UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended October 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Transition Period from ______ to ______
Commission File Number 0-24856
------------------------------------
UST PRIVATE EQUITY INVESTORS FUND, INC.
(Exact name of Registrant as specified in its charter)
MARYLAND 13-3786385
-------- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
114 West 47th Street
New York, NY 10036-1532
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (212) 852-1000
Title of Each Class Name of Exchange on Which Registered
------------------- ------------------------------------
None None
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or Section 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No |_|
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
FORM 10-K. [ ]
The number of shares outstanding of the registrant's common stock as of October
31, 1997 was 40,463 shares. No active market for the shares of the registrant
exists; therefore, the market value of such shares cannot be determined.
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DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Prospectus of the Registrant dated December 16, 1994, as
supplemented by supplements thereto dated August 28, 1995 and October 31, 1995,
(the "Prospectus") are incorporated by reference in Part I, Part II and Part III
hereof.
UST PRIVATE EQUITY INVESTORS FUND, INC.
INDEX
<TABLE>
<CAPTION>
Item No. Form 10-K
Report
Page
<S> <C> <C>
PART I
1. Business...................................................................................
2. Properties.................................................................................
3. Legal Proceedings..........................................................................
4. Submission of Matters to a Vote of Security Holders........................................
PART II
5. Market for Registrant's Common Equity and Related Stockholder Matters......................
6. Selected Financial Data....................................................................
7. Management's Discussion and Analysis of Financial Condition and Results of
Operations.................................................................................
8. Financial Statements and Supplementary Data................................................
9. Changes in and Disagreements with Accountants and Financial Disclosure.....................
PART III
10. Directors and Executive Officers of the Registrant.........................................
11. Executive Compensation ....................................................................
12. Security Ownership of Certain Beneficial Owners and Management.............................
13. Certain Relationships and Related Transactions.............................................
PART IV
14. Exhibits, Financial Statements, Schedules, and Reports on Form 8-K.........................
</TABLE>
SIGNATURES
CAUTIONARY STATEMENT FOR PURPOSES OF
THE "SAFE HARBOR" PROVISIONS OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
WHEN USED IN THIS ANNUAL REPORT ON FORM 10-K, THE WORDS "BELIEVES,"
"ANTICIPATES," "EXPECTS" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY
FORWARD-LOOKING STATEMENTS. STATEMENTS LOOKING FORWARD IN TIME ARE INCLUDED IN
THIS ANNUAL REPORT ON FORM 10-K PURSUANT TO THE "SAFE HARBOR" PROVISION OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH STATEMENTS ARE SUBJECT TO
CERTAIN RISKS AND UNCERTAINTIES WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY, INCLUDING, BUT NOT LIMITED TO, THOSE SET FORTH IN "RISK FACTORS" AS
SET FORTH IN THE COMPANY'S REGISTRATION STATEMENT ON FORM N-2 (FILE NO.
33-84290) AND IN "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS." READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON
THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE HEREOF. THE
COMPANY UNDERTAKES NO OBLIGATION TO PUBLICLY REVISE THESE FORWARD-LOOKING
STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES OCCURRING AFTER THE DATE HEREOF OR
TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.
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PART I
Item 1. Business
Formation:
- ---------
UST Private Equity Investors Fund, Inc. (the "Company" or the "Registrant") is a
Maryland corporation organized on September 16, 1994. The Company is a
non-diversified, closed-end management investment company operating as a
business development company under the Investment Company Act of 1940, as
amended and has registered its shares under the Securities Act of 1933, as
amended. The Company's investment objective is to achieve long-term capital
appreciation by investing in private later-stage venture capital and private
middle-market companies and in certain venture capital, buyout and private
equity funds that the Managing Investment Adviser (defined herein) believes
offer significant long-term capital appreciation.
United States Trust Company of New York (the "Managing Investment Adviser" or
"U.S. Trust") provides investment management services to the Company pursuant to
a management agreement originally dated December 9, 1994, as amended (the
"Management Agreement"), between the Managing Investment Adviser and the
Company. The Managing Investment Adviser is a subsidiary of U.S. Trust
Corporation. All officers of the Company are employees and/or officers of the
Managing Investment Adviser. The Managing Investment Adviser is responsible for
performing the management and administrative services necessary for the
operation of the Company.
Pursuant to a Registration Statement on Form N-2 (File No. 33-84290) which was
declared effective on December 16, 1994, the Company publicly offered up to
50,000 shares of common stock (the "Shares") at $1,000 per Share. The Company
held its initial and final closings on July 31, 1995, and October 31, 1995
representing over $28.0 million and $12.4 million, respectively. The Company
sold a total of 40,463 Shares in the public offering (after taking into account
the 1 Share purchased for $1,000 on September 16, 1994, by David I. Fann, the
Company's President). Gross proceeds received by the Company for the sale of its
Shares during 1995 totaled $40,463,000 and net proceeds after the payment of
offering and organizational expenses totaled $40,117,109. Shares of the Company
were made available through U.S. Trust Company of California, N.A. (the "Selling
Agent") to clients of U.S. Trust and its affiliates who meet the Company's
investor suitability standards.
In connection with the public offering of its Shares, the Managing Investment
Adviser paid to the Selling Agent a commission totaling $10,000. The Company
incurred offering and organizational costs associated with the public offering
totaling $374,891. Net proceeds to the Company from the public offering, after
offering and organizational costs, totaled $40,117,109.
The Company's Articles of Incorporation provide that the duration of the Company
will be ten years from the final closing of the sale of the Shares, subject to
the rights of the Managing Investment Adviser and the investors to extend the
term of the Company. Additional characteristics of the Company's business are
discussed in the "Company", "Risk Factors" and "Investment Objective and
Policies" sections of the Prospectus, which sections are incorporated herein by
reference.
