corp. 605,177
14,675 Pennsylvania Power & Light Co. 365,041
46,828 Scana Corp. 1,264,356
17,289 Telefonos De Mexico S.A., ADR 570,537
--------------
Total 5,225,755
--------------
Total Common Stocks (identifed cost, $92,655,926) 118,957,753
--------------
Corporate Bonds--10.7%
ASSET BACKED SECURITIES--2.3%
$ 965,000 Banc One Credit Card Master Trust, 6.30%, (Series 1995-B)/(Class A),
10/15/2002 984,772
965,000 Dayton Hudson Credit Card Co., 6.10%, (Series 1995-1, Class A),
2/25/2002 976,676
425,000 First Deposit Master Trust, 6.05%, (Series 1995-2), 8/15/2002 429,513
535,000 Ford Credit Auto Lease Trust, 6.35%, (Series 1995-1, Class A-2),
10/15/1998 537,841
575,000 Ford Credit Auto Loan Master Trust, 6.50%, (Series 1995-1),
8/15/2002 589,656
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE BALANCED FUND
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Corporate Bonds--continued
ASSET BACKED SECURITIES--CONTINUED
$ 1,220,961 Prudential Home Mortgage Securities, 6.75%, 12/25/2023 $ 1,227,066
--------------
Total 4,745,524
--------------
FINANCE--3.9%
725,000 Commercial Credit Group, Inc., 6.375%, 9/15/2002 731,822
790,000 CNA Financial Corp., 7.25%, 11/15/2023 771,087
1,000,000 Fleet Financial Group, Inc., 6.00%, 10/26/1998 1,004,170
775,000 Fleet Financial Group, Inc., 7.125%, 5/1/2000 806,643
1,000,000 Ford Motor Credit Co., 6.25%, 11/8/2000 1,005,370
1,010,000 Lehman Brothers Holdings, Inc., 6.625%, 11/15/2000 1,015,050
420,000 Meridian Bancorp, Inc., 6.625%, 6/15/2000 427,938
715,000 Merrill Lynch & Co, Inc., 6.64%, 9/19/2002 730,087
985,000 Norwest Corp., 6.00%, 10/13/1998 993,757
505,000 Norwest Financial, Inc., 6.75%, 6/1/2005 519,231
--------------
Total 8,005,155
--------------
FOREIGN BONDS--3.1%
1,750,000 Banque Parabas N.Y., 6.875%, 3/1/2009 1,728,107
1,000,000 International American Development Bank, 8.50%, 5/1/2001 1,118,290
1,500,000 Italy Rep, 6.875%, 9/27/2023 1,423,845
1,490,000 Landeskreditbank Baden, 7.625%, 2/1/2023 1,652,499
455,000 Repsol International Finance, 7.00%, 8/1/2005 477,573
--------------
Total 6,400,314
--------------
INDUSTRIAL--1.4%
1,120,000 Motorola, Inc., 6.50%, 9/1/2025 1,151,360
775,000 Wal-Mart Stores., Inc., 6.125%, 10/1/1999 783,424
720,000 Waste Management, Inc., 7.70%, 10/1/2002 781,200
--------------
Total 2,715,984
--------------
Total Corporate Bonds (identified cost, $21,532,386) 21,866,977
--------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE BALANCED FUND
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
U.S. Government Agencies--9.2%
FEDERAL HOME LOAN MORTGAGE CORPORATION--2.1%
$ 2,321,000 5.59%, 12/13/1995 $ 2,316,567
301,060 6.50%, 12/1/2008 300,307
391,268 6.50%, 7/1/2010 390,529
73,670 6.50%, 4/1/2009 73,486
840,479 6.50%, 3/1/2009 838,378
361,163 6.50%, 6/1/2009 360,260
91,353 6.50%, 2/1/2009 91,124
--------------
Total 4,370,651
--------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--2.9%
74,728 8.50%, 8/1/2016 78,176
234,232 7.50%, 4/1/2007 239,647
436,911 8.00%, 6/1/2022 450,298
334,493 8.00%, 1/1/2023 344,662
76,342 8.50%, 6/1/2024 79,324
753,331 8.50%, 7/1/2024 782,756
44,644 8.50%, 10/1/2024 46,388
905,499 8.50%, 12/1/2024 940,868
815,000 7.40%, 7/1/2004 886,565
600,000 5.68%, 12/15/1995 598,674
940,000 7.375%, 3/28/2005 1,022,664
687,756 9/25/2018 REMIC, PO 648,284
--------------
Total 6,118,306
--------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION--2.2%
872,114 7.00%, 5/15/2023 875,236
421,221 7.50%, 3/15/2023 429,906
474,350 7.00%, 8/15/2023 476,048
2,662,558 6.50%, 4/15/2024 2,614,286
--------------
Total 4,395,476
--------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE BALANCED FUND
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
U.S. Government Agencies--continued
FEDERAL AGENCIES--2.0%
$ 2,000,000 Federal Home Loan Bank, 4.587%, 8/27/1998 $ 1,954,880
755,000 International Bank for Global Reconstruction and Development, 6.375%,
7/21/2005 775,008
1,250,000 Private Export Funding Corp., 7.95%, 11/1/2006 1,399,850
--------------
Total 4,129,738
--------------
Total U.S. Government Agencies (identified cost, $18,852,134) 19,014,171
--------------
U.S. Treasury Obligations--21.2%
U.S. TREASURY BILLS--1.5%
3,143,000 12/14/1995 3,136,651
--------------
U.S. TREASURY BONDS--3.5%
5,890,000 8.125%, 8/15/2021 7,271,382
--------------
U.S. TREASURY NOTES--16.2%
1,065,000 7.375%, 11/15/1997 1,103,276
630,000 7.75%, 11/30/1999 679,417
2,925,000 7.75%, 2/15/2001 3,209,720
790,000 8.00%, 5/15/2001 878,749
6,845,000 5.875%, 7/31/1997 6,896,338
1,900,000 6.125%, 7/31/2000 1,943,928
285,000 7.50%, 5/15/2002 313,320
1,675,000 7.50%, 10/31/1999 1,789,888
1,890,000 5.375%, 5/31/1998 1,887,940
2,585,000 6.375%, 8/15/2002 2,686,384
1,400,000 6.875%, 7/31/1999 1,462,342
3,300,000 4.75%, 8/31/1998 3,243,801
1,050,000 7.875%, 4/15/1998 1,106,763
220,000 6.50%, 4/30/1999 226,910
6,065,000 6.50%, 8/15/1997 6,173,988
--------------
Total 33,602,764
--------------
Total U.S. Treasury Obligations (identified cost, $42,897,469) 44,010,797
--------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE BALANCED FUND
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
(a) Repurchase Agreement--1.4%
$ 2,902,457 Daiwa Securities America, Inc., 5.90%, 11/30/1995, due 12/1/1995 (at
amortized cost) $ 2,902,457
--------------
Total investments (identified cost, $178,840,372) (b) $ 206,752,155
--------------
</TABLE>
* Non-income producing securities.
(a) The repurchase agreement is fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(b) The cost of investments for federal tax purposes amounts to $179,553,055.
The net unrealized appreciation of investments on a federal tax basis
amounts to $27,199,100 which is comprised of $29,627,880 appreciation and
$2,428,780 depreciation at November 30, 1995.
Note: The categories of investments are shown as a percentage of net assets
($207,421,495) at November 30, 1995.
Note: The fund is required to deposit cash or U.S. Government Securities as
collateral for the S&P 500 Index Futures.
The following acronym(s) are used throughout this portfolio:
ADR--American Depositary Receipt
PO--Principal Only
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
NOVEMBER 30, 1995
<TABLE>
<S> <C> <C>
Assets:
Investments at value
(identified cost $178,840,372, and tax cost $179,553,055) $ 206,752,155
Cash 9,934
Income receivable 1,281,918
Receivable for investments sold 1,320,212
Receivable for shares sold 200,014
Deferred expenses 28,541
--------------
Total assets 209,592,774
Liabilities:
Payable for investments purchased $ 959,925
Payable for shares redeemed 1,155,487
Payable for daily variation margin 6,956
Accrued expenses 48,911
------------
Total liabilities 2,171,279
--------------
Net Assets for 17,399,546 shares outstanding $ 207,421,495
--------------
Net Assets Consist of:
Paid in capital $ 173,017,219
Net unrealized appreciation of investments and futures contracts (including
unrealized appreciation on futures contracts of $217,390) 28,129,173
Accumulated net realized gain on investments and futures contracts 5,011,421
Undistributed net investment income 1,263,682
--------------
Total Net Assets $ 207,421,495
--------------
Net Asset Value and Redemption Proceeds Per Share:
($207,421,495 / 17,399,546 shares outstanding) $11.92
--------------
Offering Price Per Share (100/95.50 of $11.92)* $12.48
--------------
</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
YEAR ENDED NOVEMBER 30, 1995
<TABLE>
<S> <C> <C>
Investment Income:
Dividends $ 2,548,119
Interest 6,082,763
-------------
Total income 8,630,882
Expenses:
Investment advisory fee $ 1,394,516
Administrative personnel and services fee 178,968
Custodian fees 39,843
Transfer and dividend disbursing agent fees and expenses 36,743
Trustees' fees 14,899
Auditing fees 15,986
Legal fees 14,664
Portfolio accounting fees 67,586
Share registration costs 26,727
Printing and postage 19,786
Insurance premiums 6,079
Miscellaneous 14,456
------------
Total expenses 1,830,253
Waiver of investment advisory fee (316,346)
------------
Net expenses 1,513,907
-------------
Net investment income 7,116,975
-------------
Realized and Unrealized Gain (Loss) on Investments and Futures Contracts:
Net realized gain on investments and futures contracts 5,333,434
Net change in unrealized appreciation of investments and futures contracts 34,366,856
-------------
Net realized and unrealized gain on investments and futures contracts 39,700,290
-------------
Change in net assets resulting from operations $ 46,817,265
-------------
</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, 1995 1994
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets:
Operations--
Net investment income $ 7,116,975 $ 6,435,680
Net realized gain (loss) on investments and futures contracts
($5,923,208 and $3,060,817 net gains, respectively, as computed for
federal tax purposes) 5,333,434 2,764,758
Net change in unrealized appreciation (depreciation) on investment and
futures contracts 34,366,856 (10,061,721)
-------------- --------------
Change in net assets resulting from operations 46,817,265 (861,283)
-------------- --------------
Distributions to Shareholders--
Distributions from net investment income (6,933,437) (6,032,536)
Distributions from net realized gain on investments and futures
contracts (3,058,366) (669,917)
-------------- --------------
Change in net assets resulting from distributions to shareholders (9,991,803) (6,702,453)
-------------- --------------
Share Transactions--
Proceeds from sale of shares 57,249,693 62,911,836
Net asset value of shares issued to shareholders in payment of
distributions declared 9,726,091 6,649,214
Cost of shares redeemed (90,810,110) (33,837,708)
-------------- --------------
Change in net assets resulting from share transactions (23,834,326) 35,723,342
-------------- --------------
Change in net assets 12,991,136 28,159,606
Net Assets:
Beginning of period 194,430,359 166,270,753
-------------- --------------
End of period (including undistributed net investment income of
$1,263,682 and $1,080,144, respectively) $ 207,421,495 $ 194,430,359
-------------- --------------
</TABLE>
(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, 1995 1994 1993(a)
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.93 $ 10.33 $ 10.00
Income from investment operations
Net investment income 0.40 0.35 0.19
Net realized and unrealized gain (loss) on investments 2.13 (0.38) 0.29
--------- --------- -----------
Total from investment operations 2.53 (0.03) 0.48
--------- --------- -----------
Less distributions
Distributions from net investment income (0.38) (0.33) (0.15)
Distributions from net realized gain on investments (0.16) (0.04) --
--------- --------- -----------
Total distributions (0.54) (0.37) (0.15)
--------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 11.92 $ 9.93 $ 10.33
--------- --------- -----------
Total Return (b) 26.32% (0.39%) 4.89%
Ratios to Average Net Assets
Expenses 0.76% 0.75% 0.75%*
Net investment income 3.58% 3.46% 3.30%*
Expense waiver/reimbursement (c) 0.16% 0.17% 0.19%*
Supplemental Data
Net assets, end of period (000 omitted) $207,421 $194,430 $166,271
Portfolio turnover 102% 74% 60%
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 10, 1993 (date of initial
public investment) to November 30, 1993.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE BALANCED FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1995
(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 portfolios. The financial statements included
herein are only those of Biltmore Balanced Fund (the "Fund"), a diversified
portfolio. 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.
INVESTMENT VALUATIONS--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. All other securities are valued at
prices provided by an independent pricing service.
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 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.
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"). Dividend
income and distributions to shareholders are recorded on the ex-dividend
date.
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.
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.
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 its 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.
FUTURES CONTRACTS--The Fund purchases stock index futures contracts to
manage cashflows, enhance yield, and to potentially reduce transaction
costs. Upon entering into a stock index futures contract with a broker, the
Fund is required to deposit in a segregated account a specified amount of
cash or U.S. government securities. Futures contracts are valued daily and
unrealized gains or losses are recorded in a "variation margin" account.
Daily, the Fund receives from or pays to the broker a specified amount of
cash based upon changes in the variation margin account. When a contract
is closed, the Fund recognizes a realized gain or loss.
For the period ended November 30, 1995, the Fund had realized gains on
futures contracts of $261,691.
Futures contracts have market risks, including the risk that the change in
the value of the contract may not correlate with changes in the value of
the underlying securities.
At November 30, 1995, the Fund had outstanding futures contracts as set
forth below:
<TABLE>
<CAPTION>
Expiration Contracts to Unrealized
Date Deliver/Receive Position Appreciation
<S> <C> <C> <C>
- ------------------------------------------------------------
20 S&P 500
December 1995 Index Futures Long $217,390
</TABLE>
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>
Year Ended November 30, 1995 1994
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------
Shares sold 5,362,908 6,165,635
Shares issued to shareholders in payment of distributions declared 944,056 653,174
Shares redeemed (8,483,555) (3,337,297)
----------- -----------
Net change resulting from share transactions (2,176,591) 3,481,512
----------- -----------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Wachovia Asset Management, 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 any 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. This 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 AGENT AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
serves as transfer and dividend disbursing agent for the Fund. This fee is based
on the size, type, and number of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--Federated Services Company maintains the Fund's
accounting records for which it receives a fee. The fee is based on the level of
the Fund's average daily net assets for the period, plus out-of-pocket expenses.
CUSTODIAN FEES--Wachovia Bank of North Carolina, N.A. is the Fund's custodian.
The fee is based on the level of the Fund's average daily net assets for the
period, plus out-of-pocket expenses.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE BALANCED FUND
ORGANIZATIONAL EXPENSES--Organizational expenses of $31,904 were borne initially
by FAS. The Fund has agreed to reimburse FAS for the organizational expenses
during the five year period following the Fund's effective date. For the period
ended November 30, 1995, the Fund paid $6,384 pursuant to this agreement.
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 November 30, 1995, were as follows:
<TABLE>
<S> <C>
Purchases $ 189,863,926
--------------
Sales $ 205,610,257
--------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Trustees and Shareholders of
THE BILTMORE FUNDS:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Biltmore Balanced Fund (one of the portfolios
comprising The Biltmore Funds) as of November 30, 1995, and the related
statement of operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended and the financial
highlights for the periods presented therein. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Biltmore Balanced Fund of The Biltmore Funds at Novem-
ber 30, 1995, and the results of its operations for the year then ended, changes
in its net assets for each of the two years in the period then ended, and
financial highlights for the periods presented therein, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
January 15, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TRUSTEES OFFICERS
<TABLE>
<S> <C>
James A. Hanley John W. McGonigle
Samuel E. Hudgins President and Treasurer
J. Berkley Ingram, Jr. Ronald M. Petnuch
D. Dean Kaylor Vice President and Assistant Treasurer
Charles S. Way, Jr. Peter J. Germain
Secretary
Gail Cagney
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed
by any bank, and are not insured or guaranteed by the U.S. government,
the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any
other government agency. Investment in mutual funds involves risk,
including 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, expenses and other information.
Federated Securities Corp.
is the distributor of the fund. Cusip 090207821
ANNUAL REPORT
DATED
November 30, 1995
JANUARY 31, 1996
BILTMORE
EQUITY FUND
WACHOVIA INVESTMENTS
MAKE YOURSELF COMFORTABLE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PRESIDENT'S MESSAGE
Dear Shareholder:
I'm pleased to present the Annual Report to Shareholders of Biltmore Equity Fund
for the twelve-month period ended November 30, 1995. The report begins with a
brief commentary on the stock market from your fund's portfolio manager.
Following the commentary are a complete listing of the fund's investments and
its financial statements.
On your behalf, Biltmore Equity Fund invests in a portfolio of blue-chip stocks
issued by some of America's largest, best-known companies. In particular, the
fund's portfolio manager seeks stocks issued by companies that are both
undervalued and have good growth opportunities. At the end of the report period,
the fund's portfolio included such names as Caterpillar, General Electric,
Chrysler, Ford, General Motors, American Brands, and Coca-Cola.
As the stock market soared to record highs, the fund rewarded shareholders with
strong performance during the twelve-month period. The fund delivered total
return figures based on net asset value and maximum offering price of 28.74% and
22.90%, respectively,* as its share price increased by 23% to reach $12.71 at
the end of the period. Shareholders also received a total of $0.25 in dividends
and $0.23 in capital gains per share. Fund net assets grew by $43 million to end
the period at $130 million.
Thank you for selecting Biltmore Equity Fund to pursue classic long-term
performance from stocks. We look forward to keeping you informed about your
investment, and we welcome your comments and suggestions.
Sincerely,
John W. McGonigle
President
January 15, 1996
* 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
The economy completed its long awaited "soft landing" during the fiscal year.
Despite several interest rate increases in 1994 and early 1995, the economy
demonstrated surprising strength at the outset of the fiscal year. By the second
quarter of 1995, however, economic growth became increasingly sluggish. The slow
growth continued until mid-summer, when the economy rebounded, aided by a slight
interest rate reduction in July. Despite the resurgence, inflation remained in
check, with producer and consumer price increases below 3% annual rates.
Stocks set record highs during the fiscal year, sparked by healthy corporate
profits and the stronger-than-expected economy. Heavy merger-and-acquisition
activity and optimism regarding deficit reduction efforts in Washington also
contributed to the robust equity markets. The Dow Jones Industrial Average
topped the 5,000-point barrier and the Standard & Poor's Composite Index of 500
Stocks* reached the 600-point level. The Biltmore Equity Fund continued to
concentrate on those sectors benefiting from the dramatic expansion of emerging
markets and new economies around the world. During the twelve-month period ended
November 30, 1995, the Fund had a total return of 28.74% based on the net asset
value and 22.90% based on the maximum offering price.**
On November 30, 1995, the Fund's largest common stock holdings were
Bristol-Myers Squibb Co., Philip Morris Cos., Inc., General Electric Co., Royal
Dutch Petroleum Co., Honeywell Inc., Kimberly Clark Corp., KeyCorp, MCI
Communications Corp., Sara Lee Corp., and FMC Corp. On November 30, 1995, the
Fund had net assets of $130 million and a net asset value of $12.71 per share.
As of November 30, 1995, the Fund's 30-day SEC yield was 1.59% based on net
asset value and 1.52% based on the maximum offering price.**
*Standard & Poor's Composite Index of 500 Stocks is a composite index of common
stocks in industry, transportation, and financial and public utility
companies, and can be used to compare to the total returns of funds whose
portfolios are invested primarily in common stocks. This index is unmanaged,
and investments cannot be made in an index.
**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
GROWTH OF $10,000 INVESTED IN BILTMORE EQUITY FUND
The graph below illustrates the hypothetical investment of $10,000 in the
Biltmore Equity Fund (the "Fund") from May 7, 1993 (start of performance) to
November 30, 1995 compared to the S&P 500 Index.+
"Graphic representation "C" omitted. See Appendix."
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF, OR
GUARANTEED BY, ANY BANK AND ARE NOT FEDERALLY INSURED.
*Represents a hypothetical investment of $10,000 in the Fund after deducting
the maximum sales charge of 4.50% ($10,000 investment minus $450 sales charge
= $9,550). The Fund's performance assumes the reinvestment of all dividends
and distributions. The S&P 500 Index has been adjusted to reflect reinvestment
of dividends on securities in the index.
**Total return quoted reflects all applicable sales charges and contingent
deferred sales charges.
Total return for shareholders purchasing shares of the Fund at net asset value
without a sales charge, including accounts purchasing shares through the Trust
Divisions of the Wachovia Banks, is 28.74% for the year ended November 30,
1995, as reflected in the "Financial Highlights" section of the Fund's
prospectus, and 13.24% for the period from May 7, 1993 (start of performance)
through November 30 1995.
+ The S&P 500 Index is not adjusted to reflect sales loads, expenses, or other
fees that the SEC requires to be reflected in the Fund's performance. The
index is unmanaged.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE EQUITY FUND PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Common Stocks--88.5%
CAPITAL GOODS--6.5%
9,300 Ametek, Inc. $ 163,913
10,890 Caterpillar, Inc. 668,374
44 *Gardner Denver Machinery, Inc. 737
47,155 General Electric Co. 3,171,174
31,835 Giddings & Lewis, Inc. 501,401
8,100 Harsco Corp. 477,900
54,810 Honeywell, Inc. 2,610,326
5,500 Keystone International, Inc. 112,750
4,100 Lawson Products, Inc. 97,375
14,945 York International 668,789
--------------
Total 8,472,739
--------------
CONSUMER DURABLES--3.8%
17,513 Chrysler Corp. 908,487
47,490 Ford Motor Co. 1,341,593
15,326 General Motors Corp. 743,311
5,000 LADD Furniture, Inc. 66,875
1,700 Phelps Dodge Corp. 115,388
7,200 Stanley Works 364,500
12,305 Tecumseh Prods. Co. 652,165
9,000 Tenneco Inc. 432,000
7,600 Varity Corp. 294,500
--------------
Total 4,918,819
--------------
CONSUMER NON-DURABLES--26.7%
33,813 Abbott Laboratories 1,373,652
7,900 American Brands, Inc. 329,824
5,700 American Greetings Corp. 155,324
13,280 American Home Products Co. 1,211,800
9,000 American Stores Co. New 236,250
2,375 Aviall Inc. 20,187
15,000 Bandag Inc. 738,750
21,050 Baxter International Inc. 884,100
3,100 Becton, Dickinson & Co. 216,224
11,655 Bergen Brunswig Corp. Class A 279,720
49,166 Bristol-Myers Squibb Co. 3,945,571
10,180 Coca-Cola Co. 771,134
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE EQUITY FUND PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Common Stocks--continued
CONSUMER NON-DURABLES--CONTINUED
30,618 Columbia/HCA Healthcare $ 1,580,654
22,752 CPC International, Inc. 1,564,200
6,050 Dun & Bradstreet Corp. 377,369
30,589 Fingerhut Cos., Inc. 386,186
13,750 *Fruit of the Loom, Inc. Class A 266,406
51,810 Hasbro, Inc. 1,580,205
5,075 IBP Inc. 317,188
33,239 Kimberly-Clark Corp 2,555,248
1,800 Knight Ridder, Inc. 116,100
2,100 Lee Enterprises, Inc. 87,413
11,169 Lilly (Eli) & Co. 1,111,316
13,000 Limited, Inc. 232,375
3,950 Loews Corp. 606,325
5,800 Lowes Companies Inc. 182,700
27,200 *LTV Corp. 394,400
4,800 Melville Corp, 149,400
29,911 Merck & Co., Inc. 1,850,743
39,721 PepsiCo, Inc. 2,194,585
5,200 Pfizer, Inc. 301,600
37,419 Philip Morris Cos., Inc. 3,283,517
71,844 Sara Lee Corp. 2,316,969
4,700 Sbarro, Inc. 105,163
16,700 Scherer Corp. 741,063
1,850 Sears, Roebuck & Co. 72,844
26,800 Service Corp., International 1,088,750
6,000 Stanhome, Inc. 178,500
1,300 Times Mirror Co New 42,250
14,726 Times Mirror Co New-Publishing (pfd stock) 379,195
9,000 *Toys R Us, Inc. 209,250
2,200 Unifi, Inc. 52,250
1,600 Unilever N. V. 212,600
--------------
Total 34,699,300
--------------
ENERGY--8.9%
28,796 Amoco Corp. 1,950,929
5,000 Atlantic Richfield Co. 541,875
25,850 Baker Hughes, Inc. 526,694
1,500 Camco Intl. Inc. 35,250
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE EQUITY FUND PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Common Stocks--continued
ENERGY--CONTINUED
24,385 Coastal Corp. $ 810,801
14,800 Dresser Industries, Inc. 349,650
16,185 Exxon Corp. 1,252,314
8,550 Halliburton Co. 370,856
10,180 MAPCO, Inc. 547,175
8,076 Mobil Corp. 842,933
11,735 Phillips Petroleum Co. 390,189
20,801 Royal Dutch Petroleum Co. 2,670,328
20,690 Schlumberger, Ltd. 1,313,815
--------------
Total 11,602,809
--------------
FINANCE--11.1%
5,804 Allstate Corp. 237,964
21,325 AMBAC, Inc 940,966
11,795 American Express Co. 501,288
17,201 American International Group, Inc. 1,543,790
6,040 Chubb Corp 587,390
10,200 Citicorp 721,650
20,425 Federal Home Loan Mortgage Corp. 1,572,725
17,916 Federal National Mortgage Association 1,961,802
67,777 KeyCorp 2,499,277
3,800 Lehman Brothers Holdings 85,975
8,750 MBIA, Inc. 673,750
7,750 Morgan (J.P.) & Co., Inc. 608,375
3,850 Morgan Stanley Group, Inc. 332,063
28,395 Providian Corp. 1,139,349
14,379 Salomon, Inc. 523,036
6,600 SunTrust Banks, Inc. 450,450
2,800 United Asset Management Corp. 105,350
--------------
Total 14,485,200
--------------
MATERIALS & SERVICES--9.7%
6,250 Aluminum Co. of America 365,625
1,950 Crane Co. 66,544
1,100 Dow Chemical Co. 77,963
55,180 Ecolab Inc 1,586,425
15,838 Equifax, Inc. 663,216
30,225 *FMC Corp. 2,232,872
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE EQUITY FUND PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Common Stocks--continued
MATERIALS & SERVICES--CONTINUED
2,350 Georgia Pacific Corp. $ 182,713
26,051 Goodyear Tire & Rubber Co. 1,103,911
22,200 Hanson PLC 338,550
6,800 International Paper Co. 259,250
2,450 NCH Corp. 132,606
14,101 Potash Corp. Saskatchewan, Inc. 974,732
65,983 Praxair, Inc. 1,921,755
1,000 Sigma Aldrich 49,250
48,570 Sonoco Products Co. 1,214,250
24,250 Tyco International Ltd. 760,844
24,764 Witco Corp. 761,493
--------------
Total 12,691,999
--------------
TECHNOLOGY--13.7%
15,460 American Telephone & Telegraph, Inc. 1,020,360
4,650 Augat, Inc 80,213
24,448 Avnet, Inc. 1,149,056
4,150 Boeing Co. 302,431
8,980 Cabletron Systems, Inc. 745,340
4,895 *Cisco Systems, Inc. 411,792
6,250 Computer Association International Corp. 409,375
6,140 *Computer Sciences Corp. 446,685
8,500 *Cray Research Inc. 204,000
5,300 *Digital Equipment Corp. 312,038
18,286 Hewlett-Packard Co. 1,515,452
15,350 Intel Corp. 934,431
22,754 International Business Machines, Inc. 2,198,605
15,300 Linear Technology Corp 692,325
87,887 MCI Communications Corp. 2,350,977
4,440 *Microsoft Corp. 386,835
18,235 Motorola Inc. 1,116,894
12,201 Northern Telecom Ltd. 492,615
8,800 *Novell, Inc. 148,500
6,650 Raytheon Co. 295,925
3,050 Sunstrand Corp. 197,488
2,200 *Thermo Electron Corp. 108,900
15,385 Xerox Corp. 2,109,668
3,000 *Zebra Technologies Corp. 200,250
--------------
Total 17,830,155
--------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE EQUITY FUND PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
Shares or
Principal
Amount Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Common Stocks--continued
TRANSPORTATION--2.2%
15,530 CSX Corp $ 1,360,816
21,386 Conrail, Inc. 1,494,347
--------------
Total 2,855,163
--------------
UTILITIES--5.9%
32,330 BellSouth Corp. 1,256,829
3,200 Carolina Power & Light Co. 105,200
45,801 GTE Corp. 1,952,268
35,239 NYNEX Corp. 1,748,735
4,350 Pacific Telesis Group 130,500
4,750 Pennsylvania Power & Light Co. 118,156
52,319 Scana Corp. 1,412,613
4,000 SCE Corp. 62,500
15,576 Southern Co. 356,301
7,850 Telefonos de Mexico, ADR 259,050
4,950 U.S. West, Inc. (communications) 154,688
4,950 U.S. West, Inc. (media) 89,100
--------------
Total 7,645,940
--------------
Total Common Stocks (identified cost, $97,863,301) 115,202,124
--------------
U.S. Government Agency Securities--3.9%
FEDERAL HOME LOAN MORTGAGE CORP. DISCOUNT NOTES--3.6%
$ 630,000 5.67%, 12/15/1995 628,601
310,000 5.68%, 12/14/1995 309,364
3,800,000 5.75%, 12/11/1995 3,794,110
--------------
Total 4,732,075
--------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION DISCOUNT NOTE--0.3%
355,000 5.64%, 12/11/1995 354,446
--------------
Total U.S. Government Agency Securities (identified cost, $4,900,180) 5,086,521
--------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE EQUITY FUND PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
U.S. Treasury Obligations--2.8%
U.S. TREASURY BILLS
$ 3,695,000 12/14/1995 (identified cost, $3,687,848) $ 3,687,536
--------------
**Repurchase Agreement--4.3%
5,627,404 Daiwa Securities America, Inc., 5.90%, dated 11/30/1995,
due 12/1/1995 (at amortized cost) 5,627,404
--------------
Total Investments (identified cost, $112,078,733) $ 129,603,585+
--------------
</TABLE>
* Non-income producing security.
