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LOGO
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ICAP
Family of Mutual Funds
Semi-Annual
Report
June 30, 1998
Discretionary
Equity
Portfolio
Equity
Portfolio
Select
Equity
Portfolio
Euro Select
Equity
Portfolio
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LOGO
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ICAP
Table of Contents
page
Letter to Shareholders 1
Investment Highlights
Discretionary Equity Portfolio 5
Equity Portfolio 6
Select Equity Portfolio 7
Euro Select Equity Portfolio 8
Schedules of Investments
Discretionary Equity Portfolio 9
Equity Portfolio 13
Select Equity Portfolio 17
Euro Select Equity Portfolio 19
Statements of Assets and Liabilities 22
Statements of Operations 23
Statements of Changes in Net Assets
Discretionary Equity Portfolio 24
Equity Portfolio 25
Select Equity Portfolio 26
Euro Select Equity Portfolio 27
Financial Highlights
Discretionary Equity Portfolio 28
Equity Portfolio 29
Select Equity Portfolio 30
Euro Select Equity Portfolio 31
Notes to Financial Statements 32
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LOGO
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ICAP
July 1998
Dear Shareholder:
Once again, the economy and the financial markets defied the consensus. The
conventional wisdom was that the Asian crisis would result in a slow first half,
beset by profit warnings which would impede the stock market, followed by a
stabilization in Asia in the second half which would allow economic growth and
stock prices to rebound. Our own concern was whether the Fed would have to
tighten in the second half of the year as the moderating influence of Asia on
strong U.S. growth diminished. This scenario did not unfold. Rather, stimulated
by lower interest rates, strong employment and a significant drop in energy
prices, domestic consumption - houses, cars and general merchandise - was very
strong, especially for this late in the cycle. Outside the U.S., Europe, which
has been moribund through much of the 1990's, began to stir. Asia, in fact, did
slump, ranging from sharp drops in the ASEAN countries to Japan's first two-
quarter downturn since 1954. However, initially, exports from Asia were less
than feared, probably as a result of a lack of access to capital, although our
exports to the area have shrunk considerably. Despite weakness in earnings for
commodity producers, technology companies and other multinationals, the U.S.
stock market responded to lower interest rates, strong liquidity, and record
merger and acquisition activity by adding another 18% to its multi-year gains.
Unfortunately, given the lethargy in Japan and the reduction of growth in China,
it is unlikely that there will be a quick, or easy, resolution to that region's
woes anytime soon. Given the ease with which a strong U.S. economy pulled Mexico
out of the ditch in 1994, we feel that many investors are too complacent about
the impact of Asia on the U.S. The good news is that the deflationary drag from
that region should keep the Fed on hold, and the dollar strong, for some time.
Those U.S. (and European) companies with improving fortunes will see exaggerated
stock market gains as global liquidity flows seek more certain returns. On the
other hand, the basic problem in Asia is that massive amounts of capital
(primarily borrowed) were put into productive assets without a rigorous analysis
of potential returns. Non-Asian competitors in such industries are now faced
with the prospect of poor pricing conditions for a prolonged period as
enterprises are run for cash. Ironically, as trade finance (supported by the
West) improves, conditions for commodity producers could get worse. Moreover,
Western companies which dreamed of huge new markets for branded consumer goods
as a new Asian middle class was spawned will likely be disappointed.
Over one-half of Asia's trade is internal. With Japan not eager to buy, ASEAN
countries will continue to target the U.S. But even if export units surge,
dollar revenues are unlikely to grow significantly. This compounds the problem
of repaying debt. Moreover, much of China's exports are also intra-region, and
reduced strength within the area will put pressure on that country's internal
employment problem. While we feel that these problems will eventually be solved
without a world financial crisis, the downside risks can be summed up in the
following graphs.
(GRAPHS)
Source: FactSet Research Systems Inc.
Here you can see what were, until recently, viewed as the great future markets
for both goods and securities - China, Russia, India and Brazil. All markets
have been hit hard. These countries represent huge populations, and are
surrogates for whole continents. On the flip side, the U.S. stock market is now
characterized by high valuations, but given the lack of alternatives, the low
level of interest rates and the strength of the dollar, that is understandable,
if not totally justifiable. But what is not justifiable, and makes us queasy, is
the degree of speculation that has entered the U.S. market. Look at the graph of
Yahoo!
(GRAPH)
Source: FactSet Research Systems Inc.
An interesting concept yes, but $9 billion of market cap for $100mm+ of revenues
- - no way. The market says that nouveau advertiser Yahoo! is worth more than the
New York Times - we doubt it. Unfortunately, Yahoo! is not an isolated example
of overvaluation within the U.S. market. The top tier S&P stocks by market cap
continue to dominate the performance of the index. In fact, the spread between
the top 100 and the bottom 400 has never been wider. By virtue of not owning
five stocks - Microsoft, GE, Coke, Lucent Technologies and Wal-Mart (up 57% on
average for the first half) - one would have missed out on over four percentage
points of the 18% move of all 500 stocks in the S&P. In fact, the
capitalization of the Internet stocks themselves is approaching the values of
the entire stock market of the former wunderkinds - Thailand, Malaysia and
Indonesia. This is a condition that is unlikely to persist.
So where does ICAP stand? We coped well with the vicissitudes of the first half.
Performance for the ICAP Funds ranged from respectable to outstanding:
YTD
Portfolio Total Return
---------- ------------
ICAP Discretionary Equity Portfolio 15.2%
ICAP Equity Portfolio 15.9%
ICAP Select Equity Portfolio 17.0%
ICAP Euro Select Equity Portfolio 33.7%
Morningstar Large Value - Top Quartile<F1> 12.4%
In particular, these figures compare favorably with the Funds in the top
quartile of the Morningstar Large Value category.
Our view of the future is that:
1)The U.S. economy will slow in the second half as a result of high
inventories, weaker exports and a downturn in capital goods;
2)Corporate profits will be up modestly, and less than expected;
3)The Fed will not tighten as a result of Asia and the fragile state of other
dollar linked economies (Russia, etc.);
4)The merger and acquisition boom will continue, but the trend toward stock
deals at small premiums will diminish the benefit to the overall market.
In this environment we would expect modest gains for the U.S. averages in the
second half. Europe, given its ramp-up to the EMU and earlier position in the
business cycle, could see larger returns. Our emphasis will remain on individual
stock selection.
As you will recall from previous letters, ICAP is focused on investing in
corporate restructurings both in the U.S. and in Europe. We feel that our risk
in this approach is less, but our upside is equal to, or greater than, that of
the market. Companies that have in the past performed poorly, but which have
attractive assets, and a more incentivized new (or old) management, possess a
superior risk/reward profile. The following is a list of companies, some or all
of which were held by the Discretionary Equity, Equity or Select Equity
Portfolios on June 30, 1998. Listed are major corporate actions, and whether the
company has embarked on a major streamlining or share repurchase. Several
companies are active on all fronts. The payoff from these deeds helped us
deliver solid results in the first half, but we feel that not all of the good
news is reflected in the stocks - there are more restructuring developments
likely to occur in these companies and others.
