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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-09025
New Covenant Funds
----------------------------
(Exact name of registrant as specified in charter)
200 East Twelfth Street, Suite C, 47130
---------------------------------------- -----------
(Address of principal executive offices) (Zip code)
200 East Twelfth Street, Suite C, 47130
---------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: 800-858-6127
Date of fiscal year end: June 30, 2004
Date of reporting period: June 30, 2004
Form N-CSR is to be used by management investment companies to file
reports with the Commission not later than 10 days after the transmission to
stockholders of any report that is required to be transmitted to stockholders
under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1).
The Commission may use the information provided on Form N-CSR in its regulatory,
disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form
N-CSR, and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. Section 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
Include a copy of the report transmitted to stockholders pursuant to Rule
30e-1 under the Act (17 CFR 270.30e-1).
[NEW COVENANT FUNDS LOGO]
ANNUAL REPORT
JUNE 30, 2004
NEW COVENANT GROWTH FUND
NEW COVENANT INCOME FUND
NEW COVENANT BALANCED GROWTH FUND
NEW COVENANT BALANCED INCOME FUND
TABLE OF CONTENTS
Shareholder Letter.................................................. 2
Portfolios of Investments........................................... 6
Statements of Assets and Liabilities................................ 18
Statements of Operations............................................ 19
Statements of Changes in Net Assets................................. 20
Financial Highlights................................................ 22
Notes to Financial Statements....................................... 26
Trustees and Officers............................................... 32
Report of Independent Registered Public Accounting Firm............. 33
TO OUR SHAREHOLDERS
NEW COVENANT FUNDS
JUNE 30, 2004
Dear Shareholders:
The 12-month period between July 1, 2003 and June 30, 2004 was characterized by
a strong and improving economy, solid stock-market gains and relatively flat
bond-market returns.
The U.S. economy began the period with rapidly accelerating growth. Historically
low interest rates helped boost business spending from very weak levels prior to
the period. Meanwhile, low mortgage rates encouraged consumers to refinance
their home loans, helping individuals increase their discretionary income. Those
factors helped produce exceptionally strong growth during the third calendar
quarter of 2003.
The pace of economic growth subsequently cooled to levels closer to historical
norms. Economic stimulus remained strong, supported by low interest rates, tax
cuts and government spending, but weak job growth and rising energy prices
restrained the economy's expansion.
Signs of rising inflation began appearing in the spring, due in part to
powerful demand from China for natural resources such as oil and steel. The
Federal Reserve Board (the "Fed") signaled that it would raise short-term
interest rates to forestall a sharp rise in prices, causing investors to demand
higher yields on bonds. That trend helped slow the economy and reduce
inflationary pressures. The Fed did increase short-term rates in June by
one-quarter of a percentage point, to 1.25%.
That environment led to strong stock-market performance during the second half
of 2003, followed by more tepid gains during early 2004. Corporate profits
accelerated during the period, due to surging demand and strong productivity. A
weak dollar boosted profits for U.S. firms that rely on exports, including
many manufacturing and technology companies.
The improved economic climate particularly helped stocks of low-quality firms
with little or no earnings and weak balance sheets. Such stocks, which had
declined severely during the previous bear market, led the market as the surging
economy improved weak companies' prospects. Market leadership rotated into
higher-quality stocks in the middle of the period, but reverted to low-quality
stocks during late spring.
Small-capitalization shares significantly outperformed large-caps during the
period. Investors favored the relatively attractive valuations small stocks
offered, especially given the improving economy--a common scenario at the
beginning of an economic recovery.
The stock market cooled off in early 2004, as a number of factors combined to
reduce investors' enthusiasm. Those factors included the weak job market; rising
energy prices; global developments, such as the threat of terrorism and U.S.
difficulties in Iraq; and the uncertainty associated with a closely-contested
presidential contest. Growth stocks led the market by a considerable margin
early in the period, but value stocks narrowed that gap substantially during the
first half of 2004.
Bonds produced relatively flat returns during the 12-month period. Treasury
securities offered very low yields at the beginning of the period. Those yields
were fairly volatile, as investors tried to gauge the direction of interest
rates. Yields declined in the fall, but rose in the spring as investors
anticipated that the Fed would tighten monetary policy. Corporate bonds
benefited from the improving credit environment, particularly during 2003.
THE NEW COVENANT GROWTH FUND
The New Covenant Growth Fund gained 19.81% during the 12-month period ended June
30, compared to a 19.10% return for the Fund's benchmark, the S&P 500.(1) The
Dow Jones Wilshire 5000(2), a stock index representing more than 5,000
companies, returned 21.17% for the same period. The Trustees of the Fund
recently changed the Fund's benchmark from the Wilshire 5000 to the S&P 500
stock index. This index more accurately reflects the Fund's strategy and
portfolio characteristics. The Trustees also felt that the better-known S&P 500
was more familiar to shareholders, and therefore easier for them to use in
assessing Fund performance. The two indices' long-term performances are very
similar.
The Growth Fund held approximately 60% of its assets in its core style-neutral
portfolio during the period, with approximately 17% in the Fund's dedicated
growth allocation, 14% in its value allocation and 9% in international stocks.
The Fund significantly outperformed the S&P during the period's first three
quarters, and lagged during the three months through June. Strong performance
from stocks in the core portfolio helped the Fund throughout much of the period.
The Fund's overweight stake against the benchmark in small- and mid-cap shares
also boosted relative performance. The Fund's investment strategy focuses
primarily on shares of high-quality companies, and that strategy hurt relative
returns during the final quarter.
THE NEW COVENANT INCOME FUND
The New Covenant Income Fund returned 0.00% during the 12 months ended June 30,
2004, compared to a 0.32% gain for the Lehman Brothers Aggregate Bond Index.(3)
The Income Fund maintained a duration neutral to the benchmark throughout much
of the period, but shifted to a relatively short duration near the end of the
period. The Fund's duration was shortened at the beginning of April in
anticipation of rising interest rates. That move proved somewhat premature, and
the shorter duration hampered relative returns during April. The Fund's short
duration boosted relative returns near the end of the period, however, as
interest rates increased.
2
TO OUR SHAREHOLDERS
NEW COVENANT FUNDS
JUNE 30, 2004
The Income Fund holds the largest portion of its assets in mortgage-backed
securities, which typically outperform other fixed-income issues during periods
of gradually rising interest rates. As of June 30 the Fund held 45% of assets in
government agency issues, 12% in Treasury securities and 22% in corporate
bonds.(4)
THE NEW COVENANT BALANCED GROWTH FUND
The New Covenant Balanced Growth Fund gained 11.95% during the 12 months ended
June 30, 2004. That compared to an 11.36% return for a benchmark comprised of a
60% weighting in the S&P 500 and a 40% weighting in the Lehman Brothers
Aggregate Bond Index.
The Fund held an overweight allocation to stocks during much of the period. That
allocation helped boost returns against the benchmark, as stocks outperformed
bonds. The Fund's stock allocation grew to approximately 65% of assets at the
end of 2003. The investment advisor rebalanced the Fund during the first quarter
to its neutral allocation of 60% stocks and 40% bonds. Changes in the markets
caused that allocation to change to 63% stocks and 37% bonds by the end of the
period.
THE NEW COVENANT BALANCED INCOME FUND
The New Covenant Balanced Income Fund gained 7.07% for the year ended June 30,
2004. That return compared to a 6.67% gain for the Fund's benchmark, a composite
index with a 65% weighting in the Lehman Aggregate Bond Index and a 35%
weighting in the S&P 500.
The stock market's strong performance helped push this Fund's stock allocation
above its neutral level. That larger stock allocation boosted relative returns
as stocks climbed. As it had with the Balanced Growth Fund, the investment
advisor rebalanced the Fund's positions to their neutral levels (65% bonds, 35%
stocks) during the first quarter, but changes in the capital markets again led
to a higher-than-neutral stock allocation. The Fund ended the period with 62% of
its assets in bonds and 38% of assets in stocks.
/s/ Dennis J. Murphy
Dennis J. Murphy
Executive Vice President
and Chief Investment Officer
The NCF Investment Department of
New Covenant Trust Company, N.A.(5)
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS. THE INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT
AN INVESTOR'S SHARES, WHEN REDEEMED MAY BE WORTH MORE OR LESS THAN THE ORIGINAL
COST. TO OBTAIN MORE CURRENT PERFORMANCE INFORMATION, PLEASE CALL 877-835-4531
OR VISIT OUR WEBSITE AT WWW.NEWCOVENANTFUNDS.COM.
(1) The Standard & Poor's Composite Index of 500 stocks is an unmanaged,
capitalization weighted index that measures the performance of 500
large-capitalization stocks representing all major industries. It is not
possible to invest directly in any index.
(2) The Dow Jones Wilshire 5000 Total Market Stock Index is an unmanaged index
which measures the performance of all U.S. headquartered equity securities
with readily available price data. Over 5,000 capitalization weighted
security returns are used to adjust the index. It is not possible to
invest directly in any index.
(3) The Lehman Brothers Aggregate Bond Index is an unmanaged index of U.S.
bonds, which includes reinvestment of any earnings, is widely used to
measure the overall performance of the U.S. bond market. It is not
possible to invest directly in any index.
(4) Portfolio composition is subject to change.
(5) A subsidiary of the Presbyterian Foundation.
NEW COVENANT GROWTH FUND
Ten Largest Stock Holdings at June 30, 2004
(Portfolio composition may change at any time)
Security Market Value % of Portfolio Sector
- -------- ------------ -------------- ------------------------------
Pfizer, Inc, $ 15,007,956 1.8% Pharmaceuticals
Microsoft Corp. 13,371,791 1.6 Computer Science and Software
Citigroup, Inc. 12,860,784 1.5 Financial Services
Cisco Systems, Inc. 10,524,695 1.3 Computer Science and Software
Bank of America Corp. 10,191,632 1.2 Banking
General Electric Co. 9,739,439 1.2 Diversified Operations
International Business Machines Corp. 9,682,395 1.2 Computer Science and Software
Time Warner, Inc. 9,291,909 1.1 Broadcasting and Media
Exxon Mobil Corp. 9,206,192 1.1 Oil and Gas
Intel Corp. 8,219,280 1.0 Technology
3
TO OUR SHAREHOLDERS
JUNE 30, 2004
HYPOTHETICAL ILLUSTRATION OF $10,000 INVESTED IN
NEW COVENANT GROWTH FUND*
VS.
THE WILSHIRE 5000 TOTAL MARKET STOCK INDEX AND THE S&P 500 INDEX+
[PERFORMANCE GRAPH]
Growth Fund Wilshire 5000 Index S&P 500 Index
Jun-94 10000 10000 10000
Jun-95 11740 12472 12603
Jun-96 14406 15742 15886
Jun-97 18143 20357 21391
Jun-98 20828 26232 27853
Jun-99 23115 31371 34192
Jun-00 24590 34357 36671
Jun-01 21559 29085 31232
Jun-02 17821 24251 25614
Jun-03 17436 24559 25679
Jun-04 20890 29759 30586
+Wilshire 5000 Total Market Stock Index is an unmanaged index that measures the
performance of all U.S. headquartered equity securities with readily available
price data. Over 5,000 capitalization weighted security returns are used to
adjust the index. The Standard & Poor's 500 Index is an unmanaged,
capitalization weighted index that measures the performance of 500
large-capitalization stocks representing all major industries.
1 YEAR 3 YEAR 5 YEAR 10 YEAR
RETURN** RETURN** RETURN** RETURN**
Growth Fund 19.81% -1.04% -2.00% 7.65%
Wilshire 5000 Index 21.17% 0.77% -1.05% 11.52%
S&P 500 Index 19.10% -0.69% -2.20% 11.82%
JUNE 30, 2004
HYPOTHETICAL ILLUSTRATION OF $10,000 INVESTED IN
NEW COVENANT INCOME FUND*
VS.
THE LEHMAN BROTHERS AGGREGATE BOND INDEX++
[PERFORMANCE GRAPH]
Income Fund Lehman Brothers Aggregate Bond Index
Jun-94 10000 10000
Jun-95 10934 11255
Jun-96 11554 11819
Jun-97 12510 12783
Jun-98 13732 14131
Jun-99 13894 14573
Jun-00 14387 15238
Jun-01 15870 16949
Jun-02 17134 18412
Jun-03 18784 20327
Jun-04 18783 20393
++The Lehman Brothers Aggregate Bond Index is representative of intermediate and
long-term government and investment grade corporate debt securities.
1 YEAR 3 YEAR 5 YEAR 10 YEAR
RETURN** RETURN** RETURN** RETURN**
Income Fund 0.00% 5.78% 6.22% 6.51%
Lehman Brothers
Aggregate Bond Index 0.32% 6.36% 6.95% 7.39%
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS. THE INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT
AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THE ORIGINAL
COST. TO OBTAIN MORE CURRENT PERFORMANCE INFORMATION, PLEASE CALL 877-835-4531
OR VISIT OUR WEBSITE AT WWW.NEWCOVENANTFUNDS.COM.
* The performance information for all of the New Covenant Funds reflects
performance prior to the July 1, 1999 inception date of the Funds. It
represents performance records of the private pools previously managed by
the Presbyterian Church (U.S.A.) Foundation, the predecessor entity to the
Advisor. These private pools had investment objectives and policies in all
material respects equivalent to those of the Funds. They were not subject
to the requirements of the Investment Company Act of 1940 or the Internal
Revenue Code of 1986, which may adversely affect performance results. The
performance has been restated to reflect the total expenses of the Funds.
** Returns shown are average annual returns, assuming reinvestment of all
dividends and distributions.
4
TO OUR SHAREHOLDERS
JUNE 30, 2004
HYPOTHETICAL ILLUSTRATION OF $10,000 INVESTED IN
NEW COVENANT BALANCED GROWTH FUND*
VS.
THE BLENDED WILSHIRE/AGGREGATE INDEX AND THE BLENDED S&P 500/AGGREGATE INDEX+
[PERFORMANCE GRAPH]
Balanced Growth Fund Blended Wilshire/Aggregate Index Blended S&P 500/Aggregate Index
Jun-94 10000 10000 10000
Jun-95 11374 11977 12053
Jun-96 13173 14058 14132
Jun-97 15667 16960 17469
Jun-98 17732 20598 21354
Jun-99 19115 23374 24600
Jun-00 20097 25192 26182
Jun-01 19493 23923 24930
Jun-02 17975 22289 22995
Jun-03 18532 23502 24109
Jun-04 20745 26445 26848
+The Blended Wilshire/Aggregate Index is a composite index composed of 60%
Wilshire 5000 Total Market Stock Index and 40% Lehman Brothers Aggregate Bond
Index. The Blended S&P 500/Aggregate Index is a composite index composed of 60%
S&P 500 Index and 40% Lehman Brothers Aggregate Bond Index.
1 YEAR 3 YEAR 5 YEAR 10 YEAR
RETURN** RETURN** RETURN** RETURN**
Balanced Growth Fund 11.95% 2.10% 1.65% 7.57%
Blended Wilshire/
Aggregate Index 12.52% 3.40% 2.50% 10.21%
Blended S&P 500/
Aggregate Index 11.36% 2.50% 1.76% 10.38
JUNE 30, 2004
HYPOTHETICAL ILLUSTRATION OF $10,000 INVESTED IN
NEW COVENANT BALANCED INCOME FUND*
VS.
THE BLENDED WILSHIRE/AGGREGATE INDEX AND THE BLENDED S&P 500/AGGREGATE INDEX++
[PERFORMANCE GRAPH]
Balanced Income Fund Blended Wilshire/Aggregate Index Blended S&P 500/Aggregate Index
Jun-94 10000 10000 10000
Jun-95 11205 11673 11716
Jun-96 12509 13085 13124
Jun-97 14273 15095 15357
Jun-98 15956 17641 18017
Jun-99 16760 19283 19863
Jun-00 17497 20541 21005
Jun-01 17861 20877 21375
Jun-02 17583 20775 21144
Jun-03 18638 22375 22701
Jun-04 19956 24015 24217
++The Blended Wilshire/Aggregate Index is a composite index composed of 35%
Wilshire 5000 Total Market Stock Index and 65% Lehman Brothers Aggregate Bond
Index. The Blended S&P 500/Aggregate Index is a composite index composed of 35%
S&P 500 Index and 65% Lehman Brothers Aggregate Bond Index.
1 YEAR 3 YEAR 5 YEAR 10 YEAR
RETURN** RETURN** RETURN** RETURN**
Balanced Income Fund 7.07% 3.77% 3.55% 7.15%
Blended Wilshire/
Aggregate Index 7.33% 4.78% 4.49% 9.16%
Blended S&P 500/
Aggregate Index 6.67% 4.25% 4.04% 9.25%
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE PERFORMANCE DATA QUOTED
REPRESENTS PAST PERFORMANCE AND CURRENT RETURNS MAY BE LOWER OR HIGHER. TOTAL
RETURN FIGURES INCLUDE CHANGE IN SHARE PRICE, REINVESTMENT OF DIVIDENDS AND
CAPITAL GAINS. THE INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT
AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THE ORIGINAL
COST. TO OBTAIN MORE CURRENT PERFORMANCE INFORMATION, PLEASE CALL 877-835-4531
OR VISIT OUR WEBSITE AT WWW.NEWCOVENANTFUNDS.COM.
* The performance information for all of the New Covenant Funds reflects
performance prior to the July 1, 1999 inception date of the Funds. It
represents performance records of the private pools previously managed by
the Presbyterian Church (U.S.A.) Foundation, the predecessor entity to the
Advisor. These private pools had investment objectives and policies in all
material respects equivalent to those of the Funds. They were not subject
to the requirements of the Investment Company Act of 1940 or the Internal
Revenue Code of 1986, which may adversely affect performance results. The
performance has been restated to reflect the total expenses of the Funds.
** Returns shown are average annual returns, assuming reinvestment of all
dividends and distributions.
