<PAGE> 1
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON February 27, 1998.
FILE NO. 33-68666
FILE NO. 811-8004
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 (X)
Post-Effective Amendment No. 10
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 (X)
Amendment No. 12
ALLEGHANY FUNDS
---------------
(Exact name of Registrant as Specified in Charter)
171 North Clark Street
Chicago, Illinois 60601 (312) 223-2139
- ----------------------- --------------
(Address of Principal Executive Offices) (Registrant's Telephone Number)
Kenneth C. Anderson,
President
ALLEGHANY FUNDS
171 North Clark Street
Chicago, Illinois 60601-3294
----------------------------
(Name and Address of Agent for Service)
With a Copy to:
Arthur Simon, Esq.
SONNENSCHEIN NATH & ROSENTHAL
8000 Sears Tower
Chicago, Illinois 60606
It is proposed that this filing become effective (check appropriate box):
immediately upon filing pursuant to Paragraph (b);
(X) on February 27, 1998 pursuant to Paragraph (b);
60 days after filing pursuant to paragraph (a)(i); on (date)
pursuant to Paragraph (a)(i);
75 days after filing pursuant to paragraph (a)(ii);
or on (date) pursuant to paragraph (a)(ii) of Rule 485.
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ALLEGHANY FUNDS
CROSS REFERENCE SHEET PURSUANT TO RULE 481A
PART A--INFORMATION REQUIRED IN A PROSPECTUS:
<TABLE>
<CAPTION>
FORM N-LA ITEM CAPTION IN PROSPECTUS
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<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Prospectus Summary;
Expense Information
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant Investment Objectives and Policies; Investment
Strategies and Risk Considerations
5. Management of the Fund Management of the Funds
5A. Management's Discussion Not Applicable
of Fund Performance
6. Capital Stock and Other Securities Net Asset Value;
Dividends and Taxes;
General Information
7. Purchase of Securities Being Offered Purchase of Shares; Exchange of Shares;
Account Options; Distribution Plans
8. Redemption or Repurchase Redemption of Shares
9. Legal Proceedings Not Applicable
</TABLE>
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PART B--INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION:
<TABLE>
<CAPTION>
FORM N-LA ITEM CAPTION IN SAI
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<S> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Covered in Part A
13. Investment Objectives and Policies Investment Policies and Risk Considerations;
Investment Restrictions; Portfolio Transactions
and Brokerage Commissions
14. Management of the Fund Trustees and Officers
15. Principal Holders of Securities Principal Holders of Securities
16. Investment Advisory and Other Services Investment Advisory and Other Services
17. Brokerage Allocation Portfolio Transactions
and Brokerage Commissions
18. Capital Stock and Other Securities Other Information
19. Purchase, Redemption, and
Pricing of Securities Being Offered Covered in Part A
20. Tax Status Taxes
21. Underwriters Covered in Part A
22. Calculations of Performance Data Performance Information
23. Financial Statements Audited Financials dated 10/31/97
</TABLE>
- --------------------------------------------------------------------------------
PART C -- OTHER INFORMATION:
Information required to be included in Part C is set forth under the appropriate
Item, so numbered, in Part C to this Registration Statement.
3
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PROSPECTUS
(WITH APPLICATION)
FEBRUARY 27, 1998
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
ALLEGHANY FUNDS
The Chicago Trust Company, Investment Advisor
Montag & Caldwell, Inc., Investment Advisor
(800) 992-8151
<PAGE> 5
ALLEGHANY FUNDS
171 North Clark Street
Chicago, IL 60601
(800) 992-8151
Website: http://www.alleghanyfunds.chicago-trust.com
PROSPECTUS
FEBRUARY 27, 1998
ALLEGHANY FUNDS (formerly known as the "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 (the "Sub-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 invests 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 is placed upon selection of particular investments as opposed
to allocation of assets.
CHICAGO TRUST BOND FUND seeks high current income consistent with what
Chicago Trust believes to be prudent risk of capital. The Fund primarily invests
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 seeks to achieve its objective by investing substantially all
of its assets in a diversified portfolio of primarily intermediate-term
municipal debt obligations.
1
<PAGE> 6
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 Funds 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 a 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
27, 1998, as supplemented from time to time, which has been filed with the
Securities and Exchange Commission ("SEC") and is available along with other
related materials in the SEC's Internet Website (http://www.sec.gov). The
Statement of Additional Information is incorporated by reference into this
Prospectus and is available upon request and without charge from the Company, at
the addresses and telephone numbers below.
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.
<TABLE>
<CAPTION>
Alleghany Funds Investment Advisors:
--------------- --------------------
<S> <C>
171 North Clark Street The Chicago Trust Company
Chicago, IL 60601-3294 171 North Clark Street
(800) 992-8151 Chicago, IL 60601-3294
Montag & Caldwell, Inc.
1100 Atlanta Financial Center
3343 Peachtree Road, NE
Atlanta, GA 30326-1450
(800) 992-8151
</TABLE>
2
<PAGE> 7
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUMMARY.......................................... 4
EXPENSE INFORMATION......................................... 6
FINANCIAL HIGHLIGHTS........................................ 8
INVESTMENT OBJECTIVES AND POLICIES.......................... 14
MONTAG & CALDWELL GROWTH FUND............................. 14
CHICAGO TRUST GROWTH & INCOME FUND........................ 15
CHICAGO TRUST TALON FUND.................................. 15
CHICAGO TRUST BALANCED FUND............................... 16
MONTAG & CALDWELL BALANCED FUND........................... 17
CHICAGO TRUST BOND FUND................................... 18
CHICAGO TRUST MUNICIPAL BOND FUND......................... 19
CHICAGO TRUST MONEY MARKET FUND........................... 20
INVESTMENT STRATEGIES AND RISK CONSIDERATIONS............... 21
MANAGEMENT OF THE FUNDS..................................... 30
PORTFOLIO MANAGEMENT METHODS................................ 31
ADMINISTRATION OF THE FUNDS................................. 33
PURCHASE OF SHARES.......................................... 35
EXCHANGE OF SHARES.......................................... 36
REDEMPTION OF SHARES........................................ 37
ACCOUNT OPTIONS............................................. 39
DISTRIBUTION PLAN........................................... 39
NET ASSET VALUE............................................. 40
DIVIDENDS AND TAXES......................................... 40
PERFORMANCE OF THE FUNDS.................................... 42
GENERAL INFORMATION......................................... 42
APPENDIX
DEBT RATINGS................................................ 44
</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> 8
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 invests 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
4
<PAGE> 9
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
Chicago Trust believes to be prudent risk of capital. The Fund primarily invests
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 seeks 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 PLAN." 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," "ACCOUNT
OPTIONS" 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 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."
MANAGEMENT OF THE FUNDS
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;
5
<PAGE> 10
CHICAGO TRUST BOND FUND; CHICAGO TRUST MUNICIPAL BOND FUND; CHICAGO TRUST MONEY
MARKET FUND; and CHICAGO TRUST TALON FUND, with Talon serving as Sub-Advisor.
Talon, One North Franklin, Chicago, Illinois 60606, a registered investment
advisor, is the Sub-Advisor for CHICAGO TRUST TALON FUND.
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, 1997, Chicago Trust managed approximately $7.0 billion
in assets primarily for pension and profit sharing accounts, individuals,
families, and insurance companies. As of that date, Talon managed over $450
million in assets primarily for high net worth individuals, trusts, charitable
foundations, employee benefit plans and family partnerships. As of December 31,
1997, Montag & Caldwell managed over $17.0 billion in assets primarily for
employee benefit, endowment, charitable and other institutional clients, mutual
funds, and high net worth individuals.
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. Chicago Trust 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> 11
ANNUAL FUND OPERATING EXPENSES AS A PERCENTAGE OF AVERAGE NET ASSETS:
<TABLE>
<CAPTION>
NET EXPENSE RATIO
INVESTMENT OTHER AFTER ADVISORS'
ADVISORY FEES EXPENSES VOLUNTARY FEE
After Voluntary 12B-1 AFTER VOLUNTARY WAIVERS AND
FUND(1) FEE WAIVERS FEES REIMBURSEMENTS REIMBURSEMENT(1)
------- --------------- ----- --------------- -----------------
<S> <C> <C> <C> <C>
Montag & Caldwell Growth Fund(2)............. 0.80% 0.25% 0.18% 1.23%
Chicago Trust Growth & Income Fund(2)........ 0.68% 0.25% 0.17% 1.10%
Chicago Trust Talon Fund..................... 0.43% 0.25% 0.62% 1.30%
Chicago Trust Balanced Fund(3)............... 0.67% 0.25% 0.18% 1.10%
Montag & Caldwell Balanced Fund.............. 0.67% 0.25% 0.33% 1.25%
Chicago Trust Bond Fund...................... 0.33% 0.25% 0.22% 0.80%
Chicago Trust Municipal Bond Fund(3)......... 0.00% 0.10% 0.00% 0.10%
Chicago Trust Money Market Fund(3)........... 0.40% N/A 0.16% 0.56%
</TABLE>
(1) The above table reflects a continuation of the Advisors' voluntary
undertakings to waive investment advisory fees and/or reimburse each Fund,
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: MONTAG & CALDWELL GROWTH FUND 0.80%, 0.19%, and 1.24%; CHICAGO
TRUST GROWTH & INCOME FUND 0.70%, 0.17%, and 1.12%; CHICAGO TRUST TALON
FUND 0.80%, 0.62%, and 1.67%; CHICAGO TRUST BALANCED FUND; 0.70%, 0.18%,
and 1.13%; MONTAG & CALDWELL BALANCED FUND 0.75%, 0.33%, and 1.33%; CHICAGO
TRUST BOND FUND 0.55%, 0.22%, and 1.02%; CHICAGO TRUST MUNICIPAL BOND FUND
0.60%, 0.79% and 1.64%; CHICAGO TRUST MONEY MARKET FUND 0.40%, 0.16%, and
0.56%. Except for changes in the expense structure for CHICAGO TRUST GROWTH
& INCOME FUND, CHICAGO TRUST BALANCED FUND, CHICAGO TRUST MUNICIPAL BOND
FUND AND CHICAGO TRUST MONEY MARKET FUND as discussed in footnote (3) below
and for one-time expenses incurred in MONTAG & CALDWELL GROWTH FUND, the
ratios shown above reflect the expenses incurred by each existing Fund
during the fiscal year ended October 31, 1997, unless otherwise noted.
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) As of February 28, 1997, the Advisor reduced the amount of advisory fees
waived by 0.10% for CHICAGO TRUST GROWTH & INCOME FUND and CHICAGO TRUST
BALANCED FUND resulting in a net expense ratio of 1.10% for each of these
Funds. As of February 27, 1998, the Advisor has voluntarily undertaken to
reimburse the expenses of CHICAGO TRUST MUNICIPAL BOND FUND so as not to
exceed 0.10% and is no longer waiving fees or reimbursing expenses for
CHICAGO TRUST MONEY MARKET FUND.
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> 12
EXAMPLE:
Based on the level of expenses listed above after waivers and
reimbursements, 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 $ 39 $ 68 $149
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.......................... $ 1 $ 3 $ 6 $ 13
Chicago Trust Money Market Fund............................ $ 6 $ 18 $ 31 $ 70
</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.
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, 1997, 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 included as
the Appendix in the Statement of Additional Information.
8
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<TABLE>
<CAPTION>
MONTAG & CALDWELL CHICAGO TRUST
GROWTH FUND GROWTH & INCOME FUND
--------------------------------- -----------------------------------------------
YEAR YEAR PERIOD YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
10/31/97 10/31/96 10/31/95* 10/31/97 10/31/96 10/31/95 10/31/94**
-------- -------- --------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD...... $ 17.08 $ 13.16 $ 10.00 $ 16.17 $ 12.90 $ 10.11 $ 10.00
-------- -------- ------- -------- -------- -------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)............. (0.05) 0.00 0.02 0.08 0.11 0.09 0.07
Net realized and unrealized gain on
investments............................ 5.79 3.93 3.16 3.91 3.34 2.79 0.10
-------- -------- ------- -------- -------- -------- -------
Total from investment operations....... 5.74 3.93 3.18 3.99 3.45 2.88 0.17
-------- -------- ------- -------- -------- -------- -------
LESS DISTRIBUTIONS:
From and in excess of net investment
income................................. 0.00 (0.01) (0.02) (0.09) (0.11) (0.09) (0.06)
From net realized gain on investments.... (0.14) 0.00 0.00 (0.34) (0.07) 0.00 0.00
-------- -------- ------- -------- -------- -------- -------
Total distributions.................... (0.14) (0.01) (0.02) (0.43) (0.18) (0.09) (0.06)
-------- -------- ------- -------- -------- -------- -------
NET INCREASE IN NET ASSET VALUE........... 5.60 3.92 3.16 3.56 3.27 2.79 0.11
-------- -------- ------- -------- -------- -------- -------
NET ASSET VALUE, END OF PERIOD............ $ 22.68 $ 17.08 $ 13.16 $ 19.73 $ 16.17 $ 12.90 $ 10.11
======== ======== ======= ======== ======== ======== =======
TOTAL RETURN.............................. 33.82% 29.91% 31.87%(2) 25.16% 26.98% 28.66% 1.73%(2)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)..... $479,557 $166,243 $40,355 $274,608 $205,133 $172,296 $12,282
Ratio of expenses to average net assets
before reimbursement of expenses by
Advisor................................ 1.24% 1.32% 1.87%(1) 1.12% 1.15% 1.50% 2.21%(1)
Ratio of expenses to average net assets
after reimbursement of expenses by
Advisor................................ 1.23% 1.28% 1.30%(1) 1.07%(3) 1.00% 1.09%(4) 1.20%(1)
Ratio of net investment income to average
net assets before reimbursement of
expenses by Advisor.................... (0.38)% (0.10)% (0.36)%(1) 0.36% 0.62% 0.33% (0.15)%(1)
Ratio of net investment income to average
net assets after reimbursement of
expenses by Advisor.................... (0.37)% (0.06)% 0.20%(1) 0.41% 0.77% 0.74% 0.86%(1)
Portfolio turnover....................... 18.65% 26.36% 34.46%(2) 30.58% 25.48% 9.00% 37.01%(2)
Average commission rate paid............. $ 0.0592 $ 0.0639 N/R $ 0.0530 $ 0.0571 N/R N/R
</TABLE>
- ---------------
* MONTAG & CALDWELL GROWTH FUND Class N shares 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 affects the net expense
ratio, changed from 1.00% to 1.10% on February 28, 1997.
(4) 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.
9
<PAGE> 14
<TABLE>
<CAPTION>
CHICAGO TRUST TALON FUND CHICAGO TRUST BALANCED FUND
------------------------------------------ ---------------------------------
YEAR YEAR YEAR PERIOD YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
10/31/97 10/31/96 10/31/95 10/31/94* 10/31/97 10/31/96 10/31/95**
-------- -------- -------- --------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD...... $ 14.39 $ 12.07 $ 10.25 $10.00 $ 9.60 $ 8.43 $ 8.34
------- ------- ------- ------ -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................... 0.11 0.04 0.09 0.02 0.28 0.27 0.03
Net realized and unrealized gain on
investments and options................ 4.38 3.01 1.84 0.23 1.60 1.16 0.06
------- ------- ------- ------ -------- -------- --------
Total from investment operations....... 4.49 3.05 1.93 0.25 1.88 1.43 0.09
------- ------- ------- ------ -------- -------- --------
LESS DISTRIBUTIONS:
From and in excess of net investment
income................................. (0.09) (0.03) (0.11) 0.00 (0.28) (0.26) 0.00
From net realized gain on investments.... (1.19) (0.70) 0.00 0.00 (0.14) 0.00 0.00
------- ------- ------- ------ -------- -------- --------
Total distributions.................... (1.28) (0.73) (0.11) 0.00 (0.42) (0.26) 0.00
------- ------- ------- ------ -------- -------- --------
NET INCREASE IN NET ASSET VALUE........... 3.21 2.32 1.82 0.25 1.46 1.17 0.09
------- ------- ------- ------ -------- -------- --------
NET ASSET VALUE, END OF PERIOD............ $ 17.60 $ 14.39 $ 12.07 $10.25 $ 11.06 $ 9.60 $ 8.43
======= ======= ======= ====== ======== ======== ========
TOTAL RETURN.............................. 33.47% 26.51% 18.92% 2.50%(2) 20.10% 17.21% 1.08%(2)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)..... $28,460 $17,418 $10,538 $4,355 $187,993 $156,703 $152,820
Ratio of expenses to average net assets
before reimbursement of expenses by
Advisor................................ 1.67% 1.98% 3.04% 7.82%(1) 1.13% 1.17% 1.19%(1)
Ratio of expenses to average net assets
after reimbursement of expenses by
Advisor................................ 1.30% 1.30% 1.30% 1.30%(1) 1.07%(3) 1.00% 1.00%(1)
Ratio of net investment income to average
net assets before reimbursement of
expenses by Advisor.................... 0.34% (0.38)% (0.97)% (4.13)%(1) 2.70% 2.79% 2.56%(1)
Ratio of net investment income to average
net assets after reimbursement of
expenses by Advisor.................... 0.71% 0.30% 0.77% 2.39%(1) 2.76% 2.96% 2.73%(1)
Portfolio turnover....................... 112.72% 126.83% 229.43% 33.66%(2) 34.69% 34.29% 0.72%(2)
Average commission rate paid............. $0.0591 $0.0612 N/R N/R $0.0576 $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.
(3) The Advisor's expense reimbursement level, which affects the net expense
ratio, changed from 1.00% to 1.10% on February 28, 1997.
N/R Not required.
10
<PAGE> 15
<TABLE>
<CAPTION>
MONTAG & CALDWELL CHICAGO TRUST
BALANCED FUND BOND FUND
--------------------------------- -----------------------------------------------
YEAR YEAR PERIOD YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
10/31/97 10/31/96 10/31/95* 10/31/97 10/31/96 10/31/95 10/31/94**
-------- -------- --------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD...... $ 14.29 $ 12.12 $ 10.00 $ 9.89 $ 9.94 $ 9.21 $ 10.00
------- ------- ------- -------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................... 0.25 0.27 0.26 0.61 0.60 0.60 0.50
Net realized and unrealized gain (loss)
on investments......................... 2.93 2.17 2.09 0.23 (0.05) 0.73 (0.82)
------- ------- ------- -------- ------- ------- -------
Total from investment operations....... 3.18 2.44 2.35 0.84 0.55 1.33 (0.32)
------- ------- ------- -------- ------- ------- -------
LESS DISTRIBUTIONS:
From and in excess of net investment
income................................. (0.25) (0.27) (0.23) (0.60) (0.60) (0.60) (0.47)
From net realized gain on investments.... (1.21) 0.00 0.00 0.00 0.00 0.00 0.00
------- ------- ------- -------- ------- ------- -------
Total distributions.................... (1.46) (0.27) (0.23) (0.60) (0.60) (0.60) (0.47)
------- ------- ------- -------- ------- ------- -------
NET INCREASE (DECREASE) IN NET ASSET
VALUE.................................... 1.72 2.17 2.12 0.24 (0.05) 0.73 (0.79)
------- ------- ------- -------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD............ $ 16.01 $ 14.29 $ 12.12 $ 10.13 $ 9.89 $ 9.94 $ 9.21
======= ======= ======= ======== ======= ======= =======
TOTAL RETURN 24.26% 20.37% 23.75%(2) 8.84% 5.76% 14.89% (3.23)%(2)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)..... $82,719 $31,473 $21,908 $120,532 $79,211 $70,490 $12,546
Ratio of expenses to average net assets
before reimbursement of expenses by
Advisor................................ 1.33% 1.58% 2.50%(1) 1.02% 1.10% 1.54% 2.02%(1)
Ratio of expenses to average net assets
after reimbursement of expenses by
Advisor................................ 1.25% 1.25% 1.25%(1) 0.80% 0.80% 0.80% 0.80%(1)
Ratio of net investment income to average
net assets before reimbursement of
expenses by Advisor.................... 1.70% 1.83% 1.38%(1) 6.02% 5.89% 5.78% 4.83%(1)
Ratio of net investment income to average
net assets after reimbursement of
expenses by Advisor.................... 1.78% 2.16% 2.63%(1) 6.24% 6.19% 6.52% 6.05%(1)
Portfolio turnover....................... 28.13% 43.58% 27.33%(2) 17.76% 41.75% 68.24% 20.73%(2)
Average commission rate paid............. $0.0591 $0.0644 N/R 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.
11
<PAGE> 16
<TABLE>
<CAPTION>
CHICAGO TRUST
MUNICIPAL BOND FUND
---------------------------------------------
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
10/31/97 10/31/96 10/31/95 10/31/94*
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............. $ 10.06 $ 10.08 $ 9.56 $ 10.00
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.......................... 0.38 0.38 0.35 0.27
Net realized and unrealized gain (loss) on
investments................................. 0.12 (0.02) 0.52 (0.46)
------- ------- ------- -------
Total from investment operations............ 0.50 0.36 0.87 (0.19)
------- ------- ------- -------
LESS DISTRIBUTIONS FROM AND IN EXCESS OF NET
INVESTMENT INCOME........................... (0.37) (0.38) (0.35) (0.25)
------- ------- ------- -------
Net increase (decrease) in net asset value....... 0.13 (0.02) 0.52 (0.44)
------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD................... $ 10.19 $ 10.06 $ 10.08 $ 9.56
======= ======= ======= =======
TOTAL RETURN..................................... 5.13% 3.59% 9.29% (1.92)%(2)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)........... $12,379 $11,186 $11,679 $10,462
Ratio of expenses to average net assets before
reimbursement of expenses by Advisor........ 1.64% 1.53% 2.16% 2.09%(1)
Ratio of expenses to average net assets after
reimbursement of expenses by Advisor(3)..... 0.90% 0.90% 0.90% 0.90%(1)
Ratio of net investment income to average net
assets before reimbursement of expenses by
Advisor..................................... 3.00% 3.11% 2.37% 1.90%(1)
Ratio of net investment income to average net
assets after reimbursement of expenses by
Advisor..................................... 3.74% 3.74% 3.63% 3.09%(1)
Portfolio turnover............................. 16.19% 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.
(3) The Advisor's expense reimbursement level, which reduces the net expense
ratio, changed from 0.90% to 0.10% on February 27, 1998. (unaudited)
12
<PAGE> 17
<TABLE>
<CAPTION>
CHICAGO TRUST
MONEY MARKET FUND
---------------------------------------------
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
10/31/97 10/31/96 10/31/95 10/31/94*
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.......... $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income....................... 0.05 0.05 0.05 0.03
-------- -------- -------- --------
LESS DISTRIBUTIONS FROM NET INVESTMENT
INCOME................................... (0.05) (0.05) (0.05) (0.03)
-------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD................ $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ========
TOTAL RETURN.................................. 5.15% 5.14% 5.56% 3.20%(2)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)........ $238,551 $226,536 $206,075 $122,929
Ratio of expenses to average net assets
before reimbursement of expenses by
Advisor.................................. 0.56% 0.59% 0.63% 0.64%(1)
Ratio of expenses to average net assets
after reimbursement of expenses by
Advisor(4)............................... 0.50% 0.50% 0.43%(3) 0.40%(1)
Ratio of net investment income to average
net assets before reimbursement of
expenses by Advisor...................... 5.00% 4.93% 5.24% 3.49%(1)
Ratio of net investment income to average
net assets after reimbursement of
expenses by Advisor...................... 5.06% 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.
(4) Effective February 27, 1998, the Advisor is no longer waiving fees or
reimbursing expenses. (unaudited)
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, 1997, 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
13
<PAGE> 18
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 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.
14
<PAGE> 19
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 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 Composite Stock Price Index (the
"S&P 500") ("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.
15
<PAGE> 20
Under normal circumstances, as determined by the Sub-Advisor, 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.
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
16
<PAGE> 21
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 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.
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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.
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-
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<PAGE> 23
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 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 alternative minimum tax, or
"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
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<PAGE> 24
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 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.
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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.
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 Ginnie Mae (formerly known 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.
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<PAGE> 26
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
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 Securities and
Exchange
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<PAGE> 27
Commission ("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."
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
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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 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
24
<PAGE> 29
ALLEGHANY FUNDS NEW ACCOUNT APPLICATION
- --------------------------------------------------------------------------------
INVESTMENT ADVISORS: THE CHICAGO TRUST COMPANY
MONTAG & CALDWELL, INC.
FOR ASSISTANCE WITH THIS APPLICATION, OR FOR AN IRA APPLICATION, CALL US AT
800-992-8151.
1. REGISTRATION
COMPLETE A, B OR C BELOW. (PLEASE PRINT)
A. Individual or Joint Account*
<TABLE>
<S> <C> <C> <C>
- ------------------------ ------------------------ --------------------- ------------
First Name Last Name Social Security Birthdate
- ------------------------ ------------------------ --------------------- ------------
First Name Last Name Social Security Birthdate
* Registration will be Joint Tenancy with Rights of Survivorship, unless specified.
</TABLE>
B. Gift to Minors
<TABLE>
<S> <C> <C>
- --------------------------------------------------- Under the _______ UGMA/UTMA
Name of Custodian State
- --------------------------------------------------- ------------------------------------ ------------------
As Custodian For (name of minor) Minor's Social Security Minor's Birth Date
</TABLE>
C. Corporations, Partnerships, Trusts and Others
<TABLE>
<S> <C>
- --------------------------------------------------- ------------------------------------
Name of Legal Entity Taxpayer Identification Number
- --------------------------------------------------- ------------------------------------
Name of Fiduciary Name of Fiduciary
- ---------------------------------------------------
Date of Trust (month, day, year)
</TABLE>
2. MAILING ADDRESS
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------
Street City State ZIP Code
- --------------------------------------------------- ------------------------------------
Daytime Telephone Internet Address
</TABLE>
If you have an account in another Alleghany Fund that is registered under the
same name as above, please
list the account number here:
---------------------------------------------------
<TABLE>
<S> <C>
Citizen Of U.S. [ ] [ ] Non Resident Alien (Country of Residence)
------------------------
Resident Alien [ ]
</TABLE>
Send Duplicate Statements To:
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------------------
Name Company
- --------------------------------------------------------------------------------------------
Street City State ZIP Code
</TABLE>
<PAGE> 30
3. INVESTMENT INFORMATION
<TABLE>
<CAPTION>
Distribution Options
Capital Gains Capital Gains Capital Gains
& Dividends Reinvested, & Dividends
Fund Name (Fund #) Amount Percentage Reinvested Dividends in Cash in Cash
------------------ ------ or ---------- ------------- ----------------- -------------
<S> <C> <C> <C> <C> <C>
Montag & Caldwell Growth Fund (#134)
--------- ------------
[ ] [ ] [ ]
Chicago Trust Growth & Income Fund (#133)
--------- ------------
[ ] [ ] [ ]
Chicago Trust Talon Fund (#132)
--------- ------------
[ ] [ ] [ ]
Chicago Trust Balanced Fund (#131)
--------- ------------
[ ] [ ] [ ]
Montag & Caldwell Balanced Fund (#130)
--------- ------------
[ ] [ ] [ ]
Chicago Trust Bond Fund (#120)
--------- ------------
[ ] [ ] [ ]
Chicago Trust Municipal Bond Fund (#110)
--------- ------------
[ ] [ ] [ ]
Chicago Trust Money Market Fund (#100)
--------- ------------
[ ] [ ] [ ]
Total Investment 100%
--------- Dividends and Capital
Gains will be reinvested
unless otherwise specified.
Please make check payable to "Alleghany Funds"
</TABLE>
4. PURCHASE, EXCHANGE AND REDEMPTION AUTHORIZATIONS
<TABLE>
<S> <C>
- ------ Permits exchanges between accounts with identical
registrations.
- ------
I (we) authorize First Data Investor Services Group, Inc. to
honor telephone instructions for my (our) account. Neither
the Fund nor First Data Investor Services Group, Inc. will
be liable for properly acting upon telephone instructions
believed to be genuine.
- ------
I (we) authorize First Data to honor instructions to
purchase shares electronically or have redemption proceeds
sent directly to my (our) bank account VIA ELECTRONIC FUNDS
TRANSFER USING AUTOMATED CLEARING HOUSE (ACH) procedures. I
have completed the Bank Account Information below to
establish this procedure.
</TABLE>
BANK ACCOUNT INFORMATION -- STAPLE A PREPRINTED DEPOSIT SLIP OR VOIDED CHECK
FROM YOUR BANK ACCOUNT.
------------------------------------- -------------------------------------
Bank Account Number Registration of account to be debited
------------------------------------- -------------------------------------
Name of Bank Street Address
----------------------------------------------------------------------------
City State ZIP Code
Bank's ABA Number (9 digits)
----------------------------------------------------------------------------
Signature(s) of Bank Account owner(s)
---------------------------------------
---------------------------------------
<PAGE> 31
5. ALLEGHANY FUNDS AUTOMATIC INVESTMENT PLAN
This service lets you invest ($50 or more) automatically on a monthly
basis, from your bank account to your Alleghany account. Change or cancel
your plan anytime with a phone call. (The Automatic Investment Plan
normally becomes active 20 business days after your application is
processed.) You may select more than one fund for your Automatic Investment
Plan.
TO ESTABLISH THIS FEATURE, COMPLETE THE BANK ACCOUNT INFORMATION REQUESTED
IN SECTION 4.
<TABLE>
<CAPTION>
Account Number
Fund Name (Fund #) Monthly Amount (if established)
------------------ -------------- ----------------------------
<S> <C> <C>
Montag & Caldwell Growth Fund (#134) $ ----------------
------------------
Chicago Trust Growth & Income Fund (#133) $ ----------------
------------------
Chicago Trust Talon Fund (#132) $ ----------------
------------------
Chicago Trust Balanced Fund (#131) $ ----------------
------------------
Montag & Caldwell Balanced Fund (#130) $ ----------------
------------------
Chicago Trust Bond Fund (#120) $ ----------------
------------------
Chicago Trust Municipal Bond Fund (#110) $ ----------------
------------------
Chicago Trust Money Market Fund (#100) $ ----------------
------------------
Total Investment $ ----------------
------------------
</TABLE>
Please start my Automatic Investment Plan on the following date each
month:
------------------------------
I (we) understand that my ACH debit will be dated on the day of each month
indicated above. If that day falls on a day in which the NYSE is not open
for business, the debit will occur on the next available business day. I
(we) agree that if such debit is not honored, First Data Investor Services
Group, Inc. reserves the right to discontinue this service and any share
purchases made upon such deposit will be cancelled. I (we) further agree
that if the net asset value of shares purchased is less when said purchase
is cancelled than when the purchase was made, First Data Investor Services
Group, Inc. shall be authorized to liquidate other dates or fractions
thereof held in my (our) account to make up the deficiency. This Automatic
Investment Plan may be discontinued by First Data Investor Services Group,
Inc. upon 30 days written notice or at any time by the investor by a written
notice to First Data Investor Services Group, Inc. which is received not
later than 5 business days prior to the above designated investment date.
6. FREE CHECKWRITING PRIVILEGES (Money Market Fund Only)
<TABLE>
<S> <C>
- ------ Check here if you would like free checkwriting privileges.
There is a $500 minimum for any check written. Your
checkbook will be mailed to you within two weeks. Please
sign below to indicate the authorized signature for checks
written.
Authorized Signature(s)
</TABLE>
------------------------------------ -------------------------------
1 2
------------------------------------ -------------------------------
<PAGE> 32
7. ACKNOWLEDGMENT AND SIGNATURE
Each owner must sign this section.
I am (we are) of legal age, have received and read the Prospectus for the
funds in which I am (we are) investing and agree to the terms therein.
Under penalties of perjury, the account owner hereby certifies that (1) the
Tax ID number is correct and (2) the account owner is not subject to backup
withholding because (a) the account owner is exempt from backup withholding
(b) the account owner has not been notified of being subject to backup
withholding as a result of a failure to report all interest or dividends,
or (c) the Internal Revenue Service has provided notification that the
account owner is no longer subject to backup withholding. (The Internal
Revenue Service does not require your consent to any provision of this
document other than the certifications required to avoid backup
withholding.)
---------------------------------------------------------------------------
Signature of Individual Signature of Joint Owner Date
------------------------------------------------------------------
---------------------------------------------------------------------------
Signature of Partner, Trustees or Other Date
------------------------------------------------------------------
8. FOR INVESTMENT DEALER INFORMATION ONLY
- ---------------------------------------------- --------------------------------
Firm Name Branch/Branch #
--------- ---------------
- --------------------------------------------------------------------------------
Branch Address
--------------
----------------------------------------------------------------------------
City State ZIP Code
-------------------------------------------------------------------
-------------------------------- -----------------------------------------
Rep# Rep's Last Name
---- ---------------
[ ] I have given investment advice on this account.
[ ] I have NOT given investment advice on this account.
COMPLETE SIGNATURE CARD ON REVERSE FOR THE CHECKWRITING PRIVILEGE
The payment of checks drawn by you is authorized by the signature(s) appearing
on the reverse side. Each signatory guarantees the genuineness of the other
signatures.
Boston Safe Deposit and Trust Company (the "Bank") is hereby appointed agent by
the person(s) signing this card (the "Depositor(s)") and, as agent, is
authorized and directed, upon presentment of checks to the Bank to transmit such
checks to the Fund or its transfer agent, which shall be deemed an instruction
by the Depositor(s) to redeem shares registered in the name of the Depositor(s)
in the amounts of such checks and to deposit the proceeds in the Depositor(s)
checking account.
