<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Pre-Effective Amendment No. 1 |X|
Post-Effective Amendment No. ___ |_|
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 |X|
Amendment No. 1 |X|
(Check appropriate box or boxes)
-------------------
The Catholic Funds, Inc.
(Exact name of registrant as specified in charter)
1100 WEST WELLS STREET
MILWAUKEE, WISCONSIN 53233
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (414) 273-6266
THEODORE F. ZIMMER, ESQ.
THE CATHOLIC FUNDS, INC.
1100 WEST WELLS STREET
MILWAUKEE, WISCONSIN 53233
(Name and Address of Agent for Service)
Copy to:
CONRAD G. GOODKIND, ESQ.
Quarles & Brady LLP
411 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
The Registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that the
Registration Statement shall thereafter become effective in accordance with
section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said section 8(a), may determine.
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[LOGO]
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Prospectus
----------------------------------------------------
May 3, 1999
LOGO Equity Income Fund
LOGO Large-Cap Growth Fund
LOGO Disciplined Capital Appreciation Fund
THIS PROSPECTUS HAS INFORMATION YOU SHOULD KNOW BEFORE YOU DECIDE TO INVEST.
PLEASE READ IT CAREFULLY AND KEEP IT WITH YOUR INVESTMENT RECORDS. THERE IS A
TABLE OF CONTENTS ON THE NEXT PAGE WHICH ALLOWS YOU TO QUICKLY FIND INFORMATION
ABOUT THE FUNDS.
CATHOLIC FINANCIAL SERVICES CORPORATION IS THE ADVISER TO THE FUNDS. NEITHER THE
CATHOLIC FUNDS NOR CATHOLIC FINANCIAL SERVICES CORPORATION IS SPONSORED OR
ENDORSED BY THE CATHOLIC CHURCH, NOR HAS THE CATHOLIC CHURCH APPROVED OR
DISAPPROVED THE FUNDS' SHARES.
AS WITH OTHER MUTUAL FUNDS, THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
APPROVED OR DISAPPROVED OF THESE FUNDS' SHARES OR DETERMINED WHETHER THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING
A CRIME.
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Table of Contents
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Overview.......................................................................2
Equity Income Fund.............................................................4
Large-Cap Growth Fund..........................................................5
Disciplined Capital Appreciation Fund..........................................6
Fees and Expenses..............................................................7
Management.....................................................................8
Using Mutual Funds in an Investment Program...................................10
How to Invest.................................................................11
Selling Your Shares...........................................................15
Shareholder Information.......................................................18
For More Information..........................................................20
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Overview
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[ICON]
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 FUNDS AND THE
FUND MANAGEMENT (ADVISER, DISTRIBUTOR, ADMINISTRATOR, TRANSFER AGENT AND
CUSTODIANS) GENERALLY.
[ICON]
The Catholic Funds
- ------------------
The Catholic Funds, Inc. is a family of mutual funds contained within a single
investment company organized as a Maryland Corporation. This Prospectus
describes shares for all three of its Funds:
<TABLE>
<CAPTION>
Primary
Fund Investment Objectives+ Investments
<S> <C> <C>
- ---------------------------------------------------------------------------
Equity Income Fund Current income and long-term capital Dividend paying common stocks
growth
- ------------------------------------------------------------
Large-Cap Growth Fund Long-term capital growth Large-cap common stocks
- ------------------------------------------------------------
Disciplined Capital Appreciation Fund Long-term capital appreciation Common stocks in a broad capitalization
range
- ------------------------------------------------------------
</TABLE>
+ There can be no assurance that any Fund will achieve its objective.
Catholic Financial Services Corporation, a Wisconsin corporation registered as
an investment adviser under federal securities laws, is the Adviser to the
Funds. Catholic Financial Services Corporation and The Catholic Funds have
retained Sub-Advisers to manage the day-to-day selection and management of each
Fund's investments. The Sub-Advisers are: Todd Investment Advisors, Inc. for the
Equity Income Fund, Peregrine Capital Management, Inc. for the Large-Cap Growth
Fund, and Vantage Global Advisors, Inc. for the Disciplined Capital Appreciation
Fund.
[ICON]
Investment Philosophy Statement
- -----------------------------
The investment philosophy for The Catholic Funds, Inc. (the "Catholic Funds" or
"CFI") is based on two principles:
1. Prudent Financial Stewardship The investments in CFI will be managed using
strategies aimed at producing results that will help investors reach their
financial goals, without taking unwarranted risks.
2. Responsible Catholic Stewardship CFI will strive to invest the assets of each
of its managed funds in companies whose primary products, services and
activities are substantially consistent with certain core Catholic values. The
Board of Directors of CFI has selected, from among many important core Catholic
values, the following values for us to apply when we select investments for the
Funds:
- SANCTITY OF HUMAN LIFE--Human life deserves protection from the moment of
conception.
- NO UNJUST WARS--The indiscriminate destruction of civilians is wrong, even
in the course of an otherwise justifiable war.
- DIGNITY OF THE HUMAN PERSON--Every person is entitled to be treated with
dignity and justice, because every human being is created in the image and
likeness of God.
The Board of Directors selected these three particular core Catholic values
using the following criteria. First, each of the selected values is grounded in
the very fundamental Catholic value that every person is made in the image and
likeness of God. Second, each relates to the protection of innocent victims who
have no choice or whose choices are extremely limited under the relevant
circumstances, such as unborn children, civilians in war and people who need to
earn a living. Third, the Advisers can practically and efficiently implement
each of these values in making day-to-day investment decisions, and the Board of
Directors effectively can monitor and direct compliance with these values.
The Board of Directors may from time to time select different or additional core
Catholic values that CFI 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
Funds' investment programs.
The Board of Directors will establish guidelines from time to time which the
Advisers will use to identify and select investments for each of the Funds.
These guidelines will help focus the Advisers' attention on factors that are
relevant in identifying investments for each 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 each 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.
2
<PAGE>
By application of these values, each 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 Funds 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 Funds 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 Funds, it is likely that the
Funds from time to time will own stocks 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 each Fund will purchase only those securities which meet both the Fund's
investment objective and the responsible Catholic stewardship principle, the
return on securities chosen may be lower than if the Funds considered only
financial and other traditional criteria when selecting investments. However,
the Sub-Advisers have analyzed the anticipated effects of the core Catholic
values screen on their selections of investments for the Funds, and they have
assured CFI's Board of Directors that in their judgment the application of these
core Catholic values will not significantly hamper the ability of the Funds' to
achieve their investment objectives.
[ICON]
General Risks to Consider
- -----------------------
MARKET RISK Common stock prices overall will rise and fall over short and even
extended periods. The equity markets tend to move in cycles, and a Fund's net
asset value (and therefore its share price) will fluctuate with these price
changes and market fluctuations. You could lose money investing in the Funds.
OBJECTIVE RISK Objective risk is the risk that a Fund's stocks may not
fluctuate in the same manner as the stock markets generally. This is because
each of the Funds selects stocks in accordance with defined objectives, policies
and principles. For example, when selecting stocks a Fund will focus on
specified sizes of companies, companies that pay dividends, or companies meeting
other specified criteria, in addition to applying its Catholic stewardship
principles. As a result, a Fund's investment portfolio likely will not be
representative of the stock market generally.
ADVISER'S BACKGROUND Catholic Financial Services Corporation (the "Adviser")
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, CFI and the Adviser have
retained the services of experienced Sub-Advisers to provide day-to-day
portfolio management and other advisory services to the Funds. CFI's Board of
Directors, on the Adviser's recommendation, selected each Sub-Adviser based on
its experience and past performance record in managing assets under investment
objectives, programs and strategies relevant to those of the particular Fund,
including experience with implementing social and ethical screens similar to
CFI's responsible Catholic stewardship principle. The Adviser 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 the Adviser successfully can manage the advisory, administrative
and distribution functions for each of the Funds, or that it and the Sub-
Advisers will be successful in achieving the investment objective of any of the
Funds.
Other risks specific to each Fund are discussed in the following summary
information about the individual Funds.
3
<PAGE>
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Equity Income Fund
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[ICON]
Investment Objective
- -------------------
The Equity Income Fund seeks both a reasonable level of current income and
long-term capital growth.
[ICON]
Who Should Invest
- ------------------
The Fund is intended for investors who seek capital growth and, at the same
time, wish to receive current income at a level that is greater than the average
dividend rates of common stocks generally.
[ICON]
Investment Policies
- ------------------
The Fund seeks reasonable income by investing primarily in a diversified
portfolio of dividend paying stocks that have a market capitalization of at
least $1.0 billion and that exhibit long-term growth potential. The Fund's
portfolio manager normally invests at least 75% of the Fund's total assets in
these securities. The Fund has the flexibility, however, to invest the balance
of its assets in all types of domestic securities, including investment-grade
bonds and convertible fixed-income securities (some of which may be below
investment grade), and non-dividend paying stocks. The Fund also may invest in
securities of foreign issuers traded on a U.S. national securities exchange or
the NASDAQ National Market System. Investing in foreign securities offers
potential benefits not available from investing solely in the securities of
domestic issuers, including the opportunity to invest in foreign issuers that
appear to offer growth potential, or in foreign countries with economic policies
or business cycles different from those in the U.S.
The Fund's portfolio manager considers several factors in determining which
individual securities to buy, hold or sell. The portfolio manager looks for
companies with fundamental "value" or "growth" potential that the manager
believes is not reflected in their current market prices. Value potential means
that a company's stock price is low relative to its perceived worth. Growth
potential is the perception that a company's earnings will grow faster than
inflation and the economy in general, and that these earnings will be reflected
in a higher stock price. In researching a company, the portfolio manager
ordinarily will place a substantial emphasis on the company's prospects for
above average sales and earnings growth per share, sound balance sheet and
financial condition, product development, marketing capabilities and strength of
management. The portfolio manager also attempts to spread the Fund's holdings
among many different companies and industries.
In selecting fixed-income securities, the Fund typically buys only
investment-grade bonds (rated Baa3/BBB- and higher). The Fund may purchase debt
securities that are convertible into equity securities and may invest up to 5%
of its assets in convertible securities rated BB. The Fund also may invest up to
5% of its assets in a single non-Treasury issue. Non-Treasury issues include
corporate, asset-backed, and mortgage-backed bonds and notes.
[ICON]
Investment Risks
- ----------------
OBJECTIVE AND MARKET RISK The value of the Fund's investments (and therefore
its share price) will vary in response to many factors. Stock values fluctuate
in response to the activities of individual companies and general market and
economic conditions. Dividend paying stocks typically have lower growth
potential than other types of stock, and their prices therefore do not tend to
increase as rapidly as other stocks during periods of general increases in stock
prices.
INTEREST RATE RISK Bond values fluctuate based on several factors, but
primarily credit quality and interest rate changes. Because the Fund primarily
will buy investment grade bonds, the principal risk associated with its bond
investments is interest rate risk. Interest rate risk is the possibility that
rising interest rates will cause declines in the prices of the bonds that the
Fund holds. Bond prices typically move in the opposite direction of interest
rates, with the prices of bonds with longer maturities typically changing more
than the prices of those with shorter maturities.
CREDIT RISK Non-treasury bonds in which the Fund may invest are subject to
credit risk. Credit risk is the possibility that the borrower of the bond
proceeds, or the guarantor of the bond, will not be able to make principal and
interest payments on a timely basis. Creditworthiness could deteriorate because
of general economic conditions, adverse developments that affect the industry in
which the borrower conducts its business, or adverse developments that affect
the borrower's business uniquely. If the creditworthiness of an issuer of a bond
held by the Fund were to deteriorate, the value of the bond likely would drop.
CONVERTIBLE SECURITIES Convertible bonds that the Fund may purchase often are
rated below investment grade or are not rated, because they fall below debt
obligations and just above equity in order of preference on a company's balance
sheet. As a result, an issuer with investment grade senior debt may offer
convertible bonds which are below investment grade. Below investment grade
convertible bonds (sometimes referred to as junk bonds) in which the Fund may
invest generally are more vulnerable to default than higher grade bonds, and are
more susceptible to adverse business, financial and economic conditions that
reduce the capacity and willingness of borrowers to make
4
<PAGE>
scheduled interest and principal payments. The market prices of these
convertible bonds may fluctuate more in times of economic uncertainty than is
the case for higher rated bonds. Also, because the bond is convertible into the
company's common stock, the market price of the bond tends to rise and fall with
the price of the company's common stock. Under some market conditions, this
feature can cause the bond's market price to be more erratic than junk bonds
generally.
FOREIGN SECURITIES Investing in foreign securities involves special additional
risks and considerations not typically associated with investing in securities
of U.S. companies. These include: fluctuation in value of foreign portfolio
investments due to changes in currency rates and control regulations (e.g.,
currency blockage); lack of public information about foreign issuers; lack of
uniform accounting, auditing and financial reporting standards comparable to
those applicable to domestic issuers and greater difficulties in commencing
lawsuits against foreign issuers.
- ------------------------------------------------
Large-Cap Growth Fund
------------------------------------------------
[ICON]
Investment Objective
- -------------------
The Large-Cap Growth Fund seeks long-term capital growth by investing primarily
in high quality growth stocks of companies with large market capitalizations.
[ICON]
Who Should Invest
- ------------------
The Fund is intended for investors who want long-term capital appreciation, can
tolerate fluctuations in portfolio value, and have no need for current income
from the Fund.
[ICON]
Investment Policies
- ------------------
The Fund seeks fast growing companies with the potential to produce superior
long-term results. The Fund's investment will consist primarily of stocks with
market capitalizations above $5 billion. These companies have exhibited rapid
earnings gains in relation to the average of companies in the S&P 500 Index,
with superior returns on capital and below average levels of debt. Stocks are
selected with a long-term investment horizon, allowing full participation in
company success with low portfolio turnover and transaction costs. The Fund
typically will be fully invested in equities and will avoid short-term market
timing.
Under normal market conditions, the Fund's portfolio manager will invest at
least 75% of the Fund's total assets in the common stocks of companies with
large market capitalizations. Companies whose capitalizations fall below $5
billion after purchase continue to be considered large-capitalization for
purposes of this 75% policy. Companies with large market capitalizations
typically have a large number of publicly held shares and a high trading volume,
resulting in a high degree of liquidity. These tend to be quality companies with
strong management organizations.
The Fund has the flexibility to invest in other market capitalizations and
various types of domestic securities and in the securities of foreign issuers
traded on a U.S. national securities exchange or the NASDAQ National Market
System. Investing in foreign securities offers potential benefits not available
from investing solely in securities of domestic issuers, including the
opportunity to invest in foreign issuers that appear to offer growth potential,
or in foreign countries with economic policies or business cycles different from
those of the U.S.
When, in the judgment of the Adviser, the market for large capitalization stocks
poses an undue risk to the Fund in the short term, the Adviser temporarily may
invest without limitation in preferred stocks and investment-grade debt
instruments, to adjust its investment exposure. While the Adviser will use these
defensive strategies only to protect the Fund against anticipated adverse market
developments, the Fund will miss out on growth in the large capitalization
market that potentially could occur during the period that the Fund is in a
defensive posture.
[ICON]
Investment Risks
- ----------------
The value of the Fund's investments will depend not only on the movement of the
market in general, but on factors that affect the individual stocks held in the
Fund's portfolio, such as the companies' financial performance, management and
business trends. The Fund's focus on investment in fast growing companies means
that the market ratios of its portfolio companies (such as the price to earnings
ratio) may be higher than those of large capitalization companies in general.
Also, in recent years, companies that have made disappointing earnings
announcements, especially those with high market ratios, have experienced sharp
and immediate declines in their stock prices.
Investing in foreign securities involves special additional risks and
considerations not typically associated with investing in securities of U.S.
companies. These include: fluctuation in value of foreign portfolio investments
due to changes in currency rates and control regulations (e.g., currency
blockage); lack of public information about foreign issuers; lack of uniform
accounting, auditing and financial reporting standards comparable to those
applicable to domestic issuers and greater difficulties in commencing lawsuits
against foreign issuers.
5
<PAGE>
When you sell your shares of the Fund, they may be worth more or less than what
you paid for them. The Fund is subject to both objective risk and general market
risk.
- ------------------------------------------------
Disciplined Capital Appreciation Fund
------------------------------------------------
[ICON]
Investment Objective
- -------------------
The Disciplined Capital Appreciation Fund seeks long-term growth of capital with
controlled risk by investing in a diversified portfolio, primarily in common
stocks of companies in a broad range of market capitalizations.
[ICON]
Who Should Invest
- ------------------
This Fund is intended for investors who seek long-term capital appreciation, can
tolerate fluctuations in portfolio value, and have no need for current income
from the Fund.
[ICON]
Investment Policies
- ------------------
The Fund is managed using a systematic, computer driven model to objectively
identify attractive stocks solely based on numerical measures of growth and
value. Consistent and continuous application of this model ensures that stocks
are evaluated solely on their relative values, not influenced by analyst biases.
By analyzing a large universe of stocks daily, new investment opportunities can
be discovered. This disciplined process of stock selection has built in
portfolio risk controls that limit industry and individual stock concentration.
The portfolio is diversified with approximately 100 stocks across many
industries, normally with the majority of the issues in companies with market
capitalizations between $1 and $10 billion at the time of purchase. Under normal
market conditions, the Fund expects to be fully invested in common stocks,
thereby providing investors with broad-based equity exposure. A significant
portion of the Fund's total assets will be invested in companies with medium
market capitalizations. The Fund has the flexibility to invest in other market
capitalizations and other types of securities, including the securities of
foreign issuers traded on a U.S. national securities exchange or on the NASDAQ
National Market System.
When, in the judgment of the Adviser, the market poses an undue risk to the Fund
in the short term, the Adviser temporarily may invest without limitation in
preferred stocks and investment-grade debt instruments, to adjust its investment
exposure. While the Adviser will use these defensive strategies only to protect
the Fund against anticipated adverse market developments, the Fund will miss out
on growth in the large capitalization market that potentially could occur during
the period that the Fund is in a defensive posture.
[ICON]
Investment Risks
- ----------------
The Fund is subject both to objective risk and general market risk. The value of
the Fund's investments will vary in response to many factors. Stock values
fluctuate in response to the activities of individual companies and general
market and economic conditions. Investing in medium capitalization stocks may
involve greater risk than investing in large capitalization stocks, because they
can be subject to more abrupt or erratic market movements.
Investing in foreign securities involves special additional risks and
considerations not typically associated with investing in securities of U.S.
companies. These include: fluctuation in value of foreign portfolio investments
due to changes in currency rates and control regulations (e.g., currency
blockage); lack of public information about foreign issuers; lack of uniform
accounting, auditing and financial reporting standards comparable to those
applicable to domestic issuers and greater difficulties in commencing lawsuits
against foreign issuers.
[ICON]
Portfolio Turnover
- ------------------
In general, the greater the volume of buying and selling by a mutual fund, the
greater the impact that brokerage commissions and other transaction costs will
have on its return. A mutual fund with turnover expenses in excess of 100%
engages in a high volume of buying and selling, and likely will pay more
brokerage commissions and may realize more taxable gains than a mutual fund with
less turnover.
High portfolio turnover rates may also cause substantial net short-term gains,
and any distributions resulting from such gains will be ordinary income for
federal income tax purposes.
Because of the Disciplined Capital Appreciation Fund's investment strategy, we
anticipate that its portfolio turnover rate may be over 100%.
6
<PAGE>
- --------------------------------------------------------------------------------
Fees and Expenses
- --------------------------------------------------------------------------------
[ICON]
General Information
- -------------------
Fees and expenses are important considerations in choosing a mutual fund. That's
because you, as a shareholder, pay the costs of operating a fund, plus any
transaction costs associated with buying, selling, or exchanging shares.
Shareholder transaction expenses are charges you pay when you buy shares in one
of the Funds, redeem (sell) shares by wire or exchange shares by telephone. In
the case of purchases and exchanges, shareholder transaction expenses reduce the
amount of your payment that is invested in shares of the mutual fund. In the
case of sales, shareholder transaction expenses reduce the amount of the sale
proceeds returned to you.
Annual fund operating expenses, on the other hand, are expenses that a mutual
fund pays to conduct its business, including investment advisory fees and the
costs of maintaining shareholder accounts, administering the fund, providing
shareholder services, and other activities of the mutual fund. Annual fund
operating expenses are deducted from a mutual fund's assets, and therefore
reduce its total return.
[ICON]
Fees and Expenses of the Funds
- ---------------------------
THE TABLE BELOW DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND
HOLD SHARES OF THE FUNDS.
Shareholder Transaction Expenses
(fees paid directly from your investment)
<TABLE>
<CAPTION>
Disciplined
Equity- Large-Cap Capital
Income Growth Appreciation
Fund Fund Fund
<S> <C> <C> <C>
- -----------------------------------------------------------------------
Maximum Sales Charge (Load)
Imposed on Purchases (as a
percentage of offering price) (1) 4.00% 4.00% 4.00%
- -----------------------------------------------------------------------
Maximum Sales Charge (Load)
Imposed on Reinvested Dividends None None None
- -----------------------------------------------------------------------
Redemption Fees (2) None None None
- -----------------------------------------------------------------------
Exchange Fee (3) None None None
- -----------------------------------------------------------------------
</TABLE>
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
<TABLE>
<CAPTION>
Disciplined
Equity- Large-Cap Capital
Income Growth Appreciation
Fund Fund Fund
<S> <C> <C> <C>
- -----------------------------------------------------------------------
Management Fees .80% .90% .90%
- -----------------------------------------------------------------------
Distribution (12b-1) Fees .25% .25% .25%
- -----------------------------------------------------------------------
Other Expenses (4) 1.34% 1.34% 1.34%
- -----------------------------------------------------------------------
Total Fund Operating Expenses 2.39% 2.49% 2.49%
- -----------------------------------------------------------------------
Expense Reimbursement (5) (0.74%) (0.74%) (0.74%)
- -----------------------------------------------------------------------
Net Expenses 1.65% 1.75% 1.75%
- -----------------------------------------------------------------------
</TABLE>
(1) To determine if you qualify for a lower sales charge, see "How to Invest".
(2) The Funds charge $12.00 for each wire redemption
(3) The Funds charge $5.00 for each telephone exchange
(4) Other Expenses are based on estimated amounts for the current fiscal year.
(5) The Adviser commits to reimburse the Funds to the extent that Annual Total
Fund Operating Expenses exceed 1.65% for the Equity Income Fund and 1.75%
for the Large-Cap Growth and Disciplined Capital Appreciation Funds.
[ICON]
Example
- ----------
The following example is intended to help you compare the cost of investing in
the Funds with the cost of investing in other mutual funds. The example assumes
that you invest $10,000 in a 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 costs may be higher or lower, based on
these assumptions your costs would be:
<TABLE>
<CAPTION>
1 Year 3 Years
<S> <C> <C>
- ------------------------------------------------------------
Equity Income Fund $632 $1,116
- ------------------------------------------------------------
Large-Cap Growth Fund $642 $1,144
- ------------------------------------------------------------
Disciplined Capital Appreciation Fund $642 $1,144
- ------------------------------------------------------------
</TABLE>
7
<PAGE>
- --------------------------------------------------------------------------------
Management
- --------------------------------------------------------------------------------
[ICON]
Adviser
- ---------
Catholic Financial Services Corporation ("CFSC"), a Wisconsin corporation
organized in 1994, is the investment adviser ("Adviser") and Distributor
("Distributor") for the Funds. As the Adviser, CFSC makes the investment
decisions for the Funds. As the Distributor, CFSC sells the Funds' shares to
investors. The 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 which
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, and benevolent purposes and for 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 rank in the top 15% of life insurers in the U.S. in
terms of life insurance in force and total assets. The Catholic Fraternal
Alliance has more than 220,000 members who belong to one of more than 800 local
lodges throughout the U.S. The Catholic Fraternal Alliance provides $7 million
annually in charitable and benevolent funding and services to its members, their
Catholic parishes and communities. The Catholic Fraternal Alliance has nearly $5
billion of life insurance in force and nearly $1 billion of total assets under
management.
[ICON]
Advisory Agreements
- -------------------
Pursuant to the terms of the Advisory Agreements, and subject to the supervision
of the Funds' Board of Directors, the Adviser and Sub-Advisers manage the
investment and reinvestment of the Funds' assets, provide the Funds with
personnel, facilities, and administrative services, and supervise the Funds'
daily business affairs. We formulate and implement a continuous investment
program for the Funds consistent with each Fund's investment objectives,
policies and restrictions.
We provide office space as well as executive and other personnel to the Funds.
In addition to investment advisory fees, each Fund incurs the following
expenses: legal, auditing and accounting expenses; directors' fees and expenses;
insurance premiums; brokers' commissions; taxes and governmental fees; expenses
of issuing and redeeming shares; organizational expenses; expenses of
registering or qualifying shares for sale; postage and printing for reports and
notices to shareholders; fees and disbursements of the Custodian and Transfer
Agent; certain expenses with respect to membership fees of industry
associations; and any extraordinary expenses, such as litigation expenses.
For providing the services listed above, the Adviser receives an annual advisory
fee of 0.80 of 1% of daily net assets for the Equity Income Fund and .90 of 1%
for the Large-Cap Growth and Disciplined Capital Appreciation Funds. Out of
these fees, the Adviser pays the Sub-Advisory fees applicable to each Fund.
[ICON]
Sub-Advisers
- -------------
We have engaged Todd Investment Advisors, Inc., Peregrine Capital Management,
Inc. and Vantage Global Advisors, Inc. to serve as Sub-Advisers to the Funds.
- ------------------------------------------------
Equity Income Fund
------------------------------------------------
Todd Investments Advisors, Inc. ("Todd"), 101 South Fifth Street, Suite 3160,
Louisville, KY 40202, serves as the Sub-Adviser for the Equity Income Fund.
Under our direction and control, Todd makes the day-to-day investment decisions
for the Fund. Todd is registered as an investment adviser under the securities
laws.
Curtiss M. Scott, Jr., CFA, manages the day-to-day Fund investments. Mr. Scott
has served as a Senior Portfolio Manager at Todd since May 1996. Prior to 1996,
Mr. Scott served as Partner and Managing Director of Executive Investment
Advisors, Louisville, Kentucky. Mr. Scott has been managing equity portfolios
since 1978.
8
<PAGE>
Todd receives the following annual fee: 0.38 of 1% on the first $10 million;
0.35 of 1% on the next $40 million; and 0.30 of 1% on average daily net assets
over $50 million (payable from the 0.80% Annual Advisory Fee paid to the
Adviser).
The Western and Southern Life Insurance Company ("Western-Southern") indirectly
owns all of the outstanding capital stock of Todd through Western-Southern's
investment advisor subsidiary, Fort Washington Investment Advisors, Inc.
("FWIA").
Western-Southern is an Ohio mutual life insurance company founded in 1888.
Western-Southern, together with its operating companies, has approximately $14.0
billion in total assets. FWIA manages most of the assets of the Western-Southern
group of companies, and also manages assets of third parties on a discretionary
basis. Western-Southern and FWIA are each headquartered in Cincinnati, Ohio.
- ------------------------------------------------
Large-Cap Growth Fund
------------------------------------------------
Peregrine Capital Management, Inc. ("Peregrine"), a wholly-owned subsidiary of
Norwest Bank of Minnesota, N.A., serves as the Sub-Adviser for the Large-Cap
Growth Fund. Peregrine is located at LaSalle Plaza, 800 LaSalle Avenue, Suite
1850, Minneapolis, Minnesota 54402-2018.
John S. Dale, CFA and Gary Nussbaum, CFA, serve as co-managers of the Large Cap
Growth Fund. Mr. Dale and Mr. Nussbaum are both senior vice presidents and
portfolio managers at Peregrine. Prior to joining Peregrine in 1987, Mr. Dale
was with Norwest Corp. Mr. Nussbaum has been with Peregrine since 1990. Prior to
1990, he worked as an investment research officer with Shawmut National
Corporation/Connecticut National Bank.
Peregrine receives the following annual fee: 0.50 of 1% on the first $25
million; 0.45 of 1% on next $25 million; and 0.40 of 1% on average daily net
assets over $50 million (payable from the 0.90% Annual Advisory Fee paid to the
Adviser).
- ------------------------------------------------
Disciplined Capital Appreciation Fund
------------------------------------------------
Vantage Global Advisors, Inc. ("Vantage"), 630 Fifth Avenue, New York, NY 10111,
serves as the Sub-Adviser to the Disciplined Capital Appreciation Fund. Vantage,
which is registered as an investment adviser under the securities laws, is
wholly-owned by Lincoln National Corporation, located in Fort Wayne, Indiana.
T. Scott Wittman, CFA, and Enrique Chang manage the day-to-day Fund investments.
Mr. Wittman has served as President and Chief Investment Officer of Vantage
since February 1991. Mr. Chang has served as Director of Research and Portfolio
Management at Vantage since November 1997. Prior to Joining Vantage, Mr. Chang
worked for J&W Seligman from April 1997 to November 1997, and served as Director
of Quantitative Analysis and Strategy with General Reinsurance Corporation from
October 1993 to March 1997.
Vantage receives the following fee: 0.50 of 1% on the first $50 million; 0.45 of
1% on the next $50 million; and 0.40 of 1% of the Fund's average daily net
assets over $100 million (payable from the 0.90% Annual Advisory Fee paid to the
Adviser). Vantage has agreed to waive 10 basis points from the fee schedule for
the first two years of the Fund's operations or until its total assets reach $35
million, whichever occurs first.
9
<PAGE>
- --------------------------------------------------------------------------------
Using Mutual Funds in an Investment Program
- --------------------------------------------------------------------------------
Mutual funds provide small investors some of the advantages enjoyed by wealthy
investors. A relatively small investment can buy part of a diversified
portfolio. That portfolio is managed by investment professionals, relieving you
of the need to make individual stock or bond selections. You also enjoy
conveniences, such as daily pricing and liquidity. The portfolio, because of its
size, has lower transaction costs on its trades than most individuals would
have.
In choosing a mutual fund as an investment vehicle, you are giving up some
investment decisions, but must still make others. The decisions you don't have
to make are those involved with choosing individual securities. We will perform
that function. In addition, we will arrange for the safekeeping of securities,
auditing the annual financial statements, and daily valuation of the Fund, as
well as other functions.
You, however, retain at least part of the responsibility for an equally
important decision. This decision involves determining a portfolio of mutual
funds that balances your investment goals with your tolerance for risk. It is
likely that this decision may include the use of more than one fund of the CFI
Family of Funds.
10
<PAGE>
- --------------------------------------------------------------------------------
How to Invest
- --------------------------------------------------------------------------------
[ICON]
Buying Shares in the Funds
- ------------------------
You can buy shares in the Funds through a licensed registered representative, by
mail or wire transfer. You buy shares at net asset value ("NAV") plus any sales
charge that applies (the "public offering price" or "POP"). The maximum sales
charge is 4.00% of the public offering price (or 4.17% of the NAV). We do not
impose a sales charge when an investor redeems shares. We may reduce or waive
sales charges on certain purchases. The adjacent chart shows the sales charge
percentage for shares at different dollar level purchases.
[ICON]
Reducing Your Sales Charge
- ------------------------
We may reduce your sales charges on purchases of shares under certain
circumstances, described below. If you are eligible for one of these reductions,
you must tell us or your Registered Representative at the time you purchase
shares or you may not receive the reduction. Directors and employees of the
Funds and the Adviser and Sub-Advisers, employees of Catholic fraternal benefit
societies, persons employed by brokers owned by fraternal benefit societies that
sell shares of the Funds and persons licensed to receive commissions for sales
of the Funds may not pay a sales charge on their purchases or on purchases made
by family members residing with them. We reserve the right to stop or change
these reductions at any time.
50% REDUCTION: Non-profit organizations, charitable trusts, and endowments pay
only 50% of the normal sales charge so long as there is a meaningful Catholic
affiliation. The reduction does not apply to retirement plan accounts.
RIGHT OF ACCUMULATION: You can combine all your share purchases across Funds
and accounts, including the purchases of your immediate family, when computing
your current sales charge for shares. Immediate family means your spouse and
your children who are dependents for federal income tax purposes. Eligible
shares for combination in computing the sales charge include those contained in
individual, joint tenant, gift/transfer to minor, trust and IRA accounts.
Employer-sponsored plans can link the shares in the plan for purposes of
calculating a sales charge reduction. Shares of the Firstar Money Market Fund
are not eligible shares for Right of Accumulation. However, any Funds' shares
that have been exchanged INTO the Firstar Money Market Fund are eligible shares
for Right of Accumulation. Right of Accumulation includes the value of all
shares at the public offering price.
