Semi-Annual Report
March 31, 2000
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Capstone
Social Ethics
and
Religious Values Fund
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A Member Of
The Capstone Group
of Mutual Funds
CAPSTONE SOCIAL ETHICS & RELIGIOUS VALUES FUND
-----------------------------------------------------------------------------
Dear Shareholder:
We are pleased to present the semi-annual report for Capstone Social Ethics
and Religious Values Fund for the period ended March 31, 2000.
ECONOMIC OUTLOOK
The strong economic growth of the final quarter of 1999 rolled into the
first quarter of 2000. The financial markets took some unusual turns as
long-term interest rates headed lower in response to buybacks of long-term
government bonds, while short-term interest rates headed higher in
anticipation of additional interest rate hikes from the Federal Reserve. In
the equity markets, the "new economy" ruled once again over the "old
economy" as the tech-heavy Nasdaq composite rose 12.41% for the quarter
versus a 2.29% increase for the S&P 500.
U.S. consumers continued on the spending binge that we saw at the end of
1999. Retail sales rose 1.1% in February, following a 0.4% increase in
January. Even with higher interest rates, demand for automobiles and other
interest-sensitive durable goods remained strong as vehicle sales rose 1.4%
in February and 3.0% in January. Thirty-year home mortgage rates are up
more than 1.3% (130 basis points) since the first quarter of 1999, but that
has not led to a significant slowdown in the housing market. In February,
sales of new homes were up 2.9% from 1999. The U.S. manufacturing sector
also remains strong. The National Association of Purchasing Managers Index
(NAPM) stood at 55.8 in March (the 14th consecutive month above 50)
suggesting continued strength in the sector.
The final revision to fourth quarter 1999 GDP was 7.3%, the strongest pace
since 1984. Growth for the first quarter of 2000 is also expected to be
well in excess of the 3.5% rate that the Federal Reserve would like to see.
Over recent years we have heard Fed chairman Greenspan discuss productivity
growth in the U.S. economy. At times he has been cautious (don't
overestimate the benefits) and at other times almost "giddy". In his
February testimony, he addressed the productivity topic again and received
criticism from many economists particularly those that subscribe to "new
paradigms" that advocate allowing faster growth in the economy. Greenspan
testified that "the profoundly beneficial forces driving the American
economy to competitive excellence are also engendering a set of imbalances
that, unless contained, threaten our continuing prosperity". Greenspan
explained that the rise in productivity may actually strengthen the wealth
effect within the economy since higher levels of productivity raise
expectations for corporate earnings and lead to even higher stock prices.
The Fed is clearly concerned that tight labor markets, rapidly rising stock
prices, and high expectations of future growth will lead to inflationary
growth in the economy. Some have argued that Greenspan's task is more
difficult at this time than perhaps a decade ago since many of these high
tech companies are insensitive to small changes in short-term interest
rates. His job is also made more difficult by the fact that as soon as the
markets begin to feel that the Fed may be nearing the end of raising rates,
then stock markets rally again (creating more wealth) since investors
believe the Fed is out of the picture.
[GRAPHIC OMITTED: WORM CHART U.S. TREASURY YIELD CURVE INVERTS]
U.S. Treasury Yield Curve Inverts
12/31/99 - 3/31/00
12/31/99 3/31/00
3 month 5.312 5.886
6 month 5.726 6.14
1 year 5.962 6.239
2 year 6.235 6.483
3 year 6.25 6.43
4 year 6.3 6.35
5 year 6.34 6.32
6 year 6.35 6.3
7 year 6.36 6.28
8 year 6.39 6.15
9 year 6.4 6.05
10 year 6.435 6.015
11 year 6.436 6.01
12 year 6.437 5.98
13 year 6.438 5.95
14 year 6.439 5.94
15 year 6.44 5.93
16 year 6.441 5.92
17 year 6.442 5.9
18 year 6.443 5.89
19 year 6.444 5.88
20 year 6.445 5.87
21 year 6.446 5.86
22 year 6.447 5.85
23 year 6.448 5.849
24 year 6.449 5.848
25 year 6.45 5.845
26 year 6.451 5.842
27 year 6.452 5.84
28 year 6.453 5.839
29 year 6.46 5.838
30 year 6.479 5.837
Source: Bloomberg
Greenspan's testimony telegraphed the interest rate increase that the Fed
approved on March 21st. The next meeting is scheduled for May 16th. This
represents the longest period between meetings for this year. The long time
between meetings has led to some speculation that the Fed may elect to move
50 basis points in May or even consider making an inter-meeting move. We do
not see the Fed abandoning the gradualist approach that they have pursued
up to this point, particularly since inflation has been contained.
Inter-meeting moves should be reserved for "emergency" situations. The Fed
will continue to raise rates until the economy slows to a more sustainable
rate. The gradualist approach will be best for both the economy and the
financial markets.
EQUITY MARKET OVERVIEW
The early months of the new millennium will be remembered as some of the
most tumultuous on record. The year began with the start of the long
awaited correction in the equity market. As measured by the S&P 500 index,
the equity market fell by 6.8 % during the first two months of the year.
The market decline during this period was led by "old economy" groups such
as household appliances, paper products and containers. The groups
performing relatively well included electronic instruments, semiconductors,
and entertainment.
Then, as suddenly as it had gone down, the market turned upward again in
March, rising 9.77% with a powerful rally led by resurgence in bank,
insurance, and other financial stocks as well as energy related stocks. By
the end of the quarter, which to some seemed at first like the end of the
bull market, the S&P produced a gain of 2.29%.
Many clients have inquired about the equity market volatility of early
April. As this is written in the first week of April, the S&P has risen
about 0.6 % for the month so far. This rather routine number masks the
intraday volatility, particularly on Tuesday, April 4, when the S&P 500
experienced an intraday decline of 6.5%, only to rally late in the day,
closing down less than 1%. The leadership in this decline was been the
technology sector. This is the same area, we would note, that produced much
of the market's gain during 1999.
As we have stated in past reports, the equity market over the past few
years has been uncharacteristically calm, as measured by historical
standards. A statistical measure often used by investors to measure
volatility is standard deviation. In words, standard deviation measures the
distance from the average over a given time period in which individual
observations fall. If the standard deviation of a series of returns is low,
it means that returns have been fairly uniform in each period observed. If
the standard deviation is high, it means that returns have been more widely
disbursed. Over the past 50 years, the annualized monthly standard
deviation of S&P 500 returns has been 13.90%. A rolling 5 year monthly
standard deviation reveals that volatility has been as high as 18% in
October, 1978 and December, 1990. This same figure has been as low as 8.82%
in January, 1997. At present, the five year moving standard deviation
stands at 13.05%, about average for the entire period. One of the striking
aspects of these figures is the extent to which volatility in the equity
market has fallen in recent years. What investors experience as "increased"
volatility is in fact a return to "normal" from an all time low.
The underlying causes in the recent round of increased volatility involves
not only "the usual suspects" of rising interest rates
and fears of inflation, but the increased uncertainty created as market
valuations, as measured by P/E multiples, rise to record breaking levels.
The same can be said with respect to returns. As we noted in our last
letter, the past five years of the S&P 500 have been the best ever. It is
reasonable to expect that equity returns, like volatility, will return to
more normal levels than those recently experienced.
[GRAPHIC OMITTED: WORM CHART S&P 500 STANDARD DEVIATION]
S&P 500 Standard Deviation
Dec-53 10.80875685
Jan-54 10.93942232
Feb-54 10.75177449
Mar-54 10.75073132
Apr-54 10.75718601
May-54 10.63552208
Jun-54 10.63047006
Jul-54 10.57932877
Aug-54 10.77070526
Sep-54 11.18499891
Oct-54 11.2680233
Nov-54 11.73816932
Dec-54 11.76550646
Jan-55 11.76551477
Feb-55 11.77183011
Mar-55 11.7998701
Apr-55 11.75992326
May-55 11.67746799
Jun-55 11.58390392
Jul-55 11.73200994
Aug-55 11.72584085
Sep-55 11.59128591
Oct-55 11.77575096
Nov-55 12.12091739
Dec-55 12.05927317
Jan-56 12.11377692
Feb-56 12.16229229
Mar-56 12.30035458
Apr-56 12.24207455
May-56 12.5425957
Jun-56 12.45023798
Jul-56 12.32094987
Aug-56 12.45401856
Sep-56 12.73032725
Oct-56 12.68129092
Nov-56 12.71410307
Dec-56 12.69394947
Jan-57 12.93882879
Feb-57 12.92696408
Mar-57 12.83172078
Apr-57 12.62965774
May-57 12.66434253
Jun-57 12.59412338
Jul-57 12.59298444
Aug-57 12.89485994
Sep-57 13.24520832
Oct-57 13.38066631
Nov-57 13.24014132
Dec-57 13.39082021
Jan-58 13.4506089
Feb-58 13.46370406
Mar-58 13.40803632
Apr-58 13.33362145
May-58 13.3342773
Jun-58 13.28789509
Jul-58 13.34407743
Aug-58 13.01010048
Sep-58 13.08263532
Oct-58 12.98361297
Nov-58 12.9932742
Dec-58 13.08483717
Jan-59 12.99290707
Feb-59 13.00145367
Mar-59 12.9976739
Apr-59 12.94464846
May-59 12.89714974
Jun-59 12.90984058
Jul-59 12.79504542
Aug-59 12.70077142
Sep-59 12.57666471
Oct-59 12.5022597
Nov-59 12.00550441
Dec-59 11.88655876
Jan-60 12.43471341
Feb-60 12.43590256
Mar-60 12.46381914
Apr-60 12.44973477
May-60 12.48955573
Jun-60 12.0418152
Jul-60 11.88309754
Aug-60 11.92142012
Sep-60 12.29188888
Oct-60 12.19148163
Nov-60 11.84115664
Dec-60 11.97828552
Jan-61 12.08427117
Feb-61 12.04105127
Mar-61 11.73937895
Apr-61 11.73348264
May-61 11.33825223
Jun-61 11.37116973
Jul-61 11.25326842
Aug-61 11.11590458
Sep-61 10.92304957
Oct-61 10.95800366
Nov-61 11.04194864
Dec-61 10.98230123
Jan-62 10.95104441
Feb-62 10.82971666
Mar-62 10.8431265
Apr-62 11.22922322
May-62 11.82192234
Jun-62 12.45019264
Jul-62 12.72577432
Aug-62 12.47044908
Sep-62 12.3334607
Oct-62 12.21019278
Nov-62 12.98643368
Dec-62 12.78944706
Jan-63 12.82424846
Feb-63 12.87055125
Mar-63 12.88633536
Apr-63 12.96458412
May-63 12.96203669
Jun-63 13.00904909
Jul-63 12.92710352
Aug-63 13.06973596
Sep-63 12.97419707
Oct-63 12.99684927
Nov-63 12.98316076
Dec-63 12.84960723
Jan-64 12.87872111
Feb-64 12.87989977
Mar-64 12.87992262
Apr-64 12.80337374
May-64 12.78943074
Jun-64 12.78615414
Jul-64 12.73538133
Aug-64 12.74020374
Sep-64 12.54426033
Oct-64 12.54356766
Nov-64 12.54409697
Dec-64 12.51351889
Jan-65 12.03368897
Feb-65 12.03742572
Mar-65 12.04127807
Apr-65 12.02943292
May-65 12.0084365
Jun-65 12.27673597
Jul-65 12.18531694
Aug-65 12.171073
Sep-65 11.79626661
Oct-65 11.80595164
Nov-65 11.72346069
Dec-65 11.60696383
Jan-66 11.35047678
Feb-66 11.35250936
Mar-66 11.40016572
Apr-66 11.41493741
May-66 11.68191516
Jun-66 11.61761766
Jul-66 11.58753805
Aug-66 12.0895909
Sep-66 12.05163962
Oct-66 12.16258588
Nov-66 12.03543412
Dec-66 12.03752899
Jan-67 12.33562042
Feb-67 12.319829
Mar-67 12.40074311
Apr-67 12.10564936
May-67 11.68307329
Jun-67 10.9437621
Jul-67 10.79070763
Aug-67 10.81267678
Sep-67 10.54071814
Oct-67 10.6873613
Nov-67 9.738750895
Dec-67 9.768520728
Jan-68 9.8718122
Feb-68 9.887409082
Mar-68 9.803517587
Apr-68 10.19774553
May-68 10.19189676
Jun-68 10.11559271
Jul-68 10.17169333
Aug-68 9.974396539
Sep-68 10.0394141
Oct-68 9.976053229
Nov-68 10.15152835
Dec-68 10.36309458
Jan-69 10.34610484
Feb-69 10.58430069
Mar-69 10.65481987
Apr-69 10.67740529
May-69 10.67232909
Jun-69 11.00881279
Jul-69 11.36536435
Aug-69 11.48212982
Sep-69 11.50198605
Oct-69 11.64513131
Nov-69 11.74924244
Dec-69 11.79284336
Jan-70 12.22767647
Feb-70 12.47891223
Mar-70 12.45508917
Apr-70 13.04198656
May-70 13.28386574
Jun-70 13.29079517
Jul-70 13.6859285
Aug-70 13.81432639
Sep-70 13.82050553
Oct-70 13.77826813
Nov-70 13.96837465
Dec-70 14.18404362
Jan-71 14.28670151
Feb-71 14.2715522
Mar-71 14.30296579
Apr-71 14.35659598
May-71 14.27023054
Jun-71 14.24053486
Jul-71 14.36746195
Aug-71 14.00213348
Sep-71 14.0025852
Oct-71 14.03533365
Nov-71 14.03548504
Dec-71 14.4964053
Jan-72 14.13269252
Feb-72 14.17100358
Mar-72 14.08704633
Apr-72 13.98504388
May-72 13.78942562
Jun-72 13.83245193
Jul-72 13.70996255
Aug-72 13.77873155
Sep-72 13.72715465
Oct-72 13.64484227
Nov-72 13.78633124
Dec-72 13.75724229
Jan-73 13.61430797
Feb-73 13.65354363
Mar-73 13.65632643
Apr-73 13.3611473
May-73 13.37756866
Jun-73 13.38138917
Jul-73 13.43688524
Aug-73 13.52692456
Sep-73 13.53555324
Oct-73 13.53529725
Nov-73 14.25207683
Dec-73 14.14371273
Jan-74 14.14614605
Feb-74 13.99730013
Mar-74 13.9609004
Apr-74 14.03930374
May-74 14.09657899
Jun-74 13.88886038
Jul-74 14.05990511
Aug-74 14.40346833
Sep-74 15.27834985
Oct-74 16.900971
Nov-74 16.96701786
Dec-74 16.96707244
Jan-75 17.54279906
Feb-75 17.60449343
Mar-75 17.62944416
Apr-75 17.24385524
May-75 17.14268405
Jun-75 17.04330268
Jul-75 17.09020532
Aug-75 16.99327948
Sep-75 17.02300356
Oct-75 17.21677444
Nov-75 17.11864156
Dec-75 16.95667717
Jan-76 17.65618689
Feb-76 17.65800785
Mar-76 17.63804006
Apr-76 17.58534518
May-76 17.49626714
Jun-76 17.57945109
Jul-76 17.46949212
Aug-76 17.39513996
Sep-76 17.41048965
Oct-76 17.32698485
Nov-76 17.32902069
Dec-76 17.06904654
Jan-77 17.2255511
Feb-77 17.20556134
Mar-77 17.21779514
Apr-77 17.21747823
May-77 17.21353127
Jun-77 17.29868358
Jul-77 17.31839352
Aug-77 17.2551846
Sep-77 17.25347108
Oct-77 17.3591435
Nov-77 17.29222516
Dec-77 17.2845597
Jan-78 17.48078471
Feb-78 17.43072492
Mar-78 17.4723803
Apr-78 17.787783
May-78 17.77665416
Jun-78 17.79246797
Jul-78 17.87540178
