VFI CORE PORTFOLIO
VFI INTERMEDIATE DURATION PORTFOLIO
VFI SHORT DURATION PORTFOLIO
SEMI-ANNUAL REPORT
Dated April 30, 1996
Voyageur offers a family of mutual funds, each with an individual objective
stated in its prospectus. Investment objectives of the funds range from high
current income to long-term capital appreciation. Exchange privileges allow you
to change your investment between Voyageur Funds as your objectives or market
conditions change.
VOYAGEUR HIGH YIELD FUNDS seek high current income free from both Federal income
taxes and state income taxes (where applicable). The Funds invest in medium and
lower grade municipal bonds.
<TABLE>
<CAPTION>
<S> <C>
Voyageur MINNESOTA High Yield Municipal Bond Fund
VOYAGEUR TAX FREE FUNDS seek high current income free from both Federal income
taxes and state income taxes (where applicable). The Funds invest in investment
grade municipal bonds.
Voyageur ARIZONA Tax Free Fund Voyageur MINNESOTA Tax Free Fund
Voyageur CALIFORNIA Tax Free Fund Voyageur NATIONAL Tax Free Fund
Voyageur COLORADO Tax Free Fund Voyageur NEW MEXICO Tax Free Fund
Voyageur FLORIDA Tax Free Fund Voyageur NORTH DAKOTA Tax Free Fund
Voyageur IDAHO Tax Free Fund Voyageur UTAH Tax Free Fund
Voyageur IOWA Tax Free Fund Voyageur WISCONSIN Tax Free Fund
Voyageur KANSAS Tax Free Fund
VOYAGEUR INSURED TAX FREE FUNDS seek high current income free from both Federal
income taxes and state income taxes (where applicable) with the added safety of
an insured portfolio. The Funds invest in insured municipal bonds.
Voyageur ARIZONA Insured Tax Free Fund Voyageur FLORIDA Insured Tax Free Fund
Voyageur CALIFORNIA Insured Tax Free Fund Voyageur OREGON Insured Tax Free Fund
Voyageur MISSOURI Insured Tax Free Fund Voyageur MINNESOTA Insured Fund
Voyageur NATIONAL Insured Tax Free Fund Voyageur WASHINGTON Insured Tax Free Fund
VOYAGEUR LIMITED TERM FUNDS seek to preserve original investment principal while
providing income free from both Federal income taxes and state income taxes
(where applicable). The Funds invest in intermediate term investment grade
municipal bonds.
Voyageur FLORIDA Limited Term Tax Free Fund
Voyageur NATIONAL Limited Term Tax Free Fund
Voyageur MINNESOTA Limited Term Tax Free Fund
VOYAGEUR EQUITY FUNDS seek long term capital appreciation by investing in common
stocks.
Voyageur AGGRESSIVE GROWTH Fund Voyageur GROWTH Stock Fund
Voyageur GROWTH AND INCOME Fund Voyageur INTERNATIONAL Equity Fund
VOYAGEUR INCOME FUNDS seek high current income from investments issued,
guaranteed or otherwise backed by the full faith and credit of the U.S.
Government.
Voyageur U.S. GOVERNMENT SECURITIES Fund
VOYAGEUR CASH TRUST SERIES MONEY MARKET FUNDS seek high current income,
principal protection and liquidity by investing in money market instruments.
Voyageur CALIFORNIA MUNICIPAL CASH Series Voyageur OHIO MUNICIPAL CASH Series
Voyageur MUNICIPAL CASH Series Voyageur PRIME CASH Series
Voyageur FLORIDA MUNICIPAL CASH Series Voyageur TREASURY CASH Series
Voyageur GOVERNMENT CASH Series Voyageur MINNESOTA MUNICIPAL CASH Series
</TABLE>
For more complete information regarding the investment objectives, fees and
expenses of the Funds, please obtain a prospectus from your Investment
Representative or from Voyageur, 90 South Seventh Street, Suite 4400,
Minneapolis, MN 55402-4115; (612) 376-7044 (local); 800-525-6584 (MKTG).
Dear Shareholder,
We are pleased to present our first Semi-Annual Report for the Voyageur
Financial Institutions Funds for the one month period ended April 30, 1996.