This checking arrangement is subject to the applicable terms and restrictions,
including charges, set forth in the current Prospectus for the Alleghany Funds,
for which the Depositor has arranged to redeem shares by checkwriting. The
Depositor(s) agrees he shall be subject to the rules and regulations of the Bank
pertaining to this checking arrangement as amended from time to time and
applicable laws of the Commonwealth of Massachusetts; that the Bank has the
right not to honor checks which do not meet the Bank's normal standards for
checks presented to it, that the Bank and Alleghany Funds have the right to
change, modify or terminate this checkwriting service at any time; and that the
Bank shall be liable only for its own negligence.
Please return this completed form to Alleghany Funds, P.O. Box 5164,
Westborough, MA 01581.
<PAGE> 33
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, 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
25
<PAGE> 34
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 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 more exacting than those to
which many foreign issuers may be subject. The above Funds may also invest in
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 depository
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 depository 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
26
<PAGE> 35
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; 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 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 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
27
<PAGE> 36
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.
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."
28
<PAGE> 37
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.
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
29
<PAGE> 38
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
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 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 $7.0 billion in assets at December 31,
1997, 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%; 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%.
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, and CHICAGO TRUST MUNICIPAL BOND
FUND for operating expenses in excess of 1.10%, 1.30%, 1.10%, 0.80%, and 0.10%,
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, a registered investment advisor
located at 1100 Atlanta Financial Center, 3343 Peachtree Road, NE, Atlanta,
Georgia 30326-1450. 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
Chicago Trust 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. Effective on the date of this Prospectus,
MONTAG & CALDWELL GROWTH FUND'S fee is 0.80% on the first $800 million of
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<PAGE> 39
average daily net assets and 0.60% of average daily net assets over $800
million. MONTAG & CALDWELL BALANCED FUND'S fee is 0.75%.
Montag & Caldwell has voluntarily undertaken to reduce its advisory fee and
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, One North Franklin, Chicago, Illinois 60606, the Sub-Advisor for
CHICAGO TRUST TALON FUND only, is a registered investment advisor, established
in 1984. Talon is controlled by Terry D. Diamond, its Chairman and Chief
Executive Officer, who is also the Chairman of Talon Securities, Inc. ("Talon
Securities"), a registered broker-dealer and an affiliate of Talon. 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's investment management history did not include
experience with respect to advising investment companies.
PORTFOLIO MANAGEMENT METHODS
INVESTMENT MANAGEMENT TEAMS
Investment decisions for each Fund are made by investment management teams
at the respective Advisor (or Sub-Advisor for CHICAGO TRUST TALON FUND). The
teams are headed by the following portfolio managers: Jerold L. Stodden and
Nancy Scinto for CHICAGO TRUST GROWTH & INCOME FUND, Thomas J. Marthaler and
David J. Cox 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
The equity performance objective is to produce returns above the S&P 500
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 Chicago Trust 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. 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
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<PAGE> 40
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.
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 Rating Co. 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.
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.
Mr. Ronald E. Canakaris, President and Chief Investment Officer of Montag &
Caldwell 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
Class A shares had net assets of $415 million as of December 31, 1997. Average
annual returns for the one-year, three-year, five-year, ten-year and since
inception periods ended December 31, 1997 compared with the performance of the
S&P were:
<TABLE>
<CAPTION>
ENTERPRISE S&P 500
MONTAG & CALDWELL ENTERPRISE GROWTH GROWTH FUND- INDEX
GROWTH FUND (1) FUND (1),(3) NET OF LOAD (2),(3) (4)
----------------- ----------------- ------------------- -------
<S> <C> <C> <C> <C>
One Year..................... 31.85 31.76 25.53 33.25
Since 11/2/94*............... 31.42 31.41 29.91 28.72
Three Years.................. 34.38 34.73 32.55 31.12
Five Years................... N/A 21.77 20.59 20.25
Ten Years.................... N/A 18.50 17.92 18.04
</TABLE>
- ---------------
* MONTAG & CALDWELL GROWTH FUND Class N shares were offered beginning 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 Class A shares has been capped
at 1.60% from January 1, 1990 through December 31, 1997. 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, 1997. A
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<PAGE> 41
portion of the expenses of MONTAG & CALDWELL GROWTH FUND were reimbursed from
inception through 1996.
(4) The S&P 500 Index is an unmanaged index of common stocks that is considered
to be generally representative of the United States stock market. The S&P
500 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.
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 with the Administrator, First
Data Investor Services Group, Inc. (the "Sub-Administrator"), 53 State Street,
Boston, Massachusetts 02109, acts as Sub-Administrator and receives a fee from
the Administrator 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
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<PAGE> 42
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.
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.
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<PAGE> 43
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. 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 IRAs and
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 or an authorized broker or its designee 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. On certain days, such as Columbus Day and Veterans Day, the NYSE is open
for business but the Federal banks are closed, and conversion into federal funds
does not occur until the next business day. 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 "Alleghany 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. Class I shares are available for
purchase by shareowners investing $5 million or more in the Fund and clients of
certain investment advisors which have agreements with the Fund.
Each Fund may accept orders by telephone 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 or their
authorized designees to promptly forward purchase orders and payments for same
to the Company.
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 "Alleghany 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 a 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:
35
<PAGE> 44
BOSTON SAFE DEPOSIT & TRUST
ABA #011001234
FOR: Alleghany Funds
A/C 140414
FBO "FUND NUMBER"
"SHAREOWNER ACCOUNT NUMBER"
A completed application with original 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 investment slip from a
previous confirmation or statement with your investment in the envelope
provided. Your check must be made payable to "Alleghany Funds" and mailed to the
Alleghany Funds, P.O. Box 5163, Westborough, Massachusetts 01581. The Funds will
not accept third party checks for the subsequent purchase of shares.
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 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 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.
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<PAGE> 45
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.
If your account is an Individual Retirement Account (IRA), your redemption
request must be submitted in writing. Please call a customer service
representative (800-992-8151) to request an IRA Distribution Request form or for
further information.
Except as noted below, redemption requests received in proper form by the
Transfer Agent or an authorized broker or its designee 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 Trust Instrument, 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 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: Alleghany
Funds, P.O. Box 5164, Westborough, Massachusetts 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
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<PAGE> 46
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 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. Canceled checks are only available upon request, and a
fee will be charged to receive them.
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<PAGE> 47
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, semiannual,
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 Individual Retirement Account (IRA) is a custodial account created for
the exclusive benefit of you and your beneficiaries. There are many types of
IRAs available including Individual, Spousal, Rollover, SEP-IRA, SIMPLE-IRA,
Roth-Contributory and Roth-Conversion. Because income generated from an IRA is
tax-deferred, CHICAGO TRUST MUNICIPAL BOND FUND may not be used for IRAs.
The annual maintenance fee for an IRA is $15.00 per year. This fee will be
paid through an automatic liquidation of shares from your account each December.
You may choose to pay this fee prior to December by sending in a check.
Shareowners with a cumulative balance greater than or equal to $50,000 will have
IRA fees waived.
DISTRIBUTION PLAN
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% (currently, CHICAGO TRUST MUNICIPAL BOND FUND'S Rule 12b-1
fee is reduced to 0.10%) 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
(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 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 and prospective shareowners used in
connection with the sale of a Fund's shares, and personnel and communication
equipment used in servicing shareowner accounts and prospective
39
<PAGE> 48
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, Martin Luther King Jr.'s Birthday, 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,
unless de minimis, 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 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.
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<PAGE> 49
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 exdividend
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 MONTAG & CALDWELL GROWTH 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 qualifies and intends to continue to qualify as a "regulated
investment company" under Subchapter M of 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.
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.
41
<PAGE> 50
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 Average and the S&P 500, 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 30-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.
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
42
<PAGE> 51
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 available
for purchase to shareowners who invest $5 million or more in the Fund and
clients of certain investment advisors which have agreements with the Fund.
Information about Class I shares is available by calling the Fund at (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.
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 Company 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 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.
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<PAGE> 52
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, 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 Company
at (800) 992-8151 or write to Alleghany 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 highgrade
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.
"BE" -- 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.
"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.
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<PAGE> 53
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.
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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 ALLEGHANY FUNDS, CALL:
(800) 992-8151
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<PAGE> 55
PROSPECTUS
AND APPLICATION
(SEE INSIDE BACK COVER)
FEBRUARY 27, 1998
MONTAG & CALDWELL GROWTH FUND
(CLASS I SHARES)
ALLEGHANY FUNDS
(800) 992-8151
Montag & Caldwell, Inc., Investment Advisor
<PAGE> 56
INVESTMENT ADVISOR
Montag & Caldwell, Inc.
1100 Atlanta Financial Center
3343 Peachtree Road, NE
Atlanta, GA 30326-1450
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 ALLEGHANY FUNDS, CALL:
(800) 992-8151
<PAGE> 57
ALLEGHANY FUNDS
MONTAG & CALDWELL GROWTH FUND
FOR INSTITUTIONAL SHAREHOLDERS
CLASS I SHARES
1100 Atlanta Financial Center
Atlanta, Georgia 30326-1450
(800) 992-8151
Website: http://alleghanyfunds.chicago-trust.com
PROSPECTUS
February 27, 1998
ALLEGHANY FUNDS (formerly known as the "CT&T Funds") (the "Company") is a
no-load, open-end management investment company which consists of eight separate
diversified investment series designed to offer investors a variety of
investment opportunities. This Prospectus pertains only to the Class I shares of
the Montag & Caldwell Growth Fund. The Fund's Investment Advisor is 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.
The shares of the Fund may be purchased or 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
principle.
This Prospectus sets forth concisely the information a prospective investor
should know before investing in the Fund. Investors should read and retain this
Prospectus for future reference. Additional information about the Fund is
contained in the Statement of Additional Information dated February 27, 1998, as
supplemented from time to time, which has been filed with the Securities and
Exchange Commission ("SEC") and is available along with other related materials
on the SEC's Internet Web site (http://www.sec.gov). The Statement of Additional
Information is incorporated by reference into this Prospectus and is available
upon request and without charge from the Company, at the address and telephone
number below.
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.
<TABLE>
<CAPTION>
Alleghany Funds: Investment Advisor:
- ---------------- -------------------
<S> <C>
171 North Clark Street Montag & Caldwell, Inc.
Chicago, IL 60601-3294 1100 Atlanta Financial Center
(800) 992-8151 3343 Peachtree Road, NE
Atlanta, GA 30326-1450
</TABLE>
1
<PAGE> 58
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUMMARY.......................................... 3
EXPENSE INFORMATION......................................... 4
FINANCIAL HIGHLIGHTS........................................ 6
INVESTMENT OBJECTIVE AND POLICIES........................... 7
INVESTMENT STRATEGIES AND RISK CONSIDERATIONS............... 8
MANAGEMENT OF THE FUND...................................... 14
PORTFOLIO MANAGEMENT METHODS................................ 15
ADMINISTRATION OF THE FUND.................................. 16
PURCHASE OF SHARES.......................................... 18
REDEMPTION OF SHARES........................................ 18
NET ASSET VALUE............................................. 20
DIVIDENDS AND TAXES......................................... 20
PERFORMANCE OF THE FUND..................................... 21
GENERAL INFORMATION......................................... 22
APPENDIX
DEBT RATINGS................................................ 24
</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 FUND 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.
2
<PAGE> 59
PROSPECTUS SUMMARY
THE FUND
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. This Prospectus offers only Class I shares of MONTAG & CALDWELL GROWTH
FUND (the "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 Fund 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
the Fund and the investment risks associated with such instruments are discussed
in detail under "INVESTMENT STRATEGIES AND RISK CONSIDERATIONS."
INVESTMENT OBJECTIVE OF THE FUND
The 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.
HOW TO PURCHASE SHARES
The minimum initial investment for Class I shares is $5 million. For
purposes of the initial investment minimum, the accounts of clients of
registered investment advisors that have entered into service agreements with
the Fund may be aggregated in determining whether the $5 million minimum has
been met. In addition, clients of Montag & Caldwell, the Fund's Investment
Advisor, which have total assets in excess of $5 million under management with
Montag & Caldwell may invest in shares of the Fund without regard to the initial
investment minimum. Class I shares of the Fund do not impose any sales load,
redemption or exchange fees or have a Distribution Plan pursuant to Rule 12b-1
("12b-1 Plan") under the Investment Company Act of 1940, as amended (the "1940
Act"). The public offering price is the net asset value per share next
determined after receipt of a purchase order in proper form. See "PURCHASE OF
SHARES."
3
<PAGE> 60
HOW TO REDEEM SHARES
Shares of the Fund may be redeemed at the net asset value per share of
Class I shares of the Fund next determined after receipt of a redemption request
in proper form. Signature guarantees may be required. See "REDEMPTION OF
SHARES."
DIVIDENDS
The 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
Fund unless and until the shareowner notifies the Transfer Agent in writing
requesting payments in cash. The Fund declares and pays dividends, if any,
quarterly. See "DIVIDENDS AND TAXES."
MANAGEMENT OF THE FUND
Montag & Caldwell, 1100 Atlanta Financial Center, 3343 Peachtree Road, NE,
Atlanta, Georgia 30326-1450, a registered investment advisor, is the Investment
Advisor for the Fund.
As of December 31, 1997, Montag & Caldwell managed over $17.0 billion in
assets primarily for employee benefit, endowment, charitable and other
institutional clients, mutual funds, and high net worth individuals.
First Data Distributors, Inc., 4400 Computer Drive, Westborough,
Massachusetts 01581 serves as the Fund's Distributor. Bankers Trust Company, 16
Wall Street, New York, New York 10005, serves as the Custodian of the Fund's
assets. The Chicago Trust Company, 171 North Clark Street, Chicago, Illinois
60601, serves as the Fund's Administrator. First Data Investor Services Group,
Inc., 53 State Street, Boston, Massachusetts 02109 serves as the Fund's
Sub-Administrator. First Data Investor Services Group, Inc., 4400 Computer
Drive, Westborough, Massachusetts 01581, serves as the Fund's Transfer Agent.
EXPENSE INFORMATION
<TABLE>
<S> <C>
SHAREOWNER TRANSACTION EXPENSES OF THE 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 Fund's 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.
ANNUAL FUND OPERATING EXPENSES AS A PERCENTAGE OF AVERAGE NET ASSETS:
<TABLE>
<S> <C>
Investment Advisory Fees (after reimbursement).............. 0.80%
12b-1 Fees.................................................. None
Other Expenses.............................................. 0.13%
----
Net Expense Ratio........................................... 0.93%
----
</TABLE>
The purpose of this table is to assist the investor in understanding the
various expenses that an investor in the Fund will bear directly or indirectly.
The figures in the above table are based on the Fund's operating expenses for
the fiscal year ended October 31, 1997. Montag & Caldwell has voluntarily
4
<PAGE> 61
undertaken to waive its fee or reimburse the Fund for total operating expenses
of Class I shares in excess of 0.98%.
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............................... $9 $30 $51 $114
</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 Fund's 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.
The Fund offers two classes of shares that invest in the same portfolio of
securities. Shareowners of Class N are subject to a 12b-1 Plan, and the
shareowners of Class I are not; therefore, expenses and performance figures will
vary between the classes. The information set forth in the foregoing tables and
example relates only to the Class I shares. See "GENERAL INFORMATION."
5
<PAGE> 62
FINANCIAL HIGHLIGHTS
The following Financial Highlights are part of the financial statements for
the Fund. The audited period presented is from the Fund's commencement of
operations to October 31, 1997, 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 the period indicated in their
report thereon appearing in the Company's related Statement of Additional
Information.
The following table sets forth financial data for a share of beneficial
interest outstanding throughout each period presented. This should therefore be
read in conjunction with the financial statements and related notes included as
the Appendix in the Statement of Additional Information.
<TABLE>
<CAPTION>
MONTAG & CALDWELL
GROWTH FUND
-----------------
YEAR PERIOD
ENDED ENDED
10/31/97 10/31/96*
-------- ---------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 17.08 $ 15.59
-------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income..................................... 0.00 0.02
Net realized and unrealized gain on investments........... 5.81 1.49
-------- --------
Total from investment operations....................... 5.81 1.51
-------- --------
LESS DISTRIBUTIONS:
Distributions from and in excess of net investment
income................................................. 0.00 (0.02)
Distributions from net realized gain on investments....... (0.14) 0.00
-------- --------
Total distributions.................................... (0.14) (0.02)
-------- --------
NET INCREASE IN NET ASSET VALUE............................. 5.67 1.49
-------- --------
NET ASSET VALUE, END OF PERIOD.............................. $ 22.75 $ 17.08
======== ========
TOTAL RETURN................................................ 34.26% 9.67%(2)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period (in 000's)...................... $268,861 $ 52,407
Ratio of expenses to average net assets before
reimbursement of expenses by Advisor................... 0.93% 0.98%(1)
Ratio of expenses to average net assets after
reimbursement of expenses by Advisor................... 0.93% 0.98%(1)
Ratio of net investment income to average net assets
before reimbursement of expenses by Advisor............ (0.07)% 0.17%(1)
Ratio of net investment income to average net assets
after reimbursement of expenses by Advisor............. (0.06)% 0.17%(1)
Portfolio turnover........................................ 18.65% 26.36%(2)
Average commission rate paid.............................. $ 0.0592 $ 0.0639
</TABLE>
- ---------------
* MONTAG & CALDWELL GROWTH FUND Class I shares commenced operations on June
28, 1996.
(1) Annualized.
(2) Not Annualized.
PERFORMANCE MEASURES
From time to time, the Fund may advertise performance measures as set forth
under "PERFORMANCE OF THE FUND."
Performance measures will be based on historical earnings and are not
intended to indicate future performance. Management's detailed discussion of the
Company's performance data will be found in the Fund's most recent Annual Report
to Shareowners, which will be available upon request and without charge, by
calling the Fund at (800) 992-8151.
6
<PAGE> 63
PORTFOLIO TURNOVER
The portfolio turnover rate for the Fund 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 Fund to receive a favorable tax
treatment. In any event, portfolio turnover is generally not expected to exceed
100% in the Fund. 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 OBJECTIVE AND POLICIES
The investment objective of the 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, the 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 Fund intends to notify shareowners before making any change in any
such policy or restriction. Fundamental policies may not be changed without
shareowner approval.
The Fund strives to attain its investment objective, but there can, of
course, be no assurance that it 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.
The 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 12 to 18 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 the 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 transactions for hedging
purposes. Such investments are generally considered to be derivative securities.
These and other applicable investment activities with respect to the 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, 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
7
<PAGE> 64
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.
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 Fund, nor
can there be any assurance that the Fund's investment objective will be
attained. Unless otherwise indicated, all percentage limitations governing the
investments of the Fund 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 the Fund's total assets will not
be considered a violation.
GOVERNMENT OBLIGATIONS
The Fund 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 Ginnie Mae (formerly known as "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
Fund.
MONEY MARKET SECURITIES
The Fund 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.
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 the 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
8
<PAGE> 65
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, the 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,
the 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
The Fund may not borrow money or issue senior securities, except as
described in this paragraph. The 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 Fund may not mortgage, pledge, or hypothecate any
assets, except that the 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.
The Fund will not purchase securities while its borrowings (including reverse
repurchase agreements) exceed 5% of its total assets. The Fund may borrow money
as a temporary measure for extraordinary purposes or to facilitate redemptions.
The Fund will not borrow money in excess of 25% of the value of its total
assets. The Fund has no intention of increasing its 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
The Fund may invest up to 15% of its 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
The Fund may enter into repurchase agreements pursuant to which the 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 the 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, the Fund may
9
<PAGE> 66
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. The 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
The Fund may enter into reverse repurchase agreements with banks and
broker-dealers. Reverse repurchase agreements involve sales by the Fund of
portfolio assets concurrently with an agreement by the 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."
RULE 144A SECURITIES
The Fund 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 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 the Fund during any period that qualified institutional
buyers become uninterested in purchasing these restricted securities.
SECURITIES LENDING
The Fund 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 the 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. The Fund will not make such
loans in excess of 25% of the value of its total assets. The major risk to which
the Fund 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, the 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
The Fund may invest in securities issued by other investment companies
which invest in securities in which the 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, the Fund may invest in securities of other
investment companies within the limits prescribed by the 1940 Act, 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. The Fund is 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, the Fund would bear, along with other shareowners,
its pro rata portion of such investment company's expenses, including advisory
fees. These expenses would be in addition to the advisory and other expenses
that the Fund bears directly in connection with its own operations.
10
<PAGE> 67
SHORT-TERM TRADING
The Fund 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 the Fund believes to be a
temporary disparity in the normal yield relationship between the two securities.
Such trading may be expected to increase the Fund's portfolio turnover rate and
the expenses incurred in connection with such trading.
FOREIGN SECURITIES
The 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 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, the 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 more exacting than those to
which many foreign issuers may be subject. The Fund may also invest in 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, the Fund's derivative
11
<PAGE> 68
instruments may entail various types and degrees of risk, depending upon the
characteristics of a derivative instrument and the Fund's overall portfolio.
The Fund may engage in such practices for hedging purposes, or to maintain
liquidity, or in anticipation of changes in the composition of its portfolio
holdings. The Fund will not engage in derivative investments purely for
speculative purposes. The 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 the Fund's
derivative instruments will be consistent with the Fund's existing percentage
limitations with respect 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 the Fund; 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 the Fund is permitted to invest that are considered by the Investment
Advisor to be derivative in nature.
1. OPTIONS:
The 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. The Fund will only purchase call options to the
extent premiums paid on all outstanding call options do not exceed 20% of the
Fund's total assets. The 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. The Fund will only purchase put options to
the extent that the premiums on all outstanding put options do not exceed 20% of
the Fund's total assets. The 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. The 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, the Fund will receive premium income from
writing call options, which may offset the cost of purchasing put options and
may also contribute to the Fund's total return. The Fund may lose potential
market appreciation if the judgment of its 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 the Fund offset put options or call
options prior to exercise or expiration. If the 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.
The 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 SEC
that over-the-counter options are illiquid. Accordingly, the 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.
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<PAGE> 69
2. FORWARD COMMITMENTS, WHEN-ISSUED SECURITIES, AND DELAYED-DELIVERY
TRANSACTIONS:
The 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 the Fund would generally
purchase securities on a when-issued, delayed-delivery, or forward commitment
basis with the intention of acquiring the securities, the Fund may dispose of
such securities prior to settlement if its 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:
The Fund may engage in futures contracts and options on futures contracts
for hedging purposes or to maintain liquidity. However, the 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 the Fund to take or make delivery of certain securities or the cash
value of a securities index. The 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. The 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, the Fund may purchase a futures contract in anticipation of
purchases of securities. In addition, the 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.
The Fund may purchase and sell call and put options on futures contracts
traded on an exchange or board of trade. When the 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 the 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, the 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 the Fund intends to
purchase. Similarly, if the market is expected to decline, the Fund might
purchase put options or sell call options on futures contracts rather than sell
futures contracts. In connection with the Fund's position in a futures contract
or option thereon, the 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.
GENERAL RISK FACTORS
1. OPTIONS, FUTURES, AND FORWARD CONTRACTS:
The 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 the
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 inability to predict correctly the direction of security prices,
interest rates and other
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<PAGE> 70
economic factors. For a further discussion, see "INVESTMENT POLICIES AND RISK
CONSIDERATIONS" in the Statement of Additional Information.
2. FIXED INCOME INVESTING:
The 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, the Fund 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 FUND
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.
MONTAG & CALDWELL, INC.
The Investment Advisor for the Fund is Montag & Caldwell, a registered
investment advisor located at 1100 Atlanta Financial Center, 3343 Peachtree
Road, NE, Atlanta, Georgia 30326-1450. Montag & Caldwell, founded in 1945, is an
indirect wholly-owned subsidiary of the Alleghany Corporation, which is engaged
through its subsidiaries in the business of title insurance, reinsurance, other
financial services and industrial minerals. Alleghany Corporation is located at
Park Avenue Plaza, New York, New York 10055.
Pursuant to an Investment Advisory Agreement with the Company, Montag &
Caldwell provides an investment program for the Fund in accordance with its
investment policies, limitations and restrictions, and The Chicago Trust Company
furnishes executive, administrative and clerical services required for the
transaction of the Fund's business.
For providing investment advisory services, the Fund has agreed to pay
Montag & Caldwell a monthly fee at an annual rate of 0.80% on the first $800
million of the Fund's average daily net assets and 0.60% on the Fund's average
daily net assets over $800 million, effective the date of this prospectus.
Montag & Caldwell has voluntarily undertaken to reduce its advisory fee and
to reimburse MONTAG & CALDWELL GROWTH FUND for operating expenses (as defined
previously) in excess of 0.98% for Class I shares. Such fee reimbursements and
waivers may be terminated at the discretion of Montag & Caldwell.
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<PAGE> 71
PORTFOLIO MANAGEMENT METHODS
INVESTMENT MANAGEMENT TEAM
Investment decisions for the Fund are made by an investment management team
at Montag & Caldwell. Ronald E. Canakaris heads the team and is the portfolio
manager for the Fund.
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.
Mr. Ronald E. Canakaris, President and Chief Investment Officer of Montag &
Caldwell 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
Class A shares had net assets of $415 million as of December 31, 1997. Average
annual returns for the one-year, three-year, five-year, ten-year and since
inception periods ended December 31, 1997 compared with the performance of the
Standard & Poor's 500 Composite Stock Price Index ("S&P 500 Index") were:
<TABLE>
<CAPTION>
MONTAG & CALDWELL ENTERPRISE S&P 500
GROWTH FUND ENTERPRISE GROWTH GROWTH FUND -- INDEX
CLASS I(1) FUND (1),(3) Net of Load (2),(3) (4)
----------------- ----------------- ------------------- -------
<S> <C> <C> <C> <C>
One Year..................... 32.17 31.76 25.53 33.25
Since 6/28/96*............... 32.33 31.53 27.37 32.30
Three Years.................. N/A 34.73 32.55 31.12
Five Years................... N/A 21.77 20.59 20.25
Ten Years.................... N/A 18.50 17.92 18.04
</TABLE>
- ---------------
* MONTAG & CALDWELL GROWTH FUND Class I shares commenced operations on June
28, 1996.
(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 Class A shares has been capped
at 1.60% from January 1, 1990 through December 31, 1997. 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 Class I shares has been capped at 0.98% from inception
on June 28, 1996 through December 31, 1997.
(4) S&P 500 Index is an unmanaged index of common stocks that is considered to
be generally representative of the United States stock market. The S&P 500
Index is adjusted to reflect reinvestment of dividends.
The investment objective, 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
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<PAGE> 72
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.
ADMINISTRATION OF THE FUND
THE ADMINISTRATOR AND SUB-ADMINISTRATOR
The Chicago Trust Company ("Chicago Trust") (the "Administrator") acts as
the Company's Administrator pursuant to an Administration Agreement with the
Company. For services provided, the Administrator 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. The Administrator 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 per Fund for average
daily net assets in excess of $500 million.
Pursuant to a Sub-Administration Agreement with the Administrator, First
Data Investor Services Group, Inc. (the "Sub-Administrator"), 53 State Street,
Boston, Massachusetts 02109, acts as Sub-Administrator and receives a custody
liaison fee from Chicago Trust equal to that received by the Administrator as
set out above.
The services provided to the Fund under these Agreements include:
coordinating and monitoring of any third parties furnishing services to the
Fund; providing the necessary office space, equipment and personnel to perform
administrative and clerical functions for the Fund; 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 Fund, including the daily calculation of the Fund's net asset value.
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 the Fund: maintains the records of
shareowner's accounts; 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 Fund pursuant to a distribution agreement with the Fund.
THE CUSTODIAN
Bankers Trust Company (the "Custodian"), 16 Wall Street, New York, New York
10005, is Custodian for the cash and securities of the Fund.
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<PAGE> 73
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, 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
Fund's Custodian, Administrator, Sub-Administrator and Transfer Agent or other
"service providers"; costs of obtaining quotations of portfolio securities; and
pricing of Fund shares.
Class-specific expenses which may differ among classes, or which are
determined by the Trustees to be class-specific, will be borne solely by
shareowners of the relevant class. These expenses may include but are not
limited to: certain distribution fee payments; 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 the Fund may be purchased directly from the Fund at the net asset
value next determined after receipt of the order in proper form. The minimum
initial investment is $5 million; there is no minimum subsequent investment. For
purposes of the initial investment minimum, the accounts of clients of
registered investment advisors that have entered into service agreements with
the Fund may be aggregated in determining whether the $5 million minimum has
been met. In addition, clients of Montag & Caldwell, the Fund's Investment
Advisor, which have total assets in excess of $5 million under management with
Montag & Caldwell may invest in shares of the Fund without regard to the initial
investment minimum. 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 the Fund. The Fund also reserves the
right to change the initial and subsequent investment minimums.
Purchase orders for shares of the Fund which are received by the Transfer
Agent or an authorized broker or its designee in proper form, including money
order, check or bank draft, by the regular closing of the New York Stock
Exchange ("NYSE") (currently 4:00 p.m. Eastern time) will be priced at the
Fund's net asset value determined that day. 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 the Fund or to "Alleghany 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. 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.
The Fund offers two classes of shares. Only the Class I shares are offered
under this Prospectus.
The Fund may accept telephone orders from broker-dealers or service
organizations or their authorized designee which have been previously approved
by the Fund. It is the responsibility of such broker-dealers or service
organizations to promptly forward purchase orders and payments for same to the
Company. Shares of the Fund may be purchased through broker-dealers, banks and
bank trust departments which may charge the investor a transaction fee or other
fee for their services at the time of
17
<PAGE> 74
purchase. Such fees would not otherwise be charged if the shares were purchased
directly from the Company.
Purchases may be made in one of the following ways:
INITIAL PURCHASES BY MAIL
Shares of the 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 "Montag & Caldwell Growth Fund Class I Shares", c/o First
Data Investor Services Group Inc., P.O. Box 5164, Westborough, Massachusetts
01581. The Fund 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 the 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 # 01-10-01234
FOR: Alleghany Funds
A/C 140414
FBO "FUND #234"
"SHAREOWNER ACCOUNT NUMBER"
A completed application with original 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 may be made by mail,
bank wire, or by telephone. When making additional investments by mail, simply
return the investment slip from a previous confirmation or statement with your
investment in the envelope provided. Your check must be made payable to "MONTAG
& CALDWELL GROWTH FUND--CLASS I SHARES" and mailed to the Alleghany Funds, P.O.
Box 5163, Westborough, Massachusetts 01581. The Fund will not accept third party
checks for the subsequent purchase of shares.
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 Fund and the Transfer Agent each reserve the right to
reject any purchase order in whole or in part.
REDEMPTION OF SHARES
IN GENERAL
Shares of the 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 or an
authorized broker or its designee of a redemption request meeting the
requirements described below. The 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
18
<PAGE> 75
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 or an authorized broker or its designee 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 Fund 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 the Fund selling assets under
disadvantageous conditions or to the detriment of the remaining shareowners of
the Fund. Pursuant to the Company's Trust Instrument, 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 the Fund 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 the Fund. In-kind payments need not constitute a cross-section of
the Fund's portfolio.
Shares may be redeemed in one of the following ways:
REDEMPTIONS BY MAIL
Shareowners may submit a written request for redemption to: Alleghany
Funds, P.O. Box 5164, Westborough, Massachusetts 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
19
<PAGE> 76
signature guarantees). Further documentation may be requested from corporations,
executors, administrators, trustees, or guardians.
The Fund reserves 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 the Funds. Neither the
Fund nor any of its 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
Fund 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 tax identification number,
banking institution, bank account number, and the name in which his or her bank
account is registered.
Shares of the Fund 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.
NET ASSET VALUE
The net asset value per share of the 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, Martin Luther King Jr.'s Birthday, 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 the 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.
DIVIDENDS AND TAXES
DIVIDENDS
Dividends, if any, from the Fund's net investment income will be declared
and paid quarterly. Aggregate net profits, if any, realized from the sale of
portfolio securities, 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.
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<PAGE> 77
Dividends paid by the Fund with respect to Class N shares are calculated in
the same manner and at the same time as Class I shares. Both Class N and Class I
shares of the Fund will share proportionately in the investment income and
general expenses of the Fund, but 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
FUND."
TAXES
The Fund intends to continue to qualify as a "regulated investment company"
under Subchapter M of the Internal Revenue Code ("the Code"). Such qualification
relieves the Fund of liability for Federal income taxes to the extent the Fund's
earnings are distributed in accordance with the Code. The Fund is treated as a
separate 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 the 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 Fund 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.
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.
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 FUND
IN GENERAL
Performance 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 the Fund will
fluctuate and an investor's shares, when redeemed, may be worth more or less
than their original cost. Performance information for the Fund may be compared
to various unmanaged indices such as the Dow Jones Industrial Average and the
S&P 500 Index, and to the performance of other mutual funds tracked by mutual
fund rating services. Further information about the performance of the Fund 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 the 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
21
<PAGE> 78
produced the Fund's cumulative total return over the same period if the Fund's
performance had remained constant throughout.
GENERAL INFORMATION
ORGANIZATION
The 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.
DESCRIPTION OF SHARES
The Fund is authorized to issue an unlimited number of shares of beneficial
interest without par value. Shares of the Fund represent equal proportionate
interests in the assets of the Fund only and have identical voting, dividend,
redemption, liquidation, and other rights. 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. Currently, there is only one
class of shares issued by the Company, except for MONTAG & CALDWELL GROWTH FUND
which offers two classes of shares: Class I shares which are offered by this
Prospectus, and Class N shares. Class N shares are offered to retail investors.
Information about Class N shares is available by calling the Fund at (800)
992-8151.