Aug-78 17.8517192
Sep-78 17.77822493
Oct-78 18.25807146
Nov-78 17.57713907
Dec-78 17.57541342
Jan-79 17.64319448
Feb-79 17.70791385
Mar-79 17.81756006
Apr-79 17.70690233
May-79 17.67195798
Jun-79 17.71101439
Jul-79 17.29412124
Aug-79 16.92326608
Sep-79 15.88463334
Oct-79 14.72006861
Nov-79 14.61802614
Dec-79 14.55975648
Jan-80 13.81491421
Feb-80 13.58181897
Mar-80 14.41059546
Apr-80 14.37649158
May-80 14.41072353
Jun-80 14.340782
Jul-80 14.18569167
Aug-80 14.14217675
Sep-80 14.02392741
Oct-80 13.82769035
Nov-80 14.48790538
Dec-80 14.58729637
Jan-81 13.94412857
Feb-81 13.93715516
Mar-81 13.95742399
Apr-81 13.99900134
May-81 13.97922793
Jun-81 13.91919802
Jul-81 13.90607969
Aug-81 14.1968969
Sep-81 14.41065862
Oct-81 14.50104045
Nov-81 14.58432997
Dec-81 14.52040781
Jan-82 14.33561988
Feb-82 14.54235119
Mar-82 14.52897159
Apr-82 14.60505777
May-82 14.66227372
Jun-82 14.59262269
Jul-82 14.61483969
Aug-82 15.53599281
Sep-82 15.53086883
Oct-82 16.0278963
Nov-82 16.05252023
Dec-82 16.05108478
Jan-83 15.74650732
Feb-83 15.69722764
Mar-83 15.71749247
Apr-83 15.62023151
May-83 15.64449563
Jun-83 15.62402579
Jul-83 15.64467552
Aug-83 15.6177122
Sep-83 15.59639093
Oct-83 14.93976471
Nov-83 14.93612511
Dec-83 14.96433009
Jan-84 14.93824482
Feb-84 14.96459106
Mar-84 14.83111068
Apr-84 14.82773965
May-84 15.06401068
Jun-84 15.01420689
Jul-84 15.05956048
Aug-84 15.57020544
Sep-84 15.5735143
Oct-84 15.17497159
Nov-84 15.11078699
Dec-84 15.11883925
Jan-85 15.23758784
Feb-85 15.23132581
Mar-85 14.37533206
Apr-85 14.33830959
May-85 14.3719644
Jun-85 14.35466379
Jul-85 14.16062058
Aug-85 14.18489778
Sep-85 14.30223052
Oct-85 14.37701618
Nov-85 13.94617185
Dec-85 13.90025846
Jan-86 13.67055914
Feb-86 13.95416654
Mar-86 14.03629376
Apr-86 13.99607653
May-86 14.10652852
Jun-86 14.06700154
Jul-86 14.42211
Aug-86 14.31020975
Sep-86 14.68111242
Oct-86 14.69574881
Nov-86 14.64810748
Dec-86 14.64751839
Jan-87 15.49244405
Feb-87 15.19510634
Mar-87 15.15157474
Apr-87 15.1781958
May-87 15.02362453
Jun-87 14.97986297
Jul-87 14.90179286
Aug-87 14.15621739
Sep-87 14.28130311
Oct-87 17.21093727
Nov-87 17.697917
Dec-87 17.90305099
Jan-88 17.92498668
Feb-88 17.97726371
Mar-88 18.05948026
Apr-88 17.83681089
May-88 17.82014378
Jun-88 17.84772077
Jul-88 17.7522204
Aug-88 17.87148817
Sep-88 17.92154534
Oct-88 17.89249479
Nov-88 17.92956438
Dec-88 17.90993079
Jan-89 18.07766778
Feb-89 18.03896921
Mar-89 18.04297847
Apr-89 18.11300541
May-89 17.86973544
Jun-89 17.89671246
Jul-89 18.13257732
Aug-89 17.62298341
Sep-89 17.63183915
Oct-89 17.71217431
Nov-89 17.67193047
Dec-89 17.67046629
Jan-90 17.84943655
Feb-90 17.84954841
Mar-90 17.84766142
Apr-90 17.91768204
May-90 18.17924378
Jun-90 18.20614489
Jul-90 18.20732756
Aug-90 18.78264412
Sep-90 18.88192552
Oct-90 18.84126076
Nov-90 18.79796468
Dec-90 18.74571817
Jan-91 18.7978736
Feb-91 18.7680356
Mar-91 18.67408866
Apr-91 18.64626604
May-91 18.59775969
Jun-91 18.77358116
Jul-91 18.58394443
Aug-91 18.37593332
Sep-91 17.9224692
Oct-91 17.81723498
Nov-91 17.95975021
Dec-91 18.4566411
Jan-92 17.67188949
Feb-92 17.61812725
Mar-92 17.65161205
Apr-92 17.65250878
May-92 17.65384313
Jun-92 17.59409455
Jul-92 17.55458166
Aug-92 17.54988244
Sep-92 17.49752573
Oct-92 14.24888136
Nov-92 13.62211406
Dec-92 13.34944109
Jan-93 13.28359806
Feb-93 13.19100866
Mar-93 13.05735638
Apr-93 13.16311449
May-93 13.17798334
Jun-93 13.09359201
Jul-93 13.0953448
Aug-93 12.98570352
Sep-93 12.94732285
Oct-93 12.93448307
Nov-93 12.91648651
Dec-93 12.91363889
Jan-94 12.65999079
Feb-94 12.67254315
Mar-94 12.89340075
Apr-94 12.75663398
May-94 12.68471161
Jun-94 12.75881898
Jul-94 12.27104895
Aug-94 12.34831299
Sep-94 12.42147448
Oct-94 12.35698225
Nov-94 12.50881025
Dec-94 12.49211962
Jan-95 12.04675982
Feb-95 12.11845045
Mar-95 12.12857942
Apr-95 12.05738556
May-95 11.4727215
Jun-95 11.46423585
Jul-95 11.49436016
Aug-95 10.5482061
Sep-95 10.252381
Oct-95 10.25169402
Nov-95 10.08637637
Dec-95 10.06916021
Jan-96 10.01745769
Feb-96 9.659272272
Mar-96 9.64510287
Apr-96 9.637128147
May-96 9.556584801
Jun-96 9.201423298
Jul-96 9.41377889
Aug-96 9.408169856
Sep-96 9.5368583
Oct-96 9.560816457
Nov-96 9.666794748
Dec-96 8.656606195
Jan-97 8.823490584
Feb-97 8.826760392
Mar-97 9.045822943
Apr-97 9.256662779
May-97 9.491258914
Jun-97 9.491816929
Jul-97 9.852936745
Aug-97 10.23732205
Sep-97 10.38390883
Oct-97 10.60477198
Nov-97 10.66302796
Dec-97 10.66243603
Jan-98 10.65753594
Feb-98 10.94729301
Mar-98 11.05210391
Apr-98 10.89241292
May-98 10.99712223
Jun-98 11.02690602
Jul-98 11.05486127
Aug-98 13.18244203
Sep-98 13.3239972
Oct-98 13.63933301
Nov-98 13.72258013
Dec-98 13.8321179
Jan-99 13.85487863
Feb-99 13.88357274
Mar-99 13.619408
Apr-99 13.63956273
May-99 13.78214292
Jun-99 13.71798516
Jul-99 13.90708547
Aug-99 13.9214774
Sep-99 13.94335521
Oct-99 14.07874547
Nov-99 13.83887746
Dec-99 13.93697342
Source: Capstone Research
FIXED INCOME MARKET OVERVIEW
The first quarter of 2000 proved to be one of the more interesting quarters
for the fixed income market in several years. The Lehman Aggregate Index
(the broadest measure of the domestic investment-grade market) rose 2.21%
for the first quarter easily surpassing its return for all of 1999 when the
index declined -0.82%. The desire for liquidity helped U.S. Treasury
securities to outperform corporates and mortgage-backed securities by wide
margins. The quarter was highlighted by a dramatic inversion of the
Treasury yield curve, the widening of corporate yield spreads, and negative
comments from officials of the U.S. Treasury Department regarding U.S.
Agency securities.
The yield curve for two-year and thirty-year U.S. Treasuries inverted
during the first quarter for the first time since March 1990. In January
the Treasury department announced the details of their plan to retire
outstanding debt in 2000. The plan includes the buyback of up to $30
billion of outstanding Treasury bonds and changes in the auction calendar
for the issuance of new debt. Most of the buybacks will be focused in
securities longer than ten years as the government is seeking to maintain
an average maturity of approximately six years. The government also
announced that new thirty-year bonds will now be auctioned only twice per
year with approximately $10 billion in February followed by a modest
reopening of the same issue (about $5 billion) in August. Following the
announcement, investors scrambled to purchase the outstanding long-term
bonds that would most likely be targeted for repurchase by the government.
The heavy demand for these securities pushed the yields on long-term bonds
lower. At the same time, anticipation of additional short-term interest
rate increases from the Fed pressured rates higher on two-year securities.
On January 28th the curve inverted as two year yields closed at 6.58%, and
the thirty-year closed at 6.45%.
[GRAPHIC OMITTED: WORM CHART CORPORATE YIELD CURVES DO NOT INVERT]
Corporate Yield Curves Do Not Invert
"A" Rated Industrials
12/31/99 - 3/31/00
12/31/99 3/31/00
3 Mo 6.4 6.88
6 Mo 6.74 7.15
1 Yr 6.97 7.24
2 Yr 7.09 7.38
3 Yr 7.25 7.44
4 Yr 7.34 7.48
5 Yr 7.39 7.49
6 Yr 7.47 7.5
7 Yr 7.55 7.5
8 Yr 7.6 7.5
9 Yr 7.61 7.51
10 Yr 7.61 7.51
11 Yr 7.69 7.55
12 Yr 7.7 7.6
13 Yr 7.72 7.65
14 Yr 7.74 7.66
15 Yr 7.76 7.69
16 Yr 7.79 7.7
17 Yr 7.81 7.73
18 Yr 7.85 7.75
19 Yr 7.9 7.77
20 Yr 7.97 7.79
21 Yr 7.97 7.79
22 Yr 7.97 7.8
23 Yr 7.98 7.81
24 Yr 7.98 7.82
25 Yr 7.99 7.83
26 Yr 7.98 7.83
27 Yr 7.95 7.83
28 Yr 7.94 7.83
29 Yr 7.93 7.82
30 Yr 7.91 7.82
Source: Bloomberg
While the Treasury yield curve inverted, corporate yield curves maintained
their more traditional "upward sloping" shape. In other words, corporate
investors were not willing to accept lower yields in exchange for the risk
of owning longer dated corporate securities. As a result, corporate yield
spreads widened. Longer-dated securities (20+ years) were particularly hard
hit on a relative performance basis versus their long-term Treasury
counterparts; for the quarter, the Lehman Long-Term Treasury Index
outperformed the Long-Term Corporate Index by 6% (or 600 basis points).
Since corporate yield spreads remain one of the primary themes of the fixed
income market, we have once again included an updated ten-year spread
table. Despite wider spreads, we maintain our positive outlook on the
corporate bond sector. While a classic textbook interpretation of an
inverted Treasury yield curve would indicate that a recession was imminent,
the most recent inversion is much more "technical" in nature. With the Fed
seeking to use a gradualist approach to slow the economy from its torrid
pace, we do not believe that the credit risk of owning corporate bonds has
increased to the level that is reflected in corporate yield spreads.
In mid-March, the Treasury Department made another announcement that roiled
the fixed income markets. Under Secretary Gary Gensler announced his
department's support for a poorly sponsored House bill that would alter the
regulation of Fannie Mae, Freddie Mac and other government sponsored
enterprises (GSEs). His comments pushed agency spreads wider and added more
uncertainty to an already volatile market. Corporate spreads widened a bit
more in sympathy with agency spreads. We do not believe that the bill has
much chance of passage. First, the Treasury Department has no authority
over the GSEs. Second, few lawmakers have a desire to enact legislation
that would raise mortgage rates for their constituents. Finally, even the
author of the bill does not expect it to become law. Investors who already
own agency securities should be in no rush to sell in response to this
development.
Ten Year "A" Rated Corporate Bonds
Average Yield Spread over Comparable U.S. Treasuries
(Basis Points*)
Change
------
Sector 12/31/98 9/30/99 12/31/99 3/31/00 12/99 - 3/00
------ -------- ------- -------- ------- ------------
Industrial 120 128 115 153 +38
Utilities 90 115 101 135 +34
Banks 120 130 118 161 +43
Finance 120 129 120 159 +39
Source: Lehman Brothers
* A basis point (bp) is equal to one one-hundredth of one percent of yield
and represents the smallest unit measure for quoting bond yields. One
hundred basis points is equal to 1.00%.
Sincerely,
/S/EDWARD L. JAROSKI /S/DAN E. WATSON
Edward L. Jaroski Dan E. Watson
President and Chairman of the Board Executive Vice President
<TABLE>
<CAPTION>
CAPSTONE SOCIAL ETHICS & RELIGIOUS VALUES FUND
MONEY MARKET FUND
SCHEDULE OF INVESTMENTS - March 31, 2000 (Unaudited)
---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Shares Value
------------ ------------
SHORT-TERM INVESTMENTS (100.04%)
AIM Prime Portfolio Money Market, Institutional Class 18,541,620 $18,541,620
Fifth Third Bank, 5.55%, dated 03/31/00,due 04/03/00,
repurchase price $945,909 (collateralized by FNMA Pool #535117,
7.50%, due 01/16/30, market value $970,000) (Cost $945,472) 945,472 945,472
------------
TOTAL INVESTMENTS (Cost $19,487,092) (100.04%) 19,487,092
OTHER ASSETS & LIABILITIES, NET (-0.04%) (7,331)
------------
NET ASSETS (100.00%) $19,479,761
============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
CAPSTONE SOCIAL ETHICS & RELIGIOUS VALUES FUND
SHORT-TERM BOND FUND
SCHEDULE OF INVESTMENTS - March 31, 2000 (Unaudited)
---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Principal Value
------------ ------------
AGENCY OBLIGATIONS (32.55%)
FEDERAL FARM MORTGAGE CO. (9.99%)
5.50%, 03/26/02 1,700,000 $1,655,103
6.10%, 11/19/01 1,000,000 986,250
------------
2,641,353
------------
FEDERAL HOME LOAN BANK (10.98%)
5.25%, 04/25/02 3,000,000 2,902,500
------------
FEDERAL HOME LOAN MORTGAGE CO. (7.85%)
4.75%, 12/14/01 2,150,000 2,075,760
------------
FEDERAL NATIONAL MORTGAGE ASSOC. (3.73%)
6.52%, 09/05/02 1,000,000 985,780
------------
TOTAL AGENCY OBLIGATIONS (Cost $8,719,906) 8,605,393
------------
CORPORATE BONDS (36.58%)
APPAREL (2.56%)
VF Corp., 9.50%, 05/01/01 665,000 677,043
------------
BANKS (4.83%)
Chase Manhattan Corp., 5.50%, 02/15/02 700,000 690,333
Mercantile Bancorp, 6.80%, 06/15/01 590,000 587,693
------------
1,278,026
------------
CHEMICALS (2.49%)
Air Products & Chemicals, Inc. 8.35%, 01/15/02 650,000 658,651
------------
FINANCIAL SERVICES (11.99%)
Associates Corp., 6.70%, 05/29/01 500,000 497,295
Donaldson, Lufkin & Jenrette, Inc., 5.875%, 04/01/02 750,000 724,988
Ford Motor Co., 9.00%, 09/15/01 700,000 715,099
GMAC, 9.625%,12/15/01 150,000 155,127
Lehman Brothers Holdings, Inc., 6.20%, 01/15/02 600,000 585,426
Merrill Lynch & Co., 6.06%, 10/15/01 500,000 491,485
------------
3,169,420
------------
INSURANCE (1.89%)
Travelers Property Casualty Corp., 6.75%, 04/15/01 500,000 498,840
------------
RAILROADS (4.71%)
Consolidated Rail Corp., 9.75%, 06/01/00 497,000 499,053
Union Pacific Railroad C. Equipment Trust, 7.32%, 02/01/02 750,000 746,062
------------
1,245,115
------------
RETAIL STORES (4.35%)
Penney (J.C.) Co., Inc., 7.25%, 04/02/02 500,000 489,830
Penney (J.C.) Co., Inc., 9.05%, 03/01/01 250,000 251,663
Sears Credit Account Trust, 9.00%, 10/01/01 400,000 409,024
------------
1,150,517
------------
TELECOMMUNICATIONS (3.76%)
South Western Bell Telephone, 7.00%, 08/19/02 1,000,000 994,550
------------
TOTAL CORPORATE BONDS (Cost $9,847,460) 9,672,162
------------
U.S. TREASURY OBLIGATIONS (29.08%)
6.25%, 08/31/02 2,500,000 2,486,325
6.25%, 12/15/03 500,000 497,030
6.50%, 08/31/01 1,000,000 1,000,000
6.625%, 06/30/01 2,500,000 2,504,300
6.625%, 07/31/01 1,200,000 1,202,064
------------
TOTAL U.S. TREASURY OBLIGATIONS (Cost $7,796,150) 7,689,719
------------
REPURCHASE AGREEMENTS (0.21%)
Fifth Third Bank, 5.55%, dated 03/31/00,due 04/03/00, repurchase
Price $54,594 (collateralized by FNMA Pool #535117, 7.50%, due
01/16/30, market value $60,000) (Cost $54,567) 54,567 54,567
------------
TOTAL INVESTMENTS (Cost $26,418,083) (98.42%) 26,021,841
OTHER ASSETS & LIABILITIES, NET (1.58%) 417,211
------------
NET ASSETS (100%) $26,439,052
============
*Non-income producing investment.
