SEMI-ANNUAL
REPORT
[LOGO]
MARCH 31, 1999
<PAGE>
[LOGO]
TABLE OF CONTENTS
RNC MONEY MARKET FUND
Shareholder Letter ...................................... 2
Investment Portfolio .................................... 3
Statement of Assets and Liabilities ..................... 5
Statement of Operations ................................. 6
Statement of Changes in Net Assets ...................... 7
Financial Highlights .................................... 8
RNC EQUITY FUND
Shareholder Letter ...................................... 9
Investment Portfolio .................................... 11
Statement of Assets and Liabilities ..................... 14
Statement of Operations ................................. 15
Statement of Changes in Net Assets ...................... 16
Financial Highlights .................................... 17
RNC MUTUAL FUND GROUP, INC.
Notes to Financial Statements ........................... 18
<PAGE>
RNC MONEY MARKET FUND
Dear Shareholders,
We are pleased to provide you with the latest financial statistics for the six
months ending March 31, 1999.
The fund continues to furnish shareholders with a favorable return consistent
with all of the First Tier Taxable Money Market Funds. As of March 31, 1999, the
net seven day yield for the fund after expenses was 4.20% (annualized) compared
to the average net seven day yield after expenses of 4.22% (annualized) for the
other high quality money market funds as reported by IBC Financial Data, Inc.
The Fund's SEC yield on March 31, 1999 was 4.51%.
Reduced levels of volatility during the past six months resulted in the
unwinding of the domestic financial "liquidity crunch" we alluded to at the time
of our last annual report (September 30, 1998). Furthermore, in order to avert a
possible crisis, the Federal Reserve Bank (under the able leadership of Chairman
Greenspan) lowered the targeted fed funds rate a total of 75 basis points (3/4
of 1%). As a result, short term interest rates fell by a commensurate level.
At this time, we believe the current economic environment provides no compelling
reason for the Fed to either raise or lower rates, although our perception is
that they may be somewhat hawkish. Therefore, we have continued to focus on
highly marketable short term securities while stressing the quality
characteristics. Additionally, we are now emphasizing a somewhat shorter
maturity profile since there has been generally little yield advantage to longer
dated issues.
Thank you for expressing confidence in our ability to provide a benefit to you
as a shareholder in the Fund. Please contact us if you have any questions
regarding the Fund or your account.
Sincerely,
Daniel J. Genter
President
RNC Mutual Fund Group, Inc.
RNC Capital Management LLC
<PAGE>
RNC MONEY MARKET FUND
INVESTMENT PORTFOLIO
MARCH 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
------ -----
<S> <C> <C>
Commercial Paper - 35.0%
Barton Capital Corp. (LOC Societe Generale),
4.860%, 04/09/99 $ 2,000,000 $1,997,840
Caterpillar Financial Services Corp.,
4.770%, 04/22/99 2,000,000 1,994,435
Cooperative Association of Tractor Dealers
"A" (LOC MBIA), 4.850%, 05/04/99 1,450,000 1,443,554
Enterprise Funding Co. (LOC Bayerische Vereinsbank),
4.830%, 04/15/99 1,500,000 1,497,182
Ford Motor Credit Corp., 4.800%, 04/15/99 1,500,000 1,497,200
JP Morgan and Co., 4.770%, 04/26/99 2,000,000 1,993,375
Receivables Capital Corp. (LOC Bank of America),
4.890%, 04/07/99 1,583,000 1,581,710
-----------
Total Commercial Paper 12,005,296
-----------
BANK OBLIGATIONS - 2.9%
NationsBank, NA, Bankers Acceptance, 4.720%, 05/12/99 1,000,000 994,624
-----------
FEDERAL AGENCY SECURITIES - 17.9%
Federal Home Loan Bank, 6.110%, 06/30/99 2,810,000 2,818,054
Federal Home Loan Bank, 8.600%, 08/25/99 1,300,000 1,317,930
Federal Home Loan Bank, 5.625%, 03/03/00 1,000,000 1,003,490
Federal National Mortgage Association, 5.340%, 01/24/00 1,000,000 1,003,649
