<PAGE>
PROSPECTUS
(WITH APPLICATION)
FEBRUARY 28, 1997
AS REVISED JUNE 26, 1997
MONTAG & CALDWELL GROWTH FUND
CHICAGO TRUST GROWTH & INCOME FUND
CHICAGO TRUST TALON FUND
CHICAGO TRUST BALANCED FUND
MONTAG & CALDWELL BALANCED FUND
CHICAGO TRUST BOND FUND
CHICAGO TRUST MUNICIPAL BOND FUND
CHICAGO TRUST MONEY MARKET FUND
CT&T FUNDS
The Chicago Trust Company, Investment Advisor
Montag & Caldwell, Inc., Investment Advisor
(800) 992-8151
<PAGE>
CT&T FUNDS
171 North Clark Street
Chicago, IL 60601
PROSPECTUS
FEBRUARY 28, 1997
AS REVISED JUNE 26, 1997
CT&T FUNDS (the "Company") is a no-load, open-end management
investment
company which consists of eight separate diversified investment
series (each a
"Fund" and collectively, the "Funds") designed to offer investors
a variety of
investment opportunities. Each Fund has distinct investment
objectives and
policies.
CHICAGO TRUST GROWTH & INCOME FUND, CHICAGO TRUST BALANCED FUND
(FORMERLY
KNOWN AS CHICAGO TRUST ASSET ALLOCATION FUND), CHICAGO TRUST BOND
FUND, CHICAGO
TRUST MUNICIPAL BOND FUND, and CHICAGO TRUST MONEY MARKET FUND are
advised by
The Chicago Trust Company ("Chicago Trust"). CHICAGO TRUST TALON
FUND is served
by Chicago Trust as Investment Advisor and by Talon Asset
Management, Inc.
("Talon") as Sub-Investment Advisor. MONTAG & CALDWELL GROWTH FUND
and MONTAG &
CALDWELL BALANCED FUND are advised by Montag & Caldwell, Inc.
("Montag &
Caldwell").
MONTAG & CALDWELL GROWTH FUND seeks long-term capital
appreciation consistent
with investments primarily in a combination of equity,
convertible, fixed
income, and short-term securities. Capital appreciation is
emphasized, and
generation of income is secondary.
CHICAGO TRUST GROWTH & INCOME FUND seeks long-term total return
through a
combination of capital appreciation and current income. In seeking
to achieve
its investment objective, the Fund invests primarily in common
stocks,
preferred stocks, securities convertible into common stocks, and
fixed income
securities.
CHICAGO TRUST TALON FUND seeks long-term total return through
capital
appreciation. The Fund will invest primarily in stocks of
companies with
capitalization levels believed by Talon to have prospects for
capital
appreciation. The Fund may also invest in preferred stock and debt
securities,
including those which may be convertible into common stock.
CHICAGO TRUST BALANCED FUND seeks growth of capital with current
income
through asset allocation. The Fund seeks to achieve this objective
by holding a
varying combination of generally two or more of the following
investment
categories: common stocks (both dividend and non-dividend paying);
preferred
stocks; convertible preferred stocks; fixed income securities,
including bonds
and bonds convertible into common stocks; and short-term interest-
bearing
obligations.
MONTAG & CALDWELL BALANCED FUND seeks long-term total return
through
investment primarily in a combination of equity, fixed income, and
short-term
securities. The allocation between asset classes may vary over
time in
accordance with the expected rates of return of each asset class;
however,
primary emphasis will be placed upon selection of particular
investments as
opposed to allocation of assets.
CHICAGO TRUST BOND FUND seeks high current income consistent
with what The
Chicago Trust Company believes to be prudent risk of capital. The
Fund will
primarily invest in a broad range of bonds and other fixed income
securities
(bonds and debentures) with an average weighted portfolio maturity
between
three and ten years.
CHICAGO TRUST MUNICIPAL BOND FUND seeks a high level of current
interest
income exempt from Federal income taxes consistent with the
conservation of
capital. The Fund will seek to achieve its objective by investing
substantially
all of its assets in a diversified portfolio of primarily
intermediate-term
municipal debt obligations.
1
<PAGE>
CHICAGO TRUST MONEY MARKET FUND seeks to provide as high a level
of current
interest income as is consistent with maintaining liquidity and
stability of
principal. The Fund seeks to achieve its objective by investing in
short-term,
high-quality, U.S. dollar-denominated money market instruments.
AN INVESTMENT IN CHICAGO TRUST MONEY MARKET FUND IS NEITHER
INSURED NOR
GUARANTEED BY THE U.S. GOVERNMENT, AND THERE CAN BE NO ASSURANCE
THAT THE FUND
WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER
SHARE.
Shares of each Fund are purchased and redeemed without any
purchase or
redemption charge imposed by the Company, although institutions
may charge
their customers for services provided in connection with their
investments.
Shares of the Fund are not deposits, obligations of, or endorsed
by any bank,
and are not insured or guaranteed by any bank, the Federal Deposit
Insurance
Corporation, the Federal Reserve Board, or any other agency. An
investment in
the Fund involves investment risks, including the possible loss of
principal.
This Prospectus sets forth concisely the information a
prospective investor
should know before investing in any of the above Funds. Investors
should read
and retain this Prospectus for future reference. Additional
information about
the Funds is contained in the Statement of Additional Information
dated
February 28, 1997, as supplemented from time to time, which has
been filed with
the Securities and Exchange Commission and is available upon
request and
without charge from the Company, at the addresses and telephone
numbers below.
The Statement of Additional Information is incorporated by
reference into this
Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE
CONTRARY IS A CRIMINAL
OFFENSE.
CT&T Funds
Investment Advisors:
171 North Clark Street
Chicago, IL 60601-3294 The Chicago
Trust Company
(800) 992-8151 171
North Clark Street
Chicago,
IL 60601-3294
(800) 992-8151
Montag &
Caldwell, Inc.
1100 Atlanta
Financial Center
3343
Peachtree Road, NE
Atlanta,
GA 30326-1450
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
- ----
<S>
<C> <C>
PROSPECTUS
SUMMARY..................................................... 4
EXPENSE
INFORMATION....................................................
6
FINANCIAL
HIGHLIGHTS................................................... 9
INVESTMENT OBJECTIVES AND
POLICIES..................................... 15
MONTAG & CALDWELL GROWTH
FUND......................................... 15
CHICAGO TRUST GROWTH & INCOME
FUND.................................... 16
CHICAGO TRUST TALON
FUND.............................................. 17
CHICAGO TRUST BALANCED
FUND........................................... 17
MONTAG & CALDWELL BALANCED
FUND....................................... 18
CHICAGO TRUST BOND
FUND............................................... 19
CHICAGO TRUST MUNICIPAL BOND
FUND..................................... 20
CHICAGO TRUST MONEY MARKET
FUND....................................... 22
INVESTMENT STRATEGIES AND RISK
CONSIDERATIONS.......................... 22
MANAGEMENT OF THE
FUNDS................................................ 31
PORTFOLIO MANAGEMENT
METHODS........................................... 33
ADMINISTRATION OF THE
FUNDS............................................ 35
PURCHASE OF
SHARES..................................................... 36
EXCHANGE OF
SHARES..................................................... 37
REDEMPTION OF
SHARES................................................... 38
ACCOUNT
OPTIONS........................................................
40
DISTRIBUTION
PLANS..................................................... 40
NET ASSET
VALUE........................................................ 41
DIVIDENDS AND
TAXES.................................................... 41
PERFORMANCE OF THE
FUNDS............................................... 43
GENERAL
INFORMATION....................................................
43
APPENDIX
--------
Debt
Ratings...........................................................
45
</TABLE>
THIS PROSPECTUS IS NOT AN OFFERING OF THE SECURITIES HEREIN
DESCRIBED IN ANY
JURISDICTION OR TO ANY PERSON TO WHOM IT IS UNLAWFUL FOR THE FUNDS
TO MAKE SUCH
AN OFFER OR SOLICITATION. NO SALES REPRESENTATIVE, DEALER, OR
OTHER PERSON IS
AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION
OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS.
3
<PAGE>
PROSPECTUS SUMMARY
THE FUNDS
The Company is an open-end, management investment company
commonly known as a
mutual fund. The Company was established as a Delaware business
trust on
September 10, 1993. The Company currently offers eight separate
series of
shares: MONTAG & CALDWELL GROWTH FUND; CHICAGO TRUST GROWTH &
INCOME FUND;
CHICAGO TRUST TALON FUND; CHICAGO TRUST BALANCED FUND; MONTAG &
CALDWELL
BALANCED FUND; CHICAGO TRUST BOND FUND; CHICAGO TRUST MUNICIPAL
BOND FUND; AND
CHICAGO TRUST MONEY MARKET FUND.
INVESTMENT DEFINITIONS
EQUITY SECURITIES--The term "equity securities" as used herein
typically
refers to common stock or preferred stock, which represent a
stockholder's
equity or ownership of shares in a company.
DEBT SECURITIES--Examples of "debt securities" are bills, notes
and bonds,
each representing a promise by the issuer to re-pay a debt which
is generally
secured by the assets of such issuer. Also in this investment
category are
debentures, which are bonds or promissory notes that are backed by
the general
credit of the issuer, but not secured by specific assets of such
issuer.
CONVERTIBLE FEATURES--Equity or debt securities purchased by the
Funds may
have "convertible" features, whereby they can be exchanged for
another class of
securities, according to the terms of their respective issuers.
SHORT-TERM INSTRUMENTS--"Short-term (or money market)
instruments" are
generally private or Government obligations with maturities of one
year or less
and may include (but are not limited to) certificates of deposit,
bankers'
acceptances, corporate commercial paper, and Government
obligations.
DERIVATIVE INVESTMENTS--the term "derivatives" has been used to
identify a
range and variety of financial categories. In general, a
derivative is commonly
defined as a financial instrument whose performance is derived, at
least in
part, from the performance of an underlying asset, such as a
specific security
or an index of securities. Derivatives which may be used from time
to time by
certain Funds and the investment risks associated with such
instruments, are
discussed in detail under "INVESTMENT STRATEGIES AND RISK
CONSIDERATIONS."
INVESTMENT OBJECTIVES OF THE FUNDS
MONTAG & CALDWELL GROWTH FUND seeks long-term capital
appreciation consistent
with investments primarily in a combination of equity,
convertible, fixed
income, and short-term securities. Capital appreciation is
emphasized, and
generation of income is secondary.
CHICAGO TRUST GROWTH & INCOME FUND seeks long-term total return
through a
combination of capital appreciation and current income. In seeking
to achieve
its investment objective, the Fund invests primarily in common
stocks,
preferred stocks, securities convertible into common stocks, and
fixed income
securities.
CHICAGO TRUST TALON FUND seeks long-term total return through
capital
appreciation. The Fund will invest primarily in stocks of
companies with
capitalization levels believed by Talon to have prospects for
capital
appreciation. The Fund may also invest in preferred stock and debt
securities,
including those which may be convertible into common stock.
CHICAGO TRUST BALANCED FUND seeks growth of capital with current
income
through asset allocation. The Fund seeks to achieve this objective
by holding a
varying combination of generally two or more of the following
investment
categories: common stocks (both dividend and non-dividend paying);
preferred
stocks; convertible preferred stocks; fixed income securities,
including bonds
and bonds convertible into common stocks; and short-term interest-
bearing
obligations.
4
<PAGE>
MONTAG & CALDWELL BALANCED FUND seeks long-term total return
through
investment primarily in a combination of equity, fixed income, and
short-term
securities. The allocation between asset classes may vary over
time in
accordance with the expected rates of return of each asset class;
however,
primary emphasis will be placed upon selection of particular
investments as
opposed to allocation of assets.
CHICAGO TRUST BOND FUND seeks high current income consistent
with what The
Chicago Trust Company believes to be prudent risk of capital. The
Fund will
primarily invest in a broad range of bonds and other fixed income
securities
(bonds and debentures) with an average weighted portfolio maturity
between
three and ten years.
CHICAGO TRUST MUNICIPAL BOND FUND seeks a high level of current
interest
income exempt from Federal income taxes consistent with the
conservation of
capital. The Fund will seek to achieve its objective by investing
substantially
all of its assets in a diversified portfolio of primarily
intermediate-term
municipal debt obligations.
CHICAGO TRUST MONEY MARKET FUND seeks to provide as high a level
of current
interest income as is consistent with maintaining liquidity and
stability of
principal. The Fund seeks to achieve its objective by investing in
short-term,
high-quality, U.S. dollar-denominated money market instruments.
HOW TO PURCHASE SHARES
The minimum initial investment for regular accounts (other than
Individual
Retirement Accounts ("IRAs") and Uniform Gift to Minor Accounts
("UGMAs")) is
$2,500 for each Fund, and the minimum subsequent investment is
$50, except for
accounts opened through a fund network. In such case, the minimums
of the fund
network will apply. The minimum initial investment for IRAs and
UGMAs is $500,
and the minimum subsequent investment for IRAs and UGMAs is $50.
The minimum
initial and subsequent investment for those enrolled in the
Automatic
Investment Plan is $50. The Funds do not impose any sales load,
redemption or
exchange fees. MONTAG & CALDWELL GROWTH FUND, CHICAGO TRUST GROWTH
& INCOME
FUND, CHICAGO TRUST TALON FUND, CHICAGO TRUST BALANCED FUND,
MONTAG & CALDWELL
BALANCED FUND, CHICAGO TRUST BOND FUND, and CHICAGO TRUST
MUNICIPAL BOND FUND
have a Distribution Plan pursuant to Rule 12b-1 under the
Investment Company
Act of 1940, as amended (the "1940 Act"). See "DISTRIBUTION
PLANS." The public
offering price for shares of each of the Funds is the net asset
value per share
next determined after receipt of a purchase order in proper form.
MONTAG &
CALDWELL GROWTH FUND offers two classes of shares; only Class N
shares for
retail investors are offered by this Prospectus. See "PURCHASE OF
SHARES" and
"GENERAL INFORMATION."
HOW TO REDEEM SHARES
Shares of each Fund may be redeemed at the net asset value per
share of the
Fund next determined after receipt by the Transfer Agent of a
redemption
request in proper form. Signature guarantees may be required. See
"REDEMPTION
OF SHARES."
DIVIDENDS
Each Fund intends to distribute substantially all of its net
investment
income and net realized capital gains, if any, to shareowners.
Distributions of
net capital gains, if any, will be made annually. All
distributions are
reinvested at net asset value, in additional full and fractional
shares of the
respective Fund unless and until the shareowner notifies the
Transfer Agent in
writing requesting payments in cash.
MONTAG & CALDWELL GROWTH FUND, CHICAGO TRUST GROWTH & INCOME
FUND, CHICAGO
TRUST TALON FUND, CHICAGO TRUST BALANCED FUND, and MONTAG &
CALDWELL BALANCED
FUND declare and pay dividends, if any, quarterly. CHICAGO TRUST
BOND FUND and
CHICAGO TRUST MUNICIPAL BOND FUND declare and pay dividends
monthly. CHICAGO
TRUST MONEY MARKET FUND'S net investment income is declared daily
and paid
monthly. See "DIVIDENDS AND TAXES."
5
<PAGE>
MANAGEMENT OF THE FUNDS
Chicago Trust Company ("Chicago Trust"), 171 North Clark Street,
Chicago,
Illinois 60601, an Illinois corporation, provides investment
advisory services
to CHICAGO TRUST GROWTH & INCOME FUND; CHICAGO TRUST BALANCED
FUND; CHICAGO
TRUST BOND FUND; CHICAGO TRUST MUNICIPAL BOND FUND; CHICAGO TRUST
MONEY MARKET
FUND; and CHICAGO TRUST TALON FUND, with Talon Asset Management,
Inc. serving
as Sub-Advisor.
Talon Asset Management, Inc. ("Talon"), One North Franklin,
Chicago, Illinois
60606, a registered investment advisor, is the Sub-Investment
Advisor for
CHICAGO TRUST TALON FUND.
Montag & Caldwell, Inc. ("Montag & Caldwell"), 1100 Atlanta
Financial Center,
3343 Peachtree Road NE, Atlanta, Georgia 30326-1450, a registered
investment
advisor, is the Investment Advisor for MONTAG & CALDWELL GROWTH
FUND and MONTAG
& CALDWELL BALANCED FUND.
As of December 31, 1996, Chicago Trust managed approximately
$6.0 billion in
assets primarily for pension and profit sharing accounts,
individuals,
families, and insurance companies. As of that date, Talon managed
over $356
million in assets primarily for high net worth individuals,
trusts, charitable
foundations, employee benefit plans and family partnerships. As of
December 31,
1996, Montag & Caldwell managed over $8.5 billion in assets
primarily for
employee benefit, endowment, charitable and other institutional
clients, mutual
funds, and high net worth individuals. Chicago Trust may be deemed
to be a
"control person" (as defined in the 1940 Act) of certain Funds,
because as of
January 30, 1997, it owned of record, but not beneficially: 34.60%
of MONTAG &
CALDWELL GROWTH FUND Class N; 93.62% of CHICAGO TRUST GROWTH &
INCOME FUND;
56.60% of MONTAG & CALDWELL BALANCED FUND; 82.47% of CHICAGO TRUST
BOND FUND;
92.53% of CHICAGO TRUST MUNICIPAL BOND FUND; 96.63% of CHICAGO
TRUST MONEY
MARKET FUND; and 98.67% of CHICAGO TRUST BALANCED FUND.
First Data Distributors, Inc., 4400 Computer Drive, Westborough,
Massachusetts 01581, serves as the Funds' Distributor. Bankers
Trust Company,
16 Wall Street, New York, New York 10005, serves as the Custodian
of the Funds'
assets. The Chicago Trust Company serves as the Funds'
Administrator. First
Data Investor Services Group, Inc., 53 State Street, Boston,
Massachusetts
02109, serves as the Funds' Sub-Administrator. First Data Investor
Services
Group, Inc., 4400 Computer Drive, Westborough, Massachusetts
01581, serves as
the Funds' Transfer Agent.
EXPENSE INFORMATION
<TABLE>
<S>
<C>
Shareowner Transaction Expenses for Each Fund:
Maximum Sales Load Imposed on Purchases
................................... None
Maximum Sales Load Imposed on Reinvested Dividends
........................ None
Maximum Deferred Sales Load
............................................... None
Redemption Fees
........................................................... None
Exchange Fees
............................................................. None
</TABLE>
If you want to redeem shares by wire transfer, the Funds'
Transfer Agent
charges a fee, currently $20.00 for each wire redemption.
Institutions may
independently charge fees for shareowner transactions or for
advisory services;
please see their materials for details.
