- ------------------------------------------------------------------------------
Description of art work on cover of report
Catholic Values Investment Trust logo --
Light blue solid circle with letters CVIT printed over it in blue & violet.
- -------------------------------------------------------------------------------
Annual Report
December 31,1998
Catholic Values Investment Trust Equity Fund
<PAGE>
TABLE OF CONTENTS
LETTER TO SHAREHOLDERS....................... 1
MANAGEMENT DISCUSSION........................ 3
DIVIDEND DISTRIBUTIONS........................4
CATHOLIC VALUES INVESTMENT TRUST Equity Fund
Portfolio of Investments................... 5
Statement of Assets and Liabilities........ 7
Statement of Operations.................... 8
Statement of Changes in Net Assets......... 9
Financial Highlights...................... 10
Notes to Financial Statements..............11
CATHOLIC VALUES INVESTMENT TRUST EQUITY FUND
LETTER TO SHAREHOLDERS
================================================================================
January, 1999
Dear Shareholders:
We hope you are as pleased with the Catholic Values Investment Trust Equity
Fund (CVIT), which opened on May 1, 1997, as we are. The Fund invests for
long-term growth of capital and risk aversion. It pursues this objective by
investing in a broadly diversified portfolio of well-established U.S. and,
eventually, non-U.S. companies which meet strict financial quality and religious
standards. These companies must offer products or services and undertake
activities that are consistent with the core teachings of the Roman Catholic
Church.
At the moment, all investments are in U.S. securities. As the Fund grows in
size, additional international securities may be added resulting in a global
fund. As of December 31, 1998, the Fund's return since inception was 10.19% in
the Individual share class and 10.64% in the Institutional Service share class.
The independent Catholic Advisory Board reviews the Fund's investments so
as to be consistent with Catholic values. This is not a simple nor singular
responsibility since there are many Catholics with varying viewpoints and there
are many Catholic institutions with their own views as well. In addition, there
are changing circumstances and varying economic environments in which companies
must operate. Thus, this independent Board must exercise great wisdom and
caution in reviewing each company and equity to assure that the investment
conforms to the objectives.
The Catholic Advisory Board is comprised of six independent lay Catholics.
Information concerning Catholic issues is obtained by participation in numerous
Catholic organizations, the seeking of advice and counsel from various clergy
and Vatican sources, the use of a variety of secondary sources, and the open
discussion of issues and policies. The board members are:
Thomas P. Melady, Chairman, Former U.S. Ambassador to the Holy See,
Uganda and Burundi, President Emeritus of Sacred Heart University
Margaret M. Heckler, Former U.S. Representative from Massachusetts
10th district, former Secretary of Health and Human Services,
former Ambassador to Ireland
Bowie K. Kuhn, Former Commissioner of Baseball
Timothy J. May, Senior Partner, Patton Boggs, L.L.P.
Thomas S. Monaghan, President, CEO and Chairman of Domino's Pizza, Inc.
William A. Wilson, Former (and first) U.S. Ambassador to the Holy See
In addition, the Catholic Advisory Board is most fortunate that His
Eminence John Cardinal O'Connor is its Ecclesiastical Advisor.
Initially, Wright Investors' Service, the Fund's investment Adviser,
selects the equities from its approved list of quality blue chip companies. All
companies on this approved list are, in the opinion of Wright, soundly financed
with established records of earnings profitability and equity growth. All have
established investment acceptance and active, liquid markets. These selections
are then reviewed by the Catholic Advisory Board to assure that the equity
complies with Catholic teachings of doctrine. When a company is found not to be
in compliance with Church core teachings, the investment Adviser is asked not to
purchase that stock for the CVIT portfolio or remove it, if warranted.
The result is continuous dialogue, continuous information input, continuous
review, and thus continuous evaluation. Independent thinking and independent
information provides input and assures that the Fund adheres to Catholic
doctrine while balancing changes in the marketplace, changes in informational
input, and changes in value systems. Thus, your Fund combines Catholic values
with investment values.
The Fund has its own website: www.catholicinvestment.com. The site contains
information about your fund, including a recent list of portfolio holdings. You
may also, after following some security protection procedures, access your
account.
Sincerely,
/s/Walter R.Miller
Walter R. Miller, Ph.D.
Secretary to the
Catholic Advisory Board
<PAGE>
THE WRIGHT MANAGED EQUITY TRUST - EQUITY FUNDS
WRIGHT CATHOLIC VALUES INVESTMENT TRUST - INSTITUTIONAL SERVICE SHARES
Growth of $10,000 invested 5/31/97* through 12/31/98
Annual Total Return
Lst 1 Yr Since Incept*
CVIT -0.8% +10.3%
Lipper Growth Funds +22.9% +23.5%
NYSE +18.5% +22.9%
The cumulative total return of a U.S. $10,000 investment in the WRIGHT
CATHOLIC VALUES INVESTMENT TRUST on 5/31/97 would have grown to $11,672 by
December 31, 1998.
