(cover page)
(logo) The Catholic Funds Investing with Faith in the Future
Prospectus
November 8, 1999
(logo) The Catholic Money Market Fund
For more information you can contact us at: The Catholic Funds 1100 West
Wells St. Milwaukee, Wisconsin 53233 or call toll- free at 877-222-2402
NEITHER THE CATHOLIC FUNDS NOR THE ADVISER, CATHOLIC
FINANCIAL SERVICES CORPORATION, IS SPONSORED OR ENDORSED
BY THE CATHOLIC CHURCH, NOR HAS THE CATHOLIC CHURCH
APPROVED OR DISAPPROVED THE FUNDS' SHARES.
AS WITH OTHER MUTUAL FUNDS, THE SECURITIES AND EXCHANGE
COMMISSION HAS NOT APPROVED OR DISAPPROVED OF THIS
FUND'S SHARES OR DETERMINED WHETHER THIS PROSPECTUS IS
ACCURATE OR COMPLETE. ANYONE WHO TELLS YOU OTHERWISE IS
COMMITTING A CRIME.
THIS PROSPECTUS HAS INFORMATION YOU SHOULD KNOW BEFORE
YOU DECIDE TO INVEST. PLEASE READ IT CAREFULLY AND KEEP IT
WITH YOUR INVESTMENT RECORDS. THERE IS A TABLE OF
CONTENTS ON THE NEXT PAGE THAT ALLOWS YOU TO QUICKLY
FIND INFORMATION ABOUT THE FUND.
TABLE OF CONTENTS
KEY INFORMATION ON YOUR INVESTMENT
WHAT ARE THE FUND'S GOALS? WHAT ARE THE FUND'S PRINCIPAL
INVESTMENT STRATEGIES? WHAT ARE THE FUND'S PRIMARY RISKS?
WHAT ARE THE FUND'S FEES AND EXPENSES? WHO ARE THE
FUND'S INVESTMENT ADVISER, SUB-ADVISER AND PORTFOLIO
MANAGER? YEAR 2000 ISSUES
OTHER IMPORTANT INFORMATION YOU SHOULD KNOW ABOUT THE
FUND
A WORD ABOUT CREDIT QUALITY
TAXABLE INVESTMENTS
YOUR ACCOUNT SHARE PRICE
INVESTMENT PHILOSOPHY STATEMENT
MORE ABOUT THE ADVISER
BUYING SHARES
INVESTMENT MINIMUMS ADDITIONAL PURCHASES BY MAIL BY
TELEPHONE EXCHANGE PRIVILEGE AUTOMATIC INVESTMENT
SERVICES
SELLING SHARES
BY MAIL TELEPHONE REDEMPTION CHECKWRITING SYSTEMATIC
WITHDRAWAL PLAN RETIREMENT ACCOUNTS SIGNATURE
GUARANTEES
ADDITIONAL POLICIES
TELEPHONE TRANSACTIONS DIVIDEND DISTRIBUTION POLICY
REINVESTMENT OF DIVIDENDS DISTRIBUTION FEES STATEMENTS
BACKUP WITHHOLDING
RESERVED RIGHTS
FOR MORE INFORMATION
BEFORE READING THIS PROSPECTUS
References to "you" and "your" in the prospectus refer to prospective
investors or shareholders. References to "we", "us" or "our" refer to the Fund
and Fund management (Adviser, Sub-Adviser, Distributor, Transfer Agent
and Custodian) generally.
KEY INFORMATION ON YOUR INVESTMENT
WHAT ARE THE FUND'S GOALS?
The Catholic Money Market Fund seeks current income, a stable share price
and daily liquidity.
WHAT ARE THE FUND'S PRINCIPAL INVESTMENT STRATEGIES?
The Fund is managed to provide attractive yields and a stable share price of
$1.00. It invests in a portfolio of high-quality, short-term debt securities
issued by certain corporations, banks and other financial or governmental
institutions. In addition, the Fund will purchase only those securities which
meet both the Fund investment objective and the responsible Catholic
stewardship principle described later in this prospectus.
WHAT ARE THE FUND'S PRIMARY RISKS?
The Fund is subject to credit rate risk and interest rate risk.
Credit rate risk is the chance that an issuer of a security may not pay the
interest or the principal when it becomes due.
Interest rate risk is the chance that an increase in interest rates will reduce
the fair market value of a security. Generally, the value of a bond moves in
the opposite direction of interest rates. Longer term bond prices tend to move
more in response to interest changes than shorter term bonds.
Adviser risk is the risk that the adviser's application of investment strategies
will be less successful than other funds and the Fund may underperform
other funds. In addition, because the Fund invests consist with core Catholic
values, the adviser may have fewer investments to choose from than other
funds and the return on the securities the Fund can purchase may be less
than other similar securities.
Your investment in this money market Fund is not insured or guaranteed by
the Federal Deposit Insurance Corporation (FDIC) or any other government
agency. The Fund's goal is to preserve the value of your investment at $1.00
per share. However, it is possible to lose money by investing in this Fund.
The Fund is appropriate for investors who are comfortable with the risks
described here and who need cash immediately. It can also be used as a
permanent conservative part of your portfolio.
WHAT ARE THE FUND'S FEES AND EXPENSES?
This section describes the fees and expenses that you may pay if you buy
and hold shares of the Fund.
SHAREHOLDER FEES (fees paid directly from your investment): The Fund
is no-load, so you pay no sales charges (loads) to buy or sell shares.
ANNUAL FUND OPERATING EXPENSES(1) (expenses that are deducted
from Fund assets):
Money
Market Fund
Management Distribution and Other Total Fund Operating
Fees Service (12b-1) Expenses(1) Expenses(2)
Fees
0.30% 0.05% 0.59% 0.94%
(1) "Other Expenses" are based on estimated amounts for the current fiscal
year. They do not include the temporary reduction in management fees described
in the section "WHO ARE THE FUND'S INVESTMENT ADVISER, SUB-ADVISER AND PORTFOLIO
MANAGER?" that follows.
(2)The costs of operating the Fund are deducted from Fund assets, which
means you pay them indirectly. These costs are deducted before computing
the daily share price or making distributions. As a result, they don't appear on
your account statement, but instead reduce the total return you receive from
your investment.
Example The following example is intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in the Fund for the time periods
indicated, and then redeem all of your shares at the end of those periods.
The example also assumes that your investment has a 5% return each year
and that the Fund's operating expenses remain the same. Although your
actual cost may be higher or lower, based on these assumptions, your cost
would be (3):
1 Year 3 Years
Money Market Fund $96 $301
(3) The Transfer Agent charges $12 for each wire redemption and $5 for
each telephone exchange.
WHO ARE THE FUND'S INVESTMENT ADVISER, SUB-ADVISER AND
PORTFOLIO MANAGER?
Catholic Financial Services Corporation, a Wisconsin corporation organized
in 1994, is the investment adviser and distributor for the Fund. As the
adviser, it is responsible for the investment decisions for the Fund.
Strong Capital Management, Inc. (Strong) is the sub-adviser for the Fund
and makes the investment decisions for the Fund. Strong provides
investment management services for mutual funds and other investment
portfolios representing assets of over $34 billion. Strong began conducting
business in 1974. Since then, its principal business has been providing
investment advice for individuals and institutional accounts, such as pension
and profit-sharing plans, as well as mutual funds, several of which are
available through variable insurance products.
The adviser and sub-adviser may be collectively referred to as "advisers".
Jay N. Mueller manages the Fund. He has over 15 years of investment
experience and is a Chartered Financial Analyst. He joined the sub-adviser
as a securities analyst and portfolio manager in September 1991, and
currently manages several Strong money market funds. For four years prior
to joining Strong, Mr. Mueller was employed by R. Meeder & Associates as a
securities analyst and portfolio manager. Mr. Mueller received his bachelor's
degree in Economics from the University of Chicago in 1982.
For its services, the adviser receives the following annual fee, computed
daily:
If the portfolio is $50 million or less: 0.30% If the portfolio is over $50
million and less than $100 million: 0.25% If the portfolio is over $100
million and less than $200 million: 0.20% If the portfolio is $200 million
or more: 0.15%
From the above fees, the adviser pays the sub-adviser:
If the portfolio is $50 million or less: 0.20% If the portfolio is over $50
million and less than $100 million: 0.15% If the portfolio is over $100
million and less than $200 million: 0.10% If the portfolio is $200 million
or more: 0.075%
However, neither the adviser nor sub-adviser shall receive any fees until the
Money Market Fund has $25 million in assets or for the first six months,
whichever comes earlier, and once either has occurred; the adviser shall
charge at an annual rate of 0.10% and pay the sub-adviser at an annual rate
of 0.05% for the next six months or until the Money Market Fund has $50
million in assets, whichever comes first. Thereafter the management fee
schedule set forth in this section applies without any waivers.
YEAR 2000 ISSUES
Your investment could be adversely affected if the computer systems do not
properly process and calculate date-related information before, on and after
January 1, 2000. Year 2000-related computer problems could have a
negative impact on the Fund and its investments. However, we are working
to avoid these problems and to obtain assurances from our service providers
that they are taking similar steps.
OTHER IMPORTANT INFORMATION YOU SHOULD KNOW ABOUT THE
FUND
A WORD ABOUT CREDIT QUALITY
Credit quality measures the issuer's expected ability to pay interest and
principal payments on time. We make investments for the Fund consistent
with Rule 2a-7 under the Investment Company Act of 1940. This rule
categorizes eligible money market securities as First Tier or Second Tier.
First Tier securities are generally in the highest short-term credit rating
category. Second Tier securities are considered to be investment grade but
not in the highest credit rating category. The rule requires that the Fund
invest at least 95% if its assets in First Tier securities.
The rule also requires that we invest in securities maturing in 397 days or
less and maintain a dollar-weighted average portfolio maturity of not more
than 90 days. By limiting the maturity of the Fund's investments, we seek to
lessen the changes in asset values caused by fluctuations in short-term
interest rates. Part of the Fund's objective is to maintain a constant net asset
value per share of $1.00.
TAXABLE INVESTMENTS
The Fund anticipates that all its earnings will be taxable to you at ordinary
income tax rates unless your investment is through an IRA or other tax-
deferred account.
