VAN DEVENTER & HOCH
-------------------
AMERICAN VALUE FUND
Annual Report
October 31, 2000
<PAGE>
VAN DEVENTER & HOCH AMERICAN VALUE FUND
October 31, 2000
Dear Shareholders:
The American Value Fund posted a return of 0.57% for the twelve months ended
October 31, 2000. By comparison, the S&P 500 Index gained 6.1% for the same
period. Although the Fund's twelve-month performance fell short of our
objective, the shortfall was largely experienced during the first four months of
this measurement period. Since that time, we have been particularly pleased with
the portfolio's progress.
For the period February 29, 2000 through October 31, 2000, the Fund's
performance has been very strong. During this eight-month interval, the American
Value Fund has gained 23.28% while the S&P 500 Index has increased a modest
5.4%. This eight-month period is significant because it coincides with the large
price correction experienced in the growth-oriented NASDAQ market since its peak
in early March.
During this time, investor sentiment for so-called "New Economy" stocks changed
dramatically. Investors have challenged the popular notion that technology and
telecommunications stocks are somehow immune to the forces of the overall
economy. These investors have now begun to focus less on hopeful concepts and
more on real assets, earnings, and stock valuations. This development has
benefited many traditional market segments and significantly bolstered the
Fund's returns.
The Fund experienced positive contributions from nearly every economic sector
during this interval. The most meaningful to the Fund's results was the
portfolio's 21% exposure to Financial Services, which contributed significantly
to the Fund's return. Likewise, the portfolio's exposure to the Energy and
Capital Goods sectors aided results. Symptomatic with current market sentiment,
the only sectors posting meaningful declines were Technology and Communications,
which together accounted for a modest 16% of the portfolio's investments.
During the year, stock prices for many of the market's most highly valued
companies have significantly weakened. Although the broad market's valuations
have remained surprisingly stable throughout this retrenchment, the valuations
for many stocks within the market have changed considerably. Stocks with
moderate but reliable earnings growth prospects have appreciated in value for
most of the year, while stocks with stronger but less certain earnings growth
prospects have depreciated in value.
2
<PAGE>
VAN DEVENTER & HOCH AMERICAN VALUE FUND
As stock prices continue to jump around, sometimes erratically, we will continue
to look for what we consider to be the best values across a broad range of
economic sectors and industries. We will focus the Fund's investments on
companies with attractive valuations relative to their underlying assets and
future earning power. We believe this strategy should continue to serve our
shareholders' long-term objectives of both safety and growth of capital.
Cordially,
/s/ Russell Kartub
Russell Kartub
Portfolio Manager for American Value Fund
The information contained in this report is authorized for use when proceeded or
accompanied by a prospectus for the Fund. The Fund is distributed by First Fund
Distributors, Inc., 4455 E. Camelback Rd., Suite 261E, Phoenix, AZ 85018.
3
<PAGE>
VAN DEVENTER & HOCH AMERICAN VALUE FUND
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT
IN THE VAN DEVENTER & HOCH AMERICAN VALUE FUND,
THE RUSSELL MID CAP VALUE INDEX & THE S&P 500 COMPOSITE STOCK PRICE INDEX
Average Annual Total Return(1)
One year...................... 0.57%
Since inception (5/7/99)...... (8.18%)
Russell Mid Cap Van Deventer & Hoch S&P 500 Composite
Value Index American Value Fund Stock Price Index
----------- ------------------- -----------------
May-7-99 10,000 10,000 10,000
Jul-99 9,689 9,680 9,984
Oct-99 9,142 8,757 10,274
Jan-00 8,664 7,976 10,542
Apr-00 9,345 8,325 11,013
Jul-00 9,365 8,072 10,880
Oct-00 10,225 8,807 10,899
Past performance is not predictive of future performance.
(1) Average Annual Total Return represents the average change in account value
over the periods indicated.
* The Russell Mid Cap Value Index is comprised of securities in the Russell
Mid Cap Index with less than average growth orientations, including lower
price-to-book and price-to earnings ratios. This Index is a widely used
benchmark of the mid-cap universe.
* 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 stocks that comprise this index have similar
long-term risk and return characteristics as the Fund.
