UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-4788
VLC TRUST
(Exact name of registrant as specified in charter)
ONE REGENCY PLAZA, PROVIDENCE, RHODE ISLAND 02903
(Address of principal executive offices)
MARGARET D. FARRELL, ESQ.
SECRETARY
HINCKLEY, ALLEN & SNYDER LLP
1500 FLEET CENTER
PROVIDENCE, RHODE ISLAND 02903
(Name and address of agent for service)
Registrant's telephone number, including area code: (401) 421-1411
Date of fiscal year end: October 31
Date of reporting period: October 31, 2003
Form N-CSR is to be used by management investment companies to file
reports with the Commission not later than 10 days after the transmission
to stockholders of any report that is required to be transmitted to
stockholders under Rule 30e-1 under the Investment Company Act of 1940
(17 CFR 270.30e-1). The Commission may use the information provided on Form
N-CSR in its regulatory, disclosure review, inspection, and policymaking
roles.
A registrant is required to disclose the information specified by
Form N-CSR, and the Commission will make this information public. A
registrant is not required to respond to the collection of information
contained in Form N-CSR unless the Form displays a currently valid Office
of Management and Budget ("OMB") control number. Please direct comments
concerning the accuracy of the information collection burden estimate and
any suggestions for reducing the burden to Secretary, Securities and
Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The
OMB has reviewed this collection of information under the clearance
requirements of 44 U.S.C. Section 3507.
- -----------------------------------------------------------------------
TABLE OF CONTENTS OCTOBER 31, 2003
Item 1 1
Report of the President 1
Investment Preformance Review 2
Statement of Assets and Liabilities 3
Statement of Operations 4
Statement of Changes 5
Financial Highlights 6
Notes to Financial Statements 7
Portfolio of Investments 10
Report of Independent Auditors 14
Federal Income Tax Information 15
Trustees and Officers 15
Items 2 - 10 20
ITEM 1
The following is a copy of the report transmitted to shareholders
pursuant to Rule 30e-1 under the Investment Company Act of 1940 (17 CFR
270.30e-1)
OCEAN STATE TAX EXEMPT FUND [LOGO]
Report of the President
October 31, 2003
Another solid year for the municipal bond market, yet questions still
abound. Is the economy really bouncing back? Will the mutual fund scandal
affect investment performance? Most importantly, how will this changing
environment affect my stake in the Ocean State Tax Exempt Fund ("the
Fund")?
During the fiscal year ended October 31, 2003 the Fund's net asset
value declined from $10.54 to $10.48 while the dividend distribution dipped
from $0.45 to $0.42. Interest rates continued their downward trend in 2003
but that may not be the case in 2004.
Many prognosticators are predicting where the economy is headed next.
At Ocean State Tax Exempt Fund we strive to manage a fund that will achieve
it's stated investment objective in any kind of market. The Fund's goal is
to provide as high a level of current income as is consistent with the
preservation of principal. It's by design that our fund does not experience
drastic price moves either up or down.
Interest rates and bond yields are cyclical. They rise and fall with
the perceived peaks and dips in the economy. Are we at a low for interest
rates? We're not sure. However, rates have certainly fallen to historically
low levels these past few years helping to spur an unprecedented rally in
the bond market.
Is it bad for a bond investor if rates rise? Common wisdom says yes
but it's not necessarily true. Remember, the real advantage of the Ocean
State Tax Exempt Fund is earning income that is free from both state and
federal taxes for a Rhode Island investor. This tax advantage exists in any
economic climate. Ocean State strives to reduce downside volatility through
its holdings of higher coupon shorter-term debt, which should fare better
in a rising rate environment than would longer-term lower coupon bonds.
Also, if inflation became a risk to the economy, a vigilant Federal Reserve
Bank would be wise to raise rates to temper what could potentially grow
into a greater problem.
We appreciate being entrusted with the safeguarding and management of
your assets while the mutual fund industry is under much scrutiny. We will
continually work to retain your confidence. Thank you.
Very truly yours,
/s/ Alfred B. Van Liew
Alfred B. Van Liew
President and Chairman of the
Board of Trustees
1
OCEAN STATE TAX EXEMPT FUND
INVESTMENT PERFORMANCE REVIEW
as of October 31, 2003
Prior
November 1, 2002 Fiscal Year November 1, 1998 November 1, 1993
through Ended through through
October 31, 2003 October 31, 2002 October 31, 2003 October 31, 2003
---------------- ---------------- ---------------- ----------------
<s> <c> <c> <c> <c>
Total Rate of Return(b)
Based on:
Net Asset Value 3.60% 4.21% 4.23% 5.00%
Offering Price -0.55% 0.04% 3.37% 4.57%
As of As of
October 31, 2003 October 31, 2002
---------------- ----------------
<s> <c> <c>
30-day Current Yield
Based on:
Net Asset Value 3.38% 3.87%
Offering Price 3.25% 3.72%
30-day Tax-Equivalent Yield (a)
Based on:
Net Asset Value 5.71% 7.01%
Offering Price 5.49% 6.72%
The Ocean State Tax Exempt Fund has placed a high priority on capital
preservation while at the same time striving for competitive after-tax
investment returns. The Fund has maintained the weighted average maturity
of the portfolio at 10.6 years as of October 31, 2003.
The average quality rating of the investments, in the following table
was Aaa/AAA (Moody's and Standard & Poor's bond rating services).
Portfolio Quality Analysis
% of Total Portfolio
--------------------
as of as of
Rating 10/31/03 10/31/02
------ -------- --------
<s> <c> <c>
Aaa/AAA 75.13% 72.43%
Aa/AA 22.95% 23.09%
A 1.05% 3.68%
Baa/BBB 0.87% 0.80%
Not Rated 0% 0%
The Fund will continue its policy of seeking the highest tax
advantaged yields available, consistent with maintaining quality and
diversification objectives.
(a) For 2003, shareholders subject to a maximum Federal tax rate of 35%
and a Rhode Island tax rate of 9% of federal taxable income. For
2002, shareholders subject to a maximum Federal tax rate of 38.60%
and a Rhode Island tax rate of 25%. All dividend income is exempt
from local, Federal and Rhode Island taxes for Rhode Island
residents. Capital gains taxes will apply to any distributed capital
gains.