YOUR ACCOUNT SHARE PRICE
The price at which you purchase and redeem Fund shares is equal to the net
asset value (NAV) per share determined on the effective date of the
purchase or redemption. We calculate the Fund's NAV per share at the
close of trading on the New York Stock Exchange (usually 3:00 p.m. Central
Time). We don't calculate NAV on days when the NYSE is closed for trading
(weekends and national holidays).
We value the Fund's assets on the basis of amortized cost. When we use
amortized cost to value money market fund securities, we generally mean
that the security is initially valued at the price we paid for it. After that,
the value of the security is gradually increased (amortizing a discount) or
decreased (amortizing a premium) each day without regard to fluctuating
interest rates. If market prices are not available, value is based on a
security's fair value as determined in good faith by us under the supervision
of the Board of Directors of the Catholic Funds and in accordance with Board
approved plans or policies.
INVESTMENT PHILOSOPHY STATEMENT
1. Prudent Financial Stewardship
The investments in the Fund will be managed using strategies consistent
with the Fund's objective aimed at producing results that will help investors
reach their financial goals.
2. Responsible Catholic Stewardship
We will strive to invest the assets of the Fund in companies whose primary
products, services and activities are substantially consistent with certain core
Catholic values. The Board of Directors of the Fund has selected, from
among many important core Catholic values, the following values for us to
apply when we select investments for the Fund:
Sanctity of Human Life - Human life deserves protection from the moment of
conception.
No Unjust Wars - The indiscriminate destruction of civilians is wrong, even in
the course of an otherwise justifiable war.
Dignity of the Human Person - Every person is entitled to be treated with
dignity and justice, because every human being is created in the image and
likeness of God.
The Board of Directors selected these three particular core Catholic values
using the following criteria. First, each of the selected values is grounded in
the very fundamental Catholic value that every person is made in the image
and likeness of God. Second, each relates to the protection of innocent
victims who have no choice or whose choices are extremely limited under the
relevant circumstances, such as unborn children, civilians in war and people
who need to earn a living. Third, the advisers can practically and efficiently
implement each of these values in making day-to-day investment decisions,
and the Board of Directors effectively can monitor and direct compliance with
these values. If a Fund owns a company that is found to be an inappropriate
investment, we will sell its securities in an orderly and prudent manner.
The Board of Directors may from time to time select different or additional
core Catholic values that we will implement in its investment program. For
example, the Board of Directors may determine to add or substitute a
selected core Catholic value in response to official doctrinal statements of the
Catholic Church. In any event, the Board of Directors has the sole and
exclusive authority to select the core Catholic values that we will implement
in the Fund's investment programs.
The Board of Directors will establish guidelines from time to time, which the
advisers will use to identify and select investments for the Fund. These
guidelines will help focus the advisers' attention on factors that are relevant
in identifying investments for the Fund which are consistent with the selected
core Catholic values, but the advisers necessarily will exercise some
subjective judgment when applying these guidelines to any specific facts and
circumstances. The Board of Directors will monitor investment selections that
the advisers make for the Fund, and will provide specific direction and modify
and refine the guidelines as necessary so that, in the judgment of the Board
of Directors, the advisers' investment selections remain consistent with the
selected core Catholic values. The Board of Directors' decision on these
matters will be final. By application of these values, the Fund will avoid
investing in companies:
That directly participate in abortion;
That derive more than 5% of their revenues directly from the production or
development of indiscriminate weapons of mass destruction (for example,
biological and chemical weapons and first-strike nuclear weapons); or
Whose employment practices are substantially inconsistent with the dignity
and primacy of the human person (for example, not providing a livable wage
as dictated by the standards of the particular region; not providing safe,
sanitary or humane working conditions; or discriminating against individuals
on account of sex, race, color, social condition, language or religion).
From time to time the Fund may decide to avoid investing in companies
because of other business activities or practices that may be determined to
be inconsistent with core Catholic values. For example, the guideline above
regarding producers and developers of weapons of mass destruction states
that the Fund will avoid investing in companies that derive more than 5% of
their revenues directly from the production or development of indiscriminate
weapons of mass destruction. We have stated this test in terms of revenues
derived directly from these activities, because objective data regarding
indirect revenues generally is difficult to obtain and verify. However, if we
obtain reliable information establishing that a company derives more than 5%
of its revenues indirectly from the production or development of
indiscriminate weapons of mass destruction, we may determine that an
investment in that company is inconsistent with the selected core Catholic
values. We also may determine that an investment in a particular company is
inconsistent with the selected core Catholic values based on considerations
and factors different from those specifically listed above.
Investors should bear in mind that, because we consider only certain core
Catholic values when selecting investments for the Fund, it is likely that the
Fund from time to time will own securities of companies that engage in
business and employment activities and practices that may be perceived by
some to be inconsistent with important core Catholic values other than those
described above.
Because the Fund will purchase only those securities which meet both the
Fund investment objective and the responsible Catholic stewardship
principle, the return on securities chosen may be lower than if the Fund
considered only financial and other traditional criteria when selecting
investments. However, the advisers have analyzed the anticipated effects of
the core Catholic values screen on the selection of investments for the Fund,
and they have assured the Fund's Board of Directors that, in their judgment,
the application of these core Catholic values will not significantly hamper the
ability of the Fund to achieve its investment objective.
MORE ABOUT THE ADVISER
Catholic Financial Services Corporation ("CFSC"), a Wisconsin corporation
organized in 1994, is the investment adviser and distributor for the Fund. As
the adviser, CFSC makes the investment decisions for the Fund. As the
distributor, CFSC sells the Fund shares to investors. The Board of Directors
of CFSC has committed to distribute a minimum of 10% of its net operating
income before taxes to support Catholic education and vocations and other
Catholic causes.
This is a voluntary commitment that CFSC may elect to discontinue at
anytime. CFSC presently does not anticipate that it will have any operating
income prior to the year 2003.
The majority of the outstanding stock of CFSC is held by Catholic Knights
Financial Services, Inc., which functions as an administrative holding
company and is a wholly-owned subsidiary of Catholic Knights Insurance
Society ("Catholic Knights"). Catholic Knights is a non-profit, non-stock
membership organization, licensed to do business as a fraternal benefit
insurance society. The remaining outstanding stock in CFSC is owned by
Catholic Order of Foresters (a non-profit, non-stock Illinois fraternal benefit
insurance society) and Catholic Knights of America (a non-profit, non-stock
Missouri fraternal benefit insurance society). All three fraternals are formed
to unite Catholics and their families for social, religious, benevolence and
intellectual improvement and to provide quality financial products and
fraternal benefits to their members. All of the stock in CFSC is owned by
these three fraternal benefit insurance societies, hereafter referred to as the
Catholic Fraternal Alliance.
The Catholic Fraternal Alliance provides ordinary and interest sensitive whole
and universal life insurance, term insurance and a variety of fixed return
annuity products to individual Catholics in more than 30 states. As a group,
the Catholic Fraternal Alliance ranks in the top 15% of life insurers in the
United States in terms of life insurance in force and total assets. The Catholic
Fraternal Alliance has more than 220,000 members who belong to one of
more than 800 local lodges throughout the United States. The Catholic
Fraternal Alliance provides $7 million annually in charitable and benevolent
funding and services to its members, their Catholic parishes and
communities. The Catholic Fraternal Alliance has nearly $5 billion of life
insurance in force and nearly $1 billion of total assets under management.
Adviser's Background - CFSC has no prior experience in managing mutual
funds, nor has it previously been engaged in the business of providing
investment advice on either a discretionary or non-discretionary basis. In part
for this reason, the Fund and CFSC have retained the services of an
experienced sub- adviser, Strong, to provide day-to-day portfolio
management and other advisory services to the Fund. The Fund's Board of
Directors, on CFSC's recommendation, selected the sub-adviser based on its
experience and past performance record in managing assets under
investment objectives, programs and strategies relevant to those of the Fund,
including ability to implement social and ethical screens similar to our
responsible Catholic stewardship principle. CFSC also has hired personnel
experienced with conducting and managing administrative functions and
distribution operations of mutual funds. Even with these steps, there can be
no assurance that CFSC can successfully manage the advisory,
administrative and distribution functions for the Fund, or that it and the sub-
adviser will be successful in achieving the investment objective of the Fund.
BUYING SHARES
Investment Minimums:
$1,000 for all accounts
$50 minimum for additional purchases
Opening a New Account
To open your new account, please follow these steps:
Step One: Please review this prospectus.
Step Two: Please complete The Catholic Money Market Fund application for
every different account registration. For example, you need a separate
application for an individual account in the Fund and a separate application
for an IRA account invested in the Fund. If you do not complete the
application properly, your purchase may be delayed or rejected.
Step Three: Make your check payable to The Catholic Funds. PLEASE DO
NOT MAKE YOUR CHECK PAYABLE TO Catholic Financial Services
Corporation.
Step Four: Mail your completed application and check to:
THE CATHOLIC FUNDS
PO BOX 05710
MILWAUKEE WI 53205-9986
Please note, how you register your account with the Fund can affect your
legal interests as well as the rights and interests of your family and
beneficiaries. You should always consult with your legal and/or tax adviser to
determine the account registration that best meets your needs. You must
clearly identify the type of account you want on your application. Some
account registrations may require additional documents. For example, a
parish account needs a letter, on parish stationery, stating who is authorized
to access the account. This letter must also be signed by all persons who
have that account authority.
ADDITIONAL PURCHASES BY MAIL
For additional purchases in existing Fund accounts please send your check
directly to the Fund's transfer agent at the following address:
REGULAR MAIL THE CATHOLIC FUNDS C/O FIRSTAR MUTUAL FUND
SERVICES LLC PO BOX 701 MILWAUKEE WI 53201-0701
EXPRESS MAIL/PRIVATE THE CATHOLIC FUNDS C/O FIRSTAR
MUTUAL FUND SERVICES LLC THIRD FLOOR 615 EAST MICHIGAN
STREET MILWAUKEE WI 53202
Please indicate your Catholic Fund account number on the face of all
subsequent investment checks and make your check payable to The
Catholic Funds.
