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AQUINAS FUNDS
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SEMI-ANNUAL REPORT
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THE AQUINAS FUNDS, INC.
1-800-423-6369
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June 30, 1999
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AQUINAS FUNDS
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Dear JUNE 1999
Shareholder:
The Aquinas success story continued through mid-year 1999. As you are aware, the
financial markets continued their roller coaster effect during the first six
months of 1999 and our philosophy to be fully invested continues to work well
for us. We were pleased with the second quarter performance of the Aquinas
Equity Income Fund. Value investing came back into popularity and this Fund did
very well, having 13.31% total return in the second quarter and a year-to-date
total return of 9.05%. Over time, stock investors tend to swing back and forth
between the value style and the growth style of investing. This is one reason
why our Aquinas Equity Growth Fund appeared to take a small breather in 1999. It
is the style and sector rotations that appear to us to dominate the stock market
results in the short run. Both the Fixed Income Fund and the Balanced Fund
outperformed their respective benchmarks during the second quarter of 1999.
The Aquinas Funds provide a conservative range of portfolios that can be the
core of your investing program. They range from "value styles" to "growth
styles" and from "large cap" to "mid-cap" to "small cap" size portfolios. Each
Fund has at least two different teams managing the Funds. This increases
diversification and permits us to require a manager to stick with its investment
style. We have the flexibility to change managers with only a minor disruption
if the situation requires us to do so. Such a situation occurred on June 30,
1999. Your Board of Directors decided to change one of the Aquinas Equity Income
managers in order to stay with the long term objectives of the Fund. Relatively
high market valuations and our requirement that a fund manager stick to its
investing style resulted in the lowering of the average capitalization of the
stocks in this Fund to a point that we did not have representation in the large
cap sector to the extent that we wanted. Therefore, on July 1st we replaced
Beutel-Goodman, which had 40% of the portfolio, with Waite & Associates, L.L.C.,
a company that invests primarily in the large cap sector. Eventually, Waite will
have 50% of this portfolio. That transition resulted in the sale of a number of
securities. It is too early in the year to access the effect of the increased
portfolio turnover on this fund's year-end capital gains distribution.
AQUINAS FIXED INCOME FUND
The Aquinas Fixed Income return of -1.90% for the six months ended June 30,
1999, net of all expenses, beat its benchmark, the Lehman Government/Corporate
Index, which had a return of
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- -2.28%. These results reflect the upward movement of interest rates and the
scrutiny of the pace of our economy by the Federal Reserve. Fortunately, your
portfolio holds some corporate bonds with imbedded "puts" that actually shorten
the portfolio duration when interest rates move up. We continue to believe that
high quality corporate bonds offer the best risk/reward opportunities for the
portfolio. As you review our portfolio and compare it with other funds, please
note the high quality that this portfolio has. Many mutual funds do not have the
same high percentage of investment grade securities as the Aquinas Fixed Income
Fund.
AQUINAS EQUITY INCOME FUND
Up 13.31% for the second quarter and up 9.05% for the six months ended June 30,
1999, the Aquinas Equity Income Fund is a solid performer. In fact, this Fund
outperformed the S&P 500/R benchmark for the second quarter of this year
(13.31% vs. 7.05%). Historically, value investing has provided good returns for
shareholders. While 1998 had a large gap between growth stocks and value
stocks, this gap reversed in the second quarter of 1999 and value stocks
performed better than growth stocks. The portfolio contains the names of
well-established companies that have good performance and are readily
recognized.
AQUINAS EQUITY GROWTH FUND
The Aquinas Equity Growth Fund is a combination of small, medium, and large
stocks. While the large cap sector has performed as expected, the small cap
component has performed below expectations even though it outperformed the
larger cap component on an absolute basis. Overall, the Fund was up 6.50% for
June 30, 1999, up 6.62% for the second quarter, and up 6.37% for the calendar
year-to-date. While the numbers are o.k., we find that the markets appear to
have ignored the positive characteristics of the small and mid-cap parts of this
portfolio. For the smaller half of the portfolio, our companies average revenue
growth was 50% for the current year vs. 9% for the S&P 500/R. Similarly,
earnings were up 33% for the current year vs. 4% for the S&P 500/R, and return
on equity was up 21% vs. 19% for the S&P 500/R. The portfolio is full of great
companies with great upside potential. We believe investors eventually will
start to recognize the value of these companies.
AQUINAS BALANCED INCOME FUND
The Aquinas Balanced Fund is currently invested 60% in stocks and 40% in bonds.
The stocks are
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two-thirds large cap value style and one-third small-to mid-cap growth style.
For the second quarter, the Fund outperformed its benchmark of 60% S&P 500/R
and 40% Lehman Brothers Government/Corporate Index (7.34% vs. 3.79%) although
year-to-date, the total return is (4.19% vs. 6.52%). The second quarter
performance was the result of value stocks returning to favor as well as the
recognition that small- and mid-cap stocks had more value than previously
thought by investors. With regard to value stocks, we also replaced, Beutel-
Goodman, which had about 15% of the Fund, with Waite. The fixed income
component consists only of investment grade securities. We do not have any
"junk" bonds in the portfolio. Our portfolio of investment grade corporate
bonds having imbedded puts can perform well when interest rates move in
either direction. With rates currently moving up, these bonds return above
average relative yields. This portfolio is well positioned to provide a more
moderate level of volatility for investors that have a shorter term or less
certain investment time horizon.
As an investor, the money that you place in the Aquinas Funds should be money
that you intend to keep invested for a period of at least three to five years.
We have observed that a number of investors move money in and out of the market
and from fund to fund too frequently. Either they try to time the markets, "they
have a need for action", or they have not clearly identified their investment
goals. If you find yourself moving money frequently from fund to fund, we
recommend that you consult with a financial professional about the role that
mutual funds play in your investment portfolio or you can call us and we will
give you some ideas on the subject.
<TABLE>
<CAPTION>
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SIX ONE THREE YEAR FIVE YEAR AVERAGE ANNUAL
TOTAL RETURNS AS OF 6/30/99 MONTHS YEAR AVERAGE ANNUAL AVERAGE ANNUAL SINCE INCEPTION<F1>
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<S> <C> <C> <C> <C> <C>
Aquinas Equity Growth 6.37% 11.32% 21.87% 22.78% 18.14%
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Aquinas Balanced 4.19% 6.08% 13.41% 14.52% 12.02%
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Aquinas Equity Income 9.05% 9.55% 17.71% 19.47% 16.67%
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Aquinas Fixed Income (1.90)% 1.47% 6.10% 6.47% 5.21%
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</TABLE>
<F1> Inception date: January 3, 1994. Returns shown include the reinvestment of
dividends. Performance reflects fee waivers in effect. Absent fee waivers,
total returns would be reduced. Past performance is not predictive of
future results. Investment return and principal value will fluctuate, so
that your shares, when redeemed, may be worth more or less than the
original cost.
Y2K is on the minds of many investors. From an investing point of view, we
believe that it is still
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better to be in the market than try to time the market. We do not intend to go
into cash during the last half of 1999. There probably will be some disruptions
in various parts of the world as a result of Y2K problems. We want to be in the
market when the investing public realizes that the world is not doomed and they
return to the market. We will stop trading about a week before the end of the
year in order to have all accounts settled by December 28, 1999. We will also
pay our dividends and capital gains distributions, if any, by December 28, 1999,
and mail the confirmations to you before year end. Our Y2K efforts have been
reviewed by the Boards of the Aquinas Funds and Aquinas Investment Advisors,
Inc. Our vendors have spent much time and money to prepare for this event and we
feel comforted that everyone involved has worked hard to minimize any
disruptions from the Y2K effect.
In addition to the long-term performance results of the Funds, many of you are
also concerned about the socially responsible investing (SRI) activities of the
funds. Unlike most social funds that simply screen out companies, we work harder
for you by trying to change company policies in appropriate situations. It takes
little effort to screen out a company that offends your value system, but if you
do, there is no change in the corporate behavior. It may take more effort, but
there is a far greater reward if you can convince the company to make the
necessary change to its behavior.
At Aquinas, your money has worked to accomplish a lot of change and to improve
many areas of concern at some of America's largest companies. You cannot name a
U.S. company that is "too big" to change. We have achieved results in all areas
of concern of the National Conference of Catholic Bishops investment guidelines.
If you want a current detailed list of these guidelines, please contact us and
we will be happy to provide one to you. If you sit on the finance committee of a
Catholic organization, we have a "white paper" for you and your fellow committee
members to use to discuss your roles in good stewardship.
Thank you for investing with us.
