ANNUAL REPORT
December 31, 1998
[GRAPHIC OMITTED]
The REvest
Value Fund
A No-Load Mutual Fund
Managed in Maine
A Value-Oriented
Investment In Small and
Medium-Sized Company Equities
A Series of The Winter Harbor Fund
<PAGE>
Profile of the Fund
- --------------------------------------------------------------------------------
The REvest Value Fund ("REvest" or the "Fund") is a no-load series of the Winter
Harbor Fund, an open-end, diversified investment management company. Jennifer E.
Goff, President of Ebright Investments, Inc. ("EII"), a registered investment
adviser, is responsible for the management of the Fund's portfolio, subject to
the authority of the Fund's Trustees.
REvest seeks long-term growth and secondarily current income by investing in a
broadly diversified portfolio of common stocks and convertible securities.
Prospective portfolio investments are selected on a value basis, and are
primarily limited to small and medium-sized companies, viewed by the Fund's
investment adviser as having attractive financial characteristics and/or
"vitality factors." Vitality factors are those factors (e.g. an active
acquisition, stock buy-back and/or cost reduction program) that should allow a
company to build future, incremental value for shareholders. By combining the
prospect of vitality with a value-oriented selection process, we believe we are
able to buy Great Companies at Great Prices. These tenets are elaborated upon in
the following outline:
- -- Small & Mid-Cap Stocks - We believe these securities have more potential
for capital appreciation because they have historically generated higher
returns for investors, and because they are generally less well-known,
making them more likely to be improperly priced by the marketplace. The
Fund will normally invest at least 90% of its assets in common stocks,
convertible preferred stocks and convertible bonds. At least 80% of these
"allowable securities" will be income-producing, and at least 80% of these
will be issued by companies with market capitalizations between $200
million and $2 billion.
- -- Value-Orientation, Plus Growth - We look for companies with "value
discrepancies," or market prices below our assessment of their "real"
business worth. From that group, we select companies with vitality or
ongoing programs that should allow them to increase their long-term value.
We believe profits can come from both the continued success and growth of
each portfolio company, as well as the eventual elimination of any value
discrepancy we believe was present at the time of purchase.
- -- Consistent Portfolio Character - We will automatically close the Fund to
new investors at the end of any calendar year during which its assets reach
$350 million. Since we specialize in small and medium size company
equities, we believe a larger asset base could limit our flexibility in
buying and selling for the Fund, or force us to invest in more companies
than we can closely follow. By placing practical limits on our size, we
believe we can make it possible for the Fund's investment adviser to
actively manage the portfolio, and enable the Fund to maintain a constant
character over its lifetime.
Please keep in mind, however, that this is a "fixed" style of money management.
REvest does not change from year-to-year, or attempt in any way to anticipate
market trends. Because of this, the Fund is often out-of-sync with the general
equity markets, and short-term performance may be better or worse than either
the "market" or other less specialized funds. Management follows this very
disciplined and consistent path because it believes that in the long run, this
"fixed" characteristic can lead to premium long-term returns.
<PAGE>
REvest
Manager's Letter Value Fund [LOGO]
- --------------------------------------------------------------------------------
Dear Friends and Fellow Shareholders:
History will remember 1998 as the year that large-cap, growth stocks had a huge
party and everyone else stayed home. Although the year started with a
broad-based rally, concerns over the world economy led to a narrowing of the
market in April and a substantial decline in most equity prices between July and
October. Then, as year-end approached, Federal Reserve intervention helped abate
foreign turmoil concerns, providing the impetus the U.S. market indices needed
to recover much of their losses, and in some cases, go on to new highs.
The S&P 500 Index returned 28.6% in 1998. Virtually all of this gain was the
result of outperformance by a concentrated group of very large companies. The
S&P 500 is a market capitalization (or size) weighted index of 500 stocks. As
such, certain large names contribute disproportionately to its performance. Last
year, eight stocks -- Microsoft, Lucent, Dell, Cisco, Wal-Mart, MCI Worldcom,
Intel and IBM -- provided about half the gain in the S&P 500, while twenty made
up more than 80%, and 37 stocks accounted for the entire gain. The narrowness of
the market is even more apparent if one realizes that almost 75% of the
investable equity universe failed to return even 8%, while a full 66% of all
common stocks in the United States had negative returns in 1998!
Given this backdrop, it should come as no surprise that small-company stocks
lagged their larger-cap brethren for the fifth consecutive year, with the
Russell 2000 Index ending the year down 2.6%. The Russell 2000 had been down
almost 30% on October 8th, its lowest point, prior to the year-end rally. The
rally was sparked by the Federal Reserve implementing a series of three,
quarter-point interest rate cuts in September, October and November. The moves
were viewed by the market as an anticipatory effort to block the economic
slowdown overseas from spreading to the United States. While we will have to
wait and see whether the cuts have their intended effort long term, short term
they were enough to buoy consumer confidence and improve liquidity, important
factors in sustaining the now eight year old bull market.
REvest, as a result of its small-company, value-oriented approach, ended the
year down 6.1%. Although it was the first time in three years that we failed to
outperform our benchmark, we were pleased with our performance. In volatile
markets such as these, we believe capital preservation can be as important as
capital appreciation. At the October 8th low, REvest was down 20.5%, compared to
28.3% for the Russell 2000. And although we had a slow start to the year, REvest
led the benchmark for most of the summer and into the middle of December. We
attribute the resiliency of our portfolio to its yield orientation, as dividends
often provide downside protection in times of falling prices.
Going into 1999, we believe we are well positioned for what very well might be
another volatile year. Many analysts are questioning the large multinational
companies' ability to generate the earnings growth necessary to sustain rising
stock prices in the face of continued difficulties overseas (or in our backyard,
as is the case with Brazil). In addition, there is ample evidence of froth in
the market as Internet stocks continue to command astronomical prices despite
many having no prospect of earnings for the foreseeable future. Our strategy is
to maintain a higher-yielding portfolio, and to continue to use price weakness
to upgrade the quality of our holdings. Several changes that were made in the
summer of 1998, including the addition of Kaydon Corporation and Right
Management Consultants, Inc., contributed positively to REvest's return for the
year. With some stocks still at prices that are 40%-50% below twelve-month
highs, we hope to find several more "great companies at great prices" in the new
year.
