ANNUAL REPORT
OCTOBER 31, 1998
HAVEN CAPITAL MANAGEMENT, INC.
Investment Adviser
The Haven Fund
LETTER TO INVESTORS
December 1998
Dear Shareholder:
For the fiscal year ended October 31, 1998 the Fund's total return was +0.3%.
This compares with the Standard & Poor's 500 Stock Index of +22.0% and the
Lipper Growth Fund Index of +9.5%. Most observers, beneficiaries of it or not,
feel that the S&P 500 Index moved into a world of its own in 1998, driven
probably by the strong flow of new money into the "index" funds which replicate
it. By way of comparison, the Wilshire 4500<F1> declined 3.4% in the year ended
October 31. Extended performance data can be found on page 4.
Since we had written in last year's annual report that we expected the stock
market some day to have a correction, we were not surprised by the one that
occurred. What did surprise us was that stocks which sold at more modest price-
earnings ratios than the averages, and had not fully participated in the
euphoric market of the first half of the year, often suffered more in the
correction than did the Top 50 of the S&P 500, even though many of the latter
had valuations which were indefensible on historic or economic bases. Subsequent
to the end of August the trend reversed and smaller stocks outperformed the S&P
500. For example, for the two months ended October 31 the Fund was +17.4%,
versus +15.1% for the S&P 500. We hope, but do not know, this trend will
continue.
The table on the next page gives a capsule view of stock market performance
patterns over the past 1) calendar year to date, 2) 12 months and 3) three-year
period ended on October 31. Note the magnitude of differences between "large,"
"mid-cap" and "small" in each style of fund -"growth," "blend" and "value." In
every case "large" outperformed. This has not always been true, and indeed there
is no logical reason why it should be true, but in 1998 it was a trend that
eclipsed all others. Logic and the stock market often have a tenuous
relationship, but in the long run stock performance follows earnings
performance.
MORNINGSTAR CATEGORY AVERAGES
Total Returns as of 10/31/98
Morningstar Year Number 12 Number 3 Year Number
Category<F2> to Date of Funds Months of Funds Annualized of Funds
- ------------ ------- -------- ------ -------- ---------- --------
Large Growth 14.12% 336 17.07% 314 20.19% 190
Mid-Cap Growth -1.02% 334 -0.93% 311 10.31% 217
Small Growth -13.61% 229 -15.94% 223 5.58% 134
Large Blend 8.85% 840 14.21% 791 20.89% 527
Mid-Cap Blend -1.52% 228 -0.72% 210 14.09% 126
Small Blend -13.94% 185 -14.81% 173 10.91% 87
Large Value 4.02% 492 8.79% 470 19.09% 336
Mid-Cap Value -5.18% 250 -2.07% 241 15.52% 146
Small Value -13.31% 307 -12.97% 289 12.12% 174
Domestic Hybrid 5.08% 683 7.92% 660 13.98% 468
Source: Morningstar Principia, November 1998 release
The figures shown represent the average total returns in each fund category for
the periods shown ended on October 31, 1998. Return figures assume reinvestment
of all dividends.
Morningstar, Inc. classifies The Haven Fund as a "mid-cap blend" fund, and it
was in the second quartile of performance of this sector for the 12 months and
three-year periods shown.<F3>
EMC Corp. was a repeater for the best performing stock in the Fund. The company
continues to gain market share in the dynamic market for add-on computer
memories. The next four best performers were Johnson & Johnson, which of course
represents "big-cap growth," Valeo SA, a dynamic multinational auto parts
manufacturer, Leggett & Platt, a diversified manufacturer of parts for consumer
durable products and Commerce Bancorp/NJ, a fast-growing community bank serving
the Philadelphia metropolitan area.