* Top Quartile Lowest Return
Restructuring Actions Taken Year-to-Date
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Cost Share
Company Corporate Action Cutting Repurchase
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BF Goodrich 1)Elimination of money-losing business
from Maintenance & Repair Operations X
2)Integration of Freedom Chemical
into existing infrastructure
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Canadian Pacific 1)Sale of unprofitable lines at CP Rail X X
2) Integration of several acquisitions
in shipping business
3)Creation of Legacy REIT for city-center
hotel properties
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Case 1)Sold German plant and moved
operations to the UK X
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Cigna 1)Separation of environmental &
asbestos liability exposure
from the rest of their
Property/Casualty operations X
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Citicorp 1)Merger with Travelers X X
2)Standardized global infrastructure
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Consolidated Stores 1)MacFrugal's acquisition X
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Dun & Bradstreet 1)Divestiture of R.H. Donnelley X
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Fort James 1)Integration of Fort Howard
and James River operations X
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General Motors 1)Sold Hughes defense operations X
2)Combined Delphi/Delco and
announced partial IPO
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Hasbro 1)Acquisition of Tiger Electronics X X
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Hoechst 1)Announced sale of Trevira
polyester operation X
2)Announced spin-out of Celanese
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Host Marriott 1)Announced conversion to a REIT
2)Announced Blackstone
properties acquisition
3)Announced spin-off of senior
living center
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NationsBank 1)Finalizing integration of
Boatmen's acquisition X
2)Barnett integration planning
completed, to be implemented
by October
3)Merger with BankAmerica
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News Corporation 1)TV Guide sold X
2)Announced IPO of 20% of Fox Group
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Philips Electronics 1)Sale of Polygram X
2)Divestiture of Car Radio operations (likely)
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Raytheon 1)Integration of Texas Instruments/
GMH defense acquisitions X
2)Sold non-core Amana appliance division
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Reynolds Metals 1)Sold $900 million of low
return businesses X
2)Announced sale of can operations
for $750 million
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Seagram Co. 1)Announced Polygram purchase
2)Tropicana sale announced
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Tenet Healthcare 1)Renegotiated contracts to
lower supply costs X
2)Sold non-core Vencor assets
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USA Waste 1)Acquisition of Waste Management X
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Thank you for your continuing support of the ICAP Funds.
Very truly yours,
/s/Robert H. Lyon
Robert H. Lyon
President
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ICAP
Investment Highlights
ICAP Discretionary Equity Portfolio
Total Return
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Portfolio Total Return
FOR THE PERIOD ENDED 6/30/98
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ONE YEAR 22.7%
AVERAGE ANNUAL
SINCE COMMENCEMENT 30.2%
(12/31/94)
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ICAP Discretionary S&P 500
Equity Portfolio Stock Index
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12/31/94 10,000.00 10,000.00
3/31/95 10,881.24 10,973.66
6/30/95 12,234.49 12,021.28
9/30/95 13,189.80 12,976.51
12/31/95 13,521.18 13,757.79
3/31/96 14,595.05 14,496.25
6/30/96 14,827.67 15,146.78
9/30/96 15,334.90 15,614.91
12/31/96 16,975.94 16,916.57
3/31/97 17,649.50 17,370.11
6/30/97 20,497.94 20,402.57
9/30/97 22,273.14 21,930.89
12/31/97 21,831.30 22,560.49
3/31/98 24,325.02 25,707.41
6/30/98 25,156.04 26,556.28
This chart assumes an initial gross investment of $10,000 made on 12/31/94.
Returns shown include the reinvestment of all dividends. Past performance is not
predictive of future results. Investment return and principal value will
fluctuate so that shares, when redeemed, may be worth more or less than the
original cost. In the absence of existing fee waivers, total return would be
reduced.
The S&P 500 Stock Index is an unmanaged index of 500 selected common stocks,
most of which are listed on the New York Stock Exchange. The Index is heavily
weighted toward stocks with large market capitalizations and represents
approximately two-thirds of the total market value of all domestic common
stocks. A direct investment in the S&P 500 Stock Index is not possible.
Sector Breakdown
ICAP Discretionary S&P 500
Equity Portfolio Stock Index
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Basic Industries 7% 4%
Capital Equipment -
Technology 15% 9%
Capital Spending 8% 8%
Consumer Durables 3% 3%
Consumer Services 12% 5%
Consumer Staples 10% 11%
Energy 6% 8%
Financial 15% 18%
Healthcare 16% 12%
Retail 4% 6%
Transportation 8% 1%
Utilities 2% 9%
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LOGO
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ICAP
Investment Highlights
ICAP Equity Portfolio
Total Return
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Portfolio Total Return
FOR THE PERIOD ENDED 6/30/98
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ONE YEAR 22.9%
AVERAGE ANNUAL
SINCE COMMENCEMENT 31.8%
(12/31/94)
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ICAP Equity Portfolio S&P 500 Stock Index
12/31/94 10,000.00 10,000.00
3/31/95 10,924.64 10,973.66
6/30/95 12,385.10 12,021.28
9/30/95 13,472.79 12,976.51
12/31/95 13,885.34 13,757.79
3/31/96 15,046.74 14,496.25
6/30/96 15,246.14 15,146.78
9/30/96 15,778.47 15,614.91
12/31/96 17,531.43 16,916.57
3/31/97 18,201.28 17,370.11
6/30/97 21,337.53 20,402.57
9/30/97 23,172.82 21,930.89
12/31/97 22,630.38 22,560.49
3/31/98 25,359.03 25,707.41
6/30/98 26,232.69 26,556.28
This chart assumes an initial gross investment of $10,000 made on 12/31/94.
Returns shown include the reinvestment of all dividends. Past performance is not
predictive of future results. Investment return and principal value will
fluctuate so that shares, when redeemed, may be worth more or less than the
original cost. In the absence of existing fee waivers, total return would be
reduced.
The S&P 500 Stock Index is an unmanaged index of 500 selected common stocks,
most of which are listed on the New York Stock Exchange. The Index is heavily
weighted toward stocks with large market capitalizations and represents
approximately two-thirds of the total market value of all domestic common
stocks. A direct investment in the S&P 500 Stock Index is not possible.
Sector Breakdown
ICAP Equity Portfolio S&P 500 Stock Index
Basic Industries 7 4
Capital Equipment -
Technology 9 15
Capital Spending 8 8
Consumer Durables 3 3
Consumer Services 12 5
Consumer Staples 10 11
Energy 6 8
Financial 15 18
Healthcare 16 12
Retail 4 6
Transportation 8 1
Utilities 2 9
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LOGO
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ICAP
Investment Highlights
ICAP Select Equity Portfolio
Total Return
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Portfolio Total Return
FOR THE PERIOD ENDED 6/30/98
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SINCE COMMENCEMENT
(12/31/97) 17.0%
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ICAP Select Equity Portfolio S&P 500 Stock Index
12/31/97 10,000.00 10,000.00
3/31/98 11,365.67 11,394.88
6/30/98 11,698.05 11,771.15
This chart assumes an initial gross investment of $10,000 made on 12/31/97.
Returns shown include the reinvestment of all dividends. Past performance is not
predictive of future results. Investment return and principal value will
fluctuate so that shares, when redeemed, may be worth more or less than the
original cost. In the absence of existing fee waivers and reimbursements, total
return would be reduced.
The S&P 500 Stock Index is an unmanaged index of 500 selected common stocks,
most of which are listed on the New York Stock Exchange. The Index is heavily
weighted toward stocks with large market capitalizations and represents
approximately two-thirds of the total market value of all domestic common
stocks. A direct investment in the S&P 500 Stock Index is not possible.
Sector Breakdown
ICAP Select Equity Portfolio S&P 500 Stock Index
Basic Industries 9 4
Capital Equipment -
Technology 5 15
Capital Spending 0 8
Consumer Durables 8 3
Consumer Services 26 5
Consumer Staples 9 11
Energy 0 8
Financial 14 18
Healthcare 9 12
Retail 4 6
Transportation 16 1
Utilities 0 9
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LOGO
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ICAP
Investment Highlights
ICAP Euro Select Equity Portfolio
Total Return
Sector Breakdown
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Portfolio Total Return
FOR THE PERIOD ENDED 6/30/98
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SINCE COMMENCEMENT
(12/31/97) 33.7%
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ICAP Euro Morgan Stanley
Select Equity Portfolio Capital International Europe Index
12/31/97 10,000.000 10,000.00
3/31/98 12,119.80 12,030.49
6/30/98 13,368.22 12,649.39
This chart assumes an initial gross investment of $10,000 made on 12/31/97.
