Combined
Annual Report
to Shareholders
September 30, 1995
The U.S. Government Securities Fund
The Strategic Stock Fund
The Stock Fund
The Virginia Municipal Bond Fund
The Maryland Municipal Bond Fund
The Treasury Money Market Fund
The Money Market Fund
The Tax-Free Money Market Fund
Funds Managed by
[LOGO OF VIRTUS CAPITAL MANAGEMENT, INC.]
The Investment Adviser to The Virtus Funds is Virtus Capital Management, Inc.,
a subsidiary of Signet Banking Corporation. The Virtus Funds are administered
by subsidiaries of Federated Investors, independent of Signet.
Investment products offered through Signet Financial Services, Inc. are not
deposits, obligations of, or guaranteed by Signet Bank, and are not insured by
FDIC or any Federal agency. In addition, they involve risk, including possible
loss of principal invested. Member NASD.
Virtus Capital Management, Inc. is the investment adviser for The Virtus Funds.
Federated Securities Corp. is the distributor of The Funds.
Federated Securities Corp., Distributor, is independent of Signet Bank.
[LOG OF VIRTUS FUNDS]
MESSAGE TO SHAREHOLDERS
- --------------------------------------------------------------------------------
Dear Investor:
I am pleased to present your Annual Report for The Virtus Funds, which covers
the 12-month period ended September 30, 1995.
This report contains complete financial information--including a commentary by
the portfolio manager, long-term performance graphs, and a list of holdings--for
every fund in the Virtus family.
I encourage you to take a few minutes to review the following highlights for
each fund over the period:
THE U.S. GOVERNMENT SECURITIES FUND paid dividends of $0.64 per share for
Investment Shares ($0.66 for Trust Shares). The fund produced a total return of
9.84% for Investment Shares (10.11% for Trust Shares).* The fund's net asset
value increased from $9.83 on the first day of the period to $10.13 on the last
day of the period. At the end of the report period, net assets stood at more
than $216 million.
THE STRATEGIC STOCK FUND BEGAN OPERATION ON MARCH 7, 1995. From that date
through September 30, 1995, the fund's high-quality stock holdings delivered a
total return of 20.59% based on net asset value.* The fund paid dividends of
$0.03 per share. The fund's net asset value increased from $10.00 on March 7,
1995 to $12.03 on the last day of the period. At the end of the report period,
net assets stood at more than $78 million.
THE STOCK FUND RECORDED STRONG PERFORMANCE IN A FAVORABLE STOCK MARKET
ENVIRONMENT. It's high-quality stock holdings delivered a total return of
20.02% for Investment Shares (20.33% for Trust Shares based on net asset
value).* The fund paid dividends of $0.09 per share and capital gains of $0.30
per share for Investment Shares (and dividends of $0.12 per share and capital
gains of $0.30 per share for Trust Shares). The fund's net asset value
increased from $11.80 on the first day of the period to $13.70 on the last day
of the period. At the end of the report period, net assets stood at more than
$89 million.
THE VIRGINIA MUNICIPAL BOND FUND paid tax-free dividends** of $0.45 per share
for Investment Shares ($0.48 for Trust Shares). The fund produced a total
return of 10.00% for Investment Shares (10.27% for Trust Shares).* The fund's
net asset value increased from $10.26 on the first day of the period to $10.81
on the last day of the period. At the end of the report period, net assets
stood at more than $104 million.
THE MARYLAND MUNICIPAL BOND FUND paid tax-free dividends** of $0.40 per share
and capital gains of $0.02 per share for Investment Shares ($0.42 in dividends
and $0.02 in capital gains for Trust Shares). The fund produced a total return
of 9.81% for Investment Shares (10.09% for Trust Shares).* The fund's net asset
value increased from $10.17 on the first day of the period to $10.69 on the
last day of the period. At the end of the report period, net assets stood at
more than $41 million.
THE TREASURY MONEY MARKET FUND paid dividends of $0.05 per share for Investment
and Trust Shares. At the end of the report period, net assets stood at more
than $248 million.+
THE MONEY MARKET FUND paid dividends of $0.05 per share for Investment and
Trust Shares. At the end of the report period, net assets stood at more than
$215 million.+
THE TAX-FREE MONEY MARKET FUND paid tax-free dividends of $0.03 per share. At
the end of the report period, net assets stood at more than $81 million.+
Thank you for your confidence in The Virtus Funds. We will continue to keep you
up to date on the progress of your investment.
Sincerely,
Garry M. Allen
Chief Investment Officer
Virtus Capital Management, Inc.
Investment Adviser to The Virtus Funds
November 15, 1995
- ---------
*Performance quoted represents past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
**Income may be subject to the federal alternative minimum tax.
+Although money market funds seek to maintain a stable net asset value of $1.00
per share, there is no assurance that they will be able to do so. An investment
in the Fund is neither insured nor guaranteed by the U.S. government.
THE U.S. GOVERNMENT SECURITIES FUND
- --------------------------------------------------------------------------------
MANAGEMENT DISCUSSION AND ANALYSIS
---------------------------------------------------------------------------
If given the opportunity, the Federal Reserve (the "Fed") might very
well say that present economic conditions are as close to "ideal" as may be
practical. The economy is growing at a moderate pace. Inflation, as
measured by the CPI (Consumer Price Index), continues to improve. In
addition, Congress will have the opportunity to make decisive changes in
the budget deficit if they choose to do so. With the first two conditions
present and the third a somewhat remote possibility, the Fed should be
pleased with their efforts to date.
Overall, yield levels have fallen significantly since the first of the
year, and may be in a trading range for the immediate future. The 30-year
Treasury Bond has been yielding between 6.25% and 6.75% since mid-May, and
the 2 year Treasury has seen yields of between 5.45% and 6.20% during this
period. Current levels of 6.25% and 5.45% respectively, are at the low side
of the range. Yields on the shorter maturity bonds are reflecting a .50%
drop in rates by the Fed, although such an action is not certain for the
November Fed meeting according to most economists. The economy is still
expanding at a comfortable pace, so there is not an overwhelming urgency to
drop rates. Since short-term interest rates already reflect a drop in rates
by .50%, we see significant risk in owning a lot of short-term bonds at
this point in time.
Two factors are causing mortgage-backed bonds to be attractive at this
time, and we are gradually adding to our positions where possible.
Investors are fearing another round of rapid prepayments (as seen in 1993)
now that rates have dropped, and the overall high volatility in the markets
has run investors out of the mortgage market. We feel that prepayments will
not be as high as the market projects, and that interest rate markets will
settle down, reducing volatility. These two changes in the market along
with higher current income promise to make investing in mortgages very
attractive over the next few months.
THE U.S. GOVERNMENT SECURITIES FUND--Investment Shares
- --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN THE U.S. GOVERNMENT SECURITIES FUND--INVESTMENT
SHARES
The graph below illustrates the hypothetical investment of $10,000 in The
U.S. Government Securities Fund (the "Fund") from October 16, 1990 (start of
performance) to September 30, 1995, compared to the Lehman Brothers Intermediate
Government Bond Index ("LBIGB").+
[GRAPH APPEARS HERE]
AVERAGE ANNUAL TOTAL RETURN*** FOR THE PERIOD ENDED SEPTEMBER 30, 1995
1 Year....................................................................7.68%
Start of Performance (10/16/90)...........................................7.83%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
*Reflects operations of the Fund from the start of performance (10/16/90)
through 9/30/95, on a cumulative basis.
**Represents a hypothetical investment of $10,000 in the Fund. The Fund's
performance assumes the reinvestment of all dividends and distributions.
***Total return quoted reflects all applicable contingent deferred sales
charges.
The LBIGB IS not adjusted to reflect sales loads, expenses, or other fees that
the SEC requires to be reflected in the Fund's performance. The LBIGB has been
adjusted to reflect reinvestment of dividends on securities in the index. This
index is unmanaged.
THE U.S. GOVERNMENT SECURITIES FUND--Trust Shares
- --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN THE U.S. GOVERNMENT SECURITIES FUND--TRUST SHARES
The graph below illustrates the hypothetical investment of $10,000 in The
U.S. Government Securities Fund (the "Fund") from October 16, 1990 (start of
performance) to September 30, 1995, compared to the Lehman Brothers Intermediate
Government Bond Index ("LBIGB").+
[GRAPH APPEARS HERE]
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIOD ENDED SEPTEMBER 30, 1995
1 Year...................................................................10.11%
Start of Performance (10/16/90)...........................................7.96%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
*Reflects operations of the Fund from the start of performance (10/16/90)
through 9/30/95, on a cumulative basis.
**Represents a hypothetical investment of $10,000 in the Fund. The Fund's
performance assumes the reinvestment of all dividends and distributions.
The LBIGB IS not adjusted to reflect sales loads, expenses, or other fees that
the SEC requires to be reflected in the Fund's performance. The LBIGB has been
adjusted to reflect reinvestment of dividends on securities in the index. This
index is unmanaged.
THE U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- --------------
LONG-TERM INVESTMENTS--96.9%
- -------------------------------------------------------------------------------------------------
U.S. TREASURY NOTES--67.7%
---------------------------------------------------------------------------------
$ 6,000,000 7.125%, 2/29/2000 $ 6,252,660
---------------------------------------------------------------------------------
2,000,000 7.50%, 11/15/2001 2,143,720
---------------------------------------------------------------------------------
17,500,000 7.50%, 5/15/2002 18,836,825
---------------------------------------------------------------------------------
5,000,000 7.875%, 4/15/1998 5,231,050
---------------------------------------------------------------------------------
2,225,000 7.875%, 11/15/1999 2,375,343
---------------------------------------------------------------------------------
19,000,000 7.875%, 11/15/2004 21,146,050
---------------------------------------------------------------------------------
10,000,000 8,00%, 1/15/1997 10,266,600
---------------------------------------------------------------------------------
5,000,000 8.125%, 2/15/1998 5,243,650
---------------------------------------------------------------------------------
6,250,000 8.25%, 7/15/1998 6,620,813
---------------------------------------------------------------------------------
10,000,000 8.50%, 5/15/1997 10,405,300
---------------------------------------------------------------------------------
10,750,000 8.75%, 10/15/1997 11,340,712
---------------------------------------------------------------------------------
40,000,000 8.875%, 11/15/1998 43,302,000
---------------------------------------------------------------------------------
3,000,000 8.875%, 2/15/1999 3,263,460
--------------------------------------------------------------------------------- --------------
Total U.S. Treasury Notes 146,428,183
--------------------------------------------------------------------------------- --------------
GOVERNMENT OBLIGATIONS--29.2%
---------------------------------------------------------------------------------
4,500,000 Federal Home Loan Bank, 6.125%, 8/5/1996 4,511,970
---------------------------------------------------------------------------------
102,082 Fededal Home Loan Bank, 8.076%, 8/1/2019 105,056
---------------------------------------------------------------------------------
5,000,000 Federal Home Loan Bank, 8.23%, 8/9/2001 5,488,150
---------------------------------------------------------------------------------
62,225 Federal Home Loan Bank, 8.531%, 12/1/2020 63,783
---------------------------------------------------------------------------------
10,000,000 Federal Home Loan Mortgage Corp., 7.69%, 12/16/1996 10,223,900
---------------------------------------------------------------------------------
5,000,000 Federal Home Loan Mortgage Corp., 7.974%, 4/20/2005 5,139,550
---------------------------------------------------------------------------------
3,601,159 Federal Home Loan Mortgage Corp., PC, REMIC, 7.80%, 5/15/2012 3,635,766
---------------------------------------------------------------------------------
1,500,000 Federal National Mortgage Association, 7.85%, 9/10/1998 1,569,390
---------------------------------------------------------------------------------
30,035,817 Federal National Mortgage Association, 8.00%, 7/1/2025 30,805,034
---------------------------------------------------------------------------------
663,657 Federal National Mortgage Association, 8.50%, 12/1/2001 689,155
---------------------------------------------------------------------------------
95,853 Federal National Mortgage Association, 8.778%, 6/1/2019 98,655
---------------------------------------------------------------------------------
216,480 Government National Mortgage Association, 8.00%, 3/15/2017 223,851
---------------------------------------------------------------------------------
483,576 Government National Mortgage Association, 9.00%, 9/15/2021 510,772
--------------------------------------------------------------------------------- --------------
Total Government Obligations 63,065,032
--------------------------------------------------------------------------------- --------------
TOTAL LONG-TERM INVESTMENTS (IDENTIFIED COST $210,997,477) 209,493,215
--------------------------------------------------------------------------------- --------------
</TABLE>
THE U.S. GOVERNMENT SECURITIES FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- --------------
(a) REPURCHASE AGREEMENT--1.3%
- -------------------------------------------------------------------------------------------------
2,712,740 Nikko Securities, Inc., 6.45%, dated 9/30/1995, due 10/2/1995
(at amortized cost) 2,712,740
--------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS (IDENTIFIED COST $213,710,217)(b) $ 212,205,955
--------------------------------------------------------------------------------- --------------
</TABLE>
(a) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
(b) The cost of investments for federal tax purposes amounts to $213,710,217.
The unrealized appreciation/depreciation of investments on a federal tax
basis amounts to $(1,504,262) which is comprised of $1,962,039 appreciation
and $3,466,301 depreciation at September 30, 1995.
The following acronym(s) are used within this portfolio:
PC--Participation Certificate
REMIC--Real Estate Mortgage Investment Conduit
Note: The categories of investments are shown as a percentage of net assets
($216,212,875) at September 30, 1995.
(See Notes which are an integral part of the Financial Statements)
THE STRATEGIC STOCK FUND
- --------------------------------------------------------------------------------
MANAGEMENT DISCUSSION AND ANALYSIS
---------------------------------------------------------------------------
Since inception (March 6, 1995) through September 30, 1995, The
Strategic Stock Fund (the "Fund") produced a return of 20.6%* which
compares to the Standard and Poor's 500** Index (S&P 500) at 22.1%.
Under the direction of Garry M. Allen, Chief Investment Officer,
Virtus Capital Management Inc. has implemented a new style of equity
management. The new method of investment is called "Style Management."
Style Management is a very unique method of investing.
Academic research shows that style determines 80-90% of investment
return. Virtus seeks to capture the predominant investment style to take
greater advantage of market trends. This involves opportunistic positioning
defined by style and size. "Style" refers to two widely accepted
descriptions of stocks known as growth and value. Growth stocks are those
companies with above average earnings expectations. Value stocks are those
companies selling at a low price relative to the actual value of their
underlying assets. "Size" refers to the division between large and small
companies based upon market value.
Style movements typically occur every one to three years (there have
been sixteen intermediate style changes since 1968), while size movements
generally occur every five to seven years (there have been four size
changes since 1968). This type of shifting between style and size has been
occurring ever since the stock market has existed.
Style management identifies and captures greater rewards from active
management. Style (value vs. growth) and size (small vs. large-cap)
represent the two major components of systematic risk and return in the
market. Style dominates even the most skillful manager's returns. Active
style management reduces the level of risk in a portfolio and thus improves
the risk/reward trade-off.
The S&P 500 continued its torrid performance pace during the third
quarter 1995, generating a 7.88% total return. Through nine months ended
September 30, 1995, the S&P 500 has a return of 29.75%. Over the past
fourteen months, growth stocks have dominated value stocks. Virtus Capital
Management's unique Style Management process first identified growth, and
specifically small growth, as the most attractive style asset class in July
1994. As predicted, aggressive growth returns have been stellar, leading
all U.S. equity market segments. Virtus Capital Management specializes in
capturing the most rewarding investment style over a one to three year time
horizon.
Strategically, the U.S. equity market has begun a systematic movement
toward value. Accordingly, Virtus' Style portfolio positions have been
shifted into 50% small value, with the remaining 50% in small growth. We
anticipate a full shift to value as early as December 1995.
Virtus Capital Management anticipates that 1996 will reward value
investors over growth investors. We believe the equity market is
transitioning from a wealth creation market to a capital preservation
market led by value stocks.
*Performance quoted represents past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
**The Standard and Poor's 500 Index is a composite of 500 stocks. The index
is unmanaged.
THE STRATEGIC STOCK FUND
- --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN THE STRATEGIC STOCK FUND
The graph below illustrates the hypothetical investment of $10,000 in The
Strategic Stock Fund (the "Fund") from March 7, 1995 (start of performance) to
September 30, 1995, compared to the Standard & Poor's 500 ("S&P 500").+
[GRAPH APPEARS HERE]
AVERAGE ANNUAL TOTAL RETURN** FOR THE PERIOD ENDED SEPTEMBER 30, 1995
Start of Performance (3/7/95)..........................................18.59%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
*Reflects a hypothetical investment of $10,000 in the Fund. The ending value of
the Fund reflects a redemption fee of 2.00% on any redemption less than 5
years from the purchase date. The S&P 500 has been adjusted to reflect
reinvestment of dividends on securities in the index.
**Total return quoted reflects all applicable contingent deferred sales charges.
The S&P 500 IS not adjusted to reflect sales loads, expenses, or other fees that
the SEC requires to be reflected in the Fund's performance.
