VILLERE BALANCED FUND
October, 2000
To Our Fellow Shareholders:
We're happy to share the news that the Villere Balanced Fund finished its first
fiscal year on August 31 with a cumulative return of 34.70%, outperforming both
the Dow Jones Industrial Average of 8.49% and the Russell 3000 of 19.59% over
the same period. The Fund's current asset allocation is 65% stocks, 27% bonds,
and 8% cash.
In this period of extreme market volatility, we believe a Balanced Fund is the
appropriate vehicle for shareholders who wish to stabilize their investment from
a risk-reward standpoint. The market, as measured by the S&P 500, appears
attractively valued at about 23 times 2001 earnings of $63. We are beginning to
see signs of disinflation, including the fact that real consumer spending
increased only 3% in the second quarter, less than half the first quarter's 7.6%
rate. Such positive indicators led Federal Reserve Board Chairman Alan Greenspan
to leave rates untouched when he met with the Federal Open Market Committee on
August 22nd, a move that should stabilize the economy and help take some
pressure off the market.
The combination of low inflation, consistent corporate earnings, and a federal
budget surplus means absolute fundamentals for investing in equities remain
attractive.
We want to give you a closer look at a few of the Fund's equity holdings. As the
price of oil has rebounded and activity in the Gulf of Mexico has accelerated
substantially, we have had a positive return in our energy stocks, Gulf Island
Fabrication and Stone Energy. Our philosophy that intrinsic value will
eventually be recognized was rewarded twice during the year. General Electric
announced July 16th it would acquire Harmon Industries, an equipment and
solutions provider for the worldwide rail transportation industry, for $30 per
share, a 100% premium over Harmon's trading price. Pittway Corporation, a
manufacturer of security alarm systems and components, was acquired by Honeywell
at a 50% premium as well. The Fund had an unfortunate experience, however, with
Independent Energy, a generator and marketer of power in the United Kingdom.
Independent's success in marketing overwhelmed the company's billing system,
which resulted in a liquidity crisis. Attempts by senior management to secure
sufficient funding to continue operations were negated by their lenders'
decision to seek receivership.
<PAGE>
VILLERE BALANCED FUND
We project that the Fund's equity turnover rate will remain under 30% in an
attempt to keep capital gains distributions to a minimum. We have maintained
this discipline, selling only two securities since inception that have realized
a gain. A third gain came from the Honeywell/Pittway cash offer.
The most recent money-tightening cycle has led to rising interest rates which
have dampened the performance of the fixed income component of our Fund.
However, the Federal Open Market Committee's August action to keep rates steady
at 6.5% indicates that the tightening may have finally come to a close, with a
total rate increase of 175 basis points. To ensure that the Fund is less
susceptible to this tough interest rate environment, we have purchased our
corporate bonds using a ladder approach and have not bought a bond that has
greater than a 10-year maturity.
"The expansion of aggregate demand is moderating toward a pace closer to the
rate of growth of the economy's potential to produce," observed the Federal Open
Market Committee in August. We agree. We believe that the market will continue
to act well and we have properly diversified the Fund to optimize its
performance in such conditions. However, we are also positioned to take full
advantage when money may shift to other sectors. We continue to invest in
companies with superior management and strong earning power whose potential is
yet to be recognized by the investing public.
Thank you for your investment in the Villere Balanced Fund.
/s/ St. Denis J. Villere /s/ George G. Villere
St. Denis J. Villere George G. Villere
/s/ George V. Young /s/ St. Denis J. Villere III
George V. Young St. Denis J. Villere III
P.S. Remember, you can check Fund results at any time through our Web site
www.villere.com.
2
<PAGE>
VILLERE BALANCED FUND
Value of $10,000 vs S&P 500 + Lehman Corporate Bond Index
Cumulative Total Return
Period Ended August 31, 2000
Since Inception (9/30/99)...34.70%
Villere S&P 500 + Lehman
Balanced Corporate
Fund Bond Index
------ ------
9/30/99 10,000 10,000
11/30/99 12,080 10,566
2/29/00 12,439 10,474
5/31/00 12,700 10,775
8/31/00 13,470 11,439
Past Performance is not predictive of future performance.
The S&P 500 + Lehman Corp Bond Index is a blend of the S&P 500 Index (65%), and
the Lehman Corporate Bond Index (35%).