Sincerely,
/s/ Frank Rauscher
Frank Rauscher
President and Treasurer
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FIXED INCOME FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 1999 (UNAUDITED)
PRINCIPAL
AMOUNT VALUE
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FIXED INCOME BONDS 96.9%
ASSET-BACKED SECURITIES 8.3%
$300,000 Amresco Residential Securities
Mortgage Loan Trust,
8.075%, 4/25/26 $310,116
425,000 Amresco Residential Securities
Mortgage Loan Trust,
7.615%, 3/25/27 426,062
350,000 Capital Auto Receivables Asset Trust,
5.68%, 8/15/04 345,563
143,575 Chase Manhattan Auto Owner Trust,
6.25%, 11/15/00 144,128
375,000 MBNA Master Credit Card Trust,
6.60%, 11/15/04 383,340
400,000 Nationslink Funding Corp.,
6.476%, 7/20/08 396,168
400,000 Olympic Auto Trust,
6.625%, 12/15/02 402,944
375,000 Providian Master Trust, 97-4A,
6.25%, 6/15/07 374,224
400,000 Prudential Securities Secured
Financing Corp.,
6.48%, 1/15/09 387,900
500,000 Saxon Asset Securities Trust 97-3 AF6,
6.73%, 2/25/27 494,275
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3,664,720
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CORPORATE BONDS 64.0%
525,000 Associates Corp. of North America,
7.75%, 2/15/05 547,559
450,000 Bank One Corp.,
6.00%, 2/17/09 415,647
400,000 Bear Stearns Corp.,
6.75%, 12/15/07 389,208
655,000 Bellsouth Capital Funding,
6.04%, 11/15/26 655,930
PRINCIPAL
AMOUNT VALUE
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CORPORATE BONDS 64.0% (CONT'D.)
$1,000,000 Burlington North Santa Fe,
6.10%, 2/27/27 $1,002,770
445,000 Citicorp, 8.00%, 2/1/03 464,491
1,275,000 Coca-Cola Enterprises, Inc.,
7.00%, 10/1/26 1,267,006
200,000 Coca-Cola Enterprises, Inc.,
6.75%, 9/15/28 186,032
600,000 Commercial Credit Co.,
7.875%, 2/1/25 628,110
420,000 Compania Telecom Chile,
7.625%, 7/15/06 397,669
400,000 Corporation Andina de Fomento,
7.10%, 2/1/03 393,816
1,300,000 Dayton Hudson Corp.,
5.895%, 6/15/37 1,300,585
800,000 Donaldson Lufkin Jenrette Securities
Corp., 5.625%, 2/15/16 789,528
350,000 El Paso Energy Corp.,
6.75%, 11/15/03 349,867
340,000 EOP Operating LP,
6.376%, 2/15/02 333,254
1,000,000 First Union Corp.,
7.50%, 4/15/35 1,044,990
400,000 Ford Motor Credit Co.,
6.375%, 2/1/29 347,888
629,000 General Electric Capital Corp.,
8.30%, 9/20/09 691,560
300,000 General Motors Acceptance Corp.,
5.95%, 3/14/03 293,001
600,000 General Motors Acceptance Corp.,
8.875%, 6/1/10 676,368
400,000 Global Marine, Inc.,
7.125%, 9/1/07 383,804
950,000 Grand Metropolitan Investment PLC,
7.45%, 4/15/35 980,324
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FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D.)
JUNE 30, 1999 (UNAUDITED)
PRINCIPAL
AMOUNT VALUE
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CORPORATE BONDS 64.0% (CONT'D.)
$950,000 Heller Financial, Inc.,
6.25%, 3/1/01 $950,342
1,000,000 Household Finance Corp.,
6.00%, 5/1/04 970,550
1,100,000 Hydro-Quebec,
8.05%, 7/7/24 1,188,759
800,000 IBM Corp.,
6.22%, 8/1/27 794,184
890,000 Lehman Brothers Hldg., Inc.,
8.80%, 3/1/15 963,888
400,000 Lockheed Martin Corp.,
6.85%, 5/15/01 402,716
1,030,000 Motorola, Inc.,
6.50%, 9/1/25 1,010,966
700,000 NationsBank Corp.,
8.57%, 11/15/24 789,523
790,000 New Jersey Bell Telephone Co.,
7.85%, 11/15/29 841,690
175,000 Occidental Petroleum,
8.45%, 2/15/29 183,829
1,125,000 Penney (J.C.) & Co., Inc.,
7.40%, 4/1/37 1,134,517
400,000 Rollins Truck Leasing Corp.,
7.00%, 3/15/01 401,012
350,000 Sprint Capital Corp.,
6.90%, 5/1/19 326,214
420,000 Tenneco, Inc.,
8.075%, 10/1/02 432,680
900,000 Transamerica Financial Corp.,
5.92%, 3/29/02 887,463
1,000,000 Wal-Mart Stores, Inc.,
5.85%, 6/1/00 1,001,320
1,030,000 WMX Technologies, Inc.,
6.65%, 5/15/05 1,034,305
300,000 WMX Technologies, Inc.,
7.10%, 8/1/26 304,719
PRINCIPAL
AMOUNT VALUE
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CORPORATE BONDS 64.0% (CONT'D.)
$1,175,000 Xerox Corp.,
5.875%, 6/15/37 $1,175,846
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28,333,930
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U.S. GOVERNMENT AGENCIES 7.4%
386,624 FHLMC, Pool 555316,
9.00%, 6/1/19 412,114
500,000 FMAC, Pool 2108-QA,
6.25%, 12/15/28 493,415
208,057 FNCI, Pool 323671,
8.00%, 8/1/12 214,299
380,000 FNMA, 6.00%, 5/15/08 369,793
200,000 FNR 1998-30B,
6.50%, 8/20/24 190,530
350,000 FNR 1998-17,
6.50%, 1/18/26 333,578
300,000 GNMA, 1998-22PD,
6.50%, 9/20/28 277,011
352,222 GN Platinum #780904,
9.50%, 7/15/18 379,628
600,000 Tennessee Valley Authority,
6.235%, 7/15/45 609,018
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3,279,386
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U.S. TREASURY OBLIGATIONS 17.2%
390,000 U.S. Treasury Bond,
8.875%, 8/15/17 497,812
70,000 U.S. Treasury Bond,
8.00%, 11/15/21 84,216
1,575,000 U.S. Treasury Note,
5.50%, 2/28/03 1,560,982
610,000 U.S. Treasury Note,
7.00%, 7/15/06 645,990
4,075,000 U.S. Treasury Note,
6.50%, 10/15/06 4,205,359
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FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D.)
JUNE 30, 1999 (UNAUDITED)
PRINCIPAL
AMOUNT VALUE
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U.S. TREASURY OBLIGATIONS 17.2% (CONT'D.)
$320,000 U.S. Treasury Note,
5.625%, 5/15/08 $313,328
270,000 U.S. Treasury Strips, 2/15/20 73,934
890,000 U.S. Treasury Strips, 11/15/21 222,180
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7,603,801
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Total Fixed Income Bonds
(cost $43,592,223) 42,881,837
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SHORT-TERM INVESTMENT 4.8%
2,146,435 UMB Bank, n.a., Money Market
Fiduciary, Demand Deposit, 3.45%
(cost $2,146,435) 2,146,435
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Total Investments 101.7%
(cost $45,738,658) 45,028,272
Liabilities, less
Other Assets (1.7%) (750,216)
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Net Assets 100.0% $44,278,056
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See notes to financial statements.
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EQUITY INCOME FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 1999 (UNAUDITED)
NUMBER
OF SHARES VALUE
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COMMON STOCKS 98.4%
APPAREL 1.1%
4,400 VF Corp. $188,100
20,000 The Warnaco Group, Inc. 535,000
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723,100
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AUTOMOTIVE AND RELATED
INDUSTRIES 4.5%
30,400 Dana Corp. 1,400,300
16,500 Federal-Mogul Corp. 858,000
12,400 Ford Motor Co. 699,825
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2,958,125
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BANKING 7.6%
18,400 First Union Corp. 864,800
6,000 Morgan (J.P.) & Co., Inc. 843,000
13,500 PNC Bank Corp. 777,938
12,700 Republic New York Corp. 865,981
36,000 Union Planters Corp. 1,608,750
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4,960,469
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BREWERIES 1.1%
10,100 Anheuser-Busch Cos., Inc. 716,469
---------
BUILDING MATERIALS 1.2%
13,400 Armstrong World Industries, Inc. 774,688
---------
BUSINESS SERVICES 1.4%
18,700 First Data Corp. 915,131
---------
CHEMICALS 4.1%
39,700 B. F. Goodrich Co. 1,687,250
25,100 Hercules, Inc. 986,744
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2,673,994
---------
COMPUTER SERVICES 1.3%
15,100 Electronic Data Systems Corp. 854,093
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NUMBER
OF SHARES VALUE
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CONSUMER PRODUCTS 5.5%
28,800 American Greetings Corp., Class A $867,600
9,800 Eastman Kodak Co. 663,950
27,600 Whirlpool Corp. 2,042,400
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3,573,950
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DIVERSIFIED 1.2%
31,500 Tenneco, Inc. 752,062
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ELECTRIC UTILITIES 6.6%
48,800 American Power Conversion Corp.<F1> 982,100
30,000 Central & South West Corp. 701,250
22,800 Constellation Energy Group 675,450
18,200 DTE Energy Co. 728,000
8,810 Duke Energy Corp. 479,044
18,600 Public Service Enterprise Group, Inc. 760,275
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4,326,119
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ELECTRICAL PRODUCTS 1.1%
16,500 Hubbell, Inc., Class B 748,688
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FINANCIAL SERVICES 5.5%
21,300 A.G. Edwards, Inc. 686,925
14,900 Household International, Inc. 705,888
24,400 KeyCorp 783,850
8,800 Marsh & McLennan Cos., Inc. 664,400
16,890 SLM Holding Corp. 773,772
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3,614,835
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FOOD 2.4%
34,200 Supervalu, Inc. 878,513
24,100 Sysco Corp. 718,481
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1,596,994
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FORESTRY 1.1%
29,200 Georgia-Pacific Corp.
