UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT ON REGISTERED MANAGEMENT
INVESTMENT COMPANIES
INVESTMENT COMPANY ACT FILE NUMBER 811-09177
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)
THEODORE F. ZIMMER, ESQ., PRESIDENT
THE CATHOLIC FUNDS, INC.
1100 WEST WELLS STREET
MILWAUKEE, WISCONSIN 53233
(NAME AND ADDRESS OF AGENT FOR SERVICE)
WITH A COPY TO:
FREDRICK G. LAUTZ, ESQ.
QUARLES & BRADY LLP
411 EAST WISCONSIN AVENUE
MILWAUKEE, WISCONSIN 53202
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (414) 278-6500
DATE OF FISCAL YEAR END: SEPTEMBER 30, 2003
DATE OF REPORTING PERIOD: MARCH 31, 2003
Form N-CSR is to be used by management investment companies to file reports
with the Commission not later than 10 days after the transmission to
stockholders of any report that is required to be transmitted to stockholders
under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1).
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under the clearance requirements of 44 U.S.C. Section 3507.
ITEM 1. REPORTS TO STOCKHOLDERS
(THE CATHOLIC FUNDS LOGO(R))
GIVING VOICE TO CATHOLIC VALUESSM
SEMI-ANNUAL REPORT
MARCH 31, 2003
THE CATHOLIC EQUITY FUND
THE CATHOLIC MONEY MARKET FUND
The Catholic Funds
1-877-222-2402
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2 Letter to Shareholders
4 The Catholic Equity Fund
6 The Catholic Money Market Fund
8 Schedule of Investments - The Catholic Equity Fund
16 Schedule of Futures Contracts - The Catholic Equity Fund
17 Schedule of Investments - The Catholic Money Market Fund
19 Statements of Assets & Liabilities
20 Statements of Operations
21 Statements of Changes in Net Assets
23 Financial Highlights
27 Notes to Financial Statements
Letter to Shareholders
Dear Fellow Shareholder:
This semi-annual report of The Catholic Funds covers the six months beginning
October 1, 2002 and ending March 31, 2003.
FINANCIAL STEWARDSHIP
As we write this letter (May 13), the S&P 500(R) Indexi<F1> is up about 4% since
the beginning of 2003. However, we do not pretend to know when or how the stock
market will recover fully. However, we do believe that in the past, those who
remained invested in stocks during difficult times usually have been rewarded
for their faith in the work ethic, technical skills and entrepreneurial spirit
of Americans. The Catholic Equity Fund is a way to remain broadly invested in
stocks. It substantially mirrors the S&P 500(R) Index (except for five
companies that are excluded for abortion reasons).ii<F2> We continue to believe
that The Catholic Equity Fund can serve as the core investment for the stock
portion of an investor's asset allocation.iii<F3>
The Catholic Money Market Fundiv<F4> can also play a useful role in any
investor's portfolio as a place for short-term investments. It also facilitates
exchanges into and out of The Catholic Equity Fund.
We continue to have great confidence in our investment management team--Mellon
Equity Associates for the Catholic Equity Fund and Strong Capital Management for
The Catholic Money Market Fund. Both have extensive experience and enjoy
nationwide respect, especially in the niches for which we have engaged them--
index investing and money market investing respectively. Please read their
comments on their Fund's performance and their investment outlook.
CATHOLIC VALUES IN ACTION
The Catholic Values in Action Program of The Catholic Equity Fund has three
components:
o Filing Shareholder Resolutions
o Casting Votes
o Writing Letters
FILING SHAREHOLDER RESOLUTIONS--We filed eight shareholder resolutions for this
2002-03 filing season.
WHAT THE RESOLUTION ASKED FOR COMPANIES
- ----------------------------- ---------
EXECUTIVE COMPENSATION--Review executive Alcoa
compensation history, particularly the ratio Bristol-Myers Squibb
between executive compensation and the pay of Coca-Cola
the average and lowest paid workers, and address El Paso Corp
possible excessive growth in executive EMC Corp.
compensation and those ratios General Electric
CHILD LABOR--Ensure that child labor was not Federated Department Stores
used in making rugs that the company purchases
abroad and sells in the U.S.
BOARD ELECTIONS--nominate more director Exxon Mobil
candidates than available positions so that
shareholders have a choice.
Each of the resolutions encourages companies to protect and promote the dignity
of the human person as required by Catholic social teaching. The child-labor
resolution does this directly. The other resolutions act indirectly. The
executive compensation resolutions assume that an executive who seeks excessive
compensation is unlikely to have worker dignity high on his or her list.
Similarly, the board-election resolution works indirectly in that it would give
shareholders some ability to shape the board into one that will act as the
conscience of the corporation.
We are encouraged by our first year of filing resolutions. EMC and Federated
agreed to our proposals without waiting for a shareholder vote. News reports
indicated that Coca-Cola and G.E. made some movement on the executive
compensation issue on account of shareholder pressure. The shareholders of the
six companies other than EMC and Federated have voted, or will vote, on the
proposals that we filed.
Experience since "socially responsible investing" was born in response to South
African apartheid shows that persistent resolution filing by shareholders acting
in coalitions will eventually improve corporate behavior. We work with other
shareholders through the coalitions Interfaith Center on Corporate
Responsibility and Responsible Wealth.
CASTING VOTES--The Catholic Equity Fund can vote on all proposals coming before
the annual shareholder meetings of the 495 companies in the portfolio. To help
us do that efficiently, we have developed a set of guidelines based on Catholic
values and our particular focus. During the six months ended March 31, 2003,
out of 216 votes, we voted with management 104 times and against 107 times, and
we abstained 5 times.
Our website (www.catholicfunds.com) now includes a summary of our voting
guidelines and a record of our votes. We encourage you to take a look.
WRITING LETTERS--We believe that we can help improve corporate behavior by
informing CEOs that The Catholic Equity Fund owns shares and that we will vote
and advocate as necessary to improve corporate behavior in line with Catholic
social teaching. We have written that type of letter to all 495 companies in
the portfolio, and we continue to write as the Index adds new companies to
replace deleted ones. In addition, we watch news reports, both in newspapers
and on the Internet, for corporate activity that seems inconsistent with, or
exemplary of, Catholic values. As appropriate, we write critical or
congratulatory letters to the CEOs.
THANK YOU
We continue to appreciate your trust and confidence.
/s/Daniel J. Steininger /s/Theodore F. Zimmer
Daniel J. Steininger Theodore F. Zimmer
Chairman of the Board President
i<F1> "S&P 500" is a trademark of The McGraw-Hill Companies, Inc., and has
been licensed for use by The Catholic Funds. The Catholic Funds are
not sponsored, endorsed, sold or promoted by Standard & Poor's(R) and
Standard & Poor's makes no representations regarding the advisability
of investing in the Funds.
ii<F2> The Catholic Equity Fund seeks to match the Index, but performance can
be expected to differ by a small percentage representing operating
costs and the exclusion of abortion-related stocks from the portfolio.
An investment cannot be made directly in the Index. Past performance
is not a guarantee of future results. The principal value and
investment returns will fluctuate, and when redeemed an investor's
shares may be worth more or less than their original cost.
iii<F3> Each investor should determine what share of investment assets should
be in stocks by considering age, time frame for needing funds,
tolerance for ups and downs, and other factors.
iv<F4> An investment in The Catholic Money Market Fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although the Fund seeks to preserve the value of
your investment at $1 per share, it is possible to lose money by
investing in the Fund.
The Catholic Equity Fund
PORTFOLIO MANAGER:
Mellon Equity Associates is an independently run, wholly owned subsidiary of
Mellon Financial Corporation located in Pittsburgh, Pennsylvania. It advises
passive and active accounts for institutional and individual clients since 1983.
Today, we manage over $14 billion in assets for 113 clients.
The portfolio manger, Thomas Durante, joined Mellon Equity Associates in January
2000. In addition to The Catholic Equity Fund, Tom manages several index
accounts at Mellon Equity. Tom earned a BS in accounting from Fairfield
University in 1982.
COMMENTARY:
While the S&P 500 Index had a positive return of 5.02% for the last six months,
it was a very volatile period.
The fourth quarter of 2002 began with a strong rally in stock prices as
investors bought stocks that had been beaten down during the two and a half year
bear market. After rallying again in the first few days of January, the market
sold off considerably through early March. Economic uncertainty, compounded by
geopolitical concerns, stifled both capital expenditures and investor
willingness to commit to the equity market. However, the market again rallied
considerably in mid March as investors perceived uncertainties lifting and were
buoyed by hopes for a short war in Iraq. Over the entire six month period, the
larger technology and telecommunications stocks were among the strongest
contributors to the S&P 500 Index returns. Value style companies, such as
consumer staple stocks, detracted from the performance of the Fund as investor
sentiment switched to growth companies.
Over the past few weeks, a mixed picture has emerged for the U.S. economy and
U.S. stock market. As the initial outcome with the conflict in Iraq seemed
resolved, much of the uncertainty in the market was lifted, specifically the
cost of the war and the price of oil. This should create a better climate for
businesses to accelerate spending and hopefully spawn job creation. For the
stock market, it appears that concerns over corporate misdeeds and accounting
irregularities have been addressed and investor confidence should continue to be
buoyed. Unfortunately, GDP continues to sputter, as the lack of business
spending to date has constrained growth in the economy.
Large cap U.S. stocks should remain a core component of a long-term investor's
portfolio. With interest rates low, geopolitical risks fading and attractive
valuations, stocks should provide returns closer to their historical average.
The S&P 500 is an unmanaged index comprised of 500 common stocks representative
of the stock market as a whole. It is not possible to invest directly in an
index.
THE CATHOLIC EQUITY FUND - CLASS A
GROWTH OF A $10,000 INVESTMENT
The Catholic Equity The Catholic Equity
Date Fund - Class A Fund - Class A w/load S&P 500 Index
---- -------------- --------------------- -------------
5/3/99 $10,000 $9,600 $10,000
6/30/99 $10,290 $9,878 $10,306
9/30/99 $9,690 $9,302 $9,663
12/31/99 $10,855 $10,421 $11,101
3/31/00 $11,155 $10,709 $11,356
6/30/00 $10,945 $10,507 $11,055
9/30/00 $10,965 $10,526 $10,948
12/31/00 $10,302 $9,890 $10,092
3/31/01 $9,338 $8,964 $8,895
6/30/01 $10,000 $9,600 $9,416
9/30/01 $8,464 $8,126 $8,034
12/31/01 $9,385 $9,010 $8,893
3/31/02 $9,334 $8,961 $8,917
6/30/02 $8,044 $7,723 $7,722
9/30/02 $6,632 $6,367 $6,388
12/31/02 $7,208 $6,920 $6,927
3/31/03 $6,962 $6,684 $6,709
AVERAGE ANNUAL RETURNS
March 31, 2003 (Unaudited)
Since Inception
1 Year Inception Date
------ --------- ---------
Class A (without sales load) (25.41)% (8.83)% 5/3/99
Class A (with sales load) (28.40)% (9.79)% 5/3/99
S&P 500 Index (24.76)% (9.69)% n/a
Class C (without sales load) n/a n/a 4/9/02
Class C (with sales load) n/a n/a 4/9/02
Class I n/a n/a 4/3/02
Performance information prior to April 3, 2002 reflects performance of The
Catholic Disciplined Capital Appreciation Fund, which had a similar, but not
identical, investment program to that of The Catholic Equity Fund.
