-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, d569gs30/srur5qfS7mq4SvoSeGJ48F/en34hSrgHV3q4JavggROwH1jOvEI1Iw2 E+P7eGQoFWXVCVqzECSAiQ== 0000950007-95-000092.txt : 199507050000950007-95-000092.hdr.sgml : 19950705 ACCESSION NUMBER: 0000950007-95-000092 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950430 FILED AS OF DATE: 19950703 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: 1940 Act SEC FILE NUMBER: 811-04579 FILM NUMBER: 95551852 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 ANNUAL REPORT Dear Shareholders, Enclosed you will find the Annual Report for your Blanchard American Equity Fund for the fiscal year ending April 30, 1995. As you know, the investment objective of the Fund is to seek long-term price appreciation through a portfolio of high-quality securities of well-established "growth" companies. These companies have a history of consistent and sustainable revenue and earnings growth, regardless of the economic environment. Other superior financial characteristics of the stocks in the Fund's portfolio include excellent pre-tax margins, high returns on equity, and high-dividend growth rates. The Year In Review The equity markets have advanced during the first quarter of calendar 1995, pushing both the Dow Jones and the S&P 500 indices to record levels. As the quarter progressed, investors gained confidence that the economy was beginning to slow in reaction to the Federal Reserve's seven interest rate increases over the last year. Evidence of slowing economic growth convinced investors that long-term rates had probably peaked during this cycle. As a result, the market shrugged off weakness in the dollar and the economic crisis in Mexico and concentrated on the favorable implications of a domestic "soft landing". The Fund has advanced in a similar fashion, although it has trailed the S&P 500 index. The technology sector showed continued strength, as did telecommunications, financial and gaming-related issues. This was partially offset by the underperformance of issues in the retail and HMO industries. The dramatic move that the market made during the first quarter of 1995 stands in stark contrast to the preceding nine months, during which the market was constantly The following information was reprint as a line graph. The Value of a $10,000 Investment in the Blanchard American Equity Fund inception 11/2/92 through 4/30/95 as compared to the Standard & Poor's 500 for the same period ----------------------------------------- Avg. Annual Returns through 4/30/95 Blanchard American Equity Fund* ----------------------------------------- 1 year 4.83% since inception -0.51% ----------------------------------------- FYE 4/30/93 FYE 4/30/94 FYE 4/30/95 AEF -9.00% 3.52% 4.83% S&P 500 6.60% 5.33% 17.40% $9,925 $ 9,032 9,350 $ 9,801 $10,000 $10,660 $11,228 $13,182 Reflects deduction of $75 acct opening fee Blanchard Standard American Equity & Poor's Fund^ 500(D) *The average annual returns quoted above reflect reinvestment of distributions but do not reflect the deduction of the account opening fee. If fee was reflected, the returns would be lower. The total return includes changes in principal value. The average annual return is total return annualized and compounded. Past performance is no guarantee of future results. (D)Source: S&P 500 is an unmanaged composite index of U.S. stock market performance. ^Reflects deduction of the one-time account opening fee of $75. This chart is for comparative purposes only and is not intended to reflect on future performance of the index or the BAEF. (over, please) battling to overcome the interest rate increases by the Federal Reserve. These nine months were characterized by extreme volatility in the prices of individual stocks and overall returns which were disappointing for both the Fund and the market. Investment Outlook At Provident we continue to focus on company fundamentals. Relative to the market, the companies in your portfolio _ such as Microsoft and Motorola, two of the Fund's top ten holdings as of this writing, 5/22/95 _ generate superior revenue growth, earnings growth and returns on equity. Naturally, past performance of these companies or of the Fund itself is no guarantee of future results. As with any stock mutual fund, principal value and investment return will vary with market conditions so that shares, when redeemed, may be worth more or less than their original purchase price. However, with a relative valuation in the lower part of its historical range, we believe your portfolio is well positioned for future performance. In addition, initial signs that the economy is beginning to slow should make earnings gains by cyclical companies more difficult. Evidence of a peak in cyclical earnings is supported by the fact that the ratio of earnings estimate increases