UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-07963
The New York State Opportunity Funds
(Exact name of registrant as specified in charter)
5710 Commons Park
E. Syracuse, New York 13057
(Address of principal executive offices)
(Zip code)
Gregg A. Kidd
Pinnacle Advisors LLC
5710 Commons Park
E. Syracuse, New York 13057
(Name and address of agent for service)
Registrant's telephone number, including area code: (315) 251-1101
Date of fiscal year end: March 31
Date of reporting period: August 31, 2004
Form N-CSRS is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSRS in its regulatory, disclosure review, inspection and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSRS, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSRS unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. Reports to Stockholders.
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| New York State Opportunity Funds |
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| New York Equity Fund |
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| Semi-Annual Report |
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| September 30, 2004 |
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| Investment Adviser |
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| Pinnacle Advisors LLC |
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| 5710 Commons Park Dr. East |
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| Syracuse, NY 13057 |
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The following chart gives a visual breakdown of the Fund by the industry sectors | |||
the underlying securities represent as a percentage of the portfolio of investments. |
![[nyesemiannual1104002.jpg]](https://capedge.com/proxy/N-CSRS/0001162044-04-000413/nyesemiannual1104002.jpg)
NEW YORK EQUITY FUND | |||
STATEMENT OF ASSETS AND LIABILITIES | |||
September 30, 2004 (Unaudited) | |||
ASSETS |
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Investment securities, at value (Cost $4,668,902) | $ 5,427,928 | ||
| Cash |
| 10,113 |
Receivable for Securities Sold | 91,298 | ||
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| TOTAL ASSETS | 5,529,339 |
LIABILITIES |
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Payable for securities purchased | 312,238 | ||
| Payable to affiliates (Note 3) | 5,840 | |
Other accrued expenses | 7,368 | ||
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| TOTAL LIABILITIES | 325,446 |
NET ASSETS | $ 5,203,893 | ||
NET ASSETS CONSIST OF: |
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Paid-in capital | $ 10,742,152 | ||
| Accumulated Undistributed Net Investment Loss | (43,493) | |
Accumulated net realized losses from security transactions | (6,253,792) | ||
| Net unrealized appreciation on investments | 759,026 | |
NET ASSETS | $ 5,203,893 | ||
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Shares of beneficial interest outstanding (unlimited number | |||
| of shares authorized, no par value) | 660,735 | |
Net asset value and redemption price per share | $ 7.88 | ||
Maximum offering price per share ($7.88/95.25%) (Note 1) | $ 8.27 | ||
NEW YORK EQUITY FUND | |||||
STATEMENTS OF CHANGES IN NET ASSETS | |||||
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| Six Months Ended September 30, 2004 (Unaudited) | Year Ended March 31, 2004 |
FROM OPERATIONS |
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Net investment loss | $ (43,493) | $ (76,853) | |||
| Net realized gain (loss) from security transactions | (117,434) | 395,149 | ||
Net change in unrealized appreciation | |||||
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| (depreciation) on investments | (549,788) | 1,914,686 | |
Net increase (decrease) in net assets from operations | (710,715) | 2,232,982 | |||
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FROM CAPITAL SHARE TRANSACTIONS | |||||
| Proceeds from shares sold | 265,081 | 290,309 | ||
Payments for shares redeemed | (489,771) | (424,345) | |||
Net decrease in net assets from capital share transactions | (224,690) | (134,036) | |||
TOTAL INCREASE (DECREASE) IN NET ASSETS | (935,405) | 2,098,946 | |||
NET ASSETS |
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Beginning of year | 6,139,298 | 4,040,352 | |||
| End of year |
| $5,203,893 | $6,139,298 | |
CAPITAL SHARE ACTIVITY |
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Shares sold | 36,416 | 36,436 | |||
| Shares redeemed |
| (61,792) | (54,876) | |
Net increase (decrease) in shares outstanding | (25,376) | (18,440) | |||
| Shares outstanding, beginning of year | 686,111 | 704,551 | ||
Shares outstanding, end of year | 660,735 | 686,111 | |||
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NEW YORK EQUITY FUND | ||||||
FINANCIAL HIGHLIGHTS | ||||||
