MESSAGE TO SHAREHOLDERS
- --------------------------------------------------------------------------------
Dear Investor:
I'm pleased to present your Semi-Annual Report for The Virtus Funds, which
covers the six-month period from October 1, 1995 through March 31, 1996.
As always, this report contains complete financial information--including a
commentary by the portfolio manager and a list of holdings--for every fund in
the Virtus family. Please note that the names of the two Virtus stock funds have
been changed to better reflect their investment strategies.
I encourage you to take a few minutes to review the following highlights for
each fund over the six-month period. Overall, bond performance was adversely
impacted by rising rates in the first quarter of 1996. While stocks stood at an
all-time high due to an outstanding 1995 environment, the first quarter's rise
in rates and reports of a stronger-than-expected economy combined to introduce a
degree of volatility in the market.
- - THE U.S. GOVERNMENT SECURITIES FUND paid dividends of $0.32 per share for
Investment Shares ($0.33 for Trust Shares). For the six-month period ended
March 31, 1996, the fund produced a total return of 1.82% for Investment
Shares (1.95% for Trust Shares) based on net asset value.* The fund's net
asset value decreased slightly from $10.13 on the first day of the period to
$10.00 on the last day of the period. At the end of the report period, net
assets stood at more than $215 million.
- - THE VIRTUS STYLE MANAGER: LARGE CAP FUND, formerly known as The Stock Fund,
turned in competitive performance through its high-quality portfolio of
stocks. For the six-month period ended March 31, 1996, the fund produced a
total return of 7.89% for Investment Shares (8.00% for Trust Shares) based on
net asset value.* The fund paid dividends of $0.13 per share and capital gains
of $1.20 per share for Investment Shares (and dividends of $0.14 per share and
capital gains of $1.20 per share for Trust Shares.) The fund's net asset value
decreased from $13.70 on the first day of the period to $13.40 on the last day
of the period. At the end of the report period, net assets stood at more than
$95 million.
- - THE VIRTUS STYLE MANAGER FUND, formerly know as The Strategic Stock Fund,
produced a total return of 2.72% for the period ended March 31, 1996 based on
net asset value.* The fund paid dividends of $0.12 per share and capital gains
of $1.35 per share. The fund's net asset value decreased from $12.03 on the
first day of the period to $10.85 on the last day. Net assets stood at more
than $65.4 million on the last day of the period.
- - THE VIRGINIA MUNICIPAL BOND FUND paid tax-free dividends** of $0.21 per share
for Investment Shares ($0.22 for Trust Shares). For the six-month period ended
March 31, 1996, the fund produced a total return of 1.37% for Investment
Shares (1.50% for Trust Shares) based on net asset value.* The fund's net
asset value decreased slightly from $10.81 on the first day of the period to
$10.75 on the last day of the period. At the end of the report period, net
assets stood at more than $103 million.
- - THE MARYLAND MUNICIPAL BOND FUND paid tax-free dividends** of $0.20 per share
for Investment Shares ($0.22 in dividends for Trust Shares). For the six-month
period ended March 31, 1996, the fund produced a total return of 1.49% for
Investment Shares (1.62% for Trust Shares) based on net asset value.* The
fund's net asset value decreased slightly from $10.69 on the first day of the
period to $10.65 on the last day of the period. At the end of the report
period, net assets stood at more than $42 million.
- - THE TREASURY MONEY MARKET FUND, paid dividends of $0.02 per share for Trust
Shares and Investment Shares. Over the period, assets grew dramatically--from
$248 at the beginning of the period to more than $411 million at the period's
end.+
- - THE MONEY MARKET FUND paid dividends of $0.03 per share for both Trust Shares
and Investment Shares. Through the fund's portfolio of high-quality money
market securities. At the end of the report period, net assets stood at more
than $258 million.+
- - THE TAX-FREE MONEY MARKET FUND paid tax-free dividends++ of $0.02 per share.
At the end of the report period, net assets stood at more than $85 million.+
Thank you for pursuing your financial goals through The Virtus Funds. We look
forward to keeping you informed about the progress of your investment.
Sincerely,
LOGO
Garry M. Allen
Chief Investment Officer
Virtus Capital Management
Investment Adviser to The Virtus Funds
May 15, 1996
* Performance quoted reflects 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. Reflecting the Funds'
contingent deferred sales charge, the total returns of The Virtus Funds were
as follows: The U.S. Government Securities Fund (Investment Shares): - .21%;
The Style Manager Fund: 0.64%; The Style Manager: Large Cap Fund (Investment
Shares): 5.72%; The Virginia Municipal Bond Fund (Investment Shares): -.60%;
and The Maryland Municipal Bond Fund (Investment Shares): -.50%.
** Income may be subject to the federal alternative minimum tax.
+ Although money market funds seek to maintain a stable net asset value of $1
per share, there is no guarantee that they will be able to do so. An
investment in the fund is neither insured nor guaranteed by the U.S.
government.
++ Income may be subject to the federal alternative minimum tax and state and
local taxes.
INVESTMENT REVIEW
The U.S. Government Securities Fund
- --------------------------------------------------------------------------------
The fixed income markets during 1995 were a welcome change to what was
experienced during 1994. It was amazing to see one of the WORST bond markets in
recent history (1994) be immediately followed by one of the BEST bond markets in
recent history (1995). If nothing else, it proves that fixed income investors
should look at their portfolios and mutual fund holdings as long term
investments. As many practitioners have so often preached, it is the commitment
to a sound investment program that provides the best returns over time.
Now to the current market environment. During the last six months, the fixed
income markets have struggled with a few key issues. Will the economy experience
above trend growth (GDP of 3% or higher) and if so, will inflation become a
concern? These fears have caused interest rates to rise during the first quarter
of 1996. Given recent economic statistics, these fears would appear unwarranted.
Growth for the first quarter of 1996 was reported at 2.8% and inflation is still
well contained. But, as investors look out to the future, there still exists
some concern over prospects down the road. This period of nervousness may last
for the next couple of months until economic statistics either confirm recent
fears or allay them.
As evidence of potential strength in the economy began to develop, the average
maturity of The Virtus U.S. Government Securities Fund was reduced. This
reduction in average maturity should help to preserve value during a period of
rising interest rates. This strategy will remain in place until the time when we
believe rates have reached their peak. The adjustment of average maturity is a
key component in preserving and growing principal value of the portfolio. In
addition to portfolio income, capital gains (during falling interest rate
environments) and capital preservation (during rising rate environments) are
major contributors to the funds total rate of return over time.
INVESTMENT REVIEW
The Style Manager Fund--Large Cap
- --------------------------------------------------------------------------------
During the quarter ended 12/31/95, most economic data pointed to slower growth
in the economy, accompanied with low inflation expectations. The soft landing
seemed fairly solid for the moment, but some signs were pointing to economic
growth in 1996 that would be below desired targets. In this ideal environment,
interest rates fell sharply through December. During the quarter ended March 31,
1996, out of nowhere came strong economic growth and fears of higher inflation.
Interest rates rose back to levels seen at the beginning of the first quarter.
The tone of the fixed income markets turned from very bullish to down right
negative.
We believe that the economy will begin to slow somewhat with higher interest
rates, and that interest rates will fall mildly from current levels. Most
inflation pressure is believed to be temporary in nature.
The Standard and Poor's 500 Index ("S&P 500")* surged 11.72% during the six
months ended March 31, 1996. The S&P 500 advanced 5.96% in the fourth quarter
1995, and an additional 5.44% in the first quarter 1996. The S&P 500 continued a
torrid pace that resulted in 1995 performance of 37 1/2%, second highest for the
S&P since the S&P 500's creation in March, 1957.
Strategically, the fourth quarter 1995 represented a Style-transition quarter
wherein the fund was repositioned out of Growth stocks and into Value
stocks--50% movement into Value in October, 1995, and the second 50% movement
into Value occurred at year end. The fund moved into 1996 fully invested in
Value stocks. Value represents the most under-valued Style asset class. We
entered 1996 fully invested in Value and anticipate a one to three year period
that rewards a capital preservation Style theme driven by Value stock investing.
For the six-month period ended March 31, 1996, The Style Manager Fund-Large Cap
had a total return, based on net asset value, of 8.0%**, for Trust Shares and
7.89% for Investment Shares which compares with 11.72% return for the S&P 500.
* The S&P 500 is an unmanaged index of common stocks in industry,
transportation, and financial and public utility companies. Actual
investments cannot be made in an index.
** 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.
INVESTMENT REVIEW
The Style Manager Fund
- --------------------------------------------------------------------------------
During the quarter ended 12/31/95, most economic data pointed to slower growth
in the economy, accompanied with low inflation expectations. The soft landing
seemed fairly solid for the moment, but some signs were pointing to economic
growth in 1996 that would be below desired targets. In this ideal environment,
interest rates fell sharply through December. During the quarter ended March 31,
1996, out of nowhere came strong economic growth and fears of higher inflation.
Interest rates rose back to levels seen at the beginning of the first quarter.
The tone of the fixed income markets turned from very bullish to down right
negative.
We believe that the economy will begin to slow somewhat with higher interest
rates, and that interest rates will fall mildly from current levels. Most
inflation pressure is believed to be temporary in nature.
The Standard and Poor's 500 Index ("S&P 500") surged 11.72% during the six
months ended March 31, 1996. The S&P 500 advanced 5.96% in the fourth quarter
1995, and an additional 5.44% in the first quarter 1996. The S&P 500 continued a
torrid pace that resulted in 1995 performance of 37 1/2%, second highest for the
S&P since the S&P 500's creation in March, 1957.
Strategically, the fourth quarter 1995 represented a Style-transition quarter
wherein the fund was repositioned out of Growth stocks and into Value
stocks--50% movement into Value in October, 1995, and the second 50% movement
into Value occurred at year end. The fund moved into 1996 fully invested in
Value stocks. Value represents the most under-valued Style asset class. We
entered 1996 fully invested in Value and anticipate a one to three year period
that rewards a capital preservation Style theme driven by Value stock investing.
For the six-month period ended March 31, 1996, The Style Manager Fund had a
total return, based on net asset value, of 2.72%* which compares to the Russell
2000** return of 7.4%.
* 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 Russell 2000 Small Stock Index is an unmanaged index consisting of
approximately 2,000 small capitalization common stocks that can be used to
compare to the total returns of funds whose portfolios are invested primarily
in small capitalization common stocks. Actual investments cannot be made in
an index.
INVESTMENT REVIEW
The Virginia Municipal Bond Fund
- --------------------------------------------------------------------------------
The fixed income markets have begun 1996 with a negative tone due to a rise in
interest rates. Rates across the yield curve have risen because of stronger
economic growth and fears of rising inflation. At this stage in the economic
cycle, we believe these fears are unfounded. The rise in rates thus far this
year, may lead to an economic slow down towards the later half of 1996. As the
economy slows, this should, in turn, cause interest rates to fall once again.
Relative to U.S. Treasury bonds, municipal bond prices have held up pretty well
given the rise in interest rates. Municipals have outperformed Treasury
securities, particularly in the five year and longer maturities.
As evidence of the strength in the economy began to appear, the average maturity
of The Virtus Virginia Municipal Bond Fund was reduced. This reduction in
average maturity should help to preserve value during a period of rising
interest rates. This strategy will remain in place until the time when we
believe rates have reached their peak. As we discussed in our comments above, we
would anticipate lengthening the portfolio later this year.
INVESTMENT REVIEW
The Maryland Municipal Bond Fund
- --------------------------------------------------------------------------------
The fixed income markets have begun 1996 with a negative tone due to a rise in
interest rates. Rates across the yield curve have risen because of stronger
economic growth and fears of rising inflation. At this stage in the economic
cycle, we believe these fears are unfounded. The rise in rates thus far this
year, may lead to an economic slow down towards the later half of 1996. As the
economy slows, this should, in turn, cause interest rates to fall once again.
Relative to U.S. Treasury bonds, municipal bond prices have held up pretty well
given the rise in interest rates. Municipals have outperformed Treasury
securities, particularly in the five year and longer maturities.
As evidence of the strength in the economy began to appear, the average maturity
of The Virtus Maryland Municipal Bond Fund was reduced. This reduction in
average maturity should help to preserve value during a period of rising
interest rates. This strategy will remain in place until the time when we
believe rates have reached their peak. As we discussed in our comments above, we
would anticipate lengthening the portfolio later this year.
THE U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ----------------------------------------------------------------- ------------
<C> <C> <S> <C>
LONG-TERM INVESTMENTS--96.1%
- -------------------------------------------------------------------------------------
U.S. TREASURY NOTES--69.3%
-----------------------------------------------------------------
$35,000,000 5.00%, 2/15/1999 $ 34,190,450
-----------------------------------------------------------------
6,000,000 7.125%, 2/29/2000 6,221,400
-----------------------------------------------------------------
2,000,000 7.50%, 11/15/2001 2,124,200
-----------------------------------------------------------------
17,500,000 7.50%, 5/15/2002 18,649,925
-----------------------------------------------------------------
5,000,000 7.875%, 4/15/1998 5,197,800
-----------------------------------------------------------------
2,225,000 7.875%, 11/15/1999 2,356,987
-----------------------------------------------------------------
16,000,000 7.875%, 11/15/2004 17,553,920
-----------------------------------------------------------------
10,000,000 8.00%, 1/15/1997 10,195,600
-----------------------------------------------------------------
5,000,000 8.125%, 2/15/1998 5,205,550
-----------------------------------------------------------------
6,250,000 8.25%, 7/15/1998 6,569,125
-----------------------------------------------------------------
10,000,000 8.50%, 5/15/1997 10,315,500
-----------------------------------------------------------------
10,750,000 8.75%, 10/15/1997 11,226,978
-----------------------------------------------------------------
15,000,000 8.875%, 11/15/1998 16,069,800
-----------------------------------------------------------------
3,000,000 8.875%, 2/15/1999 3,231,090
----------------------------------------------------------------- ------------
Total U.S. Treasury Notes 149,108,325
----------------------------------------------------------------- ------------
GOVERNMENT OBLIGATIONS--26.8%
-----------------------------------------------------------------
4,500,000 Federal Home Loan Bank, 6.125%, 8/5/1996 4,510,530
-----------------------------------------------------------------
5,000,000 Federal Home Loan Bank, 8.23%, 8/9/2001 5,437,800
-----------------------------------------------------------------
8,000,000 Federal Home Loan Mortgage Corp., 7.69%, 12/16/1996 8,128,880
-----------------------------------------------------------------
2,780,383 Federal Home Loan Mortgage Corp., PC, REMIC, 7.80%, 5/15/2012 2,799,039
-----------------------------------------------------------------
5,000,000 Federal Home Loan Mortgage Corp., 7.974%, 4/20/2005 5,115,950
-----------------------------------------------------------------
91,541 Federal Home Loan Mortgage Corp., 8.113%, 8/1/2019 94,134
-----------------------------------------------------------------
49,906 Federal Home Loan Mortgage Corp., 8.654%, 12/1/2020 50,606
-----------------------------------------------------------------
1,500,000 Federal National Mortgage Association, 7.85%, 9/10/1998 1,563,390
-----------------------------------------------------------------
569,949 Federal National Mortgage Association, 8.50%, 12/1/2001 593,984
-----------------------------------------------------------------
91,073 Federal National Mortgage Association, 8.777%, 6/1/2019 93,657
-----------------------------------------------------------------
29,290,971 Government National Mortgage Association, 7.00%, 11/15/2025 28,530,871
-----------------------------------------------------------------
199,721 Government National Mortgage Association, 8.00%, 3/15/2017 205,958
-----------------------------------------------------------------
401,431 Government National Mortgage Association, 9.00%, 9/15/2021 428,399
----------------------------------------------------------------- ------------
Total Government Obligations 57,553,198
----------------------------------------------------------------- ------------
TOTAL LONG-TERM INVESTMENTS (IDENTIFIED COST $210,511,500) 206,661,523
----------------------------------------------------------------- ------------
</TABLE>
THE U.S. GOVERNMENT SECURITIES FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ----------------------------------------------------------------- ------------
(A) REPURCHASE AGREEMENT--2.7%
- -------------------------------------------------------------------------------------
<S> <C> <C>
$ 5,846,571 Nikko Securities Co. International, Inc., 5.37%, dated 3/29/1996,
due 4/1/1996 (at amortized cost) $ 5,846,571
----------------------------------------------------------------- ------------
TOTAL INVESTMENTS (IDENTIFIED COST $216,358,071)(B) $212,508,094
----------------------------------------------------------------- ------------
</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 $216,358,071.
The net unrealized depreciation of investments on a federal tax basis
amounts to $3,849,977 which is comprised of $713,352 appreciation and
$4,563,329 depreciation at March 31, 1996.
Note: The categories of investments are shown as a percentage of net assets
($215,072,393) at March 31, 1996.
