ICAP FUNDS
Semi-Annual Report
JUNE 30, 1999
- ------------------------------
DISCRETIONARY EQUITY PORTFOLIO
EQUITY PORTFOLIO
SELECT EQUITY PORTFOLIO
EURO SELECT EQUITY PORTFOLIO
(LOGO)
ICAP
INSTITUTIONAL CAPITAL/R
TABLE OF CONTENTS
Letter to Investors......................................................1
Investment Highlights
Discretionary Equity Portfolio.........................................3
Equity Portfolio.......................................................4
Select Equity Portfolio................................................5
Euro Select Equity Portfolio...........................................6
Schedules of Investments
Discretionary Equity Portfolio.........................................7
Equity Portfolio......................................................11
Select Equity Portfolio...............................................15
Euro Select Equity Portfolio..........................................17
Statements of Assets and Liabilities....................................20
Statements of Operations................................................21
Statements of Changes in Net Assets
Discretionary Equity Portfolio........................................22
Equity Portfolio......................................................23
Select Equity Portfolio...............................................24
Euro Select Equity Portfolio..........................................25
Financial Highlights
Discretionary Equity Portfolio........................................26
Equity Portfolio......................................................27
Select Equity Portfolio...............................................28
Euro Select Equity Portfolio..........................................29
Notes to Financial Statements...........................................30
July 6, 1999
TO ALL ICAP FUNDS INVESTORS:
During the second quarter the stock market witnessed a change in leadership away
from the large-cap growth stocks which had dominated since the fourth quarter of
1997, to a broader market with strong representation of cyclicals and smaller-
cap stocks. Technology stocks were generally still strong, but consumer and drug
stocks faltered while basic industry and energy issues soared. The ICAP Fund
Family fared well with each Fund beating its respective index for the quarter
and year-to-date.
----------------------------------------------------------
YTD
Portfolio/Index 2Q 1999 Thru 6/30/99
----------------------------------------------------------
Discretionary Equity Portfolio 12.29% 16.19%
Equity Portfolio 12.33% 16.95%
Select Equity Portfolio 11.54% 22.76%
S&P 500/R Index 7.05% 12.38%
Euro Select Equity Portfolio 1.02% 3.64%
Morgan Stanley Capital
International Europe Index (0.31)% (2.41)%
On a year-to-date basis the Equity Portfolio, the Discretionary Equity Portfolio
and the Euro Select Equity Portfolio are all in the top 25% of their respective
Morningstar category. The Select Equity Portfolio was ranked in the top 2% of
its Morningstar category.
We believe that this change in stock market leadership, while abrupt, was
decisive and rational. For some time we have felt that the large number of
interest rate cuts, over 100 in total, made by leading central banks throughout
Europe, Asia and Latin America would in turn provide the liquidity to lead to an
eventual resumption of growth in industrial production in the world outside of
North America. We also felt that as investors began to realize that there was a
connection between these interest rate cuts and renewed global growth, that they
would also begin to believe that the negative pricing environment that had
developed during the Asian/Russian financial crisis would be alleviated. The
next logical development in this sequence, once pricing was becoming less
onerous, was that most companies could produce earnings above the level Wall
Street was expecting. Given that these stocks were still well below their old
highs, there was a lot of room for rapid stock price improvement. That was the
story of the second quarter.
But as we enter the second half of 1999, many investors fear that this cycle
could short-circuit. The Fed raised interest rates on June 30, Y2K is coming and
stock prices are very high. While there are risks, we are optimistic that our
portfolios are well positioned for the second half of 1999 and into the year
2000. We see economic improvement coming to Western Europe and Latin America
plus a very strong rebound in non-Japan Asia. We also see Japan gradually
bottoming and the U.S. gradually topping. In essence we see the next 12 to 18
months being the mirror image of the past two years. We would expect that this
mirror image would extend from economic change to the financial markets. During
the Asian financial crisis money flowed heavily to the small number of U.S.
stocks which could deliver improving earnings, or perceived earnings, in that
tough environment. As prosperity broadens so should the markets. Consequently,
companies that produce stable earnings and are at high valuations will be hurt
by even a modest rise in U.S. interest rates (which we expect), while companies
with improving prospects and low valuations (regardless of capitalization size)
can continue to outperform. Another way to view the current market is to look at
the hundreds of billions of dollars held in General Electric and Microsoft where
their business can hardly get better, compared to the $6 billion capitalizations
of large industrial companies such as Dana and TRW (each with revenues of well
over $12 billion and are current ICAP holdings)<F1> where business should be
getting stronger. At the margin, if investors decide to spend an incremental one
billion dollars on a TRW or Dana, it is going to have a substantially greater
stock price impact than if it just continues to flow into the bloated
capitalization of a General Electric.
In order to benefit from the resurgence in the Asian economy, ICAP analysts have
been looking for direct and indirect beneficiaries of this economic recovery
that meet our traditional quantitative screens. In those countries, access to
capital has been reestablished, credit spreads are narrowing and their stock
markets are booming. While work remains to be done, this part of the world has
emerged from its financial crisis with a lower cost structure and renewed
commitment to profit maximization. An improved business climate in non-Japan
Asia should lead to better demand for Western products, as well as stronger
demand for raw materials and less price discounting on manufactured goods which
are exported from this region. Many ICAP holdings such as Citigroup, Motorola
and Philips Electronics will be positively impacted by this trend, and new
holdings such as Northwest Airlines have been bought to provide even greater
exposure to economic improvement in this region. In general these stocks, and
others we have purchased to exploit this theme, share the following
characteristics: their stock prices were materially hurt during the Asian
financial crisis, their earnings estimate revisions are just starting to improve
and their valuations remain very low compared to the S&P 500.
As we enter the second half of 1999, we continue to believe that we are entering
a period of more balanced global growth, where earnings for many companies will
be sharply improving, but where interest rates may be moving modestly higher. We
believe that in this environment, active managers with good stock selection will
continue to be rewarded.
Thank you for your continued support. We appreciate your business.
Sincerely,
/s/Robert H. Lyon
Robert H. Lyon
President and Chief Investment Officer
<F1> The ICAP Funds are actively managed portfolios. The companies mentioned may
not be in all of the Funds.