The S&P 500 Index is a broad market-weighted average of U.S. blue-chip
companies. The S&P 500 Index is unmanaged and returns include reinvested
dividends. The Lehman Corporate Bond Index includes all publicly issued, fixed
rate, nonconvertible, investment-grade, domestic corporate debt.
<PAGE>
VILLERE BALANCED FUND
SCHEDULE OF INVESTMENTS at August 31, 2000
--------------------------------------------------------------------------------
Shares Value
-------- -----------
COMMON STOCKS: 65.4%
BANKS: 2.6%
2,600 Wells Fargo Co. $ 112,288
----------
BUILDING & CONSTRUCTION: 2.4%
3,300 Insituform Tech, Inc. Class A* 101,269
----------
CABLE TV: 2.1%
2,700 Adelphia Communications Corp. Class A* 90,450
----------
COMMUNICATIONS SERVICES: 2.3%
5,900 Covad Communications Group, Inc.* 96,244
----------
COMPUTER - INTEGRATED SYSTEMS: 10.5%
18,100 Vitech America, Inc.* 81,445
10,000 3D Systems Corp.* 200,000
3,700 Jack Henry & Associates, Inc. 164,188
----------
445,633
----------
DISTRIBUTION - WHOLESALE: 3.6%
5,250 SCP Pool Corp.* 153,891
----------
ELECTRIC - DISTRIBUTION: 1.9%
12,900 Independent Energy Holdings Plc.* 80,424
----------
ELECTRONIC COMPONENT: 4.9%
6,800 Harmon Industries, Inc. 208,675
----------
FINANCE - COMMERCIAL SERVICES: 2.2%
2,600 H&R Block, Inc. 93,275
----------
FOOD: 2.0%
5,000 Riviana Foods, Inc. 85,625
----------
HOME FURNISHINGS: 2.2%
5,300 Leggett & Platt, Inc. 93,744
----------
MEDICAL INFORMATION SYSTEM: 4.5%
5,000 Cerner Corp.* 190,313
----------
MEDICAL PRODUCTS: 5.6%
6,000 Luminex Corp.* 240,000
----------
OIL COMPANY - EXPLORATION & PRODUCTION: 3.2%
2,300 Stone Energy Corp.* 137,569
----------
OIL FIELD MACHINE & EQUIPMENT: 3.9%
9,000 Gulf Island Fabrication, Inc.* 166,500
----------
OPTICAL RECOGNITION SOFTWARE: 2.0%
2,600 Optimal Robotics Corp.* 86,775
----------
RESTAURANTS: 2.0%
6,800 O'Charleys, Inc.* 86,700
----------
TELEPHONE - INTEGRATED: 2.5%
2,900 WorldCom, Inc.* 105,850
----------
TRANSPORTATION - RAIL: 5.0%
23,000 Kansas City Southern Industries, Inc. 212,750
----------
TOTAL COMMON STOCKS
(Cost $ 2,422,817)+ 2,787,975
----------
PRINCIPAL
AMOUNT
---------
CORPORATE BONDS: 22.4%
AEROSPACE/DEFENSE: 1.7%
$ 75,000 Boeing Co. 6.875%, due 11/01/2006 73,447
----------
COSMETICS & TOILETRIES: 1.2%
50,000 Colgate-Palmolive Co. 6.580%, due 11/05/2002 49,452
----------
FINANCE - AUTO LOANS: 1.5%
75,000 Ford Motor Credit Co. 5.800%, due 1/12/2009 66,117
----------
FOOD: 1.6%
75,000 Sara Lee Corp. 6.000%, due 1/15/2008 69,857
----------
HOME FURNISHINGS: 1.8%
75,000 Leggett & Platt Inc. 7.650%, due 2/15/2005 76,072
----------
OFFICE AUTOMATION & EQUIPMENT: 1.1%
50,000 Pitney Bowes Inc. 5.950%, due 2/1/2005 48,157
----------
4
<PAGE>
VILLERE BALANCED FUND
SCHEDULE OF INVESTMENTS at August 31, 2000
--------------------------------------------------------------------------------
PRINCIPAL
AMOUNT Value
--------- -----------
OIL COMPANY - EXPLORATION & PRODUCTION: 5.9%
$ 50,000 Stone Energy Corp. 8.750%, due 9/15/2007 49,000
200,000 Mobil Corp. 8.375%, due 2/12/2001 200,879
----------
249,879
----------
OIL COMPANY - INTEGRATED: 1.2%
50,000 Chevron Corp. 6.625%, due 10/01/2004 49,584
----------
TRANSPORTATION - MARINE: 3.4%
145,000 International Shipholding Corp. 9.000%, due 7/1/2003 143,550
----------
TRANSPORTATION - RAIL: 3.0%
125,000 CSX Transportation, Inc. 7.770%, due 4/1/2010 125,700
----------
TOTAL CORPORATE BONDS
(Cost $ 948,753)+ 951,815
----------
U.S. GOVERNMENT OBLIGATIONS: 3.7%
150,000 U.S. Treasury Note 6.500%, due 2/15/2010
(Cost $ 150,268)+ 156,563
----------
SHORT- TERM INVESTMENT: 8.2%
MUTUAL FUND INVESTMENT: 8.2%
$350,922 Firstar Stellar Treasury Fund (Cost $ 350,922) $ 350,922
----------
TOTAL INVESTMENTS IN SECURITIES: 99.7%
(Cost $ 3,872,760) 4,247,275
Other Assets less Liabilities: 0.3% 13,320
----------
TOTAL NET ASSETS: 100.0% $4,260,595
==========
* Non-income producing security.
