(LOGO)
AQUINAS FUNDS
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ANNUAL REPORT
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THE AQUINAS FUNDS, INC.
1-800-423-6369
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December 31, 1999
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AQUINAS FUNDS
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DEAR FEBRUARY 2000
SHAREHOLDER:
Our top performer in 1999 was the AQUINAS EQUITY GROWTH FUND (+23.1%) which
outperformed the S&P 500/R Index (+21.0%). The stock market finished 1999 near
all-time highs for some of the major indices. Every day, the media announcers
repeat the rise in market indices and the positive economic news. Investors feel
confident that things are rosy. Consumer confidence is at a 30-year high and
unemployment is at new lows. Even with interest rates rising, the general public
only hears that "the market is up!" Stock market indices have had double-digit
gains for almost five years and everyone believes that everyone else is getting
rich. If a company has "dot.com" in their name, investors flock to throw money
at it even if it has never turned a profit and is only one or two years old. Is
the market that good?
Let's look at the indices. Almost half the stocks in the S&P 500 were flat to
down for the year! 20% of the S&P stocks fell more than 25%! ONLY SEVEN STOCKS
contributed HALF of the S&P 500 performance AND THE TOP 30 STOCKS of the S&P
CONTRIBUTED ALL OF THE RETURN! These are not signs of a robust bull market.
There is more - ALMOST HALF THE STOCKS ON THE NEW YORK STOCK EXCHANGE (NYSE)
WERE DOWN 10% OR MORE and only one-third of the NYSE were actually up for the
year making the Equity Growth Fund's performance even more impressive given its
diversified portfolio.
The stock market ended 1999 priced near an all-time high when compared to actual
earnings, book values and Gross Domestic Product. In 1999, investments in the
technology sector produced large returns whether or not the company had
earnings. The S&P 500 now has the technology sector as 30% of its base and this
sector returned over 75% of the 1999 return. Needless to say - value investing
as represented by our Aquinas Equity Income Fund and 40% of our Aquinas Balanced
Fund has not worked lately. So how did the other value managers do? If a value
manager threw in the towel and bought high P/E technology, they did better than
our Equity Income Fund. A review of the portfolios of other value managers
reveals many companies that did not come close to any definition of value. While
investors in those funds received better returns in 1999, their fund had asset
allocations different than one would expect from a value fund. The Aquinas
Equity Income Fund stayed true to its investment objective. We have seen this
type of market before in the 1971-73 time period when the growth style and
momentum investing were hot. The following three years show that the value style
returned the best.
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AQUINAS FUNDS
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Meanwhile, our Aquinas Equity Growth Fund beat the S&P 500 without concentrating
so much in technology. We believe that it has less risk because it does not have
this concentration nor does it follow the "dot.com" herd mentality. Risk
profiles are important when valuations are in stratospheric ranges.
Our Funds are designed for the long-term investor to use in a sound asset
allocation program. Investments in both the growth style and value style provide
diversification in what we believe will achieve superior long-term results.
Our Catholic values work continues to have positive results. The feminist
activists are trying to counter the work we did to prevent the manufacture and
distribution of the French abortion pill (RU-486). Planned Parenthood has been
frustrated with its inability to get the pill to the market. Thousands of
abortions have not happened because the abortion pill was not available.
Corporate donations to Planned Parenthood continue to be an area of concern and
we have made progress in this area. For example, the management at Whirlpool
Corporation reviewed their policy of donating to Planned Parenthood and wisely
decided to extricate the company from this area and serve their community in
productive ways. We salute the leaders of this well-managed company for their
wisdom on this topic and for their great financial results.
We no longer hold Disney in our portfolio for two reasons: (1) we achieved our
social objectives with them as (a) there is now a Catholic priest on their board
of directors who is involved in issues such as potential religious disparagement
(b) Disney is actively participating in organizations focused on the sweatshop
issues (c) ABC-TV's programming is now participating in the V-chip parental
guidance system; and (2) their financial performance does not meet our
requirements.
We view 2000 with confidence, that investing in the U.S. economy is a great way
to get rich for the patient investor. Thank you for investing with us.
Sincerely,
Frank Rauscher
President and Treasurer
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AQUINAS FUNDS
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AQUINAS FIXED INCOME FUND
The Federal Reserve raised interest rates three times in 1999. The result was
only the second time since the 1976 inception of the Lehman Government/Corporate
Bond Index that the Index returns were negative. Fortunately, the Aquinas Fixed
Income Fund (-1.9%) beat the Lehman Government/Corporate Bond Index average (-
2.2%). Even in the face of short-term rate increases, the Fund has done well.
One of the reasons is that part of the Fund is invested in "put bonds" which
tend to increase in value if interest rates move rapidly in either direction.
The Federal Reserve has a commitment to fighting inflation and can either
increase interest rates or decrease the money supply to slow down the economy.
Although short-term rates are increasing, long-term rates are decreasing because
the Treasury has announced that it will buy back long-term bonds and decrease
the rate of issue of new bonds because of the budget surplus outlook. The yield
curve now has two year treasuries at a higher rate than long-term bonds and it
has been over ten years since that has happened. When interest rates stop
rising, it is usually very beneficial for bonds. In the meantime, the coupon
yield on the portfolio continues to increase and this is built into the total
return of the securities. Additionally, if the economy remains strong, some of
these securities may be given a credit upgrade because of improving company
fundamentals. Normally this results in an increase in value for the security
reclassified.
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TOTAL RETURNS
For the Periods Ended December 31, 1999
Five Average
Year Annual
One Average Since
Year Annual Inception
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Aquinas Fixed
Income Fund (1.86)% 6.41% 4.77%
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Lehman Bros. Gov't./
Corp. Bond Index (2.15)% 7.60% 5.67%
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Lehman Bros.
AQUINAS FIXED Gov't./Corp.
INCOME FUND Bond Index
Dec. 1994 $9,691 $9,649
Dec. 1995 11,266 11,505
Dec. 1996 11,585 11,840
Dec. 1997 12,574 12,995
Dec. 1998 13,475 14,225
Dec. 1999 13,224 13,920
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).
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AQUINAS FUNDS
AQUINAS EQUITY INCOME FUND
Though most major stock market indices recorded their fifth straight year of
double-digit gains and closed the year at or near all-time highs, all is not
quite as cheery as it may appear. First, the stock market is priced at or near
an all-time high compared to earnings, book value, and Gross Domestic Product
(GDP). Second, though the indices were rising sharply, most stocks were not
participating. In a year in which the major indices gained over 20%, it seems
hard to believe that:
- Nearly half the stocks in the S&P 500 Index were flat to down for the
year
- 20% of the S&P 500 Index stocks fell more than 25%
- Half the S&P 500 Index performance was contributed by just seven stocks
- The top thirty stocks of the S&P 500 Index were responsible for all of
the return
- Nearly half the stocks on the NYSE (3,870 in total) were down 10% or
more
- Only a third of the stocks on the NYSE were up for the year
While wealth definitely increased in 1999, it did so for only a relative handful
of companies. The odds of picking stocks that outperformed the S&P 500 Index,
which was up 21.0%, were roughly one in three. Any diversified portfolio is
likely to hold a number of underperforming stocks in such an environment.
Most investment professionals look at stocks as being either "growth" or "value"
oriented. Over history, the markets tend to favor one style for a few years and
then the other.
Aquinas Equity Income, with a return of +1.1% follows a true value investing
approach, focusing on stocks with below-market price/earnings and price-to-book
ratios and above-market dividend yields. Though empirical evidence shows that
this approach has worked very well over time, in 1999 (indeed, for the last two
years), we could not have selected a worse "pond to fish in."
Why did Aquinas Equity Income lag the S&P 500 Index? For starters, the S&P 500
Index has had a major transformation over the last decade from a balance of
value and growth stocks to one which is large-cap growth style oriented. For
example, technology (at almost 30% of the Index) has replaced energy as a major
component. The stocks in the S&P 500 Index more closely resemble the stocks in
our Aquinas Equity Growth Fund than it does our Aquinas Equity Income Fund. To
assist investors in evaluating Aquinas Equity Income's performance, we are
adding an additional benchmark, the Russell 3000 Value Index. This Index
contains stocks which resemble the holdings of the Equity Income Fund. In
staying true to the "value" investment style, the Equity Income Fund has made it
easier for financial advisers to construct an accurate asset allocation program.
Another factor explaining why the Equity Income Fund lagged the S&P 500 Index is
the impact of super size funds on large-cap stocks,
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AQUINAS FUNDS
AQUINAS EQUITY INCOME FUND (CONTINUED)
such as those in the S&P 500 Index. A super sized mutual fund typically will
invest most of its money in large-cap stocks because of liquidity needs to fund
withdrawals. This has placed an above-average value on large capitalization
stocks.
To summarize: first, the last two years and the last six months in particular
have been as adverse a market for traditional value investing as any in the last
twenty years. History tells us to stay on course as the "value style" will
return. Second, we've made a change in one of the Equity Income managers by
terminating Beutel-Goodman and adding Waite & Associates. Waite returned 6.5% in
the 4th quarter of 1999. Every portfolio needs diversification and we always
recommend that investors look at the market as a whole. We believe the stage is
set for value investing to return as a top performing style.