INVESTMENT HIGHLIGHTS
ICAP DISCRETIONARY EQUITY PORTFOLIO TOTAL RETURN
ICAP Discretionary Equity Portfolio S&P 500 Stock Index
12/31/94 $10,000.00 $10,000.00
12/31/95 13,521.18 13,757.79
12/31/96 16,975.94 16,916.57
12/31/97 21,831.30 22,560.49
12/31/98 24,052.54 29,007.51
6/30/99 26,915.27 30,452.89
Portfolio Total Return for the period ended 6/30/99
- ---------------------------------------------------
One Year 11.10%
Average Annual Since Inception (12/31/94) 25.68%
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 - JUNE 30, 1999
ICAP Discretionary Equity Portfolio S&P 500 Stock Index
Basic Industries 3.86% 3.41%
Capital Goods 7.22% 7.65%
Communications 11.98% 9.61%
Consumer Durables 5.30% 1.87%
Consumer Services 11.30% 4.10%
Consumer Staples 9.41% 8.81%
Energy 2.09% 6.45%
Financial 15.10% 15.80%
Healthcare 11.59% 11.29%
Retail 5.51% 6.83%
Technology 15.19% 21.14%
Transportation 1.45% 0.96%
Utilities 0.00% 2.09%
INVESTMENT HIGHLIGHTS
ICAP EQUITY PORTFOLIO TOTAL RETURN
ICAP Equity Portfolio S&P 500 Stock Index
12/31/94 $10,000.00 $10,000.00
12/31/95 13,885.34 13,757.79
12/31/96 17,531.43 16,916.57
12/31/97 22,630.38 22,560.49
12/31/98 25,215.08 29,007.51
6/30/99 28,313.81 32,599.64
Portfolio Total Return for the period ended 6/30/99
- ---------------------------------------------------
One Year 12.42%
Average Annual Since Inception (12/31/94) 27.19%
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 - JUNE 30, 1999
ICAP Equity Portfolio S&P 500 Stock Index
Basic Industries 3.85% 3.41%
Capital Goods 7.09% 7.65%
Communications 11.68% 9.61%
Consumer Durables 5.26% 1.87%
Consumer Services 11.65% 4.10%
Consumer Staples 8.42% 8.81%
Energy 2.30% 6.45%
Financial 14.98% 15.80%
Healthcare 11.83% 11.29%
Retail 5.42% 6.83%
Technology 15.25% 21.14%
Transportation 2.27% 0.96%
Utilities 0.00% 2.09%
INVESTMENT HIGHLIGHTS
ICAP SELECT EQUITY PORTFOLIO TOTAL RETURN
ICAP Select Equity Portfolio S&P 500 Stock Index
12/31/97 $10,000.00 $10,000.00
6/30/98 11,698.05 11,771.15
12/31/98 11,532.85 12,857.66
6/30/99 13,577.13 14,449.88
Portfolio Total Return for the period ended 6/30/99
- ---------------------------------------------------
One Year 21.03%
Average Annual Since Inception (12/31/97) 26.17%
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, 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 - JUNE 30, 1999
ICAP Select Equity Portfolio S&P 500 Stock Index
Basic Industries 0.00% 3.41%
Capital Goods 11.61% 7.65%
Communications 5.04% 9.61%
Consumer Durables 4.73% 1.87%
Consumer Services 19.69% 4.10%
Consumer Staples 12.17% 8.81%
Energy 0.00% 6.45%
Financial 13.09% 15.80%
Healthcare 11.72% 11.29%
Retail 4.62% 6.83%
Technology 12.75% 21.14%
Transportation 4.58% 0.96%
Utilities 0.00% 2.09%
INVESTMENT HIGHLIGHTS
ICAP EURO SELECT EQUITY PORTFOLIO TOTAL RETURN
ICAP Euro Select Morgan Stanley Capital
Equity Portfolio International Europe Index
12/31/97 $10,000.00 $10,000.00
6/30/98 13,368.22 12,649.39
12/31/98 12,739.67 12,853.01
6/30/99 12,603.47 12,542.79
Portfolio Total Return for the period ended 6/30/99
- ---------------------------------------------------
One Year (1.23)%
Average Annual Since Inception (12/31/97) 20.42%
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, 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.
SECTOR BREAKDOWN - JUNE 30, 1999
ICAP Euro Select Morgan Stanley Capital
Equity Portfolio International Europe Index
Basic Industries 8.15% 4.60%
Capital Goods 4.52% 4.00%
Communications 9.26% 13.40%
Consumer Durables 6.90% 5.80%
Consumer Services 12.45% 9.70%
Consumer Staples 7.13% 6.90%
Energy 2.30% 7.50%
Financial 23.18% 24.20%
Healthcare 7.72% 8.50%
Retail 0.00% 4.00%
Technology 7.18% 4.20%
Transportation 7.01% 2.20%
Utilities 4.19% 5.00%
For country composition see page 19.
DISCRETIONARY EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS BY INDUSTRY - Unaudited
June 30, 1999
- ----------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------------------
COMMON STOCKS 95.13%
AUTOS, TRUCKS 5.04%
70,200 Dana Corp. $3,233,587
19,400 Ford Motor Co. 1,094,887
113,450 General Motors Corp. 7,487,700
------------
11,816,174
------------
BANKS 5.53%
118,150 Bank of America Corp. 8,661,872
126,100 U.S. Bancorp 4,287,400
------------
12,949,272
------------
CHEMICALS 2.02%
111,500 Akzo Nobel N.V. ADR 4,724,812
------------
COMMUNICATIONS - EQUIPMENT 3.96%
47,608 Motorola, Inc. 4,510,858
54,850 Nortel Networks Corp. 4,761,666
------------
9,272,524
------------
COMPUTER SYSTEMS 4.87%
39,100 International Business Machines Corp. 5,053,675
107,850 Xerox Corp. 6,369,891
------------
11,423,566
------------
DEFENSE 1.49%
63,700 TRW Inc. 3,495,538
------------
DRUGS, SUPPLIES 11.02%
82,900 Baxter International, Inc. 5,025,812
108,900 Bristol-Myers Squibb Co. 7,670,644
197,700 Hoechst AG ADR 9,094,200
102,100 Monsanto Co. 4,026,569
------------
25,817,225
------------
ELECTRONICS 4.24%
98,594 Philips Electronics N.V. 9,945,670
------------
See notes to financial statements.