During this short period of initial investment operations, the VFI Funds
performed competitively with their benchmarks -- as the fixed income markets,
across the board, turned in lackluster results.
Along with the Semi-Annual Report, I would also like to remind you of "Voyageur
on CallTM," Voyageur's new automated voice response system. Voyageur on CallTM
will allow you the flexibility of accessing a variety of account information
(including daily price and yield information) when you need it -- seven days a
week; 24 hours a day! If you have any questions regarding the use of Voyageur on
CallTM, or would simply like to speak with a shareholder service representative,
you can reach Voyageur during regular business hours at 1-800-545-3863 (press
0).
Below you will find a summary of the results for each of the VFI Funds net asset
value, dividends paid, and
total net assets for the reporting period.
<TABLE>
<CAPTION>
NET ASSET
VALUE NET ASSET DIVIDENDS TOTAL NET
BEGINNING OF VALUE END PAID PER ASSETS END OF
PERIOD PERIOD OF PERIOD SHARE PERIOD (000'S)
- ------ ------ --------- ----- --------------
Period ended April 30, 1996:
<S> <C> <C> <C> <C>
VFI Core Portfolio $10.00* $9.87 $0.05 $30,261
VFI Intermediate Duration Portfolio 10.00* 9.95 0.05 30,503
VFI Short Duration Portfolio 10.00* 9.98 0.05 30,552
- -----------------------------------------
*Net asset value at March 27, 1996 (commencement of operations)
</TABLE>
On the page that follows, VFI Funds Co-managers, Randal W. Harrison, CFA
(Voyageur Asset Management) and Anthony G. Bastardi (Cadre Financial Services,
Inc.), will update you on the economy, current/anticipated interest rate
environment, and the overall tone of the bond market.
We thank you for your confidence and the opportunity to serve your investment
needs. We look forward to many more reporting periods in the years to come.
Sincerely,
John G. Taft
President
VFI Core Portfolio
VFI Intermediate Duration Portfolio
VFI Short Duration Portfolio
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FUND PERFORMANCE
Discussion of the Funds Performance
by Randal W. Harrison, CFA, and Anthony G. Bastardi
The investment objective of each VFI fund is to seek as high a level of current
income as is consistent with preservation of principal and the average duration
of the respective funds.
The three VFI Funds performed in line with the market for the brief period since
their inception. While rising interest rates put downward pressure on bond
prices, hurting total returns, it is important to note that the reporting period
encompasses just over a month, as the VFI funds have only been in operation
since late March.
* The VFI Core Portfolio achieved a total return of -0.76% since the March 27
inception date (assuming purchase at net asset value and reinvestment of
the dividends and capital gains).
* The VFI Intermediate Duration Portfolio achieved a total return of 0.01%
since the March 27 inception date (assuming purchase at net asset value and
reinvestment of the dividends and capital gains).
* The VFI Short Duration Portfolio achieved a total return of 0.29% since the
March 27 inception date (assuming purchase at net asset value and
reinvestment of the dividends and capital gains).
OUTLOOK FOR THE VFI FUNDS
Our outlook for the VFI Funds is cautious. We expect that there will be an
improvement in the NAV, over the coming year. However, strong economic growth in
the near term could continue to put upward pressure on interest rates. In light
of this view we have reduced the overall duration exposure for the funds, with
the expectation that duration risk will be added when the market outlook becomes
more positive.
