SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
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[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
The Aquinas Funds, Inc.
(Name of Registrant as Specified in its Charter)
----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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[X] No fee required.
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
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4) Date Filed:
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[Letterhead of The Aquinas Funds, Inc.]
Notice of Special Meeting of Shareholders of the Funds
To be Held September 5, 2000
To Our Shareholders:
We invite you to attend our special meeting of shareholders on Tuesday,
September 5, 2000, at 8:30 a.m. (Central Standard Time), at our principal
executive offices located at 5310 Harvest Hill Road, Suite 248, Dallas, Texas
75230. As we describe in the accompanying proxy statement, we will vote on (a)
the election of seven directors, (b) a service and distribution plan for each of
the Funds, (c) a new management and advisory agreement for the Aquinas Balanced
Fund (to be renamed the Aquinas Small-Cap Fund) and (d) on other business that
may properly come before the special meeting.
We have enclosed a proxy card with this proxy statement. Your vote is
important, no matter how many shares you own. Even if you plan to attend the
special meeting, please complete, date and sign the proxy card and mail it as
soon as you can in the envelope we have provided. If you attend the special
meeting, you can revoke your proxy and vote your shares in person if you choose.
We look forward to seeing you at the special meeting.
THE AQUINAS FUNDS, INC.
Charles Clark
Secretary/Treasurer
Dallas, Texas
August 23, 2000
<PAGE>
FREQUENTLY ASKED QUESTIONS
Q: Why have I received this proxy statement?
Our Board of Directors has sent you this proxy statement, starting around
August 23, 2000 to ask for your vote as a shareholder of the Funds on
certain matters to be voted on at the special meeting.
Q: What am I voting on?
You will vote on (a) electing seven directors, (b) approving a service and
distribution plan and (c) if you are a shareholder of the Aquinas Balanced
Fund (to be renamed the Aquinas Small-Cap Fund; hereinafter the "Aquinas
Small-Cap Fund"), approving a new management and advisory agreement, which
provides for a fee increase. Our Board of Directors is not aware of any
other matter which will be presented for your vote at the special meeting.
Q: Do I need to attend the special meeting in order to vote?
No. You can vote either in person at the special meeting or by completing
and mailing the enclosed proxy card.
Q: How will proxies be solicited?
We will solicit proxies by mail. In addition, certain of our officers and
employees may solicit by telephone, telegraph and personally. We will not
pay these officers and employees specifically for soliciting proxies. We
will bear the cost of soliciting proxies, including preparing, assembling
and mailing the proxy material.
Q: Who is entitled to vote?
If you owned shares of the Aquinas Small-Cap Fund, the Aquinas Equity
Income Fund (to be renamed the Aquinas Value Fund; hereinafter the "Aquinas
Value Fund"), the Aquinas Equity Growth Fund (to be renamed the Aquinas
Growth Fund; hereinafter the "Aquinas Growth Fund") or the Aquinas Fixed
Income Fund, as of the close of business on the record date, July 31, 2000,
then you are entitled to vote. You will be entitled to one vote per share
for each share you own on the record date.
Q: How many shares of the Fund's stock are entitled to vote?
As of the record date, 2,274,716 shares of the Aquinas Small-Cap Fund,
4,698,919 shares of the Aquinas Value Fund, 3,277,613 shares of the Aquinas
Growth Fund and 4,208,523 shares of the Aquinas Fixed Income Fund were
entitled to vote at the special meeting.
Q: What happens if the special meeting is adjourned?
The special meeting could be adjourned if a quorum does not exist. For
purposes of any adjournment, proxies will be voted "for" adjournment unless
you direct otherwise by writing anywhere on the enclosed proxy that you
will vote against any adjournments.
Q: What constitutes a quorum?
A "quorum" refers to the number of shares that must be in attendance at a
meeting to lawfully conduct business. A majority of the votes of the shares
of a Fund entitled to be cast represent a quorum for that Fund. As a
result, holders of 1,137,359 shares of the Aquinas Small-Cap Fund,
2,349,460 shares of the Aquinas Value Fund, 1,638,807 shares of the Aquinas
Growth Fund and 2,104,262 shares of the Aquinas Fixed Income Fund must be
present in person or represented by proxy at the special meeting to
constitute a quorum for the respective Fund.
Q: What happens if I sign and return my proxy card but do not mark my vote?
Frank A. Rauscher and Charles Clark, as proxies, will vote your shares to
elect the Board of Director's nominees for director, to approve the service
and distribution plan and, if applicable, to approve the new management and
advisory agreement.
Q: May I revoke my proxy?
You may revoke your proxy at any time before it is exercised by giving
notice of your revocation to us in writing (by subsequent proxy or
otherwise). Your presence at the special meeting does not itself revoke
your proxy.
Q: Who will count the votes?
Sunstone Financial Group, Inc., the Fund's administrator, will count the
votes and act as inspector of elections.
Q: What percentage of the outstanding shares do directors and officers own?
As of July 31, 2000, our directors and officers together own less than 1%
of the outstanding shares of each Fund.
Q: What is a service and distribution plan?
A service and distribution plan allows a fund to pay fees to cover service
and distribution costs, including the costs to sell and market the mutual
fund and to maintain shareholder accounts.
1
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Q: How can I obtain a copy of the annual report?
You may request a copy of our latest annual report and the semi-annual
report succeeding the annual report by writing to The Aquinas Funds, Inc.,
5310 Harvest Hill Road, Dallas, Texas 75230, Attn: Corporate Secretary or
by calling 1-972-233-6655. We will furnish this copy free of charge.
2
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BACKGROUND
On July 26, 2000, our Board of Directors met and, among other things, did
the following:
o changed the investment objective of the Aquinas Balanced Fund from
"long-term capital growth consistent with reasonable risk to
principal" to "capital appreciation";
o changed the name of the Aquinas Balanced Fund to the Aquinas Small-Cap
Fund;
o changed the name of the Aquinas Equity Income Fund to the Aquinas
Value Fund;
o changed the name of the Aquinas Equity Growth Fund to the Aquinas
Growth Fund;
o subject to shareholder approval, approved a new management and
advisory agreement for the Aquinas Small-Cap Fund with the Adviser,
Aquinas Investment Advisers, Inc.;
o approved a new sub-advisory agreement for the Aquinas Small-Cap Fund
with John McStay Investment Counsel, L.L.C., which increases the
monthly fee payable to this portfolio manager from 0.80% to 0.90%;
o nominated seven individuals to be presented to the shareholders of the
Funds for election as directors; and
o subject to shareholder approval, approved a distribution and service
plan to be entered into by each of the Funds.
