<PAGE>
THE VALIANT FUND
SEMI-ANNUAL REPORT
FEBRUARY 28, 1997
(UNAUDITED)
<PAGE>
THE VALIANT FUND
U.S. TREASURY MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 28, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 1)
--------- --------
<C> <S> <C>
U.S. TREASURY BILLS (A)- 29.2%
$ 45,000,000 5.070%, 04/17/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 44,702,137
15,000,000 4.960%, 05/15/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,845,000
10,000,000 5.050%, 07/03/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,826,056
10,000,000 5.100%, 07/24/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,794,583
10,000,000 5.040%, 09/18/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,718,600
2,000,000 5.160%, 09/18/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,942,380
10,000,000 5.080%, 10/16/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,676,856
26,000,000 5.125%, 10/16/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,152,382
10,000,000 5.120%, 11/13/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,634,489
---------------
Total U.S. Treasury Bills. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135,292,483
---------------
REPURCHASE AGREEMENTS - 70.8%
112,000,000 First Boston Corp.
5.350%, 03/03/97, Dated 02/28/97, Repurchase Price $112,049,933
(Collateralized by U.S. Treasury Notes ranging in rates from 5.00% to 7.50%,
and ranging in maturities from 01/31/98 to 05/15/05; combined total par value
$113,210,000; valued at $115,768,852) . . . . . . . . . . . . . . . . . . . . . . . 112,000,000
10,435,000 Goldman, Sachs & Co., Inc.
5.300%, 03/03/97, Dated 02/28/97, Repurchase Price $l0,439,609
(Collateralized by U.S. Treasury Note, 6.25%, due 02/15/07,
total par value $10,875,000; valued at $10,644,412) . . . . . . . . . . . . . . . . 10,435,000
114,000,000 J.P. Morgan & Co., Inc.
5.375%, 03/03/97, Dated 02/28/97, Repurchase Price $114,051,063
(Collateralized by U.S. Treasury Note, 7.00%, due 07/15/06; total par value
$112,353,000; valued at $116,280,107) . . . . . . . . . . . . . . . . . . . . . . . 114,000,000
91,000,000 Morgan Stanley Group, Inc.
5.330%, 03/03/97, Dated 02/28/97, Repurchase Price $91,040,419
(Collateralized by U.S. Treasury Note, 7.875% & U.S. Treasury Bond,11.875%,
due 04/15/98 & 11/15/03; total par value $32,315,000 & $44,640,000; valued at
$33,991,892 & $59,048,188) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91,000,000
---------------
Total Repurchase Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 327,435,000
---------------
Total Investments - 100.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 462,727,483
(Cost $462,727,483)* ---------------
---------------
</TABLE>
- ---------------
(A) Rate represents annualized yield to maturity at date of purchase
(unaudited).
* Aggregate cost for Federal tax purposes.
SEE NOTES TO FINANCIAL STATEMENTS
2
<PAGE>
THE VALIANT FUND
GENERAL MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 28, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 1)
--------- --------
<C> <S> <C>
BANKERS' ACCEPTANCE NOTICES (A) - 7.5%
Bank of New York
$ 9,000,000 5.300%, 04/11/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,945,675
---------------
Corestates (Phil Nat'l) Bank
6,100,000 5.290%, 03/14/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,088,347
5,000,000 5.310%, 04/22/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,961,650
5,000,000 5.260%, 05/13/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,946,670
---------------
15,996,667
---------------
Republic National Bank of NY
1,450,000 5.290%, 03/03/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,449,574
1,300,000 5.290%, 04/07/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,292,932
4,600,000 5.290%, 04/09/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,573,638
---------------
7,316,144
---------------
Total Bankers' Acceptance Notices. . . . . . . . . . . . . . . . . . . . . . . . . . 32,258,486
---------------
COMMERCIAL PAPER (A) - 50.8%
AEROSPACE - 1.0%
Allied Signal, Inc.
4,300,000 5.260%, 03/04/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,298,115
---------------
CHEMICALS - 4.6%
Dupont (E I) De Nemours & Co.
10,000,000 5.250%, 05/05/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,905,208
---------------
Great Lakes Chemical Corp.
10,000,000 5.240%, 03/31/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,956,334
---------------
19,861,542
---------------
DRUGS & HEALTH CARE - 3.5%
Abbott Laboratories
15,000,000 5.220%, 04/28/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,873,850
---------------
SEE NOTES TO FINANCIAL STATEMENTS
3
<PAGE>
<CAPTION>
VALUE
PAR VALUE (NOTE 1)
--------- --------
<C> <S> <C>
COMMERCIAL PAPER-(CONTINUED)
FINANCIAL SERVICES - 3.3%
Ford Motor Credit Co.
$ 9,124,000 5.280%, 03/03/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,121,324
5,000,000 5.220%, 03/21/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,985,500
---------------
14,106,824
---------------
FOOD PRODUCTS - 14.7%
Coca Cola Co.
10,000,000 5.240%, 03/07/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,991,267
---------------
General Mills, Inc.
6,000,000 5.250%, 03/20/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,983,375
---------------
H.J. Heinz Co.
4,000,000 5.280%, 03/07/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,996,480
5,950,000 5.250%, 04/10/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,915,292
---------------
9,911,772
---------------
PepsiCo, Inc.
18,000,000 5.230%, 03/03/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,994,770
---------------
Sara Lee Corp.
13,500,000 5.230%, 03/12/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,478,426
6,000,000 5.280%, 03/27/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,977,120
---------------
19,455,546
---------------
63,336,730
---------------
INSURANCE - 2.5%
AIG Funding, Inc.
10,750,000 5.220%, 03/10/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,735,971
---------------
INTERNATIONAL OIL - 2.3%
Sonoco Products Co.
10,000,000 5.260%, 03/04/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,995,617
---------------
SEE NOTES TO FINANCIAL STATEMENTS
4
<PAGE>
<CAPTION>
VALUE
PAR VALUE (NOTE 1)
--------- --------
<C> <S> <C>
COMMERCIAL PAPER-(CONTINUED)
LEISURE TIME - 4.1%
Walt Disney Co.
$ 5,000,000 5.220%, 05/30/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,934,750
5,000,000 5.320%, 06/09/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,926,111
8,000,000 5.280%, 06/11/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,880,320
---------------
17,741,181
---------------
NON-BANK FINANCE - 6.6%
IBM Credit Corp.
12,000,000 5.270%, 03/07/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,989,460
8,000,000 5.300%, 03/31/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,964,667
---------------
19,954,127
---------------
Transamerica Finance Corp., Inc.
8,500,000 5.330%, 04/01/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,460,987
---------------
28,415,114
---------------
PAPER - 2.5%
Weyerhaeuser Co.
11,000,000 5.250%, 04/22/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,916,583
---------------
TELECOMMUNICATIONS - 4.6%
Pacific Bell
20,000,000 5.370%, 03/03/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,994,033
---------------
UTILITIES - 1.2%
PacifiCorp
5,000,000 5.310%, 03/18/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,987,462
---------------
Total Commercial Paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219,263,022
---------------
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE>
<CAPTION>
VALUE
PAR VALUE (NOTE 1)
--------- --------
<C> <S> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS (A) - 16.6%
Federal Home Loan Bank
$ 38,000,000 5.240%, 07/18/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 37,231,176
Federal National Mortgage Assoc.