<TABLE>
<CAPTION>
THE VOYAGEUR FINANCIAL INSTITUTIONS FUNDS
STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED) APRIL 30, 1996
- -------------------------------------------------------------------------------------------------------------------
VFI VFI
VFI INTERMEDIATE SHORT
CORE DURATION DURATION
PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- ---------
ASSETS
<S> <C> <C> <C>
Investments in securities, at market value (note 1)
(identified costs, $42,094,164, $38,533,233 and
$27,974,365, respectively)................................. $41,805,290 $38,495,947 $27,927,300
Cash in bank on demand deposit.................................. 699 834 780
Accrued interest receivable..................................... 245,175 164,490 64,147
Receivable for investment securities sold....................... 1,942,605 -- 10,963,593
Organizational costs (note 3)................................... 5,144 5,144 5,144
----------- ----------- -----------
Total assets................................................. 43,998,913 38,666,415 38,960,964
----------- ----------- -----------
LIABILITIES
Dividends payable to shareholders.............................. 143,106 135,233 129,286
Payable for investment securities purchased..................... 13,591,477 8,024,062 8,272,861
Other accrued expenses.......................................... 3,635 3,667 6,500
----------- ----------- -----------
Total liabilities............................................ 13,738,218 8,162,962 8,408,647
----------- ----------- -----------
NET ASSETS APPLICABLE TO OUTSTANDING CAPITAL STOCK.............. $30,260,695 $30,503,453 $30,552,317
=========== =========== ===========
Represented by:
Capital Stock - $.01 par value (note 1)...................... $ 30,661 $ 30,652 $ 30,602
Additional paid-in capital................................... 30,618,372 30,618,381 30,568,432
Accumulated net realized gain (loss) on investments.......... (99,464) (108,294) 348
Unrealized depreciation of investments....................... (288,874) (37,286) (47,065)
----------- ----------- -----------
TOTAL NET ASSETS........................................... $30,260,695 $30,503,453 $30,552,317
=========== =========== ===========
SHARES OUTSTANDING AND NET ASSET VALUE PER SHARE
Shares of Capital Stock outstanding: 3,066,072; 3,065,176
and 3,060,176, respectively (note 4)....................... $9.87 $9.95 $9.98
===== ===== =====
See accompanying notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
THE VOYAGEUR FINANCIAL INSTITUTIONS FUNDS
STATEMENTS OF OPERATIONS (UNAUDITED) PERIOD ENDED APRIL 30, 1996
- ------------------------------------------------------------------------------------------------------------------
VFI VFI
VFI INTERMEDIATE SHORT
CORE DURATION DURATION
PORTFOLIO* PORTFOLIO* PORTFOLIO*
---------- ---------- ----------
Investment income:
<S> <C> <C> <C>
Interest....................................................... $ 174,436 $166,054 $159,791
--------- -------- --------
Expenses (note 3):
Investment advisory and management fee......................... 5,636 5,662 2,832
Service fees................................................... 1,409 1,415 1,417
Custodian fees................................................. -- -- 2,832
Dividend-disbursing, transfer, administrative
and accounting services fees................................. 2,731 2,744 2,745
Amortization of organizational costs........................... 87 87 87
--------- -------- --------
Total expenses............................................... 9,863 9,908 9,913
--------- -------- --------
Investment income - net...................................... 164,573 156,146 149,878
--------- -------- --------
Realized and unrealized gain (loss) on investments:
Realized gain (loss) on security transactions (note 2)......... (99,464) (108,294) 348
Net change in unrealized appreciation or depreciation
of investments.............................................. (288,874) (37,286) (47,065)
--------- -------- --------
Net loss on investments.................................... (388,338) (145,580) (46,717)
--------- -------- --------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS... $(223,765) $10,566 $103,161
========== ======= ========
* Period from March 27, 1996 (commencement of operations) to April 30, 1996.
See accompanying notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
THE VOYAGEUR FINANCIAL INSTITUTIONS FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)
- -------------------------------------------------------------------------------------------------------------------
VFI VFI
VFI INTERMEDIATE SHORT
CORE DURATION DURATION
PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- ---------
PERIOD FROM PERIOD FROM PERIOD FROM
MARCH 27, 1996* MARCH 27, 1996* MARCH 27, 1996*
TO APRIL 30, 1996 TO APRIL 30, 1996 TO APRIL 30, 1996
(UNAUDITED) (UNAUDITED) (UNAUDITED)
----------- ----------- -----------
Operations:
<S> <C> <C> <C>
Investment income - net................................ $ 164,573 $ 156,146 $ 149,878
Realized gain (loss) on investments - net.............. (99,464) (108,294) 348
Net change in unrealized appreciation or
depreciation of investments.......................... (288,874) (37,286) (47,065)
------------ ------------ -----------
Net increase (decrease) in net assets
resulting from operations....................... (223,765) 10,566 103,161
------------ ----------- -----------
Distributions to shareholders from:
Investment income - net................................ (164,573) (156,146) (149,878)
------------ ------------ -----------
Capital share transactions (note 4):
Proceeds from sale of shares........................... 30,649,033 30,649,033 30,599,034
Net asset value of shares issued in reinvestment of net
investment income distributions...................... -- -- --
Payments for redemption of shares...................... -- -- --
----------- ----------- -----------
Increase in net assets from
capital share transactions........................... 30,649,033 30,649,033 30,599,034
----------- ----------- -----------
Total increase in net assets....................... 30,260,695 30,503,453 30,552,317
Net assets at beginning of period......................... -- -- --
----------- ----------- -----------
Net assets at end of period............................... $30,260,695 $30,503,453 $30,552,317
=========== =========== ===========
* Commencement of operations.
