ICAP FUNDS
Semi-Annual
Report
JUNE 30, 2000
------------------------------
DISCRETIONARY EQUITY PORTFOLIO
EQUITY PORTFOLIO
SELECT EQUITY PORTFOLIO
EURO SELECT EQUITY PORTFOLIO
(LOGO)
ICAP INSTITUTIONAL CAPITAL/R
<PAGE>
Table of Contents
Letter to Shareholders...................................................1
Investment Highlights and Schedules of Investments
Discretionary Equity Portfolio.........................................3
Equity Portfolio.......................................................7
Select Equity Portfolio...............................................11
Euro Select Equity Portfolio..........................................14
Statements of Assets and Liabilities....................................17
Statements of Operations................................................18
Statements of Changes in Net Assets
Discretionary Equity Portfolio........................................19
Equity Portfolio......................................................20
Select Equity Portfolio...............................................21
Euro Select Equity Portfolio..........................................22
Financial Highlights
Discretionary Equity Portfolio........................................23
Equity Portfolio......................................................24
Select Equity Portfolio...............................................25
Euro Select Equity Portfolio..........................................26
Notes to Financial Statements...........................................27
<PAGE>
July 2000
Dear Fellow Shareholders:
(PHOTO)
ROBERT H. LYON
PRESIDENT AND CHIEF INVESTMENT OFFICER
The U.S. stock market was characterized by extremely speculative conditions in
the first half of 2000. On the way to recording slightly NEGATIVE returns
(despite a robust earnings environment globally), the markets were extremely
volatile due to concerns about Fed tightening. Technology and biotechnology
stocks, in particular, witnessed huge swings in sentiment. Essentially companies
whose "theoretical" earnings lie far into the future are the ultimate long-
duration assets. They perform like supercharged zero-coupon bonds. Investors
have been led by the media to believe that in an environment where higher
interest rates lead to slower growth - the sanctuary is in sectors of the market
which can grow regardless of conditions. Unfortunately, as interest rates headed
higher in the second quarter, the marginal buyer of these "dream stocks" dropped
out, while sellers ranging from insiders, to those hit by margin calls, to good
old short sellers, stepped in. Despite the heavy decimation of the most
speculative parts of the market, there remain large pockets of extreme excess
represented by very young companies with minimal track records, sporting multi-
billion dollar capitalizations, despite losing tens of millions of real cash per
year. While the lowest tier of such issues is in the process of being carried
off the field, the walking wounded still survive. We would expect the casualty
list to grow.
A byproduct of the volatility of technology stocks and the Nasdaq has been the
extreme reaction to small (negative) changes in company guidance. This is
distressing because the punishment usually does not fit the crime (30% to 40%
drops in price for a relatively minor miss in the estimate), and because there
is no real symmetry - a modest positive improvement in the outlook is greeted by
a one-day pop in the stock with limited (or negative) follow-thru. All of this
points to a treacherous, toppy, market environment. While our portfolios
generally performed in-line with the value indices (S&P Value and Russell 1000
Value) during the first half of 2000, we were penalized as some of our large
holdings, with little change in fundamentals, suffered steep price declines as
psychology shifted toward a perceived slower growth environment (General Motors
Corp. was an example of this phenomenon).
As we look into the second half of the year, we would expect the U.S. economy to
record solid growth, despite some of the weak economic numbers recently
reported. Personal income is strong, inventories are low, capital spending is
strong, exports are recovering and government spending (after a multi-year
hiatus) is lifting. Business conditions outside the U.S. also continue to
improve. In addition, labor conditions in the U.S. remain extremely tight, and
the recent softening in some statistics has had zero impact on mounting wage
pressure. Despite the fact that the Fed did not raise rates at their June
meeting, their statement continued to highlight the inflationary dangers on the
employment front. Most businesses are seeing anecdotal evidence of extreme
tightness in labor - witness signing bonuses, concierge services and other non-
wage benefit escalation. Moreover, despite some slowing in the housing market,
there is an increasing realization that a 3% increase in shelter contained in
the CPI is grossly underreporting conditions in the real world (where prices may
be increasing more like 6%+). Consequently, although the pressures in wages and
housing may be lagging indicators, there is a good chance that there will be
some more Fed tightening in the second half of this year. This is likely to
lead to a continuation of choppy markets and limited returns.
<PAGE>
However, despite this backdrop, there is a silver lining. The overheating of the
U.S. economy may be cooled by further, limited Fed actions. Meanwhile, the rest
of the world is experiencing a well-balanced recovery that could extend for
several years. This last point is key to our portfolio strategy. We believe that
there is a good chance that despite somewhat higher rates in the U.S., liquidity
in the rest of the world will be sufficient to support continued growth.
Consequently, earnings expectations for a broad swath of U.S. manufacturing
companies, although modestly tempered from a couple of months ago, look solid
well out into the future. Stocks of many such companies are 30% to 50% off their
recent highs, despite being generally healthier than in many years.
Interestingly, this point is not being ignored by certain groups of
sophisticated investors. Consolidation is occurring across a broad range of
basic industries, and several of the corporate raiders of the 1980's have
reappeared (along with large pools of private equity). There is a method to
their madness. Huge numbers of American manufacturing companies are selling well
below their true equilibrium level. We would expect individual companies to be
picked off one at a time. We expect to participate in this trend by owning
stocks which are attractive, using our process, in their own right, but which
might also be logical takeover candidates as well.
One example of a recent purchase consistent with this theme would be Allstate
Corp. Now 50% off its high, Allstate is selling near its book value and at about
eight times earnings (for old timers it even has a respectable yield). Allstate
has a 50-state franchise in the biggest market of the world, and despite the
rise of the Internet, would be a valuable addition for many European insurance
giants with limited exposure to our market. The depressed market capitalization
of many U.S. companies with hard to duplicate assets, and business franchises,
could invite bids from well-endowed outsiders (our portfolio recently benefited
from the announcement that Seagram Company Ltd. will be acquired by French giant
Vivendi SA at a sizeable premium). We believe that we are in the early days of
this process, while at the same time we are moving into the final stage of the
demise of the dot.com bubble. For value investors who demonstrate both patience
and tenacity there is an opportunity to produce solid returns, with relatively
low risk, over the next several years as the various acts of this play unfold.