25,000,000 5.240%, 04/18/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,825,333
U.S. Treasury Bill
10,000,000 5.120%, 11/13/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,634,489
---------------
Total U.S. Government and Agency Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 71,690,998
---------------
REPURCHASE AGREEMENTS - 25.1%
37,000,000 First Boston Corp.
5.350%, 03/03/97, Dated 02/28/97, Repurchase Price $37,016,496
(Collateralized by U.S. Treasury Notes, ranging in rates from 5.625%
to 6.50%, and ranging in maturities from 07/31/00 to 08/15/05; combined
total par value of $37,984,000; valued at $37,930,337) . . . . . . . . . . . . . . . 37,000,000
36,435,000 J.P. Morgan & Co., Inc.
5.375%, 03/03/97, Dated 02/28/97, Repurchase Price $36,451,320
(Collateralized by U.S. Treasury Note, 6.50%, due 10/15/06; total par
value $36,568,000; valued at $37,164,670) . . . . . . . . . . . . . . . . . . . . . 36,435,000
35,000,000 Morgan Stanley Group, Inc.
5.330%, 03/03/97, Dated 02/28/97, Repurchase Price $35,015,546
(Collateralized by U.S. Treasury Note, 7.50%; due 02/15/05; total par
value $33,795,000; valued at $35,820,752) . . . . . . . . . . . . . . . . . . . . . 35,000,000
Total Repurchase Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108,435,000
---------------
Total Investments - 100.0% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 431,647,506
(Cost $431,647,506)* ---------------
---------------
</TABLE>
- ---------------
(A) Rate represents annualized yield to maturity at date of purchase
(unaudited).
* Aggregate cost for Federal tax purposes.
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
THE VALIANT FUND
TAX- EXEMPT MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
FEBRUARY 28, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 1)
--------- --------
<C> <S> <C>
MUNICIPAL BONDS AND NOTES - 100.0%
ALASKA - 2.1%
$ 5,000,000 Alaska Housing Finance Corporation
Series C
3.400%, 06/01/26***
SBPA: Swiss Bank Corp . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,000,000
---------------
CALIFORNIA - 3.8%
9,025,000 California State, RANS
Series A
4.500%, 06/30/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,051,936
---------------
COLORADO - 3.9%
5,000,000 Colorado Health Facilities
Sisters of Charity Health Care
3.300%, 05/15/25**
LOC: Toronto Dominion Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000,000
1,130,000 Colorado Springs Company Utility Revenue
6.000%, 11/15/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,148,894
3,200,000 Regional Transportation District
Passenger Fare Revenue, Series 86A
3.350%, 06/01/99
LOC: Credit Local de France . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,200,000
---------------
9,348,894
---------------
CONNECTICUT - 3.0%
3,000,000 Connecticut State Housing Finance Authority
Series A3
3.600%, 04/10/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000,000
4,200,000 Connecticut State Special Assessment
Unemployment Compensation, Series C
3.900%, 07/01/97**
SBPA: FGIC Securities Purchase, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 4,200,000
---------------
7,200,000
---------------
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
<CAPTION>
VALUE
PAR VALUE (NOTE 1)
--------- --------
<C> <S> <C>
DELAWARE - 1.3%
$ 3,000,000 Delaware State
Series A
5.000%, 01/01/98 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,032,485
---------------
FLORIDA - 7.1%
8,000,000 Dade County Water & Sewer Revenue Systems
3.250%, 10/05/22***
SBPA: Commerzbank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,000,000
2,940,000 Florida Municipal Power Agency
Series A
3.350%, 03/11/97
LOC: First Union Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,940,000
1,500,000 Florida Municipal Power Agency
Series A
3.400%, 03/13/97
LOC: First Union Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500,000
1,628,000 Gainesville Utilities Systems
Series C
3.500%, 05/07/97
LINE: Bank of America, Suntrust Bank . . . . . . . . . . . . . . . . . . . . . . . . 1,628,000
3,000,000 Gainesville Utilities Systems
Series C
3.400%, 05/13/97
LINE: Bank of America, Suntrust Bank . . . . . . . . . . . . . . . . . . . . . . . . 3,000,000
---------------
17,068,000
---------------
GEORGIA - 5.1%
4,000,000 De Kalb Private Hospital Authority
(Egelston Childrens Hospital), Series B
3.350%, 03/01/24***
LOC: Trust Company Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000,000
1,000,000 De Kalb Private Hospital Authority
(Egleston Childrens Hospital Project) 95A
3.350%, 12/01/17***
LOC: Suntrust Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000
2,800,000 Georgia Municipal Gas Authority Revenue
Gas Portfolio I Series A
3.350%, 11/01/06
LOC: Wachovia, Credit Suisse, Morgan Guaranty, ABN AMRO . . . . . . . . . . . . . . 2,800,000
3,600,000 Georgia Municipal Gas Authority Revenue
Southern Portfolio I Project B
3.300%, 03/07/97
LOC: Wachovia Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,600,000
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
<CAPTION>
VALUE
PAR VALUE (NOTE 1)
--------- --------
<C> <S> <C>
GEORGIA- (CONTINUED)
$ 900,000 Georgia Municipal Gas Authority Revenue
Southern Portfolio I Project D
3.350%, 03/10/97
LOC: Wachovia Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 900,000
---------------
12,300,000
---------------
HAWAII - 1.4%
2,400,000 Hawaii Department of Budget & Finance
Kaiser Permanente, Series 84B
3.650%, 03/03/97** . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,400,000
1,000,000 Hawaii Department of Budget & Finance
Kaiser Permanente, Series 84B
3.500%, 09/01/97** . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000
---------------
3,400,000
---------------
ILLINOIS - 3.5%
3,000,000 Chicago Illinois GO
Tender Notes
3.550%, 10/31/97
LOC: Landesban Hessen-Thueringer GZ . . . . . . . . . . . . . . . . . . . . . . . . 3,000,000
2,500,000 Chicago Illinois GO
Tender Notes
3.650%, 02/05/98
LOC: Morgan Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,500,000
3,000,000 Illinois Health Facilities
(Advocate Health) Series B
3.450%, 08/15/22
LINE: First National Bank Chicago . . . . . . . . . . . . . . . . . . . . . . . . . 3,000,000
---------------
8,500,000
---------------
KANSAS - 4.9%
11,900,000 Kansas Department of Transportation Highway Revenue
Series B
3.250%, 09/01/14***. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,900,000
---------------
MASSACHUSETTS - 1.7%
1,800,000 Massachusetts Bay Transportation Authority
84A
3.625%, 03/03/97**
LOC: State Street Bank & Trust Co. . . . . . . . . . . . . . . . . . . . . . . . . . 1,800,000
---------------
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
<CAPTION>
VALUE
PAR VALUE (NOTE 1)
--------- --------
<C> <S> <C>
MASSACHUSETTS- (CONTINUED)
$ 2,250,000 Massachusetts Bay Transportation Authority
84A
3.450%, 09/02/97**
LOC: State Street Bank & Trust Co. . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,250,000
---------------
4,050,000
---------------
MICHIGAN - 1.0%
2,500,000 Michigan Municipal Bond Authority Revenue
Series A
4.500%, 07/03/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,504,901
---------------
MINNESOTA - 3.2%
1,800,000 Rochester Health Care Facilities
Mayo Foundation/Medical Center
3.450%, 03/05/97
LOC: Credit Suisse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,800,000
2,000,000 Rochester Health Care Facilities
Mayo Foundation/Medical Center
3.350%, 04/03/97
