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VAN DEVENTER & HOCH
AMERICAN VALUE FUND
ANNUAL REPORT
OCTOBER 31, 1998
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VH
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VAN DEVENTER & HOCH AMERICAN VALUE FUND
November 30, 1998
Dear Shareholders:
The Van Deventer & Hoch American Value Fund declined 7.75 percent in the Fund's
six month period ended October 31, 1998. This compared with a modest loss for
the S&P 500 Index of 0.40 percent during the same period.
The Fund's disappointing returns can be attributed to the so-called
capitalization effect. In selecting securities for American Value, Van Deventer
& Hoch looks for what it considers to be the best values throughout the
broadly-defined market without regard for capitalization. Currently, the average
weighted market capitalization of the Fund's holdings is about one-third that of
the S&P 500, and the Fund's median market cap of about $5 billion more closely
resembles that of the S&P Mid-Cap Index.
This focus on mid-sized companies is believed to be an intelligent strategy
which will benefit shareholders over the long term. From our research, we have
deduced that many of these companies have growth potential that appears far
superior to that of their larger counterparts. As a group, they sell at prices
which compare more favorably with their underlying assets, revenue and earnings.
In the short term, however, the portfolio has been buffeted by the poor
performance of these moderately-sized stocks. The S&P Mid-Cap Index, for
instance, gained a comparatively modest 6.7 percent during the Fund's fiscal
year.
Van Deventer & Hoch will continue to focus American Value on reasonably priced
issues which span various capitalization categories and have sound long-term
potential. Though currently unpopular with some investors, it is believed that
issues selected with conservative valuation characteristics are the most likely
to achieve shareholders' long-term objectives of both safety and growth of
capital.
Cordially,
/s/ Richard A. Snyders
Richard A. Snyders
President
Van Deventer & Hoch
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COMPARISON OF CHANGE IN VALUE OF $10,000 INVERSTMENT IN THE VAN
DEVENTER & HOCH AMERICAN VALUE FUND AND THE S & P 500 INDEX
Average Annual Total Return
Period Ended October 31, 1998
Cumulative Since Inception (4/30/98). -7.75%
Van Deventer & Hoch
American Value Fund S & P 500 Index
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30-Apr-98 $10,000 $10,000
31-May-98 9,686 9,828
30-Jun-98 9,619 10,227
31-Jul-98 9,158 10,119
31-Aug-98 8,189 8,657
30-Sep-98 8,803 9,210
31-Oct-98 9,225 9,960
Past performance is not predictive of future performance.
The S&P 500 is a broad market-weighted average of U.S. blue-chip companies. The
index is unmanaged and returns include reinvested dividends.
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VAN DEVENTER & HOCH AMERICAN VALUE FUND
SCHEDULE OF INVESTMENTS AT OCTOBER 31, 1998
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Shares COMMON STOCKS - 78.1% Market Value
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BASIC MATERIALS - 6.7%
6,500 Crown Cork & Seal Co., Inc................................ $ 207,188
11,500 Longview Fiber Co......................................... 138,000
17,500 Louisiana-Pacific Corp.................................... 310,625
7,200 Reliance Steel & Aluminum Co.............................. 222,750
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878,563
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CAPITAL GOODS - 3.8%
2,000 Flour Corp................................................ 77,625
4,000 Tecumseh Products Co., Class A............................ 208,000
7,000 Tenneco, Inc.............................................. 212,625
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498,250
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CHEMICALS - 4.4%
5,200 Air Products & Chemicals, Inc............................. 196,300
4,800 Lubrizol Corp............................................. 133,800
6,000 Praxair, Inc.............................................. 241,500
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571,600
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CONSUMER CYCLICAL - 8.1%
4,600 Dillard's, Inc............................................ 142,887
7,500 Fleetwood Enterprises, Inc................................ 241,875
7,000 Genuine Parts Co.......................................... 220,500
4,000 Goodyear Tire & Rubber Co................................. 215,500
6,500 ITT Industries, Inc....................................... 232,375
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1,053,137
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CONSUMER PRODUCTS - 2.2%
9,500 ConAgra, Inc.............................................. 289,156
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CONSUMER STAPLES - 4.8%
7,000 Albertson's, Inc.......................................... 388,938
5,000 Kimberly-Clark Corp....................................... 241,250
