<PAGE>
AS FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION
ON DECEMBER 29, 1998
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Pre-Effective Amendment No. __ / /
Post-Effective Amendment No. __ / /
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No.____ / /
(Check appropriate box or boxes)
THE CATHOLIC ALLIANCE FUNDS, INC.
(Exact name of registrant as specified in charter)
1100 WEST WELLS STREET
MILWAUKEE, WISCONSIN 53233
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (414) 273-6266
THEODORE F. ZIMMER, ESQ.
THE CATHOLIC ALLIANCE FUNDS, INC.
1100 WEST WELLS STREET
MILWAUKEE, WISCONSIN 53233
(Name and Address of Agent for Service)
Copy to:
CONRAD G. GOODKIND, ESQ.
Quarles & Brady
411 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that the Registration
Statement shall thereafter become effective in accordance with section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said section 8(a),
may determine.
<PAGE>
THE CATHOLIC ALLIANCE FUNDS, INC.
Equity Income Fund
Large-Cap Growth Fund
Disciplined Capital Appreciation Fund
PROSPECTUS __________, 1998
Information contained herein is subject to completion or amendment. A
Registration Statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the Registration Statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
[LOGO]
AS WITH OTHER MUTUAL FUNDS, THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
APPROVED OR DISAPPROVED OF THESE FUNDS' SHARES OR DETERMINED WHETHER THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANYONE WHO TELLS YOU OTHERWISE IS
COMMITTING A CRIME.
<PAGE>
TABLE OF CONTENTS
OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
EQUITY INCOME FUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
LARGE-CAP GROWTH FUND. . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
DISCIPLINED CAPITAL APPRECIATION FUND. . . . . . . . . . . . . . . . . . . . 11
FEES AND EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
HOW TO INVEST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SELLING YOUR SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SHAREHOLDER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . 24
FOR MORE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
BEFORE READING THIS PROSPECTUS
<PAGE>
References to "you" and "your" in the prospectus refer to prospective
investors or shareholders. References to "we", "us" or "our" refer to the Funds
and the Fund Management (Adviser, Sub-Advisers, Distributor, Administrator,
Transfer Agent and Custodians) generally.
OVERVIEW
INVESTMENT PHILOSOPHY STATEMENT
The investment philosophy for The Catholic Alliance Funds, Inc. (the
"Catholic Alliance Funds" or "CAF") is based on two principles:
1. PRUDENT FINANCIAL STEWARDSHIP
The investments in CAF will be managed using strategies aimed at
producing results that will help investors reach their financial goals, without
taking unwarranted risks.
2. RESPONSIBLE CATHOLIC STEWARDSHIP
Principle -- CAF will strive to invest the assets of each of its
managed funds in companies whose primary products, services and activities are
substantially consistent with core Catholic values.
General Investment Policies -- In order to implement this principle,
CAF will avoid investing in companies that directly participate in abortion, in
companies that derive more than 5% of either revenues or profits from the
production or development of indiscriminate weapons of mass destruction (e.g.,
biological and chemical weapons and first-strike nuclear weapons) and in
companies whose employment practices have been found to be substantially
inconsistent with the dignity and primacy of the human person. From time to
time, the Funds may decide to avoid investing in other companies because of
other activities that may be determined to be inconsistent with core Catholic
values.
Investing pursuant to this principle may cause one or more funds to
forego a profitable investment opportunity or to dispose of a security
when it may be disadvantageous to do so from an investment viewpoint.
Nonetheless, in the opinion of management, applying this principle
will not have a material impact on the rate of return of any Fund.
BENEFITS FROM INVESTING IN MUTUAL FUNDS
Mutual funds provide small investors some of the advantages enjoyed by
wealthy investors. A relatively small investment can buy part of a diversified
portfolio. That portfolio is managed by investment professionals, relieving you
of the need to make individual stock or bond selections. You also enjoy
conveniences, such as daily pricing and liquidity. The portfolio, because of
its size, has lower transaction costs on its trades than most individuals would
have.
<PAGE>
In choosing a mutual fund as an investment vehicle, you are giving up some
investment decisions, but must still make others. The decisions you don't have
to make are those involved with choosing individual securities. We will perform
that function. In addition, we will arrange for the safekeeping of securities,
auditing the annual financial statements, and daily valuation of the Fund, as
well as other functions.
You, however, retain at least part of the responsibility for an equally
important decision. This decision involves determining a portfolio of mutual
funds that balances your investment goals with your tolerance for risk. It is
likely that this decision may include the use of more than one fund of the CAF
Family of Funds.
A CHOICE OF FUNDS. CAF offer investors three distinct mutual fund choices.
The three Funds are described below.
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PORTFOLIO INVESTMENT OBJECTIVES+ PRIMARY INVESTMENTS
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Equity Income Fund Current income and long- Dividend paying common
term capital growth stocks
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Large-Cap Growth Fund Long-term capital growth Large-cap common stocks
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Disciplined Capital Long-term capital Common stocks in a
Appreciation Fund appreciation broad capitalization range
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- -----------------------------
+ There can be no assurance that any Fund will achieve its objective.
GENERAL RISKS TO CONSIDER
MARKET RISK - Common stock prices overall will rise and fall over short and
even extended periods. The equity markets tend to move in cycles, and a Fund's
net asset value will fluctuate with these price changes and market fluctuations.
OBJECTIVE RISK - Objective risk is the risk that a Fund's equity
investments may not fluctuate in the same manner as the stock markets generally.
This is because each of the Funds selects stocks for investment in accordance
with defined objectives and policies. The Fund's resulting investment portfolio
will focus on stocks of specified sizes of companies, companies that pay
dividends, or companies meeting other specified criteria that will not be
representative of the market generally.
Other risks specific to each Fund are discussed in the following summary
information about the individual Funds.
INVESTMENT ADVISER
Catholic Financial Services Corporation, a Wisconsin Corporation registered
as an investment adviser under the securities laws, is the Adviser to the Funds.
The Sub-Advisers are: Todd Investment Advisors, Inc. for the Equity Income
Fund, Peregrine Capital Management, Inc. for the Large-Cap Growth Fund, and
Vantage Global Advisors, Inc. for the Disciplined Capital Appreciation Fund.
<PAGE>
EXPENSES
Costs are an important consideration in choosing a mutual fund. That's
because you, as a shareholder, pay the costs of operating a fund, plus any
transaction costs associated with buying, selling, or exchanging shares.
Shareholder transaction expenses are charges you pay when you buy shares in
one of the Funds, redeem (sell) shares by wire or exchange shares by telephone.
In the case of purchases and exchanges, shareholder transaction expenses reduce
the amount of your payment that is invested in shares of the mutual fund. In the
case of sales, shareholder transaction expenses reduce the amount of the sale
proceeds returned to you.
Annual fund operating expenses, on the other hand, are expenses that a
mutual fund pays to conduct its business, including investment advisory fees and
the costs of maintaining shareholder accounts, administering the fund, providing
shareholder services, and other activities of the mutual fund. Annual fund
operating expenses are deducted from a mutual fund's assets, and therefore
reduce its total return.
<PAGE>
EQUITY INCOME FUND
INVESTMENT OBJECTIVE
The Equity Income Fund seeks both a reasonable level of current income and
long-term capital growth.
WHO SHOULD INVEST
The Fund is intended for investors who seek current income and capital
growth.
INVESTMENT POLICIES
The Fund seeks reasonable income by investing primarily in a diversified
portfolio of dividend paying stocks that exhibit long-term growth potential. We
normally invest at least 75% of the Fund's total assets in these securities.
The Fund has the flexibility, however, to invest the balance in all types of
domestic securities, including investment-grade fixed income securities, and
non-dividend paying stock, and in the securities of foreign issuers traded on a
U.S. national securities exchange or the NASDAQ National Market System.
In selecting equity securities, the Fund identifies companies that have the
potential for future earnings and dividend growth, are undervalued compared to
stocks of similar companies, have a high quality rating, and a minimum market
capitalization of $1 billion.
In selecting fixed-income securities, the Fund typically buys only
investment-grade bonds (rated Baa3/BBB- and higher). Up to 5% of the Fund's
assets may be invested in any one non-Treasury issue. Non-Treasury issues
include corporate, asset-backed, and mortgage-backed bonds and notes.
INVESTMENT RISKS
The value of the Fund's investments varies in response to many factors.
Stock values fluctuate in response to the activities of individual companies and
general market and economic conditions. Dividend paying stocks typically have
lower capital growth potential than other types of stock. Therefore, the Fund's
value may rise or fall less than the market as a whole. Bond values fluctuate
based on changes in interest rates and in the credit quality of the issuer.
Investments in securities of foreign issuers may involve risks in addition to
those of U.S. companies, including increased political and economic risk.
Also, as a mutual fund, the Fund seeks to spread investment risk by diversifying
its holdings among many companies and industries. Of course, when you sell your
shares of the Fund, they may be worth more or less than what you paid for them.
SUB-ADVISER
We have hired Todd Investment Advisors, Inc. ("Todd") to serve as
Sub-Adviser
<PAGE>
to the Fund. Under our direction and control, Todd makes the day-to-day
investment decisions for the Fund.
PORTFOLIO MANAGER
Curtiss M. Scott, Jr., CFA, manages the day-to-day Fund investments. Mr.
Scott has served as a Senior Portfolio Manager at Todd since May of, 1996.
Prior to 1996, Mr. Scott served as Partner and Managing Director of Executive
Investment Advisors, Louisville, Kentucky. Mr. Scott has been managing equity
portfolios since 1978.
ANNUAL ADVISORY FEE
0.80 of 1% on average daily net assets.
ANNUAL SUB-ADVISORY FEE
0.38 of 1% on the first $10 million; 0.35 of 1% on the next $40 million;
and 0.30 of 1% on average daily net assets over $50 million (payable from the
0.80% Annual Advisory Fee paid to the Adviser).
<PAGE>
LARGE-CAP GROWTH FUND
INVESTMENT OBJECTIVE
The Large-Cap Growth Fund seeks long-term capital growth by investing
primarily in high quality growth stocks of companies with large market
capitalizations.
WHO SHOULD INVEST
The Fund is intended for investors who want long-term capital appreciation,
can tolerate fluctuations in portfolio value, and have no need for current
income from the Fund.
INVESTMENT POLICIES
The Fund invests in fast growing companies to produce superior long-term
results. The portfolio is comprised primarily of stocks with market
capitalizations above $5 billion. These companies have exhibited rapid earnings
gains in relation to the average of companies in the S&P 500 Index, with
superior returns on capital and below average levels of debt. Stocks are
selected with a long-term investment horizon, allowing full participation in
company success with low portfolio turnover and transaction costs. The Fund
will typically be fully invested in equities and avoids short-term market
timing.
We normally invest at least 75% of the Fund's total assets in the common
stocks of companies with large market capitalizations. Companies whose
capitalizations fall below $5 billion after purchase continue to be considered
large-capitalization for purposes of the 75% policy. The Fund has the
flexibility, however, to invest in other market capitalizations and various
types of domestic securities and in the securities of foreign issuers traded on
a U.S. national securities exchange or the NASDAQ National Market System.
The Fund also reserves the right to invest without limitation in preferred
stocks and investment-grade debt instruments for temporary, defensive purposes.
INVESTMENT RISKS
Companies with large market capitalizations typically have a large number
of publicly held shares and a high trading volume, resulting in a high degree of
liquidity. These tend to be quality companies with strong management
organizations.
The value of the Fund's investments will depend not only on the movement of
the market in general, but on factors that affect the individual stocks held in
the Fund's portfolio, such as the companies' financial performance, management
and business trends. The Fund's focus on investment in fast growing companies
means that the market ratios of its portfolios companies (such as the price to
earnings ratio) may be higher than those of large capitalization companies in
general. Also, in recent years, any earnings disappointment by a company,
especially those with high market ratios, has tended to result in a significant
decrease in the company's stock market price.
<PAGE>
Investments in securities of foreign companies may involve risks in addition to
those of U.S. companies, including increased political and economic risk.
As a mutual fund, the Fund seeks to spread investment risk by diversifying
its holdings among many companies and industries. When you sell your shares of
the Fund, they may be worth more or less than what you paid for them.
SUB-ADVISER
Peregrine Capital Management, Inc. ("Peregrine") serves as the Sub-Adviser
to the Fund.
PORTFOLIO MANAGERS
John S. Dale, CFA and Gary Nussbaum, CFA, serve as co-managers of the Fund.
Mr. Dale and Mr. Nussbaum are both senior vice presidents and portfolio managers
at Peregrine. Prior to joining Peregrine in 1987, Mr. Dale was with Northwest
Corp. Mr. Nussbaum has been with Peregrine since 1990. Prior to 1990, he
worked as an investment research officer with Shawmut National
Corporation/Connecticut National Bank.
ANNUAL ADVISORY FEE
0.90 of 1% on average daily net assets.
ANNUAL SUB-ADVISORY FEE
0.50 of 1% on the first $25 million; 0.45 of 1% on next $25 million; and
0.40 of 1% on average daily net assets over $50 million (payable from the 0.90%
Annual Advisory Fee paid to the Adviser).
<PAGE>
DISCIPLINED CAPITAL APPRECIATION FUND
INVESTMENT OBJECTIVE
The Disciplined Capital Appreciation Fund seeks long-term growth of capital
with controlled risk by investing in a diversified portfolio, concentrated in
common stocks of companies with broad market capitalizations.
WHO SHOULD INVEST
This Fund is intended for investors who seek long-term capital
appreciation, can tolerate fluctuations in portfolio value, and have no need for
current income from the Fund.
INVESTMENT POLICIES
The Fund is managed using a systematic, computer driven model to
objectively identify attractive stocks solely based on numerical measures of
growth and value. Consistent and continuous application of this model ensures
that stocks are evaluated solely on their relative values, not influenced by
analyst biases. By analyzing a large universe of stocks daily, new investment
opportunities can be discovered. This disciplined process of stock selection
has built in portfolio risk controls that limit industry and individual stock
concentration. The portfolio is diversified with approximately 100 stocks
across many industries, normally with the majority of the issues in companies
with market capitalizations between $1 and $10 billion at the time of purchase.
Under normal conditions, the Fund expects to be fully invested in common stocks,
thereby providing investors with broad-based equity exposure. The Fund has the
flexibility, however, to invest in other market capitalizations and other types
of securities, including the securities of foreign issuers traded on a U.S.
national securities exchange or on the NASDAQ National Market System.
The Fund also reserves the right to invest without limitation in preferred
stocks and investment-grade debt instruments for temporary, defensive purposes.
INVESTMENT RISKS
Investing in medium capitalization stocks may involve greater risk than
investing in large capitalization stocks, because they can be subject to more
abrupt or erratic movements. However, they tend to involve less risk than
stocks of small capitalization companies.
The value of the Fund's investments varies in response to many factors.
Stock values fluctuate in response to the activities of individual companies and
general market and economic conditions. Investments in securities of foreign
issuers may involve risks in addition to those of U.S. companies, including
increased political and economic risk.
As a mutual fund, the Fund seeks to spread investment risk by diversifying
its holdings among many companies and industries. When you sell your shares of
the
<PAGE>
Fund, they may be worth more or less than what you paid for them.
PORTFOLIO TURNOVER
In general, the greater the volume of buying and selling by a mutual fund,
the greater the impact that brokerage commissions and other transaction costs
will have on its return. A mutual fund with turnover expenses in excess of 100%
engages in a high volume of buying and selling, and likely will pay more
brokerage commissions and realize more taxable gains than a mutual fund with
less turnover.
High portfolio turnover rates may also result in the realization of
substantial net short-term gains, and any distributions resulting from such
gains will be ordinary income for federal income tax purposes.
Because of the Fund's investment strategy, we anticipate that the portfolio
turnover rate for the Fund may be over 100%.
SUB-ADVISER
Vantage Global Advisors, Inc. ("Vantage") serves as the Sub-Adviser to the
Fund. Under our direction and control, Vantage makes the day-to-day investment
decisions for the Fund.
PORTFOLIO MANAGER
T. Scott Wittman, CFA, and Enrique Chang manage the day-to-day Fund
investments. Mr. Wittman has served as President and Chief Investment Officer
of Vantage since February, 1991. Mr. Chang has served as Director of Research
and Portfolio Management at Vantage since November of 1997. Prior to Joining
Vantage, Mr. Chang worked for J&W Seligman from April 1997 to November 1997, and
served as Director of Quantitative Analysis and Strategy with General
Reinsurance Corporation from October 1993 to March 1997.
ANNUAL ADVISORY FEE
0.90 of 1% on average daily net assets.
ANNUAL SUB-ADVISORY FEE
0.50 of 1% on first $50 million; 0.45 of 1% on the next $50 million; and
0.40 of 1% on average daily net assets over $100 million (payable from the 0.90%
Annual Advisory Fee paid to the Adviser).
<PAGE>
FEES AND EXPENSES
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND
HOLD SHARES OF THE FUNDS.
SHAREHOLDER TRANSACTION EXPENSES
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<TABLE>
<CAPTION>
Equity-Income Large-Cap Disciplined
Fund Growth Fund Capital
Appreciation
Fund
<S> <C> <C> <C>
Maximum Sales Charge (Load)
Imposed on Purchases (as a
percentage of offering price)(1) 4% 4% 4%
Maximum Sales Charge (Load)
Imposed on Reinvested Dividends None None None
Redemption Fees(2) None None None
Exchange Fee(3) None None None
</TABLE>
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ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM
FUND ASSETS)
<TABLE>
<CAPTION>
Equity-Income Large-Cap Disciplined
Fund Growth Fund Capital
Appreciation
Fund
<S> <C> <C> <C>
Management Fees .80% .90% .90%
Distribution (12b-1) Fees .25% .25% .25%
Other Expenses (4) 2.32 2.32 2.32
Total Fund Operating Expenses 3.37 3.47 3.47
Expense Reimbursement(5) (1.62) (1.72) (1.72)
Net Expenses 1.75 1.75 1.75
</TABLE>
<PAGE>
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(1) To determine if you qualify for a lower sales charge, see "How to Invest".
(2) The Funds charge $12.00 for each wire redemption
(3) The Funds charge $5.00 for each telephone exchange
(4) Other Expenses are based on estimated amounts for the current fiscal year.
(5) The Adviser commits to reimburse the Funds to the extent that Annual Total
Fund Operating Expenses exceed 1.75%
EXPENSE EXAMPLE
The following example shows you what you could pay in expenses over time.
It uses the same hypothetical conditions other funds use in their prospectuses:
$10,000 initial investment, 5% total return each year and no changes in
expenses. The figures shown would be the same whether you sold your shares at
the end of a period or kept them. Because actual return and expenses will be
different, the example is for comparison only.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
<S> <C> <C>
Equity Income Fund $726 $1,395
Large-Cap Growth Fund $736 $1,422
Disciplined Capital $736 $1,422
Appreciation Fund
</TABLE>
<PAGE>
MANAGEMENT
ADVISER
Catholic Financial Services Corporation ("CFSC"), a Wisconsin corporation
organized in 1994, is the investment adviser ("Adviser") and Distributor
("Distributor") for the Funds. As the Adviser, CFSC makes the investment
decisions for the Funds. As the Distributor, CFSC sells the Funds' shares to
investors.
The majority of the outstanding stock of CFSC is held by Catholic Knights
Financial Services, Inc., a wholly-owned subsidiary of Catholic Knights
Insurance Society ("Catholic Knights"), which functions as an administrative
holding company. Catholic Knights is a non-profit, non-stock membership
organization, licensed to do business as a fraternal benefit insurance society.
The remaining outstanding stock in CFSC is owned by Catholic Order of Foresters
(a non-profit, non-stock Illinois fraternal benefit insurance society) and
Catholic Knights of America (a non-profit, non-stock Missouri fraternal benefit
insurance society), both of which are also formed to provide quality financial
products and fraternal benefits to their members. All of the stock in CFSC is
owned by these three fraternal benefit insurance societies, hereafter referred
to as the Catholic Fraternal Alliance.
The Catholic Fraternal Alliance provides ordinary and interest sensitive
whole and universal life insurance, term insurance and a variety of fixed return
annuity products to individual Catholics in more than 30 states. As a group,
the Catholic Fraternal Alliance rank in the top 15% of life insurers in terms of
life insurance in force and total assets. The Catholic Fraternal Alliance has
more than 220,000 members who belong to one of more than 800 local lodges
throughout the U.S. The Catholic Fraternal Alliance provides $7 million
annually in charitable and benevolent funding and services to its members, their
Catholic parishes and communities. The Catholic Fraternal Alliance has nearly
$5 billion of life insurance in force and nearly $1 billion of total assets
under management.
SUB-ADVISERS
We have engaged Todd Investment Advisors, Inc., Peregrine Capital
Management, Inc. and Vantage Global Advisors, Inc. to serve as Sub-Advisers to
the Funds.
Todd Investments Advisors, Inc., 101 South Fifth Street, Suite 3160,
Louisville, KY 40202, serves as the Sub-Adviser for the Equity Income Fund.
Todd is registered as an investment adviser under the securities laws and is a
wholly-owned subsidiary of Stifel Financial Corporation of St. Louis, a
brokerage and investment banking firm.
Peregrine Capital Management, Inc., a wholly-owned subsidiary of Norwest
Bank of Minnesota, N.A., serves as the Sub-Adviser for the Large-Cap Growth
Fund. Peregrine is located at LaSalle Plaza, 800 LaSalle Avenue, Suite 1850,
Minneapolis, Minnesota 54402-2018.
Vantage Global Advisors, Inc., 630 Fifth Avenue, New York, NY 10111, serves
as the Sub-Adviser to the Disciplined Capital Appreciation Fund. Vantage, which
is registered as an investment adviser under the securities laws, is
wholly-owned by Lincoln National
<PAGE>
Corporation, located in Fort Wayne, Indiana.
ADVISORY AGREEMENTS
Pursuant to the terms of the Advisory Agreements, and subject to the
supervision of the Funds' Board of Directors, the Adviser and Sub-Advisers
manage the investment and reinvestment of the Funds' assets, provide the Funds
with personnel, facilities, and administrative services, and supervise the
Funds' daily business affairs. We formulate and implement a continuous
investment program for the Funds consistent with each Fund's investment
objectives, policies and restrictions
We provide office space as well as executive and other personnel to the
Funds. In addition to investment advisory fees, each Fund incurs the following
expenses: legal, auditing and accounting expenses; directors' fees and expenses;
insurance premiums; brokers' commissions; taxes and governmental fees; expenses
of issuing and redeeming shares; organizational expenses; expenses of
registering or qualifying shares for sale; postage and printing for reports and
notices to shareholders; fees and disbursements of the Custodian and Transfer
Agent; certain expenses with respect to membership fees of industry
associations; and any extraordinary expenses, such as litigation expenses.
For providing the services listed above, the Adviser receives an annual
advisory fee of 0.80 of 1% of daily net assets for the Equity Income Fund and
.90 of 1% for the Large-Cap Growth and Disciplined Capital Appreciation Funds.
Out of these fees, the Adviser pays the Sub-Advisory fees applicable to each
Fund.
HOW TO INVEST
BUYING SHARES IN THE FUNDS
You can buy shares in the Funds through a licensed registered
representative, by mail or wire transfer. You buy shares at net asset value
("NAV") plus a maximum sales charge of 4.00% of the public offering price
("POP") incurred at the time of purchase. We do not impose a sales charge when
an investor redeems. We may reduce or waive sales charges on certain purchases.
The chart below shows the sales charge percentage for shares at different dollar
level purchases.
REDUCING YOUR SALES CHARGE
We may reduce your sales charges on purchases of shares under certain
circumstances, described below. If you are eligible for one of these
reductions, you must tell us or your Registered Representative at the time you
purchase shares or you may not receive the reduction. Directors and employees
of the Funds and the Adviser and Sub-Advisers, as well as persons licensed to
receive commissions for sales of the Funds may not pay a sales charge on their
purchases or on purchases made by family members residing with them. We reserve
the right to stop or change these reductions at any time.
50% REDUCTION: Non-profit organizations, charitable trusts, and endowments pay
only 50% of the normal sales charge so long as there is a meaningful Catholic
affiliation.
<PAGE>
The reduction does not apply to retirement plan accounts.
RIGHT OF ACCUMULATION: You can combine all your share purchases across Funds
and accounts, including the purchases of your immediate family, when computing
your current sales charge for shares. Immediate family means your spouse and
your children who are dependents for federal income tax purposes. Eligible
shares for combination in computing the sales charge include those contained in
individual, joint tenant, gift/transfer to minor, trust and IRA accounts.
Employer-sponsored plans can link the shares in the plan for purposes of
calculating a sales charge reduction. Shares in the Firstar Money Market Fund
are not eligible shares for Right of Accumulation. Right of Accumulation
includes the value of all shares at the public offering price.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
REGULAR
REGULAR SALES CHARGE 50% SALES
YOUR SALES CHARGE AS A % OF NET 50% SALES CHARGE AS A %
INVESTMENT AS A % OF AMOUNT CHARGE AS A OF NET AMOUNT
ACCOUNT POP* INVESTED* % OF POP* INVESTED*
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Less than 4.00% 4.17% 2.00% 2.04%
$25,000
- --------------------------------------------------------------------------------
$25,000 but less 3.75% 3.90% 1.88% 1.91%
than $50,000
- --------------------------------------------------------------------------------
$50,000
but less than 3.00% 3.09% 1.50% 1.52%
$100,000
- --------------------------------------------------------------------------------
$100,000
but less than 2.00% 2.04% 1.00% 1.01%
$250,000
- --------------------------------------------------------------------------------
$250,000
but less than 1.00% 1.01% 0.50% 0.50%
$500,000
- --------------------------------------------------------------------------------
$500,000 and up* 0.00% 0.00% 0.00% 0.00%
- --------------------------------------------------------------------------------
</TABLE>
*REGISTERED REPRESENTATIVES MAY RECEIVE COMPENSATION NOT EXCEEDING 0.70% OF
THE SALES CHARGE ON AMOUNTS PURCHASED AND MAY RECEIVE COMPENSATION NOT
EXCEEDING 0.35% OF 1% OF AMOUNTS INVESTED AT $500,000 AND UP.
- --------------------------------------------------------------------------------
LETTER OF INTENT
If you expect to invest $25,000 or more during the next 13 months, you can
reduce your sales charge by signing a Letter of Intent. A Letter of Intent
permits you to pay the sales charge that would be applicable if you add up all
shares of the Funds that you agree to buy within the 13-month period. You can
include purchases in accounts you have linked for purposes of the Right of
Accumulation, and you can back date a Letter of Intent to include purchases made
in the last 90 days. However, we do not recalculate the sales charge on prior
purchases.
You do not have any obligation to buy additional shares. During the Letter
of Intent period, we will escrow shares totaling 5% of the investment goal. If
for some reason you do not fulfill the Letter of Intent within the 13-month
period, we will sell escrowed shares to cover any additional sales charges due
from you. You should sign only one Letter of Intent for all accounts combined
under Right of Accumulation.
<PAGE>
MINIMUM PURCHASE AMOUNT
PER ACCOUNT PER TRANSACTION
<TABLE>
<CAPTION>
MINIMUM
PURCHASE AMOUNT
PER ACCOUNT INITIAL ADDITIONAL
PER TRANSACTION PURCHASE PURCHASE
--------------- -------- --------
<S> <C> <C>
Regular Account * $1,000 $100
IRA* $250 $50
Automatic
Investment Plan $250 $50
</TABLE>
- --------------------------------------------------------------------------------
* Indicates purchases made by check or wire.
The Funds may waive the minimum investment amount needed to open or add to an
account for certain employer-sponsored accounts.
OPENING A NEW ACCOUNT
You can open a new account through a licensed Registered Representative,
or directly by mail. A complete, signed application is required for new
accounts. Also, you will need to fill out an application if after you open your
account, you subsequently purchase shares of a Fund that was not selected in
your initial application.
Your CFSC Registered Representative is ready to help you open a new
account. If you do not know the name of your Registered Representative, please
call The Catholic Alliance Funds, Inc. at 800-_________.
To open your account, just follow these steps:
1. After reviewing this prospectus, complete a Catholic Alliance Funds
application and New Account Form, which should be attached to the
prospectus, for every different account registration. For example,
you need separate applications for an individual account in the Equity
Income Fund and an IRA invested in the Equity Income Fund. If you
don't complete the application properly, your purchase may be delayed
or rejected;
2. Make your check payable to the "CATHOLIC ALLIANCE FUNDS"; and
3. Mail your completed application and check to:
REGULAR MAIL
The Catholic Alliance Funds, Inc.
P.O. Box _____
Milwaukee, WI ______
<PAGE>
EXPRESS MAIL/PRIVATE DELIVERY
The Catholic Alliance Funds, Inc.
1100 W. Wells Street
Milwaukee, WI 53233
ACCOUNTS FOR RETIREMENT SAVINGS
Catholic Fraternal Alliance members, their enterprises and Catholic
organizations may establish their own individual or business retirement plans.
These accounts may offer you tax advantages. You should consult with your legal
and/or tax adviser before you establish a retirement plan.
A third-party maintenance fee may apply to some retirement accounts.
Please review plan documents for more information.
Your CFSC Registered Representative will provide you with all the
materials, documents and forms you need, and will work with you in establishing
your retirement plan from among these choices:
- - Traditional IRA (Individual retirement Account);
- - "rollover" IRA;
- - Roth IRA (annual contributions are not tax deductible, but distributions
may not be subject to income tax);
- - SEP-IRA (Simplified Employee Pension Plan);
- - SIMPLE-IRA (Savings Incentive Match Plan for Employees);
- - Education IRA - (annual contributions are not tax deductible, but
distributions may not be subject to income tax);
- - 403(b)(7) retirement plan account (legal restrictions apply to your ability
to withdraw funds from this account); and
- - qualified retirement plans.
BUYING ADDITIONAL SHARES FOR YOUR ACCOUNT
After you have opened an account with The Catholic Alliance Funds, you can
make additional investments of $100 or more to that account by mail, telephone
or wire. Please put your name and your Catholic Alliance Mutual Funds Account
number on the face of all investment checks and make sure your checks are
payable to the "CATHOLIC ALLIANCE FUNDS." Some retirement accounts, such as the
403(b)(7) Retirement Plan, may allow you to make investments only by deferring
part of your salary.
BY MAIL. Purchase orders should be sent to:
REGULAR MAIL
The Catholic Alliance Funds, Inc.
C/o Firstar Mutual Fund Services, LLC
P.O. Box 701
Milwaukee, WI 53201-0701
EXPRESS MAIL/PRIVATE DELIVERY
The Catholic Alliance Fund, Inc.
c/o Firstar Mutual Fund Services, LLC
Third Floor
615 East Michigan Street
Milwaukee, WI 53202
<PAGE>
BY TELEPHONE: Before you can buy additional shares by telephone, you must
have selected the Request for Telephone Purchase option on the application.
Once you have selected this option, you can call Firstar Mutual Fund Services at
1-800 _______ and have money withdrawn from your bank checking or savings
account to make your investment. You pay the next price computed after the
Funds have received your investment from your bank.
BY WIRE. If your bank is a member of or has a corresponding relationship
with a member of the Federal Reserve System, you can buy shares of the Funds by
wire transfer by following these steps:
1. Call Firstar Mutual Fund Services at 1-800-__________ and provide the
following information:
- - your account registration;
- - the name of the Fund(s) in which you want to invest;
- - your address;
- - your Social Security or tax identification number;
- - the dollar amount;
- - the name of the wiring bank; and
- - the name and the telephone number of the person at your bank who the Funds
can contact about your purchase.
Firstar must receive your wire order before the closing of the NYSE
(normally 3:00 p.m. Central Time) in order for you to receive that day's price.
2. Instruct your bank to use the following instructions when wiring funds:
WIRE TO: FIRSTAR BANK MILWAUKEE, N.A.
CREDIT: FIRSTAR MUTUAL FUND SERVICES, LLC
ACCOUNT 112-952-137
FURTHER
CREDIT: (NAME OF FUND)
(SHAREHOLDER ACCOUNT NUMBER)
(SHAREHOLDER REGISTRATION)
Please call (800) ________________ prior to sending the wire in order to
obtain a confirmation number and to ensure prompt and accurate handling of
funds.
<PAGE>
We are not responsible for the consequences of delays resulting from the
banking or Federal Reserve Wire system, or from incomplete wiring instructions.
ACCOUNT REGISTRATION
How you register your account with the Funds can affect your legal
interests as well as the rights and interests of your family and beneficiaries.
You should always consult with your legal and/or tax adviser to determine the
account registration that best meets your needs. You must clearly identify the
type of account you want on your Catholic Alliance Mutual Funds application.
Some account registrations may require additional documents.
AUTOMATIC INVESTMENT PLANS
To make regular investing more convenient, you can open an automatic
investment plan with no initial investment and a minimum of $50 per account per
transaction after you start your plan. Using the Catholic Alliance Mutual Funds
Automatic Investment Plans, you may implement a strategy called dollar cost
averaging. Dollar cost averaging involves investing a fixed amount of money at
regular intervals. When you "dollar cost average," you purchase more shares
when the price is low and fewer shares when the price is high. Dollar cost
averaging does not ensure a profit or protect against a loss during declining
markets. Because such a program involves continuous investment regardless of
changing share prices, you should consider your ability to continue the program
through times when the share prices are low. Your CFSC Registered
Representative is ready to help you set up one of the following plans.
THE BANK DRAFT PLAN allows you to make regular investments in the Funds directly
from your checking or savings account. The following rules and/or guidelines
apply:
- You can select up to four transaction dates per month (at least seven
days apart). If you don't select the date(s), the money will
automatically be withdrawn from your bank account on the 5th of the
month;
- To start the plan or change your bank account, you must notify Firstar
Mutual Fund Services, LLC in writing at least 13 business days prior
to the transaction date. All bank account owners must sign the bank
draft plan card;
- To stop or change the amount of your plan, you must notify Firstar
Mutual Fund Services, LLC in writing or via telephone at
1(800)________ at least five business days prior to the transaction
date; and
- Make sure you have enough money in your bank account to make the
investment so you can avoid paying any possible fees from your bank or
our Transfer Agent.