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TOTAL RETURNS
For the Periods Ended December 31, 1999
Five Average
Year Annual
One Average Since
Year Annual Inception
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Aquinas Equity
Income Fund 1.12% 17.37% 13.73%
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S&P 500
Stock Index 21.04% 28.56% 23.58%
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Russell 3000
Value Index 6.65% 22.15% 17.78%
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AQUINAS EQUITY S&P 500 Russell 3000
INCOME FUND Stock Index Value Index
Dec. 1994 $9,707 $10,132 $9,806
Dec. 1995 13,165 13,939 13,436
Dec. 1996 15,854 17,140 16,338
Dec. 1997 20,269 22,859 22,029
Dec. 1998 21,383 29,393 25,002
Dec. 1999 21,623 35,577 26,665
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 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 Value Index measures the performance of those Russell 3000
Index companies with lower price-to-book ratios and lower forecasted growth
values.
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AQUINAS FUNDS
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AQUINAS EQUITY GROWTH FUND
AQUINAS EQUITY GROWTH FUND HAD A TOTAL RETURN OF 23.1%, which exceeded the 1998
return of 22.0%. We did well without exposing the portfolio to heavy
concentrations of risk in specific companies, industry sectors or market
capitalization sizes. We invest in large, medium- and small-capitalization size
companies with real earnings and quantifiable prospects. In 1999, companies
without earnings in the technology sectors was the place to be as speculation
intensity placed high market values on those companies. We do not speculate with
your money - we invest it based upon the fact that the companies have a track
record of real revenues that are growing. Diversification is the hallmark of
this long-term growth fund. Unlike some other funds, we did not speculate in the
"dot.com" internet-related stocks as we will wait for them to prove their true
earnings capacity. We can understand that a company may benefit from a monopoly
or oligopoly short-term market position. However, few of these high-tech and
"dot.com" companies appear to have truly unique positions. The market did reward
companies such as Microsoft, Cisco, Intel and Sun Microsystems for their unique
economic positions (of course, Microsoft has been officially declared a
monopoly). However, only these and a few others have true unique market
positions.
OUR RETURN OF 23.1% compared to the Russell 3000 benchmark return of 20.9%. It
surpassed the S&P 500 Index return of 21.0%. WHILE EVERYONE BELIEVES THAT ALL
STOCKS DID WELL IN 1999, HERE IS AN EYE-OPENER - the S&P 500 Index had half of
its return come from just seven stocks. Most of the stocks in the S&P 500 Index
were flat or lost money in 1999.
Our Catholic values activities in the pro-life area continue to apply pressure
on companies to "do the right thing." Aquinas is viewed by pro-choice as a
reason that the abortion pill has not made it to market in the U.S. (an honor
that we appreciate). We have enjoyed success in gender discrimination
situations; and, our affordable housing reviews of financial intermediaries
continue to keep focus on their need to fulfill their congressionally mandated
tasks.
We appreciate the support of all of our investors as we endeavor on your behalf
to improve corporate behavior.
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AQUINAS FUNDS
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AQUINAS EQUITY GROWTH FUND (CONTINUED)
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TOTAL RETURNS
For the Periods Ended December 31, 1999
Five Average
Year Annual
One Average Since
Year Annual Inception
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Aquinas Equity
Growth Fund 23.12% 25.40% 19.37%
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S&P 500
Stock Index 21.04% 28.56% 23.58%
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Russell 3000 Index 20.90% 26.94% 22.05%
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AQUINAS EQUITY S&P 500 Russell 3000
GROWTH FUND Stock Index Index
Dec. 1994 $9,322 $10,132 $10,018
Dec. 1995 12,145 13,939 13,705
Dec. 1996 14,927 17,140 16,695
Dec. 1997 19,252 22,859 22,001
Dec. 1998 23,478 29,393 27,312
Dec. 1999 28,906 35,577 33,021
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 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.
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AQUINAS FUNDS
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AQUINAS BALANCED FUND
This Fund seeks long-term capital appreciation consistent with reasonable risk
by investing in a diversified portfolio of common stocks and investment-grade
fixed income securities. 1999 was a very unusual year because two of the three
strategies of this Fund did not perform well. The fixed income part was
negatively influenced by a dramatic rise in interest rates, which caused bond
values to drop in the short run. The Fund's drop was less than what it would
have been had not the portfolio included securities that tend to increase in
value when interest rates move either up or down rapidly. Even so, we had a
small loss in the bond component of -1.9% compared to the Lehman
Government/Corporate Bond Index loss of -2.2% and the 30-year U.S. Treasury Bond
loss of -15.0%. This was only the second time since the Lehman Index was created
that it has shown a loss and we believe that we did well in a terrible market.
The equity portion of the Fund did better, but the value style part of the Fund,
which is 40% of the Fund, has not done well. True value style investing has been
out of favor for five years and the gap between it and the growth style is as
large as it has ever been. During the summer, we replaced one of the value
managers, Beutel-Goodman, with a new manager, Waite & Associates. Waite appears
to have outperformed (6.75%) the large-cap value peer group (5.75%) in the 4th
quarter of 1999; however, the group as a whole is out-of-favor with the market,
which is in love with technology stocks. Most people believe that the entire
stock market did well in 1999. They are not aware that half the stocks on the
New York Stock Exchange lost 10% or more in 1999 and that 20% of the stocks in
the S&P 500 Index lost more than 25%.
Because the market indexes mentioned most often in the media were up, investors
believed that every one was on the gravy train. Yet, the numbers above do not
reflect a strong, broad market. In reality, the tech stocks of the Nasdaq and
seven stocks in the S&P 500 Index provided most of the euphoria. We do not
believe that this will repeat itself in 2000.
Our socially responsible investing is done in cooperation with other like-minded
investors. We have worked on eliminating tobacco sales to minors as well as
encouraging pro-life activities such as reducing corporate donations to Planned
Parenthood. We are delighted to report that Whirlpool Corporation has decided to
remove itself from the pro-choice arena and will no longer make donations to
such organizations as Planned Parenthood. These are just a few examples of how
your money is "doing good" in corporate America. For a more detailed list of
achievements, please call us. Thank you for your support.
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AQUINAS FUNDS
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AQUINAS BALANCED FUND (CONTINUED)
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TOTAL RETURNS
For the Periods Ended December 31, 1999
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Five Average
Year Annual
One Average Since
Year Annual Inception
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Aquinas
Balanced Fund 4.06% 13.95% 10.93%
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Lehman Bros. Gov't./
Corp. Bond Index (2.15)% 7.60% 5.67%
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S&P 500
Stock Index 21.04% 28.56% 23.58%
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Lehman Bros.
AQUINAS S&P 500 Gov't./Corp.
BALANCED FUND Stock Index Bond Index
Dec. 1994 $9,694 $10,132 $9,649
Dec. 1995 11,937 13,939 11,505
Dec. 1996 13,763 17,140 11,840
Dec. 1997 16,502 22,859 12,995
Dec. 1998 17,899 29,393 14,225
Dec. 1999 18,625 35,577 13,920
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).
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.
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AQUINAS FUNDS
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FIXED INCOME FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
Principal
Amount Value
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FIXED INCOME BONDS 96.8%
ASSET-BACKED SECURITIES 8.3%
$300,000 Amresco Residential Securities Mortgage Loan Trust,
8.075%, 4/25/26 $303,075
425,000 Amresco Residential Securities Mortgage Loan Trust,
7.615%, 3/25/27 417,295
350,000 Capital Auto Receivables Asset Trust,
5.68%, 8/15/04 335,927
140,000 First Plus Home Loan Trust,
7.93%, 04/10/23 122,746
375,000 MBNA Master Credit Card Trust,
6.60%, 11/15/04 377,126
400,000 Nationslink Funding Corp.,
6.476%, 7/20/08 375,264
335,285 Olympic Auto Trust,
6.625%, 12/15/02 333,887
375,000 Providian Master Trust, 97-4A,
6.25%, 6/15/07 368,014
400,000 Prudential Securities Secured Financing Corp.,
6.48%, 1/15/09 367,152
500,000 Saxon Asset Securities Trust
97-3 AF6, 6.73%, 2/25/27 482,535
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3,483,021
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CORPORATE BONDS 67.6%
570,000 American Airlines
7.024%, 10/15/09 552,415
525,000 Associates Corp. of North America,
7.75%, 2/15/05 533,327
450,000 Bank One Corp.,
6.00%, 2/17/09 399,911
400,000 Bear Stearns Corp.,
6.75%, 12/15/07 374,220
Principal
Amount Value
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CORPORATE BONDS 67.6% (CONT'D.)
$ 655,000 Bellsouth Capital Funding,
6.04%, 11/15/26 $649,171
445,000 Citicorp, 8.00%, 2/1/03 453,517
1,275,000 Coca-Cola Enterprises, Inc.,
7.00%, 10/1/26 1,239,007
200,000 Coca-Cola Enterprises, Inc.,
6.75%, 9/15/28 174,926
600,000 Commercial Credit Co.,
7.875%, 2/1/25 605,532
420,000 Compania Telecom Chile,
7.625%, 7/15/06 394,220
400,000 Corporation Andina de Fomento,
7.10%, 2/1/03 393,616
1,300,000 Dayton Hudson Corp.,
5.895%, 6/15/37 1,297,491
800,000 Donaldson Lufkin Jenrette Securities
Corp., 5.625%, 2/15/16 788,528
510,000 Edison International, Inc.,
6.875%, 9/15/04 497,995
350,000 El Paso Energy Corp.,
6.75%, 11/15/03 338,576
515,000 EOP Operating LP,
6.376%, 2/15/12 501,404
1,000,000 First Union Corp.,
7.50%, 4/15/35 1,000,770
1,200,000 Ford Motor Credit Co.,
7.375%, 10/28/09 1,187,880
400,000 Ford Motor Credit Co.,
6.375%, 2/1/29 336,180
629,000 General Electric Capital Corp.,
8.30%, 9/20/09 662,463
300,000 General Motors Acceptance Corp.,
5.95%, 3/14/03 288,942
600,000 General Motors Acceptance Corp.,
8.875%, 6/1/10 642,930
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AQUINAS FUNDS
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FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D.)