Set forth below is a table identifying on which proposals the shareholders
of each Fund will vote:
-------------------------- ---------------- -------------- --------------
Shareholders Shareholders
of the Fund of the Fund
Shareholders will vote will vote on
of the Fund (separately) approving
will vote on approving a new
(collectively) a service and management
on electing distribution and advisory
directors? plan? agreement?
-------------------------- ---------------- -------------- --------------
-------------------------- ---------------- -------------- --------------
Aquinas Small-Cap Fund Yes Yes Yes
-------------------------- ---------------- -------------- --------------
Aquinas Value Fund Yes Yes No
-------------------------- ---------------- -------------- --------------
Aquinas Growth Fund Yes Yes No
-------------------------- ---------------- -------------- --------------
Aquinas Fixed Income Fund Yes Yes No
-------------------------- ---------------- -------------- --------------
(a) ELECTION OF DIRECTORS
Director Nominees
At the special meeting, we will elect seven directors to hold office until
their respective successors are chosen and qualified. The Board has nominated
seven people for election. As proxies, Frank A. Rauscher and Charles Clark
intend to vote for the election of all of the Board's nominees. They will also
vote proxies for another person that the Board may recommend in place of a
nominee if that nominee becomes unable to serve as a director before the special
meeting.
We recommend a vote "for" all the nominees. Each of the nominees is a
member of the present Board. Each nominee has consented to being named as a
nominee and to serve if elected.
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Our directors (each of whom is a nominee), and certain important
information regarding our directors (including their principal occupations for
at least the last five years), are as follows:
MICHAEL R. CORBOY, 69, Director.
-----------------
#7 Kings Gate Court
Dallas, Texas 75225
Mr. Corboy is President of Corboy Investment Company, a private
investment company.
SISTER IMELDA GONZALEZ, CDP, 59, Director.
---------------------------
c/o NATRI
8824 Cameron Street
Silver Spring, Maryland 20910
Sister Gonzalez has been a member of the staff of the National
Association of Treasurers of Religious Institutions, Silver Spring,
Maryland, since April 1997. Prior thereto, Sister Gonzalez was the
Treasurer General and Chief Financial Officer of the Congregation of Divine
Providence of San Antonio, Texas.
THOMAS J. MARQUEZ, 62, Director.
-----------------
5526 Delouche
Dallas, Texas 75220
Mr. Marquez has been a self-employed private investor since 1990.
CHARLES CLARK*, 61, Director and Secretary.
2420 Butler
Dallas, Texas 75235
Mr. Clark is President of Olmsted-Kirk Paper Company. Mr. Clark has
been Secretary, Treasurer and a Director of the Adviser since April 29,
1997.
JOHN L. STRAUSS, 60, Director.
---------------
4601 Christopher Place
Dallas, Texas 75204
Mr. Strauss was a principal of Barrow, Hanley, Mewhinney & Strauss, an
investment advisory firm from 1980 until his retirement in January 1998. He
is currently a partner in Clover Partners, a money management hedge fund.
--------------------------
* Mr. Clark is a director who is an "interested person" of the Company as that
term is defined in the 1940 Act.
4
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KATHLEEN MULDOON, 51, Director
8117 Preston Road, Suite 420
Dallas, Texas 75225
Ms. Muldoon is Vice President of Carter Financial Management, a
financial planning firm. She has been employed by Carter Financial
Management since 1979.
LEVY CURRY, 51, Director
2200 Ross Avenue, Suite 1600
Dallas, Texas 75225
Mr. Curry has been Senior Manager, Human Resources Strategic Group, of
Deloitte & Touche LLP since 1998. Prior thereto he served as Vice
President, Human Resources, for Paging Network Inc. (Pagenet), a wireless
messaging company. Mr. Curry serves as an adjunct professor at Southern
Methodist University Cox School of Business.
Our officers who are not also directors, and certain information
regarding those officers (including their principal occupations for at
least the last five years), are as follows:
JOE PETE WILBERT, 56, Vice President
5310 Harvest Hill Road
Suite 248
Dallas, Texas 75230
Mr. Wilbert has been President of Central Hardwoods since 1970.
CHRISTY FRAZER, 55, Vice President
5310 Harvest Hill Road
Suite 230
Dallas, Texas 75230
Mrs. Frazer has been employed by Aquinas Investment Advisers, Inc.
since October 1994 as National Sales Manager-Retirement Accounts. From 1993
to 1994 she was employed by Guaranty Federal Bank, Dallas, Texas
JOHN J. KICKHAM, 58, Vice President.
---------------
5310 Harvest Hill Road
Suite 245
Dallas, Texas 75230
Mr. Kickham has been the President of Quarterdeck of Texas, Inc., a
mortgage banking firm, since March 1994. From November 1994 through
November 1995, he was President of Wing Industries, a door manufacturer.
Mr. Kickham has been Chairman of the Kickham Group, Inc., a private
investment company, since March 1985.
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FRANK A. RAUSCHER, 56, President and Treasurer.
-----------------
5310 Harvest Hill Road
Suite 248
Dallas, Texas 75230
Mr. Rauscher has been the Chief Operating Officer of the Adviser since
August 1994 and Chief Executive Officer of the Adviser since May 1997.
Compensation
The following table sets forth information on the compensation paid to
directors for their services during the fiscal year ended December 31, 1999. Ms.
Muldoon and Mr. Curry have been directors only since February 24, 2000 and May
24, 2000, respectively. Mr. Strauss was an "interested person" of the Company
during the fiscal year ended December 31, 1999.
Pension or Total
Retirement Estimated Compensation
Benefits Annual From Company
Aggregate Accrued as Benefits and Fund
Compensation Part of Fund Upon Complex Paid
Name of Person from Company Expenses Retirement to Directors
-------------- ------------ ------------ ---------- ------------
Charles Clark $ 0 $0 $0 $ 0
Michael R. Corboy 2,000 0 0 2,000
Imelda Gonzalez, CDP 1,000 0 0 1,000
Thomas J. Marquez 2,000 0 0 2,000
John L. Strauss 0 0 0 0
We compensate each disinterested director $500 for each meeting of the
Board attended in person. We may also reimburse directors for travel expenses
incurred in order to attend meetings of the Board. During the fiscal year ended
December 31, 1999, there were reimbursements of $1,459.10 for travel expenses.
Sister Gonzalez has assigned all directors fees that she receives to her
religious order.
Board Meetings and Committees
The Board has no audit, nominating, compensation or other similar
committees. The Board met 5 times during the fiscal year ended December 31,
1999. Sister Gonzales and Messrs. Clark and Corboy each attended four out of the
five meetings of the Board. (Sister Gonzales participated by telephone in two of
the meetings she attended.) Messrs. Clark and Strauss attended three out of the
five meetings of the Board.