(Timber Group) 737,300
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EQUITY INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D.)
JUNE 30, 1999 (UNAUDITED)
NUMBER
OF SHARES VALUE
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HEALTH CARE PRODUCTS 2.1%
9,700 Baxter International, Inc. $588,063
21,700 Mallinckrodt, Inc. 789,337
---------
1,377,400
---------
HOSPITAL MANAGEMENT AND
SERVICES 0.7%
23,200 Tenet Healthcare Corp.<F1> 430,650
---------
HOUSEHOLD PRODUCTS 0.9%
13,200 Newell Rubbermaid, Inc. 613,800
---------
INSURANCE 3.6%
20,600 The Allstate Corp. 739,025
13,700 MBIA, Inc. 887,075
20,200 Ohio Casualty Corp. 729,725
---------
2,355,825
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MACHINERY AND EQUIPMENT 1.2%
19,600 Deere & Co. 776,650
---------
MANUFACTURING 0.2%
2,300 Ingersoll-Rand Co. 148,637
---------
NATURAL GAS UTILITIES 3.9%
28,300 El Paso Energy Corp. 995,806
20,600 NICOR, Inc. 784,088
20,000 Peoples Energy Corp. 753,750
---------
2,533,644
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OFFICE EQUIPMENT 1.8%
29,800 Harris Corp. 1,167,787
---------
OIL AND GAS 10.8%
25,692 Burlington Resources, Inc. 1,111,179
17,000 EVI Weatherford, Inc.<F1> 622,625
17,800 Kerr-McGee Corp. 893,337
7,800 Mobil Corp. 772,200
41,700 Repsol SA-ADR 847,031
NUMBER
OF SHARES VALUE
--------- -----
OIL AND GAS 10.8% (CONT'D.)
13,700 Royal Dutch Petroleum Co. $825,425
32,200 Ultramar Diamond Shamrock Corp. 702,363
26,600 USX-Marathon Group 866,162
10,000 Williams Cos., Inc. 425,625
---------
7,065,947
---------
PAPER AND PAPER PRODUCTS 4.1%
11,600 Bowater, Inc. 548,100
14,200 Champion International Corp. 679,825
12,700 Kimberly-Clark Corp. 723,900
26,000 Westvaco Corp. 754,000
---------
2,705,825
---------
PRINTING AND PUBLISHING 2.1%
21,100 Deluxe Corp. 821,581
14,300 Donnelley (R.R.) & Sons Co. 529,994
---------
1,351,575
---------
REAL ESTATE 1.1%
48,000 HRPT Properties Trust 735,000
---------
RETAIL 1.2%
15,800 Penney (J.C.) Co., Inc. 767,288
---------
SEMICONDUCTORS 1.1%
11,900 Intel Corp. 708,050
---------
STEEL AND IRON 2.0%
48,200 USX-U.S. Steel Group, Inc. 1,301,400
---------
TECHNOLOGY 0.7%
22,000 Pall Corp. 488,125
---------
TELECOMMUNICATIONS 7.6%
9,200 Ameritech Corp. 676,200
12,600 Bell Atlantic Corp. 823,725
24,800 GTE Corp. 1,877,050
26,200 Newbridge Networks Corp.<F1> 753,250
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EQUITY INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D.)
JUNE 30, 1999 (UNAUDITED)
NUMBER
OF SHARES VALUE
---------- -----
TELECOMMUNICATIONS 7.6% (CONT'D.)
14,100 US West Communications Group $828,375
---------
4,958,600
---------
TEXTILES 1.4%
21,000 Springs Industries, Inc., Class A 916,125
---------
TOBACCO PRODUCTS 2.2%
23,933 R.J. Reynolds Tobacco Holdings, Inc.<F1> 753,890
24,500 UST, Inc. 716,625
---------
1,470,515
---------
TRANSPORTATION 1.2%
20,000 GATX Corp. 761,250
---------
WASTE DISPOSAL 2.8%
22,600 Browning-Ferris Industries, Inc. 971,800
15,860 Waste Management, Inc. 852,475
---------
1,824,275
---------
Total Common Stocks
(cost $55,430,672) 64,384,385
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PRINCIPAL
AMOUNT VALUE
------ -----
CONVERTIBLE BONDS 0.9%
$610,000 Quantum Corp.,
7.00%, 8/1/04
(cost $610,000) $579,500
---------
SHORT-TERM INVESTMENT 0.8%
518,872 UMB Bank, n.a., Money Market
Fiduciary, Demand Deposit, 3.45%
(cost $518,872) 518,872
---------
Total Investments 100.1%
(cost $56,559,544) 65,482,757
Liabilities, less
Other Assets (0.1%) (27,588)
---------
Net Assets 100.0% $65,455,169
===========
<F1>Non-income producing security
See notes to financial statements.
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EQUITY GROWTH FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 1999 (UNAUDITED)
NUMBER
OF SHARES VALUE
---------- -----
COMMON STOCKS 95.9%
ADVERTISING 0.8%
5,000 Omnicom Group, Inc. $400,000
----------
APPAREL 0.4%
3,000 NIKE, Inc., Class B 189,937
----------
BANKING 4.3%
8,300 The Bank of New York Co., Inc. 304,506
3,900 Bank One Corp. 232,294
20,295 Charter One Financial, Inc. 564,455
5,700 Chase Manhattan Corp. 493,762
5,600 Mercantile Bancorporation, Inc. 319,900
3,100 Northern Trust Corp. 300,700
----------
2,215,617
----------
BEVERAGES 0.4%
9,000 The Pepsi Bottling Group, Inc. 207,562
----------
BIOTECHNOLOGY 1.3%
8,000 Biogen, Inc.<F1> 514,500
3,400 Genzyme Corp. <F1> 164,903
----------
679,403
----------
BUSINESS SERVICES 6.7%
19,000 Concord EFS, Inc.<F1> 803,937
12,400 CSG Systems International, Inc.<F1> 324,725
24,050 Fiserv, Inc.<F1> 753,066
11,900 Iron Mountain, Inc.<F1> 340,637
12,600 The Metzler Group, Inc.<F1> 348,075
16,627 NOVA Corp.<F1> 415,675
13,562 Paychex, Inc. 432,289
----------
3,418,404
----------
COMMUNICATIONS 0.3%
2,300 ALLTEL Corp. 164,450
----------
NUMBER
OF SHARES VALUE
--------- -----
COMPUTER PRODUCTS 3.2%
9,000 Cisco Systems, Inc.<F1> $578,812
9,000 EMC Corp.<F1> 495,000
7,100 Great Plains Software, Inc.<F1> 335,031
1,700 International Business
Machines Corp. 219,725
----------
1,628,568
----------
COMPUTER SERVICES 6.1%
13,700 Affiliated Computer Services, Inc.<F1> 693,563
1,800 America Online, Inc.<F1> 198,900
8,800 Automatic Data Processing, Inc. 387,200
400 Infoseek Corp.<F1> 19,175
3,800 Network Solutions, Inc.<F1> 300,675
18,400 Sungard Data Systems, Inc.<F1> 634,800
11,700 Transaction Systems Architects, Inc.<F1> 456,300
10,600 Unisys Corp.<F1> 412,738
----------
3,103,351
----------
COMPUTER SOFTWARE 2.2%
12,700 Microsoft Corp.<F1> 1,145,381
----------
CONSUMER GOODS 0.8%
7,700 Avon Products, Inc. 427,350
----------
DIVERSIFIED 1.1%
3,000 AlliedSignal, Inc. 189,000
4,900 Corning, Inc. 343,612
----------
532,612
----------
DRUGS 3.3%
20,700 Dura Pharmaceuticals, Inc.<F1> 247,106
9,500 Jones Pharma, Inc. 374,063
5,200 Merck & Co., Inc. 384,800
2,100 Pfizer, Inc. 230,475
9,100 Schering-Plough Corp. 482,300
----------
1,718,744
----------
(LOGO)
AQUINAS FUNDS
- -----------------------------------------------------------------------------
EQUITY GROWTH FUND
SCHEDULE OF INVESTMENTS (CONT'D.)