Returns shown include the reinvestment of all dividends. Past performance is not
predictive of future results. Investment return and principal value will
fluctuate so that shares, when redeemed, may be worth more or less than the
original cost. In the absence of existing fee waivers and reimbursements, total
return would be reduced.
The Morgan Stanley Capital International Europe Index is the aggregate of 15
individual European country indices. A direct investment in the Morgan Stanley
Capital International Europe Index is not possible.
ICAP Euro Morgan Stanley Capital
Select Equity Portfolio International Europe Index
Basic Industries 6 6
Capital Equipment -
Technology 8 5
Capital Spending 0 5
Consumer Durables 7 4
Consumer Services 5 7
Consumer Staples 4 9
Energy 6 7
Financial 23 28
Healthcare 17 9
Retail 2 5
Transportation 7 2
Utilities 15 13
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LOGO
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ICAP
Discretionary Equity Portfolio
Schedule of Investments
June 30, 1998 (Unaudited)
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NUMBER
OF SHARES VALUE
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COMMON STOCKS 87.87%
AUTOS, TRUCKS 2.69%
80,450 General Motors Corp. $ 5,375,066
------------
BANKS 9.19%
36,500 Bankers Trust Corp. 4,236,281
44,250 Citicorp 6,604,313
97,950 NationsBank Corp. 7,493,175
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18,333,769
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CHEMICALS 3.54%
62,484 Du Pont (E.I.) de Nemours & Co. 4,662,869
79,897 IMC Global Inc. 2,406,897
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7,069,766
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COMPUTER SYSTEMS 3.48%
44,050 International Business Machines Corp. 5,057,491
57,950 NCR Corp.<F1> 1,883,375
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6,940,866
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DEFENSE 4.59%
36,700 Northrop Grumman Corp. 3,784,687
93,364 Raytheon Co. - Class A 5,380,100
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9,164,787
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DRUGS, SUPPLIES 11.73%
39,550 Akzo Nobel N.V. ADR 4,385,106
132,288 American Home Products Corp. 6,845,904
75,150 Baxter International, Inc. 4,044,009
141,100 Hoechst AG ADR 7,002,088
30,600 St. Jude Medical, Inc.<F1> 1,126,463
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23,403,570
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ELECTRONICS 3.17%
74,350 Philips Electronics N.V. 6,319,750
------------
ENTERTAINMENT 1.84%
171,200 Host Marriott Corp.<F1> 3,049,500
13,000 Starwood Hotels & Resorts 628,063
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3,677,563
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See notes to financial statements.
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LOGO
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ICAP
Discretionary Equity Portfolio
Schedule of Investments (cont'd.)
June 30, 1998 (Unaudited)
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NUMBER
OF SHARES VALUE
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FINANCIAL - MISCELLANEOUS 2.14%
85,950 Household International, Inc. $ 4,276,013
------------
FOOD, TOBACCO & BEVERAGE 5.39%
151,600 Philip Morris Cos., Inc. 5,969,250
116,800 Seagram Co. Ltd. 4,781,500
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10,750,750
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FOREST & PAPER, CONTAINERS 1.09%
78,900 UPM-Kymmene Corp. ADR 2,171,486
------------
HEALTHCARE - MISCELLANEOUS 2.90%
66,400 Humana Inc.<F1> 2,070,850
118,650 Tenet Healthcare Corp.<F1> 3,707,812
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5,778,662
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HOUSEHOLD PRODUCTS 2.03%
91,200 Fort James Corp. 4,058,400
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INSURANCE 2.28%
66,000 CIGNA Corp. 4,554,000
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MEDIA 2.49%
137,550 Dun and Bradstreet Corp. 4,968,994
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METALS 1.85%
66,150 Reynolds Metals Co. 3,700,266
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NON-DEFENSE CAPITAL SPENDING 2.72%
50,100 B.F. Goodrich Company 2,486,212
61,000 Case Corp. 2,943,250
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5,429,462
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OIL 4.03%
68,900 Elf Aquitaine ADR 4,891,900
88,050 Unocal Corp. 3,147,787
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8,039,687
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OIL SERVICES 1.85%
54,000 Schlumberger Ltd. 3,688,875
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See notes to financial statements.
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LOGO
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ICAP
Discretionary Equity Portfolio
Schedule of Investments (cont'd.)
June 30, 1998 (Unaudited)
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NUMBER
OF SHARES VALUE
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RETAIL 3.53%
20,800 Circuit City Stores, Inc. $ 975,000
36,300 Consolidated Stores Corp.<F1> 1,315,875
88,392 Federated Department Stores, Inc.<F1> 4,756,594
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7,047,469
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SERVICES - MISCELLANEOUS 2.79%
112,700 USA Waste Services, Inc.<F1> 5,564,562
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SOFTWARE & SERVICES 1.62%
97,100 First Data Corp. 3,234,644
------------
TELEPHONE 1.97%
31,350 AT&T Corp. 1,790,869
46,900 Bell Atlantic Corp. 2,139,812
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3,930,681
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TOYS 1.66%
84,200 Hasbro, Inc. 3,310,112
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TRANSPORTATION 7.30%
45,350 AMR Corp.<F1> 3,775,387
60,734 Burlington Northern Santa Fe Corp. 5,963,320
169,900 Canadian Pacific, Ltd. 4,820,913
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14,559,620
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TOTAL COMMON STOCKS
(cost $149,266,961) 175,348,820
------------
PREFERRED STOCK 4.42%
MEDIA 4.42%
312,000 News Corp. Ltd. ADR 8,814,000
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TOTAL PREFERRED STOCK
(cost $5,803,407) 8,814,000
------------
See notes to financial statements.
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ICAP
Discretionary Equity Portfolio
Schedule of Investments (cont'd.)
June 30, 1998 (Unaudited)
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PRINCIPAL
AMOUNT VALUE
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SHORT-TERM INVESTMENTS 7.23%
DISCOUNTED COMMERCIAL PAPER 4.95%
$ 700,000 Pitney Bowes Inc., 5.48%, 7/7/98 $ 699,467
7,800,000 Procter & Gamble Co., 5.45%, 7/7/98 7,793,160
1,400,000 Walt Disney Co., 5.44%, 7/13/98 1,397,514
------------
9,890,141
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MONEY MARKET 2.28%
4,544,871 UMB Bank Money Market Fiduciary 4,544,871
------------
TOTAL SHORT-TERM INVESTMENTS
(cost $14,435,012) 14,435,012
------------
TOTAL INVESTMENTS 99.52%
(cost $169,505,380) 198,597,832
Cash and Other Assets,
less Liabilities 0.48% 951,722
------------
NET ASSETS 100.00% $199,549,554
============
See notes to financial statements.