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Principal Shareholders
As of July 31, 2000, the officers and directors of the Funds as a group
owned less than 1% of the outstanding shares of each Fund. At July 31, 2000, the
following persons owned more than 5% of a Fund's outstanding shares:
Name and Address Percent
of Beneficial Owner Number of Shares of Class
---------------------------- ---------------- --------
Aquinas Small-Cap Fund:
The Catholic Foundation Aggregate: 1,526,065 67.1%
5310 Harvest Hill Road As Trustee: 530,209 23.3%
Suite 248 Beneficially Owned: 995,856 43.8%
Dallas, Texas 75230
The Lay Employees of the 199,382 8.8%
Roman Catholic Diocese
of Dallas 403(b)(7) plan
P.O. Box 190507
Dallas, Texas 75219
Aquinas Value Fund:
The Catholic Foundation Aggregate: 1,225,541 26.1%
5310 Harvest Hill Road As Trustee: 859,665 18.3%
Suite 248 Beneficially Owned: 365,876 7.8%
Dallas, Texas 75230
Aquinas Growth Fund:
The Catholic Foundation Aggregate: 811,029 24.7%
5310 Harvest Hill Road As Trustee: 491,851 15.0%
Suite 248 Beneficially Owned: 319,178 9.7%
Dallas, Texas 75230
The Lay Employees of the 205,330 6.3%
Roman Catholic Diocese
of Dallas 403(b)(7) plan
P.O. Box 190507
Dallas, Texas 75219
Aquinas Fixed Income Fund:
The Catholic Foundation Aggregate: 1,603,303 38.1%
5310 Harvest Hill Road As Trustee: 810,167 19.3%
Suite 248 Beneficially Owned: 793,136 18.8%
Dallas, Texas 75230
The Bishop Charles V 238,980 5.7%
Grahmann Trust
P.O. Box 190507
Dallas, Texas 75219
7
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No other person owns of record or, to our knowledge, beneficially, 5% or
more of the outstanding shares of any Fund. By virtue of its stock ownership,
The Catholic Foundation is deemed to "control," as that term is defined in the
Investment Company Act of 1940, the Aquinas Small-Cap Fund.
Vote Required
Under Maryland law, shareholders elect directors by a plurality of the
votes cast by shares which are entitled to vote in the election, assuming a
quorum is present. For this purpose, "plurality" means that the nominees
receiving the largest number of votes from the shareholders of the Funds will be
elected as directors. Any shares which do not vote, whether by abstention,
broker non-vote or otherwise, will not affect the election of directors.
(b) APPROVAL OF SERVICE DISTRIBUTION PLAN
WITH RESPECT TO EACH OF THE FUNDS
We are proposing that holders of shares of each of the Funds approve the
Service and Distribution Plan approved by the Board. There is currently no
distribution plan for shares of the Funds. The Distribution Plan would
supplement other arrangements under which shareholder services are currently
rendered to shareholders of the Funds.
We recommend a vote "for" the approval of the Distribution Plan.
Description of the Distribution Plan
The Distribution Plan, which was drafted pursuant to Section 12(b) of the
Investment Company Act of 1940 and Rule 12b-1 thereunder, was approved with
respect to the Funds on July 26, 2000 by the Board, including those directors
who are not interested persons of the Company and who have no direct or indirect
interest in the Distribution Plan or any related agreements (the "Rule 12b-1
Directors"). The Distribution Plan is being submitted for shareholder approval
pursuant to the requirements of Rule 12b-1.
The Distribution Plan permits each Fund whose shareholders approve it to
use Fund assets to finance the distribution of the Fund's shares. (Funds whose
shareholders have approved the Distribution Plan are referred to as "Approving
Funds"). The Distribution Plan permits each Approving Fund to pay a distribution
and service fee on an annualized basis of up to 0.25% of such Approving Fund's
average daily net assets. The distribution and servicing fee may be spent on any
activities primarily intended to result in the sale of shares of the Approving
Fund. Examples of such activities include:
o Compensation of securities dealers, financial institutions or similar
persons ("Shareholder Organizations") who render personal service to
shareholders, assist in the maintenance of shareholder accounts or who
render assistance in distributing or promoting the sale of shares.
o Advertising.
o Printing and distributing prospectuses to prospective investors.
o Purchasing and distributing other promotional material.
The Distribution Plan contains a number of safeguards that are intended to
insure that payments pursuant to the Distribution Plan accomplish its
objectives. All agreements with Shareholder Organizations must be approved by
the Board, including a majority of the 12b-1 Directors. Assuming their election
at the special meeting, Sister Gonzalez, Ms. Muldoon, and Messrs. Curry, Corboy,
Marquez and Strauss will be the 12b-1 Directors. The directors anticipate that
substantially all agreements with Shareholder Organizations will provide for
compensation based on a percentage of the value of their clients' investments in
the applicable Approving
8
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Fund. Other expenditures under the Distribution Plan, such as advertising,
printing and mailing costs must be authorized by one of our officers.
Our officers will provide to the Board on a quarterly basis, and the Board
will review, a written report of amounts expended pursuant to the Distribution
Plan and the purpose of the expenditures. The Distribution Plan further provides
that with respect to each Approving Fund, it may be terminated by a vote of the
majority of the 12b-1 Directors or by a vote of a majority of the outstanding
voting securities of the Approving Fund. The Board must approve the continuation
of the Distribution Plan annually, and if it does not, the Distribution Plan
will terminate automatically. So long as the Distribution Plan continues in
effect, the selection and nomination of directors who are not interested persons
of the Company will be committed to the discretion of the 12b-1 Directors. The
Distribution Plan may not be amended to increase materially the permitted amount
of payments with respect to an Approving Fund without the approval of a majority
of the 12b-1 Directors and a majority of the outstanding voting securities of
the Approving Fund. Any amendments to the Distribution Plan not related to
increasing the amount of permitted payments must be approved by the 12b-1
Directors.
Factors Considered by the Board of Directors
In voting to approve the Distribution Plan and submitting it to the
shareholders of the Funds for their approval, the directors, including the 12b-1
Directors, considered a number of factors. Prior to approving the Distribution
Plan, the directors had the opportunity to review a draft of the Distribution
Plan and discuss with our officers possible expenditures that might be made
pursuant to it.
