-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Jl/DHIzOzl/tXuXo2KRa/ogwsnnL11i74szomaI2+b9kd9Scdm5LtK3S4ad7nVSX aXnDbEoPP5GrScbds36YMA== 0000950147-01-500043.txt : 20010122 0000950147-01-500043.hdr.sgml : 20010122 ACCESSION NUMBER: 0000950147-01-500043 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20001031 FILED AS OF DATE: 20010108 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ADVISORS SERIES TRUST CENTRAL INDEX KEY: 0001027596 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: DE FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-07959 FILM NUMBER: 1503185 BUSINESS ADDRESS: STREET 1: 2020 E FINANCIAL WAY SUITE 100 CITY: GLENDORA STATE: CA ZIP: 91741 BUSINESS PHONE: 8188521033 MAIL ADDRESS: STREET 1: 2020 E FINANCIAL WAY STREET 2: SUITE 100 CITY: GLENDORA STATE: CA ZIP: 91741 N-30D 1 e-6015.txt ANNUAL REPORT DATED 10/31/2000 VAN DEVENTER & HOCH ------------------- AMERICAN VALUE FUND Annual Report October 31, 2000 VAN DEVENTER & HOCH AMERICAN VALUE FUND October 31, 2000 Dear Shareholders: The American Value Fund posted a return of 0.57% for the twelve months ended October 31, 2000. By comparison, the S&P 500 Index gained 6.1% for the same period. Although the Fund's twelve-month performance fell short of our objective, the shortfall was largely experienced during the first four months of this measurement period. Since that time, we have been particularly pleased with the portfolio's progress. For the period February 29, 2000 through October 31, 2000, the Fund's performance has been very strong. During this eight-month interval, the American Value Fund has gained 23.28% while the S&P 500 Index has increased a modest 5.4%. This eight-month period is significant because it coincides with the large price correction experienced in the growth-oriented NASDAQ market since its peak in early March. During this time, investor sentiment for so-called "New Economy" stocks changed dramatically. Investors have challenged the popular notion that technology and telecommunications stocks are somehow immune to the forces of the overall economy. These investors have now begun to focus less on hopeful concepts and more on real assets, earnings, and stock valuations. This development has benefited many traditional market segments and significantly bolstered the Fund's returns. The Fund experienced positive contributions from nearly every economic sector during this interval. The most meaningful to the Fund's results was the portfolio's 21% exposure to Financial Services, which contributed significantly to the Fund's return. Likewise, the portfolio's exposure to the Energy and Capital Goods sectors aided results. Symptomatic with current market sentiment, the only sectors posting meaningful declines were Technology and Communications, which together accounted for a modest 16% of the portfolio's investments. During the year, stock prices for many of the market's most highly valued companies have significantly weakened. Although the broad market's valuations have remained surprisingly stable throughout this retrenchment, the valuations for many stocks within the market have changed considerably. Stocks with moderate but reliable earnings growth prospects have appreciated in value for most of the year, while stocks with stronger but less certain earnings growth prospects have depreciated in value. 2 VAN DEVENTER & HOCH AMERICAN VALUE FUND As stock prices continue to jump around, sometimes erratically, we will continue to look for what we consider to be the best values across a broad range of economic sectors and industries. We will focus the Fund's investments on companies with attractive valuations relative to their underlying assets and future earning power. We believe this strategy should continue to serve our shareholders' long-term objectives of both safety and growth of capital. Cordially, /s/ Russell Kartub Russell Kartub Portfolio Manager for American Value Fund The information contained in this report is authorized for use when proceeded or accompanied by a prospectus for the Fund. The Fund is distributed by First Fund Distributors, Inc., 4455 E. Camelback Rd., Suite 261E, Phoenix, AZ 85018. 