N-CSR 1 l15124anvcsr.txt NEW COVENANT FUNDS FORM N-CSR 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, Jeffersonville, IN 47130 ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) BISYS Fund Services, 3435 Stelzer Road, Columbus, OH 43219 ------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: 614-470-8000 --------------------------- Date of fiscal year end: June 30, 2005 ------------------------- Date of reporting period: June 30, 2005 ------------------------ 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 ANNUAL REPORT New Covenant Growth Fund New Covenant Income Fund New Covenant Balanced Growth Fund New Covenant Balanced Income Fund [NEW COVENANT FUNDS LOGO] JUNE 30, 2005 YOU CAN GET FREE COPIES OF REPORTS AND THE SAI, OR REQUEST OTHER INFORMATION AND DISCUSS YOUR QUESTIONS ABOUT THE FUNDS BY CONTACTING A BROKER THAT SELLS THE FUNDS, OR BY CONTACTING THE FUNDS AT: NEW COVENANT FUNDS 3435 STELZER ROAD COLUMBUS, OH 43219 TELEPHONE: 1-800-858-6127 INTERNET: http://www.newcovenantfunds.com YOU CAN REVIEW AND GET COPIES OF THE FUNDS' REPORTS AND SAI AT THE PUBLIC REFERENCE ROOM OF THE SECURITIES AND EXCHANGE COMMISSION. YOU CAN GET TEXT-ONLY COPIES: - FOR A DUPLICATING FEE, BY WRITING THE PUBLIC REFERENCE SECTION OF THE COMMISSION, WASHINGTON, DC 20549-6009 OR CALLING 1-202-942-8090, OR BY ELECTRONIC REQUEST, BY E-MAILING THE SEC AT THE FOLLOWING ADDRESS: publicinfo@sec.gov - FREE FROM THE COMMISSION'S WEBSITE AT http://www.sec.gov. 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 Report of Independent Registered Public Accounting Firm ................... 33 Supplemental Data ......................................................... 34 Trustees and Officers ..................................................... 36 TO OUR SHAREHOLDERS NEW COVENANT FUNDS JUNE 30, 2005 Dear Shareholders: The U.S. economy strengthened during the 12-month period ended June 30, 2005. The stock market was very volatile, however, as investors reacted to differing reports about the direction of the economy, interest rates, energy prices and political factors. Long-term bonds performed relatively well in that environment, while prices on short-term bonds fell substantially. The economy benefited both from strong consumer spending and from gradually rising business spending. Those trends helped counter the effects of higher energy prices, which typically drag on the economy by reducing money available for investment and other types of consumption. Meanwhile, low mortgage rates contributed to a strong housing market. That trend enhanced Americans' sense of financial comfort, offsetting the effects of slow wage growth and higher gasoline prices. Corporations earlier in the decade had streamlined operations and reduced debt. Those efficiencies helped translate strengthening demand into strong earnings and cash flow, and contributed to historically high corporate cash holdings. Corporations began to deploy that cash during this period in mergers and acquisitions and other shareholder-friendly initiatives. The Federal Reserve Board (the "Fed") was concerned throughout the period about the prospect for higher inflation, and sought to prevent an inflation up-tick by removing excess monetary stimulus from the economy. Beginning with a rate hike on June 30, 2004, the Fed raised its target federal funds rate nine times during the period, for a total increase of two and one-quarter percentage points. These financial cross-currents contributed to a choppy stock market. Stocks slumped in the summer of 2004 as investors worried about a number of factors, including political uncertainty due to the close electoral campaign, conditions in Iraq, rising energy prices and slow employment gains. The market then rallied strongly during the fourth quarter of 2004 as many of those factors improved: Employment appeared to gain strength, the resolution of the election provided political clarity and oil prices declined. Stocks fell again during the first calendar quarter of 2005. Investors were concerned about the possibility that resurgent energy prices would translate into higher inflation and reduce consumers' spending power. Their fears appeared to be confirmed in March 2005, when the economy slowed and inflation picked up. Stocks rebounded later in the spring, however, as stronger economic data, healthy profit reports and solid demand--all of it accompanied by relatively tame inflation--convinced investors that weakness in March had represented only a temporary soft patch in the economy. Small caps outperformed larger stocks for the period as a whole, due to small-company shares' dramatically stronger returns during the first half of the year. Large-cap shares assumed market leadership during the first half of 2005, however, and generated superior returns for the final six months of the period. Value and growth stocks experienced a similar dynamic: Value stocks led growth shares for the period as a whole, but growth outperformed late in the period. Yields on short-term bonds rose in line with the Fed's interest-rate increases, causing prices on those bonds to fall. Long-term bond yields declined slightly for the 12-month period, however. That decline might have resulted from a number of factors, including a benign long-term inflation outlook and strong overseas demand for long-term Treasury bonds. Mortgage-backed and corporate bonds generally outperformed government securities. High-yield bonds were very volatile. They led the fixed-income markets during much of the period, but fell quickly in March after major automakers announced weak earnings. THE NEW COVENANT GROWTH FUND The New Covenant Growth Fund gained 7.38% during the 12-month period ended June 30, 2005, compared to a 6.32% return for the Fund's benchmark, the Standard & Poor's 500 Index.(1) During this fiscal year two new managers were added to handle this Fund's growth allocation. Mazama Capital Management specializes in small- and mid-cap growth stocks, while Santa Barbara Asset Management focuses on large-cap growth shares. We felt that managers with specific expertise in those sections of the market could best serve shareholders. The Fund's core allocation, managed by Wellington Management Company, outperformed the stock market(1) and boosted performance against the benchmark. The Fund's relative performance also benefited from our decision to over-weight value stocks during the first half of the period. We added to the Fund's growth stake during 2005, bringing it even with the Fund's value allocation. That change also helped relative returns, as growth stocks assumed market leadership late in the period.(2) We added an emerging-markets allocation to the Fund's portfolio, in order to provide opportunity for greater growth. That shift boosted performance against the S&P, as emerging markets generally performed well. The Fund's international exposure as a whole boosted returns during the first half of the period, as the dollar lost ground to foreign currencies, but dragged on relative returns during the second half of the period as the dollar strengthened.(2) THE NEW COVENANT INCOME FUND The New Covenant Income Fund returned 6.02% during the 12 months ended June 30, 2005, compared to a 6.80% gain for the Lehman Brothers Aggregate Bond Index.(3) We reduced the Fund's average duration just prior to this fiscal year to a position shorter than that of the benchmark, in order to protect against rising interest rates. Rates on the longer-term issues in which this Fund primarily invests generally declined or were flat, however, so the shorter average duration dragged on relative performance.(2) 2 TO OUR SHAREHOLDERS -------------------------------------------------------------------------------- NEW COVENANT FUNDS JUNE 30, 2005 The Fund held a higher allocation than the benchmark in mortgage-backed securities, which boosted relative gains. The Fund's underweight position in Treasury bonds also helped relative performance, as Treasury issues lagged other fixed-income securities. We maintained the Fund's bias toward very high-quality issues in other sectors. That emphasis on quality hurt performance early in the period, when low-quality bonds led the market, but benefited relative performance late in the fiscal year as higher-quality bonds assumed leadership.(2) THE NEW COVENANT BALANCED GROWTH FUND The New Covenant Balanced Growth Fund gained 6.68% during the 12 months ended June 30, 2005, compared to a 6.62% return for a benchmark composed of a 60% weighting in the S&P 500(1) and a 40% weighting in the Lehman Brothers Aggregate Bond Index(3). This Fund is comprised of a combination of the New Covenant Growth Fund and the New Covenant Income Fund, with a neutral allocation of 60% of assets in stocks and 40% in bonds. We allowed the Fund's Growth Fund allocation to grow during the period, from 62% of assets at the beginning of the period to roughly 65% at the end. That overweight stock position helped this Fund outperform its benchmark, as stocks' returns slightly exceeded those of bonds during this period.(2) THE NEW COVENANT BALANCED INCOME FUND The New Covenant Balanced Income Fund gained 6.32% for the year ended June 30, 2005. That return compared to a 6.74% gain for the Fund's benchmark, a composite index with a 65% weighting in the Lehman Brothers Aggregate Bond Index(3) and a 35% weighting in the S&P 500(1). The New Covenant Balanced Income Fund's neutral allocation calls for investing 65% of assets in the Income Fund and 35% of assets in the Growth Fund. The Fund during this period held a slightly overweight stock allocation, with roughly 38% of the portfolio allocated to the stock market. That overweight position in stocks boosted relative returns, as stocks generally outperformed bonds. The Fund's bond allocation lagged the fixed-income benchmark, however, due to its shorter average duration. That trait hurt relative returns for the Balanced Income Fund.(2) /s/ Dennis J. Murphy Dennis J. Murphy Executive Vice President and Chief Investment Officer NCF Investment Department of New Covenant Trust Company, N.A.(4) 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 PERFORMANCE INFORMATION CURRENT TO THE MOST RECENT MONTH END, PLEASE CALL 877-835-4531 OR VISIT OUR WEBSITE AT www.NewCovenantFunds.com. (1) The Standard & Poor's 500 Composite Index of 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) Portfolio composition is subject to change. (3) The Lehman Brothers Aggregate Bond Index is an unmanaged index of U.S. bonds, which includes reinvestment of any earnings. It 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) A subsidiary of the Presbyterian Foundation. PORTFOLIO ALLOCATION (UNAUDITED) (SUBJECT TO CHANGE) -------------------------------------------------------------------------------- GROWTH FUND:
PERCENTAGE OF SECURITY ALLOCATION MARKET VALUE -------------------------------------------------------------------------------- Financials 19.9% Information Technology 17.7% Health Care 17.3% Consumer Discretionary 13.7% Industrials 10.7% Energy 7.5% Consumer Staples 6.3% Telecommunications 2.3% Materials 2.3% Utilities 2.3% -------------------------------------------------------------------------------- Total 100.0%
BALANCED GROWTH FUND:
INCOME FUND: PERCENTAGE OF SECURITY ALLOCATION MARKET VALUE -------------------------------------------------------------------------------- Government Agency/MBS 33.0% Asset Backed 27.0% Corporates 17.0% Treasuries 14.0% Cash 9.0% -------------------------------------------------------------------------------- Total 100.0%
PERCENTAGE OF SECURITY ALLOCATION MARKET VALUE -------------------------------------------------------------------------------- Investment Companies 98.5% Cash Equivalents 1.5% -------------------------------------------------------------------------------- Total 100.0%
BALANCED INCOME FUND:
PERCENTAGE OF SECURITY ALLOCATION MARKET VALUE -------------------------------------------------------------------------------- Investment Companies 98.6% Cash Equivalents 1.4% -------------------------------------------------------------------------------- Total 100.0%
3 TO OUR SHAREHOLDERS -------------------------------------------------------------------------------- JUNE 30, 2005 HYPOTHETICAL ILLUSTRATION OF $10,000 INVESTED IN NEW COVENANT GROWTH FUND* VS. THE S&P 500 INDEX+ [GRAPH]
Growth Fund S&P 500 Index 6/95 10000 10000 10784 10795 11208 11438 11935 12060 6/96 12271 12605 12640 12990 13399 14078 13388 14446 6/97 15453 16973 16293 18250 15955 18774 17820 21394 6/98 17740 22100 15083 19902 17754 24140 17898 25343 6/99 19689 27130 18513 25436 21046 29220 21461 29891 6/00 20945 29096 20790 28815 19436 26560 17378 23411 6/01 18363 24781 15439 21144 17256 23403 17319 23468 6/02 15180 20324 12491 16813 13465 18230 12857 17656 6/03 14851 20375 15459 20914 17349 23461 17791 23859 6/04 17794 24268 17274 23813 19037 26012 18655 25452 6/05 19107 25801
+ 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. Investors cannot invest directly in an index, although they may invest in the underlying securities.
1 YEAR 3 YEAR 5 YEAR 10 YEAR RETURN** RETURN** RETURN** RETURN** Growth Fund 7.38% 7.97% -1.82% 6.69% S&P 500 Index 6.32% 8.28% -2.37% 9.94%
JUNE 30, 2005 HYPOTHETICAL ILLUSTRATION OF $10,000 INVESTED IN NEW COVENANT INCOME FUND* VS. THE LEHMAN BROTHERS AGGREGATE BOND INDEX++ [GRAPH]
Lehman Brothers Income Fund Aggregate Bond Index 6/95 10000 10000 10217 10196 10698 10631 10508 10442 6/96 10567 10502 10770 10696 11137 11017 11087 10955 6/97 11441 11358 11844 11735 12150 12080 12291 12268 6/98 12560 12555 12816 13086 12955 13130 12840 13065 6/99 12707 12950 12770 13038 12797 13022 13007 13309 6/00 13158 13541 13530 13949 14050 14536 14475 14977 6/01 14515 15061 15116 15756 15130 15763 15109 15778 6/02 15670 16361 16357 17110 16582 17380 16796 17622 6/03 17180 18062 17167 18036 17183 18093 17616 18574 6/04 17179 18120 17700 18699 17827 18878 17741 18787 6/05 18213 19353
++ The Lehman Brothers Aggregate Bond Index is representative of intermediate and long-term government and investment grade corporate debt securities. Investors cannot invest directly in an index, although they may invest in the underlying securities.
1 YEAR 3 YEAR 5 YEAR 10 YEAR RETURN** RETURN** RETURN** RETURN** Income Fund 6.02% 5.14% 6.72% 6.18% Lehman Brothers Aggregate Bond Index 6.80% 5.76% 7.40% 6.83%
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 PERFORMANCE INFORMATION CURRENT TO THE MOST RECENT MONTH END, 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, 2005 HYPOTHETICAL ILLUSTRATION OF $10,000 INVESTED IN NEW COVENANT BALANCED GROWTH FUND* VS. THE BLENDED S&P 500/AGGREGATE BOND INDEX+ [GRAPH]
Balanced Growth Fund Blended S&P 500/Aggregate Index 6/95 10000 10000 10552 10554 10957 11113 11356 11391 6/96 11581 11726 11878 12033 12479 12783 12481 12961 6/97 13774 14494 14461 15350 14403 15804 15500 17212 6/98 15590 17717 14369 16980 15876 19120 15896 19652 6/99 16805 20411 16209 19695 17540 21414 17856 21923 6/00 17669 21723 17779 21872 17344 21201 16751 19930 6/01 17138 20685 15781 19185 16802 20412 16839 20465 6/02 15803 19079 14386 17390 15142 18408 14782 18162 6/03 16292 20004 16688 20318 17961 21811 18416 22266 6/04 18238 22275 18106 22309 19273 23620 18992 23275 6/05 19457 23750
The Blended S&P 500/Aggregate Bond Index is a composite index composed of 60% S&P 500 Index and 40% Lehman Brothers Aggregate Bond Index. Investors cannot invest directly an index, although they may invest in the underlying securities.
1 YEAR 3 YEAR 5 YEAR 10 YEAR RETURN** RETURN** RETURN** RETURN** Balanced Growth Fund 6.68% 7.18% 1.95% 6.88% Blended S&P 500/ Aggregate Bond Index 6.62% 7.57% 1.80% 9.03%
JUNE 30, 2005 HYPOTHETICAL ILLUSTRATION OF $10,000 INVESTED IN NEW COVENANT BALANCED INCOME FUND* VS. BLENDED S&P 500/AGGREGATE BOND INDEX++ [GRAPH]
Balanced Income Fund Blended S&P 500/Aggregate Index 6/95 10000 10000 10413 10405 10852 10911 11003 10988 6/96 11164 11202 11421 11461 11918 12022 11893 12093 6/97 12737 13107 13298 13744 13412 14152 14070 14974 6/98 14240 15378 13698 15282 14575 16410 14532 16641 6/99 14957 16954 14670 16654 15382 17483 15647 17895 6/00 15615 17928 15842 18229 15840 18219 15705 17805 6/01 15940 18244 15470 17804 16024 18469 16038 18507 6/02 15692 18047 15142 17439 15705 18159 15556 18122 6/03 16633 19376 16862 19545 17641 20403 18098 20878 6/04 17810 20670 17938 20963 18681 21762 18471 21535 6/05 18936 22062
++ The Blended S&P 500/Aggregate Bond Index is a composite index composed of 35% S&P 500 Index and 65% Lehman Brothers Aggregate Bond Index. Investors cannot invest directly in an index, although they may invest in the underlying securities.
