[LOGO] OCEAN STATE
TAX EXEMPT FUND
REPORT OF THE PRESIDENT
April 30, 2000
During the six months ended April 30, 2000 the Ocean State Tax Exempt
Fund ("the Fund") had a total return of 1.18% despite rising interest rates
and equity market volatility. The Fund's net asset value declined from
$10.12 to $10.11 while the Fund's income dividend remained steady
distributing $0.25 per share in income which was tax-free from State and
Federal taxes for Rhode Island residents.
The aggressive stance taken by the Fed, through the enactment of
multiple interest rate hikes to slow down the strongest U.S. economy in
decades, appears to be showing results. A spate of weak economic indicators
has raised hopes that the end of rate increases is near, encouraging bond
investors to make longer term commitments. In the past, too much economic
growth, too quickly, has been a precursor to inflation. Chief among bond
investors greatest fears is the impact of inflation on eroding investment
returns. Hopefully, these Fed moves will help to keep inflation at bay and
not impact the growth we've felt here in Rhode Island.
Ocean State is poised to weather any market volatility through its
emphasis on high coupon pre-refunded debt, a portfolio with an intermediate
weighted average maturity of 12.1 years and a portfolio credit quality with
69% in Aaa/AAA rated investment securities. Such an investment mix should
minimize net asset value fluctuations. In addition, these investments
should help to maintain a high current income distribution.
Ocean State is meant to be a long term investment for both up and
down markets. The Fund's primary investment objective remains preservation
of principal while generating a high level of current income. Obviously,
most investors believe they pay too much in taxes. However, for those
investors in higher income tax brackets the avoidance of income taxes
should be an integral part of their investment strategy. Ocean State Tax
Exempt Fund can help you meet these objectives.
Very truly yours,
/s/ Alfred B. Van Liew
Alfred B. Van Liew
President and Chairman of the
Board of Trustees
OCEAN STATE TAX EXEMPT FUND
INVESTMENT PERFORMANCE REVIEW
as of April 30, 2000
(unaudited)
<TABLE>
<CAPTION>
Prior
November 1, 1999 Fiscal Year May 1, 1995 May 1, 1990
through Ended through through
April 30, 2000 October 31, 1999 April 30, 2000 April 30, 2000
---------------- ---------------- -------------- --------------
<S> <C> <C> <C> <C>
Total Rate of Return (b)
Based on:
Net Asset Value 1.18% (0.66)% 4.88% 5.57%
Offering Price (0.86)% (4.67)% 4.01% 5.13%
<CAPTION>
As of As of
April 30, 2000 October 31, 1999
-------------- ----------------
<S> <C> <C>
30-day Current Yield
Based on:
Net Asset Value 4.77% 4.91%
Offering Price 4.58% 4.72%
30-day Tax-Equivalent Yield (a)
Based on:
Net Asset Value 7.55% 7.99%
Offering Price 7.24% 7.67%
<FN>
<Fa> For 1999, shareholders were subject to a combined Federal and State
tax rate of 36.78% (31% Federal, 27% State).
<Fb> Past performance is no guarantee of future results. Total return is
not annualized.
</FN>
</TABLE>
The Ocean State Tax Exempt Fund has placed a high priority on capital
preservation while at the same time striving for competitive after-tax
investment returns. The Fund has maintained the weighted average maturity
of the portfolio at 12.1 years as of April 30, 2000.
The average quality rating of the investments, in the following table
was Aa/AA (Moody's and Standard & Poor's bond rating services).
Portfolio Quality Analysis
<TABLE>
<CAPTION>
% of Total Portfolio
as of as of
Rating 4/30/00 10/31/99
------ ------- --------
<S> <C> <C>
Aaa/AAA 69.23% 66.85%
Aa/AA 20.63% 22.26%
A 8.50% 9.33%
Baa/BBB 1.64% 1.56%
Not Rated 0% 0%
</TABLE>
The Fund will continue its policy of seeking the highest tax
advantaged yields available, consistent with maintaining quality and
diversification objectives.