BY TELEPHONE
Before you can buy additional shares by telephone, you must have selected
the Request for Telephone Purchase option on the application. Once you
have selected this option, you can call Firstar Mutual Fund Services at 1-877-
222- 2402 and have money withdrawn from your bank checking or savings
account to make your investment. You pay the price computed after the Fund
has received your request for purchase. For example, if you telephone
before 3:00 (CST), you will get that day's price. If you telephone after 3:00
(CST), you will receive the next day's price.
< BY WIRE >
If your bank is a member of or has a corresponding relationship with a
member of the Federal Reserve System, you can buy shares of the Fund by
wire transfer by following these steps:
1. Call Firstar Mutual Fund Services at 1-877-222-2402 and provide the
following information:
- - your account registration; - the name of the Fund(s) in which you want to
invest; - your address; - your Social Security or tax identification number; -
the dollar amount; - the name of the wiring bank; and - the name and the
telephone number of the person at your bank whom we can contact about
your purchase.
Firstar must receive your wire order before the closing of the NYSE (normally
3:00 p.m. Central Time) in order for you to receive that day's price.
2. Instruct your bank to use the following instructions when wiring funds:
WIRE TO: FIRSTAR BANK MILWAUKEE, N.A. CREDIT: FIRSTAR
MUTUAL FUND SERVICES, LLC ACCOUNT 112-952-137 ROUTING
NUMBER 075000022
FURTHER CREDIT: The Catholic Money Market Fund (SHAREHOLDER
ACCOUNT NUMBER) (SHAREHOLDER REGISTRATION)
3. Mail your completed, signed application to:
REGULAR MAIL THE CATHOLIC FUNDS P.O. Box 05710, Milwaukee, WI
53205-05710
EXPRESS MAIL/PRIVATE THE CATHOLIC FUNDS 1100 West Wells St.
Milwaukee, WI 53233
Please call 1-877-222-2402 prior to sending the wire in order to obtain a
confirmation number and to ensure prompt and accurate handling of funds.
We are not responsible for the consequences of delays resulting from the
banking or Federal Reserve Wire system, or from incomplete wiring
instructions.
EXCHANGE PRIVILEGE
You may exchange shares of any Catholic Fund for shares of another
existing Catholic Fund, either in writing or by telephone, if the accounts are
identically registered (with the same name, address and Taxpayer
Identification Number). Before you can invest in another Catholic Fund you
must have the current prospectus for such Funds. A $5 fee is charged for
each telephone exchange. You may pay a sales charge if you exchange
from this Money Market Fund into another Fund.
AUTOMATIC INVESTMENT SERVICES
You may invest automatically in the following ways, some of which may be
subject to additional restrictions or conditions.
BANK DRAFT PLAN This plan allows you to make regular, automatic
investments from your bank checking or savings account.
AUTOMATIC EXCHANGE PLAN This plan allows you to make regular,
automatic exchanges from one eligible Catholic Fund to another and may be
appropriate for an investment technique known as dollar cost averaging.
Before you can invest in another Catholic Fund you must have the current
prospectus for such Funds.
SELLING SHARES
You can sell shares in several ways.
<BY MAIL >
Write a letter of instruction. It should specify your account number, the dollar
amount or number of shares you wish to redeem, the names and signatures
of the owners (or other authorized persons), and your mailing address. Then,
mail it to:
REGULAR MAIL THE CATHOLIC FUNDS C/O FIRSTAR MUTUAL FUND
SERVICES LLC PO BOX 701 MILWAUKEE WI 53201-0701
EXPRESS MAIL/PRIVATE THE CATHOLIC FUNDS C/O FIRSTAR
MUTUAL FUND SERVICES LLC THIRD FLOOR 615 EAST MICHIGAN
STREET MILWAUKEE WI 53202
TELEPHONE REDEMPTION
Telephone redemption privileges exist on your account (unless you chose
not to have them when you opened your account). With this option, you may
sell shares by phone and receive the proceeds in one of two ways:
(1) We can mail a check to the address on your account if this address has
been current for at least 60 days, and you have not placed a previous
redemption within the prior 30 days.
(2) For a $12 fee, we can transmit the proceeds by wire to a properly pre-
authorized bank account. The proceeds usually will arrive at your bank the
first banking day after we process your redemption.
CHECKWRITING
Sign up for free checkwriting when you open your account or call 1-877-222-
2402 to add it later to an existing account.
Please remember:
Check redemptions must be for a minimum of $500.
You cannot write a check to close out an account.
If you recently purchased shares, a redemption request, including a check
redemption, on those shares will not be honored until 12 days after we
received the purchase check or electronic transaction.
You will be charged a service fee, currently $20, for a stop-payment on a
check written on your Catholic Funds account.
Some transactions and requests require a signature guarantee. If you are
selling shares you hold in certificate form, you must submit the certificates
with your redemption request. Each registered owner must sign the
certificates and all signatures must be guaranteed.
SYSTEMATIC WITHDRAWAL PLAN
This plan allows you to redeem a fixed sum from your account on a regular
basis. Payments may be sent electronically to a bank account or as a check
to you or anyone you properly designate. You must have a minimum account
balance of $5,000 to start this plan and you may have up to 9 withdrawals
per month per account.
RETIREMENT ACCOUNTS
With an IRA (or other retirement account), you will be charged a $12.50
annual account maintenance fee for each account up to a maximum of $25.
If you sell shares out of a qualified retirement account and you are eligible to
roll the sale proceeds into another retirement plan, we will withhold for
federal income tax purposes a portion of the sale proceeds unless you
transfer all of the proceeds to an eligible retirement plan. We will tell you
before the fees are changed.
Special distribution requirements may apply to retirement accounts such as a
403(b)(7) plan.
For instructions on Roth and Traditional IRA accounts, SIMPLE IRA, SEP-
IRA, 403(b)(7), Keogh, Pension Plan, Profit Sharing Plan or 401(k) Plan
accounts, call 1-877-222-2402.
SIGNATURE GUARANTEES
We require a signature guarantee to help ensure that major transactions or
changes to your account are in fact authorized by you. For example, we
require a signature guarantee on written redemption requests for more than
$25,000. You can obtain a signature guarantee for a nominal fee from most
banks, brokerage firms and other financial institutions. A notary public stamp
or seal cannot be substituted for a signature guarantee.
ADDITIONAL POLICIES
TELEPHONE TRANSACTIONS
Once you place a telephone transaction request, it cannot be canceled or
modified. We use reasonable procedures to confirm that telephone
transaction requests are genuine. We may be responsible if we do not follow
these procedures. You are responsible for losses resulting from fraudulent or
unauthorized instructions received over the telephone, provided we
reasonably believe the instructions were genuine. During times of unusual
market activity or when our phones are not working properly you may
experience a delay placing a telephone request. We may also suspend the
right to make telephone transactions during such times.
DIVIDEND DISTRIBUTION POLICY
The Fund pays you dividends from net investment income monthly.
Dividends are declared on each day that NAV is calculated, except for bank
holidays. Dividends earned on weekends, holidays and days when the
Fund's NAV is not calculated are declared on the first day preceding these
days that the Fund's NAV is calculated. Your investment earns dividends
from the first business day after we accept your purchase order.
REINVESTMENT OF DIVIDENDS
Your dividend distributions will be automatically reinvested in additional
shares of the Fund, unless you choose otherwise. Your other options are to
receive checks for these payments, have them automatically invested in
another Catholic Fund or have them deposited into your bank account.
DISTRIBUTION FEES
We have adopted a plan under Rule 12b-1 of the Investment Company Act of
1940 that allows The Fund to pay an annual fee of 0.05% of its average daily
net assets for providing certain distribution and continuing services to
shareholders. Because these fees are paid from Fund assets on an ongoing
basis, these fees will increase your costs over time and may cost you more
than other types of sales charges.
STATEMENTS
You will receive confirmation of your original purchase and, thereafter,
monthly statements showing your account activity. To assist you in tax
preparation, after the end of each calendar year, we send you a statement of
your ordinary dividends (Form 1099 DIV).
BACKUP WITHHOLDING
By law, we must withhold 31% of your distributions and proceeds if (1) you
are subject to backup withholding or (2) you have not provided us with
complete and correct taxpayer information such as your Social Security
Number (SSN) or Tax Identification Number (TIN).
RESERVED RIGHTS
We reserve the right to:
- -Refuse, change, discontinue or temporarily suspend account services,
including purchase, exchange or telephone redemption privileges, for any
reason.
- -Reject any purchase request for any reason including exchanges from other
Catholic Funds. Generally, we do this if the purchase or exchange is
disruptive to the efficient management of a Fund (due to the timing of the
investment or an investor's history of excessive trading).
- -Change the minimum or maximum investment amounts.
- -Delay sending out redemption proceeds for up to seven days (this generally
only applies to very large redemptions without notice, excessive trading or
during unusual market conditions).
- -Suspend redemptions or postpone payments when the NYSE is closed for
any reason other than its usual weekend or holiday closings, when trading is
restricted by the SEC or under any circumstances deemed an emergency
under applicable law. Make a redemption-in-kind (a payment in portfolio
securities rather than cash) if the amount you are redeeming is in excess of
the lesser of (1) $250,000 or (2) 1% of the Fund's assets.
- -Close any account that does not meet minimum investment requirements.
We will give you notice and 60 days to begin an automatic investment
program or to increase your balance to the required minimum.
- -Reject any purchase or redemption request that does not contain all
required documentation.
(Back Cover)
FOR MORE INFORMATION
More information is available upon request at no charge, including:
SHAREHOLDER REPORTS: Additional information will be available in the
annual and semi-annual report to shareholders. These reports contain a
letter from management, show portfolio holdings. discuss recent market
conditions, economic trends and investment strategies that significantly
affected your investment's performance during the last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI): The SAI contains
more details about investment policies and techniques. A current SAI is on
file with the SEC and is incorporated into this prospectus by reference. This
means that the SAI is legally considered a part of this prospectus even
though it is not physically contained within this prospectus.
To request information or to ask questions call us toll free at 1-(877) 222-
2402
To reduce the volume of mail you receive, we will mail only one copy of the
most recent financial report and/or prospectuses to your household. Call 1-
877-222- 2402 if you wish to receive free additional copies.
This prospectus is not an offer to sell securities in any place where it would
be illegal to do so.