versus decreases for economically sensitive stocks appears to have peaked last quarter. This scenario favors the growth stocks in which your portfolio invests _ companies whose earnings potential has traditionally been unaffected by cyclical changes in the economy. While there can be no assurances of success, we enter the current year with a great deal of optimism about the prospects for your Blanchard American Equity Fund, and we look forward to reporting strong results to you at this time next year. Sincerely, JM:ml Jeffrey Miller Managing Director Provident Investment Counsel Portfolio Managers of the Blanchard American Equity Fund Distributed by Sheffield Investments, Inc. (1551) 04ARSL0695 BLANCHARD AMERICAN EQUITY FUND-PORTFOLIO OF INVESTMENTS April 30, 1995 (Left Column) Shares Value ------ ----- EQUITY SECURITIES (97.15%) Auto Parts (1.73%) *Autozone, Inc. ..................... 7,200 $ 166,500 --------- Building Products (3.80%) Home Depot, Inc. ................... 8,767 366,022 --------- Broadcast, Radio & TV (3.16%) Capital Cities/ABC, Inc. ........... 3,600 304,200 --------- Computer Software & Service (16.65%) *Analog Devices, Inc. ............... 4,800 129,000 Automatic Data Processing, Inc. .... 2,800 179,900 *Cabletron Systems, Inc. ............ 2,350 111,625 Computer Associates International, Inc. .............. 2,200 141,625 *Computer Sciences Corp. ............ 2,200 108,625 *Microsoft, Inc. 6,000 490,500 *Oracle System Corp. ................ 12,600 384,300 Paychex, Inc. ...................... 1,200 57,150 --------- 1,602,725 --------- Electronics & Electrical (15.70%) *Applied Material, Inc. ............. 3,000 184,875 Hewlett Packard .................... 2,800 185,150 Intel Corp. ........................ 3,500 358,312 Molex Inc.-Cl. A ................... 750 27,000 Motorola, Inc. ..................... 6,300 358,313 Nokia Corp. (ADR) .................. 6,800 278,800 Sensormatics Electronics Corp. ..... 4,000 119,000 --------- 1,511,450 --------- Employment Services (.94%) Manpower Inc. ...................... 2,700 90,112 --------- Entertainment & Leisure (1.32%) *British Sky Broadcasting (ADR) ..... 2,400 57,600 *Hospitality Franchise System, Inc. . 2,300 69,863 --------- 127,463 --------- Environmental Control (.82%) Browning-Ferris Industries, Inc. ... 2,400 79,200 --------- Financial Services (13.51%) Federal Home Loan Mortgage Corp. ............................ 1,300 84,825 Federal National Mortgage Association ...................... 2,500 220,625 First Financial Management Corp. ... 1,700 124,312 First USA, Inc. .................... 3,400 144,500 First Data Corporation ............. 5,130 288,563 Finova Group Corp. ................. 3,400 114,750 MBNA Corp. ......................... 10,700 323,675 --------- 1,301,250 --------- Funeral Services (1.32%) Loewen Group, Inc. ................. 4,500 126,914 --------- Gaming (1.14%) *Circus Circus Enterprises, Inc. .... 3,300 109,312 --------- (Right Column) Shares Value ------ ----- Health Maintenance (6.92%) *Humana, Inc. ....................... 7,300 $ 142,350 U.S. Healthcare, Inc. .............. 6,975 186,581 United Healthcare Corp. ............ 9,300 337,125 --------- 666,056 --------- Insurance (3.15%) American International Group Inc. .. 800 85,400 MGIC Investment Corp. .............. 4,000 169,500 PMI Group .......................... 1,300 48,425 --------- 303,325 --------- Medical Services (3.32%) Cardinal Health, Inc. .............. 1,600 73,800 Medtronic, Inc. .................... 2,500 185,937 Sun Healthcare Group, Inc. ......... 2,500 60,313 --------- 320,050 --------- Natural Gas Products & Pipe (3.64%) Enron Corp. ........................ 10,300 350,200 --------- Office & Business Equipment (3.38%) Alco Standard Corporaion ........... 1,200 85,050 *Office Depot, Inc. ................. 7,550 171,763 Pittson Services Group ............. 2,900 68,875 --------- 325,688 --------- Pharmaceuticals (.79%) *Scherer R P Corp. .................. 1,600 76,400 --------- Real Estate (1.53%) Equity Residential Prop. Trust ..... 5,500 147,125 --------- Restaurants (1.27%) McDonalds Corp. .................... 3,500 122,500 --------- Retail (5.77%) Lowe's Cos. ........................ 3,100 89,513 Talbots Inc. ....................... 1,600 48,600 Tyco International ................. 2,300 120,750 Wal-Mart Stores, Inc. .............. 12,500 296,875 --------- 555,738 --------- Telecommunications (7.29%) *ALC Communications Corp. ........... 2,600 99,125 *Andrew Corp. ....................... 1,900 94,050 Ericsson L M Tel Co. Cl. B (ADR) ... 5,500 368,844 *General Instrument Corp. ........... 4,100 139,912 --------- 701,931 --------- TOTAL EQUITY SECURITIES (IDENTIFIED COST $7,973,450) ........ 9,354,161 --------- TOTAL INVESTMENTS (IDENTIFIED COST $7,973,450)(a)(97.15%) ............ 