THE PAYROLL DEDUCTION SAVINGS AND INVESTMENT PLAN allows employees of
<PAGE>
participating companies to invest in the Funds through direct deduction from
their paychecks or commission checks.
All payroll deductions for retirement plan accounts will be considered
current year contributions unless we are notified in writing.
PURCHASES
Your purchase must be in U.S. dollars and your check must be drawn on a
U.S. bank. We do not accept cash, traveler's checks or third party checks. If
your check does not clear, we will cancel your purchase and hold you liable for
any losses and any applicable fees, currently $20. When you buy shares by any
type of check, electronic funds transfer or automatic investment purchase, you
may not be able to redeem the shares you purchased for 12 days or until your
check has cleared, whichever is later. This does not limit your right to redeem
shares. Rather, it operates to make sure that payment for the shares redeemed
has been received by the Transfer Agent.
<PAGE>
SELLING YOUR SHARES
IN GENERAL
You can sell your shares on any business day. When you sell your shares
you receive the net asset value per share. If we receive your request in good
order before the close of the New York Stock Exchange ("NYSE") (normally 3:00
p.m. Central Time) you will receive that day's price. If we receive your
redemption request in good order after the close of the NYSE, or on a holiday,
weekend or a day the NYSE is closed, we will process your transaction at the
closing price on the next business day. You can sell shares by mail, telephone
or wire.
YOU MUST HAVE YOUR SIGNATURE GUARANTEED FOR WRITTEN SELL ORDERS IF:
1. You want to sell shares with a value of more than $25,000;
2. You want the proceeds sent to an address other than the one listed for
your account;
3. You want the check payable to someone other than the account owner(s);
or
You can usually obtain a signature guarantee at commercial banks, trust
companies or broker-dealers. A SIGNATURE GUARANTEE IS NOT THE SAME THING AS A
NOTARIZED SIGNATURE. Accounts held by a corporation, trust, estate,
custodianship, guardianship, partnership or pension and profit sharing plan may
require more documentation.
SYSTEMATIC WITHDRAWAL PLAN
You can have money automatically withdrawn from your account(s) on a
regular basis by using our systematic withdrawal plan. The plan allows you to
receive funds or pay a bill at regular intervals. The following rules and/or
guidelines apply:
- You need a minimum of $10,000 in your account to start the plan;
- You must withdraw a minimum of $100 monthly;
- You can select the date(s) on which the money is withdrawn. If you
don't select the date(s), we will withdraw the money automatically
from your account on the 15th of the month;
- To start the plan or change the payee(s), you must notify us in
writing at least 13 business days prior to the first withdrawal and
you must have all account owner(s) sign the appropriate form;
- To stop or change your plan, you must notify us at least five business
days prior to the next withdrawal; and
<PAGE>
- Because of sales charges, you must consider carefully the costs of
frequent investments in and withdrawals from your account.
CLOSING SMALL ACCOUNTS
All Catholic Alliance Funds account owners share the high cost of
maintaining accounts with low balances. To reduce this cost, we reserve the
right, subject to legal restrictions, if any, to close an account when, due to a
redemption, its value is less than $1,000. This does not apply to retirement
plan accounts. We will notify you in writing before closing any account, and
you will have 30 days to add money to bring the balance up to $1,000.
REINSTATEMENT PRIVILEGE
You have 30 days after you sell shares to reinvest the dollar amount you
redeemed without having to pay another sales charge. You will pay the net asset
value per share on the day when you've made your reinstatement and not on the
day when you sold your investment. The following rules apply:
You may use this privilege only once per account;
You must send a written request and a check for the amount you wish to
reinvest to the Fund's transfer agent;
The dollar amount you reinvest cannot exceed the dollar amount you sold;
and
The sale of your shares may be a taxable event despite the reinstatement.
EXCHANGE PRIVILEGE
FUND TO FUND EXCHANGE. You may exchange shares in one Catholic Alliance
Fund for shares in another Catholic Alliance Fund either by telephone or in
writing without paying any additional sales charge. However, a $5 service fee
will be charged for each telephone exchange request (no charge is imposed for
written exchange requests). The following rules and/or guidelines apply:
- Minimum investment rules may apply when you open a new account by
exchanging shares, and you may have to submit a new application (i.e.,
you must exchange at least $1,000 worth of shares to another Fund and
fill out a new account form, if you have not previously opened an
account in the fund into which shares will be exchanged);
- You may only exchange into Funds that are legally available for sale
in your state;
- You may have a taxable gain or loss as a result of an exchange;
- We reserve the right to modify or terminate the exchange privilege
upon
<PAGE>
60 days' written notice to each shareholder prior to the modification
or termination taking effect.
MONEY MARKET EXCHANGE. Shareholders may exchange all or a portion of their
shares in the Funds for shares of the Firstar Money Market Fund at their
relative net asset values and may also exchange back into a Catholic Alliance
fund without the imposition of any charges or fees. (However, if you purchase
shares of the Money Market Fund directly and then exchange into the Funds, you
will be subject to a sales charge.) Exchanges into the Firstar Money Market
Fund are subject to the minimum purchase and redemption amounts set forth in the
prospectus for the Firstar Money Market Fund. The Fund is a no-load money
market fund managed by an affiliate of Firstar. The Firstar Money Market Fund
is unrelated to the Catholic Fraternal Alliance or any of the Funds. No charge
to shareholders is imposed for this exchange; however, the Distributor may be
compensated by the Firstar Money Market Fund for certain distribution and
support services provided in connection with exchanges made by shareholders of
the Funds. Also, Firstar will charge a $5.00 fee for each exchange transaction
that is executed by telephone. Before exchanging into the Firstar Money Market
Fund, please read the applicable prospectus, which may be obtained by calling
_______________.
TAX CONSIDERATIONS
Federal law requires us to withhold 31% of a shareholder's reportable
payments (which include dividends, capital gain distributions and redemption
proceeds) for those who have not properly certified that the Social Security or
other taxpayer identification number they provided is correct and that he or she
is not subject to backup withholding. We do not provide information on state
and local tax consequences of owning shares in the Funds.
REINVESTMENT OF FUND DISTRIBUTIONS
Unless you request otherwise, we will reinvest all of your income dividends
and/or capital gains distributions into the Funds at net asset value and pay no
sales charges. You also can have your distributions paid in cash. When you
receive a distribution you may have to pay taxes whether or not you reinvested
them or had them paid out to you in cash. If you have requested cash
distributions and we cannot locate you, we will reinvest your dividends.
DISTRIBUTION FEES
In addition to the sales charge deducted at the time of purchase, we have
adopted a plan under rule 12b-1 of the Investment Company Act of 1940 that
allows each Fund to pay distribution fees for the sale and distribution of its
shares and continuing services to shareholder accounts. Each Fund pays 0.25 of
1% of its average daily net assets.
Because these fees are paid on each Fund's net assets on an on-going basis,
over time these fees will increase the cost of your investment and may cost you
more than paying other types of sales charges.
<PAGE>
SHAREHOLDER INFORMATION
SHARE PRICE CALCULATION
The price at which you purchase and redeem Fund shares is equal to the net
asset value (NAV) per share determined on the effective date of the purchase or
redemption. Each Fund's NAV per share is calculated at the close of the regular
trading session of the NYSE, which is usually 3:00 p.m. Central Time.
NAV
EQUALS
TOTAL ASSETS
MINUS
LIABILITIES
DIVIDED BY
# OF SHARES OUTSTANDING
DIVIDENDS, CAPITAL GAINS AND TAXES
The Funds will distribute any net investment income and any net realized
long or short-term capital gains at least annually. Each Fund may also pay a
special distribution at the end of the calendar year to comply with federal tax
requirements. DIVIDENDS and DISTRIBUTIONS may be reinvested automatically in
shares of the Funds at net asset value without a sales charge or taken in cash.
If your account is a taxable account, you will pay tax on dividends and
distributions from the Funds whether you receive them in cash or additional
shares.
If you redeem a Fund's shares or exchange them for shares of another Fund,
any gain on the transaction may be subject to tax.
Each Fund intends to make distributions that will either be taxed as
ordinary income or capital gains. Capital gains distributions may be taxable at
different rates depending on the length of time the Fund has held the assets
sold.
By law, we must withhold 31% of your distributions and proceeds if you have
not provided a taxpayer identification number or social security number.
This section summarizes some of the consequences under current federal tax
law of an investment in the Funds. It is not a substitute for personal tax
advice. Consult your personal tax advisor about the potential tax consequences
of an investment in the Funds under all applicable tax laws.
YEAR 2000
Like other organizations around the world, the Funds could be adversely
affected if the computer systems used by them, their service providers, or
companies in which they invest do not properly process and calculate information
that relates to dates
<PAGE>
beginning January 1, 2000 and beyond. This situation may occur because for many
years computer programmers used only two digits to describe years, such as 98
for 1998. A program written in this manner may not work when it encounters the
year 00.
While 2000-related computer problems could have a negative effect on the
Funds, we are working to avoid such problems and to obtain assurances from
service providers that they are taking similar steps.
<PAGE>
FOR MORE INFORMATION
If you would like more information about the Funds, you may call Firstar
Mutual Fund Services at 1-800-________ to request a free copy of the Funds'
Statement of Additional Information (SAI), Annual or Semiannual Reports, or to
ask other questions about the Funds. The SAI has been filed with the Securities
and Exchange Commission SEC and is legally a part of the Prospectus.
To view these documents, along with other related documents, you can visit
the SEC's Internet web site (http://www.sec.gov) or the Commission's Public
Reference Room in Washington, D.C. Information on the operation of the public
reference room can be obtained by calling 1-800-SEC-0330. Additionally, copies
of this information can be obtained, for a duplicating fee, by writing the
Public Reference Section of the Commission, Washington, D.C. 20549-6009.
Investment Company File No. __________
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
__________________ , 1999
THE CATHOLIC ALLIANCE FUNDS, INC.
1100 W. Wells Street
Milwaukee, WI 53233
(800) ____________
EQUITY INCOME FUND
LARGE-CAP GROWTH FUND
DISCIPLINED CAPITAL APPRECIATION FUND
Information contained herein is subject to completion or amendment. A
Registration Statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the Registration Statement
becomes effective. This Statement of Additional Information shall not
constitute an offer to sell or the solicitation of an offer to buy nor shall
there be any sale of these securities in any State in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such State.
This Statement of Additional Information is not a Prospectus, but contains
additional information which should be read in conjunction with The Catholic
Alliance Mutual Funds Inc. Prospectus dated ____________ __, 1999. A Prospectus
may be obtained at no charge by writing to the Funds' Transfer Agent, Firstar
Mutual Fund Services, LLC, at 615 East Michigan Street, Milwaukee, Wisconsin
53202 or by calling the Transfer Agent at (800) ______________.
In this Statement of Additional Information, The Catholic Alliance Funds,
Inc. may be referred to as CAF, and the Equity Income Fund, Large-Cap Growth
Fund and the Disciplined Capital Appreciation Fund may be referred to
collectively as the "Funds" or individually as a "Fund." Terms not otherwise
defined have the same meaning as in the Prospectus.
TABLE OF CONTENTS
PAGE
FUND HISTORY 1
INVESTMENT TECHNIQUES AND STRATEGIES 1
INVESTMENT RESTRICTIONS 2
MANAGEMENT 4
CONTROL PERSONS 6
THE INVESTMENT ADVISER 6
PERFORMANCE INFORMATION 7
DETERMINATION OF NET ASSET VALUE PER SHARE 9
DISTRIBUTION OF SHARES 9
DISTRIBUTION PLAN 10
LETTERS OF INTENT 10
REGULATED INVESTMENT COMPANY STATUS 11
DESCRIPTION OF SHARES 12
PORTFOLIO TRANSACTIONS AND BROKERAGE 13
PAYMENTS "IN KIND" 14
ADMINISTRATIVE, CUSTODIAN AND TRANSFER AGENT SERVICES 14
COUNSEL AND INDEPENDENT PUBLIC ACCOUNTANTS 15
<PAGE>
FUND HISTORY
The CAF family of funds consists of three separate series of CAF, a
Maryland corporation registered as an open-end management investment company
under the Investment Company Act of 1940 (the "1940 Act"). CAF was organized by
Catholic Financial Services Corporation (CFSC) in 1998. All of the stock of
CFSC, a Wisconsin corporation, is owned by a consortium of Catholic fraternal
benefits insurance societies (the "Catholic Fraternal Alliance"). The majority
of the stock of CFSC is held by Catholic Knights Financial Services, Inc., a
wholly-owned subsidiary of Catholic Knights Insurance Society, which functions
as an administrative holding company. Further information regarding the
Catholic Fraternal Alliance is contained in the Prospectus under "Management."
INVESTMENT TECHNIQUES AND STRATEGIES
The investment objective and policies of the Funds are described in the
Prospectus. Set forth below is supplemental information about those policies
and the types of securities in which the Funds may invest, as well as the
strategies the Funds may use to try to achieve their objectives.
FOREIGN SECURITIES
As noted in the Prospectus, the Funds may invest in the equity and debt
securities of foreign issuers that are listed on a U.S. securities exchange or
traded in the U.S. over-the-counter markets. Foreign securities are subject
however, to additional risks not associated with domestic securities, as
discussed below. These additional risks may be more pronounced as to
investments in securities issued by companies located in emerging market
countries.
Investing in foreign securities offer potential benefits not available from
investing solely in securities of domestic issuers, including the opportunity
to invest in foreign issuers that appear to offer growth potential, or in
foreign countries with economic policies or business cycles different from those
of the U.S.
RISKS OF FOREIGN INVESTING. Investing in foreign securities involves
special additional risks and considerations not typically associated with
investing in securities of U.S. companies. These include: fluctuation in value
of foreign portfolio investments due to changes in currency rates and control
regulations (e.g.,currency blockage); lack of public information about foreign
issuers; lack of uniform accounting, auditing and financial reporting standards
comparable to those applicable to domestic issuers and greater difficulties in
commencing lawsuits against foreign issuers.
REPURCHASE AGREEMENTS
Each Fund may acquire securities subject to repurchase agreements for
liquidity purposes to meet anticipated redemptions, or pending the investment of
the proceeds from sales of Fund shares, or pending the settlement of purchases
of portfolio securities. In a repurchase transaction, a Fund acquires a
security from, and simultaneously resells it to, an approved vendor. An
"approved vendor" is a U.S. commercial bank or the U.S. branch of a foreign
bank
<PAGE>
or a broker-dealer which has been designated a primary dealer in government
securities which must meet credit requirements set by the Board of Directors
from time to time. The repurchase price exceeds the purchase price by an amount
that reflects an agreed-upon interest rate effective for the period during which
the repurchase agreement is in effect. The majority of these transactions run
from day to day, and delivery pursuant to the resale typically will occur within
one to five days of the purchase. Repurchase agreements are considered
"loans" under the 1940 Act, collateralized by the underlying security. The
Funds' repurchase agreements require that at all times while the repurchase
agreement is in effect, the value of the collateral must equal or exceed the
repurchase price to fully collateralize the repayment obligation.
Additionally, the Adviser will impose creditworthiness requirements to confirm
that the vendor is financially sound and will continuously monitor the
collateral's value.
INVESTMENT RESTRICTIONS
The following are fundamental policies for each Fund, and together with
each Fund's investment objective described in the Prospectus, cannot be changed
without the vote of a "majority"of the outstanding voting securities of that
Fund. Such a "majority" vote is defined in the 1940 Act as the vote of the
holders of the lesser of: (i) 67% or more of the shares present or represented
by proxy at a shareholder meeting, if the holders of more than 50% of the
outstanding shares are present, or (ii) more than 50% of the outstanding shares.
For any Fund, we may not:
(1) invest more than 5% of its net assets, taken at value at the time of
each investment, in the securities (including repurchase agreements)
of any one issuer (for this purpose, the issuer(s) of a debt security
being deemed to be only the entity or entities whose assets or
revenues are subject to the principal and interest obligations of the
security), except that up to 25% of a Fund's net assets may be
invested without regard to this limitation and provided that such
restrictions shall not apply to obligations issued or guaranteed by
the U.S. government or any agency or instrumentality thereof;
(2) purchase securities on margin, except for use of short-term credit
necessary for clearance of purchases and sales of portfolio
securities;
(3) make short sales of securities or maintain a short position, or write,
purchase, or sell puts, calls, straddles, spreads, or combinations
thereof, except for short sales against the box;
(4) make loans to other persons, except that we reserve freedom of action,
consistent with a Fund's other investment policies and restrictions
and as described in the prospectus and this statement of additional
information, to: (a) invest in debt obligations, including those that
are either publicly offered or of a type customarily purchased by
institutional investors, even though the purchase of such debt
obligations may be deemed the making of loans; and (b) enter into
repurchase agreements;
(5) issue senior securities or borrow, except that we may borrow for a
Fund in
<PAGE>
amounts not in excess of 10% of its net assets, taken at current
value, and then only from banks as a temporary measure for
extraordinary or emergency purposes (we will not borrow money for the
Funds to increase income, but only to meet redemption requests that
otherwise might require untimely dispositions of portfolio securities;
interest paid on any such borrowing will reduce a Fund's net income);
(6) mortgage, pledge, hypothecate or in any manner transfer, as security
for indebtedness, any securities owned or held by a Fund, except as
may be necessary in connection with and subject to the limits in
restriction (5);
(7) underwrite any issue of securities, except to the extent that we
purchase securities directly from an issuer thereof in accord with a
Fund's investment objectives and policies may be deemed to be
underwriting or to the extent that in connection with the disposition
of portfolio securities we may be deemed an underwriter for the Fund
under federal securities laws;
(8) purchase or sell commodities or commodity contracts;
(9) invest more than 25% of a Fund's net assets, taken at current value at
the time of each investment, in securities of non-governmental issuers
whose principal business activities are in the same industry in any
single industry or issuer (except the U.S. government or any agency or
instrumentality thereof);
(10) invest in oil, gas or mineral related programs or leases except as may
be included in the definition of public utilities, although we may
invest in securities of enterprises engaged in oil, gas or mineral
exploration for a Fund;
(11) invest in repurchase agreements maturing in more than seven days or in
other securities with legal or contractual restrictions on resale if,
as a result thereof, more than 10% of a Fund's net assets (taken at
current value at the time of such investment) would be invested in
such securities;
(12) purchase more than 10% of the outstanding voting securities of an
issuer or invest for the purpose of exercising control or management.
<PAGE>
NON-FUNDAMENTAL INVESTMENT RESTRICTIONS
The following operating policies of the Funds are not fundamental policies
and, as such, may be changed by a majority vote of the Board of Directors
without shareholder approval. These additional restrictions provide that for
any Fund, we may not:
(1) purchase or sell real estate, or real estate limited partnership
interests provided that we may invest in securities for a Fund secured
by real estate or interests therein or issued by companies that invest
in real estate or interests therein;
(2) invest in any security if as a result a Fund would have more than 5%
of its net assets invested in securities of companies which, together
with any predecessors, have been in continuous operation for less than
three years; or
(3) purchase securities or other investment companies, if the purchase
would cause more than 10% of the value of a Fund's net assets to be
invested in investment company securities provided that' (a) no
investment will be made in the securities of any one investment
company if immediately after such investment more than 3% of the
outstanding voting securities of such company would be owned by a Fund
or more than 5% of the value of a Fund's net assets would be invested
in such company; and (b) no restrictions shall apply to a purchase of
investment company securities in connection with a merger,
consolidation acquisition or reorganization.
MANAGEMENT
The Fund Directors and Officers and their principal occupations and
business affiliations during the past five years are listed below.
PRINCIPAL OCCUPATION
NAME, AGE AND ADDRESS POSITION WITH CAF DURING PAST FIVE YEARS
Daniel J. Steininger* Chairman of the Board of President of Catholic
1100 West Wells Street Directors Knights Insurance Society
Milwaukee, WI 53233
D.O.B. 5/1/45
Allan G. Lorge* President, Chief Secretary/Treasurer of
1100 W. Wells St. Executive Officer Catholic Knights
Milwaukee, WI 53233 Insurance Society
D.O.B. 12/9/49
Theodore F. Zimmer* Director General Counsel,
1100 W. Wells St. Catholic Knights
Milwaukee, WI 53233 Insurance Society since
D.O.B. Sept. 1997; Partner of
Miller, Simon, McGinn and
Clark (law firm) from
Oct. 1996 to Sept. 1997;
and prior to Oct. 1996,
Partner at Quarles &
Brady LLP
James M. Borden Director Chief Executive Officer
P.O. Box 591 of HUFCOR (1978-present)
Janesville, WI 53547
D.O.B. 12/21/36
Daniel R. Doucette Director President and Chief
North Sunnyslope Road Executive Officer
Brookfield, WI 53005 Milwaukee Mutual
D.O.B. 9/03/49 Insurance Co. since 1991
Thomas J. Munninghoff Director President, Munninghoff,
430 Reading Road Lang and Co. (accounting
Cincinnati, OH 45202 firm) since 1983
D.O.B. 8/27/47
Conrad L. Sobczak Director Retired, formerly
6015 Washington Boulevard President and CEO, Family
Wauwatosa, WI 53213 Health Systems, Inc. from
D.O.B. 10/20/38 1987-1998
David L. Vollmar Director Retired, formerly
1700 Arrowhead Court Partner, Arthur Andersen
Elm Grove, WI 53122 LLP from 1951-1988
D.O.B. 12/15/33
- --------------------------------
*Directors who are "Interested Persons" (as defined in the 1940 Act).
<PAGE>
Each of the Funds pays an equal portion of the fees and expenses of the
five Directors who are officers, director of employees or affiliated persons of
the Adviser. Such fees consist of an annual retainer in the amount of $500 and
$250 per Board meeting attended. The estimated annual compensation to be paid
by CAF to each of the Directors is set forth in the table below:
<TABLE>
<CAPTION>
TOTAL
AGGREGATE RETIREMENT COMPENSATION
COMPENSATION BENEFITS FROM FUNDS
FROM AND FUND
NAME AND POSITION THE FUNDS COMPLEX
WITH CAF
<S> <C> <C> <C>
James M. Borden $1,500 $0 $1,500
Director
Daniel R. Doucette $1,500 $0 $1,500
Director
Thomas J. Munninghoff $1,500 $0 $1,500
Director
Conrad L. Sobczak $1,500 $0 $1,500
Director
David L. Vollmar $1,500 $0 $1,500
Director
</TABLE>
- -----------------------
<PAGE>
CONTROL PERSONS
As of the date of this Statement of Additional information, the Adviser was
the sole initial shareholder of the Funds' shares.
THE INVESTMENT ADVISER
Each Fund is managed by CFSC pursuant to an Investment Advisory Agreement.
The Agreement was approved by the Board of Directors, including a majority of
the Directors who are not Interested Persons of the Funds or of CFSC on _______,
1999.
Basic information as to the Adviser and the Investment Advisory Agreement
is set forth in the Prospectus under "Management".
Todd Investment Advisors, Inc., Peregrine Capital Management, Inc. and
Vantage Global Advisors, Inc. have been engaged to serve as Sub-Advisers to the
Equity Income Fund, Large-Cap Growth Fund and Disciplined Capital Appreciation
Fund, respectively.
The Sub-Advisory Agreements require the Sub-Advisers, at their expense, to
provide the Funds with adequate office space, facilities and equipment, and to
provide and supervise the activities of all administrative and clerical
personnel required to provide effective corporate administration for the Funds,
including the compilation and maintenance of records with respect to its
operations, the preparation and filing of specified reports, and composition of
proxy materials and registration statements for continuous public sale of shares
of the Funds.
Expenses not expressly assumed by the Adviser under the Investment Advisory
Agreement, the Sub-Advisers under the Sub-Advisory Agreements, or by the
Distributor under the Distribution Agreement are paid by the Funds.
The Sub-Advisory Agreements provide that in the absence of willful
misfeasance, bad faith or gross negligence in the performance of its duties, or
reckless disregard for obligations and duties under the Sub-Advisory Agreement,
the Sub-Adviser is not liable for any loss resulting from a good faith error or
omission on its part with respect to any of its duties thereunder.
PERFORMANCE INFORMATION
From time to time the Funds may advertise their "yield" and "total return".
"Yield" is based on historical earnings and total return is based on historical
distributions; neither is intended to indicate future performance. The "yield"
of a Fund refers to the income generated by an investment in that Fund over a
one-month period (which period will be stated in the
<PAGE>
advertisement). This income is then "annualized." That is, the amount of income
generated by the investment during the month is assumed to be generated each
month over a twelve-month period and is shown as a percentage of the investment.
"Total return" of the Funds refers to the annual average return for 1, 5, and
10-year periods (or the portion thereof during which a Fund has been in
existence). Total return is the change in redemption value of shares purchased
with an initial $1,000 investment, assuming the reinvestment of dividends and
capital gain distributions and the redemption of the shares at the end of the
period.
Performance information should be considered in light of the particular
Fund's investment objectives and policies, characteristics and quality of its
portfolio securities, and the market conditions during the applicable period,
and should not be considered as a representation of what may be achieved in the
future. Investors should consider these factors and possible differences in the
methods used in calculating performance information when comparing a Fund's
performance to performance figures published for other investment vehicles.
Average annual total return is computed by finding the average annual
compounded rates of return over the 1, 5, and 10-year periods (or the portion
thereof during which a Fund has been in existence) ended on the date of the
respective Fund's balance sheet that would equate the initial amount invested to
the ending redeemable value, according to the following formula:
Where: P = a hypothetical initial payment of $1,000;
T = average annual total return;
n = number of years (1, 5 or 10); and
ERV = ending redeemable value of a hypothetical $1,000 payment, made at
the beginning of the 1, 5 or 10 year periods, at the end of the
1, 5, or 10 year periods (or fractional portion thereof).
Under the foregoing formula, the time periods used in advertising will be
based on rolling calendar quarters, updated to the last day of the most recent
quarter prior to submission of the advertising for publication, and will cover
1, 5, and 10 year periods or a shorter period dating from the effectiveness of
the Registration Statement of the Funds. In calculating the ending redeemable
value, all dividends and distributions by a Fund are assumed to have been
reinvested at net asset value as described in the Prospectus on the reinvestment
dates during the period. Total return, or "T" in the formula above, is computed
by finding the average annual compounded rates of return over the 1, 5, and 10
year periods (or fractional portion thereof) that would equate the initial
amount invested to the ending redeemable value.
In addition to the total return quotations discussed above, a Fund may
advertise its yield based on a 30-day (or one month) period ended on the date of
the Fund's most recent balance sheet, computed by dividing the net investment
income per share of a Fund earned during the period by the maximum offering
price per Fund share on the last day of the period, according to the following
formula:
a b 6
YIELD 2[(------ 1) 1]
cd
Where: a = dividends and interest earned during the period;
<PAGE>
b = expenses accrued for the period (net of reimbursements);
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends; and
d = the maximum offering price per share on the last day of the
period.
Under this formula, interest earned on debt obligations for purposes of "a"
above, is calculated by (i) computing the yield to maturity of each obligation
held by a Fund based on the market value of the obligation at the close of
business on the last day of each month, or, with respect to obligations
purchased during the month, the purchase price (plus actual accrued interest),
(ii) dividing that figure by 360 and multiplying the quotient by the market
value of the obligation (including actual accrued interest as referred to above)
to determine the interest income on the obligation that is in the Fund's
portfolio (assuming a month of 30 days), and (iii) computing the total of the
interest earned on all debt obligations and all dividends accrued on all equity
securities during the thirty-day or one month period. In computing dividends
accrued, dividend income is recognized by accruing 1/360 of the stated dividend
rate of a security each day that the security is in the Fund's portfolio.
Undeclared earned income, computed in accordance with generally accepted
accounting principles, may be subtracted from the maximum offering price
calculation required pursuant to "d" above.
Each Fund may, from time to time, compare its performance to other mutual
funds with similar investment objectives and to the industry as a whole, as
quoted by ranking services and publications, such as Lipper Analytical Services,
Inc., Morningstar, Inc., FORBES, FORTUNE, MONEY, BUSINESS WEEK, VALUE LINE, INC.
and THE WALL STREET JOURNAL. These rating services and magazines rank the
performance of the Funds against all funds over specified periods and in
specified categories.
DETERMINATION OF NET ASSET VALUE PER SHARE
Each Fund's shares are sold at their next determined net asset value per
share. Each Fund determines the net asset value per share by subtracting the
Fund's liabilities (including accrued expenses and dividends payable) from the
Fund's total assets (the value of the securities a Fund holds plus cash or other
assets, including interest accrued but not yet received) and dividing the result
by the total number of shares outstanding.
The next determined net asset value per share will be calculated as of the
close of regular trading on the New York Stock Exchange at least once every
weekday, Monday through Friday, except on (i) customary national business
holidays which result in the closing of the New York Stock Exchange which are
New Year's Day, Martin Luther King, Jr., Day, Washington's Birthday, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving, and Christmas;
(ii) days when no security is tendered for redemption and no customer order is
received; or (iii) days when changes in the value of the investment company's
portfolio securities do not affect the current net asset value of the Fund's
redeemable securities. Portfolio securities which are traded on stock exchanges
are valued at the last sale price as of the close of business on the day the
securities are being valued, or, lacking any sales, at the latest bid price.
Each over-the-counter security for which the last sale price on the day of
valuation is available from NASDAQ and falls within the range of the latest bid
and asked quotations is valued at that price.
<PAGE>
All other securities traded in the over-the-counter market are valued at the
most recent bid prices as obtained from one or more dealers that make markets in
the securities. Portfolio securities which are traded both in the
over-the-counter market and on a stock exchange are valued according to the
broadest and most representative market.
Securities and other assets for which quotations are not readily available
will be valued at their fair market value as determined by the Board of
Directors.
DISTRIBUTION OF SHARES
CFSC, each Fund's investment Adviser, also acts as Distributor of the
shares of each Fund. CFSC has agreed to use its "best-efforts" to distribute
each Fund's shares, but has not committed to purchase or sell any specific
number of shares. The Distribution Agreement for the Funds is renewable
annually by the vote of the directors at a meeting called for such purpose and
may be terminated upon 30 days' written notice by either party. Under the
Agreement, CFSC will pay for the costs and expenses of preparing, printing and
distributing materials not prepared by the Funds and used by CFSC in connection
with its offering of shares for sale to the public, including the additional
costs of printing copies of the prospectus and of annual and interim reports to
shareholders other than copies required for distribution to shareholders or for
filing under the federal securities laws, and any expenses of advertising
incurred by CFSC in connection with the offering of the shares.
DISTRIBUTION PLAN
Each Fund has adopted a distribution plan (the "Distribution Plan")
pursuant to Rule 12b-1 of the Investment Company Act. Under each Plan, the
Adviser provides the Directors after the end of each quarter a written report
setting forth all amounts expended under the Plan, including all amounts paid to
dealers as distribution or service fees. In approving the Plan in accordance
with the requirements of Rule 12b-1, the Directors considered various factors,
including the amount of the distribution fee. The Directors determined that
there is a reasonable likelihood that the Plan of each respective Fund will
benefit the Fund and the shareholders of the Fund.
Each Plan may be terminated by vote of a majority of the Directors who are
not interested persons, or by vote of the majority of the outstanding voting
securities of the Fund. Any change in the Plan that would materially increase
the distribution cost to the Fund requires shareholder approval; otherwise, it
may be amended by the Directors, including a majority of the Directors who are
not interested persons, by vote cast in person at a meeting called for the
purpose of voting upon such amendment. So long as a Distribution Plan is in
effect, the selection or nomination of the Directors who are not interested
persons is committed to the discretion of such Directors.
The Distribution Plan of a Fund may be terminated by the Directors at any
time on 60 days written notice without payment of any penalty by the Adviser, by
vote of a majority of the outstanding voting securities of the Fund, or by vote
of a majority of the Directors who are not interested persons.
<PAGE>
Each Distribution Plan will continue in effect for successive one-year
periods, if not sooner terminated in accordance with its terms, provided that
each such continuance is specifically approved by the vote of the Directors,
including a majority of the Directors who are not interested persons.
LETTERS OF INTENT
A Letter of Intent (referred to as a "Letter") is an investor's statement
in writing to the Distributor of the intention to purchase shares of the Funds
during a 13-month period (the "Letter of Intent period"),which may, at the
investor's request, include purchases made up to 90 days prior to the date of
the Letter. The Letter states the investor's intention to make the aggregate
amount of purchases of shares which, when added to the investor's holdings of
shares of those funds, will equal or exceed the amount specified in the Letter.
Purchases made by reinvestment of dividends or distributions of capital gains
and purchases made at net asset value without sales charge do not count toward
satisfying the amount of the Letter. A Letter enables an investor to count the
shares purchased under the Letter to obtain the reduced sales charge rate on
purchases of shares of the Funds that apply under the Right of Accumulation to
current purchases of shares. Each purchase under the Letter will be made at the
public offering price applicable to a single lump-sum purchase of shares in the
intended purchase amount.
In submitting a Letter, the investor makes no commitment to purchase
shares, but if the investor's purchases of shares within the Letter of Intent
period, when added to the value (at offering price) of the investor's holdings
of shares on the last day of that period, do not equal or exceed the intended
purchase amount, the investor will pay the additional amount of sales charge
applicable to such purchases. Shares equal in value to 5% of the intended
purchase amount will be held in escrow by the Transfer Agent.
REGULATED INVESTMENT COMPANY STATUS
As a regulated investment company (a "RIC") under Subchapter M of the U.S.
