-----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, JuGq4zLOuP8DJr/WkLOJcCjb5ZellYVHerIER0WgnKW2CSm7oFNUrYORn2jt6ovs j6+sX6E3RRJ3E67qEqmhfQ== 0000950147-98-000989.txt : 19981201 0000950147-98-000989.hdr.sgml : 19981201 ACCESSION NUMBER: 0000950147-98-000989 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981130 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: 98761026 BUSINESS ADDRESS: STREET 1: 2025 E FINANCIAL WAY SUITE 101 CITY: GLENDORA STATE: CA ZIP: 91741 BUSINESS PHONE: 8188521033 MAIL ADDRESS: STREET 1: 2025 E FINANCIAL WAY STREET 2: SUITE 101 CITY: GLENDORA STATE: CA ZIP: 91741 N-30D 1 ANNUAL REPORT OF THE ROCKHAVEN FUND ROCKHAVEN ASSET MANAGEMENT THE RISK MANAGERS THE ROCKHAVEN FUND THE ROCKHAVEN PREMIER DIVIDEND FUND Annual Report For the period ended September 30, 1998 Dear Investor: This is our first annual report since the Fund's inception in November 1997, so we would like to start with a simple thank you. We realize that you have literally thousands of mutual funds from which to choose to invest your hard-earned savings. We appreciate the confidence you have shown in us by becoming fellow shareholders (all of the Rockhaven employees have a significant portion of their net worth invested in the Funds), and we will continue to work hard to justify your confidence. Again, thanks. As James Flanagan said, "This is a hard way to make an easy living". 1998 has caused a lot of investment managers to ponder their choice of careers. From the unprecedented out-performance of growth versus value in the first half, to the rapid decline in valuations in the third quarter, to the whiplash recovery in October, this has been a year for the record books. Speaking for myself, this has been one of the toughest years of my 15-year career, but also one of the most rewarding. We spent a lot of time reviewing and analyzing our performance and philosophy . . . we even brought out some old text books in an effort to tear apart every step of our process and question its validity, especially in a low-inflation/deflation environment. This intensive self-appraisal has lead us to refocus on the basic investment tenets that have served us so well in the past: controlling risk and listening to the market. Controlling risk - It is commonly known that active investment management must justify its fees by generating risk-adjusted returns in excess of the benchmark. But because markets are relatively efficient, consistent outperformance is difficult to achieve. This is also known as the "loser's game". A "loser's game" is one where the ultimate winner is the one who makes the fewest mistakes. We have always maintained that risk versus our benchmarks can be reduced by: * eliminating market timing...by staying fully invested. * eliminating sector betting...by matching our sector weights to those of our benchmark. * maximizing our efforts on security selection. What our analysis revealed was that while security selection is critical, especially in a 50-stock portfolio, the weight of each individual security in the portfolio is even more important. The names that hurt us the most this year have been deep value names where we had an overweight. Listening to the market - As Ned Davis states: "The degree of unprofitable anxiety in an investor's life corresponds directly to the amount of time spent dwelling on how an investment should be acting rather that on the way it actually is acting". It is pure hubris that the vast majority of Wall Street analysts are trying to decide what the market or a stock should be doing, instead of what they are doing. "Markets aren't wrong...opinions are". The best investors are those that are listening to market reality, identifying what is working, rather than steadfastly forcing their biases on the market. Our goal then is to objectively determine what the market is rewarding now and will reward in the near future, and weighting our portfolios towards these factors. This two-step process of controlling risk and listening to the market has led us to develop a proprietary risk model that not only helps improve our security selection process, but more importantly, helps us determine the appropriate weight for each security in the portfolio. The risk model is really quite simple, but since we live in such a competitive world, I can only give you an overview. The investment team meets regularly to assign the appropriate risk rating based on quantitative factors (i.e., financial strength, earnings consistency, earnings estimate agreement, and earnings surprise), as well as qualitative factors (i.e., management quality, accounting integrity, industry position, and catalysts for change). Each security is then ranked as either low, medium, or high risk, and weightings in the portfolio correspond directly to the risk rating. The adoption of this risk model led to higher than normal turnover in the quarter as we moved to lower security-specific risk in the portfolio. The beauty of this process is that I can honestly say that I have never felt better about my level of awareness/understanding of the risks in our portfolio. In order to manage risk you must have a thorough understanding of the bets you are taking.. this model provides