OCEAN STATE TAX EXEMPT FUND
STATEMENT OF ASSETS AND LIABILITIES
as of April 30, 2000
(unaudited)
<TABLE>
ASSETS
<S> <C>
Investments at value (identified cost $36,373,858) (Note 1A) $36,770,820
Cash 618,686
Interest receivable 545,548
Prepaid expenses 56,207
-----------
Total Assets $37,991,261
LIABILITIES
Payable for securities purchased $ 506,819
Distribution payable to shareholders 8,561
Accrued management fees 18,568
Payable for Capital stock redeemed 5,000
-----------
Total Liabilities 538,948
-----------
Net Assets $37,452,313
===========
Net Assets consist of:
Shares of beneficial interest at par ($.01/share) $ 37,036
Additional paid-in capital (Note 4) 37,007,980
Accumulated net realized gain on investment transactions 10,335
Net unrealized appreciation of investments 396,962
-----------
Total-Representing Net Assets at Value for 3,703,600 Shares Outstanding $37,452,313
===========
Computation of Net Asset Value & Offering Price:
Net Assets $37,452,313
Divided by number of shares outstanding 3,703,600
Net asset value $ 10.11
===========
Offering price $ 10.53
===========
</TABLE>
See Notes to Financial Statements.
OCEAN STATE TAX EXEMPT FUND
STATEMENT OF OPERATIONS
For the six-month period ended April 30, 2000
(unaudited)
<TABLE>
<S> <C> <C>
Investment Income
Interest income (Note 1B) $1,136,795
Expenses:
Adviser fees (Note 2) 66,563
Administrator fees (Note 2) 47,545
Auditing fees 15,650
Transfer agent fees 19,814
Legal fees and expenses 7,105
Distribution expenses (Note 5) 7,880
Trustees fees and expenses 11,000
Shareholder reports 2,681
Custody 14,455
Pricing fees 1,748
Miscellaneous expenses 858
Insurance 750
Registration fees 459
-------
196,508
----------
Net Investment Income $ 940,287
Realized and Unrealized Loss on Investments
Net Realized Gain on Investments 51,776
Net Change in Unrealized Depreciation of Investments (63,336)
-------
Net Realized and Unrealized Loss on Investments (11,560)
----------
Net Increase in Net Assets Resulting from Operations $ 928,727
==========
</TABLE>
See Notes to Financial Statements.
OCEAN STATE TAX EXEMPT FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six-Month Period Fiscal Year
Ended Ended
April 30, 2000 October 31, 1999
---------------- ----------------
(unaudited)
<S> <C> <C>
Increase (Decrease) in Net Assets Resulting from:
Operations:
Net investment income $ 940,287 $ 2,075,697
Net realized gain (loss) on investments 51,776 (41,442)
Change in unrealized depreciation of investments (63,336) (2,307,737)
-------------------------------
Net increase (decrease) in net assets resulting from operations 928,727 (273,482)
Dividends and distributions to shareholders from:
Net investment income ($.25 per share in 2000 and $.53 per
share in 1999) (940,287) (2,075,697)
Capital Gain ($.01 per share in 1999) 0 (41,828)
Net decrease from fund share transactions (Note 4) (2,490,092) (902,687)
-------------------------------
Total decrease in net assets (2,501,652) (3,293,694)
NET ASSETS:
Beginning of period $39,953,965 $43,247,659
-------------------------------
End of period $37,452,313 $39,953,965
===============================
</TABLE>
See Notes to Financial Statements.
OCEAN STATE TAX EXEMPT FUND
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each period.
The following data includes selected data and other performance
information derived from the financial statements.
