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, 2005
DATE OF REPORTING PERIOD: SEPTEMBER 30, 2005
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).
The Commission may use the information provided on Form N-CSR in its regulatory,
disclosure review, inspection and policymaking roles.
A registrant is required to disclose the information specified by Form N-
CSR, and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, N.W.,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. Section 3507.
ITEM 1. REPORTS TO STOCKHOLDERS
(THE CATHOLIC FUNDS LOGO)
GIVING VOICE TO CATHOLIC VALUES
THE CATHOLIC EQUITY FUND
ANNUAL REPORT
SEPTEMBER 30, 2005
The Catholic Funds
1-877-222-2402
THANK YOU FOR CALLING THE CATHOLIC FUNDS.
PLEASE SELECT FROM THE FOLLOWING SEVEN CHOICES:
o FOR FUND PRICES ------------------------------- PRESS 1
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o TO ORDER DUPLICATE ACCOUNT
STATEMENTS OR CHECKBOOKS ---------------------- PRESS 3
o FOR FUND OBJECTIVES, FUND LITERATURE
AND WATCHLIST INFORMATION --------------------- PRESS 4
o FOR MAILING, WIRING AND
INTERNET INFORMATION -------------------------- PRESS 5
o FOR YEAR-END ACCOUNT INFORMATION -------------- PRESS 6
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o IF AT ANY TIME DURING THIS CALL YOU
WOULD LIKE TO SPEAK TO A CUSTOMER
SERVICE REPRESENTATIVE ------------------------ PRESS 0
2 Letter to Shareholders
3 The Catholic Equity Fund
6 Allocation of Portfolio Assets
7 Schedule of Investments
17 Schedule of Futures Contracts
18 Statement of Assets & Liabilities
19 Statement of Operations
20 Statements of Changes in Net Assets
21 Financial Highlights
24 Notes to Financial Statements
30 Report of Independent Registered Public Accounting Firm
31 Directors and Officers
Letter to Shareholders
Dear Shareholder:
The following pages provide financial and investment information for the 12-
month period that ended September 30, 2005. In this letter, we would like to
report on how your investment has put your Catholic values into action.
DIALOGUE AND RESOLUTIONS
In the 2004-05 advocacy year, we addressed two main issues.
TREATMENT OF WORKERS -- In collaboration with Catholic religious orders and
other faith-based investment institutions, we encouraged fourteen companies to
improve the treatment of workers employed by them or by their suppliers,
particularly those in developing countries. With eight of the companies, the
encouragement took the form of first dialogue and then a resolution to be voted
on at the annual shareholder meeting. With the other six companies, dialogue
was sufficiently promising that the group decided that no resolution was
necessary at this time. The companies were Alcoa, Apple Computer, Caterpillar,
Chevron Texaco, Costco, Delphi, General Electric, General Motors, Monsanto,
Newmont Mining, Occidental Petroleum, Sears, TJX, and Wal-Mart.
EXCESSIVE CEO COMPENSATION -- With fourteen other companies, we addressed the
issue of whether their CEO compensation was excessive, particularly in
comparison with the pay of non-managerial workers. We had dialogue with them
and then filed resolutions. Other faith-based institutions joined us in these
efforts. The companies were Black & Decker, Cendant, Citigroup, International
Paper, J.P. Morgan, Kohl's Corporation, Lehman Brothers, Lockheed Martin, Marsh
& McLennan, Merrill Lynch, Morgan Stanley, Time Warner, United Technologies, and
Wells Fargo.
PROXY VOTING
Throughout the year, we voted on all the issues that came before the annual
shareholder meetings of the nearly 500 companies in the portfolio of the
Catholic Equity Fund. We voted in accordance with voting guidelines that we
developed with an eye to Catholic values.
ADDITIONAL INFORMATION
We encourage you to take a look at our website--www.catholicfunds.com. You will
find complete information about our dialogue and resolution efforts, as well as
a summary of our proxy voting guidelines.
Thank you for your continued trust and investment.
/s/Daniel J. Steininger /s/Theodore F. Zimmer
Daniel J. Steininger Theodore F. Zimmer
Chairman, The Catholic Funds President, The Catholic Funds
The Catholic Church has not sponsored or endorsed the Catholic Equity Fund nor
approved or disapproved of the Fund as an investment.
The Catholic Funds are distributed through Catholic Financial Services
Corporation, 1100 W. Wells Street, Milwaukee, WI.
As of 9/30/05 the Fund held the following weightings: Alcoa (0.19%), Apple
Computer (0.39%), Caterpillar (0.35%), Chevron Texaco (1.29%), Costco (0.18%),
Delphi (0.01%), General Electric (3.16%), General Motors (0.15%), Monsanto
(0.15%), Newmont Mining (0.18%), Occidental Petroleum (0.31%), Sears (0.11%),
TJX (0.09%), Wal-Mart (0.97%), Black & Decker (0.19%), Cendant (0.19%),
Citigroup (2.08%), International Paper (0.13%), J.P. Morgan (1.06%), Kohl's
Corporation (0.15%), Lehman Brothers (0.28%), Lockheed Martin (0.19%), Marsh &
McLennan (0.14%), Merrill Lynch (0.51%), Morgan Stanley (0.52%), Time Warner
(0.75%), United Technologies (0.47%), and Wells Fargo (0.87%). These holdings
are subject to change without notice.
The Catholic Equity Fund
MANAGEMENT:
Mellon Equity Associates, subadvisor to the Catholic Equity Fund, 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, Mellon manages over
$20.4 billion in assets for 88 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 is a Chartered Financial Analyst and has earned a
BS in accounting from Fairfield University in 1982.
MARKET COMMENTARY
For the twelve months ended September 30, 2005, the Catholic Equity Fund
("Fund") produced a total return of 12.07% (Class A without sales load),
compared to a return of the S&P500 Composite Stock Price Index ("Index") of
12.25%. The primary differences between the Fund's performance and the Index's
return were expenses and the net effect of the sampling strategy to compensate
for the securities excluded due to the sanctity of life screen. The Fund had a
solid gain for the year ended September 30, 2005, as it rose sharply during the
last quarter of 2004 as terrorism worries subsided and oil prices retreated. It
pulled back during the spring as oil prices resumed their price rise, but the
market rebounded in the past few months as corporate profits remained strong.
The recent strength in the equity market reflected the growing global economy
that has boosted strong corporate earnings. In addition to the sizable gains in
earnings at energy companies, many technology companies reported healthy
earnings. Low long-term interest rates and a strengthening labor market are
accompanying the consistent growth in the economy.
The industries that provided the greatest contribution to return were energy
reserves, electric utilities and medical providers. Energy companies posted
strong returns due to the rising demand for their products and limited supplies.
There is an increase in demand from developing countries such as China and India
as well as greater demand due to the strong U.S. economy. Oil supply has been
limited due to political unrest as well as the natural disasters that hit the
gulf coast. Utilities also benefited from the strong U.S. economy. These
companies are in favor with investors because of their growing cash flows and
high dividends. HMOs also rose as their enrollment increased due to the increase
in hiring by U.S. companies. Industries that detracted from the Fund's
performance were motor vehicle, leisure goods and department stores. The motor
vehicle companies had a difficult period as vehicle sales slowed and costs
remained high relative to foreign competitors. Some companies that are
sensitive to consumer spending detracted from the Fund's performance as worries
arose over declining disposable income due to the steep rise in energy prices.
During the twelve months ended September 30, 2005, the Catholic Equity Fund
posted healthy returns. Over the next few months the economy will have to face
rising energy prices and rising short-term interest rates. High quality
companies should be able to handle these pressures because the current level of
profits and cash flows is quite high, especially at larger companies.
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 $9,597 $10,000
6/30/99 $10,290 $9,875 $10,158
9/30/99 $9,690 $9,299 $9,523
12/31/99 $10,855 $10,417 $10,940
3/31/2000 $11,155 $10,705 $11,191
6/30/2000 $10,945 $10,504 $10,894
9/30/2000 $10,965 $10,523 $10,789
12/31/2000 $10,302 $9,886 $9,944
3/31/2001 $9,338 $8,961 $8,765
6/30/2001 $10,000 $9,597 $9,278
9/30/2001 $8,464 $8,123 $7,917
12/31/2001 $9,385 $9,007 $8,762
3/31/2002 $9,334 $8,958 $8,787
6/30/2002 $8,044 $7,720 $7,609
9/30/2002 $6,632 $6,365 $6,295
12/31/2002 $7,208 $6,918 $6,826
3/31/2003 $6,962 $6,681 $6,611
6/30/2003 $8,019 $7,696 $7,629
9/30/2003 $8,204 $7,874 $7,830
12/31/2003 $9,163 $8,794 $8,784
3/31/2004 $9,298 $8,923 $8,933
6/30/2004 $9,453 $9,072 $9,086
9/30/2004 $9,246 $8,873 $8,917
12/31/2004 $10,112 $9,704 $9,740
3/31/2005 $9,882 $9,484 $9,531
6/30/2005 $9,997 $9,594 $9,661
9/30/2005 $10,362 $9,945 $10,009
AVERAGE ANNUAL RETURNS
September 30, 2005
Since Inception
1 Year 5 Year Inception Date
------ ------ --------- ----
Class A (without sales load) 12.07% -1.12% 0.56% 5/3/99
Class A (with sales load) 7.62% -1.93% -0.09% 5/3/99
S&P 500 Index 12.25% -1.49% 0.01% 5/3/99
Class C (without sales load) 11.76% n/a 3.53% 4/9/02
Class C (with sales load) 10.76% n/a 3.53% 4/9/02
S&P 500 Index 12.25% -1.49% 4.59% 4/9/02
Class I 12.41% n/a 3.66% 4/3/02
S&P 500 Index 12.25% -1.49% 4.37% 4/3/02
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. The returns shown do not
reflect taxes a shareholder would pay on distributions and redemptions.