5
PORTFOLIO OF INVESTMENTS
NEW COVENANT GROWTH FUND
JUNE 30, 2004
Value
Shares (Note 2)
- ------ --------
COMMON STOCKS (97.9%):
ADVERTISING (0.7%):
10,100 Catalina Marketing Corp. (b) (L)......... $ 184,729
4,600 Daktronics (b) (L)....................... 114,770
231,000 Interpublic Group of Cos., Inc.(b)....... 3,171,630
35,300 Omnicom Group, Inc. ..................... 2,678,917
------------
6,150,046
------------
AEROSPACE (0.2%):
40,500 Rockwell Collins, Inc. .................. 1,349,460
------------
AUTOMOTIVE (1.9%):
8,479 Aftermarket Technology Corp. (b)......... 139,904
5,500 Bayerische Motoren Werke AG (L).......... 243,239
16,400 DaimlerChrysler AG (L)................... 768,193
128,000 Dana Corp. .............................. 2,508,800
130,800 Delphi Automotive Systems................ 1,396,944
29,000 General Motors Corp. (L)................. 1,351,110
103,500 Honda Motor Co. Ltd. (L)................. 2,517,120
9,100 Johnson Controls, Inc. .................. 485,758
15,900 Lear Corp. .............................. 937,941
111,000 Mitsubishi Motors Corp (b) (L)........... 181,075
65,000 Nissan Motors............................ 722,586
30,020 Pep Boys-Manny, Moe & Jack, Inc.(L)...... 761,007
5,200 Renault SA............................... 396,044
5,200 Scania AB - B Shares..................... 176,717
37,000 Suzuki Motor Corp. ...................... 651,734
14,000 Toyota Motor Co. ........................ 567,108
73,500 TRW Automotive Holdings Corp (b)(L)...... 1,385,475
56,600 Visteon Corp. (L)........................ 660,522
------------
15,851,277
------------
BANKING (6.5%):
7,000 ABC Bancorp (L).......................... 142,380
51,883 ABN AMRO Holdings NV..................... 1,134,960
21,020 Australia and New Zeland Banking
Group Ltd. .............................. 267,666
1,400 BancFirst (L)............................ 83,650
72,700 Banco Bilbao Vizcaya (L)................. 971,186
120,440 Bank of America Corp. ................... 10,191,632
58,300 Bank One Corp. .......................... 2,973,299
20,300 Banque Nationale de Paris (L)............ 1,248,484
16,500 Barclays Plc............................. 140,562
37,100 Bay View Capital......................... 76,426
17,300 Bayerische Vereins Ag (b)................ 308,354
12,610 Cathay Bancorp, Inc. (L)................. 841,087
101,700 Comerica, Inc. .......................... 5,581,295
7,200 Community Bank System, Inc. ............. 164,088
2,950 Corus Bankshares, Inc. .................. 121,275
10,972 Credit Suisse Group (b).................. 389,855
52,600 Credito Italiano (L)..................... 259,823
1,700 Deutsche Bank AG (L)..................... 133,716
33,000 DNB NOR ASA (L).......................... 225,189
6,700 Flagstar Bancorp, Inc. (L)............... 133,196
18,900 ForeningsSparbanken AB................... 361,293
8,250 Fremont General Corp. (L)................ 145,613
21,300 Golden West Financial Corp. ............. 2,265,255
12,100 GreenPoint Financial Corp. .............. 480,370
13,700 Hang Seng Bank (L)....................... 175,646
36,700 Hibernia Corp. .......................... 891,810
20,692 Holderbank Financiere Glarus............. 1,125,140
47,600 HSBC Holdings Plc........................ 707,845
3,800 Hudson United Bancorp. .................. 141,664
49,400 Huntington Bancshares, Inc. ............. 1,131,260
3,900 Irwin Financial Corp. ................... 102,960
1,600 ITLA Capital Corp. (b) (L)............... 64,912
25,650 J.P. Morgan Chase & Co. ................. 994,451
68,300 KeyCorp.................................. 2,041,487
20,100 Lloyds TSB Group Plc..................... 157,379
22,900 MBT Financial Corp. (L).................. 417,238
49 Mitsubishi Tokyo Financial Group,Inc. ... 453,558
32 Mizuho Financial Group, Inc. ............ 145,168
6,415 National Australia Bank Ltd. ............ 133,346
4,500 National Bank of Canada.................. 144,322
50,000 National City Corp. ..................... 1,750,500
34,900 North Fork Bancorp. (L).................. 1,327,945
15,500 Oriental Financial Group (L)............. 419,585
9,800 Peoples Bancorp, Inc. (L)................ 260,582
2,600 Provident Bankshares Corp. .............. 74,984
4,800 R & G Financial Corp. ................... 158,688
41,200 Royal Bank of Scotland Group Plc......... 1,186,493
2,600 Societe Generale......................... 220,956
13,300 Southside Bancshares (L)................. 279,300
10,100 Southwest Bancorp........................ 184,325
31,200 Standard Chartered Plc................... 508,099
16,500 State Street Corp. ...................... 809,160
77 Sumitomo Mitsui Financial Group(L)....... 527,847
24,800 SunTrust Banks, Inc. .................... 1,611,752
37,610 Texas Capital Banc (b)................... 624,326
11,700 TriCo Bancshares (L)..................... 221,130
133,500 U.S. Bancorp. ........................... 3,679,259
79 UFJ Holdings, Inc. ...................... 348,971
18,800 Unionbancal Corp......................... 1,060,320
11,300 Wells Fargo & Co. ....................... 646,699
2,800 Wesbanco, Inc. .......................... 81,564
12,200 Westamerica Bancorp. .................... 639,890
1,800 WFS Financial (b)........................ 89,118
------------
54,180,333
------------
BROADCASTING AND MEDIA (3.8%):
8,600 4 Kids Entertainment, Inc. (b) (L)....... 205,712
67,550 Belo Corp. .............................. 1,813,718
46,500 Clear Channel Communications, Inc. ...... 1,718,175
87,972 Comcast Corp. New CL A (b)............... 2,465,855
45,100 Comcast Corp. Spl A (b).................. 1,245,211
39,000 Cox Communications, Inc. Class A (b)..... 1,083,810
20,500 Cumulus Media, Inc. (b).................. 344,605
88,500 Directv Group, Inc. (b).................. 1,513,350
42,100 Gannett Co., Inc......................... 3,572,185
8,200 General Communication, Inc. (b).......... 65,108
17,900 Knology, Inc. (b) (L).................... 88,963
51,880 L-3 Communications Holdings, Inc. (L).... 3,465,584
351,500 Liberty Media Corp. (b).................. 3,159,985
19,103 News Corp Pref-Ltd Vtg Shr............... 156,359
528,550 Time Warner, Inc. (b).................... 9,291,909
30,370 Viacom, Inc. - Cl. B..................... 1,084,816
6,450 World Wrestling Entertainment, Inc. (L).. 82,238
------------
31,357,583
------------
CHEMICALS (1.1%):
22,500 Air Products & Chemical, Inc. ........... 1,180,125
2,700 Albemarle Corp........................... 85,455
4,500 Arch Chemicals, Inc...................... 129,690
20,800 Dow Chemical Co.......................... 846,560
See accompanying notes to financial statements.
6
PORTFOLIO OF INVESTMENTS
NEW COVENANT GROWTH FUND
JUNE 30, 2004
Value
Shares (Note 2)
-------------
COMMON STOCKS (CONTINUED)
CHEMICALS (CONTINUED)
20,000 Du Pont (E.I.) De Nemours ...................... $ 888,400
6,000 Nitto Denko Corp. .............................. 306,832
3,900 Norsk Hydro ASA (L) ............................ 253,473
31,400 PPG Industries, Inc. ........................... 1,962,186
27,600 Praxair, Inc. .................................. 1,101,516
47,030 Rohm & Haas Co. ................................ 1,955,507
47,000 Sumitomo Chemical Co. .......................... 219,246
1,369 Syngenta AG (b) ................................ 114,776
6,500 Takeda Chemical Industries ..................... 285,341
------------
9,329,107
------------
COMMERCIAL SERVICES (2.1%):
5,900 Aaron Rents, Inc. (L) .......................... 195,526
115,200 Accenture Ltd. (b) ............................. 3,165,696
66,560 Alliance Data Systems Corp. (b) ................ 2,812,160
8,600 Angelica Corp. ................................. 215,946
22,700 Career Education Corp. (b) ..................... 1,034,212
15,900 Checkpoint Systems, Inc. (b) ................... 285,087
4,600 Geo Group, Inc. (b) (L) ........................ 93,840
3,200 Global Imaging Systems, Inc. (b)(L) ............ 117,312
71,450 Global Payments, Inc. (L) ...................... 3,216,679
13,700 Iron Mountain, Inc. (b) ........................ 661,162
6,300 ITT Educational Services, Inc. (b) ............. 239,526
15,500 John H Harland Co. (L) ........................ 454,925
31,310 Korn/Ferry International (b) (L) ............... 606,475
9,600 Maximus, Inc. (b) .............................. 340,416
53,760 Netgear, Inc. (b) (L) .......................... 577,382
36,900 Pitney Bowes, Inc. ............................. 1,632,825
3,700 Proquest Co. (b) ............................... 100,825
28,600 Rent-Way, Inc. (b) (L) ......................... 257,400
4,400 Sourcecorp (b) ................................. 121,088
26,000 Tns, Inc. (b) .................................. 566,800
3,300 Watson Wyatt & Co. ............................. 87,945
64,600 Xerox Corp. (b) ................................ 936,700
-------------
17,719,927
-------------
COMPUTER SERVICES AND SOFTWARE (6.7%):
66,315 Activision, Inc. (b) ........................... 1,054,409
27,500 Adobe Systems, Inc. ............................ 1,278,750
1,850 Ansys, Inc. (b) ................................ 86,950
23,270 Automatic Data Processing, Inc. ................ 974,548
87,300 Bea Systems, Inc. (b) .......................... 717,606
444,080 Cisco Systems, Inc. (b) ........................ 10,524,695
75,400 Dell, Inc. (b) ................................. 2,700,827
83,820 Dendrite International, Inc. (b) ............... 1,557,376
17,300 Dst Systems, Inc. (b) .......................... 831,957
76,590 Embarcadero Technologies, Inc. (b) ............. 946,652
10,800 Epicor Software Corp. (b) (L) .................. 151,740
42,600 Gartner Group, Inc. (b) (L) .................... 563,172
148,000 Hewlett Packard Co. ............................ 3,122,799
25,540 Hyperion Solutions Corp. (b) ................... 1,116,609
300 Infosys Technologies Ltd. (L) .................. 27,831
109,840 International Business Machines Corp. .......... 9,682,395
40,668 Maxtor Corp. (b) (L) ........................... 269,629
468,200 Microsoft Corp. ................................ 13,371,791
2,600 Microstrategy, Inc. (b)(L) ..................... 111,020
138,700 Oracle Corp. (b) ............................... 1,654,691
3,400 Progress Software Corp. (b) .................... 73,678
7,150 QAD, Inc. (b) (L) .............................. 75,862
1,550 Quality Systems (b) (L) ........................ 76,090
72,360 Quest Software, Inc. (b) ....................... 933,444
3,800 Renanissance Learning, Inc. (L) ................ 85,196
42,750 RSA Security, Inc. (b) (L) ..................... 875,093
1,700 SAP AG (L) ..................................... 283,358
3,300 Scan Source, Inc. (b) (L) ...................... 196,086
5,100 Seachange International, Inc. (b) (L) .......... 86,088
52,370 Secure Computing (b) (L) ....................... 610,111
4,150 SERENA Software, Inc. (b) (L) .................. 79,224
90,980 Sonicwall, Inc. (b) ............................ 782,428
4,875 SS&C Technologies, Inc. ....................... 91,163
11,800 Sungard Data Systems (b) ....................... 306,800
4,200 Sybase, Inc. (b) ............................... 75,600
15,000 The Sco Group, Inc. (b) (L) .................... 87,750
5,500 Transaction Systems Architects, Inc. (b) ...... 118,415
8,000 Tyler Technologies, Inc. (b) (L) ............... 75,680
20,100 United Online, Inc. (b) (L) .................... 353,961
87,480 Wind River Systems, Inc. (b) ................... 1,028,765
------------
57,040,239
------------
CONSTRUCTION AND BUILDING MATERIALS (1.1%):
26,600 Bouygues SA (L) ................................ 890,627
6,700 Brookfi eld Homes Corp. (L) .................... 175,473
30,000 Centex Corp. ................................... 1,372,499
14,181 CRH Plc. ....................................... 300,208
39,450 DR Horton, Inc. ............................... 1,120,380
37,920 Dycom (b) ...................................... 1,061,760
4,200 Eagle Materials (L) ............................ 298,284
2,400 Florida Rock Industries ........................ 101,208
17,690 Hughes Supply, Inc. ............................ 1,042,472
28,600 Lennar Corp. Class A ........................... 1,278,992
2,200 Quanex Corp. ................................... 107,140
2,400 Ryland Group, Inc. ............................. 187,680
41,000 Sekisui House Ltd. (L) ......................... 455,034
14,000 Standard-Pacific Corp. ......................... 690,200
4,400 Wci Communities, Inc. (b) ...................... 98,164
------------
9,180,121
------------
CONSUMER PRODUCTS (4.6%):
22,100 Amcor Ltd. ..................................... 107,302
2,600 Bandag, Inc. ................................... 115,778
7,700 Cole (Kenneth) Productions, Inc. (L) ........... 263,879
77,600 Colgate-Palmolive Co. .......................... 4,535,720
67,940 Estee Lauder Co., Inc. (The) - Class A ......... 3,314,113
29,910 Fossil, Inc. (b) ............................... 815,048
2,400 Genlyte Group (b) .............................. 150,912
139,080 Gillette Co. ................................... 5,896,993
10,600 HNI Corp. ...................................... 448,698
24,400 Industria de Diseno Textil, SA (L) ............. 559,883
4,000 K-Swiss, Inc. (L) .............................. 80,840
71,700 Kimberly-Clark Corp. ........................... 4,723,596
4,200 L'OREAL SA (L) ................................. 335,467
194,000 Li & Fung Ltd. (L) ............................. 283,546
800 Michelin ....................................... 44,237
36,180 Nike, Inc. Class B ............................. 2,740,635
18,000 Nikon Corp. (L) ................................ 202,575
2,700 Nintendo Co. ................................... 313,018
11,500 Nu Skin Enterprises, Inc. (L) .................. 291,180
36,000 Pactiv Corp. (b) ............................... 897,840
6,000 Phillips-Van Heusen Corp. ...................... 115,500
19,300 Polaris Industries, Inc. (L) ................... 926,400
102,000 Procter & Gamble Co. ........................... 5,552,880
30,500 Rayovac Corp. (b) .............................. 857,050
See accompanying notes to financial statements.
7
PORTFOLIO OF INVESTMENTS
NEW COVENANT GROWTH FUND
JUNE 30, 2004
Value
Shares (Note 2)
-------------
COMMON STOCKS (CONTINUED)
CONSUMER PRODUCTS (CONTINUED)
6,000 Reckitt & Colman $ 169,852
41,980 Sherwin-Williams Co. ........................... 1,744,269
2,300 Stanley Furniture Co., Inc. (L) ................ 96,853
9,600 Timberland Co., Class A (b) .................... 620,064
20,150 Toro Co. (L) ................................... 1,411,911
3,200 Uni-Charm ...................................... 159,538
3,500 Unilever Plc (L) ............................... 238,889
10,700 Wolseley Plc ................................... 165,908
4,000 York International Corp. ....................... 164,280
-------------
38,344,654
-------------
DIVERSIFIED OPERATIONS (4.9%):
69,480 3M Co. ......................................... 6,253,894
4,300 Acuity Brands, Inc. ............................ 116,100
107,500 Bombardier Class B ............................. 322,320
49,100 Brambles Industries Ltd. (L) ................... 205,218
116,500 Cendant Corp. .................................. 2,851,920
59,900 Centrica Plc. .................................. 243,871
41,200 Crane Co. ...................................... 1,293,268
115,028 First Data Corp. ............................... 5,121,047
300,600 General Electric Co. ........................... 9,739,439
2,600 Harsco Corp. ................................... 122,200
26,000 Mitsubishi Corp. ............................... 252,578
2,050 Rofin-Sinar Technologies, Inc.(b) .............. 52,050
43,800 Smiths Industries Plc. ......................... 592,955
85,900 Spx Corp. (L) .................................. 3,989,196
20,900 Swire Pacific Ltd. ............................. 135,318
21,000 Textron, Inc. .................................. 1,246,350
101,000 Thermo Electron Corp. (b) ...................... 3,104,740
150,790 Tyco International Ltd. ........................ 4,997,181
4,900 Wesfarmers Ltd. ................................ 100,352
-------------
40,739,997
-------------
ELECTRONICS (3.4%):
3,500 Advantest Corp. (L) ............................ 234,477
108,800 Altera Corp. (b) ............................... 2,417,536
20,100 Ameren Corp. (L) ............................... 863,496
15,900 Ametek, Inc. ................................... 491,310
15,400 Amphenol Corp. - Class A (b) ................... 513,128
49,500 Applied Materials, Inc. (b) .................... 971,190
12,600 Asm Lithography Holding NV (b) ................. 213,237
42,620 Broadcom Corp. (b) ............................. 1,993,337
13,800 Cirrus Logic, Inc. (b) (L) ..................... 82,938
10,400 Cree Research, Inc. (b) (L) .................... 242,112
12,950 Diodes, Inc. (b) (L) ........................... 306,786
57,100 Emerson Electric Co. ........................... 3,628,705
20,400 Ess Technologies, Inc. (b) (L) ................. 218,484
24,200 Fairchild Semiconductor
International, Inc. (b) ........................ 396,154
5,000 Fanuc Co Ltd. .................................. 298,309
27,000 Furukawa Electric Co. Ltd. (b) 115,310
3,000 Hirose Electric Co. Ltd......................... 329,652
17,000 Hon Hai Precision Industry Co. Ltd. ............ 126,337
17,800 Infineon Technologies AG (b) (L) ............... 239,736
158,500 Johnson Electric Holdings ...................... 161,552
600 Keyence Corp. .................................. 136,865
24,000 Konica Corp. ................................... 331,247
6,100 Koninklijke Philips Electronics NV ............. 164,239
2,000 Kyocera Corp. .................................. 169,729
29,200 MEMC Electronic Materials, Inc. b)(L) .......... 288,496
61,600 Microchip Technology, Inc. ..................... 1,942,864
3,400 MTS Systems Corp. .............................. 79,730
3,700 Murata Manufacturing Co. Ltd. .................. 210,915
227,250 National Semiconductor Corp. (b) ............... 4,997,229
121,000 NecCorp. (L) ................................... 851,652
300 NEC Electronics Corp. .......................... 18,421
7,300 Omron Corp. .................................... 170,934
68,800 On Semiconductor Corp. (b) (L) ................. 345,376
2,700 Rohm Co Ltd. ................................... 323,164
3,964 Samsung Electornics - GDR ...................... 815,593
3,700 Siliconix, Inc. (b) (L) ........................ 183,594
8,200 Sony Corp. ..................................... 308,867
5,600 Standard Microsystems Corp. (b) ................ 130,592
11,500 Stmicroelectronics NV (L) ...................... 252,266
62,898 Taiwan Semiconductor ADR ....................... 522,679
20,500 Tektronix, Inc. ................................ 697,410
12,000 Tokyo Electron Ltd. ............................ 673,051
38,635 Trimble Navigation Ltd. (b) .................... 1,073,667
16,000 Venture Corp Ltd. ............................. 167,204
-------------
28,699,570
-------------
ENERGY (2.2%):
60,800 American Electric Power Co., Inc. .............. 1,945,600
4,600 Atmos Energy Corp. (L) ......................... 117,714
8,700 Cleco Corp. (L) ................................ 156,426
26,600 DPL, Inc. ...................................... 516,572
24,300 Edison International ........................... 621,351
358,500 El Paso Corp. .................................. 2,824,980
35,800 Entergy Corp. .................................. 2,005,158
108,674 Exelon Corp. ................................... 3,617,758
22,300 Great Plains Energy, Inc. ...................... 662,310
1,500 Iberdrola SA ................................... 31,663
17,100 Kansai Electric Power, Inc. .................... 311,707
28,900 MDU Resources Group, Inc. ...................... 694,467
35,700 NUI Corp. (L) .................................. 521,220
17,600 Oklahoma Gas & Electric Co. .................... 448,272
15,500 Pinnacle West Capital Corp. .................... 626,045
23,200 Public Service Enterprise Group, Inc. .......... 28,696
42,900 Sierra Pacific Resources (b) (L) ............... 330,759
58,000 Tokyo Gas Ltd. (L) ............................. 205,710
16,800 UGI Corp. ...................................... 539,280
2,900 Veba AG ........................................ 208,874
53,800 Xcel Energy, Inc. .............................. 898,998
-------------
18,213,560
-------------
ENTERTAINMENT AND LEISURE (0.2%):
25,000 Carnival Corp. ................................. 1,175,000
22,300 Regal Entertainment Group (L) .................. 403,630
-------------
1,578,630
-------------
FINANCIAL SERVICES (8.6%):
6,750 Affiliated Managers Group, Inc. (b) (L) ........ 339,998
1,840 Aiful Corp. .................................... 192,069
75,550 Ambac Financial Group, Inc. .................... 5,548,392
2,800 American Capital Strategies .................... 78,456
19,650 American Express Co. ........................... 1,009,617
7,050 American Home Mortgage
Investment Corp. (L) ........................... 182,807
17,400 Arthur J. Gallagher & Co. ...................... 529,830
35,200 BISYS Group, Inc. (c) .......................... 494,912
41,800 Capital One Financial Corp. .................... 2,858,284
8,600 Charter Municipal Mortgage Acceptance .......... 169,076
17,260 Chicago Mercantile Exchange .................... 2,491,826
See accompanying notes to financial statements.
