AS FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION
ON AUGUST 20, 1999
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. 1 /x/
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 /x/
Amendment No. 2 /x/
(Check appropriate box or boxes)
THE CATHOLIC 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) 278-6550
THEODORE F. ZIMMER, ESQ.
THE CATHOLIC FUNDS, INC.
1100 WEST WELLS STREET
MILWAUKEE, WISCONSIN 53233
(Name and Address of Agent for Service)
Copy to:
CONRAD G. GOODKIND, ESQ.
Quarles & Brady LLP
411 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[ ] on (date) pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
[ ] on (date) pursuant to paragraph (a)(1) of Rule 485
[ ] 75 days after filing pursuant to paragraph (a)(2) of Rule 485
[x] on November 8, 1999 pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective
amendment.
(cover page)
(logo)
The Catholic Funds
Investing with Faith in the Future
Prospectus
November 8, 1999
(logo) The Catholic Money Market Fund
THIS PROSPECTUS HAS INFORMATION YOU SHOULD KNOW BEFORE
YOU DECIDE TO INVEST. PLEASE READ IT CAREFULLY AND KEEP IT WITH
YOUR INVESTMENT RECORDS. THERE IS A TABLE OF CONTENTS ON THE
NEXT PAGE THAT ALLOWS YOU TO QUICKLY FIND INFORMATION ABOUT
THE FUND.
For more information you can contact us at:
The Catholic Funds 1100 West Wells St. Milwaukee, Wisconsin 53233 or call toll-
free at 877-222-2402
CATHOLIC FINANCIAL SERVICES CORPORATION IS THE ADVISER TO THE
FUNDS. NEITHER THE CATHOLIC FUNDS NOR CATHOLIC FINANCIAL
SERVICES CORPORATION IS SPONSORED OR ENDORSED BY THE
CATHOLIC CHURCH, NOR HAS THE CATHOLIC CHURCH APPROVED OR
DISAPPROVED THE FUNDS' SHARES.
AS WITH OTHER MUTUAL FUNDS, THE SECURITIES AND EXCHANGE
COMMISSION HAS NOT APPROVED OR DISAPPROVED OF THIS FUND'S
SHARES OR DETERMINED WHETHER THIS PROSPECTUS IS ACCURATE
OR COMPLETE. ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A
CRIME.
TABLE OF CONTENTS
KEY INFORMATION ON YOUR INVESTMENT
WHAT ARE THE FUND'S GOALS?
WHAT ARE THE FUND'S PRINCIPAL INVESTMENT STRATEGIES?
WHAT ARE THE FUND'S PRIMARY RISKS?
WHAT ARE THE FUND'S FEES AND EXPENSES?
WHO ARE THE FUND'S INVESTMENT ADVISER, SUB-ADVISER AND
PORTFOLIO MANAGER?
YEAR 2000 ISSUES
OTHER IMPORTANT INFORMATION YOU SHOULD KNOW ABOUT THE
FUND
A WORD ABOUT CREDIT QUALITY
TAXABLE INVESTMENTS
YOUR ACCOUNT SHARE PRICE
INVESTMENT PHILOSOPHY STATEMENT
MORE ABOUT THE ADVISER
BUYING SHARES
INVESTMENT MINIMUMS
ADDITIONAL PURCHASES BY MAIL
BY TELEPHONE
EXCHANGE PRIVILEGE
AUTOMATIC INVESTMENT SERVICES
SELLING SHARES
BY MAIL
TELEPHONE REDEMPTION
CHECKWRITING
SYSTEMATIC WITHDRAWAL PLAN
RETIREMENT ACCOUNTS
SIGNATURE GUARANTEES
ADDITIONAL POLICIES
TELEPHONE TRANSACTIONS
DIVIDEND DISTRIBUTION POLICY
REINVESTMENT OF DIVIDENDS
DISTRIBUTION FEES
STATEMENTS
BACKUP WITHHOLDING
RESERVED RIGHTS
FOR MORE INFORMATION
BEFORE READING THIS PROSPECTUS
References to "you" and "your" in the prospectus refer to prospective investors
or shareholders. References to "we", "us" or "our" refer to the Fund and Fund
management (Adviser, Sub-Adviser, Distributor, Transfer Agent and Custodian)
generally.
KEY INFORMATION ON YOUR INVESTMENT
WHAT ARE THE FUND'S GOALS?
The Catholic Money Market Fund seeks current income, a stable share price and
daily liquidity.
WHAT ARE THE FUND'S PRINCIPAL INVESTMENT STRATEGIES?
The Fund is managed to provide attractive yields and a stable share price of
$1.00. It invests in a portfolio of high-quality, short-term debt securities
issued by certain corporations, banks and other financial or governmental
institutions.
WHAT ARE THE FUND'S PRIMARY RISKS?
The Fund is subject to credit rate risk and interest rate risk.
Credit rate risk is the chance that an issuer of a security may not pay the
interest or the principal when it becomes due.
Interest rate risk is the chance that an increase in interest rates will reduce
the fair market value of a security.
Your investment in this money market Fund is not insured or guaranteed by the
Federal Deposit Insurance Corporation (FDIC) or any other government agency.
The Fund's goal is to preserve the value of your investment at $1.00 per share.
However, it is possible to lose money by investing in this Fund. The Fund is
appropriate for investors who are comfortable with the risks described here and
who need cash immediately. It can also be used as a permanent conservative
part of your portfolio.
WHAT ARE THE FUND'S FEES AND EXPENSES?
This section describes the fees and expenses that you may pay if you buy and
hold shares of the Fund.
SHAREHOLDER FEES (fees paid directly from your investment): The Fund is
100% no-load, so you pay no sales charges (loads) to buy or sell shares.
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from
Fund assets): The costs of operating the Fund are deducted from Fund assets,
which means you pay them indirectly. These costs are deducted before
computing the daily share price or making distributions. As a result, they don't
appear on your account statement, but instead reduce the total return you
receive from your investment.
Money
Market Fund
Management Distribution and (1)Other Total Fund Operating
Fees Service (12b-1) Expenses* Expenses
Fees
0.30% 0.05% 0.59% 0.94%
(1) "Other Expenses" are based on estimated amounts for the current fiscal year.
They do not include any reimbursement or waivers.
*The Fund charges $12 for each wire redemption and $5 for each telephone
exchange.
Example
The following example is intended to help you compare the cost of investing in
the Fund (without any fee waivers) with the cost of investing in other mutual
funds. The example assumes that you invest $10,000 in the Fund for the time
periods indicated, and then redeem all of your shares at the end of those
periods. The example also assumes that your investment has a 5% return each year
and that the Fund's operating expenses remain the same. Although your actual
cost may be higher or lower, based on these assumptions, your cost would be:
1 Year 3 Years
Money Market Fund $96 $301
WHO ARE THE FUND'S INVESTMENT ADVISER, SUB-ADVISER AND
PORTFOLIO MANAGER?
Catholic Financial Services Corporation, a Wisconsin corporation organized in
1994, is the investment adviser and distributor for the Fund. As the adviser, it
is responsible for the investment decisions for the Fund.
Strong Capital Management, Inc. (Strong) is the sub-adviser for the Fund and
makes the investment decisions for the Fund. Strong provides investment
management services for mutual funds and other investment portfolios
representing assets of over $34 billion. Strong began conducting business in
1974. Since then, its principal business has been providing investment advice
for individuals and institutional accounts, such as pension and profit-sharing
plans, as well as mutual funds, several of which are available through variable
insurance products.
Jay N. Mueller manages the Fund. He has over 15 years of investment
experience and is a Chartered Financial Analyst. He joined the sub-adviser as a
securities analyst and portfolio manager in September 1991, and currently
manages several Strong money market funds. For four years prior to joining
Strong, Mr. Mueller was employed by R. Meeder & Associates as a securities
analyst and portfolio manager. Mr. Mueller received his bachelor's degree in
Economics from the University of Chicago in 1982.
The adviser and sub-adviser may be collectively referred to as "advisers".
For its services, the adviser receives the following annual fee, computed daily:
If the portfolio is $50 million or less: 0.30%
If the portfolio is over $50 million and less than $100 million: 0.25%
If the portfolio is over $100 million and less than $200 million: 0.20%
If the portfolio is $200 million or more: 0.15%
From the above fees, the adviser pays the sub-adviser:
If the portfolio is $50 million or less: 0.20%
If the portfolio is over $50 million and less than $100 million: 0.15%
If the portfolio is over $100 million and less than $200 million: 0.10%
If the portfolio is $200 million or more: 0.075%
However, neither the adviser nor sub-adviser shall receive any fees until
the Money Market Fund has $25 million in assets or for the first six
months, whichever comes earlier, and once either has occurred; the
adviser shall charge at an annual rate of 0.10% and pay the sub-adviser at
an annual rate of 0.05% for the next six months or until the Money Market
Fund has $50 million in assets, whichever comes first. Thereafter the
management fee schedule set forth in this section applies without any
waivers.
YEAR 2000 ISSUES
Your investment could be adversely affected if the computer systems do not
properly process and calculate date-related information before, on and after
January 1, 2000. Year 2000-related computer problems could have a negative
impact on the Fund and its investments. However, we are working to avoid these
problems and to obtain assurances from our service providers that they are
taking similar steps.
OTHER IMPORTANT INFORMATION YOU SHOULD KNOW ABOUT THE FUND
A WORD ABOUT CREDIT QUALITY
Credit quality measures the issuer's expected ability to pay interest and
principal payments on time. We make investments for the Fund consistent with
Rule 2a-7 under the Investment Company Act of 1940. This rule categorizes
eligible money market securities as First Tier or Second Tier. First Tier
securities are generally in the highest short-term credit rating category.
Second Tier securities are considered to be investment grade but not in the
highest credit rating category. The Fund must invest at least 95% if its assets
in First Tier securities.
The rule requires that we invest in securities maturing in 397 days or less and
maintain a dollar-weighted average portfolio maturity of not more than 90 days.
By limiting the maturity of the Fund's investments, we seek to lessen the
changes in asset values caused by fluctuations in short-term interest rates.
Part of the Fund's objective is to maintain a constant net asset value per share
of $1.00.
TAXABLE INVESTMENTS
The Fund anticipates that all its earnings will be taxable to you at ordinary
income tax rates unless your investment is through an IRA or other tax-deferred
account.
YOUR ACCOUNT SHARE PRICE
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. We calculate the Fund's NAV per share at the close of trading on
the New York Stock Exchange (usually 3:00 p.m. Central Time). We don't
calculate NAV on days when the NYSE is closed for trading.
We value the Fund's assets on the basis of amortized cost. When we use
amortized cost to value money market fund securities, we generally mean that
the security is initially valued at the price we paid for it. After that, the
value of the security is gradually increased (amortizing a discount) or
decreased (amortizing a premium) each day without regard to fluctuating interest
rates. If market prices are not available, value is based on a security's fair
value as determined in good faith by us under the supervision of the Board of
Directors of the Catholic Funds.
INVESTMENT PHILOSOPHY STATEMENT
1. Prudent Financial Stewardship
The investments in the Fund will be managed using strategies consistent with the
Fund's objective aimed at producing results that will help investors reach their
financial goals.
2. Responsible Catholic Stewardship
We will strive to invest the assets of the Fund in companies whose primary
products, services and activities are substantially consistent with certain core
Catholic values. The Board of Directors of the Fund has selected, from among
many important core Catholic values, the following values for us to apply when
we select investments for the Fund:
Sanctity of Human Life - Human life deserves protection from the
moment of conception.
