ST. DENIS J. VILLERE & COMPANY
VILLERE BALANCED FUND
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SEMI-ANNUAL REPORT
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February 29, 2000
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March 28, 2000
To Our Fellow Shareholders:
The Villere Balanced Fund finished its first semi-annual period on February
29, 2000 with a cumulative return since inception of 24.39%. This outperformed
both the Dow Jones Industrial Average and the Russell 3000 index which returned
- -2.02% and 12.11% respectively . The asset allocation was 64% stocks, 23% bonds
and 13% in cash equivalents.
We believe the market, as evidenced by the S&P 500 price to earnings
multiple of 26, is at an historical divergence from the 110 P/E multiple of the
NASDAQ 100, a technology-laden index. The "old economy" stocks in the S&P 500,
which include paper , chemical, metals, and machinery Villere Balanced Fund ,
trade at a mere 11 times 2000 earnings, whereas the new large cap technology
stocks of the S&P 500 such as America Online, Cisco, and Intel trade at 54 times
2000 earnings. Although we do own select technology stocks, and believe the
internet is changing the world around us, we feel technology is relatively
overvalued at present. The fundamentals for investing in equities remain ideal
considering current low inflation, consistent corporate earnings, and a federal
budget surplus.
We have projected our equity turnover rate to be 30% to minimize our
shareholders' tax burden. This is borne out by the fact that we have sold only
two securities since inception. A third capital gain occurred as Honeywell
tendered for Pittway at a 35% premium.
The Federal Open Market Committee (FOMC) raised interest rates again March
21 to 6.0%, and has now raised rates 125 basis points since the original
increase. This has created a tough environment for bond performance. However,
our ladder approach, with maturities averaging six years, has reduced the impact
of this rising interest rate scenario.
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In contrast to the fixed income component of our fund, we have seen
gratifying appreciation in the equity side of our portfolio. We have diversified
our fund by purchasing equities whose value is unrecognized by the market, such
as Leggett& Platt, and Gulf Island Fabrication. Our strategy involves the
purchase of securities that have been largely ignored by Wall Street. As market
rotation occurs, the re-evaluation of these investments should enhance our net
asset value. We believe that companies with excellent earnings will benefit from
this rotation.
Leggett& Platt was founded in 1883 and holds the original patent to the
bedspring. It now provides residential components for bedding and furniture, as
well as furnishes commercial office products. It trades at only 13 times
earnings, a 30% discount to comparable industrial firms, and we project a growth
rate of 15%. Gulf Island Fabrication constructs offshore drilling and production
platforms. Its pristine balance sheet allowed it to weather the latest drop in
oil prices. As those prices rebounded and production increased in the Gulf of
Mexico, operating efficiencies enabled it to take full advantage of expanding
opportunities.
Our philosophy regarding technology stocks has not been to buy the "dot
com's", but to buy key infrastructure companies that will benefit from the
growth of the overall internet, such as Covad Communications. Covad is the
leader in digital subscriber line technology (DSL), which is provided over
standard copper telephone lines at speeds up to 25 times conventional modems. As
video streaming, and the downloading of large files becomes more common, a
broadband upgrade will be a necessity instead of a luxury. Optimal Robotics, a
Canadian company, exemplifies another type of technology investment with a
competitive edge or a unique product in the marketplace. Optimal's U-Scan
Express system allows customers of major retail chains to scan and bag their own
groceries. This technology is very similar to other self- service ideas such as
ATM's and pay at the pump gas stations. Optimal's customers include Kroger, the
largest grocery chain in the United States, which has now installed 235 systems.
Wal- Mart, the world's largest retailer, is currently testing eighteen systems
in their supercenters.
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In conclusion, we believe that the market will broaden into sectors other
than technology, and that small and mid-cap companies with excellent earnings
will benefit. We have properly diversified our fund to enhance performance in
the current market, but have positioned ourselves to take full advantage when
money may shift to other sectors. We continue to invest in companies with
superior management and strong earnings power whose potential is yet to be
recognized by the investing public.
We 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
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VILLERE BALANCED FUND
SCHEDULE OF INVESTMENTS at February 29, 2000 (Unaudited)
Shares Value
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COMMON STOCKS: 62.7%
BANKS: 3.6%
2,600 Wells Fargo Co. $ 85,963
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BUILDING & CONSTRUCTION: 3.9%
3,300 Insituform Tech, Inc.