<TABLE>
<CAPTION>
Maximum
Sales 50% Sales
Maximum Charge Charge
Sales as a % 50% Sales as a %
Your Charge of Net Charge of Net
Investment as a % Amount as a % Amount
Account of POP* Invested* of POP* Invested*
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------
Less than $25,000 4.00% 4.17% 2.00% 2.04%
- -------------------------------------------------------------------------
$25,000 but less than $50,000 3.75% 3.90% 1.88% 1.91%
- -------------------------------------------------------------------------
$50,000 but less than $100,000 3.00% 3.09% 1.50% 1.52%
- -------------------------------------------------------------------------
$100,000 but less than
$250,000 2.00% 2.04% 1.00% 1.01%
- -------------------------------------------------------------------------
$250,000 but less than
$500,000 1.00% 1.01% 0.50% 0.50%
- -------------------------------------------------------------------------
$500,000 and up* 0.00% 0.00% 0.00% 0.00%
- -------------------------------------------------------------------------
</TABLE>
* Registered Representatives may receive compensation not exceeding 70% of
the sales charge on amounts purchased and may receive compensation not
exceeding 0.35 of 1% of amounts invested at $500,000 and up.
[ICON]
Letter of Intent
- ---------------
If you expect to invest $25,000 or more during the next 13 months, you can
reduce your sales charge by signing a Letter of Intent. A Letter of Intent
permits you to pay the sales charge that would be applicable if you add up all
shares of the Funds that you agree to buy within the 13-month period. You can
include purchases in accounts you have linked for purposes of the Right of
Accumulation, and you can back date a Letter of Intent to include purchases made
in the last 90 days. However, we do not recalculate the sales charge on prior
purchases.
You do not have any obligation to buy additional shares. During the Letter of
Intent period, we will escrow shares totaling 5% of the investment goal. If for
some reason you do not fulfill the Letter of Intent within the 13-month period,
we will sell escrowed shares to cover any additional sales charges due from you.
You should sign only one Letter of Intent for all accounts combined under Right
of Accumulation.
11
<PAGE>
Minimum Purchase Amount
Per Account Per Transaction
<TABLE>
<CAPTION>
Minimum
Purchase Amount
Per Account Initial Additional
Per Transaction Purchase Purchase
<S> <C> <C>
- -----------------------------------------------------------------
Regular Account* $1,000 $50
IRA* $ 250 $50
Automatic Investment Plan $ 50 $25
UGMA or UTMA** $ 250 $50
</TABLE>
* Indicates purchases made by check or wire.
** Depending on state laws, you can set up a custodial account under the
Uniform Gifts to Minors Act (UGMA) or the Uniform Transfers to Minors Act
(UTMA). The custodial accounts provide a way to give money to a child and
obtain tax benefits. An individual can give up to $10,000 a year per child
without paying federal gift tax.
The Funds may waive the minimum investment amount needed to open or add to an
account.
[ICON]
Opening a New Account
- ---------------------
You can open a new account through a licensed Registered Representative, or
directly by mail. A complete, signed application is required for new accounts.
Also, you will need to fill out an application if after you open your account,
you subsequently purchase shares of a Fund that was not selected in your initial
application.
Your CFSC Registered Representative is ready to help you open a new account. If
you do not know the name of your Registered Representative, please call The
Catholic Funds, Inc. at 1-877-222-2402.
To open your account, just follow these steps:
1. After reviewing this prospectus, complete a Catholic Funds application and
New Account Form, which should be attached to the prospectus, for every
different account registration. For example, you need separate applications
for an individual account in the Equity Income Fund and an IRA invested in
the Equity Income Fund. If you don't complete the application properly, your
purchase may be delayed or rejected;
2. Make your check payable to "The CATHOLIC FUNDS"; and
3. Mail your completed application and check to:
REGULAR MAIL
The Catholic Funds, Inc.
P.O. Box 05710
Milwaukee, WI 53205-5710
EXPRESS MAIL/PRIVATE DELIVERY
The Catholic Funds, Inc.
1100 W. Wells Street
Milwaukee, WI 53233
[ICON]
Accounts for Retirement Savings
- ----------------------------
Shareholders, their enterprises as well as Catholic organizations may establish
their own individual or business retirement plans. These accounts may offer you
tax advantages. You should consult with your legal and/or tax adviser before you
establish a retirement plan.
A third-party maintenance fee may apply to some retirement accounts. Please
review plan documents for more information.
CFSC accepts investments from the retirement plans listed below:
- Traditional IRA (Individual Retirement Account);
- "Rollover" IRA;
- Roth IRA (annual contributions are not tax deductible, but distributions
may not be subject to income tax);
- SEP-IRA (Simplified Employee Pension Plan);
- SIMPLE-IRA (Savings Incentive Match Plan for Employees);
- Education IRA - (annual contributions are not tax deductible, but
distributions may not be subject to income tax);
- 403(b)(7) retirement plan account (legal restrictions apply to your ability
to withdraw funds from this account); and
- Qualified retirement plans.
CFSC will not provide any prototype qualified retirement plans, i.e., pension,
profit sharing and 401(k) plans, although these plans may invest in the Funds.
12
<PAGE>
- --------------------------------------------------------------------------------
Buying Additional Shares for Your Account
- --------------------------------------------------------------------------------
After you have opened an account with The Catholic Funds, you can make
additional investments of $50 or more to that account by mail, telephone or
wire. Please put your name and your Catholic Funds account number on the face of
all investment checks and make sure your checks are payable to "The Catholic
Funds." Some retirement accounts, such as the 403(b)(7) Retirement Plan, may
allow you to make investments only by deferring part of your salary.
BY MAIL. Purchase orders should be sent to:
REGULAR MAIL
The Catholic Funds, Inc.
c/o Firstar Mutual Fund Services, LLC
P.O. Box 701
Milwaukee, WI 53201-0701
EXPRESS MAIL/PRIVATE DELIVERY
The Catholic Funds, Inc.
c/o Firstar Mutual Fund Services, LLC
Third Floor
615 East Michigan Street
Milwaukee, WI 53202
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 next price computed after the Funds
have received your investment from your bank.
BY WIRE. If your bank is a member of or has a corresponding relationship with a
member of the Federal Reserve System, you can buy shares of the Funds by wire
transfer by following these steps:
1. Call Firstar Mutual Fund Services at 1-877-222-2402 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 who the Funds
can contact about your purchase.
Firstar must receive your wire order before the closing of the NYSE (normally
3:00 p.m. Central Time) in order for you to receive that day's price.
2. Instruct your bank to use the following instructions when wiring funds:
<TABLE>
<S> <C>
WIRE TO: FIRSTAR BANK MILWAUKEE, N.A.
CREDIT: FIRSTAR MUTUAL FUND SERVICES, LLC
ACCOUNT 112-952-137
ROUTING NUMBER 075000022
FURTHER CREDIT: (NAME OF FUND)
(SHAREHOLDER ACCOUNT NUMBER)
(SHAREHOLDER REGISTRATION)
</TABLE>
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.
13
<PAGE>
- --------------------------------------------------------------------------------
Account Registration
- --------------------------------------------------------------------------------
How you register your account with the Funds can affect your legal interests as
well as the rights and interests of your family and beneficiaries. You should
always consult with your legal and/or tax adviser to determine the account
registration that best meets your needs. You must clearly identify the type of
account you want on your Catholic Funds application. Some account registrations
may require additional documents.
[ICON]
Automatic Investment Plans
- -------------------------
To make regular investing more convenient, you can open an automatic investment
plan with an initial investment of $50 and a minimum of $25 per account per
transaction after you start your plan. Using The Catholic Funds Automatic
Investment Plans, you may implement a strategy called dollar cost averaging.
Dollar cost averaging involves investing a fixed amount of money at regular
intervals. When you "dollar cost average," you purchase more shares when the
price is low and fewer shares when the price is high. Dollar cost averaging does
not ensure a profit or protect against a loss during declining markets. Because
such a program involves continuous investment regardless of changing share
prices, you should consider your ability to continue the program through times
when the share prices are low. Your CFSC Registered Representative is ready to
help you set up one of the following plans.
THE BANK DRAFT PLAN allows you to make regular investments in the Funds directly
from your checking or savings account. The following rules and/or guidelines
apply:
- You can select up to two transaction dates per month (at least ten days
apart). If you don't select the date(s), the money will automatically be
withdrawn from your bank account on the 5th (and 15th) of the month;
- To start the plan or change your bank account, you must notify Firstar
Mutual Fund Services, LLC in writing at least 13 business days prior to the
transaction date. All bank account owners must sign the bank draft plan
card;
- To stop or change the amount of your plan, you must notify Firstar Mutual
Fund Services, LLC in writing or via telephone at 1-877-222-2402 at least 5
business days prior to the transaction date; and
- Make sure you have enough money in your bank account to make the investment
so you can avoid paying any possible fees from your bank or our Transfer
Agent.
THE PAYROLL DEDUCTION SAVINGS AND INVESTMENT PLAN allows employees of
participating companies to invest in the Funds through direct deduction from
their paychecks or commission checks.
All payroll deductions for retirement plan accounts will be considered current
year contributions unless we are notified in writing.
[ICON]
Purchases
- -----------
Your purchase must be in U.S. dollars and your check must be drawn on a U.S.
bank. We do not accept cash, traveler's checks or third party checks. If your
check does not clear, we will cancel your purchase and hold you liable for any
losses and any applicable fees, currently $20. When you buy shares by any type
of check, electronic funds transfer or automatic investment purchase, you may
not be able to redeem the shares you purchased for 12 days or until your check
has cleared, whichever occurs first. This does not limit your right to redeem
shares. Rather, it operates to make sure that payment for the shares purchased
has been received by the Transfer Agent.
14
<PAGE>
- --------------------------------------------------------------------------------
Selling Your Shares
- --------------------------------------------------------------------------------
[ICON]
In General
- ------------
You can sell your shares on any business day. When you sell your shares you
receive the net asset value per share. If we receive your request in good order
before the close of the New York Stock Exchange ("NYSE") (normally 3:00 p.m.
Central Time) you will receive that day's price. If we receive your redemption
request in good order after the close of the NYSE, or on a holiday, weekend or a
day the NYSE is closed, we will process your transaction at the closing price on
the next business day. A redemption request is in good order when it contains
signatures (including signature guarantees when needed) and the required
information listed below, and any legally required additional information and
documentation. You can sell shares by mail, telephone or wire.
BY MAIL.
Please include the following in your redemption request:
- Names(s) of the account owner(s);
- Account number(s);
- Amount you want to receive or the number of shares you want to sell;
- Tax withholding information, if required, for retirement accounts; and
- Signatures of all account owners.
YOU MUST HAVE YOUR SIGNATURE GUARANTEED FOR WRITTEN SELL ORDERS IF:
1. You want to sell shares with a value of more than $25,000;
2. You want the proceeds sent to an address other than the one listed for your
account; or
3. You want the check payable to someone other than the account owner(s);
You can usually obtain a signature guarantee at commercial banks, trust
companies or broker-dealers. A SIGNATURE GUARANTEE IS NOT THE SAME THING AS A
NOTARIZED SIGNATURE. Accounts held by a corporation, trust, estate,
custodianship, guardianship, partnership or pension and profit sharing plan may
require more documentation.
REGULAR MAIL
The Catholic Funds, Inc.
c/o Firstar Mutual Fund Services, LLC
P.O. Box 701
Milwaukee, WI 53201-0701
EXPRESS MAIL/PRIVATE DELIVERY
The Catholic Funds, Inc.
c/o Firstar Mutual Fund Services, LLC
Third Floor
615 East Michigan Street
Milwaukee, WI 53202
BY TELEPHONE
To make investing in the Funds more convenient, you may buy, sell or exchange
shares by telephone. We have established reasonable procedures to protect
against anyone who attempts to use the telephone service fraudulently. Please be
aware, however, that The Catholic Funds, the Custodian, the Transfer Agent or
any of their employees will not be liable for losses suffered by you that result
from following telephone instructions reasonably believed to be authentic after
verification pursuant to these procedures. Once you have made a telephone
request you cannot cancel or modify it! During periods of extreme volume caused
by dramatic economic or stock market changes, or when the telephone system is
not fully functional, you may have difficulty reaching us by telephone and
telephone transactions may be difficult to implement at those times. We reserve
the right to temporarily discontinue or limit the telephone purchase, redemption
or exchange privileges at any time during such periods.
The following rules and/or guidelines for selling by telephone apply:
- You must call Firstar Mutual Fund Services at 1-877-222-2402
- You must provide a form of personal identification to confirm your
identity;
- You can sell up to $25,000 worth of shares;
- The Funds will mail a check only to the person(s) named on the account
registration and only to the address on the account;
- Retirement plan accounts are not eligible;
- You can do only one telephone redemption within any 30-day period for each
authorized account;
- Telephone redemptions are not available if the address on the account has
been changed in the preceding 60 days; and
- If we receive your request in good order before the close of the NYSE
(normally 3:00 p.m. Central Time), you will receive that day's price.
15
<PAGE>
BY WIRE
The following rules and/or guidelines for selling by wire apply:
- You must give us written authorization, including the signatures of all the
owners of the account, on The Catholic Funds Application or Account Change
Form;
- You can make a wire redemption for any amount;
- You pay a $12.00 fee for each wire redemption;
- We must receive your request in good order before the close of the NYSE
(normally 3:00 p.m. Central Time) for you to receive that day's price; and
- Wire redemptions may not be available to you for all retirement account
plans.
[ICON]
Systematic Withdrawal Plan
- ------------------------
You can have money automatically withdrawn from your account(s) on a regular
basis by using our systematic withdrawal plan. The plan allows you to receive
funds or pay a bill at regular intervals. The following rules and/or guidelines
apply:
- You need a minimum of $10,000 in your account to start the plan;
- You must withdraw a minimum of $100 monthly;
- You can select the date(s) on which the money is withdrawn. If you don't
select the date(s), we will withdraw the money automatically from your
account on the 15th of the month;
- To start the plan or change the payee(s), you must notify us in writing at
least 13 business days prior to the first withdrawal and you must have all
account owner(s) sign the appropriate form;
- To stop or change your plan, you must notify us at least five business days
prior to the next withdrawal; and
- Because of sales charges, you must consider carefully the costs of frequent
investments in and withdrawals from your account.
[ICON]
Closing Small Accounts
- --------------------
All Catholic Funds account owners share the high cost of maintaining accounts
with low balances. To reduce this cost, we reserve the right, subject to legal
restrictions, if any, to close an account when, due to a redemption, its value
is less than $1,000. This does not apply to retirement plan accounts, automatic
investment plans or UGMA/ UTMA accounts. We will notify you in writing before
closing any account, and you will have 30 days to add money to bring the balance
up to $1,000.
[ICON]
Reinstatement Privilege
- ----------------------
You have 60 days after you sell shares to reinvest the dollar amount you
redeemed without having to pay another sales charge. You will pay the net asset
value per share on the day when you've made your reinstatement and not on the
day when you sold your investment. The following rules apply:
- You may use this privilege only once per account;
- You must send a written request and a check for the amount you wish to
reinvest to the Fund's transfer agent;
- The dollar amount you reinvest cannot exceed the dollar amount you sold;
and
- The sale of your shares may be a taxable event despite the reinstatement.
16
<PAGE>
- --------------------------------------------------------------------------------
Exchange Privilege
- --------------------------------------------------------------------------------
Fund to Fund Exchange. You may exchange shares in one Fund for shares in another
Fund either by telephone or in writing without paying any additional sales
charge. However, a $5 service fee will be charged for each telephone exchange
request (no charge is imposed for written exchange requests). The following
rules and/or guidelines apply:
- Minimum investment rules may apply when you open a new account by
exchanging shares, and you may have to submit a new application (i.e., you
must exchange at least $1,000 worth of shares to another Fund and fill out
a new account form, if you have not previously opened an account in the
fund into which shares will be exchanged);
- You may only exchange into Funds that are legally available for sale in
your state;
- You may have a taxable gain or loss as a result of an exchange;
- We reserve the right to modify or terminate the exchange privilege upon 60
days' written notice to each shareholder prior to the modification or
termination taking effect.
Money Market Exchange. Shareholders may exchange all or a portion of their
shares in the Funds for shares of the Firstar Money Market Fund at their
relative net asset values and may also exchange back into a CFI Fund without the
imposition of any charges or fees. (However, if you purchase shares of the Money
Market Fund directly and then exchange into the Funds, you will be subject to a
sales charge.) Exchanges into the Firstar Money Market Fund are subject to the
minimum purchase and redemption amounts set forth in the prospectus for the
Firstar Money Market Fund. The Fund is a no-load money market fund managed by an
affiliate of Firstar. No charge to shareholders is imposed for this exchange;
however, the Distributor may be compensated by the Firstar Money Market Fund for
certain distribution and support services provided in connection with exchanges
made by shareholders of the Funds. Also, Firstar will charge a $5.00 fee for
each exchange transaction that is executed by telephone. Before exchanging into
the Firstar Money Market Fund, please read the applicable prospectus, which may
be obtained by calling 1-877-222-2402. The Firstar Money Market Fund is
unrelated to the Catholic Fraternal Alliance or any of the Funds.
[ICON]
Reinvestment Of Fund Distributions.
- -------------------------------
Unless you request otherwise on your account application, we will reinvest all
of your income dividends and/or capital gains distributions into additional
shares of the Fund that generated the distribution. You will not pay a sales
charge on these shares. You also can have your distributions paid in cash. When
you receive a distribution you may have to pay taxes whether or not you
reinvested them or had them paid out to you in cash. If you have requested cash
distributions and we cannot locate you, we will reinvest your dividends.
[ICON]
Distribution Fees
- ----------------
In addition to the sales charge deducted at the time of purchase, we have
adopted a plan under rule 12b-1 of the Investment Company Act of 1940 that
allows each Fund to pay distribution fees for the sale and distribution of its
shares and continuing services to shareholder accounts. Each Fund pays 0.25 of
1% of its average daily net assets.
Because these fees are paid on each Fund's net assets on an on-going basis, over
time these fees will increase the cost of your investment and may cost you more
than paying other types of sales charges.
17
<PAGE>
- --------------------------------------------------------------------------------
Shareholder Information
- --------------------------------------------------------------------------------
[ICON]
Share Price Calculation
- ---------------------
The price at which you purchase and redeem Fund shares is equal to the net asset
value (NAV) per share (plus any applicable sales charge in the case of
purchases) determined on the effective date of the purchase or redemption. Each
Fund's NAV per share is calculated at the close of the regular trading session
of the NYSE, which is usually 3:00 p.m. Central Time. We do not calculate the
net asset value for the Funds on the days when the NYSE is closed for trading.
NAV EQUALS TOTAL ASSETS MINUS LIABILITIES DIVIDED BY NUMBER OF SHARES
OUTSTANDING.
We value securities owned by a Fund at current market value. For securities with
readily available market quotations, we use the quotations to price the
security. If a security does not have a readily available quotation, we value
the security as determined in good faith in accordance with guidance and
policies established by the Board of Directors. The Board of Directors approves
the use of pricing services to assist us in the determination of net asset
values.
[ICON]
Dividends, Capital Gains and Taxes
- -----------------------------
The Funds will distribute any net investment income and any net realized long or
short-term capital gains at least annually. Each Fund may also pay a special
distribution at the end of the calendar year to comply with federal tax
requirements. You may choose to have your dividends and capital gain
distributions automatically reinvested in shares of the Funds at net asset value
without a sales charge or you may take them in cash.
If your account is a taxable account, you will pay tax on dividends and
distributions from the Funds whether you receive them in cash or additional
shares.
If you redeem a Fund's shares or exchange them for shares of another Fund, any
gain on the transaction may be subject to tax.
Each Fund intends to make distributions that will either be taxed as ordinary
income or capital gains. Capital gains distributions may be taxable at different
rates depending on the length of time the Fund has held the assets sold.
Federal law requires us to withhold 31% of a shareholder's reportable payments
(which include dividends, capital gain distributions and redemption proceeds)
for those who have not properly certified that the Social Security or other
taxpayer identification number they provided is correct and that he or she is
not subject to backup withholding. We do not provide information on state and
local tax consequences of owning shares in the Funds.
This section summarizes some of the consequences under current federal tax law
of an investment in the Funds. It is not a substitute for personal tax advice.
Consult your personal tax advisor about the potential tax consequences of an
investment in the Funds under all applicable tax laws.
[ICON]
Year 2000 Compliance
- --------------------
Many currently installed computer systems and software products used by
businesses worldwide will need to be upgraded to accept four digit entries to
distinguish 21st century dates from 20th century dates. Significant uncertainty
exists concerning the potential costs and effectiveness of efforts to achieve
"Year 2000" compliance, and the possible consequences of failure.
Year 2000 issues potentially could affect the Funds in a number of ways. For
example, each Fund relies on service providers for such critical daily
operations as pricing, custody, selection of portfolio securities, tracking of
purchases and sales of portfolio securities in automated systems, transfer agent
functions (including purchases and redemptions of Fund shares, opening and
closing of shareholder accounts, calculating and recording automatic investments
and dividend and capital gain reinvestments, etc.), and the like. The Year 2000
problem in an automated system used to provide these services could disrupt the
service or corrupt the integrity of the information generated and the
transactions recorded. Also, trading prices reported by the stock exchanges and
pricing services could be affected by Year 2000 problems in the systems they use
for this purpose. Such developments could materially impair the ability of a
Fund to conduct day-to-day operations.
Also, issuers of securities that the Funds own face Year 2000 risks. They could
experience disruptions or failures of their own internal automated systems or
those of their principal customers or vendors on whose purchases, products and
services their own businesses and operations depend. These developments could
adversely affect the price of such an issuer's securities or hinder the ability
of the issuer to calculate and make interest and principal or dividend payments
on its securities. If a significant number of issuers of securities held by a
Fund were to experience such difficulties, the value of the Fund's shares could
decline.
The Advisers and Firstar Trust Company have assured CFI's Board of Directors
that they have taken reasonable steps designed to assure that the stock
selection, administration pricing, custodial and transfer agent services they
provide to the Funds will not be disrupted or otherwise affected by Year 2000
issues. These steps include extensive diagnosis of systems to identify Year 2000
problems, the correction and
18
<PAGE>
upgrading of the systems to eliminate those problems, and the testing of the
corrections and upgrades to verify resolution of the problem. While those firms
are incurring costs in these efforts, they have advised CFI's Board of Directors
that they do not anticipate that they will find it necessary to increase fees
for their services solely to recover these costs. The Advisers also have
reported that they consider Year 2000 readiness as a factor in determining which
securities to purchase and sell for the Funds. In this regard, the Advisers
typically rely on publicly available information, which may not be complete or
up to date.
CFI's Board of Directors and management will continue to monitor this situation,
and will continue to receive periodic reports and updates on the progress being
made by the Advisers and the Funds' other service providers. Despite the
precautions being taken, because of the inherent uncertainty of the scope of the
Year 2000 readiness issue worldwide (as evidenced by the various levels of
severity and catastrophe that numerous "experts" and commentators have
predicted), we can provide no absolute assurance that CFI and its service
providers will be able to identify all Year 2000 compliance risks faced by the
Funds, or that the measures they are taking to resolve those issues and their
contingency plans successfully will enable the Funds to conduct day-to-day
operations across the change to the Year 2000, or to protect the Funds from
potential economic loss.
19
<PAGE>
- --------------------------------------------------------------------------------
For More Information
- --------------------------------------------------------------------------------
If you would like more information about the Funds, you may call Shareholder
Services at 1-877-222-2402 to request a free copy of the Funds' Statement of
Additional Information (SAI), Annual or Semiannual Reports, or to ask other
questions about the Funds. The SAI has been filed with the Securities and
Exchange Commission SEC and is legally a part of the Prospectus.
To view these documents, along with other related documents, you can visit the
SEC's Internet web site (http://www.sec.gov) or the Commission's Public
Reference Room in Washington, D.C. Information on the operation of the public
reference room can be obtained by calling 1-800-SEC-0330. Additionally, copies
of this information can be obtained, for a duplicating fee, by writing the
Public Reference Section of the Commission, Washington, D.C. 20549-6009.
Investment Company File No. 811-09177
20
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
May 3, 1999
THE CATHOLIC FUNDS, INC.
1100 W. Wells Street
Milwaukee, WI 53233
(877) 222-2402
Equity Income Fund
Large-Cap Growth Fund
Disciplined Capital Appreciation Fund
This Statement of Additional Information is not a Prospectus, but
contains additional information which should be read in conjunction with The
Catholic Funds, Inc. Prospectus dated May 3, 1999. A Prospectus may be
obtained at no charge by writing to the Funds' Transfer Agent, Firstar Mutual
Fund Services, LLC, at 615 East Michigan Street, Milwaukee, Wisconsin 53202
or by calling the Transfer Agent at 1-(877)222-2402.
In this Statement of Additional Information, The Catholic Funds,
Inc. may be referred to as CFI, and the Equity Income Fund, Large-Cap Growth
Fund and the Disciplined Capital Appreciation Fund may be referred to
collectively as the "Funds" or individually as a "Fund." Terms not otherwise
defined have the same meaning as in the Prospectus.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
FUND HISTORY.......................................................3
INVESTMENT TECHNIQUES AND STRATEGIES...............................3
INVESTMENT RESTRICTIONS............................................4
MANAGEMENT.........................................................6
CONTROL PERSONS....................................................9
THE INVESTMENT ADVISER.............................................9
PERFORMANCE INFORMATION............................................9
DETERMINATION OF NET ASSET VALUE PER SHARE........................11
DISTRIBUTION OF SHARES............................................12
DISTRIBUTION PLAN.................................................12
LETTERS OF INTENT.................................................13
REGULATED INVESTMENT COMPANY STATUS...............................14
DESCRIPTION OF SHARES.............................................15
PORTFOLIO TRANSACTIONS AND BROKERAGE..............................16
PAYMENTS "IN KIND"................................................17
ACCOUNTING, FULFILLMENT, CUSTODIAN AND TRANSFER AGENT SERVICES....17
COUNSEL AND INDEPENDENT PUBLIC ACCOUNTANTS........................18
FINANCIAL STATEMENTS..............................................18
</TABLE>
2
<PAGE>
FUND HISTORY
The CFI family of funds consists of three separate series of CFI, a
Maryland corporation registered as an open-end management investment company
under the Investment Company Act of 1940 (the "1940 Act"). CFI was organized
by Catholic Financial Services Corporation (CFSC) in 1998. All of the stock
of CFSC, a Wisconsin corporation, is owned by a consortium of Catholic
fraternal benefits insurance societies (the "Catholic Fraternal Alliance").
The majority of the stock of CFSC is held by Catholic Knights Financial
Services, Inc., a wholly-owned subsidiary of Catholic Knights Insurance
Society, which functions as an administrative holding company. Further
information regarding the Catholic Fraternal Alliance is contained in the
Prospectus under "Management."
INVESTMENT TECHNIQUES AND STRATEGIES
The investment objective and policies of the Funds are described in
the Prospectus. Set forth below is supplemental information about those
policies and the types of securities in which the Funds may invest, as well
as the strategies the Funds may use to try to achieve their objectives.
Repurchase Agreements
Each Fund may acquire securities subject to repurchase agreements
for liquidity purposes to meet anticipated redemptions, or pending the
investment of the proceeds from sales of Fund shares, or pending the
settlement of purchases of portfolio securities. In a repurchase transaction,
a Fund acquires a security from, and simultaneously resells it to, an
approved vendor. An "approved vendor" is a U.S. commercial bank or the U.S.
branch of a foreign bank or a broker-dealer which has been designated a
primary dealer in government securities which must meet credit requirements
set by the Board of Directors from time to time. The repurchase price exceeds
the purchase price by an amount that reflects an agreed-upon interest rate
effective for the period during which the repurchase agreement is in effect.
The majority of these transactions run from day to day, and delivery pursuant
to the resale typically will occur within one to five days of the purchase.
Repurchase agreements are considered "loans" under the 1940 Act,
collateralized by the underlying security. The Funds' repurchase agreements
require that at all times while the repurchase agreement is in effect, the
value of the collateral must equal or exceed the repurchase price to fully
collateralize the repayment obligation. Additionally, the Adviser will impose
creditworthiness requirements to confirm that the vendor is financially sound
and will continuously monitor the collateral's value.
3
<PAGE>
INVESTMENT RESTRICTIONS
The following are fundamental policies for each Fund, and together
with each Fund's investment objective described in the Prospectus, cannot be
changed without the vote of a "majority"of the outstanding voting securities
of that Fund. Such a "majority" vote is defined in the 1940 Act as the vote
of the holders of the lesser of: (i) 67% or more of the shares present or
represented by proxy at a shareholder meeting, if the holders of more than
50% of the outstanding shares are present, or (ii) more than 50% of the
outstanding shares. For any Fund, we may not:
(1) invest more than 5% of its net assets, taken at value at
the time of each investment, in the securities (including
repurchase agreements) of any one issuer (for this purpose,
the issuer(s) of a debt security being deemed to be only
the entity or entities whose assets or revenues are subject
to the principal and interest obligations of the security),
except that up to 25% of a Fund's net assets may be invested
without regard to this limitation and provided that such
restrictions shall not apply to obligations issued or
guaranteed by the U.S. government or any agency or
instrumentality thereof;
(2) purchase securities on margin, except for use of short-term
credit necessary for clearance of purchases and sales of
portfolio securities;
(3) make short sales of securities or maintain a short position,
or write, purchase, or sell puts, calls, straddles, spreads,
or combinations thereof, except for short sales against the
box;
(4) make loans to other persons, except that we reserve freedom
of action, consistent with a Fund's other investment policies
and restrictions and as described in the prospectus and this
statement of additional information, to: (a) invest in
debt obligations, including those that are either publicly
offered or of a type customarily purchased by
institutional investors, even though the purchase of such
debt obligations may be deemed the making of loans; and
(b) enter into repurchase agreements;
(5) issue senior securities or borrow, except that we may
borrow for a Fund in amounts not in excess of 10% of its
net assets, taken at current value, and then only from
banks as a temporary measure for extraordinary or
emergency purposes (we will not borrow money for the Funds
to increase income, but only to meet redemption requests
that otherwise might require untimely dispositions of
portfolio securities; interest paid on any such borrowing
will reduce a Fund's net income);
(6) mortgage, pledge, hypothecate or in any manner transfer, as
security for indebtedness, any securities owned or held by a
Fund, except as may be necessary in connection with and
subject to the limits in restriction (5);
(7) underwrite any issue of securities, except to the extent that
we purchase securities directly from an issuer thereof in
accord with a Fund's investment objectives and policies may be
deemed to be underwriting or to the extent that in connection
with the disposition of portfolio securities we may be deemed
an underwriter for the Fund under federal securities laws;
4
<PAGE>
(8) purchase or sell commodities or commodity contracts;
(9) invest more than 25% of a Fund's total assets, taken at
current value at the time of each investment, in securities of
issuers whose principal business activities are in the same
industry in any single industry or issuer (except the U.S.
government or any agency or instrumentality thereof);
(10) invest in oil, gas or mineral related programs or leases
except as may be included in the definition of public
utilities, although we may invest in securities of enterprises
engaged in oil, gas or mineral exploration for a Fund;
(11) invest in repurchase agreements maturing in more than seven
days or in other securities with legal or contractual
restrictions on resale if, as a result thereof, more than 10%
of a Fund's net assets (taken at current value at the time of
such investment) would be invested in such securities;
(12) purchase more than 10% of the outstanding voting securities of
an issuer or invest for the purpose of exercising control or
management.
Non-Fundamental Investment Restrictions
The following operating policies of the Funds are not fundamental
policies and, as such, may be changed by a majority vote of the Board of
Directors without shareholder approval. These additional restrictions provide
that for any Fund, we may not:
(1) purchase or sell real estate, or real estate limited
partnership interests provided that we may invest in
securities for a Fund secured by real estate or interests
therein or issued by companies that invest in real estate or
interests therein;
(2) invest in any security if as a result a Fund would have more
than 5% of its net assets invested in securities of companies
which, together with any pre decessors, have been in
continuous operation for less than three years; or
(3) purchase securities or other investment companies, if the
purchas would cause more than 10% of the value of a Fund's
net assets to be invested in investment company securities
provided that' (a) no investment will be made in the
securities of any one investment company if immediately
after such investment more than 3% of the outstanding
voting securities of such company would be owned by a Fund
or more than 5% of the value of a Fund's net assets would
be invested in such company; and (b) no restrictions shall
apply to a purchase of investment company securities in
connection with a merger, consolidation acquisition or
reorganization.
5
<PAGE>
MANAGEMENT
The Fund Directors and Officers and their principal occupations and
business affiliations during the past five years are listed below.
<TABLE>
<CAPTION>
Principal Occupation
Name, Age and Address Position with CFI During Past Five Years
- --------------------- ----------------- ----------------------
<S> <C> <C>
Daniel J. Steininger* Chairman of the Board of President of Catholic Knights
1100 West Wells Street Directors and Director Insurance Society since 1981
Milwaukee, WI 53233
D.O.B. 5/1/45
Allan G. Lorge* President, Chief Secretary/Treasurer of
1100 W. Wells St. Executive Officer, and Catholic Knights Insurance
Milwaukee, WI 53233 Director Society since 1986
D.O.B. 12/9/49
Thomas A. Bausch, Ph.D. Director Professor of Management,
Marquette University Marquette University
College of Business College of Business
Straz Hall Administration since 1978;
606 N. 13th Street formerly a director for 10 years
Milwaukee, WI 53233 of Heartland Group, Inc.
