ROCKHAVEN ASSET MANAGEMENT
THE RISK MANAGERS
THE ROCKHAVEN FUND
THE ROCKHAVEN PREMIER
DIVIDEND FUND
[LOGO]
SEMI-ANNUAL REPORT
For the period ended March 31, 1999
<PAGE>
Dear Investor:
Thank you for your support of Rockhaven. We realize that you have literally
thousands of mutual funds from which to choose to invest your hard-earned
savings. We appreciate the confidence you have shown in us by becoming fellow
shareholders (all of the Rockhaven employees have a significant portion of their
net worth invested in the Funds), and we will continue to work hard to justify
your confidence.
In 1980, John Travolta and Debra Winger brought bull riding from the ranches and
rodeos of the West to bars all over America with their hit movie URBAN COWBOY.
The star of the movie was the mechanical bull, which took on a life of its own.
The bull would start out slowly, giving everyone the impression that it was easy
to ride, thereby encouraging mass participation. But as time went on, the bull
would go faster and buck more erratically, throwing more and more riders to the
ground (some with broken arms and dislocated shoulders). Finally, only a few
elite (crazy) riders would be left to challenge each other. The bull,
unperturbed, would just crank it up another notch or two until all the "cowboys"
had been thrown. (Sadly, the bulls quickly disappeared from the bars since
"urban cowboys" were much more litigious than their rural brethren).
The stock market's current bull ride is very reminiscent of its mechanical
cousin. Some would even say that in the early 1980's, as the mechanical bull was
forced out of the bars, he simply migrated to Wall Street to begin his long
running show. The bull started out slow and easy, allowing nearly everyone to
jump on and enjoy the ride. In 1987, he lurched quickly to the downside throwing
a lot of riders to the ground, and again in 1990, as more riders fell to the
wayside.
As the decade of the 1990s progressed, the bull just kept taking it up one notch
at a time, until finally, only a few riders remain. There has never been a
similar period when so few riders (stocks) have enjoyed so much. But remember,
it's always the bull that wins, not the riders.
This market just keeps getting narrower and narrower. In the first quarter, 66%
of the stocks in the S&P 500 underperformed the index's 5% return, and 55% of
the stocks actually had negative returns. Just five elite riders accounted for
half of the index's return, and mighty Microsoft alone accounted for 20% of the
index's performance.
The bull is moving fast and erratically, and eventually, he will be standing
alone, with broken and bruised riders lying at his feet.
<PAGE>
REVIEW OF MARKET BAROMETERS
* EARNINGS - We continue to experience "profitless prosperity". In the fourth
quarter, real GDP rose 6.1%, but S&P 500 earnings fell 4.4%. The U.S. economy
has grown at a booming 8.3% over the last two years, the best two-year
performance since 1985. Nevertheless, S&P 500 earnings have actually fallen
from $38.73 to $37.70, or 2.7%. Why? Well, as we learned in Economics 101,
GDP equals National Income, and its two biggest components are Corporate
Profits and Wages & Salaries. What is happening now is that in a
disinflationary global economy, with no pricing power, and a shrinking work
force, Wages & Salaries are rising and corporations can't pass the increased
costs onto consumers. Therefore, Corporate Profits are being squeezed.
* INTEREST RATES - There has been a slight steepening of the yield curve as a
result of a production agreement amongst OPEC nations and the onset of the
Serbian War. However, the long-term secular decline in global inflation is
still in tact, even though the case for lower rates (at least in the near
term) has been weakened.
* LIQUIDITY - Over the past 15 years, the Federal Reserve has been printing
money at nearly twice the rate of growth in the economy. And since 1995, that
rate of growth has exploded from 6% annually to an 11% rate, which is the
fastest sustained growth rate for money since the Fed was trying to
re-inflate the economy out of the recession in the early 1980s. The Fed is
starting to show some signs of concern that they may have provided too much
liquidity to this market. Yet, the Fed shows no current signs of tightening,
but we don't expect the floodgates to remain open much longer.
Overall, we believe investors should continue to focus on LARGE-CAP, HIGH
QUALITY, GROWTH companies. There have been some signs of life in the large-cap
value sector, especially among energy and consumer cyclicals, but it has the
feel of a temporary rally. Due to the extreme narrowness and excessive
valuations in this market, investors should remain very defensive.
PERFORMANCE
The Rockhaven Fund did very well in the six months ending March 31, 1999, with a
gain of 19.98%. This compares favorably to the S&P BARRA Value Index, which was
up 20.76% for the same period, and the S&P 500 Index, which was up 27.34%.
The S&P 500's performance continues to be dominated by just a handful of mega
large-cap growth stocks. In the first quarter of 1999, just FIVE stocks
accounted for half of the S&P 500's performance, and 18 stocks accounted for
100% of the performance. In other words, the remaining 482 stocks cancelled each
other out, for a net zero additional return.
The argument then becomes, at what price should we be willing to pay for these
great companies? The S&P 500 is now trading at a record price-to-earnings ratio
of 31.9 times trailing earnings. The largest 10 stocks trade at a significantly
higher P/E of 43.9 times. The largest stock, Microsoft, at 4.3% of the index,
trades at a lofty P/E of 70 times.