us with these tools. Performance The Rockhaven Fund did well in the early part of the year, struggled some during the summer, and then improved again in the last three months. For the year ending November 3, 1998, the Fund returned 6.70%. This compares favorably to the S&P Barra Value Index, which was up 10.01% for the same period, but pales in comparison to the 20.14% return for the S&P 500 Index. Since the Fund's inception on November 3, 1997 through the quarter ending September 30, 1998 the Fund returned -1.61% versus 1.10% for the S&P Barra Value Index and 9.88% for the S&P 500 Index. The S&P 500's performance in 1998 has been dominated by a handful of mega large-cap growth stocks. In fact, a miraculous 20 stocks accounted for 95% of the index's performance, five stocks accounted for half of the S&P's return, and two stocks (Microsoft and Dell) accounted for 25%. A market with such extremely narrow leadership is also a very high-risk market. Did we achieve our goal of providing market participation with less risk and more income? Yes and no. We performed in line with the broader market and our value and equity income peers, but significantly underperformed the S&P 500. We did outperform on the downside. During the market's big sell-off from its peak on July 17 through August 31, our Fund lost 16.70% versus a decline of 19.19% for the S&P 500, and decline of 21.05% for the S&P Value Index. The Rockhaven Premier Dividend Fund performed very well versus its convertible peers. For the year ended November 3, 1998, the Fund was up 6.22% versus a decline of 0.78% for the Merrill Lynch All-Convertible Index. Since the Fund's inception on November 3, 1997 the quarter ending September 30, 1998 the Fund returned -0.10% versus -3.28% for the Merrill Lynch All-Convertible Index. Our emphasis on higher quality, more equity-sensitive convertibles contributed greatly to the Fund's outperformance. During the S&P 500's decline of 19.19% from July 17 through August 31, the Premier Dividend Fund declined only 14.79%. In summary, if I were grading our performance for 1998, I would give the Rockhaven Fund a B- and the Premier Dividend Fund an A-. Both Funds have shown improvement as the year progressed. It has been a volatile (though rewarding) year, and we look forward to an exciting, hopefully equally rewarding 1999. Thanks for your support, Chris Wiles, President, Rockhaven Asset Management THE ROCKHAVEN FUND COMPARISON OF THE CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE ROCKHAVEN FUND VERSUS THE S&P 500 COMPOSITE INDEX AND THE S&P 500 BARRA VALUE INDEX Fund total return from commencement of operations on November 3, 1997 to September 30, 1998: -1.61%. FUND S&P 500 S&P 500 BARRA VALUE INDEX ---- ------- ------------------------- 11/3/1997 10,000 10,000 10,000 11/30/1997 10,060 10,175 10,108 12/31/1997 10,300 10,335 10,317 1/31/1998 10,400 10,440 10,179 2/28/1998 11,082 11,175 10,917 3/31/1998 11,466 11,666 11,430 4/30/1998 11,426 11,840 11,578 5/29/1998 11,175 11,617 11,386 6/30/1998 11,186 12,075 11,459 7/31/1998 10,813 11,935 11,196 8/31/1998 9,460 10,195 9,377 9/30/1998 9,839 10,831 9,928 * The S&P 500 Composite Stock Price Index is an unmanged capitalization-weighted index of 500 stocks designed to represent the broad domestic economy. * The S&P Barra Value Index is an unmanaged capitalization weighted index that contains approximately 50% of the stocks in the S&P 500 with lower price-to-book ratios. 5 THE ROCKHAVEN PREMIER DIVIDEND FUND COMPARISON OF THE CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE ROCKHAVEN PREMIER DIVIDEND FUND VERSUS THE MERRILL LYNCH ALL-CONVERTIBLE INDEX Fund total return from commencement of operations on November 3, 1997 to September 30, 1998: -0.10%. MERRILL LYNCH FUND ALL-CONVERTIBLE INDEX ---- --------------------- 11/3/1997 10,000 10,000 11/30/1997 9,940 10,004 12/31/1997 10,106 10,102 1/31/1998 10,197 10,128 2/28/1998 10,879 10,582 3/31/1998 11,158 10,971 4/30/1998 11,532 11,040 5/29/1998 11,350 10,796 6/30/1998 11,228 10,887 7/31/1998 10,954 10,714 8/31/1998 9,706 9,483 9/30/1998 9,990 9,672 * The Valuation calculation for the Merrill Lynch All-Convertible Index is for the period November 1, 1997 through September 30, 1998. * The Merrill Lynch All-Convertible Index includes U.S. dollar-denominated convertibles of $50 million or more in size, and incorporates both traditional and mandatory conversion structure. 6 THE ROCKHAVEN FUND SCHEDULE OF INVESTMENTS AT SEPTEMBER 30, 1998 - -------------------------------------------------------------------------------- COMMON STOCKS & Shares CONVERTIBLE SECURITIES: 101.5% Market Value - -------------------------------------------------------------------------------- AEROSPACE: 1.2% 250 Lockheed Martin Corp............................... $ 25,203 -------- BASIC MATERIALS: 3.8% 1,000 E.I Du Pont de Nemours............................. 56,125 1,000 Royal Group Technologies, CONVPRD 6.875%..................................... 