THE STRATEGIC STOCK FUND
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------ ----------------------------------------------------------------------------------- -------------
COMMON STOCKS--96.5%
- -------------------------------------------------------------------------------------------------
COMMERCIAL SERVICES--0.5%
-----------------------------------------------------------------------------------
5,000 Barefoot, Inc. $ 65,625
-----------------------------------------------------------------------------------
27,900 (c)Weatherford International 362,700
----------------------------------------------------------------------------------- -------------
Total 428,325
----------------------------------------------------------------------------------- -------------
CONSUMER DURABLES--4.1%
-----------------------------------------------------------------------------------
15,700 Dallas Semiconductor Corp. 321,850
-----------------------------------------------------------------------------------
12,300 Jacobs Engr Group, Inc. 305,963
-----------------------------------------------------------------------------------
38,000 Lennar Corp. 826,500
-----------------------------------------------------------------------------------
36,800 Oakwood Homes Corp. 1,297,200
-----------------------------------------------------------------------------------
18,400 United Dominion Industries Ltd. 443,900
----------------------------------------------------------------------------------- -------------
Total 3,195,413
----------------------------------------------------------------------------------- -------------
CONSUMER NON-DURABLES--7.5%
-----------------------------------------------------------------------------------
17,700 (c)Acclaim Entertainment, Inc. 455,775
-----------------------------------------------------------------------------------
29,400 Arctco, Inc. 374,850
-----------------------------------------------------------------------------------
300 Ihop Corp. 7,875
-----------------------------------------------------------------------------------
40,800 (c)Jones Apparel Group, Inc. 1,453,500
-----------------------------------------------------------------------------------
34,600 Lands End, Inc. 544,950
-----------------------------------------------------------------------------------
25,800 (c)Mac Frugals Bargains Close-Outs, Inc. 406,350
-----------------------------------------------------------------------------------
19,350 (c)Nautica Enterprises, Inc. 662,738
-----------------------------------------------------------------------------------
16,600 (c)Ralcorp Holdings, Inc. 392,175
-----------------------------------------------------------------------------------
16,300 (c)Smithfield Foods, Inc. 362,675
-----------------------------------------------------------------------------------
44,700 Superior Industries International, Inc. 1,201,313
----------------------------------------------------------------------------------- -------------
Total 5,862,201
----------------------------------------------------------------------------------- -------------
CONSUMER SERVICES--12.8%
-----------------------------------------------------------------------------------
11,200 Arrow International, Inc. 484,400
-----------------------------------------------------------------------------------
42,900 (c)Fhp International Corp. 1,034,963
-----------------------------------------------------------------------------------
26,900 (c)Genesis Health Ventures, Inc. 961,675
-----------------------------------------------------------------------------------
46,700 (c)Health Care + Retirement Corp. 1,500,238
-----------------------------------------------------------------------------------
34,600 (c)Healthcare Compare Corp. 1,340,750
-----------------------------------------------------------------------------------
14,600 Herbalife International, Inc. 142,350
-----------------------------------------------------------------------------------
32,700 Integrated Health Services, Inc. 923,775
-----------------------------------------------------------------------------------
26,300 (c)Nellcor, Inc. 1,308,425
-----------------------------------------------------------------------------------
1,000 Nelson Thomas, Inc. 25,250
-----------------------------------------------------------------------------------
15,500 Quantum Health Resource, Inc. 166,625
-----------------------------------------------------------------------------------
30,100 (c)Sunrise Medical, Inc. 827,750
-----------------------------------------------------------------------------------
41,900 (c)Vencor, Inc. 1,340,800
----------------------------------------------------------------------------------- -------------
Total 10,057,001
----------------------------------------------------------------------------------- -------------
</TABLE>
THE STRATEGIC STOCK FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------ ----------------------------------------------------------------------------------- -------------
COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT--1.4%
-----------------------------------------------------------------------------------
5,600 (c)Integrated Device Technology, Inc. $ 140,000
-----------------------------------------------------------------------------------
14,700 (c)Komag, Inc. 961,013
----------------------------------------------------------------------------------- -------------
Total 1,101,013
----------------------------------------------------------------------------------- -------------
ELECTRONIC TECHNOLOGY--6.0%
-----------------------------------------------------------------------------------
15,500 (c)Catalina Marketing Corp. 961,000
-----------------------------------------------------------------------------------
19,400 (c)CompUSA, Inc. 834,200
-----------------------------------------------------------------------------------
2,100 (c)Datascope Corp. 43,575
-----------------------------------------------------------------------------------
7,800 Hyperion Software Corp. 442,650
-----------------------------------------------------------------------------------
20,500 (c)Lattice Semiconductor Corp. 832,813
-----------------------------------------------------------------------------------
37,800 (c)Stratus Computer, Inc. 992,250
-----------------------------------------------------------------------------------
17,600 (c)Symbol Technologies, Inc. 583,000
----------------------------------------------------------------------------------- -------------
Total 4,689,488
----------------------------------------------------------------------------------- -------------
ENERGY MINERALS--1.1%
-----------------------------------------------------------------------------------
43,800 (c)California Energy, Inc. 897,900
----------------------------------------------------------------------------------- -------------
ENTERTAINMENT--1.4%
-----------------------------------------------------------------------------------
11,700 (c)Bet Holdings, Inc. 234,000
-----------------------------------------------------------------------------------
8,000 Chris-Craft Industries, Inc. 348,000
-----------------------------------------------------------------------------------
8,900 (c)Recoton Corp. 244,750
-----------------------------------------------------------------------------------
19,600 (c)Rio Hotel + Casino, Inc. 254,800
----------------------------------------------------------------------------------- -------------
Total 1,081,550
----------------------------------------------------------------------------------- -------------
FINANCE--3.1%
-----------------------------------------------------------------------------------
25,000 Cash America International, Inc. 171,875
-----------------------------------------------------------------------------------
12,700 Commercial Federal Corp. 454,025
-----------------------------------------------------------------------------------
21,000 Money Store, Inc. 994,875
-----------------------------------------------------------------------------------
25,600 (c)National Auto Credit, Inc. 492,800
-----------------------------------------------------------------------------------
12,300 Pioneer Group, Inc. 336,713
----------------------------------------------------------------------------------- -------------
Total 2,450,288
----------------------------------------------------------------------------------- -------------
FOOD & BEVERAGE--0.7%
-----------------------------------------------------------------------------------
21,200 Richfood Holdings, Inc. 533,975
----------------------------------------------------------------------------------- -------------
HEALTH SERVICES--1.5%
-----------------------------------------------------------------------------------
36,300 (c)Vivra, Inc. 1,152,525
----------------------------------------------------------------------------------- -------------
HEALTHCARE--1.1%
-----------------------------------------------------------------------------------
3,200 (c)Apria Healthcare Group, Inc. 79,200
-----------------------------------------------------------------------------------
15,600 Invacare Corp. 748,800
----------------------------------------------------------------------------------- -------------
Total 828,000
----------------------------------------------------------------------------------- -------------
HOSPITAL SUPPLIES--0.8%
-----------------------------------------------------------------------------------
9,600 (c)Rotech Medical Corp. 238,800
-----------------------------------------------------------------------------------
19,700 (c)Technology Medical Products, Inc. 379,225
----------------------------------------------------------------------------------- -------------
Total 618,025
----------------------------------------------------------------------------------- -------------
</TABLE>
THE STRATEGIC STOCK FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------ ----------------------------------------------------------------------------------- -------------
COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS--0.2%
-----------------------------------------------------------------------------------
8,600 Fieldcrest Cannon, Inc. $ 188,125
----------------------------------------------------------------------------------- -------------
INSURANCE--0.9%
-----------------------------------------------------------------------------------
10,200 (c)American Travellers Corp. 189,975
-----------------------------------------------------------------------------------
13,100 Capsure Holdings Corp. 180,125
-----------------------------------------------------------------------------------
4,800 (c)Markel Corp. 352,800
----------------------------------------------------------------------------------- -------------
Total 722,900
----------------------------------------------------------------------------------- -------------
MACHINERY & EQUIPMENT--0.5%
-----------------------------------------------------------------------------------
6,100 Nacco Industries, Inc. 362,188
----------------------------------------------------------------------------------- -------------
MANUFACTURING--15.3%
-----------------------------------------------------------------------------------
32,500 Agco Corp 1,478,750
-----------------------------------------------------------------------------------
12,700 Belden, Inc. 333,375
-----------------------------------------------------------------------------------
70,600 Callaway Golf Co. 1,094,300
-----------------------------------------------------------------------------------
15,000 (c)Champion Enterprises, Inc. 298,125
-----------------------------------------------------------------------------------
6,500 Clayton Homes, Inc. 154,375
-----------------------------------------------------------------------------------
15,800 Elcor Chemical Corp. 300,200
-----------------------------------------------------------------------------------
2,900 Federal Mogul Corp. 55,463
-----------------------------------------------------------------------------------
12,900 Medusa Corp. 364,425
-----------------------------------------------------------------------------------
13,400 Mueller Industries, Inc. 695,125
-----------------------------------------------------------------------------------
12,000 (c)Paxar Corp. 165,000
-----------------------------------------------------------------------------------
4,600 Picturetel Corp. 208,150
-----------------------------------------------------------------------------------
3,100 (c)Pyxis Corp. 60,063
-----------------------------------------------------------------------------------
44,400 Reynolds + Reynolds, Co. 1,526,250
-----------------------------------------------------------------------------------
16,500 (c)Scotts Co. 365,063
-----------------------------------------------------------------------------------
23,000 Southdown, Inc. 405,375
-----------------------------------------------------------------------------------
17,400 St John Knits, Inc. 848,250
-----------------------------------------------------------------------------------
58,000 (c)Toll Brothers, Inc. 1,094,750
-----------------------------------------------------------------------------------
33,000 Trimas Corp. 684,750
-----------------------------------------------------------------------------------
16,300 (c)Vlsi Technology, Inc. 558,275
-----------------------------------------------------------------------------------
8,256 (c)Watson Pharmaceuticals, Inc. 338,496
-----------------------------------------------------------------------------------
18,100 (c)Zebra Technologies Corp. 963,825
----------------------------------------------------------------------------------- -------------
Total 11,992,385
----------------------------------------------------------------------------------- -------------
MISCELLANEOUS--4.2%
-----------------------------------------------------------------------------------
14,200 (c)Devry, Inc. 365,650
-----------------------------------------------------------------------------------
19,000 Franklin Quest Co. 465,500
-----------------------------------------------------------------------------------
2,500 (c)Horizon Healthcare Corp. 56,875
-----------------------------------------------------------------------------------
20,900 (c)Robert Half International, Inc. 713,213
-----------------------------------------------------------------------------------
30,100 (c)Sanifill, Inc. 985,775
-----------------------------------------------------------------------------------
</TABLE>
THE STRATEGIC STOCK FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------ ----------------------------------------------------------------------------------- -------------
COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
MISCELLANEOUS--CONTINUED
-----------------------------------------------------------------------------------
27,600 (c)Sierra Health Services, Inc. $ 690,000
----------------------------------------------------------------------------------- -------------
Total 3,277,013
----------------------------------------------------------------------------------- -------------
OIL--2.7%
-----------------------------------------------------------------------------------
11,200 (c)Barrett Resources Corp. 252,000
-----------------------------------------------------------------------------------
12,400 (c)BJ Services, Co. 313,100
-----------------------------------------------------------------------------------
31,700 Pogo Producing, Co. 721,175
-----------------------------------------------------------------------------------
22,700 (c)Swift Transportation, Inc. 391,575
-----------------------------------------------------------------------------------
20,000 Vintage Petroleum, Inc. 420,000
----------------------------------------------------------------------------------- -------------
Total 2,097,850
----------------------------------------------------------------------------------- -------------
PRODUCER MANUFACTURING--0.4%
-----------------------------------------------------------------------------------
19,200 (c)Shorewood Packaging Corp. 333,600
----------------------------------------------------------------------------------- -------------
RAW MATERIALS--0.4%
-----------------------------------------------------------------------------------
10,800 (c)Dravo Corp. 137,700
-----------------------------------------------------------------------------------
7,400 (c)Fibreboard Corp. 191,475
----------------------------------------------------------------------------------- -------------
Total 329,175
----------------------------------------------------------------------------------- -------------
REAL ESTATE--1.9%
-----------------------------------------------------------------------------------
50,300 (c)Consolidated Stores Corp. 1,163,188
-----------------------------------------------------------------------------------
6,500 Department 56, Inc. 303,875
----------------------------------------------------------------------------------- -------------
Total 1,467,063
----------------------------------------------------------------------------------- -------------
RETAIL TRADE--1.1%
-----------------------------------------------------------------------------------
12,000 Baker (J.) Inc. 97,500
-----------------------------------------------------------------------------------
20,700 Claire's Stores, Inc. 424,350
-----------------------------------------------------------------------------------
20,300 (c)Michaels Stores, Inc. 329,875
----------------------------------------------------------------------------------- -------------
Total 851,725
----------------------------------------------------------------------------------- -------------
TECHNOLOGY SERVICES--19.3%
-----------------------------------------------------------------------------------
14,500 Allen Group, Inc. 525,625
-----------------------------------------------------------------------------------
28,050 (c)American Management System, Inc. 750,338
-----------------------------------------------------------------------------------
1,050 (c)Andrew Corp. 64,181
-----------------------------------------------------------------------------------
37,200 (c)Aspect Telecommunications Corp. 1,004,400
-----------------------------------------------------------------------------------
51,400 Breed Technologies, Inc. 1,021,575
-----------------------------------------------------------------------------------
26,700 (c)California Microwave 674,175
-----------------------------------------------------------------------------------
64,200 (c)Cheyenne Software, Inc. 1,284,000
-----------------------------------------------------------------------------------
1,400 (c)Clear Channel Communications, Inc. 106,050
-----------------------------------------------------------------------------------
25,300 Dentsply International, Inc. 872,850
-----------------------------------------------------------------------------------
13,600 (c)Digi International, Inc. 384,200
-----------------------------------------------------------------------------------
1,800 (c)Electronic Arts 66,150
-----------------------------------------------------------------------------------
21,300 Exabyte Corp. 287,550
-----------------------------------------------------------------------------------
19,300 (c)Fiserv, Inc. 557,288
-----------------------------------------------------------------------------------
27,900 (c)Input/Output, Inc. 1,070,663
-----------------------------------------------------------------------------------
</TABLE>
THE STRATEGIC STOCK FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------ ----------------------------------------------------------------------------------- -------------
COMMON STOCKS--CONTINUED
- -------------------------------------------------------------------------------------------------
TECHNOLOGY SERVICES--CONTINUED
-----------------------------------------------------------------------------------
500 Kent Electors Corp. $ 21,938
-----------------------------------------------------------------------------------
21,200 (c)Marshall Industries 800,300
-----------------------------------------------------------------------------------
3,000 (c)Micros System, Inc. 107,250
-----------------------------------------------------------------------------------
31,700 (c)Oak Industries, Inc. 954,963
-----------------------------------------------------------------------------------
900 Paychex, Inc. 41,625
-----------------------------------------------------------------------------------
5,800 (c)Standard Microsystems Corp. 100,050
-----------------------------------------------------------------------------------
55,700 (c)Sun Guard Data Systems 1,629,225
-----------------------------------------------------------------------------------
50,000 (c)Tech Data Corp. 706,250
-----------------------------------------------------------------------------------
7,100 (c)Three Five System, Inc. 185,488
-----------------------------------------------------------------------------------
25,500 (c)Verifone, Inc. 710,813
-----------------------------------------------------------------------------------
29,400 (c)Zilog, Inc. 1,223,775
----------------------------------------------------------------------------------- -------------
Total 15,150,722
----------------------------------------------------------------------------------- -------------
TELECOMMUNICATIONS--0.4%
-----------------------------------------------------------------------------------
15,600 Skywest, Inc. 296,400
----------------------------------------------------------------------------------- -------------
TRANSPORTATION--4.2%
-----------------------------------------------------------------------------------
10,200 Air Express International Corp. 257,550
-----------------------------------------------------------------------------------
32,800 (c)American Freightways Corp. 492,000
-----------------------------------------------------------------------------------
11,800 Expeditores International Washington, Inc. 318,600
-----------------------------------------------------------------------------------
12,800 (c)M.S. Carriers, Inc. 204,800
-----------------------------------------------------------------------------------
24,800 (c)Offshore Logistics, Inc. 344,100
-----------------------------------------------------------------------------------
25,000 Werner Enterprises, Inc. 518,750
-----------------------------------------------------------------------------------
17,600 (c)Wisconsin Central Transportation Corp. 1,174,800
----------------------------------------------------------------------------------- -------------
Total 3,310,600
----------------------------------------------------------------------------------- -------------
UTILITIES--3.0%
-----------------------------------------------------------------------------------
23,500 (c)Destec Energy, Inc. 352,500
-----------------------------------------------------------------------------------
22,600 (c)International Rectifier Co. 909,650
-----------------------------------------------------------------------------------
27,200 (c)Ionics, Inc. 1,132,189
----------------------------------------------------------------------------------- -------------
Total 2,394,339
----------------------------------------------------------------------------------- -------------
TOTAL COMMON STOCKS (IDENTIFIED COST $70,511,424) 75,669,789
----------------------------------------------------------------------------------- -------------
FOREIGN COMMON STOCK--0.2%
- -------------------------------------------------------------------------------------------------
MISCELLANEOUS--0.2%
-----------------------------------------------------------------------------------
6,200 Adia Services, Inc.--ADR (IDENTIFIED COST $144,925) 140,275
----------------------------------------------------------------------------------- -------------
</TABLE>
THE STRATEGIC STOCK FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------ ----------------------------------------------------------------------------------- -------------
(a) REPURCHASE AGREEMENT--4.3%
- -------------------------------------------------------------------------------------------------
$ 3,392,177 Prudential Securities, Inc., 6.25%, dated 9/30/1995, due 10/2/1995
(at amoritized cost) $ 3,392,177
----------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST $74,048,526)(b) $ 79,202,241
----------------------------------------------------------------------------------- -------------
</TABLE>
(a) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
(b) The cost of investments for federal tax purposes amounts to $74,048,526. The
net unrealized appreciation/depreciation of investments on a federal tax
basis amounts to $5,153,715 which is comprised of $8,351,175 appreciation
and $3,197,460 depreciation at September 30, 1995.
(c) Non-income producing security.
Note: The categories of investments are shown as a percentage of net assets
($78,388,037) at September 30, 1995.
The following acronym is used within this portfolio:
ADR--American Depositary Receipt
(See Notes which are an integral part of the Financial Statements)
THE STOCK FUND
- --------------------------------------------------------------------------------
MANAGEMENT DISCUSSION AND ANALYSIS
---------------------------------------------------------------------------
For the year ended September 30, 1995, The Stock Fund (the "Fund") has
a return of and 20.33% for Trust Shares,* and 17.91% for Investment Shares*
(taking into account the contingent deferred sales charge), which compares
to the Standard and Poor's 500 Index** (S&P 500) at 29.81%.
The Stock Fund is managed utilizing a cash flow return on investment
framework coupled with traditional fundamental analysis. In addition, the
Fund attempts to incorporate into the portfolio the dominant equity style,
growth or value, which Virtus believes will show superior performance.
Style is incorporated into The Stock Fund by overweighting or
underweighting specific S&P 500 market sectors.
Year to date through September 30, 1995, The Stock Fund has been
managed with emphasis on growth equities. Accordingly, the consumer staples
and technology sectors have been overweighted while the energy and
financial sectors have been underweighted. The companies in the portfolio
are predominantly larger capitalized and the overall dividend yield has
been comparable to that of the S&P 500.
*Performance quoted represents past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
**The Standard and Poor's 500 Index is a composite of 500 stocks. The index
is unmanaged.
THE STOCK FUND--Investment Shares
- --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN THE STOCK FUND--INVESTMENT SHARES
The graph below illustrates the hypothetical investment of $10,000 in The
Stock Fund (the "Fund") from October 16, 1990 (start of performance) to
September 30, 1995, compared to the Standard & Poor's 500 Index ("S&P 500").+
[GRAPH APPEARS HERE]
AVERAGE ANNUAL TOTAL RETURN*** FOR THE PERIOD ENDED SEPTEMBER 30, 1995
1 Year...................................................................17.91%
Start of Performance (10/16/90)..........................................10.43%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
*Reflects operations of the Fund from the start of performance 10/16/90
through 9/30/95, on a cumulative basis.
**Represents a hypothetical investment of $10,000 in the Fund. The Fund's
performance assumes the reinvestment of all dividends and distributions.
***Total return quoted reflects all applicable contingent deferred sales
charges.
+The S&P 500 is not adjusted to reflect sales loads, expenses, or other fees
that the SEC requires to be reflected in the Fund's performance. The S&P 500
has been adjusted to reflect reinvestment of dividends on securities in the
index. This index is unmanaged.
THE STOCK FUND--Trust Shares
------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN THE STOCK FUND--TRUST SHARES
The graph below illustrates the hypothetical investment of $10,000 in The
Stock Fund (the "Fund") from October 16, 1990 (start of performance) to
September 30, 1995, compared to the Standard & Poor's 500 Index ("S&P 500").+
[GRAPH APPEARS HERE]
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIOD ENDED SEPTEMBER 30, 1995
1 Year..................................................................20.33%
Start of Performance (10/16/90).........................................10.56%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT
RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY
MAY BE WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS
OF OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
*Reflects operations of the Fund from the start of performance 10/16/90 through
9/30/95, on a cumulative basis.
**Represents a hypothetical investment of $10,000 in the Fund. The Fund's
performance assumes the reinvestment of all dividends and distributions.
+The S&P 500 is not adjusted to reflect sales loads, expenses, or other fees
that the SEC requires to be reflected in the Fund's performance. The S&P 500
has been adjusted to reflect reinvestment of dividends on securities in the
index. This index is unmanaged.
THE STOCK FUND
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------ ------------------------------------------------------------------------------------- -------------
COMMON STOCKS--94.2%
- ---------------------------------------------------------------------------------------------------
AUTOMOBILE--0.8%
-------------------------------------------------------------------------------------
15,400 General Motors Corp. $ 721,875
------------------------------------------------------------------------------------- -------------
BANKING--1.9%
-------------------------------------------------------------------------------------
29,100 Republic New York Corp. 1,702,350
------------------------------------------------------------------------------------- -------------
BASIC INDUSTRY--0.9%
-------------------------------------------------------------------------------------
20,300 Carlisle Companies, Inc. 844,987
------------------------------------------------------------------------------------- -------------
BASIC MATERIALS--1.8%
-------------------------------------------------------------------------------------
35,100 PPG Industries, Inc. 1,632,150
------------------------------------------------------------------------------------- -------------
BROADCASTING--1.9%
-------------------------------------------------------------------------------------
31,000 Gannett, Inc. 1,693,375
------------------------------------------------------------------------------------- -------------
CHEMICALS--5.3%
-------------------------------------------------------------------------------------
21,600 Du Pont (E.I.) De Nemours & Co. 1,485,000
-------------------------------------------------------------------------------------
26,200 Kerr-McGee Corp. 1,454,100
-------------------------------------------------------------------------------------
17,650 Monsanto Co. 1,778,238
------------------------------------------------------------------------------------- -------------
Total 4,717,338
------------------------------------------------------------------------------------- -------------
CONSUMER CYCLICAL--6.1%
-------------------------------------------------------------------------------------
16,000 Capital Cities ABC, Inc. 1,882,000
-------------------------------------------------------------------------------------
44,108 (c)Consolidated Stores Corp. 1,019,997
-------------------------------------------------------------------------------------
11,450 Philip Morris Companies, Inc. 956,075
-------------------------------------------------------------------------------------
55,950 Sara Lee Corp. 1,664,513
------------------------------------------------------------------------------------- -------------
Total 5,522,585
------------------------------------------------------------------------------------- -------------
CONSUMER STAPLES--5.1%
-------------------------------------------------------------------------------------
39,000 Abbott Laboratories 1,662,375
-------------------------------------------------------------------------------------
13,458 General Electric Co. 857,948
-------------------------------------------------------------------------------------
37,127 Merck & Co., Inc. 2,079,112
------------------------------------------------------------------------------------- -------------
Total 4,599,435
------------------------------------------------------------------------------------- -------------
ELECTRICAL EQUIPMENT--2.1%
-------------------------------------------------------------------------------------
22,900 Hewlett Packard Co. 1,909,288
------------------------------------------------------------------------------------- -------------
ELECTRONIC TECHNOLOGY--1.0%
-------------------------------------------------------------------------------------
26,400 (c)SCI Systems, Inc. 910,800
------------------------------------------------------------------------------------- -------------
FINANCE--7.9%
-------------------------------------------------------------------------------------
34,450 Ahmanson (H.F.) and Co. 874,169
-------------------------------------------------------------------------------------
27,000 BankAmerica Corp. 1,616,625
-------------------------------------------------------------------------------------
32,400 Bear Stearns Companies, Inc. 696,600
-------------------------------------------------------------------------------------
7,000 CCB Financial Corp. 357,875
-------------------------------------------------------------------------------------
29,700 Chemical Banking Corp. 1,807,987
-------------------------------------------------------------------------------------
20,600 Fleet Financial Group, Inc. 777,650
-------------------------------------------------------------------------------------
</TABLE>
THE STOCK FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------ ------------------------------------------------------------------------------------- -------------
COMMON STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
FINANCE--CONTINUED
-------------------------------------------------------------------------------------
13,650 Nationsbank Corp. $ 917,963
------------------------------------------------------------------------------------- -------------
Total 7,048,869
------------------------------------------------------------------------------------- -------------
FOOD & BEVERAGE--6.2%
-------------------------------------------------------------------------------------
49,800 Albertson's Inc. 1,699,425
-------------------------------------------------------------------------------------
31,050 (c)Canandaigua Wine, Inc. 1,509,806
-------------------------------------------------------------------------------------
109,200 Hudson Foods, Inc. 1,515,150
-------------------------------------------------------------------------------------
16,550 PepsiCo, Inc. 844,050
------------------------------------------------------------------------------------- -------------
Total 5,568,431
------------------------------------------------------------------------------------- -------------
HEALTH SERVICES--2.1%
-------------------------------------------------------------------------------------
56,500 Manor Care, Inc. 1,921,000
------------------------------------------------------------------------------------- -------------
HOUSEHOLD PRODUCTS--3.1%
-------------------------------------------------------------------------------------
28,150 Clorox Co. 2,009,206
-------------------------------------------------------------------------------------
22,550 Lancaster Colony Corp. 766,700
------------------------------------------------------------------------------------- -------------
Total 2,775,906
------------------------------------------------------------------------------------- -------------
INDUSTRIAL SERVICES--2.9%
-------------------------------------------------------------------------------------
35,100 Baldor Electric Co. 881,887
-------------------------------------------------------------------------------------
45,700 Dover Corp. 1,748,025
------------------------------------------------------------------------------------- -------------
Total 2,629,912
------------------------------------------------------------------------------------- -------------
INSURANCE--0.9%
-------------------------------------------------------------------------------------
5,400 Loews Corp. 785,700
------------------------------------------------------------------------------------- -------------
MANUFACTURING--17.5%
-------------------------------------------------------------------------------------
25,500 Alcan Aluminium Ltd. 825,563
-------------------------------------------------------------------------------------
11,400 (c)Applied Materials, Inc. 1,165,650
-------------------------------------------------------------------------------------
47,800 Baxter International, Inc. 1,965,775
-------------------------------------------------------------------------------------
22,000 Emerson Electric Co. 1,573,000
-------------------------------------------------------------------------------------
29,743 Hershey Foods Corp. 1,914,706
-------------------------------------------------------------------------------------
24,600 Intel Corp. 1,479,075
-------------------------------------------------------------------------------------
40,400 Kennametal, Inc. 1,464,500
-------------------------------------------------------------------------------------
39,750 Parker Hannifin Corp. 1,510,500
-------------------------------------------------------------------------------------
32,350 Premark International, Inc. 1,645,806
-------------------------------------------------------------------------------------
34,700 (c)Sun Microsystems, Inc. 2,186,100
------------------------------------------------------------------------------------- -------------
Total 15,730,675
------------------------------------------------------------------------------------- -------------
OIL--7.6%
-------------------------------------------------------------------------------------
21,450 Amoco Corp. 1,375,481
-------------------------------------------------------------------------------------
37,650 Chevron Corp. 1,830,731
-------------------------------------------------------------------------------------
23,400 Exxon Corp. 1,690,650
-------------------------------------------------------------------------------------
18,950 Mobil Corp. 1,887,894
------------------------------------------------------------------------------------- -------------
Total 6,784,756
------------------------------------------------------------------------------------- -------------
</TABLE>
THE STOCK FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------ ------------------------------------------------------------------------------------- -------------
COMMON STOCKS--CONTINUED
- ---------------------------------------------------------------------------------------------------
PRINTING & PUBLISHING--1.0%
-------------------------------------------------------------------------------------
25,500 Chesapeake Corp. $ 921,188
------------------------------------------------------------------------------------- -------------
RETAIL TRADE--3.9%
-------------------------------------------------------------------------------------
44,600 Sears Roebuck & Co. 1,644,625
-------------------------------------------------------------------------------------
64,800 Walgreen Co. 1,814,400
------------------------------------------------------------------------------------- -------------
Total 3,459,025
------------------------------------------------------------------------------------- -------------
TECHNOLOGY SERVICES--3.1%
-------------------------------------------------------------------------------------
62,800 DQE 1,664,200
-------------------------------------------------------------------------------------
39,356 Sun Guard Data Systems 1,151,163
------------------------------------------------------------------------------------- -------------
Total 2,815,363
------------------------------------------------------------------------------------- -------------
TELECOMMUNICATIONS--6.4%
-------------------------------------------------------------------------------------
27,800 Bell Atlantic Corp. 1,706,225
-------------------------------------------------------------------------------------
41,350 GTE Corp. 1,622,987
-------------------------------------------------------------------------------------
14,850 Harris Corp. 814,894
-------------------------------------------------------------------------------------
63,150 MCI Communications Corp. 1,645,847
------------------------------------------------------------------------------------- -------------
Total 5,789,953
------------------------------------------------------------------------------------- -------------
TRANSPORTATION--1.0%
-------------------------------------------------------------------------------------
21,700 Illinois Central Corp. 849,013
------------------------------------------------------------------------------------- -------------
UTILITIES--3.7%
-------------------------------------------------------------------------------------
24,500 BellSouth Corp. 1,791,562
-------------------------------------------------------------------------------------
31,100 Eastern Utilities Association 754,175
-------------------------------------------------------------------------------------
29,850 Illinova Corp. 809,681
------------------------------------------------------------------------------------- -------------
Total 3,355,418
------------------------------------------------------------------------------------- -------------
TOTAL COMMON STOCKS (IDENTIFIED COST $75,622,131) 84,689,392
------------------------------------------------------------------------------------- -------------
(a) REPURCHASE AGREEMENT--4.6%
- ---------------------------------------------------------------------------------------------------
$ 4,116,513 Nikko Securities Co. International, Inc., 6.45%, dated 9/29/1995, due
10/2/1995 (at amortized cost) 4,116,513
------------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST $79,738,644)(b) $ 88,805,905
------------------------------------------------------------------------------------- -------------
</TABLE>
(a) The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
(b) The cost of investments for federal tax purposes amounts to $79,738,644. The
net unrealized appreciation of investments on a federal tax basis amounts to
$9,067,261 which is comprised of $9,397,847 appreciation and $330,586
depreciation at September 30, 1995.