The following plotting points are used for comparison in the total
investment return mountain chart.
Date Wright Catholic Values Lipper Equity NYSE
Investment Trust Growth Funds Index
05/31/97 $10,000 $10,000 $10,000
12/31/97 $11,766 $11,362 $11,699
12/31/98 $11,672 $13,960 $13,864
- --------------------------------------------------------------------------------
THE WRIGHT MANAGED EQUITY TRUST - EQUITY FUNDS
WRIGHT CATHOLIC VALUES INVESTMENT TRUST - INDIVIDUAL SHARES Growth of $10,000
invested 5/31/97* through 12/31/98
Annual Total Return
Lst 1 Yr Since Incept*
CVIT -1.3% +9.9%
Lipper Growth Funds +22.9% +23.5%
NYSE +18.5% +22.9%
The cumulative total return of a U.S. $10,000 investment in the WRIGHT CATHOLIC
VALUES INVESTMENT TRUST on 5/31/97 would have grown to $11,616 by December 31,
1998.
The following plotting points are used for comparison in the total investment
return mountain chart.
Date Wright Catholic Values Lipper Equity NYSE
Investment Trust Growth Funds Index
05/31/97 $10,000 $10,000 $10,000
12/31/97 $11,770 $11,362 $11,699
12/31/98 $11,616 $13,960 $13,864
- --------------------------------------------------------------------------------
*: For comparison with other averages, the investment results are shown from
the first month-end since the Fund's inception. Actual performance since
May 1 inception was 10.19% in the Individual share class and 10.64% in the
Institutional Service share class.Lipper Growth Funds are an average of 1,139
growth funds.
<PAGE>
CATHOLIC VALUES INVESTMENT TRUST EQUITY FUND
MANAGEMENT DISCUSSION
================================================================================
For stock investors, the year 1998 was one of the strangest in market
history. On the surface, at the level of the major market averages, 1998 was a
good year: the S&P 500 Composite rewarded investors with a return of 29% during
1998. But for most stocks outside of a select handful of large-cap favorites and
speculative internet issues, 1998 was closer to a bear market than to a bull
market. Within the S&P 500, a majority of stocks performed relatively poorly
during 1998. Seventy-seven big stocks from the S&P 500 today's version of the
"nifty fifty" from the 1970s - contributed all of the S&P's gain in 1998. The
other 423 stocks were essentially unchanged in the aggregate. Outside of the
biggest 100 stocks on the S&P 500, the next 5,000 stocks declined over 10%
(median change) in price this past year. As 1998 ended, these stocks were still
off around 33% on average from their 1998 peaks.
Your CVIT Fund did not participate in the domination of a relatively few
large-cap and Internet stocks that was the story of the stock market during
1998. Wright's strict quality standards preclude investing in speculative issues
- - such as Internet stocks with no or poor earnings history. Additionally, many
of the big-cap stocks that dominated the S&P 500's performance last year have
risen to exorbitant P/E levels.
In the fourth quarter, underweighting in communications and retail stocks
hampered the CVIT, although the individual securities in these groups selected
for the fund did well. Overweighting in the chemical, metal products and utility
industries also hurt. A big positive for the CVIT fund in the fourth quarter was
its underweighting in energy stocks, which were weak in the quarter. A strong
performance by the recreation companies in the fund also helped results.
From 1991 to the middle of 1997, the U.S. stock market was a model of
stability, sensibility and low volatility. But over the past 18 months, stock
market fluctuations have been growing steadily. Since last August, as stock
prices have regained momentum, investor confidence has grown into what appears
to be full-blown euphoria in early 1999. The breadth of the rally hasn't exactly
been inspiring; in fact, the advance has become more and more concentrated in
technology and speculative Internet stocks. Investment fundamentals remain
positive today; still, one cannot help but wonder if they are so good as to
warrant the highest P/E multiples in history.
The U.S. economy continues to sail along at a good clip, with consumers
showing little concern over international economic difficulties. U.S.
manufacturing has been the one sector affected by the Asian recession, with a
loss of nearly 300,000 factory jobs over the past nine months. Service-producing
industries, on the other hand, have created 2 1/4 million new jobs over the same
period, maintaining the strong positive trend in personal income. Consumer
confidence remains high, although anything that erodes consumer confidence could
also cause spending to slow as personal savings are rebuilt. At this stage,
though, it appears more likely that the U.S. economy will lend support to the
struggling economies of the world in 1999, rather than being dragged down to
their levels. Some slowing in economic growth is almost certainly coming, but
Wright still forecasts real GDP growth of 2 1/2% to 3%, with inflation staying
low, in 1999.