** 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 $112,280,775. The
net unrealized appreciation of investments on a federal tax basis amounts to
$17,322,810, which is comprised of $18,668,414 appreciation and $1,345,604
depreciation at November 30, 1995.
The following abbreviation is used in this portfolio:
ADR--American Depository Receipt
Note: The categories of investments are shown as a percentage of net assets
($130,150,164) at November 30, 1995.
Note: The fund is required to deposit cash or U.S. Government Securities as
collateral for the S&P 500 Index Futures.
(See Notes which are an integral part of the Financial Statements)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
<TABLE>
<S> <C> <C>
Assets:
Total investments in securities, at value (identified cost
$112,078,733, and tax cost $112,280,775) $ 129,603,585
Receivable for shares sold 316,062
Income receivable 278,003
Receivable for investments sold 37,107
Deferred expenses 10,898
--------------
Total assets 130,245,655
Liabilities:
Payable for investments purchased $ 35,582
Payable for shares redeemed 12,546
Payable for daily variation margin 11,600
Accrued expenses 35,763
---------
Total liabilities 95,491
--------------
Net Assets for 10,238,873 shares outstanding $ 130,150,164
--------------
Net Assets Consist of:
Paid in capital $ 105,192,237
Net unrealized appreciation of investments and futures contracts (including unrealized
appreciation on futures contracts of $263,400) 17,788,252
Accumulated net realized gain on investments and futures contracts 6,984,672
Undistributed net investment income 185,003
--------------
Total Net Assets $ 130,150,164
--------------
Net Asset Value and Redemption Proceeds Per Share:
($130,150,164 / 10,238,873 shares outstanding) $12.71
--------------
Offering Price Per Share (100/95.50 of $12.71)* $13.31
--------------
</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
YEAR ENDED NOVEMBER 30, 1995
<TABLE>
<S> <C> <C>
Investment Income:
Dividends $ 2,291,496
Interest 819,498
-------------
Total income 3,110,994
Expenses:
Investment advisory fee $ 754,597
Administrative personnel and services fee 96,714
Custodian fees 21,560
Transfer and dividend disbursing agent fees and expenses 38,078
Trustees' fees 5,429
Auditing fees 15,999
Legal fees 3,373
Portfolio accounting fees 54,218
Share registration costs 21,421
Printing and postage 15,381
Insurance premiums 4,269
Miscellaneous 16,152
------------
Total expenses 1,047,191
Waiver of investment advisory fee (76,995)
------------
Net expenses 970,196
-------------
Net investment income 2,140,798
-------------
Realized and Unrealized Gain (Loss) on Investments and Futures Contracts:
Net realized gain on investments and futures contracts 7,169,919
Net change in unrealized appreciation of investments and futures contacts 17,600,644
-------------
Net realized and unrealized gain on investments and futures contracts 24,770,563
-------------
Change in net assets resulting from operations $ 26,911,361
-------------
</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, 1995 1994
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets:
Operations--
Net investment income $ 2,140,798 $ 1,446,277
Net realized gain on investments and futures contracts ($7,456,796 and
$1,927,035, respectively, as computed
for federal tax purposes) 7,169,919 1,790,525
Net change in unrealized appreciation of investments and futures con-
tracts 17,600,644 (922,981)
-------------- --------------
Change in net assets resulting from operations 26,911,361 2,313,821
-------------- --------------
Distributions to Shareholders--
Distributions from net investment income (2,269,960) (1,351,595)
Distributions from net realized gains (1,933,454) (473,495)
-------------- --------------
Change in net assets resulting from distributions to
shareholders (4,203,414) (1,825,090)
-------------- --------------
Share Transactions--
Proceeds from sale of shares 48,585,296 45,572,500
Net asset value of shares issued to shareholders in payment of distri-
butions declared 3,740,311 1,766,826
Cost of shares redeemed (31,905,163) (22,803,523)
-------------- --------------
Change in net assets resulting from share transactions 20,420,444 24,535,803
-------------- --------------
Change in net assets 43,128,391 25,024,534
Net Assets:
Beginning of period 87,021,773 61,997,239
-------------- --------------
End of period (including undistributed net investment income of $185,003
and $314,165, respectively) $ 130,150,164 $ 87,021,773
-------------- --------------
</TABLE>
(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, 1995 1994 1993(a)
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.32 $ 10.28 $ 10.00
Income from investment operations
Net investment income 0.23 0.20 0.12
Net realized and unrealized gain (loss) on investments and
future contracts 2.64 0.12 0.25
--------- --------- -----------
Total from investment operations 2.87 0.32 0.37
Less distributions
Distributions from net investment income (0.25) (0.20) (0.09)
Distributions from net realized gain on investments (0.23) (0.08) --
--------- --------- -----------
Total distributions (0.48) (0.28) (0.09)
--------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 12.71 $ 10.32 $ 10.28
--------- --------- -----------
Total Return (b) 28.74% 3.10% 3.68%
Ratios to Average Net Assets
Expenses 0.90% 0.87% 0.81%*
Net investment income 1.99% 1.98% 2.18%*
Expense waiver/reimbursement (c) 0.07% 0.16% 0.32%*
Supplemental Data
Net assets, end of period (000 omitted) $130,150 $87,022 $61,997
Portfolio turnover 65% 35% 50%
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 10, 1993 (date of initial
public investment) to November 30, 1993.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1995
(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 portfolios. The financial statements included
herein are only those of Biltmore Equity Fund (the "Fund"), a diversified
portfolio. 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.
INVESTMENT VALUATIONS--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. All other securities are valued at
prices provided by an independent pricing service.
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 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.
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"). Dividend
income and distributions to shareholders are recorded on the ex-dividend
date.
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.
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.
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 its 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.
FUTURES CONTRACTS--The Fund purchases stock index futures contracts to
manage cash flows, enhance yield, and to potentially reduce transaction
costs. Upon entering into a stock futures contract with a broker, the
Fund is required to deposit in a segregated account a specified amount of
cash or U.S. government securities. Futures contracts are valued daily and
unrealized gains or losses are recorded in a "variation margin" account.
Daily, the Fund receives from or pays to the broker a specified amount of
cash based upon changes in the variation margin account. When a contract
is closed, the Fund recognizes a realized gain or loss. For the year
ended November 30, 1995, the Fund had realized gains on future contracts
in the amount of $783,473.
Futures contracts have market risks, including the risk that the change in
the value of the contract may not correlate with changes in the value of
the underlying securities.
At November 30, 1995, the Fund had outstanding futures contracts as set
forth below:
<TABLE>
<CAPTION>
Expiration Contracts to Unrealized
Date Deliver/Receive Position Appreciation
<S> <C> <C> <C>
- -------------------------------------------------------------------------
December 1995 20 S&P 500 Index Futures Long $263,400
</TABLE>
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>
Year Ended November 30, 1995 1994
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------
Shares sold 4,282,287 4,415,092
Shares issued to shareholders in payment of distributions declared 351,282 170,048
Shares redeemed (2,825,368) (2,185,478)
----------- -----------
Net change resulting from share transactions 1,808,201 2,399,662
----------- -----------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Wachovia Asset Management, 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 any 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. This 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 AGENT AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Fund for
which it receives a fee. This fee is based on the size, type, and number of
accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ also maintains the Trust's accounting records
for which it receives a fee. The fee is based on the level of the Trust's
average daily net assets for the period, plus out-of-pocket expenses.
CUSTODIAN FEES--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
daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses of $34,484 were borne initially
by FAS. The Fund has agreed to reimburse FAS for the organizational expenses
during the five year period following the Fund's effective date. For the year
ended November 30, 1995, the Fund paid $6,626 pursuant to this agreement.
GENERAL--Certain of the Officers of the Trust are Officers and Directors or
Trustees of the above companies.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE EQUITY FUND
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
year ended November 30, 1995, were as follows:
<TABLE>
<S> <C>
Purchases $ 86,550,631
-------------
Sales $ 63,612,133
-------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Trustees and Shareholders of
THE BILTMORE FUNDS:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Biltmore Equity Fund (one of the portfolios
comprising The Biltmore Funds) as of November 30, 1995, and the related
statement of operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended and the financial
highlights for the periods presented therein. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Biltmore Equity Fund of The Biltmore Funds at November 30, 1995, and the results
of its operations for the year then ended, changes in its net assets for each of
the two years in the period then ended, and the financial highlights for the
periods presented therein, in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
January 15, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TRUSTEES OFFICERS
<TABLE>
<S> <C>
James A. Hanley John W. McGonigle
Samuel E. Hudgins President and Treasurer
J. Berkley Ingram, Jr. Ronald M. Petnuch
D. Dean Kaylor Vice President and Assistant Treasurer
Charles S. Way, Jr. Peter J. Germain
Secretary
Gail Cagney
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed
by any bank, and are not insured or guaranteed by the U.S. government,
the Federal Deposit Insurance Corporation, the Federal Reserve Board,
or any other government agency. Investment in mutual funds involves
risk, including 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, expenses and other information.
Federated Securities Corp.
is the distributor of the fund. Cusip 090297839
831-10 G01512-04(1/96)
ANNUAL REPORT
DATED
November 30, 1995
JANUARY 31, 1996
BILTMORE
EQUITY INDEX FUND
WACHOVIA INVESTMENTS
MAKE YOURSELF COMFORTABLE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PRESIDENT'S MESSAGE
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders of Biltmore Equity
Index Fund for the twelve-month period ended November 30, 1995. 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
investments and its financial statements.
On your behalf, Biltmore Equity Index Fund pursues a total return that
approximates that of the Standard & Poor's 500 Index*--a classic benchmark of
stock market performance. As a result, the fund's extensive portfolio contained
stocks issued by some of America's largest, best-known companies, including
Caterpillar, General Electric, Black & Decker, Ford, General Motors, Maytag,
American Brands, Goodyear, American Brands, Anheuser-Busch, Bristol-Myers
Squibb, Coca-Cola, Disney, Gap, Hershey Foods, Nike, PepsiCo, Sears, Wal-Mart,
and many, many more.
The reporting period was characterized by a favorable economic environment that
sent stocks to record highs. As a result, the fund rewarded shareholders with
extremely strong twelve-month performance. The fund delivered total return
figures based on net asset value and maximum offering price of 36.15% and
30.07%, respectively,** as its share price increased by 33% to reach $13.62 at
the end of the period. Shareholders also received a total of $0.27 in dividends
and $0.03 in capital gains per share. Fund net assets ended the period at $187
million.
Thank you for selecting Biltmore Equity Index Fund to pursue classic long-term
performance from a highly diversified portfolio of stocks. We welcome your
comments and suggestions.
Sincerely,
John W. McGonigle
President
January 15, 1996
* Standard & Poor's Composite Index of 500 Stocks is a composite index of
common stocks in industry, transportation, and financial and public utility
companies, which can be used to compare to the total returns of funds whose
portfolios are invested primarily in stocks. This index is unmanaged, and
investments cannot be made in an index.
** 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 EQUITY INDEX FUND
The economy completed its long awaited "soft landing" during the fiscal year.
Despite several interest rate increases in 1994 and early 1995, the economy
demonstrated surprising strength at the outset of the fiscal year. By the second
quarter of 1995, however, economic growth became increasingly sluggish. The slow
growth continued until mid-summer, when the economy rebounded, aided by a slight
interest rate reduction in July. Despite the resurgence, inflation remained in
check, with producer and consumer price increases below 3% annual rates.
Stocks set record highs during the fiscal year, sparked by healthy corporate
profits and the stronger-than-expected economy. Heavy merger-and-acquisition
activity and optimism regarding deficit reduction efforts in Washington also
contributed to the robust equity markets. During the twelve-month period ended
November 30, 1995, the Fund had a total return of 36.15% based on the net asset
value and 30.07% based on the maximum offering price.*
During the fiscal year, the Fund's portfolio manager used index futures
contracts to more closely track the performance of the Standard & Poor's
Composite Index of 500 Stocks, while simultaneously managing the cash position
required to handle cashflow into and out of the Fund. On November 30, 1995, the
Fund had net assets of $187 million and a net asset value of $13.62 per share.
As of November 30, 1995, the Fund's 30-day SEC yield was 1.91% based on net
asset value and 1.82% based on the maximum offering price.*
*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
GROWTH OF $10,000 INVESTED IN BILTMORE EQUITY INDEX FUND
The graph below illustrates the hypothetical investment of $10,000 in the
Biltmore Equity Index Fund (the "Fund") from May 7, 1993 (start of performance)
to November 30, 1995 compared to the S&P 500 Index.+
"Graphic representation "D" omitted. See Appendix."
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF, OR
GUARANTEED BY, ANY BANK AND ARE NOT FEDERALLY INSURED.
*Represents a hypothetical investment of $10,000 in the Fund after deducting
the maximum sales charge of 4.50% ($10,000 investment minus $450 sales charge
= $9,550). The Fund's performance assumes the reinvestment of all dividends
and distributions. The S&P 500 Index has been adjusted to reflect reinvestment
of dividends on securities in the index.
**Total return quoted reflects all applicable sales charges and contingent
deferred sales charges.
Total return for shareholders purchasing shares of the Fund at net asset value
without a sales charge, including accounts purchasing shares through the Trust
Divisions of the Wachovia Banks, is 36.15% for the year ended November 30,
1995, as reflected in the "Financial Highlights" section of the Fund's
prospectus, and 15.53% for the period from May 7, 1993 (start of performance)
through November 30, 1995.
+ The S&P 500 Index is not adjusted to reflect sales loads, expenses, or other
fees that the SEC requires to be reflected in the Fund's performance. The
index is unmanaged.
BILTMORE EQUITY INDEX FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
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Common Stocks--89.6%
CAPITAL GOODS--4.2%
1,114 Briggs & Stratton Corp. $ 46,370
7,927 Browning Ferris Industries, Inc. 238,801
7,448 Caterpillar, Inc. 457,121
1,260 Cincinnati Milacron Inc. 32,918
4,005 Cooper Industries, Inc. 146,182
1,520 Cummins Engine Co., Inc. 59,660
9,660 Deere & Co. 317,573
4,221 Dover Corp. 164,091
2,896 Eaton Corp. 157,832
8,356 Emerson Electric Co. 651,768
1,334 Foster Wheeler Corp. 52,693
63,070 General Electric Co. 4,241,458
1,281 Giddings & Lewis, Inc. 20,176
1,890 Grainger (W.W.) Inc. 126,394
4,739 Honeywell, Inc. 225,695
4,237 Illinois Tool Works Inc. 268,520
3,932 Ingersoll-Rand Co. 150,890
1,445 PACCAR Inc. 63,219
2,747 Parker-Hannifin Corp. 100,952
1,634 Raychem Corp. 84,968
14,594 Westinghouse Electric Corp. 246,274
460 Zurn Industries, Inc. 11,270
--------------
Total 7,864,825
--------------
CONSUMER DURABLES--2.8%
1,388 Armstrong World Industries, Inc. 83,106
3,170 Black & Decker Corp. 118,479
14,236 Chrysler Corp. 738,492
3,114 Cooper Tire & Rubber Co. 76,682
3,768 Dana Corp. 110,214
4,208 Dillard Department Stores, Inc. 121,506
2,217 Echlin, Inc. 80,921
7,500 *Federated Dept. Stores, Inc. 218,437
39,982 Ford Motor Co. 1,129,491
27,830 General Motors Corp. 1,349,755
4,569 Genuine Parts Co. 184,473
</TABLE>
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BILTMORE EQUITY INDEX FUND
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
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Common Stocks--continued
CONSUMER DURABLES--CONTINUED
5,641 Goodyear Tire and Rubber Co. $ 239,037
1,703 Harnischfeger Industries, Inc. 57,689
1,434 Jostens, Inc. 35,492
1,206 Kaufman & Broad Home Corp. 15,678
4,005 Maytag Corp. 81,602
1,231 *Morrison Knudsen Corp. 7,386
1,801 National Services Industries, Inc. 58,532
2,796 *Navistar International Corp. 30,407
745 Outboard Marine Corp. 15,273
2,292 Pep Boys-Manny, Moe & Jack 60,738
1,005 Pulte Corp. 30,904
1,652 Stanley Works (The) 83,633
1,158 Timken Co. 46,754
1,073 TRINOVA Corp. 32,995
1,971 *Western Atlas, Inc. 94,362
2,746 Whirlpool Corp. 152,403
--------------
Total 5,254,441
--------------
CONSUMER NON-DURABLES--28.8%
29,735 Abbott Laboratories, Inc. 1,207,983
1,032 Alberto-Culver Co., Cl. B 33,281
9,458 Albertson's, Inc. 290,833
2,387 Allergan Pharmaceuticals Inc. 73,997
7,031 American Brands, Inc. 293,544
2,766 American Greetings Corp., Cl. A 75,373
11,466 American Home Products Co. 1,046,272
5,524 American Stores Co. 145,005
9,549 Anheuser-Busch Companies, Inc. 632,621
20,176 Archer Daniels Midland Co. 348,036
2,551 Avon Products, Inc. 185,266
1,750 *Bally Entertainment Group 21,219
1,940 Bard (C.R.), Inc. 56,017
2,170 Bausch & Lomb, Inc. 78,391
10,409 Baxter International, Inc. 437,178
2,499 Becton, Dickinson & Co. 174,305
3,653 *Beverly Enterprises, Inc. 42,466
3,900 Block (H&R), Inc. 173,550
18,877 Bristol-Myers Squibb Co. 1,514,879
</TABLE>
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BILTMORE EQUITY INDEX FUND
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
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Common Stocks--continued
CONSUMER NON-DURABLES--CONTINUED
2,569 Brown-Forman Corp., Cl. B $ 97,943
668 Brown Group, Inc. 9,352
3,566 Brunswick Corp. 76,223
5,447 CPC International Inc. 374,481
6,446 *CUC International Inc. 244,948
9,275 Campbell Soup Co. 518,241
5,732 Capital Cities/ABC, Inc. 708,618
3,831 Charming Shoppes, Inc. 8,859
3,590 Circuit City Stores, Inc. 104,110
1,976 Clorox Co. 149,682
46,946 Coca-Cola Co. 3,556,160
5,394 Colgate-Palmolive Co. 395,110
16,489 Columbia HCA/Healthcare Corp. 851,245
8,922 Comcast Corp., Cl. A 176,210
4,258 Comerica Inc. 159,143
1,624 *Community Psychiatric Centers 18,067
9,136 ConAgra, Inc. 364,298
1,427 Coors (Adolph) Co. 28,897
5,883 *Darden Restaurants Inc. 68,390
2,669 Dayton-Hudson Corp. 193,836
3,460 Dial Corp. 93,420
19,392 Disney (Walt) Co. (The) 1,165,944
5,661 Donnelley (R.R.) & Sons Co. 217,241
3,601 Dow Jones & Co., Inc. 138,188
6,314 Dun & Bradstreet Corp. 393,836
12,665 Eastman Kodak Co. 861,220
1,393 Fleming Companies, Inc. 32,213
7,452 *Freeport McMoran Copper 202,136
2,825 *Fruit of the Loom Inc. 54,734
5,216 Gannett Co., Inc. 318,176
5,358 Gap, Inc. (The) 242,449
5,885 General Mills, Inc. 324,411
2,207 Giant Food, Inc., Cl. A 71,176
16,500 Gillette Co. 855,938
1,423 Great Atlantic & Pacific Tea Co., Inc. 31,128
1,248 Handleman Co. 7,800
1,136 Harland (John H.) Co. 23,430
3,817 *Harrahs Entertainment, Inc. 94,948
</TABLE>
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BILTMORE EQUITY INDEX FUND
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
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Common Stocks--continued
CONSUMER NON-DURABLES--CONTINUED
3,266 Hasbro, Inc. $ 99,613
13,599 Heinz (H.J.) Co. 433,468
920 Helmerich & Payne 25,070
2,890 Hershey Foods Corp. 178,458
1,795 Hilton Hotels Corp. 116,002
17,722 Home Depot, Inc. 786,414
6,014 *Humana Inc. 168,392
4,155 International Flavors & Fragrances, Inc. 212,424
2,913 Interpublic Group of Cos., Inc. 111,786
24,028 Johnson & Johnson 2,081,425
17,006 K-Mart Corp. 131,796
8,187 Kellogg Co. 625,282
1,367 *King World Productions Inc. 54,167
1,859 Knight-Ridder, Inc. 119,906
4,561 *Kroger Co. 152,793
10,321 Laidlaw Inc. 95,469
10,256 Lilly (Eli) & Co. 1,020,472
13,300 Limited, Inc. (The) 237,737
2,787 Liz Claiborne, Inc. 81,868
2,193 Loews Corp. 336,626
770 Long's Drug Stores, Inc. 30,607
5,954 Lowe's Companies 187,551
883 Luby's Cafeterias, Inc. 19,426
2,324 Manor Care, Inc. 75,820
8,229 Mattel, Inc. 230,412
9,248 May Department Stores Co. 403,444
25,824 McDonald's Corp. 1,152,396
1,855 McGraw-Hill, Inc. 155,356
8,599 Medtronic, Inc. 471,870
3,903 Melville Corp. 121,481
1,371 Mercantile Stores Co., Inc. 63,752
46,047 Merck & Co., Inc. 2,849,158
1,023 Meredith Corp. 40,281
5,511 Morton International Inc. 190,818
3,612 New York Times Co. (The), Cl. A 106,554
5,382 Nike, Inc., Cl. B 312,156
3,062 Nordstrom, Inc. 120,184
1,817 Ogden Corp. 38,611
</TABLE>
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BILTMORE EQUITY INDEX FUND
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
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Common Stocks--continued