<F1> Non-income producing
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LOGO
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ICAP
Equity Portfolio
Schedule of Investments
June 30, 1998 (Unaudited)
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NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS 90.09%
AUTOS, TRUCKS 2.82%
270,850 General Motors Corp. $ 18,096,165
------------
BANKS 9.30%
121,550 Bankers Trust Corp. 14,107,397
144,800 Citicorp 21,611,400
311,950 NationsBank Corp. 23,864,175
------------
59,582,972
------------
CHEMICALS 3.63%
212,066 Du Pont (E.I.) de Nemours & Co. 15,825,425
248,092 IMC Global Inc. 7,473,772
------------
23,299,197
------------
COMPUTER SYSTEMS 3.71%
155,000 International Business Machines Corp. 17,795,938
183,200 NCR Corp.<F1> 5,954,000
------------
23,749,938
------------
DEFENSE 4.56%
110,550 Northrop Grumman Corp. 11,400,469
309,706 Raytheon Co. - Class A 17,846,808
------------
29,247,277
------------
DRUGS, SUPPLIES 12.37%
135,900 Akzo Nobel N.V. ADR 15,067,913
453,662 American Home Products Corp. 23,477,008
245,200 Baxter International, Inc. 13,194,825
476,800 Hoechst AG ADR 23,661,200
105,400 St. Jude Medical, Inc.<F1> 3,880,038
------------
79,280,984
------------
ELECTRONICS 3.30%
248,430 Philips Electronics N.V. 21,116,550
------------
ENTERTAINMENT 2.37%
590,150 Host Marriott Corp.<F1> 10,512,047
97,400 Starwood Hotels & Resorts 4,705,638
------------
15,217,685
------------
See notes to financial statements.
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LOGO
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ICAP
Equity Portfolio
Schedule of Investments (cont'd.)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
FINANCIAL - MISCELLANEOUS 2.19%
283,000 Household International, Inc. $ 14,079,250
------------
FOOD, TOBACCO & BEVERAGE 5.49%
504,800 Philip Morris Cos., Inc. 19,876,500
373,200 Seagram Co. Ltd. 15,277,875
------------
35,154,375
------------
FOREST & PAPER, CONTAINERS 1.13%
262,400 UPM-Kymmene Corp. ADR 7,221,773
------------
HEALTHCARE - MISCELLANEOUS 2.75%
207,600 Humana Inc.<F1> 6,474,525
356,500 Tenet Healthcare Corp.<F1> 11,140,625
------------
17,615,150
------------
HOUSEHOLD PRODUCTS 2.03%
292,000 Fort James Corp. 12,994,000
------------
INSURANCE 2.25%
208,750 CIGNA Corp. 14,403,750
------------
MEDIA 2.16%
383,600 Dun and Bradstreet Corp. 13,857,550
------------
METALS 1.90%
217,500 Reynolds Metals Co. 12,166,406
------------
NON-DEFENSE CAPITAL SPENDING 2.75%
150,100 B.F. Goodrich Company 7,448,711
211,350 Case Corp. 10,197,638
------------
17,646,349
------------
OIL 4.08%
231,420 Elf Aquitaine ADR 16,430,820
271,850 Unocal Corp. 9,718,638
------------
26,149,458
------------
OIL SERVICES 1.91%
179,500 Schlumberger Ltd. 12,262,094
------------
See notes to financial statements.
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LOGO
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ICAP
Equity Portfolio
Schedule of Investments (cont'd.)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
RETAIL 3.41%
68,700 Circuit City Stores, Inc. $ 3,220,312
121,500 Consolidated Stores Corp.<F1> 4,404,375
264,558 Federated Department Stores, Inc.<F1> 14,236,527
------------
21,861,214
------------
SERVICES - MISCELLANEOUS 2.86%
371,150 USA Waste Services, Inc.<F1> 18,325,531
------------
SOFTWARE & SERVICES 1.74%
334,550 First Data Corp. 11,144,697
------------
TELEPHONE 2.05%
105,300 AT&T Corp. 6,015,262
156,400 Bell Atlantic Corp. 7,135,750
------------
13,151,012
------------
TOYS 1.41%
229,725 Hasbro, Inc. 9,031,064
------------
TRANSPORTATION 7.92%
150,600 AMR Corp.<F1> 12,537,450
197,716 Burlington Northern Santa Fe Corp. 19,413,240
662,700 Canadian Pacific, Ltd. 18,804,113
------------
50,754,803
------------
TOTAL COMMON STOCKS
(cost $511,757,043) 577,409,244
------------
PREFERRED STOCK 4.76%
MEDIA 4.76%
1,078,700 News Corp. Ltd. ADR 30,473,275
------------
TOTAL PREFERRED STOCK
(cost $20,815,866) 30,473,275
------------
See notes to financial statements.
- --------------------------------------------------------------------------------
LOGO
- --------------------------------------------------------------------------------
ICAP
Equity Portfolio
Schedule of Investments (cont'd.)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT 3.55%
MONEY MARKET 3.55%
$22,729,112 UMB Bank Money Market Fiduciary $ 22,729,112
------------
TOTAL SHORT-TERM INVESTMENT
(cost $22,729,112) 22,729,112
------------
TOTAL INVESTMENTS 98.40%
(cost $555,302,021) 630,611,631
Cash and Other Assets,
less Liabilities 1.60% 10,247,388
------------
NET ASSETS 100.00% $640,859,019
============
See notes to financial statements.
<F1> Non-income producing
- --------------------------------------------------------------------------------
LOGO
- --------------------------------------------------------------------------------
ICAP
Select Equity Portfolio
Schedule of Investments
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS 87.54%
AUTOS, TRUCKS 5.96%
5,600 General Motors Corp. $374,150
--------
BANKS 14.07%
2,600 Bankers Trust Corp. 301,763
7,600 NationsBank Corp. 581,400
--------
883,163
--------
CHEMICALS 4.56%
9,500 IMC Global Inc. 286,188
--------
COMPUTER SYSTEMS 3.62%
7,000 NCR Corp.<F1> 227,500
--------
DRUGS, SUPPLIES 4.12%
5,000 American Home Products Corp. 258,750
--------
ENTERTAINMENT 8.80%
31,000 Host Marriott Corp.<F1> 552,187
--------
FOOD, TOBACCO & BEVERAGE 8.95%
7,000 Philip Morris Cos., Inc. 275,625
7,000 Seagram Co. Ltd. 286,563
--------
562,188
--------
HEALTHCARE - MISCELLANEOUS 4.58%
9,200 Tenet Healthcare Corp.<F1> 287,500
--------
METALS 4.63%
5,200 Reynolds Metals Co. 290,875
--------
NON-DEFENSE CAPITAL SPENDING 4.30%
5,600 Case Corp. 270,200
--------
RETAIL 4.29%
5,000 Federated Department Stores, Inc.<F1> 269,062
--------
See notes to financial statements.
- --------------------------------------------------------------------------------
LOGO
- --------------------------------------------------------------------------------
ICAP
Select Equity Portfolio
Schedule of Investments(cont'd.)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
SERVICES - MISCELLANEOUS 4.40%
5,600 USA Waste Services, Inc.<F1> $ 276,500
----------
TRANSPORTATION 15.26%
4,800 AMR Corp.<F1> 399,600
2,800 Burlington Northern Santa Fe Corp. 274,925
10,000 Canadian Pacific, Ltd. 283,750
----------
958,275
----------
TOTAL COMMON STOCKS
(cost $5,294,471) 5,496,538
----------
PREFERRED STOCK 11.70%
MEDIA 11.70%
26,000 News Corp. Ltd. ADR 734,500
----------
TOTAL PREFERRED STOCK
(cost $554,369) 734,500
----------
PRINCIPAL
AMOUNT
- ---------
SHORT-TERM INVESTMENT 5.14%
MONEY MARKET 5.14%
$322,908 UMB Bank Money Market Fiduciary 322,908
----------
TOTAL SHORT-TERM INVESTMENT
(cost $322,908) 322,908
----------
TOTAL INVESTMENTS 104.38%
(cost $6,171,748) 6,553,946
Liabilities, less Cash
and Other Assets (4.38)% (274,927)
----------
NET ASSETS 100.00% $6,279,019
==========
See notes to financial statements.