Initially the Board considered the nature of the circumstances that made
implementation of the Distribution Plan necessary or appropriate. Our officers
reviewed with the directors the performance of each of the Funds and its growth
in net assets. Our officers noted that despite the positive performance of the
Funds, their net assets had grown slowly. Our officers noted that a faster
growth in net assets might enable the Funds to offer the following benefits to
shareholders:
o Lower per share transaction costs that would result if the
sub-advisers were able to effect larger transactions.
o More efficient portfolio management as it is easier for the Funds to
process redemption requests without disrupting their investment
strategy if they have net cash inflows.
o Increased flexibility of the Funds in pursuing their investment
objectives in that they may be able to establish meaningful positions
in the various stocks in which the sub-advisers would like to invest
without reducing positions currently held by the Funds.
o Lowering the Funds' expense ratios with respect to their fixed
expenses which would be spread over a larger base.
o Increased communications with shareholders and prospective
shareholders.
The Board then considered the causes of the slow growth in net assets of
each of the Funds. Our officers informed the Board that no-load mutual funds
were increasingly being sold through the efforts of third parties such as
brokerage firms, banks, investment advisers, consultants and others. No-load
mutual funds have increasingly employed distribution plans to compensate these
third parties. Since the Funds have not had a distribution plan, they have been
at a competitive disadvantage in attracting the interest of third parties to
promote the Funds. Our officers also informed the Board that advertising in
financial publications continues to be a means employed by no-load mutual funds
to promote the sale of their shares and that a source of funds for such
advertising is payment made pursuant to distribution plans. This funding source
has heretofore not been available to the Funds and the Adviser has not had the
resources to commit to an advertising program in financial publications.
9
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The Board then considered whether the Distribution Plan would address the
problems mentioned above and alleviate them. The Adviser informed the Board that
if the Distribution Plan were approved, then it would at our request undertake
on behalf of an Approving Fund, marketing efforts similar to those undertaken by
other no-load mutual funds. The Adviser indicated that it would undertake to
identify Shareholder Organizations that would distribute shares of an Approving
Fund and, in appropriate circumstances, would be willing to supplement an
Approving Fund's payments to Shareholder Organizations with payments from its
own resources. Additionally the Board determined that an Approving Fund may
advertise in financial publications to supplement the Adviser's promotional
activities. In this circumstance, the Adviser represented to the Board that it
would not reduce its effort to promote sales of shares of an Approving Fund and
that through advertising the increased name recognition of an Approving Fund
would afford the Adviser additional marketing opportunities. In approving the
Distribution Plan, the directors determined, in the exercise of their business
judgment and in light of their fiduciary duties under state law and the
Investment Company Act of 1940, that the Distribution Plan is reasonably likely
to benefit the Funds and their shareholders.
Although the Board concluded that the Distribution Plan is reasonably
likely to benefit the Funds and their shareholders, it also considered possible
alternatives. The Board considered the possibility of the Funds imposing a
front-end sales load and retaining a brokerage firm to serve as principal
underwriter for them. The Board concluded that adoption of the Distribution Plan
would be more likely to result in increased sales than converting the Funds to
load funds.
The Board recognized that the Adviser would benefit from increased
management fees as a result of growth in the Funds' assets. The Board concluded
that such benefits would not be disproportionate to the above-described
anticipated benefits to each Fund and its shareholders because the Adviser would
have increased portfolio management responsibilities as a result of the growth
of the assets of the Funds. The Board also recognized that the Adviser had
heretofore utilized its own resources to finance distribution of shares of the
Funds and would continue to do so if the Distribution Plan is approved by the
shareholders of the Funds. The Board determined that payments by any Fund of
investment advisory fees to the Adviser did not constitute indirect financing of
distribution of the Funds because the advisory fees paid by the Funds were not
out of line with the investment advisory fees paid by comparable funds.
In addition to considering the potential benefits of the Distribution Plan
to the Funds and their shareholders, the Board also considered the impact of the
Distribution Plan on the expenses of each of the Funds.
Fees and Expenses of the Aquinas Small-Cap Fund
The following table shows the fees and expenses you may pay if you buy and
hold shares of the Aquinas Small-Cap Fund:
ACTUAL PRO FORMA
------ ---------
Management Fee 1.00% 1.25%*
Distribution (12b-1) and/or Service Fees 0.00% 0.25%
Other Expenses 0.53% 0.53%
----- -----
Total Annual Fund Operating Expenses 1.53%** 2.03%**
===== =====
* We are also asking the shareholders of the Aquinas Small-Cap Fund to
approve a new management and advisory agreement with the Adviser providing
for an investment advisory fee of 1.25% per annum of the average daily net
assets of the Aquinas Small-Cap Fund.
** The expenses listed above do not reflect that the Adviser has agreed to
limit the Fund's total expenses (excluding interest, taxes, brokerage and
extraordinary expenses) to an annual rate of 1.50% (1.95% if the new
management and advisory agreement is approved) of the Fund's average net
assets. This fee waiver is voluntary and may be terminated at any time. For
the fiscal year ended December 31, 1999, the Adviser waived a portion
10
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of its management fee for the Fund, so the actual management fee the Fund
was paid was 0.97% of average net assets, reducing total expenses from
1.53% to 1.50%.
Example
This example is intended to help you compare the cost of investing in the
Aquinas Small-Cap Fund with the cost of investing in other mutual funds. It
assumes that:
o you invest $10,000 for the time indicated and then redeem all your
shares at the end of that period;
o your investment has a 5% return each year;
o the Fund's operating expenses remain the same; and
o you reinvest all dividends and distributions.
Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Based on the Actual Expenses $156 $483 $ 834 $1,824
Based on the Pro Forma Expenses $206 $637 $1,093 $2,358
The expense example is for comparison purposes only. It does not represent
the Fund's actual expenses or returns, either past or future. Actual expenses or
returns may vary.
The Board concluded that the increase in the expenses of the Aquinas
Small-Cap Fund resulting from implementation of the Distribution Plan did not
outweigh the potential benefits of the Distribution Plan described above.
Fees and Expenses of the Aquinas Value and Growth Funds
This table describes the fees and expenses you may pay if you buy and hold
shares of the Aquinas Value Fund or the Aquinas Growth Fund.
ACTUAL PRO FORMA
------ ---------
Value Growth Value Growth
Fund Fund Fund Fund
----- ------ ----- ------
Management Fee 1.00% 1.00% 1.00% 1.00%
Distribution (12b-1)
and/or Service Fees 0.00% 0.00% 0.25% 0.25%
Other Expenses 0.38% 0.41% 0.38% 0.41%
----- ----- ----- -----
Total Annual Fund
Operating Expenses 1.38% 1.41% 1.63% 1.66%
===== ===== ===== =====
Example
This example is intended to help you compare the cost of investing in the
Aquinas Value Fund and the Aquinas Growth Fund with the cost of investing in
other mutual funds. It assumes that:
o you invest $10,000 for the time indicated and then redeem all your
shares at the end of that period;
o your investment has a 5% return each year;
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o each Fund's operating expenses remain the same; and
o you reinvest all dividends and distributions.
Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
Aquinas Value Fund: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
Based on the Actual Expenses $141 $437 $755 $1,657
Based on the Pro Forma Expenses $166 $514 $887 $1,933
Aquinas Growth Fund:
Based on the Actual Expenses $144 $446 $771 $1,691
Based on the Pro Forma Expenses $169 $523 $902 $1,965
This expense example is for comparison purposes only. It does not represent
the Funds' actual expenses or returns, past or future. Actual expenses or
returns may vary.
The Board concluded that the increase in the expenses of the Aquinas Value
Fund and the Aquinas Growth Fund resulting from implementation of the
Distribution Plan did not outweigh the potential benefits of the Distribution
Plan described above.
Fees and Expenses of the Aquinas Fixed Income Fund
ACTUAL PRO FORMA
------ ---------
Management Fee 0.60% 0.60%
Distribution (12b-1) and/or Service Fees 0.00% 0.25%
Other Expenses 0.42% 0.42%
----- -----
Total Annual Fund Operating Expenses 1.02%* 1.27%*
===== =====
* The expenses listed above do not reflect that the Adviser has agreed to
limit the Fund's total expenses (excluding interest, taxes, brokerage and
extraordinary expenses) to an annual rate of 1.00% of the Fund's average
net assets. This fee waiver is voluntary and may be terminated at any time.
For the fiscal year ended December 31, 1999, the Adviser waived a portion
of its management fee for the Fund, so the actual management fee the Fund
paid was 0.58% of average net assets, reducing total expenses from 1.02% to
1.00%. The Adviser intends to continue to reduce its management fees to
limit total expenses to 1.00% of the Fund's average net assets irrespective
of whether or not this Fund's shareholders vote to approve the Distribution
Plan.
Example
This example is intended to help you compare the cost of investing in the
Aquinas Fixed Income Fund with the cost of investing in other mutual funds. It
assumes that:
o you invest $10,000 for the time indicated and then redeem all your
shares at the end of that period;
o your investment has a 5% return each year;
o the Fund's operating expenses remain the same; and
o you reinvest all dividends and distributions.
12
<PAGE>
Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Based on the Actual Expenses $104 $325 $563 $1,248
Based on the Pro Forma Expenses $129 $403 $697 $1,534
The expense example is for comparison purposes only. It does not represent
the Fund's actual expenses or returns, either past or future. Actual expenses or
returns may vary.
The Board concluded that the increase in the expenses of the Aquinas Fixed
Income Fund resulting from implementation of the Distribution Plan did not
outweigh the potential benefits of the Distribution Plan described above.
Vote Required
The favorable vote of the holders of a "majority" (as defined in the
Investment Company Act of 1940) of the outstanding shares of each of the Funds
is required for the approval of the Distribution Plan by the respective Fund.
Under the Investment Company Act of 1940, the vote of the holders of a
"majority" of the outstanding shares of a Fund means the vote of the holders of
the lesser of (a) 67% or more of its shares present at the meeting or
represented by proxy if the holders of 50% or more of its shares are so present
or represented; or (b) more than 50% of its outstanding shares. Abstentions and
broker non-votes will not be counted for or against the proposal but will be
counted as votes present for purposes of determining whether or not more than
50% of the outstanding shares are present or represented at the meeting. The
failure to vote (other than by broker non-votes or abstentions), assuming more
than 50% of the outstanding shares of a Fund are present, has no effect if (a)
above is applicable and has the same effect as a vote against the proposal if
(b) above is applicable. Abstentions and broker non-votes have the same effect
as a vote against the proposal.
If the Distribution Plan is approved by the Aquinas Small-Cap Fund, the
Distribution Plan will take effect with respect to the Aquinas Small-Cap Fund on
November 1, 2000. If the Distribution Plan is approved by the other Funds, the
Distribution Plan will take effect with respect to such Approving Funds on a
date to be determined by the Board, but not prior to November 1, 2000.
(c) APPROVAL OF NEW MANAGEMENT AND
ADVISORY AGREEMENT FOR THE AQUINAS SMALL-CAP FUND
Introduction
The Aquinas Small-Cap Fund presently has a management and advisory
agreement with the Adviser, pursuant to which the Adviser furnishes continuous
consulting, administrative and investment advisory services to the Aquinas
Small-Cap Fund. The Current Advisory Agreement was entered into on December 31,
1993. We are asking the shareholders of the Aquinas Small-Cap Fund to approve a
new management advisory agreement with the Adviser. The Proposed Advisory
Agreement has been approved by the Board. The Proposed Advisory Agreement will
take effect on November 1, 2000 assuming it is approved by the shareholders of
the Aquinas Small-Cap Fund at the special meeting. The Board approved the
Proposed Advisory Agreement at the same time it approved a change of the
investment objective and of the name of the Aquinas Small-Cap Fund. The Board
contemplates that the Aquinas Small-Cap Fund will invest primarily in common
stocks of small capitalization companies. (Currently the Balanced Fund is in
effect a combination of each of the other Funds.)
We recommend a vote "for" the approval of the Proposed Advisory Agreement.
13
<PAGE>
Description of Current and Proposed Advisory Agreements
The terms of the Current Advisory Agreement and the Proposed Advisory
Agreement are substantially identical except for the fees payable to the
Adviser. Under the Current Advisory Agreement, the Aquinas Small-Cap Fund pays
the Adviser a monthly fee of 1/12 of 1.00% (1.00% per annum) of the average
daily net asset value of the Fund. The Proposed Advisory Agreement provides for
an increase in the monthly advisory fee payable to the Adviser for the services
it provides to the Aquinas Small-Cap Fund to 1/12 of 1.25% (1.25% per annum) of
the average daily net asset value of the Fund.
Pursuant to the Current Advisory Agreement, the Adviser (i) provides or
oversees the provision of all general management and administrative, investment
advisory and portfolio management and distribution services for the Aquinas
Small-Cap Fund; (ii) provides the Aquinas Small-Cap Fund with office space,
equipment and personnel necessary to operate and administer the business of the
Aquinas Small-Cap Fund, and to supervise the provision of services by third
parties such as the portfolio managers and the custodian; (iii) develops the
investment programs, selects portfolio managers, allocates assets among
portfolio managers and monitors the portfolio managers' investment programs and
results; and (iv) is authorized to select or hire portfolio managers to select
individual portfolio securities held in the Aquinas Small-Cap Fund. The Adviser
bears the expense it incurs in providing these services as well as the costs of
preparing and distributing explanatory materials concerning the Aquinas
Small-Cap Fund. (If the shareholders of the Aquinas Small-Cap Fund approve the
Distribution Plan, the Adviser will not bear the cost of the distribution
expenses paid by the Fund under the Distribution Plan.)