CONSUMER NON-DURABLES--CONTINUED
8,462 Penney (J.C.) Co., Inc. $ 396,656
5,885 Pennsylvania Power & Light 146,389
29,324 PepsiCo, Inc. 1,620,151
23,516 Pfizer, Inc. 1,363,928
31,268 Philip Morris Cos., Inc. 2,743,767
3,154 Pioneer Hi-Breed International Inc. 180,567
1,675 Polaroid Corp. 77,259
7,253 *Price/Costco Inc. 120,581
25,593 Procter & Gamble Co. 2,210,595
3,596 Providian Corp. 144,290
4,980 Quaker Oats Co. 173,055
3,725 Ralston Purina Co. 238,400
2,979 Reebok International Ltd. 77,454
3,141 Rite-Aid Corp. 98,156
6,002 Rubbermaid Inc. 165,055
1,453 Russell Corp. 38,686
1,971 *Ryan's Family Steakhouses, Inc. 14,536
2,150 Safety-Kleen Corp. 30,638
2,596 St. Jude Medical Inc. 102,542
17,859 Sara Lee Corp. 575,953
13,853 Schering-Plough Corp. 794,816
13,885 Seagram Co., Ltd. 506,803
14,459 Sears, Roebuck & Co. 569,323
3,575 Service Corp. International 145,234
860 Shared Medical Systems Corp. 37,302
1,541 *Shoney's Inc. 16,566
748 Springs Industries, Inc. 31,416
1,849 Stride Rite Corp. 16,179
2,601 SuperValu Stores, Inc. 83,882
6,790 Sysco Corp. 207,944
2,696 TJX Companies, Inc. (The) 44,821
24,306 *Tele-Communications, Inc., Cl. A 449,661
2,088 Temple-Inland Inc. 94,743
7,437 *Tenet Healthcare Corp. 132,936
14,375 Time Warner Inc. 575,000
4,174 Times Mirror Co. 135,655
10,326 *Toys "R" Us, Inc. 240,080
2,451 Tribune Co. 158,089
</TABLE>
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BILTMORE EQUITY INDEX FUND
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
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Common Stocks--continued
CONSUMER NON-DURABLES--CONTINUED
7,287 UST Inc. $ 237,738
5,959 Unilever N.V. 791,802
6,447 United Healthcare Corp. 405,355
5,730 U.S. Healthcare, Inc. 260,715
2,119 United States Surgical Corp. 53,240
2,361 V.F. Corp. 122,772
85,549 Wal-Mart Stores, Inc. 2,053,176
9,164 Walgreen Co. 266,902
5,020 Warner-Lambert Co. 448,035
3,799 Wendy's International, Inc. 78,354
3,907 Whitman Corp. 85,954
2,050 Willamette Industries Inc. 124,025
2,824 Winn-Dixie Stores, Inc. 181,089
4,934 *Woolworth (F.W.) Corp. 74,010
4,328 Wrigley (Wm.), Jr. Co. 203,957
--------------
Total 53,847,694
--------------
ENERGY--8.5%
3,462 Amerada-Hess Corp. 164,445
18,485 Amoco Corp. 1,252,359
2,310 Ashland Oil, Inc. 80,561
5,987 Atlantic Richfield Co. 648,841
5,251 Baker Hughes, Inc. 106,989
4,711 Burlington Resources, Inc. 181,374
24,276 Chevron Corp. 1,198,627
3,903 Coastal Corp. 129,775
3,466 Consolidated Natural Gas Co. 153,804
6,785 Dresser Industries, Inc. 160,296
2,493 Enserch Corp. 38,642
46,253 Exxon Corp. 3,578,826
3,080 Fluor Corp. 200,200
4,252 Halliburton Co. 184,431
1,925 Kerr-McGee Corp. 111,409
1,244 Louisiana Land & Exploration Co. 48,516
2,004 McDermott International, Inc. 36,323
14,733 Mobil Corp. 1,537,757
334 NACCO Industries, Inc., Cl. A 19,038
4,599 Noram Energy Corp. 36,217
</TABLE>
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BILTMORE EQUITY INDEX FUND
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
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Common Stocks--continued
ENERGY--CONTINUED
11,812 Occidental Petroleum Co. $ 261,340
3,846 *Oryx Energy Co. 50,479
5,556 Panhandle Eastern Corp. 157,652
1,720 Pennzoil Co. 68,155
9,754 Phillips Petroleum Co. 324,320
1,551 Pittston Company-Services Group 47,306
8,878 Placer Dome Inc. 219,731
19,960 Royal Dutch Petroleum Co. 2,562,365
3,360 *Santa Fe Energy Resources, Inc. 31,080
9,021 Schlumberger, Ltd. 572,834
3,216 Sonat, Inc. 103,716
2,808 Sun Co., Inc. 77,922
6,732 Tenneco, Inc. 323,136
9,671 Texaco, Inc. 715,654
9,083 Unocal Corp. 244,106
11,065 USX Marathon Corp. 203,319
3,769 Williams Companies, Inc. (The) 158,298
--------------
Total 15,989,843
--------------
FINANCE--11.0%
4,196 Aetna Life & Casualty Co. 307,882
4,361 Ahmanson (H.F.) & Co. 116,657
1,648 Alexander & Alexander Services 36,050
18,154 American Express Co. 771,545
7,626 American General Corp. 258,331
17,645 American International Group, Inc. 1,583,639
14,692 Banc One Corp. 560,132
4,140 Bank of Boston Corp. 191,993
7,104 Bank New York Inc. 334,776
13,936 BankAmerica Corp. 886,678
2,916 Bankers Trust New York Corp. 189,175
3,610 Barnett Banks, Inc. 217,051
1,968 Beneficial Corp. 99,876
4,686 Boatmen's Bancshares Inc. 181,582
2,688 CIGNA Corp. 295,680
6,624 Chase Manhattan Corp. 403,236
9,384 Chemical Banking Corp. 563,040
3,238 Chubb Corp. 314,896
</TABLE>
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BILTMORE EQUITY INDEX FUND
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
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Common Stocks--continued
FINANCE--CONTINUED
14,800 Citicorp $ 1,047,100
5,191 CoreStates Financial Corp. 201,151
6,289 Dean Witter Discover & Co. 320,739
6,731 Federal Home Loan Mortgage Corp. 518,287
10,157 Federal National Mortgage Association 1,112,192
5,034 First Bank System, Inc. 259,880
3,353 First Chicago Corp. 233,034
3,011 First Fidelity Bancorporation 220,932
2,828 First Interstate Bancorp. 378,952
6,405 First Union Corp. 349,873
5,257 Fleet/Norstar Financial Group, Inc. 219,480
3,052 General Reinsurance Corp. 456,656
2,181 Golden West Financial Corp. 111,504
5,026 Great Western Financial Corp. 128,163
3,593 Household International, Inc. 224,563
1,808 Jefferson-Pilot Corp. 128,594
8,470 Keycorp 312,331
3,869 Lincoln National Corp. 180,876
5,529 MBNA Corp. 223,233
2,714 Marsh & McLennan Cos., Inc. 235,440
5,455 Mellon Bank Corp. 291,843
6,552 Merrill Lynch & Co., Inc. 364,455
6,982 Morgan (J.P.) & Co., Inc. 548,087
2,850 Morgan Stanley & Co., Inc. 245,813
5,770 NBD Bancorp, Inc. 221,424
5,457 National City Corp. 176,670
10,106 NationsBank Corp. 721,316
12,058 Norwest Corp. 397,914
8,503 PNC Bank Corp. 248,713
1,956 Republic NY Corp. 123,228
2,342 SAFECO Corp. 166,282
3,142 St. Paul Companies, Inc. 175,952
3,953 Salomon, Inc. 143,790
4,786 Shawmut National Corp. 179,475
4,287 SunTrust Banks, Inc. 292,588
2,664 Torchmark Corp. 113,220
2,583 Transamerica Corp. 197,922
11,905 Travelers Corp. 708,348
</TABLE>
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BILTMORE EQUITY INDEX FUND
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
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Common Stocks--continued
FINANCE--CONTINUED
2,703 UNUM Corp. $ 146,300
4,156 USF&G Corp. 71,691
3,643 U.S. Bancorp. 123,407
1,280 USLIFE Corp. 36,960
6,374 Wachovia Corp. 286,830
1,836 Wells Fargo & Co. 386,019
--------------
Total 20,543,446
--------------
INSURANCE--0.4%
16,708 Allstate Corp. 685,028
--------------
MATERIALS & SERVICES--8.1%
4,153 Air Products & Chemicals, Inc. 230,492
8,363 Alcan Aluminum Ltd. 277,024
4,090 Alco Standard Corp. 177,915
10,590 Allied-Signal, Inc. 500,378
6,632 Aluminum Co. of America 387,972
3,056 *Alza Corp. 70,288
13,156 Barrick Gold Corp 346,990
1,917 Bemis, Inc. 50,082
4,101 *Bethlehem Steel Corporation 57,414
1,751 Boise Cascade Corp. 65,225
5,581 *Boston Scientific Corp 226,030
1,063 Centex Corp. 34,946
3,470 Champion International Co. 163,524
8,525 Corning, Inc. 256,816
1,122 Crane Co. 38,288
3,357 *Crown Cork & Seal Co., Inc. 140,574
3,446 Cyprus Amax Minerals Co. 94,765
3,072 Deluxe Corp. 84,864
10,012 Dow Chemical Co. 709,601
20,565 Du Pont (E.I.) de Nemours & Co., Inc. 1,367,573
4,167 Echo Bay Mines Ltd. 43,233
2,396 Ecolab, Inc. 68,885
5,308 Engelhard Corp. 124,074
1,361 *FMC Corp. 100,544
1,714 Fleetwood Enterprises, Inc. 41,136
1,760 General Signal Corp. 56,760
3,373 Georgia-Pacific Corp. 262,251
</TABLE>
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BILTMORE EQUITY INDEX FUND
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Common Stocks--continued
MATERIALS & SERVICES--CONTINUED
964 Goodrich (B.F.) Co. $ 67,601
3,508 Grace (W.R.) & Co. 213,111
2,471 Great Lakes Chemical Corp. 175,750
2,700 Harcourt General, Inc. 108,675
4,151 Hercules, Inc. 227,786
5,135 Homestake Mining Co. 84,728
4,310 *ITT Corp. 528,514
4,356 Inco. Ltd. 155,183
1,810 Inland Steel Industries, Inc. 47,286
9,429 International Paper Co. 359,481
3,047 James River Corp. of Virginia 95,981
5,968 Kimberly-Clark Corp. 458,790
4,014 Louisana-Pacific Corp. 108,378
4,548 Marriott International, Inc. 169,413
5,840 Masco Industries, Inc. 172,280
2,109 Mead Corp. 120,477
1,683 Milipore Corp. 62,692
15,636 Minnesota Mining & Manufacturing Co. 1,024,158
4,249 Monsanto Co. 486,511
3,706 Moore Corp. Ltd. 66,245
2,529 Nalco Chemical Co. 77,451
5,881 Newell Co. 155,111
3,206 Newmont Mining Corp. 138,259
3,255 Nucor Corp. 162,343
1,764 *Owens-Corning Fiberglass Corp. 78,278
7,691 PPG Industries, Inc. 348,979
4,329 Pall Corp. 117,424
2,589 Phelps Dodge Corp. 175,728
1,088 Potlatch Corp. 43,928
5,136 Praxair, Inc. 149,586
2,255 Premark International, Inc. 115,005
2,338 Reynolds Metals Co. 135,020
2,520 Rohm & Haas Co. 151,830
3,137 *Rowan Companies, Inc. 23,528
4,891 Santa Fe Pacific Gold Corp. 58,692
5,639 Scott Paper Co. 322,128
3,171 Sherwin-Williams Co. 125,651
1,856 Sigma Aldrich 91,408
</TABLE>
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BILTMORE EQUITY INDEX FUND
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
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Common Stocks--continued
MATERIALS & SERVICES--CONTINUED
1,494 Snap-On Tools Corp. $ 66,110
3,564 Stone Container Corp. 55,688
2,067 Teledyne, Inc. 50,125
20 Teledyne, Inc. (pfd stock) 265
5,686 Tyco International Finance 178,398
3,043 USX--U.S. Steel Group 99,278
2,608 Union Camp Corp. 128,118
5,111 Union Carbide Corp. 202,523
1,555 *Varity Corp. 60,256
18,013 WMX Technologies, Inc. 531,384
3,757 Westvaco Corp. 102,848
7,670 Weyerhaeuser Co. 347,068
3,381 Worthington Industries, Inc. 66,352
--------------
Total 15,069,446
--------------
NON-ENERGY--0.1%
3,943 *ARMCO Inc. 22,672
1,571 ASARCO Inc. 55,574
--------------
Total 78,246
--------------
PROCESS INDUSTRIES--0.2%
1,984 Avery Dennison Corp. 94,488
1,123 Ball Corp. 32,146
3,102 Eastman Chemical Co. 203,569
1,579 Federal Paper Board Co. 82,108
--------------
Total 412,311
--------------
TECHNOLOGY--13.6%
3,839 *Advanced Micro Devices, Inc. 78,699
7,029 Alltel Corp 207,356
4,394 *Amdahl Corp. 41,743
9,855 *Amgen, Inc. 489,054
8,099 AMP, Inc. 324,972
1,433 *Andrew Corp. 61,977
4,511 Apple Computer, Inc. 171,982
6,236 *Applied Materials Inc. 303,226
1,775 Autodesk, Inc. 62,569
5,369 Automatic Data Processing, Inc. 427,507
4,331 *Biomet Inc. 80,124
</TABLE>
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BILTMORE EQUITY INDEX FUND
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
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Common Stocks--continued
TECHNOLOGY--CONTINUED
12,714 Boeing Co. $ 926,533
2,667 *Cabletron Systems Inc. 221,361
1,698 *Ceridian Corp. 71,316
9,992 *Cisco Systems, Inc. 840,577
9,732 *COMPAQ Computer Corp. 481,734
8,944 Computer Associates International, Inc. 585,832
2,040 *Computer Sciences Corp. 148,410
928 *Cray Research, Inc. 22,272
4,253 *DSC Communications Corp. 168,525
1,384 *Data General Corp. 16,781
5,467 *Digital Equipment Corp. 321,870
1,981 EG&G, Inc. 38,134
8,188 First Data Corp. 581,348
2,345 General Dynamics Corp. 139,821
1,448 Harris Corp. 83,441
18,990 Hewlett-Packard Co. 1,573,796
30,654 Intel Corp. 1,866,062
1,698 *Intergraph Corp. 29,184
21,170 International Business Machines Corp. 2,045,551
1,519 Johnson Controls Inc. 105,191
7,435 Lockheed Martin Corp. 545,543
6,294 Loral Corp. 213,209
25,316 MCI Communications Corp. 677,203
2,854 Mallinckrodt Group, Inc. 97,393
4,253 McDonnell-Douglas Corp. 379,049
7,638 Micron Technology Inc. 418,181
21,623 *Microsoft Corp. 1,883,904
21,910 Motorola, Inc. 1,341,987
4,624 *National Semiconductor Co. 98,838
9,435 Northern Telecom, Ltd. 380,938
1,837 Northrop-Grumman Corp. 112,976
13,630 *Novell, Inc. 230,006
16,047 *Oracle Systems Corp. 728,133
1,559 Perkin-Elmer Corp. 56,124
18,755 Pharmacia & Upjohn Inc. 672,836
5,620 Pitney Bowes, Inc. 251,495
9,176 Raytheon Co. 408,332
8,062 Rockwell International Corp. 395,038
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE EQUITY INDEX FUND
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Common Stocks--continued
TECHNOLOGY--CONTINUED
2,856 Scientific-Atlanta, Inc. $ 45,339
5,904 *Silicon Graphics Inc. 215,496
12,975 Sprint Corp. 519,000
3,554 *Sun Microsystems 298,980
2,424 TRW, Inc. 181,497
4,329 *Tandem Computers, Inc. 54,113
2,427 Tandy Corp. 115,586
1,204 Tektronix, Inc. 64,866
3,237 Tellabs Inc. 127,052
6,931 Texas Instruments, Inc. 401,132
3,168 Textron, Inc. 242,748
731 Thomas & Betts Corp. 53,637
6,366 *Unisys Corp. 41,379
4,594 United Technologies Corp. 430,688
13,393 *Viacom Inc. 646,212
3,983 Xerox Corp. 546,169
--------------
Total 25,392,027
--------------
TRANSPORTATION--1.5%
2,830 *AMR Corp. 216,848
5,286 Burlington Northern Inc. 426,184
3,914 CSX Corp. 342,964
2,917 Conrail Inc. 203,825
1,613 Consolidate Freightways, Inc. 42,341
1,890 Delta Air Lines, Inc. 146,711
2,088 *Federal Express Corp. 156,078
4,918 Norfolk Southern Corp. 387,293
1,455 Roadway Services, Inc. 73,477
2,935 Ryder Systems, Inc. 70,073
5,346 Southwest Airlines Co. 133,650
7,643 Union Pacific Corp. 517,813
2,193 *U.S. Air Group, Inc. 29,331
1,047 *Yellow Corp. 12,564
--------------
Total 2,759,152
--------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE EQUITY INDEX FUND
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Common Stocks--continued
UTILITIES--10.4%
58,897 AT & T Corp $ 3,887,202
18,404 *Airtouch Communications, Inc. 536,016
6,908 American Electric Power Co., Inc. 259,913
20,594 Ameritech Corp. 1,132,670
5,493 Baltimore Gas & Electric Co. 146,251
16,247 Bell Atlantic Corp. 1,023,561
36,960 BellSouth Corp. 1,436,820
5,826 Carolina Power & Light Co. 191,529
7,118 Central & SouthWest Corp. 191,296
5,775 Cinergy Corp. 170,362
1,882 *Columbia Gas System, Inc. 81,396
8,747 Consolidated Edison Co. 252,569
5,386 Detroit Edison Co. 175,718
6,430 Dominion Resources, Inc. 254,788
7,627 Duke Power Co. 342,261
750 Eastern Enterprises 24,375
9,370 Enron Corp. 351,375
8,480 Entergy Corp. 236,380
6,909 FPL Group, Inc. 299,678
36,116 GTE Corp. 1,539,444
4,287 General Public Utilities Corp. 135,576
4,890 Houston Industries, Inc. 223,717
5,373 Niagara Mohawk Power Corp. 53,058
1,892 NICOR, Inc. 48,010
2,510 Northern States Power Co. 117,970
15,846 NYNEX Corp. 786,357
5,681 Ohio Edison Co. 129,242
1,006 Oneok, Inc. 23,641
8,257 PECO Energy Co. 239,453
3,048 Pacific Enterprises 81,534
15,797 Pacific Gas & Electric Co. 434,417
15,772 Pacific Telesis Group 473,160
10,584 Pacificorp 207,711
1,299 People's Energy Corp. 39,619
9,111 Public Service Enterprise Group, Inc. 269,913
22,622 SBC Communications Inc. 1,221,588
16,654 SCEcorp. 260,218
24,776 Southern Co. 566,751
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE EQUITY INDEX FUND
<TABLE>
<CAPTION>
Shares or
Principal
Amount Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Common Stocks--continued
UTILITIES--CONTINUED
8,409 Texas Utilities Co. $ 323,746
7,991 Unicom Corp. 255,712
3,802 Union Electric Co. 152,555
17,523 U.S. West, Inc. (communications) 547,594
17,523 U.S. West, Inc. (media) 315,414
--------------
Total 19,440,560
--------------
Total Common Stocks (identified cost $123,800,622) 167,337,019
--------------
U.S. Treasury Obligations--2.1%
U.S. TREASURY BILLS--2.1%
$ 3,850,000 12/14/1995 (identified cost $3,842,605) 3,842,223
--------------
U.S. Government Agencies--7.6%
FEDERAL FARM CREDIT BANK DISCOUNT NOTES--0.3%
600,000 5.58%, 12/15/1995 598,668
--------------
FEDERAL HOME LOAN MORTGAGE CORP. DISCOUNT NOTES--1.5%
1,000,000 5.59%, 12/13/1995 998,090
300,000 5.55%, 12/15/1995 299,334
1,500,000 5.68%, 12/14/1995 1,496,923
--------------
Total 2,794,347
--------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION DISCOUNT NOTES--5.8%
9,500,000 5.56%, 12/12/1995 9,483,470
1,200,000 5.59%, 12/13/1995 1,197,720
200,000 5.58%, 12/15/1995 199,558
--------------
Total 10,880,748
--------------
Total U.S. Government Agencies (identified cost $14,274,306) 14,273,763
--------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE EQUITY INDEX FUND
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
**Repurchase Agreement--0.4%
$ 834,681 Daiwa, Inc., 5.90%, dated 11/30/95, due 12/1/95
(at amortized cost) $ 834,681
--------------
Total Investments (identified cost $142,752,214)+ $ 186,287,686
--------------
</TABLE>
+ The cost of investments for federal tax purposes amounts to $142,792,323. The
net unrealized appreciation of investments on a federal tax basis amounts to
$43,495,363 which is comprised of $46,473,668 appreciation and $2,978,305
depreciation at November 30, 1995.
* Non-income producing security.
** 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
($186,841,404) at November 30, 1995.
Note: The fund is required to deposit cash or U.S. Government Securities as
collateral for the S&P 500 Index Futures.
(See Notes which are an integral part of the Financial Statements)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE EQUITY INDEX FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
<TABLE>
<S> <C> <C>
Assets:
Total Investments at value (identified cost $142,752,214,
and tax cost $142,792,323) $ 186,287,686
Income receivable 442,713
Receivable for investments sold 307,745
Receivable for shares sold 215,380
Deferred expenses 26,083
--------------
Total assets 187,279,607
Liabilities:
Payable for investments purchased $ 328,048
Payable for shares redeemed 35,078
Payable for daily variation margin 25,672
Accrued expenses 49,405
----------
Total liabilities 438,203
--------------
Net Assets for 13,717,964 shares outstanding $ 186,841,404
--------------
Net Assets Consist of:
Paid-in capital $ 131,757,373
Net unrealized appreciation of investments and futures contracts 44,341,628
Accumulated net realized gain on investments and futures contracts 9,959,531
Undistributed net investment income 782,872
--------------
Total Net Assets $ 186,841,404
--------------
Net Asset Value and Redemption Proceeds Per Share:
($186,841,404 / 13,717,964 shares outstanding) $13.62
--------------
Offering Price Per Share (100/95.50 of $13.62)* $14.26
--------------
</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
YEAR ENDED NOVEMBER 30, 1995
<TABLE>
<S> <C> <C>
Investment Income:
Dividends $ 4,306,941
Interest 909,177
-------------
Total income 5,216,118
Expenses:
Investment advisory fee $ 545,415
Administrative personnel and services fee 163,299
Custodian fees 36,361
Transfer and dividend disbursing agent fees and expenses 32,774
Trustees' fees 13,123
Auditing fees 15,505
Legal fees 15,921
Portfolio accounting fees 76,703
Share registration costs 26,598
Printing and postage 19,683
Insurance premiums 7,800
Miscellaneous 15,643
----------
Total expenses 968,825
Waiver of investment advisory fee (97,171)
----------
Net expenses 871,654
-------------
Net investment income 4,344,464
-------------
Realized and Unrealized Gain (Loss) on Investments:
Net realized gain on investments and futures contracts 9,977,764
Net change in unrealized appreciation of investments and
futures contracts 42,222,143
-------------
Net realized and unrealized gain on investments and futures contracts 52,199,907
-------------
Change in net assets resulting from operations $ 56,544,371
-------------
</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, 1995 1994
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets:
Operations--
Net investment income $ 4,344,464 $ 4,099,231
Net realized gain (loss) on investments and futures
contracts ($10,975,465 and $449,877, respectively,
as computed for federal tax purposes) 9,977,764 596,542
Net change in unrealized appreciation (depreciation) of investments and
futures contracts 42,222,143 (3,907,225)
-------------- --------------
Change in net assets resulting from operations 56,544,371 788,548
-------------- --------------
Distributions to Shareholders--
Distributions from net investment income (4,345,032) (3,872,917)
Distributions from net realized gains (598,243) (255,437)
-------------- --------------
Change in net assets resulting from distributions to shareholders (4,943,275) (4,128,354)
-------------- --------------
Share Transactions--
Proceeds from sale of shares 42,901,737 53,300,273
Net asset value of shares issued to shareholders in payment of distri-
butions declared 4,807,483 4,124,935
Cost of shares redeemed (96,320,658) (19,499,382)
-------------- --------------
Change in net assets resulting from share transactions (48,611,438) 37,925,826
-------------- --------------
Change in net assets 2,989,658 34,586,020
Net Assets:
Beginning of period 183,851,746 149,265,726
-------------- --------------
End of period (including undistributed net investment income of $782,872
and $783,440, respectively) $ 186,841,404 $ 183,851,746
-------------- --------------
</TABLE>
(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, 1995 1994 1993(a)
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.27 $ 10.47 $ 10.00
Income from investment operations
Net investment income 0.28 0.25 0.15
Net realized and unrealized gain (loss) on investments and
futures contracts 3.37 (0.19) 0.43
--------- --------- -----------
Total from investment operations 3.65 0.06 0.58
--------- --------- -----------
Less distributions
Distributions from net investment income (0.27) (0.24) (0.11)
Distributions from net realized gain on investments (0.03) (0.02) --
--------- --------- -----------
Total distributions (0.30) (0.26) (0.11)
--------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 13.62 $ 10.27 $ 10.47
--------- --------- -----------
Total Return (b) 36.15% 0.56% 5.80%
Ratios to Average Net Assets
Expenses 0.48% 0.46% 0.43%*
Net investment income 2.39% 2.44% 2.54%*
Expense waiver/reimbursement (c) 0.05% 0.08% 0.12%*
Supplemental Data
Net assets, end of period (000 omitted) $186,841 $183,852 $149,266
Portfolio turnover 60% 9% 9%
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 10, 1993 (date of initial
public investment) to November 30, 1993.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE EQUITY INDEX FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1995
(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 portfolios. The financial statements included
herein are only those of Biltmore Equity Index Fund (the "Fund"), a diversified
portfolio. 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.
INVESTMENT VALUATIONS--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. All other securities are valued at
prices provided by an independent pricing service.
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 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.
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"). Dividend
income and distributions to shareholders are recorded on the ex-dividend
date.
