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Annual Report
September 30, 1999
[GRAPHIC OMITTED: ILLUSTRATION OF A CHURCH AND CROSS]
Capstone
Social Ethics
and
Religious Values Fund
[GRAPHIC OMITTED: PYRAMID LOGO]
A Member Of
The Capstone Group
of Mutual Funds
CAPSTONE SOCIAL ETHICS & RELIGIOUS VALUES FUND
- ------------------------------------------------------------------------
Dear Shareholder:
We are pleased to present the annual report for Capstone Social Ethics
and Religious Values Fund for the period ended September 30, 1999.
ECONOMIC OVERVIEW
The third quarter of 1999 marked the fourth consecutive quarter of
rising interest rates. Investors could take some solace in the fact that
the rise was not as severe as what transpired in the first half of 1999,
the yield on the thirty-year U.S. Treasury bond rose just 8 basis points
to finish the third quarter with a yield of 6.05%. The year-over-year
rise in interest rates has been rather dramatic, recall that on
September 30th of last year the yield on the thirty-year Treasury was
4.96%. Interest rates have been pushed higher by ongoing fears of
possible inflation sparked by tight labor markets in the U.S. and by
further evidence that the modest recoveries in foreign economies will
continue. The rise in interest rates put pressure on equity prices
leading to a 6.25% decline in the S&P 500 for the third quarter.
The recent strength in the Yen can be attributed to the modest economic
recovery that continues to unfold in Japan. Since late May, the Yen has
appreciated more than 14% versus the dollar. Japan's recovery is also
confirmed by the rise in their index of leading economic indicators,
which rose to 85.70 in August -- the highest level in five years. While
we do not believe the Japanese economy is on the cusp of a dramatic
turnaround, the positive developments we have seen so far should help to
bring some much needed stability to the entire region. For many
quarters, the U.S. economy has been the only bright spot on the world
economic stage. As other regions begin to show signs of improved
economic performance this will heighten fears of higher commodity prices
and inflation.
At the August 24th meeting the Federal Reserve voted to raise short-term
interest rates by 25 basis points to 5.25%. This followed the 25 basis
point increase from the June meeting. In announcing the rate increase,
the Fed also adopted a symmetrical directive (neutral stance) for the
near term noting that the two rate increases from the summer and the
firming of conditions in the U.S. financial markets "should markedly
diminish the risk of rising inflation going forward." The move by the
Federal Reserve was not the only noteworthy central bank action of the
quarter. In early September, the Bank of England voted to raise its
repurchase rate by 25 basis points to 5.25%. The move was prompted by
surging home prices in the U.K., the lowest unemployment in two decades,
and by faster economic growth worldwide. Many analysts are anticipating
that the European Central Bank (ECB) will also raise short-term interest
rates soon in response to a rebound in economic growth for the 11
nations governed by the ECB.
As we move into the final quarter of 1999 we expect the modest recovery
in overseas economies to continue. We would not be surprised to see the
pace of growth in the U.S. subside modestly and move closer to the 3%
pace that the Fed would like to see. The U.S. consumer may be a bit less
ebullient going forward since higher interest rates have eliminated many
of the opportunities to benefit from mortgage refinancing. Also, with
equity markets likely to finish the year with positive returns
significantly lower than the last few years, spending induced by the
"wealth effect" may be diminished.
EQUITY MARKET OVERVIEW
The third quarter of 1999 produced negative returns for the equity
market as measured by the S&P 500 index. For the quarter, the index fell
6.25%, while year to date it remains up by 5.36%. Given the equity
market's long bull run, down quarters are sometimes hard to remember,
but they do happen. The last was in the third quarter, 1998, when the
S&P 500 fell by 9.95%. The current period's negative return is slightly
below the average down quarter for the past 50 years of 5.36%.
What can make negative periods more disconcerting is the unknown length
of the downturn. Investors can take some comfort from the fact that
periods of decline are usually not long lived. For example, as shown in
Table 1, of the 36 times in the past fifty years that the S&P 500 has
turned down following a positive quarter, in 24 cases, or 66.7%, the
following quarter has been positive. In seven cases, or about 20%, the
market moves upward again after two quarters of decline. There have been
two instances of the quarter after quarter market decline that investors
wisely fear. The largest was the decline totaling over 44% which took
place over 4 quarters ending September, 1974. The second was the drop of
nearly 29% which took six quarters before it ended in June, 1970.
Both cases of lengthy decline were driven in large part by ongoing
external forces which pushed inflation and interest rates up
dramatically from pre-decline levels and stock prices down. The 29% drop
which ended in mid-1970 came about as fiscal policy was committed to the
Vietnam War with no reduction in domestic spending. The second was a
result in the rapid increase in energy prices which worked their way
through the economy.
At the present time we do not see the conditions in place for the kind
of multiquarter torture of the type previously described. We do expect
to see moderation in the rate of return in equities in coming quarters.
While the inflation rate is likely to remain low, we expect the best
news to be behind us. Similarly, we do not expect a dramatic increase in
rates from the current levels, but believe the lows may be behind us for
the time being.
Corporate profits continue to be the best news in the investment
outlook. The recent earnings reporting season was among the strongest on
record in terms of reported earnings exceeding expectations. Looking to
the year 2000, we would expect over all S&P operating earnings to grow
at about 12%. With this in mind, we would expect coming quarters to be
more volatile than in the past as the benign inflation and interest rate
environment becomes somewhat less positive for equities. While equity
returns will moderate, we nonetheless expect that over the space of more
than one or two quarters they will be positive.
Table I
Analysis of S&P 500 Performance Following Initial Down Quarter
--------------------------------------------------------------
Number of Subsequent Average Decline/ Total
Down Quarters Frequency % Frequency Quarter Decline
- ------------------------------------------------------------------------
0 24 66.7% -5.07 -5.07
1 7 19.4 -5.54 -10.15
2 3 8.3 -3.59 -10.77
3 1 2.8 -11.17 -44.68
4 0 0.0 0.00 0.00
5 1 2.8 -4.75 -28.50
FIXED INCOME MARKET OVERVIEW
The third quarter of 1999 marked the first time this year that most of
the bond market indices that we track were finally able to record
positive total returns for a quarter. Fixed income investors have had
few reasons to cheer since the yield on the thirty-year U.S. Treasury
bottomed at 4.72% on October 5th of last year. The ensuing twelve months
have proven to be very difficult for fixed income investors. The Lehman
Brothers Long Treasury Index (maturities in excess of 10 years) posted a
- -7.68% total return for the twelve month period ending 9/30/99.
Mortgage-backed securities continue to perform very well versus other
sectors. Year-to-date mortgages have outdistanced Treasuries and
corporates by 290 basis points and 330 basis points respectively. Within
the mortgage sector, mortgages backed by 15-year collateral have done
significantly better than mortgages backed by 30-year collateral.
Corporate yield spreads continue to be the dominant theme within the
fixed income market. While investors benefited from tighter spreads in
the first quarter of this year, the widening of spreads that began in
the second quarter spilled over into the third quarter pushing spreads
beyond the levels that we saw at the end of 1998. Recall that spreads
widened dramatically in the fall of 1998 as the global liquidity crisis
unfolded. The primary reason for wider spreads in 1999 is the deluge of
new corporate bond issues. In 1999, the amount of new investment-grade
corporate bond issues brought to market in the month of August totaled
$27.6 billion, for August 1998 the figure was $9.5 billion. For the
month of September, this year's figure was $24.5 billion versus $12.0
billion in 1998. The "deluge of supply" was created by the desire of
many corporations to issue new debt earlier in the year to avoid any
potential Y2K market disruptions at year-end. The problem was compounded
by the ongoing trend of "mega-deals" (in July, Ford Motor Credit issued
$4.0 billion of five-year notes) and by more stringent risk controls
within the fixed income dealer community. As the liquidity crisis
unfolded in 1998, the brokerage firms on Wall Street found themselves
holding an inventory of bonds that was larger than they would have
preferred. When spreads widened last year, these firms suffered losses
on these positions. To prevent a recurrence of these losses, many firms
have adopted tighter risk procedures that limit the inventory the fixed
income desk can carry. Because of these controls, the dealer community
has become a less aggressive bidder for securities at the same time that
more bonds are hitting the market.
Yield spreads on securities issued by the various U.S. government
agencies have also widened in 1999. The spread widening of the agency
sector has less to do with supply within the agency sector, rather the
problem is supply within the entire investment-grade sector of the
market. At current spreads, we believe agency securities provide an
excellent alternative to U.S. Treasuries. We suspect that spreads on
agency securities will tighten before corporate spreads begin to
tighten. For corporate bonds, we would not be surprised if spreads
narrowed in the first quarter of next year just as they did this year.
For your reference, we have included tables showing the total returns
for each Capstone Social Ethics and Religious Values Funds. If you have
any questions, please feel free to contact us at (800) 262-6631. We
thank you for your continued support.
Sincerely,
Edward L. Jaroski Dan E. Watson
President and Chairman of the Board Executive Vice President
CAPSTONE SOCIAL ETHICS & RELIGIOUS VALUES FUND
- ------------------------------------------------------------------------
Comparison of Change in Value of a $10,000 Investment in Capstone Social
Ethics and Religious Values Fund
(Short Term Bond Fund and the Custom Index*)
- ---------------------------------------
AVERAGE ANNUAL TOTAL RETURN
as of 9-30-99
- ---------------------------------------
Class A Class C Custom
------------------------------
1 yr. 1.84% 2.05% 2.69%
- ---------------------------------------
Past performance is not predictive of future performance.
[GRAPHIC OMITTED: WORM CHART: COMPARISON OF CHANGE IN VALUE OF A $10,000
INVESTMENT]
Short-Term SERV Short-Term SERV Short-Term
Class A Class C Custom Index
1/5/99 $10,000 $10,000
1/31/99 $10,004 $10,020 $10,045
2/28/99 $9,944 $9,976 $10,011
3/31/99 $9,985 $10,046 $10,088
4/30/99 $9,989 $10,082 $10,126
5/31/99 $10,054 $10,066 $10,120
6/30/99 $10,089 $10,100 $10,151
7/31/99 $10,097 $10,108 $10,172
8/31/99 $10,122 $10,133 $10,195
9/30/99 $10,184 $10,205 $10,269
* 1/3 Merrill 1-3 yr. Treasury Index.
* 1/3 Merrill 1-3 yr. Agency Index.
* 1/3 Merrill 1-3 yr. Corporate Index.
CAPSTONE SOCIAL ETHICS & RELIGIOUS VALUES FUND
- ------------------------------------------------------------------------
Comparison of Change in Value of a $10,000 Investment in Capstone Social
Ethics and Religious Values Fund
(Bond Fund and the Lehman Brothers Gov't./Corp. Bond Index)
- ---------------------------------------------
AVERAGE ANNUAL TOTAL RETURN
as of 9-30-99
- ---------------------------------------------
Class A Class C Lehman Bros.
------------------------------------
1 yr. -2.04% -1.83% -1.62%
- ---------------------------------------------
Past performance is not predictive of future performance.
[GRAPHIC OMITTED: WORM CHART: COMPARISON OF CHANGE IN VALUE OF A $10,000
INVESTMENT]
SERV SERV
Bond Fund Bond Fund Lehman Brothers
Class A Class C Gov't./Corp. Bond Index
10/1/98 $10,000 $10,000
10/31/98 $9,948 $9,960 $9,929
11/30/98 $9,960 $9,996 $9,989
12/31/98 $9,964 $10,017 $10,013
1/31/99 $10,005 $10,074 $10,084
2/28/99 $9,718 $9,823 $9,844
3/31/99 $9,748 $9,878 $9,893
4/30/99 $9,744 $9,898 $9,918
5/31/99 $9,769 $9,784 $9,815
6/30/99 $9,738 $9,751 $9,785
7/31/99 $9,718 $9,735 $9,758
8/31/99 $9,709 $9,726 $9,750
9/30/99 $9,796 $9,816 $9,838
CAPSTONE SOCIAL ETHICS & RELIGIOUS VALUES FUND
- ------------------------------------------------------------------------
Comparison of Change in Value of a $10,000 Investment in Capstone Social
Ethics and Religious Values Fund
(Large Cap Equity Fund and the S&P 500 Index)
- ---------------------------------------
AVERAGE ANNUAL TOTAL RETURN
as of 9-30-99
- ---------------------------------------
Class A Class C S&P 500
------------------------------
1 yr. 28.10% 28.35% 27.80%
- ---------------------------------------
Past performance is not predictive of future performance.
[GRAPHIC OMITTED: WORM CHART: COMPARISON OF CHANGE IN VALUE OF A $10,000
INVESTMENT]
Large Cap SERV Large Cap SERV
Class A Class C S&P 500 Index
10/1/98 $10,000 $10,000
10/31/98 $10,828 $10,820 $10,813
11/30/98 $11,440 $11,465 $11,469
12/31/98 $12,090 $12,082 $12,130
1/31/99 $12,595 $12,591 $12,637
2/28/99 $12,214 $12,214 $12,244
3/31/99 $12,715 $12,727 $12,734
4/30/99 $13,225 $13,237 $13,227
5/31/99 $12,879 $12,895 $12,915
6/30/99 $13,616 $13,633 $13,632
7/31/99 $13,185 $13,202 $13,206
8/31/99 $13,145 $13,170 $13,140
9/30/99 $12,810 $12,835 $12,780
CAPSTONE SOCIAL ETHICS & RELIGIOUS VALUES FUND
- ------------------------------------------------------------------------
Comparison of Change in Value of a $10,000 Investment in Capstone Social
Ethics and Religious Values Fund
(Small Cap Equity Fund and the S&P 600 Index)
- ---------------------------------------
AVERAGE ANNUAL TOTAL RETURN
as of 9-30-99
- ---------------------------------------
Class A Class C S&P 600
------------------------------
1 yr. 17.27% 17.49% 17.54%
- ---------------------------------------
Past performance is not predictive of future performance.
[GRAPHIC OMITTED: WORM CHART: COMPARISON OF CHANGE IN VALUE OF A $10,000
INVESTMENT]
Small Cap SERV Small Cap SERV
Class A Class C S&P 600 Index
10/1/98 $10,000 $10,000
10/31/98 $10,476 $10,480 $10,464
11/30/98 $11,016 $11,032 $11,053
12/31/98 $11,699 $11,731 $11,760
1/31/99 $11,551 $11,575 $11,612
2/28/99 $10,481 $10,513 $10,566
3/31/99 $10,656 $10,688 $10,702
4/30/99 $11,302 $11,342 $11,409
5/31/99 $11,587 $11,607 $11,687
6/30/99 $12,286 $12,303 $12,352
7/31/99 $12,222 $12,239 $12,243
8/31/99 $11,667 $11,688 $11,704
9/30/99 $11,727 $11,749 $11,754
CAPSTONE SOCIAL ETHICS & RELIGIOUS VALUES FUND
- ------------------------------------------------------------------------
Comparison of Change in Value of a $10,000 Investment in Capstone Social
Ethics and Religious Values Fund
(International Fund and the MSCI EAFE Index)
- ---------------------------------------
AVERAGE ANNUAL TOTAL RETURN
as of 9-30-99
- ---------------------------------------
Class A Class C MSCI EAFE
------------------------------
1 yr. 31.98% 32.23% 31.32%
- ---------------------------------------
Past performance is not predictive of future performance.