1 YEAR 3 YEAR 5 YEAR 10 YEAR RETURN** RETURN** RETURN** RETURN** Balanced Income Fund 6.32% 6.46% 3.93% 6.59% Blended S&P 500/ Aggregate Bond Index 6.74% 6.92% 4.24% 8.23%
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 PERFORMANCE INFORMATION CURRENT TO THE MOST RECENT MONTH END, 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, 2005
Value Shares (Note 2) -------------------------------------------------------------------------------- COMMON STOCKS (98.2%): ADVERTISING (1.1%): 284,000 Interpublic Group of Cos., Inc.(b)(L) ........... $3,459,120 35,900 Lamar Advertising Co.(b)(L) ..................... 1,535,443 17,300 Monster Worldwide, Inc.(b) ...................... 496,164 52,800 Omnicom Group, Inc.(L) .......................... 4,216,608 5,100 Ventiv Health, Inc.(b)(L) ....................... 98,328 ----------- 9,805,663 ----------- AEROSPACE (0.3%): 56,000 United Technologies Corp. ....................... 2,875,600 ----------- AUTOMOTIVE (1.0%): 6,600 American Axle & Manufacturing Hldgs, Inc.(L) .... 166,782 5,500 Bayerische Motoren Werke AG ..................... 251,997 15,000 Bridgestone Corp. ............................... 289,060 12,500 DaimlerChrysler AG .............................. 508,413 82,000 Dana Corp. ...................................... 1,230,820 28,200 Genuine Parts Co.(L) ............................ 1,158,738 91,500 Honda Motor Co. Ltd. ............................ 2,251,815 10,600 Hyundai Motor Co., Ltd. - GDR ................... 294,872 97,000 Nissan Motors ................................... 961,332 12,900 Noble International, Ltd. ....................... 303,795 2,800 Renault SA ...................................... 247,089 5,320 Reynolds & Reynolds Co. ......................... 143,800 37,000 Suzuki Motor Corp. .............................. 582,101 14,580 Tenneco Automotive, Inc.(b) ..................... 242,611 8,200 Titan International, Inc.(L) .................... 114,636 4,300 Volkswagen AG ................................... 196,496 ----------- 8,944,357 ----------- BANKING (6.3%): 60,679 ABN AMRO Holdings NV ............................ 1,494,756 21,020 Australia and New Zealand Banking Group Ltd. ...................................... 348,374 1,190 BancFirst(L) .................................... 103,518 84,000 Banco Bilbao Vizcaya ............................ 1,297,470 62,600 Banco Santander Central Hispano SA .............. 726,709 350,500 Bank Central Asia PT(b) ......................... 129,415 256,580 Bank of America Corp. ........................... 11,702,615 34,000 Bank of Yokohama, Ltd. .......................... 196,715 23,900 Banque Nationale de Paris ....................... 1,640,395 16,500 Barclays Plc .................................... 164,270 16,000 Bayerische Vereins Ag(b) ........................ 416,414 15,800 City Holding Co.(L) ............................. 577,016 46,000 Comerica, Inc. .................................. 2,658,800 13,714 Credit Suisse Group ............................. 541,300 26,900 Credito Italiano ................................ 142,217 4,300 Deutsche Bank AG ................................ 336,671 8,200 East West Bancorp, Inc. ......................... 275,438 2,700 Farmers Capital Bank Corp.(L) ................... 93,528 3,920 First Citizens Bancshares, Inc., Class A(L) ..... 566,636 4,900 Fortis .......................................... 136,009 9,100 Fremont General Corp.(L) ........................ 221,403 12,600 HDFC Bank, Ltd. - ADR ........................... 586,026 18,370 Holderbank Financiere Glarus .................... 1,118,810 34,100 HSBC Holdings Plc ............................... 543,918 2,680 Hudson United Bancorp(L) ........................ 96,748 66,756 JPMorgan Chase & Co. ............................ 2,357,822 77,400 KeyCorp(L) ...................................... 2,565,810 44,130 Kookmin Bank - ADR .............................. 2,011,445 48,700 Lloyds TSB Group Plc ............................ 412,838 12,540 MBT Financial Corp.(L) .......................... 241,395
Value Shares (Note 2) -------------------------------------------------------------------------------- 71 Mitsubishi Tokyo Financial Group, Inc. .......... $603,042 4,500 National Bank of Canada ......................... 199,955 114,000 National City Corp. ............................. 3,889,680 785,500 PT Bank Mandiri ................................. 120,846 255,000 Public Bank Berhad .............................. 449,605 21,400 R & G Financial Corp ............................ 378,566 43,600 Royal Bank of Scotland Group Plc(R) ............. 1,317,447 8,000 Santander BanCorp ............................... 200,480 3,600 Societe Generale ................................ 366,711 25,000 Standard Bank ................................... 242,367 31,200 Standard Chartered Plc .......................... 570,353 247 Sumitomo Mitsui Financial Group ................. 1,672,082 27,400 SunTrust Banks, Inc. ............................ 1,979,376 13,100 SVB Financial Group(b)(L) ....................... 627,490 4,000 Taylor Capital Group Inc.(L) .................... 157,000 15,330 TriCo Bancshares(L) ............................. 342,472 30,000 Turkiye Garanti Bankasi AG(b) ................... 129,407 115,000 U.S. Bancorp .................................... 3,358,000 254 UFJ Holdings, Inc.(b) ........................... 1,325,138 17,000 Unibanco - GDR .................................. 656,540 39,400 Wells Fargo & Co. ............................... 2,426,252 4,800 Wintrust Financial Corp.(L) ..................... 251,280 3,544 Yapi Ve Kredi Bankasi AS(b) ..................... 13,559 ----------- 54,982,129 ----------- BROADCASTING AND MEDIA (3.5%): 14,800 Citadel Broadcasting Co.(b)(L) .................. 169,460 6,000 CKX, Inc.(b)(L) ................................. 77,190 83,272 Comcast Corp. New Class A(b) .................... 2,556,450 7,600 Comcast Corp. Special Class A(b) ................ 227,620 17,040 Cumulus Media, Inc.(b) .......................... 200,731 247,500 DIRECTV Group, Inc.(b)(L) ....................... 3,836,250 13,600 Dreamworks Animation SKG, Inc.(b) ............... 356,320 28,300 Gannett Co., Inc.(L) ............................ 2,012,979 8,800 Grupo Televisa .................................. 546,392 27,178 Liberty Global Inc.(b)(L) ....................... 1,268,397 379,000 Liberty Media Corp.(b) .......................... 3,862,010 8,300 Radio One, Inc.(b) .............................. 105,659 650,650 Time Warner, Inc.(b) ............................ 10,872,362 148,000 Viacom, Inc., Class B ........................... 4,738,960 ----------- 30,830,780 ----------- CHEMICALS (0.6%): 10,100 Cad Potash Corporation of Saskatchewan .......... 964,635 12,500 Dow Chemical Co. ................................ 556,625 20,900 E.I. du Pont de Nemours and Co. ................. 898,909 55,000 Lyondell Chemical Co.(L) ........................ 1,453,100 5,900 Nitto Denko Corp. ............................... 338,695 2,700 Norsk Hydro ASA ................................. 247,885 50,000 Sumitomo Chemical Co. ........................... 230,165 1,662 Syngenta AG ..................................... 171,170 10,500 Takeda Chemical Industries ...................... 521,256 ----------- 5,382,440 ----------- COMMERCIAL SERVICES (1.7%): 15,569 Aaron Rents, Inc.(L) ............................ 387,512 139,200 Accenture Ltd.(b)(L) ............................ 3,155,665 14,000 Apollo Group, Inc., Class A(b) .................. 1,095,080 16,400 Avocent Corp.(b) ................................ 428,696 10,390 CSG Systems International, Inc.(b) .............. 197,202 7,420 Cyberoptics Corp.(b) ............................ 96,460 10,700 Education Management Corp.(b) ................... 360,911 11,080 Gevity HR, Inc.(L) .............................. 221,932
See accompanying notes to financial statements. 6 PORTFOLIO OF INVESTMENTS -------------------------------------------------------------------------------- NEW COVENANT GROWTH FUND JUNE 30, 2005
Value Shares (Note 2) -------------------------------------------------------------------------------- 4,100 Global Payments, Inc.(L) ........................... $277,980 6,900 Heidrick & Struggles Int'l., Inc.(b)(L) ............ 179,952 45,980 IKON Office Solutions, Inc. ........................ 437,270 6,600 ITT Educational Services, Inc.(b)(L) ............... 352,572 17,390 John H. Harland Co.(L) ............................. 660,820 5,900 McGrath Rentcorp(L) ................................ 139,830 59,000 Pitney Bowes, Inc. ................................. 2,569,450 6,600 Pre-Paid Legal Services, Inc.(L) ................... 294,690 14,500 Rent-Way, Inc.(b)(L) ............................... 142,680 5,600 Robert Half International, Inc.(L) ................. 139,832 2,300 The Corporate Executive Board Co. .................. 180,159 21,300 W.W. Grainger, Inc. ................................ 1,167,027 64,900 Xerox Corp.(b) ..................................... 894,971 39,700 XM Satellite Radio Hldgs, Inc., Class A (b)(L)...... 1,336,302 ----------- 14,716,993 ----------- COMPUTER SERVICES AND SOFTWARE (7.0%): 55,940 Adobe Systems, Inc.(L) ............................. 1,601,003 32,900 Affiliated Computer Svcs, Inc., Class A(b)(L) ...... 1,681,190 4,620 ANSYS, Inc.(b)(L) .................................. 164,056 39,900 Automatic Data Processing, Inc. .................... 1,674,603 1,400 Avid Technology, Inc.(b) ........................... 74,592 392,600 Cisco Systems, Inc.(b) ............................. 7,502,586 2,700 Dassault Systemes SA ............................... 130,898 187,600 Dell, Inc.(b) ...................................... 7,412,076 22,300 DST Systems, Inc.(b)(L) ............................ 1,043,640 12,100 Earthlink, Inc.(b)(L) .............................. 104,786 7,870 Epicor Software Corp.(b) ........................... 103,884 1,300 F5 Networks, Inc.(a)(b) ............................ 61,406 11,000 GSI Commerce Inc.(b)(L) ............................ 184,250 103,000 Hewlett Packard Co. ................................ 2,421,530 3,600 Imation Corp.(L) ................................... 139,644 4,200 Infosys Technologies Ltd.(L) ....................... 325,374 8,700 Infousa, Inc. ...................................... 101,790 101,600 International Business Machines Corp. .............. 7,538,720 10,240 Intervideo, Inc.(b)(L) ............................. 147,251 10,900 Intervoice, Inc.(b)(L) ............................. 94,067 8,390 Komag, Inc.(b)(L) .................................. 238,024 22,900 Lexmark International, Inc.(b) ..................... 1,484,607 12,100 Manhattan Associates, Inc.(b) ...................... 232,441 99,500 Maxtor Corp.(b)(L) ................................. 517,400 26,200 Mentor Graphics Corp.(b) ........................... 268,550 489,400 Microsoft Corp. .................................... 12,156,696 4,670 Microstrategy, Inc.(b)(L) .......................... 247,697 373,800 Oracle Corp.(b) .................................... 4,934,160 37,700 Parametric Technology Corp.(b) ..................... 240,526 30,000 Perot Systems Corp., Class A(b)(L) ................. 426,600 5,120 Progress Software Corp.(b)(L) ...................... 154,368 51,000 Red Hats, Inc.(b)(L) ............................... 668,100 4,700 SAP AG ............................................. 820,978 2,400 SAP AG - ADR(L) .................................... 103,920 8,300 SERENA Software, Inc.(b)(L) ........................ 160,190 4,965 SS&C Technologies, Inc.(L) ......................... 157,291 56,100 SunGard Data Systems(b) ............................ 1,973,037 7,370 Sybase, Inc.(b)(L) ................................. 135,240 8,700 Syntel, Inc.(L) .................................... 139,461 6,300 Take-Two Interactive Software, Inc.(b)(L) .......... 160,335 8,680 Transaction Systems Architects, Inc.(b) ............ 213,788 3,500 Trend Micro, Inc. .................................. 124,786 11,300 Trident Microsystems(b)(L) ......................... 256,397 23,000 Trizetto Group, Inc.(b)(L) ......................... 322,230
Value Shares (Note 2) -------------------------------------------------------------------------------- 35,730 United Online, Inc.(L) ............................. $388,028 62,100 Veritas Software Corp.(b) .......................... 1,515,240 16,400 Wipro, Ltd. - ADR(L) ............................... 342,104 40,400 Xilinx, Inc.(L) .................................... 1,030,200 ----------- 61,919,740 ----------- CONSTRUCTION AND BUILDING MATERIALS (2.3%): 32,500 Bouygues SA ........................................ 1,347,839 3,100 Brookfield Homes Corp.(L) .......................... 141,360 18,581 CRH Plc ............................................ 489,435 105,400 D. R. Horton, Inc. ................................. 3,964,094 4,310 Eagle Materials(L) ................................. 399,063 6,900 Granite Construction, Inc.(L) ...................... 193,890 55,100 Hovnanian Enterprises - A(b)(L) .................... 3,592,520 33,000 Jacobs Engineering Group, Inc.(b) .................. 1,856,580 37,100 Lafarge North America, Inc. ........................ 2,316,524 2,400 Lafarge SA ......................................... 218,908 24,800 Lennar Corp., Class A(L) ........................... 1,573,560 3,500 Quanex Corp. ....................................... 185,535 6,740 Ryland Group, Inc. ................................. 511,364 41,000 Sekisui House Ltd. ................................. 414,848 18,330 Standard-Pacific Corp.(L) .......................... 1,612,124 18,000 The Stanley Works .................................. 819,720 6,200 WCI Communities, Inc.(b)(L) ........................ 198,586 ----------- 19,835,950 ----------- CONSUMER PRODUCTS (3.8%): 60,309 Amcor Ltd. ......................................... 307,901 27,000 Cintas Corp.(L) .................................... 1,042,200 39,200 General Mills, Inc. ................................ 1,834,168 123,800 Gillette Co. ....................................... 6,267,994 19,800 Herman Miller, Inc. ................................ 610,632 11,200 HNI Corp. .......................................... 572,880 14,100 Industria de Diseno Textil, SA ..................... 363,210 8,490 K-Swiss, Inc.(L) ................................... 274,567 75,200 Kimberly-Clark Corp. ............................... 4,706,768 5,700 L'OREAL SA ......................................... 409,509 258,000 Li & Fung Ltd. ..................................... 536,048 3,400 Michelin ........................................... 207,227 18,100 Nike, Inc., Class B ................................ 1,567,460 19,000 Nikon Corp ......................................... 215,399 7,570 Nu Skin Enterprises, Inc.(L) ....................... 176,381 8,200 Polo Ralph Lauren Corp. ............................ 353,502 175,100 Procter & Gamble Co.(L) ............................ 9,236,524 34,680 Sherwin-Williams Co. ............................... 1,633,081 4,820 Stanley Furniture Co., Inc. ........................ 118,379 27,000 Timberland Co., Class A(b)(L) ...................... 1,045,440 21,520 Toro Co.(L) ........................................ 830,887 5,100 Tupperware Corp.(L) ................................ 119,187 3,700 UniFirst Corp. ..................................... 149,998 3,500 Unilever Plc ....................................... 227,303 10,700 Wolseley Plc ....................................... 225,134 23,000 Yakult Honsha Co., Ltd. ............................ 415,200 ----------- 33,446,979 ----------- DIVERSIFIED OPERATIONS (4.2%): 59,800 3M Co. ............................................. 4,323,540 7,600 Acuity Brands, Inc.(L) ............................. 195,244 44,480 Brambles Industries Ltd. ........................... 276,911 122,400 Cendant Corp. ...................................... 2,738,088 165,928 First Data Corp. ................................... 6,660,350 339,600 General Electric Co. ............................... 11,767,140 4,940 Harsco Corp. ....................................... 269,477
See accompanying notes to financial statements. 7 PORTFOLIO OF INVESTMENTS (CONTINUED) -------------------------------------------------------------------------------- NEW COVENANT GROWTH FUND JUNE 30, 2005
Value Shares (Note 2) -------------------------------------------------------------------------------- 4,400 Lincoln Educational Services(b)(L) ................. $89,100 45,100 Mitsubishi Corp. ................................... 613,871 23,000 Mitsui & Co. ....................................... 217,980 3,300 Shin-Etsu Chemical Co., Ltd. ....................... 125,399 99,000 Sumitomo Corp. ..................................... 794,395 22,900 Teleflex, Inc.(L) .................................. 1,359,573 131,000 Thermo Electron Corp.(b) ........................... 3,519,970 127,500 Tyco International Ltd. ............................ 3,723,000 6,803 Wesfarmers Ltd. .................................... 207,407 ----------- 36,881,445 ----------- ELECTRONICS (4.0%): 4,100 Ade Corp.(b)(L) .................................... 115,005 9,700 Advantest Corp. .................................... 717,059 21,199 Agere Systems Inc.(b)(L) ........................... 254,388 42,600 Altera Corp.(b) .................................... 844,332 28,200 Ameren Corp. ....................................... 1,559,460 21,400 Amis Holdings, Inc.(b)(L) .......................... 285,476 24,300 Amkor Technologies, Inc.(b)(L) ..................... 109,350 92,100 Amphenol Corp., Class A ............................ 3,699,657 12,600 ASML Holding N.V.(b) ............................... 198,586 3,610 Bel Fuse, Inc., Class B(L) ......................... 110,322 5,000 Cabot Microelectronics Corp.(b)(L) ................. 144,950 66,000 Conexant Systems, Inc.(b) .......................... 106,260 22,680 Cree Research, Inc.(b)(L) .......................... 577,660 13,440 Diodes, Inc.(b) .................................... 419,328 68,900 Emerson Electric Co. ............................... 4,315,206 30,500 Fairchild Semiconductor Int'l., Inc.(b)(L) ......... 449,875 7,800 Fanuc Co Ltd. ...................................... 496,344 185,500 Flextronics International Ltd.(b) .................. 2,450,455 3,600 FLIR Systems, Inc.(b)(L) ........................... 107,424 112,500 Freescale Semicondutor Inc., Class A(b)(L) ......... 2,363,625 3,000 Hirose Electric Co. Ltd. ........................... 330,626 64,549 Hon Hai Precision Industry Co. Ltd. ................ 671,716 10,000 Hubbell, Inc., Class B ............................. 441,000 23,700 Infineon Technologies AG(b) ........................ 222,340 27,600 Intersil Corp., Class A ............................ 518,052 800 Keyence Corp. ...................................... 179,511 104,800 Lam Research Corp.(b) .............................. 3,032,912 29,100 Lattice Semiconductor Corp.(b) ..................... 129,204 27,690 MEMC Electronic Materials, Inc.(b)(L) .............. 436,671 10,100 Methode Electronics, Inc. .......................... 119,887 20,600 Micrel, Inc.(b) .................................... 237,312 6,470 MTS Systems Corp. .................................. 217,263 7,200 Multi-Fineline Electronix Inc.(b)(L) ............... 132,480 3,700 Murata Manufacturing Co. Ltd. ...................... 188,690 35,000 NEC Corp. .......................................... 189,548 11,000 Nippon Electric Glass Co., Ltd. .................... 166,405 107 Nippon Telegraph & Telephone Corp. ................. 458,751 18,500 Novellus Systems, Inc.(b) .......................... 457,135 13,600 Omnivision Technologies, Inc.(b)(L) ................ 184,824 7,300 Omron Corp. ........................................ 161,102 101,200 On Semiconductor Corp.(b) .......................... 465,520 6,300 Photronics, Inc.(b) ................................ 147,042 11,200 Pixelworks, Inc.(b)(L) ............................. 96,096 13,100 Power-One, Inc.(b)(L) .............................. 82,661 5,200 Rohm Co. Ltd. ...................................... 502,211 9,604 Samsung Electronics - GDR .......................... 2,295,356 8,900 Sigmatel, Inc.(b) .................................. 152,724 8,200 Sony Corp. ......................................... 282,733 13,100 STMicroelectronics NV .............................. 210,272