4
<PAGE>
VAN DEVENTER & HOCH AMERICAN VALUE FUND
SCHEDULE OF INVESTMENTS AT OCTOBER 31, 2000
--------------------------------------------------------------------------------
Shares COMMON STOCKS: 97.80% Market Value
--------------------------------------------------------------------------------
BASIC MATERIALS: 3.45%
7,000 Louisiana-Pacific Corp.............................. $ 59,500
6,000 Praxair, Inc........................................ 223,500
-----------
283,000
-----------
CAPITAL GOODS: 14.79%
2,000 Avery Dennison Corp................................. 101,000
2,000 Boeing Co........................................... 135,625
6,500 Crown Cork & Seal Co., Inc.......................... 59,313
3,000 Emerson Electric Co................................. 220,312
3,000 Fluor Corp.......................................... 105,000
2,300 Honeywell International, Inc........................ 123,769
6,500 ITT Industries, Inc................................. 211,656
10,800 Reliance Steel & Aluminum Co........................ 256,500
-----------
1,213,175
-----------
COMMUNICATION SERVICES: 5.04%
350 Avaya, Inc.*........................................ 4,703
7,000 MCI WorldCom Inc.*.................................. 166,250
1,500 SBC Communications, Inc............................. 86,531
734 VelocityHSI, Inc.................................... 780
2,684 Verizon Communications.............................. 155,169
-----------
413,433
-----------
CONSUMER CYCLICAL: 12.79%
4,000 Delphi Automotive Systems Corp...................... 62,750
7,500 Masco Corp.......................................... 140,156
18,000 Mattel, Inc......................................... 232,875
3,000 May Department Stores, Co........................... 78,750
9,000 Sherwin-Williams Co................................. 195,187
4,000 Tribune Co.......................................... 148,250
7,000 V F Corp............................................ 191,188
-----------
1,049,156
-----------
CONSUMER STAPLES: 8.80%
7,000 Albertson's, Inc.................................... 165,812
12,000 Bowne & Co., Inc.................................... 100,500
1,300 Cardinal Health, Inc................................ 123,175
3,000 Clorox Co........................................... 133,875
3,000 Kimberly-Clark Corp................................. 198,000
-----------
721,362
-----------
5
<PAGE>
VAN DEVENTER & HOCH AMERICAN VALUE FUND
SCHEDULE OF INVESTMENTS AT OCTOBER 31, 2000, CONTINUED
--------------------------------------------------------------------------------
Shares Market Value
--------------------------------------------------------------------------------
ENERGY: 9.21%
3,000 EOG Resources, Inc.................................. $ 118,125
3,000 Halliburton Co...................................... 111,188
9,500 Occidental Petroleum Corp........................... 188,813
2,600 Phillips Petroleum Co............................... 160,550
5,000 Texas Pacific Land Trust............................ 176,875
-----------
755,551
-----------
FINANCIAL SERVICES: 21.28%
2,500 A.G. Edwards, Inc................................... 126,875
6,000 Allstate Corp....................................... 241,500
3,000 Fannie Mae.......................................... 231,000
3,600 MBIA, Inc........................................... 261,675
3,000 Metris Companies, Inc............................... 97,125
2,500 T. Rowe Price Associates............................ 117,031
6,000 UnumProvident Corp.................................. 169,500
2,000 Wachovia Corp.*..................................... 108,000
4,720 Washington Mutual, Inc.............................. 207,680
4,000 Wells Fargo Co...................................... 185,250
-----------
1,745,636
-----------
HEALTH CARE: 7.03%
4,000 Bristol Myers Squibb Co............................. 243,750
1,400 Merck & Co., Inc.................................... 125,913
4,000 Schering-Plough Corp................................ 206,750
-----------
576,413
-----------
TECHNOLOGY: 11.01%
1,000 Applied Materials, Inc.*............................ 53,125
5,500 Compaq Computer Corp................................ 167,255
4,000 Electronic Data Systems Corp........................ 187,750
1,500 International Business Machines Corp................ 147,750
4,200 Lucent Technologies Inc............................. 97,912
1,500 Microsoft Corp.*.................................... 103,313
3,500 Motorola, Inc....................................... 87,281
7,000 Xerox Corp.......................................... 59,063
-----------
903,449
-----------
TRANSPORTATION & SERVICES: 0.86%
