--------------------------------
OMB APPROVAL
--------------------------------
OMB No. 3235-0059
Expires: February 28, 2006
Estimated average burden
hours per response ....... 12.75
--------------------------------

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12

The Catholic Funds, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

Not Applicable
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

1) Title of each class of securities to which transaction applies:

--------------------------------------------------------------------

2) Aggregate number of securities to which transaction applies:

--------------------------------------------------------------------

3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):

--------------------------------------------------------------------

4) Proposed maximum aggregate value of transaction:

--------------------------------------------------------------------

5) Total fee paid:

[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.

1) Amount Previously Paid:

--------------------------------------------------------------------

2) Form, Schedule or Registration Statement No.:

--------------------------------------------------------------------

3) Filing Party:

--------------------------------------------------------------------

4) Date Filed:

[THE CATHOLIC FUNDS, INC. LETTERHEAD]

December 30, 2005

Dear Catholic Funds Shareholder:

We are enclosing proxy materials to ask for your approval of proposed changes
that, taken together, are expected to benefit the shareholders. They include:

o A proposal to approve a new Investment Subadvisory Agreement with
Ziegler Capital Management, LLC ("ZCM") to act as subadviser for the
Catholic Equity Fund (the "Fund").

o The election of Amelia E. Macareno and Bernard E. Reidy (the
"Proposed Directors") to the Board of Directors of the Catholic
Funds, Inc.

o For Class C shareholders of the Fund only, a proposal to approve a
Plan of Reorganization and Liquidation pursuant to which Class C
shares of the Fund would be liquidated, and Class C shareholders
would receive, as liquidation proceeds, Class A shares having a net
asset value equal to the net asset value of their Class C shares.

These proposals will be presented at a Special Meeting of Shareholders on
January 23, 2006, at 10:00 a.m. Central Time, at the offices of Catholic
Knights, located at 1100 West Wells Street, Milwaukee, Wisconsin. The Board of
Directors believes that the proposed changes are in the best interests of the
shareholders of the Fund and unanimously recommends that you vote "FOR" their
approval.

The Board of Directors believes that a change in the investment subadviser for
the Fund is in the best interests of the Fund and its shareholders for various
reasons. First, in an effort to attract more investors and increase the assets
of the Fund, the Board of Directors has adopted a change in the Fund's
investment objective and strategy. The modified investment objective and
strategy are designed to enhance the return of the Fund as compared to the S&P
500 Index (the "Index") so that, after taking into account operating expenses,
the Fund potentially will provide shareholders with a return comparable to that
of the Index. At the same time the Fund will continue to promote important
Catholic values through its advocacy program. Because ZCM has extensive
knowledge and experience with this type of investment strategy, the Board
believes ZCM is uniquely qualified to manage the Fund's assets under this
strategy. Second, ZCM is an affiliate of B.C. Ziegler & Company, a brokerage
firm that has significant distribution channels, including seven wholesalers, a
retail distribution network of more than 200 financial intermediaries and
multiple institutional sales representatives and consultants. The Board of
Directors believes that coupling the distribution capabilities of B.C. Ziegler
and Company with the investment management services of ZCM will increase the
return of the Fund as well as enhance the distribution of the Fund's shares. The
Board believes these improvements will make the Fund more attractive to
investors and will eventually result in an increase in Fund assets sufficient to
secure the long term viability of the Fund.

The Investment Company Act of 1940 (the "1940 Act") allows Directors to appoint
new directors to the Board of Directors without seeking shareholder approval so
long as, after the appointment(s), at least two thirds of the Directors on the
Board have been elected by shareholders. The Proposed Directors have been so
duly appointed by the Board and are currently serving as members of the Board.
However, the Proposed Directors are the only Directors serving on the Board who
have not been elected by the shareholders. Since a shareholder vote is already
required to approve the new subadvisory agreement with ZCM, you are now being
asked to elect the Proposed Directors to the Board as well. By doing so, the
Board will be composed entirely of directors who have been elected by
shareholders. The Board believes this is in the shareholders' best interest in
order to provide the Board with maximum flexibility to appoint additional
directors in the future without the costs and delays associated with holding a
special shareholders' meeting to do so.

In the liquidation, the Fund will distribute to each Class C shareholder, as
liquidation proceeds, that number of Class A shares of the Fund which has a net
asset value equal to the aggregate net asset value of the Class C shares held by
the shareholder on the date of the liquidation. Class A shares incur lower
ongoing operating expenses than do Class C shares, because Class A shares have a
12b-1 fee of only 25 basis points, as compared to 75 basis points for the Class
C shares. The Class C shareholders will not incur the front-end sales charge
ordinarily associated with the Fund's sale of Class A shares, nor will they be
subject to any contingent deferred sales charge with respect to the Class C
shares being liquidated. In addition, the liquidation of the Class C shares will
not result in the recognition of any taxable gain or loss to the Class C
shareholders. In short, as a result of the liquidation, Class C shareholders
will own Class A shares with a lower continuing expense structure, and they will
incur no fees, costs or taxes in the liquidation.

These proposals are more fully discussed in the Proxy Statement. We urge you to
read carefully the enclosed materials before deciding how to vote.

Your vote is important! Whether or not you expect to attend in person, we urge
you to vote your shares. For your convenience, you may vote by telephone or by
signing, dating and returning the enclosed proxy card. Promptly voting your
shares will ensure the presence of a quorum and save us the expense and extra
work of additional solicitation. To vote by telephone, please follow the
instructions included with your proxy card. Voting in this manner is fast, easy
and convenient, and your vote is immediately confirmed and tabulated. It also
helps to reduce postage and proxy tabulation costs. You do not need to return
the enclosed proxy card if you are voting by telephone.

Thank you for your consideration continued support.

Sincerely,

THE CATHOLIC FUNDS, INC.

/s/ Theodore F. Zimmer

THEODORE F. ZIMMER
President

THE CATHOLIC FUNDS, INC.

QUESTIONS AND ANSWERS
GENERAL INFORMATION REGARDING THE PROPOSALS TO BE CONSIDERED
AT THE SPECIAL SHAREHOLDER MEETING

When and where is the shareholders meeting?

The special meeting of shareholders of the Catholic Equity Fund (the
"Fund") will be held on January 23, 2006, at 10:00 a.m. Central Time, at the
offices of Catholic Knights located at 1100 West Wells Street, Milwaukee,
Wisconsin.

What proposals am I voting on?

The following list summarizes each proposal to be presented at the meeting
and the Class of the Fund's shares that the Board is soliciting with respect to
each proposal:

PROPOSAL AFFECTED CLASS
-------- --------------

1. Approval of a new Investment Subadvisory Agreement with All Classes
Ziegler Capital Management, LLC ("ZCM"), which would
replace Mellon Equity Associates, LLP ("Mellon") as the
Fund's subadviser.

2. The elections of Amelia E. Macareno and Bernard E. Reidy All Classes
(the "Proposed Directors") to the Board of Directors of the
Catholic Funds, Inc.

3. Approval of a Plan of Reorganization and Liquidation to Class C
liquidate Class C shares of the Fund.

How do I vote?

You may vote by completing and signing the proxy card and returning it in
the enclosed postage pre-paid envelope or by voting by telephone. You may also
vote in person at the special meeting. You may also vote via telephone by
following the instructions of your proxy card. Even if you intend to attend the
special meeting and vote your shares in person, you are urged to complete and
return the enclosed proxy card or to vote by telephone. Voting in any of the
ways will not prevent you from voting your stock at the Special Meeting if you
desire to do so, as your vote by proxy is revocable at your option. To vote by
telephone, please call the number listed on your proxy card and follow the
simple recorded instructions using the proxy card as a guide. If you vote by
telephone, there is no need to mail back your proxy card. We urge you to vote
your shares. It is important.

How many votes am I entitled to cast?

You are entitled to one vote for each share (and a fractional vote for
each fractional share) of the Fund that you owned on the record date. The record
date is December 20, 2005.

How does the Board recommend I vote?

The Board recommends that shareholders vote FOR each of the proposals
described in this proxy statement.

PROPOSAL 1:
NEW SUBADVISORY AGREEMENT

Who votes on this proposal?

Proposal 1 applies to all shareholders of the Fund.

Why am I being asked to approve a new subadvisory agreement?

The Board of Directors believes that a change in the investment subadviser
for the Fund is in the best interest of Fund and its shareholders for various
reasons. First, in an effort to attract more investors and increase the assets
of the Fund, the Board of Directors has adopted a change in the Fund's
investment objective and strategy. The modified investment objective and
strategy are designed to enhance the return of the Fund as compared to the S&P
500 Index (the "Index") so that, after deducting the Fund's operating expenses,
the Fund potentially will provide shareholders with a return more comparable to
that of the Index. At the same time the Fund will continue to promote important
Catholic values through its advocacy program. Because ZCM has extensive
knowledge and experience with this type of investment strategy, the Board
believes ZCM is uniquely qualified to manage the Fund's assets pursuant to this
new objective and strategy. Second, ZCM is an affiliate of B.C. Ziegler &
Company, a brokerage firm that has significant distribution channels, including
seven wholesalers, a retail distribution network of more than 200 financial
intermediaries and multiple institutional sales representatives and consultants.
The Board of Directors believes that coupling the distribution capabilities of
B.C. Ziegler and Company with the advisory services of ZCM will increase the
return of the Fund as well as enhance the distribution of the Fund's shares. The
Board believes these improvements will make the Fund more attractive to
investors and will eventually result in an increase in Fund assets sufficient to
secure the long term viability of the Fund.

Will the portfolio manager of the Fund change if the subadvisory agreement with
ZCM is approved?

Yes. The current portfolio manager of the Fund will be replaced with new
portfolio managers. The Fund will be managed by a team of investment
professionals with equities experience who are employed by the subadviser. The
team will jointly develop and implement investment strategies for the Fund. The
team will consist of Donald J. Nesbitt and Brian K. Andrew and will be led by
Donald J. Nesbitt.

Donald J. Nesbitt, CFA. Donald J. Nesbitt is a Vice President and the
Director of Equity Portfolio Management for ZCM. Mr. Nesbitt joined ZCM and its
affiliates in early 2002 after having spent nearly four years at Qwest
Communication's pension plan in Denver, Colorado, where he managed $6 billion of
equities, using research-enhanced, quantitative, approaches. Prior to joining
Qwest, Mr. Nesbitt spent nine years at the Illinois Teachers' Retirement System
where, as Director of Investments, he was responsible for the management of $20
billion across various asset classes. Mr. Nesbitt holds a B.S. in economics from
Saint Cloud State University, St. Cloud, Minnesota, and a M.S. in financial
analysis from the University of Wisconsin-Milwaukee. He holds a Chartered
Financial Analyst (CFA) designation and has been actively involved with the
Association for Investment Management and Research (AIMR). Mr. Nesbitt has also
instructed investment courses at the University of Illinois-Springfield and has
spoken at numerous industry conferences on the topics of enhanced equity
management and derivative investment.

Brian K. Andrew, CFA. Brian K. Andrew is ZCM's Chief Investment Officer
and a Senior Managing Director serving on ZCM's Management Committee. Mr. Andrew
has been a portfolio manager with ZCM and its affiliates since 1994. He is also
a member of ZCM's Equity and Fixed Income Committees. Prior to joining ZCM and
its affiliates in 1994, he worked as an analyst and portfolio manager for bank
trust and investment advisory firms and was a managing director and partner in a
private investment advisory firm. Mr. Andrew received a BS in finance from the
University of Minnesota. He has also achieved his Chartered Financial Analyst
designation.

Will the management fees that are deducted from the Fund's assets increase with
the change in subadviser?

No. The Fund presently pays its Adviser, Catholic Financial Services
Corporation ("CFSC" or the "Adviser") a fee at the annual rate of 0.50 of 1% of
the Fund's average daily net assets. CFSC pays to Mellon a subadvisory fee at
the annual rate of 0.12 of 1% of the Fund's first $50 million in average daily
net assets, and 0.06 of 1% of the Fund's average daily net assets in excess of
$50 million. If the shareholders vote to change the subadviser from Mellon to
ZCM, the subadvisory fees paid by CFSC to ZCM with increase to:

o 0.20 of 1% of average daily net assets of $250 million or less;

o 0.18 of 1% of average daily net assets in excess of $250 million up
to $500 million; and

o 0.15 of 1% of average daily net assets in excess of $500 million.

However, the subadvisory fees will continue to be paid by CFSC out of its
advisory fees, which will not increase as a result of the change to ZCM.
Therefore, the management fee deducted from the Fund's assets and actually
incurred by the shareholders will not increase (it will remain at an annual rate
of 0.50 of 1% of the Funds average daily net assets). In fact, the management
fee is expected to decrease in the future due to the fact that CFSC has agreed
to reduce its advisory fee to the annual rate of 0.45 of 1% of the Fund's
average daily net assets in excess of $500 million contingent upon approval of
the Subadvisory Agreement with ZCM.

What are the differences between the investment management services presently
provided by Mellon and those that will be provided by ZCM under the new
subadvisory agreement?

There are significant differences between the subadvisory services
provided by Mellon and those that will be provided by ZCM under the new
subadvisory agreement. Under the current subadvisory agreement, Mellon passively
manages the Fund's assets by replicating the S&P 500 Index, differing with the
index only for purposes of excluding stocks to comply with the Fund's sanctity
of life exclusionary screen. Under the subadvisory agreement with ZCM, ZCM will
provide the Fund with a more actively managed investment strategy whereby ZCM
will utilize "optimization" and "enhancement" strategies to provide the Fund
with an enhanced return. In addition, the subadvisory agreement with Mellon and
the new subadvisory agreement with ZCM will differ in that ZCM will not take on
the responsibility for implementing the Fund's sanctity of life exclusionary
screen on a day to day basis. CFSC has agreed to take on this responsibility.

Will the Fund adhere to the same Catholic values under the new subadviser?