In this bull market, the biggest mistake of most investors has been to sell
great companies because of valuation and reinvest the proceeds into not so great
companies that are more reasonably valued. This is also the biggest reason
investors continue to under-perform the S&P 500. The S&P 500 lets it winners run
with no regard to valuation.
In the Rockhaven Fund, because we have been listening to the market we have
focused on large-cap, high-quality, growth companies. Due to our inherent income
and value biases, however, we have slightly underperformed the growth dominated
S&P 500.
The Rockhaven Premier Dividend Fund had a stellar six months ending March 31,
1999, with a gain of 27.94%. This compares very favorably to the Merrill Lynch
All-Convertible Index, which was up 19.98%.
The Merrill Lynch All-Convertible Index was up 5.46% in the first quarter and
its performance was even more narrow than that of the S&P 500. The top five out
of 499 converts accounted for 100% of the index's performance, with the America
Online 4% of 11/15/02 accounting for an incredible 46.5% of the index's return.
As usual, convertibles behaved like their underlying common stocks with the
large-cap, high-quality, growth-oriented converts outperforming small-cap,
low-quality value. Also, like the S&P 500, technology was the place to be.
The Rockhaven Premier Dividend Fund's emphasis on large-cap, higher quality,
more equity-sensitive convertibles served the Fund exceptionally well during
this period.
<PAGE>
In summary, both the Rockhaven Fund and the Premier Dividend Fund will STRIVE to
offer investors solid participation in their respective benchmarks with less
risk and more income. In the last six months I think we did a pretty good job of
that, and we look forward to the remainder of the millennium.
Thanks for your support,
/s/ Christopher Wiles
- ------------------------
Christopher Wiles
Description of Indices mentioned in shareholder letter:
The Standard & Poor's BARRA Value Index is a capitalization-weighted index of
all the stocks in the Standard & Poor's 500 that have low price-to-book ratios.
It is designed so that approximately 50% of the SPX market capitalization is in
the Value Index. The S&P 500 is an unmanaged capitalization-weighted index of
500 stocks designed to represent the broad domestic economy. The Merrill Lynch
All-Convertible Index includes U.S. dollar-denominated convertibles of $50
million or more in size, and incorporates both traditional and mandatory
conversion structure. These indices are not available for investment and do not
incur charges or expenses. Advisor Rockhaven Asset Management, LLC 100 First
Avenue, Suite 850 Pittsburgh, PA 15222 www.rockhaven.com
<PAGE>
THE ROCKHAVEN FUND
THE ROCKHAVEN FUND
Comparison of the change in value of a $10,000 investment in
The Rockhaven Fund versus the S&P 500 Composite Stock Price Index and
the S&P 500 BARRA Value Fund Index
Average Annual Total Return Period Ended March 31, 1999:
1 Year.................................14.55%
Since Inception (11-3-97)..............19.08%
S&P 500 Barra Value Index S&P Barra Raw
------------------------- -------------
11/3/1997 10,000 10,000
11/30/1997 10,175 10,108
12/31/1997 10,335 10,317
1/31/1998 10,440 10,179
2/28/1998 11,175 10,917
3/31/1998 11,666 11,430
4/30/1998 11,840 11,578
5/29/1998 11,617 11,386
6/30/1998 12,075 11,459
7/31/1998 11,935 11,196
8/31/1998 10,195 9,377
9/30/1998 10,831 9,928
10/31/98 11,701 10,691
11/30/98 12,392 11,226
12/31/98 13,091 11,604
1/31/99 13,628 11,824
2/28/99 13,188 11,546
3/31/99 13,700 11,880
Past performance does not predict future performance.
The S&P 500 Composite Stock Price Index is an unmanaged capitalization-weighted
index of 500 stocks designed to represent the broad domestic economy.
The S&P BARRA Value Index is an unmanaged capitalization weighted index that
contains approximately 50% of the stocks in the S&P 500 with lower price-to-book
ratios.
6
<PAGE>
THE ROCKHAVEN PREMIER DIVIDEND FUND
The Rockhaven Premier Dividend Fund
Comparison of the change in value of a $10,000 investment in The Rockhaven
Premier Dividend Fund versus the Merrill Lynch All-Convertible Index.
Average Annual Total Return Period Ended March 31, 1999:
1 Year..................................2.96%
Since Inception (11-3-97)..............12.54%
Merrill Lynch
All-Convertible Index
---------------------
11/3/1997 10,000
11/30/1997 10,004
12/31/1997 10,102
1/31/1998 10,128
2/28/1998 10,582
3/31/1998 10,971
4/30/1998 11,040
5/29/1998 10,796
6/30/1998 10,887
7/31/1998 10,714
8/31/1998 9,483
9/30/1998 9,672
10/31/98 9,922
11/30/98 10,396
12/31/98 11,004
1/31/99 11,547
2/28/99 11,143
3/31/99 11,605
Past performance does not predict future performance.
The Valuation calculation for the Merrill Lynch All-Convertible Index is for the
period November 1, 1997 through March 31, 1999.