JUNE 30, 1999 (UNAUDITED)
NUMBER
OF SHARES VALUE
--------- -----
ELECTRICAL PRODUCTS 2.3%
12,800 ANTEC Corp.<F1> $410,400
5,900 Conexant Systems, Inc.<F1> 342,569
7,100 Harmonic Lightwaves, Inc.<F1> 407,806
----------
1,160,775
----------
ELECTRONICS 2.0%
8,000 General Electric Co. 904,000
1,800 Sanmina Corp.<F1> 136,575
----------
1,040,575
----------
ENTERTAINMENT 1.4%
7,800 Carnival Corp. 378,300
3,400 Time Warner, Inc. 244,800
3,000 Walt Disney (The) Co. 92,438
----------
715,538
----------
FINANCIAL SERVICES 7.0%
2,600 American Express Co. 338,325
17,200 AmeriCredit Corp.<F1> 275,200
3,800 Federal National Mortgage Assn. 259,825
7,700 Finova Group, Inc. 405,213
14,000 HealthCare Financial Partners, Inc.<F1> 479,500
3,200 Knight/Trimark Group, Inc., Class A<F1> 193,000
3,400 Marsh & McLennan Cos., Inc. 256,700
15,832 Metris Cos., Inc. 645,154
2,700 Morgan Stanley Dean Witter & Co. 276,750
4,900 Providian Financial Corp. 458,150
----------
3,587,817
----------
FOOD 1.4%
12,600 The Kroger Co. 352,012
7,800 Safeway, Inc.<F1> 386,100
----------
738,112
----------
HEALTH CARE PRODUCTS 3.7%
9,200 Abbott Laboratories 418,600
5,000 Biomet, Inc. 198,750
7,425 Cardinal Health, Inc. 476,128
NUMBER
OF SHARES VALUE
--------- -----
HEALTH CARE PRODUCTS 3.7% (CONT'D.)
4,400 Guidant Corp. $226,325
3,300 Medtronic, Inc. 256,988
12,000 Mylan Laboratories, Inc. 318,000
----------
1,894,791
----------
HEALTH CARE SERVICES 1.1%
6,800 Wellpoint Health Networks, Inc.<F1> 577,150
----------
HOME FURNISHINGS 1.0%
8,800 Furniture Brands International, Inc.<F1> 245,300
8,700 WestPoint Stevens, Inc.<F1> 259,369
----------
504,669
----------
HOUSEHOLD PRODUCTS 1.0%
1,300 Clorox Co. 138,856
3,600 Procter & Gamble Co. 321,300
2,200 Williams-Sonoma, Inc.<F1> 76,588
----------
536,744
----------
INSURANCE 1.8%
5,061 American International Group, Inc. 592,453
1,700 CIGNA Corp. 151,300
4,100 MGIC Investment Corp. 192,188
----------
935,941
----------
MACHINERY AND EQUIPMENT 0.9%
9,000 PACCAR, Inc. 480,375
----------
MANUFACTURING 3.8%
11,000 Danaher Corp. 639,375
13,800 Gentex Corp.<F1> 386,400
5,600 Tyco International Ltd. 530,600
7,600 Waters Corp.<F1> 403,750
----------
1,960,125
----------
MEDIA 7.0%
15,000 American Tower Corp. 360,000
9,100 Capstar Broadcasting Corp.<F1> 249,113
(LOGO)
AQUINAS FUNDS
- -------------------------------------------------------------------------------
EQUITY GROWTH FUND
SCHEDULE OF INVESTMENTS (CONT'D.)
JUNE 30, 1999 (UNAUDITED)
NUMBER
OF SHARES VALUE
--------- -----
MEDIA 7.0% (CONT'D.)
15,200 Clear Channel
Communications, Inc.<F1> $1,047,850
13,100 Infinity Broadcasting Corp.<F1> 389,725
27,780 Outdoor Systems, Inc.<F1> 1,013,970
8,000 SFX Entertainment, Inc.<F1> 532,500
----------
3,593,158
----------
OFFICE EQUIPMENT 0.7%
5,700 Pitney Bowes, Inc. 366,225
----------
OIL AND GAS 2.2%
8,600 Apache Corp. 335,400
6,600 The Coastal Corp. 264,000
9,700 Vastar Resources, Inc. 508,644
----------
1,108,044
----------
RESTAURANTS 3.0%
19,000 Brinker International, Inc.<F1> 516,562
11,100 McDonald's Corp. 458,569
14,700 Starbucks Corp.<F1> 552,169
----------
1,527,300
----------
RETAIL 12.2%
5,750 99 Cents Only Stores<F1> 287,141
3,000 Abercrombie & Fitch Co.<F1> 144,000
12,900 Bed Bath and Beyond, Inc.<F1> 496,650
22,600 BJ's Wholesale Club, Inc.<F1> 679,413
4,900 Costco Cos., Inc.<F1> 392,306
15,700 CSK Auto Corp.<F1> 423,900
3,800 Dayton Hudson Corp. 247,000
10,100 Dollar Tree Stores, Inc.<F1> 444,400
10,100 Family Dollar Stores, Inc. 242,400
5,600 Federated Department Stores, Inc.<F1> 296,450
10,000 Home Depot, Inc. 644,375
2,500 Kohl's Corp.<F1> 192,969
6,400 Linens 'n Things, Inc.<F1> 280,000
7,900 Ross Stores, Inc. 397,962
NUMBER
OF SHARES VALUE
--------- -----
RETAIL 12.2% (CONT'D.)
6,650 Staples, Inc.<F1> $205,734
18,200 Tandy Corp. 889,525
----------
6,264,225
----------
SEMICONDUCTORS 2.9%
6,500 Altera Corp.<F1> 239,281
6,200 Intel Corp. 368,900
2,600 Texas Instruments, Inc. 377,000
7,500 Vitesse Semiconductor Corp.<F1> 505,781
----------
1,490,962
----------
TELECOMMUNICATIONS 9.0%
16,100 ADC Telecommunications, Inc.<F1> 733,556
8,350 AT&T Corp. 466,034
21,300 General Instrument Corp.<F1> 905,250
6,400 Lucent Technologies, Inc. 431,600
6,100 MCI WorldCom, Inc.<F1> 526,125
4,100 Nokia Corp. ADR 375,406
5,500 Qwest Communications
International, Inc.<F1> 181,844
9,100 SBC Communications, Inc. 527,800
13,600 Scientific-Atlanta, Inc. 489,600
----------
4,637,215
----------
WASTE DISPOSAL 0.6%
6,100 Waste Management, Inc. 327,875
----------
Total Common Stock
(cost $36,428,948) 49,278,995
----------
(LOGO)
AQUINAS FUNDS
- -----------------------------------------------------------------------------
EQUITY GROWTH FUND
SCHEDULE OF INVESTMENTS (CONT'D.)
JUNE 30, 1999 (UNAUDITED)
PRINCIPAL
AMOUNT VALUE
------ -----
SHORT-TERM INVESTMENT 3.6%
$1,871,032 UMB Bank, n.a., Money Market
Fiduciary, Demand Deposit, 3.45% $1,871,032
(cost $1,871,032) ----------
Total Investments 99.5%
(cost $38,299,980) 51,150,027
Other Assets
less Liabilities 0.5% 266,078
----------
Net Assets 100.0% $51,416,105
===========
<F1>Non-income producing security
See notes to financial statements.
(LOGO)
AQUINAS FUNDS
- ------------------------------------------------------------------------------
BALANCED FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 1999 (UNAUDITED)
NUMBER
OF SHARES VALUE
---------- -----
COMMON STOCKS 60.2%
APPAREL 0.4%
700 VF Corp. $29,925
2,800 The Warnaco Group, Inc. 74,900
---------
104,825
---------
AUTOMOTIVE AND RELATED
INDUSTRIES 1.5%
2,500 Dana Corp. 115,156
2,500 Federal-Mogul Corp. 130,000
2,100 Ford Motor Co. 118,519
---------
363,675
---------
BANKING 3.9%
3,860 Charter One Financial, Inc. 107,356
3,000 First Union Corp. 141,000
1,100 Mercantile Bancorporation, Inc. 62,837
1,000 Morgan (J.P.) & Co., Inc. 140,500
2,300 PNC Bank Corp. 132,538
2,100 Republic New York Corp. 143,194
6,100 Union Planters Corp. 272,594
---------
1,000,019
---------
BREWERIES 0.5%
1,800 Anheuser-Busch Cos., Inc. 127,688
---------
BUILDING MATERIALS 0.5%
2,100 Armstrong World Industries, Inc. 121,406
---------
BUSINESS SERVICES 2.9%
3,100 Concord EFS, Inc.<F1> 131,169
2,400 CSG Systems International, Inc.<F1> 62,850
2,450 First Data Corp. 119,897
3,500 Fiserv, Inc.<F1> 109,594
2,400 Iron Mountain, Inc.<F1> 68,700
2,500 The Metzler Group, Inc.<F1> 69,062
3,317 NOVA Corp.<F1> 82,925
NUMBER
OF SHARES VALUE
--------- -----
BUSINESS SERVICES 2.9% (CONT'D.)