Yes. The change in subadvisers will not affect the Catholic values
promoted by the Fund. The Fund will adhere to the Catholic values of the
sanctity of human life and the dignity of the human person in the same manner as
it has adhered to those values under its subadvisory agreement with Mellon.
There will be one change in responsibilities. Mellon, under the supervision and
direction of the Adviser, historically has implemented the Fund's sanctity of
life exclusionary screen. ZCM does not offer those screening services.
Accordingly, the Adviser has taken on the responsibility for implementing the
Fund's sanctity of life exclusionary screen on a day-to-day basis.

When will the new subadvisory agreement with ZCM become effective?

Pending shareholder approval, the subadvisory agreement will become
effective, and ZCM will take over the day-to-day management of the Fund's
assets, upon effectiveness of the amendment to the Fund's SEC registration
statement which was filed with the SEC on December 1, 2005. That amendment is
scheduled to become effective on February 1, 2006.

What if there are not enough votes to reach a quorum by the scheduled date of
the special shareholder meeting, or if insufficient votes are received to
approve the new subadvisory agreement with ZCM?

PROPOSAL 2:
ELECTION OF NEW DIRECTORS

Who votes on this proposal?

Proposal 2 applies to all shareholders of the Fund.

Why am I being asked to vote on the election of the proposed Directors?

The Investment Company Act of 1940 (the "1940 Act") allows Directors to
appoint new Directors to the Board of Directors without seeking shareholder
approval so long as, following the appointment(s), at least two thirds of the
Directors on the Board have been elected by shareholders. Ms. Macareno and Mr.
Reidy have been so duly appointed by the Board and are currently serving as
members of the Board. They presently are the only Directors serving on the Board
who have not been elected by the shareholders. Since a shareholder vote is
already required to approve the new subadvisory agreement with ZCM, you are now
being asked to elect the Proposed Directors to the Board as well. By doing so,
the Board will be composed entirely of directors who have been elected by the
shareholders. The Board believes this is in the shareholders' best interest in
order to provide the Board with maximum flexibility to appoint additional
directors in the future without the costs and delays associated with holding a
special shareholders' meeting to do so.

What if there are not enough votes to reach a quorum by the scheduled date of
the special shareholder meeting, or if insufficient votes are received to elect
the Proposed Directors?

Catholic Knights, the ultimate parent company of CFSC, and the other
fraternal benefit societies that are shareholders of CFSC, namely Catholic Order
of Foresters and Catholic Union of Texas (The KJT), together with the
Archdiocese of New York, hold a majority of all outstanding shares of the Fund.
Those organizations have indicated their present intention to vote all of their
shares of common stock of the Fund in favor of electing Ms. Macareno and Mr.
Reidy to the Board of Directors. Therefore, the representation of those
organizations' shares at the meeting and their votes in favor of the Proposed
Directors will be sufficient both to constitute a quorum for the conduct of
business at the meeting and for the election of Ms. Macareno and Mr. Reidy to
the Board. As reflected by its appointments of Ms. Macareno and Mr. Reidy to the
Board of Directors, the Board has a high degree of confidence in their abilities
and characters to serve effectively as Directors of the Fund, and the Board
recommends that all shareholders vote "FOR" their election.

PROPOSAL 3:
LIQUIDATION OF CLASS C SHARES

Who votes on this proposal?

Proposal 3 only applies to Class C shareholders of the Fund, and therefore
only those persons who hold Class C shares of the Fund on the Record Date are
permitted to vote on this matter.

Why am I being asked to approve a plan to liquidate Class C shares?

The Board of Directors believes that the liquidation of Class C shares of
the Fund is in the best interests of the Fund and the Class C shareholders for
various reasons. Sales of Class C shares have, historically, been low and the
ongoing annual operating expenses Class C shareholders are subject to have been
high. By eliminating Class C shares, the Fund will avoid the costs that are
associated with the administration, recordkeeping, accounting, and registration
of the shares. In the liquidation, the Fund will distribute to each Class C
shareholder, as liquidation proceeds, that number of Class A shares of the Fund
which has a net asset value equal to the aggregate net asset value of the Class
C shares held by the shareholder on the date of the liquidation. Class A shares
incur lower ongoing operating expenses than do Class C shares, because Class A
shares have a 12b-1 fee of only 25 basis points, as compared to 75 basis points
for the Class C shares. The Class C shareholders will not incur the front-end
sales charge ordinarily associated with the Fund's sale of Class A shares, nor
will they be subject to any contingent deferred sales charge with respect to the
Class C shares being liquidated. In addition, the liquidation of the Class C
shares will not result in the recognition of any taxable gain or loss to the
Class C shareholders. In short, following the liquidation Class C shareholders
will own Class A shares with a lower continuing expense structure, and they will
incur no fees, costs or taxes in the liquidation.

What will the proposed liquidation involve?

The Fund's transfer agent will establish for each Class C shareholder an
account containing the number of the Fund's Class A shares having the same
aggregate net asset value as the aggregate net asset value of the Class C shares
held by the shareholder immediately prior to the liquidation. Such accounts will
be identical in all respects to the accounts currently maintained by the
transfer agent for each Class C shareholder. Certificates for Class C shares
issued before the liquidation, if any, will represent Class A shares after the
liquidation. However, the Fund normally does not issue share certificates. At
the time the shares are issued, the records of the Fund will be adjusted to show
the assets that are now attributed to the Class C shares as assets of Class A
shares.

Will I be subject to higher fees as a Class A shareholder than I was as a Class
C shareholder?

No. In fact, as a Class A shareholder, your shares will incur lower annual
operating expenses than you would incur as a Class C shareholder. Currently,
both Class A and Class C shares are subject to distribution plans adopted
pursuant to Rule 12b-1 under the 1940 Act which provide for payments to the
Fund's distributor. The plan applicable to Class C shares provides for payments
equal to 0.75% of the average daily net assets of the Fund attributable to the
Class C shares as compensation to the distributor for its efforts in marketing
Class C shares. The plan applicable to Class A shares provides for payments of
up to 0.25% of the Fund's average daily net assets attributable to Class A
shares. That fee is designed to reimburse the distributor for specified costs
and expenses it incurs in connection with distributing and promoting sales of
Class A shares. Because all other operating expenses of the Class C and Class A
shares are identical, by becoming Class A shareholders, you will enjoy a
reduction of 50 basis points in annual operating expenses.

For a presentation of annual operating expenses incurred with respect to
Class C shares as compared to Class A shares, see the fee table included in this
proxy statement under the caption "Proposal 3: For Class C Shareholders Only -
Approval of Plan of Reorganization and Liquidation."

Will the proposed liquidation cost shareholders anything?

No. You will not incur the front-end sales charge ordinarily associated
with the purchase of Class A shares with respect to the Class A shares you
receive as liquidation proceeds for your Class C shares, and any contingent
deferred sales charges ordinarily associated with the redemption of Class C
shares will not apply in this liquidation. In short, you will incur no sales
charges in connection with the liquidation of your Class C shares and your
receipt of Class A shares as liquidation proceeds. In addition, you will benefit
from the lower annual expenses discussed above.

What are the differences between the Class C and Class A Shares?

Class A and Class C shares are subject to different operating expenses, as
described above. In addition, purchases of Class A shares ordinarily are subject
to front-end sales charges. While Class C shares have no front-end sales charge,
Class C shares redeemed within one year of purchase are subject to a contingent
deferred sales charge. Other than these differences, the Class C and Class A
shares of the Fund have equal rights and privileges. In particular, each Share
of a particular class is entitled to one vote, to participate equally in
dividends and distributions declared by the Board with respect to the class, and
upon liquidation or dissolution of the Fund, to participate proportionately in
the net assets allocable to such class. Shareholders of the Fund do not have
cumulative voting rights and there are no preemptive or conversion rights
applicable to any of the Fund's shares.

What are the tax consequences of the proposed liquidation?

The proposed liquidation will not be a taxable event for federal income
tax purposes. You will not recognize any capital gain or loss as a direct result
of the liquidation. Your tax basis and holding period in your Class C shares
will carry over to any Class A shares that you receive as liquidation proceeds.

When will the proposed liquidation take place

If the proposed Plan of Reorganization and Liquidation is approved by the
Class C shareholders, the liquidation of Class C shares and liquidating
distribution of Class A shares will occur on or about February 1, 2006.

What if there are not enough votes to reach a quorum by the scheduled date of
the special shareholder meeting, or if insufficient votes are received to
approve the Plan of Reorganization and Liquidation?

The presence at the meeting in person or by proxy of one third of the
Class C shareholders entitled to vote on the proposal shall constitute a quorum.
In the absence of a quorum, the holders of a majority of shares entitled to vote
at the special meeting and present in person or by proxy, or, if no shareholder
entitled to vote is present in person or by proxy, any officer present entitled
to preside or act as Secretary of such meeting may adjourn the meeting from time
to time without further notice, to a date not more than 120 days after December
20, 2005. A vote for the proposal may take place at such an adjourned meeting if
a quorum is present. In order to approve the Plan of Reorganization and
Liquidation, it must be approved by the lesser of: (i) shareholders owning 67%
or more of the Class C shares of the Fund present at the special meeting, if
shareholders owning 50% of the outstanding shares of Class C shares of the Fund
are present at the special meeting, in person, or by proxy, or (ii) shareholders
owning more than 50% of the outstanding Class C shares of the Fund. If
insufficient votes are received, Class C shares will remain in their current
status, although the Fund will discontinue new sales of Class C shares in the
future.

THE CATHOLIC FUNDS, INC.

The Catholic Equity Fund

1100 West Wells Street
Milwaukee, Wisconsin 53233
Telephone: (414) 278-6550
www.catholicfunds.com

------------------------------------------------------------------

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
ON JANUARY 23, 2006
------------------------------------------------------------------

TO THE SHAREHOLDERS OF THE CATHOLIC EQUITY FUND OF THE CATHOLIC FUNDS, INC.:

A Special Meeting of Shareholders of the Catholic Equity Fund of The
Catholic Funds, Inc. will be held on January 23, 2006, at 10:00 a.m. Central
Time, at the offices of Catholic Knights located at 1100 West Wells Street,
Milwaukee, Wisconsin, for the following purposes:

1. To approve a new Investment Subadvisory Agreement with Ziegler
Capital Management, LLC;

2. To elect Amelia E. Macareno and Bernard E. Reidy to the Board of
Directors;

3. To approve a Plan of Reorganization and Liquidation to liquidate
Class C shares of the Fund; and

4. To transact such other business as properly may come before the
meeting or an adjournment thereof.

The proxy statement accompanying this notice contains more complete
information regarding the matters to be acted upon at the special meeting. The
Board of Directors has fixed the close of business on December 20, 2005, as the
record date for determining shareholders entitled to notice of, and to vote at,
the special meeting and any adjournment thereof. Only shareholders of record at
the close of business on that date will be entitled to vote.

By Order of the Board of Directors

/s/ Theodore F. Zimmer

Milwaukee, Wisconsin THEODORE F. ZIMMER
December 30, 2005 President

THE CATHOLIC FUNDS, INC.

The Catholic Equity Fund

1100 West Wells Street
Milwaukee, Wisconsin 53233
Telephone: (414) 278-6550
www.catholicfunds.com

------------------------------------------------------------------

PROXY STATEMENT
------------------------------------------------------------------

SOLICITATION

This proxy statement is being furnished by the Board of Directors of The
Catholic Funds, Inc. ("CFI"), a Wisconsin corporation, to the shareholders of
the Catholic Equity Fund (the "Fund") in connection with the solicitation of
proxies for use at a special meeting of shareholders to be held on January 23,
2006, at 10:00 a.m. Central Time, at the offices of Catholic Knights located at
1100 West Wells Street, Milwaukee, Wisconsin, or any adjournment thereof. The
Board encourages you to read this proxy statement carefully and mark and return
the enclosed proxy. The Board of Directors is soliciting your proxy with respect
to the following proposals:

PROPOSAL AFFECTED CLASS
-------- --------------

1. Approval of a new Investment Subadvisory Agreement with All Classes
Ziegler Capital Management, LLC ("ZCM") to act as
subadviser for the Fund.

2. The election of Amelia E. Macareno and Bernard E. Reidy All Classes
(individually a "Proposed Director" and collectively the
"Proposed Directors") to the Board of Directors of the
Catholic Funds, Inc.

3. Approval of a Plan of Reorganization and Liquidation to Class C
liquidate Class C shares of the Fund.

The Board is conducting the solicitation of proxies for use at the special
meeting principally through the mailing of this proxy statement and the
accompanying proxy card. Officers and employees of The Catholic Funds, Inc. and
of Catholic Financial Services Corporation, the current investment adviser to
the Fund ("CFSC" or the "Adviser"), may also solicit shareholder proxies in
person, by telephone, by facsimile, or via the Internet.

The Fund will not be responsible for any of the costs and expenses
associated with this proxy solicitation, which are estimated to be $10,700. All
such costs and expenses will be borne by the Adviser.

This proxy statement and the accompanying materials are being mailed to
shareholders on or about December 30, 2005.

Please read this proxy statement carefully before voting on the proposal.
If you have questions about this proxy statement or if you would like additional
information regarding the proposals, please contact The Catholic Funds, Inc. at
1100 West Wells Street, Milwaukee, Wisconsin 53233, or by calling
1-877-222-2402.

VOTING INFORMATION

Shareholders Eligible to Vote

The Board has determined that shareholders of the Fund as of the close of
business on December 20, 2005 (the "Record Date") are entitled to notice of the
special meeting and are eligible to vote at the special meeting (or any
adjournment thereof) on each proposal applicable to the class of which they are
a shareholder. Voting eligibility requirements for the proposals are set forth
below.

Number of Votes

As of the Record Date, there were 845,156.446 Class A shares of the Fund
outstanding, 348,875.163 Class C shares of the Fund outstanding and
4,185,350.918 Class I shares of the Fund outstanding. Shareholders are entitled
to one vote per share (and one fractional vote for each fractional share) of the
Fund.