Value Shares (Note 2) -------------------------------------------------------------------------------- 5,500 Synopsis, Inc.(b) .................................. $91,685 138,820 Taiwan Semiconductor ADR ........................... 1,266,034 3,600 TDK Corp. .......................................... 245,654 47,700 Teradyne, Inc.(b)(L) ............................... 570,969 11,700 Tokyo Electron Ltd. ................................ 619,903 2,400 Veeco Instruments, Inc.(b)(L) ...................... 39,072 ----------- 34,868,123 ----------- ENERGY (3.3%): 85,600 American Electric Power Co., Inc. .................. 3,156,072 10,800 Chubu Electric Power Co., Inc. ..................... 259,301 197,500 El Paso Corp.(L) ................................... 2,275,200 6,400 Empire District Electric Co.(L) .................... 153,344 14,160 Energy Partners Ltd.(b)(L) ......................... 371,134 108,774 Exelon Corp. ....................................... 5,583,368 32,000 Great Plains Energy, Inc. .......................... 1,020,480 6,400 Headwaters, Inc.(b)(L) ............................. 220,032 11,900 Iberdrola SA ....................................... 314,318 17,100 Kansai Electric Power, Inc. ........................ 344,192 102,070 Korea Electric Power Corp. ......................... 1,599,437 17,900 Oklahoma Gas & Electric Co.(L) ..................... 518,026 24,400 Pepco Holdings, Inc. ............................... 584,136 11,000 Scottish & Southern Energy Plc ..................... 199,706 89,140 Sierra Pacific Resources(b)(L) ..................... 1,109,793 2,500 Tohoku Electric Power Co., Inc. .................... 53,367 65,000 Tokyo Gas Ltd. ..................................... 243,479 3,100 UIL Holdings Corp.(L) .............................. 166,811 60,800 Valero Energy(L) ................................... 4,809,888 10,100 Veba AG ............................................ 900,821 13,330 Westar Energy, Inc. ................................ 320,320 140,500 Williams Co., Inc. ................................. 2,669,500 107,200 Xcel Energy, Inc.(L) ............................... 2,092,544 ----------- 28,965,269 ----------- ENTERTAINMENT AND LEISURE (0.1%): 23,800 Regal Entertainment Group(L) ....................... 449,344 27,000 The Walt Disney Co. ................................ 679,860 ----------- 1,129,204 ----------- FINANCIAL SERVICES (7.6%): 3,200 Accredited Home Lenders(b)(L) ...................... 140,800 10,900 Advance America Cash Advance(L) .................... 174,400 12,010 Advanta, Class B(L) ................................ 338,202 2,100 Affiliated Managers Group, Inc.(b) ................. 143,493 2,760 AIFUL Corp. ........................................ 206,022 47,500 Ambac Financial Group, Inc. ........................ 3,313,600 7,460 American Capital Strategies(L) ..................... 269,381 6,450 American Home Mrtg. Investment Corp.(L) ............ 225,492 13,000 Ares Capital Corp. ................................. 231,790 18,220 Bay View Capital Corp. ............................. 281,863 35,200 BISYS Group, Inc.(b)(c) ............................ 525,888 6,300 Calamos Asset Management ........................... 171,612 57,700 Capital One Financial Corp. ........................ 4,616,577 19,300 CapitalSource Inc.(b)(L) ........................... 378,859 6,200 Certegy, Inc. ...................................... 236,964 24,540 Charter Municipal Mortgage Acceptance(L) ........... 538,898 14,600 Checkfree Corp.(b) ................................. 497,276 20,700 CIT Group, Inc. .................................... 889,479 304,676 Citigroup, Inc. .................................... 14,085,170 95,000 Commerce Assets Holdings ........................... 126,250 9,320 CompuCredit Corp.(b)(L) ............................ 319,490 124,298 Countrywide Credit Industries, Inc. ................ 4,799,146 4,353 Deutsche Boerse AG ................................. 340,399
See accompanying notes to financial statements. 8 PORTFOLIO OF INVESTMENTS (CONTINUED) -------------------------------------------------------------------------------- NEW COVENANT GROWTH FUND JUNE 30, 2005
Value Shares (Note 2) -------------------------------------------------------------------------------- 83,300 E*TRADE Financial Corp.(b) ......................... $1,165,367 37,300 Equifax, Inc. ...................................... 1,331,983 7,900 Euronext NV ........................................ 267,669 60,000 Federal Home Loan Mortgage Corp. ................... 3,913,800 23,036 Fidelity National Financial, Inc. .................. 822,155 19,000 Friedman, Billings, Ramsey Group, Inc.(L) .......... 271,700 45,000 Fubon Financial Holding Co., Ltd.(R) ............... 438,395 49,800 Goldman Sachs Group, Inc. .......................... 5,080,596 61,100 HBOS Plc ........................................... 942,283 4,300 Huron Consulting Group, Inc.(b) .................... 101,265 28,279 ING Groep NV ....................................... 800,000 25,000 Lazard Ltd., Class A(b)(L) ......................... 581,250 41,100 Lehman Brothers Holdings, Inc. ..................... 4,080,408 61,600 MBIA, Inc.(L) ...................................... 3,653,496 293,900 MBNA Corp. ......................................... 7,688,423 5,390 Novastar Financial, Inc.(L) ........................ 211,019 6,900 ORIX Corp. ......................................... 1,036,339 52,700 Paychex, Inc. ...................................... 1,714,858 7,400 SEI Investments Co. ................................ 276,390 8,100 SWS Group, Inc. .................................... 139,158 8,305 UBS AG ............................................. 648,473 ----------- 68,016,078 ----------- FOOD AND BEVERAGES (2.8%): 31,900 Aramark Corp. ...................................... 842,160 163,100 Archer-Daniels-Midland Co. ......................... 3,487,078 3,800 Carrefour SA ....................................... 184,457 30,800 Coca-Cola Co. ...................................... 1,285,900 8,600 Groupe Danone ...................................... 756,833 24,200 Hormel Foods Corp. ................................. 709,786 9,700 Koninklijke Numico NV(b) ........................... 388,423 88,900 Kraft Foods, Inc., Class A(L) ...................... 2,827,909 5,760 Nash Finch Co.(L) .................................. 211,622 4,842 Nestle SA .......................................... 1,240,084 14,300 PepsiAmericas, Inc. ................................ 366,938 129,100 PepsiCo, Inc. ...................................... 6,962,364 10,920 Ruddick Corp.(L) ................................... 278,788 54,700 SUPERVALU, Inc. .................................... 1,783,767 52,300 Sysco Corp. ........................................ 1,892,737 117,700 Unilever Plc ....................................... 1,135,929 45,132 Woolworths Ltd. .................................... 567,787 ----------- 24,922,562 ----------- FOREST AND PAPER PRODUCTS(0.9%): 27,800 Abitibi-Consolidated, Inc. ......................... 123,959 93,500 Georgia Pacific Corp. .............................. 2,973,300 13,730 Glatfelter(L) ...................................... 170,252 14,500 Meadwestvaco Corp.(L) .............................. 406,580 4,900 Svenska Cellusoa AB, B Shares ...................... 156,916 11,100 Upm-Kymmene Oyj .................................... 213,239 60,100 Weyerhaeuser Co. ................................... 3,825,366 ----------- 7,869,612 ----------- HEALTH SERVICES (3.7%): 39,500 Aetna, Inc. ........................................ 3,271,390 43,500 AFLAC, Inc. ........................................ 1,882,680 8,480 Allscripts Healthcare Solution, Inc.(b)(L) ......... 140,853 4,000 American Healthways, Inc.(b)(L) .................... 169,080 1,500 AMERIGROUP Corp.(b) ................................ 60,300 22,100 Coventry Health Care, Inc.(b) ...................... 1,563,575 50,600 Express Scripts, Inc., Class A(b) .................. 2,528,988 4,160 Genesis Healthcare(b) .............................. 192,525 49,300 HCA, Inc. .......................................... 2,793,831
Value Shares (Note 2) -------------------------------------------------------------------------------- 68,700 Health Management Assoc., Inc., Class A(L) ......... $1,798,566 77,400 Humana, Inc.(b) .................................... 3,075,876 14,100 IDX Systems Corp.(b) ............................... 424,974 2,500 Lifepoint Hospitals, Inc.(b) ....................... 126,300 6,300 Manor Care, Inc. ................................... 250,299 61,900 McKesson Corp. ..................................... 2,772,501 3,320 Molina Heathcare, Inc.(b)(L) ....................... 146,943 49,800 PacifiCare Health Systems, Inc.(b) ................. 3,558,210 4,350 PolyMedica Corp. ................................... 155,121 40,800 Quest Diagnostics, Inc. ............................ 2,173,416 6,980 Rehabcare Group, Inc.(b) ........................... 186,575 2,800 Sierra Health Services, Inc.(b)(L) ................. 200,088 39,200 Stryker Corp. ...................................... 1,864,352 9,500 Triad Hospitals, Inc.(b)(L) ........................ 519,080 2,900 Universal Health Services, Inc., Class B ........... 180,322 55,600 Varian Medical Systems, Inc.(b)(L) ................. 2,075,548 ----------- 32,111,393 ----------- HOTELS AND OTHER LODGING PLACES (0.1%): 8,400 Accor SA ........................................... 394,223 156,000 Shangri-La Asia Ltd. ............................... 240,834 ----------- 635,057 ----------- INSURANCE (7.1%): 27,200 Ace Ltd. ........................................... 1,219,920 47,809 Aegon NV ........................................... 619,821 5,100 Allianz AG ......................................... 587,725 60,900 Allstate Corp. ..................................... 3,638,775 15,200 American Equity Invstmnt Life Hldng Co.(L) ......... 180,576 76,679 American International Group, Inc. ................. 4,455,050 120,000 Aon Corp.(L) ....................................... 3,004,800 5,590 Arch Capital Group Ltd.(b) ......................... 251,830 9,500 Aspen Insurance Holdings Ltd. ...................... 261,820 9,200 Axa ................................................ 230,195 48 Berkshire Hathaway, Inc., Class A(b) ............... 4,008,000 14,885 Cathay Financial Holding Co., Ltd. ................. 299,635 7,900 China Life Insurance Co. - ADR(b) .................. 215,670 41,000 Chubb Corp. ........................................ 3,510,010 80,300 CIGNA Corp. ........................................ 8,594,508 5,000 Everest Re Group, Ltd. ............................. 465,000 119,000 Genworth Financial, Inc., Class A .................. 3,597,370 58,500 Hartford Financial Services Group, Inc. ............ 4,374,630 54,200 Insurance Australia Group Ltd. ..................... 248,215 43 Millea Holdings, Inc. .............................. 578,301 44,000 Mitsui Marine and Fire ............................. 396,751 32,300 Montpelier RE Holdings Ltd.(L) ..................... 1,116,934 34,800 Old Republic International Corp. ................... 880,092 12,400 Phoenix Companies Inc.(L) .......................... 147,560 12,300 Platinum Underwriter Holdings Ltd. ................. 391,386 61,700 Promina Group Ltd. ................................. 221,442 19,904 QBE Insurance Group Ltd. ........................... 243,124 36,200 Reinsurance Group of America, Inc. ................. 1,683,662 3,660 Selective Insurance Group, Inc.(L) ................. 181,353 95,939 St. Paul Cos., Inc. ................................ 3,792,469 9,439 Swiss Re ........................................... 580,771 5,090 United Fire & Casualty Co.(L) ...................... 226,098 293,900 UnumProvident Corp.(L) ............................. 5,384,248 89,800 Wellpoint, Inc.(b) ................................. 6,253,672 29,300 Yasuda F & M Insurance ............................. 296,200 ----------- 62,137,613 ----------- INTERNET SERVICES (0.3%): 17,700 Asiainfo Holdings, Inc.(b)(L) ...................... 97,527
See accompanying notes to financial statements. 9 PORTFOLIO OF INVESTMENTS (CONTINUED) -------------------------------------------------------------------------------- NEW COVENANT GROWTH FUND JUNE 30, 2005
Value Shares (Note 2) -------------------------------------------------------------------------------- 13,000 CNET Networks, Inc.(b)(L) .......................... $152,620 8,100 InfoSpace, Inc.(b)(L) .............................. 266,733 15,400 Ipass, Inc.(b)(L) .................................. 93,324 4,050 j2 Global Communications, Inc.(b)(L) ............... 139,482 4,500 Netease.com Inc.- ADR(b)(L) ........................ 256,995 20,200 Openwave Systems, Inc.(b)(L) ....................... 331,280 9,200 Softbank Corp. ..................................... 361,224 10,390 WebEx Communications, Inc.(b)(L) ................... 274,400 112 Yahoo Japan Corp. .................................. 235,545 ----------- 2,209,130 ----------- MACHINERY AND EQUIPMENT (1.2%): 3,160 Albany International Corp., Class A(L) ............. 101,468 17,100 Atlas Copca AB, A Shares ........................... 271,613 37,500 Caterpillar, Inc. .................................. 3,574,125 12,000 Eaton Corp. ........................................ 718,800 29,200 Fastenal Co.(L) .................................... 1,788,792 10,150 Graco, Inc.(L) ..................................... 345,811 17,300 Lennox International, Inc.(L) ...................... 366,241 2,600 NIDEC Corp. ........................................ 275,512 11,200 Schneider SA ....................................... 845,321 3,400 SMC Corp. .......................................... 371,333 8,500 Stewart & Stevenson Services, Inc. ................. 192,610 31,600 Zebra Technologies Corp., Class A(b) ............... 1,383,764 ----------- 10,235,390 ----------- MANUFACTURING (1.2%): 13,100 Assa Abloy AB Class B .............................. 168,644 6,100 Cummins, Inc.(L) ................................... 455,121 27,300 FEI Co.(b)(L) ...................................... 622,713 2,300 Greif Brothers Co., Class A ........................ 140,530 4,700 Griffon Corp.(b)(L) ................................ 104,340 3,200 Hexcel Corp.(b)(L) ................................. 54,144 16,700 Illinois Tool Works, Inc. .......................... 1,330,656 36,000 Ingersoll-Rand Co. ................................. 2,568,600 10,000 INI Steel Co.(b) ................................... 136,913 10,000 Kao Corp. .......................................... 236,032 6,900 Moog, Inc.(b)(L) ................................... 217,281 1,800 NACCO Industries, Inc. ............................. 192,996 47,400 Parker Hannifin Corp. .............................. 2,939,273 13,500 Siemens AG ......................................... 987,048 5,100 Standex International Corp.(L) ..................... 144,891 ----------- 10,299,182 ----------- MEDICAL PRODUCTS (4.6%): 96,000 Amgen, Inc.(b) ..................................... 5,804,160 9,050 Applera Corp.-Celera Genomics Grp.(b)(L) ........... 99,279 79,000 Baxter International, Inc. ......................... 2,930,900 29,400 Beckman Coulter, Inc.(L) ........................... 1,868,958 36,500 Biomet, Inc. ....................................... 1,264,360 2,700 Biosite Diagnostics, Inc.(b) ....................... 148,473 19,100 Cerner Corp.(b)(L) ................................. 1,298,227 5,200 Cooper Cos., Inc. .................................. 316,472 40,500 Depomed, Inc.(b) ................................... 176,985 29,100 Diagnostic Products Corp.(L) ....................... 1,377,303 24,300 Edwards Lifesciences Corp.(b)(L) ................... 1,045,386 15,210 Exelixis, Inc.(b)(L) ............................... 113,010 46,800 Forest Laboratories, Inc., Class A(b) .............. 1,818,180 10,100 Genentech, Inc.(b)(L) .............................. 810,828 64,864 Genzyme Corp.(b) ................................... 3,897,678 8,010 Haemonetics Corp.(b) ............................... 325,526 2,600 Henry Schein, Inc.(b)(L) ........................... 107,952 2,200 Hoya Corp. ......................................... 254,175
Value Shares (Note 2) -------------------------------------------------------------------------------- 1,100 INAMED Corp.(b) .................................... $73,667 97,200 Johnson & Johnson, Inc. ............................ 6,317,999 58,500 Laboratory Corp. of America Holdings(b) ............ 2,919,150 4,240 Landauer, Inc.(L) .................................. 220,098 6,870 Medical Action Industries(b) ....................... 122,630 23,400 Medtronic, Inc. .................................... 1,211,886 3,000 Millipore Corp.(b) ................................. 170,190 27,000 Patterson Co., Inc.(b)(L) .......................... 1,217,160 17,660 Per-Se Technologies, Inc.(b)(L) .................... 371,213 34,300 Sanofi -Synthelabo SA .............................. 2,819,235 3,300 Syneron Medical, Ltd.(b)(L) ........................ 120,747 20,380 Zeneca Group Plc ................................... 844,099 ----------- 40,065,926 ----------- METALS AND MINING (0.9%): 11,900 Alcan, Inc. ........................................ 357,437 6,600 Anglo American Plc ................................. 154,836 14,023 Broken Hill Proprietary Co. Ltd. ................... 193,942 17,600 Cameco Corp. ....................................... 785,496 4,890 Carpenter Technology Corp. ......................... 253,302 10,800 Century Aluminum Co.(b)(L) ......................... 220,320 10,440 Commercial Metals Co. .............................. 248,681 18,000 Companhia Vale do Rio Doce - ADR(L) ................ 492,120 13,300 Inco Ltd.(L) ....................................... 502,075 3,120 Kennametal, Inc. ................................... 143,052 4,500 Lawson Products, Inc. .............................. 174,690 3,900 Mining and Metallurgical Company Norilsk Nickel ..................................... 236,340 4,800 Mueller Industries, Inc. ........................... 130,080 14,563 Noranda, Inc. ...................................... 249,991 7,010 NS Group, Inc.(b)(L) ............................... 227,895 37,500 Repsol Ypf S.A ..................................... 960,537 3,000 Schnitzer Steel Industries, Inc.(L) ................ 71,100 25,400 Southern Peru Copper Corp. ......................... 1,088,137 25,300 Steel Dynamics, Inc.(L) ............................ 664,125 17,600 Xstrata Plc ........................................ 339,717 ----------- 7,493,873 ----------- OIL AND GAS (6.0%): 26,146 Billiton Plc ....................................... 333,637 17,800 Chesapeake Energy Corp.(L) ......................... 405,840 131,822 ChevronTexaco Corp. ................................ 7,371,486 135,738 ConocoPhillips ..................................... 7,803,578 77,180 Devon Energy Corp. ................................. 3,911,482 9,650 Eni SpA ............................................ 248,931 216,300 Exxon Mobil Corp. .................................. 12,430,760 4,600 Frontier Oil Corp.(L) .............................. 135,010 2,900 Kaneb Services, LLC ................................ 125,512 15,461 Kerr-McGee Corp.(L) ................................ 1,179,829 3,277 L'Air Liquide ...................................... 558,927 32,000 Meridian Resource Corp.(b) ......................... 152,960 62,900 Occidental Petroleum Corp. ......................... 4,838,897 2,500 Patterson-UTI Energy, Inc. ......................... 69,575 13,400 Petroleo Brasileiro SA - ADR ....................... 662,002 45,800 Royal Dutch Petroleum .............................. 2,993,826 56,000 Royal Dutch Petroleum - New York Shares - ADR ...... 3,634,400 44,500 Sasol Ltd. ......................................... 1,206,490 18,200 Shell Transportation & Trading Co. Plc ............. 177,036 7,160 Stone Energy Corp.(b) .............................. 350,124 5,900 Suncor Energy, Inc. ................................ 279,076 4,000 Swift Energy Co.(b)(L) ............................. 143,280 6,420 Tesoro Petroleum Corp. ............................. 298,658