(b) Past performance is no guarantee of future results. Total return does
not reflect the deduction of taxes that a shareholder would pay on
Fund distributions or the redemption of Fund shares. The offering
price reflects a maximum sales charge of 4.00%.
2
OCEAN STATE TAX EXEMPT FUND
STATEMENT OF ASSETS AND LIABILITIES
as of October 31, 2003
ASSETS
<s> <c>
Investments at value (identified cost $31,116,117) (Note 1A) $32,771,380
Cash 29,581
Interest receivable 397,788
Receivable for Capital Stock Sold 21,594
-----------
TOTAL ASSETS $33,220,343
LIABILITIES
Distribution payable to shareholders $ 43,381
Payable for Capital Stock Redeemed 40,598
Accrued Expenses 4,385
Accrued management fees 17,098
-----------
TOTAL LIABILITIES 105,462
===========
NET ASSETS $33,114,881
===========
Net Assets consist of:
Shares of beneficial interest at par ($.01/share) $ 31,588
Additional paid-in capital 31,321,523
Accumulated net realized gain on investment transactions 105,754
Undistributed net investment income 753
Net unrealized appreciation of investments 1,655,263
-----------
TOTAL-REPRESENTING NET ASSETS AT VALUE FOR 3,158,805 SHARES OUTSTANDING $33,114,881
===========
COMPUTATION OF NET ASSET VALUE & OFFERING PRICE:
Net Assets $33,114,881
Divided by number of shares outstanding 3,158,805
Net asset value $ 10.48
===========
Offering price $ 10.92
===========
See Notes to Financial Statements.
3
OCEAN STATE TAX EXEMPT FUND
STATEMENT OF OPERATIONS
For the year ended October 31, 2003
<s> <c> <c>
Investment Income
Interest income (Note 1B) $1,684,028
Expenses:
Adviser fees (Note 2) $120,832
Administrator fees (Note 2) 86,309
Transfer agent fees 36,557
Auditing fees 35,232
Legal fees and expenses 24,672
Trustees fees and expenses 24,000
Distribution expenses (Note 5) 12,832
Custody 10,147
Shareholder reports 7,451
Pricing fees 3,208
Miscellaneous expenses 2,694
Insurance 1,377
Registration fees 950
--------
$366,261
----------
Net Investment Income $1,317,767
Realized and Unrealized Gain/(Loss) on Investments
Net Realized Gain on Investments 90,977
Net Change in Unrealized Depreciation of Investments (161,791)
--------
Net Realized and Unrealized Loss on Investments (70,814)
----------
Net Increase in Net Assets Resulting from Operations $1,246,953
==========
See Notes to Financial Statements.
4
OCEAN STATE TAX EXEMPT FUND
STATEMENTS OF CHANGES IN NET ASSETS
Fiscal Year Fiscal Year
Ended Ended
October 31, 2003 October 31, 2002
---------------- ----------------
<s> <c> <c>
Increase (Decrease) in Net Assets Resulting from:
Operations:
Net investment income $ 1,317,767 $ 1,532,639
Net realized gain on investments 90,977 106,579
Change in unrealized depreciation of investments (161,791) (145,641)
----------- -----------
Net increase in net assets resulting from operations $ 1,246,953 $ 1,493,577
Dividends and distributions to shareholders from:
Net investment income ($.42 per share in 2003 and
$.45 per share in 2002) (1,317,766) (1,532,647)
Net realized gains ($.03 per share in 2003) (105,799) 0
Net decrease from fund share transactions (Note 4) (2,797,165) (175,574)
----------- -----------
Total decrease in net assets (2,973,777) (214,644)
NET ASSETS:
Beginning of year 36,088,658 36,303,302
----------- -----------
End of year $33,114,881 $36,088,658
=========== ===========
See Notes to Financial Statements.
5
OCEAN STATE TAX EXEMPT FUND
FINANCIAL HIGHLIGHTS
For a share outstanding throughout each period.
The following data includes selected data and other performance
information derived from the financial statements.
Fiscal Fiscal Fiscal Fiscal Fiscal
Year Year Year Year Year
Ended Ended Ended Ended Ended
10/31/03 10/31/02 10/31/01 10/31/00 10/31/99
-------- -------- -------- -------- --------
<s> <c> <c> <c> <c> <c>
Per Share Operating Performance:
Net Asset Value, Beginning of Year $ 10.54 $ 10.55 $ 10.25 $ 10.12 $ 10.71
Net investment income .42 .45 .47 .49 .53
Net realized and unrealized gain (loss)
on securities (.03) (.01) .30 .13 (.58)
------- ------- ------- ------- -------
Total from Investment Operations .39 .44 .77 .62 (.05)
------- ------- ------- ------- -------
Less Distributions:
Dividends from net investment income (.42) (.45) (.47) (.49) (.53)
Distribution from net realized gains (.03) (.00) (.00) (.00) (.01)
------- ------- ------- ------- -------
Total Distributions (.45) (.45) (.47) (.49) (.54)
------- ------- ------- ------- -------
Net Asset Value, End of Year $ 10.48 $ 10.54 $ 10.55 $ 10.25 $ 10.12
======= ======= ======= ======= =======
Total investment return at Net Asset
Value (a) 3.60% 4.21% 7.63% 6.22% (.66)%
Ratios and Supplemental Data:
Net Assets, End of Year (000"s omitted) $33,115 $36,089 $36,303 $37,526 $39,954
Ratio of expenses to average net assets 1.06% 1.04% 1.19% 1.12% .94%
Ratio of net investment income to
average net assets 3.82% 4.25% 4.52% 4.76% 4.91%
Portfolio turnover 19% 17% 4% 5% 13%
Fund expenses per share .12 .11 .13 .12 .10
Net investment income per share .42 .45 .47 .49 .53
<FN>
(a) Total investment return does not reflect sales load.