LOC: Credit Suisse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000,000
1,000,000 University of Minnesota Revenues
Full Faith & Credit Variable Series I
3.350%, 03/10/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000
3,000,000 University of Minnesota Revenues
Series F
3.350%, 03/18/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000,000
---------------
7,800,000
---------------
MISSISSIPPI - 0.4%
900,000 Jackson County Port Facility
Chevron USA Project
3.450%, 06/01/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 900,000
---------------
NEVADA - 2.9%
7,000,000 Clark County Airport Improvement Authority Revenue
3.250%, 07/01/25***
LOC: Toronto Dominion Bank, Union Bank Switzerland . . . . . . . . . . . . . . . . . 7,000,000
---------------
NEW JERSEY - 2.1%
5,000,000 New Jersey, TRANS
Series 1997A
3.450%, 05/29/97
LOC: Union Bank Switzerland . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000,000
---------------
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE>
<CAPTION>
VALUE
PAR VALUE (NOTE 1)
--------- --------
<C> <S> <C>
NEW MEXICO - 2.9%
$ 4,000,000 Albuquerque Airport Authority Revenue
AMBAC
3.250%, 07/01/14***. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,000,000
2,900,000 Hurley PCR
(British Petroleum)
3.700%, 12/01/15***. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,900,000
---------------
6,900,000
---------------
NEW YORK - 6.0%
5,000,000 New York City Municipal Water Finance Authority
3.100%, 06/15/23
LIQ: FGIC Securities Purchase, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 5,000,000
1,700,000 New York City Municipal Water Finance Authority
Revenue Bonds
3.500%, 06/15/24
FGIC Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,700,000
1,280,000 New York City Municipal Water Finance Authority
Water and Sewer System, Series C
3.450%, 06/15/22
FGIC Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,280,000
5,500,000 New York City, RANS
Series B
4.500%, 06/30/97
LOC: Canadian Imperial Bank of Commerce, Bank of Nova Scotia, Commerzbank . . . . . 5,517,110
900,000 Port Authority New York & New Jersey Special Obligation
Adjustment Adjusted Versatile Structure Obligation 3
3.450%, 06/01/20
SBPA: Morgan Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 900,000
---------------
14,397,110
---------------
NORTH CAROLINA - 2.6%
6,200,000 Winston Salem Water & Sewer System
3.250%, 06/01/14***
SPBA: Wachovia Bank of N.C. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,200,000
---------------
PENNSYLVANIA - 1.2%
3,000,000 Pennsylvania State
TANS
4.500%, 06/30/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,009,221
---------------
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE>
<CAPTION>
VALUE
PAR VALUE (NOTE 1)
--------- --------
<C> <S> <C>
PUERTO RICO - 1.2%
$ 3,000,000 Puerto Rico Commonwealth
TRANS, Series A
4.000%, 07/30/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,007,019
---------------
RHODE ISLAND - 0.8%
2,000,000 State of Rhode Island & Providence
Series 1996
3.350%, 04/11/97
LINE: Union Bank of Switzerland . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000,000
---------------
TENNESSEE - 3.3%
6,600,000 Memphis Tennessee GO
Series A
3.300%, 08/01/03
SBPA: Westdeutchelandesbank . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,600,000
1,400,000 Metro Nashville/Davidson County Health
(Vanderbilt University) 85A
3.650%, 01/15/98** . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,400,000
---------------
8,000,000
---------------
TEXAS - 14.5%
1,000,000 Dallas Area Rapid Transit Authority
Series A
3.450%, 05/09/97
LOC: Credit Suisse, Swiss Bank Corp. . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000
5,300,000 Harris County Texas Health
3.450%, 12/01/25***
LINE: Morgan Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,300,000
4,200,000 Harris County Toll Road
Series H
3.250%, 08/01/20***
LINE: Morgan Guaranty Trust Co. . . . . . . . . . . . . . . . . . . . . . . . . . . 4,200,000
2,100,000 Lone Star Texas Airport Improvement Authority
American Airlines, Series A
3.500%, 12/01/14***
LOC: Royal Bank of Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,100,000
5,000,000 Lower Colorado River Authority Texas Revenue
Refunding Junior Lien 3rd Supply Series
3.250%, 01/01/13
SEE NOTES TO FINANCIAL STATEMENTS
12
<PAGE>
<CAPTION>
VALUE
PAR VALUE (NOTE 1)
--------- --------
<C> <S> <C>
TEXAS- (CONTINUED)
SBPA: Bayerische Landesbank GZ . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,000,000
$ 5,300,000 North Central Texas Health Facility
(Presbyterian Health) Series D MBIA
3.500%, 12/01/15***
SBPA: Nationsbank of Texas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,300,000
11,000,000 Texas State
TRANS
4.750%, 08/29/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,064,054
900,000 Texas State Water Development Board
3.550%, 03/01/15***
LOC: Canadian Imperial Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . 900,000
---------------
34,864,054
---------------
UTAH - 6.2%
3,800,000 Emery County Utah, PCR
(Pacificorp) AMBAC
3.450%, 11/01/24***
SBPA: Bank of Nova Scotia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,800,000
4,700,000 Intermountain Power Agency
Power Supply Revenue, Series 85E
3.750%, 03/16/97**
LOC: Swiss Bank Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,700,000
4,000,000 Intermountain Power Agency
Power Supply Revenue, Series 85F
3.750%, 03/16/97**
LOC: Swiss Bank Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000,000
2,500,000 Intermountain Power Agency
Power Supply Revenue, Series 85F
3.930%, 06/16/97**
LOC: Morgan Guaranty Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,500,000
---------------
15,000,000
---------------
VERMONT - 0.7%
1,700,000 Vermont Education, Health & Buildings Finance Agency
Middlebury College
3.700%, 05/01/97** . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,700,000
---------------
WASHINGTON - 10.2%
7,300,000 Seattle Water System Revenue
3.300%, 09/01/25***
LOC: Bayerische Landesbank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,300,000
2,000,000 Washington Health Care Facilities
Sisters Providence, Series D
3.500%, 10/01/05
SEE NOTES TO FINANCIAL STATEMENTS
13
<PAGE>
<CAPTION>
VALUE
PAR VALUE (NOTE 1)
--------- --------
<C> <S> <C>
LINE: Rabobank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,000,000
$ 4,900,000 Washington State GO
Series 96A
3.250%, 06/01/20
SBPA: Landesbank Hessen-Thueringen GZ . . . . . . . . . . . . . . . . . . . . . . . 4,900,000
6,400,000 Washington State GO
Series 96B
3.250%, 06/01/20
SBPA: Landesbank Hessen-Thueringen GZ . . . . . . . . . . . . . . . . . . . . . . . 6,400,000
2,000,000 Washington State Public Power Supply
3.250%, 07/01/17***
LINE: Bank of America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000,000
2,000,000 Washington State Public Power Supply
3.500%, 07/01/17***
LINE: Bank of America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000,000
---------------
24,600,000
---------------
WISCONSIN - 2.9%
3,000,000 Sheboygan, PCR
Wisconsin Electric Power Company
3.350%, 09/01/15***. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000,000
4,100,000 Sheboygan, PCR
Wisconsin Power & Light
3.250%, 08/01/14***. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,100,000
---------------
7,100,000
---------------
Total Investments - 100.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 240,833,620
(Cost $240,833,620)* ---------------
---------------
</TABLE>
* Aggregate cost for Federal tax purposes.