DISCRETIONARY EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS BY INDUSTRY - Unaudited (continued)
June 30, 1999
- ----------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------------------
FINANCIAL - MISCELLANEOUS 6.22%
174,950 Citigroup Inc. $8,310,125
132,200 Household International, Inc. 6,262,975
------------
14,573,100
------------
FOOD, TOBACCO & BEVERAGE 5.08%
73,850 Bestfoods 3,655,575
205,400 Philip Morris Cos., Inc. 8,254,512
------------
11,910,087
------------
FOREST & PAPER, CONTAINERS 1.66%
123,400 UPM-Kymmene Corp. ADR 3,879,388
------------
HOUSEHOLD PRODUCTS 3.87%
84,200 Fort James Corp. 3,189,075
102,950 Kimberly-Clark Corp. 5,868,150
------------
9,057,225
------------
INSURANCE 2.65%
39,350 CIGNA Corp. 3,502,150
46,450 Hartford Financial Services Group, Inc. 2,708,616
------------
6,210,766
------------
LEISURE 2.47%
262,200 Host Marriott Corp. 3,113,625
61,000 Royal Caribbean Cruises Ltd. 2,668,750
------------
5,782,375
------------
LONG DISTANCE 2.94%
123,350 AT&T Corp. 6,884,472
------------
MEDIA 8.28%
100,550 Dun & Bradstreet Corp. 3,563,241
63,900 Gannett Co., Inc. 4,560,862
279,300 News Corp. Ltd. Class A ADR 8,815,406
125,610 R.H. Donnelley Corp. 2,457,246
------------
19,396,755
------------
MISCELLANEOUS COMMUNICATIONS 1.64%
68,350 General Motors Corp., Class H<F1> 3,844,687
------------
See notes to financial statements.
<F1> Non-income producing.
DISCRETIONARY EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS BY INDUSTRY - Unaudited (continued)
June 30, 1999
- ----------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------------------
NON-DEFENSE CAPITAL SPENDING 1.85%
45,750 Tyco International Ltd. $4,334,812
------------
OIL 1.98%
63,200 Elf Aquitaine SA ADR 4,649,150
------------
POLLUTION CONTROL 3.52%
153,500 Waste Management, Inc. 8,250,625
------------
REGIONAL BELL OPERATING COMPANIES 6.81%
61,250 Ameritech Corp. 4,501,875
143,600 Bell Atlantic Corp. 9,387,850
35,100 U S WEST, Inc. 2,062,125
------------
15,951,850
------------
RETAIL 5.24%
100,650 Dayton Hudson Corp. 6,542,250
108,292 Federated Department Stores, Inc.<F1> 5,732,708
------------
12,274,958
------------
SOFTWARE & SERVICES 1.37%
58,500 Computer Associates International, Inc. 3,217,500
------------
TRANSPORTATION 1.38%
99,700 Northwest Airlines Corp.* 3,240,250
------------
TOTAL COMMON STOCKS
(cost $178,279,225) 222,902,781
------------
See notes to financial statements.
<F1> Non-income producing.
DISCRETIONARY EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS BY INDUSTRY - Unaudited (continued)
June 30, 1999
- ----------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------
SHORT-TERM INVESTMENT 5.30%
MONEY MARKET 1.60%
$3,748,696 UMB Bank Money Market Fiduciary $3,748,696
------------
COMMERCIAL PAPER 3.70%
1,500,000 Coca-Cola, 4.87%, Due 8/2/1999 1,493,629
5,100,000 Lucent Technologies, 4.93%, Due 8/12/1999 5,071,190
2,100,000 Procter & Gamble, 4.75%, Due 7/1/1999 2,100,000
------------
8,664,819
------------
TOTAL SHORT-TERM INVESTMENTS
(cost $12,413,515) 12,413,515
------------
Total Investments 100.43%
(cost $190,692,740) 235,316,296
Liabilities, less Cash
and Other Assets (0.43)% (1,013,401)
NET ASSETS 100.00% $234,302,895
============
See notes to financial statements.
EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS BY INDUSTRY - Unaudited
June 30, 1999
- ----------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------------------
COMMON STOCKS 98.65%
AUTOS, TRUCKS 5.19%
276,500 Dana Corp. $12,736,281
79,600 Ford Motor Co. 4,492,425
456,675 General Motors Corp. 30,140,550
------------
47,369,256
------------
BANKS 5.59%
465,600 Bank of America Corp. 34,134,300
497,100 U.S. Bancorp 16,901,400
------------
51,035,700
------------
CHEMICALS 2.12%
456,850 Akzo Nobel N.V. ADR 19,359,019
------------
COMMUNICATIONS - EQUIPMENT 4.15%
190,690 Motorola, Inc. 18,067,878
228,250 Nortel Networks Corp. 19,814,953
------------
37,882,831
------------
COMPUTER SYSTEMS 5.21%
165,600 International Business Machines Corp. 21,403,800
442,950 Xerox Corp. 26,161,734
------------
47,565,534
------------
DEFENSE 1.56%
259,550 TRW Inc. 14,242,806
------------
DRUGS, SUPPLIES 10.62%
345,950 Baxter International, Inc. 20,973,219
385,300 Bristol-Myers Squibb Co. 27,139,569
691,650 Hoechst AG ADR 31,815,900
432,900 Monsanto Co. 17,072,494
------------
97,001,182
------------
ELECTRONICS 4.29%
388,286 Philips Electronics N.V. 39,168,350
------------
See notes to financial statements.
EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS BY INDUSTRY - Unaudited (continued)
June 30, 1999
- ----------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------------------
FINANCIAL - MISCELLANEOUS 6.03%
645,062 Citigroup Inc. $30,640,445
515,350 Household International, Inc. 24,414,706
------------
55,055,151
------------
FOOD, TOBACCO & BEVERAGE 5.18%
300,250 Bestfoods 14,862,375
808,300 Philip Morris Cos., Inc. 32,483,556
------------
47,345,931
------------
FOREST & PAPER, CONTAINERS 1.68%
486,750 UPM-Kymmene Corp. ADR 15,302,203
------------
HEALTHCARE - MISCELLANEOUS 1.03%
507,800 Tenet Healthcare Corp.<F1> 9,426,038
------------
HOUSEHOLD PRODUCTS 3.12%
332,400 Fort James Corp. 12,589,650
278,700 Kimberly-Clark Corp. 15,885,900
------------
28,475,550
------------
INSURANCE 3.19%
167,150 CIGNA Corp. 14,876,350
244,200 Hartford Financial Services Group, Inc. 14,239,913
------------
29,116,263
------------
LEISURE 2.82%
1,215,750 Host Marriott Corp. 14,437,031
258,400 Royal Caribbean Cruises Ltd. 11,305,000
------------
25,742,031
------------
LONG DISTANCE 2.65%
432,795 AT&T Corp. 24,155,371
------------
MEDIA 8.67%
433,850 Dun & Bradstreet Corp. 15,374,559
270,350 Gannett Co., Inc. 19,296,231
1,097,300 News Corp. Ltd. Class A ADR 34,633,531
503,860 R.H. Donnelley Corp. 9,856,761
------------
79,161,082
------------
See notes to financial statements.
<F1> Non-income producing.
EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS BY INDUSTRY - Unaudited (continued)
June 30, 1999
- ----------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------------------
MISCELLANEOUS COMMUNICATIONS 1.66%
269,250 General Motors Corp., Class H<F1> $15,145,313
------------
NON-DEFENSE CAPITAL SPENDING 1.99%
191,400 Tyco International Ltd. 18,135,150
------------
OIL 2.27%
281,810 Elf Aquitaine SA ADR 20,730,648
------------
POLLUTION CONTROL 3.45%
585,450 Waste Management, Inc. 31,467,938
------------
REGIONAL BELL OPERATING COMPANIES 7.21%
247,750 Ameritech Corp. 18,209,625
601,700 Bell Atlantic Corp. 39,336,138
141,100 U S WEST, Inc. 8,289,625
------------
65,835,388
------------
RETAIL 5.34%
401,800 Dayton Hudson Corp. 26,117,000
427,858 Federated Department Stores, Inc.<F1> 22,649,733
------------
48,766,733
------------
SOFTWARE & SERVICES 1.39%
231,100 Computer Associates International, Inc. 12,710,500
------------
TRANSPORTATION 2.24%
162,100 AMR Corp.<F1> 11,063,325
287,900 Northwest Airlines Corp.<F1> 9,356,750
------------
20,420,075
------------
TOTAL COMMON STOCKS
(cost $729,240,249) 900,616,043
------------
See notes to financial statements.
<F1> Non-income producing.
EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS BY INDUSTRY - Unaudited (continued)
June 30, 1999
- ----------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------
SHORT-TERM INVESTMENT 1.74%
MONEY MARKET 1.74%
$15,886,088 UMB Bank Money Market Fiduciary $15,886,088
------------
TOTAL SHORT-TERM INVESTMENT
(cost $15,886,088) 15,886,088
------------
TOTAL INVESTMENTS 100.39%
(cost $745,126,337) 916,502,131
Liabilities, less Cash
and Other Assets (0.39)% (3,574,474)
------------
NET ASSETS 100.00% $912,927,657
============
See notes to financial statements.
SELECT EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS BY INDUSTRY - Unaudited
June 30, 1999
- ----------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------------------
COMMON STOCKS 99.40%
AUTOS, TRUCKS 4.71%
22,400 General Motors Corp. $1,478,400
-----------
BANKS 8.42%
36,100 Bank of America Corp. 2,646,581
-----------
COMMUNICATIONS - EQUIPMENT 4.37%
14,500 Motorola, Inc. 1,373,875
-----------
DEFENSE 4.44%
25,400 TRW Inc. 1,393,825
-----------
DRUGS, SUPPLIES 9.87%
54,400 Hoechst AG ADR 2,502,400
15,200 Monsanto Co. 599,450
-----------
3,101,850
-----------
ELECTRONICS 8.30%
25,844 Philips Electronics N.V. 2,607,013
-----------
FINANCIAL - MISCELLANEOUS 4.58%
30,400 Household International, Inc. 1,440,200
-----------
FOOD, TOBACCO & BEVERAGE 7.64%
59,700 Philip Morris Cos., Inc. 2,399,194
-----------
HEALTHCARE - MISCELLANEOUS 1.77%
30,000 Tenet Healthcare Corp.<F1> 556,875
-----------
HOUSEHOLD PRODUCTS 4.46%
37,000 Fort James Corp. 1,401,375
-----------
LEISURE 4.16%
110,000 Host Marriott Corp. 1,306,250
-----------
MEDIA 15.42%
35,000 Dun & Bradstreet Corp. 1,240,313
73,900 News Corp. Ltd. Class A ADR 2,332,469
65,000 R.H. Donnelley Corp. 1,271,562
-----------
4,844,344
See notes to financial statements.
<F1> Non-income producing.
SELECT EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS BY INDUSTRY - Unaudited (continued)
June 30, 1999
- ----------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------------------
POLLUTION CONTROL 7.10%
41,500 Waste Management, Inc. $2,230,625
-----------
REGIONAL BELL OPERATING COMPANIES 5.02%
24,100 Bell Atlantic Corp. 1,575,538
-----------
RETAIL 4.59%
22,200 Dayton Hudson Corp. 1,443,000
-----------
TRANSPORTATION 4.55%
44,000 Northwest Airlines Corp.<F1> 1,430,000
-----------
TOTAL COMMON STOCKS
(cost $28,123,631) 31,228,945
-----------
PRINCIPAL
AMOUNT
- -------------
SHORT-TERM INVESTMENT 1.12%
MONEY MARKET 1.12%
$351,093 UMB Bank Money Market Fiduciary 351,093
-----------
TOTAL SHORT-TERM INVESTMENT
(cost $351,093) 351,093
-----------
TOTAL INVESTMENTS 100.52%
(cost $28,474,724) 31,580,038
Liabilities, less Cash
and Other Assets (0.52)% (161,565)
-----------
NET ASSETS 100.00% $31,418,473
===========
See notes to financial statements.
<F1> Non-income producing.