YOU CAN ALSO OBTAIN COPIES BY VISITING THE SEC'S PUBLIC
REFERENCE ROOM IN WASHINGTON, D.C. OR BY SENDING YOUR
REQUEST AND A DUPLICATING FEE TO THE SECURITIES AND
EXCHANGE COMMISSION'S PUBLIC REFERENCE SECTION,
WASHINGTON, D.C. 20549- 6009. YOU CAN CALL 1-800-SEC-0330 FOR
INFORMATION ON THE OPERATION OF THE PUBLIC REFERENCE
ROOM.
The above information is also available on the Securities and Exchange
Commission website http://www.sec.gov.
SEC file number: 811-09177
STATEMENT OF ADDITIONAL INFORMATION ("SAI")
The Catholic Funds, Inc.
1100 West Wells Street
Milwaukee, Wisconsin 53233
The Catholic Money Market Fund
November 8, 1999
TABLE OF CONTENTS PAGE
Fund History and Organization
Investment Restrictions
Investment Policies and Techniques
Rule 2a-7 Maturity, Quality and diversification Restrictions
Variable or Floating Rate Securities
Management
Operations
Distributor
Distribution Plan
Principal Shareholders
Portfolio Transactions and Brokerage
Accounting, Fulfillment, Custodian and Transfer Agent Services
Taxes
Determination of Net Asset Value
Additional Shareholder Information
Financial Statements
No person has been authorized to give any information or to make any
representations other than those contained in this SAI and its corresponding
Prospectus dated November 8, 1999, and if given or made, such information
or representations may not be relied upon as having been authorized. This
SAI does not constitute an offer to sell securities. Three other series of The
Catholic Funds, Inc. (Equity Income, Large-Cap Growth and Disciplined
Capital Appreciation Funds) have their own prospectus and SAI and a
prospective shareholder should read and review these prior to any
investment in such other series. Prospectuses and SAIs may be obtained by
calling toll free 1-877-222- 2402 or writing to Catholic Financial Services
Corporation at 1100 West Wells Street, Milwaukee, WI 53233.
FUND HISTORY AND ORGANIZATION
The Catholic Funds are a family of funds consisting of four separate series of
The Catholic Funds, Inc., a Maryland corporation registered as an open-end
management investment company under the Investment Company Act of
1940 (the "1940 Act"). The Catholic Funds, Inc. was organized by Catholic
Financial Services Corporation (CFSC) in 1998. All of the stock of CFSC, a
Wisconsin corporation, is owned by a consortium of Catholic fraternal
benefits insurance societies (the "Catholic Fraternal Alliance"). The majority
of the stock of CFSC is held by Catholic Knights Financial Services, Inc., a
wholly-owned subsidiary of Catholic Knights Insurance Society, which
functions as an administrative holding company. Further information
regarding the Catholic Fraternal Alliance is contained in the Prospectus
under "Management."
INVESTMENT POLICIES AND RESTRICTIONS
The following policies and restrictions supplement the investment objective
and policies set forth in the Fund's Prospectus:
REPURCHASE AGREEMENTS. The Fund may invest in repurchase
agreements for defensive purposes due to market conditions or to generate
income from an excess cash balance. A repurchase agreement is an
agreement where the Fund gets a fixed-income security (usually a security
issued by the U.S. Government or one of its agencies, a banker's
acceptance or a certificate of deposit) from a bank or other party, that is
subject to resale to the seller at an agreed upon price and date (normally, the
next business day). A repurchase agreement may be considered a loan
collateralized by securities. The price reflects an agreed upon interest rate
effective for the time the security is owned by the Fund. In these
transactions, the securities acquired by the Fund (including accrued interest
earned thereon) must have a total value in excess of the value of the
repurchase agreement and are held by a custodian bank until repurchased.
In addition, the Fund's Board will monitor the Fund's repurchase agreement
transactions generally and will establish guidelines and standards for review
by the investment adviser of the creditworthiness of any bank, broker or
dealer party to a repurchase agreement with the Fund.
Repurchase agreements have some risks. If the other party defaults on its
obligation at a time when the value of the security has declined, the Fund
may incur a loss. If the other party becomes insolvent a court may find that
the underlying security is collateral for a loan by the Fund and the Fund may
not have complete control over the collateral. It is also possible that the Fund
may not be able to prove its interest in the underlying security and may be
treated as an unsecured creditor. While the Adviser and Sub-adviser
acknowledge these risks, they expect to control them.
LENDING OF SECURITIES. The Fund may lend securities to qualified
institutional investors (typically brokers, dealers, banks or other financial
institutions) who need to borrow securities in order to complete transactions
such as covering short sales. The Fund tries to increase its income through
the receipt of interest on the loan. The Fund realizes gains or losses on the
securities loaned that occur during the term of the loan. The terms and the
structure and the total amount of such loans must comply with the
Investment Company Act of 1940, and any Rules and Regulations or
interpretations of the Securities and Exchange Commission. These
provisions currently limit the amount of securities a fund may lend to 33 1/3%
of the its total assets, and require that (a) the borrower pledge and maintain
with the Fund collateral consisting of cash, an irrevocable letter of credit or
securities issued or guaranteed by the United States Government having at
all times not less than 100% of the value of the securities loaned, (b) the
borrower add to such collateral whenever the price of the securities loaned
rises (i.e., the borrower "marks to the market" on a daily basis), (c) the loan
be made subject to termination by the Fund at any time, and (d) the Fund
receive reasonable interest on the loan (which may include the Fund's
investing any cash collateral in interest bearing short-term investments), any
distribution on the loaned securities and any increase in their market value.
Loan arrangements made by the Fund will comply with all other applicable
regulatory requirements, including the rules of the New York Stock
Exchange, which presently require the borrower, after notice, to redeliver the
securities within the normal settlement time of three business days. All
relevant facts and circumstances, including the creditworthiness of the
broker, dealer or institution, will be considered in making decisions with
respect to the lending of securities, subject to review by the Fund's Board.
ILLIQUID SECURITIES. The Fund may invest up to 10% of its net assets in
illiquid securities. Illiquid securities are securities that may not be sold or
disposed of in the ordinary course of business within seven business days at
approximately the value at which they are being carried on the Fund's books.
The Fund may invest in restricted, privately placed securities that, under SEC
rules, may be sold only to qualified institutional buyers. Because these
securities can be resold only to qualified institutional buyers it could be
difficult for the Fund to convert to sell them if needed.
If a market develops for a restricted security held by the Fund, it may be
treated as a liquid security, in accordance with procedures and guidelines
approved by the Fund's Board. This generally includes securities that are
unregistered that can be sold to qualified institutional buyers in accordance
with Rule 144A under the 1933 Act. While the sub-adviser determines the
liquidity of restricted securities on a daily basis, the Board oversees and
retains ultimate responsibility for the decisions. Several factors the Board
considers in monitoring these decisions include the valuation of a security,
the availability of qualified institutional buyers, and the availability of
information about the security's issuer.
FUNDAMENTAL INVESTMENT RESTRICTIONS: The Fund has following
fundamental investment limitations, which cannot be changed in any material
way without the approval of the holders of a majority of the Fund's shares.
For these purposes, a "majority" of shares means shares representing the
lesser of: (i) 67% or more of the votes cast to approve a change, so long as
shares representing more than 50% of the Fund's net asset value are
present or represented by proxy; or (ii) more than 50% of the Fund's net
asset value. These limitations are considered at the time investment
securities are purchased.
BORROWING. The Fund may not borrow money, except for temporary or
emergency purposes in an amount not exceeding 10% of its Fund's net
assets. The Fund may only borrow money through banks or reverse
repurchase agreements, and must comply with all applicable rules and
regulations. The Fund may not borrow to increase income (leveraging), but
only to facilitate redemption requests which might otherwise require untimely
dispositions of portfolio securities. When borrowing exceeds 5% of the
Fund's net assets, the Fund will repay all borrowings before making
additional investments, and interest paid on such borrowings will reduce net
income.
COMMODITIES. The Fund may not invest in commodities or commodity
contracts.
DIVERSIFICATION. The Fund may not purchase securities of any issuer if,
as a result, more than 5% of the Fund's total assets would be invested in that
issuer's securities. This limitation does not apply to obligations of the United
States Government, its agencies, or instrumentalities. The Fund may,
however, invest in a single issuer as permitted by the Securities and
Exchange Commission (which currently permits a money market fund to
invest up to 25% of its total assets in the highest-quality securities of a
single issuer for a period of up to three business days).
ILLIQUID SECURITIES. The Fund may not acquire any security if, as a
result, more than 10% of its net assets would be invested in securities that
are illiquid.
INDUSTRY CONCENTRATION. The Fund may not invest more than 25% of
its total assets in any one industry, provided that there is no limitation with
respect to investments in United States Treasury Bills, other obligations
issued or guaranteed by the Federal Government, its agencies and
instrumentalities or certificates of deposit or banker's acceptances of
domestic institutions.
INVESTING FOR CONTROL. The Fund may not invest in a company for
purposes of controlling its management.
INVESTMENT COMPANIES (Mutual Funds). The Fund may not invest in
any other investment company, except through a merger, consolidation or
acquisition of assets, or to the extent permitted by Section 12 of the 1940
Act. Investment companies whose shares the Fund acquires pursuant to
Section 12 must have investment objectives and investment policies
consistent with those of the Fund.
LOANS. The Fund may not make loans to other persons, except by the
purchase of obligations in which the Fund is authorized to invest.
MARGIN. The Fund may not purchase securities on margin or sell securities
short.
OIL, GAS, MINERALS. The Fund may not invest in interests in oil, gas or
other mineral exploration or development programs.
PLEDGING ASSETS. The Fund may pledge, mortgage or hypothecate its
assets in an amount up to 10% of its net assets, but only to secure
borrowings for temporary or emergency purposes.
PUT, CALL, STRADDLE, SPREAD OPTIONS. The Fund may not write or
invest in put, call, straddle, or spread options.
REAL ESTATE. The Fund may not invest directly in real estate, or real
estate investment trust securities.
SENIOR SECURITIES. The Fund may not issue senior securities.
UNDERWRITING. The Fund may not engage in the business of
underwriting securities issued by other persons. The Fund will not be
considered an underwriter when disposing of its investment securities.
