<PAGE> 1
VALOR INVESTMENT FUND, INC.
Financial Statements for the
Six Months Ended January 31, 2000, and
Independent Accountants' Review Report
<PAGE> 2
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
To the Shareholders and
Board of Directors
Valor Investment Fund, Inc.
We have reviewed the accompanying statement of assets and liabilities and
schedule of investments in securities of Valor Investment Fund, Inc. (the
"Company") as of January 31, 2000, 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 interim 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 auditing standards generally accepted in the United States of America, 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 such financial statements for them to be in conformity with
accounting principles generally accepted in the United States of America.
We have previously audited, in accordance with auditing standards generally
accepted in the United States of America, the statement of changes in net assets
for the year ended July 31, 1999, and the related statements of operations and
shareholders' investment in securities for the year then ended; and in our
report dated September 17, 1999, we expressed an unqualified opinion on those
statements.
March 24, 2000
<PAGE> 3
VALOR INVESTMENT FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
JANUARY 31, 2000
<TABLE>
<S> <C>
ASSETS:
Investments in securities - at market value (cost of $13,151,792) $13,295,647
Interest receivable 200,371
Prepaid expenses 6,768
-----------
Total assets 13,502,786
LIABILITIES - Accrued expenses 14,500
-----------
NET ASSETS (equivalent to $15.27 per share based on 883,525 shares of
common stock outstanding at January 31, 2000) $13,488,286
===========
</TABLE>
See notes to financial statements and Independent Accountants' Review Report.
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<PAGE> 4
VALOR INVESTMENT FUND, INC.
SCHEDULE OF INVESTMENTS IN SECURITIES (UNAUDITED)
JANUARY 31, 2000
<TABLE>
<CAPTION>
COST OR
PRINCIPAL AMORTIZED
AMOUNT COST MARKET
<S> <C> <C> <C>
MONEY MARKET FUNDS -
Dreyfus Tax Exempt Money Market Fund $ 68,898 $ 68,898 $ 68,898
SHORT-TERM MUNICIPAL BONDS:
Central Michigan University Rev., 7.000%, October 1, 2000 210,000 212,795 218,207
Lenawee County, MI Gen. Obl., 6.100%, May 1, 2000 125,000 125,000 125,560
--------- --------- ---------
Total short-term municipal bonds 335,000 337,795 343,767
LONG-TERM MUNICIPAL BONDS:
Alaska State Hsg Fin Corp, 6.375%, December 1, 2012 275,000 273,033 289,319
Ann Arbor General Obl., 6.000%, September 1, 2009 100,000 98,510 103,703
Avondale School District, 5.800%, May 1, 2007 140,000 140,000 145,349
Bay County General Obl., 6.500%, May 1, 2004 500,000 500,000 512,580
Berkley City Sch Dist MI FGIC, 5.6250%, January 1, 2005 270,000 263,230 279,380
Brandon School District, 5.600%, May 1, 2010 100,000 98,983 103,369
Brevard County Solid Waste Disposal, 5.700%, 100,000 100,000 100,613
April 1, 2009
Caledonia Comm. Schools MI, 6.625%, May 1, 2014 150,000 150,000 157,763
Carrollton Public School District, 6.400%, May 1, 2004 65,000 64,868 67,288
Carrollton Public School District, 6.400%, May 1, 2005 75,000 74,814 77,640
Carrollton Public School District, 6.400%, May 1, 2006 75,000 74,782 77,640
Carrollton Public School District, 6.400%, May 1, 2007 75,000 74,752 77,650
Cedar Springs Public School Distrct, 5.875%, May 1, 2004 250,000 249,477 261,820
Central Michigan University Rev., 5.500%, October 1, 2010 200,000 200,000 200,310
Central Michigan University Rev., 6.000%, October 1, 2013 100,000 100,807 101,205
Cheboygan General Obl., AMBAC, 5.400%, 100,000 99,033 96,537
November 1, 2015
Chicago Emer. Telephone Sys., 5.800%, January 1, 2013 100,000 100,000 104,401
Chicago, Ill. General Obl., 6.250%, January 1, 2012 200,000 205,905 208,106
Chicago O'Hare Airport, Int'l Rev., 6.750%, January 1, 2018 230,000 249,764 237,949
Clawson City School District, 4.900%, May 1, 2013 200,000 199,083 179,290
Clintondale Comm. Schools, 6.500%, May 1, 2010 100,000 99,684 105,923
Cook County General Obl., 5.400%, November 15, 2008 200,000 200,000 207,114
Coopersville Area Mich Pub Schools, 5.000%, May 1, 2024 100,000 98,251 83,723
Desoto Independent School District, 4.900%, 75,000 75,000 64,709
August 15, 2014
Essexville Hampton Public Schools, MI FGIC, 5.500%, 150,000 146,610 153,039
May 1, 2007
Eugene Trojan Nuclear Proj Rev. OR, 5.900% 140,000 140,487 141,925
September 1, 2009
Ferndale Sch Dist FGIC, 5.375%, May 1, 2016 100,000 98,284 94,153
Flat Rock Comm. School District, 5.250%, May 1, 2010 125,000 123,713 122,949
--------- --------- ---------
Total forward 4,295,000 4,299,070 4,355,447
(Continued)
</TABLE>
-3-
<PAGE> 5
VALOR INVESTMENT FUND, INC.