9,354,161 --------- CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES (2.85%) ........................... 274,182 --------- NET ASSETS (100%) ................... $9,628,343 ========== (a)The aggregate cost for federal income tax purposes is $8,041,793; the aggregate gross unrealized appreciation is $1,627,094; and the gross depreciation is $314,726; resulting in net unrealized appreciation of $1,312,368. *Non-income producing. See notes to financial statements. 3 BLANCHARD AMERICAN EQUITY FUND Statement of Assets and Liabilities April 30, 1995 Assets: Investments in securities, at value (Identified Cost $7,973,450) (note 1) ......................... $9,354,161 Cash ............................................................ 28,264 Receivables for: Investments sold .............................................. 296,726 Shares of beneficial interest sold ............................ 30,345 Dividends ..................................................... 3,074 Reimbursement from Manager .................................... 6,000 Deferred organizational costs (note 1) .......................... 66,484 ---------- Total assets ............................................. 9,785,054 ---------- Liabilities: Payables for: Investments purchased ......................................... 47,767 Shares of beneficial interest repurchased ..................... 74,217 Accrued expenses and other liabilities .......................... 34,727 ---------- Total liabilities ........................................ 156,711 ---------- Net assets ............................................... $9,628,343 ========== Net assets are comprised of: Paid in capital (unlimited authorized shares of beneficial interest, $.01 par value, 1,000,269 shares outstanding) ................. $9,219,364 Accumulated realized loss ....................................... (959,867) Accumulated net investment loss ................................. (11,865) Unrealized net appreciation on investments ...................... 1,380,711 ---------- Net assets ............................................... $9,628,343 ========== Net asset value per share ................................ $9.63 ===== See notes to financial statements. 4 BLANCHARD AMERICAN EQUITY FUND Statement of Operations For the Year Ended April 30, 1995 Investment income: Dividends $107,980 Interest 30,332 -------- Total income 138,312 -------- Expenses: Investment management fee (note 2) ................. $ 128,735 Transfer agent fees (note 5) ....................... 60,949 Plan of distribution fee (note 3) .................. 58,516 Accounting fees (note 5) ........................... 53,300 Professional fees .................................. 40,465 Organizational expenses ............................ 26,588 Custodian fees ..................................... 24,508 Shareholder reports and notices .................... 19,700 Registration fees .................................. 19,400 Trustees' fees, retirement plan curtailment and other expenses (note 5) .......................... 16,782 Other .............................................. 747 --------- Total expenses ........................... 449,690 Less: Expenses waived by Manager (note 2) .......... (92,524) --------- Net expenses ....................................... 357,166 -------- Investment loss-net ................................ (218,854) -------- Realized and unrealized gain (loss)-net (note 1): Realized loss on investments in securities-net ....... (304,036) Change in unrealized appreciation on investments ..... 1,056,341 ---------- Net realized and unrealized gain .............................. 752,305 -------- Net increase in net assets resulting from operations ........... $533,451 ======== See notes to financial statements. 5 BLANCHARD AMERICAN EQUITY FUND Statement of Changes in Net Assets
For the Year For the Year Ended Ended April 30, 1995 April 30, 1994 -------------- -------------- Increase (decrease) in net assets: Operations: Investment loss-net .............................................. $ (218,854) $ (467,930) Realized gain (loss)-net ......................................... (304,036) 601,197 Change in unrealized appreciation or depreciation-net ............ 1,056,341 1,663,800 ----------- ----------- Net increase in net assets resulting from operations ............. 533,451 1,797,067 ----------- ----------- Dividends and distributions to shareholders from: Tax return of capital ............................................ (259,191) - Transactions in shares of beneficial interest- net decrease (note 6) ............................................ (4,616,259) (18,975,186) ----------- ----------- Net decrease in net assets ..................................... (4,341,999) (17,178,119) Net assets: Beginning of year .................................................. 13,970,342 31,148,461 ----------- ----------- End of year (including accumulated net investment loss of $11,865 and $0, respectively) .................................... $ 9,628,343 $13,970,342 =========== ===========
