SEMI-ANNUAL REPORT
JUNE 30, 2000
[GRAPHIC]
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 management investment company. Jennifer E.
Goff, President of Ebright Investments, Inc. ("EII" or the "Adviser"), a
registered investment adviser, is responsible for the management of the Fund's
portfolio, subject to the authority of the Fund's Board of Trustees.
REvest primarily 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 program, stock buy-back program and/or cost reduction program) that
should, in the investment adviser's judgment, 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 AND MID- We believe these securities have more potential for capital
CAP STOCKS 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% will be issued by companies with market capitalizations
between $200 million and $2 billion at the time of
investment.
VALUE-ORIENTATION, We look for companies with "value discrepancies," or market
PLUS VITALITY 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 We will automatically close the Fund to new investors
PORTFOLIO beginning on March 1 after the end of any calendar year
CHARACTER during which its assets reach $350 million. Since we
specialize in small and medium-size companies, 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>
MANAGER'S LETTER REVEST VALUE FUND
--------------------------------------------------------------------------------
Dear Friends and Fellow Shareholders:
Like the fireworks my father used to set off over the Mt. Gretna Lake on the
fourth of July, the markets started this year with a bang and ended the first
half in a long, drawn-out fade. On February 2nd, at its first meeting of the
year, the Federal Reserve Board voted to raise short-term interest rates a
quarter point. It was the fourth time the committee had done so since June 1999.
The announcement itself was basically a non-event as Chairman Greenspan had
already set the stage for a series of rate hikes throughout the year as a means
of slowing the economy.
Shortly thereafter, the market once again began to bifurcate into New and Old
Economy stocks, with the New Economy stocks garnering the majority of the money
flows. New Economy stocks were deemed to be interest rate insensitive due to
their high levels of cash, low levels of debt and high unit growth. REvest was
able to keep up during this explosive time, ending the first quarter up 6.9%, as
compared to a rise of 7.1% and an increase of 2.3% for the Russell 2000 Index
and the S&P 500 Index, respectively.
The market's fascination with momentum took a breather in the second quarter, as
investors woke up to the fact that even New Economy stocks are vulnerable in a
rising interest rate environment. More importantly, the notion that earnings
matter came back in vogue. Analysts became less tolerant of business models that
require access to unlimited amounts of capital and that are not expected to earn
a profit for the foreseeable future. These collective realizations caused the
market value of many high fliers to stream back down toward Earth.
The Fed raised rates twice in the second quarter, 0.25% at its April meeting and
0.50% at the May meeting, and signaled its intention to continue as long as
inflation remained a threat. While Old Economy stocks had better relative
performance as a result, the Fed's actions created a great deal of uncertainty.
When investors were not questioning when the rate increases would stop, they
were wondering what the ultimate impact would be on the market in general and
second half earnings in particular. Will the Fed manage a soft landing, or will
it overshoot the mark and push the economy into a recession? As the quarter drew
to a close, the consensus opinion seemed to change daily. REvest held its own in
this interval, gaining 0.5%, versus a decline of 3.8% and a loss of 2.7% for the
Russell 2000 and S&P 500, respectively.
For the six months ended June 30, 2000, REvest was up 7.5%, significantly
outperforming both of the major benchmarks. During the same period, the Russell
2000 was up 3.0%, while the S&P 500 was down 0.4%. The Fund's performance was
favorably impacted by investments in energy, health and technology, while
financial and industrial cyclical stocks hampered performance.
The rest of the year remains a question mark. There are numerous cross-currents,
including the possibility of further rate increases and the fact that this is an
election year, which make it hard to predict. One thing is for certain, however,
as the various forces work against each other, the unusually high level of
volatility experienced recently will continue.
Regarding the previously announced acquisition of REvest by Royce Total Return
Fund, proxy material is currently being reviewed by the Securities and Exchange
Commission. I anticipate sending this material to shareholders in September.
Assuming approval by a majority of the outstanding shares, the transaction
should close in October.