2,773 Paychex, Inc. $88,389
---------
732,586
---------
CHEMICALS 1.6%
6,400 B. F. Goodrich Co. 272,000
3,500 Hercules, Inc. 137,594
---------
409,594
COMPUTER PRODUCTS 0.3%
1,400 Great Plains Software, Inc.<F1> 66,062
---------
COMPUTER SERVICES 2.2%
2,800 Affiliated Computer Services, Inc.<F1> 141,750
2,200 Electronic Data Systems Corp. 124,437
800 Network Solutions, Inc.<F1> 63,300
3,600 Sungard Data Systems, Inc.<F1> 124,200
2,300 Transaction Systems Architects, Inc.<F1> 89,700
---------
543,387
---------
CONSUMER PRODUCTS 2.1%
4,900 American Greetings Corp., Class A 147,613
1,700 Eastman Kodak Co. 115,175
3,600 Whirlpool Corp. 266,400
---------
529,188
---------
CONSUMER SERVICES 0.3%
3,368 Jostens, Inc. 70,939
---------
DIVERSIFIED 0.5%
5,500 Tenneco, Inc. 131,312
---------
DRUGS 0.5%
4,200 Dura Pharmaceuticals, Inc.<F1> 50,137
1,900 Jones Pharma, Inc. 74,813
---------
124,950
---------
ELECTRIC UTILITIES 3.0%
5,800 American Power Conversion Corp.<F1> 116,725
(LOGO)
AQUINAS FUNDS
- -------------------------------------------------------------------------------
BALANCED FUND
SCHEDULE OF INVESTMENTS (CONT'D.)
JUNE 30, 1999 (UNAUDITED)
NUMBER
OF SHARES VALUE
--------- -----
ELECTRIC UTILITIES 3.0% (CONT'D.)
5,100 Central & South West Corp. $119,212
4,100 Constellation Energy Group 121,463
3,100 DTE Energy Co. 124,000
1,586 Duke Energy Corp. 86,239
2,700 Edison International 72,225
3,100 Public Service Enterprise Group, Inc. 126,713
---------
766,577
---------
ELECTRICAL PRODUCTS 1.4%
2,900 ANTEC Corp.<F1> 92,981
1,200 Conexant Systems, Inc.<F1> 69,675
1,400 Harmonic Lightwaves, Inc.<F1> 80,412
2,700 Hubbell, Inc., Class B 122,513
---------
365,581
---------
FINANCIAL SERVICES 4.1%
3,600 A.G. Edwards, Inc. 116,100
4,100 AmeriCredit Corp.<F1> 65,600
1,500 Finova Group, Inc. 78,937
2,600 HealthCare Financial Partners, Inc.<F1> 89,050
2,300 Household International, Inc. 108,962
4,100 KeyCorp 131,713
600 Knight/Trimark Group, Inc., Class A<F1> 36,188
1,300 Marsh & McLennan Cos., Inc. 98,150
3,192 Metris Cos., Inc. 130,074
1,000 Providian Financial Corp. 93,500
2,000 SLM Holding Corp. 91,625
---------
1,039,899
---------
FOOD 0.8%
5,200 Supervalu, Inc. 133,575
2,400 Sysco Corp. 71,550
---------
205,125
---------
FORESTRY 0.5%
4,900 Georgia-Pacific Corp.
(Timber Group) 123,725
---------
NUMBER
OF SHARES VALUE
--------- -----
HEALTH CARE PRODUCTS 1.2%
1,900 Baxter International, Inc. $115,187
3,700 Mallinckrodt, Inc. 134,587
2,400 Mylan Laboratories, Inc. 63,600
---------
313,374
---------
HEALTH CARE SERVICES 0.3%
1,000 Wellpoint Health Networks, Inc.<F1> 84,875
---------
HOME FURNISHINGS 0.4%
1,900 Furniture Brands International, Inc.<F1> 52,963
1,700 WestPoint Stevens, Inc.<F1> 50,681
---------
103,644
---------
HOSPITAL MANAGEMENT
AND SERVICES 0.3%
4,100 Tenet Healthcare Corp.<F1> 76,106
---------
HOUSEHOLD PRODUCTS 0.4%
2,000 Newell Rubbermaid, Inc. 93,000
400 Williams-Sonoma, Inc.<F1> 13,925
---------
106,925
---------
INSURANCE 1.5%
3,000 The Allstate Corp. 107,625
1,800 MBIA, Inc. 116,550
800 MGIC Investment Corp. 37,500
3,400 Ohio Casualty Corp. 122,825
---------
384,500
---------
MACHINERY AND EQUIPMENT 0.9%
3,200 Deere & Co. 126,800
1,700 PACCAR, Inc. 90,737
---------
217,537
---------
MANUFACTURING 1.5%
2,200 Danaher Corp. 127,875
3,500 Gentex Corp.<F1> 98,000
1,200 Ingersoll-Rand Co. 77,550
(LOGO)
AQUINAS FUNDS
- --------------------------------------------------------------------------------
BALANCED FUND
SCHEDULE OF INVESTMENTS (CONT'D.)
JUNE 30, 1999 (UNAUDITED)
NUMBER
OF SHARES VALUE
--------- -----
MANUFACTURING 1.5% (CONT'D.)
1,400 Waters Corp.<F1> $74,375
---------
377,800
---------
MEDIA 2.5%
3,100 American Tower Corp. 74,400
2,200 Capstar Broadcasting Corp.<F1> 60,225
2,200 Clear Channel Communications, Inc.<F1> 151,663
2,700 Infinity Broadcasting Corp.<F1> 80,325
4,168 Outdoor Systems, Inc.<F1> 152,132
1,600 SFX Entertainment, Inc.<F1> 106,500
---------
625,245
---------
NATURAL GAS UTILITIES 1.5%
3,100 El Paso Energy Corp. 109,081
3,500 NICOR, Inc. 133,219
3,400 Peoples Energy Corp. 128,137
---------
370,437
---------
OFFICE EQUIPMENT 0.8%
4,900 Harris Corp. 192,019
---------
OIL AND GAS 4.9%
1,700 Apache Corp. 66,300
2,560 Burlington Resources, Inc. 110,720
1,300 The Coastal Corp. 52,000
4,000 EVI Weatherford, Inc.<F1> 146,500
2,900 Kerr-McGee Corp. 145,544
1,200 Mobil Corp. 118,800
6,400 Repsol SA-ADR 130,000
1,300 Royal Dutch Petroleum Co. 78,325
5,400 Ultramar Diamond Shamrock Corp. 117,787
4,300 USX-Marathon Group 140,019
1,900 Vastar Resources, Inc. 99,631
600 Williams Cos., Inc. 25,538
---------
1,231,164
---------
NUMBER
OF SHARES VALUE
--------- -----
PAPER AND PAPER PRODUCTS 1.7%
2,100 Bowater, Inc. $99,225
1,800 Champion International Corp. 86,175
2,100 Kimberly-Clark Corp. 119,700
4,000 Westvaco Corp. 116,000
---------
421,100
---------
PRINTING AND PUBLISHING 0.8%
3,600 Deluxe Corp. 140,175
2,100 Donnelley (R.R.) & Sons Co. 77,831
---------
218,006
---------
REAL ESTATE 0.5%
8,000 HRPT Properties Trust 122,500
---------
RESTAURANTS 0.6%
3,400 Brinker International, Inc.<F1> 92,438
1,700 Starbucks Corp.<F1> 63,856
---------
156,294
---------
RETAIL 3.7%
1,125 99 Cents Only Stores<F1> 56,180
600 Abercrombie & Fitch Co.<F1> 28,800
2,500 Bed Bath and Beyond, Inc.<F1> 96,250
4,800 BJ's Wholesale Club, Inc.<F1> 144,300
3,100 CSK Auto Corp.<F1> 83,700
2,000 Dollar Tree Stores, Inc.<F1> 88,000
1,400 Linens 'n Things, Inc.<F1> 61,250
2,500 Penney (J.C.) Co., Inc. 121,406
1,600 Ross Stores, Inc. 80,600
3,600 Tandy Corp. 175,950
---------
936,436
---------
SEMICONDUCTORS 0.7%
2,200 Intel Corp. 130,900
600 Vitesse Semiconductor Corp.<F1> 40,462
---------
171,362
---------
(LOGO)
AQUINAS FUNDS
- -------------------------------------------------------------------------------
BALANCED FUND
SCHEDULE OF INVESTMENTS (CONT'D.)