The following acronym(s) are used throughout this portfolio:
PC -- Participation Certificate
REMIC -- Real Estate Mortgage Investment Conduit
(See Notes which are an integral part of the Financial Statements)
VIRTUS STYLE MANAGER: LARGE CAP FUND
(FORMERLY, THE STOCK FUND)
PORTFOLIO OF INVESTMENTS
MARCH 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------ -----------
<C> <C> <S> <C>
COMMON STOCKS--97.1%
- -----------------------------------------------------------------------------------
BANKING--23.6%
------------------------------------------------------------------
38,930 Banc One Corp. $ 1,386,881
------------------------------------------------------------------
3,800 Bancorp Hawaii, Inc. 133,475
------------------------------------------------------------------
10,200 Bank of Boston Corp. 506,175
------------------------------------------------------------------
18,100 Bank of New York Co., Inc. 932,150
------------------------------------------------------------------
33,500 BankAmerica Corp. 2,596,250
------------------------------------------------------------------
8,800 Barnett Banks, Inc. 547,800
------------------------------------------------------------------
11,700 Boatmen's Bancshares, Inc. 459,225
------------------------------------------------------------------
16,200 Chase Manhattan Corp. 1,190,700
------------------------------------------------------------------
22,600 Chemical Banking Corp. 1,593,300
------------------------------------------------------------------
10,400 Comerica, Inc. 434,200
------------------------------------------------------------------
3,900 Crestar Financial Corp. 224,250
------------------------------------------------------------------
5,700 Edwards(AG), Inc. 141,787
------------------------------------------------------------------
29,000 First Chicago NBD Corp. 1,203,500
------------------------------------------------------------------
6,800 First Security Corp. 188,700
------------------------------------------------------------------
6,000 First Tennessee National Corp. 198,000
------------------------------------------------------------------
25,900 First Union Corp. 1,566,950
------------------------------------------------------------------
3,100 First Virginia Bank, Inc. 125,163
------------------------------------------------------------------
5,700 First of America Bank Corp. 264,337
------------------------------------------------------------------
6,800 Firstar Corp. 304,300
------------------------------------------------------------------
17,000 J.P. Morgan & Co., Inc. 1,411,000
------------------------------------------------------------------
21,400 KeyCorp. 826,575
------------------------------------------------------------------
12,800 Mellon Bank Corp. 705,600
------------------------------------------------------------------
5,100 Mercantile Bancorporation, Inc. 233,325
------------------------------------------------------------------
5,300 Meridian Bancorp, Inc. 276,925
------------------------------------------------------------------
13,300 National City Corp. 467,162
------------------------------------------------------------------
24,450 NationsBank Corp. 1,959,056
------------------------------------------------------------------
4,100 Old Kent Financial Corp. 163,488
------------------------------------------------------------------
21,300 PNC Financial Corp. 654,975
------------------------------------------------------------------
4,200 Regions Financial Corp. 184,275
------------------------------------------------------------------
5,100 Republic New York Corp. 303,450
------------------------------------------------------------------
8,000 SouthTrust Corp. 221,000
------------------------------------------------------------------
2,700 Star Banc Corp. 174,150
------------------------------------------------------------------
</TABLE>
VIRTUS STYLE MANAGER: LARGE CAP FUND
(FORMERLY, THE STOCK FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------ -----------
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------
<C> <C> <S> <C>
BANKING--CONTINUED
------------------------------------------------------------------
5,100 Summit Bancorp $ 188,700
------------------------------------------------------------------
15,400 Wachovia Corp. 689,150
------------------------------------------------------------------ -----------
Total 22,455,974
------------------------------------------------------------------ -----------
CONSUMER DURABLES--6.9%
------------------------------------------------------------------
8,700 Brunswick Corp. 200,100
------------------------------------------------------------------
34,600 Chrysler Corp. 2,153,850
------------------------------------------------------------------
97,200 Ford Motor Co. 3,341,250
------------------------------------------------------------------
13,800 Goodyear Tire & Rubber Co. 703,800
------------------------------------------------------------------
3,600 Snap-On Tools Corp. 168,300
------------------------------------------------------------------ -----------
Total 6,567,300
------------------------------------------------------------------ -----------
CONSUMER NON-DURABLES--1.8%
------------------------------------------------------------------
16,400 American Brands, Inc. 694,950
------------------------------------------------------------------
24,700 RJR Nabisco Holdings Corp. 747,175
------------------------------------------------------------------
5,800 V.F. Corp. 320,450
------------------------------------------------------------------ -----------
Total 1,762,575
------------------------------------------------------------------ -----------
CONSUMER SERVICES--0.3%
------------------------------------------------------------------
8,700 New York Times Co., Class A 252,300
------------------------------------------------------------------ -----------
ELECTRONIC TECHNOLOGY--6.6%
------------------------------------------------------------------
5,700 General Dynamics Corp. 333,450
------------------------------------------------------------------
3,550 Harris Corp. 219,656
------------------------------------------------------------------
51,500 International Business Machines Corp. 5,722,938
------------------------------------------------------------------ -----------
Total 6,276,044
------------------------------------------------------------------ -----------
ENERGY MINERALS--3.7%
------------------------------------------------------------------
28,800 Occidental Petroleum Corp. 770,400
------------------------------------------------------------------
6,900 Sun Co., Inc. 199,238
------------------------------------------------------------------
23,900 Texaco, Inc. 2,055,400
------------------------------------------------------------------
26,000 USX Corp. 500,500
------------------------------------------------------------------ -----------
Total 3,525,538
------------------------------------------------------------------ -----------
FINANCE--1.0%
------------------------------------------------------------------
18,600 American General Corp. 641,700
------------------------------------------------------------------
10,600 Bear Stearns Cos., Inc. 262,350
------------------------------------------------------------------ -----------
Total 904,050
------------------------------------------------------------------ -----------
INSURANCE--3.7%
------------------------------------------------------------------
9,800 AON Corp. 507,150
------------------------------------------------------------------
10,400 Aetna Life & Casualty Co. 785,200
------------------------------------------------------------------
6,500 Jefferson-Pilot Corp. 350,188
------------------------------------------------------------------
</TABLE>
VIRTUS STYLE MANAGER: LARGE CAP FUND
(FORMERLY, THE STOCK FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------ -----------
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------
<C> <C> <S> <C>
INSURANCE--CONTINUED
------------------------------------------------------------------
9,400 Lincoln National Corp. $ 477,050
------------------------------------------------------------------
3,300 ReliaStar Financial Corp. 149,325
------------------------------------------------------------------
11,300 SAFECO Corp. 378,550
------------------------------------------------------------------
7,700 St. Paul Cos., Inc. 427,350
------------------------------------------------------------------
6,200 Transamerica Corp. 464,225
------------------------------------------------------------------ -----------
Total 3,539,038
------------------------------------------------------------------ -----------
NON-ENERGY MINERALS--2.4%
------------------------------------------------------------------
3,900 ASARCO, Inc. 136,500
------------------------------------------------------------------
8,400 Cyprus Amax Minerals 237,300
------------------------------------------------------------------
9,800 Louisiana-Pacific Corp. 238,875
------------------------------------------------------------------
6,300 Phelps Dodge Corp. 432,338
------------------------------------------------------------------
5,800 Reynolds Metals Co. 342,925
------------------------------------------------------------------
18,400 Weyerhauser Co. 848,700
------------------------------------------------------------------ -----------
Total 2,236,638
------------------------------------------------------------------ -----------
PROCESS INDUSTRIES--4.8%
------------------------------------------------------------------
23,700 Dow Chemical Co. 2,058,937
------------------------------------------------------------------
10,700 Ethyl Corp. 102,987
------------------------------------------------------------------
2,400 Goodrich (B.F.) Co. 190,800
------------------------------------------------------------------
27,450 International Paper Co. 1,081,041
------------------------------------------------------------------
5,700 Lubrizol Corp. 168,150
------------------------------------------------------------------
5,100 Temple-Inland, Inc. 239,063
------------------------------------------------------------------
6,400 Union Camp Corp. 317,600
------------------------------------------------------------------
9,200 Westvaco Corp. 270,250
------------------------------------------------------------------
5,000 Witco Corp. 176,250
------------------------------------------------------------------ -----------
Total 4,605,078
------------------------------------------------------------------ -----------
PRODUCER MANUFACTURING--1.3%
------------------------------------------------------------------
9,800 Cooper Industries, Inc. 382,200
------------------------------------------------------------------
3,700 Cummins Engine Co., Inc. 149,388
------------------------------------------------------------------
3,700 Johnson Controls, Inc. 276,112
------------------------------------------------------------------
4,400 National Service Industries, Inc. 159,500
------------------------------------------------------------------
2,200 Olin Corp. 191,400
------------------------------------------------------------------
2,700 Timken Co. 124,538
------------------------------------------------------------------ -----------
Total 1,283,138
------------------------------------------------------------------ -----------
RETAIL TRADE--3.6%
------------------------------------------------------------------
18,078 Limited, Inc. 343,482
------------------------------------------------------------------
9,500 Melville Corp. 340,812
------------------------------------------------------------------
</TABLE>
VIRTUS STYLE MANAGER: LARGE CAP FUND
(FORMERLY, THE STOCK FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------ -----------
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------
<C> <C> <S> <C>
RETAIL TRADE--CONTINUED
------------------------------------------------------------------
20,400 Penney (J.C.) Co., Inc. $ 1,014,900
------------------------------------------------------------------
35,300 Sears, Roebuck & Co. 1,720,875
------------------------------------------------------------------ -----------
Total 3,420,069
------------------------------------------------------------------ -----------
SAVINGS & LOAN--0.6%
------------------------------------------------------------------
10,650 Ahmanson (H.F.) & Co. 258,262
------------------------------------------------------------------
12,400 Great Western Financial Corp. 299,150
------------------------------------------------------------------ -----------
Total 557,412
------------------------------------------------------------------ -----------
TECHNOLOGY SERVICES--3.8%
------------------------------------------------------------------
67,600 General Motors Corp. 3,599,700
------------------------------------------------------------------ -----------
TELEPHONE--12.2%
------------------------------------------------------------------
89,900 BellSouth Corp. 3,326,300
------------------------------------------------------------------
87,650 GTE Corp. 3,845,644
------------------------------------------------------------------
38,700 NYNEX Corp. 1,930,162
------------------------------------------------------------------
38,800 Pacific Telesis Group 1,071,850
------------------------------------------------------------------
42,600 U.S. West, Inc. 1,379,175
------------------------------------------------------------------ -----------
Total 11,553,131
------------------------------------------------------------------ -----------
TRANSPORTATION--0.7%
------------------------------------------------------------------
7,100 Consolidated Rail Corp. 508,537
------------------------------------------------------------------
7,200 Ryder Systems, Inc. 196,200
------------------------------------------------------------------ -----------
Total 704,737
------------------------------------------------------------------ -----------
UTILITY HOLDING CO.--4.4%
------------------------------------------------------------------
16,900 American Electric Power Co., Inc. 705,575
------------------------------------------------------------------
13,200 DTE Energy Co. 443,850
------------------------------------------------------------------
40,300 Edison International 690,138
------------------------------------------------------------------
10,600 Enova Corp. 242,475
------------------------------------------------------------------
20,600 Entergy Corp. 576,800
------------------------------------------------------------------
6,850 Illinova Corp. 192,656
------------------------------------------------------------------
11,500 Northeast Utilities Co. 227,125
------------------------------------------------------------------
14,400 P P & L Resources, Inc. 351,000
------------------------------------------------------------------
7,900 Pinnacle West Capital Corp. 228,113
------------------------------------------------------------------
19,500 Unicom Corp. 526,500
------------------------------------------------------------------ -----------
Total 4,184,232
------------------------------------------------------------------ -----------
UTILITIES-ELECTRIC--15.0%
------------------------------------------------------------------
10,900 Allegheny Power Systems, Inc. 331,088
------------------------------------------------------------------
13,300 Baltimore Gas & Electric Co. 367,412
------------------------------------------------------------------
8,300 CMS Energy Corp. 244,850
------------------------------------------------------------------
</TABLE>
VIRTUS STYLE MANAGER: LARGE CAP FUND
(FORMERLY, THE STOCK FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------ -----------
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------
<C> <C> <S> <C>
UTILITIES-ELECTRIC--CONTINUED
------------------------------------------------------------------
13,900 Carolina Power & Light Co. $ 517,775
------------------------------------------------------------------
13,400 Centerior Energy Corp. 107,200
------------------------------------------------------------------
21,300 Consolidated Edison Co. 678,937
------------------------------------------------------------------
9,700 DPL, Inc. 231,587
------------------------------------------------------------------
7,000 DQE, Inc. 202,125
------------------------------------------------------------------
5,500 Delmarva Power and Light Co. 116,875
------------------------------------------------------------------
15,700 Dominion Resources, Inc. 622,112
------------------------------------------------------------------
18,600 Duke Power Co. 939,300
------------------------------------------------------------------
16,800 FPL Group, Inc. 760,200
------------------------------------------------------------------
8,700 Florida Progress Corp. 296,888
------------------------------------------------------------------
23,800 Houston Industries, Inc. 514,675
------------------------------------------------------------------
5,100 Ipalco Enterprises, Inc. 136,425
------------------------------------------------------------------
5,600 Kansas City Power And Light Co. 142,800
------------------------------------------------------------------
10,800 Long Island Lighting Co. 190,350
------------------------------------------------------------------
5,000 Montana Power Co. 108,125
------------------------------------------------------------------
5,700 NIPSCO Industries, Inc. 212,325
------------------------------------------------------------------
5,900 New England Electric System 225,675
------------------------------------------------------------------
6,500 New York State Electric and Gas Corp. 152,750
------------------------------------------------------------------
13,100 (b) Niagara Mohawk Power Corp. 86,787
------------------------------------------------------------------
6,100 Northern States Power Co. 297,375
------------------------------------------------------------------
13,800 Ohio Edison Co. 312,225
------------------------------------------------------------------
3,500 Oklahoma Gas and Electric Co. 139,563
------------------------------------------------------------------
38,400 Pacific Gas & Electric Co. 868,800
------------------------------------------------------------------
25,700 PacifiCorp 536,487
------------------------------------------------------------------
20,100 Peco Energy Co. 535,162
------------------------------------------------------------------
5,800 Public Service Co. Colo 204,450
------------------------------------------------------------------
22,200 Public Service Enterprises Group, Inc. 610,500
------------------------------------------------------------------
5,800 Puget Sound Power & Light Co. 147,900
------------------------------------------------------------------
9,400 SCANA Corp. 258,500
------------------------------------------------------------------
60,300 Southern Co. 1,439,663
------------------------------------------------------------------
20,500 Texas Utilities Co. 848,188
------------------------------------------------------------------
9,300 Union Electric Co. 381,300
------------------------------------------------------------------
5,700 Western Resources, Inc. 173,850
------------------------------------------------------------------
10,000 Wisconsin Energy Corp. 283,750
------------------------------------------------------------------ -----------
Total 14,223,974
------------------------------------------------------------------ -----------
</TABLE>
VIRTUS STYLE MANAGER: LARGE CAP FUND
(FORMERLY, THE STOCK FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------------ -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------
<C> <C> <S> <C>
UTILITIES-GAS--0.7%
------------------------------------------------------------------
7,700 Pacific Enterprises $ 199,238
------------------------------------------------------------------
13,600 Panhandle Eastern Corp. 423,301
------------------------------------------------------------------ -----------
Total 622,539
------------------------------------------------------------------ -----------
TOTAL COMMON STOCKS (IDENTIFIED COST $87,374,553) 92,273,467
------------------------------------------------------------------ -----------
(A)REPURCHASE AGREEMENT--2.9%
- -----------------------------------------------------------------------------------
$2,724,891 Nikko Securities Co. International, Inc., 5.37%, dated 3/29/1996,
due 4/1/1996 2,724,891
------------------------------------------------------------------ -----------
TOTAL INVESTMENTS (IDENTIFIED COST $90,099,444)(C) $94,998,358
------------------------------------------------------------------ -----------
</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) Non-income producing security.
(c) The cost of investments for federal tax purposes amounts to $90,099,444. The
net unrealized appreciation of investments on a federal tax basis amounts to
$4,898,914 which is comprised of $6,728,868 appreciation and $1,829,954
depreciation at March 31, 1996.
Note: The categories of investments are shown as a percentage of net assets
($95,063,102) at March 31, 1996.
(See Notes which are an integral part of the Financial Statements)
VIRTUS STYLE MANAGER FUND
(FORMERLY, THE STRATEGIC STOCK FUND)
PORTFOLIO OF INVESTMENTS
MARCH 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------ -----------
<C> <C> <S> <C>
COMMON STOCKS--98.5%
- -----------------------------------------------------------------------------------
COMMERCIAL SERVICES--5.1%
------------------------------------------------------------------
5,900 ABM Industries, Inc. $ 195,437
------------------------------------------------------------------
9,000 American Business Products, Inc. 203,625
------------------------------------------------------------------
6,900 Nash Finch Co. 115,575
------------------------------------------------------------------
35,547 Ogden Corp. 693,166
------------------------------------------------------------------
37,000 Safety-Kleen Corp. 531,875
------------------------------------------------------------------
18,300 Standard Register 434,625
------------------------------------------------------------------
7,700 True North Communications, Inc. 192,500
------------------------------------------------------------------
16,309 Wallace Computer, Inc. 952,038
------------------------------------------------------------------ -----------
Total 3,318,841
------------------------------------------------------------------ -----------
CONSUMER DURABLES--4.9%
------------------------------------------------------------------
8,400 Anthony Industries, Inc. 222,600
------------------------------------------------------------------
8,500 Bassett Furniture Industries, Inc. 221,000
------------------------------------------------------------------
32,893 Fleetwood Enterprises, Inc. 814,102
------------------------------------------------------------------
12,200 Kaufman & Broad Homes Corp. 195,200
------------------------------------------------------------------
10,800 La-Z Boy Chair Co. 336,150
------------------------------------------------------------------
4,700 National Presto Industries, Inc. 188,000
------------------------------------------------------------------
4,300 Oneida Ltd. 73,638
------------------------------------------------------------------
9,900 Ryland Group, Inc. 159,638
------------------------------------------------------------------
5,800 Skyline Corp. 142,825
------------------------------------------------------------------
10,400 Stanhome, Inc. 331,500
------------------------------------------------------------------
2,500 Starrett (L.S.) Co., Class A 62,500