VOTING RIGHTS
Each issued and outstanding full and fractional share of the Fund is
entitled to one full and fractional vote in the Fund and all shares of the Fund
participate equally in regard to dividends, distributions, and liquidations
except that Class I shares have no voting rights with respect to the
distribution plan. Shareowners do not have cumulative voting rights. On any
matter submitted to a vote of shareowners, shares of the Fund or class 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 the Fund, in which case the shareowners of the Fund shall be entitled to vote
thereon. The business and affairs of the Fund are managed under the direction of
the Board of Trustees. 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 Fund. 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 Fund. In addition, subject to certain conditions,
shareowners may apply to the Company 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 Fund will not be personally
liable for the obligations of the 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 the 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.
22
<PAGE> 79
PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS
The Fund 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, the Fund 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
Montag & Caldwell 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 the Fund to brokers which have sold shares
of that Fund.
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 Alleghany Funds, P.O. Box 5164, Westborough,
Massachusetts 01581.
23
<PAGE> 80
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.
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.
Plus (+) or Minus (-) -- The ratings from "AA"through "BBB" may be modified by
the addition of a plus or minus sign to show relative standing within the
major rating categories.
24
<PAGE> 81
Montag & Caldwell Growth Fund (Institutional Class only)
New Account Application
For assistance with this application, call us at 800-992-8151
1. REGISTRATION
Corporations, Partnerships, Trusts and Others
<TABLE>
<S> <C>
------------------------------------ ------------------------------------
Name of Legal Entity Taxpayer Identification Number
------------------------------------ ------------------------------------
Name of Fiduciary Name of Fiduciary
------------------------------------
Date of Trust (month, day, year)
</TABLE>
2. MAILING ADDRESS
---------------------------------------------------------------------------
Street City State ZIP Code
<TABLE>
<S> <C>
------------------------------------ ------------------------------------
Daytime Telephone Internet Address
</TABLE>
Citizen Of U.S. [ ] [ ] Non Resident Alien (Country of
Resident Alien [ ] Residence)
--------------------------
Send Duplicate Statements To:
---------------------------------------------------------------------------
Name Company
---------------------------------------------------------------------------
Street City State ZIP Code
3. INVESTMENT INFORMATION
<TABLE>
<CAPTION>
Distribution Options
Capital Gains Capital Gains Capital Gains
and Dividends Reinvested and Dividends
Fund Name Amount Reinvested Dividends, in Cash in Cash
--------- ------ ------------- ------------------ -------------
<S> <C> <C> <C> <C>
Montag & Caldwell Growth Fund-I Shares [ ] [ ] [ ]
---------------
For Wire Instructions please refer to
Prospectus. Dividends and Capital Gains will be reinvested
unless otherwise specified.
</TABLE>
4. TELEPHONE REDEMPTION
____ I (we)authorize First Data Investor Services Group, Inc. to honor
telephone instructions for my (our) account and to wire redemption
proceeds per my (our) instructions below: Neither the Fund nor
First Data Investor Services Group, Inc. will be liable for
property acting upon telephone instructions believed to be genuine.
<TABLE>
<S> <C>
------------------------------ ----------------------------------------
Bank Account Number Name of Bank
</TABLE>
--------------------------------------------------------------------------
Street City State ZIP Code
Bank's ABA Number (9 digits)
----------------------------------------------
Signature(s) of Bank Account owner(s) or Trustee(s)
-----------------------
-----------------------
5. ACKNOWLEDGEMENT AND SIGNATURE
Each owner must sign this section.
I am (we are) of legal age, have received and read the Prospectus for the
funds in which I am (we are) investing and agree to the terms therein.
Under penalties of perjury, the account owner hereby certifies that (1) the
Tax ID number is correct and (2) the account owner is not subject to backup
withholding because (a) the account owner is exempt from backup withholding
(b) the account owner has not been notified of being subject to backup
withholding as a result of a failure to report all interest or dividends,
or (c) the Internal Revenue Service has provided notification that the
account owner is no longer subject to backup withholding. (the Internal
Revenue Service does not require your consent to any provision of this
document other than the certifications required to avoid backup
withholding)
- --------------------------------------------------------------------------------
Signature of Partner, Signature of Joint Owner, Date
Trustee or Other Partner, Trustee or Other
6. FOR INVESTMENT DEALER INFORMATION ONLY
<TABLE>
<S> <C>
------------------------------------ ------------------------------------
Firm Name Branch/Branch #
</TABLE>
---------------------------------------------------------------------------
Branch Address City State ZIP Code
<TABLE>
<S> <C>
------------------------------ ----------------------------------------
Rep# Rep's Last Name
</TABLE>
[ ] I have given investment advice on this account.
[ ] I have not given investment advice on this account.
Mail Completed Application to: "ALLEGHANY FUNDS", c/o First Data Investor
Services Group, P.O. Box 5164, Westborough, MA 01581
<PAGE> 82
ALLEGHANY 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
Chicago Trust Money Market Fund
STATEMENT OF ADDITIONAL INFORMATION
FEBRUARY 27, 1998
This Statement of Additional Information provides supplementary information
pertaining to shares representing interests in eight investment portfolios of
Alleghany Funds (formerly known as the "CT&T Funds") (the "Company"): Montag &
Caldwell Growth Fund; Chicago Trust Growth & Income Fund; Chicago Trust Talon
Fund; Chicago Trust Balanced Fund (formerly known as "Chicago Trust Asset
Allocation Fund"); Montag & Caldwell Balanced Fund; Chicago Trust Bond Fund;
Chicago Trust Municipal Bond Fund; and Chicago Trust Money Market Fund. Each
Fund offers Class N shares for retail investors and Montag & Caldwell Growth
Fund also offers Class I shares for institutional investors.
This Statement of Additional Information is not a Prospectus, and should be
read only in conjunction with the Prospectus dated February 27, 1998. No
investment in shares should be made without first reading the Prospectus. A copy
of the Prospectus may be obtained without charge from the Company at the address
and telephone number below.
<TABLE>
<S> <C>
Alleghany Funds: Investment Advisor to Certain Funds:
- --------------------------------------------- ---------------------------------------------
171 North Clark Street THE CHICAGO TRUST COMPANY
Chicago, IL 60601 171 North Clark Street
(800) 992-8151 Chicago, IL 60601
Investment Advisor to Certain Funds:
---------------------------------------------
MONTAG & CALDWELL, INC.
1100 Atlanta Financial Center
3343 Peachtree Road, NE
Atlanta, GA 30326-1450
</TABLE>
No person has been authorized to give any information or to make any
representations not contained in this Statement of Additional Information or in
the Prospectus in connection with the offering made by the Prospectus and, if
given or made, such information or representations must not be relied upon as
having been authorized by the Company or its distributor. The Prospectus does
not constitute an offering by the Company or by the distributor in any
jurisdiction in which such offering may not lawfully be made.
<PAGE> 83
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
THE FUNDS................................................... 3
INVESTMENT POLICIES AND RISK CONSIDERATIONS................. 3
INVESTMENT RESTRICTIONS..................................... 17
TRUSTEES AND OFFICERS....................................... 19
PRINCIPAL HOLDERS OF SECURITIES............................. 21
INVESTMENT ADVISORY AND OTHER SERVICES...................... 24
Investment Advisory Agreements............................ 24
Sub-Investment Advisory Agreement......................... 26
The Administrator and Sub-Administrator................... 26
PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS............ 29
TAXES....................................................... 30
PERFORMANCE INFORMATION..................................... 32
OTHER INFORMATION........................................... 35
APPENDIX.................................................... 36
</TABLE>
The Annual Report Including Audited Financial Statements dated October 31, 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
2
<PAGE> 84
THE FUNDS
Alleghany Funds, 171 North Clark Street, Chicago, Illinois 60601, is a
no-load, open-end management investment company which currently offers eight
series of shares of beneficial interest representing separate portfolios of
investments: 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 (collectively referred to as "Funds" or
individually as a "Fund").
INVESTMENT POLICIES AND RISK CONSIDERATIONS
The following supplements the information contained in the Prospectus
concerning the investment policies of the Funds. Except as otherwise stated
below or in the Prospectus, all Funds may invest in the portfolio investments
included in this section. A description of applicable credit ratings is set
forth in the Appendix to the Prospectus.
The investment practices described below, except for the discussion of
portfolio loan transactions, are not fundamental and may be changed by the Board
of Trustees without the approval of the shareowners.
As discussed in the Prospectus, certain of the following investment
instruments are generally considered "derivative" in nature and are so noted.
While not a fundamental policy, each Fund that is permitted the use of such
instruments will generally limit its aggregate holdings of such instruments to
20% or less of its total assets.
RESTRICTED SECURITIES
Each Fund will limit investments in securities of issuers which the Fund is
restricted from selling to the public without registration under the 1933 Act to
no more than 5% of the Fund's total assets, excluding restricted securities
eligible for resale pursuant to Rule 144A that have been determined to be liquid
by a Fund's Investment Advisor, pursuant to guidelines adopted by the Company's
Board of Trustees.
CONVERTIBLE SECURITIES
Common stock occupies the most junior position in a company's capital
structure. Convertible securities entitle the holder to exchange the securities
for a specified number of shares of common stock, usually of the same company,
at specified prices within a certain period of time and to receive interest or
dividends until the holder elects to convert. The provisions of any convertible
security determine its ranking in a company's capital structure. In the case of
subordinated convertible debentures, the holder's claims on assets and earnings
are subordinated to the claims of other creditors, and are senior to the claims
of preferred and common shareowners. In the case of preferred stock and
convertible preferred stock, the holder's claims on assets and earnings are
subordinated to the claims of all creditors but are senior to the claims of
common shareowners.
MONEY MARKET INSTRUMENTS AND RELATED RISKS
Money market instruments in which the Funds may invest include, but are not
limited to the following: short-term corporate obligations; Certificates of
Deposit ("CDs"); Eurodollar Certificates of Deposit ("Euro CDs"); Yankee
Certificates of Deposit ("Yankee CDs"); foreign bankers' acceptances; foreign
commercial paper; letter of credit-backed commercial paper; time deposits; loan
participations ("LPs"); variable--and floating-rate instruments; and master
demand notes.
Euro CDs, Yankee CDs and foreign bankers' acceptances involve risks that
are different from investments in securities of U.S. banks. The major risk,
which is sometimes referred to as "sovereign risk," pertains to possible future
unfavorable political and economic developments, possible withholding taxes,
seizures of foreign deposits, currency controls, interest limitations, or other
governmental restrictions which
3
<PAGE> 85
might affect payment of principal or interest. Investment in foreign commercial
paper also involves risks that are different from investments in securities of
commercial paper issued by U.S. companies. Non-U.S. securities markets generally
are not as developed or efficient as those in the United States. Such securities
may be less liquid and more volatile than securities of comparable U.S.
corporations. Non-U.S. issuers are not generally subject to uniform accounting
and financial reporting standards, practices and requirements comparable to
those applicable to U.S. issuers. In addition, there may be less public
information available about foreign banks, their branches and other issuers.
Time deposits usually trade at a premium over Treasuries of the same
maturity. Investors regard such deposits as carrying some credit risk, which
Treasuries do not; also, investors regard time deposits as being sufficiently
less liquid than Treasuries; hence, investors demand some extra yield for buying
time deposits rather than Treasuries. The investor in a loan participation has a
dual credit risk to both the borrower and also the selling bank. The second risk
arises because it is the selling bank that collects interest and principal and
sends it to the investor.
VARIABLE- AND FLOATING-RATE INSTRUMENTS AND RELATED RISKS
With respect to the variable- and floating-rate instruments that may be
acquired by Chicago Trust Balanced Fund, Montag & Caldwell Balanced Fund,
Chicago Trust Bond Fund and Chicago Trust Municipal Bond Fund, the Investment
Advisor will consider the earning power, cash flows and other liquidity ratios
of the issuers and guarantors of such instruments and, if the instruments are
subject to demand features, will monitor their financial status with respect to
the ability of the issuer to meet its obligation to make payment on demand.
Where necessary to ensure that a variable- or floating-rate instrument meets a
Fund's quality requirements, the issuer's obligation to pay the principal of the
instrument will be backed by an unconditional bank letter or line of credit,
guarantee, or commitment to lend.
Because variable and floating-rate instruments are direct lending
arrangements between the lender and the borrower, it is not contemplated that
such instruments will generally be traded, and there is generally no established
secondary market for these obligations, although they are redeemable at face
value. Accordingly, where these obligations are not secured by letters of credit
or other credit support arrangements, the Fund's right to redeem is dependent on
the ability of the borrower to pay principal and interest on demand.
The same credit research must be done for master demand notes as in
accepted names for potential commercial paper issuers to reduce the chances of a
borrower getting into serious financial difficulties.
LOANS OF PORTFOLIO SECURITIES AND RELATED RISKS
All Funds may lend portfolio securities to broker-dealers and financial
institutions provided: (1) the loan is secured continuously by collateral
marked-to-market daily and maintained in an amount at least equal to the current
market value of the securities loaned; (2) a Fund may call the loan at any time
and receive the securities loaned; (3) a Fund will receive any interest or
dividends paid on the loaned securities; and (4) the aggregate market value of
securities loaned by a Fund will not at any time exceed 25% of the total assets
of such Fund.
Collateral will consist of U.S. Government securities, cash equivalents, or
irrevocable letters of credit. Loans of securities involve a risk that the
borrower may fail to return the securities or may fail to maintain the proper
amount of collateral. Therefore, a Fund will only enter into portfolio loans
after a review by the Investment Advisor, under the supervision of the Board of
Trustees, including a review of the creditworthiness of the borrower. Such
reviews will be monitored on an ongoing basis.
LOAN PARTICIPATIONS ("LPS")
All Funds may engage in LPs. LPs are loans sold by the lending bank to an
investor. The loan participant borrower may be a company with highly-rated
commercial paper that finds it can obtain
4
<PAGE> 86
cheaper funding through an LP than with commercial paper and can also increase
the company's name recognition in the capital markets. LPs often generate
greater yield than commercial paper.
The borrower of the underlying loan will be deemed to be the issuer except
to the extent the Fund derives its rights from the intermediary bank which sold
the LPs. Because LPs are undivided interests in a loan made by the issuing bank,
the Fund may not have the right to proceed against the LP borrower without the
consent of other holders of the LPs. In addition, LPs will be treated as
illiquid if, in the judgment of the Investment Advisor, they cannot be sold
within seven days.
FOREIGN BANKERS' ACCEPTANCES
All Funds may purchase foreign bankers' acceptances, although Chicago Trust
Money Market Fund's purchases are limited by the quality standards of Rule 2a-7
under the Investment Company Act of 1940 (the "1940 Act"). Foreign bankers'
acceptances are short-term (270 days or less), non-interest-bearing notes sold
at a discount and redeemed by the accepting foreign bank at maturity for full
face value and denominated in U.S. dollars. Foreign bankers' acceptances are the
obligations of the foreign bank involved, to pay a draft drawn on it by a
customer. These instruments reflect the obligation both of the bank and the
drawer to pay the face amount of the instrument upon maturity.
FOREIGN COMMERCIAL PAPER
All Funds may purchase foreign commercial paper, although Chicago Trust
Money Market Fund's purchases are limited by the quality standards of Rule 2a-7
under the 1940 Act. Foreign commercial paper consists of short-term unsecured
promissory notes denominated in U.S. dollars, either issued directly by a
foreign firm in the U.S., or issued by a "domestic shell" subsidiary of a
foreign firm established to raise dollars for the firm's operations abroad or
for its U.S. subsidiary. Like commercial paper issued by U.S. companies, foreign
commercial paper is rated by the rating agencies (Moody's, S&P) as to the
issuer's creditworthiness. Foreign commercial paper can potentially provide the
investor with a greater yield than domestic commercial paper.
EURODOLLAR CERTIFICATES OF DEPOSIT ("EURO CDS")
A Euro CD is a receipt from a bank for funds deposited at that bank for a
specific period of time at some specific rate of return and denominated in U.S.
dollars. It is the liability of a U.S. bank branch or foreign bank located
outside the U.S. Almost all Euro CDs are issued in London.
YANKEE CERTIFICATES OF DEPOSIT ("YANKEE CDS")
Yankee CDs are certificates of deposit that are issued domestically by
foreign banks. It is a means by which foreign banks may gain access to U.S.
markets through their branches which are located in the United States, typically
in New York. These CDs are treated as domestic securities.
REPURCHASE AGREEMENTS
The repurchase price under the repurchase agreements described in the
Prospectus generally equals the price paid by a Fund plus interest negotiated on
the basis of current short-term rates (which may be more or less than the rate
on the securities underlying the repurchase agreement). Repurchase agreements
may be considered loans by a Fund under the 1940 Act.
The financial institutions with which a Fund may enter into repurchase
agreements are banks and non-bank dealers of U.S. Government securities that are
listed on the Federal Reserve Bank of New York's list of reporting dealers and
banks, if such banks and non-bank dealers are deemed creditworthy by the
Investment Advisor or Sub-Investment Advisor. The Investment Advisor or
Sub-Investment Advisor will continue to monitor the creditworthiness of the
seller under a repurchase agreement, and will require the seller to maintain
during the term of the agreement the value of the securities subject to the
agreement at not less than the repurchase price.
5
<PAGE> 87
Each Fund will only enter into a repurchase agreement where the market
value of the underlying security, including interest accrued, will be at all
times equal to or exceed the value of the repurchase agreement. The securities
held subject to a repurchase agreement by Chicago Trust Money Market Fund may
have stated maturities exceeding 13 months, provided the repurchase agreement
itself matures in less than 13 months.
REVERSE REPURCHASE AGREEMENTS
Reverse repurchase agreements involve the sale of securities held by a Fund
pursuant to a Fund's agreement to repurchase the securities at an agreed upon
price, date and rate of interest. Such agreements are considered to be
borrowings under the 1940 Act, and may be entered into only for temporary or
emergency purposes. While reverse repurchase transactions are outstanding, a
Fund will maintain in a segregated account cash, or liquid, securities in an
amount at least equal to the market value of the securities, plus accrued
interest, subject to the agreement. (Liquid securities as used in the prospectus
and this Statement of Additional Information include equity securities and debt
securities that are unencumbered and market-to-market daily.) Reverse repurchase
agreements involve the risk that the market value of the securities sold by the
Fund may decline below the price at which the Fund is obligated to repurchase
such securities.
SECURITIES OF OTHER INVESTMENT COMPANIES
Each Fund intends to limit 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 as a whole.
Each Fund will also limit investments in securities of other investment
companies as described in the Prospectus under "INVESTMENT STRATEGIES AND RISK
CONSIDERATIONS" and in this Statement of Additional Information under
"INVESTMENT RESTRICTIONS."
LOWER-GRADE DEBT SECURITIES AND RELATED RISKS
The following discussion applies to Chicago Trust Growth & Income Fund,
Chicago Trust Talon Fund, Chicago Trust Balanced Fund, Chicago Trust Bond Fund,
and Chicago Trust Municipal Bond Fund.
Fixed income securities rated lower than "Baa3" by Moody's or "BBB-" by S&P
are considered to be of poor standing and predominantly speculative. Such
securities are subject to a substantial degree of credit risk. Such medium- and
low-grade bonds held by a Fund may be issued as a consequence of corporate
restructurings, such as leveraged buy-outs, mergers, acquisitions, debt
recapitalizations; or similar events. Also, high-yield 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.
In the past, the high yields from low-grade bonds have more than
compensated for the higher default rates on such securities. However, there can
be no assurance that diversification will protect the Fund from widespread bond
defaults brought about by a sustained economic downturn, or that yields will
continue to offset default rates on high-yield bonds in the future. Issuers of
these securities are often highly leveraged, so that their ability to service
their debt obligations during an economic downturn or during sustained periods
of rising interest rates may be impaired. In addition, such issuers may not have
more traditional methods of financing available to them, and may be unable to
repay debt at maturity by refinancing. Further, the recent economic recession
has resulted in default levels with respect to such securities in excess of
historic averages.
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The value of lower-rated debt securities will be influenced not only by
changing interest rates, but also by the bond market's perception of credit
quality and the outlook for economic growth. When economic conditions appear to
be deteriorating, low- and medium-rated bonds may decline in market value due to
investors' heightened concern over credit quality, regardless of prevailing
interest rates. Adverse publicity and investor perceptions, whether or not based
on fundamental analysis, may decrease the value and liquidity of lower-rated
securities held by a Fund, especially in a thinly traded market. Illiquid or
restricted securities held by a Fund may involve valuation difficulties.
Especially at such times, trading in the secondary market for high-yield
bonds may become thin and market liquidity may be significantly reduced. Even
under normal conditions, the market for high-yield bonds may be less liquid than
the market for investment-grade corporate bonds. There are fewer securities
dealers in the high-yield market, and purchasers of high-yield bonds are
concentrated among a smaller group of securities dealers and institutional
investors. In periods of reduced market liquidity, high-yield bond prices may
become more volatile.
YOUTH AND GROWTH OF LOWER-RATED SECURITIES MARKET--The recent growth of the
lower-rated securities market has paralleled a long economic expansion, and it
has not weathered a recession in the market's present size and form. An economic
downturn or increase in interest rates is likely to have an adverse effect on
the lower-rated securities market generally (resulting in more defaults) and on
the value of lower-rated securities contained in the portfolios of the Funds
which hold these securities.
SENSITIVITY TO INTEREST RATE AND ECONOMIC CHANGES--The economy and interest
rates can affect lower-rated securities differently from other securities. For
example, the prices of lower-rated securities are more sensitive to adverse
economic changes or individual corporate developments than are the prices of
higher-rated investments. 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 their
principal and interest payment obligations, to meet projected business goals,
and to obtain additional financing. If the issuer of a lower-rated security
defaulted, a Fund may incur additional expenses to seek recovery. In addition,
periods of economic uncertainty and changes can be expected to result in
increased volatility of market prices of lower-rated securities and a Fund's net
asset values.
LIQUIDITY AND VALUATION -- To the extent that an established secondary
market does not exist and a particular obligation is thinly traded, the
obligation's fair value may be difficult to determine because of the absence of
reliable, objective data. As a result, a Fund's valuation of the obligation and
the price it could obtain upon its disposition could differ. Adverse publicity
and investor perceptions, whether or not based on fundamental analysis, may
decrease the values and liquidity of lower-rated securities held by the Funds,
especially in a thinly traded market.
CREDIT RATINGS -- The credit ratings of Moody's and S&P are evaluations of
the safety of principal and interest payments, not market value risk, of
lower-rated securities. Also, credit rating agencies may fail to timely change
the credit ratings to reflect subsequent events. Therefore, in addition to using
recognized rating agencies and other sources, the Investment Advisor or
Sub-Investment Advisor also performs its own analysis of issuers in selecting
investments for the Funds. The Investment Advisor's or Sub-Investment Advisor's
analysis of issuers may include, among other things, historic and current
financial condition, current and anticipated cash flow and borrowing strength of
management, responsiveness to business conditions, credit standing, and current
and anticipated results of operations.
YIELDS AND RATINGS -- The yields on certain obligations are dependent on a
variety of factors, including general market conditions, conditions in the
particular market for the obligation, the financial condition of the issuer, the
size of the offering, the maturity of the obligation and the ratings of the
issue. The ratings of Moody's and S&P represent their respective opinions as to
the quality of the obligations they undertake to rate. Ratings, however, are
general and are not absolute standards of quality. Consequently, obligations
with the same rating, maturity and interest rate may have different market
prices.
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While any investment carries some risk, certain risks associated with
lower-rated securities are different from those for investment-grade securities.
The risk of loss through default is greater because lower-rated securities are
usually unsecured and are often subordinate to an issuer's other obligations.
Additionally, the issuers of these securities frequently have high debt levels
and are thus more sensitive to difficult economic conditions, individual
corporate developments, and rising interest rates. Consequently, the market
price of these securities may be quite volatile and may result in wider
fluctuations of a Fund's net asset value per share. A description of various
bond ratings appears in the Appendix to the Prospectus.
OPTIONS AND RELATED RISKS
All Funds except Chicago Trust Money Market Fund may buy put and call
options and write covered call and secured put options. These options are
generally considered to be derivative securities. Such options may relate to
particular securities, stock indices, or financial instruments and may or may
not be listed on a national securities exchange and issued by the Options
Clearing Corporation. Options trading is a highly specialized activity which
entails greater than ordinary investment risk. Options on particular securities
may be more volatile than the underlying securities, and therefore, on a
percentage basis, an investment in options may be subject to greater fluctuation
than an investment in the underlying securities themselves.
These Funds will write call options only if they are "covered." In the case
of a call option on a security, the option is "covered" if a Fund owns the
security underlying the call or has an absolute and immediate right to acquire
that security without additional cash consideration (or, if additional cash
consideration is required, cash or liquid securities, in such amount are held in
a segregated account by its custodian) upon conversion or exchange of other
securities held by it. For a call option on an index, the option is covered if a
Fund maintains with its custodian a diversified stock portfolio, or liquid
assets equal to the contract value.
A call option is also covered if a Fund holds a call on the same security
or index as the call written where the exercise price of the call held is (i)
equal to or less than the exercise price of the call written; or (ii) greater
than the exercise price of the call written provided the difference is
maintained by the Fund in cash or liquid securities in a segregated account with
its custodian. The Funds will write put options only if they are "secured" by
liquid assets maintained in a segregated account by the Funds' Custodian in an
amount not less than the exercise price of the option at all times during the
option period.
A Fund's obligation to sell a security subject to a covered call option
written by it, or to purchase a security subject to a secured put option written
by it, may be terminated prior to the expiration date of the option by the
Fund's execution of a closing purchase transaction, which is effected by
purchasing on an exchange an option of the same series as the previously written
option. Such a purchase does not result in the ownership of an option. A closing
purchase transaction will ordinarily be effected to realize a profit on an
outstanding option, to prevent an underlying security from being called, to
permit the sale of the underlying security, or to permit the writing of a new
option containing different terms on such underlying security. The cost of such
a liquidation purchase plus transaction costs may be greater than the premium
received upon the original option, in which event the Fund will have incurred a
loss in the transaction.
There is no assurance that a liquid secondary market will exist for any
particular option. An option writer, unable to effect a closing purchase
transaction, will not be able to sell the underlying security (in the case of a
covered call option) or liquidate the segregated account (in the case of a
secured put option) until the option expires or the optioned security is
delivered upon exercise with the result that the writer in such circumstances
will be subject to the risk of market decline or appreciation in the security
during such period.
PURCHASING CALL OPTIONS--Each of these Funds may purchase call options to
the extent that premiums paid by such Fund do not aggregate more than 20% of
that Fund's total assets. When a Fund purchases a call option, in return for a
premium paid by the Fund to the writer of the option, the Fund obtains the right
to buy the security underlying the option at a specified exercise price at any
time during the term of the option. The writer of the call option, who receives
the premium upon writing the option,
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has the obligation, upon exercise of the option, to deliver the underlying
security against payment of the exercise price. The advantage of purchasing call
options is that a Fund may alter portfolio characteristics and modify portfolio
maturities without incurring the cost associated with transactions, except the
cost of the option.
A Fund may, following the purchase of a call option, liquidate its position
by effecting a closing sale transaction by selling an option of the same series
as the option previously purchased. The Fund will realize a profit from a
closing sale transaction if the price received on the transaction is more than
the premium paid to purchase the original call option; the Fund will realize a
loss from a closing sale transaction if the price received on the transaction is
less than the premium paid to purchase the original call option.
Although a Fund will generally purchase only those call options for which
there appears to be an active secondary market, there is no assurance that a
liquid secondary market on an Exchange will exist for any particular option, or
at any particular time, and for some options no secondary market on an Exchange
may exist. In such event, it may not be possible to effect closing transactions
in particular options, with the result that a Fund would have to exercise its
options in order to realize any profit and would incur brokerage commissions
upon the exercise of such options and upon the subsequent disposition of the
underlying securities acquired through the exercise of such options. Further,
unless the price of the underlying security changes sufficiently, a call option
purchased by a Fund may expire without any value to the Fund, in which event the
Fund would realize a capital loss which will be short-term unless the option was
held for more than one year.
COVERED CALL WRITING--Each of these Funds may write covered call options
from time to time on such portions of their portfolios, without limit, as the
Investment Advisor or Sub-Investment Advisor determines is appropriate in
pursuing a Fund's investment objective. The advantage to a Fund of writing
covered calls is that the Fund receives a premium which is additional income.
However, if the security rises in value, the Fund may not fully participate in
the market appreciation.
During the option period, a covered call option writer may be assigned an
exercise notice by the broker-dealer through whom such call option was sold,
requiring the writer to deliver the underlying security against payment of the
exercise price. This obligation is terminated upon the expiration of the option
or upon entering a closing purchase transaction. A closing purchase transaction,
in which a Fund, as writer of an option, terminates its obligation by purchasing
an option of the same series as the option previously written, cannot be
effected with respect to an option once the option writer has received an
exercise notice for such option.
Closing purchase transactions will ordinarily be effected to realize a
profit on an outstanding call option, to prevent an underlying security from
being called, to permit the sale of the underlying security or to enable a Fund
to write another call option on the underlying security with either a different
exercise price or expiration date or both. A Fund may realize a net gain or loss
from a closing purchase transaction depending upon whether the net amount of the
original premium received on the call option is more or less than the cost of
effecting the closing purchase transaction. Any loss incurred in a closing
purchase transaction may be partially or entirely offset by the premium received
from a sale of a different call option on the same underlying security. Such a
loss may also be wholly or partially offset by unrealized appreciation in the
market value of the underlying security. Conversely, a gain resulting from a
closing purchase transaction could be offset in whole or in part by a decline in
the market value of the underlying security.
If a call option expires unexercised, the Fund will realize a short-term
capital gain in the amount of the premium on the option less the commission
paid. Such a gain, however, may be offset by depreciation in the market value of
the underlying security during the option period. If a call option is exercised,
a Fund will realize a gain or loss from the sale of the underlying security
equal to the difference between the cost of the underlying security and the
proceeds of the sale of the security plus the amount of the premium on the
option less the commission paid.
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A Fund will write call options only on a covered basis, which means that a
Fund will own the underlying security subject to a call option at all times
during the option period. Unless a closing purchase transaction is effected, a
Fund would be required to continue to hold a security which it might otherwise
wish to sell or deliver a security it would want to hold. The exercise price of
a call option may be below, equal to, or above the current market value of the
underlying security at the time the option is written.
PURCHASING PUT OPTIONS--Each of these Funds may invest up to 20% of its
total assets in the purchase of put options. A Fund will, at all times during
which it holds a put option, own the security covered by such option. With
regard to the writing of put options, each Fund will limit the aggregate value
of the obligations underlying such put options to 50% of its total assets. The
purchase of the put on substantially identical securities held will constitute a
short sale for tax purposes, the effect of which is to create short-term capital
gain on the sale of the security and to suspend running of its holding period
(and treat it as commencing on the date of the closing of the short sale) or
that of a security acquired to cover the same if at the time the put was
acquired, the security had not been held for more than one year.
A put option purchased by a Fund gives it the right to sell one of its
securities for an agreed price up to an agreed date. A Fund would purchase put
options in order to protect against a decline in the market value of the
underlying security below the exercise price less the premium paid for the
option ("protective puts"). The ability to purchase put options allows a Fund to
protect unrealized gains in an appreciated security in their portfolios without
actually selling the security. If the security does not drop in value, a Fund
will lose the value of the premium paid. A Fund may sell a put option which it
has previously purchased prior to the sale of the securities underlying such
option. Such sale will result in a net gain or loss depending on whether the
amount received on the sale is more or less than the premium and other
transaction costs paid on the put option which is sold.
Each of these Funds may sell a put option purchased on individual portfolio
securities. Additionally, a Fund may enter into closing sale transactions. A
closing sale transaction is one in which a Fund, when it is the holder of an
outstanding option, liquidates its position by selling an option of the same
series as the option previously purchased.
WRITING PUT OPTIONS--Each of these Funds may also write put options on a
secured basis which means that a Fund will maintain in a segregated account with
its Custodian, cash or U.S. Government securities in an amount not less than the
exercise price of the option at all times during the option period. The amount
of cash or U.S. Government securities held in the segregated account will be
adjusted on a daily basis to reflect changes in the market value of the
securities covered by the put option written by the Fund. Secured put options
will generally be written in circumstances where the Investment Advisor or
Sub-Investment Advisor wishes to purchase the underlying security for a Fund's
portfolio at a price lower than the current market price of the security. In
such event, that Fund would write a secured put option at an exercise price
which, reduced by the premium received on the option, reflects the lower price
it is willing to pay.
Following the writing of a put option, a Fund may wish to terminate the
obligation to buy the security underlying the option by effecting a closing
purchase transaction. This is accomplished by buying an option of the same
series as the option previously written. The Fund may not, however, effect such
a closing transaction after it has been notified of the exercise of the option.
FUTURES CONTRACTS AND RELATED RISKS
All Funds except Chicago Trust Money Market Fund may enter into contracts
for the purchase or sale for future delivery of securities, including index
contracts. Futures contracts are generally considered to be derivative
securities. While futures contracts provide for the delivery of securities,
deliveries usually do not occur. Contracts are generally terminated by entering
into offsetting transactions.
The Funds may enter into such futures contracts to protect against the
adverse effects of fluctuations in security prices, or interest rates without
actually buying or selling the securities. For example, if interest rates are
expected to increase, a Fund might enter into futures contracts for the sale of
debt securities.