No Unjust Wars - The indiscriminate destruction of civilians is
wrong, even in the course of an otherwise justifiable war.
Dignity of the Human Person - Every person is entitled to be treated
with dignity and justice, because every human being is created in
the image and likeness of God.
The Board of Directors selected these three particular core Catholic values
using the following criteria. First, each of the selected values is grounded in
the very fundamental Catholic value that every person is made in the image and
likeness of God. Second, each relates to the protection of innocent victims who
have no choice or whose choices are extremely limited under the relevant
circumstances, such as unborn children, civilians in war and people who need to
earn a living. Third, the advisers can practically and efficiently implement
each of these values in making day-to-day investment decisions, and the Board of
Directors effectively can monitor and direct compliance with these values.
The Board of Directors may from time to time select different or additional core
Catholic values that we will implement in its investment program. For example,
the Board of Directors may determine to add or substitute a selected core
Catholic value in response to official doctrinal statements of the Catholic
Church. In any event, the Board of Directors has the sole and exclusive
authority to select the core Catholic values that we will implement in the
Fund's investment programs.
The Board of Directors will establish guidelines from time to time, which the
advisers will use to identify and select investments for the Fund. These
guidelines will help focus the advisers' attention on factors that are relevant
in identifying investments for the Fund which are consistent with the selected
core Catholic values, but the advisers necessarily will exercise some subjective
judgment when applying these guidelines to any specific facts and
circumstances. The Board of Directors will monitor investment selections that
the advisers make for the Fund, and will provide specific direction and modify
and refine the guidelines as necessary so that, in the judgment of the Board of
Directors, the advisers' investment selections remain consistent with the
selected core Catholic values. The Board of Directors' decision on these matters
will be final. By application of these values, the Fund will avoid investing in
companies:
That directly participate in abortion;
That derive more than 5% of their revenues directly from the
production or development of indiscriminate weapons of mass
destruction (for example, biological and chemical weapons and
first-strike nuclear weapons); or
Whose employment practices are substantially inconsistent with the
dignity and primacy of the human person (for example, not
providing a livable wage as dictated by the standards of the
particular region; not providing safe, sanitary or humane working
conditions; or discriminating against individuals on account of sex,
race, color, social condition, language or religion).
From time to time the Fund may decide to avoid investing in companies because
of other business activities or practices that may be determined to be
inconsistent with core Catholic values. For example, the guideline above
regarding producers and developers of weapons of mass destruction states that
the Fund will avoid investing in companies that derive more than 5% of their
revenues directly from the production or development of indiscriminate weapons
of mass destruction. We have stated this test in terms of revenues derived
directly from these activities, because objective data regarding indirect
revenues generally is difficult to obtain and verify. However, if we obtain
reliable information establishing that a company derives more than 5% of its
revenues indirectly from the production or development of indiscriminate weapons
of mass destruction, we may determine that an investment in that company is
inconsistent with the selected core Catholic values. We also may determine that
an investment in a particular company is inconsistent with the selected core
Catholic values based on considerations and factors different from those
specifically listed above.
Investors should bear in mind that, because we consider only certain core
Catholic values when selecting investments for the Fund, it is likely that the
Fund from time to time will own securities of companies that engage in business
and employment activities and practices that may be perceived by some to be
inconsistent with important core Catholic values other than those described
above.
Because the Fund will purchase only those securities which meet both the Fund
investment objective and the responsible Catholic stewardship principle, the
return on securities chosen may be lower than if the Fund considered only
financial and other traditional criteria when selecting investments. However,
the advisers have analyzed the anticipated effects of the core Catholic values
screen on the selection of investments for the Fund, and they have assured the
Fund's Board of Directors that, in their judgment, the application of these core
Catholic values will not significantly hamper the ability of the Fund to achieve
its investment objective.
MORE ABOUT THE ADVISER
Catholic Financial Services Corporation ("CFSC"), a Wisconsin corporation
organized in 1994, is the investment adviser and distributor for the Fund. As
the adviser, CFSC makes the investment decisions for the Fund. As the
distributor, CFSC sells the Fund shares to investors. The Board of Directors of
CFSC has committed to distribute a minimum of 10% of its net operating income
before taxes to support Catholic education and vocations and other Catholic
causes.
This is a voluntary commitment that CFSC may elect to discontinue at anytime.
CFSC presently does not anticipate that it will have any operating income prior
to the year 2003.
The majority of the outstanding stock of CFSC is held by Catholic Knights
Financial Services, Inc., which functions as an administrative holding company
and is a wholly-owned subsidiary of Catholic Knights Insurance Society
("Catholic Knights"). 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). All three fraternals are formed to unite Catholics
and their families for social, religious, benevolence and intellectual
improvement and 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 ranks in the top 15% of life insurers in the United
States 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 United States. 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.
Adviser's Background - CFSC has no prior experience in managing mutual funds,
nor has it previously been engaged in the business of providing investment
advice on either a discretionary or non-discretionary basis. In part for this
reason, the Fund and CFSC have retained the services of an experienced sub-
adviser, Strong, to provide day-to-day portfolio management and other advisory
services to the Fund. The Fund's Board of Directors, on CFSC's recommendation,
selected the sub-adviser based on its experience and past performance record in
managing assets under investment objectives, programs and strategies relevant
to those of the Fund, including ability to implement social and ethical screens
similar to our responsible Catholic stewardship principle. CFSC also has hired
personnel experienced with conducting and managing administrative functions
and distribution operations of mutual funds. Even with these steps, there can be
no assurance that CFSC can successfully manage the advisory, administrative
and distribution functions for the Fund, or that it and the sub-adviser will be
successful in achieving the investment objective of the Fund.
BUYING SHARES
Investment Minimums:
$1,000 for all accounts
$50 minimum for additional purchases
Opening a New Account
To open your new account, please follow these steps:
Step One: Please review this prospectus.
Step Two: Please complete The Catholic Money Market Fund application for
every different account registration. For example, you need a separate
application for an individual account in the Fund and a separate application for
an IRA account invested in the Fund. If you do not complete the application
properly, your purchase may be delayed or rejected.
Step Three: Make your check payable to The Catholic Funds. PLEASE DO NOT
MAKE YOUR CHECK PAYABLE TO Catholic Financial Services Corporation.
Step Four: Mail your completed application and check to:
THE CATHOLIC FUNDS
PO BOX 05710
MILWAUKEE WI 53205-9986
Please note, how you register your account with the Fund 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 application. Some account registrations may
require additional documents. For example, a parish account needs a letter, on
parish stationery, stating who is authorized to access the account. This letter
must also be signed by all persons who have that account authority.
ADDITIONAL PURCHASES BY MAIL
For additional purchases in existing Fund accounts please send your check
directly to the Fund's transfer agent at the following address:
REGULAR MAIL
THE CATHOLIC FUNDS
C/O FIRSTAR MUTUAL FUND SERVICES LLC
PO BOX 701
MILWAUKEE WI 53201-0701
EXPRESS MAIL/PRIVATE
THE CATHOLIC FUNDS
C/O FIRSTAR MUTUAL FUND SERVICES LLC
THIRD FLOOR
615 EAST MICHIGAN STREET
MILWAUKEE WI 53202
Please indicate your Catholic Fund account number on the face of all subsequent
investment checks and make your check payable to The Catholic Funds.
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 1-877-222-
2402 and have money withdrawn from your bank checking or savings account to make
your investment. You pay the price computed after the Fund has received your
request for purchase. For example, if you telephone before 3:00 (CST), you will
get that day's price. If you telephone after 3:00 (CST), you will receive the
next day's price.
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 Fund by wire transfer by
following these steps:
1. Call Firstar Mutual Fund Services at 1-877-222-2402 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
whom we 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
ROUTING NUMBER 075000022
FURTHER CREDIT: The Catholic Money Market Fund
(SHAREHOLDER ACCOUNT NUMBER)
(SHAREHOLDER REGISTRATION)
3. Mail your completed, signed application to:
REGULAR MAIL
THE CATHOLIC FUNDS
C/O FIRSTAR MUTUAL FUND SERVICES LLC
PO BOX 701
MILWAUKEE WI 53201-0701
EXPRESS MAIL/PRIVATE
THE CATHOLIC FUNDS
C/O FIRSTAR MUTUAL FUND SERVICES LLC
THIRD FLOOR
615 EAST MICHIGAN STREET
MILWAUKEE WI 53202
Please call 1-877-222-2402 prior to sending the wire in order to obtain a
confirmation number and to ensure prompt and accurate handling of funds.
We are not responsible for the consequences of delays resulting from the
banking or Federal Reserve Wire system, or from incomplete wiring instructions.
EXCHANGE PRIVILEGE
You may exchange shares of any Catholic Fund for shares of another existing
Catholic Fund, either in writing or by telephone, if the accounts are
identically registered (with the same name, address and Taxpayer Identification
Number). A $5 fee is charged for each telephone exchange. You may pay a sales
charge if you exchange from this Money Market Fund into another Fund.
AUTOMATIC INVESTMENT SERVICES
You may invest or redeem automatically in the following ways, some of which
may be subject to additional restrictions or conditions.
BANK DRAFT PLAN This plan allows you to make regular, automatic
investments from your bank checking or savings account.
AUTOMATIC EXCHANGE PLAN This plan allows you to make regular,
automatic exchanges from one eligible Catholic Fund to another and may
be appropriate for an investment technique known as dollar cost
averaging. Before you can invest in another Catholic Fund you must have
the current prospectus for such Funds.
SELLING SHARES
You can sell shares in several ways.
BY MAIL
Write a letter of instruction. It should specify your account number, the dollar
amount or number of shares you wish to redeem, the names and signatures of
the owners (or other authorized persons), and your mailing address. Then, mail
it to:
REGULAR MAIL
THE CATHOLIC FUNDS
C/O FIRSTAR MUTUAL FUND SERVICES LLC
PO BOX 701
MILWAUKEE WI 53201-0701
EXPRESS MAIL/PRIVATE
THE CATHOLIC FUNDS
C/O FIRSTAR MUTUAL FUND SERVICES LLC
THIRD FLOOR
615 EAST MICHIGAN STREET
MILWAUKEE WI 53202
TELEPHONE REDEMPTION
Telephone redemption privileges exist on your account (unless you chose not to
have them when you opened your account). With this option, you may sell shares
by phone and receive the proceeds in one of two ways:
(1) We can mail a check to the address on your account if this address
has been current for at least 60 days.
(2) For a $12 fee, we can transmit the proceeds by wire to a properly pre-
authorized bank account. The proceeds usually will arrive at your bank
the first banking day after we process your redemption.
CHECKWRITING
Sign up for free checkwriting when you open your account or call 1-877-222-
2402 to add it later to an existing account.
Please remember:
Check redemptions must be for a minimum of $500.
You cannot write a check to close out an account.
If you recently purchased shares, a redemption request, including a check
redemption, on those shares will not be honored until 12 days after we received
the purchase check or electronic transaction.
You will be charged a service fee, currently $20, for a stop-payment on a
check written on your Catholic Funds account.
Some transactions and requests require a signature guarantee. If you are
selling shares you hold in certificate form, you must submit the certificates
with your redemption request. Each registered owner must sign the
certificates and all signatures must be guaranteed.
SYSTEMATIC WITHDRAWAL PLAN
This plan allows you to redeem a fixed sum from your account on a regular basis.
Payments may be sent electronically to a bank account or as a check to you or
anyone you properly designate. You must have a minimum account balance of
$5,000 to start this plan and you may have up to 9 withdrawals per account.
