[QUARLES & BRADY LLP LETTERHEAD]
January 19, 2005
VIA EDGAR
- ---------
Ms. Valerie Lithotomos
Securities and Exchange Commission
Division of Investment Management
Judiciary Plaza
450 Fifth Street, N.W.
Washington DC 20549
Re: THE CATHOLIC FUNDS, INC. (THE "REGISTRANT")
1933 ACT NO. 333-69803; 1940 ACT FILE NO. 811-09177
RESPONSE TO COMMENTS ON POST-EFFECTIVE AMENDMENT NO. 9 TO REGISTRATION
STATEMENT ON FORM N-1A
Dear Ms. Lithotomos:
This is in response to your January 18, 2005 telephone comments on Post-
Effective Amendment No. 9 (the "Amendment") to the Registration Statement on
Form N-1A of The Catholic Funds, Inc. filed under Rule 485(a)(1) on December 13,
2004.
You noted that the Registrant discloses its policy with respect to the
disclosure of portfolio holdings in its Prospectus under the heading "Other
Share and Shareholder Information - Disclosure of Fund Portfolio Holdings." You
commented that Item 4(d) of Form N-1A provides that the Registrant may, if it so
desires, move this disclosure to the Statement of Additional Information and
include a statement in the Prospectus that this disclosure can be found in the
Statement of Additional Information. You further directed the Registrant's
attention to Item 11(f) of Form N-1A with respect to the substance of the re-
quired disclosure. You requested that the Registrant disclose whether it or its
investment adviser or another party receives any compensation or consideration
in connection with the disclosure of the Fund's portfolio holdings, and to state
whether such disclosures are made pursuant to any agreements of confidentiality
or other restrictions or arrangements which require the receiving party to
maintain the disclosures in confidence.
The Registrant has determined to move the disclosure to its Statement of
Additional Information and to include a statement in its Prospectus that its
policy with respect to the disclosure of its portfolio holdings can be found in
its Statement of Additional Information. The Registrant has expanded the
disclosure as requested and has set it forth in its Statement of Additional
Information.
Attached for the staff's information are the revised pages of the
Prospectus and Statement of Additional Information, marked to show the new
disclosures. Please see the attached excerpt from the Prospectus captioned
"Other Share and Shareholder Information - Disclosure of Fund Portfolio
Holdings" and the attached excerpt from the Statement of Additional Information
captioned "Disclosure of Fund Portfolio Holdings."
The Registrant has authorized us to represent, on its behalf, that the
Registrant will not use the Securities and Exchange Commission's comment process
reflected in this letter as a defense in any securities related litigation
against the Registrant.
As indicated in our December 13, 2004 filing letter that accompanied the
Amendment and on the cover page of the Amendment, the Registrant requests that
effectiveness of the Amendment be accelerated so that it becomes effective on
February 1, 2005.
Please contact me at (414) 277-5309 if you have any questions or concerns
regarding this response. Thank you for your assistance.
Very truly yours,
QUARLES & BRADY LLP
/s/ Fredrick G. Lautz
Fredrick G. Lautz
FGL:ba
Attachments
191023.40000
cc (w/enc): Theodore F. Zimmer
Mr. Allan G. Lorge
Mr. Daniel M. Hanrahan
LOGO - The Catholic Funds, Inc
Prospectus
February 1, 2005
The Catholic Equity Fund
Neither The Catholic Funds nor the adviser, Catholic Financial Services
Corporation, is sponsored or endorsed by the Roman Catholic Church, nor has the
Catholic Church approved or disapproved the shares of The Catholic Funds.
As with other mutual funds, the Securities and Exchange Commission has not
approved or disapproved of the Fund's shares or determined whether this
prospectus is accurate or complete. Anyone who tells you otherwise is
committing a crime.
This prospectus has information you should know before you decide to
invest. Please read it carefully and keep it with your investment records.