Class A* 93,225
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CABLE TV: 3.6%
1,600 Adelphia Communications Corp.* 87,900
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COMPUTER - INTEGRATED SYSTEMS: 3.7%
14,100 Vitech America, Inc.* 89,006
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DISTRIBUTION - WHOLESALE: 3.6%
3,500 SCP Pool Corp.* 86,844
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ELECTRIC - DISTRIBUTION: 4.1%
2,000 Independent Energy Holdings Plc.* 100,125
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ELECTRONIC COMPONENT: 2.9%
5,100 Harmon Industries, Inc. 71,400
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FINANCE - COMMERCIAL SERVICES: 2.4%
1,300 H&R Block, Inc. 57,037
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FOOD: 3.4%
5,000 Riviana Foods, Inc. 83,125
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FUNERAL SERVICES & RELIGIOUS ITEMS: 3.4%
19,500 Stewart Enterprises, Inc., Class A 82,875
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HOME FURNISHINGS: 3.7%
5,300 Leggett & Platt, Inc. 89,106
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INTERNET SOFTWARE: 2.6%
700 Covad Communications Group, Inc.* 63,175
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OIL COMPANY - EXPLORATION & PRODUCTION: 3.9%
2,300 Stone Energy Corp.* 93,438
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OIL FIELD MACHINERY & EQUIPMENT: 3.8%
9,000 Gulf Island Fabrication, Inc.* 92,250
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OPTICAL RECOGNITION SOFTWARE: 3.9%
2,600 Optimal Robotics Corp.* 95,875
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RESTAURANTS: 3.2%
6,800 O'Charleys, Inc.* $ 76,500
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TELECOMMUNICATIONS: 3.4%
1,850 MCI WorldCom Inc.* 82,556
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TRAVEL SERVICES: 3.6%
4,400 Pegasus Systems, Inc.* 88,000
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TOTAL COMMON STOCKS
(Cost $1,487,807) 1,518,400
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Principal
Amount
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CORPORATE BONDS: 21.5%
AEROSPACE/DEFENSE: 3.0%
$75,000 Boeing Co.
6.875%, due 11/01/2006 71,864
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COSMETICS & TOILETRIES: 2.0%
50,000 Colgate-Palmolive Co.
6.580%, due 11/15/2002 49,030
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FINANCE - AUTO LOANS: 2.7%
75,000 Ford Motor Credit Co.
5.800%, due 1/12/2009 65,305
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FOOD: 2.8%
75,000 Sara Lee Corp.
6.000%, due 1/15/2008 68,117
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HOME FURNISHINGS: 3.1%
75,000 Leggett & Platt Inc.
7.650%, due 2/15/2005 75,248
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OFFICE AUTOMATION & EQUIPMENT: 2.0%
50,000 Pitney Bowes Inc.
5.950%, due 2/1/2005 47,022
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OIL COMPANY - EXPLORATION & PRODUCTION: 1.9%
50,000 Stone Energy Corp.
8.750%, due 9/15/2007 46,500
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OIL COMPANY - INTEGRATED: 2.0%
50,000 Chevron Corp.
6.625%, due 10/01/2004 48,769
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See accompanying Notes to Financial Statements.
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VILLERE BALANCED FUND
SCHEDULE OF INVESTMENTS at February 29, 2000 (Unaudited), Continued
Principal
Amount Value
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TRANSPORTATION - MARINE: 2.0%
$50,000 International Shipholding Corp.
9.000%, due 7/1/2003 $ 48,625
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TOTAL CORPORATE BONDS
(Cost $526,692) 520,480
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U.S. GOVERNMENT OBLIGATIONS: 2.1%
50,000 U.S. Treasury Note
6.125%, due 12/31/2001
(Cost $49,945) 49,625
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SHORT-TERM INVESTMENT: 13.6%
MONEY MARKET INVESTMENT: 13.6%
$329,454 Firstar Stellar Treasury Fund
(Cost $329,454) $ 329,454
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TOTAL INVESTMENTS IN SECURITIES: 99.9%
(Cost $2,393,898) 2,417,959
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Other Assets less Liabilities: 0.1%
2,116
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TOTAL NET ASSETS: 100.0% $2,420,075
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* Non-income producing security.
