ROCKHAVEN ASSET MANAGEMENT
THE RISK MANAGERS
The Rockhaven Fund
The Rockhaven Premier
Dividend Fund
[LOGO]
ANNUAL REPORT
FOR THE YEAR ENDED SEPTEMBER 30, 2000
<PAGE>
Dear Investor:
As a money manager, I realize it is oftentimes difficult to keep a positive
mental attitude throughout difficult times. I can understand that as
shareholders, you may feel a little leery of the current market environment and
understandably so. It has been an extremely difficult year to be an investor,
but I do thank you for your continued confidence in Rockhaven and hope you are
pleased with us so far.
The value versus growth question has riddled investing for as long as I can
remember. It seems as though the two categories should represent drastically
different schools of thought and the stocks of certain companies should fall
distinctly on one side of the line or the other. However, it seems as though the
two categories are no longer effective in describing the goals of the average
investor.
Undervalued stocks with lower price-to-earnings (P/E) ratios are commonly
referred to as value stocks, while growth stocks are typically considered those
with higher P/E ratios that have been able to grow rapidly and have enjoyed
higher valuations. We often hear that "growth stocks are outperforming" or that
"value stocks are back in favor" but rarely is this adequate information on
which to base investment decisions.
As a portfolio manager, I have found the terms growth and value to mean less and
less as time goes on. At Rockhaven, we are typically looking for companies with
proven management, a sound business plan, and those that have gained market
share, and of course, we are looking for companies whose stock price will
appreciate. These companies can be considered traditionally value or growth
stocks, but that is rarely where we focus our decision-making.
INSTEAD, WE LIKE TO LOOK AT INVESTMENTS ALONG THE RISK HORIZON. Many times,
value stocks can be considered "lower risk" because investors have come to
associate lower P/E stocks with less volatility. Volatility, however, does not
denote risk. Rarely are investors concerned about upside volatility: a movement
in a stock price upwards of over 200% is never considered a risky investment. It
is more likely that investors are concerned with downside risk: the probability
that an investment will lose value rather than appreciate. This is not to say
that value stocks cannot appreciate 200% or that all growth stocks will; risk is
more a measure of probability than defining characteristics. We believe that
measuring a stock's risk/reward characteristics is much more valuable than
measuring its P/E.
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ROCKHAVEN ASSET MANAGEMENT 1 2000 ANNUAL REPORT
<PAGE>
As an investor, your asset allocation should actively look at the risk
characteristics of your various investments and their performance against a
given market benchmark. Many measurements are used to determine risk: alpha,
beta, standard deviation, and Sharpe Ratio are only a few. Unfortunately, it
seems the investing public is concerned more about the size of the companies
they invest in (large, mid-cap, and small) and the style their past performance
is characteristic of (growth, blend, and value). Instead, individual investors
should take a closer look at their risk profile and determine an asset
allocation to closely track their tolerance for both upside and downside risk.
We actively measure risk within both of our mutual fund portfolios and both The
Rockhaven Fund and The Rockhaven Premier Dividend Fund are structured to track
different benchmarks with a focus on reducing risk. We are often asked how the
two funds differ and their variations are closely tied to the differences in
their appropriate benchmarks. While The Rockhaven Fund is designed to track the
broader market of the S&P 500 Index and The Rockhaven Premier Dividend Fund is
targeted towards the Merrill Lynch All-Convertible Index, both funds focus on
using convertibles and superior stock selection to reduce risk, while
participating in the benchmark's upside.
As the market continues its tumultuous ride, investors will begin to pay added
attention to the risk characteristics of their overall portfolio. Making money
will most likely not be as easy as it was in recent past. The focus will shift
to not LOSING money. This is where risk factors play a pivotal role.
THE CURRENT ENVIRONMENT
In the stock market, a "bubble" occurs when a group of stocks are "priced for
perfection". In other words, the stocks are priced for unlimited growth with
minimal foreseeable risk factors. As long as you have these conditions, the
bubble continues to grow and the stocks go up. But when the reality hits that
growth is not unlimited and that there are risks, the bubble deflates rapidly.
We have seen this happen in Internet stocks, business-to-consumer, and
business-to-business bubbles. We are seeing it happen in the telecom, optical,
and biotech sectors. The bubbles are popping. But until the bubbles pop, we play
them. Why? Because our job is to make money. We ride them for what they are
worth and then we jump out. Not easy, but necessary.
* EARNINGS -- Through the first three quarters of this year, earnings growth
is ahead of last year's 18% pace. That said, it does appear that the
combination of higher fuel costs, a weak Euro, and the declining wealth
effect are taking their toll on corporate earnings. Next year's earnings
growth will still be a robust 8-10%, but that is a significant deceleration
from 18%. The key is decelerating growth.
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ROCKHAVEN ASSET MANAGEMENT 2 2000 ANNUAL REPORT
<PAGE>
* INTEREST RATES -- While the inflation rate has risen slightly from the 2%
range to the 3% range, the Fed's inclination is towards a modest easing.
It's definitely not a given, but at least the bias towards higher rates is
less of a factor.
* LIQUIDITY & SUPPLY/DEMAND -- The weakness in the Euro has kept foreigner's
money flowing into the U.S., but the political and economic pressure for a
stronger Euro has been mounting. This is not positive for U.S. equities. On
the flip side, the mounting pessimism and losses experienced by tech and
telecom investors has greatly curtailed the new issue supply which is a
positive.