6
<PAGE>
ANNUAL FUND OPERATING EXPENSES AS A PERCENTAGE OF AVERAGE NET
ASSETS:
<TABLE>
<CAPTION>
INVESTMENT OTHER
NET EXPENSE RATIO
ADVISORY FEES EXPENSES
AFTER ADVISORS'
AFTER VOLUNTARY 12B-1 AFTER VOLUNTARY
VOLUNTARY FEE WAIVERS
FUND (1) FEE WAIVERS FEES REIMBURSEMENTS
AND REIMBURSEMENT (1)
-------- --------------- ----- --------------- -
- --------------------
<S> <C> <C> <C>
<C>
MONTAG & CALDWELL GROWTH
FUND (2)(3) 0.80% 0.25% 0.23%
1.28%
CHICAGO TRUST GROWTH &
INCOME FUND (4) 0.65% 0.25% 0.20%
1.10%
CHICAGO TRUST TALON FUND 0.12% 0.25% 0.93%
1.30%
CHICAGO TRUST BALANCED
FUND (4) 0.63% 0.25% 0.22%
1.10%
MONTAG & CALDWELL BAL-
ANCED FUND 0.42% 0.25% 0.58%
1.25%
CHICAGO TRUST BOND FUND 0.25% 0.25% 0.30%
0.80%
CHICAGO TRUST MUNICIPAL
BOND FUND 0.00% 0.25% 0.65%
0.90%
CHICAGO TRUST MONEY MAR-
KET FUND 0.31% n/a 0.19%
0.50%
</TABLE>
- --------
(1) The above table reflects a continuation of the Advisors'
voluntary
undertakings to waive investment advisory fees and/or reimburse
each Fund,
except for MONTAG & COLDWELL GROWTH FUND, for expenses exceeding
the limits
shown. Absent such fee waivers and reimbursement of expenses, the
investment
advisory fees, other expenses, and total operating expenses,
respectively, for
those Funds with fee waivers and/or expense reimbursements
currently in effect,
would be as follows: CHICAGO TRUST GROWTH & INCOME FUND 0.70%,
0.20%, and
1.15%; CHICAGO TRUST TALON FUND 0.80%, 0.93%, and 1.98%; CHICAGO
TRUST BALANCED
FUND 0.70%, 0.22%, and 1.17%; MONTAG & CALDWELL BALANCED FUND
0.75%, 0.58%, and
1.58%; CHICAGO TRUST BOND FUND 0.55%, 0.30%, and 1.10%; CHICAGO
TRUST MUNICIPAL
BOND FUND 0.60%, 0.68%, and 1.53%; and CHICAGO TRUST MONEY MARKET
FUND 0.40%,
0.19%, and 0.59%. Except for changes in the expense structure for
MONTAG &
CALDWELL GROWTH FUND, CHICAGO TRUST GROWTH & INCOME FUND and
CHICAGO TRUST
BALANCED FUND which are discussed in footnotes (3) and (4) below,
the ratios
shown above reflect the expenses incurred by each existing Fund
during the
fiscal year ended October 31, 1996. Please refer to the data
contained in
"FINANCIAL HIGHLIGHTS" for additional information.
(2)MONTAG & CALDWELL GROWTH FUND offers two classes of shares that
invest in
the same portfolio of securities. Shareowners of Class N are
subject to a 12b-1
Distribution Plan; therefore, expenses and performance figures
will vary
between the classes. The information set forth in the table above
and the
example below relates only to the Class N shares. See "GENERAL
INFORMATION".
(3)The table shows the fees for MONTAG & CALDWELL GROWTH FUND
Class N shares
restated for the fiscal year ended October 31, 1996. The Advisor
waived a
portion of its advisory fee equivalent to .04% during the year
from November 1,
1995 to February 29, 1996 so that the net expense ratio for the
year was 1.28%.
(4)As of February 28, 1997, the net expense ratio for both CHICAGO
TRUST GROWTH
& INCOME FUND and CHICAGO TRUST BALANCED FUND increased from 1.00%
to 1.10% as
a result of the Advisor's decision to reduce the amount of
advisory fees waived
by .10% for each of the these Funds.
Long-term shareowners may pay more than the economic equivalent
of the
maximum front-end sales charges permitted by the National
Association of
Securities Dealers, Inc.
7
<PAGE>
EXAMPLE:
Based on the level of expenses listed above after reimbursement,
the total
expenses relating to an investment of $1,000 would be as follows
assuming a 5%
annual return and redemption at the end of each time period.
<TABLE>
<CAPTION>
NAME OF FUND 1 YEAR 3 YEARS 5 YEARS 10
YEARS
- ------------ ------ ------- ------- -------
- -
<S> <C> <C> <C> <C>
MONTAG & CALDWELL GROWTH FUND $13 $41 $70 $155
CHICAGO TRUST GROWTH & INCOME FUND $11 $35 $61 $134
CHICAGO TRUST TALON FUND $13 $41 $71 $157
CHICAGO TRUST BALANCED FUND $11 $35 $61 $134
MONTAG & CALDWELL BALANCED FUND $13 $40 $69 $151
CHICAGO TRUST BOND FUND $ 8 $26 $44 $ 99
CHICAGO TRUST MUNICIPAL BOND FUND $ 9 $29 $50 $111
CHICAGO TRUST MONEY MARKET FUND $ 5 $16 $28 $ 63
</TABLE>
The foregoing tables are designed to assist the investor in
understanding the
various costs and expenses that a shareowner will bear directly or
indirectly.
While the example assumes a 5% annual return, the Funds' actual
performance
will vary and may result in actual returns greater or less than
5%. THE EXAMPLE
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES AND ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
8
<PAGE>
FINANCIAL HIGHLIGHTS
MONTAG & CALDWELL GROWTH FUND
CHICAGO TRUST GROWTH & INCOME FUND
CHICAGO TRUST TALON FUND
CHICAGO TRUST BALANCED FUND
MONTAG & CALDWELL BALANCED FUND
CHICAGO TRUST BOND FUND
CHICAGO TRUST MUNICIPAL BOND FUND
CHICAGO TRUST MONEY MARKET FUND
The following Financial Highlights are part of the financial
statements for
the Funds listed above. The audited periods presented are from
each of these
Fund's respective commencement of operations to October 31, 1996,
the end of
the Company's most recent fiscal year.
These Financial Highlights have been audited by KPMG Peat
Marwick LLP,
independent certified public accountants, for each of the periods
indicated in
their report thereon appearing in the Company's related Statement
of Additional
Information.
The following tables set forth financial data for a share of
beneficial
interest outstanding throughout each period presented. These
should therefore
be read in conjunction with the financial statements and related
notes also
included as Appendix "A" in the Statement of Additional
Information.
9
<PAGE>
<TABLE>
<CAPTION>
MONTAG & CALDWELL CHICAGO
TRUST
GROWTH FUND GROWTH &
INCOME FUND
------------------- ---------------
- --------------------
YEAR PERIOD YEAR
YEAR PERIOD
ENDED ENDED ENDED
ENDED ENDED
10/31/96 10/31/95* 10/31/96
10/31/95 10/31/94**
-------- --------- -------- -----
- --- ----------
<S> <C> <C> <C> <C>
<C>
NET ASSET VALUE, BEGIN-
NING OF PERIOD......... $ 13.16 $ 10.00 $ 12.90 $
10.11 $ 10.00
-------- -------- -------- -----
- --- --------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.. 0.00 0.02 0.11
0.09 0.07
Net realized and
unrealized gain on
investments........... 3.93 3.16 3.34
2.79 0.10
-------- -------- -------- -----
- --- --------
Total from investment
operations.......... 3.93 3.18 3.45
2.88 0.17
-------- -------- -------- -----
- --- --------
LESS DISTRIBUTIONS:
From and in excess of
net investment in-
come.................. (0.01) (0.02) (0.11)
(0.09) (0.06)
From net realized gain
on investments........ 0.00 0.00 (0.07)
0.00 0.00
-------- -------- -------- -----
- --- --------
Total distributions.. (0.01) (0.02) (0.18)
(0.09) (0.06)
-------- -------- -------- -----
- --- --------
NET ASSET VALUE, END OF
PERIOD................. $ 17.08 $ 13.16 $ 16.17 $
12.90 $ 10.11
======== ======== ========
======== ========
TOTAL RETURN............ 29.91% 31.87%(/2/) 26.98%
28.66% 1.73%(/2/)
RATIOS/SUPPLEMENTAL DA-
TA:
Net assets, end of pe-
riod (in 000's)....... $166,243 $ 40,355 $205,133
$172,296 $ 12,282
Ratio of expenses to
average net assets
before reimbursement
of expenses by
Advisor............... 1.32% 1.87%(/1/) 1.15%
1.50% 2.21%(/1/)
Ratio of expenses to
average net assets
after reimbursement
of expenses by
Advisor............... 1.28% 1.30%(/1/) 1.00%
1.09%(/3/) 1.20%(/1/)
Ratio of net
investment income to
average net assets
before reimbursement
of expenses by
Advisor............... -0.10% -0.36%(/1/) 0.62%
0.33% -0.15%(/1/)
Ratio of net
investment income to
average net assets
after reimbursement
of expenses by
Advisor............... -0.06% 0.20%(/1/) 0.77%
0.74% 0.86%(/1/)
Portfolio turnover..... 26.36% 34.46%(/2/) 25.48%
9.00% 37.01%(/2/)
Average commission
rate paid............. $ 0.0639 n/r $ 0.0571
n/r n/r
</TABLE>
- --------
* MONTAG & CALDWELL GROWTH FUND Class N commenced investment
operations on
November 2, 1994.
** CHICAGO TRUST GROWTH & INCOME FUND commenced investment
operations on
December 13, 1993.
(/1/)Annualized.
(/2/)Not annualized.
(/3/)The Advisor's expense reimbursement level, which reduces the
net expense
ratio, changed from 1.20% to 1.00% on September 21, 1995.
n/r Not Required
10
<PAGE>
<TABLE>
<CAPTION>
CHICAGO TRUST
CHICAGO TRUST
TALON FUND
BALANCED FUND
----------------------------- ------
- --------------
YEAR YEAR PERIOD YEAR
PERIOD
ENDED ENDED ENDED ENDED
ENDED
10/31/96 10/31/95 10/31/94*
10/31/96 10/31/95**
-------- -------- --------- ------
- -- ----------
<S> <C> <C> <C> <C>
<C>
NET ASSET VALUE, BEGIN-
NING OF PERIOD......... $ 12.07 $ 10.25 $ 10.00 $
8.43 $ 8.34
-------- -------- ------- ------
- -- --------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.. 0.04 0.09 0.02
0.27 0.03
Net realized and
unrealized gain on
investments........... 3.01 1.84 0.23
1.16 0.06
-------- -------- ------- ------
- -- --------
Total from investment
operations.......... 3.05 1.93 0.25
1.43 0.09
LESS DISTRIBUTIONS:
From net investment
income................ (0.03) (0.11) 0.00
(0.26) 0.00
From net realized gain
on investments........ (0.70) 0.00 0.00
0.00 0.00
-------- -------- ------- ------
- -- --------
Total distributions.. (0.73) (0.11) 0.00
(0.26) 0.00
-------- -------- ------- ------
- -- --------
NET ASSET VALUE, END OF
PERIOD................. $ 14.39 $ 12.07 $ 10.25 $
9.60 $ 8.43
======== ======== =======
======== ========
TOTAL RETURN............ 26.51% 18.92% 2.50%(/2/)
17.21% 1.08%(/2/)
Ratios/Supplemental Da-
ta:
Net assets, end of
period (in 000's)..... $ 17,418 $ 10,538 $ 4,355
$156,703 $152,820
Ratio of expenses to
average net assets
before reimbursement
of expenses by
Advisor............... 1.98% 3.04% 7.82%(/1/)
1.17% 1.19%(/1/)
Ratio of expenses to
average net assets
after reimbursement
of expenses by
Advisor............... 1.30% 1.30% 1.30%(/1/)
1.00% 1.00%(/1/)
Ratio of net
investment income to
average net assets
before reimbursement
of expenses by
Advisor............... -0.38% -0.97% -4.13%(/1/)
2.79% 2.56%(/1/)
Ratio of net
investment income to
average net assets
after reimbursement
of expenses by
Advisor............... 0.30% 0.77% 2.39%(/1/)
2.96% 2.73%(/1/)
Portfolio turnover..... 126.83% 229.43% 33.66%(/2/)
34.29% 0.72%(/2/)
Average commission
rate paid............. $ 0.0612 n/r n/r $
0.0596 n/r
</TABLE>
- --------
*CHICAGO TRUST TALON FUND commenced investment operations on
September 19,
1994.
**CHICAGO TRUST BALANCED FUND commenced investment operations on
September
21, 1995.
(/1/)Annualized.
(/2/)Not annualized.
n/r Not Required
11
<PAGE>
<TABLE>
<CAPTION>
MONTAG & CALDWELL CHICAGO
TRUST
BALANCED FUND BOND
FUND
------------------- ----------------
- --------------
YEAR PERIOD YEAR YEAR
PERIOD
ENDED ENDED ENDED ENDED
ENDED
10/31/96 10/31/95* 10/31/96
10/31/95 10/31/94**
-------- --------- -------- ------
- -- ----------
<S> <C> <C> <C> <C>
<C>
NET ASSET VALUE, BEGIN-
NING OF PERIOD......... $ 12.12 $ 10.00 $ 9.94 $
9.21 $ 10.00
------- ------- ------- ------
- - -------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.. 0.27 0.26 0.60
0.60 0.50
Net realized and
unrealized gain
(loss) on invest-
ments................. 2.17 2.09 (0.05)
0.73 (0.82)
------- ------- ------- ------
- - -------
Total from investment
operations.......... 2.44 2.35 0.55
1.33 (0.32)
------- ------- ------- ------
- - -------
LESS DISTRIBUTIONS:
From net investment
income................ (0.27) (0.23) (0.60)
(0.60) (0.47)
------- ------- ------- ------
- - -------
Total distributions.. (0.27) (0.23) (0.60)
(0.60) (0.47)
------- ------- ------- ------
- - -------
NET ASSET VALUE, END OF
PERIOD................. $ 14.29 $ 12.12 $ 9.89 $
9.94 $ 9.21
======= ======= =======
======= =======
TOTAL RETURN............ 20.37% 23.75%(/2/) 5.76%
14.89% -3.23%(/2/)
RATIOS/SUPPLEMENTAL DA-
TA:
Net assets, end of
period (in 000's)..... $31,473 $21,908 $79,211
$70,490 $12,546
Ratio of expenses to
average net assets
before reimbursement
of expenses by
Advisor............... 1.58% 2.50%(/1/) 1.10%
1.54% 2.02%(/1/)
Ratio of expenses to
average net assets
after reimbursement
of expenses by
Advisor............... 1.25% 1.25%(/1/) 0.80%
0.80% 0.80%(/1/)
Ratio of net
investment income to
average net assets
before reimbursement
of expenses by
Advisor............... 1.83% 1.38%(/1/) 5.89%
5.78% 4.83%(/1/)
Ratio of net
investment income to
average net assets
after reimbursement
of expenses by
Advisor............... 2.16% 2.63%(/1/) 6.19%
6.52% 6.05%(/1/)
Portfolio turnover..... 43.58% 27.33%(/2/) 41.75%
68.24% 20.73%(/2/)
Average commission
rate paid............. $0.0644 n/r n/r
n/r n/r
</TABLE>
- --------
*MONTAG & CALDWELL BALANCED FUND commenced investment
operations on November
2, 1994.
** CHICAGO TRUST BOND FUND commenced investment operations on
December 13,
1993.
(/1/)Annualized.
(/2/)Not annualized.
n/r Not Required
12
<PAGE>
<TABLE>
<CAPTION>
CHICAGO
TRUST
MUNICIPAL BOND
FUND
-------------------
- ----------
YEAR YEAR
PERIOD
ENDED ENDED
ENDED
10/31/96 10/31/95
10/31/94*
-------- --------
- ---------
<S> <C> <C>
<C>
NET ASSET VALUE, BEGINNING OF PERIOD.......... $ 10.08 $ 9.56
$ 10.00
------- -------
- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income........................ 0.38 0.35
0.27
Net realized and unrealized gain (loss) on
investments................................. (0.02) 0.52
(0.46)
------- -------
- -------
Total from investment operations........... 0.36 0.87
(0.19)
------- -------
- -------
LESS DISTRIBUTIONS:
From net investment income................... (0.38) (0.35)
(0.25)
------- -------
- -------
Total distributions........................ (0.38) (0.35)
(0.25)
------- -------
- -------
NET ASSET VALUE, END OF PERIOD................ $ 10.06 $ 10.08
$ 9.56
======= =======
=======
TOTAL RETURN.................................. 3.59% 9.29%
- -1.92%(/2/)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)......... $11,186 $11,679
$10,462
Ratio of expenses to average net assets be-
fore reimbursement of expenses by Advisor... 1.53% 2.16%
2.09%(/1/)
Ratio of expenses to average net assets af-
ter reimbursement of expenses by Advisor.... 0.90% 0.90%
0.90%(/1/)
Ratio of net investment income to average
net assets before reimbursement of expenses
by Advisor.................................. 3.11% 2.37%
1.90%(/1/)
Ratio of net investment income to average
net assets after reimbursement of expenses
by Advisor.................................. 3.74% 3.63%
3.09%(/1/)
Portfolio turnover........................... 27.47% 42.81%
14.85%(/2/)
</TABLE>
- --------
*CHICAGO TRUST MUNICIPAL BOND FUND commenced investment
operations on
December 13, 1993.
(/1/)Annualized.
(/2/)Not annualized.
13
<PAGE>
<TABLE>
<CAPTION>
CHICAGO TRUST
MONEY MARKET FUND
----------------------------------
YEAR YEAR PERIOD
ENDED ENDED ENDED
10/31/96 10/31/95 10/31/94*
-------- -------- ---------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD................. $ 1.00 $ 1.00 $ 1.00
-------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income..... 0.05 0.05 0.03
-------- -------- --------
Total from investment
operations............. 0.05 0.05 0.03
-------- -------- --------
LESS DISTRIBUTIONS:
From net investment in-
come..................... (0.05) (0.05) (0.03)
-------- -------- --------
Total distributions..... (0.05) (0.05) (0.03)
-------- -------- --------
NET ASSET VALUE, END OF PE-
RIOD...................... $ 1.00 $ 1.00 $ 1.00
======== ======== ========
TOTAL RETURN............... 5.14% 5.56%
3.20%(/2/)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in 000's)............... $226,536 $206,075 $122,929
Ratio of expenses to av-
erage net assets before
reimbursement of ex-
penses by Advisor........ 0.59% 0.63%
0.64%(/1/)
Ratio of expenses to av-
erage net assets after
reimbursement of ex-
penses by Advisor........ 0.50% 0.43%(/3/)
0.40%(/1/)
Ratio of net investment
income to average net
assets before
reimbursement of
expenses by Advisor...... 4.93% 5.24%
3.49%(/1/)
Ratio of net investment
income to average net
assets after reimburse-
ment of expenses by Ad-
visor.................... 5.02% 5.44%
3.73%(/1/)
</TABLE>
- --------
*CHICAGO TRUST MONEY MARKET FUND commenced investment operations
on December
14, 1993.
(/1/)Annualized.
(/2/)Not annualized.
(/3/)The Advisor's expense reimbursement level, which reduces the
net expense
ratio, changed from 0.40% to 0.50% on July 12, 1995.
14
<PAGE>
PERFORMANCE MEASURES
From time to time, the Funds may advertise performance measures
as set forth
under "PERFORMANCE OF THE FUNDS."
