-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JRDOo36c+Ls/3Vy/Zb7HrZ2QWE0IAn0hbTMtIALi3EggfxD4dv6nwlswjkzDl6pt V8NZlfptH1Y88xqtMGG7fQ== 0000789289-97-000035.txt : 19971126 0000789289-97-000035.hdr.sgml : 19971126 ACCESSION NUMBER: 0000789289-97-000035 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971125 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BLANCHARD FUNDS CENTRAL INDEX KEY: 0000789289 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 133333918 STATE OF INCORPORATION: MA FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-04579 FILM NUMBER: 97727777 BUSINESS ADDRESS: STREET 1: 41 MADSON AVE 24TH FL CITY: NEW YORK STATE: NY ZIP: 10010 BUSINESS PHONE: 2127797979 MAIL ADDRESS: STREET 1: 41 MADISON AVENUE 24TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10010 FORMER COMPANY: FORMER CONFORMED NAME: BLANCHARD STRATEGIC GROWTH FUND DATE OF NAME CHANGE: 19901225 N-30D 1 - ------------------------------------------------------------------------------- PRESIDENT'S MESSAGE - ------------------------------------------------------------------------------- Dear Investor: I'm pleased to present the Annual Report to Shareholders for the Blanchard Group of Funds. This report covers the funds' fiscal year, which is the period from October 1, 1996 through September 30, 1997. For greater efficiency in printing and mailing, this report now combines information for all funds. It begins with a commentary by the portfolio manager, and follows with a complete list of holdings and financial statements for each fund. A fund-by-fund summary for the period follows: . BLANCHARD GLOBAL GROWTH FUND The fund's diversified portfolio of U.S. and foreign stocks and bonds+ produced a solid total return of 13.20%* through dividends totaling $0.21 per share and capital gains totaling $2.26 per share. Assets in the fund totaled more than $62 million at the end of the period. . BLANCHARD PRECIOUS METALS FUND, INC. Due to extremely weak market conditions, the fund's portfolio of precious metals investments and securities of mining companies produced a negative total return of (15.24%).* While the fund paid dividends totaling $0.30 per share and capital gains totaling $2.25 per share, the fund's share price fell from $8.90 to $5.37 as prices of the fund's holdings declined with the market. The fund's assets closed the period at $67 million. . BLANCHARD FLEXIBLE INCOME FUND The fund's diversified portfolio of fixed income securities paid monthly dividends totaling $0.31 per share and recorded a $0.14 per share increase in net asset value. As a result, the fund achieved a total return of 9.53%.* The fund's assets reached $155 million. . BLANCHARD SHORT-TERM FLEXIBLE INCOME FUND The fund's conservative portfolio of fixed income securities produced a total return of 7.24%* through monthly dividends totaling $0.17 per share, and a $0.04 per share increase in net asset value. Assets in the fund totaled more than $133 million. . BLANCHARD FLEXIBLE TAX-FREE BOND FUND Designed for tax-sensitive investors, this fund paid federally tax-free dividends totaling $0.25 per share.** Through this income stream and a $0.25 per share increase in net asset value, the fund achieved a total return of 9.59%.* Assets reached $24 million. - ------------------------------------------------------------------------------- PRESIDENT'S MESSAGE (CONTINUED) - ------------------------------------------------------------------------------- Thank you for pursuing your financial goals through the Blanchard Group of Funds. If you are not already doing so, consider reinvesting your earnings automatically in additional shares. It's a convenient way to gain the advantage of compounding--and increase your opportunity to participate in key financial markets over time. Sincerely, /s/ Edward C. Gonzales Edward C. Gonzales President November 15, 1997 +Foreign investing involves special risks including currency risk, increased volatility of foreign securities, and differences in auditing and other financial standards. *Performance quoted reflects past performance and is not indicative of future results. 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. **Income may be subject to the federal alternative minimum tax and state and local taxes. Dear Shareholders, Enclosed please find the Annual Report for your Blanchard Global Growth Fund for the fiscal year ended September 30, 1997. ["Graphic representation A1 omitted. See Appendix."] The Blanchard Global Growth Fund's total return (price change plus reinvestment of distributions) for the year ending September 30, 1997 was 13.20%. By comparison, the Morgan Stanley World Index (MSCI World) rose 24.12%, and the Salomon Brothers World Government Bond Index (WGBI) was up 2.41% for the same period.* During the past year, equity markets substantially outperformed bond markets around the globe. It appears the markets have priced in a continued period of strong economic growth with low inflation. Equity markets in Continental Europe performed better than the rest of the world, mainly because corporate earnings have increased. Corporate earnings increased due to a pick up in economic growth, and an increase in exports (due to their weaker currencies), as well as from gains in productivity. Among the major stock markets, only *The Morgan Stanley World Index is based on the share prices of approximately 1,600 companies listed on the stock exchanges of 22 countries. The Salomon Brothers World Government Bond Index is comprised of 17 Government bond markets whose eligibility is determined based on market capitalization and investment criteria; a market's issues must total at least US$20 billion, DM30 billion, and 2.5 trillion for three consecutive months, after which it will be added to the SBWGBI at the end of the following quarter. These indices are unmanaged. Actual investment cannot be made in an index. the Japanese stock market declined during the past year. The low interest rate environment in Japan has yet to spur economic growth, as the deregulation of the financial industry has been slow. The Blanchard Global Growth Fund benefited from its exposure to equities, since equities posted higher returns than bonds. However, our allocation across equity markets did not help performance. We were overweighted in Continental Europe and Japan and underweighted in the United States. Our currency hedging strategy added value, since the U.S. Dollar strengthened against most currencies in Continental Europe and Japan. We continue to hedge a portion of our Japanese Yen, Swiss Franc, and Dutch Guilder exposure. During the past year, the Blanchard Global Growth Fund sold equities in favor of fixed income securities, as the result of strong equity performance during the past year. We also shifted a portion of the fund out of U.S. equities and into foreign equities. Continental Europe and Japan offer more attractive values, since the U.S. equity market has appreciated substantially in the past few years. We believe the gloom has been overdone in Japan, and the stock market reflects attractive long-term value. Thank you for your continued patronage. Sincerely, /s/ Thomas B. Hazuka Thomas B. Hazuka, Ph.D. Chief Investment Officer Mellon Capital Management Corporation Portfolio Manager of the Blanchard Global Growth Fund Dear Shareholders, Enclosed please find the Annual Report for your Blanchard Precious Metals Fund for the fiscal year ended September 30, 1997. ["Graphic representation A2 omitted. See Appendix."] THE YEAR IN REVIEW One year ago, gold was trading around the $380 level and concerns were mounting that the International Monetary Fund, or IMF, was likely to sell 5 million ounces of gold to fund capital projects in developing countries. This and other concerns, such as the strengthening U.S. dollar, moved us to adopt a more defensive posture in the portfolio to reflect the increasing likelihood that the gold price would come under pressure. This turned out to be quite an understatement, as large sales of gold by central banks, particularly the Dutch and Australians, drove the yellow metal sharply lower. Central bank sales are almost impossible to forecast except for the general expectation that they do occur every year, but generally in quantities that don't disrupt the market. This is partly because other central banks tend to buy about half of the gold sold by their sister institutions. In the 1990's, central bank gold sales have netted out to about 7.5 million ounces per year when central bank buying is accounted for. Surprisingly, the past year has not been terribly out of the ordinary. About 15 million ounces of central bank gold has been sold, with perhaps 9 million of this not taken up by other central bank purchases. Ordinarily, one would not expect the price of gold to swoon by as much as 19% (from $380 to $308) in response. However, this time was different in a very significant way. Aggressive speculative short sales of gold accompanied every announcement of a central bank sale. Large quantities of gold have been borrowed from central banks at a borrowing cost of 2-3% per annum and sold in the marketplace in what turned out to be a successful effort to drive the gold price lower. These speculators have correctly assumed that gold buyers will be timid in the face of a growing perception that some banks are less willing to hold onto their sizable gold holdings. Estimates of the quantity of gold borrowed and sold short range as high as 2,000 metric tons, which is about 65 million ounces! Clearly, this swamps the actual amount of gold sold by the banks and amply explains the sharp gold price decline, which has in turn pushed most gold equities dramatically lower. In line with the gold price decline, the Blanchard Precious Metals Fund declined by 15.24% in the past year. A LOOK AHEAD The dominant theme of increasing and long-lasting central bank gold sales continues to weigh heavily on the bullion price as 1997 draws to a close. In recent days, the focal point of the issue has become the potential for sales of Swiss gold reserves starting in the year 2000. These sales could come about in response to a change in the Swiss constitution, which would eliminate or reduce the requirement for a gold backstop in the money supply. Complicating the issue is the proposal to create a Solidarity Foundation for charitable purposes, which would be funded in part by gold bullion sales, perhaps as much as 800 metric tons (about 26 million ounces). These proposals would both require political approval, followed by popular approval in a national referendum. If successful, the gold would be sold gradually over a period of five to eight years. The worst-case scenario at present seems to be the addition of 9 million ounces of gold to the annual supply-demand equation, which would last 5 years. Putting this into perspective, the annual gold market is currently sized at 130 million ounces of gold, so this is a manageable quantity. However, the larger issue is whether a significant change in central bank attitudes toward gold is at hand. If central banks are more willing to part with their gold in the years ahead, then gold will settle into a lower trading range than we have become accustomed to in the past ten years. If instead, the net supply of central bank gold remains at less than ten million ounces per year as in the past, then we can look forward to an explosive rally in the gold market as the huge outstanding short position is bought back. We lean toward the latter scenario, particularly since gold is now trading below the cost of production for about one quarter of the global gold mining community! New mining projects are being canceled or deferred and the supply of newly mined gold and scrap is now falling. Nonetheless, caution is the order of the day until we discern a more predictable upward path for the gold price. Thank you for your continued patronage. Sincerely, /s/ Peter C. Cavelti Peter C. Cavelti Chairman and CEO Cavelti Capital Management Ltd. Portfolio Manager of the Blanchard Precious Metals Fund, Inc. Dear Shareholders, Enclosed please find the annual report for your Blanchard Flexible Income Fund for the fiscal year ended September 30, 1997. ["Graphic representation A3 omitted. See Appendix."] The past year has been one of relatively good economic growth and declining inflation. The Federal Reserve Board (the "Fed") has continued its policy of promoting price stability and the market has responded by pushing bonds yields lower. The fund has benefited from this environment as the investments in high yield bonds* and mortgage backed securities have not only earned attractive yields, but have also appreciated in price. The third allocation, U.S. Treasurys, has provided the anchor to the portfolio. Looking forward, we are increasingly concerned with the tight labor markets and high resource utilization currently existing in the U.S. In order to relieve these pressures, higher interest rates will probably be required. However, if the Fed continues to be vigilant in its fight against inflation, significant interest rate increases should not be in the offing. *Lower rated bonds involve a higher degree of risk than investment grade bonds in return for higher yield potential. While the markets will undoubtedly have bouts of volatility, relative stability may remain the norm. In this environment, the fund should continue to benefit from its prudent blend of financial assets. Thank you for your continued patronage. Sincerely, /s/ Jack D. Burks Jack D. Burks Managing Director of OFFITBANK Portfolio Manager of the Blanchard Flexible Income Fund Dear Shareholders, Enclosed please find the annual report for your Blanchard Short-Term Flexible Income Fund for the fiscal year ended September 30, 1997. ["Graphic representation A4 omitted. See Appendix."] The past year has been one of relatively good economic growth and declining inflation. The Federal Reserve Board (the "Fed") has continued its policy of promoting price stability and the market has responded by pushing bond yields lower. The fund has benefited from this environment as the investments in high yield bonds* and mortgage backed securities have not only earned attractive yields, but have also appreciated in price. The third allocation, U.S. Treasurys, has provided the anchor to the portfolio. Looking forward, we are increasingly concerned with the tight labor markets and high resource utilization currently existing in the U.S. In order to relieve these pressures, higher interest rates will probably be required. However, if the Fed continues to be vigilant in its fight against inflation, significant interest rate increases should not be in the offing. *Lower rated bonds involve a higher degree of risk than investment grade bonds in return for higher yield potential. While the markets will undoubtedly have bouts of volatility, relative stability may remain the norm. In this environment, the fund should continue to benefit from its prudent blend of financial assets. Thank you for your continued patronage. Sincerely, /s/ Jack D. Burks Jack D. Burks Managing Director of OFFITBANK Portfolio Manager of the Blanchard Short-Term Flexible Income Fund Dear Shareholders, Enclosed please find the Annual Report for your Blanchard Flexible Tax-Free Bond Fund for the fiscal year ended September 30, 1997. ["Graphic representation A5 omitted. See Appendix."] The past fiscal year was an excellent one for investors in the Blanchard Flexible Tax-Free Bond Fund. Interest rates declined during the first fiscal quarter, but rose sharply in early 1997 as the Federal Reserve Board raised interest rates to slow an extremely strong economy and quell inflation fears. Although the economy continued to grow at a 3.5% - 4% rate over the next two quarters, inflation continued moderate with the consumer price index rising only 2.2% over the past 12 months. Consequently, interest rates declined during the final two quarters of the fund's fiscal year. The Blanchard Flexible Tax-Free Bond Fund was invested in a portfolio of longer-term, high-quality tax exempt bonds, with a maturity of approximately 20 years for most of the year. During the latter part of the fiscal year, cash reserves were raised to reduce the average maturity of the fund in anticipation of possible interest rate increases. Overall, the fund had an excellent year, posting a total return of 9.59% versus 8.43% for the Lehman Brothers Current Municipal Bond Index.+ Additionally, the fund was ranked #31 by Lipper Analytical Services out of 233 funds in its category of general municipal debt funds for total cumulative reinvested performance for the twelve month period ended 9/30/97. The fund also outperformed the Lipper General Municipal Debt Fund average of 8.59%.++ Morningstar has awarded the Blanchard Flexible Tax-Free Bond Fund its 4-star rating for risk-adjusted performance for the overall period ended 9/30/97 in its category of 1,374 municipal funds.* Naturally, past performance is no guarantee of future performance. As with any fixed income fund, investment return, yield, and principal value will vary with changing market conditions so that an investor's shares, when redeemed, may be worth more or less than their original purchase price. Thank you for your continued patronage. Sincerely, /s/ Kenneth J. McAlley Kenneth J. McAlley Executive Vice President United States Trust Company of New York Portfolio Manager of the Blanchard Flexible Tax-Free Bond Fund +Lehman Brothers Municipal Index is an unmanaged broad market performance benchmark for the tax-exempt bond market. To be included in the Lehman Brothers Municipal Bond Index, bonds must have a minimum credit rating of at least Baa. Actual investments cannot be made in an index. ++Lipper figures represent the average of the total returns reported by all of the mutual funds designated by Lipper Analytical Services, Inc. as falling into the respective categories indicated. Lipper rankings and figures do not reflect sales charges. *Morningstar proprietary ratings reflect risk-adjusted performance through 9/30/97. The ratings are subject to change every month. Past performance is not a guarantee of future results. Morningstar ratings are calculated from the fund's three-year returns in excess of 90-day Treasury bill returns, and a risk factor that reflects fund performance below 90-day Treasury bill returns. The fund received 4 stars for the three-year period. It was rated among 1,374 municipal funds for the three-year period. The top ten percent of the funds in the category receive 5 stars, the next 22.5% receive 4 stars, and the next 35% receive 3 stars. The rating shown does not reflect certain management fees which were waived during the period. If reflected, they may have impacted the rating. BLANCHARD GLOBAL GROWTH FUND PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1997 - --------------------------------------------------------------------------------
VALUE IN U.S. SHARES DOLLARS ------ ------------------------------ ----------- FOREIGN SECURITIES SECTOR--29.8% ------------------------------------- AUSTRIA--0.1% ------------------------------ BANKING--0.0% ------------------------------ 100 Bank Austria, AG $ 4,865 ------------------------------ 100 (a)Bank Austria AG, Rights 226 ------------------------------ ----------- Total 5,091 ------------------------------ ----------- CHEMICALS--0.0% ------------------------------ 200 Lenzing AG 11,821 ------------------------------ ----------- FINANCIAL SERVICES--0.0% ------------------------------ 100 Creditanstalt-Bankverein 6,298 ------------------------------ 200 Creditanstalt-Bankverein, Pfd. 10,422 ------------------------------ ----------- Total 16,720 ------------------------------ ----------- PETROLEUM--0.1% ------------------------------ 150 OMV AG 22,375 ------------------------------ ----------- RUBBER & MISC. MATERIALS--0.0% ------------------------------ 200 Radex-Heraklith 8,299 ------------------------------ ----------- STEEL--0.0% ------------------------------ 100 Boehler-Uddeholm 8,403 ------------------------------ ----------- UTILITIES--0.0% ------------------------------ 100 Oest Elektrizitats, Class A 7,081 ------------------------------ ----------- TOTAL AUSTRIA 79,790 ------------------------------ ----------- BRAZIL--0.0% ------------------------------ 7,481 Rhodia-Ster S.A., GDR 18,702 ------------------------------ ----------- DENMARK--0.1% ------------------------------ BANKING--0.1% ------------------------------ 200 Den Danske Bank 21,787 ------------------------------ 400 Unidanmark, Class A 25,978 ------------------------------ ----------- Total 47,765 ------------------------------ -----------
BLANCHARD GLOBAL GROWTH FUND - --------------------------------------------------------------------------------
VALUE IN U.S. SHARES DOLLARS ------ ------------------------------ ------------ FOREIGN SECURITIES SECTOR--CONTINUED ------------------------------------- DENMARK--CONTINUED ------------------------------ COMMUNICATIONS EQUIPMENT--0.0% ------------------------------ 200 Tele Danmark AS, Class B $ 10,492 ------------------------------ ------------ ENVIRONMENTAL SERVICES--0.0% ------------------------------ 100 Danisco 5,662 ------------------------------ ------------ INDUSTRIAL SERVICES--0.0% ------------------------------ 100 Nkt Holding 7,728 ------------------------------ ------------ MISCELLANEOUS--0.0% ------------------------------ 300 Korn-Og Foderstof 9,363 ------------------------------ ------------ TRANSPORTATION-AIR--0.0% ------------------------------ 400 SAS Danmark AS 6,717 ------------------------------ ------------ TOTAL DENMARK 87,727 ------------------------------ ------------ FINLAND--0.2% ------------------------------ BANKING--0.0% ------------------------------ 3,950 Merita Ltd, Class A 18,739 ------------------------------ ------------ ELECTRICAL EQUIPMENT--0.1% ------------------------------ 250 Nokia AB, Class K 23,672 ------------------------------ 500 Nokia AB-A 47,534 ------------------------------ ------------ Total 71,206 ------------------------------ ------------ MISCELLANEOUS--0.1% ------------------------------ 36 Rauma Oy 748 ------------------------------ 1,300 UPM-Kymmene OY 36,118 ------------------------------ ------------ Total 36,866 ------------------------------ ------------ NON-FERROUS METALS--0.0% ------------------------------ 500 Outokumpu Oy 9,119 ------------------------------ ------------ TRADING COMPANY--0.0% ------------------------------ 750 Kesko 10,560 ------------------------------ ------------ TOTAL FINLAND 146,490 ------------------------------ ------------
BLANCHARD GLOBAL GROWTH FUND - --------------------------------------------------------------------------------
