SEMI-ANNUAL
REPORT
APRIL 30, 1999
HAVEN CAPITAL MANAGEMENT, INC.
Investment Adviser
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THE
HAVEN
FUND
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(PHOTO)
<PAGE>
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LETTER TO INVESTORS
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April 1999
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THE
HAVEN
FUND
------
Dear Shareholder:
Most financial market history viewed in retrospect is not very interesting, but
sometimes it becomes so unusual as to merit special attention. The late 1920's
and again the early 1930's were such times, as were the late 1960's and early
1970's, because in all those times the markets went to extremes. We suspect that
the late 1990's are going to prove to be another such time. A narrow band of
stocks have lead the stock market to new highs. From the beginning of July 1998
through the end of April 1999, ten stocks accounted for 56% of the gains to the
Standard & Poor's 500 Stock Index.<F1> Ten stocks equal 2% of the Index. This
was going to an extreme. This extreme made the S&P 500 Index not useful as a
measure of the market, which is why we added the Wilshire 4500 Index<F2> to our
comparison tables last year. This extreme has also been rooted in emotions
rather than fundamentals, which is why it had to eventually become unpinned. We
believe that all financial history supports the premise that long-term
investment results derive from corporations' fundamentals and not from their
images.
An interesting example is the following chart of Leggett & Platt,<F3> one of our
holdings, vs. the S&P 500 Index. Leggett & Platt's relative stock performance to
the S&P 500 Index peaked in 1998 and declined until recently despite the fact
that the company has a superb record of earnings performance that is above
average. It increased its dividend 48-fold in the past 27 years, or 15.4%
compounded annually, but at April 30 was selling at less than half the price-
earnings ratio of the S&P 500 Index. By the standards of fundamental analysis,
this does not make sense.
THE HAVEN FUND | SEMI-ANNUAL REPORT | 1
<PAGE>
STOCK PERFORMANCE
Rel to S&P Composite
Leggett & Platt Inc. Index (500) (Right Scale)
------------------------- -------------------------
1/1996 12.00 .01887
2/1996 11.69 .01825
3/1996 11.44 .01772
4/1996 12.88 .01968
5/1996 14.19 .02120
6/1996 13.88 .02069
7/1996 13.00 .02031
8/1996 14.25 .02186
9/1996 14.69 .02137
10/1996 14.94 .02118
11/1996 15.31 .02023
12/1996 17.31 .02337
1/1997 16.06 .02043
2/1997 17.94 .02268
3/1997 16.25 .02146
4/1997 17.38 .02168
5/1997 18.88 .02225
6/1997 21.50 .02429
7/1997 22.69 .02377
8/1997 21.50 .02390
9/1997 22.28 .02352
10/1997 20.88 .02282
11/1997 21.50 .02250
12/1997 20.94 .02158
1/1998 22.59 .02305
2/1998 25.09 .02391
3/1998 25.72 .02334
4/1998 25.97 .02336
5/1998 25.13 .02303
6/1998 25.00 .02205
7/1998 26.81 .02393
8/1998 20.06 .02096
9/1998 20.75 .02040
10/1998 23.38 .02128
11/1998 22.69 .01950
12/1998 22.00 .01790
1/1999 20.37 .01592
2/1999 20.94 .01691
3/1999 20.00 .01555
4/1999 23.06 .01727
On Monday, April 12 some of the pins supporting the S&P 500 Index came out and
stock market leadership changed dramatically. There was a sharp turn toward
"value" investing. As a result, through Friday, May 14 your Fund was +9.6% for
the year 1999 to date, vs. +9.3% for the S&P 500 and +7.8% for the Wilshire 4500
Index. This is in comparison with the Fund's performance in the fiscal half-year
ended April 30 of +14.9%, vs. +22.3% for the S&P 500 Index and +24.2% for the
Wilshire 4500 Index. The Fund's energy holdings were a drag on performance in
December, January and February and have since recovered. [More complete
comparison tables may be found on page 4.]
Our best performing stocks for the fiscal half-year were: Amdocs, Ltd.,<F3> a
small Israeli company which has quickly become a world leader in Customer Care
and Billing (CC&B) for telecommunications companies; Circuit City Stores,<F3>
the electronics retailer; EMC Corp.,<F3> which continues to gain market share in
computer storage devices; Avery Dennison,<F3> a diversified manufacturer of
tags, labels and analogous products; and Novell, Inc.,<F3> a revamped and
recovering provider of computer network solutions.