RETIREMENT ACCOUNTS
With an IRA (or other retirement account), you will be charged a $12.50 annual
account maintenance fee for each account up to a maximum of $25. If you sell
shares out of a qualified retirement account and you are eligible to roll the
sale proceeds into another retirement plan, we will withhold for federal income
tax purposes a portion of the sale proceeds unless you transfer all of the
proceeds to an eligible retirement plan. We will tell you before the fees are
changed.
Special distribution requirements may apply to retirement accounts such as a
403(b)(7) plan.
For instructions on Roth and Traditional IRA accounts, SIMPLE IRA, SEP-IRA,
403(b)(7), Keogh, Pension Plan, Profit Sharing Plan or 401(k) Plan accounts,
call 1-877-222-2402.
SIGNATURE GUARANTEES
We require a signature guarantee to help ensure that major transactions or
changes to your account are in fact authorized by you. For example, we require a
signature guarantee on written redemption requests for more than $25,000. You
can obtain a signature guarantee for a nominal fee from most banks, brokerage
firms and other financial institutions. A notary public stamp or seal cannot be
substituted for a signature guarantee.
ADDITIONAL POLICIES
TELEPHONE TRANSACTIONS
Once you place a telephone transaction request, it cannot be canceled or
modified. We use reasonable procedures to confirm that telephone transaction
requests are genuine. We may be responsible if we do not follow these
procedures. You are responsible for losses resulting from fraudulent or
unauthorized instructions received over the telephone, provided we reasonably
believe the instructions were genuine. During times of unusual market activity
or when our phones are not working properly you may experience a delay placing a
telephone request. We may also suspend the right to make telephone
transactions during such times.
DIVIDEND DISTRIBUTION POLICY
The Fund pays you dividends from net investment income monthly. Dividends
are declared on each day that NAV is calculated, except for bank holidays.
Dividends earned on weekends, holidays and days when the Fund's NAV is not
calculated are declared on the first day preceding these days that the Fund's
NAV is calculated. Your investment generally earns dividends from the first
business day after we accept your purchase order.
REINVESTMENT OF DIVIDENDS
Your dividend distributions will be automatically reinvested in additional
shares of the Fund, unless you choose otherwise. Your other options are to
receive checks for these payments, have them automatically invested in another
Catholic Fund or have them deposited into your bank account.
DISTRIBUTION FEES
We have adopted a plan under Rule 12b-1 of the Investment Company Act of
1940 that allows The Fund to pay an annual fee of 0.05% of its average daily net
assets for providing certain distribution and continuing services to
shareholders. Because these fees are paid from Fund assets on an ongoing basis,
these fees will increase your costs over time and may cost you more than other
types of sales charges.
STATEMENTS
You will receive confirmation of your original purchase and, thereafter, monthly
statements showing your account activity. To assist you in tax preparation,
after the end of each calendar year, we send you a statement of your ordinary
dividends (Form 1099 DIV).
BACKUP WITHHOLDING
By law, we must withhold 31% of your distributions and proceeds if (1) you are
subject to backup withholding or (2) you have not provided us with complete and
correct taxpayer information such as your Social Security Number (SSN) or Tax
Identification Number (TIN).
RESERVED RIGHTS
We reserve the right to:
- -Refuse, change, discontinue or temporarily suspend account services,
including purchase, exchange or telephone redemption privileges, for any
reason.
- -Reject any purchase request for any reason including exchanges from
other Catholic Funds. Generally, we do this if the purchase or exchange is
disruptive to the efficient management of a Fund (due to the timing of the
investment or an investor's history of excessive trading).
- -Change the minimum or maximum investment amounts.
- -Delay sending out redemption proceeds for up to seven days (this
generally only applies to very large redemptions without notice, excessive
trading or during unusual market conditions).
- -Suspend redemptions or postpone payments when the NYSE is closed
for any reason other than its usual weekend or holiday closings, when
trading is restricted by the SEC or under any emergency circumstances.
Make a redemption-in-kind (a payment in portfolio securities rather than
cash) if the amount you are redeeming is in excess of the lesser of (1)
$250,000 or (2) 1% of the Fund's assets.
- -Close any account that does not meet minimum investment
requirements. We will give you notice and 60 days to begin an automatic
investment program or to increase your balance to the required minimum.
- -Reject any purchase or redemption request that does not contain all
required documentation.
FOR MORE INFORMATION
More information is available upon request at no charge, including:
SHAREHOLDER REPORTS: Additional information is available in the
annual and semi-annual report to shareholders. These reports contain a
letter from management, show portfolio holdings. discuss recent market
conditions, economic trends and investment strategies that significantly
affected your investment's performance during the last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI): The SAI contains
more details about investment policies and techniques. A current SAI is on
file with the SEC and is incorporated into this prospectus by reference.
This means that the SAI is legally considered a part of this prospectus
even though it is not physically contained within this prospectus.
To request information or to ask questions call us toll free at 1-(877) 222-2402
To reduce the volume of mail you receive, we will mail only one copy of the most
recent financial report and/or prospectuses to your household. Call 1-877-222-
2402 if you wish to receive free additional copies.
This prospectus is not an offer to sell securities in any place where it would
be illegal to do so.
YOU CAN ALSO OBTAIN COPIES BY VISITING THE SEC'S PUBLIC
REFERENCE ROOM IN WASHINGTON, D.C. OR BY SENDING YOUR
REQUEST AND A DUPLICATING FEE TO THE SECURITIES AND EXCHANGE
COMMISSION'S PUBLIC REFERENCE SECTION, WASHINGTON, D.C. 20549-
6009. YOU CAN CALL 1-800-SEC-0330 FOR INFORMATION ON THE
OPERATION OF THE PUBLIC REFERENCE ROOM.
The above information is also available on the Securities and Exchange
Commission website http://www.sec.gov.
SEC file number: 811-09177
STATEMENT OF ADDITIONAL INFORMATION ("SAI")
The Catholic Funds, Inc.
1100 West Wells Street
Milwaukee, Wisconsin 53233
The Catholic Money Market Fund
November 8, 1999
TABLE OF CONTENTS PAGE
Fund History and Organization
Investment Restrictions
Investment Policies and Techniques
Rule 2a-7 Maturity, Quality and diversification Restrictions
Variable or Floating Rate Securities
Management
Operations
Distributor
Distribution Plan
Principal Shareholders
Portfolio Transactions and Brokerage
Accounting, Fulfillment, Custodian and Transfer Agent Services
Taxes
Determination of Net Asset Value
Additional Shareholder Information
Financial Statements
No person has been authorized to give any information or to make any
representations other than those contained in this SAI and its corresponding
Prospectus dated November 8, 1999, and if given or made, such information or
representations may not be relied upon as having been authorized. This SAI
does not constitute an offer to sell securities. Three other series of The
Catholic Funds, Inc. (Equity Income, Large-Cap Growth and Disciplined Capital
Appreciation Funds) have their own prospectus and SAI and a prospective
shareholder should read and review these prior to any investment in such other
series. Prospectuses and SAIs may be obtained by calling toll free 1-877-222-
2402 or writing to Catholic Financial Services Corporation at 1100 West Wells
Street, Milwaukee, WI 53233.
FUND HISTORY AND ORGANIZATION
The Catholic Funds are a family of funds consisting of four separate series of
The Catholic Funds, Inc., a Maryland corporation registered as an open-end
management investment company under the Investment Company Act of 1940
(the "1940 Act"). The Catholic Funds, Inc. 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 POLICIES AND RESTRICTIONS
The following policies and restrictions supplement the investment objective and
policies set forth in the Fund's Prospectus:
REPURCHASE AGREEMENTS. The Fund may invest in repurchase
agreements for defensive purposes due to market conditions or to generate
income from an excess cash balance. A repurchase agreement is an agreement
where the Fund gets a fixed-income security (usually a security issued by the
U.S. Government or one of its agencies, a banker's acceptance or a certificate
of deposit) from a bank or other party, that is subject to resale to the
seller at an agreed upon price and date (normally, the next business day).
A repurchase agreement may be considered a loan collateralized by securities.
The price reflects an agreed upon interest rate effective for the time the
security is owned by the Fund. In these transactions, the securities acquired
by the Fund (including accrued interest earned thereon) must have a total value
in excess of the value of the repurchase agreement and are held by a custodian
bank until repurchased. In addition, the Fund's Board will monitor the Fund's
repurchase agreement transactions generally and will establish guidelines and
standards for review by the investment adviser of the creditworthiness of any
bank, broker or dealer party to a repurchase agreement with the Fund.
Repurchase agreements have some risks. If the other party defaults on its
obligation at a time when the value of the security has declined, the Fund may
incur a loss. If the other party becomes insolvent a court may find that the
underlying security is collateral for a loan by the Fund and the Fund may not
have complete control over the collateral. It is also possible that the Fund may
not be able to prove its interest in the underlying security and may be treated
as an unsecured creditor. While the Adviser and Sub-adviser acknowledge these
risks, they expect to control them.
LENDING OF SECURITIES. The Fund may lend securities to qualified
institutional investors (typically brokers, dealers, banks or other financial
institutions) who need to borrow securities in order to complete transactions
such as covering short sales. The Fund tries to increase its income through the
receipt of interest on the loan. The Fund realizes gains or losses on the
securities loaned that occur during the term of the loan. The terms and the
structure and the total amount of such loans must comply with the Investment
Company Act of 1940, and any Rules and Regulations or interpretations of the
Securities and Exchange Commission. These provisions currently limit the amount
of securities a fund may lend to 33 1/3% of the its total assets, and require
that (a) the borrower pledge and maintain with the Fund collateral consisting
of cash, an irrevocable letter of credit or securities issued or guaranteed by
the United States Government having at all times not less than 100% of the
value of the securities loaned, (b) the borrower add to such collateral
whenever the price of the securities loaned rises (i.e., the borrower "marks to
the market" on a daily basis), (c) the loan be made subject to termination by
the Fund at any time, and (d) the Fund receive reasonable interest on the loan
(which may include the Fund's investing any cash collateral in interest bearing
short-term investments), any distribution on the loaned securities and any
increase in their market value. Loan arrangements made by the Fund will comply
with all other applicable regulatory requirements, including the rules of the
New York Stock Exchange, which presently require the borrower, after notice, to
redeliver the securities within the normal settlement time of three business
days. All relevant facts and circumstances, including the creditworthiness of
the broker, dealer or institution, will be considered in making
decisions with respect to the lending of securities, subject to review by the
Fund's Board.
ILLIQUID SECURITIES. The Fund may invest up to 10% of its net assets in
illiquid securities. Illiquid securities are securities that may not be sold or
disposed of in the ordinary course of business within seven business days at
approximately the value at which they are being carried on the Fund's books.
The Fund may invest in restricted, privately placed securities that, under SEC
rules, may be sold only to qualified institutional buyers. Because these
securities can be resold only to qualified institutional buyers it could be
difficult for the Fund to convert to sell them if needed.
If a market develops for a restricted security held by the Fund, it may be
treated as a liquid security, in accordance with procedures and guidelines
approved by the Fund's Board. This generally includes securities that are
unregistered that can be sold to qualified institutional buyers in accordance
with Rule 144A under the 1933 Act. While the sub-adviser determines the
liquidity of restricted securities on a daily basis, the Board oversees and
retains ultimate responsibility for the decisions. Several factors the Board
considers in monitoring these decisions include the valuation of a security,
the availability of qualified institutional buyers, and the availability of
information about the security's issuer.