The Merrill Lynch All-Convertible Index includes U.S. dollar-denominated
convertibles of $50 million or more in size, and incorporates both traditional
and mandatory conversion structures.
7
<PAGE>
THE ROCKHAVEN FUND
SCHEDULE OF INVESTMENTS at March 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
COMMON STOCKS &
Shares CONVERTIBLE SECURITIES: 98.11% Market Value
- --------------------------------------------------------------------------------
AEROSPACE: 1.67%
1,400 Lockheed Martin Corporation................... $ 52,763
-----------
BASIC MATERIALS: 2.95%
800 E.I du Pont de Nemours and Company............ 46,450
1,000 Monsanto Company, CONV PRD 6.5%............... 46,500
-----------
92,950
-----------
CAPITAL GOODS/DIVERSIFIED: 6.07%
900 Emerson Electric Co........................... 47,644
800 General Electric Company...................... 88,500
2,200 Ingersoll-Rand Co., CONV PFD 6.75%............ 55,550
-----------
191,694
-----------
CONSUMER CYCLICAL: 2.90%
750 Ford Motor Company............................ 42,563
1,200 Mattel, Inc................................... 29,850
700 Tribune Company, CONV PFD 6.25%............... 19,250
-----------
91,663
-----------
ENERGY: 5.79%
328 BP Amoco PLC ADR.............................. 33,108
700 Mobil Corporation............................. 61,600
1,100 Shell Transport and Trading ADR............... 44,687
1,100 The Williams Companies, Inc................... 43,450
-----------
182,845
-----------
FINANCE: 16.51%
1,100 Citigroup Inc................................. 70,262
1,000 Federal National Mortgage Association......... 69,250
500 J.P. Morgan & Co. Incorporated................ 61,687
3,100 Lincoln National Corporation,
CONV PFD 7.75%............................... 82,150
800 Natbank/Jefferson-Pilot Corporation,
CONV PFD 7.25%............................... 93,600
8
<PAGE>
THE ROCKHAVEN FUND
SCHEDULE OF INVESTMENTS at March 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Shares Market Value
- --------------------------------------------------------------------------------
FINANCE, CONTINUED
2,600 National Australia Bank Limited,
CONV PRD 7.875%.............................. $ 81,412
1,100 Wilmington Trust Corporation.................. 62,803
-----------
521,164
-----------
HEALTH CARE: 12.63%
1,100 American Home Products Corporation............ 71,775
950 Bausch & Lomb Incorporated.................... 61,750
700 Baxter International Inc...................... 46,200
1,400 Bristol-Myers Squibb Company.................. 90,037
775 Johnson & Johnson............................. 72,608
900 Pharmacia & Upjohn, Inc....................... 56,138
-----------
398,508
-----------
RETAILING: 6.64%
85,000 Costco Companies, Inc.,
CONV BOND 0%................................. 91,375
1,700 Dollar General Corporation,
CONV PFD 8.5%................................ 71,719
45,000 Rite Aid Corporation,
CONV BOND 5.25%............................. 46,350
-----------
209,444
-----------
SERVICES: 5.39%
1,300 McDonald's Corporation........................ 58,906
2,100 Sysco Corporation............................. 55,256
1,800 The Walt Disney Company....................... 56,025
-----------
170,187
-----------
STAPLES: 7.37%
900 H.J. Heinz Company............................ 42,638
1,100 Hershey Foods Corporation..................... 61,600
1,100 McCormick & Company, Incorporated............. 31,866
1,350 Philip Morris Companies Inc................... 47,503
800 The Coca-Cola Company......................... 49,100
-----------
232,707
-----------
9
<PAGE>
THE ROCKHAVEN FUND
SCHEDULE OF INVESTMENTS at March 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Shares Market Value
- --------------------------------------------------------------------------------
TECHNOLOGY: 19.83%
1,350 Electronic Data Systems Corporation........... $ 65,728
20,000 EMC Corporation., CONV BOND 3.25%............. 114,150
950 Hewlett-Packard Company....................... 64,422
300 Intel Corporation............................. 35,662
300 International Business Machines............... 53,175
15,000 Level One Communications, Incorporated
CONV BOND 4%................................. 29,700
800 MediaOne Group, Inc.,
CONV PFD 6.25%............................... 66,200
900 Motorola, Inc................................. 65,925
1,050 Pitney Bowes Inc.............................. 66,938
1,200 Xerox Corporation............................. 64,050
-----------
625,950
-----------
TRANSPORTATION: 0.79%
500 Union Pacific Corporportion,
CONV PFD 6.25%............................... 25,062
-----------
UTILITIES: 2.88%
1,800 NIPSCO Industries, Inc.,
CONV PFD 7.75%............................... 90,900
-----------
UTILITY: 6.67%
1,400 Ameritech Corporation......................... 81,025
1,800 BCE Inc....................................... 79,763
900 U S WEST, Inc................................. 49,556
-----------
210,344
-----------
Total Common Stocks &
Convertible Securities (cost $2,761,191)... 3,096,181
-----------
10
<PAGE>
THE ROCKHAVEN FUND
SCHEDULE OF INVESTMENTS at March 31, 1999 (Unaudited), Continued
- --------------------------------------------------------------------------------
Market Value
- --------------------------------------------------------------------------------
Principal Amount SHORT-TERM INVESTMENTS: 1.26%
- --------------------------------------------------------------------------------
$39,858 Star Treasury Fund,
4.99% (cost $39,858)....................... 39,858
-----------
Total Investments in Securities
(cost $2,801,050): 99.37%.................... $ 3,136,039
Other Assets less Liabilities: 0.63%.......... 19,786
-----------
Total Net Assets: 100.0% ..................... $ 3,155,825
===========
+At March 31, 1999, the cost of securities for Federal income tax purposes was
the same as the basis for financial reporting. Unrealized appreciation and
depreciation of securities were as follows:
Gross unrealized appreciation.................................. $ 412,582
Gross unrealized depreciation.................................. (77,592)
---------
Net unrealized appreciation................................ $ 334,990
=========
See accompanying Notes to Financial Statements.