------------------------------------------------------------------
8,600 Sturm Ruger & Co., Inc. 331,100
------------------------------------------------------------------
16,200 Winnebago Industries, Inc. 139,725
------------------------------------------------------------------ -----------
Total 3,217,978
------------------------------------------------------------------ -----------
CONSUMER NON-DURABLES--5.1%
------------------------------------------------------------------
12,992 Block Drug, Inc., Class A 537,544
------------------------------------------------------------------
22,500 Coors Adolph Co., Class B 402,187
------------------------------------------------------------------
29,103 Dean Foods Co. 727,575
------------------------------------------------------------------
36,750 Flowers Industries, Inc. 496,125
------------------------------------------------------------------
11,200 International Multifoods Corp. 214,200
------------------------------------------------------------------
18,700 Lance, Inc. 291,019
------------------------------------------------------------------
</TABLE>
VIRTUS STYLE MANAGER FUND
(FORMERLY, THE STRATEGIC STOCK FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------ -----------
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------
<C> <C> <S> <C>
CONSUMER NON-DURABLES--CONTINUED
------------------------------------------------------------------
5,500 Oxford Industries, Inc. $ 96,938
------------------------------------------------------------------
22,300 Universal Corp. 560,288
------------------------------------------------------------------ -----------
Total 3,325,876
------------------------------------------------------------------ -----------
CONSUMER SERVICES--0.8%
------------------------------------------------------------------
9,000 Luby's Cafeterias, Inc. 208,125
------------------------------------------------------------------
12,900 Sbarro, Inc. 325,725
------------------------------------------------------------------ -----------
Total 533,850
------------------------------------------------------------------ -----------
ELECTRONIC TECHNOLOGY--1.0%
------------------------------------------------------------------
2,500 Curtiss Wright Corp. 130,000
------------------------------------------------------------------
11,600 Thiokol Corp. 508,950
------------------------------------------------------------------ -----------
Total 638,950
------------------------------------------------------------------ -----------
FINANCE--24.0%
------------------------------------------------------------------
6,600 Associated Banc Corp. 249,150
------------------------------------------------------------------
12,200 BancorpSouth, Inc. 305,000
------------------------------------------------------------------
8,200 Bankers Corp. 138,375
------------------------------------------------------------------
4,800 CCB Financial Corp. 241,200
------------------------------------------------------------------
9,435 CNB Bancshares, Inc. 273,615
------------------------------------------------------------------
26,262 Central Fidelity Banks, Inc. 892,908
------------------------------------------------------------------
14,300 Centura Banks, Inc. 525,525
------------------------------------------------------------------
3,700 Chittenden Corp. 98,975
------------------------------------------------------------------
9,600 Citizens Bancorp 290,400
------------------------------------------------------------------
9,100 Citizens Banking Corp. 277,550
------------------------------------------------------------------
9,345 Commerce Bancorp, Inc. 194,055
------------------------------------------------------------------
27,341 Compass Bancshares, Inc. 881,747
------------------------------------------------------------------
5,300 Cullen Frost Bankers, Inc. 261,025
------------------------------------------------------------------
19,600 Dauphin Deposit Corp. 588,000
------------------------------------------------------------------
14,800 Deposit Guaranty Corp. 699,300
------------------------------------------------------------------
7,300 F & M National Corp. 126,838
------------------------------------------------------------------
18,356 First American Corp. 816,842
------------------------------------------------------------------
24,885 First Commerce Corp. 821,205
------------------------------------------------------------------
12,300 First Commonwealth Financial Corp. 238,312
------------------------------------------------------------------
17,400 First Hawaiian, Inc. 480,675
------------------------------------------------------------------
11,600 First Michigan Bank Corp. 350,900
------------------------------------------------------------------
6,200 Firstbank Illinois Co. 190,650
------------------------------------------------------------------
6,700 Fort Wayne National Corp. 201,000
------------------------------------------------------------------
17,100 Fulton Financial Corp. 367,917
------------------------------------------------------------------
</TABLE>
VIRTUS STYLE MANAGER FUND
(FORMERLY, THE STRATEGIC STOCK FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------ -----------
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------
<C> <C> <S> <C>
FINANCE--CONTINUED
------------------------------------------------------------------
6,700 JSB Financial, Inc. $ 225,287
------------------------------------------------------------------
9,700 Jefferson Bankshares, Inc. 208,550
------------------------------------------------------------------
15,100 Keystone Financial, Inc. 494,525
------------------------------------------------------------------
4,300 Liberty Bancorp, Inc. 159,100
------------------------------------------------------------------
17,800 Magna Group, Inc. 411,625
------------------------------------------------------------------
8,000 Mark Twain Bancshares, Inc. 300,000
------------------------------------------------------------------
33,571 Mercantile Bankshares Corp. 881,239
------------------------------------------------------------------
12,100 Mid Am, Inc. 222,337
------------------------------------------------------------------
3,900 New York Bancorp, Inc. 91,650
------------------------------------------------------------------
9,100 One Valley Bancorp West Virginia, Inc. 285,512
------------------------------------------------------------------
10,000 Provident Bancorp, Inc. 505,000
------------------------------------------------------------------
53,200 Reliance Group Holdings, Inc. 418,950
------------------------------------------------------------------
7,970 Republic Bancorp, Inc. 91,655
------------------------------------------------------------------
3,100 S & T Bancorp, Inc. 95,325
------------------------------------------------------------------
7,400 Susquehanna Bankshares, Inc. 209,050
------------------------------------------------------------------
7,600 United Bankshares, Inc. 222,300
------------------------------------------------------------------
17,700 United Carolina Bancshares 433,650
------------------------------------------------------------------
2,600 Victoria Bankshares, Inc. 99,125
------------------------------------------------------------------
5,700 Whitney Holding Corp. 178,125
------------------------------------------------------------------
9,200 Zions Bancorp 650,900
------------------------------------------------------------------ -----------
Total 15,695,069
------------------------------------------------------------------ -----------
HEALTH TECHNOLOGY--0.2%
------------------------------------------------------------------
8,100 ADAC Laboratories 142,762
------------------------------------------------------------------ -----------
INSURANCE--5.7%
------------------------------------------------------------------
12,900 Alfa Corp. 177,375
------------------------------------------------------------------
6,500 Foremost Corp. 357,500
------------------------------------------------------------------
8,100 Fremont General Corp. 191,362
------------------------------------------------------------------
11,100 Home Beneficial Corp., Class B 277,500
------------------------------------------------------------------
16,700 (b) National Auto Credit, Inc. 252,587
------------------------------------------------------------------
24,547 Ohio Casualty Corp. 883,692
------------------------------------------------------------------
5,500 PXRE Corp. 140,250
------------------------------------------------------------------
9,100 Selective Insurance Group, Inc. 327,600
------------------------------------------------------------------
2,100 Trenwick Group, Inc. 107,100
------------------------------------------------------------------
22,000 USLIFE Corp. 646,250
------------------------------------------------------------------
</TABLE>
VIRTUS STYLE MANAGER FUND
(FORMERLY, THE STRATEGIC STOCK FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------ -----------
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------
<C> <C> <S> <C>
INSURANCE--CONTINUED
------------------------------------------------------------------
3,800 Washington National Corp. $ 101,650
------------------------------------------------------------------
11,300 Zenith National Insurance Corp. 269,788
------------------------------------------------------------------ -----------
Total 3,732,654
------------------------------------------------------------------ -----------
MANAGEMENT SERVICES--0.9%
------------------------------------------------------------------
10,900 PHH Corp. 606,312
------------------------------------------------------------------ -----------
NON-ENERGY MINERALS--2.7%
------------------------------------------------------------------
10,500 Carpenter Technology Corp. 404,250
------------------------------------------------------------------
10,800 Chaparral Steel Co. 160,650
------------------------------------------------------------------
5,100 Cleveland Cliffs, Inc. 225,675
------------------------------------------------------------------
8,600 Lukens, Inc. 213,925
------------------------------------------------------------------
4,200 Quanex Corp. 91,875
------------------------------------------------------------------
18,900 Rayonier, Inc. 685,125
------------------------------------------------------------------ -----------
Total 1,781,500
------------------------------------------------------------------ -----------
PROCESS INDUSTRIES--4.9%
------------------------------------------------------------------
6,200 Chemed Corp. 230,175
------------------------------------------------------------------
700 Chesapeake Corp. 21,175
------------------------------------------------------------------
15,600 Dexter Corp. 413,400
------------------------------------------------------------------
9,000 Guilford Mills, Inc. 220,500
------------------------------------------------------------------
5,600 Learonal 138,600
------------------------------------------------------------------
33,100 Longview Fibre Co. 558,562
------------------------------------------------------------------
10,000 O'Sullivan Corp. 110,000
------------------------------------------------------------------
8,500 Pope & Talbot, Inc. 117,937
------------------------------------------------------------------
20,980 Potlatch Corp. 896,895
------------------------------------------------------------------
8,300 Springs Industries, Inc., Class A 381,800
------------------------------------------------------------------
6,400 Stepan Chemical Co. 124,000
------------------------------------------------------------------ -----------
Total 3,213,044
------------------------------------------------------------------ -----------
PRODUCER MANUFACTURING--4.1%
------------------------------------------------------------------
7,600 Cascade Corp. 108,300
------------------------------------------------------------------
4,900 Commercial Intertech Corp. 92,488
------------------------------------------------------------------
22,300 Federal-Mogul Corp. 415,338
------------------------------------------------------------------
5,000 Hunt Manufacturers Co. 76,250
------------------------------------------------------------------
9,800 Kaman Corp., Class A 106,575
------------------------------------------------------------------
13,400 Kimball International, Inc., Class B 381,900
------------------------------------------------------------------
4,900 Manitowoc, Inc. 154,350
------------------------------------------------------------------
15,200 Miller Herman, Inc. 471,200
------------------------------------------------------------------
7,900 Simpson Industries, Inc. 74,063
------------------------------------------------------------------
</TABLE>
VIRTUS STYLE MANAGER FUND
(FORMERLY, THE STRATEGIC STOCK FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------ -----------
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------
<C> <C> <S> <C>
PRODUCER MANUFACTURING--CONTINUED
------------------------------------------------------------------
13,300 Smith (A.O.) Corp. $ 314,212
------------------------------------------------------------------
7,800 Standard Products Co. 190,125
------------------------------------------------------------------
3,700 Thomas Industries, Inc. 77,700
------------------------------------------------------------------
19,800 UNR Industries, Inc. 158,400
------------------------------------------------------------------
5,000 Zero Corp. 83,750
------------------------------------------------------------------ -----------
Total 2,704,651
------------------------------------------------------------------ -----------
REAL ESTATE INVESTMENT TRUST--0.7%
------------------------------------------------------------------
6,700 National Golf Properties, Inc. 170,012
------------------------------------------------------------------
9,400 Omega Healthcare Investors 269,075
------------------------------------------------------------------ -----------
Total 439,087
------------------------------------------------------------------ -----------
RETAIL TRADE--5.9%
------------------------------------------------------------------
5,000 Blair Corp. 126,250
------------------------------------------------------------------
8,100 CPI Corp. 129,600
------------------------------------------------------------------
9,900 Cato Corp., Class A 100,238
------------------------------------------------------------------
36,200 Family Dollar Stores, Inc. 533,950
------------------------------------------------------------------
13,200 Ingles Markets, Inc., Class A 168,300
------------------------------------------------------------------
11,300 Longs Drug Stores Corp. 533,925
------------------------------------------------------------------
29,400 Ruddick Corp. 360,150
------------------------------------------------------------------
20,400 Shopko Stores, Inc. 285,600
------------------------------------------------------------------
8,500 Smith's Food & Drug Centers, Inc., Class B 204,000
------------------------------------------------------------------
6,700 Strawbridge & Clothier, Inc., Class A 128,138
------------------------------------------------------------------
51,546 TJX Cos., Inc. 1,295,093
------------------------------------------------------------------ -----------
Total 3,865,244
------------------------------------------------------------------ -----------
SAVINGS AND LOANS--0.5%
------------------------------------------------------------------
15,600 First Financial Corp. Wisconsin 333,450
------------------------------------------------------------------ -----------
SHIPPING & LEASING--0.9%
------------------------------------------------------------------
12,800 GATX Corp. 588,800
------------------------------------------------------------------ -----------
TRANSPORTATION--1.0%
------------------------------------------------------------------
27,900 Alexander and Baldwin, Inc. 669,600
------------------------------------------------------------------ -----------
UTILITY HOLDING CO.--4.3%
------------------------------------------------------------------
8,400 CILCORP, Inc. 361,200
------------------------------------------------------------------
23,176 Cipsco, Inc. 895,173
------------------------------------------------------------------
2,700 E Town Corp. 73,575
------------------------------------------------------------------
9,300 SIG Corp., Inc. 324,338
------------------------------------------------------------------
19,000 Sierra Pacific Resources 477,375
------------------------------------------------------------------
</TABLE>
VIRTUS STYLE MANAGER FUND
(FORMERLY, THE STRATEGIC STOCK FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------ -----------
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------
<C> <C> <S> <C>
UTILITY HOLDING CO.--CONTINUED
------------------------------------------------------------------
6,300 South Jersey Industries, Inc. $ 134,663
------------------------------------------------------------------
17,900 WPL Holdings, Inc. 552,662
------------------------------------------------------------------ -----------
Total 2,818,986
------------------------------------------------------------------ -----------
UTILITIES-ELECTRIC--14.6%
------------------------------------------------------------------
33,500 Atlantic Energy, Inc. NJ 561,125
------------------------------------------------------------------
9,200 Black Hills Corp. 223,100
------------------------------------------------------------------
11,100 Central Hudson Gas & Electric Service 335,775
------------------------------------------------------------------
7,400 Central VT Public Service Corp. 111,000
------------------------------------------------------------------
13,000 Eastern Utilities Association 279,500
------------------------------------------------------------------
5,000 Empire Distribution Electric Co. 91,250
------------------------------------------------------------------
21,114 Hawaiian Electric Industries, Inc. 738,990
------------------------------------------------------------------
18,800 IES Industries, Inc. 524,050
------------------------------------------------------------------
22,600 Idaho Power Co. 655,400
------------------------------------------------------------------
3,300 Interstate Power Co. 105,188
------------------------------------------------------------------
18,200 MDU Resources Group, Inc. 418,600
------------------------------------------------------------------
10,200 Madison Gas & Electric Co. 255,000
------------------------------------------------------------------
69,879 MidAmerican Energy Co. 1,249,087
------------------------------------------------------------------
19,900 Minnesota Power and Light Co. 552,225
------------------------------------------------------------------
29,700 Nevada Power Co. 649,687
------------------------------------------------------------------
5,600 Northwestern Public Service Co. 162,400
------------------------------------------------------------------
8,700 Orange & Rockland Utilities, Inc. 312,113
------------------------------------------------------------------
34,112 Portland General Corp. 1,048,944
------------------------------------------------------------------
24,500 Rochester Gas & Electric Corp 529,813
------------------------------------------------------------------
9,000 United Illuminating Co. 331,875
------------------------------------------------------------------
12,200 WPS Resources Corp. 410,225
------------------------------------------------------------------ -----------
Total 9,545,347
------------------------------------------------------------------ -----------
UTILITIES-GAS--8.9%
------------------------------------------------------------------
8,500 Bay State Gas Co. 236,937
------------------------------------------------------------------
5,600 Connecticut Energy Corp. 107,100
------------------------------------------------------------------
6,300 Connecticut Natural Gas Corp. 146,475
------------------------------------------------------------------
9,800 Eastern Enterprises 347,900
------------------------------------------------------------------
24,677 El Paso Natural Gas 913,049
------------------------------------------------------------------
6,900 Energen Corp. 150,937
------------------------------------------------------------------
11,100 Laclede Gas Co. 252,525
------------------------------------------------------------------
7,500 New Jersey Resources Corp. 216,562
------------------------------------------------------------------
9,400 Northwest Natural Gas Co. 298,450
------------------------------------------------------------------
</TABLE>
VIRTUS STYLE MANAGER FUND
(FORMERLY, THE STRATEGIC STOCK FUND)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------------ -----------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------
UTILITIES-GAS--CONTINUED
------------------------------------------------------------------
17,200 ONEOK, Inc. $ 410,650
------------------------------------------------------------------
2,800 Pennsylvania Enterprises 108,150
------------------------------------------------------------------
22,000 Peoples Energy Corp. 712,250
------------------------------------------------------------------
18,300 Piedmont Natural Gas, Inc. 407,175
------------------------------------------------------------------
11,900 Public Service Co. North Carolina, Inc. 190,400
------------------------------------------------------------------
3,900 United Cities Gas Co. 69,225
------------------------------------------------------------------
27,300 Washington Gas Light Co. 597,188
------------------------------------------------------------------
35,600 Washington Water Power Co. 680,850
------------------------------------------------------------------ -----------
Total 5,845,823
------------------------------------------------------------------ -----------
UTILITIES-WATER--2.3%
------------------------------------------------------------------
23,014 American Water Works Co., Inc. 886,039
------------------------------------------------------------------
4,000 California Water Service Corp. 140,000
------------------------------------------------------------------
7,500 Philadelphia Suburban Corp. 173,438
------------------------------------------------------------------
20,500 United Water Resources, Inc. 269,063
------------------------------------------------------------------ -----------
Total 1,468,540
------------------------------------------------------------------ -----------
TOTAL COMMON STOCKS (IDENTIFIED COST $61,692,789) 64,486,364
------------------------------------------------------------------ -----------
(A)REPURCHASE AGREEMENT--1.2%
- -----------------------------------------------------------------------------------
$ 809,338 Nikko Securities Co. International, Inc., 5.37%, dated 3/29/1996,
due 4/1/1996 809,338
------------------------------------------------------------------ -----------
TOTAL INVESTMENTS (IDENTIFIED COST $62,502,127)(C) $65,295,702
------------------------------------------------------------------ -----------
</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) Non-income producing security.
(c) The cost of investments for federal tax purposes amounts to $62,502,127. The
net unrealized appreciation of investments on a federal tax basis amounts to
$2,793,577 which is comprised of $3,940,655 appreciation and $1,147,078
depreciation at March 31, 1996.
Note: The categories of investments are shown as a percentage of net assets
($65,470,691) at March 31, 1996.