See accompanying notes to financial statements. 10 PORTFOLIO OF INVESTMENTS (CONTINUED) -------------------------------------------------------------------------------- NEW COVENANT GROWTH FUND JUNE 30, 2005
Value Shares (Note 2) -------------------------------------------------------------------------------- 1,000 Total SA, Class B .................................. $235,202 9,400 Ultra Petroleum Corp.(b)(L) ........................ 285,384 23,900 Unocal Corp. ....................................... 1,554,695 19,870 Vintage Petroleum, Inc. ............................ 605,439 23,000 Xto Energy, Inc. ................................... 781,770 5,400 YUKOS - ADR(b)(L) .................................. 12,312 ----------- 52,786,118 ----------- PHARMACEUTICALS (6.0%): 148,300 Abbott Laboratories ................................ 7,268,183 63,710 Abgenix, Inc.(b)(L) ................................ 546,632 28,800 Amylin Pharmaceuticals(b)(L) ....................... 602,784 16,200 Array Biopharma, Inc.(b)(L) ........................ 102,060 19,670 Astrazeneca Plc .................................... 817,620 11,500 Barr Pharmaceuticals, Inc.(b) ...................... 560,510 5,000 Bayer AG ........................................... 167,171 48,540 Cephalon, Inc.(b)(L) ............................... 1,932,377 96,500 Chiron Corp.(b)(L) ................................. 3,366,885 42,800 Cubist Pharmaceuticals, Inc.(b)(L) ................. 563,676 22,650 CV Therapeutics, Inc.(b)(L) ........................ 507,813 46,500 Dendreon Corp.(b)(L) ............................... 243,195 5,000 Eli Lilly & Co. .................................... 278,550 13,360 Encysive Pharmaceuticals, Inc.(b) .................. 144,422 23,000 Endo Pharmaceuticals Holdings, Inc.(b) ............. 604,440 92,100 Gilead Sciences, Inc.(b) ........................... 4,051,479 77,500 Hospira, Inc.(b) ................................... 3,022,500 62,900 Human Genome Sciences, Inc.(b)(L) .................. 728,382 26,500 ICOS Corp.(b)(L) ................................... 561,005 48,800 Incyte Pharmaceutical, Inc.(b)(L) .................. 348,920 120,500 King Pharmaceuticals, Inc.(b) ...................... 1,255,610 54,700 Ligand Pharmaceutical, Class B(b) .................. 380,165 40,308 Medco Health Solutions, Inc.(b) .................... 2,150,835 120,400 Millennium Pharmaceuticals, Inc.(b) ................ 1,116,108 6,600 Neurocrine Biosciences, Inc.(b)(L) ................. 277,596 13,300 Neurogen Corp.(b)(L) ............................... 90,706 45,761 Novartis AG ........................................ 2,181,392 4,100 Novo Nordisk A/S, Class B .......................... 208,851 19,080 NPS Pharmaceuticals, Inc.(b)(L) .................... 216,558 328,315 Pfizer, Inc. ....................................... 9,054,928 6,000 PRA International(b) ............................... 160,680 19,660 Regeneron Pharmaceuticals, Inc.(b) ................. 164,947 7,200 Rigel Pharmaceuticals, Inc.(b)(L) .................. 143,424 4,067 Roche Holding AG ................................... 515,083 29,900 Sankyo Co. ......................................... 574,844 667 Sanofi -Aventis .................................... 54,904 8,000 Teva Pharmaceutical SP - ADR ....................... 249,120 31,200 Trimeris, Inc.(b)(L) ............................... 311,376 6,100 UCB SA ............................................. 296,767 109,500 Watson Pharmaceutical, Inc.(b) ..................... 3,236,820 66,100 Wyeth .............................................. 2,941,450 17,380 Zymogenetics, Inc.(b)(L) ........................... 305,888 ----------- 52,306,656 ----------- PRINTING AND PUBLISHING (0.7%): 5,570 Advo, Inc.(L) ...................................... 177,405 28,000 Dex Media, Inc. .................................... 683,480 65,000 McGraw-Hill Companies, Inc. ........................ 2,876,250 74,100 Pearson Plc ........................................ 873,179 9,700 Reed Elsevier NV ................................... 135,267 69,800 Reed International Plc ............................. 668,640 7,500 Schibsted ASA ...................................... 206,570 3,100 Thomson Corp. ...................................... 103,848 -----------
Value Shares (Note 2) -------------------------------------------------------------------------------- 9,600 Thomson Corp. ...................................... $322,656 14,289 VNU NV ............................................. 399,040 ----------- 6,446,335 ----------- REAL ESTATE (1.5%): 16,100 Aames Investment Corp. ............................. 156,492 171,000 Amoy Properties Ltd. ............................... 251,891 20,460 Anthracite Capital, Inc.(L) ........................ 242,451 12,190 Arbor Realty Trust, Inc. ........................... 349,853 51,500 Archston-Smith Trust ............................... 1,988,930 32,800 Ashford Hospitality Trust(L) ....................... 354,240 23,600 Boston Properties, Inc. ............................ 1,652,000 9,700 Diamondrock Hospitality Co. ........................ 109,610 12,200 Equity One, Inc. ................................... 276,940 8,100 GMH Communities Trust .............................. 112,185 4,500 Highwoods Properties, Inc.(L) ...................... 133,920 22,100 Homebanc Corp.(L) .................................. 200,889 33,690 IndyMac Mortgage Holdings, Inc. .................... 1,372,194 41,000 iStar Financial, Inc. .............................. 1,705,190 86,000 Mitsubishi Estate Co. .............................. 947,793 26,000 Mitsui Fudosan ..................................... 292,174 10,900 Omega Healthcare Investors, Inc. ................... 140,174 23,300 Pulte Homes, Inc. .................................. 1,963,025 4,710 Redwood Trust, Inc. ................................ 243,036 9,700 Saxon Reit Inc. .................................... 165,579 16,000 Sun Hung Kai Properties ............................ 157,983 18,875 Technical Olympic USA(L) ........................... 458,285 ----------- 13,274,834 ----------- RESTAURANTS (1.0%): 11,205 CEC Entertainment, Inc.(b)(L) ...................... 471,618 48,300 Cheesecake Factory, Inc.(b) ........................ 1,677,459 10,400 CKE Restaurants, Inc.(L) ........................... 144,768 230,200 McDonald's Corp. ................................... 6,388,050 1,300 P.F. Chang's China Bistro, Inc.(b)(L) .............. 76,674 5,600 Panera Bread Co., Class A(b)(L) .................... 347,676 ----------- 9,106,245 ----------- RETAIL (3.4%): 43,700 Abercrombie & Fitch Co., Class A(L) ................ 3,002,190 2,800 AnnTaylor Stores Corp.(b) .......................... 67,984 16,700 Autozone, Inc.(b) .................................. 1,544,082 48,300 Bed Bath & Beyond, Inc.(b) ......................... 2,017,974 89,300 Blockbuster, Inc.(L) ............................... 814,416 4,600 Burlington Coat Factory Warehouse(L) ............... 196,144 14,605 Cato Corp. ......................................... 301,593 4,900 Cawachi, Ltd. ...................................... 207,428 46,600 Claire's Stores, Inc. .............................. 1,120,730 1,400 Columbia Sportswear Co.(b)(L) ...................... 69,146 92,000 Dollar General Corp. ............................... 1,873,120 13,000 Dollar Tree Stores, Inc.(b)(L) ..................... 312,000 9,000 DSW Inc.(b) ........................................ 224,550 30,200 Esprit Asia Holdings Ltd.(R) ....................... 218,545 2,300 Fast Retailing Co., Ltd. ........................... 119,578 7,300 Finish Line, Class A(L) ............................ 138,116 15,580 Gamestop Corp.(b)(L) ............................... 509,622 12,300 Genesco, Inc.(b)(L) ................................ 456,207 11,200 Home Depot, Inc. ................................... 435,680 53,100 Jusco Ltd. ......................................... 810,471 3,300 Longs Drug Stores Corp.(L) ......................... 142,065 33,800 Lowe's Cos., Inc.(L) ............................... 1,967,836 11,700 Massmart Holdings Ltd. ............................. 78,549 42,300 Michaels Stores, Inc.(L) ........................... 1,749,951
See accompanying notes to financial statements. 11 PORTFOLIO OF INVESTMENTS (CONTINUED) -------------------------------------------------------------------------------- NEW COVENANT GROWTH FUND JUNE 30, 2005
Value Shares (Note 2) -------------------------------------------------------------------------------- 8,120 Movie Gallery, Inc.(L) ............................. $214,612 6,300 New York & Co.(b) .................................. 132,678 3,900 Pantry, Inc.(b) .................................... 151,047 11,600 Sears Holding Corp.(b) ............................. 1,738,492 2,000 Shimamura Co. Ltd. ................................. 168,968 3,800 Shopko Stores, Inc.(b) ............................. 92,378 10,900 Stride Rite Corp. .................................. 150,311 29,400 TJX Co., Inc. ...................................... 715,890 6,700 Urban Outfitters, Inc.(b)(L) ....................... 379,823 58,500 Wal-Mart Stores, Inc. .............................. 2,819,700 43,000 Walgreen Co. ....................................... 1,977,570 156,406 Walmart De Mexico SA ............................... 634,749 18,400 Whole Foods Market, Inc.(L) ........................ 2,176,720 7,900 Williams-Sonoma, Inc.(b)(L) ........................ 312,603 ----------- 30,043,518 ----------- TECHNOLOGY (3.2%): 119,500 Agilent Technologies, Inc.(b) ...................... 2,750,890 32,500 Aquantive, Inc.(b)(L) .............................. 575,900 23,000 ATI Technologies, Inc.(b)(L) ....................... 272,550 24,800 Axcelis Technologies, Inc.(b) ...................... 170,128 40,300 Brooks Automation, Inc.(b) ......................... 598,455 6,900 Canon, Inc. ........................................ 363,715 13,100 Dolby Laboratories, Inc., Class A(b) ............... 288,986 16,600 Emulex Corp.(b)(L) ................................. 303,116 13,100 eResearch Technology, Inc.(b)(L) ................... 175,409 35,900 Genesis Microchip, Inc.(b)(L) ...................... 662,714 16,400 Hitachi High Technology Corp. ...................... 250,611 10,500 Hutchinson Technology, Inc.(b)(L) .................. 404,355 410,500 Intel Corp. ........................................ 10,697,630 41,200 Linear Technology Corp. ............................ 1,511,628 15,300 Mykrolis Corp.(b)(L) ............................... 217,413 12,700 Plantronics, Inc.(L) ............................... 461,772 95,900 RF Micro Devices, Inc.(b)(L) ....................... 520,737 252,100 Texas Instruments, Inc.(L) ......................... 7,076,447 73,950 Western Digital Corp.(b) ........................... 992,409 ----------- 28,294,865 ----------- TELECOMMUNICATIONS (4.3%): 24,300 America Movil ...................................... 1,448,523 23,750 Aspect Communications Corp.(b) ..................... 266,713 102,100 Avaya, Inc.(b) ..................................... 849,472 130,600 CenturyTel, Inc.(L) ................................ 4,522,679 8,300 Ditech Communications Corp.(b)(L) .................. 53,867 6,800 Ericsson - ADR(L) .................................. 217,260 198,000 Hutchison Telecommunications International, Ltd.(b) ............................. 196,140 9,900 Inphonic, Inc.(b)(L) ............................... 152,262 130,300 Koninklijke(Royal) KPN NV .......................... 1,094,640 35,500 Korea Telecom Corp. ................................ 763,250 62,800 Magyar Telekom ..................................... 268,573 215,900 Motorola, Inc. ..................................... 3,942,335 81,800 Nextel Communications, Inc, Class A(b) ............. 2,642,958 52,100 Nextel Partners, Inc., Class A(b) .................. 1,311,357 13,300 Nokia Oyj - Class A ................................ 222,981 70,500 Polycom, Inc.(b) ................................... 1,051,155 16,600 Portugal Telecom, SGPS, SA ......................... 157,540 46,730 Premiere Global Services, Inc.(b)(L) ............... 527,582 1,309,500 PT Telekomunikasi Indonesia ........................ 671,538 40,900 Qualcomm, Inc. ..................................... 1,350,109 36,760 Rural Cellular Corp.(b) ............................ 192,990 28,700 SBC Communications, Inc. ........................... 681,625 33,700 Scientific-Atlanta, Inc. ........................... 1,121,199 398,500 Singapore Telecommunications Ltd.(b)(R) ............ 654,324
Value Shares (Note 2) -------------------------------------------------------------------------------- 17,700 Societe Europeenne Satellite ....................... $259,254 151,200 Sprint Corp.(L) .................................... 3,793,608 2,077 Swisscom AG ........................................ 677,900 6,200 Tele Danmark AS, Class B ........................... 265,956 182,000 Telefonaktiebolaget LM Ericsson .................... 585,164 85,103 Telefonica De Espana ............................... 1,394,864 9,400 Telefonos de Mexico - ADR .......................... 177,566 34,886 Telekom Austria AG ................................. 678,632 110,400 Telesp Celular Participa - ADR(b)(L) ............... 471,408 11,500 Telus Corp. ........................................ 392,474 8,200 Telus Corp. ........................................ 288,356 31,600 Ubiquitel, Inc.(b)(L) .............................. 257,856 19,300 US Unwired, Inc.(b) ................................ 112,326 23,252 Verizon Communications, Inc.(L) .................... 803,357 5,300 Vivendi Universal .................................. 167,193 1,267,568 Vodafone Group Plc ................................. 3,089,579 ----------- 37,776,565 ----------- TRANSPORTATION (1.6%): 6,040 Alexander & Baldwin(L) ............................. 279,954 14,190 Arkansas Best Corp.(L) ............................. 451,384 67,000 CSX Corp. .......................................... 2,858,220 32,000 Expeditors Int'l. of Washington, Inc.(L) ........... 1,593,920 81,000 Japan Airlines System Corp. ........................ 218,603 4,500 Knight Transportation, Inc.(L) ..................... 109,485 3,100 Landstar System, Inc.(b) ........................... 93,372 197,939 Qantas Airways, Ltd. ............................... 508,294 19,250 Ryder System, Inc. ................................. 704,550 210,500 Southwest Airlines Co. ............................. 2,932,265 104,300 Werner Enterprises, Inc.(L) ........................ 2,048,452 35,000 Yamato Transport ................................... 486,506 35,100 Yellow Roadway Corp.(b)(L) ......................... 1,783,080 ----------- 14,068,085 ----------- WASTE MANAGEMENT (0.9%): 264,600 Waste Management, Inc. ............................. 7,498,764 TOTAL COMMON STOCKS ................................ 862,182,473 CASH EQUIVALENTS (1.6%): 14,391,787 JPMorgan Cash Trade Execution ...................... 14,391,787 TOTAL CASH EQUIVALENTS ............................. 14,391,787 INVESTMENTS HELD AS COLLATERAL FOR LOANED SECURITIES (12.9%): 106,000,000 Investment Grade Repurchase Agreement (Merrill Lynch, 3.5175%, 7/1/05) ................... 106,000,000 7,240,073 U.S. Agency Mortgages (Morgan Stanley, 3.42%, 7/1/05) ..................................... 7,240,073 ----------- TOTAL INVESTMENTS HELD AS COLLATERAL FOR LOANED SECURITIES .............................. 113,240,073 TOTAL (COST $883,523,858)(a) .................................... $989,814,333 ============ ============
Percentages indicated are based on net assets of $878,582,670. (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 $9,772,779 and by PFIC mark to market of $502,114. Cost for federal income tax differs from value by net unrealized appreciation (depreciation) of securities as follows: Unrealized appreciation $123,903,151 Unrealized depreciation (27,887,569) ------------ Net unrealized appreciation $96,015,582 ============
(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 See accompanying notes to financial statements. 12 PORTFOLIO OF INVESTMENTS -------------------------------------------------------------------------------- NEW COVENANT INCOME FUND JUNE 30, 2005
Principal Value Amount (Note 2) -------------------------------------------------------------------------------- ASSET BACKED SECURITIES (29.5%): $1,005,000 Ameriquest Mortgage Securities Inc., 4.37%, 10/25/33* ................................... $1,005,020 4,410,000 Assets Backed Funding Securities, 4.25%, 6/25/35 ............................................ 4,409,646 5,225,000 Banc of America Mortgage Securities, 4.805%, 5/25/35 * .................................. 5,247,501 5,180,000 Banc of America Mortgage Securities, 4.63%, 6/25/35 * ................................... 5,160,239 4,545,000 Bank of America Commercial Mortgage Inc., 5.48%, 6/10/39 * ............................. 4,844,468 1,105,000 Bank of America Commercial Mortgage Inc., 4.50%, 7/10/42 ............................... 1,110,258 3,894,817 Bear Stearns Commercial Mortgage Securities, 6.08%, 2/15/35 ......................... 4,023,645 4,615,000 Bear Stearns Commercial Mortgage Securities, 5.47%, 6/11/41 ......................... 4,919,905 1,100,000 Chase Funding Loan Acquisition Trust, 3.42%, 5/25/34 * ................................... 1,105,951 1,195,000 Commercial Mortgage Pass-Through Certificate, 5.44%, 7/10/37 * ...................... 1,268,174 4,864,848 Countrywide Home Loan, 3.39%, 2/25/35 * ............ 4,865,732 3,280,000 First Franklin Mortgage Loan, 3.42%, 12/25/32 * ......................................... 3,293,850 1,370,000 GE Capital Commercial Mortgage Corp., 4.60%, 11/10/38 .................................... 1,376,987 3,510,000 General Electric Capital Corp., 6.125%, 2/22/11 ............................................ 3,818,073 1,012,663 GMAC Commercial Mortgage Corp., 2.96%, 3/10/39 ..................................... 987,997 5,230,000 GMAC Commercial Mortgage Securities Inc., 5.30%, 8/10/38 ............................... 5,497,240 930,756 GSAMP Trust, 3.29%, 12/25/34 * ..................... 933,295 1,005,021 Harborview Mortgage Loan Trust, 3.25%, 3/19/35 * .......................................... 1,002,506 5,225,000 Home Equity Mortgage Trust, 3.62%, 6/25/30(d) ......................................... 5,225,000 3,263,431 Indymac Index Mortgage Loan Trust, 3.45%, 9/25/34 * ................................... 3,256,484 3,419,433 Indymac Index Mortgage Loan Trust, 3.42%, 11/25/34 * .................................. 3,421,569 925,513 Indymac Index Mortgage Loan Trust, 3.38%, 1/25/35 * ................................... 924,328 2,370,913 Ixis Real Estate Capital Trust, 3.21%, 2/25/35 * .......................................... 2,372,758 4,660,974 JPMorgan Chase Commercial Mortgage Securities Co., 4.28%, 5/15/41 ..................... 4,670,306 4,170,000 JPMorgan Chase Commercial Mortgage Securities Co., 5.38%, 5/15/41 * ................... 4,381,433 4,065,000 JPMorgan Chase Commercial Mortgage Securities Corp., 4.77%, 3/12/39 ................... 4,134,283 4,560,704 LB Commercial Conduit Mortgage Trust, 6.41%, 6/15/31 ..................................... 4,645,813 3,135,000 LB-UBS Commercial Mortgage Trust, 4.79%, 10/15/29 .................................... 3,178,379 1,807,828 Lehman Brothers, 7.18%, 9/15/19, Series 2000-C4 ............................................ 1,879,784 3,970,000 Master Adjustable Rate Mortgages Trust, 3.79%, 11/21/34 * .................................. 3,888,011 709,330 Master Adjustable Rate Mortgages Trust, 3.79%, 11/21/34 * .................................. 708,237 4,605,363 Merrill Lynch Mortgage Investors, Inc., 4.51%, 2/25/35 * ................................... 4,591,236