3 VAN DEVENTER & HOCH AMERICAN VALUE FUND COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE VAN DEVENTER & HOCH AMERICAN VALUE FUND, THE RUSSELL MID CAP VALUE INDEX & THE S&P 500 COMPOSITE STOCK PRICE INDEX Average Annual Total Return(1) One year...................... 0.57% Since inception (5/7/99)...... (8.18%) Russell Mid Cap Van Deventer & Hoch S&P 500 Composite Value Index American Value Fund Stock Price Index ----------- ------------------- ----------------- May-7-99 10,000 10,000 10,000 Jul-99 9,689 9,680 9,984 Oct-99 9,142 8,757 10,274 Jan-00 8,664 7,976 10,542 Apr-00 9,345 8,325 11,013 Jul-00 9,365 8,072 10,880 Oct-00 10,225 8,807 10,899 Past performance is not predictive of future performance. (1) Average Annual Total Return represents the average change in account value over the periods indicated. * The Russell Mid Cap Value Index is comprised of securities in the Russell Mid Cap Index with less than average growth orientations, including lower price-to-book and price-to earnings ratios. This Index is a widely used benchmark of the mid-cap universe. * The S&P 500 Composite Stock Price Index is an unmanaged capitalization-weighted index of 500 stocks designed to represent the broad domestic economy. The stocks that comprise this index have similar long-term risk and return characteristics as the Fund. 4 VAN DEVENTER & HOCH AMERICAN VALUE FUND SCHEDULE OF INVESTMENTS AT OCTOBER 31, 2000 - -------------------------------------------------------------------------------- Shares COMMON STOCKS: 97.80% Market Value - -------------------------------------------------------------------------------- BASIC MATERIALS: 3.45% 7,000 Louisiana-Pacific Corp.............................. $ 59,500 6,000 Praxair, Inc........................................ 223,500 ----------- 283,000 ----------- CAPITAL GOODS: 14.79% 2,000 Avery Dennison Corp................................. 101,000 2,000 Boeing Co........................................... 135,625 6,500 Crown Cork & Seal Co., Inc.......................... 59,313 3,000 Emerson Electric Co................................. 220,312 3,000 Fluor Corp.......................................... 105,000 2,300 Honeywell International, Inc........................ 123,769 6,500 ITT Industries, Inc................................. 211,656 10,800 Reliance Steel & Aluminum Co........................ 256,500 ----------- 1,213,175 ----------- COMMUNICATION SERVICES: 5.04% 350 Avaya, Inc.*........................................ 4,703 7,000 MCI WorldCom Inc.*.................................. 166,250 1,500 SBC Communications, Inc............................. 86,531 734 VelocityHSI, Inc.................................... 780 2,684 Verizon Communications.............................. 155,169 ----------- 413,433 ----------- CONSUMER CYCLICAL: 12.79% 4,000 Delphi Automotive Systems Corp...................... 62,750 7,500 Masco Corp.......................................... 140,156 18,000 Mattel, Inc......................................... 232,875 3,000 May Department Stores, Co........................... 78,750 9,000 Sherwin-Williams Co................................. 195,187 4,000 Tribune Co.......................................... 148,250 7,000 V F Corp............................................ 191,188 ----------- 1,049,156 ----------- CONSUMER STAPLES: 8.80% 7,000 Albertson's, Inc.................................... 165,812 12,000 Bowne & Co., Inc.................................... 100,500 1,300 Cardinal Health, Inc................................ 123,175 3,000 Clorox Co........................................... 133,875 3,000 Kimberly-Clark Corp................................. 198,000 ----------- 721,362 ----------- 5 VAN DEVENTER & HOCH AMERICAN VALUE FUND SCHEDULE OF INVESTMENTS AT OCTOBER 31, 2000, CONTINUED - -------------------------------------------------------------------------------- Shares Market Value - -------------------------------------------------------------------------------- ENERGY: 9.21% 3,000 EOG Resources, Inc.................................. $ 118,125 3,000 Halliburton Co...................................... 111,188 9,500 Occidental Petroleum Corp........................... 188,813 2,600 Phillips Petroleum Co............................... 160,550 5,000 Texas Pacific Land Trust............................ 176,875 ----------- 755,551 ----------- FINANCIAL SERVICES: 21.28% 2,500 A.G. Edwards, Inc................................... 126,875 6,000 Allstate Corp....................................... 241,500 3,000 Fannie Mae.......................................... 231,000 3,600 MBIA, Inc........................................... 261,675 3,000 Metris Companies, Inc............................... 97,125 2,500 T. Rowe Price Associates............................ 