</FN>
6
OCEAN STATE TAX EXEMPT FUND
NOTES TO FINANCIAL STATEMENTS
October 31, 2003
NOTE 1 SIGNIFICANT ACCOUNTING POLICIES
VLC Trust (the Trust) is a Massachusetts business trust organized on
August 1, 1986 and registered under the Investment Company Act of 1940, as
amended, as a non diversified, open-end management investment company. The
Declaration of Trust permits the Trustees to create additional portfolios
(funds). As of October 31, 2003 there is only one fund, Ocean State Tax
Exempt Fund (the Fund). The objective of the Fund is to seek to provide as
high a level of current income, exempt from Rhode Island and Federal income
taxes, as is consistent with preservation of capital. The Fund invests
primarily in obligations which pay interest exempt from Rhode Island and
Federal income taxes. The Fund commenced operations on December 8, 1986.
At October 31, 2003, 96.46% of the Fund's net assets are invested in
Rhode Island municipal securities. Economic changes effecting the state in
certain of its public bodies and municipalities may affect the ability of
the issuer to pay the required principal and interest payments of the
municipal securities. In order to reduce risk associated with such factors
on October 31, 2003, 81.40% of the portfolio of investments have credit
enhancements backing them which the Fund relies on, such as: letters of
credit, insurance, or guarantees. MBIA provides the largest total
enhancements for the Fund, representing 25.87% of the portfolio.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to
make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
A) SECURITY VALUATION: Debt securities are valued on the basis of
valuations furnished by a pricing service since such valuations are
believed to reflect the fair value of such securities. Valuations used by
the Fund are frequently determined without exclusive reliance on quoted
prices and take into account appropriate factors such as institutional-size
trading in similar groups of securities, yield, quality, coupon rate,
maturity, type of issue, trading characteristics, broker quotes and other
local market conditions. Valuations developed through pricing techniques
may vary from the actual amounts realized upon sale of the securities, and
the potential variation may be greater for those securities valued using
fundamental analysis. Securities having an original maturity of less than
sixty days are valued at cost adjusted for amortization of premiums and
accretion of discounts. Other securities are appraised in good faith at
fair value using methods determined by the Trustees and applied on a
consistent basis. The Trustees monitor the valuation of the Fund's
municipal bonds through receipt of periodic reports from the Adviser.
B) SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME: Security
transactions are accounted for on a trade date basis (date the order to buy
or sell is executed). Interest income is recorded on the accrual basis. The
specific identification method is used for determining net realized gains
and losses for both financial statement and Federal income tax purposes.
7
OCEAN STATE TAX EXEMPT FUND
NOTES TO FINANCIAL STATEMENTS-(Continued)
NOTE 1 Significant Accounting Policies (continued)
C) FEDERAL INCOME TAXES: The Fund's policy is to comply with the
provisions of subchapter M of the Internal Revenue Code available to
regulated investment companies and distribute to shareholders all of its
net income, including any net realized gain on investments. Accordingly, no
provision for Federal income tax or excise tax is necessary. Dividends paid
by the Fund from net interest on tax-exempt municipal bonds are not
includable by shareholders as gross income for Federal income tax purposes,
because the Fund intends to meet certain requirements of the Internal
Revenue Code applicable to regulated investment companies which will enable
the Fund to pay tax-exempt interest dividends. The portion of such
interest, if any, earned on private activity bonds issued after August 7,
1986 may be considered a tax preference item to shareholders.
The tax character of distributions as reported on the Statements of
Changes in Net Assets for the years ended October 31, 2003 and 2002 was as
follows:
2003 2002
---- ----
<s> <c> <c>
Tax-Exempt Income $1,317,766 $1,532,647
Long-Term Capital Gains 105,799 -
As of October 31, 2003, the components of distributable earnings on a
tax basis were as follows:
<s> <c>
Undistributed Long-Term Capital Gain $ 96,783
Unrealized Appreciation 1,664,234
D) DISTRIBUTIONS TO SHAREHOLDERS: Dividends from net investment
income are declared daily and distributed monthly. Capital gains
distributions, if any, are declared and distributed annually.
NOTE 2 ADVISORY AND ADMINSTRATIVE SERVICES AND OTHER AFFILIATED
TRANSACTIONS
Van Liew Capital Inc. is the Adviser and the Administrator to the
Fund. The Fund pays Van Liew Capital Inc. at the following annual rates for
the adviser and administrator services, respectively:
.35 and .25 of 1% of the first $200 million of average daily net
assets.
.30 and .20 of 1% of average daily net assets over $200 million.
The Fund does not pay fees to Trustees affiliated with the Adviser or
to any of its officers. The Fund pays Trustees who are not interested
persons of the Fund an annual retainer plus $250 per meeting attended. The
annual retainer at October 31, 2003 was $2,000.
Legal fees and expenses of $24,672 were paid to a firm of which the
Fund's Secretary is a partner.
For the fiscal year ended October 31, 2003, the Distributor received
$11,060 in commissions as a result of Fund share sales.
8
OCEAN STATE TAX EXEMPT FUND
NOTES TO FINANCIAL STATEMENTS-(Continued)
NOTE 3 INVESTMENT TRANSACTIONS
For the fiscal year ended October 31, 2003 purchases and sales of
investment securities, other than short-term investments, aggregated
$6,393,950 and $9,268,914, respectively. The aggregate cost of investments
for Federal income tax purposes is substantially the same as the aggregate
cost for financial statement purposes. At October 31, 2003, gross
unrealized appreciation on investment securities was $1,707,753 and gross
unrealized depreciation on investment securities was $52,490.
NOTE 4 SHARES OF BENEFICIAL INTEREST
The authorized capital of the Fund consists of unlimited number of
shares of beneficial interest with par value of one cent per share.
