THE HAVEN FUND
ANNUAL REPORT
OCTOBER 31, 1995
HAVEN CAPITAL MANAGEMENT, INC.
Investment Adviser
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
LETTER TO INVESTORS
December 1995
Dear Shareholder,
For the fiscal year ended October 31, the net asset value ("NAV") per share of
The Haven Fund increased 13.7% with all of the increase occurring in 1995. The
Standard & Poor's 500 Stock Index increased 26.4% for the same 12-month period.
The Lipper Growth Fund Index increased 24.0% during this period. Our performance
for this reporting period was affected severely by timing in that we
underperformed in August and September. The performance numbers of the Fund for
various periods as regularly reported in the financial press are, we feel, a
better overall guide than what the performance was at any particular date.
GROWTH OF A $10,000 INVESTMENT
- ------------------------------
DATE S&P 500 LIPPER GROWTH FUND INDEX THE HAVEN FUND
- ---- ------- ------------------------ --------------
6/22/94 $10,000 $10,000 $10,000
10/31/94 10,523 10,544 10,650
1/31/95 10,557 10,268 10,206
4/30/95 11,624 11,281 11,174
7/31/95 12,810 12,780 12,259
10/31/95 13,271 13,121 12,104
This chart assumes an initial gross investment of $10,000 made on 6/22/94
(inception). Returns shown include the reinvestment of all dividends. Past
performance is not predictive of future performance. Investment return and
principal value will fluctuate, so that shares, when redeemed, may be worth more
or less than the original cost.
Total Returns
FOR PERIODS ENDED OCTOBER 31, 1995
----------------------------------
Annualized
One Since
Year Inception<F1>
---- -------------
The Haven Fund 13.7% 15.1%
S&P 500 Stock Index 26.4% 23.4%
Lipper Growth
Fund Index 24.0% 22.1%
<F1>June 22, 1994
The S&P 500 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 112 funds in the Lipper Growth Fund category. 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 earnings
of the stocks represented in the major unmanaged stock indices.
A direct investment in either the S&P 500 or the Lipper Growth Fund Index is not
possible.
The U.S. stock market has had an extraordinarily strong performance over the
first 10 months of 1995, unequaled (in local currency terms) among developed
countries. In dollar terms, only Switzerland and Sweden outperformed the U.S.
Our foreign holdings benefited from the weak dollar but otherwise mostly marked
time. The market strength in the U.S. broadened during the period, with the
secondary measures outperforming the larger capitalized indices. The Nasdaq
index, dominated by a handful of large technology issues, was the best
performer, being up 37.8%. Technology (electronic and medical) and airlines have
been the strongest sectors so far this year and alone accounted for about 25% of
the performance of the Standard & Poor's 500. We do not generally own major
positions in technology and airlines, as they very seldom meet our criteria of
either valuation (the former) or business attraction (the latter). With a
composite technology index gaining 55% and an airline index 80% for the ten
months, both as tracked by The Leuthold Group, these represent a very fast-
moving target to catch. Technology does include many attractive businesses.
However, expectations and hence valuations have become very high. A comparison
prepared by The Leuthold Group of current valuations with those of other periods
when technology issues peaked (1983, 1972, 1969, 1962) supports this view.
Very little has happened over the past few months to change our view of the
underlying economic fundamentals. The domestic economy is slowing its pace of
growth, foreign economics are also slowing, inflation worldwide shows no sign of
resurgence and interest rates are flat to lower in direction. The U.S. consumer
has begun to restrain his/her spending except for a few durable items such as
computers and home furnishings. Capital spending and exports have been the
sources of the modest growth we have had. We are inclined to plan on continued,
modest growth but with a view that a decline in economic activity will take
place at some point next year.
We believe that the three principal supports for the U.S. equity market have
been earnings, interest rates and liquidity, especially the last.
Earnings in 1995 for companies included in the S&P 500 will be more than 50%
higher than two years ago, clearly an extraordinary performance. Interestingly,
this performance did not produce positive results in 1994. However the peak
rates of change have passed, and growth has begun to slow during the second
half. We think it likely that negative earnings comparisons will be common
either in the final quarter of 1995 or the beginning of 1996. We do not believe
investor expectations have yet adjusted to this probability. Some third quarter
reports have already proved a shortfall from expectations. The incidents of
disappointment will probably increase, with risk both to individual issues and
the market.
Interest rates have declined about 150 basis points during the year and been a
boost to valuations. This, of course, contrasts sharply with 1994. Both Federal
Reserve policy and a decline in inflationary expectations have been positive
influences. While we expect long-term interest rates to be flat to down modestly
from here, the most significant positive impact from this source is probably
behind us.