In the past, periods of stock market dominance by a few issues have
invariably been followed by a period in which overpriced market favorites
correct to more reasonable values. Wright believes that the high-quality,
reasonably priced issues held in the CVIT are likely to fare considerably better
than the overpriced stock market leaders over the next couple of years. The CVIT
ended 1998 holding stocks with an average P/E multiple of 14 times expected
year-ahead earnings, just half the S&P 400's forward valuation. In spite of the
undervaluation of the portfolio, earnings growth is expected to be significant
over the next year as well as the next five years.
<PAGE>
Catholic Values Investment Trust Equity Fund
DIVIDEND DISTRIBUTIONS
================================================================================
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
N.A.V. Distri- Distri- 12 Month 5 Year 10 Year Cum.
Period Per bution bution Shares Invstmnt Invstmnt Invstmnt Invstmnt
Ending Share $ P/S in Shares Owned Value Return Return Return Return
(Annualized)(Annualized)(Annualized)
- ------------------------------------------------------------------------------------------------------------------------
CATHOLIC VALUES INVESTMENT TRUST EQUITY FUND
- Institutional Service Shares
5/1/97 $10.00 100.00 $1,000.00
Dec.97 11.89 0.040 0.003431 100.34 1,193.04 - - - 19.31%
Jan.98 11.95 100.34 1,199.06 - - - -
Feb.98 12.87 100.34 1,291.38 - - - -
Mar.98 13.23 0.006 0.000451 100.39 1,328.16 - - - -
Apr.98 13.20 100.39 1,325.15 - - - -
May 98 12.74 100.39 1,278.97 26.13% - - 25.55%
Jun.98 12.58 100.39 1,262.91 22.26% - - 22.21%
Jul.98 11.72 100.39 1,176.55 4.21% - - 13.91%
Aug.98 9.80 100.39 983.81 -12.86% - - -1.22%
Sep.98 10.06 100.39 1,009.91 -14.49% - - 0.70%
Oct.98 11.12 100.39 1,116.32 -0.95% - - 7.61%
Nov.98 11.47 100.39 1,151.45 -0.48% - - 9.32%
Dec.98 11.79 100.39 1,183.58 -0.80% - - 10.64%
CATHOLIC VALUES INVESTMENT TRUST EQUITY FUND
- Individual Shares
5/1/97 $10.00 100.00 $1,000.00
Dec.97 11.87 0.040 0.003439 100.34 1,191.04 - - - 19.11%
Jan.98 11.92 100.34 1,196.05 - - - -
Feb.98 12.83 100.34 1,287.36 - - - -
Mar.98 13.17 0.006 0.000452 100.39 1,322.14 - - - -
Apr.98 13.14 100.39 1,319.12 - - - -
May 98 12.69 100.39 1,273.95 25.88% - - 25.09%
Jun.98 12.52 100.39 1,256.88 21.91% - - 21.71%
Jul.98 11.67 100.39 1,171.54 4.04% - - 13.52%
Aug.98 9.75 100.39 978.80 -13.15% - - -1.59%
Sep.98 10.01 100.39 1,004.90 -14.84% - - 0.35%
Oct.98 11.05 100.39 1,109.30 -1.40% - - 7.16%
Nov.98 11.40 100.39 1,144.44 -0.83% - - 8.90%
Dec.98 11.71 100.39 1,175.56 -1.30% - - 10.19%
</TABLE>
<PAGE>
Catholic Values Investment Trust Equity Fund
PORTFOLIO OF INVESTMENTS
December 31, 1998
================================================================================
Shares Value
------- ------
Equity Interests -- 96.4%
APPAREL -- 1.5%
VF Corp.................... 4,300 $ 201,563
-----------
AUTOMOTIVE -- 6.7%
Dana Corp.................. 5,600 $ 228,900
Johnson Controls........... 3,500 206,500
Modine Mfg. Co............. 5,900 213,875
Superior Industries Int'l.. 8,400 233,625
-----------
$ 882,900
-----------
CHEMICALS -- 6.7%
Cooper Tire & Rubber....... 12,300 $ 251,381
Morton Int'l Inc.-W/I...... 8,100 198,450
PPG Industries, Inc........ 3,700 215,525
Rohm & Haas Company........ 7,200 216,900
-----------
$ 882,256
-----------
CONSTRUCTION -- 7.0%