[GRAPHIC OMITTED: WORM CHART: COMPARISON OF CHANGE IN VALUE OF A $10,000
INVESTMENT]
International International MSCI EAFE
SERV Class A SERV Class C Index
10/1/98 $10,000 $10,000
10/31/98 $11,160 $11,164 $11,045
11/30/98 $11,672 $11,680 $11,614
12/31/98 $11,961 $11,973 $12,075
1/31/99 $12,117 $12,129 $12,042
2/28/99 $11,944 $11,960 $11,758
3/31/99 $12,363 $12,384 $12,251
4/30/99 $13,051 $13,076 $12,751
5/31/99 $12,520 $12,537 $12,097
6/30/99 $13,157 $13,173 $12,571
7/31/99 $12,806 $12,817 $12,948
8/31/99 $13,028 $13,053 $12,998
9/30/99 $13,198 $13,223 $13,132
<TABLE>
<CAPTION>
CAPSTONE SOCIAL ETHICS & RELIGIOUS VALUES FUND
MONEY MARKET FUND
SCHEDULE OF INVESTMENTS - September 30, 1999
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Shares Value
-------------- --------------
SHORT-TERM INVESTMENTS (99.54%)
AIM Prime Portfolio Money Market, Institutional
Class 22,758,898 $22,758,898
Fifth Third Bank Repurchase Agreement, 4.68%, dated
09/30/99, due 10/01/99, repurchase price $318,840
(collateralized by FNMA Pool #313887, 7.00%,
due 11/01/17, market value $325,467 (Cost $318,799) 318,799 318,799
--------------
TOTAL INVESTMENTS (Cost $23,077,697) (99.54%) 23,077,697
OTHER ASSETS & LIABILITIES, NET (0.46%) 106,766
--------------
NET ASSETS (100.00%) $23,184,463
==============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
CAPSTONE SOCIAL ETHICS & RELIGIOUS VALUES FUND
SHORT-TERM BOND FUND
SCHEDULE OF INVESTMENTS - September 30, 1999
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Principal Value
-------------- --------------
AGENCY OBLIGATIONS (36.79%)
FEDERAL FARM MORTGAGE CO. (3.86%)
6.10%, 11/19/01 $1,000,000 $1,000,780
--------------
FEDERAL HOME LOAN BANK (6.45%)
4.885%, 02/23/01 1,700,000 1,673,701
--------------
FEDERAL HOME LOAN MORTGAGE CO. (14.96%)
4.75%, 12/14/01 2,150,000 2,094,573
5.375%, 03/01/01 1,800,000 1,783,116
--------------
3,877,689
--------------
FEDERAL NATIONAL MORTGAGE ASSOC. (11.52%)
5.72%, 01/09/01 3,000,000 2,987,340
--------------
TOTAL AGENCY OBLIGATIONS (Cost $9,647,129) 9,539,510
--------------
CORPORATE BONDS (37.16%)
APPAREL (2.66%)
VF Corp., 9.50%, 05/01/01 665,000 690,383
--------------
BANKS (4.95%)
Chase Manhattan Corp., 5.50%, 02/15/02 700,000 692,888
Mercantile Bancorp, 6.80%, 06/15/01 590,000 591,304
--------------
1,284,192
--------------
CHEMICALS (2.59%)
Air Products & Chemicals, Inc. 8.35%, 01/15/02 650,000 672,640
--------------
FINANCIAL SERVICES (13.29%)
Associates Corp., 6.70%, 05/29/01 500,000 502,660
Bear Sterns Co., 5.75%, 02/15/01 550,000 544,423
Ford Motor Co., 9.00%, 09/15/01 700,000 731,962
General Motors Acceptance Corp., 9.625%, 12/15/01 150,000 159,239
Lehman Brothers Holdings, Inc., 6.20%, 01/15/02 600,000 590,490
Merrill Lynch & Co., 6.06%, 10/15/01 500,000 496,525
Sears Credit Account Trust, 9.00%, 10/01/01 400,000 419,068
--------------
3,444,367
--------------
INSURANCE (1.93%)
Travelers Property Casualty Corp., 6.75%, 04/15/01 500,000 501,850
--------------
RAILROADS (4.89%)
Consolidated Rail Corp., 9.75%, 06/01/00 497,000 508,670
Union Pacific Railroad C. Equipment Trust, 7.32%,
02/01/02 750,000 757,972
--------------
1,266,642
--------------
RETAIL STORES (2.93%)
Penney (J.C.) Co., Inc., 7.25%, 04/02/02 500,000 501,690
Penney (J.C.) Co., Inc., 9.05%, 03/01/01 250,000 257,182
--------------
758,872
--------------
TELECOMMUNICATIONS (3.92%)
Southwestern Bell Telephone, 7.00%, 08/19/02 1,000,000 1,015,080
--------------
TOTAL CORPORATE BONDS (Cost $9,727,499) 9,634,026
--------------
U.S. TREASURY OBLIGATIONS (24.27%)
U.S. Treasury Notes
6.625%, 06/30/01 2,500,000 2,538,675
6.625%, 07/31/01 1,200,000 1,219,872
6.50%, 08/31/01 1,000,000 1,015,620
6.25%, 08/31/02 1,500,000 1,519,680
--------------
TOTAL U.S. TREASURY OBLIGATIONS (Cost $6,345,914) 6,293,847
--------------
REPURCHASE AGREEMENTS (0.35%)
Fifth Third Bank, 4.68%, dated 09/30/99, due
10/01/99, repurchase price $89,211
(collateralized by FNMA Pool #313887, 7.00%,
due 11/01/17, market value $91,568 (Cost $89,199) 89,199
--------------
TOTAL INVESTMENTS (Cost $25,809,741) (98.57%) 25,556,582
OTHER ASSETS & LIABILITIES, NET (1.43%) 371, 254
--------------
NET ASSETS (100%) $25,927,836
==============
*Non-income producing investment.
ADR -- American Depository Receipt
Cost for federal income tax at September 30, 1999
was $25,809,741 and net unrealized depreciation
consisted of:
Gross unrealized appreciation $17,803
Gross unrealized depreciation (270,962)
--------------
Net unrealized depreciation $(253,159)
==============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
CAPSTONE SOCIAL ETHICS & RELIGIOUS VALUES FUND
BOND FUND
SCHEDULE OF INVESTMENTS - September 30, 1999
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Principal Value
-------------- --------------
AGENCY OBLIGATIONS (15.89%)
FEDERAL HOME LOAN BANK (7.42%)
5.77%, 12/22/99 $1,000,000 $1,000,360
5.50%, 07/14/00 1,100,000 1,097,594
5.125%, 09/15/03 1,500,000 1,438,608
5.80%, 09/02/08 1,000,000 940,497
--------------
4,477,059
--------------
FEDERAL HOME LOAN MORTGAGE CO. (3.66%)
4.75%, 12/14/01 1,000,000 973,233
6.45%, 04/29/09 1,300,000 1,238,023
--------------
2,211,256
--------------
FEDERAL NATIONAL MORTGAGE ASSOC. (4.03%)
5.625%, 03/15/01 1,000,000 994,918
6.00%, 05/15/08 1,500,000 1,435,241
--------------
2,430,159
--------------
UTILITIES (0.78%)
Tennessee Valley Authority, 6.00%, 03/15/13 500,000 469,311
--------------
TOTAL AGENCY OBLIGATIONS (Cost $9,897,634) 9,587,785
--------------
CORPORATE BONDS (26.03%)
AEROSPACE (0.67%)
Lockheed Martin Corp., 6.85%, 5/15/01 200,000 199,744
McDonnell Douglas Corp., 6.875%, 11/01/06 205,000 203,237
--------------
402,981
--------------
AIRLINES (0.70%)
AMR Corp., 9.00%, 08/01/12 175,000 190,259
Delta Air Lines, Inc. , 9.75%, 05/15/21 200,000 229,741
--------------
420,000
--------------
APPLIANCES (0.34%)
Whirlpool Corp., 9.50%, 6/15/00 200,000 203,800
--------------
AUTOMOTIVE (0.33%)
General Motors Acceptance Corp., 6.75%, 02/07/02 200,000 201,106
--------------
AUTO PARTS & EQUIPMENT (0.35%)
Autozone, Inc., 6.50%, 07/15/08 225,000 207,357
--------------
BANKS (4.97%)
Bank of America Corp., 6.625%, 5/30/01 100,000 100,298
BankBoston NA, 6.375%, 4/15/08 175,000 165,171
Bankers Trust Corp., 9.00%, 8/01/01 100,000 103,585
Bankers Trust Corp., 8.125%, 5/15/02 110,000 113,130
Chase Manhattan Corp., 7.125%, 02/01/07 225,000 223,424
Citicorp, 5.625%, 2/15/01 100,000 99,174
First Chicago Corp., 9.875%, 8/15/00 175,000 180,664
First Union Corp., 8.125%, 6/24/02 175,000 181,840
Keycorp, 7.50%, 6/15/06 235,000 236,345
Mellon Financial Co., 6.875%, 3/01/03 100,000 99,730
Morgan (J. P.) Co., Inc, 7.625%, 9/15/04 225,000 232,309
Nationsbank Corp., 6.875%, 2/15/05 100,000 99,138
Norwest Financial, Inc., 7.00%, 1/15/03 100,000 100,881
PNC Funding Corp., 6.875%, 3/01/03 200,000 199,042
Republic NY Corp., 7.75%, 5/15/02 225,000 230,609
Southtrust Bank, Inc., 6.125%, 01/09/28 175,000 162,834
SunTrust Bank, Inc., 7.375%, 7/01/06 200,000 201,264
Wachovia Corp., 6.605%, 10/01/25 175,000 171,763
Wells Fargo Co., 6.875%, 4/01/06 100,000 98,073
--------------
2,999,274
--------------
CHEMICALS (0.92%)
Dow Chemical Co., 6.85%, 8/15/13 175,000 164,365
Dupont De Nemours (E. I.) Co., 8.125%, 3/15/04 175,000 185,024
Lubrizol Corp., 5.875%, 12/01/08 225,000 208,092
--------------
557,481
--------------
COSMETICS & TOILETRIES (0.32%)
Procter & Gamble Co., 8.00%, 10/26/29 175,000 191,904
--------------
DIVERSIFIED CONGLOMERATES (0.46%)
PPG Ind., Inc., 7.375%, 06/01/16 175,000 174,086
Tenneco, Inc., 8.075%, 10/01/02 100,000 102,604
--------------
276,690
--------------
ELECTRONIC EQUIPMENT (0.65%)
Motorola, Inc., 6.50%, 3/01/08 225,000 217,078
Texas Instruments, Inc., 6.875%, 7/15/00 175,000 175,727
--------------
392,805
--------------
FINANCIAL SERVICES (3.26%)
Allstate Corp., 6.75%, 05/15/18 200,000 181,433
Associates Corp. of N.A., 6.50%, 10/15/02 200,000 199,411
Chrysler Financial Co. LLC, 5.875%, 2/07/01 170,000 169,459
Ford Motor Credit Co., 8.00%, 6/15/02 225,000 232,949
G.E. Capital Corp., 5.50%, 11/01/01 200,000 196,872
Hartford Life, Inc. 7.10%, 06/15/07 175,000 171,930
Hartford Life, Inc., 7.65%, 06/15/27 200,000 198,030
Lehman Bros. Holdings, 6.625%, 2/15/08 100,000 104,245
Lehman Bros. Holdings, 8.875%, 3/01/02 100,000 93,456
Merrill Lynch & Co., Inc., 6.25%, 1/15/06 100,000 94,777
Merrill Lynch & Co., Inc., 8.00%, 6/01/07 100,000 103,695
Morgan Stanley Dean Witter, 6.875%, 3/01/07 225,000 220,490
--------------
1,966,747
--------------
FOOD & BEVERAGE (1.40%)
Archer Daniels ADM., 7.125%, 03/01/13 225,000 223,558
Campbell Soup Co., 6.90%, 10/15/06 225,000 225,934
Heinz (H. J.) Co., 6.00%, 3/15/08 225,000 212,856
Kroger Co., 7.00%, 05/01/18 200,000 181,625
--------------
843,973
--------------
INSURANCE (0.63%)
International Lease Finance Corp., 7.00%, 05/15/00 100,000 100,583
International Lease Finance Corp., 8.875%, 4/15/01 100,000 103,724
Travelers Property Casualty Corp., 6.75%, 4/15/01 175,000 176,327
--------------
380,634
--------------
INVESTMENT COMPANIES (0.37%)
Bear Stearns Co., Inc., 6.625%, 1/15/04 225,000 220,680
--------------
MEDICAL PRODUCTS (0.32%)
Bausch & Lomb, Inc., 6.75%, 12/15/04 200,000 195,868
--------------
OFFICE EQUIPMENT (0.29%)
Xerox Corp., 7.20%, 04/01/16 175,000 173,185
--------------
OIL & GAS (2.00%)
Atlantic Richfield Co., 8.25%, 02/01/22 200,000 216,891
BP America, Inc., 9.375%, 11/01/00 175,000 180,877
Chevron Capital USA, Inc., 7.45%, 8/15/04 175,000 177,347
Dresser Industries, Inc., 6.25%, 6/01/00 100,000 100,364
Mobil Corp., 8.375%, 2/12/01 175,000 179,718
Southern Union Co., 7.60%, 02/01/24 175,000 166,219
Texaco Capital, Inc., 8.50%, 2/15/03 175,000 185,953
--------------
1,207,369
--------------
PAPER AND FOREST PRODUCTS (0.59%)
International Paper Co., 7.625%, 1/15/07 185,000 188,061
Weyerhaeuser Co., 7.25%, 07/01/13 175,000 170,361
--------------
358,422
--------------
PHARMACEUTICAL (0.27%)
Bristol-Myers Squibb Co., 6.80%, 11/15/26 175,000 165,616
--------------
PIPELINES (0.30%)
Enron Corp., 8.25%, 09/15/12 175,000 183,671
--------------
RAILROADS (0.69%)
Norfolk South Corp., 6.95%, 5/01/02 225,000 225,736
Union Pacific Corp., 6.125%, 1/15/04 200,000 193,453
--------------
419,189
--------------
RETAIL STORES (1.50%)
Penney (J. C.) Co., Inc., 6.375%, 9/15/00 100,000 99,668
Penney (J. C.) Co., Inc., 7.25%, 4/01/02 100,000 100,562
Rite Aid Corp., 6.875%, 08/15/13 175,000 139,124
Safeway, Inc., 7.00%, 9/15/07 200,000 195,445
Sears Roebuck & Co., 6.50%, 6/15/00 200,000 200,481
Wal-Mart Stores, Inc., 5.875%, 10/15/05 175,000 168,384
--------------
903,664
--------------
TELECOMMUNICATIONS (2.14%)
AT&T Corp., 7.50%, 6/01/06 200,000 204,521
Bell Tel-Penn Co., 6.625%, 9/15/02 175,000 175,723
GTE Florida, Inc., 6.86%, 02/01/28 175,000 161,793
New York Telephone Co., 6.25%, 2/15/04 100,000 98,620
New York Telephone Co., 7.25%, 02/15/24 100,000 94,768
Pacific Bell, 6.25%, 3/01/05 100,000 97,992
Southern New England Telecommunications Corp.,
7.00%, 8/05 100,000 101,323
US WEST Comm., 6 375%, 10/15/02 225,000 223,751
WorldCom, Inc., 6.95%, 08/15/28 140,000 130,260
--------------
1,288,751
--------------
UTILITIES (2.28%)
Baltimore Gas & Electric Co., 8.375%, 8/15/01 175,000 181,228
Carolina Power & Light Co., 5.95%, 3/1/09 200,000 183,620
Central Power & Light Co., 6.625%, 7/01/05 220,000 216,820
Commonwealth Edison, 8.625%, 02/01/22 150,000 152,462
Consolidated Edison, Inc., 7.60%, 1/15/00 100,000 100,485
Consolidated Edison, Inc., 6.375%, 4/01/03 100,000 99,312
Consolidated Natural Gas Co., 6.625%, 12/01/08 175,000 167,746
Duke Power Corp., 7.00%, 6/01/00 100,000 100,470
Southern California Edison Co., 6.50%, 6/01/01 175,000 175,443
--------------
1,377,586
--------------
WASTE MANAGEMENT (0.28%)
WMX Technologies Inc., 6.70%, 5/01/01 175,000 170,705
--------------
TOTAL CORPORATE BONDS (Cost $16,718,254) 15,709,458
--------------
FOREIGN BONDS (6.28%)
FOREIGN CORPORATE BONDS (4.86%)
Abn Amro N.V., 7.55%, 6/28/06+ 225,000 226,718
Amoco Canada Petro Co., 7.25%, 12/01/02+ 200,000 202,628
Banque Paribas NY, 8.35%, 6/15/07+ 150,000 155,264
Bayerische Landesbk Ciro, 7.375%, 12/14/02+ 100,000 102,201
Bell Canada, 9.50%, 10/15/10+ 200,000 237,174
Cable & Wireless Communications PLC, 6.75%, 3/06/08+ 175,000 178,106
Deutsche Bank Financial Inc., 6.70%, 12/31/06+ 175,000 167,466
Dresdner Bank NY, 6.625%, 9/15/05+ 225,000 216,571
Hanson Over., 7.375%, 1/15/03+ 100,000 101,203
Lb Baden-Wuerttenberg, 7.625%, 02/01/23+ 200,000 204,663
Norsk Hydro, 6.70%, 01/15/18+ 175,000 153,891
Northern Telecommunications Co., 8.75%, 6/12/01+ 100,000 103,679
Santander Financial Issuances, 7.875%, 04/15/05+ 225,000 229,008
Sony Corp., 6.125%, 3/04/03+ 225,000 222,440
Swiss Bank Corp. NY, 7.00%, 10/15/15+ 225,000 211,487
Toronto-Dominion Bank NY, 6.45%, 1/15/09+ 230,000 219,185
--------------
2,931,684
--------------
FOREIGN GOVERNMENT REGIONAL (1.42%)
Nova Scotia, 7.25%, 07/27/13+ 100,000 99,726
Ontario, 6.125%, 6/28/00+ 175,000 175,242
Province of Manitoba, 8.00%, 4/15/02+ 175,000 181,503
Province of Quebec, 6.50%, 01/17/06+ 225,000 219,886
Saskatchewan, 8.00%, 02/01/13+ 170,000 181,801
--------------
858,158
--------------
TOTAL FOREIGN BONDS (Cost $4,037,635) 3,789,842
--------------
U.S. TREASURY OBLIGATIONS (50.35%)
TREASURY BONDS (5.49%)
7.875%, 02/15/21 2,000,000 2,326,876
6.25%, 08/15/23 1,000,000 983,750
--------------
3,310,626
--------------
TREASURY NOTES (44.86%)
6.25%, 8/31/00 600,000 604,500
6.50%, 5/31/01 1,700,000 1,722,312
7.875%, 8/15/01 2,500,000 2,596,875
7.50%, 11/15/01 1,400,000 1,450,750
6.375%, 8/15/02 4,200,000 4,268,250
5.75%, 08/15/03 1,700,000 1,694,687
7.25%, 5/15/04 900,000 949,219
7.50%, 02/15/05 1,800,000 1,923,750
6.50%, 8/15/05 2,550,000 2,608,969
6.25%, 2/15/07 200,000 201,813
6.625%, 5/15/07 600,000 618,938
4.75%, 11/15/08 1,200,000 1,092,750
7.50%, 11/15/16 2,600,000 2,878,689
8.125%, 08/15/19 2,000,000 2,368,126
6.75%, 08/15/26 2,000,000 2,093,126
--------------
27,072,754
--------------
TOTAL U.S. TREASURY OBLIGATIONS (Cost $32,643,345) 30,383,380
--------------
REPURCHASE AGREEMENTS (0.03%)
Fifth Third Bank, 4.68%, dated 09/30/99, due
10/01/99, repurchase price $14,192
(collateralized by FNMA Pool #313887, 7.00%,
due 11/01/17, market value $14,929 (Cost $14,190) 14,190 14,190
--------------
TOTAL INVESTMENTS (Cost $63,311,058) (98.58%) 59,484,655
OTHER ASSETS & LIABILITIES, NET (1.42%) 859,038
--------------
NET ASSETS (100%) $60,343,693
==============
*Non-income producing investment.