-----------
Total Federal Agency Securities 6,143,123
-----------
CORPORATE BONDS - 38.7%
American Express Credit, 8.500%, 06/15/99 1,800,000 1,812,046
American General Corp., 7.700%, 10/15/99 1,155,000 1,169,759
American Home Products Corp., 7.700%, 02/15/00 1,000,000 1,022,820
Associates Corp., North America, 6.380%, 04/30/99 2,000,000 2,002,044
Chrysler Financial Company, L.L.C., 13.25%, 10/15/99 350,000 364,145
General Motors Acceptance Corporation, 5.010%, 09/20/99* 1,000,000 999,999
IBM Credit Corp., 5.680%, 05/07/99 750,000 750,628
NBD Bank Michigan, N.A., 7.050%, 06/09/99 1,000,000 1,003,800
Norwest Corp., 7.200%, 08/28/99 500,000 503,967
Norwest Corp., 7.625%, 10/15/99 400,000 405,109
Salomon Inc., 4.526%, 04/05/99* 2,000,000 1,999,851
Xerox Corp., 4.440%, 05/05/99* 1,245,000 1,244,259
-----------
Total Corporate Bonds 13,278,427
-----------
OVERNIGHT REPURCHASE AGREEMENT - 4.7%
Seattle Northwest Government Repurchase Agreement,
4.900%, dated 03/31/99 due 04/01/99, collateralized
by $1,950,000 Federal Home Loan Mortgage Corporation,
7.125% , due 07/21/99 (collateral market value of
$1,648,000) (proceeds $1,615,155) (cost $1,615,000) 1,615,000 1,615,000
-----------
TOTAL INVESTMENT PORTFOLIO - 99.2% 34,036,470
Other Assets less Liabilities - 0.8% 259,202
-----------
Net Assets - 100.0% $34,295,672
===========
</TABLE>
* Floating rate obligation. Rate shown is that in effect on March 31, 1999.
See accompanying notes to financial statements
<PAGE>
RNC MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1999
(UNAUDITED)
ASSETS:
Investment portfolio
(cost $34,036,470) $34,036,470
Cash 805
Interest receivable 371,140
Due from Advisor 15,970
Other assets 37,872
-----------
Total assets 34,462,257
-----------
LIABILITIES:
Dividends payable 153,222
Other accrued expenses 13,363
-----------
Total liabilities 166,585
-----------
NET ASSETS - (EQUIVALENT TO $1.00 PER SHARE BASED ON
34,298,082 SHARES OF CAPITAL STOCK OUTSTANDING) $34,295,672
===========
See accompanying notes to financial statements
<PAGE>
RNC MONEY MARKET FUND
STATEMENT OF OPERATIONS
For the Six Months Ended March 31, 1999
(Unaudited)
INVESTMENT INCOME:
Interest Income $ 886,613
---------
EXPENSES:
Advisory fees (Note 3) 70,446
Shareholders' Rule 12b-1 fees (Note 3) 42,955
Professional fees 22,929
Administration fees (Note 3) 19,945
Registration fees 11,967
Fund accounting fees 10,871
Custodian fees 10,691
Audit fees 6,982
Transfer Agent fees 5,731
Printing & other fees 2,425
Directors' fees 2,564
Insurance fees 1,088
Miscellaneous fees 12,633
---------
Total expenses 221,227
Less: expenses waived and reimbursed (Note 3) (90,695)
---------
Net expenses 130,532
---------
NET INVESTMENT INCOME 756,081
---------
Net Increase in Net Assets Resulting
from Operations $ 756,081
=========
See accompanying notes to financial statements
<PAGE>
RNC MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS YEAR ENDED
ENDED SEPTEMBER 30,
MARCH 31, 1999# 1998
--------------- -------------
Net Increase in Net Assets Resulting
from Operations $ 756,081 $ 1,864,620
------------ -------------
Distributions to Shareholders from Net
Investment Income (756,081) (1,867,023)
------------ -------------
Capital Share Transactions:
Proceeds from shares sold 70,731,239 171,813,189
Proceeds from shares reinvested 69,306 309,427
Cost of shares redeemed (70,638,528) (182,556,191)
------------ -------------
Total Increase (Decrease) from capital
share transactions 162,017 (10,433,575)
------------ -------------
Total Increase (Decrease) in Net Assets 162,017 (10,435,978)
Net Assets:
Beginning of period 34,133,655 44,569,633
------------ -------------
End of period $ 34,295,672 $ 34,133,655
============ =============
CHANGE IN SHARES:
Shares sold 70,731,239 171,813,189
Shares reinvested 69,306 309,427
Shares redeemed (70,638,528) (182,556,191)
------------ -------------
Net Increase (Decrease) 162,017 (10,433,575)