Performance measures are based on historical earnings and are
not intended to
indicate future performance. Management's detailed discussion of
the Company's
performance data may be found in the most recent Annual Report to
Shareowners,
dated October 31, 1996, which is available upon request and
without charge, by
calling (800) 992-8151.
PORTFOLIO TURNOVER
The portfolio turnover rate for each of the Funds is calculated
by dividing
the lesser of purchases or sales of portfolio investments for the
reporting
period by the monthly average value of the portfolio investments
owned during
the reporting period. The calculation excludes all securities,
including
options, whose maturities or expiration dates at the time of
acquisition are
one year or less. Portfolio turnover may vary greatly from year to
year as well
as within a particular year, and may be affected by cash
requirements for
redemption of units and by requirements which enable the Funds to
receive
favorable tax treatment. In any event, portfolio turnover is
generally not
expected to exceed 100% in the Funds, except for Chicago Trust
Talon Fund in
which it is not expected to exceed 150%. A high rate of portfolio
turnover
(i.e., over 100%) may result in the realization of substantial
capital gains
and involves correspondingly greater transaction costs.
INVESTMENT OBJECTIVES AND POLICIES
The investment objective of each Fund is fundamental and may not
be changed
without a vote of the holders of the majority of the voting
securities of the
Fund. Unless otherwise stated in this Prospectus or the Statement
of Additional
Information, each Fund's investment policies are not fundamental
and may be
changed without shareowner approval. While a non-fundamental
policy or
restriction may be changed by the Trustees of the Company without
shareowner
approval, the Funds intend to notify shareowners before making any
change in
any such policy or restriction. Fundamental policies may not be
changed without
shareowner approval.
The Funds strive to attain their investment objectives, but
there can, of
course, be no assurance that they will do so. Please refer to the
policies and
risk disclosures more fully described under "INVESTMENT STRATEGIES
AND RISK
CONSIDERATIONS." Additional investment policies and restrictions
are described
in the Statement of Additional Information.
MONTAG & CALDWELL GROWTH FUND:
MONTAG & CALDWELL GROWTH FUND seeks long-term capital
appreciation consistent
with investments primarily in a combination of convertible and
non-convertible
equity securities, convertible and non-convertible debt
securities, and short-
term instruments. Capital appreciation is emphasized, and
generation of income
is secondary. Montag & Caldwell selects equity securities that it
believes are
undervalued based upon the issuer's estimated earning power and
ability to
produce strong earnings growth over the next twelve to eighteen
months. Issuers
include, but are not limited to, established companies with a
history of growth
and companies that are expected to enter periods of earnings
growth. Montag &
Caldwell may purchase securities of companies which do not pay
dividends, but
which are believed to have superior growth potential. The Fund may
invest in
securities listed on a stock exchange as well as those traded
over-the-counter.
While it is this Fund's policy to remain substantially invested
in common
stock or securities convertible into common stock, it may invest
in non-
convertible preferred stock and non-convertible debt securities.
When Montag &
Caldwell has determined that adverse market and economic
conditions warrant,
the Fund may invest all or part of its assets in high-quality
money market
securities and repurchase agreements for temporary defensive
purposes. The Fund
may invest up to 30% of its total assets in foreign securities in
the form of
American Depositary Receipts ("ADRs") and European Depositary
Receipts
("EDRs"), although it has no current intention of investing in
unsponsored ADRs
or EDRs. The Fund may also engage in futures and options
15
<PAGE>
transactions for hedging purposes. Such investments are generally
considered to
be derivative securities. These and other applicable investment
activities with
respect to this Fund are more fully described in the next section
of this
Prospectus.
Debt securities consist of obligations of the U.S. Government,
its agencies
or instrumentalities, obligations of U.S. companies and of U.S.
banks such as
bonds, debentures, mortgage- and other asset-backed securities,
zero coupon
bonds, and convertible debentures. The Fund will invest only in
investment-
grade debt securities which include those securities that are
rated "Baa3" or
better by Moody's Investors Service, Inc. ("Moody's") or "BBB- "
or better by
Standard & Poor's Corporation ("S&P"), or if not rated, of
comparable quality
in the opinion of Montag & Caldwell. The dollar weighted average
quality of the
debt securities rated by Moody's will be "A3" or better, the
dollar weighted
average quality of the investment-grade debt securities rated by
S&P will be
"A" or better, and the dollar weighted average quality of unrated
debt
securities will be comparable, as determined by Montag & Caldwell.
The Appendix
contains an explanation of Moody's and S&P ratings. In the event a
rated
security held by the Fund is downgraded below an investment-grade
rating by
Moody's or S&P, the Investment Advisor shall promptly reassess the
risks
involved and take such actions as it determines will be in the
best interests
of the Fund and its shareowners.
CHICAGO TRUST GROWTH & INCOME FUND:
CHICAGO TRUST GROWTH & INCOME FUND seeks long-term total return
through a
combination of capital appreciation and current income. Under
normal
circumstances, the Fund will invest at least 65% of its total
assets in
securities which are designed to achieve growth and/or income. The
Fund invests
primarily in common stocks, preferred stocks and securities
convertible into
common stocks. The Fund may also invest a portion of its assets in
debt
securities that are not convertible into common stocks, which may
include
obligations of the U.S. Government, its agencies or
instrumentalities,
obligations of U.S. corporations, and obligations of U.S. banks.
The portion of
the Fund's total assets invested in equity type securities or debt
securities
will vary according to the Investment Advisor's assessment of
longer-term
conditions in the economy and the risk/return potential of equity,
debt, and
money market securities. This Fund's investment strategy will
emphasize
companies that, in the opinion of the portfolio management team,
offer
prospects for capital growth and growth of earnings and dividends.
The Fund
expects to invest primarily in securities currently paying
dividends although
it may buy securities that are not paying dividends but offer
prospects for
growth of capital or future income. If, in the Investment
Advisor's judgment,
the risk adjusted total return potential for equity securities
exceeds that
available from debt securities or money market securities,
investments in
equity securities could exceed 75% of the Fund's portfolio.
While it is this Fund's policy to remain substantially invested
in common
stocks, preferred stocks, or securities convertible into common
stocks, it may
invest all or part of its total assets in high-quality money
market securities
and repurchase agreements for temporary defensive purposes when
the Investment
Advisor has determined that adverse market and economic conditions
so warrant.
The Fund may invest up to 20% of its total assets in foreign
securities in the
form of ADRs or EDRs, although it has no current intention of
investing in
unsponsored ADRs and EDRs. The Fund may write (sell) covered call
options for
investment purposes and may both purchase and sell options on
stock indices for
hedging purposes. The Fund may also enter into futures contracts
and options on
futures contracts. Such investments are generally considered to be
derivative
securities. These and other applicable investment activities with
respect to
this Fund are more fully described in the next section of this
Prospectus.
This Fund's investment in debt securities will be made primarily
in those
considered to be investment-grade. Investment-grade debt
securities include
those securities which are rated "Baa3" or better by Moody's or
"BBB-" or
better by S&P at the time of purchase, or, if unrated, are
determined to be of
comparable quality by the Investment Advisor. The Fund intends to
limit its
investment in debt securities rated lower than investment-grade to
less than
10% of its assets. The Fund will not invest in securities rated
lower than "B"
by Moody's or S&P. Debt securities rated lower than investment-
grade are
commonly called "junk bonds" and
16
<PAGE>
are considered to have speculative characteristics. For an
explanation of
Moody's and S&P's ratings, please see the Appendix. In the event a
rated
security held by the Fund is downgraded below a "B" rating by
Moody's or S&P,
the Investment Advisor shall promptly reassess the risks involved
and take such
actions as it determines will be in the best interests of the Fund
and its
shareowners. The Fund will not invest in securities that are in
default nor
will the Fund invest in securities which, in the Investment
Advisor's opinion,
involve excessive risk.
CHICAGO TRUST TALON FUND:
CHICAGO TRUST TALON FUND seeks long-term total return through
capital
appreciation. The Fund will invest primarily in stocks of
companies with
varying capitalization levels believed by Talon to have prospects
for capital
appreciation. These could include the equity securities of
companies with total
market capitalizations at the time of investment of less than $500
million and
which are outside the Standard & Poor's 500 Index ("small-cap
companies").
There are certain risks associated with investing in small-cap
companies; first
and foremost is their greater earnings and price volatility in
comparison to
large companies. The Fund may also invest in preferred stock and
debt
securities, including those which may be convertible into common
stock.
While under normal circumstances, the Fund will invest at least
75% of its
total assets in securities designed to achieve capital growth, the
Fund may
invest all or part of its assets in U.S. Government securities,
high-quality
money market securities, and repurchase agreements for temporary
defensive
purposes when Talon has determined that adverse market and
economic conditions
so warrant. The Fund may invest up to 30% of its total assets in
foreign
securities in the form of ADRs or EDRs, although it has no current
intention of
investing in unsponsored ADRs and EDRs. The Fund may write (sell)
covered
options for investment purposes and may purchase and sell options
on stock
indices for hedging purposes. Such investments are generally
considered to be
derivative securities. These and other applicable investment
activities with
respect to this Fund are more fully described in the next section
of this
Prospectus.
This Fund's investment in debt securities will be made primarily
in those
considered to be investment-grade. Investment-grade debt
securities include
those securities which are rated "Baa3" or better by Moody's or
"BBB-" or
better by S&P at the time of purchase, or, if unrated, are
determined to be of
comparable quality by the Investment Advisor. This Fund may invest
up to 20% of
its total assets in debt securities rated lower than "Baa3" by
Moody's or "BBB-
" by S&P. Such securities are commonly called "junk bonds" and are
considered
to have speculative characteristics. The Fund will not invest in
securities
rated lower than "B" by Moody's or "B" by S&P. For an explanation
of Moody's
and S&P's ratings, please see the Appendix. In the event a rated
security held
by the Fund is downgraded below a "B" by Moody's or S&P, the Sub-
Investment
Advisor, under the general supervision of the Investment Advisor,
shall
promptly reassess the risks involved and take such actions as it
determines are
in the best interests of the Fund and its shareowners. The Fund
will not invest
in securities that are in default nor will the Fund invest in
securities which,
in the Investment Advisor's or Sub-Investment Advisor's opinion,
involve
excessive risk.
CHICAGO TRUST BALANCED FUND:
CHICAGO TRUST BALANCED FUND seeks growth of capital with current
income
through asset allocation. The Fund seeks to achieve its objective
by holding a
varying combination of generally two or more of the following
investment
categories: common stocks (both dividend and non-dividend paying);
preferred
stocks; convertible preferred stocks; fixed income securities,
including bonds
and bonds convertible into common stocks; and short-term interest-
bearing
obligations. Allocation among asset classes will not be fixed, and
portfolio
strategies used will vary, according to the Investment Advisor's
assessment of
which asset class offers the greatest potential for maximizing
capital
appreciation from time to time. Although it is not the Fund's
intent to trade
for short-term profits, purchases and sales of securities will be
made whenever
the Investment Advisor deems it would contribute to the
achievement of the
Fund's objective. The Fund will be invested in securities
representing a number
of different industry classifications and does not intend to
concentrate its
investments in a particular industry.
17
<PAGE>
Capital appreciation is pursued through investment in equity
securities
generally. It is anticipated that between 40% and 70% of the
Fund's total
assets will be invested in equity securities, including preferred
stocks, and
between 30% and 60% of its total assets will be invested in fixed
income
securities.
Issuers include, but are not limited to, established companies
with a history
of growth and expected future growth. These could include the
equity securities
of companies with total market capitalizations at the time of
investment of
less than $500 million and which are outside the Standard & Poor's
500 Index
("small-cap companies"). There are certain risks associated with
investing in
small-cap companies; primarily their greater earnings and price
volatility in
comparison to large companies. The Fund may purchase securities of
companies
which do not pay dividends, but which are believed to have
superior growth
potential. The Fund may invest in securities listed on a stock
exchange as well
as those traded over-the-counter.
The Fund generally invests in a combination of fixed income
securities,
including U.S. Government securities, debt securities, and
convertible
securities. Securities may have equity conversion privileges or
other equity
features, including attached warrants or rights. The Fund may
invest in
mortgage-backed securities and asset-backed securities. Asset-
backed securities
include consumer loans such as credit card receivables and
installment loan
contracts, and commercial loans such as equipment receivables. The
purpose of
investing in such fixed income securities is to produce a stable
flow of income
to offset the volatility normally associated with equity
investments. The
dollar weighted average maturity will range between three and ten
years under
normal circumstances.
When, in the opinion of the Fund's Investment Advisor, a
defensive investment
posture is warranted, the Fund is permitted to invest temporarily
and without
limitations in U.S. Government obligations, high-quality money
market
securities, and repurchase agreements. The Fund may invest up to
30% of its
total assets in foreign securities in the form of ADRs or EDRs,
although it has
no current intention of investing in unsponsored ADRs and EDRs.
The Fund may
write (sell) covered call options for investment purposes, may
purchase and
sell options on stock indices and engage in futures and options
transactions
for hedging purposes, may purchase portfolio securities on a when-
issued basis,
may purchase or sell portfolio securities for delayed delivery,
and may invest
in interest rate swaps for hedging purposes, which could subject
the Fund to
increased risks. Such investments are generally considered to be
derivative
securities. The Fund may also lend its portfolio securities. See
"Derivative
Investments" and "General Risk Factors" under "INVESTMENT
STRATEGIES AND RISK
CONSIDERATIONS". These and other applicable investment activities
with respect
to this Fund are more fully described in the next section of this
Prospectus.
This Fund's investment in debt securities will be made primarily
in those
considered to be investment-grade. Investment-grade debt
securities include
those securities which are rated "Baa3" or better by Moody's or
"BBB-" or
better by S&P at the time of purchase, or, if unrated, are
determined to be of
comparable quality by the Investment Advisor. The Fund may invest
up to 20% of
its total assets in debt securities rated lower than "Baa3" by
Moody's or "BBB-
" by S&P. Such securities are commonly called "junk bonds" and are
considered
to have speculative characteristics. See "High-Yield/High-Risk
Securities" and
"General Risk Factors" under "INVESTMENT STRATEGIES AND RISK
CONSIDERATIONS".
The Fund will not invest in securities rated lower than "B" by
Moody's or S&P.
For an explanation of Moody's and S&P's ratings, please see the
Appendix. In
the event a rated security held by the Fund is downgraded below a
"B" by
Moody's or "B" by S&P, the Investment Advisor shall promptly
reassess the risks
involved and take such actions as it determines are in the best
interests of
the Fund and its shareowners. The Fund will not invest in
securities that are
in default nor will the Fund invest in securities which, in the
Investment
Advisor's opinion, involve excessive risk.
MONTAG & CALDWELL BALANCED FUND:
MONTAG & CALDWELL BALANCED FUND seeks long-term total return
through
investment primarily in a combination of equity and debt
securities, and short-
term instruments. The allocation between asset classes may vary
over time in
accordance with the expected rates of return of each asset class;
however,
primary emphasis
18
<PAGE>
will be placed upon selection of particular investments as opposed
to
allocation of assets. The Fund will have a strategic target
allocation of
equity positions between 50% and 70% of total assets, but for
temporary
defensive purposes the Fund may reduce the actual equity
commitment to 25% of
total assets or less. From time to time, Montag & Caldwell will
determine the
expected total return to the Fund on its equity securities over a
period of
twelve to eighteen months as compared with the Fund's expected
return during
that period from fixed income investments and money market
securities. If the
expected total return from equities appears to be more attractive,
the
percentage invested in equity securities will be increased. If the
expected
total return from fixed income securities appears to be more
attractive, the
equity portion will be reduced.
In seeking capital appreciation, the Fund may invest in common
stocks and
securities convertible into common stocks of established companies
by selecting
securities that are believed to be undervalued based upon their
estimated
earning power and ability to produce strong earnings growth over
the next
twelve to eighteen months. Income produced from the equity portion
of the Fund
will be of secondary importance. The equity portion of this Fund
will consist
of the same type of securities that will normally form the
portfolio of the
MONTAG & CALDWELL GROWTH FUND.
In seeking income, at least 25% of the Fund's total assets will
be invested
at all times in fixed income senior securities. The fixed income
portion of the
portfolio will be comprised of U.S. Government issuers,
investment-grade debt
securities, and preferred stock. The Fund may invest in mortgage-
backed
securities, asset-backed securities which include consumer loans
such as credit
card receivables and installment loan contracts, and commercial
loans such as
equipment receivables. The purpose of the fixed income securities
will be to
produce a stable flow of income to offset the volatility normally
associated
with equity investment. The dollar weighted average maturity will
range between
three and ten years under normal circumstances.
When, in the opinion of Montag & Caldwell, a defensive
investment posture is
warranted, this Fund is permitted to invest temporarily and
without limitations
in U.S. Government obligations, high-quality money market
securities, and
repurchase agreements with respect to U.S. Government securities.
The Fund may
also invest up to 30% of its total assets in foreign securities in
the form of
ADRs or EDRs, although it has no current intention of investing in
unsponsored
ADRs and EDRs. In addition, the Fund is permitted to purchase
portfolio
securities on a when-issued basis, to purchase or sell portfolio
securities for
delayed delivery, to lend its portfolio securities, and to engage
in futures
and options transactions for hedging purposes. Such investments
are generally
considered to be derivative securities. These and other applicable
investment
activities with respect to this Fund are more fully described in
the next
section of this Prospectus.
Debt securities consist of obligations of the U.S. Government,
its agencies
or instrumentalities, obligations of U.S. companies and of U.S.
banks such as
bonds, debentures, mortgage- and other asset-backed securities,
zero coupon
bonds, and convertible debentures. Investment-grade debt
securities include
those securities which are rated "Baa3" or better by Moody's or
"BBB-" or
better by S&P. The dollar weighted average quality of the debt
securities rated
by Moody's will be "A3" or better and the dollar weighted average
quality of
the investment-grade debt securities rated by S&P will be "A" or
better. The
dollar weighted average quality of unrated debt securities will be
comparable,
as determined by Montag & Caldwell. The Appendix contains an
explanation of
Moody's and S&P ratings. In the event a rated security held by the
Fund is
downgraded below an investment-grade rating by Moody's or S&P, the
Investment
Advisor will promptly reassess the risks involved and take such
actions as it
determines will be in the best interests of the Fund and its
shareowners.
CHICAGO TRUST BOND FUND:
CHICAGO TRUST BOND FUND seeks high current income consistent
with what the
Investment Advisor believes to be prudent risk of capital. The
Fund will
primarily invest in a broad range of intermediate-term bonds and
other fixed
income securities. The Fund's dollar weighted average maturity
will range
between three and ten years under normal market conditions.
