<PAGE> 1
VALOR INVESTMENT FUND, INC.
FINANCIAL STATEMENTS FOR THE
SIX MONTHS ENDED JANUARY 31, 1996, AND
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
<PAGE> 2
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
Shareholders and
Board of Directors
Valor Investment Fund, Inc.
We have reviewed the accompanying statement of assets and liabilities and
statement of investments of Valor Investment Fund, Inc. (the "Company") as of
January 31, 1996, and the related statements of operations, shareholders'
investment and changes in net assets for the six months then ended. These
financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interm
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters.
It is substantially less in scope than an audit conducted in accordance with
generally accepted auditing standards, the objective of which is the expression
of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements in order for them to be in
conformity with generally accepted accounting principles.
Deloitte & Touche LLP
March 15, 1996
<PAGE> 3
VALOR INVESTMENT FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
AS OF JANUARY 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investments in securities - at market value (cost of $13,199,694) (Note 2) $13,877,777
Interest receivable 199,280
Prepaid expenses 4,504
-----------
Total assets 14,081,561
LIABILITIES - Accrued expenses 22,318
-----------
NET ASSETS (equivalent to $15.91 per share based on 883,525 shares of
common stock outstanding at January 31, 1996) $14,059,243
===========
See notes to financial statements and Independent Accountants' Review Report.
</TABLE>
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<PAGE> 4
VALOR INVESTMENT FUND, INC.
STATEMENT OF INVESTMENTS (UNAUDITED) (NOTE 2)
JANUARY 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST MARKET
<S> <C> <C> <C>
MONEY MARKET FUNDS -
Dreyfus Tax Exempt Money Market Fund $121,392 $121,392 $121,392
SHORT-TERM MUNICIPAL BONDS -
Michigan State Hospital Fin. Auth., 7.100%,
August 15, 1996 60,000 60,000 61,208
LONG-TERM MUNICIPAL BONDS:
Alaska State Hsg Fin Corp, 6.375%, December 1, 2012 275,000 272,403 300,259
Ann Arbor General Obl, 6.000%, September 1, 2009 100,000 97,866 105,702
Bay County General Obl, 6.500%, May 1, 2004 500,000 500,000 510,000
Brandon School District, 6.250%, May 1, 2005 330,000 324,854 342,147
Brandon School District, 6.250%, May 1, 2006 75,000 72,100 77,761
Brandon School District, 6.250%, May 1, 2007 50,000 47,044 51,841
Brevard County Solid Waste Disposal, 5.700%,
April 1, 2009 100,000 100,000 102,153
Caledonia Comm. Schools MI, 6.625%, May 1, 2014 150,000 150,000 165,050
Carrollton Public School District, 6.400%, May 1, 2004 65,000 64,735 68,218
Carrollton Public School District, 6.400%, May 1, 2005 75,000 74,665 78,618
Carrollton Public School District, 6.400%, May 1, 2006 75,000 74,637 78,524
Carrollton Public School District, 6.400%, May 1, 2007 75,000 74,610 78,478
Cedar Springs Public School District, 5.875%, May 1, 2014 250,000 249,328 263,293
Central Michigan University Rev., 7.000%, October 1, 2000 210,000 235,147 239,087
Central Michigan University Rev., 5.500%, October 1, 2010 200,000 200,000 205,392
Central Michigan University Rev., 6.000%, October 1, 2013 100,000 101,047 105,516
Chicago, Illinois Emergency Telephone Sys., 5.800%,
January 1, 2013 100,000 100,000 103,511
Chicago, Illinois General Obl., 7.250%, January 1, 2006 200,000 216,564 206,886
Chicago, Illinois General Obl., 6.250%, January 1, 2012 200,000 207,959 212,410
Chippewa Valley Schools, 7.750%, May 1, 2005 50,000 46,759 54,030
Chippewa Valley Schools, 7.800%, May 1, 2008 555,000 553,405 600,066
Clintondale Comm. Schools, 6.500%, May 1, 2010 100,000 99,557 113,934
Cook County General Obl., 5.400%, November 15, 2008 200,000 200,000 205,276
Detroit City School District, 5.050%, May 1, 1997 250,000 253,138 254,298
District of Columbia Gen. Obl., 7.875%, June 1, 2006 145,000 145,000 149,960
Flat Rock Community School District, 5.25%, May 1, 2010 125,000 123,199 126,268
Flint, Michigan General Obl., 6.250%, November 1, 2003 100,000 98,175 101,335
Flint, Michigan General Obl., 6.250%, November 1, 2004 100,000 97,983 100,792
Florida General Obligation, 5.900%, October 1, 2008 250,000 244,272 255,258
Florida State Board of Education, 6.000%, May 1, 2005 500,000 500,000 557,000
--------- --------- ---------
Total forward 5,505,000 5,524,447 5,813,063
</TABLE>
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<PAGE> 5
VALOR INVESTMENT FUND, INC.