Internal Revenue Code of 1986, as amended (the "Code"), a Fund would not be
subject to Federal income taxes on the net investment income and capital gains
that the Fund distributes to the Fund's shareholders. The distribution of net
investment income and capital gains will be taxable to Fund shareholders
regardless of whether the shareholder elects to receive these distributions in
cash or in additional shares. Distributions reported to Fund shareholders as
capital gains from property held for more than 1 year, shall be taxable as such,
regardless of how long the shareholder has owned the shares. Fund shareholders
will be notified annually by the Fund as to the Federal tax status of all
distributions made by the Fund. Distributions may be subject to state and local
taxes. To qualify as a RIC, the Code requires that at the end of each quarter
of the taxable year, (i) at least 50% of the market value of the Fund's total
assets be invested in cash, U.S. Government Securities, the securities of other
regulated investment companies, and other securities, with such securities of
any one issuer limited for the purposes of this calculation to an amount not
greater than 5% of the value of Fund's total assets and 10% of the outstanding
voting securities of any one issuer, and (ii) not more than 25% of the value of
the Fund's total assets be invested in the securities of any one issuer (other
than U.S. Government Securities or the securities of other regulated investment
companies), or of two or more issuers which the Fund controls and which are
determined to be engaged in the same or similar trades or businesses, or related
trades or businesses.
<PAGE>
Each of the Funds will seek to qualify for treatment as a RIC under the
Code. Provided that a Fund (i) is a RIC and (ii) distributes at least 90% of
the Fund's net investment income (including, for this purpose, net realized
short-term capital gains), the Fund itself will not be subject to Federal income
taxes to the extent the Fund's net investment income and the Fund's net realized
long and short-term capital gains, if any, are distributed to the Fund's
shareholders. To avoid an excise tax on its undistributed income, each Fund
generally must distribute annually at least 98% of its income, including its net
long-term capital gains as calculated on a calendar year basis as defined by the
Code. One of several requirements for RIC qualification is that the Fund must
receive at least 90% of the Fund's gross income each year from dividends,
interest, payments with respect to securities loans, gains from the sale or
other disposition of securities or foreign currencies, or other income derived
with respect to the Fund's investments in stock, securities, and foreign
currencies (the "90% Test").
In the event of a failure by a Fund to qualify as a RIC, the Fund would be
subject to Federal income taxes on its taxable income and the Fund's
distributions, to the extent that such distributions are derived from the Fund's
current or accumulated earnings and profits, would constitute dividends that
would be taxable to the shareholders of the Fund as ordinary income and would be
eligible for the dividends received deduction for corporate shareholders. This
treatment would also apply to any portion of the distributions that might have
been treated in the shareholder's hands as long-term capital gains, as discussed
below, had the Fund qualified as a RIC.
If a Fund were to fail to qualify as a RIC for one or more taxable years,
the Fund could then qualify (or requalify) as a RIC for a subsequent taxable
year only if the Fund had distributed to the Fund's shareholders a taxable
dividend equal to the full amount of any earnings or profits (less the interest
charge mentioned below, if applicable) attributable to such period. In
addition, pursuant to the Code and an interpretative notice issued by the IRS,
if the Fund should fail to qualify as a RIC and should thereafter seek to
qualify as a RIC, the Fund may be subject to tax on the excess (if any) of the
fair market of the Fund's assets over the Fund's basis in such assets, as of the
day immediately before the first taxable year for which the Fund seeks to
qualify as a RIC. A similar rule may apply if the Fund initially qualifies as a
RIC, then fails to qualify for more than 1 taxable year, and subsequently
requalifies as a RIC.
If a Fund determines that the Fund will not qualify as a RIC under
Subchapter M of the Code, the Fund will establish procedures to reflect the
anticipated tax liability in the Fund's net asset value.
DESCRIPTION OF SHARES
In the interest of economy and convenience, certificates representing
shares purchased are not issued. However, such purchases are confirmed to the
investor and credit to their accounts on the books maintained by Firstar Mutual
Fund Services, LLC (the "Agent"), Milwaukee, Wisconsin. The investor will have
the same rights of ownership with respect to such shares as if certificates had
been issued.
Shareholders have the right to vote on the election of Directors at each
meeting of
<PAGE>
shareholders at which Directors are to be elected and on other matters as
provided by law or the Articles of Incorporation or Bylaws of CAF. CAF's Bylaws
do not require that meetings of shareholders be held annually. However, special
meetings of shareholders may be called for purposes such as electing or removing
directors, changing fundamental policies, or approving investment advisory
contacts. Shareholders of each series of a series company, such as the Adviser,
vote together with each share of each series of the company on matters affecting
all series (such as election of directors), with each share entitled to a single
vote. On matters affecting only one series (such as a change in that series'
fundamental investment restrictions), only the shareholders of that series are
entitled to vote. On matters relating to all the series but affecting the
series differently (such as a new Investment Advisory Agreement), separate votes
by series are required.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Under the Investment Advisory Agreements and the Sub-Advisory Agreements
(referred to hereinafter in this section as the "Advisory Agreements"), the
Adviser and Sub-Advisers (hereinafter referred to in this section as the
"Advisers") have the authority to direct the placement of orders for the
purchase and sale of the Funds' portfolio securities.
The cost of securities transactions for each Fund will consist primarily of
brokerage commissions or dealer or underwriter spreads.
Occasionally, securities may be purchased directly from the issuer. For
securities traded primarily in the over-the-counter market, the sellers who make
a market in the securities will be dealt with directly unless better prices and
execution are available elsewhere. Such dealers usually act as principals for
their own account. In placing portfolio transactions, the Advisers seek the
best combination of price and execution.
In determining which brokers provide best execution, the Advisers look
primarily to the stock price quoted by the broker, and normally places orders
with the broker through which the most favorable price can be obtained. It is
expected that securities will ordinarily be purchased in the primary markets,
and that in assessing the best net price and execution available to a Fund, the
Advisers will consider all factors they deem relevant, including the breadth or
the market in the security, the price of the security, the financial condition
and execution capability of the broker or dealer and the reasonableness of the
commission, if any (for the specific transaction and on a continuing basis).
Although it is expected that sales of shares of the Funds will be made only by
the Distributor, the Adviser may in the future consider the willingness of
particular brokers to sell shares of the Funds as a factor in the selection of
brokers for the Funds' portfolio transactions, subject to the overall best price
and execution standard.
Assuming equal execution capabilities, other factors may be taken into
account in selecting brokers or dealers to execute particular transactions and
in evaluating the best net price and execution available. The Advisers may
consider "brokerage and research services" (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934), statistical quotations,
specifically the quotations necessary to determine the Funds' net asset values,
and other information provided to the Funds, to the Adviser (or their
affiliates)). The Advisers may also cause a Fund to pay to a broker or dealer
who provides such brokerage and research services a
<PAGE>
commission for executing a portfolio transaction which is in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction. The Advisers must determine, in good faith, however, that
such commission was reasonable in relation to the value of the brokerage and
research services provided, viewed in terms of that particular transaction or in
terms of all the accounts over which the Advisers exercise investment
discretion. It is possible that certain of the services received by the
Advisers attributable to a particular transaction will benefit one or more other
accounts for which investment discretion is exercised by the Advisers.
PAYMENTS "IN KIND"
Payment for shares tendered for redemption is ordinarily made in cash.
However, the Board of Directors may determine that it would be detrimental to
the best interests of the remaining shareholders of a particular Fund to make
payment of a redemption order wholly or partly in cash. In that case the Fund
may pay the redemption proceeds in whole or in part by a distribution "in kind"
of securities from the portfolio of the Fund, in lieu of cash, in conformity
with applicable rules of the Securities and Exchange Commission. The Funds have
elected to be governed by Rule 18f-1 under the Investment Company Act, pursuant
to which each Fund is obligated to redeem shares solely in cash up to the lesser
of $250,000 or 1% of the net assets of the Fund during any 90-day period for any
one shareholder. If shares are redeemed in kind, the redeeming shareholder
might incur brokerage or other costs in selling the securities for cash. The
method of valuing securities used to make redemptions in kind will be the same
as the method a Fund uses to value its portfolio securities described above
under"Determination of Net Asset Values Per Share" and that valuation will be
made as of the time the redemption price is determined.
ACCOUNTING, FULFILLMENT, CUSTODIAN AND TRANSFER AGENT SERVICES
Firstar Mutual Fund Services, LLC ("Firstar") provides fund accounting,
fulfillment, custodian and transfer agent services to each of the Funds.
Firstar provides fund accounting services pursuant to the terms of a Fund
Accounting Servicing Agreement. The current rate of payment for these services
per Fund per year is $22,000 for the first $40 million; .01 of 1% on average
daily net assets on the next $200 million; and .05 of 1% of average daily net
assets exceeding $240 million.. The Fund Accounting Servicing Agreement will
continue in effect from year to year.
Under a Fulfillment Servicing Agreement, Firstar is entitled to a minimum
monthly fee of $100 per Fund.
Firstar serves as the custodian of each Fund's assets, pursuant to a
Custodian Servicing Agreement. The Custodian Servicing Agreement provides that
Firstar is entitled to receive an annual fee set at .02 of 1% on average daily
net asset value. Firstar is entitled to receive a minimum annual fee of $3,000
from each Fund.
Firstar provides transfer agent and dividend disbursing services to each
Fund pursuant to the terms of a Transfer Agent Servicing Agreement. Under the
terms of the Transfer Agent Servicing Agreement, Firstar is entitled to annual
compensation of minimum annual fees of
<PAGE>
$25,000 for the first Fund, and $10,000 for each additional Fund. Firstar is
also entitled to reimbursement for all out of pocket expenses incurred in
providing such services. The Transfer Agent Servicing Agreement will continue
in effect until terminated, and may be terminated by either party without cause
on ninety (90) days' prior written notice.
COUNSEL AND INDEPENDENT PUBLIC ACCOUNTANTS
Quarles & Brady serves as legal counsel for the Funds. Arthur Andersen LLP
has been selected as independent public accountants for the Funds.
FINANCIAL STATEMENTS
Audited balance sheets will be filed by Pre-Effective Amendment to the
Registration Statement.
<PAGE>
CATHOLIC ALLIANCE FUNDS, INC.
FORM N-1A
PART C
OTHER INFORMATION
Item 23. Exhibits
See Exhibit Index following the Signature Page of this Registration
Statement, which Index is incorporated herein by this reference.
Item 24. Persons Controlled by or under Common Control with Registrant
Not applicable. See "Control Persons" in Part B.
Item 25. Indemnification
Reference is made to Article IX of the Registrant's By-laws filed as
Exhibit (b) to Registrant's Registration Statement with respect to
Indemnification of Registrant's officers and directors, which is set
forth below:
SECTION 9.1. INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND
AGENTS.
The Corporation shall indemnify each person who was or is a party
or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative ("Proceeding"), by reason of the
fact that he is or was a Director, officer, employee or agent of
the Corporation, or is or was serving at the request of the
Corporation as a Director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise,
against all expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by
him in connection with such Proceeding to the fullest extent
permitted by law; PROVIDED that:
(a) whether or not there is an adjudication of liability in such
Proceeding, the Corporation shall not indemnify any person for
any liability arising by reason of such person's willful
misfeasance, bad faith, gross negligence, or reckless disregard
of the duties involved in the conduct of his office or under any
contract or agreement with the Corporation ("disabling conduct");
and
(b) the Corporation shall not indemnify any person unless:
(1) the court or other body before which the Proceeding was
brought (i) dismisses the Proceeding for insufficiency of
evidence of any disabling
<PAGE>
conduct, or (ii) reaches a final decision on the merits that such
person was not liable by reason of disabling conduct; or
(2) absent such a decision, a reasonable determination is made,
based upon a review of the facts, by (i) the vote of a majority
of a quorum of the Directors of the Corporation who are neither
interested persons of the Corporation as defined in the
Investment Company Act of 1940 nor parties to the Proceeding, or
(ii) if such quorum is not obtainable, or even if obtainable, if
a majority of a quorum of Directors described in paragraph (b)
(2) (i) above so directs, by independent legal counsel in a
written opinion, that such person was not liable by reason of
disabling conduct.
Expenses (including attorneys' fees) incurred in defending a
Proceeding will be paid by the Corporation in advance of the final
disposition thereof upon an undertaking by such person to repay such
expenses (unless it is ultimately determined that he is entitled to
indemnification), if:
(1) such person shall provide adequate security for his undertaking;
(2) the Corporation shall be insured against losses arising by reason
of such advance; or
(3) a majority of a quorum of the Directors of the Corporation who
are neither interested persons of the Corporation as defined in
the Investment Company Act of 1940 nor parties to the Proceeding,
or independent legal counsel in a written opinion, shall
determine, based on a review of readily available facts, that
there is reason to believe that such person will be found to be
entitled to indemnification.
SECTION 9.2. INSURANCE OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS.
The Corporation may purchase and maintain insurance on behalf of any
person who is or was a Director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as
a Director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any
liability asserted against him and incurred by him in or arising out
of his position. However, in no event will the Corporation purchase
insurance to indemnify any such person for any act for which the
Corporation itself is not permitted to indemnify him.
Item 26. Business and Other Connections of Investment Adviser
(a) Catholic Financial Services Corporation
Catholic Financial Services Corporation acts as the Investment
Adviser and Distributor to the Funds. Set forth below is a list of the officers
and directors of the Adviser as of December 1, 1998, together with information
as to any other business, profession, vocation or employment of a substantial
nature of those officers and directors during the past two years:
<PAGE>
NAME POSITIONS & OFFICES
---- WITH ADVISER OTHER
------------------- -----
Allan G. Lorge President Secretary/Treasurer, Vice
President, Director of
Catholic Brokerage
Services since Nov. 1994;
Secretary/Treasurer, Vice
President, Director of
Catholic Knights
Financial Services, Inc.
since June 1994; and
Secretary/Treasurer of
Catholic Knights
Insurance Society since
Sept. 1991
Daniel J. Steininger Treasurer President and Director of
Catholic Knights
Financial Services, Inc.
since June 1994;
President and Director of
Catholic Brokerage
Services Corp. since Nov.
1994; and President of
Catholic Knights
Insurance Society since
June 1981
Russell J. Kafka Vice President- Director of Catholic
Investments and Director Knights Financial
Services, Inc. since June
1994; Director of
Catholic Brokerage
Services Corp. since Nov.
1994; and Vice President-
Investments of Catholic
Knights Insurance Society
since Jan. 1985
Daniel H. Strasburg Vice President and Director of Catholic
Director Knights Financial
Services, Inc. since June
1994; Vice President and
Director of Catholic
Brokerage Services Corp.
since Nov. 1994; and Vice
President and Chief
Actuary of Catholic
Knights Insurance Society
since July 1983
<PAGE>
Michael Stivoric Director Director of Catholic
Knights Financial
Services, Inc. since
June 1994; Director of
Catholic Brokerage
Services Corp. since Nov.
1994; and Vice President
of Fraternal Relations of
Catholic Knights
Insurance Society since
Dec. 1982
Mark K. Forbord Controller Controller of Catholic
Knights Financial
Services, Inc. since
__________; Controller of
Catholic Brokerage
Services Corp. since
___________; Senior
Financial Analyst of
Catholic Knights
Insurance Society since
July 1995; Instructor at
the University of
Wisconsin-Milwaukee since
Jan. 1986; and Instructor
at Cardinal-Stritch
University since Sept.
(b) Todd Investment Advisors, Inc.
Todd Investment Advisors, Inc. serves as the Sub-Adviser to the Equity
Income Fund. Todd is a wholly-owned subsidiary of Stifel Financial Corporation
of St. Louis, a brokerage and investment banking firm. Todd operates as an
independent asset management unit and does not execute trades through Stifel.
Set forth below is a list of the officers and directors of Todd as of
December 1, 1998, together with information as to any other business,
profession, location or employment of a substantial nature of those officers and
directors during the past two years. (The business address of all such persons
is c/o Todd Investment Advisors, Inc., 101 South Fifth Street, Suite 3160,
Louisville, Kentucky 40202):
NAME POSITIONS WITH TODD OTHER
---- ------------------- -----
Bosworth M. Todd Chairman and Chief Director of First Capital
Executive Officer Bank of Kentucky
Robert P. Bordogna President and Chief
Executive Officer
<PAGE>
Richard A. Loebig Executive Vice President Vice President and Fixed
Income Portfolio Manager,
Chandler Liquid Asset
Management; Vice
President and Director of
Taxable Fixed Income, PNC
Bank, Kentucky
Margaret C. Bell Vice President and
Director of Marketing
Charles K. Blair Vice President of Business Development, PNC
Business Development Bank Kentucky, Inc.
(c) Vantage Global Advisors, Inc.
Vantage Global Advisors, Inc. serves as the Sub-Adviser to the Disciplined
Capital Appreciation Fund. Vantage Global Advisors is a wholly-owned subsidiary
of Lincoln National Corporation in Fort Wayne, Indiana. All Vantage
professionals have an ownership stake in the firm through stock and stock
options of Lincoln National Corporation stock.
Set forth below is a list of the officers and directors of Vantage as of
December 1, 1998, together with information as to any other business,
profession, location or employment of a substantial nature of those officers and
directors during the past two years. (The business address of all such persons
is c/o Vantage Global Advisors, Inc., 630 Fifth Avenue, Suite 2670, New York,
N.Y. 10111):
<PAGE>
NAME POSITIONS WITH VANTAGE OTHER
---- ---------------------- -----
Scott Wittman President and Director Senior Vice President
Delaware Distributors
Limited Partnership
Dennis A. Blume Director Executive Vice President
and Director, Lincoln
National Investment
Management Company
Herbert T. McMeekin Director President and Director,
Lincoln National
Investment Management
Company; Executive Vice
President, Lincoln
National Corporation
(Holding Company)
Jeffrey J. Nick Director President and Chief
Executive Officer,
Lincoln National
Investment Companies
Bruce B. Barton Director President, Delaware
Distributors LP;
Executive, Lincoln
National Corporation
Mark C. Viani Vice President
Yi Feng Yang Vice President - Research Vice President, J&W
Seligman from May 1997 to
May 1998
Enrique D. Chang Senior Vice President/ Director of Quantitative
Quantitative Research Analysis/Senior Vice
President, J&W Seligman
from April 1997 to
November 1997; Director
of Quantitative Analysis
and Strategy, General
Reinsurance from October
1993 to March 1997
(d) Peregrine Capital Management, Inc.
Peregrine Capital Management, Inc. serves as the Sub-Adviser to the
Large-Cap Growth Fund. Peregrine Capital Management, Inc. is a wholly-owned
subsidiary of Norwest Bank Minnesota, N.A. However, Peregrine operates
independently through an entrepreneurial agreement with Norwest.
Set forth below is a list of the officers and directors of Peregrine
Capital Management, Inc. as of December 1, 1998, together with information as to
any other business, profession, location or employment of a substantial nature
of those officers and directors during the past two years. (The business
address of all such persons is c/o Peregrine Capital Management, Inc., 800
LaSalle Avenue, Suite 1850, Minneapolis, Minnesota 55402-2018):
<PAGE>
NAME POSITIONS WITH PEREGRINE OTHER
---- ------------------------ -----
Robert B. Mersky Chairman of the Board, Chief none
Executive Officer and
President
Ronald G. Hoffman Senior Vice President, Chief none
____ Officer, Chief _____
Officer and Chief Financial
Officer
Paul E. von Kuster, III Senior Vice President and none
Portfolio Manager
Jeannine McCormick Senior Vice President and none
Investment Analyst
William D. Giese Senior Vice President and none
Portfolio Manager
Patricia D. Burns Senior Vice President and none
Portfolio Manager
John S. Dale Senior Vice President and none
Portfolio Manager
Gary E. Nussbaum Senior Vice President and none
Portfolio Manager
Barbara K. McFadden Senior Vice President and none
Equity Trader
Paul R. Wurm Senior Vice President, none
Assistant Trader and
Accountant
Frank T. Matthews Vice President and Systems none
Manager
Tasso H. Coin, Jr. Senior Vice President and none
Portfolio Manager
Julie M. Gerend Senior Vice President - Plant none
Service and Marketing
Daniel J. Hagen Vice President and Senior none
Research Analyst
Jay H. Strohmaier Senior Vice President - Client Sales and
Service and Marketing Marketing, Voyageur
Asset Management
from April 1996 to
September 1996;
Clifton Group
(Investment
Management) Sales
and Marketing from
January 1995 to
March 1996
James P. Ross Vice President and Senior
Portfolio Advisor
Item 27. Principal Underwriter
<PAGE>
(a) Catholic Financial Services Corporation acts as the distributor
to each of the Funds. Catholic Financial Services Corporation
does not act as the principal underwriter or distributor of any
other open-end mutual funds.
Item 28. Location of Accounts and Records
Catholic Financial Services Corporation
1100 West Wells Street
Milwaukee, Wisconsin 53233
Firstar Mutual Fund Services, LLC
615 East Michigan Street
Milwaukee, Wisconsin 53202
Item 29. Management Services
Not applicable.
Item 30. Undertakings
Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Milwaukee, State of Wisconsin on this 23rd day of
December, 1998.
THE CATHOLIC ALLIANCE FUNDS, INC.
By: /s/ Allan G. Lorge
---------------------------------------
Allan G. Lorge, President and CEO
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on this 23rd day of December 1998, by
the following persons in the capacities indicated.
SIGNATURE TITLE
/s/ Daniel J. Steininger Chairman of the Board and Director
--------------------------------
Daniel J. Steininger
/s/ Allan G. Lorge President, Chief Executive Officer and
-------------------------------- Director
Allan G. Lorge
/s/ Theodore F. Zimmer Director
--------------------------------
Theodore F. Zimmer
/s/ Russell J. Kafka Treasurer (Chief Accounting and Financial
-------------------------------- Officer)
Russell J. Kafka
<PAGE>
EXHIBIT INDEX
Exhibit Numbered
Number Description Page
- ------- ----------- --------
(a) Articles of Incorporation
(b) By-Laws
(c)(1) Articles Sixth through Eighth and Article Tenth of the
Articles of Incorporation, filed as Exhibit (a) herewith
(c)(2) Articles II, VI, IX and X of the Bylaws, filed as Exhibit
(b) herewith
(d)(1) Investment Advisory Agreement
(d)(2) Form of Sub-Advisory Agreement
(e) Distribution Agreement
(f) None
(g) Custodian Agreement
(h)(1) Transfer Agent Servicing Agreement
(h)(2) Fund Accounting Servicing Agreement
(h)(3) Fulfillment Servicing Agreement
(h)(4) Rule 10f-3 Plan*
(i) Legal Opinion and Consent of Quarles & Brady
(j) Accountants Consent*
(k) None
(l) None
(m) Rule 12b-1 Plan
(n) None
(o) Rule 18f-3 Plan*
- -----------------------------
* To be filed by pre-effective amendment.
<PAGE>
ARTICLES OF INCORPORATION
OF
THE CATHOLIC ALLIANCE FUNDS, INC.
FIRST: The undersigned, Allan G. Lorge, whose address is 1100 West Wells
Street, P.O. Box 05900, Milwaukee, Wisconsin 53205-0900, being at least eighteen
(18) years of age does, hereby file these Articles of Incorporation forming a
corporation under the general laws of the State of Maryland, as set forth below.
SECOND: The name of the corporation ("Corporation") is:
The Catholic Alliance Funds, Inc.
THIRD: The purposes for which the corporation is formed are as follows:
(A) To operate as and carry on the business of an investment company,
and exercise all the powers necessary and appropriate to the conduct of
such operations.
(B) In general, to carry on any other business in connection with or
incidental to the foregoing purpose, to have and exercise all the powers
conferred upon corporations by the laws of the Sate of Maryland as in force
from time to time, to do everything necessary, suitable, or proper for the
attainment of any object or the furtherance of any power not inconsistent
with Maryland law, either alone or in association with others, and to take
any action incidental or appurtenant to or growing out of or connected with
the Corporation's business or purposes, objects, or powers.
(C) To conduct and carry on its business, or any part thereof, to
have one or more offices, and to exercise any or all of its corporate
powers and rights, in the State of Maryland, in other states, territories,
districts, colonies, and dependencies of the United States, and in any or
all foreign countries.
The foregoing clauses shall be construed both as objects and powers,
and the foregoing enumeration of specific powers shall not be held to limit or
restrict in any manner the general power of the corporation, within the fullest
extent of the law.
FOURTH: The address of the principal office of the corporation in the
State of Maryland is: The Catholic Alliance Funds, Inc., c/o The Corporation
Trust Incorporated, 300 East Lombard, Baltimore, Maryland 21202. The name and
address of the resident agent of the Corporation in the State of Maryland is:
The Corporation Trust Incorporated, 300 East Lombard, Baltimore, Maryland 21202.
The resident agent is a
<PAGE>
citizen of the State of Maryland, and actually resides therein.
FIFTH: CAPITAL STOCK.
(A) GENERAL. The total number of shares of stock which the
Corporation, by resolution or resolutions of the Board of Directors, shall
have authority to issue is One Billion (1,000,000,000) shares, par value
One-Tenth of One Cent ($0.001) per share, such shares having an aggregate
par value of One Million Dollars ($1,000,000). All such shares are herein
classified as "Common Stock," subject, however, to the authority
hereinafter granted to the Board of Directors to classify or reclassify any
such shares into one or more separate series ("series") and, within any
such series, one or more separate classes ("classes"), to increase or
decrease the aggregate number of shares of stock or the number of shares of
stock of any series or class that the Corporation has authority to issue,
and to authorize that all such shares of stock be issued as shares of one
or more series or one or more classes designated as the Board of Directors
may determine. Initially, one hundred fifty million (150,000,000) shares
of Common Stock shall be divided equally among three series as set forth
below:
<TABLE>
<CAPTION>
--------------------------------------------------------------------
SERIES NUMBER OF SHARES
--------------------------------------------------------------------
<S> <C>
Equity Income Fund 50,000,000
--------------------------------------------------------------------
Mid-Cap Growth Fund 50,000,000
--------------------------------------------------------------------
Disciplined Capital Appreciation Fund 50,000,000
--------------------------------------------------------------------
</TABLE>
(B) CREATION OF SERIES OR CLASSES. The balance of shares of stock
now or hereafter authorized but unissued may be issued as Common Stock, in
one or more new series or one or more new classes within any series, each
consisting of such number of shares and having such designations, powers,
preferences. rights, qualifications, limitations, and restrictions,
including variations between different series or classes as to purchase
price, terms and manner of redemption special and relative rights as to
dividends and on liquidation, conversion rights and conditions of separate
voting rights, as shall be fixed and determined from time to time by
resolution or resolutions providing for the issuance of such shares adopted
by the Board of Directors, to whom authority so to fix and determine the
same is hereby expressly granted.
(C) DIVIDENDS AND DISTRIBUTIONS. Without limiting the generality of
the foregoing. the dividends and distributions of investment income and
capital gains with respect to Common Stock and any series or class that may
hereafter be created shall be in such amount as may be declared from time
to time by the Board of Directors. and such dividends and distributions may
vary from series to series or class to class to such extent and for such
purposes as the Board of Directors may deem appropriate, including. but not
limited to, the purpose of
<PAGE>
complying with any requirements of regulatory or legislative authorities.
(D) CLASSIFICATION. The Board of Directors is hereby expressly
granted authority to (1) classify or reclassify any unissued stock (whether
now or hereafter authorized) from time to time by setting or changing the
preferences, conversion, or other rights. voting powers, restrictions,
limitations as to dividends, qualifications, valuation, or terms or
conditions of redemption of the stock, and (2) pursuant to such
classification or reclassification to increase or decrease the number of
authorized shares of any series or class, but the number of shares of any
series or class shall not be decreased by the Board of Directors below the
number of shares thereof then outstanding, or increased above the number of
shares then authorized; provided however, that nothing herein shall
prohibit the Board of Directors from increasing or decreasing the aggregate
number of shares of stock or the number of shares of stock of any series or
class that the Corporation has authority to issue.
(E) PROVISIONS FOR SERIES AND CLASSES. In addition to other
provisions of these Articles, the following provisions are applicable
regarding any series or class of shares of stock of the Corporation
established and designated by paragraph (A) of this Article FIFTH and shall
be applicable if the Board of Directors shall establish and designate
additional series or classes as provided in that paragraph:
(i) CLASSIFICATION. The Board of Directors may classify or
reclassify any unissued shares, or any shares previously issued and
reacquired, of any series or class into one or more series or classes
that may be established and designated from time to time. With
respect to any shares of any series or class reacquired by the
Corporation from time to time, the Corporation may cancel such shares,
hold such shares as treasury shares (of the same or some other series
or class), or reissue such shares for such consideration not less than
the greater of the par value and the net asset value per share (as
described in paragraph (A)(ii) of Article SEVENTH hereof) and on such
terms as they may determine.
(ii) ASSETS BELONGING TO A SERIES OR CLASS. All consideration
received by the Corporation for the issue or sale of shares of a
particular series or class, together with all assets in which such
consideration is invested or reinvested, all income, earnings,
profits, and proceeds thereof, including any proceeds derived from the
sale, exchange, or liquidation of such assets, and any funds or
payments derived from any reinvestment of such proceeds in whatever
form the same may be, shall irrevocably belong to that series or class
for all purposes, subject only to the rights of creditors, and shall
be so recorded upon the books of account of the Corporation. In the
event that there are any assets, income, earnings,
<PAGE>
profits. and proceeds thereof, funds, or payments which are not
readily identifiable as belonging to any particular series or class,
the Board of Directors shall allocate them among any one or more of
the series or classes established and designated from time to time in
such manner and on such basis as they, in their sole discretion deem
fair and equitable. Each such allocation by the Board of Directors
shall be conclusive and binding upon the shareholders of all series
and classes for all purposes.
(iii) LIABILITIES BELONGING TO A SERIES OR CLASS. The assets
belonging to each particular series or class shall be charged with the
liabilities of the Corporation in respect of that series or class and
all expenses, costs, charges, and reserves attributable to that series
or class, and any general liabilities, expenses, costs, charges, and
reserves of the Corporation that are not readily identifiable as
belonging to any particular series or class shall be allocated, and
charged by the Board of Directors, to and among any one or more of the
series or classes established and designated from time to time in such
manner and on such basis as the Board of Directors in its sole
discretion deem fair and equitable. Each allocation of liabilities,
expenses, costs, charges, and reserves by the Board of Directors shall
be conclusive and binding upon the holders of shares of all series and
classes for all purposes.
(iv) DIVIDENDS AND DISTRIBUTIONS. The power of the Corporation
to pay dividends and make distributions shall be governed by paragraph
(C) of this Article FIFTH with respect to any one or more series or
classes which represent interests in separately managed components of
the Corporation's assets. Dividends and distributions on shares of a
particular series or class may be paid with such frequency as the
Board of Directors may determine, which may be daily or otherwise,
pursuant to a standing resolution or resolutions adopted only once or
with such frequency as the Board of Directors may determine. Such
dividends and distributions may be paid to the holders of shares of a
particular series or class, from such of the income and capital gains,
accrued or realized, attributable to the assets belonging to that
series or class, as the Board of Directors may determine, after
providing for actual and accrued liabilities belonging to that series
or class. All dividends and distributions on shares of a particular
series or class shall be distributed pro rata to the holders of that
series or class in proportion to the number of shares of that series
or class held by such holders at the date and time of record
established for the payment of such dividends or distributions.
Notwithstanding the provisions of this Article FIFTH, the Board of
Directors may declare and distribute a stock dividend to holders of
shares of any series or class of shares by the distribution of shares
of another series or class.
<PAGE>
(v) EQUALITY. Subject to the provisions of this Article
FIFTH, all shares of all series or classes shall have identical rights
and privileges, except insofar as variations thereof among series or
classes shall have been determined and fixed by the Board of
Directors. Each share of any series or class shall represent an equal
proportionate share in the assets of that series or class with each
other share of that series or class. The Board of Directors may divide
or combine the shares of any series or class into a greater or lesser
number of shares of the series or class without thereby changing the
proportionate interests of the holders of such shares in the assets of
that series or class.
(vi) CONVERSION OR EXCHANGE RIGHTS. Subject to compliance with
the requirements of the Investment Company Act of 1940, the Board of
Directors shall have the authority to provide that the holders of
shares of any series or class shall have the right to convert or
exchange said shares for or into shares of one or more other series or
classes in accordance with such requirements and procedures as may be
established by the Board of Directors from time to time
(vii) ESTABLISHMENT AND DESTINATION OF SERIES OR CLASSES. The
establishment and designation of any series or class of shares in
addition to those established and designated in paragraph (A) of this
Article FIFTH shall be effective upon the execution of the appropriate
instruments and the proper filing thereof in accordance with the
Maryland General Corporation Law, setting forth such establishment and
designation and the relative rights, preferences, voting powers,
restrictions. Imitations as to dividends, qualifications, valuation,
and terms and conditions of redemption of such series or class or as
otherwise provided in such instruments. At any time that there are no
shares outstanding or subscribed for any particular series or class
previously established and designated, the Board of Directors may by a
similar procedure abolish that series or class and the establishment
and designation thereof.
(viii) LIQUIDATION. In the event of the liquidation of a
particular series or class, the shareholders of the series or class
that has been established and designated and that is being liquidated
shall be entitled to receive, when and as declared by the Board of
Directors, the excess of the assets belonging to that series or class
over the liabilities belonging to that series or class. The holders
of shares of any series or class shall not be entitled thereby to any
distribution upon liquidation of any other series or class. The assets
that may be distributed to the shareholders of any
<PAGE>
series or class shall be distributed among such shareholders in
proportion to the number of shares of that series or class held by
each such shareholder and recorded on the books of the Corporation.
The liquidation of any particular series or class in which there are
shares then outstanding may be authorized by an instrument in writing
signed by a majority of the Directors then in office, subject to the
affirmative vote of "a majority of the outstanding voting securities"
of that series or class, as the quoted phrase is defined in the
Investment Company Act of 1940.
<PAGE>
(ix) VOTING. Each share of each series or class shall have
equal voting rights with every other share of every other series or
class, and all shares of all series or classes shall vote as a single
group except where a separate vote of any series or class is required
by the Investment Company Act of 1940, the Maryland General
Corporation Law, these Articles of Incorporation, the By-Laws of the
Corporation, or as the Board of Directors may determine in its sole
discretion. Where a separate vote is required with respect to one or
more series or classes, then the shares of all other series or classes
shall vote as a single series or class. provided that, as to any
matter which does not affect the interest of a particular series or
class, only the holders of shares of the one or more affected series
or classes shall be entitled to vote.