1,500 Union Pacific Corp.................................. 70,313
-----------
6
<PAGE>
VAN DEVENTER & HOCH AMERICAN VALUE FUND
SCHEDULE OF INVESTMENTS AT OCTOBER 31, 2000, CONTINUED
--------------------------------------------------------------------------------
Shares Market Value
--------------------------------------------------------------------------------
UTILITIES: 3.54%
4,000 American Water Works Co., Inc....................... $ 97,500
1,500 El Paso Energy Corp................................. 94,031
1,500 FPL Group, Inc...................................... 99,000
-----------
290,531
-----------
TOTAL COMMON STOCKS
(Cost $7,441,195+)................................ 8,022,019
-----------
Principal
Amount SHORT-TERM INVESTMENTS: 2.21%
--------------------------------------------------------------------------------
MONEY MARKET INSTRUMENTS: 0.01%
$ 973 UMB Money Market Fiduciary
(Cost $973)....................................... 973
-----------
U.S. TREASURY OBLIGATIONS: 2.20%
$181,000 U.S. Treasury Bill, due 12/07/2000
(Cost $179,923)................................... 179,923
-----------
TOTAL SHORT-TERM INVESTMENTS
(Cost $180,896)................................... 180,896
-----------
TOTAL INVESTMENTS IN SECURITIES
(Cost $7,622,091): 100.01%........................ 8,202,915
Liabilities in Excess of Other Assets: (0.01%)...... (321)
-----------
NET ASSETS: 100.00%............................. $ 8,202,594
===========
* Non-income producing security.
+ At October 31, 2000, the cost of securities for Federal tax purposes was
the same as for financial reporting purposes. Gross unrealized appreciation
and depreciation of securities is as follows:
Gross unrealized appreciation....................... $ 1,769,570
Gross unrealized depreciation....................... (1,188,746)
-----------
Net unrealized appreciation.................. $ 580,824
===========
See accompanying Notes to Financial Statements.
7
<PAGE>
VAN DEVENTER & HOCH AMERICAN VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES AT OCTOBER 31, 2000
--------------------------------------------------------------------------------
ASSETS
Investments in securities, at value
(identified cost $7,622,091)............................... $ 8,202,915
Cash.......................................................... 775
Receivables:
Dividends and interest..................................... 11,555
Other Assets.................................................. 1,857
-----------
Total assets............................................ 8,217,102
-----------
LIABILITIES
Accrued expenses.............................................. 14,508
-----------
NET ASSETS...................................................... $ 8,202,594
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($8,202,594 / 691,348 shares outstanding; unlimited
number of shares [par value $0.01] authorized)............. $ 11.86
===========
COMPONENTS OF NET ASSETS
Paid-in capital............................................... $ 7,544,853
Undistributed net investment income........................... 74,403
Accumulated net realized gain on investments.................. 2,514
Net unrealized appreciation on investments.................... 580,824
-----------
Net assets.............................................. $ 8,202,594
===========
See accompanying Notes to Financial Statements.
8
<PAGE>
VAN DEVENTER & HOCH AMERICAN VALUE FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 2000
--------------------------------------------------------------------------------
INVESTMENT INCOME
Income
Dividends................................................. $ 195,576
Interest.................................................. 31,080
-----------
Total income........................................... 226,656
-----------
Expenses (Note 3)
Management fees........................................... 61,454
Administration fees....................................... 39,581
Distribution fees......................................... 21,948
-----------
Total expenses......................................... 122,983
-----------
Net investment income.............................. 103,673
-----------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
Net realized gain on investments.............................. 8,595
Net change in unrealized appreciation on investments.......... (223,492)
-----------
Net realized and unrealized loss on investments............ (214,897)
-----------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS ......................................... $ (111,224)
===========
See accompanying Notes to Financial Statements.