Transactions in shares of beneficial interest and in dollars were as
follows:
Shares Amount
------ ------
<s> <c> <c>
Balance at 10/31/01 3,441,769 $34,378,038
Shares sold 266,726 2,789,854
Shares issued in reinvestment of dividends 90,689 949,525
Shares redeemed (373,670) (3,914,953)
--------- -----------
Net decrease (16,255) (175,574)
--------- -----------
Balance at 10/31/02 3,425,514 $34,202,464
========= ===========
Shares sold 224,010 2,360,385
Shares issued in reinvestment of dividends 77,128 812,802
Shares redeemed (567,847) (5,970,352)
--------- -----------
Net decrease (266,709) (2,797,165)
--------- -----------
Balance at 10/31/03 3,158,805 $31,405,299
========= ===========
NOTE 5 DISTRIBUTION PLAN
The Fund has adopted a Distribution Plan (the Plan) pursuant to Rule
12b-1 (the Rule) of the Investment Company Act of 1940 (the Act). The Rule
provides in substance that the Fund may not engage directly or indirectly
in financing any activity which is primarily intended to result in the sale
of its shares except pursuant to a plan adopted under the Rule. Under the
Plan, the Fund is authorized to pay for the printing of all prospectuses,
statements of additional information and reports and notices to
shareholders, even those which are not sent to existing shareholders. The
Fund paid $12,832 under the Plan during fiscal 2003.
9
OCEAN STATE TAX EXEMPT FUND
PORTFOLIO OF INVESTMENTS
as of October 31, 2003
Ratings
Principal Moody's/ Value
Amount Standard & Poor's (b) (Note 1)
--------- --------------------- --------
<s> <c> <c>
MUNICIPAL SECURITIES (98.96%) (a)
Rhode Island General Obligation and Revenue (63.82%) (a)
$ 500,000 Barrington School District 5.00%, 10/1/14 Aa-2/NR $ 542,500
200,000 Burrillville General Obligation FGIC Insured 5.70%, 5/1/11 Aaa/AAA 215,500
300,000 East Providence General Obligation MBIA Insured 5.70%,
5/15/10 Aaa/AAA 323,625
200,000 East Providence General Obligation MBIA Insured 3.125%,
3/15/11 Aaa/AAA 196,750
250,000 Kent County Water Auth. MBIA Insured 6.35%, 7/15/14 Aaa/AAA 263,485
300,000 Lincoln General Obligation FGIC Insured 5.60%, 8/1/12 Aaa/NR 328,500
225,000 Middletown General Obligation 4.00%, 7/15/12 Aa-3/NR 231,469
210,000 Newport General Obligation MBIA Insured 6.50%, 8/15/06 Aaa/AAA 210,788
75,000 North Kingstown General Obligation 6.70%, 12/15/05 Aa-3/NR 82,969
80,000 North Kingstown General Obligation 6.80%, 12/15/06 Aa-3/NR 91,900
200,000 North Kingstown General Obligation FGIC Insured 5.70%,
10/1/18 Aaa/AAA 222,500
120,000 North Providence General Obligation MBIA Insured 6.00%,
10/01/09 Aaa/AAA 121,706
250,000 North Providence General Obligation FSA Insured 3.85%,
10/15/16 Aaa/AAA 244,375
500,000 North Providence General Obligation FSA Insured 4.00%,
10/15/17 Aaa/AAA 490,625
250,000 North Smithfield General Obligation FGIC Insured 4.00%,
10/15/12 Aaa/NR 257,813
500,000 Pawtucket General Obligation AMBAC Insured 5.00%,
4/15/09 Aaa/NR 558,750
500,000 Pawtucket General Obligation CGIC Insured 6.00%, 3/15/15 Aaa/AAA 538,125
500,000 Pawtucket General Obligation CGIC Insured 6.00%, 3/15/11 Aaa/AAA 538,125
500,000 Pawtucket General Obligation CGIC Insured 6.00%, 3/15/13 Aaa/AAA 538,125
500,000 Pawtucket General Obligation CGIC Insured, 6.00%, 3/15/12 Aaa/AAA 538,125
200,000 Providence Public Bldg. Auth. FSA Insured 5.10%, 12/15/08 Aaa/AAA 225,000
150,000 Providence Public Bldg. Auth. MBIA Insured 5.50%,
12/15/13 Aaa/AAA 166,875
500,000 Providence Public Bldg. Auth. AMBAC Insured 5.125%,
12/15/14 Aaa/AAA 548,125
185,000 Providence Public Bldg. Auth. FSA Insured 5.00%, 12/15/18 Aaa/AAA 193,788
250,000 Providence Public Bldg. Auth. AMBAC Insured 5.25%,
12/15/15 Aaa/AAA 276,250
250,000 Providence Public Bldg. Auth. FSA Insured 5.50%, 12/15/10 Aaa/AAA 288,125
500,000 Providence Redevelopment Auth. AMBAC Insured, 5.30%,
4/1/12 Aaa/NR 551,875
200,000 Providence Redevelopment Radian Insured 4.25%, 9/1/13 NR/AA 202,000
250,000 Smithfield General Obligation MBIA Insured 5.00%, 10/15/07 Aaa/AAA 277,812
10
OCEAN STATE TAX EXEMPT FUND
PORTFOLIO OF INVESTMENTS-(Continued)
Ratings
Principal Moody's/ Value
Amount Standard & Poor's (b) (Note 1)
--------- --------------------- --------
<s> <c> <c>
MUNICIPAL SECURITIES (98.96%)(a)-(Continued)
Rhode Island General Obligation and Revenue (63.82%)(a)-(Continued)
$ 250,000 Warwick General Obligation MBIA Insured 4.60%, 11,15,05 Aaa/AAA $ 265,937
700,000 Warwick General Obligation MBIA Insured 6.60%, 11/15/06 Aaa/AAA 708,967
250,000 Warwick General Obligation FSA Insured 4.00%, 7/15/11 Aaa/AAA 261,562
250,000 Warwick General Obligation FSA Insured 4.125%, 7/15/13 Aaa/AAA 257,187
200,000 West Warwick General Obligation AMBAC Insured 4.625%,
3/1/03 Aaa/AAA 212,750
35,000 Westerly Dunn's Corner Fire District Unlimited Tax
Assessment 7.80%, 6/1/03 A-1/NR 36,130
145,000 Rhode Island Clean Water Pre-refunded U.S. T MBIA Insured
6.50%, 10/1/06 Aaa/AAA 149,425
150,000 Rhode Island Clean Water MBIA Insured 5.30%, 10/1/07 Aaa/AAA 168,188
100,000 Rhode Island Clean Water AMBAC Insured 4.75%, 10/1/18 Aaa/AAA 102,500
225,000 Rhode Island Clean Water MBIA Insured 5.00%, 10/1/18 Aaa/AAA 236,250
650,000 Rhode Island Depositors Economic Protection Corp.