SIXTH: NUMBER OF DIRECTORS. The number of Directors of the Corporation
shall be such number as may from time to time be fixed by the By-Laws of the
Corporation, or by action of the Board of Directors or otherwise pursuant to
authorization contained in such By-Laws, but the number of Directors shall never
be less than three (3). Allan G. Lorge, Daniel J. Steininger and Theodore F.
Zimmer shall serve as initial directors until the first meeting of shareholders
or until their successors are duly chosen and qualified.
SEVENTH: REGULATION OF THE POWERS OF THE CORPORATION AND ITS DIRECTORS AND
SHAREHOLDERS.
(A) ISSUANCE AND SALE OF THE CORPORATION'S SHARES.
(i) GENERAL. All corporate powers and authority of the
Corporation (except as otherwise provided by statute, by these
Articles of Incorporation, or by the By-Laws of the Corporation) shall
be vested in and exercised by the Board of Directors. The Board of
Directors shall have the power to determine or cause to be determined
the nature, quality, character, and composition of the portfolio of
securities and investments of each series or class of the Corporation,
but the foregoing shall not limit the ability of the Board of
Directors to delegate such power to a Committee of the Board of
Directors or to an officer of the Corporation, or to enter into an
investment advisory or management contract as described in paragraph
(E)(v) of this Article SEVENTH. The Board of Directors may from time
to time issue and sell or cause to be issued and sold any of the
Corporation's authorized shares, including any additional shares which
it hereafter authorizes and any shares redeemed or repurchased by the
Corporation, except that only shares previously contracted to be sold
may be issued during any period when the determination of net asset
value is suspended pursuant to the provisions
<PAGE>
of paragraph (C)(iii) of this Article SEVENTH. All such authorized
shares, when issued in accordance with the terms of this paragraph (A)
shall be fully paid and nonassessable No holder of any shares of the
Corporation shall be entitled, by reason of holding or owning such
shares, to any prior, preemptive, or other right to subscribe to,
purchase, or otherwise acquire any additional shares of the
Corporation subsequently issued for cash or other consideration or by
way of a dividend or otherwise, and any or all of such shares of the
Corporation. whether now or hereafter authorized or created, may be
issued, reissued, or transferred. if the same have been reacquired and
have treasury status, to such persons. firms. corporations, and
associations, and for such lawful consideration, and on such terms as
the Board of Directors in its discretion may determine. without first
offering the same, or any portion thereof, to any said holder. Voting
power in the election of Directors and for all other purposes shall be
vested exclusively in the holders of the Corporation's authorized and
issued shares.
(ii) PRICE. No shares of the Corporation shall be issued or
sold by the Corporation, except as a stock dividend distributed to
shareholders, for less than an amount which would result in proceeds
to the Corporation. before taxes payable by the Corporation in
connection with such transaction, of at least the net asset value per
share determined as set forth in paragraph (C) of this Article SEVENTH
as of such time as the Board of Directors shall have by resolution
theretofore prescribed. In the absence of a resolution of the Board of
Directors applicable to the transaction, such net asset value shall be
that next determined after receipt of an unconditional purchase order.
(iii) ON MERGER OR CONSOLIDATION. The Board of Directors, in
its sole discretion, may permit shares of the Corporation to be issued
for stock or assets of any kind. In this regard, in connection with
the acquisition of any assets or stock of another person (as such term
is defined in Section 2(a)(28) of the Investment Company Act of 1940),
the Board of Directors may issue or cause to be issued shares of the
Corporation and accept in payment therefor, in lieu of cash, such
assets at their fair market value, or such stock at the fair market
value of the assets held by such person, either with or without
adjustment for contingent costs or liabilities, provided that the
funds of the Corporation are permitted by law to be invested in such
assets or stock
(iv) FRACTIONAL SHARES. The Board of Directors may issue and
sell fractions of shares having pro rata all the rights of full
shares, including, without limitation, the right to vote and to
receive dividends.
<PAGE>
(v) RESTRICTIONS ON TRANSFER OF SHARES. Shares of any series
or class of the Corporation shall not be transferred until such
transfer shall have been reported to the Board of Directors and
approved by them.
<PAGE>
(B) REDEMPTION AND REPURCHASE OF THE CORPORATION'S SHARES.
(i) REDEMPTION OF SHARES. The Corporation shall redeem its
shares, subject to the conditions and at the price determined as
hereinafter set forth. upon proper application of the record holder
thereof at such office or agency as may be designated from time to
time for that purpose by the Board of Directors. Any such application
must be accompanied by the certificate or certificates. if any.
evidencing such shares, duly endorsed or accompanied by a proper
instrument or transfer. The Board of Directors shall have the power
to determine or to delegate to the proper officers of the Corporation
the power to determine from time to time the form and the other
accompanying documents which shall be necessary to constitute a proper
application for redemption. The Board of Directors may by resolution
order the redemption from time to time of all shares of the stock of
the Corporation at the net asset value of such shares as set forth in
paragraph (C) of this Article SEVENTH in accounts having a net asset
value of less than $1,000, or such greater or lesser minimum amount as
determined from time to time by the Board of Directors and which is
consistent with applicable law, subject to such terms and conditions
as the Board of Directors may, in its sole discretion, determine to be
appropriate and desirable.
(ii) PRICE. Such shares shall be redeemed at their net asset
value determined as set forth in paragraph (C) of this Article SEVENTH
as of such time as the Board of Directors shall have theretofore
prescribed by resolution. In the absence of such resolution, the
redemption price of shares deposited shall be the net asset value of
such shares next determined as set forth in paragraph (C) of this
Article SEVENTH after receipt of such application.
(iii) PAYMENT. Payment for such shares shall be made to the
shareholder of record within seven (7) days after the date upon which
proper application is received, or such other time period of greater
or lesser duration as permitted by applicable law, subject to the
provisions of paragraph (B)(iv) of this Article SEVENTH. Such payment
shall be made in cash or other assets of the Corporation or both, as
the Board of Directors shall prescribe.
(iv) EFFECT OF SUSPENSION OF DETERMINATION OF NET ASSET VALUE.
If, pursuant to paragraph (C)(iii) of this Article SEVENTH, the Board
of Directors shall declare a suspension of the determination of net
asset value, the rights of shareholders (including those who shall
have applied for redemption pursuant to paragraph (B)(i) of this
Article
<PAGE>
SEVENTH but who shall not yet have received payment) to have shares
redeemed and paid for by the Corporation shall be suspended until the
termination of such suspension is declared. Any record holder whose
redemption right is so suspended may, during the period of such
suspension, by appropriate written notice of revocation to the office
or agency where application was made, revoke his application and
withdraw any share certificates which accompanied such application.
The redemption price of shares for which redemption applications have
not been revoked shall be the net asset value of such shares next
determined as set forth in paragraph (C) of this Article SEVENTH after
the termination of such suspension, and payment shall be made within
seven (7) days after the date upon which the proper application was
made plus the period after such application during which the
determination of net asset value was suspended
(v) REPURCHASE BY AGREEMENT. The Corporation may repurchase
shares of the Corporation directly, or through its principal
underwriter or other agent designated for the purpose, by agreement
with the owner thereof, at a price not exceeding the net asset value
per share determined as of the time when the purchase or contract of
purchase is made or the net asset value as of any time which may be
later determined pursuant to paragraph (C) of this Article SEVENTH,
provided payment is not made for the shares prior to the time as of
which such net asset value is determined.
(C) NET ASSET VALUE OF SHARES.
(i) BY WHOM DETERMINED. The Board of Directors shall have the
power and duty to determine the method and time for computing the net
asset value per share of the outstanding shares of the Corporation and
of any such series or class of the Corporation. It may delegate such
power and duty to one or more of the Directors and officers of the
Corporation, to the custodian or depository of the Corporation's
assets. or to another agent of the Corporation appointed for such
purpose. Any determination made pursuant to this section by the Board
of Directors, or its delegate, shall be binding on all parties
concerned.
(ii) WHEN DETERMINED. The net asset value shall be determined
at such times as the Board of Directors shall prescribe by resolution,
provided that such net asset value shall be determined at least once
each week as of the close of business on a day the New York Stock
Exchange is open for trading and the Corporation is open for business
("business day"). In the absence of a resolution of the Board of
Directors,
<PAGE>
the net asset value shall be determined as of the close of regular
trading on the New York Stock Exchange on each business day.
(iii) SUSPENSION OF DETERMINATION OF NET ASSET VALUE. The Board
of Directors may declare a suspension of the determination of net
asset value for the whole or any part of any period (a) during which
the New York Stock Exchange is closed other than customary weekend and
holiday closings, (b) during which trading on the New York Stock
Exchange is restricted, (c) during which an emergency exists as a
result of which disposal by the Corporation of securities owned by it
is not reasonably practicable or it is not reasonably practicable for
the Corporation fairly to determine the value of its net assets, or
(d) during which a governmental body having jurisdiction over the
Corporation may by order permit for the protection of the security
holders of the Corporation. Such suspension shall take effect at such
time as the Board of Directors shall specify, which shall not be later
than the close of business on the business day next following the
declaration. and thereafter there shall be no determination of net
asset value until the Board of Directors shall declare the suspension
at an end, except that the suspension shall terminate in any event on
the first day on which (l) the condition giving rise to the suspension
shall have ceased to exist and (2) no other condition exists under
which suspension is authorized under this paragraph (C)(iii) of
Article SEVENTH.
Each declaration by the Board of Directors pursuant to this
paragraph (C)(iii) of Article SEVENTH shall be consistent with such
official rules and regulations, if any, relating to the subject matter
thereof as shall have been promulgated by the Securities and Exchange
Commission or any other governmental body having jurisdiction over the
Corporation and as shall be in effect at the time. To the extent not
inconsistent with such official rules and regulations, the
determination of the Board of Directors shall be conclusive.
(iv) COMPUTATION OF NET ASSET VALUE.
(a) NET ASSET VALUE PER SHARE. The net asset value of
each share of each series or class or, where applicable, of the
Corporation, as of any particular time shall be the quotient
obtained by dividing the value of the net assets of such series
or class or, where applicable, of the Corporation, by the total
number of shares of the series or class or, where applicable, the
Corporation, outstanding. Notwithstanding the above, the Board
of Directors may determine to maintain the net asset value per
share of any
<PAGE>
series or class at a designated constant dollar amount and in
connection therewith may adopt procedures not inconsistent with
the Investment Company Act of 1940 for the continuing
declarations of income attributable to that series or class as
dividends payable in additional shares of that series or class at
the designated constant dollar amount and for the handling of any
losses attributable to that series or class. Such procedures may
provide that in the event of any loss, each shareholder shall be
deemed to have contributed to the capital of the Corporation
attributable to that series or class his pro rata portion of the
total number of shares required to be cancelled in order to
permit the net asset value per share of that series or class to
be maintained, after reflecting such loss, at the designated
constant dollar amount. Each shareholder of the Corporation
shall be deemed to have agreed, by his investment in any series
or class with respect to which the Board of Directors shall have
adopted any such procedure, to make the contribution referred to
in the preceding sentence in the event of any such loss.
(b) NET ASSET VALUE OF SERIES OR CLASS. The value of
the net assets of any series or class or, where applicable, of
the Corporation, as of any particular time shall be the value of
the assets of the series or class or. where applicable, the
Corporation, less its liabilities, determined and computed as
prescribed by the Board of Directors.
(D) COMPLIANCE WITH INVESTMENT COMPANY ACT OF 1940. Notwithstanding
any of the foregoing provisions of this Article SEVENTH, the Board of
Directors may prescribe. in its absolute discretion, such other bases and
times for determining the per share net asset value of the shares of any
series or class or, where applicable, of the Corporation as it shall deem
necessary or desirable to enable the Corporation to comply with any
provision of the Investment Company Act of 1940, or any rule, release.
order or regulation thereunder. including any rule or regulation adopted by
any securities association registered under the Securities Exchange Act of
1934, all as in effect now or as hereafter amended or added, or any
decision of a court of competent jurisdiction, notwithstanding that any of
the foregoing shall later be found to be invalid or otherwise reversed or
modified by any of the foregoing.
(E) MISCELLANEOUS.
(i) COMPENSATION OF DIRECTORS. The Board of Directors shall
have power from time to time to authorize payment of compensation to
<PAGE>
the Directors for services to the Corporation, including fees for
attendance at meetings of the Board of Directors and of committees of
the Board of Directors.
(ii) INSPECTION OF CORPORATION'S BOOKS. The Board of Directors
shall have power from time to time to determine whether and to what
extent, and at what times and places, and under what conditions and
regulations the accounts and books of the Corporation (other than the
stock ledger) or any of them shall be open to the inspection of
shareholders; and no shareholder shall have any right to inspect any
account, book, or document of the Corporation except as at the time
and to the extent required by applicable law, unless authorized by a
resolution of the shareholders or the Board of Directors.
(iii) RESERVATION OF RIGHT TO AMEND. The Corporation reserves
the right to make any amendment of its charter, now or hereafter
authorized by law, including any amendment which alters the contract
rights, as expressly set forth in its charter, of any outstanding
stock, and all rights herein conferred upon shareholders are granted
subject to such reservation. The Board of Directors shall have the
power to adopt, alter, or repeal the By-Laws of the Corporation,
except to the extent that the By-Laws otherwise provide, or as
otherwise provided by applicable law.
(iv) DETERMINATION OF NET PROFITS. DIVIDENDS. ETC. The Board
of Directors is expressly authorized to determine, in accordance with
generally accepted accounting principles and practices, what
constitutes net profits. earnings, surplus, or net assets in excess of
capital, and to determine what accounting periods, whether daily,
annual, or any other period, shall be used by any series or class or.
where applicable, the Corporation, for any purpose; to set apart out
of any funds of any series or class or, where applicable, the
Corporation, such reserves for such purposes as it shall determine and
to abolish the same; to declare and pay dividends and distributions in
cash, securities, or other property from surplus or any funds legally
available therefor, in such amounts and at such intervals (which may
be as frequently as daily) or on such other periodic basis, as it
shall determine; to declare such dividends or distributions by means
of a formula or other method of determination, at meetings held less
frequently than the frequency of the effectiveness of such
declarations; to establish payment dates for dividends or any other
distributions on any basis, including dates occurring less frequently
than the effectiveness of the declaration thereof; and to provide for
the payment of declared dividends on a date earlier than the specified
payment date in the case of shareholders of the Corporation redeeming
<PAGE>
their entire ownership of shares of the Corporation.
The Corporation and each of its series intends to qualify as a
"regulated investment company" under the Internal Revenue Code of
1986, or any successor or comparable statute thereto, and regulations
promulgated thereunder. Inasmuch as the computation of net income and
gains for Federal income tax purposes may vary from the computation
thereof on the books of the Corporation, the Board of Directors shall
have the power, in its sole discretion, to distribute in any fiscal
year as dividends, including dividends designated in whole or in part
as capital gains distributions, amounts sufficient, in the opinion of
the Board of Directors, to enable the Corporation and each of its
series to qualify as a regulated investment company and to avoid
liability of the Corporation and each of its series for Federal income
tax in respect of that year. However, nothing in the foregoing shall
limit the authority of the Board of Directors to make distributions
greater than or less than the amount necessary to qualify as a
regulated investment company and to avoid liability of the Corporation
and each of its series for such tax.
<PAGE>
(v) CONTRACTS. The Board of Directors may in its discretion
from time to time enter into an underwriting contract or contracts
providing for the sale of the shares of Common Stock of the
Corporation to net the Corporation not less than the amount provided
for in paragraph (A)(ii) of this Article SEVENTH, whereby the
Corporation may either agree to sell the shares to the other party to
the contract or appoint such other party its sales agent for such
shares (such other party being herein sometimes called the
"underwriter"), and in either case, on such terms and conditions as
may be prescribed in the By-Laws, if any, and such further terms and
conditions as the Board of Directors may in its discretion determine
is not inconsistent with the provisions of this Article SEVENTH or of
the By-Laws; and such contract may also provide for the repurchase of
shares of the Corporation by such other party as agent of the
Corporation.
The Board of Directors may in its discretion from time to time
enter into an investment advisory or management contract whereby the
other party to such contract shall undertake to furnish to a series or
class or, where applicable. the Corporation, such management,
investment advisory, statistical and research facilities and services,
and such other facilities and services. if any, and all upon such
terms and conditions. as the Board of Directors may in its discretion
determine.
Any contract of the character described in the paragraphs above
or for services as custodian, transfer agent or disbursing agent or
related services may be entered into with any corporation, firm.
trust, or association, although one or more of the Directors or
officers of the Corporation may be an officer, director, trustee,
shareholder, or member of such other party to the contract, and no
such contract shall be invalidated or rendered voidable by reason of
the existence of any such relationship, nor shall any person holding
such relationship be liable merely by reason of such relationship for
any loss or expense to the Corporation under or by reason of said
contract or accountable for any profit realized directly or indirectly
therefrom, except as otherwise provided by applicable law. The same
person (including a firm, corporation, trust, or association) may be
the other party to contracts entered into pursuant to the above
paragraphs, and any individual may be financially interested or
otherwise affiliated with persons who are parties to any or all of the
contracts mentioned in this paragraph, except as otherwise provided by
applicable law
Any contract entered into pursuant to the first two paragraphs of
this paragraph (E)(v) of Article SEVENTH shall be consistent with and
subject to the requirements of Section 15 of the Investment Company
Act
<PAGE>
of 1940 (including any amendment thereof or other applicable Act of
Congress hereafter enacted) with respect to its continuance in effect,
its termination, and the method of authorization and approval of such
contract or renewal thereof.
(vi) SHAREHOLDER VOTING. On each matter submitted to a vote of
the shareholders, each holder of a share shall be entitled to one vote
for each whole share and to a proportionate fractional vote for each
fractional share standing in his name on the books of the Corporation,
except as otherwise provided in paragraph (E)(ix) of Article FIFTH.
Notwithstanding any provision of the Maryland General Corporation Law
requiring a greater proportion than a majority of the votes of all
series or classes, or of any series or class, of stock entitled to be
cast to take or authorize any action, such action may, subject to
other applicable provisions of law, these Articles of Incorporation,
and the By-Laws of the Corporation, be taken or authorized upon the
concurrence of a majority of the aggregate number of the votes
entitled to be cast thereon.
(vii) CERTIFICATES. The Board of Directors of the Corporation
may by resolution authorize the issuance of some or all of the shares
of any series or classes of the Corporation's Common Stock without
certificates.
(viii) INDEMNIFICATION AND LIMITATION OF LIABILITY. To the
fullest extent permitted by Maryland and Federal law, as amended or
interpreted. no Director or officer of the Corporation shall be
personally liable to the Corporation or the holders of shares of its
series or classes for money damages and each Director and officer
shall be indemnified by the Corporation; PROVIDED, HOWEVER, that
nothing herein shall be deemed to protect any Director or officer of
the Corporation against any liability to the Corporation or the
holders of shares of its series or classes to which such Director or
officer would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his or her office.
EIGHTH: References in these Articles to the Investment Company Act of 1940
shall mean the published statute, the rules thereunder. and, where applicable,
published cases and interpretative letters of the Securities and Exchange
Commission.
<PAGE>
IN WITNESS WHEREOF, I have signed these Articles of Incorporation and
acknowledge the same to be my act of this15th day of December, 1998.
/s/ Allan G. Lorge
-------------------------
Allan G. Lorge, Sole Incorporator
WITNESS:
/s/ Theodore F. Zimmer
- -------------------------
Theodore F. Zimmer
STATE OF WISCONSIN )
) ss
COUNTY OF MILWAUKEE )
The foregoing instrument was acknowledged before me this 15th day of
December, 1998 by Allan G. Lorge and Theodore F. Zimmer, both persons known to
me, in their individual capacities.
/s/ Fredrick G. Lautz
-------------------------
Notary Public, Milwaukee County
State of Wisconsin
My Commission Is Permanent
<PAGE>
BY-LAWS
OF
THE CATHOLIC ALLIANCE FUNDS, INC.
(A Maryland Corporation)
ARTICLE I
NAME OF CORPORATION, LOCATION OF
OFFICES AND SEAL
SECTION 1.1. NAME. The name of the Corporation is The Catholic Alliance Funds,
Inc.
SECTION 1.2. PRINCIPAL OFFICES. The principal office of the Corporation in the
State of Maryland shall be located in Baltimore, Maryland. The Corporation may,
in addition, establish and maintain such other offices and places of business as
the Board of Directors may, from time to time, determine.
SECTION 1.3. SEAL. The corporate seal of the Corporation shall be circular in
form and shall bear the name of the Corporation, the year of its incorporation,
and the words "Corporate Seal, Maryland" or "Corporate Seal, Md." The form of
the seal shall be subject to alteration by the Board of Directors and the seal
may be used by causing it or a facsimile to be impressed or affixed or printed
or otherwise reproduced. Any officer or Director of the Corporation shall have
authority to affix the corporate seal of the Corporation to any document
requiring the same.
ARTICLE II
STOCKHOLDERS
SECTION 2.1. PLACE OF MEETINGS. All meetings of the Stockholders shall be held
at such place within or outside the State of Maryland as the Board of Directors
may determine.
SECTION 2.2. ANNUAL MEETING. The Corporation shall not be required to hold an
annual meeting of its shareholders in any year in which election of Directors is
not required to be acted upon under the Investment Company Act. In the event
that the Corporation shall be required by the Investment Company Act to hold an
annual meeting of shareholders, such meeting shall be held: (a) at a date and
time set by the Board of Directors in accordance with the Investment Company Act
if the purpose of the meeting is to elect Directors, but in no event later than
one hundred and twenty (120) days after the event requiring the annual meeting;
and (b) on a date and time fixed by the Board of Directors during the month of
April (i) in the fiscal year immediately following the fiscal year in which
independent accountants were appointed by the Board of Directors if the
<PAGE>
purpose of the meeting is to ratify the selection of such independent
accountants or (ii) in any fiscal year if an annual meeting is to be held for
any reason other than as specified in the foregoing. Any shareholders' meeting
held in accordance with the preceding sentence shall for all purposes constitute
the annual meeting of shareholders for the fiscal year of the Corporation in
which the meeting is held. At any such meeting, the shareholders shall elect
Directors to hold the offices of any Directors who have held office for more
than one (1) year or who have been elected by the Board of Directors to fill
vacancies which result from any cause. Except as the Articles of Incorporation
or applicable law provides otherwise, Directors may transact any business within
the powers of the Corporation as may properly come before the meeting. Any
business of the Corporation may be transacted at the annual meeting without
being specifically designated in the notice, except such business as is
specifically required by applicable law to be stated in the notice.
SECTION 2.3. SPECIAL MEETINGS. Special Meetings of the Stockholders for any
purpose or purposes, unless otherwise prescribed by statute or by the Articles
of Incorporation, may be called at any time by resolution of the Board of
Directors or by the President. Special Meetings of the Stockholders shall be
called by the Secretary: (1) for the purpose of considering the removal of a
Director from office upon the written request of Stockholders entitled to vote
not less than 10% of all the votes entitled to be cast at such meeting, and the
Corporation shall cooperate with and assist the Stockholders of record who
notify the Corporation that they wish to communicate with the other Stockholders
for the purpose of obtaining signatures to request such a meeting, all pursuant
to and in accordance with Section 16(c) of the Investment Company Act of 1940,
as amended; and (2) for any other purpose upon the written request of
Stockholders entitled to vote not less than 25% of all of the votes entitled to
be cast at such meeting. In either case, such request shall state the
purpose(s) of such meeting and the matter(s) proposed to be acted upon, and the
Corporation may condition the calling of the meeting on payment by the
Stockholders of the reasonably estimated cost of preparing and mailing the
notice of the meeting, in which case the Secretary shall determine and specify
the estimated cost to such Stockholders. No special meeting shall be called
upon the request of the Stockholders pursuant to clause (2) above if the purpose
is to consider any matter which is substantially the same as a matter voted upon
at any special meeting of the Stockholders held during the preceding 12 months,
unless requested by the holders of a majority of all shares entitled to be voted
at such meeting.
SECTION 2.4. NOTICE OF MEETINGS. The Secretary shall cause notice of the
place, date and hour, and, in the case of a special meeting, the purpose or
purposes for which the meeting is called, to be served, either personally or by
mail, not less than 10 nor more than 90 days before the date of the meeting, to
each Stockholder entitled to vote at such meeting. If mailed (1) such notice
shall be directed to a Stockholder at his address as it shall appear on the
books of the Corporation (unless he shall have filed with the Transfer Agent of
the Corporation a written request that notices intended for him be mailed to
some other address, in which case it shall be mailed to the address designated
in such request) and (2) such notice shall be deemed to have been given as of
the date when it is deposited in the United States mail with first class postage
<PAGE>
thereon prepaid. Irregularities in the notice or in the giving thereof, as well
as the accidental omission to give notice of any meeting to, or the non-receipt
of any such notice by, any of the Stockholders shall not invalidate any action
otherwise properly taken by or at any such meeting.
Notice of any Stockholders' meeting need not be given to any
Stockholder who shall sign a written waiver of such notice whether before or
after the time of such meeting, which waiver shall be filed with the record of
such meeting, or to any Stockholder who is present at such meeting in person or
by proxy. Notice of adjournment of a Stockholders' meeting to another time or
place need not be given if such time and place are announced at the meeting.
SECTION 2.5. QUORUM. The presence at any Stockholders' meeting, in person or
by proxy, of Stockholders entitled to cast one-third of the votes shall be
necessary and sufficient to constitute a quorum for the transaction of business,
except as otherwise provided by statute, by the Articles of Incorporation or by
these By-Laws. In the absence of a quorum, the holders of a majority of shares
entitled to vote at the meeting and present in person or by proxy, or, if no
Stockholder entitled to vote is present in person or by proxy, any officer
present entitled to preside or act as Secretary of such meeting may adjourn the
meeting SINE DIE or from time to time without further notice to a date not more
than 120 days after the original record date. Any business that might have been
transacted at the meeting originally called may be transacted at any such
adjourned meeting at which a quorum is present.
SECTION 2.6. VOTING. At each Stockholders' meeting, each Stockholder entitled
to vote shall be entitled to one vote for each share of stock of the Corporation
validly issued and outstanding and standing in his name on the books of the
Corporation on the record date fixed in accordance with Section 6.3 of Article
VI hereof. Except as otherwise specifically provided in the Articles of
Incorporation or these By-Laws or as required by provisions of the Investment
Company Act of 1940, as amended from time to time, all matters shall be decided
by a vote of the majority of the votes validly cast. The vote upon any question
shall be by ballot whenever requested by any person entitled to vote, but,
unless such a request is made, voting may be conducted in any way approved by
the meeting.
SECTION 2.7. STOCKHOLDERS ENTITLED TO VOTE. If the Board of Directors sets a
record date for the determination of Stockholders entitled to notice of or to
vote at any Stockholders' meeting in accordance with Section 6.3 of Article VI
hereof, each Stockholder of the Corporation shall be entitled to vote, in person
or by proxy, each share of stock standing in his name on the books of the
Corporation on such record date. If no record date has been fixed, the record
date for the determination of Stockholders entitled to notice of or to vote at a
meeting of Stockholders shall be the later of the close of business on the day
on which notice of the meeting is mailed or the thirtieth day before the
meeting, or, if notice is waived by all Stockholders, at the close of business
on the tenth day next preceding the day on which the meeting is held.
SECTION 2.8. PROXIES. The right to vote by proxy shall exist only if the
instrument
<PAGE>
authorizing such proxy to act shall have been signed by the Stockholder or by
his duly authorized attorney. Unless a proxy provides otherwise, it is not
valid more than eleven months after its date. Proxies shall be delivered prior
to the meeting to the Secretary of the Corporation or to the person acting as
Secretary of the meeting before being voted. A proxy with respect to stock held
in the name of two or more persons shall be valid if executed by one of them
unless at or prior to exercise of such proxy the Corporation receives a specific
written notice to the contrary from any one of them. A proxy purporting to be
executed by or on behalf of a Stockholder shall be deemed valid unless
challenged at or prior to its exercise.
ARTICLE III
BOARD OF DIRECTORS
SECTION 3.1. POWERS. Except as otherwise provided by law, by the Articles of
Incorporation or by these By-Laws, the business and affairs of the Corporation
shall be managed under the direction of and all the powers of the Corporation
shall be exercised by or under authority of its Board of Directors.
SECTION 3.2. NUMBER AND TERM. The Board of Directors shall consist of not
fewer than three nor more than eleven Directors, as specified by a resolution of
a majority of the entire Board of Directors, provided that at least a majority
of the entire Board of Directors shall be persons who are not interested persons
of the Corporation as defined in the Investment Company Act of 1940. Each
Director (whenever selected) shall hold office until his successor is elected
and qualified or until his earlier death, resignation or removal.
SECTION 3.3. ELECTION. At any annual meeting of Stockholders called and held
for the purpose of electing Directors pursuant to the requirements of the
Investment Company Act of 1940, as amended, the Corporation's Articles of
Incorporation or these By-Laws, Directors shall be elected by vote of the
holders of a majority of the shares present in person or by proxy and entitled
to vote thereon.
SECTION 3.4. VACANCIES AND NEWLY CREATED DIRECTORSHIPS. If any vacancies shall
occur in the Board of Directors by reason of death, resignation, removal or
otherwise, or if the authorized number of Directors shall be increased, the
Directors then in office shall continue to act, and such vacancies (if not
previously filled by the Stockholders) may be filled by a majority of the
Directors then in office, although less than a quorum, except that a newly
created Directorship may be filled only by a majority vote of the entire Board
of Directors; provided, however, that immediately after filling such vacancy, at
least two-thirds (2/3) of the Directors then holding office shall have been
elected to such office by the Stockholders of the Corporation. In the event
that at any time, other than the time preceding the first annual Stockholders'
meeting, less than a majority of the Directors of the Corporation holding office
at that time were elected by the Stockholders, a meeting of the Stockholders
shall be held promptly and in any event within 60 days for the purpose of
electing Directors to fill any existing vacancies in the Board of Directors,
unless the Securities and Exchange Commission or any court of competent
jurisdiction shall by order extend such period.
<PAGE>
SECTION 3.5. REMOVAL. At any meeting of Stockholders duly called and at which
a quorum is present, the Stockholders may, by the affirmative votes of the
holders of a majority of the votes entitled to be cast thereon, remove any
Director or Directors from office, with or without cause, and may elect a
successor or successors to fill any resulting vacancies for the unexpired terms
of the removed Directors.
SECTION 3.6. ANNUAL AND REGULAR MEETINGS. The Board of Directors from time to
time may provide by resolution for the holding of regular and annual meetings of
the Board of Directors and fix their time and place within or outside the State
of Maryland. At the annual meeting of the Board of Directors, the Board shall
choose officers and transact other proper business for an annual meeting.
Notice of such annual and regular meetings of the Board of Directors need not be
in writing, provided that written notice of any change in the time or place of
such meetings shall be sent promptly to each Director not present at the meeting
at which such change was made in the manner provided in Section 3.7 of this
Article III for notice of special meetings of the Board of Directors. Except as
provided by the Investment Company Act of 1940, as amended, members of the Board
of Directors or any committee designated thereby may participate in a meeting of
such Board or committee by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other at the same time and participation by such means
shall constitute presence in person at the meeting.
SECTION 3.7. SPECIAL MEETINGS. Special meetings of the Board of Directors may
be held at any time or place and for any purpose when called by the Chairman of
the Board or by a majority of the Directors. Notice of special meetings,
stating the time and place, shall be (1) mailed to each Director at his
residence or regular place of business at least five days before the day on
which a special meeting is to be held or (2) delivered to him personally or
transmitted to him by telegraph, cable or wireless at least one day before the
meeting.
SECTION 3.8. WAIVER OF NOTICE. No notice of any meeting need be given to any
Director who is present at the meeting or who waives notice of such meeting in
writing (which waiver shall be filed with the records of such meeting), whether
before or after the time of the meeting.
SECTION 3.9. QUORUM AND VOTING. At all meetings of the Board of Directors, the
presence of one-third of the total number of Directors then in office (but not
less than two Directors) shall constitute a quorum and shall be sufficient for
the transaction of business. In the absence of a quorum, a majority of the
Directors present may adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present. The
action of a majority of the Directors present at a meeting at which a quorum is
present shall be the action of the Board of Directors, unless the concurrence of
a greater proportion is required for such action by law, by the Articles of
Incorporation or by these By-Laws.
SECTION 3.10. ACTION WITHOUT A MEETING. Any action required or permitted to be
taken at any meeting of the Board of Directors or of any committee thereof may
be taken without a meeting if a written consent to such action is signed by all
members of the
<PAGE>
Board or of such committee, as the case may be, and such written consent is
filed with the minutes of proceedings of the Board or committee.
SECTION 3.11. CONFERENCE TELEPHONE. Members of the Board of Directors or of
any committee designated by the Board of Directors may participate in a meeting
of the Board of Directors or of such committee by means of a conference
telephone or similar communications equipment if all persons participating in
the meeting can hear each other at the same time. Participation by such means
shall constitute presence in person at such meeting, unless otherwise prohibited
by applicable law.
SECTION 3.12. COMPENSATION OF DIRECTORS. The Board of Directors may, by
resolution, determine what compensation and reimbursement of expenses of
attendance at meetings, if any, shall be paid to Directors in connection with
their service on the Board. Nothing herein contained shall be construed to
preclude any Director from serving the Corporation in any other capacity or from
receiving compensation therefor.