VALUE IN U.S. SHARES DOLLARS ------ ---------------------------------------- ----------- FOREIGN SECURITIES SECTOR--CONTINUED ----------------------------------------------- FRANCE--0.7% ---------------------------------------- AUTOMOBILE--0.0% ---------------------------------------- 150 Peugeot S.A. $ 19,772 ---------------------------------------- ----------- BEVERAGE--0.2% ---------------------------------------- 310 LVMH (Moet-Hennessy) 65,891 ---------------------------------------- ----------- BROADCASTING--0.0% ---------------------------------------- 150 Havas S.A. 10,182 ---------------------------------------- ----------- BUILDING MATERIALS--0.1% ---------------------------------------- 255 Compagnie de St. Gobain 39,329 ---------------------------------------- 280 Lafarge-Coppee 20,521 ---------------------------------------- ----------- Total 59,850 ---------------------------------------- ----------- CHEMICALS--0.1% ---------------------------------------- 1,122 Rhone-Poulenc, Class A 44,633 ---------------------------------------- ----------- FINANCIAL SERVICES--0.1% ---------------------------------------- 260 AXA 17,442 ---------------------------------------- 230 Compagnie Financiere de Paribas, Class A 17,058 ---------------------------------------- ----------- Total 34,500 ---------------------------------------- ----------- MOTOR VEHICLE PARTS--0.0% ---------------------------------------- 384 Michelin, Class B 21,813 ---------------------------------------- ----------- PHARMACEUTICALS--0.2% ---------------------------------------- 220 L'Oreal 88,072 ---------------------------------------- 290 Sanofi S.A. 26,934 ---------------------------------------- ----------- Total 115,006 ---------------------------------------- ----------- RETAILERS-BROADLINE--0.0% ---------------------------------------- 60 Pinault-Printemps-Redoute S.A. 28,146 ---------------------------------------- ----------- RETAILERS SPECIALTY--0.0% ---------------------------------------- 275 Castorama Dubois Investisse 29,574 ---------------------------------------- ----------- UTILITIES--0.0% ---------------------------------------- 170 Lyonnaise des Eaux S.A. 18,970 ---------------------------------------- ----------- TOTAL FRANCE 448,337 ---------------------------------------- -----------
BLANCHARD GLOBAL GROWTH FUND - --------------------------------------------------------------------------------
VALUE IN U.S. SHARES DOLLARS ------ ----------------------------------------- ----------- FOREIGN SECURITIES SECTOR--CONTINUED ------------------------------------------------ GERMANY--2.6% ----------------------------------------- AIRLINES--0.1% ----------------------------------------- 2,500 Deutsche Lufthansa AG $ 49,237 ----------------------------------------- ----------- AUTOMOTIVE & RELATED--0.1% ----------------------------------------- 1,000 Daimler Benz AG 82,515 ----------------------------------------- ----------- BANKING--0.4% ----------------------------------------- 2,250 Bayerische Hypotheken-Und Wechsel-Bank AG 96,140 ----------------------------------------- 2,700 Deutsche Bank AG 190,090 ----------------------------------------- ----------- Total 286,230 ----------------------------------------- ----------- CHEMICALS--0.2% ----------------------------------------- 4,500 Bayer AG 179,165 ----------------------------------------- ----------- ELECTRICAL EQUIPMENT--0.6% ----------------------------------------- 5,650 Siemens AG 381,634 ----------------------------------------- ----------- HEALTHCARE-GENERAL--0.1% ----------------------------------------- 1,500 Merck KGAA 57,302 ----------------------------------------- ----------- INSURANCE-LIFE--0.6% ----------------------------------------- 1,500 Allianz AG Holding 361,895 ----------------------------------------- ----------- MULTI-INDUSTRY--0.2% ----------------------------------------- 218 Viag AG 97,566 ----------------------------------------- ----------- STEEL--0.1% ----------------------------------------- 200 Thyssen AG 46,634 ----------------------------------------- ----------- UTILITIES-ELECTRIC--0.2% ----------------------------------------- 2,050 RWE AG 99,254 ----------------------------------------- ----------- TOTAL GERMANY 1,641,432 ----------------------------------------- ----------- HONG KONG--1.1% ----------------------------------------- BANKING--0.2% ----------------------------------------- 4,844 Bank Of East Asia 18,093 ----------------------------------------- 6,000 Hang Seng Bank, Ltd. 73,856 -----------------------------------------
BLANCHARD GLOBAL GROWTH FUND - --------------------------------------------------------------------------------
VALUE IN U.S. SHARES DOLLARS ------ ---------------------------------- ----------- FOREIGN SECURITIES SECTOR--CONTINUED ----------------------------------------- HONG KONG--CONTINUED ---------------------------------- BANKING--CONTINUED ---------------------------------- 1,545 HSBC Holdings PLC $ 51,713 ---------------------------------- 1,200 Wing Lung Bank 7,118 ---------------------------------- ----------- Total 150,780 ---------------------------------- ----------- BROADCASTING--0.0% ---------------------------------- 2,000 Television Broadcasting 7,082 ---------------------------------- ----------- ENTERTAINMENT & RECREATION--0.0% ---------------------------------- 3,000 Hong Kong & Shang Hot 3,644 ---------------------------------- 4,000 Shangri-La Asia 4,110 ---------------------------------- ----------- Total 7,754 ---------------------------------- ----------- FINANCIAL SERVICES--0.0% ---------------------------------- 6,000 Peregrine Investment 10,196 ---------------------------------- ----------- MULTI-INDUSTRY--0.2% ---------------------------------- 9,000 Hutchison Whampoa 88,686 ---------------------------------- 3,000 Swire Pacific, Ltd. 22,971 ---------------------------------- ----------- Total 111,657 ---------------------------------- ----------- PROPERTY--0.1% ---------------------------------- 2,000 Hysan Development Co., Ltd. 5,983 ---------------------------------- 5,033 New World Development Co., Ltd. 30,440 ---------------------------------- 4,000 Wharf Holdings Ltd. 14,732 ---------------------------------- ----------- Total 51,155 ---------------------------------- ----------- REAL ESTATE--0.3% ---------------------------------- 5,000 Cheung Kong 56,216 ---------------------------------- 10,000 Sun Hung Kai Properties 117,601 ---------------------------------- ----------- Total 173,817 ---------------------------------- ----------- TELECOMMUNICATIONS--0.2% ---------------------------------- 34,843 Hong Kong Telecommunications, Ltd. 78,800 ---------------------------------- -----------
BLANCHARD GLOBAL GROWTH FUND - --------------------------------------------------------------------------------
VALUE IN U.S. SHARES DOLLARS ------ --------------------------------- ----------- FOREIGN SECURITIES SECTOR--CONTINUED ---------------------------------------- HONG KONG--CONTINUED --------------------------------- UTILITIES--0.1% --------------------------------- 9,000 China Light and Power Co., Ltd. $ 49,548 --------------------------------- 12,000 Hong Kong and China Gas Co., Ltd. 24,735 --------------------------------- ----------- Total 74,283 --------------------------------- ----------- TOTAL HONG KONG 665,524 --------------------------------- ----------- IRELAND--0.3% --------------------------------- BANKING--0.0% --------------------------------- 1 Bank of Ireland PLC 7 --------------------------------- ----------- BUILDING MATERIALS--0.3% --------------------------------- 14,329 CRH PLC 163,425 --------------------------------- ----------- TOTAL IRELAND 163,432 --------------------------------- ----------- ITALY--1.0% --------------------------------- AUTOMOTIVE & RELATED--0.2% --------------------------------- 37,510 Fiat SPA 133,859 --------------------------------- 4,180 Fiat SPA 7,434 --------------------------------- ----------- Total 141,293 --------------------------------- ----------- BANKING--0.1% --------------------------------- 5,300 Banca Commerciale Italiana 15,229 --------------------------------- 600 Imi 6,437 --------------------------------- ----------- Total 21,666 --------------------------------- ----------- BROADCASTING--0.0% --------------------------------- 3,500 Mediaset SPA 18,046 --------------------------------- ----------- FINANCE-0.0% --------------------------------- 6,200 Credito Italiano 16,774 --------------------------------- ----------- PAPER PRODUCTS--0.0% --------------------------------- 1,000 Burgo (Cartiere) SPA 6,488 --------------------------------- ----------- PETROLEUM--0.3% --------------------------------- 26,000 Eni SPA 163,729 --------------------------------- -----------
BLANCHARD GLOBAL GROWTH FUND - --------------------------------------------------------------------------------
VALUE IN U.S. SHARES DOLLARS ------ --------------------------------------- ----------- FOREIGN SECURITIES SECTOR--CONTINUED ---------------------------------------------- ITALY--CONTINUED --------------------------------------- RUBBER & MISC. MATERIALS--0.0% --------------------------------------- 2,300 Pirelli SPA $ 6,742 --------------------------------------- ----------- TELECOMMUNICATIONS--0.4% --------------------------------------- 46,000 Telecom Italia Mobile SPA 182,545 --------------------------------------- 9,944 Telecom Italia SPA 66,249 --------------------------------------- ----------- Total 248,794 --------------------------------------- ----------- UTILITIES--0.0% --------------------------------------- 1,200 Edison SPA 6,458 --------------------------------------- ----------- TOTAL ITALY 629,990 --------------------------------------- ----------- JAPAN--10.3% --------------------------------------- AIRLINES-0.0% --------------------------------------- 2,000 Japan Airlines Co. 7,276 --------------------------------------- ----------- AUTOMOTIVE & RELATED--1.0% --------------------------------------- 2,000 Denso Corp. 48,562 --------------------------------------- 3,000 Honda Motor Co., Ltd. 104,666 --------------------------------------- 5,000 Nissan Motor Co., Ltd. 29,833 --------------------------------------- 15,000 Toyota Motor Credit Corp. 459,932 --------------------------------------- ----------- Total 642,993 --------------------------------------- ----------- BANKING--1.7% --------------------------------------- 9,000 Asahi Bank, Ltd. 52,208 --------------------------------------- 18,000 Bank of Tokyo-Mitsubishi, Ltd. 343,084 --------------------------------------- 9,000 Fuji Bank, Ltd., Tokyo 99,196 --------------------------------------- 8,000 Industrial Bank of Japan, Ltd., Tokyo 99,445 --------------------------------------- 6,000 Mitsubishi Trust & Banking Corp., Tokyo 93,478 --------------------------------------- 4,000 Mitsui Trust & Banking 19,922 --------------------------------------- 15,000 Sakura Bank, Ltd., Tokyo 71,725 --------------------------------------- 10,000 Sumitomo Bank, Ltd., Osaka 150,825 ---------------------------------------
BLANCHARD GLOBAL GROWTH FUND - --------------------------------------------------------------------------------
VALUE IN U.S. SHARES DOLLARS ------ ----------------------------------- ----------- FOREIGN SECURITIES SECTOR--CONTINUED ------------------------------------------ JAPAN--CONTINUED ----------------------------------- BANKING--CONTINUED ----------------------------------- 8,000 Tokai Bank, Ltd., Nagoya $ 66,230 ----------------------------------- ----------- Total 996,113 ----------------------------------- ----------- BUILDING & CONSTRUCTION-0.0% ----------------------------------- 1,000 Obayashi Corp. 6,041 ----------------------------------- ----------- BUILDING MATERIALS--0.0% ----------------------------------- 3,000 Takara Standard Co. 21,331 ----------------------------------- ----------- CAPITAL GOODS--0.2% ----------------------------------- 13,000 Asahi Glass Co., Ltd. 101,052 ----------------------------------- ----------- CHEMICALS & RELATED--0.4% ----------------------------------- 12,000 Daicel Chemical Industries 30,728 ----------------------------------- 6,000 Sekisui Chemical Co. 45,198 ----------------------------------- 1,000 Shin-Etsu Chemical Co. 27,513 ----------------------------------- 6,000 Sumitomo Bakelite Co., Ltd. 42,562 ----------------------------------- 2,000 Sumitomo Chemical Co. 7,342 ----------------------------------- 3,000 Takeda Chemical Industries 89,998 ----------------------------------- ----------- Total 243,341 ----------------------------------- ----------- CHEMICAL-SPECIALTY--0.3% ----------------------------------- 2,000 Fuji Photo Film Co. 82,539 ----------------------------------- 5,000 Shiseido Co. 80,385 ----------------------------------- ----------- Total 162,924 ----------------------------------- ----------- COMMUNICATION EQUIPMENT--0.3% ----------------------------------- 8,000 Matsushita Electric Industrial Co. 144,526 ----------------------------------- 1 NTT Data Communications Systems Co. 45,330 ----------------------------------- ----------- Total 189,856 ----------------------------------- ----------- COMPUTERS--0.2% ----------------------------------- 6,000 Fujitsu, Ltd. 75,081 -----------------------------------
BLANCHARD GLOBAL GROWTH FUND - --------------------------------------------------------------------------------
VALUE IN U.S. SHARES DOLLARS ------- ---------------------------------------- ----------- FOREIGN SECURITIES SECTOR--CONTINUED ------------------------------------------------ JAPAN--CONTINUED ---------------------------------------- COMPUTERS--CONTINUED ---------------------------------------- 6,000 NEC Corp. $ 73,092 ---------------------------------------- ----------- Total 148,173 ---------------------------------------- ----------- CONSUMER ELECTRONIC--0.4% ---------------------------------------- 1,000 Rohm Co. 117,676 ---------------------------------------- 6,000 Sharp Corp. 54,695 ---------------------------------------- 1,000 Sony Corp. 94,473 ---------------------------------------- ----------- Total 266,844 ---------------------------------------- ----------- ELECTRONICS & ELECTRICAL EQUIPMENT--0.9% ---------------------------------------- 500 Advantest 49,308 ---------------------------------------- 2,000 Canon Sales Co., Inc. 39,446 ---------------------------------------- 5,000 Canon, Inc. 146,267 ---------------------------------------- 16,000 Hitachi, Ltd. 139,223 ---------------------------------------- 600 Kyocera Corp. 39,231 ---------------------------------------- 1,000 Mitsubishi Corp. 9,696 ---------------------------------------- 1,000 Murata Manufacturing 43,258 ---------------------------------------- 1,000 Tokyo Electron, Ltd. 61,076 ---------------------------------------- 4,000 Yamatake-Honeywell 56,352 ---------------------------------------- ----------- Total 583,857 ---------------------------------------- ----------- FINANCIAL SERVICES--0.8% ---------------------------------------- 2,200 Credit Saison Co., Ltd. 59,799 ---------------------------------------- 4,000 Daiwa Securities Co., Ltd. 24,530 ---------------------------------------- 134,000 (a)Nikkei 300 Stock Index List Fund 304,268 ---------------------------------------- 7,000 Nomura Securities Co., Ltd. 91,075 ---------------------------------------- 3,000 Yamaichi Securities Co., Ltd. 6,166 ---------------------------------------- ----------- Total 485,838 ---------------------------------------- ----------- FOOD PROCESSING--0.1% ---------------------------------------- 3,000 House Foods Corp. 50,965 ---------------------------------------- -----------
BLANCHARD GLOBAL GROWTH FUND - --------------------------------------------------------------------------------
VALUE IN U.S. SHARES DOLLARS ------ ----------------------------------- ----------- FOREIGN SECURITIES SECTOR--CONTINUED ------------------------------------------ JAPAN--CONTINUED ----------------------------------- HOUSING & CONSTRUCTION--0.1% ----------------------------------- 13,000 Taisei Corp. $ 48,587 ----------------------------------- ----------- INSURANCE--0.2% ----------------------------------- 11,000 Sumitomo Marine & Fire 76,117 ----------------------------------- 4,000 Tokio Marine and Fire Insurance Co. 48,065 ----------------------------------- ----------- Total 124,182 ----------------------------------- ----------- MACHINERY--0.3% ----------------------------------- 14,000 Komatsu, Ltd. 78,313 ----------------------------------- 4,000 Mori Seiki Co. 46,739 ----------------------------------- 4,000 Takuma Co., Ltd. 39,778 ----------------------------------- ----------- Total 164,830 ----------------------------------- ----------- NON-RESIDENTIAL CONSTRUCTION--0.1% ----------------------------------- 7,000 Sekisui House, Ltd. 66,711 ----------------------------------- ----------- OIL & RELATED--0.0% ----------------------------------- 8,000 Mitsubishi Oil Co. 21,480 ----------------------------------- ----------- PAPER PRODUCTS--0.0% ----------------------------------- 2,000 Nippon Paper Industries Co. 10,972 ----------------------------------- ----------- PHARMACEUTICALS--0.4% ----------------------------------- 6,000 Chugai Pharmaceutical Co. 51,711 ----------------------------------- 4,000 Kaken Pharmaceutical 13,823 ----------------------------------- 2,000 Sankyo Co., Ltd. 69,280 ----------------------------------- 4,000 Shionogi and Co. 24,894 ----------------------------------- 3,000 Yamanouchi Pharmaceutical Co., Ltd. 74,086 ----------------------------------- ----------- Total 233,794 ----------------------------------- ----------- PHOTO EQUIPMENT & SUPPLIES--0.0% ----------------------------------- 1,000 Nikon Corp. 15,745 ----------------------------------- ----------- PRINTING-COMMERCIAL--0.0% ----------------------------------- 1,000 Dai Nippon Printing Co., Ltd. 21,381 ----------------------------------- -----------
BLANCHARD GLOBAL GROWTH FUND - --------------------------------------------------------------------------------
VALUE IN U.S. SHARES DOLLARS ------ ---------------------------------- ----------- FOREIGN SECURITIES SECTOR--CONTINUED ----------------------------------------- JAPAN--CONTINUED ---------------------------------- REAL ESTATE--0.2% ---------------------------------- 8,000 Mitsubishi Estate Co., Ltd. $ 116,682 ---------------------------------- ----------- RETAIL--0.3% ---------------------------------- 1,000 Daiei, Inc. 5,519 ---------------------------------- 5,000 Hankyu Department Stores, Inc. 41,435 ---------------------------------- 1,000 Isetan Co. 9,613 ---------------------------------- 2,000 Ito Yokado Co., Ltd. 108,395 ---------------------------------- ----------- Total 164,962 ---------------------------------- ----------- RUBBER & MISC. MATERIALS--0.1% ---------------------------------- 3,000 Bridgestone Corp. 72,097 ---------------------------------- ----------- SHIPBUILDING--0.2% ---------------------------------- 27,000 Mitsubishi Heavy Industries, Ltd. 147,899 ---------------------------------- ----------- STEEL--0.1% ---------------------------------- 44,000 NKK Corp. 59,070 ---------------------------------- 9,000 Nippon Steel Co. 19,839 ---------------------------------- ----------- Total 78,909 ---------------------------------- ----------- TELECOMMUNICATIONS--0.9% ---------------------------------- 62 Nippon Telegraph & Telephone Corp. 570,316 ---------------------------------- ----------- TEXTILE & APPAREL--0.1% ---------------------------------- 6,000 Nisshinbo Industries 39,728 ---------------------------------- ----------- TRADING COMPANY--0.3% ---------------------------------- 15,000 Itochu Corp. 51,960 ---------------------------------- 22,000 Marubeni Corp. 72,926 ---------------------------------- 4,000 Onward Kashiyama Co., Ltd. 57,678 ---------------------------------- ----------- Total 182,564 ---------------------------------- ----------- TRANSPORTATION--0.4% ---------------------------------- 12 East Japan Railway Co. 56,286 ---------------------------------- 35,000 (a)Kawasaki Kisen Kaisha, Ltd. 38,286 ----------------------------------
BLANCHARD GLOBAL GROWTH FUND - --------------------------------------------------------------------------------
VALUE IN U.S. SHARES DOLLARS ------ ------------------------------- ----------- FOREIGN SECURITIES SECTOR--CONTINUED -------------------------------------- JAPAN--CONTINUED ------------------------------- TRANSPORTATION--CONTINUED ------------------------------- 28,000 Kinki Nippon Railway $ 159,874 ------------------------------- ----------- Total 254,446 ------------------------------- ----------- UTILITIES--0.3% ------------------------------- 900 Kansai Electric Power Co., Inc. 16,035 ------------------------------- 1,000 Sumitomo Electric Industries 14,337 ------------------------------- 8,100 Tokyo Electric Power Co. 155,731 ------------------------------- ----------- Total 186,103 ------------------------------- ----------- TOTAL JAPAN 6,427,992 ------------------------------- ----------- NETHERLANDS--0.7% ------------------------------- BANKING--0.1% ------------------------------- 1,621 ABN-Amro Hldgs N.V. 32,822 ------------------------------- ----------- CONSUMER & RELATED--0.0% ------------------------------- 200 Heineken N.V. 35,080 ------------------------------- ----------- FOOD PROCESSING--0.1% ------------------------------- 200 Unilever N.V. 42,687 ------------------------------- ----------- HOUSEHOLD DURABLES--0.1% ------------------------------- 600 Philips Electronics N.V. 50,766 ------------------------------- ----------- INSURANCE--0.2% ------------------------------- 315 Aegon N.V. 25,228 ------------------------------- 1,065 Ahold N.V. 28,788 ------------------------------- 1,436 ING Groep N.V. 65,945 ------------------------------- ----------- Total 119,961 ------------------------------- ----------- PETROLEUM--0.2% ------------------------------- 2,600 Royal Dutch Petroleum 145,526 ------------------------------- ----------- TOTAL NETHERLANDS 426,842 ------------------------------- -----------
BLANCHARD GLOBAL GROWTH FUND - --------------------------------------------------------------------------------
VALUE IN U.S. SHARES DOLLARS ------ --------------------------------- ----------- FOREIGN SECURITIES SECTOR--CONTINUED ---------------------------------------- NEW ZEALAND--0.1% --------------------------------- BUILDING MATERIALS--0.0% --------------------------------- 5,552 Fletcher Challenge Energy $ 6,936 --------------------------------- ----------- FOREST PRODUCTS--0.1% --------------------------------- 8,300 Carter Holt Harvey 18,026 --------------------------------- 222 Fletcher Challenge Forests 277 --------------------------------- ----------- Total 18,303 --------------------------------- ----------- TELECOMMUNICATIONS--0.0% --------------------------------- 3,900 Telecom Corp. of New Zealand 19,788 --------------------------------- ----------- TOTAL NEW ZEALAND 45,027 --------------------------------- ----------- NORWAY--0.2% --------------------------------- ENERGY--0.1% --------------------------------- 1,000 Norsk Hydro AS 59,591 --------------------------------- ----------- FOREST PRODUCTS--0.1% --------------------------------- 300 Norske Skogindustrier AS, Class A 11,271 --------------------------------- 200 Norske Skogindustrier AS, Class B 6,867 --------------------------------- ----------- Total 18,138 --------------------------------- ----------- INSURANCE-LIFE--0.0% --------------------------------- 1,300 (a)Storebrand ASA 9,329 --------------------------------- ----------- MULTI-INDUSTRY--0.0% --------------------------------- 200 Aker AS, Class A 3,743 --------------------------------- 40 Aker AS, Class B 681 --------------------------------- 100 Orkla Borregaard AS, Class A 8,837 --------------------------------- ----------- Total 13,261 --------------------------------- ----------- NON-FERROUS METALS--0.0% --------------------------------- 400 Elkem AS, Class A 7,092 --------------------------------- ----------- TOTAL NORWAY 107,411 --------------------------------- -----------