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.
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.
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 its 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.
FUTURES CONTRACTS--The Fund purchases stock index futures contracts to
manage cash flows, enhance yield, and to potentially reduce transaction
costs. Upon entering into a stock index futures contract with a broker, the
Fund is required to deposit in a segregated account a specified amount of
cash or U.S. government securities. Futures contracts are valued daily and
unrealized gains or losses are recorded in a "variation margin" account.
Daily, the Fund receives from or pays to the broker a specified amount of
cash based upon changes in the variation margin account. When a contract is
closed, the Fund recognizes a realized gain or loss.
For the period ended November 30, 1995, the Fund had realized gains on
futures contracts of $3,332,431.
Futures contracts have market risks, including the risk that the change in
the value of the contract may not correlate with changes in the value of
the underlying securities.
At November 30, 1995, the Fund had outstanding futures contracts as set
forth below:
<TABLE>
<CAPTION>
Unrealized
Expiration Contracts to Appreciation
Date Deliver/Receive Position (Depreciation)
<S> <C> <C> <C>
- -------------------------------------------------------------------------
December 1995 62 S&P 500 Index Futures Long $806,156
</TABLE>
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>
Year Ended November 30, 1995 1994
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------
Shares sold 3,643,231 5,136,588
Shares issued to shareholders in payment of
distributions declared 423,558 393,713
Shares redeemed (8,252,788) (1,878,820)
----------- -----------
Net change resulting from share transactions (4,185,999) 3,651,481
----------- -----------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Wachovia Asset Management, 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 any 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. This 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 AGENT AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
serves as transfer and dividend disbursing agent for the Fund. This fee is based
on the size, type, and number of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--Federated Services Company maintains the Fund's
accounting records for which it receives a fee. The fee is based on the level of
the Fund's average daily net assets for the period, plus out-of-pocket expenses.
CUSTODIAN FEES--Wachovia Bank of North Carolina, N.A. is the Fund's custodian.
The fee is based on the level of the Fund's average daily net assets for the
period, plus out-of-pocket expenses.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE EQUITY INDEX FUND
ORGANIZATIONAL EXPENSES--Organizational expenses of $34,484 were borne initially
by FAS. The Fund has agreed to reimburse FAS for the organizational expenses
during the five year period following the Fund's effective date. For the period
ended November 30, 1995, the Fund paid $5,833 pursuant to this agreement.
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 November 30, 1995, were as follows:
<TABLE>
<S> <C>
Purchases $ 106,831,793
--------------
Sales $ 153,684,048
--------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Trustees and Shareholders of
THE BILTMORE FUNDS:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Biltmore Equity Index Fund (one of the
portfolios comprising The Biltmore Funds) as of November 30, 1995, and the
related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended and the
financial highlights for the periods presented therein. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Biltmore Equity Index Fund of The Biltmore Funds at November 30, 1995, and the
results of its operations for the year then ended, changes in its net assets for
each of the two years in the period then ended, and the financial highlights for
the periods presented therein, in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
January 15, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TRUSTEES OFFICERS
<TABLE>
<S> <C>
James A. Hanley John W. McGonigle
Samuel E. Hudgins President and Treasurer
J. Berkley Ingram, Jr. Ronald M. Petnuch
D. Dean Kaylor Vice President and Assistant Treasurer
Charles S. Way, Jr. Peter J. Germain
Secretary
Gail Cagney
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves risk, including 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, expenses and other information.
Federated Securities Corp.
is the distributor of the fund. Cusip 090297817
831-11 G01512-09(1/96)
ANNUAL REPORT
DATED
NOVEMBER 30, 1995
JANUARY 31, 1996
BILTMORE
EMERGING MARKETS FUND
WACHOVIA INVESTMENTS
MAKE YOURSELF COMFORTABLE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PRESIDENT'S MESSAGE
Dear Shareholder:
I am pleased to present the first Annual Report to Shareholders of Biltmore
Emerging Markets Fund. The report covers the period from December 26, 1994, when
the fund began operation, through November 30, 1995. It 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 investments and its financial
statements.
On your behalf, Biltmore Emerging Markets Fund pursues growth over the long term
by investing in stocks of foreign companies located in emerging market
countries. The fund's portfolio managers use a unique "two-tier, equal
weighting" approach to selecting stocks for the fund. First-tier countries are
those with a relatively high degree of liquidity, market capitalization and
gross domestic product. By contrast, smaller countries comprise the second tier.
Investment guidelines are established to take advantage of opportunities within
each tier. This approach offers greater diversification than most emerging
market funds, with the opportunity for better protection from unexpected
negative developments in any one country.
At the end of the period, the fund's portfolio contained stocks issued by
companies from 17 countries. It is important to remember that the performance of
emerging market stocks does not correlate with the performance of U.S. stocks.
This was particularly true during 1995, which saw the U.S. stock market soar to
record levels. The total return for period from January 1, 1995 through November
30, 1995 was (11.50%) as measured by the IFC Investable Composite Index,* an
unmanaged index that is used to measure the performance of emerging markets.
Despite an unfavorable international climate, Biltmore Emerging Markets Fund
outperformed the overall international stock market during the period, achieving
total return of figures based on net asset value and maximum offering price of
4.10% and (0.57%), respectively,** as its share price increased by $0.41 to
reach $10.41 at the end of the period. Fund net assets ended the period at $71.2
million.
Thank you for selecting Biltmore Emerging Markets Fund to pursue long-term
growth from a highly diversified portfolio of foreign stocks. We welcome your
comments and suggestions.
Sincerely,
John W. McGonigle
President
January 15, 1996
*The IFC Investable Composite Index is a market-capitalization-weighted foreign
securities index, which is used to measure the performance of emerging markets
(as defined by the World Bank) in Europe, Asia, Latin America, and Middle
East/Africa. The index currently covers approximately 900 securities in 24
markets. This index is unmanaged, and investments cannot be made in an index.
**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 EMERGING MARKETS FUND
The investment environment for emerging markets was weak throughout the fiscal
year, continuing the trend from 1994. Emerging markets from Latin America to
Asia continued to be restrained by the lingering effects of the collapse of the
Mexican peso. Strong U.S. equity markets put added pressure on emerging markets
by attracting a greater share of investment dollars. The total return of the IFC
Investable Composite Index for the period from January 1, 1995 through November
30, 1995 was (11.50%).
The Biltmore Emerging Markets Fund utilized a two-tiered, broadly diversified
investment philosophy to minimize the effect of the market's downturn. The Fund
also used the period of declining values to establish initial positions at
attractive prices.
On November 30, 1995, the Fund's investments were distributed along the
following geographical lines: 51.5% in Asia, another 36.2% in Latin America and
12.3% in Europe. The largest holdings were in Argentina (8.2%), Brazil (8.5%),
Malaysia (6.8%), Mexico (7.4%) and Thailand (7.3%). On November 30, 1995, the
Fund's net assets totaled $71.2 million. The net asset value per share was
$10.41.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE EMERGING MARKETS FUND
GROWTH OF $10,000 INVESTED IN BILTMORE EMERGING MARKETS FUND
The graph below illustrates the hypothetical investment of $10,000 in the
Biltmore Emerging Markets Fund (the "Fund") from December 26, 1994 (start of
performance) to November 30, 1995 compared to the IFC Investable Composite Index
(Total Return Series) (IFCI).+
"Graphic representation "A" omitted. See Appendix."
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF, OR
GUARANTEED BY, ANY BANK AND ARE NOT FEDERALLY INSURED.
*Represents a hypothetical investment of $10,000 in the Fund after deducting
the maximum sales charge of 4.50% ($10,000 investment minus $450 sales charge
= $9,550). The Fund's performance assumes the reinvestment of all dividends
and distributions. The IFCI has been adjusted to reflect reinvestment of
dividends on securities in the index.
**Total return quoted reflects all applicable sales charges and contingent
deferred sales charges.
Total return for shareholders purchasing shares of the Fund at net asset value
without a sales charge, including accounts purchasing shares through the Trust
Division of the Wachovia Banks, is 4.10% for the period December 26, 1994
(start of performance) through November 30, 1995, as reflected in the
Financial Highlights section of the Fund's prospectus.
+The IFCI is not adjusted to reflect sales loads, expenses, or other fees that
the SEC requires to be reflected in the Fund's performance. The index is
unmanaged.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE EMERGING MARKETS FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Common Stocks--71.3%
ARGENTINA--8.2%
70,000 Astra CIA Argentina De Petroleo, S.A. $ 119,048
14,160 Banco de Galicia Y Buenos Aires, ADR 277,890
14,500 Banco Frances del Rio de La Plata, ADR 378,813
15,800 Buenos Aires Embotelladora, S.A., ADR 400,925
6,000 Capex, S.A., ADR 67,500
40,333 Ciadea, S.A. 173,501
75,000 Comercial del Plata, S.A. 182,323
36,000 Molinos Rio de la Plata 279,112
29,600 Naviera Perez Companc, Class A 143,617
173,528 Naviera Perez Companc, Class B 841,948
370,000 Siderca, S.A. 311,665
13,600 Telecom Argentina Stet-France Telecom S.A., ADR 595,000
21,300 Telefonica de Argentina, ADR 521,850
32,500 Transportadora de Gas Del Sur, ADR 353,438
62,000 YPF Sociedad Anonima, ADR 1,209,000
-------------
Total Argentina 5,855,630
-------------
BRAZIL--0.8%
22,000 Aracruz Celulose, ADR 198,000
725,000 Light Servicos de Electricidade, S.A. 217,628
29,300 Souza Cruz, S.A. 174,387
-------------
Total Brazil 590,015
-------------
CHILE--4.0%
9,000 Banco O'Higgins, ADR 166,500
5,000 Banco Osorno Y La Union, ADR 61,875
6,275 Chilgener, S.A., ADR 147,463
6,800 Compania Cervecerias Unidas, S.A., ADR 148,750
9,000 Compania de Telecomucicacones de Chile, ADR 649,125
8,000 Cristalerias de Chile, ADR 178,000
5,500 Embotelladora Andina, ADR 175,313
21,675 Empresas Nacional de Electricidade, ADR 433,500
12,000 Enersis, S.A., ADR 307,500
7,400 Madeco, S.A., ADR 174,825
13,300 Maderas Y Sinteticos Sociedad, ADR 221,113
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE EMERGING MARKETS FUND
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Common Stocks--continued
CHILE--CONTINUED
4,500 Sociedad Quimica Minera de Chile, ADR $ 198,000
-------------
Total Chile 2,861,964
-------------
CHINA--2.3%
1,200,000 Harbin Power Equipment Co. 203,235
11,500 Huaneng Power International Inc., ADR 182,563
1,500,000 Maanshan Iron & Steel 246,286
1,600,000 Qingling Motors 395,092
700,000 Shanghai Haixing Shipping Co. 50,679
6,750 Shanghai Petrochemical Corp., ADR 186,469
1,600,000 Yizheng Chemical Fibre Co. Ltd. 390,955
-------------
Total China 1,655,279
-------------
GREECE--3.8%
12,220 Aegek, S.A. 104,512
8,695 Alpha Credit Bank 499,723
2,500 Alpha Leasing, S.A. 62,936
4,200 Commercial Bank of Greece, S.A. 145,272
7,120 Delta Dairy, S.A. 129,868
11,120 Ergo Bank, S.A. 431,359
6,380 Goody's, S.A. 98,808
3,550 Hellas Can Packaging S.A. 70,421
13,000 Hellenic Bottling Co., S.A. 379,718
5,000 Hellenic Sugar Industries, S.A. 65,878
6,200 Hellenic Technodomiki 130,285
4,800 Heracles General Cement, S.A. 45,995
4,250 Intracom, S.A. 91,452
10,100 Michaniki, S.A. 125,645
3,000 National Bank of Greece 141,212
4,850 Titan Cement Co., S.A. 181,411
-------------
Total Greece 2,704,495
-------------
HONG KONG--5.8%
215,000 Amoy Properties Ltd. 205,691
80,000 Cheung Kong (Holdings) Ltd. 455,080
90,000 China Light & Power Co. Ltd. 423,535
195,000 Citic Pacific Ltd. 613,873
75,000 Guoco Group Ltd. 355,855
30,000 Hong Kong Electric Ltd. 100,648
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE EMERGING MARKETS FUND
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Common Stocks--continued
HONG KONG--CONTINUED
10,000 Hong Kong Telecommunications, ADR $ 171,250
46,000 HSBC Holdings 677,966
110,000 Hutchison Whampoa Ltd. 621,469
65,000 Sun Hung Kai Properties Ltd. 523,116
-------------
Total Hong Kong 4,148,483
-------------
HUNGARY--0.2%
4,000 Gedeon Richter Ltd., GDR 67,000
5,000 Mol Magyar Olaj Es Gazipar 41,500
-------------
Total Hungary 108,500
-------------
INDIA--2.5%
69,500 Arvind Mills, GDR 220,663
4,700 Bajaj Auto, GDR 98,230
4,500 Grasim Industries, GDR 74,250
10,000 Hindalco Industries Ltd., GDR 267,500
5,500 Indian Hotels Co. (The), GDR 95,590
14,500 Indian Petrochemicals, GDR 119,625
14,000 Larsen & Toubro Limited, GDR 217,000
2,000 Ranbaxy Laboratories, Ltd., GDR 36,500
15,500 Reliance Industries Ltd., GDR 194,680
800 Tata Electric Companies, GDR 240,000
8,400 Tata Engineering and Locomotive Company Limited, GDR 94,500
57,500 Videocon International Ltd., GDR 112,125
-------------
Total India 1,770,663
-------------
INDONESIA--5.0%
240,000 PT Astra International 478,213
40,500 PT Bank Bali 79,812
218,750 PT Bank Dagang Nasional Indonesia 182,012
175,000 PT Barito Pacific Timber 128,367
29,500 PT Ciputra Development 53,613
55,000 PT Hanjaya Mandala Sampoerna 551,566
340,992 PT Indah Kiat Pulp & Paper Corp. 246,392
50,000 PT Indocement Tunggal Perkasa 169,696
60,000 PT Indofood Sukses Makmur 262,755
10,000 PT Indosat, ADR 342,500
45,000 PT Kalbe Farma 142,873
300,000 PT Mayora Indah 203,635
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE EMERGING MARKETS FUND
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Common Stocks--continued
INDONESIA--CONTINUED
60,000 PT Modern Photo Film Co. $ 341,581
140,000 PT Semen Gresik 343,333
-------------
Total Indonesia 3,526,348
-------------
MALAYSIA--6.8%
32,000 Ammb Holdings, BHD 331,100
60,000 Genting, BHD 517,935
55,000 Hume Industries, BHD 247,142
42,500 Land & General, BHD 84,598
63,000 Leader Universal Holdings, BHD 167,619
47,000 Malayan Banking, BHD 372,369
70,000 Malaysian International Shipping, BHD 171,068
39,500 Oyl Industries, BHD 288,037
50,000 Perusahaan Otomobil Nasional, BHD (Proton) 168,506
220,000 Renong, BHD 320,851
50,000 Resorts World, BHD 244,383
200,000 Sime Darby, BHD 516,358
70,000 Telekom Malaysia, BHD 521,482
155,000 Tenaga Nasional, BHD 580,410
50,000 UMW Holdings, BHD 117,264
30,000 United Engineers, BHD 186,835
-------------
Total Malaysia 4,835,957
-------------
MEXICO--7.4%
23,000 Alfa, S.A. 271,666
35,000 Altos Hornos De Mexico, S.A. 209,489
106,000 Cemex, S.A. de C.V. 320,743
210,000 Cifra, S.A. de C.V. 221,287
70,800 Corporacion Geo, S.A. 200,138
22,000 Desc Sociedad de Fomento Industrial, S.A. de C.V., ADR 291,500
30,000 Empresas ICA Sociedad Controladora, S.A. de C.V., ADR 307,500
13,500 Empresas La Moderna, S.A. de C.V., ADR 199,125
65,000 Fomento Economico Mexicano, S.A. de C.V. 149,927
70,000 Gruma, S.A. de C.V. 193,232
82,800 Grupo Carso, S.A. de C.V. 459,328
25,000 Grupo Elektra, S.A. de C.V., ADR 171,875
19,000 Grupo Embotelladora De Mexico, S.A., GDR 190,000
60,000 Grupo Financiero Banamex Accival, S.A. de C.V. Class B 92,047
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE EMERGING MARKETS FUND
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Common Stocks--continued
MEXICO--CONTINUED
2,250 Grupo Financiero Banamex Accival, S.A. de C.V. Class L $ 3,193
13,500 Grupo Televisa, S.A. de C.V., ADR 291,938
80,000 Industrias Penoles, S.A. 348,772
25,500 Kimberly Clark de Mexico, S.A. de C.V. 335,037
90,000 Organizacion Soriana, S.A. de C.V. 89,582
28,500 Telefonos de Mexico, S.A., ADR 940,500
-------------
Total Mexico 5,286,879
-------------
PANAMA--0.4%
8,700 Pan American Beverage Inc., ADR 280,575
-------------
Total Panama 280,575
-------------
PERU--3.1%
203,328 Backus & Johnston 350,113
21,474 Banco Wiese, ADR 142,265
10,827 Cementos Lima 135,163
343,300 CPT Telefonica Del Peru 662,068
18,305 CrediCorp, ADR 292,880
44,683 Compania de Minas Buenaventura, S.A. 250,056
17,483 Minsur, S.A. 123,427
70,841 Southern Peru Copper Corp. 280,558
-------------
Total Peru 2,236,530
-------------
PHILIPPINES--2.8%
286,250 Ayala Land, Inc. 327,955
500,000 JG Summit Holdings, Inc. 137,483
35,000 Manila Electric Co. 270,002
12,000 Metropolitan Bank and Trust Company 205,079
508,750 Petron Corp. 233,149
6,200 Philippine Long Distance Tele Co., ADR 347,200
15,000 Philippine National Bank 132,901
116,000 San Miguel Corp. 372,121
-------------
Total Philippines 2,025,890
-------------
PORTUGAL--3.9%
49,700 Banco Comercial Portugues 650,755
6,600 Banco Espirito Santo e Comercial de Lisboa 94,472
10,300 Banco Portugues de Investimentos 114,822
6,327 Banco Totta Y Acores 102,042
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE EMERGING MARKETS FUND
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Common Stocks--continued
PORTUGAL--CONTINUED
17,740 Cimentos de Portugal, S.A. (Cimpor) $ 289,621
5,600 Jeronimo Martins Sgps. 302,902
9,800 Modelo Continente Sgps. 243,384
14,330 Portugal Telecom Sgps. 261,929
9,300 Portugal Telecom, S.A., ADR 174,375
9,000 Sociedade de Construcoes Soares da Costa, S.A. 110,897
22,000 Sonae Investimentos 464,380
-------------
Total Portugal 2,809,579
-------------
SOUTH KOREA--3.8%
8,600 Daewoo Securities Co. 241,043
9,000 Hyundai Motor Co., GDR 147,375
13,500 Korea Electric Power Corp. 536,041
150 Korea Mobile Telecommunications Corp. 126,244
5,000 Korean Air Lines 164,796
13,000 LG Chemicals Ltd. 268,215
10,704 LG Electronics Inc., GDR 138,082
1,800 LG Information and Communications 135,470
2,000 Pohang Iron and Steel Co. Ltd. 175,352
3,000 Samsung Electronics Co. 461,173
13,000 Shinhan Bank 296,766
-------------
Total South Korea 2,690,557
-------------
TAIWAN--0.7%
11,150 Asia Cement, GDR 172,825
6,000 China Steel Corp., GDR 95,220
20,000 President Enterprises Corp., GDR 213,750
-------------
Total Taiwan 481,795
-------------
THAILAND--7.3%
52,000 Bangkok Bank 553,895
30,000 Bank of Ayudhya Public Co. 162,162
125,000 Finance One Public Co. Ltd. 780,008
27,000 Italian Thai Development 251,113
129,700 Krung Thai Bank PLC 476,838
22,000 Land & Houses Company 323,529
26,000 PTT Exploration and Production 241,812
23,000 Shinawatra Computer & Communications 533,863
7,000 Siam Cement Co. 336,645
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE EMERGING MARKETS FUND
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Common Stocks--continued
THAILAND--CONTINUED
180,000 Telecomasia Corp. $ 543,720
47,000 Thai Airways International PLC 80,326
60,000 Thai Farmers Bank 534,181
42,000 TPI Polene PLC 232,035
11,000 United Communications Industries, Ltd. 131,161
-------------
Total Thailand 5,181,288
-------------
TURKEY--2.5%
240,000 Adana Cimento Sanayii 34,498
612,000 Akbank, T.A.S. 147,544
277,500 Altinyildiz Mensucat Ve Konfeksiyon Fabriklari, A.S. 70,688
185,000 Bagfas Bandirma Gubre Fabrikalari, A.S. 72,371
250,000 Brisa Bridgestone Sabanci Lastik San. Ve Tic, A.S. 63,683
310,500 Ege Biracilik Ve Malt Sanayii, A.S. 86,156
198,000 Erciyas Biracilik Ve Malt Sanayii 104,476
1,460,000 Eregli Demir Ve Celik Fabrikalari, T.A.S. 131,496
1,254,000 KOC Holding, A.S. 198,504
109,000 Migros Turk, T.A.S. 111,063
472,000 Netas Telekomunik 124,527
310,000 Petkim Petrokimya Holding, A.S. 172,034
715,000 Petrol Ofisi, A.S. 118,386
135,000 Tat Konserve Sanayii, A.S. 78,603
540,000 Tofas Otomobil Ticaret, A.S. 60,917
465,000 Tupras Turkiye Petrol Rafinerileri, A.S. 73,608
791,000 Turkiye Garanti Bankasi, A.S. 57,569
835,000 Yapi Ve Kredi Bankasi, A.S. 50,136
-------------
Total Turkey 1,756,259
-------------
Total Common Stocks (identified cost, $54,489,929) 50,806,686
-------------
Prefered Stocks--7.7%
BRAZIL--7.7%
35,707,667 Banco Bradesco, S.A. 308,621
1,300,000 Banco Itau, S.A. 375,427
490,000 Brasmotor, S.A. 102,960
2,300,000 Centrais Electricas Brasileiras, S.A. Class B (Electrobras) 647,552
250,000 Centrais Eletricas Brasileiras, S.A. Class A (Eletrobras) 70,904
879,911 Cia Cervejaria Brahma 347,010
14,433,000 Cia Energetica de Minas Gerais (CEMIG) 319,704
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE EMERGING MARKETS FUND
<TABLE>
<CAPTION>
Shares or
Principal
Amount Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Prefered Stocks--continued
BRAZIL--CONTINUED
4,180,000 Cia Vale Do Rio Doce $ 679,288
10,500,000 Lojas Americanas, S.A. 229,759
4,600,000 Petroleo Brasileiras, S.A. (Petrobras) 390,436
22,000,000 Telecomunicacoes Brasileiras, S.A. (Telebras) 1,083,946
3,395,000 Telecomunicacoes de Sao Paulo, S.A. (Telesp) 590,268
400,000,000 Usinas Siderurgicas de Minas Gerais (Usiminas) 356,071
-------------
Total Brazil 5,501,946
-------------
GREECE--0.0%
1,480 Aegek S.A. 8,860
-------------
Total Greece 8,860
-------------
Total Preferred Stocks (identified cost, $4,324,836) 5,510,806
-------------
Convertible Bonds--2.1%
TAIWAN--2.1%
$ 250,000 Formosa Chemical, 1.75%, 7/19/2001 237,500
200,000 Nan Ya Plastics, 1.75%, 7/19/2001 197,000
300,000 Pacific Construction, 2.125%, 10/1/1998 270,523
300,000 Teco Electric and Machinery, 2.75%, 4/15/2004 225,000
150,000 United Micro Electronics, 1.25%, 6/8/2004 198,375
150,000 Walsin Lihwa Corp, 3.25%, 6/16/2004 136,500
200,000 Yang Ming Marine, 2.00%, 10/6/2001 215,750
-------------
Total Taiwan 1,480,648
-------------
Total Convertible Bonds (identified cost, $1,626,783) 1,480,648
-------------
Closed-End Investment Companies--6.4%
HUNGARY 0.3%
5,000 Hungarian Investment Company 272,500
-------------
Total Hungary 272,500
-------------
INDIA--1.5%
74,500 India Fund Inc. 651,875
43,000 Morgan Stanley India Investment Fund 392,375
-------------
Total India 1,044,250
-------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE EMERGING MARKETS FUND
<TABLE>
<CAPTION>
Shares or
Principal
Amount Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Closed-End Investment Companies--continued
KOREA--2.4%
42,100 Korea Fund Inc. $ 905,150
74,666 Korean Investment Fund Inc. 783,993
-------------
Total Korea 1,689,143
-------------
TAIWAN--2.2%
90 Formosa Fund 661,500
30,000 Formosa Growth Fund 367,500
7,000 Taipei Fund 514,500
-------------
Total Taiwan 1,543,500
-------------
Total Closed-End Investment Companies (identified cost, $4,875,863) 4,549,393
-------------
*Repurchase Agreement--9.8%
$ 7,007,408 Daiwa Securities America, Inc., 5.90%, dated 11/30/1995,
due 12/1/1995 (at amortized cost) 7,007,408
-------------
Total Investments (identified cost, $72,324,819) $ 69,354,941+
-------------
</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 $72,344,222. The net unrealized
depreciation of investments on a federal tax basis amounts to $2,989,281,
which is comprised of $2,927,404 appreciation and $5,916,685 depreciation at
November 30, 1995.
Note: The categories of investments are shown as a percentage of net assets
($71,275,883) at November 30, 1995.