EURO SELECT EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS BY INDUSTRY - Unaudited
June 30, 1999
- ----------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------------------
COMMON STOCKS 100.18%
AUTOS, TRUCKS 6.90%
18,991 DaimlerChrysler AG $1,687,825
-----------
BANKS 13.90%
105,300 Bank Austria AG ADR 1,107,630
22,429 ING Groep N.V. ADR 1,233,595
3,550 UBS AG 1,059,572
-----------
3,400,797
-----------
CHEMICALS 3.86%
22,300 Akzo Nobel N.V. ADR 944,962
-----------
COMMUNICATIONS - EQUIPMENT 13.46%
91,300 Hellenic Telecommunications
Organization SA ADR 1,010,006
26,200 KPN N.V. ADR 1,257,600
63,300 Vivendi SA ADR 1,025,536
-----------
3,293,142
-----------
DEFENSE 4.52%
29,700 Lagardere S.C.A. ADR 1,105,695
-----------
DRUGS, SUPPLIES 7.73%
41,100 Hoechst AG ADR 1,890,600
-----------
ELECTRONICS 7.19%
17,434 Philips Electronics N.V. 1,758,655
-----------
FOOD, TOBACCO & BEVERAGE 7.14%
40,600 Diageo plc ADR 1,745,800
-----------
FOREST & PAPER, CONTAINERS 4.29%
33,400 UPM-Kymmene Corp. ADR 1,050,013
-----------
INSURANCE 9.31%
17,450 AXA ADR 1,087,353
26,445 Royal & Sun Alliance Insurance
Group plc ADR 1,189,062
-----------
2,276,415
-----------
See notes to financial statements.
EURO SELECT EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS BY INDUSTRY - Unaudited (continued)
June 30, 1999
- ----------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- ----------------------------------------------------------------------
LEISURE 8.01%
51,500 Granada Group plc $955,480
33,400 Peninsular & Oriental Steam
Navigation Co. ADR 1,003,470
-----------
1,958,950
-----------
OIL 2.30%
7,650 Elf Aquitaine SA ADR 562,753
-----------
PUBLISHING 4.55%
230,500 Independent News & Media plc 1,113,753
-----------
TRANSPORTATION 7.02%
60,100 KLM Royal Dutch Airlines N.V. 1,716,606
-----------
TOTAL COMMON STOCKS
(cost $22,040,917) 24,505,966
-----------
See notes to financial statements.
EURO SELECT EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS BY INDUSTRY - Unaudited (continued)
June 30, 1999
- ----------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ----------------------------------------------------------------------
SHORT-TERM INVESTMENT 2.30%
MONEY MARKET 2.30%
$563,686 UMB Bank Money Market Fiduciary $563,686
-----------
TOTAL SHORT-TERM INVESTMENT
(cost $563,686) 563,686
-----------
TOTAL INVESTMENTS 102.48%
(cost $22,604,603) 25,069,652
Liabilities, less Cash
and Other Assets (2.48)% (607,786)
-----------
NET ASSETS 100.00% $24,461,866
===========
Euro Select Equity Portfolio country composition as of June 30, 1999:
COUNTRY %
------------------------------------------
Netherlands 28.2
United Kingdom 20.0
France 15.4
Germany 14.6
Ireland 4.6
Austria 4.5
Finland 4.3
Switzerland 4.3
Greece 4.1
------------------------------------------
TOTAL 100.0%
------------------------------------------
See notes to financial statements.
STATEMENTS OF ASSETS AND LIABILITIES - Unaudited
June 30, 1999
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
DISCRETIONARY SELECT EURO SELECT
EQUITY EQUITY EQUITY EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS:
Investments, at cost $190,692,740 $745,126,337 $28,474,724 $22,604,603
============ ============ =========== ===========
Investments, at value $235,316,296 $916,502,131 $31,580,038 $25,069,652
Receivable for securities sold 1,220,035 5,384,557 552,416 _
Dividends and interest receivable 436,330 1,867,007 61,674 48,390
Tax reclaim receivable 57,173 206,653 5,199 43,528
Receivable from Adviser 29,387 49,614 14,175 12,888
Other assets 18,473 18,407 8,690 _
------------ ------------ ----------- -----------
Total Assets 237,077,694 924,028,369 32,222,192 25,174,458
------------ ------------ ----------- -----------
LIABILITIES:
Payable for securities purchased 1,568,443 6,413,237 603,642 289,380
Dividends payable 1,015,287 4,006,525 163,360 379,390
Accrued investment advisory fees 151,222 596,559 18,818 20,202
Accrued expenses and other liabilities 39,847 84,391 17,899 18,477
Other liabilities _ _ _ 5,143
------------ ------------ ----------- -----------
Total Liabilities 2,774,799 11,100,712 803,719 712,592
------------ ------------ ----------- -----------
NET ASSETS $234,302,895 $912,927,657 $31,418,473 $24,461,866
============ ============ =========== ===========
NET ASSETS CONSIST OF:
Capital stock $63,452 $203,463 $11,329 $9,875
Paid-in capital in excess of par 173,658,494 703,994,443 27,817,775 20,201,754
Undistributed net investment income 2,740 3,313 388 _
Undistributed net realized
gain on investments and
foreign currency transactions 15,954,653 37,350,644 483,667 1,785,188
Net unrealized appreciation
on investments 44,623,556 171,375,794 3,105,314 2,465,049
------------ ------------ ----------- -----------
NET ASSETS $234,302,895 $912,927,657 $31,418,473 $24,461,866
============ ============ =========== ===========
CAPITAL STOCK, $0.01 PAR VALUE
Authorized 100,000,000 100,000,000 100,000,000 100,000,000
Issued and outstanding 6,345,186 20,346,265 1,132,887 987,485
NET ASSET VALUE, REDEMPTION PRICE
AND OFFERING PRICE PER SHARE $36.93 $44.87 $27.73 $24.77
====== ====== ====== ======
</TABLE>
See notes to financial statements.