Past performance is not an indication of future results. Investment return and
principal value will fluctuate, and shares, when redeemed, may be worth more or
less than their original cost. At various times, the Fund's adviser waived its
management fees and/or reimbursed Fund expenses. Had the adviser not done so,
the Fund's total return would have been lower.
Class A performance has been restated to reflect the maximum sales charge of
4%. Class C performance would reflect the maximum contingent sales charge
(CDSC) of 1% terminating one year after the purchase of shares. Class I shares
have no sales load and are for institutional shareholders only.
Performance data is not shown for Class C or Class I shares since they have not
been in operation for a full year.
The returns shown do not reflect the deduction of taxes that a shareholder
would pay on Fund distributions or the redemption of Fund shares.
The S&P 500 is an unmanaged index comprised of 500 common stocks representative
of the stock market as a whole. It is not possible to invest directly in an
index.
March 31, 2003
(Unaudited)
Ticker Symbols Net Asset Values
-------------- ----------------
Equity A CTHQX $6.78
Equity C CTHSX $6.75
Equity I CTHRX $6.77
TOP 10 HOLDINGS
As of March 31, 2003 (Unaudited)
Percentage
of
Rank Ticker Security Name Net Assets
---- ------ ------------- ----------
1 MSFT Microsoft Corp. 3.34%
2 GE General Electric Co. 3.28%
3 XOM Exxon Mobil Corp. 3.03%
4 WMT Wal-Mart Stores, Inc. 2.97%
5 PFE Pfizer Inc. 2.47%
6 C Citigroup Inc. 2.28%
7 JNJ Johnson & Johnson 2.20%
8 IBM International Business
Machines Corp. 1.70%
9 AIG American
International Group, Inc. 1.67%
10 MRK Merck & Co. Inc. 1.60%
The Catholic Money Market Fund
PORTFOLIO MANAGER:
Strong Capital Management, Inc. is an active international and domestic equity
and fixed-income manager located in Menomonee Falls, Wisconsin. It advises a
mutual fund family, Strong Funds, and provides other investment services with
over $38 billion in individual and institutional assets. The portfolio manager,
Jay N. Mueller, CFA, joined Strong in September 1991 as a securities analyst and
portfolio manager. He also serves as Strong's chief economist. Jay received
his B.A. in Economics in 1982 from the University of Chicago and is a Chartered
Financial Analyst. In addition to The Catholic Money Market Fund, he manages
several other money market funds for Strong. He emphasizes the top-down
analysis of the economy, interest rates, and the supply of and demand for
credit.
COMMENTARY:
Short term interest rates fell about 0.50% over the six months ending March 31,
2003. This decline was primarily attributable to the Federal Reserve's decision
to cut its overnight target for the Federal Funds rate by half a percent on
November 6. Mixed economic data and uncertainty over the conflict with Iraq
kept interest rates within a relatively narrow range over the first three months
of 2003.
Other events of significance to short term debt markets included:
O The election of a Republican majority in both the U.S. Senate and House of
Representatives. Unified party control of the two houses of Congress and
the executive branch was viewed as an economic positive, in that tax cuts
and other fiscal stimulus measures were deemed more likely to become law.
O Improved corporate profits. Better business results helped allay investors'
worst fears of credit deterioration.
O Debt reduction. Some highly leveraged companies paid down outstanding debt
or issued new equity, improving balance sheet strength.
In conjunction with the general movement to shore up balance sheets, many
corporations elected to reduce their reliance on short term debt. In some
cases, commercial paper and other short term debt was paid off out of corporate
cash flow, while some companies elected to issue longer term debt, using the
proceeds to retire commercial paper. This retreat from the cash marketplace
reduced the pool of corporate-backed credits available to money market
investors.
America is now eighteen months into a tepid economic recovery. Over that time
period real GDP has expanded at an annual rate below 3% and we have yet to put
together two sequential quarters of vigorous growth. Employment conditions have
been stagnant at best, which is disappointing even in comparison with the
'jobless recovery' of the early '90s. The major U.S. stock indices, while above
their lows of last October, have failed to rally in the manner typical of prior
economic recoveries.
While many factors have been cited to explain the slow, tentative nature of this
recovery, most of them can be grouped under two headings: the lingering effects
of the late '90s bubble, and geopolitical turmoil. It is important to recognize
that both categories are truly global in scope. September 11th and other
instances of international terrorism, the conflict in Afghanistan, civil unrest
in oil exporting nations like Nigeria and Venezuela, and saber-rattling from
North Korea have combined to create a cloud of nervous uncertainty. As well,
markets in Europe, Asia and Latin America were caught up in the same asset
bubble that carried the U.S. stock market indices to their all time highs.
With the end to the military phase of the Operation Iraqi Freedom, some of the
geopolitical uncertainty is likely to dissipate. The worst fears embedded in
financial markets did not come to pass--weapons of mass destruction were not
used, the oil fields of the Middle East were not severely damaged, the war did
not widen. There will be stresses and strains in the months ahead, but perhaps
also some positive ripple-effects. As of this writing, monetary policy remains
accommodative, while additional fiscal stimulus in the form of tax relief is
highly likely. The resolution of the Iraq crisis has also allowed energy prices
to decline. Low interest rates are still providing support to the housing
market. And rising corporate earnings provide us with reason to believe that an
improvement in labor market conditions is on the horizon. Eventually, a
strengthening economy should permit the Federal Reserve to raise its short term
rate targets.
An investment in the Fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the Fund seeks to
preserve the value of your investment at $1 per share, it is possible to lose
money by investing in the Fund.
SCHEDULE OF INVESTMENTS
AS OF MARCH 31, 2003 (UNAUDITED)
THE CATHOLIC EQUITY FUND
Common Stocks (99.2%) Shares Market Value
- --------------------- ------ ------------
3M Co. 800 $104,024
Abbott Laboratories 3,100 116,591
ACE Limited 500 14,475
ADC Telecommunications,
Inc.*<F5> 1,600 3,296
Adobe Systems Inc. 450 13,873
Advanced Micro Devices,
Inc.*<F5> 700 4,326
The AES Corp.*<F5> 1,100 3,982
Aetna Inc. 300 14,790
AFLAC Inc. 1,000 32,050
Agilent Technologies, Inc.*<F5> 900 11,835
Air Products and
Chemicals, Inc. 400 16,572
Alberto-Culver Co. -
Class B 100 4,928
Albertson's, Inc. 700 13,195
Alcoa Inc. 1,700 32,946
Allegheny Energy, Inc. 200 1,242
Allegheny
Technologies, Inc. 100 290
Allergan, Inc. 300 20,463
Allied Waste
Industries, Inc.*<F5> 400 3,196
The Allstate Corp. 1,400 46,438
ALLTEL Corp. 600 26,856
Altera Corp.*<F5> 800 10,832
Altria Group, Inc. 4,100 122,836
Ambac Financial
Group, Inc. 250 12,630
Amerada Hess Corp. 200 8,852
Ameren Corp. 300 11,715
American Electric
Power Co., Inc. 800 18,280
American Express Co. 2,600 86,398
American Greetings
Corp. - Class A 100 1,310
American International
Group, Inc. 5,137 254,025
American Power
Conversion Corp.*<F5> 400 5,696
American Standard
Companies Inc.*<F5> 100 6,877
AmerisourceBergen Corp. 207 10,867
Amgen Inc.*<F5> 2,490 143,299
AmSouth BanCorp. 700 13,916
Anadarko Petroleum Corp. 500 22,750
Analog Devices, Inc.*<F5> 700 19,250
Andrew Corp.*<F5> 200 1,100
Anheuser-Busch
Companies, Inc. 1,700 79,237
Anthem, Inc.*<F5> 300 19,875
AOL Time Warner Inc.*<F5> 8,800 95,568
Aon Corp. 600 12,408
Apache Corp. 357 22,041
Apartment Investment
& Management Co. -
Class A 200 7,296
Apollo Group, Inc. -
Class A*<F5> 300 14,970
Apple Computer, Inc.*<F5> 700 9,898
Applera Corp. 400 6,332
Applied Materials, Inc.*<F5> 3,200 40,256
Applied Micro
Circuits Corp.*<F5> 500 1,630
Archer-Daniels-
Midland Co. 1,300 14,040
Ashland Inc. 100 2,967
AT&T Corp. 1,500 24,300
AT&T Wireless
Services Inc.*<F5> 5,300 34,980
Autodesk, Inc. 200 3,052
Automatic Data
Processing, Inc. 1,150 35,408
AutoNation, Inc.*<F5> 600 7,650
AutoZone, Inc.*<F5> 200 13,742
Avaya Inc.*<F5> 600 1,224
Avery Dennison Corp. 200 11,734
Avon Products, Inc. 500 28,525
Baker Hughes Inc. 700 20,951
Ball Corp. 100 5,570
Bank of America Corp. 2,900 193,836
The Bank of New York
Co., Inc. 1,500 30,750
Bank One Corp. 2,300 79,626
C.R. Bard, Inc. 100 6,306
Bausch & Lomb Inc. 100 3,289
Baxter International Inc. 1,200 22,368
BB&T Corp. 900 28,287
The Bear Stearns
Companies Inc. 200 13,120
Becton, Dickinson and Co. 500 17,220
Bed Bath & Beyond Inc.*<F5> 600 20,724
BellSouth Corp. 3,700 80,179
Bemis Co., Inc. 100 4,206