SUMMARY
It's hard to be bullish with decelerating earnings growth and the threat of a
weaker dollar. Of course, excessive pessimism is always a positive, but we may
have to tread sideways to mount a charge. Look for high quality yield and watch
popping bubbles.
We continue to watch the market closely for signs of a movement in one direction
or the other. We have taken the opportunity to buy a few defensive names in the
funds and decrease our exposure in the "bubbles". We are also keeping a close
eye on credit ratings and bond yields, as they are oftentimes good predictors of
future moves in stock prices.
With the current uncertainty in the market, fear is the operative word. Fear
over earnings, fear of the Euro, fear over energy prices...just plain fear. Some
of these fears are justified, some aren't, but like all bear markets, it will
take some time. Time is what we need to move through the pessimism. Remember,
just as bull markets end, so do bear markets.
We appreciate your continued support through the difficult times and like you,
hope for good times ahead.
Sincerely,
/s/ Chris Wiles
Chris Wiles
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ROCKHAVEN ASSET MANAGEMENT 3 2000 ANNUAL REPORT
<PAGE>
The Rockhaven Fund
AVERAGE ANNUAL TOTAL RETURN(1)
One Year ......................... 22.04%
Since Inception (11/3/97)......... 13.98%
COMPARISON OF THE CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE ROCKHAVEN
FUND VERSUS THE S&P 500 COMPOSITE STOCK PRICE INDEX(2) AND THE S&P/BARRA
VALUE FUND INDEX.(3)
S&P 500 S&P 500 Composite
The Rockhaven Fund Barra Value Index Stock Price Index
------------------ ----------------- -----------------
3 Nov 97 $10,000 $10,000 $10,000
31 Dec 97 9,707 10,335 10,317
31 Mar 98 10,807 11,666 11,430
30 Jun 98 10,543 12,075 11,459
30 Sep 98 9,274 10,831 9,928
31 Dec 98 10,860 13,091 11,604
31 Mar 99 11,127 13,700 11,880
30 Jun 99 11,868 14,619 13,103
30 Sep 99 11,303 13,661 11,842
31 Dec 99 13,558 15,647 12,846
31 Mar 00 14,697 15,959 12,817
30 Jun 00 14,408 15,491 12,209
30 Sep 00 $14,635 $15,298 $13,227
Past performance does not predict future performance.
(1) Average Annual Total Return table represents the average change in account
value over the periods indicated and includes the maximum sales charge.
(2) The S&P 500 Composite Stock Price Index is an unmanaged
capitalization-weighted index of 500 stocks designed to represent the broad
domestic economy.
(3) The S&P/Barra Value Index is an unmanaged capitalization-weighted index
that contains approximately 50% of the stocks in the S&P 500 lower
price-to-book ratios.
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ROCKHAVEN ASSET MANAGEMENT 4 2000 ANNUAL REPORT
<PAGE>
The Rockhaven Premier Dividend Fund
AVERAGE ANNUAL TOTAL RETURN(1)
One Year ......................... 42.01%
Since Inception (11/3/97)......... 25.33%
COMPARISON OF THE CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE ROCKHAVEN
PREMIER DIVIDEND FUND VERSUS THE MERRILL LYNCH ALL-CONVERTIBLE INDEX.2 PAST
The Rockhaven Merrill Lynch
Premier Dividend Fund All Convertible Index
--------------------- ---------------------
3 Nov 97 $10,000 $10,000
31 Dec 97 9,525 10,102
31 Mar 98 10,517 10,971
30 Jun 98 10,582 10,888
30 Sep 98 9,415 9,673
31 Dec 98 10,938 11,005
31 Mar 99 12,047 11,606
30 Jun 99 12,998 12,459
30 Sep 99 12,803 12,303
31 Dec 99 16,641 15,358
31 Mar 00 18,557 16,623
30 Jun 00 18,176 14,305
30 Sep 00 $19,291 $15,512
Performance does not predict future performance.
(1) Average Annual Total Return represents the average change in account value
over the periods indicated and includes the maximum sales charge.
(2) The valuation calculation for the Merrill Lynch All-Convertible Index is
for the period November 1, 1997 through September 30, 2000. This index
includes U.S. dollar-denominated convertibles of $50 million or more in
size, and incorporates both traditional and mandatory conversion
structures.