D.O.B. 06/06/38 (mutual fund family)
J. Michael Borden Director Chief Executive Officer of
P.O. Box 591 HUFCOR (1978-present)
Janesville, WI 53547
D.O.B. 12/21/36
Daniel R. Doucette Director Director of Business
250 North Sunnyslope Road Strategy and Mergers/
Suite 250 Acquisitions, Unum Corp.
Brookfield, WI 53005 (Financial services and
D.O.B. 9/03/49 insurance); prior thereto,
President and Chief
Executive Officer, Milwaukee
Mutual Insurance Co. since
1991
Thomas J. Munninghoff Director President, Munninghoff,
430 Reading Road Lange and Co. (accounting
Cincinnati, OH 45202 firm) since 1983
D.O.B. 8/27/47
Conrad L. Sobczak Director Retired, formerly President
6015 Washington Boulevard and CEO, Family Health
Wauwatosa, WI 53213 Systems, Inc. from 1987-1998
D.O.B. 10/20/38
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Principal Occupation
Name, Age and Address Position with CFI During Past Five Years
- --------------------- ----------------- ----------------------
<S> <C> <C>
David L. Vollmar Director Retired, formerly Partner, Arthur
1700 Arrowhead Court Andersen LLP from 1951-1988
Elm Grove, WI 53122
D.O.B. 12/15/33
Mark K. Forbord Chief Financial Officer Controller of Catholic Knights Financial
1100 W. Wells St. Services, Inc. since April 19, 1996; Controller
Milwaukee, WI 53233 of Catholic Brokerage Services Corp. since
D.O.B. 1/21/54 April 19, 1996; Senior Financial Analyst of Catholic
Knights Insurance Society since July 1995;
Instructor at The University of Wisconsin-Milwaukee
since Jan. 1986; and Instructor at Cardinal-
Stritch University since September 1990
Russell J. Kafka Treasurer Director of Catholic Knights Financial Services,
1100 W. Wells St. Inc. since June 1994; Director of Catholic Brokerage
Milwaukee, WI 53233 Services Corp. since November 1994; and Vice
D.O.B. 6/20/44 President-Investments of Catholic Knights Insurance
Society since January 1985
Joseph F. Wreschnig Secretary Director of Mutual Funds Operations, Catholic
1100 W. Wells St. Financial Services Corp., since January 1999; prior
Milwaukee, WI 53233 to January 1999, Assistant Vice President and
D.O.B. 6/30/50 Secretary of AAL Capital Management Corporation
Theodore F. Zimmer Vice President General Counsel, Catholic Knights Insurance
1100 W. Wells St. Society since September 1997; Partner at Miller,
Milwaukee, WI 53233 Simon, McGinn and Clark (law firm) from
D.O.B. 12/17/40 October 1996 to Sept. 1997; and prior to October
1996, Partner at Quarles & Brady LLP
</TABLE>
- ------------------------------------
7
<PAGE>
* Directors who are "Interested Persons" (as defined in the 1940 Act).
Each of the Funds pays an equal portion of the fees and expenses of the
five Directors who are officers, director of employees or affiliated persons of
the Adviser. Such fees consist of an annual retainer in the amount of $500 and
$250 per Board meeting attended. The estimated annual compensation to be paid by
CFI to each of the Directors is set forth in the table below:
<TABLE>
<CAPTION>
Aggregate Com- Total Compensation
Name and Position pensation From the Retirement Benefits From the Funds
With CFI Funds and Fund Complex
-------- ------------------ ------------------- ------------------
<C> <S> <S> <S>
Thomas A. Bausch, Ph.D. $1,500 $0 $1,500
J. Michael Borden
Director $1,500 $0 $1,500
Daniel R. Doucette
Director $1,500 $0 $1,500
Thomas J. Munninghoff
Director $1,500 $0 $1,500
Conrad L. Sobczak
Director $1,500 $0 $1,500
David L. Vollmar
Director $1,500 $0 $1,500
</TABLE>
8
<PAGE>
CONTROL PERSONS
As of the date of this Statement of Additional information, the Adviser
was the sole initial shareholder of the Funds' shares.
THE INVESTMENT ADVISER
Each Fund is managed by CFSC pursuant to an Investment Advisory
Agreement. The Agreement was approved by the Board of Directors, including a
majority of the Directors who are not Interested Persons of the Funds or of CFSC
on February 17, 1999.
Basic information as to the Adviser and the Investment Advisory
Agreement is set forth in the Prospectus under "Management".
Todd Investment Advisors, Inc., Peregrine Capital Management, Inc.
and Vantage Global Advisors, Inc. have been engaged to serve as Sub-Advisers
to the Equity Income Fund, Large-Cap Growth Fund and Disciplined Capital
Appreciation Fund, respectively.
The Sub-Advisory Agreements require the Sub-Advisers, at their expense,
to provide the Funds with adequate office space, facilities and equipment, and
to provide and supervise the activities of all administrative and clerical
personnel required to provide effective corporate administration for the Funds,
including the compilation and maintenance of records with respect to its
operations, the preparation and filing of specified reports, and composition of
proxy materials and registration statements for continuous public sale of shares
of the Funds.
Expenses not expressly assumed by the Adviser under the Investment
Advisory Agreement, the Sub-Advisers under the Sub-Advisory Agreements, or by
the Distributor under the Distribution Agreement are paid by the Funds.
The Sub-Advisory Agreements provide that in the absence of willful
misfeasance, bad faith or gross negligence in the performance of its duties, or
reckless disregard for obligations and duties under the Sub-Advisory Agreement,
the Sub-Adviser is not liable for any loss resulting from a good faith error or
omission on its part with respect to any of its duties thereunder.
PERFORMANCE INFORMATION
From time to time the Funds may advertise their "yield" and "total
return". "Yield" is based on historical earnings and total return is based on
historical distributions; neither is intended to indicate future performance.
The "yield" of a Fund refers to the income generated by an investment in that
Fund over a one-month period (which period will be stated in the advertisement).
This income is then"annualized." That is, the amount of income generated by the
investment during the month is assumed to be generated each month over a
twelve-month period and is shown as a percentage of the investment. "Total
return" of the Funds refers to the annual average
9
<PAGE>
return for 1, 5, and 10-year periods (or the portion thereof during which a
Fund has been in existence). Total return is the change in redemption value
of shares purchased with an initial $1,000 investment, assuming the
reinvestment of dividends and capital gain distributions and the redemption
of the shares at the end of the period.
Performance information should be considered in light of the particular
Fund's investment objectives and policies, characteristics and quality of its
portfolio securities, and the market conditions during the applicable period,
and should not be considered as a representation of what may be achieved in the
future. Investors should consider these factors and possible differences in the
methods used in calculating performance information when comparing a Fund's
performance to performance figures published for other investment vehicles.
Average annual total return is computed by finding the average annual
compounded rates of return over the 1, 5, and 10-year periods (or the portion
thereof during which a Fund has been in existence) ended on the date of the
respective Fund's balance sheet that would equate the initial amount invested to
the ending redeemable value, according to the following formula:
P(1~+~T)n~=~ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the 1, 5, or 10 year
periods at the end of the 1, 5, or 10 year periods
(or fractional portion thereof).
Under the foregoing formula, the time periods used in advertising will
be based on rolling calendar quarters, updated to the last day of the most
recent quarter prior to submission of the advertising for publication, and will
cover 1, 5, and 10 year periods or a shorter period dating from the
effectiveness of the Registration Statement of the Funds. In calculating the
ending redeemable value, all dividends and distributions by a Fund are assumed
to have been reinvested at net asset value as described in the Prospectus on the
reinvestment dates during the period. Total return, or "T" in the formula above,
is computed by finding the average annual compounded rates of return over the 1,
5, and 10 year periods (or fractional portion thereof) that would equate the
initial amount invested to the ending redeemable value.
In addition to the total return quotations discussed above, a Fund may
advertise its yield based on a 30-day (or one month) period ended on the date of
the Fund's most recent balance sheet, computed by dividing the net investment
income per share of a Fund earned during the period by the maximum offering
price per Fund share on the last day of the period, according to the following
formula:
Yield~=~2[({a-b} over cd~+~1)6~-~1]
10
<PAGE>
Where:
a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends.
d = the maximum offering price per share on the last day of
the period.
Under this formula, interest earned on debt obligations for purposes of
"a" above, is calculated by (i) computing the yield to maturity of each
obligation held by a Fund based on the market value of the obligation at the
close of business on the last day of each month, or, with respect to obligations
purchased during the month, the purchase price (plus actual accrued interest),
(ii) dividing that figure by 360 and multiplying the quotient by the market
value of the obligation (including actual accrued interest as referred to above)
to determine the interest income on the obligation that is in the Fund's
portfolio (assuming a month of 30 days), and (iii) computing the total of the
interest earned on all debt obligations and all dividends accrued on all equity
securities during the thirty-day or one month period. In computing dividends
accrued, dividend income is recognized by accruing 1/360 of the stated dividend
rate of a security each day that the security is in the Fund's portfolio.
Undeclared earned income, computed in accordance with generally accepted
accounting principles, may be subtracted from the maximum offering price
calculation required pursuant to "d" above.
Each Fund may, from time to time, compare its performance to other
mutual funds with similar investment objectives and to the industry as a whole,
as quoted by ranking services and publications, such as Lipper Analytical
Services, Inc., Morningstar, Inc., FORBES, FORTUNE, MONEY, BUSINESS WEEK, VALUE
LINE, INC. AND THE WALL STREET JOURNAL. These rating services and magazines rank
the performance of the Funds against all funds over specified periods and in
specified categories.
DETERMINATION OF NET ASSET VALUE PER SHARE
Each Fund's shares are sold at their next determined net asset value
per share, plus any applicable sales charge. Each Fund determines the net asset
value per share by subtracting the Fund's liabilities (including accrued
expenses and dividends payable) from the Fund's total assets (the value of the
securities a Fund holds plus cash or other assets, including interest accrued
but not yet received) and dividing the result by the total number of shares
outstanding.
The next determined net asset value per share will be calculated as
of the close of regular trading on the New York Stock Exchange at least once
every weekday, Monday through Friday, except on (i) customary national
business holidays which result in the closing of the New York Stock Exchange
which are New Year's Day, Martin Luther King, Jr., Day, Washington's
Birthday, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving, and Christmas; (ii) days when no security is tendered for
redemption and no customer order is received; or (iii) days when changes in
the value of the investment company's portfolio securities do not affect the
current net asset value of the Fund's redeemable securities. Portfolio
securities which are traded on stock exchanges are valued at the last sale
price as of the close of business on the day the securities are being valued,
or, lacking any sales, at the latest bid price. Each over-the-counter
security for which the last sale price
11
<PAGE>
on the day of valuation is available from NASDAQ and falls within the range
of the latest bid and asked quotations is valued at that price. All other
securities traded in the over-the-counter market are valued at the most
recent bid prices as obtained from one or more dealers that make markets in
the securities. Portfolio securities which are traded both in the
over-the-counter market and on a stock exchange are valued according to the
broadest and most representative market.
Securities and other assets for which quotations are not readily
available will be valued at their fair market value as determined by the Board
of Directors.
DISTRIBUTION OF SHARES
CFSC, each Fund's investment Adviser, also acts as Distributor of the
shares of each Fund. CFSC has agreed to use its "best-efforts" to distribute
each Fund's shares, but has not committed to purchase or sell any specific
number of shares. The Distribution Agreement for the Funds is renewable annually
by the vote of the directors at a meeting called for such purpose and may be
terminated upon 30 days' written notice by either party. Under the Agreement,
CFSC will pay for the costs and expenses of preparing, printing and distributing
materials not prepared by the Funds and used by CFSC in connection with its
offering of shares for sale to the public, including the additional costs of
printing copies of the prospectus and of annual and interim reports to
shareholders other than copies required for distribution to shareholders or for
filing under the federal securities laws, and any expenses of advertising
incurred by CFSC in connection with the offering of the shares.
DISTRIBUTION PLAN
Each Fund has adopted a distribution plan (the "Distribution Plan")
pursuant to Rule 12b-1 of the Investment Company Act. Under each Plan, the
Adviser provides the Directors after the end of each quarter a written report
setting forth all amounts expended under the Plan, including all amounts paid to
dealers as distribution or service fees. In approving the Plan in accordance
with the requirements of Rule 12b-1, the Directors considered various factors,
including the amount of the distribution fee. The Directors determined that
there is a reasonable likelihood that the Plan of each respective Fund will
benefit the Fund and the shareholders of the Fund.
Each Plan may be terminated by vote of a majority of the Directors
who are not interested persons, or by vote of the majority of the outstanding
voting securities of the Fund. Any change in the Plan that would materially
increase the distribution cost to the Fund requires shareholder approval;
otherwise, it may be amended by the Directors, including a majority of the
Directors who are not interested persons, by vote cast in person at a meeting
called for the purpose of voting upon such amendment. So long as a
Distribution Plan is in effect, the selection or nomination of the Directors
who are not interested persons is committed to the discretion of such
Directors.
The Distribution Plan of a Fund may be terminated by the Directors
at any time on 60 days written notice without payment of any penalty by the
Adviser, by vote of a majority of the outstanding voting securities of the
Fund, or by vote of a majority of the Directors who are not interested
persons.
12
<PAGE>
Each Distribution Plan will continue in effect for successive one-year
periods, if not sooner terminated in accordance with its terms, provided that
each such continuance is specifically approved by the vote of the Directors,
including a majority of the Directors who are not interested persons.
LETTERS OF INTENT
A Letter of Intent (referred to as a "Letter") is an investor's
statement in writing to the Distributor of the intention to purchase shares of
the Funds during a 13-month period (the "Letter of Intent period"),which may, at
the investor's request, include purchases made up to 90 days prior to the date
of the Letter. The Letter states the investor's intention to make the aggregate
amount of purchases of shares which, when added to the investor's holdings of
shares of those funds, will equal or exceed the amount specified in the Letter.
Purchases made by reinvestment of dividends or distributions of capital gains
and purchases made at net asset value without sales charge do not count toward
satisfying the amount of the Letter. A Letter enables an investor to count the
shares purchased under the Letter to obtain the reduced sales charge rate on
purchases of shares of the Funds that apply under the Right of Accumulation to
current purchases of shares. Each purchase under the Letter will be made at the
public offering price applicable to a single lump-sum purchase of shares in the
intended purchase amount.
In submitting a Letter, the investor makes no commitment to purchase
shares, but if the investor's purchases of shares within the Letter of Intent
period, when added to the value (at offering price) of the investor's holdings
of shares on the last day of that period, do not equal or exceed the intended
purchase amount, the investor will pay the additional amount of sales charge
applicable to such purchases. Shares equal in value to 5% of the intended
purchase amount will be held in escrow by the Transfer Agent.
REGULATED INVESTMENT COMPANY STATUS
As a regulated investment company (a "RIC") under Subchapter M of
the U.S. Internal Revenue Code of 1986, as amended (the "Code"), a Fund would
not be subject to Federal income taxes on the net investment income and
capital gains that the Fund distributes to the Fund's shareholders. The
distribution of net investment income and capital gains will be taxable to
Fund shareholders regardless of whether the shareholder elects to receive
these distributions in cash or in additional shares. Distributions reported
to Fund shareholders as capital gains from property held for more than 1
year, shall be taxable as such, regardless of how long the shareholder has
owned the shares. Fund shareholders will be notified annually by the Fund as
to the Federal tax status of all distributions made by the Fund.
Distributions may be subject to state and local taxes. To qualify as a RIC,
the Code requires that at the end of each quarter of the taxable year, (i) at
least 50% of the market value of the Fund's total assets be invested in cash,
U.S. Government Securities, the securities of other regulated investment
companies, and other securities, with such securities of any one issuer
limited for the purposes of this calculation to an amount not greater than 5%
of the value of Fund's total assets and 10% of the outstanding voting
securities of any one issuer, and (ii) not more than 25% of the value of the
Fund's total assets be invested in the securities of any one issuer (other
than U.S. Government Securities or the securities of other regulated
investment companies), or of two or more issuers which the Fund controls and
which are determined to be engaged in the same or similar trades or
businesses, or related trades or businesses.
13
<PAGE>
Each of the Funds will seek to qualify for treatment as a RIC under the
Code. Provided that a Fund (i) is a RIC and (ii) distributes at least 90% of the
Fund's net investment income (including, for this purpose, net realized
short-term capital gains), the Fund itself will not be subject to Federal income
taxes to the extent the Fund's net investment income and the Fund's net realized
long and short-term capital gains, if any, are distributed to the Fund's
shareholders. To avoid an excise tax on its undistributed income, each Fund
generally must distribute annually at least 98% of its income, including its net
long-term capital gains as calculated on a calendar year basis as defined by the
Code. One of several requirements for RIC qualification is that the Fund must
receive at least 90% of the Fund's gross income each year from dividends,
interest, payments with respect to securities loans, gains from the sale or
other disposition of securities or foreign currencies, or other income derived
with respect to the Fund's investments in stock, securities, and foreign
currencies (the "90% Test").
In the event of a failure by a Fund to qualify as a RIC, the Fund would
be subject to Federal income taxes on its taxable income and the Fund's
distributions, to the extent that such distributions are derived from the Fund's
current or accumulated earnings and profits, would constitute dividends that
would be taxable to the shareholders of the Fund as ordinary income and would be
eligible for the dividends received deduction for corporate shareholders. This
treatment would also apply to any portion of the distributions that might have
been treated in the shareholder's hands as long-term capital gains, as discussed
below, had the Fund qualified as a RIC.
If a Fund were to fail to qualify as a RIC for one or more taxable
years, the Fund could then qualify (or requalify) as a RIC for a subsequent
taxable year only if the Fund had distributed to the Fund's shareholders a
taxable dividend equal to the full amount of any earnings or profits (less
the interest charge mentioned below, if applicable) attributable to such
period. In addition, pursuant to the Code and an interpretative notice issued
by the IRS, if the Fund should fail to qualify as a RIC and should thereafter
seek to qualify as a RIC, the Fund may be subject to tax on the excess (if
any) of the fair market of the Fund's assets over the Fund's basis in such
assets, as of the day immediately before the first taxable year for which the
Fund seeks to qualify as a RIC. A similar rule may apply if the Fund
initially qualifies as a RIC, then fails to qualify for more than 1 taxable
year, and subsequently requalifies as a RIC.
If a Fund determines that the Fund will not qualify as a RIC under
Subchapter M of the Code, the Fund will establish procedures to reflect the
anticipated tax liability in the Fund's net asset value.
DESCRIPTION OF SHARES
In the interest of economy and convenience, certificates representing
shares purchased are not issued. However, such purchases are confirmed to the
investor and credit to their accounts on the books maintained by Firstar Mutual
Fund Services, LLC (the "Agent"), Milwaukee, Wisconsin. The investor will have
the same rights of ownership with respect to such shares as if certificates had
been issued.
Shareholders have the right to vote on the election of Directors at
each meeting of shareholders at which Directors are to be elected and on other
matters as provided by law or the Articles of Incorporation or Bylaws of CFI.
CFI's Bylaws do not require that meetings of shareholders be held annually.
However, special meetings of shareholders may be called for purposes such as
electing or removing directors, changing fundamental
14
<PAGE>
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.
15
<PAGE>
PORTFOLIO TRANSACTIONS AND BROKERAGE
Under the Investment Advisory Agreements and the Sub-Advisory
Agreements (referred to hereinafter in this section as the "Advisory
Agreements"), the Adviser and Sub-Advisers (hereinafter referred to in this
section as the "Advisers") have the authority to direct the placement of
orders for the purchase and sale of the Funds' portfolio securities.
The cost of securities transactions for each Fund will consist
primarily of brokerage commissions or dealer or underwriter spreads.
Occasionally, securities may be purchased directly from the issuer.
For securities traded primarily in the over-the-counter market, the sellers
who make a market in the securities will be dealt with directly unless better
prices and execution are available elsewhere. Such dealers usually act as
principals for their own account. In placing portfolio transactions, the
Advisers seek the best combination of price and execution.
In determining which brokers provide best execution, the Advisers
look primarily to the stock price quoted by the broker, and normally places
orders with the broker through which the most favorable price can be
obtained. It is expected that securities will ordinarily be purchased in the
primary markets, and that in assessing the best net price and execution
available to a Fund, the Advisers will consider all factors they deem
relevant, including the breadth or the market in the security, the price of
the security, the financial condition and execution capability of the broker
or dealer and the reasonableness of the commission, if any (for the specific
transaction and on a continuing basis). Although it is expected that sales of
shares of the Funds will be made only by the Distributor, the Adviser may in
the future consider the willingness of particular brokers to sell shares of
the Funds as a factor in the selection of brokers for the Funds' portfolio
transactions, subject to the overall best price and execution standard.
Assuming equal execution capabilities, other factors may be taken
into account in selecting brokers or dealers to execute particular
transactions and in evaluating the best net price and execution available.
The Advisers may consider "brokerage and research services" (as those terms
are defined in Section 28(e) of the Securities Exchange Act of 1934),
statistical quotations, specifically the quotations necessary to determine
the Funds' net asset values, and other information provided to the Funds, to
the Adviser (or their affiliates)). The Advisers may also cause a Fund to pay
to a broker or dealer who provides such brokerage and research services a
commission for executing a portfolio transaction which is in excess of the
amount of commission another broker or dealer would have charged for
effecting that transaction. The Advisers must determine, in good faith,
however, that such commission was reasonable in relation to the value of the
brokerage and research services provided, viewed in terms of that particular
transaction or in terms of all the accounts over which the Advisers exercise
investment discretion. It is possible that certain of the services received
by the Advisers attributable to a particular transaction will benefit one or
more other accounts for which investment discretion is exercised by the
Advisers.
PAYMENTS "IN KIND"
Payment for shares tendered for redemption is ordinarily made in
cash. However, the Board of Directors may determine that it would be
detrimental to the best interests of the remaining shareholders of a
16
<PAGE>
particular Fund to make payment of a redemption order wholly or partly in
cash. In that case the Fund may pay the redemption proceeds in whole or in
part by a distribution "in kind" of securities from the portfolio of the
Fund, in lieu of cash, in conformity with applicable rules of the Securities
and Exchange Commission. The Funds have elected to be governed by Rule 18f-1
under the Investment Company Act, pursuant to which each Fund is obligated to
redeem shares solely in cash up to the lesser of $250,000 or 1% of the net
assets of the Fund during any 90-day period for any one shareholder. If
shares are redeemed in kind, the redeeming shareholder might incur brokerage
or other costs in selling the securities for cash. The method of valuing
securities used to make redemptions in kind will be the same as the method a
Fund uses to value its portfolio securities described above
under"Determination of Net Asset Values Per Share" and that valuation will be
made as of the time the redemption price is determined.
ACCOUNTING, FULFILLMENT, CUSTODIAN AND TRANSFER AGENT SERVICES
Firstar Mutual Fund Services, LLC ("Firstar") provides fund
accounting, fulfillment, custodian and transfer agent services to each of the
Funds.
Firstar provides fund accounting services pursuant to the terms of a
Fund Accounting Servicing Agreement. The current rate of payment for these
services per Fund per year is $22,000 for the first $40 million; .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 .002 of 1% on
average daily net asset value. Firstar is entitled to receive a minimum
annual fee of $3,000 from each Fund.
Firstar provides transfer agent and dividend disbursing services to
each Fund pursuant to the terms of a Transfer Agent Servicing Agreement.
Under the terms of the Transfer Agent Servicing Agreement, Firstar is
entitled to annual compensation of minimum annual fees of $25,000 for the
first Fund, and $10,000 for each additional Fund. Firstar is also entitled to
reimbursement for all out of pocket expenses incurred in providing such
services. The Transfer Agent Servicing Agreement will continue in effect
until terminated, and may be terminated by either party without cause on
ninety (90) days' prior written notice.
COUNSEL AND INDEPENDENT PUBLIC ACCOUNTANTS
The audited financial statements of the Equity Income Portfolio
included in this Statement of Additional Information has been audited by
Arthur Andersen LLP, independent public accountants, as indicated in its
report with respect thereto which also is included in this Statement of
Additional Information in reliance upon the authority of said firm as experts
in accounting and auditing in giving said report.
17
<PAGE>
Quarles & Brady LLP, as counsel to CFI, has rendered its opinion as
to certain legal matters regarding the due authorization and valid issuance
of the shares of common stock being sold pursuant to the Prospectus.
FINANCIAL STATEMENTS
The following is the Balance Sheet of The Catholic Funds, Inc. as of
April 23, 1999, together with related footnotes. The Balance Sheet has
been audited by Arthur Andersen LLP, and its report thereon also is included
below.
18
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and Board of Directors
of The Catholic Funds, Inc:
We have audited the statements of assets and liabilities of the Equity Income
Fund, the Large-Cap Growth Fund, and the Disciplined Capital Appreciation
Fund, each being a series of The Catholic Funds, Inc. (the "Funds," a
Maryland corporation) as of April 23, 1999. These financial statements are
the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements based upon our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the statements of assets and liabilities referred to above
present fairly, in all material respects, the net assets of the Funds as of
April 23, 1999, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
April 26, 1999.
<PAGE>
THE CATHOLIC FUNDS, INC.
STATEMENTS OF ASSETS AND LIABILITIES
APRIL 23, 1999
<TABLE>
<CAPTION>
DISCIPLINED
EQUITY LARGE-CAP CAPITAL
INCOME GROWTH APPRECIATION
FUND FUND FUND
-------- --------- ------------
<S> <C> <C> <C>
Assets:
Cash $ 33,334 $ 33,333 $ 33,333
Prepaid registration fees 9,214 9,213 9,213
Prepaid insurance 3,167 3,167 3,166
Prepaid directors' fees 1,000 1,000 1,000
--------
Total assets $ 46,715 $ 46,713 $ 46,712
Liabilities:
Due to Advisor 13,381 13,380 13,379
--------
Net assets:
<PAGE>
Net assets applicable to 3,334, 3,333,
and 3,333 issued and outstanding
shares, respectively, with no par
value; unlimited shares authorized. $ 33,334 $ 33,333 $ 33,333
--------
Net asset value:
Net asset value; redemption price and
minimum offering price per share (net
assets/shares outstanding). $ 10.00 $ 10.00 $ 10.00
-------- ---------
Maximum offering price per share $ 10.42 $ 10.42 $ 10.42
-------- ---------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
THE CATHOLIC FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
APRIL 23, 1999
1. Organization
The Catholic Funds, Inc. (the "Company") is organized as a Maryland
corporation. The Company has registered under the Investment Company Act
of 1940 as a diversified, open-end management investment company. The
Company may establish multiple series; currently three series have been
established: the Equity Income Fund, the Large-Cap Growth Fund, and the
Disciplined Capital Appreciation Fund (individually referred to as a
"Fund" and collectively as the "Funds"). All 10,000 initial shares were
issued to Catholic Financial Services Corporation, the investment advisor
("Advisor").
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of the financial statements.
These policies are in conformity with generally accepted accounting
principles ("GAAP").
a. Investment Valuation
Portfolio securities that are traded on stock exchanges are valued at
the last sale price as of the close of business on the day the
securities are being valued or, lacking any sales, at the latest bid
price. Each over-the-counter security for which the last sale price
on the day of valuation is available from NASDAQ and falls within the
latest bid and asked quotations is valued at that price. All other
securities traded in the over-the-counter market are valued at the
most recent bid prices as obtained from one or more dealers that make
markets in the securities. Securities that are traded in both the
over-the-counter market and on a stock exchange are valued according
to the broadest and most representative market. Securities for which
quotations are not readily available will be valued at their fair
market value as determined by the Board of Directors.
b. Organization Costs
The Advisor has absorbed $132,500 of costs incurred by the Fund in
connection with its organization and public offering of shares. The
Fund will not be required to reimburse the Advisor for these
organization costs.
<PAGE>
c. Federal Income and Excise Taxes
Each fund intends to comply with the requirements of the Internal
Revenue Code necessary to qualify as a regulated investment company
and to make the requisite distributions of taxable income to its
shareholders.
d. Distributions to Shareholders
The Funds will distribute any net investment income and any net
realized long or short-term capital gains at least annually.
Distributions to shareholders are recorded on the ex-dividend date.
Each Fund may also pay a special distribution at the end of the
calendar year to comply with federal tax requirements, which may
differ from generally accepted accounting principles.
e. Expenses
A shareholder may pay both transaction and operating fees and expenses
when buying and holding shares of the Funds. Shareholder transaction
expenses are fees paid directly from an investment in the Funds.
Annual fund operating expenses are expenses that are deducted from
Fund assets, such as advisory and distribution fees. Expenses that
are not directly attributable to a portfolio are typically allocated
among the portfolios in proportion to their respective net assets.
f. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles require management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported
changes in net assets during the reporting period. Actual results
could differ from those estimates.
3. Investment Advisor
The Company has an Investment Advisory Agreement with the Advisor to
furnish investment advisory services to the Funds. Todd Investment
Advisors, Inc., Peregrine Capital Management, Inc., and Vantage Global
Advisors, Inc. are Sub-Advisors to the Funds. Under the terms of the above
agreements, the Advisor receives an annual advisory fee of 0.80% of average
daily net assets for the Equity Income Fund, and 0.90% for the Large-Cap
Growth and Disciplined Capital Appreciation Funds. Out of these fees, the
Advisor pays the Sub-Advisory fees applicable to each Fund. The Advisor
commits to reimburse the Funds to the extent that annual total fund
operating expenses exceed 1.75%.
<PAGE>
4. Capital Stock
The Company is authorized to issue a total of one billion shares of common
stock with a par value of $.001 per share. A total of 150 million shares
of common stock shall initially be classified as 50 million for each of the
Funds.
5. Distribution Plan
Catholic Financial Services Corporation ("CFSC") is the Distributor
("Distributor") for the Funds. Pursuant to Rule 12b-1 under the 1940 Act,
each Fund has adopted a Distribution Plan (the "Distribution Plan"). Under
the Distribution Plan, each Fund is authorized to pay expenses incurred for
the sale and distribution of its shares and continuing services to
shareholder accounts. Each Fund pays 0.25% of its average daily net
assets.
<PAGE>
CATHOLIC FUNDS, INC.
FORM N-1A
PART C
OTHER INFORMATION
Item 23. Exhibits
See Exhibit Index following the Signature Page of this
Registration Statement, which Index is incorporated herein by
this reference.
Item 24. Persons Controlled by or under Common Control with Registrant
Not applicable. See "Control Persons" in Part B.
Item 25. Indemnification
Reference is made to Article IX of the Registrant's By-laws
filed as Exhibit (b) to Registrant's Registration Statement
with respect to Indemnification of Registrant's officers and
directors, which is set forth below:
SECTION 9.1. INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES
AND AGENTS. The Corporation shall indemnify each person who
was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative
("Proceeding"), by reason of the fact that he is or was a
Director, officer, employee or agent of the Corporation, or is
or was serving at the request of the Corporation as a
Director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against
all expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by
him in connection with such Proceeding to the fullest extent
permitted by law; PROVIDED that:
(a) whether or not there is an adjudication of liability
in such Proceeding, the Corporation shall not
indemnify any person for any liability arising by
reason of such person's willful misfeasance, bad
faith, gross negligence, or reckless disregard of the
duties involved in the conduct of his office or under
any contract or agreement with the Corporation
("disabling conduct"); and
(b) the Corporation shall not indemnify any person
unless:
(1) the court or other body before which the
Proceeding was brought (i) dismisses the
Proceeding for insufficiency of evidence of
any disabling
C-1
<PAGE>
conduct, or (ii) reaches a final decision
on the merits that such person was not
liable by reason of disabling conduct; or
(2) absent such a decision, a reasonable
determination is made, based upon a
review of the facts, by (i) the vote of a
majority of a quorum of the Directors of
the Corporation who are neither
interested persons of the Corporation as
defined in the Investment Company Act of
1940 nor parties to the Proceeding, or
(ii) if such quorum is not obtainable, or
even if obtainable, if a majority of a
quorum of Directors described in
paragraph (b) (2) (i) above so directs,
by independent legal counsel in a written
opinion, that such person was not liable
by reason of disabling conduct.
Expenses (including attorneys' fees) incurred in defending a
Proceeding will be paid by the Corporation in advance of the
final disposition thereof upon an undertaking by such person
to repay such expenses (unless it is ultimately determined
that he is entitled to indemnification), if:
(1) such person shall provide adequate security
for his undertaking;
(2) the Corporation shall be insured against
losses arising by reason of such advance; or
(3) a majority of a quorum of the Directors
of the Corporation who are neither
interested persons of the Corporation as
defined in the Investment Company Act of
1940 nor parties to the Proceeding, or
independent legal counsel in a written
opinion, shall determine, based on a
review of readily available facts, that
there is reason to believe that such
person will be found to be entitled to
indemnification.
SECTION 9.2. INSURANCE OF OFFICERS, DIRECTORS, EMPLOYEES AND
AGENTS. The Corporation may purchase and maintain insurance on
behalf of any person who is or was a Director, officer,
employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a Director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability
asserted against him and incurred by him in or arising out of
his position. However, in no event will the Corporation
purchase insurance to indemnify any such person for any act
for which the Corporation itself is not permitted to indemnify
him.