STATEMENTS OF OPERATIONS - Unaudited
For the Six Months Ended June 30, 1999
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
DISCRETIONARY SELECT EURO SELECT
EQUITY EQUITY EQUITY EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends<F1> $2,198,978 $8,816,524 $247,205 $553,212
Interest 244,521 406,131 11,089 10,721
------------ ------------ ----------- -----------
Total investment income 2,443,499 9,222,655 258,294 563,933
------------ ------------ ----------- -----------
EXPENSES:
Investment advisory fees 866,459 3,310,681 62,206 129,437
Fund administration and accounting fees 93,825 159,630 27,274 29,072
Federal and state registration fees 14,062 45,520 8,500 7,998
Shareholder servicing 12,726 24,843 8,605 8,765
Custody fees 12,170 30,820 1,349 2,971
Legal fees 8,480 8,480 8,479 8,487
Directors' fees and expenses 7,533 7,533 7,533 7,533
Audit fees 6,844 6,844 4,676 4,675
Reports to shareholders 6,074 6,124 6,124 6,024
Amortization of organization costs 3,598 3,598 _ _
Other 3,630 4,656 2,215 2,585
------------ ------------ ----------- -----------
Total expenses before waivers
and reimbursements 1,035,401 3,608,729 136,961 207,547
Waivers and reimbursements
of expenses by Adviser (168,942) (298,048) (74,755) (78,110)
------------ ------------ ----------- -----------
Net expenses 866,459 3,310,681 62,206 129,437
------------ ------------ ----------- -----------
NET INVESTMENT INCOME 1,577,040 5,911,974 196,088 434,496
------------ ------------ ----------- -----------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on investments 18,905,554 51,648,355 868,341 2,886,427
Change in net unrealized appreciation
on investments 12,513,548 74,278,617 1,905,664 (2,234,940)
------------ ------------ ----------- -----------
Net gain on investments 31,419,102 125,926,972 2,774,005 651,487
------------ ------------ ----------- -----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $32,996,142 $131,838,946 $2,970,093 $1,085,983
=========== ============ ========== ==========
<F1> Net of $84,304, $334,429, $7,164 and $65,168
in foreign withholding taxes, respectively.
</TABLE>
See notes to financial statements.
DISCRETIONARY EQUITY PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
SIX MONTHS ENDED
JUNE 30, 1999 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1998
- -------------------------------------------------------------------------------
OPERATIONS:
Net investment income $1,577,040 $3,134,884
Net realized gain on investments 18,905,554 3,179,531
Change in net unrealized appreciation
on investments 12,513,548 13,361,843
------------ -----------
Net increase in net assets resulting
from operations 32,996,142 19,676,258
------------ -----------
DISTRIBUTIONS PAID FROM:
Net investment income (1,610,075) (3,106,991)
Net realized gain on investments _ (5,568,769)
------------ -----------
Net decrease in net assets resulting
from distributions paid (1,610,075) (8,675,760)
------------ -----------
CAPITAL SHARE TRANSACTIONS:
Shares sold 10,273,175 57,481,356
Reinvested distributions 559,077 8,428,247
Shares redeemed (13,284,294) (28,677,907)
------------ -----------
Net increase (decrease) in
net assets resulting
from capital share transactions (2,452,042) 37,231,696
------------ -----------
TOTAL INCREASE IN NET ASSETS 28,934,025 48,232,194
NET ASSETS:
Beginning of period 205,368,870 157,136,676
------------ -----------
End of period $234,302,895 $205,368,870
============ ============
TRANSACTIONS IN SHARES:
Shares sold 298,429 1,869,143
Reinvested distributions 16,927 262,025
Shares redeemed (386,549) (893,947)
------------ -----------
Net increase (decrease) (71,193) 1,237,221
============ ===========
See notes to financial statements.
EQUITY PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
- -------------------------------------------------------------------------------
SIX MONTHS ENDED
JUNE 30, 1999 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1998
- -------------------------------------------------------------------------------
OPERATIONS:
Net investment income $5,911,974 $8,012,437
Net realized gain (loss) on investments 51,648,355 (13,842,012)
Change in net unrealized appreciation
on investments 74,278,617 63,286,668
------------ -----------
Net increase in net assets resulting
from operations 131,838,946 57,457,093
------------ -----------
DISTRIBUTIONS PAID FROM:
Net investment income (6,020,942) (7,958,317)
------------ -----------
Net decrease in net assets resulting
from distributions paid (6,020,942) (7,958,317)
------------ -----------
CAPITAL SHARE TRANSACTIONS:
Shares sold 154,763,784 407,643,663
Reinvested distributions 1,906,213 7,620,729
Shares redeemed (86,827,118) (118,898,372)
------------ -----------
Net increase in net assets resulting
from capital share transactions 69,842,879 296,366,020
------------ -----------
TOTAL INCREASE IN NET ASSETS 195,660,883 345,864,796
NET ASSETS:
Beginning of period 717,266,774 371,401,978
------------ -----------
End of period $912,927,657 $717,266,774
============ ============
TRANSACTIONS IN SHARES:
Shares sold 3,801,146 10,993,859
Reinvested distributions 47,513 197,225
Shares redeemed (2,070,270) (3,197,801)
------------ -----------
Net increase 1,778,389 7,993,283
============ ===========
See notes to financial statements.
Select Equity Portfolio
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
SIX MONTHS ENDED
JUNE 30, 1999 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1998
- --------------------------------------------------------------------------------
OPERATIONS:
Net investment income $196,088 $107,011
Net realized gain (loss) on investments 868,341 (384,674)
Change in net unrealized appreciation
on investments 1,905,664 1,199,650
------------ -----------
Net increase in net assets resulting
from operations 2,970,093 921,987
------------ -----------
DISTRIBUTIONS PAID FROM:
Net investment income (200,052) (109,221)
------------ -----------
Net decrease in net assets resulting
from distributions paid (200,052) (109,221)
------------ -----------
CAPITAL SHARE TRANSACTIONS:
Shares sold 19,097,205 10,047,431
Reinvested distributions 36,557 105,755
Shares redeemed (66,179) (1,385,103)
------------ -----------
Net increase in net assets resulting
from capital share transactions 19,067,583 8,768,083
------------ -----------
TOTAL INCREASE IN NET ASSETS 21,837,624 9,580,849
NET ASSETS:
Beginning of period 9,580,849 _
------------ -----------
End of period $31,418,473 $9,580,849
============ ===========
TRANSACTIONS IN SHARES:
Shares sold 713,221 481,241
Reinvested distributions 1,467 4,740
Shares redeemed (2,634) (65,148)
------------ -----------
Net increase 712,054 420,833
============ ===========
See notes to financial statements.