------------ -------------
# Unaudited.
See accompanying notes to financial statements
<PAGE>
RNC MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
For the Six Months For the Year Ended September 30,
Ended March 31, --------------------------------------------------
1999# 1998 1997 1996 1995 1994
-------- -------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value at beginning of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
-------- -------- ------- ------- -------- --------
Income from investment operations:
Net investment income 0.022 0.049 0.049 0.047 0.051 0.032
Less distributions:
From net
investment income -0.022 -0.049 -0.049 -0.047 -0.051 -0.032
-------- -------- ------- ------- -------- --------
Net Asset Value at end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======== ======== ======= ======= ======== ========
Total Return 2.20%** 4.99% 5.01% 4.70% 5.10% 3.20%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (000's) $34,296 $34,134 $44,570 $37,744$ 31,066 $43,686
Ratio of expenses to average net assets:
After expense waiver 0.70%* 0.76% 0.70% 0.90% 0.80% 0.70%
Ratio of net investment
income to average net assets
(net of expense waiver) 4.40%* 4.92% 4.90% 4.70% 5.00% 3.20%
# Unaudited
* Annualized
** Not annualized.
</TABLE>
<PAGE>
RNC MUTUAL FUND GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
(UNAUDITED)
1. ORGANIZATION
The RNC Mutual Fund Group, Inc. (the "Group"), is registered under the
Investment Company Act of 1940 (the "1940 Act") as an open-end management
investment company, with two diversified funds: The RNC Equity Fund (the "Equity
Fund") and the RNC Money Market Fund (the "Money Fund"), formerly the RNC Liquid
Assets Fund, Inc., (collectively the "Funds"). The Equity Fund began operations
on November 1, 1996. The investment objective of the Equity Fund is to seek
above-average total return consistent with reasonable risk. The Fund seeks to
achieve its objective by investing primarily in equity securities. The Money
Fund's investment objective is high current income consistent with preservation
of capital and liquidity.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds. These policies are in conformity with generally accepted
accounting principles.
A. SECURITY VALUATION. Investments in securities traded on a national
securities exchange or included in the NASDAQ National Market System
are valued at the last reported sale price at the close of regular
trading on the last business day of the period; securities traded on
an exchange or NASDAQ for which there have been no sales and other
over-the-counter securities are valued at the last reported bid price.
Securities for which quotations are not readily available are valued
at their respective fair values as determined in good faith by the
Board of Directors. For the Equity Fund short-term investments are
stated at cost, which when combined with accrued interest,
approximates market value.
U.S. Government securities with less than 60 days remaining to
maturity when acquired by the Money Fund are valued on an amortized
cost basis. U.S. Government securities with more than 60 days
remaining to maturity are valued at the current market value (using
the mean between the bid and asked price) until the 60th day prior to
maturity, and are then valued at amortized cost based upon the value
on such date unless the Board determines during such 60-day period
that this amortized cost basis does not represent fair value.
Short-term portfolio securities for the Money Fund are valued
using the amortized cost method, which approximates market value.
B. FEDERAL INCOME TAXES. The Funds intend to comply with the requirements
of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its
shareholders. Therefore, no federal income tax provision is required.
As of September 30, 1998, the Equity Fund had realized capital losses
of $38,897 to offset future net capital gains through fiscal year
ended 2005.