Quorum

In order for a vote on each of the proposals to be taken at the special
meeting, there must exist a quorum of shareholders eligible to vote on the
proposal. For proposals 1 and 2, the presence at the special meeting, in person
or by proxy, of shareholders of the Fund representing one-third of all the
shares of the Fund outstanding and entitled to vote on the proposal constitutes
a quorum for that proposal. For proposal 3, the presence at the special meeting,
in person or by proxy, of Class C shareholders representing one-third of all the
outstanding Class C shares of the Fund and entitled to vote on the proposal
constitutes a quorum for the proposal. Although abstentions and "broker
non-votes" (as described below) will not be counted toward the approval of
proposals 1 or 3, they will be counted for purposes of determining whether a
quorum is present. However, abstentions and broker non-votes have the effect of
votes cast against proposals 1 and 3, given the approval requirements. Broker
non-votes are shares held by a broker or nominee for which a validly executed
proxy is received but are not voted on a proposal because instructions have not
been received from the beneficial owners or persons entitled to vote and the
broker or nominee does not have discretionary voting power.

Votes Required to Pass each Proposal

In order for proposal 1 to be approved, it must be approved by the lesser
of: (i) shareholders owning 67% or more of the shares of the Fund present at the
special meeting, if shareholders holding more than 50% of the outstanding shares
of the Fund are present at the special meeting, in person or by proxy; or (ii)
shareholders owning more than 50% of the outstanding shares of the Fund. In
order for proposal 2 to be approved EACH Proposed Director must be elected by
the vote of a majority of the shareholders present in person or by proxy at the
special meeting. Catholic Knights, the ultimate parent company of CFSC and the
other fraternal benefit societies that are shareholders of CFSC, namely Catholic
Order of Foresters and Catholic Union of Texas (the "KJT"), together with the
Archdiocese of New York, hold a majority of all outstanding shares of the Fund.
Those organizations have indicated their present intention to vote all of their
shares of common stock of the Fund in favor of proposals 1 and 2. Therefore, the
representation of those organizations' shares at the meeting and their votes in
favor of proposals 1 and 2 will be sufficient both to constitute a quorum for
the conduct of business at the meeting and for approval of proposals 1 and 2.

In order for proposal 3 to be approved, it must be approved
by the lesser of: (i) shareholders owning 67% or more of the
Class C shares of the Fund present at the special meeting, if
shareholders owning 50% of the outstanding shares of Class C
shares of the Fund are present at the special meeting, in person,
or by proxy, or (ii) shareholders owning more than 50% of the
outstanding Class C shares of the Fund.

Adjournment

In the unlikely event that sufficient votes in favor of a proposal are not
received by the time scheduled for the special meeting, the persons named as
proxies may propose one or more adjournments of the special meeting to permit
further solicitation of proxies with respect to the proposal. Any such
adjournment will require the affirmative vote of a majority of the votes cast on
the question in person or by proxy at the session of the special meeting to be
adjourned. The persons named as proxy will vote in favor of such adjournment
those proxies which they are entitled to vote in favor of the proposal. They
will vote against any such adjournment those proxies required to be voted
against the proposal.

Execution of Proxies

Any shareholder entitled to vote on a proposal may vote at the special
meeting in person or by a duly executed proxy. Shares represented by properly
executed proxies received by The Catholic Funds, Inc. will be voted at the
special meeting and any adjournment thereof in accordance with the terms of the
proxies.

If no instructions are specified in a properly executed, unrevoked proxy,
such shares will be voted "FOR" the approval of all proposals applicable to the
share. Proxies will be voted in the discretion of the persons named in the proxy
on any other proposals properly brought before the special meeting. The Board
presently does not anticipate that any other matters will be considered at the
special meeting.

Revocation of Proxies

A shareholder may revoke his or her proxy at any time prior to the voting
thereof by filing a written notice of revocation with the Secretary of The
Catholic Funds, Inc., by delivering a duly executed proxy bearing a later date,
or by attending the special meeting and voting his or her shares in person.
Unless so revoked, the shares represented by a properly executed proxy will be
voted at the special meeting and at any adjournment thereof in accordance with
the instructions indicated on that proxy.

Security Ownership of Certain Beneficial Owners and Management

The table below sets forth information, as of the Record Date, regarding
the ownership of the shares of the Fund held by persons known to own,
beneficially, or as noted, of record, five percent (5%) or more of the
outstanding shares of the Fund, each Director and executive officer of The
Catholic Funds, Inc., and the group consisting of all Directors and executive
officers of The Catholic Funds, Inc. Unless specifically shown in the table
below, a Director or executive officer does not own more than 1% of any class of
shares of the Fund.

The Catholic Equity Fund
Percent of Outstanding Shares Beneficially Owned
-------------------------------------------------------------------

Class A Class C Class I Total
------- ------- ------- -----

NAP & Co- Mercantile 33.49% 26.06%
7650 Magna Dr.
Belleville, IL 62223-3366

Catholic Knights 31.36% 24.40%
1100 West Wells St.
Milwaukee, WI 53233-2332

The Catholic Equity Fund
Percent of Outstanding Shares Beneficially Owned
-------------------------------------------------------------------

Class A Class C Class I Total
------- ------- ------- -----

Catholic Order of Foresters 5.60% 4.35%
Attn: Greg Temple
355 Shuman Blvd.
Naperville, IL 60563-8494

Marshall & Ilsley Trust Co. 6.36% 4.95%
FBO Catholic Knights Home Office
Employees Pension Plan Trust
#910209006
1000 N. Water St., Fl 14
Milwaukee, WI 53202-6648

Other Entities

Campbell Lodge Boys 5.99% 4.66%
Home Foundation
231 Scott Street
Covington, KY 41011-1557

U.S. Bank NA as Custodian for 7.13% 0.46%
Richard G. Bloomfield IRA Rollover
1811 Superior Blvd.
Wyandotta, MI 48192-4822

Branch Banking and Trust Shareholder 16.07% 2.52%
Omnibus Account
300 E. Wendover Ave.
Suite 100
Greensboro, NC 27401-1221

Officers and Directors of CFI (as a group - 4.41% 0.90%
thirteen persons)*

- -----------------------

* No officer or director of The Catholic Funds, Inc. owned individually more
than 1% of the outstanding shares of the Catholic Equity Fund.

Changes in Control

There are no arrangements known to The Catholic Funds, Inc. or to its
Directors, including any pledge by any person of securities of The Catholic
Funds, Inc., the operation of which may at a subsequent date result in a change
of control of The Catholic Funds, Inc. Since the beginning of its last fiscal
year there has been no change in control of The Catholic Funds, Inc.

PROPOSAL 1:
FOR ALL SHAREHOLDERS
APPROVAL OF NEW SUBADVISORY AGREEMENT

Background

The Board has determined that it is in the best interest of the Fund to
engage ZCM as the subadviser to the Fund. Accordingly, the Board has entered
into a subadvisory agreement with ZCM and CFSC which is subject to approval by
shareholders. The agreement will become effective, and ZCM will take over the
day-to-day management of the Fund's assets, concurrent with effectiveness of the
amendment to the Fund's SEC registration statement, which is scheduled to become
effective on February 1, 2006. For the reasons discussed in detail below, the
Board recommends that the shareholders of the Fund approve the new subadvisory
agreement.

Under the Fund's current investment objective, strategy and performance,
the Fund has failed to attract sufficient assets to remain viable for the
long-term. The Board believes steps must be taken to attract more assets to the
Fund. In an effort to increase sales of Fund shares, the Board has adopted a new
investment objective and strategy, which is designed to "enhance" the return of
the Fund as compared to the return of the S&P 500 Index. Currently, the Fund is
one of many funds that uses a replication strategy designed to approximate the
total return of the S&P 500 Index. Because of the Fund's small size, the
competing funds that use this strategy typically have lower annual operating
expense ratios. Because the competitive funds provide a virtually identical
return with lower annual operating expenses, they are typically more attractive
to investors from a financial perspective. Although the competing funds
typically do not provide the advocacy of Catholic values offered by the Fund,
investors who are interested in such advocacy have proven unwilling to pay for
it through lower net returns. Under the new investment strategy the Fund will
seek to achieve a total return that exceeds the return of the S&P 500 Index, so
that, after deducting the Fund's operating expenses, the Fund's net return will
be comparable to the total return of the Index. At the same time, the Fund will
continue to promote important Catholic values through its advocacy program. The
Board believes that this increase in return will help compensate for the Fund's
higher operating expenses and attract more investors to the Fund, which the
Board believes is imperative to secure the long-term viability of the Fund.

Mellon Equity Associates, LLP ("Mellon") presently serves as the Fund's
subadviser. While the Board has been pleased with Mellon's services, it believes
that ZCM has superior knowledge and experience with the new investment objective
and strategy adopted by the Fund, insofar as ZCM currently employs a similar
type of "enhanced" index strategy with various other investment companies it
manages as well as with certain of its separately managed accounts. Accordingly,
ZCM is well versed in the enhanced index strategy and understands how to
properly implement and manage the strategy. The Board believes that the Fund's
new strategy readily can be implemented by ZCM by merely employing the same
techniques it currently uses in its separately managed accounts, only on a
larger scale.

Mellon historically has implemented the Fund's sanctity of life
exclusionary screen. ZCM does not offer this service. Accordingly, CFSC is
assuming responsibility for this function. While ZCM will rely on CFSC to
determine which stocks must be excluded from the Fund's portfolio consistent
with its sanctity of life value, as Mellon has done in the past, ZCM will
provide the Fund with an impact analysis on screened companies and will adjust
the portfolio to minimize the tracking error resulting from the screening
process.

In addition to the increased return the Fund will strive to achieve
through its new investment program and securing the services of ZCM as its
subadviser, the Board believes that distribution of the Fund will be enhanced
due to ZCM's affiliation with B.C. Ziegler and Company ("B.C. Ziegler"), a
brokerage firm that has significant distribution channels, including seven
wholesalers, a retail distribution network of more than 200 financial
intermediaries and multiple institutional sales representatives and consultants.
The Board believes that coupling the advisory services of ZCM with the
distribution capabilities of B.C. Ziegler will benefit current Fund shareholders
not only in the short-term by increasing their return, but in the long-term, by
protecting the shareholders' investments through securing the long-term
viability of the Fund.

Description of the Advisory Agreement

Catholic Financial Services Corporation ("CFSC"), a Wisconsin corporation
organized in 1994, is the investment adviser and distributor for The Catholic
Funds, Inc. The majority of the outstanding stock of CFSC is held by Catholic
Knights Financial Services, Inc., an administrative holding company which is a
wholly-owned subsidiary of Catholic Knights. Catholic Knights is a non-profit,
non-stock membership organization licensed to do business as a fraternal benefit
society. Its principal executive offices are located at 1100 West Wells Street,
Milwaukee, Wisconsin. The remaining outstanding stock in CFSC is owned by
Catholic Order of Foresters (a non-profit, non-stock Illinois fraternal benefit
society) and Catholic Union of Texas, the KJT (a Texas fraternal benefit
society).

CFSC has served as the investment adviser to the Fund and its predecessor
since commencement of operations on May 3, 1999. CFSC provides these services
pursuant to the terms of an Investment Advisory Agreement with The Catholic
Funds, Inc. dated February 17, 1999, as amended. Continuation of the advisory
agreement from year-to-year is subject to annual approval by (a) a majority of
the independent directors of The Catholic Funds, Inc. and (b) the Board of
Directors of The Catholic Funds, Inc. or by a vote of a majority of the
outstanding shareholders of the Fund. The Investment Advisory Agreement was last
re-approved by the Board of Directors at a meeting held on February 15, 2005.

The Advisory Agreement requires CFSC, at its expense, to provide the Fund
with adequate office space, facilities and equipment and to provide and
supervise the activities of all administrative and clerical personnel required
to provide effective corporate administration for the Fund, including the
compilation and maintenance of records with respect to its operations, the
preparation and filing of specified reports, and the composition of proxy
materials and registration statements for the continuous public sale of shares
of the Fund.

For providing the services listed above, the Adviser historically has
received an annual advisory fee at the rate of 0.50 of 1% of daily net assets
for the Fund. Out of this fee, the adviser pays the subadvisory fee applicable
to the Fund. The Fund paid CFSC $185,499 in advisor fees for the fiscal year
ended September 30, 2005. CFSC waived fees and/or reimbursed expenses to the
Fund in the total amount of $472,871 for that year. CFSC has agreed to reduce
its annual advisory fee to 0.45 of 1% of the Fund's average daily net assets in
excess of $500 million contingent upon shareholder approval of the subadvisory
agreement with ZCM.

The only effects that the replacement of Mellon as subadviser by ZCM will
have on the terms of the Advisory Agreement are the reduction in the advisory
fee discussed above and the fact that the Adviser will assume the responsibility
for implementing the Fund's sanctity of life exclusionary screen on a day to day
basis. ZCM's subadvisory fee will be paid by CFSC out of its advisory fee.

Description of the Subadvisory Agreement

Although the general responsibilities, terms and conditions of the new
subadvisory agreement with ZCM will be substantially the same as those provided
in the subadvisory agreement with Mellon, the agreements will differ in the
investment management services provided, as previously discussed, in the fact
that the Adviser will take on the responsibility for implementing the Fund's
sanctity of life exclusionary screen on a day-to-day basis, and in the fee
structure discussed below.