EURO SELECT EQUITY PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
SIX MONTHS ENDED
JUNE 30, 1999 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1998
- --------------------------------------------------------------------------------
OPERATIONS:
Net investment income $434,496 $409,656
Net realized gain (loss) on investments 2,886,427 (152,423)
Change in net unrealized appreciation
on investments (2,234,940) 4,699,989
------------ -----------
Net increase in net assets resulting
from operations 1,085,983 4,957,222
------------ -----------
DISTRIBUTIONS PAID FROM:
Net investment income (434,542) (426,390)
Net realized gain on investments _ (938,757)
------------ -----------
Net decrease in net assets resulting
from distributions paid (434,542) (1,365,147)
------------ -----------
CAPITAL SHARE TRANSACTIONS:
Shares sold 3,320,824 38,237,521
Reinvested distributions 55,107 1,365,033
Shares redeemed (7,599,329) (15,160,806)
------------ -----------
Net increase (decrease) in
net assets resulting
from capital share transactions (4,223,398) 24,441,748
------------ -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS (3,571,957) 28,033,823
NET ASSETS:
Beginning of period 28,033,823 _
------------ -----------
End of period $24,461,866 $28,033,823
============ ===========
TRANSACTIONS IN SHARES:
Shares sold 132,714 1,746,129
Reinvested distributions 2,213 58,865
Shares redeemed (300,049) (652,387)
------------ -----------
Net increase (decrease) (165,122) 1,152,607
============ ===========
See notes to financial statements.
DISCRETIONARY EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED
(For a share outstanding JUNE 30, 1999 YEAR ENDED DECEMBER 31,
throughout the period) (UNAUDITED) 1998 1997 1996 1995<F1>
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $32.01 $30.34 $29.55 $25.42 $20.00
Income from investment operations:
Net investment income 0.25 0.52 0.48 0.36 0.31
Net realized and unrealized gain on
investments 4.92 2.57 7.80 6.09 6.70
------- -------- -------- -------- -------
Total income from investment
operations 5.17 3.09 8.28 6.45 7.01
------- -------- -------- -------- -------
Less distributions:
From net investment income (0.25) (0.52) (0.48) (0.36) (0.31)
In excess of book net investment income _ _ (0.01) _ _
From net realized gain on investments _ (0.90) (7.00) (1.80) (1.27)
In excess of book net realized gain on
investments _ _ _ (0.16) (0.01)
------- -------- -------- -------- -------
Total distributions (0.25) (1.42) (7.49) (2.32) (1.59)
------- -------- -------- -------- -------
NET ASSET VALUE, END OF PERIOD $36.93 $32.01 $30.34 $29.55 $25.42
======= ======== ======= ======= =======
TOTAL RETURN<F2> 16.19% 10.17% 28.60% 25.55% 35.21%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period
(in thousands) $234,303 $205,369 $157,137 $110,280 $37,362
Ratio of expenses to average
net assets<F3><F4> 0.80% 0.80% 0.80% 0.80% 0.80%
Ratio of net investment income to
average net assets<F3><F4> 1.46% 1.65% 1.37% 1.35% 1.71%
Portfolio turnover rate 64% 129% 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, 1999.
<F3> Net of waivers by the Adviser. Without waivers of expenses, the ratio of
expenses to average net assets would have been 0.96%, 0.98%, 1.02%, 1.11% and
1.56%, and the ratio of net investment income to average net assets would have
been 1.30%, 1.47%, 1.15%, 1.04% and 0.95% for 1999, 1998, 1997, 1996 and 1995,
respectively.
<F4> Annualized.
</TABLE>
See notes to financial statements.
EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED
JUNE 30, 1999 YEAR ENDED DECEMBER 31,
(UNAUDITED) 1998 1997 1996 1995<F1>
- ------------------------------------------------------------------------------------------------------------------------------
(For a share outstanding
throughout the period)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $38.63 $35.12 $31.16 $26.03 $20.00
Income from investment operations:
Net investment income 0.29 0.50 0.37 0.31 0.28
Net realized and unrealized gain on
investments 6.25 3.51 8.57 6.49 7.45
------- ------- ------- ------- -------
Total income from investment
operations 6.54 4.01 8.94 6.80 7.73
------- ------- ------- ------- -------
Less distributions:
From net investment income (0.30) (0.50) (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 (0.30) (0.50) (4.98) (1.67) (1.70)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $44.87 $38.63 $35.12 $31.16 $26.03
====== ======= ====== ======= =======
TOTAL RETURN<F2> 16.95% 11.42% 29.08% 26.26% 38.85%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period
(in thousands) $912,928 $717,267 $371,402 $149,125 $46,788
Ratio of expenses to average
net assets<F3><F4> 0.80% 0.80% 0.80% 0.80% 0.80%
Ratio of net investment income to
average net assets<F3><F4> 1.43% 1.39% 1.06% 1.15% 1.49%
Portfolio turnover rate 54% 133% 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, 1999.
<F3> Net of waivers by the Adviser. Without waivers of expenses, the ratio of
expenses to average net assets would have been 0.87%, 0.91%, 0.97%, 1.12% and
1.44%, and the ratio of net investment income to average net assets would have
been 1.36%, 1.28%, 0.89%, 0.83% and 0.85% for 1999, 1998, 1997, 1996 and 1995,
respectively.
<F4> Annualized.
</TABLE>
See notes to financial statements.
SELECT EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SIX MONTHS ENDED
(For a share outstanding JUNE 30, 1999 YEAR ENDED
throughout the period) (UNAUDITED) DECEMBER 31, 1998<F1>
- --------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $22.77 $20.00
Income from investment operations:
Net investment income 0.21 0.28
Net realized and unrealized gain on
investments 4.97 2.78
------ ------
Total income from investment
operations 5.18 3.06
------ ------
Less distributions:
From net investment income (0.22) (0.29)
------ ------
Total distributions (0.22) (0.29)
------ ------
NET ASSET VALUE, END OF PERIOD $27.73 $22.77
====== ======
TOTAL RETURN<F2> 22.76% 15.33%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period
(in thousands) $31,418 $9,581
Ratio of expenses to average
net assets<F3><F4> 0.80% 0.80%
Ratio of net investment income to
average net assets<F3><F4> 2.52% 1.82%
Portfolio turnover rate 94% 250%
<F1> Commencement of operations after the close of business on December 31,
1997.