See notes to financial statements. 6 BLANCHARD AMERICAN EQUITY FUND Notes To Financial Statements April 30, 1995 NOTE 1 - Organization and Accounting Policies: Blanchard American Equity Fund (the "Fund") is a series of Blanchard Funds which was organized as a Massachusetts business trust on January 24, 1986. The Fund is a registered, open-end non-diversified management investment company under the Investment Company Act of 1940 ("the Act"). The Fund had no operations before November 9, 1992 other than the sale of 10,000 shares of beneficial interest for $100,000 to Sheffield Management Company (the "Manager"). The following is a summary of the significant accounting policies followed by the Fund: A. Valuation of Investments-Portfolio securities traded on a domestic exchange are valued at the 4 PM EST price on that exchange, and if no sale is made on that day, at the closing bid price (or the mean price in cases where a mean is reported instead of the closing bid). In cases where a security is traded on more than one exchange it is valued at the quotation on the exchange determined to be the primary market for such security by the Trustees or the Manager. All other portfolio securities for which over-the-counter market quotations are readily available are valued at the latest available bid prices. Short-term debt securities which mature in 60 days or less are valued at amortized cost if their original maturity was 60 days or less, or by amortizing their value on the 61st day prior to maturity if their term to maturity at the date of purchase exceeded 60 days. All other securities and other assets of the Fund are valued at fair value as determined in good faith by the Trustees. B. Accounting for Investments-Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on security transactions are determined on the identified cost method. Interest income is accrued daily. Dividend income and other distributions are recorded on the ex-dividend date. C. Federal Income Tax Status-It is Fund's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to its shareholders. Accordingly, no federal income tax provision is required. D. Dividends and Distribution to Shareholders-The Fund records dividends and distributions to its shareholders on the record date. The amount of dividends and distributions from net investment income and net realized capital gains is determined in accordance with federal income tax regulations which may differ from generally accepted accounting principles. These "book/tax" differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal tax-basis treatment; temporary differences do not require reclassification. Dividends and distributions which exceed net investment income or net realized gains for financial reporting purposes but not for tax purposes are reported as dividends or distributions in excess of net investment income or net realized gains for tax purposes. To the extent they exceed net investment income or net realized gains for tax purposes they are reported as distributions of paid-in capital. E. Organizational Expenses-The Manager paid the organizational expenses of the Fund incurred prior to the public offering of its shares amounting to approximately $132,941. The Fund has reimbursed the Manager for such expenses and has deferred and is amortizing such expenses over five years from the date of commencement of the Fund's operations. 7 BLANCHARD AMERICAN EQUITY FUND Notes To Financial Statements (continued) April 30, 1995 F. Other-Certain expenses for the Blanchard Group of Funds are allocated among the funds based upon their relative average net assets. NOTE 2 - Investment Management Agreement: Pursuant to a management agreement (the "Agreement"), the Manager manages the Fund and the investment of the Fund's assets, subject at all times to the supervision of the Fund's Trustees. In addition to providing overall business management and administrative services, the Manager selects, monitors and evaluates the Portfolio Adviser as noted below. The Manager receives from the Fund an advisory fee payable monthly at an annual rate of 1.1% of the Fund's average daily net assets. Expenses of the Fund, exclusive of taxes, interest, brokerage commissions, distribution fees, extraordinary expenses and certain other excludable expenses, are subject to the expense limitation imposed by one of the states in which shares of the Fund are offered for sale. For the year ended April 30, 1995, the Fund's expenses exceeded the above limitation by $92,524 which was borne by the Manager through