Class A share performance categories shown for periods prior to 4/3/02 are for
the Catholic Equity Fund's predecessor fund, The Catholic Disciplined Capital
Appreciation Fund. Class C and I shares were first available on 4/2/02.
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.
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.
Current performance maybe lower or higher than the performance data quoted.
Performance data current to the most recent month-end can be found at our
website, www.CatholicFunds.com
September 30, 2005
Ticker Symbols Net Asset Values
-------------- ----------------
Equity A CTHQX $9.93
Equity C CTHSX $9.91
Equity I CTHRX $9.95
TOP 10 HOLDINGS
September 30, 2005
Percentage
of
Rank Ticker Security Name Net Assets
---- ------ ------------- ----------
1 XOM Exxon Mobil Corporation 3.54%
2 GE General Electric Company 3.16%
3 MSFT Microsoft Corporation 2.10%
4 C Citigroup Inc. 2.08%
5 JNJ Johnson & Johnson 1.97%
6 BAC Bank of America Corporation 1.49%
7 AIG American International
Group, Inc. 1.42%
8 MO Altria Group, Inc. 1.36%
9 PG The Procter & Gamble Company 1.34%
10 INTC Intel Corporation 1.33%
EXPENSE EXAMPLE
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including sales charges (loads) on purchase payments; redemptions fees;
and exchange fees; and (2) ongoing costs, including management fees;
distribution and/or service (12b-1) fees; and other Fund expenses. This example
is intended to help you understand your ongoing costs (in dollars) of investing
in the Fund and to compare these costs with the ongoing costs of investing in
other mutual funds. The example is based on an investment of $1,000 invested at
the beginning of the period and held for the entire period from April 1, 2005,
to September 30, 2005.
ACTUAL EXPENSES
For each class, the first line of the table below provides information about
actual account values and actual expenses. You may use the information in this
line, together with the amount you invested, to estimate the expenses that you
paid over the period. Simply divide your account value by $1,000 (for example,
an $8,600 account value divided by $1,000 = 8.6), then multiply the result by
the number in the first line under the heading entitled "Expenses Paid During
Period" to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
For each class, the second line of the table below provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratio and an assumed rate of return of 5% per year before expenses,
which is not the Fund's actual return. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expense you paid for the period. You may use this information to compare the
ongoing costs of investing in the Fund and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads), redemption fees, or exchange fees. Therefore, the second line
of the table for each class is useful in comparing ongoing costs only, and will
not help you determine the relative total costs of owning different funds. In
addition, if these transaction costs were included, your costs would have been
higher.
EXPENSE EXAMPLES
Expenses Paid
Beginning Account Ending Account During Period1<F1> Annualized
Value (4/1/2005) Value (9/30/2005) (4/1/2005 to 9/30/2005) Expense Ratio2<F2>
---------------- ----------------- ---------------------- ------------------
Class A Actual $1,000.00 $1,048.60 $3.08 0.60%
Class A Hypothetical
(5% return before expenses) $1,000.00 $1,022.06 $3.04 0.60%
Class C Actual $1,000.00 $1,067.90 $4.41 0.85%
Class C Hypothetical
(5% return before expenses) $1,000.00 $1,020.81 $4.31 0.85%
Class I Actual $1,000.00 $1,050.70 $1.80 0.35%
Class I Hypothetical
(5% return before expenses) $1,000.00 $1,023.31 $1.78 0.35%
1<F1> Expenses are equal to the Fund's annualized expense ratio multiplied
by the average account value over the period, multiplied by the number
of days in the most recent half-year/365 days (to reflect the one-half
year period).
2<F2> On November 15, 2004, the adviser voluntarily increased its expense
reimbursements and fee waivers for each class of Fund shares, thereby
decreasing the expense ratios for Class A from 0.95% to 0.60%, Class C
from 1.20% to 0.85%, and Class I from 0.70% to 0.35%.
ALLOCATION OF PORTFOLIO ASSETS
(Calculated as a Percentage of Net Assets1<F3>)
Financials2<F4> 19.70%
Information Technology2<F4> 14.95%
Health Care2<F4> 13.16%
Industrials2<F4> 10.87%
Consumer Discretionary2<F4> 10.52%
Energy2<F4> 10.09%
Consumer Staples2<F4> 9.51%
Utilities2<F4> 3.58%
Telecommunication Services2<F4> 3.05%
Materials2<F4> 2.82%
Futures Contracts 1.86%
FHLB Discount Note 1.62%
U.S. Treasury Bill 0.12%
1<F3> Total Net Assets on September 30, 2005 were $39,795,382
2<F4> Sectors based on Global Industry Classification Standard (GICS(R))
SCHEDULE OF INVESTMENTS
SEPTEMBER 30, 2005
THE CATHOLIC EQUITY FUND
Common Stocks (98.25%) Shares Value
- ---------------------- ------ -----
Consumer Discretionary - 10.52%
Apollo Group, Inc. - Class A (a)<F5> 500 $33,195
AutoNation, Inc. (a)<F5> 650 12,980
AutoZone, Inc. (a)<F5> 175 14,569
Bed Bath & Beyond Inc. (a)<F5> 1,015 40,783
Best Buy Co., Inc. 1,450 63,118
Big Lots, Inc. (a)<F5> 300 3,297
The Black & Decker Corporation 300 24,627
Brunswick Corporation 300 11,319
Carnival Corporation 1,550 77,469
Centex Corporation 500 32,290
Circuit City Stores, Inc. 600 10,296
Clear Channel Communications, Inc. 1,875 61,669
Coach, Inc. (a)<F5> 1,300 40,768
Comcast Corporation - Class A (a)<F5> 7,752 227,754
Cooper Tire & Rubber Company 200 3,054
Dana Corporation 500 4,705
Darden Restaurants, Inc. 500 15,185
Delphi Corporation 1,800 4,968
Dillard's Inc. - Class A 200 4,176
Dollar General Corporation 1,150 21,091
Dow Jones & Company, Inc. 200 7,638
DR Horton, Inc. 1,000 36,220
Eastman Kodak Company 1,050 25,546
eBay Inc. (a)<F5> 3,900 160,680
Family Dollar Stores, Inc. 600 11,922
Federated Department Stores, Inc. 945 63,192
Ford Motor Company 6,400 63,104
Fortune Brands, Inc. 550 44,731
Gannett Co., Inc. 850 58,505
The Gap, Inc. 2,000 34,860
General Motors Corporation 2,015 61,679
Genuine Parts Company 600 25,740
The Goodyear Tire & Rubber Company (a)<F5> 600 9,354
H&R Block, Inc. 1,180 28,296
Harley-Davidson, Inc. 950 46,018
Harrah's Entertainment, Inc. 600 39,114
Hasbro, Inc. 600 11,790
Hilton Hotels Corporation 1,150 25,668
The Home Depot, Inc. 7,550 287,957
International Game Technology 1,200 32,400
The Interpublic Group
of Companies, Inc. (a)<F5> 1,450 16,878
J.C. Penney Company, Inc. - Holding Company 850 40,307
Johnson Controls, Inc. 630 39,091
Jones Apparel Group, Inc. 400 11,400
KB HOME 300 21,960
Knight-Ridder, Inc. 200 11,736
Kohl's Corporation (a)<F5> 1,215 60,969
Leggett & Platt, Incorporated 650 13,130
Limited Brands 1,250 25,537
Liz Claiborne, Inc. 400 15,728
Lowe's Companies, Inc. 2,740 176,456
Marriott International, Inc. - Class A 650 40,950
Mattel, Inc. 1,450 24,186
Maytag Corporation 300 5,478
McDonald's Corporation 4,450 149,031
The McGraw-Hill Companies, Inc. 1,300 62,452
Meredith Corporation 100 4,989
The New York Times Company - Class A 500 14,875
Newell Rubbermaid Inc. 940 21,291
News Corporation - Class A 8,600 134,074
NIKE, Inc. - Class B 650 53,092
Nordstrom, Inc. 800 27,456
Office Depot, Inc. (a)<F5> 1,150 34,155
OfficeMax Inc. 200 6,334
Omnicom Group Inc. 650 54,360
Pulte Homes, Inc. 800 34,336
RadioShack Corporation 500 12,400
Reebok International Ltd. 200 11,314
Sears Holdings Corporation (a)<F5> 354 44,045
The Sherwin-Williams Company 400 17,628
Snap-On, Inc. 200 7,224
The Stanley Works 300 14,004
Staples, Inc. 2,575 54,899
Starbucks Corporation (a)<F5> 1,350 67,635
Starwood Hotels & Resorts Worldwide, Inc. 750 42,878
Target Corporation 3,145 163,320
Tiffany & Co. 500 19,885
Time Warner Inc. 16,500 298,815
The TJX Companies, Inc. 1,665 34,099
Tribune Company 950 32,196
Univision Communications
Inc. - Class A (a)<F5> 850 22,551
V.F. Corporation 300 17,391
Viacom Inc. - Class B 5,600 184,856
Visteon Corporation 500 4,890
The Walt Disney Company 7,050 170,116
Wendy's International, Inc. 400 18,060
Whirlpool Corporation 200 15,154
Yum! Brands, Inc. 1,050 50,831
-----------
4,186,169
-----------