DECEMBER 31, 1999
Principal
Amount Value
- ---------- -----
CORPORATE BONDS 67.6% (CONT'D.)
$ 400,000 Global Marine, Inc.,
7.125%, 9/1/07 $369,708
950,000 Grand Metropolitan Investment PLC,
7.45%, 4/15/35 935,797
1,000,000 Heller Financial, Inc.,
6.50%, 7/22/02 982,780
1,000,000 Household Finance Corp.,
7.20%, 7/15/06 978,680
1,100,000 Hydro-Quebec,
8.05%, 7/7/24 1,145,617
800,000 IBM Corp.,
6.22%, 8/1/27 771,160
1,290,000 Lehman Brothers Hldg., Inc.,
8.80%, 3/1/15 1,355,287
400,000 Lockheed Martin Corp.,
6.85%, 5/15/01 396,744
1,030,000 Motorola, Inc.,
6.50%, 9/1/25 981,878
700,000 NationsBank Corp.,
8.57%, 11/15/24 742,483
790,000 New Jersey Bell Telephone Co.,
7.85%, 11/15/29 789,716
175,000 Occidental Petroleum,
8.45%, 2/15/29 179,555
1,125,000 Penney (J.C.) & Co., Inc.,
7.40%, 4/1/37 1,060,110
400,000 Rollins Truck Leasing Corp.,
7.00%, 3/15/01 397,556
350,000 Sprint Capital Corp.,
6.90%, 5/1/19 318,542
900,000 Transamerica Financial Corp.,
7.25%, 8/15/02 900,945
430,000 Tyco International Group,
6.25%, 6/15/03 412,043
1,030,000 WMX Technologies, Inc.,
6.65%, 5/15/05 1,022,532
Principal
Amount Value
- ---------- -----
CORPORATE BONDS 67.6% (CONT'D.)
$ 300,000 WMX Technologies, Inc.,
7.10%, 8/1/26 $275,115
1,175,000 Xerox Corp.,
5.875%, 6/15/37 1,171,863
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28,501,132
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U.S. GOVERNMENT AGENCIES 11.7%
175,000 FGLMC 30 year TBA,
7.50%, 2/25/30 173,250
530,000 FGLMC 30 year TBA,
8.00%, 2/25/30 535,130
410,000 FHLMC, 5.75%, 3/15/09 374,572
990,000 FHLMC, 6.625%, 9/15/09 962,003
333,386 FHLMC, Pool 555316,
9.00%, 6/1/19 349,115
142,543 FNMA, Pool 323671,
8.00%, 8/1/12 145,349
380,000 FNMA, 6.00%, 5/15/08 355,745
200,000 FNMA, 1998-30B,
6.50%, 8/20/24 184,012
350,000 FNMA, 1998-17,
6.50%, 1/18/26 321,849
347,682 FNMA, #523850,
10.50%, 10/1/14 367,239
300,000 GNMA, 1998-22PD,
6.50%, 9/20/28 260,802
294,445 GNMA, #780904,
9.50%, 7/15/18 313,766
600,000 Tennessee Valley Authority,
6.235%, 7/15/45 595,482
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4,938,314
-----------
U.S. TREASURY OBLIGATIONS 9.2%
2,070,000 U.S. Treasury Bond,
8.875%, 8/15/17 2,500,746
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AQUINAS FUNDS
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FIXED INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D.)
DECEMBER 31, 1999
Principal
Amount Value
- ---------- -----
U.S. TREASURY OBLIGATIONS 9.2% (CONT'D.)
$170,000 U.S. Treasury Bond,
8.00%, 11/15/21 $192,918
720,000 U.S. Treasury Note,
7.00%, 7/15/06 737,280
200,000 U.S. Treasury Note,
5.625%, 5/15/08 188,084
270,000 U.S. Treasury Strips, 2/15/20 69,112
890,000 U.S. Treasury Strips, 11/15/21 205,376
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3,893,516
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Total Fixed Income Bonds
(cost $42,453,688) 40,815,983
-----------
SHORT-TERM INVESTMENTS 2.6%
500,000 First Capital Commercial Paper,
5.84%, 1/14/00 500,000
601,219 UMB Bank, n.a., Money Market
Fiduciary, Demand Deposit, 2.20% 601,219
-----------
Total Short-Term Investments
(cost $1,101,219) 1,101,219
-----------
Total Investments 99.4%
(cost $43,554,907) 41,917,202
Other Assets
less Liabilities 0.6% 236,669
-----------
Net Assets 100.0% $42,153,871
===========
See notes to financial statements.
<PAGE>
AQUINAS FUNDS
- --------------------------------------------------------------------------------
EQUITY INCOME FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
Number
of Shares Value
- ---------- -----
COMMON STOCKS 91.3%
AEROSPACE 1.0%
10,400 Northrop Grumman Corp. $562,250
-----------
AIRLINES 0.8%
9,000 Delta Airlines, Inc. 448,313
-----------
AUTOMOTIVE AND RELATED
INDUSTRIES 4.0%
21,100 Dana Corp. 631,681
11,100 Ford Motor Co. 593,156
14,000 General Motors Corp. 1,017,625
8,000 Tenneco Automotive, Inc. 74,500
-----------
2,316,962
-----------
BANKING 8.0%
9,100 Bank of America Corp. 456,706
33,000 Bank of New York Co., Inc. 1,320,000
8,900 Morgan (J.P.) & Co., Inc. 1,126,963
12,400 PNC Bank Corp. 551,800
29,200 Union Planters Corp. 1,151,575
-----------
4,607,044
-----------
BREWERIES 0.7%
5,500 Anheuser-Busch Cos., Inc. 389,813
-----------
BUILDING MATERIALS 0.9%
16,300 Armstrong World Industries, Inc. 544,013
-----------
CHEMICALS 1.1%
23,200 B. F. Goodrich Co. 638,000
-----------
COMPUTER PRODUCTS 1.0%
5,400 International Business
Machines Corp. 583,200
-----------
Number
of Shares Value
- ---------- -----
CONSUMER PRODUCTS 5.7%
4,300 Brown-Forman Corp., Class B $246,175
8,700 Eastman Kodak Co. 576,375
18,100 Fortune Brands, Inc. 598,431
40,000 Pactiv Corp.<F1> 425,000
22,300 Whirlpool Corp. 1,450,894
-----------
3,296,875
-----------
DIVERSIFIED MANUFACTURING
OPERATIONS 1.7%
6,200 General Electric Co. 959,450
-----------
ELECTRIC UTILITIES 4.6%
28,800 Central & South West Corp. 576,000
18,000 DTE Energy Co. 564,750
8,810 Duke Energy Corp. 441,601
17,000 New Century Energies, Inc. 516,375
15,800 Public Service Enterprise Group, Inc. 550,037
-----------
2,648,763
-----------
ELECTRICAL PRODUCTS 2.0%
19,600 Hubbell, Inc., Class B 534,100
19,400 Thomas and Betts Corp. 618,375
-----------
1,152,475
-----------
FINANCIAL SERVICES 6.2%
18,900 A.G. Edwards, Inc. 605,981
15,000 Federal National Mortgage Assn. 936,562
25,100 KeyCorp 555,338
7,000 Morgan Stanley Dean Witter and Co. 999,250
12,100 Wells Fargo Co. 489,294
-----------
3,586,425
-----------
FOOD 1.5%
6,200 Hershey Foods Corp. 294,500
29,300 Supervalu, Inc. 586,000
-----------
880,500
-----------
<PAGE>
AQUINAS FUNDS
- --------------------------------------------------------------------------------
EQUITY INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D.)
DECEMBER 31, 1999
Number
of Shares Value
- ---------- -----
FORESTRY 1.0%
23,900 Georgia-Pacific Corp.
(Timber Group) $588,537
-----------
HEALTH CARE PRODUCTS 1.7%
10,900 American Home Products Corp. 429,869
18,200 Mallinckrodt, Inc. 578,987
-----------
1,008,856
-----------
INSURANCE 3.6%
9,000 American General Corp. 682,875
7,000 American International Group, Inc. 756,875
39,700 Ohio Casualty Corp. 637,681
-----------
2,077,431
-----------
MACHINERY AND EQUIPMENT 0.5%
5,900 Caterpillar Inc. 277,669
-----------
MANUFACTURING 2.0%
8,900 Illinois Tool Works, Inc. 601,306
9,900 Ingersoll-Rand Co. 545,119
-----------
1,146,425
-----------
NATURAL GAS UTILITIES 2.9%
28,300 El Paso Energy Corp. 1,098,394
16,900 NICOR, Inc. 549,250
-----------
1,647,644
-----------
OFFICE EQUIPMENT 5.3%
18,000 Avery Dennison Corp. 1,311,750
49,000 Harris Corp. 1,307,688
56,000 Lanier Worldwide, Inc.<F1> 217,000
9,100 Xerox Corp. 206,456
-----------
3,042,894
-----------
OIL AND GAS 8.6%
29,000 Conoco Inc., Class B 721,375
6,600 Exxon Mobil Corp. 531,713
10,000 Kerr-McGee Corp. 620,000
Number
of Shares Value
- ---------- -----
OIL AND GAS 8.6% (CONT'D.)