The liquidity portion of the equation is the most difficult to predict. The flow
of assets into equity mutual funds has been much discussed by the media. It is
enormous, dwarfs all other sources of demand for stocks and its magnitude was
generally unexpected. Eighty percent of equity-fund moneys have come in during
the five years since the market lows of 1990. Nearly 300 companies now have more
than 80% of their shares held by institutions (up from 35 in 1990). With
technology concentration high in many funds, this set of facts could potentially
be a large problem in the event fund shareholders begin to redeem fund shares.
When we combine the current status of the three supports for stocks with the
fact that the overall stock market valuation is high (based on the historical
record), our conclusion is to be cautious. Our portfolios are composed of
individual issues, however, and we are still finding stocks and convertible
bonds that are reasonably priced, partly because of the rotation that is
occurring in the overall market. Just as technology is now everyone's silk
purse, other groups are sow's ears. We prefer, and always have, to buy stocks we
think are good value, which often mean those out-of-fashion. We use our cash
reserves to add investment positions as our disciplines uncover good values.
/s/ Colin C. Ferenbach
Colin C. Ferenbach
President
STATEMENT OF NET ASSETS
October 31, 1995
Number
of Shares Value
- -------- -----
COMMON STOCKS 79.53%
Banks 7.37%
25,000 First Union Corp. $1,240,625
20,000 First Virginia Banks, Inc. 817,500
25,000 Firstar Corp. 884,375
15,000 Morgan (J.P.) & Co., Inc. 1,156,875
---------
4,099,375
---------
Capital Goods 1.92%
60,000 Detroit Diesel Corp. <F2> 1,065,000
---------
Chemicals 1.68%
15,000 DuPont (E.I.) De Nemours & Co. 935,625
---------
Consumer Non-Durables 6.19%
20,000 Colgate Palmolive Co. 1,385,000
20,000 Int'l. Flavors & Fragrances, Inc. 965,000
15,000 Kimberly-Clark Corp. 1,089,375
---------
3,439,375
---------
Drug & Hospital Supplies 13.61%
50,000 Guidant Corp. 1,600,000
50,000 Haemonetics Corp. <F2> 943,750
15,000 Johnson & Johnson 1,222,500
25,000 Schering-Plough Corp. 1,340,625
25,000 Stryker Corp. 1,128,125
25,000 United Healthcare Corp. 1,328,125
---------
7,563,125
---------
Electrical Equipment 2.25%
20,000 Grainger (W.W.), Inc. 1,250,000
---------
Electronics 1.67%
10,000 Hewlett Packard Co. 926,250
---------
Furnishings & Appliances 2.86%
60,000 Juno Lighting, Inc. 870,000
30,000 Legget & Platt, Inc. 720,000
---------
1,590,000
---------
Insurance 1.27%
20,000 Mid Ocean Limited - (BER) 707,500
---------
Lodging & Catering 2.73%
50,000 Brinker International, Inc. <F2> 606,250
30,000 Sysco Corp. 911,250
---------
1,517,500
---------
Miscellaneous Industrials 6.00%
25,000 Avery Dennison Corp. 1,118,750
20,000 Minnesota Mining & Manufacturing Co. 1,137,500
40,000 Praxair, Inc. 1,080,000
---------
3,336,250
---------
Natural Gas 0.73%
45,000 NGC Corp. 405,000
----------
Oil - Domestic 3.62%
50,000 Enron Oil & Gas Co. 1,000,000
60,000 United Meridian Corp. <F2> 1,012,500
---------
2,012,500
---------
Oil - International 5.30%
20,000 Canadian Occidental Petroleum - (CAN) 585,000
10,000 Mobil Corp. 1,007,500
11,000 Royal Dutch Petroleum Co. - (NETH) 1,351,625
---------
2,944,125
---------
Oil Well Equipment & Services 3.25%
40,000 Coflexip - Sponsored ADR 560,000
20,000 Schlumberger Ltd. - (NETH ANT) 1,245,000
---------
1,805,000
---------
Paper 2.40%
30,000 Viking Office Products, Inc. <F2> 1,335,000
---------
Publishing & Broadcasting 4.52%
40,000 American Greetings Corp., Class A 1,260,000
20,000 Eastman Kodak Co. 1,252,500
---------
2,512,500
---------
Real Estate Investment Trusts 1.81%
50,000 General Growth Properties, Inc. 1,006,250
---------
Retailing 10.35%
30,000 Circuit City Stores, Inc. 1,001,250
60,000 Heilig Meyers Co. 1,102,500
45,000 Lowe's Cos., Inc. 1,215,000
50,000 Sports Authority (The), Inc. <F2> 1,087,500
65,000 Stop & Shop Cos., Inc. <F2> 1,348,750
---------
5,755,000
---------
