(LOGO)
AQUINAS FUNDS
------------------------
ANNUAL REPORT
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THE AQUINAS FUNDS, INC.
1-800-423-6369
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December 31, 1998
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AQUINAS FUNDS
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DEAR FEBRUARY 1999
SHAREHOLDER:
HAPPY BIRTHDAY TO US!
At the end of 1998, the Aquinas Funds celebrated five years of successful
Catholic values investing. The Funds have proven that it was possible to earn
competitive returns and invest in a Catholic manner at the same time. We are
thankful to the thousands of investors and Catholic organizations that are
willing to put their money where their values are. You have harvested the
financial results and witnessed that corporations can change for the better.
Over the years, each of our Funds has received good ratings from various
financial and social rating organizations. Investors can visit our web site at
www.aquinasfunds.com and obtain detailed information on current events involving
the Funds.
Our shareholders will remember 1998 as the year of the roller coaster markets
and social investing success stories.
Traditional measures of value were thrown aside as investors experienced a real
financial panic in the later months of the summer and through the early fall. It
seems that many investors were perplexed by uncertainty and sought safety by
investing in only the largest companies. News-papers had headlines aplenty about
the Asian flu, hedge funds, Long Term Capital hedge fund, Federal Reserve
involvement in market stabilization efforts, etc. And the financial results were
masked by the market gains of only a few companies that played a major role in
the most reported market indices such as the S&P 500 and the Dow Jones 30
Industrials. The S&P 500 is a market value weighted index (stock price
multiplied by the number of shares outstanding), with each stock's weight in the
Index proportionate to its market value.
Most investors may not realize that many stock indices were down on an
unweighted basis in 1998: The AMEX was down 27%, the NASDAQ was down 20%, and
the NYSE was down 13%. We feel good that all of our returns were positive for
the year ended December 31, 1998.
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The gap between value stocks and growth stocks achieved an all-time high in
1998. This benefited our Equity Growth Fund, which was 50% large cap growth
stocks. This gap also reduced returns on the Equity Income and Balanced Funds in
1998; however, history has shown that the popularity of value and growth stocks
tends to shift. While indices such as the S&P 500 have shown good gains, fewer
than 50 stocks really produced the results in 1998. We at Aquinas believe that
it may be more prudent to be diversified over a larger range of investments.
When the markets were in free fall in August and September, we reminded our
investors that we do not try to time the markets. As a result, the Equity and
Balanced Funds held minimal money market instruments when the market rise began
to occur.
Regarding the Catholic values social issues, we are pleased to report that a
major bank has broken the "glass ceiling" for female employees and has begun
considering females for senior positions in the bank. In fact, a woman was hired
to head their marketing department. The same is true for a large industrial
corporation. While it is hard to believe that a "glass ceiling" could still
exist at a major corporation, these situations do exist. After seven months of
pressure and communications, the CEO has assured us that they will aggressively
mentor existing female employees to prepare them for upper management.
Furthermore, they promoted a female to a senior operating position at year-end.
Articles appearing in 1998 identified the Aquinas Funds as a major reason that
the French abortion pill (RU-486) has not been widely available in the U.S.,
even though the FDA approved it more than two years ago. While we do not know
how many babies have been saved, we believe that it is in the tens of thousands.
As shareholders, you helped make this possible. However, there are now Internet
web sites that encourage pro-abortion forces to write the drug companies to
reverse the decisions they made to stay out of the abortion pill business. We
are staying vigilant on this issue.
Corporate donations to Planned Parenthood are an area of concern to us. In 1998,
our investment advisor, Aquinas Investment Advisors, Inc., began support of the
St. Antoninus Institute, which tracks the support of corporate donations to
Planned Parenthood. Aquinas Investment
AQUINAS FUNDS
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Advisors, Inc. will work with the institute to utilize its experience in
reducing or eliminating contributions to Planned Parenthood.
Although tobacco is not on the investing guidelines list of the National
Conference of Catholic Bishops, we do work on tobacco issues in support of
Catholic religious communities that are concerned about tobacco use by minors.
We filed a shareholder proposal with two billboard companies in our portfolio to
eliminate their acceptance of tobacco advertising directed to children. I am
pleased to report that we achieved our objectives.
Sometimes we are asked why we have The Walt Disney Company in our portfolio. At
present, we only have 1,000 shares. The Securities and Exchange Commission
requires that we own a stock for more than one year before we can file a
shareholder proposal; therefore, we own shares in the event that we may wish to
file a shareholder proposal. So far, our objectives with Disney have been
achieved on three issues and we have not needed this leverage yet. At present,
Disney has a Catholic priest on their Board of Directors, they are actively
participating toward the improvement of "sweatshop manufacturing", and their
ABC-TV unit participates in the TV ratings system. All of this has been achieved
through active involvement of ourselves and others as shareholders. Please
remember that as a shareholder, you are an owner of the company; and, as an
owner, you can achieve results.
While the first five years were very successful for us, we look forward to the
next five years. Thank you for investing with us.
Sincerely,
/s/ Frank Rauscher
Frank Rauscher
President and Treasurer
AQUINAS FUNDS
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AQUINAS FIXED INCOME FUND
The Aquinas Fixed Income return of 7.17% net of all expenses finished below the
benchmark Lehman Brothers Government/Corporate Bond Index of 9.47%. And, while
investment-grade corporate bonds usually offer the most attractive risk/reward
results over time, 1998 was one of those years when the flight to the highest
quality, U.S. government securities, was caused by unusual events referred to
mainly as "the Asian flu". Thus, we did well in the face of the flight of monies
into U.S. Treasury securities. We continue to believe that high quality
corporate bonds offer the most attractive long-term risk/reward alternative for
our portfolio. We have a good gross yield advantage versus our benchmark and we
believe that we have good opportunities to perform even better in the long-term.
As the events of 1998 have shown, short-term volatility is difficult to predict.
This is a classic reason why we encourage long-term investing because it allows
us to take advantage of the panic of others as we calmly adjust our positions to
improve our opportunity for good returns.
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TOTAL RETURNS
For the Periods Ended December 31, 1998
Average
Annual
Since
One Inception/
Year Five Years<F1>
- ---------------------------------------
Aquinas Fixed
Income Fund 7.17% 6.15%
- ---------------------------------------
Lehman Bros.
Gov't./Corp.
Bond Index 9.47% 7.31%
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<F1> For the period ended December 31, 1998, the average annual since inception
and the five-year returns are the same.
AQUINAS FIXED LEHMAN BROS.
INCOME GOV'T./CORP.
FUND BOND INDEX
------------- -------------
1994 9,691 9,649
1995 11,266 11,505
1996 11,585 11,840
1997 12,574 12,995
1998 13,475 14,275
This chart assumes an initial gross investment of $10,000 made on 1/3/94
(inception). Returns shown include the reinvestment of all dividends.
Performance reflects fee waivers in effect. Absent fee waivers, total returns
would be reduced. Past performance is not predictive of future performance.
Investment return and principal value will fluctuate, so that your shares, when
redeemed, may be worth more or less than the original cost.
The Lehman Brothers Government/Corporate Bond Index includes all public
obligations of the U.S. Treasury, excluding flower bonds and foreign-targeted
issues; all publicly issued debt of U.S. government agencies and quasi-federal
corporations, and corporate debt guaranteed by the U.S. government; and all
publicly issued, fixed rate, nonconvertible, investment grade, dollar-
denominated, SEC-registered corporate debt (including debt issued or guaranteed
by foreign sovereign governments, municipalities, or governmental agencies, or
international agencies).
AQUINAS FUNDS
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AQUINAS EQUITY INCOME FUND
This Fund seeks growth of capital and a high level of current income by
investing principally in conservative income-producing equity securities
(typically, dividend paying common stocks). We use two separate portfolio
managers to avoid concentration of risks. We invest in a larger number of stocks
than a typical equity income fund. The equity markets in 1998 were dominated by
a small number of stocks. The added diversification and reduced concentrations
worked against us in 1998. The Fund performed below the S&P 500 benchmark, which
returned 28.58% in 1998. Most mutual funds using this benchmark did not beat it.
Only 10 of the 500 stocks in the S&P 500 were responsible for almost half of the
market capitalization weighted rise. Those ten stocks were Microsoft, Wal-Mart,
GE, Lucent, Cisco, Intel, IBM, Dell, Merck, & Pfizer. Most of those 10 are
considered growth stocks. We believe that over time our diversification and
focus on dividend-paying stocks will reflect favorably in comparison with this
benchmark or the performance of our peers. In the short run, we understand that
the gap between growth stocks and value stocks in 1998 was very large. History
shows that these differences occur in cycles and that value stocks have
outperformed during their cycle. With the current length of the positive U.S.
economy reaching record levels, we believe that our cautious optimism is the way
to invest for the future.
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TOTAL RETURNS
For the Periods Ended December 31, 1998
Average
Annual
Since
One Inception/
Year Five Years<F1>
- ---------------------------------------
Aquinas Equity
Income Fund 5.50% 16.44%
- ---------------------------------------
S&P 500
Stock Index 28.58% 24.09%
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<F1> For the period ended December 31, 1998, the average annual since inception
and the five-year returns are the same.
AQUINAS EQUITY
INCOME S&P 500 LEHMAN BROS GOVT/
FUND STOCK INDEX CORP BOND INDEX
-------------- ----------- -----------------
1994 9,707 10,132 9,649
1995 13,165 13,939 11,505
1996 15,854 17,140 11,840
1997 20,269 22,859 12,995
1998 21,383 29,393 14,275
This chart assumes an initial gross investment of $10,000 made on 1/3/94
(inception). Returns shown include the reinvestment of all dividends.
Performance reflects fee waivers in effect. Absent fee waivers, total returns
would be reduced. Past performance is not predictive of future perform ance.
Investment return and principal value will fluctuate, so that your shares, when
redeemed, may be worth more or less than the original cost.
The S&P 500 Stock Index is an unmanaged index of 500 selected common stocks,
most of which are listed on the New York Stock Exchange. The Index is heavily
weighted toward stocks with large market capitalizations and represents
approximately two-thirds of the total market value of all domestic common
stocks.
AQUINAS FUNDS
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AQUINAS EQUITY GROWTH FUND
Our Aquinas Equity Growth Fund invests in small, medium, and large corporations.
It does not require that a company pay a dividend because many of these
companies have decided to reinvest in themselves rather than pay a dividend.