<PAGE>
RNC MUTUAL FUND GROUP, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1999
(UNAUDITED)
2. SIGNIFICANT ACCOUNTING POLICIES - continued
C. SECURITY TRANSACTIONS, DIVIDENDS AND DISTRIBUTIONS. As is common in
the industry, security transactions are accounted for on the trade
date. Dividend income and distributions to shareholders are recorded
on the ex-dividend date.
D. REPURCHASE AGREEMENTS. Securities pledged as collateral for repurchase
agreements are held by the custodian bank until the respective
agreements mature. Provisions of the repurchase agreements ensure that
the market value of the collateral, including accrued interest
thereon, is sufficient in the event of default by the counterparty. If
the counterparty defaults and the value of the collateral declines or
if the counterparty enters an insolvency proceeding, realization of
collateral by the Funds may be delayed or limited.
E. EXPENSES. Expenses that are related to one of the Funds are charged
directly to that fund. Other operating expenses of the fund are
allocated to the Funds on the basis of relative net assets.
F. DEFERRED ORGANIZATION COSTS. The Equity Fund has incurred expenses of
$39,116 in connection with the organization. These costs have been
deferred and are being amortized on a straight line basis over a
period of sixty months from the date the Equity Fund commenced
operations.
G. USE OF ESTIMATES. The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial
statements, as well as the reported amounts of income and expenses
during the reported period. Actual results could differ from those
estimates.
3. INVESTMENT MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
For the six months ended March 31, 1999, RNC Capital Management LLC (the
"Advisor") provided the Funds with investment management services under an
Investment Advisory Agreement. The Advisor furnished all investment advice,
office space, facilities, and most of the personnel needed by the Funds. As
compensation for its services, the Advisor was entitled to a monthly fee at the
annual rate of 1.00% based upon the average daily net assets of the Equity Fund
and 0.41% based upon the average daily net assets for the Money Fund. For the
six months ended March 31, 1999, the Equity Fund incurred $38,688 in advisory
fees and the Money Fund incurred $70,446 for the six months ended March 31,
1999. RNC voluntarily waived a portion of the Money Fund advisory fee, which
amounted to $22,337 or 0.13% of the Money Fund's average daily net assets.
<PAGE>
RNC MUTUAL FUND GROUP, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1999
(UNAUDITED)
The Funds are responsible for their own operating expenses. The Advisor may
reduce its fees or make reimbursement to the Funds at any time in order to
reduce the Funds' expenses. Any such reductions made by the Advisor in its fees
or payments or reimbursement of expenses which are the Funds' obligation are
subject to reimbursement by the Funds provided the Funds are able to effect such
reimbursement and remain in compliance with applicable laws. During the six
months ended March 31, 1999 the Advisor reimbursed or waived expenses of the
Money Market Fund in the amount of $90,695 and reimbursed the Equity Fund
$49,537 in fees and expenses.
Investment Company Administration, L.L.C. (the "Administrator") acts as the
Funds' Administrator under an Administration Agreement. The Administrator
prepares various federal and state regulatory filings, reports and returns for
the Funds; prepares reports and materials to be supplied to the directors;
monitors the activities of the Funds' custodian, transfer agent and accountants;
coordinates the preparation and payment of the Funds expenses and reviews the
Funds' expense accruals. For its services, the Administrator receives a monthly
fee at the following annual rate:
Under $40 million $40,000
$40 to $100 million 0.10% of average daily net assets
$100 to $200 million 0.05% of average daily net assets
Over $200 million 0.03% of average daily net assets
First Fund Distributors, Inc. (the "Distributor") acts as the Fund's
principal underwriter in a continuous public offering of the Fund's shares. The
Distributor receives no fees for its services and is an affiliate of the
Administrator.
The Funds have adopted a Shareholder Rule 12b-1 Plan (the "Plan") in
accordance with Rule 12b-1 under the 1940 Act. The Plan provides that the Funds
will pay a fee to the Distributor at an annual rate of 0.25% of the average
daily net assets of the Funds. The Equity Fund incurred $9,672 in Plan expenses
for the six months ended March 30, 1998. The Distributor waived all fees
totaling $42,955 for the six months ended March 31, 1999, in its capacity of
Shareholder Servicing Agent for the Money Fund.