ARTICLE IV
COMMITTEES
SECTION 4.1. ORGANIZATION. By resolution adopted by the Board of Directors,
the Board may designate one or more committees, including an Executive
Committee. The Chairmen of such committees shall be elected by the Board of
Directors. Each member of a committee shall be a Director and shall hold office
at the pleasure of the Board. The Board of Directors shall have the power at
any time to change the members of such committees and to fill vacancies in the
committees. The Board may delegate to these committees any of its powers,
except the power to declare a dividend, authorize the issuance of stock,
recommend to Stockholders any action requiring Stockholders' approval, amend
these By-Laws, or approve any merger or share exchange which does not require
Stockholder approval.
SECTION 4.2. EXECUTIVE COMMITTEE. There may be an Executive Committee of two
or more Directors appointed by the Board who may meet at stated times or on
notice to all by any of their own number. The Executive Committee shall consult
with and advise the officers of the Corporation in the management of its
business and exercise such powers of the Board of Directors as may be lawfully
delegated by the Board of Directors. The Executive Committee shall keep regular
minutes of its proceedings and report the same to the Board when required.
SECTION 4.3. OTHER COMMITTEES. The Board of Directors may appoint other
committees which shall have such powers and perform such duties as may be
delegated from time to time by the Board.
SECTION 4.4. PROCEEDINGS AND QUORUM. In the absence of an appropriate
resolution of the Board of Directors, each committee may adopt such rules and
regulations not inconsistent with law, the Articles of Incorporation or these
By-Laws to govern its proceedings, quorum and manner of acting as it shall deem
proper and desirable. In the event any member of any committee is absent from
any meeting, the members
<PAGE>
thereof present at the meeting, whether or not they constitute a quorum, may
appoint a member of the Board of Directors to act in the place of such absent
member.
ARTICLE V
OFFICERS
SECTION 5.1. GENERAL. The officers of the Corporation shall be a President, a
Secretary and a Treasurer, and may include one or more Vice Presidents,
Assistant Secretaries or Assistant Treasurers, and such other officers as may be
appointed in accordance with the provisions of Section 9 of this Article V. The
Board of Directors may, but shall not be required to, elect a Chairman of the
Board.
SECTION 5.2. ELECTION, TENURE AND QUALIFICATIONS. The officers of the
Corporation, except those appointed as provided in Section 9 of this Article V,
shall be elected by the Board of Directors at its first annual meeting or such
meetings as shall be held prior to its first annual meeting, and thereafter
annually at its annual meeting. If any officers are not chosen at any annual
meeting, such officers may be chosen at any subsequent regular or special
meeting of the Board. Except as otherwise provided in this Article V, each
officer chosen by the Board of Directors shall hold office until the next annual
meeting of the Board of Directors and until his successor shall have been
elected and qualified. Any person may hold one or more offices of the
Corporation except the offices of President and Vice President; however, a
person who holds more than one office may not act in more than one capacity to
execute, acknowledge or verify an instrument required by law to be executed,
acknowledged or verified by more than one officer. The Chairman of the Board
shall be elected from among the Directors of the Corporation and may hold such
office only as long as he continues to be a Director. No other officer need be
a Director.
SECTION 5.3. REMOVAL AND RESIGNATION. Whenever in the Board's judgment the
best interest of the Corporation will be served thereby, any officer may be
removed from office by the vote of a majority of the members of the Board of
Directors given at a regular meeting or any special meeting called for such
purpose. Any officer may resign his office at any time by delivering a written
resignation to the Board of Directors, the President, the Secretary, or any
Assistant Secretary. Unless otherwise specified therein, such resignation shall
take effect upon delivery.
<PAGE>
SECTION 5.4. CHAIRMAN OF THE BOARD. The Chairman of the Board, if there be
such an officer, shall preside at all Stockholders' meetings and at all meetings
of the Board of Directors and shall be EX OFFICIO a member of all committees of
the Board of Directors. He shall have such powers and perform such other duties
as may be assigned to him from time to time by the Board of Directors.
SECTION 5.5. PRESIDENT. The President shall be the chief executive officer of
the Corporation and, in the absence of the Chairman of the Board or if no
Chairman of the Board has been chosen, he shall preside at all Stockholders'
meetings and at all meetings of the Board of Directors and shall in general
exercise the powers and perform the duties of the Chairman of the Board.
Subject to the supervision of the Board of Directors, he shall have general
charge of the business, affairs, and property of the Corporation and general
supervision over its officers, employees and agents. Except as the Board of
Directors may otherwise order, he may sign in the name and on behalf of the
Corporation all deeds, bonds, contracts, or agreements. He shall exercise such
other powers and perform such other duties as from time to time may be assigned
to him by the Board of Directors.
SECTION 5.6. VICE PRESIDENT. The Board of Directors may from time to time
elect one or more Vice Presidents who shall have such powers and perform such
duties as from time to time may be assigned to them by the Board of Directors or
the President. At the request or in the absence or disability of the President,
the Vice President (or, if there are two or more Vice Presidents, then the
senior of the Vice Presidents present and able to act) may perform all the
duties of the President and, when so acting, shall have all the powers of and be
subject to all the restrictions upon the President.
SECTION 5.7. TREASURER AND ASSISTANT TREASURERS. The Treasurer shall be the
principal financial and accounting officer of the Corporation and shall have
general charge of the finances and books of account of the Corporation. Except
as otherwise provided by the Board of Directors, he shall have general
supervision of the funds and property of the Corporation and of the performance
by the Custodian of its duties with respect thereto. He shall render to the
Board of Directors, whenever directed by the Board, an account of the financial
condition of the Corporation and of all his transactions as Treasurer; and as
soon as possible after the close of each financial year he shall make and submit
to the Board of Directors a like report for such financial year. He shall
perform all acts incidental to the office of Treasurer, subject to the control
of the Board of Directors.
Any Assistant Treasurer may perform such duties of the Treasurer as
the Treasurer or the Board of Directors may assign, and, in the absence of the
Treasurer, he may perform all the duties of the Treasurer.
SECTION 5.8. SECRETARY AND ASSISTANT SECRETARIES. The Secretary shall attend
to the giving and serving of all notices of the Corporation and shall record all
proceedings of the meetings of the Stockholders and Directors in books to be
kept for that purpose. He shall keep in safe custody the seal of the
Corporation, and shall have charge of the records of the Corporation, including
the stock books and such other books and papers as the Board of Directors may
direct and such books, reports, certificates and other
<PAGE>
documents required by law to be kept, all of which shall at all reasonable times
be open to inspection by any Director. He shall perform such other duties as
appertain to his office or as may be required by the Board of Directors.
Any Assistant Secretary may perform such duties of the Secretary as
the Secretary or the Board of Directors may assign, and, in the absence of the
Secretary, he may perform all the duties of the Secretary.
SECTION 5.9. SUBORDINATE OFFICERS. The Board of Directors from time to time
may appoint such other officers or agents as it may deem advisable, each of whom
shall have such title, hold office for such period, have such authority and
perform such duties as the Board of Directors may determine. The Board of
Directors from time to time may delegate to one or more officers or agents the
power to appoint any such subordinate officers or agents and to prescribe their
respective rights, terms of office, authorities and duties.
SECTION 5.10. REMUNERATION. The salaries or other compensation of the officers
of the Corporation shall be fixed from time to time by resolution of the Board
of Directors, except that the Board of Directors may by resolution delegate to
any person or group of persons the power to fix the salaries or other
compensation of any subordinate officers or agents appointed in accordance with
the provisions of Section 9 of this Article V.
SECTION 5.11. SURETY BONDS. The Board of Directors may require any officer or
agent of the Corporation to execute a bond (including, without limitation, any
bond required by the Investment Company Act of 1940, as amended, and the rules
and regulations of the Securities and Exchange Commission) to the Corporation in
such sum and with such surety or sureties as the Board of Directors may
determine, conditioned upon the faithful performance of his duties to the
Corporation, including responsibility for negligence and for the accounting of
any of the Corporation's property, funds or securities that may come into his
hands.
ARTICLE VI
CAPITAL STOCK
SECTION 6.1. STOCK LEDGERS. The stock ledgers of the Corporation, containing
the names and addresses of the Stockholders and the number of shares held by
them respectively, shall be kept at the principal offices of the Corporation or
at the offices of the transfer agent of the Corporation.
SECTION 6.2. TRANSFER AGENTS AND REGISTRARS. The Board of Directors may from
time to time appoint or remove transfer agents and/or registrars of transfers of
shares of stock of the Corporation, and it may appoint the same person as both
transfer agent and registrar.
SECTION 6.3. FIXING OF RECORD DATE. The Board of Directors may fix in advance
a date as a record date for the determination of the Stockholders entitled to
notice of or to vote
<PAGE>
at Stockholders' meeting or any adjournment thereof, or to express consent to
corporate action in writing without a meeting, or to receive payment of any
dividend or other distribution or allotment of any rights, or to exercise any
rights in respect of any change, conversion or exchange of stock, or for the
purpose of any other lawful action, provided that (1) such record date shall be
within 60 days prior to the date on which the particular action requiring such
determination will be taken, (2) the transfer books shall not be closed for a
period longer than 20 days, and (3) in the case of a meeting of Stockholders,
the record date or any closing of the transfer books shall be at least 10 days
before the date of the meeting.
ARTICLE VII
FISCAL YEAR AND ACCOUNTANT
SECTION 7.1. FISCAL YEAR. The fiscal year of the Corporation shall be
determined by resolution of the Board of Directors.
SECTION 7.2. ACCOUNTANT. The Corporation shall employ an independent public
accountant or a firm of independent public accountants as its Accountant to
examine the accounts of the Corporation and to sign and certify financial
statements filed by the Corporation. The Accountant's certificates and reports
shall be addressed both to the Board of Directors and to the Stockholders of the
Corporation. The employment of the Accountant shall be conditioned upon the
right of the Corporation to terminate the employment forthwith without any
penalty by vote of a majority of the outstanding voting securities at any
meeting of the Stockholders' called for that purpose.
A majority of the members of the Board of Directors who are not
interested persons (as such term is defined in the Investment Company Act of
1940, as amended, and the Rules of the Securities and Exchange Commission
promulgated thereunder) of the Corporation shall select the Accountant: (a) at
any meeting held within 30 days before or 90 days after the beginning of the
fiscal year of the Corporation for fiscal years during which no annual meeting
of Stockholders is held; and (b) within 30 days before or after the beginning of
the fiscal year of the Corporation or before the annual meeting of Stockholders
for any fiscal year in which an annual meeting of Stockholders is held. With
respect to fiscal years during which an annual meeting of Stockholders is held,
the Board's selection of the Accountant shall be submitted for ratification or
rejection at such annual meeting of Stockholders. If the Stockholders shall
reject the Board's selection of the Accountant at such meeting, the Accountant
shall be selected by majority vote of the Corporation's outstanding voting
securities, either at the meeting at which the rejection occurred or at a
subsequent meeting of Stockholders called for that purpose.
Any vacancy occurring due to the resignation of the Accountant may be
filled by the vote of a majority of the members of the Board of Directors who
are not interested persons of the Corporation (as that term is defined in the
Investment Company Act of 1940, as amended, and the Rules of the Securities and
Exchange Commission promulgated thereunder).
<PAGE>
ARTICLE VIII
CUSTODY OF SECURITIES
SECTION 8.1. EMPLOYMENT OF CUSTODIAN. All assets of the Corporation shall be
held by one or more custodian banks or trust companies meeting the requirements
of the Investment Company Act of 1940, as amended, and having capital, surplus
and undivided profits of at least $2,000,000 and may be registered in the name
of the Corporation, or any such custodian, or a nominee of either of them. The
terms of any custodian agreement shall be determined by the Board of Directors,
which terms shall be in accordance with the provisions of the Investment Company
Act of 1940, as amended.
Subject to such rules, regulations and orders as the Securities and
Exchange Commission may adopt, the Corporation may direct a custodian to deposit
all or any part of the securities owned by the Corporation in a system for the
central handling of securities established by a national securities exchange or
a national securities association registered with the Securities and Exchange
Commission, or otherwise in accordance with the Investment Company Act of 1940,
as amended, pursuant to which system all securities of any issuer deposited
within the system are treated as fungible and may be transferred or pledged by
bookkeeping entry without physical delivery of such securities, provided that
all such deposits shall be subject to withdrawal only upon the order of the
Corporation, a custodian, or pursuant to an agreement between a custodian and a
futures commission merchant to meet the margin requirements of a registered
securities exchange or contract market and in accordance with the Investment
Company Act of 1940, as amended.
ARTICLE IX
INDEMNIFICATION AND INSURANCE
SECTION 9.1. INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS. The
Corporation shall indemnify each person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative
("Proceeding"), by reason of the fact that he is or was a Director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a Director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against all expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such Proceeding to
the fullest extent permitted by law; PROVIDED that:
(a) whether or not there is an adjudication of liability in such
Proceeding, the Corporation shall not indemnify any person
for any liability arising by reason of such person's willful
misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his
office or under any contract or agreement with
<PAGE>
the Corporation ("disabling conduct"); and
(b) the Corporation shall not indemnify any person unless:
(1) the court or other body before which the Proceeding was
brought (i) dismisses the Proceeding for insufficiency of
evidence of any disabling conduct, or (ii) reaches a final
decision on the merits that such person was not liable by
reason of disabling conduct; or
(2) absent such a decision, a reasonable determination is
made, based upon a review of the facts, by (i) the vote of a
majority of a quorum of the Directors of the Corporation who
are neither interested persons of the Corporation as defined
in the Investment Company Act of 1940 nor parties to the
Proceeding, or (ii) if such quorum is not obtainable, or
even if obtainable, if a majority of a quorum of Directors
described in paragraph (b)(2)(i) above so directs, by
independent legal counsel in a written opinion, that such
person was not liable by reason of disabling conduct.
Expenses (including attorneys' fees) incurred in defending a
Proceeding will be paid by the Corporation in advance of the final disposition
thereof upon an undertaking by such person to repay such expenses (unless it is
ultimately determined that he is entitled to indemnification), if:
(1) such person shall provide adequate security for his
undertaking;
(2) the Corporation shall be insured against losses arising by
reason of such advance; or
<PAGE>
(3) a majority of a quorum of the Directors of the Corporation
who are neither interested persons of the Corporation as
defined in the Investment Company Act of 1940 nor parties to
the Proceeding, or independent legal counsel in a written
opinion, shall determine, based on a review of readily
available facts, that there is reason to believe that such
person will be found to be entitled to indemnification.
SECTION 9.2. INSURANCE OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS. The
Corporation may purchase and maintain insurance on behalf of any person who is
or was a Director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a Director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by him in or
arising out of his position. However, in no event will the Corporation purchase
insurance to indemnify any such person for any act for which the Corporation
itself is not permitted to indemnify him.
ARTICLE X
AMENDMENTS
SECTION 10.1. BY STOCKHOLDERS. These By-Laws may be adopted by the
incorporator and the Board of Directors prior to the Corporation's issuance of
any shares of its capital stock, and thereafter may be amended or repealed by
vote of the holders of a majority of the Corporation's stock, as defined in the
Investment Company Act of 1940, at any annual or special meeting of the
Stockholders at which a quorum is present or represented, provided that notice
of the proposed amendment shall have been contained in the notice of the
meeting.
SECTION 10.2. BY DIRECTORS. The Directors may adopt, amend or repeal any
By-Law by majority vote of all of the Directors in office at any regular
meeting, or at any special meeting if notice of the proposed By-Law, amendment
or repeal shall have been included in the notice of such meeting.
SECTION 10.3. IMPLIED AMENDMENTS. Any action taken or authorized by the
Stockholders or by the Board of Directors which would be inconsistent with the
By-Laws then in effect, but which is taken or authorized by affirmative vote of
not less than the number of shares or the number of Directors required to amend
the By-Laws so that the By-Laws would be consistent with such action and which
is not in violation of applicable federal or state law, shall be given the same
effect as though the By-Laws had been temporarily amended or suspended so far,
but only so far, as is necessary to permit the specific action so taken or
authorized.
<PAGE>
THE CATHOLIC ALLIANCE FUNDS, INC.
INVESTMENT ADVISORY AGREEMENT
This Agreement is made this ___ day of __________, 1999, by and between The
Catholic Alliance Funds, Inc. ("CAF"), a Maryland corporation registered under
the Investment Company Act of 1940 ("1940 Act") as an open-end diversified
management investment company, and Catholic Financial Services Corporation
("Manager"), a Wisconsin corporation registered under the Investment Advisers
Act of 1940 as an investment adviser.
1. APPOINTMENT. CAF hereby appoints Manager to furnish investment
advisory and portfolio management services with respect to the portion
of its assets represented by the shares of common stock issued in each
series listed in SCHEDULE A hereto, as such schedule may be amended
from time to time (each such series hereinafter referred to as a
"Fund"). Manager accepts such appointment and agrees to perform the
services described herein. Manager shall use its best efforts and
judgment in rendering the advice and performing the services
contemplated by this Agreement.
2. INVESTMENT MANAGEMENT SERVICES. Manager shall manage the investment
operations of CAF and each Fund, subject to the terms of this
Agreement and to the supervision and control of CAF's Board of
Directors ("Directors"). Manager agrees to perform, or arrange for the
performance of, the following services with respect to each Fund:
(a) to obtain and evaluate such information relating to economies,
industries, businesses, securities and commodities markets, and
individual securities, commodities and indices as it may deem
necessary or useful in discharging its responsibilities
hereunder;
(b) to formulate and maintain a continuing investment program in a
manner consistent with and subject to (i) CAF's articles of
incorporation and bylaws; (ii) the Fund's investment objectives,
policies, and restrictions as set forth in written documents
furnished by CAF to Manager; (iii) all securities, commodities,
and tax laws and regulations applicable to the Fund and CAF; and
(iv) any other written limits or directions furnished by the
Directors to Manager;
(c) unless otherwise directed by the Directors, to determine from
time to time, securities, commodities, interests, or other
investments to be purchased, sold, retained, or lent by the Fund,
and to implement those decisions, including the selection of
entities with or through which such purchases, sales, or loans
are to be effected;
<PAGE>
(d) to use reasonable efforts to manage the Fund so that it will
qualify as a regulated investment company under subchapter M of
the Internal Revenue Code of 1986, as amended;
(e) to make recommendations as to the manner in which voting rights,
rights to consent to CAF or Fund action, and any other rights
pertaining to CAF or the Fund shall be exercised; provided the
Manager shall have no authority or responsibility to execute any
voting proxies or consents on behalf of CAF or any Fund, but
rather shall promptly forward to CAF all proxy and other
solicitation materials it receives with respect to any such
voting rights or consents;
(f) to make available to CAF promptly upon request all of the Fund's
records and ledgers, and any reports or information reasonably
requested by CAF; and
(g) to the extent required by law, to furnish to regulatory
authorities any information or reports relating to the services
provided pursuant this Agreement.
Except as otherwise instructed from time to time by the Directors,
with respect to execution of transactions for CAF on behalf of a Fund,
Manager shall place, or arrange for the placement of, all orders for
purchases, sales, or loans either directly with the issuer or with a
broker-dealer, or other counterparty or agent selected by Manager. In
connection with the selection of all such parties for the placement of
all such orders, Manager shall attempt to obtain most favorable
execution and price, but may nevertheless in its sole discretion as a
secondary factor, purchase and sell portfolio securities from and to
broker-dealers who provide research and analysis to Manager which
Manager may lawfully and appropriately use in its investment
management and advisory capacities, whether or not such research and
analysis may also be useful to Manager in connection with its services
to other clients. In recognition of such services or brokerage
services provided by a broker or dealer, Manager is hereby authorized
to pay such broker or dealer a commission or spread in excess of that
which might be charged by another broker or dealer for the same
transaction if Manager determines in good faith that the commission or
spread is reasonable in relation to the value of the services so
provided.
CAF hereby authorizes any entity or person associated with Manager
that is a member of a national securities exchange to effect any
transaction on the exchange for the account of a Fund to the extent
permitted by and in accordance with Section 11(a) of the Securities
Exchange Act of 1934 and Rule 11a2-2(T) thereunder. CAF hereby
consents to the retention by such entity or person of compensation for
such transaction in accordance with Rule 11a2-2(T)(a)(iv).
<PAGE>
Manager may, where it deems to be advisable, aggregate orders for its
other customers together with any securities of the same type to be
sold or purchased for CAF, one or more Funds, and/or other clients of
Manager in order to obtain best execution or lower brokerage
commissions. In such event, Manager shall allocate the shares so
purchased or sold, as well as the expense incurred in the transaction,
in a manner it considers to be equitable and fair, and consistent with
its fiduciary obligations to CAF, the Funds, and Manager's other
customers.
Manager shall for all purposes be deemed to be an independent
contractor and not an agent of CAF and shall, unless otherwise
expressly provided or authorized, have no authority to act for or
represent CAF in any way.
3. ADMINISTRATIVE SERVICES. Manager shall supervise the business and
affairs of CAF and each Fund, and shall provide such services and
facilities as may be required for effective administration of CAF and
Funds as are not provided by employees or other agents engaged by CAF;
provided that Manager shall not have any obligation to provide under
this Agreement any such services which are the subject of a separate
agreement or arrangement between CAF and Manager, any affiliate of
Manager, or any third-party administrator.
4. USE OF AFFILIATED COMPANIES AND SUBCONTRACTORS. In connection with
the services to be provided by Manager under this Agreement, Manager
may, to the extent it deems appropriate, and subject to compliance
with the requirements of applicable laws and regulations and upon
receipt of written approval of the Directors, make use of (i) its
affiliated companies, if any, and their directors, trustees, officers,
and employees and (ii) subcontractors selected by Manager, provided
that Manager shall supervise and remain fully responsible for the
services of all such third parties in accordance with and to the
extent provided by this Agreement. All costs and expenses associated
with services provided by any such third parties shall be borne by
Manager or such parties.
5. EXPENSES BORNE BY CAF. Except to the extent expressly assumed by
Manager herein or under a separate agreement between CAF and Manager
and except to the extent required by law to be paid by Manager,
Manager shall not be obligated to pay any costs or expense incidental
to the organization, operations, or business of CAF. Without
limitation, such costs and expense shall include, but not be limited
to:
(a) all charges of depositories, custodians, and other agencies for
the safekeeping and servicing of its cash, securities, and other
property;
<PAGE>
(b) all expenses of maintaining and servicing shareholder accounts,
including all charges for transfer, shareholder recordkeeping,
dividend disbursing, redemption, and other agents for the benefit
of the Funds (including, without limitation, fund accounting and
administration agents);
(c) all charges for equipment or services used for obtaining price
quotations or for communication between Manager and CAF and the
custodian, transfer agent, or any other agent selected by CAF;
(d) all charges for administrative and accounting services provided
to CAF by Manager, or any other provider of such services;
(e) all charges for services of CAF's independent auditors and for
services to CAF by legal counsel;
(f) all compensation of Directors, other than those affiliated with
Manager, all expenses incurred in connection with their services
to CAF, and all expenses of meetings of the Directors or
committees thereof;
(g) all expenses incidental to holding meetings of shareholders of
CAF ("Shareholders"), including printing and supplying to each
record-date Shareholder notice and proxy solicitation material,
and all other proxy solicitation expense;
(h) all expenses of printing of annual or more frequent revisions of
CAF prospectus(es) and of supplying to each then existing
Shareholder a copy of a revised prospectus;
(i) all expenses related to preparing and transmitting certificates,
if any, representing shares of CAF;
(j) all expenses of bond and insurance coverage required by law or
deemed advisable by the Board of Directors;
(k) all brokers' commissions and other normal charges incident to the
purchase, sale, or lending of portfolio securities;
(l) all taxes and governmental fees payable to federal, state, or
other governmental agencies, domestic or foreign, including all
stamp or other transfer taxes;
<PAGE>
(m) all expenses of registering and maintaining the registration of
CAF under the 1940 Act and, to the extent no exemption is
available, expenses of registering CAF's shares under the
Securities Act of 1933, of qualifying and maintaining
qualification of CAF and CAF's shares for sale under securities
laws of various states or other jurisdictions, and of
registration and qualification of CAF under all other laws
applicable to CAF or its business activities;
(n) all interest on indebtedness, if any, incurred by CAF or a Fund;
and
(o) all fees, dues, and other expenses incurred by CAF in connection
with membership of CAF in any trade association or other
investment company organization.
6. ALLOCATION OF EXPENSES BORNE BY CAF. Any expenses borne by CAF that
are attributable solely to the organization, operation, or business of
a Fund shall be paid solely out of Fund assets. Any expense borne by
CAF which is not solely attributable to a Fund, nor solely to any
other series of shares of CAF, shall be apportioned in such manner as
Manager determines is fair and appropriate or as otherwise specified
by the Board of Directors.
7. EXPENSES BORNE BY MANAGER. Manager at its own expense shall furnish
all executive and other personnel, office space, and office facilities
required to render the investment management and administrative
services set forth in this Agreement. Manager shall pay all expenses
of establishing, maintaining, and servicing the accounts of
Shareholders in each Fund listed in Schedule A to this Agreement.
However, Manager shall not be required to pay or provide any credit
for services provided by CAF's custodian or other agents without
additional cost to CAF.
In the event that Manager pays or assumes any expense of CAF or a Fund
not required to be paid or assumed by Manager under this Agreement,
Manager shall not be obligated hereby to pay or assume the same or
similar expense in the future; provided, however, that nothing
contained herein shall be deemed to relieve Manager of any obligation
to CAF or a Fund under any separate agreement or arrangement between
the parties.
8. MANAGEMENT FEE; REDUCTION OF COMPENSATION AND REIMBURSEMENT OF
EXPENSES. For the services rendered, facilities provided, and charges
assumed and paid by Manager hereunder, CAF shall pay to Manager out of
the assets of each Fund fees at the annual rate for such Fund set
forth in SCHEDULE A to this Agreement. For each Fund, the management
fee shall accrue on each calendar day, and shall be payable monthly on
the
<PAGE>
first business day of the next succeeding calendar month. The daily
fee accrual shall be computed by multiplying the fraction of one
divided by the number of days in the calendar year by the applicable
annual rate of fee, and multiplying this product by the net assets of
the Fund, determined in the manner established by the Board of
Directors, as of the close of business on the last preceding business
day on which the Fund's net asset value was determined.
Manager may voluntarily reduce any portion of the compensation or
reimbursement of expenses due to it pursuant to this Agreement and may
agree to make payments to limit the expenses which are the
responsibility of a Fund under this Agreement. Any such reduction or
payment shall be applicable only to such specific reduction or payment
and shall not constitute an agreement to reduce any future
compensation or reimbursement due to Manager hereunder or to continue
future payments. Any such reduction will be agreed upon prior to
accrual of the related expense or fee and will be estimated daily. Any
Fund expense paid by Manager voluntarily or pursuant to an agreed
expense limitation shall be reimbursed by the appropriate Fund to
Manager in the first, second or third (or any combination thereof)
fiscal year next succeeding the fiscal year of the withholding,
reduction, or payment to the extent permitted by applicable law if the
aggregate expenses for the next succeeding fiscal year, second
succeeding fiscal year, or third succeeding fiscal year do not exceed
any limitation to which Manager has agreed. Such reimbursement may be
paid prior to the Fund's payment of current expenses if so requested
by Manager even if such payment may require Manager to waive or reduce
its fees hereunder or to pay current Fund expenses. Manager may agree
not to require payment of any portion of the compensation or
reimbursement of expenses.
9. RETENTION OF SUBADVISER. Subject to obtaining the initial and
periodic approvals required under Section 15 of the 1940 Act, Manager
may retain one or more subadvisers at Manager's own cost and expense
for the purpose of furnishing one or more of the services described in
Section 2 hereof with respect to CAF or one or more Funds. Retention
of a subadviser shall in no way reduce the responsibilities or
obligations of Manager under this Agreement, and Manager shall be
responsible to CAF and its Funds for all acts or omissions of any
subadviser in connection with the performance of Manager's duties
hereunder.
10. NONEXCLUSIVITY. The services of Manager to CAF hereunder are not to
be deemed exclusive, and Manager shall be free to render similar
services to others.
<PAGE>
11. STANDARD OF CARE. Neither Manager, nor any of its directors,
officers, shareholders, agents, or employees shall be liable to CAF or
its Shareholders for any error of judgment, mistake of law, loss
arising out of any investment, or any other act or omission in the
performance by Manager of its duties under this Agreement, except for
loss or liability resulting from willful misfeasance, bad faith, or
gross negligence on Manager's part or from reckless disregard by
Manager of its obligations and duties under this Agreement. Nothing in
this Agreement shall be construed to protect any officer of Manager
from liability for violation of Section 17(h) or (i) of the 1940 Act.
12. ABSENCE OF LIABILITY OF DIRECTORS AND SHAREHOLDERS. Any obligation of
CAF hereunder shall be binding only upon the assets of CAF (or the
applicable Fund thereof) and shall not be binding upon any Director,
officer, employee, agent, or Shareholder of CAF. Neither the
authorization of any action by the Directors or Shareholders of CAF
nor the execution of this Agreement on behalf of CAF shall impose any
liability upon any Director or any Shareholder. Nothing in this
Agreement shall be construed to protect any Director or officer of CAF
from liability for violation of Section 17(h) or (i) of the 1940 Act.
13. OWNERSHIP OF RECORDS; INTERPARTY REPORTING. All records required to
be maintained and preserved by CAF pursuant to the provisions of rules
or regulations of the Securities and Exchange Commission under Section
31(a) of the 1940 Act or other applicable laws or regulations that are
maintained and preserved by Manager on behalf of CAF and any other
records the parties mutually agree shall be maintained by Manager on
behalf of CAF are the property of CAF and shall be surrendered by
Manager promptly on request by CAF; provided, however, that Manager
may at its own expense make and retain copies of any such records.
CAF shall furnish or otherwise make available to Manager such copies
of financial statements, proxy statement, reports, and other
information relating to the business and affairs of each Shareholder
in a Fund as Manager may, at any time or from time to time, reasonably
require in order to discharge its obligations under this Agreement.
Manager shall prepare and furnish to CAF as to each Fund statistical
data and other information in such form at such intervals as CAF may
reasonably request.
14. USE OF MANAGER'S NAME. CAF may use the name "The Catholic Alliance
Funds, Inc." and the names of the Funds listed in SCHEDULE A or any
other name derived from the name "The Catholic Alliance Funds, Inc."
only for so long as this Agreement or any extension, renewal, or
amendment hereof remains in effect, including any similar agreement
with any organization which shall have succeeded to the business of
Manager as
<PAGE>
investment adviser. At such time as this Agreement or any extension,
renewal, or amendment hereof, or such other similar agreement shall no
longer be in effect, CAF will cease to use any name derived from the
name "The Catholic Alliance Funds, Inc." or otherwise connected with
Manager, or with any organization which shall have succeeded to
Manager's business as investment adviser.
15. AMENDMENT. This Agreement may not be materially amended with respect
to CAF or any Fund without the affirmative votes (a) of a majority of
the Board of Directors, including a majority of those Directors who
are not "interested persons" of CAF or of Manager, voting in person at
a meeting called for the purpose of voting on such approval, and (b)
of a "majority of the outstanding shares" of CAF or, with respect to
an amendment affecting an individual Fund, a "majority of the
outstanding shares" of the Fund. The terms "interested persons" and
"vote of a majority of the outstanding shares" shall be construed in
accordance with their respective definitions in the 1940 Act and, with
respect to the latter term, in accordance with Rule 18f-2 under the
1940 Act.
16. EFFECTIVE DATE AND TERMINATION. This Agreement shall become effective
with respect to any Fund as of the effective date for that Fund
specified in SCHEDULE A hereto. This Agreement may be terminated at
any time, without payment of any penalty, as to any Fund by the Board
of Directors of CAF, or by a vote of a majority of the outstanding
shares of that Fund, upon at least sixty (60) days' written notice to
Manager. This Agreement may be terminated by Manager at any time upon
at least sixty (60) days' written notice to CAF. This Agreement shall
terminate automatically in the event of its "assignment" (as defined
in the 1940 Act). Unless terminated as hereinbefore provided, this
Agreement shall continue in effect with respect to any Fund for a
period of two years following the effective date for such Fund
specified in SCHEDULE A, and shall remain in effect thereafter from
year to year only so long as such continuance is specifically approved
with respect to the Fund at least annually (a) by a majority of those
Directors who are not interested persons of CAF or Manager, voting in
person at a meeting called for the purpose of voting on such approval,
and (b) by either the Board of Directors or CAF, or by a "vote of a
majority of the outstanding shares" of the Fund.
17. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original.
18. HEADINGS. Headings are placed herein for convenience of reference
only and shall not be taken as a part hereof or control or affect the
meaning, construction or effect of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the day and year first above written.
THE CATHOLIC ALLIANCE FUNDS, INC.
By:
Attest:
CATHOLIC FINANCIAL SERVICES CORPORATION
By:
Attest:
<PAGE>
THE CATHOLIC ALLIANCE FUNDS, INC.
MANAGEMENT AGREEMENT
SCHEDULE A
The Funds of The Catholic Alliance Funds, Inc. currently subject to this
Agreement are as follows:
1. EQUITY INCOME FUND
A. EFFECTIVE DATE: Concurrent with effectiveness of the Registration
Statement on Form N-1A of The Catholic Alliance Funds, Inc.
B. MANAGEMENT FEE: The management fee for this Fund, calculated in
accordance with Paragraph 8 of the Investment Management
Agreement, shall be at an annual rate of 0.80 of 1% of the
average daily net assets of the Fund.
2. LARGE-CAP GROWTH FUND
A. EFFECTIVE DATE: Concurrent with effectiveness of the Registration
Statement on Form N-1A of The Catholic Alliance Funds, Inc.
B. MANAGEMENT FEE: The management fee for this Fund, calculated in
accordance with Paragraph 8 of the Investment Management
Agreement, shall be at an annual rate of 0.90 of 1% of the
average daily net assets of the Fund.
3. DISCIPLINED CAPITAL APPRECIATION FUND
A. EFFECTIVE DATE: Concurrent with effectiveness of the Registration
Statement on Form N-1A of The Catholic Alliance Funds, Inc.
B. MANAGEMENT FEE: The management fee for this Fund, calculated in
accordance with Paragraph 8 of the Investment Management
Agreement, shall be at an annual rate of 0.90 of 1% of the
average daily net assets of the Fund.