With 1998 and its extreme valuation divergences behind us, we look to the future
with optimism. The performance gap between large- and small-cap stocks has never
been greater, leading us to hope that we are close to an inflection point where
small-cap stocks will once again outperform. At some point, the large-cap stocks
will prove not to be immune to what is going on beyond our borders. At that
juncture, small-caps, with their relatively cheap valuations and higher growth
rates, should shine.
As always, we want to thank you for your confidence. Your continued support of
our work through the ownership of your shares is much appreciated.
Sincerely,
/s/ Jennifer Ebright Goff
Jennifer Ebright Goff
Portfolio Manager
President, Ebright Investments, Inc.
January 27, 1999
Note: The S&P 500 and the Russell 2000 are unmanaged indices and include the
reinvestment of dividends.
1
<PAGE>
Portfolio Summary
- --------------------------------------------------------------------------------
The following (unaudited) information provides a "bird's eye" view of the REvest
portfolio as of December 31, 1998. For a more complete picture, the Schedule of
Investments and accompanying financial statements and notes should be read in
their entirety.
Portfolio Composition Value % of Net Assets
- --------------------------------------------------------------------------------
Common Stocks:
Micro-Caps (under $200M) $ 4,191,369 16.95%
Small-Caps ($200M - $1B) 12,809,530 51.80%
Mid-Caps ($1B - $2B) 5,591,720 22.61%
Convertible Bonds 1,485,000 6.00%
Non-Convertible Bond 412,500 1.67%
Cash & Other Assets Less Liabilities 240,004 0.97%
----------- ------
Total Net Assets $24,730,123 100.00%
=========== ======
Industry Concentration (% of Net Assets)
- --------------------------------------------------------------------------------
[PIE CHART]
Net Cash 1.0%
Consumer Products 8.5%
Energy 11.1%
Financial 10.4%
Health 11.3%
Industrial Cyclicals 17.9%
Real Estate 8.5%
Retail 9.7%
Services 10.8%
Technology 10.8%
Average Financial Characteristics of Portfolio Companies
- --------------------------------------------------------------------------------
Market Capitalization ............. $597.9M
P/E Ratio ......................... 18.3x
P/B Ratio ......................... 2.1x
Return on Assets .................. 7.3%
Return on Equity .................. 12.6%
Compound 3-Year Growth Rate ....... 15.4%
Gross Portfolio Yield ............. 2.6%
2
<PAGE>
REvest
Portfolio Summary (Continued) Value Fund [LOGO]
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Top Ten Equity Positions Market Value % of Net Assets
- -------------------------------------------------------------------------------------
<S> <C> <C>
1. Control Devices, Inc. ......................... $720,000 ......... 2.9%
2. Rayonier, Inc. ................................ 689,063 ......... 2.8%
3. Teleflex, Inc. ................................ 684,375 ......... 2.8%
4. IDEXX Laboratories, Inc. ...................... 672,656 ......... 2.7%
5. Analogic Corporation .......................... 658,438 ......... 2.7%
6. Cousins Properties, Inc. ...................... 645,000 ......... 2.6%
7. Berry Petroleum Company, Class A .............. 638,437 ......... 2.6%
8. Matthews International Corporation, Class A ... 630,000 ......... 2.5%
9. Donegal Group, Inc. ........................... 625,000 ......... 2.5%
10. The Standard Register Company ................. 618,750 ......... 2.5%
</TABLE>
Top Ten Equity Contributors to the Fund's Net Realized and Unrealized Gain on
Investment (Per Share)
- --------------------------------------------------------------------------------
[BAR GRAPH]
IDEXX Laboratories, Inc.
In Focus Systems, Inc.
The Toro Company
Penn Virginia Corporation
Lucor, Inc.
FEI Company
Chemed Corporation
Matthews International Corporation,
Class A
Regal-Beloit Corporation
La-Z-Boy, Inc.
Major Portfolio Changes (Listed in Descending Order of Value)
- --------------------------------------------------------------------------------
Five Largest Equity Purchases: Five Largest Equity Sales:
1. Regal-Beloit Corporation (+, x) 1. Keystone Financial Corporation (x)
2. Helen of Troy Corporation (+) 2. La-Z-Boy, Inc. (x)
3. Stein Mart, Inc. (+) 3. Oxford Industries, Inc. (x)
4. Planar Systems, Inc. (+) 4. National Presto Industries, Inc. (x)
5. Kaydon Corporation (+) 5. Haggar Corp.
(+) Position Added (x) Position Eliminated
3
<PAGE>
Portfolio Process
- --------------------------------------------------------------------------------
One question we frequently get asked is "How do you go about determining which
stocks to put in your portfolio?" To answer this question, we have put together
the following schematic to take you step-by-step through the decision-making
process:
- --------------------------------------------------------------------------------
Screen for Size, Quality and Value
- - Market capitalization between $100 million and $1 billion
- - High return on assets and equity
- - Revenue and earnings growth
- - Low debt and/or high cash
- - Low Price/Earnings, Price/Book, Price/Sales, Price/Cash Flow ratios
- --------------------------------------------------------------------------------
Fundamental Analysis of Prospect Companies
- - Identify "critical issues" - Valuation
- - Vitality - Visitation
- --------------------------------------------------------------------------------
Stock Selection and Ongoing Portfolio Maintenance
- - Ongoing review of sector weightings
- - Continual monitoring of vitality factors and valuation
- - Strict sell discipline
- --------------------------------------------------------------------------------
Most prospects are identified through our own screening efforts. By selecting
various price and performance parameters, we can reduce the large universe of
companies (about 8,000) down to a manageable short-list of candidates for
further exploration. The goal is to determine quickly whether or not a
particular company is worth spending serious research time on.
Once we have gathered all the public information, we review the material
carefully. First, we use several valuation techniques to cross-confirm our
appraisal of each prospect's business worth, and to determine whether there is a
discrepancy between this value and the current market price. Assuming a
discrepancy exists, we then try to determine whether the company has a viable
plan for its future growth and development (vitality), and whether there is
evidence that its recent initiatives have produced the intended result(s). In
doing so, we try to identify what we call "critical issues", or those factors
which affect the company or its business in a significant way. In essence, we
are trying to ascertain whether a particular company is a "great company" at a
"great price".