BLANCHARD GLOBAL GROWTH FUND - --------------------------------------------------------------------------------
VALUE IN U.S. SHARES DOLLARS ------ -------------------------------- ----------- FOREIGN SECURITIES SECTOR--CONTINUED --------------------------------------- SOUTH AFRICA--0.1% -------------------------------- MINERAL PRODUCTS--0.1% -------------------------------- 20,000 Billiton PLC $ 77,030 -------------------------------- ----------- SPAIN--0.8% -------------------------------- BANKING--0.1% -------------------------------- 300 Argentaria SA 17,947 -------------------------------- 900 Banco Bilbao Vizcaya SA 27,705 -------------------------------- 1,200 Banco Santander 39,311 -------------------------------- ----------- Total 84,963 -------------------------------- ----------- PETROLEUM--0.1% -------------------------------- 1,100 Repsol SA 47,531 -------------------------------- ----------- REAL ESTATE--0.3% -------------------------------- 6,000 Vallehermosa SA 165,405 -------------------------------- ----------- TELECOMMUNICATIONS--0.1% -------------------------------- 2,200 Telefonica de Espana 69,123 -------------------------------- ----------- UTILITIES--0.2% -------------------------------- 2,400 Endesa SA 51,209 -------------------------------- 400 Gas Natural SDG SA 21,063 -------------------------------- 2,200 Iberdrola SA 27,045 -------------------------------- 600 Union Elec Fenosa 5,205 -------------------------------- ----------- Total 104,522 -------------------------------- ----------- TOTAL SPAIN 471,544 -------------------------------- ----------- SWEDEN--0.7% -------------------------------- BANKING--0.0% -------------------------------- 1,500 Skand Enskilda BKN, Class A 18,188 -------------------------------- 300 Svenska Handelsbanken, Stockholm 10,399 -------------------------------- ----------- Total 28,587 -------------------------------- ----------- COMMUNICATIONS--0.2% -------------------------------- 2,300 Telefonaktiebolaget LM Ericsson 110,491 -------------------------------- -----------
BLANCHARD GLOBAL GROWTH FUND - --------------------------------------------------------------------------------
VALUE IN U.S. SHARES DOLLARS ------ ------------------------------------------------- ----------- FOREIGN SECURITIES SECTOR--CONTINUED --------------------------------------------------------- SWEDEN--CONTINUED ------------------------------------------------- MISCELLANEOUS--0.2% ------------------------------------------------- 2,600 Scania AB, Class A 78,814 ------------------------------------------------- 2,600 Scania AB, Class B $ 78,814 ------------------------------------------------- ----------- Total 157,628 ------------------------------------------------- ----------- PHARMACEUTICALS--0.3% ------------------------------------------------- 8,800 Astra AB, Class A 162,372 ------------------------------------------------- ----------- TOTAL SWEDEN 459,078 ------------------------------------------------- ----------- SWITZERLAND--7.6% ------------------------------------------------- AIRLINES-0.1% ------------------------------------------------- 30 Sairgroup 40,120 ------------------------------------------------- ----------- BANKING--1.2% ------------------------------------------------- 600 Credit Suisse Group 81,064 ------------------------------------------------- 200 Schweizerische Bankgesellschaft (UBS) 46,755 ------------------------------------------------- 300 Schweizerische Bankgesellschaft (UBS) 350,454 ------------------------------------------------- 900 Schweizerischer Bankverein 243,193 ------------------------------------------------- ----------- Total 721,466 ------------------------------------------------- ----------- BUILDING PRODUCTS--0.1% ------------------------------------------------- 50 Holderbank Financiere Glaris AG, Class B 47,442 ------------------------------------------------- 100 Holderbank Financiere Glaris AG, Class R 19,527 ------------------------------------------------- ----------- Total 66,969 ------------------------------------------------- ----------- COMMERCIAL SERVICES--0.0% ------------------------------------------------- 15 SGS Societe Generale de Surveillance Holding S.A. 26,248 ------------------------------------------------- ----------- ELECTRICAL EQUIPMENT--0.3% ------------------------------------------------- 95 ABB AG 139,913 ------------------------------------------------- 10 Schindler Holding AG 12,445 ------------------------------------------------- 50 Sulzer AG 38,023 ------------------------------------------------- ----------- Total 190,381 ------------------------------------------------- -----------
BLANCHARD GLOBAL GROWTH FUND - --------------------------------------------------------------------------------
VALUE IN U.S. SHARES DOLLARS ------ -------------------------------------------------------- ------------ FOREIGN SECURITIES SECTOR--CONTINUED --------------------------------------------------------------- SWITZERLAND--CONTINUED -------------------------------------------------------- FOOD PROCESSING--1.1% -------------------------------------------------------- 500 Nestle SA $ 696,507 -------------------------------------------------------- ------------ HEALTHCARE-GENERAL--1.6% -------------------------------------------------------- 100 Roche Holding AG 1,015,677 -------------------------------------------------------- ------------ HOUSEHOLD PRODUCTS--0.4% -------------------------------------------------------- 600 Zurich Versicherungsgesellschaft 261,139 -------------------------------------------------------- ------------ HUMAN RESOURCES--0.1% -------------------------------------------------------- 200 Adecco S.A. 80,446 -------------------------------------------------------- ------------ INSURANCE-LIFE--0.5% -------------------------------------------------------- 190 Schw Rueckversicherungs 284,922 -------------------------------------------------------- ------------ METAL & MINING--0.1% -------------------------------------------------------- 75 Alusuisse Lonza Holding AG 73,002 -------------------------------------------------------- ------------ MISCELLANEOUS--2.0% -------------------------------------------------------- 790 Novartis AG 1,211,909 -------------------------------------------------------- ------------ RETAIL-RESTAURANTS--0.0% -------------------------------------------------------- 50 Valora Holding AG 10,640 -------------------------------------------------------- ------------ UNASSIGNED--0.1% -------------------------------------------------------- 50 Societe Suisse pour la Microelectronique et l'Horlogerie 29,772 -------------------------------------------------------- 200 Societe Suisse pour la Microelectronique et l'Horlogerie 27,537 -------------------------------------------------------- ------------ Total 57,309 -------------------------------------------------------- ------------ TOTAL SWITZERLAND 4,736,735 -------------------------------------------------------- ------------ UNITED KINGDOM--3.2% -------------------------------------------------------- AEROSPACE--0.1% -------------------------------------------------------- 1,900 British Aerospace PLC 50,307 -------------------------------------------------------- ------------ BANKING--0.6% -------------------------------------------------------- 7,100 Lloyds TSB Group PLC 95,311 -------------------------------------------------------- 18,028 National Westminster Bank PLC, London 272,242 -------------------------------------------------------- ------------ Total 367,553 -------------------------------------------------------- ------------
BLANCHARD GLOBAL GROWTH FUND - --------------------------------------------------------------------------------
VALUE IN U.S. SHARES DOLLARS ------ ------------------------------------------------- ----------- FOREIGN SECURITIES SECTOR--CONTINUED -------------------------------------------------------- UNITED KINGDOM--CONTINUED ------------------------------------------------- BROADCASTING--0.4% ------------------------------------------------- 900 British Sky Broadcasting Group PLC $ 6,809 ------------------------------------------------- 27,500 Carlton Communications PLC 227,572 ------------------------------------------------- ----------- Total 234,381 ------------------------------------------------- ----------- DIVERSIFIED OPERATIONS--0.2% ------------------------------------------------- 19,334 Williams Holdings PLC 115,040 ------------------------------------------------- ----------- FOOD PROCESSING--0.2% ------------------------------------------------- 14,300 Allied Domecq PLC 113,334 ------------------------------------------------- ----------- HEALTH CARE--0.5% ------------------------------------------------- 33,224 Smithkline Beecham Corp. 324,121 ------------------------------------------------- ----------- MACHINERY--0.3% ------------------------------------------------- 8,800 Siebe PLC 176,949 ------------------------------------------------- ----------- MULTI-INDUSTRY--0.3% ------------------------------------------------- 7,500 Hanson PLC, ADR 180,938 ------------------------------------------------- ----------- OIL & RELATED--0.2% ------------------------------------------------- 10,370 British Petroleum Co. PLC 156,347 ------------------------------------------------- ----------- PHARMACEUTICALS--0.2% ------------------------------------------------- 4,800 Glaxo Wellcome PLC 107,036 ------------------------------------------------- ----------- PUBLISHING--0.2% ------------------------------------------------- 12,722 EMI Group PLC 124,933 ------------------------------------------------- ----------- RETAIL--0.0% ------------------------------------------------- 5,468 Thorn EMI 12,318 ------------------------------------------------- ----------- TELECOMMUNICATIONS--0.0% ------------------------------------------------- 1,125 Cable & Wireless 9,578 ------------------------------------------------- ----------- TOTAL UNITED KINGDOM 1,972,835 ------------------------------------------------- ----------- TOTAL FOREIGN SECURITIES SECTOR (IDENTIFIED COST $18,032,118) 18,605,918 ------------------------------------------------- -----------
BLANCHARD GLOBAL GROWTH FUND - --------------------------------------------------------------------------------
VALUE IN U.S. SHARES DOLLARS --------- --------------------------------------------------- ------------ EMERGING MARKETS SECURITIES SECTOR--9.9% ------------------------------------------------------------- ARGENTINA--0.3% --------------------------------------------------- PETROLEUM--0.3% --------------------------------------------------- 21,385 Compania Naviera Perez Companc S.A., Class B $ 172,398 --------------------------------------------------- ------------ BRAZIL--1.4% --------------------------------------------------- BANKING--0.1% --------------------------------------------------- 7,000,000 Banco Bradesco S.A., Pfd. 73,794 --------------------------------------------------- ------------ BASIC INDUSTRY--0.6% --------------------------------------------------- 4,387 (a)Cia Acos Especiais Itabira-Acesita, ADR 16,937 --------------------------------------------------- 3,207 (a)Companhia Energetica de Minas Gerais, ADR 176,219 --------------------------------------------------- 7,400 Companhia Vale Do Rio Doce, ADR 181,017 --------------------------------------------------- ------------ Total 374,173 --------------------------------------------------- ------------ INDUSTRIAL SERVICES--0.6% --------------------------------------------------- 2,750 Telecomunicacoes Brasileras, ADR 354,063 --------------------------------------------------- ------------ STEEL--0.0% --------------------------------------------------- 1,211,792 Cia Acos Especiais Itabira-Acesita, Pfd. 2,632 --------------------------------------------------- ------------ UTILITIES--0.1% --------------------------------------------------- 150,000 Centrais Eletricas Brasileiras S.A., Pfd., Series B 84,887 --------------------------------------------------- 6,588 Light Servicos de Eletricidade S.A. 2,820 --------------------------------------------------- ------------ Total 87,707 --------------------------------------------------- ------------ TOTAL BRAZIL 892,369 --------------------------------------------------- ------------ CHILE--0.8% --------------------------------------------------- CONSUMER DURABLES--0.2% --------------------------------------------------- 4,200 Compania Cervecerias Unidas S.A., ADR 120,750 --------------------------------------------------- ------------ ENGINEERING-BUSINESS SERVICES--0.3% --------------------------------------------------- 5,319 Chilgener S.A., ADR 145,940 --------------------------------------------------- ------------ TELECOMMUNICATIONS--0.1% --------------------------------------------------- 2,525 Compania Telecomunicacion Chile, ADR 81,747 --------------------------------------------------- ------------ UTILITIES--0.2% --------------------------------------------------- 3,750 (b)Chilectra S.A., ADR 118,378 --------------------------------------------------- ------------ TOTAL CHILE 466,815 --------------------------------------------------- ------------
BLANCHARD GLOBAL GROWTH FUND - --------------------------------------------------------------------------------
VALUE IN U.S. SHARES DOLLARS ------- ------------------------------------------------------ ------------ EMERGING MARKETS SECURITIES SECTOR--CONTINUED -------------------------------------------------------------- COLOMBIA--0.4% ------------------------------------------------------ BANKING--0.3% ------------------------------------------------------ 2,600 Banco Ganadero S.A., ADR, Class B $ 104,000 ------------------------------------------------------ 5,500 Banco Industrial Colombiano, ADR 98,313 ------------------------------------------------------ ------------ Total 202,313 ------------------------------------------------------ ------------ MISCELLANEOUS--0.1% ------------------------------------------------------ 3,500 Cementos Diamante S.A., GDR 45,500 ------------------------------------------------------ ------------ TOTAL COLOMBIA 247,813 ------------------------------------------------------ ------------ GREECE--0.0% ------------------------------------------------------ BANKING--0.0% ------------------------------------------------------ 422 Ergo Bank S.A. 28,267 ------------------------------------------------------ ------------ INDIA--0.3% ------------------------------------------------------ CHEMICALS--0.1% ------------------------------------------------------ 5,700 Indian Petrochemicals, GDR 58,397 ------------------------------------------------------ ------------ STEEL--0.0% ------------------------------------------------------ 5,500 Steel Authority of India, GDR 35,888 ------------------------------------------------------ ------------ TEXTILES--0.2% ------------------------------------------------------ 4,300 Reliance Industries, Ltd., GDR 98,631 ------------------------------------------------------ ------------ TOTAL INDIA 192,916 ------------------------------------------------------ ------------ INDONESIA--0.3% ------------------------------------------------------ BANKING--0.2% ------------------------------------------------------ 275,626 (a)PT Bank Dagang Nasional 54,455 ------------------------------------------------------ 39,374 (a)PT Bank Dagang Nasional, Warrants 2/14/2000 2,274 ------------------------------------------------------ 260,814 (a)PT Bank International Indonesia 75,311 ------------------------------------------------------ 32,072 (a)PT Bank International Indonesia, Warrants 1/17/2000 2,720 ------------------------------------------------------ ------------ Total 134,760 ------------------------------------------------------ ------------ CAPITAL GOODS--0.1% ------------------------------------------------------ 3,100 (a)PT Indosat, ADR 81,375 ------------------------------------------------------ ------------ TOTAL INDONESIA 216,135 ------------------------------------------------------ ------------
BLANCHARD GLOBAL GROWTH FUND - --------------------------------------------------------------------------------
VALUE IN U.S. SHARES DOLLARS ------ --------------------------------------------- ----------- EMERGING MARKETS SECURITIES SECTOR--CONTINUED ---------------------------------------------------- KOREA--0.6% --------------------------------------------- AUTOMOBILE--0.0% --------------------------------------------- 2,066 Hyundai Motor Service Co., Pfd. $ 13,999 --------------------------------------------- ----------- CAPITAL GOODS--0.1% --------------------------------------------- 3,284 (a)Anam Industrial Co., Ltd. 52,400 --------------------------------------------- ----------- COMPUTERS--0.1% --------------------------------------------- 5,750 Anam Industrial Co., Ltd., Pfd. 33,934 --------------------------------------------- ----------- ELECTRONICS & ELECTRICAL--0.0% --------------------------------------------- 2 (a)Samsung Electronics Co. 193 --------------------------------------------- 18 (b)Samsung Electronics Co., GDR 968 --------------------------------------------- ----------- Total 1,161 --------------------------------------------- ----------- HOUSING & CONSTRUCTION--0.0% --------------------------------------------- 9,000 (a)Kumho Construction & Engineering Co., Pfd. 21,836 --------------------------------------------- ----------- MACHINERY--0.0% --------------------------------------------- 6,000 (a)(b)Daewoo Heavy Industries, Pfd. 23,213 --------------------------------------------- ----------- MULTI-INDUSTRY--0.2% --------------------------------------------- 2,283 (a)(b)Dong Bang Forwarding Co. 118,516 --------------------------------------------- 913 (a)Dong Bang Forwarding Co., Rights 14,222 --------------------------------------------- ----------- Total 132,738 --------------------------------------------- ----------- PETROLEUM--0.1% --------------------------------------------- 2,571 (a)Yukong, Ltd. 47,767 --------------------------------------------- ----------- UTILITIES--0.1% --------------------------------------------- 3,200 (a)Korea Electric Power Corp. 70,995 --------------------------------------------- ----------- TOTAL KOREA 398,043 --------------------------------------------- ----------- MALAYSIA--0.9% --------------------------------------------- AIRLINES--0.1% --------------------------------------------- 25,000 Malaysian Airline System 40,071 --------------------------------------------- ----------- BANKING--0.2% --------------------------------------------- 14,000 Commerce Asset Holdings Berhad 15,708 ---------------------------------------------
BLANCHARD GLOBAL GROWTH FUND - --------------------------------------------------------------------------------
VALUE IN U.S. SHARES DOLLARS ------ ------------------------------------------------------ ---------- EMERGING MARKETS SECURITIES SECTOR--CONTINUED ------------------------------------------------------------- MALAYSIA--CONTINUED ------------------------------------------------------ BANKING--CONTINUED ------------------------------------------------------ 1,750 (a)Commerce Asset Holdings Berhad, Warrants 12/31/2002 $ 566 ------------------------------------------------------ 25,000 RHB Capital BHD 29,591 ------------------------------------------------------ 12,000 Malayan Banking Berhad 60,291 ------------------------------------------------------ ---------- Total 106,156 ------------------------------------------------------ ---------- BEVERAGES--0.1% ------------------------------------------------------ 40,000 Guinness Anchor Berhad 61,648 ------------------------------------------------------ ---------- FOREST PRODUCTS--0.0% ------------------------------------------------------ 10,000 Jaya Tiasa Holdings 27,587 ------------------------------------------------------ ---------- INDUSTRIAL COMPONENT--0.0% ------------------------------------------------------ 9,000 United Engineers, Ltd. 28,851 ------------------------------------------------------ ---------- LEISURE & RECREATION--0.1% ------------------------------------------------------ 12,000 Genting Berhad 37,358 ------------------------------------------------------ ---------- MULTI-INDUSTRY--0.1% ------------------------------------------------------ 35,000 Sime Darby Berhad 72,821 ------------------------------------------------------ ---------- NON RESIDENTIAL CONSTRUCTION--0.1% ------------------------------------------------------ 47,000 Renong Berhad 46,359 ------------------------------------------------------ ---------- TELECOMMUNICATIONS--0.1% ------------------------------------------------------ 13,500 Telekom Malaysia Berhad 40,988 ------------------------------------------------------ ---------- UTILITIES--0.1% ------------------------------------------------------ 18,000 Petronas Gas Berhad 53,263 ------------------------------------------------------ ---------- TOTAL MALAYSIA 515,102 ------------------------------------------------------ ---------- MEXICO--1.4% ------------------------------------------------------ FINANCIAL SERVICES--0.3% ------------------------------------------------------ 4,900 (a)Carso Global Telecom, ADR 41,592 ------------------------------------------------------ 4,900 (a)Grupo Carso S.A. de C.V., Class A1, ADR 78,898 ------------------------------------------------------ 16,000 (a)Grupo Financiero Banamex Accivel, Class B 50,450 ------------------------------------------------------ 1,140 (a)Grupo Financiero Banamex Accivel, Class L 3,345 ------------------------------------------------------
BLANCHARD GLOBAL GROWTH FUND - --------------------------------------------------------------------------------