117,031 6,000 UnumProvident Corp.................................. 169,500 2,000 Wachovia Corp.*..................................... 108,000 4,720 Washington Mutual, Inc.............................. 207,680 4,000 Wells Fargo Co...................................... 185,250 ----------- 1,745,636 ----------- HEALTH CARE: 7.03% 4,000 Bristol Myers Squibb Co............................. 243,750 1,400 Merck & Co., Inc.................................... 125,913 4,000 Schering-Plough Corp................................ 206,750 ----------- 576,413 ----------- TECHNOLOGY: 11.01% 1,000 Applied Materials, Inc.*............................ 53,125 5,500 Compaq Computer Corp................................ 167,255 4,000 Electronic Data Systems Corp........................ 187,750 1,500 International Business Machines Corp................ 147,750 4,200 Lucent Technologies Inc............................. 97,912 1,500 Microsoft Corp.*.................................... 103,313 3,500 Motorola, Inc....................................... 87,281 7,000 Xerox Corp.......................................... 59,063 ----------- 903,449 ----------- TRANSPORTATION & SERVICES: 0.86% 1,500 Union Pacific Corp.................................. 70,313 ----------- 6 VAN DEVENTER & HOCH AMERICAN VALUE FUND SCHEDULE OF INVESTMENTS AT OCTOBER 31, 2000, CONTINUED - -------------------------------------------------------------------------------- Shares Market Value - -------------------------------------------------------------------------------- UTILITIES: 3.54% 4,000 American Water Works Co., Inc....................... $ 97,500 1,500 El Paso Energy Corp................................. 94,031 1,500 FPL Group, Inc...................................... 99,000 ----------- 290,531 ----------- TOTAL COMMON STOCKS (Cost $7,441,195+)................................ 8,022,019 ----------- Principal Amount SHORT-TERM INVESTMENTS: 2.21% - -------------------------------------------------------------------------------- MONEY MARKET INSTRUMENTS: 0.01% $ 973 UMB Money Market Fiduciary (Cost $973)....................................... 973 ----------- U.S. TREASURY OBLIGATIONS: 2.20% $181,000 U.S. Treasury Bill, due 12/07/2000 (Cost $179,923)................................... 179,923 ----------- TOTAL SHORT-TERM INVESTMENTS (Cost $180,896)................................... 180,896 ----------- TOTAL INVESTMENTS IN SECURITIES (Cost $7,622,091): 100.01%........................ 8,202,915 Liabilities in Excess of Other Assets: (0.01%)...... (321) ----------- NET ASSETS: 100.00%............................. $ 8,202,594 =========== * Non-income producing security. + At October 31, 2000, the cost of securities for Federal tax purposes was the same as for financial reporting purposes. Gross unrealized appreciation and depreciation of securities is as follows: Gross unrealized appreciation....................... $ 1,769,570 Gross unrealized depreciation....................... (1,188,746) ----------- Net unrealized appreciation.................. $ 580,824 =========== See accompanying Notes to Financial Statements. 7 VAN DEVENTER & HOCH AMERICAN VALUE FUND STATEMENT OF ASSETS AND LIABILITIES AT OCTOBER 31, 2000 - -------------------------------------------------------------------------------- ASSETS Investments in securities, at value (identified cost $7,622,091)............................... $ 8,202,915 Cash.......................................................... 775 Receivables: Dividends and interest..................................... 11,555 Other Assets.................................................. 1,857 ----------- Total assets............................................ 8,217,102 ----------- LIABILITIES Accrued expenses.............................................. 14,508 ----------- NET ASSETS...................................................... $ 8,202,594 =========== NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE ($8,202,594 / 691,348 shares outstanding; unlimited number of shares [par value $0.01] authorized)............. $ 11.86 =========== COMPONENTS OF NET ASSETS Paid-in capital............................................... $ 7,544,853 Undistributed net investment income........................... 74,403 Accumulated net realized gain on investments.................. 