FUNDAMENTAL INVESTMENT RESTRICTIONS: The Fund has following fundamental
investment limitations, which cannot be changed in any material way without the
approval of the holders of a majority of the Fund's shares. For these purposes,
a "majority" of shares means shares representing the lesser of: (i) 67% or more
of the votes cast to approve a change, so long as shares representing more than
50% of the Fund's net asset value are present or represented by proxy; or (ii)
more than 50% of the Fund's net asset value. These limitations are considered
at the time investment securities are purchased.
BORROWING. The Fund may not borrow money, except for temporary or
emergency purposes in an amount not exceeding 10% of its Fund's net assets.
The Fund may only borrow money through banks or reverse repurchase
agreements, and must comply with all applicable rules and regulations. The Fund
may not borrow to increase income (leveraging), but only to facilitate
redemption requests which might otherwise require untimely dispositions of
portfolio securities. When borrowing exceeds 5% of the Fund's net assets, the
Fund will repay all borrowings before making additional investments, and
interest paid on such borrowings will reduce net income.
COMMODITIES. The Fund may not invest in commodities or commodity
contracts.
DIVERSIFICATION. The Fund may not purchase securities of any issuer if, as a
result, more than 5% of the Fund's total assets would be invested in that
issuer's securities. This limitation does not apply to obligations of the
United States Government, its agencies, or instrumentalities. The Fund may,
however, invest in a single issuer as permitted by the Securities and Exchange
Commission (which currently permits a money market fund to invest up to 25% of
its total assets in the highest-quality securities of a single issuer for a
period of up to three business days).
ILLIQUID SECURITIES. The Fund may not acquire any security if, as a result,
more than 10% of its net assets would be invested in securities that are
illiquid.
INDUSTRY CONCENTRATION. The Fund may not invest more than 25% of its
total assets in any one industry, provided that there is no limitation with
respect to investments in United States Treasury Bills, other obligations
issued or guaranteed by the Federal Government, its agencies and
instrumentalities or certificates of deposit or banker's acceptances of
domestic institutions.
INVESTING FOR CONTROL. The Fund may not invest in a company for
purposes of controlling its management.
INVESTMENT COMPANIES (Mutual Funds). The Fund may not invest in any
other investment company, except through a merger, consolidation or acquisition
of assets, or to the extent permitted by Section 12 of the 1940 Act. Investment
companies whose shares the Fund acquires pursuant to Section 12 must have
investment objectives and investment policies consistent with those of the Fund.
LOANS. The Fund may not make loans to other persons, except by the
purchase of obligations in which the Fund is authorized to invest.
MARGIN. The Fund may not purchase securities on margin or sell securities
short.
OIL, GAS, MINERALS. The Fund may not invest in interests in oil, gas or other
mineral exploration or development programs.
PLEDGING ASSETS. The Fund may pledge, mortgage or hypothecate its
assets in an amount up to 10% of its net assets, but only to secure borrowings
for temporary or emergency purposes.
PUT, CALL, STRADDLE, SPREAD OPTIONS. The Fund may not write or invest
in put, call, straddle, or spread options.
REAL ESTATE. The Fund may not invest directly in real estate, or real estate
investment trust securities.
SENIOR SECURITIES. The Fund may not issue senior securities.
UNDERWRITING. The Fund may not engage in the business of underwriting
securities issued by other persons. The Fund will not be considered an
underwriter when disposing of its investment securities.
RULE 2A-7: MATURITY, QUALITY, AND DIVERSIFICATION RESTRICTIONS
All capitalized but undefined terms in this discussion shall have the meaning
such terms have in Rule 2a-7 under the 1940 Act. The Fund is subject to certain
maturity restrictions in accordance with Rule 2a-7 for money market funds that
use the amortized cost method of valuation to maintain a stable net asset value
of $1.00 per share. Accordingly, the Fund will (1) maintain a dollar weighted
average portfolio maturity of 90 days or less, and (2) will purchase securities
with a remaining maturity of no more than 13 months (397 calendar days).
Further, the Fund will limit its investments to U.S. dollar-denominated
securities which represent minimal credit risks and meet certain credit
quality and diversification requirements. For purposes of calculating the
maturity of portfolio instruments, the Fund will follow the requirements of
Rule 2a-7. Under Rule 2a-7, the maturity of portfolio instruments is calculated
as indicated below.
Generally, the maturity of a portfolio instrument shall be deemed to be the
period remaining (calculated from the trade date or such other date on which
the Fund's interest in the instrument is subject to market action) until the
date noted on the face of the instrument as the date on which the principal
amount must be paid, or in the case of an instrument called for redemption,
the date on which the redemption payment must be made, except that: (1) An
instrument that is issued or guaranteed by the U.S. government or any agency
thereof which has a variable rate of interest readjusted no less frequently
than every 762 days shall be deemed to have a maturity equal to the period
remaining until the next readjustment of the interest rate. (2) A Variable Rate
Instrument, the principal amount of which is scheduled on the face of the
instrument to be paid on 397 calendar days or less shall be deemed to have a
maturity equal to the period remaining until the next readjustment of the
interest rate. (3) A Variable Rate Instrument that is subject to a Demand
Feature shall be deemed to have a maturity equal to the longer of the period
remaining until the next readjustment of the interest rate or the period
remaining until the principal amount can be recovered through demand. (4)
A Floating Rate Instrument that is subject to a Demand Feature shall be
deemed to have a maturity equal to the period remaining until the principal
amount can be recovered through demand. (5) A repurchase agreement shall be
deemed to have a maturity equal to the period remaining until the date on which
the repurchase of the underlying securities is scheduled to occur, or, where no
date is specified, but the agreement is subject to a demand, the notice period
applicable to a demand for the repurchase of the securities.
The Fund is subject to certain credit quality restrictions pursuant to Rule 2a-7
under the 1940 Act. The Fund will invest at least 95% of its assets in
instruments determined to present minimal credit risks and, at the time of
acquisition, are (1) obligations issued or guaranteed by the U.S. government,
its agencies, or instrumentalities; (2) rated by at least two nationally
recognized rating agencies (or by one agency if only one agency has issued a
rating) (the "required rating agencies") in the highest rating category for
short-term debt obligations; (3) unrated but whose issuer is rated in the
highest category by the required rating agencies with respect to a class
of short-term debt obligations or any security within that class that is
comparable in priority and security with the instrument; or (4) unrated
(other than the type described in (3)) but determined by the Board of
Directors of the Fund to be of comparable quality to the foregoing
(provided the unrated security has not received a short-term rating, and
with respect to a long-term security with a remaining maturity within the
Fund's maturity restrictions, has not received a long-term rating from any
agency that is other than in its highest rating category). The foregoing
are referred to as "first-tier securities."
The balance of the securities in which the Fund may invest are instruments
determined to present minimal credit risks, which do not qualify as first-tier
securities, and, at the time of acquisition, are (1) rated by the required
rating agencies in one of the two highest rating categories for short-term debt
obligations; (2) unrated but whose issuer is rated in one of the two highest
categories by the required rating agencies with respect to a class of short-
term debt obligations or any security within that class that is comparable in
priority and security with the obligation; or (3) unrated (other than
described in (2)) but determined by the Board of Directors of the Fund to
be of comparable quality to the foregoing (provided the unrated security
has not received a short-term rating and, with respect to a long-term
security with a remaining maturity within the Fund's maturity restrictions,
has not received a long-term rating from any agency that is other than in
one of its highest two rating categories). The foregoing are referred to
as "second-tier securities." In addition to the foregoing guidelines, the
Fund is subject to certain diversification restrictions pursuant to Rule 2a-7
under the 1940 Act, which include (1) the Fund will not acquire a second-tier
security of an issuer if, after giving effect to the acquisition, the Fund
would have invested more than the greater of 1% of its total assets or one
million dollars in second-tier securities issued by that issuer, or (2) the
Fund will not invest more than 5% of the Fund's assets in the securities
(other than securities issued by the U.S. government or any agency or
instrumentality thereof) issued by a single issuer, except for certain
investments held for not more than 3 business days.
VARIABLE- OR FLOATING-RATE SECURITIES
The Fund may invest in securities which offer a variable- or floating-rate of
interest. Variable-rate securities provide for automatic establishment of a new
interest rate at fixed intervals (e.g. daily, monthly, semi-annually, etc.).
Floating-rate securities generally provide for automatic adjustment of the
interest rate whenever some specified interest rate index changes. The
interest rate on variable- or floating-rate securities is ordinarily
determined by reference to or is a percentage of a bank's prime rate, the
90-day U.S. Treasury bill rate, the rate of return on commercial paper or
bank certificates of deposit, an index of short-term interest rates, or
some other objective measure. Variable- or floating-rate securities
frequently include a demand feature entitling the holder to sell the
securities to the issuer at par. In many cases, the demand feature can be
exercised at any time on seven days notice; in other cases, the demand feature
is exercisable at any time on 30 days notice or on similar notice at intervals
of not more than one year.
Some securities which do not have variable or floating interest rates may be
accompanied by puts producing similar results and price characteristics. When
considering the maturity of any instrument which may be sold or put to the
issuer or a third party, the Fund may consider that instrument's maturity to be
shorter than its stated maturity. Variable-rate demand notes include master
demand notes which are obligations that permit the Fund to invest fluctuating
amounts, which may change daily without penalty, pursuant to direct arrangements
between the Fund, as lender, and the borrower. The interest rates on these
notes fluctuate from time to time. The issuer of such obligations normally
has a corresponding right, after a given period, to prepay in its discretion
the outstanding principal amount of the obligations plus accrued interest
upon a specified number of days notice to the holders of such obligations. The
interest rate on a floating-rate demand obligation is based on a known lending
rate, such as a bank's prime rate, and is adjusted automatically each time such
rate is adjusted. The interest rate on a variable-rate demand obligation is
adjusted automatically at specified intervals. Frequently, such obligations
are secured by letters of credit or other credit support arrangements
provided by banks. Because these obligations are direct lending arrangements
between the lender and rower, it is not contemplated that such instruments
will generally be traded. There generally is not an established secondary
market for these obligations, although they are redeemable at face value.
Accordingly, where these obligations are not secured by letters of credit
or other credit support arrangements, the Fund's right to redeem is dependent
on the ability of the borrower to pay principal and interest on demand. Such
obligations frequently are not rated by credit rating agencies and, if not
so rated, the Fund may invest in them only if the Adviser determines that
at the time of investment the obligations are of comparable quality to the
other obligations in which the Fund may invest. The Adviser, on behalf of
the Fund, will consider on an ongoing basis the creditworthiness of the
issuers of the floating- and variable-rate demand obligations in the Fund's
portfolio.
The Fund will not invest more than 10% of its net assets in variable- and
floating-rate demand obligations that are not readily marketable (a variable- or
floating-rate demand obligation that may be disposed of on not more than seven
days notice will be deemed readily marketable and will not be subject to this
limitation). In addition, each variable- or floating-rate obligation must meet
the credit quality requirements applicable to all the Fund's investments at the
time of purchase. When determining whether such an obligation meets the Fund's
credit quality requirements, the Fund may look to the credit quality of the
financial guarantor providing a letter of credit or other credit support
arrangement.