Certain officers of the Fund are officers and/or directors of the
Administrator and Distributor.
4. PURCHASES AND SALES OF SECURITIES
Purchases and the proceeds from the sales of securities, other than
short-term investments, for the six months ended March 31, 1991 were $2,568,113
and $1,905,553 respectively for the Equity Fund.
<PAGE>
RNC EQUITY FUND
Dear Shareholders,
As the President and CEO of RNC Capital Management LLC, which is the
advisor for the RNC Equity Fund, I would like to take this opportunity to
express my gratitude for your participation in the Fund. The following report
contains a summary of the performance and holdings of the Fund for the six
months ended March 31, 1999. Financial statements are also enclosed which detail
Fund expenses as of March 31, 1999.
Over the past six months, the equity market has enjoyed a period of
sustained upward progress, following the upheavals that characterized most of
the previous six months. The stock market has recovered in stellar fashion from
the negative return suffered in the third quarter of 1998 when the fear of a
credit crunch, the collapse of the Russian financial markets, an IMF bailout of
Brazil and the near collapse of various hedge funds combined to severely erode
financial asset values. In spite of these concerns, the domestic economy surged
ahead in the 4th qtr of last year and continued its momentum into the 1st qtr of
this year as the Federal Reserve provided ample liquidity in the form of a rate
cut as well as sustaining a double-digit increase in the monetary base. Of equal
importance to investors has been the remarkable lack of inflation that has
characterized this entire economic expansion, with the consumer price index
rising a very benign 1.4% during the past six months. Low inflation has in turn
allowed interest rates to remain stable, further allowing market valuations to
improve with the Price/Earnings Ratio rising to a historically high range of 25x
- - 28x during the past six months.
During the turbulent period of mid 1998, the Fund held relative value while
remaining fully invested. As a result, with the market recovering dramatically
in the 4th qtr and continuing its momentum into the 1st qtr, Fund holders have
enjoyed virtually full participation in the recovery. We are pleased to report
that the NAV or Net Asset Value (a calculation of performance after the
deduction of all expenses) rose 25.4% for participants who have been
shareholders from September 30, 1998 to March 31, 1999.
Over the next six months, we anticipate some moderation in the pace of
economic growth as a widening trade deficit exerts a drag on an otherwise robust
economy. Furthermore, consumer spending which has been the engine behind the
ever expanding economy should slow due to a less robust housing market and a
lower level of refinancing as interest rates hover near the high-end of their
trading range. Finally, should there be any stumble in the stock market (defined
as a correction of 10% or more), the "wealth effect" from rising equity prices
and outsized capital gains could dampen consumer spending which currently
exceeds, and has for some time, the level of consumer income. This imbalance has
resulted in a negative savings rate as calculated by the Department of Commerce,
a condition that is clearly unsustainable on a long-term basis.
<PAGE>
While we remain bullish regarding the trend of the market, particularly in
view of an expected reacceleration in earnings during the remainder of 1999, we
are mindful of the degree to which valuations are stretched. Indeed, this market
is already reflecting an ongoing perfect environment of low inflation, high
productivity, stable interest rates, strong economic growth, and rising
corporate profits. Should any of these variables change for the worse, a swift
and possibly significant market reaction could result. Early this year, the
market has already experienced two 5% corrections and could easily fall 10% or
more sometime during the year, but still provide a 10% plus return by year end.
A catalyst for a correction of this magnitude could be an uptick in inflation
brought on by an overly strong economy followed by a Federal Reserve response of
tighter money, and therefore, less liquidity. Another catalyst could be a
resumption of global disruptions marked by currency devaluations. Despite the
"global healing" that has commenced following a coordinated move by central
bankers to lower rates, there are various economies such as Japan's that remain
fragile and have yet to begin a long awaited recovery. Despite these concerns,
we remain positive regarding the ability of the economy to grow without inciting
higher inflation and are further encouraged by the expected improvement in
profits throughout the remainder of the year.