Total Common Stocks
(cost $34,477,927) 44,205,375
----------
Par
(000)
-----
Convertible Bonds 10.16%
5,140 <F3> AXA, 6.00% - (FR), 01/01/01 1,272,820
900 Credit Suisse Holding Finance,
4.88% - (SW), 11/19/02 1,414,688
1,000 Cross Timbers Oil Co., 5.25%, 11/01/03 856,250
500 J. Sainsbury, 8.50% - (GB), 11/19/05 979,017
4,650 <F3> Sanofi, 4.0% - (FR), 01/01/00 1,121,811
---------
<F3>Nominal par
Total Convertible Bonds
(cost $5,130,672) $ 5,644,586
-----------
Agency Obligation 5.39%
3,000 Federal National Mortgage
Association, 5.62%, 11/15/95 2,993,443
---------
(cost $2,993,443)
Commercial Paper 3.24%
1,800 Ford Motor Credit Co., 5.75%, 11/03/95 1,799,425
---------
(cost $ 1,799,425)
Total Investments 98.32%
(cost $44,401,467 <F4>) $54,642,829
----- -----------
Other Assets in Excess of Liabilities 1.68% 935,789
-----------
Net Assets applicable to 4,761,489 Shares of Common
Stock issued and outstanding 100.00% $55,578,618
===========
Net Assets Value, offering and redemption price
per share ($55,578,618/4,761,489) $11.67
======
The aggregate unrealized appreciation (depreciation) on a tax basis is as
follows:
Gross appreciation $11,247,152
Gross depreciation (1,005,790)
-----------
Net appreciation $10,241,362
===========
<F2>Non-income producing securities.
<F4>Also cost for federal income tax purposes.
See Notes to Financial Statements.
Country Abbreviations
(BER) - Bermuda (NETH) - Netherland
(CAN) - Canada (NETH ANT)- Netherland Antilles
(FR) - France (SW) - Switzerland
(GB) - Great Britain
STATEMENT OF OPERATIONS
For the Year ended October 31, 1995
Investment Income:
Dividends $ 771,448
Interest 545,152
---------
Total Investment Income 1,316,600
---------
Operating Expenses:
Investment advisory fees 297,723
Professional fees 105,730
Administration and accounting fees 99,996
Distribution fees 48,931
Amortization of organizational costs 47,904
Transfer agent fees 44,276
Blue sky fees 43,742
Custodian fees 28,840
Trustees' fees and expenses 27,595
Insurance fees 17,367
Registration fees 14,687
Miscellaneous expenses 7,606
--------
Total Operating Expenses Before Waivers 784,397
Fee Waivers (28,751)
--------
Total Operating Expenses 755,646
--------
Net Investment Income 560,954
--------
Net realized gain from:
Investments 3,309,169
Foreign currency transactions 84,574
Net increase (decrease) in unrealized
appreciation (depreciation) on:
Investments 2,628,826
Translation of assets and liabilities in foreign currency (36,020)
----------
Net realized and unrealized gain (loss) from
investments and foreign currency 5,986,549
----------
Net increase in net assets resulting from operations $6,547,503
==========
See Notes to Financial Statements.
STATEMENT OF CHANGES IN NET ASSETS
Year Period
Ended Ended
October 31, October 31,
1995 1994<F5>
---- --------
Increase in Net Assets from Operations:
Net investment income $ 560,954 $ 172,203
Net realized gain on investments and foreign
currency transactions 3,393,743 953,748
Net change in unrealized appreciation
on investments and translation of other
assets and liabilities
denominated in foreign currencies 2,592,806 1,617,006
--------- ---------
Net increase in net assets from operations 6,547,503 2,742,957
--------- ---------
Dividends Paid to Shareholders:
From net investment income (685,149) -
From net realized gains (961,624) -
----------- ---------
Total dividends paid to shareholders (1,646,773) -
----------- ---------
Share Transactions:
Proceeds from shares issued in the exchange - 41,141,033
Proceeds from shares sold 4,563,571 1,741,865
Value of shares issued in reinvestment
of dividends 1,438,749 -
Cost of shares redeemed (656,287) (294,000)
----------- ----------
Increase in net assets from
share transactions 5,346,033 42,588,898
----------- ----------
Total increase in net assets 10,246,763 45,331,855
----------- ----------
Net Assets:
Beginning of period 45,331,855 -
----------- -----------
End of period $55,578,618 $45,331,855
============ ===========
<F5>The Haven Fund commenced operations on June 23, 1994.