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ROCKHAVEN ASSET MANAGEMENT 5 2000 ANNUAL REPORT
<PAGE>
THE ROCKHAVEN FUND
Schedule of Investments
AT SEPTEMBER 30, 2000
SHARES COMMON STOCKS: 41.15% MARKET VALUE
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CONSUMER DISCRETIONARY: 1.26%
1,300 Wal-Mart Stores, Inc. $ 62,563
-----------
CONSUMER STAPLES: 4.04%
900 The Coca-Cola Company 49,612
1,900 The Quaker Oats Company 150,338
-----------
199,950
-----------
ENERGY: 2.75%
1,524 Exxon Mobil Corporation 135,827
-----------
FINANCE: 11.93%
1,150 American International Group, Inc. 110,041
1,500 Associates First Capital Corporation/Citigroup 57,000
2,500 Bank One Corporation 96,562
1,733 Citigroup Inc. 93,690
450 J.P. Morgan & Co., Incorporated 73,519
500 Lehman Brothers Holdings Inc. 73,875
1,300 Merrill Lynch & Co., Inc. 85,800
-----------
590,487
-----------
HEALTH CARE: 5.07%
1,800 Abbott Laboratories 85,612
1,400 Bristol-Myers Squibb Company 79,975
1,900 Pfizer, Inc. 85,381
-----------
250,968
-----------
INDUSTRIALS: 2.45%
2,100 General Electric Company 121,144
-----------
INFORMATION TECHNOLOGY: 13.65%
2,500 Compaq Computer Corporation 68,950
300 Corning Incorporated 89,100
1,400 EMC Corporation1 138,775
1,712 Intel Corporation 71,262
1,700 Lucent Technologies Inc. 51,956
2,300 Motorola, Inc. 64,975
2,400 Nokia Corporation ADR Class A 95,550
1,600 Nortel Networks Corporation 95,300
-----------
675,868
-----------
Total Common Stocks (cost $1,742,438) $ 2,036,807
-----------
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ROCKHAVEN ASSET MANAGEMENT 6 2000 ANNUAL REPORT
<PAGE>
THE ROCKHAVEN FUND
Schedule of Investments
AT SEPTEMBER 30, 2000
SHARES CONVERTIBLE PREFERRED STOCKS: 24.95% MARKET VALUE
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CONSUMER DISCRETIONARY: 2.16%
2,000 Cox Communications, Inc., 7% $ 107,000
-----------
CONSUMER STAPLES: 1.72%
1,200 The Estee Lauder Companies Inc., 6.25% 85,200
-----------
ENERGY: 1.05%
1,000 Apache Corporation, 6.5% 51,312
-----------
FINANCE: 3.71%
800 Lehman Brothers Holdings Inc., Series B, 5% 39,300
1,700 MetLife Capital Trust I, 8% 144,500
-----------
183,800
-----------
HEALTH CARE: 1.91%
1,800 Monsanto Company/Pharmacia, 6.5% 94,275
-----------
INFORMATION TECHNOLOGY: 4.80%
2,400 Amdocs Limited, 6.75% 130,650
900 Tribune Company/America Online, 2% 107,100
-----------
237,750
-----------
MATERIALS: 1.64%
1,800 Sealed Air Corporation, Series A, $2 81,000
-----------
TELECOMMUNICATION SERVICES: 2.33%
150 Global Crossing Ltd., 6.75% 37,275
2,100 Vodafone/MediaOne Group, Inc., 7% 78,225
-----------
115,500
-----------
UTILITIES: 5.63%
1,600 Calpine "High Tides" Capital Trust II, 5.5% 168,600
3,100 EOG Resources, 7% 110,244
-----------
278,844
-----------
Total Convertible Preferred Stocks
(cost $1,063,185) $ 1,234,681
-----------
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ROCKHAVEN ASSET MANAGEMENT 7 2000 ANNUAL REPORT
<PAGE>
THE ROCKHAVEN FUND
Schedule of Investments
AT SEPTEMBER 30, 2000
PRINCIPAL
AMOUNT CONVERTIBLE BONDS: 32.93% MARKET VALUE
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CONSUMER DISCRETIONARY: 5.44%
$135,000 Costco Companies, Inc., 0%, 8/19/20171 $ 116,269
200,000 Four Seasons Hotel, Inc. Lyons, 0%, 9/23/20291 83,750
30,000 Omnicom Group Inc., 4.25%, 1/3/2007 68,962
-----------
268,981
-----------
CONSUMER STAPLES: 1.99%
90,000 Clear Channel Communications, Inc., 2.625%, 4/1/2003 98,775
-----------
HEALTH CARE: 3.69%
90,000 Centocor, Inc. (convertible into shares of Johnson &
Johnson, Inc.), 4.75%, 2/15/2005 115,650
70,000 Roche Holdings, Inc. (convertible into shares of
Genetech), 0%, 1/19/20151 66,850
-----------
182,500
-----------
INFORMATION TECHNOLOGY: 18.20%
80,000 Exodus Communications, Inc., 4.75%, 7/15/2008 124,300
90,000 International Rectifier Corporation, 4.25%, 7/15/2007 83,475
90,000 Juniper Networks, Inc., 4.75%, 3/15/2007 138,712
40,000 Lattice Semiconductor Corporation, 4.75%, 11/1/2006 57,950
20,000 Oak Industries, Inc. (convertible into shares of
Corning), 4.875%, 3/1/2008 129,325
80,000 Rational Software Corporation, 5%, 2/1/2007 163,200
200,000 Sanmina Corporation, 0%, 9/12/20201 85,750
70,000 Solectron Corporation, 0%, 1/27/20191 51,625
50,000 Burr-Brown Corporation (convertible into shares of
Texas Instruments), 4.25%, 2/15/2007 66,500
-----------
900,837
-----------
TELECOMMUNICATION SERVICES: 3.61%
70,000 Level 3 Communications, Inc., 6%, 9/15/2009 94,093
90,000 NEXTEL Communications, Inc., 5.25%, 1/15/2010 84,825
-----------
178,918
-----------
Total Convertible Bonds (cost $1,459,303) $ 1,630,011
-----------
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ROCKHAVEN ASSET MANAGEMENT 8 2000 ANNUAL REPORT
<PAGE>
THE ROCKHAVEN FUND
Schedule of Investments
AT SEPTEMBER 30, 2000
PRINCIPAL
AMOUNT SHORT-TERM INVESTMENTS: 0.62% MARKET VALUE
--------------------------------------------------------------------------------
$30,531 Firstar Stellar Treasury Fund (cost $30,531) $ 30,531
Total Investments in Securities (cost
$4,295,4572): 99.65% 4,932,030
Other Assets in Excess of Liabilities: 0.35% 17,110
-----------
NET ASSETS: 100% $ 4,949,140
-----------
(1) Non-income producing security.