The following abbreviations are used in this portfolio:
ADR--American Depository Receipts
GDR--Global Depository Receipts
(See Notes which are an integral part of the Financial Statements)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE EMERGING MARKETS FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
<TABLE>
<S> <C> <C>
Assets:
Investments, at value
(identified cost $72,324,819; tax cost $72,344,222) $ 69,354,941
Interest-bearing demand deposit 1,720,710
Income receivable 111,744
Receivable for investments sold 65,200
Receivable for shares sold 126,018
-------------
Total assets 71,378,613
Liabilities:
Payable for shares redeemed $ 25,963
Payable to Custodian 16,863
Payable for taxes withheld 10,401
Accrued expenses 49,503
---------
Total liabilities 102,730
-------------
Net Assets for 6,850,061 shares outstanding $ 71,275,883
-------------
Net Assets Consist of:
Paid in capital $ 74,284,104
Net unrealized depreciation of investments, foreign exchange contracts and translation of
assets and liabilities in foreign currency (2,970,114)
Accumulated net realized loss on investments, foreign exchange contracts and foreign
currency transactions (367,477)
Undistributed net investment income 329,370
-------------
Total Net Assets $ 71,275,883
-------------
Net Asset Value and Redemption Proceeds Per Share:
($71,275,883 / 6,850,061 shares outstanding) $10.41
-------------
Offering Price Per Share (100/95.50 of $10.41)* $10.90
-------------
</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 NOVEMBER 30, 1995*
<TABLE>
<S> <C> <C> <C>
Investment Income:
Dividends (net of foreign taxes withheld of $34,995) $ 599,285
Interest (net of foreign taxes withheld of $1,286) 385,750
------------
Total income 985,035
Expenses:
Investment advisory fee $ 371,458
Administrative personnel and services fee 75,000
Custodian fees 204,302
Transfer and dividend disbursing agent fees and expenses 16,691
Trustees' fees 3,230
Legal fees 7,180
Portfolio accounting fees 59,757
Printing and postage 15,000
Insurance premiums 5,501
Miscellaneous 13,754
----------
Total expenses 771,873
Waivers--
Waiver of investment advisory fee $ (60,903)
Waiver of administrative personnel and services fee (41,860)
---------
Total waivers (102,763)
----------
Net expenses 669,110
------------
Net investment income 315,925
------------
Realized and Unrealized Gain (Loss) on Investments, Foreign Exchange Contracts
and Foreign Currency Transactions:
Net realized loss on investments, foreign exchange contracts
and foreign currency transactions (366,282)
Net change in unrealized depreciation of investments, foreign exchange
contracts and translation of assets and liabilities in foreign currency (2,970,114)
------------
Net realized and unrealized loss on investments, foreign exchange
contracts and foreign currency (3,336,396)
------------
Change in net assets resulting from operations $ (3,020,471)
------------
</TABLE>
*For the period from December 26, 1994 (date of initial public investment) to
November 30, 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 November 30, 1995*
<S> <C>
- ---------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets:
Operations--
Net investment income $ 315,925
Net realized loss on investments, foreign exchange contracts and foreign currency
transactions ($224,021 net loss, as computed for federal tax purposes) (366,282)
Net change in unrealized depreciation of investments, foreign exchange contracts and
translation of assets and liabilities in foreign currency (2,970,114)
-------------
Change in net assets resulting from operations (3,020,471)
-------------
Share Transactions--
Proceeds from sale of shares 77,297,434
Cost of shares redeemed (3,001,080)
-------------
Change in net assets resulting from share transactions 74,296,354
-------------
Change in net assets 71,275,883
Net Assets:
Beginning of period --
-------------
End of period (including undistributed net investment income of $329,370) $ 71,275,883
-------------
</TABLE>
*For the period from December 26, 1994 (date of initial public investment) to
November 30, 1995.
(See Notes which are an integral part of the Financial Statements)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE EMERGING MARKETS FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
Period Ended November 30, 1995(a)
<S> <C>
- ------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
Income from investment operations
Net investment income 0.05
Net realized and unrealized gain on investments and foreign currency 0.36
-----------
Total from investment operations 0.41
-----------
NET ASSET VALUE, END OF PERIOD $ 10.41
-----------
Total Return (b) 4.10%
Ratios to Average Net Assets
Expenses 1.80%*
Net investment income 0.85%*
Expense waiver/reimbursement (c) 0.28%*
Supplemental Data
Net assets, end of period (000 omitted) $71,276
Portfolio turnover 17 %
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from December 26, 1994 (date of initial
public investment) to November 30, 1995.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE EMERGING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1995
(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 portfolios. The financial statements included
herein are only those of Biltmore Emerging Markets Fund (the "Fund"), a
diversified portfolio. 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.
INVESTMENT VALUATIONS--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. All other securities are valued at
prices provided by an independent pricing service.
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 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.
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"). Dividend
income and distributions to shareholders are recorded on the ex-dividend
date.
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. At November 30, 1995, the Fund,
for federal tax purposes, had a capital loss carryforward of $224,021,
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 2003.
Withholding taxes on foreign interest and dividends have been provided for
in accordance with the Fund's understanding of the applicable country's tax
rules and rates.
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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE EMERGING MARKETS FUND
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 currencies against U.S. dollars 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 amounts 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.
RECLASSIFICATION--In accordance with 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"), permanent book and tax differences have been reclassified to
paid-in capital. These differences are primarily due to differing
treatments for foreign currency transactions. Amounts as of November 30,
1995, have been reclassified to reflect the following:
<TABLE>
<CAPTION>
Increase (Decrease)
<S> <C> <C>
Accumulated Net Undistributed Net
Paid-In Capital Realized Gain/Loss Investment Income
- ----------------------------------------------------------
($12,250) ($1,195) $13,445
</TABLE>
Net investment income, net realized gains/losses, and net assets were not
affected by this change.
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 November 30, 1995*
<S> <C>
- ---------------------------------------------------------------------------------------------------------
Shares sold 7,143,913
Shares redeemed (293,852)
-----------
Net change resulting from share transactions 6,850,061
-----------
</TABLE>
*For the period from December 26, 1994 (date of initial public investment) to
November 30, 1995.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Wachovia Asset Management, the Fund's investment
adviser (the "Adviser"), receives 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 any portion of its fee. The
Adviser can modify or terminate this voluntary waiver at any time at its
sole discretion.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE EMERGING MARKETS FUND
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the
Fund with certain administrative personnel and services. This 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 AGENT AND DIVIDEND DISBURSING AGENT FEES--Federated Services
Company ("FServ") serves as transfer and dividend disbursing agent for the
Fund, for which it receives a fee. This fee is based on the size, type, and
number of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records
for which it receives a fee. The fee is based on the level of the Fund's
average daily net assets for the period, plus out-of-pocket expenses.
CUSTODIAN FEES--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 daily net assets for the period, plus out-of-pocket
expenses.
ORGANIZATIONAL EXPENSES--Estimated organizational expenses of $30,000 were
borne initially by FAS. The Fund has agreed to reimburse Federated
Administrative Services for the organizational expenses during the five
year period following the Fund's effective date. For the period ended
November 30, 1995, the Fund paid $2,000 pursuant to this agreement.
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 November 30, 1995, were as follows:
<TABLE>
<S> <C>
Purchases $ 71,236,647
--------------
Sales $ 5,680,136
--------------
</TABLE>
(6) CONCENTRATION OF CREDIT RISK
The Fund invests in 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 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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Trustees and Shareholders of
THE BILTMORE FUNDS:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Biltmore Emerging Markets Fund (one of the
portfolios comprising The Biltmore Funds) as of November 30, 1995, and the
related statement of operations, the statement of changes in net assets and the
financial highlights for the period from December 26, 1994 (date of initial
public investment) to November 30, 1995. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of November 30, 1995, by
correspondence with the custodian and brokers. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Biltmore Emerging Markets Fund of The Biltmore Funds at November 30, 1995, and
the results of its operations, changes in its net assets and the financial
highlights for the period from December 26, 1994 to November 30, 1995, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
January 15, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TRUSTEES OFFICERS
<TABLE>
<S> <C>
James A. Hanley John W. McGonigle
Samuel E. Hudgins President and Treasurer
J. Berkley Ingram, Jr. Ronald M. Petnuch
D. Dean Kaylor Vice President and Assistant Treasurer
Charles S. Way, Jr. Peter J. Germain
Secretary
Gail Cagney
Asistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves risk, including
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, expenses and other
information.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Federated Securities Corp.
is the distributor of the fund. Cusip 090297797
ANNUAL REPORT
DATED
NOVEMBER 30, 1995
JANUARY 31, 1996
BILTMORE
FIXED INCOME FUND
WACHOVIA INVESTMENTS
MAKE YOURSELF COMFORTABLE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PRESIDENT'S MESSAGE
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders of Biltmore Fixed
Income Fund for the twelve-month period ended November 30, 1995. The report
begins with a brief commentary on the bond market. Following the commentary is a
complete listing of fund investments and its financial statements.
On your behalf, Biltmore Fixed Income Fund pursues a high level of total return
from a diversified portfolio of income-producing securities. At the end of the
year, 54.5% of the fund assets was invested in U.S. Treasury securities, 24.3%
in government agency securities, 18.4% in corporate bonds, and 2.1% in a
repurchase agreement.
Consistent with a highly favorable interest rate environment during the
reporting period, the fund rewarded shareholders with total return figures based
on net asset value and maximum offering price of 17.20% and 11.96%,
respectively,* dividends totaling $0.57 per share, and a $0.93 increase in share
price. Total net assets increased by more than $21 million to reach $169.8
million on the last day of the period.
Thank you for your confidence in Biltmore Fixed Income Fund. We will continue to
keep you up to date on your investment, and we welcome your comments and
suggestions.
Sincerely,
John W. McGonigle
President
January 15, 1996
* 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
At the outset of the fiscal year, the bond market began a phenomenal rally that
continued throughout most of the twelve-month period. Signs of slower economic
growth and low inflation ignited the strong rally, which lasted until the third
quarter of 1995. At that point, stronger-than-expected economic growth and
profit-taking restrained the bond market. However, modest inflation and signs of
a slower economy touched off another bond rally in October and November, with
yields falling more than 50 basis points. The Lehman Brothers Aggregate Bond
Index* gained 17.65% for the twelve-month period ended November 30, 1995.
In anticipation of lower interest rates, the Biltmore Fixed Income Fund
maintained a maturity distribution that was slightly longer than the market. The
Fund's manager also adjusted sector weights as spreads changed between corporate
and Treasury bonds. As spreads widened at the outset of the fiscal year, the
Fund's manager increased the overall weight of corporate and agency bonds.
Later, when spreads tightened, the Fund's manager increased Treasury bond
holdings.
During the year ended November 30, 1995, the Fund had a total return of 17.20%
based on net asset value and 11.96% based on the maximum offering price.** On
November 30, 1995, net assets totaled $169.8 million with a net asset value per
share of $9.90. As of November 30, 1995, the Fund's 30-day SEC yield was 5.41%
based on net asset value and 5.16% based on the maximum offering price.** The
Fund ended the period with an average duration of 4.86 years.
*Lehman Brothers Aggregate Bond Index is a total return index measuring both
the capital price changes and income provided by the underlying universe of
securities, weighted by market value outstanding. This index is unmanaged, and
investments cannot be made in an index.
**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
GROWTH OF $10,000 INVESTED IN BILTMORE FIXED INCOME FUND
The graph below illustrates the hypothetical investment of $10,000 in the
Biltmore Fixed Income Fund (the "Fund") from May 7, 1993 (start of performance)
to November 30, 1995 compared to the Lehman Brothers Aggregate Bond Index.+
"Graphic representation "G" omitted. See Appendix."
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF, OR
GUARANTEED BY, ANY BANK AND ARE NOT FEDERALLY INSURED.
*Represents a hypothetical investment of $10,000 in the Fund after deducting
the maximum sales charge of 4.50% ($10,000 investment minus $450 sales charge
= $9,550). The Fund's performance assumes the reinvestment of all dividends
and distributions. The Lehman Brothers Aggregate Bond Index has been adjusted
to reflect reinvestment of dividends on securities in the index.
**Total return quoted reflects all applicable sales charges and contingent
deferred sales charges.
Total return for shareholders purchasing shares of the Fund at net asset value
without a sales charge, including accounts purchasing shares through the Trust
Divisions of the Wachovia Banks, is 17.20% for the year ended November 30,
1995, as reflected in the "Financial Highlights" section of the Fund's
prospectus, and 5.79% for the period from May 7, 1993 (start of performance)
through November 30, 1995.
+The Lehman Brothers Aggregate Bond Index is not adjusted to reflect sales
loads, expenses, or other fees that the SEC requires to be reflected in
the Fund's performance. The index is unmanaged.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Corporate Bonds--18.4%
BANKING--0.6%
$ 1,000,000 Bankers Trust NY Corp., 7.25%, 11/1/1996 $ 1,012,630
--------------
CHEMICALS--2.0%
650,000 Air Products & Chemicals, Inc., 8.35%, 1/15/2002 724,692
1,358,500 Monsanto Co., 7.09%, 12/15/2000 1,398,141
1,000,000 duPont (E.I.) de Nemours & Co., 6.47%, 9/26/2002 1,022,400
240,000 duPont (E.I.) de Nemours & Co., 7.00%, 4/16/1997 244,051
--------------
Total 3,389,284
--------------
DRUGS--0.7%
1,215,000 American Home Products, 6.875%, 4/15/1997 1,232,411
--------------
ELECTRONIC TECHNOLOGY--0.4%
605,000 Motorola, Inc., 8.40%, 8/15/2031 753,183
--------------
FINANCE--8.4%
350,000 American Express Credit Corp., 6.125%, 11/15/2001 351,568
1,000,000 American General Finance Corp., 6.47%, 9/7/2000 1,016,870
670,000 Barclays American Corp., 9.125%, 12/1/1997 710,227
850,000 Beneficial Corp., 10.00%, 12/1/2021 994,007
750,000 Beneficial Corp., 6.49%, 9/27/2000 758,843
1,250,000 Beneficial Corp., 7.99%, 2/14/2000 1,339,488
1,500,000 CIGNA Corp., 6.375%, 1/15/2006 1,458,060
1,000,000 Chubb Capital Corp., 6.875%, 2/1/2003 1,038,180
655,000 General Electric Capital Corp., 8.65%, 5/1/2018 662,022
750,000 Grand Metropolitan Investment Corp., 7.45%, 4/15/2035 825,821
1,500,000 Household Finance Corp., 6.13%, 6/19/1998 1,507,815
1,000,000 Household Finance Corp., 7.125%, 9/1/2005 1,041,070
1,000,000 IBM Credit Corp., 5.00%, 5/10/1996 995,650
850,000 Norwest Corp., 6.375%, 9/15/2002 862,453
630,000 TransAmerica Financial Corp., 9.25%, 6/30/1997 662,420
--------------
Total 14,224,494
--------------
FINANCE-INSURANCE--0.7%
1,100,000 Metropolitan Life Insurance Co., 7.00%, 11/1/2005 1,120,339
--------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE FIXED INCOME FUND
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Corporate Bonds--continued
FINANCIAL SERVICES--1.6%
$ 770,000 Italy Republic, 6.875%, 9/27/2023 $ 730,907
2,000,000 Merrill Lynch & Co. Inc., 6.64%, 9/19/2002 2,042,200
--------------
Total 2,773,107
--------------
HEALTH SERVICES--1.0%
1,750,000 Archer Daniels Midland Co., 6.25%, 5/15/2003 1,758,680
--------------
HOUSEHOLD PRODUCTS--0.2%
240,000 Armstrong World Industries, Inc., 9.75%, 4/15/2008 303,089
--------------
MACHINERY & EQUIPMENT--1.2%
2,000,000 John Deere Capital Corp., 6.23%, 10/18/2000 2,005,000
--------------
RETAIL TRADE--0.6%
1,000,000 Sears, Roebuck & Co., 6.09%, 12/5/2000 1,000,000
--------------
SERVICES--0.6%
1,080,000 Morgan Stanley Group, Inc., 5.65%, 6/15/1997 1,074,913
--------------
TECHNOLOGY SERVICES--0.4%
750,000 WMX Technologies Inc., 6.375%, 12/1/2003 753,015
--------------
Total Corporate Bonds (identified cost $30,909,255) 31,400,145
--------------
U.S. Government Agency Securities--24.3%
FEDERAL HOME LOAN MORTGAGE CORPORATION--3.2%
13,588 12.50%, 7/1/2011 15,579
946 12.50%, 4/1/2014 1,054
7,964 12.50%, 3/1/2014 9,157
5,444 12.50%, 2/1/2010 6,221
25,802 11.00%, 10/1/2015 28,543
4,309 11.00%, 10/1/2010 4,716
1,564 10.00%, 2/1/2019 1,697
762 10.00%, 2/1/2019 828
2,421 10.00%, 1/1/2019 2,634
1,188 10.00%, 1/1/2019 1,293
1,531 9.50%, 2/1/2019 1,611
2,440 9.50%, 2/1/2019 2,567
40,298 9.50%, 7/1/2016 42,850
1,593 9.00%, 1/1/2019 1,657
2,675 9.00%, 1/1/2019 2,783
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE FIXED INCOME FUND
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
U.S. Government Agency Securities--continued
FEDERAL HOME LOAN MORTGAGE CORPORATION--CONTINUED
$ 138 9.00%, 9/1/2017 $ 144
2,559 8.50%, 8/1/2017 2,659
6,907 8.50%, 7/1/2017 7,185
4,028 8.00%, 1/1/2019 4,151
3,034 8.00%, 7/1/2017 3,120
61,201 8.00%, 4/1/2009 63,222
12,871 8.00%, 2/1/2009 13,271
1,754 8.00%, 1/1/2009 1,811
28,645 8.00%, 12/1/2008 29,569
30,178 8.00%, 1/1/2008 31,192
3,390,878 7.50%, 9/1/2007 3,471,411
764,340 7.00%, 6/1/2008 773,650
886,404 6.50%, 4/1/2009 884,188
--------------
Total 5,408,763
--------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--11.5%
474 12.50%, 9/1/2013 550
1,080 10.00%, 2/1/2019 1,183
6,039 10.00%, 2/1/2019 6,618
1,275 10.00%, 1/1/2019 1,399
2,576 9.50%, 2/1/2019 2,729
1,488 9.50%, 7/1/2016 1,587
1,750 9.50%, 7/1/2016 1,872
316 9.50%, 7/1/2016 338
2,978 9.00%, 8/1/2018 3,154
1,119 9.00%, 1/1/2017 1,185
2,435 8.50%, 2/1/2019 2,537
459 8.50%, 2/1/2017 479
37,596 8.00%, 9/1/2009 39,088
9,980 8.00%, 1/1/2009 10,376
5,221 8.00%, 11/1/2008 5,429
202,567 7.50%, 2/1/2023 206,446
232,752 7.50%, 2/1/2023 237,209
158,753 7.50%, 2/1/2023 161,912
168,856 7.50%, 2/1/2023 171,863
161,585 7.50%, 2/1/2023 164,679
219,805 7.50%, 1/1/2023 223,781
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE FIXED INCOME FUND
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
U.S. Government Agency Securities--continued
FEDERAL NATIONAL MORTGAGE ASSOCIATION--CONTINUED
$ 188,716 7.50%, 1/1/2023 $ 192,233
521,845 7.50%, 1/1/2023 531,572
1,198,902 7.50%, 4/1/2007 1,226,621
4,200,000 7.375%, 3/28/2005 4,569,348
1,000,000 6.85%, 4/5/2004 1,055,470
976,570 6.5%, 10/1/2010 973,513
5,600,000 6.05%, 6/30/2003 5,616,688
1,709,005 6.00%, 1/1/2009 1,678,021
2,500,000 5.80%, 12/10/2003 2,454,300
50,000 5.45%, 10/10/2003 48,360
--------------
Total 19,590,540
--------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION--9.0%
4,454 12.25%, 5/15/2014 5,062
2,143 12.25%, 3/15/2014 2,435
12,164 12.25%, 2/15/2014 13,825
8,741 12.25%, 8/15/2013 9,934
9,684 12.25%, 10/15/2013 11,007
710 11.50%, 6/15/2013 809
2,218 11.50%, 12/15/2017 2,528
1,925 11.50%, 11/15/2015 2,194
9,283 11.00%, 9/15/2015 10,461
7,882 11.00%, 9/15/2015 8,882
19,749 11.00%, 9/15/2015 22,254
6,205 11.00%, 9/15/2015 6,992
30,113 11.00%, 8/15/2015 33,933
3,044 11.00%, 12/15/2015 3,431
1,860 11.00%, 11/15/2015 2,096
367 11.00%, 11/15/2015 414
2,724 11.00%, 11/15/2015 3,070
42,463 10.50%, 8/15/2017 47,307
3,397 10.50%, 8/15/2017 3,775
9,981 10.50%, 7/15/2017 11,119
6,932 10.50%, 9/15/2015 7,623
3,615 10.50%, 9/15/2015 4,022
3,506 10.50%, 11/15/2000 3,695
7,116 10.50%, 11/15/2000 7,501
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE FIXED INCOME FUND
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
U.S. Government Agency Securities--continued
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION--CONTINUED
$ 887 10.50%, 11/15/2000 $ 935
7,636 10.50%, 10/15/2000 8,049
904 10.00%, 2/15/2019 994
6,455 10.00%, 2/15/2019 7,098
600 10.00%, 2/15/2019 656
1,525 10.00%, 2/15/2019 1,677
4,395 10.00%, 1/15/2019 4,830
65,459 9.50%, 9/15/2020 70,341
43,408 9.50%, 6/15/2020 46,682
57,931 9.50%, 4/15/2020 62,348
26,515 9.50%, 4/15/2020 28,515
38,742 9.50%, 4/15/2020 41,664
28,912 9.50%, 4/15/2020 31,068
79,329 9.50%, 4/15/2020 85,246
53,510 9.50%, 4/15/2020 57,501
28,230 9.50%, 11/15/2020 30,335
54,637 9.50%, 11/15/2020 58,893
31,227 9.50%, 10/15/2020 33,556
32,625 9.50%, 10/15/2020 35,058
134,710 9.50%, 10/15/2020 144,757
1,081 9.50%, 2/15/2019 1,162
4,274 9.50%, 7/15/2018 4,604
36,126 9.50%, 9/15/2017 38,910
17,710 9.50%, 10/15/2017 19,075
6,326 9.50%, 7/15/2016 6,819
39,188 9.50%, 7/15/2016 42,241
70,487 9.50%, 6/15/2016 75,979
23,386 9.50%, 5/15/2016 25,266
2,937 9.50%, 5/15/2016 3,166
2,415 9.50%, 5/15/2016 2,605
287,366 9.50%, 12/15/2016 309,754
4,270 9.50%, 6/15/2001 4,483
77,379 9.00%, 1/15/2021 81,961
85,676 9.00%, 1/15/2021 90,749
100,532 9.00%, 1/15/2021 106,484
52,774 9.00%, 1/15/2021 55,857
86,182 9.00%, 1/15/2021 91,285
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE FIXED INCOME FUND
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
U.S. Government Agency Securities--continued
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION--CONTINUED
$ 61,858 9.00%, 1/15/2020 $ 65,570
51,005 9.00%, 11/15/2020 54,026
61,638 9.00%, 12/15/2019 65,336
172,068 9.00%, 12/15/2019 182,256
86,564 9.00%, 11/15/2019 91,758
70,280 9.00%, 10/15/2019 74,497
27,197 9.00%, 6/15/2018 28,850
17,950 9.00%, 4/15/2018 19,041
60,219 9.00%, 5/15/2018 63,880
1,350 9.00%, 7/15/2017 1,434
21,581 9.00%, 6/15/2017 22,909
37,434 9.00%, 5/15/2017 39,797
60,436 9.00%, 1/15/2017 64,203
9,153 9.00%, 1/15/2017 9,724
81,087 9.00%, 1/15/2017 86,142
57,901 9.00%, 1/15/2017 61,511
56,053 9.00%, 1/15/2017 59,548
5,856 9.00%, 12/15/2016 6,221
70,516 9.00%, 11/15/2016 74,912
49,835 9.00%, 9/15/2016 52,981
2,988 9.00%, 9/15/2016 3,174
19,814 9.00%, 9/15/2016 21,050
46,398 9.00%, 9/15/2016 49,290
80,826 9.00%, 9/15/2016 85,865
2,212 9.00%, 8/15/2016 2,350
203 9.00%, 8/15/2016 215
24,734 9.00%, 7/15/2016 26,276
63,332 9.00%, 6/15/2016 67,280
1,922 9.00%, 6/15/2016 2,042
25,900 9.00%, 6/15/2016 27,616
11,421 9.00%, 5/15/2016 12,133
32,251 9.00%, 5/15/2016 34,287
56,951 9.00%, 5/15/2016 60,546
53,247 9.00%, 10/15/2016 56,607
57,213 9.00%, 10/15/2016 60,825
291 9.00%, 10/15/2016 309
747 9.00%, 10/15/2016 794
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE FIXED INCOME FUND
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
U.S. Government Agency Securities--continued
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION--CONTINUED
$ 31,388 9.00%, 10/15/2016 $ 33,393
51,754 8.50%, 6/15/2022 54,034
143,882 8.50%, 5/15/2022 150,222
21,192 8.50%, 4/15/2022 22,317
144,749 8.50%, 5/15/2022 151,127
72,932 8.50%, 5/15/2021 76,646
46,520 8.50%, 9/15/2021 48,570
111,318 8.50%, 12/15/2021 116,223
61,928 8.50%, 11/15/2021 64,656
84,457 8.50%, 11/15/2021 88,758
103,836 8.50%, 11/15/2021 108,412
4,312 8.50%, 9/15/2017 4,544
8,005 8.50%, 6/15/2017 8,431
35,546 8.50%, 7/15/2016 37,401
36,216 8.50%, 6/15/2016 38,106
11,476 8.50%, 6/15/2016 12,075
136,930 8.50%, 6/15/2016 144,075
45,161 8.50%, 5/15/2016 47,584
158,287 8.00%, 9/15/2022 163,926
213,804 8.00%, 9/15/2022 221,591
1,355,146 8.00%, 9/15/2022 1,403,430
432,893 8.00%, 5/15/2022 448,659
148,973 8.00%, 4/15/2022 154,399
13,031 8.00%, 6/15/2017 13,584
20,446 8.00%, 2/15/2017 21,340
1,561,038 7.50%, 1/15/2024 1,593,226
102,882 7.50%, 3/15/2023 105,206
165,348 7.50%, 2/15/2023 169,084
195,454 7.50%, 2/15/2023 199,869
207,596 7.50%, 12/15/2022 212,286
218,078 7.50%, 12/15/2022 223,004
204,818 7.50%, 8/15/2022 209,445
191,488 7.50%, 2/15/2022 195,980
167,408 7.50%, 12/15/2022 171,190
202,241 7.50%, 12/15/2022 206,809
205,213 7.50%, 11/15/2022 209,848
203,680 7.50%, 10/15/2022 208,280
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE FIXED INCOME FUND
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
U.S. Government Agency Securities--continued
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION--CONTINUED
$ 907,863 7.00%, 6/15/2023 $ 909,842
1,800,301 6.50%, 5/15/2009 1,802,550
1,844,098 6.00%, 5/15/2009 1,815,845
14,594 5.50%, 8/15/1998 14,433
14,694 5.50%, 8/15/1998 14,531
--------------
Total 15,465,158
--------------
AID TO ISRAEL--0.6%
1,000,000 5.625%, 9/15/2003 978,030
--------------
Total U.S. Government Agency Securities (identified cost $40,527,537) 41,442,491
--------------
U.S. Treasury Obligations--54.5%
TREASURY BONDS--17.6%
1,350,000 8.00%, 11/15/2021 1,648,053
22,570,000 8.125%, 8/15/2021 27,863,342
275,000 10.75%, 8/15/2005 373,956
--------------
Total 29,885,351
--------------
TREASURY NOTES--36.9%
1,095,000 9.125%, 5/15/1999 1,218,012
3,250,000 8.75%, 10/15/1997 3,441,458
350,000 7.875%, 8/15/2001 388,280
500,000 7.75%, 1/31/2000 540,470
800,000 7.75%, 12/31/1999 864,000
1,500,000 7.75%, 11/30/1999 1,617,660
1,945,000 7.50%, 11/15/2001 2,127,947
1,500,000 7.50%, 10/31/1999 1,602,885
1,215,000 7.50%, 12/31/1996 1,241,390
2,500,000 7.25%, 11/15/1996 2,541,400
500,000 6.875%, 3/31/2000 525,705
425,000 6.875%, 8/31/1999 444,325
750,000 6.75%, 2/28/1997 762,068
1,500,000 6.625%, 3/31/1997 1,523,430
4,000,000 6.50%, 4/30/1999 4,125,640
750,000 6.50%, 4/30/1997 761,250
4,000,000 6.25%, 5/31/2000 4,111,880
1,500,000 6.05%, 12/31/1997 1,518,750
5,500,000 5.875%, 7/31/1997 5,541,250
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE FIXED INCOME FUND
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
U.S. Treasury Obligations--continued
TREASURY NOTES--CONTINUED
$ 500,000 5.75%, 10/31/1997 $ 503,435
3,250,000 5.625%, 6/30/1997 3,261,180
1,000,000 5.50%, 7/31/1997 1,001,720
9,450,000 5.125%, 4/30/1998 9,390,938
11,750,000 5.125%, 3/31/1998 11,680,205
2,000,000 4.75%, 8/31/1998 1,965,940
--------------
Total 62,701,218
--------------
Total U.S. Treasury Obligations (identified cost $89,149,956) 92,586,569
--------------
*Repurchase Agreement--2.1%
3,518,583 Daiwa Securities America, Inc., 5.90%, dated 11/30/1995,
due 12/1/1995 (at amortized cost) 3,518,583
--------------
Total Investments (identified cost $164,105,331) $ 168,947,788+
--------------
</TABLE>
* 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 $164,128,712. The
net unrealized appreciation of investments on a federal tax basis amounts to
$4,819,076 which is comprised of $5,515,259 appreciation and $696,183
depreciation at November 30, 1995.