The five worst stocks we held were Ocean Energy, an independent
explorer/producer of oil and gas, Gulf Canada Ltd., in that same industry, New
Holland, a global manufacturer of agricultural equipment, Schlumberger, Ltd.,
primarily an oil service company, and Andrew Corp., primarily a manufacturer of
telecommunications equipment. Three out of the five are energy-related. The
price of crude oil (North Sea Brent, a global reference) dropped 34% in the 12
months to October 31. In that environment, it was the rare energy stock (our
Total SA was one) that did not suffer. Schlumberger went from one of our best
stocks last year to one of our worst. Ocean Energy's production rose 31% in the
nine months to September 30, but exploration/production stocks had few friends
regardless of results. One person's glut is another's margin of safety. We,
remembering the shortages of the 1970's, are inclined to regard the current 5%
surplus in petroleum capacity as a rather narrow margin of safety for such an
essential commodity. New Holland's stock reacted to the abrupt mid-year decline
in agricultural commodity prices. It is a financially strong, improving company
selling at a price-earnings ratio of approximately nine times 1999 estimated
earnings, so we are prepared to be patient. The driver of Andrew's growth in
recent years has been the worldwide build-out of cellular telephone systems.
That business slowed down in 1998, but we expect the slowdown to be temporary.
We consider Andrew's long-term growth potential to be favorable.
It was a difficult year, capped by a minor panic from the middle of August
through the middle of October, and we thank you for your continued support.
Sincerely,
/s/ Colin C. Ferenbach
Colin C. Ferenbach
President
<F1>The Wilshire 4500 Index is the Wilshire 5000 Index less the Standard &
Poor's 500. The Wilshire 5000 Index measures the performance of all U.S.
headquartered equity securities with readily available price data. The Wilshire
4500 uses approximately 6500 security returns to adjust the index. The index
was created December 31, 1983 and is made up of 60% NYSE, 37% NASDAQ and 3%
AMEX.
<F2>Fund Category Classification Definitions
Funds with a combined relative price/earnings and price/book figure of less than
1.75 are considered to be value funds. Portfolios with combined ratios equal or
greater than 1.75 but less than or equal to 2.25 are considered to be blend
funds (by definition, the S&P 500 scores 2.00), and any funds with a sum greater
than 2.25 are classified as growth funds. "Small" refers to companies with less
than $1 billion in market capitalization. "Mid-cap" refers to companies with
market capitalizations between $1 and $5 billion dollars and "large" refers to
companies with market capitalizations over $5 billion dollars.
<F3>Morningstar rankings for The Haven Fund for the one- and three-year periods
ended October 31, 1998 were: 91 out of 210 for the one-year period; and 42 out
of 126 for the three-year period. Morningstar did not rank the Fund prior to its
inception in 1994 when the Fund was operated as a limited partnership.
Past performance is no guarantee of future results.
The chart below 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.
Growth of a $10,000 Investment
for the Fund and the Partnership
The Haven S&P 500 Lipper Growth Wilshire
Fund Stock Index Fund Index 4500 Index
---- ----------- ---------- ----------
6/27/84 10,000 10,000 10,000 10,000
10/31/89 21,485 26,959 23,733 22,696
10/31/90 20,001 24,969 20,688 17,935
10/31/91 27,068 33,289 29,264 27,058
10/31/92 30,496 36,601 31,546 29,520
10/31/93 35,619 42,069 37,534 36,871
10/31/94 37,634 43,698 38,299 36,934
10/31/95 42,771 55,251 47,484 45,340
10/31/96 54,853 68,522 55,508 53,333
10/31/97 68,512 90,525 71,284 68,789
10/31/98 68,703 110,432 78,041 66,471
Average Annual Total Return of the Fund
FOR PERIODS ENDED OCTOBER 31, 1998
-----------------------------------
One Since
Year Inception<F4>
---- ----------
The Haven Fund 0.3% 16.5%
S&P 500 Stock Index 22.0% 25.8%
Lipper Growth Fund Index 9.5% 19.0%
Wilshire 4500 Index (3.4)% 16.0%
<F4> June 23, 1994
Average Annual Total Return of the Fund and Partnership
FOR PERIODS ENDED OCTOBER 31, 1998
One Five Ten Since
Year Year Year Inception<F5>
---- ---- ---- ---------
The Haven Fund 0.3% 14.0% 14.0% 14.4%
S&P 500 Stock Index 22.0% 21.3% 17.9% 18.2%
Lipper Growth
Fund Index 9.5% 16.1% 14.7% 15.7%
Wilshire 4500 Index (3.4)% 12.6% 13.7% 14.5%
<F5>June 27, 1984
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 is an unmanaged index comprised of the largest 30
of the 864 funds in the Lipper Growth Fund category as of October 31, 1998.
