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New York Equity Fund
--------------------
Semi-Annual Report
September 30, 2000
INVESTMENT ADVISOR ADMINISTRATOR
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PINNACLE ADVISORS LLC ULTIMUS FUND SOLUTIONS, LLC
4605 E. GENESEE STREET 135 MERCHANT STREET, SUITE 230
DEWITT, NEW YORK 13214 CINCINNATI, OHIO 45246
1.315.251.1101 1.888.899.8344
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<PAGE>
NEW YORK EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
September 30, 2000
(Unaudited)
ASSETS
Investment securities, at market value (Cost $10,762,511) $ 14,609,088
Dividends receivable 24,520
Receivable for capital shares sold 35,196
Organization expenses, net (Note 1) 16,192
Other assets 20,839
------------
TOTAL ASSETS 14,705,835
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LIABILITIES
Payable for capital shares redeemed 8,163
Payable to affiliates (Note 3) 7,360
Due to Advisor (Note 3) 11,156
Other accrued expenses 5,615
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TOTAL LIABILITIES 32,294
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NET ASSETS $ 14,673,541
============
NET ASSETS CONSIST OF:
Paid-in capital $ 10,167,283
Accumulated net investment loss (39,674)
Accumulated net realized gains from security transactions 699,355
Net unrealized appreciation on investments 3,846,577
------------
NET ASSETS $ 14,673,541
============
Shares of beneficial interest outstanding (unlimited number
of shares authorized, no par value) 689,000
============
Net asset value and redemption price per share (Note 1) $ 21.30
============
Maximum offering price per share (Note 1) $ 22.36
============
See accompanying notes to financial statements.
<PAGE>
NEW YORK EQUITY FUND
STATEMENT OF OPERATIONS
For the Six Months Ended September 30, 2000
(Unaudited)
INVESTMENT INCOME
Dividends $ 73,476
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EXPENSES
Investment advisory fees (Note 3) 57,146
Accounting services fees (Note 3) 11,751
Professional fees 10,328
Administrative services fees (Note 3) 8,119
Insurance expense 7,323
Shareholder services and transfer agent fees (Note 3) 6,110
Amortization of organization expenses (Note 1) 4,982
Custodian fees 4,720
Registration fees 3,291
Postage and supplies 2,981
Trustees' fees and expenses 2,250
Shareholder reporting costs 1,650
Pricing costs 193
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TOTAL EXPENSES 120,844
Fees waived by the Advisor (Note 3) (7,694)
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NET EXPENSES 113,150
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NET INVESTMENT LOSS (39,674)
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REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS
Net realized losses from security transactions (180,776)
Net change in unrealized appreciation/
depreciation on investments 1,414,987
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NET REALIZED AND UNREALIZED GAINS ON INVESTMENTS 1,234,211
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NET INCREASE IN NET ASSETS FROM OPERATIONS $ 1,194,537
============
See accompanying notes to financial statements.