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Such a sale would have much the same effect as selling an equivalent value of
the debt securities owned by the Fund. If interest rates did increase, the value
of the debt securities in the portfolio would decline, but the value of the
futures contracts to the Fund would increase at approximately the same rate,
thereby keeping the net asset value of the Fund from declining as much as it
otherwise would have. Similarly, when it is expected that interest rates may
decline, futures contracts may be purchased to hedge in anticipation of
subsequent purchases of securities at higher prices. Since the fluctuations in
the value of futures contracts should be similar to those of debt securities,
the Fund could take advantage of the anticipated rise in value of debt
securities without actually buying them until the market had stabilized. At that
time, the futures contracts could be liquidated and the Fund could then buy debt
securities on the cash market.
A stock index futures contract obligates the seller to deliver (and the
purchaser to take) an amount of cash equal to a specific dollar amount times the
difference between the value of a specific stock index at the close of the last
trading day of the contract and the price at which the agreement was made. Open
futures contracts are valued on a daily basis and a Fund may be obligated to
provide or receive cash reflecting any decline or increase in the contract's
value. No physical delivery of the underlying stocks in the index is made in the
future.
With respect to options on futures contracts, when a Fund is temporarily
not fully invested, it may purchase a call option on a futures contract to hedge
against a market advance. The purchase of a call option on a futures contract is
similar in some respects to the purchase of a call option on an individual
security. Depending on the pricing of the option compared to either the price of
the futures contract upon which it is based, or the price of the underlying debt
securities, it may or may not be less risky than ownership of the futures
contract or underlying debt securities. As with the purchase of futures
contracts, when a Fund is not fully invested, it may purchase a call option on a
futures contract to hedge against a market advance.
The writing of a call option on a futures contract constitutes a partial
hedge against the declining price of the security or foreign currency which is
deliverable upon exercise of the futures contract. If the futures price at the
expiration of the option is below the exercise price, the Fund will retain the
full amount of the option premium which provides a partial hedge against any
decline that may have occurred in the value of the Fund's portfolio holdings.
The writing of a put option on a futures contract constitutes a partial hedge
against the increasing price of the security or foreign currency which is
deliverable upon exercise of the futures contract. If the futures price at the
expiration of the option is higher than the exercise price, the Fund will retain
the full amount of the option premium which provides a partial hedge against any
increase in the price of securities which the Fund intends to purchase.
Call and put options on stock index futures are similar to options on
securities except that, rather than the right to purchase or sell stock at a
specified price, options on a stock index future give the holder the right to
receive cash. Upon exercise of the option, the delivery of the futures position
by the writer of the option to the holder of the option will be accompanied by
delivery of the accumulated balance in the writer's futures margin account which
represents the amount by which the market price of the futures contract, at
exercise, exceeds, in the case of a call, or is less than, in the case of a put,
the exercise price of the futures contract. If an option is exercised on the
last trading day prior to the expiration date of the option, the settlement will
be made entirely in cash equal to the difference between the exercise price of
the option and the closing price of the futures contract on the expiration date.
If a put or call option which a Fund has written is exercised, the Fund may
incur a loss which will be reduced by the amount of the premium it received.
Depending on the degree of correlation between changes in the value of its
portfolio securities and changes in the value of its options positions, the
Fund's losses from existing options on futures may, to some extent, be reduced
or increased by changes in the value of portfolio securities. The purchase of a
put option on a futures contract is similar in some respects to the purchase of
protective puts on portfolio securities and for Federal tax purposes, will be
considered a "short sale." For example, a Fund will purchase a put option on a
futures contract to hedge the Fund's portfolio against the risk of rising
interest rates.
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To the extent that market prices move in an unexpected direction, a Fund
may not achieve the anticipated benefits of futures contracts or options on
futures contracts or may realize a loss. For example, if the Fund is hedged
against the possibility of an increase in interest rates which would adversely
affect the price of securities held in its portfolio and interest rates decrease
instead, the Fund would lose part or all of the benefit of the increased value
which it has because it would have offsetting losses in its futures position. In
addition, in such situations, if the Fund had insufficient cash, it may be
required to sell securities from its portfolio to meet daily variation margin
requirements. Such sales of securities may, but will not necessarily, be at
increased prices which reflect the rising market. A Fund may be required to sell
securities at a time when it may be disadvantageous to do so.
Further, with respect to options on futures contracts, a Fund may seek to
close out an option position by writing or buying an offsetting position
covering the same securities or contracts and have the same exercise price and
expiration date. The ability to establish and close out positions on options
will be subject to the maintenance of a liquid secondary market, which cannot be
assured.
FORWARD COMMITMENTS, WHEN-ISSUED SECURITIES, AND DELAYED DELIVERY TRANSACTIONS
AND RELATED RISKS
All Funds except Chicago Trust Money Market Fund may dispose of or
negotiate a when-issued or forward commitment after entering into these
transactions. Such transactions are generally considered to be derivative
transactions. These Funds will normally realize a capital gain or loss in
connection with these transactions. For purposes of determining a Fund's average
dollar-weighted maturity, the maturity of when-issued or forward commitment
securities will be calculated from the commitment date.
When a Fund purchases securities on a when-issued, delayed delivery or
forward commitment basis, the Fund's Custodian will maintain in a segregated
account: cash, or liquid securities having a value (determined daily) at least
equal to the amount of the Fund's purchase commitments. In the case of a forward
commitment to sell portfolio securities, the Custodian will hold the portfolio
securities themselves in a segregated account while the commitment is
outstanding. These procedures are designed to ensure that the Fund will maintain
sufficient assets at all times to cover its obligations under when-issued
purchases, forward commitments and delayed delivery transactions.
ASSET-BACKED SECURITIES AND RELATED RISKS
All Funds except Montag & Caldwell Growth Fund, Chicago Trust Talon Fund
and Chicago Trust Money Market Fund may invest in asset-backed securities.
Asset-backed securities are securities backed by installment contracts, credit
card and other receivables, or other financial type assets. Asset-backed
securities represent interests in "pools" of assets in which payments of both
interest and principal on the securities are made monthly, thus in effect
"passing through" monthly payments made by the individual borrowers on the
assets underlying securities, net of any fees paid to the issuer or guarantor of
the securities. The average life of asset-backed securities varies with the
maturities of the underlying instruments. An asset-backed security's stated
maturity may be shortened, and the security's total return may be difficult to
predict precisely.
MORTGAGE-BACKED SECURITIES AND MORTGAGE PASS-THROUGH SECURITIES AND RELATED
RISKS
All Funds except Montag & Caldwell Growth Fund, Chicago Trust Talon Fund
and Chicago Trust Money Market Fund may also invest in mortgage-backed
securities. The timely payment of principal and interest on mortgage-backed
securities issued or guaranteed by Ginnie Mae (formerly known as the Government
National Mortgage Association) ("GNMA") is backed by GNMA and the full faith and
credit of the U.S. Government. Also, securities issued by GNMA and other
mortgage-backed securities may be purchased at a premium over the maturity value
of the underlying mortgages. This premium is not guaranteed and would be lost if
prepayment occurs. Mortgage-backed securities issued by U.S. Government agencies
or instrumentalities other than GNMA are not "full faith and credit"
obligations. Certain obligations, such as those issued by the Federal Home Loan
Bank are supported by the issuer's right to borrow from the U.S. Treasury; while
others, such as those issued by the Federal National
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Mortgage Association ("FNMA"), are supported only by the credit of the issuer.
Unscheduled or early payments on the underlying mortgages may shorten the
securities' effective maturities and reduce returns. These Funds may agree to
purchase or sell these securities with payment and delivery taking place at a
future date.
Mortgage-backed securities have greater market volatility then other types
of securities. In addition, because prepayments often occur at times when
interest rates are low or are declining, the Funds may be unable to reinvest
such funds in securities which offer comparable yields. The yields provided by
these mortgage securities have historically exceeded the yields on other types
of U.S. Government securities with comparable maturities in large measure due to
the risks associated with prepayment features. (See "General Risks of Mortgage
Securities" herein.)
For Federal tax purposes other than diversification under Subchapter M of
the Internal Revenue Code of 1986, as amended (the "Code"), mortgage-backed
securities are not considered to be separate securities but rather "grantor
trusts" conveying to the holder an individual interest in each of the mortgages
constituting the pool.
The mortgage securities which are issued or guaranteed by GNMA, Federal
Home Loan Mortgage Corporation ("FHLMC"), or FNMA ("certificates") are called
pass-through certificates because a pro-rata share of both regular interest and
principal payments (less GNMA's, FHLMC's, or FNMA's fees and any applicable loan
servicing fees), as well as unscheduled early prepayments on the underlying
mortgage pool, are passed through monthly to the holder of the certificate
(i.e., the portfolio).
Each of these Funds may also invest in pass-through certificates issued by
non-governmental issuers. Pools of conventional residential mortgage loans
created by such issuers generally offer a higher rate of interest than
government and government-related pools because there are no direct or indirect
government guarantees of payment. Timely payment of interest and principal of
these pools is, however, generally supported by various forms of insurance or
guarantees, including individual loan, title, pool and hazard insurance. The
insurance and guarantees are issued by government entities, private insurance
and the mortgage poolers. Such insurance and guarantees and the creditworthiness
of the issuers thereof will be considered in determining whether a
mortgage-related security meets the Fund's quality standards. The Fund may buy
mortgage-related securities without insurance or guarantees if through an
examination of the loan experience and practices of the poolers, the investment
manager determines that the securities meet the Fund's quality standards.
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS"), REAL ESTATE MORTGAGE INVESTMENT
CONDUITS ("REMICS"), MULTI-CLASS PASS-THROUGHS, AND RELATED RISKS
All Funds except Montag & Caldwell Growth Fund, Chicago Trust Talon Fund
and Chicago Trust Money Market Fund may also invest in certain debt obligations
which are collateralized by mortgage loans or mortgage pass-through securities.
These obligations are generally considered to be derivative securities. CMOs and
REMICs are debt instruments issued by special-purpose entities which are secured
by pools or mortgage loans or other mortgage-backed securities. Multi-class
pass-through securities are equity interests in a trust composed of mortgage
loans or other mortgage-backed securities. Payments of principal and interest on
underlying collateral provides the funds to pay debt service on the CMO or REMIC
or make scheduled distributions on the multi-class pass-through securities.
CMOs, REMICs, and multi-class pass-through securities (collectively, CMOs unless
the context indicates otherwise) may be issued by agencies or instrumentalities
of the U.S. Government or by private organizations.
In a CMO, a series of bonds or certificates is issued in multiple classes.
Each class of CMOs, often referred to as a "tranche," is issued at a specified
coupon rate or adjustable rate tranche (to be discussed in the next paragraph)
and has a stated maturity or final distribution date. Principal prepayments on
collateral underlying a CMO may cause it to be retired substantially earlier
than the stated maturities or final distribution dates. Interest is paid or
accrues on all classes of a CMO on a monthly, quarterly, or semi-annual basis.
The principal and interest on the underlying mortgages may be allocated among
several classes of a series of a CMO in many ways. In a common structure,
payments of principal, including any
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principal prepayments, on the underlying mortgages are applied to the classes of
a series of a CMO in the order of their respective stated maturities or final
distribution dates, so that no payment of principal will be made on any class of
a CMO until all other classes having an earlier stated maturity or final
distribution date have been paid in full.
One or more tranches of a CMO may have coupon rates which reset
periodically at a specified increment over an index such as the London Interbank
Offered Rate ("LIBOR"). These adjustable-rate tranches, known as "floating-rate
CMOs," will be considered as adjustable-rate mortgage securities ("ARMs") by the
Funds. Floating-rate CMOs may be backed by fixed-rate or adjustable-rate
mortgages; to date, fixed-rate mortgages have been more commonly utilized for
this purpose. Floating-rate CMOs are typically issued with lifetime "caps" on
the coupon rate thereon. These "caps," similar to the "caps" on adjustable-rate
mortgages, represent a ceiling beyond which the coupon rate on a floating-rate
CMO may not be increased regardless of increases in the interest rate index to
which the floating-rate CMO is geared.
REMICs are private entities formed for the purpose of holding a fixed pool
of mortgages secured by an interest in real property. REMICs are similar to CMOs
in that they issue multiple classes of securities. As with CMOs, the mortgages
which collateralize the REMICs in which the Funds may invest include mortgages
backed by GNMA certificates or other mortgage pass-throughs issued or guaranteed
by the U.S. Government, its agencies or instrumentalities or issued by private
entities, which are not guaranteed by any government agency.
Yields on privately issued CMOs as described above have been historically
higher than the yields on CMOs issued or guaranteed by U.S. Government agencies.
However, the risk of loss due to default on such instruments is higher since
they are not guaranteed by the U.S. Government. These Funds will not invest in
subordinated privately issued CMOs.
RESETS--The interest rates paid on the ARMs and CMOs in which these Funds
may invest generally are readjusted at intervals of one year or less to an
increment over some predetermined interest rate index. There are three main
categories of indices: those based on U.S. Treasury securities; those derived
from a calculated measure such as a cost of funds index; or a moving average of
mortgage rates. Commonly utilized indices include: the one-year, three-year and
five-year constant maturity Treasury rates; the three-month Treasury bill rate;
the six-month Treasury bill rate; rates on longer-term Treasury securities; the
11th District Federal Home Loan Bank Cost of Funds; the National Median Cost of
Funds; the one-month, three-month, six-month or one-year LIBOR; the prime rate
of a specific bank; or commercial paper rates. Some indices, such as the
one-year constant maturity Treasury rate, closely mirror changes in market
interest rate levels. Others, such as the 11th District Federal Home Loan Bank
Cost of Funds index, tend to lag behind changes in market rate levels and tend
to be somewhat less volatile.
CAPS AND FLOORS--The underlying mortgages which collateralize the ARMs and
CMOs in which these Funds may invest will frequently have caps and floors which
limit the maximum amount by which the loan rate to the residential borrower may
change up or down (1) per reset or adjustment interval and (2) over the life of
the loan. Some residential mortgage loans restrict periodic adjustments by
limiting changes in the borrower's monthly principal and interest payments
rather than limiting interest rate changes. These payment caps may result in
negative amortization.
STRIPPED MORTGAGE SECURITIES AND RELATED RISKS
All Funds except Montag & Caldwell Growth Fund, Chicago Trust Talon Fund
and Chicago Trust Money Market Fund may also invest in stripped mortgage
securities. The stripped mortgage securities in which the Funds may invest will
only be issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. Stripped mortgage securities have greater market volatility
than other types of mortgage securities in which the Funds invest.
Stripped mortgage securities are usually structured with two classes that
receive different proportions of the interest and principal distributions on a
pool of mortgage assets. A common type of stripped
14
<PAGE> 96
mortgage security will have one class receiving some of the interest and most of
the principal from the mortgage assets, while the other class will receive most
of the interest and the remainder of the principal. In the most extreme case,
one class will receive all of the interest (the interest-only or "IO" class),
while the other class will receive all of the principal (the principal-only or
"PO" class). The yield to maturity on an IO class is extremely sensitive not
only to changes in prevailing interest rates but also to the rate of principal
payments (including prepayments) on the related underlying mortgage assets, and
a rapid rate of principal payments may have a material adverse effect on the
yield to maturity of any such IOs held by a Fund. If the underlying mortgage
assets experience greater than anticipated prepayments of principal, the Fund
may fail to fully recoup its initial investment in these securities even if the
securities are rated in the highest rating categories--"Aaa" or "AAA" by Moody's
or S&P, respectively.
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 may generally be illiquid. The Fund will treat
stripped mortgage securities as illiquid securities except for those securities
which are issued by U.S. Government agencies and instrumentalities and backed by
fixed rate mortgages whose liquidity is monitored by the Investment Advisor,
subject to the supervision of the Board of Trustees. The staff of the Securities
and Exchange Commission (the "SEC") has indicated that it views such securities
as illiquid. Until further clarification of this matter is provided by the
staff, a Fund's investment in stripped mortgage securities will be treated as
illiquid and will, together with any other illiquid investments, not exceed 15%
of such Fund's net assets.
OTHER MORTGAGE-BACKED SECURITIES
All Funds except Montag & Caldwell Growth Fund, Chicago Trust Talon Fund
and Chicago Trust Money Market Fund may invest in other mortgage-backed
securities. The Investment Advisor expects that governmental, government-related
or private entities may create mortgage loan pools and other mortgage-related
securities offering mortgage pass-through and mortgage-collateralized
investments in addition to those described above. The mortgages underlying these
securities may include alternative mortgage instruments, that is, mortgage
instruments whose principal or interest payments may vary or whose terms to
maturity may differ from customary long-term fixed-rate mortgages. As new types
of mortgage-related securities are developed and offered to investors, the
Investment Advisor will, consistent with a Fund's investment objective, policies
and quality standards, consider making investments in such new types of
mortgage-related securities.
GENERAL RISKS OF MORTGAGE SECURITIES
The mortgage securities in which a Fund invests differ from conventional
bonds in that principal is paid back over the life of the mortgage security
rather than at maturity. As a result, the holder of the mortgage securities
(i.e., the Fund) receives monthly scheduled payments of principal and interest,
and may receive unscheduled principal payments representing prepayments on the
underlying mortgages. When the holder reinvests the payments and any unscheduled
prepayments of principal it receives, it may receive a rate of interest which is
lower than the rate on the existing mortgage securities. For this reason,
mortgage securities may be less effective than other types of securities as a
means of "locking in" long-term interest rates.
A decline in interest rates may lead to a faster rate of repayment of the
underlying mortgages and expose a Fund to a lower rate of return upon
reinvestment. To the extent that such mortgage-backed securities are held by a
Fund, the prepayment right of mortgagors may decrease or limit the increase in
net asset value of the Fund because the value of the mortgage-backed securities
held by the Fund may decline more than or may not appreciate as much as the
price of non-callable debt securities. To the extent market interest rates
increase beyond the applicable cap or maximum rate on a mortgage security, the
market value of the mortgage security would likely decline to the same extent as
a conventional fixed-rate security. The volatility of the security would likely
increase, however, because the expected decline in prepayments would lead to
longer effective maturity of the underlying mortgages.
15
<PAGE> 97
In addition, to the extent mortgage securities are purchased at a premium,
mortgage foreclosures and unscheduled principal prepayments may result in some
loss of the holder's principal investment to the extent of the premium paid. On
the other hand, if mortgage securities are purchased at a discount, both a
scheduled payment of principal and an unscheduled prepayment of principal will
increase current and total returns and will accelerate the recognition of income
which when distributed to shareowners will be taxable as ordinary income.
With respect to pass-through mortgage pools issued by non-governmental
issuers, there can be no assurance that the private insurers associated with
such securities can meet their obligations under the policies. Although the
market for such non-governmental issued or guaranteed mortgage securities is
becoming increasingly liquid, securities issued by certain private organizations
may not be readily marketable. The purchase of such securities is subject to
each Fund's limit with respect to investment in illiquid securities.
INTEREST RATE SWAPS AND RELATED RISKS
Only Chicago Trust Balanced Fund, Chicago Trust Bond Fund, and Chicago
Trust Municipal Bond Fund may enter into interest rate swaps for hedging
purposes and not for speculation. Interest rate swaps are generally considered
to be derivative transactions. A Fund will typically use interest rate swaps to
preserve a return on a particular investment or portion of its portfolio or to
shorten the effective duration of its portfolio investments. Interest rate swaps
involve the exchange by a Fund with another party of their respective
commitments to pay or receive interest, such as an exchange of fixed-rate
payments for floating-rate payments.
A Fund will only enter into interest rate swaps on a net basis, i.e., the
two payment streams are netted out, with the Fund receiving or paying, as the
case may be, only the net amount of the two payments. Inasmuch as these
transactions are entered into for good faith hedging purposes, the Funds and the
Investment Advisor believe that such obligations do not constitute senior
securities as defined in the 1940 Act and, accordingly, will not treat them as
being subject to the Funds' borrowing restrictions. 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 such
accrued excess will be maintained in a segregated account by the Fund's
Custodian.
In a cap or floor, one party agrees, usually in return for a fee, to make
payments under particular circumstances. For example, the purchaser of an
interest rate cap has the right to receive payments to the extent a specified
interest rate exceeds an agreed level; the purchaser of an interest rate floor
has the right to receive payments to the extent a specified interest rate falls
below an agreed level. A collar entitles the purchaser to receive payments to
the extent a specified interest rate falls outside an agreed range.
Swap agreements may involve leverage and may be highly volatile; depending
on how they are used, they may have a considerable impact on a Fund's
performance. Swap agreements involve risks depending upon the other party's
creditworthiness and ability to perform, as judged by the Investment Advisor as
well as the Fund's ability to terminate its swap agreements or reduce its
exposure through offsetting transactions.
MUNICIPAL SECURITIES
Chicago Trust Municipal Bond Fund is expected to maintain a dollar-weighted
average maturity of between three and ten years under normal market conditions.
An assessment of a portfolio's dollar-weighted average maturity requires the
consideration a number of factors, including each bond's yield, coupon interest
payments, final maturity, call and put features, and prepayment exposure. The
Fund's computation of its dollar-weighted average maturity is based upon
estimated rather than known factors and there can be no assurance that the
anticipated average weighted maturity will be attained. In that regard, a change
in interest rates generally will affect a portfolio's dollar-weighted average
maturity.
16
<PAGE> 98
OTHER INVESTMENTS
The Board of Trustees may, in the future, authorize a Fund to invest in
securities other than those listed here and in the Prospectus, provided that
such investment would be consistent with that Fund's investment objective and
that it would not violate any fundamental investment policies or restrictions
applicable to that Fund.
INVESTMENT RESTRICTIONS
The investment restrictions set forth below are fundamental policies and
may not be changed as to a Fund without the approval of a majority of the
outstanding voting shares (as defined in the 1940 Act) of the Fund. Unless
otherwise indicated, all percentage limitations governing the investments of
each Fund 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 which results from a relative change in values or
from a change in a Fund's total assets will not be considered a violation.
Except as set forth under "INVESTMENT OBJECTIVES AND POLICIES" and
INVESTMENT STRATEGIES AND RISK CONSIDERATIONS" in the Prospectus, each Fund may
not:
(1) As to 75% of the total assets of each Fund, purchase the securities of any
one issuer (other than securities issued by the U.S. Government or its
agencies or instrumentalities) if immediately after such purchase, more
than 5% of the value of the Fund's total assets would be invested in
securities of such issuer;
(2) Purchase or sell real estate (but this restriction shall not prevent the
Funds from investing directly or indirectly in portfolio instruments
secured by real estate or interests therein or acquiring securities of real
estate investment trusts or other issuers that deal in real estate),
interests in oil, gas and/or mineral exploration or development programs or
leases;
(3) Purchase or sell commodities or commodity contracts, except that a Fund may
enter into futures contracts and options thereon in accordance with such
Fund's investment objectives and policies;
(4) Make investments in securities for the purpose of exercising control;
(5) Purchase the securities of any one issuer if, immediately after such
purchase, a Fund would own more than 10% of the outstanding voting
securities of such issuer;
(6) Sell securities short or purchase securities on margin, except such
short-term credits as are necessary for the clearance of transactions. For
this purpose, the deposit or payment by a Fund for initial or maintenance
margin in connection with futures contracts is not considered to be the
purchase or sale of a security on margin;
(7) Make loans, except that this restriction shall not prohibit (a) the
purchase and holding of debt instruments in accordance with a Fund's
investment objectives and policies, (b) the lending of portfolio
securities, or (c) entry into repurchase agreements with banks or
broker-dealers;
(8) Borrow money or issue senior securities, except that each Fund may borrow
from banks and enter into reverse repurchase agreements for temporary
purposes in amounts up to one-third of the value of its total assets at the
time of such borrowing; or mortgage, pledge, or hypothecate any assets,
except 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 at the time of its borrowing. All borrowings will
be done from a bank and asset coverage of at least 300% is required. A Fund
will not purchase securities when borrowings exceed 5% of that Fund's total
assets;
(9) Purchase the securities of issuers conducting their principal business
activities in the same industry (other than obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities) if
immediately after such purchase the value of a Fund's investments in such
industry would exceed 25% of the value of the total assets of the Fund;
17
<PAGE> 99
(10) Act as an underwriter of securities, except that, in connection with the
disposition of a security, a Fund may be deemed to be an "underwriter" as
that term is defined in the 1933 Act;
(11) Invest in puts, calls, straddles or combinations thereof except to the
extent disclosed in the Prospectus;
(12) Invest more than 5% of its total assets in securities of companies less
than three years old. Such three year periods shall include the operation
of any predecessor company or companies.
18
<PAGE> 100
TRUSTEES AND OFFICERS
Information pertaining to the Trustees and Executive Officers of the
Company is set forth below.
<TABLE>
<CAPTION>
POSITION PRINCIPAL OCCUPATIONS
NAME AGE WITH COMPANY FOR PAST FIVE YEARS
- ------------------------------- --- ------------------------------- ----------------------------------
<S> <C> <C> <C>
Stuart D. Bilton* 52 Chairman, Board of Trustees Mr. Bilton is Executive Vice
171 North Clark Street (Chief Executive Officer) President of Chicago Title and
Chicago, IL 60601 Trust Company and President and
Chief Executive Officer of The
Chicago Trust Company, where he is
responsible for the Financial
Services Group. Mr. Bilton has
held a variety of positions within
Chicago Title and Trust Company
including: Chief Economist; Senior
Vice President--Corporate
Marketing and Strategic Planning;
Vice President--Lincoln National
Life; and Manager of Eastern
Region Reinsurance Operations. Mr.
Bilton was educated at the London
School of Economics and at the
University of Wisconsin. He is a
Chartered Financial Analyst, a
Director of Montag & Caldwell,
Inc., and a Director of Baldwin &
Lyons, Inc., an Indianapolis-based
insurance company, and of the Boys
and Girls Clubs of Chicago.
Dorothea C. Gilliam* 45 Trustee Ms. Gilliam is Vice President of
171 North Clark Street Investments of the Alleghany
Chicago, IL 60601 Corporation, the parent company of
Chicago Title and Trust Company.
Previously, she was an Assistant
Vice President of Chicago Title
and Trust Company.
Leonard F. Amari 55 Trustee Mr. Amari is a Partner at the law
734 North Wells Street offices of Amari & Locallo, a
Chicago, IL 60610 practice confined exclusively to
the real estate tax assessment
process.
Gregory T. Mutz 52 Trustee Mr. Mutz is the Chairman of the
125 South Wacker Drive Board for both the Amli Realty and
Suite 3100 Amli Residential Properties, Inc.
Chicago, IL 60606 As Chairman, he is responsible for
the operation of the two real
estate companies whose principal
businesses are multi-family
apartments, land, and business,
office and industrial parks.
Nathan Shapiro 61 Trustee Mr. Shapiro is the President of SF
1700 Ridge Investments, Inc., a broker/dealer
Highland Park, IL 60035 and investment banking firm.
Previously, he was President of
SLD Corporation, a consulting
firm, and Senior Vice President of
Pekin, Singer and Shapiro, an
investment advisory firm. He is a
Director of Baldwin & Lyons, Inc.
</TABLE>
19
<PAGE> 101
<TABLE>
<CAPTION>
POSITION PRINCIPAL OCCUPATIONS
NAME AGE WITH COMPANY FOR PAST FIVE YEARS
- ------------------------------- --- ------------------------------- ----------------------------------
<S> <C> <C> <C>
Kenneth C. Anderson 33 President (Chief Operating Mr. Anderson is a Senior Vice
171 North Clark Street Officer) President of The Chicago Trust
Chicago, IL 60601 Company and has been an officer
since 1993. He is responsible for
the mutual fund operations and
marketing. Mr. Anderson is a
Certified Public Accountant.
David F. Seng 56 Senior Vice President Mr. Seng is an Executive Vice
1100 Atlanta Financial President and Chief Operating
Center Officer of Montag & Caldwell,
3343 Peachtree Road, NE Inc., and a Chartered Financial
Atlanta, GA 30326-8151 Analyst.
Gerald F. Dillenburg 31 Vice President, Secretary, and Mr. Dillenburg is a Vice President
171 North Clark Street Treasurer (Chief Financial of The Chicago Trust Company and
Chicago, IL 60601 Officer and Compliance Officer) has been the operations manager
and compliance officer of the
mutual funds since 1996.
Previously, he was an audit
manager with KPMG Peat Marwick
LLP, specializing in investment
services, including mutual and
trust funds, broker/dealers and
investment advisors. Mr.
Dillenburg is a Certified Public
Accountant.
Thomas J. Adams III, Esq. 56 Vice President Mr. Adams joined Chicago Title and
171 North Clark Street Trust Company in September 1967 as
Chicago, IL 60601 Attorney Trainee and was appointed
Assistant Counsel in July 1972. In
January 1973, he was appointed
Assistant General Counsel of both
Chicago Title and Trust Company
and Chicago Title Insurance
Company. In December 1979, Mr.
Adams was elected Vice President,
Associate General Counsel of
Chicago Title and Trust Company
and Chicago Title Insurance
Company. In 1985, he was elected
General Corporate Counsel and
Secretary of Chicago Title
Insurance Company as well as
General Corporate Counsel of
Chicago Title and Trust Company.
Mr. Adams was also elected Vice
President of Security Union Title
Insurance Company in April 1988.
Mr. Adams received his B.A. from
Dartmouth College in 1964, his
Juris Doctor from Northwestern Law
School in 1967, and an M.B.A. from
the University of Chicago Graduate
School of Business in 1974.
</TABLE>
- ---------------
* These Trustees are considered "interested persons" of the Funds as defined
under the 1940 Act.
The Trustees of the Company who are not "interested persons" of the Funds
receive fees and expenses for each meeting of the Board of Trustees they attend.
Prior to January 1, 1997, such Trustees received $1,500 for each Board Meeting
attended, and an annual retainer of $1,500. Effective January 1, 1998, such
Trustees will receive $2,000 for each Board Meeting attended, and an annual
retainer of $2,000. No officer or employee of Chicago Title and Trust Company or
The Chicago Trust Company ("Chicago Trust") or their affiliates receives any
compensation from the Funds for acting as a Trustee of
20
<PAGE> 102
the Company. The Officers of the Company receive no compensation directly from
the Funds for performing the duties of their offices.
Set forth below are the total fees which were paid to each of the Trustees
who are not "interested persons" during the fiscal period ended October 31,
1997.
<TABLE>
<CAPTION>
TRUSTEE AGGREGATE FEES PAID BY THE COMPANY
- ------- ----------------------------------
<S> <C>
Leonard F. Amari............................................ $5,375
Gregory T. Mutz............................................. $6,875
Nathan Shapiro.............................................. $6,875
</TABLE>
As of January 30, 1998, the Trustees and Officers of the Company as a group
owned less than 1% of the outstanding shares of any class of each Fund.
PRINCIPAL HOLDERS OF SECURITIES
Listed below are the names and addresses of those shareowners who, as of
February 23, 1998, owned of record or beneficially of 5% or more of the shares
of the Funds. The shares held in the nominee names of Marshall & Ilsley Trust
Co. are owned of record by Chicago Trust. Chicago Title and Trust Company
("Chicago Title and Trust"), an Illinois chartered trust company, a wholly-owned
subsidiary of Alleghany Corporation ("Alleghany"), is the owner of Alleghany
Asset Management, which is the holding company of Chicago Trust and Montag &
Caldwell, Inc. ("Montag and Caldwell"), the Investment Advisors for the Funds.
Shareowners who have the power to vote a large percentage of shares of a
particular Fund can control the Fund and determine the outcome of a
shareholders' meeting.
MONTAG & CALDWELL GROWTH FUND
CLASS N
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHAREOWNERS PERCENTAGE OWNED
----------- ----------------
<S> <C>
Charles Schwab & Co., Inc................................... 24.75%
Special Custody Account for Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104
Miter & Co.................................................. 20.27%
c/o Marshall & Ilsley Trust Co.
Attn: Outsourcing
P.O. Box 2977
Milwaukee, WI 53202
</TABLE>
MONTAG & CALDWELL GROWTH FUND
CLASS I
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHAREOWNERS PERCENTAGE OWNED
----------- ----------------
<S> <C>
The Bank of Mississippi..................................... 21.58%
c/o Trust
P.O. Box 1605
Jackson, MS 39215
</TABLE>
21
<PAGE> 103
<TABLE>
<CAPTION>
SHAREOWNERS PERCENTAGE OWNED
----------- ----------------
<S> <C>
Miter & Co.................................................. 13.13%
c/o Marshall & Ilsley Trust Co.
Attn: Outsourcing
P.O. Box 2977
Milwaukee, WI 53202
Mac & Co.................................................... 6.22%
Mutual Funds Operations
P.O. Box 3198
Pittsburgh, PA 15230
Wilmington Trust............................................ 5.71%
FBO Central Newspapers, Inc.
Savings Plus Plan
1100 N. Market St.
Wilmington, DE 19890
</TABLE>
CHICAGO TRUST GROWTH & INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHAREOWNERS PERCENTAGE OWNED
----------- ----------------
<S> <C>
Miter & Co.................................................. 88.94%
c/o Marshall & Ilsley Trust Co.
Attn: Outsourcing
P.O. Box 2977
Milwaukee, WI 53202
</TABLE>
CHICAGO TRUST TALON FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHAREOWNERS PERCENTAGE OWNED
----------- ----------------
<S> <C>
Miter & Co.................................................. 5.39%
c/o Marshall & Ilsley Trust Co.
Attn: Outsourcing
P.O. Box 2977
Milwaukee, WI 53202
</TABLE>
CHICAGO TRUST BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHAREOWNERS PERCENTAGE OWNED
----------- ----------------
<S> <C>
Miter & Co.................................................. 97.84%
c/o Marshall & Ilsley Trust Co.
Attn: Outsourcing
P.O. Box 2977
Milwaukee, WI 53202
</TABLE>
22
<PAGE> 104
MONTAG & CALDWELL BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHAREOWNERS PERCENTAGE OWNED
----------- ----------------
<S> <C>
Miter & Co.................................................. 30.97%
c/o Marshall & Ilsley Trust Co.