<PAGE>
SUB-ADVISORY AGREEMENT
AGREEMENT made as of the ____ day of _______, 1998, by and among THE
CATHOLIC ALLIANCE FUNDS, INC. a Maryland corporation (the "Fund Company"),
CATHOLIC FINANCIAL SERVICES CORPORATION, a Wisconsin corporation (the "Adviser"
and "Distributor"), and _________________________, a
____________________________ (the "Sub-Adviser").
W I T N E S S E T H
For good and valuable consideration, the receipt of which is hereby
acknowledged, it is hereby agreed by and among the parties hereto as follows:
1. IN GENERAL
The Sub-Adviser agrees, as more fully set forth herein, to act as
Sub-Adviser to the Fund Company with respect to the investment and
reinvestment of the assets of the [INSERT NAME OF FUND]
_________________ and of any other series of common stock of the Fund
Company as the parties may mutually agree and specify from time to
time on EXHIBIT A hereto. The [INSERT NAME OF FUND] ________________
and each other such series is referred to herein as a "Fund". The
Sub-Adviser agrees to supervise and arrange the purchase of securities
and the sale of securities held in the investment portfolios of each
Fund specified on EXHIBIT A. It is understood that the Fund Company
may create one or more additional series of shares and that, if it
does so, this Agreement may be amended by the mutual written consent
of the parties to include such additional series under the terms of
this Agreement.
2. DUTIES AND OBLIGATIONS OF THE SUB-ADVISER WITH RESPECT TO INVESTMENTS
OF ASSETS OF THE FUNDS
(a) Subject to the succeeding provisions of this section and
subject to the oversight and review of the Adviser and the direction
and control of the Board of Directors of the Fund Company, the
Sub-Adviser shall:
(i) Determine what securities shall be purchased or sold by
each Fund specified on EXHIBIT A;
(ii) Arrange for the purchase and the sale of securities
held in each Fund specified on EXHIBIT A; and
(iii) Provide the Adviser and the Directors with such reports
as may reasonably be requested in connection with the
<PAGE>
discharge of the foregoing responsibilities and the discharge of
the Adviser's responsibilities under its Investment Advisory
Agreement with the Fund Company and those of the Distributor
under its Distribution Agreement with the Fund Company.
(b) Any investment purchases or sales made by the Sub-Adviser
under this section shall at all times conform to, and be in accordance
with, any requirements imposed by: (1) the provisions of the
Investment Company Act of 1940 (the "Act") and of any rules or
regulations in force thereunder; and (2) the provisions of the
Articles of Incorporation and By-Laws of the Fund Company as amended
from time to time; (3) any policies and determinations of the Board of
Directors of the Fund Company; and (4) the fundamental investment
policies of the relevant Fund, as reflected in the Fund Company's
registration statement under the Act, or as amended by the
shareholders of the Fund Company; provided that copies of the items
referred to in clauses (2), (3) and (4) shall have been furnished to
the Sub-Adviser.
(c) The Sub-Adviser shall give the Fund Company the benefit of
its best judgment and effort in rendering services hereunder. In the
absence of willful misfeasance, bad faith, negligence or reckless
disregard of its obligations or duties ("disabling conduct") hereunder
on the part of the Sub-Adviser (and its officers, directors, agents,
employees, controlling persons, shareholders and any other person or
entity affiliated with the Sub-Adviser) the Sub-Adviser shall not be
subject to liability to the Fund Company or to any shareholder of the
Fund Company for any act or omission in the course of, or connected
with, rendering services hereunder, including without limitation any
error of judgment or mistake of law or for any loss suffered by any of
them in connection with the matters to which this Agreement relates,
except to the extent specified in Section 36(b) of the Act concerning
loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services. Except for such disabling
conduct, the Fund Company shall indemnify the Sub-Adviser (and its
officers, directors, agents, employees, controlling persons,
shareholders and any other person or entity affiliated with the
Sub-Adviser) against any liability arising from the Sub-Adviser's
conduct under this Agreement to the extent permitted by the Fund
Company's Articles of Incorporation, By-Laws and applicable law.
(d) Nothing in this Agreement shall prevent the Sub-Adviser or
any affiliated person (as defined in the Act) of the Sub-Adviser from
acting as investment advisor or manager for any other person, firm or
corporation and shall not in any way limit or restrict the Sub-Adviser
or any such affiliated person from buying, selling or trading any
securities for its or their own accounts or for the accounts of others
for whom it or they may be acting; except, however, the Sub-Adviser
expressly represents that while this Agreement is in effect it will
not undertake to manage the
<PAGE>
assets of any other mutual fund sponsored by a Catholic organization,
without the prior written consent of the Fund Company. In addition,
the Sub-Adviser expressly represents that it will undertake no
activities which, in its judgment, will adversely affect the
performance of its obligation to the Fund Company under this Agreement
or under the Act. It is agreed that the Sub-Adviser shall have no
responsibility or liability for the accuracy or completeness of the
Fund Company's Registration Statement under the Act and the Securities
Act of 1933, except for information supplied by the Sub-Adviser for
inclusion therein. The Sub-Adviser shall be deemed to be an
independent contractor and, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Fund Company
in any way or otherwise be deemed an agent of the Fund Company.
(e) In connection with its duties to arrange for the purchase
and sale of each Fund's portfolio securities, the Sub-Adviser shall
follow the principles set forth in any investment advisory agreement
in effect from time to time between the Fund Company and the Adviser,
provided that a copy of any such agreement shall have been provided to
the Sub-Adviser. The Sub-Adviser will promptly communicate to the
Adviser and to the officers and the Directors of the Fund Company such
information relating to portfolio transactions as they may reasonably
request.
Without limiting the generality of the foregoing, with respect to
the execution of transactions on behalf of a Fund, and except as
otherwise instructed from time to time by the Board of Directors of
the Fund Company, the Sub-Adviser shall place, or arrange for the
placement of, all orders for purchases, sales or loans either directly
with the issuer or with a broker-dealer, or other counterparty or
agent selected by the Sub-Adviser. In connection with the selection
of all such parties for the placement of all such orders, the
Sub-Adviser shall attempt to obtain most favorable execution and
price, but may nevertheless in its sole discretion, as a secondary
factor, purchase and sell portfolio securities from and to
broker-dealers who provide research and analysis to the Sub-Adviser
which the Sub-Adviser lawfully and appropriately may use in its
capacity as Sub-Adviser, whether or not such research and analysis
also may be useful to the Sub-Adviser in connection with its services
to other clients. In recognition of such research and analytical
services or brokerage services provided by a broker or dealer, the
Sub-Adviser is authorized to pay such broker or dealer a commission or
spread in excess of that which might be charged by another broker or
dealer for the same transaction if the Sub-Adviser determines in good
faith that the commission or spread is reasonable in relation to the
value of the services so provided.
The Fund Company hereby authorizes any entity or person
associated with the Sub-Adviser that is a member of a national
securities exchange to effect any transaction on the exchange for the
account of a
<PAGE>
Fund to the extent permitted by and accordance with Section 11(a) of
the Securities Exchange Act of 1934 and Rule 11a2-2(T) thereunder.
The Fund Company hereby consents to the retention by such entity or
person of compensation for such transaction in accordance with Rule
11a2-2(T)(a)(iv).
The Sub-Adviser may, where it deems it to be advisable, aggregate
orders for its other customers together with any securities of the
same type to be sold or purchased for one or more Funds, and/or other
clients of the Sub-Adviser in order to obtain best execution or lower
brokerage commissions. In such event, the Sub-Adviser shall allocate
the shares so purchased or sold, as well as the expense incurred in
the transaction, in a manner it considers to be equitable and fair,
and consistent with its fiduciary obligations to the Fund Company, the
Funds and the Sub-Adviser's other customers.
(f) The Sub-Adviser shall, where it deems it appropriate, make
recommendations to the Fund Company as to the manner in which voting
rights, rights to consent to the Fund Company or Fund Action, and any
other rights pertaining to the Fund Company or any of the Funds shall
be exercised; provided that the Sub-Adviser shall have no obligation
nor any authority to execute any voting proxies or consents on behalf
of the Fund Company or any Fund, but rather shall promptly forward to
the Fund Company all proxy and other solicitation materials that the
Sub-Adviser may receive with respect to any such voting rights or
consents.
3. ALLOCATION OF EXPENSES
The Sub-Adviser agrees that it will furnish the Fund Company, at
the Sub-Adviser's expense, with all office space and facilities,
equipment and clerical personnel necessary for carrying out the
Sub-Adviser's duties under this Agreement. The Sub-Adviser will also
pay all compensation of those of the Fund Company's officers and
employees, if any, and of those Directors, if any, who in each case
are affiliated persons of the Sub-Adviser.
4. CERTAIN RECORDS
Any records required to be maintained and preserved pursuant to
the provisions of Rule 31a-1 and Rule 31a-2 under the Act which are
prepared or maintained by the Sub-Adviser on behalf of the Fund
company are the property of the Fund Company and will be surrendered
promptly to the Fund Company or the Adviser on request.
5. REFERENCE TO THE SUB-ADVISER
Neither the Fund Company nor the Adviser or any affiliate or
agent
<PAGE>
thereof shall make reference to or use the name of the Sub-Adviser or
any of its affiliates in any advertising or promotional materials
without the prior approval of the Sub-Adviser, which approval shall
not be unreasonably withheld.
6. COMPENSATION OF THE SUB-ADVISER
The Adviser agrees to pay the Sub-Adviser, and the Sub-Adviser
agrees to accept as full compensation for all services rendered by the
Sub-Adviser as such, a management fee as specified on EXHIBIT A.
7. DURATION AND TERMINATION
(a) This Agreement shall go into effect with respect to the
[INSERT NAME OF FUND] on the date specified on EXHIBIT A attached
hereto. In the event the parties hereto mutually agree that one or
more series of the Fund Company should be included as additional
"Fund(s)" hereunder, this Agreement shall become effective with
respect to each such additional Fund on the date specified on EXHIBIT
A hereto. Once effective with respect to any Fund(s), this Agreement
shall, unless terminated as hereinafter provided, continue in effect
for a period of two years with respect to such Fund, and thereafter
from year to year, but only so long as such continuance is
specifically approved at least annually by a majority of the Fund
Company's Board of Directors, or by the vote of the holders of a
"majority" (as defined in the Act) of the outstanding voting
securities of the relevant Fund(s), and, in either case, a majority of
the Directors who are not parties to this Agreement or "interested
persons" (as defined in the Act) of any such party cast in person at a
meeting called for the purpose of voting on such approval.
(b) This Agreement may be terminated by the Sub-Adviser in its
entirety or with respect to any one or more specifically identified
Funds at any time without penalty upon giving the Fund Company and the
Adviser sixty (60) days' written notice (which notice may be waived by
the Fund Company and the Adviser) and may be terminated by the Fund
Company or the Adviser in its entirety or with respect to any one or
more specifically identified Funds at any time without penalty upon
giving the Sub-Adviser sixty (60) days' written notice (which notice
may be waived by the Sub-Adviser), provided that such termination by
the Fund Company shall be directed or approved by the vote of a
majority of all of its Directors in office at the time or by the vote
of the holders of a "majority" (as defined in the Act) of the voting
securities of each Fund with respect to which the Agreement is to be
terminated. This Agreement shall automatically terminate in the event
of its "assignment" (as defined in the Act). This Agreement will also
automatically terminate in the event that the Investment Advisory
Agreement by and between the Fund Company and the Adviser is
terminated for any reason.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused the foregoing instrument
to be executed by their duly authorized officers and their seals to be hereto
affixed, all as of the day and year first above written.
THE CATHOLIC ALLIANCE FUNDS, INC. CATHOLIC FINANCIAL SERVICES
CORPORATION
By: By:
[INSERT NAME OF SUB-ADVISER]
By:
Its:
<PAGE>
EXHIBIT A
THE CATHOLIC ALLIANCE FUNDS, INC.
[NAME OF SUB-ADVISER]
SUB-ADVISORY AGREEMENT
1. [NAME OF FUND]:
a. Effective Date: Effective date of The Catholic Alliance Funds, Inc.'s
SEC Registration Statement on Form N-1A.
b. Management Fee: computed daily and paid monthly at the annual rate of
_____ of one percent on the [Name of Fund]'s average daily net assets.
<PAGE>
DISTRIBUTION AGREEMENT
This Agreement, made as of the ______ day of _______, 1999, between THE
CATHOLIC ALLIANCE FUNDS, INC., a Maryland corporation (the "Fund Company"), and
CATHOLIC FINANCIAL SERVICES CORPORATION, a Wisconsin corporation (the
"Distributor").
WITNESSETH:
WHEREAS, the Fund Company proposes to engage in business as an open-end
management investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "1940 Act"), and it is in the interest of
the Fund Company to offer its series of shares entitled the Equity Income Series
("Equity Income Fund"), the Large-Cap Growth Series ("Growth Fund") and the
Disciplined Capital Appreciation Series ("Disciplined Capital Appreciation
Fund") (individually a "Fund" and collectively the "Funds") for sale
continuously; and
WHEREAS, the Distributor is registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and is a member in
good standing of the National Association of Securities Dealers, Inc. (the
"NASD"); and
WHEREAS, the Fund Company and the Distributor wish to enter into an
agreement with each other with respect to the continuous offering of the shares
of beneficial interest of all series of shares of the Fund Company (the
"Shares"), to commence after the effectiveness of its initial registration
statement filed pursuant to the Securities Act of 1933, as amended (the "1933
Act"), and the 1940 Act.
NOW, THEREFORE, the parties agree as follows:
1. APPOINTMENT OF DISTRIBUTOR
The Fund Company hereby appoints the Distributor as its exclusive
agent to sell and to arrange for the sale of the Shares, on the terms and for
the period set forth in this Agreement, and the Distributor hereby accepts such
appointment and agrees to act hereunder directly and/or through the Fund
Company's transfer agent in the manner set forth in the prospectus (as defined
below). It is understood and agreed that the services of the Distributor
hereunder are not exclusive, and the Distributor may act as principal
underwriter for the shares of any other registered investment company. It is
also understood that purchases of shares of any Fund may be made directly
through the Fund Company's Transfer Agent in the manner set forth in the
prospectus for the relevant Fund.
<PAGE>
2. SERVICES AND DUTIES OF THE DISTRIBUTOR
(a) The Distributor agrees to sell the Shares of each Fund, as
agent for the Fund Company, from time to time during the term of this Agreement
upon the terms described in the prospectus for the relevant Fund. As used in
this Agreement, the term "prospectus" shall mean the prospectus and statement of
additional information of each Fund included as part of the Fund Company's
Registration Statement, as such prospectus and statement of additional
information may be amended or supplemented from time to time, and the term
"Registration Statement" shall mean the Registration Statement most recently
filed from time to time by the Fund Company with the Securities and Exchange
Commission and effective under the 1933 Act and the 1940 Act, as such
Registration Statement is amended by any amendments thereto at the time in
effect. The Distributor shall not be obligated to sell any certain number of
Shares.
(b) Upon commencement of the Fund Company's operations, the
Distributor will hold itself available to receive orders, satisfactory to the
Distributor, for the purchase of the Shares and will accept such orders and will
transmit such orders and funds received by it in payment for such Shares as are
so accepted by the Fund Company's transfer agent or custodian, as appropriate,
as promptly as practicable. Purchase orders shall be deemed effective at the
time and in the manner set forth in the prospectus for the relevant Fund. The
Distributor shall not make any short sales of Shares.
(c) The offering price of the Shares shall be the net asset
value per share of the Shares (as defined in the Articles of Incorporation) and
as determined as set forth in the prospectus for the relevant Fund, plus the
sales charge (determined as set forth in the prospectus). The Fund Company
shall furnish the Distributor, with all possible promptness, an advice of each
computation of net asset value and offering price.
(d) The above-mentioned sales charge shall constitute the entire
compensation of the Distributor, except that the Distributor may also be
compensated through payments under the Distribution Plan adopted with respect to
any Fund pursuant to Rule 12b-1 under the 1940 Act.
3. DUTIES OF THE FUND COMPANY
(a) MAINTENANCE OF FEDERAL REGISTRATION. The Fund Company
shall, at its expense, take, from time to time, all necessary action and such
steps, including payment of the related filing fees, as may be necessary to
register and maintain registration of a sufficient number of Shares under the
1933 Act. The Fund Company agrees to file from time to time such amendments,
reports and other documents as may be necessary in order that there may be no
untrue statement of a material fact in a registration statement or prospectus,
or necessary in order that there may be no omission to state a material fact in
the registration statement or prospectus of any Fund which omission would make
the statements therein misleading.
<PAGE>
(b) MAINTENANCE OF "BLUE SKY" QUALIFICATIONS. The Fund Company
shall, at its expense, use its best efforts to qualify and maintain the
qualification of an appropriate number of Shares for sale under the securities
laws of such states as the Distributor and the Fund Company may approve, and, if
necessary or appropriate in connection therewith, to qualify and maintain the
qualification of the Fund Company as a broker or dealer in such states; provided
that the Fund Company shall not be required to amend its Articles of
Incorporation or By-Laws to comply with the laws of any state, to maintain an
office in any state, to change the terms of the offering of the Shares in any
state from the terms set forth in the prospectus of the relevant Fund, to
qualify as a foreign corporation in any state or to consent to service of
process in any state other than with respect to claims arising out of the
offering and sale of the Shares. The Distributor shall furnish such information
and other material relating to its affairs and activities as may be required by
the Fund Company in connection with such qualifications.
(c) COPIES OF REPORTS AND PROSPECTUS. The Fund Company shall,
at its expense, keep the Distributor fully informed with regard to its affairs
and in connection therewith shall furnish to the Distributor copies of all
information, financial statements and other papers which the Distributor may
reasonably request for use in connection with the distribution of Shares,
including such number of copies of the prospectus of each Fund and annual and
interim reports as the Distributor reasonably may request in connection with
selling and arranging for the sale of the Shares and in connection with the
performance of its duties and obligations under this Agreement.
4. CONFORMITY WITH APPLICABLE LAWS AND RULES
The Distributor agrees that in selling Shares hereunder it shall
conform in all respects with the laws of the United States and of any state in
which Shares may be offered, and with applicable rules and regulations of the
NASD.
5. EXPENSES
(a) The Fund Company shall bear all costs and expenses of the
continuous offering of its Shares in connection with: (i) fees and disbursements
of its counsel and independent accountants, (ii) the preparation, filing and
printing of any registration statements and/or prospectus(es) required by and
under the federal securities laws, (iii) the preparation and mailing of annual
and interim reports, prospectus(es) and proxy materials to shareholders and (iv)
the qualifications of Shares of the Fund Company for sale under the securities
laws of such states or other jurisdictions as shall be selected by the Fund
Company and the Distributor and the cost and expenses payable to each such state
for continuing qualification therein.
(b) The Distributor shall bear (i) the costs and expenses of
preparing, printing and distributing any materials not prepared by the Fund
Company and other materials used by the Distributor in connection with its
offering of Shares for sale to the public, including the additional cost of
printing copies of the prospectus(es)
<PAGE>
and of annual and interim reports to shareholders other than copies thereof
required for distribution to shareholders or for filing with any federal
securities authorities, (ii) any expenses of advertising incurred by the
Distributor in connection with such offering and (iii) the expenses of
registration or qualification of the Distributor as a dealer or broker under
federal or state laws and the expenses of continuing such registration or
qualification.
6. INDEPENDENT CONTRACTOR
In performing its duties hereunder, the Distributor shall be an
independent contractor and neither the Distributor, nor any of its officers,
directors, employees, or representatives is or shall be an employee of the Fund
Company in the performance of the Distributor's duties hereunder. The
Distributor shall be responsible for its own conduct and the employment,
control, and conduct of its agents and employees and for injury to such agents
or employees or to others through its agents or employees. The Distributor
assumes full responsibility for its agents and employees under applicable
statutes and agrees to pay all employee taxes thereunder.
7. INDEMNIFICATION
(a) INDEMNIFICATION OF FUND COMPANY. The Distributor agrees to
indemnify and hold harmless the Fund Company and each of its present or former
directors, officers, employees, representatives and each person, if any, who
controls or previously controlled the Fund Company within the meaning of Section
15 of the 1933 Act against any and all losses, liabilities, damages, claims or
expenses (including the reasonable costs of investigating or defending any
alleged loss, liability, damage, claims or expense and reasonable legal counsel
fees incurred in connection therewith) to which the Fund Company or any such
person may become subject under the 1933 Act, under any other statute, at common
law, or otherwise, arising out of the acquisition of any Shares by any person
which (i) may be based upon any wrongful act by the Distributor or any of the
Distributor's directors, officers, employees or representatives, or (ii) may be
based upon any untrue statement or alleged untrue statement of a material fact
contained in a registration statement, prospectus, shareholder report or other
information covering Shares filed or made public by the Fund Company or any
amendment thereof or supplement thereto, or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, but if and only if such statement or
omission was made in reliance upon information furnished to the Fund Company by
the Distributor for the specific purpose of inclusion in such registration
statement, prospectus, shareholder report or other information. In no case (i)
is the Distributor's indemnity in favor of the Fund Company, or any person
indemnified to be deemed to protect the Fund Company of such indemnified person
against any liability to which the Fund Company or such person would otherwise
be subject by reason of willful misfeasance, bad faith, or gross negligence in
the performance of his duties or by reason of his reckless disregard of his
obligations and duties under this Agreement or (ii) is the Distributor to be
liable under its indemnity agreement contained in this Paragraph with respect to
any claim made against the Fund Company or any person indemnified unless the
Fund Company or
<PAGE>
such person, as the case may be, shall have notified the Distributor in writing
for the claim within a reasonable time after the summons or other first written
notification giving information of the nature of the claim shall have been
served upon the Fund Company or upon such person (or after the Fund Company or
such person shall have received notice to such service on any designated agent).
However, failure to notify the Distributor of any such claim shall not relieve
the Distributor from any liability which the Distributor may have to the Fund
Company or any person against whom such action is brought otherwise than on
account of the Distributor's indemnity agreement contained in this Paragraph.
The Distributor shall be entitled to participate, at its own expense,
in the defense, or, if the Distributor so elects, to assume the defense of any
suit brought to endorse any such claim, but, if the Distributor elects to assume
the defense, such defense shall be conducted by legal counsel chosen by the
Distributor and satisfactory to the Fund Company and to the defendant or
defendants who are entitled to such indemnification. In the event that the
Distributor elects to assume the defense of any suit and retain legal counsel,
the Fund Company and the defendant or defendants who are entitled to such
indemnification, shall bear the fees and expenses of any additional legal
counsel retained by them. If the Distributor does not elect to assume the
defense of any such suit, the Distributor will reimburse the Fund Company and
the defendant or defendants entitled to such indemnification for the reasonable
fees and expenses of any legal counsel retained by them. The Distributor agrees
to promptly notify the Fund Company of the commencement of any litigation of
proceedings against it or any of its officers, employees or representatives in
connection with the issue or sale of any Shares.
(b) INDEMNIFICATION OF THE DISTRIBUTOR. The Fund Company agrees to
indemnify and hold harmless the Distributor and each of its present or former
directors, officers, employees, representatives and each person, if any, who
controls or previously controlled the Distributor within the meaning of Section
15 of the 1933 Act, under any other statute, at common law, or otherwise,
arising out of the acquisition of any Shares by any person which (i) may be
based upon any wrongful act by the Fund Company or any of the Fund Company's
directors, officers, employees or representatives (other than the Distributor),
or (ii) may be based upon any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, shareholder
report or other information covering Shares filed or made public by the Fund
Company or any amendment thereof or supplement thereto, or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, unless such
statement or omission was made in reliance upon information furnished to the
Fund Company by the Distributor. In no case (i) is the Fund Company's indemnity
in favor of the Distributor, or any person indemnified to be deemed to protect
the Distributor or such indemnified person against any liability to which the
Distributor or such person would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of his duties or
by reason of his reckless disregard of his obligations and duties under this
Agreement, or (ii) is the Fund Company to be liable under its indemnity
agreement contained in this Paragraph with respect to any claim made
<PAGE>
against Distributor or person indemnified unless the Distributor, or such
person, as the case may be, shall have notified the Fund Company in writing of
the claim within a reasonable time after the summons or other first written
notification giving information of the nature of the claim shall have been
served upon the Distributor or upon such person (or after the Distributor or
such person shall have received notice of such service on any designated agent).
However, failure to notify the Fund Company of any such claim shall not relieve
the Fund Company from any liability which the Fund Company may have to the
Distributor or any person against whom such action is brought otherwise than on
account of the Fund Company's indemnity agreement contained in this Paragraph.
The Fund Company shall be entitled to participate, at its own expense,
in the defense, or, if the Fund Company so elects, to assume the defense of any
suit brought to enforce any such claim, but if the Fund Company elects to assume
the defense, such defense shall be conducted by legal counsel chosen by the Fund
Company and satisfactory to the Distributor and to the defendant or defendants
entitled to such indemnification. In the event that the Fund Company elects to
assume the defense of any suit and retain legal counsel, the Distributor and the
defendant or defendants entitled to such indemnification, shall bear the fees
and expenses of any additional legal counsel retained by them. If the Fund
Company does not elect to assume the defense of any such suit, the Fund Company
will reimburse the Distributor and the defendant or defendants entitled to such
indemnification for the reasonable fees and expenses of any legal counsel
retained by them. The Fund Company agrees to promptly notify the Distributor of
the commencement of any litigation or proceedings against it or any of its
directors, officers, employees or representatives in connection with the issue
or sale of any Shares.
8. AUTHORIZED REPRESENTATIONS
The Distributor is not authorized by the Fund Company to give on
behalf of the Fund Company any information or to make any representations in
connection with the sale of Shares other than the information and
representations contained in a registration statement or prospectus filed with
the Securities and Exchange Commission ("SEC") under the 1933 Act and/or the
1940 Act, covering Shares, as such registration statement and prospectus may be
amended or supplemented from time to time, or contained in shareholder reports
or other material that may be prepared by or on behalf of the Fund Company for
the Distributor's use. This shall not be construed to prevent the Distributor
from preparing and distributing tombstone ads and sales literature or other
material as it may deem appropriate. No person other than the Distributor is
authorized to act as principal underwriter (as such term is defined in the 1940
Act) for the Fund Company.
9. TERM OF AGREEMENT
The term of this Agreement shall begin on the date first above
written, and unless sooner terminated as hereinafter provided, this Agreement
shall remain in effect for a period of one year from the date hereof.
Thereafter, this
<PAGE>
Agreement shall continue in effect from year to year, subject to the termination
provisions and all other terms and conditions thereof, so long as such
continuation shall be specifically approved at least annually by the Board of
Directors or by vote of a majority of the outstanding voting securities of the
Fund Company and, concurrently with such approval by the Board of Directors or
prior to such approval by the holders of the outstanding voting securities of
the Fund Company, as the case may be, by the vote, cast in person at a meeting
called for the purpose of voting on such approval, of a majority of the
directors of the Fund Company who are not parties to this Agreement or
interested persons of any such party. The Distributor shall furnish to the Fund
Company, promptly upon its request, such information as may reasonably be
necessary to evaluate the terms of this Agreement or any extension, renewal or
amendment hereof.
10. AMENDMENT OR ASSIGNMENT OF AGREEMENT
This Agreement may not be amended or assigned except as permitted
by the 1940 Act, and this Agreement shall automatically and immediately
terminate in the event of its assignment.
11. TERMINATION OF AGREEMENT
This Agreement may be terminated by either party hereto, without
the payment of any penalty, on not more than upon 60 days nor less than 30 days
prior notice in writing to the other party provided, that in the case of
termination by the Fund Company such action shall have been authorized by
resolution of a majority of the directors of the Fund Company who are not
parties to this Agreement or interested persons of any such party, or by vote of
a majority of the outstanding voting securities of the Fund Company.
12. MISCELLANEOUS
The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Nothing herein contained shall be deemed to require the Fund
Company to take any action contrary to its Articles of Incorporation or By-Laws,
or any applicable statutory or regulatory requirement to which it is subject or
by which it is bound, or to relieve or deprive the Board of Directors of the
Fund Company of responsibility for and control of the conduct of the affairs of
the Fund Company.
13. DEFINITION OF TERMS
<PAGE>
Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from term or provision of
the 1940 Act shall be resolved by reference to such term or provision of the
1940 Act and to interpretation thereof, if any, by the United States court or,
in the absence of any controlling decision of any such court, by rules,
regulations or orders of the Securities and Exchange Commission validly issued
pursuant to the 1940 Act. Specifically, the terms "vote of a majority of the
outstanding voting securities", "interested persons", "assignment", and
"affiliated person", as used in Paragraphs 8, 9 and 10 hereof, shall have the
meanings assigned to them by Section 2(a) of the 1940 Act. In addition, where
the effect of a requirement of the 1940 Act reflected in any provision of this
Agreement is relaxed by a rule, regulation or order of the Securities and
Exchange Commission, whether of special or of general application, such
provision shall be deemed to incorporate the effect of such rule, regulation or
order.
14. COMPLIANCE WITH SECURITIES LAWS
The Fund Company represents that it is registered as an open-end
management investment company under the 1940 Act, and agrees that it will comply
with all the provisions of the 1940 Act and of the rules and regulations
thereunder. The Fund Company and the Distributor each agree to comply with all
of the applicable terms and provisions of the 1940 Act, the 1933 Act and,
subject to the provisions of Section 4(d), all applicable "Blue Sky" laws. The
Distributor agrees to comply with all of the applicable terms and provisions of
the Securities Exchange Act of 1934.
15. NOTICES
Any notice required to be given pursuant to this Agreement shall
be deemed duly given if delivered or mailed by registered mail, postage prepaid,
to the Distributor or to the Fund Company at either 1100 West Wells Street,
Milwaukee, Wisconsin 53233.
16. GOVERNING LAW
This Agreement shall be governed and construed in accordance with
the laws of the State of Wisconsin.
17. NO SHAREHOLDER LIABILITY
The Distributor understands that the obligations of this
Agreement are not binding upon any shareholder of the Fund Company personally,
but bind only the Fund Company's property; the Distributor represents that it
has notice of the provisions of the Articles of Incorporation disclaiming
shareholder liability for acts or obligations of the Fund Company.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed by their duly authorized representatives and their respective
corporate seals to be hereunto affixed, as of the day and year first above
written.
THE CATHOLIC ALLIANCE FUNDS, INC.
By:
ATTEST:
- ------------------------------
CATHOLIC FINANCIAL SERVICES CORPORATION
By:
ATTEST:
- ------------------------------
<PAGE>
CUSTODIAN SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this ____ day of _______,
1999, by and between The Catholic Alliance Funds, Inc., a Maryland corporation
(hereinafter referred to as the "Fund Company"), and Firstar Bank Milwaukee,
N.A., a national banking association (hereinafter referred to as the
"Custodian").
WHEREAS, the Fund Company is an open-end management investment company
which is registered under the Investment Company Act of 1940, as amended (the
"1940 Act");
WHEREAS, the Fund Company is authorized to create separate series, each
with its own separate investment portfolio; and
WHEREAS, the Fund Company desires that the securities and cash of each
series of the Fund Company listed on EXHIBIT A attached hereto, as may be
amended from time to time (each such series referred to herein individually as a
"Fund" and collectively as the "Funds"), shall be hereafter held and
administered by Custodian pursuant to the terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements herein made, the
Fund Company and Custodian agree as follows:
1. DEFINITIONS
The word "securities" as used herein includes stocks, shares, bonds,
debentures, notes, mortgages or other obligations, and any certificates,
receipts, warrants or other instruments representing rights to receive, purchase
or subscribe for the same, or evidencing or representing any other rights or
interests therein, or in any property or assets.
The words "officers' certificate" shall mean a request or direction or
certification in writing signed in the name of the Fund Company by any two of
the President, a Vice President, the Secretary and the Treasurer of the Fund
Company, or any other persons duly authorized to sign by the Board.
The word "Board" shall mean Board of Directors of The Catholic
Alliance Funds, Inc.
2. NAMES, TITLES, AND SIGNATURES OF THE COMPANY'S OFFICERS
An officer of the Fund Company will certify to Custodian the names and
signatures of those persons authorized to sign the officers' certificates and
the names of the members of the Board, together with any changes which may occur
from time to time.
<PAGE>
3. RECEIPT AND DISBURSEMENT OF MONEY
A. Custodian shall open and maintain a separate account or accounts
in the name of each Fund, subject only to draft or order by
Custodian acting pursuant to the terms of this Agreement.
Custodian shall hold in such account or accounts, subject to the
provisions hereof, all cash received by it from or for the
account of the Fund Company. Custodian shall make payments of
cash to, or for the account of, the Fund Company from such cash
only:
(1) For the purchase of securities for the portfolio of a Fund
upon the delivery of such securities to Custodian,
registered in the name of the relevant Fund or of the
nominee of Custodian referred to in Section 7 or in proper
form for transfer;
(2) For the purchase or redemption of shares of the common stock
of a Fund upon delivery thereof to Custodian, or upon proper
instructions from the Fund Company;
(3) For the payment of interest, dividends, taxes, investment
adviser's fees or operating expenses (including, without
limitation thereto, fees for legal, accounting, auditing and
custodian services and expenses for printing and postage);
(4) For payments in connection with the conversion, exchange or
surrender of securities owned or subscribed to by a Fund
held by or to be delivered to Custodian; or
(5) For other proper corporate purposes certified by resolution
of the Board.
Before making any such payment, Custodian shall receive (and may rely
upon) an officers' certificate requesting such payment and stating that it is
for a purpose permitted under the terms of items (a), (b), (c), or (d) of this
Subsection A of this Section 3, and also, in respect of item (e), upon receipt
of an officers' certificate specifying the amount of such payment, setting forth
the purpose for which such payment is to be made, declaring such purpose to be a
proper corporate purpose, and naming the person or persons to whom such payment
is to be made, provided, however, that an officers' certificate need not precede
the disbursement of cash for the purpose of purchasing a money market
instrument, or any other security with same or next-day settlement, if the
President, a Vice President, the Secretary or the Treasurer of the Fund Company
issues appropriate oral or facsimile instructions to Custodian and an
appropriate officers' certificate is received by Custodian within two business
days thereafter.