(c) Non-income producing security.
Note: The categories of investments are shown as a percentage of net assets
($89,853,293) at September 30, 1995.
(See Notes which are an integral part of the Financial Statements)
THE VIRGINIA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
MANAGEMENT DISCUSSION AND ANALYSIS
---------------------------------------------------------------------------
The U.S. Treasury market has performed extremely well this year due to
sustained growth with little threat of inflation. The municipal bond market
has also done well but has under performed the U.S. Treasury market due to
concerns over the possibility of a flat tax. While we do not think that a
flat tax will be imposed in its current format we will continue to invest
conservatively and keep abreast of the situation.
Assets remained stable throughout the quarter for The Virginia
Municipal Bond Fund. The Fund's primary emphasis is to concentrate in
higher coupon, premium bonds as opposed to lower coupon discounts. The Fund
continues to gravitate toward a more equal weighting between General
Obligation and Revenue bonds, concentrating in the 7-15 year range. The
target average weighted maturity for the fund is approximately 10 years. We
continue to emphasize AAA rated securities.
THE VIRGINIA MUNICIPAL BOND FUND--Investment Shares
---------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN THE VIRGINIA MUNICIPAL BOND FUND--INVESTMENT
SHARES
The graph below illustrates the hypothetical investment of $10,000 in
The Virginia Municipal Bond Fund (the "Fund") from October 24, 1990 (start
of performance) to September 30, 1995, compared to the Lehman Brothers 10
Year Municipal Bond Index ("LBMBI").+
[GRAPH APPEARS HERE]
AVERAGE ANNUAL TOTAL RETURN*** FOR THE PERIOD ENDED SEPTEMBER 30, 1995
1 Year...............................................................7.87%
Start of Performance (10/24/90)......................................6.99%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT
RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY
MAY BE WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT
OBLIGATIONS OF OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
*Reflects operations of the Fund from the start of performance (10/24/90)
through 9/30/95, on a cumulative basis.
**Represents a hypothetical investment of $10,000 in the Fund. The Fund's
performance assumes the reinvestment of all dividends and distributions.
***Total return quoted reflects all applicable contingent deferred sales
charges.
The LBMBI IS not adjusted to reflect sales loads, expenses, or other fees
that the SEC requires to be reflected in the Fund's performance. The LBMBI
has been adjusted to reflect reinvestment of dividends on securities in the
index. This index is unmanaged.
THE VIRGINIA MUNICIPAL BOND FUND--Trust Shares
---------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN THE VIRGINIA MUNICIPAL BOND FUND--TRUST
SHARES
The graph below illustrates the hypothetical investment of $10,000 in
The Virginia Municipal Bond Fund (the "Fund") from October 24, 1990 (start
of performance) to September 30, 1995, compared to the Lehman Brothers 10
Year Municipal Bond Index ("LBMBI").+
[GRAPH APPEARS HERE]
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIOD ENDED SEPTEMBER 30, 1995
1 Year..............................................................10.27%
Start of Performance (10/24/90)......................................7.13%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT
RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY
MAY BE WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT
OBLIGATIONS OF OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
*Reflects operations of the Fund from the start of performance (10/24/90)
through 9/30/95, on a cumulative basis.
**Represents a hypothetical investment of $10,000 in the Fund. The Fund's
performance assumes the reinvestment of all dividends and distributions.
+The LBMBI IS not adjusted to reflect sales loads, expenses, or other fees
that the SEC requires to be reflected in the Fund's performance. The
LBMBI has been adjusted to reflect reinvestment of dividends on
securities in the index. This index is unmanaged.
THE VIRGINIA MUNICIPAL BOND FUND
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------ ------------------------------------------------------------------------ --------- --------------
LONG-TERM MUNICIPALS SECURITIES--95.6%
- --------------------------------------------------------------------------------------
$ 1,000,000 Albermarle County, VA, IDA 5.75%, Refunding Revenue Bonds,
(Martha-Jefferson Hospital)/(Callable 10/1/2003
@ 102)/(Original Issue Yield: 5.85%), 10/1/2008 A $ 1,010,600
------------------------------------------------------------------------
900,000 Arlington County, VA, IDA 6.60%, Refunding Revenue Bonds, (Arlington
Hospital)/(Series A)/(Callable 9/1/2001
@ 102), 9/1/2004 A-1 1,010,088
------------------------------------------------------------------------
250,000 Arlington County, VA, Public Improvements, 6.00%, GO UT Bonds, (Callable
12/1/2001 @ 102), 12/1/2005 AAA 270,130
------------------------------------------------------------------------
3,000,000 Chesapeake Bay, VA, Bridge & Tunnel Commisson, 5.50% Revenue Bonds,
(Callable 7/1/2005 @ 102)/(FGIC Insured),
7/1/2006 AAA 3,098,130
------------------------------------------------------------------------
1,000,000 Chesapeake, VA, 5.25%, GO UT Refunding Bonds,
(Original Issue Yield: 5.35%), 12/1/2006 AA 1,021,980
------------------------------------------------------------------------
1,360,000 Chesapeake, VA, Public Improvements, 5.70%, GO UT Bonds, (Callable
8/1/2002 @ 102), 8/1/2007 AA 1,424,980
------------------------------------------------------------------------
320,000 Chesapeake, VA, Water & Sewer System Authority, 6.60%, Refunding Revenue
Bonds, (Callable 7/1/2002 @ 102)/
(Original Issue Yield: 6.70%), 7/1/2006 A+ 349,929
------------------------------------------------------------------------
1,500,000 Chesterfield County, VA, Public Improvements, 5.00%, GO UT Refunding
Bonds, (Callable 3/1/2003 @ 101.5), 3/1/2006 AA 1,508,895
------------------------------------------------------------------------
300,000 Chesterfield County, VA, Public Improvements, 6.60%, GO UT Bonds,
(Series B)/(Callable 1/1/2001 @ 102), 1/1/2003 AAA 332,724
------------------------------------------------------------------------
300,000 Chesterfield, VA, Water & Sewer System Authority, 6.10%, Refunding
Revenue Bonds, (Callable
11/1/2002 @ 102), 11/1/2004 AA 326,901
------------------------------------------------------------------------
1,000,000 Covington Allegheny County, VA, IDA 6.20%, Pollution Control Revenue
Bonds, (Westvaco Corp. Project)/(Callable 4/1/1996 @ 100), 4/1/2007 A-1 1,058,210
------------------------------------------------------------------------
2,545,000 Danville, VA, IDA, 6.20% Revenue Bonds, (Danville Regional Medical
Center)/(FGIC Insured), 10/1/2009 AAA 2,667,312
------------------------------------------------------------------------
500,000 Danville, VA, Public Improvements, 6.20%, GO UT Bonds, (Callable
5/1/2002 @ 102), 5/1/2006 A 534,980
------------------------------------------------------------------------
1,140,000 Fairfax County, VA, 5.30%, Refunding Revenue Bonds, (Callable 11/15/2003
@ 102)/(AMBAC Insured),
11/15/2006 AAA 1,158,684
------------------------------------------------------------------------
7,905,000 Fairfax County, VA, 5.40%, GO UT Refunding Bonds, (Series A)/(Callable
6/1/2002 @ 102)/(State Aid
Withholding), 6/1/2006 AAA 8,147,130
------------------------------------------------------------------------
1,505,000 Fairfax County, VA, 5.40%, Refunding Revenue Bonds,
(Callable 11/15/2003 @ 102)/(AMBAC Insured), 11/15/2007 AAA 1,525,994
------------------------------------------------------------------------
1,000,000 Fairfax County, VA, 6.00%, GO UT Refunding Bonds,
(Series B)/(Callable 11/1/1999 @ 102)/(State Aid
Withholding), 5/1/2008 AAA 1,046,790
------------------------------------------------------------------------
</TABLE>
THE VIRGINIA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------ ------------------------------------------------------------------------ --------- --------------
LONG-TERM MUNICIPALS SECURITIES--CONTINUED
- --------------------------------------------------------------------------------------
$ 1,000,000 Hampton Roads, VA, Capital Improvements, 5.10%,
Wastewater Refunding Revenue Bonds, (Callable 10/1/2003 @ 102)/(Original
Issue Yield: 5.15%), 10/1/2008 AA $ 981,370
------------------------------------------------------------------------
500,000 Hampton Roads, VA, Medical College, 6.50%, Refunding Revenue Bonds,
(Series A)/(Callable 11/15/2001 @ 102)/
(Original Issue Yield: 6.65%), 11/15/2005 A- 530,690
------------------------------------------------------------------------
1,000,000 Hampton Roads, VA, Medical College, 6.30%, Refunding Revenue Bonds,
(Series A)/(Callable 11/15/2001 @ 102)/ (Original Issue Yield: 6.40%),
11/15/2002 A- 1,058,640
------------------------------------------------------------------------
1,000,000 Henrico County, VA, Public Improvements, 5.20%, GO UT Refunding Bonds,
(Callable 1/15/2003 @ 102)/(Original Issue Yield: 5.30%), 1/15/2007 AAA 1,011,670
------------------------------------------------------------------------
1,000,000 Henrico County, VA, Public Improvements, 5.20%, GO UT Refunding Bonds,
(Callable 1/15/2003 @ 102)/(Original Issue Yield: 5.35%), 1/15/2008 AAA 1,002,110
------------------------------------------------------------------------
500,000 James Madison University, VA, 5.375%, Refunding Revenue Bonds, (Callable
6/1/2003 @ 102)/(AMBAC Insured)/
(Original Issue Yield: 5.481%), 6/1/2009 AAA 499,240
------------------------------------------------------------------------
500,000 Leesburg, VA, Sewer Improvements, 6.10%, Utility System Revenue Bonds,
(Callable 7/1/2002 @ 102)/(MBIA Insured)/ (Original Issue Yield: 6.15%),
7/1/2007 AAA 534,905
------------------------------------------------------------------------
1,000,000 Loudoun County, VA, 5.50%, GO UT Refunding Bonds, (Callable 10/1/2003 @
102)/(State Aid Withholding)/(Original Issue Yield: 5.649%), 10/1/2007 AA- 1,026,300
------------------------------------------------------------------------
600,000 Loudoun County, VA, IDA 5.50%, Revenue Bonds, (Northern Virginia
Criminal Justice)/(Callable 6/1/2003 @ 102)/(Original Issue Yield:
5.829%), 6/1/2008 AA 612,126
------------------------------------------------------------------------
1,000,000 Lynchburg, VA, 5.00%, GO UT Refunding Bonds, (Callable 4/1/2003 @
102)/(Original Issue Yield: 5.15%), 4/1/2004 AA 1,017,320
------------------------------------------------------------------------
1,850,000 Lynchburg, VA, 5.25%, GO UT Refunding Bonds, (Callable 4/1/2003 @
102)/(Original Issue Yield: 5.45%), 4/1/2007 AA 1,866,521
------------------------------------------------------------------------
500,000 Lynchburg, VA, Public Improvements, 5.80%, GO UT Bonds, (Callable
3/1/2001 @ 102), 3/1/2008 AA 526,420
------------------------------------------------------------------------
500,000 Lynchburg, VA, Public Improvements, 5.60%, GO UT Bonds, (Callable
3/1/2001 @ 102), 3/1/2006 AA 521,965
------------------------------------------------------------------------
500,000 Manassas, VA, IDA 7.30% Refunding Revenue Bonds, (International Business
Machines)/(Callable 5/1/2000 @ 102),
5/1/2008 A3 549,600
------------------------------------------------------------------------
1,500,000 Newport News, VA, 5.20%, GO UT Refunding Bonds,
(Series C)/(Callable 6/1/2003 @ 102), 6/1/2008 AA 1,482,075
------------------------------------------------------------------------
1,500,000 Newport News, VA, 5.45%, GO UT Refunding Bonds,
(Series B)/(Callable 11/1/2003 @ 102)/(State Aid
Withholding), 11/1/2008 AA- 1,516,155
------------------------------------------------------------------------
500,000 Newport News, VA, 5.80%, GO UT Refunding Bonds, (Series B)/(Callable
7/1/1999 @ 102)/(Original Issue Yield: 5.90%),
7/1/2007 AA 519,010
------------------------------------------------------------------------
</TABLE>
THE VIRGINIA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------ ------------------------------------------------------------------------ --------- --------------
LONG-TERM MUNICIPALS SECURITIES--CONTINUED
- --------------------------------------------------------------------------------------
$ 725,000 Newport News, VA, 5.80%, GO UT Refunding Improvements Bonds, (Series
B)/(Callable 7/1/1999 @ 102)/(Original Issue Yield: 5.90%), 7/1/2007 AA- $ 752,818
------------------------------------------------------------------------
1,835,000 Newport News, VA, Water Utility Improvements, 6.10%,
GO UT Bonds, (Series A)/(Callable 6/1/2002 @ 101.5),
6/1/2008 AA 1,937,962
------------------------------------------------------------------------
1,000,000 Norfolk, VA, IDA 6.20%, Refunding Revenue Bonds, (Daughter's
Charity-DePaul Hospital), 12/1/2002 Aa 1,069,630
------------------------------------------------------------------------
250,000 Norfolk, VA, IDA 6.60%, Revenue Bonds, (Children's
Hospital King's Group)/(AMBAC Insured)/(Original Issue Yield: 6.70%),
6/1/2002 AAA 275,560
------------------------------------------------------------------------
250,000 Norfolk, VA, IDA 6.75%, Revenue Bonds, (Children's
Hospital King's Group)/(AMBAC Insured)/(Original Issue Yield: 6.85%),
6/1/2004 AAA 282,713
------------------------------------------------------------------------
1,000,000 Norfolk, VA, Public Improvements, 5.25%, GO UT Refunding Bonds,
(Callable 2/1/2003 @ 102)/(Original Issue Yield: 5.35%), 2/1/2006 AA 1,017,650
------------------------------------------------------------------------
1,000,000 Norfolk, VA, Public Improvements, 5.25%, GO UT Refunding Bonds,
(Callable 6/1/2004 @ 101)/(State Aid
Withholding)/(Original Issue Yield: 5.35%), 6/1/2008 AA 996,260
------------------------------------------------------------------------
500,000 Norfolk, VA, Public Improvements, 6.00%, GO UT Refunding Bonds, (Series
A)/(Callable 2/1/2001 @102)/
(Original Issue Yield: 6.20%), 2/1/2008 AA 522,860
------------------------------------------------------------------------
1,245,000 Norfolk, VA, Water Utility Improvements, 6.25% Revenue Bonds, (MBIA
Insured), 11/1/2005 AAA 1,370,172
------------------------------------------------------------------------
1,000,000 Petersburg, VA, Hospital Authority, 5.90%, Refunding Revenue Bonds,
(Southside Regional Medical Center), 7/1/2002 A 1,027,890
------------------------------------------------------------------------
300,000 Portsmouth, VA, 6.40%, GO UT Refunding Bonds, (Callable 11/1/2001 @
102), 11/1/2003 AA- 330,231
------------------------------------------------------------------------
1,000,000 Prince William County, VA, 5.00%, GO UT Refunding Bonds, (Series
C)/(Callable 8/1/2003 @ 102)/(State Aid
Withholding)/(Original Issue Yield: 5.15%), 8/1/2007 AA 985,880
------------------------------------------------------------------------
1,000,000 Prince William County, VA, 5.10%, GO UT Refunding Bonds, (Series
C)/(Callable 8/1/2003 @ 102)/(State Aid
Withholding)/(Original Issue Yield: 5.20%), 8/1/2008 AA 981,470
------------------------------------------------------------------------
2,575,000 Richmond, VA, Metropolitan Authority, 6.00%, Refunding Revenue Bonds,
(Series A)/(Callable 7/15/2002 @ 102)/(FGIC Insured), 7/15/2008 AAA 2,714,951
------------------------------------------------------------------------
500,000 Richmond, VA, Metropolitan Authority, 6.05%, Refunding Revenue Bonds,
(Series B)/(Callable 7/15/2002 @ 102)/(FGIC Insured)/(Original Issue
Yield: 6.149%), 7/15/2005 AAA 537,935
------------------------------------------------------------------------
500,000 Richmond, VA, Public Improvements, 6.30%, GO UT Refunding Bonds,
(Callable 1/15/2001 @ 102)/(Original Issue Yield: 6.40%), 1/15/2004 AA 541,210
------------------------------------------------------------------------
625,000 Richmond, VA, Public Improvements, 6.40%, GO UT Refunding Bonds, (Series
B)/(Callable 1/15/2001 @ 102)/ (Original Issue Yield: 6.50%), 1/15/2005 AA 676,344
------------------------------------------------------------------------
</TABLE>
THE VIRGINIA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------ ------------------------------------------------------------------------ --------- --------------
LONG-TERM MUNICIPALS SECURITIES--CONTINUED
- --------------------------------------------------------------------------------------
$ 250,000 Richmond, VA, Public Improvements, 6.60%, GO UT Refunding Bonds, (Series
B)/(Callable 1/15/2001 @ 102)/ (Original Issue Yield: 6.70%), 1/15/2007 AA $ 270,043
------------------------------------------------------------------------
600,000 Roanoke County, VA, Public Improvements, 5.55%, GO UT Refunding Bonds,
(Callable 6/1/2003 @ 102)/(Original Issue Yield: 5.65%), 6/1/2008 AA 610,734
------------------------------------------------------------------------
750,000 Roanoke, VA, Carilion Health System, IDA 6.90%, Refunding Revenue Bonds,
(Roanoke Memorial Hospital Project)/
(Original Issue Yield: 7.00%), 7/1/1999 A+ 801,338
------------------------------------------------------------------------
1,185,000 Roanoke, VA, IDA 6.00%, Refunding Revenue Bonds,
(Roanoke Memorial Hospital)/(Series B)/(Callable 7/1/2002
@ 102)/(Original Issue Yield: 6.10%), 7/1/2007 A1 1,218,156
------------------------------------------------------------------------
1,000,000 Roanoke, VA, Public Improvements, 4.70%, GO UT Bonds, (Callable 8/1/2004
@ 102), 8/1/2005 AA 972,300
------------------------------------------------------------------------
900,000 Virginia Beach, VA, 6.00%, GO UT Refunding Bonds,
(Callable 2/1/2002 @ 102)/(Original Issue Yield: 6.10%),
2/1/2006 AA 961,947
------------------------------------------------------------------------
295,000 Virginia Beach, VA, Development Authority, 6.30%,
Revenue Bonds, (Sentara Bayside Hospital)/(Callable
11/1/2001 @ 102)/(Original Issue Yield: 6.35%), 11/1/2004 AA 317,252
------------------------------------------------------------------------
1,325,000 Virginia Beach, VA, Public Improvements, 5.40%, GO UT Bonds, (Original
Issue Yield: 5.45%)/(State Aid
Withholding), 9/1/2002 AA 1,386,374
------------------------------------------------------------------------
1,000,000 Virginia Beach, VA, Public Improvements, 5.40%, GO UT Bonds, (Original
Issue Yield: 5.50%), 9/1/2003 AA 1,045,810
------------------------------------------------------------------------
500,000 Virginia Beach, VA, Public Improvements, 5.70%, GO UT Bonds, (Callable
7/15/2002 @ 102), 7/15/2006 AA 523,890
------------------------------------------------------------------------
500,000 Virginia Beach, VA, Public Improvements, 5.80%, GO UT Bonds, (Callable
7/15/2002 @ 102), 7/15/2007 AA 523,065
------------------------------------------------------------------------
665,000 Virginia Beach, VA, Public Improvements, 5.90%, GO UT Bonds, (Callable
7/15/2002 @ 102), 7/15/2008 AA 694,593
------------------------------------------------------------------------
350,000 Virginia Beach, VA, Public Improvements, 6.50%, GO UT Bonds, (Series
C)/(Callable 8/1/2001 @ 102), 8/1/2005 AA 383,198
------------------------------------------------------------------------
250,000 Virginia Beach, VA, Public Improvements, 6.90%, GO UT Bonds, (Series
A)/(Prerefunded 6/1/2000 @ 102), 6/1/2004 AA 279,180
------------------------------------------------------------------------
1,000,000 Virginia College Building Authority, VA, 5.50%, Refunding Revenue Bonds,
(Hampton University Project)/(Callable
4/1/2003 @ 102)/(Original Issue Yield: 5.60%), 4/1/2005 A+ 1,025,280
------------------------------------------------------------------------
2,500,000 Virginia College Building Authority, VA, University &
College Improvements, 5.55%, Revenue Bonds, (University of Richmond
Project)/(Callable 11/1/2004 @ 100), 11/1/2019 Aa 2,580,925
------------------------------------------------------------------------
385,000 Virginia State HDA, 6.05%, Revenue Bonds, (Series F)/
(Callable 11/1/2002 @ 102), 11/1/2006 AA 400,242
------------------------------------------------------------------------
410,000 Virginia State HDA, 6.10%, Revenue Bonds, (Series F)/
(Callable 11/1/2002 @ 102), 11/1/2007 AA 423,243
------------------------------------------------------------------------
</TABLE>
THE VIRGINIA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------ ------------------------------------------------------------------------ --------- --------------
LONG-TERM MUNICIPALS SECURITIES--CONTINUED
- --------------------------------------------------------------------------------------
$ 300,000 Virginia State Public Building Authority, 5.80%, Refunding Revenue
Bonds, (Series A)/(Callable 8/1/2001 @ 101),
8/1/2002 AA $ 321,006
------------------------------------------------------------------------
3,480,000 Virginia State Public Building Authority, 6.00%, Refunding Revenue
Bonds, (Series A)/(Callable 8/1/2001 @ 101),
8/1/2003 AA 3,738,634
------------------------------------------------------------------------
1,310,000 Virginia State Public Building Authority, Public Improvements, 5.25%,
Refunding Revenue Bonds, (Series A)/
(Callable 8/1/2003 @ 101)/(Original Issue Yield: 5.30%),
8/1/2006 AA 1,336,135
------------------------------------------------------------------------
1,500,000 Virginia State Public Building Authority, Public Improvements, 5.40%,
Refunding Revenue Bonds, (Series A)/(Callable 8/1/2003 @ 101)/(Original
Issue Yield: 5.45%), 8/1/2008 AA 1,516,995
------------------------------------------------------------------------
3,000,000 Virginia State Public Building Authority, Public Improvements, 5.40%,
Revenue Bonds, (Series C)/(Callable 8/1/2002 @ 101), 8/1/2005 AA 3,116,460
------------------------------------------------------------------------
755,000 Virginia State Public Building Authority, Public Improvements, 5.60%,
Revenue Bonds, (Series C)/(Callable 8/1/2002 @ 101)/(Original Issue
Yield: 5.70%), 8/1/2007 AA 780,172
------------------------------------------------------------------------
360,000 Virginia State Public Building Authority, Public Improvements, 6.60%
Revenue Bonds, (Series A)/(Callable 8/1/2001 @ 102)/(Original Issue