ADR -- American Depository Receipt
Cost for federal income tax at March 31, 2000 was $26,418,083
and net unrealized depreciation consisted of:
Gross unrealized appreciation $918
Gross unrealized depreciation (397,160)
------------
Net unrealized depreciation $(396,242)
============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
CAPSTONE SOCIAL ETHICS & RELIGIOUS VALUES FUND
BOND FUND
SCHEDULE OF INVESTMENTS - March 31, 2000 (Unaudited)
---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Principal Value
------------ ------------
AGENCY OBLIGATIONS (15.61%)
FEDERAL HOME LOAN BANK (5.16%)
5.125%, 09/15/03 1,500,000 $1,412,874
5.50%, 07/14/00 1,100,000 1,098,148
5.80%, 09/02/08 1,000,000 911,833
------------
3,422,855
------------
FEDERAL HOME LOAN MORTGAGE CO. (6.18%)
4.75%, 12/14/01 1,000,000 965,580
6.30%, 06/01/04 2,000,000 1,931,594
6.45%, 04/29/09 1,300,000 1,208,276
------------
4,105,450
------------
FEDERAL NATIONAL MORTGAGE ASSOC. (3.59%)
5.625%, 03/15/01 1,000,000 990,365
6.00%, 05/15/08 1,500,000 1,390,656
------------
2,381,021
------------
UTILITIES (0.68%)
Tennessee Valley Authority, 6.00%, 03/15/13 500,000 449,004
------------
TOTAL AGENCY OBLIGATIONS (Cost $10,845,703) 10,358,330
------------
CORPORATE BONDS (27.62%)
AEROSPACE (0.60%)
Lockheed Martin Corp., 6.85%, 05/15/01 200,000 197,368
McDonnell Douglas Corp., 6.875%, 11/01/06 205,000 199,096
------------
396,464
------------
AIRLINES (0.60%)
AMR Corp., 9.00%, 08/01/12 175,000 184,659
Delta Air Lines, Inc., 9.75%, 05/15/21 200,000 213,947
------------
398,606
------------
APPLIANCES (0.30%)
Whirlpool Corp., 9.50%, 06/15/00 200,000 200,788
------------
AUTO PARTS & EQUIPMENT (0.31%)
Autozone, Inc., 6.50%, 07/15/08 225,000 205,182
------------
AUTOMOBILE MANUFACTURERS (0.35%)
Daimler Chrysler, 7.40%, 01/20/05 230,000 229,432
------------
BANKS (5.16%)
Bank of America Corp., 6.625%, 05/30/01 100,000 99,171
BankBoston NA, 6.375%, 04/15/08 225,000 209,089
Bankers Trust Corp., 8.125%, 05/15/02 110,000 111,082
Bankers Trust Corp., 9.00%, 08/01/01 100,000 102,015
Chase Manhattan Corp., 7.125%, 02/01/07 225,000 220,340
Citicorp 5.625%, 02/15/01 100,000 98,747
Citigroup , Inc., 5.80%, 03/15/04 230,000 218,803
First Chicago Corp., 9.875%, 08/15/00 175,000 176,877
First Union Corp., 8.125%, 06/24/02 190,000 192,304
Keycorp, 7.50%, 06/15/06 235,000 233,139
Mellon Financial Co., 6.875%, 03/01/03 100,000 98,336
National City Corp. 5.75%, 02/01/09 230,000 202,371
National Westminster Bancorp, Inc. 7.375%, 10/01/09 225,000 219,706
Nationsbank Corp., 6.875%, 02/15/05 100,000 97,134
Norwest Financial, Inc., 7.00%, 01/15/03 100,000 98,437
PNC Funding Corp., 6.875%, 03/01/03 200,000 197,131
Republic NY Corp., 7.75%, 05/15/02 225,000 224,999
Southtrust Bank, Inc., 6.125%, 01/09/28 175,000 160,960
SunTrust Bank, Inc., 7.375%, 07/01/06 200,000 197,825
Wachovia Corp., 6.605%, 10/01/25 175,000 170,714
Wells Fargo Co., 6.875%, 4/01/06 100,000 97,181
------------
3,426,361
------------
CHEMICALS (0.82%)
Dow Chemical Co., 6.85%, 8/15/13 175,000 163,130
Dupont De Nemours (E. I.) Co., 8.125%, 3/15/04 175,000 180,528
Lubrizol Corp., 5.875%, 12/01/08 225,000 202,633
------------
546,291
------------
COMPUTER SERVICES & SOFTWARE (0.33%)
Electronic Data Systems Corp. 7.125%, 10/15/09 225,000 220,851
------------
COMPUTER SYSTEMS (0.66%)
Honeywell Inc. 7.50%, 03/01/10 230,000 232,483
International Business Machines Corp. 5.375%, 02/1/09 230,000 203,079
------------
435,562
------------
COSMETICS & TOILETRIES (0.59%)
Procter & Gamble Co., 8.00%, 10/26/29 175,000 186,179
Scott Paper Co. 7.00% 08/15/23 225,000 207,698
------------
393,877
------------
DIVERSIFIED CONGLOMERATES (0.26%)
PPG Industries, Inc., 7.375%, 06/01/16 175,000 170,363
------------
ELECTRONIC EQUIPMENT (0.89%)
Emerson Electric Co. 5.85%, 03/15/09 225,000 204,057
Motorola, Inc., 6.50%, 03/01/08 225,000 213,971
Texas Instruments, Inc., 6.875%, 07/15/00 175,000 174,820
------------
592,848
------------
FINANCIAL SERVICES (4.59%)
Allstate Corp., 6.75%, 05/15/18 200,000 175,045
Associates Corp. of N.A., 6.50%, 10/15/02 200,000 195,733
Bear Stearns Co., Inc., 6.625%, 01/15/04 225,000 217,026
Charles Schwab Corp., 8.05%, 03/01/10 230,000 231,601
Chrysler Financial Co. LLC, 5.875%, 02/07/01 170,000 168,309
Ford Motor Credit Co., 8.00%, 06/15/02 225,000 227,507
G.E. Capital Corp., 5.50%, 11/01/01 200,000 195,085
General Motors Acceptance Corp., 6.75%, 02/07/02 225,000 222,242
Hartford Life, Inc., 7.10%, 06/15/27 175,000 169,941
Hartford Life, Inc., 7.65%, 06/15/27 200,000 193,384
Household Finance Corp. 6.00% 15/01/04 230,000 217,624
Lehman Bros. Holdings, 6.625%, 02/15/08 100,000 91,899
Lehman Bros. Holdings, 8.875%, 03/01/02 100,000 102,125
Merrill Lynch & Co., Inc., 6.25%, 01/15/06 100,000 93,684
Merrill Lynch & Co., Inc., 8.00%, 06/01/07 100,000 101,746
Morgan (J. P.) Co., Inc, 7.625%, 09/15/04 225,000 226,418
Morgan Stanley Dean Witter, 6.875%, 03/01/07 225,000 216,418
------------
3,045,787
------------
FOOD & BEVERAGE (1.24%)
Archer Daniels ADM., 7.125%, 03/01/13 225,000 219,072
Campbell Soup Co., 6.90%, 10/15/06 225,000 220,769
Heinz (H. J.) Co., 6.00%, 03/15/08 225,000 209,042
Kroger Co., 7.00%, 05/01/18 200,000 176,650
------------
825,533
------------
INSURANCE (0.57%)
International Lease Finance Corp., 7.00%, 05/15/00 100,000 99,978
International Lease Finance Corp., 8.875%, 04/15/01 100,000 101,517
Travelers Property Casualty Corp., 6.75%, 04/15/01 175,000 173,850
------------
375,345
------------
MEDICAL PRODUCTS (0.29%)
Bausch & Lomb, Inc., 6.75%, 12/15/04 200,000 193,121
------------
OFFICE EQUIPMENT (0.25%)
Xerox Corp., 7.20%, 04/01/16 175,000 167,412
------------
OIL & GAS (1.79%)
Atlantic Richfield Co., 8.25%, 02/01/22 200,000 216,702
BP America, Inc., 9.375%, 11/01/00 175,000 177,328
Chevron Capital USA, Inc., 7.45%, 08/15/04 175,000 173,569
Dresser Industries, Inc., 6.25%, 06/01/00 100,000 99,879
Mobil Corp., 8.375%, 02/12/01 175,000 176,917
Southern Union Co., 7.60%, 02/01/24 175,000 160,596
Texaco Capital, Inc., 8.50%, 02/15/03 175,000 179,893
------------
1,184,884
------------
PAPER & FOREST PRODUCTS (0.53%)
International Paper Co., 7.625%, 01/15/07 185,000 181,873
Weyerhaeuser Co., 7.25%, 07/01/13 175,000 171,374
------------
353,247
------------
PHARMACEUTICAL (0.25%)
Bristol-Myers Squibb Co., 6.80%, 11/15/26 175,000 165,374
------------
PIPELINES (0.27%)
Enron Corp., 8.25%, 09/15/12 175,000 178,552
------------
RAILROADS (0.62%)
Norfolk South Corp., 6.95%, 05/01/02 225,000 222,023
Union Pacific Corp., 6.125%, 01/15/04 200,000 188,961
------------
410,984
------------
REAL ESTATE INVESTMENT TRUST (0.30%)
Eop Operating LP., 7.25%, 02/15/18 225,000 196,752
------------
RETAIL STORES (1.26%)
Penney (J. C.) Co., Inc., 7.25%, 04/01/02 100,000 94,645
Penney (J. C.) Co., Inc., 6.375%, 09/15/00 100,000 98,544
Rite Aid Corp., 6.875%, 08/15/13 175,000 89,250
Safeway, Inc., 7.00%, 09/15/07 200,000 191,116
Sears Roebuck & Co., 6.50%, 06/15/00 200,000 199,704
Wal-Mart Stores, Inc., 5.875%, 10/15/05 175,000 165,844
------------
839,103
------------
TELECOMMUNICATIONS (2.38%)
AT&T Corp., 7.50%, 06/01/06 200,000 198,225
Bell Tel-Penn Co., 6.625%, 09/15/02 175,000 172,302
GTE Florida, Inc., 6.86%, 02/01/28 175,000 154,934
Lucent Technologies, Inc., 7.25%, 07/15/06 250,000 250,938
New York Telephone Co., 6.25%, 02/15/04 100,000 95,707
New York Telephone Co., 7.25%, 02/15/24 100,000 90,090
Pacific Bell, 6.25%, 03/01/05 100,000 95,645
Southern New England Telecommunications Corp., 7.00%, 08/15/05 100,000 98,947
US WEST Comm., 6 375%, 10/15/02 225,000 219,604
WorldCom, Inc., 6.95%, 08/15/28 225,000 205,544
------------
1,581,936
------------
UTILITIES (2.15%)
Baltimore Gas & Electric Co., 8.375%, 08/15/01 175,000 177,263
Carolina Power & Light Co., 5.95%, 03/01/09 200,000 180,274
Central Power & Light Co., 6.625%, 07/01/05 220,000 211,330
Commonwealth Edison, 8.625%, 02/01/22 150,000 150,533
Consolidated Edison, Inc., 6.375%, 04/01/03 225,000 218,683
Consolidated Natural Gas Co., 6.625%, 12/01/08 175,000 163,494
Duke Power Corp., 7.00%, 06/01/00 100,000 99,976
Southern California Edison Co., 6.50%, 06/01/01 225,000 223,362
------------
1,424,915
------------
WASTE MANAGEMENT (0.26%)
WMX Technologies Inc., 6.70%, 05/01/01 175,000 169,422
------------
TOTAL CORPORATE BONDS (Cost $19,609,996) 18,328,992
------------
FOREIGN BONDS (6.13%)
FOREIGN CORPORATE BONDS (4.86%)
ABN Amro Bank N.V., 7.55%, 06/28/06+ 225,000 224,059
Amoco Canada Petroleum Co. Ltd., 7.25%, 12/01/02+ 200,000 200,110
Banque Paribas NY, 8.35%, 06/15/07+ 225,000 228,809
Barclays Bank PLC., 7.40%, 12/15/09+ 230,000 225,651
Bayerische Landesbk Ciro, 7.375%, 12/14/02+ 100,000 99,914
Bell Canada, 9.50%, 10/15/10+ 200,000 223,660
Cable And Wireless Communication PLC, 6.75%, 03/06/08+ 175,000 175,397
Deutsche Bank Financial Inc., 6.70% 12/31/06+ 175,000 166,227
Dresdner Bank NY, 6.625%, 09/15/05+ 225,000 215,054
Hanson Overseas B.V., 7.375% 01/15/03+ 100,000 99,174
Lb Baden-Wuerttenberg, 7.625%, 02/01/23+ 200,000 200,527
Norsk Hydro, 6.70%, 01/15/18+ 225,000 199,037
Nortel Networks Corp., 8.75%, 06/12/01+ 100,000 101,782
Santander Financial Issuances, 7.875%, 04/15/05+ 225,000 225,802
Sony Corp., 6.125%, 03/04/03+ 225,000 218,893
Swiss Bank Corp. NY, 7.00%, 10/15/15+ 225,000 208,762
Toronto-Dominion Bank-NY, 6.45%, 01/15/09+ 230,000 213,204
------------
3,226,062
------------
FOREIGN GOVERNMENT REGIONAL (1.27%)
Province of Manitoba, 8.00%, 04/15/02+ 175,000 177,352
Province of Nova Scotia 7.25%, 07/27/13+ 100,000 98,953
Province of Ontario 6.125%, 06/28/00+ 175,000 174,879
Province of Quebec, 6.50%, 01/17/06+ 225,000 215,456
Province of Saskatchewan CDA, 8.00%, 02/01/13+ 170,000 175,918
------------
842,558
------------
TOTAL FOREIGN BONDS (Cost $4,366,353) 4,068,620
------------
U.S. TREASURY OBLIGATIONS (48.82%)
4.75%, 11/15/08 1,200,000 1,081,500
5.75%, 08/15/03 1,700,000 1,667,063
6.25%, 08/15/23 2,000,000 2,028,750
6.25%, 02/15/07 200,000 199,625
6.25%, 08/15/00 600,000 600,000
6.375%, 08/15/02 4,200,000 4,188,190
6.50%, 08/15/05 2,550,000 2,565,938
6.50%, 05/31/01 1,700,000 1,700,532
6.625%, 05/15/07 600,000 611,625
6.75%, 08/15/26 2,000,000 2,173,750
7.25%, 05/15/04 1,900,000 1,958,782
7.50%, 02/15/05 1,800,000 1,885,500
7.50%, 11/15/01 1,400,000 1,421,000
7.50%, 11/15/16 2,600,000 2,946,125
7.875%, 02/15/21 2,000,000 2,395,000
7.875%, 08/15/01 2,500,000 2,544,533
8.125%, 08/15/19 2,000,000 2,430,626
------------
32,398,539
------------
TOTAL U.S. TREASURY OBLIGATIONS (Cost $34,447,291) 32,398,539
------------
REPURCHASE AGREEMENTS (0.75%)
Fifth Third Bank, 5.55%, dated 03/31/00, due 04/03/00,
repurchase price $495,417 (collateralized by FNMA Pool
#535117, 7.50%, due 01/16/30, market value $510,000)
(cost $495,188) 495,188 495,188
------------
TOTAL INVESTMENTS (Cost $69,764,531) (98.93%) 65,649,669
OTHER ASSETS & LIABILITIES, NET (1.07%) 714,353
------------
NET ASSETS (100%) $66,364,022
============
+Denominated in U.S. Dollars
Cost for federal income tax at March 31, 2000 was $69,764,531
and net unrealized depreciation consisted of:
Gross unrealized appreciation $27,943
Gross unrealized depreciation (4,142,805)
------------
Net unrealized depreciation $(4,114,862)
============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
CAPSTONE SOCIAL ETHICS & RELIGIOUS VALUES FUND
LARGE CAP EQUITY FUND
SCHEDULE OF INVESTMENTS - March 31, 2000 (Unaudited)
---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Shares Value
------------ ------------
COMMON STOCK (99.46%)
ADVERTISING (0.29%)
Interpublic Group of Cos., Inc. 4,074 $192,496
Omnicom Group, Inc. 2,830 264,428
Young & Rubicam, Inc. 730 34,310
------------
491,234
------------
AEROSPACE (0.78%)
BF Goodrich Co. 691 19,823
Boeing Co. 12,369 469,249
General Dynamics Corp. 2,760 137,310
Lockheed Martin Corp. 4,936 100,879
Northrop Grumman Corp. 1,120 59,290
Raytheon Co. Cl B 4,353 77,266
United Technologies Corp. 7,020 443,576
------------
1,307,393
------------
AGRICULTURAL (0.26%)
Monsanto Co. 8,431 434,196
------------
AIRLINES (0.24%)
AMR Corp.* 2,304 73,440
Delta Air Lines, Inc. 2,300 122,475
Southwest Airlines Co. 8,176 170,163
US Airways Group, Inc.* 1,163 32,346
------------
398,424
------------
APPAREL (0.13%)
Liz Claiborne, Inc. 750 34,359
Nike, Inc. Cl B 3,702 146,692
Reebok International Ltd.* 100 925
VF Corp. 1,488 35,805
------------
217,781
------------
APPLIANCES (0.06%)
Maytag Corp. 880 29,150
Whirlpool Corp. 1,254 73,516
------------
102,666
------------
AUTO PARTS & EQUIPMENT (0.26%)
Autozone, Inc.* 1,887 52,364
Briggs & Stratton Corp. 180 7,403
Cummins Engine Company 460 17,279
Dana Corp. 2,005 56,516
Delphi Automotive Systems Corp. 7,784 124,544
Genuine Parts Co. 2,180 52,048
Pep Boys-Manny Moe & Jack 660 3,919
TRW Corp. 1,975 115,538
------------
429,611
------------
AUTOMOBILE MANUFACTURERS (0.97%)
Ford Motor Co. 17,058 783,602
General Motors Corp. 9,214 763,034
Navistar International Corp.* 620 24,877
Paccar, Inc. 1,096 54,800
------------
1,626,313
------------
BANKS (5.37%)
AmSouth Bancorp 1,750 26,141
Bank America Corp. 23,788 1,247,382
Bank of New York, Inc. 10,478 435,492
Bank One Corp. 15,814 543,606
BB&T Corp. 4,030 113,092
Chase Manhattan Corp. 12,032 1,049,040
Comerica, Inc. 2,548 106,697
Fifth Third Bancorp 4,858 306,054
First Union Corp. 13,414 499,672
Firstar Corp. 11,911 273,209
Fleet Boston Financial Corp. 12,071 440,591
Golden West Financial Corp. 2,220 69,236
Huntington Bancshares, Inc. 3,102 69,407