<F1> Non-income producing
- --------------------------------------------------------------------------------
LOGO
- --------------------------------------------------------------------------------
ICAP
Euro Select Equity Portfolio
Schedule of Investments
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS 97.40%
FINLAND 3.87%
39,800 UPM-Kymmene Corp. ADR $1,095,376
----------
FRANCE 14.80%
21,250 Axa-UAP ADR 1,207,266
23,900 Elf Aquitaine ADR 1,696,900
30,000 Vivendi ADR 1,281,171
----------
4,185,337
----------
GERMANY 19.40%
14,800 Bayerische Vereinsbank AG ADR 1,254,489
50,600 Hoechst AG ADR 2,511,025
29,100 RWE Aktiengesellschaft AG ADR 1,721,783
----------
5,487,297
----------
ITALY 4.22%
16,250 Telecom Italia SpA ADR 1,194,375
----------
NETHERLANDS 25.36%
11,000 Akzo Nobel N.V. ADR 1,219,625
9,800 Gucci Group N.V. 519,400
18,229 ING Groep N.V. ADR 1,191,721
46,250 KLM Royal Dutch Airlines N.V. 1,893,359
27,600 Philips Electronics N.V. 2,346,000
----------
7,170,105
----------
SWEDEN 1.99%
21,750 Svenska Cellulosa AB ADR 563,181
----------
SWITZERLAND 9.30%
13,900 Novartis AG ADR 1,156,491
3,964 UBS AG 1,473,843
----------
2,630,334
----------
See notes to financial statements.
- --------------------------------------------------------------------------------
LOGO
- --------------------------------------------------------------------------------
ICAP
Euro Select Equity Portfolio
Schedule of Investments(cont'd.)
June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- --------------------------------------------------------------------------------
UNITED KINGDOM 18.46%
23,200 Diageo plc ADR $ 1,117,950
11,550 National Westminster Bank PLC ADR 1,241,625
274,000 Pilkington plc 505,146
52,500 Tomkins plc ADR 1,200,938
40,600 United News & Media plc ADR 1,155,196
-----------
5,220,855
-----------
TOTAL COMMON STOCKS
(cost $23,976,527) 27,546,860
-----------
PRINCIPAL
AMOUNT
- ---------
SHORT-TERM INVESTMENT 2.95%
MONEY MARKET 2.95%
$834,410 UMB Bank Money Market Fiduciary 834,410
-----------
TOTAL SHORT-TERM INVESTMENT
(cost $834,410) 834,410
-----------
TOTAL INVESTMENTS 100.35%
(cost $24,810,937) 28,381,270
Liabilities, less Cash
and Other Assets (0.35)% (98,104)
-----------
NET ASSETS 100.00% $28,283,166
===========
See notes to financial statements.
- --------------------------------------------------------------------------------
LOGO
- --------------------------------------------------------------------------------
ICAP
Euro Select Equity Portfolio
Schedule of Investments(cont'd.)
June 30, 1998 (Unaudited)
At June 30, 1998, investments were comprised of the following industries:
Industries
---------------------------------------
Banks 18.7%
Building 1.8
Drugs, Supplies 17.7
Electric Power 6.2
Electronics 8.5
Food, Tobacco & Beverage 4.1
Forest & Paper, Containers 6.0
Insurance 4.4
Media 4.2
Non-Defense Capital Spending 4.4
Oil 6.2
Retail 1.9
Telephone 9.0
Transportation 6.9
------
Total 100.0%
======
See notes to financial statements.
- --------------------------------------------------------------------------------
(LOGO)
- --------------------------------------------------------------------------------
ICAP
ICAP Funds, Inc.
Statements of Assets and Liabilities
June 30, 1998 (Unaudited)
DISCRETIONARY SELECT EURO SELECT
EQUITY EQUITY EQUITY EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- --------------------------------------------------------------------------------
ASSETS:
Investments, at cost $169,505,380 $555,302,021 $ 6,171,748 $24,810,937
====================================================
Investments, at value $198,597,832 $630,611,631 $ 6,553,946 $28,381,270
Receivable for
securities sold 1,602,577 13,360,679 - 78,135
Dividends and
interest receivable 349,045 1,154,713 9,532 76,210
Receivable from Adviser - - 9,040 -
Receivable for
fund shares sold - - - 202
Tax reclaim receivable 29,097 95,322 - 11,690
Prepaid assets 17,908 26,576 9,680 9,674
Deferred organization
costs 10,922 10,921 - -
------------ ------------ ------------ ------------
Total Assets 200,607,381 645,259,842 6,582,198 28,557,181
------------ ------------ ------------ ------------
LIABILITIES:
Dividends payable 801,963 2,223,360 9,182 221,285
Payable for securities
purchased 122,055 1,744,868 248,993 -
Accrued investment
advisory fee 100,589 365,638 - 9,327
Payable to Adviser -
expenses - - 15,885 15,885
Accrued expenses 33,220 66,957 29,119 27,518
------------ ------------ ------------ ------------
Total Liabilities 1,057,827 4,400,823 303,179 274,015
------------ ------------ ------------ ------------
NET ASSETS $199,549,554 $640,859,019 $ 6,279,019 $28,283,166
============ ============ ============ ===========
NET ASSETS CONSIST OF:
Capital stock $ 57,592 $ 158,630 $ 2,691 $ 11,044
Paid-in-capital in
excess of par 156,720,093 537,932,318 5,735,721 22,893,827
Undistributed net
investment income 4,092 4,019 6,661 6,724
Undistributed net realized
gain on investments 13,675,325 27,454,442 151,748 1,801,238
Net unrealized appreciation
on investments 29,092,452 75,309,610 382,198 3,570,333
------------ ------------ ------------ ------------
NET ASSETS $199,549,554 $640,859,019 $ 6,279,019 $28,283,166
============ ============ ============ ===========
CAPITAL STOCK,
$0.01 PAR VALUE
Authorized 100,000,000 100,000,000 100,000,000 100,000,000
Issued and outstanding 5,759,199 15,863,015 269,081 1,104,441
NET ASSET VALUE,
REDEMPTION PRICE
AND OFFERING PRICE PER SHARE $34.65 $40.40 $23.34 $25.61
====== ====== ====== ======
See notes to financial statements.
- --------------------------------------------------------------------------------
(LOGO)
- --------------------------------------------------------------------------------
ICAP
ICAP Funds, Inc.
Statements of Operations
For the Six Months Ended June 30, 1998 (Unaudited)
- --------------------------------------------------------------------------------
DISCRETIONARY SELECT EURO SELECT
EQUITY EQUITY EQUITY EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends<F1> $ 2,094,487 $ 6,152,715 $ 27,274 $ 429,351
Interest 419,580 405,343 2,881 35,465
Earnings credits 11,689 24,870 120 512
----------- ----------- ----------- -----------
2,525,756 6,582,928 30,275 465,328
----------- ----------- ----------- -----------
EXPENSES:
Investment advisory fees 753,447 2,129,519 17,143 108,957
Fund administration and
accounting fees 90,481 148,042 27,273 27,273
Federal and state
registration fees 16,807 38,208 18,416 18,421
Shareholder servicing 12,190 16,673 11,461 11,451
Custody fees 11,657 23,792 2,352 2,963
Legal fees 9,962 9,957 11,780 11,956
Directors' fees and expenses 7,832 7,853 7,145 7,145
Audit fees 7,175 7,182 3,224 3,224
Amortization of
organization costs 3,598 3,598 - -
Reports to shareholders 3,527 3,540 3,624 3,636
Other 2,201 2,855 960 1,211
----------- ----------- ----------- -----------
Total expenses before waivers
and reimbursements 918,877 2,391,219 103,378 196,237
Waivers and reimbursements
of expenses by Adviser (165,430) (261,700) (86,235) (87,280)
----------- ----------- ----------- -----------
Net expenses 753,447 2,129,519 17,143 108,957
----------- ----------- ----------- -----------
NET INVESTMENT INCOME 1,772,309 4,453,409 13,132 356,371
----------- ----------- ----------- -----------
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Net realized gain on
investments 14,236,426 27,862,430 151,748 2,726,996
Change in net unrealized
appreciation
on investments 10,344,287 41,499,101 382,198 3,570,333
----------- ----------- ----------- -----------
Net gain on investments 24,580,713 69,361,531 533,946 6,297,329
----------- ----------- ----------- -----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $26,353,022 $73,814,940 $ 547,078 $ 6,653,700
=========== =========== =========== ===========
<F1> Net of $68,422, $219,545, $517 and $78,533 in foreign withholding taxes,
respectively.