Yield: 6.65%), 8/1/2004 AA 398,668
------------------------------------------------------------------------
600,000 Virginia State Public School Authority, 5.75%, Revenue Bonds, (Series
B)/(Callable 1/1/2003 @ 102)/(State Aid Withholding), 1/1/2008 AA 622,602
------------------------------------------------------------------------
1,550,000 Virginia State Public School Authority, School Improvements, 5.30%,
Revenue Bonds, (Series A)/(Callable 1/1/2003 @ 102)/(State Aid
Withholding), 1/1/2007 AA 1,569,081
------------------------------------------------------------------------
465,000 Virginia State Public School Authority, School Improvements, 5.90%,
Revenue Bonds, (Callable 8/1/2002 @ 102)/
(Original Issue Yield: 6.00%), 8/1/2006 AA 495,248
------------------------------------------------------------------------
500,000 Virginia State Public School Authority, School Improvements, 6.00%,
Revenue Bonds, (Series A)/(Callable 8/1/2004 @ 102)/(State Aid
Withholding), 8/1/2005 AA 543,505
------------------------------------------------------------------------
300,000 Virginia State Resource Authority, Water & Sewer System, 5.85%,
Refunding Revenue Bonds, (Frederick County-Lot 9)/ (Callable 10/1/2002 @
102)/(Original Issue Yield: 5.95%),
10/1/2006 AA 316,527
------------------------------------------------------------------------
1,000,000 Virginia State Transportation Board Contract, 5.375%, Refunding Revenue
Bonds, (U.S. Route 58 Corridor PG-A)/
(Callable 5/15/2003 @ 102)/(Original Issue Yield: 5.50),
5/15/2007 AA 1,017,600
------------------------------------------------------------------------
2,030,000 Virginia State Transportation Board Contract, 6.00%, Refunding Revenue
Bonds, (Northern Virginia Transportation District PG-A)/(Callable
5/15/2004 @ 101)/(Original Issue Yield: 6.31%), 5/15/2008 AA 2,148,816
------------------------------------------------------------------------
</TABLE>
THE VIRGINIA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT CREDIT
OR SHARES RATING* VALUE
<C> <S> <C> <C>
- ------------ ------------------------------------------------------------------------ --------- --------------
LONG-TERM MUNICIPALS SECURITIES--CONTINUED
- --------------------------------------------------------------------------------------
$ 600,000 Virginia State Transportation Board Contract, 6.00%, Refunding Revenue
Bonds, (Route 28 Project)/(Callable
4/1/2002 @ 102)/(Original Issue Yield: 6.20%), 4/1/2004 AA $ 648,984
------------------------------------------------------------------------
550,000 Virginia State Transportation Board Contract, 6.00%, Refunding Revenue
Bonds, (Route 28 Project)/(Callable
4/1/2002 @ 102)/(Original Issue Yield: 6.30%), 4/1/2005 AA 591,701
------------------------------------------------------------------------
1,800,000 Virginia State Transportation Board Contract, 6.00%, Refunding Revenue
Bonds, (Route 28 Project)/(Callable
4/1/2002 @ 102)/(Original Issue Yield: 6.40%), 4/1/2007 AA 1,907,478
------------------------------------------------------------------------
1,500,000 Virginia State Transportation Board Contract, Highway Improvements,
5.10%, Revenue Bonds, (Northern Virginia Transportation District
PG)/(Series C)/(Callable 5/15/2003
@ 102)/(Original Isuue Yield: 5.228%), 5/15/2007 AA 1,493,400
------------------------------------------------------------------------
1,000,000 Virginia State, 5.10%, GO UT Bonds, (Series B)/(Callable
12/1/2003 @ 102), 12/1/2007 AAA 1,008,620
------------------------------------------------------------------------
1,000,000 Virginia State, 5.20%, GO UT Refunding Bonds, (Callable
6/1/2003 @ 102)/(Original Issue Yield: 5.25%), 6/1/2008 AAA 1,005,580
------------------------------------------------------------------------
520,000 Virginia State, Public Improvements, 5.60%, GO UT Bonds, (Series
A)/(Callable 6/1/2003 @ 102), 6/1/2007 AAA 545,282
------------------------------------------------------------------------
500,000 Virginia State, Public Improvements, 5.70%, GO UT Bonds, (Series
A)/(Callable 6/1/2003 @ 102), 6/1/2008 AAA 523,415
------------------------------------------------------------------------
615,000 Virginia State, University & College Improvements, 5.75%, GO UT Revenue
Bonds, (Higher Educational Institute)/ (Series D)/(Callable 6/1/2002 @
102), 6/1/2008 AAA 643,997
------------------------------------------------------------------------
1,000,000 Virginia State, University & College Improvements, 6.50%, Revenue Bonds,
(Higher Educational Institutions)/(Series A)/ (Prerefunded 6/1/1999 @
102), 6/1/2006 AAA 1,090,670
------------------------------------------------------------------------ --------------
TOTAL LONG-TERM MUNICIPAL SECURITIES
(IDENTIFIED COST, $96,873,356) 99,569,256
------------------------------------------------------------------------ --------------
MUTUAL FUND SHARES--2.8%
- --------------------------------------------------------------------------------------
2,728,108 Goldman, Sachs Institutional Tax Exempt $ 2,728,108
------------------------------------------------------------------------
220,695 Municipal Fund for Temporary Investment 220,695
------------------------------------------------------------------------ --------------
TOTAL MUTUAL FUND SHARES (AT NET ASSET VALUE) 2,948,803
------------------------------------------------------------------------ --------------
TOTAL INVESTMENTS (IDENTIFIED COST $99,822,159)(a) $ 102,518,059
------------------------------------------------------------------------ --------------
</TABLE>
(a) The cost of investments for federal tax purposes amounts to $99,822,159. The
net unrealized appreciation of investments on a federal tax basis amounts to
$2,695,900 which is comprised of $2,908,136 appreciation and $212,236
depreciation at September 30, 1995.
* Please refer to the Appendix of the Statement of Additional Information for
an explanation of the credit ratings. Current credit ratings are unaudited.
Note: The categories of investments are shown as a percentage of net assets
(104,242,665) at September 30, 1995.
THE VIRGINIA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
The following acronym(s) are used throughout this portfolio:
AMBAC--American Municipal Bond Assurance Corporation
FGIC--Financial Guaranty Insurance Company
GO--General Obligation
HDA--Housing Development Authority
IDA--Industrial Development Authority
MBIA--Municipal Bond Investors Assurance
UT--Unlimited Tax
(See Notes which are an integral part of the Financial Statements)
THE MARYLAND MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
MANAGEMENT DISCUSSION AND ANALYSIS
---------------------------------------------------------------------------
The U.S. Treasury market has performed extremely well this year due to
sustained growth with little threat of inflation. The municipal bond market
has also done well but has under performed the U.S. Treasury market due to
concerns over the possibility of a flat tax. While we do not think that a
flat tax will be imposed in its current format we will continue to invest
conservatively and keep abreast of the situation.
Assets remained stable throughout the quarter for The Maryland
Municipal Bond Fund. The Fund's primary emphasis is to concentrate in
higher coupon, premium bonds as opposed to lower coupon discounts. The Fund
continues to gravitate toward a more equal weighting between General
Obligation and Revenue bonds, concentrating in the 7-15 year range. The
target average weighted maturity for the fund is approximately 10 years. We
continue to emphasize AAA rated securities.
THE MARYLAND MUNICIPAL BOND FUND--Investment Shares
- --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN THE MARYLAND MUNICIPAL BOND FUND--INVESTMENT
SHARES
The graph below illustrates the hypothetical investment of $10,000 in The
Maryland Municipal Bond Fund (the "Fund") from October 30, 1990 (start of
performance) to September 30, 1995, compared to the Lehman Brothers 10 Year
Municipal Bond Index ("LBMBI").+
[GRAPH APPEARS HERE]
AVERAGE ANNUAL TOTAL RETURN*** FOR THE PERIOD ENDED SEPTEMBER 30, 1995
1 Year....................................................................7.77%
Start of Performance (10/30/90)...........................................6.58%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
*Reflects operations of the Fund from the start of performance (10/30/90)
through 9/30/95, on a cumulative basis.
**Represents a hypothetical investment of $10,000 in the Fund. The Fund's
performance assumes the reinvestment of all dividends and distributions.
***Total return quoted reflects all applicable contingent deferred sales
charges.
+The LBMBI IS not adjusted to reflect sales loads, expenses, or other fees
that the SEC requires to be reflected in the Fund's performance. The LBMBI
has been adjusted to reflect reinvestment of dividends on securities in the
index. This index is unmanaged.
THE MARYLAND MUNICIPAL BOND FUND--Trust Shares
- --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN THE MARYLAND MUNICIPAL BOND FUND--TRUST SHARES
The graph below illustrates the hypothetical investment of $10,000 in The
Maryland Municipal Bond Fund (the "Fund") from October 30, 1990 (start of
performance) to September 30, 1995, compared to the Lehman Brothers 10 Year
Municipal Bond Index ("LBMBI").+
[GRAPH APPEARS HERE]
AVERAGE ANNUAL TOTAL RETURN*** FOR THE PERIOD ENDED SEPTEMBER 30, 1995
1 Year...................................................................10.09%
Start of Performance (10/30/90)...........................................6.72%
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
*Reflects operations of the Fund from the start of performance (10/30/90)
through 9/30/95, on a cumulative basis.
**Represents a hypothetical investment of $10,000 in the Fund. The Fund's
performance assumes the reinvestment of all dividends and distributions.
+The LBMBI IS not adjusted to reflect sales loads, expenses, or other fees that
the SEC requires to be reflected in the Fund's performance. The LBMBI has been
adjusted to reflect reinvestment of dividends on securities in the index. This
index is unmanaged.
THE MARYLAND MUNICIPAL BOND FUND
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------ ------------------------------------------------------------------------- --------- -------------
LONG-TERM MUNICIPALS--95.2%
- ---------------------------------------------------------------------------------------
$ 555,000 Annapolis, MD, Public Improvement GO Bonds, 5.90%,
7/15/2005 A+ $ 594,594
-------------------------------------------------------------------------
485,000 Anne Arundel County, MD, Consolidated General
Improvement GO Bonds, 6.10%, 8/1/2010 AA+ 515,768
-------------------------------------------------------------------------
500,000 Anne Arundel County, MD, Consolidated General
Improvement GO Bonds, 5,70%, 7/15/2003 AA+ 536,660
-------------------------------------------------------------------------
500,000 Baltimore County, MD, 63rd Met District GO Bonds, 6.10%, 7/1/2006 Aaa 540,415
-------------------------------------------------------------------------
395,000 Baltimore County, MD, 63rd Met District GO Bonds, 5.80%, 7/1/2003 Aaa 424,791
-------------------------------------------------------------------------
850,000 Baltimore County, MD, 63rd Met District GO Bonds, 6.125%, 7/1/2007 Aaa 913,810
-------------------------------------------------------------------------
400,000 Baltimore County, MD, Revenue Authority, Refunding
Revenue Bonds, 4.90%, 10/1/2008 Aa1 382,924
-------------------------------------------------------------------------
1,000,000 Baltimore County, MD, Revenue Authority, Refunding
Revenue Bonds, 5.25%, 7/1/2008 A 998,990
-------------------------------------------------------------------------
1,000,000 Baltimore, MD, Consolidated Public Improvement GO Bonds, 5.375%, (Series
A)/(AMBAC Insured), 10/15/2008 AAA 999,970
-------------------------------------------------------------------------
250,000 Baltimore, MD, Consolidated Public Improvement GO Bonds, 6.25%, (Series
C)/(FGIC Insured), 10/15/2003 AAA 276,053
-------------------------------------------------------------------------
250,000 Baltimore, MD, Consolidated Public Improvement GO Bonds, 6.40%, (Series
A)/(FGIC Insured), 10/15/2001 AAA 274,888
-------------------------------------------------------------------------
500,000 Baltimore, MD, Participation Certificates, 5.50%, (Series 1993b)(MBIA
Insured), 4/1/2007 AAA 510,005
-------------------------------------------------------------------------
1,700,000 Baltimore, MD, Public Facility Revenue Bonds, 6.50%,
12/1/2010 AA- 1,840,182
-------------------------------------------------------------------------
1,000,000 Calvert County, MD, Public Improvement, Refunding
Revenue Bonds, 4.875%, 7/15/2008 Aa 949,200
-------------------------------------------------------------------------
300,000 Frederick County, MD, GO Bonds, 5.55%, 7/1/2007 AA- 308,877
-------------------------------------------------------------------------
355,000 Harford County, MD, GO Bonds, 5.70%, 9/1/2007 AAA 385,743
-------------------------------------------------------------------------
395,000 Harford County, MD, GO Bonds, 5.70%, 9/1/2007
(Prerefunded) AA- 411,799
-------------------------------------------------------------------------
500,000 Howard County, MD, GO Bonds, 5.75%, 5/15/2008 AA+ 516,460
-------------------------------------------------------------------------
1,350,000 Howard County, MD, Public Improvement, Refunding
Revenue Bonds, 5.25%, (Series A), 8/15/2007 AA+ 1,362,339
-------------------------------------------------------------------------
375,000 Laurel, MD, Refunding Revenue Bonds, 6.60%, (Series A)/ (MBIA Insured),
7/1/2003 AA+ 416,674
-------------------------------------------------------------------------
500,000 Maryland National Capital Park & Planning Commission, GO Bonds, 6.10%,
7/1/2006, (callable 7/1/2004) AA 539,215
-------------------------------------------------------------------------
3,000,000 Maryland State & Local Facility, GO Bonds, 5.60%,
3/15/2008 (callable 3/15/2007) AAA 3,120,960
-------------------------------------------------------------------------
</TABLE>
THE MARYLAND MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------ ------------------------------------------------------------------------- --------- -------------
LONG-TERM MUNICIPALS--CONTINUED
- ---------------------------------------------------------------------------------------
$ 750,000 Maryland State Local & Local Facility, GO Bonds, 5.50%,
2/1/2008 (callable 2/1/2007) AAA $ 772,275
-------------------------------------------------------------------------
500,000 Maryland State Health & Higher Education, Revenue Bonds, 5.30%, (Suburban
Hospital), 7/1/2006 (callable 7/1/2005) AAA 507,565
-------------------------------------------------------------------------
1,000,000 Maryland State Health & Higher Education, Revenue Bonds, 5.30%, (Francis
Scott Key Medical Center)/(FGIC Insured),
7/1/2008 (callable 7/1/2005) AAA 992,590
-------------------------------------------------------------------------
500,000 Maryland State Health & Higher Education, Revenue Bonds, 5.10%,
(Northwest Hospital Center)/(AMBAC Insured),
7/1/2008 (callable 7/1/2005) AAA 472,155
-------------------------------------------------------------------------
500,000 Maryland State Transportation Authority, Refunding Revenue Bonds, 5.70%,
7/1/2005 A+ 528,300
-------------------------------------------------------------------------
400,000 Maryland State Transportation Authority, Refunding Revenue Bonds, ETM,
6.625%, 7/1/2003 (callable 11/1/94) AAA 431,720
-------------------------------------------------------------------------
850,000 Maryland State Transportation Authority, Refunding Revenue Bonds, 5.80%,
7/1/2006 A+ 900,159
-------------------------------------------------------------------------
250,000 Maryland State, Revenue Bonds, 6.50%, (Series 1), 7/15/2002 AAA 278,980
-------------------------------------------------------------------------
500,000 Maryland State, Revenue Bonds, 6.70%, (Series 2), 7/15/2001 AAA 558,210
-------------------------------------------------------------------------
1,020,000 Maryland Water Quality Revenue Financing Revolving Loan Fund, 6.30%
(Series A), 9/1/2009 AA 1,087,238
-------------------------------------------------------------------------
355,000 Montgomery County, MD, Housing Opportunity Revenue Bonds, Consolidated
SFM, 7.125%, (Series C), 7/1/2006
(callable 7/1/1999) Aa 371,263
-------------------------------------------------------------------------
520,000 Montgomery County, MD, Public Improvement, Refunding GO Bonds, 5.75%,
(Series A), 7/1/2006 AAA 557,466
-------------------------------------------------------------------------
700,000 Montgomery County, MD, Public Improvement, Refunding GO Bonds, 5.80%,
(Series A), 7/1/2007 AAA 749,259
-------------------------------------------------------------------------
250,000 Montgomery County, MD, Consolidated Public Improvement, Revenue Bonds,
6.90%, (Series A), 4/1/2000 AAA 276,150
-------------------------------------------------------------------------
1,000,000 Ocean City, MD, GO Bonds, 5.50%, (MBIA Insured),
3/15/2009 (callable 3/15/2006) AAA 1,009,470
-------------------------------------------------------------------------
325,000 Ocean City, MD, Refunding GO Bonds, 6.00%, (MBIA Insured), 11/1/2003
(Prerefunded) AAA 354,380
-------------------------------------------------------------------------
1,935,000 Prince Georges County, MD, IDA Hyattsville District Court Facility,
Revenue Bonds, 6.00% (Series A), 7/1/2009 AA 2,036,665
-------------------------------------------------------------------------
560,000 Prince Georges County, MD, GO Bonds, 5.95%, (Maryland Local Government
Trust), 8/1/2007 (callable 8/1/2004) Aa 591,853
-------------------------------------------------------------------------
380,000 Prince Georges County, MD, Justice Center Parking Facility, Refunding
Revenue Bonds, 6.10%, 5/1/2001 AA- 406,053
-------------------------------------------------------------------------
500,000 Prince Georges County, MD, Participation Certificates, 5.50%, (MBIA
Insured), 3/15/2008 AAA 507,720
-------------------------------------------------------------------------
750,000 Prince Georges County, MD, Participation Certificates, 5.90%, (MBIA
Insured), 9/15/2009, (callable 9/15/2006) AAA 777,555
-------------------------------------------------------------------------
1,425,000 Rockville, MD, Refunding Revenue GO Bonds, 4.90%,
4/15/2007 AA+ 1,390,615
-------------------------------------------------------------------------
</TABLE>
THE MARYLAND MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT CREDIT
OR SHARES RATING* VALUE
<C> <S> <C> <C>
- ------------ ------------------------------------------------------------------------- --------- -------------
LONG-TERM MUNICIPALS--CONTINUED
- ---------------------------------------------------------------------------------------
$ 1,000,000 University, MD, Auxiliary Facility & Tuition Revenue, Refunding Revenue
Bonds, 4.90%, (Series C), 10/1/2008
(callable 10/1/2005) AA+ $ 960,020
-------------------------------------------------------------------------
1,000,000 University, MD, Auxiliary Facility & Tuition Revenue, Refunding Revenue
Bonds, 5.00%, (Series C), 10/1/2009
(callable 10/1/2005) AA+ 976,390
-------------------------------------------------------------------------
500,000 University, MD, Auxiliary Facility & Tuition Revenue Bonds, 6.30%,
(Series A), 2/1/2008 (callable 2/1/2003) AA+ 533,880
-------------------------------------------------------------------------
500,000 University, MD, Auxiliary Facility & Tuition Revenue Bonds, 6.40%,
(Series B), 4/1/2006 (Prerefunded) AAA 560,650
-------------------------------------------------------------------------
500,000 University, MD, Auxiliary Facility & Tuition Revenue Bonds, 5.30%,
(Series A), 4/1/2007 (callable 2/1/2005) AA+ 506,325
-------------------------------------------------------------------------
475,000 Washington County, MD, Public Improvement, 5.80%,
1/1/2008 (callable 1/1/2005) A+ 498,351
-------------------------------------------------------------------------
400,000 Washington County, MD, Public Improvement, Refunding Revenue Bonds,
5.25%, (FGIC Insured), 1/1/2007 (callable
1/1/2005) AAA 403,468
-------------------------------------------------------------------------
1,000,000 Washington Suburban Sanitation District MD, Refunding Revenue Bonds,
5.25%, (Series F), (FGIC Insured), 1/1/2007 AAA 1,008,670
-------------------------------------------------------------------------
500,000 Washington Suburban Sanitation District MD, Special Assessment Revenue
Bonds, 6.00%, 6/1/2005 (callable
6/1/2004) AA 540,560
-------------------------------------------------------------------------
750,000 Washington Suburban Sanitation District MD, Special Assessment Revenue
Bonds, 6.00%, 6/1/2005 AA 809,948
-------------------------------------------------------------------------
400,000 Washington Suburban Sanitation District MD, Refunding Revenue Bonds,
6.1%, (Series F)/(FGIC Insured), 6/1/2007 AAA 431,365
------------------------------------------------------------------------- -------------
TOTAL LONG-TERM MUNICIPAL SECURITIES
(IDENTIFIED COST $38,661,238) 39,607,585
------------------------------------------------------------------------- -------------
MUTUAL FUND SHARES--4.0%
- ---------------------------------------------------------------------------------------
998,679 Goldman Sachs Institutional Tax Exempt 998,679
-------------------------------------------------------------------------
679,827 Municipal Fund for Temporary Investment 679,827
------------------------------------------------------------------------- -------------
TOTAL MUTUAL FUND SHARES (AT NET ASSET VALUE) 1,678,506
------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST $40,339,744)(a) $ 41,286,091
------------------------------------------------------------------------- -------------
</TABLE>
(a) The cost of investments for federal tax purposes amounts to $40,339,744. The
net unrealized appreciation/depreciation of investments on a federal tax
basis amounts to $946,347 which is comprised of $1,129,037 appreciation and
$182,690 depreciation at September 30, 1995.