** Put bonds and notes have demand features which mature within one year. The
interest rate shown reflects the rate currently in effect.
*** Variable rate demand notes are payable upon not more than one, seven, or
thirty days' notice. The interest rate shown reflects the rate currently in
effect.
SEE NOTES TO FINANCIAL STATEMENTS
14
<PAGE>
GLOSSARY OF TERMS
VALUE
PAR VALUE (NOTE 1)
--------- --------
AMBAC = American Municipal Bond Assurance Corp.
FGIC = Financial Guaranty Insurance Corp.
GO = General Obligations
LIQ = Liquidity
LINE = Bank Line of Credit Issued
LOC = Letter of Credit
MBIA = Municipal Bond Insurance Association
PCR = Pollution Control Revenue
RANS = Revenue Anticipation Notes
SBPA = Standby Purchase Agreement
TRANS = Tax and Revenue Anticipation Notes
SEE NOTES TO FINANCIAL STATEMENTS
15
<PAGE>
THE VALIANT FUND
STATEMENTS OF ASSETS AND LIABILITIES
FEBRUARY 28, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
U.S. TREASURY U.S. TREASURY GENERAL TAX-EXEMPT
MONEY MARKET INCOME MONEY MARKET MONEY MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
ASSETS:
Investments (Note 1):
Investments at value. . . . . . . . . . . . . . $ 135,292,483 $ -- $ 323,212,506 $ 240,833,620
Repurchase agreements . . . . . . . . . . . . . 327,435,000 -- 108,435,000 --
------------- ------------- ------------- -------------
Total investments at value . . . . . . . . 462,727,483 -- 431,647,506 240,833,620
Cash . . . . . . . . . . . . . . . . . . . . . . . . 572 25,359 370 78,869
Interest receivable. . . . . . . . . . . . . . . . . 48,674 -- 16,120 1,665,399
Deferred organization expense (Note 1) . . . . . . . 11,087 10,363 7,816 8,049
------------- ------------- ------------- -------------
Total Assets . . . . . . . . . . . . . . . 462,787,816 35,722 431,671,812 242,585,937
------------- ------------- ------------- -------------
LIABILITIES:
Dividends payable. . . . . . . . . . . . . . . . . . 1,779,681 -- 1,317,068 600,579
Payable for investments purchased. . . . . . . . . . -- -- -- 6,424,077
Advisory fee payable (Note 2). . . . . . . . . . . . 73,984 -- 60,566 38,089
Distribution fee payable (Note 2). . . . . . . . . . 94,734 -- 1,829 --
Payable to Adviser . . . . . . . . . . . . . . . . . 11,087 10,363 7,816 8,049
------------- ------------- ------------- -------------
Total Liabilities. . . . . . . . . . . . . 1,959,486 10,363 1,387,279 7,070,794
------------- ------------- ------------- -------------
NET ASSETS. . . . . . . . . . . . . . . . . . . . . . . . $ 460,828,330 $ 25,359 $ 430,284,533 $ 235,515,143
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
NET ASSETS CONSIST OF:
Paid-in capital (Note 4) . . . . . . . . . . . . . . $ 460,824,790 $ 25,359 $ 430,560,623 $ 235,614,709
Accumulated net realized gain (loss) on
investments sold. . . . . . . . . . . . . . . . 3,540 -- (276,090) (99,566)
------------- ------------- ------------- -------------
Total Net Assets . . . . . . . . . . . . . $ 460,828,330 $ 25,359 $ 430,284,533 $ 235,515,143
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
SHARES OF BENEFICIAL INTEREST OUTSTANDING:
Class A. . . . . . . . . . . . . . . . . . . . . . . 79,986,514 25,359 421,365,268 235,614,709
Class B. . . . . . . . . . . . . . . . . . . . . . . 281,355,158 -- 9,195,355 --
Class C. . . . . . . . . . . . . . . . . . . . . . . -- -- -- --
Class D. . . . . . . . . . . . . . . . . . . . . . . 99,483,118 -- -- --
NET ASSET VALUE,
All Shares - offering and redemption price per share
(Net Assets/Shares Outstanding). . . . . . . . . . . $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
16
<PAGE>
THE VALIANT FUND
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
U.S. TREASURY U.S. TREASURY GENERAL TAX-EXEMPT
MONEY MARKET INCOME MONEY MARKET MONEY MARKET
PORTFOLIO PORTFOLIO(*) PORTFOLIO PORTFOLIO
--------- ----------- --------- ---------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest (Note 1). . . . . . . . . . . . . . . . . $ 10,964,460 $ 738,116 $ 9,814,458 $ 4,281,785
------------ ------------ ------------ ------------
EXPENSES:
Investment advisory fee (Note 2) . . . . . . . . . 412,466 33,215 363,546 246,012
Distribution fee, Class B (Note 2) . . . . . . . . 318,890 -- 11,716 --
Distribution fee, Class D (Note 2 ). . . . . . . . 181,748 -- -- --
Trustee fees (Note 2). . . . . . . . . . . . . . . 3,086 -- 4,071 2,845
Amortization of organization costs (Note 1). . . . 2,489 2,076 2,489 2,459
Expenses borne by the Investment Adviser (Note 2). (5,575) (2,076) (6,560) (5,334)
------------ ------------ ------------ ------------
Total Expenses. . . . . . . . . . . . . . . . 913,104 33,215 375,262 246,012
------------ ------------ ------------ ------------
NET INVESTMENT INCOME . . . . . . . . . . . . . . . . . 10,051,356 704,901 9,439,196 4,035,773
------------ ------------ ------------ ------------
REALIZED GAIN/(LOSS) ON
INVESTMENTS SOLD (NOTE 1). . . . . . . . . . . . . 15,672 -- (1,528) 13,394
------------ ------------ ------------ ------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS. . . . . . . . . . . . . $ 10,067,028 $ 704,901 $ 9,437,668 $ 4,049,167
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
- ------
(*) The Portfolio had investment operations from December 13, 1996 through
January 30, 1997.