Attn: Outsourcing
P.O. Box 2977
Milwaukee, WI 53202
American Express Trust Company.............................. 13.38%
FBO American Express Trust Retirement Services
P.O. Box 534
Minneapolis, MN 55422
Huntington Trust Co......................................... 7.68%
FBO Diocese of Covington
Attn: Mutual Funds
P.O. Box 1558
Columbus, OH 43260
Wachovia Bank N.A. Cust..................................... 6.78%
North Carolina Textile Foundation
301 N. Main St.
P.O. Box 3073
Winston-Salem, NC 27150
</TABLE>
CHICAGO TRUST BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHAREOWNERS PERCENTAGE OWNED
----------- ----------------
<S> <C>
Miter & Co.................................................. 69.67%
c/o Marshall & Ilsley Trust Co.
Attn: Outsourcing
P.O. Box 2977
Milwaukee, WI 53202
Mitra & Co.................................................. 11.12%
FBO Chicago Trust for SCI
P.O. Box 2977
Milwaukee, WI 53202
Davis & Company............................................. 10.94%
c/o Marshall & Ilsley Trust Co.
Attn: Outsourcing
P.O. Box 2977
Milwaukee, WI 53202
</TABLE>
CHICAGO TRUST MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHAREOWNERS PERCENTAGE OWNED
----------- ----------------
<S> <C>
Davis & Company............................................. 90.40%
c/o Marshall & Ilsley Trust Co.
Attn: Outsourcing
P.O. Box 2977
Milwaukee, WI 53202
</TABLE>
CHICAGO TRUST MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHAREOWNERS PERCENTAGE OWNED
----------- ----------------
<S> <C>
Davis & Company............................................. 95.72%
c/o Marshall & Ilsley Trust Co.
Attn: Outsourcing
P.O. Box 2977
Milwaukee, WI 53202
</TABLE>
23
<PAGE> 105
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISORY AGREEMENTS
The advisory services provided by the Investment Advisor of each Fund, and
the fees received by it for such services, are described in the Prospectus. The
Investment Advisor of each Fund may from time to time voluntarily waive a
portion of its advisory fees with respect to such Fund and/or reimburse a
portion of the Fund's expenses.
The investment advisory fees earned and waived by Chicago Trust and Montag
& Caldwell, as well as expenses reimbursed, with respect to the applicable Funds
for which each acts as Investment Advisor, are set forth below:
FISCAL YEAR ENDED OCTOBER 31, 1997:
<TABLE>
<CAPTION>
GROSS ADVISORY FEES NET ADVISORY FEES WAIVED FEES AND
FUND EARNED BY ADVISORS AFTER FEE WAIVERS REIMBURSED EXPENSES
---- ------------------- ----------------- -------------------
<S> <C> <C> <C>
Montag & Caldwell Growth Fund......... $3,800,124 $3,758,696 $ 41,428
Chicago Trust Growth & Income Fund.... $1,734,260 $1,604,403 $129,857
Chicago Trust Talon Fund.............. $ 182,742 $ 97,146 $ 85,596
Chicago Trust Balanced Fund........... $1,228,508 $1,126,305 $102,203
Montag & Caldwell Balanced Fund....... $ 400,868 $ 355,895 $ 44,973
Chicago Trust Bond Fund............... $ 550,514 $ 328,975 $221,539
Chicago Trust Municipal Bond Fund..... $ 69,127 $ 0 $ 85,359
Chicago Trust Money Market Fund....... $1,004,607 $ 862,275 $142,332
</TABLE>
FISCAL YEAR ENDED OCTOBER 31, 1996:
<TABLE>
<CAPTION>
GROSS ADVISORY FEES NET ADVISORY FEES WAIVED FEES AND
FUND EARNED BY ADVISORS AFTER FEE WAIVERS REIMBURSED EXPENSES
---- ------------------- ----------------- -------------------
<S> <C> <C> <C>
Montag & Caldwell Growth Fund......... $ 834,718 $ 800,071 $ 34,647
Chicago Trust Growth & Income Fund.... $1,324,207 $1,038,213 $ 285,994
Chicago Trust Talon Fund.............. $ 112,153 $ 16,856 $ 95,297
Chicago Trust Balanced Fund........... $1,075,631 $ 815,487 $ 260,144
Montag & Caldwell Balanced Fund....... $ 195,796 $ 110,391 $ 85,405
Chicago Trust Bond Fund............... $ 416,462 $ 190,705 $ 225,757
Chicago Trust Municipal Bond Fund..... $ 67,672 $ 0 $ 70,437
Chicago Trust Money Market Fund....... $ 821,513 $ 647,188 $ 174,325
</TABLE>
FISCAL YEAR ENDED OCTOBER 31, 1995:
<TABLE>
<CAPTION>
NET ADVISORY FEES
GROSS ADVISORY FEES PAID WAIVED FEES AND
FUND EARNED BY ADVISORS AFTER FEE WAIVERS REIMBURSED EXPENSES
---- ------------------- ----------------- -------------------
<S> <C> <C> <C>
Montag & Caldwell Growth Fund......... $154,451 $ 45,631 $108,820
Chicago Trust Growth & Income Fund.... $222,466 $ 94,834 $127,632
Chicago Trust Talon Fund.............. $ 64,359 $ 0 $139,529
Chicago Trust Balanced Fund........... $121,079 $ 90,985 $ 30,094
Montag & Caldwell Balanced Fund....... $ 78,125 $ 0 $129,051
Chicago Trust Bond Fund............... $123,919 $ 0 $165,348
Chicago Trust Municipal Bond Fund..... $ 66,027 $ 0 $138,875
Chicago Trust Money Market Fund....... $638,608 $346,606 $292,002
</TABLE>
24
<PAGE> 106
Under the Investment Advisory Agreements, the Investment Advisor of each
Fund is not liable for any error of judgment or mistake of law or for any loss
suffered by the Company or a Fund in connection with the performance of the
Agreement, except a loss resulting from willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from reckless
disregard of its duties and obligations thereunder.
Each Investment Advisory Agreement is terminable with respect to a Fund by
vote of the Board of Trustees or by the holders of a majority of the outstanding
voting securities of the Fund, at any time without penalty, on 60 days' written
notice to the Investment Advisor. An Investment Advisor may also terminate its
advisory relationship with respect to a Fund on 60 days' written notice to the
Company. Each Investment Advisory Agreement terminates automatically in the
event of its assignment.
Under each Investment Advisory Agreement, the Fund pays the following
expenses: (1) the fees and expenses of the Company's disinterested directors;
(2) the salaries and expenses of any of the Company's officers or employees who
are not affiliated with the Investment Advisor; (3) interest expenses; (4) taxes
and governmental fees; (5) brokerage commissions and other expenses incurred in
acquiring or disposing of portfolio securities; (6) the expenses of registering
and qualifying shares for sale with the SEC and with various state securities
commissions; (7) accounting and legal costs; (8) insurance premiums; (9) fees
and expenses of the Company's Custodian, Administrator, Sub-Administrator and
Transfer Agent and any related services; (10) expenses of obtaining quotations
of the Funds' portfolio securities and of pricing the Funds' shares; (11)
expenses of maintaining the Company's legal existence and of shareowners'
meetings; (12) expenses of preparation and distribution to existing shareowners
of reports, proxies and prospectuses; and (13) fees and expenses of membership
in industry organizations.
Chicago Title and Trust, 171 North Clark Street, Chicago, Illinois 60601,
an Illinois chartered trust company and a wholly-owned subsidiary of Alleghany,
provided investment advisory services to certain Funds of the Company since
their respective inception dates through October 30, 1995. As described more
fully below, Chicago Trust, an Illinois corporation, assumed those
responsibilities on October 30, 1995. Such Funds include: 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. ("Talon") serving as Sub-Investment
Advisor ("Sub-Advisor") for that Fund.
Chicago Title and Trust formed Alleghany Asset Management, Inc. ("AAM"), a
wholly-owned subsidiary, to act as a holding company for certain of its
financial services entities. On October 30, 1995, Chicago Title and Trust
transferred substantially all of its fiduciary business and investment
operations to Chicago Trust, a wholly-owned subsidiary of AAM. As part of such
transfer, Chicago Trust assumed all of Chicago Title and Trust's obligations and
liabilities under its existing Investment Advisory Agreements. Chicago Title and
Trust entered into a Guaranty Agreement with the Company on behalf of each Fund
for which it serves as Investment Advisor, pursuant to which it guarantees all
the obligations and liabilities of Chicago Trust under such Agreements. The
investment management operations with respect to the Company remain unchanged,
and those persons or groups responsible for the investment management of the
applicable Funds of the Company continue to have such responsibility for Chicago
Trust.
Chicago Trust managed approximately $7.0 billion in assets at December 31,
1997, consisting primarily of pension and profit sharing accounts, high net
worth individuals, families and insurance companies. Chicago Trust, an Illinois
corporation, is an indirect and wholly-owned subsidiary of AAM. AAM, 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.
As part of the corporate reorganization of Chicago Title and Trust
described above, Montag & Caldwell became an indirect wholly-owned subsidiary of
Chicago Title and Trust. Prior to October 30, 1995, Montag & Caldwell was a
wholly-owned subsidiary of AAM.
25
<PAGE> 107
SUB-INVESTMENT ADVISORY AGREEMENT
Pursuant to a Sub-Investment Advisory Agreement between Chicago Trust and
Talon, Talon provides an investment program for Chicago Trust Talon Fund,
including investment research and the determination from time to time of the
securities that will be purchased and sold by the Fund, subject to the
supervision of Chicago Trust and the Board of Trustees of the Company. Prior to
December 23, 1996, as compensation for its services, Talon received from Chicago
Trust an annual fee of 0.40% of the first $8 million, 0.50% of the next $12
million, 0.70% of the next $230 million of the average daily net assets of this
Fund, and 0.75% of such average daily net assets in excess of $250 million.
Effective December 23, 1996, 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 the months in which the Fund's
average daily net assets are $18 million or less, the Sub-Advisor will receive
no fee. During the fiscal years ended October 31, 1995, 1996 and 1997, Talon was
paid $37,762, $15,109 and $60,407, respectively, for sub-investment advisory
services rendered.
Under the Sub-Investment Advisory Agreement, Talon is not liable for any
error of judgment or mistake of law or for any loss suffered by Chicago Trust or
the Funds in connection with the performance of the Sub-Investment Advisory
Agreement, except a loss resulting from willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from reckless
disregard of its duties and obligations thereunder.
THE ADMINISTRATOR AND SUB-ADMINISTRATOR
As Administrator, Chicago Trust, 171 North Clark Street, Chicago, Illinois
60601, provides certain administrative services to the Company pursuant to an
Administration Agreement. First Data Investor Services Group, Inc. ("First
Data"), 53 State Street, Boston, Massachusetts 02109, provides certain
administrative services for the Funds and Chicago Trust pursuant to a
Sub-Administration Agreement.
Under the Administration Agreement, the Administrator is responsible for:
(1) coordinating with the Custodian and Transfer Agent and monitoring the
services they provide to the Funds; (2) coordinating with and monitoring any
other third parties furnishing services to the Funds; (3) providing the Funds
with necessary office space, telephones and other communications facilities and
personnel competent to perform administrative and clerical functions; (4)
supervising the maintenance by third parties of such books and records of the
Funds as may be required by applicable Federal or state law; (5) preparing or
supervising the preparation by third parties of all Federal, state and local tax
returns and reports of the Funds required by applicable law; (6) preparing and,
after approval by the Funds, filing and arranging for the distribution of proxy
materials and periodic reports to shareowners of the Funds as required by
applicable law; (7) preparing and, after approval by the Company, arranging for
the filing of such registration statements and other documents with the SEC and
other Federal and state regulatory authorities as may be required by applicable
law; (8) reviewing and submitting to the Officers of the Company for their
approval invoices or other requests for payment of the Funds' expenses and
instructing the Custodian to issue checks in payment thereof; and (9) taking
such other action with respect to the Company or the Funds as may be necessary
in the opinion of the Administrator to perform its duties under the Agreement.
As compensation for services performed under the Administration Agreement,
the Administrator receives a fee payable monthly at an annual rate (as described
in the Prospectus) multiplied by the average daily net assets of the Company.
26
<PAGE> 108
The administrative fees earned with respect to each Fund are set forth
below:
<TABLE>
<CAPTION>
ADMINISTRATIVE FEES ADMINISTRATIVE FEES ADMINISTRATIVE FEES
FUND FYE OCTOBER 31, 1995 FYE OCTOBER 31, 1996 FYE OCTOBER 31, 1997
---- -------------------- -------------------- --------------------
FPS FIRST DATA
------- ----------
<S> <C> <C> <C> <C>
Montag & Caldwell Growth Fund....... $28,574 $ 58,127 $76,898 $165,326
Chicago Trust Growth & Income Fund.. $35,261 $104,720 $52,175 $ 69,751
Chicago Trust Talon Fund............ $27,445 $ 9,096 $ 5,005 $ 6,670
Chicago Trust Balanced Fund......... $ 8,685 $ 83,563 $38,136 $ 47,246
Montag & Caldwell Balanced Fund..... $27,554 $ 15,232 $ 9,676 $ 17,554
Chicago Trust Bond Fund............. $30,042 $ 41,966 $21,291 $ 28,043
Chicago Trust Municipal Bond Fund... $27,050 $ 6,481 $ 2,679 $ 3,007
Chicago Trust Money Market Fund..... $36,291 $113,018 $56,421 $ 65,373
</TABLE>
Prior to June 1, 1997, FPS Broker Services, Inc. ("FPSB"), 3200 Horizon
Drive, King of Prussia, Pennsylvania 19406, acted as an Underwriter of the
Funds' shares for the purpose of facilitating the registration of shares of the
Funds under state securities laws and assisted in sales of shares pursuant to
the Underwriting Agreement approved by the Company's Trustees. Pursuant to its
Underwriter Compensation Agreement with the Company, FPSB was paid an annual
underwriter fee of $2,500 for each Class N Shares Fund and $2,000 for each Class
I Shares Fund ($22,000 per annum total for eight Class N Shares Funds and one
Class I Shares Fund), and certain other registration and transaction fees. For
the fiscal years ended October 31, 1995 and 1996, an aggregate of $18,125 and
$20,833 was paid on behalf of the then-existing Funds.
Effective June 1, 1997, First Data Distributors, Inc. replaced FPS Broker
Services, Inc. as principal underwriter and distributor of the Funds' shares.
27
<PAGE> 109
DISTRIBUTION PLAN
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 pay actual expenses not exceeding, on an annual basis, 0.25% of a
Fund's average daily net assets. To the Company's knowledge, no interested
person of the Company, nor any of its Trustees who are not "interested persons,"
has a direct or indirect financial interest in the operation of the Plan. The
Company anticipates that each Fund will benefit from additional shareholders and
assets as a result of implementation of the Plan. The terms of such Plan are
more fully described in the Prospectus under "DISTRIBUTION PLAN." Amounts spent
on behalf of each Fund pursuant to such Plan during the fiscal year ended
October 31, 1997 are set forth below.
<TABLE>
<CAPTION>
DISTRIBUTION COMPENSATION TO COMPENSATION TO
FUND PRINTING SERVICES BROKER DEALERS SALES PERSONNEL
- ---- -------- ------------ --------------- ---------------
<S> <C> <C> <C> <C>
Montag & Caldwell Growth Fund......... $19,215 $27,812 $498,145 $11,738
Chicago Trust Growth & Income Fund.... $30,404 $26,242 $125,246 $11,097
Chicago Trust Talon Fund.............. $ 3,684 $10,855 $ 7,166 $ 1,750
Chicago Trust Balanced Fund........... $14,980 $21,233 $ 94,632 $ 1,732
Montag & Caldwell Balanced Fund....... $ 3,319 $12,615 $ 60,338 $ 4,873
Chicago Trust Bond Fund............... $ 8,401 $16,784 $ 61,136 $ 5,920
Chicago Trust Municipal Bond Fund..... $ 1,017 $10,097 $ 4,500 $ 109
</TABLE>
<TABLE>
<CAPTION>
SERVICE
FUND MARKETING PROVIDERS TOTAL
- ---- --------- --------- --------
<S> <C> <C> <C>
Montag & Caldwell Growth Fund............................ $148,846 $ 22,097 $727,853
Chicago Trust Growth & Income Fund....................... $293,428 $ 48,204 $534,621
Chicago Trust Talon Fund................................. $ 10,904 $ 229 $ 34,588
Chicago Trust Balanced Fund.............................. $277,955 $ 36,782 $447,314
Montag & Caldwell Balanced Fund.......................... $ 14,892 $ 4,736 $100,772
Chicago Trust Bond Fund.................................. $ 63,038 $ 14,725 $170,004
Chicago Trust Municipal Bond Fund........................ $ 2,129 $ 0 $ 17,852
</TABLE>
28
<PAGE> 110
PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS
The Investment Advisor or Sub-Advisor is responsible for decisions to buy
and sell securities for the Funds and for the placement of its portfolio
business and the negotiation of commissions, if any, paid on such transactions.
The Investment Advisor, in placing trades for a Fund, will follow the Company's
policy of seeking best execution of orders. Securities traded in the
over-the-counter market are generally traded on a net basis. These securities
are generally traded on a net basis with dealers acting as principal for their
own accounts without a stated commission. In over-the-counter transactions,
orders are placed directly with a principal market-maker unless a better price
and execution can be obtained by using a broker. Brokerage commissions are paid
on transactions in listed securities, futures contracts, and options.
The Investment Advisor or Sub-Advisor effects portfolio transactions for
other investment companies and advisory accounts. Research services furnished by
broker-dealers through whom the Funds effect securities transactions may be used
by the Investment Advisor or Sub-Advisor, as the case may be, in servicing all
of their respective accounts; not all such services may be used in connection
with the Funds. The Investment Advisor and Sub-Advisor will attempt to equitably
allocate portfolio transactions among the Funds and others whenever concurrent
decisions are made to purchase or sell securities by the Funds and other
accounts. In making such allocations between the Funds and others, the main
factors to be considered are the respective investment objectives, the relative
size of portfolio holdings of the same or comparable securities, the
availability of cash for investment, the size of investment commitments
generally held, and the opinions of the persons responsible for recommending
investments to the Funds and the others. In some cases, this procedure could
have an adverse effect on the Funds. In the opinion of the Investment Advisor
and Sub-Advisor, however, the results of such procedures will, on the whole, be
in the best interest of each of the clients.
<TABLE>
<CAPTION>
BROKERAGE BROKERAGE BROKERAGE
COMMISSIONS COMMISSIONS COMMISSIONS
FUND FYE OCTOBER 31, 1995 FYE OCTOBER 31, 1996 FYE OCTOBER 31, 1997
- ---- -------------------- -------------------- --------------------
<S> <C> <C> <C>
Montag & Caldwell Growth Fund......... $50,125 $204,066 $537,610
Chicago Trust Growth & Income Fund.... $13,723 $122,722 $130,947
Chicago Trust Talon Fund.............. $49,652 $ 40,019 $ 55,212*
Chicago Trust Balanced Fund........... N/A $ 66,370 $ 58,087
Montag & Caldwell Balanced Fund....... $15,328 $ 17,700 $ 34,393
Chicago Trust Bond Fund............... N/A N/A N/A
Chicago Trust Municipal Bond Fund..... N/A N/A N/A
Chicago Trust Money Market Fund....... N/A N/A N/A
</TABLE>
* Of this amount, $1,300 paid to Talon Securities, Inc. ("TSI"), an affiliate of
Talon, the Fund's Sub-Advisor. The amount paid to TSI represents: (a) 0.20% of
the aggregate brokerage commissions received by TSI from all clients during
the most recent fiscal year; and (b) 2.35% of the total commissions paid by
Chicago Trust Talon Fund to all brokers through whom trades were placed during
the Fund's most recent fiscal year.
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
29
<PAGE> 111
correspondingly greater transaction costs. To the extent that net capital gains
are realized, distributions derived from such gains are treated as ordinary
income for Federal income tax purposes.
The portfolio turnover rates for the Funds for their most recent fiscal
periods may be found under "FINANCIAL HIGHLIGHTS" in the Prospectus. Chicago
Trust Talon Fund experienced a portfolio turnover rate of 112.72% for the fiscal
year ended October 31, 1997 (vs. 126.83% for the fiscal year ended October 31,
1996 and 229.43% for the fiscal year ended October 31, 1995). The Fund is
periodically repositioned in the market as it seeks capital preservation, value
and competitive performance. Portfolio trades are executed in accordance with
the Fund's investment objective, in the best judgment of management.
TAXES
Each Fund intends to continue to qualify each year as a regulated
investment company under the Code.
In order to so qualify, a Fund must, among other things, (i) derive at
least 90% of its gross income from dividends, interest, payments with respect to
certain securities loans, gains from the sale of securities or foreign
currencies, or other income (including but not limited to gains from options,
futures or forward contracts) derived with respect to its business of investing
in such stock, securities or currencies; (ii) derive less than 30% of its gross
income from gains from the sale or other disposition of securities or certain
futures and options thereon held for less than three months ("short-short
gains"); (iii) distribute at least 90% of its dividend, interest and certain
other taxable income each year; and (iv) at the end of each fiscal quarter
maintain at least 50% of the value of its total assets in cash, U.S. Government
securities, securities of other regulated investment companies, and other
securities of issuers which represent, with respect to each issuer, no more than
5% of the value of a Fund's total assets and 10% of the outstanding voting
securities of such issuer, and with no more than 25% of its assets invested in
the securities (other than those of the government or other regulated investment
companies) of any one issuer or of two or more issuers which the Fund controls
and which are engaged in the same, similar or related trades and businesses.
To the extent such Fund qualifies for treatment as a regulated investment
company, it will not be subject to Federal income tax on income paid to
shareowners in the form of dividends or capital gains distributions.
An excise tax at the rate of 4% will be imposed on the excess, if any, of a
Fund's "required distributions" over actual distributions in any calendar year.
Generally, the "required distribution" is 98% of a Fund's ordinary income for
the calendar year plus 98% of its capital gain net income recognized during the
one-year period ending on October 31 plus undistributed amounts from prior
years. The Funds intend to make distributions sufficient to avoid imposition of
the excise tax. For a distribution to qualify as such with respect to a calendar
year under the foregoing rules, it must be declared by a Fund during October,
November or December to shareowners of record during such month and paid by
January 31 of the following year. Such distributions will be taxable in the year
they are declared, rather than the year in which they are received.
When a Fund writes a call, or purchases a put option, an amount equal to
the premium received or paid by it is included in the Fund's accounts as an
asset and as an equivalent liability.
In writing a call, the amount of the liability is subsequently
"marked-to-market" to reflect the current market value of the option written.
The current market value of a written option is the last sale price on the
principal exchange on which such option is traded or, in the absence of a sale,
the mean between the last bid and asked prices. If an option which a Fund has
written expires on its stipulated expiration date, the Fund recognizes a
short-term capital gain. If a Fund enters into a closing purchase transaction
with respect to an option which the Fund has written, the Fund realizes a
short-term gain (or loss if the cost of the closing transaction exceeds the
premium received when the option was sold) without regard to any unrealized gain
or loss on the underlying security, and the liability related to such option is
extinguished. If
30
<PAGE> 112
a call option which a Fund has written is exercised, the Fund realizes a capital
gain or loss from the sale of the underlying security and the proceeds from such
sale are increased by the premium originally received.
The premium paid by a Fund for the purchase of a put option is recorded in
the Fund's assets and liabilities as an investment and subsequently adjusted
daily to the current market value of the option. For example, if the current
market value of the option exceeds the premium paid, the excess would be
unrealized appreciation and, conversely, if the premium exceeds the current
market value, such excess would be unrealized depreciation. The current market
value of a purchased option is the last sale price on the principal exchange on
which such option is traded or, in the absence of a sale, the mean between the
last bid and asked prices. If an option which a Fund has purchased expires on
the stipulated expiration date, the Fund realizes a short-term or long-term
capital loss for Federal income tax purposes in the amount of the cost of the
option. If a Fund exercises a put option, it realizes a capital gain or loss
(long-term or short-term, depending on the holding period of the underlying
security) from the sale which will be decreased by the premium originally paid.
The amount of any realized gain or loss on closing out options on certain
stock indices will result in a realized gain or loss for tax purposes. Such
options held by a Fund at the end of each fiscal year on a broad-based stock
index will be required to be "marked-to-market" for Federal income tax purposes.
Sixty percent of any net gain or loss recognized on such deemed sales or on any
actual sales will be treated as long-term capital gain or loss, and the
remainder will be treated as short-term capital gain or loss ("60/40 gain or
loss"). Certain options, futures contracts and options on futures contracts
utilized by the Funds are "Section 1256 contracts." Any gains or losses on
Section 1256 contracts held by a Fund at the end of each taxable year (and on
October 31 of each year for purposes of the 4% excise tax) are
"marked-to-market" with the result that unrealized gains or losses are treated
as though they were realized and the resulting gain or loss is treated as a
60/40 gain or loss.
Shareowners will be subject to Federal income taxes on distributions made
by the Funds whether received in cash or additional shares of the Funds.
Distributions of net investment income and net short-term capital gains, if any,
will be taxable to shareowners as ordinary income. Distributions of net capital
gains (the excess of net capital gains over net short-term capital losses), if
any, will be taxable to shareowners as 28% rate gains or 20% rate gains, without
regard to how long a shareowner has held shares of a Fund. A loss on the sale of
shares held for six months or less will be treated as a long-term capital loss
to the extent of any long-term capital gain dividend paid to the shareowner with
respect to such shares. Dividends paid by a Fund may qualify in part for the 70%
dividends-received deduction for corporations, provided however, that those
shares have been held for at least 45 days.
An investment in Chicago Trust Municipal Bond Fund is not intended to
constitute a balanced investment program. Shares of this Fund would not be
suitable for tax-exempt institutions and may not be suitable for retirement
plans qualified under Section 401 of the Code, H.R. 10 plans, and IRAs since
such plans and accounts are generally tax-exempt and, therefore, not only would
the shareowner receive less income and not gain any benefit from the Fund's
dividend being tax-exempt, but such dividends would be ultimately taxable to the
beneficiaries when distributed.
In order for Chicago Trust Municipal Bond Fund to pay exempt-interest
dividends for any taxable year, at the close of each taxable quarter, at least
50% of the aggregate value of the Fund's portfolio must consist of
exempt-interest obligations. Within 60 days after the close of its taxable year,
the Fund will notify its shareowners of the portion of the dividends paid by the
Fund which constitutes exempt-interest dividends with respect to such taxable
year.
The Funds will notify shareowners each year of the amount of dividends and
distributions, including the amount of any distribution of 28% rate gains and
20% rate gains, and the portion of its dividends which qualify for the 70%
deduction.
Dividends and distributions also may be subject to state and local taxes.
Shareowners are urged to consult their tax advisors regarding specific questions
as to Federal, state and local taxes.
31
<PAGE> 113
The foregoing discussion relates solely to U.S. Federal income tax law.
Non-U.S. investors should consult their tax advisors concerning the tax
consequences of ownership of shares of the Funds, including the possibility that
distributions may be subject to a 30% United States withholding tax (or a
reduced rate of withholding provided by treaty).
PERFORMANCE INFORMATION
IN GENERAL
From time to time, the Company may include general comparative information,
such as statistical data regarding inflation, securities indices or the features
or performance of alternative investments, in advertisements, sales literature
and reports to shareowners. The Company may also include calculations, such as
hypothetical compounding examples or tax-free compounding examples, which
describe hypothetical investment results in such communications. Such
performance examples will be based on an express set of assumptions and are not
indicative of the performance of any Fund. In addition, the Company may include
charts comparing various tax-free yields versus taxable yield equivalents at
different income levels.
From time to time, the yield and total return of a Fund may be quoted in
advertisements, shareowner reports or other communications to shareowners.
TOTAL RETURN CALCULATIONS
The Funds that compute their average annual total returns do so by
determining the average annual compounded rates of return during specified
periods that equate the initial amount invested to the ending redeemable value
of such investment. This is done by dividing the ending redeemable value of a
hypothetical $1,000 initial payment by $1,000 and raising the quotient to a
power equal to one divided by the number of years (or fractional portion
thereof) covered by the computation and subtracting one from the result. This
calculation can be expressed as follows:
Average Annual Total Return = (ERV) 1/n
[-----] -1
P
Where: ERV = ending redeemable value at the end of the period covered by
the computation of a hypothetical $1,000 payment made at the
beginning of the period
P = hypothetical initial payment of $1,000
n = period covered by the computation, expressed in terms of
years
The Funds that compute their aggregate total returns over a specified
period do so by determining the aggregate compounded rate of return during such
specified period that likewise equates over a specified period the initial
amount invested to the ending redeemable value of such investment. The formula
for calculating aggregate total return is as follows:
Aggregate Annual Total Return = (ERV)
----- -1
P
Where: ERV = ending redeemable value at the end of the period covered by
the computation of a hypothetical $1,000 payment made at the
beginning of the period
P = hypothetical initial payment of $1,000
The calculations of average annual total return and aggregate total return
assume the reinvestment of all dividends and capital gain distributions on the
reinvestment dates during the period. The ending redeemable value (variable
"ERV" in each formula) is determined by assuming complete redemption of the
hypothetical investment and the deduction of all nonrecurring charges at the end
of the period covered
32
<PAGE> 114
by the computations. Such calculations are not necessarily indicative of future
results and do not take into account Federal, state and local taxes that
shareowners must pay on a current basis.
Since performance will fluctuate, performance data for the Funds should not
be used to compare an investment in the Funds' shares with bank deposits,
savings accounts and similar investment alternatives which often provide an
agreed or guaranteed fixed yield for a stated period of time. Shareowners should
remember that performance is generally a function of the kind and quality of the
instruments held in a portfolio, portfolio maturity, operating expenses and
market conditions.
The average annual total returns for the Funds which quote such performance
were as follows for the periods shown:
<TABLE>
<CAPTION>
ONE YEAR ENDED FROM INCEPTION OF FUND
SERIES 10/31/97 THROUGH 10/31/97
------ -------------- ----------------------
<S> <C> <C>
Montag & Caldwell Growth Fund Class N 33.82 31.92
Montag & Caldwell Growth Fund Class I 34.26 33.56
Chicago Trust Growth & Income Fund 25.16 20.78
Chicago Trust Talon Fund 33.47 26.08
Chicago Trust Balanced Fund 20.10 18.20
Montag & Caldwell Balanced Fund 24.26 22.83
Chicago Trust Bond Fund 8.84 6.56
Chicago Trust Municipal Bond Fund 5.13 4.07
</TABLE>
YIELD OF CHICAGO TRUST MONEY MARKET FUND
As summarized in the Prospectus, the yield of this Fund for a seven-day
period (the "base period") will be computed by determining the net change in
value (calculated as set forth below) of a hypothetical account having a balance
of one share at the beginning of the period, dividing the net change in account
value by the value of the account at the beginning of the base period to obtain
the base period return, and multiplying the base period return by 365/7 with the
resulting yield figure carried to the nearest hundredth of one percent. Net
changes in value of a hypothetical account will include the value of additional
shares purchased with dividends from the original share and dividends declared
on both the original share and any such additional shares, but will not include
realized gains or losses or unrealized appreciation or depreciation on portfolio
investments. Yield may also be calculated on a compound basis (the "effective
yield") which assumes that net income is reinvested in shares of the Fund at the
same rate as net income is earned for the base period.
The yield and effective yield of Chicago Trust Money Market Fund will vary
in response to fluctuations in interest rates and in the expenses of the Fund.
For comparative purposes, the current and effective yields should be compared to
current and effective yields offered by competing financial institutions for the
same base period and calculated by the methods described above. For the
seven-day period ended October 31, 1997, Chicago Trust Money Market Fund had a
yield of 5.22% and an effective yield of 5.32%.
YIELDS OF CHICAGO TRUST BOND FUND AND CHICAGO TRUST MUNICIPAL BOND FUND
The yield of each of these Funds is calculated by dividing the net
investment income per share (as described below) earned by the Fund during a
30-day (or one month) period by the maximum offering price per share on the last
day of the period and annualizing the result on a semi-annual basis by adding
one to the quotient, raising the sum to the power of six, subtracting one from
the result and then doubling the difference. A Fund's net investment income per
share earned during the period is based on the average daily number of shares
outstanding during the period entitled to receive dividends and includes
dividends and interest earned during the period minus expenses accrued for the
period, net of reimbursements.
33
<PAGE> 115
This calculation can be expressed as follows:
6
YIELD = 2 [(a - b + 1) - 1]
-----
cd
Where: a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends
d = maximum offering price per share on the last day of the
period
For the purpose of determining net investment income earned during the
period (variable "a" in the formula), dividend income on equity securities held
by a Fund is recognized by accruing 1/360 of the stated dividend rate of the
security each day that the security is in the Fund. Except as noted below,
interest earned on any debt obligations held by a Fund is calculated by
computing the yield to maturity of each obligation held by that Fund based on
the market value of the obligation (including actual accrued interest) at the
close of business on the last business day of the month, the purchase price
(plus actual accrued interest) and dividing the result by 360 and multiplying
the quotient by the market value of the obligation (including actual accrued
interest) in order to determine the interest income on the obligation for each
day of the subsequent month that the obligation is held by that Fund. For
purposes of this calculation, it is assumed that each month contains 30 days.