JUNE 30, 1999 (UNAUDITED)
NUMBER
OF SHARES VALUE
--------- -----
STEEL AND IRON 0.8%
8,000 USX-U.S. Steel Group, Inc. $216,000
---------
TECHNOLOGY 0.2%
2,900 Pall Corp. 64,344
---------
TELECOMMUNICATIONS 4.6%
3,200 ADC Telecommunications, Inc.<F1> 145,800
1,400 Ameritech Corp. 102,900
2,100 Bell Atlantic Corp. 137,288
2,900 General Instrument Corp.<F1> 123,250
3,900 GTE Corp. 295,181
4,000 Newbridge Networks Corp.<F1> 115,000
2,700 Scientific-Atlanta, Inc. 97,200
2,400 US West Communications Group 141,000
---------
1,157,619
---------
TEXTILES 0.6%
3,400 Springs Industries, Inc., Class A 148,325
---------
TOBACCO PRODUCTS 1.0%
4,066 R.J. Reynolds Tobacco Holdings, Inc.<F1> 128,079
4,100 UST, Inc. 119,925
---------
248,004
---------
TRANSPORTATION 0.5%
3,400 GATX Corp. 129,413
---------
WASTE DISPOSAL 1.3%
3,700 Browning-Ferris Industries, Inc. 159,100
3,400 Waste Management, Inc. 182,750
---------
341,850
---------
Total Common Stocks
(cost $12,793,133) 15,241,417
---------
PRINCIPAL
AMOUNT VALUE
------- -----
FIXED INCOME BONDS 37.8%
ASSET-BACKED SECURITIES 2.6%
$150,000 Amresco Residential Securities
Mortgage Loan Trust,
7.615%, 3/25/27 $150,375
125,000 Olympic Auto Trust,
6.625%, 12/15/02 125,920
125,000 Providian Master Trust 97-4A,
6.25%, 6/15/07 124,741
100,000 Saxon Asset Securities Trust 97-3
AF6, 6.73%, 2/25/27 98,855
149,367 World Omni Auto Lease Securitization,
6.18%, 11/25/03 148,786
---------
648,677
---------
CORPORATE BONDS 23.8%
225,000 Associates Corp. of North America,
7.75%, 2/15/05 234,668
120,000 Bear Stearns Corp.,
6.75%, 12/15/07 116,762
150,000 Bellsouth Capital Funding,
6.04%, 11/15/26 150,213
300,000 Burlington North Santa Fe,
6.10%, 2/27/27 300,831
281,000 Coca-Cola Enterprises, Inc.,
7.00%, 10/1/26 279,238
100,000 Coca-Cola Enterprises, Inc.,
6.75%, 9/15/28 93,016
130,000 Commercial Credit Co.,
7.875%, 2/1/25 136,091
120,000 Compania Telecom Chile,
7.625%, 7/15/06 113,620
100,000 Corporation Andina de Fomento,
7.10%, 2/1/03 98,454
265,000 Dayton Hudson Corp.,
5.895%, 6/15/37 265,119
300,000 Donaldson Lufkin Jenrette Securities
Corp., 5.625%, 2/15/16 296,073
(LOGO)
AQUINAS FUNDS
- ------------------------------------------------------------------------------
BALANCED FUND
SCHEDULE OF INVESTMENTS (CONT'D.)
JUNE 30, 1999 (UNAUDITED)
PRINCIPAL
AMOUNT VALUE
------- -----
CORPORATE BONDS 23.8% (CONT'D.)
$100,000 El Paso Energy Corp.,
6.75%, 11/15/03 $99,962
100,000 EOP Operating LP,
6.375%, 1/15/02 98,257
245,000 First Union Corp.,
7.50%, 4/15/35 256,023
200,000 General Electric Capital Corp.,
8.30%, 9/20/09 219,892
150,000 General Motors Acceptance Corp.,
8.875%, 6/1/10 169,092
100,000 Global Marine, Inc.,
7.125%, 9/1/07 95,951
225,000 Grand Metropolitan Investment PLC,
7.45%, 4/15/35 232,182
250,000 Household Finance Corp.,
6.00%, 5/1/04 242,637
250,000 Hydro-Quebec,
8.05%, 7/7/24 270,173
255,000 Lehman Brothers Hldg., Inc.,
8.80%, 3/1/15 276,170
120,000 Lockheed Martin Corp.,
6.85%, 5/15/01 120,815
250,000 Motorola, Inc.,
6.50%, 9/1/25 245,380
150,000 NationsBank Corp.,
8.57%, 11/15/24 169,183
210,000 New Jersey Bell Telephone Co.,
7.85%, 11/15/29 223,740
60,000 Norfolk Southern Corp.,
6.95%, 5/1/02 60,570
250,000 Penney (J.C.) & Co., Inc.,
7.40%, 4/1/37 252,115
150,000 Rollins Truck Leasing Corp.,
7.00%, 3/15/01 150,380
100,000 Salomon, Inc.,
7.30%, 5/15/02 102,331
PRINCIPAL
AMOUNT VALUE
------ -----
CORPORATE BONDS 23.8% (CONT'D.)
$130,000 Tenneco, Inc.,
8.075%, 10/1/02 $133,925
50,000 WMX Technologies, Inc.,
6.65%, 5/15/05 50,209
250,000 WMX Technologies, Inc.,
7.10%, 8/1/26 253,932
210,000 Xerox Corp.,
5.90%, 5/5/37 209,929
---------
6,016,933
---------
U.S. GOVERNMENT AGENCIES 3.4%
132,557 FHLMC, Pool 555316,
9.00%, 6/01/19 141,296
175,294 FNCI, Pool 313049,
8.50%, 8/1/11 181,702
140,000 FNCL, 30 Year TBA,
7.00%, 8/15/29 138,337
100,000 FNR 1998-17,
6.50%, 1/18/26 95,308
3,862 GNMA, Pool 031096,
9.50%, 6/15/09 4,160
78,271 GNMA, Pool 780904,
9.50%, 7/15/18 84,362
80,000 GNMA 1998-22 PD,
6.50%, 9/20/28 73,870
150,000 Tennessee Valley Authority,
6.235%, 7/15/45 152,254
---------
871,289
---------
U.S. TREASURY OBLIGATIONS 8.0%
35,000 U.S. Treasury Bond,
8.875%, 8/15/17 44,675
50,000 U.S. Treasury Bond,
8.00%, 11/15/21 60,154
130,000 U.S. Treasury Note,
6.00%, 8/15/99 130,179
(LOGO)
AQUINAS FUNDS
- -------------------------------------------------------------------------------
BALANCED FUND
SCHEDULE OF INVESTMENTS (CONT'D.)
JUNE 30, 1999 (UNAUDITED)
PRINCIPAL
AMOUNT VALUE
------ -----
U.S. TREASURY OBLIGATIONS 8.0% (CONT'D.)
$200,000 U.S. Treasury Note,
6.25%, 6/30/02 $202,936
625,000 U.S. Treasury Note,
5.50%, 2/28/03 619,438
30,000 U.S. Treasury Note,
7.00%, 7/15/06 31,770
740,000 U.S. Treasury Note,
6.50%, 10/15/06 763,673
720,000 U.S. Treasury Strips, 11/15/21 179,741
---------
2,032,566
---------
Total Fixed Income Bonds
(cost $9,693,117) 9,569,465
---------
SHORT-TERM INVESTMENT 3.2%
804,378 UMB Bank, n.a., Money Market
Fiduciary, Demand Deposit, 3.45%
(cost $804,378) 804,378
---------
Total Investments 101.2%
(cost $23,290,628) 25,615,260
Liabilities less
Other Assets (1.2)% (299,192)
---------
Net Assets 100.0% $25,316,068
===========
<F1>Non-income producing security
See notes to financial statements.