20,500 KeySpan Corp. $475,344
26,900 Repsol SA-ADR 625,425
13,700 Royal Dutch Petroleum Co. 827,994
24,900 Ultramar Diamond Shamrock Corp. 564,919
25,000 USX-Marathon Group 617,187
-----------
4,983,957
-----------
PAPER AND PAPER PRODUCTS 4.9%
11,600 Bowater, Inc. 630,025
24,000 Kimberly-Clark Corp. 1,566,000
18,900 Westvaco Corp. 616,612
-----------
2,812,637
-----------
PRINTING AND PUBLISHING 2.0%
42,300 Deluxe Corp. 1,160,606
-----------
REAL ESTATE 1.0%
63,600 HRPT Properties Trust 572,400
-----------
RETAIL 4.1%
8,700 Costco Wholesale Corp.<F1> 793,875
10,200 Dayton Hudson Corp. 749,062
8,300 The May Department Stores Co. 267,675
29,100 Penney (J.C.) Co., Inc. 580,181
-----------
2,390,793
-----------
SEMICONDUCTORS 1.7%
11,900 Intel Corp. 979,519
-----------
STEEL AND IRON 2.2%
39,200 USX-U.S. Steel Group, Inc. 1,293,600
-----------
TELECOMMUNICATIONS 6.7%
10,000 AT&T Corp. 507,500
9,800 Bell Atlantic Corp. 603,313
22,100 GTE Corp. 1,559,431
12,107 SBC Communications, Inc. 590,216
<PAGE>
AQUINAS FUNDS
- --------------------------------------------------------------------------------
EQUITY INCOME FUND
SCHEDULE OF INVESTMENTS (CONT'D.)
DECEMBER 31, 1999
Number
of Shares Value
- ---------- -----
TELECOMMUNICATIONS 6.7% (CONT'D.)
8,400 U S WEST, Inc. $604,800
-----------
3,865,260
-----------
TEXTILES 1.1%
16,300 Springs Industries, Inc., Class A 650,981
-----------
TOBACCO PRODUCTS 1.7%
27,000 R.J. Reynolds Tobacco
Holdings, Inc. 475,875
20,500 UST, Inc. 516,344
-----------
992,219
-----------
TRANSPORTATION 1.1%
19,200 GATX Corp. 648,000
-----------
Total Common Stocks
(cost $50,216,229) $52,753,511
-----------
Principal
Amount Value
- ---------- -----
SHORT-TERM INVESTMENTS 7.5%
$4,356,684 UMB Bank, n.a., Money Market
Fiduciary, Demand Deposit, 2.20%
(cost $4,356,684) $4,356,684
-----------
Total Investments 98.8%
(cost $54,572,913) 57,110,195
Other Assets
less Liabilities 1.2% 703,208
-----------
Net Assets 100.0% $57,813,403
===========
<F1>Non-income producing security
See notes to financial statements.
<PAGE>
AQUINAS FUNDS
- --------------------------------------------------------------------------------
EQUITY GROWTH FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
Number
of Shares Value
- ---------- -----
COMMON STOCKS 94.1%
ADVERTISING 0.9%
5,400 Omnicom Group, Inc. $540,000
-----------
BANKING 2.1%
29,809 Charter One Financial, Inc. 570,097
5,100 Chase Manhattan Corp. 396,206
5,600 Northern Trust Corp. 296,800
-----------
1,263,103
-----------
BIOTECHNOLOGY 0.8%
2,400 Biogen, Inc.<F1> 202,800
2,200 Genentech, Inc.<F1> 295,900
-----------
498,700
-----------
BUSINESS SERVICES 6.0%
34,900 Concord EFS, Inc.<F1> 898,675
17,475 Fiserv, Inc.<F1> 669,511
11,900 Iron Mountain, Inc.<F1> 467,819
12,100 Maximus, Inc.<F1> 410,644
14,427 NOVA Corp.<F1> 455,352
16,962 Paychex, Inc. 678,480
-----------
3,580,481
-----------
COMMUNICATIONS 0.6%
4,300 ALLTEL Corp. 355,556
-----------
COMPUTER PRODUCTS 7.6%
25,600 Cabletron Systems, Inc.<F1> 665,600
12,500 Cisco Systems, Inc.<F1> 1,339,062
7,300 EMC Corp.<F1> 797,525
5,400 Great Plains Software, Inc.<F1> 403,650
2,600 International Business
Machines Corp. 280,800
1,600 JDS Uniphase Corp.<F1> 258,100
8,600 Metromedia Fiber Network, Class A<F1> 412,263
Number
of Shares Value
- ---------- -----
COMPUTER PRODUCTS 7.6% (CONT'D.)
5,600 Microchip Technology, Inc.<F1> $383,250
-----------
4,540,250
-----------
COMPUTER SERVICES 8.4%
13,700 Affiliated Computer Services, Inc.<F1> 630,200
5,400 America Online, Inc.<F1> 407,362
12,100 CSG Systems International, Inc.<F1> 482,488
4,600 Entrust Technologies, Inc.<F1> 275,712
4,500 Go2Net, Inc.<F1> 391,500
16,000 iXL Enterprises, Inc.<F1> 888,000
2,800 Network Solutions, Inc.<F1> 609,175
8,000 Sun Microsystems, Inc.<F1> 619,500
19,000 Sungard Data Systems, Inc.<F1> 451,250
10,500 Transaction Systems Architects, Inc.<F1> 294,000
-----------
5,049,187
-----------
COMPUTER SOFTWARE 7.0%
2,600 Citrix Systems, Inc.<F1> 319,800
5,300 Computer Associates
International, Inc. 370,669
5,300 Legato Systems, Inc.<F1> 364,706
2,300 Mercury Interactive Corp.<F1> 248,256
14,200 Microsoft Corp.<F1> 1,657,850
7,000 Oracle Corp.<F1> 784,438
4,000 Rational Software Corp.<F1> 196,500
3,900 Symantec Corp.<F1> 228,638
-----------
4,170,857
-----------
CONSUMER GOODS 0.7%
6,800 Kimberly-Clark Corp. 417,600
-----------
DIVERSIFIED MANUFACTURING
OPERATIONS 3.9%
2,600 Corning, Inc. 335,238
10,200 General Electric Co. 1,578,450
6,800 Honeywell International, Inc. 392,275
-----------
2,305,963
-----------
<PAGE>
AQUINAS FUNDS
- --------------------------------------------------------------------------------
EQUITY GROWTH FUND
SCHEDULE OF INVESTMENTS (CONT'D.)
DECEMBER 31, 1999
Number
of Shares Value
- ---------- -----
DRUGS 4.3%
4,100 Biovail Corp. International<F1> $384,375
9,000 Bristol-Myers Squibb Co. 577,688
21,000 Dura Pharmaceuticals, Inc.<F1> 292,688
10,450 Jones Pharma, Inc. 453,922
8,100 Merck & Co., Inc. 543,206
6,300 Pfizer, Inc. 204,356
2,800 Schering-Plough Corp. 118,125
-----------
2,574,360
-----------
ELECTRICAL PRODUCTS 1.9%
6,100 Amphenol Corp., Class A<F1> 406,031
5,200 ANTEC Corp.<F1> 189,800
7,800 Conexant Systems, Inc.<F1> 517,725
-----------
1,113,556
-----------
ELECTRONICS 1.0%
12,600 AVX Corp. 629,213
-----------
ENTERTAINMENT 1.3%
4,400 Carnival Corp. 210,375
4,800 International Speedway Corp.,
Class A 241,800
4,600 Time Warner, Inc. 333,213
-----------
785,388
-----------
FINANCIAL SERVICES 6.1%
3,800 American Express Co. 631,750
19,600 AmeriCredit Corp.<F1> 362,600
4,900 Capital One Financial Corp. 236,119
13,900 Finova Group, Inc. 493,450
14,000 Knight/Trimark Group, Inc., Class A<F1> 644,000
4,300 Marsh & McLennan Cos., Inc. 411,456
15,832 Metris Cos., Inc. 565,005
2,000 Morgan Stanley Dean Witter & Co. 285,500
-----------
3,629,880
-----------
HEALTH CARE PRODUCTS 0.7%
12,400 Medtronic, Inc. 451,825
-----------
Number
of Shares Value
- ---------- -----
HOUSEHOLD PRODUCTS 1.9%
6,800 Procter & Gamble Co. $745,025
8,300 Williams-Sonoma, Inc.<F1> 381,800
-----------
1,126,825
-----------
INSURANCE 2.8%
5,226 American International Group, Inc. 565,061
18,500 MGIC Investment Corp. 1,113,469
-----------
1,678,530
-----------
MANUFACTURING 3.2%
10,000 Danaher Corp. 482,500
13,400 Gentex Corp. 371,850
12,500 Millipore Corp. 482,813
11,200 Waters Corp.<F1> 593,600
-----------
1,930,763
-----------
MEDIA 7.4%
4,509 AMFM, Inc.<F1> 352,829
7,400 CBS Corp. 473,137
14,800 Clear Channel Communications, Inc.<F1> 1,320,900
11,400 Comcast Corp., Special Class A<F1> 576,412
3,100 Hispanic Broadcasting Corp.<F1> 285,878
26,950 Infinity Broadcasting Corp.<F1> 975,253
12,000 SFX Entertainment, Inc.<F1> 434,250
-----------
4,418,659
-----------
MEDICAL 2.1%
10,000 Amgen, Inc.<F1> 600,625
6,900 Johnson & Johnson 642,562
-----------
1,243,187
-----------
OFFICE EQUIPMENT 0.5%
14,000 Miller (Herman), Inc. 322,000
-----------
OIL AND GAS 1.4%
8,000 Apache Corp. 295,500
6,500 El Paso Energy Corp. 252,281
<PAGE>
AQUINAS FUNDS
- --------------------------------------------------------------------------------
EQUITY GROWTH FUND
SCHEDULE OF INVESTMENTS (CONT'D.)
