ANNUAL REPORT
OCTOBER 31, 1997
HAVEN CAPITAL MANAGEMENT, INC.
Investment Adviser
THE HAVEN FUND
<PAGE>
LETTER TO INVESTORS
November 1997
THE HAVEN FUND
Dear Shareholder,
For the fiscal year ended October 31, 1997 the Fund's total return was 24.9%.
This compares with increases in the Standard & Poor's 500 Stock Index of 32.1%
and the Lipper Growth Fund Index of 28.4%. Additional performance data,
including a more complete history, may be found on page 3.
The under-performance described above was not a surprise to us. Markets
exhibiting the famous "irrational exuberance" described by Federal Reserve
Bank Chairman Greenspan are not relatively favorable to our style of investing
carefully stock by stock. We are also very much aware that in 1995 the Standard
and Poor's Index rose 37.6%, in 1996, 23.0%, and for the ten months of 1997,
24.5%. Repeated increases of this magnitude are not unprecedented, but we
believe they are also not sustainable. As a long-term trend, the U.S. stock
market has historically risen in step with corporate earnings, as logic would
lead one to assume. For the past 75 years, this trend has been approximately
7.7% per annum, but the "in step with" obviously includes many "missteps" on
a year-to-year basis. In the late 1970's and early 1980's the Standard and
Poor's Index went, in effect, nowhere, leaving the market in 1982 behind the
long-term trend. Now, 15 years later, we believe that the market has got ahead
of the trend. We have therefore maintained a relatively cautious investment
posture throughout the year and are continuing to do so.
The resolution of an above-trend market pattern can come two ways: either the
market declines substantially back towards its trend line, or the market
stagnates for an extended period while corporate earnings catch up with stock
market valuation levels. The first alternative, of which we had a taste in the
last week of October of this year, would inflict considerable pain on
overextended valuations and investors. The second alternative would be, in a
word, boring but much preferable. As investors who select stocks one at a time
on their perceived investment merits, we have done well in boring markets.
The Fund's five best-performing stocks for the year were EMC Corp.,
Schlumberger, Computer Associates, First Commerce and Texas Instruments. EMC
reoriented its attention from mainframe computer memories, a slowing business,
to shared-network memories, and sales of the latter grew 100% this year.
Schlumberger is benefiting from a new boom in the oil-service industry, a boom
derived from industry supply/demand fundamentals and not from high oil prices
which have, indeed, declined. Computer Associates is a large software company
whose earnings unexpectedly declined; the stock sold off sharply, then recovered
all it had lost and more when earnings did the same. First Commerce is a
Louisiana bank being acquired, as we had anticipated. Texas Instruments has, as
we wrote at mid-year, restructured with favorable results toward higher value-
added memory chips.
<PAGE>
Our five worst-performing holdings were Reader's Digest, United Meridian, The
Sports Authority, Silicon Graphics and Viking Office Products. We wrote in the
Semi-Annual Report that Reader's Digest is a company with substantial intangible
assets in need of a change in management. That event has now occurred, but
results remain to be seen. United Meridian is an independent oil and gas
exploration company. In our opinion its fundamental outlook has continually
improved, but the stock has suffered from the unwinding of the excessive
valuation it received in 1996. We still have a profit of over 100%. The Sports
Authority likewise has suffered only from the correction of an overvaluation; we
believe their business fundamentals are fine. Silicon Graphics is a company
where the management has failed recently to capitalize on a superb product line.
A management change was needed, and it has just occurred. Viking Office Products
is yet another stock that "corrected" from an overvaluation. We believe the
business fundamentals to be solid. We have a 300% profit on our original
purchase and a substantial profit on the entire holding. As we have previously
reported, we sold and then repurchased much of our original holdings in United
Meridian, Viking and The Sports Authority.
HSBC Holdings (parent of Hong Kong & Shanghai Bank) merits a special mention.
When we purchased this stock in August 1996, we felt that it was undervalued on
its merits, largely as a consequence of fears concerning the impending takeover
of Hong Kong by the Peoples Republic of China. In August 1997, the Hong Kong
stock market hit an all-time high and HSBC stock had risen 83% above our cost,
largely as a consequence of enthusiasm over the successful completion of that
same event. We then thought the stock was overvalued, and we sold most of the
shares when the gain became long-term. When the Hong Kong stock market crashed
in late October, we repurchased much of what we had sold, down 36% from the
price two months earlier and back again to being undervalued. It is,
incidentally, the largest bank in the world, is very well capitalized and has
extensive operations outside Asia (including Midland Bank in Britain and Marine
Midland Bank in New York).