Many of these companies are in the Russell 3000, which is an index that we use
for comparison. While our fund did very well and returned 21.95%, we did not
quite match the Russell 3000 Index return of 24.09%. The markets of 1998,
including the Russell 3000, were heavily influenced by large capitalization
growth stocks concentrated in only a few securities and industry groups such as
technology. We are invested in solid companies with good long-term prospects
that will continue to be rewarded by patience. We are quite pleased with our
returns when we consider the roller coaster ride of 1998. Please refer to the
chart below for details.
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TOTAL RETURNS
For the Periods Ended December 31, 1998
Average
Annual
Since
One Inception/
Year Five Years<F1>
- ---------------------------------------
Aquinas Equity
Growth Fund 21.95% 18.63%
- ---------------------------------------
S&P 500
Stock Index 28.58% 24.09%
- ---------------------------------------
Russell 3000
Index 24.14% 22.28%
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<F1> For the period ended December 31, 1998, the average annual since inception
and the five-year returns are the same.
AQUINAS EQUITY
GROWTH S&P 500 RUSSELL 3000
FUND STOCK INDEX INDEX
------------- ------------- -------------
1994 9,322 10,132 10,018
1995 12,145 13,939 13,705
1996 14,927 17,140 16,695
1997 19,252 22,859 22,001
1998 23,478 29,393 27,312
This chart assumes an initial gross investment of $10,000 made on 1/3/94
(inception). Returns shown include the reinvestment of all dividends. Perform
ance reflects fee waivers in effect. Absent fee waivers, total returns would be
reduced. Past performance is not predictive of future performance. Investment
return and principal value will fluctuate, so that your shares, when redeemed,
may be worth more or less than the original cost.
The S&P 500 Stock Index is an unmanaged index of 500 selected common stocks,
most of which are listed on the New York Stock Exchange. The Index is heavily
weighted toward stocks with large market capitalizations and represents
approximately two-thirds of the total market value of all domestic
common stocks.
The Russell 3000 Index is composed of the 3,000 largest U.S. securities, as
determined by total market capitalization. This portfolio of securities
represents approximately 98% of the investable U.S. equity market.
AQUINAS FUNDS
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AQUINAS BALANCED FUND
The Aquinas Balanced Fund invests in both common stocks and fixed income
securities. About 40% of this portfolio is invested in a style called large-cap
value. This style was out of favor in 1998 as illustrated by the S&P Barra Value
Index, which underperformed the S&P Barra Growth Index by 28%, the largest
amount ever. This portfolio contains great companies and we believe that their
value will be recognized in the near future as investors recognize that "growth
momentum" has driven up the price of "growth stocks" to irrational highs in the
short run. The Aquinas Balanced Fund has a long-term perspective and we are
comfortable with the quality companies in our portfolio. The fixed income
component of the portfolio performed reasonably well, 7.17%, versus the Lehman
Brothers Government/Corporate Bond Index return of 9.47% during a time period
when a major financial crisis hit the securities markets (it was nicknamed "the
Asian flu"). Many investors abandoned investment-grade corporate bonds in a
flight to the quality of treasury securities. Meanwhile, your investment grade
portfolio had good returns and was positioned to take advantage of future
opportunities for even better relative performance. We believe that our current
asset allocation of 40% large-cap value, 20% small-mid cap growth, and 40% fixed
income is appropriate for long term investors that desire a more moderate
volatility in the portfolio.
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TOTAL RETURNS
For the Periods Ended December 31, 1998
Average
Annual
Since
One Inception/
Year Five Years<F1>
- ---------------------------------------
Aquinas
Balanced Fund 8.46% 12.36%
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Lehman Bros.
Gov't./ Corp.
Bond Index 9.47% 7.31%
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S&P 500
Stock Index 28.58% 24.09%
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<F1> For the period ended December 31, 1998, the average annual since inception
and the five-year returns are the same.
AQUINAS LEHMAN BROS.
BALANCED GOV'T./CORP. S&P 500
FUND BOND INDEX STOCK INDEX
------------- ------------ ------------
1994 9,694 9,649 10,132
1995 11,937 11,505 13,939
1996 13,763 11,840 17,140
1997 16,502 12,995 22,859
1998 17,899 14,275 28,468
This chart assumes an initial gross investment of $10,000 made on 1/3/94
(inception). Returns shown include the reinvestment of all dividends. Perform-
ance reflects fee waivers in effect. Absent fee waivers, total returns would be
reduced. Past performance is not predictive of future performance. Investment
return and principal value will fluctuate, so that your shares, when redeemed,
may be worth more or less than the original cost.
The Lehman Brothers Government/Corporate Bond Index includes all public
obligations of the U.S. Treasury, excluding flower bonds and foreign-targeted
issues; all publicly issued debt of U.S. government agencies and quasi-federal
corporations, and corporate debt guaranteed by the U.S. government; and all
publicly issued, fixed rate, nonconvertible, investment grade, dollar-
denominated, SEC-registered corporate debt (including debt issued or guaranteed
by foreign sovereign governments, municipalities, or governmental agencies, or
international agencies).
The S&P 500 Stock Index is an unmanaged index of 500 selected common stocks,
most of which are listed on the New York Stock Exchange. The Index is heavily
weighted toward stocks with large market capitalizations and represents
approximately two-thirds of the total market value of all domestic common
stocks.
AQUINAS FUNDS
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FIXED INCOME FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
Principal
Amount Value
- -------- -----
FIXED INCOME BONDS 87.6%
ASSET-BACKED SECURITIES 12.1%
$ 27,029 Amresco Residential Securities
Mortgage Loan Trust,
6.275%, 4/25/18 $ 27,578
850,000 Amresco Residential Securities
Mortgage Loan Trust,
8.075%, 4/25/26 892,644
425,000 Amresco Residential Securities
Mortgage Loan Trust,
7.615%, 3/25/27 442,706
275,000 Amresco Residential Securities
Mortgage Loan Trust,
7.05%, 4/25/27 289,597
300,000 California Infrastructure SCE 97-1A5,
6.28%, 9/25/05 309,480
342,439 Chase Manhattan Auto Owner Trust,
6.25%, 11/15/00 345,531
525,000 First USA Credit Card Master Trust,
5.654%, 2/17/05 525,000
247,297 IMC Home Equity Loan Trust
1997-4 A, 5.775%, 10/20/27 247,618
375,000 MBNA Master Credit Card Trust,
6.60%, 11/15/04 394,395
400,000 Olympic Auto Trust,
6.625%, 12/15/02 410,624
375,000 Providian Master Trust, 97-4A,
6.25%, 6/15/07 380,824
500,000 Saxon Asset Securities Trust 97-3 AF6,
6.73%, 2/25/27 518,005
375,000 UCFC Home Equity Loan Trust,
7.825%, 1/15/28 393,532
-----------
5,177,534
-----------
Principal
Amount Value
- -------- -----
CORPORATE BONDS 48.1%
$467,000 American Express Credit Corp.,
8.50%, 6/15/99 $473,907
525,000 Associates Corp. of North America,
7.75%, 2/15/05 582,214
400,000 Bear Stearns Corp.,
6.75%, 12/15/07 412,520
655,000 Bellsouth Capital Funding,
6.04%, 11/15/26 677,113
600,000 Citicorp, 8.00%, 2/1/03 649,308
775,000 Coca-Cola Enterprises, Inc.,
7.00%, 10/1/26 863,459
200,000 Coca-Cola Enterprises, Inc.,
6.75%, 9/15/28 209,552
600,000 Commercial Credit Co.,
7.875%, 2/1/25 698,892
420,000 Compania Telecom Chile,
7.625%, 7/15/06 402,171
400,000 Corporation Andina de Fomento,
7.10%, 2/1/03 397,024
800,000 Donaldson Lufkin Jenrette Securities
Corp., 5.625%, 2/15/16 802,224
350,000 El Paso Energy Corp.,
6.75%, 11/15/03 365,400
350,000 First Maryland Bancorp,
7.20%, 7/1/07 379,155
800,000 Ford Motor Credit Co.,
8.375%, 1/15/00 824,128
629,000 General Electric Capital Corp.,
8.30%, 9/20/09 759,876
600,000 General Motors Acceptance Corp.,
8.875%, 6/1/10 745,080
400,000 Global Marine, Inc.,
7.125%, 9/1/07 417,180
550,000 Grand Metropolitan Investment PLC,
7.45%, 4/15/35 620,185
650,000 Heller Financial, Inc.,
6.25%, 3/1/01 658,268
AQUINAS FUNDS
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FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D.)
DECEMBER 31, 1998
Principal
Amount Value
- -------- -----
CORPORATE BONDS 48.1% (CONT'D.)
$850,000 Household Finance Corp.,
7.125%, 4/30/99 $ 855,246
190,000 Lasmo, Inc.,
7.30%, 11/15/27 176,003
890,000 Lehman Brothers Hldg., Inc.,
8.80%, 3/1/15 978,982
400,000 Lockheed Martin Corp.,
6.85%, 5/15/01 411,308
830,000 Motorola, Inc.,
6.50%, 9/1/25 879,261
350,000 Nabisco, Inc.,
7.55%, 6/15/15 354,711
700,000 NationsBank Corp.,
8.57%, 11/15/24 873,250
590,000 New Jersey Bell Telephone Co.,
7.85%, 11/15/29 714,065
500,000 Norwest Financial, Inc.,
6.00%, 8/1/99 503,030
380,000 Penney (J.C.) & Co., Inc.,
7.40%, 4/1/37 413,964
385,000 Rodamco NV,
7.30%, 5/15/05 408,042
400,000 Rollins Truck Leasing Corp.,
7.00%, 3/15/01 409,120
420,000 Tenneco, Inc.,
8.075%, 10/1/02 446,704
400,000 Transamerica Financial Corp.,
6.125%, 11/1/01 400,416
880,000 WMX Technologies, Inc.,
6.65%, 5/15/05 912,287
900,000 Xerox Corp.,
5.875%, 6/15/37 923,589
------------
20,597,634
------------
U.S. GOVERNMENT AGENCIES 8.1%
488,515 FHLMC, Pool 555316,
9.00%, 6/1/19 518,436
Principal
Amount Value
- -------- -----
U.S. GOVERNMENT AGENCIES 8.1% (CONT'D.)
