E.I.I. Realty Securities Trust
E.I.I. Realty Securities Fund
Semi-Annual Report
(Unaudited)
Six Months Ended
December 31, 1998
<PAGE>
E.I.I. REALTY SECURITIES TRUST
E.I.I. Realty Securities Fund
Schedule of Investments
December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Number
of Shares Value +
--------- -------
<S> <C> <C>
COMMON STOCK -- (96.7%)
- ------------
Apartment Investment & Management Company 11,000 $ 409,063
Archstone Communities Trust 20,002 405,041
Arden Realty Group, Inc. 38,500 892,719
Avalonbay Communities, Inc. 15,855 543,034
Boston Properties, Inc. 16,900 515,450
Bradley Real Estate Trust, Inc. 19,800 405,900
BRE Properties, Inc., Class A 16,400 405,900
CarrAmerica Realty Corp. 16,700 400,800
Catellus Development Corp. 23,800 340,638
Charles E. Smith Residential Realty, Inc. 18,000 578,250
Chateau Communities, Inc. 26,524 777,485
Cornerstone Properties, Inc. 38,900 607,813
Crestline Capital Corp. 2,610 38,171
Developers Diversified Realty Corp. 30,300 537,825
Equity Office Properties Trust 59,959 1,439,010
Equity Residential Properties Trust 19,437 785,984
Federal Realty Investment Trust 11,100 262,238
Franchise Finance Corp. of America 33,200 796,800
General Growth Properties, Inc. 25,100 950,663
Host Marriott Corp. 26,100 360,506
Kilroy Realty Corp. 35,200 809,600
Kimco Realty Corp. 33,100 1,313,656
Liberty Property Trust 27,100 667,338
Mack-Cali Realty Corp. 15,700 484,738
Manufactured Home Communities, Inc. 16,900 423,556
Meditrust Corp. 19,200 290,400
Nationwide Health Properties, Inc. 12,000 258,750
Patriot American Hospitality, Inc. 67,500 405,000
Post Properties, Inc. 24,420 938,644
Prologis Trust 39,648 822,696
Reckson Associates Realty Corp. 37,800 838,688
Simon Property Group, Inc. 46,100 1,313,850
</TABLE>
See accompanying Notes to Financial Statements
1
<PAGE>
E.I.I. REALTY SECURITIES TRUST
E.I.I. Realty Securities Fund
Schedule of Investments
December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Number
of Shares Value +
--------- -------
<S> <C> <C>
COMMON STOCK -- (Continued)
- ------------
SL Green Realty Corp. 25,500 $ 551,438
Spieker Properties, Inc. 11,600 401,650
Starwood Hotels & Resorts 37,186 843,657
Storage Trust Realty 22,900 535,288
Sun Communities, Inc. 23,700 825,056
Taubman Centers, Inc. 36,200 497,750
The Macerich Company 15,700 402,313
Tower Realty Trust 19,100 384,388
Trinet Corp. Realty 5,000 133,750
Urban Shopping Centers, Inc. 8,100 265,275
Vornado Realty Trust 27,600 931,500
-----------
TOTAL COMMON STOCK (Cost $27,257,293) 25,792,271
-----------
PREFERRED STOCK -- (1.2%)
Vornado Realty Trust Preferred
Convertible Series A (Cost $350,229) 6,700 324,950
-----------
TEMPORARY INVESTMENTS -- (2.1%)
Provident Institutional Funds Trust
For Federal Securities Fund (Cost $552,154) 552,154 52,154
-----------
TOTAL INVESTMENTS -- 100.0% (Cost $28,159,676)++ $26,669,375
===========
</TABLE>
+ See Note B to Financial Statement
++ Approximates cost for federal income tax purposes
See accompanying Notes to Financial Statements
2
<PAGE>
E.I.I. Realty Securities Trust
E.I.I. Realty Securities Fund
Statement of Assets and Liabilities
December 31, 1998
(Unaudited)
ASSETS
Investments at value (Cost $28,159,676) ................ $26,669,375
Receivable from advisor ................................ 2,395
Dividends receivable ................................... 247,736
Receivable for investment securities sold .............. 34,595
Organizational expense ................................. 162,377
Prepaid expenses and other assets ...................... 6,006
-----------
Total Assets .................................. 27,125,020
-----------
LIABILITIES
Accrued expenses ....................................... 22,027
-----------
Total Liabilities ............................. 22,027
-----------
NET ASSETS (Applicable to 2,971,710
Institutional Class shares outstanding, $.01
par value, unlimited shares authorized) .................. $27,102,993