MBIA Insured Escrowed to Maturity 6.55%, 8/1/10 Aaa/AAA 772,906
215,000 Rhode Island Depositors Economic Protection Corp.
CAPMAC Guaranteed Escrowed to Maturity 6.375%, 8/1/22 Aaa/AAA 265,256
250,000 Rhode Island Depositors Economic Protection Corp.
Escrowed to Maturity 5.75%, 8/1/21 Baa-1/NR 286,563
500,000 Rhode Island Economic Development Corp. Airport Revenue
FSA Insured 5.25%, 7/1/12 Aaa/AAA 545,625
395,000 Rhode Island Economic Development Corp. Airport Revenue
FSA Insured 5.25%, 7/1/13 Aaa/AAA 429,069
545,000 Rhode Island Economic Development Corp. Airport Revenue
FSA Insured 5.25%, 7/1/14 Aaa/AAA 588,600
450,000 Rhode Island Economic Development Corp. Airport Revenue
FSA Insured 5.00%, 7/1/18 Aaa/AAA 473,625
400,000 Rhode Island Economic Development Corp. Providence Place
Radian Insured 6.125%, 7/1/20 NR/AA 448,000
100,000 RI COPS MBIA Insured 5.375%, 10/1/16 Aaa/AAA 110,250
300,000 Rhode Island Lease Participation Certificate Shepard
Bldg. AMBAC Insured 5.125%, 6/1/12 Aaa/AAA 331,125
150,000 Rhode Island Port Auth. Pre-refunded U.S. T AMBAC Insured
6.50%, 6/1/08 Aaa/AAA 157,695
500,000 Rhode Island Refunding Bond Authority AMBAC Insured
5.25%, 2/1/10 Aaa/AAA 560,625
750,000 Rhode Island General Obligation MBIA Insured 5.00%, 9/1/18 Aaa/AAA 792,187
300,000 Rhode Island General Obligation FGIC Insured 5.125%,
7/15/14 Aaa/AAA 323,250
480,000 Rhode Island General Obligation FGIC Insured 5.00%, 9/1/14 Aaa/AAA 511,800
500,000 Rhode Island General Obligation MBIA Insured 5.75%, 8/1/15 Aaa/AAA 560,625
1,000,000 Rhode Island General Obligation FGIC Insured 5.50%, 9/1/16 Aaa/AAA 1,110,000
11
OCEAN STATE TAX EXEMPT FUND
PORTFOLIO OF INVESTMENTS-(Continued)
Ratings
Principal Moody's/ Value
Amount Standard & Poor's (b) (Note 1)
--------- --------------------- --------
<s> <c> <c>
MUNICIPAL SECURITIES (98.96%)(a)-(Continued)
Rhode Island General Obligation and Revenue (63.82%)(a)-(Continued)
$ 200,000 Rhode Island Cons. Cap. Dev. MBIA Insured 5.25%, 11/1/10 Aaa/AAA $ 227,250
400,000 Rhode Island Cons. Cap. Dev. FGIC Insured 5.40%, 9/1/14 Aaa/AAA 441,500
250,000 Rhode Island Cons. Cap. Dev. FGIC Insured 5.00%, 9/1/16 Aaa/AAA 266,875
250,000 Rhode Island Cons. Cap. Dev. FGIC Insured 5.00%, 9/1/15 Aaa/AAA 267,813
-----------
Total Rhode Island General Obligation and Revenue $21,135,140
-----------
Rhode Island Health & Education Building Corporation (24.38%)(a)
$ 500,000 University of Rhode Island MBIA Insured 2.375%, 9/15/08 Aaa/AAA $ 496,250
100,000 University of Rhode Island AMBAC Insured 5.20%, 9/15/15 Aaa/AAA 108,125
300,000 University of Rhode Island AMBAC Insured 5.20%, 9/15/16 Aaa/AAA 323,250
100,000 Bryant College AMBAC Insured 4.60%, 6/1/12 Aaa/AAA 107,375
100,000 Brown University 4.75%, 9/1/12 Aa-1/AA+ 105,875
200,000 Brown University 5.90%, 9/1/14 Aa-1/AA+ 218,500
780,000 Brown University 5.25%, 9/1/16 Aa-1/AA+ 845,325
400,000 Brown University 5.00%, 9/1/19 Aa-1/AA+ 417,500
500,000 Brown University 5.00%, 9/1/23 Aa-1/AA+ 509,375
195,000 Roger Williams College Connie Lee Insured 6.50%, 11/15/08 Aaa/AAA 197,488
195,000 Roger Williams College Connie Lee Insured 6.625%, 11/15/11 Aaa/AAA 197,500
250,000 Salve Regina College Radian Insured 5.25%, 3/15/18 NR/AA 264,375
750,000 Johnson & Wales College MBIA Insured 5.00%, 4/1/29 Aaa/AAA 762,188
500,000 Johnson & Wales College XL Capital 5.25%, 4/1/14 Aaa/AAA 555,000
250,000 Rhode Island School of Design MBIA Insured 4.40%, 6/1/15 Aaa/AAA 258,750
585,000 Rhode Island School of Design MBIA Insured 4.60%, 6/1/17 Aaa/AAA 604,012
500,000 St. Antoine Residence Pre-refunded U.S. T. 6.75%, 11/15/18 Aa-3/NR 510,805
500,000 St. Antoine Residence LOC-Allied Irish Bank 6.125%,
11/15/18 Aa-3/NR 525,000
300,000 Lifespan MBIA Insured 5.75%, 5/15/23 Aaa/AAA 320,250
200,000 Memorial Hospital MBIA Insured 6.50%, 7/1/04 Aaa/AAA 204,764
300,000 Rhode Island Hospital FGIC Insured 6.70%, 8/15/04 Aaa/AAA 304,725
100,000 United Methodist Elder Care LOC-Fleet Bank 7.50%, 11/1/14 NR/A+ 104,455
125,000 New England Tech Inst. Connie Lee Insured 6.00%, 3/1/15 NR/AAA 132,188
-----------
Total Rhode Island Health & Education Building Corporation $ 8,073,075
-----------
Rhode Island Housing & Mortgage Finance Corporation (8.26%)(a)
$ 5,000 9.30%, 7/1/04, FGIC Insured Aaa/AAA $ 5,005
200,000 5.65%, 10/1/07 NR/A 204,250
250,000 4.00%, 4/1/13 Aa-2/AA+ 248,750
200,000 5.70%, 4/1/15 Aa-2/AA+ 208,250
400,000 5.00%, 10/1/16 Aa-2/AA+ 409,500
350,000 5.75%, 4/1/17 Aa-2/AA+ 357,000
10,000 6.50%, 10/1/22 Aa-2/AA+ 10,104
250,000 5.40%, 10/1/16 Aa-2/AA+ 258,750
12
OCEAN STATE TAX EXEMPT FUND
PORTFOLIO OF INVESTMENTS-(Continued)
Ratings
Principal Moody's/ Value
Amount Standard & Poor's (b) (Note 1)
--------- --------------------- --------
<s> <c> <c>
MUNICIPAL SECURITIES (98.96%)(a)-(Continued)
Rhode Island Housing & Mortgage Finance Corporation (8.26%)(a)