Once again we welcome new shareholders and thank you all for your continued
support.
Sincerely,
/s/ Colin C. Ferenbach
Colin C. Ferenbach
President
The chart on the following page assumes an initial gross investment of $10,000
made on June 27, 1984 and shows how the Fund and its predecessor have performed.
The Fund began operations on June 23, 1994. Results for the period prior to that
date reflect the performance of HCM Partners, L.P., a limited partnership that
was managed by Haven Capital Management, Inc., the Fund's investment adviser,
from 1984 to 1994. On June 23, 1994 the Fund acquired the assets of the
Partnership in exchange for shares of the Fund. Although the Partnership was
managed by the same individuals who manage the Fund, and the Fund is managed in
a manner that is in all material respects equivalent to the management of the
Partnership, the information below should not be viewed as an indication of the
future performance of the Fund. It includes information regarding the
Partnership's operations for periods before the Fund's registration statement
became effective. The Partnership was not registered under the Investment
Company Act of 1940 and therefore was not subject to certain investment
restrictions that are imposed by that Act. If the Partnership had been
registered, its performance might have been adversely affected. In addition, the
expenses borne by the Fund are higher than those borne by the Partnership.
<PAGE>
Average Annual Total Return of the
Fund and Partnership
FOR PERIODS ENDED OCTOBER 31, 1997
- --------------------------------------------------------------------------
One Five Ten Since
Year Year Year Inception<F1>
---- ---- ---- ------------
The Haven Fund 24.9% 17.6% 15.7% 15.5%
- --------------------------------------------------------------------------
S&P 500 Stock Index 32.1% 19.8% 17.1% 18.0%
- --------------------------------------------------------------------------
Lipper Growth
Fund Index 28.4% 17.7% 15.8% 15.9%
- --------------------------------------------------------------------------
<F1> June 27, 1984
- --------------------------------------------------------------------------
Average Annual Total Return
of the Fund
FOR PERIODS ENDED OCTOBER 31, 1997
- ---------------------------------------------------------
One Since
Year Inception<F2>
---- -------------
The Haven Fund 24.9% 21.8%
- ---------------------------------------------------------
S&P 500 Stock Index 32.1% 27.0%
- ---------------------------------------------------------
Lipper Growth
Fund Index 28.4% 22.6%
- ---------------------------------------------------------
<F2> June 23, 1994
- ---------------------------------------------------------
<TABLE>
GROWTH OF A $10,000 INVESTMENT FOR THE FUND AND THE PARTNERSHIP
<CAPTION>
6/27/84 10/31/84 10/31/85 10/31/86 10/31/87 10/31/88 10/31/89
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
THE HAVEN FUND 10,000 10,707 13,463 17,403 16,491 19,155 22,183
S&P 500 Stock Index 10,000 11,007 13,119 17,460 18,585 21,348 26,959
Lipper Growth Fund Index 10,000 10,650 12,609 16,302 16,440 18,947 23,733
10/31/90 10/31/91 10/31/92 10/31/93 10/31/94 10/31/95 10/31/96
- ---------------------------------------------------------------------------------------------------------------------------------
THE HAVEN FUND 20,650 27,947 31,122 36,777 38,856 44,160 54,853
S&P 500 Stock Index 24,969 33,289 36,601 42,069 43,698 55,251 68,522
Lipper Growth Fund Index 20,688 29,264 31,546 37,534 38,299 47,484 55,508
<FN>
The S&P 500 Stock Index is an unmanaged index of 500 selected common stocks,
most of which are listed on the New York Stock Exchange. The index is heavily
weighted toward stocks with large market capitalizations and represents
approximately two-thirds of the total market value of all domestic common
stocks.
The Lipper Growth Fund Index includes the largest 30 funds in the group which,
by prospectus or portfolio practice, normally invest in companies whose long-
term earnings are expected to grow significantly faster than the earnings of the
stocks represented in the major unmanaged stock indices.