J.P. Morgan & Co., Inc. 3,172 417,911
Keycorp 6,330 120,270
Mellon Financial Corporation 6,900 203,550
National City Corp. 8,374 172,714
Northern Trust Corp. 3,510 237,144
PNC Bank Corp. 4,485 202,105
Regions Financial Corp. 2,400 54,750
SouthTrust Corp. 1,700 43,244
State Street Boston Corp. 2,770 268,344
Summit Bancorp 1,800 47,250
Suntrust Banks, Inc. 5,415 312,715
Synovus Financial Corp. 3,735 70,498
U.S. Bancorp 9,592 209,825
Union Planters Corp. 1,530 47,143
Wachovia Corp. 3,922 264,980
Washington Mutual Financial Services, Inc. 9,221 244,357
Wells Fargo & Co. 21,754 890,554
------------
8,986,973
------------
BROADCASTING (2.18%)
CBS Corp.* 11,256 637,371
Clear Channel Comm, Inc.* 5,040 348,075
MediaOne Group, Inc.* 9,560 774,360
Meredith Corp. 2,178 60,302
Time Warner, Inc. 18,210 1,821,000
------------
3,641,108
------------
BUILDING (0.11%)
Armstrong World Industries, Inc. 460 8,223
Centex Corp. 250 5,953
Masco Corp. 5,160 105,780
Owens Corning 926 17,940
Vulcan Materials Company 1,180 54,059
------------
191,955
------------
BUILDING MAINTENANCE & SERVICE (0.03%)
Ecolab, Inc. 1,416 51,950
------------
CHEMICALS (1.10%)
Air Products & Chemicals, Inc. 2,868 81,559
Dow Chemical Co. 3,781 431,034
Dupont De Nemours & Co. 14,414 762,140
Eastman Chemical Co. 1,060 48,230
Engelhard Corp. 984 14,882
FMC Corp. 460 25,990
Great Lakes Chem Corp. 200 6,800
Hercules, Inc. 1,153 18,592
Int'l Flavors & Fragrance, Inc. 3,046 106,800
Praxair, Inc. 1,801 74,966
Rohm & Haas Co. 2,668 119,060
Sigma Aldrich Corp. 1,178 31,658
Union Carbide Corp. 1,796 104,728
W.R. Grace & Co.* 444 5,633
------------
1,832,072
------------
COMMERCIAL SERVICES (0.12%)
Cendant Corp.* 10,146 187,701
Quintiles Transnational Corp.* 1,000 17,063
------------
204,764
------------
COMPONENTS (0.42%)
Honeywell International, Inc. 10,668 562,070
Johnson Controls, Inc. 1,454 78,607
Parker Hannifin Corp. 1,301 53,748
------------
694,425
------------
COMPUTER HARDWARE (7.01%)
Analog Devices, Inc.* 4,670 376,227
Apple Computer, Inc.* 2,199 298,652
Compaq Computer Corp. 21,610 575,366
Dell Computer Corp.* 33,712 1,818,341
EMC Corp.* 13,504 1,688,000
Gateway 2000, Inc.* 4,140 219,420
Hewlett-Packard Co. 13,413 1,778,061
International Business Machines Corp. 24,086 2,842,147
Seagate Technology, Inc.* 2,855 172,014
Sun Microsystems, Inc.* 20,782 1,947,338
------------
11,715,566
------------
COMPUTER SERVICES & SOFTWARE (10.67%)
3Com Corp.* 4,393 244,360
Adobe Systems, Inc. 1,570 174,761
America Online, Inc.* 29,960 2,014,810
Autodesk, Inc. 810 36,855
Automatic Data Processing, Inc. 8,850 427,012
BMC Software, Inc.* 3,190 157,505
Cabletron Systems, Inc.* 2,130 62,435
Ceridian Corp.* 1,930 37,032
Citrix Systems, Inc.* 2,240 148,400
Comcast Corp. Cl A 12,930 560,839
Computer Associates International, Inc. 7,215 427,037
Computer Sciences Corp.* 2,478 196,072
Compuware Corp.* 4,540 95,624
Comverse Technology, Inc.* 1,130 213,570
Electronic Data Systems Corp. 6,750 433,266
First Data Corp. 5,771 255,367
Microsoft Corp.* 68,664 7,295,550
NCR Corp.* 1,090 43,736
Network Appliance, Inc.* 3,880 321,070
Novell, Inc.* 4,239 121,340
Oracle Corp.* 37,096 2,895,807
Parametric Technology Corp.* 3,230 68,032
PE Corp. - PE Biosystems Group 2,660 256,690
Peoplesoft, Inc.* 2,990 59,800
Silicon Graphics, Inc.* 2,625 27,727
Unisys Corp.* 3,580 91,290
Yahoo, Inc.* 6,950 1,191,056
------------
17,857,043
------------
CONSUMER PRODUCTS (0.38%)
American Greetings Corp. Cl A 1,490 27,192
Jostens, Inc. 1,140 27,787
The Clorox Co. 3,592 116,740
Tupperware Corp. 1,001 15,828
Unilever N.V. NY Shares New 9,280 446,600
------------
634,147
------------
CONTAINERS (0.08%)
Bemis Co. 115 4,241
Crown Cork & Seal Co., Inc. 1,796 28,736
Owens Illinois, Inc.* 2,120 35,775
Pactiv Corporation * 2,248 19,670
Sealed Air Corp.* 965 52,412
------------
140,834
------------
COSMETICS & TOILETRIES (1.62%)
Alberto- Culver Company 910 21,669
Avon Products, Inc. 3,888 112,995
Colgate-Palmolive Co. 8,538 481,330
Gillette Co. 14,778 556,946
Kimberly Clark Corp. 7,936 444,416
Procter & Gamble Co. 19,362 1,089,113
------------
2,706,469
------------
DIVERSIFIED CONGLOMERATES (5.68%)
Cooper Industries, Inc. 1,134 39,690
Corning, Inc. 3,733 724,202
Crane Co. 260 6,126
Danaher Corp. 1,660 84,660
Eaton Corp. 1,100 85,800
General Electric Company 44,136 6,849,356
Illinois Tool Works, Inc. 4,746 262,217
ITT Industries, Inc. 1,258 39,077
National Service Industries, Inc. 550 11,584
PPG Industries, Inc. 2,695 140,982
Textron, Inc. 2,590 157,666
Tyco International Ltd. 22,268 1,110,617
------------
9,511,977
------------
ELECTRICAL SERVICES (0.13%)
Adaptec, Inc.* 1,080 41,715
Molex, Inc. 2,992 175,780
------------
217,495
------------
ELECTRONIC EQUIPMENT (7.43%)
Advanced Micro Devices, Inc.* 1,909 108,932
Applied Materials, Inc.* 10,210 962,293
Conexant Systems, Inc. 2,500 177,500
Emerson Electric Co. 6,356 336,074
Intel Corp. 44,132 5,822,666
KLA-Tencor Corp.* 2,420 203,885
LSI Logic Corp.* 3,790 275,249
Micron Technology, Inc.* 3,518 443,268
Motorola Rights Exp. 11/08/08 9,556 1,360,536
National Semiconductor Corp.* 2,180 132,163
Solectron Corp.* 7,420 297,264
Tektronix, Inc. 570 31,920
Teradyne, Inc.* 2,260 185,885
Texas Instruments, Inc. 10,794 1,727,040
Thomas & Betts Corp. 245 6,921
Xilinx, Inc.* 4,160 344,500
------------
12,416,096
------------
ENGINEERING (0.02%)
Fluor Corp. 850 26,350
------------
ENTERTAINMENT & LEISURE (0.09%)
Brunswick Corp. 1,744 33,027
Hasbro, Inc. 3,175 52,388
Mattel, Inc. 5,941 62,009
------------
147,424
------------
FINANCIAL SERVICES (5.10%)
American Express Co. 6,486 966,009
Associates First Capital Corp. 9,702 207,987
Capital One Financial Corp. 2,550 122,241
Citigroup, Inc. 44,734 2,653,285
Countrywide Credit Industries, Inc. 1,030 28,068
Deluxe Corp. 2,617 69,351
Dun & Bradstreet Corp. 2,606 74,597
Equifax, Inc. 1,930 48,733
Fannie Mae 14,371 811,063
Federal Home Loan Mortgage Corp. 9,448 417,484
H.R. Block, Inc. 1,170 52,358
Household International, Inc. 6,379 238,016
Lehman Brothers Holding, Inc. 1,700 164,900
MBNA Corp. 10,575 269,663
Morgan Stanley Dean Witter & Co. 15,264 1,244,970
Old Kent Financial Corp. 670 21,649
Paine Webber Group, Inc. 1,430 62,920
Paychex, Inc. 3,395 177,813
Providian Financial Corp. 2,106 182,432
Schwab (Charles) Corp. 10,730 609,598
Service Corporation International 3,972 11,916
SLM Holding Corp. 1,840 61,295
T. Rowe Price 730 28,835
------------
8,525,183
------------
FOOD & BEVERAGE (2.09%)
Albertson's, Inc. 7,092 219,852
Archer-Daniels-Midland Company 15,221 157,918
Best Foods Co. 5,928 277,505
Campbell Soup Company 8,514 261,806
General Mills, Inc. 5,988 216,691
Great Atlantic & Pacific Tea Co., Inc. 910 17,745
Heinz (H.J.) Company 8,297 289,358
Hershey Foods Corp. 3,260 158,925
Kellogg Co. 8,970 229,856
Kroger Co.* 14,164 248,755
Nabisco Group Holdings Corp. 10,580 126,960
Quaker Oats Co. 3,161 191,636
Ralston-Ralston Purina Group 5,588 152,972
Safeway, Inc.* 7,390 334,398
Supervalu, Inc. 3,620 68,554
Sysco Corp. 7,038 251,169
Winn Dixie Stores, Inc. 3,000 58,313
Wm. Wrigley Jr. Company 3,075 236,198
------------
3,498,611
------------
FOREST & PAPER PRODUCTS (0.50%)
Boise Cascade Corp. 485 16,854
Champion Int'l Corp. 1,112 59,214
Fort James Corp. 2,602 57,244
Georgia-Pacific Group 1,966 77,780
International Paper Co. 5,350 228,713
Louisiana-Pacific Corp. 970 13,459
Potlatch Corp. 120 5,160
Temple Inland, Inc. 820 40,846
The Mead Corp. 1,040 36,335
Westvaco Corp. 1,136 37,914
Weyerhaeuser Co. 3,514 200,298
Willamette Ind., Inc. 1,406 56,416
------------
830,233
------------
HEALTHCARE SERVICES (0.45%)
Alza Corp. Cl A* 1,140 42,821
Columbia/HCA Healthcare Corp. 8,612 217,991
Healthsouth Rehabilitation Corp.* 5,860 32,596
Manor Care, Inc. 1,785 24,098
Mekesson HBOC, Inc. 3,499 73,479
Tenet Healthcare Corp.* 4,813 110,699
United Healthcare Corp. 2,690 160,391
Wellpoint Health Networks, Inc.* 1,210 84,549
------------
746,624
------------
HOME FURNISHINGS (0.07%)
Newell Rubbermaid, Inc. 4,288 106,396
Springs Industries, Inc. 110 4,180
------------
110,576
------------
HOTELS (0.12%)
Hilton Hotels Corp. 5,520 42,780
Marriott International, Inc. 4,973 156,650
------------
199,430
------------
INDUSTRIAL (0.43%)
Black & Decker Corp. 1,121 42,108
Caterpillar, Inc. 4,792 188,985
Deere & Co. 3,028 115,064
Dover Corp. 2,660 127,348
Grainger (W. W.), Inc. 1,470 79,748
McDermott International, Inc. 440 4,043
Rockwell International Corp. 2,606 108,963
Snap-On, Inc. 560 14,665
Thermo Electron Corp.* 2,082 42,421
------------
723,345
------------
INSURANCE (3.01%)
Aetna Life & Casualty, Inc. 2,274 126,633
AFLAC, Inc. 3,700 168,581
Allstate Corp. 10,166 242,078
American General Corp. 4,067 228,260
American International Group, Inc. 21,687 2,374,727
Aon Corp. 3,304 106,554
Chubb Corp. 2,900 195,931
Cigna Corp. 2,918 221,039
Cincinnati Financial Corp. 2,200 82,775
Conseco Co., Inc. 3,316 37,927
Hartford Financial Services Group, Inc. 3,058 161,310
Humana, Inc.* 2,525 18,464
Jefferson Pilot Corp. 1,879 125,071
Lincoln National Corp. 2,208 73,968
Marsh & McLennan Co., Inc. 4,133 455,922
MBIA, Inc. 1,460 76,011
MGIC Investment Corp. 1,080 47,115
Progressive Corp. 1,180 89,754
SAFECO Corp. 1,259 33,442
Saint Paul Cos. 2,640 90,090
Torchmark Corp. 1,210 27,981
Unum Corp. 2,630 44,710
------------
5,028,343
------------
INVESTMENT COMPANIES (0.41%)
Bear Stearns Cos., Inc. 1,037 47,313
Franklin Resources, Inc. 3,090 103,322
Merrill Lynch & Co. 5,072 532,560
------------
683,195
------------
MACHINERY, GENERAL INDUSTRIAL (0.06%)
Ingersoll-Rand Company 2,243 99,253
------------
MATERIALS (0.05%)
Arch Coal, Inc. 85 594
Barrick Gold Corp. 4,301 67,472
Homestake Mining Co. 3,400 20,400
------------
88,466
------------
MEDICAL DRUGS (1.13%)
Schering-Plough Corp. 19,670 722,873
Warner-Lambert Co. 12,022 1,172,145
------------
1,895,018
------------
MEDICAL PRODUCTS (7.57%)
Abbott Labs 21,036 740,204
Allergan, Inc. 1,810 90,500
American Home Products Corp. 17,880 958,815
Amgen, Inc.* 13,670 838,996
Bausch & Lomb, Inc. 935 48,795
Baxter International., Inc. 4,763 298,581
Becton, Dickinson & Company 3,960 104,198
Biogen, Inc.* 2,120 148,135
Biomet, Inc. 1,660 60,383
Boston Scientific Corp.* 5,262 112,146
Bristol- Myers Squibb Company 27,348 1,579,347
C R Bard, Inc. 750 29,016
Cardinal Health, Inc. 4,010 183,959
Guidant Corp. 4,256 250,306
IMS Health, Inc. 4,252 72,018
Johnson & Johnson 19,716 1,381,352
Lilly (Eli) & Co. 15,440 972,720
Mallinckrodt, Inc. 1,140 32,775
Medtronic, Inc. 16,102 828,247
Merck & Co. 31,770 1,973,711
PE Corp.-PE Biosystems Group 560 37,240
Pfizer, Inc. 50,974 1,863,737
Shared Medical Systems, Inc. 440 22,825
St. Jude Medical, Inc.* 1,157 29,865
------------
12,657,871
------------
METALS (0.43%)
Alcan Aluminum Ltd. 3,447 116,767
Alcoa, Inc. 5,124 359,961
Freeport-McMoran Copper & Gold, Inc.* 1,590 19,179
Inco Ltd. 3,457 63,306
Phelps Dodge Corp. 1,065 50,588
Placer Dome, Inc. 4,407 35,807
Reynolds Metals Co. 867 57,981
Timken Co. 670 10,888
------------
714,477
------------
MINING & BUILDING MATERIALS (0.03%)
Newmont Mining Corp. 1,978 44,381
------------
MISCELLANEOUS MANUFACTURING (0.39%)
Ball Corp. 290 10,023
Millipore Corp. 450 25,397
Minnesota Mining & Manufacturing Co. 6,482 574,062
NACCO Industries, Inc. Cl A 110 5,273
Pall Corp. 1,479 33,185
------------
647,940
------------
MOTORCYCLE MANUFACTURERS (0.11%)
Harley-Davidson, Inc. 2,340 185,738
------------
OFFICE EQUIPMENT (0.45%)
Avery Dennison Corp. 1,791 109,363
Ikon Office Solutions, Inc. 2,002 12,387
Lexmark International Group, Inc. Cl A* 1,680 177,660
Office Depot, Inc.* 4,880 56,425
Pitney Bowes, Inc. 3,854 172,226
Xerox Corp. 8,732 227,032
------------
755,093
------------
OIL & GAS (5.52%)
Amerada Hess Corp. 1,308 84,530
Anadarko Petro Corp. 950 36,753
Apache Corp. 980 48,755
Ashland, Inc. 345 11,536
Atlantic Richfield Company (ARCO) 5,052 429,420
Baker Hughes, Inc. 3,540 107,085
Burlington Resources, Inc. 2,007 74,259
Chevron Oil Corp. 9,947 919,476
Conoco, Inc. Cl B 4,040 103,525
Exxon Mobil Corp. 46,451 3,614,468
Halliburton Co. 5,078 208,198
Kerr-McGee Corp. 1,250 72,188
NICOR, Inc. 390 12,846
Occidental Petroleum Corp. 5,063 105,057
Phillips Petroleum Co. 3,044 140,785
Royal Dutch Petroleum Co. 29,140 1,677,371
Schlumberger, Ltd. 7,520 575,280
Sempra Energy 3,995 66,916
Sunoco, Inc. 640 17,520
Texaco, Inc. 8,042 431,252
The Coastal Corp. 2,820 129,720
Tosco Corp. 220 6,696
Transocean Sedco Forex, Inc. 2,177 111,707
Union Pacific Resources Group, Inc. 3,481 50,475
Unocal Corp. 2,682 79,790
USX Marathon Group, Inc. 4,236 110,401
------------
9,226,009
------------
PAINT & RELATED PRODUCTS (0.03%)
Sherwin Williams Co. 1,966 43,129
------------
PHARMACEUTICALS (0.30%)
Pharmacia & Upjohn, Inc. 7,584 449,352
Watson Pharmaceuticals, Inc.* 1,130 44,847
------------
494,199
------------
PHOTOGRAPHY EQUIPMENT (0.18%)
Eastman Kodak Co. 5,244 284,815
Polaroid Corp. 840 19,950
------------
304,765
------------
PIPELINES (0.72%)
Columbia Gas System, Inc. 1,478 87,572
El Paso Energy Corp. 2,976 120,156
Enron Corp. 9,892 740,664
Williams Cos., Inc. 5,690 250,004
------------
1,198,396
------------
PRINTING (0.05%)
R.R. Donnelley & Sons Co. 3,648 76,380
------------
PUBLISHING (0.68%)
Dow Jones & Co. 1,745 125,313
Gannett, Inc. 5,434 382,418
Knight-Ridder, Inc. 1,619 82,468
McGraw-Hill Cos., Inc. 3,280 149,240
New York Times Co. Cl A 3,274 140,577
Times Mirror Co. Cl A 1,228 114,127
Tribune Co. 4,130 151,003
------------
1,145,146
------------