Thank you for your continued support. We appreciate your business.
Sincerely,
/S/ Robert H. Lyon
Robert H. Lyon
President and Chief Investment Officer
The ICAP Funds are actively managed portfolios. The companies mentioned may not
be held in all of the Funds.
(PHOTO) (PHOTO) (PHOTO)
ICAP INVESTMENT TEAM
<PAGE>
Discretionary Equity Portfolio
Investment Highlights
June 30, 2000
FUND DESCRIPTION
The Discretionary Equity Portfolio invests primarily in U.S. dollar-denominated
equity securities of companies with market capitalizations of at least $2
billion. The Portfolio may invest up to 35% of its total assets in cash and cash
equivalents for any purpose, and may invest up to 100% of its total assets in
such instruments for temporary defensive purposes. The Portfolio will typically
hold between 40 and 45 securities.
AVERAGE ANNUALIZED TOTAL RETURNS FOR THE PERIODS ENDED JUNE 30, 2000
--------------------------------------------------------------------------------
SINCE
INCEPTION
1 YEAR 3 YEARS 5 YEARS (12/31/94)
--------------------------------------------------------------------------------
ICAP DISCRETIONARY
EQUITY PORTFOLIO (4.61)% 9.16% 16.86% 19.53%
GROWTH OF $10,000
--------------------------------------------------------------------------------
ICAP Discretionary S&P 500 S&P/BARRA
Equity Portfolio Stock Index Value Index
------------------ ------------------ ------------------
12/31/94 10,000 10,000 10,000
12/31/95 13,521 13,580 13,700
12/31/96 16,976 16,917 16,713
12/31/97 21,831 22,560 21,725
12/31/98 24,053 29,008 24,914
12/31/99 27,625 35,112 28,082
6/30/00 26,659 34,963 26,938
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 Fund's portfolio may differ significantly from the securities in the
Indices. The Indices are unmanaged and therefore do not reflect the cost of
portfolio management or trading.
A direct investment in any of these Indices is not possible.
<PAGE>
Discretionary Equity Portfolio
Schedule of Investments by Sector - Unaudited
June 30, 2000
--------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
--------------------------------------------------------------------------------
COMMON STOCKS 96.0%
BASIC INDUSTRIES 5.3%
98,850 Alcan Aluminum Ltd. $ 3,064,350
83,650 Union Carbide Corp. 4,140,675
75,050 Weyerhaeuser Co. 3,227,150
--------------
10,432,175
--------------
CAPITAL GOODS 5.3%
67,350 General Dynamics Corp. 3,519,038
49,800 TRW Inc. 2,160,075
99,450 Tyco International Ltd. 4,711,444
--------------
10,390,557
--------------
COMMUNICATIONS 11.2%
176,150 AT&T Corp. 5,570,744
119,700 Bell Atlantic Corp. 6,082,256
17,750 Cable & Wireless plc ADR 888,609
57,650 U S WEST, Inc. 4,943,488
102,800 Vodafone AirTouch plc ADR 4,259,775
1,700 WorldCom, Inc.<F1> 77,987
--------------
21,822,859
--------------
CONSUMER DURABLES 5.9%
134,000 Ford Motor Co. 5,762,000
96,829 General Motors Corp. 5,622,134
17,545 Visteon Corp. 212,733
--------------
11,596,867
--------------
CONSUMER SERVICES 7.2%
42,450 Knight-Ridder, Inc. 2,257,809
109,700 News Corp. Ltd. Class A ADR 5,210,750
105,310 R.H. Donnelley Corp.<F1> 2,040,381
77,500 Seagram Company Ltd. 4,495,000
--------------
14,003,940
--------------
CONSUMER STAPLES 3.3%
74,450 Kimberly-Clark Corp. 4,271,569
8,000 Newell Rubbermaid, Inc. 206,000
71,500 Tricon Global Restaurants, Inc.<F1> 2,019,875
--------------
6,497,444
--------------
See notes to financial statements.
<F1> Non-income producing.
<PAGE>
Discretionary Equity Portfolio
Schedule of Investments by Sector - Unaudited (continued)
June 30, 2000
--------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
--------------------------------------------------------------------------------
ENERGY 8.6%
132,350 Conoco Inc., Class B $ 3,250,847
70,650 ExxonMobil Corp. 5,546,025
104,750 Texaco Inc. 5,577,938
96,800 USX-Marathon Group 2,426,050
--------------
16,800,860
--------------
FINANCIAL 15.4%
73,900 Allstate Corp. 1,644,275
191,800 Associates First Capital Corp., Class A 4,279,538
88,000 Citigroup Inc. 5,302,000
81,650 Fannie Mae 4,261,109
87,100 Household International, Inc. 3,620,094
201,900 MetLife, Inc.<F1> 4,252,519
22,700 Providian Financial Corp. 2,043,000
117,850 Wells Fargo & Co. 4,566,687
--------------
29,969,222
--------------
HEALTHCARE 11.9%
104,000 Abbott Laboratories, Inc. 4,634,500
43,500 Aetna Inc. 2,792,156
98,650 Becton, Dickinson and Co. 2,830,022
85,900 Biomet, Inc. 3,301,781
89,950 Bristol-Myers Squibb Co. 5,239,588
84,934 Pharmacia Corp. 4,390,026
--------------
23,188,073
--------------
RETAIL 3.7%
87,192 Federated Department Stores, Inc.<F1> 2,942,730
73,000 Target Corp. 4,234,000
--------------
7,176,730
--------------
TECHNOLOGY 15.2%
86,050 Computer Associates International, Inc. 4,404,684
89,950 Electronic Data Systems Corp. 3,710,438
31,600 Gateway, Inc.<F1> 1,793,300
48,850 International Business Machines Corp. 5,352,128
14,550 Lucent Technologies Inc. 862,087
173,674 Motorola, Inc. 5,047,401
177,076 Philips Electronics N.V. 8,411,110
--------------
29,581,148
--------------
See notes to financial statements.
<F1> Non-income producing.