19
<PAGE>
This Fund will invest primarily in fixed income securities that
are, at the
time of purchase, of investment- grade. Investment-grade debt
securities
include those securities which are rated "Baa3" or better by
Moody's or "BBB-"
or better by S&P. These fixed income securities may include
obligations of the
U.S. Government, its agencies or instrumentalities, obligations of
U.S.
corporations, and obligations of U.S. banks. Under normal market
conditions, at
least 65% of the Fund's total assets will be invested in fixed
income
securities including intermediate investment-grade bonds,
debentures, mortgage
and other asset-related securities, zero coupon bonds, and
convertible
debentures. Other asset-backed securities include consumer loans
such as credit
card receivables and installment loan contracts, and commercial
loans such as
equipment receivables. The Fund may also invest in longer-term
bonds as well as
short-term notes, bills, commercial paper, and certificates of
deposit. The
Fund's portfolio may include, but is not limited to: asset-backed
securities;
bank obligations; collateralized bonds; loan and mortgage
obligations;
commercial paper; corporate debt securities; foreign securities;
private
placements; repurchase agreements; savings and loan obligations;
and U.S.
Government and agency obligations.
When, in the opinion of the Investment Advisor, a defensive
investment
posture is warranted, this Fund is permitted to invest temporarily
and without
limitation in U.S. Government obligations, high-quality money
market
securities, and repurchase agreements with respect to U.S.
Government
securities. The Fund is permitted to purchase portfolio securities
on a when-
issued basis, to purchase or sell portfolio securities for delayed
delivery, to
engage in options transactions, futures contracts and related
options for
hedging purposes, and to invest in interest rate swaps, which
could subject the
Fund to increased risks. Such investments are generally considered
to be
derivative securities. The Fund may also lend its portfolio
securities. These
and other applicable investment activities with respect to this
Fund are more
fully described in the next section of this Prospectus.
This Fund may invest up to 20% of its total assets in fixed
income securities
which are rated lower than "Baa3" by Moody's or "BBB-" by S&P or,
if unrated,
will be determined to be of comparable quality by the Investment
Advisor. These
instruments are commonly called "junk bonds" and are considered to
have
speculative characteristics. The Fund will not invest in
securities rated lower
than "B" by Moody's or S&P. In the event a rated security held by
the Fund is
downgraded below "B" by Moody's or S&P, the Investment Advisor
shall promptly
reassess the risks involved and take such actions as it determines
will be in
the best interests of the Fund and its shareowners. See the
Appendix for a
description of Corporate Debt Ratings. The Fund will not invest in
securities
that are in default nor will the Fund invest in securities which,
in the
Investment Advisor's opinion, involve excessive risk.
CHICAGO TRUST MUNICIPAL BOND FUND:
CHICAGO TRUST MUNICIPAL BOND FUND seeks a high level of current
interest
income exempt from Federal income taxes consistent with the
conservation of
capital. The Fund will seek to achieve its objective by investing
substantially
all of its assets in a diversified portfolio of primarily
intermediate-term
municipal debt obligations issued by or on behalf of states,
territories and
possessions of the United States and the District of Columbia and
their
political subdivisions, agencies and instrumentalities, or multi-
state agencies
or authorities, the interest from which is exempt from Federal
income taxes. It
is a fundamental policy of the Fund that, under normal market
conditions, at
least 80% of its total assets will be invested in municipal
securities. The
Fund is expected to maintain a dollar weighted average maturity of
between
three and ten years under normal market conditions.
This Fund may seek to reduce fluctuations in its net asset value
by engaging
in portfolio strategies involving options on securities, futures
contracts and
options on futures contracts, as more fully described in the next
section of
this Prospectus. Any gain derived by the Fund from the use of such
instruments
will be treated as a combination of short-term and long-term
capital gain and,
if not offset by realized capital losses incurred by the Fund,
will be
distributed to shareowners and will be taxable to shareowners as a
combination
of ordinary income and long-term capital gain. The Fund may also
purchase
floating and variable-rate municipal obligations, purchase
municipal securities
on a "when-issued" or "forward delivery" basis, enter into stand-
by
20
<PAGE>
commitments and engage in short-term trading. Such investments are
generally
considered to be derivative securities. The Fund will invest at
least 65% of
its total assets in bonds which consist of obligations with a
maturity of
greater than one year.
While this Fund does not intend to realize taxable investment
income, the
Fund has the authority to invest as much as 20% of its total
assets on a
temporary basis in the following taxable securities: notes issued
by or on
behalf of incorporated issuers; obligations of the U.S. Government
and its
agencies or instrumentalities; commercial paper; bank certificates
of deposit;
bankers' acceptances; and repurchase agreements for such
securities. The Fund
reserves the right to invest a greater portion of its assets in
high-quality
money market securities for temporary defensive purposes. The Fund
may also
invest up to 20% of its total assets in tax-exempt industrial
development bonds
and 5% of its total assets in municipal leases and participation
therein. See
descriptions below.
This Fund may invest up to 20% of its assets in "AMT" bonds. AMT
bonds are
tax-exempt "private activity" bonds issued after August 7, 1986
whose proceeds
are directed at least in part to a private, for-profit
organization. While the
income from AMT bonds is exempt from regular Federal income tax,
it is a tax
preference item for purposes of the "alternative minimum tax". The
alternative
minimum tax is a special tax that applies to a limited number of
taxpayers who
have certain adjustments to income or tax preference items.
This Fund may invest up to 20% of its total assets in municipal
securities
rated lower than "Baa3" by Moody's or "BBB-" by S&P. Such
securities are
commonly called "junk bonds" and are considered to have
speculative
characteristics. The Fund will not invest in securities rated
lower than "B" by
Moody's or S&P. For an explanation of Moody's and S&P's ratings,
please see the
Appendix. In the event a security held by the Fund is downgraded
below a "B" by
Moody's or S&P, the Investment Advisor shall promptly reassess the
risks
involved and take such actions as it determines are in the best
interests of
the Fund and its shareowners. The Fund will not invest in
securities that are
in default nor will the Fund invest in securities which, in the
Investment
Advisor's opinion, involve excessive risk.
MUNICIPAL SECURITIES CONSIDERATIONS
Municipal securities include municipal bonds, short-term
municipal notes, and
tax-exempt commercial paper. Municipal bonds are debt obligations
issued to
obtain funds for various public purposes that are exempt from
Federal income
tax in the opinion of issuer's counsel. The two principal
classifications of
municipal bonds are "general obligation" and "revenue" bonds.
General
obligation bonds are secured by the issuer's pledge of its full
faith, credit
and taxing power for the payment of principal and interest.
Revenue bonds are
payable only from the revenues derived from a particular facility
or class of
facilities or, in some cases, from the proceeds of a special
excise tax or
other specific source such as from the user of the facility being
financed. The
term "municipal bonds" also includes "moral obligation" issues
which are
normally issued by special purpose authorities.
Industrial development bonds ("IDBs") and private activity bonds
("PABs") are
in most cases revenue bonds and are not payable from the
unrestricted revenues
of the issuer. The credit quality of IDBs and PABs is usually
directly related
to the credit standing of the corporate user of the facilities
being financed.
Participation interests are interests in municipal bonds,
including IDBs and
PABs, and floating and variable-rate obligations that are owned by
banks. These
interests carry a demand feature permitting the holder to tender
them back to
the bank, which demand feature is backed by an irrevocable letter
of credit or
guarantee of the bank.
A put bond is a municipal bond which gives the holder the
unconditional right
to sell the bond back to the issuer at a specified price and
exercise date,
which is typically well in advance of the bond's maturity date.
Short-term
municipal notes and tax-exempt commercial paper include tax
anticipation notes,
bond anticipation notes, revenue anticipation notes, and other
forms of short-
term loans.
Yields on municipal securities depend on a variety of factors,
including the
general money market conditions, the conditions of the municipal
bond market,
the size of the particular offering, the maturity of the
21
<PAGE>
obligation, the financial condition of the issuer and the rating
of the issue.
The ability of the Fund to achieve its investment objective also
depends on the
continuing ability of the issuers of municipal securities and
participation
interests, or the guarantors of either, to meet their obligations
for the
payment of interest and principal when due. The issuer of a
municipal
obligation may make such payments from money raised through a
variety of
sources, including the issuer's general taxing power, a specific
type of tax or
a particular facility or project.
CHICAGO TRUST MONEY MARKET FUND:
CHICAGO TRUST MONEY MARKET FUND seeks to provide for its
shareowners as high
a level of current income as is consistent with the principles of
preservation
of capital and maintenance of liquidity. The Fund will seek to
achieve such
objective by investing in a diversified portfolio of money market
instruments.
It is the policy of the Fund to maintain a net asset value of
$1.00 per share
for purposes of purchases and redemptions, although there can be
no assurance
that it will do so. The dollar weighted average maturity of the
portfolio can
be no greater than 90 days. The Fund's shares are neither insured
nor
guaranteed by the U.S. Government.
In order to attain its investment goal, the Fund will limit its
investments
to securities maturing in 397 days or less, such as, but not
limited to:
certificates of deposit of banks and Federal savings banks;
bankers'
acceptances; corporate commercial paper; U.S. Government and
agency securities;
and repurchase agreements with respect to the above instruments.
The Fund may
not invest more than 5% of its total assets in the securities of a
single
issuer, except U.S. Government securities.
To be included in the Fund's portfolio of investments, each
security must be
denominated in United States dollars, be of minimal credit risk,
and be high-
quality. The Fund's investments are limited to those which, in
accordance with
standards established by the Trustees, are believed to present
minimal credit
risk. Therefore, the Fund will not purchase a security (other than
U.S.
Government securities) unless the security is: (1) rated with the
highest
ratings assigned to short-term debt securities by at least two
nationally
recognized statistical rating agencies (or, if not rated or rated
by only one
agency, is determined to be of comparable quality by the
Investment Advisor);
or (2) is rated by at least two such agencies within their two
highest ratings
assigned to short-term debt securities (or, if not rated or rated
by only one
agency, is determined to be of comparable quality by the
Investment Advisor)
and not more than 5% of the assets of the Fund would be invested
in such
securities. Determinations of comparable quality shall be made in
accordance
with procedures established by the Board of Trustees.
Because of the high-quality and short maturity of the Fund's
investments, the
Fund's yield may be lower than that of non-money market fixed
income funds that
invest in lower rated securities and securities of longer
maturities. The yield
on money market instruments is very sensitive to short-term
lending conditions.
In addition, there is an element of risk in money market
instruments since an
issuer may become insolvent and default in meeting interest and
principal
payments.
Please refer to the policies and risk disclosures, as well as
the other
specified practices with respect to all the Funds below in
"INVESTMENT
STRATEGIES AND RISK CONSIDERATIONS."
INVESTMENT STRATEGIES AND RISK CONSIDERATIONS
IN GENERAL
Shareowners should understand that all investments involve risk
and there can
be no guarantee against loss resulting from an investment in the
Funds, nor can
there be any assurance that the Funds' investment objectives will
be attained.
Unless otherwise indicated, all percentage limitations governing
the
investments of the Funds apply only at the time of transaction.
Accordingly, if
a percentage restriction is adhered to at the time of investment,
a later
increase or decrease in the percentage represented by such
investment which
results from a relative change in values or from a change in a
Fund's total
assets will not be considered a violation.
22
<PAGE>
GOVERNMENT OBLIGATIONS
ALL FUNDS may invest in obligations issued or guaranteed by the
U.S.
Government, its agencies or instrumentalities to the extent
described above.
Obligations of certain agencies and instrumentalities of the U.S.
Government,
such as the Government National Mortgage Association ("GNMA"), are
supported by
the full faith and credit of the U.S. Treasury; others, such as
those of
Federal Home Loan Banks, are supported by the right of the issuer
to borrow
from the Treasury; others, such as those of the Federal National
Mortgage
Association ("FNMA"), are supported by the discretionary authority
of the U.S.
Government to purchase the agency's obligations; still others,
such as those of
the Student Loan Marketing Association, are supported only by the
credit of the
instrumentality. No assurance can be given that the U.S.
Government would
provide financial support to U.S. Government-sponsored
instrumentalities if it
is not obligated to do so by law. Some Government obligations may
be issued as
variable or floating-rate instruments.
Securities issued or guaranteed by the U.S. Government, its
agencies and
instrumentalities have historically involved little risk of loss
of principal.
However, due to fluctuations in interest rates, the market value
of such
securities may vary during the period of time the shareowner owns
shares of the
Funds.
MONEY MARKET SECURITIES
ALL FUNDS may invest in money market securities, including bank
obligations
and commercial paper. Bank obligations may include bankers'
acceptances,
negotiable certificates of deposit, and non-negotiable time
deposits earning a
specified return, issued for a definite period of time by a U.S.
bank that is a
member of the Federal Reserve System or is insured by the Federal
Deposit
Insurance Corporation, or by a savings and loan association or
savings bank
that is insured by the Federal Deposit Insurance Corporation. Bank
obligations
also include U.S. dollar-denominated obligations of foreign
branches of U.S.
banks or of U.S. branches of foreign banks, all of the same type
as domestic
bank obligations. Investments in bank obligations are limited to
the
obligations of financial institutions having more than $1 billion
in total
assets at the time of purchase. Investments by CHICAGO TRUST MONEY
MARKET FUND
in non-negotiable time deposits are limited to no more than 5% of
its total
assets at the time of purchase.
Domestic and foreign banks are subject to extensive but
different government
regulations which may limit the amount and types of their loans
and the
interest rates that may be charged. In addition, the profitability
of the
banking industry is largely dependent upon the availability and
cost of funds
to finance lending operations and the quality of underlying bank
assets.
Investments in obligations of foreign branches of U.S. banks and
of U.S.
branches of foreign banks may subject a Fund to additional
investment risks,
including future political and economic developments, the possible
imposition
of withholding taxes on interest income, possible seizure or
nationalization of
foreign deposits, the possible establishment of exchange controls,
or the
adoption of other foreign governmental restrictions which might
adversely
affect the payment of principal and interest on such obligations.
In addition,
foreign branches of U.S. banks and U.S. branches of foreign banks
may be
subject to less stringent reserve requirements and to different
accounting,
auditing, reporting, and record keeping standards than those
applicable to
domestic branches of U.S. banks. Investments in the obligations of
U.S.
branches of foreign banks or foreign branches of U.S. banks will
be made only
when the Investment Advisor believes that the credit risk with
respect to the
investment is minimal.
Commercial paper may include variable and floating-rate
instruments, which
are unsecured instruments that permit the interest on indebtedness
thereunder
to vary. Variable-rate instruments provide for periodic
adjustments in the
interest rate. Floating-rate instruments provide for automatic
adjustment of
the interest rate whenever some other specified interest rate
changes. Some
variable and floating-rate obligations are direct lending
arrangements between
the purchaser and the issuer and there may be no active secondary
market.
However, in the case of variable and floating-rate obligations
with the demand
feature, a Fund may demand payment of principal and accrued
interest at a time
specified in the instrument or may resell the instrument to a
third party. In
the event an issuer of a variable or floating-rate obligation
defaulted on its
payment obligation, a
23
<PAGE>
Fund might be unable to dispose of the note because of the absence
of a
secondary market and could, for this or other reasons, suffer a
loss to the
extent of the default. Substantial holdings of variable and
floating-rate
instruments could reduce portfolio liquidity.
BORROWING
ALL FUNDS may not borrow money or issue senior securities,
except as
described in this paragraph. Each Fund may borrow from banks or
enter into
reverse repurchase agreements for temporary purposes in amounts up
to 10% of
the value of its total assets. The Funds may not mortgage, pledge,
or
hypothecate any assets, except that each Fund may mortgage,
pledge, or
hypothecate its assets in connection with any such borrowing and
in amounts not
in excess of the lesser of the dollar amounts borrowed or 10% of
the value of
the total assets of the Fund. A Fund will not purchase securities
while its
borrowings (including reverse repurchase agreements) exceed 5% of
its total
assets. The Funds may borrow money as a temporary measure for
extraordinary
purposes or to facilitate redemptions. No Fund will borrow money
in excess of
25% of the value of its total assets. The Funds have no intention
of increasing
their net income through borrowing. Any borrowing will be done
from a bank with
the required asset coverage of at least 300%. In the event that
such asset
coverage shall at any time fall below 300%, the Fund shall, within
three days
thereafter (not including Sundays or holidays) or such longer
period as the SEC
may prescribe by rules and regulations, reduce the amount of its
borrowings to
such an extent that the asset coverage of such borrowings shall be
at least
300%.
ILLIQUID SECURITIES
ALL FUNDS may invest up to 15% (10% in the case of CHICAGO TRUST
MONEY MARKET
FUND) of their respective net assets in securities which are
illiquid. Illiquid
securities will generally include, but are not limited to:
repurchase
agreements and time deposits with notice/termination dates in
excess of seven
days; unlisted over-the-counter options; interest rate, currency
and mortgage
swap agreements; interest rate caps, floors and collars; and
certain securities
which are subject to trading restrictions because they are not
registered under
the Securities Act of 1933 (the "1933 Act").
REPURCHASE AGREEMENTS
ALL FUNDS may enter into repurchase agreements pursuant to which
a Fund
purchases portfolio assets from a bank or broker-dealer
concurrently with an
agreement by the seller to repurchase the same assets from the
Fund at a later
date at a fixed price. Repurchase agreements are considered, under
the 1940
Act, to be collateralized loans by a Fund to the seller secured by
the
securities transferred to the Fund. Repurchase agreements will be
fully
collateralized by securities in which the Fund may invest
directly. Such
collateral will be marked-to-market daily. If the seller of the
underlying
security under the repurchase agreement should default on its
obligation to
repurchase the underlying security, a Fund may experience delay or
difficulty
in exercising its right to realize upon the security and, in
addition, may
incur a loss if the value of the security should decline, as well
as
disposition costs in liquidating the security. A Fund must treat
each
repurchase agreement as a security for tax diversification
purposes and not as
cash, a cash equivalent or receivable.
REVERSE REPURCHASE AGREEMENTS
ALL FUNDS may enter into reverse repurchase agreements with
banks and broker-
dealers. Reverse repurchase agreements involve sales by a Fund of
portfolio
assets concurrently with an agreement by that Fund to repurchase
the same
assets at a later date at a fixed price. During the reverse
repurchase
agreement period, the Fund continues to receive principal and
interest payments
on these securities. During the time a reverse repurchase
agreement is
outstanding, the Fund will maintain a segregated custodial account
consisting
of cash or liquid securities having a value at least equal to the
resale price.
Reverse repurchase agreements are considered to be borrowings by
the Fund, and
as such are subject to the investment limitations discussed above
under the
sub-section titled "Borrowing."
24
<PAGE>
RULE 144A SECURITIES
ALL FUNDS may purchase securities which are not registered under
the 1933 Act
but which can be sold to "qualified institutional buyers" in
accordance with
Rule 144A under the 1933 Act. Any such security will not be
considered illiquid
so long as it is determined by the Investment Advisor or Sub-
Investment
Advisor, under guidelines approved by the Company's Board of
Trustees, that an
adequate trading market exists for that security. This investment
practice
could have the effect of increasing the level of illiquidity in a
Fund during
any period that qualified institutional buyers become uninterested
in
purchasing these restricted securities.
SECURITIES LENDING
ALL FUNDS may seek additional income from time to time by
lending their
respective portfolio securities on a short-term basis to banks,
brokers and
dealers under agreements. Loans of portfolio securities by each
Fund will be
collateralized by cash held in non-interest bearing demand
accounts, letters of
credit or securities issued or guaranteed by the U.S. Government
or its
agencies or instrumentalities which will be maintained at all
times in an
amount equal to the current market value of the loaned securities.
