[LOGO OF CATHOLIC FUNDS]
THE CATHOLIC FUNDS
----------------------------------
INVESTING WITH FAITH IN THE FUTURE
Annual Report
September 30, 1999
The Catholic Funds
[ ] Equity Income Fund
[ ] Large-Cap
Growth Fund
[ ] Disciplined Capital
Appreciation Fund
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2 President's Letter
4 Fraternalism Up Close
Fund Spotlights
6 The Catholic Equity Income Fund
8 The Catholic Large-Cap Growth Fund
10 The Catholic Disciplined Capital Appreciation Fund
Schedules of Investments
12 The Catholic Equity Income Fund
17 The Catholic Large-Cap Growth Fund
21 The Catholic Disciplined Capital Appreciation Fund
32 Statements of Assets and Liabilities
33 Statements of Operations
34 Statements of Changes in Net Assets
35 Notes to Financial Statements
39 Financial Highlights
40 Report of Independent Public Accountants
41 A Note on Forward-Looking Statements
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 Funds and their investments. However, we are working to avoid
these problems and to obtain assurances from our service providers that they are
taking similar steps.
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President's Letter
[PHOTO OF ALLAN G. LORGE]
OCTOBER 29, 1999
================================================================================
Dear Fellow Shareholder:
It is my honor and pleasure to provide you with our first annual report to
shareholders. After all of the preparation, it is wonderful to see our Funds a
reality. We designed The Catholic Funds to provide Catholics the opportunity to
have their investments professionally managed by some of the nation's best money
managers, in a manner consistent with certain core Catholic values. Our
investment policy reflects our strong belief that Catholic values are as
important in the 21st century as they always have been. As one of our founding
shareholders, you shared in this vision and chose to "invest with faith in the
future."
As you read on in this report, you will find there is some good news and some
not-so-good news. The good news is that by most traditional measures such as
inflation, unemployment and housing starts, the U.S. economy is in excellent
shape. The business world remains positive, reporting generally strong economic
conditions over most areas. However, from May, the inception of our Funds,
through September, the S&P 500(R) Index(1) lost about 3.4% and daily swings of
1% occurred more frequently than usual. This stock market volatility also
resulted in some lukewarm returns for our Funds. None-the-less, we are proud of
our Funds and the performance of our portfolios in this challenging market.
(1)The S&P 500(R) Index is an unmanaged index comprised of 500 common stocks
representative of the stock market as a whole.
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3 877/222-2402
We feel that the short-term swings should not distract attention from the Funds'
philosophy of investing for the long term. We hope you will keep the long-term
time horizon in mind when evaluating your investment returns, because like it or
not, there will always be volatility in the stock market. We have already made
the most critical decision of allocating a portion of our investments to the
investment objectives of one or more of The Catholic Funds. Now we must stay on
course.
To assist us in this regard, we have the help of sub-advisers who were selected
through a national search of more than 1,000 investment managers. Our group of
experienced, professional portfolio managers knows the business, sticks to our
investment objectives and works hard for you. I would like to take this
opportunity to inform you of a recent development in our portfolio manager
corps. We have a new portfolio manager for The Catholic Disciplined Capital
Appreciation Fund. Christopher Harvey joined Enrique Chang as co-portfolio
manager as of September 30, 1999. Christopher takes the place of T. Scott
Wittman who was also the president of Vantage Investment Advisors, Inc. Mr.
Wittman and his family have decided to move back to the Midwest where he will be
working for Habitat for Humanity. We wish Scott and his family all the best.
I encourage you to read further into this report to hear directly from our
portfolio managers what is behind our Funds. I am confident you will find it a
very informative read. We thank you for your investment in The Catholic Funds
and look forward to a long and successful relationship.
Sincerely,
/s/ Allan G. Lorge
Allan G. Lorge
President
The Catholic Funds
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Fraternalism Up Close
[PHOTOS APPEAR HERE]
(left to right: John Kenawell, President, Catholic Knights of America; Robert
Ciesla, High Chief Ranger, Catholic Order of Foresters; Daniel Steininger,
President, Catholic Knights Insurance Society)
The Catholic Funds are the result of an historic first. Catholic Knights
Insurance Society, Catholic Order of Foresters and Catholic Knights of America,
each a fraternal benefit society founded before 1890, joined together in the
first fraternal alliance (The Catholic Fraternal Alliance) to form and own
Catholic Financial Services Corporation, the distributor and adviser to the
family of mutual funds known as The Catholic Funds. To fully understand the
significance of this, one must know the history of fraternalism.
Fraternal benefit societies began in England in the 1500s to provide sickness
and death benefits as well as social opportunities for members. Several
societies migrated to the United States during the 1800s and many American
societies also developed. The early success of fraternal benefit societies here
can be shown by its lead organization. The National Fraternal Congress of
America (NFCA) traces its founding to November 17, 1886, when 16 societies, with
a combined membership of 535,000 and nearly $1.2 billion of insurance in force
joined together. These are significant numbers even by today's standards. Today
the NFCA has 91 fraternal benefit societies with almost 10 million members.
While each fraternal benefit society is unique, there are important
similarities. Each must have a common bond such as religion, occupation or
values. They must also be not-for-profit, have a branch or lodge system, and
society members must participate in society governance. Each must provide
insurance and other benefits to members. The early fraternal benefit societies
often provided benefits to immigrant members who viewed these societies as
creating and defining
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5 877/222-2402
their community in a new and unfamiliar country. Because of members' low incomes
and mistrust of the new country, these societies became providers of last resort
for widows and orphans. Today, meeting their members' social, educational,
financial and community service needs is still a vital part of these fraternal
benefit societies' missions.
Catholic Knights Insurance Society, Catholic Order of Foresters and Catholic
Knights of America recognize that their members need both prudent financial
stewardship and Catholic stewardship. The Catholic Funds, with its investments
in companies whose primary products, services and activities being consistent
with the core Catholic values of sanctity of human life, no unjust wars and
dignity of the human person, now exist to meet these needs.
Catholic Financial Services Corporation, with its commitment to distribute 10%
of its net operating income before taxes to Catholic causes, continues in the
fraternal tradition. Together Catholic Knights Insurance Society, Catholic Order
of Foresters and Catholic Knights of America accounted for over $7.3 million in
community service programs and fraternal support for 1998. []
The Catholic
Fraternal Alliance
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. Ranks in the top 15% of life insurers in the United States in terms of life
insurance in force and total assets.
. Has more than 220,000 members who belong to one of more than 800 local lodges
throughout the United States.
. Provides over $7 million annually in charitable and benevolent funding and
services to its members, their Catholic parishes and communities.
. Has nearly $5 billion of life insurance in force and nearly $1 billion of
total assets under management.
THE CORE CATHOLIC VALUES
================================================================================
Our investment philosophy is based on two principles:
PRUDENT FINANCIAL STEWARDSHIP
. Managing investments using strategies consistent with each Fund's objective
aimed at producing results that will help investors reach their financial
goals.
RESPONSIBLE CATHOLIC STEWARDSHIP
. Investing in companies whose primary products, services and activities are
substantially consistent with certain core Catholic values.
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.
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The Catholic Equity
Income Fund
[PHOTO]
Curtiss M. Scott, Jr., CFA, Portfolio Manager
MANAGEMENT
================================================================================
Todd Investment Advisors, Inc. of Louisville, Kentucky is the sub-adviser for
The Catholic Equity Income Fund. Todd was founded in 1967 and manages about $3
billion in public and private accounts. It combines bottom-up and top-down
techniques and the focus of its work is valuation. It compares price to
intrinsic value in seeking to identify companies with the greatest potential for
price appreciation. It also pays close attention to discovering early changes in
earnings momentum as well as other factors that could lead to the unlocking of
shareholder value. The portfolio manager is Curtiss M. Scott, Jr. Curt is a
Chartered Financial Analyst and a 21-year veteran of the investment business.
1. How has the Fund performed compared to the market (S&P 500(R) Index) since
inception and why?
The Fund has modestly underperformed the S&P 500 since inception on May 3, 1999.
This is largely due to the fact that the S&P 500 has become a mega-cap growth
index. In addition, we have a 15% weighting in bonds and cash for income
generation and defensive purposes. In spite of this fact, we have performed
admirably against this benchmark, particularly as a value manager. During this
period, value managers have underperformed the S&P 500, as indicated by the
Russell 1000(R) Value Index(2) return of -8.2% versus -3.4% for the S&P 500. The
S&P 500(R) Index is an unmanaged index comprised of 500 common stocks
representative of the stock market as a whole. The Russell 1000(R) Value Index
measures the performance of those Russell 1000 companies with lower price-to-
book ratios and forecasted growth value.
2. Do you make a conscious effort to hold stocks in every sector?
Yes. We attempt to hold stocks in every major sector of the S&P 500. (A major
sector is one that has a position of 4% or more.) We also have a sector off-
weighting policy and it is as follows: (plus or minus)6% absolute or (plus or
minus)50% relative to the S&P, whichever is greater. This process controls risk
on a top-down basis because when the major sectors rise or fall significantly,
we will always be represented appropriately in those sectors and not deviate too
far from the index. Volatility is minimized as a result.
3. What process do you use to decide when a stock should be sold?
A stock is considered for sale when its price-to-intrinsic value ratio rises
above that of the S&P 500 or when the fundamentals of a stock or an industry
weaken. A stock is automatically sold when the price-to-intrinsic value ratio
rises above 1.5x that of the S&P 500 and/or a significant negative earnings
surprise occurs.
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4. You hold much less in technology than the market weighting of the S&P 500
(11% to 25% or so). Is it going to crash?
The underweighting in technology within the portfolio is primarily a function of
the strong outperformance of this sector of the market over the past several
years. This strong outperformance has led to unattractive valuations on our
Dividend Discount Model. Consequently, we have reduced our weighting in
technology over the past six months. We believe in the long-term performance
potential of the technology sector; therefore, we will have significant
representation there. However, we do feel that technology is an area with the
greatest potential for a significant correction.
[PIE CHART APPEARS HERE]
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SECTOR BREAKDOWN
Financial...........................................16%
Technology..........................................11
Government Bonds.................................... 9
Utility............................................. 8
Consumer Cyclicals.................................. 7
Consumer Non-Cyclicals.............................. 7
Health Care......................................... 7
Commercial Services................................. 6
Basic Materials..................................... 5
Energy.............................................. 5
Corporate Bonds..................................... 4
Industrials......................................... 4
Telecommunications.................................. 4
Consumer Services................................... 3
Transport........................................... 2
Cash Equivalents.................................... 2
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PORTFOLIO CHARACTERISTICS SEPTEMBER 30, 1999
<S> <C>
NAV per Share.............................................. $9.54
Total Net Assets........................................... $3,311,602
Number of Holdings......................................... 53
Largest Market Cap......................................... $480.0 Billion
Median Market Cap.......................................... $19.2 Billion
Smallest Market Cap........................................ $0.9 Billion
Price/Earnings Ratio....................................... 21.5x
Price/Book Ratio........................................... 4.92
Earnings Growth Rate (Projected)........................... 11%
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<CAPTION>
TOTAL RETURN - CUMULATIVE SEPTEMBER 30, 1999
On Net Asset Value On Offering Price*
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Since Inception 5/3/99: -4.06% -7.92%
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Notes to performance information: Share values and total returns are subject to
fluctuation. Shares, when redeemed, may be worth more or less than their
original cost. Past performance is not an indication of future results.