<PAGE>
Discretionary Equity Portfolio
Schedule of Investments by Sector - Unaudited (continued)
June 30, 2000
--------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
--------------------------------------------------------------------------------
TRANSPORTATION 0.1%
3,150 Burlington Northern Santa Fe Corp. $ 72,253
--------------
UTILITIES 2.9%
125,000 Edison International 2,562,500
61,550 FPL Group, Inc. 3,046,725
--------------
5,609,225
--------------
TOTAL COMMON STOCKS
(cost $176,500,979) 187,141,353
--------------
PRINCIPAL
AMOUNT
---------
SHORT-TERM INVESTMENTS 5.2%
MONEY MARKET 0.6%
$1,135,183 UMB Bank Money Market Fiduciary 1,135,183
--------------
COMMERCIAL PAPER 4.6%
6,700,000 Coca-Cola, 6.48%, Due 7/27/2000 6,669,341
2,300,000 Sara Lee Corp., 6.46%, Due 7/06/2000 2,297,992
--------------
8,967,333
--------------
TOTAL SHORT-TERM INVESTMENTS
(cost $10,102,516) 10,102,516
--------------
TOTAL INVESTMENTS 101.2%
(cost $186,603,495) 197,243,869
Liabilities, less Cash
and Other Assets (1.2)% (2,234,646)
--------------
NET ASSETS 100.0% $195,009,223
==============
See notes to financial statements.
<PAGE>
Equity Portfolio
Investment Highlights
June 30, 2000
FUND DESCRIPTION
The Equity Portfolio invests primarily in U.S. dollar-denominated equity
securities of companies with market capitalizations of at least $2 billion. The
Portfolio intends to be virtually fully invested in equity securities at all
times. The Portfolio will typically hold between 40 and 45 securities.
AVERAGE ANNUALIZED TOTAL RETURNS FOR THE PERIODS ENDED JUNE 30, 2000
--------------------------------------------------------------------------------
SINCE
INCEPTION
1 YEAR 3 YEARS 5 YEARS (12/31/94)
--------------------------------------------------------------------------------
ICAP EQUITY PORTFOLIO (4.13)% 9.83% 17.95% 20.82%
GROWTH OF $10,000
--------------------------------------------------------------------------------
ICAP S&P 500 S&P/BARRA
Equity Portfolio Stock Index Value Index
------------------ ------------------ ------------------
12/31/94 10,000 10,000 10,000
12/31/95 13,885 13,758 13,700
12/31/96 17,531 16,917 16,713
12/31/97 22,630 22,560 21,725
12/31/98 25,215 29,008 24,913
12/31/99 29,321 35,112 28,082
6/30/00 28,271 34,963 26,939
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 Fund's portfolio may differ significantly from the securities in the
Indices. The Indices are unmanaged and therefore do not reflect the cost of
portfolio management or trading.
A direct investment in any of these Indices is not possible.
<PAGE>
Equity Portfolio
Schedule of Investments by Sector - Unaudited
June 30, 2000
--------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
--------------------------------------------------------------------------------
COMMON STOCKS 98.9%
BASIC INDUSTRIES 5.4%
446,150 Alcan Aluminum Ltd. $ 13,830,650
428,050 Union Carbide Corp. 21,188,475
402,100 Weyerhaeuser Co. 17,290,300
--------------
52,309,425
--------------
CAPITAL GOODS 5.4%
342,550 General Dynamics Corp. 17,898,238
250,400 TRW Inc. 10,861,100
492,950 Tyco International Ltd. 23,353,506
--------------
52,112,844
--------------
COMMUNICATIONS 11.6%
895,796 AT&T Corp. 28,329,548
618,150 Bell Atlantic Corp. 31,409,747
95,700 Cable & Wireless plc ADR 4,790,981
291,150 U S WEST, Inc. 24,966,113
536,150 Vodafone AirTouch plc ADR 22,216,716
8,100 WorldCom, Inc.<F1> 371,587
--------------
112,084,692
--------------
CONSUMER DURABLES 6.2%
690,250 Ford Motor Co. 29,680,750
503,816 General Motors Corp. 29,252,817
90,377 Visteon Corp. 1,095,815
--------------
60,029,382
--------------
CONSUMER SERVICES 7.5%
215,550 Knight-Ridder, Inc. 11,464,566
570,000 News Corp. Ltd. Class A ADR 27,075,000
516,760 R.H. Donnelley Corp.<F1> 10,012,225
412,850 Seagram Company Ltd. 23,945,300
--------------
72,497,091
--------------
CONSUMER STAPLES 3.4%
388,000 Kimberly-Clark Corp. 22,261,500
40,700 Newell Rubbermaid, Inc. 1,048,025
353,900 Tricon Global Restaurants, Inc.<F1> 9,997,675
--------------
33,307,200
--------------
See notes to financial statements.
<F1> Non-income producing.
<PAGE>
Equity Portfolio
Schedule of Investments by Sector - Unaudited (continued)
June 30, 2000
--------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
--------------------------------------------------------------------------------
ENERGY 8.7%
679,950 Conoco Inc., Class B $ 16,701,272
354,550 ExxonMobil Corp. 27,832,175
508,900 Texaco Inc. 27,098,925
509,000 USX-Marathon Group 12,756,812
--------------
84,389,184
--------------
FINANCIAL 14.9%
378,100 Allstate Corp. 8,412,725
981,550 Associates First Capital Corp., Class A 21,900,834
469,974 Citigroup Inc. 28,315,934
420,250 Fannie Mae 21,931,797
438,350 Household International, Inc. 18,218,922
1,014,900 MetLife, Inc.<F1> 21,376,331
626,500 Wells Fargo & Co. 24,276,875
--------------
144,433,418
--------------
HEALTHCARE 13.3%
527,000 Abbott Laboratories 23,484,437
216,750 Aetna Inc. 13,912,641
118,300 Bausch & Lomb, Inc. 9,153,462
513,700 Becton, Dickinson and Co. 14,736,769
428,600 Biomet, Inc. 16,474,312
472,800 Bristol-Myers Squibb Co. 27,540,600
448,814 Pharmacia Corp. 23,198,074
--------------
128,500,295
--------------
RETAIL 3.8%
446,658 Federated Department Stores, Inc.<F1> 15,074,707
381,000 Target Corp. 22,098,000
--------------
37,172,707
--------------
TECHNOLOGY 15.6%
431,500 Computer Associates International, Inc. 22,087,406
462,000 Electronic Data Systems Corp. 19,057,500
151,800 Gateway, Inc.<F1> 8,614,650
260,100 International Business Machines Corp. 28,497,206
74,500 Lucent Technologies Inc. 4,414,125
864,545 Motorola, Inc. 25,125,839
922,286 Philips Electronics N.V. 43,808,585
--------------
151,605,311
--------------
See notes to financial statements.