<PAGE>
NEW YORK EQUITY FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
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Six Months
Ended
September 30, Year Ended,
2000 March 31,
(Unaudited) 2000
---------------------------------------------------------------------------------------------
FROM OPERATIONS
<S> <C> <C>
Net investment loss $ (39,674) $ (87,788)
Net realized gains (losses) from security transactions (180,776) 1,082,317
Net change in unrealized appreciation/
depreciation on investments 1,414,987 1,655,514
------------ ------------
Net increase in net assets from operations 1,194,537 2,650,043
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
From net realized gains from security transactions -- (142,527)
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold 3,513,936 1,498,021
Net asset value of shares issued in reinvestment
of distributions to shareholders -- 85,441
Payments for shares redeemed (94,622) (327,992)
------------ ------------
Net increase in net assets from capital share transactions 3,419,314 1,255,470
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TOTAL INCREASE IN NET ASSETS 4,613,851 3,762,986
NET ASSETS
Beginning of period 10,059,690 6,296,704
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End of period $ 14,673,541 $ 10,059,690
============ ============
CAPITAL SHARE ACTIVITY
Shares sold 171,695 92,509
Shares issued in reinvestment of
distributions to shareholders -- 5,041
Shares redeemed (4,681) (20,574)
------------ ------------
Net increase in shares outstanding 167,014 76,976
Shares outstanding, beginning of period 521,986 445,010
------------ ------------
Shares outstanding, end of period 689,000 521,986
============ ============
</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
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Six Months
Ended
September 30, Year Ended Year Ended Period Ended
2000 March 31, March 31, March 31,
(Unaudited) 2000 1999 1998 (a)
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<S> <C> <C> <C> <C>
Net asset value at beginning of period $ 19.27 $ 14.15 $ 12.58 $ 10.00
------------ ------------ ------------ ------------
Income from investment operations:
Net investment loss (0.06) (0.17) (0.05) (0.01)
Net realized and unrealized gains on investments 2.09 5.58 1.69 2.59
------------ ------------ ------------ ------------
Total from investment operations 2.03 5.41 1.64 2.58
------------ ------------ ------------ ------------
Distributions from net realized gains -- (0.29) (0.07) --
------------ ------------ ------------ ------------
Net asset value at end of period $ 21.30 $ 19.27 $ 14.15 $ 12.58
============ ============ ============ ============
TOTAL RETURN (B) 10.53% 38.55% 13.07% 25.80%
============ ============ ============ ============
Net assets at end of period $ 14,673,541 $ 10,059,690 $ 6,296,704 $ 1,581,185
============ ============ ============ ============
Ratio of net expenses to average net assets (c) 1.97%(d) 1.98% 1.97% 1.93%(d)
Ratio of net investment loss to average net assets -0.69%(d) -1.15% -0.60% -0.20%(d)
Portfolio turnover rate 196%(d) 154% 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 expense to average net assets, assuming no waiver of fees and/or
reimbursement of expenses by the Advisor, would have been 2.13% (d), 2.74%,
4.49% and 13.85% (d) for the periods ended September 30, 2000 and March 31,
2000, 1999 and 1998, respectively (Note 3).
(d) Annualized.
See accompanying notes to financial statements.
<PAGE>
NEW YORK EQUITY FUND
PORTFOLIO OF INVESTMENTS
September 30, 2000
(Unaudited)
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SHARES COMMON STOCKS - 98.9% MARKET VALUE
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APPAREL - 2.0%
30,000 Tommy Hilfiger Corp. $ 288,750
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BANKS - 16.9%
10,000 Bank of New York Co., Inc. 560,625
10,000 BSB Bancorp, Inc. 223,750
8,000 Chase Manhattan Corp. 369,500
3,000 J.P. Morgan & Co., Inc. 490,125
15,000 KeyCorp 379,687
900 M&T Bank Corp. 459,000
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2,482,687
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BIOTECHNOLOGY - 9.9%
15,000 Chiron Corp. 675,000
4,500 Human Genome Sciences, Inc. 779,063
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1,454,063
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COMMERCIAL AND CONSUMER SERVICES - 4.0%
11,250 Paychex, Inc. 590,625
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COMMUNICATION EQUIPMENT - 10.8%
7,500 America Online, Inc. 403,125
4,000 Corning, Inc. 1,188,000
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1,591,125
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COMPUTERS - 3.8%
5,000 International Business Machines Corp. 562,500
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COMPUTER SOFTWARE AND SERVICES - 6.1%
20,000 Computer Associates International, Inc. 503,750
4,000 EMC Corp. 396,500
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900,250
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CONSUMER FINANCE - 2.5%
6,000 American Express Co. 364,500
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DIVERSIFIED MANUFACTURING - 5.5%
14,000 General Electric, Co. 807,625
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See accompanying notes to financial statements.