Consumer Staples - 9.51%
Alberto-Culver Company 300 13,425
Albertson's, Inc. 1,250 32,062
Altria Group, Inc. 7,350 541,768
Anheuser-Busch Companies, Inc. 2,700 116,208
Archer-Daniels-Midland Company 2,250 55,485
Avon Products, Inc. 1,700 45,900
Brown-Forman Corporation - Class B 300 17,862
Campbell Soup Company 650 19,337
The Clorox Company 575 31,935
The Coca-Cola Company 7,305 315,503
Coca-Cola Enterprises, Inc. 1,050 20,475
Colgate-Palmolive Company 1,850 97,661
ConAgra Foods, Inc. 1,840 45,540
Constellation Brands,
Inc. - Class A (a)<F5> 700 18,200
Costco Wholesale Corporation 1,650 71,099
CVS Corporation 2,900 84,129
General Mills, Inc. 1,250 60,250
The Gillette Company 3,165 184,203
H.J. Heinz Company 1,250 45,675
Hershey Foods Corporation 600 33,786
Kellogg Company 950 43,824
Kimberly-Clark Corporation 1,700 101,201
The Kroger Co. (a)<F5> 2,600 53,534
McCormick & Co., Inc. 500 16,315
Molson Coors Brewing Company 200 12,802
The Pepsi Bottling Group, Inc. 500 14,275
PepsiCo, Inc. 5,850 331,754
The Procter & Gamble Company 8,980 533,951
Reynolds American Inc. 300 24,906
Safeway Inc. 1,550 39,680
Sara Lee Corporation 2,800 53,060
SUPERVALU INC. 500 15,560
Sysco Corporation 2,215 69,485
Tyson Foods, Inc. 900 16,245
UST Inc. 600 25,116
Walgreen Co. 3,580 155,551
Wal-Mart Stores, Inc. 8,800 385,616
Wm. Wrigley Jr. Company 590 42,409
-----------
3,785,787
-----------
Energy - 10.09%
Amerada Hess Corporation 250 34,375
Anadarko Petroleum Corporation 850 81,387
Apache Corporation 1,132 85,149
Baker Hughes Incorporated 1,250 74,600
BJ Services Company 1,180 42,468
Burlington Resources Inc. 1,300 105,716
ChevronTexaco Corporation 7,959 515,186
ConocoPhillips 4,928 344,516
Devon Energy Corporation 1,600 109,824
El Paso Corporation 2,345 32,596
EOG Resources, Inc. 800 59,920
Exxon Mobil Corporation 22,198 1,410,461
Halliburton Company 1,750 119,910
Kerr-McGee Corporation 450 43,700
Kinder Morgan, Inc. 300 28,848
Marathon Oil Corporation 1,297 89,402
Murphy Oil Corp. 600 29,922
Nabors Industries, Ltd. (a)<F5> 600 43,098
National-Oilwell
Varco Inc. (a)<F5> 600 39,480
Noble Corporation 450 30,807
Occidental Petroleum Corporation 1,440 123,019
Rowan Companies, Inc. 400 14,196
Schlumberger Limited 2,100 177,198
Sunoco, Inc. 500 39,100
Transocean Inc. (a)<F5> 1,150 70,507
Valero Energy Corporation 1,100 124,366
Weatherford
International Ltd. (a)<F5> 500 34,330
The Williams Companies, Inc. 2,000 50,100
XTO Energy, Inc. 1,300 58,916
-----------
4,013,097
-----------
Financials - 19.70%
ACE Limited 1,050 49,424
AFLAC INCORPORATED 1,790 81,087
The Allstate Corporation 2,340 129,379
Ambac Financial Group, Inc. 350 25,221
American Express Company 4,350 249,864
American International Group, Inc. 9,102 563,960
AmSouth Bancorporation 1,250 31,575
Aon Corporation 1,150 36,892
Apartment Investment & Management Company 300 11,634
Archstone-Smith Trust 700 27,909
Bank of America Corporation 14,102 593,694
The Bank of New York Company, Inc. 2,700 79,407
BB&T Corporation 1,950 76,147
The Bear Stearns Companies Inc. 390 42,802
Capital One Financial Corporation 1,050 83,496
The Charles Schwab Corporation 3,700 53,391
The Chubb Corporation 700 62,685
Cincinnati Financial Corporation 651 27,270
CIT Group Inc. 700 31,626
Citigroup Inc. 18,205 828,692
Comerica Incorporated 600 35,340
Compass Bancshares, Inc. 400 18,332
Countrywide Financial Corporation 2,098 69,192
E*TRADE Financial Corporation (a)<F5> 1,200 21,120
Equity Office Properties Trust 1,471 48,116
Equity Residential 1,050 39,742
Fannie Mae 3,400 152,388
Federated Investors, Inc. - Class B 300 9,969
Fifth Third Bancorp 1,950 71,623
First Horizon National Corporation 400 14,540
Franklin Resources, Inc. 550 46,178
Freddie Mac 2,450 138,327
Golden West Financial Corporation 900 53,451
The Goldman Sachs Group, Inc. 1,650 200,607
The Hartford Financial Services Group, Inc. 1,050 81,028
Huntington Bancshares Incorporated 850 19,099
Janus Capital Group Inc. 750 10,837
Jefferson-Pilot Corporation 500 25,585
JPMorgan Chase & Co. 12,395 420,562
KeyCorp 1,450 46,762
Lehman Brothers Holdings Inc. 950 110,656
Lincoln National Corporation 600 31,212
Loews Corporation 450 41,584
M&T Bank Corporation 300 31,713
Marsh & McLennan Companies, Inc. 1,840 55,918
Marshall & Ilsley Corporation 750 32,633
MBIA Inc. 500 30,310
MBNA Corporation 4,400 108,416
Mellon Financial Corporation 1,450 46,357
Merrill Lynch & Co., Inc. 3,300 202,455
MetLife, Inc. 2,700 134,541
MGIC Investment Corporation 300 19,260
Moody's Corporation 880 44,950
Morgan Stanley 3,800 204,972
National City Corporation 2,050 68,552
North Fork Bancorporation, Inc. 1,700 43,350
Northern Trust Corporation 650 32,858
Plum Creek Timber Company, Inc. 650 24,642
PNC Financial Services Group 1,050 60,921
Principal Financial Group, Inc. 950 45,002
The Progressive Corporation 650 68,101
ProLogis 900 39,879
Providian Financial
Corporation (a)<F5> 1,000 17,680
Prudential Financial, Inc. 1,850 124,986
Public Storage, Inc. 300 20,100
Regions Financial Corporation 1,652 51,410
Safeco Corporation 400 21,352
Simon Property Group, Inc. 690 51,143
SLM Corporation 1,475 79,119
Sovereign Bancorp, Inc. 1,300 28,652
The St. Paul Travelers Companies, Inc. 2,341 105,041
State Street Corporation 1,150 56,258
SunTrust Banks, Inc. 1,250 86,813
Synovus Financial Corp. 1,050 29,106
T. Rowe Price Group, Inc. 500 32,650
Torchmark Corporation 400 21,132
U.S. Bancorp 6,400 179,712
UnumProvident Corporation 1,050 21,525
Vornado Realty Trust 400 34,648
Wachovia Corporation 5,584 265,743
Washington Mutual, Inc. 3,095 121,386
Wells Fargo & Company 5,940 347,906
XL Capital Ltd. - Class A 500 34,015
Zions Bancorporation 300 21,363
-----------
7,838,975
-----------
Health Care - 13.16%
Abbott Laboratories 6,950 294,680
Aetna Inc. 1,000 86,140
Allergan, Inc. 765 70,089
AmerisourceBergen Corporation 657 50,786
Amgen Inc. (a)<F5> 4,340 345,768
Applera Corporation -
Applied Biosystems Group 650 15,106
Bausch & Lomb Incorporated 200 16,136
Baxter International Inc. 2,150 85,720
Becton, Dickinson and Company 850 44,565
Biogen Idec Inc. (a)<F5> 1,160 45,797
Biomet, Inc. 850 29,503
Boston Scientific
Corporation (a)<F5> 2,080 48,610
Bristol-Myers Squibb Company 9,650 232,179
C.R. Bard, Inc. 400 26,412
Cardinal Health, Inc. 2,300 145,912
Caremark Rx, Inc. (a)<F5> 1,600 79,888
Chiron Corporation (a)<F5> 350 15,267
CIGNA Corporation 500 58,930
Coventry Health Care, Inc. (a)<F5> 400 34,408
Eli Lilly and Company 6,000 321,120
Express Scripts, Inc. (a)<F5> 500 31,100
Fisher Scientific
International Inc. (a)<F5> 400 24,820
Forest Laboratories, Inc. (a)<F5> 2,450 95,476
Genzyme Corporation (a)<F5> 950 68,058
Gilead Sciences, Inc. (a)<F5> 1,600 78,016
Guidant Corporation 1,150 79,223
Hospira, Inc. (a)<F5> 525 21,509
Humana Inc. (a)<F5> 600 28,728
IMS Health Incorporated 750 18,878
Johnson & Johnson 12,400 784,672
King Pharmaceuticals, Inc. (a)<F5> 850 13,073
Laboratory Corporation
of America Holdings (a)<F5> 500 24,355
Manor Care, Inc. 300 11,523
McKesson Corporation 2,250 106,763
Medco Health
Solutions, Inc. (a)<F5> 1,075 58,942
MedImmune, Inc. (a)<F5> 850 28,603
Medtronic, Inc. 4,230 226,813
Merck & Co. Inc. 12,350 336,044
Millipore Corporation (a)<F5> 200 12,578
Mylan Laboratories Inc. 800 15,408
PerkinElmer, Inc. 500 10,185
Quest Diagnostics Incorporated 600 30,324
Schering-Plough Corporation 7,750 163,138
St. Jude Medical, Inc. (a)<F5> 1,280 59,904
Stryker Corporation 980 48,441
Thermo Electron Corporation (a)<F5> 600 18,540
UnitedHealth Group Incorporated 4,400 247,280
Waters Corporation (a)<F5> 400 16,640
Watson Pharmaceuticals,
Inc. (a)<F5> 400 14,644
WellPoint Inc. (a)<F5> 2,200 166,804
Wyeth 6,200 286,874
Zimmer Holdings, Inc. (a)<F5> 890 61,312
-----------
5,235,684
-----------
Industrials - 10.87%
3M Co. 2,680 196,605
Allied Waste Industries, Inc. (a)<F5> 900 7,605
American Power Conversion Corporation 650 16,835
American Standard Companies, Inc 600 27,930
Avery Dennison Corporation 350 18,336
The Boeing Company 2,900 197,055
Burlington Northern Santa Fe Corporation 1,350 80,730
Caterpillar Inc. 2,400 141,000
Cendant Corporation 3,700 76,368
Cintas Corporation 500 20,525