The specific security investments for the Aquinas Small-Cap Fund are made
by portfolio managers selected by the Adviser. We and the Adviser enter into
portfolio management (sub-advisory) agreements with each of the portfolio
managers of the Aquinas Small-Cap Fund. Under the portfolio management
agreements, the portfolio manager is authorized to make specific portfolio
investments for that segment of the assets of the Aquinas Small-Cap Fund under
its management in accordance with the investment objective of the Aquinas
Small-Cap Fund and the portfolio manager's investment approach and strategies.
Currently the portfolio managers for the Aquinas Small-Cap Fund and their annual
fees expressed as a percentage of the average daily net assets under management
are:
Portfolio Manager Rate
----------------- ----
Atlantic Asset Management, L.L.C. 0.10%(1)
Income Research & Management, Inc. 0.30%(2)
Waite & Associates L.L.C. 0.315%
NFJ Investment Group 0.40%(2)
John McStay Investment Counsel, L.L.C. 0.80%
---------------------
(1) The fee rate paid to Atlantic Asset Management, L.L.C. will vary based on
the investment performance of the assets under its management but will not
be less than 0.10%, nor greater than 0.50%.
(2) The fee rate paid to each of Income Research & Management, Inc. and NFJ
Investment Group will vary based on assets under management but, with
respect to Income Research & Management, Inc. will not be less than 0.15%,
nor more than 0.40%, and with respect to NFJ Investment Group will not be
less than 0.315%, nor more than 0.40%.
The change of investment objective and investment strategy of the Aquinas
Small-Cap Fund will become effective on November 1, 2000. The Adviser
contemplates that initially the sole portfolio manager of the Aquinas Small-Cap
Fund at such time will be John McStay Investment Counsel, L.L.C., who will be
paid a fee at the rate of 0.90% per annum of the average daily net assets under
its management.
14
<PAGE>
For the fiscal years ended December 31, 1999, December 31, 1998 and
December 31, 1997, the fees paid to the Adviser for management and investment
advisory services to the Aquinas Small-Cap Fund were, respectively, $244,380
(net of waivers of $3,353), $290,593 and $289,730.
The Aquinas Small-Cap Fund paid (a) brokerage commissions of $34,524 on
total transactions of $25,664,202 for the fiscal year ended December 31, 1999,
(b) brokerage commissions of $37,849 on total transactions of $23,781,232 for
the fiscal year ended December 31, 1998, and (c) brokerage commissions of
$36,448 on total transactions of $22,830,609 for the fiscal year ended December
31, 1997.
During the fiscal year ended December 31, 1999, the Aquinas Small-Cap Fund
paid brokerage commission of $28,856 on transactions of $22,078,776 to brokers
who provided research.
Fees and Expenses for the Aquinas Small-Cap Fund
This table describes the fees and expenses you may pay if you buy and hold
shares of the Aquinas Small-Cap Fund.
Most Recent
Fiscal Year End Pro Forma
--------------- ---------
Management Fee 1.00% 1.25%
Distribution (12b-1) and/or Service Fees 0.00% 0.25%*
Other Expenses 0.53% 0.53%
----- -----
Total Annual Fund Operating Expenses 1.53%** 2.03%**
===== =====
* The pro forma expenses listed above assume the Distribution Plan is
adopted.
** The expenses listed above do not reflect that the Adviser has agreed to
limit the Fund's total expenses (excluding interest, taxes, brokerage and
extraordinary expenses) to an annual rate of 1.50% (1.95% if the Proposed
Advisory Agreement is approved) of the Fund's average net assets. This fee
waiver is voluntary and may be terminated at any time. For the fiscal year
ended December 31, 1999, the Adviser waived a portion of its management fee
for the Fund, so the actual management fee the Fund paid was 0.97% of
average net assets, reducing total expenses from 1.53% to 1.50%.
Example
This example is intended to help you compare the cost of investing in the
Aquinas Small-Cap Fund with the cost of investing in other mutual funds. It
assumes that:
o you invest $10,000 for the time indicated and then redeem all your
shares at the end of that period;
o your investment has a 5% return each year;
o the Fund's operating expenses remain the same; and
o you reinvest all dividends and distributions.
15
<PAGE>
Although your actual costs may be higher or lower, based on these
assumptions your cost would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Based on the Actual Expenses $156 $483 $ 834 $1,824
Based on the Pro Forma Expenses $206 $637 $1,093 $2,358
The expense example is for comparison purposes only. It does not represent
the Fund's actual expenses or returns, either past or future. Actual expenses or
returns may vary.
If approved by the requisite shareholder vote, the Proposed Advisory
Agreement will become effective on November 1, 2000. The Proposed Advisory
Agreement provides that it will continue in effect as long as its continuance is
specifically approved at least annually by (i) the Board, or by the vote of a
majority (as defined in the Investment Company Act of 1940) of the outstanding
shares of the Aquinas Small-Cap Fund; and (ii) by the vote of a majority of the
directors of the Aquinas Small-Cap Fund who are not interested persons, cast in
person at a meeting called for the purpose of voting on such approval. The
Proposed Advisory Agreement provides that it may be terminated at any time
without the payment of any penalty by the Board or by a vote of a majority of
the outstanding shares of the Aquinas Small-Cap Fund on sixty (60) calendar days
written notice to the Adviser, and by the Adviser on the same notice to the
Fund, and that it shall be automatically terminated if it is assigned.
Description of Aquinas Investment Advisers, Inc.
The Adviser is a wholly-owned subsidiary of The Catholic Foundation and was
organized to become the investment adviser to the Funds.
The Evaluation by the Board of Directors and Directors' Recommendation
The Board has determined that approving the Proposed Advisory Agreement
with the Adviser will enable the Aquinas Small-Cap Fund to obtain services of
high quality at costs deemed appropriate, reasonable and in the best interests
of the Fund and its shareholders.
In making its determinations, the Board took into consideration:
o the fact that the Adviser has demonstrated its abilities as an
investment adviser while serving as the investment adviser to the
Fund;
o the fact the terms of the Current Advisory Agreement are substantially
identical to the terms of the Proposed Advisory Agreement except for
the fees payable to the Adviser;
o the fact the management of the Fund pursuant to its new investment
objective and investment strategy will be labor intensive requiring
the Adviser to pay higher fees to portfolio managers;
o the fact the Fund pursuant to its new investment objective and
investment strategy will be actively managed, making the Adviser's
socially responsible investment analysis more time consuming; and
16
<PAGE>
o the fact the Fund invests in relatively small companies which tend not
to be widely followed by third party research analysts requiring the
Adviser to utilize its own resources in evaluating the performance of
the portfolio managers;
In weighing the factors discussed above, the Board assigned substantially
equal weight to each of the factors.