+Denominated in U.S. Dollars.
ADR -- American Depository Receipt
Cost for federal income tax at September 30,
1999 was $63,311,058 and net unrealized
depreciation consisted of:
Gross unrealized appreciation $15,961
Gross unrealized depreciation (3,842,364)
--------------
Net unrealized depreciation $(3,826,403)
==============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
CAPSTONE SOCIAL ETHICS & RELIGIOUS VALUES FUND
LARGE CAP EQUITY FUND
SCHEDULE OF INVESTMENTS - September 30, 1999
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Shares Value
-------------- --------------
COMMON STOCK (99.80%)
ADVERTISING (0.31%)
Interpublic Group of Cos., Inc. 4,804 $197,564
Omnicom Group, Inc. 2,760 218,557
--------------
416,121
--------------
AEROSPACE (1.45%)
Alliedsignal, Inc. 7,132 427,473
BF Goodrich Co. 161 4,668
Boeing Co. 12,369 527,228
General Dynamics Corp. 2,320 144,854
Lockheed Martin Corp. 4,936 161,345
Northrop Grumman Corp. 1,130 71,825
Raytheon Co. Cl B 4,353 216,017
United Technologies Corp. 6,320 374,854
--------------
1,928,264
--------------
AGRICULTURAL (0.35%)
Monsanto Co. 8,431 300,880
Pioneer Hi-Bred International., Inc. 4,305 171,392
--------------
472,272
--------------
AIRLINES (0.32%)
AMR Corp.* 2,884 157,177
Delta Air Lines, Inc. 2,300 111,550
Southwest Airlines Co. 8,176 124,172
US Airways Group, Inc.* 1,163 30,528
--------------
423,427
--------------
APPAREL (0.20%)
Liz Claiborne, Inc. 450 13,950
Nike, Inc. - Cl B 3,702 210,550
Reebok International Ltd.* 100 1,069
VF Corp. 1,488 46,127
--------------
271,696
--------------
APPLIANCES (0.08%)
Maytag Corp. 880 29,314
Whirlpool Corp. 1,134 74,063
--------------
103,377
--------------
AUTO PARTS & EQUIPMENT (0.30%)
Autozone, Inc.* 1,887 52,954
Cooper Tire & Rubber Co. 330 5,815
Dana Corp. 2,005 74,436
Delphi Automotive Systems Corp. 7,784 125,031
Genuine Parts Co. 2,180 57,906
Pep Boys-Manny Moe & Jack 660 9,818
TRW Corp. 1,545 76,864
--------------
402,824
--------------
AUTOMOBILE MANUFACTURERS (1.11%)
Ford Motor Co. 16,438 824,982
General Motors Corp. 8,894 559,766
Navistar International Corp.* 620 28,830
Paccar, Inc. 1,096 55,759
--------------
1,469,337
--------------
BANKS (6.55%)
AmSouth Bancorp 1,750 41,016
Bank America Corp. 22,898 1,275,132
Bank of New York, Inc. 10,478 350,358
Bank One Corp. 15,814 550,525
Bankboston Corp. 3,698 160,401
BB&T Corp. 4,030 130,471
Chase Manhattan Corp. 11,382 857,918
Comerica, Inc. 1,808 91,530
Fifth Third Bancorp 3,808 231,693
First Union Corp. 13,174 468,500
Firstar Corp. 11,911 305,219
Fleet Financial Group, Inc. 7,692 281,720
Golden West Financial Corp. 1,250 122,813
Huntington Bancshares, Inc. 3,102 82,397
J.P. Morgan & Co., Inc. 2,472 282,426
Keycorp 6,330 163,393
Mellon Bank Corp. 6,900 232,875
National City Corp. 8,374 223,481
Northern Trust Corp. 1,820 151,970
PNC Bank Corp. 3,965 208,906
Regions Financial Corp. 2,400 72,000
Republic New York Corp. 1,210 74,339
SouthTrust Corp. 1,700 60,988
State Street Boston Corp. 2,290 147,991
Summit Bancorp 1,800 58,388
Summit Bancorp Rights* 1,800 --
Suntrust Banks, Inc. 4,605 302,779
Synovus Financial Corp. Rights* 525 --
U.S. Bancorp 9,592 289,559
Union Planters Corp. 1,530 62,348
Wachovia Corp. 3,382 265,910
Washington Mutual Financial Services, Inc. 9,221 269,714
Wells Fargo & Co. 21,754 862,002
--------------
8,678,762
--------------
BROADCASTING (1.01%)
CBS Corp.* 15,076 697,265
Clear Channel Comm, Inc.* 6,650 531,169
Meredith Corp. 2,948 107,049
--------------
1,335,483
--------------
BUILDING (0.17%)
Armstrong World Industries, Inc. 460 20,671
Centex Corp. 250 7,391
Louisiana-Pacific Corp. 970 15,156
Masco Corp. 5,160 159,960
Owens Corning 926 20,083
--------------
223,261
--------------
BUILDING MAINTENANCE & SERVICE (0.04%)
Ecolab, Inc. 1,416 48,321
--------------
CHEMICALS (1.38%)
Air Products & Chemicals, Inc. 2,868 83,351
Dow Chemical Co. 3,021 343,261
Dupont De Nemours & Co. 14,414 877,452
Eastman Chemical Co. 860 34,400
Engelhard Corp. 984 17,897
Great Lakes Chem Corp. 200 7,613
Hercules, Inc. 1,153 33,005
International Flavors & Fragrance, Inc. 3,046 105,087
Nalco Chemical Co. 560 28,280
Praxair, Inc. 1,801 82,846
Rohm & Haas Co. 2,488 89,879
Sigma Aldrich Corp. 1,178 37,402
Union Carbide Corp. 1,346 76,470
W.R. Grace & Co.* 444 7,132
--------------
1,824,075
--------------
COMMERCIAL SERVICES (0.14%)
Cendant Corp.* 10,146 180,092
--------------
COMPONENTS (0.10%)
Johnson Controls, Inc. 1,024 67,904
Parker Hannifin Corp. 1,191 53,372
--------------
121,276
--------------
COMPUTER HARDWARE (6.06%)
Apple Computer, Inc.* 2,069 130,994
Compaq Computer Corp. 21,430 491,551
Dell Computer Corp.* 31,692 1,325,122
EMC Corp.* 12,796 914,114
Gateway 2000, Inc.* 3,970 176,417
Hewlett-Packard Co. 13,063 1,201,796
International Business Machines Corp. 23,036 2,795,995
Seagate Technology, Inc.* 2,685 82,732
Sun Microsystems, Inc.* 9,826 913,818
--------------
8,032,539
--------------
COMPUTER SERVICES & SOFTWARE (8.26%)
America Online, Inc. 13,810 1,436,240
Autodesk, Inc. 500 10,938
Automatic Data Processing, Inc. 9,180 409,658
BMC Software, Inc.* 2,860 204,669
Cabletron Systems, Inc.* 2,130 33,414
Ceridian Corp.* 1,930 48,009
Computer Associates International, Inc. 7,005 429,056
Computer Sciences Corp.* 2,268 159,469
Compuware Corp.* 4,540 118,324
Data General Corp.* 730 15,376
Electronic Data Systems Corp. 7,140 377,974
First Data Corp. 6,011 263,733
Microsoft Corp.* 64,814 5,869,718
Network Appliance, Inc.* 840 60,165
Novell, Inc.* 4,239 87,694
Oracle Corp.* 18,118 824,369
Parametric Technology Corp. 3,230 43,605
PE Corp - PE Biosystems Group Rights* 73 --
PE Corp. - PE Biosystems Group 1,410 101,873
Peoplesoft, Inc.* 2,990 50,643
Silicon Graphics, Inc.* 2,625 28,711
Unisys Corp.* 3,580 161,548
3Com Corp.* 4,273 122,849
Adobe Systems, Inc. 720 81,720
--------------
10,939,755
--------------
CONSUMER PRODUCTS (0.74%)
Alberto-Culver Co. Cl B 910 21,044
American Greetings Corp. Cl A 1,490 38,368
Jostens, Inc. 1,140 21,803
The Clorox Co. 4,432 169,524
The Unilever Group 10,470 713,269
Tupperware Corp. 1,001 20,270
--------------
984,278
--------------
CONTAINERS (0.10%)
Bemis Co. 115 3,896
Bemis Co., Rights* 115 --
Crown Cork & Seal Co., Inc. 1,796 43,553
Owens Illinois, Inc.* 2,120 42,003
Sealed Air Corp.* 785 40,280
--------------
129,732
--------------
COSMETICS & TOILETRIES (2.38%)
Avon Products, Inc. 3,888 96,471
Colgate-Palmolive Co. 9,108 416,691
Gillette Co. 15,708 533,090
Kimberly Clark Corp. 7,416 389,340
Procter & Gamble Co. 18,342 1,719,563
--------------
3,155,155
--------------
DIVERSIFIED CONGLOMERATES (5.44%)
Cooper Industries, Inc. 614 28,705
Corning, Inc. 3,143 215,492
Danaher Corp. 1,660 87,461
Eaton Corp. 880 75,955
General Electric Co. 42,116 4,993,378
Illinois Tool Works, Inc. 3,646 271,855
ITT Industries, Inc. 1,258 40,020
National Service Industries, Inc. 550 17,325
PPG Industries, Inc. 2,405 144,300
Tenneco, Inc. 2,248 38,216
Textron, Inc. 2,650 205,044
Tyco International Ltd. 10,584 1,092,798
--------------
7,210,549
--------------
ELECTRONIC EQUIPMENT (4.60%)
Advanced Micro Devices, Inc.* 1,909 32,811
Applied Materials, Inc.* 4,670 363,676
Emerson Electric Co. 5,676 358,652
Intel Corp. 42,282 3,142,081
KLA-Tencor Corp.* 980 63,700
LSI Logic Corp.* 1,715 88,323
Micron Technology, Inc.* 3,138 208,873
Motorola Rights Exp. 11/08/08 2,670 --
Motorola, Inc. 7,840 689,920
National Semiconductor Corp.* 2,180 66,490
Solectron Corp.* 3,170 227,646
Tektronix, Inc. 460 15,410
Texas Instruments, Inc. 10,054 826,942
Thomas & Betts Corp. 245 12,495
--------------
6,097,019
--------------
ENGINEERING (0.03%)
Fluor Corp. 850 34,213
--------------
ENTERTAINMENT & LEISURE (0.17%)
Brunswick Corp. 1,744 43,382
Hasbro, Inc. Rights* 1,125 --
Hasbro, Inc. 3,175 68,064
Mattel, Inc. 5,941 112,879
--------------
224,325
--------------
FINANCIAL SERVICES (5.16%)
American Express Co. 5,636 758,747
Associates First Capital Corp. 9,702 349,272
Capital One Financial Corp. 2,290 89,310
Citigroup, Inc. 42,564 1,872,816
Countrywide Credit Industries, Inc. 1,030 33,218
Deluxe Corp. 2,617 88,978
Dun & Bradstreet Corp. 2,606 77,854
Equifax, Inc. 1,930 54,281
Fannie Mae 13,931 873,300
Federal Home Loan Mortgage Corp. 9,448 491,296
H.R. Block, Inc. 1,060 46,044
Household International, Inc. 6,379 255,957
Lehman Brothers Holding, Inc. 1,290 75,223
MBNA Corp. 10,575 241,242
Morgan Stanley Dean Witter & Co. 7,587 676,666
Paine Webber Group, Inc. 1,430 51,838
Paychex, Inc. 3,395 115,854
Providian Financial Corp. 1,756 139,053
Schwab (Charles) Corp. 10,240 344,960
Service Corporation International 3,972 41,954
SLM Holding Corp. 1,840 79,120
Synovus Financial Corp. 3,735 69,798
--------------
6,826,781
--------------
FOOD & BEVERAGE (3.13%)
Albertson's, Inc. 7,092 280,577
Archer-Daniels Midland Co. 15,221 185,506
Best Foods Co. 6,448 312,728
Campbell Soup Co. 8,514 333,110
General Mills, Inc. 4,114 333,748
Great Atlantic & Pacific Tea Co., Inc. 910 27,584
Heinz (H.J.) Co. 8,297 356,771
Hershey Foods Corp. 3,260 158,721
Kellogg Co. 8,970 335,814
Kroger Co.* 14,164 312,493
Nabisco Group Holdings Corp. 10,580 158,700
Quaker Oats Co. 3,781 233,949
Ralston-Ralston Purina Group 5,588 155,416
Safeway, Inc.* 7,020 267,199
Supervalu, Inc. 3,620 78,961
Sysco Corp. 7,608 266,756
Winn Dixie Stores, Inc. 3,000 89,063
Wm. Wrigley Jr. Co. 3,695 254,262
--------------
4,141,358
--------------
FOREST & PAPER PRODUCTS (0.62%)
Boise Cascade Corp. 485 17,672
Champion Int'l Corp. 1,222 62,780
Fort James Corp. 2,602 69,441
Fort James Corp. Rights 822 --
Georgia-Pacific Group 1,966 79,623
International Paper Co. 5,350 257,134
Potlatch Corp. 120 4,943
Temple Inland, Inc. 710 42,955
The Mead Corp. 1,040 35,750
Westvaco Corp. 1,136 29,110
Weyerhaeuser Co. 2,864 165,038
Willamette Ind., Inc. 1,406 60,634
--------------
825,080
--------------
HEALTHCARE SERVICES (0.52%)
Alza Corp. Cl A* 1,140 48,806
Columbia/HCA Healthcare Corp. 8,612 182,467
HCR Manor Care, Inc.* 1,785 30,680
Healthsouth Rehabilitation Corp.* 5,860 35,526