8
PORTFOLIO OF INVESTMENTS
NEW COVENANT GROWTH FUND
JUNE 30, 2004
Value
Shares (Note 2)
------ --------
COMMON STOCKS (CONTINUED)
FINANCIAL SERVICES (CONTINUED)
20,100 Cit Group, Inc............................ $ 769,629
276,576 Citigroup, Inc............................ 12,860,784
7,000 CompuCredit Corp. (b)..................... 121,100
105,749 Countrywide Credit Industries, Inc. ...... 7,428,867
5,373 Deutsche Boerse AG (L).................... 274,230
5,900 Efunds Corp. (b) (L)...................... 103,250
35,600 Equifax, Inc.............................. 881,100
118,600 Federal Home Loan Mortgage Corp........... 7,507,380
86,100 Federal National Mortgage Association..... 6,144,096
11,136 Fidelity National Financial, Inc.......... 415,818
24,800 Friedman, Billings, Ramsey Group, Inc. (L) 490,792
21,700 Goldman Sachs Group, Inc. ................ 2,043,272
38,700 HBOS Plc.................................. 478,995
27,607 ING Groep NV.............................. 651,608
4,000 Jackson Hewitt Tax Service, Inc. (b)...... 70,000
55,000 MBIA, Inc................................. 3,141,600
53,700 MBNA Corp................................. 1,384,923
73,100 Merrill Lynch & Co........................ 3,945,938
24,460 MGIC Investment Corp...................... 1,855,536
78,800 Morgan Stanley Dean Witter & Co........... 4,158,276
3,342 Muenchener Rueckver (L)................... 363,098
40,000 Nikko Securities Co., Ltd................. 193,924
12,000 Nomura Securities Co...................... 177,611
4,750 Novastar Financial, Inc. (L).............. 180,310
6,500 Orix Corp................................. 744,627
36,100 Regions Financial Corp. .................. 1,319,455
5,600 Saxon Capital, Inc. (b)................... 127,848
8,305 UBS AG.................................... 585,209
4,700 World Acceptance Corp. (b) (L)............ 86,151
-----------
72,400,694
-----------
FOOD AND BEVERAGES (3.9%):
31,600 Aramark Corp. ............................ 908,816
3,800 Carrefour SA (L).......................... 184,376
134,560 Coca-Cola Co. ............................ 6,792,590
93,000 Coca-Cola Enterprises, Inc. .............. 2,696,070
18,300 Compass Group Plc. ....................... 111,674
5,600 Groupe Danone (L)......................... 488,509
23,000 Hormel Foods Corp. ....................... 715,300
35,440 JM Smuckers Co. .......................... 1,627,050
18,920 Kellogg Co. .............................. 791,802
9,700 Koninklijke Numico NV (b)................. 311,678
94,000 Kraft Foods, Inc. Class A................. 2,977,920
5,450 Nash Finch Co. (L)........................ 136,414
4,284 Nestle SA. ............................... 1,142,491
62,500 Pepsi Bottling Group, Inc. ............... 1,908,750
14,700 PepsiAmericas, Inc. ...................... 312,228
89,200 PepsiCo, Inc. ............................ 4,806,096
24,300 Ruddick Corp. ............................ 545,535
176,130 Safeway, Inc. (b)......................... 4,463,134
39,100 SUPERVALU, Inc. .......................... 1,196,851
62,400 Unilever Plc. ............................ 612,208
18,300 Woolworths Ltd. .......................... 145,325
-----------
32,874,817
-----------
FOREST AND PAPER PRODUCTS (1.7%):
16,200 Abitibi-Consolidated, Inc. ............... 110,558
164,330 Georgia Pacific Corp...................... 6,076,924
11,800 Glatfelter (L)............................ 166,144
34,900 International Paper Co. .................. 1,560,030
27,000 Sumitomo Forestry......................... 310,296
27,000 Temple-Inland, Inc. ...................... 1,869,750
9,800 Upm-Kymmene Oyj........................... 186,478
17,100 Wausau-Mosinee Paper Corp. (L)............ 295,830
51,600 Weyerhaeuser Co. ......................... 3,256,992
-----------
13,833,002
-----------
HEALTH SERVICES (2.5%):
36,500 Aetna, Inc. .............................. 3,102,500
2,700 Amedisys, Inc. (b) (L).................... 89,208
14,900 Anthem, Inc. (b) (L)...................... 1,334,444
19,400 Apria Healthcare Group, Inc. (b).......... 556,780
17,700 Express Scripts, Inc., Class A (b)........ 1,402,371
3,300 Genesis Healthcare (b).................... 95,832
18,850 HCA, Inc. ................................ 783,972
37,700 Humana, Inc. (b).......................... 637,130
29,240 Lifepoint Hospitals, Inc. (b) (L)......... 1,088,313
52,130 McKesson Corp............................. 1,789,623
19,400 PacifiCare Health Systems, Inc. (b)....... 750,004
4,100 PolyMedica Corp. (L)...................... 127,264
4,600 Rehabcare Group, Inc. (b) (L)............. 122,498
199,200 Schering-Plough Corporation............... 3,681,215
18,100 Stryker Corp. ............................ 995,500
4,000 Symbion, Inc. (b) (L)..................... 69,840
62,700 Triad Hospitals, Inc. (b)................. 2,334,321
2,200 UnitedHealth Group, Inc. ................. 136,950
11,150 US Oncology, Inc. (b)..................... 164,128
2,100 VCA Antech, Inc. (b)...................... 94,122
15,500 Wellpoint Health Networks (b)............. 1,736,155
-----------
21,092,170
-----------
HOTELS AND OTHER LODGING PLACES (0.0%):
6,800 Accor SA (L).............................. 286,998
-----------
INSURANCE (4.0%):
83,870 Aegon NV. ................................ 1,011,221
4,000 Allianz Ag (L)............................ 433,127
60,079 American International Group, Inc. ....... 4,282,431
10,950 Arch Capital Group Ltd. (b)............... 436,686
54 Berkshire Hathaway, Inc. Class A (b)...... 4,803,300
49,000 Chubb Corp. .............................. 3,340,820
71,000 CIGNA Corp. .............................. 4,885,510
400 Great West Lifeco, Inc. .................. 14,380
57,000 Hartford Financial Services Group, Inc. .. 3,918,180
4,500 LandAmerica Financial Group, Inc. ........ 175,185
39 Millea Holdings, Inc. .................... 579,022
61,000 Mitsui Marine And Fire.................... 573,019
18,400 Nrma Insurance Group...................... 64,087
33,900 Old Republic International Corp. ......... 804,108
13,000 Platinum Underwriter Holdings Ltd. ....... 395,590
34,200 Promina Group Ltd. ....................... 95,295
19,800 Prudential Corp., Plc. ................... 170,380
19,865 Qbe Insurance Group Ltd (L)............... 177,126
25,200 Reinsurance Group of America, Inc. ....... 1,024,380
86,039 St. Paul Cos., Inc. ...................... 3,488,021
2,050 Stewart Information Services Corp. ....... 69,229
15,851 Swiss Re. ................................ 1,029,606
18,800 Torchmark Corp. .......................... 1,011,440
19,300 Yasuda F & M Insurance.................... 197,219
-----------
32,979,362
-----------
INTERNET SERVICES (0.8%):
106,700 CNET Networks, Inc. (b) (L)............... 1,181,169
See accompanying notes to financial statements.
9
PORTFOLIO OF INVESTMENTS
NEW COVENANT GROWTH FUND
JUNE 30, 2004
Value
Shares (Note 2)
------ --------
COMMON STOCKS (CONTINUED)
INTERNET SERVICES (CONTINUED)
3,500 j2 Global Communications, Inc. (b) (L).... $ 97,300
148,970 VeriSign, Inc. (b)........................ 2,964,503
14,350 WebEx Communications, Inc. (b) (L)........ 312,256
12 Yahoo Japan Corp. (b)..................... 116,574
43,800 Yahoo, Inc. (b)........................... 1,591,254
-----------
6,263,056
-----------
MACHINERY AND EQUIPMENT (0.8%):
3,050 Albany International Corp. Class A........ 102,358
5,000 Briggs & Stratton Corp. .................. 441,750
36,900 Caterpillar, Inc. ........................ 2,931,335
54,850 Graco, Inc. .............................. 1,703,093
9,000 Lincoln Electric Holdings, Inc. .......... 306,810
1,100 Nidec Corp. .............................. 112,707
4,900 Schneider SA (L).......................... 334,445
3,400 SMC Corp. ................................ 367,685
5,050 Watsco, Inc. ............................. 141,754
-----------
6,441,937
-----------
MANUFACTURING (0.2%)
13,900 Assa Abloy AB Class B (L)................. 177,603
1,650 NACCO Industries, Inc. ................... 156,750
21,200 Pentair, Inc. ............................ 713,168
7,600 Siemens AG. .............................. 546,933
2,800 Simpson Manufacturing Co., Inc. .......... 157,136
100 Thyssen Krupp AG. ........................ 1,709
-----------
1,753,299
-----------
MEDICAL PRODUCTS (5.4%):
19,400 Advanced Medical Optics, Inc. (b) (L)..... 825,858
24,110 Allergan, Inc. ........................... 2,158,327
21,050 Applera Corp.-Celera Genomics Group (b)... 242,286
33,420 Arthrocare Corp. (b) (L).................. 971,854
9,900 Bausch & Lomb, Inc. ...................... 644,193
99,500 Baxter International, Inc. ............... 3,433,745
39,100 Becton, Dickinson & Co. .................. 2,025,380
45,350 Biomet, Inc. ............................. 2,015,354
16,000 Cerner Corp. (b) (L)...................... 713,280
14,100 Ciphergen Biosystems, Inc. (b) (L)........ 103,212
16,700 Cooper Cos., Inc. ........................ 1,054,939
14,200 Diagnostic Products Corp. (L)............. 623,948
45,010 Dj Orthopedics, Inc. (b).................. 1,035,230
4,000 Essilor International SA (L).............. 261,093
45,900 Forest Laboratories, Inc., Class A (b).... 2,599,317
25,480 Gen-Probe, Inc. (b)....................... 1,205,714
60,900 Genzyme Corp. (b)......................... 2,882,397
21,360 Guidant Corp. ............................ 1,193,597
2,200 Hoya Corp. ............................... 230,252
87,200 Johnson & Johnson, Inc. .................. 4,857,039
47,600 Kinetic Concepts, Inc. (b)................ 2,375,240
75,500 Laboratory Corp. of America Hldngs (b) (L) 2,997,350
6,400 Medical Action Industries (b)............. 117,760
90,600 Medtronic, Inc. .......................... 4,414,032
2,500 Mine Safety Appliances.................... 84,250
6,100 Ocular Sciences, Inc. (b)................. 231,800
14,000 Per-Se Technologies, Inc. (b) (L)......... 203,560
63,000 PerkinElmer, Inc. ........................ 1,262,520
10,000 Respironics, Inc. (b)..................... 587,500
31,500 Sanofi-Synthelabo SA (L).................. 1,996,705
8,400 Seattle Genetics, Inc. (b) (L)............ 59,052
31,120 Serologicals Corp. (b) (L)................ 622,089
6,500 Sybron Dental Specialities, Inc. (b)...... 194,025
2,060 Synthes-Stratec, Inc. .................... 234,801
9,600 Transkaryotic Therapy (b) (L)............. 143,616
11,880 Zeneca Group Plc. ........................ 533,008
-----------
45,134,323
-----------
METALS AND MINING (0.4%):
8,500 Alcan, Inc. .............................. 349,953
8,100 Anglo American Plc. ...................... 165,696
23,462 Broken Hill Proprietary Co. Ltd. ......... 204,786
3,500 Century Aluminum Co. (b).................. 86,765
4,800 Commercial Metals Co. .................... 155,760
3,000 Companhia Vale do Rio Doce ADR............ 117,300
3,000 Companhia Vale do Rio Doce ADR............ 142,650
6,400 Compass Minerals International, Inc. ..... 124,032
2,700 Freeport-McMoran-Cooper Corp. (b)......... 116,397
9,900 Inco Ltd. (b)............................. 342,144
10,100 Precision Castparts Corp. ................ 552,369
10,000 Rio Tinto Plc. ........................... 240,470
4,000 Schnitzer Steel Industries, Inc. (L)...... 135,840
55,000 Wmc Resources Ltd. ....................... 188,500
23,600 Xstrata Plc. ............................. 315,426
-----------
3,238,088
-----------
OIL AND GAS(6.4%):
34,200 Anadarko Petroleum Corp. ................. 2,004,120
30,770 Baker Hughes, Inc. ....................... 1,158,491
164,100 BG Plc. .................................. 1,011,080
56,067 Billiton Plc. ............................ 486,527
53,140 BJ Services Co. (b)....................... 2,435,938
17,300 Chesapeake Energy Corp. (L)............... 254,656
62,811 Chevrontexaco Corp. (L)................... 5,911,143
98,019 ConocoPhillips............................ 7,477,870
5,400 Denbury Resources, Inc. (b)............... 113,130
90,690 Devon Energy Corp. ....................... 5,985,540
23,150 Eni SpA (L)............................... 459,660
207,300 Exxon Mobil Corp. ........................ 9,206,192
50,380 Grand Prideco, Inc. (b)................... 930,015
107,000 Halliburton Co. .......................... 3,237,820
5,200 Houston Exploration Co. (b)............... 269,568
22,700 Kerr-McGee Corp. ......................... 1,220,579
3,478 L'Air Liquide (L)......................... 575,095
137,000 Marathon Oil Corp. ....................... 5,184,080
38,600 Royal Dutch Petroleum (L)................. 1,980,886
3,500 Royal Dutch Petroleum - New York
Shares - ADR.............................. 180,845
2,500 Sasol LTD. ............................... 38,674
18,200 Shell Transportation & Trading Co.Plc. ... 133,508
48,700 Statoil ASA (L)........................... 618,279
8,300 Stone Energy Corp. (b).................... 379,144
9,400 Suncor Energy, Inc. ...................... 238,444
5,800 Tesoro Petroleum Corp. (b)................ 160,080
33,000 Unocal Corp. ............................. 1,254,000
29,100 Vintage Petroleum, Inc. .................. 493,827
5,400 YUKOS ADR................................. 171,720
-----------
53,570,911
-----------
PHARMACEUTICALS(6.7%):
141,400 Abbott Laboratories....................... 5,763,464
8,600 Abgenix, Inc. (b)......................... 100,792
10,700 Ariad Pharmaceuticals (b) (L)............. 80,143
42,670 Astrazeneca Plc. ......................... 1,937,241
800 Aventis SA. .............................. 60,716
See accompanying notes to financial statements.