Note: The categories of investments are shown as a percentage of net assets
($169,845,611) at November 30, 1995.
(See Notes which are an integral part of the Financial Statements)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE FIXED INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (identified cost $164,105,331 and tax
cost $164,128,712) $ 168,947,788
Income receivable 2,139,163
Receivable for investments sold 1,013,490
Receivable for shares sold 157,009
Deferred expenses 24,263
--------------
Total assets 172,281,713
Liabilities:
Payable for investments purchased $ 1,000,000
Payable for shares redeemed 1,387,597
Accrued expenses 48,505
------------
Total liabilities 2,436,102
--------------
Net Assets for 17,151,389 shares outstanding $ 169,845,611
--------------
Net Assets Consist of:
Paid in capital $ 169,733,976
Net unrealized appreciation of investments 4,842,457
Accumulated net realized loss on investments (5,030,116)
Undistributed net investment income 299,294
--------------
Total Net Assets $ 169,845,611
--------------
Net Asset Value and Redemption Proceeds Per Share:
($169,845,611 / 17,151,389 shares outstanding) $9.90
--------------
Offering Price Per Share (100/95.50 of $9.90)* $10.37
--------------
</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
YEAR ENDED NOVEMBER 30, 1995
<TABLE>
<S> <C> <C>
Investment Income:
Interest $ 10,871,605
Expenses:
Investment advisory fee $ 957,389
Administrative personnel and services fee 143,274
Custodian fees 31,913
Transfer and dividend disbursing agent fees and expenses 36,211
Trustees' fees 15,044
Auditing fees 15,498
Legal fees 10,619
Portfolio accounting fees 70,150
Share registration costs 28,521
Printing and postage 15,398
Insurance premiums 5,434
Miscellaneous 10,752
------------
Total expenses 1,340,203
Waivers and reimbursements--
Waiver of investment advisory fee (159,425)
------------
Net expenses 1,180,778
-------------
Net investment income 9,690,827
-------------
Realized and Unrealized Gain (Loss) on Investments:
Net realized loss on investments (1,093,245)
Net change in unrealized appreciation of investments 16,676,119
-------------
Net realized and unrealized gain on investments 15,582,874
-------------
Change in net assets resulting from operations $ 25,273,701
-------------
</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, 1995 1994
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets:
Operations--
Net investment income $ 9,690,827 $ 8,483,525
Net realized gain (loss) on investments ($1,257,247 and $3,749,695 net
loss, respectively, as computed for federal tax purposes) (1,093,245) (3,910,216)
Net change in unrealized appreciation (depreciation) 16,676,119 (10,860,025)
-------------- --------------
Change in net assets resulting from operations 25,273,701 (6,286,716)
-------------- --------------
Distributions to Shareholders--
Distributions from net investment income (9,563,573) (8,390,071)
Distributions from net realized gains -- (893,398)
-------------- --------------
Change in net assets resulting from distributions
to shareholders (9,563,573) (9,283,469)
-------------- --------------
Share Transactions--
Proceeds from sale of shares 42,117,498 45,809,510
Net asset value of shares issued to shareholders in payment of distri-
butions declared 8,445,158 8,987,006
Cost of shares redeemed (45,177,829) (30,801,044)
-------------- --------------
Change in net assets resulting from share transactions 5,384,827 23,995,472
-------------- --------------
Change in net assets 21,094,955 8,425,287
Net Assets:
Beginning of period 148,750,656 140,325,369
-------------- --------------
End of period (including undistributed net investment income of $299,294
and $172,040, respectively) $ 169,845,611 $ 148,750,656
-------------- --------------
</TABLE>
(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, 1995 1994 1993(a)
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 8.97 $ 10.00 $ 10.00
Income from investment operations
Net investment income 0.58 0.56 0.31
Net realized and unrealized gain (loss) on investments 0.92 (0.98) (0.01)
--------- --------- -----------
Total from investment operations 1.50 (0.42) 0.30
--------- --------- -----------
Less distributions
Distributions from net investment income (0.57) (0.55) (0.30)
Distributions from net realized gain on investment
transactions -- (0.06) --
--------- --------- -----------
Total distributions (0.57) (0.61) (0.30)
--------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 9.90 $ 8.97 $ 10.00
--------- --------- -----------
Total Return (b) 17.20% (4.30%) 3.02%
Ratios to Average Net Assets
Expenses 0.74% 0.71% 0.68%*
Net investment income 6.07% 5.90% 5.44%*
Expense waiver/reimbursement(c) 0.10% 0.13% 0.19%*
Supplemental Data
Net assets, end of period (000 omitted) $169,846 $148,751 $140,325
Portfolio turnover 155% 148% 149%
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 10, 1993 (date of initial
public investment) to November 30, 1993.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE FIXED INCOME FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1995
(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 portfolios. The financial statements included
herein are only those of Biltmore Fixed Income Fund (the "Fund"), a diversified
portfolio. 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.
INVESTMENT VALUATIONS--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. All other securities are valued at
prices provided by an independent pricing service.
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 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").
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.
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.
At November 30, 1995, the Fund, for federal tax purposes, had a capital
loss carryforward of $5,006,942 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 as follows:
<TABLE>
<S> <C>
Expiration Year Expiration Amount
2002 $3,749,695
2003 $1,257,247
</TABLE>
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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE FIXED INCOME FUND
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 its 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.
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>
Year Ended November 30, 1995 1994
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------
Shares sold 4,450,994 4,885,157
Shares issued to shareholders in payment of distributions declared 893,781 953,520
Shares redeemed (4,785,329) (3,277,961)
----------- -----------
Net change resulting from share transactions 559,446 2,560,716
----------- -----------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Wachovia Asset Management, the Fund's investment
adviser (the "Adviser"), receives for its services an annual investment advisory
fee equal to 0.60 of 1% of the Fund's average daily net assets.
The Adviser may voluntarily choose to waive any 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. This 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 AGENT AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Fund for
which it receives a fee. This fee is based on the size, type, and number of
accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
CUSTODIAN FEES--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
daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses of $34,484 were borne initially
by FAS. The Fund has agreed to reimburse FAS for the organizational expenses
during the five year period following the Fund's effective date. For the year
ended November 30, 1995, the Fund paid $6,897 pursuant to this agreement.
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 year
ended November 30, 1995, were as follows:
<TABLE>
<S> <C>
Purchases $ 241,919,786
--------------
Sales $ 238,670,575
--------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Trustees and Shareholders of
THE BILTMORE FUNDS:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Biltmore Fixed Income Fund (one of the
portfolios comprising The Biltmore Funds) as of November 30, 1995, and the
related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended and the
financial highlights for the periods presented therein. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Biltmore Fixed Income Fund of The Biltmore Funds at November 30, 1995, and the
results of its operations for the year then ended, changes in its net assets for
each of the two years in the period then ended, and the financial highlights for
the periods presented therein, in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
January 15, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TRUSTEES OFFICERS
<TABLE>
<S> <C>
James A. Hanley John W. McGonigle
Samuel E. Hudgins President and Treasurer
J. Berkley Ingram, Jr. Ronald M. Petnuch
D. Dean Kaylor Vice President and Assistant Treasurer
Charles S. Way, Jr. Peter J. Germain
Secretary
Gail Cagney
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed
by any bank, and are not insured or guaranteed by the Federal U.S. government,
the Federal Deposit Insurance Corporation, the Federal Reserve Board,
or any other government agency. Investment in mutual funds involves
risk, including 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, expenses and other information.
Federated Securities Corp.
is the distributor of the fund. Cusip 090297851
831-13 G01512-11(1/96)
ANNUAL REPORT
DATED
NOVEMBER 30, 1995
JANUARY 31, 1996
BILTMORE QUANTITATIVE
EQUITY FUND
WACHOVIA INVESTMENTS
MAKE YOURSELF COMFORTABLE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PRESIDENT'S MESSAGE
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders of Biltmore
Quantitative Equity Fund for the year ended November 30, 1995. The report begins
with a brief commentary on the stock market from your fund's portfolio manager.
Following the commentary are a complete listing of the fund's investments and
its financial statements.
On your behalf, Biltmore Quantitative Equity Fund pursues growth and income by
investing in a portfolio of stocks issued by large, established companies across
the entire industrial spectrum. At the end of the period, the fund's portfolio
included such household names as General Electric, Chrysler, Bristol Myers,
PepsiCo, Nike, Philip Morris, Exxon, Citicorp, Aetna, Procter & Gamble, and IBM.
Consistent with a soaring stock market that characterized the reporting period,
the fund rewarded shareholders with extremely strong performance during the
twelve-month reporting period. The fund delivered total return figures based on
net asset value and maximum offering price of 39.33% and 33.09%, respectively,*
as its share price increased by nearly 36% to reach $13.11 at the end of the
period. Shareholders also received a total of $0.22 in dividends per share. Fund
net assets grew by $29.9 million to end the period at $122 million.
Thank you for selecting Biltmore Quantitative Equity Fund to pursue your
long-term financial goals. We look forward to keeping you informed about your
investment, and we welcome your comments and suggestions.
Sincerely,
John W. McGonigle
President
January 15, 1996
*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 QUANTITATIVE EQUITY FUND
The economy completed its long awaited "soft landing" during the fiscal year.
Despite several interest rate increases in 1994 and early 1995, the economy
demonstrated surprising strength at the outset of the fiscal year. By the second
quarter of 1995, however, economic growth became increasingly sluggish. The slow
growth continued until mid-summer, when the economy rebounded, aided by a slight
interest rate reduction in July. Despite the resurgence, inflation remained in
check, with producer and consumer price increases below 3% annual rates.
Stocks set record highs during the fiscal year, sparked by healthy corporate
profits and the stronger-than-expected economy. Heavy merger-and-acquisition
activity and optimism regarding deficit reduction efforts in Washington also
contributed to the robust equity markets. The Dow Jones Industrial Average
topped the 5,000-point barrier and the Standard & Poor's Composite Index of 500
Stocks* reached the 600-point level. The Biltmore Quantitative Equity Fund
continued to concentrate on those sectors benefiting from the dramatic expansion
of emerging markets and new economies around the world. During the twelve-month
period ended November 30, 1995, the Fund had a total return of 39.33% based on
the net asset value and 33.09% based on the maximum offering price.**
On November 30, 1995, the Fund's largest holdings were IBP Inc., General
Electric Co., Lockhead Martin Corp., Schering-Plough Corp., Sprint Corp.,
Ameritech Corp., Procter & Gamble Co., Philip Morris Cos. Inc., IBM Corp., and
Cabletron Systems Inc. On November 30, 1995, the Fund had net assets of $121.9
million and a net asset value of $13.11 per share. As of November 30, 1995, the
Fund's 30-day SEC yield was 1.39% based on net asset value and 1.32% based on
the maximum offering price.**
*Standard & Poor's Composite Index of 500 Stocks is a composite index of common
stocks in industry, transportation, and financial and public utility
companies, and can be used to compare to the total returns of funds whose
portfolios are invested primarily in common stocks. This index is unmanaged,
and investments cannot be made in an index.
**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 QUANTITATIVE EQUITY FUND
GROWTH OF $10,000 INVESTED IN BILTMORE QUANTITATIVE EQUITY FUND
The graph below illustrates the hypothetical investment of $10,000 in the
Biltmore Quantitative Equity Fund (the "Fund") from March 25, 1994 (start of
performance) to November 30, 1995 compared to the S&P 500 Index.+
"Graphic representation "E" omitted. See Appendix."
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF, OR
GUARANTEED BY, ANY BANK AND ARE NOT FEDERALLY INSURED.
*Represents a hypothetical investment of $10,000 in the Fund after deducting
the maximum sales charge of 4.50% ($10,000 investment minus $450 sales charge
= $9,550). The Fund's performance assumes the reinvestment of all dividends
and distributions. The S&P 500 Index has been adjusted to reflect reinvestment
of dividends on securities in the index.
**Total return quoted reflects all applicable sales charges and contingent
deferred sales charges.
Total return for shareholders purchasing shares of the Fund at net asset value
without a sales charge, including accounts purchasing shares through the Trust
Divisions of the Wachovia Banks, is 39.33% for the year ended November 30,
1995, as reflected in the "Financial Highlights" section of the Fund's
prospectus, and 19.55% for the period from March 25, 1994 (start of
performance) through November 30, 1995.
+ The S&P 500 Index is not adjusted to reflect sales loads, expenses, or other
fees that the SEC requires to be reflected in the Fund's performance. The
index is unmanaged.
BILTMORE QUANTITATIVE EQUITY FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Common Stocks--96.6%
CAPITAL GOODS--3.0%
49,842 General Electric Co. $ 3,351,875
8,700 Parker Hannifin Corp. 319,725
--------------
Total 3,671,600
--------------
CHEMICALS--2.7%
36,000 Air Products & Chemicals Inc. 1,998,000
53,600 Engelhard Corp. 1,252,900
--------------
Total 3,250,900
--------------
COMMERCIAL SERVICES--2.3%
27,000 *Cabletron Systems, Inc. 2,241,000
7,300 Textron, Inc. 559,362
--------------
Total 2,800,362
--------------
CONSUMER DURABLES--4.8%
10,000 Aluminum Company of America 585,000
41,504 Chrysler Corp. 2,153,020
14,600 General Motors Corp. 708,100
12,000 Goodrich B. F. Co. 841,500
5,286 Goodyear Tire and Rubber Co. 223,994
26,000 Leggett & Platt, Inc. 627,250
18,800 Timken Co. 759,050
--------------
Total 5,897,914
--------------
CONSUMER NON-DURABLES--20.7%
29,466 American Stores Co. 773,483
27,281 Banta Corp. 1,193,544
35,100 Baxter International, Inc. 1,474,200
21,200 Becton Dickinson & Co. 1,478,700
54,075 Bergen Brunswig Corp., Class A 1,297,800
21,200 Bristol-Myers Squibb Co. 1,701,300
10,000 Capital Cities/ABC, Inc. 1,236,250
50,000 Circuit City Stores, Inc. 1,450,000
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE QUANTITATIVE EQUITY FUND
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Common Stocks--continued
CONSUMER NON-DURABLES--CONTINUED
59,801 IBP, Inc. $ 3,737,562
19,257 Johnson & Johnson 1,668,138
6,300 Lilly, (Eli) & Co. 626,850
8,750 Mattel, Inc. 245,000
43,140 PepsiCo, Inc. 2,383,485
54,100 Rite Aid Corp. 1,690,625
25,000 *Safeway, Inc. 1,162,500
49,370 Schering-Plough Corp. 2,832,604
6,000 Temple-Inland, Inc. 272,250
--------------
Total 25,224,291
--------------
CONSUMER SERVICES--5.0%
18,000 3Com Corporation 823,500
49,500 Flowers Industry, Inc. 637,313
27,500 Newell Co. 725,312
8,000 Nike, Inc. 464,000
28,319 Philip Morris Cos., Inc. 2,484,992
15,000 Tribune Co. 967,500
--------------
Total 6,102,617
--------------
ENERGY--8.5%
23,000 British Petroleum Company, PLC., ADR 2,199,375
40,800 Coastal Corp. 1,356,600
21,145 Exxon Corp. 1,636,094
18,500 Halliburton Co. 802,437
14,608 Mobil Corp. 1,524,710
7,700 Royal Dutch Petroleum Co., ADR 988,487
43,706 Williams Cos., Inc. 1,835,652
--------------
Total 10,343,355
--------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE QUANTITATIVE EQUITY FUND
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Common Stocks--continued
FINANCE--9.2%
20,400 Bank New York Co., Inc. $ 961,350
15,500 BankAmerica Corp. 986,188
19,500 Chemical Banking Corp. 1,170,000
25,000 Citicorp 1,768,750
11,800 NationsBank Corp. 842,225
30,000 Pinnacle West Capital Corp. 817,500
28,000 Reliastar Financial Corp. 1,211,000
51,258 Southtrust Corp. 1,300,672
15,000 Travelers Group, Inc. 892,500
44,214 USLIFE Corp. 1,276,679
--------------
Total 11,226,864
--------------
HEALTHCARE--1.5%
22,000 Rhone Poulenc Rorer, Inc. 1,053,250
13,000 United Healthcare Corp. 817,375
--------------
Total 1,870,625
--------------
INDUSTRIAL SERVICES--0.9%
17,800 Harsco Corp. 1,050,200
--------------
INSURANCE--4.4%
22,600 Aetna Life & Casualty Co. 1,658,275
28,738 Allstate Corp. 1,178,258
19,000 MBIA, Inc. 1,463,000
15,000 Safeco Corp. 1,065,000
--------------
Total 5,364,533
--------------
MACHINERY & EQUIPMENT--0.6%
45,000 Giddings & Lewis, Inc. 708,750
--------------
MATERIALS & SERVICES--6.5%
15,500 Champion International Corp. 730,438
23,977 Ennis Business Forms, Inc. 299,713
8,700 Georgia-Pacific Corp. 676,425
25,500 Marriot International, Inc. 949,875
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE QUANTITATIVE EQUITY FUND
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Common Stocks--continued
MATERIALS & SERVICES--CONTINUED
29,478 PHH Corp. $ 1,348,618
4,800 Premark International, Inc. 244,800
13,300 Procter & Gamble Co. 1,148,787
16,600 Tyco International Ltd. 520,825
29,500 Union Carbide Corp. 1,168,937
18,000 Weyerhaeuser Co. 814,500
--------------
Total 7,902,918
--------------
RETAIL TRADE--1.0%
31,000 Sears Roebuck & Co. 1,220,625
--------------
TECHNOLOGY--14.2%
22,000 Avnet, Inc. 1,034,000
49,559 Comdisco, Inc. 1,678,811
27,717 Computer Associates International, Inc. 1,815,464
15,000 Harris Corp. 864,375
24,200 International Business Machines 2,338,325
27,500 *King World Products, Inc. 1,089,687
41,905 Lockheed Corp. 3,074,779
32,000 Micron Technology, Inc. 1,752,000
68,004 Sprint Corp. 2,720,160
20,000 Tandy Corp. 952,500
--------------
Total 17,320,101
--------------
TRANSPORTATION--1.3%
4,700 CSX Corp. 411,838
12,272 GATX Corp. 598,260
7,800 Norfolk Southern Corp. 614,250
75 *Transport Holdings, Inc. 2,944
--------------
Total 1,627,292
--------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE QUANTITATIVE EQUITY FUND
<TABLE>
<CAPTION>
Shares or
Principal
Amount Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Common Stocks--continued
UTILITIES--10.0%
47,671 Ameritech Corp. $ 2,621,905
56,000 BellSouth Corp. 2,177,000
58,338 DQE 1,684,510
11,705 Duke Power Co. 525,262
33,865 General Public Utilities Corp. 1,070,981
8,835 New England Electric System 344,565
32,500 Pacific Telesis Group 975,000
37,193 SBC Communications, Inc. 2,008,422
28,508 Scana Corp. 769,716
--------------
Total 12,177,361
--------------
Total Common Stocks (identified cost $91,395,068) 117,760,308
--------------
U.S. Government Agencies--2.5%
FEDERAL FARM CREDIT BANK--0.2%
300,000 5.58%, 12/15/1995 299,334
--------------
FEDERAL HOME LOAN BANK--0.5%
300,000 5.55%, 12/19/1995 299,151
300,000 5.60%, 12/13/1995 299,430
--------------
Total 598,581
--------------
FEDERAL HOME LOAN MORTGAGE CORPORATION--0.2%
200,000 5.56%, 12/11/1995 199,690
--------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION--1.6%
600,000 5.59%, 12/13/1995 598,860
300,000 5.59%, 12/22/1995 299,007
300,000 5.68%, 12/15/1995 299,337
700,000 5.55%, 12/12/1995 698,782
--------------
Total 1,895,986
--------------
Total U.S. Government Agencies (identified cost $2,993,702) 2,993,591
--------------
U.S. Treasury Obligations--0.4%
522,000 United States Treasury Bills, 12/14/1995 (identified cost $520,976) 520,946
--------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE QUANTITATIVE EQUITY FUND
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
**Repurchase Agreement--0.5%
$ 618,823 Daiwa Securities America, Inc., 5.90%, dated 11/30/1995, due 12/1/1995 (at
amortized cost) $ 618,823
--------------
Total Investments (identified cost $95,528,569) $ 121,893,668+
--------------
</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 $95,528,569. The
net unrealized appreciation of investments on a federal tax basis amounts to
$26,365,099, which is comprised of $26,843,915 appreciation and $478,816
depreciation at November 30, 1995.
Note: The categories of investments are shown as a percentage of net assets
($121,894,513) at November 30, 1995.
Note: The fund is required to deposit cash or U.S. Government Securities as
collateral for the S&P 500 Index Futures.