See accompanying Notes to Financial Statements.
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VILLERE BALANCED FUND
STATEMENT OF ASSETS AND LIABILITIES at February 29, 2000 (Unaudited)
ASSETS
Investments in securities, at value (cost $2,393,898) ......... $2,417,959
Receivables:
Due from Adviser ............................................ 29,021
Dividends and interest ...................................... 13,446
Capital shares sold ......................................... 350
Prepaid expenses .............................................. 6,237
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Total assets .................................................. 2,467,013
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LIABILITIES
Payable for securities purchased .............................. 27,200
Accrued expenses .............................................. 19,738
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Total liabilities ............................................. 46,938
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NET ASSETS ...................................................... $2,420,075
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COMPOSITION OF NET ASSETS
Paid-in capital ............................................... $2,370,777
Undistributed net investment income ........................... 6,476
Undistributed net realized gain on investments ................ 18,761
Net unrealized appreciation on investments .................... 24,061
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Net assets .................................................... $2,420,075
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NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER SHARE
($2,420,075/202,573 shares outstanding; unlimited number
of shares authorized without par value) ....................... $ 11.95
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See accompanying Notes to Financial Statements.
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VILLERE BALANCED FUND
STATEMENT OF OPERATIONS Period Ended February 29, 2000* (Unaudited)
INVESTMENT INCOME
Income
Interest income .............................................. $ 19,085
Dividend income .............................................. 1,585
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Total income .............................................. 20,670
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Expenses
Administration fees .......................................... 12,493
Fund accounting fees ......................................... 7,475
Audit fees ................................................... 6,559
Transfer agent fees .......................................... 5,493
Advisory fees ................................................ 4,219
Custody fees ................................................. 3,481
Reports to shareholders ...................................... 2,084
Legal fees ................................................... 1,709
Trustees' fees ............................................... 1,668
Insurance .................................................... 462
Registration fees ............................................ 81
Other ........................................................ 2,085
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Total expenses ............................................ 47,809
Less: fees waived and expenses absorbed ................... (39,240)
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Net expenses .............................................. 8,569
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NET INVESTMENT INCOME ................................... 12,101
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REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments ............................... 72,443
Net change in unrealized appreciation on investments ........... 24,061
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Net realized and unrealized gain on investments .............. 96,504
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NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ....... $ 108,605
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* Commenced operations on September 30, 1999.
See accompanying Notes to Financial Statements.
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VILLERE BALANCED FUND
STATEMENT OF CHANGES IN NET ASSETS (Unaudited)
Period Ended
February 29, 2000*
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INCREASE IN NET ASSETS FROM:
OPERATIONS
Net investment income ...................................... $ 12,101
Net realized gain on investments ........................... 72,443
Net change in unrealized appreciation on investments ....... 24,061
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NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ..... 108,605
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DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ................................. (5,625)
From net realized gain ..................................... (53,682)
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TOTAL DISTRIBUTIONS TO SHAREHOLDERS ...................... (59,307)
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CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from net change in
outstanding shares (a) ................................... 2,270,777
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TOTAL INCREASE IN NET ASSETS ............................. 2,320,075
NET ASSETS
Beginning of period ........................................ 100,000
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END OF PERIOD (including undistributed net
investment income of $6,476) ............................. $ 2,420,075
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(a) Summary of capital share transactions is as follows:
Period Ended
February 29, 2000*
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Shares Value
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Shares sold 198,447 $2,322,577
Shares issued in reinvestment of distributions 5,130 59,040
Shares redeemed (11,004) (110,840)
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Net increase 192,573 $2,270,777
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* Commenced operations on September 30, 1999.
See accompanying Notes to Financial Statements.
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VILLERE BALANCED FUND
FINANCIAL HIGHLIGHTS For a capital share outstanding throughout the period
September 30, 1999*
Through
February 29, 2000#
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Net asset value, beginning of period ......................... $ 10.00
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INCOME FROM INVESTMENT OPERATIONS:
Net investment income ...................................... 0.08
Net realized and unrealized gain on investments ............ 1.95
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Total from investment operations ............................. 2.03
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LESS DISTRIBUTIONS:
From net investment income ................................. (0.04)
From net realized gain ..................................... (0.04)
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Total distributions .......................................... (0.08)
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Net asset value, end of period ............................... $ 11.95
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Total return ................................................. 24.39%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (millions) ....................... $ 2.4
RATIO OF EXPENSES TO AVERAGE NET ASSETS:
Before fees waived and expenses absorbed ................... 8.35%**
After fees waived and expenses absorbed .................... 1.50%**
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS:
Before fees waived and expenses absorbed ................... (4.74%)**
After fees waived and expenses absorbed .................... 2.11%**
Portfolio turnover rate .................................... 33%
* Commencement of operations.
