VAM SHORT GOVERNMENT AGENCY FUND
Dated April 30, 1996
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VAM SHORT GOVERNMENT AGENCY FUND
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) APRIL 30, 1996
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Assets:
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Investments in securities, (note 1)
(identified cost: $99,923)............................................ $ 99,781
Cash in bank on demand deposit.......................................... 77
Accrued interest receivable............................................. 1,875
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Assets applicable to outstanding capital stock............................. $101,733
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Represented by (note 1):
Capital stock - $.01 par value.......................................... $ 100
Additional paid-in capital.............................................. 99,900
Undistributed net investment income..................................... 1,875
Unrealized depreciation on investments.................................. (142)
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Total net assets...................................................... $101,733
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Net assets applicable to outstanding
Institutional Class Shares.............................................. $101,733
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Shares outstanding and net asset value per share
Institutional Class Shares outstanding: 10,000 (note 5)................ $10.17
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See accompanying notes to financial statements.
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VAM SHORT GOVERNMENT AGENCY FUND
STATEMENT OF OPERATIONS (UNAUDITED) SIX MONTHS ENDED APRIL 30, 1996
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Investment income:
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Interest............................................................................. $2,867
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Unrealized (loss) on investments:
Net change in unrealized appreciation or depreciation of investment.................. (273)
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Net (loss) on investments.......................................................... (273)
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NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................................... $2,594
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See accompanying notes to financial statements.
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VAM SHORT GOVERNMENT AGENCY FUND
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED)
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SIX MONTHS PERIOD
ENDED ENDED
APRIL 30, 1996 OCTOBER 31,
(UNAUDITED) 1995
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Operations:
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Investment income - net................................................. $ 2,867 $ 1,875
Net change in unrealized appreciation or
depreciation of investments........................................... (273) 131
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Net increase in net assets resulting from operations................ 2,594 2,006
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Distributions to shareholders from:
Investment income - net:
Institutional class................................................... (2,867) --
Share transactions (note 1): Proceeds from sale of shares:
Institutional Class (note 3).......................................... -- 100,000
Institutional Service Class........................................... -- 1,000
Payments for redemption of shares:
Institutional Class................................................... -- --
Institutional Service Class........................................... -- (1,000)
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Increase in net assets from share transactions.......................... -- 100,000
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Total increase (decrease) in net assets............................... (273) 102,006
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Net assets at beginning of period.......................................... 102,006 --
Net assets at end of period (including undistributed
net investment income of $1,875 and $1,875, respectively)............... $101,733 $102,006
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See accompanying notes to financial statements.
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VAM SHORT GOVERNMENT AGENCY FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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1) ORGANIZATION
VAM Short Duration Government Agency Fund (the Fund), a Fund within VAM
Institutional Funds, Inc. which was incorporated in January 1985, is
registered under the Investment Company Act of 1940 (as amended) as a
diversified, open-end management investment company. Pursuant to its
articles of incorporation, VAM Institutional Funds, Inc. has 10 trillion
shares of authorized capital stock that may be issued. The Fund offers two
classes of shares the Institutional Class Shares and the Institutional
Service Class Shares. Each of which is sold pursuant to different sales
arrangements and bear different expenses.
The investment objective of the Fund is to seek as high a level of current
income as is consistent with preservation of principal and the average
portfolio duration ranging from zero to three years. The Fund will invest
exclusively in securities issued or guaranteed by the United States
government or its agencies or instrumentalities.
The only share transactions of the Fund since its formation were the
initial sale (at $10 per share) on January 12, 1995 of 10,000 shares of
Institutional Class Shares and 100 shares of Institutional Service Class
Shares to Voyageur Fund Managers, Inc. (Voyageur) and redemptions of 100
Institutional Service Class Shares by Voyageur. Except for the investment
of the initial capital proceeds, the fund has not commenced operations as
of April 30, 1996.
The values of fixed-income securities are determined using pricing services
or prices quoted by independent brokers. When market quotations are not
readily available, securities are valued at fair value according to methods
selected in good faith by the Board of Directors or Trustees. Short-term
securities with maturities less than 60 days when acquired, or which
subsequently are within 60 days of maturity, are valued at amortized cost
which approximates market value.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of net increases (decreases)
in net assets from operations during the reporting period. Actual results
could differ from those estimates. Effective August 1, 1995, the Fund
changed its fiscal year end from September 30 to October 31.
