THE NEW YORK STATE OPPORTUNITY FUND
SEMI-ANNUAL REPORT
September 30, 1997
(Unaudited)
Investment Adviser Administrator
Pinnacle Advisors LLC COUNTRYWIDE FUND SERVICES, INC.
4605 E. Genesee Street 312 Walnut Street
DeWitt, New York 13214 P.O. Box 5354
1.315.251.1101 Cincinnati, Ohio 45201-5354
1.800.443.4249
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<TABLE>
<CAPTION>
NEW YORK EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1997
(Unaudited)
<S> <C>
ASSETS
Investments in securities, at value (cost $582,501) $ 615,391
Cash 11,335
Receivable for capital shares sold 1,910
Dividends receivable 1,243
Receivable from Advisor (Note 3) 17,527
Organization expenses, net (Note 1) 44,840
Other assets 14,185
--------------
TOTAL ASSETS 706,431
--------------
LIABILITIES
Payable for securities purchased 15,506
Payable to Administrator (Note 3) 4,000
Other accrued expenses 1,681
--------------
TOTAL LIABILITIES 21,187
--------------
NET ASSETS $ 685,244
==============
Net assets consist of:
Paid-in capital $ 652,107
Accumulated undistibuted net investment income 247
Net unrealized appreciation on investments 32,890
--------------
Net assets $ 685,244
==============
Shares of beneficial interest outstanding (unlimited number of shares
authorized, no par value) 64,253
==============
Net asset value and redemption price per share (Note 1) $ 10.66
==============
Maximum offering price per share $ 11.19
==============
See accompanying notes to the financial statements.
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<TABLE>
<CAPTION>
NEW YORK EQUITY FUND
STATEMENT OF OPERATIONS
Six Months Ended September 30, 1997
(Unaudited)
<S> <C>
INVESTMENT INCOME
Dividends $ 3,706
----------
TOTAL INVESTMENT INCOME 3,706
----------
EXPENSES
Accounting fees (Note 3) 6,000
Insurance expense 5,348
Amortization of organization expenses (Note 1) 4,981
Postage and supplies 3,539
Administrative fees (Note 3) 3,000
Shareholder service and transfer agent fees (Note 3) 3,000
Registration fees 2,552
Trustees' fees and expenses 2,250
Printing of shareholder reports 2,208
Investment advisory fees (Note 3) 1,896
Custodian fees 1,000
Distribution expense 851
Pricing costs 278
----------
TOTAL EXPENSES 36,903
Fees waived by the Advisor (Note 3) (33,444)
----------
NET EXPENSES 3,459
----------
NET INVESTMENT INCOME 247
----------
NET INCREASE IN UNREALIZED APPRECIATION ON INVESTMENTS 32,890
----------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 33,137
==========
See accompanying notes to the financial statements.
</TABLE>
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<TABLE>
<CAPTION>
NEW YORK EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended September 30, 1997
(Unaudited)
INCREASE (DECREASE) IN NET ASSETS
<S> <C>
FROM OPERATIONS:
Net investment income $ 247
Net increase in unrealized appreciation on investments 32,890
-------------
Net increase in net assets from operations 33,137
-------------
FROM CAPITAL SHARE TRANSACTIONS (a):
Proceeds from shares sold 565,764
Payments for shares redeemed (13,657)
-------------
Net increase in net assets from capital share transactions 552,107
-------------
TOTAL INCREASE IN NET ASSETS 585,244
NET ASSETS:
Beginning of period 100,000
-------------
End of period $ 685,244
=============
(a) Summary of capital share activity follows:
Shares sold 55,549
Shares redeemed (1,296)
-------------
Net increase in shares outstanding 54,253
Shares outstanding, beginning of period 10,000
-------------
Shares outstanding, end of period 64,253
=============
See accompanying notes to the financial statements.
</TABLE>
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<TABLE>
<CAPTION>
NEW YORK EQUITY FUND
FINANCIAL HIGHLIGHTS
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Period
Period Ended September 30, 1997 (a)
(Unaudited)
<S> <C>
Net asset value at beginning of period $ 10.00
============
Income from investment operations:
Net investment income 0.00
Net unrealized gains on investments 0.66
------------
Total from investment operations 0.66
------------
Net asset value at end of period $ 10.66
============
Total return 6.60%
============
Net assets at end of period $ 685,244
============
Ratio of expenses to average net assets (b) 1.81%(c)
Ratio of net investment income to average net assets 0.13%(c)
Portfolio turnover rate 0.00%
Average commission rate per share $ 0.3075
<FN>
(a)Represents the period from the initial public offering of shares
(May 12, 1997) through September 30, 1997.