<F1> Non-income producing.
<PAGE>
Equity Portfolio
Schedule of Investments by Sector - Unaudited (continued)
June 30, 2000
--------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
--------------------------------------------------------------------------------
TRANSPORTATION 0.1%
13,800 Burlington Northern Santa Fe Corp. $ 316,538
--------------
UTILITIES 3.0%
680,600 Edison International 13,952,300
314,250 FPL Group, Inc. 15,555,375
--------------
29,507,675
--------------
TOTAL COMMON STOCKS
(cost $902,813,581) 958,265,762
--------------
PRINCIPAL
AMOUNT
---------
SHORT-TERM INVESTMENT 1.9%
MONEY MARKET 1.9%
$18,655,134 UMB Bank Money Market Fiduciary 18,655,134
--------------
TOTAL SHORT-TERM INVESTMENT
(cost $18,655,134) 18,655,134
--------------
TOTAL INVESTMENTS 100.8%
(cost $921,468,715) 976,920,896
Liabilities, less Cash
and Other Assets (0.8)% (8,071,765)
--------------
NET ASSETS 100.0% $968,849,131
==============
See notes to financial statements.
<PAGE>
Select Equity Portfolio
Investment Highlights
June 30, 2000
FUND DESCRIPTION
The Select Equity Portfolio invests primarily in U.S. dollar-denominated equity
securities of companies with market capitalizations of at least $2 billion. The
Portfolio will concentrate its investments in fewer securities than the
Discretionary Equity and Equity Portfolios, typically holding between 15 and 25
securities.
AVERAGE ANNUALIZED TOTAL RETURNS FOR THE PERIODS ENDED JUNE 30, 2000
--------------------------------------------------------------------------------
SINCE
INCEPTION
1 YEAR (12/31/97)
--------------------------------------------------------------------------------
ICAP SELECT EQUITY PORTFOLIO 5.99% 17.66%
GROWTH OF $10,000
--------------------------------------------------------------------------------
ICAP Select S&P 500 S&P/BARRA
Equity Portfolio Stock Index Value Index
------------------ ------------------ ------------------
12/31/97 10,000 10,000 10,000
6/30/98 11,698 11,771 11,213
12/31/98 11,533 12,858 11,467
6/30/99 14,158 14,450 13,068
12/31/99 14,666 15,564 12,926
6/30/00 15,006 15,497 12,400
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 Fund's portfolio may differ significantly from the securities in the
Indices. The Indices are unmanaged and therefore do not reflect the cost of
portfolio management or trading.
A direct investment in any of these Indices is not possible.
<PAGE>
Select Equity Portfolio
Schedule of Investments by Sector - Unaudited
June 30, 2000
--------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
--------------------------------------------------------------------------------
COMMON STOCKS 98.4%
BASIC INDUSTRIES 4.1%
20,300 Union Carbide Corp. $1,004,850
--------------
CAPITAL GOODS 4.4%
25,300 TRW Inc. 1,097,388
--------------
COMMUNICATIONS 11.3%
55,800 AT&T Corp. 1,764,675
12,000 U S WEST, Inc. 1,029,000
--------------
2,793,675
--------------
CONSUMER DURABLES 7.1%
30,021 General Motors Corp. 1,743,095
--------------
CONSUMER SERVICES 12.2%
19,500 Knight-Ridder, Inc. 1,037,156
19,000 News Corp. Ltd. Class A ADR 902,500
18,700 Seagram Company Ltd. 1,084,600
--------------
3,024,256
--------------
ENERGY 7.5%
75,700 Conoco Inc., Class B 1,859,381
--------------
FINANCIAL 16.4%
15,600 Citigroup Inc. 939,900
24,000 Household International, Inc. 997,500
100,100 MetLife, Inc.<F1> 2,108,356
--------------
4,045,756
--------------
HEALTHCARE 16.3%
10,000 Aetna Inc. 641,875
14,300 Bausch & Lomb, Inc. 1,106,463
38,100 Becton, Dickinson and Co. 1,092,994
20,400 Bristol-Myers Squibb Co. 1,188,300
--------------
4,029,632
--------------
See notes to financial statements.
<F1> Non-income producing.
<PAGE>
Select Equity Portfolio
Schedule of Investments by Sector - Unaudited (continued)
June 30, 2000
--------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
--------------------------------------------------------------------------------
TECHNOLOGY 19.1%
20,700 Computer Associates International, Inc. $ 1,059,581
56,950 Motorola, Inc. 1,655,109
42,000 Philips Electronics N.V. 1,995,000
--------------
4,709,690
--------------
TOTAL COMMON STOCKS
(cost $22,298,836) 24,307,723
--------------
PRINCIPAL
AMOUNT
---------
SHORT-TERM INVESTMENT 2.2%
MONEY MARKET 2.2%
$555,355 UMB Bank Money Market Fiduciary 555,355
--------------
TOTAL SHORT-TERM INVESTMENT
(cost $555,355) 555,355
--------------
TOTAL INVESTMENTS 100.6%
(cost $22,854,191) 24,863,078
Liabilities, less Cash
and Other Assets (0.6)% (150,955)
--------------
NET ASSETS 100.0% $24,712,123
==============
See notes to financial statements.
Euro Select Equity Portfolio
Investment Highlights
June 30, 2000
FUND DESCRIPTION
The Euro Select Equity Portfolio invests primarily in equity securities,
predominantly American Depositary Receipts ("ADRs"), of established European
companies with market capitalizations of at least $2 billion. The Portfolio will
typically hold between 15 and 25 securities.