11
<PAGE>
THE ROCKHAVEN FUND
STATEMENT OF ASSETS AND LIABILITIES at March 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
ASSETS
Investments in securities, at value
(identified cost $2,801,049) ................................ $ 3,136,039
Receivables:
Due from Advisor ............................................ 6,625
Dividends and interest ...................................... 6,102
Prepaid expenses ............................................... 20,587
-----------
Total assets ............................................. 3,169,353
-----------
LIABILITIES
Payables:
Due to administrator ........................................ 2,548
Dividends ................................................... 235
Fund shares repurchased ..................................... 12
Accrued expenses ............................................... 10,733
-----------
Total liabilities ........................................ 13,528
-----------
NET ASSETS ........................................................ $ 3,155,825
===========
NET ASSET VALUE, OFFERING AND REDEMPTION
PRICE PER SHARE [$3,155,825/273,096 shares
outstanding; unlimited number of shares
(par value $.01) authorized] .................................... $ 11.56
===========
COMPONENTS OF NET ASSETS
Paid-in capital ................................................ $ 2,901,467
Dividends in excess of net investment income ................... (4,234)
Accumulated net realized loss on investments ................... (76,398)
Net unrealized appreciation on investments ..................... 334,990
-----------
Net assets .................................................. $ 3,155,825
===========
See accompanying Notes to Financial Statements.
12
<PAGE>
THE ROCKHAVEN FUND
STATEMENT OF OPERATIONS
For the Six Months Ended March 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Income
Dividends .................................................. $ 38,788
Interest ................................................... 1,764
---------
Total income ............................................ 40,552
---------
Expenses
Administration fees (Note 3) ............................... 14,959
Advisory fees (Note 3) ..................................... 10,837
Professional fees .......................................... 8,976
Fund accounting fee ........................................ 8,204
Transfer agent fees ........................................ 7,480
Registration fees .......................................... 5,056
Distribution expense (Note 4) .............................. 3,612
Custodian .................................................. 3,591
Other ...................................................... 2,882
Reports to shareholders .................................... 2,493
Trustees' fees ............................................. 2,028
---------
Total expenses .......................................... 70,118
Less, advisory fee waiver and absorption ................ (48,443)
---------
Net expenses ............................................ 21,675
---------
Net investment income ................................ 18,877
---------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from security transactions ............... 40,437
Net change in unrealized appreciation
on investments ........................................... 443,952
---------
Net realized and unrealized gain
on investments ........................................ 484,389
---------
Net Increase in Net Assets Resulting
from Operations .................................... $ 503,266
=========
See accompanying Notes to Financial Statements.
13
<PAGE>
THE ROCKHAVEN FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Six Months November 3, 1997
Ended through
March 31, 1999# September 30, 1998
--------------- ------------------
NET INCREASE IN ASSETS FROM
OPERATIONS
Net investment income....................... $ 18,877 $ 22,715
Net realized loss from security
transactions............................. 40,437 (116,835)
Net change in unrealized depreciation
of securities............................ 443,952 (108,962)
---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ........... 503,266 (203,082)
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS
Net investment income....................... (24,107) (21,719)
---------- ----------
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from
net change in outstanding shares (a)..... 685,359 2,216,108
---------- ----------
TOTAL INCREASE IN NET ASSETS .......... 1,164,518 1,991,307
NET ASSETS
Beginning of period......................... 1,991,307 -0-
---------- ----------
END OF PERIOD .............................. $3,155,825 $1,991,307
========== ==========
(a) A summary of capital share transactions is as follows:
Six Months November 3, 1997*
Ended through
March 31, 1999# September 30, 1998
------------------------ ------------------------
Shares Paid In Capital Shares Paid in Capital
------ --------------- ------ ---------------
Shares sold.............. 76,023 $773,453 205,027 $2,215,772
Shares issued in
reinvestment of
distributions......... 1,605 18,410 1,483 15,706
Shares redeemed.......... (9,663) (106,504) (1,379) (15,370)
------ -------- ------- ----------
Net increase............. 67,965 $685,359 205,131 $2,216,108
====== ======== ======= ==========
*Commencement of operations.