$380,000 FNMA, 6.00%, 5/15/08 $ 401,991
350,000 FNR 1998-17,
6.50%, 1/18/26 354,704
500,000 Freddie Mac 2108-QA,
6.25%, 12/15/28 507,559
300,000 GNMA, 1998-22PD,
6.50%, 9/20/28 300,300
433,576 GN Platinum #780904,
9.50%, 7/15/18 468,263
275,000 Guaranteed Export Certificates,
6.28%, 6/15/04 283,181
600,000 Tennessee Valley Authority,
6.235%, 7/15/45 629,832
------------
3,464,266
------------
U.S. TREASURY OBLIGATIONS 19.3%
385,000 U.S. Treasury Bond,
8.875%, 8/15/17 542,296
530,000 U.S. Treasury Bond,
8.00%, 11/15/21 708,463
600,000 U.S. Treasury Note,
5.875%, 1/31/99 600,648
1,000,000 U.S. Treasury Note,
5.00%, 2/15/99 1,000,590
40,000 U.S. Treasury Note,
6.50%, 5/31/02 42,251
1,235,000 U.S. Treasury Note,
6.25%, 6/30/02 1,296,330
755,000 U.S. Treasury Note,
7.50%, 2/15/05 864,384
2,000,000 U.S. Treasury Note,
7.00%, 7/15/06 2,282,140
320,000 U.S. Treasury Note,
5.625%, 5/15/08 341,488
270,000 U.S. Treasury Strips, 2/15/20 83,948
1,860,000 U.S. Treasury Strips, 11/15/21 529,709
------------
8,292,247
------------
AQUINAS FUNDS
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FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D.)
DECEMBER 31, 1998
Principal
Amount Value
- -------- -----
Total Fixed Income Bonds
(cost $36,458,831) $37,531,681
------------
SHORT-TERM INVESTMENTS 11.2%
$1,000,000 Associates Corp., Commercial Paper,
5.34%, 1/8/99 1,000,000
600,000 GMAC Commercial Paper,
5.80%, 1/6/99 600,000
3,192,680 UMB Bank, n.a., Money Market
Fiduciary, Demand Deposit, 3.41% 3,192,680
------------
Total Short-term Investments
(cost $4,792,680) 4,792,680
------------
Total Investments 98.8%
(cost $41,251,511) 42,324,361
Other Assets
less Liabilities 1.2% 540,736
------------
Net Assets 100.0% $42,865,097
============
See notes to financial statements.
AQUINAS FUNDS
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EQUITY INCOME FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
Number
of Shares Value
- ---------- -----
COMMON STOCKS 94.9%
AEROSPACE 1.6%
12,200 Lockheed Martin Corp. $ 1,033,950
------------
APPAREL 2.7%
13,300 VF Corp. 623,438
43,800 The Warnaco Group, Inc. 1,105,950
------------
1,729,388
------------
AUTOMOTIVE RELATED
INDUSTRIES 4.2%
34,700 Dana Corp. 1,418,363
11,200 Ford Motor Co. 657,300
18,500 Tenneco, Inc. 630,156
------------
2,705,819
------------
BANKING 7.8%
6,400 Bankers Trust New York Corp. 546,800
13,200 Chase Manhattan Corp. 898,425
16,000 First Union Corp. 973,000
25,100 PNC Bank Corp. 1,358,538
28,000 Union Planters Corp. 1,268,750
------------
5,045,513
------------
BREWERIES 1.0%
10,100 Anheuser-Busch Cos., Inc. 662,813
------------
BUILDING MATERIALS 0.9%
9,300 Armstrong World Industries, Inc. 560,906
------------
BUSINESS SERVICES 2.2%
45,200 First Data Corp. 1,432,275
------------
CHEMICALS 5.7%
37,400 B. F. Goodrich Co. 1,341,725
6,800 Dow Chemical Co. 618,375
19,200 Mallinckrodt, Inc. 591,600
Number
of Shares Value
- ---------- -----
CHEMICALS 5.7% (CONT'D.)
12,900 Union Carbide Corp. $ 548,250
21,600 Westvaco Corp. 579,150
------------
3,679,100
------------
COMPUTER EQUIPMENT 1.6%
5,500 International Business Machines
Corp. 1,016,125
------------
COMPUTER SERVICES 2.4%
31,600 Electronic Data Systems Corp. 1,587,900
------------
CONSUMER PRODUCTS 0.9%
14,900 American Greetings Corp., Class A 611,831
------------
CONSUMER SERVICES 1.6%
39,916 Jostens, Inc. 1,045,300
------------
DRUGS 0.9%
10,200 American Home Products Corp. 574,388
------------
ELECTRIC UTILITIES 3.6%
18,400 Allegheny Energy, Inc. 634,800
18,700 Baltimore Gas & Electric Co. 577,363
13,000 DTE Energy Co. 557,375
8,810 Duke Energy Corp. 564,391
------------
2,333,929
------------
ELECTRONIC PRODUCTS 0.9%
15,500 Hubbell, Inc., Class B 589,000
------------
FINANCIAL SERVICES 5.1%
19,000 A.G. Edwards, Inc. 707,750
17,400 Marsh & McLennan Cos., Inc. 1,016,813
33,200 SLM Holding Corp. 1,593,600
------------
3,318,163
------------
AQUINAS FUNDS
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EQUITY INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D.)
DECEMBER 31, 1998
Number
of Shares Value
- ---------- -----
FOOD 2.2%
22,800 Supervalu, Inc. $ 638,400
29,100 Sysco Corp. 798,431
------------
1,436,831
------------
FORESTRY 1.0%
26,100 Georgia-Pacific Corp. (Timber Group) 621,506
------------
FUNERAL SERVICES 1.8%
31,600 Service Corp. International 1,202,775
------------
HEALTH CARE PRODUCTS 1.0%
9,700 Baxter International, Inc. 623,831
------------
HOLDING COMPANIES 3.1%
15,000 Public Service Enterprise Group, Inc. 600,000
48,400 RJR Nabisco Holdings Corp. 1,436,875
------------
2,036,875
------------
HOSPITAL MANAGEMENT AND
SERVICES 1.4%
13,500 Columbia/HCA Healthcare Corp. 334,125
23,200 Tenet Healthcare Corp. <F1> 609,000
------------
943,125
------------
INSURANCE 3.7%
8,400 CIGNA Corp. 649,425
17,800 MBIA, Inc. 1,167,012
14,900 Ohio Casualty Corp. 612,762
------------
2,429,199
------------
MINING 1.4%
20,000 Newmont Mining Corp. 361,250
10,900 Phelps Dodge Corp. 554,537
------------
915,787
------------
NATURAL GAS UTILITIES 3.4%
28,300 El Paso Energy Corp. 985,194
14,200 NICOR, Inc. 599,950
Number
of Shares Value
- ---------- -----
NATURAL GAS UTILITIES 3.4% (CONT'D.)
15,600 Peoples Energy Corp. $ 622,050
------------
2,207,194
------------
OFFICE EQUIPMENT 0.9%
15,200 Harris Corp. 556,700
------------
OIL AND GAS 8.9%
9,500 Atlantic Richfield Co. 619,875
20,892 Burlington Resources, Inc. 748,195
17,000 EVI Weatherford, Inc.<F1> 329,375
16,400 Kerr-McGee Corp. 627,300
7,800 Mobil Corp. 679,575
11,200 Repsol SA-ADR 611,800
18,900 Texaco, Inc. 999,337
22,700 Ultramar Diamond Shamrock Corp. 550,475
20,300 Williams Cos., Inc. 633,106
------------
5,799,038
------------
PAPER AND PAPER PRODUCTS 2.6%
11,600 Bowater, Inc. 480,675
14,200 Champion International Corp. 575,100
11,800 Kimberly-Clark Corp. 643,100
------------
1,698,875
------------
PRINTING AND PUBLISHING 1.0%
17,300 Deluxe Corp. 632,531
------------
REAL ESTATE 0.9%
41,000 HRPT Properties Trust 576,563
------------
RETAIL 1.8%
21,600 Intimate Brands, Inc. 645,300
10,700 Penney (J.C.) Co., Inc. 501,562
------------
1,146,862
------------
SEMICONDUCTORS 4.8%
14,500 Intel Corp. 1,719,156
AQUINAS FUNDS
- -------------------------------------------------------------------------------
EQUITY INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D.)
DECEMBER 31, 1998
Number
of Shares Value
- ---------- -----
SEMICONDUCTORS 4.8% (CONT'D.)
16,600 Texas Instruments, Inc. $ 1,420,337
------------
3,139,493
------------
STEEL/IRON 0.8%
22,900 USX-U.S. Steel Group, Inc. 526,700
------------
TECHNOLOGY 1.1%
27,800 Pall Corp. 703,688
------------
TELECOMMUNICATIONS 6.5%
11,000 Bell Atlantic Corp. 624,937
27,600 GTE Corp. 1,861,275
20,000 SBC Communications, Inc. 1,072,500
9,900 US West Communications Group 639,787
------------
4,198,499
------------
TEXTILES 1.0%
15,000 Springs Industries, Inc., Class A 621,563
------------
TRANSPORTATION 1.0%
17,000 GATX Corp. 643,875
------------
WASTE DISPOSAL 1.5%
21,260 Waste Management, Inc. 991,248
------------
Total Common Stocks
(cost $51,525,957) $61,579,158
------------
Principal
Amount Value
- ---------- -----
CONVERTIBLE BONDS 0.9%
$ 610,000 Quantum Corp.,
7.00%, 8/1/04
(cost $610,000) $ 587,125
------------
SHORT-TERM INVESTMENTS 4.1%
2,623,074 UMB Bank, n.a., Money Market
Fiduciary, Demand Deposit, 3.41%
(cost $2,623,074) 2,623,074
------------
Total Investments 99.9%
(cost $54,759,031) 64,789,357
Other Assets
less Liabilities 0.1% 87,407
------------
Net Assets 100.0% $64,876,764
============
<F1>Non-income producing security
See notes to financial statements.