VALUE IN U.S. SHARES DOLLARS ------- ------------------------------------------------------ ------------ EMERGING MARKETS SECURITIES SECTOR--CONTINUED -------------------------------------------------------------- MEXICO--CONTINUED ------------------------------------------------------ FINANCIAL SERVICES--CONTINUED ------------------------------------------------------ 68 Grupo Financiero Inbursa, S.A. de C.V., Class B, ADR $ 1,504 ------------------------------------------------------ ------------ Total 175,789 ------------------------------------------------------ ------------ INDUSTRIAL & RELATED--0.1% ------------------------------------------------------ 11,000 Apasco S.A. de C.V. 83,668 ------------------------------------------------------ ------------ MULTI-INDUSTRY--0.2% ------------------------------------------------------ 12,791 Alfa, S.A. de C.V., Class A 120,173 ------------------------------------------------------ ------------ PAPER PRODUCTS--0.2% ------------------------------------------------------ 25,000 Kimberly-Clark de Mexico 130,792 ------------------------------------------------------ ------------ TELECOMMUNICATIONS--0.5% ------------------------------------------------------ 110,000 Telefonos de Mexico 286,679 ------------------------------------------------------ ------------ TELECOMMUNICATION SERVICES--0.1% ------------------------------------------------------ 4,000 Grupo Televisa S.A. 71,094 ------------------------------------------------------ ------------ TOTAL MEXICO 868,195 ------------------------------------------------------ ------------ PHILIPPINES--0.1% ------------------------------------------------------ BANKING--0.0% ------------------------------------------------------ 1,935 Metro Bank and Trust Co. 17,247 ------------------------------------------------------ ------------ OIL & RELATED--0.1% ------------------------------------------------------ 400,000 (a)Belle Corp. 52,174 ------------------------------------------------------ 80,000 (a)Belle Corp., warrants 10/6/2000 0 ------------------------------------------------------ ------------ Total 52,174 ------------------------------------------------------ ------------ TOTAL PHILIPPINES 69,421 ------------------------------------------------------ ------------ PORTUGAL--0.6% ------------------------------------------------------ ENGINEERING-BUSINESS SERVICES--0.1% ------------------------------------------------------ Sonae Investimentos Sociedade Gestora de Participacoes 1,500 Sociais, S.A. 59,303 ------------------------------------------------------ ------------ FINANCIAL SERVICES--0.2% ------------------------------------------------------ 6,000 Banco Commercial Portugues, Class R 126,709 ------------------------------------------------------ ------------
BLANCHARD GLOBAL GROWTH FUND - --------------------------------------------------------------------------------
VALUE IN U.S. SHARES DOLLARS ------ ---------------------------------------------------- ------------ EMERGING MARKETS SECURITIES SECTOR--CONTINUED ----------------------------------------------------------- PORTUGAL--CONTINUED ---------------------------------------------------- FOOD & BEVERAGE--0.2% ---------------------------------------------------- 1,399 Estabelecimentos Jeronimo Martins & Filho SGPS, S.A. $ 107,681 ---------------------------------------------------- ------------ TELECOMMUNICATIONS--0.1% ---------------------------------------------------- 2,000 Portugal Telecom S.A. 86,751 ---------------------------------------------------- ------------ TOTAL PORTUGAL 380,444 ---------------------------------------------------- ------------ SINGAPORE--0.3% ---------------------------------------------------- BANKING--0.1% ---------------------------------------------------- 3,000 Development Bank of Singapore, Ltd. 30,598 ---------------------------------------------------- 6,000 Oversea-Chinese Banking Corp., Ltd. 41,582 ---------------------------------------------------- ------------ Total 72,180 ---------------------------------------------------- ------------ BROADCASTING--0.0% ---------------------------------------------------- 1,000 Singapore Press Holdings, Ltd. 14,711 ---------------------------------------------------- ------------ ENTERTAINMENT & RECREATION--0.0% ---------------------------------------------------- 3,000 Hotel Properties, Ltd. 3,707 ---------------------------------------------------- ------------ MACHINERY--0.0% ---------------------------------------------------- 1,250 Keppel Corp. 4,985 ---------------------------------------------------- 2,000 Van Der Horst, Ltd. 2,733 ---------------------------------------------------- ------------ Total 7,718 ---------------------------------------------------- ------------ PROPERTY--0.1% ---------------------------------------------------- 2,000 City Developments, Ltd. 12,945 ---------------------------------------------------- 3,000 DBS Land Ltd. 7,297 ---------------------------------------------------- 2,000 First Capital Corp., Ltd. 4,472 ---------------------------------------------------- 9,000 United Overseas Bank, Ltd. 35,829 ---------------------------------------------------- ------------ Total 60,543 ---------------------------------------------------- ------------ TELECOMMUNICATIONS--0.1% ---------------------------------------------------- 13,000 Singapore Telecommunications 22,014 ---------------------------------------------------- ------------
BLANCHARD GLOBAL GROWTH FUND - --------------------------------------------------------------------------------
VALUE IN U.S. SHARES DOLLARS ------ ---------------------------------------- ------------ EMERGING MARKETS SECURITIES SECTOR--CONTINUED ----------------------------------------------- SINGAPORE--CONTINUED ---------------------------------------- TRANSPORTATION-AIR--0.0% ---------------------------------------- 3,000 Singapore Airlines, Ltd. $ 22,164 ---------------------------------------- ------------ TOTAL SINGAPORE 203,037 ---------------------------------------- ------------ SOUTH AFRICA--1.8% ---------------------------------------- BANKING--0.2% ---------------------------------------- 7,186 Amalgamated Banks of South Africa 48,955 ---------------------------------------- 2,515 Nedcor, Ltd. 54,234 ---------------------------------------- 1,000 Standard Bank Investment Corp., Ltd. 44,523 ---------------------------------------- ------------ Total 147,712 ---------------------------------------- ------------ CHEMICAL--0.2% ---------------------------------------- 9,000 Sasol, Ltd. 124,075 ---------------------------------------- ------------ COAL--0.0% ---------------------------------------- 419 Anglo American Coal Corp., Ltd. 24,454 ---------------------------------------- ------------ ENTERTAINMENT--0.1% ---------------------------------------- 62,743 Sun International (South Africa), Ltd. 38,503 ---------------------------------------- ------------ FINANCIAL SERVICES--0.2% ---------------------------------------- 312 (a)Dimension Data Holdings, Ltd. 1,305 ---------------------------------------- 4,500 Free State Consolidated Gold Mines, Ltd. 26,553 ---------------------------------------- 6,000 Malbak Limited 8,754 ---------------------------------------- 7,000 Rembrandt Group, Ltd. 63,384 ---------------------------------------- ------------ Total 99,996 ---------------------------------------- ------------ FOOD & BEVERAGE--0.0% ---------------------------------------- 672 Foodcorp., Ltd. 4,326 ---------------------------------------- ------------ HOUSEHOLD PRODUCTS--0.0% ---------------------------------------- 837 Ellerine Holdings, Ltd. 6,645 ---------------------------------------- 81 (a)JD Group, Ltd. 613 ---------------------------------------- ------------ Total 7,258 ---------------------------------------- ------------
BLANCHARD GLOBAL GROWTH FUND - --------------------------------------------------------------------------------
SHARES OR VALUE PRINCIPAL IN U.S. AMOUNT DOLLARS --------- -------------------------------------------------- ------------ EMERGING MARKETS SECURITIES SECTOR--CONTINUED ------------------------------------------------------------ SOUTH AFRICA--CONTINUED -------------------------------------------------- INDUSTRIAL MANUFACTURING--0.2% -------------------------------------------------- 6,045 Barlow Ltd. $ 69,069 -------------------------------------------------- 1,030 Anglo American Industrial Corp., Ltd. 38,676 -------------------------------------------------- ------------ Total 107,745 -------------------------------------------------- ------------ INSURANCE--0.3% -------------------------------------------------- 27,826 LibLife Strategic Investments, Ltd. 96,127 -------------------------------------------------- 3,000 Liberty Life Association of Africa, Ltd. 87,544 -------------------------------------------------- ------------ Total 183,671 -------------------------------------------------- ------------ LODGING & RESTAURANT--0.2% -------------------------------------------------- 4,068 South African Breweries, Ltd. 118,055 -------------------------------------------------- ------------ MEDICAL-DRUGS--0.0% -------------------------------------------------- 989 South African Druggists, Ltd. 6,451 -------------------------------------------------- ------------ METALS & MINING--0.4% -------------------------------------------------- 3,000 Anglo American Platinum Corp., Ltd. 51,979 -------------------------------------------------- 1,500 Anglo American Corporation of South Africa Limited 76,762 -------------------------------------------------- 3,300 De Beers Centenary AG 96,299 -------------------------------------------------- 4,000 Gencor Ltd. 9,441 -------------------------------------------------- ------------ Total 234,481 -------------------------------------------------- ------------ RETAIL-DIVERSIFIED--0.0% -------------------------------------------------- 2,284 New Clicks Holdings, Ltd. 2,960 -------------------------------------------------- ------------ TOTAL SOUTH AFRICA 1,099,687 -------------------------------------------------- ------------ TAIWAN--0.4% -------------------------------------------------- MISCELLANEOUS--0.1% -------------------------------------------------- 7,018 (a)Walsin Lihwa Wire, GDR 56,846 -------------------------------------------------- ------------ NON-RESIDENTIAL CONSTRUCTION--0.1% -------------------------------------------------- 10,902 (a)Tuntex Distinct Corp., GDR 62,414 -------------------------------------------------- ------------
BLANCHARD GLOBAL GROWTH FUND - --------------------------------------------------------------------------------
SHARES OR VALUE PRINCIPAL IN U.S. AMOUNT DOLLARS ---------- ------------------------------------------------ ------------ EMERGING MARKETS SECURITIES SECTOR--CONTINUED ----------------------------------------------------------- TAIWAN--CONTINUED ------------------------------------------------ TECHNOLOGY--0.2% ------------------------------------------------ 4,213 (a)Macronix International Co., Ltd., ADR $ 94,529 ------------------------------------------------ ------------ TOTAL TAIWAN 213,789 ------------------------------------------------ ------------ THAILAND--0.3% ------------------------------------------------ BANKING--0.1% ------------------------------------------------ 27,000 Krung Thai Bank PLC 18,223 ------------------------------------------------ 13,500 Siam Commercial Bank 43,884 ------------------------------------------------ ------------ Total 62,107 ------------------------------------------------ ------------ BUILDING MATERIALS--0.0% ------------------------------------------------ 2,000 Siam Cement Co., Ltd 32,837 ------------------------------------------------ ------------ COMMUNICATIONS--0.1% ------------------------------------------------ 35,000 (a)TelecomAsia Corp. 28,444 ------------------------------------------------ 9,000 United Communication Industry Public Co., Ltd. 26,777 ------------------------------------------------ ------------ Total 55,221 ------------------------------------------------ ------------ PETROLEUM--0.1% ------------------------------------------------ 4,500 PTT Exploration and Production Public Co. 60,248 ------------------------------------------------ ------------ TOTAL THAILAND 210,413 ------------------------------------------------ ------------ TURKEY--0.0% ------------------------------------------------ MULTI-INDUSTRY--0.0% ------------------------------------------------ 349 Koc Yatirim Ve Sanayi Mamulleri Pazarlama S.A. 132 ------------------------------------------------ ------------ TOTAL EMERGING MARKETS SECURITIES SECTOR 6,174,976 (IDENTIFIED COST $6,248,756) ------------------------------------------------ ------------ COMMERCIAL PAPER--28.8% ----------------------------------------------------------- FINANCE--28.8% ------------------------------------------------ $3,000,000 Ford Motor Credit Corp., 5.50%, 12/12/1997 2,969,670 ------------------------------------------------ 3,000,000 General Electric Capital Corp., 5.50%, 10/8/1997 2,996,792 ------------------------------------------------ 3,000,000 Hertz Corp., 5.50%, 12/12/1997 2,969,670 ------------------------------------------------ 3,000,000 Monte Rosa Capital Corp., 5.54%, 10/2/1997 2,999,538 ------------------------------------------------ New Center Asset Trust, A1/P1 Series, 5.53%, 3,000,000 10/6/1997 2,997,696 ------------------------------------------------
BLANCHARD GLOBAL GROWTH FUND - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT OR FOREIGN VALUE CURRENCY PAR IN U.S. AMOUNT DOLLARS ------------ -------------------------------------------------- ----------- COMMERCIAL PAPER--CONTINUED --------------------------------------------------------------- FINANCE--CONTINUED -------------------------------------------------- $ 3,000,000 Sheffield Receivables Corp., 5.54%, 10/2/1997 $ 2,999,538 -------------------------------------------------- ----------- TOTAL COMMERCIAL PAPER (IDENTIFIED COST $17,927,564) 17,932,904 -------------------------------------------------- ----------- U.S. FIXED INCOME SECURITIES SECTOR--10.7% --------------------------------------------------------------- GOVERNMENT/AGENCY--10.7% -------------------------------------------------- 1,500,000 United States Treasury Bill, 12/11/1997 1,485,591 -------------------------------------------------- 325,000 United States Treasury Bond, 7.25%, 8/15/2022 355,427 -------------------------------------------------- 500,000 United States Treasury Bond, 7.50%, 11/15/2016 556,730 -------------------------------------------------- 1,200,000 United States Treasury Bond, 7.625%, 11/15/2022 1,368,528 -------------------------------------------------- 1,430,000 United States Treasury Bond, 11.75%, 11/15/2014 2,076,432 -------------------------------------------------- 400,000 United States Treasury Note, 6.25%, 2/15/2003 404,000 -------------------------------------------------- 350,000 United States Treasury Receipt PO Strip, 8/15/2005 216,097 -------------------------------------------------- 350,000 United States Treasury Receipt IO Strip, 2/15/2005 223,298 -------------------------------------------------- ----------- TOTAL U.S. FIXED INCOME SECURITIES SECTOR (IDENTIFIED COST $6,431,631) 6,686,103 -------------------------------------------------- ----------- FOREIGN FIXED INCOME SECURITIES SECTOR--17.1% --------------------------------------------------------------- DENMARK--0.9% -------------------------------------------------- 3,310,000 Denmark--Bullet, Bond, 8.00%, 3/15/2006 562,497 -------------------------------------------------- ----------- FRANCE--3.7% -------------------------------------------------- 10,500,000 France (Govt. of), 6.50%, 10/25/2006 1,909,509 -------------------------------------------------- 2,150,000 France O.A.T., Bond, 7.25%, 4/25/2006 409,622 -------------------------------------------------- ----------- Total 2,319,131 -------------------------------------------------- ----------- GERMANY--3.4% -------------------------------------------------- 1,040,000 Republic of Germany, Bond, 6.25%, 4/26/2006 620,604 -------------------------------------------------- 287,000 Republic of Germany, Deb., 7.125%, 12/20/2002 178,442 -------------------------------------------------- 1,065,000 Germany (Fed. Republic), 6.50%, 7/15/2003 646,130 -------------------------------------------------- 1,140,000 Germany (Fed. Republic), Bond, 6.00%, 1/5/2006 669,438 -------------------------------------------------- ----------- Total 2,114,614 -------------------------------------------------- -----------
BLANCHARD GLOBAL GROWTH FUND - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT OR FOREIGN VALUE CURRENCY PAR IN U.S. AMOUNT DOLLARS ------------ --------------------------------------------------- ----------- FOREIGN FIXED INCOME SECURITIES SECTOR--CONTINUED ---------------------------------------------------------------- ITALY--1.2% --------------------------------------------------- $880,000,000 Buoni Poliennali Del Tes, Deb., 10.50%, 4/15/1998 $ 519,182 --------------------------------------------------- 310,000,000 Italy (Republic of), Deb., 10.50%, 4/1/2005 227,162 --------------------------------------------------- ----------- Total 746,344 --------------------------------------------------- ----------- NETHERLANDS--3.1% --------------------------------------------------- 1,690,000 Dutch Government Bond, 5.75%, 2/15/2007 864,572 --------------------------------------------------- 580,000 Netherlands Government Bond, 7.50%, 4/15/2010 337,602 --------------------------------------------------- 880,000 Dutch Government Bond, 7.25%, 10/1/2004 493,875 --------------------------------------------------- 410,000 Netherlands Government Bond, 7.00%, 2/15/2003 225,363 --------------------------------------------------- ----------- Total 1,921,412 --------------------------------------------------- ----------- SPAIN--1.3% --------------------------------------------------- 104,600,000 Kingdom of Spain, Deb., 12.25%, 3/25/2000 817,732 --------------------------------------------------- ----------- SWEDEN--0.4% --------------------------------------------------- 1,600,000 Sweden (Kingdom of), 10.25%, 5/5/2000 236,091 --------------------------------------------------- ----------- UNITED KINGDOM--3.1% --------------------------------------------------- 245,000 United Kingdom Treasury Bond, 8.00%, 12/7/2015 455,561 --------------------------------------------------- 239,000 United Kingdom Treasury, 7.75%, 9/8/2006 417,789 --------------------------------------------------- 400,000 United Kingdom Treasury, 8.50%, 7/16/2007 737,321 --------------------------------------------------- 190,000 United Kingdom Treasury, 9.75%, 8/27/2002 346,591 --------------------------------------------------- ----------- Total 1,957,262 --------------------------------------------------- ----------- TOTAL FOREIGN FIXED INCOME SECURITIES SECTOR (IDENTIFIED COST $10,804,770) 10,675,083 --------------------------------------------------- ----------- (C) REPURCHASE AGREEMENT--1.9% ---------------------------------------------------------------- 1,176,958 CS First Boston, 6.05%, dated 9/30/1997, due 10/1/1997 (at amortized cost) 1,176,958 --------------------------------------------------- ----------- TOTAL INVESTMENTS (IDENTIFIED COST $60,621,797)(D) $61,251,942 --------------------------------------------------- -----------
BLANCHARD GLOBAL GROWTH FUND - ------------------------------------------------------------------------------- (a) Non-income producing security. (b) Denotes a restricted security which is subject to restrictions on resale under Federal Securities laws. At September 30, 1997, these securities amounted to $261,075 which represents 0.4% of net assets. (c) 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 investment in the repurchase agreement is through participation in a joint account with other Federated funds. (d) The cost of investments for federal tax purposes amounts to $60,689,138 The net unrealized appreciation of investments on a federal tax basis amounts to $562,804 which is comprised of $2,899,362 appreciation and $2,336,558 depreciation at September 30, 1997. Note: The categories of investments are shown as a percentage of net assets ($62,197,366) at September 30, 1997. The following acronyms are used throughout this portfolio: ADR--American Depositary Receipt GDR--Global Depositary Receipt IO--Interest Only PO--Principal Only PLC--Public Limited Company SPA--Standby Purchase Agreement STRIP--Separate Trading of Registered Interest & Principal of Securities (See Notes which are an integral part of the Financial Statements) BLANCHARD PRECIOUS METALS FUND, INC. PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1997 - --------------------------------------------------------------------------------
VALUE IN U.S. SHARES DOLLARS --------- -------------------------------- ----------- EQUITIES--84.5% ------------------------------------------ METALS & MINING--84.5% -------------------------------- AUSTRALIA--1.0% -------------------------------- 600,000 (a)Croesus Mining NL $ 152,449 -------------------------------- 1,000,000 (a)Laverton Gold NL 148,820 -------------------------------- 1,258,000 (a)(b)Lone Star Exploration NL 200,253 -------------------------------- 1,300,000 (a)Lone Star Exploration NL 215,500 -------------------------------- ----------- Total 717,022 -------------------------------- ----------- CANADA--53.0% -------------------------------- 1,640,000 (a)Ariel Resources, Ltd. 367,859 -------------------------------- 421,000 Cambior, Inc. 4,736,840 -------------------------------- 229,600 (a)Dayton Mining Corp. 803,600 -------------------------------- 1,405,500 (a)(b)Eldorado Gold Corp., Ltd. 3,823,798 -------------------------------- 230,000 (a)First Silver Reserve, Inc. 183,061 -------------------------------- 95,200 Franco-Nevada Mining Corp., Ltd. 2,242,148 -------------------------------- 721,000 (a)Geomaque Explorations, Ltd. 1,930,249 -------------------------------- 50,000 (a)Goldcorp, Inc., Class A 318,750 -------------------------------- 401,500 (a)Golden Knight Resources, Inc. 1,191,093 -------------------------------- 316,000 (a)Greenstone Resources, Ltd. 3,235,339 -------------------------------- 510,000 (a)Kinross Gold Corp. 2,836,875 -------------------------------- 194,300 (a)Philex Gold, Inc. 773,235 -------------------------------- 135,000 Placer Dome, Inc. 2,581,875 -------------------------------- 4,115,069 (a)Santa Cruz Gold, Inc. 1,488,755 -------------------------------- 1,260,000 (a)TVX Gold, Inc. 7,840,527 -------------------------------- 466,000 (a)Viceroy Resource Corp. 1,180,131 -------------------------------- ----------- Total 35,534,135 -------------------------------- -----------
BLANCHARD PRECIOUS METALS FUND, INC. - --------------------------------------------------------------------------------