9
<PAGE>
VAN DEVENTER & HOCH AMERICAN VALUE FUND
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
Year ended May 7, 1999* to
October 31, 2000 October 31, 1999
---------------- ----------------
INCREASE / (DECREASE) IN NET ASSETS FROM
OPERATIONS:
Net investment income...................... $ 103,673 $ 71,511
Net realized gain / (loss) on
investments............................... 8,595 (6,081)
Net change in unrealized depreciation
on investments............................ (223,492) (1,584,652)
----------- -----------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS ............ (111,224) (1,519,222)
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income................. (100,781) --
----------- -----------
TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
Net increase / (decrease) in net assets
derived from net change in
outstanding shares (a).................... (2,202,947) 12,136,768
----------- -----------
TOTAL INCREASE / (DECREASE)
----------- -----------
IN NET ASSETS ........................ (2,414,952) 10,617,546
----------- -----------
NET ASSETS
Beginning of period........................ 10,617,546 --
----------- -----------
END OF PERIOD.............................. $ 8,202,594 $10,617,546
=========== ===========
(a) A summary of share transactions is as follows:
Year ended May 7, 1999* to
October 31, 2000 October 31, 1999
------------------------- -------------------------
Shares Value Shares Value
----------- ----------- ----------- -----------
Initial capitalization... -- $ -- 903,489 $12,291,651
Shares sold ............. 34,366 372,185 67,932 924,279
Shares issued for
reinvestment of
distributions......... 8,853 100,655 -- --
Shares redeemed.......... (243,564) (2,675,787) (79,728) (1,079,162)
----------- ----------- ----------- -----------
Net increase (decrease).. (200,345) $(2,202,947) 891,693 $12,136,768
=========== =========== =========== ===========
* Commencement of operations.
See accompanying Notes to Financial Statements.
10
<PAGE>
VAN DEVENTER & HOCH AMERICAN VALUE FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
--------------------------------------------------------------------------------
Year May 7, 1999*
ended through
October 31, 2000 October 31, 1999
---------------- ----------------
Net asset value, beginning of period ......... $ 11.91 $ 13.60
----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................... 0.14 0.08
Net realized and unrealized loss on
investments ............................ (0.08) (1.77)
----------- -----------
Total from investment operations .... 0.06 (1.69)
----------- -----------
Less distributions:
From net investment income .............. (0.11) --
----------- -----------
Net asset value, end of period ............... $ 11.86 $ 11.91
=========== ===========
Total return ................................. 0.57% (12.43%)++
Ratios/supplemental data:
Net assets, end of period (millions) ......... $ 8.2 $ 10.6
Ratio of expenses to average net assets: ..... 1.40% 1.29%+
Ratio of net investment income to
average net assets: ..................... 1.18% 1.23%+
Portfolio turnover rate ...................... 26.22% 25.16%
* Commencement of operations of Allegiance American Value Fund, predecessor
and accounting survivor.
++ Not annualized.
+ Annualized.
See accompanying Notes to Financial Statements.
11
<PAGE>
VAN DEVENTER & HOCH AMERICAN VALUE FUND
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION
The Van Deventer & Hoch American Value Fund (the "Fund") (formerly
Allegiance American Value Fund) is 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 Fund's investment objective is long-term growth of capital and above average
current income with investments primarily in equity securities of 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. The Fund began
operations on May 7, 1999.
On August 10, 2000, the shareholders of Allegiance American Value Fund, a
series of Allegiance Investment Trust, approved an Agreement and Plan of
Reorganization ("Reorganization Plan") for a tax-free reorganization whereby
substantially all of the assets of the Allegiance American Value Fund were
exchanged for shares of the Van Deventer & Hoch American Value Fund, a series of
Advisors Series Trust. The Allegiance American Value Fund was the accounting
survivor and therefore the operations and performance since the commencement of
its operations on May 7, 1999 were carried over to the Fund.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund. These policies are in conformity with generally accepted
accounting principles.
A. SECURITY VALUATION: The Fund's investments are carried at fair value.
Securities that are primarily traded on a national securities exchange
shall be 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 in the NASDAQ National Market System for
which market quotations are readily available shall be 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 shall be valued at the most recent trade 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 Fund's 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.