A direct investment in either the S&P 500 Stock Index or the Lipper Growth Fund
Index is not possible.
Total return calculations reflect fee waivers in effect. In the absence of fee
waivers, total return performance would be reduced. Total return is based on net
change in NAV assuming reinvestment of distributions. Investment return and
principal value of an investment will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than the original cost. Past
performance is no guarantee of future results.
</TABLE>
<PAGE>
STATEMENT OF NET ASSETS
October 31, 1997
Number
of Shares Value
--------- -----
COMMON STOCKS 90.87%
AUTO PARTS 3.43%
60,000 Detroit Diesel Corp.<F3> $1,237,500
25,000 Valeo SA - (FR) 1,667,187
----------
2,904,687
----------
BANKS 10.43%
40,000 Commerce Bancorp, Inc./NJ 1,575,000
30,000 First Commerce Corp. 1,927,500
20,000 First Union Corp. 981,250
40,000 HSBC Holdings plc. - (GB) 996,577
10,000 Morgan (J.P.) & Co., Inc. 1,097,500
30,000 Wachovia Corp. 2,259,375
----------
8,837,202
----------
CHEMICALS 1.34%
20,000 du Pont (E.I.) de Nemours & Co. 1,137,500
----------
CONSUMER NON-DURABLES 3.67%
50,000 Alberto-Culver Co. 1,296,875
35,000 Kimberly-Clark Corp. 1,817,812
----------
3,114,687
----------
DRUG & HOSPITAL SUPPLIES 8.44%
20,000 Abbott Laboratories 1,226,250
25,000 Johnson & Johnson 1,434,375
45,000 Stryker Corp. 1,673,438
30,000 United Healthcare Corp. 1,389,375
15,000 Zeneca Group plc. - (GB) 1,430,625
----------
7,154,063
----------
ELECTRICAL EQUIPMENT 5.29%
15,000 Grainger (W.W.), Inc. 1,311,562
10,000 Matsushita Electric Industrial
Company, Ltd. - (JAP) 1,691,250
40,000 Molex, Inc. 1,500,000
----------
4,502,812
----------
<PAGE>
STATEMENT OF NET ASSETS (cont'd.)
Number
of Shares Value
--------- -----
COMMON STOCKS 90.87% (cont'd.)
ELECTRONICS 16.71%
35,000 Computer Associates International, Inc. $ 2,609,688
50,000 Electronic Data Systems Corp. 1,934,375
60,000 EMC Corp./Mass. <F3> 3,360,000
30,000 Hewlett-Packard Co. 1,850,625
20,000 Hitachi Ltd. - (JAP) 1,600,000
45,000 Silicon Graphics, Inc. <F3> 660,937
20,000 Texas Instruments Inc. 2,133,750
----------
14,149,375
----------
ENVIRONMENTAL CONTROL 1.26%
25,000 Culligan Water Technologies, Inc. <F3> 1,065,625
----------
FURNISHINGS & APPLIANCES 1.97%
40,000 Leggett & Platt, Inc. 1,670,000
----------
INSURANCE 4.28%
25,000 Equitable Companies (The), Inc. 1,029,688
40,000 Mid Ocean Limited - (BER) 2,595,000
----------
3,624,688
----------
LODGING & CATERING 1.41%
30,000 Sysco Corp. 1,200,000
----------
MACHINERY 3.63%
1,000 Bucher Holding AG - (CH) 946,011
75,000 New Holland N.V. - (NETH) 2,132,812
----------
3,078,823
----------
MISCELLANEOUS INDUSTRIALS 1.41%
30,000 Avery Dennison Corp. 1,194,375
----------
OIL - INTERNATIONAL 7.19%
100,000 Gulf Canada Resources Ltd. - (CAN) <F3> 837,500
<PAGE>
STATEMENT OF NET ASSETS (cont'd.)
Number
of Shares Value
--------- -----
COMMON STOCKS 90.87% (cont'd.)
OIL - INTERNATIONAL 7.19% (CONT'D.)