Based upon its review, the Board concluded that the Proposed Advisory
Agreement with the Adviser is reasonable, fair and in the best interests of the
Aquinas Small-Cap Fund and its shareholders, and the fees provided in the
Proposed Advisory Agreement are fair and reasonable. In the Board's view,
retaining the Adviser under the terms of the Proposed Advisory Agreement is
desirable and in the best interests of the Aquinas Small-Cap Fund and its
shareholders. Accordingly, after consideration of the above factors, and such
other facts and information as it deemed relevant, the Board voted to recommend
approval of the Proposed Advisory Agreement by the shareholders of the Aquinas
Small-Cap Fund.
Vote Required
The favorable vote of the holders of a "majority" (as defined in the
Investment Company Act of 1940) of the outstanding shares of the Aquinas
Small-Cap Fund is required for the approval of the Proposed Advisory Agreement.
Under the Investment Company Act of 1940, the vote of the holders of a
"majority" of the outstanding shares of the Aquinas Small-Cap Fund means the
vote of the holders of the lesser of (a) 67% or more of its shares present at
the special meeting or represented by proxy if the holders of 50% or more of its
shares are so present or represented; or (b) more than 50% of its outstanding
shares. Abstentions and broker non-votes will not be counted for or against the
proposal but will be counted as votes present for purposes of determining
whether or not more than 50% of the outstanding shares are present or
represented at the special meeting. The failure to vote (other than by broker
non-votes or abstentions), assuming more than 50% of the outstanding shares of
the Aquinas Small-Cap Fund are present, has no effect if (a) above is applicable
and has the same effect as a vote against the proposal if (b) above is
applicable. Abstentions and broker non-votes have the same effect as a vote
against the proposal. If the Proposed Advisory Agreement is not approved at the
special meeting, the Current Advisory Agreement will continue until its
scheduled termination date.
INVESTMENT ADVISER, PORTFOLIO MANAGERS AND ADMINISTRATOR
The Funds' investment adviser is Aquinas Investment Advisers, Inc., 5310
Harvest Hill, Suite 248, Dallas, Texas 75230.
The portfolio managers are:
o Atlantic Asset Management, L.L.C. ("AAM") is a portfolio manager for
the Aquinas Fixed Income Fund and the Aquinas Small-Cap Fund. AAM is
controlled by Ronald Sellars.
o Income Research & Management, Inc. ("IRM") serves as a portfolio
manager to the Aquinas Fixed Income Fund and the Aquinas Small-Cap
Fund. IRM is controlled by John A. Sommers.
o Waite & Associates L.L.C. ("Waite") is a portfolio manager for the
Aquinas Value Fund and the Aquinas Small-Cap Fund. Waite is controlled
by Leslie A. Waite.
o NFJ Investment Group ("NFJ") serves as a portfolio manager for the
Aquinas Value Fund and the Aquinas Small-Cap Fund. NFJ is a general
partnership indirectly controlled by Allianz AG.
17
<PAGE>
o John McStay Investment Counsel, L.L.C. ("JMIC") is a portfolio manager
for the Aquinas Growth Fund and the Aquinas Small-Cap Fund. American
International Group, Inc. directly or indirectly through its
affiliates owns a majority interest in JMIC.
o Sirach Capital Management, Inc. ("Sirach") is a portfolio manager for
the Aquinas Growth Fund. Sirach is a wholly-owned subsidiary of United
Asset Management Corporation, a publicly traded company, which has
entered into an agreement to be acquired by Old Mutual, plc.
The Funds' Administrator is Sunstone Financial Group, Inc., 207 East
Buffalo Street, Suite 400, Milwaukee, Wisconsin 53202. The Funds have no
principal underwriter.
RECEIPT OF SHAREHOLDER PROPOSALS
Under the proxy rules of the Securities and Exchange Commission,
shareholder proposals meeting tests contained in those rules may, under certain
conditions, be included in our proxy materials for a particular meeting of
shareholders. One of these conditions relates to the timely receipt by us of any
such proposal. Since we do not have regular annual meetings of shareholders,
under these rules, proposals submitted for inclusion in the proxy materials for
a particular meeting must be received by us a reasonable time before the
solicitation of proxies for the meeting is made. The fact that we receive a
shareholder proposal in a timely manner does not insure its inclusion in our
proxy materials since there are other requirements in the proxy rules relating
to such inclusion.
OTHER MATTERS
The Board knows of no other matters that may come before the special
meeting. If any other matters properly come before the special meeting, it is
the intention of the persons acting pursuant to the enclosed form of proxy to
vote the shares represented by said proxies in accordance with their best
judgment with respect to such matters.
SOLICITATION
We will bear the cost of soliciting proxies. We expect to solicit proxies
mainly by mail. Some of our employees may also solicit proxies personally and by
telephone. We do not anticipate that we will retain anyone to solicit proxies or
that we will pay compensation to anyone for that purpose. We will, however,
reimburse brokers and other nominees for their reasonable expenses in
communicating with the persons for whom they hold shares of the Fund.
If you would like to receive a copy of our latest annual report and
semi-annual report succeeding the annual report, please write to The Aquinas
Funds, Inc., 5310 Harvest Hill Road, Dallas, Texas 75230, Attention: Corporate
Secretary or call 1-972-233-6655, and we will provide you with a copy free of
charge.
THE AQUINAS FUNDS, INC.
/s/ Charles Clark
Charles Clark
Secretary/Treasurer
Dallas, Texas
August 23, 2000
18
<PAGE>
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
AQUINAS BALANCED FUND
The Aquinas Funds, Inc.
September 5, 2000
The undersigned constitutes and appoints Frank A. Rauscher and Charles
Clark, and each of them singly, with power of substitution, attorneys and
proxies for and in the name and place of the undersigned to appear and vote with
the same effect as the undersigned at the special meeting of shareholders of The
Aquinas Funds, Inc., the "Fund," to be held at the principal executive offices
of the Fund located at 5310 Harvest Hill Road, Suite 278, Dallas, Texas 75230,
on Tuesday, September 5, 2000 at 8:30 a.m. (Central Standard Time) and at any
adjournments or postponements thereof, all shares of stock of the Aquinas
Balanced Fund which the undersigned is entitled to vote as follows:
(1) To elect seven directors to the Board of Directors.
For all nominees listed below (except as marked to the contrary) [ ]
Withhold authority to vote for nominees listed below [ ]
(Instruction: To withhold authority to vote for any individual nominee, strike a
line through the nominee's name in the list below.)