SHARES OR VALUE PRINCIPAL IN U.S. AMOUNT DOLLARS ---------- ---------------------------------------------------- ----------- EQUITIES--CONTINUED --------------------------------------------------------------- GHANA--4.8% ---------------------------------------------------- 290,000 Ashanti Goldfields Co., GDR $ 3,190,000 ---------------------------------------------------- ----------- SOUTH AFRICA--5.0% ---------------------------------------------------- 551,700 East Rand Gold & Uranium Co., Ltd., ADR 764,325 ---------------------------------------------------- 200,000 Free State Consolidated Gold Mines Ltd., ADR 1,218,750 ---------------------------------------------------- 255,000 Vaal Reefs Explorations & Mining Co., Ltd., ADR 1,370,625 ---------------------------------------------------- ----------- Total 3,353,700 ---------------------------------------------------- ----------- UNITED STATES--20.7% ---------------------------------------------------- 1,425,000 (a)Canyon Resources Corp. 3,918,750 ---------------------------------------------------- 260,000 Homestake Mining Co. 3,981,250 ---------------------------------------------------- 626,500 (a)Meridian Gold, Inc. 3,093,344 ---------------------------------------------------- 64,500 Newmont Mining Corp. 2,898,469 ---------------------------------------------------- ----------- Total 13,891,813 ---------------------------------------------------- ----------- TOTAL EQUITIES (IDENTIFIED COST $78,030,194) 56,686,670 ---------------------------------------------------- ----------- WARRANTS--1.3% --------------------------------------------------------------- 227,500 (a)Atlas Corp., Warrants (expire 12/15/99) 1,138 ---------------------------------------------------- 75,000 (a)Canyon Resources Corp., Warrants (expire 3/20/99) -- ---------------------------------------------------- (a)(b)Geomaque Explorations Ltd., Warrants (expire 870,084 325,000 3/19/99) ---------------------------------------------------- ----------- TOTAL WARRANTS (IDENTIFIED COST $827,565) 871,222 ---------------------------------------------------- ----------- PREFERRED STOCK--0.8% --------------------------------------------------------------- UNITED STATES--0.8% ---------------------------------------------------- 25,000 Freeport-McMoRan Copper & Gold, Inc., Cumulative Pfd., Series SILV (IDENTIFIED COST $432,868) 528,125 ---------------------------------------------------- ----------- U.S. TREASURY SECURITIES--7.8% --------------------------------------------------------------- U.S. TREASURY BILL--7.8% ---------------------------------------------------- $5,300,000 12/11/1997 (IDENTIFIED COST $5,248,217) 5,249,088 ---------------------------------------------------- -----------
BLANCHARD PRECIOUS METALS FUND, INC. - -------------------------------------------------------------------------------
VALUE PRINCIPAL IN U.S. AMOUNT DOLLARS ---------- --------------------------------------------------- ----------- (C) REPURCHASE AGREEMENT--8.2% -------------------------------------------------------------- $5,492,706 CS First Boston Corp., 6.05%, dated 9/30/1997, due 10/1/1997 (at amortized cost) $ 5,492,706 --------------------------------------------------- ----------- TOTAL INVESTMENTS (IDENTIFIED COST $90,031,550)(D) $68,827,811 --------------------------------------------------- -----------
(a) Non-income producing security. (b) Certain of these securities are subject to restrictions on resale under Federal Securities laws. At September 30, 1997, these securities amounted to $4,894,135 with represents 7.3% of net assets. (c) The repurchase agreements is fully collateralized by U.S.government and/or agency obligations based on market prices at the date of the portfolio. (d) The cost of investments for federal tax purposes amounts to $90,719,260. The net unrealized depreciation of investments on a federal tax basis amounts to $20,522,951 which is comprised of $1,599,113 appreciation and $22,122,064 depreciation at September 30, 1997. Note: The categories of investments are shown as a percentage of net assets ($67,037,240) at September 30, 1997. The following acronyms are used throughout this portfolio: ADR--American Depository Receipt GDR--Global Depository Receipt (See Notes which are an integral part of the Financial Statements) BLANCHARD FLEXIBLE INCOME FUND PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1997 - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE ------------- ------------------------------------------------- ------------ CORPORATE BONDS--26.6% --------------------------------------------------------------- AEROSPACE--1.1% ------------------------------------------------- $ 1,700,000 Sequa Corp., Sr. Note, 8.75%, 12/15/2001 $ 1,738,250 ------------------------------------------------- ------------ CONSUMER RELATED--1.3% ------------------------------------------------- Host Marriot Travel Plaza, Sr. Note, 9.50%, 1,062,500 1,000,000 5/15/2005 ------------------------------------------------- John Q. Hammons Hotels, 1st Mtg. Bond, 8.875%, 1,015,000 1,000,000 2/15/2004 ------------------------------------------------- ------------ Total 2,077,500 ------------------------------------------------- ------------ FINANCE--3.5% ------------------------------------------------- Americo Life, Inc., Sr. Sub. Note, 9.25%, 1,548,750 1,500,000 6/1/2005 ------------------------------------------------- 1,000,000 Navistar Financial Corp. Owner Trust 1995-A , Sr. Sub. Note, 8.875%, 11/15/1998 1,024,241 ------------------------------------------------- Presidential Life Corp., Sr. Note, 9.50%, 1,556,250 1,500,000 12/15/2000 ------------------------------------------------- Reliance Group Holdings, Inc., Sr. Note, 9.00%, 1,306,250 1,250,000 11/15/2000 ------------------------------------------------- ------------ Total 5,435,491 ------------------------------------------------- ------------ INDUSTRIAL SERVICES--0.6% ------------------------------------------------- 1,000,000 EnviroSource, Inc., Sr. Note, 9.75%, 6/15/2003 1,005,000 ------------------------------------------------- ------------ OIL REFINING--1.5% ------------------------------------------------- 2,250,000 PDV America, Sr. Note, 7.25%, 8/1/1998 2,267,957 ------------------------------------------------- ------------ PAPER/FOREST PRODUCTS/CONTAINERS--4.9% ------------------------------------------------- Doman Industries, Ltd., Sr. Note, 8.75%, 995,000 1,000,000 3/15/2004 ------------------------------------------------- 1,250,000 Fort Howard Corp., Sr. Sub. Note, 9.00%, 2/1/2006 1,358,749 ------------------------------------------------- 1,000,000 Maxxam Group, Inc., Sr. Note, 11.25%, 8/1/2003 1,065,000 ------------------------------------------------- 1,000,000 Repap New Brunswick, 1st Priority Sr. Secd. Note, 9.875%, 7/15/2000 1,012,500 ------------------------------------------------- 1,000,000 Repap Wisconsin, Inc., 1st Priority Sr. Secd. Note, 9.25%, 2/1/2002 1,058,750 ------------------------------------------------- 2,000,000 (a)Stone Container Finance Co. CDA, Company Guarantee, 11.50%, 8/15/2006 2,130,000 ------------------------------------------------- ------------ Total 7,619,999 ------------------------------------------------- ------------
BLANCHARD FLEXIBLE INCOME FUND - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE ------------- ------------------------------------------------- ------------ CORPORATE BONDS--CONTINUED --------------------------------------------------------------- REAL ESTATE DEVELOPMENT--1.0% ------------------------------------------------- Granite Development Partners, Sr. Note, Series B, $ 1,477,500 $ 1,500,000 10.83%, 11/15/2003 ------------------------------------------------- ------------ RETAIL TRADE--0.7% ------------------------------------------------- (a)Nine West Group, Inc., Sr. Note, 8.375%, 1,010,000 1,000,000 8/15/2005 ------------------------------------------------- ------------ SERVICES--2.0% ------------------------------------------------- 1,000,000 (a)Calpine Corp., Sr. Note, 8.75%, 7/15/2007 1,022,500 ------------------------------------------------- HMH Properties, Inc., Sr. Note, Series B, 9.50%, 1,057,500 1,000,000 5/15/2005 ------------------------------------------------- Prime Hospitality Corp., Sr. Sub. Note, 9.75%, 1,060,000 1,000,000 4/1/2007 ------------------------------------------------- ------------ Total 3,140,000 ------------------------------------------------- ------------ STEEL--1.7% ------------------------------------------------- 1,500,000 Armco, Inc., Sr. Note, 9.375%, 11/1/2000 1,552,500 ------------------------------------------------- Bethlehem Steel Corp., Sr. Note, 10.375%, 1,080,000 1,000,000 9/1/2003 ------------------------------------------------- ------------ Total 2,632,500 ------------------------------------------------- ------------ TELECOMMUNICATIONS/CABLE--2.0% ------------------------------------------------- Centennial Cellular Corp., Sr. Note, 8.875%, 1,020,000 1,000,000 11/1/2001 ------------------------------------------------- Lenfest Communications Inc., Sr. Note, 8.375%, 1,007,500 1,000,000 11/1/2005 ------------------------------------------------- Teleport Communications Group, Inc., Sr. Note, 1,097,500 1,000,000 9.875%, 7/1/2006 ------------------------------------------------- ------------ Total 3,125,000 ------------------------------------------------- ------------ TRANSPORTATION--4.1% ------------------------------------------------- Eletson Holdings, Inc., 1st Mtg. Note, 9.25%, 1,541,250 1,500,000 11/15/2003 ------------------------------------------------- 1,389,000 Piedmont Aviation, 10.15%, 3/28/2003 1,451,505 ------------------------------------------------- 852,000 Piedmont Aviation, 9.90%, 1/15/2001 862,650 ------------------------------------------------- 1,500,000 Sea Containers Ltd., Sr. Note, 9.50%, 7/1/2003 1,552,500 ------------------------------------------------- 896,000 USAir, Inc., 9.90%, 1/15/2001 885,920 ------------------------------------------------- ------------ Total 6,293,825 ------------------------------------------------- ------------ UTILITIES-ELECTRIC--2.2% ------------------------------------------------- 1,000,000 Cleveland Electric Illuminating Co., 1st Mtg. Bond, 9.50%, 5/15/2005 1,090,000 -------------------------------------------------
BLANCHARD FLEXIBLE INCOME FUND - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE ------------- ------------------------------------------------- ------------ CORPORATE BONDS--CONTINUED --------------------------------------------------------------- UTILITIES-ELECTRIC--CONTINUED ------------------------------------------------- $ 2,218,808 (a)Tucson Electric Power Co., 10.21%, 1/1/2009 $ 2,307,561 ------------------------------------------------- ------------ Total 3,397,561 ------------------------------------------------- ------------ TOTAL CORPORATE BONDS (IDENTIFIED COST 41,220,583 $39,374,399) ------------------------------------------------- ------------ FOREIGN SECURITIES--1.0% --------------------------------------------------------------- TELECOMMUNICATIONS--1.0% ------------------------------------------------- CAD 2,000,000 Rogers Cablesystems, Ltd., Sr. Secd. Note, 9.65%, 1/15/2014 (IDENTIFIED COST $1,511,716) 1,545,948 ------------------------------------------------- ------------ MORTGAGE BACKED SECURITIES--31.1% --------------------------------------------------------------- FEDERAL HOME LOAN MORTGAGE CORPORATION--31.1% ------------------------------------------------- 35,403 Pool E00434, 7.00%, 5/1/2011 35,809 ------------------------------------------------- 975,488 Pool E00466, 7.00%, 1/1/2012 986,676 ------------------------------------------------- 993,214 Pool E00497, 7.00%, 7/1/2012 1,004,139 ------------------------------------------------- 1,627,552 Pool E20217, 7.00%, 1/1/2011 1,646,202 ------------------------------------------------- 3,643,090 Pool E20271, 7.00%, 11/1/2011 3,684,872 ------------------------------------------------- 702,239 Pool E64769, 7.00%, 7/1/2011 710,292 ------------------------------------------------- 264,596 Pool E64891, 7.00%, 7/1/2011 267,631 ------------------------------------------------- 1,498,267 Pool E65184, 7.00%, 8/1/2011 1,515,450 ------------------------------------------------- 440,315 Pool E65186, 7.00%, 8/1/2011 445,365 ------------------------------------------------- 58,006 Pool E65399, 7.00%, 9/1/2011 58,671 ------------------------------------------------- 459,199 Pool E65450, 7.00%, 10/1/2011 464,466 ------------------------------------------------- 283,376 Pool E65454, 7.00%, 10/1/2011 286,626 ------------------------------------------------- 163,361 Pool E65468, 7.00%, 10/1/2011 165,235 ------------------------------------------------- 2,208,871 Pool E65490, 7.00%, 10/1/2011 2,234,205 ------------------------------------------------- 2,821,959 Pool E65503, 7.00%, 10/1/2011 2,854,324 ------------------------------------------------- 304,766 Pool E65597, 7.00%, 10/1/2011 308,261 ------------------------------------------------- 241,313 Pool E65645, 7.00%, 11/1/2011 244,080 ------------------------------------------------- 643,716 Pool E65660, 7.00%, 11/1/2011 651,099 ------------------------------------------------- 786,446 Pool E65690, 7.00%, 11/1/2011 795,466 ------------------------------------------------- 1,523,500 Pool E65702, 7.00%, 11/1/2011 1,540,973 -------------------------------------------------
BLANCHARD FLEXIBLE INCOME FUND - -------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE ------------- --------------------------------------------- ------------ MORTGAGE BACKED SECURITIES--CONTINUED ----------------------------------------------------------- $ 945,741 Pool E65703, 7.00%, 11/1/2011 $ 956,588 --------------------------------------------- 1,908,905 Pool E65712, 7.00%, 12/1/2011 1,930,799 --------------------------------------------- 326,516 Pool E65717, 7.00%, 11/1/2011 330,261 --------------------------------------------- 1,026,390 Pool E65723, 7.00%, 11/1/2011 1,038,161 --------------------------------------------- 409,609 Pool E65750, 7.00%, 11/1/2011 414,307 --------------------------------------------- 34,080 Pool E65759, 7.00%, 12/1/2011 34,471 --------------------------------------------- 3,252,636 Pool E67171, 7.00%, 7/1/2012 3,288,412 --------------------------------------------- 2,981,906 Pool E67276, 7.00%, 8/1/2012 3,014,704 --------------------------------------------- 30,851 Pool G10524, 7.00%, 5/1/2011 31,205 --------------------------------------------- 596,894 Pool G10556, 7.00%, 7/1/2011 603,740 --------------------------------------------- 298,671 Pool G10590, 7.00%, 10/1/2011 302,097 --------------------------------------------- 16,291,034 Pool G10690, 7.00%, 7/1/2012 16,470,219 --------------------------------------------- ------------ TOTAL MORTGAGE BACKED SECURITIES (IDENTIFIED 48,314,806 COST $47,988,240) --------------------------------------------- ------------ U.S. TREASURY--37.5% ----------------------------------------------------------- U.S. TREASURY BONDS--13.7% --------------------------------------------- 20,000,000 7.25%, 5/15/2004 21,256,240 --------------------------------------------- ------------ U.S. TREASURY NOTES--23.8% --------------------------------------------- 35,000,000 7.00%, 7/15/2006 36,914,047 --------------------------------------------- ------------ TOTAL U.S. TREASURY (IDENTIFIED COST 58,170,287 $56,623,205) --------------------------------------------- ------------ (B)REPURCHASE AGREEMENT--2.9% ----------------------------------------------------------- 4,512,438 CS First Boston, 6.05%, dated 9/30/1997, due 10/1/1997 (AT AMORTIZED COST) 4,512,438 --------------------------------------------- ------------ TOTAL INVESTMENTS (IDENTIFIED COST $153,764,062 $150,009,998)(C) --------------------------------------------- ------------
(a) Denotes a restricted security which is subject to restrictions on resale under Federal Securities laws. At September 30, 1997, these securities amounted to $6,470,061 which represents 4.2% of net assets. (b) The repurchase agreement is fully collateralized by U.S. Treasury obligations based on market prices at the date of the portfolio. (c) The cost of investments for federal tax purposes amounts to $150,009,998. The net unrealized appreciation of investments on a federal tax basis amounts to $3,754,064 which is comprised of $3,781,564 appreciation and $27,500 depreciation at September 30, 1997. BLANCHARD FLEXIBLE INCOME FUND - -------------------------------------------------------------------------------- Note: The categories of investments are shown as a percentage of net assets ($155,222,701) at September 30, 1997. The following acronyms are used throughout this portfolio: CAD--Canadian Dollars CDA--Community Development Administration (See Notes which are an integral part of the Financial Statements) BLANCHARD SHORT-TERM FLEXIBLE INCOME FUND PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1997 - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE ----------- --------------------------------------------------- ------------ COLLATERALIZED MORTGAGE OBLIGATIONS--4.5% --------------------------------------------------------------- FINANCIAL SERVICES--0.4% --------------------------------------------------- $ 4,796 CMC Securities Corp. 1993-A, Series 1993-A, Class A2, 7.50%, 2/25/2023 $ 4,785 --------------------------------------------------- 583,666 Merrill Lynch Mortgage Investors, Series 1990-I, Class A, 9.20%, 1/15/2011 583,223 --------------------------------------------------- ------------ Total 588,008 --------------------------------------------------- ------------ GOVERNMENT/AGENCY--4.1% --------------------------------------------------- 1,892,678 (a)Resolution Trust Corp. Mtg. Pass-Thru 1992-3, Series 1992-3, Class A2, 6.45%, 10/25/2019 1,896,823 --------------------------------------------------- 1,283,183 (a)Resolution Trust Corp. Mtg. Pass-Thru 1992-3, Series 1992-3, Class A3, 6.05%, 6/25/2021 1,287,200 --------------------------------------------------- 1,412,944 (a)Resolution Trust Corp. Mtg. Pass-Thru 1992-6, Series 1992-6, Class A4, 7.36%, 11/25/2025 1,423,542 --------------------------------------------------- 774,275 Resolution Trust Corp. Mtg. Pass-Thru 1992-C1, Series 1992-C1, Class A1, 8.80%, 8/25/2023 781,778 --------------------------------------------------- ------------ Total 5,389,343 --------------------------------------------------- ------------ TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (IDENTIFIED COST $5,841,278) 5,977,351 --------------------------------------------------- ------------ CORPORATE BONDS--29.3% --------------------------------------------------------------- AEROSPACE/DEFENSE--0.4% --------------------------------------------------- 500,000 Sequa Corp., Sr. Note, 8.75%, 12/15/2001 511,250 --------------------------------------------------- ------------ AIRLINES--0.1% --------------------------------------------------- 200,000 USAir, Inc., 9.80%, 1/15/2000 208,250 --------------------------------------------------- ------------ CHEMICALS--1.9% --------------------------------------------------- 500,000 Borden Chemicals & Plastics Operating, Note, 9.50%, 5/1/2005 528,750 --------------------------------------------------- Harris Chemical North America, Inc., Sr. Note, 523,750 500,000 10.25%, 7/15/2001 --------------------------------------------------- 300,000 ISP Holdings, Inc., Sr. Note, 9.00%, 10/15/2003 315,000 --------------------------------------------------- 500,000 Kaiser Aluminum & Chemical Corp., Sr. Note, 9.875%, 2/15/2002 522,500 ---------------------------------------------------
BLANCHARD SHORT-TERM FLEXIBLE INCOME FUND - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE ----------- ------------------------------------------------- ------------ CHEMICALS--CONTINUED ------------------------------------------------- $ 600,000 SIFTO Canada, Inc., Sr. Note, 8.50%, 7/15/2000 $ 612,000 ------------------------------------------------- ------------ Total 2,502,000 ------------------------------------------------- ------------ CONSUMER RELATED--4.0% ------------------------------------------------- 750,000 Chiquita Brands International Inc., Sr. Note, 9.625%, 1/15/2004 795,000 ------------------------------------------------- 800,000 HMH Properties, Inc., Sr. Note, Series B, 9.50%, 5/15/2005 846,000 ------------------------------------------------- 2,460,000 RJR Nabisco, Inc., Note, 8.75%, 7/15/2007 2,615,172 ------------------------------------------------- 1,000,000 Revlon Consumer Products Corp., Note, 9.375%, 4/1/2001 1,037,500 ------------------------------------------------- ------------ Total 5,293,672 ------------------------------------------------- ------------ CONTAINERS-PAPER/PLASTIC--0.8% ------------------------------------------------- 500,000 Container Corp. of America, Sr. Note, 11.25%, 5/1/2004 555,000 ------------------------------------------------- 500,000 Sea Containers Ltd., 9.50%, 7/1/2003 517,500 ------------------------------------------------- ------------ Total 1,072,500 ------------------------------------------------- ------------ ENERGY MINERALS--1.4% ------------------------------------------------- 2,000,000 USX Marathon Group, 5.75%, 7/1/2001 1,962,500 ------------------------------------------------- ------------ ENTERTAINMENT--4.2% ------------------------------------------------- 1,000,000 Caesars World, Inc., Sr. Sub. Note, 8.875%, 8/15/2002 1,037,500 ------------------------------------------------- 1,000,000 Harrah's Operations, Inc., Sr. Sub. Note, 8.75%, 3/15/2000 1,027,500 ------------------------------------------------- 405,000 Host Marriot Travel Plazas Inc., Sr. Note, 9.50%, 5/15/2005 430,312 ------------------------------------------------- 900,000 Station Casinos, Inc., Sr. Sub. Note, 9.625%, 6/1/2003 904,500 ------------------------------------------------- 1,000,000 Time Warner Entertainment Co. LP, Note, 9.625%, 5/1/2002 1,116,927 ------------------------------------------------- 600,000 Trump Atlantic City Associations, Company Guarantee, 11.25%, 5/1/2006 584,250 ------------------------------------------------- 500,000 Viacom, Inc., Sub. Deb., 8.00%, 7/7/2006 500,000 ------------------------------------------------- ------------ Total 5,600,989 ------------------------------------------------- ------------ FINANCIAL SERVICES--1.9% ------------------------------------------------- 500,000 Navistar Financial Corp. Owner Trust 1995-A , Sr. Sub. Note, 8.875%, 11/15/1998 512,120 ------------------------------------------------- 500,000 Presidential Life Corp., Sr. Note, 9.50%, 12/15/2000 518,750 -------------------------------------------------
BLANCHARD SHORT-TERM FLEXIBLE INCOME FUND - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE ----------- --------------------------------------------------- ------------ CORPORATE BONDS--CONTINUED --------------------------------------------------------------- FINANCIAL SERVICES--CONTINUED --------------------------------------------------- $ 1,000,000 Reliance Group Holdings, Inc., Sr. Note, 9.00%, 11/15/2000 $ 1,045,000 --------------------------------------------------- 500,000 Williams Scotsman, Inc., Sr. Note, 9.875%, 6/1/2007 512,500 --------------------------------------------------- ------------ Total 2,588,370 --------------------------------------------------- ------------ INDUSTRIAL RELATED--2.9% --------------------------------------------------- 850,000 Armco, Inc., Sr. Note, 9.375%, 11/1/2000 879,750 --------------------------------------------------- 350,000 Bethlehem Steel Corp., Sr. Note, 10.375%, 9/1/2003 378,000 --------------------------------------------------- 500,000 Exide Corp., Sr. Note, 10.75%, 12/15/2002 531,250 --------------------------------------------------- 500,000 Fort Howard Corp., Sr. Sub. Note, 9.00%, 2/1/2006 543,499 --------------------------------------------------- 700,000 John Q. Hammon Hotels, 1st Mtg. Bond, 8.875%, 2/15/2004 710,500 --------------------------------------------------- 500,000 Unisys Corp., Deb., 9.50%, 7/15/1998 503,750 --------------------------------------------------- 300,000 Unisys Corp., Sr. Note, 10.625%, 10/1/1999 311,250 --------------------------------------------------- ------------ Total 3,857,999 --------------------------------------------------- ------------ OIL REFINING--1.1% --------------------------------------------------- 1,000,000 Clark Oil Refining and Corp. Del, Sr. Note, 10.50%, 12/1/2001 1,035,000 --------------------------------------------------- 500,000 PDV America Inc., Sr. Note, 7.25%, 8/1/1998 503,991 --------------------------------------------------- ------------ Total 1,538,991 --------------------------------------------------- ------------ PAPER PRODUCTS--2.0% --------------------------------------------------- 500,000 Repap New Brunswick Inc., 1st Priority Sr. Secd. Note, 9.875%, 7/15/2000 506,250 --------------------------------------------------- 500,000 Repap New Brunswick Inc., Sr. Note, 9.0625%, 7/15/2000 495,000 --------------------------------------------------- 700,000 Repap Wisconsin, Inc., 1st Priority Sr. Secd. Note, 9.25%, 2/1/2002 741,125 --------------------------------------------------- 700,000 Stone Container Corp., Sr. Note, 9.875%, 2/1/2001 714,875 --------------------------------------------------- 200,000 Stone Container Corp., Sr. Sub. Note, 11.00%, 8/15/1999 208,500 --------------------------------------------------- ------------ Total 2,665,750 --------------------------------------------------- ------------ PRINTING & PUBLISHING--0.5% --------------------------------------------------- 600,000 World Color Press Inc., Sr. Sub. Note, 9.125%, 3/15/2003 630,750 --------------------------------------------------- ------------ RETAIL TRADE--0.7% --------------------------------------------------- 1,000,000 Nine West Group, Inc., Sr. Note, 8.375%, 8/15/2005 1,010,000 --------------------------------------------------- ------------