Portfolio Investments:
- ----------------------
The Company commenced investment operations on August 1, 1995 and during the
year ended October 31, 1997 ("Fiscal 1997"), the Company's investment portfolio
consisted of securities with an aggregate cost of $41,829,598 and a fair value
of $47,016,190. The Company has
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invested $26.6 million in twelve later stage venture capital and private middle
market companies (two of which are now public companies) and committed to invest
another $12.0 million in six venture capital, buyout and private equity funds.
The following is a description of the Company's investments as of October 31,
1997 and which are more fully set forth in Item 8.
AbTox, Inc. is a manufacturer of gas plasma sterilizers used in hospitals. The
use of minimally invasive surgical tools (e.g., lapryscopes and endoscopes) has
become widespread requiring more advanced sterilization methods. The sterilizers
are FDA approved and Abtox has a strong intellectual property position. The
Company led the financing which was completed in February 1997. It also
currently holds a position on the Board of Directors.
Best Friends Pet Care Inc. is a pet boarding and grooming provider. It has
located its kennels to allow for consumer access while providing quality pet
care. Best Friends is currently building several new facilities throughout the
Northeast modeled after its Norwalk, CT center.
Cardiopulmonary Corp. is a manufacturer of "smart" ventilators which gauge the
respiratory strength of an acute or sub-acute patient. The technology was
developed at Yale University Hospital - New Haven and is FDA approved. The
company began shipping product in 1997.
LogicVison, Inc. is a developer of built-in semiconductor testing software. As
semiconductors become more complex testing becomes increasingly difficult and
even more critical. One approach entails designing the chip and the testing
method concurrently, and incorporating the testing function on the chip to allow
for self-testing.
NeoVista Software, Inc. is a company engaged in developing data mining software
applications. Data mining is an emerging industry segment resulting from the
investment by companies in data warehouses. Data mining allows companies to
discover non-obvious relationships by applying various artificial intelligence
algorithms to their data warehouses. NeoVista's current customer base includes
several large banks, leading insurance companies, and national retailers.
The Party Experience, Inc./Party Stores Holdings, Inc. is a regional retail
store chain (primarily New York and Massachusetts) focused on the concept of
selling party and party-related merchandise (plates, decorations, balloons,
etc.) at discount prices. Currently, the Company holds a seat on the Board of
Directors.
P2 Holdings Corporation/Plynetics is a leading provider of a broad range of
integrated rapid prototyping and rapid tooling services. Corporations have begun
outsourcing these services in order to shorten product development cycles and
reduce production costs. The Company currently serves on the Board of Directors.
QuickLogic Corporation is a manufacturer and developer of programmable logic
devices and field programmable gate array (FPGA) semiconductors.
Rental Service Corporation ("RSC") (ticker: "RSV", New York Stock Exchange) is a
public middle-market company engaged in the equipment rental business in the
United States. The Company sold approximately two-thirds of its position at
$19.83 per share in May 1997. The closing price at October 31, 1997 was $26.75
per share. As of October 31, 1997, this position was carried at a 10% discount
to the closing price reflecting certain sale restrictions.
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CommSite International Inc. is a private venture capital backed company
engaged in the business of providing site acquisition and site management
services to the wireless telecommunications industry. CommSite has contracts
with several major carriers to build out cellular, paging, specialized mobile
radio, and personal communications services networks. In 1997, CommSite
substantially grew its customer base and, as a consequence, its revenue. The
Company continues to be active on the Board of Directors.
ProCommunications, Inc. is a company which provides telephone answering and
inbound call services for small and medium sized businesses. Its strategy is to
consolidate the inbound teleservice industry while cross-selling additional
value-added services. The Company currently maintains a seat on the Board of
Directors.
Corsair Communications, Inc. is a provider of equipment and services to combat
cellular telephone fraud and to improve cellular networks which completed its
initial public offering in July 1997 at $15.00 per share. The closing stock
price as of the Company's fiscal year end was $23.25 per share. The Company is
currently carrying this position at a 15% discount or $19.76 per share
reflecting restrictions of sale.
Sevin Rosen V, L.P. is a venture capital fund focused on investing
in early stage companies in the communication, health care, and computer
software and hardware sectors. Over the last year, Sevin Rosen has made two
distributions. The first distribution resulted from the initial public offering
of Ciena (ticker: "CIEN", NASDAQ), a company whose products expand the capacity
of fiber optic lines in telecommunications applications. The Company received
13,228 shares with a cost basis of $1.40 per share which the Company then sold
at an average price of $52.05. The second distribution resulted from the sale of
Integrity QA, a software company, to Pure Atria. In this case, the Company
received 4,683 shares with a cost basis of $1.85 per share which the Company
then sold at an average price of $13.45 per share. To date, Sevin Rosen has made
18 other investments including: Capstone Turbine Corp., a developer of a highly
efficient, low emission small turbine generator; and a company which is
developing a proprietary spectrum management system for analog and digital
cellular networks.
Lawrence, Smith & Horey, III, L.P. is a later-stage venture capital firm focused
on investing in companies on the East coast. It is currently invested in six
companies in various industry segments including: an Internet classified
advertisement company; a switched telecommunications company providing enhanced
fax services; and a start-up of a regional airline. It has also co-invested with
the Company in CommSite, ProCommunications and Best Friends.
Morgenthaler Venture Partners IV, L.P. is a Cleveland based venture
capital/buyout firm investing in information technology and healthcare companies
at various stages of development as well as buyouts of basic businesses. The
current portfolio consists of eleven companies including: CardioThoracic
Systems, Inc. (ticker: "CTSI", NASDAQ) which completed its initial public
offering in April 1996; a buyout investment of a manufacturer of metal conveyor
belts and wire products; and a developer of pharmaceuticals for diabetes,
rheumatoid arthritis and multiple sclerosis. One company in the portfolio has
been sold - AneuRx, Inc. which was acquired by Medtronic, a public company, at
over 2.5 times Morgenthaler's cost basis.