While a grand finale is a bit premature at this point, this Manager's Letter
will likely serve as my last as Portfolio Manager for REvest. I am pleased to be
able to end my tenure with such good performance. Once again, I want to thank
you for including us in your portfolio of investments. Your support over the
years has been greatly appreciated.
Sincerely,
Jennifer Ebright Goff
Portfolio Manager
President, Ebright Investments, Inc.
August 17, 2000
Note: The S&P 500 and the Russell 2000 are unmanaged indices and include the
reinvestment of dividends.
1
<PAGE>
PORTFOLIO SUMMARY
--------------------------------------------------------------------------------
The following information provides a "bird's eye" view of the REvest portfolio
as of June 30, 2000. For a more complete picture, the Performance Discussion,
Portfolio of Investments and accompanying financial statements should be read in
their entirety.
<TABLE>
<CAPTION>
PORTFOLIO Common Stocks: MARKET VALUE % OF NET ASSETS
COMPOSITION ------------ ---------------
<S> <C> <C>
Micro-Caps (under $200M) .......... $ 1,657,499 ........ 10.7%
Small-Caps ($200M - $1B) .......... 10,644,969 ........ 68.7%
Mid-Caps ($1B - $2B) .............. 2,038,438 ........ 13.2%
Convertible Bonds ................... 799,500 ........ 5.2%
Cash Equivalents .................... 383,684 ........ 2.5%
Liabilities in Excess of Other
Assets .............................. (43,638) ........ (0.3)%
------------ ------
Net Assets .......................... $ 15,480,452 ........ 100.0%
============ ======
% OF NET ASSETS
---------------
INDUSTRY Industrial Cyclical ....................................... 19.0%
CONCENTRATION Energy .................................................... 11.9%
Health .................................................... 11.4%
Financial ................................................. 10.6%
Retail .................................................... 10.6%
Technology ................................................ 10.4%
Services .................................................. 8.7%
Consumer Products ......................................... 7.8%
Real Estate ............................................... 7.4%
Cash Equivalents .......................................... 2.5%
Liabilities in Excess of Other Assets .................... (0.3)%
AVERAGE FINANCIAL Market Capitalization ..................................... $601.4M
CHARACTERISTICS P/E Ratio ................................................. 20.9X
OF PORTFOLIO P/B Ratio ................................................. 2.0X
COMPANIES Return on Assets .......................................... 6.6%
Return on Equity .......................................... 13.0%
Projected 5-Year EPS Growth Rate .......................... 14.4%
Gross Portfolio Yield ..................................... 2.6%
MARKET VALUE % OF NET ASSETS
------------ ---------------
TOP TEN EQUITY 1. IDEXX Laboratories, Inc. ......... $ 457,500 ........ 3.0%
POSITIONS 2. Barrett Resources Corporation .... 456,562 ........ 2.9%
3. CBRL Group, Inc. ................. 440,625 ........ 2.8%
4. Matthews International Corporation 435,000 ........ 2.8%
5. St. Mary Land & Exploration, Co. . 420,625 ........ 2.7%
6. Arrow International, Inc. ........ 418,750 ........ 2.7%
7. The Toro Company ................. 411,719 ........ 2.7%
8. Analogic Corporation ............. 400,000 ........ 2.6%
9. CLARCOR, Inc. .................... 397,500 ........ 2.6%
10. Invacare Corporation ............. 393,750 ........ 2.5%
</TABLE>
2
<PAGE>
PERFORMANCE DISCUSSION REVEST VALUE FUND
--------------------------------------------------------------------------------
The first half of 2000 marked a large departure from the themes seen in the
prior two years. Continuing the trend begun in late 1999, small-cap stocks
outperformed large-cap stocks. This statement was particularly true in the first
quarter where the Russell 2000 Index returned 7.1% while the S&P 500 Index only
returned 2.3%. While both indices gave up some of these gains in the second
quarter, the Russell 2000 more than the S&P 500, the Russell 2000 still
prevailed in the end. For the first six months, the Russell 2000 rose 3.0% as
compared to a decline of 0.4% for the S&P 500.