(2) At September 30, 2000, The cost of securities for federal income tax
purposes is 2 a $4,300,317. Gross unrealized appreciation and depreciation
of securities on a tax basis were as follows:
Gross unrealized appreciation $ 886,894
Gross unrealized depreciation $ (255,181)
-----------
Net unrealized appreciation $ 631,713
===========
See accompanying Notes to Financial Statements.
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ROCKHAVEN ASSET MANAGEMENT 9 2000 ANNUAL REPORT
<PAGE>
THE ROCKHAVEN FUND
Statement of Assets and Liabilities
AT SEPTEMBER 30, 2000
ASSETS
Investments in securities, at value (cost $4,295,457) $4,932,030
Receivables:
Securities sold 290,390
Dividends and interest 9,300
Due from advisor 4,929
Fund shares sold 818
Prepaid expenses 24,141
----------
Total Assets 5,261,608
==========
LIABILITIES
Payables:
Securities purchased 293,105
Fund shares redeemed 5,164
Due to Administrator 2,466
Distribution fees 1,032
Accrued expenses 10,701
----------
Total Liabilities 312,468
==========
NET ASSETS $4,949,140
==========
Net asset value and redemption price per share
[$4,949,140/337,325 shares outstanding; unlimited
number of shares (par value $0.01) authorized] $ 14.67
==========
Maximum offering price per share ($14.67/0.9425) $ 15.56
==========
COMPONENTS OF NET ASSETS
Paid-in capital $3,844,243
Accumulated net realized gain on investments 468,324
Net unrealized appreciation on investments 636,573
----------
Net Assets $4,949,140
==========
See accompanying Notes to Financial Statements.
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ROCKHAVEN ASSET MANAGEMENT 10 2000 ANNUAL REPORT
<PAGE>
THE ROCKHAVEN FUND
Statement of Operations
FOR THE YEAR ENDED SEPTEMBER 30, 2000
INVESTMENT INCOME
Income
Dividends $ 74,952
Interest 33,479
---------
Total Income 108,431
=========
Expenses
Advisory fees (Note 3) 31,645
Administration fees (Note 3) 30,082
Professional fees 24,501
Fund accounting fees 17,326
Transfer agent fees 15,218
Registration expense 10,684
Distribution fees (Note 4) 10,548
Custody fees 6,771
Report to shareholders 5,784
Trustees fees 3,597
Other 4,256
---------
Total expenses 160,412
Less: advisory fee waiver and absorption (Note 3) (96,980)
---------
Net expenses 63,432
---------
Net Investment Income 44,999
=========
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments 478,572
Net change in unrealized appreciation on investments 403,036
---------
Net realized and unrealized gain on investments 881,608
---------
Net Increase in Net Assets Resulting from Operations $ 926,607
=========
See accompanying Notes to Financial Statements.
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ROCKHAVEN ASSET MANAGEMENT 11 2000 ANNUAL REPORT
<PAGE>
THE ROCKHAVEN FUND
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
SEPT. 30, 2000 SEPT. 30, 1999
-------------- --------------
<S> <C> <C>
NET INCREASE/(DECREASE) IN NET ASSETS FROM:
OPERATIONS
Net investment income $ 44,999 $ 25,704
Net realized gain on investments 478,572 188,976
Net change in unrealized appreciation
investments 403,036 342,499
----------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 926,607 557,179
=========== ===========
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income (42,552) (30,220)
From net realized gain (81,316) --
----------- -----------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (123,868) (30,220)
=========== ===========
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase in net assets derived from net
change in outstanding shares(1) 1,153,052 475,083
----------- -----------
TOTAL INCREASE IN NET ASSETS 1,955,791 1,002,042
=========== ===========
NET ASSETS
Beginning of year 2,993,349 1,991,307
----------- -----------
END OF YEAR $ 4,949,140 $ 2,993,349
=========== ===========
(1) A summary of share transactions is as follows:
YEAR ENDED YEAR ENDED
SEPT. 30, 2000 SEPT. 30, 1999
------------------ ------------------
SHARES VALUE SHARES VALUE
------ ----- ------ -----
Shares sold 95,600 $1,360,625 90,975 $ 955,142
Shares issued in
reinvestment of distributions 7,279 96,478 2,002 23,116
Shares redeemed (20,929) (304,051) (42,733) (503,175)
------ ---------- ------- ---------
Net Increase 81,950 $1,153,052 50,244 $ 475,083
====== ========== ======= =========
</TABLE>
See accompanying Notes to Financial Statements.