C-2
<PAGE>
Item 26. Business and Other Connections of Investment Adviser
(a) Catholic Financial Services Corporation
Catholic Financial Services Corporation acts as the
Investment Adviser and Distributor to the Funds. Set
forth below is a list of the officers and directors
of the Adviser as of March 31, 1999, together with
information as to any other business, profession,
vocation or employment of a substantial nature of
those officers and directors during the past two
years:
<TABLE>
<CAPTION>
Positions &
Name Offices with Adviser Other
- ---- -------------------- -----
<C> <S> <S>
Allan G. Lorge President and Director Secretary/Treasurer, Vice President, Director
of Catholic Brokerage Services since November 1994;
Secretary/Treasurer, Vice President, Director of
Catholic Knights Financial Services, Inc. since
June 1994; and Secretary/Treasurer of Catholic Knights
Insurance Society since Sept. 1991
Daniel J. Steininger Chairman of the Board, President and Director of Catholic Knights Financial
Secretary and Treasurer Services, Inc. since June 1994; President
and Director of Catholic Brokerage Services Corp. since
November 1994; and President of Catholic Knights Insurance
Society since June 1981
Russell J. Kafka Vice President-Investments Director of Catholic Knights Financial Services,
and Director Inc. since June 1994; Director of Catholic Brokerage
Services Corp. since November 1994; and Vice President-
Investments of Catholic Knights Insurance Society since
January 1985
Daniel H. Strasburg Vice President and Director of Catholic Knights Financial Services, Inc.
Director since June
</TABLE>
C-3
<PAGE>
<TABLE>
<CAPTION>
Positions &
Name Offices with Adviser Other
- ---- -------------------- -----
<C> <S> <S>
1994; Vice President and Director of Catholic Brokerage
Services Corp. since November 1994; and Vice President
and Chief Actuary of Catholic Knights Insurance Society since
July 1983
Michael Stivoric Director Director of Catholic Knights Financial Services, Inc. since
June 1994; Director of Catholic Brokerage Services Corp. since
November 1994; and Vice President of Fraternal Relations of
Catholic Knights Insurance Society since December 1982
Mark K. Forbord Controller Controller of Catholic Knights Financial Services, Inc.
since April 19, 1996; Controller of Catholic Brokerage Services
Corp. since April 19, 1996; Senior Financial Analyst of Catholic
Knights Insurance Society since July 1995; Instructor at the
University of Wisconsin-Milwaukee since January 1986; and
Instructor at Cardinal-Stritch University since September 1990
Joseph F. Wreschnig Director of Mutual Director of Mutual Funds Operations of Catholic Financial Services
Funds Operations Corporation since January 1999; prior thereto, Assistant Vice
President and Secretary of AAL Capital Management Corporation
</TABLE>
(b) Todd Investment Advisors, Inc.
Todd Investment Advisors, Inc. serves as the Sub-
Adviser to the Equity Income Fund. Todd is an
indirect, wholly owned subsidiary of The Western and
Southern Life Insurance Company. Todd operates as
an independent asset management unit.
C-4
<PAGE>
Set forth below is a list of the officers and directors of Todd as
of March 31, 1999, together with information as to any other business,
profession, location or employment of a substantial nature of those officers
and directors during the past two years. (The business address of all such
persons is c/o Todd Investment Advisors, Inc., 101 South Fifth Street, Suite
3160, Louisville, Kentucky 40202):
C-5
<PAGE>
<TABLE>
<CAPTION>
Name Positions with Todd Other
- ---- ------------------- -----
<C> <S> <S>
Bosworth M. Todd Chairman Director of First Capital Bank of Kentucky
Robert P. Bordogna President and Chief
Executive Officer
Richard A. Loebig Executive Vice President Vice President and Fixed Income Portfolio
Manager, Chandler Liquid Asset Management;
Vice President and Director of Taxable Fixed
Income, PNC Bank, Kentucky
Margaret C. Bell Vice President and
Director of Marketing
Charles K. Blair Vice President of Business Development, PNC Bank Kentucky, Inc.
Business Development
</TABLE>
(c) Vantage Global Advisors, Inc.
Vantage Global Advisors, Inc. serves as the
Sub-Adviser to the Disciplined Capital Appreciation
Fund. Vantage Global Advisors is a wholly-owned
subsidiary of Lincoln National Corporation in Fort
Wayne, Indiana. All Vantage professionals have an
ownership stake in the firm through stock and stock
options of Lincoln National Corporation stock.
Set forth below is a list of the officers and directors of Vantage as
of March 31, 1999, together with information as to any other business,
profession, location or employment of a substantial nature of those officers and
directors during the past two years. (The business address of all such persons
is c/o Vantage Global Advisors, Inc., 630 Fifth Avenue, Suite 2670, New York,
N.Y. 10111):
C-6
<PAGE>
<TABLE>
<CAPTION>
Name Positions with Vantage Other
- ---- ---------------------- -----
<S> <C> <C>
Scott Wittman President and Director Senior Vice President Delaware Distributors
Limited Partnership
Dennis A. Blume Director Executive Vice President and Director, Lincoln
National Investment Management Company
Herbert T. McMeekin Director President and Director, Lincoln National Investment
Management Company; Executive Vice President,
Lincoln National Corporation (Holding Company)
Jeffrey J. Nick Director President and Chief Executive Officer, Lincoln National
Investment Companies
Bruce B. Barton Director President, Delaware Distributors LP; Executive, Lincoln
National Corporation
Mark C. Viani Vice President
Yi Feng Yang Vice President - Research Vice President, J&W Seligman from May 1997 to May 1998
Enrique D. Chang Senior Vice President/ Director of Quantitative Analysis/Senior Vice President,
Quantitative Research J&W Seligman from April 1997 to November 1997; Director
of Quantitative Analysis and Strategy, General Reinsurance
from October 1993 to March 1997
</TABLE>
C-7
<PAGE>
(d) Peregrine Capital Management, Inc.
Peregrine Capital Management, Inc. serves as the
Sub-Adviser to the Large-Cap Growth Fund.
Peregrine Capital Management, Inc. is a
wholly-owned subsidiary of Norwest Bank Minnesota,
N.A. However, Peregrine operates independently
through an entrepreneurial agreement with Norwest.
Set forth below is a list of the officers and directors of Peregrine
Capital Management, Inc. as of March 31, 1999, together with information as to
any other business, profession, location or employment of a substantial nature
of those officers and directors during the past two years. (The business address
of all such persons is c/o Peregrine Capital Management, Inc., 800 LaSalle
Avenue, Suite 1850, Minneapolis, Minnesota 55402-2018):
<TABLE>
<CAPTION>
Name Positions with Peregrine Other
- ---- ------------------------ -----
<C> <S> <S>
Robert B. Mersky Chairman of the Board, None
Chief Executive Officer
and President
Ronald G. Hoffman Senior Vice President, None
Chief Operating Officer,
Chief Compliance Officer
and Chief Financial Officer
Paul E. von Kuster, III Senior Vice President and None
Portfolio Manager
Jeannine McCormick Senior Vice President and None
Investment Analyst
William D. Giese Senior Vice President and None
Portfolio Manager
Patricia D. Burns Senior Vice President and None
Portfolio Manager
John S. Dale Senior Vice President and None
Portfolio Manager
Gary E. Nussbaum Senior Vice President and None
Portfolio Manager
Barbara K. McFadden Senior Vice President and None
Equity Trader
Paul R. Wurm Senior Vice President, None
Assistant Trader and
Accountant
Frank T. Matthews Vice President and Systems None
Manager
</TABLE>
C-8
<PAGE>
<TABLE>
<CAPTION>
Name Positions with Peregrine Other
- ---- ------------------------ -----
<C> <S> <S>
Tasso H. Coin, Jr. Senior Vice President and None
Portfolio Manager
Julie M. Gerend Senior Vice President - None
Client Service and Marketing
Daniel J. Hagen Vice President and Senior None
Research Analyst
Jay H. Strohmaier Senior Vice President - Sales and Marketing, Voyageur Asset
Client Service and Marketing Management from April 1996 to September
1996; Clifton Group (Investment Management)
Sales and Marketing from January 1995 to
March 1996
James P. Ross Vice President and Senior None
Portfolio Advisor
</TABLE>
Item 27. Principal Underwriter
(a) Catholic Financial Services Corporation acts as the
distributor to each of the Funds. Catholic Financial
Services Corporation does not act as the principal
underwriter or distributor of any other open-end
mutual funds.
Item 28. Location of Accounts and Records
Catholic Financial Services Corporation
1100 West Wells Street
Milwaukee, Wisconsin 53233
Firstar Mutual Fund Services, LLC
615 East Michigan Street
Milwaukee, Wisconsin 53202
Item 29. Management Services
Not applicable.
Item 30. Undertakings
Not applicable.
C-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has caused this pre-effective
amendment to its Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Milwaukee, State of
Wisconsin on this 26th day of April, 1999.
THE CATHOLIC FUNDS, INC.
By: /s/ Allan G. Lorge
---------------------------------
Allan G. Lorge, President and CEO
Pursuant to the requirements of the Securities Act of 1933, this
pre-effective amendment to the Registrant's Registration Statement has been
signed on this 26th day of April, 1999, by the following persons in the
capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Daniel J. Steininger Chairman of the Board and Director
- --------------------------------
Daniel J. Steininger
/s/ Allan G. Lorge President, Chief Executive Officer and Director
- --------------------------------
Allan G. Lorge
/s/ Russell J. Kafka Treasurer (Chief Financial Officer)
- --------------------------------
Russell J. Kafka
/s/ Mark K. Forbord Principal Accounting Officer
- --------------------------------
Mark K. Forbord
Thomas A. Bausch* Director
- --------------------------------
Thomas A. Bausch
J. Michael Borden* Director
- --------------------------------
J. Michael Borden
Daniel R. Doucette* Director
- --------------------------------
Daniel R. Doucette
</TABLE>
C-10
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
Thomas J. Munninghoff* Director
- --------------------------------
Thomas J. Munninghoff
Conrad L. Sobczak* Director
- --------------------------------
Conrad L. Sobczak
David L. Vollmar* Director
- --------------------------------
David L. Vollmar
*By: /s/ Allan G. Lorge
- -----------------------------------------
Allan G. Lorge, pursuant to a Power
of Attorney dated February 17, 1999,
a copy of which is filed herewith
(see following page)
</TABLE>
C-11
<PAGE>
THE CATHOLIC ALLIANCE FUNDS, INC.
Power of Attorney
KNOW ALL MEN BY THESE PRESENT, that each person whose signature appears
below constitutes and appoints Allan G. Lorge, Theodore F. Zimmer and Joseph F.
Wreschnig, or any of them, with full power of substitution, as his true and
lawful attorneys and agents, to execute from time to time in his name and on his
behalf, in any and all capacities, any and all pre-effective and post-effective
amendments to The Catholic Alliance Funds, Inc.'s Registration Statement on Form
N-1A (Registration No. 333-69803 under the Securities Act of 1933; File No.
811-09177 under the Investment Company Act of 1940) filed with the Securities
and Exchange Commission under both the Securities Act of 1933, as amended, and
the Investment Company Act of 1940, as amended, together with any and all other
instruments which such attorneys and agents, or any of them, deem necessary or
advisable to enable The Catholic Alliance Funds, Inc. to comply with such Acts
and the rules, regulations and requirements of the Securities and Exchange
Commission and the securities or Blue Sky laws of any state or other
jurisdiction, and the undersigned hereby ratifies and confirms as his own act
and deed any and all actions that such attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof. Any of such attorneys and agents
have, and may exercise, all of the powers conferred herein.
IN WITNESS WHEREOF, each of the undersigned directors of The Catholic
Alliance Funds, Inc. has hereunto set his hand as of this 17th day of February,
1999.
<TABLE>
<CAPTION>
<C> <S>
/s/ Daniel J. Steininger /s/ Allan G. Lorge
- ----------------------------------- -----------------------------------
Daniel J. Steininger Allan G. Lorge
/s/ Thomas Bausch /s/ James M. Borden
- ----------------------------------- -----------------------------------
Thomas Bausch James M. Borden
/s/ Daniel R. Doucette /s/ Thomas J. Munninghoff
- ----------------------------------- -----------------------------------
Daniel R. Doucette Thomas J. Munninghoff
/s/ Conrad L. Sobczak /s/ David L. Vollmar
- ----------------------------------- -----------------------------------
Conrad L. Sobczak David L. Vollmar
</TABLE>
C-12
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Previously Filed and
Incorporated By
Reference From
-------------------------
Exhibit No. Description Filing Date Filed Filed Herewith
- ----------- ------------------------------ ------------- ---------- --------------
<C> <S> <S> <S> <S>
(a)(1) Articles of Incorporation Initial Reg- 12/28/98
istration
(a)(2) Articles of Amendment changing *
name to The Catholic Funds, Inc.
(b) Bylaws Initial 12/28/98
Registration
(c)(1) Articles Sixth through Eighth Initial 12/28/98
and Article Tenth of the Registration
Articles of Incorporation (see
Exhibit (a))
(c)(2) Articles II, VI, IX and X of
the Bylaws (see Exhibit (b))
(d)(1) Investment Advisory Agreement *
with Catholic Financial Services
Corporation
(d)(2) Sub-Advisory Agreement with *
Vantage Global Advisors, Inc.
(d)(3) Sub-Advisory Agreement with Todd *
Investment Advisors, Inc.
(d)(4) Sub-Advisory Agreement with *
Peregrine Capital Management
(e)(1) Distribution Agreement Initial 12/28/98
Registration
(e)(2) Selected Dealer Letter Agreement *
(f) Not Applicable
(g) Custodian Servicing Agreement *
(h)(1) Transfer Agent Servicing *
Agreement
</TABLE>
C-13
<PAGE>
<TABLE>
<CAPTION>
Previously Filed and
Incorporated By
Reference From
-------------------------
Exhibit No. Description Filing Date Filed Filed Herewith
- ----------- ------------------------------ ------------- ---------- --------------
<C> <S> <S> <S> <S>
(h)(2) Fund Accounting Servicing *
Agreement
(h)(3) Fulfillment Servicing Agreement *
(i) Legal Opinion and Consent of Initial *
Quarles & Brady Registration
(j)(1) Consent of Independent Public *
Accountants
(j)(2) Consent of Counsel (included Initial 12/28/98
in Exhibit (i)) Registration
(k) Not Applicable
(l) Subscription Agreement *
(m) Rule 12b-1 Plan Initial 12/28/98
Registration
(n) Financial Data Schedule (Not
Applicable)
(o) Not Applicable
</TABLE>
C-14
<PAGE>
[GRAPHIC] THE CATHOLIC FUNDS
APPLICATION
WELCOME! You will be joining other Catholics who are already investing with
faith in the future by purchasing The Catholic Funds. Please complete the
application and mail to: Catholic Financial Services Corporation, 1100 W Wells
St, PO Box 05710, Milwaukee, WI 53233. If you have any questions, please call
our Shareholder Services at 877-222-2402.
<TABLE>
<CAPTION>
ACCOUNT TYPE (choose one type)
<S> <C> <C> <C>
/ / Individual / / Uniform Transfer to Minor / / IRA to IRA Transfer / / IRA to Roth Conversion
/ / Joint Tenants with / / Uniform Gift to Minor / / Roth IRA to Roth IRA Transfer / / 60 Day IRA Rollover
Rights of Survivorship / / Guardianship / / Ed. IRA to Ed. IRA Transfer / / Sole Proprietorship
/ / POD/TOD / / Traditional IRA / / SIMPLE to SIMPLE Transfer / / Corporation
/ / Marital/Community / / Roth IRA / / 403(b) Plan / / Non-profit Organization
Property / / Education IRA / / 403(b)/TSA to 403(b) Transfer / / Church
/ / Survivorship Marital/ / / SEP-IRA / / 403(b) rollover to Traditional IRA / / Trust
Community Property(1) / / SIMPLE IRA / / Qualified Plan direct rollover to Traditional IRA
</TABLE>
ACCOUNT REGISTRATION AND MAILING ADDRESS
INDIVIDUAL/CUSTODIAN/RETIREMENT PLAN/EDUCATION IRA GUARDIAN/OTHER
<TABLE>
<CAPTION>
<S><C>
____________________________________________________________________________________________
First Name Middle Initial Last Name
_____________________________________________________________ ___________________________
Address (if PO Box, please include physical address) Birthdate
_____________________________________________________________ ___________________________
City State Zip Social Security Number
________________________________ __________________________
Daytime Telephone Number Evening Telephone Number
JOINT OWNER/MINOR
____________________________________________________________________________________________
First Name Middle Initial Last Name
_____________________________________________________________ ___________________________
Address (if PO Box, please include physical address) Birthdate
_____________________________________________________________ ___________________________
City State Zip Social Security Number
_________________________________ __________________________
Daytime Telephone Number Evening Telephone Number
(1) If applicable state law does not recognize the survivorship form of marital/community property, this choice shall be
deemed to be marital/community property without the survivorship feature.
FUND SELECTION INITIAL INVESTMENT MINIMUMS
The Catholic Equity Income Fund $______________ $1,000 per fund for Regular Accounts
The Catholic Large Cap Growth Fund $______________ $250 per fund for IRA Based Accounts
The Catholic Disciplined Capital Appreciation Fund $______________ $250 per fund for UGMA/UTMA Accounts
The Firstar Money Market Fund* $______________ $50 per fund with an Automatic Investment Plan,
minimum monthly investment of $25 per fund.
</TABLE>
(*Firstar Money Market Fund application required)
<PAGE>
<TABLE>
<CAPTION>
<S><C>
REDUCING YOUR SALES CHARGE
/ / RIGHTS OF ACCUMULATION: Link the following accounts to calculate sales charge on current and future purchases of The
Catholic Funds. Please note: Personal accounts cannot be linked to employer retirement plans such as 403(b), SEP, and
SIMPLE IRAs. Account numbers and new accounts to be linked:__________________________________________________________________
/ / LETTER OF INTENT (NOT AVAILABLE FOR SEP AND SIMPLE IRAS OR 403(b) RETIREMENT PLAN ACCOUNTS): It is my intention,
although I am not obligated to do so, to invest at least the amount shown in the box checked below in The Catholic
Funds (excluding Firstar Money Market Fund) over a 13 month period, which may include the 90 days prior to this
application. The sales charge for all purchases will be calculated at the rate applicable to the amount indicated below but
may be recalculated and recovered from escrowed shares in accordance with the prospectus if I fail to complete the
Letter of Intent.
Starting Date of Letter of Intent: _________ / / $25,000 / / $50,000 / / $100,000 / / $250,000 / / $500,000
DIVIDENDS AND CAPITAL GAINS
All dividend and capital gain disbursements will be reinvested into your account, unless you choose an option below:
/ / Have all dividends sent to my address of record / / Have all capital gains sent to my address of record.
TELEPHONE TRANSACTIONS
/ / I want to add the telephone purchase option. Please complete The Telephone Purchase Option Request Form.
The telephone exchange and the telephone redemption options are automatic unless you complete this section.
Note: The telephone redemption option is not available for IRAs, Retirement Accounts, or 403(b) accounts.
/ / No telephone exchange privilege wanted on my account.
/ / No telephone redemption privilege wanted on my account.
AUTOMATIC INVESTMENT PLANS
/ / Bank Draft Plan (Complete and attach the Bank Draft Plan Card)
/ / Payroll Deduction Plan (Complete and attach the Payroll Deduction Plan Card)
REDEMPTION OPTIONS
/ / Wire Redemption - I request the wire redemption privilege. I understand that the proceeds of any wire redemption
will be wired only to the bank account designated below. A voided check or deposit ticket is attached. There will
be fees associated with this transaction at time of redemption.
_______________________________________________________________________________________________________________
Name of Financial Institution Routing Number (ABA - 9 digits)
_______________________________________________________________________________________________________________
Address Account Number
_______________________________________________________________________________________________________________
City State Zip Account Type: checking or savings
/ / Systematic Withdrawal Plan ($10,000 minimum balance required to start.)
Please liquidate shares from _____________________ for $________ on or about the _____ of _______________,
Name of Fund Day Month
and on or about the _______ of each / / month / / quarter / / six months / / year thereafter as follows:
/ / to the account's address of record OR / / electronically to the bank named below OR / / to the following:
_______________________________________________________________________________________________________________
Name or Financial Institution Certificate or Account Number For The Benefit of:
_______________________________________________________________________________________________________________
Address City State ZIP
_______________________________________________________________________________________________________________
Financial Institution Routing Number Account Type: checking or savings (Attach a voided check or
deposit ticket)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S><C>
NEW ACCOUNT INFORMATION
THE FOLLOWING INFORMATION IS REQUIRED FOR EACH APPLICATION TO MEET INVESTMENT INDUSTRY REGULATORY RULES DESIGNED FOR CUSTOMER
PROTECTION. THIS INFORMATION IS CONFIDENTIAL AND MAY ONLY BE RELEASED BY CATHOLIC FINANCIAL SERVICES CORPORATION TO ITS TRANSFER
AGENCY, FIRSTAR MUTUAL FUND SERVICES, LLC AND ITS FRATERNAL BENEFIT SOCIETY (FBS) AFFILIATES. IF YOU DO NOT WANT ANY FBS TO RECEIVE
THIS INFORMATION PLEASE SIGN HERE:
_________________________________________________________________________________
A. ACCOUNT INFORMATION
_________________________________________________ ______________________________
Primary Registered Owner/Trustee/Custodian Birthdate
_________________________________________________ ______________________________
Employer Name Occupation
_________________________________________________________________________________
Employer Address City State Zip
_________________________________________________ ______________________________
Joint Owner/Minor Birthdate
_________________________________________________ ______________________________
Employer Name Occupation
_________________________________________________________________________________
Employer Address City State Zip
MARTIAL STATUS:
/ / Single / / Divorced
/ / Married / / Widowed
NUMBER OF DEPENDANTS
UNDER 18: ____________________
CITIZENSHIP:
/ / USA
/ / Other ____________________
ANY ACCOUNT OWNER
/ / Own a business?
How many employees? __________
/ / Associated with NASD
Firm?_________________________
B. FINANCIAL SUITABILITY INFORMATION (FOR HOUSEHOLD)
PRIOR INVESTMENT EXPERIENCE
None Less than Greater than
5 years 5 years
Savings/CDs / / / / / /
Stocks / / / / / /
Bonds / / / / / /
Mutual Funds / / / / / /
Other_________ / / / / / /
ANNUAL INCOME
/ / Under - $20,000
/ / $20,001 - $35,000
/ / $35,001 - $50,000
/ / $50,001 - $75,000
/ / $75,001 - $100,000
/ / More than $100,000
MARGINAL FEDERAL TAX RATE
/ / Less than 15%
/ / 16% - 28%
/ / 29% - 31%
/ / 32% - 36%
/ / 37% - 39.6%
ASSETS
Cash/CDs $______________
Stocks/Bonds $______________
Mutual Funds $______________
Retirement Accounts $______________
Residence (Equity) $______________
Business $______________
Other ______________ $______________
TOTAL ASSETS $______________
Liquid Net Worth $______________
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S><C>
C. INVESTMENT INFORMATION (For This Investment Only)
TIMING INVESTMENT INVESTMENT SOURCE OF FUNDS
CHARACTERISTICS PURPOSE
I expect to hold these / / Liquidity / / Retirement / / Current Income / / Loans
shares for _____ years. / / Preserve Principal / / College Funding / / Savings/Checking/CDs / / Gift/Inheritance
If holding for less than / / Income / / Home Purchase / / Retirement Plan/IRA / / Other*________
3 years, why? / / Capital Growth / / Emergency Fund / / Insurance/Annuity proceeds*
__________________________ / / Aggressive Growth / / Other / / Sale of another investment*
__________________________ / / I am making this investment *Explain
__________________________ because I want to invest consistent ________________________________________________
__________________________ with core Catholic values. ________________________________________________
________________________________________________
RISK TOLERANCE
Circle the number(s) below that corresponds with the level of risk you are willing to accept with this investment.
1 LOW 2 3 4 5 6 7 8 9 HIGH 10
Certificates of Deposit Utility and Blue Chip Smaller Company/Emerging Precious Metals
Savings Accounts Stocks and Bonds Growth Securities/International Oil and Gas Drilling
Money Market Funds Global Securities/High Yield Bonds
Please give us the allocation of your entire investment portfolio based upon the following objectives (must total 100%).
Cash Reserves ______% Income _____% Growth & Income _____% Growth _____% Aggressive Growth _____%
D. FRATERNAL BENEFIT SOCIETY MEMBERSHIP INFORMATION
/ / I am currently a member of___________________________________________________________________________________
/ / I hereby apply for membership of ____________________________________________________________________________
/ / This is a Catholic organization or business entity.
Primary Joint
Owner Owner (choose one box per owner)
/ / / / A. I am a Catholic and a member of the parish listed below.
/ / / / B. I am a Catholic and currently not a member of a parish.
/ / / / C. My spouse is a Catholic and a member of the parish listed below.
/ / / / D. My spouse is a Catholic and currently not a member of a parish.
/ / / / E. My spouse or I am an employee of a Catholic organization.
/ / / / F. My spouse or I am an employee of a business enterprise owned by a Catholic.
/ / / / G. While not eligible for membership, I wish to invest consistent with certain core Catholic values.
___________________________________________________________________________________________________________________
Name of Parish Address City State Zip
___________________________________________________________________________________________________________________
Name of Catholic Organization or Business Enterprise Address City State Zip
___________________________________________________________________________________________________________________
Registered Representative Signature Date
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S><C>
IRA and 403(b) BENEFICIARY DESIGNATION
You may change your beneficiary on IRA or 403(b) retirement plan accounts at anytime by written notice to the Custodian. If more
than one beneficiary designation is delivered to the Custodian, the designation with the latest date will be honored. If no
beneficiary is designated for your account, then your surviving spouse, or if not married, your estate will be your beneficiary.
State community property law may affect your designation. If you are married and the primary beneficiary is not your spouse, your
spouse must sign the consent and waiver of rights on the beneficiary designation card. If you have legal questions, consult your
attorney.
This beneficiary designation applies to the following Catholic Funds account(s):
____________________________________________________________ _____________________________________________________
IRA Holder's Name Mutual Fund Account Number(s)
I hereby revoke all prior designations and designate the following beneficiaries to receive amounts due as
distribution from my Catholic Funds
/ / IRA / / 403(b) retirement plan account(s) as a result of my death:
_____________________________________________________________ _____________________________________________________
PRIMARY BENEFICIARY SECONDARY BENEFICIARY
_____________________________________________________________ _____________________________________________________
City State Social Security Number City State Social Security Number
_____________________________________________________________ _____________________________________________________
Date of Birth Relationship Date of Birth Relationship
_____________________________________________________________ _____________________________________________________
SECONDARY BENEFICIARY SECONDARY BENEFICIARY
_____________________________________________________________ _____________________________________________________
City State Social Security Number City State Social Security Number
_____________________________________________________________ _____________________________________________________
Date of Birth Relationship Date of Birth Relationship
If there are additional beneficiaries, please attach a separate signed sheet detailing the above beneficiary information.
IRA Holder Signature X _____________________________________________________________Dated ________________________________
Spousal Consent: I am the spouse of the owner of this account and I irrevocably waive and give up any interest
or rights to the assets in the account and consent to the beneficiary designated above.
X______________________________________________________________________________Dated_________________________________
403(b) Plan accounts require a witness signature.
X______________________________________________________________________________Dated_________________________________
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S><C>
SIGNATURE AND CERTIFICATION
I affirm that I received the current prospectus for the fund I am purchasing and that I understand the provisions, including the
provisions relating to the account options I selected and agree to their terms. I certify that I have full legal authority and
capacity to purchase shares of The Catholic Funds and to establish or use any related options. I understand that no account may be
accepted without a valid social security or tax identification number.
If application is for an IRA or 403(b) retirement plan account, I certify that I have received a copy of either The Catholic Funds
IRA Disclosure Statement or 403(b) Retirement Plan Document and accept and adopt the appropriate plan. I authorize and appoint
Firstar Bank, Milwaukee, NA to act as Custodian of shares purchased and agree to indemnify it against loss in connection with
distributions made in accordance with my current beneficiary designation on file. I understand that I am responsible for
determining the tax treatment of any transaction and I certify that I am eligible to adopt an IRA or 403(b) retirement plan account,
whichever is applicable.
Under the penalty of perjury, I certify that all information on the application is true and correct to the best of my knowledge,
including that the social security number or tax identification number is correct and I am not subject to backup withholding because
I have not been notified by the IRS that I am subject to backup withholding as a result of a failure to report all interest and
dividends, or the IRS has notified me that I no longer subject to backup withholding. The IRS does not require your consent to any
provision of this document other than the certifications required to avoid backup withholding.
__________________________________________ ____________________________________________________________________ _______________
Print Name Signature of Owner/Custodian/Trustee/Corporate Officer Date
__________________________________________ _____________________________________________________________________ _______________
Print Name Signature of Joint Owner/Co-Trustee/Corporate Co-Signer Date
BROKER-DEALER SIGNATURES AND APPROVAL
Name of Broker-Dealer, if other than Catholic Financial Services Corporation _____________________________________________________
_______________________________________________________________ _________________________________________________ _______________
Registered Representative Introducing the Account (please print) Signature of Registered Representative Date
_____________________________ ________________________________ _________________________________________________________________
Daytime Telephone Number Evening Telephone Number Representative Code Number
Comments: _______________________________________________________________________________________________________________________
__________________________________________________________________________________________________________________________________
__________________________________________________________________________________________________________________________________
Approval by Authorized Principal of Catholic Financial Services Corporation
_______________________________________________________________ _________________________________________________ _______________
Print Name Signature of Principal Date
Custodian Acceptance of IRA and 403(b) Retirement Plan Accounts
_______________________________________________________________ _________________________________________________ _______________
Print Name Firstar Bank Authorized Signature Date
FOR OFFICE USE ONLY
[GRAPHIC] / / / / / / / /
</TABLE>
<PAGE>
Exhibit (a)(2)
ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION
<PAGE>
ARTICLES OF AMENDMENT TO
ARTICLES OF INCORPORATION OF
THE CATHOLIC ALLIANCE FUNDS, INC.
The Catholic Alliance Funds, Inc., a Maryland corporation having its
principal office in Baltimore, Maryland (hereinafter called the
"corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The charter of the corporation is hereby amended by striking
out Article First thereof and inserting in lieu thereof the following:
"FIRST: The name of the corporation is The Catholic
Funds, Inc."
SECOND: The amendment of the charter of the corporation as
hereinafter set forth has been duly approved by the Board of Directors and
sole stockholder of the corporation.
IN WITNESS WHEREOF, The Catholic Alliance Funds, Inc., has caused
these presents to be signed in its name and on its behalf by its President
and attested by its Secretary on the 8th day of April, 1999.
Attest: THE CATHOLIC ALLIANCE FUNDS, INC.
/s/ Joseph F. Wreschnig /s/ Allan G. Lorge
- ------------------------------ By:-------------------------
Joseph F. Wreschnig, Secretary Allan G. Lorge, President
THE UNDERSIGNED, President of The Catholic Alliance Funds, Inc., who
executed the foregoing Articles of Amendment on behalf of said corporation,
of which this certificate is made a part, hereby acknowledges, in the name
and on behalf of said corporation, the foregoing Articles of Amendment to be
the corporate act of said corporation and further certifies that, to the best
of his knowledge, information and belief, the matters and facts set forth
therein with respect to the approval thereof are true in all material
respects, under the penalties of perjury.
/s/ Allan G. Lorge
-------------------------
Allan G. Lorge, President
<PAGE>
Exhibit (d)(1)
INVESTMENT ADVISORY AGREEMENT WITH
CATHOLIC FINANCIAL SERVICES CORPORATION
<PAGE>
THE CATHOLIC ALLIANCE FUNDS, INC.
INVESTMENT ADVISORY AGREEMENT
This Agreement is made this 17th day of February, 1999, by and
between The Catholic Alliance Funds, Inc. ("CAF"), a Maryland corporation
registered under the Investment Company Act of 1940 ("1940 Act") as an
open-end diversified management investment company, and Catholic Financial
Services Corporation ("Manager"), a Wisconsin corporation registered under
the Investment Advisers Act of 1940 as an investment adviser.
1. APPOINTMENT. CAF hereby appoints Manager to furnish investment
advisory and portfolio management services with respect to the
portion of its assets represented by the shares of common stock
issued in each series listed in SCHEDULE A hereto, as such
schedule may be amended from time to time (each such series
hereinafter referred to as a "Fund"). Manager accepts such
appointment and agrees to perform the services described herein.
Manager shall use its best efforts and judgment in rendering the
advice and performing the services contemplated by this Agreement.