AVERAGE ANNUALIZED TOTAL RETURNS FOR THE PERIODS ENDED JUNE 30, 2000
--------------------------------------------------------------------------------
SINCE
INCEPTION
1 YEAR (12/31/97)
--------------------------------------------------------------------------------
ICAP EURO SELECT EQUITY PORTFOLIO 15.31% 18.35%
GROWTH OF $10,000
-------------------------------------------------------------------
ICAP Euro Select Morgan Stanley Capital
Equity Portfolio International Europe Index
------------------ --------------------------
12/31/97 10,000 10,000
6/30/98 13,368 12,649
12/31/98 12,740 12,853
6/30/99 13,204 12,543
12/31/99 15,546 14,896
6/30/00 15,226 14,437
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 Fund's portfolio may differ significantly from the securities in the Index.
The Index is unmanaged and therefore does not reflect the cost of portfolio
management or trading.
A direct investment in this Index is not possible.
<PAGE>
Euro Select Equity Portfolio
Schedule of Investments by Sector - Unaudited
June 30, 2000
--------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
--------------------------------------------------------------------------------
COMMON STOCKS 97.5%
BASIC INDUSTRIES 6.8%
66,200 Jefferson Smurfit Group plc ADR $ 1,166,775
46,700 Pechiney SA ADR 969,025
--------------
2,135,800
--------------
CAPITAL GOODS 11.6%
176,600 Investor AB, B Shares 2,426,272
72,700 SKF AB ADR 1,208,638
--------------
3,634,910
--------------
COMMUNICATIONS 15.2%
13,700 Cable & Wireless plc ADR 685,856
53,700 Infonet Services Corp., Class B<F1> 641,044
20,700 KPN N.V. ADR 930,206
113,600 Portugal Telecom SA ADR 1,278,000
29,900 Vodafone AirTouch plc ADR 1,238,981
--------------
4,774,087
--------------
CONSUMER SERVICES 14.0%
135,700 Bass plc ADR 1,569,031
30,500 News Corp. Ltd. Class A ADR 1,448,750
23,900 Seagram Company Ltd. 1,386,200
--------------
4,403,981
--------------
CONSUMER STAPLES 4.3%
37,800 Diageo plc ADR 1,344,262
--------------
ENERGY 8.1%
50,600 Shell Transport & Trading Co. ADR 2,526,837
--------------
FINANCIAL 21.2%
52,200 ABN AMRO Holding N.V. ADR 1,282,163
20,829 ING Groep N.V. ADR 1,405,958
189,010 Nordic Baltic Holding AB 1,380,605
25,900 Zurich Allied AG ADR<F1> 2,567,589
--------------
6,636,315
--------------
HEALTHCARE 4.3%
25,900 Pharmacia Corp. 1,338,706
--------------
See notes to financial statements.
<F1> Non-income producing.
<PAGE>
Euro Select Equity Portfolio
Schedule of Investments by Sector - Unaudited (continued)
June 30, 2000
--------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
--------------------------------------------------------------------------------
TECHNOLOGY 12.0%
50,636 Philips Electronics N.V. $ 2,405,210
8,900 Siemens AG ADR 1,343,702
--------------
3,748,912
--------------
TOTAL COMMON STOCKS
(cost $27,910,421) 30,543,810
--------------
PRINCIPAL
AMOUNT
---------
SHORT-TERM INVESTMENT 2.9%
MONEY MARKET 2.9%
$918,920 UMB Bank Money Market Fiduciary 918,920
--------------
TOTAL SHORT-TERM INVESTMENT
(cost $918,920) 918,920
--------------
TOTAL INVESTMENTS 100.4%
(cost $28,829,341) 31,462,730
Liabilities, less Cash
and Other Assets (0.4)% (142,621)
--------------
NET ASSETS 100.0% $31,320,109
==============
Euro Select Equity Portfolio country composition as of June 30, 2000:
COUNTRY %
------------------------------------------------
United Kingdom 24.5
Netherlands 20.0
Sweden 16.6
United States 10.0
Switzerland 8.5
Canada 4.6
Germany 4.5
Portugal 4.2
Ireland 3.9
France 3.2
- - - - - --- - - - - - - - - - --- - - - - - -
TOTAL 100.0%
================================================
See notes to financial statements.
<PAGE>
Statements of Assets and Liabilities - Unaudited
June 30, 2000
--------------------------------------------------------------------------------
DISCRETIONARY SELECT EURO SELECT
EQUITY EQUITY EQUITY EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------------------------------------------------------------------------
ASSETS:
Investments, at cost $186,603,495 $921,468,715 $22,854,191 $28,829,341
============ ============ ============ ============
Investments, at value $197,243,869 $976,920,896 $24,863,078 $31,462,730
Receivable for
securities sold 611,629 7,449,036 - -
Dividends and interest
receivable 163,615 909,963 27,236 47,508
Tax reclaim receivable 32,608 117,976 - 39,244
Receivable from Adviser 26,066 45,548 12,390 14,720
Other assets 26,715 26,232 8,649 8,821
------------ ------------ ------------ ------------
Total Assets 198,104,502 985,469,651 24,911,353 31,573,023
------------ ------------ ------------ ------------
LIABILITIES:
Payable for securities
purchased 2,364,279 13,930,361 104,504 -
Dividends payable 560,097 1,954,874 57,126 206,016
Accrued investment
advisory fee 134,113 665,703 16,674 27,142
Accrued expenses and
other liabilities 36,790 69,582 20,926 19,756
------------ ------------ ------------ ------------
Total Liabilities 3,095,279 16,620,520 199,230 252,914
------------ ------------ ------------ ------------
NET ASSETS $195,009,223 $968,849,131 $24,712,123 $31,320,109
============ ============ ============ ============
NET ASSETS CONSIST OF:
Capital stock $60,293 $234,002 $8,693 $12,280
Paid-in-capital in
excess of par 163,353,573 839,807,419 21,116,695 26,454,162
Undistributed net
investment income 42,735 227,939 - 2,384
Accumulated net realized
gain on investments
and foreign currency
transactions 20,912,248 73,127,590 1,577,848 2,217,894
Net unrealized
appreciation on
investments 10,640,374 55,452,181 2,008,887 2,633,389
------------ ------------ ------------ ------------
NET ASSETS $195,009,223 $968,849,131 $24,712,123 $31,320,109
============ ============ ============ ============
CAPITAL STOCK,
$0.01 PAR VALUE
Authorized 100,000,000 100,000,000 100,000,000 100,000,000
Issued and outstanding 6,029,292 23,400,176 869,333 1,228,017
NET ASSET VALUE,
REDEMPTION PRICE
AND OFFERING PRICE
PER SHARE $32.34 $41.40 $28.43 $25.50
====== ====== ====== ======
See notes to financial statements.