12
<PAGE>
VAN DEVENTER & HOCH AMERICAN VALUE FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
--------------------------------------------------------------------------------
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.
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 - COMMITMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
A. MANAGEMENT FEE. Van Deventer & Hoch (the "Advisor") acts as the
Investment Advisor to the Fund. The advisor provides the Fund with
investment management services under an Investment Advisory Agreement.
The Advisor furnishes all investment advice, office space, facilities,
and provides most of the personnel needed by the Fund. As compensation
for its services, the Advisor is entitled to a monthly fee at the
annual rate of 0.70% based upon the average daily net assets of the
Fund. For the year ended October 31, 2000, the Fund incurred $61,454
in Advisory Fees.
B. ADMINISTRATIVE SERVICE FEE. Pursuant to an Administrative Services
Agreement, Van Deventer & Hoch provides certain administration
services to the Fund. In consideration of the services provided by Van
Deventer & Hoch, they receive a fee computed daily and paid monthly at
an annual rate of 0.70% (0.35% prior to August 10, 2000) of the
average daily net assets of the Fund. This fee arrangement requires
them to absorb and pay out of their own resources all operating
expenses that exceed an annual rate of 1.65% (1.30% prior to August
10, 2000) of the average daily net assets.
C. DISTRIBUTION FEES. The Fund has adopted a Distribution Plan pursuant
to Rule 12b-1 (the "Plan"). The Plan permits the Fund to pay for
distribution and related expenses at an annual rate of up to 0.25% of
the Fund's average daily net assets annually. The expenses covered by
the Plan may include the cost of preparing and distributing
13
<PAGE>
VAN DEVENTER & HOCH AMERICAN VALUE FUND
NOTES TO FINANCIAL STATEMENTS, CONTINUED
--------------------------------------------------------------------------------
prospectuses and other sales material, advertising and public
relations expenses, payments to financial intermediaries and
compensation of personnel involved in selling shares of the Fund.
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 October 31, 2000, the
Fund paid the Distribution Coordinator in the amount of $21,948.
D. Investment Company Administration, L.L.C. (the "Sub-Administrator")
acts as the Fund's Sub-Administrator under an Sub-Administration
Agreement. The Sub-Administrator prepares various federal and state
regulatory filings, reports and returns for the Fund; 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 the Fund's expenses and reviews the
Fund's expense accruals. For its services, the Sub-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
E. First Fund Distributors, Inc. (the "Distributor") acts as the Fund's
principal underwriter in a continuous public offering of the Fund's
shares. The Distributor is an affiliate of the Administrator.
F. Certain officers of the Fund are also officers and/or directors of the
Administrator and the Distributor.
NOTE 4 - SECURITIES TRANSACTIONS
For the year ended October 31, 2000, the cost of purchases and the proceeds
from sales of securities, excluding short-term securities, were $2,167,268 and
$3,377,751, respectively.
14
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
--------------------------------------------------------------------------------
To the Board of Trustees and Shareholders of
Van Deventer & Hoch American Value Fund
In our opinion, the accompanying statement of assets and liabilities, including
the schedule 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 Van Deventer & Hoch American Value
Fund (the "Fund") (formerly Allegiance American Value Fund) at October 31, 2000,
the results of its operations for the year then ended, the changes in its net
assets and the financial highlights for the year then ended and for the period
May 7, 1999 (commencement of operations) through October 31, 1999, 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 October 31, 2000 by correspondence with the
custodian, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
New York, New York
December 5, 2000
15
<PAGE>
ADVISOR
Van Deventer & Hoch
655 North Central Avenue, Suite 1550
Glendale, California 91203
DISTRIBUTOR
First Fund Distributors, Inc.
4455 East Camelback Road, Suite 261E
Phoenix, Arizona 85018
CUSTODIAN
United Missouri Bank, N.A.
928 Grand Boulevard
Kansas City, Missouri 64106
TRANSFER AGENT
ICA Fund Services Corp.
4455 East Camelback Road, Suite 261E
Phoenix, Arizona 85018
800-576-8229
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
LEGAL COUNSEL
Paul, Hastings, Janofsky & Walker LLP
345 California Street, 29th Floor
San Francisco, California 94104