2. INVESTMENT MANAGEMENT SERVICES. Manager shall manage the
investment operations of CAF and each Fund, subject to the terms
of this Agreement and to the supervision and control of CAF's
Board of Directors ("Directors"). Manager agrees to perform,
or arrange for the performance of, the following services with
respect to each Fund:
(a) to obtain and evaluate such information relating to
economies, in dustries, businesses, securities and
commodities markets, and individual securities,
commodities and indices as it may deem necessary or
useful in discharging its responsibilities hereunder;
(b) to formulate and maintain a continuing investment
program in a manner consistent with and subject to
(i) CAF's articles of incorporation and bylaws; (ii)
the Fund's investment objectives, policies, and
restrictions as set forth in written documents
furnished by CAF to Manager; (iii) all securities,
commodities, and tax laws and regulations applicable
to the Fund and CAF; and (iv) any other written
limits or directions furnished by the Directors to
Manager;
(c) unless otherwise directed by the Directors, to
determine from time to time, securities, commodities,
interests, or other investments to be purchased,
sold, retained, or lent by the Fund, and to implement
those decisions, including the selection of entities
with or through which such purchases, sales, or loans
are to be effected;
<PAGE>
(d) to use reasonable efforts to manage the Fund so that
it will qualify as a regulated investment company
under subchapter M of the Internal Revenue Code of
1986, as amended;
(e) to make recommendations as to the manner in which
voting rights, rights to consent to CAF or Fund
action, and any other rights pertaining to CAF or the
Fund shall be exercised; provided the Manager shall
have no authority or responsibility to execute any
voting proxies or consents on behalf of CAF or any
Fund, but rather shall promptly forward to CAF all
proxy and other solicitation materials it receives
with respect to any such voting rights or consents;
(f) to make available to CAF promptly upon request all of
the Fund's records and ledgers, and any reports or
information reasonably re quested by CAF; and
(g) to the extent required by law, to furnish to
regulatory authorities any information or reports
relating to the services provided pursuant this
Agreement.
Except as otherwise instructed from time to time by the
Directors, with respect to execution of transactions for CAF
on behalf of a Fund, Manager shall place, or arrange for the
placement of, all orders for purchases, sales, or loans either
directly with the issuer or with a broker-dealer, or other
counterparty or agent selected by Manager. In connection with
the selection of all such parties for the placement of all
such orders, Manager shall attempt to obtain most favorable
execution and price, but may nevertheless in its sole
discretion as a secondary factor, purchase and sell portfolio
securities from and to broker-dealers who provide research and
analysis to Manager which Manager may lawfully and
appropriately use in its investment management and advisory
capacities, whether or not such research and analysis may also
be useful to Manager in connection with its services to other
clients. In recognition of such services or brokerage services
provided by a broker or dealer, Manager is hereby authorized
to pay such broker or dealer a commission or spread in excess
of that which might be charged by another broker or dealer for
the same transaction if Manager determines in good faith that
the commission or spread is reasonable in relation to the
value of the services so provided.
CAF hereby authorizes any entity or person associated with
Manager that is a member of a national securities exchange to
effect any transaction on the exchange for the account of a
Fund to the extent permitted by and in ac cordance with
Section 11(a) of the Securities Exchange Act of 1934 and Rule
11a2-2(T) thereunder. CAF hereby consents to the retention by
such entity or person of compensation for such transaction in
accordance with Rule 11a2-2(T)(a)(iv).
Manager may, where it deems to be advisable, aggregate orders
for its other customers together with any securities of the
same type to be sold or purchased for CAF, one or more Funds,
and/or other clients of Manager in order to obtain best
execution or lower brokerage commissions. In such event,
Manager shall allocate the shares so purchased or sold, as
well as
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the expense incurred in the transaction, in a manner
it considers to be equitable and fair, and consistent with its
fiduciary obligations to CAF, the Funds, and Manager's other
customers.
Manager shall for all purposes be deemed to be an independent
contractor and not an agent of CAF and shall, unless otherwise
expressly provided or authorized, have no authority to act for
or represent CAF in any way.
3. ADMINISTRATIVE SERVICES. Manager shall supervise the business
and affairs of CAF and each Fund, and shall provide such
services and facilities as may be required for effective
administration of CAF and Funds as are not provided by
employees or other agents engaged by CAF; provided that
Manager shall not have any obligation to provide under this
Agreement any such services which are the subject of a
separate agreement or arrangement between CAF and Manager, any
affiliate of Manager, or any third-party administrator.
4. USE OF AFFILIATED COMPANIES AND SUBCONTRACTORS. In connection with
the services to be provided by Manager under this Agreement,
Manager may, to the extent it deems appropriate, and subject to
compliance with the requirements of applicable laws and regulations
and upon receipt of written approval of the Directors, make use of
(i) its affiliated companies, if any, and their directors,
trustees, officers, and employees and (ii) subcontractors selected
by Manager, provided that Manager shall supervise and remain fully
responsible for the services of all such third parties in
accordance with and to the extent provided by this Agreement. All
costs and expenses associated with services provided by any such
third parties shall be borne by Manager or such parties.
5. EXPENSES BORNE BY CAF. Except to the extent expressly assumed
by Manager herein or under a separate agreement between CAF
and Manager and except to the extent required by law to be
paid by Manager, Manager shall not be obligated to pay any
costs or expense incidental to the organization, operations,
or business of CAF. Without limitation, such costs and expense
shall include, but not be limited to:
(a) all charges of depositories, custodians, and other agencies
for the safekeeping and servicing of its cash, securities,
and other property;
(b) all expenses of maintaining and servicing shareholder
accounts, including all charges for transfer,
shareholder recordkeeping, dividend disbursing,
redemption, and other agents for the benefit of the
Funds (including, without limitation, fund accounting
and administration agents);
(c) all charges for equipment or services used for
obtaining price quotations or for communication
between Manager and CAF and the custodian, transfer
agent, or any other agent selected by CAF;
(d) all charges for administrative and accounting
services provided to CAF by Manager, or
3
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any other provider of such services;
(e) all charges for services of CAF's independent
auditors and for services to CAF by legal counsel;
(f) all compensation of Directors, other than those
affiliated with Manager, all expenses incurred in
connection with their services to CAF, and all
expenses of meetings of the Directors or committees
thereof;
(g) all expenses incidental to holding meetings of
shareholders of CAF ("Shareholders"), including
printing and supplying to each record-date
Shareholder notice and proxy solicitation material,
and all other proxy solicitation expense;
(h) all expenses of printing of annual or more frequent
revisions of CAF prospectus(es) and of supplying to
each then existing Shareholder a copy of a revised
prospectus;
(i) all expenses related to preparing and transmitting
certificates, if any, representing shares of CAF;
(j) all expenses of bond and insurance coverage required
by law or deemed advisable by the Board of Directors;
(k) all brokers' commissions and other normal charges
incident to the purchase, sale, or lending of
portfolio securities;
(l) all taxes and governmental fees payable to federal,
state, or other governmental agencies, domestic or
foreign, including all stamp or other transfer taxes;
4
<PAGE>
(m) all expenses of registering and maintaining the
registration of CAF under the 1940 Act and, to the
extent no exemption is available, expenses of
registering CAF's shares under the Securities Act of
1933, of qualifying and maintaining qualification of
CAF and CAF's shares for sale under securities laws
of various states or other jurisdictions, and of
registration and qualification of CAF under all other
laws applicable to CAF or its business activities;
(n) all interest on indebtedness, if any, incurred by CAF or a
Fund; and
(o) all fees, dues, and other expenses incurred by CAF in
connection with membership of CAF in any trade
association or other investment company organization.
6. ALLOCATION OF EXPENSES BORNE BY CAF. Any expenses borne by CAF
that are attributable solely to the organization, operation,
or business of a Fund shall be paid solely out of Fund assets.
Any expense borne by CAF which is not solely attributable to a
Fund, nor solely to any other series of shares of CAF, shall
be apportioned in such manner as Manager determines is fair
and appropriate or as otherwise specified by the Board of
Directors.
7. EXPENSES BORNE BY MANAGER. Manager at its own expense shall
furnish all executive and other personnel, office space, and office
facilities required to render the investment management and
administrative services set forth in this Agreement. Manager shall
pay all expenses of establishing, maintaining, and servicing the
accounts of Shareholders in each Fund listed in Schedule A to this
Agreement. However, Manager shall not be required to pay or provide
any credit for services provided by CAF's custodian or other agents
without additional cost to CAF.
In the event that Manager pays or assumes any expense of CAF
or a Fund not required to be paid or assumed by Manager under
this Agreement, Manager shall not be obligated hereby to pay
or assume the same or similar expense in the future; provided,
however, that nothing contained herein shall be deemed to
relieve Manager of any obligation to CAF or a Fund under any
separate agreement or arrangement between the parties.
8. MANAGEMENT FEE; REDUCTION OF COMPENSATION AND REIMBURSEMENT OF
EXPENSES. For the services rendered, facilities provided, and
charges assumed and paid by Manager hereunder, CAF shall pay
to Manager out of the assets of each Fund fees at the annual
rate for such Fund set forth in Schedule A to this Agreement.
For each Fund, the management fee shall accrue on each
calendar day, and shall be payable monthly on the first business
day of the next succeeding calendar month. The daily fee accrual
shall be computed by multiplying the fraction of one divided by the
number of days in the calendar year by the applicable annual
rate of fee, and multiplying this product by the net assets of
the Fund, determined in the manner established by the Board of
Directors, as of the close of business on the last preceding
business day on which the Fund's net asset value was
determined.
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Manager may voluntarily reduce any portion of the compensation
or re imbursement of expenses due to it pursuant to this
Agreement and may agree to make payments to limit the expenses
which are the responsibility of a Fund under this Agreement.
Any such reduction or payment shall be applicable only to such
specific reduction or payment and shall not constitute an
agreement to reduce any future compensation or reimbursement
due to Manager hereunder or to continue future payments. Any
such reduction will be agreed upon prior to accrual of the
related expense or fee and will be estimated daily. In this
regard, Manager hereby agrees to waive fees and reimburse
expenses for CAF's fiscal year ending September 30, 1999 so
that the net operating expenses for that period, on an
annualized basis, will not exceed 1.75% for the Large-Cap
Growth and Disciplined Capital Appreciation Funds and 1.65%
for the Equity Income Fund.
Any Fund expense paid by Manager voluntarily or pursuant to an
agreed expense limitation (including the expense limitation
described in the foregoing for fiscal 1999) shall be
reimbursed by the appropriate Fund to Manager in the first,
second or third (or any combination thereof) fiscal year next
succeeding the fiscal year of the withholding, reduction, or
payment to the extent permitted by applicable law if the
aggregate expenses for the next succeeding fiscal year, second
succeeding fiscal year, or third succeeding fiscal year do not
exceed any limitation to which Manager has agreed. Such
reimbursement may be paid prior to the Fund's payment of
current expenses if so requested by Manager even if such
payment may require Manager to waive or reduce its fees
hereunder or to pay current Fund expenses. Manager may agree
not to require payment of any portion of the compensation or
reimbursement of expenses.
9. RETENTION OF SUBADVISER. Subject to obtaining the initial and
periodic approvals required under Section 15 of the 1940 Act,
Manager may retain one or more subadvisers at Manager's own cost
and expense for the purpose of furnishing one or more of the
services described in Section 2 hereof with respect to CAF or
one or more Funds. Retention of a subadviser shall in no way
reduce the responsibilities or obligations of Manager under this
Agreement, and Manager shall be responsible to CAF and its Funds
for all acts or omissions of any subadviser in connection with the
performance of Manager's duties hereunder.
10. NONEXCLUSIVITY. The services of Manager to CAF hereunder are not
to be deemed exclusive, and Manager shall be free to render
similar services to others.
11. STANDARD OF CARE. Neither Manager, nor any of its directors,
officers, share holders, agents, or employees shall be liable to
CAF or its Shareholders for any error of judgment, mistake of
law, loss arising out of any investment, or any other act or
omission in the performance by Manager of its duties under this
Agreement, except for loss or liability resulting from willful
misfeasance, bad faith, or gross negligence on Manager's part or
from reckless disregard by Manager of its obligations and duties
under this Agreement. Nothing in this Agreement shall be
construed to protect any officer of Manager from liability for
violation of Section 17(h) or (i) of the 1940 Act.
12. ABSENCE OF LIABILITY OF DIRECTORS AND SHAREHOLDERS. Any
obligation of CAF hereunder shall be
6
<PAGE>
binding only upon the assets of CAF (or the applicable Fund
thereof) and shall not be binding upon any Director, officer,
employee, agent, or Shareholder of CAF. Neither the authorization
of any action by the Directors or Shareholders of CAF nor the
execution of this Agreement on behalf of CAF shall impose any
liability upon any Director or any Shareholder. Nothing in this
Agreement shall be construed to protect any Director or officer
of CAF from liability for violation of Section 17(h) or (i) of
the 1940 Act.
13. OWNERSHIP OF RECORDS; INTERPARTY REPORTING. All records
required to be maintained and preserved by CAF pursuant to the
provisions of rules or regulations of the Securities and Exchange
Commission under Section 31(a) of the 1940 Act or other applicable
laws or regulations that are maintained and preserved by Manager
on behalf of CAF and any other records the parties mutually agree
shall be maintained by Manager on behalf of CAF are the property
of CAF and shall be surrendered by Manager promptly on request by
CAF; provided, however, that Manager may at its own expense make
and retain copies of any such records.
CAF shall furnish or otherwise make available to Manager such
copies of financial statements, proxy statement, reports, and
other information relating to the business and affairs of each
Shareholder in a Fund as Manager may, at any time or from time
to time, reasonably require in order to discharge its
obligations under this Agreement.
Manager shall prepare and furnish to CAF as to each Fund
statistical data and other information in such form at such
intervals as CAF may reasonably request.
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<PAGE>
14. USE OF MANAGER'S NAME. CAF may use the name "The Catholic
Alliance Funds, Inc." and the names of the Funds listed in
SCHEDULE A or any other name derived from the name "The
Catholic Alliance Funds, Inc." only for so long as this Agreement
or any extension, renewal, or amendment hereof remains in effect,
including any similar agreement with any organization which shall
have succeeded to the business of Manager as investment adviser.
At such time as this Agreement or any extension, renewal, or
amendment hereof, or such other similar agreement shall no longer
be in effect, CAF will cease to use any name derived from the name
"The Catholic Alliance Funds, Inc." or otherwise connected with
Manager, or with any organization which shall have succeeded to
Manager's business as investment adviser.
15. AMENDMENT. This Agreement may not be materially amended with
respect to CAF or any Fund without the affirmative votes (a) of a
majority of the Board of Directors, including a majority of those
Directors who are not "interested persons" of CAF or of Manager,
voting in person at a meeting called for the purpose of voting on
such approval, and (b) of a "majority of the outstanding shares"
of CAF or, with respect to an amendment affecting an individual
Fund, a "majority of the outstanding shares" of the Fund. The
terms "interested persons" and "vote of a majority of the
outstanding shares" shall be construed in accordance with their
respective definitions in the 1940 Act and, with respect to the
latter term, in accordance with Rule 18f-2 under the 1940 Act.
16. EFFECTIVE DATE AND TERMINATION. This Agreement shall become
effective with respect to any Fund as of the effective date for
that Fund specified in SCHEDULE A hereto. This Agreement may be
terminated at any time, without payment of any penalty, as to any
Fund by the Board of Directors of CAF, or by a vote of a majority
of the outstanding shares of that Fund, upon at least sixty (60)
days' written notice to Manager. This Agreement may be terminated
by Manager at any time upon at least sixty (60) days' written
notice to CAF. This Agreement shall terminate automatically in the
event of its "assignment" (as defined in the 1940 Act). Unless
terminated as hereinbefore provided, this Agreement shall continue
in effect with respect to any Fund for a period of two years
following the effective date for such Fund specified in
SCHEDULE A, and shall remain in effect thereafter from year to
year only so long as such continuance is specifically approved
with respect to the Fund at least annually (a) by a majority of
those Directors who are not interested persons of CAF or Manager,
voting in person at a meeting called for the purpose of voting on
such approval, and (b) by either the Board of Directors or CAF,
or by a "vote of a majority of the outstanding shares" of the
Fund.
17. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original.
18. HEADINGS. Headings are placed herein for convenience of
reference only and shall not be taken as a part hereof or
control or affect the meaning, construction or effect of this
Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day and year first above written.
8
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THE CATHOLIC ALLIANCE FUNDS, INC.
By: /s/ Allan G. Lorge
-------------------------
Allan G. Lorge, President
CATHOLIC FINANCIAL SERVICES CORPORATION
By: /s/ Allan G. Lorge
-------------------------
Allan G. Lorge, President
9
<PAGE>
THE CATHOLIC ALLIANCE FUNDS, INC.
MANAGEMENT AGREEMENT
SCHEDULE A
The Funds of The Catholic Alliance Funds, Inc. currently subject to
this Agreement are as follows:
1. Equity Income Fund
A. EFFECTIVE DATE: Concurrent with effectiveness of the
Registration Statement on Form N-1A of The Catholic
Alliance Funds, Inc.
B. MANAGEMENT FEE: The management fee for this Fund,
calculated in accordance with Paragraph 8 of the
Investment Management Agreement, shall be at an
annual rate of 0.80 of 1% of the average daily net
assets of the Fund.
2. Large-Cap Growth Fund
A. EFFECTIVE DATE: Concurrent with effectiveness of the
Registration Statement on Form N-1A of The Catholic
Alliance Funds, Inc.
B. MANAGEMENT FEE: The management fee for this Fund,
calculated in accordance with Paragraph 8 of the
Investment Management Agreement, shall be at an
annual rate of 0.90 of 1% of the average daily net
assets of the Fund.
3. Disciplined Capital Appreciation Fund
A. EFFECTIVE DATE: Concurrent with effectiveness of the
Registration Statement on Form N-1A of The Catholic
Alliance Funds, Inc.
B. MANAGEMENT FEE: The management fee for this Fund,
calculated in accordance with Paragraph 8 of the
Investment Management Agreement, shall be at an
annual rate of 0.90 of 1% of the average daily net
assets of the Fund.
<PAGE>
Exhibit (d)(2)
SUB-ADVISORY AGREEMENT WITH
VANTAGE GLOBAL ADVISORS, INC.
<PAGE>
SUB-ADVISORY AGREEMENT
AGREEMENT made as of the 17th day of February, 1999, by and among THE
CATHOLIC ALLIANCE FUNDS, INC. a Maryland corporation (the "Fund Company"),
CATHOLIC FINANCIAL SERVICES CORPORATION, a Wisconsin corporation (the "Adviser"
and "Distributor"), and VANTAGE GLOBAL ADVISORS, INC., a Delaware corporation
(the "Sub-Adviser").
W I T N E S S E T H
For good and valuable consideration, the receipt of which is hereby
acknowledged, it is hereby agreed by and among the parties hereto as follows:
1. In General
The Sub-Adviser agrees, as more fully set forth
herein, to act as Sub-Adviser to the Fund Company with respect
to the investment and reinvestment of the assets of the
Disciplined Growth Fund and of any other series of common
stock of the Fund Company as the parties may mutually agree
and specify from time to time on EXHIBIT A hereto. The
Disciplined Growth Fund and each other such series is referred
to herein as a "Fund". The Sub-Adviser agrees to supervise and
arrange the purchase of securities and the sale of securities
held in the investment portfolios of each Fund specified on
EXHIBIT A. It is understood that the Fund Company may create
one or more additional series of shares and that, if it does
so, this Agreement may be amended by the mutual written
consent of the parties to include such additional series under
the terms of this Agreement.
2. Duties and Obligations of the Sub-Adviser with Respect to
Investments of Assets of the Funds
(a) Subject to the succeeding provisions of this
section and subject to the oversight and review of the Adviser
and the direction and control of the Board of Directors of the
Fund Company, the Sub-Adviser shall:
(i) Determine what securities shall be
purchased or sold by each Fund specified on EXHIBIT
A;
(ii) Arrange for the purchase and the sale
of securities held in each Fund specified on EXHIBIT
A; and
(iii) Provide the Adviser and the Directors
with such reports as may reasonably be requested in
connection with the discharge of the foregoing
responsibilities and the discharge of the Adviser's
re sponsibilities under its Investment Advisory
Agreement with the Fund Company and those of the
Distributor under its Distribution Agreement with the
Fund Company.
<PAGE>
(b) Any investment purchases or sales made by the
Sub-Adviser under this section shall at all times conform to,
and be in accordance with, any requirements imposed by: (1)
the provisions of the Investment Company Act of 1940 (the
"Act") and of any rules or regulations in force thereunder;
and (2) the provisions of the Articles of Incorporation and
By-Laws of the Fund Company as amended from time to time; (3)
any policies and determinations of the Board of Directors of
the Fund Company; and (4) the fundamental investment policies
of the relevant Fund, as reflected in the Fund Company's
registration statement under the Act, or as amended by the
shareholders of the Fund Company; provided that copies of the
items referred to in clauses (2), (3) and (4) shall have been
furnished to the Sub-Adviser.
(c) The Sub-Adviser shall give the Fund Company the
benefit of its best judgment and effort in rendering services
hereunder. In the absence of willful misfeasance, bad faith,
negligence or reckless disregard of its obligations or duties
("disabling conduct") hereunder on the part of the Sub-Adviser
(and its officers, directors, agents, employees, controlling
persons, shareholders and any other person or entity
affiliated with the Sub-Adviser) the Sub-Adviser shall not be
subject to liability to the Fund Company or to any shareholder
of the Fund Company for any act or omission in the course of,
or connected with, rendering services hereunder, including
without limitation any error of judgment or mistake of law or
for any loss suffered by any of them in con nection with the
matters to which this Agreement relates, except to the extent
specified in Section 36(b) of the Act concerning loss
resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services. Except for such
disabling conduct, the Fund Company shall indemnify the
Sub-Adviser (and its officers, directors, agents, employees,
controlling persons, shareholders and any other person or
entity affiliated with the Sub-Adviser) against any liability
arising from the Sub-Adviser's conduct under this Agreement to
the extent permitted by the Fund Company's Articles of
Incorporation, By-Laws and applicable law.
(d) Nothing in this Agreement shall prevent the
Sub-Adviser or any affiliated person (as defined in the Act)
of the Sub-Adviser from acting as investment advisor or
manager for any other person, firm or corporation and shall
not in any way limit or restrict the Sub-Adviser or any such
affiliated person from buying, selling or trading any
securities for its or their own accounts or for the accounts
of others for whom it or they may be acting; except, however,
the Sub-Adviser expressly represents that while this Agree
ment is in effect it will not undertake to manage the assets
of any other mutual fund sponsored by a Catholic organization,
without the prior written consent of the Fund Company. In
addition, the Sub-Adviser expressly represents that it will
undertake no activities which, in its judgment, will adversely
affect the performance of its obligation to the Fund Company
under this Agreement or under the Act. It is agreed that the
Sub-Adviser shall have no responsibility or liability for the
accuracy or completeness of the Fund Company's Registration
Statement under the Act and the Securities Act of 1933, except
for information supplied by the Sub-Adviser for inclusion
therein. The Sub-Adviser shall be deemed to be an independent
contractor and, unless otherwise expressly provided or
authorized,
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<PAGE>
have no authority to act for or represent the Fund Company in
any way or otherwise be deemed an agent of the Fund Company.
(e) In connection with its duties to arrange for the
purchase and sale of each Fund's portfolio securities, the
Sub-Adviser shall follow the principles set forth in any
investment advisory agreement in effect from time to time
between the Fund Company and the Adviser, provided that a copy
of any such agreement shall have been provided to the
Sub-Adviser. The Sub-Adviser will promptly communicate to the
Adviser and to the officers and the Directors of the Fund
Company such information relating to portfolio transactions as
they may reasonably request.
Without limiting the generality of the foregoing,
with respect to the execution of transactions on behalf of a
Fund, and except as otherwise instructed from time to time by
the Board of Directors of the Fund Company, the Sub-Adviser
shall place, or arrange for the placement of, all orders for
purchases, sales or loans either directly with the issuer or
with a broker-dealer, or other counterparty or agent selected
by the Sub-Adviser. In connection with the selection of all
such parties for the placement of all such orders, the
Sub-Adviser shall attempt to obtain most favorable execution
and price, but may nevertheless in its sole discretion, as a
secondary factor, purchase and sell portfolio securities from
and to broker-dealers who provide research and analysis to the
Sub-Adviser which the Sub-Adviser lawfully and appropriately
may use in its capacity as Sub-Adviser, whether or not such
research and analysis also may be useful to the Sub-Adviser in
connection with its services to other clients. In recognition
of such research and analytical services or brokerage services
provided by a broker or dealer, the Sub-Adviser is authorized
to pay such broker or dealer a commission or spread in excess
of that which might be charged by another broker or dealer for
the same transaction if the Sub-Adviser determines in good
faith that the commission or spread is reasonable in relation
to the value of the services so provided.
The Fund Company hereby authorizes any entity or
person associated with the Sub-Adviser that is a member of a
national securities exchange to effect any transaction on the
exchange for the account of a Fund to the extent permitted by
and accordance with Section 11(a) of the Securities Exchange
Act of 1934 and Rule 11a2-2(T) thereunder. The Fund Company
hereby consents to the retention by such entity or person of
compensation for such transaction in accordance with Rule
11a2-2(T)(a)(iv).
The Sub-Adviser may, where it deems it to be
advisable, aggregate orders for its other customers together
with any securities of the same type to be sold or purchased
for one or more Funds, and/or other clients of the Sub-Adviser
in order to obtain best execution or lower brokerage
commissions. In such event, the Sub-Adviser shall allocate the
shares so purchased or sold, as well as the expense incurred
in the transaction, in a manner it considers to be equitable
and fair, and consistent with its fiduciary obligations to the
Fund Company, the Funds and the Sub-Adviser's other customers.
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<PAGE>
(f) The Sub-Adviser shall, where it deems it
appropriate, make recommendations to the Fund Company as to
the manner in which voting rights, rights to consent to the
Fund Company or Fund Action, and any other rights pertaining
to the Fund Company or any of the Funds shall be exercised;
provided that the Sub-Adviser shall have no obligation nor any
authority to execute any voting proxies or consents on behalf
of the Fund Company or any Fund, but rather shall promptly
forward to the Fund Company all proxy and other solicitation
materials that the Sub-Adviser may receive with respect to any
such voting rights or consents.
(g) The Sub-Adviser shall be responsible for
preparing and filing with the SEC all reports on Schedule 13F
required under Section 13(f) of the Securities Exchange Act of
1934 in connection with equity positions held by each Fund.
3. Allocation of Expenses
The Sub-Adviser agrees that it will furnish the Fund
Company, at the Sub-Adviser's expense, with all office space
and facilities, equipment and clerical personnel necessary for
carrying out the Sub-Adviser's duties under this Agreement.
The Sub-Adviser will also pay all compensation of those of the
Fund Company's officers and employees, if any, and of those
Directors, if any, who in each case are affiliated persons of
the Sub-Adviser.
4. Certain Records
Any records required to be maintained and preserved
pursuant to the provisions of Rule 31a-1 and Rule 31a-2 under
the Act which are prepared or maintained by the Sub-Adviser on
behalf of the Fund company are the property of the Fund
Company and will be surrendered promptly to the Fund Company
or the Adviser on request.
5. Reference to the Sub-Adviser
Neither the Fund Company nor the Adviser or any
affiliate or agent thereof shall make reference to or use the
name of the Sub-Adviser or any of its affiliates in any
advertising or promotional materials without the prior
approval of the Sub-Adviser, which approval shall not be
unreasonably withheld.
6. Compensation of the Sub-Adviser
The Adviser agrees to pay the Sub-Adviser, and the
Sub-Adviser agrees to accept as full compensation for all
services rendered by the Sub-Adviser as such, a management fee
as specified on EXHIBIT A.
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7. Duration and Termination
(a) This Agreement shall go into effect with respect
to the Disciplined Growth Fund on the date specified on
EXHIBIT A attached hereto. In the event the parties hereto
mutually agree that one or more series of the Fund Company
should be included as additional "Fund(s)" hereunder, this
Agreement shall become effective with respect to each such
additional Fund on the date specified on EXHIBIT A hereto.
Once effective with respect to any Fund(s), this Agreement
shall, unless terminated as hereinafter provided, continue in
effect for a period of two years with respect to such Fund,
and thereafter from year to year, but only so long as such
continuance is specifically approved at least annually by a
majority of the Fund Company's Board of Directors, or by the
vote of the holders of a "majority" (as defined in the Act) of
the outstanding voting securities of the relevant Fund(s),
and, in either case, a majority of the Directors who are not
parties to this Agreement or "interested persons" (as defined
in the Act) of any such party cast in person at a meeting
called for the purpose of voting on such approval.
(b) This Agreement may be terminated by the
Sub-Adviser in its entirety or with respect to any one or more
specifically identified Funds at any time without penalty upon
giving the Fund Company and the Adviser sixty (60) days'
written notice (which notice may be waived by the Fund Company
and the Adviser) and may be terminated by the Fund Company or
the Adviser in its entirety or with respect to any one or more
specifically identified Funds at any time without penalty upon
giving the Sub-Adviser sixty (60) days' written notice (which
notice may be waived by the Sub-Adviser), provided that such
termination by the Fund Company shall be directed or approved
by the vote of a majority of all of its Directors in office at
the time or by the vote of the holders of a "majority" (as
defined in the Act) of the voting securities of each Fund with
respect to which the Agreement is to be terminated. This
Agreement shall automatically terminate in the event of its
"assignment" (as defined in the Act). This Agreement will also
automatically terminate in the event that the Investment
Advisory Agreement by and between the Fund Company and the
Adviser is terminated for any reason.
IN WITNESS WHEREOF, the parties hereto have caused the foregoing
instrument to be executed by their duly authorized officers and their seals to
be hereto affixed, all as of the day and year first above written.
THE CATHOLIC ALLIANCE FUNDS, INC. CATHOLIC FINANCIAL SERVICES CORPORATION
By: /s/ Allan G. Lorge By: /s/ Allan G. Lorge
------------------- -------------------
Allan G. Lorge, President Allan G. Lorge, President
VANTAGE GLOBAL ADVISORS, INC.
By: /s/ Kevin Lee
--------------
Kevin Lee, President
5
<PAGE>
EXHIBIT A
THE CATHOLIC ALLIANCE FUNDS, INC.
VANTAGE GLOBAL ADVISORS, INC.
SUB-ADVISORY AGREEMENT
1. Disciplined Growth Fund
a. Effective Date: Effective date of The Catholic Alliance Funds,
Inc.'s SEC Registration Statement on Form N-1A.
b. Management Fee: computed daily and paid monthly at the annual
rate of:
0.50 of 1% on the first $50 million;
0.45 of 1% on the next $50 million; and
0.40 of 1% on the average daily net assets over $100
million;
provided that, for the first two years during which
the Fund is in operation or until its total net
assets reach $35.0 million, whichever occurs first,
the fee shall be at the annual rate of 0.40 of 1% of
the Fund's average daily net assets.
<PAGE>
EXHIBIT (d)(3)
SUB-ADVISORY AGREEMENT WITH
TODD INVESTMENT ADVISORS, INC.
<PAGE>
SUB-ADVISORY AGREEMENT
AGREEMENT made as of the 17th day of February, 1999, by and among THE
CATHOLIC ALLIANCE FUNDS, INC. a Maryland corporation (the "Fund Company"),
CATHOLIC FINANCIAL SERVICES CORPORATION, a Wisconsin corporation (the "Adviser"
and "Distributor"), and TODD INVESTMENT ADVISORS, INC., a Kentucky corporation
(the "Sub-Adviser").
W I T N E S S E T H
For good and valuable consideration, the receipt of which is hereby
acknowledged, it is hereby agreed by and among the parties hereto as follows:
1. IN GENERAL
The Sub-Adviser agrees, as more fully set forth
herein, to act as Sub-Adviser to the Fund Company with respect
to the investment and reinvestment of the assets of the Equity
Income Fund and of any other series of common stock of the
Fund Company as the parties may mutually agree and specify
from time to time on EXHIBIT A hereto. The Equity Income Fund
and each other such series is referred to herein as a "Fund".
The Sub-Adviser agrees to supervise and arrange the purchase
of securities and the sale of securities held in the
investment portfolios of each Fund specified on EXHIBIT A. It
is understood that the Fund Company may create one or more
additional series of shares and that, if it does so, this
Agreement may be amended by the mutual written consent of the
parties to include such additional series under the terms of
this Agreement.
2. DUTIES AND OBLIGATIONS OF THE SUB-ADVISER WITH RESPECT TO
INVESTMENTS OF ASSETS OF THE FUNDS
(a) Subject to the succeeding provisions of this
section and subject to the oversight and review of the Adviser
and the direction and control of the Board of Directors of the
Fund Company, the Sub-Adviser shall:
(i) Determine what securities shall be
purchased or sold by each Fund specified on EXHIBIT
A;
(ii) Arrange for the purchase and the sale
of securities held in each Fund specified on EXHIBIT
A; and
(iii) Provide the Adviser and the Directors
with such reports as may reasonably be requested in
connection with the discharge of the foregoing
responsibilities and the discharge of the Adviser's
responsibilities under its Investment Advisory
Agreement with the Fund Company and those of the
Distributor under its Distribution Agreement with the
Fund Company.