$ 240,000 6.15%, 4/1/17 Aa-2/AA+ $ 249,000
750,000 5.40%, 10/1/17 Aa-2/AA+ 778,125
5,000 6.50%, 4/1/27 Aa-2/AA+ 5,056
-----------
Total Rhode Island Housing & Mortgage Finance Corporation $ 2,733,790
-----------
TOTAL RHODE ISLAND BONDS (96.46%) (a) $31,942,005
===========
Puerto Rico Bonds (2.50%) (a)
$ 250,000 Puerto Rico Electric Power Authority MBIA Insured, 5.00%,
7/1/10 Aaa/AAA $ 278,750
500,000 Puerto Rico Municipal Finance Auth. FSA Insured, 5.50%,
7/1/17 Aaa/AAA 550,625
-----------
TOTAL PUERTO RICO BONDS (2.50%) (a) $ 829,375
-----------
TOTAL INVESTMENTS (Cost $31,116,117)(93.96%)(a) $32,771,380
===========
<FN>
(a) Percentages indicated are based on net assets of $33,114,881 at
October 31, 2003 (total investments plus cash and receivables less
liabilities) which corresponds to a net asset value per share of
$10.48.
(b) These municipal securities meet the four highest ratings assigned by
Moody's Investors Service, Inc. or Standard & Poor's Corp. or where
not rated, are determined by the Fund to be of comparable quality
within the guidelines approved by the directors and are unaudited.
The ratings indicated are the most current available and are
unaudited. When bonds are rated differently by Moody's and S&P, the
higher rating has been reported. The rating NR means it is not rated
by Moody's or S&P. Certain securities have credit enhancement
features backing them. Without these enhancement features the
securities may or may not meet the quality standards of other
securities purchased by the Fund. (See Note 1)
(c) Abbreviations used:
AMBAC -American Municipal Bond Assurance Corp.
CGIC -Capital Guaranty Insurance Co.
FGIC -Financial Guaranty Insurance Co.
FSA -Financial Security Assurance Inc.
MBIA -Municipal Bond Investors Assurance Corp.
LOC -Letter of Credit
CAPMAC -Capital Markets Assurance Corp.
Radian -Radian Insurance Co.
</FN>
See Notes to Financial Statements.
13
OCEAN STATE TAX EXEMPT FUND
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Trustees of VLC Trust and Shareholders of
Ocean State Tax Exempt Fund
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of Ocean State Tax Exempt Fund (the
"Fund") (a portfolio of the VLC Trust), as of October 31, 2003, and the
related statement of operations for the year then ended, the statements of
changes in net assets for the two years in the period then ended, and
financial highlights for each of the five years in 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 audits.
We conducted our audits in accordance with auditing standards
generally accepted in the United States. 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 October 31,
2003, 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 audits provide 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 Ocean State Tax Exempt Fund, at October 31, 2003, the results
of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended, in
conformity with accounting principles generally accepted in the United
States.
/s/ Ernst & Young LLP
Boston, Massachusetts
December 10, 2003
14
Federal Income Tax Information (unaudited)
For the year ended October 31, 2003, the amount of long-term capital
gain designated by the Fund was $105,799. The amount of tax exempt interest
dividends distributed by the Fund was $1,317,766.
Trustees and Officers
The Trustees of the Fund are responsible for the management and
direction of the business and affairs of the Fund. The Trustees and
officers of the Fund, their affiliations, if any, with the Adviser, and
their principal occupations during at least the past five years are set
forth below. Trustees who are "interested persons" of the Fund as that term
is defined in the 1940 Act are designated with an (*) asterisk. Age of the
Trustee is in parentheses ( ). The VLC Trust consists of one investment
portfolio. The Fund's Statement of Additional Information includes
additional information about Trustees and is available, without charge and
upon request, by calling 401-421-1411.
Trustees Background
Name, Address and Age Position(s) Held with Fund Principal Occupation(s) During Past Five Years
- --------------------- -------------------------- ----------------------------------------------
<s> <c> <c>
Alfred B. Van Liew *(69) President (since 1987) Managing Partner of the Adviser, since 1984;
One Regency Plaza and Trustee (since Director of the Distributor since May 1990;
Suite One 1986) Chairman and Chief Executive Officer of Van
Providence, Rhode Island 02903 Liew Trust Company, a Rhode Island chartered
trust company, since 1984; Trustee of Preserve
Rhode Island since 1971; Adviser to the
National Trust for Historic Preservation since
1983; Trustee of St. Andrew's School since
1984; Trustee of the Museum of Yachting since
1988; and Trustee of the Seamen's Institute,
Newport, Rhode Island since 1994.