Visitation is a critical element of our research process. The primary objective
here is to test our understanding of the company by exploring the critical
issues with management. Visitation also provides an opportunity to view company
facilities first-hand, to determine their condition, usage and value. All these
factors help improve the decision making process, reducing its risk and the
potential for error.
The limited number of companies that pass through this process, about 50-65,
become the REvest portfolio. But, the work does not stop there. Portfolio
management is a journey, not a destination. We continually monitor the
portfolio, its prospects and weightings, to ensure that it remains fresh and
balanced. We want to be cognizant of any change in business fundamentals or the
elimination of the value discrepancy, so that at the appropriate time we can
replace a holding with a new idea.
4
<PAGE>
REvest
Performance Discussion Value Fund [LOGO]
- --------------------------------------------------------------------------------
In the first half of 1998, there continued to be significant performance
divergence, both by capitalization and by style. Large-cap stocks continued to
outpace small-cap stocks, with the S&P 500 Index up 17.7% and the Russell 2000
Index up 4.9%. Within the small-cap universe, the Russell 2000 Growth Index
outperformed the Russell 2000 Value Index, 5.4% versus 4.4%, respectively.
REvest finished this period up 1.2%, lagging its benchmark.
Unfortunately, things got even worse for small-cap stocks in the July through
October period. The impeachment of President Clinton, the showdown with Iraq and
the devaluation of the Russian ruble sent shocks through the market. As fear
overtook greed, money poured into U.S. Treasuries and very liquid large-cap
stocks, pretty much to the exclusion of everything else. While the S&P 500
faltered, its loss was no match to the devastation reaped upon the Russell 2000.
At the October 8th low, the Russell was down 28.3% while the S&P was still
positive 0.1%.
Then on October 17th, the tide turned. The Federal Reserve lowered rates for the
second time in two months, signaling its intent to do its part to maintain the
United States' economic expansion. The market rallied on the news. By year-end,
the S&P 500 was up 28.6% and the Russell 2000 had pared its losses to -2.6%. For
its part, REvest ended the year down 6.1%. While we did not beat our benchmark,
our performance was favorable when viewed in the context of its style. The
Russell 2000 Growth Index ended the year up 1.2% while the Russell 2000 Value
Index ended the year down 6.5%.
Comparison of Change in Value of a $10,000 Initial Investment on 8/1/94*
between The REvest Value Fund, the S&P 500 Index and the Russell 2000 Index
[LINE GRAPH]
12/31/98
--------
REvest $16,000
S&P 500 $29,459
Russell 2000 $18,422
Year 3-Years Since
Ended Ended Inception*
12/31/98 12/31/98 12/31/98
-------- -------- --------
REvest average annual total return -6.1% 12.4% 11.2%
S&P 500 average annual total return 28.6% 28.4% 27.8%
Russell 2000 average annual total return -2.6% 11.6% 14.8%
The above table and preceding narrative depict the historical returns of REvest,
the S&P 500, an unmanaged index representative of large-company stocks, and the
Russell 2000, Russell 2000 Value and Growth indices, unmanaged indices
representative of small-company stocks. The Fund's present investment philosophy
was followed in each of the periods identified. All results presented in this
Report are on a "total return" basis, which assumes that all dividends and
distributions were reinvested. No redemption fees are included because they
apply only to accounts open for less than one year.
The results presented in this Report represent past performance and should not
be considered representative of the "total return" from an investment in the
Fund today. They are provided only to give an historical perspective of the
Fund. The investment return and principal value of the Fund's shares will
fluctuate so that the shares may be worth more or less than their original cost
when redeemed.
*Commencement of Operations - August 1, 1994
5
<PAGE>
Schedule of Investments (at 12/31/98)
- --------------------------------------------------------------------------------
Shares
- ------
Common Stocks -- 91.3% Cost Value
CONSUMER PRODUCTS -- 8.5% ----------- -----------
36,300 Haggar Corp. ..................... $ 496,912 $ 415,181
25,000 * Helen of Troy Corporation ........ 473,295 367,188
27,500 * In Focus Systems, Inc. ........... 242,500 244,062
25,000 Russ Berrie and Company, Inc. .... 429,250 587,500
17,500 The Toro Company ................. 456,050 498,750
----------- -----------
2,098,007 2,112,681
----------- -----------
ENERGY --11.1%
17,500 * Barrett Resources Corporation .... 498,066 420,000
45,000 Berry Petroleum Company, Class A . 511,792 638,437
22,500 Helmerich & Payne, Inc. .......... 445,820 435,937
25,000 Penn Virginia Corporation ........ 451,646 459,374
25,000 Snyder Oil Corporation ........... 496,518 332,812
25,000 St. Mary Land & Exploration Company 468,751 462,500
----------- -----------
2,872,593 2,749,060
----------- -----------
FINANCIAL -- 10.4%
7,500 Banknorth Group .................. 246,563 282,188
22,000 Community Banks, Inc. ............ 268,092 552,750
40,000 Donegal Group, Inc. .............. 412,401 625,000
30,000 Peoples Heritage Financial Group, Inc. 209,263 600,000
25,000 Susquehanna Bancshares, Inc. ..... 287,536 511,719
----------- -----------
1,423,855 2,571,657
----------- -----------
HEALTH -- 11.3%
17,500 Analogic Corporation ............. 540,995 658,438
10,000 Arrow International, Inc. ........ 270,125 313,750
17,500 Diagnostic Products Corporation .. 497,025 544,688
25,000 * IDEXX Laboratories, Inc. ......... 328,203 672,656
25,000 Invacare Corporation ............. 494,295 600,000
----------- -----------
2,130,643 2,789,532
----------- -----------
INDUSTRIAL CYCLICALS -- 16.2%
12,500 Baldor Electric Company .......... 203,891 253,125
30,000 CLARCOR, Inc. .................... 401,725 600,000
20,000 Greif Bros. Corporation, Class A . 462,581 583,750
30,000 Kimball International, Inc., Class B 440,573 570,000
20,000 Matthews International
Corporation, Class A ........... 191,715 630,000
15,000 Rayonier, Inc. ................... 539,675 689,063
15,000 Teleflex, Inc. ................... 298,188 684,375
----------- -----------
2,538,348 4,010,313
----------- -----------
REAL ESTATE -- 6.9%
45,000 Cavalier Homes, Inc. ............. 486,763 511,875
20,000 Cousins Properties, Inc. ......... 450,267 645,000
25,000 New Plan Excel Realty Trust ...... 502,813 554,688
----------- -----------
1,439,843 1,711,563