STATEMENT OF INVESTMENTS (UNAUDITED) (NOTE 2)
JANAURY 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST MARKET
<S> <C> <C> <C>
Total forward $ 5,505,000 $ 5,524,447 $ 5,813,063
LONG-TERM MUNICIPAL BONDS - CONTINUED:
Grand Haven Area Pub. Schools, 6.050%, May 1, 2014 165,000 163,296 173,940
Grand Ledge Public Schools, 6.40%, May 1, 2008 50,000 54,704 55,453
Grosse Isle General Obligation, 5.200%, March 1, 2008 25,000 24,582 25,293
Howell School District, 6.400%, May 1, 2008 100,000 88,387 103,705
Hudsonville Public Schools, 6.000%, May 1, 2009 100,000 100,000 107,271
Illinois State Sales Tax Revenue, 5.400%, June 15, 2013 150,000 145,688 150,878
Intermountain Power Agency, 6.000%, July 1, 2016 315,000 323,414 339,154
Kentwood Public Schools, 6.400%, May 1, 2015 500,000 500,000 532,880
King County General Obligation, 6.200 %, June 1, 2002 500,000 500,000 500,000
L'Anse Creuse Public Schools, 5.500%, May 1, 2014 80,000 80,000 80,511
Lenawee County, MI Gen. Obl., 6.050%, May 1, 1999 100,000 100,000 101,000
Lenawee County, MI Gen. Obl., 6.100%, May 1, 2000 125,000 125,000 126,250
Lenawee County, MI Gen. Obl., 6.150%, May 1, 2001 125,000 125,000 126,250
Macomb Water Sup. & Sew. Disp., 6.000%, January 1, 2012 200,000 200,000 208,672
Marysville Public School District, 5.750%, May 1, 2014 150,000 147,583 155,151
Michigan State Bldg. Auth. Revenue, 6.250%,
October 1, 2020 250,000 245,587 264,460
Michigan State Trunk Line Rev., 6.000%, August 15, 2019 250,000 241,290 252,843
Millington Community School Dist., 5.700%, May 1, 2005 100,000 92,520 102,000
Monroe County General Obl., 5.250 %, November 1, 2002 65,000 61,234 66,300
Mount Pleasant Water Revenue, 6.000%, February 1, 2015 340,000 332,841 358,918
Novi Community School District, 6.1250%, May 1, 2013 250,000 250,616 269,608
Oakland County General Obl., 6.200%, May 1, 2003 500,000 488,095 515,000
Oakland County General Obl., 6.000%, November 1, 2011 115,000 113,984 121,522
Oakland County General Obl., 6.000%, November 1, 2013 145,000 142,227 152,375
Orange County Sales Tax Rev., 5.250%, January 1, 2016 150,000 147,929 147,447
Oregon General Obligation, 5.900%, July 15, 1998 500,000 500,000 526,185
Orlando Util Comm. Water & Elec., 6.300%, April 1, 2003 250,000 251,799 279,560
Rochester Comm. Sch. Dist., 5.625%, May 1, 2009 35,000 34,612 37,115
St. Lucie County School Board, 5.375%, July 1, 2013 150,000 150,000 150,819
San Antonio General Obligation, 5.750%, August 1, 2013 110,000 110,282 112,753
Santa Monica, Malibu Univ Sch Dist, 5.400%, August 1, 2009 50,000 50,000 51,179
Tarrant Co. Water Control, TX, 5.750%, March 1, 2001 150,000 150,000 160,821
---------- ---------- ----------
Total forward 11,600,000 11,565,117 12,168,376
</TABLE>
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<PAGE> 6
VALOR INVESTMENT FUND, INC.