18,750 -------- 74,875 -------- CAPITAL GOODS/DIVERSIFIED: 6.8% 500 General Electric Co................................ 39,781 700 Emerson Electric Co................................ 43,575 1,500 Ingersoll-Rand Co., CONV PFD....................... 31,500 300 Minnesota Mining & Manufacturing Co................ 22,106 -------- 136,962 -------- CONSUMER CYCLICAL: 3.7% 850 Ford Motor Co...................................... 39,897 600 Newell Co., CONV PFD 5.25%......................... 33,675 -------- 73,572 -------- ENERGY: 8.4% 750 Amoco Corp......................................... 40,406 750 Exxon Corp......................................... 52,641 1,300 Shell Transport & Trading, ADR..................... 47,369 625 Tosco Corp., CONV PFD 5.75%........................ 27,031 -------- 167,447 -------- FINANCE: 16.2% 930 Banc One Corp...................................... 39,641 700 BankAmerica / Jefferson Pilot, CONV PFD 7.25%..................................... 66,500 700 J.P. Morgan & Co., Inc............................. 59,238 2,000 Lincoln National Corp, CONVPFD 7.75%............... 49,250 1,800 National Australia Bank Ltd., CONVPRD 7.875%..................................... 47,925 See accompanying Notes to Financial Statements. 7 THE ROCKHAVEN FUND SCHEDULE OF INVESTMENTS AT SEPTEMBER 30, 1998, CONTINUED - -------------------------------------------------------------------------------- Shares Market Value - -------------------------------------------------------------------------------- FINANCE, CONTINUED 1,400 Pacific Century Financial Corp..................... $ 23,362 700 Wilmington Trust Corp.............................. 36,050 -------- 321,966 -------- HEALTH CARE: 12.8% 700 American Home Products............................. 36,663 700 Baxter International Inc........................... 41,650 950 Bausch & Lomb, Inc................................. 37,406 500 Bristol-Myers Squibb Co............................ 51,938 675 Johnson & Johnson.................................. 52,819 500 Perkin-Elmer Corp.................................. 34,344 -------- 254,820 -------- RETAILING: 6.0% 75,000 Costco Companies, Inc., CONVBOND 0%*....................................... 46,313 35,000 Rite Aid, CONVBOND 5.25%........................... 41,519 700 Sears, Roebuck & Co................................ 30,931 -------- 118,763 -------- SERVICES: 5.6% 750 McDonald's Corp.................................... 44,766 1,150 Readers Digest, CONVPRD 8.25%...................... 23,934 1,800 Sysco Corp......................................... 42,413 -------- 111,113 -------- STAPLES: 9.8% 1,400 Conagra, Inc....................................... 37,712 1,100 Dole Food Co., Inc. CONVPRD 7.00%.................. 39,600 750 H.J. Heinz Company................................. 38,344 1,400 McCormick & Co., Inc............................... 40,906 850 Philip Morris Companies, Inc....................... 39,153 -------- 195,715 -------- TECHNOLOGY: 16.6% 1,150 Computer Associates International.................. 42,550 1,400 Diebold, Inc....................................... 30,800 950 Electronic Data Systems Corp....................... 31,528 See accompanying Notes to Financial Statements. 8 THE ROCKHAVEN FUND - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS AT SEPTEMBER 30, 1998, CONTINUED Shares Market Value - -------------------------------------------------------------------------------- TECHNOLOGY, CONTINUED 25,000 EMC Corp., CONV BOND 3.25%......................... $ 64,000 750 Hewlett-Packard Co................................. 39,703 600 Motorola, Inc...................................... 25,612 1,150 Pitney Bowes, Inc.................................. 62,747 400 Xerox Corp......................................... 33,900 ---------- 330,840 ---------- TRANSPORTATION: 1.1% 500 Union Pacific Corp................................. 21,312 ---------- UTILITY: 9.5% 1,600 BCE, Inc........................................... 44,700 975 Hawaiian Electric Industries....................... 40,219 1,200 Texas Utilities, CONV PFD.......................... 67,500 700 U.S. West Inc...................................... 36,706 ---------- 189,125 ---------- Total Investments in Securities (cost $2,130,675):101.5%......................... 2,021,713 Liabilities less Other Assets: (1.5%).............. (30,406) ---------- TOTAL NET ASSETS: 100.0%........................... $1,991,307 ========== * Non-income producing security. + At September 30, 1998, the cost of securities for Federal income tax purposes is $2,141,681. Gross unrealized appreciation and depreciation of securities were as follows: Gross unrealized appreciation...................... $ 76,485 Gross unrealized depreciation...................... (196,453) ---------- Net unrealized depreciation.................... $ (119,968) ========== See accompanying Notes to Financial Statements. 9 THE ROCKHAVEN FUND STATEMENT OF ASSETS AND LIABILITIES AT SEPTEMBER 30, 1998 - -------------------------------------------------------------------------------- ASSETS Investments in securities, at value (identified cost $2,130,675)............................ $2,021,713 Receivables: Due from Advisor........................................ 6,845 Dividends and interest.................................. 5,781 Prepaid expenses........................................... 18,098 ---------- Total assets......................................... 