Under the new subadvisory agreement, ZCM, subject to the discretion and
supervision of the Adviser and the Board of Directors, will furnish an
investment program for the Fund and will determine what investments to purchase,
sell, or exchange, and what portion of the assets of the Fund should be held
uninvested. ZCM also will arrange for the purchase or sale securities and other
investments for the Fund's account and will provide other services incidental to
carrying out the Fund's investment program. For these services ZCM will receive
a fee, calculated daily and paid monthly, out of the fee paid to the Adviser
under the Advisory Agreement, at a varying annual rate depending on the average
daily net assets of the Fund, as follows:

o 0.20 of 1% of the average daily net assets in excess of $250
million;

o 0.18 of 1% of average daily net assets in excess of $250 million up
to $500 million;

o 0.15 of 1% of average daily net assets in excess of $500 million;

Services to be Rendered by ZCM to the Fund. Under the subadvisory
agreement, ZCM will:

o Buy, sell, exchange and otherwise trade in securities and other
investments of the Fund based on the "enhancement" and
"optimization" strategy of the Fund.

o Affirm securities transactions with central depositories and advise
the custodian of the Fund promptly of each purchases and sales of a
portfolio securities.

o Assist in the daily pricing of the Fund's portfolio securities and
assist in connection with the determination of the fair value of
securities in the portfolio for which market quotations are not
readily available.

o Furnish to the Board, the Company's Chief Compliance Officer or the
Adviser, as appropriate, such information, reports, evaluations,
analyses and opinions as are required by law or that such person may
reasonably request.

The subadvisory agreement with ZCM will become effective on February 1,
2006, subject to approval by the shareholders. Unless earlier terminated as
described below, the subadvisory agreement will continue in effect for two
years. After the initial two-year period, the subadvisory agreement will
continue in effect from year to year only so long as such continuance is
specifically approved at least annually by the affirmative vote of (i) the Board
of Directors, or by the vote of a majority of the outstanding voting securities
of the Fund; and, in either case (ii) a majority of the Directors who are not
parties to the subadvisory agreement or "interested persons" (as defined in the
Investment Company Act of 1940) of any such party, cast in person at a meeting
called for the purpose of voting on such approval.

The subadvisory agreement may be terminated at any time, without the
payment of any penalty, by vote of the Board, by vote of a majority of the
outstanding voting securities of the Fund, or by the Adviser, in each case on
not less than 60 days' prior written notice to ZCM. The Adviser may also
terminate the subadvisory agreement (i) upon a material breach by ZCM of its
representations and warranties set forth in the subadvisory agreement, if such
breach is not cured within 20 days or cannot reasonably be cured within 20 days;
or (ii) if ZCM becomes unable to discharge its duties and obligations under the
subadvisory agreement. ZCM may also terminate the subadvisory agreement at any
time after the initial two-year term, without the payment of any penalty, on at
least 120 days' prior notice to the Adviser and CFI. The subadvisory agreement
will terminate automatically (i) in the event of its "assignment," as such term
is defined in the Investment Company Act of 1940, or (ii) upon termination of
the advisory agreement with CFSC. By means of this proxy statement, the Board
seeks the required shareholder approval.

A copy of the subadvisory agreement with ZCM is attached to this proxy
statement as Appendix A.

Information about ZCM

General. ZCM is a wholly owned subsidiary of The Ziegler Companies, Inc.
("Ziegler"), organized as a limited liability company. The firm became a
separate legal entity from the brokerage entity subsidiary of Ziegler, B.C.
Ziegler and Company in June 2005. ZCM, together with its predecessor, B.C.
Ziegler, has been involved in the investment advisory business since 1991. ZCM
is registered with the SEC as an investment adviser and has approximately $3.1
billion in assets under management. ZCM employs 21 people, including 9
investment professionals. ZCM is located at 250 East Wisconsin Avenue, Suite
2000, Milwaukee, Wisconsin 53202. The principal executive officer and directors
of ZCM are listed in Appendix B.

ZCM currently serves as the investment adviser to the open-end investment
company, North Track Funds, Inc. as well as numerous separately managed
accounts. ZCM currently employs an "enhanced index" strategy similar to that it
will implement for the Fund with the following three funds it manages for North
Track:

Name of Fund Net Assets of Fund(1) Management Fees
- ------------ ------------------ ---------------

Dow Jones Equity Income 100 Plus Fund $13 million .55% of average daily net assets(2)
Dow Jones U.S. Health Care 100 Plus Fund $55 million .55% of average daily net assets(3)
Dow Jones U.S. Financial 100 Plus Fund $41 million .55% of average daily net assets(4)

- ---------------------------------------

(1) Net Assets information for each fund is unaudited information provided as
of October 31, 2005

(2) ZCM has contractually committed to waive fees and/or reimburse expenses
from March 1, 2005 through February 28, 2006, so that annual operating
expenses for the fund will not exceed 1.15% of average annual net assets
for Class A shares, 1.90% for Class B and Class C shares and 1.65% for
class R shares.

(3) ZCM has contractually committed to waive fees and/or reimburse expenses
from March 1, 2005 through February 28, 2006, so that the annual operating
expenses for the fund will not exceed 1.35% of annual net assets for Class
A shares, 2.10% for Class B and Class C shares and 1.85% for Class R
shares.

(4) ZCM has contractually committed to waive fees and/or reimburse expenses
from March 1, 2005 through February 28, 2006, so that the annual operating
expenses for the fund will not exceed 1.35% of annual net assets for Class
A shares, 2.10% for Class B and Class C shares and 1.85% for Class R
shares.

Representatives of The Catholic Funds, Inc. and of CFSC have met with
executives of ZCM and B.C. Ziegler, ZCM's distribution affiliate, and have
completed a detailed evaluation of ZCM's business operations, compliance
procedures and other attributes necessary to provide the Fund with services and
reports required for an investment company business. Based on the information
presented to it, the Board of The Catholic Funds, Inc. has determined that ZCM
has the resources and has implemented systems, procedures and controls that are
adequate to provide the services and reporting that the Fund requires.

Ziegler and it wholly owned subsidiaries are principally engaged in
investment banking, financial advising, investment advising, asset management,
retail brokerage, fixed income investments sales and trading and related
financial services. Ziegler is located at 250 East Wisconsin Avenue, Suite 2000,
Milwaukee, Wisconsin 53202.

The table attached as Appendix B shows the name, principal occupation and
address of each director and the principal executive officer of ZCM.

Portfolio Manager. The Fund will be managed by a team of investment
professionals with equities experience who are employed by the subadviser. The
team will jointly develop and implement investment strategies for the Fund. The
team will consist of Donald J. Nesbitt and Brian K. Andrew and will be led by
Donald J. Nesbitt.

Board's Considerations and Recommendation

Because of the Fund's small asset size, its operating expense ratios do
not compare favorably to the index and other passively managed funds with which
it competes. While the Fund's advocacy of Catholic values makes it attractive to
Catholic institutions and other persons for whom Catholic values are important,
even those investors have proven reluctant to invest in the Fund given its high
operating expense ratios and resulting below-market returns. CFSC and the Board
of Directors have employed various distribution strategies to attract assets to
the Fund, but to date have been unsuccessful in attracting a level of assets
that would make the Fund competitive and viable long term. To help control the
Fund's operating expenses and to enhance its return, CFSC has subsidized the
Fund through fee waivers and expense reimbursements. Through September 30, 2005,
CFSC committed to waive fees and reimburse expenses so that the annual operating
expenses of the Fund, expressed as a ratio of average daily net assets, would
not exceed 0.60% for Class A shares, 0.85% for Class C shares, and 0.35% for
Class I shares. For the Fund's fiscal year ended September 30, 2005, those fee
waivers and expense reimbursements totaled $472,871. Even those efforts have
failed to yield investment returns for the Fund which are competitive with other
index funds and passively managed investment vehicles available to investors.
While CFSC voluntarily has continued to cap expenses at those same ratios since
September 30, 2005, it has indicated to management and the Board of Directors of
the Fund that it is unwilling to do so indefinitely into the future. Therefore,
CFSC and the Board worked together to design a new strategy that would increase
the likelihood of growth in Fund assets in the future.

Management first began considering the need of changing the Fund's
investment objective and strategy to a new "enhanced" index strategy in the
Summer of 2005. Their deliberations centered around adopting an enhanced
investment strategy that would attempt to provide the Fund with excess return
over that of the S&P 500 Index, and thereby offset the negative impact of the
Fund's operating expenses on the net return available to shareholders. At a
meeting of the Board of Directors held on August 5, 2005, representatives of ZCM
met with the Board and provided and discussed background information regarding
ZCM's experience in managing investments designed to enhance a Fund's return
over that of a benchmark index. Based on this presentation, the Board authorized
management to continue discussions with ZCM regarding the possibility of ZCM
replacing Mellon as the Fund's subadviser. Discussions continued, and on
November 8, 2005, the Governance and Contracts Committee of the Board of
Directors met to consider whether it should advise the Board to approve an
agreement appointing ZCM as the Fund's new subadviser. On November 15, 2005, at
a meeting of the Fund's Board of Directors, the Governance and Contracts
Committee recommended that the Board of Directors approve the subadvisory
agreement with ZCM. Based on the Committee's recommendations and the
deliberations of the full Board, the Board of Directors, including all of the
Independent Directors, unanimously approved the subadvisory agreement with ZCM.

During the course of this process, the Board and the Governance and
Contracts Committee received, reviewed and considered the following information:

o The proposed subadvisory agreement with ZCM, including the
subadvisory fees proposed therein;

o A proposal from CFSC, continent upon the appointment of ZCM as
subadviser of the Fund, to implement a breakpoint in its annual
advisory fee which would reduce the fee from 0.50% to 0.45% on
average daily net assets in excess of $500 million, coupled with a
voluntary commitment from CFSC to continue to waive fees and
reimburse expenses to the Fund at least through September 30, 2006
so that annual operating expenses, expressed as a percentage of
average daily net assets, would not exceed 1.00% for Class A shares
and 0.60% for Class I shares;

o A summary of the Fund's performance and the reasons for the Fund's
lack of success, and a summary of the proposed investment objective
and strategy to be used by the subadviser;

o A report regarding the backtesting performed on the proposed
investment objective and strategy and a line graph comparing
cumulative returns of the proposed investment objective and strategy
versus the S&P 500 for the past ten years;

o A memorandum from the Fund's outside legal counsel summarizing the
duties of independent directors when considering approval of
investment advisory contracts;

o Management reports on meetings held with ZCM and Ziegler
representatives and reports on visits to ZCM's premises to conduct
due diligence investigations of ZCM's business operations, systems
and controls and its legal and regulatory compliance controls and
procedures; and

During the course of reviewing, evaluating and discussing this and other
information and ultimately in arriving at its approval and recommendation of the
subadvisory agreement with ZCM, the Board placed special emphasis on the factors
described below, among others:

o The Board viewed favorably the breadth of ZCM's experience in
managing investments, particularly its experience in actively
managing funds that utilize "optimization" and "enhancement"
objectives and strategies, and ZCM's historic investment performance
on investment products which seek to enhance the return of an Index;

o The Board was satisfied with management's reports on the experience,
quality and integrity of the personnel who would be directly
responsible for managing the Fund's assets and providing related
services;

o On a relative basis, the Board concluded that the scope and quality
of services to be provided by ZCM exceeded those provided by Mellon;

o The Board viewed favorably the backtesting performed on the proposed
new investment strategy and objective to be used by ZCM and was
satisfied with its potential for future success;

o While acknowledging that ZCM was not prepared to provide stock
screening services required to administer the Fund's sanctity of
human life value, a service historically provided by Mellon, the
Board was satisfied that the improved management ZCM would provide
and other arrangements for CFSC to undertake that function would
serve the interests of the Fund and its shareholders;

o The Board determined that ZCM has more than adequate financial
strength and backing to support its provision of the services and
its fulfillment of its duties and obligations described in the
subadvisory agreement;

o The Board viewed favorably ZCM's commitment to the Catholic Funds
and to developing a long-term relationship with the Fund;

o The Board acknowledged that the subadvisory fee that ZCM would
receive from managing the Fund's assets is greater than the fee
charged by Mellon, but the Board determined that this increased fee
was appropriate given the increased resources, skill, experience,
time and effort that would be required to manage the Fund's assets
under this optimization and enhancement strategy, as compared to the
passive replication strategy employed by Mellon. The Board viewed
favorably the fact that ZCM is offering to provide these management
services to the Fund at a substantial discount as compared to the
fee ZCM receives for managing the assets of the North Track Funds
and its privately-managed accounts under similar strategies.
Finally, the Board observed that the increased subadvisory fee would
not result in any increase in the overall advisory fees paid by the
Fund. To the contrary, the Board noted that CFSC was offering a
breakpoint reduction in the rate of the advisory fee on assets over
$500 million in connection with the proposed change in subadviser
and has committed voluntarily to continue to cap expenses on each
Class of shares of the Fund, albeit at a somewhat higher level;

o The Board also viewed as positive factors the affinity that the
subadvisory relationship with ZCM potentially can create between the
Fund and B.C. Ziegler's clients and its network of financial
intermediaries that could assist with distribution of Fund shares,
and the prospect that such an affinity offers for the Fund to
attract assets and investments from those contacts and their
clients, thereby increasing the prospects for growth in the Fund's
assets. The Board believes that growth in Fund assets offers the
potential for a decline in the Fund's expense ratio over time and
will secure the long term viability of the Fund; and

o The Directors understand that ZCM and its affiliates stand to
benefit from the relationship by having available to them a new
product of interest to the Catholic investing community. This offers
ZCM the opportunity to develop new clients and to cross sell other
investment and advisory services to clients it attracts through the
availability of Fund shares.

o The Board considered that the initial rebalancing of the Fund's
investment portfolio pursuant to the revised investment program
potentially could result in the recognition of significant capital
gains that would result in taxable distributions to shareholders.
Given that any such distributions would increase each shareholder's
tax basis in his or her shares, thereby reducing any taxable gain
recognized on a subsequent redemption of those shares, the Board did
not consider this a significant negative factor. Moreover, the Board
took into account the fact that over two-thirds of the Fund's assets
are attributable to shareholders who are tax-exempt entities and,
therefore, would be unaffected by any potential taxable
distributions. Finally, the Board concluded that any perceived
negative aspects associated with this factor are more than offset by
the potential benefits that the proposed changes offer to
shareholders.

