- --------------------------------------------------------------------------------
NEW YORK EQUITY FUND
--------------------
SEMI-ANNUAL REPORT
September 30, 1999
(Unaudited)
INVESTMENT ADVISOR ADMINISTRATOR
------------------ -------------
PINNACLE ADVISORS LLC COUNTRYWIDE FUND SERVICES, INC.
4605 E. Genesee Street P.O. Box 5354
DeWitt, New York 13214 Cincinnati, Ohio 45201-5354
1.315.251.1101 1.888.899.8344
- --------------------------------------------------------------------------------
<PAGE>
NEW YORK EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1999
(Unaudited)
ASSETS
Investment securities, at market value (Cost $6,081,446) $ 6,891,875
Dividends receivable 1,416
Receivable for capital shares sold 500
Receivable from Advisor (Note 3) 17,976
Organization expenses, net (Note 1) 26,157
Other assets 16,682
------------
TOTAL ASSETS 6,954,606
------------
LIABILITIES
Payable to Administrator (Note 3) 4,000
Other accrued expenses 1,416
------------
TOTAL LIABILITIES 5,416
------------
NET ASSETS $ 6,949,190
============
NET ASSETS CONSIST OF
Paid-in capital $ 5,984,766
Accumulated net investment loss (39,142)
Accumulated net realized gains from security transactions 193,137
Net unrealized appreciation on investments 810,429
------------
NET ASSETS $ 6,949,190
============
Shares of beneficial interest outstanding (unlimited
number of shares authorized, no par value) 478,988
============
Net asset value and redemption price per share (Note 1) $ 14.51
============
Maximum offering price per share (Note 1) $ 15.23
============
See accompanying notes to financial statements.
<PAGE>
NEW YORK EQUITY FUND
STATEMENT OF OPERATIONS
Six Months Ended September 30, 1999
(Unaudited)
INVESTMENT INCOME
Dividends $ 27,295
------------
EXPENSES
Investment advisory fees (Note 3) 33,554
Accounting services fees (Note 3) 12,000
Distribution expense (Note 3) 7,732
Administrative services fees (Note 3) 6,000
Shareholder services and transfer agent fees (Note 3) 6,000
Insurance expense 5,860
Amortization of organization expenses (Note 1) 4,982
Postage and supplies 4,897
Trustees' fees and expenses 4,500
Professional fees 4,367
Custodian fees 4,262
Shareholder reporting costs 4,086
Registration fees 2,674
Pricing costs 310
------------
TOTAL EXPENSES 101,224
Fees waived and expenses reimbursed by
the Advisor (Note 3) (34,787)
------------
NET EXPENSES 66,437
------------
NET INVESTMENT LOSS (39,142)
------------
REALIZED AND UNREALIZED GAINS ON INVESTMENTS
Net realized gains from security transactions 165,008
Net change in unrealized appreciation/
depreciation on investments 34,353
------------
NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS 199,361
------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 160,219
============
See accompanying notes to financial statements.
<PAGE>
NEW YORK EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Six Months
Ended Year
September 30, Ended
1999 March 31,
(Unaudited) 1999
- -----------------------------------------------------------------------------------------
FROM OPERATIONS
<S> <C> <C>
Net investment loss $ (39,142) $ (20,959)
Net realized gains from security transactions 165,008 94,447
Net change in unrealized appreciation/
depreciation on investments 34,353 525,613
----------- -----------
Net increase in net assets from operations 160,219 599,101
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
From net realized gains from security transactions -- (29,519)
----------- -----------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 562,846 4,437,691
Net asset value of shares issued in reinvestment
of distributions to shareholders -- 18,339
Payments for shares redeemed (70,579) (310,093)
----------- -----------
Net increase in net assets from capital share transactions 492,267 4,145,937
----------- -----------
TOTAL INCREASE IN NET ASSETS 652,486 4,715,519
NET ASSETS
Beginning of period 6,296,704 1,581,185
----------- -----------
End of period $ 6,949,190 $ 6,296,704
=========== ===========
CAPITAL SHARE ACTIVITY
Shares sold 38,806 341,457
Shares issued in reinvestment of
distributions to shareholders -- 1,297
Shares redeemed (4,828) (23,480)
----------- -----------
Net increase in shares outstanding 33,978 319,274
Shares outstanding, beginning of period 445,010 125,736
----------- -----------
Shares outstanding, end of period 478,988 445,010
=========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
NEW YORK EQUITY FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Selected Per Share Data and Ratios for a Share Outstanding Throughout Each Period
- -------------------------------------------------------------------------------------------------------------
Six Months
Ended Year Period
September 30, Ended Ended
1999 March 31, March 31,
(Unaudited) 1999 1998 (a)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value at beginning of period $ 14.15 $ 12.58 $ 10.00
------------- ------------- -------------
Income from investment operations:
Net investment loss (0.08) (0.05) (0.01)
Net realized and unrealized gains on investments 0.44 1.69 2.59
------------- ------------- -------------
Total from investment operations 0.36 1.64 2.58
------------- ------------- -------------
Distributions from net realized gains -- (0.07) --
------------- ------------- -------------
Net asset value at end of period $ 14.51 $ 14.15 $ 12.58
============= ============= =============
Total return (b) 2.54% 13.07% 25.80%
============= ============= =============
Net assets at end of period $ 6,949,190 $ 6,296,704 $ 1,581,185
============= ============= =============
Ratio of net expenses to average net assets (c) 1.98%(d) 1.97% 1.93%(d)
Ratio of net investment loss to average net assets (1.17)%(d) (0.60)% (0.20)%(d)
Portfolio turnover rate 60% 96% 25%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Represents the period from the initial public offering of shares (May 12,
1997) through March 31, 1998.
