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ASTROP RESEARCH CORPORATION
SEMI-ANNUAL REPORT
For the Six Months Ended
October 31, 2000
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ASTROP RESEARCH CORPORATION
Dear Fellow Shareholder,
As this rocky year comes to an end, the corporate earnings outlook is being
significantly undermined by signs that the economy is slowing and some analysts
are warning that, while profit growth will remain strong, current earnings
projections are too optimistic. They are adjusting their estimates accordingly
and, as a result, are adding to the anxieties being felt by investors.
Recent unemployment data has reinforced the perception that the economy is
cooling after six rate-increases by the Federal Reserve. Payrolls have risen
well below their monthly average recently. Manufacturing jobs have actually
declined, and manufacturing activity has shrunk after 18 months of growth. The
big automakers are cutting production; home appliance manufacturers, like
Whirlpool, say slowing demand will cut into their profits and department stores,
already beleaguered, are warning of a possible, if not probable, disappointing
Holiday season.
There are signs that Wall Street analysts are beginning to factor-in an economic
slow-down. For consumer cyclicals, including Caterpillar, Dow Chemical and
International Paper, analysts have reduced their earnings-growth projections.
Estimates for leading companies in consumer staples, including General Mills and
Kellogg, are also falling.
The perception that the economy need slow only modestly to curb inflationary
pressures is a result of the surprising increase in worker productivity over the
last couple of years. Comments from Fed officials seem to acknowledge that the
potential non-inflationary growth rate of the economy was thought to be 2.5% to
3%. The total allowed for about a percentage point from the normal annual growth
in the country's labor supply. Now, with the trend line for worker productivity
approaching 3.5%, Fed officials seem to agree that the non-inflationary growth
for the economy may be as high as 4.5% - most certainly 4%. In any event, Fed
chairman Greenspan recently stated that he could find no evidence that
productivity growth was slowing. The current posture of the U.S. economy is
about as favorable as it gets with controlled inflation, moderate interest rates
and an acceptable rate of corporate-earnings progress.
Confidence continues to suffer from this year's sharp corrections and many
failed rallies. The tendency of investors is to quickly nail-down profits on any
hints of trouble. The risk now is that continued choppiness will exhaust
investors patience. Broadbased adoption of a defensive strategy could have
severe consequences. Spurred by the market's spectacular performance in recent
years, individuals have sharply expanded their common stock holdings.
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The ongoing global technology revolution, led by U.S. corporations, continues to
bolster investor psychology, due in large part to its ever-advancing and
innovative contributions to worldwide growth. Since its inception earlier this
year, the Astrop First Internet Fund, following a pattern set by the technology
sector, has experienced a drop in net asset value. However, compared to other
Internet funds, the decline has been less pronounced. This is due in large part
to the fund's commitment to leading stocks related to the Internet. The fund has
sought to avoid speculative dot.com companies in favor of established,
high-growth firms that have a proven earnings record. As a result, from its
inception on July 14 to the end of the third quarter, the First Internet Fund
saw a return of -9.2% versus a return of _28.7% from the Munder Net Net Fund,
-22.4% from the Internet Fund, -29.3% from the WWW Internet Fund and -43.7% from
the Jacob Internet Fund, during the same time period.
In terms of the market's psychological profile, we note that investors' behavior
has changed somewhat recently. They have become more reluctant to move against
the swings in the market, selling into rallies, and no longer seeing dips as a
buying opportunity. This comparatively choppy correction, should, in the long
run, have beneficial effects. After five super-charged years, a consolidation of
sorts and reduced volatility should calm nerves, help make expectations more
realistic and allow earnings to catch-up, at least somewhat, with stock prices.
Though we would be at a loss to conjure-up potential catalysts, we think an
eventual breakout will be to the upside. Psychology is still basically favorable
and fundamentals remain solid.
The economy, restrained by Fed tightening over the past year, is easing back to
a less-inflation-prone pace. Profit growth is slowly moderating. But with
productivity continuing to improve, earnings should remain healthy, where the
S&P 500 operating profits should be up about 13% this year and consensus
projections forecast a 9% rise in 2001.
The quality of earnings is showing some signs of slipping. Increased pension
gains, lower taxes and other non-operating items are more heavily contributing
to bottom lines.
Such a background augurs well for continued, albeit modest, advances in stock
prices in the period ahead. The current rather serious pullback in NASDAQ,
following a record-setting 87% advance in 1999, should run its course before
long. Technology, along with healthcare and energy, are sectors that should be
at the vanguard of the next major advance, which we feel should occur in the
spring of next year.