DECEMBER 31, 1999
Number
of Shares Value
- ---------- -----
OIL AND GAS 1.4% (CONT'D.)
4,900 Vastar Resources, Inc. $289,100
-----------
836,881
-----------
RESTAURANTS 1.0%
20,000 Brinker International, Inc.<F1> 480,000
3,500 McDonald's Corp. 141,094
-----------
621,094
-----------
RETAIL 9.6%
12,650 99 Cents Only Stores<F1> 483,863
7,900 BJ's Wholesale Club, Inc.<F1> 288,350
4,800 Circuit City Stores 216,300
5,300 Costco Wholesale Corp. 483,625
15,700 CSK Auto Corp.<F1> 274,750
6,400 Dayton Hudson Corp. 470,000
12,700 Dollar Tree Stores, Inc.<F1> 615,156
15,000 Home Depot, Inc. 1,028,437
13,200 InterTan, Inc.<F1> 344,850
1,900 Kohl's Corp.<F1> 137,156
6,400 Linens 'n Things, Inc.<F1> 189,600
15,000 Ross Stores, Inc. 269,062
5,300 Tandy Corp. 260,694
9,900 Wal-Mart Stores, Inc. 684,337
-----------
5,746,180
-----------
SEMICONDUCTORS 4.2%
1,700 Altera Corp.<F1> 84,256
3,700 Chartered Semiconductor-ADR<F1> 270,100
9,000 Intel Corp. 740,813
3,800 Lam Research Corp.<F1> 423,938
4,600 Texas Instruments, Inc. 445,625
10,600 Vitesse Semiconductor Corp.<F1> 555,837
-----------
2,520,569
-----------
Number
of Shares Value
- ---------- -----
TELECOMMUNICATIONS 6.7%
8,100 ADC Telecommunications, Inc.<F1> $587,756
5,150 AT&T Corp. 261,363
6,900 Infonet Services Corp., Class B<F1> 181,125
11,000 Lucent Technologies, Inc. 822,938
14,250 MCI WorldCom, Inc.<F1> 756,140
3,200 Nokia Corp. ADR 608,000
3,900 SBC Communications, Inc. 190,125
10,600 Scientific-Atlanta, Inc. 589,625
-----------
3,997,072
-----------
Total Common Stock
(cost $39,656,564) 56,347,679
-----------
Principal
Amount
- ----------
CONVERTIBLE BONDS 1.8%
$560,000 American Tower CVT
6.25%, 10/15/09 783,300
208,000 Lamar Advertising Co.
5.25%, 9/15/06 303,160
-----------
Total Convertible Bonds
(cost $769,480) 1,086,460
-----------
<PAGE>
AQUINAS FUNDS
EQUITY GROWTH FUND
SCHEDULE OF INVESTMENTS (CONT'D.)
DECEMBER 31, 1999
Principal
Amount Value
- ---------- -----
SHORT-TERM INVESTMENT 4.7%
$2,787,906 UMB Bank, n.a., Money Market
Fiduciary, Demand Deposit, 2.20%
(cost $2,787,906) $2,787,906
-----------
Total Investments 100.6%
(cost $43,213,950) 60,222,045
Liabilities less
Other Assets (0.6)% (354,997)
-----------
Net Assets 100.0% $59,867,048
===========
<F1> Non-income producing security
See notes to financial statements.
<PAGE>
AQUINAS FUNDS
BALANCED FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999
Number
of Shares Value
- ---------- -----
COMMON STOCKS 54.0%
AEROSPACE 0.4%
1,800 Northrop Grumman Corp. $97,313
-----------
AIRLINES 0.2%
1,200 Delta Airlines, Inc. 59,775
-----------
AUTOMOTIVE AND RELATED
INDUSTRIES 1.5%
3,800 Dana Corp. 113,762
2,100 Ford Motor Co. 112,219
2,000 General Motors Corp. 145,375
-----------
371,356
-----------
BANKING 3.4%
1,200 Bank of America Corp. 60,225
5,000 Bank of New York Co., Inc. 200,000
5,753 Charter One Financial, Inc. 110,026
1,500 Morgan (J.P.) & Co., Inc. 189,937
1,900 PNC Bank Corp. 84,550
4,900 Union Planters Corp. 193,244
-----------
837,982
-----------
BREWERIES 0.3%
900 Anheuser-Busch Cos., Inc. 63,788
-----------
BUILDING MATERIALS 0.4%
2,800 Armstrong World Industries, Inc. 93,450
-----------
BUSINESS SERVICES 3.0%
4,650 Concord EFS, Inc.<F1> 119,737
2,400 CSG Systems International, Inc.<F1> 95,700
3,500 Fiserv, Inc.<F1> 134,094
2,400 Iron Mountain, Inc.<F1> 94,350
2,400 Maximus, Inc.<F1> 81,450
2,917 NOVA Corp.<F1> 92,068
Number
of Shares Value
- ---------- -----
BUSINESS SERVICES 3.0% (CONT'D.)
3,373 Paychex, Inc. $134,920
-----------
752,319
-----------
CHEMICALS 0.5%
4,100 B. F. Goodrich Co. 112,750
-----------
COMPUTER PRODUCTS 1.2%
5,100 Cabletron Systems, Inc. 132,600
1,100 Great Plains Software, Inc.<F1> 82,225
700 International Business Machines Corp. 75,600
-----------
290,425
-----------
COMPUTER SERVICES 2.6%
2,800 Affiliated Computer Services, Inc.<F1> 128,800
900 Entrust Technologies, Inc.<F1> 53,944
3,200 iXL Enterprises, Inc.<F1> 177,600
600 Network Solutions, Inc.<F1> 130,538
3,900 Sungard Data Systems, Inc.<F1> 92,625
2,100 Transaction Systems Architects, Inc.<F1> 58,800
-----------
642,307
-----------
COMPUTER SOFTWARE 0.2%
500 Mercury Interactive Corp.<F1> 53,969
-----------
CONSUMER PRODUCTS 2.2%
700 Brown-Forman Corp., Class B 40,075
1,700 Eastman Kodak Co. 112,625
3,000 Fortune Brands, Inc. 99,188
7,000 Pactiv Corp.<F1> 74,375
3,400 Whirlpool Corp. 221,213
-----------
547,476
-----------
<PAGE>
AQUINAS FUNDS
- --------------------------------------------------------------------------------
BALANCED FUND
SCHEDULE OF INVESTMENTS (CONT'D.)
DECEMBER 31, 1999
Number
of Shares Value
- ---------- -----
DIVERSIFIED MANUFACTURING
OPERATIONS 0.5%
800 General Electric Co. $123,800
1,400 Tenneco Automotive, Inc. 13,038
-----------
136,838
-----------
DRUGS 0.9%
800 Biovail Corp. International<F1> 75,000
4,200 Dura Pharmaceuticals, Inc.<F1> 58,538
2,050 Jones Pharma, Inc. 89,047
-----------
222,585
-----------
ELECTRIC UTILITIES 1.9%
5,100 Central & South West Corp. 102,000
3,200 DTE Energy Co. 100,400
1,586 Duke Energy Corp. 79,498
3,100 New Century Energies, Inc. 94,162
3,100 Public Service Enterprise Group, Inc. 107,919
-----------
483,979
-----------
ELECTRICAL PRODUCTS 1.3%
1,295 Amphenol Corp., Class A<F1> 86,198
1,000 ANTEC Corp.<F1> 36,500
1,600 Conexant Systems, Inc.<F1> 106,200
3,200 Thomas and Betts Corp. 102,000
-----------
330,898
-----------
ELECTRONICS 0.9%
2,500 AVX Corp. 124,844
3,500 Hubbell, Inc., Class B 95,375
-----------
220,219
-----------
ENTERTAINMENT 0.2%
1,000 International Speedway Corp.,
Class A 50,375
-----------
Number
of Shares Value
- ---------- -----
FINANCIAL SERVICES 3.9%
3,100 A.G. Edwards, Inc. $99,394
4,100 AmeriCredit Corp.<F1> 75,850
1,000 Capital One Financial Corp. 48,187
2,000 Federal National Mortgage Assn. 124,875
2,800 Finova Group, Inc. 99,400
4,200 KeyCorp 92,925
2,800 Knight/Trimark Group, Inc., Class A<F1> 128,800
3,192 Metris Cos., Inc. 113,914
900 Morgan Stanley Dean Witter and Co. 128,475
1,500 Wells Fargo Co. 60,656
-----------
972,476
-----------
FOOD 0.6%
800 Hershey Foods Corp. 38,000
5,200 Supervalu, Inc. 104,000
-----------
142,000
-----------
FORESTRY 0.4%
4,000 Georgia-Pacific Corp.