B. Custodian is hereby authorized to endorse and collect all checks,
<PAGE>
drafts or other orders for the payment of money received by
Custodian for the account of each Fund.
C. Custodian shall, upon receipt of proper instructions, make
federal funds available to the Fund Company as of specified times
agreed upon from time to time by the Fund Company and the
Custodian in the amount of checks received in payment for shares
of a Fund which are deposited into such Fund's account.
D. If so directed by the Fund Company, Custodian will invest any and
all available cash in overnight cash-equivalent investments as
specified by the investment manager.
4. SEGREGATED ACCOUNTS
Upon receipt of proper instructions, the Custodian shall establish and
maintain a segregated account(s) for and on behalf of each Fund, into which
account(s) may be transferred cash and/or securities.
5. TRANSFER, EXCHANGE, REDELIVERY, ETC. OF SECURITIES
Custodian shall have sole power to release or deliver any securities
of any Fund of the Fund Company held by it pursuant to this Agreement. Custodian
agrees to transfer, exchange or deliver securities held by it hereunder only:
(A) For sales of such securities for the account of a Fund upon
receipt by Custodian of payment therefore;
(B) When such securities are called, redeemed or retired or otherwise
become payable;
(C) For examination by any broker selling any such securities in
accordance with "street delivery" custom;
(D) In exchange for, or upon conversion into, other securities alone
or other securities and cash whether pursuant to any plan of
merger, consolidation, reorganization, recapitalization or
readjustment, or otherwise;
(E) Upon conversion of such securities pursuant to their terms into
other securities;
(F) Upon exercise of subscription, purchase or other similar rights
represented by such securities;
(G) For the purpose of exchanging interim receipts or temporary
securities for definitive securities;
<PAGE>
(H) For the purpose of redeeming in kind shares of common stock of
the Fund upon delivery thereof to Custodian; or
(I) For other proper corporate purposes.
As to any deliveries made by Custodian pursuant to items (a), (b),
(d), (e), (f), and (g), securities or cash receivable in exchange therefor shall
be deliverable to Custodian.
Before making any such transfer, exchange or delivery, Custodian shall
receive (and may rely upon) an officers' certificate requesting such transfer,
exchange or delivery, and stating that it is for a purpose permitted under the
terms of items (a), (b), (c), (d), (e), (f), (g), or (h) of this Section 5 and
also, in respect of item (i), upon receipt of an officers' certificate
specifying the securities to be delivered, setting forth the purpose for which
such delivery is to be made, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom delivery of such securities
shall be made, provided, however, that an officers' certificate need not precede
any such transfer, exchange or delivery of a money market instrument, or any
other security with same or next-day settlement, if the President, a Vice
President, the Secretary or the Treasurer of the Fund Company issues appropriate
oral or facsimile instructions to Custodian and an appropriate officers'
certificate is received by Custodian within two business days thereafter.
6. CUSTODIAN'S ACTS WITHOUT INSTRUCTIONS
Unless and until Custodian receives an officers' certificate to the
contrary, Custodian shall: (a) present for payment all coupons and other income
items held by it for the account of each Fund, which call for payment upon
presentation and hold the cash received by it upon such payment for the account
of such Fund; (b) collect interest and cash dividends received, with notice to
the Fund Company, for the account of a Fund; (c) hold for the account of each
Fund hereunder all stock dividends, rights and similar securities issued with
respect to any securities held by it hereunder for the account of such Fund; and
(d) execute, as agent on behalf of the Fund Company, all necessary ownership
certificates required by the Internal Revenue Code of 1986, as amended (the
"Code") or the Income Tax Regulations (the "Regulations") of the United States
Treasury Department (the "Treasury Department") or under the laws of any state
now or hereafter in effect, inserting the name of the appropriate Fund on such
certificates as the owner of the securities covered thereby, to the extent it
may lawfully do so.
<PAGE>
7. REGISTRATION OF SECURITIES
Except as otherwise directed by an officers' certificate, Custodian
shall register all securities, except such as are in bearer form, in the name of
a registered nominee of Custodian as defined in the Internal Revenue Code and
any Regulations of the Treasury Department issued thereunder or in any provision
of any subsequent federal tax law exempting such transaction from liability for
stock transfer taxes, and shall execute and deliver all such certificates in
connection therewith as may be required by such laws or regulations or under the
laws of any state. All securities held by Custodian hereunder shall be at all
times identifiable in its records held in an account or accounts of Custodian
containing only the assets of the particular Fund.
The Fund Company shall from time to time furnish to Custodian
appropriate instruments to enable Custodian to hold or deliver in proper form
for transfer, or to register in the name of its registered nominee, any
securities which it may hold for the account of any Fund and which may from time
to time be registered in the name of such Fund or the Fund Company.
8. VOTING AND OTHER ACTION
Neither Custodian nor any nominee of Custodian shall vote any of the
securities held hereunder by or for the account of any Fund, except in
accordance with the instructions contained in an officers' certificate.
Custodian shall deliver, or cause to be executed and delivered, to the Fund
Company all notices, proxies and proxy soliciting materials with respect to such
securities, such proxies to be executed by the registered holder of such
securities (if registered otherwise than in the name of any Fund or the Fund
Company), but without indicating the manner in which such proxies are to be
voted.
9. TRANSFER TAX AND OTHER DISBURSEMENTS
The Fund Company shall pay or reimburse Custodian from time to time
for any transfer taxes payable upon transfers of securities made hereunder, and
for all other necessary and proper disbursements and expenses made or incurred
by Custodian in the performance of this Agreement.
Custodian shall execute and deliver such certificates in connection
with securities delivered to it or by it under this Agreement as may be required
under the provisions of the Internal Revenue Code and any Regulations of the
Treasury Department issued thereunder, or under the laws of any state, to exempt
from taxation any exempt transfers and/or deliveries of any such securities.
<PAGE>
10. CONCERNING CUSTODIAN
Custodian shall be paid as compensation for its services pursuant to
this Agreement such compensation as may from time to time be agreed upon in
writing between the two parties. Until modified in writing, such compensation
shall be as set forth in EXHIBIT A attached hereto. Notwithstanding anything to
the contrary, amounts owed by the Fund Company to the Custodian shall only be
paid out of the assets and property of the particular Fund involved.
Custodian shall not be liable for any action taken in good faith and
without negligence and willful misconduct upon any certificate herein described
or certified copy of any resolution of the Board, and may rely on the
genuineness of any such document which it may in good faith believe to have been
validly executed.
The Fund Company agrees to indemnify and hold harmless Custodian and
its nominee from all taxes, charges, expenses, assessments, claims and
liabilities (including reasonable counsel fees) incurred or assessed against it
or by its nominee in connection with the performance of this Agreement, except
such as may arise from a breach by Custodian of any representation or warranty
made under this Agreement or from its or its nominee's own bad faith, negligent
action, negligent failure to act or willful misconduct. In the event of any
advance of cash for any purpose made by Custodian for the benefit of any Fund
resulting from orders or instructions of the Fund Company, any property at any
time held for the account of such Fund shall be security therefor.
Custodian agrees to indemnify and hold harmless the Fund Company from
all charges, expenses, assessments, and claims/liabilities (including reasonable
counsel fees) incurred or assessed against it in connection with the performance
of this Agreement, except such as may arise from the Fund Company's or any
Fund's own bad faith, negligent action, negligent failure to act, or willful
misconduct.
Custodian agrees that obligations assumed by the Fund Company pursuant
to this Agreement shall be limited in all cases to the respective assets of the
Fund with respect to which such obligation relates. Custodian further agrees
that it shall not seek satisfaction of any such obligation from the shareholder
or any individual shareholder of any Fund or any other series of the Fund
Company, nor from the Directors or any individual Director of the Fund Company.
11. SUBCUSTODIANS
Custodian is hereby authorized to engage another bank or trust company
as a subcustodian for all or any part of the Company's assets, so long as any
such bank or trust company is itself qualified under the 1940 Act and the rules
and regulations thereunder and provided further that, if the Custodian utilizes
the services of a subcustodian, the Custodian shall remain fully liable and
responsible for any losses caused to the Fund Company by the subcustodian as
fully as if the Custodian was directly responsible for any such losses under the
terms of this Agreement.
<PAGE>
Notwithstanding anything contained herein, if the Fund Company
requires the Custodian to engage specific subcustodians for the safekeeping
and/or clearing of assets, the Fund Company agrees to indemnify and hold
harmless Custodian from all claims, expenses and liabilities incurred or
assessed against it in connection with the use of such subcustodian in regard to
the Fund Company's assets, except as may arise from Custodian's own bad faith,
negligent action, negligent failure to act or willful misconduct.
12. REPORTS BY CUSTODIAN
Custodian shall furnish the Fund Company periodically as agreed upon
with a statement summarizing all transactions and entries for the account of
Fund Company. Custodian shall furnish to the Fund Company, at the end of every
month, a list of the portfolio securities for the Fund showing the aggregate
cost of each issue. The books and records of Custodian pertaining to its actions
under this Agreement shall be open to inspection and audit at reasonable times
by officers of, and by auditors employed by, the Fund Company.
13. TERMINATION OR ASSIGNMENT
This Agreement may be terminated by the Fund Company either in its
entirety or with respect to any particular Fund(s), or by Custodian, on ninety
(90) days notice, given in writing and sent by registered mail to:
c/o Firstar Mutual Fund Services, LLC
615 East Michigan Street
Milwaukee, Wisconsin 53202
Attention: Relationship Manager
or to the Fund Company at:
The Catholic Alliance Funds, Inc.
1100 West Wells Street
Milwaukee, Wisconsin 53233
Attention: President
as the case may be. Upon any termination of this Agreement, pending appointment
of a successor to Custodian or a vote of the shareholders of the relevant
Fund(s) to dissolve or to function without a custodian of its cash, securities
and other property, Custodian shall not deliver cash, securities or other
property of such Fund to the Fund Company, but may deliver them to a bank or
trust company of its own selection that meets the requirements of the 1940 Act
as a Custodian for the Fund Company to be held under terms similar to those of
this Agreement, provided, however, that custodian shall not be required to make
any such delivery or payment until full payment shall have been made by the Fund
Company of all liabilities constituting a charge on or against the properties
then held by Custodian or on or against Custodian for the account of or with
respect to the relevant Fund(s), and until full payment shall have been made to
Custodian of all its
<PAGE>
fees, compensation, costs and expenses relating to such Fund(s), subject to the
provisions of Section 10 of this Agreement.
This Agreement may not be assigned by Custodian without the consent of
the Fund Company, authorized or approved by a resolution of the Board.
14. DEPOSITS OF SECURITIES IN SECURITIES DEPOSITORIES
No provision of this Agreement shall be deemed to prevent the use by
Custodian of a central securities clearing agency or securities depository,
provided, however, that Custodian and the central securities clearing agency or
securities depository meet all applicable federal and state laws and
regulations, and the Board approves by resolution the use of such central
securities clearing agency or securities depository.
15. RECORDS
Custodian shall keep records relating to its services to be performed
hereunder, in the form and manner, and for such period, as it may deem advisable
and is agreeable to the Fund Company but not inconsistent with the rules and
regulations of appropriate government authorities, in particular Section 31 of
the 1940 Act and the rules thereunder. Custodian agrees that all such records
prepared or maintained by the Custodian relating to the services performed by
Custodian hereunder are the property of the Fund Company and will be preserved,
maintained, and made available in accordance with such section and rules of the
1940 Act and will be promptly surrendered to the Fund Company on and in
accordance with its request.
16. GOVERNING LAW
This Agreement shall be governed by Wisconsin law. However, nothing
herein shall be construed in a manner inconsistent with the 1940 Act or any rule
or regulation promulgated by the Securities and Exchange Commission thereunder.
17. PROPRIETARY AND CONFIDENTIAL INFORMATION
The Custodian agrees on behalf of itself and its directors, officers,
and employees to treat confidentially and as proprietary information of the Fund
Company all records and other information relative to the Fund Company and
prior, present, or potential shareholders of the Fund Company (and clients of
said shareholders), and not to use such records and information for any purpose
other than the performance of its responsibilities and duties hereunder, except
after prior notification to and approval in writing by the Fund Company, which
approval shall not be unreasonably withheld and may not be withheld where the
Custodian may be exposed to civil or criminal contempt proceedings for failure
to comply, when requested to divulge such information by duly constituted
authorities, or when so requested by the Fund Company.
18. NO AGENCY RELATIONSHIP
<PAGE>
Nothing herein contained shall be deemed to authorize or empower
Custodian to act as agent for the other party to this Agreement, or to conduct
business in the name of, or for the account of the other party to this
Agreement.
19. YEAR 2000 COMPLIANCE
The Custodian represents and warrants to the Fund Company that the
computer software, computer firmware, computer hardware (whether general or
special purpose) and other similar related items of automated, computerized
and/or software systems that are owned or licensed by the Custodian and will be
utilized by the Custodian or its agents in connection with the provision of
services described in this Agreement are "Year 2000 Compliant" (as defined
below). As used in this Section 19 of this Agreement, the term "Year 2000
Compliant" shall mean the ability of the relevant system to provide all of the
following functions:
A. Process date information before, during and after January 1,
2000, including but not limited to accepting date specific input
data, providing date specific output data, and performing
calculations on dates or portions of dates;
B. Function accurately and without interruption or malfunction
before, during and after January 1, 2000, without any change in
operations associated with the advent of the new millennium and
assuming no other defects, bugs, viruses or other problems
unrelated to Year 2000 compliance issues which disrupt
functionality;
C. Respond to two-digit, year-date input in a way that resolves the
ambiguity as to century and in a disclosed, defined and
predetermined manner; and
D. Store and provide output data of date specific information in
ways that are unambiguous as to century.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer or one or more counterparts as of the day
and year first written above.
THE CATHOLIC ALLIANCE FUNDS, INC. FIRSTAR BANK MILWAUKEE, N.A.
By: By:
Attest: Attest:
<PAGE>
EXHIBIT A
CUSTODY SERVICES
ANNUAL FEE SCHEDULE - DOMESTIC FUNDS
Separate Series of The Catholic Alliance Funds, Inc.
<TABLE>
<CAPTION>
NAME OF FUND DATE ADDED
------------ ----------
<S> <C>
Equity Income Fund ____________, 1999
Large-Cap Growth Fund ____________, 1999
Disciplined Capital Appreciation Fund ____________, 1999
</TABLE>
Annual fee based upon [average daily net asset value]?
2 basis points per year
Minimum annual fee per fund - $3,000
Investment transactions (purchase, sale, exchange, tender, redemption, maturity,
receipt, delivery):
$12.00 per book entry security (depository or Federal Reserve system)
$25.00 per definitive security (physical)
$25.00 per mutual fund trade
$75.00 per Euroclear
$ 8.00 per principal reduction on pass-through certificates
$35.00 per option/futures contract
$15.00 per variation margin
$15.00 per Fed wire deposit or withdrawal
Variable Amount Demand Notes: Used as a short-term investment, variable amount
notes offer safety and prevailing high interest rates. Our charge, which is 0.25
of 1%, is deducted from the variable amount note income at the time it is
credited to your account.
Plus reasonable and customary out-of-pocket expenses reported in detail, and
extraordinary expenses approved in advance in writing based upon complexity.
Fees and out-of-pocket expenses are billed to the fund monthly, based upon
market value at the beginning of the month.
<PAGE>
TRANSFER AGENT SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this ___ day of _______,
1999, by and between The Catholic Alliance Funds, a Maryland Corporation
(hereinafter referred to as the "Fund Company") and Firstar Mutual Fund
Services, LLC, a limited liability company organized under the laws of the State
of Wisconsin (hereinafter referred to as "FMFS").
WHEREAS, the Fund Company is an open-end management investment company
which is registered under the Investment Company Act of 1940, as amended (the
"1940 Act");
WHEREAS, the Fund Company is authorized to create separate series, each
with its own separate investment portfolio;
WHEREAS, FMFS is a trust company and, among other things, is in the
business of administering transfer and dividend disbursing agent functions for
the benefit of its customers; and
WHEREAS, the Fund Company desires to retain FMFS to provide transfer and
dividend disbursing agent services to each series of the Fund Company listed on
EXHIBIT A attached hereto, as may be amended from time to time (each such series
referred to herein as a "Fund" and collectively as the "Funds").
NOW, THEREFORE, in consideration of the mutual agreements herein made, the
Fund Company and FMFS agree as follows:
1. APPOINTMENT OF TRANSFER AGENT
The Fund Company hereby appoints FMFS as transfer agent of each Fund
on the terms and conditions set forth in this Agreement, and FMFS hereby accepts
such appointment and agrees to perform the services and duties set forth in this
Agreement in consideration of the compensation provided for herein
2. DUTIES AND RESPONSIBILITIES OF FMFS
FMFS shall, on behalf of each Fund, perform all of the customary
services of a transfer agent and dividend disbursing agent, and as relevant,
agent in connection with accumulation, open account or similar plans (including
without limitation any periodic investment plan or periodic withdrawal program),
including but not limited to:
A. Receive orders for the purchase of shares;
<PAGE>
B. Process purchase orders with prompt delivery, where appropriate,
of payment and supporting documentation to the Fund Company's
custodian, and issue the appropriate number of uncertificated
shares with such uncertificated shares being held in the
appropriate shareholder account;
C. Arrange for issuance of shares obtained through transfers of
funds from Shareholders' accounts at financial institutions and
arrange for the exchange of shares for shares of other eligible
investment companies, when permitted by the Prospectus for the
relevant Fund(s).
D. Process redemption requests received in good order and, where
relevant, deliver appropriate documentation to the Fund Company's
custodian;
E. Pay monies upon receipt from the Fund Company's custodian, where
relevant, in accordance with the instructions of redeeming
shareholders;
F. Process transfers of shares in accordance with the shareholder's
instructions;
G. Process exchanges between Funds and/or, if any, classes of shares
of Funds, and process exchanges of shares between the Funds and
the Firstar Money Market Fund, if applicable;
H. Prepare and transmit payments for dividends and distributions
declared by the Fund Company with respect to a Fund, after
deducting any amount required to be withheld by any applicable
laws, rules and regulations and in accordance with shareholder
instructions;
I. Make changes to shareholder records, including, but not limited
to, address changes in plans (i.e., systematic withdrawal,
automatic investment, dividend reinvestment, etc.);
J. Record the issuance of shares of each Fund and maintain, pursuant
to Rule 17Ad-10(e) promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), a record of the total
number of shares of each Fund which are authorized, issued and
outstanding;
K. Prepare shareholder meeting lists and, if applicable, mail,
receive and tabulate proxies;
L. Mail shareholder reports and prospectuses to current
shareholders;
<PAGE>
M. Prepare and file U.S. Treasury Department Forms 1099 and other
appropriate information returns required with respect to
dividends and distributions for all shareholders;
N. Provide shareholder account information upon request and prepare
and mail confirmations and statements of account to shareholders
for all purchases, redemptions and other confirmable transactions
as agreed upon with the Fund Company;
O. Mail requests for shareholders' certifications under penalties of
perjury and pay on a timely basis to the appropriate Federal
authorities any taxes to be withheld on dividends and
distributions paid by each Fund, all as required by applicable
Federal tax laws and regulations;
P. Provide a Blue Sky System which will enable the Fund Company to
monitor the total number of shares of each Fund sold in each
state. In addition, the Fund Company or its agent, including
FMFS, shall identify to FMFS in writing those transactions and
assets to be treated as exempt from the Blue Sky reporting for
each state. The responsibility of FMFS for the Fund Company's
Blue Sky state registration status is solely limited to the
initial compliance by the Fund Company and the reporting of such
transactions to the Fund Company or its agent;
Q. Answer correspondence from shareholders, securities brokers and
others relating to FMFS's duties hereunder and such other
correspondence as may from time to time be mutually agreed upon
between FMFS and the Fund Company.
R. Provide reports mutually agreeable in form and frequency to the
Fund Company's Distributor calculating and detailing sales
commissions payable with respect to shares of the Funds sold for
the relevant period.
3. COMPENSATION
The Fund Company agrees to pay FMFS for the performance of the duties
listed in this Agreement as set forth on EXHIBIT A attached hereto.
These fees and reimbursable expenses may be changed from time to time
subject to mutual written agreement between the Fund Company and FMFS.
The Fund Company agrees to pay all fees and reimbursable expenses
within ten (10) business days following the receipt of the billing notice.
Notwithstanding anything to the contrary, amounts owed by the Fund
<PAGE>
Company to FMFS shall only be paid out of assets and property of the particular
Fund involved.
4. REPRESENTATIONS OF FMFS
FMFS represents and warrants to the Fund Company that:
A. It is a limited liability company duly organized, existing and in
good standing under the laws of Wisconsin;
B. It is a registered transfer agent under the Exchange Act;
C. It is duly qualified to carry on its business in the State of
Wisconsin;
D. It is empowered under applicable laws and by its charter and
bylaws to enter into and perform this Agreement;
E. All requisite corporate proceedings have been taken to authorize
it to enter and perform this Agreement;
F. It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement; and
G. It will comply with all applicable requirements of the Securities
Act of 1933, as amended, and the Exchange Act, the 1940 Act, and
any laws, rules, and regulations of governmental authorities
having jurisdiction over it and its duties and activities
contemplated by this Agreement.
H. The computer software, computer firmware, computer hardware
(whether general or special purpose) and other similar related
items of automated, computerized and/or software systems that are
owned or licensed by FMFS and are utilized by FMFS or its agents
in connection with the provision of services described in this
Agreement are "Year 2000 Compliant" (as defined below). As used
in this Section 4.H of this Agreement, the term "Year 2000
Compliant" shall mean the ability of the relevant system to
provide all of the following functions:
(1) Process date information before, during and after January1,
2000, including but not limited to accepting date specific
input data, providing date specific output data, and
performing calculations on dates or portions of dates;
(2) Function accurately and without interruption or malfunction
before, during and after January 1, 2000, without any
<PAGE>
change in operations associated with the advent of the new
millennium and assuming no other defects, bugs, viruses or
other problems unrelated to Year 2000 compliance issues
which disrupt functionality;
(3) Respond to two-digit, year-date input in a way that resolves
the ambiguity as to century and in a disclosed, defined and
predetermined manner; and
(4) Store and provide output data of date specific information
in ways that are unambiguous as to century.
5. REPRESENTATIONS OF THE FUND COMPANY
The Fund Company represents and warrants to FMFS that:
A. The Fund Company is an open-end, diversified, management
investment company under the 1940 Act;
B. The Fund Company is a corporation, organized, existing, and in
good standing under the laws of Maryland;
C. The Fund Company is empowered under applicable laws and by its
Articles of Incorporation and Bylaws to enter into and perform
this Agreement;
D. All necessary proceedings required by the Articles of
Incorporation have been taken to authorize it to enter into and
perform this Agreement;
E. The Fund Company will comply with all applicable requirements of
the Securities Act, the Exchange Act, the 1940 Act, and any laws,
rules and regulations of governmental authorities having
jurisdiction over the Fund Company and its activities; and
F. A registration statement under the Securities Act will be made
effective and will remain effective with respect to all shares of
each Fund being offered for sale.
<PAGE>
6. COVENANTS OF THE FUND COMPANY AND FMFS
The Fund Company shall furnish FMFS a certified copy of the resolution
of the Board of Directors of the Fund authorizing the appointment of FMFS and
the execution of this Agreement. The Fund Company shall provide to FMFS a copy
of its Articles of Incorporation and Bylaws, and all amendments thereto.
FMFS shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the 1940 Act, and the rules thereunder, FMFS agrees
that all such records prepared or maintained by FMFS relating to the services to
be performed by FMFS hereunder are the property of the Fund Company and will be
preserved, maintained and made available in accordance with such section and
rules and will be surrendered to the Fund Company on and in accordance with its
request.
7. PERFORMANCE OF SERVICE; LIMITATION OF LIABILITY
FMFS shall exercise reasonable care in the performance of its duties
under this Agreement. FMFS shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Fund Company or any Fund in
connection with matters to which this Agreement relates, including losses
resulting from mechanical breakdowns or the failure of communication or power
supplies beyond FMFS's control, except a loss arising out of or relating to a
breach of any representation or warranty made by FMFS under this Agreement or
FMFS's refusal or failure to comply with the terms of this Agreement or from bad
faith, negligence, or willful misconduct on its part in the performance of its
duties under this Agreement. Notwithstanding any other provision of this
Agreement, if FMFS has exercised reasonable care in the performance of its
duties under this Agreement, the Fund Company shall indemnify and hold harmless
FMFS from and against any and all claims, demands, losses, expenses, and
liabilities (whether with or without basis in fact or law) of any and every
nature (including reasonable attorneys' fees) which FMFS may sustain or incur or
which may be asserted against FMFS by any person arising out of any action taken
or omitted to be taken by it in performing the services hereunder, except for
any and all claims, demands, losses, expenses, and liabilities arising out of or
relating to a breach of any representation or warranty made by FMFS under this
Agreement or FMFS's refusal or failure to comply with the terms of this
Agreement or from bad faith, negligence or from willful misconduct on its part
in performance of its duties under this Agreement, (i) in accordance with the
foregoing standards, or (ii) in reliance upon any written or oral instruction
provided to FMFS by any duly authorized officer of the Fund Company, such duly
authorized officer to be included in a list of authorized officers furnished to
FMFS and as amended from time to time in writing by resolution of the Board of
Directors of the Fund Company.
<PAGE>
FMFS shall indemnify and hold the Fund Company harmless from and
against any and all claims, demands, losses, expenses, and liabilities (whether
with or without basis in fact or law) of any and every nature (including
reasonable attorneys' fees) which the Fund Company may sustain or incur or which
may be asserted against the Fund Company by any person arising out of a breach
of any representation or warranty made by FMFS under this Agreement or any
action taken or omitted to be taken by FMFS as a result of FMFS's refusal or
failure to comply with the terms of this Agreement, its bad faith, negligence,
or willful misconduct.
In the event of a mechanical breakdown or failure of communication or
power supplies beyond its control, FMFS shall take all reasonable steps to
minimize service interruptions for any period that such interruption continues
beyond FMFS's control. FMFS will make every reasonable effort to restore any
lost or damaged data and correct any errors resulting from such a breakdown at
the expense of FMFS. FMFS agrees that it shall, at all times, have reasonable
contingency plans with appropriate parties, making reasonable provision for
emergency use of electrical data processing equipment to the extent appropriate
equipment is available. Representatives of the Fund Company shall be entitled to
inspect FMFS's premises and operating capabilities at any time during regular
business hours of FMFS, upon reasonable notice to FMFS.
Regardless of the above, FMFS reserves the right to reprocess and
correct administrative errors at its own expense.
In order that the indemnification provisions contained in this section
shall apply, it is understood that if in any case the indemnitor may be asked to
indemnify or hold the indemnitee harmless, the indemnitor shall be fully and
promptly advised of all pertinent facts concerning the situation in question,
and it is further understood that the indemnitee will use all reasonable care to
notify the indemnitor promptly concerning any situation which presents or
appears likely to present the probability of a claim for indemnification. The
indemnitor shall have the option to defend the indemnitee against any claim
which may be the subject of this indemnification. In the event that the
indemnitor so elects, it will so notify the indemnitee and thereupon the
indemnitor shall take over complete defense of the claim, and the indemnitee
shall in such situation initiate no further legal or other expenses for which it
shall seek indemnification under this section. The indemnitee shall in no case
confess any claim or make any compromise in any case in which the indemnitor
will be asked to indemnify the indemnitee except with the indemnitor's prior
written consent.
FMFS agrees that obligations assumed by the Fund Company pursuant to
this Agreement shall be limited in all cases to the respective assets and
properties of the particular Fund(s) to which the liability relates. FMFS
further agrees that it shall not seek satisfaction of any such obligation from
the shareholder or any individual shareholder of any Fund or of any other series
of the Fund Company, nor from the Directors or any individual Director of the
Fund Company.
8. PROPRIETARY AND CONFIDENTIAL INFORMATION
<PAGE>
FMFS agrees on behalf of itself and its directors, officers, and
employees to treat confidentially and as proprietary information of the Fund
Company all records and other information relative to the Fund Company and
prior, present, or potential shareholders (and clients of said shareholders) and
not to use such records and information for any purpose other than the
performance of its responsibilities and duties hereunder, except after prior
notification to and approval in writing by the Fund Company, which approval
shall not be unreasonably withheld and may not be withheld where FMFS may be
exposed to civil or criminal contempt proceedings for failure to comply after
being requested to divulge such information by duly constituted authorities, or
when so requested by the Fund Company.
9. TERM OF AGREEMENT
This Agreement shall become effective as of the date hereof and,
unless sooner terminated as provided herein, shall continue automatically in
effect for successive annual periods. The Agreement may be terminated by either
party (in the case of Fund Company, either in its entirety or with respect to
any particular Fund(s)) upon giving ninety (90) days prior written notice to the
other party or such shorter period as is mutually agreed upon by the parties.
However, this Agreement may be amended by mutual written consent of the parties.
10. NOTICES
Notices of any kind to be given by either party to the other party
shall be in writing and shall be duly given if mailed or delivered as follows:
Notice to FMFS shall be sent to:
Firstar Mutual Fund Services, LLC
615 East Michigan Street
Milwaukee, Wisconsin 53202
Attention: Relationship Manager
and notice to the Fund Company shall be sent to:
The Catholic Alliance Funds, Inc.
1100 West Wells Street
Milwaukee, Wisconsin 53233
Attention: President
<PAGE>
11. DUTIES IN THE EVENT OF TERMINATION
In the event that, in connection with termination, a successor to any
of FMFS's duties or responsibilities hereunder is designated by the Fund Company
by written notice to FMFS, FMFS will promptly, upon such termination and at the
expense of the Fund Company, transfer to such successor all relevant books,
records, correspondence, and other data established or maintained by FMFS under
this Agreement in a form reasonably acceptable to the Fund Company (if such form
differs from the form in which FMFS has maintained, the Fund Company shall pay
any expenses associated with transferring the data to such form), and will
cooperate in the transfer of such duties and responsibilities, including
provision for assistance from FMFS's personnel in the establishment of books,
records, and other data by such successor.
12. GOVERNING LAW
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of Wisconsin.
However, nothing herein shall be construed in a manner inconsistent with the
1940 Act or any rule or regulation promulgated by the Securities and Exchange
Commission thereunder.
13. STOCK CERTIFICATES
If at any time the Fund Company issues stock certificates for any
Fund, the following provisions will apply:
A. In the case of the loss or destruction of any certificate
representing shares, no new certificate shall be issued in lieu
thereof, unless there shall first have been furnished an
appropriate bond of indemnity issued by the surety company
approved by FMFS.
B. Upon receipt of signed stock certificates, which shall be in
proper form for transfer, and upon cancellation or destruction
thereof, FMFS shall countersign, register and issue new
certificates for the same number of shares and shall deliver them
pursuant to instructions received from the transferor, the rules
and regulations of the SEC, and the laws of the State of Maryland
relating to the transfer of shares of common stock.
C. Upon receipt of the stock certificates, which shall be in proper
form for transfer, together with the shareholder's instructions
to hold such stock certificates for safekeeping, FMFS shall
reduce such shares to uncertificated status, while retaining the
appropriate registration in the name of the shareholder upon the
transfer books of the relevant Fund.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer or one or more counterparts as of the day
and year first written above.
- --------------------------------------------------------------------------------
THE CATHOLIC ALLIANCE FUNDS, INC. FIRSTAR MUTUAL FUND SERVICES, LLC
By: By:
Attest: Attest:
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT A
TRANSFER AGENT AND SHAREHOLDER SERVICING
ANNUAL FEE SCHEDULE
Separate Funds of The Catholic Alliance Funds, Inc.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
NAME OF SERIES DATE ADDED
- --------------------------------------------------------------------------------
<S> <C>
Equity Income Fund ____________, 1999
- --------------------------------------------------------------------------------
Large-Cap Growth Fund ____________, 1999
- --------------------------------------------------------------------------------
Disciplined Capital Appreciation Fund ____________, 1999
- --------------------------------------------------------------------------------
</TABLE>
Annual Fee
$16.00 per shareholder account -- no-load fund
Minimum annual fees of $25,000 for the first Fund, $10,000 for each
additional Fund or class of shares within a Fund
Plus Reasonable and Customary Out-of-Pocket Expenses, including but not limited
to:
Telephone - toll-free lines NSCC charges
Postage Labels
Printing Proxies
Programming (with prior approval) Retention of records (with
prior approval)
Forms Shareholder Lists
Stationery/envelopes Microfilm/fiche of records
Mailing Special Reports (with prior
approval)
Mailing Related Insurance ACH fees
Insertion Services
ACH Shareholder Services
$ 125.00 per month per fund group
$ .50 per account setup and/or change
$ .50 per item for AIP purchases
$ .35 per item for EFT payments and purchases
$ 3.50 per correction, reversal, return item
<PAGE>
Qualified Plan Fees (Billed Directly to Investors)
Annual maintenance fee per account $12.50 / acct. (Cap at $25.00 per SSN)
Transfer to successor trustee $15.00 / trans.
Distribution to participant $15.00 / trans. (Exclusive of SWP)
Refund of excess contribution $15.00 / trans.