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ROCKHAVEN ASSET MANAGEMENT 12 2000 ANNUAL REPORT
<PAGE>
THE ROCKHAVEN FUND
Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
NOV. 3, 1997 (1)
YEAR ENDED YEAR ENDED THROUGH
SEPT. 30, 2000 SEPT. 30, 1999 SEPT. 30, 1998
-------------- -------------- --------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 11.72 $ 9.71 $ 10.00
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.14 0.09 0.14
Net realized and unrealized gain/(loss)
on investments 3.26 2.03 (0.29)
------- ------- -------
Total from investment operations 3.40 2.12 (0.15)
------- ------- -------
LESS DISTRIBUTIONS:
From net investment income (0.14) (0.11) (0.14)
From net realized gain on investments (0.31) -- --
= ------- ------- -------
Total distributions (0.45) (0.11) (0.14)
------- ------- -------
Net Asset Value, End of Period $ 14.67 $ 11.72 $ 9.71
======= ======= =======
Total return(2) 29.48% 21.88% (1.61)%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (millions) $ 4.9 $ 3.0 $ 2.0
RATIO OF EXPENSES TO AVERAGE NET ASSETS:
Before expense reimbursement 3.80% 4.59% 8.51%(4)
After expense reimbursement 1.50% 1.50% 1.49%(4)
RATIO OF NET INVESTMENT INCOME TO
AVERAGE NET ASSETS:
After expense reimbursement 1.07% 0.83% 1.82%(4)
Portfolio Turnover Rate 142.74% 113.36% 98.13%
======= ======= =======
</TABLE>
(1) Commencement of operations.
(2) Does not reflect sales load.
(3) Not Annualized.
(4) Annualized.
See accompanying Notes to Financial Statements.
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ROCKHAVEN ASSET MANAGEMENT 13 2000 ANNUAL REPORT
<PAGE>
THE ROCKHAVEN PREMIER DIVIDEND FUND
Schedule of Investments
AT SEPTEMBER 30, 2000
SHARES CONVERTIBLE PREFERRED STOCKS: 45 .62% MARKET VALUE
--------------------------------------------- ----------------------------------
CONSUMER DISCRETIONARY/STAPLES: 1.88%
9,800 The Estee Lauder Companies Inc., 6.25% $ 695,800
-----------
ENERGY: 7.49%
18,000 Apache Corporation, 6.75% 923,625
15,500 K N Energy, Inc., 8.25% 856,375
15,000 SEI Trust I, 6.25% 994,687
-----------
2,774,687
-----------
FINANCIAL: 7.00%
18,800 Fifth Third Bank/CNB Capital Tru st, 6% 716,750
10,000 Lehman Brothers Holdings Inc., 5 % 491,250
16,300 MetLife Capital Trust I 1,385,500
-----------
2,593,500
-----------
HEALTH CARE: 5.40%
11,000 Biovail Corporation 825,000
22,400 Monsanto Company/Pharmacia, 6.5% 1,173,200
-----------
1,998,200
-----------
MATERIALS: 3.00%
24,700 Sealed Air Corporation, Series A, $2 1,111,500
-----------
MEDIA: 3.37%
11,100 Cox Communications, Inc., 7% 593,850
5,500 Tribune Company/America Online, 2% 654,500
-----------
1,248,350
-----------
TELECOMMUNICATIONS: 11.44%
23,700 Amdocs Limited, 6.75% 1,290,169
3,900 Global Crossing Ltd., 6.75% 969,150
6,600 NEXTLINK Communications, Inc., 6.5% 1,092,300
23,700 Vodafone/MediaOne Group, Inc., 7% 882,825
-----------
4,234,444
-----------
UTILITIES: 6.04%
8,700 Calpine "High Tides" Trust II, 5.5% 916,763
37,000 EOG Resources, 7% 1,315,812
-----------
2,232,575
-----------
Total Convertible Preferred Stocks (cost
$14,644,694) $16,889,056
-----------
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ROCKHAVEN ASSET MANAGEMENT 14 2000 ANNUAL REPORT
<PAGE>
THE ROCKHAVEN PREMIER DIVIDEND FUND
Schedule of Investments
AT SEPTEMBER 30, 2000
PRINCIPAL
AMOUNT CONVERTIBLE BONDS: 53.82% MARKET VALUE
--------------------------------------------------------------------------------
CONSUMER DISCRETIONARY/STAPLES: 4.81%
$1,100,000 Costco Companies, Inc., 0%, 8/19/2017(1) $ 947,375
1,994,000 Four Seasons Hotel, Inc. Lyons, 0%, 9/23/2029(1) 834,988
-----------
1,782,363
-----------
HEALTH CARE: 7.45%
1,130,000 Centocor, Inc. (convertible into shares of Johnson &
Johnson, Inc.), 4.75%, 2/15/2005 1,452,050
850,000 Elan Finance, 0%, 12/14/2018(1) 684,250
650,000 Roche Holdings, Inc. (convertible into shares of
Genetech), 0%, 1/19/2015(1) 620,750
-----------
2,757,050
-----------
INDUSTRIALS: 5.15%
2,300,000 Sanmina Corporation, 0%, 9/12/2020(1), (2) 986,125
1,250,000 Solectron Corporation, 0%, 1/27/2019(1), (2) 921,875
-----------
1,908,000
-----------