RETAIL STORES (5.73%)
Bed Bath & Beyond, Inc.* 1,540 60,638
Best Buy Co., Inc.* 2,840 244,240
Circuit City Stores, Inc. 2,770 168,624
Consolidated Stores Corp.* 1,330 15,129
Costco Cos., Inc.* 6,180 324,836
CVS Corp. 5,444 204,490
Dillard's, Inc. Cl A 1,090 17,917
Dollar General Corp. 2,897 77,857
Eastern Enterprises 550 32,930
Federated Department Stores, Inc.* 2,797 116,775
Gap, Inc. 11,505 573,093
Harcourt General, Inc. 1,544 57,514
Home Depot, Inc. 30,819 1,987,826
J.C. Penney Co. 3,747 55,737
K-Mart Corp.* 6,188 59,946
Kohl's Corp.* 2,470 253,175
Longs Drug Stores Corp. 420 9,555
Lowe's Cos. 5,388 314,525
May Department Store Co. 4,578 130,473
Nordstrom, Inc. 1,900 56,050
Rite Aid Corp. 3,392 18,656
Sears, Roebuck & Co. 5,074 156,660
Staples, Inc.* 6,170 123,400
Tandy Corp. 2,630 133,473
Target Corp. 6,534 488,416
The Limited, Inc. 2,985 125,743
TJX Companies, Inc. 4,120 91,413
Toys 'R' Us, Inc.* 3,481 51,562
Wal Mart Stores, Inc. 59,298 3,291,038
Walgreen Co. 13,446 346,235
------------
9,587,926
------------
STEEL (0.09%)
Allegheny Technologies, Inc. 1,316 26,402
Bethlehem Steel Corp.* 2,390 14,340
Nucor Corp. 1,311 65,550
USX-U.S. Steel Group, Inc. 1,213 30,325
Worthington Industries, Inc. 1,410 17,449
------------
154,066
------------
TELECOMMUNICATIONS (16.15%)
ADC Telecommunications, Inc.* 3,890 209,574
Alltel Corp. 4,808 303,205
Andrew Corp.* 412 9,425
AT&T Corp. 42,890 2,412,562
Bell Atlantic Corp. 21,326 1,303,551
Bellsouth Corp. 25,306 1,189,381
CenturyTel, Inc. 1,620 60,142
Cisco Systems, Inc.* 89,348 6,907,716
Global Crossing Ltd. 10,183 416,867
GTE Corp. 13,966 991,586
Lucent Technologies, Inc. 41,911 2,546,092
MCI Worldcom, Inc.* 37,229 1,686,938
Nextel Communications Cl A* 4,940 732,355
Nortel Networks Corp. 19,074 2,403,324
QUALCOMM, Inc.* 9,670 1,443,852
SBC Communications, Inc. 45,445 1,908,690
Scientific Atlanta, Inc. 2,140 135,756
Sprint Corp. 12,932 814,716
Sprint Corp. (PCS Group)* 10,150 662,922
Tellabs, Inc.* 5,302 333,943
U S West, Inc. 7,485 543,598
------------
27,016,195
------------
TIRE & RUBBER (0.03%)
Cooper Tire & Rubber Co. 330 4,146
Goodyear Tire & Rubber Co. 1,950 45,459
------------
49,605
------------
TOOLS (0.01%)
Stanley Works 840 22,155
------------
TRANSPORTATION (0.37%)
Burlington Northern Santa Fe Corp. 5,064 112,041
CSX Corp. 2,475 58,163
FedEx Corp.* 3,726 145,314
Kansas City Southern Industries, Inc. 1,540 132,344
Norfolk Southern Corp. 4,316 62,043
Union Pacific Corp. 2,963 115,927
------------
625,832
------------
TRAVEL SERVICES (0.04%)
Sabre Holdings Corp. Cl A* 1,664 61,464
------------
TRUCKING & LEASING (0.02%)
Ryder Systems, Inc. 1,280 29,040
------------
UTILITIES (1.64%)
AES Corp.* 3,010 237,038
Ameren Corp. 1,918 59,337
American Electric Power Co. 2,937 87,559
Carolina Power & Light Co. 2,074 67,275
Central & South West Corp. 3,086 52,655
Cinergy Corp. 1,904 40,936
CMS Energy Corp. 1,200 21,750
Consolidated Edison, Inc. 3,449 100,020
Constellation Energy Group 2,009 64,037
Dominion Res Inc - Va 3,004 115,466
DTE Energy Co. 1,919 55,651
Duke Energy Co. 5,603 294,157
Edison International 5,376 89,040
Entergy Corp. 3,335 67,325
Firstenergy Corp. 3,145 64,866
Florida Progress Corp. 1,410 64,684
FPL Group, Inc. 3,009 138,602
GPU, Inc. 1,235 33,808
New Century Energies, Inc. 1,310 39,382
Niagara Mohawk Holdings Inc. 3,710 50,085
Northern States Power-Mn Co. 1,580 31,403
PECO Energy Co. 2,546 93,884
Peoples Energy Corp. 350 9,603
PG&E Corp. 6,099 128,079
PPL Corp. 1,385 28,998
Public Service Enterprise, Inc. 3,417 101,229
Reliant Energy, Inc. 5,360 125,625
Southern Co. 10,860 236,205
Texas Utilities Co. 4,421 131,248
Unicom Corp. 2,952 107,748
------------
2,737,695
------------
WASTE MANAGEMENT (0.07%)
Waste Management Services, Inc. 8,063 110,362
------------
TOTAL COMMON STOCK (Cost $148,205,819) 166,300,407
------------
MISCELLANEOUS INVESTMENTS (Cost $717,372) (0.43%)
S&P 500 Depository Receipts 4,800 722,701
------------
REPURCHASE AGREEMENTS (0.24%)
Fifth Third Bank, 5.55%, dated 03/31/00,due 04/03/00,repurchase
Price $399,146 (collateralized by FNMA Pool #535117, 7.50%,
due 01/16/30, market value $410,000) (Cost $398,961) 398,961 398,961
------------
TOTAL INVESTMENTS (Cost $149,322,152) (100.13%) 167,422,069
OTHER ASSETS & LIABILITIES, NET (-0.13%) (220,023)
------------
NET ASSETS (100%) $167,202,046
============
*Non-income producing investment.
ADR -- American Depository Receipt
Cost for federal income tax at March 31, 2000 was $149,322,152
and net unrealized appreciation consisted of:
Gross unrealized appreciation $31,934,436
Gross unrealized depreciation (13,834,519)
------------
Net unrealized appreciation $18,099,917
============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
CAPSTONE SOCIAL ETHICS & RELIGIOUS VALUES FUND
SMALL CAP EQUITY FUND
SCHEDULE OF INVESTMENTS - March 31, 2000 (Unaudited)
---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Shares Value
------------ ------------
COMMON STOCK (98.59%)
ADVERTISING (0.95%)
Ha-Lo Industries, Inc.* 8,570 $67,489
Snyder Communications, Inc. 13,970 314,325
True North Communications, Inc. 9,189 361,243
------------
743,057
------------
AEROSPACE (0.72%)
AAR Corp. 6,022 100,492
Alliant Techsystems, Inc.* 2,443 143,832
BE Aerospace, Inc.* 5,480 32,195
GenCorp, Inc. 5,590 43,322
Kaman Corp. Cl A 4,593 44,782
Orbital Sciences Corp.* 9,222 138,330
Teledyne Technologies, Inc.* 3,420 59,423
------------
562,376
------------
AGRICULTURAL (0.34%)
Agribrands International, Inc.* 2,430 95,529
Delta & Pine Land Co. 8,586 169,573
------------
265,102
------------
AIRLINES (0.50%)
Atlantic Coast Airlines Holdings* 4,240 109,710
Midwest Express Holdings, Inc.* 3,050 78,156
Skywest, Inc. 5,130 200,711
------------
388,577
------------
APPAREL (0.91%)
Kellywood Co. 6,610 116,088
Nautica Enterprises, Inc.* 7,636 89,723
Oshkosh B'Gosh, Inc. Cl A 2,780 50,040
Oxford Industries, Inc. 3,640 65,975
Quiksilver, Inc.* 4,590 80,612
Timberland Co. Cl A* 4,288 218,688
Wolverine World Wide, Inc. 8,148 89,628
------------
710,754
------------
APPLIANCES (0.20%)
Salton, Inc.* 2,210 95,859
Windmere-Durable Holdings, Inc.* 4,220 62,245
------------
158,104
------------
AUTO PARTS & EQUIPMENT (1.14%)
Copart, Inc.* 10,050 175,875
Discount Auto Parts, Inc.* 4,221 37,725
O'Reilly Automotive, Inc.* 11,240 159,467
Standard Motor Products, Inc. 3,956 58,845
Tower Automotive, Inc.* 9,940 162,767
Valence Technology* 6,550 154,334
Wabash National Corp. 6,050 84,322
Wynns International, Inc. 3,930 54,283
------------
887,618
------------
BANKS (5.41%)
Anchor Bancorp Wisconsin, Inc. 3,360 53,340
Banknorth Group, Inc. 5,520 148,005
Carolina First Corp. 4,840 63,525
Centura Banks, Inc. 8,126 372,272
Commerce Bancorp, Inc. 6,069 224,553
Commercial Federal Corp. 12,370 205,651
Community First Bankshares 9,250 148,000
Cullen Frost Bankers, Inc. 12,462 329,464
Downey Financial Corp. 5,926 125,928
First Bancorp/Puerto Rico 5,140 90,592
First Midwest Bancorp 8,895 215,704
Hudson United Bancorp 9,583 207,831
MAF Bancorp, Inc. 4,680 75,757
Provident Bankshares Corp. 5,565 87,649
Queens County Bancorp, Inc. 4,105 74,147
Riggs National Corp. 5,966 72,711
Silicon Valley Bancshares* 4,260 306,187
Southwest Bancorporation of Texas, Inc.* 4,820 93,689
Staten Island Bancorp, Inc. 6,350 108,744
Susquehanna Bancshares, Inc. 5,945 82,115
Trustco Bank Corp. 8,896 103,972
United Bankshares, Inc. 8,160 179,520
US Trust Corp. 3,622 684,558
Whitney Holdings Corp. 5,368 175,131
------------
4,229,045
------------
BROADCASTING (1.04%)
Allen Telecommunications, Inc.* 5,150 82,078
P-Com, Inc.* 13,680 253,080
Powerwave Technologies, Inc.* 3,829 478,625
------------
813,783
------------
BUILDING (2.84%)
ABM Industries, Inc. 5,320 125,020
Butler Manufacturing Co. 3,045 74,412
Champion Enterprises, Inc.* 9,615 55,286
D. R. Horton, Inc. 12,077 157,756
Dycom Industries, Inc.* 7,440 362,700
Eagle Hardware & Garden, Inc.* 315 16
Elcor Corp. 4,240 146,280
Florida Rock Industries, Inc. 3,990 111,720
Hughes Supply, Inc. 5,395 83,623
Insituform Technologies Cl A* 4,920 150,675
MDC Holdings, Inc. 4,250 76,234
Morrison-Knudsen Corp.* 7,740 57,082
Ryland Group, Inc. 4,489 84,169
Simpson Manufacturing Co.* 2,760 109,020
Skyline Corp. 3,320 72,003
Standard Pacific Corp. 6,320 63,200
Stone & Webster, Inc. 4,280 62,060
Thor Industries, Inc. 3,320 80,717
Toll Brothers, Inc.* 7,295 145,900
Universal Forest Products, Inc. 4,770 59,029
US Home Corp.* 3,808 144,704
------------
2,221,606
------------
BUILDING PRODUCTS (0.28%)
Lennox International, Inc. 9,130 79,887
Texas Industries, Inc. 4,410 137,261
------------
217,148
------------
CHEMICALS (1.20%)
Cambrex Corp. 5,354 232,899
Chemfirst, Inc. 5,217 101,405
MacDermid, Inc. 6,320 167,480
McWhorter Technologies, Inc.* 2,820 33,840
OM Group, Inc. 5,031 228,911
Quaker Chemical Corp. 3,480 59,160
The Geon Co. 5,295 113,842
------------
937,537
------------
COMMERCIAL SERVICES (1.35%)
Central Parking Corp. 8,505 170,100
DBT Online, Inc.* 4,260 79,076
F.Y.I. Inc.* 2,940 79,747
Insurance Auto Auctions, Inc.* 2,990 50,456
Kroll-O'Gara Co.* 4,960 54,250
Lason, Inc.* 4,490 29,606
NFO Worldwide, Inc.* 4,220 92,840
Plexus Corp.* 3,580 238,517
Prepaid Legal Services, Inc.* 4,690 139,234
Primark Corp.* 4,859 117,223
------------
1,051,049
------------
COMPONENTS (2.64%)
Alpha Industries, Inc.* 3,800 361,000
C-COR Electronics, Inc.* 5,820 285,180
Checkpoint Systems, Inc.* 5,510 46,146
Coherent, Inc.* 4,680 243,360
Dionex Corp.* 4,368 143,871
Electro Scientific Industries, Inc.* 5,240 303,920
Harman International Industries, Inc. 3,680 220,800
Silicon Valley Group, Inc.* 6,770 186,175
Standard Microsystem Corp.* 2,680 39,028
Vicor Corp.* 7,939 142,902
Watts Industries, Inc. 4,510 55,811
X-Rite, Inc. 3,240 32,804
------------
2,060,997
------------
COMPUTER HARDWARE (0.46%)
Cybex Computer Products Corp.* 235 8,842
Hutchinson Technology, Inc.* 5,510 97,114
InterVoice, Inc.* 6,090 175,849
Kronos, Inc.* 2,550 75,544
------------
357,349
------------
COMPUTER SERVICES & SOFTWARE (12.89%)
American Management Systems, Inc.* 8,128 356,108
Analysts International Corp. 4,285 42,314
Anixter International, Inc.* 7,876 219,544
Aspen Technologies, Inc.* 4,980 201,067
Auspex Systems, Inc.* 5,170 56,870
Avid Technology, Inc.* 5,540 99,027
Barra, Inc.* 2,700 91,462
Bisys Group, Inc.* 5,241 348,527
ChoicePoint, Inc.* 5,820 217,523
Ciber, Inc.* 11,640 238,620
Computer Task Group, Inc. 4,540 49,940
Dendrite International, Inc.* 7,555 158,183
Digi International Inc.* 3,730 34,503
Eloyalty Corp.* 15,945 380,687
Epicor Software Corp.* 6,890 58,565
Factset Research Systems, Inc. 6,080 164,540
Fair Issac & Co. 2,849 110,755
FileNet Corp.* 6,442 191,650
Great Plains Software, Inc.* 2,960 157,990
Harbinger Corp.* 7,570 220,476
HNC Software, Inc.* 4,690 337,973
Hyperion Solutions Corp.* 6,016 195,520
Inter Tel, Inc. 5,310 145,361
Macromedia, Inc.* 9,430 851,647
Marchfirst, Inc.* 25,000 892,188
Mercury Interactive Corp.* 14,640 1,160,220
Midway Games, Inc.* 7,820 103,615
National Data Corp. 6,846 177,996
National Instrument Corp.* 9,535 447,549
Pinnacle Systems, Inc.* 9,420 313,215
Progress Software Corp.* 6,696 156,938
Project Software & Development, Inc.* 3,970 224,305
QRS Corp.* 2,580 194,145
RSA Security, Inc.* 7,370 381,858
Saga Systems, Inc. 5,290 189,118
SEI Investments Co. 3,531 400,548
Thq, Inc.* 3,490 62,384
Verity, Inc.* 5,690 231,868
Xircom, Inc.* 5,520 204,240
------------
10,069,039
------------
COMPUTER SYSTEMS (1.98%)
Apex, Inc.* 4,180 155,183
Concord Communications, Inc.* 2,850 101,353
Jack Henry & Associates, Inc. 7,862 289,911
Mercury Computer Systems, Inc.* 3,850 188,169
Micros Systems, Inc.* 3,120 196,365
National Computer Systems, Inc. 6,186 313,940
S3, Inc.* 14,470 303,870
------------
1,548,791
------------
CONSULTING SERVICES (0.45%)
Maximus, Inc.* 3,990 121,695
Remedy Corp.* 5,500 231,688
------------
353,383
------------
CONSUMER PRODUCTS (0.81%)
FOSSIL, Inc.* 6,720 157,500
Information Resources, Inc.* 5,330 42,640
Russ Berrie and Co. 5,188 95,978
Scotts Co.* 5,889 247,338
Toro Co. 2,929 87,687
------------
631,143
------------
CONTAINERS (0.15%)
Shorewood Packaging Corp.* 5,483 117,542
------------
DISTRIBUTION WHOLESALE (0.85%)
Brightpoint, Inc.* 10,210 125,072
Insight Enterprises, Inc.* 5,090 185,467
Owens & Minor, Inc. Holding Co. 5,754 61,136
United Stationers, Inc. 6,490 231,612
Watsco, Inc. 5,865 61,216
------------
664,503
------------
DIVERSIFIED CONGLOMERATES (1.53%)
AMCOL International Corp. 4,340 66,727
Chemed Corp. 4,075 122,250
Clarcor, Inc. 5,220 92,655
Mascotech, Inc. 10,090 118,558
Myers Industries, Inc. 4,576 54,912
Roper Industries, Inc. 6,116 207,562
SPS Technologies, Inc.* 3,018 92,049
Standex International Corp. 3,850 59,675
Tenneco, Inc. 6,550 51,991
Tredegar Industries, Inc. 7,384 198,906
Volt Info Sciences, Inc.* 3,710 133,328
------------
1,198,613
------------
ELECTRONIC EQUIPMENT (10.52%)
Actel Corp.* 4,330 154,527
Analogic Corp. 3,050 112,469
Artesyn Technologies, Inc.* 7,480 141,652
Audiovox Corp. Cl A* 4,260 185,842
Benchmark Electronics, Inc.* 3,630 134,310
Burr-Brown Corp.* 10,568 574,608
C & D Technology, Inc. 2,660 156,940
C-Cube Microsystems, Inc.* 7,800 567,937
Cohu, Inc. 3,870 161,331
CTS Corp. 5,270 300,390
Dallas Semiconductors Corp. 11,338 398,247
Electroglas, Inc.* 4,200 143,850
Etec Systems, Inc.* 4,121 513,580
General Semi-Conductors, Inc.* 6,780 116,955
Gentex Corp.* 14,390 533,329
Hadco Corp.* 2,880 186,120
Harmon Industries, Inc.* 2,110 38,244