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630,188
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ENERGY - 13.9%
2,400 Atlantic Richfield Co. (ARCO)............................. 165,300
3,500 Burlington Resources, Inc................................. 144,156
10,000 Enron Oil & Gas Co........................................ 166,875
3
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VAN DEVENTER & HOCH AMERICAN VALUE FUND
SCHEDULE OF INVESTMENTS AT OCTOBER 31, 1998, CONTINUED
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Shares Market Value
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ENERGY, CONTINUED
7,600 Halliburton Co............................................. $ 273,125
9,500 Occidental Petroleum Corp.................................. 188,813
5,600 Phillips Petroleum Co...................................... 242,200
5,000 Royal Dutch Petroleum Co................................... 246,250
5,000 Texas Pacific Land Trust................................... 210,000
13,000 Union Pacific Resources Group, Inc......................... 169,000
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1,805,719
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FINANCIAL - 15.2%
10,000 Allstate Corp.............................................. 430,625
4,697 Banc One Corp.............................................. 229,566
3,168 BankAmerica Corp........................................... 181,962
6,400 Federal National Mortgage Assoc............................ 453,200
3,600 MBIA, Inc.................................................. 220,050
4,800 SAFECO Corp................................................ 207,900
6,720 Washington Mutual, Inc..................................... 251,580
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1,974,883
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REAL ESTATE INVESTMENT TRUST - 1.8%
9,674 BRE Properties, Inc., Class A.............................. 233,385
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TECHNOLOGY - 8.0%
6,000 Electronic Data Systems Corp............................... 244,125
5,000 Hewlett-Packard Co......................................... 300,938
4,000 Motorola, Inc.............................................. 208,000
5,000 Raytheon Co., Class B...................................... 290,312
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1,043,375
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TELECOMMUNICATIONS - 3.4%
3,000 AT&T Corp.................................................. 186,750
4,400 GTE Corp................................................... 258,225
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444,975
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TRANSPORTATION SERVICES - 4.1%
9,000 Norfolk Southern Corp...................................... 296,437
5,000 Union Pacific Corp......................................... 238,125
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534,562
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4
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VAN DEVENTER & HOCH AMERICAN VALUE FUND
SCHEDULE OF INVESTMENTS AT OCTOBER 31, 1998, CONTINUED
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Shares Market Value
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UTILITIES - 1.7%
8,000 Central & South West Corp................................. $ 222,500
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TOTAL COMMON STOCKS
(Cost $8,375,075)......................................... 10,180,293
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Principal Amount SHORT TERM INVESTMENTS - 21.3%
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MONEY MARKET - 0.1%
$ 8,519 UMB Bank Money Market Fiduciary (Cost $8,519)............. 8,519
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U.S. TREASURY - 5.9%
774,000 U.S. Treasury Bills, 3.96% due 01/21/99 (Cost $767,623)... 767,623
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COMMERCIAL PAPER - 15.3%
461,500 American Express Credit Corp., 5.08% due 11/03/98......... 461,305
461,700 Asscociates Corp. of North America, 5.00% due 11/06/98.... 461,315
Ford Motor Credit Company.................................
250,000 5.08% due 11/10/98...................................... 249,683
320,300 5.12% due 11/18/98...................................... 319,480
502,500 General Electric Capital Corp., 5.10% due 11/13/98........ 501,574
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Total Commercial Paper (Cost $1,993,357).................. 1,993,357
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TOTAL SHORT TERM INVESTMENTS
(Cost $2,769,499)......................................... 2,769,499
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TOTAL INVESTMENTS - 99.4%
(Cost $11,144,574) ....................................... 12,949,792
OTHER ASSETS IN EXCESS OF LIABILITIES - 0.6%.......... 73,797
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NET ASSETS - 100.0%................................... $13,023,589
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See Accompanying Notes to Financial Statements.