Our worst performers were: Borders Group,<F3> the bookshop chain which has
suffered from the belief that the Internet would drive bookshops out of business
(we do not think this will happen); Elan, plc,<F3> an Irish pharmaceutical
company whose shares fell when the Food & Drug
2 | SEMI-ANNUAL REPORT | THE HAVEN FUND
<PAGE>
Administration requested more data on an important new drug (the new data is
being compiled and the drug will be submitted for review in late 1999); Ocean
Energy,<F3> an independent oil producer now recovering from the slump in oil and
gas prices (Ocean Energy has more than its share of interesting exploration
products in North America, Africa and Asia); Diebold, Inc.,<F3> a leading
manufacturer of bank equipment whose earnings were affected, temporarily we
believe, by a reorganization of their European marketing structure; and Andrew
Corp.,<F3> which was affected by a slowdown in capital spending for cellular
telephone systems. We have confidence in all these companies.
With thanks for your continued support,
Sincerely,
/S/ Colin C. Ferenbach
Colin C. Ferenbach
President
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
<F1> 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 towards stocks with large market capitalizations and
represents approximately two-thirds of the total market value of all
domestic common stocks.
<F2> 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.
<F3> As of April 30, 1999 Leggett & Platt comprised 1.8% of the Fund; Amdocs,
Ltd. comprised 2.6% of the Fund; Circuit City Stores comprised 2.0% of the
Fund; EMC Corp. comprised 6.4% of the Fund; Avery Dennison comprised 2.2%
of the Fund; Novell, Inc. comprised 2.2% of the Fund; Borders Group
comprised 1.9% of the Fund; Elan, plc comprised 2.3% of the Fund; Ocean
Energy comprised 1.7% of the Fund; Diebold, Inc. comprised 2.5% of the
Fund; and Andrew Corp. comprised 1.8% of the Fund.
THE HAVEN FUND | SEMI-ANNUAL REPORT | 3
<PAGE>
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 Partner ship 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.
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GROWTH OF A $10,000 INVESTMENT
FOR THE FUND AND THE PARTNERSHIP
--------------------------------
6/27/84 10/31/84 10/31/89 10/31/94 4/30/99
-------- -------- -------- -------- --------
THE HAVEN FUND 10,000 10,707 21,485 37,631 78,915
S&P 500 Stock Index 10,000 11,007 26,959 43,698 135,069
Lipper Growth Fund Index 10,000 10,650 23,733 38,299 96,545
Wilshire 4500 Index 10,000 10,808 22,696 36,934 81,870
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Average Annual Total Return of the Fund
FOR PERIODS ENDED APRIL 30, 1999
-------------------------------------------
Since
One Inception
Year <F1>
-------------------------------------------
The Haven Fund 1.3% 18.0%
-------------------------------------------
S&P 500 Stock Index 21.8% 28.1%
-------------------------------------------
Lipper Growth Fund Index 19.2% 23.8%
-------------------------------------------
Wilshire 4500 Index 3.6% 19.8%
-------------------------------------------
<F1> June 23, 1994
-------------------------------------------
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Average Annual Total Return of the Fund and Partnership
FOR PERIODS ENDED APRIL 30, 1999
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One Five Ten Since
Year Year Year Inception<F1>
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The Haven Fund 1.3% 17.4% 14.6% 14.9%
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S&P 500 Stock Index 21.8% 26.8% 18.8% 19.2%
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Lipper Growth
Fund Index 19.2% 22.2% 16.6% 16.8%
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Wilshire 4500 Index 3.6% 18.2% 14.6% 15.2%
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<F1> June 27, 1984
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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 1,197 funds in the Lipper Growth Fund category as of April 30, 1999.
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.
4 | SEMI-ANNUAL REPORT | THE HAVEN FUND
<PAGE>
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STATEMENT OF NET ASSETS
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April 30, 1999 (Unaudited)
Number
of Shares Value
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COMMON STOCKS 91.61%
AUTO PARTS 2.20%
20,000 Valeo SA - (FR) $ 1,692,728
------------
BANKS 8.87%
35,000 Bank One Corp. 2,065,000
45,125 Commerce Bancorp, Inc./NJ 1,991,141
15,000 National Australia Bank Ltd. - (AUS) 1,457,812
15,000 Wachovia Corp. 1,318,125
------------
6,832,078
------------
BUILDING & HOUSING 5.62%
40,000 Armstrong World Industries, Inc. 2,190,000
60,000 Owens Corning 2,137,500
------------
4,327,500
------------
CHEMICALS 3.18%
20,000 du Pont (E.I.) de Nemours & Co. 1,412,500
20,000 Praxair, Inc. 1,035,000
------------
2,447,500
------------
CONSUMER NON-DURABLES 4.26%
50,000 Alberto-Culver Co. 1,131,250
35,000 Kimberly-Clark Corp. 2,145,938
------------
3,277,188
------------
DRUG & HOSPITAL SUPPLIES 8.93%
35,000 Elan Corp. plc - (IRL)<F1> 1,802,500
25,000 Johnson & Johnson 2,437,500
40,000 Stryker Corp. 2,447,500
20,000 VaxGen, Inc.<F1> 190,000
------------
6,877,500
------------
THE HAVEN FUND | SEMI-ANNUAL REPORT | 5
<PAGE>
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STATEMENT OF NET ASSETS (CONT'D.)