===========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER INSTITUTIONAL
CLASS SHARE .............................................. $ 9.12
===========
See accompanying Notes to Financial Statements
3
<PAGE>
E.I.I. Realty Securities Trust
E.I.I. Realty Securities Fund
Statement of Operations
Six Months
Ended
December 31, 1998
(Unaudited)
-----------
Investment Income
Dividends ........................................... $ 618,449
Interest ............................................ 24,456
-----------
Total Investment Income ............................. 642,905
-----------
Expenses
Investment advisory fee ............................. 54,120
Administrative fee .................................. 18,040
Custodian fee ....................................... 6,656
Transfer agency services fee ........................ 3,750
Organization expenses ............................... 18,420
Audit fee ........................................... 17,682
Legal fee ........................................... 14,402
Trustees' fees and expenses ......................... 14,402
Shareholders' reports ............................... 3,824
Other expenses ...................................... 5,821
-----------
Total Expenses ...................................... 157,117
Less: Expenses Waived or Reimbursable .............. (84,957)
-----------
Net Expenses ........................................ 72,160
-----------
Net Investment Income ............................... 570,745
-----------
Net Realized and Unrealized Gain (Loss)
on Investment Securities
Net Realized Loss on Investment Securities ................ (83,540)
Change in Unrealized Appreciation (Depreciation)
of Investment Securities ................................. (1,504,198)
-----------
Net Loss on Investment Securities ................... (1,587,738)
-----------
Net Decrease in Net Assets
Resulting from Operations ................................ ($1,016,993)
===========
See accompanying Notes to Financial Statements
4
<PAGE>
E.I.I. Realty Securities Trust
E.I.I. Realty Securities Fund
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months
Ended June 11, 1998 (a)
December 31, 1998 through
(Unaudited) June 30, 1998
----------- -------------
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations:
Net Investment Income ............................. $ 570,745 $ 2,518
Net Realized Loss on Investment Securities ....... (83,540) (2,559)
Change in Unrealized Appreciation (Depreciation)
of Investment Securities ......................... (1,504,198) 13,897
------------ ---------
Net Increase (Decrease) in Net Assets Resulting
from Operations .............................. (1,016,993) 13,856
------------ ---------
Distributions From:
Net Investment Income ............................. (434,812) --
Net Realized Gains ................................ -- --
------------ ---------
Total Distributions ........................... (434,812) --
------------ ---------
Capital Share Transactions -- Institutional Class: (1)
Shares Issued ..................................... 27,606,150 400,000
Shares Issued in Reinvestment of Distributions .... 434,812 --
Shares Redeemed ................................... (20) --
------------ ---------
Net Increase From Capital Share
Transactions ................................. 28,040,942 400,000
------------ ---------
Total Increase in Net Assets ........................... 26,589,137 413,856
Net Assets
Beginning of Period ............................... 513,856 100,000
------------ ---------
End of Period ..................................... $ 27,102,993 $ 513,856
============ =========
(1) Shares Issued and Redeemed -- Institutional Class:
Shares Issued .......................................... 2,872,927 40,091
Shares Reinvested ...................................... 48,694 --
Shares Redeemed ........................................ (2) --
------------ ---------
2,921,619 40,091
============ =========
</TABLE>
- ------------
(a) Commencement of Operations.