(LOGO)
AQUINAS FUNDS
- ------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
FIXED INCOME EQUITY INCOME EQUITY GROWTH BALANCED
FUND FUND FUND FUND
----- ----- ----- -----
<S> <C> <C> <C> <C>
ASSETS:
Investments at value (cost $45,738,658,
$56,559,544, $38,299,980 and
$23,290,628, respectively) $45,028,272 $65,482,757 $51,150,027 $25,615,260
Interest and dividends receivable 669,818 190,759 25,758 188,007
Cash 3,995 - - 4,221
Receivable for securities sold 40,359 748,177 561,578 201,852
Prepaid expenses 14,702 18,091 13,628 7,241
------------ ------------ ------------ ------------
Total Assets 45,757,146 66,439,784 51,750,991 26,016,581
------------ ------------ ------------ ------------
LIABILITIES:
Payable for securities purchased 1,227,004 586,457 239,194 525,574
Dividend payable 213,673 253,786 - 137,468
Accrued expenses 17,516 90,152 55,092 16,661
Accrued investment advisory fee 20,897 54,220 40,600 20,810
------------ ------------ ------------ ------------
Total Liabilities 1,479,090 984,615 334,886 700,513
------------ ------------ ------------ ------------
NET ASSETS $44,278,056 $65,455,169 $51,416,105 $25,316,068
============ =========== ============ ===========
NET ASSETS CONSIST OF:
Capital stock $455 $458 $275 $217
Paid-in capital in excess of par 45,174,456 49,228,789 35,154,532 20,772,242
Undistributed net investment income 15,008 827 - 119
Undistributed net realized gain (loss)
on investments (201,477) 7,301,882 3,411,251 2,218,858
Net unrealized appreciation (depreciation)
on investments (710,386) 8,923,213 12,850,047 2,324,632
------------ ------------ ------------ ------------
NET ASSETS $44,278,056 $65,455,169 $51,416,105 $25,316,068
============ =========== =========== ===========
CAPITAL STOCK, $.0001 par value:
Authorized 125,000,000 125,000,000 125,000,000 125,000,000
Issued and outstanding 4,546,231 4,579,316 2,750,289 2,166,898
NET ASSET VALUE,
REDEMPTION PRICE AND
OFFERING PRICE PER SHARE $9.74 $14.29 $18.69 $11.68
===== ====== ====== ======
</TABLE>
(LOGO)
AQUINAS FUNDS
- -----------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FIXED INCOME EQUITY INCOME
FUND FUND
----- -----
Six Months Six Months
ended Year ended Year
June 30, 1999 ended June 30, 1999 ended
(Unaudited) Dec. 31, 1998 (Unaudited) Dec. 31, 1998
------------ -------------- ----------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $1,131,293 $2,038,548 $507,640 $973,561
Net realized gain (loss) on investments (219,977) 775,207 6,238,310 10,191,341
Change in unrealized appreciation/
depreciation on investments (1,783,236) (56,350) (1,107,113) (7,543,105)
------------ ----------- ----------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Operations (871,920) 2,757,405 5,638,837 3,621,797
------------ ----------- ----------- -----------
DISTRIBUTIONS OF:
Net investment income (1,110,177) (2,027,059) (509,378) (966,627)
Net realized gains - (645,008) - (9,185,806)
------------ ----------- ----------- -----------
Total Distributions (1,110,177) (2,672,067) (509,378) (10,152,433)
------------ ----------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Shares sold 5,417,608 10,194,160 2,443,149 9,197,312
Shares issued to holders in
reinvestment of distributions 841,257 2,492,187 239,208 9,964,976
Shares redeemed (2,863,809) (10,605,995) (7,233,411) (21,348,662)
------------ ----------- ----------- -----------
Net Increase (Decrease) 3,395,056 2,080,352 (4,551,054) (2,186,374)
------------ ----------- ----------- -----------
TOTAL INCREASE (DECREASE) IN
NET ASSETS 1,412,959 2,165,690 578,405 (8,717,010)
NET ASSETS:
Beginning of period 42,865,097 40,699,407 64,876,764 73,593,774
------------ ----------- ----------- -----------
End of period $44,278,056 $42,865,097 $65,455,169 $64,876,764
============ =========== =========== ===========
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
(LOGO)
AQUINAS FUNDS
- --------------------------------------------------------------------------------------------
EQUITY GROWTH BALANCED
FUND FUND
----- -----
Six Months Six Months
ended Year ended Year
June 30, 1999 ended June 30, 1999 ended
(Unaudited) Dec. 31, 1998 (Unaudited) Dec. 31, 1998
----------- ------------ ----------- --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $(198,311) $(281,540) $288,085 $691,944
Net realized gain (loss) on investments 3,475,966 2,280,222 1,768,986 2,704,215
Change in unrealized appreciation/
depreciation on investments (149,460) 6,035,532 (1,047,103) (1,015,004)
----------- ---------- ----------- -----------
Net Increase (Decrease) in Net Assets
Resulting from Operations 3,128,195 8,034,214 1,009,968 2,381,155
----------- ---------- ----------- -----------
DISTRIBUTIONS OF:
Net investment income - - (283,684) (686,862)
Net realized gains - (2,171,291) - (2,293,636)
----------- ---------- ----------- -----------
Total Distributions - (2,171,291) (283,684) (2,980,498)
----------- ---------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Shares sold 5,454,962 11,098,307 1,023,639 3,327,184
Shares issued to holders in
reinvestment of distributions - 2,147,899 142,715 2,924,450
Shares redeemed (4,566,576) (7,699,405) (3,665,871) (7,727,423)
----------- ---------- ----------- -----------
Net Increase (Decrease) 888,386 5,546,801 (2,499,517) (1,475,789)
----------- ---------- ----------- -----------
TOTAL INCREASE (DECREASE) IN
NET ASSETS 4,016,581 11,409,724 (1,773,233) (2,075,132)
NET ASSETS:
Beginning of period 47,399,524 35,989,800 27,089,301 29,164,433
----------- ---------- ----------- -----------
End of period $51,416,105 $47,399,524 $25,316,068 $27,089,301
=========== =========== =========== ===========
</TABLE>
(LOGO)
AQUINAS FUNDS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FIXED INCOME FUND
---------------------------------------------------------------------
Six Months
ended Year Year Year Year
June 30, ended ended ended ended
1999 Dec. 31, Dec. 31, Dec. 31, Dec. 31,
(Unaudited) 1998 1997 1996 1995
----------- ------ ------ ------ -----
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.18 $10.17 $9.90 $10.17 $9.24
Income from Investment Operations:
Net investment income 0.25 0.54 0.55 0.54 0.54
Net realized and unrealized
gains (losses) on investments (0.44) 0.17 0.27 (0.27) 0.93
------- ------- ------- ------- ------
Total from Investment Operations (0.19) 0.71 0.82 0.27 1.47
------- ------- ------- ------- ------
Less Distributions:
Dividends from net investment
income (0.25) (0.54) (0.55) (0.54) (0.54)
Distributions from net realized gains - (0.16) - - -
------- ------- ------- ------- ------
Total Distributions (0.25) (0.70) (0.55) (0.54) (0.54)
------- ------- ------- ------- ------
Net Asset Value, End of Period $9.74 $10.18 $10.17 $9.90 $10.17
======= ======= ======= ======= ======
Total Return <F2> (1.90)% 7.17% 8.54% 2.83% 16.26%
Supplemental Data and Ratios:
Net assets, end of period
(in thousands) $44,278 $42,865 $40,699 $37,229 $35,617
Ratio to Average Net Assets of: <F3>
Expenses, net of waivers and reimbursements 1.00% 1.00% 0.99% 1.00% 0.98%
Expenses, before waivers and reimbursements 1.00% 1.03% 1.05% 1.03% 0.98%
Net investment income, net of waivers
and reimbursements 5.14% 5.27% 5.54% 5.44% 5.46%
Net investment income, before waivers
and reimbursements 5.14% 5.24% 5.48% 5.41% 5.46%
Portfolio turnover rate <F2> 83% 120% 102% 169% 126%
<F1> Commencement of operations.
<F2> Not annualized for the period from January 3, 1994 through December 31, 1994 and January 1, 1999 through June 30, 1999.
<F3> Annualized for the period from January 3, 1994 through December 31, 1994 and January 1, 1999 through June 30, 1999.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
(LOGO)
AQUINAS FUNDS
- ------------------------------------------------------------------------------
EQUITY INCOME FUND
---------- -------------------------------------------------------------------------
Jan. 3, Six Months Jan. 3,
1994 <F1> ended Year Year Year Year 1994 <F1>
through June 30, ended ended ended ended through
Dec. 31, 1999 Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1994 (Unaudited) 1998 1997 1996 1995 1994
----- ------------ ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.00 $13.21 $14.89 $13.26 $11.83 $9.39 $10.00
Income from Investment Operations:
Net investment income 0.46 0.11 0.23 0.26 0.23 0.28 0.32
Net realized and unrealized
gains (losses) on investments (0.77) 1.08 0.57 3.40 2.18 3.03 (0.61)
------- ------- ------ ------ ------- ------- -------
Total from Investment Operations (0.31) 1.19 0.80 3.66 2.41 3.31 (0.29)
------- ------- ------ ------ ------- ------- -------
Less Distributions:
Dividends from net investment
income (0.45) (0.11) (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 (0.45) (0.11) (2.48) (2.03) (0.98) (0.87) (0.32)
------- ------- ------ ------ ------- ------- -------
Net Asset Value, End of Period $9.24 $14.29 $13.21 $14.89 $13.26 $11.83 $9.39
======= ======= ====== ====== ====== ====== ======
Total Return <F2> (3.09)% 9.05% 5.50% 27.85% 20.43% 35.62% (2.93)%
Supplemental Data and Ratios:
Net assets, end of period
(in thousands) $28,147 $65,455 $64,877 $73,594 $54,184 $42,102 $32,217
Ratio to Average Net Assets of: <F3>
Expenses, net of waivers and reimbursements 1.00% 1.36% 1.36% 1.37% 1.40% 1.37% 1.45%
Expenses, before waivers and reimbursements 1.11% 1.36% 1.36% 1.37% 1.40% 1.37% 1.45%
Net investment income, net of waivers
and reimbursements 4.84% 1.60% 1.49% 1.74% 1.79% 2.47% 3.33%
Net investment income, before waivers
and reimbursements 4.73% 1.60% 1.49% 1.74% 1.79% 2.47% 3.33%
Portfolio turnover rate <F2> 139% 38% 64% 42% 32% 40% 106%
<F1> Commencement of operations.
<F2> Not annualized for the period from January 3, 1994 through December 31, 1994 and January 1, 1999 through June 30, 1999.
<F3> Annualized for the period from January 3, 1994 through December 31, 1994 and January 1, 1999 through June 30, 1999.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
(LOGO)
AQUINAS FUNDS
- -------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONT'D.)