In determining the Fund's weighted average portfolio maturity, the Fund will
consider a floating- or variable-rate security to have a maturity equal to its
stated maturity (or redemption date if it has been called for redemption),
except that it may consider (1) variable-rate securities to have a maturity
equal to the period remaining until the next readjustment in the interest rate,
unless subject to a demand feature, (2) variable-rate securities subject to a
demand feature to have a remaining maturity equal to the longer of (a) the
next readjustment in the interest rate or (b) the period remaining until the
principal can be recovered through demand, and (3) floating-rate securities
subject to a demand feature to have a maturity equal to the period remaining
until the principal can be recovered through demand. Variable- and floating-
rate securities generally are subject to less principal fluctuation than
securities without these attributes since the securities usually trade at
amortized cost following the readjustment in the interest rate.
MANAGEMENT
The Fund Directors are listed below.
<TABLE>
<CAPTION>
Name Position with The Business affiliations Compensation from
Catholic Funds, Inc. during the past five The Catholic Funds,
years Inc.
<S> <C> <C> <C>
Daniel J. Steininger* Chairman of the Director President of 0
1100 West Wells Street Board of Directors Catholic Knights
Milwaukee, WI 53233 Insurance Society
D.O.B. 5/1/45
Allan G. Lorge* President, Chief Director and 0
1100 West Wells Street Executive Officer, Secretary/Treasurer
Milwaukee, WI 53233 Director of Catholic Knights
D.O.B. 12/9/49 Insurance Society
James M. Borden Director Chief Executive $1,500
P.O. Box 591 Officer of HUFCOR
Janesville, WI 53547 (1978 - present)
D.O.B. 12/21/36
Daniel R. Doucette Director President and CEO of $1,500
North Sunnyslope Road Milwaukee Mutual
Brookfield, WI 53005 Insurance Company,
D.O.B. 9/03/49 President of The
Milwaukee Rampage
Professional Soccer Team
Thomas J. Munninghoff Director President, $1,500
430 Reading Road Munninghoff, Lang
Cincinnati, OH 45202 and Co. (accounting
D.O.B. 8/27/47 firm) since 1983
Conrad L. Sobczak Director Retired, formerly $1,500
6015 Washington Boulevard President and CEO,
Wauwatosa, WI 53213 Family Health
D.O.B. 10/20/38 Systems, Inc. from
1987 - 1998
David L. Vollmar Director Retired, formerly $1,500
1700 Arrowhead Court Partner, Arthur
Elm Grove, WI 53122 Andersen LLP from
D.O.B. 12/15/33 1951 - 1988
Thomas Bausch Director Professor of $1,500
Marquette University Management,
Straz Hall Marquette University
606 N. 13th Street College of Business
Milwaukee, WI 53233 Administration since
D.O.B. 06/06/38 1978; formerly a
director for 10 years
of Heartland Group,
Inc. (mutual fund
family)
</TABLE>
*Interested Director as defined by the Investment Company Act of 1940
**Each of The Catholic Funds pays an equal portion of the fees and expenses of
the five Directors who are officers, director or 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 The Funds to each of the Directors is set forth in the table. There
are no other funds in the fund complex nor does any director receive any
retirement benefits from The Catholic Funds, Inc.
The Fund Officers are listed below:
Name and address Position Business affiliations during
the past five years
Daniel Steininger Chairman of the Board Director President of Catholic
1100 West Wells Street Knights Insurance Society
Milwaukee, WI 53233
Allan Lorge President Director and Secretary/Treasurer
1100 West Wells Street of Catholic Knights Insurance
Milwaukee, WI 53233 Society
Theodore Zimmer Vice President General Counsel, Catholic
1100 West Wells Street Knights Insurance Society since
Milwaukee, WI 53233 September 1997; Partner at
D.O.B. 12/17/40 Miller, Simon, McGinn and Clark
(law firm) from October 1996 to
Sept. 1997, and prior to October
1996 Partner at Quarles &
Brady LLP
Russell Kafka Treasurer Director of Catholic Knights
1100 West Wells Street Financial Services, since June
Milwaukee, WI 53233 1994; Director of Catholic
D.O.B. 6/20/44 Brokerage Services Corp. since
November 1994; and Vice
President - Investments of
Catholic Knights Insurance
Society since January
Joe Wreschnig Secretary Director of Mutual Funds
1100 West Wells Street Operations, Catholic Financial
Milwaukee, WI 53233 Services Corp., since January
D.O.B. 6/30/50 1999, prior to January 1999,
Assistant Vice President and
Secretary of AAL Capital
Management Corporation and
Instructor at Cardinal Stritch
University since 1990
Mark Forbord Chief Financial Controller of Catholic Knights
1100 West Wells Street Officer and Financial Services, Inc. since
Milwaukee, WI 53233 Accountant April 19, 1996; Controller of
D.O.B. 1/21/54 Catholic Brokerage Services
Corp. since April 19, 1996;
Senior Finanical Analyst of
Catholic Knights Insurance
Society since 1995; Instructor
at The University of
Wisconsin-Milwaukee since Jan.
1986; and Instructor at Cardinal
Stritch University since
September 1990
MANAGEMENT
The 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
February 17, 1999 and amended to include the Money Market Fund on July 27th,
1999. Basic information as to the Adviser and the Investment Advisory
Agreement is set forth in the Prospectus under "Management". Strong
Investment Management, Inc. has been engaged to serve as Sub-Adviser to the
Fund. The Sub-Advisory Agreement requires the Sub-Adviser, as it relates to its
duties under the Sub-Advisory Agreement, to provide and supervise, at its
expense, the activities of all administrative and clerical personnel required to
provide effective corporate administration for the Fund, 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.
OPERATIONS
Except for expenses assumed by the Adviser, as set forth above, or by the Sub-
adviser. with respect to the distribution of the Fund's shares, the Fund is
responsible for all its other expenses, including, without limitation, interest
charges, taxes, brokerage commissions, and similar expenses; expenses of
issue, sale, repurchase or redemption of shares; expenses of registering or
qualifying shares for sale with the states and the SEC; expenses for printing
and distribution of prospectuses to existing shareholders; charges of
custodians (including fees as custodian for keeping books and similar
services for the Fund), transfer agents (including the printing and mailing
of reports and notices to shareholders), registrars, auditing and legal
services, and clerical services related to recordkeeping and shareholder
relations; printing of stock certificates; fees for directors who are not
"interested persons" of the Adviser; expenses of indemnification;
extraordinary expenses; and costs of shareholder and director meetings.
As compensation for its services, the Fund pays to the Adviser a monthly
management fee at the annual rate specified in the prospectus. The prospectus
also describes payments to the Sub-adviser by the Adviser. From time to time,
the Adviser may voluntarily waive all or a portion of its management fee for the
Fund. Reimbursement of expenses in excess of the applicable limitation will be
made on a monthly basis and will be paid to the Fund by reduction of the
Adviser's fee, subject to later adjustment, month by month, for the remainder of
the Fund's fiscal year. The Adviser may from time to time voluntarily absorb
expenses for the Fund in addition to the reimbursement of expenses in excess of
applicable limitations.
The Fund and the Adviser have adopted a Code of Ethics ("Code") which
governs the personal trading activities of all "Access Persons" of the Adviser.
The Code is based upon the principal that such Access Persons have a fiduciary
duty to place the interests of the Fund and the Adviser 's other clients ahead
of their own. The Code requires Access Persons to, among other things, preclear
their securities transactions with limited exceptions, such as transactions in
shares of mutual funds, variable insurance products, direct obligations of the
U.S. government, and certain stocks of companies that meet minimum market
capital and "float" requirements.
The Code, which applies to all Access Persons includes a ban on acquiring any
securities in an initial public offering, other than a new offering of a
registered open-end investment company, and a prohibition from profiting on
short-term trading in securities. Finally, the Code provides for trading
"black out" periods of seven calendar days during which time Advisory Persons
may not trade in securities which have been purchased or sold by any mutual
fund or other account managed by the portfolio manager.
From time to time, the Adviser may make available to third parties current and
historical information about the portfolio holdings of the Adviser's mutual
funds or other clients. Release may be made to entities such as fund ratings
entities, industry trade groups, and financial publications. Generally, the
Adviser will release this type of information only where it is otherwise
publicly available. This information may also be released where the Adviser
reasonably believes that the release will not be to the detriment of the
best interests of its clients. For more complete information about the
Adviser, including its services, investment strategies, policies, and
procedures, please call 1-877-222-2402 and ask for a copy of the Adviser's
Form ADV.
DISTRIBUTOR
CFSC, the Fund's investment Adviser, also acts as Distributor of the shares of
The Fund. CFSC has agreed to use its "best-efforts" to distribute the Fund's
shares, but has not committed to purchase or sell any specific number of shares.
The Distribution Agreement for the Fund 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
The Fund has adopted a distribution plan (the "Distribution Plan") pursuant to
Rule 12b-1 of the Investment Company Act. Under the 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 benefit the Fund and the shareholders of the
Fund. The 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.
PRINCIPAL SHAREHOLDERS
No shares have been sold as of the date of this SAI.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Under the Investment Advisory Agreement and the Sub-Advisory Agreement
(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 the Fund, the Advisers will consider all factors
they deem relevant, including the breadth of 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 most sales of shares of the Funds will be made by the
Distributor, the Advisers may in the future consider the willingness of
particular brokers to sell shares of the funds they advise 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 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.
The Fund has not yet paid brokerage commissions.
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 for this
Fund per year is $25,000 for the first $40 million; .001 of 1% on average daily
net assets on the next $200 million; and .005 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 fee based on the volume of transactions. Each Fund pays a
minimum monthly fee of $100. 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 of the Fund. 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 $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.
TAXES
The Fund intends to qualify annually for treatment as a regulated investment
company ("RIC") under Subchapter M of the IRC. If so qualified, the Fund will
not be liable for federal income tax on earnings and gains distributed to its
shareholders in a timely manner. This qualification does not involve government
supervision of the Fund's management practices or policies. The following
federal tax discussion is intended to provide you with an overview of the impact
of federal income tax provisions on the Fund or its shareholders. These tax
provisions are subject to change by legislative or administrative action at the
federal, state, or local level, and any changes may be applied retroactively.
Any such action that limits or restricts the Fund's current ability to pass-
through earnings without taxation at the Fund level, or otherwise materially
changes the Fund's tax treatment, could adversely affect the value of a share-
holder's investment in the Fund. Because the Fund's taxes are a complex matter,
you should consult your tax adviser for more detailed information concerning the
taxation of the Fund and the federal, state, and local tax consequences to
shareholders of an investment in the Fund. In order to qualify for treatment as
a RIC under the IRC, the Fund must distribute to its shareholders for each
taxable year at least 90% of its investment company taxable income (consisting
generally of taxable net investment income, net short-term capital gain, and net
gains from certain foreign currency transactions, if applicable) ("Distribution
Requirement") and must meet several additional requirements. These requirements
include the following: (1) the Fund must derive at least 90% of its gross income
each taxable year from dividends, interest, payments with respect to securities
loans, and gains from the sale or other disposition of securities (or foreign
currencies if applicable) or other income (including gains from options,
futures, or forward contracts) derived with respect to its business of
investing in securities ("Income Requirement"); (2) at the close of each
quarter of the Fund's taxable year, at least 50% of the value of its total
assets must be represented by cash and cash items, U.S. government securities,
securities of other RICs, and other securities, with these other securities
limited, in respect of any one issuer, to an amount that does not exceed 5%
of the value of the Fund's total assets and that does not represent more
than 10% of the issuer's outstanding voting securities; and (3) at the close
of each quarter of the Fund's taxable year, not more than 25% of the value
of its total assets may be invested in securities (other than U.S. government
securities or the securities of other RICs) of any one issuer. If Fund shares
are sold at a loss after being held for six months or less, the loss will be
treated as long-term, instead of short-term, capital loss to the extent of any
capital gain distributions received on those shares. The Fund's distributions
are taxable in the year they are paid, whether they are taken in cash or
reinvested in additional shares, except that certain distributions declared
in the last three months of the year and paid in January are taxable as if
paid on December 31.
The Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to the
extent it fails to distribute by the end of any calendar year substantially all
of its ordinary income for that year and capital gain net income for the one-
year period ending on October 31 of that year, plus certain other amounts.
The Fund may make additional distributions if necessary to avoid imposition
of a 4% excise tax on undistributed income and gains.
DETERMINATION OF NET ASSET VALUE
The Fund is 100% no load. This means that an investor may purchase, redeem
or exchange shares at the Fund's net asset value ("NAV") without paying a sales
charge. Generally, when an investor makes any purchases, sales, or exchanges,
the price of the investor's shares will be the NAV next determined after we
receive a request in proper form (which includes receipt of all necessary and
appropriate documentation and subject to available funds). If we receive such a
request prior to the close of the New York Stock Exchange ("NYSE") on a day on
which the NYSE is open, the share price will be the NAV determined that day.
The NAV for each Fund is normally determined as of 3:00 p.m. Central Time
("CT") each day the NYSE is open. The NYSE is open for trading Monday
through Friday except, New Year's Day, Martin Luther King Jr. Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving
Day, and Christmas Day. Additionally, if any of the aforementioned holidays
falls on a Saturday, the NYSE will not be open for trading on the preceding
Friday, and when any such holiday falls on a Sunday, the NYSE will not be
open for trading on the succeeding Monday, unless unusual business conditions
exist, such as the ending of a monthly or yearly accounting period.
We reserve the right to change the time at which purchases, redemptions, and
exchanges are priced if the NYSE closes at a time other than 3:00 p.m. CT or if
an emergency exists. The Fund's NAV is calculated by taking the fair value of
the Fund's total assets, subtracting all its liabilities, and dividing by the
total number of shares outstanding. Expenses are accrued daily and applied when
determining the NAV. The Fund's portfolio securities are valued based on market
quotations or at fair value as determined by the method selected by the Fund's
Board of Directors. The Fund values its securities on the amortized cost basis
and seek to maintain their net asset value at a constant $1.00 per share. In
the event a difference of 1/2 of 1% or more were to occur between the net asset
value calculated by reference to market values and the Fund's $1.00 per share
net asset value, or if there were any other deviation which the Fund's Board of
Directors believed would result in a material dilution to shareholders or
purchasers, the Board of Directors would consider taking any one or more of the
following actions or any other action considered appropriate: selling portfolio
securities to shorten average portfolio maturity or to realize capital gains or
losses, reducing or suspending shareholder income accruals, redeeming shares
in kind, or utilizing a value per unit based upon available indications of
market value. Available indications of market value may include, among other
things, quotations or market value estimates of securities and/or values based
on yield data relating to money market securities that are published by
reputable sources.
ADDITIONAL SHAREHOLDER INFORMATION
FUND REDEMPTIONS: Shareholders can gain access to the money in their
accounts by selling (also called redeeming) some or all of their shares by mail,
telephone, computer, automatic withdrawals, through a broker-dealer, or by
writing a check (assuming all the appropriate documents and requirements have
been met for these account options). After a redemption request is processed,
the proceeds from the sale will normally be sent on the next business day but,
in any event, no more than seven days later.
TELEPHONE EXCHANGE/REDEMPTION PRIVILEGES: The Fund employs
reasonable procedures to confirm that instructions communicated by telephone
or the Internet are genuine. The Fund may not be liable for losses due to
unauthorized or fraudulent instructions. Such procedures include but are not
limited to requiring a form of personal identification prior to acting on
instructions received by telephone, providing written confirmations of such
transactions to the address of record, and tape recording telephone
instructions.
MOVING ACCOUNT OPTIONS AND INFORMATION: When establishing a new
account by exchanging funds from an existing Catholic Funds account, some
account options, such as telephone exchange, if existing on the account from
which money is exchanged, will automatically be made available on the new
account unless the shareholder indicates otherwise, or the option is not
available on the new account. Subject to applicable policies, other account
options, including automatic investment, automatic exchange and systematic
withdrawal, may be moved to the new account at the request of the shareholder.
If allowed by our policies (i) once the account options are established on the
new account, the shareholder may modify or amend the options, and (ii) account
options may be moved or added from one existing account to another new or
existing account. Account information, such as the shareholder's address of
record and social security number, will be copied from the existing account
to the new account.
REDEMPTION-IN-KIND: The Fund has elected to be governed by Rule 18f-1
under the 1940 Act, which obligates the Fund to redeem shares in cash, with
respect to any one shareholder during any 90-day period, up to the lesser of
$250,000 or 1% of the assets of the Fund. If the Adviser determines that
existing conditions make cash payments undesirable, redemption payments may be
made in whole or in part in securities or other financial assets, valued for
this purpose as they are valued in computing the NAV for the Fund's shares (a
"redemption-in-kind"). Shareholders receiving securities or other financial
assets in a redemption-in-kind may realize a gain or loss for tax purposes, and
will incur any costs of sale, as well as the associated inconveniences. If you
expect to make a redemption in excess of the lesser of $250,000 or 1% of the
Fund's assets during any 90-day period and would like to avoid any possibility
of being paid with securities in-kind, you may do so by providing the Catholic
Funds with an unconditional instruction to redeem at least 15 calendar days
prior to the date on which the redemption transaction is to occur, specifying
the dollar amount or number of shares to be redeemed and the date of the
transaction (please call 1-877-222-2402). This will provide the Fund with
sufficient time to raise the cash in an orderly manner to pay the redemption
and thereby minimize the effect of the redemption on the interests of the
Fund's remaining shareholders. Redemption checks in excess of the lesser of
$250,000 or 1% of the Fund's assets during any 90-day period may not be
honored by the Fund if the Adviser determines that existing conditions make
cash payments undesirable.
SHARES IN CERTIFICATE FORM: Certificates will not be issued for shares
held in a Fund account unless the Fund is or becomes legally obligated to do so.
DOLLAR COST AVERAGING: The Catholic Funds have various programs to
facilitate dollar cost averaging. Dollar cost averaging is an investment
strategy that involves investing a fixed amount of money at regular time
intervals. By always investing the same set amount, an investor will be
purchasing more shares when the price is low and fewer shares when the price
is high. Ultimately, by using this principle in conjunction with fluctuations
in share price, an investor's average cost per share may be less than the
average transaction price. A program of regular investment cannot ensure a
profit or protect against a loss during declining markets. Since such a
program involves continuous investment regardless of fluctuating share
values, investors should consider their ability to continue the program
through periods of both low and high share-price levels.
SIGNATURE GUARANTEES: A signature guarantee is designed to protect
shareholders and the Fund against fraudulent transactions by unauthorized
persons. In the following instances, the Fund will require a signature guarantee
for all authorized owners of an account: - when adding the telephone redemption
option to an existing account; - when transferring the ownership of an account
to another individual or organization; - when submitting a written redemption
request for more than $25,000; - when requesting to redeem or redeposit shares
that have been issued in certificate form; - if requesting a certificate after
opening an account; - when requesting that redemption proceeds be sent to a
different name or address than is registered on an account; - if adding/
changing a name or adding/removing an owner on an account; and - if adding/
changing the beneficiary on a transfer-on-death account. A signature guarantee
may be obtained from any eligible guarantor institution, as defined by the SEC.
These institutions include banks, savings associations, credit unions,
brokerage firms, and others. Please note that a notary public stamp or seal
is not acceptable.
RIGHT OF SET-OFF: To the extent not prohibited by law, the Fund, any other
Catholic Fund, and the Adviser, each has the right to set-off against a
shareholder's account balance with a Catholic Fund, and redeem from such
account, any debt the shareholder may owe any of these entities. This right
applies even if the account is not identically registered.
PROMOTIONAL ITEMS OF NOMINAL VALUE: From time to time, the Adviser
and/or Distributor may give de minimis gifts or other immaterial consideration
to investors who open new accounts or add to existing accounts with the Catholic
Funds.
RETIREMENT PLANS: The Distributor provides documentation, including the
necessary disclosure documents for Individual Retirement Accounts (IRAs),
including Simple,Rollover, SEP, Roth and Education IRAs. These documents
describe the conditions and requirements that apply to these accounts. These
conditions and requirements are subject to changes in federal law. The
Distributor also offers a 403(B)(7) plan. A 403(b)(7) plan is a tax-sheltered
custodial account designed to qualify under section 403(b)(7) of the IRC and is
available for use by employees of certain educational, non-profit, hospital, and
charitable organizations.
SHAREHOLDER MEETINGS: Shareholders have the right to vote on the
election of Directors at each meeting of shareholders at which Directors are to
be elected and on other matters as provided by law or the Articles of
Incorporation or Bylaws of The Catholic Funds, Inc. These 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.
PERFORMANCE INFORMATION: The Catholic Funds may advertise a variety
of types of performance information as more fully described below. The Fund's
performance is historical and past performance does not guarantee the future
performance of the Fund. From time to time, the Adviser may agree to waive or
reduce its management fee and/or to absorb certain operating expenses for the
Fund. Waivers of management fees and absorption of expenses will have the
effect of increasing the Fund's performance.
7-DAY CURRENT AND EFFECTIVE YIELD: The Fund's 7-day current yield
quotation is based on a seven-day period and is computed as follows. The first
calculation is net investment income per share, which is accrued interest on
portfolio securities, plus amortized discount, minus amortized premium, less
accrued expenses. This number is then divided by the price per share (expected
to remain constant at $1.00) at the beginning of the period ("base period
return"). The result is then divided by 7 and multiplied by 365 and the
resulting yield figure is carried to the nearest one-hundredth of one percent.
Realized capital gains or losses and unrealized appreciation or depreciation of
investments are not included in the calculation. The Fund's effective yield is
determined by taking the base period return (computed as described above) and
calculating the effect of assumed compounding. Effective yield is equal
[(base period return + 1)(365/7)]- 1.
AVERAGE ANNUAL TOTAL RETURN: The Fund's average annual total return
quotation is computed in accordance with a standardized method prescribed by
rules of the SEC. The average annual total return for the Fund for a specific
period is calculated by first taking a hypothetical investment ("initial
investment") in the Fund's shares on the first day of the period and computing
the "redeemable value" of that investment at the end of the period. The
redeemable value is then divided by the initial investment, and this quotient
is taken to the Nth root (N representing the number of years in the period) and
1 is subtracted from the result, which is then expressed as a percentage. The
calculation assumes that all income and capital gains dividends paid by the
Fund have been reinvested at net asset value on the reinvestment dates during
the period.
TOTAL RETURN: Calculation of the Fund's total return is not subject to a
standardized formula. Total return performance for a specific period is
calculated by first taking an investment ("initial investment") in the Fund's
shares on the first day of the period and computing the "ending value" of that
investment at the end of the period. The total return percentage is then
determined by subtracting the initial investment from the ending value and
dividing the remainder by the initial investment and expressing the result
as a percentage. The calculation assumes that all income and capital gains
dividends paid by the Fund have been reinvested at net asset value of the
Fund on the reinvestment dates during the period. Total return may also be
shown as the increased dollar value of the hypothetical investment over the
period.