See accompanying notes to financial statements.
</TABLE>
THE VOYAGEUR FINANCIAL INSTITUTIONS FUNDS
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Voyageur Financial Institutions (VFI) Core Portfolio, VFI Intermediate
Duration Portfolio and VFI Short Duration Portfolio (the Funds) are series
within Voyageur Funds, Inc. and are registered under the Investment Company Act
of 1940 (as amended) as diversified, open-end management investment companies.
The investment objective of each Fund is to seek as high a level of current
income as is consistent with preservation of principal and the average duration
of its respective portfolio securities by investing in securities issued or
guaranteed by the United States Government or its agencies or instrumentalities.
The significant accounting policies followed by the Funds are summarized as
follows:
USE OF ESTIMATES
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 increase (decrease) in net assets
from operations during the reporting period. Actual results could differ from
those estimates.
INVESTMENTS IN SECURITIES
Securities are valued at fair value as determined by the Board of
Directors. Determination of fair value involves, among other things, using
pricing services or prices quoted by independent brokers. Short-term securities
are valued at amortized cost which approximates market value.
Security transactions are accounted for on the trade date. Securities gains
and losses are calculated on the identified-cost basis. Interest income,
including level-yield amortization of premium and discount, is accrued daily.
FEDERAL INCOME TAXES
The Funds' policy is to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
income to shareholders in amounts that will avoid or minimize federal income or
excise taxes for the Funds. Net investment income and net realized gains
(losses) for the Funds may differ for financial statement and tax purposes
primarily because of losses deferred for tax purposes due to "wash sale"
transactions. The character of distributions made during the year from net
investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains (losses) were recorded by
the Funds.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends declared daily from net investment income are payable monthly in
cash or may be reinvested in additional shares of each Fund at net asset value.
Net realized short-term capital gains, when available, may be distributed
throughout the year. Net realized long-term capital gains, when available, are
distributed annually.
REPURCHASE AGREEMENTS
Securities pledged as collateral for repurchase agreements are held by the
Fund's custodian bank until maturity of the repurchase agreement. Procedures for
all agreements ensure that the daily market value of the collateral is in excess
of the repurchase agreement in the event of default.
(2) INVESTMENT SECURITIES TRANSACTIONS
Purchase cost and proceeds of sales of investment securities, other than
short-term securities, aggregated $91,561,423 and $49,568,795 for VFI Core
Portfolio, $111,841,587 and $73,366,060 for VFI Intermediate Duration Portfolio
and $64,939,276 and $38,789,259 for VFI Short Duration Portfolio, respectively,
for the period ended April 30, 1996.
(3) EXPENSES
VFI Core Portfolio and VFI Intermediate Duration Portfolio have an
investment advisory agreement with Marquette Trust Company (Marquette). VFI
Short Duration Portfolio has an investment advisory agreement with Cadre
Consulting Services, Inc. (Cadre). Marquette has retained Voyageur Fund
Managers, Inc. (Voyageur) as the sub-adviser to VFI Core Portfolio and VFI
Intermediate Duration Portfolio. Each investment adviser furnishes, at its own
expense, office facilities, equipment and personnel for servicing the
investments of the respective funds. Under the investment advisory agreements
VFI Core Portfolio and VFI Intermediate Duration Portfolio each Fund's
investment adviser is entitled to receive from the Fund a monthly advisory and
management fee equivalent on an annual basis to .20% of the average daily net
assets of such Fund, subject to a performance adjustment of up to +/- .15%. The
investment adviser for VFI Short Duration Portfolio is entitled to receive a
monthly advisory and management fee equivalent on an annual basis to .10% of the
average daily net assets of such Fund and is not subject to a performance
adjustment.