All capitalized but undefined terms in this discussion shall have the meaning
such terms have in Rule 2a-7 under the 1940 Act. The Fund is subject to
certain maturity restrictions in accordance with Rule 2a-7 for money market
funds that use the amortized cost method of valuation to maintain a stable
net asset value of $1.00 per share. Accordingly, the Fund will (1) maintain a
dollar weighted average portfolio maturity of 90 days or less, and (2) will
purchase securities with a remaining maturity of no more than 13 months
(397 calendar days). Further, the Fund will limit its investments to U.S.
dollar-denominated securities which represent minimal credit risks and meet
certain credit quality and diversification requirements. For purposes of
calculating the maturity of portfolio instruments, the Fund will follow the
requirements of Rule 2a-7. Under Rule 2a-7, the maturity of portfolio
instruments is calculated as indicated below.
Generally, the maturity of a portfolio instrument shall be deemed to be the
period remaining (calculated from the trade date or such other date on which
the Fund's interest in the instrument is subject to market action) until the
date noted on the face of the instrument as the date on which the principal
amount must be paid, or in the case of an instrument called for redemption, the
date on which the redemption payment must be made, except that: (1) An
instrument that is issued or guaranteed by the U.S. government or any
agency thereof which has a variable rate of interest readjusted no less
frequently than every 762 days shall be deemed to have a maturity equal to
the period remaining until the next readjustment of the interest rate. (2) A
Variable Rate Instrument, the principal amount of which is scheduled on the
face of the instrument to be paid on 397 calendar days or less shall be
deemed to have a maturity equal to the period remaining until the next
readjustment of the interest rate. (3) A Variable Rate Instrument that is
subject to a Demand Feature shall be deemed to have a maturity equal to
the longer of the period remaining until the next readjustment of the interest
rate or the period remaining until the principal amount can be recovered
through demand. (4) A Floating Rate Instrument that is subject to a Demand
Feature shall be deemed to have a maturity equal to the period remaining
until the principal amount can be recovered through demand. (5) A
repurchase agreement shall be deemed to have a maturity equal to the
period remaining until the date on which the repurchase of the underlying
securities is scheduled to occur, or, where no date is specified, but the
agreement is subject to a demand, the notice period applicable to a demand
for the repurchase of the securities.
The Fund is subject to certain credit quality restrictions pursuant to Rule 2a-7
under the 1940 Act. The Fund will invest at least 95% of its assets in
instruments determined to present minimal credit risks and, at the time of
acquisition, are (1) obligations issued or guaranteed by the U.S. government,
its agencies, or instrumentalities; (2) rated by at least two nationally
recognized rating agencies (or by one agency if only one agency has issued
a rating) (the "required rating agencies") in the highest rating category for
short-term debt obligations; (3) unrated but whose issuer is rated in the
highest category by the required rating agencies with respect to a class of
short-term debt obligations or any security within that class that is
comparable in priority and security with the instrument; or (4) unrated (other
than the type described in (3)) but determined by the Board of Directors of
the Fund to be of comparable quality to the foregoing (provided the unrated
security has not received a short-term rating, and with respect to a long-term
security with a remaining maturity within the Fund's maturity restrictions, has
not received a long-term rating from any agency that is other than in its
highest rating category). The foregoing are referred to as "first-tier
securities."
The balance of the securities in which the Fund may invest are instruments
determined to present minimal credit risks, which do not qualify as first-tier
securities, and, at the time of acquisition, are (1) rated by the required
rating agencies in one of the two highest rating categories for short-term debt
obligations; (2) unrated but whose issuer is rated in one of the two highest
categories by the required rating agencies with respect to a class of short-
term debt obligations or any security within that class that is comparable in
priority and security with the obligation; or (3) unrated (other than described
in (2)) but determined by the Board of Directors of the Fund to be of
comparable quality to the foregoing (provided the unrated security has not
received a short-term rating and, with respect to a long-term security with a
remaining maturity within the Fund's maturity restrictions, has not received a
long-term rating from any agency that is other than in one of its highest two
rating categories). The foregoing are referred to as "second-tier securities."
In addition to the foregoing guidelines, the Fund is subject to certain
diversification restrictions pursuant to Rule 2a-7 under the 1940 Act, which
include (1) the Fund will not acquire a second-tier security of an issuer if,
after giving effect to the acquisition, the Fund would have invested more than
the greater of 1% of its total assets or one million dollars in second-tier
securities issued by that issuer, or (2) the Fund will not invest more than 5%
of the Fund's assets in the securities (other than securities issued by the U.S.
government or any agency or instrumentality thereof) issued by a single
issuer, except for certain investments held for not more than 3 business
days.
VARIABLE- OR FLOATING-RATE SECURITIES
The Fund may invest in securities which offer a variable- or floating-rate of
interest. Variable-rate securities provide for automatic establishment of a new
interest rate at fixed intervals (e.g. daily, monthly, semi-annually, etc.).
Floating-rate securities generally provide for automatic adjustment of the
interest rate whenever some specified interest rate index changes. The
interest rate on variable- or floating-rate securities is ordinarily determined
by reference to or is a percentage of a bank's prime rate, the 90-day U.S.
Treasury bill rate, the rate of return on commercial paper or bank certificates
of deposit, an index of short-term interest rates, or some other objective
measure. Variable- or floating-rate securities frequently include a demand
feature entitling the holder to sell the securities to the issuer at par. In
many cases, the demand feature can be exercised at any time on seven days
notice; in other cases, the demand feature is exercisable at any time on 30
days notice or on similar notice at intervals of not more than one year.
Some securities which do not have variable or floating interest rates may be
accompanied by puts producing similar results and price characteristics.
When considering the maturity of any instrument which may be sold or put to
the issuer or a third party, the Fund may consider that instrument's maturity
to be shorter than its stated maturity. Variable-rate demand notes include
master demand notes which are obligations that permit the Fund to invest
fluctuating amounts, which may change daily without penalty, pursuant to
direct arrangements between the Fund, as lender, and the borrower. The
interest rates on these notes fluctuate from time to time. The issuer of such
obligations normally has a corresponding right, after a given period, to
prepay in its discretion the outstanding principal amount of the obligations
plus accrued interest upon a specified number of days notice to the holders
of such obligations. The interest rate on a floating-rate demand obligation is
based on a known lending rate, such as a bank's prime rate, and is adjusted
automatically each time such rate is adjusted. The interest rate on a variable-
rate demand obligation is adjusted automatically at specified intervals.
Frequently, such obligations are secured by letters of credit or other credit
support arrangements provided by banks. Because these obligations are
direct lending arrangements between the lender and rower, it is not
contemplated that such instruments will generally be traded. There generally
is not an established secondary market for these obligations, although they
are redeemable at face value. Accordingly, where these obligations are not
secured by letters of credit or other credit support arrangements, the Fund's
right to redeem is dependent on the ability of the borrower to pay principal
and interest on demand. Such obligations frequently are not rated by credit
rating agencies and, if not so rated, the Fund may invest in them only if the
Adviser determines that at the time of investment the obligations are of
comparable quality to the other obligations in which the Fund may invest.
The Adviser, on behalf of the Fund, will consider on an ongoing basis the
creditworthiness of the issuers of the floating- and variable-rate demand
obligations in the Fund's portfolio.
The Fund will not invest more than 10% of its net assets in variable- and
floating-rate demand obligations that are not readily marketable (a variable-
or floating-rate demand obligation that may be disposed of on not more than
seven days notice will be deemed readily marketable and will not be subject
to this limitation). In addition, each variable- or floating-rate obligation
must meet the credit quality requirements applicable to all the Fund's
investments at the time of purchase. When determining whether such an obligation
meets the Fund's credit quality requirements, the Fund may look to the credit
quality of the financial guarantor providing a letter of credit or other credit
support arrangement.
In determining the Fund's weighted average portfolio maturity, the Fund will
consider a floating- or variable-rate security to have a maturity equal to its
stated maturity (or redemption date if it has been called for redemption),
except that it may consider (1) variable-rate securities to have a maturity
equal to the period remaining until the next readjustment in the interest rate,
unless subject to a demand feature, (2) variable-rate securities subject to a
demand feature to have a remaining maturity equal to the longer of (a) the
next readjustment in the interest rate or (b) the period remaining until the
principal can be recovered through demand, and (3) floating-rate securities
subject to a demand feature to have a maturity equal to the period remaining
until the principal can be recovered through demand. Variable- and floating-
rate securities generally are subject to less principal fluctuation than
securities without these attributes since the securities usually trade at
amortized cost following the readjustment in the interest rate.
MANAGEMENT
The Fund Directors are listed below.
<TABLE>
<CAPTION>
Name Position with The Business affiliations Compensation from
Catholic Funds, Inc. during the past five The Catholic Funds,
years Inc.
<S> <C> <C> <C>
Daniel J. Steininger* Chairman of the Director President of 0
1100 West Wells Street Board of Directors Catholic Knights
Milwaukee, WI 53233 Insurance Society
D.O.B. 5/1/45
Allan G. Lorge* President, Chief Director and 0
1100 West Wells Street Executive Officer, Secretary/Treasurer
Milwaukee, WI 53233 Director of Catholic Knights
D.O.B. 12/9/49 Insurance Society
James M. Borden Director Chief Executive $1,500
P.O. Box 591 Officer of HUFCOR
Janesville, WI 53547 (1978 - present)
D.O.B. 12/21/36
Daniel R. Doucette Director President and CEO of $1,500
North Sunnyslope Road Milwaukee Mutual
Brookfield, WI 53005 Insurance Company,
D.O.B. 9/03/49 President of The
Milwaukee Rampage
Professional Soccer Team
Thomas J. Munninghoff Director President, $1,500
430 Reading Road Munninghoff, Lang
Cincinnati, OH 45202 and Co. (accounting
D.O.B. 8/27/47 firm) since 1983
Conrad L. Sobczak Director Retired, formerly $1,500
6015 Washington Boulevard President and CEO,
Wauwatosa, WI 53213 Family Health
D.O.B. 10/20/38 Systems, Inc. from
1987 - 1998
David L. Vollmar Director Retired, formerly $1,500
1700 Arrowhead Court Partner, Arthur
Elm Grove, WI 53122 Andersen LLP from
D.O.B. 12/15/33 1951 - 1988
Thomas Bausch Director Professor of $1,500
Marquette University Management,
Straz Hall Marquette University
606 N. 13th Street College of Business
Milwaukee, WI 53233 Administration since
D.O.B. 06/06/38 1978; formerly a
director for 10 years
of Heartland Group,
Inc. (mutual fund
family)
</TABLE>
*Interested Director as defined by the Investment Company Act of 1940
**Each of The Catholic Funds pays an equal portion of the fees and
expenses of the five Directors who are officers, director or employees or
affiliated persons of the Adviser. Such fees consist of an annual retainer in
the amount of $500 and $250 per Board meeting attended. The estimated
annual compensation to be paid by The Funds to each of the Directors is set
forth in the table. There are no other funds in the fund complex nor does any
director receive any retirement benefits from The Catholic Funds, Inc.