No Fund may
make such loans in excess of 25% of the value of its total assets.
The major
risk to which the Funds would be exposed on a loan transaction is
the risk that
the borrower would become bankrupt at a time when the value of the
security
goes up. Therefore, a Fund will only enter into loan arrangements
after a
review by the Investment Advisor, subject to overall supervision
by the Board
of Trustees, including a review of the creditworthiness of the
borrowing
broker-dealer or other institution and then only if the
consideration to be
received from such loans would justify the risk. Creditworthiness
will be
monitored on an ongoing basis by the Investment Advisor.
SECURITIES OF OTHER INVESTMENT COMPANIES
ALL FUNDS may invest in securities issued by other investment
companies which
invest in securities in which the particular Fund is permitted to
invest and
which determine their net asset value per share based on the
amortized cost or
penny-rounding method. In addition, each Fund may invest in
securities of other
investment companies within the limits prescribed by the 1940 Act,
which
include limits to its investments in securities issued by other
investment
companies so that, as determined immediately after a purchase of
such
securities is made: (i) not more than 5% of the value of the
Fund's total
assets will be invested in the securities of any one investment
company; (ii)
not more than 10% of its total assets will be invested in the
aggregate in
securities of investment companies as a group; and (iii) not more
than 3% of
the outstanding voting stock of any one investment company will be
owned by the
Fund or Funds as a whole. The Funds are subject to additional
limitations in
these purchases as described under "INVESTMENT RESTRICTIONS" in
the Statement
of Additional Information. As a shareowner of another investment
company, each
Fund would bear, along with other shareowners, its pro rata
portion of the such
investment company's expenses, including advisory fees. These
expenses would be
in addition to the advisory and other expenses that a Fund bears
directly in
connection with its own operations.
SHORT-TERM TRADING
ALL FUNDS may engage in short-term trading. Securities may be
sold in
anticipation of a market decline or purchased in anticipation of a
market rise
and later sold. In addition, a security may be sold and another
purchased at
approximately the same time to take advantage of what a Fund
believes to be a
temporary disparity in the normal yield relationship between the
two
securities. Such trading may be expected to increase a Fund's
portfolio
turnover rate and the expenses incurred in connection with such
trading.
HIGH-YIELD/HIGH-RISK SECURITIES
ALL FUNDS EXCEPT MONTAG & CALDWELL GROWTH FUND, MONTAG &
CALDWELL BALANCED
FUND and CHICAGO TRUST MONEY MARKET FUND may invest in securities
with high
yields and high risks. Fixed income securities which are rated
below "Baa3" by
Moody's or "BBB-" by S&P, frequently referred to as "junk bonds",
are
considered to have speculative characteristics and changes in
economic
conditions or other circumstances are
25
<PAGE>
more likely to lead to a weakened capacity to make principal and
interest
payments than in the case of higher-rated securities. Such
securities are
subject to a substantial degree of credit risk. CHICAGO TRUST
GROWTH & INCOME
FUND may invest up to 10% of its assets in such securities.
CHICAGO TRUST TALON
FUND, CHICAGO TRUST BALANCED FUND, CHICAGO TRUST BOND FUND, and
CHICAGO TRUST
MUNICIPAL BOND FUND may each invest up to 20% of their respective
assets in
such securities.
Medium- and low-grade bonds may be issued as a consequence of
corporate
restructurings, such as leveraged buy-outs, mergers, acquisitions,
debt
recapitalizations or similar events. Also, these bonds are often
issued by
smaller, less creditworthy companies or by highly leveraged firms
which are
generally less able than more financially stable firms to make
scheduled
payments of interest and principal. The risks posed by bonds
issued under such
circumstances are substantial. Also, during an economic downturn
or substantial
period of rising interest rates, highly leveraged issuers may
experience
financial stress which would adversely affect their ability to
service
principal and interest payment obligations, to meet projected
business goals
and to obtain additional financing. Changes by recognized rating
agencies in
their rating of any security and in the ability of an issuer to
make payments
of interest and principal will also ordinarily have a more
dramatic effect on
the values of these investments than on the values of higher-rated
securities.
Such changes in value will not affect cash income derived from
these
securities, unless the issuers fail to pay interest or dividends
when due. Such
changes will, however, affect a Fund's net asset value per share.
There can be
no assurance that diversification will protect a Fund from
widespread bond
defaults brought about by a sustained economic downturn.
Please see "General Risk Factors" below and refer to the
Statement of
Additional Information for a more detailed discussion of the
applicable risk
considerations.
ASSET-BACKED SECURITIES
ALL FUNDS EXCEPT MONTAG & CALDWELL GROWTH FUND, CHICAGO TRUST
TALON FUND and
CHICAGO TRUST MONEY MARKET FUND may invest in asset-backed
securities which
represent interests in, or are secured by and payable from, pools
of
government, government-related and private organizations of
assets, such as
consumer loans, credit card receivable securities and installment
loan
contracts. Although these securities may be supported by letters
of credit or
other credit enhancements, payment of interest and principal
ultimately depends
upon individuals paying the underlying loans. The risk that
recovery on
repossessed collateral might be unavailable or inadequate to
support payments
on asset-backed securities is greater than in the case for
mortgage-backed
securities. Falling interest rates generally result in an increase
in the rate
of prepayments of mortgage loans while rising interest rates
generally decrease
the rate of prepayments. An acceleration in prepayments in
response to sharply
falling interest rates will shorten the security's average
maturity and limit
the potential appreciation in the security's value relative to a
conventional
debt security. Please see "General Risk Factors" below and refer
to the
Statement of Additional Information for a more detailed discussion
of the
applicable risk considerations.
MORTGAGE-BACKED SECURITIES
ALL FUNDS EXCEPT MONTAG & CALDWELL GROWTH FUND, CHICAGO TRUST
TALON FUND and
CHICAGO TRUST MONEY MARKET FUND may invest in mortgage-backed
securities which
represent interests in, or are secured by and payable from, pools
of mortgage
loans, including collateralized mortgage obligations. These
securities may be
U.S. Government mortgage-backed securities, which are issued or
guaranteed by a
U.S. Government agency or instrumentality (though not necessarily
backed by the
full faith and credit of the United States), such as GNMA, FNMA,
and Federal
Home Loan Mortgage Corporation certificates. Other mortgage-backed
securities
are issued by private issuers, generally originators of and
investors in
mortgage loans, including savings associations, mortgage bankers,
commercial
banks, investment bankers, and special purpose entities. These
private
mortgage-backed securities may be supported by U.S. Government
mortgage-backed
securities or some form of non-government credit enhancement.
Mortgage-backed
securities have either fixed or adjustable interest rates. The
rate of return
on mortgage-backed securities may be affected by prepayments of
principal on
the underlying loans, which generally increase as interest rates
decline; as a
result, when interest rates decline,
26
<PAGE>
holders of these securities normally do not benefit from
appreciation in market
value to the same extent as holders of other non-callable debt
securities. In
addition, like other debt securities, the values of mortgage-
related
securities, including government and government-related mortgage
pools,
generally will fluctuate in response to market interest rates.
Please see
"General Risk Factors" below and refer to the Statement of
Additional
Information for a more detailed discussion of the applicable risk
considerations.
STRIPPED MORTGAGE SECURITIES
ALL FUNDS EXCEPT MONTAG & CALDWELL GROWTH FUND, CHICAGO TRUST
TALON FUND and
CHICAGO TRUST MONEY MARKET FUND may purchase participations in
trusts that hold
U.S. Treasury and agency securities and may also purchase zero
coupon U.S.
Treasury obligations, Treasury receipts and other stripped
securities that
evidence ownership in either the future interest payments or the
future
principal payments on U.S. Government obligations. These
participations are
issued at a discount to their face value and may exhibit greater
price
volatility than ordinary debt securities because of the manner in
which their
principal and interest are returned to investors. The Funds will
only invest in
government-backed mortgage securities. The Investment Advisor will
consider
liquidity needs of a Fund when any investment in zero coupon
obligations is
made. Although stripped mortgage securities are purchased and sold
by
institutional investors through several investment banking firms
acting as
brokers or dealers, these securities were only recently developed.
As a result,
established trading markets have not yet been fully developed;
accordingly,
certain of these securities which are backed by other than fixed
rate mortgages
may be deemed to be illiquid. Please see "General Risk Factors"
below and refer
to the Statement of Additional Information for a more detailed
discussion of
the applicable risk considerations.
FOREIGN SECURITIES
ALL FUNDS EXCEPT CHICAGO TRUST BOND FUND, CHICAGO TRUST
MUNICIPAL BOND FUND
and CHICAGO TRUST MONEY MARKET FUND may invest in foreign
securities.
Investment in foreign securities is subject to special investment
risks that
differ in some respects from those related to investments in
securities of U.S.
domestic issuers. Such risks include: political, social or
economic instability
in the country of the issuer; the difficulty of predicting
international trade
patterns; the possibility of the imposition of exchange controls;
expropriation; limits on removal of currency or other assets;
nationalization
of assets; foreign withholding and income taxation; and foreign
trading
practices (including higher trading commissions, custodial charges
and delayed
settlements). Such securities may be subject to greater
fluctuations in price
than securities issued by U.S. corporations or issued or
guaranteed by the U.S.
Government, its agencies or instrumentalities. The markets on
which such
securities trade may have less volume and liquidity, and may be
more volatile,
than securities markets in the U.S. In addition, there may be less
publicly
available information about a foreign company than about a U.S.
domiciled
company. Foreign companies generally are not subject to uniform
accounting,
auditing and financial reporting standards comparable to those
applicable to
U.S. domestic companies. There is generally less government
regulation of
securities exchanges, brokers and listed companies abroad than in
the U.S.
Confiscatory taxation or diplomatic developments could also affect
investment
in those countries.
In addition, foreign branches of U.S. banks, foreign banks and
foreign
issuers may be subject to less stringent reserve requirements and
to different
accounting, auditing, reporting, and record keeping standards than
those
applicable to domestic branches of U.S. banks and U.S. domestic
issuers.
For many foreign securities, U.S. dollar-denominated American
Depositary
Receipts, or ADRs, which are traded in the United States on
exchanges or over-
the-counter, are issued by domestic banks. ADRs represent the
right to receive
securities of foreign issuers deposited in a domestic bank or a
correspondent
bank. ADRs do not eliminate the risk inherent in investing in the
securities of
foreign issuers. However, by investing in ADRs rather than
directly in stock of
foreign issuers, a Fund can avoid currency risks during the
settlement period
for either purchases or sales. In general, there is a large,
liquid market in
the United States for many ADRs. The information available for
ADRs is subject
to the accounting, auditing and financial reporting standards of
the domestic
market or exchange on which they are traded, which standards are
more uniform
and
27
<PAGE>
more exacting than those to which many foreign issuers may be
subject. The
above Funds may also invest in European Depositary Receipts, or
EDRs, which are
receipts evidencing an arrangement with a European bank similar to
that for
ADRs and are designed for use in the European securities markets.
Certain ADRs and EDRs, typically those denominated as
unsponsored, require
the holders thereof to bear most of the costs of such facilities
while issuers
of sponsored facilities normally pay more of the costs thereof.
The depositary
of an unsponsored facility frequently is under no obligation to
distribute
shareowner communications received from the issuer of the
deposited securities
or to pass through the voting rights to facility holders in
respect to the
deposited securities, whereas the depositary of a sponsored
facility typically
distributes shareowner communications and passes through the
voting rights.
DERIVATIVE INVESTMENTS
The term "derivatives" has been used to identify a range and
variety of
financial instruments. In general, a derivative is commonly
defined as a
financial instrument whose performance and value are derived, at
least in part,
from another source, such as the performance of an underlying
asset, or a
specific security, or an index of securities. As is the case with
other types
of investments, a Fund's derivative instruments may entail various
types and
degrees of risk, depending upon the characteristics of a
derivative instrument
and the Fund's overall portfolio.
Each Fund permitted the use of derivatives may engage in such
practices for
hedging purposes, or to maintain liquidity, or in anticipation of
changes in
the composition of its portfolio holdings. No Fund will engage in
derivative
investments purely for speculative purposes. A Fund will invest in
one or more
derivatives only to the extent that the instrument under
consideration is
judged by the Investment Advisor to be consistent with the Fund's
overall
investment objective and policies. In making such judgment, the
potential
benefits and risks will be considered in relation to the Fund's
other portfolio
investments.
Where not specified, investment limitations with respect to a
Fund's
derivative instruments will be consistent with such Fund's
existing percentage
limitations with respect to its overall investment policies and
restrictions.
While not a fundamental policy, the total of all instruments
deemed derivative
in nature by the Investment Advisor will generally not exceed 20%
of total
assets for any Fund which is permitted the use of such
instruments; however, as
this policy is not fundamental, it may be changed from time to
time when deemed
appropriate by the Board of Trustees. Listed below, including
risks and
policies with respect thereto, are the types of securities in
which certain
Funds are permitted to invest which are considered by the
Investment Advisor to
be derivative in nature.
1. OPTIONS:
ALL FUNDS, EXCEPT CHICAGO TRUST MONEY MARKET FUND, may engage in
options,
including those described below.
A call option enables the purchaser, in return for the premium
paid, to
purchase securities from the writer of the option at an agreed
price up to an
agreed date. The advantage is that the purchaser may hedge against
an increase
in the price of securities it ultimately wishes to buy or may take
advantage of
a rise in a particular index. A Fund will only purchase call
options to the
extent premiums paid on all outstanding call options do not exceed
20% of such
Fund's total assets. A Fund will only sell or write call options
on a covered
basis (e.g. on securities it holds in its portfolio).
A put option enables the purchaser of the option, in return for
the premium
paid, to sell the security underlying the option to the writer at
the exercise
price during the option period, and the writer of the option has
the obligation
to purchase the security from the purchaser of the option. The
advantage is
that the purchaser can be protected should the market value of the
security
decline or should a particular index decline. A Fund will only
purchase put
options to the extent that the premiums on all outstanding put
options do not
exceed
28
<PAGE>
20% of a Fund's total assets. A Fund will only purchase put
options on a
covered basis and write put options on a secured basis. Cash or
other
collateral will be held in a segregated account for such options.
A Fund will
receive premium income from writing put options, although it may
be required,
when the put is exercised, to purchase securities at higher prices
than the
current market price. At the time of purchase, a Fund will receive
premium
income from writing call options, which may offset the cost of
purchasing put
options and may also contribute to a Fund's total return. A Fund
may lose
potential market appreciation if the judgment of its Investment
Advisor or Sub-
Investment Advisor is incorrect with respect to interest rates,
security prices
or the movement of indices.
An option on a securities index gives the purchaser of the
option, in return
for the premium paid, the right to receive cash from the seller
equal to the
difference between the closing price of the index and the exercise
price of the
option.
Closing transactions essentially let a Fund offset put options
or call
options prior to exercise or expiration. If a Fund cannot effect a
closing
transaction, it may have to hold a security it would otherwise
sell or deliver
a security it might want to hold.
A Fund may use options traded on U.S. exchanges, and to the
extent permitted
by law, options traded over-the-counter. It is the position of the
Securities
and Exchange Commission ("SEC") that over-the-counter options are
illiquid.
Accordingly, a Fund will invest in such options only to the extent
consistent
with its 15% limit on investments in illiquid securities. Please
see "General
Risk Factors" below and refer to the Statement of Additional
Information for a
more detailed discussion of the applicable risk considerations.
2. FORWARD COMMITMENTS, WHEN-ISSUED SECURITIES, AND DELAYED-
DELIVERY
TRANSACTIONS:
ALL FUNDS, EXCEPT CHICAGO TRUST MONEY MARKET FUND, may purchase
or sell
securities on a when-issued or delayed-delivery basis and make
contracts to
purchase or sell securities for a fixed price at a future date
beyond customary
settlement time. Securities purchased or sold on a when-issued,
delayed-
delivery, or forward commitment basis involve a risk of loss if
the value of
the security to be purchased declines prior to the settlement
date. Although a
Fund would generally purchase securities on a when-issued,
delayed-delivery, or
forward commitment basis with the intention of acquiring the
securities, a Fund
may dispose of such securities prior to settlement if its
Investment Advisor or
Sub-Investment Advisor deems it appropriate to do so. Please see
"General Risk
Factors" below and refer to the Statement of Additional
Information for a more
detailed discussion of the applicable risk considerations.
3. FUTURES CONTRACTS AND RELATED OPTIONS:
ALL FUNDS, EXCEPT CHICAGO TRUST MONEY MARKET FUND, may engage in
futures
contracts and options on futures contracts for hedging purposes or
to maintain
liquidity. However, a Fund may not purchase or sell a futures
contract unless
immediately after any such transaction the sum of the aggregate
amount of
margin deposits on its existing futures positions and the amount
of premiums
paid for related options is 5% or less of its total assets, after
taking into
account unrealized profits and unrealized losses on any such
contracts. At
maturity, a futures contract obligates a Fund to take or make
delivery of
certain securities or the cash value of a securities index. A Fund
may sell a
futures contract in order to offset a decrease in the market value
of its
portfolio securities that might otherwise result from a market
decline. A Fund
may do so either to hedge the value of its portfolio of securities
as a whole,
or to protect against declines, occurring prior to sales of
securities, in the
value of the securities to be sold. Conversely, a Fund may
purchase a futures
contract in anticipation of purchases of securities. In addition,
a Fund may
utilize futures contracts in anticipation of changes in the
composition of its
portfolio holdings.
Any gain derived by the Fund from the use of such instruments
will be treated
as a combination of short-term and long-term capital gain and, if
not offset by
realized capital losses incurred by the Fund, will be distributed
to
shareowners and will be taxable to shareowners as a combination of
ordinary
income and long-term capital gain.
29
<PAGE>
A Fund may purchase and sell call and put options on futures
contracts traded
on an exchange or board of trade. When a Fund purchases an option
on a futures
contract, it has the right to assume a position as a purchaser or
seller of a
futures contract at a specified exercise price at any time during
the option
period. When a Fund sells an option on a futures contract, it
becomes obligated
to purchase or sell a futures contract if the option is exercised.
In
anticipation of a market advance, a Fund may purchase call options
on futures
contracts as a substitute for the purchase of futures contracts to
hedge
against a possible increase in the price of securities which a
Fund intends to
purchase. Similarly, if the market is expected to decline, a Fund
might
purchase put options or sell call options on futures contracts
rather than sell
futures contracts. In connection with a Fund's position in a
futures contract
or option thereon, a Fund will create a segregated account of cash
or liquid
securities, or will otherwise cover its position in accordance
with applicable
requirements of the SEC. Please see "General Risk Factors" below
and refer to
the Statement of Additional Information for a more detailed
discussion of the
applicable risk considerations.
4. INTEREST RATE SWAPS:
Only CHICAGO TRUST BALANCED FUND, CHICAGO TRUST BOND FUND, and
CHICAGO TRUST
MUNICIPAL BOND FUND, in order to help enhance the value of their
respective
portfolios, or manage exposure to different types of investments,
may enter
into interest rate, currency, and mortgage swap agreements and may
purchase and
sell interest rate "caps", "floors", and "collars".