MeKesson HBOC, Inc. 3,499 101,471
Tenet Healthcare Corp.* 4,813 84,528
United Healthcare Corp. 2,810 136,812
Wellpoint Health Networks, Inc.* 1,240 70,680
--------------
690,970
--------------
HOME FURNISHINGS (0.09%)
Newell Rubbermaid, Inc. 4,288 122,476
--------------
HOTELS (0.16%)
Hilton Hotels Corp. 5,520 54,510
Marriott International, Inc. 4,973 162,555
--------------
217,065
--------------
INDUSTRIAL (0.70%)
Black & Decker Corp. 1,121 51,216
Case Corp. 808 40,249
Caterpillar, Inc. 4,632 253,892
Crane Co. 260 5,834
Cummins Engine Co., Inc. 300 14,944
Deere & Co. 3,028 117,146
Dover Corp. 2,660 108,728
Grainger (W. W.), Inc. 590 28,357
Grainger, (W.W.) Rights* 190 --
Ingersoll-Rand Co. 2,243 123,225
McDermott International, Inc. 440 8,910
Rockwell International Corp. 2,386 125,265
Snap-On, Inc. 560 18,200
Thermo Electron Corp.* 2,082 27,977
--------------
923,943
--------------
INSURANCE (3.05%)
Aetna Life & Casualty, Inc. 2,164 106,577
AFLAC, Inc. 3,430 143,631
Allstate Corp Rights* 2,926 --
Allstate Corp. 10,166 253,515
American General Corp. 3,547 224,126
American International Group, Inc. 20,697 1,799,345
Aon Corp. 3,304 97,675
Chubb Corp Rights* 730 --
Chubb Corp. 1,790 89,164
Cigna Corp. 2,498 194,220
Cincinnati Financial Corp. 2,200 82,569
Conseco Co., Inc. 3,316 64,040
Hartford Financial Services Group, Inc. 2,728 111,507
Humana, Inc.* 2,525 17,359
Jefferson Pilot Corp. 2,119 133,894
Lincoln National Corp. 2,208 82,938
Marsh & McLennan Co., Inc. 3,963 271,466
MBIA, Inc. 780 36,368
MGIC Investment Corp. 920 43,930
MGIC Investment Corp. Rights* 920 --
Progressive Corp. 960 78,420
Safeco Corp. 1,259 35,252
Saint Paul Cos. 2,640 72,600
Torchmark Corp. 1,210 31,309
Unum Corp. 2,630 77,421
--------------
4,047,326
--------------
INVESTMENT COMPANIES (0.34%)
Bear Stearns Cos., Inc. 988 37,976
Franklin Resources, Inc. 3,090 95,018
Merrill Lynch & Co. 4,652 312,556
--------------
445,550
--------------
MEDICAL DRUGS (1.22%)
Schering-Plough Corp. 19,320 842,835
Warner-Lambert Co. 11,662 774,065
--------------
1,616,900
--------------
MEDICAL PRODUCTS (9.28%)
Abbott Labs 21,036 773,073
Allergan, Inc. 760 83,600
American Home Products Corp. 17,530 727,495
Amgen, Inc.* 6,580 536,270
Bausch & Lomb, Inc. 925 60,992
Baxter International., Inc. 4,713 283,958
Becton, Dickinson & Co. 3,960 111,128
Biomet, Inc. 1,660 43,679
Boston Scientific Corp.* 5,262 129,906
Bristol-Myers Squibb Co. 26,968 1,820,340
C R Bard, Inc. 630 29,649
Cardinal Health, Inc. 3,600 196,200
Guidant Corp. 4,276 229,301
IMS Health, Inc. 4,252 96,999
Johnson & Johnson 18,246 1,676,351
Lilly (Eli) & Co. 15,120 967,680
Mallinckrodt, Inc. 1,140 34,414
Medtronic, Inc. 16,832 597,536
Merck & Co. 31,440 2,037,705
Pfizer, Inc. 50,454 1,813,191
Shared Medical Systems, Inc. 190 8,883
St. Jude Medical, Inc.* 1,157 36,446
--------------
12,294,796
--------------
METALS (0.57%)
Alcan Aluminum Ltd. 4,107 128,344
Alcoa, Inc. 5,024 311,802
Asarco, Inc. 1,630 43,704
Freeport-McMoran Copper & Gold, Inc. 1,590 24,744
Inco Ltd. 3,457 73,893
Phelps Dodge Corp. 650 35,791
Placer Dome, Inc. 4,407 65,554
Reynolds Metals Co. 977 58,986
Timken Co. 670 10,804
--------------
753,622
--------------
MINING AND BUILDING MATERIALS (0.17%)
Barrick Gold Corp. 4,301 93,547
Cyprus Amax Minerals Co. 2,540 49,848
Homestake Mining Co. 3,400 31,238
Newmont Mining Corp. 1,978 51,181
--------------
225,814
--------------
MISCELLANEOUS MANUFACTURING (0.61%)
Ball Corp. 290 12,778
Honeywell, Inc. 1,470 163,629
Millipore Corp. 350 13,147
Minnesota Mining & Manufacturing Co. 5,982 574,646
NACCO Industries, Inc. Class A 110 7,686
Pall Corp. 1,479 34,294
--------------
806,180
--------------
OFFICE EQUIPMENT (0.66%)
Avery Dennison Corp. 1,331 70,210
Ikon Office Solutions, Inc. 2,002 21,396
Lexmark International Group, Inc. Class A 1,560 125,580
Office Depot, Inc.* 4,880 49,715
Pitney Bowes, Inc. 3,854 234,853
Xerox Corp. 8,732 366,198
--------------
867,952
--------------
OIL & GAS (6.49%)
Amerada Hess Corp. 1,308 80,115
Anadarko Petro Corp. 950 29,034
Apache Corp. 840 36,278
Ashland, Inc. 345 11,601
Atlantic Richfield Co. 4,972 440,644
Baker Hughes, Inc. 3,540 102,660
Burlington Resources, Inc. 1,737 63,835
Chevron Oil Corp. 9,507 843,746
Chevron, Inc. 3,007 --
Exxon Corp. 31,698 2,407,067
Halliburton Co. 5,078 208,198
Kerr-McGee Corp. 970 53,411
Mobil Corp. 10,166 1,024,225
Occidental Petroleum Corp. 5,063 117,082
Phillips Petroleum Co. 2,814 137,183
Royal Dutch Petroleum Co. 27,930 1,649,616
Schlumberger, Ltd. 7,010 436,811
Sempra Energy 3,995 83,146
Sunoco., Inc. 640 17,520
Texaco, Inc. 7,492 472,933
The Coastal Corp. 2,470 101,116
Union Pacific Resources Group, Inc. 3,481 55,914
Unocal Corp. 2,682 99,402
USX Marathon Group, Inc. 4,236 123,903
--------------
8,595,440
--------------
PAINT & RELATED PRODUCTS (0.03%)
Sherwin Williams Co. 1,966 41,163
--------------
PHARMACEUTICALS (0.28%)
Pharmacia & Upjohn, Inc. 6,934 344,100
Watson Pharmaceuticals, Inc.* 950 29,034
--------------
373,134
--------------
PHOTOGRAPHY EQUIPMENT (0.34%)
Eastman Kodak Co. 5,704 430,296
Polaroid Corp. 840 21,840
--------------
452,136
--------------
PIPELINES (0.57%)
Consolidated National Gas Co. 1,171 73,041
Enron Corp. 9,572 394,845
Sonat, Inc. 2,016 80,010
Williams Cos., Inc. 5,690 213,019
--------------
760,915
--------------
PRINTING (0.08%)
R.R. Donnelley & Sons Co. 3,648 105,336
--------------
PUBLISHING (1.24%)
Dow Jones & Co. 2,385 127,299
Gannett, Inc. 7,884 545,474
Knight-Ridder, Inc. 1,889 103,659
McGraw-Hill Cos., Inc. 4,000 193,500
New York Times Co. Cl A 4,484 168,150
Times Mirror Co. Cl A 2,288 150,579
Tribune Co. 7,240 360,190
--------------
1,648,851
--------------
RETAIL STORES (5.85%)
Best Buy Co., Inc.* 2,570 159,501
Circuit City Stores, Inc. 2,770 116,859
Consolidated Stores Corp.* 1,330 29,343
Costco Cos., Inc.* 3,240 233,280
CVS Corp. 5,444 222,183
Dayton Hudson Corp. 6,064 364,219
Dillard's, Inc. 1,090 22,141
Dollar General Corp. 2,897 89,445
Federated Department Stores, Inc.* 2,427 106,030
Gap, Inc. 11,245 359,840
Harcourt General, Inc. 1,544 64,269
Home Depot, Inc. 19,466 1,335,854
J.C. Penney Co. 3,747 128,803
K-Mart Corp.* 6,188 72,322
Kohl's Corp.* 2,440 161,345
Longs Drug Stores Corp. 420 12,548
Lowe's Cos. 4,988 243,165
May Department Store Co. 4,578 166,811
Nordstrom, Inc. 1,900 51,300
Rite Aid Corp. 3,392 46,852
Sears, Roebuck & Co. 5,074 159,197
Staples, Inc.* 6,170 134,583
Tandy Corp. 2,460 127,151
The Limited, Inc. 2,785 106,526
TJX Companies, Inc. 4,120 115,618
Too, Inc.* 397 7,121
Toys 'R' Us, Inc.* 3,481 52,215
Wal Mart Stores, Inc. 57,158 2,718,577
Walgreen Co. 13,446 341,192
--------------
7,748,290
--------------
STEEL (0.14%)
Allegheny Teledyne, Inc. 2,633 44,432
Bethlehem Steel Corp.* 2,390 17,626
Nucor 1,311 62,436
USX-U.S. Steel Group, Inc. 1,213 31,235
Worthington Industries, Inc. 1,410 23,970
--------------
179,699
--------------
TELECOMMUNICATIONS (14.11%)
ADC Telecommunications, Inc.* 1,120 46,970
Alltel Corp. 4,078 286,989
Ameritech Corp. 15,016 1,008,888
Andrew Corp.* 412 7,159
AT &T Corp. 41,570 1,808,295
Bell Atlantic Corp. 20,936 1,409,255
Bellsouth Corp. 25,486 1,146,870
CenturyTel, Inc. 1,620 65,813
Cisco Systems, Inc. 40,744 2,793,511
General Instrument Corp.* 1,959 94,277
Global Crossing Ltd. 4,413 116,945
GTE Corp. 13,696 1,052,880
Harris Corp. 710 19,614
Lucent Technologies, Inc. 38,481 2,496,455
MCI Worldcom, Inc.* 23,953 1,721,622
Nextel Communications Cl A* 4,040 273,963
Nortel Networks Corp. 17,574 896,274
QUALCOMM, Inc.* 1,780 336,754
SBC Communications, Inc. 25,694 1,312,000
Scientific Atlanta, Inc. 680 33,702
Sprint Corp. 11,642 631,579
Sprint Corp. (PCS Group) 6,010 448,121
Tellabs, Inc.* 4,832 275,122
U S West, Inc. 7,245 413,416
--------------
18,696,474
--------------
TIRE & RUBBER (0.07%)
Goodyear Tire & Rubber Co. 1,950 93,844
--------------
TOOLS (0.02%)
Stanley Works 840 21,158
--------------
TRANSPORTATION (0.54%)
Burlington Northern Santa Fe Corp. 5,064 139,260
CSX Corp. 2,475 104,878
FDX Corp.* 3,726 144,383
Kansas City Southern Industries, Inc. 1,160 53,868
Laidlaw, Inc. 4,940 33,345
Norfolk Southern Corp. 4,316 105,742
Union Pacific Corp. 2,833 136,161
--------------
717,637
--------------
TRUCKING & LEASING (0.02%)
Ryder Systems, Inc. 1,280 26,080
--------------
UTILITIES (2.33%)
AES Corp. 2,500 147,500
Ameren Corp. 1,918 72,524
American Electric Power Co. 2,937 100,225
Carolina Power & Light Co. 2,074 73,368
Central & Southwest Corp. 3,086 65,192
Cinergy Corp. 1,904 53,907
CMS Energy Corp. 1,200 40,725
Consolidated Edison, Inc. 3,449 143,134
Constellation Energy Group 2,009 56,503
Dominion Resources, Inc. 2,094 94,492
DTE Energy Co. 1,919 69,324
Duke Energy Co. 4,863 268,073
Edison International 5,376 130,703
Entergy Corp. 3,335 96,507
Firstenergy Corp. 3,145 80,197
Florida Progress Corp. 980 45,324
FPL Group, Inc. 2,329 117,323
GPU, Inc. 575 --
GPU, Inc. Rights 1,235 40,291
New Century Energies, Inc. 1,310 43,802
Niagara Mohawk Power Corp.* 3,710 57,272
NICOR, Inc. 390 14,503
Northern States Power-Mn Co. 1,580 34,069
Pacificorp 5,286 106,380
PECO Energy Co. 2,546 95,475
Peoples Energy Corp. 350 12,316
PG&E Corp. 6,099 157,812
PP&L Resource, Inc. 1,385 37,480
Public Service Enterprise, Inc. 3,417 131,981
Reliant Energy, Inc. 5,360 145,054
Southern Co. 10,860 279,645
Texas Utilities Co. 4,421 164,959
Unicom Corp. 2,952 109,040
--------------
3,085,100
--------------
WASTE MANAGEMENT (0.12%)
Waste Management Services, Inc. 8,063 155,211
--------------
TOTAL COMMON STOCK (Cost $132,460,266) 132,212,434
--------------
REPURCHASE AGREEMENTS (0.07%)
Fifth Third Bank, 4.68%, dated 09/30/99, due
10/01/99, repurchase price $93,071
(collateralized by FNMA Pool #313887,
7.00%, due 11/01/17, market value $95,550
(Cost $93,059) 93,059
--------------
TOTAL INVESTMENTS (Cost $132,553,325) (99.87%) 132,305,493
OTHER ASSETS & LIABILITIES, NET (0.13%) 176,380
--------------
NET ASSETS (100%) $132,481,873
==============
*Non-income producing investment.