The Fund Officers are listed below:
Name and address Position Business affiliations during
the past five years
Daniel Steininger Chairman of the Board Director President of Catholic
1100 West Wells Street Knights Insurance Society
Milwaukee, WI 53233
Allan Lorge President Director and Secretary/Treasurer
1100 West Wells Street of Catholic Knights Insurance
Milwaukee, WI 53233 Society
Theodore Zimmer Vice President General Counsel, Catholic
1100 West Wells Street Knights Insurance Society since
Milwaukee, WI 53233 September 1997; Partner at
D.O.B. 12/17/40 Miller, Simon, McGinn and Clark
(law firm) from October 1996 to
Sept. 1997, and prior to October
1996 Partner at Quarles &
Brady LLP
Russell Kafka Treasurer Director of Catholic Knights
1100 West Wells Street Financial Services, since June
Milwaukee, WI 53233 1994; Director of Catholic
D.O.B. 6/20/44 Brokerage Services Corp. since
November 1994; and Vice
President - Investments of
Catholic Knights Insurance
Society since January
Joe Wreschnig Secretary Director of Mutual Funds
1100 West Wells Street Operations, Catholic Financial
Milwaukee, WI 53233 Services Corp., since January
D.O.B. 6/30/50 1999, prior to January 1999,
Assistant Vice President and
Secretary of AAL Capital
Management Corporation and
Instructor at Cardinal Stritch
University since 1990
Mark Forbord Chief Financial Controller of Catholic Knights
1100 West Wells Street Officer and Financial Services, Inc. since
Milwaukee, WI 53233 Accountant April 19, 1996; Controller of
D.O.B. 1/21/54 Catholic Brokerage Services
Corp. since April 19, 1996;
Senior Finanical Analyst of
Catholic Knights Insurance
Society since 1995; Instructor
at The University of
Wisconsin-Milwaukee since Jan.
1986; and Instructor at Cardinal
Stritch University since
September 1990
MANAGEMENT
The Fund is managed by CFSC pursuant to an Investment Advisory
Agreement. The Agreement was approved by the Board of Directors,
including a majority of the Directors who are not Interested Persons of the
Funds or of CFSC on February 17, 1999 and amended to include the Money
Market Fund on July 27th, 1999. Basic information as to the Adviser and the
Investment Advisory Agreement is set forth in the Prospectus under
"Management". Strong Investment Management, Inc. has been engaged to
serve as Sub-Adviser to the Fund. The Sub-Advisory Agreement requires the
Sub-Adviser, as it relates to its duties under the Sub-Advisory Agreement, to
provide and supervise, at its expense, the activities of all administrative and
clerical personnel required to provide effective corporate administration for
the Fund, including the compilation and maintenance of records with respect
to its operations, the preparation and filing of specified reports, and
composition of proxy materials and registration statements for continuous
public sale of shares of the Funds. Expenses not expressly assumed by the
Adviser under the Investment Advisory Agreement, the Sub-Advisers under
the Sub-Advisory Agreements, or by the Distributor under the Distribution
Agreement are paid by the Funds. The Sub-Advisory Agreements provide
that in the absence of willful misfeasance, bad faith or gross negligence in
the performance of its duties, or reckless disregard for obligations and duties
under the Sub-Advisory Agreement, the Sub-Adviser is not liable for any loss
resulting from a good faith error or omission on its part with respect to any of
its duties thereunder.
OPERATIONS
Except for expenses assumed by the Adviser, as set forth above, or by the
Sub- adviser. with respect to the distribution of the Fund's shares, the Fund
is responsible for all its other expenses, including, without limitation,
interest charges, taxes, brokerage commissions, and similar expenses; expenses
of issue, sale, repurchase or redemption of shares; expenses of registering or
qualifying shares for sale with the states and the SEC; expenses for printing
and distribution of prospectuses to existing shareholders; charges of
custodians (including fees as custodian for keeping books and similar
services for the Fund), transfer agents (including the printing and mailing of
reports and notices to shareholders), registrars, auditing and legal services,
and clerical services related to recordkeeping and shareholder relations;
printing of stock certificates; fees for directors who are not "interested
persons" of the Adviser; expenses of indemnification; extraordinary
expenses; and costs of shareholder and director meetings.
As compensation for its services, the Fund pays to the Adviser a monthly
management fee at the annual rate specified in the prospectus. The
prospectus also describes payments to the Sub-adviser by the Adviser.
From time to time, the Adviser may voluntarily waive all or a portion of its
management fee for the Fund. Reimbursement of expenses in excess of the
applicable limitation will be made on a monthly basis and will be paid to the
Fund by reduction of the Adviser's fee, subject to later adjustment, month by
month, for the remainder of the Fund's fiscal year. The Adviser may from
time to time voluntarily absorb expenses for the Fund in addition to the
reimbursement of expenses in excess of applicable limitations.
The Fund and the Adviser have adopted a Code of Ethics ("Code") which
governs the personal trading activities of all "Access Persons" of the Adviser.
The Code is based upon the principal that such Access Persons have a
fiduciary duty to place the interests of the Fund and the Adviser 's other
clients ahead of their own. The Code requires Access Persons to, among
other things, preclear their securities transactions with limited exceptions,
such as transactions in shares of mutual funds, variable insurance products,
direct obligations of the U.S. government, and certain stocks of companies
that meet minimum market capital and "float" requirements.
The Code, which applies to all Access Persons includes a ban on acquiring
any securities in an initial public offering, other than a new offering of a
registered open-end investment company, and a prohibition from profiting on
short-term trading in securities. Finally, the Code provides for trading "black
out" periods of seven calendar days during which time Advisory Persons may
not trade in securities which have been purchased or sold by any mutual
fund or other account managed by the portfolio manager.
From time to time, the Adviser may make available to third parties current
and historical information about the portfolio holdings of the Adviser's mutual
funds or other clients. Release may be made to entities such as fund ratings
entities, industry trade groups, and financial publications. Generally, the
Adviser will release this type of information only where it is otherwise
publicly available. This information may also be released where the Adviser
reasonably believes that the release will not be to the detriment of the best
interests of its clients. For more complete information about the Adviser,
including its services, investment strategies, policies, and procedures, please
call 1-877-222-2402 and ask for a copy of the Adviser's Form ADV.
DISTRIBUTOR
CFSC, the Fund's investment Adviser, also acts as Distributor of the shares
of The Fund. CFSC has agreed to use its "best-efforts" to distribute the
Fund's shares, but has not committed to purchase or sell any specific
number of shares. The Distribution Agreement for the Fund is renewable
annually by the vote of the directors at a meeting called for such purpose and
may be terminated upon 30 days' written notice by either party. Under the
Agreement, CFSC will pay for the costs and expenses of preparing, printing
and distributing materials not prepared by the Funds and used by CFSC in
connection with its offering of shares for sale to the public, including the
additional costs of printing copies of the prospectus and of annual and
interim reports to shareholders other than copies required for distribution to
shareholders or for filing under the federal securities laws, and any expenses
of advertising incurred by CFSC in connection with the offering of the shares.
DISTRIBUTION PLAN
The Fund has adopted a distribution plan (the "Distribution Plan") pursuant to
Rule 12b-1 of the Investment Company Act. Under the Plan, the Adviser
provides the Directors after the end of each quarter a written report setting
forth all amounts expended under the Plan, including all amounts paid to
dealers as distribution or service fees. In approving the Plan in accordance
with the requirements of Rule 12b-1, the Directors considered various
factors, including the amount of the distribution fee. The Directors determined
that there is a reasonable likelihood that the Plan benefit the Fund and the
shareholders of the Fund. The Plan may be terminated by vote of a majority
of the Directors who are not interested persons, or by vote of the majority of
the outstanding voting securities of the Fund. Any change in the Plan that
would materially increase the distribution cost to the Fund requires
shareholder approval; otherwise, it may be amended by the Directors,
including a majority of the Directors who are not interested persons, by vote
cast in person at a meeting called for the purpose of voting upon such
amendment. So long as a Distribution Plan is in effect, the selection or
nomination of the Directors who are not interested persons is committed to
the discretion of such Directors. The Distribution Plan of a Fund may be
terminated by the Directors at any time on 60 days written notice without
payment of any penalty by the Adviser, by vote of a majority of the
outstanding voting securities of the Fund, or by vote of a majority of the
Directors who are not interested persons.
PRINCIPAL SHAREHOLDERS
No shares have been sold as of the date of this SAI.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Under the Investment Advisory Agreement and the Sub-Advisory Agreement
(referred to hereinafter in this section as the "Advisory Agreements"), the
Adviser and Sub-Advisers (hereinafter referred to in this section as the
"Advisers") have the authority to direct the placement of orders for the
purchase and sale of the Funds' portfolio securities. The cost of securities
transactions for each Fund will consist primarily of brokerage commissions or
dealer or underwriter spreads. Occasionally, securities may be purchased
directly from the issuer. For securities traded primarily in the over-the-
counter market, the sellers who make a market in the securities will be dealt
with directly unless better prices and execution are available elsewhere.