Principal Value Amount (Note 2) -------------------------------------------------------------------------------- $1,029,046 Morgan Stanley Mortgage Loan Trust, 5.43%, 10/25/34* .................................. $1,047,987 4,238,265 Morgan Stanley Mortgage Loan Trust, 5.14%, 11/25/34* .................................. 4,272,368 835,000 Residential Asset Mortgage Products Inc., 4.00%, 1/25/30 ..................................... 833,270 5,760,899 Residential Asset Mortgage Products Inc., 5.57%, 6/25/32, Series 2002-RS3, Class A15 ......... 5,806,119 984,814 Saxon Asset Securities Trust, 3.25%, 5/25/35* .......................................... 985,867 6,155,000 Structured Adjustable Rate Mortgage Loan Trust, 4.72%, 7/25/34* ............................ 6,078,080 5,220,000 UBS Commercial Mortgage Trust, 5.59%, 6/15/31 ............................................ 5,571,199 815,000 Washington Mutual, 3.81%, 6/25/34* ................ 802,452 1,975,105 Washington Mutual, 4.66%, 3/25/35* ................ 1,977,456 4,130,000 Washington Mutual, 4.69%, 5/25/35* ................ 4,126,460 1,095,000 Washington Mutual, 4.69%, 5/25/35* ................ 1,096,294 4,605,000 Wells Fargo Mortgage Backed Securities Trust, 3.54%, 9/25/34* ............................ 4,488,224 4,115,000 Wells Fargo Mortgage Backed Securities Trust, 4.54%, 1/25/35* ............................ 4,105,454 3,931,264 Wells Fargo Mortgage Backed Securities Trust, 4.56%, 2/25/35*(d) ......................... 3,921,829 4,782,642 Wells Fargo Mortgage Backed Securities Trust, 4.54%, 4/25/35* ............................ 4,763,443 3,680,000 Wells Fargo Mortgage Backed Securities Trust, 3.50%, 6/25/35*(d) ......................... 3,594,624 ----------- TOTAL ASSET BACKED SECURITIES ...................... 155,619,234 ------------ CORPORATE BONDS (17.4%): 2,165,000 Alcan, Inc., 6.125%, 12/15/33(L) ................... 2,327,301 1,900,000 Alliance Capital Management, 5.625%, 8/15/06 ............................................ 1,921,789 1,000,000 American General Finance, 5.875%, 7/14/06(L) ......................................... 1,017,545 780,000 American General Finance, 4.50%, 11/15/07 ........................................... 782,083 675,000 AOL Time Warner, Inc., 6.875%, 5/1/12(L) ........... 762,736 2,400,000 AOL Time Warner, Inc., 7.625%, 4/15/31 ............. 3,006,833 1,000,000 Bank of America Corp., 4.375%, 12/1/10(L) .......... 1,005,223 3,675,000 Bottling Group Llc, 5.00%, 11/15/13 ................ 3,808,105 1,125,000 BRE Properties, Inc., 7.125%, 2/15/13 .............. 1,290,385 3,800,000 Burlington North Santa Fe, 6.75%, 7/15/11 .......... 4,251,672 2,500,000 Carolina Power & Light, 6.50%, 7/15/12(L) .......... 2,763,568 750,000 Carramerica Realty Corp., 5.125%, 9/1/11 ........... 758,466 1,500,000 Caterpillar Financial Services Corp., 3.70%, 8/15/08 ............................................ 1,478,849 10,000,000 Coca-Cola Enterprises, 0.00%, 6/20/20 .............. 4,637,179 2,115,000 Duke Realty Corp., 7.05%, 3/1/06 ................... 2,142,721 1,600,000 EOP Operating LP, 6.80%, 1/15/09 ................... 1,716,176 3,615,000 Equity One Abs, Inc., 3.80%, 7/25/34 ............... 3,588,699 1,989,802 FedEx Corp., 6.72%, 1/15/22, Series 98-1A .......... 2,272,244 1,950,000 Firstar Bank, 7.125%, 12/1/09 ...................... 2,181,126 2,025,000 Ford Motor Corp., 6.375%, 2/1/29(L) ................ 1,565,451 610,000 Ford Motor Credit Co., 7.375%, 10/28/09(L) ........................................ 596,624 3,350,000 General Mills, Inc., 6.00%, 2/15/12 ................ 3,647,008 1,400,000 Household Finance Corp., 6.40%, 6/17/08 ............ 1,483,779 600,000 Household Finance Corp., 4.75%, 5/15/09(L) ......... 609,152 1,500,000 Household Finance Corp., 4.125%, 11/16/09 ........................................... 1,485,252 1,070,000 International Paper Co., 6.50%, 11/15/07 ........... 1,120,535
13 PORTFOLIO OF INVESTMENTS (CONTINUED) -------------------------------------------------------------------------------- NEW COVENANT INCOME FUND JUNE 30, 2005
-------------------------------------------------------------------------------- Principal Value Amount (Note 2) -------------------------------------------------------------------------------- $475,000 International Paper Co., 5.85%, 10/30/12 (L) ....... $497,319 1,750,000 Kinder Morgan Energy Partners, 7.40%, 3/15/31 ............................................ 2,138,992 675,000 May Department Stores Co., 7.45%, 9/15/11 ............................................ 768,826 4,000,000 Merrill Lynch & Co., 4.125%, 9/10/09 (L) ........... 3,986,808 3,525,000 Morgan Stanley, 3.625%, 4/1/08 (L) ................. 3,472,587 750,000 National City Corp., 4.50%, 3/15/10 ................ 757,848 1,185,000 National City Corp., 6.875%, 5/15/19 ............... 1,406,960 1,445,000 Pacific Gas & Electric, 6.05%, 3/1/34 .............. 1,598,199 3,785,000 PNC Funding Corp., 6.125%, 2/15/09 ................. 4,022,985 2,975,000 SBC Communications, Inc., 4.125%, 9/15/09 ............................................ 2,953,158 900,000 Sprint Capital Corp., 7.625%, 1/30/11 (L) .......... 1,029,054 2,930,000 Sprint Capital Corp., 6.875%, 11/15/28 ............. 3,373,690 2,800,000 SunTrust Banks, Inc., 4.25%, 10/15/09 .............. 2,790,776 4,110,000 Wachovia Bank Commercial Mortgage Trust, 4.85%, 10/15/41 ............................. 4,194,139 1,085,000 Washington Mutual, 3.95%, 7/25/34 * ................ 1,072,854 3,000,000 Washington Mutual Capital Inc, 4.20%, 1/15/10 (L) ........................................ 2,979,060 2,500,000 Wells Fargo Corp., 4.20%, 1/15/10 (L) .............. 2,501,233 ------------ TOTAL CORPORATE BONDS .............................. 91,764,989 ------------ MORTGAGE-BACKED SECURITIES (35.0%): FANNIE MAE 1,061,387 4.92%, 4/1/11 ...................................... 1,074,574 1,060,910 6.50%, 9/1/19 ...................................... 1,104,647 2,479,999 4.50%, 1/1/20 ...................................... 2,470,935 865,000 4.50%, 7/1/20(b) ................................... 861,216 3,620,000 5.00%, 7/1/20(b) ................................... 3,660,725 3,015,000 5.00%, 7/1/20(b) ................................... 3,048,919 1,095,000 5.50%, 11/15/28 .................................... 1,124,013 3,685,000 5.50%, 5/15/29 ..................................... 3,787,282 5,673,871 4.50%, 2/25/31 ..................................... 5,656,942 5,235,000 5.13%, 6/1/35(d) ................................... 5,302,532 1,510,000 5.50%, 7/1/35(b) ................................... 1,530,763 8,300,000 5.50%, 7/1/35(b) ................................... 8,414,125 3,230,000 5.50%, 7/1/35(b) ................................... 3,274,413 720,000 5.50%, 7/1/35(b) ................................... 729,900 6,340,000 5.50%, 7/1/35(b) ................................... 6,427,174 5,615,497 7.07%, 11/1/06 ..................................... 5,748,093 2,968,679 7.185%, 5/1/07 ..................................... 3,068,584 2,250,619 7.74%, 6/1/07 ...................................... 2,353,530 471,603 6.61%, 9/1/07 ...................................... 488,903 2,140,104 6.23%, 1/1/08 ...................................... 2,215,980 3,589,959 6.36%, 8/1/08 ...................................... 3,767,440 925,735 6.13%, 10/1/08 ..................................... 968,185 1,423,822 7.01%, 11/1/08 ..................................... 1,526,848 4,091,622 6.14%, 4/1/09 ...................................... 4,311,404 4,711,031 7.29%, 12/1/10 ..................................... 5,313,075 3,209,436 6.20%, 1/1/11 ...................................... 3,468,935 2,631,623 6.48%, 1/1/11 ...................................... 2,874,474 952,087 6.09%, 5/1/11 ...................................... 1,027,591 1,327,258 6.305%, 5/1/11 ..................................... 1,445,143 5,997,622 3.95%, 7/1/13 ...................................... 5,822,945 4,828,217 6.00%, 12/25/16, Series 01-71, Class QE ............ 5,016,452 418,813 6.50%, 6/1/17 ...................................... 436,302 1,994,532 6.50%, 8/1/17 ...................................... 2,077,893 1,590,000 4.50%, 9/25/25 ..................................... 1,605,921 203,291 7.50%, 5/1/27 ...................................... 217,686 199,199 7.50%, 4/1/29, Pool # 323645 ....................... 213,471
Principal Value Amount (Note 2) $233,431 7.50%, 4/1/29 ...................................... $250,155 15,308 7.50%, 8/1/29, Pool # 252712 ....................... 16,380 209,913 7.50%, 7/1/30 ...................................... 224,952 783,973 7.50%, 12/1/30 ..................................... 838,652 2,176,624 6.09%, 10/25/31 .................................... 2,207,065 1,101,219 7.00%, 6/1/32 ...................................... 1,161,960 3,383,199 6.50%, 7/1/32 ...................................... 3,508,222 960,000 4.50%, 7/25/33 ..................................... 956,008 756,764 3.16%, 4/25/35* .................................... 757,616 3,839,888 5.50%, 7/25/42 ..................................... 3,856,856 4,270,008 6.50%, 9/25/42 ..................................... 4,461,365 7,645,000 5.50%, 11/25/43 .................................... 7,777,632 6,272,968 5.95%, 2/25/44 ..................................... 6,424,369 4,625,718 6.00%, 7/25/44 ..................................... 4,784,575 932,939 6.50%, 8/25/44 ..................................... 976,032 1,576,902 7.00%, 1/25/48 ..................................... 1,666,095 FREDDIE MAC 90 8.00%, 5/1/06, Pool #E30879 ........................ 92 5,590,779 6.98%, 10/1/10, Pool #W20024(d) .................... 6,211,913 1,285,000 6.90%, 12/1/10(d) .................................. 1,429,691 3,304,652 4.00%, 8/15/13 ..................................... 3,299,566 1,490,000 4.50%, 8/15/13 ..................................... 1,498,742 4,000,000 4.50%, 5/15/15 ..................................... 4,009,086 3,105,000 4.50%, 7/15/16 ..................................... 3,120,129 4,578,264 6.00%, 5/15/17 ..................................... 4,756,139 5,095,000 5.50%, 12/15/27 .................................... 5,218,922 4,169,000 5.50%, 1/15/28 ..................................... 4,272,857 5,240,000 5.00%, 2/15/28 ..................................... 5,311,385 1,240,000 5.50%, 4/15/30 ..................................... 1,270,628 1,384,792 7.00%, 10/15/30 .................................... 1,424,386 ------------ TOTAL MORTGAGE-BACKED SECURITIES ................... 184,128,485 ------------ U.S. TREASURY OBLIGATIONS (14.3%): 2,835,000 U.S. Treasury Bonds, 7.50%, 11/15/16 (L) ........... 3,716,620 24,860,000 U.S. Treasury Bonds, 6.00%, 2/15/26 (L) ............ 30,638,011 4,930,000 U.S. Treasury Notes, 2.25%, 2/15/07 (L) ............ 4,825,819 25,025,000 U.S. Treasury Notes, 3.375%, 11/15/08 (L) . ........ 24,779,654 4,560,000 U.S. Treasury Notes, 4.75%, 5/15/14 (L) ............ 4,840,016 6,545,187 U.S. Treasury Inflation Protection Bond, 3.375%, 1/15/07 (L) ................................ 6,756,583 ------------ TOTAL U.S. TREASURY OBLIGATIONS .................... 75,556,703 ------------ Shares ------ CLOSED END INVESTMENT COMPANIES (0.5%): 40,100 BlackRock Income Opportunity Trust ................. 454,333 358,900 MFS Government Markets Income Trust ................ 2,397,452 ------------ TOTAL CLOSED END INVESTMENT COMPANIES .......................................... 2,851,785 ------------ Principal Amount --------- CASH EQUIVALENTS (8.8%): $46,233,787 JPMorgan Cash Trade Execution (c) .................. 46,233,787 ------------ TOTAL CASH EQUIVALENTS ............................. 46,233,787 ------------ Shares ------ INVESTMENTS HELD AS COLLATERAL FOR LOANED SECURITIES (6.3%): 31,000,000 Investment Grade Repurchase Agreement (Merrill Lynch, 3.5175%, 7/1/05) ................... 31,000,000 2,030,352 U.S. Agency Mortgages (Morgan Stanley, 3.42%, 7/1/05) ..................................... 2,030,352 ------------ TOTAL INVESTMENTS HELD AS COLLATERAL FOR LOANED SECURITIES .............................. 33,030,352 ------------ TOTAL (COST $579,533,177) (a) ...................... $589,185,335 ------------
See accompanying notes to financial statements. 14 PORTFOLIO OF INVESTMENTS (CONTINUED) -------------------------------------------------------------------------------- NEW COVENANT INCOME FUND JUNE 30, 2005 Percentages indicated are based on net assets of $527,208,072. (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 $781,305. Cost for federal income tax differs from value by net unrealized appreciation (depreciation) of securities as follows: Unrealized appreciation $11,092,514 Unrealized depreciation (2,221,661) ----------- Net unrealized appreciation $ 8,870,853 ===========
* Variable rate security. The interest rate shown reflects the rate in effect as of June 30, 2005. (b) Security purchased on a when-issued or delayed delivery basis. (c) All or a portion of this security has been segregated as collateral for securities purchased on a when-issued or delayed delivery basis. (d) Fair valued with market value determined pursuant to procedures adopted by the Board of Trustees. (L) A portion or all of the security is on loan. See accompanying notes to financial statements. 15 PORTFOLIO OF INVESTMENTS -------------------------------------------------------------------------------- NEW COVENANT BALANCED GROWTH FUND JUNE 30, 2005
-------------------------------------------------------------------------------- Value Shares (Note 2) -------------------------------------------------------------------------------- INVESTMENT COMPANIES (98.6%): 6,439,163 New Covenant Growth Fund(b) .......................... $192,659,762 4,240,039 New Covenant Income Fund(b) .......................... 108,375,408 ------------ TOTAL INVESTMENT COMPANIES ...................................... 301,035,170 ------------ Principal Amount --------- CASH EQUIVALENTS (1.4%): $4,154,009 JP Morgan Cash Trade Execution ....................... 4,154,009 ------------ TOTAL CASH EQUIVALENTS .......................................... 4,154,009 ------------ TOTAL INVESTMENTS (COST $287,605,896)(a) .......................................... $305,189,179 ============
Percentages indicated are based on net assets of $305,523,725. (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 $14,412,731. Cost for federal income tax differs from value by net unrealized appreciation (depreciation) of securities as follows: Unrealized appreciation $6,165,531 Unrealized depreciation (2,994,979) ---------- Net unrealized appreciation $3,170,552 ==========
(b) Investment in an affiliate in accordance with Section 12(d)(1)(G) of the Investment Company Act of 1940, as amended. NEW COVENANT BALANCED INCOME FUND JUNE 30, 2005 -------------------------------------------------------------------------------- Value Shares (Note 2) -------------------------------------------------------------------------------- INVESTMENT COMPANIES (98.8%): 1,637,290 New Covenant Growth Fund(b) ......................... $48,987,702 2,896,078 New Covenant Income Fund(b) ......................... 74,023,743 ------------ TOTAL INVESTMENT COMPANIES ...................................... 123,011,445 ------------ Principal Amount --------- CASH EQUIVALENTS (1.2%): $1,507,519 JP Morgan Cash Trade Execution ...................... 1,507,519 ------------ TOTAL CASH EQUIVALENTS .......................................... 1,507,519 ------------ TOTAL INVESTMENTS (COST $116,971,400)(a) .......................................... $124,518,964 ============ Percentages indicated are based on net assets of $124,809,394. (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 $2,161,597. Cost for federal income tax differs from value by net unrealized appreciation (depreciation) of securities as follows: Unrealized appreciation $ 6,069,799 Unrealized depreciation (683,832) ----------- Net unrealized appreciation $ 5,385,967 ===========
(b) Investment in an affiliate in accordance with Section 12(d)(1)(G) of the Investment Company Act of 1940, as amended. See accompanying notes to financial statements. 16 This Page Intentionally Left Blank. 17 STATEMENTS OF ASSETS AND LIABILITIES -------------------------------------------------------------------------------- NEW COVENANT FUNDS JUNE 30, 2005
BALANCED BALANCED GROWTH FUND INCOME FUND GROWTH FUND INCOME FUND ----------------------------------------------------------------------------------------------------------------------------- ASSETS: Investments, at value (Cost $770,283,785, $546,502,825, $4,154,009 and $1,507,519, respectively) ................................... $876,574,260 $556,154,983 $4,154,009 $1,507,519 Investments in affiliates (Cost $0, $0, $283,451,887 and $115,463,881, respectively) ................. - - 301,035,170 123,011,445 Investments held as collateral for loaned securities (Cost $113,240,073, $33,030,352, $0, $0 respectively) ................................... 113,240,073 33,030,352 - - ------------- ----------- ----------- ----------- Total Investments .................................. 989,814,333 589,185,335 305,189,179 124,518,964 Cash ............................................... - - 395,190 316,374 Foreign currency, at value (Cost $388,542, $0, $0 and $0, respectively) ........................... 389,165 - - - Interest and dividends receivable .................. 819,462 3,597,469 9,495 4,079 Receivable for investments sold .................... 10,332,454 8,413,838 - - Receivable from affiliate .......................... - - 63,111 25,505 Reclaims receivable ................................ 77,641 - - - Prepaid expenses and other assets .................. 46,012 33,626 23,212 15,190 ------------- ----------- ----------- ----------- Total Assets: ...................................... 1,001,479,067 601,230,268 305,680,187 124,880,112 ------------- ----------- ----------- ----------- LIABILITIES: Payable for investments purchased .................. 8,690,131 40,207,924 - - Payable for foreign currency contracts ............. 1,445 - - - Payable for return of collateral received on securities loaned ............................... 113,240,073 33,030,352 - - Cash overdraft ..................................... 8,672 - - - Accrued expenses and other payables: Investment advisory fees ........................ 589,282 257,131 - - Administration fees ............................. 5,978 3,619 2,111 849 Shareholder service fees ........................ 129,907 69,906 63,111 25,505 Other ........................................... 230,909 453,264 91,240 44,364 ------------- ----------- ----------- ----------- Total Liabilities: ................................. 122,896,397 74,022,196 156,462 70,718 ------------- ----------- ----------- ----------- NET ASSETS: ........................................... $878,582,670 $527,208,072 $305,523,725 $124,809,394 ============= =========== =========== =========== NET ASSETS CONSIST OF: Paid - in Capital .................................. 909,303,769 518,067,982 312,723,302 123,099,026 Undistributed (distributions in excess of) net investment income ............................... (139,239) 33,110 17,228 7,971 Accumulated net realized gains/(losses) on investments and foreign currency transactions ... (136,868,561) (545,178) (24,800,088) (5,845,167) Net unrealized appreciation on investment transactions and translation of assets and liabilities denominated in foreign currencies ... 106,286,701 9,652,158 17,583,283 7,547,564 ------------- ----------- ----------- ----------- Total Net Assets ...................................... $878,582,670 $527,208,072 $305,523,725 $124,809,394 ============= =========== =========== =========== Shares outstanding .................................... 29,368,021 20,627,751 3,906,923 6,602,991 Net asset value, offering and redemption price per share .......................................... $29.92 $25.56 $78.20 $18.90