2,052,437 ---------- LIABILITIES Cash advanced by custodian................................. 34,841 Payables: Due to administrator.................................... 2,466 Dividends............................................... 2,082 Fund shares repurchased................................. 327 Accrued expenses........................................... 21,414 ---------- Total liabilities.................................... 61,130 ---------- NET ASSETS $1,991,307 ========== NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE [$1,991,307/205,131 shares outstanding; unlimited number of shares (par value $.01) authorized]............... $ 9.71 ========== COMPONENTS OF NET ASSETS Paid-in capital............................................ $2,216,108 Undistributed net investment income........................ 996 Accumulated net realized loss on investments............... (116,835) Net unrealized depreciation on investments................. (108,962) ---------- Net assets.............................................. $1,991,307 ========== See accompanying Notes to Financial Statements. 10 THE ROCKHAVEN FUND STATEMENT OF OPERATIONS FOR THE PERIOD FROM NOVEMBER 3, 1997* THROUGH SEPTEMBER 30, 1998 - -------------------------------------------------------------------------------- INVESTMENT INCOME Income Dividends............................................... $ 36,630 Interest................................................ 4,731 --------- Total income......................................... 41,361 --------- Expenses Administration fees (Note 3)............................ 27,123 Professional fees....................................... 14,458 Transfer agent fees..................................... 13,518 Fund accounting fee..................................... 12,015 Advisory fees (Note 3).................................. 9,321 Custodian............................................... 6,511 Registration fees....................................... 6,432 Trustees' fees.......................................... 5,022 Other .................................................. 4,716 Reports to shareholders................................. 4,066 Distribution expense (Note 3)........................... 3,107 --------- Total expenses....................................... 106,289 Less: Advisor fee waiver and absorption.............. (87,643) --------- Net expenses......................................... 18,646 --------- NET INVESTMENT INCOME............................. 22,715 --------- REALIZED AND UNREALIZED LOSS ON INVESTMENTS Net realized loss from security transactions............... $(116,835) Net change in unrealized depreciation on investments....... (108,962) --------- Net realized and unrealized loss on investments......... (225,797) --------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS...................................... $(203,082) ========= * Commencement of operations. See accompanying Notes to Financial Statements. 11 THE ROCKHAVEN FUND STATEMENT OF CHANGES IN NET ASSETS - -------------------------------------------------------------------------------- November 3, 1997* through September 30, 1998 - -------------------------------------------------------------------------------- NET INCREASE IN ASSETS FROM OPERATIONS Net investment income......................................... $ 22,715 Net realized loss from security transactions.................. (116,835) Net change in unrealized depreciation of securities........... (108,962) ---------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS............................................ (203,082) ---------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Net investment income......................................... (21,719) ---------- CAPITAL SHARE TRANSACTIONS Net increase in net assets derived from net change in outstanding shares (a).................................... 2,216,108 ---------- TOTAL INCREASE IN NET ASSETS............................... 1,991,307 NET ASSETS Beginning of period........................................... -0- END OF PERIOD................................................. $1,991,307 ========== (a) A summary of capital share transactions is as follows: November 3, 1997* through September 30, 1998 ------------------------ Shares Paid In Capital ------------------------ Shares sold.................................. 205,027 $2,215,772 Shares issued in reinvestment of distributions........................... 1,483 15,706 Shares redeemed.............................. (1,379) (15,370) ------- ---------- Net increase................................. 205,131 $2,216,108 ======= ========== * Commencement of operations. See accompanying Notes to Financial Statements. 12 THE ROCKHAVEN FUND FINANCIAL HIGHLIGHTS FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT THE PERIOD - -------------------------------------------------------------------------------- November 3, 1997* through September 30, 1998 - -------------------------------------------------------------------------------- Net asset value, beginning of period.......................... $10.00 Income from investment operations: Net investment income...................................... 