Cooper Industries Ltd. - Class A 300 20,742
CSX Corporation 750 34,860
Cummins Inc. 200 17,598
Danaher Corporation 800 43,064
Deere & Company 850 52,020
Dover Corporation 750 30,592
Eaton Corporation 500 31,775
Emerson Electric Co. 1,450 104,110
Equifax Inc. 500 17,470
FedEx Corp. 1,050 91,486
Fluor Corporation 300 19,314
General Dynamics Corporation 750 89,663
General Electric Company 37,335 1,257,069
Goodrich Corporation 400 17,736
Honeywell International Inc. 3,000 112,500
Illinois Tool Works Inc. 700 57,631
Ingersoll-Rand Company 1,200 45,876
ITT Industries, Inc. 325 36,920
L-3 Communications Holdings, Inc. 400 31,628
Lockheed Martin Corporation 1,250 76,300
Masco Corporation 1,550 47,554
Monster Worldwide Inc. (a)<F5> 400 12,284
Navistar International Corporation (a)<F5> 200 6,486
Norfolk Southern Corporation 1,450 58,812
Northrop Grumman Corporation 1,214 65,981
PACCAR Inc. 625 42,431
Pall Corporation 400 11,000
Parker Hannifin Corporation 400 25,724
Pitney Bowes Inc. 850 35,479
R.R. Donnelley & Sons Company 800 29,656
Raytheon Company 1,550 58,931
Robert Half International Inc. 600 21,354
Rockwell Automation, Inc. 650 34,385
Rockwell Collins, Inc. 650 31,408
Ryder System, Inc. 200 6,844
Southwest Airlines Co. 2,400 35,640
Textron Inc. 500 35,860
Tyco International Ltd. 7,100 197,735
Union Pacific Corporation 915 65,606
United Parcel Service, Inc. - Class B 3,890 268,916
United Technologies Corporation 3,600 186,624
W.W. Grainger, Inc. 300 18,876
Waste Management, Inc. 1,950 55,790
-----------
4,324,719
-----------
Information Technology - 14.95%
ADC Telecommunications,Inc. (a)<F5> 414 9,464
Adobe Systems Incorporated 1,700 50,745
Advanced Micro Devices, Inc. (a)<F5> 1,400 35,280
Affiliated Computer
Services, Inc. - Class A (a)<F5> 400 21,840
Agilent Technologies, Inc. (a)<F5> 1,750 57,312
Altera Corporation (a)<F5> 1,350 25,798
Analog Devices, Inc. 1,350 50,139
Andrew Corporation (a)<F5> 600 6,690
Apple Computer, Inc. (a)<F5> 2,900 155,469
Applied Materials, Inc. 5,700 96,672
Applied Micro Circuits
Corporation (a)<F5> 900 2,700
Autodesk, Inc. 800 37,152
Automatic Data Processing, Inc. 2,000 86,080
Avaya Inc. (a)<F5> 1,500 15,450
BMC Software, Inc. (a)<F5> 750 15,825
Broadcom Corporation -
Class A (a)<F5> 950 44,564
Ciena Corporation (a)<F5> 1,400 3,696
Cisco Systems, Inc. (a)<F5> 22,485 403,156
Citrix Systems, Inc. (a)<F5> 600 15,084
Computer Associates International, Inc. 1,655 46,026
Computer Sciences Corporation (a)<F5> 700 33,117
Compuware Corporation (a)<F5> 1,400 13,300
Comverse Technology, Inc. (a)<F5> 750 19,702
Convergys Corporation (a)<F5> 400 5,748
Corning Incorporated (a)<F5> 5,150 99,549
Dell Inc. (a)<F5> 8,470 289,674
Electronic Arts Inc. (EA) (a)<F5> 1,100 62,579
Electronic Data Systems Corporation 1,850 41,514
EMC Corporation (a)<F5> 8,450 109,343
First Data Corporation 2,729 109,160
Fiserv, Inc. (a)<F5> 650 29,816
Freescale Semiconductor,
Inc. - Class B (a)<F5> 1,442 34,002
Gateway, Inc. (a)<F5> 1,200 3,240
Hewlett-Packard Company 10,057 293,664
Intel Corporation 21,435 528,373
International Business
Machines Corporation (IBM) 5,615 450,435
Intuit Inc. (a)<F5> 665 29,799
Jabil Circuit, Inc. (a)<F5> 565 17,470
JDS Uniphase Corporation (a)<F5> 5,850 12,987
KLA-Tencor Corporation 650 31,694
Lexmark International, Inc. (a)<F5> 450 27,473
Linear Technology Corporation 1,050 39,470
LSI Logic Corporation (a)<F5> 1,400 13,790
Lucent Technologies Inc. (a)<F5> 15,650 50,863
Maxim Integrated Products, Inc. 1,150 49,048
Mercury Interactive Corporation (a)<F5> 300 11,880
Micron Technology, Inc. (a)<F5> 2,150 28,595
Microsoft Corporation 32,440 834,681
Molex Incorporated 550 14,674
Motorola, Inc. 8,730 192,846
National Semiconductor Corporation 1,200 31,560
NCR Corporation (a)<F5> 700 22,337
Network Appliance, Inc. (a)<F5> 1,250 29,675
Novell, Inc. (a)<F5> 1,300 9,685
Novellus Systems, Inc. (a)<F5> 500 12,540
NVIDIA Corporation (a)<F5> 600 20,568
Oracle Corporation (a)<F5> 13,280 164,539
Parametric Technology Corporation (a)<F5> 900 6,273
Paychex, Inc. 1,175 43,569
PMC - Sierra, Inc. (a)<F5> 500 4,405
QLogic Corporation (a)<F5> 300 10,260
QUALCOMM Inc. 5,700 255,075
Sabre Holdings Corporation 500 10,140
Sanmina-SCI Corporation (a)<F5> 1,700 7,293
Scientific-Atlanta, Inc. 500 18,755
Siebel Systems, Inc. 1,800 18,594
Solectron Corporation (a)<F5> 3,300 12,903
Sun Microsystems, Inc. (a)<F5> 12,050 47,236
Symantec Corporation (a)<F5> 4,217 95,557
Symbol Technologies, Inc. 750 7,260
Tektronix, Inc. 300 7,569
Tellabs, Inc. (a)<F5> 1,600 16,832
Teradyne, Inc. (a)<F5> 650 10,725
Texas Instruments Incorporated 5,700 193,230
Unisys Corporation (a)<F5> 950 6,308
Xerox Corporation (a)<F5> 3,400 46,410
Xilinx, Inc. 1,250 34,813
Yahoo! Inc. (a)<F5> 4,380 148,219
-----------
5,949,958
-----------
Materials - 2.82%
Air Products and Chemicals, Inc. 750 41,355
Alcoa Inc. 3,100 75,702
Allegheny Technologies, Inc. 300 9,294
Ashland Inc 300 16,572
Ball Corporation 400 14,696
Bemis Company, Inc. 400 9,880
The Dow Chemical Company 3,400 141,678
E.I. du Pont de Nemours and Company 3,500 137,095
Eastman Chemical Company 300 14,091
Ecolab Inc. 600 19,158
Engelhard Corporation 400 11,164
Freeport-McMoRan
Copper & Gold, Inc. - Class B 600 29,154
Georgia-Pacific Corp. 950 32,357
Hercules Incorporated (a)<F5> 400 4,888
International Flavors & Fragrances Inc. 275 9,801
International Paper Company 1,690 50,362
Louisiana-Pacific Corporation 400 11,076
MeadWestvaco Corporation 650 17,953
Monsanto Company 950 59,612
Newmont Mining Corporation 1,550 73,113
Nucor Corporation 600 35,394
Pactiv Corporation (a)<F5> 500 8,760
Phelps Dodge Corporation 300 38,979
PPG Industries, Inc. 600 35,514
Praxair, Inc. 1,100 52,723
Rohm & Haas Company 550 22,622
Sealed Air Corporation (a)<F5> 300 14,238
Sigma-Aldrich Corporation 200 12,812
Temple-Inland Inc. 400 16,340
United States Steel Corporation 400 16,940
Vulcan Materials Company 400 29,684
Weyerhaeuser Company 850 58,438
-----------
1,121,445
-----------
Telecommunication Services - 3.05%
Alltel Corporation 1,390 90,503
AT&T Corp. 2,800 55,440
BellSouth Corporation 6,500 170,950
CenturyTel, Inc. 500 17,490
Citizens Communications Company 1,250 16,937
Qwest Communications
International Inc. (a)<F5> 5,400 22,140
SBC Communications Inc. 11,650 279,251
Sprint Corporation 10,291 244,720
Verizon Communications Inc. 9,717 317,649
-----------
1,215,080
-----------
Utilities - 3.58%
The AES Corporation (a)<F5> 2,300 37,789
Allegheny Energy, Inc. (a)<F5> 600 18,432
Ameren Corporation 700 37,443
American Electric Power Company, Inc. 1,350 53,595
Calpine Corporation (a)<F5> 1,700 4,403
CenterPoint Energy, Inc. 1,100 16,357
Cinergy Corp. 700 31,087
CMS Energy Corporation (a)<F5> 800 13,160
Consolidated Edison, Inc. 865 41,996
Constellation Energy Group 600 36,960
Dominion Resources, Inc. 1,250 107,675
DTE Energy Company 590 27,057
Duke Energy Corporation 3,300 96,261
Dynegy Inc. - Class A (a)<F5> 1,200 5,652
Edison International 1,150 54,372
Entergy Corporation 750 55,740
Exelon Corporation 2,400 128,256
FirstEnergy Corp. 1,150 59,938
FPL Group, Inc. 1,400 66,640
KeySpan Corporation 600 22,068
Nicor Inc. 200 8,406
NiSource Inc. 950 23,037
Peoples Energy Corporation 100 3,938
PG&E Corporation 1,350 52,987
Pinnacle West Capital Corporation 300 13,224
PPL Corporation 1,300 42,029
Progress Energy, Inc. 850 38,038
Public Service Enterprise Group Incorporated 850 54,706
Sempra Energy 950 44,707
The Southern Company 2,605 93,155
TECO Energy, Inc. 700 12,614
TXU Corp. 850 95,948
Xcel Energy, Inc. 1,450 28,435
-----------
1,426,105
-----------
TOTAL COMMON STOCKS
(COST $33,139,446) 39,097,019
-----------
-----------
Short-Term Principal
Investments (1.74%) Amount Value
- ------------------ ------ -----
FHLB Discount Note,2.650%, 10/03/2005 $643,000 $642,893
U.S. Treasury Bill,3.175%, 12/22/2005 50,000 49,623
TOTAL SHORT-TERM INVESTMENTS
(COST $692,516) 692,516
-----------
TOTAL INVESTMENTS - 99.99%
(COST $33,831,962) 39,789,535
-----------
OTHER ASSETS, LESS LIABILITIES - 0.01% 5,847
-----------
TOTAL NET ASSETS - 100.00% $39,795,382
-----------
-----------
(a)<F5> Non-income producing security.