ADR -- American Depository Receipt
Cost for federal income tax at September 30, 1999 was
$132,582,954 and net unrealized depreciation
consisted of:
Gross unrealized appreciation $8,575,194
Gross unrealized depreciation (8,852,655)
--------------
Net unrealized depreciation $(277,461)
==============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
CAPSTONE SOCIAL ETHICS & RELIGIOUS VALUES FUND
SMALL CAP EQUITY FUND
SCHEDULE OF INVESTMENTS - September 30, 1999
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Shares Value
-------------- --------------
COMMON STOCK (99.91%)
ADVERTISING (0.60%)
Ha-Lo Industries, Inc.* 8,570 $53,562
True North Communications, Inc. 9,549 347,345
--------------
400,907
--------------
AEROSPACE (0.82%)
AAR Corp. 6,022 108,396
Alliant Techsystems, Inc.* 2,623 181,807
BE Aerospace, Inc.* 5,480 65,417
Kaman Corp. Cl A 4,593 58,561
Orbital Sciences Corp.* 8,062 141,085
--------------
555,266
--------------
AGRICULTURAL (0.50%)
Agribrands International, Inc.* 2,580 128,032
Delta & Pine Land Co. 8,146 210,778
--------------
338,810
--------------
AIRLINES (0.27%)
Atlantic Coast Airlines Holdings* 3,690 65,497
Skywest, Inc. 5,320 116,707
--------------
182,204
--------------
APPAREL (1.44%)
Authentic Fitness Corp. 4,943 86,811
K-Swiss, Inc. Cl A 2,460 77,644
Kellywood Co. 6,300 138,600
Nautica Enterprises, Inc. 7,636 123,130
Oshkosh B'Gosh, Inc. Cl A 4,320 68,985
Oxford Industries, Inc. 3,170 68,353
Phillips-Van Heusen Corp. 4,780 42,422
Quiksilver, Inc.* 4,590 83,767
Timberland Co. Cl A 4,958 193,672
Wolverine World Wide, Inc. 8,148 92,684
--------------
976,068
--------------
AUTO PARTS & EQUIPMENT (1.41%)
Discount Auto Parts, Inc.* 4,101 66,129
O'Reilly Automotive, Inc.* 5,450 259,727
Standard Motor Products, Inc. 3,956 76,895
Standard Products Co. 4,802 169,871
Standard Products Co. Rights* 4,602 --
Tower Automotive, Inc.* 9,940 196,936
Wabash National Corp. 6,050 122,891
Wynns International, Inc. 3,930 62,634
--------------
955,083
--------------
BANKS (6.95%)
Anchor Bancorp Wisconsin, Inc. 3,360 54,600
Banknorth Group, Inc. 5,520 164,910
Carolina First Corp. 4,840 95,893
Centura Banks, Inc. 6,606 273,323
Commerce Bancorp, Inc. 5,948 246,842
Commercial Federal Corp. 12,370 242,761
Community First Bankshares 6,690 112,894
Cullen Frost Bankers, Inc. 12,462 311,550
Downey Financial Corp. 5,706 114,833
First Bancorp Puerto Rico 4,820 96,701
First Merit Corp. 16,672 423,052
First Midwest Bancorp 6,790 259,293
Hudson United Bancorp 9,052 278,915
JSB Financial, Inc. 3,415 195,509
MAF Bancorp, Inc. 4,680 93,015
Premier Bancshares, Inc. 4,340 75,950
Provident Bankshares Corp. 5,565 118,430
Queens County Bancorp, Inc. 4,105 113,401
Riggs National Corp. 5,966 100,676
Silicon Valley Bancshares 4,270 103,014
Susquehanna Bancshares, Inc. 5,945 102,551
Trustco Bank Corp. 4,448 131,355
United Bankshares, Inc. 8,160 198,390
US Trust Corp. 3,872 311,212
UST Corp. 8,790 270,292
Whitney Holdings Corp. 5,988 205,837
--------------
4,695,199
--------------
BROADCASTING (0.86%)
Allen Telecommunications, Inc.* 5,150 50,212
P-Com, Inc.* 10,570 73,990
Powerwave Technologies, Inc.* 4,260 205,412
Westwood One, Inc.* 5,565 251,121
--------------
580,735
--------------
BUILDING (3.99%)
ABM Industries, Inc. 4,820 122,307
Apogee Enterprises, Inc. 5,680 39,938
Butler Manufacturing Co. 3,045 79,931
Champion Enterprises, Inc.* 9,615 86,535
D. R. Horton, Inc. 12,077 156,246
Dycom Industries, Inc.* 5,350 225,703
Eagle Hardware & Garden, Inc.* 315 118
Elcor Corp. 4,240 106,000
Florida Rock Industries, Inc. 4,140 143,865
Florida Rock Industries, Inc. Rights* 4,140 --
Hughes Supply, Inc. 5,395 117,341
Insituform Technologies Cl A* 4,670 116,750
Lone Star Industries, Inc. 4,962 247,480
MDC Holdings, Inc. 3,780 61,189
Morrison-Knudsen Corp.* 7,740 79,819
Oakwood Homes Corp. 9,638 43,371
Ryland Group, Inc. 4,489 102,125
Service Experts, Inc.* 4,460 46,272
Simpson Manufacturing Co. 2,790 130,781
Skyline Corp. 3,130 80,402
Standard Pacific Corp. 6,320 64,780
Stone & Webster, Inc. 4,830 135,240
Thor Industries, Inc. 4,200 107,100
TJ International, Inc. 4,214 105,877
TJ International, Inc. Rights* 4,214 --
Toll Brothers, Inc. 7,295 139,061
Universal Forest Products, Inc. 4,080 53,295
US Home Corp.* 3,868 107,579
--------------
2,699,105
--------------
BUILDING PRODUCTS (0.35%)
Republic Group, Inc. 2,760 38,467
Texas Industries, Inc. 5,340 197,580
--------------
236,047
--------------
CHEMICALS (1.45%)
Cambrex Corp. 6,004 158,731
Chemfirst, Inc. 5,317 145,221
MacDermid, Inc. 5,070 172,697
McWhorter Technologies, Inc.* 2,820 41,595
Mississippi Chemical Corp. 5,108 35,756
OM Group, Inc. 5,761 221,078
Quaker Chemical Corp. 3,480 57,855
The Geon Co. 5,585 143,814
--------------
976,747
--------------
COMMERCIAL SERVICES (1.68%)
Central Parking Corp. 7,795 228,004
DBT Online, Inc.* 4,020 100,249
Insurance Auto Auctions, Inc.* 2,610 38,824
Kroll-O'Gara Co. 4,960 82,770
Lason, Inc. * 4,190 186,586
NFO Worldwide, Inc.* 4,220 53,805
Plexus Corp.* 3,750 114,844
Prepaid Legal Services, Inc.* 4,910 193,331
Primark Corp.* 4,859 138,178
--------------
1,136,591
--------------
COMPONENTS (1.92%)
Alpha Industries, Inc.* 3,940 222,241
C-COR Electronics, Inc.* 2,540 77,153
C-COR Electronics, Inc. Rights* 2,370 --
Checkpoint Systems, Inc.* 5,510 51,312
Coherent, Inc.* 5,570 124,281
Dionex Corp.* 4,718 201,694
Electro Scientific Industries, Inc.* 2,970 158,245
Harman International Industries, Inc. 4,320 181,710
Silicon Valley Group, Inc.* 6,660 78,671
Vicor Corp. 8,639 195,996
--------------
1,291,303
--------------
COMPUTER HARDWARE (0.55%)
Hutchinson Technology, Inc.* 5,520 149,040
InterVoice, Inc.* 5,360 59,295
Kronos, Inc.* 3,180 116,666
Read Rite Corp.* 10,015 46,945
--------------
371,946
--------------
COMPUTER SERVICES & SOFTWARE (9.33%)
Acxiom Corp.* 16,204 318,511
American Management Systems, Inc.* 8,258 211,870
Analysts International Corp. 4,285 44,457
Anixter International, Inc.* 7,876 183,117
Aspen Technologies, Inc.* 5,120 49,920
Auspex Systems, Inc.* 4,990 44,286
Avid Technology, Inc.* 5,540 72,713
Bisys Group, Inc.* 5,451 255,686
BMC Software, Inc.* 4,810 59,223
ChoicePoint, Inc.* 3,110 209,536
Ciber, Inc.* 11,000 168,437
Computer Task Group, Inc. 4,540 66,965
Dendrite International, Inc.* 5,190 245,227
Digi International Inc.* 3,600 39,375
Factset Research Systems, Inc. 3,250 184,844
Fair Issac & Co. 3,219 90,333
FileNet Corp.* 6,192 66,177
Harbinger Corp.* 8,180 138,037
HNC Software, Inc.* 5,580 221,456
Hyperion Solutions Corp.* 6,836 150,392
Inter Tel, Inc. 5,350 94,962
Macromedia, Inc.* 8,700 355,612
Mercury Interactive Corp.* 7,570 488,738
Midway Games, Inc.* 7,060 111,195
National Data Corp. 7,046 183,196
National Instrument Corp.* 10,155 358,916
Progress Software Corp.* 3,798 119,162
QRS Corp.* 2,770 177,626
RSA Security, Inc.* 8,410 223,391
SEI Investments Co. 3,641 325,073
Technology Solutions Co.* 7,205 101,771
Vantive Corp.* 5,680 49,345
Visio Corp.* 6,370 250,022
Whittman-Hart, Inc.* 10,930 423,880
Xircom, Inc.* 5,100 217,706
--------------
6,301,157
--------------
COMPUTER SYSTEMS (1.39%)
Apex, Inc.* 4,000 74,750
Clarify, Inc.* 4,680 235,462
Jack Henry & Associates 4,201 155,174
Micros Systems, Inc.* 3,640 147,420
National Computer Systems, Inc. 6,156 236,044
S3, Inc.* 8,920 93,103
--------------
941,953
--------------
CONSULTING SERVICES (0.37%)
Inacom Corp. * 8,931 82,054
Remedy Corp.* 5,830 165,426
--------------
247,480
--------------
CONSUMER PRODUCTS (0.92%)
FOSSIL, Inc.* 6,520 176,447
Information Resources, Inc.* 4,330 47,901
Russ Berrie and Co. 5,428 113,649
Scotts Co.* 4,329 149,892
Toro Co. 3,639 136,008
--------------
623,897
--------------
CONTAINERS (0.11%)
Shorewood Packaging Corp. 5,483 74,363
--------------
COSMETICS & TOILETRIES (0.20%)
Kimberly-Clark Corp. 2,602 136,605
--------------
DISTRIBUTION WHOLESALE (0.63%)
Aviation Sales Co.* 2,970 56,430
Brightpoint, Inc.* 10,210 74,342
Insight Enterprises, Inc.* 5,400 175,500
Owens & Minor, Inc. Holding Co. 5,754 55,382
Watsco, Inc. 5,865 66,714
--------------
428,368
--------------
DIVERSIFIED CONGLOMERATES (1.87%)
AMCOL International Corp. 3,100 45,725
Blount International, Inc. Cl A 299 4,037
Chemed Corp. 5,115 154,729
Clarcor, Inc. 5,220 87,761
Mascotech, Inc. 10,090 163,332
Myers Industries, Inc. 4,576 81,224
Roper Industries, Inc. 6,576 251,532
SPS Technologies, Inc.* 3,198 121,324
Standex International Corp. 3,850 103,950
Tredegar Industries, Inc. 7,384 157,833
Tredegar Industries, Inc. Rights* 7,384 --
Volt Info Sciences, Inc.* 3,710 89,968
--------------
1,261,415
--------------
EDUCATION (0.39%)
Devry, Inc.* 13,268 265,360
--------------
ELECTRONIC EQUIPMENT (8.72%)
Analogic Corp. 3,420 107,944
Artesyn Technologies, Inc.* 6,860 130,126
Benchmark Electronics, Inc.* 3,750 132,422
Burr-Brown Corp.* 7,605 300,397
C & D Technology, Inc. 2,610 94,776
C-Cube Microsystems, Inc.* 8,400 365,400
CTS Corp. 5,580 320,850
Dallas Semiconductors Corp. 5,969 318,968
Electroglas, Inc.* 4,480 104,720
Etec Systems, Inc.* 4,631 174,241
General Semi-Conductors, Inc.* 6,000 61,875
Gentex Corp.* 14,380 297,038
Hadco Corp.* 3,260 140,995
Harmon Industries, Inc. 2,490 31,281
Harmon Industries, Inc. Rights* 2,490 --
International Rectifier Corp.* 9,894 150,883
Kemet Corp.* 7,915 253,033
Kent Electronics Corp.* 5,813 107,540
Lattice Semiconductor Corp.* 10,038 298,003
Marshall Industries Rights* 3,833 --
Marshall Industries* 4,063 148,300
Methode Electronics, Inc. 7,020 132,502
Micrel, Inc.* 8,200 355,675
Novellus Systems, Inc.* 8,040 542,197
Oak Industries, Inc.* 4,285 145,690
Park Electrochemical Co. 3,013 99,052
Photronics, Inc.* 5,350 120,041
Pioneer Standard Electronics, Inc. 5,030 72,621
SLI, Inc.* 6,500 138,531
Technitrol, Inc. 3,930 138,532
TNP Enterprises, Inc. 3,370 131,219
Trimble Navigation Ltd.* 4,660 49,804
Ultratech Stepper, Inc.* 5,040 64,260
Unitrode Corp. 6,160 258,720
Watkins Johnson Co. 3,170 106,393
--------------
5,894,029
--------------
ENERGY (0.19%)
Nstar 3,300 127,875
--------------
ENGINEERING (0.29%)
Tetra Tech, Inc.* 7,387 123,271
URS Corp.* 2,970 72,765
--------------
196,036
--------------
ENTERTAINMENT & LEISURE (0.13%)
Family Golf Centers, Inc. Rights* 5,260 --
Prime Hospitality Corp.* 11,090 88,720
--------------
88,720
--------------
FINANCIAL SERVICES (2.27%)
Americredit Corp.* 13,330 199,117
Billing Concepts Corp.* 7,230 36,150
Chittenden Corp. 4,820 137,370
Hambrecht & Quist Group* 5,240 256,432
Pioneer Group, Inc.* 5,910 88,650
Raymond James Financial, Inc. 10,881 216,940
St. Paul Bancorp, Inc. 8,045 184,029
The Profit Recovery Group International, Inc.* 9,315 415,682
--------------
1,534,370
--------------
FIREARMS & AMMUNITION (0.05%)
Sturm, Ruger & Co., Inc. 4,086 36,774
--------------
FOOD & BEVERAGES (1.72%)
Chiquita Brands International, Inc. 11,380 67,569
Corn Products International, Inc. 8,690 264,502
Earthgrains Co. 8,264 182,841
Fleming Co., Inc. 6,680 65,547
J&J Snack Foods Corp.* 2,530 49,967
Performance Food Group Co.* 3,270 83,794
Ralcorp Holdings, Inc. 5,570 98,519
SuperValu, Inc.* 87 1,898
United Natural Foods, Inc.* 3,820 33,545
Whole Foods Market, Inc.* 6,029 197,262
Michael Foods, Inc. 4,480 117,740
--------------
1,163,184
--------------
FOREST & PAPER PRODUCTS (0.47%)
Buckeye Technology, Inc.* 6,720 105,420
Caraustar Industries, Inc.* 5,735 146,242
Pope & Talbot, Inc. 5,165 63,917
--------------
315,579
--------------
HEALTH CARE SERVICES (1.78%)
Hooper Holmes, Inc. 5,280 135,300
Medquist, Inc.* 6,800 227,375
Orthodontic Centers of America, Inc.* 8,960 156,800
Pediatrix Medical Group, Inc.* 4,090 56,749
PhyCor, Inc.* 11,945 52,259
Renal Care Group, Inc.* 9,430 206,576
Sierra Health Services, Inc.* 6,011 60,861
Universal Health Services, Inc.* 7,394 191,320
US Oncology, Inc.* 13,120 118,900
--------------
1,206,140
--------------
HOME FURNISHING (0.76%)
Ethan Allen Interiors, Inc. 8,976 285,549
Interface, Inc. Cl A 8,938 45,807
La-Z Boy Chair Co. 9,573 182,485
--------------
513,841
--------------
HOME FURNISHINGS (0.69%)
Bassett Furniture Industries, Inc. 3,668 69,692
Libbey, Inc. 3,920 115,885
National Presto Industries, Inc. 4,080 157,590
Pier One, Inc. 17,914 120,919
--------------
464,086
--------------
HUMAN RESOURCES (0.66%)
CDI Corp.* 4,439 121,240
Interim Services, Inc.* 12,126 198,563
Labor Ready, Inc.* 8,230 82,814
StaffMark, Inc.* 5,120 40,640
--------------
443,257
--------------
INDUSTRIAL (0.53%)
Cognex Corp.* 8,447 254,994
Gerber Scientific, Inc. 4,671 104,514
--------------
359,508
--------------
INSURANCE (4.20%)
Arthur J. Gallagher & Co.* 3,732 198,729
Capital Re Corp.* 6,260 62,600
Conventry Corp.* 11,775 111,862
Delphi Financial Group, Inc.* 4,836 145,987
E.W. Blanch Holdings, Inc. 2,690 175,186
Enhance Financial Services Group, Inc. 6,858 121,301
Express Scripts, Inc.* 7,842 613,636
Fidelity National Financial, Inc. 5,908 89,728
First American Financial Corp. 11,058 147,901
Fremont General Corp. 12,552 119,244
Frontier Insurance Group, Inc. 7,075 61,906
Hilb, Rogal and Hamilton Co. 2,340 58,646
Radian Group, Inc. 6,987 300,004
Selective Insurance Group, Inc. 4,678 88,297
Trenwick Group, Inc. 3,767 62,391
Zenith National Insurance Corp. 4,218 90,160
Mutual Risk Management, Ltd. 8,536 104,566
Orion Capital Corp. 6,014 284,913
--------------
2,837,057
--------------