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April 30, 1999 (Unaudited)
Number
of Shares Value
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COMMON STOCKS 91.61% (cont'd.)
ELECTRICAL EQUIPMENT 1.50%
23,000 Grainger (W.W.), Inc. $ 1,154,312
------------
FURNISHINGS & APPLIANCES 4.09%
60,000 Leggett & Platt, Inc. 1,383,750
60,000 Masco Corp. 1,762,500
------------
3,146,250
------------
INFORMATION TECHNOLOGY 16.97%
40,000 Computer Associates International, Inc. 1,707,500
45,000 EMC Corp./Mass.<F1> 4,902,188
30,000 Hewlett-Packard Co. 2,366,250
75,000 Molex, Inc. 2,418,750
75,000 Novell, Inc.<F1> 1,668,750
------------
13,063,438
------------
MACHINERY 6.40%
70,000 Dover Corp. 2,585,625
505,530 Rolls-Royce plc - (UK) 2,344,185
------------
4,929,810
------------
MISCELLANEOUS INDUSTRIALS 4.72%
25,000 Avery Dennison Corp. 1,706,250
80,000 Diebold, Inc. 1,925,000
------------
3,631,250
------------
OIL - DOMESTIC 3.59%
60,000 Burlington Resources, Inc. 2,763,750
------------
OIL - INTERNATIONAL 7.09%
140,000 Ocean Energy, Inc.<F1> 1,303,750
36,000 Royal Dutch Petroleum Co. - (NETH) 2,112,750
30,000 Total SA - (FR) 2,040,000
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5,456,500
------------
6 | SEMI-ANNUAL REPORT | THE HAVEN FUND
<PAGE>
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STATEMENT OF NET ASSETS (CONT'D.)
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April 30, 1999 (Unaudited)
Number
of Shares Value
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COMMON STOCKS 91.61% (cont'd.)
OIL WELL EQUIPMENT & SERVICES 2.07%
25,000 Schlumberger, Ltd. $ 1,596,875
------------
REAL ESTATE INVESTMENT TRUSTS 2.39%
50,000 General Growth Properties, Inc. 1,840,625
------------
RETAILING 3.87%
100,000 Borders Group, Inc.<F1> 1,443,750
25,000 Circuit City Stores - Circuit City Group 1,537,500
------------
2,981,250
------------
TELECOMMUNICATIONS 4.43%
75,000 Amdocs Ltd. - (ISR)<F1> 2,015,625
100,000 Andrew Corp.<F1> 1,393,750
------------
3,409,375
------------
TRANSPORTATION 1.43%
40,000 TNT Post Group NV - (NETH) 1,097,500
------------
Total Common Stocks
(cost $44,097,387) 70,525,429
------------
THE HAVEN FUND | SEMI-ANNUAL REPORT | 7
<PAGE>
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STATEMENT OF NET ASSETS (CONT'D.)
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April 30, 1999 (Unaudited)
Par (000)/
Shares Value
- --------------------------------------------------------------------------------
CONVERTIBLE BOND 2.16%
$1,500 Bell Atlantic, 4.25%, 9/15/05
(cost $1,733,367) $ 1,661,715
------------
COMMERCIAL PAPER 2.59%
2,000 American Express Credit Corp., 4.78%, 5/4/99
(cost $1,999,203) 1,999,203
------------
SHORT-TERM INVESTMENT 2.28%
1,755,421 Temporary Investment Fund
(cost $1,755,421) 1,755,421
------------
TOTAL INVESTMENTS 98.64%
(cost $49,585,378<F2>) $75,941,768
------------
Other Assets in Excess of Liabilities 1.36% 1,044,387
------------
Net Assets applicable to 5,213,582 Shares of Common
Stock issued and outstanding 100.00% $76,986,155
============
Net Asset Value, offering and redemption price
per share ($76,986,155/5,213,582) $14.77
============
The aggregate unrealized appreciation (depreciation) on a tax basis is as
follows:
Gross appreciation....... $27,653,210
Gross depreciation....... (1,296,820)
---------------
Net appreciation.........$26,356,390<F2>
===============
<F1> Non-income producing securities.