* Total return calculation reflects a maximum sales load of 4.00%.
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<CAPTION>
TOP 5 HOLDINGS - SUBJECT TO CHANGE WITHOUT NOTICE SEPTEMBER 30, 1999
% of Total Portfolio
<S> <C>
BANK OF AMERICA CORPORATION............................................... 2.9%
The first coast-to-coast bank with about 11,500 branches globally
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ANHEUSER-BUSCH COMPANIES.................................................. 2.9
World's largest brewer; also operates theme parks and water parks
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ABBOTT LABORATORIES....................................................... 2.8
One of the top U.S. health care and pharmaceutical producers
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TEXACO, INC............................................................... 2.8
Markets fuel and lubricants at 38,000 gas stations worldwide; operates
transportation, trading and distribution facilities
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MERCK & COMPANY, INC. .................................................... 2.6
#1 drug maker in the United States; one of the world's largest prescription drug
companies
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The Catholic Large-Cap Growth Fund
[PHOTO]
John S. Dale,
CFA, Portfolio Manager
[PHOTO]
Gary E. Nussbaum,
CFA, Portfolio Manager
MANAGEMENT
================================================================================
Peregrine Capital Management, Inc. of Minneapolis is the sub-adviser to the
Fund. Peregrine was founded in 1984 and is an independently operated subsidiary
of Norwest Bank Minnesota N.A. It is organized on the premise that small teams
of experienced professionals can deliver superior investment results. It
currently manages over $6 billion in public funds and private accounts. It
manages The Catholic Large-Cap Growth Fund by concentrating on companies with
sustainable earnings growth. It confirms its research by visits to over 150
companies per year. The result is a portfolio with between 30 to 50 companies.
The portfolio managers are John S. Dale and Gary E. Nussbaum. They are both
senior vice presidents and have been portfolio managers with Peregrine for 12
and 9 years, respectively. They are also both Chartered Financial Analysts.
1. How has the Fund performed compared to the market (S&P 500(R) Index) since
inception and why?
Since the Fund's inception on May 3, 1999, it has performed relatively well in a
rather volatile market environment, with a -2.2% return for the Fund compared to
about -3.4% return for the S&P 500. There has been a tug-of-war environment
since early this year. On the positive end, the good profit and economic
environment has benefited equities. On the negative front, inflation and
interest rate expectations have risen--negatively impacting equity prices. The
S&P 500(R) Index is an unmanaged index comprised of 500 common stocks
representative of the stock market as a whole.
2. You usually hold between 30-50 stocks while many other growth fund managers
may hold 50-100 stocks--why?
We are investing in very rare companies. Based on our research, the companies
held in the Fund are expected to grow earnings at least 50% faster than the S&P
500--on a trend-line basis, and beyond an economic cycle. In other words, we
expect them to grow rapidly over a very long period. In order to meet our
expectations, companies need to be growing units at a very fast rate, must be
dominant in their industry or niche, and must maintain very high-quality
fundamental characteristics. High and defensible returns on capital and low
levels of debt allow these companies to reinvest in the business to sustain the
tremendous growth. Companies that can achieve and sustain these criteria are
very rare indeed. That is why we select, on a company-by-company basis, 30-50 of
the best. This small number may result in more day to day volatility than other
funds.
3. In your view what are the major risks facing the market during the next year?
Over the long term, corporate earnings and price-to-earnings ratios drive stock
prices. Inflation can have a significantly negative effect on the value
investors are willing to place on stocks (price-to-earnings ratio). Currently
many investors are concerned that strong economic growth will cause inflation.
We do not believe that growth causes inflation. However, inflation
The Catholic Funds 8
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can have a negative effect on economic growth and profits. While the Federal
Reserve is focused on no or low inflation, it is always possible that
inflationary forces are brewing which would be a market risk factor (moderate to
low probability).
4. How important are your face-to-face meetings with a company's management when
looking at a stock to purchase?
Face-to-face meetings with management are a critical element of this style. We
are seeking to invest in a company for a long time; therefore, it is quite
important to meet with the strategic business leaders. Management must
communicate a clear strategy of high unit volume and earnings growth, and
outstanding fundamental characteristics. In addition, we also talk to employees,
competitors, trade sources, consultants and analysts.
[PIE CHART APPEARS HERE]
SECTOR BREAKDOWN
Technology................. 34.0%
Health Care................ 18.1
Financial.................. 15.4
Commercial Services........ 13.1
Consumer Cyclicals......... 8.6
Industrials................ 5.6
Consumer Non-Cyclicals..... 1.7
Energy..................... 0.9
Cash....................... 2.6
PORTFOLIO CHARACTERISTICS SEPTEMBER 30, 1999
NAV per Share......................................................$9.78
Total Net Assets..............................................$3,570,108
Number of Holdings....................................................37
Largest Market Cap........................................$480.0 Billion
Median Market Cap..........................................$28.0 Billion
Smallest Market Cap.........................................$2.0 Billion
Price/Earnings Ratio...............................35x (CY2000 Estimate)
Price/Book Ratio.....................................................11x
Earnings Growth Rate.......28% (5 Year Historical) 21% (5 Year Forecast)
TOTAL RETURN - CUMULATIVE SEPTEMBER 30, 1999
On Net Asset Value On Offering Price*
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Since Inception 5/3/99: -2.20% -6.14%
Notes to performance information: Share values and total returns are subject to
fluctuation. Shares, when redeemed, may be worth more or less than their
original cost. Past performance is not an indication of future results.
* Total return calculation reflects a maximum sales load of 4.00%.
<TABLE>
<CAPTION>
TOP 5 HOLDINGS - SUBJECT TO CHANGE WITHOUT NOTICE
SEPTEMBER 30, 1999
% of Total Portfolio
<S>
<C>
CISCO SYSTEMS,
INC.............................................................................................9.2%
The leading provider of high-performance products used to build local and wide
area networks
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MICROSOFT
CORPORATION..........................................................................................8.6
Dominant developer of computer operating systems and applications software
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SOLECTRON
CORPORATION..........................................................................................4.9
Provides integrated manufacturing services to an array of technology companies
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HOME DEPOT,
INC................................................................................................4.8
Do-it-yourselfers and contractors alike look to this home center leader for its
prices, selection and unmatched service
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INTEL
CORPORATION..............................................................................................4.8
Worldwide dominant microprocessor developer and manufacturer
</TABLE>
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The Catholic Disciplined
Capital Appreciation Fund
[PHOTO]
Enrique Chang, Portfolio Manager
[PHOTO]
Christopher P. Harvey, Portfolio Manager
MANAGEMENT
================================================================================
Vantage Investment Advisors, Inc., the sub-adviser to The Catholic Disciplined
Capital Appreciation Fund, is a U.S. domestic equity manager, with over $9
billion in assets under management, for a diverse client base including pension
plans, endowments, foundations, insurance companies, religious organizations and
individuals. It believes consistent, long-term performance is produced by a
bottom-up, quantitative style of investing that systematically identifies
undervalued stocks with above-average earnings potential. It selects securities
based upon objective information and utilizes both growth and value criteria
such as the price/earnings (P/E) ratio, dividend yield and earnings momentum.
This analysis is facilitated by a proprietary computer system. The portfolio
managers are Enrique Chang and Christopher P. Harvey. Mr. Chang, who has masters
degrees in both business and statistics, is Vantage's chief investment officer
as well as director of research and portfolio management, while Mr. Harvey is
vice president, portfolio manager and research.
1. How has the Fund performed compared to the market (S&P 500(R) Index) since
inception and why?
The Fund has performed in-line with the S&P 500 since inception on May 3, 1999.
Using a disciplined process that identifies attractive stocks based on their
current value and prospective earnings growth, the Fund has selected individual
companies that have performed well. Offsetting the strong performance of
individual companies, the market as a whole has been driven by large companies
since inception, while medium-sized companies have lagged behind. The Fund
emphasizes medium-sized companies and did not benefit from this broader trend
toward large companies. The S&P 500(R) Index is an unmanaged index comprised of
500 common stocks representative of the stock market as a whole.
2. You use a systematic computer-driven model to identify attractive stocks.
What kind of data does this system use in the evaluation process?
The Fund utilizes data such as reported earnings, current price, dividends,
historical earnings and other items that would indicate a company's future
prospects. This data is typically found on a company's financial statements or
in general information sources. In addition, the Fund utilizes earnings
estimates generated from Wall Street analysts that provide an indication of how
the company is likely to perform in the future. Finally, the Fund considers data
generated by outside research sources that measure the reliability of Wall
Street earnings estimates and the current attractiveness of a company.
3. How does the human element factor into your system?
The systems in place are used to automate the insights of the investment team.
The team developed the system in place based on sound financial theory,
incorporating those elements in the process that have historically proven
reliable in evaluating potential investments. In addition, the team conducts
ongoing research, seeking to enhance all elements of the investment process and
maintain the effectiveness of the approach.
The Catholic Funds 10
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11 877/222-2402
4. You are called portfolio managers rather than stock pickers or traders. How
does a portfolio differ from a random collection of stocks that one hopes goes
up?
The Fund carefully balances risk and return seeking to maximize return subject
to appropriate levels of risk. The investment systems in place identify the most
attractive companies. As portfolio managers, we control risk by assembling those
stocks in a manner where individual company and industry risk is limited. We
control individual stock risk by holding many stocks and control industry risk
by investing in all industries.
[PIE CHART APPEARS HERE]
SECTOR BREAKDOWN
Technology.................25.4%
Financial..................16.8
Health Care................10.6
Telecommunications..........7.6
Consumer Cyclicals..........7.2
Consumer Non-Cyclicals......6.7
Energy......................6.0
Consumer Services...........5.8
Basic Materials.............3.7
Utility.....................2.0
Commercial Services.........1.9
Industrials.................1.4
Transport...................1.2
Cash........................3.7
PORTFOLIO CHARACTERISTICS SEPTEMBER 30, 1999
NAV per Share..................................................$9.69
Total Net Assets..........................................$3,365,592
Number of Holdings...............................................123
Largest Market Cap....................................$480.0 Billion
Median Market Cap.......................................$6.8 Billion
Smallest Market Cap.....................................$0.8 Billion
Price/Earnings Ratio (forecasted 12-month EPS).................18.0x
Price/Book Ratio................................................3.5x
EPS Growth (1 year)............................................26.8%
TOTAL RETURN - CUMULATIVE SEPTEMBER 30, 1999
On Net Asset Value On Offering Price*
- --------------------------------------------------------------------
Since Inception 5/3/99: -3.10% -7.01%
Notes to performance information: Share values and total returns are subject to
fluctuation. Shares, when redeemed, may be worth more or less than their
original cost. Past performance is not an indication of future results.