AQUINAS FUNDS
- --------------------------------------------------------------------------------
EQUITY GROWTH FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
Number
of Shares Value
- ---------- -----
COMMON STOCKS 92.7%
ADVERTISING 0.6%
5,000 Omnicom Group, Inc. $ 290,000
-------------
AEROSPACE 0.9%
9,600 Orbital Sciences Corp.<F1> 424,800
-------------
BANKING 3.3%
3,055 BankAmerica Corp. 183,682
20,295 Charter One Financial, Inc. 563,186
2,700 Chase Manhattan Corp. 183,769
5,300 First Union Corp. 322,306
2,300 Northern Trust Corp. 200,819
1,650 Providian Financial Corp. 123,750
-------------
1,577,512
-------------
BUSINESS SERVICES 9.3%
3,500 CSG Systems International, Inc.<F1> 276,500
14,500 Concord EFS, Inc.<F1> 614,437
19,500 Fiserv, Inc.<F1> 1,003,031
9,800 The Metzler Group, Inc.<F1> 477,137
18,527 NOVA Corp.<F1> 642,655
13,475 Paychex, Inc. 693,120
6,600 Quintiles Transnational Corp.<F1> 352,275
12,200 United Stationers, Inc.<F1> 317,200
-------------
4,376,355
-------------
COMMUNICATIONS 1.9%
2,300 ALLTEL Corp. 137,569
5,100 Cisco Systems, Inc.<F1> 473,344
6,000 Qwest Communications
International, Inc.<F1> 300,000
-------------
910,913
-------------
COMPUTER HARDWARE 0.8%
8,800 Compaq Computer Corp. 369,050
-------------
Number
of Shares Value
- ---------- -----
COMPUTER SERVICES 5.8%
1,600 America Online, Inc.<F1> $ 256,000
3,800 Automatic Data Processing, Inc. 304,712
10,400 Data Processing Resources Corp.<F1> 304,200
3,900 IMS Health, Inc. 294,206
2,200 Infoseek Corp.<F1> 108,625
18,200 Sungard Data Systems, Inc.<F1> 722,313
11,600 Transaction Systems Architects, Inc.<F1> 580,000
4,900 Unisys Corp.<F1> 168,744
-------------
2,738,800
-------------
COMPUTER SOFTWARE 4.0%
4,000 BMC Software, Inc.<F1> 178,250
4,200 Computer Associates
International, Inc. 179,025
4,400 Compuware Corp.<F1> 343,750
5,700 Microsoft Corp.<F1> 790,519
6,000 Network Associates, Inc.<F1> 397,500
-------------
1,889,044
-------------
DRUGS 4.6%
3,400 Biogen, Inc.<F1> 282,200
3,200 Genentech, Inc.<F1> 255,000
9,500 Jones Pharma, Inc. 346,750
2,600 Merck & Co., Inc. 383,987
3,300 Pfizer, Inc. 413,944
9,000 Schering-Plough Corp. 497,250
-------------
2,179,131
-------------
ELECTRONIC PRODUCTS 1.6%
13,000 ANTEC Corp.<F1> 261,625
25,600 Harmonic Lightwaves, Inc.<F1> 480,000
-------------
741,625
-------------
ELECTRONICS 1.4%
6,400 General Electric Co. 653,200
-------------
AQUINAS FUNDS
- --------------------------------------------------------------------------------
EQUITY GROWTH FUND
SCHEDULE OF INVESTMENTS (CONT'D.)
DECEMBER 31, 1998
Number
of Shares Value
- ---------- -----
ENTERTAINMENT 1.0%
6,600 Time Warner, Inc. $ 409,612
3,000 Walt Disney (The) Co. 90,000
-------------
499,612
-------------
FINANCIAL SERVICES 6.7%
17,200 AmeriCredit Corp.<F1> 237,575
4,800 Countrywide Credit Industries, Inc. 240,900
7,400 Federal National Mortgage Assn. 547,600
13,400 Finova Group, Inc. 722,763
14,000 HealthCare Financial Partners, Inc.<F1> 555,625
9,866 Metris Cos., Inc. 496,383
4,750 SunAmerica, Inc. 385,344
-------------
3,186,190
-------------
FOOD 2.5%
4,300 Bestfoods 228,975
2,000 Coca-Cola Company 133,750
4,800 H.J. Heinz Co. 271,800
9,400 Safeway, Inc.<F1> 572,813
-------------
1,207,338
-------------
HEALTH CARE PRODUCTS 5.7%
6,000 Abbott Laboratories 294,000
8,200 Biomet, Inc. 330,050
3,400 Eli Lilly & Co. 302,175
2,600 Guidant Corp. 286,650
8,000 Henry Schein, Inc.<F1> 358,000
3,100 Medtronic, Inc. 230,175
9,000 Mylan Laboratories, Inc. 283,500
17,500 Omnicare, Inc. 608,125
-------------
2,692,675
-------------
HOME FURNISHINGS 1.6%
10,000 Furniture Brands International, Inc.<F1> 272,500
8,000 Miller (Herman), Inc. 215,000
8,900 WestPoint Stevens, Inc.<F1> 280,906
-------------
768,406
-------------
Number
of Shares Value
- ---------- -----
HOSPITAL MANAGEMENT AND
SERVICES 0.7%
14,250 Health Management Associates<F1> $ 308,156
-------------
HOUSEHOLD PRODUCTS 1.4%
3,300 Clorox Co. 385,481
3,200 Procter & Gamble Co. 292,200
-------------
677,681
-------------
INFORMATION SYSTEMS 1.6%
16,900 Affiliated Computer Services, Inc.<F1> 760,500
-------------
INSURANCE 1.9%
1,500 American International Group, Inc. 144,937
11,500 Reliastar Financial Corp. 530,438
3,600 UNUM Corp. 210,150
-------------
885,525
-------------
Manufacturing 3.4%
11,000 Danaher Corp. 597,437
13,200 Gentex Corp.<F1> 264,000
5,700 Tyco International Ltd. 429,994
3,800 Waters Corp.<F1> 331,550
-------------
1,622,981
-------------
MEDIA 5.6%
4,000 American Tower Corp. 118,250
10,600 Capstar Broadcasting Corp.<F1> 242,475
6,800 Chancellor Media Corp.<F1> 325,550
10,100 Clear Channel
Communications, Inc.<F1> 550,450
9,100 Infinity Broadcasting Corp.<F1> 249,113
26,782 Outdoor Systems, Inc.<F1> 803,400
6,600 SFX Entertainment, Inc.<F1> 362,175
-------------
2,651,413
-------------
NATURAL GAS UTILITIES 0.8%
6,900 Columbia Energy Group 398,475
-------------
AQUINAS FUNDS
- --------------------------------------------------------------------------------
EQUITY GROWTH FUND
SCHEDULE OF INVESTMENTS (CONT'D.)
DECEMBER 31, 1998
Number
of Shares Value
- ---------- -----
OFFICE EQUIPMENT 0.8%
5,700 Pitney Bowes, Inc. $ 376,556
-------------
RESTAURANTS 2.5%
16,200 Brinker International, Inc.<F1> 467,775
13,200 Starbucks Corp.<F1> 740,850
-------------
1,208,625
-------------
RETAIL 14.0%
5,750 99 Cents Only Stores<F1> 282,469
7,900 Abercrombie & Fitch Co.<F1> 558,925
12,900 Bed Bath and Beyond, Inc.<F1> 440,212
11,300 BJ's Wholesale Club, Inc.<F1> 523,331
4,900 Borders Group, Inc.<F1> 122,194
5,325 Cardinal Health, Inc. 404,034
6,300 Costco Cos., Inc.<F1> 454,781
14,800 CSK Auto Corp.<F1> 394,975
13,200 Family Dollar Stores, Inc. 290,400
23,000 Fingerhut Cos., Inc. 355,063
7,600 Fred Meyer, Inc.<F1> 457,900
8,100 Home Depot, Inc. 495,619
3,500 Kohl's Corp.<F1> 215,031
8,900 Linens 'n Things, Inc.<F1> 352,663
5,600 Lowe's Cos., Inc. 286,650
6,800 Michaels Stores, Inc.<F1> 123,038
4,800 Office Depot, Inc. 177,300
6,500 Rite Aid Corp. 322,156
8,800 Staples, Inc._ 384,450
-------------
6,641,191
-------------
SEMICONDUCTORS 1.1%
2,800 Intel Corp. 331,975
4,300 Vitesse Semiconductor Corp.<F1> 196,188
-------------
528,163
-------------
Number
of Shares Value
- ---------- -----
Technology 1.4%
4,200 EMC Corp.<F1> $ 357,000
3,100 Solectron Corp.<F1> 288,106
-------------
645,106
-------------
TELECOMMUNICATIONS 4.7%
5,900 Airtouch Communications, Inc.<F1> 425,538
7,500 AT&T Corp. 564,375
2,400 Lucent Technologies, Inc. 264,000
8,100 MCI WorldCom, Inc.<F1> 581,175
6,900 SBC Communications, Inc. 370,012
-------------
2,205,100
-------------
TRANSPORTATION 0.6%
8,200 Airborne Freight Corp. 295,713
-------------
WASTE DISPOSAL 0.5%
5,400 Waste Management, Inc. 251,775
-------------
Total Common Stock
(cost $30,962,104) 43,961,611
-------------
AQUINAS FUNDS
- -------------------------------------------------------------------------------
EQUITY GROWTH FUND
SCHEDULE OF INVESTMENTS (CONT'D.)
DECEMBER 31, 1998
Principal
Amount Value
- ---------- -----
SHORT-TERM INVESTMENTS 7.0%
$3,300,706UMB Bank, n.a., Money Market
Fiduciary, Demand Deposit, 3.41%
(cost $3,300,706) $ 3,300,706
-------------
Total Investments 99.7%
(cost $34,262,810) 47,262,317
Other Assets
less Liabilities 0.3% 137,207
-------------
Net Assets 100.0% $47,399,524
=============
<F1>Non-income producing security
See notes to financial statements.
AQUINAS FUNDS
- --------------------------------------------------------------------------------
BALANCED FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1998
Number
of Shares Value
- ---------- -----
COMMON STOCKS 58.6%
AEROSPACE 1.1%
2,200 Lockheed Martin Corp. $ 186,450
2,600 Orbital Sciences Corp.<F1> 115,050
-------------
301,500
-------------
APPAREL 0.9%
2,000 VF Corp. 93,750
6,200 The Warnaco Group, Inc. 156,550
-------------
250,300
-------------
AUTOMOTIVE RELATED
INDUSTRIES 1.6%
5,800 Dana Corp. 237,075
1,600 Ford Motor Co. 93,900
2,900 Tenneco, Inc. 98,781
-------------
429,756
-------------
BANKING 3.6%
1,100 Bankers Trust New York Corp. 93,981
5,460 Charter One Financial, Inc. 151,515
1,900 Chase Manhattan Corp. 129,319
3,000 First Union Corp. 182,437
3,900 PNC Bank Corp. 211,087
4,400 Union Planters Corp. 199,375
-------------
967,714
-------------
BREWERIES 0.4%
1,500 Anheuser-Busch Cos., Inc. 98,438
-------------
BUILDING MATERIALS 0.3%
1,500 Armstrong World Industries, Inc. 90,469
-------------
BUSINESS SERVICES 4.4%
1,100 CSG Systems International, Inc.<F1> 86,900
3,000 Concord EFS, Inc.<F1> 127,125
6,800 First Data Corp. 215,475
Number
of Shares Value
- ---------- -----
BUSINESS SERVICES 4.4% (CONT'D.)