<PAGE>
NEW YORK EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
September 30, 2000
(Unaudited)
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SHARES COMMON STOCKS - 98.9% (CONTINUED) MARKET VALUE
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ELECTRIC COMPANIES - 1.0%
4,100 Consolidated Edison, Inc. $ 139,913
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ELECTRONICS - SEMICONDUCTORS - 1.6%
750 SDL, Inc. 231,000
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FINANCIAL (DIVERSIFIED) - 3.1%
5,000 Morgan Stanley Dean Witter & Co. 457,187
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HEALTH CARE - MAJOR PHARMACEUTICALS - 1.8%
2,100 Bristol-Meyers Squibb Co. 119,962
3,000 Pfizer, Inc. 134,812
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254,774
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INVESTMENT BANKING AND BROKERAGE - 12.4%
6,000 Bear Stearns Cos.. Inc. 378,000
4,000 Goldman Sachs Group, Inc. 455,750
4,000 Lehman Brothers Holding, Inc. 591,000
6,000 Merrill Lynch & Co.. Inc. 396,000
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1,820,750
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LIFE AND HEALTH INSURANCE - 3.5%
10,000 AXA Financial, Inc. 509,375
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OIL AND GAS - 0.4%
500 Amerada Hess Corp. 33,469
500 Texaco, Inc. 26,250
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59,719
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PROPERTY AND CASUALTY INSURANCE - 4.6%
9,000 Allstate Corp. 312,750
6,666 Citigroup, Inc. 360,381
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673,131
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TELECOMMUNICATIONS - 3.0%
15,000 AT&T Corp. 440,625
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TOBACCO - 6.0%
30,000 Philip Morris Cos., Inc. 883,125
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TOTAL COMMON STOCKS - 98.9% (COST $10,665,147) $ 14,511,724
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See accompanying notes to financial statements.
<PAGE>
NEW YORK EQUITY FUND
PORTFOLIO OF INVESTMENTS (Continued)
September 30, 2000
(Unaudited)
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SHARES SHORT TERM MONEY MARKET SECURITIES - 0.7% MARKET VALUE
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97,364 Milestone Treasury Obligation Portfolio -
Investor Shares (Cost $97,364) $ 97,364
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TOTAL INVESTMENTS AT VALUE - 99.6%
(COST $10,762,511) $ 14,609,088
OTHER ASSETS IN EXCESS OF LIABILITIES - 0.4% 64,453
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NET ASSETS - 100.0% $ 14,673,541
============
See accompanying notes to financial statements.
<PAGE>
NEW YORK STATE OPPORTUNITY FUNDS
NEW YORK EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
(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, as amended (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 business 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 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. Securities for
which market quotations are not readily available are valued at their 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.
INVESTMENT INCOME AND DISTRIBUTIONS TO SHAREHOLDERS -- Interest income is
accrued as earned. Dividend income and distributions to Fund 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.
<PAGE>
NEW YORK STATE OPPORTUNITY FUNDS
NEW YORK EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
September 30, 2000
(Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ACCOUNTING 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 applicable 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 the Fund's intention to declare as dividends in
each calendar year of 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 $10,841,877 as of September 30, 2000:
Gross unrealized appreciation $ 4,082,340
Gross unrealized depreciation (315,129)
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Net unrealized appreciation $ 3,767,211
============
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 $14,655,209 and
$11,233,890, respectively, for the six months ended September 30, 2000.
<PAGE>
NEW YORK STATE OPPORTUNITY FUNDS
NEW YORK EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
September 30, 2000
(Unaudited)
3. TRANSACTIONS WITH AFFILIATES
ADVISORY AGREEMENT
Under the terms of an 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. In accordance with the above limitation, the
Advisor voluntarily waived $9,473 of its investment advisory fees for the
six months ended September 30, 2000.
Certain trustees and officers of the Trust are also officers of the
Advisor.
ADMINISTRATION AGREEMENT
Under the terms of an Administration Agreement in effect since August 24,
2000, Ultimus Fund Solutions, LLC (the "Administrator") supplies executive,
administrative and regulatory services to the Fund, supervises the
preparation of tax returns, and coordinates the preparation of reports to
shareholders and reports to and filings with the Securities and Exchange
Commission and state securities authorities. For the performance of these
administrative services, the Administrator receives a monthly fee at an
annual rate of .15% of average daily net assets up to $50 million; .125% of
such assets from $50 million to $100 million; .100% of such assets from
$100 million to $250 million; .075% of such assets from $250 to $500
million; and .050% of such assets in excess of $500 million, subject to a
monthly minimum of $2,000. The foregoing fee will be discounted by 30%
during the first year of the agreement and 25% during the second year of
the agreement or until such time as net assets of the Fund reach $20
million, but in no case later then 2 years from the date of the agreement.
