<PAGE> 1
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VALOR INVESTMENT
FUND, INC.
Financial Statements for the
Year Ended July 31, 2000, and
Independent Auditors' Report
<PAGE> 2
VALOR INVESTMENT FUND, INC.
2290 FIRST NATIONAL BUILDING, DETROIT, MICHIGAN 48226
ANNUAL REPORT FOR THE YEAR ENDED JULY 31, 2000
To our Shareholders:
The financial statements of Valor Investment Fund, Inc. (the "Company") for the
fiscal year ended July 31, 2000, are included in this Annual Report. Net assets
at July 31, 2000 were $13,680,092 equal to $15.48 per share of common stock on
the 883,525 shares outstanding. Net asset value at July 31, 1999 was $15.70 per
share, based upon the same number of outstanding shares. The decrease in net
asset value at July 31, 2000 from the net asset value at July 31, 1999 is
primarily due to a decrease in unrealized appreciation of investments in
securities.
Your Company's net investment income for the year August 1, 1999 to July 31,
2000 was $722,789. Your Company has paid dividends of $.82 per share of common
stock from net investment income during fiscal 2000. The $.82 is further broken
down into $.42 and $.40 per share of common stock which were paid on November 2,
1999 and May 2, 2000, respectively. The Board of Directors intends to distribute
substantially all of the Company's net investment income earned during fiscal
2000.
Your Company's policy continues to be one of investment in tax-free municipal
bonds and project notes.
We wish to express our appreciation for your continued participation in the
Company.
Respectfully submitted,
William B. Klinsky,
President
<PAGE> 3
INDEPENDENT AUDITORS' REPORT
To the Shareholders and
Board of Directors
Valor Investment Fund, Inc.
We have audited the accompanying statement of assets and liabilities of Valor
Investment Fund, Inc. (the "Company") including the schedule of investments in
securities as of July 31, 2000, and the related statements of operations and
shareholders' investment for the year then ended, and the statement of changes
in net assets for each of the two years in the period then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards 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. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Company, as of July 31,
2000, and the results of its operations for the year then ended and the changes
in its net assets for each of the two years in the period then ended, in
conformity with accounting principles generally accepted in the United States of
America.
September 22, 2000
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VALOR INVESTMENT FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 2000
<TABLE>
------------------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments in securities - at market value (cost of $13,171,647) $13,490,773
Interest receivable 194,182
Prepaid expenses 7,137
-----------
Total assets 13,692,092
-----------
LIABILITIES - Accrued expenses 12,000
-----------
Total liabilities 12,000
-----------
NET ASSETS (equivalent to $15.48 per share based on 883,525 shares of
common stock outstanding at July 31, 2000) $13,680,092
===========
</TABLE>
See notes to financial statements.
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VALOR INVESTMENT FUND, INC.
SCHEDULE OF INVESTMENTS IN SECURITIES
JULY 31, 2000
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMORTIZED
AMOUNT COST MARKET
<S> <C> <C> <C>
MONEY MARKET FUNDS -
Dreyfus Tax Exempt Money Market Fund $ 99,232 $ 99,232 $ 99,232
SHORT-TERM MUNICIPAL BONDS:
Lenawee County, MI Gen. Obl., 6.150%, May 1, 2001 125,000 125,000 126,098
Tarrant Co. Water Control, Tx, 5.75%, March 1, 2001 150,000 150,000 151,268
-------- -------- --------
275,000 275,000 277,366
LONG-TERM MUNICIPAL BONDS:
Alaska State Hsg Fin Corp, 6.375%, December 1, 2012 275,000 273,107 289,729
Ann Arbor General Obl., 6.000%, September 1, 2009 100,000 99,837 103,147
Avondale School District, 5.800%, May 1, 2015 140,000 140,000 148,725
Bay County General Obl, 6.500%, May 1, 2004 500,000 500,000 512,170
Berkley City Sch Dist MI FGIC, 5.625%, Jan 1, 2015 270,000 264,288 282,814
Brandon School District, 5.600%, May 1, 2010 100,000 99,090 105,401
Brevard County Solid Waste Disposal, 5.700%, April 1, 2009 100,000 100,000 102,498
Caledonia Comm. Schools MI, 6.625%, May 1, 2014 150,000 150,000 157,584
Carrollton Public School District, 6.400%, May 1, 2004 65,000 64,884 67,234
Carrollton Public School District, 6.400%, May 1, 2005 75,000 74,833 77,578
Carrollton Public School District, 6.400%, May 1, 2006 75,000 74,800 77,578
Carrollton Public School District, 6.400%, May 1, 2007 75,000 74,769 77,588
Cass Cnty MI Sew Disp Sys - ONTWA Twp.,5.5%, May 1, 2018 100,000 98,411 99,542
Cedar Springs Public School District, 5.875%, May 1, 2014 250,000 247,833 264,005