CUMULATIVE TOTAL RETURN: Cumulative total return represents the simple
change in value of an investment over a stated period and may be quoted as a
percentage or as a dollar amount. Total returns and cumulative total returns may
be broken down into their components of income and capital (including capital
gains and changes in share price) in order to illustrate the relationship
between these factors and their contributions to total return.
COMPARISONS:
U.S. TREASURY BILLS, NOTES, OR BONDS. Investors may want to
compare the performance of the Fund to that of U.S. Treasury bills, notes,
or bonds, which are issued by the U.S. Government. Treasury obligations
are issued in selected denominations. Rates of Treasury obligations are
fixed at the time of issuance and payment of principal and interest is
backed by the full faith and credit of the Treasury. The market value of
such instruments will generally fluctuate inversely with interest rates prior
to maturity and will equal par value at maturity. Generally, the values of
obligations with shorter maturities will fluctuate less than those with longer
maturities.
CERTIFICATES OF DEPOSIT. Investors may want to compare the
Fund's performance to that of certificates of deposit offered by banks and
other depositary institutions. Certificates of deposit may offer fixed or
variable interest rates and principal is guaranteed and may be insured.
Withdrawal of the deposits prior to maturity normally will be subject to a
penalty. Rates offered by banks and other depositary institutions are
subject to change at any time specified by the issuing institution.
MONEY MARKET FUNDS. Investors may also want to compare
performance of the Fund to that of money market funds. Money market
fund yields will fluctuate and shares are not insured, but share values
usually remain stable
INDEPENDENT SOURCES. Evaluations of fund performance made by
independent sources may also be used in advertisements concerning the
Fund, including reprints of, or selections from, editorials or articles about
the Fund, especially those with similar objectives. Sources for fund
performance and articles about the Fund may include publications such as
Money, Forbes, Kiplinger's, Smart Money, Financial World, Business
Week, U.S. News and World Report, The Wall Street Journal, Barron's,
and a variety of investment newsletters.
VARIOUS BANK PRODUCTS: The Fund's performance also may be
compared on a before or after-tax basis to various bank products,
including the average rate of bank and thrift institution money market
deposit accounts.
INDICES: The Fund may compare its performance to a wide variety of
indices. There are differences and similarities between the investments
that a Fund may purchase and the investments measured by the indices.
HISTORICAL ASSET CLASS RETURNS: From time to time, marketing
materials may portray the historical returns of various asset classes. Such
presentations will typically compare the average annual rates of return of
inflation, U.S. Treasury bills, bonds, common stocks, and small stocks.
There are important differences between each of these investments that
should be considered in viewing any such comparison. The market value
of stocks will fluctuate with market conditions, and small-stock prices
generally will fluctuate more than large-stock prices. Stocks are generally
more volatile than bonds. In return for this volatility, stocks have generally
performed better than bonds or cash over time. Bond prices generally will
fluctuate inversely with interest rates and other market conditions, and the
prices of bonds with longer maturities generally will fluctuate more than
those of shorter-maturity bonds. Interest rates for bonds may be fixed at
the time of issuance, and payment of principal and interest may be
guaranteed by the issuer and, in the case of U.S. Treasury obligations,
backed by the full faith and credit of the U.S. Treasury
INDEPENDENT ACCOUNTANT: Arthur Andersen LLP is the independent
accountant for the Fund, providing audit services and assistance.
LEGAL COUNSEL: Quarles & Brady, LLP 411 East Wisconsin Ave. Milwaukee,
Wisconsin 53202, acts as legal counsel for the Fund.
FINANCIAL STATEMENTS. The Fund intends to commence operations
November 8, 1999 so no financial statements are available.
CATHOLIC 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 C-1
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 Catholic
Financial Services Corporation
(a) 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 June 30, 1999, 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:
<TABLE>
<CAPTION>
Name and address Position with Adviser Position with Funds Business affiliations
during the past two years
<S> <C> <C> <C>
Daniel Steininger Chairman of the Chairman of the Director and
1100 W. Wells Street Board, Director Board, Director President
Milwaukee, WI 53233 of Catholic
Knights Insurance
Society
Allan Lorge CEO, President, President, Director Director and
1100 W. Wells Street Treasurer, Director Secretary/Treasurer
Milwaukee, WI 53233 of Catholic Knights
Insurance Society
Theodore Zimmer Vice President Vice President General Counsel,
1100 W. Wells Street Catholic Knights
Milwaukee, WI 53233 Insurance Society
since September
1997; Partner at
Miller, Simon McGinn
and Clark (law firm)
from October 1996 to
Sept. 1997
Michael Stivoric Vice President None Director of Catholic
1100 W. Wells Street Knights Financial
Milwaukee, WI 53233 Services, Inc and of
Catholic Brokerage
Services Corp. Vice
President of Fraternal
Relations of Catholic
Knights Insurance
Society
Daniel Strasburg Vice President and None Director of Catholic
1100 W. Wells Street Director Knights Financial
Milwaukee, WI 53233 Services, Inc. Vice
President and
Director of Catholic
Brokerage Services
Corp; and Vice
President and Chief
Actuary of Catholic
Knights Insurance
Society
Russell Kafka Vice President - Treasurer Director of Catholic
1100 W. Wells Street Investments Knights Financial
Milwaukee, WI 53233 Services and of
D.O.B. 6/20/44 Catholic Brokerage
Services Corp.; Vice
President -
Investments of
Catholic Knights
Insurance Society
Joseph Wreschnig Vice President, Secretary Director of Mutual
1100 W. Wells Street Secretary Funds Operations,
Milwaukee, WI 53233 Catholic Financial
Services Corp., since
January 1999; prior to
January 1999,
Assistant Vice
President and
Secretary of AAL
Capital Management
Corporation and
Instructor at Cardinal
Stritch University
Mark Forbord Controller and Chief Chief Financial Controller of Catholic
1100 W. Wells Street Financial Officer Officer and Knights Financial
Milwaukee, WI 53233 Accountant Services, Inc. and of
Catholic Brokerage
Services Corp; Senior
Financial Analyst of
Catholic Knights
Insurance Society;
Instructor at The
University of
Wisconsin
Milwaukee; and
Instructor at Cardinal
Stritch University
David Hesse Vice President None Vice President of
1100 W. Wells Street Mutual Funds
Milwaukee, WI 53233 Distribution since
June 1999, prior to
that Inside
Wholesaler AAL
Capital Management
Corporation
Joann Van Der Loop Assistant Assistant Secretary Assistant Director
1100 W. Wells Street Secretary/Assistant Catholic Financial
Milwaukee, WI 53233 Director Services Corporation
since March 1999,
prior to that
Securities Licensing
Manager AAL Capital
Management
Corporation
Cheri Nagan Assistant Assistant Secretary Assistant Director
1100 W. Wells Street Secretary/Assistant Catholic Financial
Milwaukee, WI 53233 Director Services Corporation
since March 1999,
prior to that Mutual
Fund Specialist at
AAL Capital
Management
Corporation
Robert Ciesla Director None High Chief Ranger,
355 Shuman Blvd Catholic Order of
Naperville, IL 60566 Foresters, Secretary
Treasurer and
Director National
Fraternal Congress of
America, President
and Director
Naperville Office Park
Owner's Association,
Chairman, Illinois
Right to Life
Committee, Director,
Joliet Diocesan
Finance Board
Gregory Temple Director None Investment
355 Shuman Blvd Counselor, Catholic
Naperville, IL 60566 Order of Foresters
John Kenawell Director None President, Catholic
3525 Hampton Ave. Knights of America,
St. Louis, MO 63139 Chairperson,
Investment
Management and
Valuations
Committee of the
National Fraternal
Congress of America,
Director, Old Trails
Historical Society
</TABLE>
(b) Officers and Directors of Strong Capital Management, Inc. as of
July 31, 1999
Officers:
Chariman and Chief Investment Officer Richard S. Strong
Office of the Chief Executive David A. Braaten
Anthony J. D'Amato
Bradley C. Tank
Thomas M. Zoeller
President (Vacant)
Senior Vice President and Chief Marketing Officer Jay DeMartine
Senior Vice President and Chief Financial Officer Thomas M. Zoeller
Senior Vice President Jeffrey L. Kubik
Senior Vice President Mary F. Hoppa
Senior Vice President Wallace L. Head
Senior Vice President Anthony J. D'Amato
Vice President, Deputy General Stephen J. Shenkenberg
Counsel, Chief Compliance Officer and
Assistant Secretary
Senior Vice President and Chief Information Officer Joseph J. Rhiel
Vice President Kevin Gaughan
Treasurer John W. Widmer
Controller Kevin J. Scott
Directors:
Richard S. Strong
Richard T. Weiss
None of the officers or directors has had any other business,
profession, vocation or employment of a substantial nature
during the past two years except for Wallace L. Head, who,
prior to joining Strong in June, 1999, was Managing Director of
Sanford C. Bernstein & Co., Inc., in Chicago, Illinois, from
December, 1992 through May, 1999. None of the officers or
directors holds any position with Catholic Financial Services
Corporation or The Catholic Funds, Inc. Their business
address is 100 Heritage Reserve, Menominee Falls, WI 53051.
Item 27. Principal Underwriter
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. Information
regarding its officers and directors is contained in item 26.
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
None
SIGNATURES Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, the Registrant has caused this
amendment to its 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 ___ day of August, 1999.
THE CATHOLIC FUNDS, INC.
By: /s/ Allan G. Lorge
- -- Allan G. Lorge, President and CEO
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the Registrant's Registration Statement has been signed on this ___ day
of August, 1999, by the following persons in the capacities indicated.
SIGNATURE TITLE
/s/ Daniel J. Steininger Chairman of the Board and Director
/s/ Allan G. Lorge President, Chief Executive Officer and Director
/s/ Russell J. Kafka Treasurer (Chief Financial Officer)
/s/ Mark K. Forbord Principal Accounting Officer
Thomas A. Bausch* Director
J. Michael Borden* Director
Daniel R. Doucette* Director
Thomas J. Munninghoff* Director
Conrad L. Sobczak* Director
David L. Vollmar* Director
*By: /s/ Allan G. Lorge pursuant to a Power of Attorney dated February 17,
1999, a copy of which was previously filed April 28, 1999.
EXHIBIT INDEX
<TABLE>
<CAPTION>
Description Filing Date Filed Filed
Herewith
<S> <C> <C> <C> <C>
(a)(1) Articles of Incorporation Initial Registration December 28, 1998
(a)(2) Articles of Amendment Pre-effective April 28, 1999
changing the name of The Amendment 1
Catholic Funds, Inc.