* Total return calculation reflects a maximum sales load of 4.00%.
<TABLE>
<CAPTION>
TOP 5 HOLDINGS - SUBJECT TO CHANGE WITHOUT NOTICE
SEPTEMBER 30, 1999
% of Total Portfolio
<S>
<C>
MICROSOFT
CORPORATION...................................................................................4.0%
Dominant developer of computer operating systems and applications software
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TEXAS INSTRUMENTS,
INC..................................................................................1.5
Makes semiconductors, analog chips, logic chips and microprocessors
- ------------------------------------------------------------------------------------------------------------
IBM
CORPORATION.........................................................................................1.4
World's top provider of computer hardware, #2 provider of software
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BELL ATLANTIC
CORPORATION...............................................................................1.4
#2 local phone company in the United States
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ADOBE SYSTEMS,
INC......................................................................................1.3
Leader in desktop publishing software, including Photoshop, Illustrator and
PageMaker
</TABLE>
<PAGE>
Schedule of Investments
AS OF SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
Common Stocks (85.4%) Shares Market Value
==============================================================================
<S> <C> <C>
AEROSPACE (1.9%)
- ---------------
Allied Signal, Inc. 1,050 $ 62,934
Produces a wide variety of products for
the aerospace, automotive, pharmaceutical,
fibers and plastics industries
--------------------------------
Total 62,934
--------------------------------
AIR TRANSPORTATION (2.3%)
- ------------------------
Delta Air Lines, Inc. 1,600 77,600
Provides air transportation in the U.S.
and more than 30 other countries
--------------------------------
Total 77,600
--------------------------------
AUTOS & TRUCKS (2.4%)
- --------------------
Ford Motor Company 1,600 80,300
World's largest truck maker; #2
manufacturer of cars and trucks combined
--------------------------------
Total 80,300
--------------------------------
BANKING (8.0%)
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Bank of America Corporation 1,700 94,669
The first coast-to-coast bank with
about 11,500 branches globally
Bank One Corporation 1,300 45,256
A superregional bank with some 2,000
branches in 14 states
Regions Financial Corporation 1,400 42,000
Provides consumer banking and financial
services out of more than 700 offices
Wachovia Corporation 1,050 82,556
A southeastern interstate bank holding
company offering consumer and corporate
banking services
--------------------------------
Total 264,481
--------------------------------
CHEMICALS (1.6%)
- ---------------
Hercules, Inc. 1,800 51,525
A worldwide supplier of specialty
chemical products for making paper
and tissue paper, packaging, inks and
adhesives
---------------------------------
Total 51,525
---------------------------------
COMPUTER PRODUCTS & SERVICES (9.2%)
- ----------------------------------
Cisco Systems, Inc.* 850 58,278
The leading provider of high-performance
products used to build local and wide
area networks
Computer Associates International, Inc. 1,300 79,625
Offers software products including data
access and network management tools
</TABLE>
The Catholic Funds 12 The accompanying Notes to Financial Statements
are an integral part of this schedule.
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13 877/222-2402
Schedule of Investments (continued)
THE CATHOLIC EQUITY INCOME FUND
<TABLE>
<CAPTION>
Common Stocks (85.4%)
Shares Market Value
========================================================================================================
<S>
<C> <C>
Computer Sciences Corporation*
1,100 $ 77,343
Among the world's leaders in information technology consulting, systems
integration and outsourcing to global industries and government agencies
Microsoft Corporation*
400 36,225
Dominant developer of computer operating systems and applications software
Oracle Corporation*
1,150 52,325
The leading developer of database management systems software
- -----------------------
Total 303,796
- -----------------------
COSMETICS & TOILETRIES (2.5%)
- -----------------------------
Kimberly-Clark Corporation
1,550 81,375
World's top maker of personal paper products including Kleenex and Scott
- -----------------------
Total 81,375
- -----------------------
DRUGS & MEDICAL SUPPLIES (9.0%)
- -------------------------------
Abbott Laboratories
2,500 91,875
One of the top U.S. health care and pharmaceutical producers
Bristol-Myers Squibb Company
950 64,125
Sells pharmaceuticals and personal care products, including Clairol and Excedrin
Cardinal Health, Inc.
1,100 59,950
A large U.S. wholesaler of pharmaceuticals, and surgical and hospital supplies
Merck & Company, Inc.
1,250 81,016
#1 drug maker in the U.S.; one of the world's largest prescription drug
companies
- -----------------------
Total 296,966
- -----------------------
ELECTRICAL EQUIPMENT (2.5%)
- ---------------------------
General Electric Company
700 82,994
Produces aircraft engines, transportation equipment, appliances, lighting,
electric distribution and control equipment and related products
- -----------------------
Total 82,994
- -----------------------
ELECTRONICS (2.0%)
- ------------------
Intel Corporation
900 66,881
Worldwide dominant microprocessor developer and manufacturer
- -----------------------
Total 66,881
- -----------------------
ENERGY SERVICES (5.7%)
- -----------------------
Duke Energy Corporation
1,500 82,687
Provides electricity to two million people; also moves natural gas through
11,500 miles of pipeline that stretch from the Gulf Coast to the northeastern
U.S.
TECO Energy, Inc.
2,700 57,038
Holding company for Tampa Electric; has subsidiaries in unregulated businesses
</TABLE>
The accompanying Notes to Financial Statements are an integral part of this
schedule.
<PAGE>
Schedule of Investments (continued)
THE CATHOLIC EQUITY INCOME FUND
<TABLE>
<CAPTION>
Common Stocks (85.4%)
Shares Market Value
================================================================================
=================================
<S>
<C> <C>
Texas Utilities Company
1,350 $ 50,372
Supplies energy to more than nine million customers in Australia, Europe, Mexico
and Texas; involved in U.S. deregulated businesses
- -------------------------
Total 190,097
- -------------------------
FINANCIAL SERVICES (8.8%)
- -------------------------
H & R Block, Inc.
700 30,406
In addition to its tax operations in the U.S., Canada, Australia and the UK, it
provides mortgage services, financial planning, investment advice and accounting
Fannie Mae
1,200 75,225
A public company whose existence is mandated by the U.S. government and its
purpose is to provide liquidity in the mortgage market
MBIA, Inc.
1,600 74,600
The holding company for Municipal Bond Investors Assurance Corp., the U.S.'s
leading financial guarantor for state and local governments, nonmunicipal
issuers and financial institutions
MBNA Corporation
2,200 50,188
The world's third-largest issuer of credit and the leading issuer of affinity
cards
MGIC Investment Corporation
1,300 62,075
The parent company of Mortgage Guaranty Insurance, the leading provider of
private mortgage insurance to lenders
- -------------------------
Total 292,494
- -------------------------
FOOD & BEVERAGE (2.9%)
Anheuser-Busch Companies, Inc.
1,350 94,584
World's largest brewer; also operates theme parks and water parks
- ------------------------
Total 94,584
- ------------------------
INSURANCE (2.3%)
CIGNA Corporation
1,000 77,750
A multiline insurance and financial services company
- ------------------------
Total 77,750
- ------------------------
OIL (6.6%)
Atlantic Richfield Company
700 62,038
An integrated oil company engaging in the exploration, production, refining and
marketing of crude oil, natural gas and natural gas liquids
Coastal Corporation
1,500 61,406
A diversified energy company involved in natural gas, petroleum, chemicals,
power plants and trucking
The Catholic Funds 14 The accompanying Notes to Financial Statements
are an integral part of this schedule.
</TABLE>
<PAGE>
15 877/222-2402
Schedule of Investments (continued)
THE CATHOLIC EQUITY INCOME FUND
<TABLE>
<CAPTION>
Common Stocks (85.4%)
Shares Market Value
================================================================================
===================================
<S>
<C> <C>
Texaco, Inc.
1,500 $ 94,688
Markets fuel and lubricants worldwide; operates transportation, trading and
distribution facilities
- --------------------------
Total 218,132
- --------------------------
PAPER PRODUCTS (1.7%)
- ---------------------
Willamette Industries, Inc.
1,300 56,062
Owns more than 100 pulp, paper and other wood-product manufacturing plants
- --------------------------
Total 56,062
- --------------------------
REAL ESTATE INVESTMENT TRUSTS (REITS) (5.8%)
- --------------------------------------------
Archstone Communities Trust
2,000 38,625
The second-largest apartment real estate investment trust in the United States
First Industrial Realty Trust, Inc.
1,800 44,550
A real estate investment trust that acquires, develops and manages industrial
real estate in about 25 states
Mack-Cali Realty Corporation
1,500 40,219
A real estate investment trust that owns, leases and manages office buildings
Simon Property Group, Inc.
1,600 35,900
U.S.'s largest owner of malls; owns, develops or manages more than 240
properties and gained paired-share status after buying Corporate Property
Investors in 1998
Spieker Properties, Inc.
950 32,953
A real estate investment trust that owns about 40 million sq. ft. of industrial,
office and retail space
- --------------------------
Total 192,247
- --------------------------
RETAIL (4.1%)
- -------------
Dollar General Corporation
2,625 81,047
A chain of about 4,000 discount stores in 24 midwestern and southeastern states
Wal-Mart Stores, Inc.
1,150 54,697
World's #1 retailer, with about 3,600 Wal-Marts, Sam's Club membership-only
warehouse stores and Wal-Mart Supercenters
- --------------------------
Total 135,744
- --------------------------
STEEL PRODUCERS (2.3%)
- ----------------------
Nucor Corporation
1,600 76,200
Operates steel minimills that make steel by melting scrap metal in electric arc
furnaces at a fraction of the cost and time of conventional steelmaking
- --------------------------
Total 76,200
- --------------------------
TELECOMMUNICATIONS (3.8%)
- -------------------------
Bell Atlantic Corporation
900 60,581
#2 local phone company in the U.S.; will soon approach old Ma Bell's size after
its planned purchase of GTE
The accompanying Notes to Financial Statements are an integral part of this
schedule.