In a typical interest rate swap agreement, one party agrees to
make regular
payments equal to a floating interest rate on a specified amount
in return for
payments equal to a fixed interest rate on the same amount for a
specified
period. Swaps involve the exchange between a Fund and another
party of their
respective rights to receive interest, e.g., an exchange of fixed-
rate payments
for floating-rate payments. For example, if a Fund holds an
interest-paying
security whose interest rate is reset once a year, it may swap the
right to
receive interest at this fixed-rate for the right to receive
interest at a rate
that is reset daily. Such a swap position would offset changes in
the value of
the underlying security because of subsequent changes in interest
rates. This
would protect a Fund from a decline in the value of the underlying
security due
to rising rates, but would also limit its ability to benefit from
falling
interest rates. A Fund will enter into interest rate swaps only on
a net basis
(i.e. the two payment streams will be netted out, with the Fund
receiving or
paying as the case may be, only the net amount of the two
payments). The net
amount of the excess, if any, of a Fund's obligations over its
entitlements
with respect to each interest rate swap, will be accrued on a
daily basis and
an amount of cash or liquid securities having an aggregate net
asset value at
least equal to the accrued excess, will be maintained in a
segregated account
by the Company's custodian bank.
Interest rate swaps do not involve the delivery of securities or
other
underlying assets or principal. Thus, if the other party to an
interest rate
swap defaults, a Fund's risk of loss consists of the net amount of
interest
payments that the Fund is contractually entitled to receive.
Please see
"General Risk Factors" below and refer to the Statement of
Additional
Information for a more detailed discussion of the applicable risk
considerations.
GENERAL RISK FACTORS
1. OPTIONS, FUTURES, AND FORWARD CONTRACTS:
ALL FUNDS, EXCEPT CHICAGO TRUST MONEY MARKET FUND, may engage in
such
investment practices. The primary risks associated with the use of
futures
contracts and options are: (i) imperfect correlation between the
change in
market value of the securities held by a Fund and the price of
futures
contracts and options; (ii) possible lack of a liquid secondary
market for a
futures contract and the resulting inability to close a futures
contract when
desired; (iii) losses, which are potentially unlimited, due to
unanticipated
market movements; and (iv) the Investment Advisor's or the Sub-
Investment
Advisor's inability to predict correctly the direction of security
prices,
interest rates and other economic factors. For a further
discussion, see
"INVESTMENT POLICIES AND RISK CONSIDERATIONS" in the Statement of
Additional
Information.
30
<PAGE>
2. FIXED INCOME INVESTING:
ALL FUNDS, EXCEPT CHICAGO TRUST MONEY MARKET FUND, may engage in
fixed income
investment practices. There are two principal types of risks
associated with
investing in debt securities: (1) market (or interest rate) risk
and (2) credit
risk.
Market risk relates to the change in market value caused by
fluctuations in
prevailing rates, while credit risk relates to the ability of the
issuer to
make timely interest payments and to repay the principal upon
maturity. The
value of debt securities will normally increase in periods of
falling interest
rates; conversely, the value of these instruments will normally
decline in
periods of rising interest rates.
In an effort to obtain maximum income consistent with its
investment
objective, each of the above Funds may, at times, change the
average maturity
of its investment portfolio, consistent with a three- to ten-year
weighted
average maturity range, by investing a larger portion of its
assets in
relatively longer-term obligations when periods of declining
interest rates are
anticipated and, conversely, emphasizing shorter- and
intermediate- term
maturities when a rise in interest rates is indicated.
Credit risk refers to the possibility that a bond issuer will
fail to make
timely payments of interest or principal. The ability of an issuer
to make such
payments could be affected by general economic conditions,
litigation,
legislation or other events including the bankruptcy of the
issuer. For a
further discussion, see "INVESTMENT POLICIES AND RISK
CONSIDERATIONS" in the
Statement of Additional Information.
MANAGEMENT OF THE FUNDS
THE BOARD OF TRUSTEES
Under Delaware law, the business and affairs of the Company are
managed under
the direction of the Board of Trustees. The Statement of
Additional Information
contains the name of each Trustee and background information
regarding the
Trustees.
THE CHICAGO TRUST COMPANY
The Chicago Trust Company ("Chicago Trust") provides investment
advisory
services to CHICAGO TRUST GROWTH & INCOME FUND; CHICAGO TRUST
BALANCED FUND;
CHICAGO TRUST BOND FUND; CHICAGO TRUST MUNICIPAL BOND FUND;
CHICAGO TRUST MONEY
MARKET FUND; AND CHICAGO TRUST TALON FUND, with Talon Asset
Management, Inc.
serving as Sub-Advisor for that Fund. Pursuant to Investment
Advisory
Agreements with the Company, Chicago Trust provides an investment
program for
certain of the Funds in accordance with their respective
investment policies,
limitations and restrictions, and furnishes executive,
administrative and
clerical services required for the transaction of each Fund's
business.
Chicago Trust managed approximately $6.0 billion in assets at
December 31,
1996, consisting primarily of pension and profit sharing accounts,
and accounts
of high net worth individuals, families and insurance companies.
Chicago Trust,
an Illinois corporation, is an indirect and wholly-owned
subsidiary of
Alleghany Corporation. Alleghany Corporation, located at Park
Avenue Plaza, New
York City, New York 10055, is engaged through its subsidiaries in
the business
of title insurance, reinsurance, other financial services and
industrial
minerals.
For providing investment advisory services, the Funds have
agreed to pay
Chicago Trust a monthly fee at the following annual rates,
exclusive of
voluntary fee waivers, based on their respective average daily net
assets:
CHICAGO TRUST GROWTH & INCOME FUND'S fee is 0.70%; CHICAGO TRUST
TALON FUND'S
fee is 0.80%, which is higher than the advisory fees paid by most
other funds;
however, this fee is comparable with those of other mutual funds
with similar
investment objectives; CHICAGO TRUST BALANCED FUND'S fee is 0.70%;
CHICAGO
TRUST BOND FUND'S fee is 0.55%; CHICAGO TRUST MUNICIPAL BOND
FUND'S fee is
0.60%; and CHICAGO TRUST MONEY MARKET FUND'S fee is 0.40%.
31
<PAGE>
Chicago Trust has voluntarily undertaken to reduce its advisory
fee and to
reimburse CHICAGO TRUST GROWTH & INCOME FUND, CHICAGO TRUST TALON
FUND, CHICAGO
TRUST BALANCED FUND, CHICAGO TRUST BOND FUND, CHICAGO TRUST
MUNICIPAL BOND
FUND, and CHICAGO TRUST MONEY MARKET FUND for operating expenses
in excess of
1.10%, 1.30%, 1.10%, 0.80%, 0.90%, and 0.50%, respectively. Such
fee
reimbursements may be terminated or reduced at the discretion of
Chicago Trust.
Operating expenses for fee waiver/expense reimbursement purposes
do not include
interest, taxes, brokerage charges, litigation or extraordinary
items.
MONTAG & CALDWELL, INC.
The Investment Advisor for MONTAG & CALDWELL GROWTH FUND and
MONTAG &
CALDWELL BALANCED FUND is Montag & Caldwell, Inc. ("Montag &
Caldwell"), a
registered investment advisor located at 1100 Atlanta Financial
Center, 3343
Peachtree Road, Atlanta, Georgia 30326-1450. As of December 31,
1996 , Montag &
Caldwell managed over $8.5 billion in assets, primarily for
employee benefit,
endowment, charitable and other institutional clients, as well as
high net
worth individuals. Montag & Caldwell was founded in 1945 and is an
indirect,
wholly-owned subsidiary of Alleghany Corporation.
Pursuant to Investment Advisory Agreements with the Company,
Montag &
Caldwell provides an investment program for each of these Funds in
accordance
with their respective investment policies, limitations and
restrictions, and
furnishes executive, administrative and clerical services required
for the
transaction of each Fund's business.
For providing investment advisory services, each Fund managed by
Montag &
Caldwell has agreed to pay a monthly fee at the following annual
rates based on
each Fund's average daily net assets. MONTAG & CALDWELL GROWTH
FUND'S fee is
0.80%, which is higher than the advisory fees paid by most other
funds;
however, this fee is comparable with those of other mutual funds
with similar
investment objectives. MONTAG & CALDWELL BALANCED FUND'S fee is
0.75%, which is
higher than the advisory fees paid by most other funds; however,
this fee is
comparable with those of other mutual funds with similar
investment objectives.
Montag & Caldwell has voluntarily undertaken to reimburse MONTAG
& CALDWELL
GROWTH FUND and MONTAG & CALDWELL BALANCED FUND for operating
expenses (as
defined previously) in excess of 1.30%, and 1.25%, respectively.
Such fee
reimbursements and waivers may be terminated at the discretion of
Montag &
Caldwell.
TALON ASSET MANAGEMENT, INC.
Talon Asset Management, Inc., One North Franklin, Chicago,
Illinois 60606,
the Sub-Investment Advisor for CHICAGO TRUST TALON FUND only, is a
registered
investment advisor, established in 1984. As of December 31, 1996,
Talon managed
over $356 million in assets, primarily for high net worth
individuals, trusts,
charitable foundations, employee benefit plans and family
partnerships. Talon
is controlled by Terry D. Diamond, its Chairman and Chief
Executive Officer,
who is also the Chairman of Talon Securities, Inc., a registered
broker-dealer
and an affiliate of Talon Asset Management, Inc. Talon Securities
is paid
brokerage commissions for transactions it executes for CHICAGO
TRUST TALON
FUND. Talon has been retained by Chicago Trust pursuant to a sub-
investment
advisory agreement to provide an investment program for CHICAGO
TRUST TALON
FUND, subject to supervision of Chicago Trust, in accordance with
the objective
and policies of the Fund. For months in which the Fund's average
daily net
assets exceed $18 million, the Investment Advisor will pay the
Sub-Advisor a
fee equal to 68.75% of the management fee that the Investment
Advisor receives
from the Fund, net of any expense reimbursement. For months in
which the Fund's
average daily net assets are $18 million or less, the Sub-Advisor
will receive
no fee.
Prior to the commencement of operations of CHICAGO TRUST TALON
FUND on
September 19, 1994, Talon Asset Management's investment management
history did
not include experience with respect to advising investment
companies.
32
<PAGE>
PORTFOLIO MANAGEMENT METHODS
INVESTMENT MANAGEMENT TEAMS
Investment decisions for the Funds are made by investment
management teams at
the respective Advisors (or Sub-Advisor for CHICAGO TRUST TALON
FUND). The
teams are headed by the following portfolio managers: Jerold L.
Stodden for
CHICAGO TRUST GROWTH & INCOME FUND, Bernard Myszkowski for CHICAGO
TRUST
BALANCED FUND, Thomas J. Marthaler for CHICAGO TRUST BOND FUND,
Lois A.
Pasquale for CHICAGO TRUST MUNICIPAL BOND FUND, Fred H. Senft, Jr.
for CHICAGO
TRUST MONEY MARKET FUND, Ronald E. Canakaris for MONTAG & CALDWELL
GROWTH FUND
and MONTAG & CALDWELL BALANCED FUND, and Terry D. Diamond for
CHICAGO TRUST
TALON FUND.
THE CHICAGO TRUST COMPANY
Chicago Trust manages debt securities around a benchmark
maturity reference
point. Emphasis is placed upon diversification, issuer credit
analysis, sector
rotation, and security selection. A portfolio's average maturity
is normally
kept within +/-25% of the benchmark. Market timing is not
employed, but
maturities are gradually adjusted within the prescribed limits
based upon the
longer-term outlook for bond returns. Research concentrates on
sector analysis,
credit quality research, and careful security selection. Credit
research is
performed internally to identify improving or deteriorating credit
situations
using sources such as Moody's, S&P, and Duff & Phelps. Credit
spreads among
various quality, maturity, and group characteristics are monitored
to determine
pricing inefficiencies. Purchase and sale activity is driven by
the results of
sector analysis, credit research and interest rate outlook.
The equity performance objective is to produce returns above the
S&P 500
Index over the long-term. Stock selection is the critical
component of the
equity philosophy. Chicago Trust purchases stocks in companies
believed to have
superior financial strength and proven growth characteristics. The
equity style
concentrates on quality and growth. Risk is monitored through key
valuation
techniques. A strict sell discipline is employed, although the
focus is on the
long-term.
The investment decision-making process begins with a series of
fundamental
"screens", where the Investment Advisor identifies approximately
300 companies
which in certain respects exceed the average characteristics over
the past five
years of the companies included in the S&P 500 Index. These
characteristics
include: (i) sales and operating earnings greater than the S&P
500; (ii) more
stable earnings growth rates; (iii) lower debt levels than the S&P
500; (iv)
higher return on equity; (v) market capitalization over $400
million; and (vi)
a lower price to earnings ratio. Chicago Trust selects securities
believed to
have superior relative strength and technical patterns.
A key component of the equity process is the sell discipline.
Chicago Trust
looks for sale candidates when one or more of the following
criteria exist: (i)
deteriorating company fundamentals; (ii) the stock no longer meets
our purchase
criteria; (iii) the stock's relative strength drops below a
critical threshold;
and (iv) technically, the stock appears vulnerable to further
decline.
MONTAG & CALDWELL, INC.
The Montag & Caldwell equity performance objective is to produce
solid
returns over the long-term. Equity portfolios are managed with a
fundamental
selection process in which valuation of the long-term earning
power of the
company is interrelated with expected rate of growth in short-term
reported
earnings for that company. Among the factors important in the
valuation process
are: the estimated per share earning power of the company's
assets; return on
equity; long-term estimated reported earnings growth rate;
financial strength;
capital structure; competitive position; and quality of
management. Securities
are selected based upon extensive research and seasoned judgment
of experienced
professionals. Industry group weightings and asset allocation are
incorporated
in the selection process.
33
<PAGE>
Mr. Ronald E. Canakaris, President and Chief Investment Officer
of Montag &
Caldwell, Inc. since 1984, manages the investment program of
MONTAG & CALDWELL
GROWTH FUND. He is primarily responsible for the day-to-day
management of the
Fund's portfolio. Mr. Canakaris, a Chartered Financial Analyst,
has been a
portfolio manager and the Director of Research at Montag &
Caldwell since 1973.
He has been the portfolio manager and primarily responsible for
making the
investment decisions of the ENTERPRISE GROWTH FUND since 1980. The
ENTERPRISE
GROWTH FUND had net assets of $201.2 million as of December 31,
1996. Average
annual returns for the one-year, three-year, five-year, ten-year
and since
inception periods ended December 31, 1996 compared with the
performance of the
Standard & Poor's 500 Composite Stock Price Index were:
<TABLE>
<CAPTION>
ENTERPRISE GROWTH
MONTAG & CALDWELL ENTERPRISE GROWTH
FUND- S&P 500
GROWTH FUND (1) FUND (1), (3) NET
OF LOAD (2), (3) INDEX (4)
----------------- ----------------- -----
- --------------- ---------
<S> <C> <C> <C>
<C>
One Year................ 32.72% 32.60%
26.30% 22.95%
Since 11/2/94*.......... 31.23 31.32
28.41 26.67
Three Years............. -- 22.49
20.53 19.66
Five Years.............. -- 16.69
15.56 15.20
Ten Years............... -- 16.54
15.97 15.28
</TABLE>
- --------
* MONTAG & CALDWELL GROWTH FUND commenced investment operations
on November 2,
1994.
(1) Average annual total return reflects changes in share prices
and
reinvestment of dividends and distributions and is net of fund
expenses.
(2) Average annual total return reflects changes in the share
prices and
reinvestment of dividends and distributions and is net of fund
expenses and
the front-end sales load of 4.75%. This column reflects load-
adjusted
returns, which are net of this front-end load.
(3) The expense ratio of ENTERPRISE GROWTH FUND has been capped at
1.60% from
January 1, 1990 through December 31, 1996. From September 15,
1987 to
December 31, 1989, the expense ratio was capped at 2.50%; from
January 1,
1987 through September 15, 1987, the expense ratio was capped
at 1.50%. For
each of the years 1987 through 1993, a portion of the
ENTERPRISE GROWTH
FUND'S expenses were reimbursed. The expense ratio of the
MONTAG & CALDWELL
GROWTH FUND has been capped at 1.30% from inception on
November 2, 1994
through December 31, 1996.
(4) The Standard & Poor's 500 Composite Price Index is an
unmanaged index of
common stocks that is considered to be generally
representative of the
United States stock market. The Index is adjusted to reflect
reinvestment
of dividends.
The investment objectives, policies and strategies of the
ENTERPRISE GROWTH
FUND are substantially similar in all material aspects to the
MONTAG & CALDWELL
GROWTH FUND. Historical performance is not indicative of future
performance.
The ENTERPRISE GROWTH FUND is a separate fund and its historical
performance is
not indicative of the past or future performance of the MONTAG &
CALDWELL
GROWTH FUND. Share prices and investment returns will fluctuate
reflecting
market conditions, as well as changes in company-specific
fundamentals of
portfolio securities.
TALON ASSET MANAGEMENT, INC.
Evaluating the business prospects of individual companies is the
core of
Talon's analytical approach. The value of stocks will be measured
by: earnings
potential; cash flow; dividend growth; book value; and other
financial
criteria. Talon prefers dynamics of growth, but a reluctance to
pay excessive
premiums for growth is implicit in its management style. The
preference is
always for a better business rather than mediocrity at an apparent
attractive
valuation. Preferred stocks and debt securities may be used to
decrease
volatility and capital risk of the portfolio.
34
<PAGE>
ADMINISTRATION OF THE FUNDS
THE ADMINISTRATOR AND SUB-ADMINISTRATOR
Chicago Trust (the "Administrator") acts as the Company's
Administrator
pursuant to an Administration Agreement with the Company. For
services provided
as Administrator, Chicago Trust receives a fee at the annual rate
of: 0.060% of
the first $2 billion of average daily net assets; 0.045% of the
average daily
net assets between $2 billion and $3.5 billion and 0.040% of the
average daily
net assets in excess of $3.5 billion. Chicago Trust also receives
a custody
liaison fee equal to an annual fee per Fund of $10,000 for average
daily net
assets up to $100 million, $15,000 for average daily net assets
between $100
million and $500 million, and $20,000 for average daily net assets
in excess of
$500 million.
Pursuant to a Sub-Administration Agreement, First Data Investor
Services
Group, Inc. (the "Sub-Administrator"), 53 State Street, Boston,
Massachusetts
02109, acts as Sub-Administrator and receives a fee equal to that
received by
the Administrator as set out above. The Sub-Administrator also
receives a
custody liaison fee from Chicago Trust equal to that received by
the
Administrator as set out above.
The services provided to the Funds under these Agreements
include:
coordinating and monitoring of any third parties furnishing
services to the
Funds; providing the necessary office space, equipment and
personnel to perform
administrative and clerical functions for the Funds; preparing,
filing and
distributing proxy materials, periodic reports to shareowners,
registration
statements and other documents; and responding to shareowner
inquiries.
The Sub-Administrator also performs certain accounting and
pricing services
for the Funds, including the daily calculation of the Funds'
respective net
asset values.