5
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VAN DEVENTER & HOCH AMERICAN VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES AS OF OCTOBER 31, 1998
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ASSETS
Investments in securities, at value (identified cost $11,144,574) $12,949,792
Receivables:
Due from advisor .......................................... 60,036
Interest and dividends .................................... 9,524
Deferred organization costs ..................................... 31,187
Other assets .................................................... 9,560
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Total assets ........................................ 13,060,099
LIABILITIES
Accrued expenses ................................................ 36,510
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Total liabilities .............................. 36,510
NET ASSETS ....................................................... $13,023,589
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COMPOSITION OF NET ASSETS
Paid-in capital ................................................. $10,467,725
Undistributed net investment income ............................. 95,565
Accumulated net realized gain on investment transactions ........ 655,081
Net unrealized appreciation of investments ...................... 1,805,218
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Net assets ................................................ $13,023,589
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Shares outstanding (unlimited number of shares authorized) ...... 943,473
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE ........ $ 13.80
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See accompanying Notes to Financial Statements.
6
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VAN DEVENTER & HOCH AMERICAN VALUE FUND
STATEMENT OF OPERATIONS - MAY 1, 1998* TO OCTOBER 31, 1998
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INVESTMENT INCOME
Dividend income (net of withholding taxes of $1,211) ....... $ 117,310
Interest income ............................................ 43,355
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Total investment income ................................. 160,665
Expenses
Advisory fees (Note 3) ..................................... 43,806
Legal fees ................................................. 15,900
Distribution fees .......................................... 15,645
Accounting fees ............................................ 15,000
Administration fees (Note 3) ............................... 15,000
Shareholder reporting fees ................................. 14,001
Audit fees ................................................. 12,000
Transfer agent fees ........................................ 12,000
Registration fees .......................................... 8,550
Amortization of organization costs ......................... 3,495
Insurance fees ............................................. 2,275
Trustee fees ............................................... 1,133
Miscellaneous .............................................. 2,000
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Total expenses .......................................... 160,805
Fees waived and expenses absorbed (Note 3) .............. (95,705)
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Net expenses ............................................ 65,100
NET INVESTMENT INCOME ................................. $ 95,565
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REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments ........................... $ 655,081
Change in net unrealized appreciation on investments ....... (1,735,604)
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NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS ......... (1,080,523)
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS .......... $ (984,958)
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* Commencement of the Fund.
See accompanying Notes to Financial Statements.
7
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VAN DEVENTER & HOCH AMERICAN VALUE FUND
STATEMENT OF CHANGES IN NET ASSETS
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May 1, 1998*
to
October 31, 1998
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INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS
Net investment income ...................................... $ 95,565
Net realized gain on investments ........................... 655,081
Change in net unrealized appreciation on investments ....... (1,735,604)
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DECREASE IN NET ASSETS FROM OPERATIONS ................. (984,958)
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold .................................. 1,464,418
Cost of shares redeemed .................................... (892,848)
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NET INCREASE FROM SHARE TRANSACTIONS ................... 571,570
Total decrease in net assets ............................... (413,388)
NET ASSETS
Beginning of period ........................................ 13,436,977
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END OF PERIOD .............................................. $ 13,023,589
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CAPITAL SHARE ACTIVITY
Shares sold ................................................ 109,676
Shares redeemed ............................................ (64,289)
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Net share activity ..................................... 45,387
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* Commencement of the Fund.
See accompanying Notes to Financial Statements.