<TABLE>
<CAPTION>
Fiscal Fiscal Fiscal Fiscal
Six months Year Year Year Year
Ended Ended Ended Ended Ended
4/30/00 10/31/99 10/31/98 10/31/97 10/31/96
----------- -------- -------- -------- --------
(unaudited)
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value, Beginning of Period $ 10.12 $ 10.71 $ 10.69 $ 10.53 $ 10.59
Net investment income .25 .53 .56 .57 .56
Net realized and unrealized gain (loss)
on securities (.01) (.58) .03 .16 (.06)
---------------------------------------------------------
Total from Investment Operations .24 (.05) .59 .73 .50
---------------------------------------------------------
Less Distributions:
Dividends from net investment income (.25) (.53) (.56) (.57) (.56)
Distribution from net realized gains (.00) (.01) (.01) (.00) (.00)
---------------------------------------------------------
Total Distributions (.25) (.54) (.57) (.57) (.56)
---------------------------------------------------------
Net Asset Value, End of Period $ 10.11 $ 10.12 $ 10.71 $ 10.69 $ 10.53
=========================================================
Total investment return at Net Asset
Value (a) 1.18% (.66)% 5.46% 6.97% 4.89%
Ratios and Supplemental Data:
Net Assets, End of Period (000's omitted) $37,452 $39,954 $43,248 $41,626 $42,456
Ratio of expenses to average net assets .52% .94% .94% .99% .98%
Ratio of net investment income to
average net assets 2.47% 4.91% 5.07% 5.25% 5.31%
Portfolio turnover 2.65% 13.19% 10.30% 2.27% 13.30%
Fund expenses per share .05 .10 .10 .11 .10
Net investment income per share .25 .53 .56 .57 .56
<FN>
<Fa> Total investment return does not reflect sales load and is not
annualized.
</FN>
</TABLE>
See Notes to Financial Statements.
OCEAN STATE TAX EXEMPT FUND
NOTES TO FINANCIAL STATEMENTS
April 30, 2000
(unaudited)
NOTE 1 Significant Accounting Policies
VLC Trust (the Trust) is a Massachusetts business trust organized on
August 1, 1986 and registered under the Investment Company Act of 1940, as
amended, as a non diversified, open-end management investment company.
There is authorized an unlimited number of shares with a par value of one
cent per share. The Declaration of Trust permits the Trustees to create
additional portfolios (funds). As of April 30, 2000 there is only one fund,
Ocean State Tax Exempt Fund (the Fund). The objective of the Fund is to
seek to provide as high a level of current income, exempt from Rhode Island
and Federal income taxes, as is consistent with preservation of capital.
The Fund invests primarily in obligations which pay interest exempt from
Rhode Island and Federal income taxes. The Fund commenced operations on
December 8, 1986.
At April 30, 2000, 96.24% of the Fund's net assets are invested in
Rhode Island municipal securities. Economic changes effecting the state in
certain of its public bodies and municipalities may affect the ability of
the issuer to pay the required principal and interest payments of the
municipal securities. In order to reduce risk associated with such factors
on April 30, 2000, 64.52% of the portfolio of investments have credit
enhancements backing them which the Fund relies on, such as: letters of
credit, insurance, or guarantees. MBIA provides the largest total
enhancements for the Fund, representing 22.95% of the portfolio.
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 revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
A) Security Valuation: Debt securities are valued on the basis of
valuations furnished by a pricing service since such valuations are
believed to reflect the fair value of such securities. Valuations used by
the Fund may be determined without exclusive reliance on quoted prices and
take into account appropriate factors such as institutional-size trading in
similar groups of securities, yield, quality, coupon rate, maturity, type
of issue and other local market conditions. Securities having an original
maturity of less than sixty days are valued at cost adjusted for
amortization of premiums and accretion of discounts. Other securities are
appraised in good faith at fair value using methods determined by the
Trustees and applied on a consistent basis. The Trustees monitor the
valuation of the Fund's municipal bonds through receipt of periodic reports
from the Adviser.
B) Security Transactions and Related Investment Income: Security
transactions are accounted for on a trade date basis (date the order to buy
or sell is executed). Interest income is recorded on the accrual basis. The
specific identification method is used for determining net realized gains
and losses for both financial statement and Federal income tax purposes.
C) Federal Income Taxes: The Fund's policy is to comply with the
provisions of subchapter M of the Internal Revenue Code available to
regulated investment companies and distribute to shareholders all of its
net income, including any net realized gain on investments. Accordingly, no
provision for Federal income tax or excise tax is necessary. Dividends paid
by the Fund from net interest on tax-exempt municipal bonds are not
includable by shareholders as gross income for Federal income tax purposes,
because the Fund intends to meet certain requirements of the Internal
Revenue Code applicable to regulated investment companies which will enable
the Fund to pay tax-exempt interest dividends. The portion of such
interest, if any, earned on private activity bonds issued after
August 7, 1986 may be considered a tax preference item to shareholders.
D) Distributions to Shareholders: Dividends from net investment
income are declared daily and distributed monthly. Capital gains
distributions, if any, are declared and distributed annually. For the
period ended April 30, 2000, the Fund paid no capital gains. 100% of the
income dividends paid by the Fund are exempt from Federal and Rhode Island
income taxes.