Selected per Share Data and Ratios for a Share Outstanding Throughout Each Year | ||||||
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| Six Months Ended September 30, 2004 (Unaudited) | Year Ended March 31, 2004 | Year Ended March 31, 2003 | Year Ended March 31, 2002 | Year Ended March 31, 2001 |
Net asset value at beginning of year | $ 8.95 | $5.73 | $8.63 | $11.35 | $19.27 | |
Income (loss) from investment operations: |
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Net investment loss | (0.08) | (0.08) | (0.08) | (0.16) | (0.15) | |
| Net realized and unrealized gain (loss) on investments | (0.99) | 3.30 | (2.82) | (2.56) | (6.49) |
Total from investment operations | (1.07) | 3.22 | (2.90) | (2.72) | (6.64) | |
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Distributions from net realized gains | 0.00 | 0.00 | 0.00 | 0.00 | (1.28) | |
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Net asset value at end of year | $ 7.88 | $8.95 | $5.73 | $8.63 | $11.35 | |
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Total return (a) | -11.97% | 56.19% | -33.60% | -23.96% | -36.38% | |
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Net assets at end of year | $ 5,203,893 | $ 6,139,298 | $ 4,040,352 | $ 6,578,148 | $ 8,547,585 | |
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Ratios/Supplemental Data | ||||||
Ratio of net expenses to average net assets (b) | 1.98% | 1.98% | 1.98% | 2.06% | 2.08% | |
Ratio of net investment income to average net assets (b) | -1.92% | -1.02% | -1.40% | -1.55% | -0.91% | |
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Portfolio turnover rate | 77% | 123% | 73% | 106% | 224% | |
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(a) | Total returns shown exclude the effect of applicable sales loads. | |||||
(b) | Ratios of expenses to average net assets, assuming no waiver of fees and/or reimbursement of expenses by the advisor, would have been 2.76%, 3.04%, 4.82%, 3.26% and 2.49% for the six months ended September 30, 2004 and years ended March 31, 2004, 2003, 2002 and 2001, respectively (Note 3). | |||||
(c) | Ratio of net investment income to average net assets, assuming no waiver of fees and/or reimbursement of expenses by the advisor, would have been -2.28%. | |||||
NEW YORK EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
September 30, 2004 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
The New York Equity Fund (the “Fund”) is a non-diversified series of The New York State Opportunity Funds (the “Trust”). The Trust, registered as an open-end management investment company under the Investment Company Act of 1940, as amended (the “1940 Act”), was organized as a Massachusetts business trust on November 20, 1996. The Fund was capitalized on February 18, 1997, when affiliates of Pinnacle Advisors LLC (the “Advisor”) purchased the initial shares of the Fund at $10 per share. The Fund began the public offering of shares on May 12, 1997.
The Fund seeks to provide long-term capital growth by investing primarily in the common stocks of publicly-traded companies headquartered in the state of New York and those companies having a significant presence in the state.
The following is a summary of the Fund's significant accounting policies:
Securities Valuation -- The Fund's portfolio securities are valued as of the close of business of the regular session of trading on the New York Stock Exchange (normally 4:00 p.m., Eastern time). Securities which are traded on stock exchanges or are quoted by NASDAQ are valued at the last reported sale price as of the close of the regular session of trading on the New York Stock Exchange on the day the securities are being valued, or, if not traded on a particular day, at the closing bid price. Securities for which market quotations are not readily available are valued at their fair value as determined in good faith in accordance with consistently applied procedures established by and under the general supervision of the Board of Trustees.
Share Valuation -- The net asset value per share of the Fund is calculated daily by dividing the total value of the Fund’s assets, less liabilities, by the number of shares outstanding, rounded to the nearest cent. The maximum offering price per share of the Fund is equal to the net asset value per share plus a sales load equal to 4.98% of the net asset value (or 4.75% of the offering price). The redemption price per share is equal to the net asset value per share.
Investment Income -- Dividend income is recorded on the ex-dividend date. Interest income is accrued as earned.
Security Transactions -- Security transactions are accounted for on trade date. Realized gains and losses on security transactions are determined on a specific identification basis.