36,000 Royal Dutch Petroleum Co. - (NETH) $ 1,894,500
30,000 Total SA - (FR) 1,665,000
50,000 United Meridian Corp. <F3> 1,696,875
----------
6,093,875
----------
OIL WELL EQUIPMENT & SERVICES 2.58%
25,000 Schlumberger, Ltd. - (NETH ANT) 2,187,500
----------
PUBLISHING & BROADCASTING 0.81%
30,000 Reader's Digest Association (The), Inc. 682,500
----------
REAL ESTATE INVESTMENT TRUSTS 3.21%
50,000 General Growth Properties 1,725,000
25,000 Weingarten Realty Investors 995,313
----------
2,720,313
----------
RETAILING 11.69%
50,000 Borders Group, Inc. <F3> 1,296,875
40,000 Circuit City Stores - Circuit City Group 1,595,000
207,715 J. Sainsbury plc. - (GB) 1,733,746
40,000 Lowe's Companies, Inc. 1,665,000
90,000 Sports Authority (The), Inc. <F3> 1,704,375
80,000 Viking Office Products, Inc. <F3> 1,915,000
----------
9,909,996
----------
TELECOMMUNICATIONS 2.12%
77,500 Andrew Corp. <F3> 1,797,031
----------
Total Common Stocks
(cost $50,450,752) 77,025,052
----------
Par
(000)
-----
CONVERTIBLE BONDS 4.05%
$3,000 Meditrust, 6.875%, 11/15/98
(cost $3,078,756) 3,435,000
----------
<PAGE>
STATEMENT OF NET ASSETS (cont'd.)
October 31, 1997
Par(000)/Shares Value
--------------- -----
COMMERCIAL PAPER 5.54%
$ 4,700 Ford Motor Credit Co., 5.63%, 11/3/97
(cost $4,698,530) $ 4,698,530
-----------
SHORT-TERM INVESTMENTS 0.03%
21,226 Temporary Investment Fund
(cost $21,226) 21,226
-----------
TOTAL INVESTMENTS 100.49%
(cost $58,249,264<F4>) $85,179,808
-----------
Other Liabilities in Excess of Assets (0.49)% (411,232)
-----------
Net Assets applicable to 5,356,231 Shares of Common
Stock issued and outstanding 100.00% $84,768,576
===========
Net Asset Value, offering and redemption price
per share ($84,768,576 / 5,356,231) $15.83
======
The aggregate unrealized appreciation (depreciation) on a tax basis is as
follows:
Gross appreciation............. $27,936,767
Gross depreciation............. (1,006,223)
-----------
Net appreciation............... $26,930,544
===========
<F3> Non-income producing securities.
<F4> Also cost for federal income tax purposes.
See Notes to Financial Statements.
COUNTRY ABBREVIATIONS
(BER) - Bermuda (JAP) - Japan
(CAN) - Canada (NETH) - Netherlands
(FR) - France (NETH ANT) - Netherland Antilles
(GB) - Great Britain (CH) - Switzerland
<PAGE>
TOP TEN STOCK HOLDINGS (Unaudited)
30% of the Fund
- --------------------------------------------------
EMC Corp./Mass. 4.4%
- --------------------------------------------------
Computer Associates International, Inc. 3.4%
- --------------------------------------------------
Mid Ocean Limited 3.4%
- --------------------------------------------------
Wachovia Corp. 2.9%
- --------------------------------------------------
Schlumberger, Ltd. 2.8%
- --------------------------------------------------
Texas Instruments Inc. 2.8%
- --------------------------------------------------
New Holland N.V. 2.8%
- --------------------------------------------------
Electronic Data Systems Corp. 2.5%
- --------------------------------------------------
First Commerce Corp. 2.5%
- --------------------------------------------------
Viking Office Products 2.5%
- --------------------------------------------------
TOTAL 30.0%
- --------------------------------------------------
PERCENT OF TOTAL EQUITIES
BY COUNTRY
(UNAUDITED)
Great Britain 5.2%
Netherlands 5.0%
France 4.1%
Japan 4.1%
Bermuda 3.2%
Netherland Antilles 2.7%
Switzerland 1.2%
Canada 1.0%
United States 73.5%
<PAGE>
STATEMENT OF OPERATIONS
For the Year Ended October 31, 1997
INVESTMENT INCOME:
Dividends $ 1,028,495
Interest 601,942
-----------
Total Investment Income 1,630,437
-----------
OPERATING EXPENSES:
Investment advisory fees 463,570
Distribution fees 170,856
Administration and accounting fees 99,997
Amortization of organizational costs 50,691