(b)Ratio of expenses to average net assets assuming no waiver of fees or
reimbursement of expenses by the Advisor was 19.47%(c) (Note 3).
(c)Annualized.
</FN>
See accompanying notes to the financial statements.
</TABLE>
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<TABLE>
<CAPTION>
NEW YORK EQUITY FUND
PORTFOLIO OF INVESTMENTS
September 30, 1997 (Unaudited)
Market
Shares Value
COMMON STOCKS - 86.6%
<S> <C> <C>
Basic Materials - 1.1%
310 Albany International Corporation $ 7,789
-----------
Conglomerates - 4.3%
435 General Electric Company 29,607
-----------
Consumer, Cyclical - 15.3%
500 Chrysler Corporation 18,406
475 Eastman Kodak Company 30,845
450 Oneida Limited 15,975
220 J.C. Penney Company, Inc. 12,815
540 Tommy Hilfiger Corporation (a) 26,967
-----------
105,008
-----------
Consumer, Non-Cyclical - 19.8%
300 Bristol-Myers Squibb Company 24,825
400 Colgate-Palmolive Company 27,875
670 PepsiCo, Inc. 27,177
425 Pfizer Inc. 25,526
730 Philip Morris Companies, Inc. 30,341
-----------
135,744
-----------
Energy - 7.5%
380 Amerada Hess Corporation 23,441
450 Texaco Inc. 27,647
-----------
51,088
-----------
Financial Services - 16.4%
525 The Bank of New York Company, Inc. 25,200
200 Citicorp 26,787
500 Community Bank System, Inc. 14,500
380 ONBANcorp, Inc. 21,755
350 Travelers Group, Inc. 23,888
-----------
112,130
-----------
Industrial - 4.0%
790 Paychex, Inc. 27,551
-----------
<PAGE>
NEW YORK EQUITY FUND
PORTFOLIO OF INVESTMENTS
September 30, 1997 (Unaudited)
Market
Shares Value
<S> <C> <C>
Technology - 16.2%
365 Computer Associates International, Inc. $ 26,212
590 Corning Inc. 27,878
300 International Business Machines Corporation 31,781
300 Xerox Corporation 25,256
-----------
111,127
-----------
Utilities - 2.0%
400 Consolidated Edison Company of New York 13,600
-----------
Total Common Stocks (Cost $560,754) $ 593,644
-----------
Money Market Fund - 3.2%
21,747 The Milestone Funds Treasury Obligations
Portfolio - Investor Shares (cost $21,747) $ 21,747
-----------
Total Investments in Securities (cost $582,501) - 89.8% $ 615,391
-----------
Other Assets in Excess of Liabilities - 10.2% 69,853
-----------
Net Assets - 100.0% $ 685,244
===========
<FN>
(a) Non-income producing security.
</FN>
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
NEW YORK EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 1997
(Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
The New York Equity Fund (the Fund) is a non-diversified series of shares of The
New York State Opportunity Funds (the Trust). The Trust, registered as an
open-end management investment company under the Investment Company Act of 1940,
as amended (the 1940 Act), was organized as a Massachusetts business trust on
November 20, 1996. The Fund began the public offering of shares on May 12, 1997.
The Fund seeks to provide long-term capital growth by investing primarily in
common stocks and other equity securities of companies headquartered or having a
significant presence in the state of New York.
The following is a summary of the Fund's significant accounting policies:
Securities valuation -- The Fund's portfolio securities are valued as of the
close of business of the regular session of the New York Stock Exchange
(currently 4:00 p.m., Eastern time). Securities which are traded on stock
exchanges or are quoted by NASDAQ are valued at the last reported sale price as
of the close of the regular session of trading on the New York Stock Exchange on
the day the securities are being valued, or, if not traded on a particular day,
at the closing bid price.
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 maximum offering price per share is equal to
the net asset value per share plus a sales load equal to 4.99% of the net asset
value ( or 4.75% of the offering price). The redemption price per share is equal
to the net asset value per share.