Mary Ann Altrui (61) Trustee (since 2001) Administrator of St. Antoine Residence (a
10 Rhodes Avenue nursing facility) (1988-present); Director of
North Smithfield, Rhode Island Diocesan Elder Care Services (1997-present);
02896 oversight responsibility for St. Clare Home
(a 44-bed nursing facility in Newport, Rhode
Island); founding member with St. Elizabeth
Community, Scandinavian Home, and Steere
House of "CareLink", a management service
organization incorporated in 1997; member of
the American College of Health Care Administra-
tors, the Diocesan Biomedical Ethics Commis-
sion of the North Smithfield Advisory Council;
Director of Woonsocket Industrial Development
Corporation and WIDC Realty Corporation, and
serves on advisory committees for the Diocese
of Providence, the State of Rhode Island, and
the Nonprofit Association of Facilities and
Services for the Aging.
15
Name, Address and Age Position(s) Held with Fund Principal Occupation(s) During Past Five Years
- --------------------- -------------------------- ----------------------------------------------
<s> <c> <c>
Milton C. Bickford, Jr. (72) Trustee (since 1987) Private investor since 1989; Director (Chairman
147 Beavertail Road 1999-2002) of AAA Southern New England;
Jamestown, Rhode Island 02835 CEO, National Bickford Foremost, Inc. (national
color printing firm) (1980-1989); Trustee,
National Traffic Safety Foundation (1999-
2002).
Meredith A. Curren (44) Trustee (since 2001) Since 1990, Chief Financial Officer, Pease &
75 Pennsylvania Avenue Curren, Inc. (refiners of precious metals). Ms.
Warwick, Rhode Island 02888 Curren serves as Board Vice President of New
England Women's Jewelry Association (1995-
1998); Advisory Council Member, Manufactur-
ing Jewelers and Silversmiths of America;
Member, Providence Jewelers Club; Advisory
Board Member of Big Brothers of Rhode Island;
Board Secretary (1996-1998) and Membership
Committee Member of the University Club;
Board Member Providence Chamber of Com-
merce; Director of Bancorp Rhode Island, Inc.
and Bank Rhode Island.
Michael E. Hogue (61) Trustee (since 1989) Managing Partner, eTime (since February 2002);
116 Chestnut Street President, VIAcorp. since June 1994; Assistant
Providence, Rhode Island 02903 Professor of Insurance at the Wharton School,
University of Pennsylvania; Trustee of Trinity
Repertory Company (1997-), and President of
the Jewelry District Association (1998-).
Arthur H. Lathrop (49) Trustee (since 2001) In practice as a Certified Public Accountant (sole
28 Spruce Street proprietor) in Westerly, RI (since 1991);
Westerly, Rhode Island 02891 Member of the American Institute of Certified
Public Accountants. Trustee (since 1993) and
Chairman of the Audit Committee of Westerly
Savings Bank; Trustee and Assistant Treasurer
(since 1990) of River Bend Cemetery Company;
Corporator (since 1989) of Community Health
of Westerly, Inc.; Professional Advisory Council
Member (1995-2000) of The Rhode Island
Foundation.
Alice M. Macintosh (82) Trustee (since 1986) Marketing consultant since 1991; Chief
861 Stratford Lane Supervisory Clerk of the State's Superior Court
Warwick, Rhode Island 02886 (1986-1991); previously a Marketing Consult-
ant and Vice-President of Marketing at Hospital
Trust National Bank.
16
Name, Address and Age Position(s) Held with Fund Principal Occupation(s) During Past Five Years
- --------------------- -------------------------- ----------------------------------------------
<s> <c> <c>
Lawrence B. Sadwin (60) Trustee (since 2001) President, Lifestyle Security, LLC (since August
18 Oyster Point 2002), Division Marketing Leader for General
Warren, Rhode Island 02885 Electric (2000-2002); Chief Operating Officer
(1999-2000), Regional Manager (1998-
1999), Recruiter (1997-1998) and Long-Term
Care Specialist (1997) for Travelers/NET Plus,
Inc.; Consultant (1994-1997) for MGS Holding
Corporation; Member-At-Large, National Board
of Directors, American Heart Association;
Member, National Leadership Council, Research
America; Vice-Chairman, Landmark Health
Systems, Inc.; Vice-Chairman, Rehabilitation
Hospital of Rhode Island; Chairman of the
Board, American Heart Association (2001-
2002).
John St. Sauveur (70) Trustee (since 1992) President and CEO, WestBank Realty Corpora-
219 Great Road tion; Director of the Community College of
North Smithfield, Rhode Island Rhode Island Foundation; Chairman of the
02896 Woonsocket Industrial Development Corpor-
ation; Chairman of the Greater Woonsocket
Industrial Development Foundation; Vice
Chairman of the North Smithfield Industrial
Development Commission; a Vice President and
Director of the Rhode Island Chamber of
Commerce Federation and member of the Rhode
Island State Job Training Coordinating Council;
Finance Chairman, Landmark Health System and
Trustee, Landmark Medical Center; Commis-
sioner of the Rhode Island Resource Recovery
Corporation since 1992; Chairman of The
Rehabilitation Hospital of Rhode Island; Director
and Corporate Secretary of Gooding Realty
Corporation.
Samuel H. Hallowell, Jr. (56) Vice President (since Partner of the Adviser and Vice President
One Regency Plaza 1989) of Van Liew Trust Company since 1984;
Suite One Secretary and Past President of the Audubon
Providence, Rhode Island 02903 Society of Rhode Island.
Joseph J. Healy (36) Vice President (since Investment Officer, Fund Controller and primary
One Regency Plaza 1996) trader of the Adviser since 1992; President and
Suite One General Securities Principal of the Distributor
Providence, Rhode Island 02903 1993.