STATEMENT OF INVESTMENTS (UNAUIDTED) (NOTE 2)
JANUARY 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL AMORTIZED
AMOUNT COST MARKET
<S> <C> <C> <C>
Total forward $ 11,600,000 $ 11,565,117 $ 12,168,376
LONG-TERM MUNICIPAL BONDS - CONTINUED:
University of Michigan, Revenue, 5.750%, April 1, 2003 75,000 70,302 75,750
University of Michigan, Revenue, 5.800%, April 1, 2010 230,000 230,000 242,376
Utica Community Schools, MI, 6.500%, May 1, 2001 45,000 45,000 46,350
Utica Community Schools, MI, 6.500%, May 1, 2003 50,000 50,000 51,500
Utica Community Schools, MI, 6.500%, May 1, 2004 225,000 225,000 231,750
Utica Community Schools, MI, 6.500%, May 1, 2006 75,000 75,000 82,445
WA State Public Power Supp., 6.000%, July 1, 2012 100,000 101,732 100,186
Washoe County General Obl., 6.200%, April 1, 2010 185,000 181,151 198,662
Yale Public Schools District, MI, 5.000%, May 1, 2005 125,000 125,000 126,748
Zeeland Public Schools, MI, 6.000%, May 1, 2010 100,000 100,000 107,354
Zeeland Public Schools, MI, 6.000%, May 1, 2014 250,000 250,000 263,680
------------- ------------- -------------
Total long-term municipal bonds 13,060,000 13,018,302 13,695,177
------------- ------------- -------------
TOTAL INVESTMENTS $ 13,241,392 $ 13,199,694 $ 13,877,777
============= ============= =============
</TABLE>
See notes to financial statements and Independent Accountants' Review Report.
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<PAGE> 7
VALOR INVESTMENT FUND, INC.
STATEMENT OF OPERATIONS (UNAUDITED)
SIX MONTHS ENDED JANUARY 31, 1996
<TABLE>
<CAPTION>
<S> <C>
REVENUE:
Interest income $408,274
Gain on disposition 10
--------
Total revenue 408,284
EXPENSES:
Professional fees 7,813
Custodian fees 5,000
Other (902)
--------
Total expenses 11,911
--------
NET INVESTMENT INCOME (equivalent to $0.45 per share based on
883,525 shares of common stock outstanding at January 31, 1996) 396,373
UNREALIZED APPRECIATION OF INVESTMENTS:
Beginning of period 342,577
End of period 678,083
--------
INCREASE IN UNREALIZED APPRECIATION OF INVESTMENTS 335,506
--------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $731,879
========
</TABLE>
See notes to financial statements and Independent Accountants' Review Report.
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<PAGE> 8
VALOR INVESTMENT FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED)
SIX MONTHS ENDED JANUARY 31, 1996
<TABLE>
<CAPTION>
<S> <C>
OPERATIONS:
Net investment income $ 396,373
Increase in unrealized appreciation 335,506
-----------
Net increase in net assets resulting from operations 731,879
DISTRIBUTIONS TO SHAREHOLDERS FROM INVESTMENT INCOME 415,257
-----------
INCREASE IN NET ASSETS 316,622
NET ASSETS:
Beginning of period 13,742,621
-----------
End of period $14,059,243
===========
</TABLE>
See notes to financial statements and Independent Accountants' Review Report.
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<PAGE> 9
VALOR INVESTMENT FUND, INC.
STATEMENT OF SHAREHOLDERS' INVESTMENT (UNAUDITED)
SIX MONTHS ENDED JANUARY 31, 1996
<TABLE>
<CAPTION>
UNDISTRIBUTED UNREALIZED
COMMON STOCK NET APPRECIATION
SHARES PAID-IN RETAINED INVESTMENT OF
(NOTE 4) PAR VALUE SURPLUS EARNINGS INCOME INVESTMENTS TOTAL
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT JULY 31, 1995 883,525 $883,525 $180,944 $11,967,524 $368,051 $342,577 $13,742,621
Net increase in net assets resulting
from operations 396,373 335,506 731,879
Distributions to shareholders ($.47
per share) (415,257) (415,257)
------- -------- -------- ----------- -------- -------- -----------
BALANCE AT JANUARY 31, 1996 883,525 $883,525 $180,944 $11,967,524 $349,167 $678,083 $14,059,243
======= ======== ======== =========== ======== ======== ===========
</TABLE>
See notes to financial statements and Independent Accountants' Review Report.