Central Michigan University Rev., 7.000%, October 1, 2010 210,000 210,798 215,065
Central Michigan University Rev., 5.500%, October 1, 2010 200,000 200,000 203,780
Central Michigan University Rev., 6.000%, October 1, 2013 100,000 100,777 103,787
Cheboygan General Obligation, 5.400%, November 1, 2015 100,000 99,064 99,785
Chicago Emer. Telephone Sys., 5.800%, January 1, 2013 100,000 100,000 104,643
Chicago, Illinois General Obl., 6.250%, January 1, 2012 200,000 205,666 208,442
Chicago O'Hare Arpt. Intl Rev., 6.75%, January 1, 2018 230,000 249,226 239,494
Clawson City School Dist., 4.900%, May 1, 2013 200,000 199,118 190,392
Clintondale Comm. Schools, 6.500%, May 1, 2010 100,000 99,687 106,010
Cook County General Obl., 5.400%, November 15, 2008 200,000 200,000 208,512
Coopersville Area Mich Pub Schools, 5.00%, May 1, 2024 100,000 98,287 90,461
Desoto Independent School Dist, 4.90%, August 15, 2014 75,000 75,000 70,259
Essexville Hampton Public Schools, 5.500%, May 1, 2017 150,000 146,961 156,773
Eugene Trojan Nuclear Proj Rev OR, 5.900%, Spet. 1, 2009 140,000 140,464 140,910
Ferndale School District, 5.375%, May 1, 2116 100,000 98,337 98,582
Flat Rock Comm. School District, 5.25%, May 1, 2010 125,000 123,778 126,598
Florida State Board of Education, 6.000%, May 1, 2005 500,000 500,000 503,015
Florida State Board of Education, 5.200%, June 1, 2016 25,000 23,303 24,372
Grand Haven Area Pub. Schools, 6.050%, May 1, 2014 165,000 163,729 174,137
--------- --------- ---------
Total forward 5,295,000 5,296,047 5,430,610
(Continued)
</TABLE>
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VALOR INVESTMENT FUND, INC.
SCHEDULE OF INVESTMENTS IN SECURITIES
JULY 31, 2000
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMORTIZED
AMOUNT COST MARKET
<S> <C> <C> <C>
Total forward $ 5,295,000 $ 5,296,047 $ 5,430,610
Grand Ledge Public Schools, 6.400%, May 1, 2008 50,000 52,951 53,943
Greenville Public Schools, 5.000%, May 1, 2014 300,000 299,160 288,435
Grosse Isle General Obligation, 5.200%, March 1, 2008 25,000 24,743 25,347
Hudsonville Public Schools, 6.000%, May 1, 2009 100,000 99,186 106,661
Huron Valley School District MI FGIC, 5.875%, May 1, 2016 100,000 100,000 106,450
Illinois State Sales Tax Revenue, 5.400%, June 15, 2013 150,000 146,822 150,930
Kalamazoo Water Revenue MI FSA, 5.625%, Sept 1, 2011 100,000 98,755 103,204
Kentwood Public Schools, 6.400%, May 1, 2015 500,000 500,000 525,430
King County General Obligation, 6.200%, June 1, 2002 500,000 500,000 500,685
L'Anse Creuse Public Schools, 5.500%, May 1, 2014 180,000 179,564 180,803
Lincoln Consolidated School District, 5.800%, May 1, 2114 115,000 115,000 121,161
Lyon Twp., 5.40%, May 1, 2019 100,000 99,421 97,574
Macomb Water Sup. & Sew. Disp., 6.000%, January 1, 2012 200,000 200,000 203,372
Marysville Public School District, 5.750%, May 1, 2014 150,000 148,463 157,238
Michigan Higher Ed Stu Ln Rv, 6.000%, Sept 1, 2008 170,000 170,684 175,188
Michigan Municipal Bond Auth. Rev., 5.400%, Oct 1, 2014 100,000 97,019 100,037
Michigan Public Power Agency Revenue, 5.500%,
January 1, 2113 100,000 99,613 100,617
Michigan State Bldg. Auth. Rev., 6.250%, October 1, 2020 250,000 246,398 255,503
Michigan State Bldg. Auth. Rev., 5.30%, October 1, 2016 100,000 99,005 97,659
Michigan State Hospital Finance Authority, 5.375%,
October 15, 2013 95,000 95,701 89,052
Michigan State Hospital Finance Authority, 5.25%,
November 1, 2015 180,000 185,718 177,755
Michigan State Housing Development Authority Revenue,
5.600%, December 1, 2009 155,000 155,000 154,053
Millington Community School Dist., 5.700%, May 1, 2005 100,000 96,223 101,221
Monroe County General Obl., 5.250 %, November 1, 2002 65,000 63,797 65,754
Mount Pleasant Water Revenue, 6.000%, February 1, 2015 340,000 335,467 361,253
Novi Community School District, 6.1250%, May 1, 2013 250,000 250,354 264,535
Oakland County General Obl., 6.200%, May 1, 2003 500,000 495,635 507,050
Oakland County General Obl., 6.000%, November 1, 2011 115,000 114,279 119,033
Oakland County General Obl., 6.000%, November 1, 2013 145,000 142,938 151,094
Orange County Sales Tax Rev., 5.250%, January 1, 2016 150,000 148,404 147,044
Orlando Util Comm. Water & Elec., 6.300%, April 1, 2003 250,000 250,654 261,235
Petoskey Public School Dist, 4.750%, May 1, 2016 125,000 124,776 112,273
Rochester Comm. Sch. Dist., 5.625%, May 1, 2009 35,000 34,747 36,887
St. Lucie County School Board, 5.375%, July 1, 2013 150,000 150,000 150,926
San Antonio General Obligation, 5.750%, August 1, 2013 110,000 110,209 111,144
Santa Monica, Cal Univ Sch Dist, 5.400%, August 1, 2009 50,000 50,000 52,572
University of Michigan, Revenue, 5.800%, April 1, 2010 230,000 230,000 237,652
---------- ---------- ----------
Total forward 11,630,000 11,606,733 11,881,380
(Continued)
</TABLE>
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<PAGE> 7
VALOR INVESTMENT FUND, INC.