(See Notes which are an integral part of the Financial Statements)
THE VIRGINIA MUNICIPAL BOND FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ----------- -------------------------------------------------------- ---------- ------------
<C> <S> <C> <C>
LONG-TERM MUNICIPAL SECURITIES--94.3%
- ----------------------------------------------------------------------
$ 1,000,000 Albemarle County, VA IDA, Hospital Revenue Refunding
Bonds, 5.75% (Martha Jefferson Hospital)/(Callable
10/1/2003 @ 102), 10/1/2008 A $ 1,018,310
--------------------------------------------------------
7,675,000 Big Stone Gap, VA Redevelopment & Housing Authority,
Correctional Facility Lease Revenue Bonds, 6.00%
(Wallens Ridge Development Project)/(Callable 9/1/2005 @
102), 9/1/2007 AA 8,215,550
--------------------------------------------------------
3,000,000 Chesapeake Bay Bridge & Tunnel District, VA, General
Resolution Highway Improvements Revenue Bonds, 5.50%
(FGIC INS)/(Original Issue Yield: 5.65%)/(Callable
7/1/2005 @ 102), 7/1/2006 AAA 3,074,190
--------------------------------------------------------
1,360,000 Chesapeake, VA, GO UT Bonds, 5.70% (Original Issue
Yield: 6.20%)/(Callable 8/1/2002), 8/1/2007 AA 1,422,261
--------------------------------------------------------
1,000,000 Chesapeake, VA, GO UT Refunding Bonds, 5.25% (Original
Issue Yield: 5.35%), 12/1/2006 AA 1,019,990
--------------------------------------------------------
1,500,000 Chesterfield County, VA, GO UT Refunding Bonds, 5.00%,
(Callable 3/1/2003 @ 101.50), 3/1/2006 Aaa 1,507,980
--------------------------------------------------------
1,000,000 Commonwealth of Virginia, GO UT Bonds (Series B), 5.10%,
(Callable 12/1/2003 @ 102), 12/1/2007 AAA 1,005,390
--------------------------------------------------------
4,000,000 Commonwealth of Virginia, GO UT Public Facilities Bonds
(Series A), 5.70% (Original Issue Yield:
5.75%)/(Callable 6/1/2003 @ 102), 6/1/2008 AAA 4,174,640
--------------------------------------------------------
1,000,000 Commonwealth of Virginia, GO UT Refunding Bonds (Series
A), 5.20% (Original Issue Yield: 5.25%)/(Callable
6/1/2003 @ 102), 6/1/2008 AAA 1,005,210
--------------------------------------------------------
2,545,000 Danville, VA IDA, Hospital Refunding Revenue Bonds,
6.20% (Danville Regional Medical Center)/(FGIC
INS)/(Callable 10/1/2004 @ 101)/(Original Issue Yield:
6.30%), 10/1/2009 AAA 2,697,675
--------------------------------------------------------
7,905,000 Fairfax County, VA, GO UT Bonds (Series A), 5.40% (State
Aid Withholding LOC)/(Callable 6/1/2002 @ 102)/
(Original Issue Yield: 5.50%), 6/1/2006 AAA 8,127,763
--------------------------------------------------------
1,140,000 Fairfax County, VA, Sewer Refunding Revenue Bonds,
5.30%, (Callable 11/15/2003 @ 102)/(AMBAC INS),
11/15/2006 AAA 1,161,010
--------------------------------------------------------
1,505,000 Fairfax County, VA, Sewer Refunding Revenue Bonds,
5.40%, (Callable 11/15/2003 @ 102)/(AMBAC INS),
11/15/2007 AAA 1,526,898
--------------------------------------------------------
1,000,000 Hampton Roads, VA Sanitation District, Wastewater
Refunding Revenue Bonds, 5.10%, (Callable 10/1/2003 @
102)/(Original Issue Yield: 5.15%), 10/1/2008 AA 989,530
--------------------------------------------------------
1,000,000 Henrico County, VA, GO UT Refunding Bonds, 5.20%,
(Callable 1/15/2003 @ 102)/(Original Issue Yield:
5.30%), 1/15/2007 AAA 1,009,410
--------------------------------------------------------
</TABLE>
THE VIRGINIA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ----------- -------------------------------------------------------- ---------- ------------
LONG-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
<C> <S> <C> <C>
$ 1,000,000 Henrico County, VA, GO UT Refunding Bonds, 5.20%,
(Callable 1/15/2003 @ 102)/(Original Issue Yield:
5.35%), 1/15/2008 AAA $ 1,002,930
--------------------------------------------------------
500,000 James Madison University, VA, Revenue Bonds, 5.375%,
(Callable 6/1/2003 @ 102)/(AMBAC INS)/(Original Issue
Yield: 5.481%), 6/1/2009 AAA 501,035
--------------------------------------------------------
600,000 Loudoun County, VA IDA, Lease Revenue Bonds, 5.50%
(Northern Virginia Criminal Justice)/(Callable 6/1/2003
@ 102)/(Original Issue Yield: 5.829%), 6/1/2008 Aa 618,024
--------------------------------------------------------
1,000,000 Loudoun County, VA, GO UT Refunding Bonds (Series A),
5.50%, (Callable 10/1/2003 @ 102)/(State Aid Withholding
LOC)/(Original Issue Yield: 5.649%), 10/1/2007 Aa 1,024,160
--------------------------------------------------------
1,000,000 Lynchburg, VA, GO UT Refunding Bonds, 5.00%, (Callable
4/1/2003 @ 102)/(Original Issue Yield: 5.15%), 4/1/2004 AA 1,012,830
--------------------------------------------------------
1,850,000 Lynchburg, VA, GO UT Refunding Bonds, 5.25%, (Callable
4/1/2003 @ 102)/(Original Issue Yield: 5.45%), 4/1/2007 AA 1,862,525
--------------------------------------------------------
1,835,000 Newport News, VA, GO UT Bonds (Series A), 6.10%,
(Callable 6/1/2002 @ 101.50), 6/1/2008 Aa 1,941,632
--------------------------------------------------------
1,500,000 Newport News, VA, GO UT Refunding Bonds (Series B),
5.45%, (Callable 11/1/2003 @ 102)/(State Aid Withholding
LOC), 11/1/2008 Aa 1,518,360
--------------------------------------------------------
1,500,000 Newport News, VA, GO UT Refunding Bonds (Series C),
5.20%, (Callable 6/1/2003 @ 102), 6/1/2008 Aa 1,491,075
--------------------------------------------------------
1,000,000 Norfolk, VA, GO UT Refunding Bonds, 5.25%, (Callable
2/1/2003 @ 102)/(Original Issue Yield: 5.35%), 2/1/2006 AA 1,016,540
--------------------------------------------------------
1,000,000 Norfolk, VA, GO UT Refunding Bonds, 5.25%, (Callable
6/1/2004 @ 101)/(State Aid Withholding LOC)/(Original
Issue Yield: 5.35%), 6/1/2008 AA 998,590
--------------------------------------------------------
1,245,000 Norfolk, VA, Revenue Bonds, 6.25% (MBIA Insurance
Corporation INS), 11/1/2005 AAA 1,362,839
--------------------------------------------------------
2,535,000 Portsmouth, VA, GO UT Bonds, 5.00%, (Callable 8/1/2006 @
101)/(FGIC INS), 8/1/2011 AAA 2,405,892
--------------------------------------------------------
1,000,000 Prince William County, VA, GO UT Refunding Bonds (Series
C), 5.00%, (Callable 8/1/2003 @ 102)/(State Aid
Withholding LOC)/(Original Issue Yield: 5.15%), 8/1/2007 AA 990,980
--------------------------------------------------------
1,000,000 Prince William County, VA, GO UT Refunding Bonds (Series
C), 5.10%, (Callable 8/1/2003 @ 102)/(State Aid
Withholding LOC)/(Original Issue Yield: 5.20%), 8/1/2008 AA 990,460
--------------------------------------------------------
5,145,000 Richmond, VA Metropolitan Authority, Refunding Revenue
Bonds (Series A), 6.00%, (Callable 7/15/2002 @
102)/(FGIC INS)/(Original Issue Yield: 6.249%),
7/15/2008 AAA 5,431,422
--------------------------------------------------------
</TABLE>
THE VIRGINIA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ----------- -------------------------------------------------------- ---------- ------------
LONG-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
<C> <S> <C> <C>
$ 3,375,000 Riverside, VA Regional Jail Authority, Jail Facility
Revenue Bonds, 5.625%, (Callable 7/1/2005 @ 102)/(MBIA
Insurance Corporation LOC)/(Original Issue Yield:
5.75%), 7/1/2007 AAA $ 3,507,435
--------------------------------------------------------
1,185,000 Roanoke, VA IDA, Hospital Revenue Refunding Bonds
(Series B), 6.00%, (Callable 7/1/2002 @102)/(Roanoke
Memorial Hospital)/(Original Issue Yield: 6.10%),
7/1/2007 A+ 1,222,185
--------------------------------------------------------
1,000,000 Roanoke, VA, GO UT Bonds, 4.70%, (Callable 8/1/2004 @
102), 8/1/2005 AA 979,300
--------------------------------------------------------
3,005,000 Roanoke, VA, GO UT Bonds, 5.00%, 2/1/2011 AA 2,855,171
--------------------------------------------------------
2,000,000 Upper Occoquan Sewage Authority, VA, Regional Sewage
System Refunding Revenue Bonds (Series B), 5.00%,
(Callable 2/1/2006 @ 102)/(MBIA Insurance Corporation
LOC)/(Original Issue Yield: 5.125%), 7/1/2010 AAA 1,910,460
--------------------------------------------------------
5,155,000 Virginia Beach, VA, Certificate Participation Refunding
Bonds, 5.40% (FGIC LOC)/(Original Issue Yield: 5.575%),
9/1/2009 AAA 5,205,313
--------------------------------------------------------
2,550,000 Virginia Beach, VA, GO UT Refunding Bonds, 5.40%,
7/15/2008 AA 2,578,356
--------------------------------------------------------
1,000,000 Virginia College Building Authority, Educational
Facilities Revenue Bonds, 5.50%, (Callable 4/1/2003 @
102)/ (University of Hampton Project)/(Original Issue
Yield: 5.60%), 4/1/2005 A+ 1,025,690
--------------------------------------------------------
3,000,000 Virginia State Public Building Authority, Refunding
Revenue Bonds (Series A), 4.90%, (Callable 8/1/2005 @
101)/ (Original Issue Yield: 4.95%), 8/1/2009 AA 2,832,030
--------------------------------------------------------
1,310,000 Virginia State Public Building Authority, Refunding
Revenue Bonds (Series A), 5.25%, (Callable 8/1/2003 @
101)/ (Original Issue Yield: 5.30%), 8/1/2006 AA 1,325,812
--------------------------------------------------------
4,000,000 Virginia State Public Building Authority, Revenue Bonds,
5.10%, (Callable 8/1/2005 @ 101), 8/1/2006 AA 4,004,480
--------------------------------------------------------
1,500,000 Virginia State Public Building Authority, Revenue
Refunding Bonds (Series A), 5.40%, (Callable 8/1/2003 @
101), 8/1/2008 AA 1,503,705
--------------------------------------------------------
1,550,000 Virginia State Public School Authority, Revenue Bonds
(Series A), 5.30%, (Callable 1/1/2003 @ 102), 1/1/2007 AA 1,560,120
--------------------------------------------------------
2,030,000 Virginia State Transportation Board, Revenue Bonds,
6.00%, (Callable 5/15/2004 @ 101)/(Northern Virginia
Transportation District)/(Original Issue Yield: 6.10%),
5/15/2008 AA 2,149,080
--------------------------------------------------------
</TABLE>
THE VIRGINIA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT CREDIT
OR SHARES RATING* VALUE
- ----------- -------------------------------------------------------- ---------- ------------
<C> <S> <C> <C>
LONG-TERM MUNICIPAL SECURITIES--CONTINUED
- ----------------------------------------------------------------------
$1,500,000 Virginia State Transportation Board, Transportation
Contract Revenue Bonds (Series C), 5.10%, (Callable
5/15/2003 @ 102)/(Northern Virginia Transportation
District), 5/15/2007 AA $ 1,491,105
--------------------------------------------------------
1,000,000 Virginia State Transportation Board, Transportation
Contract Revenue Refunding Bonds, 5.375%, (Callable
5/15/2003 @ 102)/(U.S. Route 58 Corridor PG-A),
5/15/2007 AA 1,012,890
-------------------------------------------------------- ------------
TOTAL LONG-TERM MUNICIPAL SECURITIES
(IDENTIFIED COST, $97,257,144) 97,288,233
-------------------------------------------------------- ------------
MUTUAL FUND SHARES--4.8%
- ----------------------------------------------------------------------
2,638,831 Goldman Sachs & Co. 2,638,831
--------------------------------------------------------
2,249,405 Municipal Fund for Temporary Investment 2,249,405
-------------------------------------------------------- ------------
TOTAL MUTUAL FUND SHARES (AT NET ASSET VALUE) 4,888,236
-------------------------------------------------------- ------------
TOTAL INVESTMENTS (IDENTIFIED COST $102,145,380)(A) $102,176,469
-------------------------------------------------------- ------------
</TABLE>
(a) The cost of investments for federal tax purposes amounts to $102,145,380.
The net unrealized appreciation of investments on a federal tax basis
amounts to $31,089 which is comprised of $960,616 appreciation and $929,527
depreciation at March 31, 1996.
* 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
($103,207,448) at March 31, 1996.
The following acronym(s) are used throughout this portfolio:
<TABLE>
<S> <C>
AMBAC -- American Municipal Bond Assurance Corporation
FGIC -- Financial Guaranty Insurance Company
GO -- General Obligation
IDA -- Industrial Development Authority
INS -- Insured
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors Assurance
UT -- Unlimited Tax
</TABLE>
(See Notes which are an integral part of the Financial Statements)
THE MARYLAND MUNICIPAL BOND FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ----------- --------------------------------------------------------- ---------- -----------
<C> <S> <C> <C>
LONG-TERM MUNICIPAL SECURITIES--94.4%
- -----------------------------------------------------------------------
$ 2,000,000 Anne Arundel County, MD, LT GO Bonds, 5.00%, 9/1/2010 AA+ $ 1,925,320
---------------------------------------------------------
1,000,000 Baltimore County, MD Revenue Authority, Revenue Refunding
Bonds, 5.25% (Original Issue Yield: 5.40%), 7/1/2008 A 1,016,410
---------------------------------------------------------
1,700,000 Baltimore County, MD, Port Facilities Revenue Bonds,
6.50% (E.I. Du Pont de Nemours & Co.), 12/1/2010 AA- 1,838,754
---------------------------------------------------------
4,000,000 Baltimore County, MD, UT GO Refunding Bonds, 5.50%
(Pension Funding), 8/1/2005 AA+ 4,200,800
---------------------------------------------------------
1,000,000 Baltimore, MD, UT GO Bonds (Series A), 5.375% (AMBAC
INS), 10/15/2008 AAA 1,000,890
---------------------------------------------------------
1,595,000 Harford County, MD, UT GO Bonds, 5.00% (Original Issue
Yield: 5.15%), 3/1/2011 AA- 1,519,923
---------------------------------------------------------
1,350,000 Howard County, MD, UT GO Refunding Bonds (Series A),
5.25% (Original Issue Yield: 5.45%), 8/15/2007 AA+ 1,367,375
---------------------------------------------------------
2,000,000 Maryland National Capital Park & Planning Commission,
Park Acquisition & Development Refunding UT GO Bonds
Series S-2, 5.125% (Original Issue Yield: 5.20%),
7/1/2009 AA 1,971,300
---------------------------------------------------------
3,000,000 Maryland State & Local Facilities, UT GO Bonds, 5.60%
(Original Issue Yield: 5.65%), 3/15/2008 AAA 3,111,660
---------------------------------------------------------
1,000,000 Maryland State Health & Higher Educational Facilities,
Refunding Revenue Bonds, 5.30% (Francis Scott Key Medical
Center)/(FGIC INS)/(Original Issue Yield: 5.40%),
7/1/2008 AAA 995,900
---------------------------------------------------------
500,000 Maryland State Health & Higher Educational Facilities,
Refunding Revenue Bonds, 5.30% (Northwest Hospital
Center, Inc.)/(AMBAC INS)/(Original Issue Yield: 5.45%),
7/1/2006 AAA 507,080
---------------------------------------------------------
500,000 Maryland State Transportation Authority, Refunding
Revenue Bonds, 5.70% (Original Issue Yield: 5.80%),
7/1/2005 A+ 527,345
---------------------------------------------------------
850,000 Maryland State Transportation Authority, Refunding
Revenue Bonds, 5.80% (Original Issue Yield: 5.90%),
7/1/2006 A+ 900,116
---------------------------------------------------------
2,000,000 Maryland State, State & Local Facilities UT GO Bonds
(Second Series), 5.00% (Original Issue Yield: 5.10%),
10/15/2008 AAA 1,977,020
---------------------------------------------------------
1,020,000 Maryland Water Quality Financing Administrative Revolving
Loan Fund, Revenue Bonds (Series A), 6.30% (Original
Issue Yield: 6.40%), 9/1/2009 AA 1,093,175
---------------------------------------------------------
520,000 Montgomery County, MD, UT GO Refunding Bonds (Series A),
5.75% (Original Issue Yield: 5.85%), 7/1/2006 AAA 554,174
---------------------------------------------------------
3,700,000 Montgomery County, MD, UT GO Refunding Bonds (Series A),
5.80% (Original Issue Yield: 5.90%), 7/1/2007 AAA 3,943,904
---------------------------------------------------------
</TABLE>
THE MARYLAND MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OR CREDIT
SHARES RATING* VALUE
- ----------- --------------------------------------------------------- ---------- -----------
<C> <S> <C> <C>
LONG-TERM MUNICIPAL SECURITIES--CONTINUED
- -----------------------------------------------------------------------
$ 1,000,000 Ocean City, MD, UT GO Refunding Bonds, 5.50% (MBIA
Insurance Corporation LOC), 3/15/2009 AAA $ 1,007,220
---------------------------------------------------------
750,000 Prince George's County, MD, Certificates of
Participation, 5.90% (Real Estate Acquisition PG
II)/(MBIA Insurance Corporation LOC)/(Original Issue
Yield: 6.00%), 9/15/2009 AAA 783,127
---------------------------------------------------------
500,000 Prince George's County, MD, UT GO Bonds, 5.50%
(Stormwater Management)/(Original Issue Yield: 5.55%),
3/15/2008 AA 506,870
---------------------------------------------------------
1,935,000 Prince George's County, MD IDA, Lease Revenue Bonds,
6.00% (Hyattsville District Court Facility)/(Original
Issue Yield: 6.10%), 7/1/2009 AA 2,051,139
---------------------------------------------------------
1,425,000 Rockville, MD, UT GO Revenue Refunding Bonds, 4.90%
(Original Issue Yield: 5.00%), 4/15/2007 AA+ 1,392,781
---------------------------------------------------------
1,000,000 University of Maryland, System Auxiliary Facilities &
Tuition Refunding Revenue Bonds (Series C), 4.90%
(Original Issue Yield: 4.95%), 10/1/2008 AA+ 966,330
---------------------------------------------------------
2,880,000 University of Maryland, System Auxiliary Facilities &
Tuition Revenue Bonds (Series A), 5.40% (Original Issue
Yield: 5.45%), 4/1/2009 AA+ 2,899,699
---------------------------------------------------------
1,000,000 University of Maryland, System Auxiliary Facility &
Tuition Refunding Revenue Bonds (Series C), 5.00%,
10/1/2009 AA+ 973,670
---------------------------------------------------------
500,000 University of Maryland, System Auxiliary Facility &
Tuition Revenue Bonds (Series A), 5.30%, 4/1/2007 AA+ 506,536
---------------------------------------------------------
1,000,000 Washington County, MD Sanitation District, UT GO
Refunding Revenue Bonds (Series F), 5.25% (FGIC LOC),
1/1/2007 AAA 1,009,350
--------------------------------------------------------- -----------
TOTAL LONG-TERM MUNICIPAL SECURITIES
(AT IDENTIFIED COST $40,475,505) 40,547,868
--------------------------------------------------------- -----------
MUTUAL FUND SHARES--4.8%
- -----------------------------------------------------------------------
1,318,870 Goldman Sachs Institutional Tax Exempt 1,318,870
---------------------------------------------------------
732,760 Municipal Fund for Temporary Investment 732,760
--------------------------------------------------------- -----------
TOTAL MUTUAL FUND SHARES (AT NET ASSET VALUE) 2,051,630
--------------------------------------------------------- -----------
TOTAL INVESTMENTS (IDENTIFIED COST $42,527,135)(A) $42,599,498
--------------------------------------------------------- -----------
</TABLE>
(a) The cost of investments for federal tax purposes amounts to $42,527,135. The
net unrealized appreciation of investments on a federal tax basis amounts to
$72,362 which is comprised of $418,907 appreciation and $346,545
depreciation at March 31, 1996.
* 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
($42,969,337) at March 31, 1996.
THE MARYLAND MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
The following acronyms are used throughout this portfolio:
<TABLE>
<S> <C>
AMBAC -- American Municipal Bond Assurance Corporation
FGIC -- Financial Guaranty Insurance Company
GO -- General Obligation
IDA -- Industrial Development Authority
INS -- Insured
LOC -- Letter of Credit
LT -- Limited Tax
MBIA -- Municipal Bond Investors Assurance
UT -- Unlimited Tax
</TABLE>
(See Notes which are an integral part of the Financial Statements)
THE TREASURY MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ------------ ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
U.S. TREASURY--60.3%
- -------------------------------------------------------------------------------------
TREASURY BILLS--27.5%
----------------------------------------------------------------
$113,486,000 4/4/1996-6/13/1996 $113,019,921
---------------------------------------------------------------- ------------
TREASURY NOTES--32.8%
----------------------------------------------------------------
134,000,000 4.375%-9.375%, 4/15/1996-1/31/1997 134,846,268
---------------------------------------------------------------- ------------
TOTAL U.S. TREASURY 247,866,189
---------------------------------------------------------------- ------------
(A) REPURCHASE AGREEMENTS--39.4%
- -------------------------------------------------------------------------------------
40,000,000 Bear, Stearns & Co., Inc., 5.40%, dated 3/28/1996, due 4/2/1996 40,000,000
----------------------------------------------------------------
30,000,000 CS First Boston Corp., 5.43%, dated 3/26/1996, due 4/2/1996 30,000,000
----------------------------------------------------------------
35,000,000 Nikko Securities Co. International Inc., 5.40%, dated 3/29/1996,
due 4/1/1996 35,000,000
----------------------------------------------------------------
57,167,414 Prudential Securities, Inc., 5.375%, dated 3/29/1996, due
4/1/1996 57,167,414
---------------------------------------------------------------- ------------
TOTAL REPURCHASE AGREEMENTS 162,167,414
---------------------------------------------------------------- ------------
TOTAL INVESTMENTS (AT AMORTIZED COST)(B) $410,033,603
---------------------------------------------------------------- ------------
</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.
Note: The categories of investments are shown as a percentage of net assets
($411,114,084) at March 31, 1996.