See accompanying Notes to Financial Statements
5
<PAGE>
E.I.I. Realty Securities Trust
E.I.I. Realty Securities Fund
Financial Highlights
For an Institutional Class Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
Six Months
Ended June 11, 1998(a)
December 31, 1998 through
(Unaudited) June 30, 1998
----------- -------------
<S> <C> <C>
Net Asset Value, Beginning of Period.............................. $10.26 $10.00
------ ------
Income from Investment Operations
Net Investment Income.......................................... 0.18 0.05
Net Gain (Loss) on Securities (Realized and Unrealized)........ (1.14) 0.21
------ ------
Total from Investment Operations........................... (0.96) 0.26
------ ------
Less Distributions
Net Investment Income.......................................... (0.18) --
Net Realized Gains............................................. -- --
------ ------
Total Distributions........................................ (0.18) --
------ ------
Net Asset Value, End of Period.................................... $ 9.12 $10.26
====== ======
Total Return...................................................... (9.33%)# 2.60%#
Net Assets, End of Period $27,102,993 $513,856
Ratio of Expenses to Average Net Assets.......................... 1.00%(b)* 1.00%(b)*
Ratio of Net Investment Income to Average
Net Assets....................................................... 7.91%(b)* 10.50%(b)*
Portfolio Turnover Rate........................................... 5.57% 22.23%
</TABLE>
- ----------------
* Annualized
# Non-Annualized
(a) Commencement of Operations.
(b) Had certain waivers and reimbursements not been in effect, the ratio of
expenses to average net assets, for the periods ended December 31, 1998 and
June 30, 1998, would have been 2.18% and 37.75%, respectively, and the
ratio of net investment income to average net assets, for the periods ended
December 31, 1998 and June 30, 1998 would have been 6.73% and (26.25%),
respectively. Because of commencement of operations and related preliminary
transaction costs these ratios are not necessarily indicative of future
ratios.
See accompanying Notes to Financial Statements
6
<PAGE>
E.I.I. Realty Securities Trust
E.I.I. Realty Securities Fund
Notes to Financial Statements
(Unaudited)
A. Organization:
E.I.I. Realty Securities Trust was incorporated in the State of Delaware on
December 22, 1997 and is registered under the Investment Company Act of 1940, as
amended, as an open-end management investment company. E.I.I. Realty Securities
Trust may offer one or more portfolios of its shares; at present only shares of
E.I.I. Realty Securities Fund (the "Fund") are being offered. The Fund may offer
three classes of shares; Institutional, Adviser and Investor. The Fund commenced
operations on June 11, 1998 by selling shares of the Institutional share class.
As of December 31, 1998, the Adviser and Investor Classes had not commenced
operations. Shares of all classes represent equal pro-rata interests in the
Fund, except that each class will bear different expenses which will reflect the
difference in the range of services to be provided to them.
B. Significant Accounting Policies:
The following significant accounting policies are in conformity with generally
accepted accounting principles. Such policies are consistently followed by the
Fund in preparation of its financial statements.
The preparation of financial statements in accordance with generally accepted
accounting principles may require management to make estimates and assumptions
that affect the reported amounts and disclosures in the financial statements.
Actual results could differ from those estimates. Estimates include the
classification of distributions received by the Fund from the issuers of the
Fund's portfolio securities. These distributions may be classified as either
dividend income, capital gains or as non-taxable distributions. The final
classifications of these distributions can not be determined until reported to
the Fund by the issuers of the Fund's portfolio securities, which normally
occurs in January after the end of the calendar year. Reclassification of
distributions made to the Fund will not affect the net assets of the Fund. The
reclassification of distributions received by the Fund may require the Fund to
reclassify a portion of its distributions to Fund shareholders.
Security Valuation: Securities traded on a nationally recognized securities
exchange will be valued at the last sale price, or if no sale, at the mean
between the latest bid and asked price. Securities traded in any other U.S. or
foreign market shall be valued in a manner as similar as possible to the above,
or if not so traded, on the basis of the latest available price. Where there are
no readily available quotations for securities they will be valued at a fair
value as determined by the Board of Trustees acting in good faith.