#Unaudited.
See accompanying Notes to Financial Statements.
14
<PAGE>
THE ROCKHAVEN FUND
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout each period
- --------------------------------------------------------------------------------
Six Months November 3, 1997*
Ended through
March 31, 1999# September 30, 1998
--------------- ------------------
Net asset value, beginning of period........... $ 9.71 $10.00
------ ------
Income from investment operations:
Net investment income....................... 0.07 0.14
Net realized and unrealized gain (loss)
on investments......................... 1.87 (0.29)
------ ------
Total from investment operations............... 1.94 (0.15)
------ ------
Less distributions:
From net investment income.................. (0.09) (0.14)
------ ------
Net asset value, end of period................. $11.56 $ 9.71
====== ======
TOTAL RETURN .................................. 19.98%+ (1.61%)+
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands).......... $3,156 $1,991
Ratio of expenses to average net assets:
Before expense reimbursement................ 4.84%++ 8.51%++
After expense reimbursement................. 1.50%++ 1.49%++
Ratio of net investment income to average
net assets:
After expense reimbursement................. 1.30%++ 1.82%++
Portfolio turnover rate........................ 50.48% 98.13%
*Commencement of operations.
#Unaudited.
+Not annualized.
++Annualized.
See accompanying Notes to Financial Statements.
15
<PAGE>
THE ROCKHAVEN PREMIER DIVIDEND FUND
SCHEDULE OF INVESTMENTS at March 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
COMMON STOCKS &
Shares CONVERTIBLE SECURITIES: 97.53% Market Value
- --------------------------------------------------------------------------------
AEROSPACE: 2.74%
3,500 Lockheed Martin Corporation................... $ 131,906
-----------
BASIC MATERIALS: 5.85%
2,850 Monsanto Company, CONV PFD 6.5%............... 132,525
3,000 Sealed Air Corporation,
CONV PFD $2.00............................. 148,500
-----------
281,025
-----------
CAPITAL GOODS / DIVERSIFIED: 3.77%
4,900 Ingersoll-Rand Company,
CONV PFD 6.75%................................ 123,725
1,600 Laidlaw One, Inc. / US Filter
Corporation, CONV PFD........................ 57,600
-----------
181,325
-----------
Consumer Cyclical: 11.73%
130,000 Costco Companies, Inc.,
CONV BOND PFD 0%............................. 139,750
3,200 Dollar General, CONV PFD 8.5%................. 135,000
1,250 Ford Motor Company............................ 70,937
6,500 Mattel, Inc., CONV PFD .4125.................. 68,250
40,000 The Home Depot, Inc.,
CONV BOND 3.25%.............................. 111,100
1,400 Tribune Company, CONV PFD 6.25%............... 38,500
-----------
563,537
-----------
ENERGY: 4.79%
1,300 Diamond Offshore Drilling, Inc................ 41,113
30,000 Diamond Offshore Drilling, Inc.,
CONV BOND 3.75%.............................. 31,163
1,650 Shell Transport and Trading ADR............... 67,031
2,300 The Williams Companies, Inc................... 90,850
-----------
230,157
-----------
FINANCE: 8.35%
1,400 Citigroup Inc................................. 89,425
16
<PAGE>
THE ROCKHAVEN PREMIER DIVIDEND FUND
SCHEDULE OF INVESTMENTS at March 31, 1999 (Unaudited), Continued
- --------------------------------------------------------------------------------
Shares Market Value
- --------------------------------------------------------------------------------
FINANCE, CONTINUED
4,360 Lincoln National Corporation,
CONV PFD 7.75%............................. $ 115,540
850 Natbank / Jefferson-Pilot Corporation,
CONV PFD 7.25%............................... 99,450
3,100 National Australia Bank Limited,
CONV PFD 7.875%.............................. 97,069
-----------
401,484
-----------
SERVICES: 17.20%
90,000 Clear Channel Communications, Inc.,
CONV BOND 2.625%............................. 111,038
1,250 Houston Industries Incorporated,
CONV PFD 7%.................................. 150,625
800 MediaOne Group, Inc.,
CONV PFD 4.5%................................ 102,850
65,000 Omnicom Group, Inc.,
CONV BOND 4.25%.............................. 167,538
3,100 The Readers Digest Association, Inc.