NOTE 2 Advisory and Adminstrative Services and Other Affiliated
Transactions
Van Liew Capital Inc. is the Adviser and the Administrator to the
Fund. The Fund pays Van Liew Capital Inc. at the following annual rates for
the adviser and administrator services, respectively:
.35 and .25 of 1% of the first $200 million of average daily
net assets.
.30 and .20 of 1% of average daily net assets over $200
million.
The Fund does not pay fees to Trustees affiliated with the Adviser or
to any of its officers. The Fund pays Trustees who are not interested
persons of the Fund an annual retainer plus $250 per meeting attended. The
annual retainer at April 30, 2000 was $2,000.
Legal fees and expenses of $7,105 were paid to a firm of which the
Fund's Secretary is a partner.
During the period November 1, 1999 through April 30, 2000, the
Distributor received $1,806 in commissions as a result of Fund share sales.
NOTE 3 Investment Transactions
During the period ended April 30, 2000 purchases and sales of
investment securities, other than short-term investments, aggregated
$1,005,933 and $3,540,763, respectively. The aggregate cost of investments
for Federal income tax purposes is substantially the same as the aggregate
cost for financial statement purposes. At April 30, 2000, gross unrealized
appreciation on investment securities was $956,288 and gross unrealized
depreciation on investment securities was $559,326.
NOTE 4 Shares of Beneficial Interest
The authorized capital of the Fund consists of unlimited number of
shares of beneficial interest with par value of one cent per share.
Transactions in shares of beneficial interest and in dollars were as
follows:
<TABLE>
<CAPTION>
Shares Amount
------ ------
<S> <C> <C>
Balance at 10/31/98 4,037,808 $40,472,328
Shares sold 391,381 4,134,236
Shares issued in reinvestment of dividends 87,346 911,455
Shares redeemed (566,825) (5,948,378)
------------------------
Net decrease (88,098) (902,687)
------------------------
Balance at 10/31/99 3,949,710 $39,569,641
========================
Shares sold 119,417 $ 1,204,026
Shares issued in reinvestment of dividends 44,936 453,922
Shares redeemed (410,463) (4,148,040)
------------------------
Net decrease (246,110) (2,490,092)
------------------------
Balance at 4/30/00 3,703,600 $37,079,549
========================
</TABLE>
NOTE 5 Distribution Plan
The Fund has adopted a Distribution Plan (the Plan) pursuant to Rule
12b-1 (the Rule) of the Investment Company Act of 1940 (the Act). The Rule
provides in substance that the Fund may not engage directly or indirectly
in financing any activity which is primarily intended to result in the sale
of its shares except pursuant to a plan adopted under the Rule. Under the
Plan, the Fund is authorized to pay for the printing of all prospectuses,
statements of additional information and reports and notices to
shareholders, even those which are not sent to existing shareholders. The
Fund paid $7,880 under the Plan during fiscal 2000.