17
Name, Address and Age Position(s) Held with Fund Principal Occupation(s) During Past Five Years
- --------------------- -------------------------- ----------------------------------------------
<s> <c> <c>
Kevin M. Oates (44) Vice President and Partner of the Adviser since 1996; Chief
One Regency Plaza Treasurer (since 1991) Operating Officer of the Adviser (since April,
Suite One 2000) and Van Liew Trust Company, and Vice
Providence, Rhode Island 02903 President and Treasurer of the Distributor, since
1991; Vice President-Administration of the
Adviser (1991-2000).
Margaret D. Farrell (54) Secretary (since 1986) Partner, Hinckley, Allen & Snyder LLP, general
1500 Fleet Center legal counsel to the Fund, since November
Providence, Rhode Island 02903 1981; Director and Secretary of Bancorp Rhode
Island, Inc. and Bank Rhode Island; Director of
Care New England Health System; Director and
Chairman of Women & Infants Corporation;
Trustee of Butler Hospital; and Secretary of
Astro-Med, Inc. (manufacturer of graphic
recording and printing systems).
PRIVACY POLICY
The Van Liew Companies, Van Liew Securities, Inc. and Ocean State Tax
Exempt Fund have always been committed to ensuring your financial privacy.
We do not sell personal information to anyone. We recognize and respect the
privacy of our customers. This notice is being sent to comply with the
privacy regulations of the Securities and Exchange Commission. Each of the
above financial institutions has in effect the following policy with
respect to nonpublic personal information about its customers.
* Only such information received from you, through application forms or
otherwise, and information about your transactions will be collected.
* None of such information about you (or former customers) will be
disclosed to anyone, except as permitted by law (which includes
disclosure to employees necessary to service your account). We do not
disclose nonpublic personal information about you to non-affiliated
third parties.
* Policies and procedures (including physical, electronic and
procedural safeguards) are in place that are designed to protect the
confidentiality of such information.
18
Investment Adviser & Administrator
Van Liew Capital Inc. OCEAN STATE TAX EXEMPT FUND
One Regency Plaza, Suite One
Providence, Rhode Island 02903 (The Portfolio of VLC Trust)
Distributor
Van Liew Securities, Inc.
One Regency Plaza, Suite One
Providence, Rhode Island 02903
Custodian
PFPC Trust Company
Airport Business Center
200 Stevens Drive, Suite 440
Lester, Pennsylvania 19113
Transfer Agent
Ocean State Tax Exempt Fund
C/O PFPC, Inc.
P.O. Box 9839 Annual Report
Providence, Rhode Island 02903 October 31, 2003
Independent Auditors
Ernst & Young LLP
200 Clarendon Street
Boston, MA 02116-5072
Counsel
Hinckley, Allen & Snyder LLP
1500 Fleet Center
Providence, Rhode Island 02903
Trustees
Alfred B. Van Liew, Chairman
Mary Ann Altrui
Milton C. Bickford, Jr.
Meredith A. Curren
Michael E. Hogue Interest income exempt
Arthur H. Lathrop from Federal and Rhode
Alice M. Macintosh Island income taxes
Lawrence B. Sadwin from quality municipal
John H. St. Sauveur bonds.
Officers
Alfred B. Van Liew, President
Samuel H. Hallowell, Vice President
Joseph J. Healy, Vice President
Kevin M. Oates, Treasurer
Margaret D. Farrell, Secretary
ITEM 2. CODE OF ETHICS. The registrant has adopted a code of ethics
applicable to its President (as the registrant's principal executive
officer), the Treasurer (as the registrant's principal financial and
accounting officer) and any other person or persons performing the
functions of these offices or the functions of a controller. The
registrant undertakes to provide a copy of such code of ethics to any
person upon request, without charge, by calling 1-800-330-1116.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. The registrant's board has
designated Arthur H. Lathrop, an independent trustee, as its audit
committee financial expert. Mr. Lathrop is a practicing certified public
accountant and sole proprietor in Westerly, Rhode Island. Previously, Mr.
Lathrop served as Tax Manager of Sansiveri, Ryan, Sullivan & Co. of
Providence and Westerly, Rhode Island.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable.
Effective for the first fiscal year ending after December 15, 2003.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable.
Registrant is not a listed issuer as defined in Rule 10A-3 of the
Securities Exchange Act of 1934.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES. Not applicable. Registrant is an open-
end management investment company.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES.
(a) Based on their evaluation of the registrant's disclosure
controls and procedures conducted within 90 days of the filing date of this
report, the President and Treasurer have concluded that those controls and
procedures (as defined in rule 30a-2(c) under the Investment Company Act of
1940) provide reasonable assurance that material information required to be
disclosed by the registrant in this Form N-CSR has been recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission's rules and forms.
(b) There were no significant changes in the registrant's
internal controls or in other factors that could significantly affect these
controls subsequent to the date of the evaluation described above,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
ITEM 10. EXHIBITS.
(a) Any Code of Ethics, or amendment thereto, that is subject
to the disclosure required by Item 2, to the extent that the registrant
intends to satisfy the Item 2 requirements through filing of an exhibit.
See Item 2.
(b) A separate certification for each principal executive
officer and principal financial officer of the registrant as required by
Rule 30a-2(a) under the Investment Company Act of 1940.
(i) EX-99.CERT - Certifications pursuant to Section 302
of the Sarbanes - Oxley Act of 2002 (filed herewith).
(ii) EX-99.906 CERT - Certifications pursuant to Section
906 of the Sarbanes - Oxley Act of 2002 (filed herewith).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
(Registrant) VLC Trust
ON BEHALF OF
OCEAN STATE TAX EMEMPT FUND
Date: January 9, 2004 By: /s/ Alfred B. Van Liew
--------------------------------
Alfred B. Van Liew
President
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, this report has been signed below
by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.
Date: January 9, 2004 By: /s/ Alfred B. Van Liew
--------------------------------
Alfred B. Van Liew
President
Date: January 9, 2004 By: /s/ Kevin M. Oates
--------------------------------
Kevin M. Oates
Vice President & Treasurer