(b) Total returns shown exclude the effect of applicable sales loads.
(c) Ratios of expenses to average net assets, assuming no waiver of fees and
reimbursement of expenses by the Advisor, would have been 3.02%(d), 4.49%
and 13.85%(d) for the periods ended September 30, 1999 and March 31, 1999
and 1998, respectively (Note 3).
(d) Annualized.
See accompanying notes to financial statements.
<PAGE>
NEW YORK EQUITY FUND
PORTFOLIO OF INVESTMENTS
September 30, 1999
(Unaudited)
Market
Shares Value
------ -----
COMMON STOCKS - 98.8%
COMPUTER PERIPHERAL - 13.8%
10,000 EMC Corporation (a) $ 714,375
2,000 International Business Machines Corporation 242,750
------------
957,125
------------
COMPUTER SOFTWARE - 10.1%
5,500 Computer Associates International, Inc. 336,875
4,000 Microsoft Corporation (a) 362,250
------------
699,125
------------
CONGLOMERATES - 3.4%
2,000 General Electric Company 237,125
------------
CONSUMER, CYCLICAL - 7.5%
6,000 Time Warner, Inc. 364,500
5,600 Tommy Hilfiger Corporation (a) 157,850
------------
522,350
------------
CONSUMER, NON-CYCLICAL - 10.2%
3,000 Bristol-Myers Squibb Company 202,500
4,800 Colgate-Palmolive Company 219,600
8,000 Pfizer, Inc. 287,500
------------
709,600
------------
ELECTRICAL EQUIPMENT - 6.4%
6,500 Corning, Inc. 445,656
------------
ENERGY - 1.1%
700 Amerada Hess Corporation 42,875
500 Texaco, Inc. 31,563
------------
74,438
------------
<PAGE>
NEW YORK EQUITY FUND
PORTFOLIO OF INVESTMENTS
September 30, 1999
(Unaudited)
Market
Shares Value
------ -----
COMMON STOCKS - 98.8% (CONTINUED)
FINANCIAL SERVICES - 17.8%
2,000 AXA Financial, Inc. $ 111,625
5,000 The Bank of New York Company, Inc. 167,187
4,000 The Bear Stearns Companies, Inc. 153,750
2,500 Chase Manhattan Corporation 188,437
4,000 Lehman Brothers Holdings, Inc. 233,250
400 M&T Bank Corporation 183,600
3,000 Merrill Lynch & Company, Inc. 201,563
------------
1,239,412
------------
INDUSTRIAL - 7.9%
16,000 Paychex, Inc. 546,000
------------
INTERNET - 15.7%
10,500 America Online, Inc. (a) 1,092,000
------------
UTILITIES - 4.9%
5,000 Bell Atlantic Corporation 336,563
100 Consolidated Edison Company of New York 4,150
------------
340,713
------------
TOTAL COMMON STOCKS - 98.8% (Cost $6,053,115) $ 6,863,544
------------
MONEY MARKET FUND - 0.4%
28,331 The Milestone Funds Treasury Obligations
Portfolio - Investor Shares (Cost $28,331) $ 28,331
------------
TOTAL INVESTMENT SECURITIES - 99.2%
(Cost $6,081,446) $ 6,891,875
OTHER ASSETS IN EXCESS OF LIABILITIES - 0.8% 57,315
------------
NET ASSETS - 100.0% $ 6,949,190
============
(a) Non-income producing security.
See accompanying notes to financial statements.