See accompanying notes to financial statements. 18 STATEMENTS OF OPERATIONS -------------------------------------------------------------------------------- NEW COVENANT FUNDS FOR THE YEAR ENDED JUNE 30, 2005
BALANCED BALANCED GROWTH FUND INCOME FUND GROWTH FUND INCOME FUND ------------------------------------------------------------------------------------------------------------------------ INVESTMENT INCOME: Interest .......................................... $306,504 $23,652,599 $82,307 $32,690 Dividend .......................................... 15,536,287 372,875 - - Dividend income from affiliates ................... - - 5,916,266 3,358,770 Foreign tax withholding ........................... (254,724) - - - Income from securities lending .................... 124,434 49,179 - - ----------- ----------- ----------- ---------- Total Income: ..................................... 15,712,501 24,074,653 5,998,573 3,391,460 ----------- ----------- ----------- ---------- EXPENSES: Investment advisory fees .......................... 8,334,533 3,974,345 - - Administration fees ............................... 168,360 105,974 60,991 24,622 Shareholder service fees .......................... 1,897,421 1,167,293 256,524 102,038 Accounting fees ................................... 258,179 150,766 78,789 33,367 Audit fees ........................................ 38,219 23,840 13,558 4,536 Custodian fees .................................... 367,767 59,937 2,750 2,750 Insurance fees .................................... 32,345 20,680 11,512 4,833 Legal fees ........................................ 80,228 48,433 28,777 11,444 Registration and filing fees ...................... 21,035 21,835 20,841 19,259 Printing fees ..................................... 39,482 25,087 14,252 5,779 Chief Compliance Officer fees ..................... 47,859 28,336 17,132 6,673 Transfer agent fees ............................... 74,188 67,220 149,165 84,151 Other fees ........................................ 111,989 58,676 29,561 12,195 ----------- ----------- ----------- ---------- Total expenses before contractual fee reductions .. 11,471,605 5,752,422 683,852 311,647 Expenses contractually reduced .................... (1,922,875) (1,182,831) (265,567) (105,669) Expenses paid indirectly .......................... (164,060) - - - ----------- ----------- ----------- ---------- Total Expenses .................................... 9,384,670 4,569,591 418,285 205,978 ----------- ----------- ----------- ---------- NET INVESTMENT INCOME .............................. 6,327,831 19,505,062 5,580,288 3,185,482 ----------- ----------- ----------- ---------- REALIZED AND UNREALIZED GAINS/(LOSSES) FROM INVESTMENTS AND FOREIGN CURRENCY: Net realized gains/(losses) on investment and foreign currency transactions .................. 28,371,237 4,612,365 (6,816,575) (1,712,699) Realized gain distribution from underlying funds .. - - 274,261(+) 181,705(+) Net change in unrealized appreciation/ (depreciation) on investments and translation of assets and liabilities denominated in foreign currency ....................................... 26,222,561 6,746,552 20,674,190 5,905,857 ----------- ----------- ----------- ---------- Net realized/unrealized gains/(losses) on investments and foreign currency ............... 54,593,798 11,358,917 14,131,876 4,374,863 ----------- ----------- ----------- ---------- Change in net assets resulting from operations .... $60,921,629 $30,863,979 $19,712,164 $7,560,345 =========== =========== =========== ==========
(+) Represents realized gains from investment transactions with affiliates. 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, 2005 JUNE 30, 2004 JUNE 30, 2005 JUNE 30, 2004 ------------- ------------- ------------- ------------- OPERATIONS: Net investment income .............................................. $6,327,831 $2,505,244 $19,505,062 $19,421,219 Net realized gains/(losses) on investment and foreign currency transactions .................................................... 28,371,237 49,605,122 4,612,365 (1,027,902) Net change in unrealized appreciation/(depreciation) on investments and translation of assets and liabilities denominated in foreign currency ............................................. 26,222,561 87,618,337 6,746,552 (18,444,921) ------------ ------------ ------------ ------------ Change in net assets resulting from operations ..................... 60,921,629 139,728,703 30,863,979 (51,604) ------------ ------------ ------------ ------------ DISTRIBUTIONS TO SHAREHOLDERS: From net investment income ......................................... (6,321,345) (2,835,338) (21,501,226) (18,264,083) From net realized gains/(losses) on investment ..................... -- -- (1,303,165) (8,717,403) Tax return of capital .............................................. -- -- -- (2,311,618) ------------ ------------ ------------ ------------ Change in net assets from shareholder distributions ................ (6,321,345) (2,835,338) (22,804,391) (29,293,104) ------------ ------------ ------------ ------------ CAPITAL TRANSACTIONS: Change in net assets from share transactions (Note 5) .............. (10,593,031) (11,202,779) (4,876,397) 27,635,785 ------------ ------------ ------------ ------------ Change in net assets ............................................... 44,007,253 125,690,586 3,183,191 (1,708,923) ------------ ------------ ------------ ------------ NET ASSETS: Beginning of period ................................................ 834,575,417 708,884,831 524,024,881 525,733,804 ------------ ------------ ------------ ------------ End of period ...................................................... $878,582,670 $834,575,417 $527,208,072 $524,024,881 ============ ============ ============ ============ Undistributed (distributions in excess of) net investment income ... $(139,239) $(170,489) $33,110 $ - ------------ ------------ ------------- ------------
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, 2005 JUNE 30, 2004 JUNE 30, 2005 JUNE 30, 2004 ------------- ------------- ------------- ------------- OPERATIONS: Net investment income ............................................. $5,580,288 $5,313,634 $3,185,482 $3,614,507 Net realized gains/(losses) on investment and foreign currency transactions ................................................... (6,816,575) (5,757,753) (1,712,699) (1,749,924) Realized gain distributions from underlying funds ................. 274,261(+) 743,947(+) 181,705(+) 552,083(+) Net change in unrealized appreciation/(depreciation) on investments and translation of assets and liabilities denominated in foreign currency ....................................................... 20,674,190 31,737,323 5,905,857 6,133,930 ------------ ------------ ------------ ------------ Change in net assets resulting from operations .................... 19,712,164 32,037,151 7,560,345 8,550,596 ------------ ------------ ------------ ------------ DISTRIBUTIONS TO SHAREHOLDERS: From net investment income ........................................ (5,571,223) (4,860,882) (3,181,809) (3,278,062) Tax return of capital ............................................. - (299,330) - (233,142) ------------ ------------ ------------ ------------ Change in net assets from shareholder distributions ............... (5,571,223) (5,160,212) (3,181,809) (3,511,204) ------------ ------------ ------------ ------------ CAPITAL TRANSACTIONS: Change in net assets from share transactions (Note 5) ............. (11,063,444) 3,102,552 (4,484,502) (2,700,088) ------------ ------------ ------------ ------------ Change in net assets .............................................. 3,077,497 29,979,491 (105,966) 2,339,304 ------------ ------------ ------------ ------------ NET ASSETS: Beginning of period ............................................... 302,446,228 272,466,737 124,915,360 122,576,056 ------------ ------------ ------------ ------------ End of period ..................................................... $305,523,725 $302,446,228 $124,809,394 $124,915,360 ============ ============ ============ ============ Undistributed (distributions in excess of) net investment income .. $17,228 $(497,494) $7,971 $(337,348) ------------ ------------ ------------ ------------
(+) Represents realized gains from investment transactions with affiliates. 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, 2005 JUNE 30, 2004 JUNE 30, 2003 JUNE 30, 2002 JUNE 30, 2001 --------------------------- --------------------------- ------------- Net Asset Value, Beginning of Period .................. $28.07 $23.51 $24.13 $29.26 $42.07 -------- -------- -------- -------- -------- INVESTMENT ACTIVITIES: Net investment income .............................. 0.21 0.07 0.10 0.04 0.10 Net realized and unrealized gains/(losses) from investments and foreign currency transactions ... 1.85 4.58 (0.63) (5.11) (4.86) -------- -------- -------- -------- -------- Total from Investment Activities ................... 2.06 4.65 (0.53) (5.07) (4.76) -------- -------- -------- -------- -------- DIVIDENDS Net investment income .............................. (0.21) (0.09) (0.09) (0.01) - Net realized gains ................................. - - - - (7.80) Tax return of capital .............................. - - - (0.05) (0.25) -------- -------- -------- -------- -------- Total Dividends .................................... (0.21) (0.09) (0.09) (0.06) (8.05) -------- -------- -------- -------- -------- Change in net asset value per share ................ 1.85 4.56 (0.62) (5.13) (12.81) -------- -------- -------- -------- -------- NET ASSET VALUE, END OF PERIOD ..................... $29.92 $28.07 $23.51 $24.13 $29.26 ======== ======== ======== ======== ======== Total Return ....................................... 7.38% 19.81% (2.17%) (17.34%) (12.33%) RATIOS/SUPPLEMENTAL DATA Net Assets at end of period (in 000's) ............. $878,583 $834,575 $708,885 $695,622 $816,901 Ratio of expenses to average net assets ............ 1.11% 1.13% 1.13% 1.11% 1.07% Ratio of net investment income to average net assets 0.75% 0.32% 0.47% 0.15% 0.20% Ratio of expenses to average net assets(*) ......... 1.36% 1.39% 1.13% 1.11% 1.07% Portfolio turnover rate ............................ 76% 94% 63% 79% 142%
-------------------------------------------------------------------------------- (*) Ratios excluding waivers and expenses paid indirectly. 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, 2005 JUNE 30, 2004 JUNE 30, 2003 JUNE 30, 2002 JUNE 30, 2001 ------------- ------------- -------------- ------------- ------------- Net Asset Value, Beginning of Period ............. $25.17 $26.62 $25.54 $24.83 $23.89 ----------- ----------- ----------- ----------- ----------- INVESTMENT ACTIVITIES: Net investment income ......................... 0.94 0.96 1.00 1.21 1.50 Net realized and unrealized gains/(losses) from investments ................................ 0.55 (0.96) 1.42 0.73 0.92 ----------- ----------- ----------- ----------- ----------- Total from Investment Activities .............. 1.49 - 2.42 1.94 2.42 ----------- ----------- ----------- ----------- ----------- DIVIDENDS Net investment income ......................... (1.04) (0.90) (1.06) (1.23) (1.48) Net realized gains ............................ (0.06) (0.44) (0.28) - - Tax return of capital ......................... - (0.11) - - - ----------- ----------- ----------- ----------- ----------- Total Dividends ............................... (1.10) (1.45) (1.34) (1.23) (1.48) ----------- ----------- ----------- ----------- ----------- Change in net asset value per share ........... 0.39 (1.45) 1.08 0.71 0.94 ----------- ----------- ----------- ----------- ----------- NET ASSET VALUE, END OF PERIOD ................ $25.56 $25.17 $26.62 $25.54 $24.83 =========== =========== =========== =========== =========== Total Return .................................. 6.02% 0.00% 9.63% 7.97% 10.31% RATIOS/SUPPLEMENTAL DATA Net Assets at end of period (in 000's) ........ $527,208 $524,025 $525,734 $545,356 $559,286 Ratio of expenses to average net assets ....... 0.86% 0.86% 0.85% 0.84% 0.82% Ratio of net investment income to average net assets ..................................... 3.68% 3.70% 3.79% 4.72% 5.99% Ratio of expenses to average net assets(*) .... 1.08% 1.11% 0.85% 0.84% 0.82% Portfolio turnover rate ....................... 206% 242% 226% 290% 191%
-------------------------------------------------------------------------------- (*) Ratios excluding waivers. 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, 2005 JUNE 30, 2004 JUNE 30, 2003 JUNE 30, 2002 JUNE 30, 2001 ------------- ------------- ------------- ------------- ------------- Net Asset Value, Beginning of Period ........... $74.65 $67.88 $67.25 $81.92 $91.84 -------- -------- -------- -------- -------- INVESTMENT ACTIVITIES: Net investment income ....................... 1.41(#) 1.34(#) 1.27(#) 1.52(#) 2.33(#) Net realized and unrealized gains/(losses) from investments ......................... 3.54(#) 6.73(#) 0.71(#) (7.44)(#) (5.07)(#) -------- -------- -------- -------- -------- Total from Investment Activities ............ 4.95 8.07 1.98 (5.92) (2.74) -------- -------- -------- -------- -------- DIVIDENDS Net investment income ....................... (1.40) (1.23) (1.27) (1.34) (5.68) Net realized gains .......................... - - (0.08) (7.00) (1.50) Tax return of capital ....................... - (0.07) - (0.41) - -------- -------- -------- -------- -------- Total Dividends ............................. (1.40) (1.30) (1.35) (8.75) (7.18) -------- -------- -------- -------- -------- Change in net asset value per share ......... 3.55 6.77 0.63 (14.67) (9.92) -------- -------- -------- -------- -------- NET ASSET VALUE, END OF PERIOD .............. $78.20 $74.65 $67.88 $67.25 $81.92 ======== ======== ======== ======== ======== Total Return ................................ 6.68% 11.95% 3.10% (7.79%) (3.01%) RATIOS/SUPPLEMENTAL DATA Net Assets at end of period (in 000's) ...... $305,524 $302,446 $272,467 $286,314 $314,873 Ratio of expenses to average net assets ..... 0.14% 0.15% 0.14% 0.11% 0.09% Ratio of net investment income to average net assets ................................... 1.83% 1.52% 1.96% 2.02% 2.61% Ratio of expenses to average net assets(*) .. 0.22% 0.15% 0.14% 0.11% 0.09% Portfolio turnover rate ..................... 5% 12% 15% 18% 18%
-------------------------------------------------------------------------------- (*) Ratios excluding waivers (#) Represents income or gains/(losses) from affiliates. 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, 2005 JUNE 30, 2004 JUNE 30, 2003 JUNE 30, 2002 JUNE 30, 2001 ------------- ------------- ------------- ------------- ------------- Net Asset Value, Beginning of Period ........ $18.24 $17.52 $17.10 $18.88 $20.01 -------- -------- -------- -------- -------- INVESTMENT ACTIVITIES: Net investment income .................... 0.48(#) 0.53(#) 0.52(#) 0.57(#) 0.78(#) Net realized and unrealized gains/(losses) from investments ..................... 0.66(#) 0.70(#) 0.47(#) (0.84)(#) (0.38)(#) -------- -------- -------- -------- -------- Total from Investment Activities ......... 1.14 1.23 0.99 (0.27) 0.40 -------- -------- -------- -------- -------- DIVIDENDS Net investment income .................... (0.48) (0.48) (0.52) (0.54) (1.22) Net realized gains ....................... - - (0.05) (0.94) (0.31) Tax return of capital .................... - (0.03) - (0.03) - -------- -------- -------- -------- -------- Total Dividends .......................... (0.48) (0.51) (0.57) (1.51) (1.53) -------- -------- -------- -------- -------- Change in net asset value per share ...... 0.66 0.72 0.42 (1.78) (1.13) -------- -------- -------- -------- -------- NET ASSET VALUE, END OF PERIOD ........... $18.90 $18.24 $17.52 $17.10 $18.88 ======== ======== ======== ======== ======== Total Return ............................. 6.32% 7.07% 6.00% (1.55%) 2.08% RATIOS/SUPPLEMENTAL DATA Net Assets at end of period (in 000's) ... $124,809 $124,915 $122,576 $114,013 $116,519 Ratio of expenses to average net assets .. 0.17% 0.18% 0.16% 0.14% 0.12% Ratio of net investment income to average net assets ........................... 2.58% 2.34% 3.08% 3.13% 3.88% Ratio of expenses to average net assets(*) 0.25% 0.18% 0.16% 0.14% 0.12% Portfolio turnover rate .................. 6% 12% 18% 11% 20%