The following acronyms are used throughout this portfolio:
ADR--American Depository Receipt
PLC--Public Limited Company
(See Notes which are an integral part of the Financial Statements)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE QUANTITATIVE EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value (identified and tax cost $95,528,569) $ 121,893,668
Income receivable 235,266
Receivable for shares sold 168,490
Deferred expenses 22,305
--------------
Total assets 122,319,729
Liabilities:
Payable for shares redeemed $ 343,434
Payable for daily variation margin 5,200
Accrued expenses 76,582
----------
Total liabilities 425,216
--------------
Net Assets for 9,294,572 shares outstanding $ 121,894,513
--------------
Net Assets Consist of:
Paid in capital $ 93,064,967
Net unrealized appreciation of investments and futures contracts (including unrealized
appreciation on futures contracts of $166,380) 26,531,479
Accumulated net realized gain on investments and futures contracts 2,053,162
Undistributed net investment income 244,905
--------------
Total Net Assets $ 121,894,513
--------------
Net Asset Value, and Redemption Proceeds Per Share:
($121,894,513 / 9,294,572 shares outstanding) $13.11
--------------
Offering Price Per Share: (100/95.50 of $13.11)* $13.73
--------------
</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
YEAR ENDED NOVEMBER 30, 1995
<TABLE>
<S> <C> <C>
Investment Income:
]Dividends $ 2,647,572
Interest 270,026
-------------
Total income 2,917,598
Expenses:
Investment advisory fee $ 728,298
Administrative personnel and services fee 93,391
Custodian fees 20,809
Transfer agent and dividend disbursing agent fees and expenses 31,070
Trustees' fees 3,105
Auditing fees 15,999
Legal fees 8,001
Portfolio accounting fees 42,926
Share registration costs 18,911
Printing and postage 20,563
Insurance premiums 5,499
Miscellaneous 6,101
----------
Total expenses 994,673
Waiver of investment advisory fee (89,503)
----------
Net expenses 905,170
-------------
Net investment income 2,012,428
-------------
Realized and Unrealized Gain (Loss) on Investments and futures contracts:
Net realized gain on investments and futures contracts 4,403,602
Net change in unrealized appreciation of investments and futures contracts 28,219,890
-------------
Net realized and unrealized gain on investments and futures contracts 32,623,492
-------------
Change in net assets resulting from operations $ 34,635,920
-------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE QUANTITATIVE EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended November 30, 1995 1994*
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets:
Operations--
Net investment income $ 2,012,428 $ 1,151,854
Net realized gain (loss) on investments and futures contracts
($2,223,995 net gain and $2,066,486 net loss, respectively, as
computed for federal tax purposes) 4,403,602 (2,350,440)
Net change in unrealized appreciation (depreciation) on investments and
futures contracts 28,219,890 (1,688,411)
-------------- --------------
Change in net assets resulting from operations 34,635,920 (2,886,997)
-------------- --------------
Distributions to Shareholders--
Distributions from net investment income (2,031,574) (887,803)
-------------- --------------
Share Transactions--
Proceeds from sale of shares 20,816,453 104,320,677
Net asset value of shares issued to shareholders in payment of
distributions declared 1,962,206 879,725
Cost of shares redeemed (25,467,417) (9,446,677)
-------------- --------------
Change in net assets resulting from share transactions (2,688,758) 95,753,725
-------------- --------------
Change in net assets 29,915,588 91,978,925
Net Assets:
Beginning of period 91,978,925 0
-------------- --------------
End of period (including undistributed net investment income of $244,905
and $264,051, respectively) $ 121,894,513 $ 91,978,925
-------------- --------------
</TABLE>
*For the period from March 28, 1994 (date of initial public investment) to
November 30, 1994.
(See Notes which are an integral part of the Financial Statements)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE QUANTITATIVE EQUITY FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
Year Ended November 30, 1995 1994(a)
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.60 $ 10.00
Income from investment operations
Net investment income 0.22 0.12
Net realized and unrealized gain (loss) on investments and futures contracts 3.51 (0.43)
--------- -----------
Total from investment operations 3.73 (0.31)
Less distributions
Distributions from net investment income (0.22) (0.09)
--------- -----------
NET ASSET VALUE, END OF PERIOD $ 13.11 $ 9.60
--------- -----------
Total Return (b) 39.33% (3.08)%
Ratios to Average Net Assets
Expenses 0.87% 0.90%*
Net investment income 1.93% 1.83%*
Expense waiver/reimbursement (c) 0.10% 0.10%*
Supplemental Data
Net assets, end of period (000 omitted) $121,895 $91,979
Portfolio turnover 63% 64%
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from March 28, 1994 (date of initial
public investment) to November 30, 1994.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE QUANTITATIVE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1995
(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 portfolios. The financial statements included
herein are only those of Biltmore Quantitative Equity Fund (the "Fund"), a
diversified portfolio. 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.
INVESTMENT VALUATIONS--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. All other securities are valued at
prices provided by an independent pricing service.
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 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").
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"). Dividend
income and distributions to shareholders are recorded on the ex-dividend
date.
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.
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.
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 its 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.
FUTURES CONTRACTS--The Fund purchases stock index futures contracts to
manage cash flows, enhance yield, and to potentially reduce transaction
costs. Upon entering into a stock index futures contract with a broker, the
Fund is required to deposit in a segregated account a specified amount of
cash or U.S. government securities. Futures contracts are valued daily and
unrealized gains or losses are recorded in a "variation margin" account.
Daily, the Fund receives from or pays to the broker a specified amount of
cash based upon changes in the variation margin account. When a contract
is closed, the Fund recognizes a realized gain or loss. For the period
ended November 30, 1995, the Fund had realized gains
on futures contracts of $607,771 Futures contracts have market risks,
including the risk that the change in the value of the contract may not
correlate with changes in the value of the underlying securities.
At November 30, 1995, the Fund had outstanding futures contracts as set
forth below:
<TABLE>
<CAPTION>
Expiration Contracts to Unrealized
Date Deliver/Receive Position Appreciation
<S> <C> <C> <C>
- -----------------------------------------------------------
December 1995 13 S&P 500
Index Futures Long $166,380
</TABLE>
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>
Year Ended November 30, 1995 1994*
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------
Shares sold 1,840,666 10,458,666
Shares issued to shareholders in payment of distributions declared 180,286 89,773
Shares redeemed (2,308,489) (966,330)
----------- -----------
Net change resulting from share transactions (287,537) 9,582,109
----------- -----------
</TABLE>
*For the period from March 28, 1994 (date of initial public investment) to
November 30, 1994.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Wachovia Asset Management, the Fund's investment
adviser (the "Adviser"), receives for its services an annual investment advisory
fee equal to 0.70 of 1% of the Fund's average daily net assets.
The Adviser may voluntarily choose to waive any portion of its fee. The Adviser
can modify or terminate this voluntary waiver at any time at its sole
discretion.
SUB-ADVISORY FEE--The Adviser has entered into a sub-advisory agreement with
Twin Capital (the "Sub-Adviser"). Twin Capital furnishes certain investment
advisory services to the Adviser, including investment research, quantitative
analysis, statistical and other factual information, and recommendations based
on Twin Capital's analysis, and assists the Adviser in identifying securities
for the potential purchase and/or sale. Twin Capital is entitled to receive an
annual fee of $55,000. Twin Capital may elect to waive some or all of its fee.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. This 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 AGENT AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Fund for
which it receives a fee. This fee is based on the size, type, and number of
accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE QUANTITATIVE EQUITY FUND
CUSTODIAN FEES--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
daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses of $34,484 were borne initially
by FAS. The Fund has agreed to reimburse FAS for the organizational expenses
during the five year period following the Fund's effective date. For the year
ended November 30, 1995, the Fund paid $3,833 pursuant to this agreement.
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 year
ended November 30, 1995, were as follows:
<TABLE>
<S> <C>
Purchases $ 68,572,322
-------------
Sales $ 64,476,239
-------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Trustees and Shareholders of
THE BILTMORE FUNDS:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Biltmore Quantitative Equity Fund (one of the
portfolios comprising The Biltmore Funds) as of November 30, 1995, and the
related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended and the
financial highlights for the periods presented therein. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Biltmore Quantitative Equity Fund of The Biltmore Funds at November 30, 1995,
and the results of its operations for the year then ended, changes in its net
assets for each of the two years in the period then ended, and the financial
highlights for the periods presented therein, in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
January 15, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TRUSTEES OFFICERS
<TABLE>
<S> <C>
James A. Hanley John W. McGonigle
Samuel E. Hudgins President and Treasurer
J. Berkley Ingram, Jr. Ronald M. Petnuch
D. Dean Kaylor Vice President and Assistant Treasurer
Charles S. Way, Jr. Peter J. Germain
Secretary
Gail Cagney
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves risk, including 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, expenses and other information.
Federated Securities Corp.
is the distributor of the fund. Cusip 090297813
831-23 G01512-04(1/96)
ANNUAL REPORT
DATED
NOVEMBER 30, 1995
JANUARY 31, 1996
BILTMORE SHORT-TERM
FIXED INCOME FUND
WACHOVIA INVESTMENTS
MAKE YOURSELF COMFORTABLE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PRESIDENT'S MESSAGE
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders of Biltmore Short-Term
Fixed Income Fund for the twelve-month period ended November 30, 1995. The
report begins with a brief commentary on the bond market. Following the
commentary is a complete listing of the fund's investments and its financial
statements.
On your behalf, Biltmore Short-Term Fixed Income Fund pursues a high level of
income from a diversified portfolio of short-term, income-producing securities.
At the end of the report period, 78.8% of the fund's assets were concentrated in
U.S. Treasury securities, while the remaining assets were diversified among
other short-term securities.
Consistent with a highly favorable interest rate environment during the
reporting period, the fund rewarded shareholders with total return figures based
on net asset value and maximum offering price of 8.82% and 6.05%, respectively,*
dividends totaling $0.52 per share, and a $0.31 increase in share price. Total
net assets stood at $124.7 million on the last day of the period.
Thank you for your confidence in Biltmore Short-Term Fixed Income Fund. We will
continue to keep you up to date on your investment, and we welcome your comments
and suggestions.
Sincerely,
John W. McGonigle
John W. McGonigle
President
January 15, 1996
* 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 SHORT-TERM FIXED INCOME FUND
At the outset of the fiscal year, the bond market began a phenomenal rally that
continued throughout most of the twelve-month period. Signs of slower economic
growth and low inflation ignited the strong rally, which lasted until the third
quarter of 1995. At that point, stronger-than-expected economic growth and
profit-taking restrained the bond market. However, modest inflation and signs of
a slower economy touched off another bond rally in October and November, with
yields falling more than 50 basis points. The Merrill Lynch 1-3 Year U.S.
Treasury Index* gained 10.40% for the twelve-month period ended November 30,
1995. For the year ended, the Fund had a total return of 8.82% based on net
asset value and 6.05% based on the maximum offering price.**
The yield curve steepened early in the fiscal year and was then virtually
unchanged for the remainder of the 12-month period. However, the rally in
October and November increased demand for long-term bonds, causing the yield
curve for short-term bonds to steepen. The Fund's portfolio manager generally
maintained a position in line with the targeted average maturity of 1.5 years.
The Fund had net assets of $124.7 million and a net asset value of $9.89 on
November 30, 1995. As of November 30, 1995, the Fund's 30-day SEC yield was
5.20% based on net asset value and 5.07% based on the maximum offering price.**
The Fund ended the period with an average duration of 1.50 years.
* Merrill Lynch 1-3 Year U.S. Treasury Index is an unmanaged index tracking
short-term U.S. government securities with maturities between 1 and 2.99
years. This index is unmanaged, and investments cannot be made in an index.
** 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 SHORT-TERM FIXED INCOME FUND
GROWTH OF $10,000 INVESTED IN BILTMORE SHORT-TERM FIXED INCOME FUND
The graph below illustrates the hypothetical investment of $10,000 in the
Biltmore Short-Term Fixed Income Fund (the "Fund") from May 7, 1993 (start of
performance) to November 30, 1995 compared to the Merrill Lynch 1-3 Year U.S.
Treasury Index.+
"Graphic representation "H" omitted. See Appendix."
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF, OR
GUARANTEED BY, ANY BANK AND ARE NOT FEDERALLY INSURED.
*Represents a hypothetical investment of $10,000 in the Fund after deducting
the maximum sales charge of 2.50% ($10,000 investment minus $250 sales charge
= $9,750). The Fund's performance assumes the reinvestment of all dividends
and distributions. The Merrill Lynch 1-3 Year U.S. Treasury Index has been
adjusted to reflect reinvestment of dividends on securities in the index.
**Total return quoted reflects all applicable sales charges and contingent
deferred sales charges.
Total return for shareholders purchasing shares of the Fund at the net asset
value without a sales charge, including accounts purchasing shares through the
Trust Divisions of the Wachovia Banks, is 8.82%
for the year ended November 30, 1995, as reflected in the "Financial
Highlights" section of the Fund's
prospectus, and 4.54% for the period from May 7, 1993 (start of performance)
through
November 30, 1995.
+The Merrill Lynch 1-3 Year U.S. Treasury Index is not adjusted to reflect
sales loads, expenses, or other fees that the SEC requires to be reflected in
the Fund's performance. The index is unmanaged.
BILTMORE SHORT-TERM FIXED INCOME FUND
PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Asset-Backed Securities--0.0%
$ 33,472 Shawmut National Grantor Trust, Series 1992-A, 5.55%, 11/15/1997
(identified cost $33,974) $ 33,332
--------------
Collateralized Mortgage Obligations--0.5%
668,086 Household Financial Corp., Series 1992 A3, 5.80%, 4/20/2007
(identified cost $675,816) 665,788
--------------
Corporate Bonds--13.4%
AEROSPACE & DEFENSE--0.8%
1,000,000 Boeing Co., 8.375%, 3/1/1996 1,005,360
--------------
BANKING--4.6%
2,000,000 Fleet Financial Group, Inc., 6.00%, 10/26/1998 2,008,340
1,000,000 Fleet Financial Group, Inc., 7.25%, 10/15/1997, Senior Notes 1,026,080
2,500,000 International American Development Bank, 9.50%, 10/15/1997 2,666,025
--------------
Total 5,700,445
--------------
FINANCE--5.2%
1,500,000 IBM Credit Corp., 5.00%, 5/10/1996 1,493,475
1,000,000 Norwest Corp., 5.75%, 11/16/1998 997,320
4,000,000 TransAmerica Financial Corp., 6.75%, 8/15/1997, Senior Notes 4,055,760
--------------
Total 6,546,555
--------------
FINANCIAL SERVICES--2.0%
2,500,000 Merrill Lynch & Co., Inc., 5.00%, 12/15/1996 2,481,675
--------------
OIL--0.8%
1,000,000 Shell Oil Co., 7.70%, 2/1/1996 1,002,420
--------------
Total Corporate Bonds (identified cost $16,572,990) 16,736,455
--------------
Foreign Municipal Government Bond--3.2%
4,000,000 Ontario Province, Canada, 8.25%, 4/8/1996
(identified cost $4,133,800) 4,031,120
--------------
U.S. Treasury Obligations--78.8%
U.S. TREASURY NOTES--78.8%
1,500,000 8.75%, 10/15/1997 1,588,365
500,000 7.875%, 1/15/1998 524,455
18,000,000 7.50%, 1/31/1997 18,416,160
3,000,000 7.50%, 12/31/1996 3,065,160
9,250,000 7.25%, 11/15/1996 9,403,180
</TABLE>
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BILTMORE SHORT-TERM FIXED INCOME FUND
<TABLE>
<CAPTION>
Principal
Amount Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
U.S. Treasury Obligations--continued
U.S. TREASURY NOTES--CONTINUED
$ 2,000,000 6.875%, 2/28/1997 $ 2,034,680
3,500,000 6.75%, 2/28/1997 3,556,315
5,000,000 6.625%, 3/31/1997 5,078,100
7,000,000 6.50%, 8/15/1997 7,125,790
10,650,000 6.50%, 5/15/1997 10,811,454
750,000 6.50%, 4/30/1997 761,250
5,000,000 6.125%, 5/15/1998 5,082,800
1,000,000 5.75%, 10/31/1997 1,006,870
1,750,000 5.625%, 6/30/1997 1,756,020
3,000,000 5.50%, 9/30/1997 3,006,570
11,000,000 5.125%, 4/30/1998 10,931,250
3,050,000 5.125%, 3/31/1998 3,031,883
11,250,000 4.75%, 8/31/1998 11,058,413
--------------
Total U.S. Treasury Obligations (identified cost $97,313,659) 98,238,715
--------------
*Variable Rate Instruments--2.6%
3,140,000 General Electric Capital Corp., 7.98%, 12/15/2007
(Putable 12/15/1997) (identified cost $3,348,590) 3,203,679
--------------
**Repurchase Agreement--0.2%
212,095 Daiwa Securities America, Inc., 5.90%, dated 11/30/1995,
due 12/1/1995 (at amortized cost) 212,095
--------------
Total Investments (identified cost $122,290,924) $ 123,121,184+
--------------
</TABLE>
* Denotes variable rate securities which show current rate and next demand
date.
** 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 $122,310,534. The
net unrealized appreciation of investments on a federal tax basis amounts to
$810,650, which is comprised of $1,165,000 appreciation and $354,350
depreciation at November 30, 1995.
Note: The categories of investments are shown as a percentage of net assets
($124,719,640) at November 30, 1995.
(See Notes which are an integral part of the Financial Statements)
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BILTMORE SHORT-TERM FIXED INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
<TABLE>
<S> <C> <C>
Assets:
Investments in securities, at value
(identified cost $122,290,924; tax cost $122,310,534) $ 123,121,184
Income receivable 1,644,406
Receivable for investments sold 1,004,396
Receivable for shares sold 204
Deferred expenses 26,832
--------------
Total assets 125,797,022
Liabilities:
Payable for investments purchased $ 1,003,354
Payable for shares redeemed 29,986
Accrued expenses 44,042
------------
Total liabilities 1,077,382
--------------
Net Assets for 12,606,182 shares outstanding $ 124,719,640
--------------
Net Assets Consist of:
Paid in capital $ 126,484,999
Net unrealized appreciation of investments 830,260
Accumulated net realized loss on investments (3,544,742)
Undistributed net investment income 949,123
--------------
Total Net Assets $ 124,719,640
--------------
Net Asset Value and Redemption Proceeds Per Share:
($124,719,640 / 12,606,182 shares outstanding) $9.89
--------------
Offering Price Per Share (100/97.50 of $9.89)* $10.14
--------------
</TABLE>
*See "What Shares Cost" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
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BILTMORE SHORT-TERM FIXED INCOME FUND
STATEMENT OF OPERATIONS
YEAR ENDED NOVEMBER 30, 1995
<TABLE>
<S> <C> <C>
Investment Income:
Interest $ 9,023,170
Expenses:
Investment advisory fee $ 768,294
Administrative personnel and services fee 125,580
Custodian fees 27,938
Transfer and dividend disbursing agent fees and expenses 32,668
Trustees' fees 10,960
Auditing fees 15,999
Legal fees 13,670
Portfolio accounting fees 46,016
Share registration costs 25,620
Printing and postage 15,095
Insurance premiums 4,948
Miscellaneous 14,247
------------
Total expenses 1,101,035
Waivers and reimbursements--
Waiver of investment advisory fee (220,989)
------------
Net expenses 880,046
-------------
Net investment income 8,143,124
-------------
Realized and Unrealized Gain (Loss) on Investments:
Net realized gain on investments (177,221)
Net change in unrealized appreciation of investments 3,977,024
-------------
Net realized and unrealized gain on investments 3,799,803
-------------
Change in net assets resulting from operations $ 11,942,927
-------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
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BILTMORE SHORT-TERM FIXED INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended November 30, 1995 1994
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets:
Operations--
Net investment income $ 8,143,124 $ 6,859,182
Net realized gain (loss) on investments ($241,281 and
$2,790,650 net loss, respectively, as computed for
federal tax purposes (177,221) (2,862,364)
Net change in unrealized appreciation (depreciation) 3,977,024 (2,079,336)
-------------- --------------
Change in net assets resulting from operations 11,942,927 1,917,482
-------------- --------------
Distributions to Shareholders--
Distributions from net investment income (7,332,212) (6,884,557)
-------------- --------------
Share Transactions--
Proceeds from sale of shares 21,380,205 37,631,676
Net asset value of shares issued to shareholders in payment of
distributions declared 7,263,688 6,862,521
Cost of shares redeemed (56,861,374) (45,659,892)
-------------- --------------
Change in net assets resulting from share transactions (28,217,481) (1,165,695)
-------------- --------------
Change in net assets (23,606,766) (6,132,770)
Net Assets:
Beginning of period 148,326,406 154,459,176
-------------- --------------
End of period (including undistributed net investment income
of $949,123 and $138,211, respectively) $ 124,719,640 $ 148,326,406
-------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
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BILTMORE SHORT-TERM FIXED INCOME FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
Year Ended November 30, 1995 1994 1993(a)
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.58 $ 9.91 $ 10.00
Income from investment operations
Net investment income 0.59 0.45 0.27
Net realized and unrealized gain (loss) on investments 0.24 (0.33) (0.10)
--------- --------- -----------
Total from investment operations 0.83 0.12 0.17
--------- --------- -----------
Less distributions
Distributions from net investment income (0.52) (0.45) (0.26)
--------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 9.89 $ 9.58 $ 9.91
--------- --------- -----------
Total Return (b) 8.82% 1.27% 1.69%
Ratios to Average Net Assets
Expenses 0.63% 0.60% 0.58%*
Net investment income 5.83% 4.62% 4.78%*
Expense waiver/reimbursement (c) 0.18% 0.18% 0.22%*
Supplemental Data
Net assets, end of period (000 omitted) $124,720 $148,326 $154,459
Portfolio turnover 147% 151% 73%
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 10, 1993 (date of initial
public investment) to November 30, 1993.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
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BILTMORE SHORT-TERM FIXED INCOME FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1995
(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 portfolios. The financial statements included
herein are only those of Biltmore Short-Term Fixed Income Fund (the "Fund"), a
diversified portfolio. 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.
INVESTMENT VALUATIONS--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. All other securities are valued at
prices provided by an independent pricing service.
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 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.
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.
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.
At November 30, 1995 the Fund, for federal tax purposes, had a capital loss
carryforward of $3,525,132, 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 as follows:
<TABLE>
<CAPTION>
Expiration Year Expiration Amount
<S> <C>
2001 $493,199
2002 $2,790,650
2003 $241,283
</TABLE>
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
- --------------------------------------------------------------------------------
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BILTMORE SHORT-TERM FIXED INCOME FUND
purchased. Securities purchased on a when-issued or delayed delivery basis
are marked to market daily and begin earning interest on the settlement
date.
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 its 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.
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>
Year Ended November 30, 1995 1994
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------
Shares sold 2,200,207 3,860,561
Shares issued to shareholders in payment of distributions declared 745,346 705,380
Shares redeemed (5,816,573) (4,674,812)
----------- -----------
Net change resulting from share transactions (2,871,020) (108,871)
----------- -----------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Wachovia Asset Management, 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 any portion of its fee and/or reimburse certain
operating expenses of the Fund. The Adviser can modify or terminate this
voluntary waiver and/or reimbursement at any time at its sole discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Fund
with certain administrative personnel and services. This 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 AGENT AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Fund. This
fee is based on the size, type, and number of accounts and transactions made by
shareholders.
PORTFOLIO ACCOUNTING FEES--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
daily net assets for the period, plus out-of-pocket expenses.
CUSTODIAN FEES--Wachovia Bank of North Carolina N.A. is the Fund's custodian.
The fee is based on the level of the Fund's average daily net assets for the
period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses of $34,484 were borne initially
by FAS. The Fund has agreed to reimburse FAS for the organizational expenses
during the five year period following the Fund's effective date. For the period
ended November 30, 1995, the Fund paid $6,896 pursuant to this agreement.
GENERAL--Certain of the Officers and Trustees 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 November 30, 1995, were as follows:
<TABLE>
<S> <C>
Purchases $ 195,371,881
--------------
Sales $ 217,046,988
--------------
</TABLE>
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- --------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Trustees and Shareholders of
THE BILTMORE FUNDS:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Biltmore Short-Term Fixed Income Fund (one of
the portfolios comprising The Biltmore Funds) as of November 30, 1995, and the
related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended and the
financial highlights for the periods presented therein. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Biltmore Short-Term Fixed Income Fund of The Biltmore Funds at November 30,
1995, and the results of its operations for the year then ended, changes in its
net assets for each of the two years in the period then ended, and the financial
highlights for the periods presented therein, in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
January 15, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TRUSTEES OFFICERS
<TABLE>
<S> <C>
James A. Hanley John W. McGonigle
Samuel E. Hudgins President and Treasurer
J. Berkley Ingram, Jr. Ronald M. Petnuch
D. Dean Kaylor Vice President and Assistant Treasurer
Charles S. Way, Jr. Peter J. Germain
Secretary
Gail Cagney
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit
Insurance Corporation, the Federal Reserve Board, or any other government
agency. Investment in mutual funds involves risk, including 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, expenses and other information.
Federated Securities Corp.
is the distributor of the fund Cusip 090297862
G01512-12(1/96)
ANNUAL REPORT
DATED
November 30,1995
JANUARY 31, 1996
BILTMORE
SPECIAL VALUES FUND
WACHOVIA INVESTMENTS
MAKE YOURSELF COMFORTABLE
PRESIDENT'S MESSAGE
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders of Biltmore Special
Values Fund for the twelve-month period ended November 30, 1995. The report
begins with a brief commentary on the stock market. Following the commentary are
a complete listing of the fund's investments and its financial statements.
On your behalf, Biltmore Special Values Fund invests in a diversified portfolio
of small-company stocks to help your money grow over the long term. Unlike many
other funds that invest in small-company stocks through a high-flying approach,
this fund is managed through a highly disciplined approach. Its portfolio
manager seeks stocks issued by well-capitalized, and well-run small companies
that are selling at less than their estimated long-term values.
During the report period, the stock market overall soared to record levels.
Biltmore Special Values Fund rewarded shareholders with very strong performance.
The fund delivered total return figures based on net asset value and maximum
offering price of 25.91% and 20.24%, respectively,* as its share price increased
by nearly 25% to reach $12.18 at the end of the period. The fund also paid $0.02
in dividends and $0.06 in capital gains per share. Fund net assets grew by $6.6
million to end the period at $24.1 million.
Thank you for selecting Biltmore Special Values Fund to pursue your long-term
goals. We welcome your comments and suggestions.
Sincerely,
John W. McGonigle
President
January 15, 1996
* 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
The economy completed its long awaited "soft landing" during the fiscal year.
Despite several interest rate increases in 1994 and early 1995, the economy
demonstrated surprising strength at the outset of the fiscal year. By the second
quarter of 1995, however, economic growth became increasingly sluggish. The slow
growth continued until mid-summer, when the economy rebounded, aided by a slight
interest rate reduction in July. Despite the resurgence, inflation remained in
check, with producer and consumer price increases below 3% annual rates. During
the twelve-month period ended November 30, 1995, the Fund had a total return of
25.91% based on the net asset value and 20.24% based on the maximum offering
price.*
The Fund benefited from an overweighted position in financial company and oil
service stocks during 1995. The Fund's portfolio manager began buying stocks of
financial and oil service companies in 1994 during a period of rising interest
rates. The sale of many of these holdings in late 1995 generated healthy
returns. The Fund's portfolio manager avoided technology and biotechnology
stocks, which had the highest sector returns but also tend to be among the
riskiest investments. On November 30, 1995, the Fund's largest holdings were
Capital Guaranty Corp., Boston Acoustics Inc., Lawyers Title Corp.,
International Specialty Products, Inc., Capsure Holdings Corp., White River
Corp., Valassis Communications Inc., Fund American Enterprises Holdings Inc.,
Lindsay Manufacturing Co., and Security-Connecticut Corp. On November 30, 1995,
the Fund had net assets of $24.1 million and a net asset value of $12.18 per
share.