(Timber Group) 98,500
-----------
HEALTH CARE PRODUCTS 0.6%
1,400 American Home Products Corp. 55,213
2,900 Mallinckrodt, Inc. 92,256
-----------
147,469
-----------
HOUSEHOLD PRODUCTS 0.3%
1,700 Williams-Sonoma, Inc.<F1> 78,200
-----------
INSURANCE 1.8%
1,200 American General Corp. 91,050
875 American International Group, Inc. 94,609
2,800 MGIC Investment Corp. 168,525
6,000 Ohio Casualty Corp. 96,375
-----------
450,559
-----------
<PAGE>
AQUINAS FUNDS
BALANCED FUND
SCHEDULE OF INVESTMENTS (CONT'D.)
DECEMBER 31, 1999
Number
of Shares Value
- ---------- -----
MACHINERY AND EQUIPMENT 0.2%
800 Caterpillar, Inc. $37,650
-----------
MANUFACTURING 2.2%
2,000 Danaher Corp. 96,500
3,200 Gentex Corp. 88,800
1,200 Illinois Tool Works, Inc. 81,075
1,300 Ingersoll-Rand Co. 71,581
2,500 Millipore Corp. 96,563
2,200 Waters Corp.<F1> 116,600
-----------
551,119
-----------
MEDIA 2.4%
1,090 AMFM, Inc.<F1> 85,292
2,000 Clear Channel Communications, Inc.<F1> 178,500
600 Hispanic Broadcasting Corp.<F1> 55,331
5,535 Infinity Broadcasting Corp.<F1> 200,297
2,400 SFX Entertainment, Inc.<F1> 86,850
-----------
606,270
-----------
NATURAL GAS UTILITIES 0.8%
3,100 El Paso Energy Corp. 120,319
2,600 NICOR, Inc. 84,500
-----------
204,819
-----------
OFFICE EQUIPMENT 2.1%
2,500 Avery Dennison Corp. 182,188
8,000 Harris Corp. 213,500
9,600 Lanier Worldwide, Inc.<F1> 37,200
2,800 Miller (Herman), Inc. 64,400
1,200 Xerox Corp. 27,225
-----------
524,513
-----------
OIL AND GAS 3.5%
1,600 Apache Corp. 59,100
4,400 Conoco Inc., Class B 109,450
1,056 Exxon Mobil Corp. 85,074
1,600 Kerr-McGee Corp. 99,200
Number
of Shares Value
- ---------- -----
OIL AND GAS 3.5% (CONT'D.)
3,800 KeySpan Corp. $88,113
4,500 Repsol SA-ADR 104,625
1,300 Royal Dutch Petroleum Co. 78,569
3,800 Ultramar Diamond Shamrock Corp. 86,212
3,800 USX-Marathon Group 93,813
1,000 Vastar Resources, Inc. 59,000
-----------
863,156
-----------
PAPER AND PAPER PRODUCTS 1.6%
2,100 Bowater, Inc. 114,056
3,000 Kimberly-Clark Corp. 195,750
3,100 Westvaco Corp. 101,137
-----------
410,943
-----------
PRINTING AND PUBLISHING 0.8%
7,100 Deluxe Corp. 194,805
-----------
REAL ESTATE 0.4%
11,200 HRPT Properties Trust 100,800
-----------
RESTAURANTS 0.4%
4,100 Brinker International, Inc.<F1> 98,400
-----------
RETAIL 3.5%
2,525 99 Cents Only Stores<F1> 96,581
1,600 BJ's Wholesale Club, Inc.<F1> 58,400
1,100 Costco Wholesale Corp.<F1> 100,375
3,100 CSK Auto Corp.<F1> 54,250
1,300 Dayton Hudson Corp. 95,469
2,600 Dollar Tree Stores, Inc.<F1> 125,938
2,700 InterTan, Inc.<F1> 70,538
1,400 Linens 'n Things, Inc.<F1> 41,475
1,100 The May Department Stores Co. 35,475
4,200 Penney (J.C.) Co., Inc. 83,737
3,000 Ross Stores, Inc. 53,813
1,100 Tandy Corp. 54,106
-----------
870,157
-----------
<PAGE>
AQUINAS FUNDS
- --------------------------------------------------------------------------------
BALANCED FUND
SCHEDULE OF INVESTMENTS (CONT'D.)
DECEMBER 31, 1999
Number
of Shares Value
- ---------- -----
SEMICONDUCTORS 1.2%
2,200 Intel Corp. $181,088
2,200 Vitesse Semiconductor Corp.<F1> 115,363
-----------
296,451
-----------
STEEL AND IRON 0.8%
6,400 USX-U.S. Steel Group, Inc. 211,200
-----------
TELECOMMUNICATIONS 3.4%
1,700 ADC Telecommunications, Inc.<F1> 123,356
1,500 AT&T Corp. 76,125
1,500 Bell Atlantic Corp. 92,344
3,300 GTE Corp. 232,855
1,842 SBC Communications, Inc. 89,797
2,100 Scientific-Atlanta, Inc. 116,813
1,500 U S WEST, Inc. 108,000
-----------
839,290
-----------
TEXTILES 0.4%
2,700 Springs Industries, Inc., Class A 107,831
-----------
TOBACCO PRODUCTS 0.7%
4,300 R.J. Reynolds Tobacco
Holdings, Inc. 75,788
3,900 UST, Inc. 98,231
-----------
174,019
-----------
TRANSPORTATION 0.4%
3,100 GATX Corp. 104,625
-----------
Total Common Stocks
(cost $11,751,618) 13,453,056
-----------
Principal
Amount Value
- ---------- -----
CONVERTIBLE BONDS 0.8%
$100,000 American Tower CVT
6.25%, 10/15/09 $139,875
42,000 Lamar Advertising Co.
5.25%, 9/15/06 61,215
-----------
Total Convertible Bonds
(cost $142,247) 201,090
-----------
FIXED INCOME BONDS 38.0%
ASSET-BACKED SECURITIES 2.7%
150,000 Amresco Residential Securities
Mortgage Loan Trust,
7.615%, 3/25/27 147,281
104,777 Olympic Auto Trust,
6.625%, 12/15/02 104,340
125,000 Providian Master Trust 97-4A,
6.25%, 6/15/07 122,671
50,000 Prudential Securities Secured
Financing Corp.,
6.48%, 1/15/09 45,894
100,000 Saxon Asset Securities Trust
97-3 AF6, 6.73%, 2/25/27 96,507
147,640 World Omni Auto Lease
Securitization, 6.18%, 11/25/03 146,844
-----------
663,537
-----------
CORPORATE BONDS 25.6%
140,000 American Airlines,
7.024%, 10/15/09 135,681
225,000 Associates Corp. of North America,
7.75%, 2/15/05 228,569
120,000 Bear Stearns Corp.,
6.75%, 12/15/07 112,266
150,000 Bellsouth Capital Funding,
6.04%, 11/15/26 148,665
<PAGE>
AQUINAS FUNDS
- --------------------------------------------------------------------------------
BALANCED FUND
SCHEDULE OF INVESTMENTS (CONT'D.)
DECEMBER 31, 1999
Principal
Amount Value
- ---------- -----
CORPORATE BONDS 25.6% (CONT'D.)
$281,000 Coca-Cola Enterprises, Inc.,
7.00%, 10/1/26 $273,067
100,000 Coca-Cola Enterprises, Inc.,
6.75%, 9/15/28 87,463
130,000 Commercial Credit Co.,
7.875%, 2/1/25 131,199
120,000 Compania Telecom Chile,
7.625%, 7/15/06 112,634
100,000 Corporation Andina de Fomento,
7.10%, 2/1/03 98,404
265,000 Dayton Hudson Corp.,
5.895%, 6/15/37 264,489
300,000 Donaldson Lufkin Jenrette Securities
Corp., 5.625%, 2/15/16 295,698
135,000 Edison International, Inc.,
6.875%, 9/15/04 131,822
100,000 E.I. Du Pont De Nemours,
6.0%, 3/6/03 96,942
100,000 El Paso Energy Corp.,
6.75%, 11/15/03 96,736
100,000 EOP Operating LP,
6.375%, 1/15/02 97,425
245,000 First Union Corp.,
7.50%, 4/15/35 245,189
280,000 Ford Motor Credit Co.,
7.375%, 10/28/09 277,172
200,000 General Electric Capital Corp.,
8.30%, 9/20/09 210,640
150,000 General Motors Acceptance Corp.,
8.875%, 6/1/10 160,732
100,000 Global Marine, Inc.,
7.125%, 9/1/07 92,427
225,000 Grand Metropolitan Investment PLC,
7.45%, 4/15/35 221,636
200,000 Heller Financial, Inc.,
6.50%, 7/22/02 196,556
Principal
Amount Value
- ---------- -----
CORPORATE BONDS 25.6% (CONT'D.)