Traces, CONV PFD 8.25%....................... 93,387
2,400 The Walt Disney Company....................... 74,700
2,100 Wendy's International Inc.,
CONV PFD 5%................................ 126,525
-----------
826,663
-----------
STAPLES: 10.27%
90,000 Athena Neurosciences, Inc.,
CONV BOND 4.75%.............................. 110,025
1,000 McKesson Financing Trust,
CONV PFD 5%.................................. 91,000
1,900 Newell Financial Trust I,
CONV PFD 5.25%............................... 104,975
2,700 Philip Morris Companies Inc................... 95,006
90,000 Rite Aid Corp., CONV BOND 5.25%............... 92,700
-----------
493,706
-----------
17
<PAGE>
THE ROCKHAVEN PREMIER DIVIDEND FUND
SCHEDULE OF INVESTMENTS at March 31, 1999 (Unaudited), Continued
- --------------------------------------------------------------------------------
Shares Market Value
- --------------------------------------------------------------------------------
TECHNOLOGY: 17.12%
30,000 EMC Corporation, CONV BOND 3.25%.............. $ 171,225
190,000 Hewett-Packard Company,
CONV BOND 0%................................. 106,400
1,800 Ingram Micro Inc.*............................ 41,063
240,000 Ingram Micro Inc., CONV BOND 0%............... 74,700
55,000 Level One Communications, Incorporated,
CONV BOND 4%................................. 108,900
2,500 Pitney Bowes, Inc............................. 159,375
900 Xerox Corporation............................. 48,038
190,000 Xerox Corporation,
CONV BOND 0.57%.............................. 113,762
-----------
823,463
-----------
TELECOMMUNICATIONS: 10.46%
1,850 MediaOne Group, Inc.,
CONV PFD 6.25%............................... 153,087
180,000 Motorola, Inc., CONV BOND 0%*................. 153,675
2,150 QUALCOMM Financial Trust 1,
CONV PFD 5.75%............................... 195,381
-----------
502,143
-----------
TRANSPORTATION: 1.77%
1,700 Union Pacific Corporation,
CONV PFD 6.25%............................... 85,212
-----------
UTILITIES: 3.47%
3,300 NIPSCO Industries, Inc.,
CONV PFD 7.75%............................... 166,650
-----------
Total Common Stocks and Convertible
Securities (cost $4,131,111).................. 4,687,271
-----------
18
<PAGE>
THE ROCKHAVEN PREMIER DIVIDEND FUND
SCHEDULE OF INVESTMENTS at March 31, 1999 (Unaudited), Continued
- --------------------------------------------------------------------------------
Principal Amount SHORT-TERM INVESTMENTS: 1.75%
- --------------------------------------------------------------------------------
$83,873 Star Treasury Fund,
4.99% (cost $83,873)....................... 83,873
-----------
Total Investments in Securities
(cost $4,214,984): 99.28%.................. 4,771,144
Other Assets less Liabilities: 0.72%.......... 34,429
-----------
TOTAL NET ASSETS: 100.0% ..................... $ 4,805,573
===========
* Non-income producing security.
+At March 31, 1999, the cost of securities for Federal income tax purposes was
the same as the basis fro financial reporting. Gross unrealized appreciation and
depreciation of securities were as follows:
Gross unrealized appreciation................. $ 669,697
Gross unrealized depreciation................. (113,536)
---------
Net unrealized appreciation............... $ 556,161
=========
See accompanying Notes to Financial Statements.
19
<PAGE>
THE ROCKHAVEN PREMIER DIVIDEND FUND
STATEMENT OF ASSETS AND LIABILITIES at March 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
ASSETS
Investments in securities, at value
(identified cost $4,214,983) ............................. $ 4,771,144
Receivables:
Due from Advisor ......................................... 5,288
Dividends and interest ................................... 11,099
Securities sold .......................................... 16,237
Prepaid expenses ............................................ 20,063
-----------
Total assets .......................................... 4,823,831
-----------
LIABILITIES
Payables:
Due to administrator ..................................... 2,548
Dividends ................................................ 1,174
Fund shares repurchased .................................. 12
Securities purchased ..................................... 3,200
Accrued expenses ............................................ 11,324
-----------
Total liabilities ..................................... 18,258
-----------
NET ASSETS ..................................................... $ 4,805,573
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
[$4,805,573/387,371 shares outstanding; unlimited
number of shares (par value $.01) authorized] .............. $ 12.41
===========
COMPONENTS OF NET ASSETS
Paid-in capital ............................................. $ 4,108,616
Dividends in excess of net investment income ................ (11,625)
Undistributed net realized gain on investments .............. 152,421
Net unrealized appreciation on investments .................. 556,161
-----------
Net assets ............................................... $ 4,805,573
===========
See accompanying Notes to Financial Statements.
20
<PAGE>
THE ROCKHAVEN PREMIER DIVIDEND FUND
STATEMENT OF OPERATIONS
For the Six Months Ended March 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
INVESTMENT INCOME
Income
Dividends ............................................... $ 51,733
Interest ................................................ 2,452
---------
Total income ......................................... 54,185
---------
Expenses
Administration fees (Note 3) ............................ 14,959
Advisory fees (Note 3) .................................. 12,258
Professional fees ....................................... 8,976
Fund accounting fee ..................................... 8,204
Transfer agent fees ..................................... 7,480
Registration fees ....................................... 5,018
Distribution expense (Note 4) ........................... 4,086
Custodian ............................................... 3,591
Other ................................................... 2,876
Reports to shareholders ................................. 2,493
Trustees' fees .......................................... 2,028
---------
Total expenses ....................................... 71,969
Less, advisory fee waiver and absorption ............. (47,452)
---------
Net expenses ......................................... 24,517
---------
Net investment income ............................. 29,668
---------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain from security transactions ............ 190,530
Net change in unrealized appreciation
on investments ........................................ 609,009
---------
Net realized and unrealized gain
on investments ..................................... 799,539
---------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ................................. $ 829,207
=========
See accompanying Notes to Financial Statements.