Investment income and distributions -- Interest income is accrued as earned.
Dividend income and distributions to shareholders are recorded on the
ex-dividend date.
Organization expenses -- Expenses of organization have been capitalized and are
being amortized on a straight-line basis over five years.
Security transactions -- Security transactions are accounted for on trade date.
Realized gains and losses on security transactions are determined on a specific
identification basis.
Accounting estimates -- The preparation of the 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. 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 applicable to regulated investment
companies. As provided therein, in any fiscal year in which a 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.
<PAGE>
NEW YORK EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 1997
(Unaudited)
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.
The following information is based upon the federal income tax cost of portfolio
investments of $582,501 as of September 30, 1997:
Gross unrealized appreciation....................................$ 46,184
Gross unrealized depreciation.................................... (13,294)
--------
Net unrealized appreciation......................................$ 32,890
========
2. INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities of investment securities, other
than short-term investments, amounted to $560,754 and $0, respectively, for the
period ended September 30, 1997.
3. TRANSACTIONS WITH AFFILIATES
ADVISORY AGREEMENT
The Fund's investments are managed by Pinnacle Advisors LLC (the Advisor) under
the terms of an Advisory Agreement. Under the Advisory Agreement, the Fund pays
the Advisor a fee, which is computed and accrued daily and paid monthly, at an
annual rate of 1.00% of its average daily net assets up to $100 million; .95% of
such assets from $100 million to $200 million; and .85% of such assets in excess
of $200 million.
The Advisor currently intends to waive its investment advisory fees to the
extent necessary to limit the total operating expenses of the Fund to 1.98% of
average daily net assets. In accordance with the above limitation, the Advisor
voluntarily waived its entire investment advisory fees of $1,896 for the period
ended September 30, 1997 and reimbursed the Fund for $31,548 of other operating
expenses.
Certain trustees and officers of the Trust are also officers of the Advisor.
ADMINISTRATION AGREEMENT
Under the terms of the Administration Agreement between the Trust and
Countrywide Fund Services, Inc. (CFS), CFS supplies non-investment related
statistical and research data, internal regulatory compliance services and
executive and administrative services for the Fund. CFS supervises the
preparation of tax returns, reports to shareholders of the Fund, reports to and
filings with the Securities and Exchange Commission and state securities
commissions, and materials for meetings of the Board of Trustees. For the
performance of these administrative services, CFS receives a fee based on the
Fund's average daily net assets.
<PAGE>
NEW YORK EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 1997
(Unaudited)
TRANSFER AGENT AND SHAREHOLDER SERVICE AGREEMENT
Under the terms of the Transfer, Dividend Disbursing, Shareholder Service and
Plan Agency Agreement between the Trust and CFS, CFS maintains the records of
each shareholder's account, answers shareholders' inquiries concerning their
accounts, processes purchases and redemptions of the Fund's shares, acts as
dividend and distribution disbursing agent and performs other shareholder
service functions. CFS receives for its services a monthly fee based on the
number of shareholder accounts in the Fund. In addition, the Fund pays
out-of-pocket expenses including, but not limited to, postage and supplies.
ACCOUNTING SERVICES AGREEMENT
Under the terms of the Accounting Services Agreement between the Trust and CFS,
CFS calculates the daily net asset value per share and maintains the financial
books and records of the Fund. For these services, CFS receives a monthly fee
from the Fund.
DISTRIBUTION PLAN
The Trust has adopted a Plan of Distribution Pursuant to Rule 12b-1 (the Plan),
under the 1940 Act. The Plan provides that the Fund may incur certain costs
related to the distribution of the Fund shares, not to exceed 0.25% of average
daily net assets. For the period ended September 30, 1997, the Fund incurred
$851 of such expenses under the Plan.
Certain officers of the Trust are also officers of CFS.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001027657
<NAME> THE NEW YORK STATE OPPORTUNITY FUNDS - NEW YORK EQUITY FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 582,501
<INVESTMENTS-AT-VALUE> 615,391
<RECEIVABLES> 20,680
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<SHARES-COMMON-STOCK> 64,253
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<DIVIDEND-INCOME> 3,706
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<NET-CHANGE-FROM-OPS> 33,137
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<AVERAGE-NET-ASSETS> 493,556
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</TABLE>