The accompanying Notes to Financial Statements are an integral part of this
schedule.
SCHEDULE OF FUTURES CONTRACTS
SEPTEMBER 30, 2005
THE CATHOLIC EQUITY FUND
Unrealized
Futures Contracts Purchased Contracts Depreciation
- --------------------------- --------- ------------
S&P 500 Index Futures Contracts
Expiring December 2005 (Underlying Face Amount at
Value $308,575) 1 $(3,550)
S&P 500 Index E-mini Futures Contracts
Expiring December 2005 (Underlying Face Amount at
Value $432,005) 7 (1,600)
-------
TOTAL FUTURES CONTRACTS PURCHASED $(5,150)
-------
-------
The accompanying Notes to Financial Statements are an integral part of this
schedule.
STATEMENT OF ASSETS & LIABILITIES
SEPTEMBER 30, 2005
The Catholic
Equity Fund
-----------
ASSETS
- ------
Investments, at cost $33,831,962
-----------
Investments, at value $39,789,535
Cash 611
Dividend receivable 45,559
Receivable from broker 1,500
Receivable for Fund shares sold 12,138
Receivable from Adviser 2,849
Other assets 26,635
-----------
TOTAL ASSETS 39,878,827
-----------
LIABILITIES
- -----------
Payable for investments purchased 17,835
Payable for Fund shares redeemed 1,110
Accrued expenses and other liabilities 64,500
-----------
TOTAL LIABILITIES 83,445
-----------
NET ASSETS $39,795,382
-----------
-----------
NET ASSETS CONSIST OF:
- ----------------------
Paid in capital $37,836,579
Undistributed net investment income 387,297
Undistributed net realized loss on investments sold and
futures contracts (4,380,917)
Net unrealized appreciation (depreciation) on:
Investments 5,957,573
Futures contracts (5,150)
-----------
NET ASSETS $39,795,382
-----------
-----------
CLASS A SHARES
- --------------
Net assets $8,451,198
Shares authorized ($0.001 par value) 100,000,000(1)
<F6>
Shares issued and outstanding 851,205
Net asset value, redemption price and minimum offering
price per share$9.93
Maximum offering price per share ($9.93/0.96) $10.34
CLASS C SHARES
- --------------
Net assets $3,519,933
Shares authorized ($0.001 par value) 100,000,000(1)
<F6>
Shares issued and outstanding 355,327
Net asset value and offering price per share $9.91
CLASS I SHARES
- --------------
Net assets $27,824,251
Shares authorized ($0.001 par value) 100,000,000(1)
<F6>
Shares issued and outstanding 2,797,042
Net asset value, redemption price and offering price per share $9.95
(1)<F6> Represents authorized shares of the Fund. Authorized shares are not
allotted to the separate classes.
The accompanying Notes to Financial Statements are an integral part of these
statements.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 2005
The Catholic
Equity Fund
-----------
INVESTMENT INCOME
- -----------------
Dividend income $759,829
Interest income 14,480
Other income 448
----------
TOTAL INCOME 774,757
----------
EXPENSES
- --------
Investment advisory fees 185,499
Legal fees 83,163
Transfer agent fees and expenses 75,001
Portfolio accounting fees 63,392
Advocacy expenses 49,380
Insurance fees 40,192
Federal and state registration fees 33,802
Audit fees 24,918
Custody fees 21,776
Printing and postage expenses 18,817
Directors' fees and expenses 7,527
12b-1 fees - Class A 19,730
12b-1 fees - Class C 25,738
Other 4,749
----------
TOTAL EXPENSES 653,684
----------
Less waivers and reimbursements by adviser (472,871)
----------
NET EXPENSES 180,813
----------
NET INVESTMENT INCOME 593,944
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- --------------------------------------------------
Net realized gain on:
Investments 9,690
Futures contracts 46,499
Net change in unrealized appreciation (depreciation) on:
Investments 3,460,848
Futures contracts (2,535)
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 3,514,502
----------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $4,108,446
----------
----------
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 Year Ended September 30,
----------------------------------
2005 2004
---- ----
OPERATIONS
- ----------
Net investment income $593,944 $280,007
Net realized gain (loss) on
investments and futures contracts 56,189 (55,313)
Net change in unrealized appreciation on
investments and futures contracts 3,458,313 3,169,847
----------- -----------
CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS 4,108,446 3,394,541
----------- -----------
DISTRIBUTIONS TO CLASS A SHAREHOLDERS
- -------------------------------------
Distributions from net investment income (78,529) (33,289)
DISTRIBUTIONS TO CLASS C SHAREHOLDERS
- -------------------------------------
Distributions from net investment income (16,732) (17,425)
DISTRIBUTIONS TO CLASS I SHAREHOLDERS
- -------------------------------------
Distributions from net investment income (313,225) (165,953)
----------- -----------
CHANGE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (408,486) (216,667)
----------- -----------
CAPITAL SHARE TRANSACTIONS
- --------------------------
Proceeds from shareholder purchases 5,329,443 3,964,509
Net asset value of shares issued to shareholders
in payment of distributions declared 396,620 211,562
Cost of shares redeemed (1,661,397) (1,563,341)
CHANGE IN NET ASSETS FROM CAPITAL
SHARE TRANSACTIONS 4,064,666 2,612,730
----------- -----------
CHANGE IN NET ASSETS $7,764,626 $5,790,604
----------- -----------
NET ASSETS, BEGINNING OF PERIOD $32,030,756 $26,240,152
----------- -----------
NET ASSETS, END OF PERIOD $39,795,382 $32,030,756
----------- -----------
UNDISTRIBUTED NET INVESTMENT INCOME $387,297 $204,866
----------- -----------
----------- -----------
The accompanying Notes to Financial Statements are an integral part of these
statements.
FINANCIAL HIGHLIGHTS
THE CATHOLIC EQUITY FUND - CLASS A
For the Year Ended September 30,
---------------------------------------------------------------------------------
2005(3)<F9> 2004(3)<F9> 2003(3)<F9> 2002(3)<F9> 2001(3)<F9>
----------- ----------- ----------- ----------- -----------
NET ASSET VALUE,
BEGINNING OF YEAR $8.95 $7.99 $6.48 $8.43 $10.95
Net investment income (loss) 0.13 0.08 0.04 0.06 (0.04)(2)<F8>
Net realized and unrealized
gain (loss) on investments 0.95 0.93 1.49 (1.83) (2.45)
----- ----- ----- ----- -----
TOTAL FROM
INVESTMENT OPERATIONS 1.08 1.01 1.53 (1.77) (2.49)
----- ----- ----- ----- -----
Distributions from net
investment income (0.10) (0.05) (0.02) -- --
Distributions from net
realized gain -- -- -- (0.18) (0.03)
----- ----- ----- ----- -----
TOTAL DISTRIBUTIONS (0.10) (0.05) (0.02) (0.18) (0.03)
----- ----- ----- ----- -----
NET ASSET VALUE,
END OF YEAR $9.93 $8.95 $7.99 $6.48 $8.43
----- ----- ----- ----- -----
----- ----- ----- ----- -----
Total return(1)<F7> 12.07% 12.70% 23.71% (21.65)% (22.81)%
SUPPLEMENTAL DATA AND RATIOS
- ----------------------------
Net assets, end of year $8,451,198 $6,868,111 $4,683,756 $2,865,775 $4,525,315
Ratio of expenses
to average net assets:
Before expense waivers
and reimbursements 1.89% 1.94% 2.44% 2.48% 3.05%
After expense waivers
and reimbursements 0.64%(6)<F12> 0.95% 0.95% 1.23% 1.75%
Ratio of net investment income
(loss) to average net assets:
Before expense waivers
and reimbursements 0.20% (0.22)% (0.66)% (0.94)% (1.75%)
After expense waivers
and reimbursements 1.45% 0.77% 0.83% 0.31% (0.45%)
Portfolio turnover rate 5.31% 1.88% 9.46%(4)<F10> 31.23%(5)<F11> 39.17%
(1)<F7> Based on net asset value, which does not reflect the sales charge.