Brentwood Associates Buyout Fund, II, L.P. is a private equity investment firm
specializing in consolidation buyouts of businesses operating within fragmented
industries. To date, Brentwood has invested in an Internet education company
targeting the K - 12 grades; a provider of educational promotional materials for
pharmaceutical companies; and a value based specialty movie theater and family
entertainment company.
637369.5
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Bruckmann, Rosser, Sherrill & Co., L.P. is a buyout fund based in New York. It
has effected seven acquisitions to date and several add-on acquisitions for
their portfolio companies. These include: the California Pizza Kitchen, a
specialty restaurant chain; a manufacturer of high quality activewear;
Restaurant Associates, a provider of food services, catering and restaurant
management; and Jitney-Jungle Stores of America, Inc., a grocery retailer in the
Southeastern U.S. which has subsequently acquired Delchamps, Inc.
Vanguard Venture V Partners, L.P. is a early stage venture capital firm
targeting technology and healthcare companies. Their current investment
portfolio consists of fifteen companies including: a company that designs and
sells network server appliances tailored to the needs of Internet and Internet
server products; a company developing a high speed router based on parallel
processing computer technology; and a company which is using technology licenses
from NASA to produce materials for biotechnology applications.
Competition:
- ------------
The Company encounters competition from other entities and individuals having
similar investment objectives. Primary competition for desirable investments
comes from investment partnerships, venture capital affiliates of large
industrial and financial companies, investment companies and wealthy
individuals. Some of the competing entities and individuals have investment
managers or advisers with greater experience, resources and managerial
capabilities than the Company and may therefore be in a stronger position than
the Company to obtain access to attractive investments. To the extent that the
Company can compete for such investments, it may not be able to do so on terms
as favorable as those obtained by larger, more established investors.
Employees:
- ---------
At October 31, 1997, the Company had no full-time employees. All personnel of
the Company are employed by and compensated by the Managing Investment Adviser
pursuant to the Management Agreement.
Item 2. Properties.
The Company does not own or lease physical properties.
Item 3. Legal Proceedings.
The Company is not party to any material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of security holders during the fourth quarter
of the fiscal year covered by this report.
637369.5
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PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters.
The Company has 100,000 Shares authorized, of which 40,463 Shares were issued
and outstanding on October 31, 1997. On December 19, 1997, the Company declared
a dividend payable to shareholders of record on December 18, 1997 in the amount
of $46.55 per share.
There is no established public trading market for the Company's Shares.
Item 6. Selected Financial Data.
All selected financial data for the years ended October 31, 1997, 1996 and the
period commencing on August 1, 1995 (inception) and ending on October 31, 1995
may be found in the financial statements.
See Item 8.
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Liquidity and Capital Resources:
- -------------------------------
At October 31, 1997, the Company held $47,016,190 in investments as compared to
$101 in cash and $42,763,179 in investments at October 31, 1996. At October 31,
1997, investments included $4,497,794 in commercial paper, $1,986,001 in
corporate bonds, $4,049,484 in U.S. Government and agency obligations,
$5,312,037 in private investment funds, $21,803,178 in private companies,
$8,320,261 in public companies and $1,047,435 in short-term investments.
In connection with the Company's commitments to private funds in the amount
of $12,000,000, since inception, a total of $5,312,042, representing capital
calls, was paid by the Company; comprised of $3,160,665 in fiscal 1997 and
$2,151,372 in prior years.
Results of Operations:
- ---------------------
Investment Income and Expenses
For fiscal 1997, the Company had interest income of $959,878, and net operating
expenses of $743,207, resulting in net investment income of $216,671 as compared
to interest income of $2,042,949, and net operating expenses of $411,153,
resulting in net investment income of $1,631,796 for the fiscal year ended
October 31, 1996.
United States Trust Company of New York (the "Managing Investment Adviser")
provides investment management and administrative services required for the
operation of the Company. In consideration of the services rendered by the
Managing Investment Adviser, the Company pays a management fee based upon a
percentage of the net assets of the Company invested or committed to be invested
in certain types of investments and an incentive fee based in part on a
percentage of realized capital gains of the Company. Such fee is determined and
payable quarterly. For the fiscal years ended October 31, 1997, and October 31,
1996 the Managing Investment Adviser earned $588,909 and $350,156 in management
fees, respectively. In addition, for the same periods, the Managing Investment
Advisor
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received $117,732 and $4,363 in management incentive fees, respectively. For the
same periods, the Managing Investment Adviser reimbursed other operating
expenses of the Company in the amount of $165,453 and $231,177 as a result of
expenses incurred in excess of those permitted pursuant to the Company's
Prospectus.
Net Assets
The Company's net asset value per common share was $1,165.99 at October 31,
1997, up $110.22 per share from the net asset value per common share of $1055.77
at October 31, 1996. This increase is primarily the result of appreciation on
Corsair Communications and Rental Service Corporation ("Rental") and realized
gain on Rental.
For fiscal 1997, the Company had a net increase in net assets resulting from
operations of $5,933,283 ($146.64 per share), comprised of net investment income
totaling $216,671 ($5.35 per share), and realized and unrealized gains of
$5,834,344 ($144.20 per share) and allowance for management incentive fee
($117,732) ($2.91) per share compared to a net increase in net assets resulting
from operations of $2,956,633 ($73.07 per share), comprised of net investment
income totaling $1,631,796 ($40.33 per Share) and net realized and unrealized
gains of $1,329,200 ($32.84 per share) and allowance for management incentive
fee ($4,363) ($.10 per share).
At October 31, 1997, the Company's net assets were $47,179,471, an increase of
$4,459,851 from net assets of $42,719,620 at October 31, 1996.