THE TRANSFER AGENT
First Data Investor Services Group, Inc. (the "Transfer Agent"),
4400
Computer Drive, Westborough, Massachusetts 01581, performs the
following duties
in its capacity as Transfer Agent to each Fund: maintains the
records of each
shareowner's account; answers shareowner inquiries concerning
accounts;
processes purchases and redemptions of Fund shares; acts as
dividend and
distribution disbursing agent; and performs other shareowner
service functions.
Shareowner inquiries should be addressed to the Transfer Agent at
(800) 992-
8151.
THE DISTRIBUTOR
First Data Distributors, Inc. (the "Distributor"), 4400 Computer
Drive,
Westborough, Massachusetts 01581, is the principal underwriter and
distributor
of the Funds pursuant to a distribution agreement with the Funds.
THE CUSTODIAN
Bankers Trust Company (the "Custodian"), 16 Wall Street, New
York, New York
10005, is Custodian for the cash and securities of each Fund.
EXPENSES
Expenses attributable to the Company, but not to a particular
Fund, will be
allocated to each Fund thereof on the basis of relative net
assets. Similarly,
expenses attributable to a particular Fund, but not to a
particular class
thereof, will be allocated to each class thereof on the basis of
relative net
assets. General Company expenses may include but are not limited
to: insurance
premiums; Trustee fees; expenses of maintaining the Company's
legal existence;
and fees of industry organizations. General Fund expenses may
include but are
not limited to: audit fees; brokerage commissions; registration of
Fund shares
with the SEC and notification fees to the various state securities
commissions;
fees of the Funds' Custodian, Administrator, Sub-Administrator and
Transfer
Agent or other "service providers"; costs of obtaining quotations
of portfolio
securities; and pricing of Fund shares.
35
<PAGE>
Class-specific expenses relating to distribution fee payments
associated with
a Rule 12b-1 plan for a particular class of shares and any other
costs relating
to implementing or amending such plan (including obtaining
shareowner approval
of such plan or any amendment thereto) will be borne solely by
shareowners of
such class or classes. Other expense allocations which may differ
among
classes, or which are determined by the Trustees to be class-
specific, may
include but are not limited to: printing and postage expenses
related to
preparing and distributing required documents such as shareowner
reports,
prospectuses, and proxy statements to current shareowners of a
specific class;
SEC registration fees and state "blue sky" fees incurred by a
specific class;
litigation or other legal expenses relating to a specific class;
expenses
incurred as a result of issues relating to a specific class; and
different
transfer agency fees attributable to a specific class.
Notwithstanding the foregoing, the Investment Advisor or other
service
provider may waive or reimburse the expenses of a specific class
or classes to
the extent permitted under Rule 18f-3 under the 1940 Act.
PURCHASE OF SHARES
IN GENERAL
Shares of each Fund may be purchased directly from the Fund at
the net asset
value next determined after receipt of the order in proper form by
the Transfer
Agent. Shares of the Funds may be purchased through broker-
dealers, banks and
trust departments which may charge the investor a transaction fee
or other fee
for their services at time of purchase. Such fees would not
otherwise be
charged if the shares were purchased directly from the Funds.
The minimum initial investment for regular accounts (other than
Individual
Retirement Accounts ("IRAs") and Uniform Gift to Minor Accounts
("UGMAs")) is
$2,500 for each Fund, and the minimum subsequent investment is
$50, except for
accounts opened through a fund network. In such case, the minimums
of the fund
network will apply. The minimum initial investment for IRAs and
UGMAs is $500,
and the minimum subsequent investment for IRAs and UGMAs is $50.
The minimum
initial and subsequent investment for those enrolled in the
Automatic
Investment Plan is $50. There is no sales load or charge in
connection with the
purchase of shares. The Company reserves the right to reject any
purchase order
and to suspend the offering of shares of any Fund. Each Fund also
reserves the
right to vary the initial and additional investment minimums, or
to waive the
minimum investment requirements for any investor.
Purchase orders for shares of a Fund which are received by the
Transfer Agent
in proper form, including money order, check or bank draft by the
regular
closing time of the New York Stock Exchange ("NYSE") (currently
4:00 p.m.
Eastern time) will be purchased at such Fund's net asset value
determined that
day, except that orders and payment for CHICAGO TRUST MONEY MARKET
FUND must be
received by 1:00 p.m. Eastern time. For CHICAGO TRUST MONEY MARKET
FUND, your
purchase will be processed at the net asset value calculated after
your
investment has been converted to federal funds. If you invest by
check, or non-
federal funds wire, allow one business day after receipt for
conversion into
federal funds. Checks must be made payable to "CT&T FUNDS." If you
wire money
in the form of federal funds, your money will be invested at the
share price
next determined after receipt of the wire. Except for CHICAGO
TRUST MONEY
MARKET FUND, orders for shares received in proper form after 4:00
p.m. will be
priced at the net asset value determined on the next day that the
NYSE is open
for trading.
MONTAG & CALDWELL GROWTH FUND offers two classes of shares. Only
Class N
shares may be purchased under this Prospectus.
Each Fund may accept telephone orders from broker-dealers or
service
organizations which have been previously approved by a Fund. It is
the
responsibility of such broker-dealers or service organizations to
promptly
forward purchase orders and payments for same to the Company.
36
<PAGE>
Purchases may be made in one of the following ways:
INITIAL PURCHASES BY MAIL
Shares of each Fund may be purchased initially by completing the
application
accompanying this Prospectus and mailing it to the Transfer Agent,
together
with a check payable to "CT&T FUNDS", c/o First Data Investor
Services Group,
Inc., P.O. Box 5164, Westborough, Massachusetts 01581. The Funds
will not
accept third party checks for the purchase of shares. Third party
checks are
those that are made out to someone other than the Fund and are
endorsed over to
the Fund.
INITIAL PURCHASES BY WIRE
An investor desiring to purchase shares of any Fund by wire
should call the
Transfer Agent first at (800) 992-8151 and request an account
number and
furnish the Fund with your tax identification number. Following
such
notification to the Transfer Agent, federal funds and registration
instructions
should be wired through the Federal Reserve System to:
BOSTON SAFE DEPOSIT & TRUST
ABA # 011001234
FOR: CT&T Funds
A/C 140414
FBO "SHAREOWNER NAME"
"SHAREOWNER ACCOUNT NUMBER"
A completed application with signature(s) of registrant(s) must
be filed with
the Transfer Agent immediately subsequent to the initial wire.
Investors should
be aware that some banks may impose a wire service fee.
SUBSEQUENT INVESTMENTS
Once an account has been opened, subsequent purchases in the
minimum amounts
may be made by mail, bank wire, exchange or by telephone. When
making
additional investments by mail, simply return the remittance
portion of a
previous confirmation with your investment in the envelope
provided. Your check
must be made payable to "CT&T FUNDS" and mailed to the CT&T Funds,
P.O. Box
5163, Westborough, MA 01581.
All investments must be made in U.S. dollars, and, to avoid fees
and delays,
checks must be drawn only on banks located in the U.S. In order to
help ensure
the receipt of good funds, the Trust reserves the right to delay
sending your
redemption proceeds up to 15 days if you purchased shares by
check. A charge
($20 minimum) will be imposed if any check used for the purchase
of shares is
returned. The Funds and the Transfer Agent reserve the right to
reject any
purchase order in whole or in part.
EXCHANGE OF SHARES
IN GENERAL
Shares of any of the Funds within the Company may be exchanged
for shares of
the same class of any of the other Funds within the Company. The
Company
currently consists of the following Funds: MONTAG & CALDWELL
GROWTH FUND,
CHICAGO TRUST GROWTH & INCOME FUND, CHICAGO TRUST TALON FUND,
CHICAGO TRUST
BALANCED FUND, MONTAG & CALDWELL BALANCED FUND, CHICAGO TRUST BOND
FUND,
CHICAGO TRUST MUNICIPAL BOND FUND, and CHICAGO TRUST MONEY MARKET
FUND.
The exchange privilege is a convenient way to respond to changes
in your
investment goals or in market conditions. This privilege is not
designed for
frequent trading in response to short-term market fluctuations.
You may make
exchanges by mail or by telephone if you have previously elected
the telephone
authorization
37
<PAGE>
privilege on the application form. The telephone exchange
privilege may be
difficult to implement during times of drastic economic or market
changes. The
purchase of shares of any Fund through an exchange transaction is
accepted at
the net asset value next determined. You should keep in mind that
for tax
purposes, an exchange is treated as a redemption and a new
purchase, each at
net asset value of the appropriate Fund. The Funds and the
Transfer Agent
reserve the right to limit, amend, impose charges upon, terminate
or otherwise
modify the exchange privilege on 60 days' prior written notice to
shareowners.
Exchanges may be made only for shares of a Fund then offering
its shares for
sale in your state of residence and are subject to the minimum
initial
investment requirement. Requests for telephone exchanges must be
received by
the Transfer Agent by the close of regular trading on the NYSE
(currently 4:00
p.m. Eastern time) on any day that the NYSE is open for regular
trading.
REDEMPTION OF SHARES
IN GENERAL
Shares of each Fund may be redeemed without charge on any
business day that
the NYSE is open for business. Redemptions will be effective at
the net asset
value per share next determined after the receipt by the Transfer
Agent of a
redemption request meeting the requirements described below. Each
Fund normally
sends redemption proceeds on the next business day, but in any
event redemption
proceeds are sent within seven calendar days of receipt of a
redemption request
in proper form. However, your redemption proceeds may be delayed
up to 15 days
if you purchased the shares to be redeemed by check until such
check has
cleared. Payment may also be made by wire directly to any bank
previously
designated by the shareowner in a shareowner account application.
A shareowner
will be charged $20 for redemptions by wire. Also, please note
that the
shareowner's bank may impose a fee for this wire service.
Except as noted below, redemption requests received in proper
form by the
Transfer Agent prior to the close of regular trading hours on the
NYSE on any
business day that the Fund calculates its per share net asset
value are
effective that day.
Redemption requests received after the close of the NYSE are
effective as of
the time the net asset value per share is next determined. No
redemption will
be processed until the Transfer Agent has received a completed
application with
respect to the account.
The Funds will satisfy redemption requests in cash to the
fullest extent
feasible, so long as such payments would not, in the opinion of
the Board of
Trustees, result in the necessity of a Fund selling assets under
disadvantageous conditions or to the detriment of the remaining
shareowners of
the Fund. Pursuant to the Company's Declaration of Trust, payment
for shares
redeemed may be made either in cash or in-kind, or partly in cash
and partly
in-kind. However, the Company has elected pursuant to Rule 18f-1
under the 1940
Act to redeem its shares solely in cash up to the lesser of
$250,000 or 1% of
the net asset value of the Fund, during any ninety-day period for
any one
shareowner. Payments in excess of this limit by any of the Funds
will also be
made wholly in cash unless the Board of Trustees believes that
economic
conditions exist which would make such a practice detrimental to
the best
interests of any such Fund. Any portfolio securities paid or
distributed in-
kind would be valued as described under "NET ASSET VALUE". In the
event that an
in-kind distribution is made, a shareowner may incur additional
expenses, such
as the payment of brokerage commissions, on the sale or other
disposition of
the securities received from a Fund. In-kind payments need not
constitute a
cross-section of the Fund's portfolio.
MINIMUM BALANCES
Due to the relatively high cost of maintaining smaller accounts,
the Funds
reserve the right to involuntarily redeem shares in any account
for its then
current net asset value (which will be promptly paid to the
shareowner) if at
any time the total investment does not have a value of at least
$50. The
shareowner will be
38
<PAGE>
notified that the value of his or her account is less than the
required minimum
and will be allowed at least sixty days to bring the value of the
account up to
the minimum before the redemption is processed.
Shares may be redeemed in one of the following ways:
REDEMPTIONS BY MAIL
Shareowners may submit a written request for redemption to: CT&T
Funds, P.O.
Box 5164, Westborough, MA 01581. The request must be in good order
which means
that it must: (i) identify the shareowner's account name and
account number;
(ii) state the fund name, (iii) state the number of shares to be
redeemed; and
(iv) be signed by each registered owner exactly as the shares are
registered.
To prevent fraudulent redemptions, a signature guarantee for the
signature of
each person in whose name the account is registered is required on
all written
redemption requests over $50,000. A guarantee may be obtained from
any
commercial bank, trust company, savings and loan association,
federal savings
bank, a member firm of a national securities exchange or other
eligible
financial institution. Credit unions must be authorized to issue
signature
guarantees; notary public endorsements will not be accepted. The
Transfer Agent
may require additional supporting documents for redemptions made
by
corporations, executors, administrators, trustees, guardians, and
retirement
plans.
A redemption request will not be deemed to be properly received
until the
Transfer Agent receives all required documents in proper form.
Questions with
respect to the proper form for redemption requests should be
directed to the
Transfer Agent at (800) 992-8151.
REDEMPTIONS BY TELEPHONE
Shareowners who have so indicated on the application, or have
subsequently
arranged in writing to do so, may redeem shares by instructing the
Transfer
Agent by telephone at (800) 992-8151.
In order to arrange for redemption by wire or telephone after an
account has
been opened, or to change the bank or account designated to
receive redemption
proceeds, a written request must be sent to the Transfer Agent at
the address
listed under "Redemptions by Mail" above. Such requests must be
signed by the
shareowner, with signatures guaranteed (see "Redemptions by Mail"
for details
regarding signature guarantees). Further documentation may be
requested from
corporations, executors, administrators, trustees, or guardians.
The Funds reserve the right to refuse a wire or telephone
redemption if it is
believed advisable to do so. Procedures for redeeming Fund shares
by wire or
telephone may be modified or terminated at any time by any of the
Funds.
Neither the Funds nor any of their service contractors will be
liable for any
loss or expense in acting upon telephone instructions that are
reasonably
believed to be genuine. In attempting to confirm that telephone
instructions
are genuine, the Funds will use such procedures as are considered
reasonable,
including requesting a shareowner to correctly state his or her
Fund account
number, the name in which his or her account is registered, his or
her social
security number, banking institution, bank account number, and the
name in
which his or her bank account is registered.
Shares of the Funds may be redeemed through certain broker-
dealers, banks and
bank trust departments who may charge the investor a transaction
fee or other
fee for their services at the time of redemption. Such fees would
not otherwise
be charged if the shares were redeemed from the Company.
REDEMPTION BY CHECKS (CHICAGO TRUST MONEY MARKET FUND ONLY)
If you are a shareowner of CHICAGO TRUST MONEY MARKET FUND
(except for IRAs
and UGMAs) and have elected the free checkwriting option on the
account
application form, you will receive checks that you may use to make
payments to
any person or business. There is no limit on the number of checks
you may
write, but
39
<PAGE>
each check must be for at least $500. You will continue to earn
dividends on
shares redeemed until the checks are presented to the Transfer
Agent for
payment. An account cannot be closed using the checkwriting
privilege. There is
currently no charge to shareowners for checkwriting, but the Fund
reserves the
right to impose a charge in the future. There is a $30 charge for
bounced
checks. The checkwriting privilege may be suspended or terminated
at any time
upon notice to investors. Cancelled checks are only available upon
request, and
a fee will be charged to receive them.
ACCOUNT OPTIONS
IN GENERAL
The following special services are available to shareowners.
There are no
charges for the programs noted below and an investor may change or
stop these
plans at any time by written notice to the Funds.
AUTOMATIC INVESTMENT PLAN
This service allows you to make regular investments once your
account is
established. You simply authorize the automatic withdrawal of
funds from your
bank account into the Fund of your choice. The minimum initial and
subsequent
investment pursuant to this plan is $50 per month. Your initial
account must be
established prior to participating in this plan. Please complete
the
appropriate section on the new account application enclosed with
this
Prospectus.
SYSTEMATIC WITHDRAWAL PROGRAM
The Funds offer a Systematic Withdrawal Program as another
option which may
be utilized by an investor who wishes to withdraw funds from his
or her account
on a regular basis. To participate in this option, an investor
must either own
or purchase shares having a value of $50,000 or more. Automatic
payments by
check will be mailed to the investor on either a monthly,
quarterly, semi-
annual, or annual basis in amounts of $50 or more. All withdrawals
are
processed on the 25th of the month or, if such day is not a
business day, on
the next business day and paid promptly thereafter.
INDIVIDUAL RETIREMENT ACCOUNTS
An IRA is a tax-deferred retirement savings account that may be
used by an
individual under age 70 1/2 who has compensation or self-
employment income or
an individual who has received a qualified distribution from his
or her
employer's retirement plan. Because income generated from an IRA
is tax-
deferred, CHICAGO TRUST MUNICIPAL BOND FUND may not be used for
IRAs.
DISTRIBUTION PLANS
The Board of Trustees of the Company has adopted a Plan of
Distribution (the
"Plan") pursuant to Rule 12b-1 under the 1940 Act which permits
the Class N
shares of each Fund (except CHICAGO TRUST MONEY MARKET FUND) to
pay certain
expenses associated with the distribution of its shares. Under the
Plan, each
Fund may reimburse the Distributor for actual expenses not
exceeding, on an
annual basis, 0.25% of a Fund's average daily net assets.
The Plan authorizes a Fund to compensate the Distributor for the
following:
(1) services rendered by the Distributor pursuant to the
Distribution Agreement
between the Company and the Distributor; (2) payments the
Distributor makes to
financial institutions and industry professionals, such as
insurance companies,
investment counselors, accountants, estate planning firms and
broker-dealers,
including Chicago Trust and its affiliates and subsidiaries, Talon
Securities,
Inc. (an affiliate of Talon) and the affiliates and subsidiaries
of the
Distributor (collectively, "Participating Organizations"), in
consideration for
distribution services provided or expenses assumed in connection
with
distribution assistance, market research, and promotional
services, including,
but
40
<PAGE>
not limited to, printing and distributing prospectuses to persons
other than
current shareowners of a Fund, printing and distributing
advertising and sales
literature and reports to shareowners used in connection with the
sale of a
Fund's shares, and personnel and communication equipment used in
servicing
shareowner accounts and prospective shareowner inquiries; and (3)
payments the
Distributor makes to Participating Organizations pursuant to an
agreement to
provide administrative support services to the holders of a Fund's
shares.
Participating Organizations that are compensated for distribution
services may
be required to register as dealers in certain jurisdictions.
Payments for market research and promotional services may be
based in whole
or in part on a percentage of the regular salary expense for those
employees of
Participating Organizations engaged in marketing research and
promotional
services specifically relating to the distribution of Fund shares
based on the
amount of time devoted by such employees to such activities, and
any out-of-
pocket expenses associated with the distribution of Fund shares.
All such payments made by a Fund pursuant to the Plan shall be
made for the
purpose of selling shares issued by the Fund. Distribution
expenses which are
attributable to a particular Fund will be charged against that
Fund's assets.
Distribution expenses which are attributable to more than one Fund
will be
allocated among the Funds in proportion to their relative net
assets.