BLANCHARD SHORT-TERM FLEXIBLE INCOME FUND - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE ----------- --------------------------------------------------- ------------ CORPORATE BONDS--CONTINUED --------------------------------------------------------------- SERVICES--1.2% --------------------------------------------------- $ 600,000 Fleming Cos., Inc., Sr. Note, 10.625%, 12/15/2001 $ 642,000 --------------------------------------------------- 500,000 Marcus Cable Operating Co. LP, Sr. Disc. Note, 0/13.50%, 8/1/2004 453,750 --------------------------------------------------- 500,000 Prime Hospitality Corp., 1st Mtg. Bond, 9.25%, 1/15/2006 526,875 --------------------------------------------------- ------------ Total 1,622,625 --------------------------------------------------- ------------ STEEL--0.6% --------------------------------------------------- 750,000 Wheeling Pittsburgh Corp., Sr. Note, 9.375%, 11/15/2003 774,375 --------------------------------------------------- ------------ TELECOMMUNICATIONS--4.0% --------------------------------------------------- 750,000 Centennial Cellular Corp., Sr. Note, 8.875%, 11/1/2001 765,000 --------------------------------------------------- 750,000 Century Communications, Corp., Sr. Note, 9.75%, 2/15/2002 795,000 --------------------------------------------------- 1,000,000 Comcast Corp., Sr. Sub. Deb., 9.375%, 5/15/2005 1,075,000 --------------------------------------------------- 1,000,000 Videotron Group Ltd., Sr. Note, 10.625%, 2/15/2005 1,110,000 --------------------------------------------------- 1,000,000 Lenfest Communications Inc., Sr. Note, 8.375%, 11/1/2005 1,007,500 --------------------------------------------------- 500,000 Olympus Communications LP, Sr. Note, 10.625%, 11/15/2006 544,375 --------------------------------------------------- ------------ Total 5,296,875 --------------------------------------------------- ------------ TEXTILE PRODUCTS--0.4% --------------------------------------------------- 500,000 Dominion Textile USA Inc., Sr. Note, 8.875%, 11/1/2003 513,750 --------------------------------------------------- ------------ UTILITIES-ELECTRIC--1.2% --------------------------------------------------- 500,000 Jones Intercable, Inc., Sr. Note, 9.625%, 3/15/2002 537,500 --------------------------------------------------- 1,000,000 Long Island Lighting Co., Deb., 7.30%, 7/15/1999 1,016,131 --------------------------------------------------- ------------ Total 1,553,631 --------------------------------------------------- ------------ TOTAL CORPORATE BONDS (IDENTIFIED COST $37,300,571) 39,204,277 --------------------------------------------------- ------------ CORPORATE NOTE--0.8% --------------------------------------------------------------- TELECOMMUNICATIONS--0.8% --------------------------------------------------- 1,000,000 Rogers Cablesystems Ltd., Note, 9.625%, 8/1/2002 (identified cost $1,006,758) 1,075,000 --------------------------------------------------- ------------ U.S. TREASURY OBLIGATIONS--61.8% --------------------------------------------------------------- U.S. TREASURY NOTES--61.8% --------------------------------------------------- 15,000,000 5.75%, 12/31/1998 15,009,375 --------------------------------------------------- 20,000,000 6.125%, 5/15/1998 20,075,000 ---------------------------------------------------
BLANCHARD SHORT-TERM FLEXIBLE INCOME FUND - -------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE ----------- --------------------------------------------------- ------------ U.S. TREASURY OBLIGATIONS--CONTINUED --------------------------------------------------------------- U.S. TREASURY NOTES--CONTINUED --------------------------------------------------- $20,000,000 6.25%, 3/31/1999 $ 20,143,740 --------------------------------------------------- 27,000,000 6.875%, 8/31/1999 27,514,674 --------------------------------------------------- ------------ TOTAL U.S. TREASURY OBLIGATIONS (IDENTIFIED COST $82,053,737) 82,742,789 --------------------------------------------------- ------------ (B)REPURCHASE AGREEMENT--2.9% --------------------------------------------------------------- 3,832,176 CS First Boston, 6.05%, dated 9/30/1997, due 10/1/1997 (at amortized cost) 3,832,176 --------------------------------------------------- ------------ TOTAL INVESTMENTS (IDENTIFIED COST $130,034,520)(C) $132,831,593 --------------------------------------------------- ------------
(a) Denotes variable rate securities which show current rate. (b) The repurchase agreement is fully collateralized by U.S. government and/or agency obligations based on market prices at the date of the portfolio. (c) The cost of investments for federal tax purposes amounts to $130,034,520. The net unrealized appreciation of investments on a federal tax basis amounts to $2,797,073 which is comprised of $2,812,462 appreciation and $15,389 depreciation at September 30, 1997. Note: The categories of investments are shown as a percentage of net assets ($133,877,535) at September 30, 1997. The following acronym is used throughout this portfolio: LP--Limited Partnership (See Notes which are an integral part of the Financial Statements) BLANCHARD FLEXIBLE TAX-FREE BOND FUND PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1997 - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE ---------- --------------------------------------------- ------- ----------- LONG-TERM MUNICIPALS--94.5% -------------------------------------------------------- ALASKA--4.1% --------------------------------------------- $1,000,000 Valdez, AK Marine Terminal, Revenue Refunding Bonds (Series B), 5.50% (BP Pipeline Inc.), 10/1/2028 AA $ 983,917 --------------------------------------------- ----------- CALIFORNIA--8.1% --------------------------------------------- 1,000,000 California State Department of Water Resources, Revenue Refunding Bonds, 5.375% (Original Issue Yield: 5.67%), 12/1/2027 AAA 994,002 --------------------------------------------- 1,000,000 East Bay Municipal Utility District, CA, Water System Subordinated Refunding Revenue Bonds (Series 1996), 5.00% (FGIC INS)/(Original Issue Yield: 5.39%), 6/1/2026 AAA 947,502 --------------------------------------------- ----------- Total 1,941,504 --------------------------------------------- ----------- FLORIDA--8.0% --------------------------------------------- 1,000,000 Dade County, FL Water & Sewer System, Revenue Bonds, 5.25% (FGIC INS)/(Original Issue Yield: 5.70%), 10/1/2026 AAA 979,577 --------------------------------------------- 1,000,000 Florida State Board of Education Capital Outlay, GO UT, (Series A), 5.00% (Original Issue Yield: 5.40%), 6/1/2027 AA+ 948,163 --------------------------------------------- ----------- Total 1,927,740 --------------------------------------------- ----------- ILLINOIS--16.5% --------------------------------------------- 1,000,000 Cook County, IL, GO UT Refunding Bonds (Series B), 5.375% (MBIA INS)/(Original Issue Yield: 5.72%), 11/15/2018 AAA 1,001,236 --------------------------------------------- 1,000,000 Illinois Health Facilities Authority, Revenue Bonds Daily VRDNs (Healthcorp Affiliates) Aaa 1,000,000 --------------------------------------------- 1,000,000 Illinois State Sales Tax, Refunding Revenue Bonds (Series Q), 5.50% (Original Issue Yield: 6.202%), 6/15/2020 AAA 1,000,000 --------------------------------------------- 1,000,000 Metropolitan Pier & Exposition Authority, IL, Revenue Refunding Bonds, 5.25% (McCormick Plan Expansion Project)/(AMBAC INS)/(Original Issue Yield: 5.90%), 6/15/2027 AAA 972,077 --------------------------------------------- ----------- Total 3,973,313 --------------------------------------------- -----------
BLANCHARD FLEXIBLE TAX-FREE BOND FUND - --------------------------------------------------------------------------------
PRINCIPAL CREDIT AMOUNT RATING* VALUE ---------- --------------------------------------------- ------- ----------- LONG-TERM MUNICIPALS--CONTINUED -------------------------------------------------------- INDIANA--4.2% --------------------------------------------- $1,000,000 Purdue University, IN, Student Fees Revenue Bonds (Series H), Weekly VRDNs (Purdue University, IN LOC) AA- $ 1,000,000 --------------------------------------------- ----------- MASSACHUSETTS--3.9% --------------------------------------------- 1,000,000 Massachusetts Water Resources Authority, Water Revenue Bonds, 5.00% (Original Issue Yield: 5.35%), 12/1/2025 AAA 942,362 --------------------------------------------- ----------- MICHIGAN--4.1% --------------------------------------------- 1,000,000 Michigan State Hospital Finance Authority, Revenue Refunding Bonds, 5.25% (Henry Ford Health System, MI)/(Original Issue Yield: 5.70%), 11/15/2025 AA 984,047 --------------------------------------------- ----------- NEVADA--4.1% --------------------------------------------- 1,000,000 Clark County, NV School District, GO UT, 5.25% (Original Issue Yield: 5.83%), 6/15/2017 AAA 996,268 --------------------------------------------- ----------- NEW JERSEY--4.2% --------------------------------------------- 1,000,000 New Jersey State Transportation Trust Fund Agency, Revenue Bonds, 5.25% (Original Issue Yield: 5.70%), 6/15/2016 A+ 1,004,261 --------------------------------------------- ----------- NEW YORK--20.8% --------------------------------------------- 1,000,000 New York City Municipal Water Finance Authority, Revenue Bonds, 5.50% (Original Issue Yield: 5.855%), 6/15/2027 AAA 1,003,925 --------------------------------------------- 1,000,000 New York State Dormitory Authority, Revenue Bonds, 5.25% (Monte Fiore Medical Center)/(AMBAC and FHA INSs)/(Original Issue Yield: 5.53%), 2/1/2015 AAA 1,006,724 --------------------------------------------- 1,000,000 New York State Local Government Assistance Corp., Refunding Revenue Bonds (Series B), 5.50% (Original Issue Yield: 5.97%), 4/1/2021 A 1,003,043 --------------------------------------------- 1,000,000 New York State Medical Care Facilities Finance Agency, Revenue Refunding Bonds, 5.375% (Presbyterian Hospital)/(Original Issue Yield: 5.52%), 2/15/2025 AAA 995,669 --------------------------------------------- 1,000,000 Port Authority of New York and New Jersey, Revenue Bonds (104th Series), 5.20% (AMBAC INS)/(Original Issue Yield: 5.35%), 7/15/2021 AAA 990,487 --------------------------------------------- ----------- Total 4,999,848 --------------------------------------------- -----------
BLANCHARD FLEXIBLE TAX-FREE BOND FUND - -------------------------------------------------------------------------------
SHARES OR PRINCIPAL CREDIT AMOUNT RATING* VALUE ---------- --------------------------------------------- ------- ----------- LONG-TERM MUNICIPALS--CONTINUED -------------------------------------------------------- TEXAS--8.2% --------------------------------------------- $1,000,000 Coastal Bend Health Facilities Development Corp., TX, Revenue Bonds Weekly VRDNs (Incarnate World Health Systems)/(First National Bank of Chicago LOC) Aa3 $ 1,000,000 --------------------------------------------- 1,000,000 San Antonio, TX, Electric & Gas, Revenue Refunding Bonds, 5.00% (Original Issue Yield: 5.275%), 2/1/2014 AA 980,250 --------------------------------------------- ----------- Total 1,980,250 --------------------------------------------- ----------- WASHINGTON--4.2% --------------------------------------------- 1,000,000 Port of Seattle, WA, Revenue Bonds, 5.50% (FGIC INS)/(Original Issue Yield: 5.80%), 10/1/2022 AAA 1,008,212 --------------------------------------------- ----------- WISCONSIN--4.2% --------------------------------------------- 1,000,000 Wisconsin State Transportation, Revenue Bonds (Series B), 5.50% (Original Issue Yield: 5.912%), 7/1/2022 AA- 1,004,466 --------------------------------------------- ----------- TOTAL LONG-TERM MUNICIPALS (IDENTIFIED COST $21,420,079) 22,746,188 --------------------------------------------- ----------- MUTUAL FUND SHARES--4.2% -------------------------------------------------------- 999,900 Dreyfus Tax Exempt Cash Management (AT NET ASSET VALUE) 999,900 --------------------------------------------- ----------- TOTAL INVESTMENTS (IDENTIFIED COST $22,419,979)(A) $23,746,088 --------------------------------------------- -----------
* Please refer to the Appendix of the Statement of Additional Information for an explanation of the credit ratings. Current credit ratings are unaudited. (a) The cost of investments for federal tax purposes amounts to $22,419,979. The unrealized appreciation of investments on a federal tax basis amounts to $1,326,109 at September 30, 1997. Note: The categories of investments are shown as a percentage of net assets ($24,076,686) at September 30, 1997. The following acronyms are used throughout this portfolio: AMBAC--American Municipal Bond Assurance Corporation FGIC--Financial Guaranty Insurance Company FHA--Federal Housing Administration GO--General Obligation INS--Insured LOC--Letter of Credit MBIA--Municipal Bond Investors Assurance UT--Unlimited Tax VRDNs--Variable Rate Demand Notes (See Notes which are an integral part of the Financial Statements) BLANCHARD GROUP OF FUNDS STATEMENTS OF ASSETS AND LIABILITIES SEPTEMBER 30, 1997 - --------------------------------------------------------------------------------
BLANCHARD BLANCHARD BLANCHARD BLANCHARD BLANCHARD SHORT -TERM FLEXIBLE GLOBAL PRECIOUS METALS FLEXIBLE FLEXIBLE TAX-FREE GROWTH FUND FUND, INC. INCOME FUND INCOME FUND BOND FUND - ------------------------ ----------- --------------- ------------ ------------ ----------- ASSETS: - ------------------------ Investments in repurchase agreements $ 1,176,958 $ 5,492,706 $ 4,512,438 $ 3,832,176 $ -- - ------------------------ Investments in securities 60,074,984 63,335,105 149,251,624 128,999,417 23,746,088 - ------------------------ ----------- ----------- ------------ ------------ ----------- Total investments in securities, at value $61,251,942 $68,827,811 $153,764,062 $132,831,593 $23,746,088 - ------------------------ Cash -- -- -- -- 72 - ------------------------ Income receivable 330,910 191,606 2,362,460 2,479,981 365,497 - ------------------------ Receivable for investments sold 1,820,484 485,614 -- -- -- - ------------------------ Receivable for shares sold 1,350 1,250,418 72,325 46,320 41,115 - ------------------------ Net receivable for foreign currency exchange contracts sold 150,030 -- -- -- -- - ------------------------ Deferred organizational costs -- -- 15,094 17,490 16,399 - ------------------------ ----------- ----------- ------------ ------------ ----------- Total assets 63,554,716 70,755,449 156,213,941 135,375,384 24,169,171 - ------------------------ ----------- ----------- ------------ ------------ ----------- LIABILITIES: - ------------------------ Payable for investments purchased 1,024,123 2,114,799 -- -- -- - ------------------------ Payable for shares redeemed 60,354 605,097 272,640 497,950 24,696 - ------------------------ Income distribution payable -- -- 446,081 75,908 40,374 - ------------------------ Payable to Bank -- 803,519 -- 625,000 -- - ------------------------ Payable for forward foreign currency exchange contracts -- -- 7,439 -- -- - ------------------------ Payable for taxes withheld 7,796 3,188 -- -- - ------------------------ Payable for daily variation margin 63,340 -- -- -- -- - ------------------------ Accrued expenses 201,737 191,606 265,080 298,991 27,415 - ------------------------ ----------- ----------- ------------ ------------ ----------- Total liabilities 1,357,350 3,718,209 991,240 1,497,849 92,485 - ------------------------ ----------- ----------- ------------ ------------ ----------- NET ASSETS CONSIST OF: - ------------------------ Paid in capital 53,368,473 92,377,394 168,418,381 140,351,915 23,120,612 - ------------------------ Net unrealized appreciation (depreciation) of investments, translation of assets and liabilities in foreign currency, and futures contracts 821,161 (21,203,902) 3,746,717 2,798,583 1,326,109 - ------------------------ Accumulated net realized gain (loss) on investments, foreign currency transactions, and futures contracts 7,100,967 (5,605,824) (16,630,125) (9,171,223) (354,461) - ------------------------ Distributions in excess of/Undistributed net investment income 906,765 1,469,572 (312,272) (101,740) (15,574) - ------------------------ ----------- ----------- ------------ ------------ ----------- Total Net Assets $62,197,366 $67,037,240 $155,222,701 $133,877,535 $24,076,686 - ------------------------ ----------- ----------- ------------ ------------ ----------- NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE: $ 10.54 $ 5.37 $ 4.98 $ 3.04 $ 5.56 - ------------------------ ----------- ----------- ------------ ------------ ----------- Shares Outstanding 5,899,615 12,486,361 31,152,932 44,036,295 4,328,344 - ------------------------ ----------- ----------- ------------ ------------ ----------- Investments, at identified cost $60,621,797 $90,031,550 $150,009,998 $130,034,520 $22,419,979 - ------------------------ ----------- ----------- ------------ ------------ ----------- Investments, at tax cost $60,689,138 $90,719,260 $150,009,998 $130,034,520 $22,419,979 - ------------------------ ----------- ----------- ------------ ------------ -----------
(See Notes which are an integral part of the Financial Statements) BLANCHARD GROUP OF FUNDS STATEMENTS OF OPERATIONS YEAR ENDED SEPTEMBER 30, 1997 - --------------------------------------------------------------------------------
BLANCHARD BLANCHARD BLANCHARD BLANCHARD BLANCHARD SHORT -TERM FLEXIBLE GLOBAL PRECIOUS METALS FLEXIBLE FLEXIBLE TAX-FREE GROWTH FUND FUND, INC. INCOME FUND INCOME FUND BOND FUND - ------------------------ ----------- --------------- ----------- ----------- ---------- INVESTMENT INCOME: - ------------------------ Dividends $ 376,712(a) $ 675,606(c) $ -- $ -- $ -- - ------------------------ Interest 2,434,670(b) 631,572 13,043,023 10,247,264 1,236,154 - ------------------------ ---------- ------------ ----------- ----------- ---------- Total income 2,811,382 1,307,178 13,043,023 10,247,264 1,236,154 - ------------------------ ---------- ------------ ----------- ----------- ---------- EXPENSES: - ------------------------ Management fee 645,955 744,283 1,273,719 1,095,713 169,751 - ------------------------ Administrative personnel and services fee 75,000 78,467 165,355 142,259 75,000 - ------------------------ Custodian fees 63,163 50,200 68,539 48,762 16,080 - ------------------------ Transfer and dividend disbursing agent fees and expenses 118,177 77,453 317,118 343,119 37,447 - ------------------------ Directors'/Trustees' fees 2,098 2,544 3,267 3,420 1,598 - ------------------------ Auditing fees 20,726 21,698 20,688 12,277 26,804 - ------------------------ Legal fees 2,939 2,290 1,764 1,653 85 - ------------------------ Portfolio accounting fees 49,714 54,606 57,885 49,725 43,386 - ------------------------ Distribution services fee 484,467 558,212 424,573 365,238 56,584 - ------------------------ Share registration costs 11,775 21,568 12,098 13,477 11,706 - ------------------------ Printing and postage 61,840 28,849 33,894 48,635 7,825 - ------------------------ Insurance premiums 2,255 1,873 1,665 2,288 1,412 - ------------------------ Taxes 495 697 495 495 -- - ------------------------ Miscellaneous 2,018 1,786 34,211 18,580 17,258 - ------------------------ ---------- ------------ ----------- ----------- ---------- Total expenses 1,540,622 1,644,526 2,415,271 2,145,641 464,936 - ------------------------ ---------- ------------ ----------- ----------- ---------- WAIVERS-- - ------------------------ Waiver of management fee -- -- -- (129,528) (142,067) - ------------------------ Waiver of administrative personnel and services fee -- -- -- -- (39,951) - ------------------------ Waiver of distribution services fee -- -- -- -- (56,584) - ------------------------ ---------- ------------ ----------- ----------- ---------- Total waivers -- -- -- (129,528) (238,602) - ------------------------ ---------- ------------ ----------- ----------- ---------- Net expenses 1,540,622 1,644,526 2,415,271 2,016,113 226,334 - ------------------------ ---------- ------------ ----------- ----------- ---------- Net investment income (loss) 1,270,760 (337,348) 10,627,752 8,231,151 1,009,820 - ------------------------ ---------- ------------ ----------- ----------- ---------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS, FOREIGN CURRENCY, AND FUTURES CONTRACTS: - ------------------------ Net realized gain (loss) on investments, foreign currency transactions, and futures contracts 8,407,403 (2,561,982) 2,191,827 483,971 285,298 - ------------------------ Net change in unrealized appreciation (depreciation) of investments, translation of assets and liablities in foreign currency, and futures contracts (1,721,197) (9,413,528) 2,926,980 1,694,128 784,728 - ------------------------ ---------- ------------ ----------- ----------- ---------- Net realized and unrealized gain (loss) on investments 6,686,206 (11,975,510) 5,118,807 2,178,099 1,070,026 - ------------------------ ---------- ------------ ----------- ----------- ---------- Change in net assets resulting from operations $7,956,966 $(12,312,858) $15,746,559 $10,409,250 $2,079,846 - ------------------------ ---------- ------------ ----------- ----------- ----------
(a) Net of Foreign taxes withheld $33,962. (b) Net of Foreign taxes withheld $4,228. (c) Net of Foreign taxes withheld $47,201. (See Notes which are an integral part of the Financial Statements) THE BLANCHARD GROUP OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