Funds included in the category are, by definition, those which normally invest
in companies whose long-term earnings are expected to grow significantly faster
than the stocks represented in the major unmanaged stock indices.
The Wilshire 4500 Index is an unmanaged index of all U.S. equity securities with
readily available price data that are not included in the S&P 500.
A direct investment in either the S&P 500 Stock Index, the Lipper Growth Fund
Index or the Wilshire 4500 Index is not possible.
Total return calculations reflect fee waivers in effect for 1995 and 1994. 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.
STATEMENT OF NET ASSETS
October 31, 1998
Number
of Shares Value
- --------- -----
COMMON STOCKS 91.41%
AUTO PARTS 3.37%
50,000 Detroit Diesel Corp.<F6> $ 884,375
20,000 Valeo SA - (FR) 1,731,188
----------
2,615,563
----------
BANKS 14.39%
35,000 Bank One Corp. 1,710,625
52,500 Commerce Bancorp, Inc./NJ 2,132,812
61,299 HSBC Holdings plc - (UK) 1,437,209
20,000 Morgan (J.P.) & Co., Inc. 1,885,000
25,000 National Australia Bank Ltd. - (AUS) 1,665,625
75,000 Sovereign Bancorp, Inc. 984,375
15,000 Wachovia Corp. 1,363,125
----------
11,178,771
----------
BUILDING & HOUSING 2.34%
50,000 Owens Corning 1,815,625
----------
CHEMICALS 3.03%
20,000 du Pont (E.I.) de Nemours & Co. 1,150,000
30,000 Praxair, Inc. 1,207,500
----------
2,357,500
----------
COMPUTERS & OFFICE EQUIPMENT 1.91%
100,000 Novell, Inc. <F6> 1,487,500
----------
CONSUMER NON-DURABLES 3.73%
50,000 Alberto-Culver Co. 1,206,250
35,000 Kimberly-Clark Corp. 1,688,750
----------
2,895,000
----------
DRUG & HOSPITAL SUPPLIES 9.27%
25,000 Elan Corp. plc - (IRL)<F6> 1,751,562
25,000 Johnson & Johnson 2,037,500
STATEMENT OF NET ASSETS (cont'd.)
October 31, 1998
Number
of Shares Value
- --------- -----
COMMON STOCKS 91.41% (cont'd.)
DRUG & HOSPITAL SUPPLIES 9.27% (cont'd.)
45,000 Stryker Corp. $1,887,188
35,000 United Healthcare Corp. 1,524,688
----------
7,200,938
----------
ELECTRICAL EQUIPMENT 4.81%
23,000 Grainger (W.W.), Inc. 1,059,437
75,000 Molex, Inc. 2,676,563
----------
3,736,000
----------
ELECTRONICS 9.00%
50,000 Computer Associates International, Inc. 1,968,750
50,000 EMC Corp./Mass.<F6> 3,218,750
30,000 Hewlett-Packard Co. 1,805,625
----------
6,993,125
----------
FURNISHINGS & APPLIANCES 3.80%
25,000 Armstrong World Industries, Inc. 1,550,000
60,000 Leggett & Platt, Inc. 1,402,500
----------
2,952,500
----------
MACHINERY 7.35%
750 Bucher Holding AG - (CH) 694,562
60,000 Dover Corp. 1,905,000
100,000 New Holland N.V. - (NETH) 1,262,500
500,000 Rolls-Royce plc - (UK) 1,846,363
----------
5,708,425
----------
MISCELLANEOUS INDUSTRIALS 4.81%
30,000 Avery Dennison Corp. 1,243,125
80,000 Diebold, Inc. 2,495,000
----------
3,738,125
----------
STATEMENT OF NET ASSETS (cont'd.)