Realized and Unrealized Gains and Losses from Portfolio Investments:
- --------------------------------------------------------------------
For the fiscal year ended October 31, 1997, the Company had a $5,834,344 net
realized and unrealized gain from investments, comprised of $1,926,352 net
realized gain on security transactions related to investments and a $3,907,992
net change in unrealized appreciation of investments as compared to a $1,329,200
net realized and unrealized gain from investments, comprised of $43,640 net
realized gain on security transactions related to investments and a $1,285,560
net change in unrealized appreciation of investments for the fiscal year ended
October 1996.
Item 8. Financial Statements and Supplementary Data.
UST PRIVATE EQUITY INVESTORS FUND, INC.
INDEX
Portfolio of Investments at October 31, 1997
Statement of Assets and Liabilities as of October 31, 1997
Statement of Operations for the year ended October 31, 1997
Statement of Changes in Net Assets for the years ended October 31, 1997 and
October 31, 1996
Statement of Cash Flows for the year ended October 31, 1997
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Financial Highlights -- Selected Per Share Data and Ratios for the years ended
October 31, 1997 and 1996 and for the period from August 1, 1995 (commencement
of operations) to October 31, 1995
Notes to Financial Statements
Independent Auditors' Report
Note - All other schedules are omitted because of the absence of conditions
under which they are required or because the required information is
included in the financial statements or the notes thereto.
[Please refer to attached pages for above-referenced Financial Statements and
Supplementary Data
Item 9. Changes In and Disagreements with Accountants on Accounting
and Financial Disclosure.
None.
637369.5
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UST Private Equity Investors Fund, Inc.
Portfolio of Investments October 31, 1997
<TABLE>
<CAPTION>
Principal Coupon Value
Amount/Shares Rate/Yield (Note 1)
- --------------- ------------ -----------
<S> <C> <C>
COMMERCIAL PAPER -- 9.53%
$ 500,000 Abbey National Treasury, 11/26/97 ..................... 5.50% $ 498,741
500,000 Chevron Transport Corp., 11/14/97 ..................... 5.52 500,000
500,000 CIT Group Holdings, Inc., 11/25/97 ..................... 5.47 500,000
500,000 Ford Motor Credit Corp., 11/20/97 ..................... 5.48 500,000
500,000 General Electric Capital Corp., 11/13/97 ............... 5.41 500,000
500,000 General Electric Capital Corp., 11/17/97 ............... 5.50 500,000
500,000 Goldman Sachs & Co., 11/13/97 ........................ 5.53 499,053
500,000 IBM Credit Corp., 11/20/97 ........................... 5.48 500,000
500,000 Sears & Roebuck Acceptance, 12/12/97 .................. 5.52 500,000
----------
TOTAL COMMERCIAL PAPER (Cost $4,497,794) ............... 4,497,794
----------
CORPORATE BONDS - 4.21%
225,000 Bell Atlantic Corp., 12/15/97 ........................ 6.25 225,131
500,000 Chubb Capital Corp., 2/01/98 ........................... 6.00 500,665
100,000 Dupont, 12/01/97 ....................................... 8.65 100,229
485,000 Heinz (H.J.) Co., 1/05/98 .............................. 8.00 487,250
100,000 Philip Morris, 1/15/98 ................................. 6.38 100,082
431,000 Revlon Worldwide, Series B, Zero Coupon, 3/15/98 ...... 422,380
150,000 Southwestern Bell Capital, 1/20/98 ..................... 6.45 150,264
----------
TOTAL CORPORATE BONDS (Cost $1,984,155) ............... 1,986,001
----------
U.S. GOVERNMENT AGENCY OBLIGATIONS - 8.58%
550,000 Federal Farm Credit Bank, 11/03/97 ..................... 5.50 549,996
2,000,000 Federal Home Loan Bank, 11/07/97 ..................... 5.56 1,999,957
500,000 Federal National Mortgage Association, 12/09/97 ...... 5.38 499,840
1,000,000 Student Loan Mortgage Association, 12/24/97 ............ 5.62 999,691
----------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $4,049,484) .................................... 4,049,484
----------
PRIVATE INVESTMENT FUNDS #, @ - 11.26%
933 Brentwood Associates Buyout Fund II, LP ............... 707,605
1,380 Bruckmann, Rosser, Sherrill & Co., LP .................. 559,575
6,003 Lawrence, Smith & Horey III, LP ........................ 900,000
2,005 Morgenthaler Venture Partners IV, LP .................. 724,065
3,583 Sevin Rosen V, LP .................................... 1,020,792
4,005 Vanguard V, LP ....................................... 1,400,000
----------
TOTAL PRIVATE INVESTMENT FUNDS
(Cost $5,312,037)....................................... 5,312,037
----------
</TABLE>
See Notes to Financial Statements
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<TABLE>
<CAPTION>
Value
Shares (Note 1)
- ------------ ------------
<S> <C>
PRIVATE COMPANIES #, @ -- 46.21%
Preferred and Common Stocks -- 46.21%
Consumer Cyclical -- 46.21%
1,136,364 AbTox Inc., Series F ........................... $ 2,500,001
2,608,696 Best Friends Pet Care Inc., Series F ............ 3,000,000
515,464 Cardiopulmonary Corp. ........................... 2,190,722
1,125,000 +CommSite International Inc., Class A ............ 1,125,000
1,875,003 +CommSite International Inc., Class B ............ 375,002
CommSite International Inc., Bridge Note ......... 862,500
294,000 LogicVision Inc., Series F ..................... 1,249,500
500,000 NeoVista Software Inc. ........................... 500,000
500,000 Party Store Holdings Inc., Series C ............ 2,000,454
572,190 Plynetics Express Inc. ........................... 1,999,999
750,000 +ProCommunications, Inc., Series C ............... 3,000,000
2,586,207 QuickLogic Corp. ................................. 3,000,000
-----------
TOTAL PRIVATE COMPANIES (Cost $24,312,456) ...... 21,803,178
-----------
PUBLIC COMPANIES #, @ -- 17.64%
Common Stocks -- 17.64%
Capital Goods -- 17.64%
363,637 ++Corsair Communications, Inc., Series F ......... 7,186,401
47,097 ++Rental Service Corp. ........................... 1,133,860
-----------
TOTAL PUBLIC COMPANIES (Cost $626,237) 8,320,261
-----------
INVESTMENT COMPANIES -- 2.22%
1,047,435 Fidelity Cash Portfolio, U.S. Treasury II
(Cost $1,047,435)................................. 1,047,435
-----------
TOTAL INVESTMENTS (Cost $41,829,598*) ........................ 99.65% 47,016,190
OTHER ASSETS & LIABILITIES (NET) ........................... 0.35 163,281
------ -----------
NET ASSETS ................................................... 100.00% $47,179,471
====== ===========
</TABLE>
* Aggregate cost for Federal tax and book purposes.