4,000 Fiserv, Inc.<F1> $ 205,750
2,700 The Metzler Group, Inc.<F1> 131,456
5,117 NOVA Corp.<F1> 177,496
3,682 Paychex, Inc. 189,393
2,000 United Stationers, Inc.<F1> 52,000
-------------
1,185,595
-------------
CHEMICALS 2.3%
6,400 B. F. Goodrich Co. 229,600
1,000 Dow Chemical Co. 90,938
3,300 Mallinckrodt, Inc. 101,681
2,200 Union Carbide Corp. 93,500
3,500 Westvaco Corp. 93,844
-------------
609,563
-------------
COMPUTER EQUIPMENT 0.5%
800 International Business
Machines Corp. 147,800
-------------
COMPUTER SERVICES 2.8%
3,000 Data Processing Resources Corp.<F1> 87,750
5,300 Electronic Data Systems Corp. 266,325
600 Infoseek Corp.<F1> 29,625
5,300 Sungard Data Systems, Inc.<F1> 210,344
3,200 Transaction Systems Architects, Inc.<F1> 160,000
-------------
754,044
-------------
CONSUMER PRODUCTS 0.3%
2,300 American Greetings Corp., Class A 94,444
-------------
CONSUMER SERVICES 0.6%
6,368 Jostens, Inc. 166,762
-------------
DRUGS 0.7%
1,800 American Home Products Corp. 101,363
2,700 Jones Pharma, Inc. 98,550
-------------
199,913
-------------
AQUINAS FUNDS
- --------------------------------------------------------------------------------
BALANCED FUND
SCHEDULE OF INVESTMENTS (CONT'D.)
DECEMBER 31, 1998
Number
of Shares Value
- ---------- -----
ELECTRIC UTILITIES 1.5%
2,900 Allegheny Energy, Inc. $ 100,050
3,100 Baltimore Gas & Electric Co. 95,713
2,400 DTE Energy Co. 102,900
1,586 Duke Energy Corp. 101,603
-------------
400,266
-------------
ELECTRONIC PRODUCTS 1.1%
3,800 ANTEC Corp.<F1> 76,475
7,000 Harmonic Lightwaves, Inc.<F1> 131,250
2,500 Hubbell, Inc., Class B 95,000
-------------
302,725
-------------
FINANCIAL SERVICES 4.2%
3,500 A.G. Edwards, Inc. 130,375
4,700 AmeriCredit Corp.<F1> 64,919
3,000 Finova Group, Inc. 161,812
4,000 HealthCare Financial Partners, Inc.<F1> 158,750
3,400 Marsh & McLennan Cos., Inc. 198,687
2,746 Metris Cos., Inc. 138,158
6,100 SLM Holding Corp. 292,800
-------------
1,145,501
-------------
FOOD 0.9%
3,600 Supervalu, Inc. 100,800
4,900 Sysco Corp. 134,444
-------------
235,244
-------------
FORESTRY 0.4%
4,200 Georgia-Pacific Corp. (Timber Group) 100,013
-------------
FUNERAL SERVICES 0.8%
5,500 Service Corp. International 209,344
-------------
HEALTH CARE PRODUCTS 1.7%
1,900 Baxter International, Inc. 122,194
2,200 Henry Schein, Inc.<F1> 98,450
2,500 Mylan Laboratories, Inc. 78,750
Number
of Shares Value
- ---------- -----
HEALTH CARE PRODUCTS 1.7% (CONT'D.)
4,500 Omnicare, Inc. $ 156,375
-------------
455,769
-------------
HOLDING COMPANIES 1.2%
2,700 Public Service Enterprise Group, Inc. 108,000
7,000 RJR Nabisco Holdings Corp. 207,812
-------------
315,812
-------------
HOME FURNISHINGS 0.9%
3,000 Furniture Brands International, Inc.<F1> 81,750
2,300 Miller (Herman), Inc. 61,812
3,100 WestPoint Stevens, Inc.<F1> 97,844
-------------
241,406
-------------
HOSPITAL MANAGEMENT
AND SERVICES 0.6%
2,400 Columbia/HCA Healthcare Corp. 59,400
4,100 Tenet Healthcare Corp.<F1> 107,625
-------------
167,025
-------------
INFORMATION SYSTEMS 0.6%
3,600 Affiliated Computer Services, Inc.<F1> 162,000
-------------
INSURANCE 2.0%
1,400 CIGNA Corp. 108,237
2,800 MBIA, Inc. 183,575
2,200 Ohio Casualty Corp. 90,475
3,200 Reliastar Financial Corp. 147,600
-------------
529,887
-------------
MANUFACTURING 1.3%
3,200 Danaher Corp. 173,800
3,700 Gentex Corp.<F1> 74,000
1,300 Waters Corp.<F1> 113,425
-------------
361,225
-------------
MEDIA 2.8%
1,100 American Tower Corp. 32,519
AQUINAS FUNDS
- -------------------------------------------------------------------------------
BALANCED FUND
SCHEDULE OF INVESTMENTS (CONT'D.)
DECEMBER 31, 1998
Number
of Shares Value
- ---------- -----
MEDIA 2.8% (CONT'D.)
3,900 Capstar Broadcasting Corp.<F1> $ 89,212
2,000 Chancellor Media Corp.<F1> 95,750
3,000 Clear Channel Communications, Inc.<F1> 163,500
2,600 Infinity Broadcasting, Corp.<F1> 71,175
6,768 Outdoor Systems, Inc.<F1> 203,040
1,800 SFX Entertainment, Inc.<F1> 98,775
-------------
753,971
-------------
MINING 0.3%
1,800 Phelps Dodge Corp. 91,575
-------------
NATURAL GAS UTILITIES 1.3%
4,400 El Paso Energy Corp. 153,175
2,500 NICOR, Inc. 105,625
2,700 Peoples Energy Corp. 107,662
-------------
366,462
-------------
OFFICE EQUIPMENT 0.3%
2,600 Harris Corp. 95,225
-------------
OIL AND GAS 3.6%
1,500 Atlantic Richfield Co. 97,875
3,660 Burlington Resources, Inc. 131,074
4,000 EVI Weatherford, Inc.<F1> 77,500
2,600 Kerr-McGee Corp. 99,450
1,200 Mobil Corp. 104,550
1,800 Repsol SA-ADR 98,325
3,000 Texaco, Inc. 158,625
4,000 Ultramar Diamond Shamrock Corp. 97,000
3,400 Williams Cos., Inc. 106,037
-------------
970,436
-------------
PAPER AND PAPER PRODUCTS 1.1%
2,100 Bowater, Inc. 87,019
2,600 Champion International Corp. 105,300
1,900 Kimberly-Clark Corp. 103,550
-------------
295,869
-------------
Number
of Shares Value
- ---------- -----
PRINTING AND PUBLISHING 0.4%
2,900 Deluxe Corp. $ 106,031
-------------
REAL ESTATE 0.3%
6,500 HRPT Properties Trust 91,406
-------------
RESTAURANTS 0.9%
4,100 Brinker International, Inc.<F1> 118,387
2,100 Starbucks Corp.<F1> 117,862
-------------
236,249
-------------
RETAIL 3.5%
1,625 99 Cents Only Stores<F1> 79,828
1,500 Abercrombie & Fitch Co.<F1> 106,125
3,300 Bed Bath and Beyond, Inc.<F1> 112,613
2,800 BJ's Wholesale Club, Inc.<F1> 129,675
4,600 CSK Auto Corp.<F1> 122,763
4,600 Fingerhut Cos., Inc. 71,013
3,800 Intimate Brands, Inc. 113,525
2,500 Linens 'n Things, Inc.<F1> 99,063
2,000 Michaels Stores, Inc.<F1> 36,188
1,900 Penney (J.C.) Co., Inc. 89,063
-------------
959,856
-------------
SEMICONDUCTORS 1.9%
2,200 Intel Corp. 260,838
3,000 Texas Instruments, Inc. 256,688
-------------
517,526
-------------
STEEL/IRON 0.3%
4,000 USX-U.S. Steel Group, Inc. 92,000
-------------
TECHNOLOGY 0.8%
4,900 Pall Corp. 124,031
1,000 Solectron Corp.<F1> 92,937
-------------
216,968
-------------
AQUINAS FUNDS
- --------------------------------------------------------------------------------
BALANCED FUND
SCHEDULE OF INVESTMENTS (CONT'D.)
DECEMBER 31, 1998
Number
of Shares Value
- ---------- -----
TELECOMMUNICATIONS 2.7%
1,700 Bell Atlantic Corp. $ 96,581
4,600 GTE Corp. 310,212
4,000 SBC Communications, Inc. 214,500
1,600 US West Communications Group 103,400
-------------
724,693
-------------
TEXTILES 0.4%
2,500 Springs Industries, Inc., Class A 103,594
-------------
TRANSPORTATION 0.7%
2,400 Airborne Freight Corp. 86,550
2,500 GATX Corp. 94,687
-------------
181,237
-------------
WASTE DISPOSAL 0.6%
3,400 Waste Management, Inc. 158,525
-------------
Total Common Stocks
(cost $12,824,796) 15,884,138
-------------
Principal
Amount
- ----------
FIXED INCOME BONDS 39.3%
ASSET-BACKED SECURITIES 6.4%
$225,000 Amresco Residential Securities
Mortgage Loan Trust,
8.075%, 4/25/26 236,288
150,000 Amresco Residential Securities
Mortgage Loan Trust,
7.615%, 3/25/27 156,249
100,000 Amresco Residential Securities
Mortgage Loan Trust,
7.05%, 4/25/27 105,308
80,000 California Infrastructure SCE 97-1A5,
6.28%, 9/25/05 82,528
Principal
Amount Value
- ---------- -----
ASSET-BACKED SECURITIES 6.4% (CONT'D.)