Accordingly, during the six months ended September 30, 2000, the
Administrator was paid $3,213 for administrative services.
Certain officers of the Trust are also officers of the Administrator.
<PAGE>
NEW YORK STATE OPPORTUNITY FUNDS
NEW YORK EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
September 30, 2000
(Unaudited)
3. TRANSACTIONS WITH AFFILIATES (CONTINUED)
TRANSFER AGENT AND SHAREHOLDER SERVICE AGREEMENT
Under the terms of a Transfer Agency and Shareholder Services Agreement
between the Trust and the Administrator in effect since August 24, 2000,
the Administrator maintains the records of each shareholder's account,
answers shareholders' inquiries concerning their accounts, processes
purchases and redemptions of Fund shares, acts as dividend and distribution
disbursing agent and performs other shareholder service functions. For
these services, the Administrator receives from the Fund a monthly fee at
an annual rate of $17 per account, subject to a minimum of $1,500 per
month. The foregoing fee will be discounted by 30% during the first year of
the agreement and 25% during the second year of the agreement or until such
time as net assets of the Fund reach $20 million, but in no case later than
2 years from the date of the agreement. Accordingly, during the six months
ended September 30, 2000, the Administrator was paid $2,410 for transfer
agent services. In addition, the Fund pays the Administrator out-of-pocket
expenses including, but not limited to, postage and supplies.
ACCOUNTING SERVICES AGREEMENT
Under the terms of a Accounting Services Agreement between the Trust and
the Administrator in effect since August 24, 2000, the Administrator
calculates the daily net asset value per share and maintains the financial
books and records of the Fund. For these services, the Administrator
receives from the Fund a monthly fee of $2,500, plus an asset based fee
equal to 0.01% of average daily net assets from $25 to $500 million and
0.005% of such assets in excess of $500 million. The foregoing fees will be
discounted by 30% during the first year of the agreement and 25% during the
second year of the agreement or until such times as net assets of the Fund
reach $20 million, but in no case later than 2 years from the date of the
agreement. Accordingly, during the six months ended September 30, 2000, the
Administrator was paid $4,016 for accounting services. In addition, the
Fund pays the Administrator certain out-of-pocket expenses incurred by the
Administrator in obtaining valuations of the Fund's portfolio securities.
UNDERWRITING AGREEMENT
The principal underwriter of the Fund's shares is Pinnacle Investments,
Inc. (the "Underwriter"), an affiliate of the Advisor. During the six
months ended September 30, 2000, the Underwriter received underwriter
commissions of $25,076 and broker commissions of $47,042 in connection with
the sale of Fund shares.
<PAGE>
NEW YORK STATE OPPORTUNITY FUNDS
NEW YORK EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
September 30, 2000
(Unaudited)
3. TRANSACTIONS WITH AFFILIATES (CONTINUED)
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, 2000, brokerage commissions of $110,782 were charged to the
Fund.
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 shares, not to exceed 0.25% of average daily net
assets. For the six months ended September 30, 2000, the Fund incurred no
distribution-related expenses under the Plan.
PRIOR SERVICE AGREEMENT
Prior to August 24, 2000, administrative services, fund accounting services
and transfer agent services were provided to the Fund by Integrated Fund
Services, Inc. ("IFS"). Pursuant to the terms of an Administration
Agreement with the Trust, IFS received a monthly fee at an annual rate of
.15% of average daily net assets up to $25 million; .125% of such assets
from $25 million to $50 million; and .10% of such assets in excess of $50
million, subject to a monthly minimum of $1,000. Pursuant to a Transfer,
Dividend Disbursing, Shareholder Service and Plan Agency Agreement between
the Trust and IFS, IFS received for its services a monthly fee at an annual
rate of $17.00 per shareholder account, subject to a $1,000 monthly
minimum. Pursuant to an Accounting Services Agreement between the Trust and
IFS, IFS received a monthly fee of $2,000 from the Fund. Accordingly,
during the six months ended September 30, 2000, IFS was paid $16,341 by the
Fund for these services.