SEE NOTES TO FINANCIAL STATEMENTS
17
<PAGE>
THE VALIANT FUND
STATEMENTS OF CHANGES IN NET ASSETS
FEBRUARY 28, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
U.S. TREASURY U.S. TREASURY
MONEY MARKET PORTFOLIO INCOME PORTFOLIO
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
2/28/97 8/31/96 2/28/97 (*) 8/31/96 (**)
------- ------- ---------- -----------
<S> <C> <C> <C> <C>
NET ASSETS AT BEGINNING OF PERIOD . . . . . . . . . . . . . . . $ 247,135,913 $ 106,296,537 $ 25,222 $ 25,133
------------- ------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS:
Net investment income. . . . . . . . . . . . . . . . . . . 10,051,356 9,774,485 704,901 179,127
Net realized gain (loss) on investments sold . . . . . . . 15,672 (10,545) --
------------- ------------- ------------- -------------
Net increase in net assets resulting. . . . . . . . .
from operations. . . . . . . . . . . . . . . . . 10,067,028 9,763,940 704,901 179,127
------------- ------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A. . . . . . . . . . . . . . . . . . . . . . . . . . (2,157,382) (3,702,775) (704,901) (179,127)
Class B. . . . . . . . . . . . . . . . . . . . . . . . . . (6,211,910) (5,765,290) -- --
Class D. . . . . . . . . . . . . . . . . . . . . . . . . . (1,682,064) (315,420) -- --
------------- ------------- ------------- -------------
Net decrease from distributions. . . . . . . . . . . . . . (10,051,356) (9,774,485) (704,901) (179,127)
------------- ------------- ------------- -------------
SHARE TRANSACTIONS (AT $1.00 PER SHARE):
CLASS A:
Net proceeds from sales of shares . . . . . . . . . . 97,533,580 293,279,024 245,972,311 93,740,874
Issued to shareholders in reinvestment of dividends . 681 1,365 137 89
Cost of shares repurchased. . . . . . . . . . . . . . (102,811,644) (238,199,277) (245,972,311) (93,740,874)
------------- ------------- ------------- -------------
Net Class A share transactions . . . . . . . . . (5,277,383) 55,081,112 137 89
------------- ------------- ------------- -------------
CLASS B:
Net proceeds from sales of shares . . . . . . . . . . 562,179,276 555,303,801 -- --
Cost of shares repurchased. . . . . . . . . . . . . . (407,159,098) (505,084,160) -- --
------------- ------------- ------------- -------------
Net Class B share transactions. . . . . . . . . . . . 155,020,178 50,219,641 -- --
------------- ------------- ------------- -------------
CLASS D:
Net proceeds from sales of shares . . . . . . . . . . 236,742,436 49,343,549 -- --
Cost of shares repurchased. . . . . . . . . . . . . . (172,808,486) (13,794,381) -- --
------------- ------------- ------------- -------------
Net Class D share transactions . . . . . . . . . . . . . . 63,933,950 35,549,168 -- --
------------- ------------- ------------- -------------
Net increase from share transactions . . . . . . . . . . . 213,676,745 140,849,921 137 89
------------- ------------- ------------- -------------
Net increase in net assets . . . . . . . . . . . 213,692,417 140,839,376 137 89
------------- ------------- ------------- -------------
NET ASSETS AT END OF PERIOD . . . . . . . . . . . . . . . . . . $ 460,828,330 $ 247,135,913 $ 25,359 $ 25,222
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
- -----------
* The Portfolio operated from December 13, 1996 - January 30, 1997.
** The Portfolio operated from December 11, 1995 - January 10, 1996.
SEE NOTES TO FINANCIAL STATEMENTS
18
<PAGE>
THE VALIANT FUND
STATEMENTS OF CHANGES IN NET ASSETS
FEBRUARY 28, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
GENERAL MONEY TAX-EXEMPT
MARKET PORTFOLIO MONEY MARKET PORTFOLIO
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
2/28/97 8/31/96 2/28/97 8/31/96
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
NET ASSETS AT BEGINNING OF PERIOD . . . . . . . . . . . . . . $ 342,803,442 $ 385,426,702 $ 279,867,103 $ 283,653,602
--------------- --------------- --------------- ---------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS:
Net investment income . . . . . . . . . . . . . . . . . . 9,439,196 25,653,674 4,035,773 9,548,672
Net realized loss on investments sold . . . . . . . . . . (1,528) (184,202) 13,394 (4,894)
--------------- --------------- --------------- ---------------
Net increase in net assets resulting
from operations. . . . . . . . . . . . . . . . . . . 9,437,668 25,469,472 4,049,167 9,543,778
--------------- --------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A . . . . . . . . . . . . . . . . . . . . . . . . . (9,208,433) (25,172,442) (4,035,773) (9,548,672)
Class B . . . . . . . . . . . . . . . . . . . . . . . . . (230,763) (481,232) -- --
--------------- --------------- --------------- ---------------
Net decrease from distributions . . . . . . . . . . . . . (9,439,196) (25,653,674) (4,035,773) (9,548,672)
--------------- --------------- --------------- ---------------
SHARE TRANSACTIONS (AT $1.00 PER SHARE):
CLASS A:
Net proceeds from sales of shares. . . . . . . . . . 1,024,732,131 1,937,503,266 206,616,797 452,820,528
Issued to shareholders in reinvestment of dividends 1,098,760 1,317,345 428 856
Cost of shares repurchased . . . . . . . . . . . . . (938,803,022) (1,980,536,000) (250,982,579) (456,602,989)
--------------- --------------- --------------- ---------------
Net Class A share transactions . . . . . . . . . . . 87,027,869 (41,715,389) (44,365,354) (3,781,605)
--------------- --------------- --------------- ---------------
CLASS B:
Net proceeds from sales of shares. . . . . . . . . . 5,960,513 11,688,082 -- --
Cost of shares repurchased . . . . . . . . . . . . . (5,505,764) (12,411,751) -- --
--------------- --------------- --------------- ---------------
Net Class B share transactions . . . . . . . . . . . 454,749 (723,669) -- --
--------------- --------------- --------------- ---------------
Net increase (decrease) from share transactions. . . 87,482,619 (42,439,058) (44,365,354) (3,781,605)
--------------- --------------- --------------- ---------------
Net increase (decrease) in net assets. . . . . . . . 87,481,091 (42,623,260) (44,351,960) (3,786,499)
--------------- --------------- --------------- ---------------
NET ASSETS AT END OF PERIOD . . . . . . . . . . . . . . . . . $ 430,284,533 $ 342,803,442 $ 235,515,143 $ 279,867,103
--------------- --------------- --------------- ---------------
--------------- --------------- --------------- ---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
19
<PAGE>
THE VALIANT FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD (UNAUDITED)
<TABLE>
<CAPTION>
U.S. TREASURY MONEY
MARKET PORTFOLIO - CLASS A
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
2/28/97 8/31/96 8/31/95 8/31/94 (1)
------- ------- ------- -----------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of period. . . . $ 1.000 $ 1.000 $ 1.000 $ 1.000
--------- --------- --------- ---------
Income from Investment Operations:
Net investment income (2) . . . . . . 0.025 0.053 0.054 0.012
--------- --------- --------- ---------
Less Distributions:
Dividends from net investment income. (0.025) (0.053) (0.054) (0.012)
--------- --------- --------- ---------
Net Asset Value, End of period. . . . . . . $ 1.000 $ 1.000 $ 1.000 $ 1.000
--------- --------- --------- ---------
--------- --------- --------- ---------
Total Return (a) . . . . . . . . . . . . . 2.56% 5.45% 5.60% 1.19%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . $ 79,986 $ 85,260 $ 30,183 $ 25
Ratios to average net assets:
Net investment income (2) . . . . . . 5.09% (b) 5.21% 5.79% 4.06% (b)
Operating expenses (2). . . . . . . . 0.20% (b) 0.20% 0.20% 0.20% (b)
<CAPTION>
U.S. TREASURY MONEY
MARKET PORTFOLIO - CLASS B
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
2/28/97 8/31/96 8/31/95 8/31/94 (1)
------- ------- ------- -----------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of period. . . . $ 1.000 $ 1.000 $ 1.000 $ 1.000
--------- --------- --------- ---------
Income from Investment Operations:
Net investment income (3) . . . . . . 0.024 0.050 0.052 0.011
--------- --------- --------- ---------
Less Distributions:
Dividends from net investment income. (0.024) (0.050) (0.052) (0.011)
--------- --------- --------- ---------
Net Asset Value, End of period. . . . . . . $ 1.000 $ 1.000 $ 1.000 $ 1.000
--------- --------- --------- ---------
--------- --------- --------- ---------
Total Return (a). . . . . . . . . . . . . . 2.43% 5.18% 5.34% 1.12%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . $ 281,356 $ 126,327 $ 76,114 $ 13,355
Ratios to average net assets:
Net investment income (3) . . . . . . 4.87% (b) 5.01% 5.41% 3.87% (b)
Operating expenses (3). . . . . . . . 0.45% (b) 0.45% 0.45% 0.45% (b)
</TABLE>
(1) The Portfolio commenced Class A and Class B shares operations on May 17,
1994.