TABLE OF CONTENTS
PAGE
----
THE CATHOLIC FUNDS..........................................................2
INVESTMENT PHILOSOPHY STATEMENT.............................................2
THE CATHOLIC EQUITY FUND....................................................4
ADDITIONAL INVESTMENT PRACTICES AND RISKS...................................9
USING MUTUAL FUNDS IN AN INVESTMENT PROGRAM................................13
MANAGEMENT.................................................................14
HOW TO INVEST..............................................................15
SELLING YOUR SHARES........................................................26
OTHER SHARE AND SHAREHOLDER INFORMATION....................................29
FINANCIAL HIGHLIGHTS........................................................2
FOR MORE INFORMATION...............................................BACK COVER
o Trading in similar securities of the same issuer or comparable
companies;
o Information from broker/dealers; and
o An evaluation of the forces that influence the market in which the
security is purchased or sold.
DISCLOSURE OF FUND PORTFOLIO HOLDINGS
For a description of the Fund's policy and practices with respect to the
disclosure of its portfolio securities, please see the section of the Statement
of Additional Information captioned "Disclosure of Fund Portfolio Holdings."
DIVIDENDS, CAPITAL GAINS AND TAXES
This section summarizes some of the consequences under current federal tax law
of an investment in the Fund. It is not a substitute for personal tax advice.
Consult your personal tax advisor about the potential tax consequences of an
investment in the Fund under all applicable tax laws.
The Catholic Equity Fund will distribute any net investment income annually and
will distribute any net realized long or short-term capital gains at least
annually. The Fund may also pay a special distribution 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 the Fund's shares, any gain on the transaction may be subject to
tax.
The 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 Fund.
STATEMENT OF ADDITIONAL INFORMATION
FEBRUARY 1, 2005
THE CATHOLIC FUNDS, INC.
1100 WEST WELLS STREET
MILWAUKEE, WI 53233
(877) 222-2402
THE CATHOLIC EQUITY 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.'s Prospectus dated February 1, 2005 for the fund named above. A
Prospectus may be obtained at no charge by writing to the Funds at 1100 West
Wells Street, Milwaukee, Wisconsin 53233 or by calling Shareholder Services at
1-877-222-2402 or on our website at http://www.catholicfunds.com.
In this Statement of Additional Information, The Catholic Funds, Inc. may
be referred to as CFI, and The Catholic Equity Fund may be referred to as the
"Fund." Terms not otherwise defined have the same meaning as in the Prospectus.
DISCLOSURE OF FUND PORTFOLIO HOLDINGS
Because the Fund seeks to structure its investment portfolio to replicate
the composition of the S&P 500 Index, the structure of its portfolio virtually
is a matter of public record, except that the application of its sanctity of
life exclusionary screen results in minor deviations that are not apparent from
the composition of the S&P 500 Index. To protect against misuse of information
regarding the specifics of these deviations, as a matter of policy the Fund
limits disclosure of the precise composition of its investment portfolio. Con-
sistent with this policy, the Fund's administrative agent delivers quarterly
portfolio holdings reports between the fifth and tenth business day of the month
following each calendar quarter to various rating and ranking organizations that
have agreed to keep the information confidential, including organizations such
as Lipper, Morningstar, S&P and Bloomberg, among others. Information about the
Fund's portfolio holdings also is made available by the Adviser to the Fund's
Distributor, Transfer Agent, Custodian and independent auditors and other
service providers to the extent necessary to enable them to carry out their
responsibilities to the Fund. Each of them is subject either to contractual
obligations or professional rules of conduct requiring them to maintain the
information in confidence. Neither the Fund, the Adviser, or any other party
receives any compensation or other consideration in connection with these
permitted disclosures of the Fund's portfolio holdings.
The Fund also files with the SEC a complete schedule of the Fund's
portfolio holdings for the first and third quarters of each fiscal year on
Form N-Q and for the second and fourth quarters of each fiscal year on Form N-
CSR. These forms are generally filed within 60 days following the end of the
relevant fiscal quarter. These forms are available on the SEC's website at
www.sec.gov and may be reviewed and copied at the SEC's Public Reference Room in
Washington, D.C. Information on the operation of the Public Reference Room may
be obtained by calling 1-800-732-0330.
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 the 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 Fund has
elected to be governed by Rule 18f-1 under the Investment Company Act, pursuant
to which the 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 that the 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.