Our equity strategy remains focused on large capitalization companies that
are demonstrating superior growth and consistent earnings increases. Our bias
remains value-oriented with a keen sense of the appropriate price to pay for
stocks whose fundamentals and investment thesis we find attractive. The turnover
in the Fund has remained low due in part to maintaining a fully invested
position throughout the past six months as well as allowing the strongest issues
to assume a higher percentage of ownership in the Fund. Our top ten holdings now
equal 40% of the Fund. Conversely, weaker issues have been either sold outright
or reduced in order to redeploy assets into issues with more favorable
prospects. As we enter the next six-month period, we are overweighted on a
sector basis in Raw Materials, Healthcare and Financials and have an increasing
interest in the Telecommunication sector, particularly those companies that can
provide faster and easier access to the Internet. As the market undergoes
periodic corrections and as rotation inevitably occurs, we will remain
opportunistic and price sensitive, prepared to take advantage of misperceptions
and mispricing of those common stocks that meet our strict investment criteria.
The past six months have been very rewarding. It was a period where we, as
investors, were "stirred but not shaken" in our conviction that long term goals
can be achieved through consistent long term investing. Thank you for sharing
that conviction with us through your continued participation in the RNC Equity
Fund.
If you have any questions regarding your investment in the Fund, please
contact us.
Sincerely,
Daniel J. Genter
President
RNC Mutual Fund Group, Inc.
RNC Capital Management LLC
<PAGE>
RNC EQUITY FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Market
Shares Security Value Cost
- -----------------------------------------------------------------------------------------
COMMON STOCKS 95.3%
<S> <C> <C> <C> <C>
Auto 2.7%
4,300 Ford Motor Company $ 244,025 $ 201,603
------------------------
Banking 9.7%
9,000 Bank of New York Company 323,438 232,608
3,900 Chase Manhattan Corporation 317,119 205,778
7,100 Wells Fargo Company 248,944 225,919
------------------------
889,501 664,305
------------------------
Beverages 2.7%
6,300 PepsiCo, Inc. 246,881 224,823
------------------------
Capital Goods 3.6%
3,000 General Electric Company 331,875 222,908
------------------------
Chemicals 1.0%
1,000 The Dow Chemical Company 93,187 95,325
------------------------
Computers & Peripherals 10.3%
8,000 Compaq Computer Corporation 253,500 254,913
4,900 Hewlett-Packard Company 332,281 298,045
2,000 International Business Machines Corp. 354,500 191,540
------------------------
940,281 744,498
------------------------
Computer Software & Services 8.5%
7,600 First Data Corporation 324,900 236,619
5,000 Microsoft Corporation* 448,125 235,641
------------------------
773,025 472,260
------------------------
Consumer Products 4.9%
5,200 Avon Products Inc. 244,725 171,005
2,100 The Procter & Gamble Company 205,669 146,379
------------------------
450,394 317,384
------------------------
Diversified Manufactures 3.6%
4,600 Tyco International Ltd. 330,050 215,696
------------------------
</TABLE>
See accompanying notes to financial statements
<PAGE>
RNC EQUITY FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Market
Shares Security Value Cost
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Drugs 17.0%
4,200 American Home Products Corporation $ 274,050 $ 215,599
3,500 Johnson & Johnson 327,906 250,142
2,800 Lilly (Eli) and Company 237,650 184,578
4,200 McKesson HBOC, inc. 277,200 312,518
1,800 Pfizer Inc. 249,750 113,060
3,400 Schering-Plough Corporation 188,062 75,737
------------------------
1,554,618 1,151,634
------------------------
Entertainment 1.7%
5,000 The Walt Disney Company 155,625 152,647
------------------------
Financial Services 2.7%
3,800 Citigroup Inc. 242,725 191,880
------------------------
Insurance 5.3%
3,400 Hartford Financial Services Group, Inc. 193,162 155,012
3,950 Marsh & McLennan Companies, Inc. 293,041 194,760
------------------------
486,203 349,772
------------------------
Miscellaneous 2.3%
6,000 ITT Industries, Inc. 212,250 194,573
------------------------
Petroleum 6.0%
3,000 Chevron Corporation 265,313 229,549
5,000 Texaco Inc. 283,750 274,099
------------------------
549,063 503,648
------------------------
Raw Materials 2.8%