<PAGE>
NEW YORK EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 1999
(Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
The New York Equity Fund (the Fund) is a non-diversified series 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 (the 1940
Act), was organized as a Massachusetts business trust on November 20, 1996. The
Fund was capitalized on February 18, 1997, when affiliates of Pinnacle Advisors
LLC (the Advisor) purchased the initial shares of the Fund at $10 per share.
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 the
common stocks and other equity securities of publicly-traded companies
headquartered in the state of New York and those companies having a significant
presence in the state.
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 the regular session of trading on the New York Stock Exchange (normally
4:00 p.m., Eastern time). Securities which are traded on stock exchanges or are
quoted by NASDAQ are valued at the closing sales price or, if not traded on a
particular day, at the closing bid price. Securities traded in the
over-the-counter market, and which are not quoted by NASDAQ, are valued at the
last sales price, if available, otherwise, at the last quoted bid price.
Securities for which market quotations are not readily available are valued at
fair value as determined in good faith in accordance with consistently applied
procedures established by and under the general supervision of 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 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 TO SHAREHOLDERS -- Interest income is
accrued as earned. Dividend income is recorded on the ex-dividend date.
Dividends arising from net investment income, if any, are declared and paid
annually to shareholders of the Fund. Net realized short-term capital gains, if
any, may be distributed throughout the year and net realized long-term capital
gains, if any, are distributed at least once each year. Income dividends and
capital gain distributions are determined in accordance with income tax
regulations.
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.
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 and the reported amounts of income and
expenses during the reporting period. Actual results could differ from those
estimates.
<PAGE>
NEW YORK EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 1999
(Unaudited)
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.
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 $6,134,387 as of September 30, 1999:
Gross unrealized appreciation...................... $ 1,000,219
Gross unrealized depreciation...................... (242,731)
-----------
Net unrealized appreciation........................ $ 757,488
===========
The difference between the federal income tax cost of portfolio investments and
the acquisition cost is due to certain timing differences in the recognition of
capital losses under income tax regulations and generally accepted accounting
principles.
2. INVESTMENT TRANSACTIONS
Cost of purchases and proceeds from sales and maturities of investment
securities, other than short-term investments, amounted to $4,386,969 and
$3,931,205, respectively, for the six months ended September 30, 1999.
3. TRANSACTIONS WITH AFFILIATES
ADVISORY AGREEMENT
The Fund's investments are managed by 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; 0.95% of such assets from $100
million to $200 million; and 0.85% 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. Accordingly, the Advisor voluntarily waived its
investment advisory fees of $33,554 and reimbursed the Fund for $1,233 of other
operating expenses for the six months ended September 30, 1999.
Certain trustees and officers of the Trust are also officers of the Advisor.
<PAGE>
NEW YORK EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 1999
(Unaudited)
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 these
services, CFS receives a monthly fee at an annual rate of 0.15% of the Fund's
average daily net assets up to $25 million; 0.125% of such assets from $25
million to $50 million; and 0.10% of such assets in excess of $50 million,
subject to a $1,000 monthly minimum fee.
Certain officers of the Trust are also officers of CFS.
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. For these services, CFS receives a monthly fee at an annual
rate of $17 per shareholder account, subject to a $1,000 monthly minimum fee. In
addition, the Fund pays CFS 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,
based on current net asset levels, of $2,000 from the Fund. In addition, the
Fund pays CFS certain out-of-pocket expenses incurred by CFS in obtaining
valuations for the Fund's portfolio securities.
PORTFOLIO TRANSACTIONS
All of the Fund's portfolio transactions are executed through Pinnacle
Investments, Inc., an affiliate of the Advisor. For the six months ended
September 30, 1999, brokerage commissions of $14,775 were charged to the Fund.
UNDERWRITING AGREEMENT
Pinnacle Investments, Inc. (the Underwriter), an affiliate of the Advisor, is
the Fund's principal underwriter and, as such, acts as exclusive agent for the
distribution of the Fund's shares. Under the terms of the Underwriting Agreement
between the Trust and the Underwriter, the Underwriter earned $5,573 from
underwriting and broker commissions on the sale of shares of the Fund during the
six months ended September 30, 1999.
Certain officers of the Trust are also officers of the Underwriter.
DISTRIBUTION PLAN
The Trust has adopted a Plan of Distribution (the Plan) pursuant to Rule 12b-1
under the 1940 Act. The Plan provides that the Fund may directly incur or
reimburse the Advisor for certain costs related to the distribution of the
Fund's shares, not to exceed 0.25% per annum of the Fund's average daily net
assets. For the six months ended September 30, 1999, the Fund incurred $7,732 of
such expenses under the Plan.