</TABLE>
<PAGE>
Schedule of Investments (continued)
THE CATHOLIC EQUITY INCOME FUND
<TABLE>
<CAPTION>
Common Stocks (85.4%)
Shares Market Value
================================================================================
==================================
<S>
<C> <C>
GTE Corporation
850 $ 65,344
Serves more than 23 million local phone customers; offers long-distance cellular
and PCS phone service, consumer Internet access and related services
- ----------------------------
Total 125,925
- ----------------------------
- ---------------------------------------------------------------------------------
Total Common Stocks (Cost $2,956,527)
2,828,087
- ---------------------------------------------------------------------------------
</TABLE>
*Nondividend-paying stock
<TABLE>
<CAPTION>
Principal
Fixed-Income Investments (13.6%)
Amount Market Value
==================================================================================================================
<S>
<C> <C>
CORPORATE INVESTMENTS (4.5%)
- ----------------------------
Atlantic Richfield Company, 5.90%, 4/15/2009
$ 25,000 $ 23,215
Bank of America Corporation, 7.75%, 7/15/2002
50,000 51,495
Jones Apparel Group, 7.875%, 6/15/2006
25,000 24,913
Lexmark International Group, Inc., 6.75%, 5/15/2008
25,000 23,372
Nielsen Media Research, 7.60%, 6/15/2009
25,000 25,003
- ----------------------------
Total 147,998
- ----------------------------
U.S. GOVERNMENT INVESTMENTS (9.1%)
- ----------------------------------
U.S. Treasury Note, 5.625%, 5/15/2001
150,000 149,953
U.S. Treasury Note, 6.25%, 1/31/2002
75,000 75,867
U.S. Treasury Note, 5.75%, 8/15/2003
75,000 74,766
- ----------------------------
Total 300,586
- ----------------------------
- ---------------------------------------------------------------------------------
Total Fixed-Income Investments (Cost $452,318)
448,584
- ---------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Short-Term Investments (1.3%)
Amount Market Value
==================================================================================================================
<S>
<C> <C>
DEMAND NOTES (1.3%)
- -------------------
Wisconsin Corporate Central Credit Union, 5.05%
43,913 43,913
- ---------------------------------------------------------------------------------
Total Short-Term Investments (Cost $43,913)
43,913
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
Total Investments (100.3%) (Cost $3,452,758)
3,320,584
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
Liabilities, less Other Assets (-0.3%)
(8,982)
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
TOTAL NET ASSETS (100.0%)
$3,311,602
- ---------------------------------------------------------------------------------
</TABLE>
The Catholic Funds 16 The accompanying Notes to Financial Statements
are an integral part of this schedule.
<PAGE>
17 877/222-2402
Schedule of Investments
AS OF SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
Common Stocks (97.8%)
Shares Market Value
======================================================================================================================
<S>
<C> <C>
BANKING (1.3%)
- --------------
State Street Corporation
700 $ 45,237
An institutional investor services and investment management firm
- ---------------------
Total 45,237
- ---------------------
BUSINESS SERVICES (4.4%)
- ------------------------
Cintas Corporation
1,300 75,156
Designs, makes, rents and sells uniforms in the U.S. and Canada
Paychex, Inc.
2,450 83,606
Processes the payrolls of some 300,000 clients
- ---------------------
Total 158,762
- ---------------------
COMPUTER PRODUCTS & SERVICES (22.1%)
- ------------------------------------
Cisco Systems, Inc.*
4,800 329,100
The leading provider of high-performance products used to build local and wide
area networks
DST Systems, Inc.*
800 45,500
Provides information processing services and computer software products and
services to mutual funds, insurance companies and banks
EMC Corporation*
1,200 85,725
#1 maker of mainframe computer disk memory hardware and software
Microsoft Corporation*
3,400 307,913
Dominant developer of computer operating systems and applications software
SunGard Data Systems, Inc.*
800 21,050
A computer services and software company
- ---------------------
Total 789,288
- ---------------------
CONSULTING SERVICES (0.7%)
- --------------------------
Gartner Group, Inc., Class A*
900 14,344
Gartner Group, Inc., Class B*
729 12,165
One of the nation's leading information technology consultants
- ---------------------
Total 26,509
- ---------------------
DATA PROCESSING (4.8%)
- ----------------------
Automatic Data Processing, Inc.
1,500 66,937
The largest payroll and tax filing processor in the world
First Data Corporation
1,300 57,038
The U.S.'s largest third-party processor of credit card transactions
</TABLE>
The accompanying Notes to Financial Statements are an integral part of this
schedule.
<PAGE>
Schedule of Investments (continued)
THE CATHOLIC LARGE-CAP GROWTH FUND
<TABLE>
<CAPTION>
Common Stocks (97.8%) Shares Market
Value
====================================================================================
<S> <C> <C>
Fiserv, Inc.* 1,500 $ 48,750
Provides check clearing, funds transfer, credit card
administration and data processing outsourcing
services to about 7,000 financial institutions
--------------------------
Total 172,725
--------------------------
DRUGS & MEDICAL SUPPLIES (14.6%)
- --------------------------------
Cardinal Health, Inc. 800 43,600
A large U.S. wholesaler of pharmaceuticals and
surgical and hospital supplies
Medtronic, Inc. 4,600 163,300
#1 maker of implantable biomedical devices
Merck & Company, Inc. 1,500 97,219
#1 drug maker in the U.S.; one of the world's
largest prescription drug companies
Pfizer, Inc. 4,600 165,312
Makes drugs and consumer health products
Warner-Lambert Company 800 53,100
Makes pharmaceuticals and consumer products
such as Listerine, Clorets and Certs
--------------------------
Total 522,531
--------------------------
ELECTRONICS (9.8%)
- ------------------
Intel Corporation 2,300
170,919
Worldwide dominant microprocessor developer
and manufacturer
Solectron Corporation* 2,500
179,531
Provides integrated manufacturing services to
an array of technology companies
--------------------------
Total 350,450
--------------------------
ENERGY SERVICES (0.9%)
- ----------------------
Schlumberger Limited 500 31,156
One of the world's largest and most diversified
oil services firms
--------------------------
Total 31,156
--------------------------
ENTERTAINMENT (0.7%)
- --------------------
The Walt Disney Company 900 23,288
A media company with interests in TV and movies;
well known for its theme parks
--------------------------
Total 23,288
--------------------------
FINANCIAL SERVICES (10.9%)
- --------------------------
Franklin Resources, Inc. 2,300 70,725
Provides investment services to the Franklin
Templeton Group of Funds; offers management
services to other mutual funds
</TABLE>
The Catholic Funds 18 The accompanying Notes to Financial Statements
are an integral part of this schedule.
<PAGE>
19 877/222-2402
Schedule of Investments (continued)
THE CATHOLIC LARGE-CAP GROWTH FUND
<TABLE>
<CAPTION>
Common Stocks (97.8%)
Shares Market Value
=========================================================================================================
<S>
<C> <C>
The Charles Schwab Corporation
4,100 $138,119
Provides financial services; its eSchwab is the #1 online trader
The Goldman Sachs Group, Inc.
1,700 103,700
A leader in global investment banking; one of the top U.S. IPO underwriters
T. Rowe Price Associates, Inc.
2,800 76,825
Manages the proprietary T. Rowe Price Mutual Funds; provides other asset
management services for individuals and institutions
- -------------------
Total 389,369
- -------------------
FOOD & BEVERAGE (1.8%)
- ----------------------
The Coca-Cola Company
1,300 62,481
World's top soft-drink company
- -------------------
Total 62,481
- -------------------
HEALTH CARE SERVICES (3.5%)
- ---------------------------
IMS Health, Inc.
5,500 125,469
A leading worldwide provider of information and decision-support services to
the pharmaceutical and health care industries
- -------------------
Total 125,469
- -------------------
INSURANCE (4.6%)
- ----------------
American International Group, Inc.
1,875 163,008
One of the world's largest insurance firms with operations in 130 countries
- -------------------
Total 163,008
- -------------------
RETAIL (8.6%)
- -------------
Fastenal Company
500 23,563
Sells industrial and construction supplies in 600 stores
Home Depot, Inc.
2,500 171,563
Do-it-yourselfers and contractors alike look to this home center leader for its
prices, selection and unmatched service
Staples, Inc.*
5,200 113,425
Sells office products, furniture, computers, and printing and photocopying
services at more than 1,000 stores in the U.S., Canada, Germany and the UK
- -------------------
Total 308,551
- -------------------
TELECOMMUNICATIONS (9.1%)
- -------------------------
Lucent Technologies, Inc.
2,500 162,187
Leading U.S. maker of telecom equipment and software
Nokia Oyj, ADR
1,000 89,812
World's #1 mobile phone maker; headquartered in Finland
</TABLE>
The accompanying Notes to Financial Statements are an intrgral part of this
schedule.
<PAGE>
Schedule of Investments (continued)
THE CATHOLIC LARGE-CAP GROWTH FUND
<TABLE>
<CAPTION>
Common Stocks (97.8%)
Shares Market Value
======================================================================================================
<S>
<C> <C>
Telefonaktiebolaget LM Ericsson, ADR
2,300 $ 71,875
A Swedish telecommunications equipment maker, a leader in mobile phone sales
- ------------------
Total 323,874
- ------------------
----------------------------------------------------------------
Total Common Stocks (Cost $3,531,804) 3,492,698
----------------------------------------------------------------
</TABLE>
*Nondividend-paying stock
<TABLE>
<CAPTION>
Principal
Short-Term Investments (8.6%)
Amount Market Value
======================================================================================================
<S>
<C> <C>
DEMAND NOTES (8.6%)
- -------------------
Wisconsin Corporate Central Credit Union, 5.05%
134,646 134,646
Wisconsin Electric Company, 5.02%
170,955 170,955
---------------------------------------------------------------
Total Short-Term Investments (Cost $305,601) 305,601
---------------------------------------------------------------
---------------------------------------------------------------
Total Investments (106.4%) (Cost $3,837,405) 3,798,299
---------------------------------------------------------------
---------------------------------------------------------------
Liabilities, less Other Assets (-6.4%) (228,191)
---------------------------------------------------------------
---------------------------------------------------------------
TOTAL NET ASSETS (100.0%) $3,570,108
---------------------------------------------------------------
</TABLE>
The Catholic Funds 20 The accompanying Notes to Financial Statements
are an integral part of this schedule.
<PAGE>
21 877/222-2402
Schedule of Investments
AS OF SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
Common Stocks (96.6%)
Shares Market Value
===================================================================================================
<S>
<C> <C>
AEROSPACE (0.8%)
- ----------------
Cordant Technologies, Inc.
400 $ 12,175
A global leader in solid rocket-propulsion systems and the sole maker of
solid rocket boosters for NASA's space shuttle program
The B.F. Goodrich Company
500 14,500
A leader in aerospace systems and services and in specialty
chemicals; it no longer makes tires
-
- ------------------
Total 26,675
-
- ------------------
AIR TRANSPORTATION (1.2%)
- -------------------------
Delta Air Lines, Inc.