----------- -----------
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
REvest
Schedule of Investments (at 12/31/98 - Continued) Value Fund [LOGO]
- --------------------------------------------------------------------------------
Shares Cost Value
- ------ ---- -----
RETAIL -- 9.7%
22,500 Applebee's International, Inc. ... $ 513,952 $ 464,063
30,000 Claire's Stores, Inc. ............ 496,037 615,000
10,000 Hannaford Bros. Company .......... 262,450 530,000
40,000 * Stein Mart, Inc. ................. 460,000 278,750
20,000 * The Gymboree Corporation ......... 122,500 127,500
40,000 * West Marine, Inc. ................ 497,812 395,000
----------- -----------
2,352,751 2,410,313
----------- -----------
SERVICES -- 9.3%
15,000 Chemed Corporation ............... 488,493 502,500
15,000 Kaydon Corporation ............... 468,619 600,938
40,000 * Right Management Consultants, Inc. 523,090 590,000
20,000 The Standard Register Company .... 419,174 618,750
----------- -----------
1,899,376 2,312,188
----------- -----------
TECHNOLOGY -- 7.9%
45,000 Control Devices, Inc. ............ 330,143 720,000
35,000 Helix Technology Corporation ..... 500,728 455,000
25,000 * Kulicke and Soffa Industries, Inc. 473,141 443,750
45,000 * Planar Systems, Inc. ............. 495,000 306,562
----------- -----------
1,799,012 1,925,312
----------- -----------
TOTAL COMMON STOCKS $18,554,428 $22,592,619
----------- -----------
<TABLE>
<CAPTION>
Par Value
- ---------
CORPORATE BONDS -- 7.7%
<S> <C> <C> <C>
$ 400,000 MacNeal-Schwendler Corp. 7.875% Conv. Sub. Deb. due 08/18/04 ......... $ 386,206 $ 371,500
400,000 Richardson Electronics, Ltd. 8.25% Conv. Sub. Deb. due 06/15/06 ...... 346,000 350,000
400,000 Sequa Corporation 9.375% Sr. Sub. Notes due 12/15/03 ................. 397,826 412,500
400,000 Sizeler Property Investors, Inc. 8.00% Conv. Sub. Deb. due 07/15/03 .. 371,066 386,500
400,000 VLSI Technology, Inc. 8.25% Conv. Sub. Notes due 10/01/05 ............ 387,000 377,000
----------- -----------
TOTAL CORPORATE BONDS $ 1,888,098 $ 1,897,500
----------- -----------
REPURCHASE AGREEMENT -- 1.1%
Star Bank, N.A. 3.50%, dated 12/31/98, due 01/04/99, maturity
value $275,107 (collaterized by Government National Mortgage
Association, 6.875% due 03/20/24 valued at $284,757) ................. $ 275,000 $ 275,000
----------- -----------
</TABLE>
TOTAL INVESTMENTS -- 100.1% $20,717,526 $24,765,119
===========
LIABILITIES IN EXCESS OF OTHER ASSETS - (0.1%) (34,996)
-----------
TOTAL NET ASSETS - 100.0% $24,730,123
===========
*Non-income producing.
Income Tax Information - The cost for federal income tax purposes was
$20,706,815. At December 31, 1998, net unrealized appreciation for all
securities amounted to $4,058,304, consisting of aggregate gross unrealized
appreciation of $5,230,291 and aggregate gross unrealized depreciation of
$1,171,987. The Fund designates $3,202,105 as a capital gain dividend for the
purpose of the dividend paid deduction.
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
Statement of Assets and Liabilities (at 12/31/98)
- --------------------------------------------------------------------------------
ASSETS:
Investment securities:
At acquisition cost ....................................... $20,442,526
===========
At market value (Note 1) .................................. $24,490,119
Investments in repurchase agreements (Note 1) ................. 275,000
Receivable for capital shares sold ............................ 786
Interest receivable ........................................... 35,440
Dividends receivable .......................................... 18,908
Other assets .................................................. 3,738
-----------
Total Assets ............................................. 24,823,991
-----------
LIABILITIES:
Dividends payable ............................................. 6,088
Distributions payable ......................................... 42,144
Payable to affiliates (Note 4) ................................ 18,333
Payable for capital shares redeemed ........................... 11,249
Other accrued expenses and liabilities ........................ 16,054
-----------
Total Liabilities ........................................ 93,868
-----------
NET ASSETS .................................................... $24,730,123
===========
ANALYSIS OF NET ASSETS:
Paid-in capital ............................................... $20,663,004
Undistributed net investment income ........................... 12,821
Accumulated net realized gains from security transactions ..... 6,705
Net unrealized appreciation on investments .................... 4,047,593
-----------
Net Assets ............................................... $24,730,123
===========
PRICING OF SHARES:
Net asset value, offering and redemption price per share
($24,730,123 -- 2,272,903 shares outstanding) ................. $ 10.88
===========
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
Years ended December 31,
1998 1997
------------ ------------
INVESTMENT OPERATIONS:
<S> <C> <C>
Net investment income ........................................................... $ 378,008 $ 720,415
Net realized gain from security transacations ................................... 3,193,187 7,205,644
Net change in unrealized appreciation/depreciation on investments ............... (5,641,998) 2,357,022
------------ ------------
Net increase (decrease) in net assets from investment operations ............. (2,070,803) 10,283,081
------------ ------------
DIVIDENDS AND DISTRIBUTIONS:
Net investment income ........................................................... (371,064) (647,033)
Net realized gain on investments ................................................ (2,560,610) (4,933,401)
------------ ------------
Net decrease in net assets from dividends and distributions .................. (2,931,674) (5,580,434)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold ....................................................... 2,095,317 18,205,535
Net asset value of shares issued in reinvestment of distributions to shareholders 2,687,414 5,165,051
Payments for shares redeemed .................................................... (13,935,671) (31,286,540)
------------ ------------
Net decrease in net assets from capital share transactions ................... (9,152,940) (7,915,954)
------------ ------------
NET DECREASE IN NET ASSETS ......................................................... (14,155,417) (3,213,307)
NET ASSETS:
Beginning of year ............................................................... 38,885,540 42,098,847
------------ ------------
End of year ..................................................................... $ 24,730,123 $ 38,885,540