In addition, value stocks finally outperformed growth stocks. Despite a sharp
run in February and early March, growth stocks suffered a serious decline in the
second quarter due to interest rate and valuation concerns. Value stocks for
their part were fairly consistent, garnering small, but positive, returns in
both quarters. Proving that the turtle can indeed beat the hare, the Russell
2000 Value Index was up 5.9% through June 30, 2000, versus up 1.2% for the
Russell 2000 Growth Index.
REvest, with its small-cap, value orientation, ended the first half up 7.5%. Our
performance was enhanced by our participation in the technology, energy, and
health sectors, while the financial and industrial cyclical sectors acted as
more of a drag. We believe the first half's performance validated our strategy
of maintaining relatively equal weightings across industry sectors. It confirms
our belief that while we can determine value exists, we can never time the
realization of that value. Being broadly diversified helps ensure that we
participate whenever a shift finally occurs.
COMPARISON OF THE CHANGE IN VALUE OF A $10,000 INITIAL INVESTMENT
ON AUGUST 1, 1994* IN THE REVEST VALUE FUND,
S&P 500 INDEX AND RUSSELL 2000 INDEX
[GRAPHIC OMITTED]
-------------------------------------
6-30-00
-------
REvest Value Fund $16,629
S&P 500 Index $35,501
Russell 2000 Index $22,693
-------------------------------------
FOR PERIODS ENDED JUNE 30, 2000
SINCE
6-MONTHS 1-YEAR 5-YEAR INCEPTION*
-------- ------ ------ ----------
REvest Value Fund
average annual total return .. 7.50% -2.44% 9.22% 8.97%
S&P 500 Index average
annual total return .......... -0.43% 7.25% 23.80% 23.86%
Russell 2000 Index average
annual total return .......... 3.03% 14.32% 14.27% 14.85%
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, an unmanaged index 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.
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
3
<PAGE>
PORTFOLIO OF INVESTMENTS REVEST VALUE FUND
--------------------------------------------------------------------------------
JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCKS - 92.6%
SHARES COST VALUE
------ ---- -----
<S> <C> <C> <C> <C>
CONSUMER PRODUCTS 30,000 * Helen of Troy Ltd. ...................... $ 189,375 $ 167,812
- 7.8% 20,000 Russ Berrie and Company, Inc. ........... 302,600 385,000
12,500 The Toro Company ........................ 325,750 411,719
25,000 Wolverine World Wide, Inc. .............. 323,500 246,875
------------ -----------
1,141,225 1,211,406
------------ -----------
ENERGY - 11.9% 15,000 * Barrett Resources Corporation ........... 394,879 456,562
20,000 Berry Petroleum Company, Class A ........ 183,825 340,000
10,000 Helmerich & Payne, Inc. ................. 198,142 373,750
10,000 Penn Virginia Corporation ............... 161,861 246,250
10,000 St. Mary Land & Exploration Company ..... 186,094 420,625
------------ -----------
1,124,801 1,837,187
------------ -----------
FINANCIAL - 10.6% 25,000 Banknorth Group, Inc. ................... 161,044 382,813
10,000 Chittenden Corporation .................. 270,600 244,375
30,000 Donegal Group, Inc. ..................... 308,986 172,500
10,000 Protective Life Corporation ............. 319,600 266,250
25,000 Susquehanna Bancshares, Inc. ............ 287,536 356,250
10,000 Webster Financial Corporation ........... 255,625 221,875
------------ -----------
1,603,391 1,644,063
------------ -----------
HEALTH - 11.4% 12,000 Arrow International, Inc. ............... 240,820 418,750
10,000 Diagnostic Products Corporation ......... 276,375 320,000
20,000 * IDEXX Laboratories, Inc. ................ 274,872 457,500
15,000 Invacare Corporation .................... 283,220 393,750