(2)<F8> Per share net investment loss has been calculated prior to tax
adjustments.
(3)<F9> Information for the periods ended September 30, 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, 2005 reflects the operations of
The Catholic Equity Fund. (Note 1)
(4)<F10> Portfolio turnover rate excludes purchases and sales from merger of
The Catholic Values Investment Trust and The Catholic Equity Fund.
(5)<F11> Portfolio turnover reflects the operations of the Catholic Equity Fund
for the period April 3, 2002 through September 30, 2002.
(6)<F12> On November 15, 2004, the adviser voluntarily increased its expense
reimbursements and fee waivers to the Fund, thereby decreasing its
expense ratio from 0.95% to 0.60%.
The accompanying Notes to Financial Statements are an integral part of these
statements.
THE CATHOLIC EQUITY FUND - CLASS C
For the
For the Year Ended September 30, Period Ended
-------------------------------------------- September 30,
2005 2004 2003 2002(1)<F13>
---- ---- ---- -------------
NET ASSET VALUE, BEGINNING OF PERIOD $8.90 $7.96 $6.48 $8.92
----- ----- ----- -----
Net investment income 0.12 0.05 0.04 0.01
Net realized and unrealized
gain (loss) on investments 0.94 0.94 1.48 (2.45)
----- ----- ----- -----
TOTAL FROM
INVESTMENT OPERATIONS 1.06 0.99 1.52 (2.44)
----- ----- ----- -----
Distributions from net investment income (0.05) (0.05) (0.04) --
----- ----- ----- -----
TOTAL DISTRIBUTIONS (0.05) (0.05) (0.04) --
----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $9.91 $8.90 $7.96 $6.48
----- ----- ----- -----
----- ----- ----- -----
Total return(2)<F14> 11.76% 12.39% 23.69% (27.47)%(3)
<F15>
RATIOS TO AVERAGE NET ASSETS
- ----------------------------
Net assets, end of period $3,519,933 $3,344,454 $3,016,387 $3,432
Ratio of expenses to
average net assets:
Before expense waivers
and reimbursements 2.39% 2.44% 2.94% 3.71%(4)
After expense waivers <F16>
and reimbursements 0.89%(6)<F18> 1.20% 1.20% 1.20%(4)
Ratio of net investment income <F16>
(loss) to average net assets:
Before expense waivers
and reimbursements (0.30)% (0.72)% (1.16)% (1.84)%(4)
After expense waivers <F16>
and reimbursements 1.20% 0.52% 0.58% 0.67%(4)
<F16>
Portfolio turnover rate 5.31% 1.88% 9.46%(5)<F17> 31.23%(3)
<F15>
(1)<F13> Reflects operations for the period from April 9, 2002 (commencement of
operation), to September 30, 2002. (Note 1)
(2)<F14> Based on net asset value, which does not reflect the contingent
deferred sales charge.
(3)<F15> Not annualized.
(4)<F16> Computed on an annualized basis.
(5)<F17> Portfolio turnover rate excludes purchases and sales from the merger
of The Catholic Values Investment Trust and The Catholic Equity Fund.
(6)<F18> On November 15, 2004, the adviser voluntarily increased its expense
reimbursements and fee waivers to the Fund, thereby decreasing its
expense ratio from 1.20% to 0.85%.
The accompanying Notes to Financial Statements are an integral part of these
statements.
THE CATHOLIC EQUITY FUND - CLASS I
For the
For the Year Ended September 30, Period Ended
-------------------------------------------- September 30,
2005 2004 2003 2002(1)<F19>
---- ---- ---- ------------
NET ASSET VALUE, BEGINNING OF PERIOD $8.96 $8.00 $6.49 $9.02
----- ----- ----- -----
Net investment income 0.16 0.09 0.07 0.02
Net realized and unrealized
gain (loss) on investments 0.95 0.94 1.49 (2.55)
----- ----- ----- -----
TOTAL FROM
INVESTMENT OPERATIONS 1.11 1.03 1.56 (2.53)
----- ----- ----- -----
Distributions from net investment income (0.12) (0.07) (0.05) --
----- ----- ----- -----
TOTAL DISTRIBUTIONS (0.12) (0.07) (0.05) --
----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $9.95 $8.96 $8.00 $6.49
----- ----- ----- -----
----- ----- ----- -----
Total return 12.41% 12.89% 24.19% (28.05)%(2)
<F20>
RATIOS TO AVERAGE NET ASSETS
- ----------------------------
Net assets, end of period $27,824,251 $21,818,191 $18,540,009 $9,831,101
Ratio of expenses to
average net assets:
Before expense waivers
and reimbursements 1.64% 1.69% 2.19% 2.55%(3)
After expense waivers <F21>
and reimbursements 0.39%(5)<F23> 0.70% 0.70% 0.70%(3)
Ratio of net investment income <F21>
(loss) to average net assets:
Before expense waivers
and reimbursements 0.45% 0.03% (0.41)% (0.82)%(3)
After expense waivers <F21>
and reimbursements 1.70% 1.02% 1.08% 1.03%(3)
<F21>
Portfolio turnover rate 5.31% 1.88% 9.46%(4)<F22> 31.23%(2)
<F20>
(1)<F19> Reflects operations for the period from April 3, 2002 (commencement of
operations), to September 30, 2002. (Note 1)
(2)<F20> Not annualized.
(3)<F21> Computed on an annualized basis.
(4)<F22> Portfolio turnover rate excludes purchases and sales from the merger
of The Catholic Values Investment Trust and The Catholic Equity Fund.
(5)<F23> On November 15, 2004, the adviser voluntarily increased its expense
reimbursements and fee waivers to the Fund, thereby decreasing its
expense ratio from 0.70% to 0.35%.
The accompanying Notes to Financial Statements are an integral part of these
statements.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2005
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 one diversified series, the Catholic Equity Fund (the "Fund"). At
the close of business on April 2, 2002, the 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 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 redesigned 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 value 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 Fund is managed by Catholic Financial Services Corporation (the
"Adviser"). At the close of business on May 22, 2003, the Fund acquired,
through a non-taxable reorganization, substantially all of the net assets of The
Catholic Values Investment Trust Equity Fund ("CVIT").
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 listed on the NASDAQ National Market are valued at the NASDAQ
Official Closing Price ("NOCP"). Other securities traded on the national
securities exchange are valued at the last sales price on the exchange where
primarily traded. 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 other than NASDAQ are valued at the latest bid
prices. 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.
Securities not currently traded or those for which the NOCP, last sales price or
bid price, as the case may be, is deemed unreliable are valued at fair value as
determined in good faith under procedures approved by the Board of Directors.
If the event occurs that will affect the value of a Fund's portfolio securities
before the NAV has been calculated, the security will generally be priced using
a fair value procedure. The Board has adopted specific procedures for valuing
portfolio securities and delegated the responsibility of fair value
determinations to a Valuation Committee. Some of the factors that may be
considered by the Valuation Committee in determining fair value are fundamental
analytical data relating to the investment; the nature and duration of any
restriction on the disposition; trading in similar securities of the same issuer
or comparable companies; information from broker-dealers; and an evaluation of
the forces that influence the market in which the securities are purchased or
sold.
B) STOCK INDEX FUTURES CONTRACTS
The 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 Fund intends to comply with the requirements of Subchapter M of the Internal
Revenue Code necessary to qualify as a regulated investment company and to make
the requisite distributions of income and capital gains to its 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 Fund will distribute any net investment income and any net realized long or
short-term capital gains at least annually. 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 Fund 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 years ended September 30,
2005 and 2004 were as follows:
Equity Fund
-------------------------------------------
For the For the
Year Ended Year Ended
September 30, 2005 September 30, 2004
------------------ ------------------
Ordinary Income $408,486 $216,667
Long-term Capital Gains -- --
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.
As of September 30, 2005, the Fund had net capital loss carryforwards of
$3,685,235 that will expire in varying amounts through 2012 ($108,401 in 2006,
$9,803 in 2007, $1,691,715 in 2008, $1,135,875 in 2009, $5,488 in 2010, $388,847
in 2011, and $345,106 in 2012). To the extent the Fund realizes future net
capital gains, those gains will be offset by any unused capital loss
carryforwards, subject to certain IRS limitations.
As of September 30, 2005, the components of capital on a tax basis were as
follows:
Equity Fund
-----------
Cost of investments $34,531,653
-----------
-----------
Gross unrealized appreciation $ 8,575,815
Gross unrealized depreciation (3,317,933)
-----------
Net unrealized appreciation/depreciation $ 5,257,882
-----------
-----------
Undistributed ordinary income $ 386,156
Undistributed long-term capital gain --
-----------
Total distributable earnings $ 386,156
-----------
-----------
Other accumulated gain/losses $(3,685,235)
-----------
Total accumulated earnings/losses $ 1,958,803
-----------
-----------
The Fund designates 100% of dividends declared from net investment income during
the fiscal year ended September 30, 2005 as qualified income under Jobs and
Growth Tax Relief Reconciliation Act of 2003 (unaudited).