SCHEDULE OF INVESTMENTS IN SECURITIES (UNAUDITED)
JANUARY 31, 2000
<TABLE>
<CAPTION>
COST OR
PRINCIPAL AMORTIZED
AMOUNT COST MARKET
<S> <C> <C> <C>
Total forward $ 4,295,000 $ 4,299,070 $ 4,355,447
Florida State Board of Education, 6.000%, May 1, 2005 500,000 500,000 504,155
Florida State Board of Education, 5.200%, June 1, 2006 25,000 23,249 23,002
Grand Haven Area Public Schools, 6.050%, May 1, 2014 165,000 163,677 173,298
Grand Ledge Public Schools, May 1, 2008 50,000 53,136 53,642
Greenville Public Schools, 5.000%, May 1, 2014 300,000 299,128 270,972
Grosse Isle General Obl., 5.200%, March 1, 2008 25,000 24,724 24,752
Huron Valley School District MI FGIC, 5.875%, May 1, 2007 100,000 99,094 104,270
Hudsonville Public Schools, 6.000%, May 1, 2009 100,000 100,000 105,608
Illinois State Sales Tax Rev., 5.400%, June 15, 2013 150,000 146,702 144,839
Kalamazoo Water Rev., MI FSA, 5.625% 100,000 98,699 100,454
September 1, 2011
Kentwood Public Schools, 6.400%, May 1, 2002 500,000 500,000 526,690
King County General Obl., 6.200 %, June 1, 2002 500,000 500,000 500,760
L'Anse Creuse Public Schools, 5.500%, May 1, 2014 180,000 179,548 175,646
Lenawee County, MI Gen. Obl., 6.150%, May 1, 2001 125,000 125,000 126,199
Lincoln Consolidated Sch Dist MI FGIC, 5.800%, May 1, 2014 115,000 115,000 119,977
Lyon Twp 5.40% due May 1, 2019 100,000 99,405 92,124
Macomb Water Sup. & Sew. Disposal, 6.000%, 200,000 200,000 205,394
January 1, 2012
Marysville Public Sch Dist, 5.750%, May 1, 2004 150,000 148,120 156,006
Michigan Higher Ed Stu Ln Rv, 6.000%, September 1, 2008 170,000 170,724 172,227
Michigan Municipal Bond Auth. Rev. 5.400%, 100,000 96,912 95,412
October 1, 2014
Michigan Public Power Agency Rev. 5.500% 100,000 99,597 97,916
January 1, 2113
Michigan State Bldg. Auth. Rev., 6.250%, October 1, 2020 250,000 246,308 251,190
Michigan State Bldg. Auth. Rev., AMBAC, 5.300%, 100,000 98,974 91,929
October 1, 2016
Michigan State Hospital Finan Auth, 5.375%, 95,000 95,887 85,830
October 15, 2013
Michigan State Hospital Finan Auth, 5.250%, 180,000 186,044 169,495
November 1, 2015
Michigan State Hsg. Dev. Auth. Rev., AMBAC, 5.600%,
December 1, 2009 155,000 155,000 152,074
--------- --------- ---------
Total forward 8,830,000 8,823,998 8,879,308
(Continued)
</TABLE>
-4-
<PAGE> 6
VALOR INVESTMENT FUND, INC.