0.14 Net realized and unrealized loss on investments........................................... (0.29) ------ Total from investment operations.............................. (0.15) ------ Less distributions: From net investment income................................. (0.14) ------ Net asset value, end of period................................ $9.71 ------ TOTAL RETURN.................................................. (1.61%)+ RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000)............................... $1,991 Ratio of expenses to average net assets: Before expense reimbursement............................... 8.51%++ After expense reimbursement................................ 1.49%++ Ratio of net investment income to average net assets: After expense reimbursement................................ (1.82%)++ Portfolio turnover rate....................................... 98.13% * Commencement of operations. + Not annualized. ++ Annualized. See accompanying Notes to Financial Statements. 13 THE ROCKHAVEN PREMIER DIVIDEND FUND SCHEDULE OF INVESTMENTS AT SEPTEMBER 30, 1998 - -------------------------------------------------------------------------------- COMMON STOCKS & Shares CONVERTIBLE SECURITIES: 97.1% Market Value - -------------------------------------------------------------------------------- AEROSPACE: 2.4% 400 Lockheed Martin Corp.............................. $ 40,325 -------- BASIC MATERIALS: 5.4% 700 E.I. DuPont de Nemours............................ 39,287 1,400 Sealed Air, CONVPFD $2.00......................... 50,575 -------- 89,862 -------- CAPITAL GOODS / DIVERSIFIED: 4.1% 2,200 Ingersoll-Rand Company, CONVPFD 6.75%..................................... 46,200 300 Minnesota Mining & Manufacturing Co............... 22,106 -------- 68,306 -------- CONSUMER CYCLICAL: 13.2% 90,000 Costco Companies, Inc., CONVBOND 0%*...................................... 55,575 1,400 Dollar General, CONVPFD 8.5%...................... 50,400 950 Ford Motor Co..................................... 44,591 40,000 Hilton Hotels, CONVBOND 5%........................ 34,900 800 Sears, Roebuck & Co............................... 35,350 -------- 220,816 -------- ENERGY: 6.0% 950 Shell Transport & Trading, ADR.................... 34,616 750 Tosco Corp., CONVPRD 5.75%........................ 32,438 650 Unocal Corporation, CONVPRD 6.25%................. 34,288 -------- 101,342 -------- FINANCE - INVESTMENT BANKING: 12.7% 550 BankAmerica / Jefferson Pilot., CONVPFD 7.25%..................................... 52,250 1,760 Lincoln National, CONVPFD 7.75%................... 43,340 400 J.P. Morgan & Co.................................. 33,850 1,400 National Australia Bank Ltd., CONVPFD 7.875%.................................... 37,275 14 THE ROCKHAVEN PREMIER DIVIDEND FUND SCHEDULE OF INVESTMENTS AT SEPTEMBER 30, 1998, CONTINUED - -------------------------------------------------------------------------------- Shares Market Value - -------------------------------------------------------------------------------- FINANCE - INVESTMENT BANKING - CONTINUED 1,300 Pacific Century Financial Corp................ $ 21,694 950 TrustCo Bank Corp. N.Y........................ 25,323 -------- 213,732 -------- SERVICES: 14.2% 25,000 Omnicom Group, Inc., CONV BOND 4.25%.................................... 38,406 1,400 Readers Digest Trace, CONV PFD 8.25%................................ 29,138 1,700 Sysco Corp.................................... 40,056 80,000 Times Mirror Co., CONV BOND 0%*............... 35,600 550 Time Warner / Houston Industries, Inc., CONV PFD 7%................................... 41,972 1,000 Wendy's, CONV PFD 5%.......................... 52,437 -------- 237,609 -------- STAPLES: 10.9% 30,000 Alza Corp., CONV BOND 5%...................... 38,025 550 Bausch & Lomb, Inc............................ 21,656 1,300 Dole Food Traces, CONV PFD 7.00%.............. 46,800 900 Philip Morris Companies Inc................... 41,456 30,000 Rite Aid Corp., CONV BOND 5.25%............... 35,588 -------- 183,525 -------- TECHNOLOGY: 23.4% 1,500 Diebold, Inc.................................. 33,000 25,000 EMC Corp., CONV BOND 3.25%.................... 64,000 150,000 Ingram Micro, Inc., CONV BOND 0%.............. 58,875 550 Microsoft Corp., CONV PFD $2.196.............. 53,075 1,000 Pitney Bowes, Inc............................. 54,562 1,050 Qualcom, CONV PFD 5.75%....................... 43,838 1,000 Unisys, Corp. CONV PFD 3.75%.................. 47,375 40,000 Xilinx Inc., CONV BOND 5.25%.................. 38,200 -------- 392,925 -------- 15 THE ROCKHAVEN PREMIER DIVIDEND FUND SCHEDULE OF INVESTMENTS AT SEPTEMBER 30, 1998, CONTINUED - -------------------------------------------------------------------------------- Shares Market Value - -------------------------------------------------------------------------------- TRANSPORTATION: 2.0% 800 Union Pacific Corp............................ $ 34,100 ---------- UTILITIES: 2.8% 850 Texas Utilities Co., CONV PFD 9.25%........... 47,812 ---------- Total Common Stocks and Convertible Securities (cost $1,683,202).................. 1,630,354 ---------- Principal Amount SHORT-TERM INVESTMENTS: 4.8% - -------------------------------------------------------------------------------- $80,878 Star Treasury Fund, 4.99%..................... 