+ At August 31, 2000, the basis of securities for federal income tax purposes
was the same as their cost for financial reporting purposes. Unrealized
appreciation and depreciation of securities were as follows:
Gross unrealized appreciation $ 733,918
Gross unrealized depreciation (359,403)
----------
Net unrealized appreciation $ 374,515
==========
See accompanying Notes to Financial Statements.
5
<PAGE>
VILLERE BALANCED FUND
STATEMENT OF ASSETS AND LIABILITIES at August 31, 2000
--------------------------------------------------------------------------------
ASSETS
Investments in securities, at value (cost $ 3,872,760) ...... $ 4,247,275
Receivables:
Dividends and interest .................................... 19,645
Fund shares sold .......................................... 2,200
Due from Adviser .......................................... 6,883
Prepaid expenses ............................................ 7,164
-----------
Total assets ............................................ 4,283,167
-----------
LIABILITIES
Accrued expenses ............................................ 22,572
-----------
Total liabilities ....................................... 22,572
-----------
NET ASSETS .................................................... $ 4,260,595
===========
COMPONENTS OF NET ASSETS
Paid-in capital ............................................. $ 3,921,867
Undistributed net investment income ......................... 28,463
Accumulated net realized loss on investments ................ (64,250)
Net unrealized appreciation on investments .................. 374,515
-----------
Net assets .............................................. $ 4,260,595
===========
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($4,260,595/329,196 shares outstanding;
unlimited number of shares
authorized without par value) ............................. $ 12.94
===========
See accompanying Notes to Financial Statements.
6
<PAGE>
VILLERE BALANCED FUND
STATEMENT OF OPERATIONS - For the Period Ended August 31, 2000*
--------------------------------------------------------------------------------
INVESTMENT INCOME
Income
Interest income ............................................ $ 61,348
Dividend income ............................................ 7,693
---------
Total income ............................................ 69,041
---------
Expenses
Advisory fees (Note 3) ..................................... 17,334
Administration fees (Note 3) ............................... 27,616
Fund accounting fees ....................................... 14,318
Audit fees ................................................. 14,498
Transfer agent fees ........................................ 10,359
Custody fees ............................................... 5,700
Reports to shareholders .................................... 4,997
Legal fees ................................................. 5,230
Trustees' fees ............................................. 3,999
Insurance .................................................. 1,750
Registration fees .......................................... 5,024
Other ...................................................... 4,482
---------
Total expenses .......................................... 115,307
Less: fees waived and expenses absorbed ................. (80,358)
---------
Net expenses ............................................ 34,949
---------
NET INVESTMENT INCOME ................................... 34,092
---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on investments ............................. (10,573)
Net change in unrealized appreciation on investments ......... 374,515
---------
Net realized and unrealized gain on investments ............ 363,942
---------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ...................................... $ 398,034
=========
* Commenced operations on September 30, 1999.