$120,000 Citibank Credit Card Master Trust,
1998-1 Class A, 5.75%, 1/15/03 $ 121,304
175,000 First USA Credit Card Master Trust,
5.654%, 2/17/05 175,000
61,824 IMC Home Equity Loan Trust 1997-4 A,
5.775%, 10/20/27 61,905
225,000 The Money Store Home Equity,
6.90%, 7/15/38 228,733
125,000 Olympic Auto Trust,
6.625%, 12/15/02 128,320
125,000 Providian Master Trust, 97-4A,
6.25%, 6/15/07 126,941
100,000 Saxon Asset Securities Trust 97-3 AF6,
6.73%, 2/25/27 103,601
50,000 UCFC Home Equity Loan Trust,
7.825%, 1/15/28 52,471
149,917 World Omni Auto Lease Securitization,
6.18%, 11/25/03 152,212
-------------
1,730,860
-------------
CORPORATE BONDS 24.9%
225,000 Associates Corp. of North America,
7.75%, 2/15/05 249,520
120,000 Bear Stearns Corp.,
6.75%, 12/15/07 123,756
150,000 Bellsouth Capital Funding,
6.04%, 11/15/26 155,064
281,000 Coca-Cola Enterprises, Inc.,
7.00%, 10/1/26 313,073
100,000 Coca-Cola Enterprises, Inc.,
6.75%, 9/15/28 104,776
130,000 Commercial Credit Co.,
7.875%, 2/1/25 151,427
120,000 Compania Telecom Chile,
7.625%, 7/15/06 114,906
100,000 Corporation Andina de Fomento,
7.10%, 2/1/03 99,256
AQUINAS FUNDS
- -------------------------------------------------------------------------------
BALANCED FUND
SCHEDULE OF INVESTMENTS (CONT'D.)
DECEMBER 31, 1998
Principal
Amount Value
- ---------- -----
CORPORATE BONDS 24.9% (CONT'D.)
$100,000 El Paso Energy Corp.,
6.75%, 11/15/03 $ 104,400
100,000 First Maryland Bancorp,
7.20%, 7/1/07 108,330
120,000 First Union Corp.,
7.50%, 4/15/35 138,589
125,000 First Union Corp.,
6.55%, 10/15/35 130,648
265,000 Ford Motor Credit Co.,
6.85%, 8/15/00 271,026
150,000 General Motors Acceptance Corp.,
8.875%, 6/1/10 186,270
100,000 Global Marine, Inc.,
7.125%, 9/1/07 104,295
225,000 Grand Metropolitan Investment PLC,
7.45%, 4/15/35 253,712
150,000 GTE Florida, Inc.,
6.31%, 12/15/02 154,889
200,000 Heller Financial, Inc.,
5.625%, 3/15/00 200,242
260,000 Household Finance Corp.,
7.125%, 4/30/99 261,602
250,000 IBM Credit Corp.,
5.79%, 3/20/00 252,405
100,000 Lasmo, Inc.,
7.30%, 11/15/27 92,633
255,000 Lehman Brothers Hldg., Inc.,
8.80%, 3/1/15 280,495
120,000 Lockheed Martin Corp.,
6.85%, 5/15/01 123,392
250,000 Motorola, Inc.,
6.50%, 9/1/25 264,837
100,000 Nabisco, Inc.,
7.55%, 6/15/15 101,346
150,000 NationsBank Corp.,
8.57%, 11/15/24 187,125
Principal
Amount Value
- ---------- -----
CORPORATE BONDS 24.9% (CONT'D.)
$175,000 New Jersey Bell Telephone Co.,
7.85%, 11/15/29 $ 211,799
60,000 Norfolk Southern Corp.,
6.95%, 5/1/02 62,527
200,000 Norwest Financial, Inc.,
6.00%, 8/1/99 201,212
250,000 Penney (J.C.) & Co., Inc.,
7.40%, 4/1/37 272,345
165,000 Private Export Funding,
5.50%, 3/15/01 166,850
115,000 Rodamco NV,
7.30%, 5/15/05 121,883
150,000 Rollins Truck Leasing Corp.,
7.00%, 3/15/01 153,420
100,000 Salomon, Inc.,
7.30%, 5/15/02 104,569
130,000 Tenneco, Inc.,
8.075%, 10/1/02 138,265
250,000 Virginia Electric & Power Co.,
9.30%, 6/9/99 254,190
250,000 Wal-Mart Stores,
6.125%, 10/1/99 251,712
250,000 WMX Technologies, Inc.,
7.10%, 8/1/26 263,985
------------
6,730,771
------------
U.S. GOVERNMENT AGENCIES 2.9%
167,491 FHLMC, Pool 555316,
9.00%, 6/1/19 177,750
50,000 FNMA, Series 1993-191, Class PH,
6.00%, 5/25/08 50,571
100,000 FNR 1998-17,
6.50%, 1/18/26 101,344
4,536 GNMA, Pool 031096,
9.50%, 6/15/09 4,896
96,350 GNMA, Pool 780904,
9.50%, 7/15/18 104,058
AQUINAS FUNDS
- -------------------------------------------------------------------------------
BALANCED FUND
SCHEDULE OF INVESTMENTS (CONT'D.)
DECEMBER 31, 1998
Principal
Amount Value
- ---------- -----
U.S. GOVERNMENT AGENCIES 2.9% (CONT'D.)
$ 80,000 GNMA 1998-22 PD,
6.50%, 9/20/28 $ 80,080
113,235 Guaranteed Export Certificates,
6.28%, 6/15/04 116,604
150,000 Tennessee Valley Authority,
6.235%, 7/15/45 157,458
------------
792,761
------------
U.S. TREASURY OBLIGATIONS 5.1%
100,000 U.S. Treasury Bond,
8.875%, 8/15/17 140,856
90,000 U.S. Treasury Bond,
8.00%, 11/15/21 120,305
315,000 U.S. Treasury Note,
5.875%, 1/31/99 315,340
80,000 U.S. Treasury Note,
6.50%, 5/31/02 84,502
275,000 U.S. Treasury Note,
6.25%, 6/30/02 288,656
130,000 U.S. Treasury Note,
6.50%, 10/15/06 144,555
80,000 U.S. Treasury Note,
5.625%, 5/15/08 85,372
690,000 U.S. Treasury Strips, 11/15/21 196,505
------------
1,376,091
------------
TOTAL FIXED INCOME BONDS
(cost $10,318,090) 10,630,483
------------
SHORT-TERM INVESTMENTS 3.6%
150,000 GMAC Commercial Paper,
5.80%, 1/6/99 150,000
817,012 UMB Bank, n.a., Money Market
Fiduciary, Demand Deposit, 3.41% 817,012
------------
Total Short-term Investments
(cost $967,012) 967,012
------------
Principal
Amount Value
- ---------- -----
Total Investments 101.5%
(cost $24,109,898) $27,481,633
Liabilities, less
Other Assets (1.5)% (392,332)
------------
Net Assets 100.00% $27,089,301
============
<F1>Non-income producing security
See notes to financial statements.
AQUINAS FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
FIXED EQUITY EQUITY
INCOME INCOME GROWTH BALANCED
FUND FUND FUND FUND
------ ------ ------ ------
ASSETS:
Investments at value
(cost $41,251,511,
$54,759,031,
$34,262,810 and
$24,109,898,
respectively) $42,324,361 $64,789,357 $47,262,317 $27,481,633
Interest and dividends
receivable 560,852 162,649 24,357 187,758
Receivable for securities
sold 14,877 _ 260,460 199,815
Prepaid expenses 8,015 8,508 9,798 4,343
----------- ----------- ----------- -----------
Total Assets 42,908,105 64,960,514 47,556,932 27,873,549
----------- ----------- ----------- -----------
LIABILITIES:
Payable for securities
purchased _ _ 96,019 8,037
Payable to custodian _ _ _ 731,855
Accrued expenses 23,550 32,424 24,268 19,006
Accrued investment
advisory fee 19,458 51,326 37,121 25,350
----------- ----------- ----------- -----------
Total Liabilities 43,008 83,750 157,408 784,248
----------- ----------- ----------- -----------
NET ASSETS $42,865,097 $64,876,764 $47,399,524 $27,089,301
=========== =========== =========== ===========
NET ASSETS CONSIST OF:
Capital stock $ 421 $ 491 $ 270 $ 239
Paid-in capital in excess
of par 41,779,447 53,779,822 34,266,141 23,271,749
Undistributed net investment
income 567 1,842 _ 1,657
Undistributed net realized
gain on investments 11,812 1,064,283 133,606 443,921
Net unrealized appreciation
on investments 1,072,850 10,030,326 12,999,507 3,371,735
----------- ----------- ----------- -----------
NET ASSETS $42,865,097 $64,876,764 $47,399,524 $27,089,301
=========== =========== =========== ===========
CAPITAL STOCK, $.0001
PAR VALUE:
Authorized 125,000,000 125,000,000 125,000,000 125,000,000
Issued and outstanding 4,208,796 4,910,086 2,698,173 2,388,295
NET ASSET VALUE,
REDEMPTION PRICE AND
OFFERING PRICE PER SHARE $10.18 $13.21 $17.57 $11.34
=========== =========== =========== ===========
See notes to financial statements.
AQUINAS FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
FIXED EQUITY EQUITY
INCOME INCOME GROWTH BALANCED
FUND FUND FUND FUND
------ ------ ------ ------
INVESTMENT INCOME:
Interest $2,421,855 $ 120,130 $ 103,344 $ 791,860
Dividends _ 1,744,536 179,477 317,029
Other income 3,800 _ _ 500
----------- ----------- ----------- -----------
2,425,655 1,864,666 282,821 1,109,389
EXPENSES:
Investment advisory fees 232,363 653,479 396,047 290,593
Administration and fund
accounting fees 64,510 108,853 65,971 48,405
Shareholder servicing fees 37,678 48,759 39,354 35,414
Federal and state
registration fees 17,338 26,104 19,664 6,910
Pricing fees 10,492 3,043 4,443 15,374
Audit fees 7,556 12,200 7,354 5,895
Custody fees 7,161 7,949 11,132 13,468
Other 7,161 10,659 6,575 5,294
Legal fees 5,877 10,537 6,644 4,579
Reports to shareholders 3,485 5,630 3,813 2,660
Amortization of organization
expenses 2,927 2,927 2,927 2,927
Insurance 601 965 437 451
----------- ----------- ----------- -----------
Total expenses before waiver 397,149 891,105 564,361 431,970
Waiver of fees (10,042) _ _ (14,525)
----------- ----------- ----------- -----------
Net Expenses 387,107 891,105 564,361 417,445
----------- ----------- ----------- -----------
NET INVESTMENT INCOME (LOSS) 2,038,548 973,561 (281,540) 691,944
----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN:
Net realized gain on
investments 775,207 10,191,341 2,280,222 2,704,215
Change in unrealized
appreciation/depreciation
on investments (56,350) (7,543,105) 6,035,532 (1,015,004)
----------- ----------- ----------- -----------
Net Gain on Investments 718,857 2,648,236 8,315,754 1,689,211
----------- ----------- ----------- -----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $2,757,405 $3,621,797 $8,034,214 $2,381,155
=========== =========== =========== ===========
See notes to financial statements.