SCHEDULE OF INVESTMENTS IN SECURITIES
JULY 31, 2000
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL AMORTIZED
AMOUNT COST MARKET
<S> <C> <C> <C>
Total forward $ 11,630,000 $ 11,606,733 $ 11,881,380
Utica Community Schools, MI, 4.250%, May 1, 2002 100,000 100,478 99,528
Warren Consolidated Sch Dist MI MBIA, 5.50%, May 1, 2014 200,000 195,044 200,892
Washoe County General Obl., 6.200%, April 1, 2010 185,000 182,966 193,323
Wayne County Mich Community College, 5.35%, July 1, 2015 150,000 148,515 149,075
Western MI Univ Revs Gen Ser A, 5%, July 15, 2021 100,000 88,679 91,270
Yale Public Schools District, MI, 5.000%, May 1, 2005 125,000 125,000 125,883
Zeeland Public Schools, MI, 6.000%, May 1, 2010 100,000 100,000 106,521
Zeeland Public Schools, MI, 6.000%, May 1, 2014 250,000 250,000 266,303
------------ ------------ ------------
Total long-term municipal bonds 12,840,000 12,797,415 13,114,175
------------ ------------ ------------
TOTAL INVESTMENTS $ 13,214,232 $ 13,171,647 $ 13,490,773
============ ============ ============
See notes to financial statements. (Concluded)
</TABLE>
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VALOR INVESTMENT FUND, INC.
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 2000
<TABLE>
------------------------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME:
Interest income $ 776,789
Gain on disposition 7,393
---------
Total investment income 784,182
EXPENSES:
Professional fees 42,929
Custodian fees 12,556
Other 5,908
---------
Total expenses 61,393
---------
NET INVESTMENT INCOME (equivalent to $.82 per share based on
883,525 shares of common stock outstanding at July 31, 2000) 722,789
UNREALIZED APPRECIATION OF INVESTMENTS:
Beginning of period 508,482
End of period 319,126
---------
DECREASE IN NET UNREALIZED APPRECIATION OF INVESTMENTS (189,356)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 533,433
=========
</TABLE>
See notes to financial statements.
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VALOR INVESTMENT FUND, INC.
STATEMENT OF SHAREHOLDERS' INVESTMENT
YEAR ENDED JULY 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK
----------------------------------
SHARES PAID-IN RETAINED
(NOTE 4) PAR VALUE SURPLUS EARNINGS
<S> <C> <C> <C> <C>
BALANCE AT AUGUST 1, 1999 883,525 $ 883,525 $ 180,944 $ 11,967,524
Net increase in net assets resulting
from operations
Dividends to shareholders
($.82 per share)
-------- --------- --------- ------------
BALANCE AT JULY 31, 2000 883,525 $ 883,525 $ 180,944 $ 11,967,524
======== ========= ========= ============
</TABLE>
<TABLE>
<CAPTION>
NET
UNDISTRIBUTED UNREALIZED
NET APPRECIATION
INVESTMENT OF
INCOME INVESTMENTS TOTAL
<S> <C> <C> <C>
BALANCE AT AUGUST 1, 1999 $ 331,123 $ 508,482 $ 13,871,598
Net increase in net assets resulting
from operations 722,789 $(189,356) 533,433
Dividends to shareholders
($.82 per share) (724,939) (724,939)
--------- --------- ------------
BALANCE AT JULY 31, 2000 $ 328,973 $ 319,126 $ 13,680,092
========= ========= ============
</TABLE>
See notes to financial statements.