See accompanying Notes to Financial Statements.
7
<PAGE>
VILLERE BALANCED FUND
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
September 30, 1999*
through
August 31, 2000
-----------
INCREASE/(DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income ..................................... $ 34,092
Net realized loss on investments .......................... (10,573)
Net unrealized appreciation on investments ................ 374,515
-----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ..................................... 398,034
-----------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ................................. (5,629)
From net realized gain ..................................... (53,677)
-----------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS .................... (59,306)
-----------
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from net change
in outstanding shares (a) .............................. 3,821,867
-----------
TOTAL INCREASE IN NET ASSETS .......................... 4,160,595
-----------
NET ASSETS
Beginning of period ....................................... 100,000
-----------
END OF PERIOD (Including undistributed net
investment income of $28,463) .......................... $ 4,260,595
===========
(a) Summary of capital share transactions is as follows:
September 30, 1999*
through
August 31, 2000
--------------------------
Shares Value
----------- -----------
Shares sold ...................................... 333,442 $ 3,977,247
Shares issued in reinvestment of distributions ... 5,130 59,041
Shares redeemed .................................. (19,376) (214,421)
----------- -----------
Net increase ..................................... 319,196 $ 3,821,867
=========== ===========
* Commencement of operations.
See accompaying Notes to Financial Statements.
8
<PAGE>
VILLERE BALANCED FUND
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
September 30, 1999*
For a capital share outstanding through
throughout the period August 31, 2000
--------------------- ---------------
Net asset value, beginning of period .......................... $10.00
------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ....................................... 0.13
Net realized and unrealized gain on investments ............. 3.28
------
Total from investment operations .............................. 3.41
------
LESS DISTRIBUTIONS:
From net investment income .................................. (0.04)
From net realized gain ...................................... (0.43)
------
Total distributions ........................................... (0.47)
------
Net asset value, end of period ................................ $12.94
======
Total return .................................................. 34.70%#
Ratios/supplemental data:
Net assets, end of period (millions) .......................... $ 4.3
RATIO OF EXPENSES TO AVERAGE NET ASSETS:
Before fees waived and expenses absorbed .................... 4.95%+
After fees waived and expenses absorbed ..................... 1.50%+
RATIO OF NET INVESTMENT INCOME/(LOSS) TO AVERAGE NET ASSETS:
Before fees waived and expenses absorbed .................... (1.99%)+
After fees waived and expenses absorbed ..................... 1.46%+
Portfolio turnover rate ....................................... 18.35%#
* Commencement of operations.
+ Annualized.
# Not Annualized.
See accompaying Notes to Financial Statements.
9
<PAGE>
VILLERE BALANCED FUND
NOTE TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
The Villere Balanced Fund (the "Fund") is a series of shares of beneficial
interest of the Trust for Investment Managers (the "Trust") which is registered
under the Investment Company Act of 1940 (the "1940 Act") as a diversified
open-end management investment company. The Fund commenced operations on
September 30, 1999. The investment objective of the Fund is to seek long-term
capital growth, consistent with preservation of capital and balanced by current
income. The Fund seeks to achieve its objective by investing in a combination of
equity securities and high quality fixed income obligations.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund. These policies are in conformity with generally accepted
accounting principles.
A. SECURITIES VALUATION. Securities traded on a national exchange or
Nasdaq are valued at the last reported sale price at the close of
regular trading on the last business day of the period; securities
traded on an exchange or Nasdaq for which there have been no sales,
and other over-the-counter securities, are valued at the mean between
the last bid and asked prices. Securities for which quotations are not
readily available are valued at their respective fair values as
determined in good faith by the Board of Trustees. Short-term
investments are stated at cost which, when combined with accrued
interest, approximates market value.
U.S. Government securities with less than 60 days remaining to
maturity when acquired by the Fund are valued on an amortized cost
basis. U.S. Government securities with more than 60 days remaining to
maturity are valued at their current market value (using the mean
between the bid and asked price) until the 60th day prior to maturity,
and are then valued at amortized cost based upon the value on such
date unless the Board of Trustees determines during such 60 day period
that amortized cost does not represent fair value.
B. FEDERAL INCOME TAXES. The Fund intends to comply with the requirements
of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its
shareholders. Therefore, no federal income tax provision is required.