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
Year Period
Ended Ended
(For a Share Outstanding October 31, October 31,
Throughout the Period) 1995 1994<F6>
- ---------------------- ------- --------
Net Asset Value, Beginning of Period $ 10.65 $ 10.00
-------- --------
Increase from Investment Operations:
Net investment income 0.12 0.04
Net realized and unrealized gains on investments
and foreign currency transactions 1.28 0.61
-------- -------
Total from investment operations 1.40 0.65
Less Dividends Paid to Shareholders:
From net investment income (0.15) -
From net realized gains (0.23) -
-------- -------
Total distributions to shareholders (0.38) -
-------- -------
Net Asset Value, End of Period $ 11.67 $ 10.65
======= =======
Total return 13.65% 6.50%
Supplemental Data and Ratios:
Net assets, end of period (in 000s) $55,579 $45,332
Ratios of expenses to average net assets 1.53%<F7> 1.20%<F7><F8>
Ratios of net investment income to
average net assets 1.14%<F7> 1.10%<F7><F8>
Portfolio turnover rate 77% 27%
======= =======
<F6>The Haven Fund commenced operations on June 23, 1994.
<F7>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.
<F8>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
Board of 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. Realized gains or losses on sales of investments are
determined on the identified cost basis for financial reporting and income tax
purposes. Dividend income and distributions paid to shareholders are recorded
on the ex-dividend date. Interest income is recorded on an accrual basis.
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 all its net investment income and
net capital gains to its shareholders. Therefore, no federal income or excise
tax provision is required.
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.
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, 1995, the Fund had the following forward currency contract
outstanding:
Contract Cost on U.S. $
Amount Origination Current Unrealized
(000) Date Value Appreciation
----- ---- ----- ------------
French Francs, sale
settling 12/15/95 5,500 1,090,003 1,125,838 (35,835)
4. Fees and Related Party Transactions
a) Investment Advisory Fees: Under an agreement between the Trust and Haven
Capital Management, Inc. (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.
Fees were paid to the Trustees and/or Officers of the Fund for the year ended
October 31, 1995, but no fees were paid to any Trustee and/or Officer of the
Fund who is also an employee of the Adviser.
b) 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 distribution
services, the Fund pays Sunstone Financial Group, Inc. 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). Sunstone Financial Group,
Inc. became distributor on August 1, 1995.
c) 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). PFPC voluntarily waived
approximately 17% of its fee for the year ended October 31, 1995. The waiver
amounted to $17,201. As transfer agent of the Fund, PFPC receives a minimum
monthly fee of $3,000 (exclusive of out-of-pocket expenses). PFPC voluntarily
waived approximately 19% of its fee for the year ended October 31, 1995. The
waiver amounted to $8,400.
d) Custodian Fees: PNC Bank and Chase Manhattan Bank, N.A., serve as custodians
for the Fund's U.S. and foreign assets, respectively. As compensation for its
custodian services, the Fund pays PNC Bank a minimum fee of $1,500 (exclusive of
out-of-pocket expenses). PNC Bank has voluntarily waived approximately 11% of
its fee for the year ended October 31, 1995. The waiver amounted to $3,150.
5.Capital Stock
The Fund is authorized to issue an unlimited shares of common stock, par value
$.001 per share. Transactions in shares of the Fund for the year ended October
31, 1995 and the period ended October 31, 1994 were as follows:
1995 1994
---- ----
Sale of shares 424,112 170,906
Shares issued in the exchange - 4,114,103
Shares issued to shareholders in
reinvestment of dividends 141,966 -
Shares repurchased (60,964) (28,634)
--------- ---------
Net increase 505,114 4,256,375
Shares outstanding:
Beginning of period 4,256,375 -
--------- ---------
End of period 4,761,489 4,256,375
========= =========
6. Components of Net Assets
At October 31, 1995, net assets consisted of the following:
Capital paid-in $41,938,113
Accumulated net realized gains on investments and
foreign currency transactions 3,393,743
Undistributed net investment income 40,132
Net unrealized appreciation of investments 10,241,362
Net unrealized appreciation on foreign
forward currency contracts and foreign
currency transactions (34,732)
-----------
$55,578,618
===========
7. Purchases and Sales of Securities
During the year ended October 31, 1995, the cost of securities purchased and
proceeds from securities sold, excluding short-term obligations, were
$36,995,524 and $35,381,873, respectively.
8. The Exchange
As of the close of business on June 22, 1994, HCM Partners, L.P. exchanged
substantially all of its assets for shares of the Fund (the "Exchange"). The
Exchange was accomplished by a tax-free exchange of assets with a value of
$41,141,033, of which $5,996,818 was unrealized appreciation on investment
securities for 4,114,103 shares of the Fund at $10.00 per share.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and
Board of Directors of
The Haven Capital Management Trust:
We have audited the accompanying statement of net assets of The Haven Capital
Management Trust (comprised of The Haven Fund) as of October 31, 1995, and the
related statement of operations for the year then ended and the statement of
changes in net assets and the financial highlights for each of the periods
presented. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audit.
We conducted our audit 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. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned as of October 31, 1995,
by correspondence with the custodian. 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
Haven Capital Management Trust as of October 31, 1995, and the results of its
operations for the year then ended and the changes in its net assets and its
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
November 30, 1995