<PAGE>
Statements of Operations - Unaudited
For the Six Months Ended June 30, 2000
--------------------------------------------------------------------------------
DISCRETIONARY SELECT EURO SELECT
EQUITY EQUITY EQUITY EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends<F1> $1,480,805 $7,938,660 $188,685 $414,643
Interest 448,368 635,526 18,316 33,858
------------ ------------ ------------ ------------
Total investment income 1,929,173 8,574,186 207,001 448,501
------------ ------------ ------------ ------------
EXPENSES:
Investment advisory fees 838,222 3,847,207 97,272 161,602
Fund administration and
accounting fees 92,170 173,257 27,350 29,275
Shareholder servicing 13,564 34,546 8,574 8,918
Custody fees 12,449 35,167 2,662 5,157
Federal and state
registration fees 10,653 25,533 8,300 8,822
Directors' fees and expenses 7,508 7,508 7,508 7,508
Audit fees 7,060 7,060 7,109 7,109
Reports to shareholders 6,767 6,767 6,767 6,767
Legal fees 6,667 6,667 6,667 6,667
Other 2,681 4,102 1,774 2,017
------------ ------------ ------------ ------------
Total expenses before
waivers and
reimbursements 997,741 4,147,814 173,983 243,842
Waivers and reimbursements
of expenses by Adviser (159,519) (300,607) (76,710) (82,240)
------------ ------------ ------------ ------------
Net expenses 838,222 3,847,207 97,273 161,602
------------ ------------ ------------ ------------
NET INVESTMENT INCOME 1,090,951 4,726,979 109,728 286,899
------------ ------------ ------------ ------------
REALIZED AND UNREALIZED
GAIN (LOSS) ON
INVESTMENTS:
Net realized gain
on investments 22,224,241 68,007,967 2,002,023 2,437,992
Change in net unrealized
appreciation on
investments (30,720,569) (112,238,796) (1,596,980) (3,403,812)
------------ ------------ ------------ ------------
Net gain (loss)
on investments (8,496,328) (44,230,829) 405,043 (965,820)
------------ ------------ ------------ ------------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS $(7,405,377) $(39,503,850) $514,771 $(678,921)
============ ============ ============ ============
<F1> Net of $23,409, $110,925, $3,785 and $56,284 in foreign withholding taxes,
respectively.
See notes to financial statements.
<PAGE>
Discretionary Equity Portfolio
Statements of Changes in Net Assets
--------------------------------------------------------------------------------
SIX MONTHS ENDED
JUNE 30, 2000 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1999
--------------------------------------------------------------------------------
OPERATIONS:
Net investment income $1,090,951 $2,864,962
Net realized gain on investments 22,224,241 17,473,884
Change in net unrealized appreciation
on investments (30,720,569) 9,250,935
--------------- ---------------
Net increase (decrease) in net
assets resulting from operations (7,405,377) 29,589,781
--------------- ---------------
DISTRIBUTIONS PAID FROM:
Net investment income (1,078,142) (2,873,033)
Net realized gain on investments - (15,834,976)
--------------- ---------------
Net decrease in net assets resulting
from distributions paid (1,078,142) (18,708,009)
--------------- ---------------
CAPITAL SHARE TRANSACTIONS:
Shares sold 13,785,184 17,226,422
Reinvested distributions 498,190 18,520,739
Shares redeemed (32,901,660) (29,886,775)
--------------- ---------------
Net increase (decrease) in net
assets resulting from capital
share transactions (18,618,286) 5,860,386
--------------- ---------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (27,101,805) 16,742,158
NET ASSETS:
Beginning of period 222,111,028 205,368,870
--------------- ---------------
End of period $195,009,223 $222,111,028
=============== ===============
TRANSACTIONS IN SHARES:
Shares sold 409,903 499,065
Reinvested distributions 14,610 550,877
Shares redeemed (987,266) (874,276)
--------------- ---------------
Net increase (decrease) (562,753) 175,666
=============== ===============
See notes to financial statements.
<PAGE>
Equity Portfolio
Statements of Changes in Net Assets
--------------------------------------------------------------------------------
SIX MONTHS ENDED
JUNE 30, 2000 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1999
--------------------------------------------------------------------------------
OPERATIONS:
Net investment income $4,726,979 $10,673,361
Net realized gain on investments 68,007,967 46,250,153
Change in net unrealized appreciation
on investments (112,238,796) 70,593,800
--------------- ---------------
Net increase (decrease) in net
assets resulting
from operations (39,503,850) 127,517,314
--------------- ---------------
DISTRIBUTIONS PAID FROM:
Net investment income (4,617,055) (10,669,849)
Net realized gain on investments - (26,832,819)
--------------- ---------------
Net decrease in net assets resulting
from distributions paid (4,617,055) (37,502,668)
--------------- ---------------
CAPITAL SHARE TRANSACTIONS:
Shares sold 231,362,698 285,844,608
Reinvested distributions 2,371,426 36,065,337
Shares redeemed (180,291,202) (169,664,251)
--------------- ---------------
Net increase in net assets
resulting from capital
share transactions 53,442,922 152,245,694
--------------- ---------------
TOTAL INCREASE IN NET ASSETS 9,322,017 242,260,340
NET ASSETS:
Beginning of period 959,527,114 717,266,774
--------------- ---------------
End of period $ 968,849,131 $ 959,527,114
=============== ===============
TRANSACTIONS IN SHARES:
Shares sold 5,363,907 6,850,240
Reinvested distributions 54,320 843,301
Shares redeemed (4,261,408) (4,018,060)
--------------- ---------------
Net increase 1,156,819 3,675,481
=============== ===============
See notes to financial statements.