The date on which the obligation reasonably may be expected to be called or, if
none, the maturity date. With respect to debt obligations purchased at a
discount or premium, the formula generally calls for amortization of the
discount premium. The amortization schedule will be adjusted monthly to reflect
changes in the market values of such debt obligations.
Expenses accrued for the period (variable "b" in the formula) include all
recurring fees charged by a Fund to all shareowner accounts in proportion to the
length of the base period and the Fund's mean (or median) account size.
Undeclared earned income will be subtracted from the offering price per capital
share (variable "d" in the formula).
Interest earned on tax-exempt obligations that are issued without original
issue discount and have a current market discount is calculated by using the
coupon rate of interest instead of the yield to maturity. In the case of
tax-exempt obligations that are issued with original issue discount but which
have discounts based on current market value that exceed the then-remaining
portion of the original discount (market discount), the yield to maturity is the
imputed rate based on the original issue discount calculation. On the other
hand, in the case of tax-exempt obligations that are issued with original issue
discount but which have discounts based on current market value that are less
than the then-remaining portion of the original discount (market premium), the
yield to maturity is based on the market value.
With respect to mortgage- or other receivables-backed obligations which are
expected to be subject to monthly payments of principal and interest
("pay-downs"): (i) gain or loss attributable to actual monthly pay-downs are
accounted for as an increase or decrease to interest income during the period;
and (ii) each Fund may elect either (a) to amortize the discount and premium on
the remaining security, based on the cost of the security, to the weighted
average maturity date, if such information is available, or to the remaining
term of the security, if any, if the weighted average date is not available or
(b) not to amortize discount or premium on the remaining security.
For the 30-day period ended October 31, 1997, Chicago Trust Bond Fund had a
yield of 5.74%.
For the 30-day period ended October 31, 1997, Chicago Trust Municipal Bond
Fund had a yield of 3.40%.
34
<PAGE> 116
TAX-EQUIVALENT YIELD
The "tax-equivalent yield" of Chicago Trust Municipal Bond Fund is computed
by: (a) dividing the portion of the yield (calculated as above) that is exempt
from Federal income tax by one minus a stated Federal income tax rate; and (b)
adding to that figure to that portion, if any, of the yield that is not exempt
from Federal income tax.
The tax-equivalent yield of this Fund reflects the taxable yield that an
investor at the stated marginal Federal income tax rate would have to receive to
equal the primarily tax-exempt yield from Chicago Trust Municipal Bond Fund.
Before investing in this Fund, you may want to determine which investment --
tax-free or taxable -- will result in a higher after-tax yield. To do this,
divide the yield on the tax-free investment by the decimal determined by
subtracting from one the highest Federal tax rate you pay. For example, if the
tax-free yield is 5% and your maximum tax bracket is 36%, the computation is:
5% Tax-Free Yield - (1/.36 Tax Rate) = 5%/.64% = 7.81% Tax Equivalent Yield
In this example, your after-tax return would be higher from the 5% tax-free
investment if available taxable yields are below 7.81%. Conversely, the taxable
investment would provide a higher yield when taxable yields exceed 7.81%.
For the 30-day period ended October 31, 1997, Chicago Trust Municipal Bond
Fund had a tax-equivalent yield of 5.31%, based on the tax-free yield of 3.40%,
shown above, and assuming a shareowner is at the 36% Federal income tax rate.
OTHER INFORMATION
Statements contained in the Prospectus or in this Statement of Additional
Information as to the contents of any contract or other document referred to are
not necessarily complete, and in each instance reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement of which the Prospectus and this Statement of Additional Information
forms a part. Each such statement is qualified in all respects by such
reference.
CUSTODIAN
Bankers Trust Company ("Bankers Trust"), 16 Wall Street, New York, New York
10005 serves as Custodian of the Company's assets pursuant to a Custodian
Agreement. Under such Agreement, Bankers Trust: (i) maintains a separate account
or accounts in the name of each Fund; (ii) holds and transfers portfolio
securities on account of each Fund; (iii) accepts receipts and makes
disbursements of money on behalf of each Fund; (iv) collects and receives all
income and other payments and distributions on account of each Fund's
securities; and (v) makes periodic reports to the Board of Trustees concerning
each Fund's operations.
REPORTS TO SHAREOWNERS
Shareowners will receive unaudited semi-annual reports describing the
Funds' investment operations and annual financial statements audited by the
Funds' independent certified public accountants. Inquiries regarding the Funds
may be directed to the Investment Advisor or the Administrator at (800)
992-8151.
KPMG Peat Marwick LLP, 303 E. Wacker Drive, Chicago, Illinois is the
Company's independent public accountant and auditor.
35
<PAGE> 117
APPENDIX
FINANCIAL STATEMENTS
for
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
FISCAL YEAR ENDED
OCTOBER 31, 1997
------------------------------------------------------------------
ANNUAL REPORT TO SHAREOWNERS
------------------------------------------------------------------
36
<PAGE> 118
CT&T
FUNDS
Annual
Report
October 31, 1997
[ART WORK APPEARS HERE]
A Report on the Operations and Performance of Your Investment in
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 Chicago Trust Company, Investment Advisor
Montag & Caldwell, Inc., Investment Advisor
(800) 992-8151
<PAGE> 119
CT&T Funds -- Shareowner Benefits
- --------------------------------------------------------------------------------
The CT&T Funds offer a variety of special features and options for shareowners.
If you are not already taking advantage of these features and wish to do so,
call us! A customer service representative at (800) 992-8151 will help you gain
access to our free share owner options.
[ART WORK]
Low Minimum Investments
The minimum initial investment is $2,500 and any subsequent investment is $50.
[ART WORK]
Automatic Investment
You may elect to make regular investments into your account automatically by
approving electronic funds transfers into your CT&T Funds. The minimum initial
investment for the automatic investment plan is $50.
[ART WORK]
Savings for Retirement
Our easy and convenient IRA offers you a selection of mutual funds especially
suitable for your retirement accounts while your assets benefit from tax-
deferred growth.
[ART WORK]
Automatic Dividend Reinvestment
You can compound your investment earnings by reinvesting them automatically.
Monthly or quarterly dividends and annual capital gain distributions are
reinvested free of charge.
[ART WORK]
Exchange Privileges
Should your personal investment needs change, you have the flexibility to move
your investments among the CT&T Funds. Transfers between the Funds are free of
charge, and simple to make.
[ART WORK]
Check Writing
Free check writing services may be authorized and are available in the Chicago
Trust Money Market Fund. The per check minimum is $500.
Our automated shareowners account information line is available for your
convenience 24-hours a day, 7 days a week by calling (800) 992-8151.
<PAGE> 120
Dear Shareowner:
The fiscal year ended October 31, 1997 has been financially rewarding for all
investors in our funds. Holders of our equity portfolios have realized returns
ranging from 25.2% in the Chicago Trust Growth & Income Fund (Growth & Income)
to 34.3% in the Montag & Caldwell Growth Fund (Growth) "I" Class of shares. Our
Chicago Trust Talon Fund (Talon) has earned a very impressive 33.5% total return
despite holding significant cash reserves throughout the period. Fixed income
returns have ranged from 5.1% in our tax-free Municipal Bond Fund to 8.8% in the
taxable Bond Fund. Holders of our Money Market Fund have realized a 5.17% return
over the past twelve months.
Obviously, there is more information printed about mutual funds than anyone can
reasonably read or would want to read. However, on the assumption that most of
our shareowners do not read all of the financial advisory publications now
available, we thought you might like to know a sample of who has written about
our Funds during the last twelve months.
<TABLE>
<CAPTION>
Publication Date Funds
- ----------- ---- -----
<S> <C> <C>
Crain's Chicago Business December 23, 1996 Growth & Income
"Chicago Trust Fund
Manager Takes Long Views in Stock Picks"
Kiplinger's Magazine March 1997 Growth
"Best Funds: Investing for College"
Money Magazine March 1997 Growth
"Invest Like a Millionaire with these Funds"
Ft. Lauderdale Sun-Sentinel May 11, 1997 Growth & Income
"A Few Strong Growth Stocks Power Chicago Trust"
Financial Planning Magazine May 1997 Growth & Income, Talon
"Undiscovered Funds Still Abound"
Louis Rukeyser's Mutual Funds September 1997 Growth & Income
"A Wealth of Experience"
Louis Rukeyser's Mutual Funds October 1997 Growth
"A Global Opportunist"
Money Magazine November 1997 Talon
"What to Do Now to Protect Your Profits"
</TABLE>
It is customary in letters of this sort to fill space with prognostications
about the economic and financial outlook. We do not believe that is a very
useful exercise in a world where the batting average of most forecasters is less
than 50%. Instead, we wish to assure you that despite recent market returns our
enthusiasm will remain in check. We will continue to pursue our bottom-up
disciplined investment approaches, choosing securities based on fundamentals of
the business and our time-tested valuation techniques.
To all of our long-term investors, we hope we have met your expectations. To our
newer investors, we thank you for choosing the Chicago Trust/Montag & Caldwell
Funds. We will do all that we can to help you reach your financial goals. In
March 1998, to enhance and simplify your investment process, we will introduce
our website. Thank you for investing with Chicago Trust/Montag & Caldwell Funds.
Sincerely,
/s/ Stuart D. Bilton
Stuart D. Bilton
Chairman
1
<PAGE> 121
CT&T Funds -- Summary Information
Performance for the Fiscal Year Ended October 31, 1997
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Montag & Caldwell Growth Fund
Class N (Retail) Class I (Institutional) Chicago Trust Growth & Income Fund
<S> <C> <C> <C>
Total Returns:
1 Year 33.82% 34.26% 25.16%
Three Year
Average Annual N/A N/A 26.93%
Average Annual
Since Inception 31.92% 33.56% 20.78%
Value of $10,000 $22,925 $ 14,724 $20,801
from Inception
Date 11/2/94 6/28/96 12/13/93
</TABLE>
<TABLE>
<CAPTION>
Top Ten Holdings as of October 31, 1997
<S> <C> <C> <C>
Company and Cisco Systems, Inc. 4.5% Federal Home Loan Mortgage Corp. 3.9%
% of Total Net Microsoft Corp. 4.0% Illinois Tool Works, Inc. 3.9%
Assets Gillette Co. 4.0% Royal Dutch Petroleum Co., NY, ADR 3.9%
Pfizer, Inc. 3.8% American International Group, Inc. 3.8%
Coca-Cola Co. 3.8% Norwest Corp. 3.8%
Procter & Gamble Co. 3.7% Cardinal Health, Inc. 3.7%
Johnson & Johnson 3.6% Pfizer, Inc. 3.6%
Intel Corp. 3.2% Microsoft Corp. 3.5%
Oracle Corp. 3.2% Newell Co. 3.3%
Home Depot, Inc. 3.2% Sysco Corp. 3.2%
</TABLE>
<TABLE>
<CAPTION>
Chicago Trust Talon Fund Chicago Trust Balanced Fund
<S> <C> <C>
Total Returns:
1 Year 33.47% 20.10%
Three Year
Average Annual 26.16% N/A
Average Annual
Since Inception 26.08% 18.20%
Value of $10,000 $20,582 $14,229
from Inception
Date 9/19/94 9/21/95
</TABLE>
<TABLE>
<CAPTION>
Top Ten Holdings as of October 31, 1997
<S> <C> <C> <C>
Company and Mylan Laboratories, Inc. 5.4% Pfizer, Inc. 2.3%
% of Total Net U. S. Treasury Note, 5.875%, 07/31/99 5.3% Norwest Corp. 2.0%
Assets Vitalink Pharmacy Services, Inc. 5.1% American International Group, Inc. 1.9%
Robotic Vision Systems, Inc. 5.1% Schlumberger Ltd. 1.9%
Circus Circus Enterprises, Inc. 4.9% Federal Home Loan Mortgage Corp. 1.8%
North American Vaccine, Inc. 4.9% Cisco Systems, Inc. 1.7%
Pep Boys -- Manny, Moe & Jack 4.9% Microsoft Corp. 1.7%
R.R. Donnelley & Sons Co. 4.7% Illinois Tool Works, Inc. 1.7%
Danielson Holdings Corp. 4.4% MBNA Corp. 1.7%
Equity Office Properties Trust, REIT 4.3% Newell Co. 1.5%
</TABLE>
2
<PAGE> 122
CT&T Funds -- Summary Information
Performance for the Fiscal Year Ended October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Montag & Caldwell Balanced Fund Chicago Trust Bond Fund
<S> <C> <C> <C> <C>
Total Returns:
1 Year 24.26% 8.84%
Three Year
Average Annual N/A 9.77%
Average Annual
Since Inception 22.83% 6.56%
Value of $10,000 $18,509 $12,797
from Inception
Date 11/2/94 12/13/93
Top Ten Holdings as of October 31, 1997
<S> <C> <C> <C> <C>
Company and U.S. Treasury Note, 7.250%, 05/15/16 4.1% U.S. Treasury Bond, 7.125%, 02/15/23 2.3%
% of Total Net U.S. Treasury Note, 6.500%, 10/15/06 3.1% U.S. Treasury Note, 7.250%, 05/15/04 2.2%
Assets Cisco Systems, Inc. 2.5% U.S. Treasury Note, 7.875%, 08/15/01 2.2%
U.S. Treasury Note, 6.500%, 08/15/05 2.5% U.S. Treasury Note, 7.125%, 02/29/00 2.1%
Federal National Mortgage Association, U.S. Treasury Note, 6.375%, 08/15/02 2.1%
7.250%, 01/17/21, CMO, REMIC 2.5% U.S. Treasury Note, 5.750%, 10/31/00 2.1%
U.S. Treasury Note, 5.875%, 02/15/04 2.4% U.S. Treasury Note, 5.500%, 02/28/99 2.1%
Gillette Co. 2.3% U.S. Treasury Note, 5.750%, 08/15/03 2.1%
Procter & Gamble Co. 2.2% U.S. Treasury Note, 5.125%, 11/30/98 2.1%
Microsoft Corp. 2.2% Chemical Master Credit Card Trust, Class A
Johnson & Johnson 2.2% 5.550%, 09/15/03 2.1%
</TABLE>
<TABLE>
<CAPTION>
Chicago Trust Municipal Bond Fund
<S> <C> <C> <C>
Total Returns:
1 Year 5.13%
Three Year
Average Annual 5.97%
Average Annual
Since Inception 4.07%
Value of $10,000 $11,673
from Inception
Date 12/13/93
Top Ten Holdings as of October 31, 1997
<S> <C> <C> <C> <C>
Company and King County, Washington, Series A, Commonwealth of Puerto Rico, Series A, G.O.
% of Total Net G.O., 5.800%, 01/01/04 4.1% 6.500%, 07/01/03 3.6%
Assets Jordan School District, Utah, Clark County, Nevada, School District, G.O.
Series A, G.O., 5.250%, 06/15/00 4.0% 6.400%, 06/15/06 3.1%
Cook County, Illinois, Series B, G.O. Arlington Independent School District, Texas,
4.700%, 11/15/01 3.9% Refunding, G.O., 5.400%, 02/15/99 3.1%
Salt River Project Electric System Mohave County, AZ, IDA, 6.000%, 07/01/00 3.0%
Revenue, AZ, Refunding, Series A, Tulsa, Oklahoma Metropolitan Utility Authority
5.500%, 01/01/05 3.9% Revenue, 5.500%, 07/01/00 2.9%
Texas State Water Development Board,
G.O. Escrowed to Maturity, 5.000%,
08/01/99 3.7%
</TABLE>
3
<PAGE> 123
CT&T Funds
Montag & Caldwell Growth Fund
Management Discussion & Analysis October 31, 1997
- --------------------------------------------------------------------------------
The Montag & Caldwell Growth Fund (the "Fund") did particularly well in this
past fiscal year ended October 31, 1997. The Fund had a total return of 33.8% as
compared to a gain of 32.0% for the S&P 500 Index. During this same period, the
Lipper Growth Fund Index returned 28.4%. The Fund's multinational consumer,
healthcare and technology holdings contributed to the Fund's good results.
The outlook for the stock market continues to be positive. Sustained growth in
the economy and corporate profits; continued prospects for low rates of
inflation and steady to eventually lower levels of bond yields; and favorable
supply/demand factors for equities coupled with guarded views among investors on
the stock market outlook suggest a positive backdrop for share prices. It is our
view that the recent stock market correction associated with the currency
turmoil in Southeast Asia is an "overdue correction" rather than the beginning
of a substantial decline in share prices. From January 1, 1995, through
September 30, 1997, the S&P 500 Index has provided a total return of 119.3%, so
a pullback in share prices was not all that surprising. Our favorable view on
the stock market is predicated on the belief that U. S. economic growth will
moderate to a non-inflationary rate and that the Federal Reserve is in a
flexible position to implement policies that will extend the economic expansion.
The currency and financial market turmoil in Southeast Asia should contribute to
that moderating process.
We continue to be quite positive on the outlook for shares of high quality
growth companies. Because we expect more moderate growth in the U. S. economy
and corporate profits in the future, superior and consistent earnings growth
rates of these companies will become increasingly attractive. We do not expect
the turmoil in Southeast Asia to have a significant impact on the U. S.
multinational companies in the Fund. While economic growth will slow in
Southeast Asia, the region is not expected to experience an economic downturn as
severe as that of Mexico and other Latin American countries during their period
of financial stress. Most importantly, the multinational companies in the
Portfolio sell consumer non-durable products that we don't think will be
affected proportionately by a slowdown. Even in a U.S. recession, demand does
not slow significantly for products such as soft drinks, blades and detergent.
Also, other areas of the world are showing good growth, which offsets the
weakness in Southeast Asia. Such geographic diversity is one of the reasons the
Fund's multinational holdings have consistently produced solid earnings over the
years.
[PIE CHART APPEARS HERE]
Portfolio Allocation By Market Sector
Cash & Other Net Liabilities 3%
Technology 28%
Consumer Non-Durables 15%
Pharmaceuticals 9%
Health Care Services 7%
Retail 6%
Finance 7%
Food & Beverage 6%
Other Common Stocks 19%
Comparative Performance Measurement: Growth of $10,000 Invested in Montag &
Caldwell Growth Fund,
S&P 500 Index and the Lipper Growth Fund Index
since Fund's Inception
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Montag &
Caldwell
Lipper Growth Fund
S&P 500 Growth Class N
Values/Years Index Fund Index Shares
- ------------ ------- ---------- -----------
<S> <C> <C> <C>
November 1994 10,000 10,000 10,000
January 1995 10,032 9,739 10,005
April 1995 11,046 10,699 10,999
July 1995 12,142 12,075 12,630
October 1995 12,641 12,398 13,187
January 1996 13,907 13,183 14,178
April 1996 14,380 13,789 15,065
July 1996 14,152 13,145 14,874
October 1996 15,685 14,498 17,131
January 1997 17,568 15,915 19,367
April 1997 17,992 15,733 19,245
July 1997 21,527 18,897 23,571
October 1997 20,720 18,617 22,925
</TABLE>
<TABLE>
<CAPTION>
Montag &
Caldwell
Lipper Growth Fund
S&P 500 Growth Class I
Values/Years Index Fund Index Shares
- ------------ ------- ---------- -----------
<S> <C> <C> <C>
June 1996 10,000 10,000 10,000
October 1996 10,593 10,433 10,967
January 1997 11,865 11,453 12,087
April 1997 12,152 11,322 12,341
July 1997 14,539 13,598 15,125
October 1997 13,994 13,397 14,724
</TABLE>
These charts compare a $10,000 investment made in Class N Shares and Class I
Shares of the Fund on their respective inception dates to a $10,000 investment
made in the indices on that date. All dividends and capital gains are
reinvested. Further information relating to the Fund's performance, including
expense reimbursements, is contained in the Condensed Financial Information
section of the Prospectus and elsewhere in this report. Past performance is not
indicative of future performance. Indices are unmanaged and investors cannot
invest in them.
4
<PAGE> 124
CT&T Funds
Chicago Trust Growth & Income Fund
Management Discussion & Analysis October 31, 1997
================================================================================
The Chicago Trust Growth & Income Fund (the"Fund")had a strong gain of 25.2% for
the fiscal year ended October 31, 1997. While the one year return was less than
that of the S&P 500 Index or the Lipper Growth & Income Fund Index, on a three
year basis, the Fund's 26.9% annualized rate of return was in line with that of
the S&P 500 Index, at 27.5%. The Fund's return was well above that of the Lipper
Growth & Income Fund Index, at 23.2%. The Fund ranked 43rd out of 382 Growth &
Income Funds listed by Lipper Analytical Services, Inc. based on total return
fund performance for the three-year period ended October 31, 1997. These Lipper
rankings include all classes of multiple class funds, and certain expenses of
the Fund were subsidized during the ranking period.
While the stock market's gain in fiscal 1997 was the strongest of the past three
years, there was little doubt that the advance became more labored during the
closing months of the year. Two of the last three months were down with the
final quarter having the poorest return for any such period during the last
three fiscal years. October was particularly volatile as it incorporated the
often anticipated 10% market correction, several single day price change
records, and a single session volume record.
As a long-term investor, we recognize that volatility may occur in the Portfolio
during periods when the stock market is dominated by themes which are contrary
to the Fund's investment strategy. Our long term stock selection process will
continue to focus on fundamentally strong companies which are able to
demonstrate traits of consistent top and bottom line growth. Volatile markets
may result in short-term underperformance, but can also represent attractive
entry points for long-term investors.
[PIE CHART APPEARS HERE]
Portfolio Allocation By Market Sector
Consumer Durables 6%
Capital Goods 6%
Energy 7%
Consumer Non-Durables 11%
Health Care Services 10%
Technology 14%
Other Common Stocks 19%
Cash & Other Net Assets 6%
Finance 21%
Comparative Performance Measurement: Growth of
$10,000 invested in Chicago Trust Growth & Income Fund,
S&P 500 Index and the Lipper Growth & Income Fund
Index since Fund's Inception
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
LIPPER GROWTH CHICAGO TRUST
S&P & INCOME FUND GROWTH &
Values/Years 500 INDEX INDEX INCOME FUND
- ------------ ---------- ------------- -------------
<S> <C> <C> <C>
12/93 $10,000 $10,000 $10,000
4/94 $ 9,745 $ 9,807 $ 9,797
7/94 $ 9,979 $ 9,993 $ 9,945
10/94 $10,360 $10,241 $20,173
1/95 $10,394 $10,115 $10,365
4/95 $11,444 $11,036 $11,231
7/95 $12,580 $12,011 $12,327
10/95 $13,096 $12,318 $13,088
1/96 $14,408 $13,448 $14,350
4/96 $14,898 $14,021 $14,983
7/96 $14,663 $13,587 $14,933
10/96 $16,250 $14,953 $16,619
1/97 $18,201 $16,463 $18,002
4/97 $18,641 $16,616 $18,258
7/97 $22,303 $19,584 $21,812
10/97 $21,466 $19,144 $20,801
</TABLE>
This chart compares a $10,000 investment made in the Fund on its inception date
to a $10,000 investment made in the indices on that date. All dividends and
capital gains are reinvested. Further information relating to the Fund's
performance, including expense reimbursements, is contained in the Condensed
Financial Information section of the Prospectus and elsewhere in this report.
Past performance is not indicative of future performance. Indices are unmanaged
and investors cannot invest in them.
5
<PAGE> 125
CT&T Funds
Chicago Trust Talon Fund
Management Discussion & Analysis October 31, 1997
================================================================================
For the fiscal year ending October 31, 1997, the Chicago Trust Talon Fund (the
"Fund") had a total return of 33.5% versus 32.7% for the S&P 400 Mid Cap Index.
From its inception on September 19, 1994 through October 31, 1997, the Fund's
cumulative return was 105.8% versus 88.4% for the S&P 400 Mid Cap Index.
The recent disarray in Asian markets points out that diversification in itself
may not protect one from loss of principal and that globalization can work as
unfavorably for corporate profits on the way down as it does favorably on the
way up. Globalization and diversification will be subjects of future quarterly
reports. We hope that previous quarterly reports have been helpful in conveying
our investment philosophy and thought process. If you are a new shareowner and
would like to receive a few of our past quarterly reports, please call Janice
Gonnella at 312-422-5403.
We believe we are entering a period that will be characterized by greater
volatility and that stock picking will become even more important than in the
recent past. As we enter our new fiscal year, patience and discipline will
remain a cornerstone of our investment process.
Talon Asset Management, Inc. is a sub-agent of the Chicago Trust Company. As
such, we are responsible for managing your Fund. We at Talon would like to
express our appreciation to Chicago Trust for that opportunity and for their
patience and support over the last three years. The Talon "personality", which
has taken shape over that period of time, could not have happened without the
confidence that both Chicago Trust and you, our shareowners, have placed in us.
[PIE CHART APPEARS HERE]
Portfolio Allocation By Market Sector
<TABLE>
<CAPTION>
<S> <C>
Cash & Other Net Liabilities 3%
Finance 12%
Pharmaceuticals 15%
Restaurants 6%
Technology 11%
Other Common Stocks 26%
Preferred Stocks 1%
U.S. Government & Agency Obligations 26%
</TABLE>
Comparative Performance Measurement: Growth of $10,000
invested in Chicago Trust Talon Fund and
the S&P 400 Mid Cap Index since Fund's Inception
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
S&P 400 CHICAGO TRUST
VALUES/YEARS MID CAP INDEX TALON FUND
------------ ------------- ----------
<S> <C> <C>
9/94 $10,000 $10,000
10/94 $ 9,921 $10,250
1/95 $ 9,660 $10,151
4/95 $10,551 $10,766
7/95 $11,829 $12,173
10/95 $12,025 $12,189
1/96 $12,701 $12,762
4/96 $13,695 $14,580
7/96 $12,747 $13,530
10/96 $14,111 $15,420
1/97 $15,482 $18,020
4/97 $15,082 $16,935
7/97 $18,531 $20,074
10/97 $18,721 $20,582
</TABLE>
This chart compares a $10,000 investment made in the Fund on its inception date
to a $10,000 investment made in the indices on that date. All dividends and
capital gains are reinvested. Further information relating to the Fund's
performance, including expense reimbursements, is contained in the Condensed
Financial Information section of the Prospectus and elsewhere in this report.
Past performance is not indicative of future performance. Indices are unmanaged
and investors cannot invest in them.
6
<PAGE> 126
CT&T Funds
Chicago Trust Balanced Fund
Management Discussion & Analysis October 31, 1997
================================================================================
For the fiscal year ended October 31, 1997 the Chicago Trust Balanced Fund (the
"Fund") reported a total return of 20.1%. Again this year, common stocks
produced the greatest component of total return. The equities in the Portfolio
returned 32% and bonds produced approximately 11.5%, for this fiscal year. Both
bond and equity returns were competitive when measured against the S&P 500 Index
return of 32.5% and the Lehman Brothers Aggregate Bond Index return of 10.1%.
Over the course of the year, the asset allocation for stocks remained in the 52%
to 56% range and bonds in the 34% to 39% range, while cash reserves were
maintained in the 6% to 11% range.
When reviewing stock market history, October is many times the cruelest month
of the year--consider 1929 and 1987. Again, on October 27, 1997, the stock
market experienced aal year ended October 31, 1997. During the same period, the
combined index of the S&P 500 Index and the Lehman Brothers Aggregate Bond
Index increased 21.4%. The Lipper Balanced Fund Index gained 20.1% during the
same interval. The Fund's multinational consumer, healthcare and technology
equity holdings contributed to the Fund's good results.
The outlook for the stock market continues to be positive. Sustained growth in
the economy and corporate profits; continued prospects for low rates of
inflation and steady to eventually lower levels of bond yields; and favorable
supply/demand factors for equities coupled with guarded views among investors on
the stock market outlook suggest a positive backdrop for share prices. It is our
view that the recent stock market correction associated with the currency
turmoil in Southeast Asia is an "overdue correction" rather than the beginning
of a substantial decline in share prices. From January 1, 1995, through
September 30, 1997, the S&P 500 Index has provided a total return of 119.3%, so
a pullback in share prices was not all that surprising. Our favorable view on
the stock market is predicated on the belief that U. S. economic growth will
moderate to a non-inflationary rate and that the Federal Reserve is in a
flexible position to implement policies that will extend the economic expansion.
The currency and financial market turmoil in Southeast Asia should contribute to
that moderating process.
We continue to be quite positive on the outlook for shares of high quality
growth companies. Because we expect moderate growth in the U. S. economy and
corporate profits in the future, the superior and consistent earnings growth
rates of these companies will become increasingly attractive. We do not expect
the turmoil in Southeast Asia to have a significant impact on the U. S.
multinational companies in the Portfolio. While economic growth will slow in
Southeast Asia, the region is not expected to experience an economic downturn as
severe as that of Mexico and other Latin American countries during their period
of financial stress. Most importantly, the multinational companies in the
Portfolio sell consumer non-durable products that we don't think will be
affected proportionately by a slowdown. Even in a U.S. recession, demand does
not slow significantly for products such as soft drinks, blades and detergent.
Also, other areas of the world are showing good growth, which offsets the
weakness in Southeast Asia. Such geographic diversity is one of the reasons the
Fund's multinational holdings have consistently produced solid earnings gains
over the years.
With economic growth likely to slow and inflation well-controlled, we think
there is the potential for positive bond market returns in the period ahead. In
addition to gradually lengthening bond maturities, we will seek to add yield,
where appropriate, through the purchase of quality corporate bonds as well as
agency issues.
[PIE CHART APPEARS HERE]
Portfolio Allocation By Market Sector
Cash & Other Net Assets 4%
Common Stocks 58%
U.S. Government & Agency Obligations 26%
Corporate Notes & Bonds 9%
Asset Backed Securities 3%
Comparative Performance Measurement:
Growth of $10,000 invested in Montag & Caldwell Balanced
Fund, Lehman Brothers Aggregate Bond Index/S&P 500
Index and the Lipper Balanced Fund Index
since Fund's Inception
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Lehman Brothers Aggregate Lipper Balanced Montag & Caldwell
Values/Yrs. Bond Index/ S&P Index Fund Index Balanced Fund
<S> <C> <C> <C>
11/94 10,000 10,000 10,000
1/95 10,128 9,983 10,079
4/95 10,891 10,652 10,817
7/95 11,706 11,424 11,944
10/95 12,539 11,759 12,375
1/96 13,040 12,537 13,172
4/96 13,141 12,674 13,446
7/96 13,090 12,515 13,410
10/96 14,881 13,462 14,895
1/97 15,230 14,343 16,162
4/97 15,498 14,397 16,071
7/97 17,717 16,355 18,635
10/97 17,894 16,168 18,509
</TABLE>
This chart compares a $10,000 investment made in the Fund on its inception date
to a $10,000 investment made in the indices on that date. All dividends and
capital gains are reinvested. Further information relating to the Fund's
performance, including expense reimbursements, is contained in the Condensed
Financial Information section of the Prospectus and elsewhere in this report.
Past performance is not indicative of future performance. Indices are unmanaged
and investors cannot invest in them.
7
<PAGE> 127
CT&T Funds
Chicago Trust Bond Fund
Management Discussion & Analysis October 31, 1997
- --------------------------------------------------------------------------------
Bond market performance over the twelve months ended October 31, 1997, has been
influenced by a range of circumstances. At the beginning of the fiscal year,
investors were anticipating the need for the Federal Reserve to raise interest
rates to help moderate economic growth. A federal funds overnight lending rate
increase of .25% occurred at the end of March 1997. As the year elapsed,
sentiment quickly changed. Many traditional signs of economic strength such as
low unemployment, industrial production and a declining government deficit
raised concerns. Most people felt that the Federal Reserve would be forced to
raise rates in order to avoid higher inflation. Productivity, growth and global
competition has kept inflation lower than predicted by many economic "experts."
At the time of this writing, a new theme of "deflation" has become increasingly
popular due to the renewed risks of investing in emerging market countries.
For the fiscal year ended October 31, 1997, the Chicago Trust Bond Fund (the
"Fund") had a total return of 8.84%. The Fund compares its performance to both
the Lehman Brothers Aggregate Bond Index, with a total return of 8.89% for the
same period, and the Lipper Intermediate Investment Grade Debt Fund Index, which
had a total return of 8.04% during the same period.
The Fund continues to emphasize corporates and mortgages which represent 66% of
total assets. We believe that superior returns are achieved from the results of
independent, fundamental security analysis combined with the rigorous
application of a precise, disciplined portfolio construction process. Rather
than attempting to time the market, we firmly believe in adding value through
sector analysis, credit quality research and security structure analysis. We
believe our focus on long term, intrinsic value captures yield without
increasing portfolio risk.
Throughout the year, corporate bonds contributed favorably to the Fund's
comparatively strong investment results. The Fund focuses on selecting corporate
obligations that will enhance the Fund's overall return while maintaining a
strict adherence to required risk parameters. Both asset-backed and mortgage
bonds also can provide investors with strong relative returns. Prepayment risk
is analyzed under numerous interest rate scenarios to evaluate sensitivity to
changes in rates. Government bonds are used to capture risk neutral anomalies
based on the slope of the yield curve.
Changes in the Portfolio's duration are made based on our 12- to 18-month
outlook for bond returns. We are not market timers. Duration changes are
constrained to a range of plus or minus 10% of the duration of the Lehman
Brothers Aggregate Bond Index. We will also adjust the distribution of our
Portfolio's maturity and duration based on the current slope of the yield curve
to capture incremental return and to control systematic risk. Over the last
year, the Fund's effective duration has ranged from a high of 4.7 years to a low
of 4.5 years. Currently, the effective portfolio duration is 4.6 years.