Jacobs Eng. Group Inc*..... 7,900 $ 321,924
Southdown, Inc............. 4,832 285,993
Texas Industries Inc....... 5,300 142,769
Toll Brothers*............. 7,800 175,988
-----------
$ 926,674
-----------
DIVERSIFIED -- 3.1%
Crane Company.............. 7,500 $ 226,406
Lancaster Colony........... 5,550 178,294
-----------
$ 404,700
-----------
ELECTRONICS -- 12.4%
Adobe Systems Inc.......... 4,100 $ 191,675
Dallas Semiconductor Corp.. 5,400 220,050
Intel Corporation.......... 2,800 331,975
Int'l. Business Machines... 1,500 277,125
Raytheon Co................ 3,600 191,700
Sun Microsystems, Inc*..... 4,800 411,000
-----------
$ 1,623,525
-----------
FINANCIAL -- 15.6%
Ambac Fin'l. Group Inc..... 4,000 $ 240,750
A.G. Edwards, Inc.......... 6,500 242,125
BB&T Corporation........... 6,400 258,000
Compass Bancshares......... 5,500 209,344
Federal Nat'l. Mort. Assoc. 3,900 288,600
First Security CP.......... 9,400 219,725
KeyCorp (New).............. 6,400 204,800
MBIA Inc................... 3,100 203,244
Southtrust Corp............ 4,950 182,840
-----------
$ 2,049,428
-----------
FOOD -- 3.0%
Dean Foods Company......... 4,300 $ 175,494
Universal Foods Corp....... 8,000 219,500
-----------
$ 394,994
-----------
MACHINERY & EQUIPMENT -- 4.9%
Caterpillar................ 3,900 $ 179,400
Deere & Company............ 7,400 245,125
Ingersoll-Rand Co.......... 4,750 222,953
-----------
$ 647,478
-----------
METAL PRODUCERS -- 1.4%
Carpenter Technology....... 5,400 $ 183,264
-----------
<PAGE>
METAL PRODUCTS MFRS. -- 7.9%
Aeroquip-Vickers Inc....... 5,000 $ 149,688
Kaydon Corp................ 6,500 260,406
Mueller Industries*........ 8,700 176,719
Snap-on Inc................ 6,500 226,281
Trinity Industries......... 5,800 223,300
-----------
$ 1,036,394
-----------
OIL, GAS & COAL -- 1.4%
Ensco International Inc.... 8,600 $ 91,912
Nabors Inds., Inc.*........ 6,300 85,444
-----------
$ 177,356
-----------
PRINTING & PUBLISHING -- 2.7%
American Greetings Corp.... 4,500 $ 184,781
Banta Corp................. 6,200 169,725
-----------
$ 354,506
-----------
RECREATION -- 3.9%
Brunswick Corp............. 6,700 $ 165,825
Brinker International Inc*. 7,900 228,113
Ryans Family Steak Hse*.... 9,600 118,800
-----------
$ 512,738
-----------
RETAILERS -- 1.4%
Ross Stores Inc............ 4,600 181,125
-----------
TRANSPORTATION -- 5.4%
Comair Holdings Inc........ 7,200 $ 243,000
U.S. Freightways Corp...... 9,300 270,863
Werner Enterprises Inc..... 11,375 201,195
-----------
$ 715,058
-----------
UTILITIES -- 7.9%
Aliant Communication Inc... 7,200 $ 294,300
Nipsco Industries, Inc..... 7,100 216,106
SBC Communications, Inc.... 5,800 311,025
Teco Energy................ 7,600 214,225
-----------
$ 1,035,656
-----------
MISCELLANEOUS -- 3.5%
Kelly Services, Inc........ 5,800 $ 184,150
Sierra Health Svcs*........ 12,900 271,705
-----------
$ 455,855
-----------
TOTAL EQUITY INTERESTS - 96.4%
(identified cost, $11,889,875) $ 12,665,470
------------
Reserve Funds - 9.7%
Face Amount
-------------
American Express Corp.
4.702%, 1/4/99............$ 640,000 $ 640,000
General Electric Cap. Corp.
4.702%, 1/4/99............. 640,000 640,000
-----------
(at amortized cost).... $ 1,280,000
-----------
TOTAL INVESTMENTS - 106.1%
(identified cost, $13,169,875) $ 13,945,470
OTHER ASSETS,
LESS LIABILITIES -- (6.1%) (801,600)
-----------
NET ASSETS -- 100% $ 13,143,870
============
* Non-income-producing security.