10
PORTFOLIO OF INVESTMENTS
NEW COVENANT GROWTH FUND
JUNE 30, 2004
Value
Shares (Note 2)
------ --------
COMMON STOCKS (CONTINUED)
PHARMACEUTICALS (CONTINUED)
42,450 Axcan Pharmaceuticals, Inc. (b) (L)....... $ 895,695
38,650 BioMarin Pharmaceutical, Inc. (b) (L)..... 231,900
3,000 Bradley Pharmaceuticals, Class A (b) (L).. 83,700
25,300 Celgene Corp. (b) (L)..................... 1,448,678
14,800 Cephalon, Inc. (b) (L).................... 799,200
7,800 Connetics Corp. (b) (L)................... 157,560
16,500 CV Therapeutics, Inc. (b) (L)............. 276,540
20,500 Eli Lilly & Co. .......................... 1,433,155
9,500 Encysive Pharmaceuticals, Inc. (b)........ 80,750
38,460 Eon Labs, Inc. (b) (L).................... 1,574,168
45,100 Gilead Sciences, Inc. (b)................. 3,021,700
6,100 Glaxosmithkline Plc. ..................... 123,456
14,140 Hospira, Inc. (b)......................... 390,264
7,650 ILEX Oncology, Inc. (b)................... 191,174
39,500 Incyte Pharmaceutical, Inc. (b) (L)....... 301,780
116,500 King Pharmaceuticals, Inc. (b)............ 1,333,925
5,600 Kos Pharmaceuticals, Inc. (b) (L)......... 184,632
14,500 Kosan Biosciences, Inc. (b)............... 114,550
96,708 Medcohealth Solutions, Inc. (b)........... 3,626,550
54,450 Merck & Co., Inc. ........................ 2,586,375
34,140 MGI PHARMA, Inc. (b)...................... 922,121
98,700 Mylan Laboratories, Inc. ................. 1,998,675
9,900 Neurogen Corp. (b) (L).................... 74,052
33,424 Novartis AG. ............................. 1,474,510
4,100 Novo-Nordisk AS. ......................... 211,065
21,350 NPS Pharmaceuticals, Inc. (b) (L)......... 448,350
36,700 Perrigo Co. .............................. 696,199
437,805 Pfizer, Inc. ............................. 15,007,956
42,000 Regeneron Pharmaceuticals, Inc. (b) (L)... 442,260
2,940 Roche Holding AG. ........................ 291,089
25,560 Salix Pharmaceuticals, Inc. (b) (L)....... 842,202
14,000 Sankyo Co. ............................... 303,441
40,690 Sepracor, Inc. (b) (L).................... 2,152,501
307 Serono SA-B............................... 193,407
31,000 Shionogi & Co. ........................... 532,979
1,000 UCB SA. .................................. 46,573
82,000 Watson Pharmaceutical, Inc. (b)........... 2,205,800
11,800 Wyeth..................................... 426,688
5,000 Yamanouchi Pharmaceutical Co. Ltd. ....... 168,171
17,250 Zymogenetics, Inc. (b) (L)................ 327,750
-----------
55,563,897
-----------
PRINTING AND PUBLISHING (0.3%):
3,000 Dai Nippon Printing Co. Ltd. ............. 47,922
53,700 Pearson Plc. ............................. 652,478
9,700 Reed Elsevier NV.......................... 136,189
43,400 Reed International Plc. .................. 421,864
11,500 Thomson Corp. ............................ 381,947
12,000 Thomson Corp. (L)......................... 401,520
8,269 VNU NV.................................... 240,144
-----------
2,282,064
-----------
REAL ESTATE (1.0%):
171,000 Amoy Properties Ltd. (L).................. 220,333
6,400 Anthracite Capital, Inc. ................. 76,672
22,900 Boston Properties, Inc. .................. 1,146,832
5,600 Capstead Mortgage Corp. (L)............... 75,320
4,600 CB Richard Ellis Group, Inc. (b).......... 87,860
5,400 CBL & Associates Properties, Inc. ........ 297,000
16,000 Cheung Kong Holdings Ltd. ................ 117,952
24,950 Equity Inns, Inc. ........................ 231,786
39,900 General Growth Properties, Inc. .......... 1,179,842
7,500 Glenborough Realty Trust, Inc. ........... 137,625
26,000 Hongkong Land Holdings Ltd. .............. 40,560
7,800 HRPT Properties Trust..................... 78,078
6,800 IMPAC Mortgage Holdings................... 153,136
34,150 IndyMac Mortgage Holdings, Inc. .......... 1,079,140
22,700 iStar Financial, Inc. .................... 908,000
5,250 Koger Equity.............................. 121,380
11,300 Mack-Cali Realty Corp. ................... 467,594
8,900 Mission West Properties (L)............... 107,779
68,000 Mitsubishi Estate Co. .................... 843,807
26,000 Mitsui Fudosan (L)........................ 311,671
13,700 Omega Healthcare Investors, Inc. ......... 137,548
2,300 Prentiss Properties Trust................. 77,096
4,600 Redwood Trust, Inc. (L)................... 256,128
9,300 Senior Housing Properties Trust........... 156,147
16,000 Sun Hung Kai Properties (L)............... 131,285
3,300 Thornburg Mortgage Asset Corp. (L)........ 88,935
-----------
8,529,506
-----------
RESTAURANTS (0.9%):
10,225 CEC Entertainment, Inc. (b)............... 301,740
66,270 Darden Restaurants, Inc. ................. 1,361,849
5,400 Landry's Seafood Restaurants, Inc. ....... 161,406
207,700 McDonald's Corp. ......................... 5,400,199
-----------
7,225,194
-----------
RETAIL (5.1%):
5,150 Big 5 Sporting Goods Corp. (b) (L)........ 134,879
48,700 BJ's Wholesale Club, Inc. (b)............. 1,217,500
46,485 Cache, Inc. (b)........................... 628,012
100,650 Caremark Rx, Inc. (b)..................... 3,315,410
28,450 Charlotte Russe Holding, Inc. (b)......... 608,261
52,300 Chico's FAS, Inc. (b)..................... 2,361,868
34,300 Claire's Stores, Inc. .................... 744,310
50,800 Coach, Inc. (b)........................... 2,295,652
10,300 CONN'S, Inc. (b).......................... 162,328
31,170 Costco Wholesale Corp. ................... 1,280,152
29,000 Esprit Asia Holdings Ltd. (L)............. 129,760
56,600 Federated Department Stores, Inc. ........ 2,779,060
4,650 Finish Line, Class A (b).................. 140,291
39,700 Foot Locker, Inc. ........................ 966,298
136,500 Gap, Inc. ................................ 3,310,125
72,640 J.C. Penney Co............................ 2,742,886
28,320 Jos. A. Bank Clothiers, Inc. (b) (L)...... 888,965
20,400 Jusco Ltd. ............................... 818,879
49,400 Lowe's Cos., Inc. ........................ 2,595,970
3,800 Metro AG (L).............................. 180,308
14,200 Michaels Stores, Inc. .................... 781,000
12,050 Party City Corp. (b) (L).................. 150,505
20,600 Petsmart, Inc. ........................... 668,470
36,600 Saks, Inc. ............................... 549,000
2,000 Shimamura Co. Ltd. (L).................... 173,395
30,380 Sports Authority, Inc. (b) (L)............ 1,090,642
5,600 Stage Stores, Inc. (b).................... 210,896
112,680 Staples, Inc. ............................ 3,302,651
21,250 Target Corp. ............................. 902,488
27,150 Tractor Supply Co. (b).................... 1,135,413
70,700 Wal-Mart Stores, Inc. .................... 3,730,131
67,990 Williams-Sonoma, Inc. (b)................. 2,240,950
-----------
42,236,455
-----------
See accompanying notes to financial statements.
11
PORTFOLIO OF INVESTMENTS
NEW COVENANT GROWTH FUND
JUNE 30, 2004
Value
Shares (Note 2)
------ ------------
COMMON STOCKS (CONTINUED)
TECHNOLOGY (2.2%):
4,300 Black Box Corp. ............................... $ 203,218
5,000 Canon, Inc. (L)................................ 263,483
32,700 Citrix Systems, Inc. (b)....................... 665,772
30,660 Commscope, Inc. (b)............................ 657,657
3,000 Hutchinson Technology, Inc. (b) (L)............ 73,770
297,800 Intel Corp. ................................... 8,219,280
23,000 Linear Technology Corp. ....................... 907,810
15,000 Plantronics, Inc. (b).......................... 631,500
8,000 Ricoh Co. Ltd. ................................ 170,096
24,700 Storage Technology Corp. (b)................... 716,300
218,100 Texas Instruments, Inc. ....................... 5,273,658
7,700 United Defense Inds, Inc. (b).................. 269,500
------------
18,052,044
------------
TELECOMMUNICATIONS (5.0%):
44,290 Adtran, Inc. .................................. 1,477,957
9,300 America Movil.................................. 338,241
8,050 Aspect Communications Corp. (b)................ 114,310
123,800 CenturyTel, Inc. .............................. 3,718,952
50,000 China Telecom.................................. 151,286
180,000 Citizens Communications Co. (b) (L)............ 2,178,000
4,800 Comtech Telecommunications Corp. (b) (L)....... 108,288
19,450 Digi International, Inc. (b)................... 208,504
40,900 EchoStar Communications Corp., Class A (b)..... 1,257,675
33,290 Ericsson ADR (b)............................... 996,037
1,600 France Telecom (L)............................. 41,697
115,350 Juniper Networks, Inc. (b) (L)................. 2,834,150
130,300 Koninklijke (Royal) KPN NV..................... 992,395
251,200 Motorola, Inc. ................................ 4,584,400
65,400 National Grid Group............................ 504,655
148,900 Nextel Communications, Inc, Class A (b)........ 3,969,674
113,200 Nextel Partners, Inc., Class A (b) (L)......... 1,802,144
164,000 Nokia Corp. ADR................................ 2,384,560
28,500 Nokia Oyj - Class A............................ 411,240
32,150 Primus Telecommunications Group, Inc. (b) (L).. 163,322
52,400 PTEK Holdings, Inc. (b)........................ 604,172
19,250 Rural Cellular Corp. (b) (L)................... 170,748
62,500 SBC Communications, Inc. ...................... 1,515,625
32,700 Scientific-Atlanta, Inc. ...................... 1,128,150
678,999 Singapore Telecommunications, Ltd. ............ 886,962
17,700 Societe Europeenne Satellite................... 149,666
159,400 Sprint Corp. .................................. 2,805,440
2,506 Swisscom AG.................................... 828,397
1,600 TDC AS......................................... 51,987
1,800 Tele Danmark AS Class B........................ 58,485
42,130 Telefonica De Espana........................... 622,778
7,300 Telefonos de Mexico ADR........................ 242,871
9,300 Telus Corp. ................................... 139,699
81,920 UnitedGlobalCom (b)............................ 594,739
22,152 Verizon Communications, Inc. .................. 801,681
14,800 Vivendi Universal (b) (L)...................... 410,546
1,198,268 Vodafone Group Plc. ........................... 2,623,968
------------
41,873,401
------------
TRANSPORTATION (1.8%):
11,000 Alexander & Baldwin............................ 367,950
12,150 Arkansas Best Corp. ........................... 399,978
54,600 Burlington Northern Santa Fe Corp. ............ 1,914,822
20,500 CNF, Inc. ..................................... 851,980
58,590 Fedex Corp. ................................... 4,786,218
86,600 Norfolk Southern Corp. ........................ 2,296,632
15,800 Pinnacle Airlines Corp. (b).................... 178,540
6,700 Rent-A-Center, Inc. (b)........................ 200,531
16,800 Ryder System, Inc. ............................ 673,176
20,000 Singapore Airlines Ltd. ....................... 130,047
8,500 TNT Post Group NV. ............................ 194,214
20,500 Union Pacific Corp. ........................... 1,218,725
6,100 United Parcel Service, Class B................. 458,537
15,160 UTI Worldwide, Inc. ........................... 798,780
19,000 Yamato Transport............................... 310,122
------------
14,780,252
------------
WASTE MANAGEMENT (0.8%):
7,300 Duratek, Inc. (b).............................. 110,303
32,900 Republic Services, Inc. ....................... 952,126
182,900 Waste Management, Inc. ........................ 5,605,885
------------
6,668,314
------------
TOTAL COMMON STOCKS ........................... 816,814,288
------------
Principal
Amount
- ---------------
CONVERTIBLE BONDS (0.1%):
FINANCIAL SERVICES (0.1%):
$33,000,000 SMFG Finance (Cayman) LTD.,
2.25% due 7/11/05 (R).......................... 726,748
------------
TOTAL CONVERTIBLE BONDS........................ 726,748
------------
Shares
- ---------------
EXCHANGE TRADED FUNDS (0.5%):
2,300 I Shares Trust Russell 2000 (L)................ 270,986
41,000 S&P Depository Receipt (b) (L)................. 4,695,730
------------
TOTAL EXCHANGE TRADED FUNDS.................... 4,966,716
------------
Principal
Amount
- ---------------
REPURCHASE AGREEMENTS (1.4%):
REPURCHASE AGREEMENTS (1.4%):
$11,436,000 Repurchase Agreement with State
Street Bank, 1.08%, 7/1/04..................... 11,436,000
------------
(Collateralized by $2,605,000
Federal Home Loan Mortgage Corp. 2.55% due
10/12/06; $930,000 Federal National
Mortgage Association 2.55% due
6/1/06; $3,350,000 Federal National
Mortgage Association 1.55% due 7/7/05;
$360,000 Federal Home Loan Bank 1.64% due
6/17/05; $3,130,000 Federal Home Loan
Mortgage Corp. 2.04% due 2/17/06; $1,375,000
Federal Home Loan Mortgage Corp.
2.40% due 7/28/06)
TOTAL REPURCHASE AGREEMENTS.................... 11,436,000
------------
Shares
- ---------------
INVESTMENTS HELD AS COLLATERAL FOR LOANED
SECURITIES (9.5%):
79,228,937 State Street Navigator Securities
Lending Prime Portfolio, 1.23% due 7/1/04...... 79,228,937
------------
TOTAL INVESTMENTS HELD AS COLLATERAL
FOR SECURITIES LOANED.......................... 79,228,937
------------
TOTAL INVESTMENTS
(COST $833,223,451) (109.4%) (a)............................ $913,172,689
============
See accompanying notes to financial statements.
12
PORTFOLIO OF INVESTMENTS
NEW COVENANT GROWTH FUND
JUNE 30, 2004
Value
Shares (Note 2)
- ------- -----------
Percentages indicated are based on net assets of $834,575,417. (a) Represents
cost for financial reporting purposes and differs from cost basis for federal
income tax purposes by the amount of losses recognized for federal reporting in
excess of federal income tax reporting of $9,313,985 and by PFIC mark to market
of $298,782. Cost for federal income tax differs from value by net unrealized
appreciation (depreciation) of securities as follows:
Unrealized appreciation................... $ 98,462,387
Unrealized depreciation................... (28,016,488)
------------
Net unrealized appreciation (depreciation) $ 70,445,899
============
(b) Non-income producing securities.
(c) Investment in affiliate.
(L) A portion or all of the security is on loan.
(R) Security exempt from registration under Rule 144a of the
Securities Act of 1933. These securities may be resold in
transactions exempt from registration, normally to
qualified buyers.
ADR American Depository Receipt
GDR Global Depository Receipt
13
PORTFOLIO OF INVESTMENTS
NEW COVENANT INCOME FUND
JUNE 30, 2004
Principal Value
Amount (Note 2)
- ----------- -----------
ASSET BACKED SECURITIES (11.2%):
$ 5,000,000 Chase Credit Card Master Trust,
1.19%, 10/15/09, Series 2002-5 ....................... $ 5,010,393
6,660,000 Discover Card Master Trust, 1.52%, 2/16/07,
Series 1995-1, Class A ............................... 6,666,006
1,000,000 Fleet Credit Card Master Trust II,
1.24%, 5/15/08 ....................................... 1,002,251
5,000,000 Ford Credit Floorplan Master Owner Trust,
1.18%, 7/17/06, Series 2001-1 Class A ................ 5,003,208
4,075,000 Goldman Sachs Mortgage Securities Corp.
II, 4.61%, 1/10/40, Series 2003-C1 Class A3 .......... 3,917,336
4,154,832 Lehman Brothers, 7.18%, 9/15/19,
Series 2000-C4 ....................................... 4,497,648
4,625,000 Lehman Brothers, 6.65%, 11/15/27,
Series 2001-C2 ....................................... 5,080,159
5,500,000 MBNA Credit Card Master Note Trust,
1.14%, 8/15/08 ....................................... 5,506,095
5,060,000 Morgan Stanley Capital I, 5.52%, 12/15/35,
Series 2002-IQ2, Class A3 ............................ 5,250,193
1,250,000 Morgan Stanley Capital I, 4.66%, 9/13/45 ............. 1,191,057
4,000,000 Residential Asset Mortgage Product,
6.50%, 6/1/19 ........................................ 4,138,750
5,865,000 Residential Asset Mortgage Products, Inc.,
5.57%, 6/25/32, Series 2002-RS3, Class A15 ........... 6,073,702
5,220,000 UBS Commercial Mortgage Trust,
5.59%, 6/15/31 ....................................... 5,385,753
-----------
TOTAL ASSET BACKED SECURITIES ........................ 58,722,551
-----------
CORPORATE BONDS (24.8%):
2,750,000 Alcan, Inc., 6.125%, 12/15/33 ........................ 2,669,673
1,520,000 Alco Capital, 6.50%, 6/15/18 ......................... 1,667,367
1,900,000 Alliance Capital Management,
5.625%, 8/15/06 ...................................... 1,988,407
3,900,000 American General Finance, 6.10%, 5/22/06 ............. 4,111,310
1,000,000 American General Finance, 5.875%, 7/14/06 ............ 1,050,503
2,400,000 AOL Time Warner, Inc., 7.625%, 4/15/31 ............... 2,604,876
4,785,000 Banc of America Commercial Mortgage,
Inc., 5.06%, 3/11/41 ................................. 4,711,089
1,000,000 Bank of America Corp., 4.375%, 12/1/10 ............... 976,001
5,000,000 Bank of New York, 4.14%, 8/2/07 ...................... 5,024,374
2,000,000 BellSouth Telecommunications, Inc.,
6.375%, 6/1/28 ....................................... 1,984,334
4,000,000 Berkshire Hathaway, Inc.,
3.375%, 10/15/08, (R) ................................ 3,888,932
3,780,000 Bottling Group Llc, 5.00%, 11/15/13, (L) ............. 3,720,174
1,125,000 BRE Properties, Inc., 7.125%, 2/15/13 ................ 1,246,937
3,800,000 Burlington North Santa Fe, 6.75%, 7/15/11 ............ 4,184,666
2,500,000 Carolina Power & Light, 6.50%, 7/15/12 ............... 2,691,965
3,250,000 Caterpillar Financial, 4.50%, 6/15/09 ................ 3,267,787
10,000,000 Coca-Cola Enterprises, 0.00%, 6/20/20 ................ 3,824,200
1,150,000 Devon Energy Corp., 7.95%, 4/15/32 ................... 1,332,395
1,265,000 Duke Realty Corp., 7.05%, 3/1/06 ..................... 1,327,204
1,600,000 EOP Operating LP, 6.80%, 1/15/09 ..................... 1,733,392
3,975,000 Equity Residential Properties,
6.875%, 11/1/04 ...................................... 4,035,869
2,066,083 FedEx Corp., 6.72%, 1/15/22, Series 98-1A ............ 2,214,397
1,950,000 Firstar Bank, 7.125%, 12/1/09 ........................ 2,198,611
4,025,000 Ford Motor Credit Co., 7.00%, 10/1/13, (L) ........... 4,069,954
3,510,000 General Electric Capital Corp.,
6.125%, 2/22/11 ...................................... 3,764,131
4,190,000 General Electric Capital Corp.,
6.53%, 5/15/33 ....................................... 4,567,242
3,250,000 General Mills, Inc., 6.00%, 2/15/12 .................. 3,408,355
2,970,000 General Motors Acceptance Corp.,
6.875%, 9/15/11 ...................................... 3,049,424
975,000 General Motors Corp., 7.20%, 1/15/11, (L) ............ 1,022,926
615,000 General Motors Corp., 8.80%, 3/1/21 .................. 675,640
1,400,000 Georgia Power Co., 6.20%, 2/1/06 ..................... 1,470,281
1,750,000 Household Finance Corp., 6.40%, 6/17/08 .............. 1,884,171
600,000 Household Finance Corp., 4.75%, 5/15/09 .............. 603,970
1,070,000 International Paper Co., 6.50%, 11/15/07 ............. 1,154,775
625,000 International Paper Co., 5.85%, 10/30/12, (L) ........ 635,841
4,215,000 Master Alternative Loans Trust,
4.50%, 5/1/19 ........................................ 4,060,231
845,000 Master Alternative Loans Trust,
4.75%, 5/1/19 ........................................ 829,156
675,000 May Department Stores Co.,
7.45%, 9/15/11, (L) .................................. 756,401
5,000,000 Merrill Lynch & Co., 5.36%, 2/1/07 ................... 5,260,455
3,525,000 Morgan Stanley, 3.625%, 4/1/08 ....................... 3,467,201
3,250,000 National City Corp., 6.875%, 5/15/19 ................. 3,575,741
2,500,000 Nationwide Life, 5.35%, 2/15/07, (R) ................. 2,608,570
1,120,000 Pacific Bell, 6.625%, 11/1/09, (L) ................... 1,226,734
1,720,000 Pacific Gas & Electric, 6.05%, 3/1/34 ................ 1,623,128
3,785,000 PNC Funding Corp., 6.125%, 2/15/09 ................... 4,040,639
500,000 Progress Energy, Inc., 6.85%, 4/15/12, (L) ........... 541,130
1,200,000 Progress Energy, Inc., 7.75%, 3/1/31 ................. 1,349,092
850,000 Sprint Capital Corp., 7.625%, 1/30/11 ................ 940,891
2,570,000 Sprint Capital Corp., 6.875%, 11/15/28 ............... 2,477,524
2,600,000 Suntrust Banks, Inc., 6.00%, 2/15/26 ................. 2,783,893
2,500,000 USAA Capital Corp., 5.59%, 12/20/06, (R) ............. 2,636,878
1,825,000 Washington Mutual, Inc., 7.50%, 8/15/06 .............. 1,978,917
1,150,000 Weyerhaeuser Co., 7.375%, 3/15/32 .................... 1,254,404
-----------
TOTAL CORPORATE BONDS ................................ 130,172,158
-----------
MORTGAGE-BACKED SECURITIES (45.3%):
189 Federal Home Loan Mortgage Corp.,
8.00%, 5/1/06, Pool #E30879 .......................... 197
5,644,067 Federal Home Loan Mortgage Corp.,
6.98%, 10/1/10, Pool #W20024 ......................... 6,242,338
1,490,000 Federal Home Loan Mortgage Corp.,
4.50%, 8/15/13 ....................................... 1,500,423
2,343,802 Federal Home Loan Mortgage Corp.,
6.00%, 4/1/14, Pool #G11320 .......................... 2,451,520
4,540,000 Federal Home Loan Mortgage Corp.,
4.50%, 3/15/17 ....................................... 4,470,618
4,775,000 Federal Home Loan Mortgage Corp.,
6.00%, 5/15/17 ....................................... 4,990,885
865,000 Federal Home Loan Mortgage Corp.,
4.50%, 7/1/19, 4.50%, 07/01/19 ....................... 845,268
2,615,000 Federal Home Loan Mortgage Corp.,
4.50%, 7/1/19, TBA ................................... 2,555,347
5,168,000 Federal Home Loan Mortgage Corp.,
5.00%, 4/15/27 ....................................... 5,190,166
5,240,000 Federal Home Loan Mortgage Corp.,
5.00%, 2/15/28 ....................................... 5,194,935
5,095,000 Federal Home Loan Mortgage Corp.,
4.50%, 10/15/28, Series 2691 ......................... 4,939,145
820,000 Federal Home Loan Mortgage Corp.,
5.00%, 6/15/29 ....................................... 810,597
5,000,000 Federal Home Loan Mortgage Corp.,
3.905%, 5/1/34 ....................................... 4,919,982
2,670,000 Federal Home Loan Mortgage Corp.,
3.79%, 6/1/34 ........................................ 2,599,287
See accompanying notes to financial statements.