INDUSTRIALS/TRANSPORTATION: 2.76%
1,000,000 United Parcel Service, Inc., 1.75%, 9/27/2007 1,020,000
-----------
MEDIA: 3.17%
620,000 Clear Channel Communications, Inc., 2.625%, 4/1/2003 680,450
215,000 Omnicom Group Inc., 4.25%, 1/3/2007 494,231
-----------
1,174,681
-----------
TECHNOLOGY: 24.11%
700,000 Burr-Brown Corporation (convertible into shares of
Texas Instruments), 4.25%, 2/15/2007(3) 931,000
250,000 Cyras Systems, Inc., 4.5%, 8/15/2005(4) 306,250
610,000 Exodus Communications, Inc., 4.75%, 7/15/2008 947,788
1,000,000 International Rectifier Corporation, 4.25%,
7/15/20073 927,500
620,000 Juniper Networks, Inc., 4.75%, 3/15/2007 955,575
500,000 Kestrel Energy, Inc., 5.5%, 7/15/2005(4) 547,500
440,000 Lattice Semiconductor Corporation, 4.75%, 11/1/2006 637,450
260,000 Oak Industries Inc. (convertible into shares of
Corning), 4.875%, 3/1/2008 1,681,225
500,000 Rational Software Corporation, 5%, 2/1/2007(3) 1,020,000
800,000 Semtech Corporation, 4.5%, 2/1/2007(3) 971,000
-----------
8,925,288
-----------
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ROCKHAVEN ASSET MANAGEMENT 15 2000 ANNUAL REPORT
<PAGE>
THE ROCKHAVEN PREMIER DIVIDEND FUND
Statement of Assets and Liabilities
AT SEPTEMBER 30, 2000
PRINCIPAL
AMOUNT CONVERTIBLE BONDS: CONTINUED MARKET VALUE
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TELECOMMUNICATIONS: 6.37%
$ 600,000 American Tower Corporation, 5%, 2/15/2010 $ 570,750
700,000 Level 3 Communications, Inc., 6%, 9/15/2009 940,625
900,000 NEXTEL Communications, Inc., 5.25%, 1/15/20103 848,250
-----------
2,359,625
-----------
Total Convertible Bonds (cost $17,932,487) $19,927,007
===========
PRINCIPAL
AMOUNT SHORT-TERM INVESTMENTS: 2.85% MARKET VALUE
--------------------------------------------------------------------------------
$1,055,702 Firstar Stellar Treasury Fund (cost $1,055,702) $ 1,055,702
Total Investments in Securities (cost
$33,632,8832): 102.29% $37,871,765
Liabilities in excess of Other Assets: (2.29)% (848,020)
-----------
NET ASSETS: 100% $37,023,745
===========
(1) Non-income producing security.
(2) At September 30, 2000, the cost of securities for Federal income tax
purposes is the same as the basis for financial reporting. Gross
appreciation and depreciation of securities were as follows:
Gross unrealized appreciation $ 6,732,320
Gross unrealized depreciation (2,493,438)
-----------
Net unrealized appreciation $ 4,238,882
===========
(3) Securities issued in reliance on Rule 144A of the Securities Act of 1933.
Rule 144A securities may be resold in transactions exempt from registration
normally to qualified institutional buyers. These securities have been
determined by the Advisor to be liquid pursuant to procedures adopted by
the Trustees. At September 30, 2000, these securities amounted to
$5,683,875, representing 15.4% Of net assets.
(4) Securities valued under procedures approved by the Board of Trustees.
See accompanying Notes to Financial Statements.
16
<PAGE>
THE ROCKHAVEN PREMIER DIVIDEND FUND
Statement of Assets and Liabilities
FOR THE YEAR ENDED SEPTEMBER 30, 2000
ASSETS
Investments in securities, at value (cost $33,632,883) $37,871,765
Receivables:
Securities sold 1,325,961
Dividends and interest 108,090
Fund shares sold 86,485
Prepaid expenses 27,552
-----------
Total Assets 39,419,853
===========
LIABILITIES
Payables:
Securities purchased 2,336,172
Due to advisor 14,114
Distribution fees 7,432
Fund shares redeemed 9,355
Due to administrator 5,947
Accrued expenses 23,087
-----------
Total Liabilities 2,396,108
===========
NET ASSETS $37,023,745
===========
Net asset value and redemption price per share
[$37,023,745/1,933,514 shares outstanding;
unlimited number of shares (par value $0.01) authorized] $ 19.15
===========
Maximum offering price per share ($19.15/0.9425) $ 20.32
===========
COMPONENTS OF NET ASSETS
Paid-in capital $29,060,286
Undistributed net investment income 34,293
Accumulated net realized gain on investments 3,690,284
Net unrealized appreciation on investments 4,238,882
-----------
Net Assets $37,023,745
===========
See accompanying Notes to Financial Statements.