Best Buy Co., Inc.*<F5> 650 17,530
Big Lots, Inc.*<F5> 200 2,250
Biogen, Inc.*<F5> 300 8,988
Biomet, Inc. 500 15,325
BJ Services Co.*<F5> 300 10,317
The Black & Decker Corp. 200 6,972
BMC Software, Inc.*<F5> 500 7,545
The Boeing Co. 1,700 42,602
Boise Cascade Corp. 100 2,185
Boston Scientific Corp.*<F5> 800 32,608
Bristol-Myers Squibb Co. 3,800 80,294
Broadcom Corp. - Class A*<F5> 500 6,175
Brown-Forman Corp. -
Class B 100 7,690
Brunswick Corp. 200 3,800
Burlington Northern
Santa Fe Corp. 700 17,430
Burlington Resources Inc. 400 19,084
Calpine Corp.*<F5> 600 1,980
Campbell Soup Co. 800 16,800
Capital One Financial Corp. 400 12,004
Cardinal Health, Inc. 900 51,273
Carnival Corp. 1,200 28,932
Caterpillar Inc. 700 34,440
Cendant Corp.*<F5> 2,000 25,400
CenterPoint Energy, Inc. 500 3,525
Centex Corp. 100 5,436
CenturyTel, Inc. 300 8,280
Charter One Financial, Inc. 420 11,617
ChevronTexaco Corp. 2,086 134,860
Chiron Corp.*<F5> 400 15,000
The Chubb Corp. 300 13,296
CIENA Corp.*<F5> 800 3,496
CIGNA Corp. 300 13,716
Cincinnati Financial Corp. 300 10,521
Cinergy Corp. 300 10,095
Cintas Corp. 300 9,870
Circuit City Stores -
Circuit City Group 300 1,560
Cisco Systems, Inc.*<F5> 14,000 181,720
Citigroup Inc. 10,100 347,945
Citizens Communications
Co.*<F5> 600 5,988
Citrix Systems, Inc.*<F5> 300 3,948
Clear Channel
Communications, Inc.*<F5> 1,250 42,400
The Clorox Co. 450 20,776
CMS Energy Corp. 200 882
The Coca-Cola Co. 4,900 198,352
Coca-Cola Enterprises Inc. 900 16,821
Colgate-Palmolive Co. 1,100 59,884
Comcast Corp. - Class A*<F5> 4,502 128,712
Comerica Inc. 300 11,364
Computer Associates
International, Inc. 1,100 15,026
Computer Sciences Corp.*<F5> 300 9,765
Compuware Corp.*<F5> 600 2,034
Comverse Technology, Inc.*<F5> 400 4,524
ConAgra Foods, Inc. 1,100 22,088
Concord EFS, Inc.*<F5> 1,000 9,400
ConocoPhillips 1,314 70,430
Consolidated Edison, Inc. 400 15,388
Constellation Energy
Group, Inc. 300 8,319
Convergys Corp.*<F5> 300 3,960
Cooper Industries, Ltd. -
Class A 200 7,142
Cooper Tire & Rubber Co. 100 1,220
Adolph Coors Co. - Class B 100 4,850
Corning Inc.*<F5> 2,300 13,432
Costco Wholesale Corp.*<F5> 900 27,027
Countrywide Financial Corp. 200 11,500
Crane Co. 100 1,742
CSX Corp. 400 11,408
Cummins Inc. 100 2,460
CVS Corp. 800 19,080
Dana Corp. 300 2,118
Danaher Corp. 300 19,728
Darden Restaurants, Inc. 300 5,355
Deere & Co. 500 19,630
Dell Computer Corp.*<F5> 5,100 139,281
Delphi Corp. 1,100 7,513
Delta Air Lines, Inc. 200 1,780
Deluxe Corp. 100 4,013
Devon Energy Corp. 300 14,466
Dillard's, Inc. - Class A 200 2,584
The Walt Disney Co. 4,000 68,080
Dollar General Corp. 700 8,547
Dominion Resources, Inc. 600 33,222
R. R. Donnelley & Sons Co. 200 3,664
Dover Corp. 400 9,688
The Dow Chemical Co. 1,800 49,698
Dow Jones & Co., Inc. 200 7,088
DTE Energy Co. 300 11,595
E. I. du Pont de Nemours
and Co. 2,000 77,720
Duke Energy Corp. 1,800 26,172
Dynegy Inc. - Class A 600 1,566
Eastman Chemical Co. 200 5,798
Eastman Kodak Co. 600 17,760
Eaton Corp. 100 6,995
eBay Inc.*<F5> 600 51,174
Ecolab Inc. 300 14,799
Edison International*<F5> 600 8,214
El Paso Corp. 1,145 6,927
Electronic Arts Inc.*<F5> 300 17,592
Electronic Data
Systems Corp. 900 15,840
EMC Corp.*<F5> 4,300 31,089
Emerson Electric Co. 800 36,280
Engelhard Corp. 300 6,426
Entergy Corp. 400 19,260
EOG Resources, Inc. 200 7,912
Equifax Inc. 300 5,997
Equity Office
Properties Trust 821 20,894
Equity Residential 500 12,035
Exelon Corp. 600 30,246
Exxon Mobil Corp. 13,200 461,340
Family Dollar Stores, Inc. 300 9,264
Fannie Mae 2,000 130,700
Federated Department
Stores, Inc.*<F5> 400 11,208
FedEx Corp. 600 33,042
Fifth Third Bancorp 1,100 55,154
First Data Corp. 1,500 55,515
First Tennessee
National Corp. 200 7,942
FirstEnergy Corp. 600 18,900
Fiserv, Inc.*<F5> 400 12,592
FleetBoston Financial
Corp. 2,100 50,148
Fluor Corp. 200 6,736
Ford Motor Co. 3,600 27,072
Forest Laboratories, Inc.*<F5> 700 37,779
Fortune Brands, Inc. 300 12,861
FPL Group, Inc. 400 23,572
Franklin Resources, Inc. 500 16,455
Freddie Mac 1,400 74,340
Freeport-McMoRan Copper
& Gold, Inc. - Class B*<F5> 300 5,115
Gannett Co., Inc. 500 35,215
The Gap, Inc. 1,700 24,633
Gateway, Inc.*<F5> 500 1,180
General Dynamics Corp. 400 22,028
General Electric Co. 19,600 499,800
General Mills, Inc. 700 31,885
General Motors Corp. 1,100 36,982
Genuine Parts Co. 300 9,153
Genzyme Corp.*<F5> 400 14,580
Georgia-Pacific Corp. 500 6,950
The Gillette Co. 2,100 64,974
Golden West Financial Corp. 300 21,579
The Goldman Sachs
Group, Inc. 900 61,272
Goodrich Corp. 200 2,812
The Goodyear Tire &
Rubber Co. 300 1,551
W.W. Grainger, Inc. 200 8,580
Great Lakes Chemical Corp. 100 2,220
Guidant Corp.*<F5> 600 21,720
H&R Block, Inc. 400 17,076
Halliburton Co. 900 18,657
Harley-Davidson, Inc. 600 23,826
Harrah's Entertainment,
Inc.*<F5> 200 7,140
The Hartford Financial
Services Group, Inc. 500 17,645
Hasbro, Inc. 300 4,167
Hercules Inc.*<F5> 200 1,740
Hershey Foods Corp. 300 18,798
Hewlett-Packard Co. 6,007 93,409
Hilton Hotels Corp. 700 8,127
H.J. Heinz Co. 700 20,440
The Home Depot, Inc. 4,600 112,056
Honeywell International
Inc. 1,700 36,312
Humana Inc.*<F5> 300 2,880
Huntington Bancshares Inc. 500 9,295
Illinois Tool Works Inc. 600 34,890
IMS Health Inc. 500 7,805
Ingersoll-Rand Co. 300 11,577
Intel Corp. 13,000 211,640
International Business
Machines Corp. 3,300 258,819
International Flavors &
Fragrances Inc. 200 6,218
International Game
Technology*<F5> 200 16,380
International Paper Co. 900 30,420
The Interpublic Group of
Companies, Inc. 800 7,440
Intuit Inc.*<F5> 400 14,880
ITT Industries, Inc. 200 10,682
Jabil Circuit, Inc.*<F5> 400 7,000
Janus Capital Group Inc. 400 4,556
JDS Uniphase Corp.*<F5> 2,700 7,695
Jefferson-Pilot Corp. 300 11,544
John Hancock Financial
Services, Inc. 600 16,668
Johnson & Johnson 5,800 335,646
Johnson Controls, Inc. 200 14,488
Jones Apparel Group, Inc.*<F5> 300 8,229
J.P. Morgan Chase & Co. 3,900 92,469
KB HOME 100 4,545
Kellogg Co. 800 24,520
Kerr-McGee Corp. 150 6,092
KeyCorp 800 18,048
KeySpan Corp. 300 9,675
Kimberly-Clark Corp. 1,050 47,733
Kinder Morgan, Inc. 200 9,000
King Pharmaceuticals, Inc.*<F5> 500 5,965
KLA-Tencor Corp.*<F5> 400 14,377
Knight-Ridder, Inc. 200 11,700
Kohl's Corp.*<F5> 700 39,606
The Kroger Co.*<F5> 1,500 19,725
Leggett & Platt, Inc. 400 7,312
Lehman Brothers
Holdings Inc. 500 28,875
Lexmark International,
Inc.*<F5> 250 16,738
Eli Lilly and Co. 2,200 125,730
Limited Brands 1,000 12,870
Lincoln National Corp. 300 8,400
Linear Technology Corp. 600 18,522
Liz Claiborne, Inc. 200 6,184
Lockheed Martin Corp. 900 42,795
Loews Corp. 400 15,936
Louisiana-Pacific Corp.*<F5> 200 1,586
Lowe's Companies, Inc. 1,500 61,230
LSI Logic Corp.*<F5> 700 3,164
Lucent Technologies Inc.*<F5> 7,700 11,319
Manor Care, Inc.*<F5> 200 3,846
Marathon Oil Corp. 600 14,382
Marriott International,
Inc. - Class A 500 15,905
Marsh & McLennan
Companies, Inc. 1,100 46,893
Marshall & Ilsley Corp. 400 10,224
Masco Corp. 1,000 18,620
Mattel, Inc. 900 20,250
Maxim Integrated
Products, Inc.*<F5> 600 21,672
The May Department
Stores Co. 600 11,934
Maytag Corp. 200 3,806
MBIA Inc. 300 11,592
MBNA Corp. 2,550 38,377
McCormick &
Company, Inc. 200 4,828
McDermott International,
Inc.*<F5> 100 290
McDonald's Corp. 2,500 36,150
The McGraw-Hill
Companies, Inc. 400 22,236
McKesson Corp. 600 14,958
MeadWestvaco Corp. 400 9,112
MedImmune, Inc.*<F5> 500 16,415
Medtronic, Inc. 2,350 106,032
Mellon Financial Corp. 800 17,008
Merck & Co. Inc. 4,450 243,771
Mercury Interactive Corp.*<F5> 200 5,936
Meredith Corp. 100 3,818
Merrill Lynch & Co., Inc. 1,700 60,180
MetLife, Inc. 1,400 36,932
MGIC Investment Corp. 200 7,854
Micron Technology, Inc.*<F5> 1,200 9,768
Microsoft Corp. 21,000 508,410
Millipore Corp. 100 3,270
Mirant Corp.*<F5> 700 1,120
Molex Inc. 400 8,592
Monsanto Co. 500 8,200
Moody's Corp. 300 13,869
Morgan Stanley 2,100 80,535
Motorola, Inc. 4,500 37,170
Nabors Industries, Ltd.*<F5> 300 11,961
National City Corp. 1,200 33,420
National Semiconductor
Corp.*<F5> 400 6,816
Navistar International
Corp.*<F5> 100 2,461
NCR Corp.*<F5> 200 3,668
Network Appliance, Inc.*<F5> 700 7,833
The New York Times Co. -
Class A 300 12,945
Newell Rubbermaid Inc. 500 14,175
Newmont Mining Corp. 800 20,920
Nextel Communications,
Inc. - Class A*<F5> 1,900 25,441
Nicor Inc. 100 2,732
NIKE, Inc. - Class B 500 25,710
NiSource Inc. 500 9,100
Noble Corp.*<F5> 300 9,426
Nordstrom, Inc. 300 4,860
Norfolk Southern Corp. 800 14,848
North Fork BanCorp., Inc. 300 8,835
Northern Trust Corp. 400 12,180
Northrop Grumman Corp. 407 34,921
Novell, Inc.*<F5> 600 1,290
Novellus Systems, Inc.*<F5> 300 8,181
Nucor Corp. 200 7,634
NVIDIA Corp.*<F5> 300 3,855
Occidental Petroleum Corp. 700 20,972
Office Depot, Inc.*<F5> 600 7,098
Omnicom Group Inc. 400 21,668
Oracle Corp.*<F5> 10,300 111,745
PACCAR Inc. 250 12,568
Pactiv Corp.*<F5> 300 6,090
Pall Corp. 200 4,000
Parametric Technology
Corp.*<F5> 400 868
Parker-Hannifin Corp. 200 7,748
Paychex, Inc. 725 19,916
J.C. Penney Co., Inc.