+ At October 31, 1997, the Fund owned 5% or more of the Company's outstanding
shares thereby making the Company an affiliate as defined by the Investment
Company Act of 1940. At October 31, 1997, these securities were valued at the
cost at which they were acquired during the year. There were no sales of
shares of any affiliates during the year.
++ 144 Security. Certain conditions for public sale may exist.
# Restricted as to public resale. Acquired between January 3, 1996 and
October 27, 1997. Total cost of restricted securities at October 31, 1997
aggregated $30,250,731. Total market value of restricted securities owned at
October 31, 1997 was $35,435,476 or 75.1% of net assets.
@ Non-Income Producing Security
See Notes to Financial Statements
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UST Private Equity Investors Fund, Inc.
Statement of Assets and Liabilities
October 31, 1997
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments, at value (Cost $41,829,598) (Note 1) .................. $47,016,190
Receivable for investments sold .................................... 348,462
Interest receivable ................................................ 207,725
Prepaid insurance ................................................... 37,024
Unamortized organization costs (Note 4) .............................. 16,490
-----------
Total Assets ...................................................... 47,625,891
LIABILITIES:
Management fees payable ............................................. 136,328
Due to custodian bank ................................................ 56,684
Directors' fees payable ............................................. 30,000
Administration fees payable .......................................... 15,330
Accrued expenses and other payables ................................. 208,078
-----------
Total Liabilities ................................................ 446,420
-----------
NET ASSETS ............................................................ $47,179,471
===========
NET ASSETS consist of:
Undistributed net investment income ................................. $ 229,824
Accumulated net realized gain on investments ........................ 1,767,041
Net unrealized appreciation of investments ........................... 5,186,592
Allowance for Management Incentive fee .............................. (122,095)
Par value ............................................................ 405
Paid-in capital in excess of par value .............................. 40,117,704
-----------
Total Net Assets ...................................................... $47,179,471
===========
Shares of Common Stock Outstanding ($0.01 par value, 100,000 authorized) 40,463
NET ASSET VALUE PER SHARE ............................................. $ 1,165.99
===========
See Notes to Financial Statements
637369.5
-12-
<PAGE>
UST Private Equity Investors Fund, Inc.
Statement of Operations
For the Year Ended October 31, 1997
INVESTMENT INCOME:
Interest income ................................................... $ 959,878
-----------
EXPENSES:
Managing investment advisory fees (Note 2) ........................ 588,909
Legal fees ...................................................... 105,765
Insurance expense ................................................ 75,201
Administration fees ............................................. 58,000
Directors' fees and expenses (Note 2) ........................... 30,000
Amortization of organization expense (Note 4) ..................... 5,990
Miscellaneous expenses .......................................... 44,795
-----------
Total Expenses ................................................ 908,660
Expenses reimbursed by Managing Investment Adviser (Note 2) ...... (165,453)
-----------
Net Expenses ................................................... 743,207
-----------
NET INVESTMENT INCOME ................................................ 216,671
-----------
NET REALIZED AND UNREALIZED GAIN: (Note 1)
Net realized gain on investments ................................. 1,926,352
Net change in unrealized appreciation of investments ............ 3,907,992
-----------
NET REALIZED AND UNREALIZED GAIN .................................... 5,834,344
Net change in Allowance for Management Incentive fee ............... (117,732)
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............... $ 5,933,283
===========
</TABLE>
See Notes to Financial Statements
637369.5
-13-
<PAGE>
UST Private Equity Investors Fund, Inc.
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Years Ended October 31,
1997 1996
--------------- ---------------
OPERATIONS:
<S> <C> <C>
Net investment income .......................................... $ 216,671 $ 1,631,796
Net realized gain on investments .............................. 1,926,352 43,640
Net change in unrealized appreciation of investments ......... 3,907,992 1,285,560
Net change in Allowance for Management Incentive fee ......... (117,732) (4,363)
------------ ------------
Net increase in net assets resulting from operations ...... 5,933,283 2,956,633
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ....................................... (1,429,792) (389,452)
Net realized gain ............................................. (43,640) --
------------ ------------
Net increase in net assets ....................................... 4,459,851 2,567,181
NET ASSETS:
Beginning of year ............................................. 42,719,620 40,152,439
------------ ------------
End of year (including undistributed net investment income of
$229,824 and $1,283,634, respectively) ..................... $ 47,179,471 $ 42,719,620
============ ============
</TABLE>
See Notes to Financial Statements
637369.5
-14-
<PAGE>
UST Private Equity Investors Fund, Inc.