(See Notes which are an integral part of the Financial Statements)
THE MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ---------------------------------------------------------------- ------------
<C> <C> <S> <C>
*COMMERCIAL PAPER--30.1%
- ------------------------------------------------------------------------------------
AEROSPACE--1.9%
----------------------------------------------------------------
$ 5,000,000 Rockwell International Corp., 5.352%, 4/30/1996 $ 4,978,572
---------------------------------------------------------------- ------------
BANKING-FINANCE--13.9%
----------------------------------------------------------------
3,334,000 Banc One Corp., 5.344%, 6/12/1996 3,298,793
----------------------------------------------------------------
5,000,000 Banc One Funding Corp., 5.411%, 4/15/1996 4,989,636
----------------------------------------------------------------
5,000,000 J.P. Morgan & Co., Inc., 5.077%, 9/3/1996 4,893,438
----------------------------------------------------------------
9,000,000 NationsBank Corp., 5.162%-5.351%, 4/22/1996-5/10/1996 8,964,977
----------------------------------------------------------------
5,705,000 Republic New York Corp., 5.261%-5.270%, 4/30/1996-6/19/1996 5,668,976
----------------------------------------------------------------
8,000,000 SunTrust Banks, Inc., 5.228%-5.315%, 4/12/1996-4/19/1996 7,984,133
---------------------------------------------------------------- ------------
Total 35,799,953
---------------------------------------------------------------- ------------
CONSUMER SERVICES--1.9%
----------------------------------------------------------------
5,000,000 Disney (Walt) Holding Co., 5.278%, 5/17/1996 4,966,586
---------------------------------------------------------------- ------------
ELECTRONIC--1.5%
----------------------------------------------------------------
4,000,000 Hewlett-Packard Co., 5.101%-5.246%, 4/25/1996-7/19/1996 3,962,816
---------------------------------------------------------------- ------------
FINANCIAL SERVICES--8.8%
----------------------------------------------------------------
2,000,000 American Express Credit Corp., 5.363%-5.364%, 8/2/1996 1,964,467
----------------------------------------------------------------
11,000,000 Marsh & McLennan Cos., Inc., 5.117%-5.195%, 5/10/1996-10/25/1996 10,800,146
----------------------------------------------------------------
5,000,000 McGraw-Hill Cos., Inc., 5.572%, 8/16/1996 4,898,201
----------------------------------------------------------------
3,000,000 Transamerica Corp., 5.604%, 4/4/1996 2,998,655
----------------------------------------------------------------
2,000,000 Transamerica Finance Corp., 5.234%, 7/15/1996 1,970,250
---------------------------------------------------------------- ------------
Total 22,631,719
---------------------------------------------------------------- ------------
OIL/GAS--2.1%
----------------------------------------------------------------
5,600,000 Texaco, Inc., 5.001%-5.085%, 11/1/1996-11/15/1996 5,434,785
---------------------------------------------------------------- ------------
TOTAL COMMERCIAL PAPER 77,774,431
---------------------------------------------------------------- ------------
CORPORATE NOTES--34.7%
- ------------------------------------------------------------------------------------
BANKING-FINANCE--4.7%
----------------------------------------------------------------
5,000,000 J.P. Morgan & Co., Inc., 6.200%, 5/13/1996 5,003,530
----------------------------------------------------------------
385,000 NCNB Corp., 8.500%, 11/1/1996 391,027
----------------------------------------------------------------
1,000,000 NationsBank Corp., 7.500%, 2/15/1997 1,018,299
----------------------------------------------------------------
5,645,000 Security Pacific Corporation, 7.750%-9.600%, 5/14/1996-12/1/1996 5,698,036
---------------------------------------------------------------- ------------
Total 12,110,892
---------------------------------------------------------------- ------------
</TABLE>
THE MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------
CORPORATE NOTES--CONTINUED
- ------------------------------------------------------------------------------------
<C> <C> <S> <C>
FINANCE-AUTOMOTIVE--3.2%
----------------------------------------------------------------
$ 2,300,000 Associates Corp. of North America, 4.750%-8.375%, 6/1/1996-
10/15/1996 $ 2,308,653
----------------------------------------------------------------
6,000,000 Ford Motor Credit Co., 8.250%-8.875%, 5/15/1996-8/1/1996 6,036,791
---------------------------------------------------------------- ------------
Total 8,345,444
---------------------------------------------------------------- ------------
FINANCE-CONSUMER LOAN--0.6%
----------------------------------------------------------------
1,500,000 Commercial Credit Group, Inc., 8.000%, 9/1/1996 1,512,873
---------------------------------------------------------------- ------------
FINANCIAL SERVICES--9.8%
----------------------------------------------------------------
1,600,000 General Electric Capital Corp., 8.750%, 11/26/1996 1,631,569
----------------------------------------------------------------
3,000,000 John Deere Capital Corp., 4.625%, 9/2/1996 2,984,513
----------------------------------------------------------------
6,790,000 International Lease Finance Corp., 6.375%-7.900%, 10/1/1996-
11/1/1996 6,839,370
----------------------------------------------------------------
5,000,000 Norwest Corp. Medium Term Note, 4.860%, 6/28/1996 4,996,303
----------------------------------------------------------------
5,850,000 Norwest Financial, Inc., Medium Term Note, 6.250%-8.750%,
4/10/1996-2/15/1997 5,866,425
----------------------------------------------------------------
2,940,000 Transamerica Finance Corp., 5.850%-8.125%, 7/15/1996-10/15/1996 2,959,086
---------------------------------------------------------------- ------------
Total 25,277,266
---------------------------------------------------------------- ------------
OIL/GAS--1.4%
----------------------------------------------------------------
3,500,000 Texaco Capital, Inc., 9.000%, 11/15/1996 3,570,270
---------------------------------------------------------------- ------------
OTHER--0.4%
----------------------------------------------------------------
1,000,000 Vepco, Medium Term Note, 9.450%, 5/20/1996 1,004,554
---------------------------------------------------------------- ------------
PROCESS INDUSTRIES--1.2%
----------------------------------------------------------------
3,000,000 Du Pont (E.I.) de Nemours & Co., 7.930%-8.450%, 8/15/1996-
10/15/1996 3,044,955
---------------------------------------------------------------- ------------
RESTAURANT/FOOD SERVICE--7.2%
----------------------------------------------------------------
8,000,000 PepsiCo, Inc., 7.000%-7.875%, 8/15/1996-11/15/1996 8,063,150
----------------------------------------------------------------
10,500,000 Philip Morris Cos., Inc., 8.875%, 7/1/1996 10,581,266
---------------------------------------------------------------- ------------
Total 18,644,416
---------------------------------------------------------------- ------------
SECURITIES--6.2%
----------------------------------------------------------------
12,000,000 Bear Stearns & Co., Inc., 5.085%-5.233%, 4/26/1996-6/27/1996 11,883,444
----------------------------------------------------------------
3,600,000 Merrill Lynch, Pierce, Fenner & Smith, Inc., 4.750%-5.00%,
6/24/1996-12/15/1996 3,590,347
----------------------------------------------------------------
500,000 Morgan Stanley Group, Inc., 8.875%, 4/1/1996 500,000
---------------------------------------------------------------- ------------
Total 15,973,791
---------------------------------------------------------------- ------------
TOTAL CORPORATE NOTES 89,484,461
---------------------------------------------------------------- ------------
</TABLE>
THE MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------------
GOVERNMENT AGENCIES--22.6%
- ------------------------------------------------------------------------------------
<C> <C> <S> <C>
$ 950,000 Federal Home Loan Bank, 5.56%, 10/25/1996 $ 950,590
----------------------------------------------------------------
2,000,000 ** Federal National Mortgage Association, 5.300%, 6/14/1996 2,000,859
----------------------------------------------------------------
55,250,000 ** Student Loan Marketing Association, 5.310%-5.470%, 4/2/1996 55,289,742
---------------------------------------------------------------- ------------
TOTAL GOVERNMENT AGENCIES 58,241,191
---------------------------------------------------------------- ------------
(A) REPURCHASE AGREEMENTS--12.6%
- ------------------------------------------------------------------------------------
15,000,000 Nikko Securities Co. International, Inc., 5.400%, dated
3/29/1996, due 4/1/1996 15,000,000
----------------------------------------------------------------
17,549,312 Prudential Securities, Inc., 5.375%, dated 3/29/1996, due
4/1/1996 17,549,312
---------------------------------------------------------------- ------------
TOTAL REPURCHASE AGREEMENTS 32,549,312
---------------------------------------------------------------- ------------
TOTAL INVESTMENTS (AT AMORTIZED COST)(B) $258,049,395
---------------------------------------------------------------- ------------
</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 rate for interest bearing issues.
** Current rate and next reset date shown.
Note: The categories of investments are shown as a percentage of net assets
($258,108,309) at March 31, 1996.
(See Notes which are an integral part of the Financial Statements)
THE TAX-FREE MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
MARCH 31, 1996
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
- ----------- --------------------------------------------------------- ---------- -----------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--99.9%
- -----------------------------------------------------------------------
ALASKA--4.7%
---------------------------------------------------------
$ 4,000,000 Alaska State Housing Finance Corp., Revenue Bonds (Series
C) Weekly VRDNs (Swiss Bank Capital Markets LOC) A+ $ 4,000,000
--------------------------------------------------------- -----------
ARIZONA--13.0%
---------------------------------------------------------
7,100,000 Arizona Health Facilities Authority, Revenue Bonds Weekly
VRDNs (Pooled Loan Program)/(FGIC INS)/(Chemical Bank,
New York LIQ) AAA 7,100,000
---------------------------------------------------------
2,000,000 Arizona State Transportation Board, Highway Refunding
Revenue Bonds, 7.90% Bonds, 7/1/1996 (@102) AAA 2,060,901
---------------------------------------------------------
2,000,000 Arizona State Transportation Board, Refunding Revenue
Bonds, 3.50% Bonds (Maricopa County, AZ Regional Area
Roads)/(AMBAC INS), 7/1/1996 AAA 2,001,443
--------------------------------------------------------- -----------
Total 11,162,344
--------------------------------------------------------- -----------
FLORIDA--6.2%
---------------------------------------------------------
2,500,000 Manatee County, FL, Water & Sewer Revenue Bonds, 7.625%
Bonds (MBIA Insurance Corporation INS)/(United States
Treasury PRF), 10/1/1996 (@102) AAA 2,600,797
---------------------------------------------------------
2,655,000 Palm Beach County, FL School District, 4.50% TANs,
9/27/1996 SP-1+ 2,669,645
--------------------------------------------------------- -----------
Total 5,270,442
--------------------------------------------------------- -----------
ILLINOIS--9.3%
---------------------------------------------------------
4,200,000 Illinois Health Facilities Authority, Revenue Bonds
(Series E) Weekly VRDNs (Hospital Sisters Service)/(MBIA
Insurance Corporation INS)/(Morgan Guaranty Trust Co.,
New York LIQ) AAA 4,200,000
---------------------------------------------------------
3,800,000 Illinois Health Facilities Authority, Revenue Bonds
(Series E) Weekly VRDNs (MBIA Insurance Corporation
INS)/(Morgan Guaranty Trust Co., New York LIQ) AAA 3,800,000
--------------------------------------------------------- -----------
Total 8,000,000
--------------------------------------------------------- -----------
MARYLAND--7.6%
---------------------------------------------------------
3,000,000 Maryland State Health & Higher Educational Facilities,
Revenue Bonds Weekly VRDNs (Greater Baltimore Medical
Center)/(First National Bank of Maryland, Baltimore LOC) A1 3,000,000
---------------------------------------------------------
3,500,000 Maryland State Health & Higher Educational Facilities,
Revenue Bonds Weekly VRDNs (Mercy Medical Center) A 3,500,000
--------------------------------------------------------- -----------
Total 6,500,000
--------------------------------------------------------- -----------
MISSOURI--5.2%
---------------------------------------------------------
4,500,000 Missouri State HEFA, Revenue Bonds (Series C) Weekly
VRDNs (SSM Health Care)/(MBIA Insurance Corporation
INS)/(Credit Suisse Financial Products LIQ) AAA 4,500,000
--------------------------------------------------------- -----------
</TABLE>
THE TAX-FREE MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
-----------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- -----------------------------------------------------------------------
<C> <S> <C> <C>
NEW MEXICO--1.8%
---------------------------------------------------------
$ 1,500,000 Albuquerque, NM, GO UT Bonds (Series A), 5.20% Bonds,
7/1/1996 AA $ 1,505,621
--------------------------------------------------------- -----------
NORTH CAROLINA--7.6%
---------------------------------------------------------
1,250,000 Mecklenburg County, NC, Public Improvement UT GO Bonds,
6.20% Bonds (United States Treasury COL), 1/1/1997 AAA 1,276,543
---------------------------------------------------------
5,200,000 Winston-Salem, NC, SFM Refunding Revenue
Bonds Weekly VRDNs A1 5,200,000
--------------------------------------------------------- -----------
Total 6,476,543
--------------------------------------------------------- -----------
OHIO--14.9%
---------------------------------------------------------
9,336,000 Clermont County, OH Hospital Facilities, Revenue Bonds
(Series B) Weekly VRDNs (Mercy Health Systems) A+ 9,336,000
---------------------------------------------------------
3,400,000 Ohio State University, Revenue Bonds Weekly VRDNs AA- 3,400,000
--------------------------------------------------------- -----------
Total 12,736,000
--------------------------------------------------------- -----------
PENNSYLVANIA--5.3%
---------------------------------------------------------
4,500,000 Montgomery County, PA IDA Weekly VRDNs
(Plymouth Woods)/(PNC Bank, N.A. LOC) 4,500,000
--------------------------------------------------------- -----------
SOUTH CAROLINA--1.2%
---------------------------------------------------------
1,000,000 Anderson County, SC, Industrial Revenue Bonds Weekly
VRDNs (Belton Industries, Inc.) 1,000,000
--------------------------------------------------------- -----------
TENNESSEE--5.9%
---------------------------------------------------------
3,000,000 Greenville, TN IDR, Refunding Bonds Weekly VRDNs
(Pet, Inc. Project)/(PNC Bank, N.A. LOC) A1 3,000,000
---------------------------------------------------------
2,000,000 Shelby County, TN, Refunding GO UT Bonds, 6.625% TRANs,
8/1/1996 AA+ 2,054,273
--------------------------------------------------------- -----------
Total 5,054,273
--------------------------------------------------------- -----------
TEXAS--7.3%
---------------------------------------------------------
4,750,000 Lower Neches Valley, TX, Refunding Revenue Bonds, 3.10%
TOBs (Chevron U.S.A., Inc.), Optional Tender 8/15/1996 AA 4,750,000
---------------------------------------------------------
1,500,000 Texas State, (Series 1995A), 4.75% TRANs, 8/30/1996 1,508,182
--------------------------------------------------------- -----------
Total 6,258,182
--------------------------------------------------------- -----------
</TABLE>
THE TAX-FREE MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
-----------
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- -----------------------------------------------------------------------
<C> <S> <C> <C>
VIRGINIA--9.9%
---------------------------------------------------------
$ 2,300,000 Fairfax County, VA IDA, Refunding Revenue Bonds (Series
A) Weekly VRDNs (Fairfax Hospital System) AA- $ 2,300,000
---------------------------------------------------------
2,000,000 Norfolk, VA, UT GO Refunding Bonds, 4.30% Bonds, 6/1/1996 AA 2,003,569
---------------------------------------------------------
2,000,000 Virginia State Public School Authority, Refunding Revenue
Bonds (Series B), 4.00% Bonds, 1/1/1997 AA 2,010,226
---------------------------------------------------------
2,100,000 Virginia State Public School Authority, Revenue Bonds
(Series B), 7.15% Bonds (United States Treasury COL),
1/1/1997 (@102) AAA 2,200,205
--------------------------------------------------------- -----------
Total 8,514,000
--------------------------------------------------------- -----------
TOTAL INVESTMENTS (AT AMORTIZED COST)(A) $85,477,405
--------------------------------------------------------- -----------
</TABLE>
(a) Also represents cost for federal tax purposes.
* Please refer to the Appendix of the Statement of Additional Information for an
explanation of the credit ratings.
Note: The categories of investments are shown as a percentage of net assets
($85,557,936) at March 31, 1996.