For corporate shareholders in the Fund, the percentage of ordinary dividend
income distributed for the year ended September 30, 2005, which is designated as
qualifying for the dividends-received deduction, is 100% (unaudited).
E) EXPENSES
The 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 any class of shares of the Fund are allocated between each
class' respective net assets when appropriate. Fees paid under the Distribution
Plan (the "Plan") are borne by the specific class of shares of the Fund to which
the Distribution Plan applies.
F) OTHER
For financial reporting purposes, investment transactions are accounted for on
the trade date. The Fund determines 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 accounting principles
generally accepted in the Untied States of America 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
- ----------------------------------------------------------------
The Fund has entered into an agreement with the Adviser, with whom certain
Officers and Directors of the Fund are affiliated, to furnish investment
advisory services to the Fund. The terms of the agreement are as follows:
The 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 waived its management fee and/or reimbursed the Fund's operating
expenses (exclusive of brokerage, interest, taxes and extraordinary expenses) to
ensure that the Fund's operating expenses did not exceed 0.60%, 0.85% and 0.35%
(effective November 15, 2004, reflecting an increase in expense reimbursement
from the previous expense caps of 0.95%, 1.20% and 0.70%) of the average daily
net assets of Fund - Class A, Class C and Class I shares, respectively, for the
year ended September 30, 2005. While the Adviser's commitment has expired, it
is continuing to cap expenses at those amounts. This reimbursement and fee
waiver is voluntary, and may be discontinued at any time.
The Adviser has entered into a sub-advisory agreement with Mellon Equity
Associates, LLP ("Mellon"). The annual rates of the fees, payable from fees
paid to the Adviser, as a percent of average daily net assets under the sub-
advisory agreement is as follows: 0.12% on the first $50 million; 0.06% of the
Fund's average daily net assets in excess of $50 million.
For the year ended September 30, 2005, expenses of $472,871 were reimbursed by
the Adviser for the Fund. The Adviser may terminate or adjust the waiver and
expense reimbursement at any time after September 30, 2005.
The Fund has 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 of the Fund - Class A and Class
C, respectively, computed on a daily basis, to finance certain activities
relating to the distribution of its shares to investors. For the year ended
September 30, 2005, 12b-1 distribution expenses of $19,730 and $25,738 were paid
from Class A and Class C, respectively. These expenses were remitted to the
Adviser, who also acts as distributor for the shares of the Fund. The Adviser
also received sales charges from the sale of Class A shares of $35,660 for the
year ended September 30, 2005. There were no contingent deferred sales charges
paid to the Adviser for the redemption of Class C shares during the year ended
September 30, 2005. 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 Fund were as follows:
THE CATHOLIC EQUITY FUND - CLASS A SHARES
For the Year Ended For the Year Ended
September 30, 2005 September 30, 2004
---------------------------- ----------------------------
Amount Shares Amount Shares
------ ------ ------ ------
Shares sold $1,545,817 162,985 $2,062,903 232,281
Shares issued to holders in
reinvestment of distributions 72,993 7,517 32,372 3,658
Shares redeemed (828,294) (86,835) (485,188) (54,555)
-------- ------- ---------- -------
NET INCREASE $790,516 83,667 $1,610,087 181,384
-------- ------- ---------- -------
-------- ------- ---------- -------
THE CATHOLIC EQUITY FUND - CLASS C SHARES
For the Year Ended For the Year Ended
September 30, 2005 September 30, 2004
------------------------- --------------------------
Amount Shares Amount Shares
------ ------ ------ ------
Shares sold $245,364 21,908 $605,925 69,231
Shares issued to holders in
reinvestment of distributions 15,991 1,649 16,727 1,896
Shares redeemed (447,457) (43,891) (649,619) (74,463)
--------- ------- -------- -------
NET INCREASE $(186,102) (20,334) $(26,967) (3,336)
--------- ------- -------- -------
--------- ------- -------- -------
THE CATHOLIC EQUITY FUND - CLASS I SHARES
For the Year Ended For the Year Ended
September 30, 2005 September 30, 2004
---------------------------- ----------------------------
Amount Shares Amount Shares
------ ------ ------ ------
Shares sold $3,538,262 372,855 $1,295,680 148,768
Shares issued to holders in
reinvestment of distributions 307,636 31,682 162,463 18,357
Shares redeemed (385,646) (41,969) (428,534) (50,748)
---------- ------- ---------- -------
NET INCREASE $3,460,252 362,568 $1,029,609 116,377
---------- ------- ---------- -------
---------- ------- ---------- -------
5. INVESTMENT TRANSACTIONS
- --------------------------
The aggregate purchases and sales of securities, excluding short-term
investments for the Fund, for the year ended September 30, 2005 were $6,001,850
and $1,928,513, respectively. There were no purchases and sales of U.S.
government securities for the Fund.
Transactions in futures contracts for the year ended September 30, 2005 were as
follows:
Equity Fund
------------------------------
Number of Aggregate Face
Contracts Value of Contracts
--------- -------------------
Outstanding at beginning of year 5 $504,320
Contracts opened 54 4,221,955
Contracts closed (51) (3,980,545)
--- ----------
Outstanding at end of year 8 $ 745,730
--- ----------
--- ----------
6. GUARANTEES AND INDEMNIFICATIONS
- ----------------------------------
In the normal course of business, the Fund enters into contracts with service
providers that contain general indemnification clauses. The Fund's maximum
exposure under these arrangements is unknown as this would involve future claims
against the Fund that have not yet occurred. Based on experience, the Fund
expects the risk of loss to be remote.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
THE CATHOLIC FUNDS, INC.
To the Board of Directors and Shareholders
of The Catholic Funds, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Catholic Funds, Inc.
(constituting The Catholic Equity Fund, hereafter referred to as the "Fund") at
September 30, 2005, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended and
the financial highlights for each of the periods presented, in conformity with
accounting principles generally accepted in the United States of America. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at September 30, 2005 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PricewaterhouseCoopers LLP
Milwaukee, Wisconsin
November 17, 2005
DIRECTORS AND OFFICERS (UNAUDITED)
THE CATHOLIC FUNDS, INC.
Number of
Portfolios in Other
Position(s) Term of Office Complex Directorships
Name, Address and Held with and Length of Principal Occupation(s) Overseen by Held by
Date of Birth CFI Time Served During Past 5 Years Director Director
- ------------- --- ----------- ------------------- -------- --------
INDEPENDENT DIRECTORS:
- ----------------------
Thomas A. Bausch, PhD Director Indefinite, Professor of Management, 1 None
1100 W. Wells St. until successor Marquette University since 1978.
Milwaukee, WI 53233 elected.
06/06/1938
Since 1999
J. Michael Borden Director Indefinite, Chief Executive Officer, 1 Trustee,
1100 W. Wells St. until successor HUFCOR since 1978. Jefferson Fund
Milwaukee, WI 53233 elected. Group
12/21/1936 Mutual Funds
Since 1999
Daniel R. Doucette Director Indefinite, President and CEO, Milwaukee 1 None
1100 W. Wells St. until successor Insurance since 1989.
Milwaukee, WI 53233 elected.
09/03/1949
Since 1999
Amelia E. Macareno Director Indefinite, Senior Vice President, Commercial 1 None
1100 W. Wells St. until successor Lending, Merchants & Manufacturers
Milwaukee, WI 53233 elected. Bancorporation, Inc. since 2002.
10/05/1958
Since 2005 Vice President, Correspondent
Banking, U.S. Bank N.A. (1981 to 2002).
Thomas J. Munninghoff Director Indefinite, CPA-Munninghoff, Lange and Co. 1 None
1100 W. Wells St. until successor (Accounting Firm) since 1983.
Milwaukee, WI 53233 elected.
08/27/1947
Since 1999
Bernard E. Reidy Director Indefinite, Archbishop's Delegate for Administration 1 None
1100 W. Wells St. until successor and Finance, Archdiocese of New York
Milwaukee, WI 53233 elected. since 2000.
03/24/1942
Since 2005
Conrad L. Sobczak Director Indefinite, Retired; President and CEO, 1 None
1100 W. Wells St. until successor Family Health Systems
Milwaukee, WI 53233 elected. (1987 to 1998).
10/20/1938
Since 1999
INTERESTED DIRECTORS:
- ---------------------
Daniel J. Steininger(1) Director, Indefinite, CEO-Catholic Knights 1 None
1100 W. Wells St. <F24> Chairman of until successor since 1981.
Milwaukee, WI 53233 the Board elected.
05/01/1945
Since 1999
Allan G. Lorge(1)<F24> Director, Indefinite, CFO-Catholic Knights 1 None
1100 W. Wells St. Vice President,until successor since 1986.
Milwaukee, WI 53233 Secretary and elected.
12/09/1949 Chief Financial
Officer Since 1999
OFFICERS:
- ---------
Theodore F. Zimmer President One year term, General Counsel-Catholic n/a n/a
1100 W. Wells St. subject to election Knights since 1997.
Milwaukee, WI 53233 by Board of
12/17/1940 Directors or until
successor is elected.
Since 2002
Russell J. Kafka Treasurer One year term, Vice President-Investments, n/a n/a
1100 W. Wells St. subject to election Catholic Knights since 1985.
Milwaukee, WI 53233 by Board of
06/20/1944 Directors or until
successor is elected.
Since 1999
John M. Koth Chief One year term, Chief Compliance Officer-Catholic n/a n/a
1100 W. Wells St. Compliance subject to election Financial Services Corporation
Milwaukee, WI 53233 Officer by Board of since 2001.
09/27/1964 Directors or until Compliance and Operations Director-
successor is Prudential Financial Services 1999 to 2001.
elected.