<F2> Also cost for federal income tax purposes.
COUNTRY ABBREVIATIONS
(AUS) - Australia (ISR) - Israel
(FR) - France (NETH) - Netherlands
(IRL) - Ireland (UK) - United Kingdom
See Notes to Financial Statements.
8 | SEMI-ANNUAL REPORT | THE HAVEN FUND
<PAGE>
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TOP TEN STOCK HOLDINGS
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-----------------------------------------
34.6% of the Fund
-----------------------------------------
EMC Corp./Mass. 6.4%
-----------------------------------------
Burlington Resources, Inc. 3.6%
-----------------------------------------
Dover Corp. 3.4%
-----------------------------------------
Johnson & Johnson 3.2%
-----------------------------------------
Stryker Corp. 3.2%
-----------------------------------------
Hewlett-Packard Co. 3.1%
-----------------------------------------
Molex, Inc. 3.1%
-----------------------------------------
Rolls-Royce plc 3.0%
-----------------------------------------
Armstrong World Industries, Inc. 2.8%
-----------------------------------------
Kimberly-Clark Corp. 2.8%
-----------------------------------------
TOTAL 34.6%
-----------------------------------------
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PERCENT OF TOTAL EQUITIES
- --------------------------------------------------------------------------------
BY COUNTRY
(Unaudited)
- ------------------------
United States 79.3%
- ------------------------
France 5.3%
- ------------------------
Netherlands 4.5%
- ------------------------
United Kingdom 3.3%
- ------------------------
Israel 2.9%
- ------------------------
Ireland 2.6%
- ------------------------
Australia 2.1%
- ------------------------
THE HAVEN FUND | SEMI-ANNUAL REPORT | 9
<PAGE>
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STATEMENT OF OPERATIONS
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For the Six Months Ended April 30, 1999 (Unaudited)
INVESTMENT INCOME:
Dividends $423,063
Interest 139,846
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Total Investment Income 562,909
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OPERATING EXPENSES:
Investment advisory fees 230,454
Distribution fees 79,122
Administration and accounting fees 49,589
Amortization of organizational costs 25,137
Transfer agent fees 23,540
Legal fees 21,718
Trustees' fees and expenses 13,884
Custodian fees 13,759
Audit fees 11,721
Printing fees 10,146
Blue Sky fees 9,645
Insurance fees 9,148
Miscellaneous expenses 2,665
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Total Expenses 500,528
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Net Investment Income 62,381
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NET REALIZED GAIN (LOSS) FROM:
Investments 3,013,800
Foreign currency transactions (8,431)
NET INCREASE IN UNREALIZED APPRECIATION (DEPRECIATION) ON:
Investments 7,520,191
Translation of assets and liabilities in foreign currency (658)
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Net realized and unrealized gain from
investments and foreign currency 10,524,902
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Net increase in net assets resulting from operations $10,587,283
===============================================================================
See Notes to Financial Statements.
10 | SEMI-ANNUAL REPORT | THE HAVEN FUND
<PAGE>
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STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
APRIL 30, 1999 OCTOBER 31,
(UNAUDITED) 1998
- --------------------------------------------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $62,381 $413,175
Net realized gain on investments and foreign
currency transactions 3,005,369 8,045,865
Net change in unrealized appreciation (depreciation)
on investments and translation of other assets and
liabilities denominated in foreign currencies 7,519,533 (8,092,076)
- --------------------------------------------------------------------------------
Net increase in net assets from operations 10,587,283 366,964
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DIVIDENDS PAID TO SHAREHOLDERS:
From net investment income (161,414) (448,301)
From net realized gains (8,050,675) (7,848,458)
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Total dividends paid to shareholders (8,212,089) (8,296,759)
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CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold 633,203 2,772,497
Value of shares issued in reinvestment of dividends 5,915,125 6,023,822
Cost of shares redeemed (9,627,666) (7,944,801)
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Increase (decrease) in net assets from
capital share transactions (3,079,338) 851,518
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Total decrease in net assets (704,144) (7,078,277)
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NET ASSETS:
Beginning of period 77,690,299 84,768,576
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End of period $76,986,155 $77,690,299
================================================================================
See Notes to Financial Statements.