* Please refer to the Appendix of the Statement of Additional Information for
an explanation of the credit ratings. Current credit ratings are unaudited.
Note: The categories of investments are shown as a percentage of net assets
($41,619,998) at September 30, 1995.
THE MARYLAND MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
The following acronyms are used throughout this portfolio:
AMBAC--American Municipal Bond Assurance Corporation
ETM--Escrowed to Maturity
FGIC--Financial Guaranty Insurance Company
GO--General Obligation
IDA--Industrial Development Authority
MBIA--Municipal Bond Investors Assurance
SFM--Single Family Mortgage
(See Notes which are an integral part of the Financial Statements)
THE TREASURY MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- --------------------------------------------------------------------------------- --------------
U.S. TREASURY NOTES--46.6%
- -------------------------------------------------------------------------------------------------
$ 115,000,000 3.875%-9.50%, 10/15/1995-7/15/1996 $ 115,521,383
--------------------------------------------------------------------------------- --------------
(a) REPURCHASE AGREEMENTS--53.1%
- -------------------------------------------------------------------------------------------------
10,000,000 *Bear, Stearns & Co., Inc., 5.75%, dated 9/27/1995, due 10/4/1995 10,000,000
---------------------------------------------------------------------------------
10,000,000 Merrill Lynch, Pierce, Fenner & Smith Co., Inc., 5.70%, dated
9/29/1995, due 10/2/1995 10,000,000
---------------------------------------------------------------------------------
55,000,000 Nationsbank, 6.40%, dated 9/29/1995, due 10/2/1995 55,000,000
---------------------------------------------------------------------------------
24,000,000 Nikko Securities Co. International, Inc., 6.45%, dated 9/29/1995, due 10/2/1995 24,000,000
---------------------------------------------------------------------------------
32,747,139 Prudential Securities, Inc., 6.25%, dated 9/29/1995, due 10/2/1995 32,747,139
--------------------------------------------------------------------------------- --------------
TOTAL REPURCHASE AGREEMENTS 131,747,139
--------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS (AT AMORTIZED COST)(b) $ 247,268,522
--------------------------------------------------------------------------------- --------------
</TABLE>
(a) The repurchase agreements are fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(b) Also represents cost for federal tax purposes.
* Although final maturity falls beyond seven days, a liquidity feature is
included in the transaction to permit termination of the repurchase
agreement.
Note: The categories of investments are shown as a percentage of net assets
($248,019,243) at September 30, 1995.
(See Notes which are an integral part of the Financial Statements)
THE MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- ---------------------------------------------------------------------------------- --------------
*COMMERCIAL PAPER--30.8%
- -------------------------------------------------------------------------------------------------
AEROSPACE--1.9%
----------------------------------------------------------------------------------
$ 4,000,000 Rockwell International Corp., 5.68%, 11/14/1995 $ 3,972,231
---------------------------------------------------------------------------------- --------------
BANKING-FINANCE--5.5%
----------------------------------------------------------------------------------
10,000,000 Banc One Funding Corp., 5.68%-5.70%, 10/31/1995-11/30/1995 9,929,340
----------------------------------------------------------------------------------
2,000,000 CIT Group Holdings, 5.60%, 10/06/1995 1,998,444
---------------------------------------------------------------------------------- --------------
Total 11,927,784
---------------------------------------------------------------------------------- --------------
ELECTRONICS--3.2%
----------------------------------------------------------------------------------
7,000,000 Hewlett Packard Co, 5.55%-5.66%, 10/17/1995-01/02/1996 6,923,281
---------------------------------------------------------------------------------- --------------
FINANCIAL SERVICES--12.7%
----------------------------------------------------------------------------------
9,000,000 American Express Co., 5.51%-5.65%, 12/01/1995-01/29/1996 8,871,249
----------------------------------------------------------------------------------
8,000,000 Corestates Discount, 5.66%, 11/17/1995 7,940,884
----------------------------------------------------------------------------------
2,200,000 General Electric Capital Corp., 5.50%-5.60%, 01/26/1996 2,160,350
----------------------------------------------------------------------------------
8,500,000 Transamerica Finance Corp., 5.38%-6.07%, 11/13/1995-04/04/1996 8,339,909
---------------------------------------------------------------------------------- --------------
Total 27,312,392
---------------------------------------------------------------------------------- --------------
FOOD--0.6%
----------------------------------------------------------------------------------
1,300,000 Campbell Soup Co., 5.51%, 02/02/1996 1,275,327
---------------------------------------------------------------------------------- --------------
PHARMACEUTICALS--2.8%
----------------------------------------------------------------------------------
6,200,000 Schering Plough Corp., 5.57%, 01/11/1996 6,102,154
---------------------------------------------------------------------------------- --------------
RESTAURANT/FOOD SERVICE--0.9%
----------------------------------------------------------------------------------
2,000,000 Philip Morris Cos., Inc., 5.72%, 10/02/1995 1,999,682
---------------------------------------------------------------------------------- --------------
SECURITIES--3.2%
----------------------------------------------------------------------------------
7,000,000 Merrill Lynch, Pierce, Fenner & Smith, Inc., 5.65%-5.70%, 12/04/ 1995-12/07/1995 6,927,539
---------------------------------------------------------------------------------- --------------
TOTAL COMMERCIAL PAPER 66,440,390
---------------------------------------------------------------------------------- --------------
CORPORATE NOTES--18.9%
- -------------------------------------------------------------------------------------------------
BANKING-FINANCE--1.8%
----------------------------------------------------------------------------------
1,000,000 Associates Corp. of North America, 8.375%, 06/01/1996 1,016,200
----------------------------------------------------------------------------------
3,000,000 CIT Group Holdings, Inc., 8.75%, 02/15/1996 3,029,025
---------------------------------------------------------------------------------- --------------
Total 4,045,225
---------------------------------------------------------------------------------- --------------
FINANCE-AUTOMOTIVE--3.6%
----------------------------------------------------------------------------------
6,000,000 Ford Motor Credit Co., 8.25%-8.875%, 5/15/1996-08/01/1996 6,112,973
----------------------------------------------------------------------------------
1,650,000 Ford Motor Credit Co., Medium Term Note, 6.35%, 12/11/1995 1,649,719
---------------------------------------------------------------------------------- --------------
Total 7,762,692
---------------------------------------------------------------------------------- --------------
FINANCE-CONSUMER LOAN--0.7%
----------------------------------------------------------------------------------
1,500,000 Commercial Credit Group, Inc., 8.00%, 09/01/1996 1,528,271
---------------------------------------------------------------------------------- --------------
</TABLE>
THE MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- ---------------------------------------------------------------------------------- --------------
CORPORATE NOTES--CONTINUED
- -------------------------------------------------------------------------------------------------
FINANCE-RECEIVABLES--0.6%
----------------------------------------------------------------------------------
$ 1,200,000 Xerox Credit Corp., 8.75%, 11/01/1995 $ 1,202,520
---------------------------------------------------------------------------------- --------------
FINANCIAL SERVICES--3.7%
----------------------------------------------------------------------------------
3,000,000 John Deere Capital Corp., 4.625%, 09/02/1996 2,966,210
----------------------------------------------------------------------------------
3,200,000 Norwest Financial Inc., Medium Term Note, 8.75%, 04/10/1996 3,247,038
----------------------------------------------------------------------------------
1,650,000 Transamerica Finance Corp., 5.85%, 07/15/1996 1,648,020
---------------------------------------------------------------------------------- --------------
Total 7,861,268
---------------------------------------------------------------------------------- --------------
FOOD--0.4%
----------------------------------------------------------------------------------
1,000,000 General Mills, Inc., 9.05%, 10/10/1995 1,000,708
---------------------------------------------------------------------------------- --------------
OIL/GAS--1.0%
----------------------------------------------------------------------------------
2,000,000 Exxon Capital Corp., 8.00%, 12/01/1995 2,006,076
----------------------------------------------------------------------------------
155,000 Mobil Oil, 6.75%, 10/01/1995 155,000
---------------------------------------------------------------------------------- --------------
Total 2,161,076
---------------------------------------------------------------------------------- --------------
RESTAURANT/FOOD SERVICE--4.9%
----------------------------------------------------------------------------------
5,000,000 PepsiCo, Inc., 7.875%, 08/15/1996 5,078,406
----------------------------------------------------------------------------------
2,000,000 Philip Morris Cos., 9.40%, 10/01/1995 2,000,000
----------------------------------------------------------------------------------
3,365,000 Philip Morris Cos., Inc., Medium Term Notes, 9.10%-9.25%,
11/14/1995-11/15/1995 3,375,616
---------------------------------------------------------------------------------- --------------
Total 10,454,022
---------------------------------------------------------------------------------- --------------
SECURITIES--1.7%
----------------------------------------------------------------------------------
3,600,000 Merrill Lynch, Pierce, Fenner & Smith, Inc., 4.75%-5.25%,
10/30/1995-06/24/1996 3,575,829
---------------------------------------------------------------------------------- --------------
OTHER--0.5%
----------------------------------------------------------------------------------
1,000,000 Vepco, Medium Term Note, 9.45%, 05/20/1996 1,021,560
---------------------------------------------------------------------------------- --------------
TOTAL CORPORATE NOTES 40,613,171
---------------------------------------------------------------------------------- --------------
GOVERNMENT AGENCIES--37.3%
- -------------------------------------------------------------------------------------------------
4,000,000 Federal Farm Credit Bank, 5.635%-7.21%, 01/02/1996-02/26/1996* 4,003,211
----------------------------------------------------------------------------------
11,000,000 Federal Home Loan Bank, 5.48%-9.50%, 12/21/95-08/16/1996** 10,998,436
----------------------------------------------------------------------------------
7,000,000 Federal Home Loan Mortgage Corp., 5.60%-7.24%, 11/20/1995-
02/05/1996 6,970,620
----------------------------------------------------------------------------------
3,100,000 Federal National Mortgage Association, 5.72%-6.17%, 10/16/1995-
12/14/1995* 3,098,191
----------------------------------------------------------------------------------
55,250,000 Student Loan Marketing Association, 5.48%-5.72%, 10/21/1995-
12/28/1995** 55,298,910
---------------------------------------------------------------------------------- --------------
TOTAL GOVERNMENT AGENCIES 80,369,368
---------------------------------------------------------------------------------- --------------
</TABLE>
THE MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- ---------------------------------------------------------------------------------- --------------
(a)REPURCHASE AGREEMENTS--14.2%
- -------------------------------------------------------------------------------------------------
$ 20,000,000 Nikko Securities Co. International Inc., 6.45%, dated 09/29/1995,
due 10/02/1995 $ 20,000,000
----------------------------------------------------------------------------------
10,564,985 Prudential Securities, Inc., 6.25%, dated 9/29/1995, due 10/02/1995 10,564,985
---------------------------------------------------------------------------------- --------------
TOTAL REPURCHASE AGREEMENTS 30,564,985
---------------------------------------------------------------------------------- --------------
TOTAL INVESTMENTS (AT AMORTIZED COST) (b) $ 217,987,914
---------------------------------------------------------------------------------- --------------
--------------
</TABLE>
(a) The repurchase agreements are fully collateralized by U.S. government
and/or agency obligations based on market prices at the date of the
portfolio.
(b) Also represents cost for federal tax purposes.
* Each issue shows the rate of discount at the time of purchase for discount
issues, or the coupon for interest bearing issues.
** Current rate and next reset date shown.
Note: The categories of investments are shown as a percentage of net assets
($215,574,313) at September 30, 1995.
(See Notes which are an integral part of the Financial Statements)
THE TAX-FREE MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------ ------------------------------------------------------------------------ ---------- -------------
SHORT-TERM MUNICIPAL SECURITIES--92.7%
- --------------------------------------------------------------------------------------
ARIZONA--11.8%
------------------------------------------------------------------------
$ 7,100,000 Arizona Health Facilities Authority, Revenue Bonds, Weekly VRDNs (FGIC
Insured) AAA $ 7,100,000
------------------------------------------------------------------------
2,500,000 Salt River Project, AZ, Improvement & Power Electric System Revenue
Bonds, 7.00%, 1/1/1996 @102, (Prerefunded) AA 2,566,196
------------------------------------------------------------------------ -------------
Total 9,666,196
------------------------------------------------------------------------ -------------
FLORIDA--5.0%
------------------------------------------------------------------------
3,000,000 Orlando, FL Utilities Commission, Water & Electric Refunding Revenue
Bonds, 8.50%, 10/1/1995 (Prerefunded) AAA 3,060,000
------------------------------------------------------------------------
1,050,000 Volusia County, FL HFA, Weekly VRDNs (Sun Pointe Apts.)/(Citibank, NY
LOC) A-1 1,050,000
------------------------------------------------------------------------ -------------
Total 4,110,000
------------------------------------------------------------------------ -------------
GEORGIA--1.4%
------------------------------------------------------------------------
1,170,000 DeKalb County, GA, Development Authority IDR, Weekly VRDNs (Weyerhauser
Co.)/(First National Bank, Atlanta LOC) A-1+ 1,170,000
------------------------------------------------------------------------ -------------
ILLINOIS--6.2%
------------------------------------------------------------------------
1,270,000 Chicago, IL, GO Bonds Tender Notes (Series A), 4.60% (Morgan Guaranty
Trust LOC), 10/31/1995 MIG1 1,270,000
------------------------------------------------------------------------
3,800,000 Illinois Health Facilities Authority, Revenue Bonds (Series E), Weekly
VRDNs (Hospital Sisters Service)/(MBIA Insured)/(Morgan Guaranty Trust
SPA) AAA 3,800,000
------------------------------------------------------------------------ -------------
Total 5,070,000
------------------------------------------------------------------------ -------------
INDIANA--2.4%
------------------------------------------------------------------------
2,000,000 Logansport, IN EDR, Weekly VRDNs (Modine Manufacturing Co. Project) NR 2,000,000
------------------------------------------------------------------------ -------------
MARYLAND--5.6%
------------------------------------------------------------------------
1,120,000 Howard County, MD, GO Bonds (Series A), 4.75% (Cons Public Improvement),
2/15/1996 AAA 1,122,207
------------------------------------------------------------------------
3,500,000 Maryland State Health & Higher Educational Facilities Authority, Revenue
Bonds, Weekly VRDNs (Mercy Medical Center) A 3,500,000
------------------------------------------------------------------------ -------------
Total 4,622,207
------------------------------------------------------------------------ -------------
NEW MEXICO--3.0%
------------------------------------------------------------------------
2,500,000 Albuquerque, NM, GO UT Bonds (Series A), 5.20%, 7/1/1996 AA 2,528,208
------------------------------------------------------------------------ -------------
MINNESOTA--6.3%
------------------------------------------------------------------------
5,000,000 Southern Minnesota Municipal Power Agency, Power Supply System Revenue
Bonds (Series C), 7.125%, 1/1/1996 @102, (Prerefunded) AAA 5,135,549
------------------------------------------------------------------------ -------------
</TABLE>
THE TAX-FREE MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------ ------------------------------------------------------------------------ ---------- -------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- --------------------------------------------------------------------------------------
MISSOURI--5.5%
------------------------------------------------------------------------
$ 4,500,000 Missouri State Health & Educational Facility, Revenue Bonds (Series C),
Weekly VRDNs (MBIA Insured) Aaa $ 4,500,000
------------------------------------------------------------------------ -------------
NORTH CAROLINA--10.0%
------------------------------------------------------------------------
450,000 North Carolina Municipal Power Agency, Refunding Revenue Bonds (Series
B), 8.50%, 1/1/1996 @102,
(Prerefunded) AAA 463,378
------------------------------------------------------------------------
2,395,000 North Carolina Municipal Power Agency, Refunding
Revenue Bonds, 9.00%, 1/1/1996 @102, (Prerefunded) AAA 2,470,103
------------------------------------------------------------------------
5,200,000 Winston Salem, NC, Single Family Mortgage Revenue Bonds, 8.00%,
10/6/1995 A1 5,200,000
------------------------------------------------------------------------ -------------
Total 8,133,481
------------------------------------------------------------------------ -------------
PENNSYLVANIA--5.5%
------------------------------------------------------------------------
4,500,000 Montgomery County, PA, IDA Revenue Bonds, Weekly VRDNs (Plymouth Woods
Project)/(Provident National Bank LOC) NR 4,500,000
------------------------------------------------------------------------ -------------
SOUTH CAROLINA--9.4%
------------------------------------------------------------------------
1,000,000 Anderson County, SC, IDR Weekly VRDNs (Belton Industries,
Inc.)/(Nationsbank of North Carolina LOC) NR 1,000,000
------------------------------------------------------------------------
1,205,000 Columbia, SC, Refunding Bonds Tax Increment, 4.50% (MBIA Insured),
12/1/1995 AAA 1,205,000
------------------------------------------------------------------------
4,410,000 Piedmont Municipal Power Agency, SC, Electric Refunding Revenue Bonds,
8.00%, 1/1/1996 @101.5%, (Prerefunded) AAA 4,524,876
------------------------------------------------------------------------
1,000,000 Piedmont Municipal Power Agency, SC, Electric Refunding Revenue Bonds,
7.00%, 1/1/1996 @100, (Prerefunded) A- 1,006,302
------------------------------------------------------------------------ -------------
Total 7,736,178
------------------------------------------------------------------------ -------------
TENNESSEE--4.3%
------------------------------------------------------------------------
3,000,000 Greenville, TN, IDB Weekly VRDNs (PNC Bank LOC) AA3 3,000,000
------------------------------------------------------------------------
500,000 Memphis, TN, Electric System Revenue Bonds, 7.875%,
1/1/1996 @102.5, (Prerefunded) AAA 516,709
------------------------------------------------------------------------ -------------
Total 3,516,709
------------------------------------------------------------------------ -------------
TEXAS--5.8%
------------------------------------------------------------------------
4,750,000 Lower Neches Valley Authority, TX, Refunding Revenue Bonds, 4.45%
(Chevron USA, Inc. Project), 2/15/1996 AA 4,750,000
------------------------------------------------------------------------ -------------
VIRGINIA--10.5%
------------------------------------------------------------------------
1,000,000 Loudoun County, VA, IDA Weekly VRDNs (Indian Creek Association) NR 1,000,000
------------------------------------------------------------------------
1,351,000 Newport News, VA, Public Housing Authority, Weekly VRDNs (Multi-Family
Housing)/(Courthouse Acres Association) NR 1,351,000
------------------------------------------------------------------------
1,344,000 Pulaski County, VA, IDA Revenue Bonds (Series B), Weekly VRDNs (Pulaski
Furniture) NR 1,344,000
------------------------------------------------------------------------
</TABLE>
THE TAX-FREE MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- ------------ ------------------------------------------------------------------------ ---------- -------------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- --------------------------------------------------------------------------------------
VIRGINIA--CONTINUED
------------------------------------------------------------------------
$ 1,560,000 Suffolk, VA, Redevelopment & Housing Authority, Multi-Family Housing
Revenue Bonds, Weekly VRDNs (Windsor Fieldstone) NR $ 1,560,000
------------------------------------------------------------------------
2,939,000 Virginia Beach, VA, Development Authority Revenue, Weekly VRDNs
(Industrial Development NOA Project) NR 2,939,000
------------------------------------------------------------------------
400,000 Virginia College Building Authority, Refunding Revenue Bonds, 5.20%
(Equipment Leasing Program), 10/1/1995 AA 400,000
------------------------------------------------------------------------ -------------
Total 8,594,000
------------------------------------------------------------------------ -------------
TOTAL SHORT-TERM MUNICIPALS 76,032,528
------------------------------------------------------------------------ -------------
TOTAL INVESTMENTS (AT AMORTIZED COST)(a) $ 76,032,528
------------------------------------------------------------------------ -------------
</TABLE>
(a) Also represents cost for federal tax purposes.