OCEAN STATE TAX EXEMPT FUND
PORTFOLIO OF INVESTMENTS
as of April 30, 2000
(unaudited)
<TABLE>
<CAPTION>
Ratings
Principal Moody's/ Value
Amount Standard & Poor's(b) (Note 1)
--------- -------------------- --------
<S> <C> <C> <C>
MUNICIPAL SECURITIES (98.18%) (a)
Rhode Island General Obligation and Revenue (52.79%) (a)
$ 500,000 Barrington School District 5.00%, 10/1/14 Aa-3/NR $ 470,779
100,000 Bristol General Obligation 7.00%, 12/1/08 A-3/NR 103,276
120,000 Bristol General Obligation MBIA Insured 6.00%, 12/15/10 Aaa/AAA 124,375
250,000 Bristol General Obligation MBIA Insured 5.05%, 8/15/06 Aaa/AAA 250,686
300,000 Burrillville General Obligation MBIA Insured 5.75%, 10/15/17 Aaa/AAA 301,948
200,000 Burrillville General Obligation FGIC Insured 5.70%, 5/1/11 Aaa/AAA 206,543
75,000 Central Falls General Obligation 7.90%, 7/1/02 Baa-3/NR 75,133
200,000 Coventry General Obligation FSA Insured 4.00%, 11/7/07 Aaa/NR 182,817
130,000 Coventry General Obligation Pre-refunded U.S. T FGIC Insured
7.25%, 11/1/10 Aaa/AAA 134,378
460,000 Cranston General Obligation MBIA Insured 5.00%, 6/15/02 Aaa/AAA 462,986
50,000 Cumberland General Obligation 5.25%, 9/1/04 A-3/NR 51,261
165,000 Cumberland General Obligation MBIA Insured 5.70%, 10/1/11 Aaa/AAA 168,338
175,000 Cumberland General Obligation MBIA Insured 5.70%, 10/1/12 Aaa/AAA 178,103
300,000 East Providence General Obligation MBIA Insured
5.70%, 5/15/10 Aaa/AAA 310,939
135,000 Jamestown General Obligation CGIC Insured 7.00%, 3/15/07 Aaa/AAA 136,100
250,000 Kent County Water Auth. MBIA Insured 6.35%, 7/15/14 Aaa/AAA 260,989
355,000 Lincoln General Obligation MBIA Insured 5.50%, 8/15/10 Aaa/AAA 360,850
300,000 Lincoln General Obligation FGIC Insured 5.60%, 8/1/12 Aaa/NR 305,319
100,000 Narragansett General Obligation MBIA Insured 5.30%, 9/15/09 Aaa/AAA 100,899
210,000 Newport General Obligation MBIA Insured 6.50%, 8/15/06 Aaa/AAA 217,919
100,000 Newport General Obligation Pre-refunded U.S. T
6.80%, 4/15/09 A-1/NR 103,880
100,000 Newport General Obligation Pre-refunded U.S. T
6.80%, 4/15/10 A-1/NR 103,880
75,000 North Kingstown General Obligation 6.70%, 12/15/05 A-1/NR 81,481
80,000 North Kingstown General Obligation 6.80%, 12/15/06 A-1/NR 88,312
80,000 North Kingstown General Obligation Pre-refunded U.S. T
6.30%, 7/15/07 A-1/NR 82,917
120,000 North Providence General Obligation MBIA Insured
6.00%, 10/1/09 Aaa/AAA 124,076
100,000 Pawtucket General Obligation Pre-refunded U.S. T MBIA
Insured 6.75%, 9/15/08 Aaa/AAA 104,520
500,000 Pawtucket General Obligation CGIC Insured 6.00%, 3/15/15 Aaa/AAA 515,734
500,000 Pawtucket General Obligation CGIC Insured 6.00%, 3/15/11 Aaa/AAA 523,850
500,000 Pawtucket General Obligation CGIC Insured 6.00%, 3/15/13 Aaa/AAA 519,480
500,000 Pawtucket General Obligation CGIC Insured 6.00%, 3/15/12 Aaa/AAA 523,226
200,000 Providence Public Bldg. Auth. FSA Insured 5.10%, 12/15/08 Aaa/AAA 198,801
200,000 Providence Public Bldg. Auth. Pre-refunded U.S. T
7.30%, 12/1/08 Baa-2/NR 211,288
300,000 Providence Public Bldg. Auth. Pre-refunded U.S. T
7.30%, 12/1/09 Baa-2/NR 316,933
500,000 Providence Public Bldg. Auth. CGIC Insured 7.25%, 12/15/10 Aaa/AAA 518,366
150,000 Providence Public Bldg. Auth. MBIA Insured 5.50%, 12/15/13 Aaa/AAA 151,536
500,000 Providence Public Bldg. Auth. AMBAC Insured
5.125%, 12/15/14 Aaa/AAA 481,393
185,000 Providence Public Bldg. Auth. FSA Insured 5.00%, 12/15/18 Aaa/AAA 167,026
500,000 Providence Redevelopment Auth. AMBAC Insured,
5.30%, 4/1/12 Aaa/AAA 497,002
100,000 South Kingston General Obligation AMBAC Insured
5.00%, 11/15/08 Aaa/AAA 99,525
700,000 Warwick General Obligation MBIA Insured 6.60%, 11/15/06 Aaa/AAA 739,510
35,000 Westerly Dunn's Corner Fire District Unlimited Tax
Assessment 7.80%, 6/1/03 A-1/NR 36,757
35,000 Westerly Dunn's Corner Fire District Unlimited Tax
Assessment 7.85%, 6/1/04 A-1/NR 37,238
800,000 Rhode Island Clean Water Pre-refunded U.S. T MBIA Insured
6.50%, 10/1/06 NR/AAA 843,431
150,000 Rhode Island Clean Water MBIA Insured 5.30%, 10/1/07 Aaa/AAA 151,161
650,000 Rhode Island Depositors Economic Protection Corp. MBIA
Insured 6.55%, 8/1/10 Aaa/AAA 717,363
215,000 Rhode Island Depositors Economic Protection Corp.