17
<PAGE>
THE ROCKHAVEN PREMIER DIVIDEND FUND
Statement of Operations
FOR THE YEAR ENDED SEPTEMBER 30, 2000
INVESTMENT INCOME
Income
Dividends $ 501,588
Interest 325,277
-----------
Total Income 826,865
===========
EXPENSES
Advisory fees (Note 3) 185,309
Distribution fees (Note 4) 61,970
Administration fees (Note 3) 51,278
Professional fees 27,955
Fund accounting fees 18,051
Transfer agent fees 17,496
Custody fees 12,421
Registration expense 10,552
Trustee fees 3,597
Report to shareholders 3,009
Other 1,382
-----------
Total expenses 393,020
Less: advisory fee waiver (Note 3) (19,983)
-----------
Net expenses 373,037
-----------
Net Investment Income 453,828
===========
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments $ 3,694,066
Net change in unrealized appreciation on investments 3,496,919
-----------
Net realized and unrealized gain on investments 7,190,985
-----------
Net Increase in Net Assets Resulting from Operations $ 7,644,813
===========
See accompanying Notes to Financial Statements.
18
<PAGE>
THE ROCKHAVEN PREMIER DIVIDEND FUND
Statements of Changes in Net Assets
YEAR ENDED YEAR ENDED
SEPT. 30, SEPT. 30,
2000 1999
------------ ------------
NET INCREASE/(DECREASE) IN NET ASSETS FROM:
OPERATIONS
Net investment income $ 453,828 $ 81,811
Net realized gain on investments 3,694,066 276,358
Net change in unrealized appreciation on
investments 3,496,919 794,811
------------ ------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS 7,644,813 1,152,980
============ ============
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income (416,093) (86,569)
From net realized gain (242,031) --
------------ ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (658,124) (86,569)
============ ============
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase in net assets derived from net
change in outstanding shares(1) 21,299,705 5,992,141
------------ ------------
TOTAL INCREASE IN NET ASSETS 28,286,394 7,058,552
============ ============
NET ASSETS
Beginning of year 8,737,351 1,678,799
------------ ------------
END OF YEAR $ 37,023,745 $ 8,737,351
============ ============
UNDISTRIBUTED NET INVESTMENT INCOME $ 34,293 $ --
============ ============
(1) A summary of share transactions is as follows:
YEAR ENDED YEAR ENDED
SEPT. 30, 2000 SEPT. 30, 1999
------------------------- ----------------------
SHARES VALUE SHARES VALUE
--------- ------------ ------- -----------
Shares sold 1,338,984 $22,560,352 520,970 $6,336,978
Shares issued in reinvestment
of distributions 34,207 576,853 6,153 76,958
Shares redeemed (105,738) (1,837,500) (32,319) (421,795)
--------- ----------- ------- ----------
Net Increase 1,267,453 $21,299,705 494,804 $5,992,141
========= =========== ======= ==========
See accompanying Notes to Financial Statements.
19
<PAGE>
THE ROCKHAVEN PREMIER DIVIDEND FUND
Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
NOV. 3, 1997(1)
YEAR ENDED YEAR ENDED THROUGH
SEPT. 30, 2000 SEPT. 30, 1999 SEPT. 30, 1998
-------------- -------------- --------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 13.12 $ 9.80 $ 10.00
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.29 0.18 0.21
Net realized and unrealized gain/(loss)
on investments 6.26 3.33 (0.21)
------- ------- -------
Total from investment operations 6.55 3.51 --
------- ------- -------
LESS DISTRIBUTIONS:
From net investment income (0.27) (0.19) (0.20)
From net realized gain on investments (0.25) -- --
------- ------- -------
Total distributions (0.52) (0.19) (0.20)
------- ------- -------
Net Asset Value, End of Period $ 19.15 $ 13.12 $ 9.80
======= ======= =======
Total return(2) 50.67% 35.98% (0.10)%3
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (millions) $ 37.0 $ 8.7 $ 1.7
RATIO OF EXPENSES TO AVERAGE NET ASSETS:
Before expense reimbursement 1.58% 3.06% 11.28%4
After expense reimbursement 1.50% 1.50% 1.49%4
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS:
After expense reimbursement 1.83% 1.51% 2.62%4
Portfolio Turnover Rate 108.77% 120.16% 147.56%
======= ======= =======
</TABLE>
----------
(1) Commencement of operations.
(2) Does not reflect sales load.
(3) Not annualized.
(4) Annualized.
20
<PAGE>
THE ROCKHAVEN FUND & THE ROCKHAVEN PREMIER DIVIDEND FUND
Notes to Financial Statements
AT SEPTEMBER 30, 2000
NOTE 1 -- ORGANIZATION
The Rockhaven Fund and The Rockhaven Premier Dividend Fund (the "Funds") are
each a series of shares of beneficial interest 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. These policies are in conformity with generally accepted
accounting principles.
A. SECURITY VALUATION: The Funds' investments are carried at fair value.
Securities that are primarily traded on a national securities exchange are
valued at the last sale price on the exchange on which they are primarily traded
on the day of valuation or, if there has been no sale on such day, at the mean
between the bid and asked prices. Securities primarily traded on the NASDAQ
National Market System for which market quotations are readily available are
valued at the last sale price on the day of valuation, or if there has been no
sale on such day, at the mean between the bid and asked prices. Over-the-counter
("OTC") securities which are not traded in the NASDAQ National Market System are
valued at the most recent traded price. 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.
21
<PAGE>
THE ROCKHAVEN FUND & THE ROCKHAVEN PREMIER DIVIDEND FUND
Notes to Financial Statements
AT SEPTEMBER 30, 2000
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, except premiums related to the conversion feature of convertible
bonds, on debt securities purchased are amortized over the life of the
respective securities. Premiums on convertible bond securities attributable to
the conversion feature are not amortized.