* Current credit ratings are unaudited.
Note: The categories of investments are shown as a percentage of net assets
($81,977,460) at September 30, 1995.
The following acronym(s) are used throughout this portfolio:
EDR--Economic Development Revenue
FGIC--Financial Guaranty Insurance Company
GO--General Obligation
HFA--Housing Finance Authority
IDA--Industrial Development Authority
IDB--Industrial Development Bond
IDR--Industrial Development Revenue
LOC--Letter of Credit
MBIA--Municipal Bond Investors Assurance
SPA--Standby Purchase Agreement
UT--Unlimited Tax
VRDNs--Variable Rate Demand Notes
(See Notes which are an integral part of the Financial Statements)
THE VIRTUS FUNDS
(FORMERLY, THE MEDALIST FUNDS)
STATEMENTS OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THE U.S. THE VIRGINIA THE MARYLAND
GOVERNMENT THE STRATEGIC MUNICIPAL MUNICIPAL
SECURITIES FUND STOCK FUND THE STOCK FUND BOND FUND BOND FUND
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
ASSETS:
Investments in securities, at value $ 212,205,955 $79,202,241 $88,805,905 1$02,518,059 $ 41,286,091
Cash -- 803 10,220 -- --
Income receivable 4,612,815 6,773 145,241 1,581,490 561,743
Receivable for shares sold 1,031,139 33,834 286,298 70,021 9,258
Receivable for investments sold -- -- 3,599,760 3,086,518 --
- -------------------------------------------------------------------------------------------------------------------------
Total assets 217,849,909 79,243,651 92,847,424 107,256,088 41,857,092
- -------------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for shares redeemed 295,407 827,691 82,163 55,552 24,462
Payable for investments purchased -- -- 2,805,536 2,648,746 --
Income distribution payable 1,164,462 -- -- 171,817 137,278
Payable to adviser -- -- -- -- --
Payable to bank -- -- -- -- --
Accrued expenses 177,165 27,923 106,432 137,308 75,354
- -------------------------------------------------------------------------------------------------------------------------
Total liabilities 1,637,034 855,614 2,994,131 3,013,423 237,094
- -------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS $ 216,212,875 $78,388,037 $89,853,293 1$04,242,665 $ 41,619,998
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Paid in capital $ 228,775,970 $66,476,555 $73,597,501 1$03,083,957 $ 41,373,993
Net unrealized appreciation (depreciation)
of investments (1,504,262) 5,153,715 9,067,261 2,695,900 946,347
Accumulated net realized gain (loss) on
investments (8,207,295) 6,734,053 7,080,902 (1,364,455) (639,922)
Accumulated distributions in excess of net
realized gain on investments (2,897,104) -- -- (172,737) (61,419)
Undistributed net investment income 45,566 23,714 107,629 -- 999
- -------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS $ 216,212,875 $78,388,037 $89,853,293 1$04,242,665 $ 41,619,998
- -------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, and Offering Price Per
Share: (Net Assets/Shares Outstanding)
Trust Shares $10.13 -- $13.70 $10.81 $10.69
Investment Shares $10.13 $12.03 $13.70 $10.81 $10.69
- -------------------------------------------------------------------------------------------------------------------------
Redemption Proceeds Per Share:
Investment Shares* $9.93 ** $11.79 ** $13.43 ** $10.59 ** $10.48 **
- -------------------------------------------------------------------------------------------------------------------------
SHARES OUTSTANDING:
Trust Shares 10,006,598 -- 3,310,403 3,114,671 885,591
Investment Shares 11,328,043 6,518,730 3,249,476 6,525,602 3,008,082
- -------------------------------------------------------------------------------------------------------------------------
Total Shares Outstanding 21,334,641 6,518,730 6,559,879 9,640,273 3,893,673
- -------------------------------------------------------------------------------------------------------------------------
Investments, at identified cost $ 213,710,217 $ 74,048,526 $ 79,738,644 $99,822,159 $ 40,339,744
- -------------------------------------------------------------------------------------------------------------------------
Investments, at tax cost $ 213,710,217 $ 74,048,526 $ 79,738,644 $99,822,159 $ 40,339,744
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
*See "Redeeming Shares" in the prospectus.
**Computation of redemption proceeds per share: 98/100 of net asset value.
(See Notes which are an integral part of the Financial Statements)
THE VIRTUS FUNDS
(FORMERLY, THE MEDALIST FUNDS)
STATEMENTS OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THE TREASURY THE THE TAX-FREE
MONEY MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
ASSETS:
Repurchase agreements, at amortized cost $ 131,747,139 $ 30,564,985 $ --
Investments in securities, at value 115,521,383 187,422,929 76,032,528
Income receivable 2,577,248 1,400,874 883,437
Receivable for shares sold -- 6,428 7,448
Receivable for investments sold -- -- 5,400,000
Deferred expenses -- -- 7,569
- ------------------------------------------------------------------------------------------------------------------
Total assets 249,845,770 219,395,216 82,330,982
- ------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for shares redeemed -- 22,162 16,053
Payable for investments purchased -- 2,977,772 --
Income distribution payable 1,564,680 694,792 216,229
Payable to adviser 137,806 -- --
Payable to bank -- 28 74,850
Accrued expenses 124,041 126,149 46,390
- ------------------------------------------------------------------------------------------------------------------
Total liabilities 1,826,527 3,820,903 353,522
- ------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS $ 248,019,243 $ 215,574,313 $ 81,977,460
- ------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, Offering Price and Redemption
Proceeds Per Share:
(Net Assets/Shares Outstanding)
Trust Shares $1.00 $1.00 --
Investment Shares $1.00 $1.00 $1.00
- ------------------------------------------------------------------------------------------------------------------
SHARES OUTSTANDING:
Trust Shares 208,656,142 173,760,819 --
Investment Shares 39,363,101 41,813,494 81,977,460
- ------------------------------------------------------------------------------------------------------------------
Total Shares Outstanding 248,019,243 215,574,313 81,977,460
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
THE VIRTUS FUNDS
(FORMERLY, THE MEDALIST FUNDS)
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THE U.S. THE VIRGINIA THE MARYLAND
GOVERNMENT THE STRATEGIC THE STOCK MUNICIPAL MUNICIPAL
SECURITIES FUND STOCK FUND* FUND BOND FUND BOND FUND
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $15,685,511 $ 176,530 $ 258,149 $5,673,654 $2,309,623
Dividends -- 160,750 1,442,419 -- --
- -------------------------------------------------------------------------------------------------------------------------
Total investment income 15,685,511 337,280 1,700,568 5,673,654 2,309,623
- -------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fee 1,581,364 374,393 678,512 775,247 316,194
Directors'/Trustees' fees 3,099 2,430 2,214 2,002 2,361
Administrative personnel and services fee 226,246 85,069 97,229 110,908 45,246
Custodian fees 56,742 34,501 47,305 39,873 23,070
Transfer and dividend disbursing agent fees and
expenses 133,056 5,928 93,183 71,207 58,989
Share registration costs 31,460 0 22,401 27,261 28,484
Auditing fees 20,723 0 17,738 17,245 17,063
Legal fees 9,039 5,345 3,409 9,401 10,030
Printing and postage 21,324 10,689 18,638 19,515 16,561
Portfolio accounting fees 80,279 27,844 61,337 91,004 75,510
Insurance premiums 7,914 4,032 6,430 6,553 6,258
Distribution services fee 268,621 0 80,046 174,523 80,136
Miscellaneous 13,436 971 8,756 7,572 5,231
- -------------------------------------------------------------------------------------------------------------------------
Total expenses 2,453,303 551,202 1,137,198 1,352,311 685,133
Deduct--
Waiver of investment advisory fee 589,885 374,393 189,983 227,301 187,476
Reimbursement of other operating expenses by
adviser -- 12,076 -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Total waivers and reimbursements 589,885 386,469 189,983 227,301 187,476
- -------------------------------------------------------------------------------------------------------------------------
Net expenses 1,863,418 164,733 947,215 1,125,010 497,657
- -------------------------------------------------------------------------------------------------------------------------
Net investment income 13,822,093 172,547 753,353 4,548,644 1,811,966
- -------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) on investments (1,378,821) 6,734,053 7,288,596 (1,364,455) (681,620)
Net change in unrealized appreciation of
investments 7,562,122 5,153,715 8,056,089 6,633,292 2,620,698
- -------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain on
investments 6,183,301 11,887,768 15,344,685 5,268,837 1,939,078
- -------------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from
operations $20,005,394 $12,060,315 $16,098,038 $9,817,481 $3,751,044
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
*For the period from March 7, 1995 (date of initial public investment) to
September 30, 1995.
(See Notes which are an integral part of the Financial Statements)
THE VIRTUS FUNDS
(FORMERLY, THE MEDALIST FUNDS)
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THE TREASURY THE THE TAX-FREE
MONEY MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $ 27,060,335 $ 10,174,431 $ 2,071,247
- ------------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fee 2,347,424 868,490 262,792
Directors'/Trustees' fees 2,432 3,064 3,401
Administrative personnel and services fee 500,283 185,586 58,355
Custodian fees 135,276 59,951 34,118
Transfer and dividend disbursing agent fees and
expenses 48,887 49,352 20,426
Share registration costs 67,929 41,947 20,683
Auditing fees 21,228 21,996 19,452
Legal fees 8,594 9,654 10,309
Printing and postage 17,026 16,398 16,535
Portfolio accounting fees 83,695 53,722 43,769
Insurance premiums 7,371 7,540 5,835
Distribution services fee 80,097 79,316 --
Miscellaneous 22,923 11,085 3,394
- ------------------------------------------------------------------------------------------------------------------
Total expenses 3,343,165 1,408,101 499,069
Deduct--
Waiver of investment advisory fee 469,485 336,697 262,792
Waiver of distribution services fee -- 4,767 --
Reimbursement of other operating expenses by the
Adviser -- -- 31,301
- ------------------------------------------------------------------------------------------------------------------
Net expenses 2,873,680 1,066,637 204,976
- ------------------------------------------------------------------------------------------------------------------
Net investment income $ 24,186,655 $ 9,107,794 $ 1,866,271
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
THE VIRTUS FUNDS
(FORMERLY, THE MEDALIST FUNDS)
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THE U.S. GOVERNMENT THE STRATEGIC
SECURITIES FUND STOCK FUND
YEAR ENDED PERIOD ENDED
SEPTEMBER 30, SEPTEMBER 30,
1995 1994 1995*
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 13,822,093 $ 14,014,515 $ 172,547
Net realized gain (loss) on investments (1,378,821) (7,740,156) 6,734,053
Net change in unrealized appreciation (depreciation) of
investments 7,562,122 (13,608,853) 5,153,715
- -------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations 20,005,394 (7,334,494) 12,060,315
- -------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income:
Trust Shares (6,886,095) (6,839,985) --
Investment Shares (6,892,250) (7,032,638) (148,833)
Distributions from net realized gains:
Trust Shares -- -- --
Investment Shares -- -- --
Distributions in excess of net investment income:
Trust Shares -- -- --
Investment Shares -- -- --
Distributions in excess of net realized gain on investment
transactions:
Trust Shares -- (1,411,493) --
Investment Shares -- (1,485,610) --
- -------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from distributions to
shareholders (13,778,345) (16,769,726) (148,833)
- -------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS--
Proceeds from sale of shares 43,561,722 67,634,902 90,552,400
Net asset value of shares issued to shareholders in payment of
distributions declared 4,775,252 6,803,369 144,980
Cost of shares redeemed (57,893,362) (62,312,515) (24,220,825)
- -------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from share transactions (9,556,388) 12,125,756 66,476,555
- -------------------------------------------------------------------------------------------------------------------
Change in net assets (3,329,339) (11,978,464) 78,388,037
NET ASSETS:
Beginning of period 219,542,214 231,520,678 --
- -------------------------------------------------------------------------------------------------------------------
End of period $ 216,212,875 $ 219,542,214 $ 78,388,037
- -------------------------------------------------------------------------------------------------------------------
Undistributed net investment income included in net assets at
end of period $ 45,566 $ 1,817 $ 23,714
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
*For the period from March 7, 1995 (date of initial public investment) to
September 30, 1995.
(See Notes which are an integral part of the Financial Statements)
THE VIRTUS FUNDS
(FORMERLY, THE MEDALIST FUNDS)
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THE VIRGINIA MUNICIPAL
THE STOCK FUND BOND FUND
YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 753,353 $ 1,508,113 $ 4,548,644 $ 4,953,472
Net realized gain (loss) on investments 7,288,596 2,244,847 (1,364,455) (66,254)
Net change in unrealized appreciation
(depreciation) of investments 8,056,089 (4,568,297) 6,633,292 (9,882,836)
- --------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from operations 16,098,038 (815,337) 9,817,481 (4,995,618)
- --------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income:
Trust Shares (531,337) (1,098,902) (1,532,726) (1,721,741)
Investment Shares (259,454) (335,387) (3,014,821) (3,231,731)
Distributions from net realized gains:
Trust Shares (1,709,248) (1,031,282) (329) (218,630)
Investment Shares (680,158) (352,939) (675) (476,809)
Distributions in excess of net investment income:
Trust Shares -- -- -- (345)
Investment Shares -- -- -- (751)
Distributions in excess of net realized gain on
investment transactions:
Trust Shares -- -- -- (53,989)
Investment Shares -- -- -- (117,744)
- --------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from
distributions to shareholders (3,180,197) (2,818,510) (4,548,551) (5,821,740)
- --------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS--
Proceeds from sale of shares 30,860,399 60,490,244 16,219,898 38,805,692
Net asset value of shares issued to shareholders in
payment of distributions declared 1,924,491 1,651,823 2,307,640 3,165,013
Cost of shares redeemed (52,962,431) (45,926,962) (28,424,457) (26,979,033)
- --------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from share
transactions (20,177,541) 16,215,105 (9,896,919) 14,991,672
- --------------------------------------------------------------------------------------------------------------------
Change in net assets (7,259,700) 12,581,258 (4,627,989) 4,174,314
NET ASSETS:
Beginning of period 97,112,993 84,531,735 108,870,654 104,696,340
- --------------------------------------------------------------------------------------------------------------------
End of period $ 89,853,293 $ 97,112,993 $ 104,242,665 $ 108,870,654
- --------------------------------------------------------------------------------------------------------------------
Undistributed net investment income included in net
assets at end of period $ 107,629 $ 145,067 $ -- $ --
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
THE VIRTUS FUNDS
(FORMERLY, THE MEDALIST FUNDS)
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THE MARYLAND THE TREASURY MONEY
MUNICIPAL BOND FUND MARKET FUND
YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 1,811,966 $ 2,028,587 $ 24,186,655 $ 9,077,854
Net realized gain (loss) on investments (681,620) 112,304 -- --
Net change in unrealized appreciation
(depreciation) of investments 2,620,698 (4,417,809) -- --
- ------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from
operations 3,751,044 (2,276,918) 24,186,655 9,077,854
- ------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income:
Trust Shares (453,315) (515,534) (22,613,622) (8,479,888)
Investment Shares (1,357,652) (1,513,053) (1,573,033) (597,966)
Distributions from net realized gains:
Trust Shares (14,470) (108,573) -- --
Investment Shares (46,949) (329,347) -- --
- ------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from
distributions to shareholders (1,872,386) (2,466,507) (24,186,655) (9,077,854)
- ------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS--
Proceeds from sale of shares 5,252,288 14,847,555 3,244,300,655 1,070,823,360
Net asset value of shares issued to
shareholders in payment of
distributions declared 1,017,510 1,526,375 1,565,341 598,479
Cost of shares redeemed (12,408,998) (11,670,689) (3,324,014,237) (918,557,011)
- ------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from
share transactions (6,139,200) 4,703,241 (78,148,241) 152,864,828
- ------------------------------------------------------------------------------------------------------------------
Change in net assets (4,260,542) (40,184) (78,148,241) 152,864,828
NET ASSETS:
Beginning of period 45,880,540 45,920,724 326,167,484 173,302,656
- ------------------------------------------------------------------------------------------------------------------
End of period $41,619,998 $45,880,540 $248,019,243 $326,167,484
- ------------------------------------------------------------------------------------------------------------------
Undistributed net investment income included
in net assets at
end of period $ 999 $ -- $ -- $ --
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
THE VIRTUS FUNDS
(FORMERLY, THE MEDALIST FUNDS)
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THE MONEY THE TAX-FREE MONEY
MARKET FUND MARKET FUND
YEAR ENDED YEAR ENDED PERIOD ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1995 1994 1995 1994*
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 9,107,794 $ 4,600,092 $ 1,866,271 $ 111,538
Net realized gain (loss) on investments -- -- -- --
Net change in unrealized appreciation
(depreciation) of investments -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from
operations 9,107,794 4,600,092 1,866,271 111,538
- ---------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income:
Trust Shares (7,487,164) (4,275,163) -- --
Investment Shares (1,620,630) (324,929) (1,866,271) (111,538)
Distributions from net realized gains:
Trust Shares -- -- -- --
Investment Shares -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from
distributions to shareholders (9,107,794) (4,600,092) (1,866,271) (111,538)
- ---------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS--
Proceeds from sale of shares 554,922,789 301,706,503 244,825,710 32,866,117
Net asset value of shares issued to
shareholders in payment of distributions
declared 1,563,964 318,530 369,306 17,108
Cost of shares redeemed (488,593,012) (298,646,861) (185,184,196) (10,916,585)
- ---------------------------------------------------------------------------------------------------------------------
Change in net assets resulting from
share transactions 67,893,741 3,378,172 60,010,820 21,966,640
- ---------------------------------------------------------------------------------------------------------------------
Change in net assets 67,893,741 3,378,172 60,010,820 21,966,640
NET ASSETS:
Beginning of period 147,680,572 144,302,400 21,966,640 --
- ---------------------------------------------------------------------------------------------------------------------
End of period $215,574,313 $147,680,572 $81,977,460 $21,966,640
- ---------------------------------------------------------------------------------------------------------------------
Undistributed net investment income included
in net assets at end of period $ -- $ -- $ -- $ --
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
*For the period from July 27, 1994 (date of initial public investment) to
September 30, 1994.