CAPMAC Guaranteed 6.375%, 8/1/22 Aaa/AAA 231,968
250,000 Rhode Island Depositors Economic Protection Corp.
Escrowed to Maturity 5.75%, 8/1/21 Baa-1/A- 254,121
500,000 Rhode Island Economic Development Corp. Airport Revenue
FSA Insured 5.25%, 7/1/12 Aaa/AAA 494,505
395,000 Rhode Island Economic Development Corp. Airport Revenue
FSA Insured 5.25%, 7/1/13 Aaa/AAA 388,193
545,000 Rhode Island Economic Development Corp. Airport Revenue
FSA Insured 5.25%, 7/1/14 Aaa/AAA 531,524
250,000 Rhode Island Economic Development Corp. Airport Revenue
FSA Insured 5.00%, 7/1/18 Aaa/AAA 225,399
100,000 RI COPS MBIA Insured 5.375%, 10/1/16 Aaa/AAA 97,527
300,000 Rhode Island Lease Participation Certificate Shepard Bldg.
AMBAC Insured 5.125%, 6/1/12 Aaa/AAA 292,208
750,000 Rhode Island Turnpike Authority 5.35%, 12/1/17 A/A 710,851
125,000 Rhode Island Public Building Auth. AMBAC Insured
5.20%, 2/1/06 Aaa/AAA 125,499
150,000 Rhode Island Public Building Auth. AMBAC Insured
5.25%, 2/1/10 Aaa/AAA 149,663
150,000 Rhode Island Port Auth. Pre-refunded U.S. T AMBAC Insured
6.50%, 6/1/08 Aaa/AAA 160,901
500,000 Rhode Island Refunding Bond Authority AMBAC Insured
5.00%, 2/1/07 Aaa/AAA 495,129
500,000 Rhode Island Refunding Bond Authority AMBAC Insured
5.25%, 2/1/10 Aaa/AAA 498,876
250,000 Rhode Island Student Loan Auth. Gtd. Std. Lns.
6.20%, 12/1/09 Aaa/NR 250,062
250,000 Rhode Island General Obligation FGIC Insured 7.00%, 7/15/04 Aaa/AAA 269,418
5,000 Rhode Island General Obligation 7.50%, 6/15/05 NR/AA- 5,023
300,000 Rhode Island General Obligation FGIC Insured
5.125%, 7/15/14 Aaa/AAA 289,960
500,000 Rhode Island General Obligation MBIA Insured 5.75%, 8/1/15 Aaa/AAA 506,368
1,000,000 Rhode Island General Obligation FGIC Insured 5.50%, 9/1/16 Aaa/AAA 987,761
250,000 Rhode Island Cons. Cap. Dev. FGIC Insured 5.00%, 9/1/16 Aaa/AAA 231,331
250,000 Rhode Island Cons. Cap. Dev. FGIC Insured 5.00%, 9/1/15 Aaa/AAA 233,828
-----------
Total Rhode Island General Obligation and Revenue $19,772,439
Rhode Island Health & Education Building Corporation (28.04%) (a)
$ 150,000 Board of Governors CGIC Insured 6.125%, 9/15/10 Aaa/AAA $ 156,781
195,000 Board of Governors CGIC Insured 6.15%, 9/15/11 Aaa/AAA 204,058
220,000 Brown University 5.40%, 9/1/18 Aa-1/AA+ 212,088
375,000 Brown University 6.00%, 9/1/10 Aa-1/AA+ 381,870
100,000 Brown University 4.75%, 9/1/12 Aa-1/AA+ 92,283
200,000 Brown University 5.90%, 9/1/14 Aa-1/AA+ 206,543
400,000 Brown University 5.00%, 9/1/19 Aa-1/AA+ 357,143
400,000 Bryant College MBIA Insured 6.50%, 6/1/05 Aaa/AAA 418,581
100,000 Bryant College MBIA Insured 5.95%, 6/1/07 Aaa/AAA 102,647
100,000 Bryant College MBIA Insured 6.20%, 6/1/13 Aaa/AAA 102,772
355,000 Roger Williams College Connie Lee Insured Pre-refunded
U.S. T 6.50%, 11/15/08 Aaa/AAA 375,038