Each Fund also pays a monthly service fee equal on an annual basis, of .05%
of each Fund's average daily net assets. Such fee is paid to Voyageur Fund
Distributors, Inc. (the Underwriter) to compensate the Underwriter for expenses
incurred in connection with servicing of Fund shareholder accounts.
Marquette serves as the custodian of each Fund's portfolio securities and
cash. Marquette receives no additional compensation for acting as the custodian
of VFI Core Portfolio and VFI Intermediate Duration Portfolio and a monthly fee
from VFI Short Duration Portfolio equal on an annual basis to .10% of such
Fund's average daily net assets for its services as custodian.
Voyageur acts as each Fund's dividend disbursing, transfer, administrative
and accounting services agent. Voyageur receives a monthly fee from each Fund
equal on an annual basis to .10% of each Fund's average daily net assets.
In addition to the fees above, the Funds are responsible for paying most
other operating expenses including directors fees, registration fees, legal and
auditing services and other miscellaneous expenses. Organizational costs are
being amortized over 60 months on a straight-line basis.
Marquette, Cadre, Voyageur and the Underwriter reserve the right to
voluntarily waive their fees in whole or part and/or to voluntarily absorb
certain other of the Fund's expenses. Any such waiver or absorption, however,
will be in their sole discretion and may be lifted or reinstated at any time.
(4) SHARE TRANSACTIONS
Transactions in shares during the period ended April 30, 1996 were as follows:
<TABLE>
<CAPTION>
VFI VFI
VFI INTERMEDIATE SHORT
CORE DURATION DURATION
PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- ---------
PERIOD FROM PERIOD FROM PERIOD FROM
MARCH 27, 1996* MARCH 27, 1996* MARCH 27, 1996*
TO APRIL 30, 1996 TO APRIL 30, 1996 TO APRIL 30, 1996
(UNAUDITED) (UNAUDITED) (UNAUDITED)
----------- ----------- -----------
<S> <C> <C> <C>
Shares sold............................. 3,066,072 3,065,176 3,060,176
Shares issued for
reinvested distributions............. -- -- --
Shares redeemed......................... -- -- --
--------- --------- ---------
Increase in shares outstanding.......... 3,066,072 3,065,176 3,060,176
========= ========= =========
* Commencement of operations.
</TABLE>
(5) FINANCIAL HIGHLIGHTS
Per shares data (rounded to the nearest cent) for a share of capital stock
outstanding and selected information for each period are as follows:
<TABLE>
<CAPTION>
VFI VFI
VFI INTERMEDIATE SHORT
CORE DURATION DURATION
PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- ---------
PERIOD FROM PERIOD FROM PERIOD FROM
MARCH 27, 1996(A) MARCH 27, 1996(A) MARCH 27, 1996(A)
TO APRIL 30, 1996 TO APRIL 30, 1996 TO APRIL 30, 1996
(UNAUDITED) (UNAUDITED) (UNAUDITED)
----------- ----------- -----------
Net asset value:
<S> <C> <C> <C>
Beginning of period......................... $10.00 $10.00 $10.00
Operations:
Net investment income....................... .05 .05 .05
Net realized and unrealized gain (loss)
on investments............................ (.13) (.05) (.02)
----- ----- -----
Total from operations................... (.08) .00 .03
----- ----- -----
Distributions to shareholders:
From net investment income.................. (.05) (.05) (.05)
----- ----- -----
Net asset value:
End of period............................... $9.87 $9.95 $9.98
===== ===== =====
Total investment return (b).................... (.76)% .01% .29%
Net assets at end of
period (000's omitted)...................... $30,261 $30,503 $30,552
Ratios:
Ratio of expenses to
average daily net assets.................. .34%(c) .34%(c) .34%(c)
Ratio of net investment income
to average daily net assets............... 5.66%(c) 5.36%(c) 5.14%(c)
Portfolio turnover rate
(excluding short-term securities)........... 114.5% 176.4% 146.6%
See accompanying notes to Financial Highlights.