[PIE CHART PORTFOLIO ALLOCATION BY MARKET SECTOR GOES HERE]
Portfolio Allocation By Market Sector
Cash & Other Net Assests 4%
U.S. Government & Agency Obligations 47%
Corporate Notes & Bonds 40%
Other 4%
Asset Backed Securities 5%
Comparative Performance Measurement:
Growth of $10,000 invested in Chicago Trust Bond Fund,
Lehman Brothers Aggregate Bond Index and the Lipper
Intermediate Investment Grade Debt Fund Index since
Fund's Inception
[CHART COMPARATIVE PERFORMANCE MEASUREMENT GOES HERE]
<TABLE>
<CAPTION>
Lehman Brothers Aggregate Lipper Intermediate Investment Chicago Trust
Values/Yrs. Bond Index Grade Debt Fund Index Bond Fund
<S> <C> <C> <C>
12/93 10,000 10,000 10,000
4/94 9,507 9,524 9,682
7/94 9,674 9,640 9,768
10/94 9,535 9,537 9,677
1/95 9,769 9,720 9,894
4/95 10,203 10,121 10,307
7/95 10,651 10,520 10,735
10/95 11,026 10,885 11,117
1/96 11,424 11,267 11,507
4/96 11,085 10,930 11,169
7/96 11,241 11,070 11,331
10/96 11,671 11,465 11,758
1/97 11,797 11,589 11,926
4/97 11,870 11,641 11,972
7/97 12,451 12,191 12,555
10/97 12,709 12,388 12,797
</TABLE>
This chart compares a $10,000 investment made in the Fund on its inception date
to a $10,000 investment made in the indices on that date. All dividends and
capital gains are reinvested. Further information relating to the Fund's
performance, including expense reimbursements, is contained in the Condensed
Financial Information section of the Prospectus and elsewhere in this report.
Past performance is not indicative of future performance. Indices are unmanaged
and investors cannot invest in them.
8
<PAGE> 128
CT&T Funds
Chicago Trust Municipal Bond Fund
Management Discussion & Analysis October 31, 1997
- --------------------------------------------------------------------------------
Over the past year the bond markets can be characterized as having an overall
downward interest rate bias with a notable flattening of the yield curve--in
other words, rates are down and the additional yield gained from extending from
one-year to 30-year maturities has fallen. For example, in October 1996, moving
from one-year to 30 year maturities in AA-rated General Obligation bonds added
almost 2.00% in yield. This October, however, investors added only about 1.50%
in additional yield for the same extension. Also, it is typical to earn 0.10%
additional yield per year in intermediate maturities for each year of extension;
however, for most of 1997, seven- to twelve-year municipal bonds added only
0.05% to 0.07% for annual extensions.
The other significant market anomaly evident this October is the under-
performance of municipals versus taxable bonds. Expressed as a percent of U.S.
Treasury prices, municipal bonds now range from 70% to 87% for one- to 30-year
maturities. These percentages are higher than normal since U.S. Treasury yields
moved up rapidly as a result of the flight to quality from volatile equity and
international markets. Conversely, high seasonal supply in municipals held tax-
exempt bond prices down.
For the fiscal year ended October 31, 1997, total return for the Chicago Trust
Municipal Bond Fund (the "Fund") was 5.13%. The Fund earned an average annual
return of 5.97% for the three year period ended October 31, 1997. While 30-year
municipal bond yields under 6% tend to limit retail buying, this relative
"cheapness" of municipals versus taxables has increased interest in the tax-
exempt market from corporate buyers, especially insurance companies. Year to
year, municipal rates are down, with October 31, 1997, yields on five-year AA-
rated General Obligation bonds at 4.25%, 10 year maturities at 4.65%, and 30
years at 5.20%. Contributions to bond funds for most of the period were slow,
but with continuing volatility in the domestic stock market and weakness
internationally, the coming year should see greater allocations to fixed income
securities.
Activity in the Fund for the fiscal year concentrated on increasing current
income with purchases of 5% to 6% coupon bonds, as well as taking advantage of
attractive levels on issuers from "specialty" states, such as California,
Michigan, and New York. Because of local tax advantages for in-state buyers,
issuers in these states usually sell at lower yields than non-specialty issuers
such as those in Illinois, Washington, or Wisconsin, for example. Due to recent
sizable new issuance from several specialty states, we were able to take
advantage of attractive yield levels for the Fund. At October 31, 1997, the
Fund's average credit quality has been maintained at AA, average maturity at 5.6
years and duration at 4.5 years.
Comparative Performance Measurement:
Growth of $10,000 invested in Chicago Trust Municipal
Bond Fund and the Lehman Brothers Five-Year
Government Obligations Index since Fund's Inception
[COMPARATIVE PERFORMANCE MEASUREMENT CHART APPEARS HERE]
<TABLE>
<CAPTION>
LEHMAN BROTHERS
5-YEAR GOVERNMENT CHICAGO TRUST
VALUES/YEARS OBLIGATIONS INDEX MUNICIPAL BOND FUND
------------ ----------------- -------------------
<S> <C> <C>
12/93 $10,000 $10,000
1/94 $10,094 $10,106
4/94 $ 9,782 $ 9,803
7/94 $ 9,921 $ 9,922
10/94 $ 9,838 $ 9,808
1/95 $ 9,956 $ 9,958
4/95 $10,288 $10,218
7/95 $10,669 $10,518
10/95 $10,855 $10,719
1/96 $11,138 $10,969
4/96 $11,025 $10,811
7/96 $11,156 $10,935
10/96 $11,368 $11,103
1/97 $11,540 $11,230
4/97 $11,548 $11,201
7/97 $11,990 $11,600
10/97 $12,107 $11,673
</TABLE>
[PIE CHART APPEARS HERE]
Portfolio Allocation By Quality Rating
A 8%
Aa 33%
Aaa 56%
Not Rated 3%
This chart compares a $10,000 investment made in the Fund on its inception date
to a $10,000 investment made in the indices on that date. All dividends and
capital gains are reinvested. Further information relating to the Fund's
performance, including expense reimbursements, is contained in the Condensed
Financial Information section of the Prospectus and elsewhere in this report.
Past performance is not indicative of future performance. Indices are unmanaged
and investors cannot invest in them.
9
<PAGE> 129
CT&T Funds
Chicago Trust Money Market Fund
Management Discussion & Analysis October 31, 1997
- --------------------------------------------------------------------------------
Once again the most recent Federal Reserve Open Market Committee meeting came
and went without a change in interest rates. Policymakers left the Federal Funds
overnight lending rate unchanged at 5.50%. This is the same rate it has been
since late March.
While domestic economic activity continues to show strength, the picture from
overseas, Southeast Asia in particular, remains cloudy. What, if any, effect
this may have on policymaking decisions in the near future remains to be seen.
The short-term yield curve remains very flat. This means that the yield earned
for investing for seven days is approximately the same as the yield for
investing for 270 days. The Chicago Trust Money Market Fund (the "Fund") is
positioned to take advantage of this type of yield curve profile. It has a
weighted average maturity of 33 days, which is almost half the average maturity
of a "typical" prime domestic money market fund.
The performance of the Fund has exceeded its benchmark, the Donaghue's First
Tier Money Market Fund Index, by 0.23% for the quarter ended October 31, 1997.
For the previous 12 months, the outperformance has been 0.20%. The low expenses
of the Fund coupled with the effective structure of the Fund have been the
primary reasons it has continued to outperform other money market funds in the
peer group.
[PIE CHART PORTFOLIO ALLOCATION BY MARKET SECTOR APPEARS HERE]
Portfolio Allocation By Market Sector
Time Deposits 4%
Certificates of Deposit 5%
Commercial Paper 77% [INSERT PIE CHART HERE]
Cash & Other Net Assets 10%
GIC within Funding Agreement 4%
10
<PAGE> 130
CT&T Funds
Montag & Caldwell Growth Fund
Schedule of Investments October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Value
- ------ ------
<S> <C>
COMMON STOCKS - 97.44%
Business Services - 2.26%
440,100 Manpower, Inc...........................................$ 16,888,838
------------
Consumer Durables - 1.82%
490,000 Harley Davidson, Inc.................................... 13,597,500
------------
Consumer Non-Durables - 14.87%
802,500 CUC International, Inc.*................................ 23,673,750
335,000 Gillette Co............................................. 29,835,938
280,000 Interpublic Group of Companies, Inc..................... 13,300,000
427,600 Mattel, Inc............................................. 16,622,950
410,000 Procter & Gamble Co..................................... 27,880,000
------------
111,312,638
------------
Electrical - 2.80%
324,700 General Electric Co..................................... 20,963,444
------------
Entertainment and Leisure - 2.58%
235,000 Walt Disney Co.......................................... 19,328,750
------------
Finance - 6.74%
265,000 American Express Co..................................... 20,670,000
217,400 American International Group, Inc....................... 22,188,387
260,000 First Data Corp......................................... 7,556,250
------------
50,414,637
------------
Food and Beverage - 6.22%
500,000 Coca-Cola Co............................................ 28,250,000
200,000 Pioneer Hi-Bred International, Inc...................... 18,325,000
------------
46,575,000
------------
Health Care Services - 7.47%
475,000 Johnson & Johnson....................................... 27,253,125
405,000 Pfizer, Inc............................................. 28,653,750
------------
55,906,875
------------
Lodging - 2.61%
280,000 Marriott International, Inc............................. 19,530,000
------------
Medical Supplies - 2.67%
460,000 Medtronic, Inc.......................................... 20,010,000
------------
Pharmaceuticals - 8.74%
270,000 Bristol-Myers Squibb Co.................................$ 23,692,500
330,000 Eli Lilly & Co.......................................... 22,068,750
220,000 Merck & Co., Inc........................................ 19,635,000
------------
65,396,250
------------
Restaurants - 2.90%
280,000 Cracker Barrell
Old Country Store, Inc.................................. 8,260,000
300,000 McDonald's Corp......................................... 13,443,750
------------
21,703,750
------------
Retail - 5.68%
350,000 Gap, Inc................................................ 18,615,625
430,000 Home Depot, Inc......................................... 23,918,750
------------
42,534,375
------------
Technology - 27.95%
330,000 Adaptec, Inc.*........................................ 15,984,375
410,000 Cisco Systems, Inc.*.................................. 33,632,812
350,600 Compaq Computer Corp.*................................ 22,350,750
400,000 Electronic Arts, Inc.*................................ 13,550,000
313,700 Intel Corp............................................ 24,154,900
230,000 Microsoft Corp.*...................................... 29,900,000
670,000 Oracle Corp.*......................................... 23,973,438
307,400 Seagate Technology, Inc.*............................. 8,338,225
380,000 Solectron Corp.*...................................... 14,915,000
540,000 3Com Corp.*........................................... 22,376,250
------------
209,175,750
------------
Telecommunications - 2.13%
360,000 Ericsson (LM)
Telefonaktiebolaget, ADR
Class B, Series 10...................................... 15,930,000
------------
Total Common Stocks..................................... 729,267,807
------------
(Cost $582,126,971)
</TABLE>
See accompanying Notes to Financial Statements.
11
<PAGE> 131
CT&T Funds
Montag & Caldwell Growth Fund
Schedule of Investments - continued October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Value
- ------ ------
<S> <C>
INVESTMENT COMPANIES - 3.31%
15,205,543 Bankers Trust Institutional
Cash Management Fund.................. $ 15,205,543
9,534,733 Bankers Trust Institutional
Treasury Money Fund................... 9,534,733
--------------
Total Investment Companies............ 24,740,276
--------------
(Cost $24,740,276)
Total Investments - 100.75%......................... 754,008,083
--------------
(Cost $606,867,247)**
Liabilities Net of Cash and Other Assets - (0.75%).. (5,589,917)
--------------
Net Assets - 100.00%................................ $ 748,418,166
==============
</TABLE>
- -----------------------
* Non-income producing security.
** Aggregate cost for Federal income tax purposes is $606,962,652.
<TABLE>
<S> <C>
Gross unrealized appreciation $ 155,538,447
Gross unrealized (depreciation) (8,493,016)
--------------
Net unrealized appreciation $ 147,045,431
==============
</TABLE>
ADR American Depositary Receipt
See accompanying Notes to Financial Statements.
12
<PAGE> 132
CT&T Funds
Chicago Trust Growth & Income Fund
Schedule of Investments October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Value
- ----------- ------------
<S> <C> <C>
COMMON STOCKS - 94.65%
Business Services - 1.17%
84,000 Paychex, Inc. ..................................... $ 3,202,500
------------
Capital Goods - 5.64%
155,000 AlliedSignal, Inc. ................................ 5,580,000
273,000 Federal Signal Corp. .............................. 6,603,187
41,500 Pitney Bowes, Inc. ................................ 3,291,469
------------
15,474,656
------------
Chemicals - 1.93%
121,400 Praxair, Inc. ..................................... 5,288,487
------------
Consumer Durables - 6.47%
218,000 Illinois Tool Works, Inc. ......................... 10,722,875
157,000 Johnson Controls, Inc. ............................ 7,045,375
------------
17,768,250
------------
Consumer Non-Durables - 11.39%
80,600 Cintas Corp. ...................................... 5,823,350
71,500 Lancaster Colony Corp. ............................ 3,539,250
179,000 Mattel, Inc. ...................................... 6,958,625
234,100 Newell Co. ........................................ 8,983,587
88,000 Procter & Gamble Co. .............................. 5,984,000
------------
31,288,812
------------
Electrical - 2.70%
114,800 General Electric Co. .............................. 7,411,775
------------
Energy - 6.84%
132,800 Exxon Corp. ....................................... 8,158,900
202,000 Royal Dutch Petroleum Co., NY, ADR ................ 10,630,250
------------
18,789,150
------------
Finance - 21.47%
100,000 AFLAC, Inc. ....................................... 5,087,500
102,975 American International Group, Inc. ................ 10,509,886
57,000 Associates First Capital Corp., Class A ........... 3,626,625
284,600 Federal Home Loan Mortgage Corp. .................. 10,779,225
108,000 First Data Corp. .................................. 3,138,750
25,950 General Re Corp. .................................. 5,117,016
145,000 Green Tree Financial Corp. ........................ 6,108,125
158,287 MBNA Corp. ........................................ 4,164,927
325,200 Norwest Corp. ..................................... 10,426,725
------------
58,958,779
------------
Food and Beverage - 4.41%
138,500 Richfood Holdings, Inc., Class A .................. 3,341,313
219,000 Sysco Corp. ....................................... 8,760,000
------------
12,101,313
------------
Health Care Services - 10.23%
137,000 Cardinal Health, Inc. ............................. 10,172,250
333,375 Health Management Associates, Inc., Class A* ...... 8,126,016
138,600 Pfizer, Inc. ...................................... 9,805,950
------------
28,104,216
------------
Pharmaceuticals - 1.85%
57,000 Merck & Co, Inc. .................................. 5,087,250
------------
Retail - 4.26%
51,000 Kohl's Corp.* ..................................... 3,423,375
294,000 Walgreen Co. ...................................... 8,268,750
------------
11,692,125
------------
Technology - 13.70%
76,400 Cisco Systems, Inc.* .............................. 6,267,187
58,600 Computer Sciences Corp.* .......................... 4,156,938
88,000 HBO & Co. ......................................... 3,828,000
73,400 Microsoft Corp.* .................................. 9,542,000
156,000 Oracle Corp.* ..................................... 5,581,875
124,000 Sun Microsystems, Inc.* ........................... 4,247,000
96,250 3Com Corp.* ....................................... 3,988,359
------------
37,611,359
------------
Telecommunications - 2.59%
132,000 Tellabs, Inc.* .................................... 7,128,000
------------
Total Common Stocks ............................... 259,906,672
(Cost $182,870,419) ------------
Par Value
- -----------
REPURCHASE AGREEMENT - 3.65%
$10,017,000 First Chicago,
5.7000%, dated 10/31/97 to be repurchased on
11/03/97 at $10,021,758 (Collateralized by U.S.
Treasury Note 6.000%, due 06/30/99; Total Par
$9,965,000) ....................................... 10,017,000
------------
Total Repurchase Agreement ........................ 10,017,000
(Cost $10,017,000) ------------
</TABLE>
See accompanying Notes to Financial Statements.
13
<PAGE> 133
CT&T Funds
Chicago Trust Growth & Income Fund
Schedule of Investments -- Continued October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Total Investments - 98.30% ...................................... $269,923,672
(Cost $192,887,419) ** ------------
Net Other Assets and Liabilities - 1.70% ........................ 4,684,235
------------
Net Assets - 100.00% ............................................ $274,607,907
============
</TABLE>
- ----------------------------
* Non-income producing security.
** Aggregate cost for Federal income tax purposes is $192,887,419.
<TABLE>
<S> <C>
Gross unrealized appreciation $81,936,543
Gross unrealized (depreciation) (4,900,290)
-----------
Net unrealized appreciation $77,036,253
===========
</TABLE>
ADR American Depositary Receipt
See accompanying Notes to Financial Statements.
14
<PAGE> 134
CT&T Funds
Chicago Trust Talon Fund
Schedule of Investments October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Value
- ------ ------
<S> <C> <C>
COMMON STOCKS - 69.93%
Aerospace / Defense - 4.14%
14,500 General Dynamics Corp. ....................... $ 1,177,219
-----------
Cable Television - 0.16%
11,417 Tescorp, Inc.*(A)............................. 44,241
-----------
Consumer Cyclical - 4.93%
63,000 Circus Circus Enterprises, Inc.*.............. 1,401,750
-----------
Electrical - 2.46%
30,000 Berg Electronics Corp.*....................... 701,250
-----------
Finance - 12.22%
160,000 Danielson Holdings Corp. ..................... 1,260,000
52,000 Risk Capital Holdings, Inc. .................. 1,183,000
43,125 St. Paul Bancorp, Inc. ....................... 1,035,000
-----------
3,478,000
-----------
Pharmaceuticals - 15.36%
70,000 Mylan Laboratories, Inc. ..................... 1,535,625
55,000 North American Vaccine, Inc.*................. 1,381,875
67,544 Vitalink Pharmacy Services, Inc.*............. 1,456,418
-----------
4,373,918
-----------
Printing and Publishing - 4.70%
41,000 R.R. Donnelley & Sons Co. .................... 1,337,625
-----------
Real Estate - 4.30%
40,000 Equity Office Properties Trust, REIT.......... 1,222,500
-----------
Restaurants - 6.04%
28,000 Starbucks Corp.*.............................. 924,000
122,500 Unique Casual Restaurants..................... 796,250
-----------
1,720,250
-----------
Retail - 4.87%
55,000 Pep Boys-Manny Moe & Jack..................... 1,385,312
-----------
Technology - 10.75%
50,000 American Management Systems, Inc.*............ 1,081,250
22,000 Cerner Corp.*................................. 533,500
105,000 Robotic Vision Systems, Inc.*................. 1,443,750
-----------
3,058,500
-----------
Total Common Stocks........................... 19,900,565
-----------
(Cost $15,980,250)
PREFERRED STOCK - 1.27%
Cable Television
3,000 Tescorp, Inc. 8.0000% Conv. Pfd. (A).......... 363,000
-----------
Total Preferred Stock......................... 363,000
-----------
(Cost $300,000)
Par Value
- ---------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 26.26%
Federal Home Loan Bank - 3.52%
$1,000,000 5.8750%, 02/26/98............................. 1,002,210
---------
U.S. Treasury Bills (B) - 13.94%
1,000,000 4.9984%, 11/13/97............................. 998,382
1,000,000 4.8465%, 11/13/97............................. 998,382
1,000,000 5.0290%, 12/11/97............................. 994,488
1,000,000 5.1407%, 04/16/98............................. 976,900
-----------
3,968,152
-----------
U.S. Treasury Notes - 8.80%
1,000,000 5.2500%, 07/31/98............................. 998,380
1,500,000 5.8750%, 07/31/99............................. 1,505,355
-----------
2,503,735
-----------
Total U.S. Government
and Agency Obligations........................ 7,474,097
-----------
(Cost $7,466,281)
Shares
------
INVESTMENT COMPANY - 2.71%
769,994 Bankers Trust Institutional
Cash Management Fund.......................... 769,994
-----------
Total Investment Company...................... 769,994
-----------
(Cost $769,994)
PURCHASED PUT OPTIONS - 0.90%
Number of Exercise Expiration
Issuer Contracts Price Date
------ --------- -------- ----------
S & P 500 30 $9.60 11/22/97 142,500
S & P 500 20 $9.60 12/20/97 115,000
--------- -----------
50
Total Purchased Put Options............................... 257,500
-----------
(Cost $120,125)
Total Investments - 101.07%............................... 28,765,156
-----------
(Cost $24,636,650) **
Liabilities Net of Cash and Other Assets - (1.07%)........ (305,573)
-----------
Net Assets - 100.00%...................................... $28,459,583
===========
- ---------------------------------------
* Non-income producing security.
** Aggregate cost for Federal income tax purposes is $24,792,119.
Gross unrealized appreciation $4,336,501
Gross unrealized (depreciation) (363,464)
----------
Net unrealized appreciation $3,973,037
==========
</TABLE>
(A) Securities exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold, in transactions exempt
from registration, to qualified institutional buyers. At October 31,
1997, these securities amounted to $407,241 or 1.43% of net assets.
(B) Annualized yield at time of purchase
REIT Real Estate Investment Trust
See accompanying Notes to Financial Statements.
15
<PAGE> 135
CT&T Funds
Chicago Trust Balanced Fund
Schedule of Investments October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Value
- ------ ------
<S> <C> <C>
COMMON STOCKS - 53.40%
Aerospace - 1.02%
40,000 Boeing Co. ................................... $ 1,915,000
------------
Business Services - 1.01%
50,000 Paychex, Inc. ................................ 1,906,250
------------
Capital Goods - 3.11%
50,000 AlliedSignal Corp. ........................... 1,800,000
85,000 Federal Signal Corp. ......................... 2,055,937
25,000 Pitney Bowes, Inc. ........................... 1,982,812
------------
5,838,749
------------
Chemicals - 1.04%
45,000 Praxair, Inc. ................................ 1,960,312
------------
Consumer Durables - 2.89%
65,000 Illinois Tool Works, Inc. .................... 3,197,187
50,000 Johnson Controls, Inc. ....................... 2,243,750
------------
5,440,937
------------
Consumer Non-Durables - 6.35%
25,000 Cintas Corp. ................................. 1,806,250
50,000 Lancaster Colony Corp. ....................... 2,475,000
60,000 Mattel, Inc. ................................. 2,332,500
75,000 Newell Co. ................................... 2,878,125
36,000 Procter & Gamble Co. ......................... 2,448,000
------------
11,939,875
------------
Electrical - 1.37%
40,000 General Electric Co. ......................... 2,582,500
------------
Energy - 6.25%
30,000 Amoco Corp. .................................. 2,750,625
45,000 Exxon Corp. .................................. 2,764,687
52,000 Royal Dutch Petroleum Co., NY, ADR ........... 2,736,500
40,000 Schlumberger Ltd. ............................ 3,500,000
------------
11,751,812
------------
Finance - 10.12%
35,000 American International Group, Inc. ........... 3,572,188
30,000 Associates First Capital Corp., Class A....... 1,908,750
90,000 Federal Home Loan Mortgage Corp. ............. 3,408,750
50,000 First Data Corp. ............................. 1,453,125
40,000 Green Tree Financial Corp. ................... 1,685,000
120,000 MBNA Corp. ................................... 3,157,500
120,000 Norwest Corp. ................................ 3,847,500
------------
19,032,813
------------
Food and Beverage - 1.85%
45,000 Richfood Holdings, Inc., Class A.............. 1,085,625
60,000 Sysco Corp. .................................. 2,400,000
------------
3,485,625
------------
Health Care Services - 5.62%
25,000 Abbott Laboratories........................... 1,532,813
35,000 Cardinal Health, Inc. ........................ 2,598,750
90,000 Health Management
Associates, Inc., Class A*.................... 2,193,750
60,000 Pfizer, Inc. ................................. 4,245,000
------------
10,570,313
------------
Medical Supplies - 1.39%
60,000 Medtronic, Inc. .............................. 2,610,000
------------
Pharmaceuticals - 1.42%
30,000 Merck & Co, Inc. ............................. 2,677,500
------------
Retail - 1.50%
100,000 Walgreen Co. ................................. 2,812,500
------------
Technology - 7.60%
40,000 Cisco Systems, Inc.*.......................... 3,281,250
35,000 Computer Sciences Corp.*...................... 2,482,812
56,500 Electronic Data Systems Co. .................. 2,185,844
25,000 Microsoft Corp.*.............................. 3,250,000
52,500 Oracle Corp.*................................. 1,878,516
35,000 Sun Microsystems, Inc.*...................... 1,198,750
------------
14,277,172
------------
Telecommunications - 0.86%
30,000 Tellabs, Inc.*................................ 1,620,000
------------
Total Common Stocks........................... 100,421,358
------------
(Cost $68,550,142)
Par Value
- ---------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 18.09%
U.S. Treasury Notes - 7.86%
$2,000,000 9.0000%, 05/15/98............................. 2,037,280
1,500,000 5.5000%, 02/28/99............................. 1,497,795
1,500,000 8.0000%, 08/15/99............................. 1,559,055
2,000,000 7.1250%, 02/29/00............................. 2,061,360
2,000,000 5.2500%, 01/31/01............................. 1,973,480
2,000,000 7.8750%, 08/15/01............................. 2,141,680
1,500,000 5.7500%, 08/15/03............................. 1,494,015
2,000,000 5.8750%, 02/15/04............................. 2,005,480
------------
14,770,145
------------
</TABLE>
See accompanying Notes to Financial Statements.
16
<PAGE> 136
CT&T Funds
Chicago Trust Balanced Fund
Schedule of Investments - continued October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Par Value Value
- --------- ------
<S> <C>
U. S. Treasury Bonds - 1.69%
$150,0000 7.1250%, 02/15/23.................................... $ 1,667,520
150,0000 6.2500%, 08/15/23.................................... 1,503,645
-----------
3,171,165
-----------
Federal Home Loan Mortgage Corporation - 3.75%
600,000 5.5000%, 08/15/04.................................... 598,086
1,000,000 5.8500%, 02/21/06.................................... 986,980
800,000 6.0000%, 03/15/07.................................... 800,456
1,000,000 6.5000%, 09/15/07.................................... 1,014,760
570,206 7.5000%, 04/01/08.................................... 585,704
1,016,287 6.5000%, 06/01/09.................................... 1,016,602
469,525 5.1500%, 11/15/12.................................... 468,037
602,995 7.0000%, 07/01/13.................................... 606,196
692,800 7.0000%, 11/15/13, IO................................ 14,438
1,000,000 6.0000%, 12/15/23.................................... 954,150
-----------
7,045,409
-----------
Federal National Mortgage Association - 1.05%
458,555 6.0000%, 06/25/02, CMO............................... 456,987
800,365 6.9000%, 12/25/03, CMO............................... 816,101
993,359 7.0000%, 07/25/17, CMO, IO........................... 84,000
582,401 9.0000%, 05/01/25.................................... 619,710
-----------
1,976,798
-----------
Government National Mortgage Association - 3.74%
509,484 7.0000%, 06/15/08.................................... 518,558
634,229 8.0000%, 03/15/17.................................... 658,405
876,773 8.0000%, 06/15/17.................................... 910,196
1,653,925 7.0000%, 09/15/23.................................... 1,663,733
1,081,615 7.0000%, 10/15/23.................................... 1,088,029
784,192 7.0000%, 10/15/23.................................... 788,843
1,422,928 6.5000%, 03/15/26.................................... 1,407,802
-----------
7,035,566
-----------
Total U. S. Government
and Agency Obligations............................... 33,999,083
(Cost $33,455,048) -----------
CORPORATE NOTES AND BONDS - 17.72%
Cable Television - 0.44%
700,000 Continental Cablevision, Debenture
9.5000%, 08/01/13.................................... 824,250
-----------
Consumer Non-Durables - 0.68%
500,000 Anheuser Busch Co.
7.0000%, 12/01/25.................................... 495,625
750,000 Brown Group, Inc., Senior Notes
9.5000%, 10/15/06.................................... 776,250
-----------
1,271,875
-----------
Finance - 10.22%
1,000,000 Advanta Corp., MTN
7.0000%, 05/01/01.................................... 1,001,250
650,000 Associates Corp. NA
6.3750%, 08/15/98.................................... 653,361
750,000 Bankers Trust-NY, Subordinated Notes
8.1250%, 04/01/02.................................... 802,500
250,000 Chelsea GCA Realty Partnership, REIT
7.2500%, 10/21/07.................................... 252,500
1,500,000 Chrysler Financial Corp.
6.6250%, 08/15/00.................................... 1,522,500
1,000,000 Continental Corp. Notes
7.2500%, 03/01/03.................................... 1,032,500
750,000 DR Investment Corp.
7.4500%, 05/15/07 (A)................................ 793,125
945,000 Federal Realty Investment Trust
Covertible Subordinated Bonds, REIT
5.2500%, 10/28/03.................................... 907,200
1,000,000 First Chicago Bank
7.7500%, 12/01/26 (A)................................ 1,013,750
1,250,000 Goldman Sachs Group LP
6.2500%, 02/01/03 (A)................................ 1,240,625
1,000,000 International Bank for Reconstruction &
Development Notes
9.7700%, 05/27/98.................................... 1,023,750
1,000,000 John Deere Capital Corp., Debenture
8.6250%, 08/01/19.................................... 1,088,750
500,000 Leucadia National Corp.
Senior Subordinated Notes
7.8750%, 10/15/06.................................... 519,375
975,000 Leucadia National Corp.
Senior Subordinated Notes
8.2500%, 06/15/05.................................... 1,034,719
1,000,000 Merrill Lynch & Co., Inc.
7.0000%, 04/27/08.................................... 1,041,250
1,500,000 Metropolitan Life Insurance Co.
6.3000%, 11/01/03 (A)................................ 1,488,750
600,000 Olympic Financial Ltd.
11.5000%, 03/15/07................................... 622,500
1,000,000 Pacific Mutual Life Insurance Co.
7.9000%, 12/30/23 (A)................................ 1,070,000
1,000,000 Prudential Insurance Co. of America
8.3000%, 07/01/25 (A)................................ 1,095,000
1,000,000 Wells Fargo Capital
7.7300%, 12/01/26 (A)................................ 1,005,000
-----------
19,208,405
-----------
Food and Beverage - 0.54%
1,000,000 Nabisco, Inc.
6.7000%, 06/15/02.................................... 1,017,500
-----------
</TABLE>
See accompanying Notes to Financial Statements.
17
<PAGE> 137
CT&T Funds
Chicago Trust Balanced Fund
Schedule of Investments - continued October 31, 1997
================================================================================
<TABLE>
<CAPTION>
Market
Par Value Value
- --------- ------
<S> <C>
Healthcare Services - 0.47%
$ 1,100,000 Hospital Corp. of America
Debenture
7.6485%, 06/01/00 (B).............................. $ 884,125
-----------
Printing and Publishing - 1.00%
750,000 News America Holdings
7.7500%, 02/01/24................................... 753,750
520,693 Time Warner, Inc., Series M
10.2500%, 07/01/16*(A).............................. 600,099
500,000 Valassis Inserts, Inc.
Senior Subordinated Notes
9.3750%, 03/15/99.................................. 516,875
-----------
1,870,724
-----------
Retail - 0.51%
1,000,000 K-mart Corp., Debenture
7.9500%, 02/01/23.................................. 960,000
-----------
Transportation - 0.25%
433,477 Delta Air Lines, Inc.
Equipment Trust, Series 1992A
8.5400%, 01/02/07.................................. 465,898
-----------
Utilities - 3.61%
1,000,000 CalEnergy Co, Inc.
7.6300%, 10/15/07.................................. 1,012,500
1,000,000 Commonwealth Edison Bond, First Mortgage
7.7500%, 07/15/23.................................. 1,023,750
1,000,000 Gulf States Utilities, First Mortgage, Series A
8.2500%, 04/01/04.................................. 1,076,250
1,000,000 Long Island Lighting Co., Debenture
9.0000%, 11/01/22.................................. 1,128,750
1,000,000 Niagara Mohawk Power, First Mortgage
8.0000%, 06/01/04.................................. 1,057,500
500,000 Philadelphia Electric Co., First Mortgage
5.6250%, 11/01/01.................................. 490,625
922,000 WorldCom, Inc. GA, Senior Note
8.8750%, 01/15/06................................ 995,760
-----------
6,785,135
-----------
Total Corporate Notes and Bonds.................... 33,287,912
(Cost $32,193,167) -----------
YANKEE BONDS - 1.42%
$ 1,750,000 Chilgener S.A. Yankee (Chile)
6.5000%, 01/15/06.................................. $ 1,732,500
416,667 Province of Mendoza
Collateral Oil Royalty Note
10.0000%, 07/25/02 (A)............................. 442,405
500,000 Skandinaviska Enskilda,
Subordinated Notes
6.6250%, 03/29/49 (A).............................. 503,443
-----------
Total Yankee Bonds................................. 2,678,348
(Cost $2,622,867) -----------
GOVERNMENT TRUST CERTIFICATES - 0.55%
142,858 Greece Trust, Class G-2
8.0000%, 05/15/98.................................. 143,572
837,831 Israel Collateral Trust, Class 1-C
9.2500%, 11/15/01.................................. 881,817
-----------
Total Government
Trust Certificates................................. 1,025,389
(Cost $1,061,200) -----------
ASSET-BACKED SECURITIES - 1.94%
1,000,000 BA Mortgage Securities, CMO
7.3500%, 07/25/26.................................. 998,750
1,000,000 Chemical Master Credit Card Trust I, Class A
5.5500%, 09/15/03.................................. 989,210
1,000,000 Citibank Credit Card Master Trust I, Class A
6.8390%, 02/10/04.................................. 1,023,190
600,000 Midland Realty Acceptance Corp. CMO
7.4750%, 08/25/28.................................. 632,625
-----------
Total Asset-Backed Securities...................... 3,643,775
(Cost $3,575,262) -----------
REPURCHASE AGREEMENT - 6.35%
11,933,000 First Chicago,
5.7000%, dated 10/31/97 to be repurchased
on 11/03/97 at $11,938,668
(Collateralized by U.S. Treasury Note
6.0000%, due 07/31/02;
Total Par $11,895,000)............................. 11,933,000
-----------
Total Repurchase Agreement......................... 11,933,000
(Cost $11,933,000) -----------
</TABLE>
See accompanying Notes to Financial Statements.