Distributions to Shareholders -- Distributions to shareholders arising from net investment income and net realized capital gains, if any, are distributed at least once each year and are recorded on the ex-dividend date. The amount of distributions from
NEW YORK EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
September 30, 2004 (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES (Continued)
net investment income and net realized gains are determined in accordance with federal income tax regulations, which may differ from accounting principles generally accepted in the United States of America. These “book/tax” differences are temporary in nature and are primarily due to losses deferred due to wash sales. For the six months ended September 30, 2004, no distributions were required.
Estimates -- The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
Federal Income Taxes -- It is the Fund's policy to comply with the special provisions of the Internal Revenue Code applicable to regulated investment companies. As provided therein, in any fiscal year in which the Fund so qualifies and distributes at least 90% of its taxable net income, the Fund (but not the shareholders) will be relieved of federal income tax on the income distributed. Accordingly, no provision for income taxes has been made.
In order to avoid imposition of the excise tax applicable to regulated investment companies, it is the Fund's intention to declare as dividends in each calendar year at least 98% of its net investment income (earned during the calendar year) and 98% of its net realized capital gains (earned during the twelve months ended October 31) plus undistributed amounts from prior years.
2. INVESTMENT TRANSACTIONS
Cost of purchases and proceeds from sales and maturities of investment securities, other than short-term investments, amounted to $2,201,253 and $2,430,971 respectively, for the six months ended September 30, 2004.
3. TRANSACTIONS WITH AFFILIATES
ADVISORY AGREEMENT
Under the terms of an Advisory Agreement, the Fund pays the Advisor a fee, which is computed and accrued daily and paid monthly, at an annual rate of 1.00% of its average daily net assets up to $100 million; 0.95% of such assets from $100 million to $200 million; and 0.85% of such assets in excess of $200 million. The Advisor voluntarily waived $22,663 of its investment advisory fee of $29,097.
NEW YORK EQUITY FUND
NOTES TO FINANCIAL STATEMENTS (Continued)
September 30, 2004 (Unaudited)
3. TRANSACTIONS WITH AFFILIATES (Continued)
The President of the Adviser is also President and a Trustee of the Trust.
TRANSFER AGENT AND SHAREHOLDER SERVICE AGREEMENT
Under the terms of a Transfer Agency and Shareholder Services Agreement between the Trust and Mutual Shareholder Services (MSS), MSS maintains the records of each shareholder’s account, answers shareholders’ inquiries concerning their accounts, processes purchases and redemptions of Fund shares, acts as dividend and distribution disbursing agent and performs other shareholder service functions. For the six months ended September 30, 2004, MSS was paid $4,900 for transfer agent services. In addition, the Fund pays out-of-pocket expenses including, but not limited to, postage and supplies. The President of Mutual Shareholder Services is also an officer of the Fund.
ACCOUNTING SERVICES AGREEMENT
Under the terms of an Accounting Services Agreement between the Trust and MSS, MSS calculates the daily net asset value per share and maintains the financial books and records of the Fund. For the six months ended September 30, 2004, MSS was paid $7,350 for accounting services.
UNDERWRITING AGREEMENT
The principal underwriter of the Fund’s shares is Pinnacle Investments, Inc. (the “Underwriter”), an affiliate of the Advisor. For the six months ended September 30, 2004, the Underwriter received no commissions and no broker commissions in connection of Fund shares.
PORTFOLIO TRANSACTIONS
During the six months ended September 30, 2004, all of the Fund's portfolio transactions were executed through the Underwriter. As a result, brokerage commissions of $23,941 were paid by the Fund to the Underwriter.
DISTRIBUTION PLAN
The Trust has adopted a Plan of Distribution (the Plan) pursuant to Rule 12b-1 under the 1940 Act. The Plan provides that the Fund may directly incur or reimburse the Advisor for certain costs related to the distribution of the Fund shares, not to exceed 0.25% of average daily net assets. For the six months ended September 30, 2004, the Fund incurred $7,274 in distribution-related expenses under the Plan.
RELATED PARTY TRANSACTIONS
For the six months ended September 30, 2004 the Trustees for the fund were paid $2,989.
4. CONTROL OWNERSHIP
The beneficial ownership, either directly or indirectly, of more than 25% of the voting securities of a fund creates a presumption of control of the fund, under Section 2(a)(9) of the Investment Company Act of 1940. As of September 30, 2004, National Financial Services, for the benefit of others, in aggregate, more than 68% of the Fund.