October 31, 1998
Number
of Shares Value
- --------- ------
COMMON STOCKS 91.41% (cont'd.)
OIL - DOMESTIC 3.18%
60,000 Burlington Resources, Inc. $2,471,250
----------
OIL - INTERNATIONAL 7.07%
225,000 Gulf Canada Resources Ltd. - (CAN)<F6> 843,750
90,000 Ocean Energy, Inc.<F6> 1,125,000
36,000 Royal Dutch Petroleum Co. - (NETH) 1,773,000
30,000 Total SA - (FR) 1,755,000
----------
5,496,750
----------
OIL WELL EQUIPMENT & SERVICES 1.69%
25,000 Schlumberger, Ltd. 1,312,500
----------
RAILROAD 1.95%
100,000 Wisconsin Central Transportation
Corporation<F6> 1,512,500
----------
REAL ESTATE INVESTMENT TRUSTS 2.29%
50,000 General Growth Properties, Inc. 1,778,125
----------
RETAILING 4.38%
70,000 Borders Group, Inc.<F6> 1,776,250
45,000 Circuit City Stores - Circuit City Group 1,628,437
----------
3,404,687
----------
TELECOMMUNICATIONS 3.04%
65,000 Andrew Corp.<F6> 1,064,375
100,000 Amdocs Ltd. - (ISR)<F6> 1,300,000
----------
2,364,375
----------
Total Common Stocks
(cost $52,183,060) 71,019,259
----------
STATEMENT OF NET ASSETS (cont'd.)
October 31, 1998
Par(000)/Shares Value
- --------------- -----
COMMERCIAL PAPER 8.36%
$ 3,250 American Express Credit Corp., 5.25%, 11/12/98 $ 3,244,786
3,250 Ford Motor Credit Corp., 5.23%, 11/3/98 3,249,056
-----------
(cost $6,493,842) 6,493,842
-----------
SHORT-TERM INVESTMENT 0.47%
362,124 Temporary Investment Fund
(cost $362,124) 362,124
-----------
TOTAL INVESTMENTS 100.24%
(cost $59,039,026<F7>) $77,875,225
-----------
Other Liabilities in Excess of Assets (0.24)% (184,926)
-----------
Net Assets applicable to 5,437,386 Shares of Common
Stock issued and outstanding 100.00% $77,690,299
===========
Net Asset Value, offering and redemption price
per share ($77,690,299/5,437,386) $14.29
======
The aggregate unrealized appreciation (depreciation) on a tax basis is as
follows:
Gross appreciation..................$20,985,926
Gross depreciation...................(2,149,727)
Net appreciation....................$18,836,199<F7>
===========
<F6> Non-income producing securities.
<F7> Also cost for federal income tax purposes.
Country Abbreviations
(AUS) - Australia (IRL) - Ireland
(CAN) - Canada (ISR) - Israel
(CH) - Switzerland (NETH) - Netherlands
(FR) - France (UK) - United Kingdom
See Notes to Financial Statements.