# Unaudited.
** Annualized.
See accompanying Notes to Financial Statements.
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VILLERE BALANCED FUND
NOTES TO FINANCIAL STATEMENTS (Unaudited)
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 In- vestment Company Act of 1940 (the "1940 Act") as a diversified
open-end man- agement 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 fol- lowed 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 last reported
bid price. 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 deter- mines 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.
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VILLERE BALANCED FUND
NOTES TO FINANCIAL STATEMENTS (Unaudited), Continued
C. SECURITIES TRANSACTIONS, DIVIDEND INCOME AND DISTRIBUTIONS. Securities
transac tions are accounted for on the trade date. The cost of
securities sold is deter- mined 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 esti- mates and assumptions that affect the
reported amounts of assets and liabili- ties 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
"Agree- ment"). 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
February 29, 2000, the Fund incurred $4,219 in advisory fees.
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 ex- penses to average net assets will not exceed 1.50%. In the
case of the Fund's initial period of operations any fee withheld or voluntarily
reduced and/or any Fund ex- pense absorbed by the Adviser pursuant to an agreed
upon expense cap shall be re- imbursed 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 ex- pense absorption relates,
provided the aggregate amount of the Fund's current oper- ating expenses for
such fiscal year does not exceed the applicable limitation on Fund expenses. Any
such reimbursement is also contingent upon Board of Trustees review and approval
prior to the time the reimbursement is initiated. The Fund must pay its current
ordinary operating expenses before the Adviser is entitled to any reimbursement
of fees and/or expenses. During the period end February 29, 2000 the Adviser
waived fees of $4,219 and absorbed expenses of $35,021.
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VILLERE BALANCED FUND
NOTES TO FINANCIAL STATEMENTS (Unaudited), Continued
Investment Company Administration, L.L.C. (the "Administrator") acts as the
Fund's administrator under an Administration Agreement. The Administrator pre-
pares various federal and state regulatory filings, reports and returns;
prepares re- ports and materials to be supplied to the trustees; monitors the
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 February 29, 2000, the Fund incurred $12,493 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 the proceeds from the sale of securities for the
period ended February 29, 2000, excluding U.S. Government obligations and
short-term investments, were $2,106,891 and $165,133, respectively. The cost of
purchases and the proceeds from sales of U.S. Government obligations, excluding
short-term investments, were $49,945 and $0, respectively.
NOTE 5 - TAX BASIS APPRECIATION
At February 29, 2000, the cost of securities for federal income tax
purposes was the same as their cost for financial reporting purposes. Gross
unrealized apprecia- tion and depreciation of securities were as follows:
Gross unrealized appreciation ........................... $ 99,119
Gross unrealized depreciation ........................... (75,058)
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Net unrealized appreciation ........................... $ 24,061
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Adviser
ST. DENIS J. VILLERE & COMPANY
210 Baronne Street, Suite 808
New Orleans, LA 70112
877-VILLERE (877-845-5373)
www.villere.com
Distributor
FIRST FUND DISTRIBUTORS, INC.
4455 East Camelback Road, Suite 261E
Phoenix, AZ 85018
Custodian
FIRSTAR INSTITUTIONAL CUSTODY SERVICES
425 Walnut Street
Cincinnati, OH 45202
Transfer Agent
ICA FUND SERVICES CORPORATION
4455 East Camelback Road, Suite 261E
Phoenix, AZ 85018
Legal Counsel
PAUL, HASTINGS, JANOFSKY & WALKER, LLP
345 California Street, 29th Floor
San Francisco, CA 94104
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This report is intended for the shareholders of the Fund and may not be used as
sales literature unless preceded or accompanied by a current prospectus.
Past performance results shown in this report should not be considered a
representation of future performance. Share price and returns will fluctuate so
that shares, when redeemed, may be worth more or less than their original cost.
Statements and other information herein are dated and are subject to change.