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<PAGE> 10
VALOR INVESTMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
SIX MONTHS ENDED JANUARY 31, 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Valor Investment Fund, Inc. (the "Company") is registered under the
Investment Company Act of 1940, as amended, as a closed-end, diversified
management investment company. The following is a summary of significant
accounting policies followed by the Company in the preparation of its
financial statements. The policies are in conformity with generally
accepted accounting principles.
INVESTMENT SECURITIES - Investments in securities are valued at market value
as of January 31, 1996.
SECURITIES TRANSACTIONS are recorded on a trade-date basis. Cost of
securities sold is determined using the identified cost.
INTEREST INCOME adjusted for amortization of premium or accretion of
discounts on investments in municipal bonds, is earned from the settlement
date and recorded on the accrual basis.
INCOME TAXES - It is the Company's policy to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and
to make distributions of income and realized capital gains sufficient to
relieve it from all or substantially all federal income taxes. No provision
for federal income taxes is required for the six-month period ended January
31, 1996.
MANAGEMENT AND SERVICE FEES - No management fees have been paid or accrued
to outside organizations. A total of $800 in fees has been paid to
directors. The only service fees paid or accrued were legal, accounting,
custodian, and recordkeeping fees to unaffiliated persons.
2. SECURITIES TRANSACTIONS
The following summarizes the changes in investments, at amortized cost, for
the six-months ended January 31, 1996:
<TABLE>
<S> <C>
Balance, July 31, 1995 $13,233,544
Purchases 704,857
Premium amortization net of discount accretion (3,107)
Redeemed securities (735,600)
-----------
Balance, January 31, 1996 $13,199,694
===========
</TABLE>
The cost of securities includes applicable accretion of discount and
amortization of premium. Approximately $180,000 in purchases and $180,000
sales were bond transactions. The remaining transactions were related to
the money market fund.
SEE INDEPENDENT ACCOUNTANTS' REVIEW REPORT.
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<PAGE> 11
3. TRANSACTIONS WITH AFFILIATES
The Company had no transactions with affiliated persons in the six-month
period ended January 31, 1996, except as described in Note 1.
4. COMMON STOCK
There are 2,000,000 authorized shares of common stock, of which 883,525
shares were outstanding at January 31, 1996.
5. SUPPLEMENTAL INFORMATION
The following are selected per share data based on the weighted average
shares outstanding during the six months ended January 31, 1996 and the year
ended July 31, 1995.
<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
JANUARY 31, JULY 31,
1996 1995
<S> <C> <C>
Total revenues $ 0.46 $ 0.95
Total expenses (0.01) (0.04)
-------- --------
Net investment income 0.45 0.91
Distributions from net investment income (0.47) (0.97)
Increase in unrealized appreciation 0.38 0.14
-------- --------
Increase in net asset value 0.36 0.08
Net asset value - beginning 15.55 15.47
-------- --------
Net asset value - ending $ 15.91 $ 15.55
======== ========
Weighted average shares outstanding during the year 883,525 883,525
======== ========
</TABLE>
See Independent Accountants' Review Report.
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<PAGE> 12
The following details, by state, the interest income earned by the Company
during the six months ended January 31, 1996.
<TABLE>
<S> <C>
Alaska $ 8,844
California 1,350
District of Columbia 3,716
Florida 41,887
Illinois 24,848
Michigan 271,854
Nevada 5,872
Oregon 14,750
Texas 7,467
Utah 9,240
Washington 18,446
--------
Total $408,274
========
</TABLE>
*Included in the Michigan total is $2,672 interest earned on a tax-exempt
money market fund for the six months ended January 31, 1996.
******
See Independent Accountants' Review Report.
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