TOP TEN STOCK HOLDINGS
29.0% of the Fund
-----------------
EMC Corp./Mass. 4.1%
Molex, Inc. 3.4%
Diebold, Inc. 3.2%
Burlington Resources, Inc. 3.2%
Commerce Bancorp, Inc./NJ 2.7%
Johnson & Johnson 2.6%
Computer Associates International, Inc. 2.5%
Dover Corp. 2.5%
Stryker Corp. 2.4%
Morgan (J.P.) & Co., Inc. 2.4%
-----
TOTAL 29.0%
PERCENT OF TOTAL EQUITIES
BY COUNTRY
(Unaudited)
-----------
France 4.9%
United Kingdom 4.6%
Netherlands 4.3%
Ireland 2.5%
Australia 2.3%
Israel 1.8%
Canada 1.2%
Switzerland 1.0%
United States 77.4%
STATEMENT OF OPERATIONS
For the Year Ended October 31, 1998
INVESTMENT INCOME:
Dividends (net of foreign taxes withheld of $43,413) $1,106,464
Interest 341,151
----------
Total Investment Income 1,447,615
----------
OPERATING EXPENSES:
Investment advisory fees 491,740
Distribution fees 151,520
Administration and accounting fees 99,997
Transfer agent fees 52,221
Amortization of organizational costs 50,691
Legal fees 40,812
Custodian fees 27,594
Trustees' fees and expenses 25,500
Audit fees 24,278
Blue Sky fees 22,374
Printing fees 21,752
Insurance fees 19,926
Miscellaneous expenses 5,798
SEC fees 237
----------
Total Expenses 1,034,440
----------
Net Investment Income 413,175
----------
NET REALIZED GAIN (LOSS) FROM:
Investments 8,050,397
Foreign currency transactions (4,532)
NET INCREASE IN UNREALIZED APPRECIATION (DEPRECIATION) ON:
Investments (8,094,345)
Translation of assets and liabilities in foreign currency 2,269
----------
Net realized and unrealized loss from
investments and foreign currency (46,211)
----------
Net increase in net assets resulting from operations $ 366,964
==========
See Notes to Financial Statements.
STATEMENT OF CHANGES IN NET ASSETS
YEAR YEAR
ENDED ENDED
OCTOBER 31, OCTOBER 31,
1998 1997
---- ----
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income $413,175 $606,048
Net realized gain on investments and foreign
currency transactions 8,045,865 7,911,410
Net change in unrealized
appreciation (depreciation)
on investments and translation of other
assets and liabilities denominated in
foreign currencies (8,092,076) 8,411,721
----------- -----------
Net increase in net assets from operations 366,964 16,929,179
----------- -----------
DIVIDENDS PAID TO SHAREHOLDERS:
From net investment income (448,301) (542,627)
From net realized gains (7,848,458) (6,502,581)
----------- -----------
Total dividends paid to shareholders (8,296,759) (7,045,208)
----------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 2,772,497 7,649,818
Value of shares issued in reinvestment
of dividends 6,023,822 4,399,820
Cost of shares redeemed (7,944,801) (4,260,734)
----------- -----------
Increase in net assets from capital
share transactions 851,518 7,788,904
----------- -----------
Total increase (decrease) in net assets (7,078,277) 17,672,875
----------- -----------
NET ASSETS:
Beginning of year 84,768,576 67,095,701
----------- -----------
End of year $77,690,299 $84,768,576
=========== ===========
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
(For a Share YEAR YEAR YEAR YEAR PERIOD
Outstanding ENDED ENDED ENDED ENDED ENDED
Throughout each OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
Period) 1998 1997 1996 1995 1994<F8>
---- ---- ---- ---- --------
NET ASSET VALUE,
BEGINNING OF
PERIOD $15.83 $14.04 $11.67 $10.65 $10.00
------ ------ ------ ------ ------
INCREASE FROM
INVESTMENT
OPERATIONS:
Net investment
income 0.08 0.06 0.08 0.12 0.04
Net realized and
unrealized gains
(losses) on
investments and
foreign currency
transactions (0.02) 3.13 3.07 1.28 0.61
------ ------ ------ ------ ------
Total from
investment
operations 0.06 3.19 3.15 1.40 0.65
LESS DISTRIBUTIONS:
Dividends paid
to shareholders:
From net investment
income (0.08) (0.05) (0.08) (0.15) _
From net realized
gains (1.52) (1.35) (0.70) (0.23) _
------ ------ ------ ------ ------
Total
distributions
to shareholders (1.60) (1.40) (0.78) (0.38) _
NET ASSET VALUE,
END OF PERIOD $14.29 $15.83 $14.04 $11.67 $10.65
====== ====== ====== ====== ======
TOTAL RETURN 0.29% 24.90% 28.25% 13.65% 6.50%<F11>
SUPPLEMENTAL
DATA AND RATIOS:
Net assets,
end of period
(in 000s) $77,690 $84,769 $67,096 $55,579 $45,332
Ratios of expenses
to average net assets 1.26% 1.33% 1.59% 1.53%<F9> 1.20%<F9><F10>
Ratios of net
investment income to
average net assets 0.50% 0.78% 0.58% 1.14%<F9> 1.10%<F9><F10>
Portfolio turnover rate 59% 57% 67% 77% 27%
<F8> The Haven Fund commenced operations on June 23, 1994.