Transfer agent fees 47,964
Legal fees 34,789
Audit fees 30,949
Custodian fees 29,159
Trustees' fees and expenses 28,500
Printing fees 23,889
Insurance fees 19,541
Blue Sky fees 13,599
Miscellaneous expenses 10,885
-----------
Total Expenses 1,024,389
-----------
Net Investment Income 606,048
-----------
NET REALIZED GAIN FROM:
Investments 7,848,458
Foreign currency transactions 62,952
NET INCREASE (DECREASE) IN UNREALIZED APPRECIATION ON:
Investments 8,415,424
Translation of assets and liabilities in
foreign currency (3,703)
-----------
Net realized and unrealized gain from
investments and foreign currency 16,323,131
-----------
Net increase in net assets resulting from operations $16,929,179
===========
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
YEAR YEAR
ENDED ENDED
OCTOBER 31, OCTOBER 31,
1997 1996
---- ----
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 606,048 $ 351,886
Net realized gain on investments and
foreign currency transactions 7,911,410 6,413,120
Net change in unrealized appreciation
on investments and translation of
other assets and liabilities
denominated in foreign currencies 8,411,721 8,310,343
----------- -----------
Net increase in net assets
from operations 16,929,179 15,075,349
----------- -----------
DIVIDENDS PAID TO SHAREHOLDERS:
From net investment income (542,627) (369,791)
From net realized gains (6,502,581) (3,308,473)
----------- -----------
Total dividends paid to shareholders (7,045,208) (3,678,264)
----------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 7,649,818 2,709,097
Value of shares issued in reinvestment
of dividends 4,399,820 2,653,736
Cost of shares redeemed (4,260,734) (5,242,835)
----------- -----------
Increase in net assets from
capital share transactions 7,788,904 119,998
----------- -----------
Total increase in net assets 17,672,875 11,517,083
----------- -----------
NET ASSETS:
Beginning of year 67,095,701 55,578,618
----------- -----------
End of year $84,768,576 $67,095,701
=========== ===========
See Notes to Financial Statements.
<PAGE>
FINANCIAL HIGHLIGHTS
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
(For a Share Outstanding OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
Throughout each Period) 1997 1996 1995 1994<F5>
---- ---- ---- --------
NET ASSET VALUE, BEGINNING
OF PERIOD $14.04 $11.67 $10.65 $10.00
----- ----- ----- -----
INCREASE FROM INVESTMENT
OPERATIONS:
Net investment income 0.06 0.08 0.12 0.04
Net realized and unrealized
gains on investments and
foreign currency transactions 3.13 3.07 1.28 0.61
----- ----- ----- -----
Total from investment
operations 3.19 3.15 1.40 0.65
LESS DISTRIBUTIONS:
Dividends paid to shareholders:
From net investment income (0.05) (0.08) (0.15) -
From net realized gains (1.35) (0.70) (0.23) -
----- ----- ----- -----
Total distributions to
shareholders (1.40) (0.78) (0.38) -
NET ASSET VALUE, END OF PERIOD $15.83 $14.04 $11.67 $10.65
===== ===== ===== =====
TOTAL RETURN 24.90% 28.25% 13.65% 6.50%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period
(in 000s) $84,769 $67,096 $55,579 $45,332
Ratios of expenses to average
net assets 1.33% 1.59% 1.53%<F6> 1.20%<F6>
<F7>
Ratios of net investment income
to average net assets 0.78% 0.58% 1.14%<F6> 1.10%<F6>
<F7>
Portfolio turnover rate 57% 67% 77% 27%
Average commission rate
paid<F8> $0.0633 $0.0591 - -
------ ------ ------ ------
<F5> The Haven Fund commenced operations on June 23, 1994.
<F6> Without fee waivers, the ratio of operating expenses to average daily net
assets would have been 1.59% and 1.43% (annualized), for the periods
ended October 31, 1995 and 1994, respectively, and the ratio of net
investment income to average daily net assets would have been 1.08% and
0.87% (annualized) for the periods ended October 31, 1995 and 1994,
respectively.
<F7> Annualized.