(Holding Company) 500 9,820
Peoples Energy Corp. 100 3,577
PeopleSoft, Inc.*<F5> 600 9,180
The Pepsi Bottling
Group, Inc. 550 9,862
PepsiCo, Inc. 3,350 134,000
PerkinElmer, Inc. 200 1,778
Pfizer Inc. 12,100 377,036
PG&E Corp.*<F5> 800 10,760
Phelps Dodge Corp.*<F5> 200 6,496
Pinnacle West Capital Corp. 200 6,648
Pitney Bowes Inc. 500 15,960
Plum Creek Timber Co., Inc. 400 8,636
PMC-Sierra, Inc.*<F5> 300 1,785
PNC Financial Services
Group 600 25,428
Power-One, Inc.*<F5> 100 440
PPG Industries, Inc. 300 13,524
PPL Corp. 300 10,683
Praxair, Inc. 300 16,905
Principal Financial
Group, Inc.*<F5> 700 18,998
The Procter & Gamble Co. 2,600 231,530
Progress Energy, Inc. 500 19,575
The Progressive Corp. 400 23,724
Providian Financial Corp.*<F5> 600 3,936
Prudential Financial, Inc.*<F5> 1,100 32,175
Public Service Enterprise
Group Inc. 400 14,676
Pulte Homes, Inc. 100 5,015
QLogic Corp.*<F5> 200 7,428
QUALCOMM Inc.*<F5> 1,500 54,090
Quest Diagnostics Inc.*<F5> 200 11,938
Quintiles Transnational
Corp.*<F5> 200 2,432
Qwest Communications
International Inc.*<F5> 3,200 11,168
RadioShack Corp. 300 6,687
Raytheon Co. 800 22,696
Reebok International Ltd.*<F5> 100 3,285
Regions Financial Corp. 400 12,960
R.J. Reynolds Tobacco
Holdings, Inc. 200 6,452
Robert Half International
Inc.*<F5> 300 3,993
Rockwell Automation, Inc. 400 8,280
Rockwell Collins, Inc. 400 7,348
Rohm and Haas Co. 400 11,912
Rowan Companies, Inc. 200 3,932
T. Rowe Price Group Inc. 200 5,424
Ryder System, Inc. 100 2,051
Sabre Holdings Corp. 300 4,773
SAFECO Corp. 300 10,491
Safeway Inc.*<F5> 900 17,037
Sanmina-SCI Corp.*<F5> 900 3,636
Sara Lee Corp. 1,500 28,050
SBC Communications Inc. 6,500 130,390
Schering-Plough Corp. 2,900 51,707
Schlumberger Ltd. 1,150 43,712
The Charles Schwab Corp. 2,650 19,133
Scientific-Atlanta, Inc. 300 4,122
Sealed Air Corp.*<F5> 200 8,026
Sears, Roebuck and Co. 600 14,490
Sempra Energy 400 9,984
The Sherwin-Williams Co. 300 7,929
Siebel Systems, Inc.*<F5> 1,000 8,010
Sigma-Aldrich Corp. 150 6,674
Simon Property Group, Inc. 400 14,332
SLM Corp. 300 33,276
Snap-on Inc. 100 2,476
Solectron Corp.*<F5> 1,600 4,832
The Southern Co. 1,400 39,816
SouthTrust Corp. 700 17,871
Southwest Airlines Co. 1,500 21,540
Sprint Corp. - FON Group 1,800 21,150
Sprint Corp. - PCS Group*<F5> 2,000 8,720
St. Jude Medical, Inc.*<F5> 300 14,625
The St. Paul
Companies, Inc. 400 12,720
The Stanley Works 200 4,798
Staples, Inc.*<F5> 900 16,497
Starbucks Corp.*<F5> 800 20,608
Starwood Hotels & Resorts
Worldwide, Inc. 400 9,516
State Street Corp. 600 18,978
Stryker Corp. 400 27,460
Sun Microsystems, Inc.*<F5> 6,100 19,886
SunGard Data
Systems Inc.*<F5> 600 12,780
Sunoco, Inc. 200 7,314
SunTrust Banks, Inc. 600 31,590
SUPERVALU INC. 300 4,650
Symantec Corp.*<F5> 300 11,754
Symbol Technologies, Inc. 500 4,305
Synovus Financial Corp. 600 10,734
Sysco Corp. 1,300 33,072
Target Corp. 1,800 52,668
TECO Energy, Inc. 300 3,189
Tektronix, Inc.*<F5> 200 3,430
Tellabs, Inc.*<F5> 800 4,632
Temple-Inland Inc. 100 3,740
Teradyne, Inc.*<F5> 400 4,656
Texas Instruments Inc. 3,400 55,658
Textron, Inc. 300 8,238
Thermo Electron Corp.*<F5> 300 5,430
Thomas & Betts Corp.*<F5> 100 1,418
Tiffany & Co. 300 7,500
The TJX Companies, Inc. 1,000 17,600
TMP Worldwide Inc.*<F5> 200 2,146
Torchmark Corp. 200 7,160
Toys R Us, Inc.*<F5> 400 3,348
Transocean Inc. 600 12,270
Travelers Property Casualty
Corp. - Class B*<F5> 1,981 27,952
Tribune Co. 600 27,006
Tupperware Corp. 100 1,382
TXU Corp. 600 10,710
Tyco International Ltd. 3,900 50,154
Union Pacific Corp. 500 27,500
Union Planters Corp. 400 10,516
Unisys Corp.*<F5> 600 5,556
United Parcel Service,
Inc. - Class B 2,200 125,400
United States Steel Corp. 200 1,966
United Technologies Corp. 900 52,002
UnitedHealth Group Inc. 600 55,002
Univision Communications
Inc. - Class A*<F5> 500 12,255
Unocal Corp. 500 13,155
UnumProvident Corp. 500 4,900
U.S. Bancorp 3,800 72,124
UST Inc. 300 8,280
VERITAS Software Corp.*<F5> 800 14,064
Verizon
Communications Inc. 5,337 188,663
V. F. Corp. 200 7,526
Viacom Inc. - Class B*<F5> 3,500 127,820
Visteon Corp. 300 1,782
Vulcan Materials Co. 200 6,046
Wachovia Corp. 2,700 91,989
Wal-Mart Stores, Inc. 8,700 452,661
Walgreen Co. 2,000 58,960
Washington Mutual, Inc. 1,895 66,837
Waste Management, Inc. 1,200 25,416
Waters Corp.*<F5> 300 6,348
Watson
Pharmaceuticals, Inc.*<F5> 200 5,754
WellPoint Health
Networks Inc.*<F5> 300 23,025
Wells Fargo & Co. 3,300 148,467
Wendy's International, Inc. 200 5,502
Weyerhaeuser Co. 400 19,132
Whirlpool Corp. 100 4,903
The Williams
Companies, Inc. 1,000 4,580
Winn-Dixie Stores, Inc. 300 3,966
Worthington Industries, Inc. 200 2,386
Wm. Wrigley Jr. Co. 400 22,600
Xcel Energy, Inc. 800 10,248
Xerox Corp.*<F5> 1,400 12,180
Xilinx, Inc.*<F5> 700 16,387
XL Capital Ltd. - Class A 300 21,234
Yahoo! Inc.*<F5> 1,200 28,824
Yum! Brands, Inc.*<F5> 600 14,598
Zimmer Holdings, Inc.*<F5> 400 19,452
Zions BanCorp. 200 8,556
-----------
TOTAL COMMON STOCKS
(COST $19,277,343) 15,116,281
-----------
Short-Term Principal
Investment (0.1%) Amount
- ----------------- ---------
U.S. Treasury Bill,
1.1350% $10,000 9,973
-----------
TOTAL SHORT-TERM INVESTMENT
(COST $9,973) 9,973
-----------
TOTAL INVESTMENTS (99.3%)
(COST $19,287,316) 15,126,254
-----------
OTHER ASSETS,
LESS LIABILITIES (0.7%) 107,907
-----------
TOTAL NET ASSETS
(100.0%) $15,234,161
-----------
-----------
*<F5> Non-income producing security.
The accompanying Notes to Financial Statements are an integral part of this
schedule.
SCHEDULE OF FUTURES CONTRACTS
AS OF MARCH 31, 2003 (UNAUDITED)
THE CATHOLIC EQUITY FUND
Unrealized
Futures Contracts Purchased Contracts Depreciation
- --------------------------- --------- ------------
S&P 500 Index E-mini Futures
Contracts Expiring June 2003 (Underlying Face
Amount at Market Value $127,050) 3 $(663)
-----
TOTAL FUTURES CONTRACTS PURCHASED $(663)
-----
-----
The accompanying Notes to Financial Statements are an integral part of this
schedule.