Michael R. Corboy John L. Strauss
Sister Imelda Gonzalez, CDP Kathleen Muldoon
Thomas J. Marquez Levy Curry
Charles Clark
(2) To approve the proposed Service and Distribution Plan.
For [ ] Against [ ] Abstain [ ]
(3) To approve the proposed Management and Advisory Agreement.
For [ ] Against [ ] Abstain [ ]
This proxy will be voted as specified.
If no specification is made, this proxy
will be voted for each proposal.
The signature on this proxy should
correspond exactly with the name of the
shareholder as it appears on the proxy.
If stock is issued in the name of two or
more persons, each should sign the
proxy. If a proxy is signed by an
administrator, trustee, guardian,
attorney or other fiduciary, please
indicate full title as such.
Dated ____________________, 2000
Signed__________________________________
Signed__________________________________
This proxy is solicited on behalf of the Board of Directors of The Aquinas
Funds, Inc.
[ ] Please check here if you will be attending the meeting.
<PAGE>
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
AQUINAS EQUITY INCOME FUND
The Aquinas Funds, Inc.
September 5, 2000
The undersigned constitutes and appoints Frank A. Rauscher and Charles
Clark, and each of them singly, with power of substitution, attorneys and
proxies for and in the name and place of the undersigned to appear and vote with
the same effect as the undersigned at the special meeting of shareholders of The
Aquinas Funds, Inc., the "Fund," to be held at the principal executive offices
of the Fund located at 5310 Harvest Hill Road, Suite 278, Dallas, Texas 75230,
on Tuesday, September 5, 2000 at 8:30 a.m. (Central Standard Time) and at any
adjournments or postponements thereof, all shares of stock of the Aquinas Equity
Income Fund which the undersigned is entitled to vote as follows:
(1) To elect seven directors to the Board of Directors.
For all nominees listed below (except as marked to the contrary) [ ]
Withhold authority to vote for nominees listed below [ ]
(Instruction: To withhold authority to vote for any individual nominee, strike a
line through the nominee's name in the list below.)
Michael R. Corboy John L. Strauss
Sister Imelda Gonzalez, CDP Kathleen Muldoon
Thomas J. Marquez Levy Curry
Charles Clark
(2) To approve the proposed Service and Distribution Plan.
For [ ] Against [ ] Abstain [ ]
This proxy will be voted as specified.
If no specification is made, this proxy
will be voted for each proposal.
The signature on this proxy should
correspond exactly with the name of the
shareholder as it appears on the proxy.
If stock is issued in the name of two or
more persons, each should sign the
proxy. If a proxy is signed by an
administrator, trustee, guardian,
attorney or other fiduciary, please
indicate full title as such.
Dated ____________________, 2000
Signed__________________________________
Signed__________________________________
This proxy is solicited on behalf of the Board of Directors of The Aquinas
Funds, Inc.
[ ] Please check here if you will be attending the meeting.
<PAGE>
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
AQUINAS EQUITY GROWTH FUND
The Aquinas Funds, Inc.
September 5, 2000
The undersigned constitutes and appoints Frank A. Rauscher and Charles
Clark, and each of them singly, with power of substitution, attorneys and
proxies for and in the name and place of the undersigned to appear and vote with
the same effect as the undersigned at the special meeting of shareholders of The
Aquinas Funds, Inc., the "Fund," to be held at the principal executive offices
of the Fund located at 5310 Harvest Hill Road, Suite 278, Dallas, Texas 75230,
on Tuesday, September 5, 2000 at 8:30 a.m. (Central Standard Time) and at any
adjournments or postponements thereof, all shares of stock of the Aquinas Equity
Growth Fund which the undersigned is entitled to vote as follows:
(1) To elect seven directors to the Board of Directors.
For all nominees listed below (except as marked to the contrary) [ ]
Withhold authority to vote for nominees listed below [ ]
(Instruction: To withhold authority to vote for any individual nominee, strike a
line through the nominee's name in the list below.)
Michael R. Corboy John L. Strauss
Sister Imelda Gonzalez, CDP Kathleen Muldoon
Thomas J. Marquez Levy Curry
Charles Clark
(2) To approve the proposed Service and Distribution Plan.
For [ ] Against [ ] Abstain [ ]
This proxy will be voted as specified.
If no specification is made, this proxy
will be voted for each proposal.
The signature on this proxy should
correspond exactly with the name of the
shareholder as it appears on the proxy.
If stock is issued in the name of two or
more persons, each should sign the
proxy. If a proxy is signed by an
administrator, trustee, guardian,
attorney or other fiduciary, please
indicate full title as such.
Dated ____________________, 2000
Signed__________________________________
Signed__________________________________
This proxy is solicited on behalf of the Board of Directors of The Aquinas
Funds, Inc.
[ ] Please check here if you will be attending the meeting.
<PAGE>
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
AQUINAS FIXED INCOME FUND
The Aquinas Funds, Inc.
September 5, 2000
The undersigned constitutes and appoints Frank A. Rauscher and Charles
Clark, and each of them singly, with power of substitution, attorneys and
proxies for and in the name and place of the undersigned to appear and vote with
the same effect as the undersigned at the special meeting of shareholders of The
Aquinas Funds, Inc., the "Fund," to be held at the principal executive offices
of the Fund located at 5310 Harvest Hill Road, Suite 278, Dallas, Texas 75230,
on Tuesday, September 5, 2000 at 8:30 a.m. (Central Standard Time) and at any
adjournments or postponements thereof, all shares of stock of the Aquinas Fixed
Income Fund which the undersigned is entitled to vote as follows:
(1) To elect seven directors to the Board of Directors.
For all nominees listed below (except as marked to the contrary) [ ]
Withhold authority to vote for nominees listed below [ ]
(Instruction: To withhold authority to vote for any individual nominee, strike a
line through the nominee's name in the list below.)
Michael R. Corboy John L. Strauss
Sister Imelda Gonzalez, CDP Kathleen Muldoon
Thomas J. Marquez Levy Curry
Charles Clark
(2) To approve the proposed Service and Distribution Plan.
For [ ] Against [ ] Abstain [ ]
This proxy will be voted as specified.
If no specification is made, this proxy
will be voted for each proposal.
The signature on this proxy should
correspond exactly with the name of the
shareholder as it appears on the proxy.
If stock is issued in the name of two or
more persons, each should sign the
proxy. If a proxy is signed by an
administrator, trustee, guardian,
attorney or other fiduciary, please
indicate full title as such.
Dated ____________________, 2000
Signed__________________________________
Signed__________________________________
This proxy is solicited on behalf of the Board of Directors of The Aquinas
Funds, Inc.
[ ] Please check here if you will be attending the meeting.