(a)(3) Supplement for Money *
Market Fund
(b)(1) By-laws Initial Registration December 28, 1998
(C)(1) Articles Sixth through Initial Registration December 28, 1998
Eighth and Article Tenth of
the Articles of Incorporation
(see Exhibit (a))
(C)(2) Articles II, VI, IX, and X of Initial Registration December 28, 1998
the Bylaws (see Exhibit
(b))
(d)(1) Investment Advisory Pre-effective April 28, 1999
Contract Amendment 1
(d)(2) Form of Amendment to *
Investment Advisory
Contract
(d)(3) Form of Investment *
Sub-Advisory Contract
(e)(1) Distribution Agreement Pre-effective April 28, 1999
Amendment 1
(e)(2) Form of Amendment to *
Distribution Agreement
(f) Not Applicable
(g)(1) Custodian Agreement Pre-effective April 28, 1999
Amendment 1
(g)(2) Form of Amendment to *
Custodian Agreement
(h)(1) Transfer Agency Agreement Pre-effective April 28, 1999
Amendment 1
(h)(2) Amendment to Transfer *
Agency Agreement
(h)(3) Fund Accounting Servicing Pre-effective April 28, 1999
Agreement Amendment 1
(h)(4) Form of Amendment to *
Fund Accounting Servicing
Agreement
(I) Legal Opinion of Quarles Initial Registration December 28, 1998
and Brady
(j) Consent of Independent
Accountants
(k) Not Applicable
(l) Subscription Agreement Pre-effective April 28, 1999
Amendment 1
(m) Amendment to Rule 12b-1 *
Plan
(n) Financial Data Schedule
(Not Applicable)
(o) Rule 18f-3
(Not Applicable)
</TABLE>
THE CATHOLIC FUNDS, INC. - ARTICLES SUPPLEMENTARY
The Board of Directors of The Catholic Funds, Inc., a corporation
organized and existing under the laws of the State of Maryland, by Resolution
adopted on July 27, 1999 by a majority of the Directors of said corporation, has
established and designated 400,000,000 shares of its previously authorized but
unissued common stock, 1/10 of 1 cent ($.001) par value per share, as an
additional series to be known as The Catholic Money Market Fund. Shares of such
series shall have the preferences, rights, voting powers, restrictions,
limitations as to dividends, qualifications and other conditions of redemption
as set forth in Article Fifth of The Catholic Funds, Inc.'s Articles of
Incorporation. With the addition of this series, the presently designated
series of shares of The Catholic Funds, Inc.'s common stock consist of the
following:
Series No. of Shares
Equity Income Fund 50 million
Large-Cap Growth Fund 50 million
Disciplined Capital Appreciation Fund 50 million
The Catholic Money Market Fund 400 million
This action does not alter the number of authorized shares of The Catholic
Funds, Inc., which consists of one billion shares, par value $0.001 per share.
The Board of Directors has taken this action pursuant to the powers conferred
upon it under Article Fifth of The Catholic Funds, Inc.'s Articles of
Incorporation and Section 2.208 of the Maryland General Corporation Law.
THE CATHOLIC FUNDS, INC.
By:
Allan G. Lorge, President
Attest:
By:
Joseph F. Wreschnig, Secretary
STATE OF WISCONSIN )
) SS
COUNTY OF MILWAUKEE )
On this 17th day of August, 1999, before me a Notary Public for the State
and County set forth above, personally came Allan G. Lorge, as President of The
Catholic Funds, Inc., and Joseph F. Wreschnig, as Secretary of The Catholic
Funds, Inc., and in their said capacities each acknowledged the foregoing
Articles Supplementary to be the act and deed of said corporation and further
acknowledged that, to the best of their knowledge, the matters and facts set
forth are true in all material respects under the penalties of perjury.
IN WITNESS WHEREOF, I have signed below in my own hand and attached my
official seal on the day and year set forth above.
[Notary Seal] Lula Knox
Notary Public
My Commission expires: 6/2/2002
QBMKE\4414997.1
Amendment to Advisory Agreement
The Advisory Agreement dated February 17, 1999 The Catholic Funds, Inc.(f/k/a
as The Catholic Alliance Funds, Inc.) and Catholic Financial Services
Corporation is amended, as follows, to add the Money Market Fund to The
Catholic Funds, Inc.:
The Money Market Fund shall pay management fees as
follows:
For its services, the Adviser receives the following annual fee,
computed daily:
If the portfolio is $50 million or less: 0.30%
If the portfolio is over $50 million and less than $100 million: 0.25%
If the portfolio is at least $100 million and less than $200 million: 0.20%
If the portfolio is $200 million or more: 0.15%
From the above fees, the Adviser pays the Sub-Adviser:
If the portfolio is $50 million or less: 0.20%
If the portfolio is over $50 million and less than $100 million: 0.15%
If the portfolio is at least $100 million and less than $200 million: 0.10%
If the portfolio is $200 million or more: 0.075%
However, neither the Adviser nor Sub-Adviser shall receive
any fees until the Money Market Fund has $25 million in
assets or for the first six months, whichever comes earlier, and
once either has occurred; the Adviser shall charge at an
annual rate of 0.10% and pay the Sub-Adviser at an annual
rate of 0.05% for the next six months or until the Money
Market Fund has $50 million in assets, whichever comes first.
Thereafter the management fee schedule set forth in this
section applies without any waivers.
All other provisions of the agreement remain in full force and effect.
Dated this _____ day of August, 1999
The Catholic Funds, Inc.
By________________________________title______________
Catholic Financial Services Corporation
By________________________________title______________
SUB-ADVISORY AGREEMENT
AGREEMENT made as of the ___ day of _____________, 1999, by and among
THE CATHOLIC FUNDS, INC. a Maryland corporation ("Fund"), CATHOLIC
FINANCIAL SERVICES CORPORATION, a Wisconsin corporation ("Adviser"),
and STRONG CAPITAL MANAGEMENT, INC., a Wisconsin corporation ("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 with respect to the investment and reinvestment
of the assets of The Catholic Money Market Fund ("Money Market
Fund"). The Sub-Adviser agrees to supervise and arrange the
purchase of securities and the sale of securities held in the Money
Market Fund investment portfolio. It is understood that the Fund 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 Money Market Fund
(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, the Sub-Adviser shall:
(i) Determine what securities shall be purchased or sold by
the Money Market Fund;
(ii) Arrange for the purchase and the sale of securities held
in the Money Market Fund; and
(iii) Provide the Adviser and the Directors with such reports
as may reasonably be requested in connection with the
discharge of the foregoing responsibilities and the discharge of
the Adviser's responsibilities under its Investment Advisory
Agreement with the Fund and those of the Distributor under its
Distribution Agreement with the Fund.
(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 as amended from time to
time; (3) any policies and determinations of the Board of Directors of
the Fund including its 2a-7 policy; and (4) the fundamental investment
policies of the Money Market Fund, as reflected in its Registration
Statement under the Act, or as amended by its shareholders;
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 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 or to any shareholder of the Fund 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 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'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. In addition, the Sub-Adviser expressly
represents that it will undertake no activities that, in its judgment, will
adversely affect the performance of its obligation to the Fund 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'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 in any
way or otherwise be deemed an agent of the Fund.
(e) In connection with its duties to arrange for the purchase and
sale of the Money Market 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 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 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 the Money Market Fund, and
except as otherwise instructed from time to time by the Board of
Directors of the Fund, 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 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 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. The
Fund 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 and
its other customers.
(f) The Sub-Adviser shall, where it deems it appropriate, make
recommendations to the Fund as to the manner in which voting rights,
rights to consent to the Fund or Fund Action, and any other rights
pertaining to the Fund 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, but rather shall
promptly forward to the Fund 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, 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'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 are
the property of the Fund and will be surrendered promptly to the Fund
or the Adviser on request.
5. Reference to the Sub-Adviser
Neither the Fund nor the Adviser or any affiliate or agent 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 Money Market Fund shall pay management fees as follows:
For its services, the Adviser receives the following annual fee, computed
daily:
If the portfolio is $50 million or less: 0.30%
If the portfolio is over $50 million and less than $100 million: 0.25%
If the portfolio is at least $100 million and less than $200 million: 0.20%
If the portfolio is $200 million or more: 0.15%
From the above fees, the Adviser pays the Sub-Adviser:
If the portfolio is $50 million or less: 0.20%
If the portfolio is over $50 million and less than $100 million: 0.15%
If the portfolio is at least $100 million and less than $200 million: 0.10%
If the portfolio is $200 million or more: 0.075%
However, neither the Adviser nor Sub-Adviser shall receive any fees
until the Money Market Fund has $25 million in assets or for the first
six months, whichever comes earlier, and once either has occurred;
the Adviser shall charge at an annual rate of 0.10% and pay the Sub-
Adviser at an annual rate of 0.05% for the next six months or until the
Money Market Fund has $50 million in assets, whichever comes first.
Thereafter the management fee schedule set forth in this section
applies without any waivers.
7. Duration and Termination
(a) This Agreement shall go into effect with respect to the Money
Market Fund upon its effective date. In the event the parties hereto
mutually agree that one or more series of the Fund should be
included as additional "Fund(s)" hereunder, this Agreement shall
become effective with respect to each such additional Fund on the
date specified in a separate amendment. 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'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 and the
Adviser sixty (60) days' written notice (which notice may be waived by
the Fund and the Adviser) and may be terminated by the Fund or the
Adviser in its entirety or with respect to any specifically identified Fund
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 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 the Funds 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 and the
Adviser is terminated for any reason.
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 FUNDS, INC.
By:
Its:
CATHOLIC FINANCIAL SERVICES CORPORATION
By:
Its:
STRONG CAPITAL MANAGEMENT, INC.
By:
Its:
7
QBMKE\4261043.3
Amendment to Distribution Agreement
The Distribution Agreement dated February 17, 1999 between The Catholic
Funds, Inc. and Catholic Financial Services Corporation is amended to add The
Catholic Money Market Fund. This fund carries no sales charge but has a
distribution (12b-1) fee of 5 basis points.
All other provisions of the agreement remain in full force and effect.
Dated this _____ day of August, 1999
Catholic Financial Services Corporation
By________________________________title______________
The Catholic Funds, Inc.
By________________________________title______________
Amendment to Custody Servicing Agreement
The Custody Servicing Agreement dated April 30, 1999 The Catholic Funds, Inc.
and Firstar Mutual Fund Services, LLC is amended, as follows, to add the Money
Market Fund to The Catholic Funds, Inc.:
Name of Series Date Added
Money Market Fund November 1, 1999
Annual fee based upon average daily net assets:
2 basis points per year
$3,000 minimum annual fee
All other provisions of the agreement remain in full force and effect.
Dated this _____ day of August, 1999
The Catholic Funds, Inc.
By________________________________title______________
Firstar Mutual Fund Services, LLC
By________________________________title______________
Amendment to Transfer Agent Servicing Agreement
The Transfer Agency Servicing Agreement dated April 30, 1999 between The
Catholic Funds, Inc. and Firstar Mutual Fund Services, LLC is amended, as
follows, to add the Money Market Fund:
Annual Fee: $21.00 per account per year for the Money Market Fund.
Checkwriting: $1.00 per check with checks being at least $____.
All other provisions of the agreement remain in full force and effect.
Dated this _____ day of August, 1999
The Catholic Funds, Inc.
By________________________________title______________
Firstar Mutual Fund Services, LLC
By________________________________title______________
Amendment to Fund Accounting Servicing Agreement
The Fund Accounting Servicing Agreement dated April 30, 1999 between The
Catholic Funds, Inc. and Firstar Mutual Fund Services, LLC is amended, as
follows, to add the Money Market Fund:
Name of Series Date Added
Money Market Fund November 1, 1999
Money Market Fund
$25,000 for the first $40 million
1 basis point for the next $200 million
.5 basis point for over $240 million
All other provisions of the agreement remain in full force and effect.
Dated this _____ day of August, 1999
The Catholic Funds, Inc.
By________________________________title______________
Firstar Mutual Fund Services, LLC
By________________________________title______________
Amendment to Distribution Plan
The Distribution Agreement dated February 17, 1999 between The Catholic
Funds, Inc. and Catholic Financial Services Corporation is amended to add The
Catholic Money Market Fund. This fund but has a distribution (12b-1) fee of 5
basis points.
All other provisions of the agreement remain in full force and effect.
Dated this _____ day of August, 1999
Catholic Financial Services Corporation
By________________________________title______________
The Catholic Funds, Inc.
By________________________________title______________