SCHEDULE OF INVESTMENTS
AS OF MARCH 31, 2003 (UNAUDITED)
THE CATHOLIC MONEY MARKET FUND
Principal Amortized
Commercial Paper (74.6%) Amount Cost
- ------------------------ --------- ---------
Alaska Housing Finance, 1.28%, 4/01/03 $580,000 $580,000
Compass Securitization, 1.27%, 4/04/03 r<F6> 350,000 349,963
Duke University, 1.27%, 4/07/03 570,000 569,879
Erasmus Capital Corp., 1.24%, 4/11/03 r<F6> 550,000 549,811
Forrestal Funding Master Trust, 1.24%, 4/07/03 r<F6> 550,000 549,886
Marshall & Ilsley Corp., 1.235%, 4/15/03 525,000 524,748
Old Line Funding Corp., 1.25%, 4/02/03 r<F6> 350,000 349,988
Salomon Smith Barney Holdings, 1.24%, 4/02/03 525,000 524,982
Spintab-Swedmortgage AB, 1.26%, 5/07/03 350,000 349,559
Steamboat Funding Corp., 1.31%, 4/10/03 r<F6> 500,000 499,836
Stellar Funding Group, 1.28%, 5/08/03 r<F6> 500,000 499,342
Svenska Handelsbank, Inc., 1.25%, 4/22/03 550,000 549,599
Sydney Capital Corp., 1.26%, 4/16/03 r<F6> 330,000 329,827
Tasman Funding, Inc., 1.24%, 4/09/03 r<F6> 550,000 549,848
UBN Delaware, Inc., 1.27%, 5/28/03 575,000 573,844
Waterfront Funding Corp., 1.40%, 4/01/03 r<F6> 540,000 540,000
Yorkshire Building Society, 1.26%, 4/24/03 500,000 499,598
-----------
TOTAL COMMERCIAL PAPER 8,390,710
-----------
Taxable Municipal Bonds (25.3%)
- -------------------------------
California Pollution Control, 1.30%, 5/06/03 500,000 500,000
Cornerstone Funding Corp., 1.39%, 1/01/22 351,000 351,000
Gulf Coast Waste Disposal, 1.28%, 5/05/03 500,000 500,000
Oakland - Alameda Coliseum, 1.30%, 4/11/03 500,000 500,000
Oakland - Alameda Coliseum, 1.27%, 6/06/03 500,000 500,000
Parish of Calcasieu, 1.285%, 4/30/03 500,000 500,000
-----------
TOTAL TAXABLE MUNICIPAL BONDS 2,851,000
-----------
Variable Rate Demand Note (0.1%)
- --------------------------------
U.S. Bank, N.A., 1.0588% $11,257 $11,257
-----------
TOTAL VARIABLE RATE DEMAND NOTE 11,257
-----------
TOTAL INVESTMENTS (100.0%) 11,252,967
-----------
LIABILITIES, LESS OTHER ASSETS (0.0%) (1,045)
-----------
TOTAL NET ASSETS (100.0%) $11,251,922
-----------
-----------
r<F6> - Section 4(2) paper which is unregistered and restricted on its resale.
The Portfolio's Adviser has determined these securities to be liquid.
The amortized cost of such securities was $4,218,501 (37.5% of net
assets) at March 31, 2003.
The accompanying Notes to Financial Statements are an integral part of this
schedule.
STATEMENTS OF ASSETS & LIABILITIES
AS OF MARCH 31, 2003 (UNAUDITED)
The Catholic The Catholic
Equity Fund Money Market Fund
----------- -----------------
ASSETS
- ------
Investments, at cost $19,287,316 $11,252,967
----------- -----------
Investments, at value $15,126,254 $11,252,967
Cash 51,412 --
Income receivable 21,738 3,206
Receivable for investments sold 25,496 --
Receivable for Fund shares sold -- 172
Receivable from adviser 13,609 1,787
Other assets 38,212 14,016
----------- -----------
TOTAL ASSETS 15,276,721 11,272,148
----------- -----------
LIABILITIES
- -----------
Payable for investments purchased 12,072 --
Payable for Fund shares redeemed 1,993 --
Payable to broker 2,385 --
Dividends payable -- 3
Accrued expenses and other liabilities 26,110 20,223
----------- -----------
TOTAL LIABILITIES 42,560 20,226
----------- -----------
NET ASSETS $15,234,161 $11,251,922
----------- -----------
----------- -----------
NET ASSETS CONSIST OF:
- ----------------------
Paid in capital $21,424,671 $11,251,922
Undistributed net investment income 42,179 --
Undistributed net realized loss on
investments sold and futures contracts (2,070,964) --
Net unrealized depreciation on:
Investments (4,161,062) --
Futures contracts (663) --
----------- -----------
NET ASSETS $15,234,161 $11,251,922
----------- -----------
----------- -----------
CLASS A SHARES
- --------------
Net assets $3,030,832 $11,251,922
Shares authorized ($0.001 par value) 100,000,000(1)<F7> 400,000,000
Shares issued and outstanding 447,201 11,251,922
Net asset value, redemption price and
minimum offering price per share $6.78 $1.00
Maximum offering price per share ($6.78/0.96) $7.06 $1.00
CLASS C SHARES
- --------------
Net assets $3,595 --
Shares authorized ($0.001 par value) 100,000,000(1)<F7> --
Shares issued and outstanding 533 --
Net asset value and offering price per share $6.75(2)<F8> --
CLASS I SHARES
- --------------
Net assets $12,199,734 --
Shares authorized ($0.001 par value) 100,000,000(1)<F7> --
Shares issued and outstanding 1,803,043 --
Net asset value, redemption price and
offering price per share $6.77 --
(1)<F7> Represents authorized shares of the Fund. Authorized shares are not
allotted to the separate classes.
(2)<F8> Amount does not recalculate due to rounding.
The accompanying Notes to Financial Statements are an integral part of these
statements.
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 2003 (UNAUDITED)
The Catholic The Catholic
Equity Fund Money Market Fund
----------- -----------------
INVESTMENT INCOME
- -----------------
Dividend income $136,948 $ --
Interest income 154 85,409
-------- -------
TOTAL INCOME 137,102 85,409
-------- -------
EXPENSES
- --------
Transfer agent fees and expenses 41,624 17,542
Investment advisory fees 36,316 17,389
Portfolio accounting fees 29,606 17,012
Federal and state registration fees 12,320 6,224
Audit fees 6,917 6,046
Legal fees 5,932 4,322
Printing and postage expenses 5,163 2,478
12b-1 fees - Class A 3,889 2,898
12b-1 fees - Class C 14 --
Custody fees 1,638 3,822
Directors' fees and expenses 1,485 1,472
Other 8,503 4,335
-------- -------
TOTAL EXPENSES 153,407 83,540
-------- -------
Less waivers and reimbursements by adviser (98,666) (28,476)
-------- -------
NET EXPENSES 54,741 55,064
-------- -------
NET INVESTMENT INCOME 82,361 30,345
-------- -------
-------- -------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- --------------------------------------------------
Net realized loss on:
Investments (61,182) --
Futures contracts (2,033) --
Net change in unrealized
appreciation/depreciation on:
Investments 541,846 --
Futures contracts (663) --
-------- -------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS 477,968 --
-------- -------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $560,329 $30,345
-------- -------
-------- -------
The accompanying Notes to Financial Statements are an integral part of these
statements.
STATEMENTS OF CHANGES IN NET ASSETS
THE CATHOLIC EQUITY FUND
For the Six For the
Months Ended Year Ended
March 31, 2003 September 30,
(Unaudited) 2002(1)<F9>
-------------- -------------
OPERATIONS
- ----------
Net investment income $82,361 $51,887
Net realized loss on investments
sold and futures contracts (63,215) (957,717)
Net change in unrealized appreciation/depreciation
on investments and futures contracts 541,183 (3,719,227)
----------- -----------
CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS 560,329 (4,625,057)
----------- -----------
DISTRIBUTIONS TO CLASS A SHAREHOLDERS
- -------------------------------------
Distributions from net investment income (10,347) --
Distributions from net realized gain on investments -- (93,974)
DISTRIBUTIONS TO CLASS C SHAREHOLDERS
- -------------------------------------
Distributions from net investment income (20) --
DISTRIBUTIONS TO CLASS I SHAREHOLDERS
- -------------------------------------
Distributions from net investment income (89,356) --
----------- -----------
CHANGE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (99,723) (93,974)
----------- -----------
CAPITAL SHARE TRANSACTIONS
- --------------------------
Proceeds from shareholder purchases 2,147,116 12,592,074
Net proceeds from acquisition (Note 7) -- 11,898,101
Net asset value of shares issued to shareholders
in payment of distributions declared 99,325 87,639
Cost of shares redeemed (173,194) (11,683,790)
----------- -----------
CHANGE IN NET ASSETS FROM CAPITAL
SHARE TRANSACTIONS 2,073,247 12,894,024
----------- -----------
CHANGE IN NET ASSETS 2,533,853 8,174,993
----------- -----------
----------- -----------
NET ASSETS, BEGINNING OF PERIOD 12,700,308 4,525,315
----------- -----------
----------- -----------
NET ASSETS, END OF PERIOD $15,234,161 $12,700,308
----------- -----------
----------- -----------
UNDISTRIBUTED NET INVESTMENT INCOME $42,179 $59,541
----------- -----------
----------- -----------
(1)<F9> Information contained in this statement for the period October 1, 2001
through April 2, 2002 reflects the operations of The Catholic
Disciplined Capital Appreciation Fund. The information for the period
April 3, 2002 through September 30, 2002 reflects the operations for
The Catholic Equity Fund.
The accompanying Notes to Financial Statements are an integral part of these
statements.
STATEMENTS OF CHANGES IN NET ASSETS
THE CATHOLIC MONEY MARKET FUND
For the Six For the
Months Ended Year Ended
March 31, 2003 September 30,
(Unaudited) 2002
-------------- -------------
OPERATIONS
- ----------
Net investment income $30,345 $128,472
----------- -----------
CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS 30,345 128,472
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
- -----------------------------
Distributions from net investment income (30,345) (128,472)
----------- -----------
CHANGE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (30,345) (128,472)
----------- -----------
CAPITAL SHARE TRANSACTIONS
- --------------------------
Proceeds from shareholder purchases 273,942 2,366,833
Net asset value of shares issued to shareholders
in payment of distributions declared 30,268 128,006
Cost of shares redeemed (889,721) (3,016,288)
----------- -----------
CHANGE IN NET ASSETS FROM CAPITAL
SHARE TRANSACTIONS (585,511) (521,449)
----------- -----------
CHANGE IN NET ASSETS (585,511) (521,449)
----------- -----------
----------- -----------
NET ASSETS, BEGINNING OF PERIOD 11,837,433 12,358,882
----------- -----------
----------- -----------
NET ASSETS, END OF PERIOD $11,251,922 $11,837,433
----------- -----------
----------- -----------
The accompanying Notes to Financial Statements are an integral part of these
statements.