AQUINAS FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FIXED INCOME EQUITY INCOME EQUITY GROWTH BALANCED
FUND FUND FUND FUND
---- ---- ---- ----
Year Year Year Year Year Year Year Year
ended ended ended ended ended ended ended ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1998 1997 1998 1997 1998 1997 1998 1997
-------- -------- -------- -------- -------- -------- -------- --------
<C> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $2,038,548 $2,144,650 $973,561 $1,101,627 $(281,540) $(192,777) $691,944 $704,614
Net realized gain on
investments 775,207 312,887 10,191,341 7,883,317 2,280,222 4,823,830 2,704,215 4,158,125
Change in unrealized
appreciation/depreciation
on investments (56,350) 751,968 (7,543,105) 6,152,105 6,035,532 2,770,587 (1,015,004) 341,855
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Net Increase in Net Assets
Resulting from Operations 2,757,405 3,209,505 3,621,797 15,137,049 8,034,214 7,401,640 2,381,155 5,204,594
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS OF:
Net investment income (2,027,059) (2,134,527) (966,627) (1,102,951) _ _ (686,862) (702,886)
Net realized gains (645,008) _ (9,185,806) (7,778,616) (2,171,291) (4,594,461) (2,293,636) (4,125,005)
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Total Distributions (2,672,067) (2,134,527)(10,152,433) (8,881,567) (2,171,291) (4,594,461) (2,980,498) (4,827,891)
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Shares sold 10,194,160 12,103,388 9,197,312 18,210,707 11,098,307 10,876,722 3,327,184 5,618,053
Shares issued to holders
in reinvestment of
distributions 2,492,187 1,989,387 9,964,976 8,413,974 2,147,899 4,482,036 2,924,450 4,470,988
Shares redeemed (10,605,995) (11,697,340)(21,348,662) (13,470,678) (7,699,405) (4,769,299) (7,727,423) (10,971,318)
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Net Increase (Decrease) 2,080,352 2,395,435 (2,186,374) 13,154,003 5,546,801 10,589,459 (1,475,789) (882,277)
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
TOTAL INCREASE (DECREASE) IN
NET ASSETS 2,165,690 3,470,413 (8,717,010) 19,409,485 11,409,724 13,396,638 (2,075,132) (505,574)
NET ASSETS:
Beginning of period 40,699,407 37,228,994 73,593,774 54,184,289 35,989,800 22,593,162 29,164,433 29,670,007
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
End of period $42,865,097 $40,699,407 $64,876,764 $73,593,774 $47,399,524 $35,989,800 $27,089,301 $29,164,433
=========== =========== =========== =========== =========== =========== =========== ===========
</TABLE>
See notes to financial statements.
AQUINAS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FIXED INCOME
FUND
----
Year Year Year Year Jan. 3, 1994 <F1>
ended ended ended ended through
Dec. 31, 1998 Dec. 31, 1997 Dec. 31, 1996 Dec. 31, 1995 Dec. 31, 1994
------------- ------------- ------------- ------------- -------------
<C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.17 $9.90 $10.17 $9.24 $10.00
Income from Investment Operations:
Net investment income 0.54 0.55 0.54 0.54 0.46
Net realized and unrealized
gains (losses) on investments 0.17 0.27 (0.27) 0.93 (0.77)
-------- -------- -------- -------- --------
Total from Investment Operations 0.71 0.82 0.27 1.47 (0.31)
-------- -------- -------- -------- --------
Less Distributions:
Dividends from net investment
income (0.54) (0.55) (0.54) (0.54) (0.45)
Distributions from net realized gains (0.16) _ _ _ _
-------- -------- -------- -------- --------
Total Distributions (0.70) (0.55) (0.54) (0.54) (0.45)
-------- -------- -------- -------- --------
Net Asset Value, End of Period $10.18 $10.17 $9.90 $10.17 $9.24
======== ======== ======== ======== ========
Total Return <F2> 7.17% 8.54% 2.83% 16.26% (3.09)%
Supplemental Data and Ratios:
Net assets, end of period
(in thousands) $42,865 $40,699 $37,229 $35,617 $28,147
Ratio to Average Net Assets of: <F3>
Expenses, net of waivers and reimbursements 1.00% 0.99% 1.00% 0.98% 1.00%
Expenses, before waivers and reimbursements 1.03% 1.05% 1.03% 0.98% 1.11%
Net investment income, net of waivers and
reimbursements 5.27% 5.54% 5.44% 5.46% 4.84%
Net investment income, before waivers and
reimbursements 5.24% 5.48% 5.41% 5.46% 4.73%
Portfolio turnover rate <F2> 120% 102% 169% 126% 139%
</TABLE>
<F1> Commencement of operations.
<F2> Not annualized for the period from January 3, 1994 through December 31,
1994.
<F3> Annualized for the period from January 3, 1994 through December 31, 1994.
See notes to financial statements.
AQUINAS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
EQUITY INCOME
FUND
----
Year Year Year Year Jan. 3, 1994 <F1>
ended ended ended ended through
Dec. 31, 1998 Dec. 31, 1997 Dec. 31, 1996 Dec. 31, 1995 Dec. 31, 1994
------------- ------------- ------------- ------------- -------------
<C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $14.89 $13.26 $11.83 $9.39 $10.00
Income from Investment Operations:
Net investment income 0.23 0.26 0.23 0.28 0.32
Net realized and unrealized
gains (losses) on investments 0.57 3.40 2.18 3.03 (0.61)
-------- -------- -------- -------- --------
Total from Investment Operations 0.80 3.66 2.41 3.31 (0.29)
-------- -------- -------- -------- --------
Less Distributions:
Dividends from net investment
income (0.23) (0.26) (0.23) (0.28) (0.32)
Distributions from net realized gains (2.25) (1.77) (0.75) (0.59) _
-------- -------- -------- -------- --------
Total Distributions (2.48) (2.03) (0.98) (0.87) (0.32)
-------- -------- -------- -------- --------
Net Asset Value, End of Period $13.21 $14.89 $13.26 $11.83 $9.39
======== ======== ======== ======== ========
Total Return <F2> 5.50% 27.85% 20.43% 35.62% (2.93)%
Supplemental Data and Ratios:
Net assets, end of period
(in thousands) $64,877 $73,594 $54,184 $42,102 $32,217
Ratio to Average Net Assets of: <F3>
Expenses, net of waivers and reimbursements 1.36% 1.37% 1.40% 1.37% 1.45%
Expenses, before waivers and reimbursements 1.36% 1.37% 1.40% 1.37% 1.45%
Net investment income, net of waivers and
reimbursements 1.49% 1.74% 1.79% 2.47% 3.33%
Net investment income, before waivers and
reimbursements 1.49% 1.74% 1.79% 2.47% 3.33%
Portfolio turnover rate <F2> 64% 42% 32% 40% 106%
</TABLE>
<F1> Commencement of operations.
<F2> Not annualized for the period from January 3, 1994 through December 31,
1994.
<F3> Annualized for the period from January 3, 1994 through December 31, 1994.
See notes to financial statements.
AQUINAS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONT'D.)
<TABLE>
<CAPTION>
EQUITY GROWTH
FUND
----
Year Year Year Year Jan. 3, 1994 <F1>
ended ended ended ended through
Dec. 31, 1998 Dec. 31, 1997 Dec. 31, 1996 Dec. 31, 1995 Dec. 31, 1994
------------- ------------- ------------- ------------- -------------
<C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $15.12 $13.45 $12.13 $9.31 $10.00
Income from Investment Operations:
Net investment income (loss) (0.10) (0.06) (0.06) (0.01) 0.01
Net realized and unrealized
gains (losses) on investments 3.40 3.93 2.84 2.83 (0.69)
-------- -------- -------- -------- --------
Total from Investment Operations 3.30 3.87 2.78 2.82 (0.68)
-------- -------- -------- -------- --------
Less Distributions:
Dividends from net investment
income _ _ _ _ (0.01)
Distributions from net realized gains (0.85) (2.20) (1.46) _ _
-------- -------- -------- -------- --------
Total Distributions (0.85) (2.20) (1.46) _ (0.01)
-------- -------- -------- -------- --------
Net Asset Value, End of Period $17.57 $15.12 $13.45 $12.13 $9.31
======== ======== ======== ======== ========
Total Return <F2> 21.95% 28.97% 22.90% 30.29% (6.78)%
Supplemental Data and Ratios:
Net assets, end of period
(in thousands) $47,400 $35,990 $22,593 $15,912 $10,104
Ratio to Average Net Assets of: <F3>
Expenses, net of waivers and reimbursements 1.42% 1.49% 1.50% 1.50% 1.50%
Expenses, before waivers and reimbursements 1.42% 1.49% 1.54% 1.61% 1.76%
Net investment income (loss), net of
waivers and reimbursements (0.71)% (0.66)% (0.55)% (0.10)% 0.14%
Net investment income (loss) before
waivers and reimbursements (0.71)% (0.66)% (0.59)% (0.21)% (0.12)%
Portfolio turnover rate <F2> 96% 104% 112% 102% 98%
See notes to financial statements
</TABLE>
<F1> Commencement of operations.
<F2> Not annualized for the period from January 3, 1994 through December 31,
1994.
<F3> Annualized for the period from January 3, 1994 through December 31, 1994.
AQUINAS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONT'D.)
<TABLE>
<CAPTION>
BALANCED
FUND
----
Year Year Year Year Jan. 3, 1994 <F1>
ended ended ended ended through
Dec. 31, 1998 Dec. 31, 1997 Dec. 31, 1996 Dec. 31, 1995 Dec. 31, 1994
------------- ------------- ------------- ------------- -------------
<C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $11.58 $11.53 $11.03 $9.43 $10.00
Income from Investment Operations:
Net investment income (loss) 0.28 0.31 0.26 0.32 0.26
Net realized and unrealized
gains (losses) on investments 0.68 1.95 1.41 1.84 (0.57)
-------- -------- -------- -------- --------
Total from Investment Operations 0.96 2.26 1.67 2.16 (0.31)
-------- -------- -------- -------- --------
Less Distributions:
Dividends from net investment
income (0.28) (0.30) (0.26) (0.33) (0.26)
Distributions from net realized gains (0.92) (1.91) (0.91) (0.23) _
-------- -------- -------- -------- --------
Total Distributions (1.20) (2.21) (1.17) (0.56) (0.26)
-------- -------- -------- -------- --------
Net Asset Value, End of Period $11.34 $11.58 $11.53 $11.03 $9.43
======== ======== ======== ======== ========
Total Return <F2> 8.46% 19.91% 15.29% 23.14% (3.06)%
Supplemental Data and Ratios:
Net assets, end of period
(in thousands) $27,089 $29,164 $29,670 $26,779 $30,114
Ratio to Average Net Assets of: <F3>
Expenses, net of waivers and reimbursements 1.44% 1.45% 1.44% 1.46% 1.49%
Expenses, before waivers and reimbursements 1.49% 1.52% 1.49% 1.46% 1.49%
Net investment income (loss), net of
waivers and reimbursements 2.38% 2.44% 2.23% 2.93% 2.75%
Net investment income (loss), before
waivers and reimbursements 2.33% 2.37% 2.18% 2.93% 2.75%
Portfolio turnover rate <F2> 102% 94% 111% 118% 111%
</TABLE>
<F1> Commencement of operations.