a fee waiver. Certain officers and/or Trustees of the Fund are officers/directors of the Manager. The Manager has a sub-advisory agreement with Provident Investment Counsel, Inc. (the "Portfolio Adviser"). All fees for such services are paid by the Manager. The Manager has advised the Fund that the fees paid to the Portfolio Adviser were $45,521 for the year ended April 30, 1995. NOTE 3 - Distribution Agreement and Plan: Pursuant to a Distribution Agreement, Sheffield Investments, Inc. (the "Distributor") an affiliated company of the Manager, acts as principal distributor of the Fund's shares. The Distributor has the exclusive right to distribute Fund shares directly or through other broker-dealers. The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Act which provides that the Fund may finance activities which are primarily intended to result in the sale of the Fund's shares, including but not limited to advertising, printing of prospectuses and reports for other than existing shareholders, preparation and distribution of advertising material and sales literature, and payments to dealers and shareholder servicing agents who enter into agreements with the Manager or Distributor. Pursuant to the Plan, the Fund may pay distribution fees not to exceed .50% per annum of the Fund's average daily net assets. Provided that the Plan continues in effect, any cumulative expenses incurred by the Distributor on or after November 9, 1992, but not yet reimbursed by the Fund, may be reimbursed through future distribution fees from the Fund. The Distributor has advised the Fund that at April 30, 1995, the unreimbursed distribution expenses amounted to $419,809. If the Plan is terminated or discontinued in accordance with its terms, the obligation of the Fund to make payments to the Distributor pursuant to the Plan will cease and the Fund will not be required to make any payments past the date the Plan is terminated. NOTE 4 - Acquisition Agreement: Sheffield Management Company (the "Manager") and Sheffield Investments, Inc. (the "Distributor"), have entered into an acquisition agreement (the "Acquisition Agreement") with Signet Banking Corporation 8 BLANCHARD AMERICAN EQUITY FUND Notes To Financial Statements (continued) April 30, 1995 and two of its subsidiaries ("Signet"), dated February 15, 1995, pursuant to which Sheffield will sell to Signet the assets relating to, and the ability to succeed to contracts with, the Blanchard Funds, including Blanchard American Equity Fund (collectively, the "Funds"). The transactions contemplated by the Acquisition Agreement which have been approved by the Board of Trustees of the Funds are conditioned upon the approval of the shareholders of each Fund, of (1) a new investment management agreement with Signet, (2)a new distribution agreement with Federated Securities Corp., and (3)certain other conditions. No material changes are contemplated in the operation of the Funds and no management or distribution and administration fee increases are being proposed. NOTE 5 - Security Transactions and Transactions with Affiliates: Purchases and sales portfolio securities for the year ended April 30, 1995, excluding short-term investments, aggregated $4,819,865 and $8,716,371, respectively. The Distributor has advised the Fund that it received $188 from shareholders as account opening fees for the year ended April 30, 1995. The Manager has advised the Fund that, for the same period, it incurred costs, which were reimbursed by the Fund, amounting to $13,143 for performing internal accounting and transfer agency functions for the Fund. The Funds have adopted an unfunded noncontributory pension plan (the "Plan") covering all independent directors/trustees of the Funds who will have served as an independent director/trustee for at least five years at the time of retirement. Benefits under this plan are based on an annual amount equal to 75% of the director/trustee fee at the time of retirement, plus 5% for each year of service in excess of five years of service but not in excess of ten years of service. Net periodic pension expense included in Trustees' fees, retirement plan curtailment and other expenses in the Statement of Operations for the year ended April 30, 1995 was $2,615. As indicated in Note4, the Manager has entered into an agreement which provides for the acquistion of the Manager by Signet. Following the acquisition, the independent directors/trustees of the Funds will not stand for re-election. As a result, the Plan was curtailed and additional pension expense of $9,250 was recorded to reflect the previously unrecognized prior service costs of the independent directors/trustees. Included in accrued expenses and other liabilities at April 30, 1995 is $11,865 of accrued pension expense. NOTE 6 - Shares of Beneficial Interest: For the Year Ended For the Year Ended April 30, 1995 April 30, 1994 ------------------------ --------------------------- Shares Amount Shares Amount ------ ------ ------ ------ Sold ................. 