(See Notes which are an integral part of the Financial Statements)
THE U.S. GOVERNMENT SECURITIES FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
INVESTMENT SHARES 1995 1994 1993 1992 1991(a)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.83 $ 10.90 $ 10.95 $ 10.54 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.64 0.61 0.66 0.75 0.78
Net realized and unrealized gain (loss) on investments 0.30 (0.94) 0.03 0.50 0.54
- ------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.94 (0.33) 0.69 1.25 1.32
- ------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Distributions from net investment income (0.64) (0.61) (0.66 (e) (0.75) (0.78)
Distributions from net realized gains on investment
transactions -- -- (0.08) (0.09) --
Distributions in excess of net realized gain on investment
transactions (e) -- (0.13) -- -- --
- ------------------------------------------------------------------------------------------------------------------------
Total distributions (0.64) (0.74) (0.74) (0.84) (0.78)
- ------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.13 $ 9.83 $ 10.90 $ 10.95 $ 10.54
- ------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (B) 9.84% (3.36)% 6.82% 12.42% 14.00%
- ------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
Expenses 1.01% 0.99% 0.77% 0.52% 0.64%(c)
Net investment income 6.41% 5.94% 5.91% 7.01% 8.03%(c)
Expense waiver/reimbursement (d) 0.28% 0.32% 0.43% 0.65% 0.93%(c)
- ------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $114,803 $112,439 $119,187 $40,274 $10%
Portfolio turnover 82% 227% 154% 201% 101%
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED SEPTEMBER 30,
TRUST SHARES 1995 1994 1993 1992 1991(a)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.83 $ 10.90 $ 10.95 $ 10.54 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.66 0.63 0.67 0.75 0.78
Net realized and unrealized gain (loss) on investments 0.30 (0.94) 0.03 0.50 0.54
- ------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.96 (0.31) 0.70 1.25 1.32
- ------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Distributions from net investment income (0.66) (0.63) (0.67 (e) (0.75) (0.78)
Distributions from net realized gains on investment
transactions -- -- (0.08) (0.09) --
Distributions in excess of net realized gain on investment
transactions (e) -- (0.13) -- -- --
- ------------------------------------------------------------------------------------------------------------------------
Total distributions (0.66) (0.76) (0.75) (0.84) (0.78)
- ------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.13 $ 9.83 $ 10.90 $ 10.95 $ 10.54
- ------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (B) 10.11% (3.12)% 6.94% 12.42% 14.00%
- ------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
Expenses 0.76% 0.74% 0.63% 0.52% 0.64%(c)
Net investment income 6.66% 6.19% 6.17% 7.01% 8.03%(c)
Expense waiver/reimbursement (d) 0.28% 0.32% 0.43% 0.65% 0.93%(c)
- ------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $101,410 $107,103 $112,334 $95,610 $27,565
Portfolio turnover 82% 227% 154% 201% 101%
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Reflects operations for the period from October 16, 1990 (date of initial
public investment) to September 30, 1991.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(e) Distributions are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles. These
distributions do not represent a return of capital for federal tax
purposes.
(See Notes which are an integral part of the Financial Statements)
THE STRATEGIC STOCK FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
SEPTEMBER 30,
1995(a)
<S> <C>
- --------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.03
Net realized and unrealized gain (loss) on investments 2.03
- --------------------------------------------------------------------------------------------------------------------
Total from investment operations 2.06
- --------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Distributions from net investment income (0.03)
- --------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.03
- --------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (B) 20.59%
- --------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
Expenses 0.44%(c)
Net investment income 0.46%(c)
Expense waiver/reimbursement (d) 1.03%(c)
- --------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $78,388
Portfolio turnover 92%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Reflects operations for the period from March 7, 1995 (date of initial
public investment) to September 30, 1995.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
THE STOCK FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
INVESTMENT SHARES 1995(e) 1994 1993 1992 1991(a)
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.80 $ 12.39 $ 12.02 $ 11.86 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.09 0.17 0.24 0.26 0.32
Net realized and unrealized gain (loss) on investments 2.20 (0.39) 0.54 0.46 1.85
- -------------------------------------------------------------------------------------------------------------------------
Total from investment operations 2.29 (0.22) 0.78 0.72 2.17
- -------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Distributions from net investment income (0.09) (0.17) (0.25) (0.25) (0.31)
Distributions from net realized gains on investment
transactions (0.30) (0.20) (0.16) (0.31) --
- -------------------------------------------------------------------------------------------------------------------------
Total distributions (0.39) (0.37) (0.41) (0.56) (0.31)
- -------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 13.70 $ 11.80 $ 12.39 $ 12.02 $ 11.86
- -------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (b) 20.02% (1.72%) 6.31% 6.31% 22.68%
- -------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
Expenses 1.21% 1.20% 0.87% 0.95% 0.80%(c)
Net investment income 0.67% 1.40% 1.81% 2.25% 3.05%(c)
Expense waiver/reimbursement (d) 0.21% 0.23% 0.55% 0.34% 0.38%(c)
- -------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $44,509 $26,739 $18,691 $ 2,290 $ 488
Portfolio turnover 208% 205% 67% 38% 84%
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED SEPTEMBER 30,
TRUST SHARES 1995(e) 1994 1993 1992 1991(a)
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.80 $ 12.39 $ 12.02 $ 11.86 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.12 0.20 0.28 0.26 0.32
Net realized and unrealized gain (loss) on investments 2.20 (0.40) 0.51 0.46 1.85
- -------------------------------------------------------------------------------------------------------------------------
Total from investment operations 2.32 (0.20) 0.79 0.72 2.17
- -------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Distributions from net investment income (0.12) (0.19) (0.26) (0.25) (0.31)
Distributions from net realized gains on investment
transactions (0.30) (0.20) (0.16) (0.31) --
- -------------------------------------------------------------------------------------------------------------------------
Total distributions (0.42) (0.39) (0.42) (0.56) (0.31)
- -------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 13.70 $ 11.80 $ 12.39 $ 12.02 $ 11.86
- -------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (B) 20.33% (1.50%) 6.42% 6.31% 22.68%
- -------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
Expenses 0.96% 0.95% 0.66% 0.95% 0.80%(c)
Net investment income 0.92% 1.68% 2.09% 2.25% 3.05%(c)
Expense waiver/reimbursement (d) 0.21% 0.23% 0.55% 0.34% 0.38%(c)
- -------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $45,344 $70,374 $65,841 $49,581 $37,032
Portfolio turnover 208% 205% 67% 38% 84%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Reflects operations for the period from October 16, 1990 (date of initial
public investment) to September 30, 1991.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(e) Per share information presented is based on the monthly number of shares
outstanding due to large fluctuations in the number of shares outstanding
during the period.
(See Notes which are an integral part of the Financial Statements)
THE VIRGINIA MUNICIPAL BOND FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
INVESTMENT SHARES 1995 1994 1993 1992 1991(a)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.26 $ 11.26 $ 10.46 $ 10.18 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.45 0.45 0.51 0.54 0.57
Net realized and unrealized gain (loss) on investments 0.55 (0.92) 0.89 0.29 0.18
- ------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.00 (0.47) 1.40 0.83 0.75
- ------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Distributions from net investment income (0.45) (0.45 (e) (0.51) (0.54) (0.57)
Distributions from net realized gain on investment
transactions -- (0.06) (0.09) (0.01) --
Distributions in excess of net realized gain on investments
(g) -- (0.02) -- -- --
- ------------------------------------------------------------------------------------------------------------------------
Total distributions (0.45) (0.53) (0.60) (0.55) (0.57)
- ------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.81 $ 10.26 $ 11.26 $ 10.46 $ 10.18
- ------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (b) 10.00% (4.25%) 13.49% 8.51% 7.64%
- ------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
Expenses 1.17% 1.15% 0.90% 0.83% 0.47%(c)
Net investment income 4.32% 4.22% 4.68% 5.14% 6.08%(c)
Expense waiver/reimbursement (d) 0.22% 0.27% 0.50% 0.86% 1.70%(c)
- ------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $70,572 $74,706 $63,492 $20,883 $ 6,031
Portfolio turnover 26% 29% 17% 51% 27%
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED SEPTEMBER 30,
TRUST SHARES 1995 1994 1993 1992 1991(a)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.26 $ 11.26 $ 10.46 $ 10.18 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.48 0.48 0.53 0.54 0.57
Net realized and unrealized gain (loss) on investments 0.55 (0.92) 0.89 0.29 0.18
- ------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.03 (0.44) 1.42 0.83 0.75
- ------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Distributions from net investment income (0.48) (0.48 (f) (0.53) (0.54) (0.57)
Distributions from net realized gain on investment
transactions -- (0.06) (0.09) (0.01) --
Distributions in excess of net realized gain on investments
(g) -- (0.02) -- -- --
- ------------------------------------------------------------------------------------------------------------------------
Total distributions (0.48) (0.56) (0.62) (0.55) (0.57)
- ------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.81 $ 10.26 $ 11.26 $ 10.46 $ 10.18
- ------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (b) 10.27% (4.01%) 13.62% 8.51% 7.64%
- ------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
Expenses 0.92% 0.90% 0.75% 0.83% 0.47%(c)
Net investment income 4.57% 4.47% 4.85% 5.14% 6.08%(c)
Expense waiver/reimbursement (d) 0.22% 0.27% 0.50% 0.86% 1.70%(c)
- ------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $33,670 $34,165 $41,204 $20,852 $ 8,546
Portfolio turnover 26% 29% 17% 51% 27%
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Reflects operations for the period from October 16, 1990 (date of initial
public investment) to September 30, 1991.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(e) Amount includes distributions to shareholders in excess of net investment
income of $0.0001 per share.
(f) Amount includes distributions to shareholders in excess of net investment
income of $0.0002 per share.
(g) Distributions are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles. These
distributions do not represent a return of capital for federal income tax
purposes.
(See Notes which are an integral part of the Financial Statements)
THE MARYLAND MUNICIPAL BOND FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
INVESTMENT SHARES 1995 1994 1993 1992 1991(a)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.17 $ 11.24 $ 10.39 $ 10.10 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.40 0.45 0.49 0.54 0.53
Net realized and unrealized gain (loss) on investments 0.54 (0.97) 0.85 0.29 0.10
- ------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.94 (0.52) 1.34 0.83 0.63
- ------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Distributions from net investment income (0.40) (0.45) (0.49) (0.54) (0.53)
Distributions from net realized gain on investment
transactions (0.02) (0.10) -- -- --
- ------------------------------------------------------------------------------------------------------------------------
Total distributions (0.42) (0.55) (0.49) (0.54) (0.53)
- ------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.69 $ 10.17 $ 11.24 $ 10.39 $ 10.10
- ------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (b) 9.81% (4.74%) 13.24% 8.31% 6.64%
- ------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
Expenses 1.24% 1.17% 1.00% 0.59% 0.60%(c)
Net investment income 4.24% 4.22% 4.50% 5.11% 5.66%(c)
Expense waiver/reimbursement (d) 0.44% 0.51% 0.77% 1.91% 1.05%(c)
- ------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $32,172 $34,580 $33,907 $ 4,053 $ 2,940
Portfolio turnover 21% 27% 23% 34% 35%
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED SEPTEMBER 30,
TRUST SHARES 1995 1994 1993 1992 1991(a)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.17 $ 11.24 $ 10.39 $ 10.10 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.42 0.48 0.50 0.54 0.53
Net realized and unrealized gain (loss) on investments 0.54 (0.97) 0.85 0.29 0.10
- ------------------------------------------------------------------------------------------------------------------------
Total from investment operations 0.96 (0.49) 1.35 0.83 0.63
- ------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Distributions from net investment income (0.42) (0.48) (0.50) (0.54) (0.53)
Total distributions from net realized gain on investment
transactions (0.02) (0.10) -- -- --
- ------------------------------------------------------------------------------------------------------------------------
Total distributions (0.44) (0.58) (0.50) (0.54) (0.53)
- ------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 10.69 $ 10.17 $ 11.24 $ 10.39 $ 10.10
- ------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (b) 10.09% (4.50%) 13.37% 8.31% 6.64%
- ------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
Expenses 0.99% 0.92% 0.86% 0.59% 0.60%(c)
Net investment income 4.49% 4.46% 4.64% 5.11% 5.66%(c)
Expense waiver/reimbursement (d) 0.44% 0.51% 0.77% 1.91% 1.05%(c)
- ------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $ 9,447 $11,301 $12,014 $ 6,004 $ 556
Portfolio turnover 21% 27% 23% 34% 35%
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Reflects operations for the period from October 16, 1990 (date of initial
public investment) to September 30, 1991.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
THE TREASURY MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
<S> <C> <C> <C> <C> <C>
INVESTMENT SHARES 1995 1994 1993 1992 1991(A)
- -------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.03 0.02 0.04 0.06
- -------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Distributions from net investment income (0.05) (0.03) (0.02) (0.04) (0.06)
- -------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (B) 4.98% 2.90% 2.52% 3.61% 5.90%
- -------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
Expenses 0.85% 0.84% 0.70% 0.70% 0.51%(c)
Net investment income 4.92% 2.86% 2.47% 3.49% 5.65%(c)
Expense waiver/reimbursement (d) 0.10% 0.18% 0.20% 0.11% 0.27%(c)
- -------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $39,363 $21,883 $20,382 $12,960 $ 548
<CAPTION>
YEAR ENDED SEPTEMBER 30,
TRUST SHARES 1995 1994 1993 1992 1991(a)
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.03 0.03 0.04 0.06
- -------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Distributions from net investment income (0.05) (0.03) (0.03) (0.04) (0.06)
- -------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (B) 5.24% 3.16% 2.64% 3.61% 5.90%
- -------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
Expenses 0.60% 0.59% 0.58% 0.70% 0.51%(c)
Net investment income 5.17% 3.30% 2.60% 3.49% 5.65%(c)
Expense waiver/reimbursement (d) 0.10% 0.18% 0.20% 0.11% 0.27%(c)
- -------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $208,656 $304,285 $152,921 $163,451 $129,959
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Reflects operations for the period from October 16, 1990 (date of initial
public investment) to September 30, 1991.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
THE MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
INVESTMENT SHARES 1995 1994 1993 1992 1991(a)
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.03 0.03 0.04 0.06
- -------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Distributions from net investment income (0.05) (0.03) (0.03) (0.04) (0.06)
- -------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (b) 5.11% 3.10% 2.77% 3.79% 5.92%
- -------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
Expenses 0.80% 0.80% 0.64% 0.64% 0.51%(c)
Net investment income 5.04% 3.07% 2.68% 3.64% 5.99%(c)
Expense waiver/reimbursement (d) 0.21% 0.25% 0.30% 0.29% 0.36%(c)
- -------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $41,813 $15,236 $9,905 $5,803 $ 1
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED SEPTEMBER 30,
TRUST SHARES 1995 1994 1993 1992 1991(a)
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.03 0.03 0.04 0.06
- -------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Distributions from net investment income (0.05) (0.03) (0.03) (0.04) (0.06)
- -------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (B) 5.36% 3.35% 2.89% 3.79% 5.92%
- -------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
Expenses 0.57% 0.55% 0.50% 0.64% 0.51%(c)
Net investment income 5.27% 3.25% 2.83% 3.64% 5.99%(c)
Expense waiver/reimbursement (d) 0.19% 0.25% 0.30% 0.29% 0.36%(c)
- -------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $173,761 $132,445 $134,397 $136,616 $57,432
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Reflects operations for the period from October 16, 1990 (date of initial
public investment) to September 30, 1991.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
THE TAX-FREE MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30,
1995 1994(a)
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.03 0.01
LESS DISTRIBUTIONS
Distributions from net investment income (0.03) (0.01)
- ---------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------------------
TOTAL RETURN (b) 3.53% 0.45%
- ---------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
Expenses 0.39% 0.36%(c)
Net investment income 3.55% 2.65%(c)
Expense waiver/reimbursement (d) 0.56% 0.70%(c)
- ---------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $81,977 $21,967
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Reflects operations for the period from July 27, 1994 (date of initial
public investment) to September 30, 1994.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
THE VIRTUS FUNDS
(FORMERLY, THE MEDALIST FUNDS)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
(1) ORGANIZATION
The Virtus Funds (the "Trust") is registered under the Investment Company Act of
1940, as amended (the "Act"), as an open-end management investment company. The
Trust consists of eight portfolios (individually referred to as the "Fund", or
collectively as the "Funds"). All Funds, except The Strategic Stock Fund and The
Tax-Free Money Market Fund are offered in two classes of shares: Trust Shares
and Investment Shares. The Strategic Stock Fund and The Tax-Free Money Market
Fund are presented as Investment Shares for financial statement purposes. The
following portfolios comprise the Trust:
<TABLE>
<CAPTION>
PORTFOLIO NAME DIVERSIFICATION
<S> <C>
The U.S. Government Securities Fund ("Government Securities Fund") diversified
The Strategic Stock Fund ("Strategic Stock Fund") diversified
The Stock Fund ("Stock Fund") diversified
The Virginia Municipal Bond Fund ("Virginia Municipal Bond Fund") non-diversified
The Maryland Municipal Bond Fund ("Maryland Municipal Bond Fund") non-diversified
The Treasury Money Market Fund ("Treasury Money Market Fund") diversified
The Money Market Fund ("Money Market Fund") diversified
The Tax-Free Money Market Fund (Tax-Free Money Market Fund) diversified
</TABLE>
The assets of each portfolio are segregated and a shareholder's interest is
limited to the portfolio in which shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Short-term securities with remaining maturities of
sixty days or less at the time of purchase may be valued at amortized cost,
which approximates fair market value. All other securities are valued at
prices provided by an independent pricing service.
The money market Funds within the Trust use the amortized cost method to
value their portfolio securities in accordance with Rule 2a-7 of the Act.
REPURCHASE AGREEMENTS--It is the policy of the Funds to require a custodian
bank to take possession, to have legally segregated in the Federal Reserve
Book Entry System, or to have segregated within the custodian bank's vault,
all securities held as collateral under repurchase agreement transactions.
Additionally, procedures have been established by the Funds to monitor, on
a daily basis, the market value of each repurchase agreement's collateral
to ensure that the value of collateral at least equals the repurchase price
to be paid under the repurchase agreement transaction, including accrued
interest.
The Funds will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Funds' adviser to be creditworthy pursuant to guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees"). Risks may arise from the potential inability of counterparties
to honor the terms of the repurchase agreement. Accordingly, the Funds
could receive less than the repurchase price on the sale of collateral
securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Dividend income and
distributions to shareholders are recorded on the ex-dividend date.
Interest income and expenses are accrued daily. Bond premium and discount,
if applicable, are amortized as required by the Internal Revenue Code, as
amended (the "Code").
THE VIRTUS FUNDS
- --------------------------------------------------------------------------------
FEDERAL TAXES--It is the Funds' policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of their income. Accordingly, no
provisions for federal tax are necessary.
At September 30, 1995, Government Securities Fund, Virginia Municipal Bond
Fund and Money Market Fund, for federal tax purposes, each had a capital
loss carryforward, as noted below, which will reduce the Fund's taxable
income arising from future net realized gain on investments, if any, to the
extent permitted by the Code, and thus will reduce the amount of the
distributions to shareholders which would otherwise be necessary to relieve
the Fund of any liability for federal tax.
<TABLE>
<CAPTION>
FUND TOTAL CAPITAL LOSS CARRYFORWARD
<S> <C>
Government Securities Fund $ 9,742,636
Virginia Municipal Bond Fund 219,533
Money Market Fund 59,061
</TABLE>
Pursuant to the Code, such capital loss carryforwards will expire as
follows:
<TABLE>
<CAPTION>
GOVERNMENT SECURITIES FUND VIRGINIA MUNICIPAL BOND FUND
EXPIRATION YEAR EXPIRATION AMOUNT EXPIRATION YEAR EXPIRATION AMOUNT
<S> <C> <C> <C>
2003 $ 9,742,636 2003 $ 219,533
<CAPTION>
MONEY MARKET FUND
EXPIRATION YEAR EXPIRATION AMOUNT
<S> <C>
2002 $37,305
2003 21,756
</TABLE>
Additionally, net capital losses, as noted below, attributable to security
transactions incurred after October 31, 1994 are treated as arising on
October 1, 1995 the first day of the Funds' next taxable year.
<TABLE>
<CAPTION>
FUND TOTAL TAX LOSS PUSHFORWARD
<S> <C>
Government Securities Fund $ 1,373,847
Virginia Municipal Bond Fund 1,317,477
Maryland Municipal Bond Fund 701,407
</TABLE>
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Funds may engage in
when-issued or delayed delivery transactions. The Funds record when-issued
securities on the trade date and maintain security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
DEFERRED EXPENSES--The costs incurred by each Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized using the straight-line method not to exceed a period of five
years from each Fund's commencement date.
OTHER--Investment transactions are accounted for on the trade date.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value). At
September 30, 1995, Treasury Money Market Fund, Money Market Fund, and Tax-Free
Money Market Fund, capital paid-in aggregated $248,019,243 , $215,574,313, and
$81,977,460, respectively. Transactions in shares were as follows:
THE VIRTUS FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. GOVERNMENT
SECURITIES FUND STRATEGIC STOCK FUND*
FOR THE YEAR ENDED SEPTEMBER 30, 1995: SHARES DOLLARS SHARES DOLLARS
<S> <C> <C> <C> <C>
INVESTMENT SHARES:
- ------------------------------------------------------
Shares sold 2,229,961 $ 22,386,800 8,728,162 $ 90,552,400
- ------------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 481,441 4,775,252 13,541 144,980
- ------------------------------------------------------
Shares redeemed (2,817,774) (27,866,476) (2,222,973) (24,220,825)
- ------------------------------------------------------ ----------- -------------- ----------- --------------
(106,372) $ (704,424) 6,518,730 $ 66,476,555
----------- -------------- ----------- --------------
TRUST SHARES:
- ------------------------------------------------------
Shares sold 2,129,377 $ 21,174,922
- ------------------------------------------------------
Shares issued to shareholders in payment of
distributions declared -- --
- ------------------------------------------------------
Shares redeemed (3,014,663) (30,026,886)
- ------------------------------------------------------ ----------- --------------
(885,286) $ (8,851,964)
----------- --------------
Net change resulting from share transactions (991,658) $ (9,556,388)
- ------------------------------------------------------ ----------- --------------
<CAPTION>
U.S. GOVERNMENT
SECURITIES FUND
FOR THE YEAR ENDED SEPTEMBER 30, 1994: SHARES DOLLARS
<S> <C> <C>
INVESTMENT SHARES:
- ------------------------------------------------------
Shares sold 2,757,863 $ 28,737,258
- ------------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 659,546 6,803,369
- ------------------------------------------------------
Shares redeemed (2,914,655) (29,801,745)
- ------------------------------------------------------ ----------- --------------
502,754 $ 5,738,882
----------- --------------
TRUST SHARES:
- ------------------------------------------------------
Shares sold 3,770,941 $ 38,897,644
- ------------------------------------------------------
Shares issued to shareholders in payment of
distributions declared -- --
- ------------------------------------------------------
Shares redeemed (3,182,224) (32,510,770)
- ------------------------------------------------------ ----------- --------------
588,717 $ 6,386,874
----------- --------------
Net change resulting from share transactions 1,091,471 $ 12,125,756
- ------------------------------------------------------ ----------- --------------
</TABLE>
*For the period from March 7, 1995 (date of initial public investment) to
September 30, 1995.