10
<PAGE>
VILLERE BALANCED FUND
NOTE TO FINANCIAL STATEMENTS, CONTINUED
--------------------------------------------------------------------------------
C. SECURITIES TRANSACTIONS, DIVIDEND INCOME AND DISTRIBUTIONS. Securities
transactions are accounted for on the trade date. The cost of
securities sold is determined using the specific identification
method. Dividend income and distributions to shareholders are recorded
on the ex-dividend date.
D. USE OF ESTIMATES. The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial
statements. Actual results could differ from those estimates.
NOTE 3 - COMMITMENTS AND OTHER RELATED PARTY TRANSACTIONS
St. Denis J. Villere & Co. (the "Adviser") provides the Fund with investment
management services under an Investment Advisory Agreement (the "Agreement").
Under the Agreement the Adviser furnishes all investment advice, office space,
facilities, and most of the personnel needed by the Fund. As compensation for
its services, the Adviser receives a monthly fee at the annual rate of 0.75% of
the Fund's average daily net assets. For the period ended August 31, 2000, the
Fund incurred $17,334 in advisory fees.
The Fund is responsible for its own operating expenses. The Adviser has
contractually agreed to limit the Fund's expenses by reducing all or a portion
of its fees and reimbursing the Fund's expenses so that its ratio of expenses to
average net assets will not exceed 1.50%. In the case of the Fund's initial
period of operations any fee waived or voluntarily reduced and/or any Fund
expense absorbed by the Adviser pursuant to an agreed upon expense cap shall be
reimbursed by the Fund to the Adviser, if so requested by the Adviser, anytime
before the end of the fifth fiscal year following the year to which the fee
waiver and/or expense absorption relates, provided the aggregate amount of the
Fund's current operating expenses for such fiscal year does not exceed the
applicable limitation on Fund expenses. For the period ended August 31, 2000,
the Adviser waived $17,334 in fees and absorbed expenses of $63,024. The Fund
must pay its current ordinary operating expenses before the Adviser is entitled
to any reimbursement of fees and/or expenses. Any such reimbursement is also
contingent upon Board of Trustees review and approval prior to the time the
reimbursement is initiated.
Investment Company Administration, L.L.C. (the "Administrator") acts as the
Fund's administrator under an Administration Agreement. The Administrator
prepares various federal and state regulatory filings, reports and returns;
prepares reports and materials to be supplied to the trustees; monitors the
11
<PAGE>
VILLERE BALANCED FUND
NOTE TO FINANCIAL STATEMENTS, CONTINUED
--------------------------------------------------------------------------------
activities of the Fund's custodian, transfer agent and accountant; coordinates
the preparation and payment of Fund expenses and reviews the Fund's expense
accruals. For its services, the Administrator receives a monthly fee at the
following annual rates:
Under $15 million $30,000
$15 to $50 million 0.20% of average daily net assets
$50 to $100 million 0.15% of average daily net assets
$100 to $150 million 0.10% of average daily net assets
Over $150 million 0.05% of average daily net assets
For the period ended August 31, 2000, the Fund incurred $27,616 in
administration fees.
First Fund Distributors, Inc. (the "Distributor") acts as the Fund's principal
underwriter in a continuous public offering of the Fund's shares. The
Distributor is an affiliate of the Administrator.
Certain officers and trustees of the Trust are also officers and/or directors of
the Administrator and the Distributor.
NOTE 4 - PURCHASES AND SALES OF SECURITIES
The cost of purchases and proceeds from the sales of securities, excluding U.S.
Government obligations and short-term investments, for the period ended August
31, 2000, were $3,703,997 and $323,753, respectively. The cost of purchases and
the proceeds from the sales of U.S. Government obligations, excluding short-term
obligations, were $200,220 and $49,453, respectively.
12
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders of
Villere Balanced Fund
The Board of Trustees of
Trust For Investment Managers
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of Villere Balanced Fund, a series of Trust For
Investment Managers, as of August 31, 2000, and the related statement of
operations, the statements of changes in net assets, and the financial
highlights for the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of August 31, 2000, by
correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Villere Balanced Fund as of August 31, 2000, the results of its operations, the
changes in its net assets and the financial highlights for the period then
ended, in conformity with generally accepted accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
October 6, 2000
13