<F8> Computed by dividing the total amount of brokerage commissions paid by
the total shares of investment securities purchased and sold during the
period for which commissions were charged, as required by the SEC.
See Notes to Financial Statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND BUSINESS
The Haven Capital Management Trust (the "Trust") is an investment company
registered under the Investment Company Act of 1940, as amended. It is organized
as a Delaware business trust and is an open-ended, diversified, management,
series investment company which currently consists of The Haven Fund (the
"Fund").
2. SIGNIFICANT ACCOUNTING POLICIES
a) PORTFOLIO VALUATION: Securities for which market quotations are readily
available are valued at market value, which is determined by using the last
reported sale price, or if no sales are reported, and in the case of certain
securities traded over-the-counter, the mean between the last reported bid and
asked prices. Short-term obligations having remaining maturities of 60 days or
less are valued at either amortized cost or original cost plus accrued interest
receivable, both of which approximate market value. All other securities and
assets, including any restricted and/or illiquid securities, will be valued at
their fair market value as determined pursuant to procedures adopted by the
Trustees.
b) FOREIGN CURRENCY TRANSACTIONS: Transactions denominated in foreign
currencies are recorded in the Fund's records at the current prevailing exchange
rate. Asset and liability accounts that are denominated in a foreign currency
are adjusted to reflect the current exchange rate at the end of the period.
Transaction gains or losses resulting from changes in the exchange rate during
the reporting period or upon settlement of the foreign currency transaction are
reported in operations for the current period. Foreign security and currency
transactions may involve certain considerations and risks not typically
associated with those of U.S. dollar-denominated transactions.
c) SECURITY TRANSACTIONS AND INVESTMENT INCOME: Security transactions are
recorded on trade-date. Dividend income and distributions to shareholders are
recorded on the ex-dividend date. Interest income is recorded on an accrual
basis.
Realized gains or losses on sales of investments are determined on the
identified cost basis for financial reporting and income tax purposes.
d) DISTRIBUTIONS TO SHAREHOLDERS: Dividends from net investment income are
declared and paid semi-annually. Any net realized capital gains will be
distributed annually. Income distributions and capital gain distributions are
determined in accordance with federal tax regulations which may differ from
generally accepted accounting principles.
e) FEDERAL TAXES: The Fund is a separate entity for federal income tax
purposes. It is the Fund's policy to qualify as a regulated investment company
by complying with the requirements of the Internal Revenue Code applicable to
regulated investment companies, and to pay out most of its net investment income
and net capital gains to its shareholders. Therefore, no federal income or
excise tax provision is required.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (cont'd.)
f) ORGANIZATION COSTS: Costs incurred in connection with the Fund's
organization and registration are amortized on a straight-line basis over the
period of benefit, not to exceed 60 months.
g) 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
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
3. FINANCIAL INSTRUMENTS
The Fund may trade financial instruments with off-balance sheet risk in the
normal course of the investing activities and to assist in managing exposure to
market risks such as interest rates and foreign currency exchange rates. The
financial instruments include written options, forward foreign currency exchange
contracts and futures contracts. The notional or contractual amounts of these
instruments represent the investment the Fund has in particular classes of
financial instruments and do not necessarily represent the amounts potentially
subject to risk. The measurement of the risks associated with these instruments
is meaningful only when all related and offsetting transactions are considered.
At October 31, 1997, the Fund did not hold any financial instruments with off-
balance sheet risk.
4. FEES AND RELATED PARTY TRANSACTIONS
a) INVESTMENT ADVISORY FEES: Under an agreement between the Trust on behalf of
the Fund and Haven Capital Management, Inc. (the "Adviser"), the adviser
serves as the Fund's investment adviser. For investment advisory services, the
Adviser receives monthly fees at the annual rate of 0.60% of the Fund's average
daily net assets.
b) TRUSTEES FEES: Fees were paid to the Trustees and/or Officers of the Fund
for the year ended October 31, 1997, but no fees were paid to any Trustee and/or
Officer of the Fund who is also an employee of the Adviser.
c) DISTRIBUTION FEES: The Trust, on behalf of the Fund, has adopted a Plan of
Distribution (the "Plan") pursuant to Rule 12b-1 under the Investment Company
Act of 1940, as amended. Under the Plan, the Fund may spend no more each year
than 0.25% of its average daily net assets to finance activity primarily
intended to result in the sale of shares.