(2) Net investment income per share and the operating expense ratios before
waiver and reimbursement of fees by the Trustees and the Investment Adviser,
respectively, for the period ended February 28, 1997 were $ 0.026 and 0.20%, for
the period ended August 31, 1996 were $0.053 and 0.20%, for the period ended
August 31, 1995 were $0.054 and 0.21% and for the period ended August 31, 1994
were $0.012 and 0.26%.
(3) Net investment income per share and the operating expense ratios before
waiver and reimbursement of fees by the Trustees and the Investment Adviser,
respectively, for the period ended February 28, 1997 were $ 0.026 and 0.45%, for
the period ended August 31, 1996 were $0.050 and 0.45%, for the period ended
August 31, 1995 were $0.052 and 0.46% and for the period ended August 31, 1994
were $0.011 and 0.50%.
(a) Total returns for periods less than one year are not annualized and had the
Investment Adviser and Trustees not reimbursed and waived certain expenses,
respectively, total returns would have been lower.
(b) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
20
<PAGE>
THE VALIANT FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD (UNAUDITED)
U.S. TREASURY MONEY
MARKET PORTFOLIO - CLASS D
SIX MONTHS
ENDED PERIOD ENDED
2/28/97 8/31/96(1)
------- ----------
Net Asset Value, Beginning of period.............. $ 1.000 $ 1.000
-------- --------
Income from Investment Operations:
Net investment income (6).................... 0.023 0.015
-------- --------
Less Distributions:
Dividends from net investment income......... (0.023) (0.015)
-------- --------
Net Asset Value, End of period.................... $ 1.000 $ 1.000
-------- --------
-------- --------
Total Return (a).................................. 2.31% 1.55%
Ratios/Supplemental Data:
Net Assets, End of Period (000's)................. $ 99,486 $ 35,549
Ratios to average net assets:
Net investment income (6).................... 4.63%(b) 4.68%(b)
Operating expenses (6)....................... 0.70%(b) 0.70%(b)
<TABLE>
<CAPTION>
U.S. TREASURY
INCOME PORTFOLIO - CLASS A
PERIOD
ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED
2/28/97(2) 8/31/96 (3) 8/31/95 (4) 8/31/94 (5)
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of period . $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- --------
Income from Investment Operations:
Net investment income (7) . . . . 0.005 0.004 0.004 0.001
-------- -------- -------- --------
Less Distributions:
Dividends from net investment
income . . . . . . . . . . . . . (0.005) (0.004) (0.004) (0.001)
-------- -------- -------- --------
Net Asset Value, End of period . . . . $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- --------
-------- -------- -------- --------
Total Return (a) . . . . . . . . . . . 0.54% 0.35% 0.39% 0.12%
Ratios/Supplemental Data:
Net Assets, End of Period (000's). . . $ 25 $ 25 $ 25 $ 25
Ratios to average net assets:
Net investment income (7) . . . . 4.21% (b) 4.15% 4.47% 2.96% (b)
Operating expenses (7). . . . . . 0.20% (b) 0.20% 0.20% 0.20% (b)
</TABLE>
- ---------------
(1) The Portfolio commenced Class D shares operations on May 1, 1996.
(2) The Portfolio operated from December 13, 1996 to January 30, 1997.
(3) The Portfolio operated from December 11, 1995 to January 10, 1996.
(4) The Portfolio operated from December 12, 1994 to January 11, 1995.
(5) The Portfolio operated from December 28, 1993 to January 12, 1994.
(6) Net investment income per share and the operating expense ratios before
reimbursement of fees by the Investment Adviser were $0.015 and 0.70%.
(7) Net investment income per share and the operating expense ratios before
waiver and reimbursement of fees by the Trustees and the Investment Adviser,
respectively, for the period ended February 28, 1997 were $0.006 and 0.21%, for
the period ended August 31, 1996 were $0.004 and 0.35%, for the period ended
August 31, 1995 were $0.004 and 0.29% and for the period ended August 31, 1994
were $0.001 and 0.22%.
(a) Total returns for periods less than one year are not annualized and had the
Investment Adviser and Trustees not reimbursed and waived certain expenses,
respectively, total returns would have been lower.