INVESTMENT COMPANIES (1.46%)
Dain Rauscher Corp. 3,018 147,882
Eaton Vance Corp. 7,956 254,592
Jefferies Group, Inc. 5,620 117,317
Legg Mason, Inc. 12,216 468,025
--------------
987,816
--------------
LINEN SUPPLY & RELATED ITEMS (0.34%)
Angelica Corp. 3,320 38,180
G & K Services, Inc. 4,717 191,038
--------------
229,218
--------------
MACHINERY, GENERAL INDUSTRIAL (3.48%)
Applied Industrial Technologies, Inc. 4,710 84,780
Applied Power Cl A 8,254 250,715
Astec Industries, Inc.* 3,760 90,710
Baldor Electric Co. 6,540 123,851
Gardner Denver, Inc.* 3,760 56,870
Global Industries Technologies, Inc.* 4,760 58,012
Graco, Inc. 4,460 146,344
Helix Technologies Corp. 5,300 176,225
IDEX Corp. 5,760 163,080
JLG Industries, Inc. 7,440 112,995
Kulicke & Soffa Industries, Inc.* 4,990 121,319
Lindsay Manufacturing Co. 3,379 66,313
Regal-Beloit Corp. 4,708 97,691
Robbins & Myers, Inc. 3,270 50,685
Specialty Equipment Co. 4,110 103,778
Speedfam International, Inc.* 6,700 80,400
The Manitowac Co., Inc. 5,727 195,434
Thomas Industries, Inc. 3,580 66,901
Zebra Technologies Corp. Cl A* 6,696 304,459
--------------
2,350,562
--------------
MARKETING SERVICES (0.61%)
Advo, Inc.* 4,405 87,825
Catalina Marketing Corp.* 3,805 322,712
--------------
410,537
--------------
MEDICAL PRODUCTS (5.52%)
Alpharma, Inc. 5,738 202,623
Barr Labs, Inc.* 5,010 159,068
Bindly Western Industries, Inc. 5,866 83,957
Bio Technology General Corp* 7,950 76,271
Cephalon, Inc.* 6,440 115,719
Cerner Corp.* 7,080 107,970
Cooper Co.* 3,370 104,049
Cygnus, Inc.* 4,430 49,699
Datascope Corp.* 3,740 131,367
Diagnostic Products Corp. 3,520 94,380
Enzo Biochem, Inc. 5,556 157,652
Hanger Orthopedic Group, Inc.* 4,280 62,060
Idexx Labs, Inc.* 8,209 141,349
Incyte Pharmaceuticals, Inc.* 6,030 139,444
Invacare, Inc. 6,186 121,014
Liposome Co., Inc.* 7,250 55,168
Maxxim Medical, Inc. 3,360 80,430
Mentor Corp. 5,193 148,000
North American Vaccine, Inc.* 6,060 45,450
Organogenesis, Inc.* 6,180 45,964
Osteotech, Inc.* 2,670 36,379
Patterson Dental Co.* 6,857 339,850
Protein Design Labs, Inc.* 4,575 165,272
Respironics, Inc.* 6,110 50,408
Safeskin, Corp.* 10,550 86,708
Scott Technologies, Inc.* 3,850 76,038
Sola International, Inc.* 5,471 84,459
Spacelabs Medical, Inc.* 3,060 46,283
Summit Technology, Inc.* 9,290 170,123
Syncor International Corp.* 2,650 99,375
Varian Medical Systems, Inc. 6,390 139,781
Vital Signs, Inc. 2,923 59,556
Wesley Jessen VisionCare, Inc.* 3,630 113,211
Xomed Surgical Products, Inc.* 2,490 141,930
--------------
3,731,007
--------------
METAL PRODUCTS (0.07%)
Amcast Industrial Corp. 3,420 45,529
--------------
METALS (1.75%)
Brush Wellman, Inc. 4,550 66,828
Castle Am & Co. 3,507 44,276
Commercial Metals Co. 4,455 128,081
Commercial Metals Company Rights* 4,455 --
Commonwealth Industries, Inc. 4,320 58,050
Intermet Corp. 5,044 42,717
Mueller Industries, Inc.* 7,762 230,434
Quanex Corp. 3,938 100,911
Reliance Steel & Aluminum Co. 6,705 140,805
RTI International, Inc.* 4,280 42,800
Stillwater Mining Co.* 7,957 213,844
WHX Corp.* 5,354 53,540
Wolverine Corp.* 3,825 59,288
--------------
1,181,574
--------------
MISCELLANEOUS MANUFACTURING (1.22%)
A.O. Smith Corp. 5,322 160,991
Aptargroup, Inc. 7,308 195,489
Barnes Group, Inc. 4,380 87,874
Esterline Technologies Corp.* 3,660 57,645
Huffy Corp. 4,367 43,124
Justin Industries, Inc. 4,190 59,446
Lawson Products, Inc. 3,480 75,255
Paxar Corp.* 6,179 59,473
Valmont Industries, Inc. 5,260 88,763
--------------
828,060
--------------
OFFICE EQUIPMENT (0.57%)
Brady Corp. Cl A 5,180 165,760
John H. Harland Co. 5,590 108,656
New England Business, Inc. 3,980 113,679
--------------
388,095
--------------
OIL & GAS (5.69%)
Atmos Energy Corp. 5,486 132,350
Barrett Resources Corp.* 7,449 275,147
Cabot Oil & Gas Corp. 6,721 115,937
Connecticut Energy Corp. 2,590 100,201
Cross Timbers Oil Co. 9,017 121,730
Dril-Quip, Inc.* 7,160 183,028
Energen Corp. 4,780 96,795
HS Resources, Inc.* 4,310 70,576
Input/Output, Inc.* 8,714 57,730
New Jersey Resources Corp. 3,756 150,240
Newfield Exploration Co.* 8,842 291,233
Northwest Natural Gas Co. 3,832 98,914
Oceaneering International, Inc.* 4,986 83,827
Pennsylvania Enterprises, Inc. 2,720 88,230
Piedmont Natural Gas, Inc. 4,919 149,107
Plains Resources, Inc.* 4,220 75,433
Pogo Producing Co. 9,096 188,742
Pool Energy Service Co.* 5,500 135,438
Pride International, Inc.* 10,445 148,188
Public Service Company of N.C. 3,500 108,500
Seacor Holdings.* 2,990 153,238
Seitel, Inc.* 4,900 47,775
Southwest Gas Corp. 5,209 140,317
St. Mary Land & Exploration Co. 4,020 105,023
Stone Energy Corp.* 3,890 197,904
Tuboscope Inc.* 7,915 98,443
Vintage Petroleum Rights* 11,326 --
Vintage Petroleum, Inc. 11,446 154,521
WD-40 Co. 4,060 95,030
Wicor, Inc. 6,160 179,025
--------------
3,842,622
--------------
PAINT & RELATED PRODUCTS (0.09%)
Lilly Industries, Inc. 4,709 64,160
--------------
PHARMACEUTICAL (2.61%)
Biomatrix, Inc.* 4,940 110,841
Cor Therapeutics, Inc.* 5,300 100,700
Dura Pharmaceuticals, Inc.* 8,810 122,789
IDEC Pharmaceuticals Corp.* 4,080 383,648
Jones Pharmaceutical, Inc. 9,240 304,632
Parexel International Corp.* 5,380 49,093
Pharmaceutical Product Development, Inc. 4,780 64,829
Priority Healthcare Corp. Cl B* 4,944 152,646
Roberts Pharmaceutical Corp.* 6,975 210,994
U.S. Bioscience, Inc.* 5,490 78,233
Vertex Pharmaceuticals, Inc.* 5,902 183,331
--------------
1,761,736
--------------
PHOTOGRAPHY & EQUIPMENT (0.15%)
CPI Corp. 3,060 104,614
--------------
PRINTING (1.22%)
Bowne & Co., Inc. 7,404 89,311
Consolidated Graphic, Inc.* 3,760 158,390
Merrill Corp. 3,410 67,987
Valassis Communications, Inc.* 11,643 511,564
--------------
827,252
--------------
RECREATION VEHICLE MANUFACTURING (0.70%)
Coachmen Industries, Inc. 3,650 56,119
Monaco Coach Corp.* 3,840 93,600
Polaris Industries, Inc. 5,880 203,595
Winnebago Industries, Inc. 5,090 121,842
--------------
475,156
--------------
RECYCLING (0.09%)
IMCO Recycling, Inc. 3,940 59,100
--------------
RESTAURANT - RETAIL (1.22%)
Luby's Cafeterias, Inc. 6,480 74,520
Ruby Tuesday, Inc. 7,650 149,175
CEC Entertainment, Inc.* 7,042 252,632
Cheesecake Factory, Inc.* 5,475 151,931
IHOP Corp.* 6,840 138,510
Landry's Restaurants, Inc.* 7,000 56,000
--------------
822,768
--------------
RETAIL STORES (5.25%)
Action Performance Cos., Inc.* 3,650 76,878
Ames Department Stores, Inc.* 6,120 195,075
AnnTaylor Stores Corp.* 5,980 244,433
Brown Group, Inc. 4,799 87,882
Casey's General Stores, Inc. 8,842 118,539
Cato Corp. Cl A 5,660 79,771
Customtracks Corp.* 3,180 94,208
Department 56, Inc.* 3,690 88,329
Dress Barn, Inc. 5,596 102,652
Footstar Inc. Rights* 5,450 --
Footstar, Inc.* 5,470 192,818
Goody's Family Clothing, Inc.* 7,110 57,324
Jo-Ann Stores, Inc. Cl A* 4,445 55,285
Linens 'N Things, Inc.* 8,050 271,688
Men's Wearhouse, Inc.* 9,035 194,253
Michaels Stores, Inc.* 6,810 200,895
Pacific Sunwear of California, Inc.* 6,675 187,109
Regis Corp. 7,785 149,861
Shopko Stores, Inc.* 6,244 181,076
Stein Mart, Inc.* 8,202 58,439
Stride Rite Corp. 7,880 55,160
Williams Sonoma, Inc.* 11,518 559,343
Zale Corp.* 7,750 296,922
--------------
3,547,940
--------------
TELECOMMUNICATIONS (1.49%)
Adaptive Broadband Corp.* 4,310 144,385
Aspect Tele-Communications Corp.* 10,344 175,525
Black Box Corp.* 3,710 194,775
CommScope, Inc.* 9,420 306,150
Plantronics, Inc.* 3,680 183,080
--------------
1,003,915
--------------
TEXTILE PRODUCTS (0.07%)
Guilford Mills, Inc. 5,537 47,757
--------------
TRANSPORTATION (2.32%)
Air Express International Corp. 7,240 164,258
American Freightways Corp.* 5,860 106,579
Expeditors International, Inc. 10,612 340,579
Fritz Co., Inc.* 6,403 66,431
Heartland Express, Inc.* 5,370 75,851
Kirby Corp.* 4,097 80,404
Landstar Systems, Inc.* 2,355 81,836
MS Carriers, Inc.* 3,040 72,960
Offshore Logistics, Inc.* 5,150 53,109
USFreightways Corp. 5,802 274,870
Werner Enterprises, Inc. 8,448 148,896
Yellow Corp.* 5,916 97,984
--------------
1,563,757
--------------
TRUCKING & LEASING (0.11%)
Rollins Truck Leasing Corp. 7,399 74,916
--------------
UTILITIES (1.22%)
Central Hudson Gas & Electric Corp. 3,230 127,181
Cilcorp, Inc. 2,890 187,308
Eastern Utilities Associates 3,928 117,349
Northwestern Corp. 2,750 62,562
Talk.Com, Inc. Rights* 562 --
TALK.com, Inc.* 11,240 145,067
United Illuminating Co. 3,791 183,390
--------------
822,857
--------------
VITAMINS & NUTRITION PRODUCTS (0.12%)
NBTY, Inc.* 10,403 79,323
--------------
WATER (1.18%)
American States Water Co. 2,910 96,394
Aquarion Co. 3,810 136,684
Ionics, Inc.* 4,405 142,612
Philadelphia Suburban Corp. 8,652 203,863
United Water Resources, Inc. 6,740 219,893
--------------
799,446
--------------
WIRE & CABLE PRODUCTS (0.38%)
Belden, Inc. 5,520 113,160
Cable Design Technologies Corp.* 6,150 140,297
--------------
253,457
--------------
WIRELESS EQUIPMENT (0.52%)
Digital Microwave Corp. * 12,440 195,153
DSP Communications, Inc.* 8,270 157,130
--------------
352,283
--------------
TOTAL COMMON STOCK (Cost $61,534,533) 67,512,522
--------------
Principal
--------------
REPURCHASE AGREEMENTS (0.07%)
Fifth Third Bank, 4.68%, dated 09/30/99, due
10/01/99, repurchase price $48,636
(collateralized by FNMA Pool #313887, 7.00%,
due 11/01/17, market value $49,765 (Cost $48,630) $48,630 48,630
--------------
TOTAL INVESTMENTS (Cost $61,583,163) (99.98%) 67,561,152
OTHER ASSETS & LIABILITIES, NET (0.02%) 11,119
--------------
NET ASSETS (100%) $67,572,271
==============
*Non-income producing investment.
ADR -- American Depository Receipt
Cost for federal income tax at September 30, 1999
was $61,633,768 and net unrealized appreciation
consisted of:
Gross unrealized appreciation $13,156,954
Gross unrealized depreciation (7,229,570)
--------------
Net unrealized appreciation $5,927,384
==============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
CAPSTONE SOCIAL ETHICS & RELIGIOUS VALUES FUND
INTERNATIONAL FUND
SCHEDULE OF INVESTMENTS - September 30, 1999
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Shares Value
-------------- --------------
COMMON STOCK (34.79%)
AUSTRIA (0.26%)
World Equity Benchmark Securities - Austria Series 12,465 $108,680
--------------
AUSTRALIA (2.66%)
World Equity Benchmark Securities - Australia Series 107,803 1,111,718
--------------
BELGIUM (1.25%)
Electrabel SA* 340 117,823
Fortis (B) 4,990 162,613
KBC Bancassurance Holding NV* 1,540 78,312
Solvay SA 600 42,748
Tractebel 540 95,693
World Equity Benchmark Securities - Belgium Series 1,502 23,657
--------------
520,846
--------------
FRANCE (0.17%)
World Equity Benchmark Securities - France Series 3,150 72,647
--------------
GERMANY (0.19%)
World Equity Benchmark Securities - Germany Series 3,834 80,274
--------------
HONG KONG (2.25%)
World Equity Benchmark Securities -
Hong Kong Series 82,925 943,272
--------------
ITALY (2.40%)
World Equity Benchmark Securities - Italy Series 45,606 1,006,182
--------------
JAPAN (11.31%)
World Equity Benchmark Securities - Japan Series 339,450 4,731,084
--------------
NETHERLANDS (5.51%)
ABN AMRO Holding NV - Sponsored ADR 7,081 160,208
Akzo Nobel NV - Sponsored ADR 2,562 109,525
Elsevier NV - Sponsored ADR 2,444 50,407
Ing Groep NV - Sponsored ADR 5,124 280,539
KLM Royal Dutch Air Lines NV - ADR 2,319 60,584
Koninklijke Ahold - Sponsored ADR 4,373 144,856
Koninklijke KPN NV - Sponsored ADR 3,548 157,886
Koninklijke Philips Electronics - ADR 1,512 152,712
Oce NV - Sponsored ADR 3,915 73,406
Royal Dutch Petroleum - ADR 11,748 693,866
Unilever NV - ADR 2,885 196,541
Wolters Kluwer NV - Sponsored ADR 2,930 100,477
World Equity Benchmark Securities -
Netherlands Series 5,580 126,247
--------------
2,307,254
--------------
SINGAPORE (0.88%)
World Equity Benchmark Securities -
Singapore Series 48,152 367,159
--------------
SPAIN (0.83%)
World Equity Benchmark Securities -
Spain Series 13,849 346,225
--------------
SWEDEN (0.12%)
World Equity Benchmark Securities -
Sweden Series 2,220 49,673
--------------
SWITZERLAND (6.62%)
Adecco SA - Sponsored ADR 2,366 162,071
Credit Suisse Group - Sponsored ADR 5,375 246,259
Nestle SA - Sponsored ADR 4,557 429,497
Novartis AG - ADR 9,606 712,490
Roche Holding AG Genuss 6,058 701,043
UBS AG - Sponsored ADR 32,644 465,177
World Equity Benchmark Securities -
Switzerland Series 3,540 55,534
--------------
2,772,071
--------------
UNITED KINGDOM (0.34%)
World Equity Benchmark Securities -
United Kingdom Series 7,080 143,813
--------------
TOTAL COMMON STOCK (Cost $11,916,160) 14,560,898
--------------
Principal
--------------
SHORT-TERM INVESTMENTS (61.18%)
FEDERAL HOME LOAN BANK DISCOUNT CORP. (11.94%)
3.71%, 10/04/99 5,000,000 4,997,968
--------------
FEDERAL NATIONAL MORTGAGE ASSOC. (37.91%)
5.16%, 11/18/99 9,000,000 8,938,557
5.19%, 12/15/99 7,000,000 6,924,750
--------------
15,863,307
--------------
REPURCHASE AGREEMENT (11.33%)
Fifth Third Bank, 4.68%, dated 09/30/99, due
10/01/99, repurchase price $4,741,555
(collateralized by FNMA Pool #313887, 7.00%,
due 11/01/17, market value $4,836,223
(Cost $4,740,939) $4,740,939 4,740,939
--------------
TOTAL SHORT-TERM INVESTMENTS (Cost $25,601,299) 25,602,214
--------------
TOTAL INVESTMENTS (Cost $37,517,459) (95.97%) 40,163,112
OTHER ASSETS & LIABILITIES, NET (4.03%) 1,685,106
--------------
NET ASSETS (100%) $41,848,218
--------------
*Non-income producing investment.