21
<PAGE>
THE ROCKHAVEN PREMIER DIVIDEND FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
Six Months November 3, 1997*
Ended through
March 31, 1999# September 30, 1998
--------------- ------------------
NET INCREASE IN ASSETS FROM OPERATIONS
Net investment income....................... $ 29,668 $ 23,887
Net realized gain (loss) from
security transactions.................... 190,530 (38,109)
Net change in unrealized appreciation
of securities............................ 609,009 (52,848)
---------- -----------
Net increase (decrease) in net
assets resulting from operations .... 829,207 (67,070)
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS
Net investment income....................... (42,609) (22,571)
---------- -----------
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from
net change in outstanding shares (a)..... 2,340,176 1,768,440
---------- -----------
TOTAL INCREASE IN NET ASSETS ............ 3,126,774 1,678,799
NET ASSETS
Beginning of period......................... 1,678,799 -0-
---------- -----------
END OF PERIOD .............................. $4,805,573 $ 1,678,799
========== ===========
(a) A summary of capital share transactions is as follows:
Six Months November 3, 1997*
Ended through
March 31, 1999# September 30, 1998
------------------------ ------------------------
Shares Paid In Capital Shares Paid in Capital
------ --------------- ------ ---------------
Shares sold.............. 215,099 $2,326,699 172,304 $1,777,767
Shares issued in
reinvestment
of distributions...... 3,132 37,410 2,091 21,976
Shares redeemed.......... (2,117) 23,933 (3,138) (31,303)
------- ---------- ------- ----------
Net increase............. 216,114 $2,340,176 171,257 $1,768,440
======= ========== ======= ==========
*Commencement of operations.
#Unaudited.
See accompanying Notes to Financial Statements.
22
<PAGE>
THE ROCKHAVEN PREMIER DIVIDEND FUND
FINANCIAL HIGHLIGHTS
For a capital share outstanding throughout each period
- --------------------------------------------------------------------------------
Six Months November 3, 1997*
Ended through
March 31, 1999# September 30, 1998
--------------- ------------------
Net asset value, beginning of period........... $ 9.80 $10.00
Income from investment operations:
Net investment income....................... 0.08 0.21
Net realized and unrealized gain (loss)
on investments........................... 2.65 (0.21)
------ ------
Total from investment operations............... 2.73 0.00
------ ------
Less distributions:
From net investment income.................. (0.12) (0.20)
------ ------
Net asset value, end of period................. $12.41 $ 9.80
====== ======
TOTAL RETURN .................................. 27.94%+ (0.10)%+
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (million)............ $ 4.8 $ 1.7
Ratio of expenses to average net assets:
Before expense reimbursement................ 4.38%++ 11.28%++
After expense reimbursement................. 1.49%++ 1.49%++
Ratio of net investment income to average
net assets:
After expense reimbursement................. 1.81%++ 2.62%++
Portfolio turnover rate........................ 65.94% 147.56%
*Commencement of operations.
#Unaudited.
+Not annualized.
++Annualized.
See accompanying Notes to Financial Statements.
23
<PAGE>
THE ROCKHAVEN FUND
THE ROCKHAVEN PREMIER DIVIDEND FUND
NOTES TO FINANCIAL STATEMENTS at March 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
The Rockhaven Fund and Rockhaven Premier Dividend Fund (the "Funds") are
each a series of shares of Advisors Series Trust (the "Trust"), which is
registered under the Investment Company Act of 1940 as a diversified, open-end
management investment company. The Rockhaven Fund's primary investment objective
is obtaining above average current income together with capital appreciation.
The Rockhaven Premier Dividend Fund's primary investment objective is obtaining
high current income and its secondary objective is seeking capital appreciation.
The Funds attempt to achieve their objectives by investing in a diversified
portfolio of equity securities. The Funds began operations on November 3, 1997.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds:
A. SECURITY VALUATION: The Funds' investments are carried at fair value.
Securities listed on an exchange or quoted on a National Market System
are valued at the last sale price. Other securities are valued at the
mean between the last bid and asked prices. Securities for which
market quotations are not readily available, if any, are valued
following procedures approved by the Board of Trustees. Short-term
investments are valued at amortized cost, which approximates market
value.
B. FEDERAL INCOME TAXES: It is the Funds' policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Therefore, no federal income tax
provision is required.
C. SECURITY TRANSACTIONS, DIVIDENDS AND DISTRIBUTIONS: Security
transactions are accounted for on the trade date. Dividend income and
distributions to shareholders are recorded on the ex-dividend date.
Realized gains and losses on securities sold are determined on the
basis of identified cost. Discounts and premiums on securities
purchased are amortized over the life of the respective securities.
24
<PAGE>
THE ROCKHAVEN FUND
THE ROCKHAVEN PREMIER DIVIDEND FUND
NOTES TO FINANCIAL STATEMENTS at March 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
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 and the reported amounts of increases and decreases in net
assets during the reporting period. Actual results could differ from
those estimates.