80,878 ---------- Total Investments in Securities (cost $1,764,080):101.9%...................... 1,711,232 Other Assets less Liabilities: (1.9)%......... (32,433) ---------- TOTAL NET ASSETS: 100.0%...................... $1,678,799 ========== * Non-income producing security. + At September 30, 1998, the cost of securities for Federal income tax purposes is $1,769,214. Gross unrealized appreciation and depreciation of securities were as follows: Gross unrealized appreciation................. $ 50,727 Gross unrealized depreciation................. (108,709) ---------- Net unrealized depreciation............... $ (57,982) ========== See accompanying Notes to Financial Statements. 16 THE ROCKHAVEN PREMIER DIVIDEND FUND STATEMENT OF ASSETS AND LIABILITIES AT SEPTEMBER 30, 1998 - -------------------------------------------------------------------------------- ASSETS Investments in securities, at value (identified cost $1,764,080)............................ $1,711,232 Receivables: Due from Advisor........................................ 7,317 Dividends and interest.................................. 7,505 Prepaid expenses........................................... 17,566 ---------- Total assets......................................... 1,743,620 ---------- LIABILITIES Payables: Due to administrator.................................... 2,466 Dividends............................................... 595 Securities purchased.................................... 39,398 Accrued expenses........................................... 22,362 ---------- Total liabilities.................................... 64,821 ---------- NET ASSETS $1,678,799 ========== NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE [$1,678,799/171,257 shares outstanding; unlimited number of shares (par value $.01) authorized]............... $ 9.80 ========== COMPONENTS OF NET ASSETS Paid-in capital............................................ $1,768,440 Undistributed net investment income........................ 1,316 Accumulated net realized loss on investments............... (38,109) Net unrealized depreciation on investments................. (52,848) ---------- Net assets.............................................. $1,678,799 ========== See accompanying Notes to Financial Statements. 17 THE ROCKHAVEN PREMIER DIVIDEND FUND STATEMENT OF OPERATIONS FOR THE PERIOD FROM NOVEMBER 3, 1997* THROUGH SEPTEMBER 30, 1998 - -------------------------------------------------------------------------------- INVESTMENT INCOME Income Dividends............................................... $ 32,698 Interest................................................ 4,818 -------- Total income......................................... 37,516 -------- Expenses Administration fees (Note 3)............................ 27,123 Professional fees....................................... 14,458 Transfer agent fees..................................... 13,517 Fund accounting fee..................................... 12,015 Advisory fees (Note 3)................................. 6,813 Custodian............................................... 6,511 Registration fees....................................... 6,432 Trustees' fees.......................................... 5,022 Other .................................................. 4,764 Reports to shareholders................................. 4,066 Distribution expense (Note 3)........................... 2,271 -------- Total expenses....................................... 102,992 Less: Advisory fee waiver and absorption............. (89,363) -------- Net expenses......................................... 13,629 -------- NET INVESTMENT INCOME............................. 23,887 -------- REALIZED AND UNREALIZED GAIN ON INVESTMENTS Net realized loss from security transactions............... (38,109) Net change in unrealized depreciation on investments............................................. (52,848) -------- Net realized and unrealized loss on investments.......................................... (90,957) -------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS...................................... $(67,070) ======== * Commencement of operations. See accompanying Notes to Financial Statements. 18 THE ROCKHAVEN PREMIER DIVIDEND FUND STATEMENT OF CHANGES IN NET ASSETS - -------------------------------------------------------------------------------- November 3, 1997* through September 30, 1998 - -------------------------------------------------------------------------------- NET INCREASE IN ASSETS FROM OPERATIONS Net investment income......................................... $ 23,887 Net realized loss from security transactions.................. (38,109) Net change in unrealized depreciation of securities........... (52,848) ---------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS........................................... (67,070) ---------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Net investment income......................................... (22,571) ---------- CAPITAL SHARE TRANSACTIONS Net increase in net assets derived from net change in outstanding shares (a).................................... 