THE VIRTUS FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STOCK FUND
FOR THE YEAR ENDED SEPTEMBER 30, 1995: SHARES DOLLARS
<S> <C> <C>
INVESTMENT SHARES:
- ------------------------------------------------------------------------------------
Shares sold 1,471,204 $ 18,328,914
- ------------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 79,983 932,476
- ------------------------------------------------------------------------------------
Shares redeemed (566,888) (6,950,345)
- ------------------------------------------------------------------------------------ ----------- --------------
984,299 $ 12,311,045
----------- --------------
TRUST SHARES:
- ------------------------------------------------------------------------------------
Shares sold 1,027,794 $ 12,531,485
- ------------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 87,096 992,015
- ------------------------------------------------------------------------------------
Shares redeemed (3,766,090) (46,012,086)
- ------------------------------------------------------------------------------------ ----------- --------------
(2,651,200) $ (32,488,586)
----------- --------------
Net change resulting from share transactions (1,666,901) $ (20,177,541)
- ------------------------------------------------------------------------------------ ----------- --------------
</TABLE>
<TABLE>
<CAPTION>
STOCK FUND
FOR THE YEAR ENDED SEPTEMBER 30, 1994: SHARES DOLLARS
<S> <C> <C>
INVESTMENT SHARES:
- ------------------------------------------------------------------------------------
Shares sold 991,369 $ 12,047,687
- ------------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 55,960 682,714
- ------------------------------------------------------------------------------------
Shares redeemed (291,272) (3,520,199)
- ------------------------------------------------------------------------------------ ----------- --------------
756,057 $ 9,210,202
----------- --------------
TRUST SHARES:
- ------------------------------------------------------------------------------------
Shares sold 4,077,354 $ 48,442,557
- ------------------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 79,916 969,109
- ------------------------------------------------------------------------------------
Shares redeemed (3,511,622) (42,406,763)
- ------------------------------------------------------------------------------------ ----------- --------------
645,648 $ 7,004,903
----------- --------------
Net change resulting from share transactions 1,401,705 $ 16,215,105
- ------------------------------------------------------------------------------------ ----------- --------------
</TABLE>
THE VIRTUS FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VIRGINIA MUNICIPAL MARYLAND MUNICIPAL
BOND FUND BOND FUND
FOR THE YEAR ENDED SEPTEMBER 30, 1995: SHARES DOLLARS SHARES DOLLARS
<S> <C> <C> <C> <C>
INVESTMENT SHARES:
- --------------------------------------------------------
Shares sold 939,334 $ 9,896,216 358,009 $ 3,741,410
- --------------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 221,723 2,307,635 99,186 1,017,506
- --------------------------------------------------------
Shares redeemed (1,918,280) (19,864,255) (848,026) (8,637,907)
- -------------------------------------------------------- ----------- -------------- --------- --------------
(757,223) $ (7,660,404) (390,831) $ (3,878,991)
----------- -------------- --------- --------------
TRUST SHARES:
- --------------------------------------------------------
Shares sold 599,178 $ 6,323,687 145,854 $ 1,510,883
- --------------------------------------------------------
Shares issued to shareholders in payment of
distributions declared -- -- -- --
- --------------------------------------------------------
Shares redeemed (815,168) (8,560,202) (370,963) (3,771,092)
- -------------------------------------------------------- ----------- -------------- --------- --------------
(215,990) $ (2,236,515) (225,109) $ (2,260,209)
----------- -------------- --------- --------------
Net change resulting from share transactions (973,213) $ (9,896,919) (615,940) $ (6,139,200)
- -------------------------------------------------------- ----------- -------------- --------- --------------
</TABLE>
<TABLE>
<CAPTION>
VIRGINIA MUNICIPAL MARYLAND MUNICIPAL
BOND FUND BOND FUND
FOR THE YEAR ENDED SEPTEMBER 30, 1994: SHARES DOLLARS SHARES DOLLARS
<S> <C> <C> <C> <C>
INVESTMENT SHARES:
- --------------------------------------------------------
Shares sold 2,681,458 $ 29,538,167 962,509 $ 10,359,731
- --------------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 293,628 3,164,502 142,395 1,526,367
- --------------------------------------------------------
Shares redeemed (1,332,660) (14,244,030) (723,930) (7,619,230)
- -------------------------------------------------------- ----------- -------------- --------- --------------
1,642,426 $ 18,458,639 380,974 $ 4,266,868
----------- -------------- --------- --------------
TRUST SHARES:
- --------------------------------------------------------
Shares sold 857,465 $ 9,267,525 423,211 $ 4,487,832
- --------------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 46 511 -- --
- --------------------------------------------------------
Shares redeemed (1,187,167) (12,735,003) (381,847) (4,051,459)
- -------------------------------------------------------- ----------- -------------- --------- --------------
(329,656) $ (3,466,967) 41,364 $ 436,373
----------- -------------- --------- --------------
Net change resulting from share transactions 1,312,770 $ 14,991,672 422,338 $ 4,703,241
- -------------------------------------------------------- ----------- -------------- --------- --------------
</TABLE>
THE VIRTUS FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY
MONEY MARKET FUND MONEY MARKET FUND
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
INVESTMENT SHARES:
- ------------------------------------
Shares sold 44,802,002 25,345,275 66,743,936 25,429,884
- ------------------------------------
Shares issued to shareholders in
payment of distributions declared 1,521,559 598,445 1,539,099 318,530
- ------------------------------------
Shares redeemed (28,843,368) (24,442,899) (41,705,072) (20,417,859)
- ------------------------------------ ----------------- ----------------- ----------------- -----------------
17,480,193 1,500,821 26,577,963 5,330,555
----------------- ----------------- ----------------- -----------------
TRUST SHARES:
- ------------------------------------
Shares sold 3,199,498,653 1,045,478,085 488,178,853 276,276,619
- ------------------------------------
Shares issued to shareholders in
payment of distributions declared 43,782 34 24,865 --
- ------------------------------------
Shares redeemed (3,295,170,869) (894,114,112) (446,887,940) (278,229,002)
- ------------------------------------ ----------------- ----------------- ----------------- -----------------
(95,628,434) 151,364,007 41,315,778 (1,952,383)
----------------- ----------------- ----------------- -----------------
Net change resulting from share
transactions (78,148,241) 152,864,828 67,893,741 3,378,172
- ------------------------------------ ----------------- ----------------- ----------------- -----------------
</TABLE>
<TABLE>
<CAPTION>
TAX-FREE
MONEY MARKET FUND
YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
1995 1994*
<S> <C> <C>
INVESTMENT SHARES:
- ---------------------------------------------------------------------------
Shares sold 244,825,710 32,866,117
- ---------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 369,306 17,108
- ---------------------------------------------------------------------------
Shares redeemed (185,184,196) (10,916,585)
- --------------------------------------------------------------------------- ----------------- -----------------
Net change resulting from share transactions 60,010,820 21,966,640
- --------------------------------------------------------------------------- ----------------- -----------------
</TABLE>
*For the period from July 27, 1994 (date of initial public investment) to
September 30, 1994.
THE VIRTUS FUNDS
- --------------------------------------------------------------------------------
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Virtus Capital Management, Inc., the Trust's investment
adviser (the "Adviser"), receives for its services an annual investment advisory
fee based on a percentage of each Fund's average daily net assets (see below).
<TABLE>
<CAPTION>
FUND ANNUAL RATE
<S> <C>
Government Securities Fund 0.75%
Strategic Stock Fund 1.00%
Stock Fund 0.75%
Virginia Municipal Bond Fund 0.75%
Maryland Municipal Bond Fund 0.75%
Treasury Money Market Fund 0.50%
Money Market Fund 0.50%
Tax-Free Money Market Fund 0.50%
</TABLE>
The Adviser may voluntarily choose to waive a portion of its fee. The Adviser
can modify or terminate this voluntary waiver at any time at its sole
discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides each Fund
with certain administrative personnel and services. The FAS fee is based on the
level of average aggregate net assets of the Trust for the period. FAS may
voluntarily choose to waive a portion of its fee.
DISTRIBUTION SERVICES FEE--The Trust has adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, each
Fund will reimburse Federated Securities Corp. ("FSC"), the principal
distributor, from the net assets of the Fund to finance activities intended to
result in the sale of the Fund's Investment Shares. The Plan provides that the
Funds may incur distribution expenses up to 0.25 of 1% of the average daily net
assets of the Investment Shares of Government Securities Fund, Strategic Stock
Fund, Stock Fund, Virginia Municipal Bond Fund and Maryland Municipal Bond Fund
and up to 0.35 of 1% of the average daily net assets of the Investment Shares of
Treasury Money Market Fund, Money Market Fund, and Tax-Free Money Market Fund,
annually, to reimburse FSC.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Funds for
which it receives a fee. The fee is based on the size, type, and number of
accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ also maintains the Funds' accounting records
for which it receives a fee. The fee is based on the level of each Fund's
average net assets for the period, plus out-of-pocket expenses.
CUSTODIAN FEES--Signet Trust Company is the Funds' custodian for which it
receives a fee. The fee is based on the level of each Fund's average net assets
for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses were initially borne by FAS.
The Funds' have agreed to reimburse FAS for the organizational expenses during
the five year period following the date each Fund's portfolio became effective.
For the year ended, September 30, 1995 the Funds' paid the following pursuant to
this agreement.
THE VIRTUS FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EXPENSES OF AMOUNT REIMBURSED
ORGANIZING THE TO FAS FOR THE
FUND YEAR ENDED SEPTEMBER 30, 1995
<S> <C> <C>
Government Securities Fund $ 53,346 10,684
Strategic Stock Fund 35,000* 2,333
Stock Fund 59,298 4,555
Virginia Municipal Bond Fund 55,256 5,198
Maryland Municipal Bond Fund 58,484 2,130
Treasury Money Market Fund 49,243 18,721
Money Market Fund 50,235 8,342
Tax-Free Money Market Fund 50,000 2,222
</TABLE>
*Organizational expenses for the Strategic Stock Fund will be borne initially by
FAS. This number represents an estimate of future expense.
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
year ended September 30, 1995, were as follows:
<TABLE>
<CAPTION>
FUND PURCHASES SALES
<S> <C> <C>
Government Securities Fund $ 175,476,241 $ 162,662,944
Strategic Stock Fund 122,458,577 58,536,281
Stock Fund 179,057,093 203,356,173
Virginia Municipal Bond Fund 25,811,103 37,426,144
Maryland Municipal Bond Fund 8,428,679 15,485,340
</TABLE>
(6) CONCENTRATION OF CREDIT RISK
Since Virginia Municipal Bond Fund and Maryland Municipal Bond Fund invest a
substantial portion of their assets in issuers located in one state, they will
be more susceptible to factors adversely affecting issuers of those states than
would be a comparable general tax-exempt mutual fund. In order to reduce the
credit risk associated with such factors, at September 30, 1995, 14.3% of the
securities in Virginia Municipal Bond Fund's portfolio of investments were
backed by letters of credit or bond insurance of various financial institutions
and financial guaranty assurance agencies. The value of investments insured by
or supported (backed) by a letter of credit from any one institution or agency
did not exceed 8.8% of total investments. At September 30, 1995, 19.5% of the
securities in Maryland Municipal Bond Fund's portfolio of investments were
backed by letters of credit or bond insurance of various financial institutions
and financial guaranty assurance agencies. The value of investments insured by
or supported (backed) by a letter of credit from any one instution or agency did
not exceed 8.2% of total investments.
(7) SUBSEQUENT EVENT
The Trustees have unanimously recommended a merger of the Blanchard 100%
Treasury Money Market Fund, an investment portfolio of The Blanchard Group of
Funds, with The Virtus Treasury Money Market Fund. If the shareholder proxy is
approved, the merger is expected to be completed during the first quarter of
1996.
THE VIRTUS FUNDS
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
To the Board of Trustees and Shareholders of
THE VIRTUS FUNDS
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of The Virtus Funds (formerly, The Medalist
Funds) (comprising the following portfolios: The U.S. Government Securities
Fund, The Strategic Stock Fund, The Stock Fund, The Virginia Municipal Bond
Fund, The Maryland Municipal Bond Fund, The Treasury Money Market Fund, The
Money Market Fund and The Tax-Free Money Market Fund) as of September 30, 1995,
and the related statements of operations for the year then ended, the statements
of changes in net assets for the years ended September 30, 1995 and 1994 and the
financial highlights for each of the five years in the period ended September
30, 1995. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
September 30, 1995 by correspondence with the custodian and brokers; where
replies were not received from brokers, we performed other auditing procedures.
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, such financial statements and financial highlights present
fairly, in all material respects, the financial position of The Virtus Funds as
of September 30, 1995, the results of their operations, the changes in their net
assets and their financial highlights for the respective stated periods in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
November 17, 1995
Trustees Officers
- -----------------------------------------------------------------------
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. Edward C. Gonzales
William J. Copeland President and Treasurer
James E. Dowd J. Christopher Donahue
Lawrence D. Ellis, M.D. Executive Vice President
Edward L. Flaherty, Jr. John W. McGonigle
Edward C. Gonzales Executive Vice President and Secretary
Peter E. Madden Joseph S. Machi
Gregor F. Meyer Vice President and Assistant Treasurer
John E. Murray, Jr. Richard B. Fisher
Wesley W. Posvar Vice President
Marjorie P. Smuts David M. Taylor
Assistant Treasurer
C. Grant Anderson
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal. Although money market funds seek to
maintain a stable net asset value of $1.00 per share, there is no assurance that
they will be able to do so.
This report is authorized for distribution to prospective investors only when
preceded
or accompanied by the Funds' prospectus which contains facts concerning their
objective and policies, management fees, expenses and other information.
Cusip 927913103 Cusip 927913707
Cusip 927913202 Cusip 927913855
Cusip 927913301 Cusip 927913848
Cusip 927913400 Cusip 927913863
Cusip 927913830 Cusip 927913871
Cusip 927913509 Cusip 927913889
Cusip 927913608 Cusip 927913806
A. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left corner.
The U.S. Government Securities Fund-Investment Shares is represented by a broken
line, whereas the Lehman Brothers Intermediate Government Bond Index is
represented by a solid line. The line graph is a visual representation of a
comparison of change in the value of a hypothetical investment of $10,000 in the
Fund and Lehman Brothers Intermediate Index for the period from October 16, 1990
(start of performance) toSeptember 30, 1995. The "y" axis reflects the cost of
the investment. The "x" axis reflects computation periods from the ending value
of the hypothetical investment in the Fund as compared to Lehman Brothers
Intermediate Government Bond Index; the ending values are $13,956; and $14,985,
respectively. Beneath the line graph are the following total return data for
the Fund: total return figures for the one-year period, and start of
performance date cumulative total return are as follows: 7.68%; and 7.83%;
respectively. The performance disclaimer and footnotes are listed directly under
the graphic presentation.
B. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left corner.
The U.S. Government Securities Fund-Trust Shares is represented by a broken
line, whereas the Lehman Brothers Intermediate Government Bond Index is
represented by a solid line. The line graph is a visual representation of a
comparison of change in the value of a hypothetical investment of $10,000 in the
Fund and Lehman Brothers Intermediate Index for the period from October 16, 1990
(start of performance) to September 30, 1995. The "y" axis reflects the cost of
the investment. The "x" axis reflects computation periods from the ending value
of the hypothetical investment in the Fund as compared to Lehman Brothers
Intermediate Government Bond Index; the ending values are $14,620; and $14,985,
respectively. Beneath the line graph are the following total return data for
the Fund: total return figures for the one-year period, and start of
performance date cumulative total return are as follows: 10.11%; and 7.96%;
respectively. The performance disclaimer and footnotes are listed directly under
the graphic presentation.
C. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left corner.
The Strategic Stock Fund is represented by a broken line, whereas the Standard &
Poor's 500 Index is represented by a solid line. The line graph is a visual
representation of a comparison of change in the value of a hypothetical
investment of $10,000 in the Fund and Standard & Poor's 500 Index for the period
from March 7, 1995 (start of performance) toSeptember 30, 1995. The "y" axis
reflects the cost of the investment. The "x" axis reflects computation periods
from the ending value of the hypothetical investment in the Fund as compared to
Standard & Poor's 500 Index; the ending values are $11,859; and $12,174,
respectively. Beneath the line graph is the following total return data for the
Fund: start of performance date cumulative total return is as follows: 18.59%.
The performance disclaimer and footnotes are listed directly under the graphic
presentation.
D. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left corner.
The Stock Fund- Investment Shares is represented by a broken line, whereas
Standard & Poor's 500 Index is represented by a solid line. The line graph is a
visual representation of a comparison of change in the value of a hypothetical
investment of $10,000 in the Fund and Lehman Brothers Intermediate Index for the
period from October 16, 1990 (start of performance) to September 30, 1995. The
"y" axis reflects the cost of the investment. The "x" axis reflects computation
periods from the ending value of the hypothetical investment in the Fund as
compared to Standard & Poor's 500 Index; the ending values are $16,069; and
$22,119, respectively. Beneath the line graph are the following total return
data for the Fund: total return figures for the one-year period, and start of
performance date cumulative total return are as follows: 17.91%; and 10.43%;
respectively. The performance disclaimer and footnotes are listed directly under
the graphic presentation.
E. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left corner.
The Stock Fund- Trust Shares is represented by a broken line, whereas Standard &
Poor's 500 Index is represented by a solid line. The line graph is a visual
representation of a comparison of change in the value of a hypothetical
investment of $10,000 in the Fund and Lehman Brothers Intermediate Index for the
period from October 16, 1990 (start of performance) to September 30, 1995. The
"y" axis reflects the cost of the investment. The "x" axis reflects computation
periods from the ending value of the hypothetical investment in the Fund as
compared to Standard & Poor's 500 Index; the ending values are $16,452; and
$22,119, respectively. Beneath the line graph are the following total return
data for the Fund: total return figures for the one-year period, and start of
performance date cumulative total return are as follows: 20.33%; and 10.56%;
respectively. The performance disclaimer and footnotes are listed directly under
the graphic presentation.
F. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left corner.
The Virginia Municipal Bond Fund- Investment Shares is represented by a broken
line, whereas the Lehman Brothers 10 Year Municipal Bond Index is represented by
a solid line. The line graph is a visual representation of a comparison of
change in the value of a hypothetical investment of $10,000 in the Fund and the
Lehman Brothers Intermediate Index for the period from October 24, 1990 (start
of performance) to September 30, 1995. The "y" axis reflects the cost of the
investment. The "x" axis reflects computation periods from the ending value of
the hypothetical investment in the Fund as compared to the Lehman Brothers 10
Year Municipal Bond Index; the ending values are $13,426; and $15,239,
respectively. Beneath the line graph are the following total return data for
the Fund: total return figures for the one-year period, and start of
performance date cumulative total return are as follows: 6.99%; and 7.87%;
respectively. The performance disclaimer and footnotes are listed directly under
the graphic presentation.
G. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left corner.
The Virginia Municipal Bond Fund-Trust Shares is represented by a broken line,
whereas the Lehman Brothers 10 Year Municipal Bond Index is represented by a
solid line. The line graph is a visual representation of a comparison of change
in the value of a hypothetical investment of $10,000 in the Fund and the Lehman
Brothers Intermediate Index for the period from October 24, 1990 (start of
performance) to September 30, 1995. The "y" axis reflects the cost of the
investment. The "x" axis reflects computation periods from the ending value of
the hypothetical investment in the Fund as compared to the Lehman Brothers 10
Year Municipal Bond Index; the ending values are $14,046; and $15,239,
respectively. Beneath the line graph are the following total return data for
the Fund: total return figures for the one-year period, and start of
performance date cumulative total return are as follows: 10.27%; and 7.13%;
respectively. The performance disclaimer and footnotes are listed directly under
the graphic presentation.
H. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left corner.
The Maryland Municipal Bond Fund-Investment Shares is represented by a broken
line, whereas the Lehman Brothers 10 Year Municipal Bond Index is represented by
a solid line. The line graph is a visual representation of a comparison of
change in the value of a hypothetical investment of $10,000 in the Fund and the
Lehman Brothers Intermediate Index for the period from October 30, 1990 (start
of performance) to September 30, 1995. The "y" axis reflects the cost of the
investment. The "x" axis reflects computation periods from the ending value of
the hypothetical investment in the Fund as compared to the Lehman Brothers 10
Year Municipal Bond Index; the ending values are $13,165; and $15,239,
respectively. Beneath the line graph are the following total return data for
the Fund: total return figures for the one-year period, and start of
performance date cumulative total return are as follows: 7.77%; and 6.58%;
respectively. The performance disclaimer and footnotes are listed directly under
the graphic presentation.
I. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left corner.
The Maryland Municipal Bond Fund-Trust Shares is represented by a broken line,
whereas the Lehman Brothers 10 Year Municipal Bond Index is represented by a
solid line. The line graph is a visual representation of a comparison of change
in the value of a hypothetical investment of $10,000 in the Fund and the Lehman
Brothers Intermediate Index for the period from October 30, 1990 (start of
performance) to September 30, 1995. The "y" axis reflects the cost of the
investment. The "x" axis reflects computation periods from the ending value of
the hypothetical investment in the Fund as compared to the Lehman Brothers 10
Year Municipal Bond Index; the ending values are $13,768; and $15,239,
respectively. Beneath the line graph are the following total return data for
the Fund: total return figures for the one-year period, and start of
performance date cumulative total return are as follows: 10.09%; and 6.72%;
respectively. The performance disclaimer and footnotes are listed directly under