See notes to financial statements.
- --------------------------------------------------------------------------------
(LOGO)
- --------------------------------------------------------------------------------
ICAP
Discretionary Equity Portfolio
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
SIX MONTHS ENDED
JUNE 30, 1998 YEAR ENDED
(UNAUDITED) DEC. 31, 1997
- --------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 1,772,309 $ 1,982,461
Net realized gain on investments 14,236,426 29,520,220
Change in net unrealized appreciation
on investments 10,344,287 3,099,781
------------ ------------
Net increase in net assets resulting
from operations 26,353,022 34,602,462
------------ ------------
DISTRIBUTIONS PAID FROM:
Net investment income (1,771,473) (2,016,514)
------------ ------------
In excess of book net investment
income - (6,886)
Net realized gain on investments - (29,508,774)
------------ ------------
Net decrease in net assets resulting
from distributions paid (1,771,473) (31,532,174)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Shares sold 25,571,715 27,202,442
Shares issued to holders in
reinvestment of distributions 860,124 30,736,909
Shares redeemed (8,600,510) (14,152,790)
------------ ------------
Net increase in net assets resulting
from capital share transactions 17,831,329 43,786,561
------------ ------------
TOTAL INCREASE IN NET ASSETS 42,412,878 46,856,849
NET ASSETS:
Beginning of period 157,136,676 110,279,827
------------ ------------
End of period $199,549,554 $157,136,676
============ ============
See notes to financial statements.
- --------------------------------------------------------------------------------
(LOGO)
- --------------------------------------------------------------------------------
ICAP
Equity Portfolio
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
SIX MONTHS ENDED
JUNE 30, 1998 YEAR ENDED
(UNAUDITED) DEC. 31, 1997
- --------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 4,453,409 $ 2,824,874
Net realized gain on investments 27,862,430 42,465,810
Change in net unrealized appreciation
on investments 41,499,101 14,971,397
------------ ------------
Net increase in net assets resulting
from operations 73,814,940 60,262,081
------------ ------------
DISTRIBUTIONS PAID FROM:
Net investment income (4,455,777) (2,861,245)
In excess of book net investment
income - (3,755)
Net realized gain on investments - (42,465,810)
In excess of book net realized gain
on investments - (68,649)
------------ ------------
Net decrease in net assets resulting
from distributions paid (4,455,777) (45,399,459)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Shares sold 234,768,742 191,752,572
Shares issued to holders in
reinvestment of distributions 2,162,225 44,264,988
Shares redeemed (36,833,089) (28,602,814)
------------ ------------
Net increase in net assets resulting
from capital share transactions 200,097,878 207,414,746
------------ ------------
TOTAL INCREASE IN NET ASSETS 269,457,041 222,277,368
NET ASSETS:
Beginning of period 371,401,978 149,124,610
------------ ------------
End of period $640,859,019 $371,401,978
============ ============
See notes to financial statements.
- --------------------------------------------------------------------------------
(LOGO)
- --------------------------------------------------------------------------------
ICAP
Select Equity Portfolio
Statement of Changes in Net Assets
(Unaudited)
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED
JUNE 30, 1998
- --------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 13,132
Net realized gain on investments 151,748
Change in net unrealized appreciation
on investments 382,198
----------
Net increase in net assets resulting
from operations 547,078
----------
DISTRIBUTIONS PAID FROM:
Net investment income (13,033)
----------
Net decrease in net assets resulting from
distributions paid (13,033)
----------
CAPITAL SHARE TRANSACTIONS:
Shares sold 5,781,061
Shares issued to holders in
reinvestment of distributions 3,852
Shares redeemed (39,939)
----------
Net increase in net assets resulting from
capital share transactions 5,744,974
----------
TOTAL INCREASE IN NET ASSETS 6,279,019
----------
NET ASSETS:
Beginning of period -
----------
End of period $6,279,019
==========
See notes to financial statements.
- --------------------------------------------------------------------------------
(LOGO)
- --------------------------------------------------------------------------------
ICAP
Euro Select Equity Portfolio
Statement of Changes in Net Assets
(Unaudited)
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED
JUNE 30, 1998
- --------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 356,371
Net realized gain on investments 2,726,996
Change in net unrealized appreciation
on investments 3,570,333
-----------
Net increase in net assets resulting
from operations 6,653,700
-----------
DISTRIBUTIONS PAID FROM:
Net investment income (356,368)
Net realized gain on investments (925,758)
-----------
Net decrease in net assets resulting from
distributions paid (1,282,126)
-----------
CAPITAL SHARE TRANSACTIONS:
Shares sold 31,953,879
Shares issued to holders in
reinvestment of distributions 1,060,842
Shares redeemed (10,103,129)
-----------
Net increase in net assets resulting from
capital share transactions 22,911,592
-----------
TOTAL INCREASE IN NET ASSETS 28,283,166
NET ASSETS:
Beginning of period -
-----------
End of period $28,283,166
===========
See notes to financial statements.
- --------------------------------------------------------------------------------
(LOGO)
- --------------------------------------------------------------------------------
ICAP
Discretionary Equity Portfolio
Financial Highlights
- --------------------------------------------------------------------------------
SIX
MONTHS YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
(For a share outstanding JUNE 30, 1998 DEC. 31, DEC. 31, DEC. 31,
throughout the period) (UNAUDITED) 1997 1996 1995<F1>
- --------------------------------------------------------------------------------
Net asset value, beginning
of period $30.34 $29.55 $25.42 $20.00
Income from investment operations:
Net investment income 0.31 0.48 0.36 0.31
Net realized and unrealized
gain on investments 4.31 7.80 6.09 6.70
------- ------- ------- -------
Total income from investment
operations 4.62 8.28 6.45 7.01
------- ------- ------- -------
Less distributions:
From net investment income (0.31) (0.48) (0.36) (0.31)
In excess of book net
investment income - (0.01) - -
From net realized gain
on investments - (7.00) (1.80) (1.27)
In excess of book net
realized gain on investments - - (0.16) (0.01)
------- ------- ------- -------
Total distributions (0.31) (7.49) (2.32) (1.59)
------- ------- ------- -------
Net asset value, end of period $34.65 $30.34 $29.55 $25.42
======= ======= ======= =======
Total return<F2> 15.23% 28.60% 25.55% 35.21%
Supplemental data and ratios:
Net assets, end of period
(in thousands) $199,550 $157,137 $110,280 $37,362
Ratio of expenses to average
net assets<F3><F4> 0.80% 0.80% 0.80% 0.80%
Ratio of net investment income
to average net assets<F3><F4> 1.88% 1.37% 1.35% 1.71%
Portfolio turnover rate<F2> 62% 131% 138% 102%
<F1> Commencement of operations after the close of business on December 31,
1994.