SCHEDULE OF INVESTMENTS IN SECURITIES (UNAUDITED)
JANUARY 31, 2000
<TABLE>
<CAPTION>
COST
OR
PRINCIPAL AMORTIZED
AMOUNT COST MARKET
<S> <C> <C> <C>
Total forward $ 8,830,000 $ 8,823,998 $ 8,879,308
Millington Community School District, 5.700%, May 1, 2005 100,000 95,844 101,130
Monroe County General Obl., 5.250 %, November 1, 2002 65,000 63,552 65,685
Mount Pleasant Water Rev., 6.000%, February 1, 2004 340,000 334,367 359,040
Novi Community School District, 6.125%, May 1, 2003 250,000 250,326 264,020
Oakland County General Obl., 6.200%, May 1, 2003 500,000 494,899 507,455
Oakland County General Obl., 6.000%, November 1, 2011 115,000 114,246 118,743
Oakland County General Obl., 6.000%, November 1, 2013 145,000 142,861 150,944
Orange County Sales Tax Rev., 5.250%, January 1, 2016 150,000 148,354 138,849
Orlando Util Comm. Water & Elec., 6.300%, April 1, 2003 250,000 250,770 261,025
Petoskey Public School Dist, 4.750%, May 1, 2016 125,000 124,754 105,346
Rochester Comm. School District, 5.625%, May 1, 2009 35,000 34,732 35,692
St. Lucie County School Board, 5.375%, July 1, 2013 150,000 150,000 146,700
San Antonio General Obl, 5.750%, August 1, 2013 110,000 110,217 110,372
Santa Monica, CA Univ Sch Dist, 5.400%, August 1, 2009 50,000 50,000 52,090
Tarrant Co. Water Control, TX, 5.750%, March 1, 2013 150,000 150,000 152,357
University of Michigan, Revenue, 5.800%, April 1, 2010 230,000 230,000 233,749
Utica Community Schools, MI, 7.100%, May 1, 2006 75,000 75,000 77,072
Utica Community Schools, MI, 4.250%, May 1, 2002 100,000 100,601 99,079
Warren Consol. Sch Dist MI MBIA, 5.500%, May 1, 2014 200,000 194,866 195,162
Washoe County General Obl., 6.200%, April 1, 2010 185,000 182,251 193,334
Wayne County Mich Comm. College 5.350% due July 1, 2015 150,000 148,461 141,686
Yale Public Schools District, MI, 5.000%, May 1, 2005 125,000 125,000 123,967
Zeeland Public Schools, MI, 6.000%, May 1, 2004 100,000 100,000 105,766
Zeeland Public Schools, MI, 6.000%, May 1, 2004 250,000 250,000 264,411
------------ ------------ ------------
Total long-term municipal bonds 12,780,000 12,745,099 12,882,982
------------ ------------ ------------
TOTAL INVESTMENTS $ 13,183,898 $ 13,151,792 $ 13,295,647
============ ============ ============
</TABLE>
-5-
<PAGE> 7
VALOR INVESTMENT FUND, INC.
STATEMENT OF OPERATIONS (UNAUDITED)
SIX MONTHS ENDED JANUARY 31, 2000
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income $ 387,567
Gain on disposition 7,394
---------
Total investment income $ 394,961
EXPENSES:
Professional fees 32,179
Custodian fees 6,250
Other 4,187
---------
Total expenses 42,616
---------
NET INVESTMENT INCOME (Equivalent to $0.40 per share based on
883,525 shares of common stock outstanding at January 31, 2000) 352,345
---------
UNREALIZED APPRECIATION OF INVESTMENTS:
Beginning of period 508,482
End of period 143,855
---------
DECREASE IN UNREALIZED APPRECIATION OF INVESTMENTS (364,627)
---------
DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (12,282)
=========
</TABLE>
See notes to financial statements and Independent Accountants' Review Report.
-6-
<PAGE> 8
VALOR INVESTMENT FUND, INC.