</TABLE>
(a) Commencement of investment operations.
(b) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value.
(c) Annualized.
<TABLE>
<CAPTION>
VFI CORE PORTFOLIO
INVESTMENTS IN SECURITIES (UNAUDITED) APRIL 30, 1996
- --------------------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
NAME OF ISSUER AMOUNT VALUE (a)
- --------------------------------------------------------------------------------------------------------------
(Percentage of investment category relates to total net assets)
TOTAL INVESTMENTS IN SECURITIES: (138.2%)
U. S. AGENCY OBLIGATIONS: (131.2%)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Federal Farm Credit Bank
5.20%, due 05/16/96 $7,500,000 $ 7,483,750
Federal Home Loan Bank
5.25%, due 05/15/96 1,650,000 1,646,631
Federal Home Loan Mortgage Corporation
5.25%, due 05/13/96 400,000 399,300
5.18%, due 05/20/96 195,000 194,467
6.50%, due 11/15/02 2,000,000 1,972,700
7.00%, due 08/01/09 2,500,000 2,475,900
6.50%, due 07/01/25 3,000,000 2,909,730
6.04%, due 09/01/25 1,425,956 1,465,840
7.50%, due 01/01/26 4,200,000 4,157,412
7.00%, due 01/01/26 30,540 29,496
7.00%, due 02/01/26 524,690 506,745
7.00%, due 03/01/26 5,050,000 4,877,290
7.00%, due 04/01/26 1,945,122 1,878,599
Federal National Mortgage Association
5.26%, due 05/14/96 425,000 424,193
5.22%, due 05/17/96 1,900,000 1,895,592
5.36%, due 02/16/01 2,500,000 2,373,825
6.80%, due 01/10/03 5,000,000 5,004,700
TOTAL U.S. AGENCY OBLIGATIONS (cost: $39,984,414) 39,696,170
-----------
U.S. TREASURY OBLIGATIONS (6.3):
- --------------------------------------------------------------------------------------------------------------
U.S. Treasury Notes
5.88%, due 02/15/04 2,000,000 $ 1,908,120
-----------
TOTAL U.S. TREASURY OBLIGATIONS (cost: $1,908,750) 1,908,120
-----------
SHORT-TERM SECURITIES (0.7%):
- --------------------------------------------------------------------------------------------------------------
U.S. Government Money Market Fund, 4.96%(c) 201,000
-----------
TOTAL INVESTMENTS IN SHORT-TERM SECURITIES (cost: $201,000) 201,000
-----------
TOTAL INVESTMENTS IN SECURITIES (cost: $42,094,164) (b) $41,805,290
===========
See accompanying notes to investments in securities.
</TABLE>
<TABLE>
<CAPTION>
VFI INTERMEDIATE DURATION PORTFOLIO
INVESTMENTS IN SECURITIES (UNAUDITED) APRIL 30, 1996
- --------------------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
NAME OF ISSUER AMOUNT VALUE (a)
- --------------------------------------------------------------------------------------------------------------
(Percentage of investment category relates to total net assets)
TOTAL INVESTMENTS IN SECURITIES: (126.2%)
U. S. AGENCY OBLIGATIONS: (120.3%)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Federal Home Loan Bank
5.25%, due 05/15/96 $3,600,000 $ 3,592,650
Federal Home Loan Mortgage Corporation
5.25%, due 05/13/96 5,000,000 4,991,250
5.18%, due 05/20/96 1,280,000 1,276,500
6.50%, due 11/15/02 4,500,000 4,438,575
7.50%, due 09/01/09 3,500,000 3,524,850
7.00%, due 04/01/11 4,040,000 4,001,054
7.10%, due 05/01/25 1,394,769 1,439,444
6.04%, due 09/01/25 1,425,956 1,465,840
6.03%, due 10/01/25 1,458,647 1,494,428
Federal National Mortgage Association
5.84%, due 03/29/99 3,500,000 3,457,895
6.36%, due 08/16/00 1,500,000 1,487,580
5.93%, due 10/01/25 1,425,277 1,470,259
5.53%, due 10/01/25 2,501,648 2,557,535
5.97%, due 01/01/26 1,436,358 1,476,087
-----------
TOTAL U.S. AGENCY OBLIGATIONS (cost: $36,701,983) 36,673,947
-----------
U.S. TREASURY OBLIGATIONS (5.4%):
- --------------------------------------------------------------------------------------------------------------
U.S. Treasury Notes
8.13%, due 02/15/98 1,600,000 $ 1,656,000
-----------
TOTAL U.S. TREASURY OBLIGATIONS (cost: $1,665,250) 1,656,000
-----------
SHORT-TERM SECURITIES (0.5%):
- --------------------------------------------------------------------------------------------------------------
U.S. Government Money Market Fund, 4.96% (c) 166,000
-----------
TOTAL INVESTMENTS IN SHORT-TERM SECURITIES (cost: $166,000) 166,000
-----------
TOTAL INVESTMENTS IN SECURITIES (cost: $38,533,233) (b) $38,495,947
===========
See accompanying notes to investments in securities.