Additional Shareholder Fees (Billed Directly to Investors)
Any outgoing wire transfer $12.00 / wire
Telephone Exchange $ 5.00 / exchange transaction
Return check fee $20.00 / item
Stop payment $20.00 / stop
(Liquidation, dividend, draft check)
Research fee $ 5.00 / item
(For requested items of the second calendar year [or previous] to the
request)
(Cap at $25.00)
<PAGE>
NSCC AND DAZL
OUT-OF-POCKET CHARGES
NSCC Interfaces
Setup
Fund/SERV, Networking ACATS, $5,000 setup (one time)
Exchanges
Commissions $5,000 setup (one time)
Processing
Fund/SERV $ 50 / month
Networking $ 250 / month
CPU Access $ 40 / month
Fund/SERV Transactions $ .35 / trade
Networking - per item $ .025/ monthly dividend fund
Networking - per item $ .015/non-mo. dividend fund
First Data $ .10 / next-day Fund/SERV trade
First Data $ .15 / same-day Fund/SERV trade
NSCC Implementation
8 to 10 weeks lead time (target availability 10/1/97)
DAZL (Direct Access Zip Link - Electronic mail interface to financial advisor
network)
Setup $ 5,000 / fund group
Monthly Usage $ 1,000 / month
Transmission $ .015 / price record
$ .025 / other record
Enhancement $ 125 / hour
Fees and out-of-pocket expenses are billed in detail to the fund monthly
<PAGE>
FUND ACCOUNTING SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this ___ day of _______,
1999, by and between The Catholic Alliance Funds, Inc., a Maryland Corporation
(hereinafter referred to as the "Fund Company") and Firstar Mutual Fund
Services, LLC, a limited liability company organized under the laws of the State
of Wisconsin (hereinafter referred to as "FMFS").
WHEREAS, the Fund Company is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act");
WHEREAS, the Fund Company is authorized to create separate series, each
with its own separate investment portfolio;
WHEREAS, FMFS is in the business of providing, among other things, mutual
fund accounting services to investment companies; and
WHEREAS, the Fund Company desires to retain FMFS to provide accounting
services to each series of the Fund Company listed on EXHIBIT A attached hereto,
as it may be amended from time to time each such series (referred to herein
individually as a "Fund" and collectively as the "Fund").
NOW, THEREFORE, in consideration of the mutual agreements herein made, the
Fund Company (on behalf of the Funds) and FMFS agree as follows:
1. APPOINTMENT OF FUND ACCOUNTANT
The Fund Company hereby appoints FMFS as fund accountant for each of
the Funds on the terms and conditions set forth in this Agreement, and FMFS
hereby accepts such appointment and agrees to perform the services and duties
set forth in this Agreement in consideration of the compensation provided for
herein.
2. DUTIES AND RESPONSIBILITIES OF FMFS
FMFS shall provide the following services for each of the Funds;
A. Portfolio Accounting Services:
(1) Maintain portfolio records on a trade date+1 basis using
security trade information communicated from the investment
manager.
<PAGE>
(2) For each valuation date, obtain prices from a pricing source
approved by the Board of Directors of the Fund Company and
apply those prices to the portfolio positions. For those
securities where market quotations are not readily
available, the Board of Directors of the Fund Company shall
approve, in good faith, the method for determining the fair
value for such securities.
(3) Identify interest and dividend accrual balances as of each
valuation date and calculate gross earnings on investments
for the accounting period.
(4) Determine gain/loss on security sales and identify them as,
short-term or long-term; account for periodic distributions
of gains or losses to shareholders and maintain
undistributed gain or loss balances as of each valuation
date.
B. Expense Accrual and Payment Services:
(1) For each valuation date, calculate the expense accrual
amounts as directed by the Fund Company as to methodology,
rate or dollar amount.
(2) Record payments for expenses of each Fund upon receipt of
written authorization from the Fund Company.
(3) Account for expenditures of each Fund and maintain expense
accrual balances at the level of accounting detail, as
agreed upon by FMFS and the Fund Company.
(4) Provide expense accrual and payment reporting.
C. Fund Valuation and Financial Reporting Services:
(1) Account for Fund share purchases, sales, exchanges,
transfers, dividend reinvestments, and other Fund share
activity as reported by the transfer agent on a timely
basis.
(2) Apply equalization accounting as directed by the Fund
Company.
(3) Determine net investment income (earnings) for each Fund as
of each valuation date. Account for periodic distributions
of earnings to shareholders and maintain undistributed net
investment income balances as of each valuation date.
(4) Maintain a general ledger and other accounts, books, and
<PAGE>
financial records for each Fund in the form as agreed upon.
(5) Determine the net asset value of each Fund according to the
accounting policies and procedures set forth in such Fund's
Prospectus.
(6) Calculate per share net asset value, per share net earnings,
and other per share amounts reflective of Fund operations at
such time as required by the nature and characteristics of
the relevant Fund.
(7) Communicate, at an agreed upon time, the per share price for
each valuation date to parties as agreed upon from time to
time.
(8) Prepare monthly reports which document the adequacy of
accounting detail to support month-end ledger balances.
D. Tax Accounting Services:
(1) Maintain accounting records for the investment portfolio of
each Fund to support the tax reporting required for
IRS-defined regulated investment companies.
(2) Maintain tax lot detail for the investment portfolio.
(3) Calculate taxable gain/loss on security sales using the tax
lot relief method designated by the Fund Company.
(4) Provide the necessary financial information to support the
taxable components of income and capital gains distributions
to the transfer agent to support tax reporting to the
shareholders.
E. Compliance Control Services:
(1) Support reporting to regulatory bodies and support financial
statement preparation by making each Fund's accounting
records available to the Fund Company, the Securities and
Exchange Commission, and the outside auditors.
(2) Maintain accounting records according to the 1940 Act and
regulations provided thereunder.
F. FMFS will perform the following accounting functions on a daily
basis:
<PAGE>
(1) Reconcile cash and investment balances of each Fund with the
Fund's custodian, and provide the Fund's investment adviser
and, if any, the Fund's sub-adviser(s), with the beginning
cash balance available for investment purposes;
(2) Update the cash availability throughout the day as required
by each Fund's investment adviser and, if any, the Fund's
sub-adviser(s);
(3) Transmit or mail a copy of the portfolio valuation to the
Fund's investment adviser and, if any, the Fund's
sub-adviser(s);
(4) Review the impact of current day's activity on a per share
basis, review changes in market value of securities, and
review yields for reasonableness.
G. In addition, FMFS will:
(1) Prepare monthly security transactions listings;
(2) Supply various Fund Company, Fund and class (if any)
statistical data as requested on an ongoing basis.
3. PRICING OF SECURITIES
For each valuation date, obtain prices from a pricing source selected
by FMFS but approved by the Company's Board of Directors and apply those prices
to the portfolio positions of each Fund. For those securities where market
quotations are not readily available, the Company's Board of Directors shall
approve, in good faith, the method for determining the fair value for such
securities.
If the Fund Company desires to provide a price which varies from the
pricing source, the Fund Company shall promptly notify and supply FMFS with the
valuation of any such security on each valuation date. All pricing changes made
by the Fund Company will be in writing and must specifically identify the
securities to be changed by CUSIP, name of security, new price or rate to be
applied, and, if applicable, the time period for which the new price(s) is/are
effective.
<PAGE>
4. CHANGES IN ACCOUNTING PROCEDURES
Any resolution passed by the Board of Directors of the Fund Company
that affects accounting practices and procedures under this Agreement shall be
effective upon written receipt and acceptance by the FMFS.
5. CHANGES IN EQUIPMENT, SYSTEMS, SERVICE, ETC.
FMFS reserves the right to make changes from time to time, as it deems
advisable, relating to its services, systems, programs, rules, operating
schedules and equipment, so long as such changes do not adversely affect the
service provided to the Fund Company under this Agreement.
6. COMPENSATION
FMFS shall be compensated for providing the services set forth in this
Agreement in accordance with the Fee Schedule attached hereto as EXHIBIT A and
as mutually agreed upon and amended from time to time. The Fund Company agrees
to pay all fees and reimbursable expenses within ten (10) business days
following the receipt of the billing notice. Notwithstanding anything to the
contrary, amounts owed by the Fund Company to FMFS shall only be paid out of the
assets and property of the particular Fund involved.
7. PERFORMANCE OF SERVICE; LIMITATION OF LIABILITY
A. FMFS shall exercise reasonable care in the performance of its
duties under this Agreement. FMFS shall not be liable for any
error of judgment or mistake of law or for any loss suffered by
the Fund Company or any Fund in connection with matters to which
this Agreement relates, including losses resulting from
mechanical breakdowns or the failure of communication or power
supplies beyond FMFS's control, except a loss arising out of or
relating to a breach of a representation or warranty made by FMFS
under this Agreement or FMFS's refusal or failure to comply with
the terms of this Agreement or from bad faith, negligence, or
willful misconduct on its part in the performance of its duties
under this Agreement. Notwithstanding any other provision of this
Agreement, if FMFS has exercised reasonable care in the
performance of its duties under this Agreement, the Fund Company
shall indemnify and hold harmless FMFS from and against any and
all claims, demands, losses, expenses, and liabilities (whether
with or without basis in fact or law) of any and every nature
(including reasonable attorneys' fees) which FMFS may sustain or
incur or which may be asserted against FMFS by any person arising
out of any action taken or omitted to be taken by it in
performing the services hereunder, except for any and all claims,
demands, losses, expenses, and liabilities arising out of or
relating to a breach of a
<PAGE>
representation or warranty made by FMFS under this Agreement or
FMFS's refusal or failure to comply with the terms of this
Agreement or FMFS's refusal or failure to comply with the terms
of this Agreement or from bad faith, negligence or from willful
misconduct on its part in performance of its duties under this
Agreement, (i) in accordance with the foregoing standards, or
(ii) in reliance upon any written or oral instruction provided to
FMFS by any duly authorized officer of the Fund Company, such
duly authorized officer to be included in a list of authorized
officers furnished to FMFS and as amended from time to time in
writing by resolution of the Board of Directors of the Fund
Company.
FMFS shall indemnify and hold the Fund Company harmless from and
against any and all claims, demands, losses, expenses, and
liabilities (whether with or without basis in fact or law) of any
and every nature (including reasonable attorneys' fees) which the
Fund Company may sustain or incur or which may be asserted
against the Fund Company by any person arising out of a breach of
a representation or warranty made by FMFS under this Agreement or
FMFS's refusal or failure to comply with the terms of this
Agreement or any action taken or omitted to be taken by FMFS as a
result of FMFS's refusal or failure to comply with the terms of
this Agreement, its bad faith, negligence, or willful misconduct.
In the event of a mechanical breakdown or failure of
communication or power supplies beyond its control, FMFS shall
take all reasonable steps to minimize service interruptions for
any period that such interruption continues beyond FMFS's
control. FMFS will make every reasonable effort to restore any
lost or damaged data and correct any errors resulting from such a
breakdown at the expense of FMFS. FMFS agrees that it shall, at
all times, have reasonable contingency plans with appropriate
parties, making reasonable provision for emergency use of
electrical data processing equipment to the extent appropriate
equipment is available. Representatives of the Fund Company shall
be entitled to inspect FMFS's premises and operating capabilities
at any time during regular business hours of FMFS, upon
reasonable notice to FMFS.
Regardless of the above, FMFS reserves the right to reprocess and
correct administrative errors at its own expense.
<PAGE>
B. In order that the indemnification provisions contained in this
section shall apply, it is understood that if in any case the
indemnitor may be asked to indemnify or hold the indemnitee
harmless, the indemnitor shall be fully and promptly advised of
all pertinent facts concerning the situation in question, and it
is further understood that the indemnitee will use all reasonable
care to notify the indemnitor promptly concerning any situation
which presents or appears likely to present the probability of a
claim for indemnification. The indemnitor shall have the option
to defend the indemnitee against any claim which may be the
subject of this indemnification. In the event that the indemnitor
so elects, it will so notify the indemnitee and thereupon the
indemnitor shall take over complete defense of the claim, and the
indemnitee shall in such situation initiate no further legal or
other expenses for which it shall seek indemnification under this
section. Indemnitee shall in no case confess any claim or make
any compromise in any case in which the indemnitor will be asked
to indemnify the indemnitee except with the indemnitor's prior
written consent.
C. FMFS agrees that obligations assumed by the Fund Company pursuant
to this Agreement shall be limited in all cases to the respective
assets of the Fund(s) to which the obligation relates. FMFS
further agrees that it shall not seek satisfaction of any such
obligation from the shareholder or any individual shareholder of
any Fund or any other series of the Fund Company, nor from the
Directors or any individual Director of the Fund Company.
8. NO AGENCY RELATIONSHIP
Nothing herein contained shall be deemed to authorize or empower FMFS
to act as agent for the other party to this Agreement, or to conduct business in
the name of, or for the account of the other party to this Agreement.
9. RECORDS
FMFS shall keep records relating to the services to be performed
hereunder, in the form and manner, and for such period as it may deem advisable
and is agreeable to the Fund Company but not inconsistent with the rules and
regulations of appropriate government authorities, in particular, Section 31 of
the 1940 Act, and the rules thereunder. FMFS agrees that all such records
prepared or maintained by FMFS relating to the services to be performed by FMFS
hereunder are the property of the Fund Company and will be preserved,
maintained, and made available in accordance with such section and rules of the
1940 Act and will be promptly surrendered to the Fund Company on and in
accordance with its request.
<PAGE>
10. DATA NECESSARY TO PERFORM SERVICES
The Fund Company or its agent, which may be FMFS, shall furnish to
FMFS the data necessary to perform the services described herein at such times
and in such form as mutually agreed upon. If FMFS is also acting in another
capacity for the Fund Company, nothing herein shall be deemed to relieve FMFS of
any of its obligations in such capacity.
11. NOTIFICATION OF ERROR
The Fund Company will notify FMFS of any balancing or control error
caused by FMFS the later of: within three (3) business days after receipt of any
reports rendered by FMFS to the Fund Company; within three (3) business days
after discovery of any error or omission not covered in the balancing or control
procedure, or within three (3) business days of receiving notice from any
shareholder.
12. PROPRIETARY AND CONFIDENTIAL INFORMATION
FMFS agrees on behalf of itself and its directors, officers, and
employees to treat confidentially and as proprietary information of the Fund
Company all records and other information relative to the Fund Company and
prior, present, or potential shareholders of the Fund Company (and clients of
said shareholders), and not to use such records and information for any purpose
other than the performance of its responsibilities and duties hereunder, except
after prior notification to and approval in writing by the Fund Company, which
approval shall not be unreasonably withheld and may not be withheld where FMFS
may be exposed to civil or criminal contempt proceedings for failure to comply,
when requested to divulge such information by duly constituted authorities, or
when so requested by the Fund Company.
13. TERM OF AGREEMENT
This Agreement shall become effective as of the date hereof and,
unless sooner terminated as provided herein, shall continue automatically in
effect for successive annual periods. This Agreement may be terminated by either
party (in the case of the Fund Company, either in its entirety or with respect
to any particular Fund(s)) upon giving ninety (90) days prior written notice to
the other party or such shorter period as is mutually agreed upon by the
parties. However, this Agreement may be replaced or modified by a subsequent
agreement between the parties.
<PAGE>
14. NOTICES
Notices of any kind to be given by either party to the other party
shall be in writing and shall be duly given if mailed or delivered as follows:
Notice to FMFS shall be sent to:
Firstar Mutual Fund Services, LLC
615 East Michigan Street
Milwaukee, Wisconsin 53202
Attention: Relationship Manager
and notice to the Fund Company shall be sent to:
The Catholic Alliance Funds, Inc.
1100 West Wells Street
Milwaukee, Wisconsin 53233
Attention: President
15. YEAR 2000 COMPLIANCE
FMFS represents and warrants to the Fund Company that the computer
software, computer firmware, computer hardware (whether general or special
purpose) and other similar related items of automated, computerized and/or
software systems that are owned or licensed by FMFS and are utilized by FMFS or
its agents in connection with the provision of services described in this
Agreement are "Year 2000 Compliant" (as defined below). As used in this Section
15 of this Agreement, the term "Year 2000 Compliant" shall mean the ability of
the relevant system to provide all of the following functions:
A. Process date information before, during and after January 1,
2000, including but not limited to accepting date specific input
data, providing date specific output data, and performing
calculations on dates or portions of dates;
B. Function accurately and without interruption or malfunction
before, during and after January 1, 2000, without any change in
operations associated with the advent of the new millennium and
assuming no other defects, bugs, viruses or other problems
unrelated to Year 2000 compliance issues which disrupt
functionality;
C. Respond to two-digit, year-date input in a way that resolves the
ambiguity as to century and in a disclosed, defined and
predetermined manner; and
D. Store and provide output data of date specific information in
ways that are unambiguous as to century.
<PAGE>
16. DUTIES IN THE EVENT OF TERMINATION
In the event that in connection with termination, a successor to any
of FMFS's duties or responsibilities hereunder is designated by the Fund Company
by written notice to FMFS, FMFS will promptly, upon such termination and at the
expense of the Fund Company transfer to such successor all relevant books,
records, correspondence and other data established or maintained by FMFS under
this Agreement in a form reasonably acceptable to the Fund Company (if such form
differs from the form in which FMFS has maintained the same, the Fund Company
shall pay any expenses associated with transferring the same to such form), and
will cooperate in the transfer of such duties and responsibilities, including
provision for assistance from FMFS's personnel in the establishment of books,
records and other data by such successor.
17. GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the
State of Wisconsin. However, nothing herein shall be construed in a manner
inconsistent with the 1940 Act or any rule or regulation promulgated by the SEC
thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer on one or more counterparts as of the day
and year first written above.
- --------------------------------------------------------------------------------
THE CATHOLIC ALLIANCE FUNDS, INC. FIRSTAR MUTUAL FUND SERVICES, LLC
By: By:
Attest: Attest:
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT A
FUND ACCOUNTING SERVICES
ANNUAL FEE SCHEDULE
Separate Series of The Catholic Alliance Funds, Inc.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
NAME OF SERIES DATE ADDED
- --------------------------------------------------------------------------------
<S> <C>
Equity Income Fund ____________, 1999
- --------------------------------------------------------------------------------
Large-Cap Growth Fund ____________, 1999
- --------------------------------------------------------------------------------
Disciplined Capital Appreciation Fund ____________, 1999
- --------------------------------------------------------------------------------
</TABLE>
Domestic Equity Funds
$22,000 for the first $40 million
1 basis point on the next $200 million
.5 basis point on average net assets exceeding $240 million
Domestic Balanced Funds
$23,500 for the first $40 million
1.5 basis points on the next $200 million
1 basis points on average net assets exceeding $240 million
Domestic Fixed Income, International Equity Funds
$25,000 for the first $40 million
2 basis points on the next $200 million
1 basis point on average net assets exceeding $240 million
Plus reasonable and customary out-of-pocket expenses, including pricing service:
Domestic and Canadian Equities $.15
Options $.15
Corp/Gov/Agency Bonds $.50
CMO's $.80
International Equities and Bonds $.50
Municipal Bonds $.80
Money Market Instruments $.80
Fees and out-of-pocket expenses are billed to the fund monthly
<PAGE>
FULFILLMENT SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this ____ day of _________,
1999, by and between Catholic Financial Services Corporation (hereinafter
referred to where applicable as the "Adviser" or the "Distributor"), The
Catholic Alliance Funds, Inc., a Maryland corporation (hereinafter referred to
as the "Fund Company"), and Firstar Mutual Fund Services, LLC, a limited
liability company organized under the laws of the State of Wisconsin
(hereinafter referred to as "FMFS").
WHEREAS, the Adviser is a registered investment adviser under the
Investment Advisers Act of 1940, as amended;
WHEREAS, the Adviser serves as investment adviser to the Fund Company, a
registered investment company under the Investment Company Act of 1940, as
amended, which is authorized to create separate series of funds;
WHEREAS, the Distributor is a registered broker-dealer under the Securities
Exchange Act of 1934, as amended, and serves as principal distributor of Company
shares;
WHEREAS, FMFS provides fulfillment services to mutual funds;
WHEREAS, the Adviser desires to retain FMFS to provide fulfillment services
for each series of the Fund Company listed on EXHIBIT A attached hereto, as may
be amended from time to time (each such series referred to herein individually
as a "Fund" and collectively as the "Funds").
NOW, THEREFORE, the parties agree as follows:
1. DUTIES AND RESPONSIBILITIES OF FMFS FOR EACH FUND
A. Answer all prospective shareholder calls concerning any Fund.
B. Send all available Fund material requested by the prospect within
24 hours from time of call.
C. Receive and update all Fund fulfillment literature so that the
most current information is sent and quoted.
D. Provide 24 hour answering service to record prospect calls made
after hours (7 p.m. to 8 a.m. CT).
E. Maintain and store Fund fulfillment inventory.
F. Send periodic fulfillment reports to the Fund Company as agreed
upon between the parties.
<PAGE>
2. DUTIES AND RESPONSIBILITIES OF THE FUND COMPANY
A. Provide Fund fulfillment literature updates to FMFS as necessary.
B. File with the NASD, SEC and State Regulatory Agencies, as
appropriate, all fulfillment literature for any Fund that the
Fund Company requests FMFS send to prospective shareholders.
C. Supply FMFS with sufficient inventory of fulfillment materials as
requested from time to time by FMFS.
D. Provide FMFS with any sundry information about each Fund in order
to answer prospect questions.
3. INDEMNIFICATION
The Fund Company agrees to indemnify FMFS from any liability arising
out of the distribution of fulfillment literature which has not been approved by
the appropriate Federal and State Regulatory Agencies. FMFS agrees to indemnify
the Fund Company from any liability arising from the improper use of fulfillment
literature during the performance of duties and responsibilities identified in
this agreement. FMFS will be liable for bad faith, negligence or willful
misconduct on its part in its duties under this Agreement.
4. COMPENSATION
The Adviser or the Distributor (the Distributor only through the
collection of sufficient distribution expenses from the relevant Fund(s), if
applicable) agrees to compensate FMFS for the services performed under this
Agreement in accordance with the attached EXHIBIT A. All invoices shall be paid
within ten days of receipt.
5. PROPRIETARY AND CONFIDENTIAL INFORMATION
FMFS agrees on behalf of itself and its directors, officers, and
employees to treat confidentially and as proprietary information of the Fund
Company all records and other information relative to the Fund Company and
prior, present, or potential shareholders of the Fund Company (and clients of
said shareholders), and not to use such records and information for any purpose
other than the performance of its responsibilities and duties hereunder, except
after prior notification to and approval in writing by the Fund Company, which
approval shall not be unreasonably withheld and may not be withheld where FMFS
may be exposed to civil or criminal contempt proceedings for failure to comply,
when requested to divulge such information by duly constituted authorities, or
when so requested by the Fund Company.
<PAGE>
6. TERMINATION
This Agreement may be terminated by either party upon 30 days written
notice.
FMFS agrees that obligations assumed by the Fund Company pursuant to
this Agreement shall be limited in all cases to the respective assets of the
Fund(s) to which the obligation relates. FMFS further agrees that it shall not
seek satisfaction of any such obligation from the shareholder or any individual
shareholder of any Fund or any other series of the Fund Company, nor from the
Directors or any individual Director of the Fund Company.
7. NO AGENCY RELATIONSHIP
Nothing herein contained shall be deemed to authorize or empower FMFS
to act as agent for the other party to this Agreement, or to conduct business in
the name of, or for the account of the other party to this Agreement.
8. DATA NECESSARY TO PERFORM SERVICES
The Fund Company or its agent, which may be FMFS, shall furnish to
FMFS the data necessary to perform the services described herein at such times
and in such form as mutually agreed upon. If FMFS is also acting in another
capacity for the Fund Company, nothing herein shall be deemed to relieve FMFS of
any of its obligations in such capacity.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer or one or more counterparts as of the day
and year first written above.
- --------------------------------------------------------------------------------
THE CATHOLIC ALLIANCE FUNDS, INC. FIRSTAR MUTUAL FUND SERVICES, LLC
By: By:
Attest: Attest:
- --------------------------------------------------------------------------------
CATHOLIC FINANCIAL SERVICES
CORPORATION
By:
Attest:
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT A
FULFILLMENT SERVICES
FEE SCHEDULE
SEPARATE SERIES OF THE CATHOLIC ALLIANCE FUNDS, INC.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
NAME OF SERIES DATE ADDED
- --------------------------------------------------------------------------------
<S> <C>
Equity Income Fund ____________, 1999
- --------------------------------------------------------------------------------
Large-Cap Growth Fund ____________, 1999
- --------------------------------------------------------------------------------
Disciplined Capital Appreciation Fund ____________, 1999
- --------------------------------------------------------------------------------
</TABLE>
ANNUAL FEE SCHEDULE
- Customer Service
- State registration compliance edits
- Literature database
- Record prospect request and profile
- Prospect servicing 8:00 am to 7:00 pm CT
- Recording and transcription of requests received off-hours
- Periodic reporting of leads to client
- Service Fee: $.99/minute
$100/month minimum
$780 one-time set-up
- Assembly and Distribution of Literature Requests
- Generate customized prospect letters
- Assembly and insertion of literature items
- Inventory tracking
- Inventory storage, reporting
- Periodic reporting of leads by state, items requested,
market source
- Service Fee: $.45/lead - insertion of up to 4
items/lead
$.15/addition inserts
<PAGE>
[QUARLES & BRADY LLP LETTERHEAD]
December 23, 1998
The Catholic Alliance Funds, Inc.
1100 West Wells Street
Milwaukee WI 53233
Gentlemen:
In connection with the registration of The Catholic Alliance Funds, Inc., a
Maryland corporation (the "Fund"), as an open-end management investment company
under the Investment Company Act of 1940 ("1940 Act"), and the registration
under the Securities Act of 1933 ("1933 Act") of an indefinite number of the
Fund's shares of common stock, $0.001 par value per share ("Common Stock"), you
have requested that we furnish you with the following opinion and consent which
we understand is to be used in connection with and filed as an exhibit to the
Registration Statement on Form N-1A to be filed with the Securities and Exchange
Commission on or about December 28, 1998.
We understand that the Common Stock will be offered to the public in the
manner and on the terms identified and referred to in the Registration
Statement. For purposes of rendering this opinion, we have examined originals
or copies of such documents as we have considered necessary, including those
listed below. In conducting such examination, we have assumed the genuineness
of all signatures and the authenticity of all documents submitted to us as
originals and the conformity to original documents of all documents submitted to
us as copies.
The documents we have examined include, without limitation:
1. The Registration Statement of the Fund on Form N-1A which is to
be filed with the Securities and Exchange Commission
contemporaneously with the filing of this opinion and consent;
and
2. The Articles of Incorporation filed with the Department of
Assessments and Taxation for the State of Maryland on December
17, 1998.
<PAGE>
The Catholic Alliance Funds, Inc.
December 23, 1998
Page 2
Based upon and subject to the foregoing, after having due regard to such
issues of law as we have deemed relevant, and assuming that:
A. The Registration Statement becomes and remains effective, and the
Prospectus which is a part thereof and your Prospectus delivery
procedures with respect thereto fulfill all of the requirements
of the 1933 Act and the 1940 Act throughout all periods relevant
to this opinion;
B. All offers and sales of the Fund's Common Stock are made in
compliance with the terms of the Registration Statement; and
C. All offers and sales of the Fund's Common Stock are made in
compliance with the blue sky laws of the states having
jurisdiction thereof.
we are of the opinion that the Fund's Common Stock, when issued, will be legally
and validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the identification of our firm in the Prospectus
and Statement of Additional Information constituting a part thereof as legal
counsel to the Fund.
Very truly yours,
QUARLES & BRADY LLP
<PAGE>
DISTRIBUTION PLAN
PURSUANT TO RULE 12B-1 FOR
THE CATHOLIC ALLIANCE FUNDS, INC.
WHEREAS, The Catholic Alliance Funds, Inc. ( the "Fund Company"), a
Maryland corporation and open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), is
authorized to issue shares in separate Series with each such Series representing
interests in a separate portfolio of securities and other assets; and
WHEREAS, the Directors of the Fund Company as a whole, and the Directors
who are not interested persons of the Fund Company (as defined in the 1940 Act)
and who have no direct or indirect financial interest in the operation of this
Plan or in any agreement relating hereto (the "Qualified Directors"), having
determined, in the exercise of reasonable business judgment and in light of
their fiduciary duties under state law and under Section 36(a) and (b) of the
1940 Act, that there is a reasonable likelihood that this Plan will benefit each
Series identified on SCHEDULE A attached hereto and the holders of the Shares of
each such Series, have approved this Plan on behalf of each such Series by votes
cast in person at a meeting called for the purpose of voting hereon and on any
agreements related hereto;
NOW, THEREFORE, this Rule 12b-1 distribution plan is hereby approved as it
pertains to the Shares of each Series in accordance with Rule 12b-1 under the
1940 Act, on the following terms and conditions:
1. DISTRIBUTION ACTIVITIES. Subject to the supervision of the
Directors of the Fund Company, the Fund Company may, on behalf of each of its
Series identified on SCHEDULE A attached hereto, directly or indirectly, engage
in any activities related to the distribution of Shares, which activities may
include, but are not limited to, the following: (a) maintenance fees or other
payments to the Fund Company's principal underwriter and to securities dealers
and others who are engaged in the sale of Shares and who may be advising
shareholders of the Fund Company regarding the purchase, sale or retention of
Shares; (b) payment of expenses of maintaining personnel (including personnel of
organizations with which the Fund Company has entered into agreements related to
this Plan) who engage in or support distribution of Shares or who render
shareholder support services not otherwise provided by the Fund Company's
transfer agent, including, but not limited to, office space and equipment,
telephone facilities and expenses, answering routine inquiries regarding the
Fund Company, processing shareholder transactions, and providing such other
shareholder services as the Fund Company may reasonably request; (c) formulating
and implementing a marketing program and promotional television, radio,
newspaper, magazine and other mass media advertising; (d) preparing, printing
and distributing sales literature; (e) preparing, printing and distributing
prospectuses and statements of additional information and reports of the Fund
Company for recipients other than existing
<PAGE>
shareholders of the Fund Company; and (f) obtaining such information, analyses
and reports with respect to marketing and promotional activities as the Fund
Company may, from time to time, deem advisable. The Fund Company is authorized
to engage in the activities listed above, and in any other activities related to
the distribution of Shares of each of the Series identified on SCHEDULE A,
either directly or through other persons with which the Fund Company has entered
into agreements related to this Plan.
2. MAXIMUM EXPENDITURES. The expenditures to be made pursuant to
Section 1 and the basis upon which payment of such expenditures will be made
shall be determined by the Directors of the Fund Company, but in no event may
such expenditures paid for the benefit of any particular Series exceed in any
fiscal year an amount calculated at the rate of .25% of the average daily net
asset value of such Series. Such payments for distribution activities may be
made directly by the applicable Series or the Fund Company's investment adviser
or principal underwriter may incur such expenses and obtain reimbursement from
such Series.
3. MAINTENANCE FEE. In addition to the payments of compensation
provided for in Section 2 and in order to further enhance the distribution of
its Shares, the Fund Company, on behalf of each Series identified on SCHEDULE A
attached hereto, shall pay the principal underwriter a maintenance fee, accrued
daily and paid monthly, in an amount equal to an annual rate of .25% of the
daily net assets of such Series. When requested by and at the direction of the
principal underwriter, the Fund Company shall pay a maintenance fee to dealers
based on the amount of Shares sold by such dealers and remaining outstanding for
specified periods of time, if any, determined by the principal underwriter, in
amounts up to .25% per annum of the average daily net assets of the Shares. Any
maintenance fees paid to dealers shall reduce the maintenance fees otherwise
payable to the principal underwriter.
4. TERM AND TERMINATION. This Plan shall become effective on the
date hereof. Unless terminated as herein provided, this Plan shall continue in
effect for one year from the date hereof and shall continue in effect for
successive periods of one year thereafter, but only so long as each such
continuance is specifically approved by votes of a majority of both (i) the
Directors of the Fund Company and (ii) the Qualified Directors, cast in person
at a meeting called for the purpose of voting on such approval. This Plan may
be terminated with respect to any Series at any time by vote of a majority of
the Qualified Directors or by vote of a majority (as defined in the 1940 Act) of
the outstanding Shares of such Series of the Fund Company. In the event the
Plan is terminated by any Series in accordance with its terms, the obligations
of such Series to make payments to the Fund Company's principal underwriter
pursuant to the Plan will cease and such Series will not be required to make any
payments for expenses incurred after the date of termination.
5. AMENDMENTS. This Plan may not be amended with respect to any
Series to increase materially the amount of expenditures provided for in
Sections 2 and 3 hereof unless such amendment is approved by a vote of the
majority (as defined in
<PAGE>
the 1940 Act) of the outstanding Shares of such Series, and no material
amendment to this Plan shall be made unless approved in the manner provided for
annual renewal of this Plan in Section 4 hereof.
6. SELECTION AND NOMINATION OF DIRECTORS. While this Plan is in
effect, the selection and nomination of Qualified Directors of the Fund Company
shall be committed to the discretion of the Directors who are not interested
persons (as defined in the 1940 Act) of the Fund Company.
7. QUARTERLY REPORTS. The principal underwriter and the Treasurer
of the Fund Company shall provide to the Directors and the Directors shall
review, at least quarterly, a written report of the amounts expended pursuant to
this Plan and any related agreement and the purposes for which such expenditures
were made.
8. RECORDKEEPING. The Fund Company shall preserve copies of this
Plan and any related agreement and all reports made pursuant to Section 7
hereof, for a period of not less than six years from the date of this Plan, the
agreements of such reports, as the case may be, the first two years in an easily
accessible place.
9. LIMITATION OF LIABILITY. A copy of the Agreement and Articles of
Incorporation of the Fund Company is on file with the Department of Assessments
and Taxation for the State of Maryland and notice is hereby given that this Plan
is executed on behalf of the Directors of the Fund Company as directors and not
individually and that the obligations of this instrument are not binding upon
the Directors or shareholders of the Fund Company individually but are binding
only upon the assets and property of the Fund Company.
IN WITNESS WHEREOF, the Fund Company has caused this Plan to be executed as
of the date set forth below.
Dated: ____________, 1999
Attest:
By:
-------------------------------
Secretary President
<PAGE>
SCHEDULE A
SERIES
1. Large-Cap Growth Fund
2. Equity Income Fund
3. Disciplined Capital Appreciation Fund