<F9> Without fee waivers, the ratio of expenses to average daily net assets
would have been 1.59% and 1.43% (annualized) and the ratio of net investment
income to average daily net assets would have been 1.08% and 0.87% (annualized),
for the year ended October 31, 1995 and the period ended October 31, 1994,
respectively.
<F10> Annualized.
<F11> Total return for periods less than one year are not annualized.
See Notes to Financial Statements.
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) SECUIRTY 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. The differences primarily relate to
investments in forward contracts and certain securities sold at a loss or gain.
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.
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, 1998, the Fund did not hold any financial instruments with off-
balance sheet risk.
4. FEES AND RELATED PARTY TRANACTIONS
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, 1998, 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.
NOTES TO FINANCIAL STATEMENTS (cont'd.)
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).
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 first $200,000,000 of average net assets; 0.075% of the
next $200,000,000 of average net assets; 0.05% of the next $200,000,000 of
average net assets; and 0.03% of the average net assets in excess of
$600,000,000, 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 fee, at the
annual rate of 0.0175% of the Fund's first $100,000,000 of average gross assets;
0.015% of the next $400,000,000 of average gross assets; 0.0125% of the
next $500,000,000 of average gross assets; and 0.01% of the average gross assets
in excess of $1,000,000,000 (exclusive of out-of-pocket expenses and transaction
charges). The minimum monthly fee is $1,500 (exclusive of out-of-pocket expenses
and transaction charges). The Fund pays Chase Manhattan Bank, N.A. an account
fee of $5,000 per year and an asset based fee derived from the ending market
value of foreign held securities (exclusive of transaction charges).
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, 1998 and 1997, respectively, were as follows:
1998 1997
---- ----
Sale of shares 188,218 527,437
Shares issued to shareholders
in reinvestment of dividends 415,829 323,802
Shares repurchased (522,892) (273,510)
--------- ---------
Net increase 81,155 577,729
Shares outstanding:
Beginning of year 5,356,231 4,778,502
--------- ---------
End of year 5,437,386 5,356,231
========= =========
At October 31, 1998, one shareholder held approximately 17% of the outstanding
shares of the Fund.
NOTES TO FINANCIAL STATEMENTS (cont'd.)
6. COMPONENTS OF NET ASSETS
At October 31, 1998, Net Assets consisted of the following:
Capital paid-in $50,699,116
Accumulated net realized gain on investments
and foreign currency transactions 7,976,705
Undistributed net investment income 177,863
Net unrealized appreciation of investments 18,836,199
Net unrealized appreciation on foreign
currency transactions 416
-----------
$77,690,299
===========
7. PURCHASES AND SALES OF SECURITIES
For the year ended October 31, 1998, the cost of securities purchased and
proceeds from securities sold, excluding short-term obligations, were
$44,266,428 and $52,332,162, respectively.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and
Board of Trustees of
The Haven Capital Management Trust:
In our opinion, the accompanying statement of net assets 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 Haven Capital Management Trust (the "Trust") comprised of The Haven Fund at
October 31, 1998, 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. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Trust'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 generally accepted
auditing standards 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, 1998 by
correspondence with the custodians and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania 19103
December 2, 1998
IMPORTANT TAX INFORMATION (UNAUDITED)
The Haven Fund distributed a total capital gain dividend per share of $1.5188
during the fiscal year ending October 31, 1998. Of this total capital gain per
share amount, the Fund made a 28 percent gain distribution of $0.9929 per share,
a 20 percent rate gain distribution of $0.4529 per share, and a short-term
capital gain distribution of $0.0730 per share.
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.