<F2> Not annualized for the six months ended June 30, 1998.
<F3> Net of waivers by the Adviser. Without waivers of expenses, the ratio of
expenses to average net assets would have been 0.98%, 1.02%, 1.11% and
1.56%, and the ratio of net investment income to average net assets would
have been 1.70%, 1.15%, 1.04% and 0.95%, respectively.
<F4> Annualized.
See notes to financial statements.
- --------------------------------------------------------------------------------
(LOGO)
- --------------------------------------------------------------------------------
ICAP
Equity Portfolio
Financial Highlights
- --------------------------------------------------------------------------------
SIX
MONTHS YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
(For a share outstanding JUNE 30, 1998 DEC. 31, DEC. 31, DEC. 31,
throughout the period) (UNAUDITED) 1997 1996 1995<F1>
- --------------------------------------------------------------------------------
Net asset value, beginning
of period $35.12 $31.16 $26.03 $20.00
Income from investment operations:
Net investment income 0.31 0.37 0.31 0.28
Net realized and unrealized
gain on investments 5.28 8.57 6.49 7.45
------- ------- ------- -------
Total income from investment
operations 5.59 8.94 6.80 7.73
------- ------- ------- -------
Less distributions:
From net investment income (0.31) (0.37) (0.30) (0.28)
In excess of book net
investment income - (0.01) - -
From net realized gain
on investments - (4.59) (1.30) (1.41)
In excess of book net realized
gain on investments - (0.01) (0.07) (0.01)
------- ------- ------- -------
Total distributions (0.31) (4.98) (1.67) (1.70)
------- ------- ------- -------
Net asset value, end of period $40.40 $35.12 $31.16 $26.03
======= ======= ======= =======
Total return<F2> 15.92% 29.08% 26.26% 38.85%
Supplemental data and ratios:
Net assets, end of period
(in thousands) $640,859 $371,402 $149,125 $46,788
Ratio of expenses to average
net assets<F3><F4> 0.80% 0.80% 0.80% 0.80%
Ratio of net investment income
to average net assets<F3><F4> 1.67% 1.06% 1.15% 1.49%
Portfolio turnover rate<F2> 67% 121% 125% 105%
<F1> Commencement of operations after the close of business on December 31,
1994.
<F2> Not annualized for the six months ended June 30, 1998.
<F3> Net of waivers by the Adviser. Without waivers of expenses, the ratio of
expenses to average net assets would have been 0.90%, 0.97%, 1.12% and
1.44%, and the ratio of net investment income to average net assets would
have been 1.57%, 0.89%, 0.83% and 0.85%, respectively.
<F4> Annualized.
See notes to financial statements.
- --------------------------------------------------------------------------------
(LOGO)
- --------------------------------------------------------------------------------
ICAP
Select Equity Portfolio
Financial Highlights
(Unaudited)
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED
(For a share outstanding throughout the period) JUNE 30, 1998<F1>
- --------------------------------------------------------------------------------
Net asset value, beginning of period $20.00
Income from investment operations:
Net investment income 0.06
Net realized and unrealized gain on
investments 3.34
-------
Total income from investment
operations 3.40
-------
Less distributions:
From net investment income (0.06)
-------
Total distributions (0.06)
-------
Net asset value, end of period $23.34
=======
Total return<F2> 16.98%
Supplemental data and ratios:
Net assets, end of period
(in thousands) $6,279
Ratio of expenses to average
net assets<F3><F4> 0.80%
Ratio of net investment income to
average net assets<F3><F4> 0.61%
Portfolio turnover rate<F2> 101%
<F1> Commencement of operations after the close of business on December 31,
1997.
<F2> Not annualized for the six months ended June 30, 1998.
<F3> Net of waivers and reimbursements by the Adviser. Without waivers and
reimbursements of expenses, the ratio of expenses to average net assets
would have been 4.82%, and the ratio of net investment income to average
net assets would have been (3.41)%.
<F4> Annualized.
See notes to financial statements.
- --------------------------------------------------------------------------------
(LOGO)
- --------------------------------------------------------------------------------
ICAP
Euro Select Equity Portfolio
Financial Highlights
(Unaudited)
- --------------------------------------------------------------------------------
SIX MONTHS
ENDED
(For a share outstanding throughout the period) JUNE 30, 1998<F1>
- --------------------------------------------------------------------------------
Net asset value, beginning of period $20.00
Income from investment operations:
Net investment income 0.31
Net realized and unrealized gain on
investments 6.33
-------
Total income from investment
operations 6.64
-------
Less distributions:
From net investment income (0.31)
From net realized gain on investments (0.72)
-------
Total distributions (1.03)
-------
Net asset value, end of period $25.61
=======
Total return<F2> 33.68%
Supplemental data and ratios:
Net assets, end of period
(in thousands) $28,283
Ratio of expenses to average
net assets<F3><F4> 1.00%
Ratio of net investment income to
average net assets<F3><F4> 3.28%
Portfolio turnover rate<F2> 125%
<F1> Commencement of operations after the close of business on December 31,
1997.
<F2> Not annualized for the six months ended June 30, 1998.
<F3> Net of waivers and reimbursements by the Adviser. Without waivers and
reimbursements of expenses, the ratio of expenses to average net assets
would have been 1.81%, and the ratio of net investment income to average
net assets would have been 2.47%.
<F4> Annualized.
See notes to financial statements.
- --------------------------------------------------------------------------------
(LOGO)
- --------------------------------------------------------------------------------
ICAP
Notes to Financial Statements
June 30, 1998 (Unaudited)
1. Organization
ICAP Funds, Inc. ("ICAP") was incorporated on November 1, 1994 under the laws of
the State of Maryland and is registered as an open-end management investment
company under the Investment Company Act of 1940. ICAP is comprised of four
portfolios, the first two of which are diversified portfolios and the last two
of which are non-diversified portfolios; the Discretionary Equity Portfolio, the
Equity Portfolio, the Select Equity Portfolio and the Euro Select Equity
Portfolio (the "Portfolios"). Institutional Capital Corporation is the
investment adviser (the "Adviser") to the Portfolios. The Discretionary Equity
and Equity Portfolios commenced operations after the close of business on
December 31, 1994 and the Select Equity and Euro Select Equity Portfolios
commenced operations after the close of business on December 31, 1997.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by ICAP in the preparation of its financial statements. These policies
are in conformity with generally accepted accounting principles.
a) Investment Valuation - Common stocks and other equity-type securities are
valued at the last sales price on a recognized U.S. or foreign securities
exchange or Nasdaq on which such securities are primarily traded; however,
securities traded on a recognized U.S. or foreign securities exchange or Nasdaq
for which there were no transactions on a given day or securities not listed on
an exchange or Nasdaq are valued at the most recent bid prices. Debt securities
are valued by a pricing service that utilizes electronic data processing
techniques to determine values for normal institutional-sized trading units of
debt securities without regard to the existence of sale or bid prices when such
values are believed to more accurately reflect the fair value of such
securities; otherwise, actual sale or bid prices are used. Any securities or
other assets for which market quotations are not readily available are valued at
fair value as determined in good faith by the Board of Directors. Debt
securities having remaining maturities of 60 days or less when purchased are
valued by the amortized cost method when the Board of Directors determines that
the fair value of such securities is their amortized cost. Under this method of
valuation, a security is initially valued at its acquisition cost, and
thereafter, amortization of any discount or premium is recognized daily.
b) Foreign Currency Translations - Values of investments denominated in foreign
currencies are converted into U.S. dollars using the spot market rate of
exchange at the time of valuation. Purchases and sales of investments and
dividend income are translated into U.S. dollars using the spot market rate of
exchange prevailing on the respective dates of such transactions. The effect of
changes in foreign exchange rates on realized and unrealized security gains or
losses is reflected as a component of such gains or losses.
c) Federal Income and Excise Taxes - It is each Portfolio's policy to meet the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all investment company net taxable
income and net capital gains to shareholders in a manner which results in no tax
cost to the Portfolio. Therefore, no federal income or excise tax provision is
required.
d) Distributions to Shareholders - Dividends from net investment income are
declared and paid quarterly. Dividends differ from book net investment income
due to the nondeductible tax treatment of items such as organization costs.