2,514 Net unrealized appreciation on investments.................... 580,824 ----------- Net assets.............................................. $ 8,202,594 =========== See accompanying Notes to Financial Statements. 8 VAN DEVENTER & HOCH AMERICAN VALUE FUND STATEMENT OF OPERATIONS FOR THE YEAR ENDED OCTOBER 31, 2000 - -------------------------------------------------------------------------------- INVESTMENT INCOME Income Dividends................................................. $ 195,576 Interest.................................................. 31,080 ----------- Total income........................................... 226,656 ----------- Expenses (Note 3) Management fees........................................... 61,454 Administration fees....................................... 39,581 Distribution fees......................................... 21,948 ----------- Total expenses......................................... 122,983 ----------- Net investment income.............................. 103,673 ----------- REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS Net realized gain on investments.............................. 8,595 Net change in unrealized appreciation on investments.......... (223,492) ----------- Net realized and unrealized loss on investments............ (214,897) ----------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ......................................... $ (111,224) =========== See accompanying Notes to Financial Statements. 9 VAN DEVENTER & HOCH AMERICAN VALUE FUND STATEMENTS OF CHANGES IN NET ASSETS - -------------------------------------------------------------------------------- Year ended May 7, 1999* to October 31, 2000 October 31, 1999 ---------------- ---------------- INCREASE / (DECREASE) IN NET ASSETS FROM OPERATIONS: Net investment income...................... $ 103,673 $ 71,511 Net realized gain / (loss) on investments............................... 8,595 (6,081) Net change in unrealized depreciation on investments............................ (223,492) (1,584,652) ----------- ----------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ............ (111,224) (1,519,222) ----------- ----------- DISTRIBUTIONS TO SHAREHOLDERS From net investment income................. (100,781) -- ----------- ----------- TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST Net increase / (decrease) in net assets derived from net change in outstanding shares (a).................... (2,202,947) 12,136,768 ----------- ----------- TOTAL INCREASE / (DECREASE) ----------- ----------- IN NET ASSETS ........................ (2,414,952) 10,617,546 ----------- ----------- NET ASSETS Beginning of period........................ 10,617,546 -- ----------- ----------- END OF PERIOD.............................. $ 8,202,594 $10,617,546 =========== =========== (a) A summary of share transactions is as follows: Year ended May 7, 1999* to October 31, 2000 October 31, 1999 ------------------------- ------------------------- Shares Value Shares Value ----------- ----------- ----------- ----------- Initial capitalization... -- $ -- 903,489 $12,291,651 Shares sold ............. 34,366 372,185 67,932 924,279 Shares issued for reinvestment of distributions......... 8,853 100,655 -- -- Shares redeemed.......... (243,564) (2,675,787) (79,728) (1,079,162) ----------- ----------- ----------- ----------- Net increase (decrease).. (200,345) $(2,202,947) 891,693 $12,136,768 =========== =========== =========== =========== * Commencement of operations. See accompanying Notes to Financial Statements. 10 VAN DEVENTER & HOCH AMERICAN VALUE FUND FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD - -------------------------------------------------------------------------------- Year May 7, 1999* ended through October 31, 2000 October 31, 1999 ---------------- ---------------- Net asset value, beginning of period ......... $ 11.91 $ 13.60 ----------- ----------- INCOME FROM INVESTMENT OPERATIONS: Net investment income ................... 0.14 0.08 Net realized and unrealized loss on investments ............................ (0.08) (1.77) ----------- ----------- Total from investment operations .... 0.06 (1.69) ----------- ----------- Less distributions: From net investment income .............. (0.11) -- ----------- ----------- Net asset value, end of period ............... $ 11.86 $ 11.91 =========== =========== Total return ................................. 