400 19,400
Provides air transportation in the U.S. and more than 30 other countries
UAL Corporation*
300 19,594
The holding company for United Air Lines, the #1 air carrier in the world
-
- ------------------
Total 38,994
-
- ------------------
AUTOS & TRUCKS (1.9%)
- ---------------------
Delphi Automotive Systems Corporation
209 3,357
World's largest maker of auto parts; a spinoff from GM
Ford Motor Company
800 40,150
World's largest truck maker; #2 manufacturer of cars and trucks combined
General Motors Corporation
300 18,881
World's #1 maker of cars and trucks; GMAC unit provides financing services
-
- ------------------
Total 62,388
-
- ------------------
BANKING (4.4%)
- --------------
Charter One Financial, Inc.
1,440 33,300
A holding company for Charter One Bank (among the top five U.S. thrifts)
Dime Bancorp, Inc.
1,000 17,500
The parent of Dime Savings Bank of New York, the fifth-largest U.S. thrift
Fleet Boston Corporation
600 21,975
Serves customers in the Northeast through about 1,200 branches, providing
banking, asset management and data processing
The Chase Manhattan Corporation
600 45,225
Offers commercial, consumer and investment banking services globally
UnionBanCal Corporation
800 29,000
Holding company for Union Bank of California, which operates globally
-
- ------------------
Total 147,000
-
- ------------------
</TABLE>
The accompanying Notes to Financial Statements are an integral part of this
schedule.
<PAGE>
Schedule of Investments (continued)
THE CATHOLIC DISCIPLINED CAPITAL APPRECIATION FUND
<TABLE>
<CAPTION>
Common Stocks (96.6%)
Shares Market Value
===========================================================================================================================
<S>
<C> <C>
CASINOS & HOTELS (1.5%)
- -----------------------
Harrah's Entertainment, Inc.*
1,100 $ 30,525
World's second-largest gaming company
Mandalay Resort Group*
1,000 19,750
Owns 10 casino/hotels in Nevada, including Mandalay Bay, Circus Circus,
Excalibur and Luxor in Las Vegas
- ---------------------------
Total 50,275
- ---------------------------
CHEMICALS (2.3%)
- ----------------
Dow Chemical Company
300 34,087
World leader in the production of plastics, chemicals, hydrocarbons, herbicides
and pesticides
The Lubrizol Corporation
800 20,550
Makes fuel additives designed to control deposits and improve combustion, with
1,100 products marketed worldwide
W.R. Grace & Company*
1,400 22,488
Focuses on catalysts, construction materials, and coatings and sealants
- ---------------------------
Total 77,125
- ---------------------------
COMPUTER PRODUCTS & SERVICES (6.9%)
- -----------------------------------
Adaptec, Inc.*
900 35,719
Makes hardware and software that speed data transfer between computers,
peripherals and networks, dominating the market for SCSI technology
EMC Corporation*
600 42,863
#1 maker of mainframe computer disk memory hardware and software
Microsoft Corporation*
1,500 135,844
Dominant developer of computer operating systems and applications software
Safeguard Scientifics, Inc.*
200 13,600
Invests in young, primarily high-tech ventures, providing entrepreneurial and
managerial assistance to make the companies' stock desirable
Silicon Graphics, Inc.*
600 6,563
Manufactures the advanced graphics computers used to create Hollywood's most
striking special effects
- ---------------------------
Total 234,589
- ---------------------------
COMPUTERS & SOFTWARE (5.7%)
- ---------------------------
Adobe Systems, Inc.
400 45,400
Leader in desktop publishing software, including PhotoShop, Illustrator and
PageMaker
Apple Computer, Inc.*
500 31,656
Makes such products as the Macintosh computer, the fruit-colored iMac, the
Mac OS, servers, peripherals and software
The Catholic Funds 22 The accompanying Notes to Financial Statements
are an integral part of this schedule.
</TABLE>
<PAGE>
23 877/222-2402
Schedule of Investments (continued)
THE CATHOLIC DISCIPLINED CAPITAL APPRECIATION FUND
<TABLE>
<CAPTION>
Common Stocks (96.6%)
Shares Market Value
===========================================================================================================================
<S>
<C> <C>
BMC Software, Inc.*
300 $ 21,469
Provides more than 200 software tools for corporate networked computers
Compuware Corporation*
1,000 26,062
Makes testing, development and management software for programs running on
stand-alone mainframe computer systems and in corporate networks
Gateway, Inc.*
400 17,775
#2 direct marketer of personal computers in the U.S.
International Business Machines Corporation
400 48,550
World's top provider of computer hardware; #2 provider of software
- -------------------------
Total 190,912
- -------------------------
COMMUNICATIONS (0.8%)
- ---------------------
Motorola, Inc.
300 26,400
Makes cellular products, semiconductors, two-way radios, pagers, computers
and networking peripherals
- -------------------------
Total 26,400
- -------------------------
CONSUMER PRODUCTS (1.5%)
- ------------------------
Premark International, Inc.
600 30,300
Makes and sells commercial food equipment, home-decor materials, small
appliances and exercise equipment
Tupperware Corporation
1,000 20,250
Makes a variety of household products
- -------------------------
Total 50,550
- -------------------------
COSMETICS & TOILETRIES (1.1%)
- -----------------------------
Avon Products, Inc.
400 9,925
World's largest direct seller of cosmetics and beauty-related items
Kimberly-Clark Corporation
500 26,250
World's top maker of personal paper products including Kleenex and Scott
- -------------------------
Total 36,175
- -------------------------
DISTRIBUTION (0.6%)
- -------------------
Tech Data Corporation*
900 20,953
World's #2 distributor of microcomputer products
- -------------------------
Total 20,953
- -------------------------
DIVERSIFIED SERVICES & MANUFACTURING (1.5%)
- -------------------------------------------
Tyco International Ltd.
400 41,300
World leader in security and fire-protection
The accompanying Notes to Financial Statements are an integral part of this
schedule.
</TABLE>
<PAGE>
Schedule of Investments (continued)
THE CATHOLIC DISCIPLINED CAPITAL APPRECIATION FUND
<TABLE>
<CAPTION>
Common Stocks (96.6%)
Shares Market Value
===========================================================================================================================
<S>
<C> <C>
Viad Corporation
350 $ 10,325
A leading provider of convention services; offers exhibit design and production
services
- ---------------------------
Total 51,625
- ---------------------------
DRUGS & MEDICAL SUPPLIES (4.6%)
- -------------------------------
AmeriSource Health Corporation*
800 18,950
Distributes wholesale pharmaceuticals and health care products
Bergen Brunswig Corporation, Class A
1,200 12,450
Distributes drugs and medical-surgical supplies; provides over-the-counter
medications, beauty products and sundries
Forest Laboratories, Inc.*
700 29,488
Develops and manufactures name-brand and generic prescription and
nonprescription pharmaceutical products
MedImmune, Inc.*
400 39,862
Develops drugs for transplants and infectious diseases
Schering-Plough Corporation
800 34,900
Develops and markets prescription drugs, animal health products, over-the-
counter drugs, and foot care and sun care products
STERIS Corporation*
1,300 17,875
World's largest provider of infection-prevention systems for the health care,
research, food and industrial markets
- ---------------------------
Total 153,525
- ---------------------------
ELECTRONICS (3.7%)
- ------------------
Johnson Controls, Inc.
300 19,894
Makes automobile seats, interior systems and batteries, as well as environmental
control systems for commercial buildings
L-3 Communications Holdings, Inc.*
300 11,325
Makes sophisticated secure communications products
Sanmina Corporation*
300 23,212
A contract manufacturer of high-end electronic components
SCI Systems, Inc.*
500 22,219
World's #2 contract manufacturer of electronic components
Texas Instruments, Inc.
600 49,350
Makes semiconductors, analog chips, logic chips and microprocessors
- ---------------------------
Total 126,000
- ---------------------------
The Catholic Funds 24 The accompanying Notes to Financial Statements
are an integral part of this schedule.
</TABLE>
<PAGE>
25 877/222-2402
Schedule of Investments (continued)
THE CATHOLIC DISCIPLINED CAPITAL APPRECIATION FUND
<TABLE>
<CAPTION>
Common Stocks (96.6%)
Shares Market Value
========================================================================================================================
<S>
<C> <C>
FINANCIAL SERVICES (10.9%)
- --------------------------
Ambac Financial Group, Inc.
500 $23,688
A financial holding company whose subsidiaries sell financial guaranty insurance
Citigroup Inc.
1,050 46,200
The largest financial services company (formed from the merger of Citicorp and
Travelers Group)
Deluxe Corporation
600 20,400
#1 check printer in the U.S.; a leading provider of electronic payment systems
Donaldson, Lufkin & Jenrette, Inc.
700 27,694
Does investment and merchant banking and provides funding for companies via
direct investment as well as managing and underwriting securities
Freddie Mac
500 26,000
Buys conventional residential mortgages from banks and mortgage bankers
Household International, Inc.
600 24,075
Through its subsidiaries, provides co-branded and private-label credit cards, as
well as financing for purchases
J.P. Morgan & Company
200 22,850
Offers a wide variety of commercial banking and investment services
Merrill Lynch & Company, Inc.
400 26,875
A retail/wholesale financial supermarket
Morgan Stanley Dean Witter & Company
500 44,594
Investment banking and retail brokerage company, leading credit card issuer
Paine Webber Group Inc.
700 25,375
Provides retail brokerage, investment banking, municipal securities
underwriting, real estate, institutional stock and bond trading, asset
management and transaction services with about 300 offices worldwide
The Bear Stearns Companies Inc.
800 30,750
A top U.S. securities trading, investment banking and brokerage firm
The Goldman Sachs Group, Inc.
450 27,450
A leader in global investment banking; one of the top U.S. IPO underwriters
Washington Mutual, Inc.
700 20,475
The largest U.S. thrift with more than 2,000 facilities
- --------------------------
Total 366,426
- --------------------------
FOOD & BEVERAGE (5.2%)
- ----------------------
General Mills, Inc.
300 24,338
Makes and markets a variety of food products including Cheerios, Gold Medal,
Betty Crocker, Bisquick, Hamburger Helper and Fruit Roll-Ups
Keebler Foods Company*
500 14,937
#2 cookie and cracker maker in the U.S.; #1 supplier of Girl Scout cookies
McCormick & Company, Inc.
1,100 36,369
World's #1 spice maker; also makes specialty food products
Ralston-Ralston Purina Group
700 19,469
World's largest dry dog and cat food producer
The accompanying Notes to Financial Statements are an integral part of this
schedule.
</TABLE>
<PAGE>
Schedule of Investments (continued)
THE CATHOLIC DISCIPLINED CAPITAL APPRECIATION FUND
<TABLE>
<CAPTION>
Common Stocks (96.6%)
Shares Market Value
====================================================================================================
<S>
<C> <C>
Safeway Inc.*
700 $26,644
A food retailer with over 1,500 stores located in the U.S. and Canada
SUPERVALU, Inc.