THE HAVEN FUND | SEMI-ANNUAL REPORT | 11
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED
(For a Share Outstanding APRIL 30, 1999 OCT. 31, OCT. 31, OCT. 31, OCT. 31, OCT. 31,
Throughout each Period) (UNAUDITED) 1998 1997 1996 1995 1994<F1>
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $14.29 $15.83 $14.04 $11.67 $10.65 $10.00
- -----------------------------------------------------------------------------------------------------------------------------------
INCREASE FROM INVESTMENT
OPERATIONS:
Net investment income 0.01 0.08 0.06 0.08 0.12 0.04
Net realized and unrealized
gains (losses) on investments
and foreign currency transactions 1.99 (0.02) 3.13 3.07 1.28 0.61
- -----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 2.00 0.06 3.19 3.15 1.40 0.65
LESS DISTRIBUTIONS:
Dividends paid to shareholders:
From net investment income (0.03) (0.08) (0.05) (0.08) (0.15) -
From net realized gains (1.49) (1.52) (1.35) (0.70) (0.23) -
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions to
shareholders (1.52) (1.60) (1.40) (0.78) (0.38) -
NET ASSET VALUE, END OF PERIOD $14.77 $14.29 $15.83 $14.04 $11.67 $10.65
===================================================================================================================================
TOTAL RETURN 14.87%<F4> 0.29% 24.90% 28.25% 13.65% 6.50%<F4>
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (in 000s) $76,986 $77,690 $84,769 $67,096 $55,579 $45,332
Ratios of expenses to average
net assets 1.30%<F3> 1.26% 1.33% 1.59% 1.53%<F2> 1.20%<F2><F3>
Ratios of net investment income
to average net assets 0.16%<F3> 0.50% 0.78% 0.58% 1.14%<F2> 1.10%<F2><F3>
Portfolio turnover rate 19% 59% 57% 67% 77% 27%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<F1> The Haven Fund commenced operations on June 23, 1994.
<F2> 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.
<F3> Annualized.
<F4> Total return for periods less than one year are not annualized.
See Notes to Financial Statements.
12 | SEMI-ANNUAL REPORT | THE HAVEN FUND
<PAGE>
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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. 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.
THE HAVEN FUND | SEMI-ANNUAL REPORT | 13
<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 April 30, 1999, 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 six months ended April 30, 1999, 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).
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.
14 | SEMI-ANNUAL REPORT | THE HAVEN FUND
<PAGE>
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NOTES TO FINANCIAL STATEMENTS (CONT'D.)
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d) ADMINISTRATOR AND TRANSFER AGENT FEES: As compensation for its
administrative and accounting services, the Fund pays PFPC Inc. ("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: PFPC Trust Company 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 PFPC
Trust Company 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 six months ended
April 30, 1999, and the year ended October 31, 1998, were as follows:
1999 1998
- --------------------------------------------------------------------------------
Sale of shares 45,820 188,218
Shares issued to shareholders in
reinvestment of dividends 434,616 415,829
Shares repurchased (704,240) (522,892)
- --------------------------------------------------------------------------------
Net increase (decrease) (223,804) 81,155
Shares outstanding:
Beginning of period 5,437,386 5,356,231
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End of period 5,213,582 5,437,386
================================================================================
THE HAVEN FUND | SEMI-ANNUAL REPORT | 15
<PAGE>
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NOTES TO FINANCIAL STATEMENTS (CONT'D.)
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6. COMPONENTS OF NET ASSETS
At April 30, 1999, Net Assets consisted of the following:
- --------------------------------------------------------------------------------
Capital paid-in $47,619,778
Accumulated net realized gain on investments
and foreign currency transactions 2,931,400
Undistributed net investment income 78,830
Net unrealized appreciation of investments 26,356,390
Net unrealized depreciation on foreign currency transactions (243)
- --------------------------------------------------------------------------------
$76,986,155
================================================================================
7. PURCHASES AND SALES OF SECURITIES
For the six months ended April 30, 1999, the cost of securities purchased and
proceeds from securities sold, excluding short-term obligations, were
$13,613,487 and $22,989,124, respectively.
16 | SEMI-ANNUAL REPORT | THE HAVEN FUND
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THE HAVEN FUND
P.O. BOX 8903
WILMINGTON, DE 19899-8903
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- --------------------------------------------------------------------------------
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.
HA4100699