Statement of Cash Flows
For the Year Ended October 31, 1997
CASH FLOWS FROM INVESTING AND OPERATING ACTIVITIES:
Proceeds from Sales of Investments ........................ $ 11,508,142
Purchases of Investments ................................. (21,511,542)
Net Decrease in Short-Term Investments ..................... 10,831,314
Investment Income .......................................... 1,076,188
Operating Expenses Paid .................................... (487,455)
-------------
Net Cash Used for Investing and Operating Activities ...... 1,416,647
-------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions Paid ....................................... (1,473,432)
-------------
Net Cash Provided by Financing Activities .................. (1,473,432)
-------------
Net Decrease in Cash ....................................... (56,785)
Cash at Beginning of Year .................................... 101
-------------
Cash at End of Year .......................................... $ (56,684)
=============
Reconciliation of Net Investment Income to Net Cash
Used for Investing and Operating Activities:
Net Investment Income .................................... $ 216,671
Proceeds from Sales of Investments ........................ 11,508,142
Purchases of Investments ................................. (21,511,542)
Net Decrease In Short-Term Investments ..................... 10,831,314
Net Decrease in Receivables Related to Operations ......... 307,040
Net Increase in Payables Related to Operations ............ 249,757
Amortization of Organization Costs ........................ 5,990
Accretion/Amortization of Discounts and Premiums ......... (190,725)
-------------
Net Cash Used for Investing and Operating Activities ...... $ 1,416,647
=============
See Notes to Financial Statements
637369.5
-15-
<PAGE>
UST Private Equity Investors Fund, Inc.
Financial Highlights - Selected Per Share Data and Ratios
For a fund share outstanding throughout each period
<TABLE>
<CAPTION>
August 1,
1995* to
Years Ended October 31, October 31,
1997 1996 1995
--------------- --------------- -------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD .................................... $ 1,055.77 $ 992.32 $ 1,000.00
------------ ------------ -------------
Offering Costs ................................. -- -- (8.53)
------------ ------------ -------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income ..................... 5.35 40.33 12.86
Net Realized and Unrealized Gain (Loss) on
Investments .............................. 144.20 32.84 (0.17)
Net Change in Allowance for Management
Incentive fee .............................. (2.91) (0.10) --
------------ ------------ -------------
Total from Investment Operations ......... 146.64 73.07 12.69
------------ ------------ -------------
DISTRIBUTIONS
Net Investment Income ..................... (35.34) (9.62) (11.84)
Net Realized Gain ........................... (1.08) -- --
------------ ------------ -------------
NET ASSET VALUE, END OF PERIOD ............... $ 1,165.99 $ 1,055.77 $ 992.32
============ ============ =============
TOTAL NET ASSET VALUE RETURN+ .................. 14.37% 7.41% 0.39%
============ ============ =============
RATIOS AND SUPPLEMENTAL DATA
Net Assets, End of Period (Thousands) ...... $ 47,179 $ 42,720 $ 40,152
Ratio of Net Operating Expenses to Average
Net Assets ................................. 1.65% 1.00% 0.50%**
Ratio of Gross Operating Expenses to
Average Net Assets++ ..................... 2.02% 1.56% 2.44%**
Ratio of Net Investment Income to Average
Net Assets ................................. 0.48% 3.96% 5.18%**
Portfolio Turnover Rate ..................... 44% 10% 0%
</TABLE>
* Commencement of operations
** Annualized
+ Total investment return based on per share net asset value reflects the
effects of changes in net asset value based on the performance of the Fund
during the period, and assumes dividends and distributions, if any, were
reinvested. The Fund's shares were issued in a private placement and are not
traded, therefore market value total investment return is not calculated.
Total return for periods of less than one year are unannualized.
++ Expense ratio before waiver of fees and reimbursement of expenses by
adviser.
See Notes to Financial Statements
637369.5
-16-
<PAGE>
UST PRIVATE EQUITY INVESTORS FUND, INC.
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies
UST Private Equity Investors Fund, Inc. ("the Company") was
incorporated under the laws of the State of Maryland on September 16, 1994 and
is registered under the Securities Act of 1933, as amended, as a
non-diversified, closed-end management investment company which has elected to
be treated as a business development company under the Investment Company Act of
1940, as amended.
The following is a summary of the Company's significant accounting
policies. Such policies are in conformity with generally accepted accounting
principles for investment companies and are consistently followed in the
preparation of financial statements. Generally accepted accounting principles
require management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could differ
from these estimates.
(a) Portfolio valuation:
The Company values portfolio securities quarterly and at other such
times as, in the Board of Directors' view, circumstances warrant. Investments in
securities that are traded on a recognized stock exchange or on the national
securities market are valued at the last sale price for such securities on the
valuation date. Short-term debt instruments with remaining maturities of 60 days
or less are valued at amortized cost, which approximates market value. At
October 31, 1997, market quotations were not readily available for securities
valued at $35,435,476. Such securities were valued pursuant to guidelines
adopted by the Investment Adviser, under the supervision of the Board of
Directors. Such valuation may differ significantly from the values at which
actual transactions may occur.
(b) Security transactions and investment income:
Security transactions are recorded on a trade date basis. Realized
gains and losses on investments sold are recorded on the basis of identified
cost. Interest income, adjusted for amortization of premiums and, when
appropriate, discounts on investments, is earned from settlement date and is
recorded on the accrual basis.
Dividend income is recorded on the ex-dividend date.
(c) Repurchase agreements:
The Company enters into agreements to purchase securities and to resell
them at a future date. It is the Company's policy to take custody of securities
purchased and to ensure that the market value of the collateral including
accrued interest is sufficient to protect the Company from losses incurred in
the event the counterparty does not repurchase the securities. If the seller
defaults and the value of the collateral declines or if bankruptcy proceedings
are commenced with respect to the seller of the security, realization of the
collateral by the Company may be delayed or limited.
(d) Federal income taxes:
It is the policy of the Company to continue to qualify as a "regulated
investment company" under Subchapter M of the Internal Revenue Code and
distribute substantially all of its taxable income to its shareholders.