5,000 PPG Industries, Inc. 256,250 298,882
------------------------
Recreational 3.7%
7,000 Carnival Corporation 339,937 170,452
------------------------
See accompanying notes to financial statements
</TABLE>
<PAGE>
RNC EQUITY FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Market
Shares Security Value Cost
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Retailing 1.8%
4,200 May Department Stores Company $ 164,325 $162,385
------------------------
Telecommunications Services 5.0%
5,400 BellSouth Corporation 216,338 157,417
4,000 GTE Corporation 242,000 216,400
------------------------
458,338 373,817
------------------------
TOTAL COMMON STOCKS (COST $6,708,492) 8,718,553 6,708,492
------------------------
</TABLE>
Principal
Amount Repurchase Agreement 3.2%
- --------------------------------------------------------------------------------
Star Bank Repurchase Agreement, 3.5%,
dated March 31,1999, due April 1, 1999,
collateralized by $302,504 GNMA, 6.5%,
296,000 due 02/20/24 (cost $296,000) (proceeds $296,029) 296,000
----------
TOTAL INVESTMENTS: 98.5% (COST $7,004,492) 9,014,553
OTHER ASSETS LESS LIABILITIES: 1.5% 137,681
----------
Total Net Assets: 100.0% $9,152,234
==========
** Cost for Federal income tax purposes is the same.
Net unrealized depreciation consists of:
Gross unrealized appreciation $2,091,561
Gross unrealized depreciation (81,500)
----------
Net unrealized appreciation $2,010,061
==========
* Non Income Producing Security.
See accompanying notes to financial statements
<PAGE>
RNC EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1999
(Unaudited)
ASSETS:
Investments in securities, at value (cost $7,004,492) ..... $ 9,014,553
Cash ...................................................... 652
Receivables:
Subscriptions .......................................... 219,917
Dividends and Interest ................................. 6,884
Due from advisor (Note 2) ................................. 1,769
Deferred organizational costs, net (Note 2) ............... 20,907
Other assets .............................................. 21,878
-----------
Total assets .......................................... 9,286,560
-----------
LIABILITIES:
Payables:
Securities purchased .................................... 102,638
Redemptions ............................................. 10,000
Accrued 12b-1 expenses (Note 3) ........................... 5,161
Other accrued expenses .................................... 16,527
-----------
Total liabilities ..................................... 134,326
-----------
NET ASSETS .................................................. $ 9,152,234
===========
Net asset value, offering and redemption price per share
($9,152,234/480,287 shares outstanding; 500,000,000 shares
authorized with $0.01 par value) ......................... $ 19.06
===========
SOURCES OF NET ASSETS:
Paid-in capital ........................................... $ 7,148,110
Distributions in excess of net investment income .......... (4,121)
Accumulated net realized loss on investments .............. (1,816)
Net unrealized appreciation of investments ................ 2,010,061
-----------
Net assets ......................................... $ 9,152,234
===========
See accompanying notes to financial statements
<PAGE>
RNC EQUITY FUND
STATEMENT OF OPERATIONS
FOR THE PERIOD OCTOBER 1, 1998 THROUGH MARCH 31, 1999 (UNAUDITED)
INVESTMENT INCOME
Income
Dividend ................................................. $ 55,880
Interest ................................................. 3,799
----------
Total investment income ............................... 59,679
----------
Expenses
Advisor fees (Note 3) .......................... 38,688
Administration fees (Note 3) ................... 19,945
Shareholders' Rule 12b-1 Plan expense (Note 3) . 9,672
Audit fees ..................................... 6,982
Fund accounting expense ........................ 7,437
Transfer agent fees ............................ 4,787
Amortization of deferred organizational
expenses (Note 2-f) .......................... 4,202
Custodian expense .............................. 3,917
Professional fees .............................. 8,205
Registration expense ........................... 2,992
Directors fees ................................. 2,564
Printing expenses .............................. 1,714
Insurance expense .............................. 272
Miscellaneous expense .......................... 1,995
-------