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<PAGE> 10
VALOR INVESTMENT FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
YEARS ENDED JULY 31, 2000 AND 1999
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
2000 1999
<S> <C> <C>
OPERATIONS:
Net investment income $ 722,789 $ 726,009
Decrease in unrealized appreciation (189,356) (222,108)
----------- -----------
Net increase in net assets resulting from operations 533,433 503,901
DIVIDENDS TO SHAREHOLDERS FROM INVESTMENT
INCOME 724,939 742,616
----------- -----------
DECREASE IN NET ASSETS (191,506) (238,715)
NET ASSETS:
Beginning of period 13,871,598 14,110,313
----------- -----------
End of period $13,680,092 $13,871,598
=========== ===========
</TABLE>
See notes to financial statements.
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<PAGE> 11
VALOR INVESTMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED JULY 31, 2000
--------------------------------------------------------------------------------
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 are reported at market value
determined principally by obtaining quotations from nationally recognized
valuation services or market value estimates from registered
brokers/dealers.
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 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 year ended July 31,
2000.
MANAGEMENT AND SERVICE FEES - No management fees have been paid or accrued
to outside organizations. A total of $1,000 in fees has been paid to
directors. The only service fees paid or accrued were legal, accounting,
custodian, and recordkeeping fees to unaffiliated persons.
USE OF ESTIMATES IN FINANCIAL STATEMENT PREPARATION - The preparation of
financial statements in conformity with generally accepted accounting
principles requires the use of estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the
reporting period. The Company's financial statements include amounts that
are based on management's best estimates and judgments. Actual results
could differ from those estimates.
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2. SECURITIES TRANSACTIONS
The following summarizes the changes in investments, at amortized cost,
for the year ended July 31, 2000:
<TABLE>
<S> <C>
Balance, August 1, 1999 $13,166,448
Plus:
Purchases 1,663,313
Premium amortization net of discount accretion 4,160
Less:
Matured securities (125,000)
Redeemed securities (1,537,274)
----------
Balance, July 31, 2000 $13,171,647
===========
</TABLE>
Approximately $434,230 in purchases and $447,607 in sales were bond
transactions. The remaining transactions were related to the money market
fund.
3. TRANSACTIONS WITH AFFILIATES
The Company had no transactions with affiliated persons in the year ended
July 31, 2000, 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 July 31, 2000.
5. UNREALIZED DEPRECIATION AND APPRECIATION
The cost of securities for federal income tax purposes differs from the
cost for financial statement purposes because the cost for tax purposes is
adjusted by the amount of discount amortization only if the discount is
original issue discount.
The aggregate cost of securities for federal income tax purposes was
$12,936,659 at July 31, 2000. The gross unrealized appreciation and
depreciation computed as the difference between market value and cost for
tax purposes is as follows:
<TABLE>
<S> <C>
Aggregate gross unrealized depreciation $ (73,876)
Aggregate gross unrealized appreciation 629,990
----------
Net unrealized appreciation $ 556,114
==========
</TABLE>
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6. PER SHARE DATA
The following are selected per share data based on the weighted average
shares outstanding during the year:
<TABLE>
<CAPTION>
YEAR ENDED JULY 31
------------------------------------------------------------------
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
Investment income $ 0.89 $ 0.87 $ 0.91 $ 0.93 $ 0.96
Expenses (0.07) (0.05) (0.06) (0.06) (0.03)
-------- -------- -------- -------- --------
Net investment income 0.82 0.82 0.85 0.87 0.93
Dividends from net investment (0.82) (0.84) (0.85) (0.91) (0.91)
income
(Decrease) increase in unrealized
appreciation (0.22) (0.25) 0.05 0.39 0.00
-------- -------- -------- -------- --------
(Decrease) increase in net asset
value (0.22) (0.27) 0.05 0.35 0.02
Net asset value - beginning 15.70 15.97 15.92 15.57 15.55
-------- -------- -------- -------- --------
Net asset value - ending $ 15.48 $ 15.70 $ 15.97 $ 15.92 $ 15.57
======== ======== ======== ======== ========
Weighted average shares 883,525 883,525 883,525 883,525 883,525
======== ======== ======== ======== ========
</TABLE>
7. INTEREST INCOME
The following details, by state, the interest income earned by the Company
during the year ended July 31, 2000:
<TABLE>
<S> <C>
Alaska $ 17,685
California 2,700
Florida 68,653
Illinois 51,372
Michigan * 566,158
Nevada 12,381
Oregon 8,233
Texas 18,607
Washington 31,000
--------
Total $ 776,789
=========
</TABLE>
* Included in the Michigan total is $3,518 interest earned on a tax-exempt
money market fund for the year ended July 31, 2000.
******
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