BLANCHARD GLOBAL BLANCHARD PRECIOUS GROWTH FUND METALS FUND, INC. --------------------------------------- ---------------------------------------- YEAR ENDED PERIOD ENDED YEAR ENDED YEAR ENDED PERIOD ENDED YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, APRIL 30, SEPTEMBER 30, SEPTEMBER 30, APRIL 30, 1997 1996 1996 1997 1996 1996 ---------------- ------------- ------------- ----------- ------------- ------------- ------------ INCREASE (DECREASE) IN NET ASSETS: ---------------- OPERATIONS-- ---------------- Net investment income/operating (loss) $ 1,270,760 $ 465,544 $ 295,860 $ (337,348) $ (500,885) $ (1,069,928) ---------------- Net realized gain (loss) on investments, foreign currency transactions and futures contracts 8,407,403 6,148,207 8,019,815 (2,561,982) 10,615,594 13,950,013 ---------------- Net change in unrealized appreciation/depreciation of investments, translation of assets and liablities in foreign currency, and futures contracts (1,721,197) (5,394,534) 5,636,916 (9,413,528) (19,953,719) 13,616,081 ---------------- ----------- ----------- ----------- ----------- ----------- ------------ Change in net assets resulting from operations 7,956,966 1,219,217 13,952,591 (12,312,858) (9,839,010) 26,496,166 ---------------- ----------- ----------- ----------- ----------- ----------- ------------ DISTRIBUTIONS TO SHAREHOLDERS-- ---------------- Distributions from net investment income (1,170,525) -- (295,860) (2,843,687) -- -- ---------------- Distributions from net realized gains (12,602,965) (20,849,369) -- -- ---------------- Distributions in excess of net investment income -- -- (274,732) -- -- -- ---------------- Tax return of capital -- -- -- -- -- -- ---------------- ----------- ----------- ----------- ----------- ----------- ------------ Change in net assets resulting from distributions to shareholders (13,773,490) -- (570,592) (23,693,056) -- -- ---------------- ----------- ----------- ----------- ----------- ----------- ------------ SHARE TRANSACTIONS-- ---------------- Proceeds from sale of shares 10,109,624 8,636,590 5,765,409 60,617,474 35,684,735 103,376,874 ---------------- Net asset value of shares issued to shareholders in payment of distributions declared 13,095,694 -- 548,261 21,735,905 -- -- ---------------- Cost of shares redeemed (23,098,557) (13,130,249) (35,601,975) (67,198,114) (67,247,212) (75,865,525) ---------------- ----------- ----------- ----------- ----------- ----------- ------------ Change in net assets resulting from share transactions 106,761 (4,493,659) (29,288,305) 15,155,265 (31,562,477) 27,511,349 ---------------- ----------- ----------- ----------- ----------- ----------- ------------ Change in net assets (5,709,763) (3,274,442) (15,906,306) (20,850,649) (41,401,487) 54,007,515 ---------------- NET ASSETS: ---------------- Beginning of period 67,907,129 71,181,571 87,087,877 87,887,889 129,289,376 75,281,861 ---------------- ----------- ----------- ----------- ----------- ----------- ------------ End of period $62,197,366 $67,907,129 $71,181,571 $67,037,240 $87,887,889 $129,289,376 ---------------- ----------- ----------- ----------- ----------- ----------- ------------ Undistributed net investment income included in net assets at end of period $ 906,765 $ 818,136 $ -- $ 1,469,572 $ 2,856,971 $ 1,904,789 ---------------- ----------- ----------- ----------- ----------- ----------- ------------ Net gain (loss) as computed for federal tax purposes $ 7,911,101 $ 6,561,362 $ 5,881,028 $ 76,050 $ 9,039,433 $ 12,174,374 ---------------- ----------- ----------- ----------- ----------- ----------- ------------ BLANCHARD FLEXIBLE INCOME FUND -------------------------------------------- YEAR ENDED PERIOD ENDED YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, APRIL 30, 1997 1996 1996 - --------------------------- -------------- -------------- -------------- INCREASE (DECREASE) IN NET ASSETS: - --------------------------- OPERATIONS-- - --------------------------- Net investment income/operating (loss) $10,627,752 $ 5,059,729 $ 14,539,300 - --------------------------- Net realized gain (loss) on investments, foreign currency transactions and futures contracts 2,191,827 175,174 480,236 - --------------------------- Net change in unrealized appreciation/depreciation of investments, translation of assets and liablities in foreign currency, and futures contracts 2,926,980 2,016,909 5,042,160 - --------------------------- -------------- -------------- -------------- Change in net assets resulting from operations 15,746,559 7,251,812 20,061,696 - --------------------------- -------------- -------------- -------------- DISTRIBUTIONS TO SHAREHOLDERS-- - --------------------------- Distributions from net investment income (10,302,558) (5,012,727) (15,359,777) - --------------------------- Distributions from net realized gains -- -- -- - --------------------------- Distributions in excess of net investment income -- -- -- - --------------------------- Tax return of capital (342,877) (48,762) -- - --------------------------- -------------- -------------- -------------- Change in net assets resulting from distributions to shareholders (10,645,435) (5,061,489) (15,359,777) - --------------------------- -------------- -------------- -------------- SHARE TRANSACTIONS-- - --------------------------- Proceeds from sale of shares 33,454,106 13,294,718 60,702,516 - --------------------------- Net asset value of shares issued to shareholders in payment of distributions declared 8,400,717 4,042,963 11,757,432 - --------------------------- Cost of shares redeemed (79,085,787) (38,410,603) (133,349,811) - --------------------------- -------------- -------------- -------------- Change in net assets resulting from share transactions (37,230,964) (21,072,922) (60,889,863) - --------------------------- -------------- -------------- -------------- Change in net assets (32,129,840) (18,882,599) (56,187,944) - --------------------------- NET ASSETS: - --------------------------- Beginning of period 187,352,541 206,235,140 262,423,084 - --------------------------- -------------- -------------- -------------- End of period $155,222,701 $187,352,541 $ 206,235,140 - --------------------------- -------------- -------------- -------------- Undistributed net investment income included in net assets at end of period $ -- $ -- $ -- - --------------------------- -------------- -------------- -------------- Net gain (loss) as computed for federal tax purposes $ 1,771,520 $ (1,335,786) $ (3,223,064) - --------------------------- -------------- -------------- --------------
(See Notes which are an integral part of the Financial Statements) THE BLANCHARD GROUP OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
BLANCHARD SHORT-TERM BLANCHARD FLEXIBLE FLEXIBLE INCOME FUND TAX-FREE BOND FUND ------------------------------------------ ----------------------------------------- YEAR ENDED PERIOD ENDED YEAR ENDED YEAR ENDED PERIOD ENDED YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, APRIL 30, SEPTEMBER 30, SEPTEMBER 30, APRIL 30, 1997 1996 1996 1997 1996 1996 - ------------------------ ------------- ------------- ------------ ------------- ------------- ------------ INCREASE (DECREASE) IN NET ASSETS: - ------------------------ OPERATIONS-- - ------------------------ Net investment income $ 8,231,151 $ 3,640,476 $ 3,088,222 $ 1,009,820 $ 461,956 $ 960,342 - ------------------------ Net realized gain (loss) on investments, foreign currency transactions and futures contracts 483,971 (42,344) 511,538 285,298 39,445 891,432 - ------------------------ Net change in unrealized appreciation/ depreciation of investments, translation of assets and liablities in foreign currency, and futures contracts 1,694,128 526,658 767,013 784,728 594,290 (406,293) - ------------------------ ------------ ------------ ------------ ------------ ----------- ------------ Change in net assets resulting from operations 10,409,250 4,124,790 4,366,773 2,079,846 1,095,691 1,445,481 - ------------------------ ------------ ------------ ------------ ------------ ----------- ------------ DISTRIBUTIONS TO SHAREHOLDERS-- - ------------------------ Distributions from net investment income (8,210,879) (3,150,985) (3,088,222) (1,005,915) (445,952) (960,342) - ------------------------ Distributions from net realized gains (45,361) -- -- -- -- -- - ------------------------ Distributions in excess of net investment income -- -- (4,918) -- -- (8,706) - ------------------------ Tax return of capital -- (529,561) -- -- -- -- - ------------------------ ------------ ------------ ------------ ------------ ----------- ------------ Change in net assets resulting from distributions to shareholders (8,256,240) (3,680,546) (3,093,140) (1,005,915) (445,952) (969,048) - ------------------------ ------------ ------------ ------------ ------------ ----------- ------------ SHARE TRANSACTIONS-- - ------------------------ Proceeds from sale of shares 34,559,663 12,700,025 13,369,396 10,279,470 6,936,750 26,287,368 - ------------------------ Proceeds from shares issued in connection with the acquisition of Blanchard Short-Term Global Income Fund -- -- 174,188,041 -- -- -- - ------------------------ Net asset value of shares issued to shareholders in payment of distributions declared 7,218,527 3,194,311 2,652,603 919,487 411,088 750,232 - ------------------------ Cost of shares redeemed (68,087,183) (36,071,531) (37,161,711) (10,766,336) (8,149,963) (24,287,075) - ------------------------ ------------ ------------ ------------ ------------ ----------- ------------ Change in net assets resulting from share transactions (26,308,993) (20,177,195) 153,048,329 432,621 (802,125) 2,750,525 - ------------------------ ------------ ------------ ------------ ------------ ----------- ------------ Change in net assets (24,155,983) (19,732,951) 154,321,962 1,506,552 (152,386) 3,226,958 - ------------------------ NET ASSETS: - ------------------------ Beginning of period 158,033,518 177,766,469 23,444,507 22,570,134 22,722,520 19,495,562 - ------------------------ ------------ ------------ ------------ ------------ ----------- ------------ End of period $133,877,535 $158,033,518 $177,766,469 $ 24,076,686 $22,570,134 $ 22,722,520 - ------------------------ ------------ ------------ ------------ ------------ ----------- ------------ Undistributed net investment income included in net assets at end of period $ -- $ -- $ -- $ -- $ -- $ -- - ------------------------ ------------ ------------ ------------ ------------ ----------- ------------ Net gain (loss) as computed for federal tax purposes $ 483,971 $ 87,710 $ 493,015 $ -- $ -- $ -- - ------------------------ ------------ ------------ ------------ ------------ ----------- ------------
(See Notes which are an integral part of the Financial Statements) [This Page Intentionally Left Blank] 63 BLANCHARD GROUP OF FUNDS FINANCIAL HIGHLIGHTS - ------------------------------------------------------------------------------- (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
NET REALIZED AND DISTRIBUTIONS UNREALIZED FROM NET GAIN/(LOSS) REALIZED GAINS NET ON INVESTMENTS, ON INVESTMENTS, YEAR NET ASSET INVESTMENT FUTURES DISTRIBUTIONS DISTRIBUTIONS FUTURES ENDED VALUE INCOME/ CONTRACTS, AND TOTAL FROM FROM NET IN EXCESS OF TAX CONTRACTS, AND APRIL30/ BEGINNING OPERATING FOREIGN CURRENCY INVESTMENT INVESTMENT NET INVESTMENT RETURN FOREIGN CURRENCY SEPTEMBER 30, OF PERIOD (LOSS) TRANSACTIONS OPERATIONS INCOME INCOME(E) OF CAPITAL TRANSACTIONS - ------------- --------- ---------- ---------------- ---------- ------------- -------------- ---------- ---------------- BGGF 1993 $ 9.92 0.25 0.32 0.57 (0.30) -- -- (0.19) 1994 $10.00 0.03 1.29 1.32 -- -- -- (1.28) 1995 $10.04 0.08 (0.19) (0.11) -- -- -- -- 1996 $ 9.71 0.04 1.86 1.90 (0.04) (0.04) -- -- 1996(a) $11.53 0.08 0.13 0.21 -- -- -- -- 1997 $11.74 0.23 1.04 1.27 (0.21) -- -- (2.26) BPMF 1993 $ 5.04 (0.08)(h) 1.87(h) 1.79 -- -- -- -- 1994 $ 6.83 (0.11)(h) 2.01(h) 1.90 -- -- -- -- 1995 $ 8.73 (0.02) (0.41) (0.43) -- -- (0.09) (0.03) 1996 $ 7.12 (0.10) 2.75 2.65 -- -- -- -- 1996(a) $ 9.77 (0.10) (0.77) (0.87) -- -- -- -- 1997 $ 8.90 (0.02) (0.96) (0.98) (0.30) -- -- (2.25) BFIF 1993(b) $ 5.00 0.21 0.09 0.30 (0.21) -- -- -- 1994 $ 5.09 0.40 (0.17) 0.23 (0.36) -- (0.03) (0.08) 1995 $ 4.85 0.30 (0.13) 0.17 (0.00)(i) -- (0.31) -- 1996 $ 4.71 0.28 0.10 0.38 (0.31) -- -- -- 1996(a) $ 4.78 0.15 0.04 0.19 (0.13) -- (0.00)(i) -- 1997 $ 4.84 0.30 0.15 0.45 (0.30) -- (0.01) -- BSTFIF 1993(c) $ 3.00 0.00(i) 0.00(i) 0.00(i) (0.00)(i) -- -- (0.00)(i) 1994 $ 3.00 0.17 (0.06) 0.11 (0.17) -- -- (0.01) 1995 $ 2.93 0.15 -- 0.15 (0.14) (0.00)(i) -- -- 1996 $ 2.94 0.22 -- 0.22 (0.17) (0.00)(i) -- -- 1996(a) $ 2.99 0.07 0.01 0.08 (0.06) (0.00)(i) (0.01) -- 1997 $ 3.00 0.17 0.04 0.21 (0.17) -- -- (0.00)(i) BFTFBF 1994(d) $ 5.00 0.18 (0.20) (0.02) (0.18) -- -- (0.03) 1995 $ 4.77 0.24 0.26 0.50 (0.23) (0.01) -- -- 1996 $ 5.03 0.22 0.13 0.35 (0.22) -- -- -- 1996(a) $ 5.16 0.11 0.15 0.26 (0.11) -- -- -- 1997 $ 5.31 0.25 0.25 0.50 (0.25) -- -- -- DISTRIBUTIONS IN EXCESS OF NET REALIZED GAINS ON INVESTMENTS, YEAR FUTURES ENDED CONTRACTS, AND APRIL30/ FOREIGN CURRENCY SEPTEMBER 30, TRANSACTIONS(E) - ------------- ---------------- BGGF 1993 -- 1994 -- 1995 (0.22) 1996 -- 1996(a) -- 1997 -- BPMF 1993 -- 1994 -- 1995 (1.06) 1996 -- 1996(a) -- 1997 -- BFIF 1993(b) -- 1994 -- 1995 -- 1996 -- 1996(a) -- 1997 -- BSTFIF 1993(c) -- 1994 -- 1995 -- 1996 -- 1996(a) -- 1997 -- BFTFBF 1994(d) -- 1995 -- 1996 -- 1996(a) -- 1997 --
* Computed on an annualized basis. (a) The Funds have changed their fiscal year end from April 30 to September 30. Reflects operations for the period from May 1, 1996 to September 30, 1996. (b) Reflects operations for the period from November 2, 1992 (commencement of operations) to April 30, 1993. (c) Reflects operations for the period from April 16, 1993 (commencement of operations) to April 30, 1993. (d) Reflects operations for the period from August 12, 1993 (commencement of operations) to April 30, 1994. (e) Distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. These distributions do not represent a return of capital for federal income tax purposes. (f) Based on net asset value. (g) This voluntary expense decrease is reflected in both the expense and net investment income ratios shown above. (h) Calculated based on average shares outstanding-prior years amounts restated for comparative purposes. (i) Less than one cent per share. (j) Represents total commissions paid on portfolio securities divided by total portfolio shares purchased or sold on which commissions were charged. This disclosure is required for fiscal years beginning on or after September 1, 1995. (See Notes which are an integral part of the Financial Statements)
RATIOS TO AVERAGE NET ASSETS ------------------------------------ NET INVESTMENT NET ASSETS, NET ASSET INCOME/ EXPENSE END AVERAGE PORTFOLIO TOTAL VALUE, AND TOTAL OPERATING WAIVER/ OF PERIOD COMMISSIONS TURNOVER DISTRIBUTIONS OF PERIOD RETURN(F) EXPENSES (LOSS) REIMBURSEMENT(G) (000 OMITTED) RATE PAID(J) RATE - ------------- ---------- --------- -------- ---------- ---------------- ------------- ------------ --------- (0.49) $10.00 6.08% 2.40% 1.72% -- $ 84,780 -- 138% (1.28) $10.04 12.91% 2.61% 0.67% -- $109,805 -- 166% (0.22) $ 9.71 (1.04%) 2.51% 0.76% -- $ 87,088 -- 221% (0.08) $11.53 19.68% 2.54% 0.38% -- $ 71,182 -- 91% -- $11.74 1.91% 2.52%* 1.60%* -- $ 67,907 $0.0040 47% (2.47) $10.54 13.20% 2.39% 1.97% -- $ 62,197 $0.0049 49% -- $ 6.83 35.50% 3.24% (1.46%) -- $ 32,636 -- 66% -- $ 8.73 27.80% 2.46% (1.21%) -- $ 68,092 -- 174% (1.18) $ 7.12 (4.39%) 2.49% (1.48%) -- $ 75,282 -- 116% -- $ 9.77 37.03% 2.36% (1.27%) -- $129,289 -- 176% -- $ 8.90 (8.90%) 2.32%* (1.13%)* -- $ 87,888 $0.0199 36% (2.55) $ 5.37 (15.24%) 2.21% (0.45%) -- $ 67,037 $0.0125 97% (0.21) $ 5.09 6.17% 0.20%* 9.02%* -- $315,845 -- 129% (0.47) $ 4.85 4.11% 1.30% 7.10% -- $550,254 -- 346% (0.31) $ 4.71 3.74% 1.58% 6.52% -- $262,423 -- 455% (0.31) $ 4.78 8.06% 1.56% 6.06% -- $206,235 -- 347% (0.13) $ 4.84 3.95% 1.59%* 7.38%* 0.01%* $187,353 -- 87% (0.31) $ 4.98 9.53% 1.42% 6.26% -- $155,223 -- 101% (0.00)(i) $ 3.00 0.15% 3.03%* 3.89%* -- $ 2,000 -- 36% (0.18) $ 2.93 3.72% 0.63% 5.64% 1.42% $ 42,381 -- 212% (0.14) $ 2.94 5.34% 1.38% 4.80% 0.75% $ 23,445 -- 84% (0.17) $ 2.99 7.47% 1.44% 5.49% 0.40% $177,766 -- 291% (0.07) $ 3.00 2.61% 1.39%* 5.26%* 0.25%* $158,034 -- 21% (0.17) $ 3.04 7.24% 1.38% 5.63% 0.09% $133,878 -- 80% (0.21) $ 4.77 (0.48%) 0.00%* 6.79%* 2.22%* $ 23,267 -- 190% (0.24) $ 5.03 10.74% 1.00% 4.87% 1.17% $ 19,496 -- 170% (0.22) $ 5.16 6.86% 1.05% 4.43% 1.25% $ 22,723 -- 275% (0.11) $ 5.31 5.02% 1.01%* 4.83%* 1.23%* $ 22,570 -- 25% (0.25) $ 5.56 9.59% 1.00% 4.46% 1.05% $ 24,077 -- 163%
BLANCHARD GROUP OF FUNDS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1997 - ------------------------------------------------------------------------------- (1) ORGANIZATION Blanchard Group of Funds consists of Blanchard Funds (the "Trust") and Blanchard Precious Metals Fund, Inc. (the "Company") which are registered under the Investment Company Act of 1940, as amended (the "Act"), as open-end management investment companies. The Trust consists of six portfolios. The financial statements of the following portfolios (individually referred to as the "Fund", or collectively as the "Funds") are presented herein:
PORTFOLIO NAME DIVERSIFICATION INVESTMENT OBJECTIVE -------------- --------------- -------------------- Blanchard Global Growth Fund diversified Long-term capital growth. ("BGGF") Blanchard Precious Metal Fund, non- Long-term capital appreciation and Inc. ("BPMF") diversified preservation of purchasing power through investments in physical precious metals, such as gold, silver, platinum and palladium, and in securities of companies involved in precious metals. A secondary objective of the Fund is to reduce the risk of loss of capital and decrease the volatility often associated with precious metals investments by changing the allocation of its assets from precious metals securities to physical precious metals and/or investing in short-term instruments and government securities during periods when the Fund's portfolio manager believes the precious metals markets may experience declines. Blanchard Flexible Income Fund diversified High current income while seeking ("BFIF") opportunities for capital appreciation. Blanchard Short-Term Flexible diversified High current income while seeking Income Fund ("BSTFIF") opportunities for capital appreciation. Blanchard Flexible Tax-Free Bond diversified High level of current interest income Fund ("BFTFBF") exempt from federal income tax, consistent with the preservation of capital.
In addition, the Trust offers Blanchard Asset Allocation Fund which is presented separately. The assets of each portfolio are segregated and a shareholder's interest is limited to the portfolio in which shares are held. BLANCHARD GROUP OF FUNDS - ------------------------------------------------------------------------------- (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--Municipal bonds are valued by an independent pricing service, taking into consideration yield, liquidity, risk, credit quality, coupon, maturity, type of issue, and any other factors or market data the pricing service deems relevant. U.S. government securities, listed corporate bonds, other fixed income and asset-backed securities, and unlisted securities and private placement securities are generally valued at the mean of the latest bid and asked price as furnished by an independent pricing service. Listed equity foreign valued at the last sale price reported on a national securities exchange. Short-term foreign and domestic securities are valued at the prices provided by an independent pricing service. However, short-term foreign or domestic securities purchased with remaining maturities of sixty days or less may be valued at amortized cost, which approximates fair market value. Investments in open-end regulated investment companies are valued at net asset value. Foreign government and corporate bonds are valued at the last sales price reported on a national exchange. If the last sales price is not available the securities are valued at the mean of the latest bid and ask price as furnished by an independent pricing service. REPURCHASE AGREEMENTS--It is the policy of the Funds to require a custodian bank to take possession, to have legally segregated in the Federal Reserve Book Entry System, or to have segregated within the custodian bank's vault, all securities held as collateral under repurchase agreement transactions. Additionally, procedures have been established by the 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 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--Dividend income and distributions to shareholders are recorded on the ex-dividend date. Interest income and expenses are accrued daily. Bond premium and discount, if applicable, are amortized as required by the Internal Revenue Code, as amended (the "Code"). Distributions in excess of net investment income were the result of certain book and tax timing differences. These distributions do not represent a return of capital for federal income tax purposes. BLANCHARD GROUP OF FUNDS - ------------------------------------------------------------------------------- Income and capital gain distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. These differences are primarily due to differing treatments for foreign currency transactions. In addition, BPMF and BFIF reclassed a tax return of capital. The following reclassifications have been made to the financial statements as of September 30, 1997.
INCREASE (DECREASE) ------------------------------------------------------------- UNDISTRIBUTED NET INVESTMENT FUND PAID-IN ACCUMULATED NET INCOME/ DISTRIBUTIONS IN EXCESS NAME CAPITAL REALIZED GAIN/LOSS OF NET INVESTMENT INCOME ------------ --------- ------------------ ------------------------------- BGGF -- $ 11,606 $ (11,606) BPMF $ 120,846 (1,911,826) 1,790,980 BFIF (342,877) (258,682) 601,559
Net investment income, net realized gain/losses, 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. Withholding taxes on foreign interest have been provided for in accordance with the Fund's understanding of the applicable country's tax rules and rates. At September 30, 1997, BFIF, BSTFIF, and BFTFBF, for federal tax purposes, had capital loss carryforwards, as noted below, which will reduce the Funds 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 Funds of any liability for federal tax.
FUNDS TOTAL TAX LOSS CARRYFORWARD ------ --------------------------- BFIF $16,630,124 BSTFIF 9,125,862 BFTFBF 354,460
Pursuant to the Code, such capital loss carryforwards will expire as follows:
BFIF BSTFIF --------------------------------------------------------------------- EXPIRATION YEAR EXPIRATION AMOUNT EXPIRATION YEAR EXPIRATION AMOUNT --------------- ----------------- --------------- ----------------- 2002 $12,071,274 2003 $9,125,862 2003 3,223,064 2004 1,335,786
BFTFBF ------------------------------------ EXPIRATION YEAR EXPIRATION AMOUNT --------------- ----------------- 2003 $354,460
BLANCHARD GROUP OF FUNDS - ------------------------------------------------------------------------------- Additionally, net capital losses, as noted below, attributable to security transactions incurred after October 31, 1996 are treated as arising on October 1, 1997 the first day of the Funds' next taxable year.