$220,000 Household Finance Corp.,
7.20%, 7/15/06 $215,310
250,000 Hydro-Quebec,
8.05%, 7/7/24 260,368
300,000 Lehman Brothers Hldg., Inc.,
8.80%, 3/1/15 315,183
250,000 Motorola, Inc.,
6.50%, 9/1/25 238,320
150,000 NationsBank Corp.,
8.57%, 11/15/24 159,103
210,000 New Jersey Bell Telephone Co.,
7.85%, 11/15/29 209,924
60,000 Norfolk Southern Corp.,
6.95%, 5/1/02 59,474
250,000 Penney (J.C.) & Co., Inc.,
7.40%, 4/1/37 235,580
150,000 Rollins Truck Leasing Corp.,
7.00%, 3/15/01 149,083
250,000 Transamerica Financial Corp.,
7.25%, 8/15/02 250,262
100,000 Tyco International Group,
6.25%, 6/15/03 95,824
50,000 WMX Technologies, Inc.,
6.65%, 5/15/05 49,638
250,000 WMX Technologies, Inc.,
7.10%, 8/1/26 229,263
210,000 Xerox Corp.,
5.90%, 5/5/37 209,620
-----------
6,392,364
-----------
U.S. GOVERNMENT AGENCIES 5.2%
190,000 FGLMC, 30 year TBA,
7.50%, 2/25/30 188,100
135,000 FGLMC, 30 year TBA,
8.00%, 2/25/30 136,307
90,000 FHLMC, 5.75%, 3/15/09 82,223
<PAGE>
AQUINAS FUNDS
- --------------------------------------------------------------------------------
BALANCED FUND
SCHEDULE OF INVESTMENTS (CONT'D.)
DECEMBER 31, 1999
Principal
Amount Value
- ---------- -----
U.S. GOVERNMENT AGENCIES 5.2% (CONT'D.)
$300,000 FHLMC, 6.625%, 9/15/09 $291,516
114,426 FHLMC, Pool 555316,
9.00%, 6/1/19 119,824
100,000 FNMA, 1998-17,
6.50%, 1/18/26 91,957
78,031 FNMA, #523850,
10.50%, 10/1/14 82,420
3,139 GNMA, Pool 031096,
9.50%, 6/15/09 3,343
65,432 GNMA, Pool 780904,
9.50%, 7/15/18 69,726
80,000 GNMA 1998-22 PD,
6.50%, 9/20/28 69,547
150,000 Tennessee Valley Authority,
6.235%, 7/15/45 148,871
-----------
1,283,834
-----------
U.S. TREASURY OBLIGATIONS 4.5%
535,000 U.S. Treasury Bond,
8.875%, 8/15/17 646,328
100,000 U.S. Treasury Bond,
8.00%, 11/15/21 113,481
95,000 U.S. Treasury Note,
6.25%, 8/31/00 95,165
90,000 U.S. Treasury Note,
7.00%, 7/15/06 92,160
60,000 U.S. Treasury Strips, 8/15/20 14,905
720,000 U.S. Treasury Strips, 11/15/21 166,147
-----------
1,128,186
-----------
Total Fixed Income Bonds
(cost $9,838,629) 9,467,921
-----------
Principal
Amount Value
- ---------- -----
SHORT-TERM INVESTMENTS 8.0%
$ 100,000 Associates Corp. Commercial Paper,
5.75%, 1/18/00 $100,000
100,000 First Capital Commercial Paper,
5.84%, 1/14/00 100,000
1,812,016 UMB Bank, n.a., Money Market
Fiduciary, Demand Deposit, 2.20% 1,812,016
-----------
Total Short-Term Investments
(cost $2,012,016) 2,012,016
-----------
Total Investments 100.8%
(cost $23,744,510) 25,134,083
Liabilities less
Other Assets (0.8)% (198,396)
-----------
Net Assets 100.0% $24,935,687
===========
<F1> Non-income producing security
See notes to financial statements.
<PAGE>
AQUINAS FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
FIXED INCOME EQUITY INCOME EQUITY GROWTH BALANCED
FUND FUND FUND FUND
---- ---- ---- ----
<S> <C> <C> <C> <C>
ASSETS:
Investments at value (cost $43,554,907,
$54,572,913, $43,213,950 and
$23,744,510, respectively) $41,917,202 $57,110,195 $60,222,045 $25,134,083
Interest and dividends receivable 735,519 136,703 42,544 201,520
Receivable for securities sold 717,480 369,031 - 374,537
Capital shares receivable 250,324 267,385 236,616 50,608
Prepaid expenses 11,643 14,496 11,430 6,688
----------- ----------- ----------- -----------
Total Assets 43,632,168 57,897,810 60,512,635 25,767,436
----------- ----------- ----------- -----------
LIABILITIES:
Payable for securities purchased 1,429,694 - 194,572 786,046
Accrued expenses 27,667 36,032 32,771 19,939
Accrued investment advisory fee 19,767 47,875 49,786 20,437
Capital shares payable 1,169 500 368,458 5,327
----------- ----------- ----------- -----------
Total Liabilities 1,478,297 84,407 645,587 831,749
----------- ----------- ----------- -----------
NET ASSETS $42,153,871 $57,813,403 $59,867,048 $24,935,687
=========== =========== =========== ===========
NET ASSETS CONSIST OF:
Capital stock $445 $510 $307 $240
Paid-in capital in excess of par 44,248,285 54,619,538 41,280,342 23,143,299
Undistributed net investment income (loss) 25,576 9,153 - 6,118
Undistributed net realized gain (loss)
on investments (482,730) 646,920 1,578,304 396,457
Net unrealized appreciation (depreciation)
on investments (1,637,705) 2,537,282 17,008,095 1,389,573
----------- ----------- ----------- -----------
NET ASSETS $42,153,871 $57,813,403 $59,867,048 $24,935,687
=========== =========== =========== ===========
CAPITAL STOCK, $.0001 PAR VALUE:
Authorized 125,000,000 125,000,000 125,000,000 125,000,000
Issued and outstanding 4,449,481 5,098,612 3,073,367 2,398,713
NET ASSET VALUE,
REDEMPTION PRICE AND
OFFERING PRICE PER SHARE $9.47 $11.34 $19.48 $10.40
====== ====== ====== ======
</TABLE>
See notes to financial statements.
<PAGE>
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,
1999 1998 1999 1998 1999 1998 1999 1998
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment
income (loss) $2,355,930 $2,038,548 $965,239 $973,561 $(417,323) $(281,540) $590,540 $691,944
Net realized gain
(loss on investments (490,218) 775,207 7,436,100 10,191,341 7,867,504 2,280,222 2,339,367 2,704,215
Change in unrealized
appreciation/
depreciation on
investments (2,710,555) (56,350) (7,493,044) (7,543,105) 4,008,588 6,035,532 (1,982,162) (1,015,004)
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Net Increase (Decrease)
in Net Assets
Resulting from
Operations (844,843) 2,757,405 908,295 3,621,797 11,458,769 8,034,214 947,745 2,381,155
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
DISTRIBUTIONS OF:
Net investment
income (2,320,727) (2,027,059) (906,850) (966,627) - - (571,018) (686,862)
Net realized gains (14,531) (645,008) (7,904,553) (9,185,806) (6,005,483) (2,171,291) (2,401,905) (2,293,636)
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Total
Distributions (2,335,258) (2,672,067) (8,811,403) (10,152,433) (6,005,483) (2,171,291) (2,972,923) (2,980,498)
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
CAPITAL SHARE
TRANSACTIONS:
Shares sold 8,325,477 10,194,160 5,379,144 9,197,312 11,201,911 11,098,307 1,579,505 3,327,184
Shares issued to
holders in
reinvestment of
distributions 2,174,398 2,492,187 8,445,685 9,964,976 5,703,517 2,147,899 2,948,584 2,924,450
Shares redeemed (8,031,000) (10,605,995) (12,985,082) (21,348,662) (9,891,190) (7,699,405) (4,656,525) (7,727,423)
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Net Increase
(Decrease) 2,468,875 2,080,352 839,747 (2,186,374) 7,014,238 5,546,801 (128,436) (1,475,789)
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
TOTAL INCREASE (DECREASE)
IN NET ASSETS (711,226) 2,165,690 (7,063,361) (8,717,010) 12,467,524 11,409,724 (2,153,614) (2,075,132)
NET ASSETS:
Beginning 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
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
End of period $42,153,871 $42,865,097 $57,813,403 $64,876,764 $59,867,048 $47,399,524 $24,935,687 $27,089,301
=========== =========== =========== =========== =========== =========== =========== ===========
</TABLE>
See notes to financial statements.
<PAGE>
AQUINAS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FIXED INCOME FUND EQUITY INCOME FUND
------------------------------------------------ ------------------------------------------------
Year Year Year Year Year Year Year Year Year Year
ended ended ended ended ended ended ended ended ended ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1999 1998 1997 1996 1995 1999 1998 1997 1996 1995
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $10.18 $10.17 $9.90 $10.17 $9.24 $13.21 $14.89 $13.26 $11.83 $9.39
Income (loss) from
Investment Operations:
Net investment income 0.53 0.54 0.55 0.54 0.54 0.21 0.23 0.26 0.23 0.28
Net realized and unrealized
gains (losses)
on investments (0.71) 0.17 0.27 (0.27) 0.93 (0.09) 0.57 3.40 2.18 3.03
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total from Investment
Operations (0.18) 0.71 0.82 0.27 1.47 0.12 0.80 3.66 2.41 3.31
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Less Distributions:
Dividends from net
investment income (0.53) (0.54) (0.55) (0.54) (0.54) (0.20) (0.23) (0.26) (0.23) (0.28)
Distributions from net
realized gains - (0.16) - - - (1.79) (2.25) (1.77) (0.75) (0.59)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total Distributions (0.53) (0.70) (0.55) (0.54) (0.54) (1.99) (2.48) (2.03) (0.98) (0.87)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net Asset Value, End of Period $9.47 $10.18 $10.17 $9.90 $10.17 $11.34 $13.21 $14.89 $13.26 $11.83
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Total Return (1.86)% 7.17% 8.54% 2.83% 16.26% 1.12% 5.50% 27.85% 20.43% 35.62%
Supplemental Data and Ratios:
Net assets, end of period
(in thousands) $42,154 $42,865 $40,699 $37,229 $35,617 $57,813 $64,877 $73,594 $54,184 $42,102
Ratio to Average Net Assets of:
Expenses, net of waivers
and reimbursements 1.00% 1.00% 0.99% 1.00% 0.98% 1.38% 1.36% 1.37% 1.40% 1.37%
Expenses, before waivers
and reimbursements 1.02% 1.03% 1.05% 1.03% 0.98% 1.38% 1.36% 1.37% 1.40% 1.37%
Net investment income (loss),
net of waivers
and reimbursements 5.37% 5.27% 5.54% 5.44% 5.46% 1.56% 1.49% 1.74% 1.79% 2.47%
Net investment income (loss),
before waivers
and reimbursements 5.35% 5.24% 5.48% 5.41% 5.46% 1.56% 1.49% 1.74% 1.79% 2.47%
Portfolio turnover rate 131% 120% 102% 169% 126% 100% 64% 42% 32% 40%
</TABLE>
See notes to financial statements.