Such dealers usually act as principals for their own account. In placing
portfolio transactions, the Advisers seek the best combination of price and
execution. In determining which brokers provide best execution, the Advisers
look primarily to the stock price quoted by the broker, and normally places
orders with the broker through which the most favorable price can be
obtained. It is expected that securities will ordinarily be purchased in the
primary markets, and that in assessing the best net price and execution
available to the Fund, the Advisers will consider all factors they deem
relevant, including the breadth of the market in the security, the price of the
security, the financial condition and execution capability of the broker or
dealer and the reasonableness of the commission, if any (for the specific
transaction and on a continuing basis). Although it is expected that most
sales of shares of the Funds will be made by the Distributor, the Advisers
may in the future consider the willingness of particular brokers to sell shares
of the funds they advise as a factor in the selection of brokers for the Funds'
portfolio transactions, subject to the overall best price and execution
standard. Assuming equal execution capabilities, other factors may be taken
into account in selecting brokers or dealers to execute particular transactions
and in evaluating the best net price and execution available. The Advisers
may consider "brokerage and research services" (as those terms are defined
in Section 28(e) of the Securities Exchange Act of 1934), statistical
quotations, specifically the quotations necessary to determine the Funds' net
asset values, and other information provided to the Funds, to the Adviser (or
their affiliates)). The Advisers may also cause a Fund to pay to a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction. The Advisers must determine, in good faith, however, that such
commission was reasonable in relation to the value of the brokerage and
research services provided, viewed in terms of that particular transaction or
in terms of all the accounts over which the Advisers exercise investment
discretion. It is possible that certain of the services received by the Advisers
attributable to a particular transaction will benefit one or more other accounts
for which investment discretion is exercised by the Advisers.
The Fund has not yet paid brokerage commissions.
ACCOUNTING, FULFILLMENT, CUSTODIAN AND TRANSFER AGENT
SERVICES
Firstar Mutual Fund Services, LLC ("Firstar") provides fund accounting,
fulfillment, custodian and transfer agent services to each of the Funds. Firstar
provides fund accounting services pursuant to the terms of a Fund
Accounting Servicing Agreement. The current rate of payment for these
services for this Fund per year is $25,000 for the first $40 million; .001 of 1%
on average daily net assets on the next $200 million; and .005 of 1% of
average daily net assets exceeding $240 million. The Fund Accounting
Servicing Agreement will continue in effect from year to year. Under a
Fulfillment Servicing Agreement, Firstar is entitled to a fee based on the
volume of transactions. Each Fund pays a minimum monthly fee of $100.
Firstar serves as the custodian of each Fund's assets, pursuant to a
Custodian Servicing Agreement. The Custodian Servicing Agreement
provides that Firstar is entitled to receive an annual fee set at .02 of 1% on
average daily net asset value of the Fund. Firstar is entitled to receive a
minimum annual fee of $3,000 from each Fund. Firstar provides transfer
agent and dividend disbursing services to each Fund pursuant to the terms of
a Transfer Agent Servicing Agreement. Under the terms of the Transfer
Agent Servicing Agreement, Firstar is entitled to annual compensation of
minimum annual fees of $25,000 for the first Fund, and $10,000 for each
additional Fund. Firstar is also entitled to reimbursement for all out of pocket
expenses incurred in providing such services. The Transfer Agent Servicing
Agreement will continue in effect until terminated, and may be terminated by
either party without cause on ninety (90) days' prior written notice.
TAXES
The Fund intends to qualify annually for treatment as a regulated investment
company ("RIC") under Subchapter M of the IRC. If so qualified, the Fund will
not be liable for federal income tax on earnings and gains distributed to its
shareholders in a timely manner. This qualification does not involve
government supervision of the Fund's management practices or policies. The
following federal tax discussion is intended to provide you with an overview
of the impact of federal income tax provisions on the Fund or its
shareholders. These tax provisions are subject to change by legislative or
administrative action at the federal, state, or local level, and any changes
may be applied retroactively. Any such action that limits or restricts the
Fund's current ability to pass- through earnings without taxation at the Fund
level, or otherwise materially changes the Fund's tax treatment, could
adversely affect the value of a share- holder's investment in the Fund.
Because the Fund's taxes are a complex matter, you should consult your tax
adviser for more detailed information concerning the taxation of the Fund and
the federal, state, and local tax consequences to shareholders of an
investment in the Fund. In order to qualify for treatment as a RIC under the
IRC, the Fund must distribute to its shareholders for each taxable year at
least 90% of its investment company taxable income (consisting generally of
taxable net investment income, net short-term capital gain, and net gains
from certain foreign currency transactions, if applicable) ("Distribution
Requirement") and must meet several additional requirements. These
requirements include the following: (1) the Fund must derive at least 90% of
its gross income each taxable year from dividends, interest, payments with
respect to securities loans, and gains from the sale or other disposition of
securities (or foreign currencies if applicable) or other income (including
gains from options, futures, or forward contracts) derived with respect to its
business of investing in securities ("Income Requirement"); (2) at the close of
each quarter of the Fund's taxable year, at least 50% of the value of its total
assets must be represented by cash and cash items, U.S. government
securities, securities of other RICs, and other securities, with these other
securities limited, in respect of any one issuer, to an amount that does not
exceed 5% of the value of the Fund's total assets and that does not
represent more than 10% of the issuer's outstanding voting securities; and
(3) at the close of each quarter of the Fund's taxable year, not more than
25% of the value of its total assets may be invested in securities (other than
U.S. government securities or the securities of other RICs) of any one issuer.
If Fund shares are sold at a loss after being held for six months or less, the
loss will be treated as long-term, instead of short-term, capital loss to the
extent of any capital gain distributions received on those shares. The Fund's
distributions are taxable in the year they are paid, whether they are taken in
cash or reinvested in additional shares, except that certain distributions
declared in the last three months of the year and paid in January are taxable
as if paid on December 31.
The Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to
the extent it fails to distribute by the end of any calendar year substantially
all of its ordinary income for that year and capital gain net income for the
one-year period ending on October 31 of that year, plus certain other amounts.
The Fund may make additional distributions if necessary to avoid imposition
of a 4% excise tax on undistributed income and gains.
DETERMINATION OF NET ASSET VALUE
The Fund is 100% no load. This means that an investor may purchase,
redeem or exchange shares at the Fund's net asset value ("NAV") without
paying a sales charge. Generally, when an investor makes any purchases,
sales, or exchanges, the price of the investor's shares will be the NAV next
determined after we receive a request in proper form (which includes receipt
of all necessary and appropriate documentation and subject to available
funds). If we receive such a request prior to the close of the New York Stock
Exchange ("NYSE") on a day on which the NYSE is open, the share price will
be the NAV determined that day. The NAV for each Fund is normally
determined as of 3:00 p.m. Central Time ("CT") each day the NYSE is open.
The NYSE is open for trading Monday through Friday except, New Year's
Day, Martin Luther King Jr. Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
Additionally, if any of the aforementioned holidays falls on a Saturday, the
NYSE will not be open for trading on the preceding Friday, and when any
such holiday falls on a Sunday, the NYSE will not be open for trading on the
succeeding Monday, unless unusual business conditions exist, such as the
ending of a monthly or yearly accounting period.
We reserve the right to change the time at which purchases, redemptions,
and exchanges are priced if the NYSE closes at a time other than 3:00 p.m.
CT or if an emergency exists. The Fund's NAV is calculated by taking the fair
value of the Fund's total assets, subtracting all its liabilities, and dividing
by the total number of shares outstanding. Expenses are accrued daily and
applied when determining the NAV. The Fund's portfolio securities are
valued based on market quotations or at fair value as determined by the
method selected by the Fund's Board of Directors. The Fund values its
securities on the amortized cost basis and seek to maintain their net asset
value at a constant $1.00 per share. In the event a difference of 1/2 of 1% or
more were to occur between the net asset value calculated by reference to
market values and the Fund's $1.00 per share net asset value, or if there
were any other deviation which the Fund's Board of Directors believed would
result in a material dilution to shareholders or purchasers, the Board of
Directors would consider taking any one or more of the following actions or
any other action considered appropriate: selling portfolio securities to shorten
average portfolio maturity or to realize capital gains or losses, reducing or
suspending shareholder income accruals, redeeming shares in kind, or
utilizing a value per unit based upon available indications of market value.
Available indications of market value may include, among other things,
quotations or market value estimates of securities and/or values based on
yield data relating to money market securities that are published by reputable
sources.
ADDITIONAL SHAREHOLDER INFORMATION
FUND REDEMPTIONS: Shareholders can gain access to the money in their
accounts by selling (also called redeeming) some or all of their shares by
mail, telephone, computer, automatic withdrawals, through a broker-dealer,
or by writing a check (assuming all the appropriate documents and
requirements have been met for these account options). After a redemption
request is processed, the proceeds from the sale will normally be sent on the
next business day but, in any event, no more than seven days later.
TELEPHONE EXCHANGE/REDEMPTION PRIVILEGES: The Fund
employs reasonable procedures to confirm that instructions communicated
by telephone or the Internet are genuine. The Fund may not be liable for
losses due to unauthorized or fraudulent instructions. Such procedures
include but are not limited to requiring a form of personal identification prior
to acting on instructions received by telephone, providing written
confirmations of such transactions to the address of record, and tape
recording telephone instructions.
MOVING ACCOUNT OPTIONS AND INFORMATION: When establishing a
new account by exchanging funds from an existing Catholic Funds account,
some account options, such as telephone exchange, if existing on the
account from which money is exchanged, will automatically be made
available on the new account unless the shareholder indicates otherwise, or
the option is not available on the new account. Subject to applicable policies,
other account options, including automatic investment, automatic exchange
and systematic withdrawal, may be moved to the new account at the request
of the shareholder. If allowed by our policies (i) once the account options are
established on the new account, the shareholder may modify or amend the
options, and (ii) account options may be moved or added from one existing
account to another new or existing account. Account information, such as the
shareholder's address of record and social security number, will be copied
from the existing account to the new account.
REDEMPTION-IN-KIND: The Fund has elected to be governed by Rule 18f-
1 under the 1940 Act, which obligates the Fund to redeem shares in cash,
with respect to any one shareholder during any 90-day period, up to the
lesser of $250,000 or 1% of the assets of the Fund. If the Adviser determines
that existing conditions make cash payments undesirable, redemption
payments may be made in whole or in part in securities or other financial
assets, valued for this purpose as they are valued in computing the NAV for
the Fund's shares (a "redemption-in-kind"). Shareholders receiving securities
or other financial assets in a redemption-in-kind may realize a gain or loss for
tax purposes, and will incur any costs of sale, as well as the associated
inconveniences. If you expect to make a redemption in excess of the lesser
of $250,000 or 1% of the Fund's assets during any 90-day period and would
like to avoid any possibility of being paid with securities in-kind, you may do
so by providing the Catholic Funds with an unconditional instruction to
redeem at least 15 calendar days prior to the date on which the redemption
transaction is to occur, specifying the dollar amount or number of shares to
be redeemed and the date of the transaction (please call 1-877-222-2402).