Therefore, no federal income or excise tax provision is required.
Dividends from net investment income are declared and paid at least
annually. Any net realized capital gains, unless offset by any available capital
loss carryforward, are distributed to shareholders at least annually. Dividends
and distributions are determined in accordance with Federal income tax
regulations which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent. To
the extent these differences are permanent, such amounts are reclassified within
the capital accounts based on their federal tax basis treatment; temporary
differences do not require reclassification.
637369.5
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<PAGE>
At October 31, 1997 the tax basis of the Company's investments for
Federal income tax purposes amounted to $41,829,598. The net unrealized
appreciation amounted to $5,186,592, which is comprised of gross unrealized
appreciation of $5,186,595 and aggregate gross unrealized depreciation of $3.
2. Investment Advisory Fee, Administration Fee, and Related Party
Transactions
Pursuant to an Investment Management Agreement ("Agreement"), United
States Trust Company of New York ("U.S. Trust") serves as the Managing
Investment Adviser to the Company. Under the Agreement, for the services
provided, U.S. Trust is entitled to receive a fee, at the annual rate of 1.50%
of the net assets of the Company, determined as of the end of each fiscal
quarter, that are invested or committed to be invested in Portfolio Companies or
Private Funds and a fee equal to an annual rate of 0.50% of the net assets of
the Company, determined as of the end of each fiscal quarter, that are invested
in short-term investments and are not committed to Portfolio Companies or
Private Funds.
In addition to the management fee, the Company has agreed to pay U.S.
Trust an incentive fee in an amount equal to 10% of the cumulative realized
capital gains (net of realized capital losses and unrealized net capital
depreciation), less the aggregate amount of incentive fee payments in prior
years. If the amount of the incentive fee in any year is a negative number, or
cumulative net realized gains less net unrealized capital depreciation at the
end of any year is less than such amount calculated at the end of the previous
year, U.S. Trust will be required to repay the Company all or a portion of the
incentive fee previously paid.
U.S. Trust has voluntarily agreed to waive or reimburse other operating
expenses of the Company, exclusive of management fees, to the extent they exceed
0.42% of the Company's net assets, and U.S. Trust will waive or reimburse,
exclusive of management fees, all such expenses with respect to that portion of
the Company's net assets, determined as of the end of each fiscal quarter, that
is invested in short-term investments.
For the year ended October 31, 1997, brokerage commissions on
investment transactions paid to affiliates amounted to $578.
Each Director of the Company receives an annual fee of $9,000, plus a
meeting fee of $1,500 for each meeting attended, and is reimbursed for expenses
incurred for attending meetings. No person who is an officer, director or
employee of U.S. Trust, or of any parent or subsidiary thereof, who serves as an
officer, director or employee of the Company receives any compensation from the
Company.
3. Purchases and Sales of Securities
Purchases and sales of securities, excluding short-term investments,
for the Company aggregated $21,053,592 and $11,856,604, respectively. At October
31, 1997, the Company had outstanding investment commitments totaling
$7,187,963.
4. Organization Costs
The Company has borne all costs in connection with the initial
organization of the Company. All such costs are being amortized on a
straight-line basis over a period of five years from the date on which the
Company commenced operations.
637369.5
-18-
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Shareholders and Board of Directors
UST Private Equity Investors Fund, Inc.
We have audited the accompanying statement of assets and liabilities of UST
Private Equity Investors Fund, Inc., including the portfolio of investments, as
of October 31, 1997, the related statements of operations and cash flows for the
year then ended, and the statements of changes in net assets for each of the two
years in the period then ended and financial highlights for each of the
indicated periods. These financial statements and financial highlights are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1997 by correspondence with the custodian and others. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of UST
Private Equity Investors Fund, Inc. at October 31, 1997, the results of its
operations and its cash flows for the year then ended, and the changes in its
net assets for each of the two years then ended and the financial highlights for
each of the periods indicated in conformity with generally accepted accounting
principles.
/s/ Ernst & Young LLP
New York, New York
December 22, 1997
637369.5
-19-
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant.
Set forth below are names, ages, positions and certain other information
concerning the current directors and executive officers of the Company as of
October 31, 1997.
<TABLE>
<CAPTION>
Served in Present
Name and Age Position Capacity Since
- ------------ -------- -----------------
<S> <C> <C>
David I. Fann [33] President; Chief September 16, 1994
Executive Officer
Douglas A. Lindgren [35] Executive July 6, 1995
Vice President
Brian Schmidt [38] Chief Financial Officer May 31, 1996
Chief Accounting Officer
Treasurer
Frank Bruno [38] Assistant Treasurer March 4, 1997
Ronald A. Schwartz [49] Secretary September 16, 1994
Frank J. Hearn, Jr. [33] Assistant Secretary March 4, 1997
Edith A. Cassidy* [44] Director September 16, 1994
Gene M. Bernstein [50] Director December 1, 1994
Stephen V. Murphy [52] Director December 1, 1994
</TABLE>
*Indicates director who is an "interested person" of the Company within the
meaning of the Investment Company Act of 1940.
Additional information concerning the directors and executive officers of the
Company is incorporated herein by reference from the section entitled
"Management -- Directors, Officers and Investment Professionals" in the
Prospectus as modified by the Supplement dated August 28, 1995.
Item 11. Executive Compensation.