The Board primarily was influenced by the potential benefits to the Fund
associated with the heightened prospect for asset growth associated with the new
investment strategy and the Fund's relationship with ZCM. At the same time, the
Board determined that ZCM offers experience, capabilities and quality of
services appropriate for the successful application of the Fund's new investment
strategy, and offers a solid regulatory compliance culture and adequate
compliance systems, procedures and programs.

Based upon these considerations, the Board determined that it would be in
the best interests of the Fund's shareholders to have ZCM serve as the Fund's
subadviser in the place of Mellon. The Board of Directors has further determined
that the terms of the subadvisory agreement with ZCM are fair to, and in the
best interests of, the Fund and its shareholders.

ACCORDINGLY, THE BOARD OF DIRECTORS, NONE OF WHOM IS AN "INTERESTED
PERSON" OF ZCM OR ANY OF ITS AFFILIATES, UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS OF THE FUND VOTE FOR APPROVAL OF THE SUBADVISORY AGREEMENT WITH ZCM
DESCRIBED IN PROPOSAL 1.

PROPOSAL 2:
FOR ALL SHAREHOLDERS
ELECTION OF PROPOSED DIRECTORS

Background

The Investment Company Act of 1940 (the "1940 Act") allows Directors to
appoint Directors to the Board of Directors without seeking shareholder approval
as long as after the appointment(s), at least two thirds of the Directors on the
Board have been elected by shareholders. Currently, Amelia E. Macareno and
Bernard E. Reidy the Proposed Directors are the only two Directors serving on
the Board who have not been elected by the shareholders. Since a shareholder
vote is already required to approve the new Subadvisory Agreement with ZCM, the
Board has proposed that the shareholders now elect Ms. Macareno and Mr. Reidy to
the Board as well so that the Board will be composed entirely of directors who
have been elected by shareholders. The Board believes this is in the
shareholders' best interest because it will provide the Board with maximum
flexibility to appoint additional directors in the future without the costs and
delays associated with holding a special shareholders' meeting to do so. As
reflected by its appointments of Ms. Macareno and Mr. Reidy to the Board of
Directors, the Board has a high degree of confidence in their abilities and
characters to serve effectively as Directors of the Fund, and the Board
recommends that all shareholders vote "FOR" their election.

Information Concerning Directors and Proposed Directors

The Board also believes that the backgrounds and experience of Ms.
Macareno and Mr. Reidy complements the experiences of the already elected
Directors. Background information on all the Directors of the Catholic Funds,
Inc. ("CFI), including the Proposed Directors, is provided in the following
tables:

Term of Principal Number of Portfolios Other Directorships
Position(s) Office and Occupation(s) in Complex Overseen Held by Director or
Name, Address Held Length of During by Director or Nominee
and Date of Birth with CFI Time Served Past 5 Years Nominee for Director for Director
- ----------------- -------- ----------- ------------ -------------------- ------------

Independent Directors:

Thomas A. Bausch, PhD Director Indefinite, Professor of 1 None
1100 W. Wells St. until successor Management,
Milwaukee, WI 53233 elected Marquette
DOB: 06/06/1938 Since 1999 University since
1978
J. Michael Borden Director Indefinite, Chief executive 1 Trustee, Jefferson
1100 W. Wells St. until successor Officer of HUFCOR Fund Group Mutual
Milwaukee, WI 53233 elected since 1978 Funds
DOB: 12/21/1936 Since 1999

Daniel R. Doucette Director Indefinite, President and CEO 1 None
1100 W. Wells St. until successor Milwaukee
Milwaukee, WI 53233 elected Insurance since
DOB: 09/03/1949 Since 1999 1989

Amelia E. Macareno(1) Director Indefinite, Senior Vice 1 None
1100 W. Wells St. until successor President
Milwaukee, WI 53233 elected Commercial Lending
DOB: 10/05/1958 Since 2005 of Merchants &
Manufacturers
Bancorporation,
Inc. since 2002;
Vice President
Correspondent
Banking of U.S.
Bank, N.A. (1981
to 2002)

Thomas J. Munninghoff Director Indefinite, CPA Munninghoff, 1 None
1100 W. Wells St. until successor Lange and Co.
Milwaukee, WI 53233 elected (Accounting Firm)
DOB: 08/27/1947 Since 1999 since 1983

Bernard E. Reidy(1) Director Indefinite, Archbishop's 1 None
1100 W. Wells St. until successor Delegate for
Milwaukee, WI 53233 elected Administration and
DOB: 10/20/1938 Since 2005 Finance, of
Archdiocese of New
York since 2000

Conrad L. Sobczak Director Indefinite, Retired; President 1 None
1100 W. Wells St. until successor and CEO, Family
Milwaukee, WI 53233 elected Health Systems
DOB: 10/20/1938 Since 1999 (1987 to 1998)

Interested Directors:

Daniel J. Steininger(2) Director, Indefinite, CEO - Catholic 1 None
1100 W. Wells St. Chairman of until Knights since 1981
Milwaukee, WI 53233 the Board successor
DOB: 05/01/1945 elected
Since 1999

Allan G. Lorge(2) Director, Indefinite, Secretary, Treasurer 1 None
1100 W. Wells St. Vice until and CFO - Catholic
Milwaukee, WI 53233 President, successor Knights since 1986
DOB: 12/09/1949 Secretary elected
and Chief Since 1999
Financial
Officer

Officers:

Theodore F. Zimmer President One Year General Counsel - n/a n/a
1100 W. Wells St. Term, subject Catholic Knights
Milwaukee, WI 53233 to election since 1997
DOB: 12/17/1940 by Board of
Directors or
until
successor is
elected.
Since 1999

Russell J. Kafka Treasurer One Year Vice President - n/a n/a
1100 W. Wells St. Term, subject Investments Catholic
Milwaukee, WI 53233 to election Knights since 1985
DOB: 06/20/1944 by Board of
Directors or
until
successor is
elected.
Since 1999
John M. Koth Chief One Year Chief Compliance n/a n/a
1100 W. Wells St. Compliance Term, subject Officer - Catholic
Milwaukee, WI 53233 Officer to election Financial Services
DOB: 09/27/1964 by Board of Corporation since
Directors or 2001; Compliance and
until Operations Director -
successor is Prudential Financial
elected. Services, 1999-2001
Since 2004
Mark K. Forbord Controller One Year Senior Financial n/a n/a
Term, subject Analyst - Catholic
to election Knights since 1995
by Board of
Directors or
until
successor is
elected.
Since 2005

- ---------------------------------------

(1) Proposed Director.

(2) Messrs. Steininger and Lorge are considered to be "interested persons" (as
defined in the 1940 Act) of CFI by virtue of their positions with Catholic
Knights and Catholic Financial Services Corporation.

Beneficial Interest in the Fund by Directors and Proposed Directors

Dollar Range of Equity Securities
Name of Director or Proposed Director in The Catholic Equity Fund
- ------------------------------------- --------------------------
Thomas A. Bausch, PhD None
J. Michael Borden $10,001-$50,000
Daniel R. Doucette $1-$10,000
Conrad L. Sobczak $10,001-$50,000
Thomas Munninghoff Over $100,000
Dan Steininger Over $100,000
Allan Lorge $50,001-$100,000
Amelia E. Macareno(1) None
Bernard E. Reidy(1) None
- -----------------------------------

(1) Proposed Director.

Material Transactions with Independent Directors (including Proposed Directors).

No Independent Director of CFI or any immediate family member of an
Independent Director has had, during the five most recently completed calendar
years, a direct or indirect interest in CFSC, Mellon, the current subadviser for
The Catholic Equity Fund, ZCM, the proposed new subadviser for the Catholic
Equity Fund, or in any person directly or indirectly controlling, controlled by
or under common control with CFSC, Mellon or ZCM exceeding $60,000. In addition,
no Independent Director of CFI or any of their immediate family members has had,
during the two most recently completed calendar years, a direct or indirect
material interest in any transaction or series of similar transactions in which
the amount involved exceeds $60,000 and to which one of the parties was CFI, an
officer of CFI, an investment company or an officer of any investment company
having CFSC, Mellon or ZCM as its investment adviser or principal underwriter or
having an investment adviser or principal underwriter that directly or
indirectly controls, is controlled by or under common control with CFSC, Mellon
or ZCM (an "Associated Person"). No Independent Director of CFI or a member of
the immediate family of an Independent Director has had, in the two most
recently completed calendar years, a direct or indirect relationship with any
Associated Person involving an amount in excess of $60,000 and which involved:
payments for property or services to or from any Associated Person; provision of
legal services to any Associated Person; provision of investment banking
services to any Associated Person, other than as a participating underwriter in
a syndicate; or, any consulting or other relationship that is substantially
similar in nature and scope to these types of relationships.

Involvement of Directors in Certain Legal Proceedings

No Director of CFI, in the past five years has: (1) been a party to a
petition under the Federal bankruptcy laws or any state insolvency law relating
to the business or property of the Director, any partnership in which the
Director was a general partner at, or any corporation or business association of
which the Director was an executive officer at; (2) been convicted in a criminal
proceeding or named a subject to a criminal proceeding (excluding traffic
violations, and other minor offenses); (3) been subject to an order, judgment or
decree permanently or temporarily enjoining the Director from engaging in any
type of business practice or activity or to be associated with persons engaged
in certain business activities; or (4) been found to have violated any Federal
or State securities laws or any Federal commodities laws.

Director Fees.

Fees and expenses of the Independent Directors consist of an annual
retainer in the amount of $500 and $250 per Board meeting attended.
Additionally, as a means of encouraging their investment in the Fund and thereby
aligning their interests with shareholders, Directors and Officers of CFI may
purchase Class A shares of the Fund without a front-end sales change. The annual
compensation paid by CFI to each of the Directors is set forth in the table
below. No compensation information is provided for Daniel J. Steininger and
Allan G. Lorge because they are officers of Catholic Knights, the parent company
of the Fund's adviser and distributor, and are compensated by Catholic Knights
for their involvement with the Fund.

Pension or Retirement
Name of Person Aggregate Benefits Accrued as Estimated Annual Total Compensation
and Position with Compensation from Part of Fund Complex Benefit from the
the Fund Complex the Fund Complex Expenses Upon Retirement Fund Complex
---------------- ---------------- -------- --------------- ------------

Thomas A. Bausch, PhD $1,500 $ -0- $ -0- $1,500
Director

J. Michael Borden, $1,000 $ -0- $ -0- $1,000
Director

Daniel R. Doucette, $1,250 $ -0- $ -0- $1,250
Director

Conrad L. Sobczak, $1,500 $ -0- $ -0- $1,500
Director

Thomas Munninghoff, $1,500 $ -0- $ -0- $1,500
Director

Amelia E. Macareno, $ -0- $ -0- $ -0- $ -0-
Director(1)

Bernard E. Reidy, $ -0- $ -0- $ -0- $ -0-
Director(1)

- --------------------------------------

(1) Proposed Director.

Meetings and Board Committees.

The Board of Directors held four meetings during the fiscal year 2005.
Each director attended all of the meetings, with the exception of J. Michael
Borden who was absent from two meetings and Daniel R. Doucette who was absent
from one meeting. The standing committees of CFI's Board of Directors include an
Audit Committee and a Governance and Contracts Committee. Mr. J. Michael Borden
chairs the Audit Committee, and Mr. Thomas J. Munninghoff, Mr. Conrad L. Sobczak
and Mr. Bernard E Reidy serve as members of this Committee. Mr. Sobczak chairs
the Governance and Contracts Committee on which Mr. Doucette, Mr. Thomas A.
Bausch and Ms. Amelia E. Macareno serve as members. Only Independent Directors
are eligible to serve as members of these committees.

The Board has adopted a written charter governing the Audit Committee.
This charter establishes criteria for membership on the Committee, recites the
mission and responsibilities of the Committee and sets forth procedures under
which the Committee operates. A current copy of the Charter is available to
shareholders on the Fund's website at www.catholicfunds.com. Among other things,
the Audit Committee annually selects independent public accountants for the
Fund, approves any non-audit services to be provided by the independent public
accountants and oversees the preparation of the Fund's financial statements. In
this capacity, the Audit Committee meets at least annually with the independent
public accountants to discuss with them any issues surrounding the preparation
of the Fund's financial statements. The Audit Committee also discusses with the
independent public accountants the strengths and weaknesses of the systems and
operating procedures employed in connection with the preparation of the Fund's
internal financial statements, pricing procedures and the like, as well as the
performance and cooperation of staff members responsible for these functions.
The Audit Committee held one meeting during the fiscal year ended September 30,
2005.

The Board has also adopted a written charter to govern the Governance and
Contracts Committee. This charter establishes membership criteria for the
Committee, recites the purposes and responsibilities of the Committee and sets
forth procedures under which the Committee operates. A current copy of the
charter, which includes provisions regarding receiving from shareholders and
considering nominations for Independent Directors as discussed below, is
available to shareholders on the Fund's website at www.catholicfunds.com. The
primary functions of the Governance and Contracts Committee are to study and
make recommendations to the full Board regarding policies and procedures in the
areas of corporate governance, including the nomination of candidates to serve
as Independent Directors, and regarding the retention, continuation and
termination of affiliated and unaffiliated service providers to CFI and the
Fund, including advisers, subadvisers, custodians, transfer agents,
administrators, distributors and selected dealers, fund accounting agents and
the like. With respect to corporate governance matters, the Governance and
Contracts Committee:

o Considers and makes recommendations to the Board as to the proper
size of the Board, the desired skills, abilities and degree of
diversity of Board's members, and term limits and/or retirement age
for Directors;

o Adopts procedures for identifying, recruiting and interviewing
qualified candidates for the position of Independent Directors;

o Recommends to the Board individuals to be nominated for election as
Independent Directors;

o Reviews the continuing qualification of existing Directors,
including review of and reporting to the Board on the continuing
independence of the Independent Directors;

o Recommends to the Board appointments to Board committees;

o Reviews and makes recommendations regarding the Rule 17j-1 Code of
Ethics for CFI and the advisers and subadvisers of each series of
CFI established from time to time and the Code of Ethics for CFI's
chief executive officer and senior financial officers;

o Reviews and makes recommendations regarding CFI's privacy policy;
and

o Performs such other functions as from time to time may be assigned
by the Board.