<PAGE>
Select Equity Portfolio
Statements of Changes in Net Assets
--------------------------------------------------------------------------------
SIX MONTHS ENDED
JUNE 30, 2000 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1999
--------------------------------------------------------------------------------
OPERATIONS:
Net investment income $109,728 $343,153
Net realized gain on investments 2,002,023 477,674
Change in net unrealized appreciation
on investments (1,596,980) 2,406,217
--------------- ---------------
Net increase in net assets resulting
from operations 514,771 3,227,044
--------------- ---------------
DISTRIBUTIONS PAID FROM:
Net investment income (110,215) (347,672)
Net realized gain on investments - (516,699)
--------------- ---------------
Net decrease in net assets resulting
from distributions paid (110,215) (864,371)
--------------- ---------------
CAPITAL SHARE TRANSACTIONS:
Shares sold 5,164,945 21,649,178
Reinvested distributions 55,914 828,297
Shares redeemed (4,734,603) (10,599,686)
--------------- ---------------
Net increase in net assets resulting
from capital share transactions 486,256 11,877,789
--------------- ---------------
TOTAL INCREASE IN NET ASSETS 890,812 14,240,462
NET ASSETS:
Beginning of period 23,821,311 9,580,849
--------------- ---------------
End of period $24,712,123 $23,821,311
=============== ===============
TRANSACTIONS IN SHARES:
Shares sold 183,784 809,090
Reinvested distributions 1,905 30,285
Shares redeemed (170,009) (406,555)
--------------- ---------------
Net increase 15,680 432,820
=============== ===============
See notes to financial statements.
<PAGE>
Euro Select Equity Portfolio
Statements of Changes in Net Assets
--------------------------------------------------------------------------------
SIX MONTHS ENDED
JUNE 30, 2000 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1999
--------------------------------------------------------------------------------
OPERATIONS:
Net investment income $286,899 $449,123
Net realized gain on investments 2,437,992 4,077,211
Change in net unrealized appreciation
on investments (3,403,812) 1,337,212
--------------- ---------------
Net increase (decrease) in net assets
resulting from operations (678,921) 5,863,546
--------------- ---------------
DISTRIBUTIONS PAID FROM:
Net investment income (289,880) (443,758)
Net realized gain on investments (1,873,315) (1,322,801)
--------------- ---------------
Net decrease in net assets resulting
from distributions paid (2,163,195) (1,766,559)
--------------- ---------------
CAPITAL SHARE TRANSACTIONS:
Shares sold 10,684,342 9,958,444
Reinvested distributions 1,943,855 1,764,616
Shares redeemed (10,333,079) (11,986,763)
--------------- ---------------
Net increase (decrease) in net
assets resulting from capital
share transactions 2,295,118 (263,703)
--------------- ---------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (546,998) 3,833,284
NET ASSETS:
Beginning of period 31,867,107 28,033,823
--------------- ---------------
End of period $31,320,109 $31,867,107
=============== ===============
TRANSACTIONS IN SHARES:
Shares sold 402,715 399,604
Reinvested distributions 75,677 66,002
Shares redeemed (391,993) (476,595)
--------------- ---------------
Net increase (decrease) 86,399 (10,989)
=============== ===============
See notes to financial statements.
<PAGE>
Discretionary Equity Portfolio
Financial Highlights
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED
(For a share outstanding JUNE 30, 2000 YEAR ENDED DECEMBER 31,
throughout the period) (UNAUDITED) 1999 1998 1997 1996 1995<F1>
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $33.69 $32.01 $30.34 $29.55 $25.42 $20.00
Income from investment operations:
Net investment income 0.18 0.46 0.52 0.48 0.36 0.31
Net realized and unrealized gain (loss)
on investments (1.35) 4.26 2.57 7.80 6.09 6.70
---------- ---------- ---------- ---------- ---------- ----------
Total income (loss) from investment
operations (1.17) 4.72 3.09 8.28 6.45 7.01
---------- ---------- ---------- ---------- ---------- ----------
Less distributions:
From net investment income (0.18) (0.46) (0.52) (0.48) (0.36) (0.31)
In excess of book net investment income - - - (0.01) - -
From net realized gain on investments - (2.58) (0.90) (7.00) (1.80) (1.27)
In excess of book net realized gain on
investments - - - - (0.16) (0.01)
---------- ---------- ---------- ---------- ---------- ----------
Total distributions (0.18) (3.04) (1.42) (7.49) (2.32) (1.59)
---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $32.34 $33.69 $32.01 $30.34 $29.55 $25.42
========== ========== ========== ========== ========== ==========
TOTAL RETURN<F2> (3.50)% 14.85% 10.17% 28.60% 25.55% 35.21%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (in thousands) $195,009 $222,111 $205,369 $157,137 $110,280 $37,362
Ratio of expenses to average net assets:<F3>
Before expense reimbursement 0.95% 0.95% 0.98% 1.02% 1.11% 1.56%
After expense reimbursement 0.80% 0.80% 0.80% 0.80% 0.80% 0.80%
Ratio of net investment income
to average net assets:<F3>
Before expense reimbursement 0.89% 1.16% 1.47% 1.15% 1.04% 0.95%
After expense reimbursement 1.04% 1.31% 1.65% 1.37% 1.35% 1.71%
Portfolio turnover rate<F2> 81% 137% 129% 131% 138% 102%
</TABLE>
<F1> Commencement of operations after the close of business on December 31,
1994.
<F2> Not annualized for the six months ended June 30, 2000.
<F3> Annualized.
See notes to financial statements.