Federal Income Taxes: The Fund's policy is to comply with the requirements of
the Internal Revenue Code that are applicable to regulated investment companies
and to distribute all its taxable income to its shareholders.
Therefore, no federal income tax provision is required.
7
<PAGE>
Organizational Costs: Organizational costs have been capitalized and are
being amortized on a straight line basis over a period of 60 months.
Other: Security transactions are accounted for on the date the securities
are purchased or sold. Costs used in determining realized gains and losses on
the sale of investment securities are those of specific securities sold.
Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Interest income is recorded on an accrual basis.
C. Investment Advisory and Administrative Services:
The Fund has entered into an Investment Advisory Agreement with E.I.I. Realty
Securities, Inc. (the "Adviser" or "E.I.I.") for day-to-day portfolio management
services to be provided by the Adviser. The Investment Advisory Agreement
provides for the Adviser to receive a fee calculated daily and payable monthly
at an annual rate of 0.75% of the Fund's average daily net assets. The
Investment Advisory Agreement will initially be effective for a two-year period
and thereafter will be approved on an annual basis.
E.I.I. will also provide administrative services to the Fund. Under the
Administrative Services Agreement, E.I.I. will receive a fee payable monthly at
an annual rate of 0.25% of the Fund's average daily net assets. For the
Institutional Share Class, E.I.I. has agreed to waive 0.10% of its
administrative fee resulting in a net annual rate of 0.15% of average daily net
assets. E.I.I. has entered into a sub-administration contract with PFPC Inc.
under which E.I.I. pays PFPC Inc. to provide certain administrative services to
E.I.I.
E.I.I. has agreed to waive a portion of its Investment Advisory Fee and/or
assume the expenses of the Fund to the extent necessary to keep the annual
expenses of the Fund to not more than 1.00% of the average daily net assets of
the Institutional Share Class of the Fund.
D. Distribution and Shareholder Servicing Plans:
The Fund has also adopted a Distribution and Service Plan for the Investor
Share Class under which the Fund may pay up to 0.75% of the average daily net
assets of the Investor Share Class for distribution assistance.
The Fund has adopted a Shareholder Servicing Plan for the Adviser and
Investor Share Classes. Under the Shareholder Servicing Plan, the Adviser will
provide shareholder services to its clients that invest in the Fund. The Fund
may also enter into shareholder service agreements pursuant to which a
shareholder servicing agent other than the Adviser performs shareholder services
for its customers who are shareholders of the Fund. In exchange for these
services, the Fund pays up to 0.25% of the average daily net assets of the
Adviser or Investor Shares serviced by the Adviser or the agent (collectively,
the "Shareholder Servicing Agents"). Shareholder Servicing Agents may waive all
or a portion of their fee periodically.
8
<PAGE>
E. Investment Transactions:
For the period ended December 31, 1998, the Fund made the following purchases
and sales of investment securities other than U.S. Government Securities:
Purchases........................................... $27,535,440
Sales............................................... 376,949
At December 31, 1998, gross unrealized appreciation and depreciation for federal
income tax purposes on investment securities for the Fund was as follows:
Gross Unrealized Appreciation....................... $ 159,947
Gross Unrealized Depreciation....................... (1,650,248)
-----------
Net................................................. $(1,490,301)
===========
At June 30, 1998, the Fund had a capital loss carryover for federal income
tax purposes of $2,559 which expires on June 30, 2006.
F. Components of Net Assets:
At December 31, 1998, net assets consisted of:
Paid-In Capital..................................... $28,540,942
Undistributed Net Investment Income................. 138,451
Accumulated Net Realized Loss....................... (86,099)
Net Unrealized Appreciation of
Investment Securities.............................. ( 1,490,301)
-----------
$27,102,993
===========