STATEMENT OF SHAREHOLDERS' INVESTMENT (UNAUDITED)
SIX MONTHS ENDED JANUARY 31, 2000
<TABLE>
<CAPTION>
COMMON STOCK
---------------------------
SHARES PAID-IN RETAINED
(NOTE 4) PAR VALUE SURPLUS EARNINGS
<S> <C> <C> <C> <C>
BALANCE AT JULY 31, 1999 883,525 $883,525 $180,944 $11,967,524
Net decrease in net assets resulting from
operations
Dividends to shareholders ($0.42
per share)
-------- -------- -------- -----------
BALANCE AT JANUARY 31, 2000 883,525 $883,525 $180,944 $11,967,524
======== ======== ======== ===========
<CAPTION>
UNDISTRIBUTED UNREALIZED
NET APPRECIATION
INVESTMENT OF
INCOME INVESTMENTS TOTAL
<S> <C> <C> <C>
BALANCE AT JULY 31, 1999 $ 331,123 $ 508,482 $13,871,598
Net decrease in net assets resulting from 352,345 (364,627) (12,282)
operations
Dividends to shareholders ($0.42 (371,030) (371,030)
per share)
--------- --------- -----------
BALANCE AT JANUARY 31, 2000 $ 312,438 $ 143,855 $13,488,286
========= ========= ===========
</TABLE>
See notes to financial statements and Independent Accountants' Review Report.
-7-
<PAGE> 9
VALOR INVESTMENT FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED JANUARY 31, 2000 AND
YEAR ENDED JULY 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JANUARY 31, JULY 31,
2000 1999
<S> <C> <C>
OPERATIONS:
Net investment income $ 352,345 $ 726,009
Decrease in unrealized appreciation (364,627) (222,108)
----------- -----------
Net (decrease) increase in net assets resulting from operations (12,282) 503,901
DIVIDENDS TO SHAREHOLDERS FROM
INVESTMENT INCOME 371,030 742,616
----------- -----------
DECREASE IN NET ASSETS (383,312) (238,715)
NET ASSETS:
Beginning of period 13,871,598 14,110,313
----------- -----------
End of period $13,488,286 $13,871,598
=========== ===========
</TABLE>
See notes to financial statements and Independent Accountants' Review Report.
-8-
<PAGE> 10
VALOR INVESTMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
SIX MONTHS ENDED JANUARY 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 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 six month period
ended January 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 judgements. Actual results
could differ from those estimates.
-9-
<PAGE> 11
2. SECURITIES TRANSACTIONS
The following summarizes the changes in investments, at amortized cost,
for the six months ended January 31, 2000:
<TABLE>
<S> <C>
Balance, July 31, 1999 $13,166,448
Plus purchases 888,615
Less:
Redeemed securities (902,677)
Premium amortization net of discount accretion (594)
-----------
Balance, January 31, 2000 $13,151,792
===========
</TABLE>
Approximately $247,799 in purchases and $247,608 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 six months
ended January 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 January 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
the original issue discount.
The aggregate cost of securities for federal income tax purposes was
$13,062,939 at January 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 $(181,191)
Aggregate gross unrealized appreciation 413,899
---------
Net unrealized appreciation $ 232,708
=========
</TABLE>
-10-
<PAGE> 12
6. PER SHARE DATA
The following are selected per share data based on the weighted average
shares outstanding during the six months ended January 31, 2000 and the
year ended July 31, 1999:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JANUARY 31, JULY 31,
2000 1999
<S> <C> <C>
Investment income $ 0.45 $ 0.87
Expenses (0.05) (0.05)
-------- --------
Net investment income 0.40 0.82
Dividends from net investment income (0.42) (0.84)
Decrease in unrealized appreciation (0.41) (0.25)
-------- --------
Decrease in net asset value (0.43) (0.27)
Net asset value - beginning 15.70 15.97
-------- --------
Net asset value - ending $ 15.27 $ 15.70
======== ========
Weighted average shares outstanding during the period 883,525 883,525
======== ========
</TABLE>
7. INVESTMENT INCOME
The following details by state, the investment income earned by the
Company during the six months ended January 31, 2000:
<TABLE>
<S> <C>
Alaska $ 8,844
California 1,350
Florida 34,323
Illinois 25,667
Michigan* 282,581
Nevada 5,872
Oregon 4,129
Texas 9,301
Washington 15,500
--------
Total $387,567
========
</TABLE>
* Included in the Michigan total is $1,475 interest earned on a tax-exempt
money market fund for the six months ended January 31, 2000.
* * * * * *
-11-