NOTE 3 - INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
For the period ended March 31, 1999, Rockhaven Asset Management, LLC (the
"Advisor") provided the Funds with investment management services under an
Investment Advisory Agreement. The Advisor furnished all investment advice,
office space, facilities, and provides most of the personnel needed by the
Funds. As compensation for its services, the Advisor is entitled to a monthly
fee at the annual rate of 0.75% based upon the average daily net assets of each
Fund. For the period ended March 31, 1999, The Rockhaven Fund and The Rockhaven
Premier Dividend Fund incurred $10,837 and $12,258, respectively, in Advisory
Fees.
The Funds are responsible for their own operating expenses. The Advisor has
agreed to reduce fees payable to it by each Fund and to pay each Fund's
operating expenses to the extent necessary to limit each Fund's aggregate annual
operating expenses to 1.5% of average net assets (the "expense cap"). Any such
reductions made by the Advisor in its fees or payment of expenses which are a
Fund's obligation are subject to reimbursement by the Fund to the Advisor, if so
requested by the Advisor, in subsequent fiscal years if the aggregate amount
actually paid by the Fund toward the operating expenses for such fiscal year
(taking into account the reimbursement) does not exceed the applicable
limitation on the Fund's expenses. The Advisor is permitted to be reimbursed
only for fee reductions and expense payments made in the previous three fiscal
years, but is permitted to look back five years and four years, respectively,
during the initial six years and seventh year of the Fund's operations. Any such
reimbursement is also contingent upon Board of Trustees' subsequent review and
ratification of the reimbursed amounts. Such reimbursement may not be paid prior
to a Fund's payment of current ordinary operating
25
<PAGE>
THE ROCKHAVEN FUND
THE ROCKHAVEN PREMIER DIVIDEND FUND
NOTES TO FINANCIAL STATEMENTS at March 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
expenses. For the period ended March 31, 1999, the Advisor reduced its fees and
absorbed Fund expenses in the amount of $48,443 for The Rockhaven Fund and
$47,452 for The Rockhaven Premier Dividend Fund; no amounts were reimbursed to
the Advisor.
Investment Company Administration, L.L.C. (the "Administrator") acts as the
Funds' Administrator under an Administration Agreement. The Administrator
prepares various federal and state regulatory filings, reports and returns for
the Funds; prepares reports and materials to be supplied to the trustees;
monitors the activities of the Fund's custodian, transfer agent and accountants;
coordinates the preparation and payment of Fund expenses and reviews each Fund's
expense accruals. For its services, the Administrator receives a monthly fee at
the annual rate of 0.20% of average daily net assets, subject to a minimum fee
of $30,000 annually, from each Fund.
First Fund Distributors, Inc. (the "Distributor") acts as the Funds'
principal underwriter in a continuous public offering of the Fund's shares. The
Distributor is an affiliate of the Administrator.
Certain officers of the Fund are also officers and/or directors of the
Administrator and the Distributor.
NOTE 4 - DISTRIBUTION COSTS
The Trust has adopted a Distribution Plan (the "Plan") in accordance with
Rule 12b-1 under the 1940 Act. The Plan provides that the Funds may pay a fee to
the Advisor, acting as Distribution Coordinator, at an annual rate of up to
0.25% of the average daily net assets of each Fund. The fee is paid to the
Distribution Coordinator as reimbursement for, or in anticipation of, expenses
incurred for distribution-related activity. For the period ended March 31, 1999,
the Funds paid the Distribution Coordinator in the amount of $3,612 for The
Rockhaven Fund and $4,086 for The Rockhaven Premier Dividend Fund.
NOTE 5 - SECURITIES TRANSACTIONS
For the period ended March 31, 1999, the cost of purchases and the proceeds
from sales of securities, excluding short-term securities, for The Rockhaven
Fund, were $1,947,242 and $1,406,078, respectively.
26
<PAGE>
THE ROCKHAVEN FUND
THE ROCKHAVEN PREMIER DIVIDEND FUND
NOTES TO FINANCIAL STATEMENTS at March 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
For the period ended March 31, 1999, the cost of purchases and the proceeds
from sales of securities, excluding short-term securities, for The Rockhaven
Premier Dividend Fund, were $4,344,729 and $2,077,598, respectively.
27
<PAGE>
ADVISOR
Rockhaven Asset Management, LLC
100 First Avenue, Suite 850
Pittsburgh, PA 15222
www.rockhaven.com
DISTRIBUTOR
First Fund Distributors, Inc.
4455 East Camelback Road, Suite 261E
Phoenix, AZ 85018
CUSTODIAN
Firstar Bank, N.A.
425 Walnut Street
Cincinnati, OH 45202
TRANSFER AGENT
American Data Services, Inc.
150 Motor Parkway, Suite 109
Hauppauge, NY 11788
888-229-2105
LEGAL COUNSEL
Paul, Hastings, Janofsky & Walker LLP
345 California Street, 29th Floor
San Francisco, CA 94104
This report is intended for shareholders of the Funds 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.