The following acronym(s) are used throughout this portfolio:
<TABLE>
<S> <C>
AMBAC -- American Municipal Bond Assurance Corporation
COL -- Collateralized
FGIC -- Financial Guaranty Insurance Company
GO -- General Obligation
HEFA -- Health and Education Facilities Authority
IDA -- Industrial Development Authority
IDR -- Industrial Development Revenue
INS -- Insured
LIQ -- Liquidity Agreement
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors Assurance
PRF -- Prerefunded
SFM -- Single Family Mortgage
TAN -- Tax Anticipation Notes
TOBs -- Tender Option Bonds
TRANs -- Tax and Revenue Anticipation Notes
UT -- Unlimited Tax
VRDNs -- Variable Rate Demand Notes
</TABLE>
(See Notes which are an integral part of the Financial Statements)
THE VIRTUS FUNDS
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VIRTUS STYLE VIRTUS STYLE
THE U.S. MANAGER: LARGE MANAGER FUND THE
GOVERNMENT CAP FUND (FORMERLY, THE THE VIRGINIA MARYLAND
SECURITIES (FORMERLY, THE STRATEGIC MUNICIPAL MUNICIPAL
FUND STOCK FUND) STOCK FUND) BOND FUND BOND FUND
------------ -------------- -------------- ------------ -----------
<S> <C> <C> <C> <C> <C>
ASSETS:
- ---------------------------------
Investments in securities, at
value $212,508,094 $94,998,358 65,295,702 $102,176,469 $42,599,498
- ---------------------------------
Cash 183 -- -- -- --
- ---------------------------------
Income receivable 3,833,132 251,343 221,301 1,460,893 554,732
- ---------------------------------
Receivable for shares sold 111,227 5,200 20,000 77,996 20,399
- --------------------------------- ------------ ----------- ----------- ----------- -----------
Total assets 216,452,636 95,254,901 65,537,003 103,715,358 43,174,629
- --------------------------------- ------------ ----------- ----------- ------------ -----------
LIABILITIES:
- ---------------------------------
Payable for shares redeemed 66,512 84,913 -- 23,203 --
- ---------------------------------
Income distribution payable 1,110,100 -- -- 326,730 122,526
- ---------------------------------
Payable to Adviser -- -- 41,596 -- --
- ---------------------------------
Payable to Distributor -- 11,902 -- -- --
- ---------------------------------
Accrued expenses 203,631 94,984 24,716 157,977 82,766
- --------------------------------- ------------ ----------- ----------- ------------ -----------
Total liabilities 1,380,243 191,799 66,312 507,910 205,292
- --------------------------------- ------------ ----------- ----------- ------------ -----------
NET ASSETS CONSIST OF:
- ---------------------------------
Paid in capital 230,658,927 80,566,535 60,713,441 102,612,393 42,898,627
- ---------------------------------
Net unrealized appreciation
(depreciation) of investments (3,849,977) 4,898,914 2,793,575 31,089 72,363
- ---------------------------------
Accumulated net realized gain
(loss) on investments (11,736,557) 9,527,158 1,887,283 563,966 (1,653)
- ---------------------------------
Undistributed net investment
income -- 70,495 76,392 -- --
- --------------------------------- ------------ ----------- ----------- ------------ -----------
TOTAL NET ASSETS $215,072,393 $95,063,102 $65,470,691 $103,207,448 $42,969,337
- --------------------------------- ------------ ----------- ----------- ------------ -----------
NET ASSET VALUE and Offering
Price Per Share:
(Net Assets/Shares Outstanding)
- ---------------------------------
Trust Shares $10.00 $13.40 -- $10.75 $10.65
- --------------------------------- ------------ ----------- ----------- ------------ -----------
Investment Shares $10.00 $13.40 $10.85 $10.75 $10.65
- --------------------------------- ------------ ----------- ----------- ------------ -----------
Redemption Proceeds Per Share:
Investment Shares* $ 9.80** $ 13.13** $ 10.63** $ 10.54** $ 10.44**
- --------------------------------- ------------ ----------- ----------- ------------ -----------
SHARES OUTSTANDING
- ---------------------------------
Trust Shares 9,568,438 3,321,997 -- 3,016,003 852,539
- ---------------------------------
Investment Shares 11,943,581 3,771,489 6,034,452 6,581,956 3,182,033
- --------------------------------- ------------ ----------- ----------- ------------ -----------
Total Shares Outstanding 21,512,019 7,093,486 6,034,452 9,597,959 4,034,572
- --------------------------------- ------------ ----------- ----------- ------------ -----------
Investments, at identified and
tax costs $216,358,071 $90,099,444 $62,502,127 $102,145,380 $42,527,135
- --------------------------------- ------------ ----------- ----------- ------------ -----------
</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
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THE TREASURY THE THE TAX-FREE
MONEY MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS:
- -------------------------------------------
Investments in repurchase agreements $162,167,414 $ 32,549,312 $ --
- -------------------------------------------
Investments in securities 247,866,189 225,500,083 85,477,405
- ------------------------------------------- ------------ ------------ -----------
Total investments in securities, at value 410,033,603 258,049,395 85,477,405
- -------------------------------------------
Cash 3,776 -- --
- -------------------------------------------
Income receivable 2,967,850 2,181,039 705,536
- -------------------------------------------
Deferred expenses -- -- 7,569
- ------------------------------------------- ------------ ------------ -----------
Total assets 413,005,229 260,230,434 86,190,510
- ------------------------------------------- ------------ ------------ -----------
LIABILITIES:
- -------------------------------------------
Payable for investments purchased -- 973,482 --
- -------------------------------------------
Income distribution payable 1,587,809 972,064 265,488
- -------------------------------------------
Payable to Bank -- 45,031 227,292
- -------------------------------------------
Accrued expenses 303,336 131,548 139,794
- ------------------------------------------- ------------ ------------ -----------
Total liabilities 1,891,145 2,122,125 632,574
- ------------------------------------------- ------------ ------------ -----------
TOTAL NET ASSETS $411,114,084 $258,108,309 $85,557,936
- ------------------------------------------- ------------ ------------ -----------
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 245,826,453 168,500,954 --
- -------------------------------------------
Investment Shares 165,454,563 89,607,355 85,557,936
- ------------------------------------------- ------------ ------------ -----------
Total Shares Outstanding 411,281,016 258,108,309 85,557,936
- ------------------------------------------- ------------ ------------ -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
THE VIRTUS FUNDS
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VIRTUS STYLE VIRTUS STYLE
THE U.S. MANAGER: LARGE MANAGER FUND THE THE
GOVERNMENT CAP FUND (FORMERLY, THE VIRGINIA MARYLAND
SECURITIES (FORMERLY, THE STRATEGIC MUNICIPAL MUNICIPAL
FUND STOCK FUND) STOCK FUND) BOND FUND BOND FUND
----------- --------------- -------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
- --------------------------------
Dividends $ -- $ 1,339,779 $ 1,015,781 $ -- $ --
- --------------------------------
Interest 8,012,778 111,233 42,040 2,668,816 1,083,498
- -------------------------------- ----------- ----------- ----------- ----------- ----------
Total income 8,012,778 1,451,012 1,057,821 2,668,816 1,083,498
- -------------------------------- ----------- ----------- ----------- ----------- ----------
EXPENSES:
- --------------------------------
Investment advisory fee 826,927 344,898 341,646 392,448 161,021
- --------------------------------
Administrative personnel and
services fee 111,501 46,499 56,353 52,933 30,167
- --------------------------------
Custodian fees 33,071 23,842 30,501 20,096 11,663
- --------------------------------
Transfer and dividend disbursing
agent fees and expenses 66,400 32,596 5,241 35,597 29,672
- --------------------------------
Directors'/Trustees' fees 1,546 1,107 2,148 1,001 1,188
- --------------------------------
Auditing fees 10,341 8,870 -- 8,621 8,583
- --------------------------------
Legal fees 4,511 4,705 6,726 4,699 5,045
- --------------------------------
Portfolio accounting fees 36,569 30,673 24,615 45,494 37,979
- --------------------------------
Distribution services fee 149,276 59,161 -- 89,186 41,890
- --------------------------------
Share registration costs 15,700 22,203 -- 13,628 14,327
- --------------------------------
Printing and postage 10,641 9,320 13,965 9,756 8,330
- --------------------------------
Insurance premiums 3,949 3,215 3,565 3,276 3,148
- --------------------------------
Miscellaneous 6,745 4,854 858 3,761 2,610
- -------------------------------- ----------- ----------- ----------- ----------- ----------
Total expenses 1,277,177 591,943 485,618 680,496 355,623
- -------------------------------- ----------- ----------- ----------- ----------- ----------
Waivers and reimbursements--
- --------------------------------
Waiver of investment advisory
fee (202,813) (45,597) (211,974) (61,487) (74,225)
- --------------------------------
Reimbursement of other operating
expenses (1,315) -- -- -- (524)
- -------------------------------- ----------- ----------- ----------- ----------- ----------
Total waivers and
reimbursements (204,128) (45,597) (211,974) (61,487) (74,749)
- -------------------------------- ----------- ----------- ----------- ----------- ----------
Net expenses 1,073,049 546,346 273,644 619,009 280,874
- -------------------------------- ----------- ----------- ----------- ----------- ----------
Net investment
income 6,939,729 904,666 784,177 2,049,807 802,624
- -------------------------------- ----------- ----------- ----------- ----------- ----------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
- --------------------------------
Net realized gain (loss) on
investments (677,723) 10,334,252 3,296,520 2,101,158 699,687
- --------------------------------
Change in unrealized
appreciation (depreciation) of
investments (2,345,715) (4,168,347) (2,360,140) (2,664,811) (873,985)
- -------------------------------- ----------- ----------- ----------- ----------- ----------
Net realized and unrealized
gain (loss) on investments (3,023,438) 6,165,905 936,380 (563,653) (174,298)
- -------------------------------- ----------- ----------- ----------- ----------- ----------
Change in net assets
resulting from
operations $ 3,916,291 $ 7,070,571 $ 1,720,557 $ 1,486,154 $ 628,326
- -------------------------------- ----------- ----------- ----------- ----------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
THE VIRTUS FUNDS
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THE TREASURY THE THE TAX-FREE
MONEY MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND
------------ ------------ ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
- -------------------------------------------
Interest $8,617,761 $6,728,396 $1,962,203
- ------------------------------------------- ---------- ---------- ----------
EXPENSES:
- -------------------------------------------
Investment advisory fee 769,904 600,084 275,002
- -------------------------------------------
Administrative personnel and services fee 154,919 120,826 55,173
- -------------------------------------------
Custodian fees 47,393 38,285 38,406
- -------------------------------------------
Transfer and dividend disbursing agent fees
and expenses 24,275 24,734 17,110
- -------------------------------------------
Directors'/Trustees' fees 1,208 1,535 2,946
- -------------------------------------------
Auditing fees 10,541 11,024 16,026
- -------------------------------------------
Legal fees 6,268 4,839 8,324
- -------------------------------------------
Portfolio accounting fees 41,559 26,925 36,342
- -------------------------------------------
Distribution services fee 78,636 88,338 --
- -------------------------------------------
Share registration costs 37,660 21,023 17,248
- -------------------------------------------
Printing and postage 10,455 8,219 13,904
- -------------------------------------------
Insurance premiums 3,660 3,779 4,808
- -------------------------------------------
Miscellaneous 11,382 5,555 2,942
- ------------------------------------------- ---------- ---------- ----------
Total expenses 1,197,860 955,166 488,231
- ------------------------------------------- ---------- ---------- ----------
Waivers and reimbursements--
- -------------------------------------------
Waiver of investment advisory fee (133,121) (169,095) (205,734)
- -------------------------------------------
Waiver of distribution services fee (23,147) (84,545) --
- -------------------------------------------
Reimbursement of other operating expenses -- -- --
- ------------------------------------------- ---------- ---------- ----------
Total waivers and reimbursements (156,268) (253,640) (205,734)
- ------------------------------------------- ---------- ---------- ----------
Net expenses 1,041,592 701,526 282,497
- ------------------------------------------- ---------- ---------- ----------
Net investment income $7,576,169 $6,026,870 $1,679,706
- ------------------------------------------- ---------- ---------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
THE VIRTUS FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VIRTUS STYLE MANAGER:
THE U.S. GOVERNMENT LARGE CAP FUND
SECURITIES FUND (FORMERLY, THE STOCK FUND)
-------------------------------- --------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
MARCH 31, 1996 SEPTEMBER 30, MARCH 31, 1996 SEPTEMBER 30,
(UNAUDITED) 1995 (UNAUDITED) 1995
--------------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ------------------------------------
OPERATIONS--
- ------------------------------------
Net investment income $ 6,939,729 $ 13,822,093 $ 904,666 $ 753,353
- ------------------------------------
Net realized gain (loss) on
investments (677,723) (1,378,821) 10,334,252 7,288,596
- ------------------------------------
Net change in unrealized
appreciation (depreciation) of
investments (2,345,715) 7,562,122 (4,168,347) 8,056,089
- ------------------------------------ ------------ ------------ ----------- ------------
Change in net assets resulting
from operations 3,916,291 20,005,394 7,070,571 16,098,038
- ------------------------------------ ------------ ------------ ----------- ------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ------------------------------------
Distributions from net investment
income:
- ------------------------------------
Trust Shares (3,250,105) (6,886,095) (471,869) (531,337)
- ------------------------------------
Investment Shares (3,689,625) (6,892,250) (469,931) (259,454)
- ------------------------------------
Distributions from net realized
gains:
- ------------------------------------
Trust Shares -- -- -- (1,709,248)
- ------------------------------------
Investment Shares -- -- -- (680,158)
- ------------------------------------
Distributions in excess of net
investment income:
- ------------------------------------
Trust Shares -- -- -- --
- ------------------------------------
Investment Shares -- -- -- --
- ------------------------------------
Distributions in excess of net
realized gain on investment
transactions:
- ------------------------------------
Trust Shares -- -- (3,898,915) --
- ------------------------------------
Investment Shares -- -- (3,989,081) --
- ------------------------------------ ------------ ------------ ----------- ------------
Change in net assets resulting
from distributions to
shareholders (6,939,730) (13,778,345) (8,829,796) (3,180,197)
- ------------------------------------ ------------ ------------ ----------- ------------
SHARE TRANSACTIONS--
- ------------------------------------
Proceeds from sale of shares 25,021,088 43,561,722 10,117,246 30,860,399
- ------------------------------------
Net asset value of shares issued to
shareholders in payment of
distributions declared 2,871,538 4,775,252 4,886,241 1,924,491
- ------------------------------------
Cost of shares redeemed (26,009,669) (57,893,362) (8,034,453) (52,962,431)
- ------------------------------------ ------------ ------------ ----------- ------------
Change in net assets resulting
from share transactions 1,882,957 (9,556,388) 6,969,034 (20,177,541)
- ------------------------------------ ------------ ------------ ----------- ------------
Change in net assets (1,140,482) (3,329,339) 5,209,809 (7,259,700)
- ------------------------------------
NET ASSETS:
- ------------------------------------
Beginning of period 216,212,875 219,542,214 89,853,293 97,112,993
- ------------------------------------ ------------ ------------ ----------- ------------
End of period $215,072,393 $216,212,875 $95,063,102 $ 89,853,293
- ------------------------------------ ------------ ------------ ----------- ------------
Undistributed net investment income
included in net assets at end of
period $ -- $ 45,566 $ 70,495 $ 107,629
- ------------------------------------ ------------ ------------ ----------- ------------
</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
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VIRTUS STYLE MANAGER FUND
(FORMERLY, THE STRATEGIC STOCK THE VIRGINIA MUNICIPAL
FUND) BOND FUND
-------------------------------- --------------------------------
SIX MONTHS SIX MONTHS
ENDED PERIOD ENDED ENDED YEAR ENDED
MARCH 31, 1996 SEPTEMBER 30, MARCH 31, 1996 SEPTEMBER 30,
(UNAUDITED) 1995* (UNAUDITED) 1995
--------------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ------------------------------------
OPERATIONS--
- ------------------------------------
Net investment income $ 784,177 $ 172,547 $ 2,049,807 $ 4,548,644
- ------------------------------------
Net realized gain (loss) on
investments 3,296,520 6,734,053 2,101,158 (1,364,455)
- ------------------------------------
Net change in unrealized
appreciation (depreciation) of
investments (2,360,140) 5,153,715 (2,664,811) 6,633,292
- ------------------------------------ ------------ ------------ ------------ ------------
Change in net assets resulting
from operations 1,720,557 12,060,315 1,486,154 9,817,481
- ------------------------------------ ------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ------------------------------------
Distributions from net investment
income:
- ------------------------------------
Trust Shares -- -- (680,980) (1,532,726)
- ------------------------------------
Investment Shares (731,499) (148,833) (1,368,827) (3,014,821)
- ------------------------------------
Distributions from net realized
gains:
- ------------------------------------
Trust Shares -- -- -- (329)
- ------------------------------------
Investment Shares (8,143,290) -- -- (675)
- ------------------------------------
Distributions in excess of net
investment income:
- ------------------------------------
Trust Shares -- -- -- --
- ------------------------------------
Investment Shares -- -- -- --
- ------------------------------------
Distributions in excess of net
realized gain on investment
transactions:
- ------------------------------------
Trust Shares -- -- -- --
- ------------------------------------
Investment Shares -- -- -- --
- ------------------------------------ ------------ ------------ ------------ ------------
Change in net assets resulting
from distributions to
shareholders (8,874,789) (148,833) (2,049,807) (4,548,551)
- ------------------------------------ ------------ ------------ ------------ ------------
SHARE TRANSACTIONS--
- ------------------------------------
Proceeds from sale of shares 9,155,799 90,552,400 9,998,016 16,219,898
- ------------------------------------
Net asset value of shares issued to
shareholders in payment of
distributions declared 8,358,845 144,980 870,308 2,307,640
- ------------------------------------
Cost of shares redeemed (23,277,758) (24,220,825) (11,339,888) (28,424,457)
- ------------------------------------ ------------ ------------ ------------ ------------
Change in net assets resulting
from share transactions (5,763,114) 66,476,555 (471,564) (9,896,919)
- ------------------------------------ ------------ ------------ ------------ ------------
Change in net assets (12,917,346) 78,388,037 (1,035,217) (4,627,989)
- ------------------------------------
NET ASSETS:
- ------------------------------------
Beginning of period 78,388,037 -- 104,242,665 108,870,654
- ------------------------------------ ------------ ------------ ------------ ------------
End of period $ 65,470,691 $ 78,388,037 $103,207,448 $104,242,665
- ------------------------------------ ------------ ------------ ------------ ------------
Undistributed net investment income
included in net assets at end of
period $ 76,392 $ 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
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THE MARYLAND MUNICIPAL BOND
FUND THE TREASURY MONEY MARKET FUND
------------------------------- ---------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
MARCH 31, 1996 SEPTEMBER 30, MARCH 31, 1996 SEPTEMBER 30,
(UNAUDITED) 1995 (UNAUDITED) 1995
-------------- ------------- -------------- ---------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ------------------------------------
OPERATIONS--
- ------------------------------------
Net investment income $ 802,624 $ 1,811,966 $ 7,576,169 $ 24,186,655
- ------------------------------------
Net realized gain (loss) on
investments 699,687 (681,620) -- --
- ------------------------------------
Net change in unrealized
appreciation (depreciation) of
investments (873,985) 2,620,698 -- --
- ------------------------------------ ----------- ------------ ------------- ---------------
Change in net assets resulting
from operations 628,326 3,751,044 7,576,169 24,186,655
- ------------------------------------ ----------- ------------ ------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ------------------------------------
Distributions from net investment
income:
- ------------------------------------
Trust Shares (185,530) (453,315) (6,092,019) (22,613,622)
- ------------------------------------
Investment Shares (618,093) (1,357,652) (1,484,150) (1,573,033)
- ------------------------------------
Distributions from net realized
gains:
- ------------------------------------
Trust Shares -- (14,470) -- --
- ------------------------------------
Investment Shares -- (46,949) -- --
- ------------------------------------ ----------- ------------ ------------- ---------------
Change in net assets resulting
from distributions to
shareholders (803,623) (1,872,386) (7,576,169) (24,186,655)
- ------------------------------------ ----------- ------------ ------------- ---------------
SHARE TRANSACTIONS--
- ------------------------------------
Proceeds from sale of shares 4,400,187 5,252,288 454,210,083 3,244,300,655
- ------------------------------------
Net asset value of shares issued to
shareholders in payment of
distributions declared 486,499 1,017,510 1,134,823 1,565,341
- ------------------------------------
Cost of shares redeemed (3,362,050) (12,408,998) (292,250,065) (3,324,014,237)
- ------------------------------------ ----------- ------------ ------------- ---------------
Change in net assets resulting
from share transactions 1,524,636 (6,139,200) 163,094,841 (78,148,241)
- ------------------------------------ ----------- ------------ ------------- ---------------
Change in net assets 1,349,339 (4,260,542) 163,094,841 (78,148,241)
- ------------------------------------
NET ASSETS:
- ------------------------------------
Beginning of period 41,619,998 45,880,540 248,019,243 326,167,484
- ------------------------------------ ----------- ------------ ------------- ---------------
End of period $42,969,337 $ 41,619,998 $ 411,114,084 $ 248,019,243
- ------------------------------------ ----------- ------------ ------------- ---------------
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
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THE MONEY MARKET FUND THE TAX-FREE MONEY MARKET FUND
------------------------------- ---------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
MARCH 31, 1996 SEPTEMBER 30, MARCH 31, 1996 SEPTEMBER 30,
(UNAUDITED) 1995 (UNAUDITED) 1995
-------------- ------------- -------------- ---------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- ------------------------------------
OPERATIONS--
- ------------------------------------
Net investment income $ 6,026,870 $ 9,107,794 $ 1,679,706 $ 1,866,271
- ------------------------------------
Net realized gain (loss) on
investments -- -- -- --
- ------------------------------------
Net change in unrealized
appreciation (depreciation) of
investments -- -- -- --
- ------------------------------------ ------------- ------------- ------------- -------------
Change in net assets resulting
from operations 6,026,870 9,107,794 1,679,706 1,866,271
- ------------------------------------ ------------- ------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ------------------------------------
Distributions from net
investment income:
- ------------------------------------
Trust Shares (4,261,288) (7,487,164) -- --
- ------------------------------------
Investment Shares (1,765,582) (1,620,630) (1,679,706) (1,866,271)
- ------------------------------------
Distributions from net realized
gains:
- ------------------------------------
Trust Shares -- -- -- --
- ------------------------------------
Investment Shares -- -- -- --
- ------------------------------------ -------------- ------------ ------------- ------------
Change in net assets resulting
from distributions to
shareholders (6,026,870) (9,107,794) (1,679,706) (1,866,271)
- ------------------------------------ ------------- ------------- ------------- -------------
SHARE TRANSACTIONS--
- ------------------------------------
Proceeds from sale of shares 298,675,952 554,922,789 206,012,489 244,825,710
- ------------------------------------
Net asset value of shares issued to
shareholders in payment of
distributions declared 1,341,749 1,563,964 194,968 369,306
- ------------------------------------