The Committee has developed and adopted procedures for receiving from
shareholders and considering nominations for Independent Directors. At any time
that the Board of Directors determines to nominate candidates for appointment or
election to the Board, the Corporate Governance and Contracts Committee of the
Board (which generally is responsible for nominating candidates) will review and
consider director nominees proposed by shareholder(s) if and only if the
shareholder(s) making the recommendation beneficially own, in the aggregate, at
least 10% of the issued and outstanding shares of common stock of the Fund (a
"qualified shareholder"). In order to be considered for any specific
appointment/election, the qualified shareholder(s) recommendation must be
received no less than sixty days prior to the date on which the Corporate
Governance and Contracts Committee makes its nomination(s). In order to be
considered in proper form, a recommendation from a qualified shareholder must:
(i) identify the qualified shareholder by name and address; (ii) certify that
the qualified shareholder meets the 10% beneficial ownership requirement; and
(iii) describe the candidate's qualifications and provide contact information
sufficient for the Corporate Governance and Contracts Committee to contact the
candidate for additional information. Recommendations must be presented to the
Corporate Governance and Contracts Committee by first class U.S. mail addressed
as follows:

The Catholic Funds, Inc.
Attention: Chairperson, Corporate Governance
and Contracts Committee of the Board of Directors
1100 West Wells Street
Milwaukee, WI 53233

In order to be eligible for consideration as a nominee, any candidate
named in a timely submitted recommendation from a qualified shareholder must not
be an "interested person" (as that term is defined in the Investment Company Act
of 1940) of the Fund or of any investment adviser or distributor of the Fund,
and otherwise must meet all criteria and qualifications established from time to
time by the Corporate Governance and Contracts Committee. Within 30 days of a
written request from the Corporate Governance and Contracts Committee, the
candidate must submit to the Committee information reasonably requested by the
Committee in order to allow it to assess the qualifications of the candidate and
to determine that the candidate is not an "interested person." Failure to timely
respond to such a request will disqualify the candidate. In considering any
candidate recommended by a qualified shareholder, the Corporate Governance and
Contracts Committee will apply the same standards as it applies to candidates
recommended from other channels, but the Committee has sole discretion in
determining whether to nominate a candidate recommended by Qualified
Shareholder.

The Governance and Contracts Committee also provides the Board with
independent evaluations of the performance of the various service providers of
CFI and the Fund in meeting their contractual obligations and the reasonableness
of their fees in light of the scope and quality of the services they provide
(assessed on the basis of prices available in the marketplace for similar
services). In this regard, the Governance and Contracts Committee:

o Periodically requests such information as it reasonably deems
necessary to evaluate the terms of proposed new or amended or
existing investment advisory and subadvisory agreements, and
evaluates the information so furnished;

o Periodically makes similar evaluations of any distribution
agreements, distribution plans (Rule 12b-1 plans), shareholder
servicing plans and similar plans and relationships dealing with the
distribution of shares of each series of CFI established from time
to time and/or maintaining shareholder relationships on a continuing
basis;

o Reviews the performance of the adviser, each subadviser, the
distributor and their affiliates under their contracts with CFI; and

o Recommends to the Board the continuing, modification or termination
of the contracts.

The Governance and Contracts Committee also is responsible for considering
and making recommendations to the Board with respect to all matters where there
may exist an actual or potential conflict between the interests of CFI's
adviser, distributor, any subadviser or any of their affiliates on the one hand,
and CFI or any series of CFI established from time to time on the other hand.

The Governance and Contracts Committee met two times during the fiscal
year ended September 30, 2005.

THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" EACH OF THE
PROPOSED DIRECTORS SET FORTH IN PROPOSAL 2.

PROPOSAL 3:
FOR CLASS C SHAREHOLDERS ONLY
APPROVAL OF PLAN OF REORGANIZATION AND LIQUIDATION

Background

The fund currently has three classes of shares, Class A, Class C and Class
I. The investing public has demonstrated a lack of interest in Class C shares of
the Fund. In fact, Class C shares currently account for only approximately 10%
of the total net assets of the Fund. By eliminating Class C shares, the Fund
will avoid incurring the costs associated with the administration,
recordkeeping, accounting, and registration for a class of shares. As a result,
the Board has approved a Plan of Reorganization and Liquidation (attached hereto
as Appendix C) providing for the liquidation of the Class C shares of the Fund.
Under this Plan of Reorganization and Liquidation, holders of Class C shares
would receive in the liquidation Class A shares having an equal net asset value
and a lower operating expense ratio. Class C shareholders would incur no
front-end sales charges on the Class A shares received by them in the
liquidation, nor would they pay any contingent deferred sales charge on the
liquidation of their Class C shares. Additionally, Class C shareholders would
incur no taxable gains or losses as a result of the liquidation.

As liquidation proceeds from the liquidation of Class C shares, each Class
C shareholder will receive Class A shares with a net asset value equal to the
net asset value of the shareholder's C shares that are liquidated. Receiving
Class A shares as liquidation proceeds offers Class C shareholders the advantage
of lower annual operating expenses than they currently bear. Both Class A and
Class C shares are subject to distribution plans adopted pursuant to Rule 12b-1
under the 1940 Act which provide for payments to the Fund's distributor. The
plan applicable to Class C shares calls for payments equal to 0.75% of the
average daily net assets of the Fund attributable to the Class C shares while
the plan applicable to Class A shares calls for payments equal to only 0.25% of
the average daily net assets attributable to Class A shares. Because the other
operating expenses of each class are identical, by approving the proposed
liquidation, and becoming Class A shareholders, current Class C shareholders
would enjoy a reduction in annual operating expenses equal to 50 basis points.
Investors who wish to take advantage of the lower expenses of Class A shares
typically are required to pay a 4% front-end sales charge on their purchase of
Class A shares. However, under the proposed Plan of Reorganization and
Liquidation, Class C shareholders will receive the Class A shares free of any
sales charge. Finally, some current Class C shareholders may also benefit from
the elimination of Class C shares because, by becoming Class A shareholders,
they will no longer be subject to the 1% contingent deferred sales charge that
is imposed on Class C shares redeemed within one year of purchase. The following
tables show comparative expense information for the Class C and Class A shares:

SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from investment)

Class A Shares Class C Shares
-------------- --------------

Maximum Sales Charge (Load) Imposed on Purchases (as 4.00%(1) None
a percentage of the offering price)

Maximum Sales Charge (Load) Imposed on Reinvested None None
Dividends

Contingent Deferred Sales Charge (Load) (as a None 1.00%(2)
percentage of original purchase price or redemption
proceeds, whichever is less)

Redemption Fees(3) None None

Exchange Fee(4) None None

ANNUAL FUND OPERATING EXPENSES (expenses deducted from Fund assets)

Class A Shares Class C Shares
-------------- --------------

Management Fees 0.50% 0.50%
Distribution (12b-1) Fees 0.25% 0.75%
Other Expenses 1.19% 1.19%
----- -----
Total Operating Expenses(5) 1.94% 2.44%

- ------------------------------------

(1) Sales charge will not be imposed on the Class A shares received by
Class C shareholders as liquidation proceeds. The sales charge
typically imposed on Class A purchases decreases as the amount of
investment increases.

(2) The Class A shares that Class C shareholders will receive in as
liquidation proceeds will not be subject to this charge, which
typically does not terminate until one year after the shares are
purchased.

(3) The Fund charges $15.00 for each wire redemption

(4) The Fund charges $5.00 for each telephone exchange

(5) The actual annual operating expenses incurred by shareholders would
be lower based on an expense reimbursement generally provided by
CFSC, the Fund's adviser. CFSC contractually commits to such waivers
for specified periods, and such waivers may differ from period to
period.

Description of Liquidation

If the Plan of Reorganization and Liquidation is approved, it is
anticipated that the liquidation would be completed at the close of business on
February 1, 2006. At that time, the Fund will issue to each Class C shareholder
that number of Class A shares which has a total net asset value equal to the
total net asset value of that shareholder's holdings of the Fund's Class C
shares.

Shareholder Accounts and Elections

The Fund's transfer agent will establish accounts for all Class C
shareholders containing the appropriate amount of Class A shares of the Fund to
be received by each shareholder as part of the conversion.

Differences Between Class C Shares and Class A Shares

Other than the differences in the operating expenses and transaction
expenses discussed above, the Class C and Class A shares of the Fund have equal
rights and privileges. Each share of a particular class is entitled to one vote,
to participate equally in dividends and distributions declared by the Board with
respect to the class, and upon liquidation or dissolution of the Fund, to
participate proportionately in the net assets allocable to such class.
Shareholders of the Fund do not have cumulative voting rights and there are no
preemptive or conversion rights applicable to any of the Fund's shares.

Tax Consequences

The liquidation will be tax-free for federal income tax purposes. No gain
or loss will be recognized by shareholders as a consequence of the liquidation
of Class C shares and the receipt of Class A shares of the Fund pursuant to the
proposed Plan of Reorganization and Liquidation. Each Class C shareholder's
basis in the Class A shares received in the liquidation will equal the
shareholder's basis in the liquidated Class C shares immediately prior to the
liquidation. Each shareholder's holding period for the Class A shares received
in the liquidation will include the shareholder's holding period for their
liquidated Class C shares.

Board Considerations and Recommendations

For the reasons described above, the Board of Directors of the Fund
approved the Plan of Reorganization and Liquidation. In particular, the
Directors determined that the liquidation was in the best interests of the
Fund's Class C shareholders

THE BOARD UNANIMOUSLY RECOMMENDS THAT CLASS C SHAREHOLDERS VOTE FOR
APPROVAL OF THE PLAN OF REORGANIZATION AND LIQUIDATION DESCRIBED IN PROPOSAL 3.

OTHER BUSINESS

The Board is not aware of any other matters that will come before the
special meeting. However, if any other business should come before the special
meeting, your proxy, if signed and returned, will give discretionary authority
to the persons designated in it to vote according to their best judgment on such
matters.

OTHER INFORMATION

Shareholder Meetings

The Catholic Funds, Inc. is organized as a Maryland corporation and is not
required to hold annual meetings of shareholders. Its Bylaws provide that it is
not required to hold annual meetings of shareholders in any year in which the
election of directors, approval of an investment advisory agreement,
ratification of the selection of independent public accountants, or approval of
a distribution plan is not required to be acted upon by its shareholders under
the Investment Company Act of 1940. Meetings of shareholders of the Fund will be
held when and as determined necessary by the Board of Directors of The Catholic
Funds, Inc. and in accordance with the Investment Company Act of 1940.

Shareholder Proposals

Shareholders of the Fund wishing to submit proposals for inclusion in a
proxy statement for any future shareholder meetings should send their written
proposals to the Secretary of The Catholic Funds, Inc. at 1100 West Wells
Street, Milwaukee, Wisconsin 53233, within a reasonable amount of time prior to
such meeting. The Board does not presently anticipate holding any other
shareholder meetings for the Fund in 2006.

Address of Investment Adviser, Subadviser, Administrator, and Distributor

The principal offices of Catholic Financial Services Corporation, current
investment adviser and distributor to the Fund, are located at 1100 West Wells
Street, Milwaukee, Wisconsin 53233. The principal offices of Ziegler Capital
Management, LLC., the new subadviser to the Fund, pending shareholder approval,
are located at 250 East Wisconsin Avenue, Suite 2000, Milwaukee, WI 53202. The
principal offices of U.S. Bancorp Fund Services, LLC, which serves as the Fund's
administrative services agent, fund accounting and pricing services agent and
transfer agent, are located at 615 East Michigan Street, Third Floor, Milwaukee,
Wisconsin 53202-5207.

Annual Report Delivery

The financial statement of the Fund for the fiscal year ended September
30, 2005, are included in the Fund's annual report for the year ended September
30, 2005, which has previously been sent to the shareholders. The Catholic
Funds, Inc. will furnish, free of charge, a copy of the Funds' Annual Report for
the year ended September 30, 2005 to any shareholder upon request. Please write
us at: The Catholic Funds, Inc., 1100 West Wells Street, Milwaukee, Wisconsin
53233, or call us at 1-877-222-2402.

YOUR VOTE IS IMPORTANT

YOU MAY VOTE IN ONE OF TWO WAYS

Vote by Telephone Vote by Proxy Card

Read the accompanying Proxy Statement. The proxy card is enclosed with
Call toll-free 1-800-221-0697 24 hours postage-free return envelope. Mark,
a day/7 days a week. Follow the simple sign and date your proxy card and
recorded instructions using the proxy return it promptly in the enclosed
card as a guide. envelope.

NOTE: If you voted by telephone, there is no need to return your proxy card.

THE CATHOLIC FUNDS, INC.

CATHOLIC EQUITY FUND

Revocable Proxy for Special Meeting of Shareholders. This Proxy is Solicited on
Behalf of the Board of Directors.

The undersigned hereby appoints Daniel Steininger, Allan Lorge or Theodore
Zimmer, and each of them, proxy, with full power of substitution, to vote all
shares of stock the undersigned is entitled to vote at the Special Meeting of
Shareholders of the Catholic Equity Fund to be held at Catholic Knights, 1100
West Wells Street, Milwaukee, Wisconsin, at 10:00 a.m. Central Time, on January
23, 2006, or at any adjournment thereof, with respect to the matters set forth
on this proxy and described in the Notice of Special Meeting and Proxy Statement
relating to the special meeting, receipt of which is hereby acknowledged.