============ ============
UNDISTRIBUTED NET INVESTMENT INCOME ................................................ $ 12,821 $ 5,877
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
<TABLE>
<CAPTION>
REvest
Statement of Operations (for the year ended 12/31/98) Value Fund [LOGO]
- -----------------------------------------------------------------------------------
NET INVESTMENT INCOME:
Income:
<S> <C>
Interest ........................................................ $ 305,343
Dividends ....................................................... 483,193
-----------
Total Investment Income ...................................... 788,536
-----------
Expenses:
Investment advisory fees (Note 4) ............................... 315,903
Custodian and accounting services fees (Note 4) ................. 28,971
Professional fees ............................................... 19,611
Administrative services fees (Note 4) ........................... 18,288
Trustees' fees and expenses ..................................... 14,348
Registration fees ............................................... 10,113
Transfer agent fees (Note 4) .................................... 7,582
Postage and supplies ............................................ 7,463
Shareholder reports ............................................. 4,167
Insurance expense ............................................... 2,747
Other expenses .................................................. 2,535
-----------
Total Expenses ............................................... 431,728
Fees waived by the Adviser (Note 4) ............................. (21,200)
-----------
Net Expenses ................................................. 410,528
-----------
Net Investment Income ........................................ 378,008
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain from security transactions .................... 3,193,187
Net change in unrealized appreciation/depreciation on investments (5,641,998)
-----------
Net realized and unrealized loss on investments .............. (2,448,811)
-----------
NET DECREASE IN NET ASSETS FROM INVESTMENT OPERATIONS .............. $(2,070,803)
===========
</TABLE>
Financial Highlights
- --------------------------------------------------------------------------------
This table is presented to show selected data for a share outstanding throughout
each period, and to assist shareholders in evaluating the Fund's performance.
<TABLE>
<CAPTION>
Period ended
Years ended December 31, December 31,
1998 1997 1996 1995 1994 (a)
-------------------------------------------------- ------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD .................... $ 13.00 $ 12.21 $ 10.73 $ 9.66 $ 10.00
-------- -------- -------- -------- --------
INVESTMENT OPERATIONS:
Net investment income ................................ 0.15 0.21 0.21 0.18 0.04
Net realized and unrealized gain (loss) on investments (1.02) 2.64 2.16 1.38 (0.33)
-------- -------- -------- -------- --------
Total from investment operations .................. (0.87) 2.85 2.37 1.56 (0.29)
-------- -------- -------- -------- --------
DIVIDENDS AND DISTRIBUTIONS:
Net investment income ................................ (0.15) (0.19) (0.21) (0.17) (0.05)
Net realized gain on investments ..................... (1.10) (1.87) (0.68) (0.32) --
-------- -------- -------- -------- --------
Total dividends and distributions .................. (1.25) (2.06) (0.89) (0.49) (0.05)
-------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD .......................... $ 10.88 $ 13.00 $ 12.21 $ 10.73 $ 9.66
-------- -------- -------- -------- --------
TOTAL RETURN ............................................ (6.12%) 23.5% 22.3% 16.2% (2.9%)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in thousands) ................ $ 24,730 $ 38,886 $ 42,099 $ 35,804 $ 21,676
Ratio of Net Expenses to Average Net Assets (b) ......... 1.30% 1.26% 1.29% 1.30% 1.42%*
Ratio of Net Investment Income to Average Net Assets .... 1.20% 1.60% 1.78% 1.73% 1.45%*
Portfolio Turnover Rate ................................. 35% 54% 64% 53% 5%
</TABLE>
* Annualized.
(a) Represents the period from the commencement of operations (August 1, 1994)
through December 31, 1994.
(b) The ratio of expenses to average net assets before waiver of fees by the
investment adviser would have been 1.37% and 1.78%* for the periods ended
December 31, 1998 and 1994, respectively (Note 4).
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
Notes To Financial Statements
- --------------------------------------------------------------------------------
The REvest Value Fund (the "Fund") is a no-load series of The Winter Harbor Fund
(the "Trust"), a diversified open-end management investment company organized as
a Delaware business trust. The Fund's predecessor, The REvest Growth & Income
Fund, was a series of The Royce Fund (Note 5).
The Fund primarily seeks long-term growth and secondarily current income by
investing in a broadly diversified portfolio of common stocks and convertible
securities.
1. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the Trust's significant accounting policies:
Security valuation. Securities listed on an exchange or on the Nasdaq National
Market System are valued on the basis of the last reported sale price prior to
the time the valuation is made, or if no sale is reported for such day, at their
bid price for exchange-listed securities and at the average of their bid and
asked prices for Nasdaq securities. Quotations are taken from the market where
the security is primarily traded. Other over-the-counter securities for which
market quotations are readily available are valued at their bid price.
Securities for which market quotations are not readily available are valued at
their fair value under procedures established and supervised by the Board of
Trustees. Bonds and other fixed income securities may be valued by reference to
other securities with comparable ratings, interest rates and maturities, using
established independent pricing services.
Share valuation. The net asset value per share of the Fund is calculated daily
by dividing the total value of the Fund's assets, less liabilities, by the
number of shares outstanding. The offering price and redemption price per share
of the Fund is equal to the net asset value per share.
Investment income and distributions to shareholders. Dividends arising from net
investment income are declared and paid quarterly and distributions from net
realized gains, if any, are paid annually in December. These dividends and
distributions are recorded on the ex-date and are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles.