-------------------------------------------------------------------------------- (*) Ratios excluding waivers (#) Represents income or gains/(losses) from affiliates. See accompanying notes to financial statements. 25 NOTES TO FINANCIAL STATEMENTS ------------------------------------------------------------------------------- NEW COVENANT FUNDS JUNE 30, 2005 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. It 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., a wholly owned subsidiary of the Presbyterian Church (U.S.A.) Foundation (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 Trust's organizational documents, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Funds. In addition, in the normal course of business, the Trust enters 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 ask 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 adopted 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. Foreign securities traded outside the United States are generally valued as of the time their trading is complete, which is usually different from the close of the New York Stock Exchange ("NYSE"). Occasionally, events affecting the value of such securities may occur between such times and the close of the NYSE that will not be reflected in the security's market value. If events materially affecting the value of such securities occur during such period, these securities will be valued at their fair value according to procedures adopted by the Board of Trustees. All securities and other assets of a Fund initially expressed in foreign currencies will be converted to U.S. dollar values at the foreign exchange rate every business day, generally at 4:00PM EST. SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities 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 of 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. 26 NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- NEW COVENANT FUNDS JUNE 30, 2005 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 the 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 the 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 option and the price of the underlying security. Risks may also arise due to illiquid secondary markets for the options. There were no options outstanding at June 30, 2005. FOREIGN CURRENCY TRANSLATION: The books and records of the Funds are maintained in U.S. dollars. Investment valuation and other assets and liabilities initially expressed in foreign currencies are converted each business day into U.S. dollars based upon current exchange rates. Purchases and sales of foreign investments and income and expenses are converted into U.S. dollars based upon exchange rates prevailing on the respective dates of such transactions. That portion of unrealized gains or losses on investments due to fluctuations in foreign currency exchange rates is not separately disclosed. 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 foreign 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 foreign forward contracts are extinguished. There were no contracts outstanding at June 30, 2005. LOANS OF PORTFOLIO SECURITIES: The Growth Fund and Income Fund may lend their securities pursuant to a securities lending agreement ("Lending Agreement") with JPMorgan Chase Bank, N.A. ("JPMorgan"). 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 JPMorgan 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 cannot be sold or repledged. Net income earned on the investment of cash collateral and loan premiums received on non-cash collateral are allocated between JPMorgan and the Funds in accordance with the Lending Agreement. Income allocated to the Funds is included in interest income in the respective Statements of Operations. At June 30, 2005, the cash collateral received by the Growth Fund and the Income Fund was invested in repurchase agreements with interest rates ranging from 3.42% to 3.52% and a maturity date of July 1, 2005. Information on the investment of cash collateral is shown in the Portfolio of Investments. The Growth Fund and the Income Fund receive payments from borrowers equivalent to the dividends and interest that would have been earned on the securities lent while simultaneously seeking to earn income on the investment cash collateral, a portion of which is retained by the Advisor. One of the risks in lending portfolio securities, as with other extensions of credit, is the possible delay in the recovery of the securities or possible loss of rights in the collateral should the borrower fail financially. There is also the risk that, when lending portfolio securities, the securities may not be available to a Fund on a timely basis and a Fund may, therefore, lose the opportunity to sell the securities at a desirable price. In addition, in the event that a borrower of securities would file for bankruptcy or become insolvent, disposition of the securities may be delayed pending court action. However, loans will be made only to borrowers deemed by the Advisor to be creditworthy under guidelines established by the Board of Trustees and when, in the judgment of the Advisor, the consideration which can be earned currently from such securities loans justifies the attendant risks. Loans are subject to termination by the Funds or the borrower at any time, and are, therefore, not considered to be illiquid investments. In the event of bankruptcy of the borrower, realization/retention of the collateral may be subject to legal proceedings. The value of the loaned securities and related collateral at June 30, 2005, was as follows:
-------------------------------------------------------------------------------- VALUE OF VALUE OF VALUE OF NON-CASH FUND SECURITIES LOANED CASH COLLATERAL COLLATERAL -------------------------------------------------------------------------------- Growth Fund $ 111,274,178 $ 113,240,073 $ 1,009,425 Income Fund 47,161,112 33,030,352 15,014,981
27 NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- NEW COVENANT FUNDS JUNE 30, 2005 REPURCHASE AGREEMENTS: The Funds may enter into repurchase agreements, which are secured by obligations of the U.S. government, with a bank, broker-dealer or other financial institution. 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. FORWARD COMMITMENTS, WHEN-ISSUED SECURITIES AND DELAYED-DELIVERY TRANSACTIONS: The Growth Fund and the Income Fund may purchase or sell securities on a when-issued or delayed-delivery basis and make contracts to purchase or sell securities for a fixed price at a future date beyond customary settlement time. Debt securities are often issued on that basis. No income will accrue on securities purchased on a when-issued or delayed-delivery basis until the securities are delivered. The Funds will maintain cash and U.S. government securities or other liquid portfolio securities at least equal in value to commitments for when-issued securities. Securities purchased or sold on a when-issued, delayed-delivery of forward-commitment basis involve a risk of loss if the value of the security to be purchased declines prior to settlement date. Although the Funds would generally purchase securities on a when-issued, delayed-delivery or a forward-commitment basis with the intention of acquiring the securities, the Funds may dispose of such securities prior to settlement if the portfolio manager deems it appropriate to do so. The Funds may dispose of or renegotiate a when-issued or forward commitment. The Funds will normally realize a capital gain or loss in connection with these transactions. For purposes of determining the Income Fund's average dollar-weighted maturity, the maturity of when-issued or forward-commitment securities will be calculated from the commitment date. When the Funds purchase securities on a when-issued, delayed-delivery or forward-commitment basis, the Funds will maintain cash, U.S. government securities or other liquid portfolio securities having a value (determined daily) at least equal to the amount of the Funds' purchase commitments. In the case of a forward-commitment to sell portfolio securities, the custodian will hold the portfolio securities in a segregated account while the commitment is outstanding. These procedures are designed to ensure that the Funds will maintain sufficient assets at all times to cover their obligations under when-issued purchases, forward-commitments and delayed-delivery transactions. As of June 30, 2005, the Funds had outstanding when-issued or delayed-delivery purchase commitments with corresponding assets segregated, as follows:
-------------------------------------------------------------------------------- FUND AMOUNT -------------------------------------------------------------------------------- Income Fund ....................................................... $27,947,235 --------------------------------------------------------------------------------
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 are reclassified within the composition of net assets based on their federal tax-basis treatment; temporary differences do not require reclassifications. To the extent that distributions exceed net investment income and net realized gains for tax purposes, they are reported as returns of capital. FEDERAL INCOME TAXES: It is each Fund's intention to continue 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 some other reasonable method. EXPENSES PAID INDIRECTLY: The Growth Fund directs certain portfolio trades to brokers who pay a portion of their expenses. Under this arrangement, the Growth Fund had expenses reduced by $164,060, or 0.02% as a percentage of the average daily net assets of the Fund on an annualized basis for the year ended June 30, 2005. 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 28 NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- NEW COVENANT FUNDS JUNE 30, 2005 New Covenant Trust Company, N.A. (the "Advisor"). Under the Agreement, the Advisor is responsible for managing the Funds' investments as well as furnishing 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 six Sub-Advisors to assist in the selection and management of the Growth Fund's and Income 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 these Funds. The Advisor pays each Sub-Advisor a quarterly fee for their services. 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 for which the Sub-Advisor is responsible for making investment decisions. As of March 31, 2005, the following are the Sub-Advisors for the Growth Fund: Capital Guardian Trust Company, Mazama Capital Management Inc., Santa Barbara Asset Management Inc., Sound Shore Management Inc., and Wellington Management Company, LLP. Tattersall Advisory Group is the Sub-Advisor for the Income Fund. The Trust employs a Chief Compliance Officer ("CCO") who receives a portion of his compensation as approved by the Board of Trustees, as well as reimbursement of out-of-pocket expenses. The CCO is also an employee of the Advisor. 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 monthly 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 affiliated Authorized Service Provider under the Shareholder Services Agreement. The Trust has entered into servicing agreements with BISYS Fund Services Ohio, Inc. ("BISYS Ohio"), an indirect, wholly owned subsidiary of The BISYS Group, Inc. ("BISYS"). Under the servicing agreements, BISYS Ohio provides transfer agency, administrative and fund accounting services to the Funds. Under the terms of the Transfer Agency Agreement, BISYS Ohio is entitled to account based fees and annual fund level fees, as well as reimbursement of out-of-pocket expenses incurred in providing transfer agency services. Under the fund accounting agreement, BISYS Ohio 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. Effective April 22, 2005, the administration agreement was amended. As a result of this amendment, BISYS Ohio will annually waive $280,000. The Trust has a Distribution Agreement with New Covenant Funds Distributor, Inc. (the "Distributor"), an indirect, wholly owned subsidiary of BISYS, to serve as the principal distributor of the Funds' shares. The Funds do not pay the Distributor in its capacity as principal distributor. The Trust has a Custodian Agreement with JPMorgan. No officer, trustee or employee of the Trust, BISYS, or any affiliate thereof, except the CCO, receives any compensation from the Funds for serving as a Trustee or officer of the Trust. The Funds reimburse 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 short-term U.S. government and other short-term investments, for the year ended June 30, 2005, were as follows:
------------------------------------------------------------------------------- FUND PURCHASES SALES ------------------------------------------------------------------------------- Growth Fund ................................. $ 631,623,460 $ 643,958,022 Income Fund ................................. 1,051,731,188 1,042,050,464 Balanced Growth Fund ........................ 14,972,789 26,260,817 Balanced Income Fund ......................... 7,107,412 11,746,987 -------------------------------------------------------------------------------
29 NOTES TO FINANCIAL STATEMENTS ------------------------------------------------------------------------------- NEW COVENANT FUNDS JUNE 30, 2005 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 Trust 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, 2005 JUNE 30, 2004 -------------------------------------------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT -------------------------------------------------------------------------------------------------------------------- GROWTH FUND: Issued 1,761,611 $50,628,532 2,170,262 $57,829,249 Reinvested 13,925 403,177 3,060 180,445 Redeemed (2,144,207) (61,624,740) (2,593,638) (69,212,473) -------------------------------------------------------------------------------------------------------------------- Net decrease (368,671) $(10,593,031) (420,316) $(11,202,779) --------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED JUNE 30, 2005 JUNE 30, 2004 -------------------------------------------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT -------------------------------------------------------------------------------------------------------------------- INCOME FUND: Issued 1,545,813 $39,398,853 2,606,939 $67,488,886 Reinvested 95,941 2,523,604 276,892 7,160,195 Redeemed (1,830,986) (46,798,854) (1,814,304) (47,013,296) -------------------------------------------------------------------------------------------------------------------- Net increase (decrease) (189,232) $(4,876,397) 1,069,527 $27,635,785 --------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED JUNE 30, 2005 JUNE 30, 2004 -------------------------------------------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT -------------------------------------------------------------------------------------------------------------------- BALANCED GROWTH FUND: Issued 329,356 $25,120,358 471,865 $34,471,118 Reinvested 53,802 4,122,054 51,451 3,764,861 Redeemed (527,726) (40,305,856) (485,890) (35,133,427) -------------------------------------------------------------------------------------------------------------------- Net increase (decrease) (144,568) $(11,063,444) 37,426 $3,102,552 --------------------------------------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED JUNE 30, 2005 JUNE 30, 2004 -------------------------------------------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT -------------------------------------------------------------------------------------------------------------------- BALANCED INCOME FUND: Issued 494,461 $9,215,771 627,611 $11,370,210 Reinvested 103,269 1,924,091 113,907 2,066,329 Redeemed (842,433) (15,624,364) (891,041) (16,136,627) -------------------------------------------------------------------------------------------------------------------- Net decrease (244,703) $(4,484,502) (149,523) $(2,700,088) --------------------------------------------------------------------------------------------------------------------
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 30 NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- NEW COVENANT FUNDS JUNE 30, 2005 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 unrated 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 lower-rated securities 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 by investors in that Fund. The Balanced Funds are also subject to rebalancing risk. Rebalancing activities, while undertaken to maintain a 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, 2004 and June 30, 2005, were as follows:
DISTRIBUTIONS PAID FROM -------------------------------------------- ORDINARY NET LONG TERM TOTAL TAXABLE RETURN OF TOTAL DISTRIBUTIONS INCOME CAPITAL GAINS DISTRIBUTIONS CAPITAL PAID* --------------------------------------------------------------------------------------------------------------------- 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 --------------------------------------------------------------------------------------------------------------------- Growth Fund $6,321,345 $2,835,338 $-- $-- $6,321,345 $2,835,338 $-- $-- $6,321,345 $2,835,338 Income Fund 21,851,973 23,126,931 952,418 3,854,555 22,804,391 26,981,486 -- 2,311,618 22,804,391 29,293,104 Balanced Growth Fund 5,571,223 4,816,139 -- 44,742 5,571,223 4,860,881 -- 299,330 5,571,223 5,160,211 Balanced Income Fund 3,181,809 3,277,160 -- 903 3,181,809 3,278,063 -- 233,142 3,181,809 3,511,205 -----------------------------------------------------------------------------------------------------------------------------------
* Total distributions paid may differ from the Statements of Changes in Net Assets because distributions are recognized when actually paid for tax purposes. 8. FEDERAL INCOME TAXES As of June 30, 2005, the funds had available for Federal tax purposes unused capital loss carryforwards expiring as follows:
2010 2011 2012 2013 TOTAL ----------- ----------- ----------- ---------- ------------ Growth Fund $16,200,076 $96,688,185 $14,207,521 -- $127,095,782 Income Fund -- -- -- -- -- Balanced Growth Fund -- -- $1,737,647 $6,966,125 $8,703,772 Balanced Income Fund -- -- $2,891,415 $792,155 $3,683,570 ------------------------------------------------------------------------------------------------------
31 NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- NEW COVENANT FUNDS JUNE 30, 2005 Under certain tax law, certain capital losses realized after October 31, and within the taxable year may be deferred and treated as occurring on the first business day of the following year. For the period ended June 30, 2005, the Funds deferred to July 1, 2005, post-October capital losses of:
POST-OCTOBER LOSSES ------------------- Balanced Growth Fund $1,683,585
As of June 30, 2005, 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 $362,021 -- $362,021 -- $(127,095,782) $96,012,662 $(30,721,099) Income Fund 269,237 -- 269,237 -- -- 8,870,853 9,140,090 Balanced Growth Fund 17,228 -- 17,228 -- (10,387,357) 3,170,552 (7,199,577) Balanced Income Fund 7,971 -- 7,971 -- (3,683,570) 5,385,967 1,710,368 --------------------------------------------------------------------------------------------------------------------------------
* The differences between the book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to: tax deferral of losses on wash sales, the difference between book and tax amortization methods for premium and market discount, and the return of capital adjustments from real estate investment trusts. 9. OTHER FEDERAL INCOME TAX INFORMATION (UNAUDITED) For the year ended June 30, 2005, 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 maximum rate of 15%. Complete information will be reported in conjunction with the 2005 Form 1099-DIV. For the year ended June 30, 2005, the following Funds paid qualified dividend income of:
QUALIFIED DIVIDEND INCOME ------------------------- Growth Fund........................................... $14,684,320 Balanced Growth Fund.................................. 1,403,795 Balanced Income Fund.................................. 349,088
The Fund designates the following percentage of distributions eligible for the dividends received deduction for corporations:
AMOUNT ------ Growth Fund.................................................... 100% Balanced Growth Fund........................................... 25 Balanced Income Fund.......................................... 11
32 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 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 portfolios of investments, as of June 30, 2005, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and 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 audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds' internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds' internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of June 30, 2005, by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the New Covenant Funds as of June 30, 2005, 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. /s/ Ernst & Young LLP Columbus, Ohio August 17, 2005 SUPPLEMENTAL DATA (UNAUDITED) -------------------------------------------------------------------------------- NEW COVENANT FUNDS JUNE 30, 2005 PROXY VOTING POLICY A description of the policies and procedures that the Trust uses to determine how to vote proxies related to portfolio securities 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. QUARTERLY HOLDINGS Portfolio holdings statements for the Funds for the quarters ended March 31 and September 30, are available, without charge, on the Securities and Exchange Commission's website at http://www.sec.gov. ADDITIONAL FUND INFORMATION - HYPOTHETICAL COST OF INVESTING As a shareholder of the New Covenant Funds, you incur ongoing costs, including management fees and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the New Covenant Funds and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from January 1, 2005 through June 30, 2005. ACTUAL EXPENSES The table below provides information about actual account values and actual expenses. You may use the information below, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period.