<F2> Not annualized for the six months ended June 30, 1999.
<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 1.76% and 3.34%, and the ratio of net investment income to average net
assets would have been 1.56% and (0.72)% for 1999 and 1998, respectively.
<F4> Annualized.
See notes to financial statements.
EURO SELECT EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------------
SIX MONTHS ENDED
(For a share outstanding JUNE 30, 1999 YEAR ENDED
throughout the period) (UNAUDITED) DECEMBER 31, 1998<F1>
- ------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $24.32 $20.00
Income from investment operations:
Net investment income 0.42 0.35
Net realized and unrealized gain on
investments 0.47 5.07
------- -------
Total income from investment
operations 0.89 5.42
------- -------
Less distributions:
From net investment income (0.44) (0.37)
From net realized gain on investments _ (0.73)
------- -------
Total distributions (0.44) (1.10)
------- -------
NET ASSET VALUE, END OF PERIOD $24.77 $24.32
======= ======
TOTAL RETURN<F2> 3.64% 27.40%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period
(in thousands) $24,462 $28,034
Ratio of expenses to average
net assets<F3><F4> 1.00% 1.00%
Ratio of net investment income to
average net assets<F3><F4> 3.36% 1.69%
Portfolio turnover rate 114% 272%
<F1> Commencement of operations after the close of business on December 31,
1997.
<F2> Not annualized for the six months ended June 30, 1999.
<F3> Net of waivers by the Adviser. Without waivers of expenses, the ratio of
expenses to average net assets would have been 1.61% and 1.67%, and the ratio of
net investment income to average net assets would have been 2.75% and 1.02% for
1999 and 1998, respectively.
<F4> Annualized.
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS - Unaudited
June 30, 1999
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 Discretionary Equity Portfolio, the Equity Portfolio, the Select
Equity Portfolio and the Euro Select Equity Portfolio (the "Portfolios"), the
first two of which are diversified portfolios and the last two of which are non-
diversified 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.
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 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. Foreign denominated
assets may involve greater risks than domestic transactions, including currency,
political and economic, regulatory and market risks.
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.
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) 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, 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.
g) Other - Investment transactions are accounted for on the trade date. 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. Any non-cash dividends are recognized as investment income at the
fair value of the property received.
INVESTMENT TRANSACTIONS
The aggregate purchases and sales of securities, excluding short-term
investments and U.S. government obligations, for the Portfolios for the six
months ended June 30, 1999, are summarized below:
- ------------------------------------------------------------------------------
DISCRETIONARY SELECT EURO SELECT
EQUITY EQUITY EQUITY EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- -----------------------------------------------------------------------------
Purchases $133,165,911 $510,640,742 $34,090,171 $28,553,915
Sales $144,001,969 $433,332,858 $14,893,694 $32,579,325
There were no purchases or sales of U.S. government obligations.
FEDERAL INCOME TAX INFORMATION
At June 30, 1999, gross unrealized appreciation and depreciation of investments,
based on cost for federal income tax purposes of $191,646,546, $749,728,171,
$28,721,049 and $23,116,450 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 $45,799,507 $177,944,035 $3,186,192 $2,670,768
Unrealized depreciation (2,129,757) (11,170,075) (327,203) (717,566)
----------- ------------ ---------- ----------
Net unrealized
appreciation
on investments $43,669,750 $166,773,960 $2,858,989 $1,953,202
=========== ============ ========== ==========
At December 31, 1998, the Portfolios had net realized capital losses from
transactions between November 1, 1998, and December 31, 1998, which for tax
purposes are deferred and will be recognized in 1999, and capital loss
carryforwards (which are available to offset future capital gains through 2006)
as follows:
- -------------------------------------------------------------------------------
DISCRETIONARY SELECT EURO SELECT
EQUITY EQUITY EQUITY EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- -------------------------------------------------------------------------------
Post-October losses $1,505,431 $7,571,348 _ $84,203
Capital loss carryforwards _ $1,333,712 $135,320 _
INVESTMENT ADVISORY AGREEMENT
The Discretionary Equity, Equity and Select Equity Portfolio each pay the
Adviser an annual management fee of 0.80% of the Portfolio's average net assets
and the Euro Select Equity Portfolio pays the Adviser an annual management fee
of 1.00% of average net assets. Pursuant to an expense cap agreement dated
April 30, 1999 between the Adviser and the Portfolios, the Adviser agreed to
waive its management fee and/or reimburse each Portfolio's operating expense to
the extent necessary to ensure that the Discretionary Equity, Equity and Select
Equity Portfolio's expenses would not exceed 0.80% of its average net assets and
that the Euro Select Equity Portfolio would not exceed 1.00% of its net assets.
The term of this expense cap agreement is 12 months. Since inception of the
Portfolios, the Adviser has voluntarily reimbursed each Portfolio's operating
expense to the extent necessary to ensure that the Discretionary Equity, Equity
and Select Equity Portfolios would not exceed 0.80% of its average net assets
and that the Euro Select Equity Portfolio would not exceed 1.00% of its average
net assets.
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
Institutional Capital Corporation
225 West Wacker Drive, Suite 2400
Chicago, Illinois 60606-1229
www.icapfunds.com
CUSTODIAN
UMB Bank, n.a.
928 Grand Boulevard
Kansas City, Missouri 64141-6226
DIVIDEND - DISBURSING AND TRANSFER AGENT
Sunstone Financial Group, Inc.
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
AUDITOR
PricewaterhouseCoopers LLP
100 East Wisconsin Avenue, Suite 1500
Milwaukee, Wisconsin 53202-9845
LEGAL COUNSEL
Godfrey & Kahn, S.C.
780 North Water Street
Milwaukee, Wisconsin 53202-3590
This Semi-Annual Report 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 a current prospectus.
(logo)
ICAP
Institutional Capital/R
ICAP Funds
225 West Wacker Drive, Suite 2400
Chicago, IL 60606
(888) 221-ICAP (4227)
www.icapfunds.com
C/ Copyright 1999 Institutional Capital Corporation
33-0799-3M
IC-410-0899