Securities transactions. Security transactions are accounted for on the trade
date. Dividend income is recorded on the ex-dividend date and interest income is
recorded on the accrual basis. Realized gains and losses from security
transactions and unrealized appreciation and depreciation of investments are
determined on the basis of identified cost for book and tax purposes.
Repurchase agreements. The Fund enters into repurchase agreements with respect
to its portfolio securities solely with Star Bank, N.A. ("Star"), the custodian
of its assets. The Fund restricts repurchase agreements to maturities of no more
than seven days. Securities pledged as collateral for repurchase agreements are
held by Star until maturity of the repurchase agreements. Repurchase agreements
could involve certain risks in the event of default or insolvency of Star,
including possible delays or restrictions upon the ability of the Fund to
dispose of the underlying securities.
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 income and expenses
during the reporting period. Actual results could differ from those estimates.
Federal income taxes. It is the Fund's policy to comply with the special
provisions of the Internal Revenue Code available to regulated investment
companies. As provided therein, in any fiscal year in which the Fund so
qualifies and distributes at least 90% of its taxable net income, the Fund (but
not the shareholders) will be relieved of federal income tax on the income
distributed. Accordingly, no provision for income taxes has been made.
In order to avoid imposition of the excise tax applicable to regulated
investment companies, it is also the Fund's intention to declare as dividends in
each calendar year at least 98% of its net investment income (earned during the
calendar year) and 98% of its net realized capital gains (earned during the
twelve months ended October 31) plus undistributed amounts from prior years.
2. INVESTMENT TRANSACTIONS
For the year ended December 31, 1998, the cost of purchases and the proceeds
from sales of portfolio securities, other than short-term investments, amounted
to $10,761,148 and $22,429,039, respectively.
3. FUND SHARES
The Board of Trustees has authority to issue an unlimited number of shares of
beneficial interest of the Fund, with a par value of $.001. Share transactions
were as follows:
For the years ended
December 31,
1998 1997
---------- ----------
Sold ......................................... 175,492 1,418,807
Reinvested ................................... 256,185 396,134
Redeemed ..................................... (1,150,578) (2,271,260)
---------- ----------
Net decrease in shares outstanding ........... (718,901) (456,319)
Shares outstanding beginning of year ......... 2,991,804 3,448,123
---------- ----------
Shares outstanding end of year ............... 2,272,903 2,991,804
========== ==========
Shares redeemed within one year of opening a shareholder account are subject to
a 1.0% redemption fee.
4. TRANSACTIONS WITH AFFILIATES
Certain trustees and officers of the Trust are also officers of Ebright
Investments, Inc. (the "Adviser") (formerly Royce, Ebright & Associates, Inc.),
or of Countrywide Fund Services, Inc. ("CFS"), the administrative services
agent, shareholder servicing and transfer agent, and accounting services agent
for the Trust.
INVESTMENT ADVISORY AGREEMENT
The Fund's investments are managed by the Adviser pursuant to the terms of an
Advisory Agreement. The Fund pays the Adviser an investment management fee,
computed and accrued daily and paid monthly, at an annual rate of 1.00% of the
first $50 million of the Fund's average net assets and 0.75% of any additional
average net assets over $50 million.
In order to voluntarily reduce operating expenses during the year ended December
31, 1998, the Adviser waived $21,200 of its advisory fees.
SUB-ADVISORY AGREEMENT
The Adviser has retained Gouws Capital Management, Inc. ("GCMI") to provide
investment sub-advisory and marketing support services to the Fund. The Adviser
(not the Fund) pays GCMI a fee, computed daily and paid monthly, at an annual
rate equal to 50% of the Adviser's net profit, which is the investment advisory
fee received by the Adviser, less associated costs and expenses incurred by the
Adviser.
10
<PAGE>
REvest
Notes To Financial Statements (Continued) Value Fund [LOGO]
- --------------------------------------------------------------------------------
ADMINISTRATION AGREEMENT
Under the terms of an Administration Agreement effective September 26, 1998, CFS
supplies non-investment related administrative and compliance services for the
Fund. CFS supervises the preparation of reports to shareholders, reports to and
filings with the Securities and Exchange Commission and state securities
commissions, and materials for meetings of the Board of Trustees. For these
services, CFS receives a monthly fee from the Fund at an annual rate of 0.09% on
its average daily net assets up to $100 million; 0.075% on the next $100
million; and 0.05% on such net assets in excess of $200 million, subject to a
$2,000 minimum monthly fee. Under the Administration Agreement, CFS earned
$6,000 during the year ended December 31, 1998.
TRANSFER AGENT AGREEMENT
Under the terms of a Transfer, Dividend Disbursing, Shareholder Service and Plan
Agency Agreement effective September 26, 1998, CFS maintains the records of each
shareholder's account, answers shareholders' inquiries concerning their
accounts, processes purchases and redemptions of the Fund's shares, acts as
dividend and distribution disbursing agent and performs other shareholder
service functions. For these services, CFS receives a monthly fee based on the
number of shareholder accounts, subject to a $1,250 minimum monthly fee. Under
the Transfer, Dividend Disbursing, Shareholder Service and Plan Agency
Agreement, CFS earned $3,750 of transfer agent fees during the year ended
December 31, 1998. In addition, the Fund pays out-of-pocket expenses including,
but not limited to, postage and supplies.
ACCOUNTING SERVICES AGREEMENT
Under the terms of an Accounting Services Agreement effective September 26,
1998, CFS calculates the daily net asset value per share and maintains the
financial books and records of the Fund. Based on the current net assets of the
Fund, CFS receives a monthly fee of $2,000 from the Fund for these services.
Under the Accounting Services Agreement, CFS earned $6,000 of accounting
services fees during the year ended December 31, 1998. In addition, the Fund
pays certain out-of-pocket expenses incurred by CFS in obtaining valuations of
the Fund's portfolio securities.
UNDERWRITING AGREEMENT
Under the terms of an Underwriting Agreement effective September 26, 1998, CW
Fund Distributors, Inc. (the "Underwriter") serves as the exclusive agent for
the distribution of the Fund's shares. The Underwriter is an affiliate of CFS by
reason of common ownership.