Shares listed below represent the total number of shares of the Catholic Equity
Fund registered in the name printed below.

Dated: _____________________________, 200__
---------------------------------------------

---------------------------------------------
(Please sign exactly as name appears at left)
(If stock is owned by more than one person,
all owners should sign. Persons signing as
executors, administrators, trustees or in
similar capacities should so indicate.)

Shares represented by this proxy will be voted as directed by the shareholder.
IF NO DIRECTION IS SUPPLIED, THIS PROXY WILL BE VOTED FOR THESE PROPOSALS.
Please vote by filling in the appropriate boxes below, as shown, using blue or
black ink or dark pencil.

- ----------------------------------------------------------------------------------------------------------------------------
PROPOSALS: FOR AGAINST ABSTAIN

1. To approve a Subadvisory Agreement, dated December 1, 2005, by and |_| |_| |_|
among The Catholic Funds, Inc. (on behalf of the Catholic Equity
Fund), Catholic Financial Services Corporation and Ziegler Capital
Management, LLC, pursuant to which Ziegler Capital Management serves
as subadviser to the Catholic Equity Fund.
FOR WITHHOLD FOR ALL
ALL ALL EXCEPT
2. Elect Amelia E. Macareno and Bernard E. Reidy as Directors |_| |_| |_|

------------------------------------------------
Write name of excluded nominee on the line above.

4. In their discretion, the proxies are authorized to vote on such other
matters as may properly come before the meeting.
- ----------------------------------------------------------------------------------------------------------------------------

THE CATHOLIC FUNDS, INC.

CATHOLIC EQUITY FUND

FOR CLASS C SHAREHOLDERS ONLY

Revocable Proxy for Special Meeting of Shareholders. This Proxy is Solicited on
Behalf of the Board of Directors.

Shares listed below represent the total number of shares of the Catholic Equity
Fund registered in the name printed below.

Dated: _____________________________, 200__
---------------------------------------------

- ------------------------------------------------------------------------------------------------------------------------
FOR AGAINST ABSTAIN

1. To approve a Subadvisory Agreement, dated December 1, 2005, by and |_| |_| |_|
among The Catholic Funds, Inc. (on behalf of the Catholic Equity Fund),
Catholic Financial Services Corporation and Ziegler Capital Management,
LLC, pursuant to which Ziegler Capital Management serves as subadviser
to the Catholic Equity Fund.
FOR WITHHOLD FOR ALL
ALL ALL EXCEPT
2. Elect Amelia E. Macareno and Bernard E. Reidy as Directors |_| |_| |_|

--------------------------------------------------
Write name of excluded nominee on the line above.
FOR AGAINST ABSTAIN
3. To approve a Plan of Reorganization and Liquidation to liquidate |_| |_| |_|
Class C shares of the Catholic Equity Fund.

APPENDIX A

INVESTMENT SUBADVISORY AGREEMENT

AGREEMENT made as of the 1st day of December, 2005, by and among THE
CATHOLIC FUNDS, INC. a Maryland corporation (the "Fund Company"), CATHOLIC
FINANCIAL SERVICES CORPORATION, a Wisconsin corporation (the "Adviser" and
"Distributor"), and ZIEGLER CAPITAL MANAGEMENT, LLC, a Wisconsin limited
liability company (the "Sub-Adviser").

W I T N E S S E T H

For good and valuable consideration, the receipt of which is hereby
acknowledged, it is hereby agreed by and among the parties hereto as follows:

1. In General

The Sub-Adviser agrees, as more fully set forth herein, to act as
Sub-Adviser to the Fund Company with respect to the investment and
reinvestment of the assets of The Catholic Equity Fund and, subject to the
mutual agreement of the parties, of any other series of mutual fund of the
Fund Company presently designated or designated in the future. The
parties' agreement to appoint the Sub-Adviser as sub-adviser for any such
additional series shall be reflected by modifying Exhibit A attached to
this Agreement accordingly. The Catholic Equity Fund and any such
additional series are referred to herein as a "Fund". The Sub-Adviser
agrees to supervise and arrange the purchase of securities and the sale of
securities held in the investment portfolio of each Fund.

2. Duties and Obligations of the Sub-Adviser with Respect to
Investments of Assets of the Funds

(a) Subject to the succeeding provisions of this section
and subject to the oversight and review of the Adviser and the
direction and control of the Board of Directors of the Fund
Company, the Sub-Adviser shall:

(i) Determine what securities shall be purchased or
sold by each Fund specified on Exhibit A;

(ii) Arrange for the purchase and the sale of
securities held in each Fund specified on Exhibit
A; and

(iii) Provide the Adviser and the Directors with such
reports as may reasonably be requested in
connection with the discharge of the foregoing
responsibilities and the discharge of the
Adviser's responsibilities under its Investment
Advisory Agreement with the Fund Company and those
of the Distributor under its Distribution
Agreement with the Fund Company.

(b) Any investment purchases or sales made by the
Sub-Adviser under this section shall at all times conform to,
and be in accordance with, any requirements imposed by: (1)
the provisions of the Investment Company Act of 1940 (the
"Act") and of any rules or regulations in force thereunder;
and (2) the provisions of the Articles of Incorporation and
Bylaws of the Fund Company as amended from time to time; (3)
any policies and determinations of the Board of Directors of
the Fund Company; and (4) along with any amendments thereto,
the fundamental investment policies of the relevant Fund, as
reflected in the Fund Company's registration statement under
the Act, or as amended by the shareholders of the Fund
Company; provided that copies of the items referred to in
clauses (2), (3) and (4) shall have been furnished to the
Sub-Adviser.

(c) The Sub-Adviser shall give the Fund Company the
benefit of its best judgment and effort in rendering services
hereunder. In the absence of willful misfeasance, bad faith,
negligence, reckless disregard of its obligations or duties
hereunder or violation of applicable law ("disabling conduct")
on the part of the Sub-Adviser (or any of its officers,
directors, general partner(s), agents or employees (each a
"Sub-Adviser Affiliate")), neither the Sub-Adviser nor any
Sub-Adviser Affiliate shall be subject to liability to the
Fund Company or to any shareholder of the Fund Company for any
act or omission in the course of, or connected with, rendering
services hereunder, including without limitation any error of
judgment or actions performed or for any loss suffered by any
of them in connection with the matters to which this Agreement
relates, except to the extent specified in Section 36(b) of
the Act concerning loss resulting from a breach of fiduciary
duty with respect to the receipt of compensation for services.
Except for such disabling conduct, the Fund Company shall
indemnify the Sub-Adviser and each Sub-Adviser Affiliate
against any liability arising from their conduct under this
Agreement to the extent permitted by the Fund Company's
Articles of Incorporation, Bylaws and applicable law. This
Section 2(c) shall survive the termination of this Agreement.

(d) Nothing in this Agreement shall prevent the
Sub-Adviser or any affiliated person (as defined in the Act)
of the Sub-Adviser from acting as investment advisor or
manager for any other person, firm or corporation and shall
not in any way limit or restrict the Sub-Adviser or any such
affiliated person from buying, selling or trading any
securities for its or their own accounts or for the accounts
of others for whom it or they may be acting. The Sub-Adviser
will, however, promptly notify the Adviser when the
Sub-Adviser undertakes to manage the assets of any other
mutual fund sponsored by a Catholic organization. In addition,
the Sub-Adviser expressly represents that it will undertake no
activities which, in its judgment, will adversely affect the
performance of its obligation to the Fund Company under this
Agreement or under the Act. It is agreed that the Sub-Adviser
shall have no responsibility or liability for the accuracy or
completeness of the Fund Company's Registration Statement
under the Act and the Securities Act of 1933, except for
information supplied by the Sub-Adviser for inclusion therein.
The Sub-Adviser shall be deemed to be an independent
contractor and, unless otherwise expressly provided or
authorized, have no authority to act for or represent the Fund
Company in any way or otherwise be deemed an agent of the Fund
Company.

(e) In connection with its duties to arrange for the
purchase and sale of each Fund's portfolio securities, the
Sub-Adviser shall follow the principles set forth in any
investment advisory agreement in effect from time to time
between the Fund Company and the Adviser, provided that a copy
of any such agreement and any amendment thereto shall have
been provided to the Sub-Adviser. The Sub-Adviser will
promptly communicate to the Adviser and to the officers and
the Directors of the Fund Company such information relating to
portfolio transactions as they may reasonably request.

Without limiting the generality of the foregoing, with respect
to the execution of transactions on behalf of a Fund, and except as
otherwise instructed from time to time by the Board of Directors of
the Fund Company, the Sub-Adviser shall place, or arrange for the
placement of, all orders for purchases, sales or loans either
directly with the issuer or with a broker-dealer, or other
counterparty or agent selected by the Sub-Adviser. In connection
with the selection of all such parties for the placement of all such
orders, the Sub-Adviser shall attempt to obtain most favorable
execution and price, but may nevertheless in its sole discretion, as
a secondary factor, purchase and sell portfolio securities from and
to broker-dealers who provide research and analysis to the
Sub-Adviser which the Sub-Adviser lawfully and appropriately may use
in its capacity as Sub-Adviser, whether or not such research and
analysis also may be useful to the Sub-Adviser in connection with
its services to other clients. In recognition of such research and
analytical services or brokerage services provided by a broker or
dealer, the Sub-Adviser is authorized to pay such broker or dealer a
commission or spread in excess of that which might be charged by
another broker or dealer for the same transaction if the Sub-Adviser
determines in good faith that the commission or spread is reasonable
in relation to the value of the services so provided.

The Fund Company hereby authorizes any entity or person
associated with the Sub-Adviser that is a member of a national
securities exchange to effect any transaction on the exchange for
the account of a Fund to the extent permitted by and accordance with
Section 11(a) of the Securities Exchange Act of 1934 and Rule
11a2-2(T) thereunder. The Fund Company hereby consents to the
retention by such entity or person of compensation for such
transaction in accordance with Rule 11a2-2(T)(a)(iv).

The Sub-Adviser may, where it deems it to be advisable,
aggregate orders for its other customers together with any
securities of the same type to be sold or purchased for one or more
Funds, and/or other clients of the Sub-Adviser in order to obtain
best execution or lower brokerage commissions. In such event, the
Sub-Adviser shall allocate the shares so purchased or sold, as well
as the expense incurred in the transaction, in a manner it considers
to be equitable and fair, and consistent with its fiduciary
obligations to the Fund Company, the Funds and the Sub-Adviser's
other customers.

(f) The Sub-Adviser shall, where it deems it
appropriate, make recommendations to the Fund Company as to
the manner in which voting rights, rights to consent to the
Fund Company or Fund Action, and any other rights pertaining
to the Fund Company or any of the Funds shall be exercised;
provided that the Sub-Adviser shall have no obligation nor any
authority to execute any voting proxies or consents on behalf
of the Fund Company or any Fund, but rather shall promptly
forward to the Fund Company all proxy and other solicitation
materials that the Sub-Adviser may receive with respect to any
such voting rights or consents.

(g) The Sub-Adviser shall be responsible for preparing
and filing with the SEC all reports on Schedule 13F required
under Section 13(f) of the Securities Exchange Act of 1934 in
connection with equity positions held by each Fund for which
the Sub-Adviser has investment or voting discretion.

3. Allocation of Expenses

The Sub-Adviser agrees that it will furnish the Fund Company,
at the Sub-Adviser's expense, with all office space and facilities,
equipment and clerical personnel necessary for carrying out the
Sub-Adviser's duties under this Agreement.

4. Certain Records

Any records required to be maintained and preserved pursuant
to the provisions of Rule 31a-1 and Rule 31a-2 under the Act which
are prepared or maintained by the Sub-Adviser on behalf of the Fund
company are the property of the Fund Company and will be surrendered
promptly to the Fund Company or the Adviser on request.

5. Reference to the Sub-Adviser

Neither the Fund Company nor the Adviser or any affiliate or
agent thereof shall make reference to or use the name of the
Sub-Adviser or any of its affiliates in any advertising or
promotional materials without the prior written approval of the
Sub-Adviser, which approval shall not be unreasonably withheld.

6. Compensation of the Sub-Adviser

The Adviser agrees to pay the Sub-Adviser, and the Sub-Adviser
agrees to accept as full compensation for all services rendered by
the Sub-Adviser as such, a management fee as specified on Exhibit A.

7. Duration and Termination

(a) This Agreement shall go into effect with respect to
The Catholic Equity Fund on the date specified on Exhibit A
attached hereto. In the event the parties hereto mutually
agree that one or more series of the Fund Company should be
included as additional "Fund(s)" hereunder, this Agreement
shall become effective with respect to each such additional
Fund(s) on the date(s) specified on Exhibit A hereto. Once
effective with respect to any Fund, this Agreement shall,
unless terminated as hereinafter provided, continue in effect
for a period of two years with respect to such Fund, and
thereafter from year to year, but only so long as such
continuance is specifically approved at least annually by a
majority of the Fund Company's Board of Directors, or by the
vote of the holders of a "majority" (as defined in the Act) of
the outstanding voting securities of the relevant Fund, and,
in either case, a majority of the Directors who are not
parties to this Agreement or "interested persons" (as defined
in the Act) of any such party cast in person at a meeting
called for the purpose of voting on such approval.

(b) This Agreement may be terminated by the Sub-Adviser
in its entirety or with respect to any one or more
specifically identified Funds at any time without penalty upon
giving the Fund Company and the Adviser sixty (60) days'
written notice (which notice may be waived by the Fund Company
and the Adviser) and may be terminated by the Fund Company or
the Adviser in its entirety or with respect to any one or more
specifically identified Funds at any time without penalty upon
giving the Sub-Adviser sixty (60) days' written notice (which
notice may be waived by the Sub-Adviser), provided that such
termination by the Fund Company shall be directed or approved
by the vote of a majority of all of its Directors in office at
the time or by the vote of the holders of a "majority" (as
defined in the Act) of the voting securities of each Fund with
respect to which the Agreement is to be terminated. This
Agreement shall automatically terminate in the event of its
"assignment" (as defined in the Act). This Agreement will also
automatically terminate in the event that the Investment
Advisory Agreement by and between the Fund Company and the
Adviser is terminated for any reason.