14
PORTFOLIO OF INVESTMENTS
NEW COVENANT INCOME FUND
JUNE 30, 2004
Principal Value
Amount (Note 2)
- ----------- -----------
MORTGAGE-BACKED SECURITIES (CONTINUED)
$ 8,235,000 Federal Home Loan Mortgage Corp.,
5.00%, 7/1/34, TBA ................................... $ 7,949,344
3,015,000 Federal Home Loan Mortgage Corp.,
5.00%, 7/1/34, TBA ................................... 2,910,416
1,915,000 Federal Home Loan Mortgage Corp.,
5.00%, 7/1/34, TBA ................................... 1,848,572
3,565,693 Federal Home Loan Mortgage Corp.,
7.00%, 2/25/43, Series T-54 Class 3A ................. 3,768,597
5,047,152 Federal National Mortgage Association,
7.07%, 11/1/06 ....................................... 5,349,049
4,632,692 Federal National Mortgage Association,
7.185%, 5/1/07 ....................................... 4,977,219
2,270,662 Federal National Mortgage Association,
7.74%, 6/1/07 ........................................ 2,469,283
479,533 Federal National Mortgage Association,
6.61%, 9/1/07 ........................................ 513,157
2,167,908 Federal National Mortgage Association,
6.23%, 1/1/08 ........................................ 2,297,446
686,610 Federal National Mortgage Association,
6.13%, 10/1/08 ....................................... 732,191
1,439,315 Federal National Mortgage Association,
7.01%, 11/1/08 ....................................... 1,581,858
4,154,233 Federal National Mortgage Association,
6.14%, 4/1/09 ........................................ 4,439,939
5,377,587 Federal National Mortgage Association,
7.32%, 12/1/10 ....................................... 6,065,535
965,077 Federal National Mortgage Association,
6.09%, 5/1/11 ........................................ 1,033,423
1,343,072 Federal National Mortgage Association,
6.305%, 5/1/11 ....................................... 1,455,866
6,092,803 Federal National Mortgage Association,
3.95%, 7/1/13 ........................................ 5,682,731
2,117,652 Federal National Mortgage Association,
6.00%, 12/1/13 ....................................... 2,213,808
2,555,615 Federal National Mortgage Association,
6.00%, 6/1/14 ........................................ 2,669,484
5,070,000 Federal National Mortgage Association,
6.00%, 12/25/16, Series 01-71, Class QE .............. 5,304,805
5,305,000 Federal National Mortgage Association,
4.50%, 3/25/17 ....................................... 5,188,949
6,290,000 Federal National Mortgage Association,
6.00%, 3/25/17 ....................................... 6,570,042
2,051,680 Federal National Mortgage Association,
6.00%, 6/1/17 ........................................ 2,144,841
605,257 Federal National Mortgage Association,
6.50%, 6/1/17, FN 254343 ............................. 639,911
2,579,933 Federal National Mortgage Association,
6.00%, 7/1/17 ........................................ 2,691,755
4,512,413 Federal National Mortgage Association,
6.00%, 8/1/17 ........................................ 4,707,995
2,844,347 Federal National Mortgage Association,
6.50%, 8/1/17 ........................................ 3,006,775
2,960,000 Federal National Mortgage Association,
4.50%, 7/1/19, TBA ................................... 2,898,692
3,988,008 Federal National Mortgage Association,
6.50%, 12/25/23 ...................................... 4,145,134
1,590,000 Federal National Mortgage Association,
4.50%, 9/25/25 ....................................... 1,612,069
273,388 Federal National Mortgage Association,
7.50%, 5/1/27 ........................................ 293,732
174,927 Federal National Mortgage Association,
6.50%, 6/25/27 ....................................... 176,702
67,395 Federal National Mortgage Association,
7.50%, 4/1/29, Pool #323645 .......................... 72,456
376,217 Federal National Mortgage Association,
7.50%, 4/1/29 ........................................ 404,474
25,397 Federal National Mortgage Association,
7.50%, 8/1/29, Pool #252712 .......................... 27,263
4,180,000 Federal National Mortgage Association,
4.50%, 1/25/30 ....................................... 3,857,683
339,985 Federal National Mortgage Association,
7.50%, 7/1/30 ........................................ 365,520
1,178,774 Federal National Mortgage Association,
7.50%, 12/1/30 ....................................... 1,265,079
2,685,000 Federal National Mortgage Association,
6.09%, 10/25/31 ...................................... 2,771,224
1,868,554 Federal National Mortgage Association,
7.00%, 6/1/32 ........................................ 1,972,676
5,231,573 Federal National Mortgage Association,
6.50%, 7/1/32 ........................................ 5,452,870
960,000 Federal National Mortgage Association,
4.50%, 7/25/33 ....................................... 934,785
3,847,843 Federal National Mortgage Association,
7.00%, 12/25/33 ...................................... 4,065,966
998,108 Federal National Mortgage Association,
7.50%, 2/25/41 ....................................... 1,070,157
5,711,571 Federal National Mortgage Association,
7.50%, 7/25/41 ....................................... 6,123,861
5,135,061 Federal National Mortgage Association,
7.00%, 10/25/41 ...................................... 5,443,170
4,533,811 Federal National Mortgage Association,
7.50%, 12/25/41 ...................................... 4,855,363
2,138,423 Federal National Mortgage Association,
7.50%, 5/25/42 ....................................... 2,292,785
5,230,000 Federal National Mortgage Association,
5.50%, 7/25/42 ....................................... 5,340,495
11,664,005 Federal National Mortgage Association,
6.50%, 7/25/42 ....................................... 12,196,233
3,661,108 Federal National Mortgage Association,
7.00%, 7/25/42 ....................................... 3,880,778
1,497,488 Federal National Mortgage Association,
7.50%, 8/25/42 ....................................... 1,605,584
6,272,968 Federal National Mortgage Association,
5.95%, 9/25/43 ....................................... 6,452,336
7,645,000 Federal National Mortgage Association,
5.50%, 11/25/43 ...................................... 7,773,299
765,174 Federal National Mortgage Association,
7.00%, 2/25/44, Series 04-W2, Class 2A2 .............. 809,622
2,152,396 Federal National Mortgage Association,
7.00%, 1/25/48 ....................................... 2,281,542
5,227,630 Government National Mortgage Associa-
tion., 5.50%, 11/15/33, Pool #425012 ................. 5,231,441
6,420,000 Washington Mutual, 3.96%, 7/25/34 .................... 6,191,288
-----------
TOTAL MORTGAGE-BACKED SECURITIES ..................... 236,787,978
-----------
U.S. TREASURY OBLIGATIONS (11.4%):
1,680,000 U.S. Treasury Bonds, 7.50%, 11/15/16, (L) ............ 2,071,584
30,125,000 U.S. Treasury Bonds, 6.00%, 2/15/26, (L) ............. 32,470,292
9,840,000 U.S. Treasury Notes, 3.125%, 5/15/07, (L) ............ 9,843,080
14,890,000 U.S. Treasury Notes, 5.00%, 8/15/11, (L) ............. 15,549,002
-----------
TOTAL U.S. TREASURY OBLIGATIONS ...................... 59,933,958
-----------
See accompanying notes to financial statements.
15
PORTFOLIO OF INVESTMENTS
NEW COVENANT INCOME FUND
JUNE 30, 2004
Value
Shares (Note 2)
- -------- -----------
CLOSED END INVESTMENT COMPANIES (1.2%):
372,400 Blackrock Income Opportunity Trust ............. $ 3,947,440
358,900 MFS Government Markets Income Trust ............ 2,304,138
TOTAL CLOSED END INVESTMENT
-----------
COMPANIES ...................................... 6,251,578
-----------
Principal
Amount
- ------------
REPURCHASE AGREEMENTS (9.5%):
$ 49,767,000 Repurchase Agreement with State
Street Bank, 1.08%, 7/1/04 ................. 49,767,000
-----------
(Collateralized by $49,767,000 Federal
National Mortgage Association
4.00% due 2/15/05)
TOTAL REPURCHASE AGREEMENTS ................ 49,767,000
-----------
Shares
- ----------
INVESTMENTS HELD AS COLLATERAL FOR LOANED SECURITIES (12.5%):
65,501,525 State Street Navigator Securities Lending
Prime Portfolio, 1.23% due 7/1/04 ...................... 65,501,525
-------------
TOTAL INVESTMENTS HELD AS COLLATERAL
FOR SECURITIES LOANED .................................. 65,501,525
-------------
TOTAL INVESTMENTS
(COST $604,231,142) (115.9%) (a) ................................... $ 607,136,748
=============
Percentages indicated are based on net assets of $524,024,881.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for federal reporting in excess of federal income tax reporting of
$1,107,175. Cost for federal income tax purposes differs from value by net
unrealized appreciation (depreciation) of securities as follows:
Unrealized appreciation .................................. $ 6,306,765
Unrealized depreciation .................................. (4,508,334)
-----------
Net unrealized appreciation (depreciation) ............... $ 1,798,431
===========
(L) A portion or all of the security on loan.
(R) Security exempt from registration under Rule 144a of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
See accompanying notes to financial statements.
16
PORTFOLIO OF INVESTMENTS
NEW COVENANT BALANCED GROWTH FUND
JUNE 30, 2004
Value
Shares (Note 2)
------ --------
INVESTMENT COMPANIES (98.7%):
6,673,374 New Covenant Growth Fund .................... $ 187,321,620
4,415,732 New Covenant Income Fund .................... 111,143,963
-------------
TOTAL INVESTMENT COMPANIES .................. 298,465,583
-------------
Principal
Amount
- ----------
REPURCHASE AGREEMENTS (1.3%):
$4,043,000 Repurchase Agreement with State
Street Bank, 1.08%, 7/1/04 ................... 4,043,000
-------------
(Collateralized by $4,150,000 Federal
Home Loan Mortgage Corp.
2.04% due 2/17/06)
TOTAL REPURCHASE AGREEMENTS .................. 4,043,000
-------------
TOTAL INVESTMENTS
(COST $305,599,490) (100.0%) (a) ......................... $ 302,508,583
=============
Percentages indicated are based on net assets of $302,446,228.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for federal reporting in excess of federal income tax reporting of
$10,654,834, by REIT cost adjustment of $937,717 and by return of capital
of $489,331. Cost for federal income tax purposes differs from value by
net unrealized appreciation (depreciation) of securities as follows:
Unrealized appreciation ..................... $ 3,623,202
Unrealized depreciation ..................... (15,941,895)
------------
Net unrealized appreciation (depreciation) $(12,318,693)
============
NEW COVENANT BALANCED INCOME FUND
JUNE 30, 2004
Value
Shares (Note 2)
------ --------
INVESTMENT COMPANIES (98.8%):
1,696,112 New Covenant Growth Fund .................... $ 47,609,858
3,013,429 New Covenant Income Fund .................... 75,848,004
------------
TOTAL INVESTMENT COMPANIES .................. 123,457,862
------------
Principal
Amount
- ----------
REPURCHASE AGREEMENTS (1.2%):
$1,482,000 Repurchase Agreement with State
Street Bank, 1.08%, 7/1/04 ................... 1,482,000
-------------
(Collateralized by $1,515,000 Federal
Farm Credit Bank 2.50% due 11/15/05)
TOTAL REPURCHASE AGREEMENTS .................. 1,482,000
-------------
TOTAL INVESTMENTS
(COST $123,298,155) (100.0%) (a) ......................... $ 124,939,862
=============
Percentages indicated are based on net assets of $124,915,360.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for federal reporting in excess of federal income tax reporting of
$1,261,534, by REIT cost adjustment of $224,079 and by return of capital
of $333,050. Cost for federal income tax purposes differs from value by
net unrealized appreciation (depreciation) of securities as follows:
Unrealized appreciation ..................... $ 4,716,255
Unrealized depreciation ..................... (3,778,953)
-----------
Net unrealized appreciation (depreciation) $ 937,302
===========
See accompanying notes to financial statements.
17
STATEMENTS OF ASSETS AND LIABILITIES
NEW COVENANT FUNDS
JUNE 30, 2004
BALANCED BALANCED
GROWTH FUND INCOME FUND GROWTH FUND INCOME FUND
------------- ------------- ------------- -------------
ASSETS:
Investments, at value (Cost
$753,883,976, $538,729,617,
$4,043,000, and $1,482,000,
respectively) .................. $ 833,943,752 $ 541,635,223 $ 4,043,000 $ 1,482,000
Investment in affiliates
(Cost $0, $0, $ 301,556,490
and $121,816,155,
respectively) .................. -- -- 298,465,583 123,457,862
Investments held as collateral
for loaned securities (Cost
$79,228,937, $65,501,525, $0
and $0, respectively) .......... 79,228,937 65,501,525 -- --
------------- ------------- ------------- -------------
Total Investments ................ 913,172,689 607,136,748 302,508,583 124,939,862
Cash ............................. -- 270 370 17
Foreign currency, at value
(Cost $33,836, $0, $0 and
$0, respectively) .............. 33,765 -- -- --
Interest and dividends
receivable ..................... 740,418 4,554,373 121 44
Receivable for investments
sold ........................... 5,153,509 19,180,923 -- --
Receivable for forward foreign
currency contracts ............. 1,389 -- -- --
Reclaims receivable .............. 60,056 -- -- --
Prepaid expenses and other
assets ......................... 44,636 34,430 23,445 16,191
------------- ------------- ------------- -------------
Total Assets: .................... 919,206,462 630,906,744 302,532,519 124,956,114
------------- ------------- ------------- -------------
LIABILITIES:
Payable for investments
purchased ...................... 4,047,714 40,975,172 -- --
Cash overdraft ................... 545,024 -- -- --
Payable for return of
collateral received on
securities loaned .............. 79,228,937 65,501,525 -- --
Accrued expenses and other
payables:
Investment advisory fees ....... 668,974 323,048 -- --
Administration fees ............ 1,887 1,242 692 301
Other .......................... 138,509 80,876 85,599 40,453
------------- ------------- ------------- -------------
Total Liabilities: ............... 84,631,045 106,881,863 86,291 40,754
------------- ------------- ------------- -------------
NET ASSETS: ........................ $ 834,575,417 $ 524,024,881 $ 302,446,228 $ 124,915,360
============= ============= ============= =============
NET ASSETS CONSIST OF:
Paid-in capital .................. 919,890,723 522,944,385 322,359,698 127,026,399
Undistributed (distributions
in excess of) net investment
income ......................... (170,489) -- 497,494 337,348
Accumulated net realized
losses on investment and
foreign currency
transactions ................... (165,208,957) (1,825,110) (17,320,057) (4,090,094)
Net unrealized
appreciation/(depreciation)
on investment transactions
and translation of assets
and liabilities denominated
in foreign currencies .......... 80,064,140 2,905,606 (3,090,907) 1,641,707
------------- ------------- ------------- -------------
Total Net Assets ................. $ 834,575,417 $ 524,024,881 $ 302,446,228 $ 124,915,360
============= ============= ============= =============
Number of fund shares outstanding 29,736,692 20,816,983 4,051,491 6,847,694
============= ============= ============= =============
Net asset value, offering and
redemption price per share ..... $ 28.07 $ 25.17 $ 74.65 $ 18.24
============= ============= ============= =============
See accompanying notes to financial statements.
18
STATEMENTS OF OPERATIONS
NEW COVENANT FUNDS
FOR THE YEAR ENDED JUNE 30, 2004
BALANCED BALANCED
GROWTH FUND INCOME FUND GROWTH FUND INCOME FUND
------------- ------------ ------------ -----------
INVESTMENT INCOME:
Interest .......................................... $ 113,181 $ 23,491,122 $ 30,446 $ 15,148
Dividend .......................................... 11,356,228 425,033 -- --
Dividend income from affiliates ................... -- -- 5,724,408 3,823,483
Foreign tax withholding ........................... (130,130) -- -- --
Income from securities lending .................... 118,427 39,968 -- --
------------- ------------ ------------ -----------
Total Income: ..................................... 11,457,706 23,956,123 5,754,854 3,838,631
------------- ------------ ------------ -----------
EXPENSES:
Investment advisory fees .......................... 7,838,860 3,931,974 -- --
Administration fees ............................... 129,629 85,809 47,308 20,371
Shareholder service fees .......................... 1,027,604 664,553 -- --
Accounting fees ................................... 299,576 176,765 41,069 21,948
Audit fees ........................................ 38,879 25,892 18,045 12,183
Custodian fees .................................... 372,534 69,888 3,250 3,250
Insurance fees .................................... 25,290 18,575 9,717 4,300
Legal fees ........................................ 75,053 52,243 27,975 12,035
Registration and filing fees ...................... 21,619 20,251 22,134 19,225
Printing fees ..................................... 44,156 28,407 15,777 6,923
Transfer agent fees ............................... 109,667 102,592 243,966 118,259
Other fees ........................................ 32,795 22,508 11,979 5,630
------------- ------------ ------------ -----------
Total expenses before fee reductions .............. 10,015,662 5,199,457 441,220 224,124
Expenses voluntarily reduced ...................... (1,027,604) (664,553) -- --
Expenses paid indirectly .......................... (35,596) -- -- --
------------- ------------ ------------ -----------
Total Expenses .................................... 8,952,462 4,534,904 441,220 224,124
------------- ------------ ------------ -----------
NET INVESTMENT INCOME ............................. 2,505,244 19,421,219 5,313,634 3,614,507
------------- ------------ ------------ -----------
NET REALIZED AND UNREALIZED GAINS/
(LOSSES) FROM INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS:
Realized gains/(losses) on investment and foreign
currency transactions ........................... 49,605,122 (1,027,902) (5,013,806) (1,197,841)
Change in unrealized appreciation/(depreciation) on
investments and translation of assets and
liabilities denominated in foreign currency ..... 87,618,337 (18,444,921) 31,737,323 6,133,930
------------- ------------ ------------ -----------
Net realized/unrealized gains/(losses) on
investments and foreign currency ................ 137,223,459 (19,472,823) 26,723,517 4,936,089
------------- ------------ ------------ -----------
CHANGE IN NET ASSETS RESULTING
FROM OPERATIONS ................................... $ 139,728,703 $ (51,604) $ 32,037,151 $ 8,550,596
============= ============ ============ ===========
See accompanying notes to financial statements.