<PAGE>
Equity Portfolio
Financial Highlights
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED
(For a share outstanding JUNE 30, 2000 YEAR ENDED DECEMBER 31,
throughout the period) (UNAUDITED) 1999 1998 1997 1996 1995<F1>
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $43.14 $38.63 $35.12 $31.16 $26.03 $20.00
Income from investment operations:
Net investment income 0.20 0.51 0.50 0.37 0.31 0.28
Net realized and unrealized gain (loss)
on investments (1.74) 5.75 3.51 8.57 6.49 7.45
---------- ---------- ---------- ---------- ---------- ----------
Total income (loss) from investment
operations (1.54) 6.26 4.01 8.94 6.80 7.73
---------- ---------- ---------- ---------- ---------- ----------
Less distributions:
From net investment income (0.20) (0.51) (0.50) (0.37) (0.30) (0.28)
In excess of book net investment income - - - (0.01) - -
From net realized gain on investments - (1.24) - (4.59) (1.30) (1.41)
In excess of book net realized gain on
investments - - - (0.01) (0.07) (0.01)
---------- ---------- ---------- ---------- ---------- ----------
Total distributions (0.20) (1.75) (0.50) (4.98) (1.67) (1.70)
---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $41.40 $43.14 $38.63 $35.12 $31.16 $26.03
========== ========== ========== ========== ========== ==========
TOTAL RETURN<F2> (3.58)% 16.28% 11.42% 29.08% 26.26% 38.85%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (in thousands) $968,849 $959,527 $717,267 $371,402 $149,125 $46,788
Ratio of expenses to average net assets:<F3>
Before expense reimbursement 0.86% 0.87% 0.91% 0.97% 1.12% 1.44%
After expense reimbursement 0.80% 0.80% 0.80% 0.80% 0.80% 0.80%
Ratio of net investment income
to average net assets:<F3>
Before expense reimbursement 0.92% 1.15% 1.28% 0.89% 0.83% 0.85%
After expense reimbursement 0.98% 1.22% 1.39% 1.06% 1.15% 1.49%
Portfolio turnover rate<F2> 68% 118% 133% 121% 125% 105%
</TABLE>
<F1> Commencement of operations after the close of business on December 31,
1994.
<F2> Not annualized for the six months ended June 30, 2000.
<F3> Annualized.
See notes to financial statements.
<PAGE>
Select Equity Portfolio
Financial Highlights
--------------------------------------------------------------------------------
SIX MONTHS ENDED
(For a share outstanding JUNE 30, 2000 YEAR ENDED DECEMBER 31,
throughout the period) (UNAUDITED) 1999 1998<F1>
--------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $27.91 $22.77 $20.00
Income from investment operations:
Net investment income 0.13 0.38 0.28
Net realized and unrealized gain
on investments 0.52 5.78 2.78
---------- ---------- ----------
Total income from investment
operations 0.65 6.16 3.06
---------- ---------- ----------
Less distributions:
From net investment income (0.13) (0.39) (0.29)
From net realized gain
on investments - (0.63) -
---------- ---------- ----------
Total distributions (0.13) (1.02) (0.29)
---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $28.43 $27.91 $22.77
========== ========== ==========
TOTAL RETURN<F2> 2.32% 27.17% 15.33%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period
(in thousands) $24,712 $23,821 $9,581
Ratio of expenses to average
net assets:<F3>
Before expense reimbursement 1.43% 1.53% 3.34%
After expense reimbursement 0.80% 0.80% 0.80%
Ratio of net investment income
to average net assets:<F3>
Before expense reimbursement 0.27% 0.90% (0.72)%
After expense reimbursement 0.90% 1.63% 1.82%
Portfolio turnover rate<F2> 228% 375% 250%
<F1> Commencement of operations after the close of business on December 31,
1997.
<F2> Not annualized for the six months ended June 30, 2000.
<F3> Annualized.
See notes to financial statements.
<PAGE>
Euro Select Equity Portfolio
Financial Highlights
--------------------------------------------------------------------------------
SIX MONTHS ENDED
(For a share outstanding JUNE 30, 2000 YEAR ENDED DECEMBER 31,
throughout the period) (UNAUDITED) 1999 1998<F1>
--------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $27.91 $24.32 $20.00
Income from investment operations:
Net investment income 0.24 0.45 0.35
Net realized and unrealized
gain (loss) investments (0.82) 4.80 5.07
---------- ---------- ----------
Total income (loss) from
investment operations (0.58) 5.25 5.42
---------- ---------- ----------
Less distributions:
From net investment income (0.24) (0.44) (0.37)
From net realized gain
on investments (1.59) (1.22) (0.73)
---------- ---------- ----------
Total distributions (1.83) (1.66) (1.10)
---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $25.50 $27.91 $24.32
========== ========== ==========
TOTAL RETURN<F2> (2.06)% 22.03% 27.40%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period
(in thousands) $31,320 $31,867 $28,034
Ratio of expenses to average
net assets:<F3>
Before expense reimbursement 1.51% 1.61% 1.67%
After expense reimbursement 1.00% 1.00% 1.00%
Ratio of net investment income
to average net assets:<F3>
Before expense reimbursement 1.27% 1.10% 1.02%
After expense reimbursement 1.78% 1.71% 1.69%
Portfolio turnover rate<F2> 225% 245% 272%
<F1> Commencement of operations after the close of business on December 31,
1997.
<F2> Not annualized for the six months ended June 30, 2000.
<F3> Annualized.
See notes to financial statements.
<PAGE>
Notes to Financial Statements - Unaudited
June 30, 2000
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.
<PAGE>
d) Distributions to Shareholders - Distributions to shareholders are recorded on
the ex-dividend date. Dividends from net investment income are declared and paid
quarterly. Distributions of net realized capital gains, if any, will be declared
at least annually. 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, 2000, are summarized below:
--------------------------------------------------------------------------------
DISCRETIONARY SELECT EURO SELECT
EQUITY EQUITY EQUITY EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------------------------------------------------------------------------
Purchases $157,656,767 $710,435,028 $54,158,821 $69,402,479
Sales $177,456,695 $638,079,548 $53,384,275 $68,839,380
There were no purchases or sales of U.S. government obligations.
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FEDERAL INCOME TAX INFORMATION
At June 30, 2000, gross unrealized appreciation and depreciation of investments,
based on cost for federal income tax purposes of $188,671,366, $925,710,969,
$23,243,357 and $28,958,105 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 $23,347,674 $124,356,902 $3,026,804 $3,619,658
Unrealized depreciation (14,775,171) (73,146,975) (1,407,083) (1,115,033)
------------ ------------ ------------ ------------
Net unrealized
appreciation on
investments $8,572,503 $51,209,927 $1,619,721 $2,504,625
============ ============ ============ ============
INVESTMENT ADVISORY AGREEMENT
The Discretionary Equity, Equity and Select Equity Portfolios 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, as renewed April 30, 2000, 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 average 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 expenses 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.
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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.
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(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 2000 INSTITUTIONAL CAPITAL CORPORATION
54-0800-4M
IC-410-0800