(b) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
21
<PAGE>
THE VALIANT FUND
FINANCIAL HIGHLIGHTS-(CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD (UNAUDITED)
<TABLE>
<CAPTION>
GENERAL MONEY
MARKET PORTFOLIO - CLASS A
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
2/28/97 8/31/96 8/31/95 8/31/94(1)
------- ------- ------- ----------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of period . $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- --------
Income from Investment Operations:
Net investment income (2) . . . . 0.026 0.053 0.056 0.033
-------- -------- -------- --------
Less Distributions:
Dividends from net investment
income . . . . . . . . . . . . (0.026) (0.053) (0.056) (0.033)
-------- -------- -------- --------
Net Asset Value, End of period . . . . $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- --------
-------- -------- -------- --------
Total Return (a) . . . . . . . . . . . 2.59% 5.52% 5.81% 3.33%
Ratios/Supplemental Data:
Net Assets, End of Period (000's). . . $421,096 $334,069 $375,965 $167,016
Ratios to average net assets:
Net investment income (2) . . . . 5.19% (b) 5.36% 5.70% 3.70% (b)
Operating expenses (2). . . . . . 0.20% (b) 0.20% 0.20% 0.20% (b)
</TABLE>
<TABLE>
<CAPTION>
GENERAL MONEY
MARKET PORTFOLIO - CLASS B
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
2/28/97 8/31/96 8/31/95 8/31/94 (1)
------- ------- ------- -----------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of period . $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- --------
Income from Investment Operations:
Net investment income (3) . . . . 0.024 0.051 0.053 0.009
-------- -------- -------- --------
Less Distributions:
Dividends from net investment
income . . . . . . . . . . . . (0.024) (0.051) (0.053) (0.009)
-------- -------- -------- --------
Net Asset Value, End of period . . . . $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- --------
-------- -------- -------- --------
Total Return (a) . . . . . . . . . . . 2.47% 5.26% 5.54% 0.92%
Ratios/Supplemental Data:
Net Assets, End of Period (000's). . . $ 9,188 $ 8,734 $ 9,461 $ 9,520
Ratios to average net assets:
Net investment income (3) . . . . 4.92% (b) 5.11% 5.33% 3.99% (b)
Operating expenses (3). . . . . . 0.45% (b) 0.45% 0.45% 0.45% (b)
</TABLE>
- --------------
(1) The Portfolio commenced Class A and Class B shares operations on September
21, 1993 and May 17, 1994, respectively.
(2) Net investment income per share and the operating expense ratios before
waiver and reimbursement of fees by the Trustees and the Investment Adviser,
respectively, for the period ended February 28, 1997 were $0.026 and 0.20%, for
the period ended August 31, 1996 were $0.053 and 0.20%, for the period ended
August 31, 1995 were $0.056 and 0.20% and for the period ended August 31, 1994
were $0.033 and 0.21%.
(3) Net investment income per share and the operating expense ratios before
waiver and reimbursement of fees by the Trustees and the Investment Adviser,
respectively, for the period ended February 28, 1997 were $0.024 and 0.45%, for
the period ended August 31, 1996 were $0.051 and 0.45%, for the period ended
August 31, 1995 were $0.053 and 0.45% and for the period ended August 31, 1994
were $0.009 and 0.46%.
(a) Total returns for periods less than one year are not annualized and had the
Investment Adviser and Trustees not reimbursed and waived certain expenses,
respectively, total returns would have been lower.
(b) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
22
<PAGE>
THE VALIANT FUND
FINANCIAL HIGHLIGHTS-(CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD (UNAUDITED)
<TABLE>
<CAPTION>
TAX-EXEMPT MONEY
MARKET PORTFOLIO - CLASS B
SIX MONTHS
ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
2/28/97 8/31/96 8/31/95 8/31/94 (1)
------- ------- ------- -----------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of period . $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- --------
Income from Investment Operations:
Net investment income (2) . . . . 0.016 0.034 0.035 0.021
-------- -------- -------- --------
Less Distributions:
Dividends from net investment
income . . . . . . . . . . . . (0.016) (0.034) (0.035) (0.021)
-------- -------- -------- --------
Net Asset Value, End of period . . . . $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- -------- --------
-------- -------- -------- --------
Total Return (a) . . . . . . . . . . . 1.64% 3.43% 3.67% 2.11%
Ratios/Supplemental Data:
Net Assets, End of Period (000's). . . $235,515 $279,867 $283,654 $258,130
Ratios to average net assets:
Net investment income (2) . . . . 3.28% (b) 3.34% 3.50% 2.38% (b)
Operating expenses (2). . . . . . 0.20% (b) 0.20% 0.20% 0.20% (b)
</TABLE>
- ---------------
(1) The Portfolio commenced operations on October 7, 1993.
(2) Net investment income per share and the operating expense ratios before
waiver and reimbursement of fees by the Trustees and the Investment Adviser,
respectively, for the period ended February 28, 199 7 were $0.016 and .20%,
for the period ended August 31, 1996 were $0.034 and 0.20%, for the period ended
August 31, 1995 were $0.035 and 0.20% and for the period ended August 31, 1994
were $0.021 and 0.22%.
(a) Total returns for periods less than one year are not annualized and had the
Investment Adviser and Trustees not reimbursed and waived certain expenses,
respectively, total returns would have been lower.
(b) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS.
23
<PAGE>
THE VALIANT FUND
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 1997 (UNAUDITED)
The Valiant Fund (the "Trust") was organized as a Massachusetts business
trust on January 29, 1993 and is registered under the Investment Company Act of
1940 as amended, as an open end management investment company. The Trust offers
four managed investment portfolios. The accompanying financial statements and
financial highlights are those of the U.S. Treasury Money Market, the U.S.
Treasury Income, the General Money Market and the Tax-Exempt Money Market
Portfolios (individually, a "Portfolio", collectively, the "Portfolios"). The
Trust is authorized to offer four classes of shares: Class A, Class B, Class C
and Class D. U.S. Treasury Money Market Class A, B and D, U.S. Treasury Income
Class A, General Money Market Class A and B and Tax-Exempt Money Market Class A
are currently active.
1. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with generally
accepted accounting principles may require management to make certain estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could differ from those
estimates.
The following is a summary of significant accounting policies which are
consistently followed by the Trust in the preparation of its financial
statements.
PORTFOLIO VALUATIONS: Securities in the Portfolios are valued utilizing
the amortized cost method permitted in accordance with Rule 2a-7 under the
Investment Company Act of 1940. This method involves valuing a portfolio
security initially at its cost and thereafter assuming a constant amortization
to maturity of any discount or premium.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on the trade date. Net realized gains and losses on investments sold
are recorded on the identified cost basis. Interest income is recorded on the
accrual basis. Interest income consists of market discount earned (including
both original issue and market discount), less amortization of any market
premium.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: It is the policy of the
Portfolios to declare dividends daily from net investment income and to pay such
dividends monthly. Net realized capital gains, if any, are distributed at least
annually.
Income and capital gains to be distributed are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles.
FEDERAL TAXES: The Trust treats each Portfolio as a separate entity for
Federal income tax purposes. Each Portfolio intends to continue to qualify each
year as a "regulated investment company" under Subchapter M of the Internal
Revenue Code of 1986, as amended. By so qualifying, no Portfolio will be
subject to Federal income taxes to the extent that it distributes all of its
taxable or tax-exempt income, if any, for its tax year ending August 31. In
addition, by distributing during each calendar year substantially all of its net
investment income and capital gains, if any, no Portfolio will be subject to
Federal excise tax. Therefore, no Federal income tax provision is required.
REPURCHASE AGREEMENTS: Each Portfolio, except the U.S. Treasury Income
Portfolio, may engage in repurchase agreement transactions. Under the terms of
a typical repurchase agreement, the Portfolio takes possession of an underlying
debt obligation subject to an obligation of the seller to repurchase, and the
Portfolio to resell, the obligation at an agreed upon price and time, thereby
determining the yield during the Portfolio's holding period. This arrangement
results in a fixed rate of return that is not subject to market fluctuations
during the Portfolio's holding period. It is the Portfolio's policy to maintain
collateral that is at least equal at all times to the total amount of the
repurchase obligations including interest.