19
STATEMENTS OF CHANGES IN NET ASSETS
NEW COVENANT FUNDS
GROWTH FUND INCOME FUND
----------- -----------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, 2004 JUNE 30, 2003 JUNE 30, 2004 JUNE 30, 2003
------------- ------------- ------------- -------------
OPERATIONS:
Net investment income ........................................ $ 2,505,244 $ 3,113,361 $ 19,421,219 $ 19,520,007
Net realized gains/(losses) on investment and foreign
currency transactions ...................................... 49,605,122 (91,471,683) (1,027,902) 17,896,236
Net change in unrealized appreciation/(depreciation) on
investments and translation of assets and liabilities
denominated in foreign currency ............................ 87,618,337 76,696,165 (18,444,921) 10,426,007
------------- ------------- ------------- -------------
Change in net assets resulting from operations ............... 139,728,703 (11,662,157) (51,604) 47,842,250
------------- ------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ................................... (2,835,338) (2,747,947) (18,264,083) (20,721,289)
From net realized gains on investment ........................ -- -- (8,717,403) (5,326,830)
Tax return of capital ........................................ -- -- (2,311,618) --
------------- ------------- ------------- -------------
Change in net assets from shareholder distributions .......... (2,835,338) (2,747,947) (29,293,104) (26,048,119)
------------- ------------- ------------- -------------
CAPITAL TRANSACTIONS:
Change in net assets from fund share transactions ............ (11,202,779) 27,672,712 27,635,785 (41,416,799)
------------- ------------- ------------- -------------
Change in net assets ......................................... 125,690,586 13,262,608 (1,708,923) (19,622,668)
------------- ------------- ------------- -------------
NET ASSETS:
Beginning of period .......................................... 708,884,831 695,622,223 525,733,804 545,356,472
------------- ------------- ------------- -------------
End of period ................................................ $ 834,575,417 $ 708,884,831 $ 524,024,881 $ 525,733,804
============= ============= ============= =============
Undistributed (distributions in excess of) net
investment income .......................................... $ (170,489) $ 170,404 $ -- $ 453,279
============= ============= ============= =============
See accompanying notes to financial statements.
20
STATEMENTS OF CHANGES IN NET ASSETS
NEW COVENANT FUNDS
BALANCED GROWTH FUND BALANCED INCOME FUND
-------------------- --------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, 2004 JUNE 30, 2003 JUNE 30, 2004 JUNE 30, 2003
------------- ------------- ------------- -------------
OPERATIONS:
Net investment income ..................................... $ 5,313,634 $ 5,235,230 $ 3,614,507 $ 3,523,903
Net realized losses on investment and foreign
currency transactions ............................... (5,013,806) (8,310,028) (1,197,841) (1,895,081)
Net changes in unrealized depreciation on investments
and translation of assets and liabilities
denominated in foreign currency ..................... 31,737,323 10,514,095 6,133,930 5,078,734
------------- ------------- ------------- -------------
Change in net assets resulting from operations ............ 32,037,151 7,439,297 8,550,596 6,707,556
------------- ------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ................................ (4,860,882) (5,236,205) (3,278,062) (3,524,688)
From net realized gains on investment ..................... -- (354,255) -- (368,191)
Tax return of capital ..................................... (299,330) -- (233,142) --
------------- ------------- ------------- -------------
Change in net assets from shareholder distributions ....... (5,160,212) (5,590,460) (3,511,204) (3,892,879)
------------- ------------- ------------- -------------
CAPITAL TRANSACTIONS:
Change in net assets from fund share transactions ......... 3,102,552 (15,696,468) (2,700,088) 5,748,715
------------- ------------- ------------- -------------
Change in net assets ...................................... 29,979,491 (13,847,631) 2,339,304 8,563,392
------------- ------------- ------------- -------------
NET ASSETS:
Beginning of period ....................................... 272,466,737 286,314,368 122,576,056 114,012,664
------------- ------------- ------------- -------------
End of period ............................................. $ 302,446,228 $ 272,466,737 $ 124,915,360 $ 122,576,056
============= ============= ============= =============
Distributions in excess of net investment income .......... $ (497,494) $ -- $ (337,348) $ --
============= ============= ============= =============
See accompanying notes to financial statements.
21
FINANCIAL HIGHLIGHTS
NEW COVENANT FUNDS
For a Share outstanding throughout each period.
GROWTH FUND
-----------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, 2004 JUNE 30, 2003 JUNE 30, 2002 JUNE 30, 2001 JUNE 30, 2000 (a)
------------- ------------- ------------- ------------- -----------------
Net Asset Value, Beginning of Period ......... $ 23.51 $ 24.13 $ 29.26 $ 42.07 $ 40.81 (b)
INVESTMENT ACTIVITIES:
Net investment income ........................ 0.07 0.10 0.04 0.10 0.15
Net realized and unrealized gains/(losses)
from investments and foreign
currency transactions .................. 4.58 (0.63) (5.11) (4.86) 2.49
----------- ----------- ----------- ----------- ---------
Total from Investment Activities ............. 4.65 (0.53) (5.07) (4.76) 2.64
----------- ----------- ----------- ----------- ---------
DIVIDENDS:
Net investment income ........................ (0.09) (0.09) (0.01) -- (0.30)
Net realized gains ........................... -- -- -- (7.80) (1.08)
Tax return of capital ........................ -- -- (0.05) (0.25) --
----------- ----------- ----------- ----------- ---------
Total Dividends .............................. (0.09) (0.09) (0.06) (8.05) (1.38)
----------- ----------- ----------- ----------- ---------
Change in net asset value per share .......... 4.56 (0.62) (5.13) (12.81) 1.26
----------- ----------- ----------- ----------- ---------
NET ASSET VALUE, END OF PERIOD ............... $ 28.07 $ 23.51 $ 24.13 $ 29.26 $ 42.07
=========== =========== =========== =========== =========
Total Return ................................. 19.81% (2.17%) (17.34%) (12.33%) 6.38%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (in 000's) ....... $ 834,575 $ 708,885 $ 695,622 $ 816,901 $ 905,086
Ratio of expenses to average net assets ...... 1.13% 1.13% 1.11% 1.07% 1.07%
Ratio of net investment income to
average net assets ......................... 0.32% 0.47% 0.15% 0.20% 0.37%
Ratio of expenses to average net assets* ..... 1.26% 1.13% 1.11% 1.07% 1.07%
Portfolio turnover rate ...................... 94% 63% 79% 142% 152%
- -------------
* Ratios excluding waivers and expenses paid indirectly.
(a) The Fund commenced investment operations on July 1, 1999.
(b) Represents net asset value of predecessor Common Trust Fund.
See accompanying notes to financial statements.
22
FINANCIAL HIGHLIGHTS
NEW COVENANT FUNDS
For a Share outstanding throughout each period.
INCOME FUND
-----------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, 2004 JUNE 30, 2003 JUNE 30, 2002 JUNE 30, 2001 JUNE 30, 2000 (a)
------------- ------------- ------------- ------------- -----------------
Net Asset Value, Beginning of Period ......... $ 26.62 $ 25.54 $ 24.83 $ 23.89 $ 24.52 (b)
INVESTMENT ACTIVITIES:
Net investment income ........................ 0.96 1.00 1.21 1.50 1.47
Net realized and unrealized gains/(losses)
from investments ......................... (0.96) 1.42 0.73 0.92 (0.63)
----------- ----------- ----------- ----------- -----------
Total from Investment Activities ............. -- 2.42 1.94 2.42 0.84
----------- ----------- ----------- ----------- -----------
DIVIDENDS:
Net investment income ........................ (0.90) (1.06) (1.23) (1.48) (1.47)
Net realized gains ........................... (0.44) (0.28) -- -- --
Tax return of capital ........................ (0.11) -- -- -- --
----------- ----------- ----------- ----------- -----------
Total Dividends .............................. (1.45) (1.34) (1.23) (1.48) (1.47)
----------- ----------- ----------- ----------- -----------
Change in net asset value per share .......... (1.45) 1.08 0.71 0.94 (0.63)
----------- ----------- ----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD ............... $ 25.17 $ 26.62 $ 25.54 $ 24.83 $ 23.89
=========== =========== =========== =========== ===========
Total Return ................................. 0.00% 9.63% 7.97% 10.31% 3.55%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (in 000's) ....... $ 524,025 $ 525,734 $ 545,356 $ 559,286 $ 571,669
Ratio of expenses to average net assets ...... 0.86% 0.85% 0.84% 0.82% 0.83%
Ratio of net investment income to average
net assets ................................. 3.70% 3.79% 4.72% 5.99% 6.12%
Ratio of expenses to average net assets* ..... 0.99% 0.85% 0.84% 0.82% 0.83%
Portfolio turnover rate ...................... 242% 226% 290% 191% 182%
- -------------
* Ratios excluding waivers.
(a) The Fund commenced investment operations on July 1, 1999.
(b) Represents net asset value of predecessor Common Trust Fund.
See accompanying notes to financial statements.
23
FINANCIAL HIGHLIGHTS
NEW COVENANT FUNDS
For a Share outstanding throughout each period.
BALANCED GROWTH FUND
-----------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, 2004 JUNE 30, 2003 JUNE 30, 2002 JUNE 30, 2001 JUNE 30, 2000(a)
------------- ------------- ------------- ------------- ----------------
Net Asset Value, Beginning of Period .......... $ 67.88 $ 67.25 $ 81.92 $ 91.84 $ 90.96 (b)
INVESTMENT ACTIVITIES:
Net investment income ......................... 1.34 1.27 1.52 2.33 3.18
Net realized and unrealized gains/(losses)
from investments ............................. 6.73 0.71 (7.44) (5.07) 1.48
----------- ----------- ----------- ----------- ----------
Total from Investment Activities .............. 8.07 1.98 5.92 2.74 4.66
----------- ----------- ----------- ----------- ----------
DIVIDENDS:
Net investment income ......................... (1.23) (1.27) (1.34) (5.68) (3.19)
Net realized gains ............................ -- (0.08) (7.00) (1.50) (0.59)
Tax return of capital ......................... (0.07) -- (0.41) -- --
----------- ----------- ----------- ----------- ----------
Total Dividends ............................... (1.30) (1.35) (8.75) (7.18) (3.78)
----------- ----------- ----------- ----------- ----------
Change in net asset value per share ........... 6.77 0.63 (14.67) (9.92) 0.88
----------- ----------- ----------- ----------- ----------
NET ASSET VALUE, END OF PERIOD ................ $ 74.65 $ 67.88 $ 67.25 $ 81.92 $ 91.84
=========== =========== =========== =========== ==========
Total Return .................................. 11.95% 3.10% (7.79%) (3.01%) 5.13%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (in 000's) ........ $ 302,446 $ 272,467 $ 286,314 $ 314,873 $ 343,231
Ratio of expenses to average net assets ....... 0.15% 0.14% 0.11% 0.09% 0.10%
Ratio of net investment income to
average net assets ........................... 1.52% 1.96% 2.02% 2.61% 3.50%
Portfolio turnover rate ....................... 12% 15% 18% 18% 8%
- ----------------------
(a) The Fund commenced investment operations on July 1, 1999.
(b) Represents net asset value of predecessor Common Trust Fund.
See accompanying notes to financial statements.
24
FINANCIAL HIGHLIGHTS
NEW COVENANT FUNDS
For a Share outstanding throughout each period.
BALANCED INCOME FUND
-----------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JUNE 30, 2004 JUNE 30, 2003 JUNE 30, 2002 JUNE 30, 2001 JUNE 30, 2000 (a)
------------- ------------- ------------- ------------- -----------------
Net Asset Value, Beginning of Period .......... $ 17.52 $ 17.10 $ 18.88 $ 20.01 $ 20.16 (b)
INVESTMENT ACTIVITIES:
Net investment income ......................... 0.53 0.52 0.57 0.78 0.89
Net realized and unrealized gains/(losses)
from investments ............................ 0.70 0.47 (0.84) (0.38) (0.02)
----------- ----------- ----------- ----------- -----------
Total from Investment Activities .............. 1.23 0.99 (0.27) 0.40 0.87
----------- ----------- ----------- ----------- -----------
DIVIDENDS:
Net investment income ......................... (0.48) (0.52) (0.54) (1.22) (0.89)
Net realized gains ............................ -- (0.05) (0.94) (0.31) (0.13)
Tax return of capital ......................... (0.03) -- (0.03) -- --
----------- ----------- ----------- ----------- -----------
Total Dividends ............................... (0.51) (0.57) (1.51) (1.53) (1.02)
----------- ----------- ----------- ----------- -----------
Change in net asset value per share ........... 0.72 0.42 (1.78) (1.13) (0.15)
----------- ----------- ----------- ----------- -----------
NET ASSET VALUE, END OF PERIOD ................ $ 18.24 $ 17.52 $ 17.10 $ 18.88 $ 20.01
=========== =========== =========== =========== ===========
Total Return .................................. 7.07% 6.00% (1.55%) 2.08% 4.40%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (in 000's) ........ $ 124,915 $ 122,576 $ 114,013 $ 116,519 $ 124,809
Ratio of expenses to average net assets ....... 0.18% 0.16% 0.14% 0.12% 0.14%
Ratio of net investment income to
average net assets .......................... 2.34% 3.08% 3.13% 3.88% 4.46%
Portfolio turnover rate ....................... 12% 18% 11% 20% 12%
- ------------
(a) The Fund commenced investment operations on July 1, 1999.
(b) Represents net asset value of predecessor Common Trust Fund.
See accompanying notes to financial statements.
25
NOTES TO FINANCIAL STATEMENTS
NEW COVENANT FUNDS
JUNE 30, 2004
1. ORGANIZATION
New Covenant Funds (the "Trust"), an open-end, diversified management
investment company, was organized as a Delaware business trust on September 30,
1998, and is currently organized as a Delaware statutory trust. The Trust
currently consists of four investment funds: New Covenant Growth Fund ("Growth
Fund"), New Covenant Income Fund ("Income Fund"), New Covenant Balanced Growth
Fund ("Balanced Growth"), and New Covenant Balanced Income Fund ("Balanced
Income"), (individually, a "Fund," and collectively, the "Funds"). The Funds
commenced operations on July 1, 1999. The Trust's authorized capital consists of
an unlimited number of shares of beneficial interest of $0.001 par value. The
Funds' investment advisor is the NCF Investment Department of New Covenant Trust
Company, N.A. (the "Advisor").
The objectives of the Funds are as follows:
Growth Fund Long-term capital appreciation. Dividend income, if
any, will be incidental.
Income Fund High level of current income with preservation of
capital.
Balanced Growth Fund Capital appreciation with less risk than would be
present in a portfolio of only common stocks.
Balanced Income Fund Current income and long-term growth of capital.
Under the Fund's organizational documents, its officers and trustees are
indemnified against certain liabilities arising out of the performance of their
duties to the Trust. In addition, in the normal course of business, the Trust
enters enter into contracts with its vendors and others that provide general
indemnification. Each Fund's maximum exposure under these arrangements is
unknown, as this would involve future claims that may be made against a Fund.
However, based on experience, the Funds expect the risk of loss to be remote.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States ("GAAP") requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of income and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. The
policies are in conformity with GAAP.
PORTFOLIO VALUATION: Fund investments are recorded at market value. Portfolio
securities listed on a domestic or foreign exchange are valued at the last sale
price on the day of valuation or, if there was no sale that day, at the last
reported bid price as of the close of trading. Equity securities traded on
NASDAQ use the official closing price. Equity securities which are traded in
the over-the-counter market only, but which are not included on NASDAQ, are
valued at the mean between the last preceding bid and asked prices. Debt
securities with a remaining maturity of sixty days or more are valued using a
pricing service when such prices are believed to reflect fair market value.
Debt securities with a remaining maturity of less than sixty days are valued at
amortized cost, which approximates market value. Investment companies are valued
at net asset value. All other securities and securities with no readily
determinable market values are valued using procedures determined in good faith
by the Board of Trustees. Factors used in determining fair value include but are
not limited to: type of security or asset, fundamental analytical data relating
to the investment in the security, evaluation of the forces that influence the
market in which the security is purchased and sold, and information as to any
transactions or offers with respect to the security.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Security transactions are
accounted for no later than the first calculation on the first business day
following the trade date. Interest income is recognized on the accrual basis and
includes, where applicable, the amortization or premium or accretion of discount
for both financial reporting and tax purposes. Dividend income is recorded on
the ex-dividend date. Gains or losses realized on sales of securities are
determined by comparing the identified cost of the security lot sold with the
net sales proceeds.
OPTIONS: The Income Fund may purchase or write options which are traded over the
counter to hedge fluctuation risks in the prices of certain securities. When a
Fund writes a call or put option, an amount equal to the premium received is
reflected as a liability. The liability is subsequently "marked-to-market" to
reflect the current market value of the option written. The premium paid by a
Fund for the purchase of a call or put option is recorded as an investment and
subsequently "marked-to-market" to reflect the current market value of the
option purchased. The Fund is subject to the risk of an imperfect correlation
between movement in the price of the instrument and the price of the underlying
security or transaction. Risks may also arise due to illiquid secondary markets
for the instruments. There were no options outstanding at June 30, 2004.
26
NOTES TO FINANCIAL STATEMENTS
NEW COVENANT FUNDS
JUNE 30, 2004
FOREIGN CURRENCY TRANSLATION: The books and records of the Funds are maintained
in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on
the following basis:
(I) market value of investment securities, other assets and liabilities at the
current rate of exchange
(II) purchases and sales of investment securities, income and expenses at the
relevant rates of exchange prevailing on the respective dates of such
transactions.
The Funds do not isolate the portion of gains and losses on investments in
securities that is due to changes in the foreign exchange rates from that which
is due to changes in the market prices of such securities. The Funds report
gains and losses on foreign currency related transactions as realized and
unrealized gains and losses for financial reporting purposes, whereas such
gains and losses are treated as ordinary income or loss for U.S. Federal income
tax purposes.
FORWARD FOREIGN CURRENCY CONTRACTS: Certain Funds enter into forward currency
contracts as hedges against either specific transactions or portfolio
positions. All commitments are "marked-to-market" daily at the applicable
foreign exchange rate and any resulting unrealized gains or losses are recorded
currently. The Fund realizes gains and losses at the time forward contracts are
extinguished. There were no contracts outstanding at June 30, 2004.