Total expenses ......................................... 113,372
Less, expenses waived and reimbursed (Note 3)........... (49,537)
----------
Net expenses ........................................... 63,835
----------
NET INVESTMENT LOSS .................................... (4,156)
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments ............................. 79,800
Net change in unrealized appreciation
of investments for the period .............................. 1,577,194
----------
Net realized and unrealized gain on
investments ........................................... 1,656,994
----------
Net increase in Net Assets Resulting
from Operations ....................................... $1,652,838
==========
See accompanying notes to financial statements
<PAGE>
RNC EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
October 1, 1998
through For the year
March 31, 1999 ended
(Unaudtied) September 30, 1998
----------- ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM :
OPERATIONS
Net investment income (loss) ....................... $ (4,156) $ 1,696
Net realized gain (loss) on investments ............ 79,800 (62,752)
Net change in unrealized appreciation
(depreciation) of investments ..................... 1,577,194 (12,682)
---------- ----------
Net increase (decrease) in net assets
resulting from operations ..................... 1,652,838 (73,738)
---------- ----------
Distributions to shareholders from net
investment income ................................. (9,469) (12,776)
---------- ----------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold .......................... 1,627,800 3,860,678
Net asset value of shares issued on
reinvestment of distributions .................... 9,469 12,775
Cost of shares redeemed ............................ (691,240) (742,171)
---------- ----------
Net increase from capital share transactions.... 946,029 3,131,282
---------- ----------
Total increase in net assets ............... 2,589,398 3,044,768
---------- ----------
NET ASSETS:
Beginning of the period ............................ 6,562,836 3,518,068
End of the period (including undistributed
(overdistributed) net investment income
of ($19,581) and $9,504, respectively) ........... $9,152,234 $6,562,836
========== ==========
CHANGE IN SHARES:
Shares sold ........................................ 87,634 237,937
Shares issued on reinvestment of distributions ..... 507 789
Shares redeemed .................................... (39,267) (44,180)
---------- ----------
Net increase ....................................... 48,874 194,546
========== ==========
</TABLE>
See accompanying notes to financial statements
<PAGE>
RNC EQUITY FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
For the six months For the year For the period
ended ended November 1, 1996* to
March 31, 1999 # September 30, 1998 September 30, 1997
---------------- ------------------ ------------------
<S> <C> <C> <C>
Net asset value at beginning of period $15.21 $14.85 $12.00
------ ------ ------
Income from investment operations:
Net investment income (0.00) 0.01 0.02
Net realized and unrealized gain
on investments 3.87 0.39 2.83
------ ------ ------
Total from investment operations 3.87 0.40 2.85
------ ------ ------
Less distributions:
From net investment income (0.02) (0.04) 0.00
------ ------ ------
Net asset value at end of period $19.06 $15.21 $14.85
====== ====== ======
Total Return 25.46% * 2.68% 23.75%
Ratios/Supplemental Data:
Net Assets, end of period (000 omitted) $9,152 $6,562 $3,518
Ratio of expenses to average net assets:
Before expense reimbursement 2.93% ** 3.57% 8.50%
After expense reimbursement 1.65% ** 1.64% 1.65%
Ratio of net investment income to average
net assets:
Before expense reimbursement -1.39% ** -1.90% -6.53%
After expense reimbursement -0.11% ** 0.03% 0.32%
Portfolio turnover rate 25% 20% 38%
</TABLE>
# Unaudited
* Not Annualized.
** Annualized.
See accompanying notes to financial statements.
<PAGE>
ADVISER
RNC Capital Management LLC
11601 Wilshire Boulevard
25th Floor
Los Angeles, California 90025
CUSTODIAN
Firstar Bank, N.A.
425 Walnut Street
Cincinnati, Ohio 45202
TRANSFER AGENT
American Data Services, Inc.
150 Motor Parkway, Suite 109
Hauppauge, New York 11788
LEGAL COUNSEL
Paul, Hastings, Janofsky & Walker, LLP
345 California Street, 29th Floor
San Francisco, California 94104
AUDITORS
Tait, Weller & Baker
Eight Penn Center Plaza, Suite 800
Philadelphia, Pennsylvania 19103