24
<PAGE>
THE VALIANT FUND
NOTES TO FINANCIAL STATEMENTS-(CONTINUED)
FEBRUARY 28, 1997 (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES-(CONTINUED)
In the event of a counterparty default, the Portfolio has the right to use the
collateral to offset losses incurred. There is potential loss to the Portfolio
in the event the Portfolio is delayed or prevented from exercising its rights to
dispose of the collateral securities, including the risk of a possible decline
in the market value of the underlying securities during the period while the
Portfolio seeks to assert its rights. The Portfolio's sub-adviser, David L.
Babson & Co. Inc., acting under the supervision of the Trust's Board of
Trustees, reviews the value of collateral and the creditworthiness of those
banks and dealers with which the Portfolio enters into repurchase agreements to
evaluate potential risks.
EXPENSES AND ALLOCATIONS: Expenses directly attributable to a Portfolio
are charged to the Portfolio, while expenses which are attributable to more than
one Portfolio of the Trust are allocated among the respective Portfolios. Each
share class bears its pro-rata portion of expenses attributable to its series,
except that each class separately bears its' own distribution fees.
Income, Portfolio level expenses, and realized and unrealized gains and
losses are allocated to each class of shares on a daily basis based on each
class' portion of net assets.
ORGANIZATION COSTS: The Trust bears all costs in connection with its
organization, including the fees and expenses of registering and qualifying its
shares for distribution under Federal and state securities laws. All such costs
are being amortized using the straight line method over a period of five years
from commencement of each Portfolio's operations. In the event that any of the
initial shares of a Portfolio are redeemed before such organization expenses are
fully amortized, the related Portfolio will be reimbursed by the shareholder
redeeming such shares for any unamortized organization costs in the same
proportion as the number of initial shares being redeemed bears to the number of
initial shares outstanding at the time of redemption.
2. INVESTMENT ADVISORY, ADMINISTRATION, DISTRIBUTION AND OTHER FEES
Integrity Management & Research, Inc. (the "Investment Adviser" or the
"Manager"), a wholly-owned subsidiary of Integrity Investments, Inc., serves as
the Investment Adviser to the Trust. State Street Bank and Trust Company serves
as the Trust's administrator, custodian and transfer agent. Integrity
Investments, Inc. (the "Distributor") acts as exclusive distributor of the
Trust's shares.
The Trust pays the Investment Adviser a fee, computed daily and paid
monthly, at the annual rate of 0.20% of the average daily net assets of the
Trust. Under its Management Agreement with the Trust, the Manager performs
certain administrative and management services for the Trust and pays the
compensation, if any, of officers and Trustees who are affiliated with the
Manager or the Sub-Adviser and pays all the Portfolio expenses with the
following exceptions: the fees and expenses of those Trustees who are not
"interested persons" (as defined in the Investment Company Act of 1940) of the
Trust; interest on borrowings; taxes; expenses incurred by Class B, Class C and
Class D shares pursuant to the Distribution and Shareholder Servicing Plans; and
such extraordinary non-recurring expenses as may arise.
25
<PAGE>
THE VALIANT FUND
NOTES TO FINANCIAL STATEMENTS-(CONTINUED)
FEBRUARY 28, 1997 (UNAUDITED)
2. INVESTMENT ADVISORY, ADMINISTRATION, DISTRIBUTION AND OTHER FEES-
(CONTINUED)
From time to time the Investment Adviser may waive all or a portion of the
fees payable to it by a Portfolio, either voluntarily or pursuant to applicable
statutory expense limitations. As such, the Investment Adviser has agreed to
reimburse the Portfolios for expenses exceeding 0.20% of average daily net
assets for Class A shares, 0.45% of the average daily net assets for Class B
shares, 0.60% of average daily net assets for Class C shares and 0.70% of
average daily net assets for Class D shares. The expense limitations are
voluntary and were in effect through February 28, 1997. The expense limitations
may be removed at any time thereafter with 90 days' prior notice to existing
shareholders.
For the six months ended February 28, 1997 the Investment Adviser
reimbursed the Trust as follows:
PORTFOLIO REIMBURSEMENT
- --------- -------------
U.S. Treasury Money Market $5,575
U.S. Treasury Income 2,076
General Money Market 6,560
Tax-Exempt Money Market 5,334
The Investment Adviser has entered into an investment sub-advisory
agreement with David L. Babson & Co., Inc. ("Babson") pursuant to which the
Investment Adviser pays fees to Babson, computed daily and paid monthly, at the
annual rate of 0.10% of the first $500 million of the aggregate average daily
net assets of the Portfolios and 0.05% of average daily net assets in excess
thereof. Fees related to these services are borne directly by the Investment
Adviser.
The Trust has adopted a distribution plan for the Class A and Class B
shares, a distribution plan for the Class C shares and a distribution plan for
the Class D shares (together, the "Plans") pursuant to Rule 12b-1 of the
Investment
Company Act of 1940. The Plans provide for payments to the Distributor of up to
0.35% of the average net assets of the Class B shares, up to 0.50% of the
average net assets of the Class C shares and up to 0.50% of the average net
assets of the Class D shares. Payments under the Plans have been authorized at
the rate of 0.25% of each Portfolio's average daily net assets for the Class B
shares, 0.40% of each Portfolio's average daily net assets for the Class C
shares and 0.50% of each Portfolio's average daily net assets for the Class D
shares for the six months ended February 28, 1997. No payments have been
authorized for the Class A shares.
Certain directors and officers of the Investment Adviser are also Trustees
and officers of the Trust.
Trustees who are not "interested persons" of the Trust receive an annual
$1,000 retainer and $1,000 per Trustee meeting attended and are entitled to be
reimbursed for out-of-pocket expenses incurred in attending such meetings.
3. SHARES OF BENEFICIAL INTEREST
The Trust's Declaration of Trust authorizes the Trustees to issue an
unlimited number of no par value shares of beneficial interest in the
Portfolios. Shareholders are entitled to one vote for each dollar (or
proportional fractional vote for each fraction of a dollar) of net asset value
per share owned. Each Portfolio votes separately with respect to issues
affecting only that Portfolio. Shareholders of a particular class have the
exclusive right to vote on matters pertaining only to that class. Pursuant to
the Declaration of Trust, the Trustees have the authority to create additional
Portfolios and to issue additional classes of shares for each Portfolio of the
Trust.
26
<PAGE>
THE VALIANT FUND
NOTES TO FINANCIAL STATEMENTS-(CONTINUED)
FEBRUARY 28, 1997 (UNAUDITED)
3. SHARES OF BENEFICIAL INTEREST (CONTINUED)
At February 28, 1997 Integrity Investments, Inc. owned 100% of the
outstanding shares of the U. S. Treasury Income Portfolio and certain
institutional shareholders were record owners of more than 10% of the total
outstanding shares of the following Portfolios:
NAME OF PORTFOLIO NUMBER OF PERCENTAGE OF
SHAREHOLDERS SHARES OWNED
- --------------------------------------------------------------------------------
U.S. Treasury Money Market 3 88.4%
General Money Market 2 83.1%
Tax-Exempt Money Market 1 99.9%
27