<PAGE>
AQUINAS FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONT'D.)
<TABLE>
<CAPTION>
EQUITY GROWTH FUND BALANCED FUND
------------------------------------------------ ------------------------------------------------
Year Year Year Year Year Year Year Year Year Year
ended ended ended ended ended ended ended ended ended ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1999 1998 1997 1996 1995 1999 1998 1997 1996 1995
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period $17.57 $15.12 $13.45 $12.13 $9.31 $11.34 $11.58 $11.53 $11.03 $9.43
Income from Investment Operations:
Net investment income (loss) (0.14) (0.10) (0.06) (0.06) (0.01) 0.27 0.28 0.31 0.26 0.32
Net realized and unrealized
gains on investments 4.20 3.40 3.93 2.84 2.83 0.17 0.68 1.95 1.41 1.84
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total from Investment
Operations 4.06 3.30 3.87 2.78 2.82 0.44 0.96 2.26 1.67 2.16
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Less Distributions:
Dividends from net investment
income - - - - - (0.26) (0.28) (0.30) (0.26) (0.33)
Distributions from net
realized gains (2.15) (0.85) (2.20) (1.46) - (1.12) (0.92) (1.91) (0.91) (0.23)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total Distributions (2.15) (0.85) (2.20) (1.46) - (1.38) (1.20) (2.21) (1.17) (0.56)
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net Asset Value, End of Period $19.48 $17.57 $15.12 $13.45 $12.13 $10.40 $11.34 $11.58 $11.53 $11.03
======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Total Return 23.12% 21.95% 28.97% 22.90% 30.29% 4.06% 8.46% 19.91% 15.29% 23.14%
Supplemental Data and Ratios:
Net assets, end of period
(in thousands) $59,867 $47,400 $35,990 $22,593 $15,912 $24,936 $27,089 $29,164 $29,670 $26,779
Ratio to Average Net Assets of:
Expenses, net of waivers
and reimbursements 1.41% 1.42% 1.49% 1.50% 1.50% 1.50% 1.44% 1.45% 1.44% 1.46%
Expenses, before waivers
and reimbursements 1.41% 1.42% 1.49% 1.54% 1.61% 1.53% 1.49% 1.52% 1.49% 1.46%
Net investment income (loss),
net of waivers
and reimbursements (0.83)% (0.71)% (0.66)% (0.55)% (0.10)% 2.39% 2.38% 2.44% 2.23% 2.93%
Net investment income
(loss), before waivers
and reimbursements (0.83)% (0.71)% (0.66)% (0.59)% (0.21)% 2.36% 2.33% 2.37% 2.18% 2.93%
Portfolio turnover rate 99% 96% 104% 112% 102% 118% 102% 94% 111% 118%
</TABLE>
See notes to financial statements.
<PAGE>
AQUINAS FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
FIXED INCOME EQUITY INCOME EQUITY GROWTH BALANCED
FUND FUND FUND FUND
---- ---- ---- ----
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $2,794,309 $187,880 $104,626 $687,277
Dividends - 1,625,985 187,787 274,530
------------ ------------ ------------ ------------
2,794,309 1,813,865 292,413 961,807
EXPENSES:
Investment advisory fees 263,027 617,513 505,013 247,733
Administration and fund accounting fees 71,712 101,015 82,611 40,525
Shareholder servicing fees 41,035 46,398 43,854 34,796
Federal and state registration fees 16,428 18,196 17,796 8,444
Legal fees 15,529 22,309 17,069 8,406
Pricing fees 10,538 3,274 4,917 13,860
Audit fees 8,916 11,409 10,294 4,229
Reports to shareholders 7,393 11,028 8,608 4,261
Other 7,017 9,617 7,649 4,002
Custody fees 6,035 6,922 11,360 11,997
Insurance 559 945 565 419
------------ ------------ ------------ ------------
Total expenses before waiver 448,189 848,626 709,736 378,672
Waiver of fees (9,810) - - (7,405)
------------ ------------ ------------ ------------
Net Expenses 438,379 848,626 709,736 371,267
------------ ------------ ------------ ------------
NET INVESTMENT INCOME (LOSS) 2,355,930 965,239 (417,323) 590,540
------------ ------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss)
on investments (490,218) 7,436,100 7,867,504 2,339,367
Change in unrealized appreciation/
depreciation on investments (2,710,555) (7,493,044) 4,008,588 (1,982,162)
------------ ------------ ------------ ------------
Net Gain (Loss) on Investments (3,200,773) (56,944) 11,876,092 357,205
------------ ------------ ------------ ------------
NET INCREASE (DECREASE)IN NET
ASSETS RESULTING FROM OPERATIONS $(844,843) $908,295 $11,458,769 $947,745
============ ============ ============ ============
</TABLE>
See notes to financial statements.
<PAGE>
AQUINAS FUNDS
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
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. For the year ended
December 31, 1999, the Fixed Income Fund incurred a net capital loss
of $321,203, which is available to offset future capital gains through
2007.
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.
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AQUINAS FUNDS
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Where appropriate, reclassifications between net asset accounts are
made for such differences that are permanent in nature. Accordingly,
at December 31, 1999, reclassifications were recorded to increase
(decrease) undistributed net investment income by $(10,194),
$(51,078), $417,323 and $(15,061); increase (decrease) accumulated net
realized gain (loss) on investments by $(10,207), $51,090, $(417,323)
and $15,074; and decrease paid-in capital in excess of par by $13,
$12, $0 and $13 for the Fixed Income, Equity Income, Equity Growth and
Balanced Funds, respectively.
For the year ended December 31, 1999, 0%, 71.36%, 6.19% and 17.01% of
dividends paid from net investment income, including 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. For the year
ended December 31, 1999, the Equity Income, Equity Growth and Balanced
Funds designate approximately $6,252,190, $4,321,634 and $1,376,725 as
long-term capital gains for purposes of the dividends paid deduction,
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.
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, 1999, expenses of $9,810 and $3,353 were waived by the
Advisor in the Fixed Income and Balanced Funds, respectively.
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, 1999, administrative fees of $4,052 were waived in the Balanced Fund.
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AQUINAS FUNDS
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4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Funds for the year ended December 31, 1999,
were as follows:
Fixed Equity Equity
Income Income Growth Balanced
Fund Fund Fund Fund
---- ---- ---- ----
Shares sold 840,507 408,800 619,830 139,695
Shares issued to
holders in
reinvestment of
distributions 223,052 745,394 296,132 282,799
Shares redeemed (822,874) (965,668) (540,768) (412,076)
---------- ---------- ---------- ----------
Net Increase
(Decrease) 240,685 188,526 375,194 10,418
========== ========== ========== ==========
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)
========== ========== ========== ==========
5. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of securities, excluding short-term
investments, for the Funds for the year ended December 31, 1999, were as
follows:
Fixed Equity Equity
Income Income Growth Balanced
Fund Fund Fund Fund
---- ---- ---- ----
Purchases
U.S. Government $28,529,168 - - $7,519,990
Other 32,168,135 $57,001,706 $49,247,870 20,128,858
Sales
U.S. Government 32,196,267 - - 7,637,871
Other 21,945,082 66,347,862 47,651,415 23,756,460
At December 31, 1999, gross unrealized appreciation and depreciation on
investments, based on cost for federal income tax purposes of $43,713,494,
$54,585,491, $43,467,258 and $23,803,541 were as follows:
Fixed Equity Equity
Income Income Growth Balanced
Fund Fund Fund Fund
---- ---- ---- ----
Appreciation $49,549 $6,535,913 $17,895,933 $2,495,045
(Depreciation) (1,845,841) (4,011,209) (1,141,146) (1,164,503)
---------- ---------- ---------- ----------
Net Appreciation
(depreciation) on
Investments $(1,796,292) $2,524,704 $16,754,787 $1,330,542
========== ========== ========== ==========
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AQUINAS FUNDS
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of
The Aquinas Funds, Inc.:
We have audited the statements of assets and liabilities, including the
schedules of investments, 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") as of
December 31, 1999, and the related statements of operations for the year then
ended, the 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 five years in
the period then ended. These financial statements and financial highlights are
the responsibility of the Company's 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, 1999, by correspondence with the custodian
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
audits provide 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 funds constituting The Aquinas Funds, Inc. as of December 31,
1999, 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 five years in the period then ended, in
conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
January 21, 2000
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(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.