195,000 Roger Williams College Connie Lee Insured 6.50%, 11/15/08 Aaa/AAA 203,815
355,000 Roger Williams College Connie Lee Insured Pre-refunded
U.S. T 6.625%, 11/15/11 Aaa/AAA 375,924
195,000 Roger Williams College Connie Lee Insured 6.625%, 11/15/11 Aaa/AAA 206,737
1,290,000 South County Hospital Pre-refunded U.S. T 7.25%, 11/1/11 NR/AAA 1,348,313
500,000 Salve Regina College Connie Lee Insured 6.25%, 3/15/13 NR/AAA 516,983
300,000 Salve Regina College Pre-refunded U.S. T Connie Lee Insured
6.30%, 3/15/20 NR/AAA 305,694
525,000 Johnson & Wales College Connie Lee Insured 5.75%, 4/1/12 NR/AAA 536,276
750,000 Johnson & Wales College MBIA Insured 5.00%, 4/1/29 Aaa/AAA 641,545
500,000 St. Antoine Residence 6.75%, 11/15/18 Aa-3/NR 537,587
500,000 St. Antoine Residence 6.125%, 11/15/18 Aa-3/NR 488,261
575,000 Kent County Hospital MBIA Insured 7.00%, 7/1/10 Aaa/AAA 597,402
200,000 Memorial Hospital MBIA Insured 6.50%, 7/1/04 Aaa/AAA 209,291
400,000 Miriam Hospital Pre-refunded U.S. T 6.35%, 4/1/08 NR/A 421,578
400,000 Newport Hospital 5.25%, 7/1/19 A-/A+ 324,176
300,000 Rhode Island Hospital FGIC Insured 6.70%, 8/15/04 Aaa/AAA 312,812
600,000 Women & Infants Hospital CGIC Insured 6.55%, 9/1/13 Aaa/AAA 630,119
100,000 United Methodist Elder Care LOC-Fleet Bank 7.50%, 11/1/14 A/A 106,144
125,000 New England Tech Inst. Connie Lee Insured 6.00%, 3/1/15 NR/AAA 127,997
-----------
Total Rhode Island Health & Education Building Corporation $10,500,458
Rhode Island Housing & Mortgage Finance Corporation (14.64%) (a)
$ 5,000 9.30%, 7/1/04, FGIC Insured Aaa/AAA $ 4,997
25,000 7.625%, 10/1/04 Aa-2/AA 25,348
200,000 5.65%, 10/1/07 NR/A 201,049
60,000 7.80%, 10/1/10, Series A Aa-2/AA+ 61,485
300,000 7.60%, 10/1/20 NR/A 306,443
20,000 7.80%, 10/1/11 Aa-2/AA+ 20,278
350,000 7.50%, 10/1/11 Aa-2/AA+ 361,014
15,000 7.80%, 10/1/11 Aa-2/AA+ 15,209
200,000 5.70%, 4/1/15 Aa-2/AA+ 199,301
400,000 5.00%, 10/1/16 Aa-2/AA+ 369,131
500,000 5.75%, 4/1/17 Aa-2/AA+ 501,373
200,000 6.25%, 4/1/17 Aa-2/AA+ 204,545
110,000 7.95%, 10/1/20 NR/A 111,478
5,000 7.25%, 10/1/21 Aa-2/AA+ 5,145
25,000 7.875%, 10/1/21, MBIA Insured Aaa/AAA 25,381
30,000 7.75%, 4/1/22 Aa-2/AA+ 30,607
345,000 7.55%, 10/1/22 Aa-2/AA+ 355,856
300,000 6.50%, 10/1/22 Aa-2/AA+ 306,818
1,250,000 6.70%, 10/1/15 Aa-2/AA+ 1,298,700
250,000 5.40%, 10,1/16 Aa-2/AA+ 242,258
500,000 6.15%, 4/1/17 Aa-2/AA+ 505,119
300,000 6.50%, 4/1/27 Aa-2/AA+ 305,319
25,000 6.85%, 4/1/27 Aa-2/AA+ 25,634
-----------
Total Rhode Island Housing & Mortgage Finance Corporation $ 5,482,488
Rhode Island Industrial Facilities Corporation (0.77%) (a)
$ 25,000 Inge Corporation SBA GTD 9.125%, 10/1/00 Aaa/NR $ 25,492
250,000 Mobil Oil 6.00%, 11/1/14 Aaa/AAA 262,238
-----------
Total Rhode Island Industrial Facilities Corporation $ 287,730
-----------