Pursuant to the Distribution Agreement, as compensation for its services, the
Fund pays Sunstone Distribution Services, LLC, payable monthly in arrears, at
the annual rate of 0.10% per annum of the Fund's average daily net assets;
provided that such compensation shall be subject to a minimum monthly fee of
$7,083 (exclusive of out-of-pocket expenses).
<PAGE>
NOTES TO FINANCIAL STATEMENTS (cont'd.)
The Fund also pays Hewes Communications, Inc. a monthly fee of $3,500 (exclusive
of out-of-pocket expenses) as compensation for services under the Plan.
d) ADMINISTRATOR AND TRANSFER AGENT FEES: As compensation for its
administrative and accounting services, the Fund pays PFPC a fee, at the annual
rate of 0.10% of the Fund's average daily net assets, with a minimum
monthly fee of $8,333 (exclusive of out-of-pocket expenses). As transfer agent
of the Fund, PFPC receives a minimum monthly fee of $3,000 (exclusive of out-of-
pocket expenses).
e) CUSTODIAN FEES: PNC Bank and Chase Manhattan Bank, N.A., serve as custodian
and sub-custodian for the Fund's U.S. and foreign assets, respectively. As
compensation for its custodian services, the Fund pays PNC Bank a minimum
monthly fee of $1,500 (exclusive of out-of-pocket expenses).
<PAGE>
NOTES TO FINANCIAL STATEMENTS (cont'd.)
5. CAPITAL STOCK
The Fund is authorized to issue unlimited shares of common stock, par value
$.001 per share. Transactions in shares of the Fund for the years ended October
31, 1997 and 1996 were as follows:
1997 1996
---- ----
Sale of shares 527,437 212,898
Shares issued to shareholders in
reinvestment of dividends 323,802 225,609
Shares repurchased (273,510) (421,494)
--------- ---------
Net increase 577,729 17,013
Shares outstanding:
Beginning of year 4,778,502 4,761,489
--------- ---------
End of year 5,356,231 4,778,502
========= =========
6. COMPONENTS OF NET ASSETS
At October 31, 1997, Net Assets consisted of the following:
- ----------------------------------------------------------------------
Capital paid-in $49,847,598
Accumulated net realized gain on investments
and foreign currency transactions 7,774,766
Undistributed net investment income 217,521
Net unrealized appreciation of investments 26,930,544
Net unrealized depreciation on foreign
currency transactions (1,853)
-----------
$84,768,576
===========
7. PURCHASES AND SALES OF SECURITIES
For the year ended October 31, 1997, the cost of securities purchased and
proceeds from securities sold, excluding short-term obligations, were
$42,605,197 and $40,690,695, respectively.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and
Board of Trustees of
The Haven Capital Management Trust:
We have audited the accompanying statement of net assets of The Haven Capital
Management Trust (the "Trust") comprised of The Haven Fund as of October 31,
1997, the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the periods presented. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with 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. Our procedures included
confirmation of securities owned as of October 31, 1997, by correspondence with
the custodians 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
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Trust as of October 31, 1997, and the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended, and the financial highlights for each of the periods
presented, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND, L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
December 5, 1997
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<PAGE>
THE HAVEN FUND
P.O. BOX 8903
WILMINGTON, DE 19899-8903
FOR FUND INFORMATION,
PRICES AND LITERATURE, CALL
1-800-844-4836
FOR ACCOUNT BALANCES AND OTHER INFORMATION ABOUT YOUR HAVEN FUND ACCOUNT, CALL
1-800-850-7163
THIS REPORT IS SUBMITTED FOR THE GENERAL INFORMATION OF SHAREHOLDERS OF THE
HAVEN FUND. IT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS
UNLESS ACCOMPANIED OR PRECEDED BY AN EFFECTIVE PROSPECTUS FOR THE HAVEN FUND.
THE PROSPECTUS INCLUDES MORE COMPLETE INFORMATION ABOUT MANAGEMENT FEES AND
EXPENSES, INVESTMENT OBJECTIVES, RISKS AND OPERATING POLICIES OF THE HAVEN FUND.
PLEASE READ THE PROSPECTUS CAREFULLY.