</TABLE>
<TABLE>
<CAPTION>
VFI SHORT DURATION PORTFOLIO
INVESTMENTS IN SECURITIES (UNAUDITED) APRIL 30, 1996
- --------------------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
NAME OF ISSUER AMOUNT VALUE (a)
- --------------------------------------------------------------------------------------------------------------
(Percentage of investment category relates to total net assets)
TOTAL INVESTMENTS IN SECURITIES: (91.4%)
U. S. AGENCY OBLIGATIONS: (56.6%)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Federal Farm Credit Bank
5.28%, due 02/07/97 $3,500,000 $ 3,355,240
Federal Home Loan Bank
5.21%, due 10/23/96 3,000,000 2,924,021
Federal National Mortgage Association
5.05%, due 03/14/97 11,100,000 11,028,849
-----------
TOTAL U.S. AGENCY OBLIGATIONS (cost: $17,342,400) 17,308,110
-----------
U.S. TREASURY OBLIGATIONS (28.8%):
- --------------------------------------------------------------------------------------------------------------
U.S. Treasury Notes
5.13%, due 02/28/98 4,975,000 4,898,037
5.88%, due 04/30/98 2,000,000 1,993,760
U.S. Treasury Bills
5.16%, due 04/03/97 2,000,000 1,903,393
-----------
TOTAL U.S. TREASURY OBLIGATIONS (cost: $8,807,965) 8,795,190
-----------
SHORT-TERM SECURITIES (6.0%):
- --------------------------------------------------------------------------------------------------------------
U.S. Government Money Market Fund, 4.96% (c) 324,000 324,000
Salomon Brothers Repurchase Agreement, 5.29%, due 05/01/96 1,500,000 1,500,000
-----------
TOTAL INVESTMENTS IN SHORT-TERM SECURITIES (cost: $1,824,000) 1,824,000
-----------
TOTAL INVESTMENTS IN SECURITIES (cost: $27,974,365) (b) $27,927,300
===========
See accompanying notes to investments in securities.
</TABLE>
VFI CORE PORTFOLIO
VFI INTERMEDIATE DURATION PORTFOLIO
VFI SHORT DURATION PORTFOLIO
NOTES TO INVESTMENTS IN SECURITIES (UNAUDITED)
- --------------------------------------------------------------------------------
(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 $42,094,164,
$38,533,233 and $27,974,365 for Core Portfolio, Intermediate Duration
Portfolio and Short Duration Portfolio, respectively. The aggregate gross
unrealized appreciation and depreciation based on this cost was:
<TABLE>
<CAPTION>
GROSS GROSS NET
UNREALIZED UNREALIZED UNREALIZED
APPRECIATION DEPRECIATION DEPRECIATION
------------ ------------ ------------
<S> <C> <C> <C>
VFI Core Portfolio............................... $13,736 $(302,610) $(288,874)
VFI Intermediate Duration Portfolio.............. 28,275 (65,561) (37,286)
VFI Short Duration Portfolio..................... 479 (47,544) (47,065)
</TABLE>
(c) Dividend yields change daily to reflect current market conditions. Rate
shown is quoted yield as of April 30, 1996.