5. RESTRICTED SECURITIES
The investment in 220,000 shares of Nibex, Inc. common stock, the sale of which is restricted, has been valued by the board of directors at $.45 per share after considering certain pertinent factors, including the results of operations of Nibex, Inc. since the date of purchase of July 21, 2003 for $200,000 and the sales price of recent private placement in its common stock. No quoted market price exists for Nibex, Inc. shares. It is possible that the estimated value may differ significantly from the amount that might be ultimately realized in the near term and the difference could be material.
NEW YORK EQUITY FUND
BOARD OF TRUSTEES AND EXECUTIVE OFFICERS
Overall responsibility for management of the Fund rests with the Board of Trustees. The Trustees serve during the lifetime of the Trust and until its termination, or until death, resignation, retirement or removal. The Trustees, in turn, elect the officers of the Fund to actively supervise its day-to-day operations. The following are the Trustees and executive officers of the Fund:
Trustee | Address | Age | Position Held with the Trust | Length of Time Served |
*Gregg A. Kidd | 5710 Commons Park E. Syracuse, NY | 42 | President and Trustee | Since November 1996 |
Joseph Masella | One Unity Plaza at Franklin Square, Syracuse, NY | 54 | Trustee | Since February 1997 |
Mark E. Wadach | 110 Treeland Circle, Syracuse, NY | 52 | Trustee | Since February 1997 |
Vice President | Since | |||
Daniel F. Raite | 5710 Commons Park E. Syracuse, NY | 56 | Treasurer | Since April 2003 |
Michael M. Samoraj | 5710 Commons Park E. Syracuse, NY | 45 | Secretary | Since April 2003 |
*Mr. Kidd, as an affiliated person of the Advisor and the Underwriter, is an “interested person” of the Trust within the meaning of Section 2(a)(19) of the Investment Company Act of 1940.
Each Trustee oversees one portfolio of the Trust. The principal occupations of the Trustees and executive officers of the Fund during the past five years and public directorships held by the Trustees are set forth below:
Gregg A. Kidd is President of the Advisor and the Underwriter.
Joseph Masella is Executive Vice President and a Director of Unity Mutual Life Insurance Company.
Mark E. Wadach is a Sales Representative for Morabito Gas & Electric Company. Prior to October 2000, he was a Mortgage Consultant for Syracuse Securities (a real estate financing firm).
Additional information about the Board of Trustees and Executive Officers may be found in the Fund’s Statement of Additional Information (SAI). To obtain a free copy of the SAI, please call 1-888-899-8344.
Item 2. Code of Ethics. Not applicable.
Item 3. Audit Committee Financial Expert. Not applicable.
Item 4. Principal Accountant Fees and Services. Not applicable.
Item 5. Audit Committee of Listed Companies. Not applicable.
Item 6. Schedule of Investments.
Not applicable – schedule filed with Item 1.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Funds. Not applicable.
Item 8. Purchases of Equity Securities by Closed-End Funds. Not applicable.
Item 9. Submission of Matters to a Vote of Security Holders.
The registrant has not adopted procedures by which shareholders may recommend nominees to the registrant's board of trustees.
Item 10. Controls and Procedures.
(a)
Based on an evaluation of the registrant’s disclosure controls and procedures as of March 12, 2004, the disclosure controls and procedures are reasonably designed to ensure that the information required in filings on Forms N-CSRS is recorded, processed, summarized, and reported on a timely basis.
(b)
There were no significant changes in the registrant’s internal control over financial reporting that occurred during the registrant’s last fiscal half-year that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 11. Exhibits.
(a)(1)
EX-99.CODE ETH. Not applicable.
(a)(2)
EX-99.CERT. Filed herewith.
(a)(3)
Any written solicitation to purchase securities under Rule 23c-1 under the Act (17 CFR 270.23c-1) sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons. Not applicable.
(b)
EX-99.906CERT. Filed herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
The New York State Opportunity Funds
By /s/Gregg A. Kidd
*Gregg A. Kidd
Chief Executive Officer
Date December 3, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By /s/Gregg A. Kidd
*Gregg A. Kidd
Chief Executive Officer
Date December 3, 2004
By /s/Daniel F. Raite
*Daniel F. Raite
Chief Financial Officer
Date December 3, 2004
* Print the name and title of each signing officer under his or her signature.