International Rectifier Corp.* 10,074 384,071
Kemet Corp.* 8,065 510,111
Kent Electronics Corp.* 5,953 173,753
Lattice Semiconductor Corp.* 9,248 625,974
Methode Electronics, Inc. 7,020 354,510
Micrel, Inc.* 7,910 759,360
Park Electrochemical Co. 2,563 62,793
Photronics, Inc.* 5,070 179,034
Pioneer Standard Electronics, Inc. 5,030 79,223
SLI, Inc.* 6,640 112,880
Technitrol, Inc. 3,310 192,807
TNP Enterprises, Inc. 3,540 155,096
Trimble Navigation Ltd.* 4,910 126,432
Ultratech Stepper, Inc.* 5,600 79,800
------------
8,216,175
------------
ENGINEERING (0.28%)
Tetra Tech, Inc.* 7,387 175,441
URS Corp.* 3,110 40,819
------------
216,260
------------
ENTERTAINMENT & LEISURE (0.10%)
Prime Hospitality Corp.* 11,090 80,402
------------
FINANCIAL SERVICES (1.39%)
Americredit Corp.* 13,330 217,446
Billing Concepts Corp.* 7,230 50,836
Chittenden Corp. 5,560 165,063
Investors Financial Services Corp. 3,110 183,101
National Discount Brokers Group, Inc.* 3,250 160,469
Pioneer Group, Inc.* 5,910 137,407
The Profit Recovery Group International, Inc.* 9,065 167,702
------------
1,082,024
------------
FOOD & BEVERAGES (1.64%)
American Italian Pasta Co.* 3,730 91,851
Chiquita Brands International, Inc. 11,380 54,055
Corn Products International, Inc. 8,380 201,644
Earthgrains Co. 9,104 135,422
Fleming Co., Inc. 7,740 116,584
Hain Food Group, Inc.(The)* 3,660 103,624
J&J Snack Foods Corp.* 2,530 50,284
Michael Foods, Inc. 4,480 94,080
Performance Food Group Co.* 3,450 75,469
Ralcorp Holdings, Inc.* 5,570 80,765
United Natural Foods, Inc.* 3,820 57,300
Whole Foods Market, Inc.* 5,349 221,649
------------
1,282,727
------------
FOREST & PAPER PRODUCTS (0.46%)
Buckeye Technology, Inc.* 6,720 118,440
Caraustar Industries, Inc.* 5,735 81,007
Deltic Timber Corp. 2,640 62,535
Pope & Talbot, Inc. 5,165 94,907
------------
356,889
------------
HEALTH CARE (0.06%)
ADAC Laboratories 3,360 46,200
------------
HEALTH CARE SERVICES (1.46%)
Hooper Holmes, Inc. 6,170 211,708
Medquist, Inc.* 7,090 192,759
Orthodontic Centers of America, Inc.* 9,540 178,875
Renal Care Group, Inc.* 9,320 202,127
Universal Health Services, Inc.* 6,104 299,096
US Oncology, Inc.* 13,120 59,040
------------
1,143,605
------------
HOME FURNISHINGS (1.09%)
Bassett Furniture Industries, Inc. 4,568 63,952
Ethan Allen Interiors, Inc. 8,126 203,150
Interface, Inc. Cl A 8,938 37,986
La-Z Boy Chair Co. 10,763 165,481
Libbey, Inc. 3,920 107,310
National Presto Industries, Inc. 2,760 90,045
Pier One, Inc. 17,914 183,619
------------
851,543
------------
HUMAN RESOURCES (0.58%)
CDI Corp.* 4,439 84,341
Interim Services, Inc.* 13,126 243,651
Labor Ready, Inc.* 8,230 81,271
StaffMark, Inc.* 5,120 40,640
------------
449,903
------------
INDUSTRIAL (0.71%)
Cognex Corp.* 8,067 465,365
Gerber Scientific, Inc. 4,671 90,209
------------
555,574
------------
INSURANCE (2.52%)
Arthur J. Gallagher & Co.* 7,444 241,930
Conventry Corp.* 11,775 100,087
Delphi Financial Group, Inc.* 4,792 145,557
E.W. Blanch Holdings, Inc. 2,640 52,800
Enhance Financial Services Group, Inc. 7,108 100,400
Fidelity National Financial, Inc. 5,908 81,604
First American Financial Corp. 11,778 167,100
Fremont General Corp. 12,552 74,528
Hilb, Rogal and Hamilton Co. 2,670 72,924
Mutual Risk Management, Ltd. 9,836 196,720
R.L.I. Corp. 2,470 82,745
Radian Group, Inc. 7,147 340,376
SCPIE Holdings Inc. 2,700 82,687
Selective Insurance Group, Inc. 4,678 79,818
Trenwick Group, Inc. 4,047 57,164
Zenith National Insurance Corp. 4,218 93,587
------------
1,970,027
------------
INVESTMENT COMPANIES (1.07%)
Dain Rauscher Corp. 2,728 179,877
Eaton Vance Corp. 7,026 301,679
Jefferies Group, Inc. 5,620 128,558
Raymond James Financial, Inc. 10,881 225,781
------------
835,895
------------
LINEN SUPPLY & RELATED ITEMS (0.12%)
G & K Services, Inc. 4,677 91,421
------------
MACHINERY, GENERAL INDUSTRIAL (3.16%)
Applied Industrial Technologies, Inc. 4,710 75,360
Applied Power Cl A 7,794 222,129
Astec Industries, Inc.* 4,260 113,156
Baldor Electric Co. 6,540 118,129
Gardner Denver, Inc.* 3,760 70,735
Graco, Inc. 4,170 120,930
Helix Technologies Corp. 4,340 260,671
IDEX Corp. 6,350 173,038
JLG Industries, Inc. 7,440 67,890
Kulicke & Soffa Industries, Inc.* 4,510 288,922
Lindsay Manufacturing Co. 3,379 57,865
Regal-Beloit Corp. 4,708 82,390
Robbins & Myers, Inc. 3,110 73,474
Specialty Equipment Co.* 4,780 99,185
SpeedFam-IPEC, Inc.* 6,430 127,796
The Manitowac Co., Inc. 5,487 148,492
Thomas Industries, Inc. 3,580 67,125
Zebra Technologies Corp. Cl A* 6,066 303,300
------------
2,470,587
------------
MARKETING SERVICES (0.60%)
Advo, Inc.* 4,405 110,125
Catalina Marketing Corp.* 3,515 355,894
------------
466,019
------------
MEDICAL PRODUCTS (6.88%)
Advance Paradigm, Inc.* 4,200 49,875
Advanced Tissue Sciences, Inc. 9,590 64,733
Alliance Pharmaceutical Corp.* 8,160 121,890
Alpharma, Inc. 6,008 220,794
Barr Labs, Inc.* 4,790 201,180
Bindly Western Industries, Inc. 6,396 86,746
Bio Technology General Corp* 9,460 146,630
Cephalon, Inc.* 6,440 241,500
Cerner Corp.* 6,910 186,570
Conmed Corp.* 3,300 82,706
Cooper Co.* 3,040 97,850
Cygnus, Inc.* 4,730 68,585
Datascope Corp.* 3,250 103,188
Diagnostic Products Corp. 3,520 86,020
Enzo Biochem, Inc.* 4,716 332,478
Idexx Labs, Inc.* 7,979 186,010
Immune Response* 4,830 55,545
Incyte Pharmaceuticals, Inc.* 5,450 474,150
Invacare, Inc. 6,186 169,728
Laser Vision Centers, Inc.* 5,190 36,006
Liposome Co., Inc.* 7,250 126,649
Medtronic, Inc. 1 51
Mentor Corp. 5,193 140,211
Organogenesis, Inc.* 6,180 74,546
Osteotech, Inc.* 3,310 44,271
Patterson Dental Co.* 6,577 251,570
Protein Design Labs, Inc.* 3,555 282,623
ResMed Inc.* 3,030 216,266
Respironics, Inc.* 6,110 87,831
Scott Technologies, Inc.* 3,850 72,669
Spacelabs Medical, Inc.* 3,060 48,769
Summit Technology, Inc.* 9,290 84,771
Syncor International Corp.* 2,750 90,750
Techne Corp.* 3,900 269,100
Theragenics Corp.* 5,310 71,021
Varian Medical Systems, Inc. 6,380 291,088
Vital Signs, Inc. 3,073 70,487
Wesley Jessen VisionCare, Inc.* 3,790 136,203
------------
5,371,060
------------
METAL PRODUCTS (0.04%)
Amcast Industrial Corp. 3,570 32,799
------------
METALS (1.57%)
Brush Wellman, Inc. 4,550 80,194
Castle Am & Co. 3,507 43,838
Commercial Metals Company 3,465 95,721
Commonwealth Industries, Inc. 4,320 39,150
Intermet Corp. 5,394 49,220
Material Sciences Corp.* 2,930 39,555
Mueller Industries, Inc.* 6,972 211,775
Quanex Corp. 3,938 70,884
Reliance Steel & Aluminum Co. 6,555 146,668
Steel Dynamics, Inc.* 8,290 95,853
Stillwater Mining Co.* 7,627 305,080
Wolverine Corp.* 3,825 49,008
------------
1,226,946
------------
MISCELLANEOUS MANUFACTURING (0.96%)
A.O. Smith Corp. 5,322 95,796
Aptargroup, Inc. 7,308 195,032
Barnes Group, Inc. 4,700 68,150
JAKKS Pacific, Inc.* 3,740 80,644
Justin Industries, Inc. 4,380 78,840
Lawson Products, Inc. 3,480 82,868
Paxar Corp.* 6,179 59,473
Valmont Industries, Inc. 5,260 90,735
------------
751,538
------------
OFFICE EQUIPMENT (0.38%)
Brady Corp. Cl A 4,850 151,259
John H. Harland Co. 5,590 75,465
New England Business, Inc. 3,980 68,655
------------
295,379
------------
OIL & GAS (5.24%)
Atmos Energy Corp. 5,486 89,833
Atwood Oceanics, Inc.* 2,910 192,969
Barrett Resources Corp.* 7,079 211,043
Cabot Oil & Gas Corp. 6,721 121,398
Cal Dive International, Inc.* 3,110 157,833
Cross Timbers Oil Co. 9,017 117,785
Dril-Quip, Inc.* 3,590 169,179
Energen Corp. 5,960 94,988
HS Resources, Inc.* 4,740 100,133
Input/Output, Inc.* 8,714 53,373
New Jersey Resources Corp. 4,056 173,394
Newfield Exploration Company * 8,682 306,041
Northwest Natural Gas Co. 4,362 85,059
Oceaneering International, Inc.* 4,986 93,488
Piedmont Natural Gas, Inc. 5,919 154,264
Plains Resources, Inc.* 4,220 52,750
Pogo Producing Co. 9,096 259,805
Pride International, Inc.* 11,615 264,967
Seacor Holdings.* 2,670 161,201
Southern Union Company 7,290 131,676
Southwest Gas Corp. 5,649 107,684
St. Mary Land & Exploration Co. 3,060 91,418
Stone Energy Corp.* 3,970 195,523
Tuboscope, Inc.* 9,325 158,525
Vintage Petroleum, Inc. 12,256 246,652
WD-40 Co. 4,060 85,260
Wicor, Inc. 7,070 219,170
------------
4,095,411
------------
PAINT & RELATED PRODUCTS (0.07%)
Lilly Industries, Inc. 4,709 58,274
------------
PHARMACEUTICAL (3.54%)
Biomatrix, Inc.* 4,940 125,970
Cor Therapeutics, Inc.* 4,870 321,040
Dura Pharmaceuticals, Inc.* 8,810 108,473
IDEC Pharmaceuticals Corp.* 8,060 791,895
Jones Pharmaceutical, Inc. 12,435 377,713
Medicis Pharmaceutical Corp.* 5,620 224,800
Parexel International Corp.* 5,380 50,774
Pharmaceutical Product Development, Inc.* 4,780 80,961
Priority Healthcare Corp. Cl B* 4,464 224,316
Vertex Pharmaceuticals, Inc.* 5,182 242,582
Noven Pharmaceuticals, Inc.* 4,050 44,297
Regeneron Pharmaceuticals, Inc.* 5,940 175,601
------------
2,768,422
------------
PHOTOGRAPHY & EQUIPMENT (0.09%)
CPI Corp. 3,060 71,336
------------
PRINTING (0.23%)
Bowne & Co., Inc. 7,404 95,327
Consolidated Graphic, Inc.* 3,760 48,175
Valassis Communications, Inc.* 1,153 38,409
------------
181,911
------------
RECREATION VEHICLE MANUFACTURING (0.50%)
Coachmen Industries, Inc. 3,780 52,211
Monaco Coach Corp.* 4,090 77,710
Polaris Industries, Inc. 5,490 165,386
Winnebago Industries, Inc. 5,090 91,938
------------
387,245
------------
RECYCLING (0.06%)
IMCO Recycling, Inc. 3,940 43,586
------------
RENTAL EQUIPMENT (0.07%)
Aaron Rents, Inc. Cl B 3,470 52,267
------------
RESTAURANT-RETAIL (0.93%)
CEC Entertainment, Inc.* 6,282 170,399
Cheesecake Factory, Inc.* 4,905 204,171
IHOP Corp.* 6,400 89,600
Landry's Restaurants, Inc.* 7,000 44,625
Luby's Cafeterias, Inc. 6,710 63,326
Ruby Tuesday, Inc. 8,670 151,725
------------
723,846
------------
RETAIL STORES (3.98%)
99 Cents Only Stores* 6,600 259,050
Ames Department Stores, Inc.* 5,820 142,954
AnnTaylor Stores Corp.* 6,380 146,740
Brown Shoe Company, Inc. 4,799 57,588
Casey's General Stores, Inc. 8,842 96,157
Cash America International Inc. 4,060 50,496
Cato Corp. Cl A 5,660 66,505
Cost Plus, Inc.* 3,980 134,574
DAMARK International, Inc.* 1,170 44,606
Department 56, Inc.* 4,000 59,250
Dress Barn, Inc.* 5,596 107,723
Enesco Group, Inc. 4,540 32,064
Footstar, Inc.* 4,790 135,318
Goody's Family Clothing, Inc.* 4,780 28,979
Jo-Ann Stores, Inc. Cl A* 4,745 39,739
Linens 'N Things, Inc.* 8,350 285,988
Men's Wearhouse, Inc.* 8,825 261,441
Michaels Stores, Inc.* 6,120 249,390
Pacific Sunwear of California, Inc.* 6,115 235,428
Regis Corp. 7,785 115,315
Shopko Stores, Inc.* 6,924 122,901
Stein Mart, Inc.* 5,160 42,570
Stride Rite Corp. 7,880 63,533
Zale Corp.* 7,030 331,728
------------
3,110,037
------------
SEMI-CONDUCTORS (0.39%)
American Xtal Technology, Inc.* 3,690 119,464
Intermagnetics General Corp.* 2,250 38,250
Three-Five Systems, Inc.* 2,453 147,200
------------
304,914
------------
TECHNOLOGY (0.36%)
Telxon Corp. 3,860 67,791
Zixit Corporation 2,900 211,156
------------
278,947
------------
TELECOMMUNICATIONS (3.60%)
Adaptive Broadband Corp.* 6,240 333,840
Aspect Communications Corp.* 9,304 344,830
Black Box Corp.* 3,770 261,014
Centigram Communications* 1,320 25,080
CommScope, Inc.* 9,730 443,931
General Communication, Inc. Cl A* 6,510 34,991
Network Equipment Technologies, Inc.* 4,010 40,100
Nortel Networks Corp. 5,824 733,824
PictureTel Corp.* 7,730 67,638
Plantronics, Inc.* 3,340 311,246
Symmetricom, Inc.* 2,570 27,146
TALK.com, Inc.* 11,850 189,600
------------
2,813,240
------------
TEXTILE PRODUCTS (0.05%)
Guilford Mills, Inc. 5,537 42,566
------------
TRANSPORTATION (2.22%)
American Freightways Corp.* 6,220 92,911
Arkansas Best Corp.* 3,380 35,490
Egl, Inc.* 5,390 125,991
Expeditors International, Inc. 9,552 379,692
Fleetwood Enterprises, Inc. 6,410 94,547
Fritz Co., Inc.* 6,403 64,830
Group 1 Automotive, Inc.* 5,000 58,125
Heartland Express, Inc.* 5,370 75,432
Kirby Corp.* 4,937 97,506
Landstar Systems, Inc.* 2,015 110,321
MS Carriers, Inc.* 3,320 78,020
Offshore Logistics, Inc.* 5,150 71,456
USFreightways Corp. 5,212 195,124
Werner Enterprises, Inc. 8,448 143,616
Yellow Corp.* 5,916 109,076
------------
1,732,137
------------
TRUCKING & LEASING (0.08%)
Rollins Truck Leasing Corp. 7,399 62,429
------------
UTILITIES (0.65%)
Ch Energy Group, Inc. 3,820 116,033
Eastern Utilities Associates 4,538 142,380
Energy East Corp. 533 10,560
Northwestern Corp. 4,560 94,050
United Illuminating Company 3,631 142,517
------------
505,540
------------
VITAMINS & NUTRITION PRODUCTS (0.21%)
NBTY, Inc.* 11,783 161,280
------------
WATER (0.74%)
American States Water Co. 2,590 77,053
Ionics, Inc.* 3,695 94,453
Philadelphia Suburban Corp. 8,652 156,818
United Water Resources, Inc. 7,290 253,328
------------
581,652
------------
WIRE & CABLE PRODUCTS (0.45%)
Belden, Inc. 5,520 151,800
Cable Design Technologies Corp.* 5,810 197,177
------------
348,977
------------
WIRELESS EQUIPMENT (0.90%)
Digital Microwave Corp.* 12,930 438,004
Proxim, Inc.* 2,210 264,509
------------
702,513
------------
TOTAL COMMON STOCK (Cost $61,333,976) 77,006,619
------------
MISCELLANEOUS INVESTMENTS (Cost $958,736)(1.25%)
S&P Mid-Cap 400 Depository Receipts 10,700 976,375
------------
REPURCHASE AGREEMENTS (0.13%)
Fifth Third Bank, 5.55%, dated 03/31/00,due 04/03/00, repurchase
Price $100,620 (collateralized by FNMA Pool #535117, 7.50%, due
01/16/30, market value $110,000) (Cost $100,573) 100,573 100,573
------------
TOTAL INVESTMENTS (Cost $62,393,285) (99.97%) 78,083,567
OTHER ASSETS AND LIABILITIES, NET (0.03%) 25,290
------------
NET ASSETS (100%) $78,108,857
============
*Non-income producing investment.