LOANS OF PORTFOLIO SECURITIES: The Growth Fund and Income Fund may lend their
securities pursuant to a securities lending agreement ("Lending Agreement") with
State Street Bank ("SSB"). Security loans made pursuant to the Lending Agreement
are required at all times to be secured by collateral valued at least 102% of
the market value of the securities loaned. Cash collateral received is invested
by SSB pursuant to the terms of the Lending Agreement. All such investments are
made at the risk of the Funds and, as such, the Funds are liable for investment
losses. To the extent a loan is secured by non-cash collateral, the borrower is
required to pay a loan premium. Non-cash collateral received can not be sold or
repledged. Net income earned on the investment of cash collateral and loan
premiums received on non-cash collateral are allocated between SSB and the Funds
in accordance with the Lending Agreement.
In the event of bankruptcy of the borrower, realization/retention of the
collateral may be subject to legal proceedings.
The value of loaned securities and related collateral outstanding at June 30,
2004, was as follows:
VALUE OF VALUE OF VALUE OF
FUND SECURITIES LOANED CASH COLLATERAL NON-CASH COLLATERAL
- ---- ----------------- --------------- -------------------
Growth Fund $ 77,014,576 $ 79,228,937 $ 110,538
Income Fund 64,187,099 65,501,525 --
Cash collateral received for securities on loan was invested in the following:
Growth Fund Income Fund
----------- -----------
State Street Navigator Securities Lending Prime Portfolio,
1.23% due 7/1/04 $ 79,228,937 $ 65,501,525
REPURCHASE AGREEMENTS: The Funds may enter into repurchase agreements with any
member bank of the Federal Reserve System and any broker-dealer which is
recognized as a reporting government securities dealer, whose creditworthiness
has been determined by the Advisor. Each repurchase agreement is at least 102%
collateralized and marked to market. However, in the event of default or
bankruptcy by the counterparty to the agreement, realization of the collateral
may be subject to certain costs, losses or delays.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Dividends from net investment
income of all Funds are declared and paid at least annually. For all Funds, all
net realized long-term or short-term capital gains, if any, will be declared and
distributed at least annually. Interest and dividend payments will normally be
distributed as income dividends on a quarterly basis for each of the Funds.
Income dividends and capital gain distributions are determined in accordance
with income tax regulations, which may differ from GAAP. These differences are
primarily due to differing treatments of income, gains and losses on various
investment securities held by a Fund, timing differences in the recognition of
income, gains and losses and differing characterizations of distributions made
by the Fund.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such amounts
reclassified within the composition of net assets based on their federal
tax-basis treatment; temporary differences do not require reclassifications. To
the extent they exceed net investment income and net realized gains for tax
purposes, they are reported as distribution of capital.
27
NOTES TO FINANCIAL STATEMENTS
NEW COVENANT FUNDS
JUNE 30, 2004
FEDERAL INCOME TAXES: It is each Fund's intention to qualify annually as a
regulated investment company by complying with the appropriate provisions of the
Internal Revenue Code of 1986, as amended. Accordingly, no provision for federal
income tax has been made.
ALLOCATION OF EXPENSES: Expenses directly attributable to a Fund are charged
directly to that Fund, while expenses which are attributable to more than one
Fund of the Trust are allocated among the respective Funds based upon relative
net assets or another appropriate basis.
EXPENSES PAID INDIRECTLY: The Growth Fund directs certain portfolio trades to
brokers who pay a portion of the Fund's expenses. Under this arrangement, the
Growth Fund's expenses were reduced by the amount shown below. The effect on the
Growth Fund's expense ratio, as a percentage of the average daily net assets of
the Fund on an annualized basis, for the year ended June 30, 2004 is as follows:
FUND AMOUNT RATIO
- ---- ------ -----
Growth Fund ......................... $ 35,596 0.01%
3. INVESTMENT ADVISORY AND OTHER AGREEMENTS
The Trust, on behalf of each Fund, has entered into an Investment Advisory
Agreement with the NCF Investment Department of the New Covenant Trust Company,
N.A. (or the "Advisor"). Under the Agreement, the Advisor is responsible for
managing the Funds' investments as well as providing the Funds with certain
administrative services. The Growth Fund pays the Advisor a monthly fee at the
annual rate of 0.99% of the Growth Fund's average daily net assets and the
Income Fund pays the Advisor a monthly fee at the annual rate of 0.75% of the
Income Fund's average daily net assets. The Advisor does not receive advisory
fees for the Balanced Growth and the Balanced Income Funds. The Advisor has
entered into Sub-Advisory Agreements with five Sub-Advisors to assist in the
selection and management of each Fund's investment securities. It is the
responsibility of the Sub-Advisors, under the direction of the Advisor, to make
day-to-day investment decisions for the Funds. The Advisor pays each Sub-Advisor
a quarterly fee for their services in managing assets of the Funds. The Advisor
pays the Sub-Advisor's fee directly from its own advisory fees. The Sub-Advisory
fees are based on the assets of a Fund to which the Sub-Advisor is responsible
for making investment decisions.
The following are the Sub-Advisors for the Growth Fund: Capital Guardian Trust
Company, Seneca Capital Management, Sound Shore Management Inc., and Wellington
Management Company, LLP.
Tattersall Advisory Group is the Sub-Advisor for the Income Fund.
The Trust is a party to a Shareholder Services Agreement pursuant to which each
Fund is authorized to make payments to certain entities which may include
investment advisors, banks, trust companies and other types of organizations
("Authorized Service Providers") for providing administrative services with
respect to shares of the Funds attributable to or held in the name of the
Authorized Service Provider for its clients or other parties with whom they have
a servicing relationship. Under the terms of the Shareholder Services Agreement,
each Fund is authorized to pay an Authorized Service Provider (which may include
affiliates of the Funds) a shareholder services fee at the rate of 0.25% on an
annual basis of the average daily net assets of the shares of the Fund
attributable to or held in the name of the Authorized Service Provider for
providing certain administrative services to Fund shareholders with whom the
Authorized Service Provider has a servicing relationship. In connection with the
implementation and operation of the Shareholder Services Agreement, the Advisor
has agreed to waive the amount of the investment advisory fees payable to it by
any Fund to the extent of the amount paid in fees by a Fund to any Authorized
Service Provider under the Shareholder Services Agreement.
The Trust has entered into servicing agreements with BISYS Fund Services Ohio,
Inc. ("BISYS") as of March 8, 2004. Under the servicing agreements, BISYS
provides transfer agency, administrative and fund accounting services to the
Funds. Under the fund accounting agreement, BISYS is entitled to a fee computed
at an annual rate of 0.03% of the Trust's average daily net assets for the first
$500,000,000, 0.0225% for $500,000,001 to $5,000,000,000, and 0.01% over
$5,000,000,000. Under the administration agreement, BISYS is entitled to a fee
computed at an annual rate of 0.02% of the Trust's average daily net assets
subject to a minimum fee per annum of $45,000 per Fund. Prior to March 8, 2004,
PFPC Inc. served as the Trust's fund accountant, transfer agent and
administrator.
The Trust has a Distribution Agreement with New Covenant Funds Distributor, Inc.
(the "Distributor") to serve as the principal distributor of the Funds' shares.
The Funds do not pay any fees to the Distributor in its capacity as principal
distributor.
The Trust has a Custodian Agreement with State Street Bank.
28
NOTES TO FINANCIAL STATEMENTS
NEW COVENANT FUNDS
JUNE 30, 2004
No officer, Trustee or employee of the Trust, BISYS, or any affiliate thereof,
receives any compensation from the Trust for serving as Trustee or officer of
the Company. The Trust also reimburses expenses incurred by the unaffiliated
Trustees in attending Board and Committee meetings.
4. PURCHASES AND SALES OF SECURITIES
The cost of purchases and proceeds from sales of securities, excluding U.S.
Government and short-term investments, for the year ended June 30, 2004, were as
follows:
FUND PURCHASES SALES
--------------- ---------------
Growth Fund ...................................................................... $ 729,810,326 $ 743,006,064
Income Fund ...................................................................... 1,239,301,776 1,177,960,128
Balanced Growth Fund ............................................................. 37,470,832 33,548,011
Balanced Income Fund ............................................................. 14,765,619 16,720,369
5. SHARES OF BENEFICIAL INTEREST
The Trust authorizes the issuance of an unlimited number of shares for each of
the Funds, and each share has a par value of $0.001 per share. The Fund
currently offers a single class of shares. Each issued and outstanding share of
each Fund is entitled to participate equally in dividends and distributions
declared by such Fund and in the net assets of such Fund upon liquidation or
dissolution remaining after satisfaction of outstanding liabilities.
YEAR ENDED YEAR ENDED
JUNE 30, 2004 JUNE 30, 2003
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
GROWTH FUND:
Issued ..................... 2,170,262 $ 57,829,249 3,848,573 $ 82,094,287
Reinvested ................. 3,060 180,445 7,133 153,247
Redeemed ................... (2,593,638) (69,212,473) (2,528,203) (54,574,822)
---------- ------------ ---------- ------------
Net increase (decrease) ...... (420,316) $(11,202,779) 1,327,503 $ 27,672,712
========== ============ ========== ============
YEAR ENDED YEAR ENDED
JUNE 30, 2004 JUNE 30, 2003
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
INCOME FUND:
Issued ..................... 2,606,939 $ 67,488,886 1,907,730 $ 50,189,035
Reinvested ................. 276,892 7,160,195 184,677 4,848,811
Redeemed ................... (1,814,304) (47,013,296) (3,699,149) (96,454,645)
---------- ------------ ---------- ------------
Net increase (decrease) ...... 1,069,527 $ 27,635,785 (1,606,742) $(41,416,799)
========== ============ ========== ============
YEAR ENDED YEAR ENDED
JUNE 30, 2004 JUNE 30, 2003
------------------------ --------------------------
SHARES AMOUNT SHARES AMOUNT
-------- ------------ ---------- ------------
BALANCED GROWTH FUND:
Issued ..................... 471,865 $ 34,471,118 286,683 $ 18,351,902
Reinvested ................. 51,451 3,764,861 66,792 4,232,137
Redeemed ................... (485,890) (35,133,427) (596,621) (38,280,507)
-------- ------------ -------- ------------
Net increase (decrease) ...... 37,426 $ 3,102,552 (243,146) $(15,696,468)
======== ============ ======== ============
YEAR ENDED YEAR ENDED
JUNE 30, 2004 JUNE 30, 2003
------------------------ --------------------------
SHARES AMOUNT SHARES AMOUNT
-------- ------------ ---------- ------------
BALANCED INCOME FUND:
Issued ..................... 627,611 $ 11,370,210 982,594 $ 16,737,282
Reinvested ................. 113,907 2,066,329 140,426 2,357,342
Redeemed ................... (891,041) (16,136,627) (792,004) (13,345,909)
-------- ------------ -------- ------------
Net increase (decrease) ...... (149,523) $ (2,700,088) 331,016 $ 5,748,715
======== ============ ======== ============
29
NOTES TO FINANCIAL STATEMENTS
NEW COVENANT FUNDS
JUNE 30, 2004
6. RISK FACTORS
The performance of a Fund's investments in non-U.S. companies and in companies
operating internationally or in foreign countries will depend principally on
economic conditions in their product markets, the securities markets where their
securities are traded, and on currency exchange rates. These risks are present
because of uncertainty in future exchange rates back into U.S. dollars and
possible political instability, which could affect foreign financial markets and
local economies. There are also risks related to social and economic
developments abroad, as well as risks resulting from the differences between the
regulations to which U.S. and foreign issuers and markets are subject.
The Funds will not invest more than 15% of the value of their net assets in
securities that are illiquid because of restrictions on transferability or other
reasons. Repurchase agreements with deemed maturities in excess of seven days
and securities that are not registered under the Securities Act of 1933, as
amended, but that may be purchased by institutional buyers pursuant to Rule 144A
are subject to this 15% limit (unless such securities are variable-amount
master-demand notes with maturities of nine months or less or unless the Board
determines that a liquid trading market exists). The Funds may purchase
securities which are not registered under the Securities Act but which can be
sold to "qualified institutional buyers" in accordance with Rule 144A under the
Securities Act. In some cases, such securities are classified as "illiquid
securities," however, any such security will not be considered illiquid so long
as it is determined by the Advisor, under guidelines approved by the Board of
Trustees, that an adequate trading market exists for that security. This
investment practice could have the effect of increasing the level of illiquidity
in a Fund during any period that qualified institutional buyers become
uninterested in purchasing these restricted securities.
The Income Fund may invest a limited amount of assets in debt securities which
are rated below investment grade (hereinafter referred to as "lower-rated
securities") or which are rated but deemed equivalent to those rated below
investment grade by the portfolio managers. The lower the ratings of such debt
securities, the greater their risks. These debt instruments generally offer a
higher current yield than that available from higher-grade issues, and typically
involve greater risks. The yields on high-yield/high-risk bonds will fluctuate
over time. In general, prices of all bonds rise when interest rates fall and
fall when interest rates rise. Lower-rated securities are subject to adverse
changes in general economic conditions and to changes in the financial
condition of their issuers. During periods of economic downturn or rising
interest rates, issuers of these instruments may experience financial stress
that could adversely affect their ability to make payments of principal and
interest, and increase the possibility of default.
The Balanced Funds invest their assets primarily in the Growth Fund and the
Income Fund. By investing primarily in shares of these Funds, shareholders of
the Balanced Funds indirectly pay a portion of the operating expenses,
management expenses and brokerage costs of the underlying Funds as well as their
own operating expenses. Thus, shareholders of the Balanced Funds may indirectly
pay slightly higher total operating expenses and other costs than they would pay
by directly owning shares of the Growth Fund and Income Fund. Total fees and
expenses to be borne by investors in either Balanced Fund will depend on the
portion of the Funds' assets invested in the Growth Fund and in the Income Fund.
A change in the asset allocation of either Balanced Fund could increase or
reduce the fees and expenses actually borne to investors in that Fund. The
Balanced Funds are also subject to rebalancing risk. Rebalancing activities,
while undertaken to maintain the Fund's investment risk-to-reward ratio, may
cause the Fund to underperform other funds with similar investment objectives.
For the Balanced Growth Fund, it is possible after rebalancing from equities
into a greater percentage of fixed-income securities, that equities will
outperform fixed-income investments. For the Balanced Income Fund, it is
possible that after rebalancing from fixed-income securities into a greater
percentage of equity securities, that fixed-income securities will outperform
equity investments. The performance of the Balanced Growth Fund and the Balanced
Income Fund depends on the performance of the underlying Funds in which they
invest.
7. DISTRIBUTION INFORMATION
Income and long-term capital gain distributions are determined in accordance
with Federal income tax regulations, which may differ from generally accepted
accounting principles accepted in the United States. The tax character of
distributions paid during the fiscal years ended June 30, 2003 and June 30,
2004, were as follows:
DISTRIBUTIONS PAID FROM
----------------------------------------------
NET LONG TERM TOTAL TAXABLE
ORDINARY INCOME CAPITAL GAINS DISTRIBUTIONS
--------------- ------------- -------------
2004 2003 2004 2003 2004 2003
----------- ----------- -------- ------ ---------- ------------
Growth Fund $ 2,835,338 $ 2,747,947 $ -- $ -- $ 2,835,338 $ 2,747,947
Income Fund 23,126,931 25,160,016 3,854,555 888,103 26,981,486 26,048,119
Balanced Growth Fund 4,816,139 5,227,067 44,742 363,393 4,860,881 5,590,460
Balanced Income Fund 3,277,160 3,519,607 903 373,272 3,278,063 3,892,879
TOTAL DISTRIBUTIONS
RETURN OF CAPITAL PAID*
----------------- --------------------------
2004 2003 2004 2003
-------- ----- ----------- -----------
Growth Fund $ -- $ -- $ 2,835,338 $ 2,747,947
Income Fund 2,311,618 -- 29,293,104 26,048,119
Balanced Growth Fund 299,330 -- 5,160,211 5,590,460
Balanced Income Fund 233,142 -- 3,511,205 3,892,879
* Total distributions paid may differ from the Statements of Changes in Net
Assets because distributions are recognized when actually paid for tax purposes.
30
NOTES TO FINANCIAL STATEMENTS
8. FEDERAL INCOME TAXES
As of June 30, 2004, the Funds had available for Federal tax purposes unused
capital loss carryforwards expiring as follows:
2009 2010 2011 2012 TOTAL
----------- ----------- ---- ----------- ------------
Growth Fund $96,688,185 $45,005,343 -- $14,207,522 $155,901,050
Income Fund -- -- -- 717,935 717,935
Balanced Growth -- -- -- 1,737,647 1,737,647
Balanced Income -- -- -- 2,891,416 2,891,416
As of June 30, 2004, the components of accumulated earnings/(deficit) on a tax
basis were as follows:
TOTAL
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED UNREALIZED ACCUMULATED
ORDINARY LONG -- TERM ACCUMULATED DIVIDENDS CAPITAL AND APPRECIATION/ EARNINGS/
INCOME CAPITAL GAINS EARNINGS PAYABLE OTHER LOSSES (DEPRECIATION) (DEFICIT)
------------- ------------- ----------- --------- -------------- ------------- ------------
Growth Fund $ 129,402 -- $ 129,402 -- $(155,901,050) $ 70,450,263 $(85,321,384)
Income Fund -- -- -- -- (717,935) 1,798,431 1,080,496
Balanced Growth Fund -- -- -- -- (7,602,939) (12,318,693) (19,921,632)
Balanced Income Fund -- -- -- -- (3,052,641) 937,302 (2,115,338)
9. PROXY VOTING POLICY (UNAUDITED)
A description of the policies and procedures that the Trust uses to determine
how to vote proxies related to portfolio securities and information regarding
how the Trust voted proxies related to portfolio securities during the year
ended June 30, 2004, is available (i) without charge, upon request, by calling
800-858-6127 and (ii) on the Securities and Exchange Commission's website at
http://www.sec.gov.
10. QUARTERLY HOLDINGS (UNAUDITED)
A portfolio holdings statement for the Growth Fund and the Income Fund for the
quarter ended September 30, 2004, will be available, without charge, on the
Securities and Exchange Commission's website at http://www.sec.gov within 60
days after quarter end.
11. OTHER FEDERAL INCOME TAX INFORMATION (UNAUDITED)
For the year ended June 30, 2004, dividends paid by the Funds may be subject to
a maximum tax rate of 15% as provided for by the Jobs and Growth Tax Relief Act
of 2003. The Funds intend to designate the maximum amount allowable as taxed at
a maximumn rate of 15%. Completed information will be reported in conjunction
with the 2004 Form 1099-DIV.