8
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VAN DEVENTER & HOCH AMERICAN VALUE FUND
FINANCIAL HIGHLIGHTS
FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT THE PERIOD
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May 1, 1998*
through
October 31, 1998
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Net asset value, beginning ...................................... $ 14.96
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Income from investment operations:
Net investment income ......................................... 0.10
Net realized and unrealized loss on investments ............... (1.26)
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Total from investment operations ................................ (1.16)
Net asset value, end of period .................................. $ 13.80
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Total return** .................................................. (7.75)%
Ratios/supplemental data:
Net assets, end of period (000 omitted) ......................... $13,024
Ratio of expenses to average net assets+ ........................ 1.05%
Ratio of expenses to average net assets before reimbursements+ .. 2.57%
Ratio of net investment income to average net assets+ ........... 1.53%
Portfolio turnover rate ......................................... 19.88%
* Commencement of the Fund.
** Not Annualized.
+ Annualized.
See accompanying Notes to Financial Statements.
9
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VAN DEVENTER & HOCH AMERICAN VALUE FUND
NOTES TO FINANCIAL STATEMENTS AT OCTOBER 31, 1998
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1. ORGANIZATION
Van Deventer & Hoch American Value Fund (the "Fund") is a series of the Advisors
Series Trust (the "Trust"). The Trust was organized as a business trust under
the laws of the Commonwealth of Delaware on October 3, 1996. The Trust presently
consists of thirteen separate series. The Fund is a diversified fund, as such
term is defined in the Investment Company Act of 1940, as amended (the "1940
Act").
The Fund commenced operations on May 1, 1998 pursuant to a tax free
reorganization whereby substantially all of the assets of the Chase Vista
American Value Fund were transferred to the Van Deventer & Hoch American Value
Fund.
The Van Deventer & Hoch American Value Fund (the "Fund") is a mutual fund that
seeks to maximize total return, consisting of capital appreciation (both
realized and unrealized) and income, by investing primarily in the equity
securities of well-established U.S. companies (I.E. companies with at least a
five-year operating history) which, in the opinion of the Fund's advisor, are
undervalued by the market.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
SECURITY VALUATION
The Fund's investments are carried at fair value. Equity 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. Fixed income securities are valued on the basis of valuations received
from a pricing service, the use of which has been approved by the board of
trustees. Short-term obligations are valued at amortized cost, which
approximates market value. Securities for which market quotations are not
readily available, if any, are valued following procedures approved by the Board
of Trustees.
ORGANIZATION COSTS
Costs incurred by the Fund in connection with its organization, registration and
the initial public offering of shares have been deferred and will be amortized
over 5 years.
FEDERAL INCOME TAXES
It is the Fund's policy is to comply with the provisions 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.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income will be declared and paid annually.
Distributions of net realized gains, if any, will be declared at least annually.
Distributions to shareholders are recorded on the ex-dividend date.
10
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VAN DEVENTER & HOCH AMERICAN VALUE FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
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SECURITY TRANSACTIONS
Investment transactions are accounted for on the trade date (the date the order
to buy or sell is executed). Securities gains and losses are calculated on the
identified cost basis. Interest income is accrued as earned.
Dividend income is recorded on the ex-dividend date.
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 revenue and expenses during the
reporting period.
Actual results could differ from those estimates and assumptions.
3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE
Van Deventer & Hoch (the "Advisor") acts as the Investment Advisor to the Fund.
As Investment Advisor, Van Deventer & Hoch supervises the investments of the
Fund and for such services is paid a fee. The fee is computed daily and paid
monthly at an annual rate equal to 0.70% of the Fund's average daily net assets.
The Fund is responsible for its own operating expenses. The Advisor has agreed
to reduce fees payable to it by the Fund and to pay Fund operating expenses to
the extent necessary to limit the Fund's aggregate annual operating expenses to
1.05% of average net assets (the "expense cap") through December 31, 1998. The
Advisor has agreed to an expense limitation of 1.32% for the calendar year
ending December 31, 1999. Any such reductions made by the Advisor in the fees,
or payment of expenses which are the 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 years (taking into account the
reimbursement) does not exceed the applicable limitation on Fund expenses. The
Advisor is permitted to be reimbursed only for fee reductions and expense
payments made in the previous three fiscal years, but it permitted to look back
five years and four years, respectively, during the initial six and seventh year
of the Fund's operations. Any such reimbursement is also contingent upon Board
of Trustees review and approval at the time the reimbursement is made. Such
reimbursement may not be paid prior to the Fund's payment of current ordinary
operating expenses. For the period ended October 31, 1998, the Advisor reduced
its fees and absorbed Fund expenses in the amount of $95,705; no amounts were
reimbursed to the Advisor.