ADR -- American Depository Receipt
Cost for federal income tax at March 31, 2000 was $62,393,285
and net unrealized appreciation consisted of:
Gross unrealized appreciation $24,033,883
Gross unrealized depreciation (8,343,601)
------------
Net unrealized appreciation $15,690,282
============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
CAPSTONE SOCIAL ETHICS & RELIGIOUS VALUES FUND
INTERNATIONAL FUND
SCHEDULE OF INVESTMENTS - March 31, 2000 (Unaudited)
---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Shares Value
------------ ------------
COMMON STOCK (32.93%)
AUSTRALIA (2.40%)
World Equity Benchmark Securities - Australia Series 114,543 $1,131,112
------------
AUSTRIA (0.21%)
World Equity Benchmark Securities - Austria Series 12,735 98,696
------------
BELGIUM (0.72%)
Electrabel SA* 300 79,370
Fortis (B) 4,770 122,319
KBC Bancassurance Holding NV* 1,410 50,593
Solvay SA 360 25,835
UCB SA 740 26,907
World Equity Benchmark Securities - Belgium Series 2,852 36,719
------------
341,743
------------
FRANCE (1.06%)
World Equity Benchmark Securities - France Series 18,020 500,055
------------
GERMANY (0.63%)
World Equity Benchmark Securities - Germany Series 10,974 296,298
------------
HONG KONG (2.45%)
World Equity Benchmark Securities - Hong Kong Series 84,605 1,158,031
------------
ITALY (2.51%)
World Equity Benchmark Securities - Italy Series 47,496 1,187,400
------------
JAPAN (8.94%)
World Equity Benchmark Securities - Japan Series 257,000 4,224,437
------------
NETHERLANDS (5.37%)
ABN AMRO Holdings NV Sponsored ADR 8,561 193,693
Akzo-Nobel NV 2,922 125,829
Elsevier NV Sponsored ADR 2,394 49,825
ING Groep NV Sponsored ADR 3,474 191,070
KLM Royal Dutch Air Lines NV ADR 1,979 41,559
Koninklijke Ahold NV Sponsored ADR 6,743 178,689
Koninklijke Philips Electronics ADR 1,752 300,140
Oce NV Sponsored ADR 4,545 60,789
Royal Dutch Petroleum Co. ADR 11,888 684,303
Royal PTT Nederland NV ADR 2,998 344,770
Unilever NV ADR 3,915 188,409
Wolters Kluwer NV Sponsored ADR 2,560 58,790
World Equity Benchmark Securities - Netherlands Series 4,870 117,489
------------
2,535,355
------------
SINGAPORE (0.89%)
World Equity Benchmark Securities - Singapore Series 57,242 422,160
------------
SPAIN (0.72%)
World Equity Benchmark Securities - Spain Series 11,839 338,891
------------
SWEDEN (0.45%)
World Equity Benchmark Securities - Sweden Series 6,260 213,622
------------
SWITZERLAND (5.65%)
Adecco SA Sponsored ADR 1,136 100,394
Credit Suisse Group Sponsored ADR 5,205 259,045
Nestle S.A. 4,537 406,576
Novartis AG ADR 12,096 827,158
Roche Holdings Ltd. Sponsored ADR 5,728 622,167
UBS AG Sponsored ADR 27,604 362,303
World Equity Benchmark Securities - Switzerland Series 5,790 89,745
------------
2,667,388
------------
UNITED KINGDOM (0.93%)
World Equity Benchmark Securities - United Kingdom Series 21,460 438,589
------------
TOTAL COMMON STOCK (Cost $13,008,927) 15,553,777
------------
Principal
------------
SHORT-TERM INVESTMENTS (62.19%)
FEDERAL HOME LOAN BANK DISCOUNT CORP. (45.30%)
5.60%, 04/10/00 8,000,000 7,988,927
5.69%, 05/10/00 6,500,000 6,460,378
5.76%, 05/25/00 7,000,000 6,941,536
------------
21,390,841
------------
REPURCHASE AGREEMENT (16.89%)
Fifth Third Bank, 5.55%, dated 03/31/00,due 04/03/00,repurchase
Price $7,981378 (collateralized by FNMA Pool #535117, 7.50%, due
01/16/30, market value $8,140,000) (Cost $7,977,688) 7,977,688 7,977,688
------------
TOTAL SHORT-TERM INVESTMENTS (Cost $29,368,529) 29,368,529
------------
TOTAL INVESTMENTS (Cost $42,377,456) (95.12%) 44,922,306
OTHER ASSETS & LIABILITIES, NET (4.88%) 2,303,881
------------
NET ASSETS (100%) $47,226,187
============
*Non-income producing investment.
ADR -- American Depository Receipt
Cost for federal income tax at March 31, 2000 was $42,377,456
and net unrealized appreciation consisted of:
Gross unrealized appreciation $3,968,839
Gross unrealized depreciation (1,423,989)
------------
Net unrealized appreciation $2,544,850
============
</TABLE>
<TABLE>
<CAPTION>
FUTURES CONTRACTS OUTSTANDING - March 31, 2000
---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Unrealized
Total Value Appreciation
Number of Contracts (U.S. Dollars) (Depreciation)
------------------- -------------- --------------
79 CAC 40, delivery date 04/28/00 $4,741,814 $(101,730)
24 DAX, delivery date 06/16/00 4,366,089 (259,302)
90 FTSE 100, delivery date 06/16/00 9,477,425 140,597
9 IBEX, delivery date 04/20/00 1,028,485 (51,365)
4 MIB 30, delivery date 06/19/00 885,312 (61,965)
96 NIKKEI 225, delivery date 06/13/00 9,544,776 320,348
87 OMX, delivery date 04/28/00 1,395,877 (105,514)
82 Currency futures, delivery date 06/21/00-Euro Dollar 9,847,175 (3,317)
63 Currency futures, delivery date 06/21/00-Japanese Yen 7,802,550 326,068
86 Currency futures, delivery date 06/21/00-British Pound 8,567,750 93,447
------------ ------------
$57,657,253 $297,267
============ ============
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
THE CAPSTONE SOCIAL ETHICS AND RELIGIOUS VALUES FUND
STATEMENTS OF ASSETS AND LIABILITIES (Unaudited) March 31, 2000
---------------------------------------------------------------------------------------------------------------------------------
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
$19,487,092, $26,418,083, $69,764,531,
$149,322,152, $62,393,285 and $42,377,456
respectively) (Note 2) $19,487,092 $26,021,841 $65,649,669 $167,422,069 $78,083,567 $45,150,554
Cash -- -- 1 1 -- --
Cash at broker, margin accounts -- -- -- -- -- 2,067,018
Receivables:
Fund shares sold -- -- -- 110,000 -- 11,000
Dividends and interest 6,404 427,083 991,774 127,919 34,735 2,709
Prepaid expenses 5,477 7,209 8,588 7,042 8,612 7,206
----------- ----------- ----------- ------------ ----------- -----------
Total assets 19,498,973 26,456,133 66,650,032 167,667,031 78,126,914 47,238,487
----------- ----------- ----------- ------------ ----------- -----------
LIABILITIES:
Payables:
Distributions payable $ 8,643 $ -- $ -- $ -- $ -- $ --
Investments purchased -- -- 259,278 451,838 -- --
12b-1 fees 5 4 373 816 157 135
Fund shares redeemed -- -- 289 257 43 100
Due to Advisor -- 4,440 11,142 26,539 13,681 7,490
Accrued expenses 10,564 12,637 14,928 (14,465 4,176 4,575
----------- ----------- ----------- ------------ ----------- -----------
Total liabilities 19,212 17,081 286,010 464,985 18,057 12,300
----------- ----------- ----------- ------------ ----------- -----------
NET ASSETS $19,479,761 $26,439,052 $66,364,022 $167,202,046 $78,108,857 $47,226,187
=========== =========== =========== ============ =========== ===========
NET ASSETS CONSIST OF:
Paid-in Capital $19,479,761 $26,936,751 $70,527,448 $145,035,816 $60,291,895 $39,463,216
Undistributed net investment income -- 34,398 88,060 17,079 5,427 37,285
Accumulated realized gain (loss)
on investments -- (135,855) (136,624 4,049,234 2,121,253 4,883,351
Net unrealized appreciation
(depreciation) on:
Investments -- (396,242) (4,114,862) 18,099,917 15,690,282 2,842,335
----------- ----------- ----------- ------------ ----------- -----------
Net Assets $19,479,761 $26,439,052 $66,364,022 $167,202,046 $78,108,857 $47,226,187
=========== =========== =========== ============ =========== ===========
CLASS A SHARES (NOTE 1):
Net assets for 21,385, 650,
74,579, 91,831, 18,984 and 18,129
shares outstanding, respectively $ 21,385 $ 15,895 $ 1,732,043 $ 3,314,451 $ 631,569 $ 558,187
Net asset value, offering and
redemption price per Class A Share $1.00 $24.46 $23.22 $36.09 $33.27 $30.79
CLASS C SHARES (NOTE 1):
Net assets for 19,458,376, 1,078,347,
2,776,321, 4,531,531, 2,324,800,
and 1,514,337 shares outstanding,
respectively $19,458,376 $ 26,423,157 $64,631,979 $163,887,595 $77,477,288 $46,668,000
Net asset value, offering and
redemption price per Class C share $ 1.00 $ 24.50 $ 23.28 $ 36.17 $ 33.33 $ 30.82
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
THE CAPSTONE SOCIAL ETHICS AND RELIGIOUS VALUE FUND
STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED MARCH 31, 2000
(Unaudited)
---------------------------------------------------------------------------------------------------------------------------------
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 $ 601,894 $ 744,947 $ 1,859,447 $ 17,316 $ 6,840 $ 724,005
Dividends -- -- -- 838,007 268,877 87,209
---------- ----------- ------------ ----------- ----------- ------------
Total Investment Income 601,894 744,947 1,859,447 855,323 275,717 811,214
---------- ----------- ------------ ----------- ----------- ------------
EXPENSES:
Investment advisory fees (Note 4) 10,798 19,505 48,053 108,423 53,800 32,186
Administration fee (Note 4) 5,399 6,502 16,018 36,141 17,933 10,729
Accounting fee (Note 4) 12,760 12,445 12,445 12,619 12,620 12,620
Custodian fees 1,232 2,342 4,007 8,432 5,032 2,598
Transfer agency fees 3,802 3,761 3,761 3,761 3,761 3,761
Distribution fees (Note 4) 9 6 383 948 177 141
Trustee expense (Note 4) 2,281 2,256 2,256 2,256 2,256 2,256
Audit fees 2,535 3,353 2,507 2,507 2,507 2,507
Legal fees 2,281 2,256 2,256 2,256 2,256 2,256
Consulting fees 2,692 3,251 8,009 18,071 8,967 5,364
Pricing fees -- 1,577 6,720 9,438 6,227 3,226
Registration fees 5,069 7,606 11,597 18,086 10,835 8,469
Reports to shareholders -- 251 251 251 251 251
Other 4,556 2,535 5,216 10,882 5,754 3,725
---------- ----------- ------------ ----------- ----------- ------------
Total expenses before waivers 53,414 67,646 123,479 234,071 132,376 90,089
Fees waived (Note 4) (7,813) -- -- -- -- --
---------- ----------- ------------ ----------- ----------- ------------
Total expenses, net 45,601 67,646 123,479 234,071 132,376 90,089
---------- ----------- ------------ ----------- ----------- ------------
Net investment income 556,293 677,301 1,735,968 621,252 143,341 721,125
---------- ----------- ------------ ----------- ----------- ------------
REALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY:
Net realized gain (loss) on:
Investments -- (97,752) (2,405) 4,115,658 3,072,521 4,217,589
Net unrealized appreciation
(depreciation) during the period on:
Investments -- (143,083) (288,459) 18,347,749 9,712,293 905,730
---------- ---------- ------------ ----------- ----------- ----------
Net gain (loss) on investments
and currency -- (240,835) (290,864) 22,463,407 12,784,814 5,123,319
---------- ---------- ------------ ----------- ----------- ----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 556,293 $ 436,466 $ 1,445,104 $23,084,659 $12,928,155 $5,844,444
========== ========== ============ =========== =========== ==========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
THE CAPSTONE SOCIAL ETHICS AND RELIGIOUS VALUES FUND
STATEMENTS OF CHANGES IN NET ASSETS
---------------------------------------------------------------------------------------------------------------------------------
Money Market Short-Term Bond Large Cap Small Cap International
Fund Bond Fund Fund Equity Fund Equity Fund Fund
------------------------------------------------------------------------------------------
For the Six Months Ended March 31, 2000 (Unaudited)
<S> <C> <C> <C> <C> <C> <C>
INCREASE IN NET ASSETS
Operations:
Net investment income $ 556,293 $ 677,301 $ 1,735,968 $ 621,252 $ 143,341 $ 721,125
Net realized gain (loss) on:
Investments -- (97,752) (2,405) 4,115,658 3,072,521 4,217,589
Net unrealized appreciation
(depreciation) during the period on:
Investments -- (143,083) (288,459) 18,347,749 9,712,293 905,730
----------- ----------- ----------- ----------- ------------ -----------
Net increase in net assets
resulting from operations 556,293 436,466 1,445,104 23,084,659 12,928,155 5,844,444
----------- ----------- ----------- ----------- ------------ -----------
Distributions to shareholders from:
Net investment income
Class A (468) (193) (18,948) (5,621) (356) (2,589)
Class C (555,825) (667,330) (1,691,745) (624,193) (139,680) (702,305)
Net realized gain
Class A -- -- -- (6,284) (1,378) (2,594)
Class C -- -- -- (3,639,024) (3,483,299) (4,700,568)
----------- ----------- ----------- ----------- ------------ -----------
Total Distributions (556,293) (667,523) (1,710,693) (4,275,122) (3,624,713) (5,408,056)
----------- ----------- ----------- ----------- ------------ -----------
Increase (decrease) in net assets
from Fund share transactions (Note 6) (3,704,702) 742,273 6,285,918 15,910,636 1,233,144 4,941,581
----------- ----------- ----------- ----------- ------------ -----------
Increase (decrease) in net assets (3,704,702) 511,216 6,020,329 34,720,173 10,536,586 5,377,969
NET ASSETS:
Beginning of period 23,184,463 25,927,836 60,343,693 132,481,873 67,572,271 41,848,218
----------- ----------- ----------- ----------- ------------ -----------
End of period $19,479,761 $26,439,052 $66,364,022 $167,202,046 $78,108,857 $47,226,187
=========== =========== =========== ============ =========== ===========
For the Year Ended September 30, 1999
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 6) 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 AND RELIGIOUS VALUES FUND
FINANCIAL HIGHLIGHTS (Unaudited)
---------------------------------------------------------------------------------------------------------------------------------
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.