/s/ William B. Astrop
William B. Astrop, CFA
December 11, 2000
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ASTROP FIRST INTERNET FUND
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SCHEDULE OF INVESTMENTS AT OCTOBER 31, 2000 (UNAUDITED)
SHARES VALUE
-------- -----------
COMMON STOCKS - 95.02%
E-COMMERCE/E-TAILERS - 9.91%
8,759 The Charles Schwab Corporation...................... $ 307,660
5,088 eBay Inc.*.......................................... 262,032
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569,692
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HARDWARE - 24.79%
10,174 Compaq Computer Corporation......................... 309,391
10,271 Dell Computer Corporation*.......................... 302,995
2,895 EMC Corporation*.................................... 257,836
2,349 Sun Microsystems, Inc.*............................. 260,445
6,017 Texas Instruments, Incorporated..................... 295,209
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1,425,876
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INFRASTRUCTURE - 18.76%
7,232 Nokia Corporation ADR Class A....................... 309,168
3,909 QUALCOMM Incorporated*.............................. 254,513
2,558 Siebel Systems, Inc.*............................... 268,430
10,389 WorldCom, Inc.*..................................... 246,739
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1,078,850
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INTERNET TECHNOLOGY/SOFTWARE - 31.75%
4,040 Adobe Systems Incorporated.......................... 307,293
1,162 Broadcom Corporation - Class A*..................... 258,400
2,090 CIENA Corporation*.................................. 219,711
5,058 Cisco Systems, Inc.*................................ 272,500
2,820 Corning Incorporated................................ 215,730
4,315 Microsoft Corporation*.............................. 297,196
7,736 Oracle Corporation*................................. 255,288
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1,826,117
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PORTALS - 9.81%
5,703 America Online, Inc................................. 287,602
4,716 Yahoo! Inc.*........................................ 276,476
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564,078
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Total Common Stocks (Cost $5,922,682)........................... 5,464,612
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See Notes to Financial Statements
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ASTROP FIRST INTERNET FUND
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SCHEDULE OF INVESTMENTS AT OCTOBER 31, 2000 (UNAUDITED), CONT'D
PRINCIPAL
AMOUNT VALUE
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SHORT-TERM INVESTMENTS - 4.93%
$283,657 Firstar Stellar Treasury Fund (Cost $283,657)....... $ 283,657
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Total Investments in Securities
(Cost $6,206,339): 99.95%......................... 5,748,269
Other Assets in Excess of Liabilities: 0.05%........ 2,694
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TOTAL NET ASSETS: 100%.............................. $ 5,750,963
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ADR - American depositary receipt
* Non-income producing security
See Notes to Financial Statements
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ASTROP FIRST INTERNET FUND
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STATEMENT OF ASSETS AND LIABILITIES AT OCTOBER 31, 2000 (UNAUDITED)
ASSETS
Investments in securities, at value
(identified cost $6,206,339)................................ $ 5,748,269
Receivables
Dividends and interest...................................... 5,887
Prepaid expenses.............................................. 13,925
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Total assets.............................................. 5,768,081
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LIABILITIES
Payables
Due to advisor.............................................. 1,731
Accrued expenses.............................................. 15,387
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Total liabilities........................................ 17,118
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NET ASSETS...................................................... $ 5,750,963
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NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($5,750,963/633,435 shares outstanding; unlimited number
of shares authorized without par value)..................... $ 9.08
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COMPONENTS OF NET ASSETS
Paid-in capital............................................... $ 6,220,774
Undistributed net investment income........................... (11,741)
Net unrealized appreciation on investments.................... (458,070)
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Net assets.................................................. $ 5,750,963
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See Notes to Financial Statements
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ASTROP FIRST INTERNET FUND
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STATEMENT OF OPERATIONS
FOR THE PERIOD JULY 14, 2000* THROUGH OCTOBER 31, 2000 (UNAUDITED)
INVESTMENT INCOME
Income
Dividends .................................................. $ 408
Interest.................................................... 13,717
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Total income............................................ 14,126
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Expenses
Organization expense........................................ 35,000
Advisory fees (Note 3)...................................... 9,687
Professional fees........................................... 6,597
Fund accounting fees........................................ 4,105
Transfer agent fees......................................... 4,105
Registration fees........................................... 3,518
Administration fees (Note 3)................................ 2,548
Distribution (Note 4)....................................... 2,548
Custody fees................................................ 2,345
Trustee fees................................................ 1,173
Shareholder Reporting....................................... 1,173
Other....................................................... 880
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Total expenses.......................................... 73,678
Less: advisory fee waiver and absorption (Note 3)....... (47,811)
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Net expenses............................................ 25,867
NET INVESTMENT LOSS................................... (11,741)
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REALIZED AND UNREALIZED LOSS ON INVESTMENTS
Net change in unrealized depreciation on investments.......... (458,070)
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NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS.. $ (469,810)
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* Commencement of operations