This will provide the Fund with sufficient time to raise the cash in an orderly
manner to pay the redemption and thereby minimize the effect of the
redemption on the interests of the Fund's remaining shareholders.
Redemption checks in excess of the lesser of $250,000 or 1% of the Fund's
assets during any 90-day period may not be honored by the Fund if the
Adviser determines that existing conditions make cash payments
undesirable.
SHARES IN CERTIFICATE FORM: Certificates will not be issued for shares
held in a Fund account unless the Fund is or becomes legally obligated to do
so.
DOLLAR COST AVERAGING: The Catholic Funds have various programs
to facilitate dollar cost averaging. Dollar cost averaging is an investment
strategy that involves investing a fixed amount of money at regular time
intervals. By always investing the same set amount, an investor will be
purchasing more shares when the price is low and fewer shares when the
price is high. Ultimately, by using this principle in conjunction with
fluctuations in share price, an investor's average cost per share may be less
than the average transaction price. A program of regular investment cannot
ensure a profit or protect against a loss during declining markets. Since such a
program involves continuous investment regardless of fluctuating share
values, investors should consider their ability to continue the program
through periods of both low and high share-price levels.
SIGNATURE GUARANTEES: A signature guarantee is designed to protect
shareholders and the Fund against fraudulent transactions by unauthorized
persons. In the following instances, the Fund will require a signature
guarantee for all authorized owners of an account: - when adding the
telephone redemption option to an existing account; - when transferring the
ownership of an account to another individual or organization; - when
submitting a written redemption request for more than $25,000; - when
requesting to redeem or redeposit shares that have been issued in certificate
form; - if requesting a certificate after opening an account; - when requesting
that redemption proceeds be sent to a different name or address than is
registered on an account; - if adding/ changing a name or adding/removing
an owner on an account; and - if adding/ changing the beneficiary on a
transfer-on-death account. A signature guarantee may be obtained from any
eligible guarantor institution, as defined by the SEC. These institutions
include banks, savings associations, credit unions, brokerage firms, and
others. Please note that a notary public stamp or seal is not acceptable.
PROMOTIONAL ITEMS OF NOMINAL VALUE: From time to time, the
Adviser and/or Distributor may give de minimis gifts or other immaterial
consideration to investors who open new accounts or add to existing
accounts with the Catholic Funds.
RETIREMENT PLANS: The Distributor provides documentation, including
the necessary disclosure documents for Individual Retirement Accounts
(IRAs), including Simple,Rollover, SEP, Roth and Education IRAs. These
documents describe the conditions and requirements that apply to these
accounts. These conditions and requirements are subject to changes in
federal law. The Distributor also offers a 403(B)(7) plan. A 403(b)(7) plan is
a tax-sheltered custodial account designed to qualify under section 403(b)(7)
of the IRC and is available for use by employees of certain educational, non-
profit, hospital, and charitable organizations.
SHAREHOLDER MEETINGS: Shareholders have the right to vote on the
election of Directors at each meeting of shareholders at which Directors are
to be elected and on other matters as provided by law or the Articles of
Incorporation or Bylaws of The Catholic Funds, Inc. These Bylaws do not
require that meetings of shareholders be held annually. However, special
meetings of shareholders may be called for purposes such as electing or
removing directors, changing fundamental policies, or approving investment
advisory contacts. Shareholders of each series of a series company, such as
the adviser, vote together with each share of each series of the company on
matters affecting all series (such as election of directors), with each share
entitled to a single vote. On matters affecting only one series (such as a
change in that series' fundamental investment restrictions), only the
shareholders of that series are entitled to vote. On matters relating to all the
series but affecting the series differently (such as a new Investment Advisory
Agreement), separate votes by series are required.
PERFORMANCE INFORMATION: The Catholic Funds may advertise a
variety of types of performance information as more fully described below.
The Fund's performance is historical and past performance does not
guarantee the future performance of the Fund. From time to time, the Adviser
may agree to waive or reduce its management fee and/or to absorb certain
operating expenses for the Fund. Waivers of management fees and
absorption of expenses will have the effect of increasing the Fund's
performance.
7-DAY CURRENT AND EFFECTIVE YIELD: The Fund's 7-day current yield
quotation is based on a seven-day period and is computed as follows. The
first calculation is net investment income per share, which is accrued interest
on portfolio securities, plus amortized discount, minus amortized premium,
less accrued expenses. This number is then divided by the price per share
(expected to remain constant at $1.00) at the beginning of the period ("base
period return"). The result is then divided by 7 and multiplied by 365 and the
resulting yield figure is carried to the nearest one-hundredth of one percent.
Realized capital gains or losses and unrealized appreciation or depreciation
of investments are not included in the calculation. The Fund's effective yield
is determined by taking the base period return (computed as described
above) and calculating the effect of assumed compounding. Effective yield is
equal [(base period return + 1)(365/7)]- 1.
AVERAGE ANNUAL TOTAL RETURN: The Fund's average annual total
return quotation is computed in accordance with a standardized method
prescribed by rules of the SEC. The average annual total return for the Fund
for a specific period is calculated by first taking a hypothetical investment
("initial investment") in the Fund's shares on the first day of the period and
computing the "redeemable value" of that investment at the end of the
period. The redeemable value is then divided by the initial investment, and
this quotient is taken to the Nth root (N representing the number of years in
the period) and 1 is subtracted from the result, which is then expressed as a
percentage. The calculation assumes that all income and capital gains
dividends paid by the Fund have been reinvested at net asset value on the
reinvestment dates during the period.
TOTAL RETURN: Calculation of the Fund's total return is not subject to a
standardized formula. Total return performance for a specific period is
calculated by first taking an investment ("initial investment") in the Fund's
shares on the first day of the period and computing the "ending value" of that
investment at the end of the period. The total return percentage is then
determined by subtracting the initial investment from the ending value and
dividing the remainder by the initial investment and expressing the result as a
percentage. The calculation assumes that all income and capital gains
dividends paid by the Fund have been reinvested at net asset value of the
Fund on the reinvestment dates during the period. Total return may also be
shown as the increased dollar value of the hypothetical investment over the
period.
CUMULATIVE TOTAL RETURN: Cumulative total return represents the
simple change in value of an investment over a stated period and may be
quoted as a percentage or as a dollar amount. Total returns and cumulative
total returns may be broken down into their components of income and
capital (including capital gains and changes in share price) in order to
illustrate the relationship between these factors and their contributions to
total return.
COMPARISONS:
U.S. TREASURY BILLS, NOTES, OR BONDS. Investors may want to
compare the performance of the Fund to that of U.S. Treasury bills, notes, or
bonds, which are issued by the U.S. Government. Treasury obligations are
issued in selected denominations. Rates of Treasury obligations are fixed at
the time of issuance and payment of principal and interest is backed by the
full faith and credit of the Treasury. The market value of such instruments will
generally fluctuate inversely with interest rates prior to maturity and will
equal par value at maturity. Generally, the values of obligations with shorter
maturities will fluctuate less than those with longer maturities.
CERTIFICATES OF DEPOSIT. Investors may want to compare the Fund's
performance to that of certificates of deposit offered by banks and other
depositary institutions. Certificates of deposit may offer fixed or variable
interest rates and principal is guaranteed and may be insured. Withdrawal of
the deposits prior to maturity normally will be subject to a penalty. Rates
offered by banks and other depositary institutions are subject to change at
any time specified by the issuing institution.
MONEY MARKET FUNDS. Investors may also want to compare
performance of the Fund to that of money market funds. Money market fund
yields will fluctuate and shares are not insured, but share values usually
remain stable
INDEPENDENT SOURCES. Evaluations of fund performance made by
independent sources may also be used in advertisements concerning the
Fund, including reprints of, or selections from, editorials or articles about
the Fund, especially those with similar objectives. Sources for fund performance
and articles about the Fund may include publications such as Money,
Forbes, Kiplinger's, Smart Money, Financial World, Business Week, U.S.
News and World Report, The Wall Street Journal, Barron's, and a variety of
investment newsletters.
VARIOUS BANK PRODUCTS: The Fund's performance also may be
compared on a before or after-tax basis to various bank products, including
the average rate of bank and thrift institution money market deposit accounts.
INDICES: The Fund may compare its performance to a wide variety of
indices. There are differences and similarities between the investments that a
Fund may purchase and the investments measured by the indices.
HISTORICAL ASSET CLASS RETURNS: From time to time, marketing
materials may portray the historical returns of various asset classes. Such
presentations will typically compare the average annual rates of return of
inflation, U.S. Treasury bills, bonds, common stocks, and small stocks. There
are important differences between each of these investments that should be
considered in viewing any such comparison. The market value of stocks will
fluctuate with market conditions, and small-stock prices generally will
fluctuate more than large-stock prices. Stocks are generally more volatile
than bonds. In return for this volatility, stocks have generally performed
better than bonds or cash over time. Bond prices generally will fluctuate
inversely with interest rates and other market conditions, and the prices of
bonds with longer maturities generally will fluctuate more than those of
shorter-maturity bonds. Interest rates for bonds may be fixed at the time of
issuance, and payment of principal and interest may be guaranteed by the issuer
and, in the case of U.S. Treasury obligations, backed by the full faith and
credit of the U.S. Treasury.
INDEPENDENT ACCOUNTANT: Arthur Andersen LLP is the independent
accountant for the Fund, providing audit services and assistance.
LEGAL COUNSEL: Quarles & Brady, LLP 411 East Wisconsin Ave.
Milwaukee, Wisconsin 53202, acts as legal counsel for the Fund.
FINANCIAL STATEMENTS. The Fund intends to commence operations
November 8, 1999 so no financial statements are available.
CATHOLIC FUNDS, INC. FORM N-1A