SHAREHOLDER SERVICE PLAN
The Trust has adopted a Shareholder Service Plan (the "Plan"). Under the Plan,
the Trust may enter into shareholder service agreements pursuant to which a
shareholder service provider performs certain shareholder services not otherwise
provided by the transfer agent. For these services, the Adviser pays the
shareholder service provider a fee at an annual rate of up to 0.25% of the
average daily net assets attributable to shares owned by investors for which the
shareholder service provider maintains a servicing relationship. The Fund may
reimburse the Adviser such payments in an amount not to exceed 0.25% per annum
of the average daily net assets of the Fund. For the year ended December 31,
1998, no shareholder servicing fees were paid by the Adviser or reimbursed or
accrued by the Fund.
5. AGREEMENT AND PLAN OF REORGANIZATION
The Fund was originally organized as a series of The Royce Fund, an open-end
management investment company organized as a Delaware business trust. Pursuant
to an Agreement and Plan of Reorganization that occurred on September 25, 1998,
all assets and liabilities of The REvest Growth & Income Fund (the Predecessor
Fund), that had substantially identical investment objectives and policies as
the Fund, were transferred in exchange for all capital shares of the Fund. The
Predecessor Fund then distributed to its shareholders as a liquidating dividend
all capital shares of the Fund in exchange for and in cancellation of its
capital shares.
For federal income tax purposes, the reorganization qualified as a tax-free
reorganization with no tax consequences to the Predecessor Fund, the Fund or
their shareholders.
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Board of Trustees of The Winter Harbor Fund and Shareholders of The
REvest 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 The REvest Value Fund, (hereafter
referred to as the "Fund") at December 31, 1998, the results of operations for
the year then ended, the changes in its net assets and financial highlights for
each of the periods indicated, in conformity with generally accepted accounting
principles. 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 generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 1998 by correspondence with the
custodian, provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Columbus, Ohio
February 16, 1999
11
<PAGE>
Our New Partners
- --------------------------------------------------------------------------------
With the successful completion of the reorganization of The REvest Value Fund,
Ebright Investments, Inc. ("EII" or "Adviser") began what we hope to be a long
and prosperous partnership with Gouws Capital Management, Inc. ("GCMI"). GCMI is
a registered investment adviser managing approximately $800 million in client
assets using a value orientation. As such, it already has the infrastructure in
place to support the growing research and marketing needs of a mutual fund such
as ours. By naming GCMI sub- advisor to the Fund, EII gains access to its
extensive staff, information services, computer systems, trading facilities and
marketing resources. Building this infrastructure was part of EII's long-term
business plan. By partnering with GCMI, we save time, energy and substantially
reduce the Adviser's future overhead costs. With that said, we would like to
introduce you to key members of GCMI's staff, people we work with on a daily
basis.
THE PRESIDENTS
[PHOTO]
Johann H. Gouws, President - Gouws Capital Management (Right)
Richard E. Curran, Jr., President & Chief Trust Officer -
Acadia Trust, N.A. (Left)
RESEARCH AND SMALL CAPITAL EQUITY INVESTMENT
STANDING:
[PHOTO]
Jan F. Macleod, Vice President, Director of Research
Gregg A. Marston, Senior Vice President, Portfolio Manager
SEATED:
Carole M. Hersam, Equity Analyst
David E. Smith, Equity Analyst
SUPPORT SERVICES
[PHOTO]
STANDING, LEFT TO RIGHT:
Diane M. Aston, Systems Manager
Patricia N. O'Donnell, Director of Marketing
Frank E. Kemna, Senior Vice President, Chief Operating Officer
SITTING, LEFT TO RIGHT:
Cornelia B. Morin, Ebright Investments Inc.,
Vice President, Operations and Customer Service
Joan M. Smith, Vice President, Treasurer
12
<PAGE>
REvest
Year 2000 Disclosure Value Fund [LOGO]
- --------------------------------------------------------------------------------
There has been a lot of public attention lately concerning the impact that the
Year 2000 date change may have on businesses, utilities, and other organizations
that rely on computerized systems to help run their operations. The Year 2000
date change may affect any system that uses computer software programs and
computer chips that store calendar dates as two-digit rather than four-digit
numbers. Beginning in the year 2000, a computer system utilizing these types of
software or chips may recognize date codes as occurring in the 1900s.
Ebright Investments, Inc. ("EII") and Countrywide Fund Services, Inc. ("CFS")
(back office service provider to the Fund), use computer systems to support the
management and operation of The REvest Value Fund. Computer software and
computer chips also are used to run security systems, communications networks,
and office infrastructure that are essential to EII's daily operation. EII
relies on service providers for its computer and office systems. The Fund's
management is exercising oversight on the Year 2000 compliance efforts of its
various service providers. In most instances, upgrades of non-compliant systems
have been completed and testing should be completed by Spring of 1999.
The Fund's Board of Trustees is receiving quarterly reports on the status of
Year 2000 readiness efforts. Also, EII and CFS are both subject to regulatory
oversight with respect to Year 2000 readiness. While EII and CFS are taking
steps to address the Year 2000 issue and to obtain reasonable assurances that
comparable steps are being taken by the Fund's other major service providers,
there can be no guarantees that these steps will be sufficient to avoid adverse
impact on the Fund from this problem.
It is always good practice for our shareholders to check account statements and
to keep all records for your account. The issues surrounding the Year 2000 date
change make such record retention especially important. If you have any
questions or problems regarding any information on your statements, please
contact Cornelia Morin by calling EII at (800) 277-5573.
Customer Service
- --------------------------------------------------------------------------------
1. If I have questions or need literature about the Fund who may I call?
Call Cornelia Morin, EII's customer service officer, at (800) 277-5573. The
office is open from 9:00am to 5:00pm ET every business day.
2. If I have questions about the Fund's investments who should I call?
Call Jennifer Goff, the Fund's portfolio manager, at (800) 277-5573. We are
one of a small number of funds where the manager is available to talk
directly to investors. If Jen is traveling she will return your call when
she returns to the office. We try to treat our investors as true partners
with us, in the Fund.
3. How often does the Fund mail out statements?
Cumulative year-to-date statements are mailed out after each transaction
and after each dividend. Tax information is mailed by January 31st of each
year. The Fund distributes formal Annual and Semi-Annual Reports that are
mailed to each shareholder in February and August, respectively.