See notes to financial statements
<PAGE>
Catholic Values Investment Trust Equity Fund
STATEMENT OF ASSETS AND LIABILITIES
================================================================================
December 31,
1998
- -------------------------------------------------------------------------------
ASSETS:
Investments -
Identified cost................................. $ 13,169,875
Unrealized appreciation......................... 775,595
------------
Total Value (Note 1A)........................... $ 13,945,470
Cash ............................................ 94,171
Dividends and interest receivable................. 9,341
Receivable for Fund shares sold................... 34,521
Receivable from Investment Adviser (Note 2)....... 16,500
Deferred organization expenses (Note 1B).......... 84,516
------------
Total Assets.................................... $ 14,184,519
------------
LIABILITIES:
Investment Adviser fee payable.................... $ 130
Payable for investments purchased................. 994,508
Accrued Advisory Board fees payable (Note 2)...... 1,866
Accrued expenses and other liabilities............ 9,378
Payable for Fund shares reacquired................ 34,767
------------
Total Liabilities............................... $ 1,040,649
------------
NET ASSETS........................................... $ 13,143,870
==============
NET ASSETS CONSIST OF:
Proceeds from sales of shares (including shares
issued to shareholders in payment of distributions
declared), less cost of shares reacquired........ $ 12,665,782
Accumulated undistributed net realized loss on
investments (computed on the basis of
identified cost.................................. (297,507)
Unrealized appreciation of investments (computed
on the basis of identified cost)................. 775,595
------------
Net assets applicable to outstanding shares..... $ 13,143,870
==============
Computation of net asset value, offering and
redemption price per share (Note 7):
Institutional Service shares:
Net assets...................................... $ 9,173,741
==============
Shares of beneficial interest outstanding....... 777,787
==============
Net asset value, offering price, and redemption
price per share of beneficial interest ....... $ 11.79
==============
Individual shares:
Net assets...................................... $ 3,970,129
==============
Shares of beneficial interest outstanding....... 339,103
==============
Net asset value, offering price, and redemption
price per share of beneficial interest......... $ 11.71
==============
See notes to financial statements
<PAGE>
Catholic Values Investment Trust Equity Fund
STATEMENT OF OPERATIONS
================================================================================
For the Year
Ended
December 31, 1998
- -------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividend Income................................ $ 152,320
Interest Income................................ 8,294
------------
Total investment income...................... $ 160,614
------------
Expenses
Investment Adviser fee (Note 2)................ $ 83,198
Advisory Board fee (Note 2).................... 12,262
Administrator fee (Note 2)..................... 7,766
Compensation of Trustees not affiliated with
the Investment Adviser or Administrator...... 13,910
Custodian fee - Institutional Service shares (Note 1C) 32,003
Custodian fee - Individual shares (Note 1C)... 17,145
Registration Costs - Institutional Service shares 12,867
Registration Costs - Individual shares ........ 15,033
Distribution expenses - Institutional Service
shares (Note 3)............................. 20,627
Distribution expenses - Individual shares (Note 3) 21,446
Transfer and dividend disbursing agent fees -
Institutional Service shares................ 2,350
Transfer and dividend disbursing agent fees -
Individual shares........................... 3,596
Amortization of organization expenses (Note 1B) 25,137
Auditing expense............................... 15,900
Legal services................................. 18,853
Printing expense............................... 13,859
Miscellaneous.................................. 2,999
------------
Total expenses............................... $ 318,951
------------
Deduct -
Reduction of Investment Adviser fee (Note 2)... $ 83,092
Reduction of Distribution fee - Individual shares (Note 3) 12,946
Allocation of expenses to Investment Adviser (Note 2)..... 44,300
Reduction of custodian fee - Institutional
Service shares (Note 1C).................... 5,840
Reduction of custodian fee - Individual shares (Note 1C) 2,031
------------
Total deductions............................. $ 148,209
------------
Net expenses................................. $ 170,742
------------
Net investment loss........................ $ (10,128)
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized loss on investments (identified
cost basis).................................... $ (297,507)
Change in unrealized appreciation of investments. 198,703
------------
Net realized and unrealized loss on investments.. $ (98,804)
------------
Net decrease in net assets from operations..... $ (108,932)
==============
See notes to financial statements
<PAGE>
Catholic Values Investment Trust Equity Fund
STATEMENTS OF CHANGES IN NET ASSETS
================================================================================
<TABLE>
<CAPTION>
<S> <C> <C>
Year May 1, 1997
Ended (start of business) to
Dec. 31, 1998 Dec. 31, 1997
- ---------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
From Operations --
Net investment loss.............................................. $ (10,128) $ (2,913)
Net realized gain (loss) on investments.......................... (297,507) 41,503
Change in unrealized appreciation of investments................. 198,703 576,892
------------ ------------
Increase (decrease) in net assets from operations.............. $ (108,932) $ 615,482
------------ ------------
Distributions to shareholders:
From net realized gain - Institutional Service class............. $ (2,644) $ (29,065)
From net realized gain - Individual class........................ (941) (4,400)
In excess of realized gain - Institutional Service class......... (1,743) -
------------ ------------
Total distributions to shareholders............................ $ (5,328) $ (33,465)
------------ ------------
Fund share transactions -- Institutional Service class:
Proceeds from shares sold...................................... $ 2,656,493 $ 8,133,814
Issued to shareholders in payment of distributions declared.... 3,611 23,903
Cost of shares reacquired...................................... (2,222,070) (9,357)
------------ ------------
Net increase in net assets from Fund share transactions
- Institutional Service class................................ $ 438,034 $ 8,148,360