1,768,440 ---------- TOTAL INCREASE IN NET ASSETS............................... 1,678,799 NET ASSETS Beginning of period........................................... -0- ---------- END OF PERIOD................................................. $1,678,799 ========== (a) A summary of capital share transactions is as follows: November 3, 1997* through September 30, 1998 ------------------------ Shares Paid In Capital ------------------------ Shares sold................................ 172,304 $1,777,767 Shares issued in reinvestment of distributions........................... 2,091 21,976 Shares redeemed............................ (3,138) (31,303) ------- ---------- Net increase............................... 171,257 $1,768,440 ======= ========== * Commencement of operations. See accompanying Notes to Financial Statements. 19 THE ROCKHAVEN PREMIER DIVIDEND FUND FINANCIAL HIGHLIGHTS FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT THE PERIOD - -------------------------------------------------------------------------------- November 3, 1997* through September 30, 1998 - -------------------------------------------------------------------------------- Net asset value, beginning of period........................ $10.00 Income from investment operations: Net investment income.................................... 0.21 Net realized and unrealized loss on investments.......... (0.21) ------ Total from investment operations............................ 0.00 ------ Less distributions: Dividends from net investment income..................... (0.20) ------ Net asset value, end of period.............................. $ 9.80 ====== TOTAL RETURN................................................ (0.10)%+ RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000)............................. $1,679 Ratio of expenses to average net assets: Before expense reimbursement............................. 11.28%++ After expense reimbursement.............................. 1.49%++ Ratio of net investment income to average net assets: After expense reimbursement.............................. 2.62%++ Portfolio turnover rate..................................... 147.56% * Commencement of operations. + Not annualized. ++ Annualized. See accompanying Notes to Financial Statements. 20 THE ROCKHAVEN FUND THE ROCKHAVEN PREMIER DIVIDEND FUND NOTES TO FINANCIAL STATEMENTS AT SEPTEMBER 30, 1998 - -------------------------------------------------------------------------------- NOTE 1 - ORGANIZATION The Rockhaven Fund and Rockhaven Premier Dividend Fund (the "Funds") are a series of shares 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 Rockhaven Fund's primary investment objective is obtaining above average current income together with capital appreciation. The Rockhaven Premier Dividend Fund's primary investment objective is obtaining high current income and its secondary objective is seeking capital appreciation. The Funds attempt to achieve their objectives by investing in a diversified portfolio of equity securities. The Funds began operations on November 3, 1997. NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies followed by the Funds. These policies are in conformity with generally accepted accounting principles. A. SECURITY VALUATION: The Funds' investments are carried at fair value. Securities listed on an exchange or quoted on a National Market System are valued at the last sale price. Other securities are valued at the mean between the last bid and asked prices. 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 Funds' 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. 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 21 NOTES TO FINANCIAL STATEMENTS, CONTINUED - -------------------------------------------------------------------------------- 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 - INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES For the period ended September 30, 1998, Rockhaven Asset Management, LLC (the "Advisor") provided the Funds with investment management services under an Investment Advisory Agreement. The Advisor furnished all investment advice, office space, facilities, and provides most of the personnel needed by the Funds. As compensation for its services, the Advisor is entitled to a monthly fee at the annual rate of 0.75% based upon the average daily net assets of each Fund. For the period ended September 30, 1998, the Rockhaven Fund and the Rockhaven Premier Dividend Fund incurred $9,321 and $6,813, respectively, in Advisory Fees. The Funds are responsible for their own operating expenses. The Advisor has agreed to reduce fees payable to it by each Fund and to pay each Fund's operating expenses to the extent necessary to limit each Fund's aggregate annual operating expenses to 1.5% of average net assets (the "expense cap"). Any such reductions made by the Advisor in its fees or payment of expenses which are a Fund's obligation are subject to reimbursement by the Fund to the Advisor, if so requested by the Advisor, in subsequent fiscal years if the aggregate amount actually paid by a Fund toward the operating expenses for such fiscal year (taking into account the reimbursement) does not exceed the applicable limitation on the Fund's expenses. The Advisor is permitted to be reimbursed only for fee reductions and expense payments made in the previous three fiscal years, but is permitted to look back five years and four years, respectively, during the initial six years and seventh year of the Fund's operations. Any such reimbursement is also contingent upon Board of Trustees review and approval at the time the reimbursement is made. Such reimbursement may not be paid prior to a Fund's payment of current ordinary operating expenses. For the period ended September 30, 1998, the Advisor reduced its fees and absorbed Fund expenses in the amount of $87,643 for The Rockhaven Fund and $89,363 for The Rockhaven Premier Dividend Fund; no amounts were reimbursed to the Advisor. 