0.57% (12.43%)++ Ratios/supplemental data: Net assets, end of period (millions) ......... $ 8.2 $ 10.6 Ratio of expenses to average net assets: ..... 1.40% 1.29%+ Ratio of net investment income to average net assets: ..................... 1.18% 1.23%+ Portfolio turnover rate ...................... 26.22% 25.16% * Commencement of operations of Allegiance American Value Fund, predecessor and accounting survivor. ++ Not annualized. + Annualized. See accompanying Notes to Financial Statements. 11 VAN DEVENTER & HOCH AMERICAN VALUE FUND NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- NOTE 1 - ORGANIZATION The Van Deventer & Hoch American Value Fund (the "Fund") (formerly Allegiance American Value Fund) is a series of shares of beneficial interest of Advisors Series Trust (the "Trust"), which is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. The Fund's investment objective is long-term growth of capital and above average current income with investments primarily in equity securities of U.S. companies (i.e. companies with at least a five-year operating history) which, in the opinion of the Fund's advisor, are undervalued by the market. The Fund began operations on May 7, 1999. On August 10, 2000, the shareholders of Allegiance American Value Fund, a series of Allegiance Investment Trust, approved an Agreement and Plan of Reorganization ("Reorganization Plan") for a tax-free reorganization whereby substantially all of the assets of the Allegiance American Value Fund were exchanged for shares of the Van Deventer & Hoch American Value Fund, a series of Advisors Series Trust. The Allegiance American Value Fund was the accounting survivor and therefore the operations and performance since the commencement of its operations on May 7, 1999 were carried over to the Fund. NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies consistently followed by the Fund. These policies are in conformity with generally accepted accounting principles. A. SECURITY VALUATION: The Fund's investments are carried at fair value. Securities that are primarily traded on a national securities exchange shall be valued at the last sale price on the exchange on which they are primarily traded on the day of valuation or, if there has been no sale on such day, at the mean between the bid and asked prices. Securities primarily traded in the NASDAQ National Market System for which market quotations are readily available shall be valued at the last sale price on the day of valuation, or if there has been no sale on such day, at the mean between the bid and asked prices. Over-the-counter ("OTC") securities which are not traded in the NASDAQ National Market System shall be valued at the most recent trade price. Securities for which market quotations are not readily available, if any, are valued following procedures approved by the Board of Trustees. Short-term investments are valued at amortized cost, which approximates market value. B. FEDERAL INCOME TAXES: It is the Fund's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Therefore, no federal income tax provision is required. 12 VAN DEVENTER & HOCH AMERICAN VALUE FUND NOTES TO FINANCIAL STATEMENTS, CONTINUED - -------------------------------------------------------------------------------- C. SECURITY TRANSACTIONS, DIVIDENDS AND DISTRIBUTIONS: Security transactions are accounted for on the trade date. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Realized gains and losses on securities sold are determined on the basis of identified cost. D. USE OF ESTIMATES: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets during the reporting period. Actual results could differ from those estimates. NOTE 3 - COMMITMENTS AND OTHER TRANSACTIONS WITH AFFILIATES A. MANAGEMENT FEE. Van Deventer & Hoch (the "Advisor") acts as the Investment Advisor to the Fund. The advisor provides the Fund with investment management services under an Investment Advisory Agreement. The Advisor furnishes all investment advice, office space, facilities, and provides most of the personnel needed by the Fund. As compensation for its services, the Advisor is entitled to a monthly fee at the annual rate of 0.70% based upon the average daily net assets of the Fund. For the year ended October 31, 2000, the Fund incurred $61,454 in Advisory Fees. B. ADMINISTRATIVE SERVICE FEE. Pursuant to an Administrative Services Agreement, Van Deventer & Hoch provides certain administration services to the Fund. In