------------ ------------
Individual class:
Proceeds from shares sold...................................... $ 3,115,248 $ 1,266,585
Issued to shareholders in payment of distributions declared.... 896 4,133
Cost of shares reacquired...................................... (378,693) (18,450)
------------ ------------
Net increase in net assets from Fund share transactions
- Individual class........................................... $ 2,737,451 $ 1,252,268
------------ ------------
Total net increase from Fund share transactions (Note 4)......... 3,175,485 9,400,628
------------ ------------
Net increase in net assets..................................... $ 3,061,225 $ 9,982,645
NET ASSETS:
At beginning of period............................................. 10,082,645 100,000
------------ ------------
At end of period................................................... $ 13,143,870 $ 10,082,645
============== ==============
See notes to fianacial statements
</TABLE>
<PAGE>
Catholic Values Investment Trust Equity Fund
================================================================================
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Year Ended From May 1, 1997 (start of business) to
December 31, 1998 December 31, 1997
- ----------------------------------------------------------------------------------------------------------------------
Institutional Individual Institutional Individual
FINANCIAL HIGHLIGHTS Service Shares Shares Service Shares Shares
- ----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period................. $ 11.890 $ 11.870 $ 10.000 $ 10.000
-------- -------- -------- --------
Income (Loss) from Investment Operations:
Net investment income (loss)*..................... $ 0.003 $ (0.036) $ (0.000)+ $ (0.024)
Net realized and unrealized gain (loss)
on investments................................. (0.097) (0.118) 1.930 1.934
-------- -------- -------- --------
Total income (loss) from investment operations.. $ (0.094) $ (0.154) $ 1.930 $ 1.910
--------- --------- -------- --------
Less distributions:
From net realized gain on investments........... $ (0.004) $ (0.006) $ (0.040) $ (0.040)
In excess of net realized gain on investments... (0.002) - - -
-------- -------- -------- --------
Total distributions............................. $ (0.006) $ (0.006) $ (0.040) $ (0.040)
-------- -------- -------- --------
Net asset value, end of period....................... $ 11.790 $ 11.710 $ 11.890 $ 11.870
========= ========= ========= =========
Total Return (1)..................................... (0.80%) (1.30%) 19.31% 19.11%
Ratios/Supplemental Data:
Net assets, end of period (000 omitted)........... $ 9,174 $ 3,970 $ 8,686 $ 1,397
Ratio of expenses to average net assets*(3)....... 1.49% 1.95% 1.73% (2) 2.24% (2)
Ratio of net investment income (loss) to
average net assets............................... 0.02% (0.42%) (0.01%)(2) (0.44%)(2)
Portfolio turnover rate........................... 50% 50% 14% 14%
<FN>
* During the periods presented, the Investment Adviser, the Administrator and
the Principal Underwriter waived all or a portion of their fees and the
Investment Adviser was allocated a portion of the operating expenses. Had such
actions not been undertaken, net investment loss per share and the ratios would
have been as follows:
Year Ended From May 1, 1987 (start of business) to
December 31, 1998 December 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------
Institutional Individual Institutional Individual
Service Shares Shares Service Shares Shares
Net investment loss per share........................ $ (0.170) $ (0.212) $ (0.047) $ (0.212)
========= ========= ========= =========
Annualized Ratios (As a percentage of average net assets):
Expenses.......................................... 2.64% 4.00% 4.50% (2) 5.69% (2)
Net investment loss............................... (1.13%) (2.47%) (2.78%)(2) (3.89%)(2)
(1) Total investment return is calculated assuming a purchase at the net asset
value on the first day and a sale at the net asset value on the last day of
each period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the reinvestment date.
(2) Annualized.
(3) During the years ended December 31, 1998 and 1997, custodian fees were
reduced by credits resulting from cash balances the Fund maintained with the
Custodian (Note 1C). The computation of net expenses to average daily net
assets reported above is computed without consideration of such credit. If
these credits were considered, the ratio of net expenses to average daily
net assets would have been reduced to 1.42% and 1.48% for the Institutional
Service shares and 1.88% and 1.99% for the Individual shares.
(+) Amount represents less than ($0.001) per share.
</FN>
See notes to financial statements
</TABLE>
<PAGE>
Catholic Values Investment Trust Equity Fund
NOTES TO FINANCIAL STATEMENTS
================================================================================
(1) SIGNIFICANT ACCOUNTING POLICIES
The Catholic Values Investment Trust Equity Fund (the Fund) (one of the
series of the Catholic Values Investment Trust) is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-ended
management investment company. The Fund seeks long-term growth of capital and
reasonable current income through investments in a broadly diversified portfolio
consisting primarily of equity securities of high-quality, well-established
companies which meet strict quality and religious standards. The companies in
which the Fund may invest must offer products or services and undertake
activities that are consistent with the core teachings of the Roman Catholic
Church. The following is a summary of significant accounting policies
consistently followed by the Fund in the preparation of its financial
statements. The policies are in conformity with generally accepted accounting
principles.
A. Investment Valuations - Securities listed on securities exchanges or in
the NASDAQ National Market are valued at closing sale prices if those prices are
deemed to be representative of market values at the close of business. Unlisted
or listed securities, for which closing sale prices are not available, are
valued at the mean between latest bid and asked prices. Fixed income securities
for which market quotations are readily available are valued on the basis of
valuations supplied by a pricing service. Fixed income and equity securities for
which market quotations are unavailable or deemed not to be representative of
market values at the close of business, restricted securities, and other assets
are valued at their fair value as determined in good faith by or at the
direction of the Trustees of the Trust. Short-term obligations maturing in 60
days or less are valued at amortized cost, which approximates market value.