4. Is it correct that there are no sales charges or 12b-1 fees?
Yes, not one penny of your investment goes to any sales charge or 12b-1
fee. The Fund is one of the so-called "pure" no-load Funds. You will
rarely, if ever, see the Fund advertised to investors. We believe that the
Fund should sell itself because it does a good job for its investors.
5. Is the Fund available for IRA investments and other retirement plans?
Yes, the Fund offers both IRA and 403(b)(7) plans to its investors. Because
of the Fund's philosophy and long-term approach to investing, we believe
that it may be an appropriate vehicle for all types of retirement plans.
6. When does the Fund pay income and capital gain distributions?
The Fund makes quarterly income distributions and an annual capital gain
distribution at the end of December. A preliminary, non-binding estimate of
the amount of the year-end distributions is available to shareholders by
calling the EII office any time after the Thanksgiving holiday.
Distributions are automatically reinvested unless we receive other
instructions from the shareholder.
7. Why does the Fund impose a 1.00% redemption fee during the first year
following the opening of a shareholder account?
This fee is charged to discourage short-term trading in the Fund's shares.
When short-term investors trade in and out of a mutual fund, they increase
the costs of operations for the permanent shareholders. This activity can
also disrupt the investment plan for the portfolio and reduce overall
returns. When charged, the 1.00% fee recovers the costs of this disruption
for the rest of the shareholders.
8. How do I receive published information and other mailings from the Fund
when issued?
The Fund maintains a "direct" mailing list especially for its "street name"
shareholders. This will speed your receipt of all Fund mailings such as our
financial reports and special interim shareholder letters. If you are not
on the mailing list and would like to be included, please call Cornelia
Morin, our customer service officer, and she will add your name.
<PAGE>
The following (unaudited) chart provides the historical prices and distributions
of the Fund since inception.
Historical Price & Distribution Chart
- --------------------------------------------------------------------------------
Quarter Payable Distribution Reinvest
Ended Price Date Amount Type Price
- --------------------------------------------------------------------------------
8/01/94* $10.00*
9/30/94 10.04 None
12/31/94 9.66 12/30/94 $0.050 Income $ 9.66
- --------------------------------------------------------------------------------
3/31/95 10.00 3/24/95 0.045 Income 9.91
6/30/95 10.55 6/30/95 0.045 Income 10.55
9/30/95 11.16 9/25/95 0.040 Income 11.20
12/31/95 10.73 12/29/95 0.040 Income 10.73
12/29/95 0.160 ST Gains 10.73
12/29/95 0.160 LT Gains 10.73
- --------------------------------------------------------------------------------
3/31/96 11.26 3/15/96 0.050 Income 11.06
6/30/96 11.65 6/14/96 0.050 Income 11.90
9/30/96 11.92 9/13/96 0.060 Income 11.77
12/31/96 12.21 12/31/96 0.050 Income 12.21
12/31/96 0.160 ST Gains 12.21
12/31/96 0.520 LT Gains 12.21
- --------------------------------------------------------------------------------
3/31/97 12.33 3/14/97 0.055 Income 12.64
6/30/97 13.24 6/13/97 0.055 Income 13.09
9/30/97 14.76 9/12/97 0.060 Income 14.68
12/31/97 13.00 12/31/97 0.020 Income 13.00
12/31/97 0.760 ST Gains 13.00
12/31/97 0.260 LT Gains(20%) 13.00
12/31/97 0.850 LT Gains(28%) 13.00
- --------------------------------------------------------------------------------
3/31/98 13.45 3/14/98 0.050 Income 13.43
6/30/98 13.08 6/13/98 0.030 Income 12.93
9/30/98 10.11 9/21/98 0.040 Income 10.22
9/21/98 0.930 LT Gains 10.22
12/31/98 10.88 12/31/98 0.025 Income 10.88
12/31/98 0.175 LT Gains 10.88
- --------------------------------------------------------------------------------
*Initial offering date and price.
This report must be accompanied or preceded by a current Prospectus of the Fund.
Ebright Investments, Inc.
Investment Adviser
511 Congress Street, 9th Floor
Portland, ME 04101
(207) 774-7455 o (800) 277-5573
Fax (207) 772-7370
REvest
Value Fund
P.O. Box 5354
Cincinnati, OH 45201-5354
(877) 473-8378
A Series of The Winter Harbor Fund
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001059611
<NAME> The Winter Harbor Fund
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 20,717,526
<INVESTMENTS-AT-VALUE> 24,765,119
<RECEIVABLES> 55,134
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 3,738
<TOTAL-ASSETS> 24,823,991
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 93,868
<TOTAL-LIABILITIES> 93,868
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 20,663,004
<SHARES-COMMON-STOCK> 2,272,903
<SHARES-COMMON-PRIOR> 2,991,804
<ACCUMULATED-NII-CURRENT> 12,821
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6,705
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,047,593
<NET-ASSETS> 24,730,123
<DIVIDEND-INCOME> 483,193
<INTEREST-INCOME> 305,343
<OTHER-INCOME> 0
<EXPENSES-NET> 410,528
<NET-INVESTMENT-INCOME> 378,008
<REALIZED-GAINS-CURRENT> 3,193,187
<APPREC-INCREASE-CURRENT> (5,641,998)
<NET-CHANGE-FROM-OPS> (2,070,803)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 371,064
<DISTRIBUTIONS-OF-GAINS> 2,560,610
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 175,492
<NUMBER-OF-SHARES-REDEEMED> 1,150,578
<SHARES-REINVESTED> 256,185
<NET-CHANGE-IN-ASSETS> (14,155,417)
<ACCUMULATED-NII-PRIOR> 5,877
<ACCUMULATED-GAINS-PRIOR> (625,872)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 315,903
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 431,728
<AVERAGE-NET-ASSETS> 31,590,275
<PER-SHARE-NAV-BEGIN> 13.00
<PER-SHARE-NII> 0.15
<PER-SHARE-GAIN-APPREC> (1.02)
<PER-SHARE-DIVIDEND> 0.15
<PER-SHARE-DISTRIBUTIONS> 1.10
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.88
<EXPENSE-RATIO> 1.30
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