20,000 Omnicare, Inc. .......................... 258,813 181,250
------------ -----------
1,334,100 1,771,250
------------ -----------
INDUSTRIAL 10,000 Aptargroup .............................. 285,025 270,000
CYCLICALS - 19.0% 10,000 CLARCOR, Inc. ........................... 266,267 397,500
10,000 Greif Bros. Corporation, Class A ........ 216,950 307,500
10,000 Kaydon Corporation ...................... 284,628 210,000
15,000 LSI Industries, Inc. .................... 296,406 227,812
25,000 M.A. Hanna Company ...................... 339,000 225,000
15,000 Matthews International Corporation ...... 340,778 435,000
20,000 Regal-Beloit Corporation ................ 340,588 318,750
10,000 Teleflex, Inc. .......................... 174,700 370,625
20,000 Wausau-Mosinee Paper Corporation ........ 220,962 171,250
------------ -----------
2,765,304 2,933,437
------------ -----------
REAL ESTATE - 5.7% 10,000 Cousins Properties, Inc. ................ 175,117 385,000
10,000 Manufactured Home Communities, Inc. ..... 240,600 239,375
20,000 New Plan Excel Realty Trust ............. 291,100 260,000
------------ -----------
706,817 884,375
------------ -----------
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
--------------------------------------------------------------------------------
JUNE 30, 2000 (UNAUDITED)
COMMON STOCKS - 92.6% (Continued)
SHARES COST VALUE
------ ---- -----
RETAIL - 10.6% 10,000 Applebee's International, Inc. ........... $ 226,573 $ 303,125
30,000 CBRL Group, Inc. ........................ 340,763 440,625
20,000 Claire's Stores, Inc. ................... 374,794 385,000
30,000 * Stein Mart, Inc. ........................ 270,000 307,500
30,000 * West Marine, Inc. ....................... 309,062 205,312
------------ -----------
1,521,192 1,641,562
------------ -----------
SERVICES - 8.7% 10,000 Chemed Corporation ...................... 323,247 281,875
25,000 * Computer Horizons Corporation ........... 348,858 335,938
15,000 Landauer, Inc. .......................... 285,587 233,438
10,000 National Data Corporation ............... 326,900 230,000
10,000 * Right Management Consultants, Inc. ...... 325,750 262,500
------------ -----------
1,610,342 1,343,751
------------ -----------
TECHNOLOGY - 6.9% 10,000 Analogic Corporation .................... 290,000 400,000
10,000 * Dionex Corporation ...................... 324,450 267,500
30,000 * Planar Systems, Inc. .................... 206,750 388,125
1,000 Woodhead Industries ..................... 16,000 18,250
------------ -----------
837,200 1,073,875
------------ -----------
TOTAL COMMON STOCKS ................................... $ 12,644,372 $14,340,906
------------ -----------
CORPORATE BONDS - 5.2%
PAR COST VALUE
--- ---- -----
$300,000 MSC.Software Corporation 7.875% Conv. Sub. Deb.
due 8/18/04 ............................................ $ 289,611 $ 258,750
300,000 Richardson Electronics Ltd. 8.25% Conv. Sub. Deb.
due 6/15/06 ............................................. 259,500 273,375
300,000 Sizeler Property Investors, Inc. 8.00% Conv. Sub. Deb.
due 7/15/03 ............................................. 278,250 267,375
------------ -----------
TOTAL CORPORATE BONDS ................................... $ 827,361 $ 799,500
------------ -----------
MONEY MARKETS - 2.5%
SHARES
------
383,684 Firstar Stellar Treasury Fund ........................... $ 383,684 $ 383,684
------------ -----------
TOTAL INVESTMENTS AT VALUE - 100.3% ..................... $ 13,855,417 $15,524,090
============ -----------
LIABILITIES IN EXCESS OF OTHER ASSETS - (0.3%) .......... (43,638)
-----------
TOTAL NET ASSETS - 100.0% ............................... $15,480,452
===========
</TABLE>
* Non-income producing.