ADR -- American Depository Receipt
Cost for federal income tax at September 30, 1999
was $37,517,459 and net unrealized appreciation
consisted of:
Gross unrealized appreciation $2,912,620
Gross unrealized depreciation (266,967)
--------------
Net unrealized appreciation $2,645,653
--------------
</TABLE>
<TABLE>
<CAPTION>
FUTURES CONTRACTS OUTSTANDING - September 30, 1999
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Unrealized
Total Value Appreciation
Number of Contracts (U.S. Dollars) (Depreciation)
- ------------------- -------------- --------------
79 CAC 40, delivery date 10/29/99 $3,866,345 $(96,153)
28 DAX, delivery date 12/17/99 3,853,382 (178,244)
86 FTSE 100, delivery date 12/17/99 8,613,313 (392,866)
8 IBEX, delivery date 10/15/99 811,286 (36,428)
4 MIB 30, delivery date 12/20/99 725,255 (4,377)
87 NIKKEI 225, delivery date 12/14/99 7,182,511 1,880
86 OMX, delivery date 10/22/99 833,786 (12,911)
-------------- --------------
$25,935,858 $(719,099)
============== ==============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
THE CAPSTONE SOCIAL ETHICS & RELIGIOUS VALUES FUND
STATEMENTS OF ASSETS AND LIABILITIES September 30, 1999
- ---------------------------------------------------------------------------------------------------------------------------------
Money Market Short-Term Bond Large Cap Small Cap International
Fund Bond Fund Fund Equity Fund Equity Fund Fund
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value (identified cost
$23,077,697, $25,809,741, $63,311,058,
$132,553,325, $61,583,163 and
$37,517,459 respectively) (Note 2) $23,077,697 $25,556,582 $59,484,655 $132,305,493 $67,561,152 $40,163,112
Cash denominated in foreign currency,
at value (identified cost $1,508,286) -- -- -- -- -- 1,518,335
Receivables:
Investments sold -- -- -- 68,544 -- --
Due from Advisor 16,097 -- -- -- -- --
Dividends and interest 98,841 381,330 881,704 137,157 35,393 3,788
Variation margin receivable -- -- -- -- -- 175,156
Prepaid expenses 7,789 9,478 8,839 9,090 10,277 9,089
------------ ------------ ------------ ------------ ------------ ------------
Total assets 23,200,424 25,947,390 60,375,198 132,520,284 67,606,822 41,869,480
------------ ------------ ------------ ------------ ------------ ------------
LIABILITIES:
Payables:
Distributions payable $3,427 $-- $-- $-- $-- $--
Fund shares redeemed -- -- 3 12 4 --
Due to Advisor -- 3,403 9,971 21,193 11,201 6,825
Accrued expenses 12,534 16,151 21,531 17,206 23,346 14,437
------------ ------------ ------------ ------------ ------------ ------------
Total liabilities 15,961 19,554 31,505 38,411 34,551 21,262
------------ ------------ ------------ ------------ ------------ ------------
NET ASSETS $23,184,463 $25,927,836 $60,343,693 $132,481,873 $67,572,271 $41,848,218
============ ============ ============ ============ ============ ============
NET ASSETS CONSIST OF:
Paid-in capital $23,184,463 $26,194,479 $64,241,530 $129,125,180 $59,058,751 $34,521,635
Undistributed net investment income -- 24,620 62,785 25,641 2,122 21,054
Undistributed realized gain (loss)
on investments -- (38,104) (134,219) 3,578,884 2,533,409 5,368,924
Net unrealized appreciation
(depreciation) on:
Investments -- (253,159) (3,826,403) (247,832) 5,977,989 1,926,555
Translation of assets and
liabilities in foreign currencies -- -- -- -- -- 10,050
------------ ------------ ------------ ------------ ------------ ------------
Net Assets $23,184,463 $25,927,836 $60,343,693 $132,481,873 $67,572,271 $41,848,218
============ ============ ============ ============ ============ ============
CLASS A SHARES (NOTE 1):
Net assets for 14,356, 29, 362,
3,146, 962 and 329 shares
outstanding respectively $14,356 $727 $8,466 $99,888 $28,060 $10,038
Net asset value, offering and
redemption price per Class A Share $1.00 $24.68 $23.36 $31.75 $29.17 $30.54
CLASS C SHARES (NOTE 1):
Net assets for 23,170,107, 1,048,748,
2,578,783, 4,164,070, 2,312,364, and
1,369,394 shares outstanding,
respectively $23,170,107 $25,927,109 $60,335,227 $132,381,985 $67,544,211 $41,838,180
Net asset value, offering and
redemption price per Class C share $1.00 $24.72 $23.40 $31.79 $29.21 $30.55
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
THE CAPSTONE SOCIAL ETHICS & RELIGIOUS VALUES FUND
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED SEPTEMBER 30, 1999
- ---------------------------------------------------------------------------------------------------------------------------------
Money Market Short-Term Bond Large Cap Small Cap International
Fund Bond Fund Fund Equity Fund Equity Fund Fund
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $1,162,464 $823,477 $3,106,739 $9,059 $9,366 $1,136,625
Dividends (net of foreign taxes
withheld of $28,932 for the
International Fund) -- -- -- 891,481 588,549 362,445
------------ ------------ ------------ ------------ ------------ ------------
Total Investment Income 1,162,464 823,477 3,106,739 900,540 597,915 1,499,070
------------ ------------ ------------ ------------ ------------ ------------
EXPENSES:
Investment advisory fees (Note 4) 23,138 24,082 87,738 97,754 92,137 59,614
Administration fee (Note 4) 11,569 8,027 29,246 32,585 30,712 19,871
Accounting fee (Note 4) 17,001 16,219 20,469 20,469 20,469 20,609
Custodian fees 2,613 3,168 7,520 16,691 17,568 6,156
Transfer agency fees 7,501 5,528 11,645 13,873 9,271 7,501
Distribution fees (Note 4) 2 1 3 76 12 5
Trustee expense (Note 4) 4,500 2,093 4,500 3,313 4,500 2,679
Audit fees 5,001 4,928 5,000 5,000 5,000 5,001
Legal fees 4,500 3,317 4,500 4,500 4,500 4,500
Consulting fees 5,785 3,996 8,280 6,016 6,916 4,357
Pricing fees -- 2,106 10,752 20,760 30,991 3,864
Registration fees 10,001 7,371 10,001 10,001 10,001 10,001
Reports to shareholders -- 1,592 2,488 4,533 2,722 2,023
Other 5,046 4,285 14,984 15,450 15,498 10,965
------------ ------------ ------------ ------------ ------------ ------------
Total expenses before waivers 96,657 86,713 217,126 251,021 250,297 157,146
Fees waived (Note 4) (36,337) (28,706) -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
Total expenses, net 60,320 58,007 217,126 251,021 250,297 157,146
------------ ------------ ------------ ------------ ------------ ------------
Net investment income 1,102,144 765,470 2,889,613 649,519 347,618 1,341,924
------------ ------------ ------------ ------------ ------------ ------------
REALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY:
Net realized gain (loss) on:
Investments -- (38,104) (134,219) 3,578,884 2,533,409 929,505
Foreign currency transactions -- -- -- -- -- 6,307,728
Net unrealized appreciation
(depreciation) during the period on:
Investments -- (253,159) (3,826,403) (247,832) 5,977,989 1,926,555
Translation of assets and liabilities
in foreign currencies -- -- -- -- -- 10,051
------------ ------------ ------------ ------------ ------------ ------------
Net gain (loss) on investments
and currency -- (291,263) (3,960,622) 3,331,052 8,511,398 9,173,839
------------ ------------ ------------ ------------ ------------ ------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $1,102,144 $474,207 $(1,071,009) $3,980,571 $8,859,016 $10,515,763
============ ============ ============ ============ ============ ============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
THE CAPSTONE SOCIAL ETHICS & RELIGIOUS VALUES FUND
STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEAR ENDED SEPTEMBER 30, 1999
- ---------------------------------------------------------------------------------------------------------------------------------
Money Market Short-Term Bond Large Cap Small Cap International
Fund Bond Fund Fund Equity Fund Equity Fund Fund
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income $1,102,144 $765,470 $2,889,613 $649,519 $347,618 $1,341,924
Net realized gain (loss) on:
Investments -- (38,104) (134,219) 3,578,884 2,533,409 929,505
Foreign currency transactions -- -- -- -- -- 6,307,728
Net unrealized appreciation
(depreciation) during the period on:
Investments -- (253,159) (3,826,403) (247,832) 5,977,989 1,926,555
Translation of assets and liabilities
in foreign currencies -- -- -- -- -- 10,051
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations 1,102,144 474,207 (1,071,009) 3,980,571 8,859,016 10,515,763
------------ ------------ ------------ ------------ ------------ ------------
Distributions to shareholders from:
Net investment income
Class A (92) (9) (106) (367) (16) (120)
Class C (1,102,052) (740,841) (2,826,722) (623,511) (345,480) (1,320,751)
Net realized gain
Class A -- -- -- -- -- (1)
Class C -- -- -- -- -- (1,868,308)
------------ ------------ ------------ ------------ ------------ ------------
Total Distributions (1,102,144) (740,850) (2,826,828) (623,878) (345,496) (3,189,180)
------------ ------------ ------------ ------------ ------------ ------------
Increase in net assets from Fund
share transactions (Note 5) 23,184,463 26,194,479 64,241,530 129,125,180 59,058,751 34,521,635
------------ ------------ ------------ ------------ ------------ ------------
Increase in net assets 23,184,463 25,927,836 60,343,693 132,481,873 67,572,271 41,848,218
NET ASSETS:
Beginning of period -- -- -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
End of period $23,184,463 $25,927,836 $60,343,693 $132,481,873 $67,572,271 $41,848,218
============ ============ ============ ============ ============ ============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
CAPSTONE SOCIAL ETHICS & RELIGIOUS VALUES FUND
FINANCIAL HIGHLIGHTS
- ---------------------------------------------------------------------------------------------------------------
The following tables include selected data for a share outstanding
throughout each fiscal year or period and other performance
information derived from financial statements. They should be read
in conjunction with the financial statements and notes thereto.
<S> <C> <C>
Money Market Fund Short-Term Bond Fund
----------------------------- -----------------------------
Class A Class C Class A Class C
------------ ------------ ------------ ------------
Net Asset Value -- Beginning of Period $1.00 $1.00 $25.00 $25.00
------------ ------------ ------------ ------------
Investment Operations:
Net investment income 0.05 0.05 0.68 0.80
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions 0.00 0.00 (0.23) (0.30)
------------ ------------ ------------ ------------
Total from investment operations 0.05 0.05 0.45 0.50
------------ ------------ ------------ ------------
Distributions:
From net investment income (0.05) (0.05) (0.77) (0.78)
From net realized capital gain -- -- -- --
------------ ------------ ------------ ------------
Total distributions (0.05) (0.05) (0.77) (0.78)
------------ ------------ ------------ ------------
Net Asset Value -- End of Period $1.00 $1.00 $24.68 $24.72
============ ============ ============ ============
Total Return 4.80% 4.90% 1.84% 2.05%
Ratios of expenses to average
net assets:
before fee waivers 0.52% 0.42% 0.79%(1) 0.54%(1)
after fee waivers 0.36% 0.26% 0.61%(1) 0.36%(1)
Ratios of net investment income to
average net assets:
before fee waivers 4.50% 4.60% 4.34%(1) 4.59%(1)
after fee waivers 4.66% 4.76% 4.52%(1) 4.77%(1)
Portfolio turnover rate N/A N/A 47.85% 47.85%
Net assets, end of period $14,356 $23,170,107 $727 $25,927,109
Bond Fund Large Cap Equity Fund
----------------------------- -----------------------------
Class A Class C Class A Class C
------------ ------------ ------------ ------------
Net Asset Value -- Beginning of Period $25.00 $25.00 $25.00 $25.00
------------ ------------ ------------ ------------
Investment Operations:
Net investment income 1.06 1.16 0.22 0.30
Net realized and unrealized gain (loss)
on investments
and foreign currency transactions (1.57) (1.62) 6.80 6.79
------------ ------------ ------------ ------------
Total from investment operations (0.51) (0.46) 7.02 7.09
------------ ------------ ------------ ------------
Distributions:
From net investment income (1.13) (1.14) (0.27) (0.30)
From net realized capital gains -- -- -- --
------------ ------------ ------------ ------------
Total distributions (1.13) (1.14) (0.27) (0.30)
------------ ------------ ------------ ------------
Net Asset Value -- End of Period $23.36 $23.40 $31.75 $31.79
============ ============ ============ ============
Total Return (2.04)% (1.83)% 28.10% 28.35%
Ratios of expenses to average
net assets:
before fee waivers 0.62% 0.37% 0.63% 0.38%
after fee waivers 0.62% 0.37% 0.63% 0.38%
Ratios of net investment income to
average net assets:
before fee waivers 4.69% 4.94% 0.74% 0.99%
after fee waivers 4.69% 4.94% 0.74% 0.99%
Portfolio turnover rate 17.09% 17.09% 142.56% 142.56%
Net assets, end of period $8,466 $60,335,227 $99,888 $132,381,985
1 Annualized -- Fund commenced operations on January 4, 1999.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
CAPSTONE SOCIAL ETHICS & RELIGIOUS VALUES FUND
FINANCIAL HIGHLIGHTS -- continued
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Small Cap Equity Fund International Equity Fund
----------------------------- -----------------------------
Class A Class C Class A Class C
------------ ------------ ------------ ------------
Net Asset Value -- Beginning of Period $25.00 $25.00 $25.00 $25.00
------------ ------------ ------------ ------------
Investment Operations:
Net investment income 0.14 0.16 0.84 0.99
Net realized and unrealized gain on
investments and foreign currency
transactions 4.17 4.21 7.00 6.91
------------ ------------ ------------ ------------
Total from investment operations 4.31 4.37 7.84 7.90
------------ ------------ ------------ ------------
Distributions:
From net investment income (0.14) (0.16) (0.92) (0.97)
From net realized capital gains 0.00 0.00 (1.38) (1.38)
------------ ------------ ------------ ------------
Total distributions (0.14) (0.16) (2.30) (2.35)
------------ ------------ ------------ ------------
Net Asset Value -- End of Period $29.17 $29.21 $30.54 $30.55
============ ============ ============ ============
Total Return 17.27% 17.49% 31.98% 32.23%
Ratios of expenses to average
net assets:
before fee waivers 0.66% 0.41% 0.64% 0.39%
after fee waivers 0.66% 0.41% 0.64% 0.39%
Ratios of net investment income to
average net assets:
before fee waivers 0.31% 0.56% 3.12% 3.37%
after fee waivers 0.31% 0.56% 3.12% 3.37%
Portfolio turnover rate 41.02% 41.02% 52.42% 52.42%
Net assets, end of period $28,060 $67,544,211 $10,038 $41,838,180
See notes to financial statements.