ADMINISTRATION FEES
Pursuant to an Administration Agreement, Investment Company Administration, LLC
(the "Administrator") provides certain administration services to the Fund. In
consideration of the services provided by the Administrator, the Administrator
receives from the Fund a fee computed daily and paid monthly at an annual rate
equal to 0.10% of the Fund's average daily net assets (with an annual minimum of
$30,000), on an annualized basis for the Fund's then-current fiscal year.
11
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VAN DEVENTER & HOCH AMERICAN VALUE FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
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DISTRIBUTION FEES
The Fund has adopted a Distribution Plan (the "Distribution Plan") in accordance
with Rule 12b-1 under the 1940 Act. The Distribution Plan provides that the Fund
shall pay distribution fees, including payments to the Distributor, at annual
rates not to exceed 0.25% of the average daily net assets of the Fund.
Distribution fees were waived for the six months ended October 31, 1998.
SHAREHOLDER SERVICING FEES
The Trust has entered into shareholder servicing agreements with certain
shareholder servicing agents (including the Advisor). These agents have agreed
to perform specified services to their customers who beneficially own shares of
the Fund for a fee of up to .25% of the average daily net assets of the Fund
held by investors for whom the agent maintains a servicing relationship. No
amounts were accrued or paid under the plan for the six months ended October 31,
1998.
4. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of securities, excluding short-term
investments, for the Fund for the six months ended October 31, 1998 is
summarized below:
Purchases $2,088,129
Sales 2,336,814
At October 31, 1998, gross unrealized appreciation and depreciation of
investments, based on cost for Federal income tax purposes of $11,144,574 were
as follows:
Appreciation $2,248,832
Depreciation 443,614
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Net appreciation on investments $1,805,218
12
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REPORT OF INDEPENDENT AUDITORS
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The Board of Trustees and Shareholders
Van Deventer & Hoch American Value Fund
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of the Van Deventer & Hoch American Value Fund
series of Advisor Series Trust, as of October 31, 1998, and the related
statements of operations, changes in net assets and the financial highlights for
the period indicated in the accompanying financial statements. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit.
We conducted our audit in accordance with the generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1998, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Van Deventer & Hoch American Value Fund series of Advisors Series Trust, as of
October 31, 1998, the results of its operations, the changes in its net assets,
and the financial highlights for the period indicated, in conformity with
generally accepted accounting principles.
MCGLADREY & PULLEN LLP
New York, New York
December 4, 1998
13
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ADVISER
Van Deventer & Hoch
800 North Brand Blvd., Suite 300
Glendale, CA 91203 ?
+
DISTRIBUTOR
First Fund Distributors, Inc.
4455 East Camelback Road, Suite 261E
Phoenix, AZ 85018 ?
+
CUSTODIAN
United Missouri Bank, N.A.
928 Grand Blvd.
Kansas City, MO 64106 ?
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TRANSFER AGENT
National Financial Data Services
330 West 9th Street
Kansas City, MO 64105 ?
+
AUDITORS
McGladrey & Pullen
555 Fifth Avenue, 8th Floor
New York, NY 10017-2416 ?
+
LEGAL COUNSEL
Paul, Hastings, Janofsky & Walker, LLP
345 California Street, 29th Floor
San Francisco, CA 94104
This report is intended for the shareholders of the Fund and may not be used as
sales literature unless preceded or accompanied by a current prospectus.
Past performance results shown in this report should not be considered a
representation of future performance. Share price and returns will fluctuate so
that shares, when redeemed, may be worth more or less than their original cost.
Statements and other information herein are dated and are subject to change.
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