1,100 23,994
Supplies about 4,800 grocery stores nationwide with brand-name and
private-label merchandise; operates nearly 350 company-owned stores
The Quaker Oats Company
500 30,938
Produces a diverse line of food products
- --------------------------
Total 176,689
- --------------------------
HEALTH CARE SERVICES & SUPPLIES (4.9%)
Allergan, Inc.
300 33,000
A leading maker of eye care and skin care products with
worldwide distribution
Amgen, Inc.*
500 40,750
Makes and markets therapeutic products for hematopoiesis (blood cell
production), inflammation, autoimmunity, neurobiology and soft-tissue repair
Bausch & Lomb, Inc.
300 19,781
#1 maker of contact lenses, lens care and eyedrops
Baxter International, Inc.
450 27,112
Produces blood transfusion systems, hemophilia treatments, home dialysis
systems and intravenous products
Genzyme Corporation*
300 13,519
Researches gene therapy treatments for diseases and medical conditions
Mallinckrodt, Inc.
600 18,112
Manufactures and distributes health care products, including imaging agents for
radiological, cardiological, urological and nuclear medicine applications
Wellpoint Health Networks, Inc.*
200 11,400
Serves about 32 million individuals nationally through HMOs, PPOs and specialty
networks such as pharmacy benefits, dental and mental health plans
- --------------------------
Total 163,674
- --------------------------
INSTRUMENTS (0.9%)
Waters Corporation*
500 30,281
Makes high-performance liquid chromatography instruments that researchers,
scientists and engineers use to separate and identify chemicals and materials
- --------------------------
Total 30,281
- --------------------------
INSURANCE (1.9%)
Aetna, Inc.
175 8,619
A leader in managed health care
American General Corporation
400 25,275
Provides retirement products, individual life insurance and consumer finance
Conseco, Inc.
500 9,656
Insurance holding company that owns over 30 insurance-related subsidiaries
</TABLE>
The Catholic Funds 26
The accompanying Notes to Financial Statements are
an integral part of this schedule.
<PAGE>
27 877/222-2402
Schedule of Investments (continued)
THE CATHOLIC DISCIPLINED CAPITAL APPRECIATION FUND
<TABLE>
<CAPTION>
Common Stocks (96.6%) Shares Market Value
======================================================================================
<S> <C> <C>
The Hartford Financial Services Group, Inc. 500 $20,438
Offers life insurance, annuities, employee benefits
administration, asset management and mutual funds
--------------------------
Total 63,988
--------------------------
MACHINERY--DIVERSIFIED (0.7%)
- -----------------------------
Ingersoll-Rand Company 400 21,975
Makes mining equipment, air compressors, production
equipment, bearings, components, power-generation
pumps and architectural hardware
--------------------------
Total 21,975
--------------------------
MANUFACTURING (1.6%)
- --------------------
American Standard Companies, Inc.* 700 26,863
A leading maker of air-conditioning systems,
plumbing products and automotive braking
systems, with about 120 plants in 35 countries
Corning, Inc. 400 27,425
One of the world's top makers of fiber-optic cable,
which it invented more than 20 years ago
--------------------------
Total 54,288
--------------------------
MEDIA (0.8%)
- ------------
Gannett Co., Inc. 400 27,675
The largest newspaper publisher in the U.S.
(its flagship being USA TODAY); also active
in TV broadcasting
--------------------------
Total 27,675
--------------------------
OFFICE EQUIPMENT (0.5%)
- -----------------------
Pitney Bowes, Inc. 300 18,281
The world's largest producer of postage meters;
also makes other mailing equipment, copiers and
fax machines
--------------------------
Total 18,281
--------------------------
OIL (5.5%)
- ----------
Chevron Corporation 350 31,062
Runs some 8,000 gas stations and has proved
reserves of 4.7 billion barrels of oil and
related products and 9.3 trillion cu. ft.
of natural gas
Conoco, Inc., Class A 950 26,362
An integrated oil and gas company, exploring
for petroleum in 15 countries
Murphy Oil Corporation 600 32,437
Explores for and produces oil and gas
</TABLE>
The accompanying Notes to Financial Statements are an integral part of this
schedule.
<PAGE>
Schedule of Investments (continued)
THE CATHOLIC DISCIPLINED CAPITAL APPRECIATION FUND
<TABLE>
<CAPTION>
Common Stocks (96.6%)
Shares Market Value
===========================================================================================================================
<S>
<C> <C>
Texaco, Inc.
500 $ 31,562
Markets fuel and lubricants worldwide; operates transportation, trading and
distribution facilities
USX-Marathon Group
1,100 32,175
The major revenue generator of USX's two business units (USX-U.S. Steel is the
other); explores for and produces oil and gas in several countries
Ultramar Diamond Shamrock Corporation
1,300 33,150
#2 independent oil refining and marketing company in the U.S.
- ---------------------------
Total 186,748
- ---------------------------
PAINTING PRODUCTS (0.2%)
- ------------------------
The Sherwin-Williams Company
300 6,281
The U.S.'s largest paint company
- ---------------------------
Total 6,281
- ---------------------------
PAPER PRODUCTS (0.6%)
- ---------------------
Georgia-Pacific Group
500 20,250
One of the leading manufacturers, distributors and wholesalers of building
products as well as forest and paper products
- ---------------------------
Total 20,250
- ---------------------------
PHOTO EQUIPMENT & SUPPLIES (0.4%)
- ---------------------------------
Eastman Kodak Company
200 15,088
Makes cameras, film, and other photographic products
- ---------------------------
Total 15,088
- ---------------------------
PIPELINES (1.0%)
- ----------------
Enron Corporation
800 33,000
#1 buyer and seller of natural gas in the U.S.; builds and manages worldwide
natural gas transportation, power generation, liquids and clean fuels facilities
- ---------------------------
Total 33,000
- ---------------------------
PRINTING & PUBLISHING (4.9%)
- ----------------------------
Dow Jones & Company, Inc.
600 32,025
Publishes the Wall Street Journal, Barron's and SmartMoney (jointly owned with
Hearst) and supplies information electronically to more than 1.1 million
subscribers through the Dow Jones Newswires
Electronics for Imaging, Inc.*
400 20,562
Makes hardware-and-software systems that link computer networks to color copiers
and desktop laser printers, enabling users to create high-quality color
documents in their offices
The Catholic Funds 28 The accompanying Notes to Financial Statements
are an integral part of this schedule.
</TABLE>
<PAGE>
29 877/222-2402
Schedule of Investments (continued)
THE CATHOLIC DISCIPLINED CAPITAL APPRECIATION FUND
<TABLE>
<CAPTION>
Common Stocks (96.6%)
Shares Market Value
===========================================================================================================================
<S>
<C> <C>
Knight-Ridder, Inc.
500 $ 27,438
Publishes newspapers including the Detroit Free Press, The Philadelphia Inquirer
and The Miami Herald
Lexmark International Group, Inc., Class A*
400 32,200
A leading maker of computer printers and related products
R.R. Donnelley & Sons Company
900 25,987
A large commercial printer with about 50 printing plants globally
Valassis Communications, Inc.*
600 26,362
Publishes cents-off coupons and other promotional materials printed in
freestanding, four-color inserts.
- ---------------------------
Total 164,574
- ---------------------------
RENTAL AUTOS & EQUIPMENT (0.5%)
- -------------------------------
The Hertz Corporation, Class A
400 17,600
One of the world's top car rental businesses (Ford Motor owns 81% of Hertz)
- ---------------------------
Total 17,600
- ---------------------------
RETAIL (5.4%)
- -------------
Best Buy Company, Inc.*
600 37,237
Sells home office products, consumer electronics, entertainment software and
appliances throughout the U.S.
Dollar Tree Stores, Inc.*
400 15,975
Operates more than 1,200 discount stores in 32 states
Kmart Corporation*
2,100 24,544
Sells name-brand and private-label general merchandise
Kohl's Corporation*
400 26,450
Operates more than 230 family-oriented department stores
Lowe's Companies, Inc.
400 19,500
#2 U.S. home improvement retail chain
Ross Stores, Inc.
1,600 32,200
Operates a discount clothing chain; sells a variety of consumer products
The Gap, Inc.
750 24,000
Operates nearly 2,600 casual clothing stores throughout the world
- ---------------------------
Total 179,906
- ---------------------------
TELECOMMUNICATIONS (9.7%)
- -------------------------
ALLTEL Corporation
450 31,669
Provides local phone service; has gained approval to provide competitive local
access service
Bell Atlantic Corporation
800 53,850
#2 local phone company in the U.S.; it will soon approach old Ma Bell's size
after its planned purchase of GTE
</TABLE>
The accompanying Notes to Financial Statements are an integral part of this
schedule.
<PAGE>
Schedule of Investments (continued)
THE CATHOLIC DISCIPLINED CAPITAL APPRECIATION FUND
<TABLE>
<CAPTION>
Common Stocks (96.6%)
Shares Market Value
===========================================================================================================================
<S>
<C> <C>
CenturyTel, Inc.
800 $ 32,500
Sells mainstream telecommunications services
Cincinnati Bell, Inc.*
1,900 36,931
Offers local exchange services
Lucent Technologies, Inc.
800 51,900
Leading U.S. maker of telecom equipment and software
SBC Communications, Inc.
700 35,744
Operates more than 37 million access lines in eight states and has agreed to buy
Ameritech in a deal that would create the nation's top local telephone company
Sprint Corporation
600 32,550
Provides local telephone service; distributes telecom equipment; publishes
directories
Tellabs, Inc.*
400 22,775
Produces equipment used to transmit data, video and voice signals and develops
related access and transport network systems
U S WEST, Inc.
500 28,531
Provides local phone and related services
- ---------------------------
Total 326,450
- ---------------------------
TRAVEL (0.5%)
- -------------
Galileo International, Inc.
400 16,100
The second-largest CRS for the travel industry; its Galileo and Apollo booking
systems allow travel agents to book plane, hotel and car rental reservations
- ---------------------------
Total 16,100
- ---------------------------
UTILITIES (2.0%)
- ----------------
Ameren Corporation
600 22,688
Serves about 1.5 million electricity customers and 300,000 natural gas
customers in Missouri and Illinois
Public Service Enterprise Group Inc.
900 34,762
Through a subsidiary, provides electricity and natural gas in New Jersey
Unicom Corporation
300 11,081
In the energy business with a well-known subsidiary, Commonwealth Edison,
serving 3.5 million customers in Illinois
- ---------------------------
Total 68,631
- ---------------------------
-------------------------------------------------------------
Total Common Stock (Cost $3,364,705) 3,250,991
-------------------------------------------------------------
*Nondividend-paying stock
</TABLE>
The Catholic Funds 30 The accompanying Notes to Financial Statements
are an integral part of this schedule.