</TABLE>
CAPSTONE SOCIAL ETHICS & RELIGIOUS VALUES FUND
NOTES TO FINANCIAL STATEMENTS - September 30, 1999
- ------------------------------------------------------------------------
(1) ORGANIZATION
The Capstone Social Ethics and Religious Values Fund (the "Trust") was
organized as a Massachusetts business trust on April 13, 1998 and is
registered under the Investment Company Act of 1940 (the "1940 Act") as
a diversified open-end management investment company. The Trust
currently consists of six diversified series: the Money Market Fund, the
Short-Term Bond Fund, the Bond Fund, the Large Cap Equity Fund, the
Small Cap Equity Fund, and the International Fund (each a "Fund" and
collectively the "Funds"). Between the date of organization and October
1, 1998, the Funds had no operations other than those relating to
organizational matters and the sale of 1 Class A share and 1 Class C
share of the Large Cap Equity Fund to Capstone Asset Management Company
("Capstone"), the Trust's adviser and administrator for $50, and the
sale of 4,000 Class C shares of the Large Cap Equity Portfolio to
another shareholder for $100,000.
On October 1, 1998 each of the Funds acquired the net assets of separate
Portfolios of a tax-exempt business trust which had been managed by
Capstone. Each of these Portfolios had been managed following investment
objectives similar to those of the Funds and their net assets consisted
principally of investment securities. Class C shares of each Fund issued
to affect these acquisitions were distributed to each of the Portfolios'
beneficiaries in complete liquidation of the business trust.
The Trust is authorized to issue an unlimited number of shares of
beneficial interest of $1.00 par value. The Fund currently offers
two Classes of shares ("Class A" and "Class C"). Each Class of shares
has equal rights as to earnings, assets and voting privileges, except
that each Class bears different distribution expenses. Each Class of
shares has exclusive voting rights with respect to matters that affect
just that Class. Income, expenses (other than expenses attributable to a
specific Class) and realized and unrealized gains or losses on
investments are allocated to each Class of shares based on its relative
net assets.
(2) INVESTMENT OBJECTIVES
As a matter of fundamental investment policy, each of the Funds will
invest in companies that are managed is a socially responsible manner,
reflecting certain ethical and religious values. Accordingly, the Funds
will not invest in companies whose primary business is the
manufacturing, operation or distribution of alcohol, caffeine or tobacco
products, meat processing, pornography, or casinos and other gambling
concerns.
The Money Market Fund's objective is to provide current income,
stability of capital and liquidity by investing in other money market
funds and short-term money market instruments. It seeks to maintain a
constant net asset value of $1.00 per share, although there can be no
assurance that this will be achieved.
The Short-Term Bond Fund's objective is to provide current income and
relative capital stability by attempting to match the price and yield
performance (before expenses) of a blended short-term index consisting
of one-third U.S. Treasury securities, one-third U.S. government
securities and one-third investment grade corporate obligations with
maximum maturities of three years.
The Bond Fund's objective is to provide current income by attempting to
match the price and yield performance (before expenses) of the Lehman
Brothers Government/Corporate Bond Index. The Bond Fund will invest
primarily in obligations of the U.S. Government, its agencies, and
instrumentalities, and investment grade corporate obligations having a
broad range of maturities.
The Large Cap Equity Fund's objective is to provide capital growth and
income by attempting to match the performance (before expenses) of the
S & P 500 Index. The Large Cap Equity Fund will invest primarily in the
common stocks of large companies whose securities are widely held and
have an active trading market.
The Small Cap Equity Fund's objective is to provide capital appreciation
by attempting to match the performance (after expenses) of the S & P
SmallCap 600 Index which consists of 600 stocks with smaller
capitalization that those included in the S & P 500 Index. The Small Cap
Equity Fund will invest primarily in equity securities of the type that
are included in the index.
The International Fund's objective is to provide capital appreciation by
attempting to match the performance and yield characteristics of the
Morgan Stanley Capital International Europe, Australia, Far East Index,
net of withholding taxes. The International Fund will invest primarily
in securities with characteristics generally comparable to those
included in this index or whose performance is expected to be
comparable.
(3) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies
consistently followed by the Trust in the preparation of its financial
statements.
A. SECURITY VALUATION
Portfolio equity securities which are primarily traded on security
exchanges are valued at the last sale price on that exchange or, if
there is no recent last sale price available, at the last current bid
quotation. A security which is listed or traded on more than one
exchange is valued at the quotation on the exchange determined to be the
primary market for such security. All other equity securities not so
traded are valued at the last current bid quotation prior to the time of
valuation.
Securities held by the Money Market Fund and other money market
securities held by the other Funds are valued using the amortized cost
method of valuation, which in the opinion of the Board of Trustees
reflects fair value.
Other debt securities are valued by using market quotations or
independent pricing services which use prices provided by market makers
or estimates of market values obtained from yield data relating to
instruments or securities with similar characteristics. Other
securities, including restricted securities, and other assets are valued
at fair value as determined in good faith by the Board of Trustees.
B. FOREIGN CURRENCY TRANSLATION
Portfolio securities and other assets and liabilities denominated in
foreign currencies are translated into U.S. dollars based on the
exchange rate of such currencies against U.S. dollars on the date of
valuation. Purchases and sales of securities and income items
denominated in foreign currencies are translated into U.S. dollars at
the exchange rate in effect on the transaction date. The Funds do not
separately report the effect of changes in foreign exchange rates from
changes in market prices on securities held. Such changes are included
in net realized and unrealized gain or loss from investments.
Realized foreign exchange gains or losses arise from sales of foreign
currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions and the difference between
the recorded amounts of dividends, interest and foreign withholding
taxes, and the U.S. dollar equivalent of the amounts actually received
or paid. Net unrealized foreign exchange gains or losses arise from
changes in foreign exchange rates on foreign currency denominated assets
and liabilities other than investments in securities held at the end of
the reporting period.
C. FEDERAL INCOME TAXES
It is the policy of the Funds to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and
to distribute substantially all of their taxable income to their
shareholders in a manner which results in no tax to the Funds.
Therefore, no federal income or excise tax provisions are required.
D. SECURITY TRANSACTIONS, INCOME AND DISTRIBUTIONS
Security transactions are accounted for on the trade date. Realized
gains and losses on security transactions are determined on the specific
identification basis. Interest income on debt securities is recorded on
the accrual basis. Discounts and premiums on debt securities are
amortized to income over their respective lives. Dividends and
distributions to shareholders are recorded on the ex-dividend date.
E. FORWARD EXCHANGE CONTRACTS
The Funds may enter into forward exchange contracts to hedge against
foreign currency exchange risks. These contracts are valued daily and
any appreciation or depreciation therein is included in the statement of
assets and liabilities. Realized and unrealized gains and losses are
included in the statement of operations.
F. FUTURES CONTRACTS
The Funds may invest in financial futures contracts. Upon entering into
a futures contract the Fund is required to deposit with its futures
broker cash or other securities equal to a certain percentage of the
futures contract amount ("initial margin"). During the term of the
futures contract payments are exchanged daily between the Fund and the
futures broker in amounts equal to the appreciation or depreciation in
the value of the futures contract ("variation margin"). The Funds
recognize gains or losses equal to the variation margin payments paid or
received. Futures contracts involve market risks is excess of the
amounts recognized in the statement of assets and liabilities,
Additionally, there is a risk that a Fund may not be able to enter into
a closing transaction because of an illiquid secondary market. On
September 30, 1999 the International Fund had cash denominated in
foreign currency of $1,518,335 which was held by its futures broker as
initial margin.
G. REPURCHASE AGREEMENTS
In connection with transactions in repurchase agreements, it is the
Funds' policy that its their custodian bank take possession of the
underlying collateral securities, the fair value of which must be equal
to the principal amount of the repurchase agreement including accrued
interest throughout the term of the repurchase agreement. If the seller
defaults and the fair value of the collateral declines, realization of
the collateral by the Funds may be delayed or limited.
H. ORGANIZATION EXPENSES
Capstone has agreed to bear all of the costs incurred in connection with
the organization and registration of the Trust's shares.
I. USE OF ESTIMATES
In preparing financial statements in accordance with generally accepted
accounting principles, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and the disclosure of contingent assets and liabilities at the date of
the financial statements. Actual results could differ from those
estimates.
(4) INVESTMENT ADVISER AND ADMINISTRATOR
Capstone serves as each Fund's adviser and administrator. Pursuant to
the terms of the Investment Advisory Agreement, Capstone shall have full
discretion to manage the assets of the Funds in accordance with their
investment objectives. As compensation for its services each Fund pays
Capstone, on a monthly basis, an investment advisory fee. The advisory
fees for the Money Market Fund are calculated at the annual rate of
0.10% of the Money Market Fund's average daily net assets. The advisory
fees for all of the other Funds are calculated at the annual rate of
0.15% on the first $500 million of the other Funds' collective average
daily net assets and then allocated to each Fund based upon relative net
assets. The rate declines to 0.10% on the next $250 million of average
daily net assets, 0.075% on the next $250 of average daily net assets,
and to 0.05% on collective average daily net assets in excess of $1
billion.
Pursuant to the terms of the Administration Agreement, Capstone will
supervise the Fund's daily business affairs, coordinate the activities
of persons providing services to the Fund, and furnish office space and
equipment to the Fund. As compensation for its services Capstone
receives a monthly fee from each Fund calculated at the annual rate of
0.05% of each Fund's average daily net assets.
Capstone has voluntarily agreed to waive its investment advisory and
administrative fees for the Money Market Fund and the Short-Term Bond
Fund, resulting in waivers of investment advisory fees for the period
ended September 30, 1999 of $23,138 and $21,529, respectively, and
waivers of administrative fees for the period ended September 30, 1999
of $11,569 and $7,177, respectively. These waivers are voluntary and may
be discontinued at any time. Upon reaching $25 million in net assets,
Capstone discontinued its waiver for the Short Term Bond Fund. The
Funds' accounting agent waived its fees for the Money Market Fund
through December 31, 1998, resulting in a waiver of fund accounting fees
for the period ended September 30, 1999 of $1,630.
(5) DISTRIBUTION PLAN AND OTHER TRANSACTIONS WITH AFFILIATES
Capstone Asset Planning Company (the "Distributor ") serves as the
Trust's principal underwriter pursuant to a Distribution Agreement. The
Distributor is an affiliate of Capstone.
The Class A shares of each Fund have adopted a Service and Distribution
Plan (the "Plan") pursuant to Rule 12(b)-1 under the 1940 Act. The Plan
provides that the Class A shares will make payments to the Distributor to
compensate the Distributor for expenditures incurred by it in connection
with the distribution of Class A shares and for the provision of certain
stockholder services including but not limited to the payment of
compensation to security dealers and other financial organizations to
obtain various distribution related and/or administrative services for
the Fund. As compensation for its services the Distributor receives a
monthly fee calculated at the annual rate of 0.10% of the average daily
net assets of the Class A shares of the Money Market Fund and 0.25% of
the average daily net assets of the Class A shares of the other Funds.
Certain officers of the Trust are also officers of Capstone and the
Distributor.
(6) SHARES OF CAPITAL STOCK
All Funds - The authorized capital stock of the funds is unlimited in
shares, with a par value of $1.00 per share. Transactions in shares of
capital stock, for the period from October 1, 1998, except for Short
Term Bond Fund which commenced operations on January 4, 1999, to
September 30, 1999, were as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Class A Class C
------------ ------------
Shares Amount Shares Amount
------------ ------------ ------------ ------------
Money Market Fund:
Shares issued in connection
with taxable reorganization $-- 4,875,832 $4,875,832
Sold 20,520 20,520 22,595,027 22,595,027
Reinvested 91 91 1,026,43 1,026,431
Redeemed (6,255) (6,255) (5,327,183) (5,327,183)
------------ ------------ ------------ ------------
Net Increase 14,356 $14,356 23,170,107 $23,170,107
============ ============ ============ ============
Short-Term Bond Fund:
Sold 36 $925 1,032,003 $25,782,734
Reinvested 1 9 27,239 673,311
Redeemed (8) (202) (10,494) (262,298)
------------ ------------ ------------ ------------
Net Increase 29 $732 1,048,748 $26,193,747
============ ============ ============ ============
Bond Fund:
Shares issued in connection
with taxable reorganization $-- 2,059,228 $51,480,690
Sold 366 8,672 517,213 12,697,515
Reinvested 5 106 8,655 204,413
Redeemed (9) (199) (6,313) (149,667)
------------ ------------ ------------ ------------
Net Increase 362 $8,579 2,578,783 $64,232,951
============ ============ ============ ============
Large Cap Equity Fund:
Shares issued in connection
with taxable reorganization $-- 921,070 $23,026,741
Sold 3,648 120,440 3,406,150 111,291,896
Reinvested 6 186 3,414 107,546
Redeemed (508) (17,125) (166,564) (5,404,504)
------------ ------------ ------------ ------------
Net Increase 3,146 $103,501 4,164,070 $129,021,679
============ ============ ============ ============
Small Cap Equity Fund:
Shares issued in connection
with taxable reorganization $-- 1,737,033 $43,425,834
Sold 1,005 29,884 596,450 16,165,914
Reinvested 1 16 364 10,258
Redeemed (44) (1,270) (21,483) (571,885)
------------ ------------ ------------ ------------
Net Increase 962 $28,630 2,312,364 $59,030,121
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Class A Class C
------------ ------------
Shares Amount Shares Amount
------------ ------------ ------------ ------------
International Fund:
Shares issued in connection
With taxable reorganization $-- 1,282,187 $32,054,682
Sold 331 10,092 83,439 2,350,109
Reinvested 4 120 3,768 106,826
Redeemed (6) (194) -- --
------------ ------------ ------------ ------------
Net Increase 329 $10,018 1,369,394 $34,511,617
============ ============ ============ ============
</TABLE>
(7) INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term securities
securities) by the Funds for the period from inception to September 30, 1999
were as follows:
Purchases Sales
-------------- --------------
Short-Term Bond Fund $34,533,331 $8,611,581
Bond Fund 21,843,440 8,701,645
Large Cap Equity Fund 192,028,323 85,069,362
Small Cap Equity Fund 39,175,440 23,485,828
International Fund 7,556,293 7,168,042
(8) TAX MATTERS
Each Fund intends to qualify as a regulated investment company under the
Internal Revenue Code and to distribute all of its taxable income,
including any net realized gains on investments, to shareholders.
Accordingly, no provision for federal income or excise tax has been
made.
Income and capital gains of the Funds are determined in accordance with
both tax regulations and generally accepted accounting principles. Such
may result in temporary and permanent differences between tax basis
earnings and earnings reported for financial statement purposes.
Temporary differences that result in over-distributions for financial
statement purposes are classified as distributions in excess of net
investment income or accumulated net realized gains. Permanent
differences in the recognition of earnings are reclassified to
additional paid-in capital. Distributions in excess of tax-basis
earnings are recorded as return of capital.
Capital Loss Carryforwards -- At September 30, 1999, the following Funds
had, for federal income tax purposes, capital loss carryforwards
available to offset future net realized capital gains.
Expiring
in 2007
------------------
Short-Term Bond Fund $38,104
Bond Fund 134,219
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
- ------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
Capstone Social Ethics and Religious Values Fund
Houston, Texas
We have audited the accompanying statements of assets and liabilities of
Capstone Social Ethics and Religious Values Fund (comprising,
respectively, the Money Market Fund, the Short-Term Bond Fund, the Bond
Fund, the Large Cap Equity Fund, the Small Cap Equity Fund, and the
International Fund), including the portfolios of investments, as of
September 30, 1999, and the related statements of operations and changes
in net assets, and the financial highlights for the respective periods
from commencement of operations to September 30, 1999. 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 audit.
We conducted our audit 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 securities owned as of September 30, 1999, by
correspondence with the custodian and brokers. 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 our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of each of the Funds comprising Capstone Social
Ethics and Religious Values Fund as of September 30, 1999, and the
results of their operations, the changes in their net assets and the
financial highlights for the respective periods from commencement of
operations to September 30, 1999 in conformity with generally accepted
accounting principles.
BRIGGS, BUNTING & DOUGHERTY, LLP
Philadelphia, Pennsylvania
October 22, 1999
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[GRAPHIC OMITTED: PYRAMID LOGO]
Capstone
SERV Funds
Equity
* LARGE CAP EQUITY FUND
* SMALL CAP EQUITY FUND
Fixed Income
* MONEY MARKET FUND
* SHORT-TERM BOND FUND
* BOND FUND
International
* INTERNATIONAL FUND
For more complete information about the SERV Funds, including charges
and expenses, contact the Distributor at the address below to receive a
prospectus. Please read it carefully before you invest or send money.
Capstone Asset Planning Company
5847 San Felipe, Suite 4100
Houston, Texas 77057
1-800-262-6631
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