FINANCIAL HIGHLIGHTS
THE CATHOLIC EQUITY FUND - CLASS A
For the Six For the For the For the For the
Months Ended Year Ended Year Ended Year Ended Period Ended
March 31, 2003 Sept. 30, Sept. 30, Sept. 30, Sept. 30,
(Unaudited) 2002(9)<F18> 2001(9)<F18> 2000(9)<F18> 1999(1)<F10>(9)<F18>
-------------- ------------ ------------ ------------ --------------------
NET ASSET VALUE,
BEGINNING OF PERIOD $6.48 $8.43 $10.95 $9.69 $10.00
----- ----- ------ ------ ------
Net investment income (loss) 0.03 0.06 (0.04)(7)<F16> (0.03)(7)<F16> --(8)<F17>
Net realized and unrealized
gain (loss) on investments 0.29 (1.83) (2.45) 1.31 (0.31)
----- ----- ------ ------ ------
TOTAL FROM
INVESTMENT OPERATIONS 0.32 (1.77) (2.49) 1.28 (0.31)
----- ----- ------ ------ ------
Distributions from net
investment income (0.02) -- -- -- --
Distributions from net
realized gain on investments -- (0.18) (0.03) (0.02) --
----- ----- ------ ------ ------
TOTAL DISTRIBUTIONS (0.02) (0.18) (0.03) (0.02) --
----- ----- ------ ------ ------
NET ASSET VALUE,
END OF PERIOD $6.78 $6.48 $8.43 $10.95 $9.69
----- ----- ------ ------ ------
----- ----- ------ ------ ------
Total return(2)<F11> 4.97%(3)<F12> (21.65)% (22.81)% 13.16% 3.10%(3)<F12>
RATIOS TO AVERAGE NET ASSETS
- ----------------------------
Expenses(4)<F13>(5)<F14> 0.95% 1.23% 1.75% 1.75% 1.75%
Net investment
income (loss)(4)<F13>(5)<F14> 1.86% 0.31% (0.45)% (0.33)% (0.03)%
Expenses(4)<F13>(6)<F15> 2.31% 2.48% 3.05% 3.31% 4.83%
Net investment
income (loss)(4)<F13>(6)<F15> 0.50% (0.94)% (1.75)% (1.89)% (3.11)%
Net assets, end of period $3,030,832 $2,865,775 $4,525,315 $4,671,129 $3,365,592
Portfolio turnover rate 0.88%(3)<F12> 31.23%(3)<F12> 39.17% 28.78% 2.44%(3)<F12>
(1)<F10> Reflects operations for the period from May 3, 1999 (commencement of
operations), to September 30, 1999.
(2)<F11> Based on net asset value, which does not reflect the sales charge.
(3)<F12> Not annualized.
(4)<F13> Computed on an annualized basis.
(5)<F14> Net of waivers and reimbursements by adviser.
(6)<F15> Gross of waivers and reimbursements by adviser.
(7)<F16> Per share net investment loss has been calculated prior to tax
adjustments.
(8)<F17> Less than one cent per share.
(9)<F18> Information for the periods ended September 30, 1999, 2000, 2001 and
October 1, 2001 through April 2, 2002 reflect the operations of The
Catholic Disciplined Capital Appreciation Fund. Information for the
period April 3, 2002 through September 30, 2002 reflects the
operations of The Catholic Equity Fund.
The accompanying Notes to Financial Statements are an integral part of these
statements.
THE CATHOLIC EQUITY FUND - CLASS C
For the Six For the
Months Ended Period Ended
March 31, 2003 September 30,
(Unaudited) 2002(1)<F19>
-------------- -------------
NET ASSET VALUE, BEGINNING OF PERIOD $6.48 $8.92
----- -----
Net investment income 0.03 0.01
Net realized and unrealized gain (loss) on investments 0.28 (2.45)
----- -----
TOTAL FROM INVESTMENT OPERATIONS 0.31 (2.44)
----- -----
Distributions from net investment income (0.04) --
----- -----
TOTAL DISTRIBUTIONS (0.04) --
----- -----
NET ASSET VALUE, END OF PERIOD $6.75 $6.48
----- -----
----- -----
Total return(2)<F20> 4.89%(3)<F21> (27.47)%(3)<F21>
RATIOS TO AVERAGE NET ASSETS
- ----------------------------
Expenses(4)<F22>(5)<F23> 1.20% 1.20%
Net investment income (loss)(4)<F22>(5)<F23> (0.05)% 0.67%
Expenses(4)<F22>(6)<F24> 2.81% 3.71%
Net investment loss(4)<F22>(6)<F24> (1.66)% (1.84)%
Net assets, end of period $3,595 $3,432
Portfolio turnover rate 0.88%(3)<F21> 31.23%(3)<F21>
(1)<F19> Reflects operations for the period from April 9, 2002 (commencement of
operations), to September 30, 2002.
(2)<F20> Based on net asset value, which does not reflect the sales charge.
(3)<F21> Not annualized.
(4)<F22> Computed on an annualized basis.
(5)<F23> Net of waivers and reimbursements by adviser.
(6)<F24> Gross of waivers and reimbursements by adviser.
The accompanying Notes to Financial Statements are an integral part of these
statements.
THE CATHOLIC EQUITY FUND - CLASS I
For the Six For the
Months Ended Period Ended
March 31, 2003 September 30,
(Unaudited) 2002(1)<F25>
-------------- -------------
NET ASSET VALUE, BEGINNING OF PERIOD $6.49 $9.02
----- -----
Net investment income 0.04 0.02
Net realized and unrealized gain (loss) on investments 0.29 (2.55)
----- -----
TOTAL FROM INVESTMENT OPERATIONS 0.33 (2.53)
----- -----
Distributions from net investment income (0.05) --
----- -----
TOTAL DISTRIBUTIONS (0.05) --
----- -----
NET ASSET VALUE, END OF PERIOD $6.77 $6.49
----- -----
----- -----
Total return 5.10%(2)<F26> (28.05)%(2)<F26>
RATIOS TO AVERAGE NET ASSETS
- ----------------------------
Expenses(3)<F27>(4)<F28> 0.70% 0.70%
Net investment income(3)<F27>(4)<F28> 0.23% 1.03%
Expenses(3)<F27>(5)<F29> 2.06% 2.55%
Net investment loss(3)<F27>(5)<F29> (1.13)% (0.82)%
Net assets, end of period $12,199,734 $9,831,101
Portfolio turnover rate 0.88%(2)<F26> 31.23%(2)<F26>
(1)<F25> Reflects operations for the period from April 3, 2002 (commencement of
operations), to September 30, 2002.
(2)<F26> Not annualized.
(3)<F27> Computed on an annualized basis.
(4)<F28> Net of waivers and reimbursements by adviser.
(5)<F29> Gross of waivers and reimbursements by adviser.
The accompanying Notes to Financial Statements are an integral part of these
statements.
THE CATHOLIC MONEY MARKET FUND
For the Six For the For the For the
Months Ended Year Ended Year Ended Period Ended
March 31, 2003 September 30, September 30, September 30,
(Unaudited) 2002 2001 2000(1)<F30>
-------------- ------------- ------------- ------------
NET ASSET VALUE,
BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00
----- ----- ----- -----
Net investment income --(2)<F31> 0.01 0.04 0.04
----- ----- ----- -----
TOTAL FROM
INVESTMENT OPERATIONS --(2)<F31> 0.01 0.04 0.04
----- ----- ----- -----
Distributions from net
investment income --(2)<F31> (0.01) (0.04) (0.04)
----- ----- ----- -----
TOTAL DISTRIBUTIONS --(2)<F31> (0.01) (0.04) (0.04)
----- ----- ----- -----
NET ASSET VALUE,
END OF PERIOD $1.00 $1.00 $1.00 $1.00
----- ----- ----- -----
----- ----- ----- -----
Total return 0.26%(3)<F32> 1.09% 4.45% 4.08%(3)<F32>
RATIOS TO AVERAGE NET ASSETS
- ----------------------------
Expenses(4)<F33>(5)<F34> 0.95% 0.95% 0.91% 0.91%
Net investment income(4)<F33>(5)<F34> 0.52% 1.08% 4.35% 5.34%
Expenses(4)<F33>(6)<F35> 1.44% 1.30% 1.05% 1.19%
Net investment income(4)<F33>(6)<F35> 0.03% 0.73% 4.21% 5.06%
Net assets, end of period $11,251,922 $11,837,433 $12,358,882 $11,020,977
(1)<F30> Reflects operations for the period from January 7, 2000 (commencement
of operations), to September 30, 2000.
(2)<F31> Less than one cent per share.
(3)<F32> Not annualized.
(4)<F33> Computed on an annualized basis.
(5)<F34> Net of waivers and reimbursements by adviser.
(6)<F35> Gross of waivers and reimbursements by adviser.
The accompanying Notes to Financial Statements are an integral part of these
statements.
NOTES TO FINANCIAL STATEMENTS
AS OF MARCH 31, 2003 (UNAUDITED)
1. ORGANIZATION
- ---------------
The Catholic Funds, Inc. (the "Company") was incorporated on December 16, 1998,
as a Maryland Corporation and is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended. The Company
consists of two diversified series: The Catholic Equity and Money Market Funds
(the "Funds"). At the close of business on April 2, 2002, The Catholic Equity
Fund ("Equity Fund") acquired, through a non-taxable reorganization,
substantially all of the net assets of The Catholic Equity Income, Large-Cap
Growth and Disciplined Capital Appreciation Funds. The Catholic Disciplined
Capital Appreciation Fund ("Disciplined Capital Appreciation Fund") was deemed
to be the accounting survivor of the reorganization. In 2002, the Company
designated three classes of Equity Fund shares: Class A, Class C and Class I.