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 year ended September 30, 2000, 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 each
Fund. 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 year ended September 30, 2000, The Rockhaven Fund and The
Rockhaven Premier Dividend Fund incurred $31,645 and $185,309, 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 1.50% 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
22
<PAGE>
THE ROCKHAVEN FUND & THE ROCKHAVEN PREMIER DIVIDEND FUND
Notes to Financial Statements
AT SEPTEMBER 30, 2000
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
review and approval at the time the reimbursement is made. Such reimbursement
may not be paid prior to a Fund's payment of current ordinary operating
expenses. For the year ended September 30, 2000, the Advisor reduced its fees
and absorbed Fund expenses in the amount of $96,980 for The Rockhaven Fund and
$19,983 for The Rockhaven Premier Dividend Fund; no amounts were reimbursed to
the Advisor. Cumulative expenses subject to recapture pursuant to the
aforementioned conditions amounted to $280,809 and $194,508 for The Rockhaven
Fund and The Rockhaven Premier Dividend Fund, respectively.
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 following annual rate:
FUND ASSET LEVEL FEE RATE
---------------- --------
Less than $15 million $30,000
$15 million to less than $50 million 0.20% of average daily net assets
$50 million to less than $100 million 0.15% of average daily net assets
$100 million to less than $150 million 0.10% of average daily net assets
More than $150 million 0.05% of average daily net assets
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.
23
<PAGE>
THE ROCKHAVEN FUND & THE ROCKHAVEN PREMIER DIVIDEND FUND
Notes to Financial Statements
AT SEPTEMBER 30, 2000
NOTE 4 -- DISTRIBUTION COSTS
The Funds have adopted a Distribution Plan pursuant to Rule 12b-1 (the "Plan").
The Plan permits the Funds to pay for distribution and related expenses at an
annual rate of up to 0.25% of each Fund's average daily net assets annually. The
expenses covered by the Plan may include the cost of preparing and distributing
prospectuses and other sales material, advertising and public relations
expenses, payments to financial intermediaries and compensation of personnel
involved in selling shares of the Funds. Payments made pursuant to the Plan will
represent compensation for distribution and service activities, not
reimbursements for specific expenses incurred. Pursuant to a distribution
coordination agreement adopted under the Plan, distribution fees are paid to the
Advisor as "Distribution Coordinator". For the year ended September 30, 2000,
the Funds paid the Distribution Coordinator in the amount of $10,548 for The
Rockhaven Fund and $61,970 for The Rockhaven Premier Dividend Fund.
NOTE 5 -- SECURITIES TRANSACTIONS
For the year ended September 30, 2000, the cost of purchases and the proceeds
from sales of securities, excluding short-term securities, for The Rockhaven
Fund, were $6,898,898 and $5,923,218, respectively. For the year ended, The
Rockhaven Fund wrote five covered call options and received a premium of $4,360.
The options expired and the Fund realized a gain of $4,360. This amount is
included in the net realized gain on investments in the statement of operations.
For the year ended September 30, 2000, the cost of purchases and the proceeds
from sales of securities, excluding short-term securities, for The Rockhaven
Premier Dividend Fund, were $65,307,051 and $44,247,450, respectively.
NOTE 6 -- LONG TERM CAPITAL GAIN DISTRIBUTIONS
The Rockhaven Fund and The Rockhaven Premier Dividend Fund have designated
dividends of $0.1627 and $0.0808 per share, respectively, as long term capital
gain distributions for the fiscal year ended September 30, 2000. This
information should not be used to prepare your personal income tax return. A tax
statement for that purpose will be forwarded to you in February 2001.
24
<PAGE>
THE ROCKHAVEN FUND & THE ROCKHAVEN PREMIER DIVIDEND FUND
Report of Independent Accountants
To the Board of Trustees and Shareholders
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Rockhaven Fund and The
Rockhaven Premier Dividend Fund, series of Advisors Series Trust (the "Funds")
at September 30, 2000, the results of each of their operations for the year then
ended and the changes in each of their net assets and the financial highlights
for each of the two years in the period then ended, in conformity with
accounting principles generally accepted in the United States of America. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with auditing standards generally accepted in the United States of America,
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at September 30, 2000 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion. The financial
highlights for the periods prior to September 30, 1999 were audited by other
independent accountants whose report dated October 23, 1998 expressed an
unqualified opinion on those financial statements.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
New York, New York
November 10, 2000
25
<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
Ultimus Fund Solutions
135 Merchant Street, Suite 230
Cincinnati, OH 45246
866.634.0603
LEGAL COUNSEL
Paul, Hastings, Janofsky & Walker LLP
345 California Street, 29th Floor
San Francisco, CA 94104
AUDITORS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
This report is intended for shareholders of the Fund and may not be used as
sales literature unless preceded or accompanied by a current prospectus.
Past performance results shown in this report should not be considered a
representation of future performance. Share price and returns will fluctuate so
that shares, when redeemed, may be worth more or less than their original cost.
Statements and other information herein are dated and are subject to change.
[LOGO]
ROCKHAVEN ASSET MANAGEMENT
THE RISK MANAGERS
100 First Avenue
Suite 850
Pittsburgh, PA 15222
800.522.3508
412.434.6771 FAX
www.rockhaven.com
(12/00 - 1450)