Money Market Fund
------------------------------------------------------------------------------
Class A Class C
-------------------------------------- ------------------------------------
For Six Months For the Year For Six Months For the Year
ended ended ended ended
March 31, 2000 September 30, March 31, 2000 September 30,
(Unaudited) 1999 (Unaudited) 1999
--------------- -------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Net Asset Value -- Beginning of Period $1.00 $1.00 $1.00 $1.00
-------- -------- -------- --------
Investment Operations:
Net investment income 0.03 0.05 0.03 0.05
Net realized and unrealized
gain (loss) on investments
and foreign currency transactions 0.00 0.00 0.00 0.00
-------- -------- -------- --------
Total from investment operations 0.03 0.05 0.03 0.05
-------- -------- -------- --------
Distributions:
From net investment income (0.03) (0.05) (0.03) (0.05)
From net realized capital gain -- -- -- --
-------- -------- -------- --------
Total distributions (0.03) (0.05) (0.03) (0.05)
-------- -------- -------- --------
Net Asset Value -- End of Period $1.00 $1.00 $1.00 $1.00
======== ======== ======== ========
Total Return 2 2.54% 4.80% 2.61% 4.90%
Ratios of expenses to average net assets:
before fee waivers 0.60% 1 0.52% 0.50% 1 0.42%
after fee waivers 0.53% 1 0.36% 0.43% 1 0.26%
Ratios of net investment income
to average net assets:
before fee waivers 5.04% 1 4.50% 5.14% 1 4.60%
after fee waivers 5.11% 1 4.66% 5.21% 1 4.76%
Portfolio turnover rate N/A N/A N/A N/A
Net assets, end of period $21,385 $14,356 $19,458,376 $23,170,107
Short-Term Bond Fund
------------------------------------------------------------------------------
Class A Class C
-------------------------------------- ------------------------------------
For Six Months For the Year For Six Months For the Year
ended ended ended ended
March 31, 2000 September 30, March 31, 2000 September 30,
(Unaudited) 1999 (Unaudited) 1999
--------------- -------------- ---------------- ---------------
Net Asset Value -- Beginning of Period $24.68 $25.00 $24.72 $25.00
-------- -------- -------- --------
Investment Operations:
Net investment income 0.52 0.68 0.64 0.80
Net realized and unrealized gain
(loss) on investments and foreign
currency transactions (0.13) (0.23) (0.23) (0.30)
-------- -------- -------- --------
Total from investment operations 0.39 0.45 0.41 0.50
-------- -------- -------- --------
Distributions:
From net investment income (0.61) (0.77) (0.63) (0.78)
From net realized capital gain -- -- -- --
-------- -------- -------- --------
Total distributions (0.61) (0.77) (0.63) (0.78)
-------- -------- -------- --------
Net Asset Value -- End of Period $24.46 $24.68 $24.50 $24.72
======== ======== ======== ========
Total Return 2 1.59% 1.84% 1.68% 2.05%
Ratios of expenses to average net assets:
before fee waivers 0.77% 1 0.79% 1 0.52% 1 0.54% 1
after fee waivers 0.77% 1 0.61% 1 0.52% 1 0.36% 1
Ratios of net investment income to average net assets:
before fee waivers 4.96% 1 4.34% 1 5.21% 1 4.59% 1
after fee waivers 4.96% 1 4.52% 1 5.21% 1 4.77% 1
Portfolio turnover rate 27.99% 47.85% 27.99% 47.85%
Net assets, end of period $15,895 $727 $26,423,157 $25,927,109
1 Annualized
2 Not annualized
3 Fund commenced operations on January 4, 1999.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
CAPSTONE SOCIAL ETHICS AND RELIGIOUS VALUES FUND
FINANCIAL HIGHLIGHTS - continued
---------------------------------------------------------------------------------------------------------------------------------
Bond Fund
------------------------------------------------------------------------------
Class A Class C
-------------------------------------- ------------------------------------
For Six Months For the Year For Six Months For the Year
ended ended ended ended
March 31, 2000 September 30, March 31, 2000 September 30,
(Unaudited) 1999 (Unaudited) 1999
--------------- -------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Net Asset Value -- Beginning of Period $23.36 $25.00 $23.40 $25.00
-------- -------- -------- --------
Investment Operations:
Net investment income 0.45 1.06 0.62 1.16
Net realized and unrealized
gain (loss) on investments
and foreign currency transactions 0.00 (1.57) (0.13) (1.62)
-------- -------- -------- --------
Total from investment operations 0.45 (0.51) 0.49 (0.46)
-------- -------- -------- --------
Distributions:
From net investment income (0.59) (1.13) (0.61) (1.14)
From net realized capital gain -- -- -- --
-------- -------- -------- --------
Total distributions (0.59) (1.13) (0.61) (1.14)
-------- -------- -------- --------
Net Asset Value -- End of Period $23.22 $23.36 $23.28 $23.40
======== ======== ======== ========
Total Return 2 1.98% (2.04)% 2.14% (1.83)%
Ratios of expenses to average net assets:
before fee waivers 0.63% 1 0.62% 0.38% 1 0.37%
after fee waivers 0.63% 1 0.62% 0.38% 1 0.37%
Ratios of net investment
income to average net assets:
before fee waivers 5.17% 1 4.69% 5.42% 1 4.94%
after fee waivers 5.17% 1 4.69% 5.42% 1 4.94%
Portfolio turnover rate 2.04% 17.09% 2.04% 17.09%
Net assets, end of period $1,732,043 $8,466 $64,631,979 $60,335,227
Large Cap Equity Fund
------------------------------------------------------------------------------
Class A Class C
-------------------------------------- ------------------------------------
For Six Months For the Year For Six Months For the Year
ended ended ended ended
March 31, 2000 September 30, March 31, 2000 September 30,
(Unaudited) 1999 (Unaudited) 1999
--------------- -------------- ---------------- ---------------
Net Asset Value -- Beginning of Period $31.75 $25.00 $31.79 $25.00
-------- -------- -------- --------
Investment Operations:
Net investment income 0.09 0.22 0.14 0.30
Net realized and unrealized gain
(loss) on investments and foreign
currency transactions 5.26 6.80 5.27 6.79
-------- -------- -------- --------
Total from investment operations 5.35 7.02 5.41 7.09
-------- -------- -------- --------
Distributions:
From net investment income (0.13) (0.27) (0.15) (0.30)
From net realized capital gain (0.88) -- (0.88) --
-------- -------- -------- --------
Total distributions (1.01) (0.27) (1.03) (0.30)
-------- -------- -------- --------
Net Asset Value -- End of Period $36.09 $31.75 $36.17 $31.79
======== ======== ======== ========
Total Return 2 16.96% 28.10% 17.12% 28.35%
Ratios of expenses to average net assets:
before fee waivers 0.57% 1 0.63% 0.32% 1 0.38%
after fee waivers 0.57%(1) 0.63% 0.32% 1 0.38%
Ratios of net investment income
to average net assets:
before fee waivers 0.61% 1 0.74% 0.86% 1 0.99%
after fee waivers 0.61% 1 0.74% 0.86% 1 0.99%
Portfolio turnover rate 17.22% 142.56% 17.22% 142.56%
Net assets, end of period $3,314,451 $99,888 $163,887,595 $132,381,985
1 Annualized
2 Not annualized
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
CAPSTONE SOCIAL ETHICS AND RELIGIOUS VALUES FUND
FINANCIAL HIGHLIGHTS - continued
---------------------------------------------------------------------------------------------------------------------------------
Small Cap Equity Fund
------------------------------------------------------------------------------
Class A Class C
-------------------------------------- ------------------------------------
For Six Months For the Year For Six Months For the Year
ended ended ended ended
March 31, 2000 September 30, March 31, 2000 September 30,
(Unaudited) 1999 (Unaudited) 1999
--------------- -------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Net Asset Value -- Beginning of Period $29.17 $25.00 $29.21 $25.00
-------- -------- -------- --------
Investment Operations:
Net investment income 0.02 0.14 0.06 0.16
Net realized and unrealized gain
(loss) on investments and foreign
currency transactions 5.66 4.17 5.67 4.21
-------- -------- -------- --------
Total from investment operations 5.68 4.31 5.73 4.37
-------- -------- -------- --------
Distributions:
From net investment income (0.03) (0.14) (0.06) (0.16)
From net realized capital gain (1.55) -- (1.55) --
-------- -------- -------- --------
Total distributions (1.58) (0.14) (1.61) (0.16)
-------- -------- -------- --------
Net Asset Value -- End of Period $33.27 $29.17 $33.33 $29.21
======== ======== ======== ========
Total Return 2 20.09% 17.27% 20.24% 17.49%
Ratios of expenses to average net assets:
before fee waivers 0.62% 1 0.66% 0.37% 1 0.41%
after fee waivers 0.62% 1 0.66% 0.37% 1 0.41%
Ratios of net investment income
to average net assets:
before fee waivers 0.15% 1 0.31% 0.40% 1 0.56%
after fee waivers 0.15% 1 0.31% 0.40% 1 0.56%
Portfolio turnover rate 24.43% 41.02% 24.43% 41.02%
Net assets, end of period $631,569 $28,060 $77,477,288 $67,544,211
International Equity Fund
International Equity Fund
------------------------------------------------------------------------------
Class A Class C
-------------------------------------- ------------------------------------
For Six Months For the Year For Six Months For the Year
ended ended ended ended
March 31, 2000 September 30, March 31, 2000 September 30,
(Unaudited) 1999 (Unaudited) 1999
--------------- -------------- ---------------- ---------------
Net Asset Value -- Beginning of Period $30.54 $25.00 $30.55 $25.00
-------- -------- -------- --------
Investment Operations:
Net investment income 0.44 0.84 0.52 0.99
Net realized and unrealized gain
(loss) on investments and foreign
currency transactions 3.73 7.00 3.69 6.91
-------- -------- -------- --------
Total from investment operations 4.17 7.84 4.21 7.90
-------- -------- -------- --------
Distributions:
From net investment income (0.49) (0.92) (0.51) (0.97)
From net realized capital gain (3.43) (1.38) (3.43) (1.38)
-------- -------- -------- --------
Total distributions (3.92) (2.30) (3.94) (2.35)
-------- -------- -------- --------
Net Asset Value -- End of Period $30.79 $30.54 $30.82 $30.55
======== ======== ======== ========
Total Return 2 14.04% 31.98% 14.19% 32.23%
Ratios of expenses to average net assets:
before fee waivers 0.67% 1 0.64% 0.42% 1 0.39%
after fee waivers 0.67% 1 0.64% 0.42% 1 0.39%
Ratios of net investment income
to average net assets:
before fee waivers 3.11% 1 3.12% 3.36% 1 3.37%
after fee waivers 3.11% 1 3.12% 3.36% 1 3.37%
Portfolio turnover rate 28.00% 52.42% 28.00% 52.42%
Net assets, end of period $558,187 $10,038 $46,668,000 $41,838,180
1 Annualized
2 Not annualized
See notes to financial statements.
</TABLE>
CAPSTONE SOCIAL ETHICS & RELIGIOUS VALUES FUND
NOTES TO FINANCIAL STATEMENTS - March 31, 2000 (Unaudited)
-----------------------------------------------------------------------
(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 advisor
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
market 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.
G. REPURCHASE AGREEMENTS
In connection with transactions in repurchase agreements, it is the Funds'
policy that 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 ADVISOR AND ADMINISTRATOR
Capstone serves as each Fund's advisor 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, resulting in waivers of
investment advisory fees for the period ended March 31, 2000 of $5,209
and waivers of administrative fees for the period ended March 31, 2000 of
$2,604. These waivers are voluntary and may be discontinued at any time.
(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, 1999 to March 31, 2000, were
as follows:
<TABLE>
<CAPTION>
Class A Class C
--------- ---------
Shares Dollars Shares Dollars
------ ------- ------ -------
<S> <C> <C> <C> <C>
Money Market Fund:
Sold 28,575 $ 28,575 4,085,288 $ 4,085,288
Reinvested 454 454 525,270 525,270
Redeemed (22,000) (22,000) (8,322,289) (8,322,289)
-------------- -------------- -------------- --------------
Net Increase (decrease) 7,029 $ 7,029 (3,711,731) $ (3,711,731)
============== ============== ============== ==============
Short-Term Bond Fund:
Sold 613 $ 15,000 9,994 $ 247,516
Reinvested 8 188 25,021 612,767
Redeemed -- -- (5,416) (133,198)
-------------- -------------- -------------- --------------
Net Increase 621 $ 15,188 29,599 $ 727,085
============== ============== ============== ==============
Bond Fund:
Sold 74,074 $ 1,712,175 189,241 $ 4,379,033
Reinvested 819 18,943 11,386 262,383
Redeemed (676) (15,655) (3,089) (70,961)
-------------- -------------- -------------- --------------
Net Increase 74,217 $ 1,715,463 197,538 $ 4,570,455
============== ============== ============== ==============
Large Cap Equity Fund:
Sold 93,555 $ 3,166,895 571,034 $ 19,937,241
Reinvested 337 11,899 17,713 616,551
Redeemed (5,207) (173,353) (221,286) (7,648,597)
-------------- -------------- -------------- --------------
Net Increase 88,685 $ 3,005,441 367,461 $ 12,905,195
============== ============== ============== ==============
Small Cap Equity Fund:
Sold 19,371 $ 644,602 92,735 $ 3,062,309
Reinvested 56 1,732 26,221 786,261
Redeemed (1,405) (44,919) (106,520) (3,216,841)
-------------- -------------- -------------- --------------
Net Increase 18,022 $ 601,415 12,436 $ 631,729
============== ============== ============== ==============
International Fund:
Sold 17,755 $ 537,127 134,538 $ 4,097,634
Reinvested 172 5,183 10,472 313,881
Redeemed (136) (4,185) (263) (8,059)
-------------- -------------- -------------- --------------
Net Increase 17,791 $ 538,125 144,747 $ 4,403,456
============== ============== ============== ==============
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:
<CAPTION>
Class A Class C
--------- ---------
Shares Dollars Shares Dollars
------ ------- ------ -------
<S> <C> <C> <C> <C>
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 1,026,431 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
============== ============== ============== ==============
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 October 1, 1999 to
March 31, 2000 were as follows:
Purchases Sales
-------------- --------
Short-Term Bond Fund $32,433,331 $ 2,765,539
Bond Fund 7,451,242 1,203,356
Large Cap Equity Fund 33,862,739 21,724,930
Small Cap Equity Fund 17,439,389 19,753,731
International Fund 4,071,579 4,165,271
(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 a 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
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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