The three classes differ principally in their respective distribution expenses
and arrangements as well as their respective sales and redemption fee
arrangements. All classes of shares have identical rights to earnings, assets
and voting privileges, except for class specific expenses and exclusive rights
to vote on matters affecting only individual classes. All outstanding shares of
the Disciplined Capital Appreciation Fund were redesignated as Class A shares
effective on March 25, 2002. Class A shares are subject to an initial maximum
sales charge of 4.00% imposed at the time of purchase. The sales charge
declines as the amount purchased increases in accordance with the Fund's
prospectus. Class C shares became effective on March 25, 2002 and commenced
operations on April 9, 2002. Class C shares are subject to a contingent
deferred sales charge ("CDSC") for redemptions made within one year of purchase,
in accordance with the Fund's prospectus. The CDSC is 1.00% of the lesser of
the original purchase price or the cost of shares being redeemed. Class I
shares became effective on March 25, 2002 and commenced operations on April 3,
2002. Class I shares are no-load shares. The Catholic Money Market Fund became
effective on November 8, 1999 and commenced operations on January 7, 2000. The
Funds are both managed by Catholic Financial Services Corporation (the
"Adviser").
2. SIGNIFICANT ACCOUNTING POLICIES
- ----------------------------------
The following is a summary of significant accounting policies consistently
followed by the Funds in preparation of their financial statements. These
policies are in conformity with accounting principles generally accepted in the
United States of America (i.e., GAAP).
A) INVESTMENT VALUATION
Securities traded over-the-counter or on a national securities exchange are
valued on the basis of market value in their principal and most representative
market. Securities where the principal and most representative market is a
national securities exchange are valued at the latest reported sale price on
such exchange that day. Exchange-traded securities for which there were no
transactions that day are valued at the latest bid prices. Securities traded on
only over-the-counter markets are valued at the latest bid prices. Debt
securities (other than short-term obligations) are valued at prices furnished by
a pricing service, subject to review by the Funds' Adviser. Short-term
obligations (maturing within 60 days) are valued on an amortized cost basis,
which approximates market value. Securities for which quotations are not
readily available and other assets are valued at fair value as determined in
good faith by the Adviser under the supervision of the board of directors.
B) STOCK INDEX FUTURES CONTRACTS
The Catholic Equity Fund may purchase and sell stock index futures contracts.
Upon entering into a contract, the Fund deposits and maintains as collateral
such initial margin as required by the exchange on which the transaction is
effected. Pursuant to the contract, the Fund agrees to receive from or pay to
the broker an amount of cash equal to the daily fluctuation in value of the
contract. Such receipts or payments are known as variation margin and are
recorded by the Fund as unrealized gains and losses. When the contract is
closed, the Fund records a realized gain or loss equal to the difference between
the value of the contract at the time it was opened and the value at the time it
was closed. As collateral for futures contracts, the Fund is required under the
1940 Act to maintain assets consisting of cash, cash equivalents or liquid
securities. The Fund's exposure on a futures contract is equal to the amount
paid for the contract by the Fund.
C) FEDERAL INCOME TAXES
The Funds intend to comply with the requirements of Subchapter M of the Internal
Revenue Code necessary to qualify as regulated investment companies and to make
the requisite distributions of income and capital gains to their shareholders
sufficient to relieve it from all or substantially all federal income taxes.
Therefore, no federal income tax provision has been recorded.
D) DISTRIBUTIONS TO SHAREHOLDERS
The Catholic Equity Fund will distribute any net investment income and any net
realized long or short-term capital gains at least annually. The Catholic Money
Market Fund pays dividends monthly. Distributions from net realized gains for
book purposes may include short-term capital gains. All short-term capital
gains are included in ordinary income for tax purposes. Distributions to
shareholders are recorded on the ex-dividend date. The Funds may also pay a
special distribution at the end of the calendar year to comply with federal tax
requirements.
The tax character of distributions paid during the year ended September 30, 2002
were as follows:
Ordinary Long-term
income capital gains
-------- -------------
Equity Fund $ -- $93,974
Money Market Fund 128,472 --
Due to inherent differences in the recognition of income, expenses and realized
gains/losses under GAAP and federal income tax purposes, permanent differences
between book and tax basis of reporting have been identified and appropriately
reclassified on the Statements of Assets and Liabilities.
The tax components of distributable earnings, capital loss carryforwards
(expiring in varying amounts through 2009), and post-October losses as of
September 30, 2002, which are not recognized for tax purposes until the first
day of the following fiscal year, are:
Ordinary Long-term Net capital loss Post-October
income capital gains carryforwards losses
-------- ------------ ---------------- ------------
Equity Fund $59,428 $ -- $1,166,045 $387,189
E) EXPENSES
Each Fund is charged for those expenses that are directly attributable to it,
such as investment advisory and custody fees. Expenses that are not directly
attributable to a Fund or to any class of shares of the Equity Fund are either
allocated equally between the Funds or in proportion to their respective net
assets when appropriate. Fees paid under the Distribution Plan (the "Plan") are
borne by the specific class of shares of the Equity Fund to which the Plan
applies.
F) OTHER
For financial reporting purposes, investment transactions are accounted for on
the trade date. The Funds determine the gain or loss realized from investment
transactions by comparing the original cost of the security lot sold with the
net sale proceeds.
Income Recognition - Interest income is accrued as earned. Dividend income is
recorded on the ex-dividend date. Income and realized and unrealized gains or
losses on investments are allocated to each class of shares based on its
relative net assets. All discounts and premiums are amortized on the effective
interest method for tax and financial reporting purposes.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of increases and decreases in net assets from operations
during the reporting period. Actual results could differ from those estimates.
3. INVESTMENT ADVISORY AND OTHER AGREEMENTS WITH RELATED PARTIES
- ----------------------------------------------------------------
Each of the Funds has entered into an agreement with the Adviser, with whom
certain officers and directors of the Funds are affiliated, to furnish
investment advisory services to the Funds. The terms of these agreements are as
follows:
The Catholic Equity Fund pays the Adviser a monthly fee at the annual rate of
0.50% of the Fund's average daily net assets. Pursuant to an expense cap
agreement, the Adviser agreed to waive its management fee and/or reimburse the
Fund's operating expenses (exclusive of brokerage, interest, taxes and
extraordinary expenses) to ensure that the Fund's operating expenses do not
exceed 0.95%, 1.20% and 0.70% of the average daily net assets of The Catholic
Equity Fund - Class A, Class C and Class I shares, respectively. The expense
cap agreement terminates on September 30, 2003.
The Catholic Money Market Fund pays the Adviser a monthly fee according to the
following schedule: if the Fund has average daily net assets of $50 million or
less: 0.30%; if the Fund has average daily net assets of more than $50 million
but less than $100 million: 0.25%; if the Fund has average daily net assets of
more than $100 million and less than $200 million: 0.20%; if the Fund's average
daily net assets exceed $200 million: 0.15%. Pursuant to an expense cap
agreement, the Adviser agreed to waive its management fee and/or reimburse the
Fund's operating expenses (exclusive of brokerage, interest, taxes and
extraordinary expenses) to ensure that the Fund's operating expenses do not
exceed 0.95% of the Fund's average daily net assets. The expense cap agreement
terminates on September 30, 2003.
The Adviser has entered into sub-advisory agreements for each of the Funds. The
sub-advisers are Mellon Equity Associates, LLP ("Mellon") for The Catholic
Equity Fund and Strong Capital Management, Inc. ("Strong") for The Catholic
Money Market Fund. The annual rates of their fees, payable from fees paid to
the Adviser, as a percent of average daily net assets under the sub-advisory
agreements are as follows:
o Mellon: 0.12% on the first $50 million; 0.06% of the Funds' average daily
nets assets in excess of $50 million.
o Strong: 0.20% if the portfolio is $50 million or less; 0.15% if the
portfolio is over $50 million and less than $100 million; 0.10% if the
portfolio is over $100 million and less than $200 million; 0.075% if the
portfolio is $200 million or more.
For the six months ended March 31, 2003, expenses of $98,666 and $28,476 were
waived by the Adviser for The Catholic Equity and Money Market Funds,
respectively. The Adviser may terminate these waivers and expense
reimbursements after September 30, 2003.
The Funds have adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1
under the Investment Company Act of 1940. The Plan authorizes the Company to
use annually 0.25% and 0.75% of its net assets for The Catholic Equity Fund -
Class A and Class C, respectively, and 0.05% for The Catholic Money Market Fund,
computed on a daily basis, to finance certain activities relating to the
distribution of its shares to investors. For the six months ended March 31,
2003, 12b-1 distribution expenses of $3,889, $14 and $2,898 were paid from The
Catholic Equity Fund - Class A, Class C and Money Market Fund, respectively.
These expenses were remitted to the Adviser, who also acts as distributor for
the shares of each Fund. The Adviser also received sales charges from the sale
of The Catholic Equity Fund - Class A shares of $6,077 for the six months ended
March 31, 2003. There were no contingent deferred sales charges paid to the
Adviser for the redemption of The Catholic Equity Fund - Class C shares during
the six months ended March 31, 2003. Sales charges are not an expense of the
Fund and are not included in the financial statements of the Fund.
4. CAPITAL SHARE TRANSACTIONS
- -----------------------------
Transactions of shares of the Funds were as follows:
THE CATHOLIC EQUITY FUND - CLASS A SHARES
For the Six Months Ended
March 31, 2003 For the Year Ended
(Unaudited) September 30, 2002(1)<F36>
------------------------ --------------------------
Amount Shares Amount Shares
------ ------ ------ ------
Shares sold $197,116 28,463 $603,783 62,346
Shares issued to effect
acquisition (Note 7) -- -- 11,898,101 1,319,159
Shares issued to holders in
reinvestment of distributions 9,949 1,410 87,639 9,642
Shares redeemed (173,194) (24,744) (11,683,790)(4)<F39> (1,485,840)
-------- ------- ----------- ----------
NET INCREASE (DECREASE) $33,871 5,129 $905,733 (94,693)
-------- ------- ----------- ----------
THE CATHOLIC EQUITY FUND - CLASS C SHARES
For the Six Months Ended
March 31, 2003 For the Period Ended
(Unaudited) September 30, 2002(2)<F37>
------------------------ --------------------------
Amount Shares Amount Shares
------ ------ ------ ------
Shares sold $-- -- $3,500 530
Shares issued to holders in
reinvestment of distributions 20 3 -- --
--- -- ------ ---
NET INCREASE $20 3 $3,500 530
--- -- ------ ---
THE CATHOLIC EQUITY FUND - CLASS I SHARES
For the Six Months Ended
March 31, 2003 For the Period Ended
(Unaudited) September 30, 2002(3)<F38>
------------------------ --------------------------
Amount Shares Amount Shares
------ ------ ------ ------
Shares sold $1,950,000 275,633 $11,984,791(4)<F39> 1,514,717
Shares issued to holders in
reinvestment of distributions 89,356 12,693 -- --
---------- ------- ----------- ---------
NET INCREASE $2,039,356 288,326 $11,984,791 1,514,717
---------- ------- ----------- ---------
THE CATHOLIC MONEY MARKET FUND
For the Six Months Ended
March 31, 2003 For the Year Ended
(Unaudited) September 30, 2002
-------------------- ------------------
Shares sold 273,942 2,366,833
Shares issued to holders in
reinvestment of distributions 30,268 128,006
Shares redeemed (889,721) (3,016,288)
-------- ----------
NET DECREASE (585,511) (521,449)
-------- ----------
-------- ----------
(1)<F36> Share transactions for the period October 1, 2001 through April 2,
2002 reflect the operations of The Catholic Disciplined Capital
Appreciation Fund. Share transactions for the period April 3, 2002
through September 30, 2002 reflect the operations of The Catholic
Equity Fund. (Note 1)
(2)<F37> Reflects operations for the period from April 9, 2002 (commencement of
operations) to September 30, 2002.