FUND TOTAL TAX LOSS PUSHFORWARD ---- -------------------------- BPMF $4,504,362 BFIF 157,286
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Funds may engage in when-issued or delayed delivery transactions. The Funds record when-issued securities on the trade date and maintain security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased on a when-issued or delayed delivery basis are marked to market daily and begin earning interest on the settlement date. FUTURES CONTRACTS--BGGF 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 September 30, 1997, BGGF had realized gains on futures contracts of $5,426,009. 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 September 30, 1997, BGGF had outstanding futures contracts as set forth below:
UNREALIZED EXPIRATION APPRECIATION DATE CONTRACTS TO RECEIVE POSITION (DEPRECIATION) ----------- -------------------- -------- -------------- December 1997 20 S&P 500 Long $332,326 December 1997 4 Long Gilt Long 17,265 December 1997 5 Notional Long 3,412 December 1997 7 CAC 40 Long 773 December 1997 7 Bund Long 15,831 December 1997 3 DAX Long 28,979 December 1997 221 Nikkei 300 Long (195,176) December 1997 12 T Bond Long 43,438 December 1997 11 T Note Long 20,875 December 1997 5 ALL--Ords Long 253 December 1997 5 FT-SE Long 81,577 -------- Net Unrealized Appreciation on Futures Contracts $349,553
FOREIGN EXCHANGE CONTRACTS--BGGF, BPMF, BFIF, and BSTFIF may enter into foreign currency exchange contracts as a way of managing foreign exchange rate risk. BGGF, BPMF, BFIF, and BSTFIF may enter into these contracts for the purchase or sale of a specific foreign currency at a BLANCHARD GROUP OF FUNDS - ------------------------------------------------------------------------------- fixed price on a future date as a hedge or cross hedge against either specific transactions or portfolio positions. The objective of the Funds foreign currency hedging transactions is to reduce the risk that the U.S. dollar value of the Funds foreign currency denominated securities will decline in value due to changes in foreign currency exchange rates. All foreign currency exchange contracts are "marked to market" daily at the applicable translation rates resulting in unrealized gains or losses. Realized gains or losses are recorded at the time the foreign currency exchange contract is offset by entering into a closing transaction or by the delivery or receipt of the currency. Risk may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of their contracts and from unanticipated movements in the value of a foreign currency relative to the U.S. dollar. At September 30, 1997, only BGGF and BFIF had outstanding foreign exchange contracts as set forth below: BGGF
CONTRACTS TO IN UNREALIZED SETTLEMENT DELIVER/ EXCHANGE CONTRACTS AT APPRECIATION DATE RECEIVE FOR VALUE (DEPRECIATION) ---------------- ------------ ----------- ------------ -------------- CONTRACTS PURCHASED: Australian Dollar 10/2/97 517,000 $ 388,913 $ 387,621 $ 1,292 Australian Dollar 1/5/98 330,000 240,059 240,195 (136) Swiss Franc 10/2/97 7,812,500 5,368,856 5,372,931 (4,075) Deutsche Mark 12/23/97 3,787,600 2,147,104 2,155,278 (8,174) French Franc 10/2/97-1/5/98 15,903,400 2,662,152 2,687,859 (25,707) British Pound 12/23/97 907,200 1,457,870 1,457,897 (27) Netherlands Guilder 10/2/97 3,975,000 1,998,692 1,997,458 1,234 CONTRACTS SOLD: Swiss Franc 10/2/97-12/23/97 14,772,000 10,111,286 10,205,532 94,246 Deutsche Mark 12/23/97 971,000 552,489 552,533 44 French Franc 10/2/97 9,246,200 1,553,066 1,558,737 5,671 British Pound 12/23/97 127,000 204,286 204,093 (193) Japanese Yen 12/18/97 414,228,700 3,460,752 3,472,727 11,975 Netherlands Guilder 10/2/97-12/23/97 7,950,000 3,931,396 4,005,276 73,880 -------- Net Unrealized Appreciation on Foreign Exchange Contracts $150,030 ========
BLANCHARD GROUP OF FUNDS - ------------------------------------------------------------------------------- BFIF
IN UNREALIZED SETTLEMENT CONTRACTS TO EXCHANGE CONTRACTS AT APPRECIATION DATE DELIVER/RECEIVE FOR VALUE (DEPRECIATION) ---------- --------------- ---------- ------------ -------------- Contracts Sold: Canadian Dollar 12/15/97 2,200,000 $1,591,320 $1,598,759 ($7,439) ------- Net Unrealized Depreciation on Foreign Exchange Contracts ($7,439) -------
FOREIGN CURRENCY TRANSLATION--The accounting records of the Funds 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 Funds 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 of portfolio securities, 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. RESTRICTED SECURITIES--Restricted securities are securities that may only be resold upon registration under federal or international securities laws or in transactions exempt from such registration. In some cases, the issuer of restricted securities has agreed to register such securities for resale, at the issuer's expense either upon demand by the Fund or in connection with another registered offering of the securities. Many restricted securities may be resold in the secondary market in transactions exempt from registration. Such restricted securities may be determined to be liquid under criteria established by the Board of Trustees. The Fund will not incur any registration costs upon such resales. The Funds' restricted securities are valued at the price provided by dealers in the secondary market or, if no market prices are available, at the fair value as determined by the Fund's pricing committee. BLANCHARD GROUP OF FUNDS - ------------------------------------------------------------------------------- Additional information on each restricted security held by BGGF at September 30, 1997 is as follows:
SECURITY ACQUISITION DATE ACQUISITION COST ----------------------------- ---------------- ---------------- Chilectra S.A. ADR 7/19/96 $91,177 Daewoo Heavy Industries, Pfd. 2/3/95-4/12/95 49,952 Samsung Electronics Co., GDR 1/3/95 917 Dong Bang Forwarding Co. 2/3/95-5/29/95 74,380
Additional information on each restricted security held by BPMF at September 30, 1997 is as follows:
SECURITY ACQUISITION DATE ACQUISITION COST --------------------------- ----------------- ---------------- Eldorado Gold Corp. Ltd. 04/08/96-08/14/97 $433,523 Geomaque Explorations Ltd., Warrants 3/11/97 827,565 Lone Star Exploration 2/26/96-3/26/97 587,746
Additional information on each restricted security held by BFIF at September 30, 1997 is as follows:
SECURITY ACQUISITION DATE ACQUISITION COST --------------------------- ------------------ ---------------- Calpine Corp. 7/2/1997 $ 996,412 Nine West Group, Inc. 7/1/1997 999,012 Stone Container Finance Co. 8/9/1996 2,000,000 Tucson Electric Power Co. 2/10/1993-12/22/93 2,098,170
CHANGE IN FISCAL YEAR--The Funds changed their fiscal year-end from April 30 to September 30 beginning May 1, 1996. DEFERRED EXPENSES--The costs incurred by each 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 over a period not to exceed five years from each Fund's commencement date. USE OF ESTIMATES--The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ from those estimated. OTHER--Investment transactions are accounted for on the trade date. BLANCHARD GROUP OF FUNDS - ------------------------------------------------------------------------------- (3) SHARES OF BENEFICIAL INTEREST The Articles of Incorporation permit the Directors to issue an unlimited number of full and fractional shares of beneficial interest (without par value). Transactions in shares were as follows:
BGGF BPMF --------------------------------------- ------------------------------------------ YEAR ENDED PERIOD ENDED YEAR ENDED YEAR ENDED PERIOD ENDED SEPTEMBER 30, SEPTEMBER 30, APRIL 30, SEPTEMBER 30, SEPTEMBER 30, YEAR ENDED 1997 1996 1996 1997 1996 APRIL 30, 1996 ------------- ------------- ----------- ------------- ------------- -------------- Shares sold 973,160 748,872 559,635 9,876,823 3,728,778 11,891,108 Shares issued to shareholders in payment of distributions declared 1,381,403 -- 52,311 3,428,378 -- -- Shares redeemed (2,237,898) (1,137,138) (3,413,086) (10,697,610) (7,081,402) (9,230,002) ----------- ----------- ----------- ----------- ----------- ----------- Net change resulting from share transactions 116,665 (388,266) (2,801,140) 2,607,591 (3,352,624) 2,661,106 =========== =========== =========== =========== =========== =========== BFIF BSTFIF --------------------------------------- ------------------------------------------ YEAR ENDED PERIOD ENDED YEAR ENDED YEAR ENDED PERIOD ENDED YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, APRIL 30, SEPTEMBER 30, SEPTEMBER 30, APRIL 30, 1997 1996 1996 1997 1996 1996 ------------- ------------- ----------- ------------- ------------- -------------- Shares sold 6,828,666 2,777,685 12,498,920 11,452,843 4,248,564 4,477,310 Shares issued in connection with the acquisition of Blanchard Short-Term Global Income Fund -- -- -- -- -- 57,869,781 Shares issued to shareholders in payment of distributions declared 1,711,576 844,211 2,424,612 2,391,887 1,070,524 888,044 Shares redeemed (16,127,237) (8,034 ,939) (27,527,713) (22,560,468) (12,096,346) (11,691,202) ----------- ----------- ----------- ----------- ----------- ----------- Net change resulting from share transactions (7,586,995) (4,413,043) (12,604,181) (8,715,738) (6,777,258) 51,543,933 =========== =========== =========== =========== =========== =========== BFTFBF --------------------------------------- YEAR ENDED PERIOD ENDED YEAR ENDED SEPTEMBER 30, SEPTEMBER 30, APRIL 30, 1997 1996 1996 ------------- ------------- ----------- Shares sold 1,901,018 1,341,280 5,015,985 Shares issued to shareholders in payment of distributions declared 169,611 78,775 142,764 Shares redeemed (1,995,557) (1,571,250) (4,631,991) ----------- ----------- ----------- Net change resulting from share transactions 75,072 (151,195) 526,758 =========== =========== ===========
BLANCHARD GROUP OF FUNDS - ------------------------------------------------------------------------------- (4) MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES MANAGEMENT FEE--Virtus Capital Management, Inc., the Trust's manger (the "Manager"), receives for its services an annual management fee based on a percentage of each Fund's average daily net assets (see below).
FUND ANNUAL RATE ------ ----------------------------------------------------------------------- BGGF 1.00% of the first 150 million, 0.875% of the excess of 150 million but not exceeding 300 million, 0.75% in excess of 300 million BPMF 1.00% of the first 150 million, 0.875% of the excess of 150 million but not exceeding 300 million, 0.75% in excess of 300 million BFIF 0.75% BSTFIF 0.75% BFTFBF 0.75%
The Manager may voluntarily choose to waive a portion of its fee. The Manager can modify or terminate this voluntary waiver at any time at its sole discretion. SUB-ADVISORY FEE--To provide portfolio advisory services for the Funds, the Manager has entered into sub-advisory agreements with the sub-advisers listed below. Under the terms of each sub-advisory agreement, the Manager will pay each sub-adviser a fee based on a percentage of each Fund's average daily net assets (see below).
FUND SUB-ADVISER ANNUAL RATE ------ --------------------------------------- ------------------------------- BGGF Mellon Capital Mortgage Corp. 0.375% of the first $100 million, 0.350% of the excess of $100 million but not exceeding $150 million, 0.325% of the excess of $150 million BPMF Cavelti Capital Management, Ltd. 0.30% of the first $150 million, 0.2625% of the excess of $150 million but less than $300 million, and 0.255% in excess of $300 million BFIF OFFITBANK 0.30% of the first $25 million, 0.25% of the next $25 million, and 0.20% in excess of $50 million BSTFIF OFFITBANK 0.30% of the first $25 million, 0.25% of the next $25 million, and 0.20% in excess of $50 million BFTFBF United States Trust Company of New York 0.20%
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS"), under the Administrative Services Agreement, provides the Funds with administrative personnel and services. The fee paid to FAS is based on the level of average aggregate daily net assets of the Funds and The Virtus Funds for the period. FAS may voluntarily choose to waive a portion of its fee. The administrative fee received during the period of the Administrative Services Agreement shall be at least $75,000 per portfolio. FAS can modify or terminate this voluntary waiver at any time at its sole discretion. DISTRIBUTION SERVICES FEE--The Trust has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, each Fund will reimburse Federated Securities Corp. ("FSC"), the principal distributor, from the net assets of the Fund to finance activities intended to BLANCHARD GROUP OF FUNDS - ------------------------------------------------------------------------------- result in the sale of the Fund's Investment Shares. The Plan provides that the Funds may incur distribution expenses up to 0.25% of the average daily net assets of the BFIF, BSTFIF, and BFTFBF and up to 0.75% of the average daily net assets of BGGF and BPMF, annually, to reimburse 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 AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated Services Company ("FServ"), through its subsidiary, Federated Shareholder Services Company ("FSSC") serves as transfer and dividend disbursing agent for the Funds. The fee paid to FSSC is based on the size, type, and number of accounts and transactions made by shareholders. PORTFOLIO ACCOUNTING FEES--FServ also maintains the Funds' accounting records for which it receives a fee. The fee is based on the level of each Fund's average net assets for the period, plus out-of-pocket expenses. CUSTODIAN FEES--Signet Trust Company is the Funds' custodian for which it receives a fee. The fee is based on the level of each Fund's average net assets for the period, plus out-of-pocket expenses. ORGANIZATIONAL EXPENSES--The Funds' Manager paid the organization expenses of the Funds listed below incurred prior to the public offering of its shares. The Funds reimbursed the Manager for these expenses and has deferred and is amortizing such expenses over five years from the date of commencement of the Funds operations. Organizational expenses paid is as follows:
FUND ORGANIZATIONAL EXPENSES - ------ ----------------------- BFIF $151,712 BSTFIF 80,724 BFTFBF 89,448
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 year ended September 30, 1997 were as follows:
FUND PURCHASES SALES - ------ ------------ ----------- BGGF $ 44,853,363 $18,165,537 BPMF 63,481,368 66,049,224 BFIF 164,757,771 202,202,473 BSTFIF 109,275,828 128,141,491 BFTFBF 35,259,413 35,460,535
BLANCHARD GROUP OF FUNDS - ------------------------------------------------------------------------------- (6) CONCENTRATION OF CREDIT RISK BGGF, BPMF, and BFIF invest in securities of non-U.S. issuers. 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. (7) PROPOSED FUND MERGER On July 18, 1997, Signet Banking Corporation ("Signet") entered into a definitive Agreement and Plan of Reorganization whereby Signet was acquired by First Union Corporation ("First Union"). It is anticipated that the merger will be consummated on or about November 28, 1997. As a result of this First Union merger, First Union will succeed to the investment advisory and functions formerly performed for the Funds by various units of Signet and various unaffiliated parties. The Board of Trustees/Directors of the Funds has approved an Agreement and Plan of Reorganization pursuant to which, on or about February 27, 1998, all of the assets, and certain liabilities of the Funds would be acquired in exchange for shares of similarly managed funds (the "Acquiring Funds") that is advised by affiliates of First Union. The reorganization would result in the liquidation and termination of the Funds. Pursuant to the reorganization, shareholders of the Funds will receive, tax-free, the number of shares of the Acquiring Funds having a value equal to the value of their shares immediately prior to the reorganization. Consummation of the reorganization is subject to approval of the shareholders of the Funds. INDEPENDENT AUDITORS' REPORT - ------------------------------------------------------------------------------- To the Board of Trustees and Shareholders of Blanchard Group of Funds: We have audited the accompanying statements of assets and liabilities, including the portfolios of investments, of Blanchard Group of Funds (comprising the following portfolios: Blanchard Global Growth Fund, Blanchard Precious Metals Fund, Inc., Blanchard Flexible Income Fund, Blanchard Short- Term Flexible Income Fund, Blanchard Flexible Tax-Free Bond Fund) as of September 30, 1997, and the related statements of operations for the year then ended, the statements of changes in net assets for the year ended September 30, 1997 and the period ended September 30, 1996, and the financial highlights for the periods ended in 1997 and 1996. The financial highlights for the periods ended in 1993, 1994 and 1995 were audited by other auditors, whose reports thereon dated June 20, 1995, expressed an unqualified opinion. These financial statements and financial highlights are the responsibility of the Trust'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 the securities owned as of September 30, 1997 by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. 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, such financial statements and financial highlights present fairly, in all material respects, the financial position of Blanchard Group of Funds as of September 30, 1997, the results of its operations, the changes in its net assets and its financial highlights for the respective stated periods in conformity with generally accepted accounting principles. As more fully described in Note 7, in November, 1997 the Funds are expected to enter into an Agreement and Plan of Reorganization, pursuant to which (subject to Fund shareholder approval) on or about February 27, 1998, all of the assets, and certain liabilities of the Funds would be acquired in exchange for shares of similarly managed funds that are advised by affiliates of First Union Corporation. The reorganization would result in the liquidation and termination of the Funds. Deloitte & Touche LLP Pittsburgh, Pennsylvania November 7, 1997 TRUSTEES/DIRECTORS OFFICERS - -------------------------------------------------------------------------------- John F. Donahue John F. Donahue Thomas G. Bigley Chairman John T. Conroy, Jr. Edward C. Gonzales William J. Copeland President and Treasurer James E. Dowd J. Christopher Donahue Lawrence D. Ellis, M.D. Executive Vice President Edward L. Flaherty, Jr. John W. McGonigle Edward C. Gonzales Executive Vice President and Peter E. Madden Secretary John E. Murray, Jr. Joseph S. Machi Wesley W. Posvar Vice President and Assistant Marjorie P. Smuts Treasurer Richard B. Fisher Vice President C. Grant Anderson Assistant Secretary This report is authorized for distribution to prospective investors only when preceded or accompanied by the fund's prospectus which contain facts concerning its objective and policies, management fees, expenses and other information. PORTFOLIO ADVISERS B L A N C H A R D Global Growth Fund GLOBAL GROWTH FUND Mellon Capital Management Corp. Precious Metals Fund, Inc. PRECIOUS METALS FUND, INC. Cavelti Capital Management Ltd. Flexible Income Fund FLEXIBLE INCOME FUND OFFITBANK Short-Term Flexible Income Fund SHORT-TERM FLEXIBLE INCOME FUND OFFITBANK Flexible Tax-Free Bond Fund FLEXIBLE TAX-FREE BOND FUND United States Trust Company of New York The Blanchard Group of Funds are available through Signet(R) Financial Services, Inc., member NASD, and are advised by an affiliate, Virtus Capital Management, Inc., which is compensated for this service. - --------------------------------------------- INVESTMENT PRODUCTS ARE NOT DEPOSITS, OBLIGATIONS OF, OR GUARANTEED BY ANY BANK. THEY ARE NOT INSURED BY THE FDIC. THEY INVOLVE RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL INVESTED. - --------------------------------------------- Federated Securities Corporation is the ANNUAL REPORT distributor of the Funds. SEPTEMBER 30, 1997 Managed by: Virtus Capital Management, Inc. G01684-12 CUSIP 093212603/093212405/093265106/093212306/093254100 (2431)AR1197 A1. The graphic presentation here displayed consists of a line graph. The corresponding components of the line graph are listed underneath. Blanchard Global Growth Fund (the "Fund") is represented by a broken line. The Standard & Poor's 500 Index (the "S&P 500") is represented by a solid line. The line graph is a visual representation of a comparison of change in value of a $10,000 hypothetical investment in the Fund and the S&P 500. The "x" axis reflects computation periods from 4/30/98 to 9/30/97. The "y" axis reflects the cost of the investment. The right margin reflects the ending value of the hypothetical investment in the Fund as compared to the S&P 500; the ending values were $20,006 and $44,582, respectively. The legend in the upper middle quadrant of the graphic presentation indicates the Fund's Average Annual Total Return for the one-year, five-year, ten-year and the since inception (6/1/86) periods ended 9/30/97, which were 13.20%, 10.51%, 6.44% and 8.97%, respectively. A2. The graphic presentation here displayed consists of a line graph. The corresponding components of the line graph are listed underneath. Blanchard Precious Metals Fund (the "Fund") is represented by a broken line. The Toronto Stock Exchange Gold & Silver Index is represented by a solid line. The line graph is a visual representation of a comparison of change in value of a $10,000 hypothetical investment in the Fund and the Toronto Stock Exchange Gold & Silver Index. The "x" axis reflects computation periods from 6/23/88 to 9/30/97. The "y" axis reflects the cost of the investment. The right margin reflects the ending value of the hypothetical investment in the Fund as compared to the Toronto Stock Exchange Gold & Silver Index; the ending values were $11,167and $13,936, respectively. The legend in the upper middle quadrant of the graphic presentation indicates the Fund's Average Annual Total Return for the one-year, five-year, and the since inception (6/23/88) periods ended 9/30/97, which were (15.24%), 9.96%, and 1.27%, respectively. A3. The graphic presentation here displayed consists of a line graph. The corresponding components of the line graph are listed underneath. Blanchard Flexible Income Fund (the "Fund") is represented by a broken line. The Merrill Lynch Aggregate Bond Index is represented by a solid line. The line graph is a visual representation of a comparison of change in value of a $10,000 hypothetical investment in the Fund and the Merrill Lynch Aggregate Bond Index. The "x" axis reflects computation periods from 11/2/92 to 9/30/97. The "y" axis reflects the cost of the investment. The right margin reflects the ending value of the hypothetical investment in the Fund as compared to the Merrill Lynch Aggregate Bond Index; the ending values were $14,003 and $14,387, respectively. The legend in the upper middle quadrant of the graphic presentation indicates the Fund's Average Annual Total Return for the one-year, and the since inception (11/2/92) periods ended 9/30/97, which were 9.53% and 7.25%, respectively. A4. The graphic presentation here displayed consists of a line graph. The corresponding components of the line graph are listed underneath. Blanchard Short-Term Flexible Income Fund (the "Fund") is represented by a broken line. The Merrill Lynch Short-Term Govenment Index is represented by a solid line. The line graph is a visual representation of a comparison of change in value of a $10,000 hypothetical investment in the Fund and the Merrill Lynch Short-Term Govenment Index. The "x" axis reflects computation periods from 4/16/93 to 9/30/97. The "y" axis reflects the cost of the investment. The right margin reflects the ending value of the hypothetical investment in the Fund as compared to the Merrill Lynch Short-Term Govenment Index; the ending values were $12,940 and $12,709, respectively. The legend in the upper middle quadrant of the graphic presentation indicates the Fund's Average Annual Total Return for the one-year, and the since inception (4/16/93) periods ended 9/30/97, which were 7.24% and 5.95%, respectively. A5. The graphic presentation here displayed consists of a line graph. The corresponding components of the line graph are listed underneath. Blanchard Flexible Tax-Free Bond Fund (the "Fund") is represented by a broken line. The Lehman Brothers Current Municipal Bond Index is represented by a solid line. The line graph is a visual representation of a comparison of change in value of a $10,000 hypothetical investment in the Fund and the Lehman Brothers Current Municipal Bond Index. The "x" axis reflects computation periods from 8/12/93 to 9/30/97. The "y" axis reflects the cost of the investment. The right margin reflects the ending value of the hypothetical investment in the Fund as compared to the Lehman Brothers Current Municipal Bond Index; the ending values were $13,553 and $12,485, respectively. The legend in the upper middle quadrant of the graphic presentation indicates the Fund's Average Annual Total Return for the one-year, and the since inception (8/12/93) periods ended 9/30/97, which were 9.59% and 7.63%, respectively. A6. The graphic presentation here displayed consists of a line graph. The corresponding components of the line graph are listed underneath. Blanchard Asset Alocation Fund (the "Fund") is represented by a broken line. The Standard & Poor's 500 Index (the "S&P 500") is represented by a solid line. The line graph is a visual representation of a comparison of change in value of a $10,000 hypothetical investment in the Fund and the S&P 500. The "x" axis reflects computation periods from 6/6/96 to 9/30/97. The "y" axis reflects the cost of the investment. The right margin reflects the ending value of the hypothetical investment in the Fund as compared to the S&P 500; the ending values were $14,534 and $14,571, respectively. The legend in the upper middle quadrant of the graphic presentation indicates the Fund's Average Annual Total Return for the one-year and the since inception (6/6/96) periods ended 9/30/97, which were 38.64%, 33.03%, respectively. -----END PRIVACY-ENHANCED MESSAGE-----