<PAGE>
(b) Any investment purchases or sales made by the
Sub-Adviser under this section shall at all times conform to,
and be in accordance with, any requirements imposed by: (1)
the provisions of the Investment Company Act of 1940 (the
"Act") and of any rules or regulations in force thereunder;
and (2) the provisions of the Articles of Incorporation and
By-Laws of the Fund Company as amended from time to time; (3)
any policies and determinations of the Board of Directors of
the Fund Company; and (4) the fundamental investment policies
of the relevant Fund, as reflected in the Fund Company's
registration statement under the Act, or as amended by the
shareholders of the Fund Company; provided that copies of the
items referred to in clauses (2), (3) and (4) shall have been
furnished to the Sub-Adviser.
(c) The Sub-Adviser shall give the Fund Company the
benefit of its best judgment and effort in rendering services
hereunder. In the absence of willful misfeasance, bad faith,
negligence or reckless disregard of its obligations or duties
("disabling conduct") hereunder on the part of the Sub-Adviser
(and its officers, directors, agents, employees, controlling
persons, shareholders and any other person or entity
affiliated with the Sub-Adviser) the Sub-Adviser shall not be
subject to liability to the Fund Company or to any shareholder
of the Fund Company for any act or omission in the course of,
or connected with, rendering services hereunder, including
without limitation any error of judgment or mistake of law or
for any loss suffered by any of them in connection with the
matters to which this Agreement relates, except to the extent
specified in Section 36(b) of the Act concerning loss
resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services. Except for such
disabling conduct, the Fund Company shall indemnify the
Sub-Adviser (and its officers, directors, agents, employees,
controlling persons, shareholders and any other person or
entity affiliated with the Sub-Adviser) against any liability
arising from the Sub-Adviser's conduct under this Agreement to
the extent permitted by the Fund Company's Articles of
Incorporation, By-Laws and applicable law.
(d) Nothing in this Agreement shall prevent the
Sub-Adviser or any affiliated person (as defined in the Act)
of the Sub-Adviser from acting as investment advisor or
manager for any other person, firm or corporation and shall
not in any way limit or restrict the Sub-Adviser or any such
affiliated person from buying, selling or trading any
securities for its or their own accounts or for the accounts
of others for whom it or they may be acting; except, however,
the Sub-Adviser expressly represents that while this Agreement
is in effect it will not undertake to manage the assets of any
other mutual fund sponsored by a Catholic organization,
without the prior written consent of the Fund Company. In
addition, the Sub-Adviser expressly represents that it will
undertake no activities which, in its judgment, will adversely
affect the performance of its obligation to the Fund Company
under this Agreement or under the Act. It is agreed that the
Sub-Adviser shall have no responsibility or liability for the
accuracy or completeness of the Fund Company's Registration
Statement under the Act and the Securities Act of 1933, except
for information supplied by the Sub-Adviser for inclusion
therein. The Sub-Adviser shall be deemed to be an independent
contractor and, unless otherwise expressly provided or
authorized,
2
<PAGE>
have no authority to act for or represent the Fund Company in
any way or otherwise be deemed an agent of the Fund Company.
(e) In connection with its duties to arrange for the
purchase and sale of each Fund's portfolio securities, the
Sub-Adviser shall follow the principles set forth in any
investment advisory agreement in effect from time to time
between the Fund Company and the Adviser, provided that a copy
of any such agreement shall have been provided to the
Sub-Adviser. The Sub-Adviser will promptly communicate to the
Adviser and to the officers and the Directors of the Fund
Company such information relating to portfolio transactions as
they may reasonably request.
Without limiting the generality of the foregoing,
with respect to the execution of transactions on behalf of a
Fund, and except as otherwise instructed from time to time by
the Board of Directors of the Fund Company, the Sub-Adviser
shall place, or arrange for the placement of, all orders for
purchases, sales or loans either directly with the issuer or
with a broker-dealer, or other counterparty or agent selected
by the Sub-Adviser. In connection with the selection of all
such parties for the placement of all such orders, the
Sub-Adviser shall attempt to obtain most favorable execution
and price, but may nevertheless in its sole discretion, as a
secondary factor, purchase and sell portfolio securities from
and to broker-dealers who provide research and analysis to the
Sub-Adviser which the Sub-Adviser lawfully and appropriately
may use in its capacity as Sub-Adviser, whether or not such
research and analysis also may be useful to the Sub-Adviser in
connection with its services to other clients. In recognition
of such research and analytical services or brokerage services
provided by a broker or dealer, the Sub-Adviser is authorized
to pay such broker or dealer a commission or spread in excess
of that which might be charged by another broker or dealer for
the same transaction if the Sub-Adviser determines in good
faith that the commission or spread is reasonable in relation
to the value of the services so provided.
The Fund Company hereby authorizes any entity or
person associated with the Sub-Adviser that is a member of a
national securities exchange to effect any transaction on the
exchange for the account of a Fund to the extent permitted by
and accordance with Section 11(a) of the SECURITIES EXCHANGE
ACT OF 1934 and Rule 11a2-2(T) thereunder. The Fund Company
hereby consents to the retention by such entity or person of
compensation for such transaction in accordance with Rule
11a2- 2(T)(a)(iv).
The Sub-Adviser may, where it deems it to be
advisable, aggregate orders for its other customers together
with any securities of the same type to be sold or purchased
for one or more Funds, and/or other clients of the Sub-Adviser
in order to obtain best execution or lower brokerage
commissions. In such event, the Sub-Adviser shall allocate the
shares so purchased or sold, as well as the expense incurred
in the transaction, in a manner it considers to be equitable
and fair, and consistent with its fiduciary obligations to the
Fund Company, the Funds and the Sub-Adviser's other customers.
3
<PAGE>
(f) The Sub-Adviser shall, where it deems it
appropriate, make recommendations to the Fund Company as to
the manner in which voting rights, rights to consent to the
Fund Company or Fund Action, and any other rights pertaining
to the Fund Company or any of the Funds shall be exercised;
provided that the Sub-Adviser shall have no obligation nor any
authority to execute any voting proxies or consents on behalf
of the Fund Company or any Fund, but rather shall promptly
forward to the Fund Company all proxy and other solicitation
materials that the Sub-Adviser may receive with respect to any
such voting rights or consents.
(g) The Sub-Adviser shall be responsible for
preparing and filing with the SEC all reports on Schedule 13F
required under Section 13(f) of the Securities Exchange Act of
1934 in connection with equity positions held by each Fund.
3. ALLOCATION OF EXPENSES
The Sub-Adviser agrees that it will furnish the Fund
Company, at the Sub-Adviser's expense, with all office space
and facilities, equipment and clerical personnel necessary for
carrying out the Sub-Adviser's duties under this Agreement.
The Sub-Adviser will also pay all compensation of those of the
Fund Company's officers and employees, if any, and of those
Directors, if any, who in each case are affiliated persons of
the Sub-Adviser.
4. CERTAIN RECORDS
Any records required to be maintained and preserved
pursuant to the provisions of Rule 31a-1 and Rule 31a-2 under
the Act which are prepared or maintained by the Sub-Adviser on
behalf of the Fund company are the property of the Fund
Company and will be surrendered promptly to the Fund Company
or the Adviser on request.
5. REFERENCE TO THE SUB-ADVISER
Neither the Fund Company nor the Adviser or any
affiliate or agent thereof shall make reference to or use the
name of the Sub-Adviser or any of its affiliates in any
advertising or promotional materials without the prior
approval of the Sub-Adviser, which approval shall not be
unreasonably withheld.
6. COMPENSATION OF THE SUB-ADVISER
The Adviser agrees to pay the Sub-Adviser, and the
Sub-Adviser agrees to accept as full compensation for all
services rendered by the Sub-Adviser as such, a management fee
as specified on EXHIBIT A.
4
<PAGE>
7. DURATION AND TERMINATION
(a) This Agreement shall go into effect with respect
to the Equity Income Fund on the date specified on EXHIBIT A
attached hereto. In the event the parties hereto mutually
agree that one or more series of the Fund Company should be
included as additional "Fund(s)" hereunder, this Agreement
shall become effective with respect to each such additional
Fund on the date specified on EXHIBIT A hereto. Once effective
with respect to any Fund(s), this Agreement shall, unless
terminated as hereinafter provided, continue in effect for a
period of two years with respect to such Fund, and thereafter
from year to year, but only so long as such continuance is
specifically approved at least annually by a majority of the
Fund Company's Board of Directors, or by the vote of the
holders of a "majority" (as defined in the Act) of the
outstanding voting securities of the relevant Fund(s), and, in
either case, a majority of the Directors who are not parties
to this Agreement or "interested persons" (as defined in the
Act) of any such party cast in person at a meeting called for
the purpose of voting on such approval.
(b) This Agreement may be terminated by the
Sub-Adviser in its entirety or with respect to any one or more
specifically identified Funds at any time without penalty upon
giving the Fund Company and the Adviser sixty (60) days'
written notice (which notice may be waived by the Fund Company
and the Adviser) and may be terminated by the Fund Company or
the Adviser in its entirety or with respect to any one or more
specifically identified Funds at any time without penalty upon
giving the Sub-Adviser sixty (60) days' written notice (which
notice may be waived by the Sub-Adviser), provided that such
termination by the Fund Company shall be directed or approved
by the vote of a majority of all of its Directors in office at
the time or by the vote of the holders of a "majority" (as
defined in the Act) of the voting securities of each Fund with
respect to which the Agreement is to be terminated. This
Agreement shall automatically terminate in the event of its
"assignment" (as defined in the Act). This Agreement will also
automatically terminate in the event that the Investment
Advisory Agreement by and between the Fund Company and the
Adviser is terminated for any reason.
IN WITNESS WHEREOF, the parties hereto have caused the foregoing
instrument to be executed by their duly authorized officers and their seals to
be hereto affixed, all as of the day and year first above written.
THE CATHOLIC ALLIANCE FUNDS, INC. CATHOLIC FINANCIAL SERVICES
CORPORATION
By: /s/ Allan G. Lorge By: /s/ Allan G. Lorge
------------------- -------------------
Allan G. Lorge, President Allan G. Lorge, President
TODD INVESTMENT ADVISORS, INC.
By: /s/ Robert P. Bordogna
-----------------------
Robert P. Bordogna, President
5
<PAGE>
EXHIBIT A
THE CATHOLIC ALLIANCE FUNDS, INC.
TODD INVESTMENT ADVISORS, INC.
SUB-ADVISORY AGREEMENT
1. Equity Income Fund
a. Effective Date: Effective date of The Catholic Alliance Funds,
Inc.'s SEC Registration Statement on Form N-1A.
b. Management Fee: computed daily and paid monthly at the annual
rate of:
0.38 of 1% on the first $10 million;
0.35 of 1% on the next $40 million; and
0.30 of 1% on average daily net assets over $50 million
<PAGE>
Exhibit (d)(4)
SUB-ADVISORY AGREEMENT WITH
PEREGRINE CAPITAL MANAGEMENT
<PAGE>
SUB-ADVISORY AGREEMENT
AGREEMENT made as of the 17th day of February, 1999, by and among THE
CATHOLIC ALLIANCE FUNDS, INC. a Maryland corporation (the "Fund Company"),
CATHOLIC FINANCIAL SERVICES CORPORATION, a Wisconsin corporation (the "Adviser"
and "Distributor"), and PEREGRINE CAPITAL MANAGEMENT, a Minnesota corporation
(the "Sub-Adviser").
W I T N E S S E T H
For good and valuable consideration, the receipt of which is hereby
acknowledged, it is hereby agreed by and among the parties hereto as follows:
1. In General
The Sub-Adviser agrees, as more fully set forth
herein, to act as Sub-Adviser to the Fund Company with respect
to the investment and reinvestment of the assets of the
Large-Cap Growth Fund and of any other series of common stock
of the Fund Company as the parties may mutually agree and
specify from time to time on EXHIBIT A hereto. The Large-Cap
Growth Fund and each other such series is referred to herein
as a "Fund". The Sub-Adviser agrees to supervise and arrange
the purchase of securities and the sale of securities held in
the investment portfolios of each Fund specified on EXHIBIT A.
It is understood that the Fund Company may create one or more
additional series of shares and that, if it does so, this
Agreement may be amended by the mutual written consent of the
parties to include such additional series under the terms of
this Agreement.
2. Duties and Obligations of the Sub-Adviser with Respect to
Investments of Assets of the Funds
(a) Subject to the succeeding provisions of this
section and subject to the oversight and review of the Adviser
and the direction and control of the Board of Directors of the
Fund Company, the Sub-Adviser shall:
(i) Determine what securities shall
be purchased or sold by each Fund specified on
EXHIBIT A;
(ii) Arrange for the purchase and the sale
of securities held in each Fund specified on EXHIBIT
A; and
(iii) Provide the Adviser and the Directors
with such reports as may reasonably be requested in
connection with the discharge of the foregoing
responsibilities and the discharge of the Adviser's
responsibilities under its Investment Advisory
Agreement with the Fund Company and those of the
Distributor under its Distribution Agreement
with the Fund Company.
<PAGE>
(b) Any investment purchases or sales made by the
Sub-Adviser under this section shall at all times conform to,
and be in accordance with, any requirements imposed by: (1)
the provisions of the Investment Company Act of 1940 (the
"Act") and of any rules or regulations in force thereunder;
and (2) the provisions of the Articles of Incorporation and
By-Laws of the Fund Company as amended from time to time; (3)
any policies and determinations of the Board of Directors of
the Fund Company; and (4) the fundamental investment policies
of the relevant Fund, as reflected in the Fund Company's
registration statement under the Act, or as amended by the
shareholders of the Fund Company; provided that copies of the
items referred to in clauses (2), (3) and (4) shall have been
furnished to the Sub-Adviser.
(c) The Sub-Adviser shall give the Fund Company the
benefit of its best judgment and effort in rendering services
hereunder. In the absence of willful misfeasance, bad faith,
negligence or reckless disregard of its obligations or duties
("disabling conduct") hereunder on the part of the Sub-Adviser
(and its officers, directors, agents, employees, controlling
persons, shareholders and any other person or entity
affiliated with the Sub-Adviser) the Sub-Adviser shall not be
subject to liability to the Fund Company or to any shareholder
of the Fund Company for any act or omission in the course of,
or connected with, rendering services hereunder, including
without limitation any error of judgment or mistake of law or
for any loss suffered by any of them in connection with the
matters to which this Agreement relates, except to the extent
specified in Section 36(b) of the Act concerning loss
resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services. Except for such
disabling conduct, the Fund Company shall indemnify the
Sub-Adviser (and its officers, directors, agents, employees,
controlling persons, shareholders and any other person or
entity affiliated with the Sub-Adviser) against any liability
arising from the Sub-Adviser's conduct under this Agreement to
the extent permitted by the Fund Company's Articles of
Incorporation, By-Laws and applicable law.
(d) Nothing in this Agreement shall prevent the
Sub-Adviser or any affiliated person (as defined in the Act)
of the Sub-Adviser from acting as investment advisor or
manager for any other person, firm or corporation and shall
not in any way limit or restrict the Sub-Adviser or any such
affiliated person from buying, selling or trading any
securities for its or their own accounts or for the accounts
of others for whom it or they may be acting; except, however,
the Sub-Adviser expressly represents that while this Agreement
is in effect it will not undertake to manage the assets of any
other mutual fund sponsored by a Catholic organization,
without the prior written consent of the Fund Company. In
addition, the Sub-Adviser expressly represents that it will
undertake no activities which, in its judgment, will adversely
affect the performance of its obligation to the Fund Company
under this Agreement or under the Act. It is agreed that the
Sub-Adviser shall have no responsibility or liability for the
accuracy or completeness of the Fund Company's Registration
Statement under the Act and the Securities Act of 1933, except
for information supplied by the Sub-Adviser for inclusion
therein. The Sub-Adviser shall be deemed to be an independent
contractor and, unless otherwise expressly provided or
authorized,
2
<PAGE>
have no authority to act for or represent the Fund Company in
any way or otherwise be deemed an agent of the Fund Company.
(e) In connection with its duties to arrange for the
purchase and sale of each Fund's portfolio securities, the
Sub-Adviser shall follow the principles set forth in any
investment advisory agreement in effect from time to time
between the Fund Company and the Adviser, provided that a copy
of any such agreement shall have been provided to the
Sub-Adviser. The Sub-Adviser will promptly communicate to the
Adviser and to the officers and the Directors of the Fund
Company such information relating to portfolio transactions as
they may reasonably request.
Without limiting the generality of the foregoing,
with respect to the execution of transactions on behalf of a
Fund, and except as otherwise instructed from time to time by
the Board of Directors of the Fund Company, the Sub-Adviser
shall place, or arrange for the placement of, all orders for
purchases, sales or loans either directly with the issuer or
with a broker-dealer, or other counterparty or agent selected
by the Sub-Adviser. In connection with the selection of all
such parties for the placement of all such orders, the
Sub-Adviser shall attempt to obtain most favorable execution
and price, but may nevertheless in its sole discretion, as a
secondary factor, purchase and sell portfolio securities from
and to broker-dealers who provide research and analysis to the
Sub-Adviser which the Sub-Adviser lawfully and appropriately
may use in its capacity as Sub-Adviser, whether or not such
research and analysis also may be useful to the Sub-Adviser in
connection with its services to other clients. In recognition
of such research and analytical services or brokerage services
provided by a broker or dealer, the Sub-Adviser is authorized
to pay such broker or dealer a commission or spread in excess
of that which might be charged by another broker or dealer for
the same transaction if the Sub-Adviser determines in good
faith that the commission or spread is reasonable in relation
to the value of the services so provided.
The Fund Company hereby authorizes any entity or
person associated with the Sub-Adviser that is a member of a
national securities exchange to effect any transaction on the
exchange for the account of a Fund to the extent permitted by
and accordance with Section 11(a) of the Securities Exchange
Act of 1934 and Rule 11a2-2(T) thereunder. The Fund Company
hereby consents to the retention by such entity or person of
compensation for such transaction in accordance with Rule
11a2- 2(T)(a)(iv).
The Sub-Adviser may, where it deems it to be
advisable, aggregate orders for its other customers together
with any securities of the same type to be sold or purchased
for one or more Funds, and/or other clients of the Sub-Adviser
in order to obtain best execution or lower brokerage
commissions. In such event, the Sub-Adviser shall allocate the
shares so purchased or sold, as well as the expense incurred
in the transaction, in a manner it considers to be equitable
and fair, and consistent with its fiduciary obligations to the
Fund Company, the Funds and the Sub-Adviser's other customers.
3
<PAGE>
(f) The Sub-Adviser shall, where it deems it
appropriate, make recommendations to the Fund Company as to
the manner in which voting rights, rights to consent to the
Fund Company or Fund Action, and any other rights pertaining
to the Fund Company or any of the Funds shall be exercised;
provided that the Sub-Adviser shall have no obligation nor any
authority to execute any voting proxies or consents on behalf
of the Fund Company or any Fund, but rather shall promptly
forward to the Fund Company all proxy and other solicitation
materials that the Sub-Adviser may receive with respect to any
such voting rights or consents.
(g) The Sub-Adviser shall be responsible for
preparing and filing with the SEC all reports on Schedule 13F
required under Section 13(f) of the Securities Exchange Act of
1934 in connection with equity positions held by each Fund.
3. Allocation of Expenses
The Sub-Adviser agrees that it will furnish the Fund
Company, at the Sub-Adviser's expense, with all office space
and facilities, equipment and clerical personnel necessary for
carrying out the Sub-Adviser's duties under this Agreement.
The Sub-Adviser will also pay all compensation of those of the
Fund Company's officers and employees, if any, and of those
Directors, if any, who in each case are affiliated persons of
the Sub-Adviser.
4. Certain Records
Any records required to be maintained and preserved
pursuant to the provisions of Rule 31a-1 and Rule 31a-2 under
the Act which are prepared or maintained by the Sub-Adviser on
behalf of the Fund company are the property of the Fund
Company and will be surrendered promptly to the Fund Company
or the Adviser on request.
5. Reference to the Sub-Adviser
Neither the Fund Company nor the Adviser or any
affiliate or agent thereof shall make reference to or use the
name of the Sub-Adviser or any of its affiliates in any
advertising or promotional materials without the prior
approval of the Sub-Adviser, which approval shall not be
unreasonably withheld.
6. Compensation of the Sub-Adviser
The Adviser agrees to pay the Sub-Adviser, and the
Sub-Adviser agrees to accept as full compensation for all
services rendered by the Sub-Adviser as such, a management fee
as specified on EXHIBIT A.
4
<PAGE>
7. Duration and Termination
(a) This Agreement shall go into effect with respect
to the Large-Cap Growth Fund on the date specified on EXHIBIT
A attached hereto. In the event the parties hereto mutually
agree that one or more series of the Fund Company should be
included as additional "Fund(s)" hereunder, this Agreement
shall become effective with respect to each such additional
Fund on the date specified on EXHIBIT A hereto. Once effective
with respect to any Fund(s), this Agreement shall, unless
terminated as hereinafter provided, continue in effect for a
period of two years with respect to such Fund, and thereafter
from year to year, but only so long as such continuance is
specifically approved at least annually by a majority of the
Fund Company's Board of Directors, or by the vote of the
holders of a "majority" (as defined in the Act) of the
outstanding voting securities of the relevant Fund(s), and, in
either case, a majority of the Directors who are not parties
to this Agreement or "interested persons" (as defined in the
Act) of any such party cast in person at a meeting called for
the purpose of voting on such approval.
(b) This Agreement may be terminated by the
Sub-Adviser in its entirety or with respect to any one or more
specifically identified Funds at any time without penalty upon
giving the Fund Company and the Adviser sixty (60) days'
written notice (which notice may be waived by the Fund Company
and the Adviser) and may be terminated by the Fund Company or
the Adviser in its entirety or with respect to any one or more
specifically identified Funds at any time without penalty upon
giving the Sub-Adviser sixty (60) days' written notice (which
notice may be waived by the Sub-Adviser), provided that such
termination by the Fund Company shall be directed or approved
by the vote of a majority of all of its Directors in office at
the time or by the vote of the holders of a "majority" (as
defined in the Act) of the voting securities of each Fund with
respect to which the Agreement is to be terminated. This
Agreement shall automatically terminate in the event of its
"assignment" (as defined in the Act). This Agreement will also
automatically terminate in the event that the Investment
Advisory Agreement by and between the Fund Company and the
Adviser is terminated for any reason.
IN WITNESS WHEREOF, the parties hereto have caused the foregoing
instrument to be executed by their duly authorized officers and their seals to
be hereto affixed, all as of the day and year first above written.
THE CATHOLIC ALLIANCE FUNDS, INC. CATHOLIC FINANCIAL SERVICES CORPORATION
By: By:
------------------------------ ------------------------------------
PEREGRINE CAPITAL MANAGEMENT
By:
------------------------------------
Its:
-----------------------------------
5
<PAGE>
EXHIBIT A
THE CATHOLIC ALLIANCE FUNDS, INC.
PEREGRINE CAPITAL MANAGEMENT
SUB-ADVISORY AGREEMENT
1. Large-Cap Growth Fund
a. Effective Date: Effective date of The Catholic Alliance Funds,
Inc.'s SEC Registration Statement on Form N-1A.
b. Management Fee: computed daily and paid monthly at the annual
rate of:
0.50 of 1% on the first $25 million;
0.45 of 1% on the next $25 million; and
0.40 of 1% on average daily net assets over $50 million.
<PAGE>
Exhibit (e)(2)
SELECTED DEALER AGREEMENT
<PAGE>
[CATHOLIC FINANCIAL SERVICES CORPORATION LETTERHEAD]
Date:
--------------------
Re: Letter Agreement for Continuous Offering of Shares of
The Catholic Alliance Funds, Inc. By Selected Dealers
Ladies and Gentlemen:
Catholic Financial Services Corporation (the "Company") desires to
enter into an agreement with you for making available to your customers and
reselling to us shares of each series of The Catholic Alliance Funds, Inc.
("CAF") of which we are, or may become, Distributor (such series hereinafter
collectively referred to as the "Funds" and individually as a "Fund") and whose
shares are offered to the public at an offering price which may or may not
include a front-end sales charge or a contingent deferred sales charge
(hereinafter referred to as "Shares"). Upon acceptance of this Agreement by you,
you understand that you may offer Shares and act as authorized agent for your
customers' purchases of Shares from us, subject, however, to all of the
following terms and conditions, and to our right, without notice, to suspend or
terminate the sale of the Shares of any one or more of the Funds:
1. Shares will be made available at the current offering price
in effect at the time the order for such Shares is confirmed and accepted by us
at our office in Milwaukee, Wisconsin. All purchase orders, redemption orders
and applications of your customers submitted by you are subject to acceptance or
rejection in our sole discretion and, if accepted, each purchase will be deemed
to have been consummated at our office in Milwaukee, Wisconsin.
2. You agree to abide by the provisions of the Investment
Company Act of 1940, as amended (the "1940 Act"), the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended, and all applicable
rules and regulations of the Securities and Exchange Commission ("SEC") and the
NASD, including without limitation, the NASD Rules of Fair Practice, whether or
not you are a broker-dealer subject to the jurisdiction of the SEC and NASD.
Without limiting the generality of the foregoing, you agree that you will not
withhold placing customers' orders for Shares so as to profit yourself as a
result of such withholding. You further agree to comply with all applicable
state and Federal laws and the rules and regulations of authorized regulatory
agencies. You agree that you will not offer Shares in any state or other
jurisdiction unless we have advised you in advance that such sale is exempt from
the qualification requirements of such state's securities laws.
3. You will make available to your customers Shares of a Fund
only in accordance with the terms and conditions of the then current Prospectus
and Statement of Additional Information (collectively referred to as the
"Prospectus") relating to that Fund, and you will make no representations about
such Shares
<PAGE>
Date:
-------------------
Page 2
not included in said Prospectus or in any authorized supplemental
material supplied or authorized by us. You will use reasonable efforts in the
offer of Shares and agree to be responsible for the proper instruction and
training of all brokerage personnel in this area employed by you, in order that
the Shares will be offered in accordance with the terms and conditions of this
Agreement and all applicable laws, rules and regulations. You agree to hold us
harmless and indemnify us, CAF and our and their respective officers, directors
and employees in the event that you or any of your current or former employees
or agents should violate any law, rule or regulation, or any provision of this
Agreement, which violation may result in any loss or liability to us, CAF, any
Fund or any of our affiliates or affiliates of CAF. If we determine to refund
any amounts paid by an investor by reason of any such violation, you shall
promptly return to us on demand any agency commissions previously paid by us to
you with respect to the transaction for which the refund is made. Furthermore,
you agree to indemnify us, our affiliates and CAF against any and all claims,
demands, controversies, actions, losses, damages, liabilities, expenses,
arbitrations, complaints or investigations, including without limitation,
reasonable attorneys' fees and court costs that are the result of or arise
directly or indirectly, in whole or in part, from us, our affiliates or CAF
acting upon instructions for the purchase, exchange or redemption of
uncertificated book shares received through our manual or automated phone system
or the Fund/SERV program of National Securities Clearing Corporation; provided
such loss, liability or damages are not the result of the gross negligence,
recklessness or intentional misconduct of us, our affiliates or CAF. All
expenses which you incur in connection with your activities under this Agreement
shall be borne by you. In connection with all purchase or redemption orders, you
are acting as agent for your customer and each transaction is for the account of
your customer and not for your own account. Termination or cancellation of this
Agreement shall not relieve you from the requirements of this paragraph as to
transactions or occurrences arising prior to such termination.
4. You will be entitled to agency commissions from the Company
on the sale of Shares as described in the current Prospectus for the relevant
Fund at the time of the sale. The Company reserves the right to increase,
decrease or discontinue payment of agency commissions for sale of Shares at any
time in its sole discretion upon written notice to you and any orders placed
after the effective date of such change will be subject to the rate(s) of agency
commissions in effect at the time of receipt of the payment by us.
<PAGE>
Date:
-------------------
Page 3
5. Where a front-end sales charge applies to the purchase of a
Fund's shares, an investor will be entitled to a reduction in the sales charge
on purchases made under a letter of intent in accordance with the current
Prospectus of the relevant Fund. In such a case, your agency commission will be
paid based upon the reduced sales charge, but adjustment to a higher agency
commission will thereafter be made to reflect actual purchases by the investor
if he should fail to fulfill his letter of intent.
6. Except for sales pursuant to plans established by the Funds
with an agent and providing for the periodic investment of new monies, orders
will not be accepted for less than the minimum number of shares or dollar
amounts set forth in the then current Prospectus of the relevant Fund.
7. Payments for purchases of Shares made by telephone or wire
order (including purchase orders received through our manual or automated phone
system, or via the Fund/SERV program of National Securities Clearing
Corporation), and all necessary account information required by us to establish
an account or to settle a redemption order, including, without limitation, the
tax identification number of the purchaser, certified either by the purchaser or
by you, shall be provided to us and received by us within three business days
after our acceptance of your order or such shorter time as may be required by
law. If such payment and other settlement information are not timely received by
us, you understand that we reserve the right, without notice, to cancel the
purchase or redemption order, or, at our option in the case of a purchase order,
to sell the Shares ordered by you back to the relevant Fund, and in either case
you may be held responsible for any loss, including loss of profit, suffered by
us or any relevant Fund resulting from your failure to make the aforesaid timely
payment or settlement. If sales of any Fund's Shares are contingent upon the
Fund's receipt of Federal Funds in payment therefor, you will forward promptly
to us any purchase orders and/or payments received by you for such Shares from
your customers. With respect to purchase orders of uncertificated book shares
placed via Fund/SERV, you shall retain in your files all applications and other
documents required by us to establish an account or to settle a redemption
order. You will provide us with the original of such documents at our request.
8. You agree that you will act as agent with respect to Shares
only if they are purchased from us or repurchased by us from your customers. If
Shares are purchased from us by your customers, you warrant that such purchases
are only for investment. If Shares are purchased by you from your customers for
redemption to us, you agree that such customers will be paid not less than the
applicable redemption or repurchase price then quoted by the Fund.
9. We may consider any order you place for Fund Shares to be
the total holding of Shares by the investor, and we may assume that the investor
is not entitled to any reduction in sales price beyond that accorded to the
amount of that purchase order as determined by the schedule set forth in the
then current Prospectus for the relevant Fund(s), unless you advise us otherwise
when you place the order.
<PAGE>
Date:
-------------------
Page 4
10. You may place redemption orders with us for Shares owned
by your customers, but only in accordance with the terms of the current
Prospectus. You understand and agree that by placing a redemption order with us
by wire or telephone (including redemption orders for uncertificated book shares
placed via our manual or automated phone system or via the Fund/SERV program of
National Securities Clearing Corporation), you represent to us that a request
for the redemption of the Shares covered by the redemption order has been
delivered to you by the registered owner(s) of such Shares, and that such
request has been executed in the manner and with the signature(s) of such
registered owner(s) guaranteed as required by the then current Prospectus of the
applicable Fund(s). Such redemption orders shall be subject to the following
additional conditions:
(a) You shall furnish us with the exact registration
and account number to be redeemed at the time you
place a redemption order by wire or telephone.
Other than for redemption orders of uncertificated
book shares placed via Fund/SERV, you shall tender
to us, within three business days of your placing
such redemption order: (i) a stock power or
letter, duly signed by the registered owner(s) of
the Shares which are the subject of the order,
duly guaranteed, (ii) any Share certificates
required for such redemption, and (iii) any
additional documents which may be required by the
applicable Fund or its transfer agent, in
accordance with the terms of the then current
Prospectus of the applicable Fund and the policies
of the transfer agent. With respect to redemption
orders of uncertificated book shares placed via
Fund/SERV, you shall retain in your files all
documents required by us to effect such
transaction. You will provide us with the
original of such documents at our request.
<PAGE>
Date:
---------------------
Page 5
(b) The redemption price will be the next net asset value
per share of the Shares computed after our receipt,
prior to the close of the New York Stock Exchange
("NYSE"), of an order placed by you to redeem such
Shares, except that orders placed by you after the
close of the NYSE on a business day will be based
on the Fund's net asset value per share determined
that day, but only if such orders were received by
you from your customer prior to the close of
business of the NYSE that day and if you placed
your redemption order with us prior to our normal
close of business that day.
(c) In connection with a redemption order you have
placed, if you fail to make delivery of all
required certificates and documents in a timely
manner, as stated above (other than for redemption
orders placed via Fund/SERV), or if the registered
owner(s) of the Shares subject to the redemption
order redeems such Shares prior to your settlement
of the order, we have the right to cancel your
redemption order. If any cancellation of a
redemption order or if any error in the timing of
the acceptance of a redemption order placed by you
shall result in a loss to us or the applicable
Fund, you shall promptly reimburse us for such
loss.
11. If any Shares sold to your customers under the terms of
this Agreement are redeemed by any of the Funds (including without limitation
redemptions resulting from an exchange for Shares of another Fund) or are
repurchased by us as agent for the Fund or are tendered to a Fund for redemption
within seven business days after our confirmation to your customers of your
original purchase order for such Shares, you shall promptly repay us the full
amount of the agency commission (including any supplemental commission) allowed
to you on the original sale, provided we notify you of such repurchase or
redemption. Termination amendment or cancellation of this Agreement shall not
relieve you from the requirements of this paragraph.
12. You will comply with, and conform your practices to, any
and all written compliance standards and policies and procedures that we may
from time to time provide to you.