At October 31, 1997, the Company had no full-time employees. Pursuant to the
Management Agreement, the Managing Investment Adviser employs and compensates
all of the personnel of the Company, and also furnishes all office facilities,
equipment, management and other administrative services required for the
operation of the Company. In consideration of the services rendered by the
Managing Investment Adviser, the Company pays a management fee based upon a
percentage of the net assets of the Company invested or committed to be invested
in certain types of investments and an incentive fee based in part on a
percentage of realized capital gains of the Company. For Fiscal 1997, the
Managing Investment Adviser reimbursed $165,453 to the Company, representing
operating expenses (excluding its management fee of $588,909). Additional
information with respect to the
637369.5
-20-
<PAGE>
management fee payable to the Managing Investment Adviser is set forth in the
"Management" section of the Prospectus, as modified by the supplement thereto
dated October 31, 1995, which section is incorporated herein by reference.
The disinterested directors receive compensation of $9,000 on an annual basis
and $1,500 for each Board of Directors' meeting attended plus reasonable
expenses. For Fiscal 1997, the disinterested directors of the Company each
received compensation totaling $15,000 and $15,000, respectively.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
As of October 31, 1997, no person or group is known by the Company to be the
beneficial owner of more than 5% of the aggregate number of Shares held by all
shareholders. The directors and officers of the Company as a group own 311
Shares. The Company is not aware of any arrangement which may, at a subsequent
date, result in a change of control of the Company.
Section 16(a) Beneficial Ownership Reporting Compliance
Under the federal securities laws, the Company's directors and executive
officers and any persons holding more than 10% of the Company's units are
required to report their ownership of units and any changes in the ownership of
the Company's units to the Company and the Securities and Exchange Commission.
These filings have all been satisfied by the Company's executive officers and
directors although the Company notes that each of Messrs. Fann, Lindgren,
Bernstein, Murphy, Schmidt and Ms. Cassidy filed untimely initial statements of
beneficial ownership on Form 3 reporting their status as directors or executive
officers. The Company notes that the reports of Messrs. Lindgren and Murphy and
Ms. Cassidy of one transaction each on separate Form 5s and the reports of
Messrs. Fann and Bernstein of two transactions each on separate Form 5s should
have been reported on separate Form 4s. In all cases the securities purchased
have not subsequently been sold or otherwise disposed of.
Item 13. Certain Relationships and Related Transactions.
The Company has engaged in no transactions with the executive officers or
directors other than as described above, in the notes to the financial
statements, or in the Prospectus.
637369.5
-21-
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) 1. Financial Statements
Portfolio of Investments at October 31, 1997
Statement of Assets and Liabilities as of October 31, 1997
Statement of Operations for the year ended October 31, 1997
Statement of Changes in Net Assets for the year ended
October 31, 1997 and October 31, 1996
Statement of Cash Flows for the year ended October 31, 1997
Financial Highlights -- Selected Per Share Data and
Ratios for the years ended October 31, 1997 and 1996
and for the period from August 1, 1995 (commencement
of operations) to October 31, 1995.
Notes to Financial Statements
Independent Auditors' Report
2. Exhibits
(3)(a) Articles of Incorporation of the Company (1)
(3)(b) Amended and Restated By-Laws of the Company (1)
(10)(a) Management Agreement (l)
(10)(b) Transfer Agency and Custody Agreement (l)
(23) Consent of Independent Auditors
(27) Financial Data Schedule (included in EDGAR
electronic filing only)
(29) Prospectus of the Company dated December 16,
1994, filed with the Securities and Exchange
Commission, as supplemented by supplements
thereto dated August 28, 1995 and October
31, 1995 (l)
(b) No reports on Form 8-K have been filed during the last quarter of the
period for which this report is filed.
(1) Incorporated by reference to the Company's Form N-2, as amended, filed
September 22, 1994.
637369.5
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
By: /s/ David I. Fann
David I. Fann, President and
Chief Executive Officer
By: /s/ Brian Schmidt
Brian Schmidt, Treasurer
By: /s/ Edith A. Cassidy
Edith A. Cassidy, Director
By: /s/ Gene M. Bernstein
Gene M. Bernstein, Director
By: /s/ Stephen V. Murphy
Stephen V. Murphy, Director
Date: January 26, 1998
637369.5
-23-
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Prospectus, which is incorporated by reference, and to the use of our report
dated December 22, 1997, included in this Annual Report (Form 10-K), for the
fiscal year ended October 31, 1997, of UST Private Equity Investors Fund, Inc.
ERNST & YOUNG LLP
New York, New York
January 26, 1998
637369.5
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM UST PRIVATE
EQUITY INVESTORS FUND, INC.'S FORM 10-K FOR THE PERIOD ENDED OCTOBER
31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000930454
<NAME> UST PRIVATE EQUITY INVESTORS FUND, INC.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-1-1996
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 41,830
<INVESTMENTS-AT-VALUE> 47,016
<RECEIVABLES> 556
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 53
<TOTAL-ASSETS> 47,625
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 446
<TOTAL-LIABILITIES> 446
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 40,118
<SHARES-COMMON-STOCK> 40
<SHARES-COMMON-PRIOR> 40
<ACCUMULATED-NII-CURRENT> 230
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,645
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5,186
<NET-ASSETS> 47,179
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 960
<OTHER-INCOME> 0
<EXPENSES-NET> 743
<NET-INVESTMENT-INCOME> 217
<REALIZED-GAINS-CURRENT> 1,926
<APPREC-INCREASE-CURRENT> 3,790
<NET-CHANGE-FROM-OPS> 5,933
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,430)
<DISTRIBUTIONS-OF-GAINS> (44)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 4,459
<ACCUMULATED-NII-PRIOR> 1,285
<ACCUMULATED-GAINS-PRIOR> 38
<OVERDIST-NET-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<GROSS-ADVISORY-FEES> 589
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 909
<AVERAGE-NET-ASSETS> 44,277
<PER-SHARE-NAV-BEGIN> 1,055.77
<PER-SHARE-NII> 5.35
<PER-SHARE-GAIN-APPREC> 141.29
<PER-SHARE-DIVIDEND> (35.34)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1,165.99
<EXPENSE-RATIO> 1.65
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