EQUITY GROWTH FUND
-------------------------------------------------------------
Six Months
ended Year Year Year Year
June 30, ended ended ended ended
1999 Dec. 31, Dec. 31, Dec. 31, Dec. 31,
(Unaudited) 1998 1997 1996 1995
----------- ----- ----- ----- ------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $17.57 $15.12 $13.45 $12.13 $9.31
Income from Investment Operations:
Net investment income (loss) (0.07) (0.10) (0.06) (0.06) (0.01)
Net realized and unrealized
gains (losses) on investments 1.19 3.40 3.93 2.84 2.83
------- ------- ------- ------- -------
Total from Investment Operations 1.12 3.30 3.87 2.78 2.82
------- ------- ------- ------- -------
Less Distributions:
Dividends from net investment
income - - - - -
Distributions from net realized gains - (0.85) (2.20) (1.46) -
------- ------- ------- ------- -------
Total Distributions - (0.85) (2.20) (1.46) -
------- ------- ------- ------- -------
Net Asset Value, End of Period $18.69 $17.57 $15.12 $13.45 $12.13
======= ======= ======= ======= =======
Total Return <F2> 6.37% 21.95% 28.97% 22.90% 30.29%
Supplemental Data and Ratios:
Net assets, end of period
(in thousands) $51,416 $47,400 $35,990 $22,593 $15,912
Ratio to Average Net Assets of: <F3>
Expenses, net of waivers and reimbursements 1.40% 1.42% 1.49% 1.50% 1.50%
Expenses, before waivers and reimbursements 1.40% 1.42% 1.49% 1.54% 1.61%
Net investment income (loss), net of
waivers and reimbursements (0.83)% (0.71)% (0.66)% (0.55)% (0.10)%
Net investment income (loss), before
waivers and reimbursements (0.83)% (0.71)% (0.66)% (0.59)% (0.21)%
Portfolio turnover rate <F2> 44% 96% 104% 112% 102%
<F1> Commencement of operations.
<F2> Not annualized for the period from January 3, 1994 through December 31, 1994 and January 1, 1999 through June 30, 1999.
<F3> Annualized for the period from January 3, 1994 through December 31, 1994 and January 1, 1999 through June 30, 1999.
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
(LOGO)
AQUINAS FUNDS
- ------------------------------------------------------------------------------
BALANCED FUND
--------- ------------------------------------------------------------------------
Jan. 3, Six Months Jan. 3,
1994 <F1> ended Year Year Year Year 1994 <F1>
through June 30, ended ended ended ended through
Dec. 31, 1999 Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1994 (Unaudited) 1998 1997 1996 1995 1994
------ ---------- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.00 $11.34 $11.58 $11.53 $11.03 $9.43 $10.00
Income from Investment Operations:
Net investment income (loss) 0.01 0.13 0.28 0.31 0.26 0.32 0.26
Net realized and unrealized
gains (losses) on investments (0.69) 0.34 0.68 1.95 1.41 1.84 (0.57)
------- ------- ------- ------- ------- ------- -------
Total from Investment Operations (0.68) 0.47 0.96 2.26 1.67 2.16 (0.31)
------- ------- ------- ------- ------- ------- -------
Less Distributions:
Dividends from net investment
income (0.01) (0.13) (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 (0.01) (0.13) (1.20) (2.21) (1.17) (0.56) (0.26)
------- ------- ------- ------- ------- ------- -------
Net Asset Value, End of Period $9.31 $11.68 $11.34 $11.58 $11.53 $11.03 $9.43
======= ======= ======= ======= ======= ====== ======
Total Return <F2> (6.78)% 4.19% 8.46% 19.91% 15.29% 23.14% (3.06)%
Supplemental Data and Ratios:
Net assets, end of period
(in thousands) $10,104 $25,316 $27,089 $29,164 $29,670 $26,779 $30,114
Ratio to Average Net Assets of: <F3>
Expenses, net of waivers and reimbursements 1.50% 1.49% 1.44% 1.45% 1.44% 1.46% 1.49%
Expenses, before waivers and reimbursements 1.76% 1.52% 1.49% 1.52% 1.49% 1.46% 1.49%
Net investment income (loss), net of
waivers and reimbursements 0.14% 2.33% 2.38% 2.44% 2.23% 2.93% 2.75%
Net investment income (loss), before
waivers and reimbursements (0.12)% 2.30% 2.33% 2.37% 2.18% 2.93% 2.75%
Portfolio turnover rate <F2> 98% 59% 102% 94% 111% 118% 111%
</TABLE>
(logo)
AQUINAS FUNDS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
FIXED INCOME EQUITY INCOME EQUITY GROWTH BALANCED
FUND FUND FUND FUND
---- ----- ----- -----
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $1,351,274 $68,248 $49,084 $326,236
Dividends - 869,874 86,148 145,742
----------- --------- --------- ---------
1,351,274 938,122 135,232 471,978
EXPENSES:
Investment advisory fees 131,988 317,617 238,784 123,336
Administration and fund accounting fees 35,941 51,893 39,014 20,151
Shareholder servicing fees 16,785 18,769 17,936 14,547
Legal fees 9,863 14,233 10,543 5,842
Federal and state registration fees 7,737 8,388 8,819 3,663
Pricing fees 4,963 1,512 2,300 7,061
Audit fees 4,380 5,933 4,700 2,350
Other 3,384 4,853 3,494 2,034
Reports to shareholders 2,803 4,364 3,160 2,071
Custody fees 2,613 2,410 4,491 6,664
Insurance 302 510 302 226
----------- --------- --------- ---------
Total expenses before waiver 220,759 430,482 333,543 187,945
Waiver of fees (778) - - (4,052)
----------- --------- --------- ---------
Net Expenses 219,981 430,482 333,543 183,893
----------- --------- --------- ---------
NET INVESTMENT INCOME (LOSS) 1,131,293 507,640 (198,311) 288,085
----------- --------- --------- ---------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on investments (219,977) 6,238,310 3,475,966 1,768,986
Change in unrealized appreciation/
depreciation on investments (1,783,236) (1,107,113) (149,460) (1,047,103)
----------- --------- --------- ---------
Net Gain (Loss) on Investments (2,003,213) 5,131,197 3,326,506 721,883
----------- --------- --------- ---------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $(871,920) $5,638,837 $3,128,195 $1,009,968
========== ========== ========== ==========
</TABLE>
See notes to financial statements.
(logo)
AQUINAS FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 (UNAUDITED)
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.
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.
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 June 30, 1999, reclassifications
(logo)
AQUINAS FUNDS
- --------------------------------------------------------------------------------
were recorded to increase (decrease) undistributed net investment income by
$(6,680), $713, $198,311 and $(5,939); increase (decrease) accumulated net
realized loss on investments by $6,693, $(701), $(198,311) and $5,951; and
decrease paid-in capital in excess of par by $13, $12, $0 and $12 for 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 Fund 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 waive 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 six months ended June 30, 1999, expenses of $778 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 period of January 1, 1999 through April 30, 1999,
administrative fees of $4,052 were waived in the Balanced Fund. Administrative
fees were not waived after this period.
(logo)
AQUINAS FUNDS
- --------------------------------------------------------------------------------
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Funds for the six months ended June 30, 1999,
were as follows:
<TABLE>
<CAPTION>
Fixed Income Equity Income Equity Growth Balanced
Fund Fund Fund Fund
----- ----- ----- -----
<S> <C> <C> <C> <C>
Shares sold 538,287 183,874 311,877 90,309
Shares issued to holders in
reinvestment of distributions 84,435 18,895 - 13,045
Shares redeemed (285,287) (533,539) (259,761) (324,751)
--------- ---------- -------- ---------
Net Increase (Decrease) 337,435 (330,770) 52,116 (221,397)
========= ========== ======== ========
</TABLE>
Transactions in shares of the Funds for the year ended December 31, 1998,
were as follows:
<TABLE>
<CAPTION>
Fixed Income Equity Income Equity Growth Balanced
Fund Fund Fund Fund
---- ----- ------ ------
<S> <C> <C> <C> <C>
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)
========= ========== ======== ========
</TABLE>
5. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of securities, excluding short-term
investments, for the Funds for the six months ended June 30, 1999, were as
follows:
<TABLE>
<CAPTION>
Fixed Income Equity Income Equity Growth Balanced
Fund Fund Fund Fund
---- ----- ---- -----
<S> <C> <C> <C> <C>
Purchases
U.S. Government $21,508,048 - - $5,582,285
Other 20,009,274 $23,043,601 $22,002,147 8,516,399
Sales
U.S. Government 21,670,838 - - 4,849,754
Other 12,443,124 25,377,196 20,011,269 11,671,003
At June 30, 1999, gross unrealized appreciation and depreciation on investments, based on cost for federal income tax purposes
of $45,797,284, $56,579,448, $38,509,359 and $23,367,061 were as follows:
</TABLE>
<TABLE>
<CAPTION>
Fixed Income Equity Income Equity Growth Balanced
Fund Fund Fund Fund
---- ---- ---- ----
<S> <C> <C> <C> <C>
Appreciation $166,573 $11,378,658 $13,485,367 $2,999,092
(Depreciation) (935,585) (2,475,349) (844,699) (750,893)
---------- ----------- ------------ ----------
Net Appreciation on Investments $(769,012) $8,903,309 $12,640,668 $2,248,199
========== =========== =========== ==========
</TABLE>
(LOGO)
THE AQUINAS FUNDS, INC.
P.O. Box 219533
Kansas City, MO 64121-9533
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.