<PAGE>
31 877/222-2402
Schedule of Investments (continued)
THE CATHOLIC DISCIPLINED CAPITAL APPRECIATION FUND
<TABLE>
<CAPTION>
Principal
Short-Term Investments (3.8%)
Amount Market Value
===========================================================================================================================
<S>
<C> <C>
DEMAND NOTES (3.8%)
- -------------------
Wisconsin Corporate Central Credit Union, 5.05%
$ 76,578 $ 76,578
Wisconsin Electric Company, 5.02%
52,953 52,953
-------------------------------------------------------------
Total Short-Term Investments (Cost $129,531) 129,531
-------------------------------------------------------------
-------------------------------------------------------------
Total Investments (100.4%) (Cost $3,494,236) 3,380,522
-------------------------------------------------------------
-------------------------------------------------------------
Liabilities, less Other Assets (-0.4%) (14,930)
-------------------------------------------------------------
-------------------------------------------------------------
Total Net Assets (100.0%) $3,365,592
-------------------------------------------------------------
</TABLE>
The accompanying Notes to Financial Statements are an integral part of this
schedule.
<PAGE>
Statements of Assets & Liabilities
As of September 30, 1999
<TABLE>
<CAPTION>
The Catholic
Disciplined
The Catholic The Catholic Capital
Equity Income Large-Cap Appreciation
Fund Growth Fund Fund
===============================================================================
<S> <C> <C> <C>
ASSETS
Investments, at cost $3,452,758 $3,837,405 $3,494,236
Investments, at value $3,320,584 $3,798,299 $3,380,522
Cash -- 3,952 --
Income receivable 14,045 2,598 3,629
Other assets 8,432 8,434 8,432
- ------------------------------------------------------------------------------
Total Assets 3,343,061 3,813,283 3,392,583
- ------------------------------------------------------------------------------
LIABILITIES
Payable for investments purchased -- 216,111 --
Payable to affiliates 791 703 662
Accrued expenses and
other liabilities 30,668 26,361 26,329
- ------------------------------------------------------------------------------
Total Liabilities 31,459 243,175 26,991
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Net Assets $3,311,602 $3,570,108 $3,365,592
- ------------------------------------------------------------------------------
NET ASSETS CONSIST OF
Paid in capital $3,458,661 $3,643,870 $3,474,001
Accumulated undistributed
net realized gains (losses) (14,885) (34,656) 5,305
Net unrealized (depreciation)
on investments (132,174) (39,106) (113,714)
- ------------------------------------------------------------------------------
Net Assets $3,311,602 $3,570,108 $3,365,592
- ------------------------------------------------------------------------------
CAPITAL STOCK, $.001 PAR VALUE
Authorized 50,000,000 50,000,000 50,000,000
Issued and outstanding 347,011 364,985 347,236
Net asset value, redemption
price and minimum offering
price per share $9.54 $9.78 $9.69
Maximum offering price per share $9.94 $10.19 $10.09
</TABLE>
The Catholic Funds 32 The accompanying Notes to Financial Statements are
an integral part of this statement.
<PAGE>
33 877/222-2402
Statements of Operations
For the Period Ended September 30, 1999*
<TABLE>
<CAPTION>
The Catholic
Disciplined
The Catholic The Catholic Capital
Equity Income Large-Cap Appreciation
Fund Growth Fund Fund
=======================================================================
<S> <C> <C> <C>
INVESTMENT INCOME
- -----------------
Interest income $15,572 $5,105 $ 4,455
Dividend income 18,666 4,445 14,711
------------------------------------------------------------
Total Income 34,238 9,550 19,166
------------------------------------------------------------
EXPENSES
- --------
Investment advisory fees 8,784 10,377 10,012
Portfolio accounting fees 9,721 9,721 9,721
Transfer agent fees
and expenses 8,275 8,275 8,275
Federal and state
registration fees 7,030 7,030 7,030
Audit fees 4,000 4,000 4,000
Custody fees 3,724 3,724 3,724
Legal fees 3,447 3,447 3,447
Distribution fees 2,745 2,883 2,781
Printing and postage
expenses 1,448 1,448 1,448
Directors fees and expenses 1,241 1,241 1,241
Other 2,069 2,069 2,069
------------------------------------------------------------
Total Expenses 52,484 54,215 53,748
------------------------------------------------------------
Less waivers and
reimbursements by adviser (34,367) (34,038) (34,281)
------------------------------------------------------------
Net Expenses 18,117 20,177 19,467
------------------------------------------------------------
- -----------------------------------------------------------------------
Net Investment
Income (Loss) 16,121 (10,627) (301)
- -----------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- --------------------------------------------------
Net realized gain (loss)
on investments (14,885) (34,656) 5,606
Net change in unrealized
depreciation on
investments (132,174) (39,106) (113,714)
------------------------------------------------------------
Net Realized and Unrealized
Loss on
Investments (147,059) (73,762) (108,108)
------------------------------------------------------------
- -----------------------------------------------------------------------
Change in Net Assets
Resulting from
Operations ($130,938) ($84,389) ($108,409)
- -----------------------------------------------------------------------
</TABLE>
*Since May 3, 1999 (commencement of operations)
The accompanying Notes to Financial Statements are an integral part of this
statement.
<PAGE>
Statements of Changes in Net Assets
For the Period Ended September 30, 1999*
<TABLE>
<CAPTION>
The Catholic
Disciplined
The Catholic The Catholic Capital
Equity Income Large-Cap Appreciation
Fund Growth Fund Fund
==============================================================================
<S> <C> <C> <C>
Operations
- ----------
Net investment income (loss) $16,121 $(10,627) $(301)
Net realized gain (loss)
on investments (14,885) (34,656) 5,606
Net change in unrealized
(depreciation) on investments (132,174) (39,106) (113,714)
----------------------------------------------------------------
Change in Net Assets
Resulting from
Operations (130,938) (84,389) (108,409)
----------------------------------------------------------------
Distributions to Shareholders
- -----------------------------
Distributions from net
investment income (16,160) -- --
Distributions from net
realized gains -- -- --
----------------------------------------------------------------
Change in Net Assets
from Distributions
to Shareholders (16,160) -- --
----------------------------------------------------------------
Capital Share Transactions
- --------------------------
Proceeds from shareholder
purchases 3,342,590 3,654,497 3,474,001
Net asset value of shares
issued to shareholders in payment
of distributions declared 16,110 -- --
Cost of shares redeemed -- -- --
---------------------------------------------------------------
Change in Net Assets
from Capital
Share Transactions 3,358,700 3,654,497 3,474,001
----------------------------------------------------------------
- ----------------------------------------------------------------------------
Change in Net Assets 3,211,602 3,570,108 3,365,592
- ----------------------------------------------------------------------------
Net Assets, Beginning of Period 100,000 -- --
- ----------------------------------------------------------------------------
Net Assets, End of Period $3,311,602 $3,570,108 $3,365,592
- ----------------------------------------------------------------------------
Accumulated Undistributed
Net Investment Income -- -- --
- ----------------------------------------------------------------------------
</TABLE>
*Since May 3, 1999 (commencement of operations)
The Catholic Funds 34 The accompanying Notes to Financial Statements are
an integral part of this statement.
<PAGE>
35 877/222-2402
Notes to Financial Statements
as of September 30, 1999
1. Organization
The Catholic Funds, Inc. was incorporated on December 16, 1998, as a Maryland
Corporation and is registered as a diversified open-end management investment
company under the Investment Company Act of 1940. The Catholic Equity Income,
Large-Cap Growth and Disciplined Capital Appreciation Funds (the "Funds") are
separate, diversified portfolios of The Catholic Funds, Inc. The Funds, managed
by Catholic Financial Services Corporation (the "adviser"), became effective on
April 30, 1999, and commenced operations on May 3, 1999.
Costs incurred with the organization, initial registration and public offering
of shares for each portfolio of the Funds have been paid by the adviser.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. These
policies are in conformity with generally accepted accounting principles "GAAP".
The presentation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates and assumptions.
a) Investment Valuation
Securities traded over-the-counter or on a national securities exchange are
valued on the basis of market value in their principal and most representative
market. Securities where the principal and most representative market is a
national securities exchange are valued at the latest reported sale price on
such exchange. Exchange-traded securities for which there were no transactions
are valued at the latest reported bid price. Securities traded on only over-the-
counter markets are valued at the latest bid prices. Debt securities (other than
short-term obligations) are valued at prices furnished by a pricing service,
subject to review by the Funds' adviser. Short-term obligations (maturing within
60 days) are valued on an amortized cost basis, which approximates market value.
Securities for which quotations are not readily available and other assets are
valued at fair value as determined in good faith by the adviser under the
supervision of the board of directors.
b) Delayed Delivery Transactions
The Funds may purchase or sell securities on a when-issued or forward commitment
basis. Payment and delivery may take place a month or more after the date of the
transaction. The price of the underlying securities and the date when the
securities will be delivered and paid for are fixed at the time the transaction
is negotiated. Losses may arise due to changes in the market value of the
underlying securities or if the counterparty does not perform under the
contract.
c) Federal Income Taxes
No provision for federal income taxes has been made since the Funds have
complied to date with the provisions of the Internal Revenue Code available to
regulated investment companies and intend to continue to so comply in future
years. As of September 30, 1999, The Catholic Large-Cap Growth and Equity Income
Funds had federal income tax capital loss carry-forwards of $31,362 and $13,699,
respectively, expiring in the tax year ending September 30, 2007.
<PAGE>
Notes to Financial Statements (continued)
d) Distributions to Shareholders
All of the Funds except The Catholic Equity Income Fund pay dividends of net
investment income annually. The Catholic Equity Income Fund pays dividends of
net investment income quarterly. Distributions of net realized capital gains, if
any, will be declared at least annually. Distributions to shareholders are
recorded on the ex-dividend date.
The character of distributions made during the year from net investment income
or net realized gains may differ from the characterization for federal income
tax purposes due to differences in the recognition of income, expense or gain
items for financial statement and tax purposes. Where appropriate,
reclassifications between net asset accounts are made for such differences that
are permanent in nature. Accordingly, at September 30, 1999, reclassifications
were recorded to increase undistributed net investment income by $39, $10,627
and $301, decrease paid-in-capital by $39, $10,627 and $0, and decrease
accumulated undistributed net realized gains by $0, $0 and $301 for The Catholic
Equity Income, Large-Cap Growth and Disciplined Capital Appreciation Funds,
respectively.
e) Expenses
Each Fund is charged for those expenses that are directly attributable to it,
such as investment advisory and custody fees. Expenses that are not directly
attributable to a Fund are either allocated equally among the Funds or in
proportion to their respective net assets when appropriate.
f) Other
For financial reporting purposes, investment transactions are accounted for on
the trade date. The Funds determine the gain or loss realized from investment
transactions by comparing the original cost of the security lot sold with the
net sale proceeds. Dividend income is recognized on an accrual basis. Premiums
and discounts on securities purchased are amortized using the level yield to
maturity method.