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
------------------------------------------------------------------------------------------------------------
JUNE 30, 2000 (UNAUDITED)
<S> <C> <C>
ASSETS: Investments, at value (acquisition cost: $13,855,417) (Note 2) ..... $ 15,524,090
Receivable for capital shares sold .................................. 50
Interest receivable ................................................. 20,776
Dividends receivable ................................................ 26,088
Receivable for securities sold ...................................... 144,727
Other assets ........................................................ 9,488
------------
Total assets ...................................................... 15,725,219
------------
LIABILITIES: Payable to affiliates (Note 5) ...................................... 17,473
Dividends payable ................................................... 4,718
Payable for securities purchased .................................... 208,506
Payable for capital shares redeemed ................................. 11,920
Other accrued expenses and liabilities .............................. 2,150
------------
Total liabilities ................................................. 244,767
------------
Net assets.......................................................... $ 15,480,452
============
NET ASSETS: $ 12,360,191
Paid-in capital.......................................................
Undistributed net investment income ................................. 2,115
Accumulated net realized gains from security transactions ........... 1,449,473
Net unrealized appreciation on investments .......................... 1,668,673
------------
Net assets ....................................................... $ 15,480,452
============
PRICE PER SHARE: Net asset value, offering and redemption price per share (Note 2)
($15,480,452 / 1,465,883 shares outstanding) ......................... $ 10.56
============
STATEMENTS OF CHANGES IN NET ASSETS
------------------------------------------------------------------------------------------------------------
SIX MONTHS FOR THE
ENDED YEAR ENDED
JUNE 30, 2000 DECEMBER 31,
(UNAUDITED) 1999
------------ ------------
INVESTMENT Net investment income .............................. $ $ 257,303
OPERATIONS: 71,410
Net realized gains from security transactions ...... 1,445,187 1,202,089
Net change in unrealized appreciation/depreciation
on investments ................................... (252,606) (2,126,314)
------------ ------------
Net increase (decrease) in net assets from 1,263,991 (666,922)
operations .......................................
From net investment income ......................... (77,709) (261,710)
DISTRIBUTIONS TO
SHAREHOLDERS:
From net realized gains on investments ............. -- (841,632)
------------ ------------
Net decrease in net assets from distributions to
shareholders ..................................... (77,709) (1,103,342)
------------ ------------
CAPITAL SHARE Proceeds from shares sold .......................... 502,751 748,290
TRANSACTIONS Reinvestment of distributions in shares ............ 68,237 978,647
(NOTE 4): Payments for shares redeemed ....................... (3,595,413) (7,368,201)
------------ ------------
Net decrease in net assets from capital share (3,024,425) (5,641,264)
transactions ...................................
------------ ------------
Total decrease in net assets ..................... (1,838,143) (7,411,528)
------------ ------------
NET ASSETS: Beginning of period ................................ 17,318,595 24,730,123
------------ ------------
End of period ...................................... $ 15,480,452 $ 17,318,595
============ ============
UNDISTRIBUTED NET INVESTMENT INCOME .................................... $ 2,115 $ 8,414
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
------------------------------------------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED JUNE 30, 2000 (UNAUDITED)
<S> <C> <C>
INVESTMENT INCOME: Interest ........................................................... $ 49,575
Dividends .......................................................... 148,475
------------
Total investment income .......................................... 198,050
------------
EXPENSES: Investment advisory fees (Note 5) .................................. 84,428
Accounting services fees (Note 5) .................................. 12,000
Administrative services fees (Note 5) .............................. 12,000
Transfer agent fees (Note 5) ....................................... 7,500
Registration fees .................................................. 4,673
Postage and supplies ............................................... 4,600
Insurance expense .................................................. 4,356
Custodian fees ..................................................... 3,742
Printing of shareholder reports .................................... 3,661
Trustees' fees and expenses ........................................ 3,000
Pricing costs ...................................................... 642
------------
Total expenses ................................................... 140,602
Fees waived by the Adviser (Note 5) ................................ (13,962)
------------
Net expenses ..................................................... 126,640
------------
NET INVESTMENT INCOME .................................................................. 71,410
------------
REALIZED AND
UNREALIZED GAIN
(LOSS) ON Net realized gains from security transactions ...................... 1,445,187
INVESTMENTS: Net change in unrealized appreciation/depreciation on investments .. (252,606)
------------
Net realized and unrealized gains on investments ................ 1,192,581
NET INCREASE IN NET ASSETS FROM INVESTMENT OPERATIONS .................................. $ 1,263,991
============
<CAPTION>
FINANCIAL HIGHLIGHTS
-----------------------------------------------------------------------------------------------------------
This table is presented to show selected data for a share outstanding through
each period and to assist shareholders in evaluating the Fund's performance.