(3)<F38> Reflects operations for the period from April 3, 2002 (commencement of
operations) to September 30, 2002.
(4)<F39> Includes $10,758,990 redeemed from Class A and immediately reinvested
in Class I Shares.
5. INVESTMENT TRANSACTIONS
- --------------------------
The aggregate purchases and sales of securities, excluding short-term
investments for The Catholic Equity Fund for the six months ended March 31, 2003
were $2,116,131 and $126,172, respectively. There were no purchases and sales
of U.S. government securities for the Fund.
Transactions in futures contracts for the six months ended March 31, 2003, for
The Catholic Equity Fund were as follows:
Number of Aggregate face
contracts value of contracts
--------- ------------------
Outstanding at beginning of year -- $ --
Contracts opened 7 305,238
Contracts closed (4) (177,525)
--- ---------
Outstanding at end of year 3 $ 127,713
--- ---------
--- ---------
At September 30, 2002, gross unrealized appreciation and depreciation on
investments, based on cost for federal income tax purposes of $17,802,968, for
The Catholic Equity Fund was as follows:
Appreciation $278,821
(Depreciation) (5,436,131)
-----------
NET DEPRECIATION ON INVESTMENTS $(5,157,310)
-----------
-----------
6. CHANGE IN INDEPENDENT ACCOUNTANTS
- ------------------------------------
Effective August 1, 2002, the Board of Directors selected the accounting firm of
PricewaterhouseCoopers LLP to serve as the Funds' independent certified public
accountants for the fiscal year ended September 30, 2002 to fill a vacancy in
such position in accordance with Section 32(a)(2) of the 1940 Act resulting from
Arthur Andersen LLP's cessation of operations. Arthur Andersen LLP had served
as the Funds' independent certified public accountant for the Funds' fiscal
years ended September 30, 1999, September 30, 2000 and September 30, 2001.
Arthur Andersen LLP's report of the financial statements of the Funds for the
fiscal years September 30, 1999, September 30, 2000 and September 30, 2001 did
not contain an adverse opinion or disclaimer of opinion or was not qualified or
modified as to uncertainty, audit scope or accounting principles. There were no
disagreements with Arthur Andersen LLP on any matter of accounting principles or
practices, financial statement disclosure or auditing scope of procedure during
the fiscal years ended September 30, 1999, September 30, 2000 and September 30,
2001 or for the interim period from October 1, 2001 through the date of their
termination.
The Funds represent that they had not consulted with PricewaterhouseCoopers LLP
any time prior to their engagement with respect to the application of accounting
principles to a specified transaction, either completed or proposed; or the
type of audit opinion that might be rendered on the Funds' financial statements.
7. ACQUISITION INFORMATION
- --------------------------
Effective at the close of business on April 2, 2002, The Catholic Equity Fund
acquired, through a non-taxable reorganization, substantially all of the net
assets of The Catholic Equity Income, Large-Cap Growth and Disciplined Capital
Appreciation Funds. The Catholic Equity Fund issued 1,864,487 shares (valued at
$16,816,919) for the 582,068, 699,484 and 545,376 shares outstanding for The
Catholic Equity Income, Large-Cap Growth and Disciplined Capital Appreciation
Funds, respectively. The net assets of $5,712,323, $6,185,778 and $4,918,818 of
The Catholic Equity Income, Large-Cap Growth and Disciplined Capital
Appreciation Funds, respectively, included net unrealized appreciation
(depreciation) on investments of $124,750, $(177,234) and $(398,551), and
accumulated net realized losses of $(183,267), $(874,354) and $(170,097),
respectively. The Catholic Equity Income, Large-Cap Growth and Disciplined
Capital Appreciation Funds also had capital loss carryforwards which were
combined with those of The Catholic Equity Fund. Subject to IRS regulations,
The Catholic Equity Fund may use capital loss carryforwards of $179,611 from The
Catholic Equity Income Fund, $817,512 from The Catholic Large-Cap Growth Fund
and $168,922 from The Catholic Disciplined Capital Appreciation Fund.
8. SUBSEQUENT EVENT - ACQUISITION INFORMATION
- ---------------------------------------------
Effective at the close of business on May 22, 2003, The Catholic Equity Fund
acquired, through a non-taxable reorganization, substantially all of the net
assets of The Catholic Values Investment Trust Equity Fund.
A NOTE ON FORWARD-LOOKING STATEMENTS
Except for historical information contained in this annual report for The
Catholic Funds, Inc., the matters discussed in these reports may constitute
forward-looking statements made pursuant to the safe harbor provisions of the
Securities Litigation Reform Act of 1995. These include any adviser, subadviser
and/or portfolio manager prediction, assessment, analysis or outlook for
individual securities, industries, market sectors and/or markets. These
statements involve risks and uncertainties. In addition to general risks
described for each Fund in the current prospectus, other factors bearing on
these reports include the accuracy of the forecasts and predictions, the
appropriateness of the investment strategies designed by the adviser, any
subadviser or portfolio manager to implement their strategies efficiently and
effectively. Any one or more of these factors, as well as other risks affecting
the securities markets and investment instruments generally could cause the
actual results of any Fund to differ materially as compared to benchmarks
associated with the particular Fund.
BOARD OF DIRECTORS
- ------------------
Daniel Steininger
Chairman of the Board
Thomas Bausch
J. Michael Borden
Daniel Doucette
Allan Lorge
Thomas Munninghoff
Conrad Sobczak
OFFICERS
- --------
Theodore Zimmer
President
William J. Binder
Vice President
Allan Lorge
Vice President, Secretary and
Chief Financial Officer
Russell Kafka
Treasurer
INVESTMENT ADVISER
- ------------------
Catholic Financial Services Corporation
1100 West Wells Street
Milwaukee, WI 53233
SUBADVISERS
- -----------
The Catholic Equity Fund
- ------------------------
Mellon Equity Associates, LLP
500 Grant St., Suite 4200
Pittsburgh, PA 15258
The Catholic Money Market Fund
- ------------------------------
Strong Capital Management, Inc.
100 Heritage Reserve
Menomonee Falls, WI 53051
LEGAL COUNSEL
- -------------
Quarles & Brady LLP
CUSTODIAN
- ---------
U.S. Bank, N.A.
TRANSFER AGENT
- --------------
U.S. Bancorp Fund Services, LLC
INDEPENDENT ACCOUNTANTS
- -----------------------
PricewaterhouseCoopers LLP
SHAREHOLDER SERVICES
- --------------------
The Catholic Funds
c/o U.S. Bancorp Fund Services, LLC
615 East Michigan Street
P.O. Box 710
Milwaukee, WI 53201-0701
THE CATHOLIC
FRATERNAL ALLIANCE
- ------------------
Catholic Knights
Daniel Steininger, President
1100 West Wells Street
Milwaukee, WI 53233
Catholic Order of Foresters
Robert Ciesla, High Chief Ranger
355 Shuman Boulevard
P.O. Box 3012
Naperville, IL 60566-7012
Catholic Knights of America
John Kenawell, President
3525 Hampton Avenue
St. Louis, MO 63139-1980
Catholic Union of Texas (The KJT)
Elo J. Goerig, President
P.O. Box 297
LaGrange, TX 78945
This report is intended for shareholders of The Catholic Funds. It is not
authorized for distribution to prospective investors unless preceded or
accompanied by a current prospectus.
The Catholic Church has not sponsored or endorsed The Catholic Funds nor
approved or disapproved of the Funds as an investment.
(CATHOLIC FINANCIAL SERVICES CORPORATION LOGO)
GIVING VOICE TO CATHOLIC VALUES
1100 West Wells Street o Milwaukee, WI 53233
1-414-278-6550
Member NASD and SIPC
The Catholic Funds are not available in all states.
ITEM 2. CODE OF ETHICS
Not applicable for filing of Semi-Annual Report to Shareholders.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
Not applicable for filing of Semi-Annual Report to Shareholders.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Not applicable for filing of Semi-Annual Report to Shareholders.
ITEMS 5-6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
Not applicable to this Registrant, insofar as the Registrant is not a
closed-end management investment company.
ITEM 8. [RESERVED]
ITEM 9. CONTROLS AND PROCEDURES
(a) Disclosure Controls and Procedures. This Item is omitted as provided
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in SEC Release IC-25914.
(b) Change in Internal Controls. Based on their evaluation as of a date
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within 90 days of the filing of this Form N-CSR, our President (Principal
Executive Officer) and Vice President, Secretary and Chief Financial Officer
(Principal Financial Officer) have confirmed that there have been no significant
changes in our internal controls (which are designed to provide reasonable
assurance as to the reliability of our published financial statements) or in
other factors that could significantly affect these controls subsequent to the
date of such evaluation.
ITEM 10. EXHIBITS
The following exhibits are attached to this Form N-CSR:
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
10(b)(1) Certification of Principal Executive Officer Required by
Section 302 of the Sarbanes-Oxley Act of 2002
10(b)(2) Certification of Principal Financial Officer Required by
Section 302 of the Sarbanes-Oxley Act of 2002
10(c) Certification of Chief Executive Officer and Chief Financial
Officer Required by Section 906 of the Sarbanes-Oxley Act of
2002
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized, on this 2nd
day of June, 2003.
THE CATHOLIC FUNDS, INC.
By: /s/ Theodore F. Zimmer
------------------------------
Theodore F. Zimmer, President
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities indicated on
this 2nd day of June, 2003.
By: /s/ Theodore F. Zimmer
------------------------------
Theodore F. Zimmer, President (Principal
Executive Officer)
By: /s/ Allan G. Lorge
------------------------------
Allan G. Lorge, Vice President,
Secretary and Chief Financial Officer
(Principal Financial Officer)