Becky
It is true, but the meaning is not as "black and white" as the Feeneyites or a plain reading of such would imply.
There is only one Way that we are joined together as the Body of Christ - through the One Church. Salvation comes into the world in the person of Jesus, and He established one Church to bring His Salvation to the world. The Church is necessary, for She is the principal instrument through which God's grace enters the world.
Everyone should then, to assure their salvation, be a formal member of this Church and profess what She professes. However, we make allowances for God to have mercy on those, who for reasons beyond their control, do not formally join the Catholic Church.
That's it. Those not formally part of the Catholic Church who are not culpable for this fact can be saved anyway. But this salvation is only possible because these people will be, in some mystical way, "inside" of the Church.
SD