B. Deferred Organization Expenses - Costs incurred by the Fund in
connection with its organization are being amortized on the straight-line basis
over five years beginning on the date the Fund commenced operations.
C. Expense Reduction - The Fund has entered into an arrangement with its
custodian whereby interest earned on uninvested cash balances is used to offset
custodian fees. All significant reductions are reported as a reduction of
expenses in the Statement of Operations.
D. Federal Taxes - The Fund's policy is to comply with the provisions of
the Internal Revenue Code (the Code) available to regulated investment companies
and distribute to shareholders each year all of its taxable income, including
any net realized gain on investments. Accordingly, no provision for federal
income or excise tax is necessary.
At December 31, 1998, the Fund, for federal income tax purposes, had a
capital loss carryover of $140,614, which will reduce taxable income arising
from future net realized gain on investments, if any, to the extent permitted by
the Code, and thus will reduce the amount of the distribution to shareholders
which would otherwise be necessary to relieve the Fund of any liability for
federal income or excise tax. Pursuant to the Code, such capital loss carryover
will expire on December 31, 2006.
<PAGE>
At December 31, 1998, net capital losses of $156,893 attributable to
security transactions incurred after October 31, 1998 are treated as arising on
the first day of the Fund's next taxable year.
E. Distributions - The Fund requires that differences in the recognition or
classification of income between the financial statements and tax earnings and
profits which result only in temporary over-distributions for financial
statement purposes, be classified as distributions in excess of net investment
income or accumulated net realized gains. Distributions in excess of tax basis
earnings and profits are reported in the financial statements as a return of
capital. Permanent differences between book and tax accounting for certain items
may result in reclassification of these items. During the year ended December
31, 1998, $10,331 was reclassified to proceeds from sales of shares and $203 was
reclassified to accumulated undistributed net realized loss and $10,128 was
reclassified from net investment loss due to differences between book and tax
accounting created primarily by the deferral of certain losses for tax purposes.
F. Multiple Classes of Shares of Beneficial Interest - The Fund offers an
Individual Share Class and an Institutional Service Share Class. The Fund may
also offer an Institutional Share Class, although such class is not currently
being offered. The share classes differ in their respective distribution and
service fees. All shareholders bear the common expenses of the Fund pro rata
based on the average daily net assets of each class, without distinction between
share classes. Dividends are declared separately for each class. Each class has
equal rights as to voting, redemption, dividends and liquidation.
G. Other - Investment transactions are accounted for on the date the
investments are purchased or sold. Dividend income and distributions to
shareholders are recorded on the ex-dividend date. However, if the ex-dividend
date has passed, certain dividends from foreign securities are recorded as the
Fund is informed of the ex-dividend date.
H. Use of 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 at the date of the financial statements and the reported amounts of
revenue and expense during the reporting period. Actual results could differ
from those estimates.
(2) INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The Fund has engaged Wright Investors' Services (Wright), a wholly owned
subsidiary of The Winthrop Corporation (Winthrop) to perform investment
management, investment advisory, and other services. For its services, Wright is
compensated based upon a percentage of average daily net assets which rate is
adjusted as average daily net assets exceed certain levels. For the year ended
December 31, 1998, the effective annual rate was 0.75%. To enhance the net
income of the Fund,
<PAGE>
Wright made a reduction of its investment adviser fee by $83,092. In
addition, $44,300 of expenses were allocated to the investment adviser. The Fund
has an independent Catholic Advisory Board which consults with the investment
adviser. The Fund also has engaged Eaton Vance Management (Eaton Vance) to act
as administrator of the Fund. Under the Administrator Agreement, Eaton Vance is
responsible for managing the business affairs of the Fund and is compensated
based upon a percentage of average daily net assets which rate is adjusted as
average daily net assets exceed certain levels. For the year ended December 31,
1998, the effective annual rate was 0.07%. Certain of the Trustees and officers
of the Fund are Trustees or officers of the above organizations. Except as to
Trustees of the Fund who are not affiliated with Eaton Vance or Wright, Trustees
and officers receive remuneration for their services to the Fund out of the fees
paid to Eaton Vance and Wright.
(3) DISTRIBUTION EXPENSES
The Trustees have adopted a Distribution Plan (the Plan) pursuant to Rule
12b-1 of the Investment Company Act of 1940. The Plan provides that the Fund
will pay Wright Investors' Service Distributors, Inc. (Principal Underwriter)
(WISDI), a wholly-owned subsidiary of Winthrop, an annual rate up to 0.75% per
annum of the Fund's average net assets attributable to the Individual shares and
up to 0.25% per annum of the Fund's average net assets attributable to the
Institutional Service shares. To enhance the net income of the Fund, the
Principal Underwriter made a reduction of its fee for the year ended December
31, 1998, of $12,946 for Individual shares.