Cost of shares redeemed (257,483,705) (488,593,012) (202,626,981) (185,184,196)
- ------------------------------------ ------------- ------------- ------------- -------------
Change in net assets resulting
from share transactions 42,533,996 67,893,741 3,580,476 60,010,820
- ------------------------------------ ------------- ------------- ------------- -------------
Change in net assets 42,533,996 67,893,741 3,580,476 60,010,820
- ------------------------------------
NET ASSETS:
- ------------------------------------
Beginning of period 215,574,313 147,680,572 81,977,460 21,966,640
- ------------------------------------ ------------- ------------- ------------- -------------
End of period $ 258,108,309 $ 215,574,313 $ 85,557,936 $ 81,977,460
- ------------------------------------ ------------- ------------- ------------- -------------
Undistributed net investment income
included in net assets at end of
period -- -- -- --
- ------------------------------------ ------------- ------------- ------------- -------------
</TABLE>
(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>
SIX MONTHS
ENDED
MARCH 31,
(UNAUDITED) YEAR ENDED SEPTEMBER 30,
----------- -------------------------------------------------------
INVESTMENT SHARES 1996 1995 1994 1993 1992 1991(A)
- ------------------------------------------------------ ----------- ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.13 $ 9.83 $10.90 $10.95 $10.54 $10.00
- ------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------
Net investment income 0.32 0.64 0.61 0.66 0.75 0.78
- ------------------------------------------------------
Net realized and unrealized gain (loss) on
investments (0.13) 0.30 (0.94) 0.03 0.50 0.54
- ------------------------------------------------------ ------ ------ ------ ------ ------ ------
Total from investment operations 0.19 0.94 (0.33) 0.69 1.25 1.32
- ------------------------------------------------------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
- ------------------------------------------------------
Distributions from net investment income (0.32) (0.64) (0.61) (0.66)(d) (0.75) (0.78)
- ------------------------------------------------------
Distributions from net realized gain on investments -- -- -- (0.08) (0.09) --
- ------------------------------------------------------
Distributions in excess of net realized gain on
investments(d) -- -- (0.13) -- -- --
- ------------------------------------------------------ ------ ------ ------ ------ ------ ------
Total distributions (0.32) (0.64) (0.74) (0.74) (0.84) (0.78 )
- ------------------------------------------------------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $10.00 $10.13 $ 9.83 $10.90 $10.95 $10.54
- ------------------------------------------------------ ------ ------ ------ ------ ------ ------
TOTAL RETURN(B) 1.82% 9.84% (3.36)% 6.82% 12.42% 14.00%
- ------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------
Expenses 1.09%* 1.01% 0.99% 0.77% 0.52% 0.64%*
- ------------------------------------------------------
Net investment income 6.18%* 6.41% 5.94% 5.91% 7.01% 8.03%*
- ------------------------------------------------------
Expense waiver/reimbursement(c) 0.18%* 0.28% 0.32% 0.43% 0.65% 0.93%*
- ------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------
Net assets, end of period (000 omitted) $119,409 $114,802 $112,439 $119,187 $40,274 $10
- ------------------------------------------------------
Portfolio turnover 47% 82% 227% 154% 201% 101%
- ------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
MARCH 31,
(UNAUDITED) YEAR ENDED SEPTEMBER 30,
----------- -------------------------------------------------------
TRUST SHARES 1996 1995 1994 1993 1992 1991(A)
- ------------------------------------------------------ ----------- ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.13 $ 9.83 $10.90 $10.95 $10.54 $10.00
- ------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------
Net investment income 0.33 0.66 0.63 0.67 0.75 0.78
- ------------------------------------------------------
Net realized and unrealized gain (loss) on
investments (0.13) 0.30 (0.94) 0.03 0.50 0.54
- ------------------------------------------------------ ------ ------ ------ ------ ------ ------
Total from investment operations 0.20 0.96 (0.31) 0.70 1.25 1.32
- ------------------------------------------------------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
- ------------------------------------------------------
Distributions from net investment income (0.33) (0.66) (0.63) (0.67)(d) (0.75) (0.78)
- ------------------------------------------------------
Distributions from net realized gain on investments -- -- -- (0.08) (0.09) --
- ------------------------------------------------------
Distributions in excess of net realized gain on
investments(d) -- -- (0.13) -- -- --
- ------------------------------------------------------ ------ ------ ------ ------ ------ ------
Total distributions (0.33) (0.66) (0.76) (0.75) (0.84) (0.78)
- ------------------------------------------------------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $10.00 $10.13 $ 9.83 $10.90 $10.95 $10.54
- ------------------------------------------------------ ------ ------ ------ ------ ------ ------
TOTAL RETURN(B) 1.95% 10.11% (3.12)% 6.94% 12.42% 14.00%
- ------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------
Expenses 0.84%* 0.76% 0.74% 0.63% 0.52% 0.64%*
- ------------------------------------------------------
Net investment income 6.43%* 6.66% 6.19% 6.17% 7.01% 8.03%*
- ------------------------------------------------------
Expense waiver/reimbursement(c) 0.18%* 0.28% 0.32% 0.43% 0.65% 0.93%*
- ------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------
Net assets, end of period (000 omitted) $95,663 $101,410 $107,103 $112,334 $95,610 $27,565
- ------------------------------------------------------
Portfolio turnover 47% 82% 227% 154% 201% 101%
- ------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(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) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(d) 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)
45
VIRTUS STYLE MANAGER: LARGE CAP FUND
(FORMERLY, THE STOCK FUND)
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
MARCH 31,
(UNAUDITED) YEAR ENDED SEPTEMBER 30,
----------- --------------------------------------------------------
INVESTMENT SHARES 1996 1995(D) 1994 1993 1992 1991(A)
- ----------------------------------------------------- ----------- ------ ------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $13.70 $11.80 $12.39 $12.02 $11.86 $10.00
- -----------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------------------
Net investment income 0.12 0.09 0.17 0.24 0.26 0.32
- -----------------------------------------------------
Net realized and unrealized gain (loss) on
investments 0.91 2.20 (0.39) 0.54 0.46 1.85
- ------------------------------------------------------ ------ ------ ------ ------ ------ ------
Total from investment operations 1.03 2.29 (0.22) 0.78 0.72 2.17
- ------------------------------------------------------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
- -----------------------------------------------------
Distributions from net investment income (0.13) (0.09) (0.17) (0.25) (0.25) (0.31)
- -----------------------------------------------------
Distributions from net realized gain on investments (1.20) (0.30) (0.20) (0.16) (0.31) --
- ------------------------------------------------------ ------ ------ ------ ------ ------ ------
Total distributions (1.33) (0.39) (0.37) (0.41) (0.56) (0.31)
- ------------------------------------------------------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $13.40 $13.70 $11.80 $12.39 $12.02 $11.86
- ------------------------------------------------------ ------ ------ ------ ------ ------ ------
TOTAL RETURN(B) 7.89% 20.02% (1.72)% 6.31% 6.31% 22.68%
- -----------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------
Expenses 1.30%* 1.21% 1.20% 0.87% 0.95% 0.80%*
- -----------------------------------------------------
Net investment income 1.87%* 0.67% 1.40% 1.81% 2.25% 3.05%*
- -----------------------------------------------------
Expense waiver/reimbursement(c) 0.10%* 0.21% 0.23% 0.55% 0.34% 0.38%*
- -----------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------
Net assets, end of period (000 omitted) $50,549 $44,509 $26,739 $18,691 $2,290 $488
- -----------------------------------------------------
Average commission rate paid $0.0517 -- -- -- -- --
- -----------------------------------------------------
Portfolio turnover 100% 208% 205% 67% 38% 84%
- -----------------------------------------------------
<CAPTION>
SIX MONTHS
ENDED
MARCH 31,
(UNAUDITED) YEAR ENDED SEPTEMBER 30,
----------- --------------------------------------------------------
TRUST SHARES 1996 1995(D) 1994 1993 1992 1991(A)
- ----------------------------------------------------- ---------- ------ ------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $13.70 $11.80 $12.39 $12.02 $11.86 $10.00
- -----------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -----------------------------------------------------
Net investment income 0.14 0.12 0.20 0.28 0.26 0.32
- -----------------------------------------------------
Net realized and unrealized gain (loss) on
investments 0.90 2.20 (0.40) 0.51 0.46 1.85
- ------------------------------------------------------ ------ ------ ------ ------ ------ ------
Total from investment operations 1.04 2.32 (0.20) 0.79 0.72 2.17
- ------------------------------------------------------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
- -----------------------------------------------------
Distributions from net investment income (0.14) (0.12) (0.19) (0.26) (0.25) (0.31)
- -----------------------------------------------------
Distributions from net realized gain on investments (1.20) (0.30) (0.20) (0.16) (0.31) --
- ------------------------------------------------------ ------ ------ ------ ------ ------ ------
Total distributions (1.34) (0.42) (0.39) (0.42) (0.56) (0.31)
- ------------------------------------------------------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $13.40 $13.70 $11.80 $12.39 $12.02 $11.86
- ------------------------------------------------------ ------ ------ ------ ------ ------ ------
TOTAL RETURN(B) 8.00% 20.33% (1.50)% 6.42% 6.31% 22.68%
- -----------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -----------------------------------------------------
Expenses 1.05%* 0.96% 0.95% 0.66% 0.95% 0.80%*
- -----------------------------------------------------
Net investment income 2.07%* 0.92% 1.68% 2.09% 2.25% 3.05%*
- -----------------------------------------------------
Expense waiver/reimbursement(c) 0.10%* 0.21% 0.23% 0.55% 0.34% 0.38%*
- -----------------------------------------------------
SUPPLEMENTAL DATA
- -----------------------------------------------------
Net assets, end of period (000 omitted) $44,515 $45,344 $70,374 $65,841 $49,581 $37,032
- -----------------------------------------------------
Average commission rate paid $0.0517 -- -- -- -- --
- -----------------------------------------------------
Portfolio turnover 100% 208% 205% 67% 38% 84%
- -----------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(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) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(d) 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)
VIRTUS STYLE MANAGER FUND
(FORMERLY, THE STRATEGIC STOCK FUND)
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
MARCH 31, PERIOD ENDED
(UNAUDITED) SEPTEMBER 30,
----------- --------------
1996 1995(A)
----------- --------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $12.03 $10.00
- ------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------------
Net investment income 0.13 0.03
- ------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.16 2.03
- ------------------------------------------------------------ ------ ------
Total from investment operations 0.29 2.06
- ------------------------------------------------------------ ------ ------
LESS DISTRIBUTIONS
- ------------------------------------------------------------
Distributions from net investment income (0.12) (0.03)
- ------------------------------------------------------------
Distributions from net realized gain on investments (1.35) --
- ------------------------------------------------------------ ------ ------
Total distributions (1.47) (0.03)
- ------------------------------------------------------------ ------ ------
NET ASSET VALUE, END OF PERIOD $10.85 $12.03
- ------------------------------------------------------------ ------ ------
TOTAL RETURN(B) 2.72% 20.59%
- ------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------------
Expenses 0.80%* 0.44%*
- ------------------------------------------------------------
Net investment income 2.30%* 0.46%*
- ------------------------------------------------------------
Expense waiver/reimbursement(c) 0.62%* 1.03%*
- ------------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------------
Net assets, end of period (000 omitted) $65,471 $78,388
- ------------------------------------------------------------
Average commission rate paid $0.0506 $--
- ------------------------------------------------------------
Portfolio turnover 107% 92%
- ------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(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) 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 VIRGINIA MUNICIPAL BOND FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
MARCH 31,
(UNAUDITED) YEAR ENDED SEPTEMBER 30,
----------- -------------------------------------------------------
INVESTMENT SHARES 1996 1995 1994 1993 1992 1991(A)
- ------------------------------------------------------ ---- ---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.81 $10.26 $11.26 $10.46 $10.18 $10.00
- ------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------
Net investment income 0.21 0.45 0.45 0.51 0.54 0.57
- ------------------------------------------------------
Net realized and unrealized gain (loss) on
investments (0.06) 0.55 (0.92) 0.89 0.29 0.18
- ------------------------------------------------------ ------ ------ ------ ------ ------ ------
Total from investment operations 0.15 1.00 (0.47) 1.40 0.83 0.75
- ------------------------------------------------------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
- ------------------------------------------------------
Distributions from net investment income (0.21) (0.45) (0.45)(e) (0.51) (0.54) (0.57)
- ------------------------------------------------------
Distributions from net realized gain
on investments -- -- (0.06) (0.09) (0.01) --
- ------------------------------------------------------
Distributions in excess of net realized gain on
investments -- -- (0.02) -- -- --
- ------------------------------------------------------ ------ ------ ------ ------ ------ ------
Total distributions (0.21) (0.45) (0.53) (0.60) (0.55) (0.57)
- ------------------------------------------------------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $10.75 $10.81 $10.26 $11.26 $10.46 $10.18
- ------------------------------------------------------ ------ ------ ------ ------ ------ ------
TOTAL RETURN(B) 1.37% 10.00% (4.25)% 13.49% 8.51% 7.64%
- ------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------
Expenses 1.26%* 1.17% 1.15% 0.90% 0.83% 0.47%(c)
- ------------------------------------------------------
Net investment income 3.84%* 4.32% 4.22% 4.68% 5.14% 6.08%(c)
- ------------------------------------------------------
Expense waiver/reimbursement(d) 0.12%* 0.22% 0.27% 0.50% 0.86% 1.70%(c)
- ------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------
Net assets, end of period (000 omitted) $70,776 $70,572 $74,706 $63,492 $20,883 $6,031
- ------------------------------------------------------
Portfolio turnover 41% 26% 29% 17% 51% 27%
- ------------------------------------------------------
<CAPTION>
SIX MONTHS
ENDED
MARCH 31,
(UNAUDITED) YEAR ENDED SEPTEMBER 30,
----------- -------------------------------------------------------
TRUST SHARES 1996 1995 1994 1993 1992 1991(A)
- ------------------------------------------------------ ---- ---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.81 $10.26 $11.26 $10.46 $10.18 $10.00
- ------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ------------------------------------------------------
Net investment income 0.22 0.48 0.48 0.53 0.54 0.57
- ------------------------------------------------------
Net realized and unrealized gain (loss) on
investments (0.06) 0.55 (0.92) 0.89 0.29 0.18
- ------------------------------------------------------ ------ ------ ------ ------ ------ ------
Total from investment operations 0.16 1.03 (0.44) 1.42 0.83 0.75
- ------------------------------------------------------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
- ------------------------------------------------------
Distributions from net investment income (0.22) (0.48) (0.48)(f) (0.53) (0.54) (0.57)
- ------------------------------------------------------
Distributions from net realized gain on investments -- -- (0.06) (0.09) (0.01) --
- ------------------------------------------------------
Distributions in excess of net realized gain on
investments -- -- (0.02) -- -- --
- ------------------------------------------------------ ------ ------ ------ ------ ------ ------
Total distributions (0.22) (0.48) (0.56) (0.62) (0.55) (0.57)
- ------------------------------------------------------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $10.75 $10.81 $10.26 $11.26 $10.46 $10.18
- ------------------------------------------------------ ------ ------ ------ ------ ------ ------
TOTAL RETURN(B) 1.50% 10.27% (4.01)% 13.62% 8.51% 7.64%
- ------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------------
Expenses 1.01%* 0.92% 0.90% 0.75% 0.83% 0.47%(c)
- ------------------------------------------------------
Net investment income 4.09%* 4.57% 4.47% 4.85% 5.14% 6.08%(c)
- ------------------------------------------------------
Expense waiver/reimbursement(d) 0.12%* 0.22% 0.27% 0.50% 0.86% 1.70%(c)
- ------------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------------
Net assets, end of period (000 omitted) $32,431 $33,670 $34,165 $41,204 $20,852 $8,546
- ------------------------------------------------------
Portfolio turnover 41% 26% 29% 17% 51% 27%
- ------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(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) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(d) Amount includes distributions to shareholders in excess of net investment
income of $0.0001 per share.
(e) Amount includes distributions to shareholders in excess of net investment
income of $0.0002 per share.
(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>
SIX MONTHS
ENDED
MARCH 31,
(UNAUDITED) YEAR ENDED SEPTEMBER 30,
----------- ---------------------------------------------------
INVESTMENT SHARES 1996 1995 1994 1993 1992 1991(A)
- ---------------------------------------------------- ---- ---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.69 $10.17 $11.24 $10.39 $10.10 $10.00
- ---------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------------------------
Net investment income 0.20 0.40 0.45 0.49 0.54 0.53
- ---------------------------------------------------
Net realized and unrealized gain (loss) on
investments (0.04) 0.54 (0.97) 0.85 0.29 0.10
- ------------------------------------------------------ ------ ------ ------ ------ ------ ------
Total from investment operations 0.16 0.94 (0.52) 1.34 0.83 0.63
- ------------------------------------------------------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
- ---------------------------------------------------
Distributions from net investment income (0.20) (0.40) (0.45) (0.49) (0.54) (0.53)
- ---------------------------------------------------
Distributions from net realized gain on
investments -- (0.02) (0.10) -- -- --
- ------------------------------------------------------ ------ ------ ------ ------ ------ ------
Total distributions (0.20) (0.42) (0.55) (0.49) (0.54) (0.53)
- ------------------------------------------------------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $10.65 $10.69 $10.17 $11.24 $10.39 $10.10
- ------------------------------------------------------ ------ ------ ------ ------ ------ ------
TOTAL RETURN(B) 1.49% 9.81% (4.74)% 13.24% 8.31% 6.64%
- ---------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------------
Expenses 1.36%* 1.24% 1.17% 1.00% 0.59% 0.60%*
- ---------------------------------------------------
Net investment income 3.68%* 4.24% 4.22% 4.50% 5.11% 5.66%*
- ---------------------------------------------------
Expense waiver/reimbursement(c) 0.35%* 0.44% 0.51% 0.77% 1.91% 1.05%*
- ---------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------
Net assets, end of period (000 omitted) $33,889 $32,172 $34,580 $33,907 $4,053 $2,940
- ---------------------------------------------------
Portfolio turnover 42% 21% 27% 23% 34% 35%
- ---------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
MARCH 31,
(UNAUDITED) YEAR ENDED SEPTEMBER 30,
----------- ---------------------------------------------------
TRUST SHARES 1996 1995 1994 1993 1992 1991(A)
- ---------------------------------------------------- ---- ---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.69 $10.17 $11.24 $10.39 $10.10 $10.00
- ---------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------------------------
Net investment income 0.22 0.42 0.48 0.50 0.54 0.53
- ---------------------------------------------------
Net realized and unrealized gain (loss) on
investments (0.04) 0.54 (0.97) 0.85 0.29 0.10
- ------------------------------------------------------ ------ ------ ------ ------ ------ ------
Total from investment operations 0.18 0.96 (0.49) 1.35 0.83 0.63
- ------------------------------------------------------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
- ---------------------------------------------------
Distributions from net investment income (0.22) (0.42) (0.48) (0.50) (0.54) (0.53)
- ---------------------------------------------------
Distributions from net realized gain on
investments -- (0.02) (0.10) -- -- --
- ------------------------------------------------------ ------ ------ ------ ------ ------ ------
Total distributions (0.22) (0.44) (0.58) (0.50) (0.54) (0.53)
- ------------------------------------------------------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $10.65 $10.69 $10.17 $11.24 $10.39 $10.10
- ------------------------------------------------------ ------ ------ ------ ------ ------ ------
TOTAL RETURN(B) 1.62% 10.09% (4.50)% 13.37% 8.31% 6.64%
- ---------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------------
Expenses 1.11%* 0.99% 0.92% 0.86% 0.59% 0.60%*
- ---------------------------------------------------
Net investment income 3.94%* 4.49% 4.46% 4.64% 5.11% 5.66%*
- ---------------------------------------------------
Expense waiver/reimbursement(c) 0.35%* 0.44% 0.51% 0.77% 1.91% 1.05%*
- ---------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------
Net assets, end of period (000 omitted) $9,080 $9,447 $11,301 $12,014 $6,004 $556
- ---------------------------------------------------
Portfolio turnover 42% 21% 27% 23% 34% 35%
- ---------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(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) 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>
SIX MONTHS
ENDED
MARCH 31,
(UNAUDITED) YEAR ENDED SEPTEMBER 30,
----------- ---------------------------------------------------
INVESTMENT SHARES 1996 1995 1994 1993 1992 1991(A)
- --------------------------------------- ----------- ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------------
Net investment income 0.02 0.05 0.03 0.02 0.04 0.06
- ---------------------------------------
LESS DISTRIBUTIONS
- ---------------------------------------
Distributions from net investment
income (0.02) (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 $ 1.00
-----
- --------------------------------------- -------- ------ ------ ------ ------
TOTAL RETURN (B) 2.39% 4.98% 2.90% 2.52% 3.61% 5.90 %
- ---------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------
Expenses 0.83%* 0.85% 0.84% 0.70% 0.70% 0.51 %*
- ---------------------------------------
Net investment income 4.72%* 4.92% 2.86% 2.47% 3.49% 5.65 %*
- ---------------------------------------
Expense waiver/reimbursement (c) 0.14% 0.10% 0.18% 0.20% 0.11% 0.27 %*
- ---------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------
Net assets, end of period (000
omitted) $165,288 $39,363 $21,883 $20,382 $12,960 $548
- ---------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
MARCH 31,
(UNAUDITED) YEAR ENDED SEPTEMBER 30,
----------- ---------------------------------------------------
1996 1995 1994 1993 1992 1991(A)
----------- ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
TRUST SHARES
- ---------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ---------------------------------------
Net investment income 0.02 0.05 0.03 0.03 0.04 0.06
- ---------------------------------------
LESS DISTRIBUTIONS
- ---------------------------------------
Distributions from net investment
income (0.02) (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 $ 1.00
- --------------------------------------- -------- ------ ------ ------ ------ -----
TOTAL RETURN (B) 2.50% 5.24% 3.16% 2.64% 3.61% 5.90 %
- ---------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------
Expenses 0.64%* 0.60% 0.59% 0.58% 0.70% 0.51 %*
- ---------------------------------------
Net investment income 4.97%* 5.17% 3.30% 2.60% 3.49% 5.65 %*
- ---------------------------------------
Expense waiver/reimbursement (c) 0.09%* 0.10% 0.18% 0.20% 0.11% 0.27 %*
- ---------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------
Net assets, end of period (000
omitted) $245,826 $208,656 $304,285 $152,921 $163,451 $129,959
- ---------------------------------------
</TABLE>
* Computed on an annualized basis.