For the year ended June 30, 2004, the following Funds paid qualified dividend
income of:
QUALIFIED DIVIDEND INCOME
--------------------------
Growth Fund..................... $2,835,338
Balanced Growth Fund............ 289,116
Balanced Income Fund............ 71,589
The Fund designates the following percentage of distributions eligible for the
dividends received deduction for corporations:
AMOUNT
------
Growth Fund.......................... 100%
Balanced Growth Fund................. 6
Balanced Income Fund................. 2
31
TRUSTEES AND OFFICERS
NEW COVENANT FUNDS
JUNE 30, 2004
TRUSTEES AND OFFICERS OF THE NEW COVENANT FUNDS
POSITION(S) HELD
NAME, ADDRESS, AND AGE WITHIN THE TRUST LENGTH OF TIME SERVED PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
- ---------------------- ---------------- --------------------- -------------------------------------------
DISINTERESTED TRUSTEES
Gail C. Duree Trustee Indefinite Investment Consultant, Montview Boulevard
200 East Twelfth Street, Suite C Since Inception Presbyterian Church (1994 - present); Women's
Jeffersonville, IN 47130 Foundation of Colorado (1995 - present); Trustee,
Age: 57 Presbyterian Foundation (1991 - 1997); Logan
School (1996 - present)
Rev. Donald B. Register Trustee Indefinite Pastor, Sixth-Grace Presbyterian Church, Chicago, IL
200 East Twelfth Street, Suite C Since Inception (1988 - present)
Jeffersonville, IN 47130
Age: 67
John D. Stuart Trustee Indefinite Independent Financial Consultant
200 East Twelfth Street, Suite C Since February, 2002
Jeffersonville, IN 47130
Age: 73
INTERESTED TRUSTEES
F. Kenneth Bateman President and Indefinite Attorney, Gerber & Bateman, P.A. (1999 - present);
200 East Twelfth Street, Suite C Trustee Since Inception Attorney, Potter, Mills & Bateman, P.A. (1997 - 1999);
Jeffersonville, IN 47130 Trustee, Presbyterian Foundation (1995 - 2001)
Age: 64
Cynthia S. Gooch Trustee Indefinite Retired; Trustee, Presbyterian Foundation
200 East Twelfth Street, Suite C Since Inception (1997 - present)
Jeffersonville, IN 47130
Age: 71
EXECUTIVE OFFICERS
Dennis Murphy Vice President Indefinite Executive Vice President and Chief Investment
200 East Twelfth Street, Suite C Since November, 2001 Officer, Presbyterian Foundation and New Covenant
Jeffersonville, IN 47130 Trust Company (2000 - present). Senior
Age: 62 Vice President and Chief Financial Officer,
Presbyterian Foundation and New Covenant
Trust Company (1982 - 2000)
Anita J. Clemons Vice President Indefinite, Vice President and Investment Officer, New Covenant
200 East Twelfth Street, Suite C Since August, 2003 Trust Company (2000 - present).
Jeffersonville, IN 47130
Age: 50
Dale Smith Treasurer Indefinite Senior Vice President of Financial
3435 Stelzer Rd., Suite 1000 Since February, 2004 Services, BISYS Fund Services
Columbus, OH 43219 (1988 - present)
Age: 44
Charles J. Daly Secretary Indefinite Counsel, BISYS Fund Services (November 2003 -
3435 Stelzer Rd., Suite 1000 Since February, 2004 present); Associate, Goodwin Proctor LLP (2001 -
Columbus, OH 43219 2003)
Age: 33
Alaina V. Metz Assistant Indefinite Vice President, Blue Sky Compliance,
3435 Stelzer Rd., Suite 1000 Secretary Since February, 2004 BISYS Fund Services (1995 - present)
Columbus, OH 43219
Age: 36
32
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and Shareholders of
New Covenant Funds:
We have audited the accompanying statements of assets and liabilities, of the
New Covenant Funds (comprised of New Covenant Growth Fund, New Covenant Income
Fund, New Covenant Balanced Growth Fund, and New Covenant Balanced Income Fund)
(collectively "the Funds") including the schedules of investments, as of June
30, 2004, and the related statements of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period then
ended, and financial highlights for each of the five years in the period then
ended. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). 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 June 30, 2004, by
correspondence with the custodian and brokers. 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 the
New Covenant Funds as of June 30, 2004, 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 financial highlights for each of the five years in
the period then ended, in conformity with U.S. generally accepted accounting
principles.
ERNST & YOUNG LLP
Columbus, Ohio
August 13, 2004
33
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36
[PICTURE]
This report is authorized for distribution only if preceded or
accompanied by a current prospectus. Shares of New Covenant Funds
are distributed by New Covenant Funds Distributor, Inc.,
3435 Stelzer Road
Columbus, OH 43219
NEW COVENANT FUNDS
200 EAST TWELFTH STREET, SUITE C
JEFFERSONVILLE, IN 47130
ITEM 2. CODE OF ETHICS.
Disclose whether, as of the end of the period covered by the report, the
registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the registrant or
a third party. If the registrant has not adopted such a code of ethics,
explain why it has not done so.
THE REGISTRANT HAS ADOPTED A CODE OF ETHICS THAT APPLIES TO THE
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICER, PRINCIPAL FINANCIAL OFFICER,
PRINCIPAL ACCOUNTING OFFICER OR CONTROLLER, OR PERSONS PERFORMING SIMILAR
FUNCTIONS. THIS CODE OF ETHICS IS INCLUDED AS EXHIBIT 11 (a)(1).
The registrant must briefly describe the nature of any amendment, during
the period covered by the report, to a provision of its code of ethics
that applies to the registrant's principal executive officer, principal
financial officer, principal accounting officer or controller, or persons
performing similar functions, regardless of whether these individuals are
employed by the registrant or a third party, and that relates to any
element of the code of ethics definition enumerated in paragraph (b) of
this Item. The registrant must file a copy of any such amendment as an
exhibit pursuant to Item 11(a)(1), unless the registrant has elected to
satisfy paragraph (f) of this Item by posting its code of ethics on its
website pursuant to paragraph (f)(2) of this Item, or by undertaking to
provide its code of ethics to any person without charge, upon request,
pursuant to paragraph (f)(3) of this Item.
If the registrant has, during the period covered by the report, granted a
waiver, including an implicit waiver, from a provision of the code of
ethics that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer or controller,
or persons performing similar functions, regardless of whether these
individuals are employed by the registrant or a third party, that relates
to one or more items set forth in paragraph (b) of this Item, the
registrant must briefly describe the nature of the waiver, the name of the
person to whom the waiver was granted, and the date of the waiver.
DURING THE PERIOD COVERED BY THE REPORT, WITH RESPECT TO THE REGISTRANT'S
CODE OF ETHICS THAT APPLIES TO ITS PRINCIPAL EXECUTIVE OFFICER, PRINCIPAL
FINANCIAL OFFICER, PRINCIPAL ACCOUNTING OFFICER OR CONTROLLER, OR PERSONS
PERFORMING SIMILAR FUNCTIONS; THERE HAVE BEEN NO AMENDMENTS TO, NOR ANY
WAIVERS GRANTED FROM, A PROVISION THAT RELATES TO ANY ELEMENT OF THE CODE
OF ETHICS DEFINITION ENUMERATED IN PARAGRAPH (b) OF THIS ITEM 2.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a) (1) Disclose that the registrant's board of directors has determined
that the registrant either:
(i) Has at least one audit committee financial expert serving on
its audit committee; or
(ii) Does not have an audit committee financial expert serving on
its audit committee.
(2) If the registrant provides the disclosure required by
paragraph (a)(1)(i) of this Item, it must disclose the name of the
audit committee financial expert and whether that person is
"independent." In order to be considered "independent" for
purposes of this Item, a member of an audit committee may not,
other than in his or her capacity as a member of the audit
committee, the board of directors, or any other board committee:
(i) Accept directly or indirectly any consulting, advisory, or
other compensatory fee from the issuer; or
(ii) Be an "interested person" of the investment company as
defined in Section 2(a)(19) of the Act (15 U.S.C. 80a-
2(a)(19)).
(3) If the registrant provides the disclosure required by
paragraph (a)(1)(ii) of this Item, it must explain why it does not
have an audit committee financial expert.
3(a)(1) THE REGISTRANT'S BOARD OF DIRECTORS HAS DETERMINED THAT THE REGISTRANT
HAS AT LEAST ONE AUDIT COMMITTEE FINANCIAL EXPERT SERVING ON ITS AUDIT
COMMITTEE.
3(a)(2) THE AUDIT COMMITTEE FINANCIAL EXPERT IS JOHN D. STUART, WHO IS
"INDEPENDENT" FOR PURPOSES OF THIS ITEM 3 OF FORM N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Disclose, under the caption Audit Fees, the aggregate fees billed for
each of the last two fiscal years for professional services rendered by the
principal accountant for the audit of the registrant's annual financial
statements or services that are normally provided by the accountant in
connection with statutory and regulatory filings or engagements for those fiscal
years.
2003 $58,803
2004 $63,000
(b) Disclose, under the caption Audit-Related Fees, the aggregate fees
billed in each of the last two fiscal years for assurance and related services
by the principal accountant that are reasonably related to the performance of
the audit of the registrant's financial statements and are not reported under
paragraph (a) of this Item. Registrants shall describe the nature of the
services comprising the fees disclosed under this category.
2003 $0
2004 $0
(c) Disclose, under the caption Tax Fees, the aggregate fees billed in
each of the last two fiscal years for professional services rendered by the
principal accountant for tax compliance, tax advice, and tax planning.
Registrants shall describe the nature of the services comprising the fees
disclosed under this category.
2003 $0
2004 $22,900
2004: preparation and filing of tax returns
(d) Disclose, under the caption All Other Fees, the aggregate fees billed
in each of the last two fiscal years for products and services provided by the
principal accountant, other than the services reported in paragraphs (a) through
(c) of this Item. Registrants shall describe the nature of the services
comprising the fees disclosed under this category.
2003 $0
2004 $0
(e) (1) Disclose the audit committee's pre-approval policies and
procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
In accordance with the Fund's Audit Committee Charter, all audit
engagements on behalf of the funds are pre-approved by the Fund's Audit
Committee.
(2) Disclose the percentage of services described in each of
paragraphs (b) through (d) of this Item that were approved by the audit
committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
2003 0%
2004 0%
(f) If greater than 50 percent, disclose the percentage of hours expended
on the principal accountant's engagement to audit the registrant's financial
statements for the most recent fiscal year that were attributed to work
performed by persons other than the principal accountant's full-time, permanent
employees.
2003 0%
2004 0%
(g) Disclose the aggregate non-audit fees billed by the registrant's
accountant for services rendered to the registrant, and rendered to the
registrant's investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under common
control with the adviser that provides ongoing services to the registrant for
each of the last two fiscal years of the registrant.
2003 $23,026
2004 $63,046
(h) Disclose whether the registrant's audit committee of the board of
directors has considered whether the provision of nonaudit services that were
rendered to the registrant's investment adviser (not including any subadviser
whose role is primarily portfolio management and is subcontracted with or
overseen by another investment adviser), and any entity controlling, controlled
by, or under common control with the investment adviser that provides ongoing
services to the registrant that were not pre-approved pursuant to paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the
principal accountant's independence.
THE AUDIT COMMITTEE HAS CONSIDERED THAT THE PROVISION OF NON-AUDIT SERVICES THAT
WERE RENDERED TO THE REGISTRANT'S INVESTMENT ADVISER AND ANY ENTITY CONTROLLING,
CONTROLLED BY, OR UNDER COMMON CONTROL WITH THE INVESTMENT ADVISER THAT PROVIDES
ONGOING SERVICES TO THE REGISTRANT THAT WERE NOT PRE-APPROVED PURSUANT TO
PARAGRAPH (c)(7)(II) OF RULE 2-01 OF REGULATION S-X IS COMPATIBLE WITH
MAINTAINING THE PRINCIPAL ACCOUNTANT'S INDEPENDENCE.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
(a) If the registrant is a listed issuer as defined in Rule 10A-3 under
the Exchange Act (17CFR 240.10A-3), state whether or not the
registrant has a separately-designated standing audit committee
established in accordance with Section 3(a)(58)(A) of the Exchange
Act (15 U.S.C. 78c(a)(58)(A)). If the registrant has such a
committee, however designated, identify each committee member. If
the entire board of directors is acting as the registrant's audit
committee as specified in Section 3(a)(58)(B) of the Exchange Act
(15 U.S.C. 78c(a)(58)(B)), so state.
(b) If applicable, provide the disclosure required by Rule 10A-3(d)
under the Exchange Act (17CFR 240.10A-3(d)) regarding an exemption
from the listing standards for all audit committees.
NOT APPLICABLE.
ITEM 6. SCHEDULE OF INVESTMENTS.
File Schedule I - Investments in securities of unaffiliated issuers as of the
close of the reporting period as set forth in Section 210.12-12 of Regulation
S-X, unless the schedule is included as part of the report to shareholders filed
under Item 1 of this Form.
NOT APPLICABLE.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
A closed-end management investment company that is filing an annual report
on this Form N-CSR must, unless it invests exclusively in non-voting securities,
describe the policies and procedures that it uses to determine how to vote
proxies relating to portfolio securities, including the procedures that the
company uses when a vote presents a conflict between the interests of its
shareholders, on the one hand, and those of the company's investment adviser;
principal underwriter; or any affiliated person (as defined in Section 2(a)(3)
of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(3)) and the rules
thereunder) of the company, its investment adviser, or its principal
underwriter, on the other. Include any policies and procedures of the company's
investment adviser, or any other third party, that the company uses, or that are
used on the company's behalf, to determine how to vote proxies relating to
portfolio securities.
NOT APPLICABLE.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
If the registrant is a closed-end management investment company, provide the
information specified in paragraph (b) of this Item with respect to any purchase
made by or on behalf of the registrant or any "affiliated purchaser," as defined
in Rule 10b-18(a)(3) under the Exchange Act (17 CFR 240.10b-18(a)(3)), of shares
or other units of any class of the registrant's equity securities that is
registered by the registrant pursuant to Section 12 of the Exchange Act (15
U.S.C. 781).
NOT APPLICABLE.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Describe any material changes to the procedures by which shareholders may
recommend nominees to the registrant's board of directors, where those changes
were implemented after the registrant last provided disclosure in response to
the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR 240.14a-101), or
this Item.
NOT APPLICABLE.
ITEM 10. CONTROLS AND PROCEDURES.
(a) Disclose the conclusions of the registrant's principal executive and
principal financial officers, or persons performing similar functions, regarding
the effectiveness of the registrant's disclosure controls and procedures (as
defined in Rule 30a-3(c) under the Act (17 CFR 270.30a-3(c))) as of a date
within 90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on the evaluation of these controls and
procedures required by Rule 30a-3(b) under the Act (17 CFR 270.30a-3(b)) and
Rules 13a-15(b) or 15d-15(b) under the Exchange Act (17 CFR 240.13a-15(b) or
240.15d-15(b)).
THE REGISTRANT'S PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER
HAVE CONCLUDED, BASED ON THEIR EVALUATION OF THE REGISTRANT'S DISCLOSURE
CONTROLS AND PROCEDURES AS CONDUCTED WITHIN 90 DAYS OF THE FILING DATE OF THIS
REPORT, THAT THESE DISCLOSURE CONTROLS AND PROCEDURES ARE ADEQUATELY DESIGNED
AND ARE OPERATING EFFECTIVELY TO ENSURE THAT INFORMATION REQUIRED TO BE
DISCLOSED BY THE REGISTRANT ON FORM N-CSR IS (i) ACCUMULATED AND COMMUNICATED TO
THE INVESTMENT COMPANY'S MANAGEMENT, INCLUDING ITS CERTIFYING OFFICERS, TO ALLOW
TIMELY DECISIONS REGARDING REQUIRED DISCLOSURE; AND (II) RECORDED, PROCESSED,
SUMMARIZED AND REPORTED WITHIN THE TIME PERIODS SPECIFIED IN THE SECURITIES AND
EXCHANGE COMMISSION'S RULES AND FORMS.
(b) Disclose any change in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Act (17 CFR 270.30a-3(d)) that
occurred during the registrant's last fiscal half-year (the registrant's second
fiscal half-year in the case of an annual report) that has materially affected,
or is reasonably likely to materially affect, the registrant's internal control
over financial reporting.
THE REGISTRANT'S PRESIDENT AND TREASURER HAVE REVIEWED REPRESENTATIONS FROM PFFC
INC. WITH RESPECT TO THEIR ROLE AS ADMINISTRATOR TO THE REGISTRANT, INCLUDING
CONTROLS AND PROCEDURES IN PLACE FROM JANUARY 1, 2004 THROUGH MARCH 7, 2004.
AFTER MARCH 7, 2004 BISYS FUND SERVICES OHIO, INC. ("BISYS") ASSUMED THE ROLE OF
ADMINISTRATOR. THE REGISTRANT'S PRESIDENT AND TREASURER ALSO OBTAINED AND
REVIEWED REPRESENTATIONS FROM BISYS IN THEIR ROLE AS ADMINISTRATOR FROM MARCH 8,
2004 THROUGH JUNE 30, 2004.
BISYS PREPARED THIS FORM N-CSR, INCLUDING THE FINANCIAL STATEMENTS INCLUDED AS
ITEM 1 OF THIS REPORT.
EXCEPT AS INCLUDED ABOVE, THERE WERE NO CHANGES IN THE REGISTRANT'S INTERNAL
CONTROL OVER FINANCIAL REPORTING THAT OCCURRED DURING THE REGISTRANT'S MOST
RECENT FISCAL HALF-YEAR (THE REGISTRANT'S SECOND FISCAL HALF-YEAR IN THE CASE OF
THE ANNUAL REPORT) THAT HAVE MATERIALLY AFFECTED OR ARE REASONABLY LIKELY TO
MATERIALLY AFFECT, THE REGISTRANT'S INTERNAL CONTROL OVER FINANCIAL REPORTING.
ITEM 11. EXHIBITS.
(a) File the exhibits listed below as part of this Form. Letter or number
the exhibits in the sequence indicated.
(a)(1) Any code of ethics, or amendment thereto, that is the subject of
the disclosure required by Item 2, to the extent that the registrant intends to
satisfy the Item 2 requirements through filing of an exhibit.
THE CODE OF ETHICS THAT IS THE SUBJECT OF THE DISCLOSURE REQUIRED BY ITEM 2 IS
ATTACHED HERETO.
(a)(2) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2(a) under
the Act (17 CFR 270.30a-2). CERTIFICATIONS PURSUANT TO RULE 30a-2(a) ARE
ATTACHED HERETO.
(a)(3) Any written solicitation to purchase securities under Rule 23c-1
under the Act (17 CFR 270.23c-1) sent or given during the period covered by the
report by or on behalf of the registrant to 10 or more persons. NOT APPLICABLE.
(b) If the report is filed under Section 13(a) or 15(d) of the Exchange
Act, provide the certifications required by rule 30a-2(b) under the Act as an
exhibit. A certification furnished pursuant to this paragraph will not be deemed
"filed" for purposes of Section 18 of the Exchange Act, or otherwise subject to
the liability of that section. Such certification will not be deemed to be
incorporated by reference into any filing under the Securities Act of 1933 or
the Exchange Act, except to the extent that the registrant incorporates it by
reference. CERTIFICATIONS PURSUANT TO RULE 30a-2(b) ARE FURNISHED HEREWITH.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) New Covenant Funds
By (Signature and Title)* /s/ Dale Smith, Treasurer
-------------------------
Date____September 9, 2004____________________
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Dale Smith, Treasurer
-------------------------
Date____September 9, 2004_____________________
By (Signature and Title)* /s/ F. Kenneth Bateman, President
---------------------------------
Date____September 9, 2004__________________________
* Print the name and title of each signing officer under his or her signature.