417,825 $3,983,359 487,125 $ 4,708,461 Reinvestment of dividends and distributions ...... 27,994 253,349 - - -------- ----------- ---------- ------------ 445,819 4,236,708 487,125 4,708,461 Repurchased .......... (928,616) (8,852,967) (2,428,717) (23,683,647) -------- ----------- ---------- ------------ Net decrease ......... (482,797) $(4,616,259) (1,941,592) $(18,975,186) ======== =========== ========== ============ 9 BLANCHARD AMERICAN EQUITY FUND Notes To Financial Statements (continued) April 30, 1995 NOTE 7 - Federal Income Taxes: As of April 30, 1995, the Fund had temporary book/tax differences primarily attributable to wash sale loss deferrals. The Fund had permanent book/tax differences primarily attributable to net operating losses. To reflect reclassifications arising from permanent book/tax differences for the year ended April 30, 1995, paid-in-capital was charged $466,180, accumulated realized loss-net was credited $33,889 and accumulated distributions in excess of investment income-net was credited $432,291. At April 30, 1995 the Fund had a net capital loss carryover of $891,524 of which $584,268 and $307,256 are available through April 30, 2002 and April 30, 2003, respectively, to offset future capital gains. To the extent that these carryover losses are used to offset future capital gains, it is probable that the gains so offset will not be distributed to shareholders. NOTE 8 - Financial Highlights: Selected ratios and per share data for a share of beneficial interest outstanding:
For the Period November 9, 1992 For the Year Ended (commencement April 30, of operations) to ---------------------- April 30, 1995 1994 1993 ---- ---- ---- Per Share Operating Performance: Net asset value, beginning of period ................... $9.42 $9.10 $10.00 Income from investment operations: Net investment loss .................................. (.01)(DD) (.20)(DD) (.03)(DD) Net gains or losses on securities (both realized and unrealized) ........................................ .45 .52 (.87) Net income (loss) from investment operations ....... .44 .32 (.90) Less dividends and distributions from: Tax return of capital ................................ (.23) .00 .00 Change in net asset value ............................ .21 .32 (.90) Net asset value, end of period ......................... $9.63 $9.42 $ 9.10 Total return .......................................... 4.83% 3.52% (9.00%)(3) Ratios/Supplemental Data: Net assets end of period ($ Million) ................. $10 $14 $31 Ratio of expenses to average net assets .............. 3.05%(1) 3.00%(1) 3.13%(1)(2) Ratio of net investment loss to average net assets ... (1.87%)(1) (2.04%)(1) (1.66%)(1)(2) Portfolio turnover ..................................... 45% 97% 49%
(1) The ratios of expenses to average net assets and net investment loss to average net assets would have been 3.79% and (2.61%), respectively, for the year ended April 30, 1995, and 3.01% and (2.05%), respectively, for the year ended April 30, 1994, and 3.73% and (2.26%), respectively, for the period ended April 30, 1993, if a portion of the Fund's expenses had not been voluntarily reimbursed by the Manager. (2) Annualized. (3) Not annualized. 10 BLANCHARD AMERICAN EQUITY FUND REPORT OF INDEPENDENT ACCOUNTANTS To the Trustees and Shareholders of Blanchard American Equity Fund In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Blanchard American Equity Fund (the "Fund") at April30, 1995, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the two years in the period then ended and for the period November 9, 1992 (commencement of operations) through April 30, 1993, in conformity with generally accepted accounting principles. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at April 30, 1995 by correspondence with the custodian and brokers and the application of alternative auditing procedures where confirmations were not received, provide a reasonable basis for the opinion expressed above. PRICE WATERHOUSE LLP 1177 Avenue of the Americas New York, New York 10036 June 20, 1995 11 (Left Column) Portfolio Adviser Provident Investment Counsel, Inc. Custodian and Transfer Agent United States Trust Company of New York Independent Accountants Price Waterhouse LLP Legal Counsel Kramer, Levin, Naftalis, Nessen, Kamin & Frankel Blanchard American Equity Fund 41 Madison Ave., 24th Floor New York, NY 10010-2267 (Right Column) Blanchard American Equity Fund Annual Report April 30, 1995 Managed by: Sheffield Management Company 41 Madison Ave., 24th Floor New York, NY 10010-2267 1-800-922-7771 -----END PRIVACY-ENHANCED MESSAGE-----