2) FEDERAL TAXES
The Fund intends to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute taxable
income to the shareholders of the Fund in amounts that will avoid or
minimize federal income or excise taxes for the Fund.
3) FEES AND EXPENSES
The Fund has an investment advisory agreement with Voyageur, under which
Voyageur manages the Fund's assets and furnishes related office facilities,
equipment, research and personnel. The Fund pays a monthly fee to Voyageur
equal to an annual rate of .50% of average daily net assets.
The Fund has a distribution agreement with Voyageur Fund Distributors, Inc.
(Fund Distributors). No compensation is paid by the Fund under the
Distribution Agreements.
Institutional Service Class Shares of the Fund also have an agreement with
Fund Distributors to compensate service organizations who provide
additional administrative, record keeping, and other shareholder services
to their customers who are beneficial owners of service shares. The Fund is
obligated to pay Fund Distributors a service fee at an annual rate up to
.25% of the Fund's average daily net assets applicable to Institutional
Service Class Shares.
The Fund will also pay a fee to Voyageur for acting as the Fund's dividend
disbursing, transfer, administrative and accounting services agent. The fee
is paid monthly and is equal to an annual rate of .10% of average daily net
assets. The Fund is also responsible for reimbursing Voyageur's
out-of-pocket expenses in connection with the performance of dividend
disbursing, transfer, administrative and accounting services.
In addition to the fees above, the Fund is responsible for paying most
other operating expenses including director's fees, registrations fees,
printing of shareholder reports, legal and auditing services,
organizational costs and other miscellaneous expenses. Under the investment
advisory agreement, Voyageur is obligated to pay all expenses and fees
(excluding interest, taxes, distribution fees and brokerage commissions)
which exceed 1.00% of the Fund's average daily net assets, on an annual
basis, up to the combined amount of its investment advisory and management
fee and its dividend-disbursing, transfer, administrative and accounting
service fees.
(4) FINANCIAL HIGHLIGHTS
Per share data (rounded to the nearest cent) for a share of beneficial
interest outstanding and selected information for each period are as follows:
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INSTITUTIONAL CLASS
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SIX MONTHS PERIOD FROM
ENDED JANUARY 12, 1995(c)
APRIL 30, 1996 TO
(UNAUDITED) OCTOBER 31, 1995
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Net asset value:
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Beginning of period.......................................... $10.20 $10.00
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Operations:
Net investment income........................................ .29 .19
Net unrealized gain (loss) on investments.................... (.03) .01
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Total from operations...................................... .26 .20
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Distributions to shareholders:
From net investment income................................... (.29) --
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Total from distributions................................... (.29) --
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Net asset value:
End of period................................................ $10.17 $10.20
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Total investment return (a)..................................... 2.55% 2.00%
Net assets at end of period (000's omitted)..................... $102 $102
Ratios:
Ratio of expenses to average daily net assets................ --%(b) --%(b)
Ratio of net investment income to average
daily net assets........................................... 5.66%(b) 2.31%(b)
Portfolio turnover rate
(excluding short-term securities)............................ --% --%
See accompanying notes to Financial Highlights.
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NOTES TO FINANCIAL HIGHLIGHTS
(a) Total investment return is based on the change in net asset value.
(b) Adjusted to an annual basis.
(c) Inception date.
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VAM SHORT GOVERNMENT AGENCY FUND
INVESTMENTS IN SECURITIES (UNAUDITED) APRIL 30, 1996
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PRINCIPAL MARKET
NAME OF ISSUER AMOUNT VALUE (A)
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U.S. Treasury Note, 5.625% due 06/30/97 $100,000 $99,781
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Total Investments in Securities (cost: $99,923)(b) $99,781
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NOTES TO INVESTMENTS IN SECURITIES
(a) Securities are valued by procedures described in note 1 to the Financial
Statements.
(b) The cost of securities for federal income tax purposes was $99,923. The
aggregate gross unrealized appreciation and depreciation of securities
based on this cost was as follows:
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GROSS GROSS NET
UNREALIZED UNREALIZED UNREALIZED
APPRECIATION DEPRECIATION DEPRECIATION
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<S> <C> <C> <C>
$-- $(142) $(142)
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