22 NOTES TO FINANCIAL STATEMENTS, CONTINUED - -------------------------------------------------------------------------------- Investment Company Administration Corporation (the "Administrator") acts as the Funds' Administrator under an Administration Agreement. The Administrator prepares various federal and state regulatory filings, reports and returns for the Funds; prepares reports and materials to be supplied to the trustees; monitors the activities of the Funds' custodian, transfer agent and accountants; coordinates the preparation and payment of Fund expenses and reviews each Fund's expense accruals. For its services, the Administrator receives a monthly fee at the annual rate of 0.20% of average daily net assets, subject to a minimum fee of $30,000 annually, from each Fund. First Fund Distributors, Inc. (the "Distributor") acts as the Funds' principal underwriter in a continuous public offering of the Funds' shares. The Distributor is an affiliate of the Administrator. The Trust has adopted a Distribution Plan (the "Plan") in accordance with Rule 12b-1 under the 1940 Act. The Plan provides that the Funds may pay a fee to the Advisor, acting as Distribution Coordinator, at an annual rate of up to 0.25% of the average daily net assets of each Fund. The fee is paid to the Distribution Coordinator as reimbursement for, or in anticipation of, expenses incurred for distribution-related activity. Certain officers of the Fund are also officers and/or directors of the Administrator and the Distributor. NOTE 4 - Securities Transactions For the period ended September 30, 1998, the cost of purchases and the proceeds from sales of securities, excluding short-term securities, for The Rockhaven Fund, were $3,504,402 and $1,256,468, respectively. For the period ended September 30, 1998, the cost of purchases and the proceeds from sales of securities, excluding short-term securities, for The Rockhaven Premier Dividend Fund, were $3,090,649 and $1,368,200, respectively. For federal income tax purposes, The Rockhaven Fund and The Rockhaven Premier Dividend Fund have capital loss carryforwards of $105,829 and $32,975, respectively, which are available to offset future realized gains. The carryforwards expire in 2006. 23 INDEPENDENT AUDITOR'S REPORT THE BOARD OF TRUSTEES AND SHAREHOLDERS THE ROCKHAVEN FUND AND THE ROCKHAVEN PREMIER DIVIDEND FUND We have audited the accompanying statements of assets and liabilities, including the schedules of investments of The Rockhaven Fund and The Rockhaven Premier Dividend Fund, series of Advisors Series Trust, as of September 30, 1998, and the related statements of operations, the statements of changes in net assets, and the financial highlights for the period indicated in the accompanying financial statements. 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 audits. We conducted our audits in accordance with the 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 September 30, 1998, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly in all material respects, the financial position of The Rockhaven Fund and The Rockhaven Premier Dividend Fund, series of Advisors Series Trust, as of September 30, 1998, the results of their operations, the changes in their net assets and their financial highlights for the period indicated, in conformity with generally accepted accounting principles. MCGLADREY & PULLEN, LLP New York, New York October 23, 1998 24 ADVISOR Rockhaven Asset Management, LLC 100 First Avenue, Suite 1050 Pittsburgh, PA 15222 www.rockhaven.com 800-522-3508 DISTRIBUTOR First Fund Distributors, Inc. 4455 East Camelback Road, Suite 261E Phoenix, AZ 85018 CUSTODIAN Star Bank, N.A. 425 Walnut Street Cincinnati, OH 45202 TRANSFER AGENT American Data Services, Inc. 150 Motor Parkway, Suite 109 Hauppauge, NY 11788 888-263-6452 LEGAL COUNSEL Paul, Hastings, Janofsky & Walker LLP 345 California Street, 29th Floor San Francisco, CA 94104 AUDITORS McGladrey & Pullen LLP 555 Fifth Avenue, 8th Floor New York, NY 10017-2416 This report is intended for shareholders of the Fund and may not be used as sales literature unless preceded or accompanied by a current prospectus. Past performance results shown in this report should not be considered a representation of future performance. Share price and returns will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Statements and other information herein are dated and are subject to change. -----END PRIVACY-ENHANCED MESSAGE-----