<PAGE>
Date:
------------------
Page 6
13. You understand and agree that we are in no way responsible
for the manner of your performance of, or for any of your acts or omissions in
connection with, the services you provide under this Agreement. In no
transaction shall you have any authority whatsoever to act as agent of a Fund,
of CAF, of us or of any other Selected Dealer, and nothing in this Agreement
shall constitute either of us the agent of the other or shall constitute you, on
the one hand, and CAF or any of the Funds on the other hand, as the agent of the
other. Except as otherwise indicated herein, all transactions in Shares between
you and us are as principal, each for its own account.
14. Any notice to you shall be duly given if mailed or
telegraphed to you at your address as registered from time to time with the
NASD. Any notice to the Company shall be sent to 1100 West Wells Street,
Milwaukee, Wisconsin 53233, Attention: Joseph F. Wreschnig, Director of
Mutual Fund Operations.
15. You may terminate this Agreement by written notice to us,
which termination shall become effective ten days after the date of mailing such
notice to us. You agree that we have and reserve the right, in our sole
discretion without notice to you, to suspend sales of Shares of any of the
Funds, at any time, or to withdraw entirely the offering of Shares of any of the
Funds, at any time, or, in our sole discretion, to modify, amend or cancel this
Agreement upon written notice to you of such modification, amendment or
cancellation, which shall be effective on the date stated in such notice.
Without limiting the foregoing: (a) we may terminate this Agreement if you
violate any of the provisions of this Agreement, said termination to become
effective on the date we mail such notice to you; (b) any provision hereof to
the contrary notwithstanding, the appointment of a trustee for all or
substantially all of your business assets, or your violation of applicable state
or Federal laws or rules and regulations of authorized regulatory agencies will
terminate this Agreement effective upon the date we mail notice to you of such
termination; and (c) this Agreement shall terminate automatically and without
notice upon your expulsion or suspension by the NASD. Our failure to terminate
this Agreement for a particular cause shall not constitute a waiver of our right
to terminate this Agreement at a later date for the same or any other cause. All
notices hereunder shall be to the respective parties at the addresses listed
hereon, unless such address is changed by written notice sent to the last
address of the other party provided under this Agreement.
16. This Agreement shall become effective as of the date when
it is executed and dated by you below and shall be in substitution of any prior
agreement between you and us covering any of the Funds. This Agreement and all
the rights and obligations of the parties hereunder shall be governed by and
construed under the laws of the State of Wisconsin applicable to agreements to
be performed in Wisconsin, without giving effect to choice of law
rules. This Agreement is not assignable or transferable, except that we may
without notice or consent from you, assign or transfer this Agreement to any
successor firm or corporation which becomes the Distributor or Sub-Distributor
of Shares of the Funds or assign any of our duties under this Agreement to any
entity controlled by or controlling the Company or under common control with the
Company.
Sincerely,
<PAGE>
Date:
-------------------------
Page 7
CATHOLIC FINANCIAL SERVICES CORPORATION
Allan G. Lorge, President
Accepted:
(Name of Selected Dealer)
(Address)
By:
-----------------------------------------------
(Authorized Signature of Selected Dealer)
(Name) (Title)
<PAGE>
Exhibit (g)
CUSTODIAN SERVICING AGREEMENT
<PAGE>
CUSTODIAN SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this _____ day of April,
1999, by and between The Catholic Funds, Inc., a Maryland corporation
(hereinafter referred to as the "Fund Company"), and Firstar Bank Milwaukee,
N.A., a national banking association (hereinafter referred to as the
"Custodian").
WHEREAS, the Fund Company is an open-end management investment company
which is registered under the Investment Company Act of 1940, as amended (the
"1940 Act");
WHEREAS, the Fund Company is authorized to create separate series, each
with its own separate investment portfolio; and
WHEREAS, the Fund Company desires that the securities and cash of each
series of the Fund Company listed on EXHIBIT A attached hereto, as may be
amended from time to time (each such series referred to herein individually as a
"Fund" and collectively as the "Funds"), shall be hereafter held and
administered by Custodian pursuant to the terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Fund Company and Custodian agree as follows:
1. Definitions
The word "securities" as used herein includes stocks, shares,
bonds, debentures, notes, mortgages or other obligations, and any certificates,
receipts, warrants or other instruments representing rights to receive, purchase
or subscribe for the same, or evidencing or representing any other rights or
interests therein, or in any property or assets.
The words "officers' certificate" shall mean a request or
direction or certification in writing signed in the name of the Fund Company by
any two of the President, a Vice President, the Secretary and the Treasurer of
the Fund Company, or any other persons duly authorized to sign by the Board.
The word "Board" shall mean Board of Directors of The Catholic
Alliance Funds, Inc.
2. Names, Titles, and Signatures of the Company's Officers
An officer of the Fund Company will certify to Custodian the
names and signatures of those persons authorized to sign the officers'
certificates and the names of the members of the Board, together with any
changes which may occur from time to time.
<PAGE>
3. Receipt and Disbursement of Money
A. Custodian shall open and maintain a separate account
or accounts in the name of each Fund, subject only to
draft or order by Custodian acting pursuant to the
terms of this Agreement. Custodian shall hold in such
account or accounts, subject to the provisions
hereof, all cash received by it from or for the
account of the Fund Company. Custodian shall make
payments of cash to, or for the account of, the Fund
Company from such cash only:
(1) For the purchase of securities for the
portfolio of a Fund upon the delivery of
such securities to Custodian, registered in
the name of the relevant Fund or of the
nominee of Custodian referred to in Section
7 or in proper form for transfer;
(2) For the purchase or redemption of shares of
the common stock of a Fund upon delivery
thereof to Custodian, or upon proper
instructions from the Fund Company;
(3) For the payment of interest, dividends,
taxes, investment adviser's fees or
operating expenses (including, without
limitation thereto, fees for legal,
accounting, auditing and custodian services
and expenses for printing and postage);
(4) For payments in connection with the
conversion, exchange or surrender of
securities owned or subscribed to by a Fund
held by or to be delivered to Custodian; or
(5) For other proper corporate purposes
certified by resolution of the Board.
Before making any such payment, Custodian shall receive (and
may rely upon) an officers' certificate requesting such payment and stating that
it is for a purpose permitted under the terms of items (a), (b), (c), or (d) of
this Subsection A of this Section 3, and also, in respect of item (e), upon
receipt of an officers' certificate specifying the amount of such payment,
setting forth the purpose for which such payment is to be made, declaring such
purpose to be a proper corporate purpose, and naming the person or persons to
whom such payment is to be made, provided, however, that an officers'
certificate need not precede the disbursement of cash for the purpose of
purchasing a money market instrument, or any other security with same or
next-day settlement, if the President, a Vice President, the Secretary or the
Treasurer of the Fund Company issues appropriate oral or facsimile instructions
to Custodian and an appropriate officers' certificate is received by Custodian
within two business days thereafter.
2
<PAGE>
B. Custodian is hereby authorized to endorse and collect
all checks, drafts or other orders for the payment of
money received by Custodian for the account of each
Fund.
C. Custodian shall, upon receipt of proper instructions,
make federal funds available to the Fund Company as
of specified times agreed upon from time to time by
the Fund Company and the Custodian in the amount of
checks received in payment for shares of a Fund which
are deposited into such Fund's account.
D. If so directed by the Fund Company, Custodian will
invest any and all available cash in overnight
cash-equivalent investments as specified by the
investment manager.
4. Segregated Accounts
Upon receipt of proper instructions, the Custodian shall
establish and maintain a segregated account(s) for and on behalf of each Fund,
into which account(s) may be transferred cash and/or securities.
5. Transfer, Exchange, Redelivery, Etc. of Securities
Custodian shall have sole power to release or deliver any
securities of any Fund of the Fund Company held by it pursuant to this
Agreement. Custodian agrees to transfer, exchange or deliver securities held by
it hereunder only:
(A) For sales of such securities for the account of a
Fund upon receipt by Custodian of payment therefore;
(B) When such securities are called, redeemed or retired
or otherwise become payable;
(C) For examination by any broker selling any such
securities in accordance with "street delivery"
custom;
(D) In exchange for, or upon conversion into, other
securities alone or other securities and cash whether
pursuant to any plan of merger, consolidation,
reorganization, recapitalization or readjustment, or
otherwise;
(E) Upon conversion of such securities pursuant to their
terms into other securities;
(F) Upon exercise of subscription, purchase or other
similar rights represented by such securities;
(G) For the purpose of exchanging interim receipts or
temporary securities for definitive securities;
(H) For the purpose of redeeming in kind shares of common
stock of the Fund upon delivery thereof to Custodian;
or
3
<PAGE>
(I) For other proper corporate purposes.
As to any deliveries made by Custodian pursuant to items (a),
(b), (d), (e), (f), and (g), securities or cash receivable in exchange therefor
shall be deliverable to Custodian.
Before making any such transfer, exchange or delivery,
Custodian shall receive (and may rely upon) an officers' certificate requesting
such transfer, exchange or delivery, and stating that it is for a purpose
permitted under the terms of items (a), (b), (c), (d), (e), (f), (g), or (h) of
this Section 5 and also, in respect of item (i), upon receipt of an officers'
certificate specifying the securities to be delivered, setting forth the purpose
for which such delivery is to be made, declaring such purpose to be a proper
corporate purpose, and naming the person or persons to whom delivery of such
securities shall be made, provided, however, that an officers' certificate need
not precede any such transfer, exchange or delivery of a money market
instrument, or any other security with same or next-day settlement, if the
President, a Vice President, the Secretary or the Treasurer of the Fund Company
issues appropriate oral or facsimile instructions to Custodian and an
appropriate officers' certificate is received by Custodian within two business
days thereafter.
6. Custodian's Acts Without Instructions
Unless and until Custodian receives an officers' certificate
to the contrary, Custodian shall: (a) present for payment all coupons and other
income items held by it for the account of each Fund, which call for payment
upon presentation and hold the cash received by it upon such payment for the
account of such Fund; (b) collect interest and cash dividends received, with
notice to the Fund Company, for the account of a Fund; (c) hold for the account
of each Fund hereunder all stock dividends, rights and similar securities issued
with respect to any securities held by it hereunder for the account of such
Fund; and (d) execute, as agent on behalf of the Fund Company, all necessary
ownership certificates required by the Internal Revenue Code of 1986, as amended
(the "Code") or the Income Tax Regulations (the "Regulations") of the United
States Treasury Department (the "Treasury Department") or under the laws of any
state now or hereafter in effect, inserting the name of the appropriate Fund on
such certificates as the owner of the securities covered thereby, to the extent
it may lawfully do so.
4
<PAGE>
7. Registration of Securities
Except as otherwise directed by an officers' certificate,
Custodian shall register all securities, except such as are in bearer form, in
the name of a registered nominee of Custodian as defined in the Internal Revenue
Code and any Regulations of the Treasury Department issued thereunder or in any
provision of any subsequent federal tax law exempting such transaction from
liability for stock transfer taxes, and shall execute and deliver all such
certificates in connection therewith as may be required by such laws or
regulations or under the laws of any state. All securities held by Custodian
hereunder shall be at all times identifiable in its records held in an account
or accounts of Custodian containing only the assets of the particular Fund.
The Fund Company shall from time to time furnish to Custodian
appropriate instruments to enable Custodian to hold or deliver in proper form
for transfer, or to register in the name of its registered nominee, any
securities which it may hold for the account of any Fund and which may from time
to time be registered in the name of such Fund or the Fund Company.
8. Voting and Other Action
Neither Custodian nor any nominee of Custodian shall vote any
of the securities held hereunder by or for the account of any Fund, except in
accordance with the instructions contained in an officers' certificate.
Custodian shall deliver, or cause to be executed and delivered, to the Fund
Company all notices, proxies and proxy soliciting materials with respect to such
securities, such proxies to be executed by the registered holder of such
securities (if registered otherwise than in the name of any Fund or the Fund
Company), but without indicating the manner in which such proxies are to be
voted.
9. Transfer Tax and Other Disbursements
The Fund Company shall pay or reimburse Custodian from time to
time for any transfer taxes payable upon transfers of securities made hereunder,
and for all other necessary and proper disbursements and expenses made or
incurred by Custodian in the performance of this Agreement.
Custodian shall execute and deliver such certificates in
connection with securities delivered to it or by it under this Agreement as may
be required under the provisions of the Internal Revenue Code and any
Regulations of the Treasury Department issued thereunder, or under the laws of
any state, to exempt from taxation any exempt transfers and/or deliveries of any
such securities.
5
<PAGE>
10. Concerning Custodian
Custodian shall be paid as compensation for its services
pursuant to this Agreement such compensation as may from time to time be agreed
upon in writing between the two parties. Until modified in writing, such
compensation shall be as set forth in EXHIBIT A attached hereto. Notwithstanding
anything to the contrary, amounts owed by the Fund Company to the Custodian
shall only be paid out of the assets and property of the particular Fund
involved.
Custodian shall not be liable for any action taken in good
faith and without negligence and willful misconduct upon any certificate herein
described or certified copy of any resolution of the Board, and may rely on the
genuineness of any such document which it may in good faith believe to have been
validly executed.
The Fund Company agrees to indemnify and hold harmless
Custodian and its nominee from all taxes, charges, expenses, assessments, claims
and liabilities (including reasonable counsel fees) incurred or assessed against
it or by its nominee in connection with the performance of this Agreement,
except such as may arise from a breach by Custodian of any representation or
warranty made under this Agreement or from its or its nominee's own bad faith,
negligent action, negligent failure to act or willful misconduct. In the event
of any advance of cash for any purpose made by Custodian for the benefit of any
Fund resulting from orders or instructions of the Fund Company, any property at
any time held for the account of such Fund shall be security therefor.
Custodian agrees to indemnify and hold harmless the Fund
Company from all charges, expenses, assessments, and claims/liabilities
(including reasonable counsel fees) incurred or assessed against it in
connection with the performance of this Agreement, except such as may arise from
the Fund Company's or any Fund's own bad faith, negligent action, negligent
failure to act, or willful misconduct.
Custodian agrees that obligations assumed by the Fund Company
pursuant to this Agreement shall be limited in all cases to the respective
assets of the Fund with respect to which such obligation relates. Custodian
further agrees that it shall not seek satisfaction of any such obligation from
the shareholder or any individual shareholder of any Fund or any other series of
the Fund Company, nor from the Directors or any individual Director of the Fund
Company.
11. Subcustodians
Custodian is hereby authorized to engage another bank or trust
company as a subcustodian for all or any part of the Company's assets, so long
as any such bank or trust company is itself qualified under the 1940 Act and the
rules and regulations thereunder and provided further that, if the Custodian
utilizes the services of a subcustodian, the Custodian shall remain fully liable
and responsible for any losses caused to the Fund Company by the subcustodian as
fully as if the Custodian was directly responsible for any such losses under the
terms of this Agreement.
6
<PAGE>
Notwithstanding anything contained herein, if the Fund Company
requires the Custodian to engage specific subcustodians for the safekeeping
and/or clearing of assets, the Fund Company agrees to indemnify and hold
harmless Custodian from all claims, expenses and liabilities incurred or
assessed against it in connection with the use of such subcustodian in regard to
the Fund Company's assets, except as may arise from Custodian's own bad faith,
negligent action, negligent failure to act or willful misconduct.
12. Reports by Custodian
Custodian shall furnish the Fund Company periodically as
agreed upon with a statement summarizing all transactions and entries for the
account of Fund Company. On a daily basis, Custodian shall provide to each
Fund's investment adviser and, if any, sub-adviser with the Fund's beginning
cash balance available for investment purposes. Custodian shall furnish to the
Fund Company, at the end of every month, a list of the portfolio securities for
the Fund showing the aggregate cost of each issue. The books and records of
Custodian pertaining to its actions under this Agreement shall be open to
inspection and audit at reasonable times by officers of, and by auditors
employed by, the Fund Company.
13. Termination or Assignment
This Agreement may be terminated by the Fund Company either in
its entirety or with respect to any particular Fund(s), or by Custodian, on
ninety (90) days notice, given in writing and sent by registered mail to:
Firstar Mutual Fund Services, LLC
615 East Michigan Street
Milwaukee, Wisconsin 53202
Attention: Relationship Manager
or to the Fund Company at:
The Catholic Funds, Inc.
1100 West Wells Street
Milwaukee, Wisconsin 53233
Attention: President
as the case may be. Upon any termination of this Agreement, pending appointment
of a successor to Custodian or a vote of the shareholders of the relevant
Fund(s) to dissolve or to function without a custodian of its cash, securities
and other property, Custodian shall not deliver cash, securities or other
property of such Fund to the Fund Company, but may deliver them to a bank or
trust company of its own selection that meets the requirements of the 1940 Act
as a Custodian for the Fund Company to be held under terms similar to those of
this Agreement, provided, however, that custodian shall not be required to make
any such delivery or payment until full payment shall have been made by the Fund
Company of all liabilities constituting a charge on or against the properties
then held by Custodian or on or against Custodian for the account of or with
respect to the
7
<PAGE>
relevant Fund(s), and until full payment shall have been made to Custodian of
all its fees, compensation, costs and expenses relating to such Fund(s),
subject to the provisions of Section 10 of this Agreement.
This Agreement may not be assigned by Custodian without the
consent of the Fund Company, authorized or approved by a resolution of the
Board.
14. Deposits of Securities in Securities Depositories
No provision of this Agreement shall be deemed to prevent the
use by Custodian of a central securities clearing agency or securities
depository, provided, however, that Custodian and the central securities
clearing agency or securities depository meet all applicable federal and state
laws and regulations, and the Board approves by resolution the use of such
central securities clearing agency or securities depository.
15. Records
Custodian shall keep records relating to its services to be
performed hereunder, in the form and manner, and for such period, as it may deem
advisable and is agreeable to the Fund Company but not inconsistent with the
rules and regulations of appropriate government authorities, in particular
Section 31 of the 1940 Act and the rules thereunder. Custodian agrees that all
such records prepared or maintained by the Custodian relating to the services
performed by Custodian hereunder are the property of the Fund Company and will
be preserved, maintained, and made available in accordance with such section and
rules of the 1940 Act and will be promptly surrendered to the Fund Company on
and in accordance with its request.
16. Governing Law
This Agreement shall be governed by Wisconsin law. However,
nothing herein shall be construed in a manner inconsistent with the 1940 Act or
any rule or regulation promulgated by the Securities and Exchange Commission
thereunder.
17. Proprietary and Confidential Information
The Custodian agrees on behalf of itself and its directors,
officers, and employees to treat confidentially and as proprietary information
of the Fund Company all records and other information relative to the Fund
Company and prior, present, or potential shareholders of the Fund Company (and
clients of said shareholders), and not to use such records and information for
any purpose other than the performance of its responsibilities and duties
hereunder, except after prior notification to and approval in writing by the
Fund Company, which approval shall not be unreasonably withheld and may not be
withheld where the Custodian may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such information by
duly constituted authorities, or when so requested by the Fund Company.
18. No Agency Relationship
8
<PAGE>
Nothing herein contained shall be deemed to authorize or
empower Custodian to act as agent for the other party to this Agreement, or to
conduct business in the name of, or for the account of the other party to this
Agreement.
19. Year 2000 Compliance
The Custodian represents to the Fund Company that the computer
software, computer firmware, computer hardware (whether general or special
purpose) and other similar related items of automated, computerized and/or
software systems that are owned or licensed by the Custodian and will be
utilized by the Custodian or its agents in connection with the provision of
services described in this Agreement are "Year 2000 Compliant" (as defined
below). As used in this Section 19 of this Agreement, the term "Year 2000
Compliant" shall mean the ability of the relevant system to provide all of the
following functions:
A. Process date information before, during and after
January1, 2000, including but not limited to
accepting date specific input data, providing date
specific output data, and performing calculations on
dates or portions of dates;
B. Function accurately and without interruption or
malfunction before, during and after January 1, 2000,
without any change in operations associated with the
advent of the new millennium and assuming no other
defects, bugs, viruses or other problems unrelated to
Year 2000 compliance issues which disrupt
functionality;
C. Respond to two-digit, year-date input in a way that
resolves the ambiguity as to century and in a
disclosed, defined and predetermined manner; and
D. Store and provide output data of date specific
information in ways that are unambiguous as to
century.
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer or one or more counterparts as of the day
and year first written above.
THE CATHOLIC FUNDS, INC. FIRSTAR BANK MILWAUKEE, N.A.
By: By:
------------------------------- -------------------------
Title: Title:
---------------------------- ----------------------
10
<PAGE>
EXHIBIT A
CUSTODY SERVICES
ANNUAL FEE SCHEDULE - DOMESTIC FUNDS
Separate Series of The Catholic Funds, Inc.
NAME OF FUND DATE ADDED
Equity Income Fund ____________, 1999
Large-Cap Growth Fund ____________, 1999
Disciplined Capital Appreciation Fund ____________, 1999
Annual fee based upon average daily net asset:
2 basis points per year;
Minimum annual fee per fund - $3,000
Investment transactions (purchase, sale, exchange, tender, redemption, maturity,
receipt, delivery):
$12.00 per book entry security (depository or Federal Reserve system)
$25.00 per definitive security (physical)
$25.00 per mutual fund trade
$75.00 per Euroclear
$ 8.00 per principal reduction on pass-through certificates
$35.00 per option/futures contract
$15.00 per variation margin $15.00 per Fed wire deposit or withdrawal
Variable Amount Demand Notes: Used as a short-term investment, variable amount
notes offer safety and prevailing high interest rates. Our charge, which is 0.25
of 1%, is deducted from the variable amount note income at the time it is
credited to your account.
Plus reasonable and customary out-of-pocket expenses reported in detail, and
extraordinary expenses approved in advance in writing based upon complexity.
Fees and out-of-pocket expenses are billed to the fund monthly, based upon
market value at the beginning of the month.
A-1
<PAGE>
Exhibit (h)(1)
TRANSFER AGENT SERVICING AGREEMENT
<PAGE>
TRANSFER AGENT SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this _____ day of
April, 1999, by and between The Catholic Funds, a Maryland Corporation
(hereinafter referred to as the "Fund Company") and Firstar Mutual Fund
Services, LLC, a limited liability company organized under the laws of the
State of Wisconsin (hereinafter referred to as "FMFS").
WHEREAS, the Fund Company is an open-end management investment
company which is registered under the Investment Company Act of 1940, as
amended (the "1940 Act");
WHEREAS, the Fund Company is authorized to create separate series,
each with its own separate investment portfolio;
WHEREAS, FMFS is a trust company and, among other things, is in the
business of administering transfer and dividend disbursing agent functions
for the benefit of its customers; and
WHEREAS, the Fund Company desires to retain FMFS to provide transfer
and dividend disbursing agent services to each series of the Fund Company
listed on EXHIBIT A attached hereto, as may be amended from time to time
(each such series referred to herein as a "Fund" and collectively as the
"Funds").
NOW, THEREFORE, in consideration of the mutual agreements herein
made, the Fund Company and FMFS agree as follows:
1. Appointment of Transfer Agent
The Fund Company hereby appoints FMFS as transfer agent of
each Fund on the terms and conditions set forth in this Agreement, and FMFS
hereby accepts such appointment and agrees to perform the services and duties
set forth in this Agreement in consideration of the compensation provided for
herein
2. Duties and Responsibilities of FMFS
FMFS shall, on behalf of each Fund, perform all of the
customary services of a transfer agent and dividend disbursing agent, and as
relevant, agent in connection with accumulation, open account or similar
plans (including without limitation any periodic investment plan or periodic
withdrawal program), including but not limited to:
A. Receive orders for the purchase of shares;
<PAGE>
B. Process purchase orders with prompt delivery, where
appropriate, of payment and supporting documentation
to the Fund Company's custodian, and issue the
appropriate number of uncertificated shares with such
uncertificated shares being held in the appropriate
shareholder account;
C. Arrange for issuance of shares obtained through
transfers of funds from Shareholders' accounts at
financial institutions and arrange for the exchange
of shares for shares of other eligible investment
companies, when permitted by the Prospectus for the
relevant Fund(s).
D. Process redemption requests received in good order
and, where relevant, deliver appropriate
documentation to the Fund Company's custodian;
E. Pay monies upon receipt from the Fund Company's
custodian, where relevant, in accordance with the
instructions of redeeming shareholders;
F. Process transfers of shares in accordance with the
shareholder's instructions;
G. Process exchanges between Funds and/or, if any,
classes of shares of Funds, and process exchanges of
shares between the Funds and the Firstar Money Market
Fund, if applicable;
H. Prepare and transmit payments for dividends and
distributions declared by the Fund Company with
respect to a Fund, after deducting any amount
required to be withheld by any applicable laws, rules
and regulations and in accordance with shareholder
instructions;
I. Make changes to shareholder records, including, but not
limited to, address changes in plans (i.e., systematic
withdrawal, automatic investment, dividend reinvestment,
etc.);
J. Record the issuance of shares of each Fund and
maintain, pursuant to Rule 17Ad-10(e) promulgated
under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), a record of the total number of
shares of each Fund which are authorized, issued and
outstanding;
K. Prepare shareholder meeting lists and, if applicable,
mail, receive and tabulate proxies;
L. Mail shareholder reports and prospectuses to current
shareholders;
M. Prepare and file U.S. Treasury Department Forms 1099
and other appropriate information returns required
with respect to dividends and distributions for all
shareholders;
2
<PAGE>
N. Provide shareholder account information upon request
and prepare and mail confirmations and statements of
account to shareholders for all purchases,
redemptions and other confirmable transactions as
agreed upon with the Fund Company;
O. Mail requests for shareholders' certifications under
penalties of perjury and pay on a timely basis to the
appropriate Federal authorities any taxes to be
withheld on dividends and distributions paid by each
Fund, all as required by applicable Federal tax laws
and regulations;
P. Provide a Blue Sky System which will enable the Fund
Company to monitor the total number of shares of each
Fund sold in each state. In addition, the Fund
Company or its agent, including FMFS, shall identify
to FMFS in writing those transactions and assets to
be treated as exempt from the Blue Sky reporting for
each state. The responsibility of FMFS for the Fund
Company's Blue Sky state registration status is
solely limited to the initial compliance by the Fund
Company and the reporting of such transactions to the
Fund Company or its agent;
Q. Answer correspondence from shareholders, securities
brokers and others relating to FMFS's duties
hereunder and such other correspondence as may from
time to time be mutually agreed upon between FMFS and
the Fund Company.
R. Provide reports mutually agreeable in form and
frequency to the Fund Company's Distributor
calculating and detailing sales commissions payable
with respect to shares of the Funds sold for the
relevant period.
3. Compensation
The Fund Company agrees to pay FMFS for the performance of the
duties listed in this Agreement as set forth on EXHIBIT A attached hereto.
These fees and reimbursable expenses may be changed from time
to time subject to mutual written agreement between the Fund Company and FMFS.
The Fund Company agrees to pay all fees and reimbursable
expenses within ten (10) business days following the receipt of the billing
notice.
Notwithstanding anything to the contrary, amounts owed by the
Fund Company to FMFS shall only be paid out of assets and property of the
particular Fund involved.
4. Representations of FMFS
FMFS represents and warrants to the Fund Company that:
3
<PAGE>
A. It is a limited liability company duly organized, existing
and in good standing under the laws of Wisconsin;
B. It is a registered transfer agent under the Exchange Act;
C. It is duly qualified to carry on its business in the State
of Wisconsin;
D. It is empowered under applicable laws and by its
charter and bylaws to enter into and perform this
Agreement;
E. All requisite corporate proceedings have been taken
to authorize it to enter and perform this Agreement;
F. It has and will continue to have access to the
necessary facilities, equipment and personnel to
perform its duties and obligations under this
Agreement; and
G. It will comply with all applicable requirements of
the Securities Act of 1933, as amended, and the
Exchange Act, the 1940 Act, and any laws, rules, and
regulations of governmental authorities having
jurisdiction over it and its duties and activities
contemplated by this Agreement.
H. The computer software, computer firmware, computer
hardware (whether general or special purpose) and
other similar related items of automated,
computerized and/or software systems that are owned
or licensed by FMFS and will be utilized by FMFS or
its agents in connection with the provision of
services described in this Agreement are "Year 2000
Compliant" (as defined below). As used in this
Section 4.H of this Agreement, the term "Year 2000
Compliant" shall mean the ability of the relevant
system to provide all of the following functions:
(1) Process date information before, during and
after January1, 2000, including but not
limited to accepting date specific input
data, providing date specific output data,
and performing calculations on dates or
portions of dates;
(2) Function accurately and without interruption
or malfunction before, during and after
January 1, 2000, without any change in
operations associated with the advent of the
new millennium and assuming no other
defects, bugs, viruses or other problems
unrelated to Year 2000 compliance issues
which disrupt functionality;
(3) Respond to two-digit, year-date input in a
way that resolves the ambiguity as to
century and in a disclosed, defined and
predetermined manner; and
4
<PAGE>
(4) Store and provide output data of date
specific information in ways that are
unambiguous as to century.
5. Representations of the Fund Company
The Fund Company represents and warrants to FMFS that:
A. The Fund Company is an open-end, diversified,
management investment company under the 1940 Act;
B. The Fund Company is a corporation, organized, existing,
and in good standing under the laws of Maryland;
C. The Fund Company is empowered under applicable laws
and by its Articles of Incorporation and Bylaws to
enter into and perform this Agreement;
D. All necessary proceedings required by the Articles of
Incorporation have been taken to authorize it to
enter into and perform this Agreement;
E. The Fund Company will comply with all applicable
requirements of the Securities Act, the Exchange Act,
the 1940 Act, and any laws, rules and regulations of
governmental authorities having jurisdiction over the
Fund Company and its activities; and
F. A registration statement under the Securities Act
will be made effective and will remain effective with
respect to all shares of each Fund being offered for
sale.
5
<PAGE>
6. Covenants of the Fund Company and FMFS
The Fund Company shall furnish FMFS a certified copy of the
resolution of the Board of Directors of the Fund authorizing the appointment
of FMFS and the execution of this Agreement. The Fund Company shall provide
to FMFS a copy of its Articles of Incorporation and Bylaws, and all
amendments thereto.
FMFS shall keep records relating to the services to be
performed hereunder, in the form and manner as it may deem advisable. To the
extent required by Section 31 of the 1940 Act, and the rules thereunder, FMFS
agrees that all such records prepared or maintained by FMFS relating to the
services to be performed by FMFS hereunder are the property of the Fund
Company and will be preserved, maintained and made available in accordance
with such section and rules and will be surrendered to the Fund Company on
and in accordance with its request.
7. Performance of Service; Limitation of Liability
FMFS shall exercise reasonable care in the performance of
its duties under this Agreement. FMFS shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund Company or
any Fund in connection with matters to which this Agreement relates,
including losses resulting from mechanical breakdowns or the failure of
communication or power supplies beyond FMFS's control, except a loss arising
out of or relating to a breach of any representation or warranty made by FMFS
under this Agreement or FMFS's refusal or failure to comply with the terms of
this Agreement or from bad faith, negligence, or willful misconduct on its
part in the performance of its duties under this Agreement. Notwithstanding
any other provision of this Agreement, if FMFS has exercised reasonable care
in the performance of its duties under this Agreement, the Fund Company shall
indemnify and hold harmless FMFS from and against any and all claims,
demands, losses, expenses, and liabilities (whether with or without basis in
fact or law) of any and every nature (including reasonable attorneys' fees)
which FMFS may sustain or incur or which may be asserted against FMFS by any
person arising out of any action taken or omitted to be taken by it in
performing the services hereunder, except for any and all claims, demands,
losses, expenses, and liabilities arising out of or relating to a breach of
any representation or warranty made by FMFS under this Agreement or FMFS's
refusal or failure to comply with the terms of this Agreement or from bad
faith, negligence or from willful misconduct on its part in performance of
its duties under this Agreement, (i) in accordance with the foregoing
standards, or (ii) in reliance upon any written or oral instruction provided
to FMFS by any duly authorized officer of the Fund Company, such duly
authorized officer to be included in a list of authorized officers furnished
to FMFS and as amended from time to time in writing by resolution of the
Board of Directors of the Fund Company.
6
<PAGE>
FMFS shall indemnify and hold the Fund Company harmless from
and against any and all claims, demands, losses, expenses, and liabilities
(whether with or without basis in fact or law) of any and every nature
(including reasonable attorneys' fees) which the Fund Company may sustain or
incur or which may be asserted against the Fund Company by any person arising
out of a breach of any representation or warranty made by FMFS under this
Agreement or any action taken or omitted to be taken by FMFS as a result of
FMFS's refusal or failure to comply with the terms of this Agreement, its bad
faith, negligence, or willful misconduct.
In the event of a mechanical breakdown or failure of
communication or power supplies beyond its control, FMFS shall take all
reasonable steps to minimize service interruptions for any period that such
interruption continues beyond FMFS's control. FMFS will make every reasonable
effort to restore any lost or damaged data and correct any errors resulting
from such a breakdown at the expense of FMFS. FMFS agrees that it shall, at
all times, have reasonable contingency plans with appropriate parties, making
reasonable provision for emergency use of electrical data processing
equipment to the extent appropriate equipment is available. Representatives
of the Fund Company shall be entitled to inspect FMFS's premises and
operating capabilities at any time during regular business hours of FMFS,
upon reasonable notice to FMFS.