See Notes to Financial Statements
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ASTROP FIRST INTERNET FUND
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STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED)
JULY 14, 2000*
THROUGH
OCTOBER 31, 2000
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INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS
Net investment loss.......................................... $ (11,741)
Net change in unrealized depreciation on investments......... (458,070)
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NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS....... (469,811)
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CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from net change
in outstanding shares (a)................................. 6,220,774
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TOTAL INCREASE IN NET ASSETS............................... 5,750,963
NET ASSETS
Beginning of period.......................................... 0
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END OF PERIOD................................................ $ 5,750,963
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(a) A summary of capital shares transactions is as follows:
JULY 14, 2000*
THROUGH
OCTOBER 31, 2000
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SHARES VALUE
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Shares sold....................................... 647,837 $ 6,356,513
Shares redeemed................................... (14,403 (135,739)
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Net increase...................................... 633,435 $ 6,220,774
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* Commencement of operations
See Notes to Financial Statements
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ASTROP FIRST INTERNET FUND
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FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD (UNAUDITED)
JULY 14, 2000*
THROUGH
OCTOBER 31, 2000
----------------
Net asset value, beginning of period.......................... $ 10.00
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INCOME FROM INVESTMENT OPERATIONS:
Net investment loss......................................... (0.02)
Net realized and unrealized loss on investments............. (0.90)
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Total from investment operations.......................... (0.92)
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Net asset value, end of period................................ $ 9.08
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TOTAL RETURN.................................................. (9.20%)+
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands)....................... $ 5,751
Ratio of expenses to average net assets:
Before expense reimbursement.............................. 7.12%++
After expense reimbursement............................... 2.50%++
Ratio of net investment loss to average net assets
After expense reimbursement............................... (4.74%)++
Portfolio turnover rate..................................... 0.00%
* Commencement of operations
+ Not Annualized
++ Annualized
See Notes to Financial Statements.
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ASTROP FIRST INTERNET FUND
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NOTES TO FINANCIAL STATEMENTS AT OCTOBER 31, 2000 (UNAUDITED)
NOTE 1 - ORGANIZATION
The Astrop First Internet 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 July 14, 2000. The investment objective of the Fund is to seek
long-term growth of capital. The Fund will pursue this objective by investing
primarily in the common stocks of companies principally engaged in the Internet
sector.
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 securities
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 of the last available bid and asked 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.
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.
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.
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ASTROP FIRST INTERNET FUND
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NOTES TO FINANCIAL STATEMENTS, CONTINUED
NOTE 3 - COMMITMENTS AND OTHER RELATED PARTY TRANSACTIONS
Astrop Research Corporation (the "Advisor") provides the Fund with
investment management services under an Investment Advisory Agreement (the
"Agreement"). Under the Agreement the Advisor furnishes all investment advice,
office space, facilities, and most of the personnel needed by the Fund. As
compensation for its services, the Advisor receives a monthly fee at the annual
rate of 0.95% of the Fund's average daily net assets. For the period from July
14, 2000 (commencement of operations) through October 31, 2000, the Fund
incurred $9,687 in advisory fees.
The Advisor has contractually agreed to limit the Fund's expenses by
reducing all or a portion of its fees and absorbing the Fund's expenses so that
the Fund's ratio of expenses to average net assets will not exceed 2.50%. Any
advisory fee waiver and/or any Fund expense absorbed by the Advisor pursuant to
the agreed upon expense cap shall be reimbursed by the Fund to the Advisor, if
so requested by the Advisor, 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. Any such
reimbursement is also contingent upon review and approval by the Trust's Board
of Trustees prior to the time the reimbursement is initiated. The Fund must pay
its current ordinary operating expenses before the Advisor is entitled to any
reimbursement of fees and/or expenses. During the period from July 14, 2000
(commencement of operations) through October 31, 2000, the Advisor reduced its
fee and absorbed fund expenses in the amount of $47,811; no amounts were
reimbursed to the Advisor.
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
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
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NOTES TO FINANCIAL STATEMENTS, CONTINUED
For the period from July 14, 2000 (commencement of operations) through
October 31, 2000, the Fund incurred $2,548 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 from July 14, 2000 (commencement of operations) through October 31, 2000,
excluding short-term investments, were $5,922,682 and $0, respectively.
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[LOGO]
ASTROP RESEARCH CORPORATION
Advisor
ASTROP RESEARCH CORPORATION
3133 Maple Drive, N.E., Suite 200
Atlanta, Georgia 30305
(404) 816-9900
Distributor
FIRST FUND DISTRIBUTORS, INC.
4455 E. Camelback Road, Suite E261
Phoenix, Arizona 85018
(602) 952-1100
Custodian
FIRSTAR INSTITUTIONAL CUSTODY SERVICES
425 Walnut Street
Cincinnati, Ohio 45202
Transfer Agent
ICA FUND SERVICES CORP.
4455 E. Camelback Road, Suite E261
Phoenix, Arizona 85018
(800) 522-9955
Auditors
TAIT, WELLER & BAKER
8 Penn Center Plaza, Suite 800
Philadelphia, Pennsylvania 19103
Legal Counsel
PAUL, HASTINGS, JANOFSKY & WALKER LLP
345 California Street, 29th Floor
San Francisco, California 94104
This report is intended for 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.