In addition, the Trustees have adopted a service plan (the Service Plan)
which allows the Fund to reimburse WISDI for payments to intermediaries for
providing account administration and personal and account maintenance services
to their customers who are beneficial owners of any of the classes of shares.
The amount of service fee payable under the Service Plan with respect to each
class of shares of the Fund may not exceed 0.25% annually of the average daily
net assets attributable to the respective classes. For the year ended December
31, 1998, the Fund neither accrued nor paid any service fees.
(4) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number
of full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
For the Year Ended For the Period from the Start of Business,
December 31, 1998 May 1, 1997 to December 31, 1997
- ----------------------------------------------------------------------------------------------------------------------------
Institutional Service Individual Institutional Service Individual
Shares Shares Shares Shares
- ----------------------------------------------------------------------------------------------------------------------------
Shares Sold 228,111 254,404 719,002 118,987
Shares issued to shareholders
in payment of distribution
declared 271 68 2,050 355
Shares Reacquired (180,991) (33,091) (656) (1,620)
------- ------- ------- -------
Net increase 47,391 221,381 720,396 117,722
======== ======== ======== ========
</TABLE>
<PAGE>
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, other than U.S. Government securities
and short-term obligations for the year ended December 31, 1998, were $8,212,155
and $5,289,749, respectively.
(6) FEDERAL INCOME TAX BASIS OF INVESTMENT SECURITIES
The cost and unrealized appreciation (depreciation) in the value of the
investment securities owned at December 31, 1998, as computed on a federal
income tax basis, are as follows:
Aggregate cost................................$ 13,169,875
===========
Gross unrealized appreciation.................$ 1,595,961
Gross unrealized depreciation................. (820,366)
-----------
Net unrealized appreciation...................$ 775,595
===========
(7) Contingent Deferred Sales Charge
A contingent deferred sales charge (CDSC) of 1% is imposed on any
redemption of Individual shares made within one year of purchase. The CDSC is
based on the lower of the net asset value at the date of purchase or the date of
sale of the redeemed shares and is paid to WISDI. No charge is made on shares
acquired through the reinvestment of distributions. Additionally, no CDSC is
charged on shares sold to Wright or its affiliates or to their respective
employees.
(8) LINE OF CREDIT
The Fund participates with other funds managed by Wright in a committed $20
million unsecured line of credit agreement with a bank. The Fund may temporarily
borrow from the line of credit to satisfy redemption requests or settle
investment transactions. Interest is charged to each Fund based on its
borrowings at an amount above the federal funds rate. In addition, a fee
computed at an annual rate of 0.10% on the average daily unused portion of the
$20 million line of credit, is allocated among the participating funds at the
end of each quarter. The Fund did not have significant borrowings or allocated
fees during the year ended December 31, 1998.
<PAGE>
Catholic Values Investment Trust Equity Fund
INDEPENDENT AUDITORS' REPORT
================================================================================
To the Trustees and Shareholders of
Catholic Values Investment Trust Equity Fund
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Catholic Values Investment Trust Equity Fund as
of December 31, 1998, and the related statement of operations for the year then
ended, and the statements of changes in net assets and the financial highlights
for the year then ended and for the period from the start of business, May 1,
1997, to December 31, 1997. These financial statements and financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
December 31, 1998, by correspondence with the custodian and brokers; where
replies were not received from brokers, we performed other auditing procedures.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Catholic Values
Investment Trust Equity Fund as of December 31, 1998, the results of its
operations, the changes in its net assets, and its financial highlights for the
respective stated periods in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
January 29, 1999
<PAGE>
ANNUAL REPORT
Catholic Advisory Board
Thomas P. Melady, Chairman
Margaret M. Heckler
Bowie K. Kuhn
Timothy J. May
Thomas S. Monaghan
William A. Wilson
Ecclestiastical Advisor
His Eminence John Cardinal O`Connor
Investment Adviser
Wright Investors' Service
1000 Lafayette Boulevard
Bridgeport, Connecticut 06604
Administrator
Eaton Vance Management
24 Federal Street
Boston, Massachusetts 02110
Principal Underwriter
Wright Investors' Service Distributors, Inc.
1000 Lafayette Boulevard
Bridgeport, Connecticut 06604
Custodian
Investors Bank & Trust Company
200 Clarendon Street
Boston, Massachusetts 02116
Transfer and Dividend Disbursing Agent
First Data Investor Services Group
Wright Managed Investment Funds
P.O. Box 5156
Westborough, Massachusetts 01581-9698
Independent Auditors
Deloitte & Touche LLP
125 Summer Street
Boston, Massachusetts 02110
This report is not authorized for use as an offer of sale or a solicitation of
an offer to buy shares of a mutual fund unless accompanied or preceded by a
Fund's current prospectus.