(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) 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>
SIX
MONTHS
ENDED
MARCH
31,
(UNAUDITED) YEAR ENDED SEPTEMBER 30,
------ ------------------------------------------------------
INVESTMENT SHARES 1996 1995 1994 1993 1992 1991(A)
- -------------------------------------------- ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- -------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------------
Net investment income 0.03 0.05 0.03 0.03 0.04 0.06
- ------------------------------------------- ----- ----- ----- ----- ----- -----
LESS DISTRIBUTIONS
- -------------------------------------------
Distributions from net investment income (0.03) (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 $1.00
- ------------------------------------------- ----- ----- ----- ----- ----- -----
TOTAL RETURN (B) 2.54% 5.11% 3.10% 2.77% 3.79% 5.92%
- -------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------
Expenses 0.59%* 0.80% 0.80% 0.64% 0.64% 0.51%*
- -------------------------------------------
Net investment income 5.00%* 5.04% 3.07% 2.68% 3.64% 5.99%*
- -------------------------------------------
Expense waiver/reimbursement (c) 0.38%* 0.21% 0.25% 0.30% 0.29% 0.36%*
- -------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------
Net assets, end of period (000 omitted) $89,607 $41,813 $15,236 $9,905 $5,803 $1
- -------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED
MARCH
31,
(UNAUDITED) YEAR ENDED SEPTEMBER 30,
------ ------------------------------------------------------
TRUST SHARES 1996 1995 1994 1993 1992 1991(A)
- -------------------------------------------- ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- -------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------------
Net investment income 0.03 0.05 0.03 0.03 0.04 0.06
- ------------------------------------------- ----- ----- ----- ----- ----- -----
LESS DISTRIBUTIONS
- -------------------------------------------
Distributions from net investment income (0.03) (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 $1.00
- ------------------------------------------- ----- ----- ----- ----- ----- -----
TOTAL RETURN (B) 2.54% 5.36% 3.35% 2.89% 3.79% 5.92%
- -------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------
Expenses 0.58%* 0.57% 0.55% 0.50% 0.64% 0.51%*
- -------------------------------------------
Net investment income 5.01%* 5.27% 3.25% 2.83% 3.64% 5.99%*
- -------------------------------------------
Expense waiver/reimbursement (c) 0.14%* 0.19% 0.25% 0.30% 0.29% 0.36%*
- -------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------
Net assets, end of period (000 omitted) $168,501 $173,761 $132,445 $134,397 $136,616 $57,432
- -------------------------------------------
</TABLE>
* Computed on an annualized basis.
(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) 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>
SIX MONTHS
ENDED
MARCH 31, YEAR ENDED SEPTEMBER
(UNAUDITED) 30,
----------- --------------------
1996 1995 1994(A)
----------- ------ -------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00
- ----------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- ----------------------------------------------------
Net investment income 0.02 0.03 0.01
- ----------------------------------------------------
LESS DISTRIBUTIONS
- ----------------------------------------------------
Distributions from net investment income (0.02) (0.03) (0.01 )
- ---------------------------------------------------- -------- ------ -------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------- -------- ------ -------
TOTAL RETURN (B) 1.58% 3.53% 0.45%
- ----------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ----------------------------------------------------
Expenses 0.51%* 0.39% 0.36%*
- ----------------------------------------------------
Net investment income 3.05%* 3.55% 2.65%*
- ----------------------------------------------------
Expense waiver/reimbursement (c) 0.37%* 0.56% 0.70%*
- ----------------------------------------------------
SUPPLEMENTAL DATA
- ----------------------------------------------------
Net assets, end of period (000 omitted) $85,558 $81,977 $21,967
- ----------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(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) 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
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
(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 Virtus Style Manager Fund and
The Tax-Free Money Market Fund are offered in two classes of shares: Trust
Shares and Investment Shares. Virtus Style Manager Fund and The Tax-Free Money
Market Fund are presented as Investment Shares for financial statement purposes.
The following portfolios comprise the Trust:
<TABLE>
<S> <C>
PORTFOLIO NAME INVESTMENT OBJECTIVE
- --------------------------------- ----------------------------------------------------------
The U.S. Government Securities Current income.
Fund ("Government Securities
Fund") (d)
- --------------------------------- ----------------------------------------------------------
Virtus Style Manager: Large Cap Growth of capital and income.
Fund ("Large Cap Fund") (d)
- --------------------------------- ----------------------------------------------------------
Virtus Style Manager Fund ("Style Growth of capital.
Manager Fund") (d)
- --------------------------------- ----------------------------------------------------------
The Virginia Municipal Bond Fund Current income exempt from federal regular income tax and
("Virginia Municipal Bond the personal income tax imposed by the Commonwealth of
Fund") (n) Virginia.
- --------------------------------- ----------------------------------------------------------
The Maryland Municipal Bond Fund Current income exempt from federal regular income tax and
("Maryland Municipal Bond the personal income tax imposed by the State of Maryland.
Fund") (n)
- --------------------------------- ----------------------------------------------------------
The Treasury Money Market Fund Current income consistent with stability of principal.
("Treasury Money Market Fund")
(d)
- --------------------------------- ----------------------------------------------------------
The Money Market Fund ("Money Current income consistent with stability of principal.
Market Fund") (d)
- --------------------------------- ----------------------------------------------------------
The Tax-Free Money Market Fund Current income exempt from federal income tax consistent
("Tax-Free Money Market Fund") with stability of principal and liquidity.
(d)
- --------------------------------- ----------------------------------------------------------
</TABLE>
(d) Diversified
(n) Non-diversified
The assets of each portfolio are segregated and a shareholder's interest is
limited to the portfolio in which shares are held.
On September 30, 1995, Treasury Money Market Fund acquired all the net assets of
The Blanchard 100% Treasury Money Market Fund pursuant to a plan of
reorganization approved by Treasury Money Market Fund's shareholders. The
acquisition was accomplished by a tax-free exchange of shares of Treasury Money
Market Fund for shares of The Blanchard 100% Treasury Money Market Fund on
September 30, 1995.
THE VIRTUS FUNDS
- --------------------------------------------------------------------------------
(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.
<TABLE>
<S> <C>
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 under the Act.
REPURCHASE AGREEMENTS--It is the policy of the Funds to require the 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.
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").
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 Funds of any liability for federal tax.
</TABLE>
<TABLE>
<CAPTION>
TOTAL TAX LOSS
FUND 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
---------------------------------------------------------------
EXPIRATION YEAR EXPIRATION AMOUNT
----------------------------------------- ------------------
<S> <C>
2003 $9,742,636
</TABLE>
THE VIRTUS FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VIRGINIA MUNICIPAL BOND FUND
- -------------------------------------------------------
EXPIRATION YEAR EXPIRATION AMOUNT
- ----------------- ------------------
<S> <C>
2003 $219,533
</TABLE>
<TABLE>
<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 were treated as arising on
October 1, 1995 the first day of the Funds' next taxable year.
<TABLE>
<CAPTION>
TOTAL TAX LOSS
FUND 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.
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER--Investment transactions are accounted for on the trade date.
THE VIRTUS FUNDS
- --------------------------------------------------------------------------------
(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 March
31, 1996, Treasury Money Market Fund, Money Market Fund, and Tax-Free Money
Market Fund, capital paid-in aggregated $411,114,084, $258,108,309, and
$85,557,936, respectively. Transactions in shares were as follows:
<TABLE>
<CAPTION>
U.S. GOVERNMENT SECURITIES
FOR THE SIX MONTHS ENDED MARCH 31, 1996: FUND LARGE CAP FUND
- --------------------------------------------------- -------------------------- --------------------------
INVESTMENT SHARES: SHARES DOLLARS SHARES DOLLARS
- --------------------------------------------------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold 1,595,307 $ 16,290,693 514,163 $ 6,964,240
- ---------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 281,048 2,871,538 339,344 4,421,688
- ---------------------------------------------------
Shares redeemed (1,260,817) (12,863,208) (331,494) (4,497,468)
- --------------------------------------------------- ---------- ------------ ---------- ------------
615,538 $ 6,299,023 522,013 $ 6,888,460
---------- ------------ ---------- ------------
TRUST SHARES:
- ---------------------------------------------------
Shares sold 854,384 $ 8,730,395 235,321 3,153,006
- ---------------------------------------------------
Shares issued to shareholders in payment of
distributions declared -- -- 35,683 464,553
- ---------------------------------------------------
Shares redeemed (1,292,543) (13,146,461) (259,410) (3,536,985)
- --------------------------------------------------- ---------- ------------ ---------- ------------
(438,159) $ (4,416,066) 11,594 $ 80,574
---------- ------------ ---------- ------------
Net change resulting from share transactions 177,379 $ 1,882,957 533,607 $ 6,969,034
- --------------------------------------------------- ---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
</TABLE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT SECURITIES
FOR THE YEAR ENDED SEPTEMBER 30, 1995: FUND LARGE CAP FUND
- --------------------------------------------------- -------------------------- --------------------------
INVESTMENT SHARES: SHARES DOLLARS SHARES DOLLARS
- --------------------------------------------------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold 2,229,961 $ 22,386,800 1,471,204 $ 18,328,914
- ---------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 481,441 4,775,252 79,983 932,476
- ---------------------------------------------------
Shares redeemed (2,817,774) (27,866,476) (566,888) (6,950,345)
- --------------------------------------------------- ---------- ------------ ---------- ------------
(106,372) $ (704,424) 984,299 $ 12,311,045
---------- ------------ ---------- ------------
TRUST SHARES:
- ---------------------------------------------------
Shares sold 2,129,377 $ 21,174,922 1,027,794 12,531,485
- ---------------------------------------------------
Shares issued to shareholders in payment of
distributions declared -- -- 87,096 992,015
- ---------------------------------------------------
Shares redeemed (3,014,663) (30,026,886) (3,766,090) (46,012,086)
- --------------------------------------------------- ---------- ------------ ---------- ------------
(885,286) $ (8,851,964) (2,651,200) $(32,488,586)
---------- ------------ ---------- ------------
Net change resulting from share transactions (991,658) $ (9,556,388) (1,666,901) $(20,177,541)
- --------------------------------------------------- ---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
</TABLE>
THE VIRTUS FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED MARCH 31, 1996: STYLE MANAGER FUND*
- ---------------------------------------------------------------------------- --------------------------
INVESTMENT SHARES: SHARES DOLLARS
- ---------------------------------------------------------------------------- ---------- ------------
<S> <C> <C>
Shares sold 820,854 $ 9,155,799
- ----------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 784,479 8,358,845
- ----------------------------------------------------------------------------
Shares redeemed (2,089,611) (23,277,758)
- ---------------------------------------------------------------------------- ---------- ------------
(484,278) $ (5,763,114)
---------- ------------
---------- ------------
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30, 1995: STYLE MANAGER FUND*
- ---------------------------------------------------------------------------- --------------------------
INVESTMENT SHARES: SHARES DOLLARS
- ---------------------------------------------------------------------------- ---------- ------------
<S> <C> <C>
Shares sold 8,728,162 $ 90,552,400
- ----------------------------------------------------------------------------
Shares issued to shareholders in payment of distributions declared 13,541 144,980
- ----------------------------------------------------------------------------
Shares redeemed (2,222,973) (24,220,825)
- ---------------------------------------------------------------------------- ---------- ------------
6,518,730 $ 66,476,555
---------- ------------
---------- ------------
</TABLE>
* For the period from March 7, 1995 (date of initial public investment) to
September 30, 1995.
THE VIRTUS FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VIRGINIA MUNICIPAL MARYLAND MUNICIPAL
FOR THE SIX MONTHS ENDED MARCH 31, 1996: BOND FUND BOND FUND
- ---------------------------------------------------- -------------------------- -------------------------
INVESTMENT SHARES: SHARES DOLLARS SHARES DOLLARS
- ---------------------------------------------------- ---------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
Shares sold 641,842 $ 7,028,515 347,008 $ 3,755,207
- ----------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 79,161 870,307 44,803 486,499
- ----------------------------------------------------
Shares redeemed (664,648) (7,281,765) (217,860) (2,352,860)
- ---------------------------------------------------- ---------- ------------ ---------- -----------
56,355 $ 617,057 173,951 $ 1,888,846
---------- ------------ ---------- -----------
TRUST SHARES:
- ----------------------------------------------------
Shares sold 272,174 $ 2,969,501 59,977 $ 644,980
- ----------------------------------------------------
Shares issued to shareholders in payment of
distributions declared -- -- -- --
- ----------------------------------------------------
Shares redeemed (370,842) (4,058,122) (93,028) (1,009,190)
- ---------------------------------------------------- ---------- ------------ ---------- -----------
(98,668) $ (1,088,621) (33,051) $ (364,210)
---------- ------------ ---------- -----------
Net change resulting from share transactions (42,313) $ (471,564) 140,900 $ 1,524,636
- ---------------------------------------------------- ---------- ------------ ---------- -----------
---------- ------------ ---------- -----------
</TABLE>
<TABLE>
<CAPTION>
VIRGINIA MUNICIPAL MARYLAND MUNICIPAL
FOR THE YEAR ENDED SEPTEMBER 30, 1995: BOND FUND BOND FUND
- ---------------------------------------------------- -------------------------- -------------------------
INVESTMENT SHARES: SHARES DOLLARS SHARES DOLLARS
- ---------------------------------------------------- ---------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
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>
THE VIRTUS FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY MONEY MARKET FUND MONEY MARKET FUND TAX-FREE MONEY MARKET FUND
------------------------------ ---------------------------- ----------------------------
SIX MONTHS YEAR ENDED SIX MONTHS YEAR ENDED SIX MONTHS YEAR ENDED
ENDED MARCH SEPTEMBER 30, ENDED MARCH SEPTEMBER ENDED MARCH SEPTEMBER
INVESTMENT SHARES 31, 1996 1995 31, 1996 30, 1995 31, 1996 30, 1995
- ----------------------------- ------------ -------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 32,347,812 44,802,002 92,919,982 66,743,936 206,012,489 244,825,710
- ----------------------------
Shares issued in connection
with acquisition of The
Blanchard 100% Money Market
Fund 122,108,127
- ----------------------------
Shares issued to shareholders
in payment of distributions
declared 1,134,821 1,521,559 1,341,749 1,539,099 194,968 369,306
- ----------------------------
Shares redeemed (29,499,298) (28,843,368) (46,467,870) (41,705,072) (202,626,981) (185,184,196)
- ---------------------------- ----------- ------------ ----------- ----------- ----------- -----------
126,091,462 17,480,193 47,793,861 26,577,963 3,580,476 60,010,820
----------- ------------ ----------- ----------- ----------- -----------
TRUST SHARES
- ----------------------------
Shares sold 299,921,078 3,199,498,653 205,755,970 488,178,853 -- --
- ----------------------------
Shares issued to shareholders
in payment of distributions
declared -- 43,782 -- 24,865 -- --
- ----------------------------
Shares redeemed (262,750,767) (3,295,170,869) (211,015,835) (446,887,940) -- --
- ---------------------------- ----------- ------------ ----------- ----------- ----------- -----------
37,170,311 (95,628,434) (5,259,865) 41,315,778 -- --
----------- ------------ ----------- ----------- ----------- -----------
Net change resulting from
share transactions 163,261,773 (78,148,241) 42,533,996 67,893,741 -- --
- ---------------------------- ----------- ------------ ----------- ----------- ----------- -----------
----------- ------------ ----------- ----------- ----------- -----------
</TABLE>
(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%
- -------------------------------------
Large Cap Fund 0.75%
- -------------------------------------
Style Manager Fund 1.00%
- -------------------------------------
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
THE VIRTUS FUNDS
- --------------------------------------------------------------------------------
Securities Fund, Style Manager Fund, Large Cap Fund, Virginia Municipal Bond
Fund, Maryland Municipal Bond Fund, Treasury Money Market Fund, Money Market
Fund, and Tax-Free Money Market Fund, annually, to reimburse FSC.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES--Federated Shareholder Services
Company 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--FAS 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 each Fund's effective date. For the six months
ended, March 31, 1996 the Funds' paid the following pursuant to this agreement.
<TABLE>
<CAPTION>
AMOUNT REIMBURSED
EXPENSES OF TO FAS FOR THE
ORGANIZING SIX MONTHS ENDED
THE FUND MARCH 31, 1996
------------ -------------------
<S> <C> <C>
Style Manager Fund $ 35,000* $ 667
- ------------------------------
Tax-Free Money Market Fund 50,000 1,667
- ------------------------------
</TABLE>
* Organizational expenses for the Virtus Style Manager 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 six
months ended March 31, 1996, were as follows:
<TABLE>
<CAPTION>
FUND PURCHASES SALES
- --------------------------------- ----------- -----------
<S> <C> <C>
Government Securities Fund $99,769,844 $99,578,098
- --------------------------------- ----------- -----------
Large Cap Fund 90,007,696 88,589,526
- --------------------------------- ----------- -----------
Style Manager Fund 72,396,017 84,656,098
- --------------------------------- ----------- -----------
Virginia Municipal Bond Fund 41,196,316 42,854,442
- --------------------------------- ----------- -----------
Maryland Municipal Bond Fund 18,283,664 17,138,044
- --------------------------------- ----------- -----------
</TABLE>
THE VIRTUS FUNDS
- --------------------------------------------------------------------------------
(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 March 31, 1996, 41.5% 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 8.0% of total investments. At March 31, 1996, 12.4% 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 institution or agency
did not exceed 2.4% of total investments.
<TABLE>
<S> <C>
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
Peter E. Madden Secretary
Gregor F. Meyer Joseph S. Machi
John E. Murray, Jr. Vice President and Assistant
Wesley W. Posvar Treasurer
Marjorie P. Smuts Richard B. Fisher
Vice President
David M. Taylor
Assistant Treasurer
C. Grant Anderson
Assistant Secretary
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Cusip 927913608 Cusip 927913855 Cusip 927913400
Cusip 927913707 Cusip 927913848 Cusip 927913301
Cusip 927913863 Cusip 927913830 Cusip 927913889
Cusip 927913871 Cusip 927913509 Cusip 927913103
Cusip 927913806 Cusip 927913202
</TABLE>