BEGINNING ENDING EXPENSE PAID EXPENSE RATIO ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* DURING PERIOD** 1/1/05 6/30/05 1/1/05 - 6/30/05 1/1/05 - 6/30/05 ---------------------------------------------------------------------------------------------------------------------- Growth Fund $1,000.00 $1,003.70 $5.56 1.12% Income Fund 1,000.00 1,021.70 4.31 0.86% Balanced Growth Fund 1,000.00 1,009.50 0.65 0.13% Balanced Income Fund 1,000.00 1,013.60 0.80 0.16%
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table below provides information about hypothetical account values and hypothetical expenses based on each of the New Covenant Funds' actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds.
BEGINNING ENDING EXPENSE PAID EXPENSE RATIO ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* DURING PERIOD** 1/1/05 6/30/05 1/1/05 - 6/30/05 1/1/05 - 6/30/05 ----------------------------------------------------------------------------------------------------------------------- Growth Fund $1,000.00 $1,019.24 $5.61 1.12% Income Fund 1,000.00 1,020.53 4.31 0.86% Balanced Growth Fund 1,000.00 1,024.15 0.65 0.13% Balanced Income Fund 1,000.00 1,024.00 0.80 0.16%
* Expenses are equal to the average account value times the Fund's annualized expense ratio multiplied by the number of days in the most recent fiscal half-year divided by the number of days in the fiscal year. ** Annualized. 34 SUPPLEMENTAL DATA (UNAUDITED) -------------------------------------------------------------------------------- NEW COVENANT FUNDS JUNE 30, 2005 APPROVAL OF THE CONTINUATION OF THE INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS The Advisory Agreement and Sub-Advisory Agreements (collectively, the "Agreements") were most recently reapproved by the Board of Trustees on May 16, 2005. Relevant provisions of the Investment Company Act of 1940 specifically provide that it is the duty of the Board to request and evaluate such information as the Board determines is necessary to allow the Board to properly consider the continuation of the Agreements, and it is the duty of the Advisor and the Sub-Advisors to furnish the Trustees with such information as is responsive to their request. Accordingly, in determining whether to renew the Agreements, the Board of Trustees requested, and the Advisor and the Sub-Advisors provided, information and data relevant to the Board's consideration. This included materials regarding the investment performance of the Funds and information regarding the fees and expenses of the Funds, as compared to other similar mutual funds. As part of its deliberations, the Board also considered and relied upon the information about the Funds, the Advisor and the Sub-Advisors that had been provided to them throughout the past year in connection with their regular Board meetings at which they engage in the ongoing oversight of the Funds and their operations. Among the factors the Board considered was the overall performance of each Fund and each Sub-Advisor relative to the performance of similar mutual funds in each Fund's peer group and relative to applicable benchmark indexes on a long-term basis and, particularly for the two new Sub-Advisors, over shorter time periods. The Board took note of the fact that the performance results achieved for the Funds were favorable on both a short-term and on a long-term basis and that the Advisor produced these results in a manner consistent with the stated investment objectives and policies of each of the Funds. The Board looked at the contribution made by each Sub-Advisor to the short-term and, if relevant, long-term performance. The Board also took note of the long-term relationship between the Advisor and the Funds and the efforts that had been undertaken by the Advisor to foster the growth and development of the Funds since their inception. In addition, the Board compared the expenses of each of the Funds to the expenses of their peers, based on data compiled by an independent source. The Board noted the range of investment advisory and administrative services provided by the Advisor to the Funds and the nature, extent and quality of these services. The Board also reviewed financial information concerning the Advisor relating to its operation of the Funds, noting the overall profitability of the relationship with the Funds to the Advisor and the financial soundness of the Advisor as demonstrated by the financial information provided. In addition, the Board discussed with the Advisor economies of scale that could be realized by the Funds and the impact of potential economies of scale on the fees assessed on the Funds. The Trustees considered information regarding additions to the Advisor's staff (particularly the Vice President of Finance, one of whose primary responsibilities is the oversight and coordination of Fund-related matters), the Advisor's retention of a consultant to assist in the selection of new Sub-Advisors, the Advisor's services in connection with negotiating a relationship with a new custodian that is projected to save the Funds money in custodial expenses, and other additional services provided by the Advisor to the Funds, and concluded that the shareholders benefit from these additional services under the Agreement. In reaching their conclusion with respect to the continuation of the Agreements, the Trustees did not identify any one single factor as being controlling; rather, the Trustees took note of a combination of factors that influenced their decision-making process. The Board did, however, identify the performance of the Funds, the commitment of the Advisor to the successful operation of the Funds, and the level of expenses of the Funds as being important elements of their consideration. The Board also took particular note of the unique duties that the Advisor undertakes in order to assure that the Funds are invested in a manner that is consistent with the social-witness principles of the Presbyterian Church (U.S.A.). The Board further considered the fact that the Advisor had undertaken during the year to waive its investment advisory fees to the extent of the amount of shareholder services fees paid by the Funds during the year in order to limit the overall operating expenses of the Funds. Based upon their review and consideration of these factors and other matters deemed relevant by the Board in reaching an informed business judgment, the Board of Trustees, including a majority of the Independent Trustees, concluded that the terms of the Advisory Agreement and the Sub-Advisory Agreements are fair and reasonable in light of the services provided and the Board therefore voted to renew the Agreements for an additional one-year period. During this process the Independent Trustees were counseled by their own independent legal counsel (as such term is defined in the rules under the 1940 Act). 35 TRUSTEES AND OFFICERS -------------------------------------------------------------------------------- NEW COVENANT FUNDS JUNE 30, 2005 TRUSTEES AND OFFICERS OF THE NEW COVENANT FUNDS
------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF PORTFOLIOS IN OTHER POSITION(S) LENGTH TERM OF OFFICE AND PRINCIPAL FUND COMPLEX TRUSTEESHIPS/ HELD WITH OF TIME OCCUPATION(S) DURING PAST OVERSEEN BY DIRECTORSHIPS NAME AND AGE TRUST SERVED 5 YEARS TRUSTEE HELD BY TRUSTEE ------------------------------------------------------------------------------------------------------------------------------------ INDEPENDENT TRUSTEES ------------------------------------------------------------------------------------------------------------------------------------ F. Kenneth Bateman Trustee Since Attorney, Gerber & Bateman, P.A. 4 None 200 E.Twelfth St., Suite C inception (1999 to present);Attorney, Potter, Jeffersonville, IN 47130 Mills & Bateman, P.A. (1997 to 1999); Age: 65 Trustee, Presbyterian Church (U.S.A.) Foundation (1995 to 2001) Gail C. Duree Trustee Since Investment Consultant, Montvie 4 None 200 E.Twelfth St., Suite C inception Boulevard Presbyterian Church (1994 Jeffersonville, IN 47130 to present);Women's Foundation of Age: 58 Colorado (1995 to present); Logan School (1996 to present) Cynthia S. Gooch Trustee Since Retired;Trustee, Presbyterian Church 4 None 200 E.Twelfth St., Suite C inception (U.S.A.) Foundation (1997 to present) Jeffersonville, IN 47130 Age: 72 Rev. Donald B. Register Trustee Since Pastor, Sixth-Grace Presbyterian 4 None 200 E.Twelfth St., Suite C inception Church, Chicago, IL (1988 to present) Jeffersonville, IN 47130 Age: 68 John D. Stuart Trustee February Independent Financial Consultant 4 None 200 E.Twelfth St., Suite C 2002 Jeffersonville, IN 47130 Age: 74 ------------------------------------------------------------------------------------------------------------------------------------ INTERESTED TRUSTEES ------------------------------------------------------------------------------------------------------------------------------------ Robert E. Leech President May 2005 President and Chief Executive Officer 4 None 200 E.Twelfth St., Suite C and Trustee of the Presbyterian Church (U.S.A.) Jeffersonville, IN 47130 Foundation (2000 to present) Age: 60 ------------------------------------------------------------------------------------------------------------------------------------ EXECUTIVE OFFICERS ------------------------------------------------------------------------------------------------------------------------------------ Dennis J. Murphy Vice Since Executive Vice President and Chief N/A N/A 200 E.Twelfth St., Suite C President Inception Investment Officer, Presbyterian Jeffersonville, IN 47130 Church (U.S.A.) Foundation and New Age: 63 Covenant Trust Company (2002- present); Senior Vice President and Chief Financial Officer, Presbyterian Church (U.S.A.) Foundation and New Covenant Trust Company (1982 to 2000). Anita J. Clemons Vice August Vice President and Investment Officer, N/A N/A 200 E.Twelfth St., Suite C President 2003 New Covenant Trust Company (2000 Jeffersonville, IN 47130 - present). Age: 51 Harry Harper Chief August Chief Compliance Officer, New N/A N/A 200 E.Twelfth St., Suite C Compliance 2004 Covenant Trust Company (2002- Jeffersonville, IN 47130 Officer present); Chief Compliance Officer, Age: 60 Allegheny Financial Group (2000- 2002); Chief Compliance Officer, Keystone Financial (1997-2000). Steve Pierce Treasurer May 2005 Vice President of Financial Services, N/A N/A 3435 Stelzer Rd. Suite 1000 BISYS Fund Services (1999 - present) Columbus, OH 43219 Age: 39 Charles J. Daly Secretary February Counsel, BISYS Fund Services N/A N/A 3435 Stelzer Rd., Suite 1000 2004 (November 2003-present); Associate, Columbus, OH 43219 Goodwin Proctor LLP (2001 -2003) Age: 34 Alaina V. Metz Assistant February Vice President, Blue Sky Compliance, N/A N/A 3435 Stelzer Rd., Suite 1000 Secretary 2004 BISYS Fund Services (1995 - present) Columbus, OH 43219 Age: 37
[GRAPHICS] 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. 200 E. Twelfth Street Jeffersonville, IN 47130. New Covenant Funds 200 E. Twelfth Street Jeffersonville, IN 47130 FDN 12-05-08 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 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 AN EXHIBIT. 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 12(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 JACK 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. 2004 $ 62,500 2005 $ 66,000 (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. 2004 $ 0.00 2005 $ 0.00 (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. 2004 $ 15,000 2005 $ 16,500 (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. 2004 $ 0.00 2005 $ 0.00 (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 Funds' Audit Committee Charter, all audit engagements on behalf of the funds are pre-approved by the Funds' Audit Committee. The Audit Committee of the Trust must pre-approve all audit services and non-audit services that the Auditor provides to the Trust. The Audit Committee of the Trust must pre-approve any engagement of the Auditor to provide non-audit services to the Trust's investment adviser and to affiliates of the Trust's investment adviser ("Service Affiliates") during the period of the Auditor's engagement to provide audit services to the Trust, if the non-audit services to the Service Affiliate directly impact the Trust's operations and financial reporting. Any non-audit services, whether to the Trust or to any Service Affiliate, that have not been pre-approved by the Audit Committee and that are estimated not to exceed $25,000, may be approved by a single designated member of the 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. 2004 100% 2005 100% (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. Not applicable. (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. 2004 $ 63,046 2005 $ 38,525 (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 REGISTRANT'S AUDIT COMMITTEE HAS EVALUATED THE NON-AUDIT SERVICES THAT THE PRINCIPAL ACCOUNTANT PROVIDED TO THE REGISTRANT'S INVESTMENT ADVISOR (AND THE ADVISOR'S RELEVANT AFFILIATES), WHICH SERVICES THE COMMITTEE DID NOT PRE-APPROVE, AND HAS CONCLUDED THAT THE PROVISIONS OF THOSE SERVICES WAS COMPATIBLE WITH MAINTAINGING THE 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. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. If the registrant is a closed-end management investment company that is filing an annual report on this Form N-CSR, provide the information specified in paragraphs (a) and (b) of this Item with respect to portfolio managers. NOT APPLICABLE. ITEM 9. 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 10. 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 11. 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 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 second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. THERE WERE NO CHANGES IN THE REGISTRANT'S INTERNAL CONTROL OVER FINANCIAL REPORTING THAT OCCURRED DURING THE SECOND FISCAL QUARTER OF THE PERIOD COVERED BY THIS REPORT THAT HAVE MATERIALLY AFFECTED OR ARE REASONABLY LIKELY TO MATERIALLY AFFECT, THE REGISTRANT'S INTERNAL CONTROL OVER FINANCIAL REPORTING. ITEM 12. 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/ Steve Pierce ------------------------------------------------------ Steve Pierce, Treasurer Date September 08, 2005 ------------------- 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/ Steve Pierce ------------------------------------------------------ Steve Pierce, Treasurer Date September 08, 2005 ------------------------------------- By (Signature and Title)* /s/ Robert Leech ------------------------------------------------------ Robert Leech, President Date September 08, 2005 --------------------------------------