Since 2004
Mark K. Forbord Controller One year term, Senior Financial Analyst- n/a n/a
1100 W. Wells St. subject to election Catholic Knights since 1995.
Milwaukee, WI 53233 by Board of
01/21/1954 Directors or until
successor is elected.
Since 1999
Additional information about the Fund's directors is available in the Statement
of Additional Information and is available, without charge, upon request, by
calling 1-877-222-2402.
(1)<F24> Messrs. Steininger and Lorge are considered to be interested persons
(as defined in the 1940 Act) of The Catholic Funds, Inc. by virtue of
their positions with Catholic Knights and Catholic Financial Services
Corporation.
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 the Fund in the current prospectus, other factors bearing on these
reports include the accuracy of the forecasts and predictions and 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 the Fund to differ materially as compared to benchmarks
associated with the Fund.
BOARD OF DIRECTORS
- ------------------
Daniel Steininger
Chairman of the Board
Thomas Bausch
J. Michael Borden
Daniel Doucette
Allan Lorge
Amelia Macareno
Thomas Munninghoff
Bernard Reidy
Conrad Sobczak
OFFICERS
- --------
Theodore Zimmer, President
Allan Lorge
Vice President, Secretary and
Chief Financial Officer
Russell Kafka, Treasurer
John Koth, Chief Compliance Officer
Mark Forbord, Controller
INVESTMENT ADVISER
- ------------------
Catholic Financial Services Corporation
1100 West Wells Street
Milwaukee, WI 53233
SUBADVISER
- ----------
Mellon Equity Associates, LLP
500 Grant St., Suite 4200
Pittsburgh, PA 15258
LEGAL COUNSEL
- -------------
Quarles & Brady LLP
CUSTODIAN
- ---------
U.S. Bank, N.A.
TRANSFER AGENT
- --------------
U.S. Bancorp Fund Services, LLC
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- ---------------------------------------------
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
David E. Huber, High Chief Ranger
355 Shuman Boulevard
P.O. Box 3012
Naperville, IL 60566-7012
Catholic Union of Texas (The KJT)
Elo J. Goerig, President
P.O. Box 297
LaGrange, TX 78945
The Fund's Statement of Additional Information contains additional information
about the Fund's Directors and is available without charge upon request by
calling 1-877-222-2402.
The Fund's Proxy Voting Policies and Procedures are available without charge
upon request by calling 1-877-222-2402, on the Fund's website,
www.catholicfunds.com, or on the SEC's website, at www.sec.gov. Information
--------------------- -----------
regarding how the Fund voted proxies relating to portfolio securities during the
twelve months ended June 30, 2005 is available, without charge, on or through
the Fund's website, at www.catholicfunds.com, and on the SEC's website, at
---------------------
www.sec.gov.
------------
Beginning with the Fund's first and third quarters ending after July 9, 2004,
the Fund will file a complete schedule of portfolio holdings with the SEC on
Form N-Q. The Form N-Q will be available without charge, upon request, by
calling 1-877-222-2402, on the Fund's website, at www.catholicfunds.com, and on
---------------------
the SEC's website, at www.sec.gov. You may also review and copy the Form N-Q
-----------
for the Fund at the SEC's Public Reference Room in Washington, DC. You may get
information about the operation of the Public Reference Room by calling 1-800-
SEC-0330.
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.
(THE CATHOLIC EQUITY FUND LOGO)
CATHOLIC FINANCIAL SERVICES CORPORATION
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
As of the end of the period covered by this Report on Form N-CSR, the
Registrant has adopted a Code of Ethics that applies to the Registrant's
principal executive officer, principal financial officer and principal
accounting officer.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The Registrant's Board of Directors has determined that the Registrant has
at least one audit committee financial expert serving on its Audit Committee.
Thomas Munninghoff, a director of the Registrant since its commencement of
operations in 1999, has been determined to be an audit committee financial
expert and he is "independent" within the meaning of Item 3(a)(2) of Form N-CSR.
Mr. Munninghoff is the President and Audit Principal for the accounting firm of
Munninghoff, Lange & Co., with which he has served in various capacities since
1983. Mr. Munninghoff is a Certified Public Accountant.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table sets forth information as to the fees billed to the
Registrant for audit, audit-related, tax and other services and products
provided by PricewaterhouseCoopers LLP, the Registrant's principal accountant,
for each of the last two fiscal years.
FISCAL YEAR ENDED SEPTEMBER 30,
-------------------------------
2004 2005
---- ----
Audit Fees(1)<F24> $20,000 $21,400
Audit-Related Fees(2)<F25> $ -0- $ -0-
Tax Fees(3)<F26> $ 2,275 $ 3,800
All Other Fees(4)<F27> $ -0- $ -0-
TOTAL $22,275 $25,200
------- -------
------- -------
- -----------
(1)<F24> This category relates to professional services rendered by the
principal accountant for the audit of the Registrant's annual
financial statements or services that are normally provided by the
accountant in connection with statutory and regulatory filings or
engagements for those fiscal years.
(2)<F25> This category relates to assurance and related services by the
principal accountant that are reasonably related to the performance of
the audit of the Registrant's financial statements and are not
reported under "Audit Fees" above.
(3)<F26> This category relates to professional services rendered by the
principal accountant for tax compliance, tax advice and tax planning.
For 2004 and 2005, PricewaterhouseCoopers LLP assisted in the
preparation of tax returns for the Registrant and also reviewed the
Registrant's dividend calculation to assure compliance with Subchapter
M of the Internal Revenue Code of 1986.
(4)<F27> This category relates to products and services provided by the
principal accountant other than those reported under "Audit Fees,"
"Audit-Related Fees," and "Tax Fees" above.
PricewaterhouseCoopers LLP did not bill any amounts over the last two
fiscal years for services or products provided to Catholic Financial Services
Corporation ("CFSC"), the Registrant's investment advisor, or any entity
controlling, controlled by or under common control with CFSC that provides
ongoing services for the Registrant.
The audit committee of the Registrant's Board of Directors selected
PricewaterhouseCoopers LLP and approved all of the audit and non-audit services
that were provided and the fees that were paid in each of 2004 and 2005 before
that firm was engaged to provide such services. The audit committee of the
Registrant's Board of Directors has not adopted any pre-approval policies and
procedures (as described in paragraph (c)(7) of Rule 2-01 of Regulation S-X)
regarding the provision of audit or non-audit services to the Registrant. The
audit committee itself must approve all such services in advance. No non-audit
services were provided to the Registrant with respect to the past two fiscal
years pursuant to a waiver from the pre-approval requirement that were
subsequently approved by the audit committee under paragraph (c)(7)(i)(C) of
Rule 2-01 of Regulation S-X.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not applicable to this Registrant, insofar as the Registrant is not a
"listed issuer" within the meaning of Rule 10A-3 under the Securities Exchange
Act of 1934.
ITEM 6. SCHEDULE OF INVESTMENTS
The Schedule of Investments in securities of unaffiliated issuers is
included in the Registrant's Annual Report to Shareholders dated as of September
30, 2005 provided under Item 1 of this Report.
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. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES
Not applicable to this Registrant, insofar as the Registrant is not a
closed-end management investment company.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS
Not applicable to this Registrant, insofar as the Registrant is not a
closed-end management investment company.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
Not applicable insofar as the Registrant has not made any material changes
to the procedures by which shareholders may recommend nominees to the
registrant's board of directors since the Registrant's Board of Directors
adopted the resolution disclosed in the Registrant's semi-annual report on Form
N-CSR for the period ended March 31, 2004.
ITEM 11. CONTROLS AND PROCEDURES
(a) Disclosure Controls and Procedures. Within 90 days prior to the
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filing of this Report on Form N-CSR, the Registrant's President (Principal
Executive Officer) and its Chief Financial Officer (Principal Financial Officer)
reviewed the Registrant's disclosure controls and procedures (as defined in
Rule 30a-3(c) of the Investment Company Act of 1940) and evaluated their
effectiveness. Based on their evaluation, such officers determined that the
disclosure controls and procedures adequately ensure that information required
to be disclosed by the Registrant in this Report on Form N-CSR is recorded,
processed, summarized and reported within the time periods required by the
Securities and Exchange Commission's rules and forms.
(b) Change in Internal Controls. There were no changes in the
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Registrant's internal control over financial reporting (as defined in Rule 30a-
3(d) under the Investment Company Act of 1940) that occurred during the second
fiscal quarter of the period covered by this Report that have materially
affected, or are reasonably likely to materially affect, the Registrant's
internal control over financial reporting.
ITEM 12. EXHIBITS
The following exhibits are attached to this Form N-CSR:
EXHIBIT NO. DESCRIPTION OF EXHIBIT
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12(a)(1) The Code of Ethics for the Registrant's Principal
Executive Officer, Principal Financial Officer, and
Principal Accounting Officers referred to in Item 2
was filed as Exhibit 12(a)(1) to the Registrant's
Certified Shareholder Report on Form N-CSR filed on
December 2, 2003, and is incorporated herein by
reference.
12(a)(2)(A) Certification of Principal Executive Officer
Required by Section 302 of the Sarbanes-Oxley Act of
2002 is filed herewith
12(a)(2)(B) Certification of Principal Financial Officer
Required by Section 302 of the Sarbanes-Oxley Act of
2002 is filed herewith
12(b) Certification of Chief Executive Officer and Chief
Financial Officer Required by Section 906 of the
Sarbanes-Oxley Act of 2002 is furnished herewith
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 1st
day of December, 2005.
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 1st day of December, 2005.
By: /s/ Theodore F. Zimmer
-----------------------
Theodore F. Zimmer, President (Principal
Executive Officer)
By: /s/ Allan G. Lorge
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Allan G. Lorge, Vice President,
Secretary and Chief Financial Officer
(Principal Financial Officer)