TOTAL RHODE ISLAND BONDS (96.24%) (a) $36,043,115
Puerto Rico Bonds (1.94%) (a)
$ 225,000 Puerto Rico Highway Pre-refunded U.S. T 7.70%, 7/1/03 Baa1/AAA $ 230,702
500,000 Puerto Rico Municipal Finance Auth. FSA Insured,
5.50%, 7/1/17 Aaa/AAA 497,003
-----------
TOTAL PUERTO RICO BONDS (1.94%) (a) $ 727,705
-----------
TOTAL INVESTMENTS (Cost $36,373,858)(97.12%) (a) $36,770,820
===========
<FN>
<Fa> Percentages indicated are based on net assets of $37,452,313 at
April 30, 2000 (total investments plus cash and receivables less
liabilities) which corresponds to a net asset value per share of
$10.11.
<Fb> These municipal securities meet the four highest ratings assigned by
Moody's Investors Service, Inc. or Standard & Poor's Corp. or where
not rated, are determined by the Fund to be of comparable quality
within the guidelines approved by the directors. The ratings
indicated are the most current available. When bonds are rated
differently by Moody's and S&P, the higher rating has been reported.
The rating NR means it is not rated by Moody's or S&P. Certain
securities have credit enhancement features backing them. Without
these enhancement features the securities may or may not meet the quality
standards of other securities purchased by the Fund. (See Note 1)
<Fc> Abbreviations used:
AMBAC -American Municipal Bond Assurance Corp.
CGIC -Capital Guaranty Insurance Co.
FGIC -Financial Guaranty Insurance Co.
FSA -Financial Security Assurance Inc.
MBIA -Municipal Bond Investors Assurance Corp.
LOC -Letter of Credit
BIG -Bond Investors Guaranty (subsidiary of MBIA)
SBA -Small Business Administration
CAPMAC -Capital Markets Assurance Corp.
</FN>
</TABLE>
See Notes to Financial Statements.
Investment Adviser & Administrator
Van Liew Capital Inc.
One Regency Plaza, Suite One
Providence, Rhode Island 02903
Distributor
Van Liew Securities, Inc.
One Regency Plaza, Suite One
Providence, Rhode Island 02903
Custodian
PFPC Trust Company
Airport Business Center
200 Stevens Drive, Suite 440
Lester, Pennsylvania 19113
Transfer Agent
PFPC, Inc.
P.O. Box 8871
Wilmington, Delaware 19899-8871
Independent Auditors
Ernst & Young LLP
200 Clarendon Street
Boston, MA 02116-5072
Counsel
Hinckley, Allen & Snyder
1500 Fleet Center
Providence, Rhode Island 02903
Trustees
Alfred B. Van Liew, Chairman
Milton C. Bickford, Jr.
Michael E. Hogue
Alice M. Macintosh
John H. St. Sauveur
Thomas R. Weschler,
Vice Admiral, US Navy, Retired
Officers
Alfred B. Van Liew, President
Samuel H. Hallowell, Vice President
Joseph J. Healy, Vice President
Kevin M. Oates, Treasurer
Margaret D. Farrell, Secretary
[LOGO] OCEAN STATE
TAX EXEMPT FUND
(The Portfolio of VLC Trust)
Semi-Annual Report
April 30, 2000
(unaudited)
Interest income exempt
from Federal and Rhode
Island income taxes
from quality municipal
bonds.