<F2> Not annualized for the period from January 3, 1994 through December 31,
1994.
<F3> Annualized for the period from January 3, 1994 through December 31, 1994.
AQUINAS FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. ORGANIZATION
The Aquinas Funds, Inc. was incorporated on October 20, 1993 as a Maryland
Corporation and is registered as a diversified open-end management investment
company under the Investment Company Act of 1940. The Fixed Income, Equity
Income, Equity Growth and Balanced Funds (the "Funds") are separate, diversified
portfolios of The Aquinas Funds, Inc. The Funds are managed by Aquinas
Investment Advisors, Inc. (the "Advisor") and commenced operations on January 3,
1994.
Costs incurred with the organization, initial registration and public offering
of shares aggregating $12,959 for each of the Fixed Income, Equity Income,
Equity Growth and Balanced Funds have been paid by the Funds. These costs were
deferred and amortized during the period from January 1, 1994 to December 31,
1998.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. These
policies are in conformity with generally accepted accounting principles
("GAAP"). The presentation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates and assumptions.
a) Investment Valuation _ Securities traded over-the-counter or on a national
securities exchange are valued on the basis of market value in their principal
and most representative market. Securities where the principal and most
representative market is a national securities exchange are valued at the latest
reported sale price on such exchange. Exchange-traded securities for which
there were no transactions are valued at the latest reported bid price.
Securities traded on only over-the-counter markets are valued at the latest bid
prices. Debt securities (other than short-term obligations) are valued at
prices furnished by a pricing service, subject to review by the Funds' Advisor
and determination of the appropriate price whenever a furnished price is
significantly different from the previous day's furnished price. Short-term
obligations (maturing within 60 days) are valued on an amortized cost basis,
which approximates value. Securities for which quotations are not readily
available and other assets are valued at fair value as determined in good faith
by the Advisor under the supervision of the Board of Directors.
b) Delayed Delivery Transactions - The Funds may purchase or sell securities on
a when-issued or forward commitment basis. Payment and delivery may take place
a month or more after the date of the transaction. The price of the underlying
securities and the date when the securities will be delivered and paid for are
fixed at the time the transaction is negotiated. Losses may arise due to
changes in the market value of the underlying securities or if the counterparty
does not perform under the contract.
c) Federal Income Taxes - No provision for federal income taxes has been made
since the Funds have complied to date with the provisions of the Internal
Revenue Code available to regulated investment companies and intend to continue
to so comply in future years. During the year ended December 31, 1998, the
Fixed Income Fund utilized its entire capital loss carryforward of $127,229.
d) Distributions to Shareholders - All of the Funds except the Fixed Income Fund
pay dividends of net investment income quarterly. The Fixed Income Fund pays
dividends of net investment income monthly. Distributions of net realized
capital gains, if any, will be declared at least annually. Distributions to
shareholders are recorded on the ex-dividend date.
The character of distributions made during the year from net investment income
or net realized gains may differ from the characterization for federal income
tax purposes due to differences in the recognition of income, expense or gain
items for financial statement and tax purposes. Where appropriate,
reclassifications between net asset accounts are made for such differences that
are permanent in nature. Accordingly, at December 31, 1998, reclassifications
were recorded to increase (decrease) undistributed net investment income by
$(13,001), $(8,254), $281,540 and $(5,372); increase accumulated net realized
gain on investments by $14,405, $9,661, $375 and $6,778; and decrease paid-in
capital in excess of par by $1,404, $1,407, $281,915 and $1,406 for the Fixed
Income, Equity Income, Equity Growth and Balanced Funds, respectively.
For the year ended December 31, 1998, 0%, 100%, 0% and 42.95% of dividends paid
from net investment income, excluding short-term capital gains, qualifies for
the dividends received deduction available to corporate shareholders of the
Fixed Income, Equity Income, Equity Growth and Balanced Funds, respectively.
e) Expenses - Each Fund is charged for those expenses that are directly
attributable to it, such as investment advisory and custody fees. Expenses that
are not directly attributable to a Fund are typically allocated among the Funds
in proportion to their respective net assets.
f) Other - Investment transactions are accounted for on the trade date plus one.
The Funds determine the gain or loss realized from investment transactions by
comparing the original cost of the security lot sold with the net sale proceeds.
Dividend income is recognized on an accrual basis. Premiums and discounts on
securities purchased are amortized using the level yield maturity method.
3. INVESTMENT ADVISORY AND OTHER AGREEMENTS
Each of the Funds has entered into an agreement with the Advisor, with whom
certain officers and directors of the Funds are affiliated, to furnish
investment advisory services to the Funds. Under the terms of this agreement,
the Funds will pay the Advisor a fee, computed daily and payable monthly, at the
annual rate of the following percentages of average daily net assets: 0.60% for
the Fixed Income Fund; and 1.00% for the Equity Income, Equity Growth and
Balanced Funds.
The Advisor voluntarily agreed to reimburse its management fee to the extent
that total annual operating expenses (exclusive of interest, taxes, brokerage
commissions and other costs incurred in connection with the purchase or sale of
portfolio securities, and extraordinary items) exceed 1.00% of the average daily
net assets of the Fixed Income Fund and 1.50% of the average daily net assets of
the Equity Income, Equity Growth and Balanced Funds, respectively, computed on a
daily basis. For the year ended December 31, 1998, expenses of $10,042 were
waived by the Advisor in the Fixed Income Fund.
Sunstone Financial Group, Inc. (the "Administrator") may periodically volunteer
to reduce all or a portion of its administrative fee with respect to one or more
of the Funds. These waivers may be terminated at any time at the
Administrator's discretion. The Administrator may not seek reimbursement of
such voluntarily reduced fees at a later date. The reduction of such fee will
cause the yield of that Fund to be higher than it would be in the absence of
such reduction. For the year ended December 31, 1998, administrative fees of
$14,525 were waived in the Balanced Fund.
AQUINAS FUNDS
- --------------------------------------------------------------------------------
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Funds for the year ended December 31, 1998, were
as follows:
Fixed Equity Equity
Income Income Growth Balanced
Fund Fund Fund Fund
------ ------ ------ ------
Shares sold 994,638 621,650 667,995 283,912
Shares issued to holders
in reinvestment of
distributions 243,413 750,881 124,950 258,278
Shares redeemed (1,031,602) (1,405,564) (475,806) (672,925)
----------- ----------- ----------- -----------
Net Increase (Decrease) 206,449 (33,033) 317,139 (130,735)
=========== =========== =========== ===========
Transactions in shares of the Funds for the year ended December 31, 1997, were
as follows:
Fixed Equity Equity
Income Income Growth Balanced
Fund Fund Fund Fund
------ ------ ------ ------
Shares sold 1,210,288 1,147,801 702,133 450,990
Shares issued to holders
in reinvestment of
distributions 199,942 569,804 299,005 373,535
Shares redeemed (1,167,624) (861,145) (299,619) (878,695)
----------- ----------- ----------- -----------
Net Increase (Decrease) 242,606 856,460 701,519 (54,170)
=========== =========== =========== ===========
5. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of securities, excluding short-term
investments, for the Funds for the year ended December 31, 1998, were as
follows:
Fixed Equity Equity
Income Income Growth Balanced
Fund Fund Fund Fund
------ ------ ------ ------
Purchases
U.S. Government $31,026,955 - - $9,646,178
Other 11,204,987 $40,769,212 $37,174,441 17,933,430
Sales
U.S. Government 28,471,865 - - 9,915,674
Other 13,809,265 49,184,924 35,717,163 20,884,201
At December 31, 1998, gross unrealized appreciation and depreciation on
investments, based on cost for federal income tax purposes of $41,251,511,
$54,795,478, $34,597,672 and $24,204,540 were as follows:
Fixed Equity Equity
Income Income Growth Balanced
Fund Fund Fund Fund
------ ------ ------ ------
Appreciation $1,146,830 $13,210,236 $13,187,539 $3,952,255
(Depreciation) (73,980) (3,216,357) (522,894) (675,162)
----------- ----------- ----------- -----------
Net Appreciation on
Investments $1,072,850 $9,993,879 $12,664,645 $3,277,093
=========== =========== =========== ===========
AQUINAS FUNDS
- --------------------------------------------------------------------------------
Report Of Independent Public Accountants
To the Shareholders and Board of Directors of
The Aquinas Funds, Inc.:
We have audited the accompanying statements of assets and liabilities of The
Aquinas Funds, Inc. (a Maryland corporation, comprising the Aquinas Fixed Income
Fund, Aquinas Equity Income Fund, Aquinas Equity Growth Fund, and Aquinas
Balanced Fund, collectively the "Funds"), including the schedules of
investments, as of December 31, 1998, and the related statements of operations
for the year then ended, statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
periods indicated therein. These financial statements and financial highlights
are the responsibility of the Funds' management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of December 31, 1998, by correspondence with the custodians
and brokers. As to securities purchased but not received, we requested
confirmation from brokers and, when replies were not received, we carried out
other alternative auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective portfolios constituting The Aquinas Funds, Inc. as of December
31, 1998, the results of their operations for the year then ended, the changes
in their net assets for each of the two years in the period then ended, and
their financial highlights for each of the periods indicated therein, in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
January 22, 1999
(LOGO)
THE AQUINAS FUNDS, INC.
P.O. Box 419533
Kansas City, MO 64141-6533
Telephone: 1-800-423-6369
This report is submitted for the general information of shareholders of The
Aquinas Funds. It is not authorized for distribution to prospective investors
unless accompanied or preceded by an effective prospectus for the Funds. The
prospectus includes more complete information about management fees and
expenses. Please read the prospectus carefully.