8. Notification of Ownership Change

For so long as the Sub-Adviser is organized as a limited
liability company, it will notify the Adviser of any change in its
ownership within a reasonable time of such change.

IN WITNESS WHEREOF, the parties hereto have caused the foregoing
instrument to be executed by their duly authorized officers and their seals to
be hereto affixed, all as of the day and year first above written.

THE CATHOLIC FUNDS, INC. CATHOLIC FINANCIAL SERVICES
CORPORATION

By: /s/ Theodore F. Zimmer By: /s/ Allan G. Lorge
---------------------------- ----------------------------
Theodore F. Zimmer, President Allan G. Lorge, President

ZEIGLER CAPITAL MANAGEMENT, LLC

By: /s/ David G. Stoeffel
----------------------------
Signature

Name: David G. Stoeffel
--------------------------
(Please print or type)

Title: President
-------------------------

EXHIBIT A

THE CATHOLIC FUNDS, INC.
ZIEGLER CAPITAL MANAGEMENT, LLC

SUB-ADVISORY AGREEMENT

1. Catholic Equity Fund:

a. Effective Date: Effective date of Post-Effective Amendment No. 10 to
The Catholic Funds, Inc.'s SEC Registration Statement on Form N-1A,
which Amendment was filed with the SEC on December 1, 2005.

b. Management Fee: computed daily and paid monthly at the annual rate
of 20 basis points (0.20%) on the first $250 million of the Fund's
average daily net assets, 18 basis points (0.18%) on the Fund's
average daily net assets in excess of $250 million but below $500
million, and 15 basis points (0.15%) of the Fund's average daily net
assets in excess of $500 million.

A-1

APPENDIX B

DIRECTORS AND THE PRINCIPAL EXECUTIVE OFFICER OF
ZIEGLER CAPITAL MANAGEMENT, LLC

The table below shows the name and principal occupation of each director
and the principal executive officer of ZCM. Except as noted otherwise in the
table, the address of each person is ZCM's address, 250 East Wisconsin Avenue,
Suite 2000, Milwaukee, WI 53202. None of the Officers or Directors of The
Catholic Funds, Inc. is affiliated with ZCM.

Name and Address Principal Occupation
- ---------------- --------------------

John J. Mulherin Director and Chief Executive Officer of The Ziegler
Companies, Inc.; Director of ZCM; Director and Chief
Executive Officer of B.C. Ziegler; Director of North
Track Funds, Inc.

T.R. Paprocki President of The Ziegler Companies, Inc.; Director of
ZCM; Director and President of B.C. Ziegler

Gary P. Engle Senior Managing Director and Chief Administrative
Officer of The Ziegler Companies, Inc.; Director of ZCM;
Director, Senior Managing Director and Chief
Administrative Officer of B.C. Ziegler

David G. Stoeffel Director and President of ZCM; Senior Managing Director
of B.C. Ziegler; President of North Track Funds, Inc.

J.C. Vredenbregt Senior Vice President and Chief Financial Officer of The
Ziegler Companies, Inc.; Director and Treasurer of ZCM;
Director, Senior Vice President and Chief Financial
Officer of B.C. Ziegler

S. Charles O'Meara Senior Managing Director, General Counsel and Corporate
Secretary of The Ziegler Companies, Inc.; Director and
Secretary of ZCM; Director, Senior Managing Director,
General Counsel and Corporate Secretary of B.C. Ziegler

B-1

APPENDIX C

PLAN OF REORGANIZATION AND LIQUIDATION

This Plan of Reorganization and Liquidation (this "Plan") is made as of
the 9th day of December, 2005, by The Catholic Funds, Inc. (the "Corporation"),
on behalf of its mutual fund series known as The Catholic Equity Fund (the
"Fund").

R E C I T A L S

WHEREAS, the Corporation: (a) is a corporation duly organized, validly
existing and in good standing under the laws of the State of Maryland; (b) is
registered as an open-end, series, management investment company under the
Investment Company Act of 1940 (the "1940 Act"); and (c) currently has
designated one mutual fund series, the Fund; and

WHEREAS, the Fund currently has three classes of shares: Class A Shares,
Class C Shares and Class I Shares; and

WHEREAS, the Reorganization will comprise the reallocation of all of the
Fund's assets and liabilities allocated to the Class C Shares to the Class A
Shares, and the concurrent distribution at the Effective Time of such Class A
shares to the Class C Shareholders in liquidation of the Class C Shares, all
upon the terms and conditions set forth in this Plan; and

WHEREAS, this Plan is intended to be, and is adopted as, a plan of
exchange within the meaning of Section 1036 of the Internal Revenue Code of
1986, as amended (the "Code"), and as a plan of recapitalization under Section
368(a)(1)(E) of the Code; and

WHEREAS, the adoption and performance of this Plan has been authorized by
the Board of Directors of the Corporation and, prior to the Closing Date, will
have been duly authorized by all other necessary corporate action on the part of
the Corporation, including approval by the Class C Shareholders.

NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:

1. DEFINITIONS

For purposes of this Plan, the following terms shall have the respective
meanings set forth below:

1.1 "Class A Shares" means the class of common shares of the Fund
referred to as Class A Shares.

1.2 "Class C Shares" means the class of common shares of the Fund
referred to as Class C Shares.

1.3 "Class C Shareholders" means the holders of record of the issued and
outstanding Class C Shares of the Fund as of the Closing Date.

1.4 "Class C Shareholder Meeting" means a special meeting of the holders
of the Class C Shares to be convened in accordance with applicable
law and the Articles of Incorporation and Bylaws of the Corporation
to consider and vote upon the approval of this Plan and the
transactions contemplated hereby.

1.5 "Closing" means the transfer to the Class A Shares of the assets of
the Class C Shares (net of liabilities) against delivery to the
Class C Shareholders of Class A Shares as described in Section 2.1
of this Plan.

C-1

1.6 "Closing Date" that date selected by the Corporation which is no
more than twenty (20) business days after the date on which the last
of the conditions precedent to the Reorganization provided in this
Plan is satisfied or lawfully waived.

1.7 "Code" means the Internal Revenue Code of 1986, as amended.

1.8 "Corporation" means The Catholic Funds, Inc., a corporation which:
(a) is duly organized, validly existing and in good standing under
the laws of the State of Maryland; (b) is registered as an open-end,
series, management investment company under the 1940 Act; and (c)
presently has designated one mutual fund series of its Common Stock,
the Fund.

1.9 "Custodian" means U.S. Bank, N.A., acting in its capacity as
custodian with respect to the assets of the Class A Shares and the
Class C Shares.

1.10 "Effective Time" means 5:01 p.m. Central Time on the Closing Date.

1.11 "Fund" means the Catholic Equity Fund, a designated mutual fund
series of the Corporation.

1.12 "1940 Act" means the Investment Company Act of 1940, as amended, and
all of the rules and regulations adopted thereunder by the SEC.

1.13 "Person" means an individual or a corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization, or other entity, as the context requires.

1.14 "Plan" means this Plan of Reorganization and Liquidation, together
with all schedules and exhibits attached hereto, as the same may be
amended from time to time in accordance with the terms hereof.

1.15 "Reorganization" means the transactions described in and
contemplated by this Plan.

1.16 "Required Class C Shareholder Vote" shall have the meaning specified
in Section 3.1 of this Plan.

1.17 "SEC" means the United States Securities and Exchange Commission.

1.18 "Securities Act" means the Securities Act of 1933, as amended, and
all rules and regulations adopted by the SEC pursuant thereto.

2. REORGANIZATION AND LIQUIDATION OF THE CLASS C SHARES.

2.1 Reallocation of Assets of Class C Shares; Distribution of Class A
Shares. At or prior to the Effective Time, all of the assets and
liabilities of the Fund then allocated to its Class C Shares shall
be reallocated to the account of the Class A Shares. Concurrent with
such reallocation, that number of Class A Shares (including, if
applicable, fractional shares rounded to the nearest thousandth of
one whole share) (the "New Class A Shares") having an aggregate net
asset value equal to the net value of the assets and liabilities so
reallocated from the Class C Shares to the Class A Shares shall be
distributed in liquidation by the Fund to the Class C Shareholders,
all determined and adjusted as provided in Section 2.2 of this Plan
and distributed as provided in Section 2.3 of this Plan.

2.2 Computation of Net Asset Value. The net asset value of the New Class
A Shares and the net value of the assets and liabilities of the
Class C Shares reallocated to Class A Shares pursuant to this Plan
shall, in each case, be determined as of the close of business on
the New York Stock Exchange on the Closing Date, in accordance with
the practices and procedures of the Funds.

C-2

2.3 Liquidating Distribution to Class C Shareholders. As a result of the
liquidating distribution described in Section 2.1, each Class C
Shareholder shall receive that number of New Class A Shares having
an aggregate net asset value that is equal to the aggregate net
asset value of the Class C Shares held by the Class C Shareholder on
the Closing Date.

2.4 Closing of Books. The assets and liabilities of the Class C Shares
reallocated to Class A Shares and the per share net asset value of
the New Class A Shares shall be valued as of the close of trading on
the New York Stock Exchange on the Closing Date. The stock transfer
books of the Class C Shares shall be permanently closed as of the
close of business on the Closing Date, and only requests for the
redemption of shares of the Class C Shares received in proper form
prior to the close of trading on the New York Stock Exchange on the
Closing Date shall be accepted by the Custodian. Redemption requests
thereafter received by the Custodian shall be deemed to be
redemption requests for the New Class A Shares (assuming that the
transactions contemplated by this Plan have been consummated) to be
distributed to the Class C Shareholders pursuant to this Plan.

2.5 Issuance of New Class A Shares. On the Closing Date, the Corporation
shall instruct its transfer agent to record on the Corporation's
books and records the pro rata interest of each of the Class C
Shareholders in the New Class A Shares in the name of such Class C
Shareholder. All Class C Shares then issued and outstanding shall
thereupon be canceled on the books of the Fund, and the status of
the Class C Shares as a designated class of shares of the Fund shall
be terminated. The Fund shall forward a confirmation of such
ownership to each of the Class C Shareholders. No redemption or
repurchase of such New Class A Shares credited to any Class C
Shareholder in respect of his or her Class C Shares shall be
permitted until a properly submitted request has been received and
accepted by the Custodian.

3. CONDITIONS PRECEDENT TO CLOSING

The Closing of the Reorganization is subject to the conditions that on or
before the Closing Date:

3.1 Approval of Plan By Class C Shareholders. The Class C Shareholder
Meeting shall have been duly called and held in accordance with the
provisions of the 1940 Act, the Maryland General Corporation Law and
the Articles of Incorporation and Bylaws of the Corporation,
including compliance with the notice and quorum requirements
thereunder, and at such meeting the Plan shall have been approved by
the affirmative vote of the lesser of (a) shareholders owning 67% or
more of the Class C Shares present at the Class C Shareholder
Meeting, if shareholders owning 50% or more of the Class C Shares
outstanding are present at such Meeting in person or by proxy; or
(b) shareholders owning more than 50% of the Class C Shares
outstanding (the "Required Class C Shareholder Vote").

3.2 No Adverse Actions. On the Closing Date, no action, suit or other
proceeding shall be pending before any court or governmental agency
in which it is sought to restrain or prohibit or obtain damages or
other relief in connection with this Plan or the transactions
contemplated hereby.

3.3 Consents and Approvals. All consents of other parties and all other
consents, orders and permits of federal, state and local regulatory
authorities (including those of the SEC and of state Blue Sky or
securities authorities) deemed necessary by the Corporation to
permit consummation, in all material respects, of the transactions
contemplated hereby, shall have been obtained.

C-3

3.4 Continued Effectiveness and Amendment of Registration Statement on
Form N-1A. The Corporation's Registration Statement, including its
prospectus, with respect to the Fund and the Class C Shares shall
remain effective with the SEC from and after the date of this Plan
and continuing up to the Closing Date, and no stop order suspending
the effectiveness thereof shall have been issued and, to the
knowledge of the Corporation, no investigation or proceeding for
that purpose shall have been instituted or be pending, threatened or
contemplated under the Securities Act.

4. TERMINATION

4.1 By the Corporation. This Plan may be terminated at any time by the
Corporation, and will be terminated by the Corporation if any of the
conditions precedent to the Reorganization set forth in Article 3
have not been satisfied as of the Closing Date.

4.2 Effects of Termination. In the event of any such termination, there
shall be no liability for damage on the part of either the Class C
Shares or the Class A Shares.

5. AMENDMENT

This Plan may be amended, modified or supplemented in such manner as the
Corporation determines; provided, however, that following approval of the Plan
by the Required Class C Shareholder Vote, no such amendment may have the effect
of changing the provisions for determining the number of New Class A Shares to
be issued to the Class C Shareholders pursuant to this Plan to the detriment of
the Class C Shareholders without their further approval.

6. MISCELLANEOUS

6.1 Headings. The Article and Section headings contained in this Plan
will have reference purposes only and shall not affect in any way
the meaning or interpretation of this Plan.

6.2 Governing Law. This Plan shall be governed by and construed in
accordance with the laws of the State of Maryland, the Corporation's
Articles of Incorporation and Bylaws, and the Fund.

IN WITNESS WHEREOF, on the authority of the Board of Directors of the
Corporation, this Plan has been executed by its duly authorized officer as of
the day and year first written above.

BY ORDER OF THE BOARD OF DIRECTORS
OF THE CATHOLIC FUNDS, INC.
(On Behalf of The Catholic Equity Fund)

By: /s/ Theodore F. Zimmer
-----------------------------------
Theodore F. Zimmer, President

C-4