consideration of the services provided by Van Deventer & Hoch, they receive a fee computed daily and paid monthly at an annual rate of 0.70% (0.35% prior to August 10, 2000) of the average daily net assets of the Fund. This fee arrangement requires them to absorb and pay out of their own resources all operating expenses that exceed an annual rate of 1.65% (1.30% prior to August 10, 2000) of the average daily net assets. C. DISTRIBUTION FEES. The Fund has adopted a Distribution Plan pursuant to Rule 12b-1 (the "Plan"). The Plan permits the Fund to pay for distribution and related expenses at an annual rate of up to 0.25% of the Fund's average daily net assets annually. The expenses covered by the Plan may include the cost of preparing and distributing 13 VAN DEVENTER & HOCH AMERICAN VALUE FUND NOTES TO FINANCIAL STATEMENTS, CONTINUED - -------------------------------------------------------------------------------- prospectuses and other sales material, advertising and public relations expenses, payments to financial intermediaries and compensation of personnel involved in selling shares of the Fund. Payments made pursuant to the Plan will represent compensation for distribution and service activities, not reimbursements for specific expenses incurred. Pursuant to a distribution coordination agreement adopted under the Plan, distribution fees are paid to the Advisor as "Distribution Coordinator". For the year ended October 31, 2000, the Fund paid the Distribution Coordinator in the amount of $21,948. D. Investment Company Administration, L.L.C. (the "Sub-Administrator") acts as the Fund's Sub-Administrator under an Sub-Administration Agreement. The Sub-Administrator prepares various federal and state regulatory filings, reports and returns for the Fund; prepares reports and materials to be supplied to the trustees; monitors the activities of the Fund's custodian, transfer agent and accountants; coordinates the preparation and payment of the Fund's expenses and reviews the Fund's expense accruals. For its services, the Sub-Administrator receives a monthly fee at the following annual rate: Fund asset level Fee rate ---------------- -------- Less than $15 million $30,000 $15 million to less than $50 million 0.20% of average daily net assets $50 million to less than $100 million 0.15% of average daily net assets $100 million to less than $150 million 0.10% of average daily net assets More than $150 million 0.05% of average daily net assets E. First Fund Distributors, Inc. (the "Distributor") acts as the Fund's principal underwriter in a continuous public offering of the Fund's shares. The Distributor is an affiliate of the Administrator. F. Certain officers of the Fund are also officers and/or directors of the Administrator and the Distributor. NOTE 4 - SECURITIES TRANSACTIONS For the year ended October 31, 2000, the cost of purchases and the proceeds from sales of securities, excluding short-term securities, were $2,167,268 and $3,377,751, respectively. 14 REPORT OF INDEPENDENT ACCOUNTANTS - -------------------------------------------------------------------------------- To the Board of Trustees and Shareholders of Van Deventer & Hoch American Value Fund In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Van Deventer & Hoch American Value Fund (the "Fund") (formerly Allegiance American Value Fund) at October 31, 2000, the results of its operations for the year then ended, the changes in its net assets and the financial highlights for the year then ended and for the period May 7, 1999 (commencement of operations) through October 31, 1999, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2000 by correspondence with the custodian, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP New York, New York December 5, 2000 15 ADVISOR Van Deventer & Hoch 655 North Central Avenue, Suite 1550 Glendale, California 91203 DISTRIBUTOR First Fund Distributors, Inc. 4455 East Camelback Road, Suite 261E Phoenix, Arizona 85018 CUSTODIAN United Missouri Bank, N.A. 928 Grand Boulevard Kansas City, Missouri 64106 TRANSFER AGENT ICA Fund Services Corp. 4455 East Camelback Road, Suite 261E Phoenix, Arizona 85018 800-576-8229 INDEPENDENT ACCOUNTANTS PricewaterhouseCoopers LLP 1177 Avenue of the Americas New York, New York 10036 LEGAL COUNSEL Paul, Hastings, Janofsky & Walker LLP 345 California Street, 29th Floor San Francisco, California 94104 -----END PRIVACY-ENHANCED MESSAGE-----