Regardless of the above, FMFS reserves the right to reprocess
and correct administrative errors at its own expense.
In order that the indemnification provisions contained in this
section shall apply, it is understood that if in any case the indemnitor may
be asked to indemnify or hold the indemnitee harmless, the indemnitor shall
be fully and promptly advised of all pertinent facts concerning the situation
in question, and it is further understood that the indemnitee will use all
reasonable care to notify the indemnitor promptly concerning any situation
which presents or appears likely to present the probability of a claim for
indemnification. The indemnitor shall have the option to defend the
indemnitee against any claim which may be the subject of this
indemnification. In the event that the indemnitor so elects, it will so
notify the indemnitee and thereupon the indemnitor shall take over complete
defense of the claim, and the indemnitee shall in such situation initiate no
further legal or other expenses for which it shall seek indemnification under
this section. The indemnitee shall in no case confess any claim or make any
compromise in any case in which the indemnitor will be asked to indemnify the
indemnitee except with the indemnitor's prior written consent.
FMFS agrees that obligations assumed by the Fund Company
pursuant to this Agreement shall be limited in all cases to the respective
assets and properties of the particular Fund(s) to which the liability
relates. FMFS further agrees that it shall not seek satisfaction of any such
obligation from the shareholder or any individual shareholder of any Fund or
of any other series of the Fund Company, nor from the Directors or any
individual Director of the Fund Company.
8. Proprietary and Confidential Information
FMFS agrees on behalf of itself and its directors, officers,
and employees to treat confidentially and as proprietary information of the Fund
Company all records and other information relative to the Fund Company and
prior, present, or potential shareholders (and clients of said shareholders) and
not to use such records and information for any purpose other than the
performance of its responsibilities and duties hereunder,
7
<PAGE>
except after prior notification to and approval in writing by the Fund
Company, which approval shall not be unreasonably withheld and may not be
withheld where FMFS may be exposed to civil or criminal contempt proceedings
for failure to comply after being requested to divulge such information by
duly constituted authorities, or when so requested by the Fund Company.
9. Term of Agreement
This Agreement shall become effective as of the date hereof
and, unless sooner terminated as provided herein, shall continue
automatically in effect for successive annual periods. The Agreement may be
terminated by either party (in the case of Fund Company, either in its
entirety or with respect to any particular Fund(s)) upon giving ninety (90)
days prior written notice to the other party or such shorter period as is
mutually agreed upon by the parties. However, this Agreement may be amended
by mutual written consent of the parties.
10. Notices
Notices of any kind to be given by either party to the other
party shall be in writing and shall be duly given if mailed or delivered as
follows: Notice to FMFS shall be sent to:
Firstar Mutual Fund Services, LLC
615 East Michigan Street
Milwaukee, Wisconsin 53202
Attention: Relationship Manager
and notice to the Fund Company shall be sent to:
The Catholic Funds, Inc.
1100 West Wells Street
Milwaukee, Wisconsin 53233
Attention: President
8
<PAGE>
11. Duties in the Event of Termination
In the event that, in connection with termination, a successor
to any of FMFS's duties or responsibilities hereunder is designated by the
Fund Company by written notice to FMFS, FMFS will promptly, upon such
termination and at the expense of the Fund Company, transfer to such
successor all relevant books, records, correspondence, and other data
established or maintained by FMFS under this Agreement in a form reasonably
acceptable to the Fund Company (if such form differs from the form in which
FMFS has maintained, the Fund Company shall pay any expenses associated with
transferring the data to such form), and will cooperate in the transfer of
such duties and responsibilities, including provision for assistance from
FMFS=s personnel in the establishment of books, records, and other data by
such successor.
12. Governing Law
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of Wisconsin.
However, nothing herein shall be construed in a manner inconsistent with the
1940 Act or any rule or regulation promulgated by the Securities and Exchange
Commission thereunder.
13. Stock Certificates
If at any time the Fund Company issues stock certificates for
any Fund, the following provisions will apply:
A. In the case of the loss or destruction of any
certificate representing shares, no new certificate
shall be issued in lieu thereof, unless there shall
first have been furnished an appropriate bond of
indemnity issued by the surety company approved by
FMFS.
B. Upon receipt of signed stock certificates, which
shall be in proper form for transfer, and upon
cancellation or destruction thereof, FMFS shall
countersign, register and issue new certificates for
the same number of shares and shall deliver them
pursuant to instructions received from the
transferor, the rules and regulations of the SEC, and
the laws of the State of Maryland relating to the
transfer of shares of common stock.
C. Upon receipt of the stock certificates, which shall
be in proper form for transfer, together with the
shareholder's instructions to hold such stock
certificates for safekeeping, FMFS shall reduce such
shares to uncertificated status, while retaining the
appropriate registration in the name of the
shareholder upon the transfer books of the relevant
Fund.
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by a duly authorized officer or one or more counterparts as of
the day and year first written above.
- ------------------------------------------------------------------------------
THE CATHOLIC FUNDS, INC. FIRSTAR MUTUAL FUND SERVICES, LLC
By: By:
------------------------------ --------------------------------
Title: Title:
--------------------------- -----------------------------
- ------------------------------------------------------------------------------
10
<PAGE>
EXHIBIT A
---------
TRANSFER AGENT AND SHAREHOLDER SERVICING
ANNUAL FEE SCHEDULE
Separate Funds of The Catholic Funds, Inc.
<TABLE>
<CAPTION>
<S> <C>
Name of Series Date Added
-------------- ----------
------------------------------------------------------------------------
Equity Income Fund ____________, 1999
------------------------------------------------------------------------
Large-Cap Growth Fund ____________, 1999
------------------------------------------------------------------------
Disciplined Capital Appreciation Fund ____________, 1999
------------------------------------------------------------------------
</TABLE>
Annual Fee
$16.00 per shareholder account
Minimum annual fees of $25,000 for the first Fund, $10,000 for
each additional Fund or class of shares within a Fund
Plus Reasonable and Customary Out-of-Pocket Expenses, including but not
limited to:
<TABLE>
<CAPTION>
<S> <C>
Telephone - toll-free lines NSCC charges
Postage Labels
Printing Proxies
Programming (with prior approval) Retention of records (with prior approval)
Forms Shareholder Lists
Stationery/envelopes Microfilm/fiche of records
Mailing Special Reports (with prior approval)
Mailing Related Insurance ACH fees
Insertion Services
</TABLE>
ACH Shareholder Services
$125.00 per month per fund group
$ .50 per account setup and/or change
$ .35 per item for both ACH and EFT payments and purchases
$ 5.00 per correction, reversal, return item
$160.00 per month for all Funds for file transfer/transmission (blue
sky, files from FMF's to Fund Company or its designee), plus $0.01 per
record transmission
A-1
<PAGE>
<TABLE>
<CAPTION>
Qualified Plan Fees (Billed Directly to Investors)
<S> <C>
Annual maintenance fee per account $12.50 / acct. (Cap at $25.00 per
SSN) Transfer to successor trustee $15.00 / trans. Distribution to
participant $15.00 / trans. (Exclusive of SWP)
Refund of excess contribution $15.00 / trans.
Additional Shareholder Fees (Billed Directly to Investors)
Any outgoing wire transfer $12.00 / wire
Telephone Exchange $ 5.00 / exchange transaction
Return check fee $25.00 / item
Stop payment $20.00 / stop
(Liquidation, dividend, draft check)
Research fee $ 5.00 / item
</TABLE>
(For requested items of the second calendar year [or previous] to the
request) (Cap at $25.00)
A-2
<PAGE>
NSCC and DAZL
Out-of-Pocket Charges
<TABLE>
<CAPTION>
NSCC Interfaces
<S> <C>
Setup
Fund/SERV, Networking ACATS, $5,000 setup (one time)
Exchanges
Commissions $5,000 setup (one time)
Processing
Fund/SERV $ 50 / month
Networking $ 250 / month
CPU Access $ 40 / month
Fund/SERV Transactions $ .35 / trade
Networking - per item $ .025/ monthly dividend fund
Networking - per item $ .015/non-mo. dividend fund
First Data $ .10 / next-day Fund/SERV trade
First Data $ .15 / same-day Fund/SERV trade
NSCC Implementation
8 to 10 weeks lead time
DAZL (Direct Access Zip Link - Electronic mail interface to financial advisor network)
Setup $ 5,000 / fund group
Monthly Usage $ 1,000 / month
Transmission $ .015 / price record
$ .025 / other record
Enhancement $ 125 / hour
</TABLE>
Fees and out-of-pocket expenses are billed in detail to the fund monthly
<PAGE>
Exhibit (h)(2)
FUND ACCOUNTING SERVICING AGREEMENT
<PAGE>
FUND ACCOUNTING SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this ____ day of April,
1999, by and between The Catholic Funds, Inc., a Maryland Corporation
(hereinafter referred to as the "Fund Company") and Firstar Mutual Fund
Services, LLC, a limited liability company organized under the laws of the State
of Wisconsin (hereinafter referred to as "FMFS").
WHEREAS, the Fund Company is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act");
WHEREAS, the Fund Company is authorized to create separate series, each
with its own separate investment portfolio;
WHEREAS, FMFS is in the business of providing, among other things,
mutual fund accounting services to investment companies; and
WHEREAS, the Fund Company desires to retain FMFS to provide accounting
services to each series of the Fund Company listed on EXHIBIT A attached hereto,
as it may be amended from time to time each such series (referred to herein
individually as a "Fund" and collectively as the "Fund").
NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Fund Company (on behalf of the Funds) and FMFS agree as follows:
1. Appointment of Fund Accountant
The Fund Company hereby appoints FMFS as fund accountant for
each of the Funds on the terms and conditions set forth in this Agreement, and
FMFS hereby accepts such appointment and agrees to perform the services and
duties set forth in this Agreement in consideration of the compensation provided
for herein.
2. Duties and Responsibilities of FMFS
FMFS shall provide the following services for each of the
Funds;
A. Portfolio Accounting Services:
(1) Maintain portfolio records on a trade date+1
basis using security trade information
communicated from the investment manager.
<PAGE>
(2) For each valuation date, obtain prices
from a pricing source approved by the
Board of Directors of the Fund Company
and apply those prices to the portfolio
positions. For those securities where
market quotations are not readily
available, the Board of Directors of the
Fund Company shall approve, in good
faith, the method for determining the
fair value for such securities.
(3) Identify interest and dividend accrual
balances as of each valuation date and
calculate gross earnings on investments for
the accounting period.
(4) Determine gain/loss on security sales and
identify them as, short-term or long-term;
account for periodic distributions of gains
or losses to shareholders and maintain
undistributed gain or loss balances as of
each valuation date.
B. Expense Accrual and Payment Services:
(1) For each valuation date, calculate the
expense accrual amounts as directed by the
Fund Company as to methodology, rate or
dollar amount.
(2) Record payments for expenses of each Fund
upon receipt of written authorization from
the Fund Company.
(3) Account for expenditures of each Fund and
maintain expense accrual balances at the
level of accounting detail, as agreed upon
by FMFS and the Fund Company.
(4) Provide expense accrual and payment reporting.
C. Fund Valuation and Financial Reporting Services:
(1) Account for Fund share purchases, sales,
exchanges, transfers, dividend
reinvestments, and other Fund share activity
as reported by the transfer agent on a
timely basis.
(2) Apply equalization accounting as directed
by the Fund Company.
(3) Determine net investment income (earnings)
for each Fund as of each valuation date.
Account for periodic distributions of
earnings to shareholders and maintain
undistributed net investment income
balances as of each valuation date.
(4) Maintain a general ledger and other
accounts, books, and financial records for
each Fund in the form as agreed upon.
2
<PAGE>
(5) Determine the net asset value of each Fund
according to the accounting policies and
procedures set forth in such Fund's
Prospectus.
(6) Calculate per share net asset value, per
share net earnings, and other per share
amounts reflective of Fund operations at
such time as required by the nature and
characteristics of the relevant Fund.
(7) Communicate, at an agreed upon time, the per
share price for each valuation date to
parties as agreed upon from time to time.
(8) Prepare monthly reports which document the
adequacy of accounting detail to support
month-end ledger balances.
D. Tax Accounting Services:
(1) Maintain accounting records for the
investment portfolio of each Fund to support
the tax reporting required for IRS-defined
regulated investment companies.
(2) Maintain tax lot detail for the
investment portfolio.
(3) Calculate taxable gain/loss on security
sales using the tax lot relief method
designated by the Fund Company.
(4) Provide the necessary financial information
to support the taxable components of income
and capital gains distributions to the
transfer agent to support tax reporting to
the shareholders.
E. Compliance Control Services:
(1) Support reporting to regulatory bodies and
support financial statement preparation by
making each Fund's accounting records
available to the Fund Company, the
Securities and Exchange Commission, and the
outside auditors.
(2) Maintain accounting records according to the
1940 Act and regulations provided
thereunder.
F. FMFS will perform the following accounting functions on
a daily basis:
(1) Reconcile cash and investment balances of
each Fund with the Fund's custodian;
3
<PAGE>
(2) Update the cash availability throughout the
day as required by each Fund's investment
adviser and, if any, the Fund's
sub-adviser(s);
(3) Transmit or mail a copy of the portfolio
valuation to the Fund's investment adviser
and, if any, the Fund's sub-adviser(s);
(4) Review the impact of current day's activity
on a per share basis, review changes in
market value of securities, and review
yields for reasonableness.
G. In addition, FMFS will:
(1) Prepare monthly security transactions
listings;
(2) Supply various Fund Company, Fund and class
(if any) statistical data as requested on an
ongoing basis.
3. Pricing of Securities
For each valuation date, obtain prices from a pricing source
selected by FMFS but approved by the Company's Board of Directors and apply
those prices to the portfolio positions of each Fund. For those securities where
market quotations are not readily available, the Company's Board of Directors
shall approve, in good faith, the method for determining the fair value for such
securities.
If the Fund Company desires to provide a price which varies
from the pricing source, the Fund Company shall promptly notify and supply FMFS
with the valuation of any such security on each valuation date. All pricing
changes made by the Fund Company will be in writing and must specifically
identify the securities to be changed by CUSIP, name of security, new price or
rate to be applied, and, if applicable, the time period for which the new
price(s) is/are effective.
4. Changes in Accounting Procedures
Any resolution passed by the Board of Directors of the Fund
Company that affects accounting practices and procedures under this Agreement
shall be effective upon written receipt and acceptance by the FMFS.
5. Changes in Equipment, Systems, Service, Etc.
FMFS reserves the right to make changes from time to time, as
it deems advisable, relating to its services, systems, programs, rules,
operating schedules and equipment, so long as such changes do not adversely
affect the service provided to the Fund Company under this Agreement.
6. Compensation
4
<PAGE>
FMFS shall be compensated for providing the services set forth
in this Agreement in accordance with the Fee Schedule attached hereto as EXHIBIT
A and as mutually agreed upon and amended from time to time. The Fund Company
agrees to pay all fees and reimbursable expenses within ten (10) business days
following the receipt of the billing notice. Notwithstanding anything to the
contrary, amounts owed by the Fund Company to FMFS shall only be paid out of the
assets and property of the particular Fund involved.
7. Performance of Service; Limitation of Liability
A. FMFS shall exercise reasonable care in the
performance of its duties under this Agreement.
FMFS shall not be liable for any error of judgment
or mistake of law or for any loss suffered by the
Fund Company or any Fund in connection with
matters to which this Agreement relates, including
losses resulting from mechanical breakdowns or the
failure of communication or power supplies beyond
FMFS's control, except a loss arising out of or
relating to a breach of a representation or
warranty made by FMFS under this Agreement or
FMFS's refusal or failure to comply with the terms
of this Agreement or from bad faith, negligence,
or willful misconduct on its part in the
performance of its duties under this Agreement.
Notwithstanding any other provision of this
Agreement, if FMFS has exercised reasonable care
in the performance of its duties under this
Agreement, the Fund Company shall indemnify and
hold harmless FMFS from and against any and all
claims, demands, losses, expenses, and liabilities
(whether with or without basis in fact or law) of
any and every nature (including reasonable
attorneys' fees) which FMFS may sustain or incur
or which may be asserted against FMFS by any
person arising out of any action taken or omitted
to be taken by it in performing the services
hereunder, except for any and all claims, demands,
losses, expenses, and liabilities arising out of
or relating to a breach of a representation or
warranty made by FMFS under this Agreement or
FMFS's refusal or failure to comply with the terms
of this Agreement or from bad faith, negligence or
from willful misconduct on its part in performance
of its duties under this Agreement, (i) in
accordance with the foregoing standards, or (ii)
in reliance upon any written or oral instruction
provided to FMFS by any duly authorized officer of
the Fund Company, such duly authorized officer to
be included in a list of authorized officers
furnished to FMFS and as amended from time to time
in writing by resolution of the Board of Directors
of the Fund Company.
FMFS shall indemnify and hold the Fund Company
harmless from and against any and all claims,
demands, losses, expenses, and liabilities (whether
with or without basis in fact or law) of any and
every nature (including reasonable attorneys' fees)
which the Fund Company may sustain or incur or which
may be asserted against the Fund Company by any
person arising out of a breach of a representation or
warranty made by FMFS under this Agreement or FMFS's
refusal or failure to comply with the terms of this
Agreement or any action taken or omitted to be taken
by FMFS as a result of FMFS's refusal or
5
<PAGE>
failure to comply with the terms of this
Agreement, its bad faith, negligence, or willful
misconduct.
In the event of a mechanical breakdown or failure of
communication or power supplies beyond its control,
FMFS shall take all reasonable steps to minimize
service interruptions for any period that such
interruption continues beyond FMFS's control. FMFS
will make every reasonable effort to restore any lost
or damaged data and correct any errors resulting from
such a breakdown at the expense of FMFS. FMFS agrees
that it shall, at all times, have reasonable
contingency plans with appropriate parties, making
reasonable provision for emergency use of electrical
data processing equipment to the extent appropriate
equipment is available. Representatives of the Fund
Company shall be entitled to inspect FMFS's premises
and operating capabilities at any time during regular
business hours of FMFS, upon reasonable notice to
FMFS.
Regardless of the above, FMFS reserves the right to
reprocess and correct administrative errors at its
own expense.
B. In order that the indemnification provisions
contained in this section shall apply, it is
understood that if in any case the indemnitor may be
asked to indemnify or hold the indemnitee harmless,
the indemnitor shall be fully and promptly advised
of all pertinent facts concerning the situation in
question, and it is further understood that the
indemnitee will use all reasonable care to notify
the indemnitor promptly concerning any situation
which presents or appears likely to present the
probability of a claim for indemnification. The
indemnitor shall have the option to defend the
indemnitee against any claim which may be the
subject of this indemnification. In the event that
the indemnitor so elects, it will so notify the
indemnitee and thereupon the indemnitor shall take
over complete defense of the claim, and the
indemnitee shall in such situation initiate no
further legal or other expenses for which it shall
seek indemnification under this section.
Indemnitee shall in no case confess any claim or
make any compromise in any case in which the
indemnitor will be asked to indemnify the
indemnitee except with the indemnitor's prior
written consent.
C. FMFS agrees that obligations assumed by the Fund
Company pursuant to this Agreement shall be limited
in all cases to the respective assets of the Fund(s)
to which the obligation relates. FMFS further agrees
that it shall not seek satisfaction of any such
obligation from the shareholder or any individual
shareholder of any Fund or any other series of the
Fund Company, nor from the Directors or any
individual Director of the Fund Company.
8. No Agency Relationship
6
<PAGE>
Nothing herein contained shall be deemed to authorize or
empower FMFS to act as agent for the other party to this Agreement, or to
conduct business in the name of, or for the account of the other party to this
Agreement.
9. Records
FMFS shall keep records relating to the services to be
performed hereunder, in the form and manner, and for such period as it may deem
advisable and is agreeable to the Fund Company but not inconsistent with the
rules and regulations of appropriate government authorities, in particular,
Section 31 of the 1940 Act, and the rules thereunder. FMFS agrees that all such
records prepared or maintained by FMFS relating to the services to be performed
by FMFS hereunder are the property of the Fund Company and will be preserved,
maintained, and made available in accordance with such section and rules of the
1940 Act and will be promptly surrendered to the Fund Company on and in
accordance with its request.
10. Data Necessary to Perform Services
The Fund Company or its agent, which may be FMFS, shall
furnish to FMFS the data necessary to perform the services described herein at
such times and in such form as mutually agreed upon. If FMFS is also acting in
another capacity for the Fund Company, nothing herein shall be deemed to relieve
FMFS of any of its obligations in such capacity.
7
<PAGE>
11. Notification of Error
The Fund Company will notify FMFS of any balancing or control
error caused by FMFS the later of: within three (3) business days after receipt
of any reports rendered by FMFS to the Fund Company; within three (3) business
days after discovery of any error or omission not covered in the balancing or
control procedure, or within three (3) business days of receiving notice from
any shareholder.
12. Proprietary and Confidential Information
FMFS agrees on behalf of itself and its directors, officers,
and employees to treat confidentially and as proprietary information of the Fund
Company all records and other information relative to the Fund Company and
prior, present, or potential shareholders of the Fund Company (and clients of
said shareholders), and not to use such records and information for any purpose
other than the performance of its responsibilities and duties hereunder, except
after prior notification to and approval in writing by the Fund Company, which
approval shall not be unreasonably withheld and may not be withheld where FMFS
may be exposed to civil or criminal contempt proceedings for failure to comply,
when requested to divulge such information by duly constituted authorities, or
when so requested by the Fund Company.
13. Term of Agreement
This Agreement shall become effective as of the date hereof
and, unless sooner terminated as provided herein, shall continue automatically
in effect for successive annual periods. This Agreement may be terminated by
either party (in the case of the Fund Company, either in its entirety or with
respect to any particular Fund(s)) upon giving ninety (90) days prior written
notice to the other party or such shorter period as is mutually agreed upon by
the parties. However, this Agreement may be replaced or modified by a subsequent
agreement between the parties.
14. Notices
Notices of any kind to be given by either party to the other
party shall be in writing and shall be duly given if mailed or delivered as
follows: Notice to FMFS shall be sent to:
Firstar Mutual Fund Services, LLC
615 East Michigan Street
Milwaukee, Wisconsin 53202
Attention: Relationship Manager
8
<PAGE>
and notice to the Fund Company shall be sent to:
The Catholic Funds, Inc.
1100 West Wells Street
Milwaukee, Wisconsin 53233
Attention: President
15. Year 2000 Compliance
FMFS represents to the Fund Company that the computer
software, computer firmware, computer hardware (whether general or special
purpose) and other similar related items of automated, computerized and/or
software systems that are owned or licensed by FMFS and will be utilized by FMFS
or its agents in connection with the provision of services described in this
Agreement are "Year 2000 Compliant" (as defined below). As used in this Section
15 of this Agreement, the term "Year 2000 Compliant" shall mean the ability of
the relevant system to provide all of the following functions:
A. Process date information before, during and after
January1, 2000, including but not limited to
accepting date specific input data, providing date
specific output data, and performing calculations on
dates or portions of dates;
B. Function accurately and without interruption or
malfunction before, during and after January 1, 2000,
without any change in operations associated with the
advent of the new millennium and assuming no other
defects, bugs, viruses or other problems unrelated to
Year 2000 compliance issues which disrupt
functionality;
C. Respond to two-digit, year-date input in a way that
resolves the ambiguity as to century and in a
disclosed, defined and predetermined manner; and
D. Store and provide output data of date specific
information in ways that are unambiguous as to
century.
16. Duties in the Event of Termination
In the event that in connection with termination, a successor
to any of FMFS's duties or responsibilities hereunder is designated by the Fund
Company by written notice to FMFS, FMFS will promptly, upon such termination and
at the expense of the Fund Company transfer to such successor all relevant
books, records, correspondence and other data established or maintained by FMFS
under this Agreement in a form reasonably acceptable to the Fund Company (if
such form differs from the form in which FMFS has maintained the same, the Fund
Company shall pay any expenses associated with transferring the same to such
form), and will cooperate in the transfer of such duties and responsibilities,
including provision for assistance from FMFS's personnel in the establishment of
books, records and other data by such successor.
9
<PAGE>
17. Governing Law
This Agreement shall be construed in accordance with the laws
of the State of Wisconsin. However, nothing herein shall be construed in a
manner inconsistent with the 1940 Act or any rule or regulation promulgated by
the SEC thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer on one or more counterparts as of the day
and year first written above.
THE CATHOLIC FUNDS, INC. FIRSTAR MUTUAL FUND SERVICES, LLC
By: By:
-------------------------- ---------------------------
Title: Title:
----------------------- ------------------------
10
<PAGE>
EXHIBIT A
FUND ACCOUNTING SERVICES
ANNUAL FEE SCHEDULE
Separate Series of The Catholic Funds, Inc.
NAME OF SERIES DATE ADDED
- -------------- ----------
Equity Income Fund ____________, 1999
Large-Cap Growth Fund ____________, 1999
Disciplined Capital Appreciation Fund ____________, 1999
Domestic Equity Funds
$22,000 for the first $40 million
1 basis point on the next $200 million
.5 basis point on average net assets exceeding $240 million
Domestic Balanced Funds
$23,500 for the first $40 million
1.5 basis points on the next $200 million
1 basis points on average net assets exceeding $240 million
Domestic Fixed Income, International Equity Funds
$25,000 for the first $40 million
2 basis points on the next $200 million
1 basis point on average net assets exceeding $240 million
Plus reasonable and customary out-of-pocket expenses, including pricing service:
Domestic and Canadian Equities $.15
Options $.15
Corp/Gov/Agency Bonds $.50
CMO's $.80
International Equities and Bonds $.50
Municipal Bonds $.80
Money Market Instruments $.80
Fees and out-of-pocket expenses are billed to the fund monthly
A-1
<PAGE>
Exhibit (h)(3)
FULFILLMENT SERVICING AGREEMENT
<PAGE>
FULFILLMENT SERVICING AGREEMENT
THIS AGREEMENT is made and entered into as of this ____ day of April,
1999, by and between Catholic Financial Services Corporation (hereinafter
referred to where applicable as the "Adviser" or the "Distributor"), The
Catholic Funds, Inc., a Maryland corporation (hereinafter referred to as the
"Fund Company"), and Firstar Mutual Fund Services, LLC, a limited liability
company organized under the laws of the State of Wisconsin (hereinafter referred
to as "FMFS").
WHEREAS, the Adviser is a registered investment adviser under the
Investment Advisers Act of 1940, as amended;
WHEREAS, the Adviser serves as investment adviser to the Fund Company,
a registered investment company under the Investment Company Act of 1940, as
amended, which is authorized to create separate series of funds;
WHEREAS, the Distributor is a registered broker-dealer under the
Securities Exchange Act of 1934, as amended, and serves as principal distributor
of Company shares;
WHEREAS, FMFS provides fulfillment services to mutual funds;
WHEREAS, the Adviser desires to retain FMFS to provide fulfillment
services for each series of the Fund Company listed on EXHIBIT A attached
hereto, as may be amended from time to time (each such series referred to herein
individually as a "Fund" and collectively as the "Funds").
NOW, THEREFORE, the parties agree as follows:
1. DUTIES AND RESPONSIBILITIES OF FMFS FOR EACH FUND
A. Answer all prospective shareholder calls concerning
any Fund.
B. Send all available Fund material requested by the
prospect within 24 hours from time of call.
C. Receive and update all Fund fulfillment literature so
that the most current information is sent and quoted.
D. Provide 24 hour answering service to record prospect
calls made after hours (7 p.m. to 8 a.m. CT).
E. Maintain and store Fund fulfillment inventory.
F. Send periodic fulfillment reports to the Fund Company
as agreed upon between the parties.
<PAGE>
2. DUTIES AND RESPONSIBILITIES OF THE FUND COMPANY
A. Provide Fund fulfillment literature updates to FMFS
as necessary.
B. File with the NASD, SEC and State Regulatory
Agencies, as appropriate, all fulfillment literature
for any Fund that the Fund Company requests FMFS send
to prospective shareholders.
C. Supply FMFS with sufficient inventory of fulfillment
materials as requested from time to time by FMFS.
D. Provide FMFS with any sundry information about each
Fund in order to answer prospect questions.
3. INDEMNIFICATION
The Fund Company agrees to indemnify FMFS from any liability
arising out of the distribution of fulfillment literature which has not been
approved by the appropriate Federal and State Regulatory Agencies. FMFS agrees
to indemnify the Fund Company from any liability arising from the improper use
of fulfillment literature during the performance of duties and responsibilities
identified in this agreement. FMFS will be liable for bad faith, negligence or
willful misconduct on its part in its duties under this Agreement.
4. COMPENSATION
The Adviser or the Distributor (the Distributor only through
the collection of sufficient distribution expenses from the relevant Fund(s), if
applicable) agrees to compensate FMFS for the services performed under this
Agreement in accordance with the attached EXHIBIT A. All invoices shall be paid
within ten days of receipt.
5. PROPRIETARY AND CONFIDENTIAL INFORMATION
FMFS agrees on behalf of itself and its directors, officers,
and employees to treat confidentially and as proprietary information of the Fund
Company all records and other information relative to the Fund Company and
prior, present, or potential shareholders of the Fund Company (and clients of
said shareholders), and not to use such records and information for any purpose
other than the performance of its responsibilities and duties hereunder, except
after prior notification to and approval in writing by the Fund Company, which
approval shall not be unreasonably withheld and may not be withheld where FMFS
may be exposed to civil or criminal contempt proceedings for failure to comply,
when requested to divulge such information by duly constituted authorities, or
when so requested by the Fund Company.
2
<PAGE>
6. TERMINATION
This Agreement may be terminated by either party upon 30 days
written notice.
FMFS agrees that obligations assumed by the Fund Company
pursuant to this Agreement shall be limited in all cases to the respective
assets of the Fund(s) to which the obligation relates. FMFS further agrees that
it shall not seek satisfaction of any such obligation from the shareholder or
any individual shareholder of any Fund or any other series of the Fund Company,
nor from the Directors or any individual Director of the Fund Company.
7. NO AGENCY RELATIONSHIP
Nothing herein contained shall be deemed to authorize or
empower FMFS to act as agent for the other party to this Agreement, or to
conduct business in the name of, or for the account of the other party to this
Agreement.
8. DATA NECESSARY TO PERFORM SERVICES
The Fund Company or its agent, which may be FMFS, shall
furnish to FMFS the data necessary to perform the services described herein at
such times and in such form as mutually agreed upon. If FMFS is also acting in
another capacity for the Fund Company, nothing herein shall be deemed to relieve
FMFS of any of its obligations in such capacity.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer or one or more counterparts as of the day
and year first written above.
THE CATHOLIC FUNDS, INC. FIRSTAR MUTUAL FUND SERVICES, LLC
By: By:
------------------------------ -----------------------------------
Title: Title:
--------------------------- ---------------------------------
CATHOLIC FINANCIAL SERVICES
CORPORATION
By:
------------------------------------
Title:
----------------------------------
3
<PAGE>
EXHIBIT A
FULFILLMENT SERVICES
FEE SCHEDULE
Separate Series of The Catholic Funds, Inc.
NAME OF SERIES DATE ADDED
Equity Income Fund ____________, 1999
Large-Cap Growth Fund ____________, 1999
Disciplined Capital Appreciation Fund ____________, 1999
ANNUAL FEE SCHEDULE
o Customer Service
o State registration compliance edits
o Literature database
o Record prospect request and profile
o Prospect servicing 8:00 am to 7:00 pm CT
o Recording and transcription of requests received
off-hours
o Periodic reporting of leads to client
o Service Fee: $.99/minute
$100/month minimum
$780 one-time set-up
o Assembly and Distribution of Literature Requests
o Generate customized prospect letters
o Assembly and insertion of literature items
o Inventory tracking
o Inventory storage, reporting
o Periodic reporting of leads by state, items
requested, market source
o Service Fee: $.45/lead - insertion of up
to 4 items/lead
$.15/addition inserts
A-2
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
(and to all references to our Firm) included in or made a part of this
registration statement.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
April 26, 1999
<PAGE>
Exhibit (l)
SUBSCRIPTION AGREEMENT
<PAGE>
THE CATHOLIC ALLIANCE FUNDS, INC.
EQUITY INCOME FUND
SUBSCRIPTION AGREEMENT
The undersigned hereby subscribes for Ten Thousand (10,000) shares of
Common Stock, $0.001 par value per share, of the Equity Income Fund of The
Catholic Alliance Funds, Inc., a corporation organized and existing under the
laws of the State of Maryland and a registered, series, open end management
investment company, and hereby agrees to pay therefor upon call of the Board of
Directors, the sum of Ten and 00/100 Dollars ($10.00) per share for an aggregate
subscription price of One Hundred Thousand and 00/100 Dollars ($100,000.00).
Dated as of this 16th day of February, 1999.
CATHOLIC KNIGHTS INSURANCE SOCIETY
By: /s/ Allan G. Lorge
-----------------------------------
Allan G. Lorge, Secretary/Treasurer