*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
GROWTH OF $10,000 INVESTED IN BILTMORE SPECIAL VALUES FUND
The graph below illustrates the hypothetical investment of $10,000 in the
Biltmore Special Values Fund (the "Fund") from May 7, 1993 (start of
performance) to November 30, 1995 compared to the Russell 2000 Index.+
"Graphic representation "B" omitted. See Appendix."
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF, OR
GUARANTEED BY, ANY BANK AND ARE NOT FEDERALLY INSURED.
*Represents a hypothetical investment of $10,000 in the Fund after deducting
the maximum sales charge of 4.50% ($10,000 investment minus $450 sales charge
= $9,550). The Fund's performance assumes the reinvestment of all dividends
and distributions. The Russell 2000 Index has been adjusted to reflect
reinvestment of dividends on securities in the index.
**Total return quoted reflects all applicable sales charges and contingent
deferred sales charges.
Total return for shareholders purchasing shares of the Fund at net asset value
without a sales charge, including accounts purchasing shares through the Trust
Divisions of the Wachovia Banks, is 25.91% for the year ended November 30,
1995, as reflected in the "Financial Highlights" section of the Fund's
prospectus, and 9.71% for the period from May 7, 1993 (start of performance)
through November 30, 1995.
+The Russell 2000 Index is not adjusted to reflect sales loads, expenses, or
other fees that the SEC requires to be reflected in the Fund's performance.
The index is unmanaged.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE SPECIAL VALUES FUND PORTFOLIO OF INVESTMENTS
NOVEMBER 30, 1995
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Common Stocks--90.4%
AUTOMOBILE PARTS--1.5%
5,000 Smith (A.O.) Corp. $ 118,750
6,000 Stewart & Stevenson Services 138,000
5,000 Walbro Corp. 97,500
-------------
Total 354,250
-------------
BUILDING MATERIALS--1.4%
18,000 Lafarge Corp. 348,750
-------------
BROADCASTING--0.6%
12,000 Jones Intercable Invest LP 148,500
-------------
CAPITAL GOODS--6.3%
11,500 *Lindsay Manufacturing Co. 408,250
13,800 Moore Products Co. 248,400
9,000 Puerto Rican Cement, Inc. 294,750
50,000 *Tyler Corp. 175,000
6,500 Velcro Industries 403,000
-------------
Total 1,529,400
-------------
CHEMICALS--3.1%
10,000 Hanna M.A. Co. 268,750
47,000 International Specialty Products, Inc. 470,000
-------------
Total 738,750
-------------
COMMERCIAL SERVICES--1.1%
15,000 *Craig Corp. 140,625
8,000 Union Corp. 136,000
-------------
Total 276,625
-------------
COMPUTERS--1.6%
22,000 Wang Laboratories, Inc. 393,250
-------------
CONSUMER DURABLES--3.3%
6,500 Allen Organ Co., Cl. B 279,500
25,000 Boston Acoustics, Inc. 518,750
-------------
Total 798,250
-------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE SPECIAL VALUES FUND PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Common Stocks--continued
CONSUMER NON-DURABLES--3.1%
19,500 American Media, Inc., Cl. A $ 85,313
18,000 *Carson, Perie, Scott & Co. 357,750
5,000 Plenum Publishing Corp. 181,250
6,000 *Scotts Co., Cl. A 120,750
-------------
Total 745,063
-------------
ELECTRONICS--0.7%
2,000 Littelfuse, Inc. 67,250
15,000 Powell Industries, Inc. 110,625
-------------
Total 177,875
-------------
ENERGY--1.8%
22,000 *Global Natural Resources, Inc. 214,500
22,000 *Pride Petroleum Services, Inc. 214,500
-------------
Total 429,000
-------------
FINANCE--24.4%
25,000 Capital Guaranty Corp. 553,125
5,000 Capital Southwest Corp. 246,250
33,000 *Capsure Holdings Corp. 462,000
40,000 *Danielson Holding Corp. 280,000
16,000 Equus II, Inc. 210,000
12,000 Financial Securities Assurance Holdings, Ltd. 313,500
6,000 Fund American Enterprises 417,000
4,000 Jefferies Group, Inc. 170,000
10,000 John Nuveen Co., Cl. A 268,750
3,500 *Jupiter National, Inc. 104,125
29,000 Lawyers Title Corp. 496,625
14,000 Leucadia National Corp. 385,000
24,500 Mellon Participating Mortgage Trust 53,594
20,000 Piper Jaffray Cos., Inc. 255,000
16,000 Security Connecticut Corp. 408,000
18,000 Stewart Information Services Corp. 400,500
8,000 *Triad Guaranty 216,000
30,000 Unico American Corp. 180,000
13,000 *White River Corp. 448,500
-------------
Total 5,867,969
-------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE SPECIAL VALUES FUND PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Common Stocks--continued
FOOD & BEVERAGE--0.8%
15,000 Midwest Grain Products, Inc. $ 181,875
-------------
INDUSTRIAL SERVICES--6.8%
17,000 Arethusa (Offshore) Ltd. 386,750
20,000 *Cliffs Drilling Co. 285,000
40,000 Marine Drilling Cos., Inc. 162,500
37,000 *Nabors Industries, Inc. 365,375
30,000 Noble Drilling Corp. 217,500
25,000 Pool Energy Services Co. 225,000
-------------
Total 1,642,125
-------------
INSURANCE--0.8%
5,000 Transport Holdings, Inc., Cl. A 196,250
-------------
LODGING--1.6%
40,000 Prime Hospitality Corp. 385,000
-------------
MACHINERY--1.6%
8,000 Gardner Denver Machinery, Inc. 134,000
15,000 Transpro, Inc. 144,375
4,500 Twin Disc, Inc. 102,937
-------------
Total 381,312
-------------
MANUFACTURING--1.3%
10,000 Cimco, Inc. 93,750
5,000 Raven Industries, Inc. 78,125
20,000 Union Switch & Signal, Inc. 140,000
-------------
Total 311,875
-------------
MATERIALS & SERVICES--8.2%
16,000 *Charter Medical Corp. 292,000
8,000 Cleveland Cliffs, Inc. 313,000
50,000 Cordiant PLC--ADR 200,000
10,000 Forest City Enterprises, Cl. A 336,250
300 Forest City Enterprises, Cl. B 10,050
17,000 Furon Co. 303,875
3,100 Gilbert Assoc, Inc., Cl. A 44,950
7,000 Mueller Industries, Inc. 161,000
3,000 Potash Corp. Saskatchewan, Inc. 207,375
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE SPECIAL VALUES FUND PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
Shares Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Common Stocks--continued
MATERIALS & SERVICES--CONTINUED
6,000 Somerset Group, Inc. $ 106,500
-------------
Total 1,975,000
-------------
METALS--0.5%
3,000 Barnes Group, Inc. 116,250
-------------
MULTI-INDUSTRY--0.3%
5,000 Tejon Ranch Co. 73,125
-------------
NON-ENERGY MINERALS--1.9%
8,000 Lone Star Industries, Inc. 199,000
10,000 Medusa Corp. 248,750
-------------
Total 447,750
-------------
OFFICE EQUIPMENT--0.5%
15,000 Duplex Products, Inc. 114,375
-------------
OIL--6.0%
32,000 Alamco, Inc. 272,000
8,000 Atwood Oceanics, Inc. 150,000
22,000 Berry Petroleum Co., Cl. A 233,750
5,000 Crystal Oil Co. 148,750
12,000 Global Industries, Inc. 322,500
18,000 Hornbeck Offshore Services, Inc. 324,000
-------------
Total 1,451,000
-------------
PRINTING & PUBLISHING--3.2%
11,000 Central Newspapers, Inc., Cl. A 350,625
27,000 Valassis Communications, Inc. 415,125
-------------
Total 765,750
-------------
REAL ESTATE--0.6%
10,000 Price Enterprises, Inc. 153,437
-------------
RETAIL--0.3%
1,000 Arden Group, Inc., Cl. A 61,500
-------------
TECHNOLOGY--3.2%
10,000 *Astrosystems, Inc. 56,250
6,800 *Dynatech Corp. 101,150
40,000 *Esco Electronics Corp. 320,000
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE SPECIAL VALUES FUND PORTFOLIO OF INVESTMENTS
<TABLE>
<CAPTION>
Shares or
Principal
Amount Value
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------
Common Stocks--continued
TECHNOLOGY--CONTINUED
27,000 Geodynamics Corp. $ 297,000
-------------
Total 774,400
-------------
TEXTILES--0.5%
7,250 Conso Products Co. 114,187
-------------
TOBACCO--1.2%
17,000 Dimon, Inc. 293,250
-------------
TRANSPORTATION--2.2%
22,000 Kirby Corp. 393,250
23,000 OMI Corp. 140,875
-------------
Total 534,125
-------------
Total Common Stocks (identified cost $19,772,679) 21,780,268
-------------
Preferred Stocks--2.6%
4,000 Cliffs Drilling Co. 116,000
30,000 *Craig Corp., Cl. A 258,750
24,000 *Sunshine Mining Co. 240,000
-------------
Total Preferred Stocks (identified cost $636,216) 614,750
-------------
**Repurchase Agreement--6.7%
$ 1,609,666 Daiwa Securities America, Inc., 5.90%, dated 11/30/95, due 12/1/95
(at amortized cost) 1,609,666
-------------
Total Investments (identified cost $22,018,561) $ 24,004,684+
-------------
</TABLE>
* Non-income producing security.
** Repurchase agreement is fully collateralized by U.S. Treasury obligations
based on prices at the date of the portfolio.
+ The cost for federal tax purposes amounts to $22,018,561. The net unrealized
appreciation of investments on a federal tax basis amounts to $1,986,123,
which is comprised of $2,937,739 appreciation and $951,616 depreciation at
November 30, 1995.
Note: The categories of investments are shown as a percentage of net assets
($24,093,074) at November 30, 1995.
The following acronym(s) are used throughout this portfolio:
ADR--American Depository Receipts
LP--Limited Partnership
PLC--Public Limited Company
(See Notes which are an integral part of the Financial Statements)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE SPECIAL VALUES FUND
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995
<TABLE>
<S> <C> <C>
Assets:
Investments, at value
(identified and tax cost $22,018,561) $ 24,004,684
Income receivable 63,844
Receivable for shares sold 137,034
Deferred expenses 2,976
-------------
Total assets 24,208,538
Liabilities:
Payable for investments purchased $ 89,206
Payable to Portfolio Accounting 6,524
Accrued expenses 19,734
---------
Total liabilities 115,464
-------------
Net Assets for 1,977,435 shares outstanding $ 24,093,074
-------------
Net Assets Consists of:
Paid in capital $ 20,146,849
Net unrealized appreciation of investments 1,986,123
Accumulated net realized gain on investments 1,812,482
Undistributed net investment income 147,620
-------------
Total Net Assets $ 24,093,074
-------------
Net Asset Value and Redemption Proceeds Per Share:
($24,093,074 / 1,977,435 shares outstanding) $12.18
-------------
Offering Price Per Share (100/95.50 of $12.18)* $12.75
-------------
</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
YEAR ENDED NOVEMBER 30, 1995
<TABLE>
<S> <C> <C> <C>
Investment Income:
Dividends $ 341,240
Interest 78,959
------------
Total income 420,199
Expenses:
Investment advisory fee $ 160,840
Administrative personnel and services fee 75,000
Custodian fees 4,021
Transfer and dividend disbursing agent fees and expenses 25,505
Trustees' fees 1,026
Auditing fees 15,408
Legal fees 3,010
Portfolio accounting fees 49,366
Share registration costs 12,087
Printing and postage 19,449
Insurance premiums 3,123
Miscellaneous 6,536
-----------
Total expenses 375,371
Waivers and reimbursements--
Waiver of investment advisory fee $ (59,075)
Waiver of administrative personnel and services fee (56,955)
---------
Total waivers (116,030)
-----------
Net expenses 259,341
------------
Net investment income 160,858
------------
Realized and Unrealized Gain (Loss) on Investments:
Net realized gain on investments 1,812,363
Net change in unrealized appreciation of investments 2,534,358
------------
Net realized and unrealized gain on investments 4,346,721
------------
Change in net assets resulting from operations $ 4,507,579
------------
</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, 1995 1994
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------
Increase (Decrease) in Net Assets:
Operations--
Net investment income $ 160,858 $ 92,287
Net realized gain on investments ($1,814,219 and
$107,758, respectively, as computed for federal tax
purposes) 1,812,363 107,758
Net change in unrealized appreciation (depreciation) 2,534,358 (511,222)
------------- -------------
Change in net assets resulting from operations 4,507,579 (311,177)
------------- -------------
Distributions to Shareholders--
Distributions from net investment income (28,748) (74,663)
Distributions from net realized gains (107,629) (333,979)
------------- -------------
Change in net assets resulting from distributions to shareholders (136,377) (408,642)
------------- -------------
Share Transactions--
Proceeds from sale of shares 7,295,013 7,239,665
Net asset value of shares issued to shareholders in payment of
distributions declared 128,327 404,334
Cost of shares redeemed (5,132,362) (1,565,034)
------------- -------------
Change in net assets resulting from share transactions 2,290,978 6,078,965
------------- -------------
Change in net assets 6,662,180 5,359,146
Net Assets:
Beginning of period 17,430,894 12,071,748
------------- -------------
End of period (including undistributed net investment
income of $147,620 and $15,510, respectively) $ 24,093,074 $ 17,430,894
------------- -------------
</TABLE>
(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, 1995 1994 1993(a)
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.75 $ 10.24 $ 10.00
Income from investment operations
Net investment income 0.09 0.06 (0.002)
Net realized and unrealized gain (loss) on investments 2.42 (0.22) 0.242
--------- --------- -----------
Total from investment operations 2.51 (0.16) 0.24
--------- --------- -----------
Less distributions
Distributions from net investment income (0.02) (0.05) --
Distributions from net realized gain on investments (0.06) (0.28) --
--------- --------- -----------
Total distributions (0.08) (0.33) --
--------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 12.18 $ 9.75 $ 10.24
--------- --------- -----------
Total Return (b) 25.91% (1.61%) 2.40%
Ratios to Average Net Assets
Expenses 1.29% 1.13% 1.25%*
Net investment income 0.80% 0.63% (0.03%)*
Expense waiver/reimbursement (c) 0.58% 1.09% 1.79%*
Supplemental Data
Net assets, end of period (000 omitted) $24,093 $17,431 $12,072
Portfolio turnover 57% 62% 68%
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from May 10, 1993 (date of initial
public investment) to November 30, 1993.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE SPECIAL VALUES FUND
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1995
(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 portfolios. The financial statements included
herein are only those of Biltmore Special Values Fund (the "Fund"), a
diversified portfolio. 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.
INVESTMENT VALUATIONS--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. All other securities are valued at
prices provided by an independent pricing service.
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 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").
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"). Dividend
income and distributions to shareholders are recorded on the ex-dividend
date.
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.
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.
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 its 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.
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).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BILTMORE SPECIAL VALUES FUND
Transactions in shares were as follows:
<TABLE>
<CAPTION>
Year Ended November 30, 1995 1994
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------
Shares sold 640,769 726,898
Shares issued to shareholders in payment of distributions declared 13,395 40,250
Shares redeemed (464,783) (157,522)
--------- ---------
Net change resulting from share transactions 189,381 609,626
--------- ---------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Wachovia Asset Management, 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 any 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. This 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 AGENT AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Fund, for
which it receives a fee. This fee is based on the size, type, and number of
accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
CUSTODIAN FEES--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
daily net assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses of $31,492 were borne initially
by FAS. The Fund has agreed to reimburse FAS for the organizational expenses
during the five year period following the Fund's effective date. For the year
ended November 30, 1995, the Fund paid $6,755 pursuant to this agreement.
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 year
ended November 30, 1995, were as follows:
<TABLE>
<S> <C>
Purchases $ 12,556,816
-------------
Sales $ 10,805,575
-------------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Trustees and Shareholders of
THE BILTMORE FUNDS:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Biltmore Special Values Fund (one of the
portfolios comprising The Biltmore Funds) as of November 30, 1995, and the
related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended and the
financial highlights for the periods presented therein. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with general accepted auditing standards.
Those standards require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of November 30, 1995, by
correspondence with the custodian and brokers. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Biltmore Special Values Fund of The Biltmore Funds at November 30, 1995, and the
results of its operations for the year then ended, changes in its net assets for
each of the two years in the period then ended, and the financial highlights for
the periods presented therein, in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
January 15, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TRUSTEES OFFICERS
<TABLE>
<S> <C>
James A. Hanley John W. McGonigle
Samuel E. Hudgins President and Treasurer
J. Berkley Ingram, Jr. Ronald M. Petnuch
D. Dean Kaylor Vice President and Assistant Treasurer
Charles S. Way, Jr. Peter J. Germain
Secretary
Gail Cagney
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed
by any bank, and are not insured or guaranteed by the U.S. government,
the Federal Deposit Insurance Corporation, the Federal Reserve Board,
or any other government agency. Investment in mutual funds involves
risk, including 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, expenses and other
information.
Federated Securities Corp.
is the distributor of the fund. Cusip 090297870
831-20 G0152-10(1/96)
A. The graphic presentation here displayed consists of the components of the
corresponding line graph listed in the upper left corner. The Biltmore Emerging
Markets Fund is represented by a solid line. The IFC Investable Composite Index
is represented by a dotted line. The line graph is a visual representation of a
comparison of change in value of a hypothetical $10,000 investment in the
Biltmore Emerging Markets Fund and IFC Investable Composite Index. The "y" axis
reflects the cost of the investment. The "x" axis reflects computation periods
from the Biltmore Emerging Markets Fund's start of business, December 26, 1994,
through November 30, 1995. The right margin reflects the ending value of a
hypothetical investment in the Biltmore Emerging Markets Fund as compared to the
IFC Investable Composite Index; the ending values are $9,943 and $8,850,
respectively. There is also a legend underneath the graphic presentation which
indicates the Cumulative Total Return for the period ended November 30, 1995,
beginning with the inception date of the Biltmore Emerging Markets Fund
(December 26, 1994); the Cumulative Total Return is (0.57%). The performance
disclaimer and footnotes are listed directly under the graphic presentation.
B. The graphic presentation here displayed consists of the components of the
corresponding line graph in the upper left corner. The Biltmore Special Values
Fund is represented by a solid line. The Russell 2000 Index is represented by a
dotted line. The line graph is a visual representation of a comparison of
change in value of a hypothetical $10,000 investment in the Biltmore Special
Values Fund and Russell 2000 Index. The "y" axis reflects the cost of the
investment. The "x" axis reflects computation periods from the Biltmore Special
Values Fund's start of business, May 7, 1993, through November 30, 1995. The
right margin reflects the ending value of the hypothetical investment in the
Biltmore Special Values Fund as compared to Russell 2000 Index; the ending
values are $12,115 and $14,068, respectively. There is also a legend underneath
the graphic presentation which indicates the Average Annual Total Return for the
period ended November 30, 1995, beginning with the inception date of the
Biltmore Special Values Fund (May 7, 1993) and the one-year period; the Average
Annual Total Returns are 7.77% and 20.24%, respectively. The performance
disclaimer and footnotes are listed directly under the graphic presentation.
C. The graphic presentation here displayed consists of the components of the
corresponding line graph listed in the upper left corner. The Biltmore Equity
Fund is represented by a solid line. The S&P 500 Index is represented by a
dotted line. The line graph is a visual representation of a comparison of change
in value of a hypothetical $10,000 investment in the Biltmore Equity Fund and
S&P 500 Index. The "y" axis reflects the cost of the investment. The "x" axis
reflects computation periods from the Biltmore Equity Fund's start of business,
May 7, 1993, through November 30, 1995. The right margin reflects the ending
value of the hypothetical investment in the Biltmore Equity Fund as compared to
S&P 500 Index; the ending values are $13,142 and $13,909, respectively. There is
also a legend underneath the graphic presentation which indicates the Average
Annual Total Return for the period ended November 30, 1995, beginning with the
inception date of the Biltmore Equity Fund (May 7, 1993) and the one-year
period; the Average Annual Total Returns are 11.23% and 22.90%, respectively.
The performance disclaimer and footnotes are listed directly under the graphic
presentation.
D. The graphic presentation here displayed consists of the components of the
corresponding line graph listed in the upper left corner. The Biltmore Equity
Index Fund is represented by a solid line. The S&P 500 is represented by a
dotted line. The line graph is a visual representation of a comparison of change
in value of a hypothetical $10,000 investment in the Biltmore Equity Index Fund
and the S&P 500 Index. The "y" axis reflects the cost of the investment. The "x"
axis reflects computation periods from the Biltmore Equity Index Fund's start
of business, May 7, 1993, through November 30, 1995. The right margin reflects
the ending value of the hypothetical investment in the Biltmore Equity Index
Fund as compared to S&P 500 Index; the ending values are $13,834 and $13,909,
respectively. There is also a legend underneath the graphic presentation which
indicates the Average Annual Total Return for the period ended November 30,
1995, beginning with the inception date of the Biltmore Equity Index Fund (May
7, 1993) and the one-year period; the Average Annual Total Returns are 13.48%
and 30.07%, respectively. The performance disclaimer and footnotes are listed
directly under the graphic presentation.
E. The graphic presentation here displayed consists of the components of the
corresponding line graph listed in the upper left corner. The Biltmore
Quantitative Equity Fund is represented by a solid line. The S&P 500 Index is
represented by a dotted line. The line graph is a visual representation of a
comparison of change in value of a hypothetical $10,000 investment in the
Biltmore Quantitative Equity Fund and S&P 500 Index. The "y" axis reflects the
cost of the investment. The "x" axis reflects computation periods from the
Biltmore Quantitative Equity Fund's start of business, March 25, 1994, through
November 30, 1995. The right margin reflects the ending value of the
hypothetical investment in the Biltmore Quantitative Equity Fund as compared to
S&P 500 Index; the ending values are $12,898 and $13,036, respectively. There is
also a legend underneath the graphic presentation which indicates the Average
Annual Total Return for the period ended November 30, 1995, beginning with the
inception date of the Biltmore Quantitative Equity Fund (March 25, 1994) and the
one-year period; the Average Annual Total Returns are 16.33% and 33.09%,
respectively. The performance disclaimer and footnotes are listed directly under
the graphic presentation.
F. The graphic presentation here displayed consists of the components of the
corresponding line graph listed in the upper left corner. The Biltmore Balanced
Fund is represented by a solid line. The S&P 500 Index is represented by a
broken line. The Lehman Brothers Aggregate Bond Index is represented by a dotted
line. The line graph is a visual representation of a comparison of change in
value of a hypothetical $10,000 investment in the Biltmore Balanced Fund a nd
Lehman Brothers Aggregate Bond Index. The "y" axis reflects the cost of the
investment. The "x" axis reflects computation periods from the Biltmore Balanced
Fund's start of business, May 7, 1993, through November 30, 1995. The right
margin reflects the ending value of the hypothetical investment in the Biltmore
Balanced Fund as compared to S&P 500 Index and Lehman Brothers Aggregate Bond
Index; the ending values are $12,604; $13,909; and $11,803, respectively. There
is also a legend underneath the graphic presentation which indicates the Average
Annual Total Return for the period ended November 30, 1995, beginning with the
inception date of the Biltmore Balanced Fund (May 7, 1993) and the one-year
period; the Average Annual Total Returns are 9.45% and 20.61%, respectively. The
performance disclaimer and footnotes are listed directly under the graphic
presentation.
G. The graphic presentation here displayed consists of the components of the
corresponding line graph listed in the upper left corner. The Biltmore Fixed
Income Fund is represented by a solid line. The Lehman Brothers Aggregate Bond
Index is represented by a dotted line. The line graph is a visual
representation of a comparison of change in value of a hypothetical $10,000
investment in the Biltmore Fixed Income Fund and Lehman Brothers Aggregate Bond
Index. The "y" axis reflects the cost of the investment. The "x" axis reflects
computation periods from the Biltmore Fixed Income Fund's start of business, May
7, 1993, through November 30, 1995. The right margin reflects the ending value
of the hypothetical investment in the Biltmore Fixed Income Fund as compared to
Lehman Brothers Aggregate Bond Index; the ending values are $11,034 and $11,803,
respectively. There is also a legend underneath the graphic presentation which
indicates the Average Annual Total Return for the period ended November 30,
1995, beginning with the inception date of the Biltmore Fixed Income Fund (May
7, 1993) and the one-year period; the Average Annual Total Returns are 3.91% and
11.96%, respectively. The performance disclaimer and footnotes are listed
directly under the graphic presentation .
H. The graphic presentation here displayed consists of the components of the
corresponding line graph listed in the upper left corner. The Biltmore Short-
Term Fixed Income Fund is represented by a solid line. The Merrill Lynch 1-3
Year U.S. Treasury Index is represented by a dotted line. The line graph is a
visual representation of a comparison of change in value of a hypothetical
$10,000 investment in the Biltmore Short-Term Fixed Income Fund and Merrill
Lynch 1-3 Year U.S. Treasury Index. The "y" axis reflects the cost of the
investment. The "x" axis reflects computation periods from the Biltmore Short-
Term Fixed Income Fund's start of business, May 7, 1993, through November 30,
1995. The right margin reflects the ending value of the hypothetical investment
in the Biltmore Short-Term Fixed Income Fund; the ending values are $10,701 and
$11,206, respectively. There is also a legend underneath the graphic
presentation which indicates the average Annual Total Return for the period
ended November 30, 1995, beginning with the inception date of the Biltmore
Short-Term Fixed Income Fund (May 7, 1993) and the one-year period; the Average
Annual Total Returns are 3.50% and 6.05%, respectively. The performance