NET ASSET VALUE
The net asset value per share of each Fund is computed as of the
close of
regular trading on the NYSE on each day the NYSE is open for
trading. The NYSE
is closed on New Year's Day, Presidents' Day, Good Friday,
Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
The net asset value per share is computed by adding the value of
all
securities and other assets in the portfolio, deducting any
liabilities
(expenses and fees are accrued daily) and dividing by the number
of shares
outstanding. The portfolio securities of each Fund listed or
traded on a stock
exchange are valued at the latest sale price. If no sale price is
reported, the
mean of the latest bid and asked prices is used. Securities traded
over-the-
counter are priced at the mean of the latest bid and asked prices.
When market
quotations are not readily available, securities and other assets
are valued at
fair value as determined in good faith by the Board of Trustees.
Bonds are valued through valuations obtained from a commercial
pricing
service or at the mean of the most recent bid and asked prices
provided by
investment dealers in accordance with procedures established by
the Board of
Trustees. Options, futures and options on futures are valued at
the settlement
price as determined by the appropriate clearing corporation.
The securities held in the portfolio of CHICAGO TRUST MONEY
MARKET FUND, and
the debt securities with maturities of sixty days or less held by
the other
Funds, are valued at amortized cost. When a security is valued at
amortized
cost, it is valued at its cost when purchased, and thereafter by
assuming a
constant amortization to maturity of any premium or accretion of
discount,
regardless of the impact of fluctuating interest rates on the
market value of
the instrument.
DIVIDENDS AND TAXES
DIVIDENDS
CHICAGO TRUST MONEY MARKET FUND'S net investment income is
declared daily and
paid monthly as a dividend to shareowners of record at the close
of business on
the day of declaration. In order to receive the dividend for that
day, the
shareowner's purchase of shares must be effective as of 1:00 p.m.
Eastern time.
Income dividends, when available, are declared and paid monthly
for CHICAGO
TRUST BOND FUND and CHICAGO TRUST MUNICIPAL BOND FUND. Dividends,
if any, from
net investment income will be declared and paid
41
<PAGE>
quarterly by MONTAG & CALDWELL GROWTH FUND, CHICAGO TRUST GROWTH &
INCOME FUND,
CHICAGO TRUST TALON FUND, CHICAGO TRUST BALANCED FUND, and MONTAG
& CALDWELL
BALANCED FUND. Aggregate net profits realized from the sale of
portfolio
securities, if any, are distributed at least once each year unless
they are
used to offset losses carried forward from prior years, in which
case no such
gain will be distributed.
Income dividends and capital gain distributions are reinvested
automatically
in additional shares at net asset value, unless you elect to
receive them in
cash. Distribution options may be changed at any time by
requesting a change in
writing. Any check in payment of dividends or other distributions
which cannot
be delivered by the Post Office or which remains uncashed for a
period of more
than one year may be reinvested in the shareowner's account at the
then current
net asset value and the dividend option may be changed from cash
to reinvest.
Dividends are reinvested on the ex-dividend date (the "ex-date")
at the net
asset value determined at the close of business on that date.
Please note that
shares purchased shortly before the record date for a dividend or
distribution
may have the effect of returning capital although such dividends
and
distributions are subject to taxes.
Dividends paid by the Fund with respect to Class I shares are
calculated in
the same manner and at the same time. Both Class N and Class I
shares of the
Fund will share proportionately in the investment income and
general expenses
of the Fund, except that the per share dividends of Class N shares
will differ
from the per share dividends of Class I shares as a result of
class-specific
expenses as discussed in "Expenses" under "ADMINISTRATION OF THE
FUNDS."
TAXES
Each Fund intends to qualify as a "regulated investment company"
under the
Internal Revenue Code ("the Code"). Such qualification relieves a
Fund of
liability for Federal income taxes to the extent the Fund's
earnings are
distributed in accordance with the Code. Each Fund is treated as a
separate
corporate entity for Federal tax purposes. Distributions of any
net investment
income and of any net realized short-term capital gains are
taxable to
shareowners as ordinary income. Distributions of net capital gain
(the excess
of net long-term capital gain over net short-term capital loss)
are taxable to
shareowners as long-term capital gain regardless of how long a
shareowner may
have held shares of a Fund. The tax treatment of distributions of
ordinary
income or capital gains will be the same whether the shareowner
reinvests the
distributions or elects to receive them in cash. A distribution
will be treated
as paid on December 31 of the current calendar year if it is
declared in
October, November or December with a record date in such a month
and paid
during January of the following calendar year. Such distributions
will be
taxable to shareowners in the calendar year in which the
distributions are
declared, rather than the calendar year in which the distributions
are
received.
Shareowners will be advised annually of the source and tax
status of all
distributions for Federal income tax purposes. Dividends and
distributions may
be subject to state and local income taxes. Further information
regarding the
tax consequences of investing in the Funds is included in the
Statement of
Additional Information. The above discussion is intended for
general
information only. Investors should consult their own tax advisors
for more
specific information on the tax consequences of particular types
of
distributions.
In the case of CHICAGO TRUST MUNICIPAL BOND FUND, distributions
of dividends
derived from tax-exempt interest will generally be exempt from
Federal income
tax to shareowners, but any distributions of net short-term gains
or taxable
interest will be taxable, and such dividends may be subject to
state and local
taxes. However, shareowners of the Fund must include the portion
of dividends
paid by the Fund that is attributable to interest on AMT bonds in
their Federal
alternative minimum taxable income. Those distributions that are
not tax-exempt
are taxable when they are paid, whether in cash or by reinvestment
in
additional shares, except that distributions declared in December
and paid in
the following January are taxable as if they were paid on December
31.
Redemptions of Fund shares, and the exchange of shares between
Funds of the
Company, are taxable events and, accordingly, shareowners may
realize capital
gains or losses on these transactions.
42
<PAGE>
Shareowners may be subject to back-up withholding on reportable
dividend and
redemption payments ("back-up withholding") if a certified
taxpayer
identification number is not on file with the Fund, or if, to the
Fund's
knowledge, an incorrect number has been furnished. An individual's
taxpayer
identification number is his/her social security number.
PERFORMANCE OF THE FUNDS
IN GENERAL
Performance, whether it be "yield", "effective yield", "total
return", or
"average annual total return" of a Fund, may be advertised to
present or
prospective shareowners. The figures are based on historical
performance and
should not be considered representative of future results. The
value of an
investment in a Fund will fluctuate and an investor's shares, when
redeemed,
may be worth more or less than their original cost. Performance
information for
a Fund may be compared to various unmanaged indices such as the
Dow Jones
Industrial Averages and the Standard & Poor's 500 Stock Index, and
to the
performance of other mutual funds tracked by mutual fund rating
services.
Further information about the performance of the Funds is included
in the
Statement of Additional Information, which may be obtained without
charge by
contacting the Fund at (800) 992-8151.
TOTAL RETURN
Total Return is defined as the change in value of an investment
in a Fund
over a particular period, assuming that all distributions have
been reinvested.
Thus, total return reflects not only income earned, but also
variations in
share prices at the beginning and end of the period. Average
annual total
return is determined by computing the annual compound return over
a stated
period of time that would have produced a Fund's cumulative total
return over
the same period if the Fund's performance had remained constant
throughout.
YIELD
Yield refers to net income generated by an investment over a
particular
period of time, which is annualized (assumed to have been
generated for one
year) and expressed as an annual percentage rate. Effective yield
is yield
assuming that all distributions are reinvested. Effective yield
will be
slightly higher than the yield because of the compounding effect
of the assumed
investment. Yield for CHICAGO TRUST MONEY MARKET FUND over a
seven-day period
is called current yield. For CHICAGO TRUST BOND FUND and CHICAGO
TRUST
MUNICIPAL BOND FUND, yield is calculated by dividing the net
investment income
per share earned during a thirty-day period by the maximum
offering price per
share on the last day of the period, and annualizing the result.
TAX-EQUIVALENT YIELD
CHICAGO TRUST MUNICIPAL BOND FUND also measures its performance
by a tax-
equivalent yield. This reflects the taxable yield that an investor
at the
highest marginal Federal income tax rate would have to receive to
equal the
primarily tax-exempt yield from this Fund. Tax-equivalent yield is
calculated
by dividing the municipal yield by the difference between 100% and
an
investor's marginal tax rate.
GENERAL INFORMATION
ORGANIZATION
Each Fund is a separate, diversified, series of the Company, a
Delaware
business trust organized pursuant to a Trust Instrument dated
September 10,
1993. The Company is registered under the 1940 Act as an open-end
management
investment company, commonly known as a mutual fund. The Trustees
of the
Company may establish additional series or classes of shares
without the
approval of shareowners. The assets of each series belong only to
that series,
and the liabilities of each series are borne solely by that series
and no
other.
43
<PAGE>
DESCRIPTION OF SHARES
Each Fund is authorized to issue an unlimited number of shares
of beneficial
interest without par value. Currently, there is only one class of
shares issued
by the Funds of the Company, except for MONTAG & CALDWELL GROWTH
FUND. That
Fund offers two classes of shares: Class N shares which are
offered by this
Prospectus and Class I shares. Since these classes have different
expenses,
i.e. Class I shares do not pay a distribution plan fee, their
performance will
vary and it is anticipated that the Class N dividends will be
lower than the
Class I dividends. Shares of each Fund represent equal
proportionate interests
in the assets of that Fund only and have identical voting,
dividend,
redemption, liquidation, and other rights except that Class I
shares of MONTAG
& CALDWELL GROWTH FUND have no rights with respect to that Fund's
distribution
plan. All shares issued are fully paid and non-assessable, and
shareowners have
no preemptive or other right to subscribe to any additional shares
and no
conversion rights. Class I shares are offered only to
institutional investors
and require a minimum investment of $40 million. Information about
Class I
shares is available by calling (800) 992-8151.
VOTING RIGHTS
Each issued and outstanding full and fractional share of a Fund
is entitled
to one full and fractional vote in the Fund. Shares of a Fund
participate
equally in regard to dividends, distributions, and liquidations
with respect to
that Fund subject to preferences (such as Rule 12b-1 distribution
fees), rights
or privileges of any share class. Shareowners have equal non-
cumulative voting
rights. Class N shares have exclusive voting rights with respect
to the
distribution plan. On any matter submitted to a vote of
shareowners, shares of
each Fund will vote separately except when a vote of shareowners
in the
aggregate is required by law, or when the Trustees have determined
that the
matter affects the interests of more than one Fund, in which case
the
shareowners of all such Funds shall be entitled to vote thereon.
Chicago Trust
may be deemed to be a "control person" (as defined in the 1940
Act) of certain
Funds, because as of January 30, 1997, it owned of record, but not
beneficially: 34.60% of MONTAG & CALDWELL GROWTH FUND; 93.62% of
CHICAGO TRUST
GROWTH & INCOME FUND; 56.60% of MONTAG & CALDWELL BALANCED FUND;
82.47% of
CHICAGO TRUST BOND FUND; 92.53% of CHICAGO TRUST MUNICIPAL BOND
FUND; 96.63% of
CHICAGO TRUST MONEY MARKET FUND; and 98.67% of CHICAGO TRUST
BALANCED FUND. See
"PRINCIPAL HOLDERS OF SECURITIES" in the Statement of Additional
Information.
SHAREOWNER MEETINGS
The Trustees of the Company do not intend to hold annual
meetings of
shareowners of the Funds. The Trustees have undertaken to the SEC,
however,
that they will promptly call a meeting for the purpose of voting
upon the
question of removal of any Trustee when requested to do so by not
less than 10%
of the outstanding shareowners of the Funds. In addition, subject
to certain
conditions, shareowners of the Funds may apply to the Funds to
communicate with
other shareowners to request a shareowners' meeting to vote upon
the removal of
a Trustee or Trustees.
CERTAIN PROVISIONS OF TRUST INSTRUMENT
Under Delaware law, the shareowners of the Funds will not be
personally
liable for the obligations of any Fund; a shareowner is entitled
to the same
limitation of personal liability extended to shareowners of
corporations. To
guard against the risk that the Delaware law might not be applied
in other
states, the Trust Instrument requires that every written
obligation of the
Company or a Fund contain a statement that such obligation may
only be enforced
against the assets of the Company or Fund and provides for
indemnification out
of Company or Fund property of any shareowner nevertheless held
personally
liable for Company or Fund obligations.
PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS
The Company will attempt to obtain the best overall price and
most favorable
execution of transactions in portfolio securities. However,
subject to policies
established by the Board of Trustees of the Company, a Fund
44
<PAGE>
may pay a broker-dealer a commission for effecting a portfolio
transaction for
a Fund in excess of the amount of commission another broker-dealer
would have
charged if Chicago Trust, Montag & Caldwell or Talon, as
appropriate,
determines in good faith that the commission paid was reasonable
in relation to
the brokerage or research services provided by such broker-dealer,
viewed in
terms of that particular transaction or such firm's overall
responsibilities
with respect to the clients, including the Fund, as to which it
exercises
investment discretion. In selecting and monitoring broker-dealers
and
negotiating commissions, consideration will be given to a broker-
dealer's
reliability, the quality of its execution services on a continuing
basis and
its financial condition.
Subject to the foregoing considerations, preference may be given
in executing
portfolio transactions for a Fund to brokers which have sold
shares of that
Fund, and Talon Securities, Inc., an affiliate of Talon, may
execute portfolio
transactions for CHICAGO TRUST TALON FUND. Any such transactions,
however, will
comply with Rule 17e-1 under the 1940 Act.
SHAREOWNER REPORTS AND INQUIRIES
Shareowners will receive Semi-Annual Reports showing portfolio
investments
and other information as of April 30 and Annual Reports audited by
independent
accountants as of October 31. Shareowners with inquiries should
call the Fund
at (800) 992-8151 or write to CT&T Funds, P.O. Box 5164,
Westborough,
Massachusetts 01581.
APPENDIX
DEBT RATINGS
MOODY'S INVESTORS SERVICE, INC. describes classifications of
corporate bonds as
follows:
"AAA" -- These bonds are judged to be of the best quality. They
carry the
smallest degree of investment risk and are generally referred to
as "gilt-
edged". Interest payments are protected by a large or by an
exceptionally
stable margin and principal is secure. While the various
protective elements
are likely to change, such changes as can be visualized are most
unlikely to
impair the fundamentally strong position of such issues.
"AA" -- These bonds are judged to be of high quality by all
standards. Together
with the "Aaa" group they comprise what are generally known as
high-grade
bonds. They are rated lower than the best bonds because margins of
protection
may not be as large as in "Aaa" securities or fluctuation of
protective
elements may be of greater amplitude or there may be other
elements present
which make the long-term risks appear somewhat larger than in
"Aaa" securities.
"A" -- These bonds possess many favorable investment attributes
and are to be
considered as upper medium-grade obligations. Factors giving
security to
principal and interest are considered adequate, but elements may
be present
which suggest a susceptibility to impairment sometime in the
future.
"BAA" -- These bonds are considered as medium-grade obligations,
i.e., they are
neither highly protected nor poorly secured. Interest payments and
principal
security appear adequate for the present but certain protective
elements may be
lacking or may be characteristically unreliable over any great
length of time.
Such bonds lack outstanding investment characteristics and in fact
have
speculative characteristics as well.
"BA" -- These bonds are judged to have speculative elements; their
future
cannot be considered as well assured. Often the protection of
interest and
principal payments may be very moderate and thereby not well
safeguarded during
both good and bad times over the future. Uncertainty of position
characterizes
bonds in this class.
"B" -- These bonds generally lack characteristics of the desirable
investment.
Assurance of interest and principal payments or of maintenance of
other terms
of the contract over any long period of time may be small.
45
<PAGE>
"CAA" -- These bonds are of poor standing. Such issues may be in
default or
there may be present elements of danger with respect to principal
or interest.
"CA" -- These bonds represent obligations which are speculative in
a high
degree. Such issues are often in default or have other marked
shortcomings.
"C" -- These bonds are the lowest-rated class of bonds and issues
so rated can
be regarded as having extremely poor prospects of ever attaining
any real
investment standing.
Moody's may modify a rating of "AA", "A" or "BAA" by adding
numerical modifiers
1, 2, 3 to show relative standing within these categories.
STANDARD & POOR'S CORPORATION describes classifications of
corporate and
municipal debt as follows:
"AAA" -- This is the highest rating assigned by Standard & Poor's
to a debt
obligation and indicates an extremely strong capacity to pay
interest and repay
principal.
"AA" -- These bonds also qualify as high-quality debt obligations.
Their
capacity to pay interest and repay principal is very strong, and
differs from
the "AAA" issues only in small degree.
"A" -- These bonds have a strong capacity to pay interest and
repay principal,
although they are somewhat more susceptible to the adverse effects
of changes
in circumstances and economic conditions than debt in higher rated
categories.
"BBB" -- These bonds are regarded as having an adequate capacity
to pay
interest and repay principal. Whereas they normally exhibit
adequate protection
parameters, adverse economic conditions or changing circumstances
are more
likely to lead to a weakened capacity to pay interest and repay
principal for
bonds in this category than for bonds in the higher rated
categories.
"BB", "B", "CCC", "CC", OR "C" -- These bonds are regarded as
having
predominantly speculative characteristics with respect to the
issuer's capacity
to pay interest and repay principal. "BB" indicates the lowest
degree of
speculation and "C" the highest degree of speculation. While such
bonds will
likely have some quality and protective characteristics, these are
outweighed
by large uncertainties or major exposures to adverse conditions.
Debt rated
"BB" has less near-term vulnerability to default than other
speculative issues.
However, it faces major ongoing uncertainties or exposure to
adverse business,
financial or economic conditions which could lead to inadequate
capacity to
meet timely interest and principal payments. The "BB" rating
category is also
used for debt subordinated to senior debt that is assigned an
actual or implied
"BBB-" rating. Debt rated "B" has a greater vulnerability to
default but
currently has the capacity to meet interest payments and principal
repayments.
Debt rated "CCC" has a currently identifiable vulnerability to
default, and is
dependent upon favorable business, financial and economic
conditions to meet
timely payments of interest and repayment of principal. The rating
"CC" is
typically applied to debt subordinated to senior debt which is
assigned an
actual or implied "CCC" rating. The rating "C" is typically
applied to debt
subordinated to senior debt which is assigned an actual or implied
"CCC-" debt
rating.
"CI" -- This rating is reserved for income bonds on which no
interest is being
paid.
"D" -- Debt is in default, and payment of interest and/or
repayment of
principal is in arrears.
PLUS (+) OR MINUS (-) -- The ratings from "AA" through "CCC" may
be modified by
the addition of a plus or minus sign to show relative standing
within the major
rating categories.
46
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INVESTMENT ADVISORS
The Chicago Trust Company
171 North Clark Street
Chicago, IL 60601-3294
Montag & Caldwell, Inc.
1100 Atlanta Financial Center
3343 Peachtree Road, NE
Atlanta, GA 30326-1450
SUB-INVESTMENT ADVISOR
Talon Asset Management, Inc.
One North Franklin
Chicago, IL 60606
ADMINISTRATOR
The Chicago Trust Company
171 North Clark Street
Chicago, IL 60601-3294
CUSTODIAN
Bankers Trust Company
16 Wall Street
New York, NY 10005
FOR ADDITIONAL INFORMATION ABOUT CT&T FUNDS, CALL:
(800) 992-8151
47