Distributions of net realized capital gains, if any, will be declared at least
annually. Distributions to shareholders are recorded on the ex-dividend date.
The character of distributions made during the year from net investment income
or net realized gain may differ from the characterization for federal income tax
purposes due to differences in the recognition of income, expense and gain items
for financial statement and tax purposes. Where appropriate, reclassifications
between net asset accounts are made for such differences that are permanent in
nature. Accordingly, at June 30, 1998, reclassifications were recorded from
undistributed net investment income to reduce paid-in-capital by $2,015, $2,015,
$6,562 and $6,721 for the Discretionary Equity, Equity, Select Equity and Euro
Select Equity Portfolios, respectively.
e) Short-Term Investments - The Portfolios maintain uninvested cash in a bank
overnight investment vehicle at their custodian. This may present credit risk to
the extent the custodian fails to perform in accordance with the custody
agreement. The creditworthiness of the custodian is monitored and this
investment is considered to present minimal credit risk by the Portfolios'
Adviser.
f) Other - Investment transactions are accounted for on the trade date plus one.
The Portfolios determine the gain or loss realized from the investment
transactions by comparing the identified original cost of the security lot sold
with the net sales proceeds. Dividend income is recognized on the ex-dividend
date and interest income is recognized on an accrual basis. Dividends from
foreign securities are recorded on the ex-dividend date, or as soon as the
information is available. 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, the disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of increases and decreases in
net assets from operations during the reporting period. Actual results could
differ from those estimates.
3. Capital Share Transactions
Transactions in shares of the Portfolios were as follows:
<TABLE>
<CAPTION>
Discretionary Select Euro Select
Equity Equity Equity Equity
Portfolio Portfolio Portfolio Portfolio
-------------------------- -------------------------- ------------ ------------
Six Months Year Six Months Year Six Months Six Months
Ended Ended Ended Ended Ended Ended
June 30, Dec. 31, June 30, Dec. 31, June 30, June 30,
1998 1997 1998 1997 1998 1998
------------ ------------ ------------ ------------ ------------ ------------
<C> <C> <C> <C> <C> <C>
Shares sold 809,041 840,715 6,184,602 5,274,966 270,619 1,479,280
Shares issued to
holders in
reinvestment of
distributions 25,569 1,026,668 55,173 1,282,704 169 46,124
Shares redeemed (254,569) (419,974) (951,353) (768,627) (1,707) (420,963)
---------- ---------- ---------- ---------- ---------- ----------
Net increase 580,041 1,447,409 5,288,422 5,789,043 269,081 1,104,441
========== ========== ========== ========== ========== ==========
</TABLE>
4. Investment Transactions
The aggregate purchases and sales of securities, excluding short-term
investments and U.S. government obligations, for the Portfolios for the period
ended June 30, 1998, are summarized below:
Discretionary Select Euro Select
Equity Equity Equity Equity
Portfolio Portfolio Portfolio Portfolio
------------- ------------- ------------ -------------
Purchases $122,141,857 $516,128,346 $9,673,129 $45,379,346
Sales $108,365,618 $342,772,593 $3,976,037 $24,129,815
There were no purchases or sales of U.S. government obligations. At June 30,
1998, gross unrealized appreciation and depreciation of investments, based on
cost for federal income tax purposes of $170,180,442, $559,225,601, $6,176,080
and $24,834,417 for the Discretionary Equity, Equity, Select Equity and Euro
Select Equity Portfolios, respectively, were as follows:
Discretionary Select Euro Select
Equity Equity Equity Equity
Portfolio Portfolio Portfolio Portfolio
----------- ----------- ----------- ------------
Unrealized
appreciation $32,253,112 $86,798,239 $551,873 $3,751,558
Unrealized
depreciation (3,835,722) (15,412,209) (174,007) (204,705)
----------- ----------- ----------- ------------
Net unrealized
appreciation
on investments $28,417,390 $71,386,030 $377,866 $3,546,853
============ =========== =========== ===========
5. Investment Advisory Agreement
The Portfolios have an agreement with the Adviser, with whom certain officers
and directors of ICAP are affiliated, to furnish investment advisory services to
the Portfolios. Under the terms of this agreement, the Discretionary Equity,
Equity and Select Equity Portfolios will pay the Adviser a monthly fee at the
annual rate of 0.80% of average net assets and the Euro Select Equity Portfolio
will pay the Adviser a monthly fee at the annual rate of 1.00% of average net
assets. If the aggregate annual operating expenses (excluding interest, taxes,
brokerage commissions and other costs incurred in connection with the purchase
or sale of portfolio securities, and extraordinary items) exceed 0.80% for the
Discretionary Equity, Equity and Select Equity Portfolios and 1.00% for the Euro
Select Equity Portfolio, the Adviser has agreed to voluntarily reimburse the
Portfolios for the amount of such excess.
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(LOGO)
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ICAP
Directors
Pamela H. Conroy
Senior Vice President, Secretary and Director,
Institutional Capital Corporation
Dr. James A. Gentry
Professor of Finance, University of Illinois
Joseph A. Hays
Retired Vice President/Corporate Relations,
Tribune Company
Robert H. Lyon
President, Chief Investment Officer and Director,
Institutional Capital Corporation
Gary S. Maurer
Executive Vice President and Director,
Institutional Capital Corporation
Harold W. Nations
Partner, Holleb & Coff
Donald D. Niemann
Executive Vice President and Director,
Institutional Capital Corporation
Barbara C. Schanmier
Senior Vice President and Director,
Institutional Capital Corporation
Officers
Robert H. Lyon
President
Pamela H. Conroy
Vice President and Treasurer
Donald D. Niemann
Vice President and Secretary
Investment Adviser
Investment Adviser
Institutional Capital Corporation
225 West Wacker Drive, Suite 2400
Chicago, Illinois 60606-1229
Custodian
UMB Bank, n.a.
928 Grand Boulevard
Kansas City, Missouri 64141-6226
Dividend-Disbursing and Transfer Agent
Sunstone Investor Services, LLC
P.O. Box 2160
Milwaukee, Wisconsin 53201-2160
Administrator and
Fund Accountant
Sunstone Financial Group, Inc.
207 East Buffalo Street, Suite 400
Milwaukee, Wisconsin 53202-5712
Auditors
PricewaterhouseCoopers LLP
411 East Wisconsin Avenue
Milwaukee, Wisconsin 53202-9905
Legal Counsel
Godfrey & Kahn, S.C.
780 North Water Street
Milwaukee, Wisconsin 53202-3590
This financial statement is submitted for the general information of the
shareholders of the ICAP Funds. It is not authorized for distribution to
prospective investors unless preceded or accompanied by an effective prospectus.
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LOGO
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ICAP
Family of Mutual Funds
ICAP Funds, Inc. 225 West Wacker Drive Suite 2400 Chicago, IL
60606-1229
IC-410-0798