SIX
MONTHS
ENDED FOR THE YEARS ENDED DECEMBER 31,
JUNE 30, --------------------------------
2000
(UNAUDITED) 1999 1998 1997 1996 1995
--------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT Net asset value, beginning of
OPERATIONS: period ...................... $ 9.87 $10.88 $13.00 $12.21 $10.73 $ 9.66
------ ------ ------ ------ ------ ------
Net investment income ....... 0.05 0.14 0.15 0.21 0.21 0.18
Net realized & unrealized
gain (loss) on investments . 0.69 (0.51) (1.02) 2.64 2.16 1.38
------ ------ ------ ------ ------ ------
Total from investment
operations ................ 0.74 (0.37) (0.87) 2.85 2.37 1.56
------ ------ ------ ------ ------ ------
DISTRIBUTIONS From net investment income .. (0.05) (0.14) (0.15) (0.19) (0.21) (0.17)
TO SHAREHOLDERS: From net realized gain on
investments ............... -- (0.50) (1.10) (1.87) (0.68) (0.32)
------ ------ ------ ------ ------ ------
Total from distributions to
shareholders .............. (0.05) (0.64) (1.25) (2.06) (0.89) (0.49)
------ ------ ------ ------ ------ ------
Net asset value, end of
period ...................... $10.56 $ 9.87 $10.88 $13.00 $12.21 $10.73
====== ====== ====== ====== ====== ======
RATIOS AND Total return ................ 7.50%3 (3.32)% (6.12)% 23.50% 22.27% 16.23%
SUPPLEMENTAL
DATA:
Net assets, end of period $15,480 $17,319 $24,730 $38,886 $42,099 $35,804
(000's) .....................
Ratio of net expenses to
average net assets1 ......... 1.50%2 1.29% 1.30% 1.26% 1.29% 1.30%
Ratio of net investment 0.85%2 1.22% 1.20% 1.60% 1.78% 1.73%
income to average net
assets .....................
Portfolio turnover rate ..... 44%2 41% 35% 54% 64% 53%
</TABLE>
1 Absent fee waivers by the Adviser, the ratios of expenses to average net
assets would have been 1.67%2, 1.59% and 1.37% for the periods ended June 30,
2000, December 31, 1999 and 1998, respectively (Note 5).
2 Annualized
3 Not Annualized.
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
1. ORGANIZATION. The REvest Value Fund (the "Fund") is a no-load series of The
Winter Harbor Fund (the "Trust"), a diversified open-end investment management
company organized as a Delaware business trust.
The Fund primarily seeks long-term growth and secondarily current income by
investing in a broadly diversified portfolio of common stocks and convertible
securities of small and medium-sized companies.
2. SIGNIFICANT ACCOUNTING POLICIES. The following is a summary of the Trust's
significant accounting policies:
Security Valuation. The Fund's portfolio securities are valued as of the close
of business of the regular session of trading on the New York Stock Exchange
(normally 4:00 p.m., Eastern Time). Securities traded on a national stock
exchange or quoted by NASDAQ are valued based upon the closing price on the
principal exchange where the security is traded, or, if not traded on a
particular day, at the closing bid price. U.S. Government obligations are valued
at their most recent bid prices as obtained from one or more of the major market
makers for such securities. 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.
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 on 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 Firstar Bank, N.A. ("Firstar"), 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
Firstar until maturity of the repurchase agreements. Repurchase agreements could
involve certain risks in the event of default or insolvency of Firstar,
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 Tax. 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.