3. Investment Advisory and Other Agreements with Related Parties
Each of the Funds has entered into an agreement with the adviser, with whom
certain officers and directors of the Funds are affiliated, to furnish
investment advisory services to the Funds. Under the terms of this agreement,
the Funds will pay the adviser a fee, computed daily and payable monthly, at the
annual rate of the following percentages of average daily net assets: 0.80% for
The Catholic Equity Income Fund; and 0.90% for The Catholic Large-Cap Growth and
Disciplined Capital Appreciation Funds.
The Funds and the adviser have entered into sub-advisory agreements for each of
the Funds. The sub-advisers are Todd Investment Advisors, Inc. "Todd" for The
Catholic Equity Income Fund, Peregrine Capital Management, Inc. "Peregrine" for
The Catholic Large-Cap Growth Fund and Vantage Investment Advisors, Inc.
"Vantage" for The Catholic Disciplined Capital Appreciation Fund. The annual
rates of their fees, payable from fees paid to the adviser, as a percent of
average daily net assets under the sub-advisory agreements were as follows:
. Todd: 0.38 of 1% on the first $10 million; 0.35 of 1% on the next $40 million;
and 0.30 of 1% on average daily net assets over $50 million.
The Catholic Funds 36
<PAGE>
37 877/222-2402
Notes to Financial Statements (continued)
. Peregrine: 0.50 of 1% on the first $25 million; 0.45 of 1% on the next $25
million; and 0.40 of 1% on average daily net assets over $50 million.
. Vantage: 0.50 of 1% on the first $50 million; 0.45 of 1% on the next $50
million; and 0.40 of 1% of the Fund's average daily net assets over $100.
Vantage has agreed to waive 10 basis points from the fee schedule for the
first two years of the Fund's operations or until its total assets reach $35
million, whichever occurs first.
The adviser voluntarily agreed to reimburse its management fee to the extent
that total annual operating expenses (exclusive of interest, taxes, brokerage
commissions and other costs incurred in connection with the purchase or sale of
portfolio securities, and extraordinary items) exceed 1.65% of the average daily
net assets of The Catholic Equity Income Fund and 1.75% of the average daily net
assets of The Catholic Large-Cap Growth and Disciplined Capital Appreciation
Funds, respectively, computed on a daily basis. For the period ended September
30, 1999, expenses of $34,367, $34,038 and $34,281 were waived by the adviser in
The Catholic Equity Income, Large-Cap Growth and Disciplined Capital
Appreciation Funds, respectively. The adviser may terminate these waivers at any
time.
The Funds have adopted a Distribution Plan ("the Plan") pursuant to Rule 12b-1
under the Investment Company Act of 1940. The Plan authorizes the Trust to use
annually 0.25% of its net assets, computed on a daily basis to finance certain
activities relating to the distribution of its shares to investors. No
remuneration has been paid by the Funds to any of the officers or affiliated
Funds' directors. In addition to $500 per year and $250 per meeting, the Funds
reimbursed unaffiliated directors for reasonable expenses incurred in relation
to attendance at the meetings.
4. Capital Share Transactions
Transactions in shares of the Funds for the period ended September 30, 1999,
were as follows:
<TABLE>
<CAPTION>
The Catholic
Disciplined
The Catholic The Catholic Capital
Equity Income Large-Cap Appreciation
Fund Growth Fund Fund
================================================================================
<S> <C> <C> <C>
Shares sold 345,341 364,985 347,236
Shares issued to holders in
reinvestment of distributions 1,670 -- --
Shares redeemed -- -- --
- --------------------------------------------------------------------------------
Net Increase (Decrease) 347,011 364,985 347,236
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
Notes to Financial Statements (continued)
5. Investment Transactions
The aggregate purchases and sales of securities, excluding short-term
investments, for the Funds for the period ended September 30, 1999, were as
follows:
<TABLE>
<CAPTION>
The Catholic
Disciplined
The Catholic The Catholic Capital
Equity Income Large-Cap Appreciation
Fund Growth Fund Fund
================================================================================
<S> <C> <C> <C>
Purchases
.........
U.S. Government $580,018 $ -- $ --
Other 3,246,297 3,736,505 3,413,048
Sales
.....
U.S. Government 271,487 -- --
Other 130,396 170,045 53,949
</TABLE>
At September 30, 1999, gross unrealized appreciation and depreciation on
investments, based on cost for federal income tax purposes of $3,453,944,
$3,840,699 and $3,494,236 were as follows:
<TABLE>
<CAPTION>
The Catholic
Disciplined
The Catholic The Catholic Capital
Equity Income Large-Cap Appreciation
Fund Growth Fund Fund
================================================================================
<S> <C> <C> <C>
Appreciation $118,695 $207,322 $216,119
(Depreciation) (252,055) (249,722) (329,833)
- --------------------------------------------------------------------------------
Net Appreciation (Depreciation)
on Investments $(133,360) $(42,400) $(113,714)
- --------------------------------------------------------------------------------
</TABLE>
The Catholic Funds 38
<PAGE>
39 877/222-2402
Financial Highlights
For the Period Ended September 30, 1999*
<TABLE>
<CAPTION>
The Catholic
Disciplined
The Catholic The Catholic Capital
Equity Income Large-Cap Appreciation
Fund Growth Fund Fund
==========================================================================================
<S> <C> <C> <C>
Net Asset Value, Beginning of Period $10.00 $10.00 $10.00
- ------------------------------------------------------------------------------------------
Net investment income (loss) 0.05 (0.03) 0.00(f)
Net realized and unrealized (loss) on investments (0.46) (0.19) (0.31)
----------------------------------------------------------------
Total from Investment
Operations (0.41) (0.22) (0.31)
----------------------------------------------------------------
Distributions from net investment income (0.05) 0.00 0.00
----------------------------------------------------------------
Total Distributions (0.05) 0.00 0.00
----------------------------------------------------------------
- ------------------------------------------------------------------------------------------
Net Asset Value, End of Period $9.54 $9.78 $9.69
- ------------------------------------------------------------------------------------------
Total return (a)(b) (4.06%) (2.20%) (3.10%)
Ratios to Average Net Assets
............................
Expenses (c)(d) 1.65% 1.75% 1.75%
Net investment income (loss) (c)(d) 1.47% (0.92%) (0.03%)
Expenses (c)(e) 4.78% 4.70% 4.83%
Net investment income (loss) (c)(e) (1.66%) (3.87%) (3.11%)
Net assets, end of period $3,311,602 $3,570,108 $3,365,592
Portfolio turnover rate (b) 18.29% 7.31% 2.44%
</TABLE>
*Since May 3, 1999 (commencement of operations).
(a) Based on net asset value, which does not reflect the sales charge.
(b) Not annualized.
(c) Annualized.
(d) Net of waivers and reimbursements by adviser.
(e) Gross of waivers and reimbursements by adviser.
(f) Less than one cent per share.
The accompanying Notes to Financial Statements are an integral part of this
statement.
<PAGE>
Report of Independent Public
Accountants
ARTHUR
ANDERSEN
To the Shareholders and Board of Directors of The Catholic Funds, Inc.:
We have audited the accompanying statements of assets and liabilities of The
Catholic Funds, Inc. (a Maryland corporation, comprising The Catholic Equity
Income, Large-Cap Growth and Disciplined Capital Appreciation Funds (the
"Funds")), including the schedules of investments, as of September 30, 1999, and
the related statement of operations, the statement of changes in net assets and
financial highlights for the period then ended. These financial statements and
financial highlights are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of September 30, 1999, by correspondence with the custodians
and brokers. As to securities purchased but not received, we requested
confirmation from brokers and, when replies were not received, we carried out
other alternative auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective portfolios constituting The Catholic Funds, Inc. as of
September 30, 1999, the results of their operations, changes in their net assets
and their financial highlights for the period then ended, in conformity with
generally accepted accounting principles.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
October 22, 1999
The Catholic Funds 40
<PAGE>
A Note on Forward-Looking Statements
Except for historical information contained in this annual report for The
Catholic Funds, Inc., the matters discussed in these reports may constitute
forward-looking statements made pursuant to the safe harbor provisions of the
Securities Litigation Reform Act of 1995. These include any adviser, sub-adviser
and/or portfolio manager prediction, assessment, analysis or outlook for
individual securities, industries, market sectors and/or markets. These
statements involve risks and uncertainties. In addition to general risks
described for each Fund in the current prospectus, other factors bearing on
these reports include the accuracy of the adviser's, and any sub-adviser's or
portfolio manager's forecasts and predictions, the appropriateness of the
investment strategies designed by the adviser, any sub-adviser or portfolio
manager to implement their strategies efficiently and effectively. Any one or
more of these factors, as well as other risks affecting the securities markets
and investment instruments generally could cause the actual results of any Fund
to differ materially as compared to benchmarks associated with the particular
Fund.
<PAGE>
<TABLE>
<CAPTION>
Board of Directors
<S> <C>
. Thomas Bausche
. J. Michael Borden . Firstar Mutual Fund Services, LLC
. Daniel Doucette
. Allan Lorge
. Thomas Munninghoff
. Daniel Steininger -- Chairman of the Board
. Conrad Sobczak . Arthur Andersen LLP
. David Vollmar
. Quarles & Brady LLP
Officers
. Allan Lorge -- President
. Theodore Zimmer -- Vice President
. Russell Kafka -- Treasurer
. Joseph Wreschnig -- Secretary
. Joann Van Der Loop -- Assistant Secretary . Catholic Knights Insurance Society
. Cheri Nagan -- Assistant Secretary Daniel Steininger, President
1100 West Wells Street
Milwaukee, WI 53233
Investment Adviser
. Catholic Financial Services Corporation . Catholic Order of Foresters
1100 West Wells Street Robert Ciesla, High Chief Ranger
Milwaukee, WI 53233 355 Shuman Boulevard
PO Box 3012
Naperville, IL 60566-7012
Sub-Adviser
The Catholic Equity Income Fund . Catholic Knights of America
. Todd Investment Advisors, Inc. John Kenawell, President
101 S. 5th Street, Suite 3160 3525 Hampton Avenue
Louisville, KY 40202 St. Louis, MO 63139-1980
The Catholic Large-Cap Growth Fund
. Peregrine Capital Management, Inc.
800 LaSalle Avenue, Suite 1850
Minneapolis, MN 55402
The Catholic Disciplined Capital Appreciation Fund
. Vantage Investment Advisors, Inc.
405 Lexington Avenue
New York, NY 10174
</TABLE>
This report is intended for shareholders of The Catholic Funds. It is not
authorized for distribution to prospective investors unless preceded or
accompanied by a current prospectus.
[LOGO OF CATHOLIC FIN. SERV.]
CATHOLIC FINANCIAL SERVICES CORPORATION
1100 West Wells Street . Milwaukee, WI 53233
1-877-222-2402
Member NASD
The Catholic Funds are not available in all states.