Based upon the federal income tax cost of portfolio investments of $13,855,417
for the six months ended June 30, 2000, the Fund had net unrealized appreciation
of $1,668,673, consisting of gross unrealized appreciation of $3,004,379 and
$1,335,706 of gross unrealized depreciation.
3. INVESTMENT TRANSACTIONS. For the six months ended June 30, 2000, cost of
purchases and proceeds from sales of portfolio securities, other than short-term
investments, amounted to $3,600,701 and $6,789,862, respectively.
4. CAPITAL 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:
SIX MONTHS
ENDED YEAR ENDED
JUNE 30,2000 DECEMBER 31,
(UNAUDITED) 1999
---------- ----------
Sold ............................................. 48,724 69,802
Reinvested ....................................... 6,472 99,773
Redeemed ......................................... (344,369) (687,422)
---------- ----------
Net decrease in shares outstanding ............... (289,173) (517,847)
Shares outstanding, beginning of period .......... 1,755,056 2,272,903
---------- ----------
Shares outstanding, end of period ................ 1,465,883 1,755,056
========== ==========
Shares redeemed within one year of opening a shareholder account are subject to
a 1.0% redemption fee.
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued) REVEST VALUE FUND
--------------------------------------------------------------------------------
5. TRANSACTIONS WITH AFFILIATES. Certain trustees and officers of the Trust are
also officers of Ebright Investments, Inc. (the "Adviser"), or of Integrated
Fund Services, Inc. ("IFS"), 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 advisory fee, computed and accrued daily and paid monthly, at an
annual rate of 1.00% of its average daily net assets.
In order to voluntarily reduce operating expenses of the Fund during the six
months ended June 30, 2000, the Adviser waived $13,962 of its investment
advisory fees.
Administration Agreement. Under the terms of an Administration Agreement, IFS
supplies non-investment related administrative and compliance services for the
Fund. IFS 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, IFS receives a monthly fee from the Fund at an annual rate of 0.09% on
the Fund's average daily net assets up to $100 million; 0.075% of the next $100
million; and 0.05% of such net assets in excess of $200 million, subject to a
$2,000 minimum monthly fee.
Transfer Agent Agreement. Under the terms of a Transfer, Dividend Disbursing,
Shareholder Service and Plan Agency Agreement, IFS 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, IFS receives a monthly fee based on the
number of shareholder accounts, subject to a $1,250 minimum monthly fee. In
addition, the Fund pays IFS out-of-pocket expenses including, but not limited
to, postage and supplies.
Accounting Services Agreement. Under the terms of an Accounting Services
Agreement, IFS calculates the daily net asset value per share and maintains the
financial books and records of the Fund. For these services, IFS receives a
monthly fee, based on current net assets, of $2,000 from the Fund. In addition,
the Fund pays IFS certain out-of-pocket expenses incurred by IFS in obtaining
valuations of the Fund's portfolio securities.
Underwriting Agreement. Under the terms of an Underwriting Agreement, IFS Fund
Distributors, Inc. (the "Underwriter") serves as the exclusive agent for the
distribution of the Fund's shares. The Underwriter is an affiliate of IFS 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 six months
ended June 30, 2000, no shareholder servicing fees were paid by the Adviser or
reimbursed or accrued by the Fund.
SHAREHOLDER INFORMATION
--------------------------------------------------------------------------------
INVESTMENTS Questions concerning the Fund's investments can be directed
to Jennifer Goff, the Fund's portfolio manager, by calling
(800) 277-5573. We are one of a small number of funds where
the manager is available to talk directly to investors. If
Ms. Goff is traveling she will return your call when she
returns to the office. We consider our shareholders as true
partners with us in the Fund.
GENERAL Shareholder service representatives are available to answer
questions about the Fund or provide you with the Fund's
current literature by calling (877) 473-8378 (Option 3)
between 8:00 am and 7:00 pm. Automatic account information
(Option 2) is available 24 hours a day.
E-MAIL Electronic correspondence for the Adviser can be sent to:
[email protected]
9
<PAGE>
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