18
<PAGE> 138
<TABLE>
<CAPTION>
CT&T FUNDS
Chicago Trust Balanced Fund
Schedule of Investments - continued October 31, 1997
=================================================================================================
<S> <C>
Total Investments - 99.47%...................................................... $ 186,988,865
-----------------
(Cost $153,390,686) **
Net Other Assets and Liabilities - 0.53%........................................ 1,004,472
-----------------
Net Assets - 100.00% $187,993,337
- ----------------------------------------------------------------------- =================
</TABLE>
* Non-income producing security.
** Aggregate cost for Federal income tax purposes is $153,390,686.
Gross unrealized appreciation $ 34,994,384
Gross unrealized (depreciation) (1,396,205)
---------------
Net unrealized appreciation $ 33,598,179
===============
IO Interest Only
ADR American Depositary Receipt
(A) Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold, in transactions exempt from
registration, to qualified institutional buyers. At October 31, 1997, these
securities amounted to $9,252,197 or 4.92% of net assets.
(B) Annualized yield at time of purchase
CMO Collateralized Mortgage Obligation
MTN Medium Term Note
REIT Real Eastate Investment Trust
Portfolio Composition (Moody's Ratings)
- ---------------------
Common Stock 53%
Repurchase Agreement 6%
U.S. Government Obligations 10%
U.S. Government Agency Obligations 8%
Government Trust Certificates 1%
Aaa 2%
AA 2%
A 6%
Baa 6%
Ba 5%
NR 1%
----
100%
====
See accompanying Notes to Financial Statements.
19
<PAGE> 139
CT&T Funds
Montag & Caldwell Balanced Fund
Schedule of Investments October 31, 1997
================================================================================
<TABLE>
<CAPTION>
Market
Shares Value
- ------ ------
<S> <C> <C>
COMMON STOCKS - 58.33%
Business Services - 1.13%
24,300 Manpower, Inc. ............................... $ 932,512
-----------
Consumer Durables - 1.19%
35,400 Harley Davidson, Inc. ........................ 982,350
-----------
Consumer-Nondurables - 8.84%
51,100 CUC International, Inc.*...................... 1,507,450
21,000 Gillette Co. ................................. 1,870,312
22,000 Interpublic Group of Companies., Inc. ........ 1,045,000
27,000 Mattel, Inc. ................................. 1,049,625
27,000 Procter & Gamble Co. ......................... 1,836,000
-----------
7,308,387
-----------
Electrical - 1.66%
21,300 General Electric Co. ......................... 1,375,181
-----------
Entertainment and Leisure - 1.69%
17,000 Walt Disney Co. .............................. 1,398,250
-----------
Finance - 4.14%
19,000 American Express Co. ......................... 1,482,000
14,300 American International Group, Inc. ........... 1,459,494
16,500 First Data Corp. ............................. 479,530
-----------
3,421,024
-----------
Food and Beverage - 3.65%
30,000 Coca-Cola Co. ................................ 1,695,000
14,400 Pioneer Hi-Bred International, Inc. .......... 1,319,400
-----------
3,014,400
-----------
Health Care Services - 6.12%
22,690 Eli Lilly & Co. .............................. 1,517,394
31,000 Johnson & Johnson............................. 1,778,625
25,000 Pfizer, Inc. ................................. 1,768,750
-----------
5,064,769
-----------
Lodging - 1.69%
20,000 Marriott International, Inc. ................. 1,395,000
-----------
Medical Supplies - 1.86%
35,400 Medtronic, Inc. .............................. 1,539,900
-----------
Pharmaceuticals - 3.63%
19,000 Bristol-Myers Squibb Co. ..................... 1,667,250
15,000 Merck & Co., Inc. ............................ 1,338,750
-----------
3,006,000
-----------
Restaurants - 1.82%
22,100 Cracker Barrell Old Country Store, Inc. ...... 651,950
19,000 McDonald's Corp. ............................. 851,437
-----------
1,503,387
-----------
Retail - 3.70%
26,500 Gap, Inc. .................................... 1,409,468
29,800 Home Depot, Inc. ............................. 1,657,625
-----------
3,067,093
-----------
Telecommunications - 1.18%
22,100 Ericsson (LM) Telefonaktiebolaget, ADR
Class B, Series 10............................ 977,925
-----------
Technology - 16.03%
22,100 Adaptec, Inc.*................................ 1,070,469
25,400 Cisco Systems, Inc.*.......................... 2,083,594
22,350 Compaq Computer Corp.*........................ 1,424,812
28,000 Electronic Arts, Inc.*........................ 948,500
19,800 Intel Corp. .................................. 1,524,600
14,000 Microsoft Corp.*.............................. 1,820,000
43,000 Oracle Corp.*................................. 1,538,594
14,800 Seagate Technology, Inc.*..................... 401,450
24,400 Solectron Corp.*.............................. 957,700
36,000 3Com Corp.*................................... 1,491,750
-----------
13,261,469
-----------
Total Common Stocks........................... 48,247,647
-----------
(Cost $37,414,304)
Par Value
- ---------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 25.66%
U.S. Treasury Notes - 17.89%
$1,500,000 5.750%, 08/15/03.............................. 1,494,015
2,000,000 5.875%, 02/15/04.............................. 2,005,480
1,500,000 7.250%, 05/15/04.............................. 1,612,620
1,500,000 7.875%, 11/15/04.............................. 1,671,195
2,000,000 6.500%, 08/15/05.............................. 2,073,780
2,500,000 6.500%, 10/15/06.............................. 2,597,725
3,000,000 7.250%, 05/15/16.............................. 3,347,640
-----------
14,802,455
-----------
</TABLE>
See accompanying Notes to Financial Statements.
20
<PAGE> 140
- --------------------------------------------------------------------------------
CT&T FUNDS
Montag & Caldwell Balanced Fund
Schedule of Investments - continued October 31, 1997
================================================================================
<TABLE>
<CAPTION>
Market
Par Value Value
- ---------- ------
<S> <C> <C> <C>
Federal Home Loan Bank - 0.61%
$ 500,000 6.940%, 02/12/04................................ $ 506,500
------------
Federal Home Loan
Mortgage Corporation- 4.04%
100,000 7.730%, 08/10/04, Debenture, Series A........... 103,593
750,000 6.400%, 12/13/06, Debenture..................... 768,638
750,000 6.700%, 01/05/07, Series B...................... 782,775
600,000 7.500%, 03/15/07, CMO, Class J.................. 606,312
175,000 6.000%, 04/15/08, CMO, Class K.................. 174,689
500,000 6.500%, 07/15/20, CMO, Class F.................. 503,810
400,000 6.500%, 11/15/20, CMO. Class H.................. 404,924
------------
3,344,741
------------
Federal National
Mortgage Association - 3.10%
500,000 7.070%, 03/08/11, MTN........................... 505,960
2,000,000 7.250%, 01/17/21, CMO, REMIC.................... 2,054,940
------------
2,560,900
------------
Government National
Mortgage Association - 0.02%
8,447 8.500%, 06/15/01................................ 8,809
2,975 9.000%, 09/15/08................................ 3,174
------------
11,983
------------
Total U.S. Government
and Agency Obligations.......................... 21,226,579
------------
(Cost $20,702,195)
CORPORATE NOTES AND BONDS - 9.33%
Finance - 7.73%
1,500,000 American Express Co., Senior Notes
6.750%, 06/23/04................................ 1,537,500
55,000 American General Finance, Senior Notes
7.200%, 07/08/99................................ 56,100
1,000,000 Citicorp, Subordinated Notes
7.125%, 05/15/06................................ 1,036,250
500,000 First National Bank Commerce, Senior Notes, MTN
6.500%, 01/14/00................................ 505,625
1,000,000 First Union National, Subordinated Notes, MTN
7.125%, 10/15/06................................ 1,036,250
750,000 General Motors Acceptance Corp.
7.125%, 05/01/03................................ 777,188
500,000 Household Finance Corp.
7.250%, 05/15/06................................ 525,000
100,000 National Re Corp., Senior Notes
8.850%, 01/15/05................................ 112,500
500,000 Salomon, Inc.
7.300%, 05/15/02................................ 519,375
285,000 Salomon, Inc., Senior Notes
7.125%, 08/01/99................................ 290,344
------------
6,396,132
------------
Retail - 1.60%
500,000 Penney (J.C.) & Co., Debenture
9.750%, 06/15/21................................ 558,750
750,000 Sears Roebuck Acceptance Corp.
6.700%, 11/15/06................................ 765,938
------------
1,324,688
------------
Total Corporate Notes and Bonds................. 7,720,820
------------
(Cost $7,564,432)
ASSET-BACKED SECURITIES - 2.93%
445,000 AT&T Universal Card Master Trust
Series 1995-2, Class A
5.950%, 10/17/02................................ 445,352
1,150,000 Chase Auto Owner Trust
Series 1997-B, Class A3
6.350%, 02/15/01................................ 1,161,661
300,000 Chemical Master Credit Card Trust
6.230%, 06/15/03................................ 302,508
500,000 Citibank Credit Card Master Trust
Series 1997-2, Class A
6.550%, 02/16/04................................ 509,460
------------
Total Asset-Backed Securities................... 2,418,981
------------
(Cost $2,389,033)
Shares
- ------
INVESTMENT COMPANY - 3.59%
2,970,204 Bankers Trust Institutional
Cash Management Fund............................ 2,970,204
------------
Total Investment Company........................ 2,970,204
------------
(Cost $2,970,204)
Total Investments - 99.84%...................................... 82,584,231
------------
(Cost $71,040,168)**
Net Other Assets and Liabilities - 0.16%........................ 134,822
------------
Net Assets - 100.00%............................................ $ 82,719,053
============
</TABLE>
- ---------------------------------------
* Non-income producing security.
** Aggregate cost for Federal income tax purposes is $71,072,517
<TABLE>
<S> <C> <C>
Gross unrealized appreciation $11,988,370
Gross unrealized (depreciation) (476,656)
-----------
Net unrealized appreciation $11,511,714
===========
</TABLE>
ADR American Depositary Receipt
CMO Collateralized Mortgage Obligation
MTN Medium Term Note
REMIC Real Estate Mortgage Investment Conduit
<TABLE>
Portfolio Composition (Moody's Ratings)
- ---------------------
<S> <C>
Common Stocks 58%
U.S. Government Obligations 19%
U.S. Government Agency Obligations 8%
Aaa 1%
A 10%
Investment Company 4%
----
100%
====
</TABLE>
See accompanying Notes to Financial Statements.
21
<PAGE> 141
CT&T Funds
Chicago Trust Bond Fund
Schedule of Investments October 31, 1997
================================================================================
<TABLE>
<CAPTION>
Market
Par Value Value
- --------- ------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 46.84%
U.S. Treasury Notes - 19.69%
<S> <C> <C> <C>
$ 1,250,000 7.375%, 11/15/97................................... $ 1,250,588
2,000,000 5.625%, 01/31/98................................... 2,000,600
2,500,000 5.125%, 11/30/98................................... 2,488,400
2,500,000 5.500%, 02/28/99................................... 2,496,325
2,500,000 7.125%, 02/29/00................................... 2,576,700
2,500,000 5.750%, 10/31/00................................... 2,499,950
2,500,000 7.875%, 08/15/01................................... 2,677,100
2,500,000 6.375%, 08/15/02................................... 2,562,125
2,500,000 5.750%, 08/15/03................................... 2,490,025
2,500,000 7.250%, 05/15/04................................... 2,687,700
------------
23,729,513
------------
U.S. Treasury Bonds - 5.33%
2,000,000 7.500%, 05/15/02................................... 2,137,020
2,500,000 7.125%, 02/15/23................................... 2,779,200
1,500,000 6.250%, 08/15/23................................... 1,503,645
------------
6,419,865
------------
Federal Home Loan
Mortgage Corporation - 12.03%
2,500,000 5.850%, 02/21/06, Debenture........................ 2,467,450
1,123,421 7.000%, 10/15/06, CMO.............................. 1,133,441
1,500,000 6.000%, 03/15/07, CMO.............................. 1,500,855
1,000,000 6.500%, 09/15/07, CMO.............................. 1,014,760
500,000 5.750%, 01/15/08, CMO.............................. 494,135
570,206 7.500%, 04/01/08, Debenture........................ 585,704
1,500,000 6.000%, 03/15/09, CMO.............................. 1,439,415
1,355,049 6.500%, 06/01/09, CMO.............................. 1,355,469
1,693,227 6.500%, 01/01/11................................... 1,693,752
1,480,425 6.500%, 11/01/11................................... 1,480,884
1,400,000 6.000%, 12/15/23, CMO.............................. 1,335,810
------------
14,501,675
------------
Federal National
Mortgage Association - 4.48%
382,130 6.000%, 06/25/02, CMO.............................. 380,823
1,067,154 6.900%, 12/25/03, CMO.............................. 1,088,134
390,121 7.000%, 07/01/08................................... 395,360
1,449,716 7.000%, 05/01/12................................... 1,469,185
931,842 9.000%, 05/01/25................................... 991,535
1,093,948 6.500%, 02/01/26................................... 1,075,482
------------
5,400,519
------------
Government National
Mortgage Association - 5.31%
876,773 8.000%, 06/15/17................................... 910,196
1,372,337 7.000%, 10/15/23................................... 1,380,475
1,442,154 7.000%, 10/15/23................................... 1,450,706
1,422,928 6.500%, 03/15/26................................... 1,407,802
1,248,893 7.000%, 08/20/27................................... 1,250,837
------------
6,400,016
------------
Total U.S. Government
and Agency Obligations............................. 56,451,588
------------
(Cost $55,587,648)
CORPORATE NOTES AND BONDS - 40.49%
Cable Television - 1.47%
1,500,000 Continental Cablevision, Debenture
9.500%, 08/01/13................................... 1,766,250
------------
Consumer Non-Durables - 1.68%
1,000,000 Anheuser Busch Co.
7.000%, 12/01/25................................... 991,250
1,000,000 Brown Group, Inc. Senior Note
9.500%, 10/15/06................................... 1,035,000
------------
2,026,250
------------
See accompanying Notes to Financial Statements
</TABLE>
22
<PAGE> 142
CT&T Funds
Chicago Trust Bond Fund
Schedule of Investments - continued October 31, 1997
================================================================================
<TABLE>
<CAPTION>
Market
Par Value Value
- --------- ------
<S> <C>
Finance - 22.34%
$ 1,250,000 Advanta Corp., MTN
7.000%, 05/01/01................................... $ 1,251,563
1,250,000 Associates Corp. NA
6.375%, 08/15/98................................... 1,256,463
2,000,000 Bankers Trust-NY, Subordinated Notes
7.500%, 01/15/02................................... 2,090,000
650,000 Chelsea GCA Realty Partnership, REIT
7.250%, 10/21/07................................... 656,500
1,750,000 Chrysler Financial Corp.
6.625%, 08/15/00................................... 1,776,250
1,500,000 Continental Corp. Notes
7.250%, 03/01/03................................... 1,548,750
1,000,000 Federal Realty Investment Trust
Convertible Subordinated Bonds, REIT
5.250%, 10/28/03................................... 960,000
2,000,000 First Chicago Bank
7.750%, 12/01/26 (A)............................... 2,027,500
1,000,000 Goldman Sachs Group LP
6.200%, 12/15/00 (A)............................... 997,500
500,000 Goldman Sachs Group LP
6.250%, 02/01/03 (A)............................... 496,250
1,275,000 John Deere Capital Corp., Debenture
8.625%, 08/01/19................................... 1,388,156
750,000 Leucadia National Corp.
Senior Subordinated Notes
7.875%, 10/15/06................................... 779,063
1,000,000 Leucadia National Corp.
Senior Subordinated Notes
8.250%, 06/15/05................................... 1,061,250
2,000,000 Merrill Lynch & Co., Inc.
7.000%, 04/27/08................................... 2,082,500
2,000,000 Metropolitan Life Insurance Co.
6.300%, 11/01/03 (A)............................... 1,985,000
1,000,000 Olympic Financial Ltd.
11.500%, 03/15/07.................................. 1,037,500
1,250,000 Pacific Mutual Life Insurance Co.
7.900%, 12/30/23 (A)............................... 1,337,500
2,000,000 Prudential Insurance Co. of America
8.300%, 07/01/25 (A)............................... 2,190,000
2,000,000 Wells Fargo Capital
7.730%, 12/01/26 (A)............................... 2,010,000
-----------
26,931,745
-----------
Food and Beverage - 0.42%
$ 500,000 Nabisco, Inc.
6.700%, 06/15/02................................... $ 508,750
-----------
Manufacturing - 0.87%
1,000,000 Figgie International, Inc., Senior Notes
9.875%, 10/01/99................................... 1,045,000
-----------
Printing and Publishing - 2.46%
1,250,000 News America Holdings
7.750%, 01/20/24................................... 1,256,250
809,967 Time Warner, Inc., Series M
10.250%, 07/01/16.................................. 933,487
750,000 Valassis Inserts, Inc.
Senior Subordinated Notes
9.375%, 03/15/99................................... 775,313
-----------
2,965,050
-----------
Retail - 1.19%
1,500,000 K-mart Corp., Debenture
7.950%, 02/01/23................................... 1,440,000
-----------
Transportation - 0.58%
209,478 Delta Air Lines, Inc.
9.375%, 09/11/07................................... 234,353
433,477 Delta Air Lines, Inc.
Equipment Trust, Series 1992A
8.540%, 01/02/07................................... 465,898
-----------
700,251
-----------
</TABLE>
See accompanying Notes to Financial Statements.
23
<PAGE> 143
CT&T Funds
Chicago Trust Bond Fund
Schedule of Investments - continued October 31, 1997
================================================================================
<TABLE>
<CAPTION>
Market
Par Value Value
- --------- ------
Utilities - 9.48%
<C> <S> <C>
$ 1,675,000 CalEnergy Co., Inc.
7.630%, 10/15/07.................................. $ 1,695,938
1,000,000 Commonwealth Edison Co., First Mortgage
7.750%, 07/15/23.................................. 1,023,750
2,000,000 Gulf States Utilities, First Mortgage, Series A
8.250%, 04/01/04.................................. 2,152,500
1,250,000 Long Island Lighting Co., Debenture
9.000%, 11/01/22.................................. 1,410,938
1,500,000 Niagra Mohawk Power, First Mortgage
8.000%, 06/01/04.................................. 1,586,250
2,000,000 Philadelphia Electric Co., First Mortgage
5.625%, 11/01/01.................................. 1,962,500
1,475,000 WorldCom, Inc. GA, Senior Note
8.875%, 01/15/06.................................. 1,593,000
------------
11,424,876
------------
Total Corporate Notes and Bonds................... 48,808,172
------------
(Cost $47,005,037)
YANKEE BONDS - 3.13%
2,000,000 Chilgener S.A. Yankee (Chile)
6.500%, 01/15/06................................... 1,980,000
593,750 Province of Mendoza
Collateral Oil Royalty Note
10.000%, 07/25/02 (A).............................. 630,428
1,150,000 Skandinaviska Enskilda, Subordinated Notes
6.625%, 03/29/49 (A)............................... 1,157,918
------------
Total Yankee Bonds................................. 3,768,346
------------
(Cost $3,673,871)
GOVERNMENT TRUST CERTIFICATE - 0.53%
607,427 Israel Collateral Trust, Class 1-C
9.250%, 11/15/01................................... 639,317
------------
Total Government Trust Certificate................. 639,317
------------
(Cost $664,635)
ASSET-BACKED SECURITIES - 4.90%
1,750,000 BA Mortgage Securities, CMO
7.350%, 07/25/26................................... 1,747,813
2,500,000 Chemical Master Credit Card Trust I, Class A
5.550%, 09/15/03................................... 2,473,025
750,000 Citibank Credit Card Master Trust I, Class A
6.839%, 02/10/04................................... 767,393
875,000 Midland Realty Acceptance Corp., CMO
7.475%, 08/25/28................................... 922,578
------------
Total Asset-Backed Securities...................... 5,910,809
------------
(Cost $5,814,813)
REPURCHASE AGREEMENT - 2.72%
$3,281,000 First Chicago,
5.700%, dated 10/31/97 to be repurchased
on 11/03/97 at $3,282,558
(Collateralized by U.S. Treasury Note
6.000%, due 07/31/02;
Total Par $3,270,000).............................. $ 3,281,000
------------
Total Repurchase Agreement......................... 3,281,000
------------
(Cost $3,281,000)
Total Investments -98.61%......................................... 118,859,232
------------
(Cost $116,027,004)*
Net Other Assets and Liabilities - 1.39%.......................... 1,672,945
------------
Net Assets - 100.00%.............................................. $120,532,177
============
</TABLE>
- ---------------------------------------------
* Aggregage cost for Federal income tax purposes is $116,027,004.
Gross unrealized appreciation $ 2,932,363
Gross unrealized (depreciation) (100,135)
------------
Net unrealized appreciation $ 2,832,228
============
(A) Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold, in transactions exempt from
registration, to qualified institutional buyers. At October 31, 1997,
these securities amounted to $12,832,096 or 10.65% of net assets.
CMO Collateralized Mortgage Obligation
MTN Medium Term Note
REIT Real Estate Investment Trust
Portfolio Composition (Mood's Ratings)
- ---------------------
Repurchase Agreement 3%
U.S. Government Obligations 25%
U.S. Government Agency Obligations 22%
Government Trust Certificates 1%
Aaa 3%
AA 3%
A 14%
Baa 13%
Ba 13%
B 1%
NR 2%
----
100%
====
See accompanying Notes to Financial Statements.
24
<PAGE> 144
CT&T Funds
Chicago Trust Municipal Bond Fund
Schedule of Investments October 31, 1997
================================================================================
<TABLE>
<CAPTION>
Market
Par Value Value
- --------- -----
<S> <C>
MUNICIPAL SECURITIES - 97.45%
Arizona - 8.53%
$ 350,000 Mohave County, IDA
6.000%, 07/01/00...................................... $ 366,569
450,000 Salt River Project Electric System Revenue
Refunding, Series A
5.500%, 01/01/05...................................... 477,842
200,000 Tucson, Arizona Water Revenue
5.400%, 07/01/05...................................... 211,152
----------
1,055,563
----------
California - 2.07%
250,000 California State
5.250%, 10/01/10...................................... 256,250
----------
Florida - 2.21%
265,000 Dade County, Florida State School District, G.O.
5.000%, 07/15/02
Insured: MBIA......................................... 273,949
----------
Georgia - 4.14%
250,000 State of Georgia, Series A, G.O.
6.100%, 03/01/05...................................... 276,045
200,000 State of Georgia, Series D, G.O.
6.700%, 08/01/09...................................... 235,980
----------
512,025
----------
Illinois - 8.21%
250,000 Chicago, Illinois Metropolitan Water
Reclamation, G.O.
6.600%, 01/01/02...................................... 271,903
475,000 Cook County, Illinois Series B, G.O.
4.700%, 11/15/01
Insured: MBIA......................................... 484,614
250,000 State of Illinois, G.O.
5.150%, 09/01/02
Insured: FGIC......................................... 259,390
----------
1,015,907
----------
Maryland - 2.03%
250,000 University of Maryland Revenue, Series B
Auxiliary Facilities and Tuition Revenue
5.400%, 04/01/98...................................... 251,718
----------
Michigan - 5.92%
250,000 Lanse Creuse Public Schools
5.000%, 05/01/03...................................... 258,368
200,000 Rochester Community School District
4.550%, 05/01/04...................................... 201,006
260,000 Utica Community Schools
5.375%, 05/01/04...................................... 273,296
----------
732,670
----------
Minnesota - 2.01%
245,000 St. Paul Housing Finance Board Revenue
5.050%, 11/01/07...................................... 249,236
----------
Nevada - 3.12%
350,000 Clark County, Nevada School District, G.O.
6.400%, 06/15/06...................................... 386,547
Insured: FGIC ----------
New Jersey - 7.24%
295,000 Camden County
Municipal Utilities Authority Revenue
6.000%, 07/15/04...................................... 321,237
350,000 State of New Jersey Transportation
Trust Fund Revenue, Series A,
Escrowed to Maturity
5.200%, 12/15/00
Insured: AMBAC........................................ 362,289
200,000 State of New Jersey, Series D, G.O.
5.500%, 02/15/04...................................... 212,296
----------
895,822
----------
New York - 6.27%
250,000 Municipal Assistance Corporation
4.500%, 07/01/01...................................... 252,850
250,000 New York City Transitional Finance
Authority Revenue
5.500%, 08/15/08...................................... 266,103
250,000 New York State Dormitory Authority
Revenue, Series C
5.100%, 05/15/03...................................... 257,463
----------
776,416
----------
Ohio - 1.67%
200,000 Ohio State Public Facilities Commission
(Higher Education), Series II-A
5.200%, 05/01/01
Insured: AMBAC........................................ 206,974
----------
Oklahoma - 2.93%
350,000 Tulsa, Oklahoma Metropolitan Utilities
Authority Revenue
5.500%, 07/01/00...................................... 362,506
----------
Oregon - 2.22%
250,000 Portland, Oregon Series A, G.O.
7.000%, 06/01/01...................................... 274,445
----------
</TABLE>
See accompanying Notes to Financial Statements.
25
<PAGE> 145
<TABLE>
<CAPTION>
CT&T Funds
Chicago Trust Municipal Bond Fund
Schedule of Investments-continued October 31, 1997
================================================================================
Market
Par Value Value
- --------- ------
<S> <C> <C>
Pennsylvania - 3.74%
$ 250,000 Commonwealth of Pennsylvania,
Green County, G.O.
5.100%, 06/15/03
Insured: MBIA..................................... $ 259,503
200,000 Commonwealth of Pennsylvania, G.O.
5.250%, 05/15/99
Insured: FGIC..................................... 204,052
------------
$ 463,555
------------
Puerto Rico - 3.59%
400,000 Commonwealth of Puerto Rico,
Series A, G.O.
6.500%, 07/01/03
Insured: MBIA..................................... 444,660
------------
Rhode Island - 2.38%
275,000 State of Rhode Island, Series A, G.O.
6.000%, 06/15/02
Insured: FGIC..................................... 294,751
------------
Texas - 10.30%
375,000 Arlington Independent School District,
Refunding, G.O.
5.400%, 02/15/99.................................. 382,050
210,000 Tarrant County Health Faciltities
Development Corp.
Health System Revenue, Series A
5.500%, 02/15/05.................................. 222,243
200,000 Texas State Public Finance Authority
Series A, G.O.
5.600%, 10/01/02.................................. 212,314
450,000 Texas State Water Development Board, G.O.
Escrowed to Maturity
5.000% 08/01/99................................... 458,537
------------
1,275,144
------------
Utah - 8.35%
300,000 Intermountain Power Agency
Power Supply Revenue
6.250%, 07/01/07.................................. 336,762
475,000 Jordan School District, Series A, G.O.
5.250%, 06/15/00.................................. 488,903
200,000 Utah State Building Ownership Authority
Lease Revenue, Series A
5.125%, 05/15/03.................................. 207,552
------------
1,033,217
------------
Virginia - 4.23%
250,000 Henrico County,Virginia
Industrial Redevelopment
Authority Revenue
5.300%, 12/01/11.................................. 258,808
250,000 Virigina State Public School
Authority Revenue
5.500%, 08/01/03.................................. 264,600
------------
523,408
------------
Washington - 4.12%
475,000 King County, Washington, Series A, G.O.
5.800%, 01/01/04.................................. 509,741
------------
Wisconsin - 2.17%
250,000 State of Wisconsin, Series A, G.O.
5.750%, 05/01/04.................................. 268,463
------------
Total Municipal Securities........................ $ 12,062,967
(Cost $11,743,478)................................ ------------
Shares
------
INVESTMENT COMPANIES - 0.51%
4,954 Goldman Sachs Tax Exempt Fund..................... 4,954
58,695 Provident Munifund................................ 58,695
------------
Total Investment Companies................. 63,649
(Cost $63,649) ------------
Total Investments - 97.96%......................................... 12,126,616
(Cost $11,807,127)* ------------
Net Other Assets and Liabilities - 2.04%........................... 252,592
------------
Net Assets - 100.00%............................................... $ 12,379,208
------------
- -------------------------------
* Aggregage cost for Federal income tax purposes is $11,807,127.
Gross unrealized appreciation $ 319,637
Gross unrealized (depreciation) (148)
-----------
Net unrealized appreciation $ 319,489
===========
AMBAC American Municipal Bond Assurance Corp.
FGIC Federal Guaranty Insurance Corp.
G.O. General Obligation
IDA Industrial Development Authority
MBIA Municipal Bond Insurance Association
Portfolio Composition (Moody's Ratings)
- ---------------------
Investment Companies 1%
Aaa 56%
Aa 33%
A 8%
NR 2%
----
100%
====
</TABLE>
See accompanying Notes to Financial Statements.
26
<PAGE> 146
<TABLE>
<CAPTION>
CT&T Funds
Chicago Trust Money Market Fund
Schedule of Investments October 31, 1997
================================================================================
Amortized
Par Value Cost
- --------- ---------
<S> <C> <C>
COMMERCIAL PAPER - 77.33%
$ 4,500,000 Beneficial Corp.
5.5520%, 11/03/97.................................. $ 4,500,000
4,500,000 Associates Corp. of North America
5.5530%, 11/04/97.................................. 4,500,000
4,500,000 Household Finance Corp.
5.5580%, 11/05/97.................................. 4,500,000
4,545,000 Chrysler Financial Corp.
5.5540%, 11/06/97(A)............................... 4,541,528
4,300,000 AVCO Financial Services, Inc.
5.5700%, 11/10/97.................................. 4,300,000
600,000 General Electric Capital Corp.
5.5710%, 11/12/97.................................. 600,000
3,900,000 Heller Financial, Inc.
5.6070%, 11/12/97.................................. 3,900,000
3,500,000 AVCO Financial Services, Inc.
5.5760%, 11/13/97.................................. 3,500,000
1,000,000 Prudential Funding Corp.
5.5100%, 11/13/97.................................. 1,000,000
4,500,000 Sears Roebuck Acceptance Corp.
5.5700%, 11/14/97.................................. 4,500,000
4,500,000 American Express Credit Corp.
5.5800%, 11/17/97.................................. 4,500,000
420,000 Prudential Funding Corp.
5.5000%, 11/18/97.................................. 420,000
3,090,000 Chrysler Financial Corp.
5.5200%, 11/18/97.................................. 3,081,945
1,034,124 Bank of America
5.5300%, 11/18/97.................................. 1,031,423
4,500,000 General Motors Acceptance Corp.
5.5860%, 11/19/97.................................. 4,500,000
3,500,000 Norwest Financial, Inc.
5.6040%, 11/20/97.................................. 3,500,000
1,000,000 American Express Credit Corp.
5.5830%, 11/20/97.................................. 1,000,000
3,500,000 General Motors Acceptance Corp.
5.5829%, 11/21/97.................................. 3,500,000
4,560,000 Chrysler Financial Corp.
5.5850%, 11/21/97(A)............................... 4,546,042
4,500,000 Commercial Credit Co.
5.5570%, 11/24/97.................................. 4,500,000
4,500,000 Heller Financial, Inc.
5.6370%, 11/25/97.................................. 4,500,000
4,500,000 AVCO Financial Services, Inc.
5.5910%, 11/26/97.................................. 4,500,000
2,500,000 First National Bank of Chicago
5.5000%, 12/01/97(A)............................... 2,488,542
2,000,000 American Express Credit Corp.
5.5568%, 12/01/97.................................. 2,000,000
4,500,000 IBM Credit Corp.,
5.5420%, 12/02/97.................................. 4,500,000
4,500,000 Beneficial Corp.
5.5585%, 12/03/97.................................. 4,500,000
4,500,000 Household Finance Corp.
5.5288%, 12/04/97.................................. 4,500,000
4,500,000 Prudential Funding Corp.
5.5381%, 12/05/97.................................. 4,500,000
4,500,000 Commercial Credit Co.
5.5296%, 12/08/97.................................. 4,500,000
4,550,000 Southern California Edison
5.5650%, 12/09/97(A)............................... 4,523,585
4,500,000 CIT Group Holdings
5.5279%, 12/10/97.................................. 4,500,000
4,500,000 CIT Group Holdings
5.5271%, 12/11/97.................................. 4,500,000
3,000,000 American General Finance
5.5271%, 12/12/97.................................. 3,000,000
1,500,000 General Electric Capital Corp.
5.5440%, 12/12/97.................................. 1,500,000
2,122,117 Bank of America
5.5100%, 12/15/97(A)............................... 2,107,825
3,300,000 Associates Corp. of North America
5.5760%, 12/15/97.................................. 3,300,000
1,419,364 Bank of America
5.5100%, 12/16/97(A)............................... 1,409,588
3,000,000 Sears Roebuck Acceptance Corp.
5.5697%, 12/16/97.................................. 3,000,000
4,500,000 Prudential Funding Corp.
5.5576%, 12/17/97.................................. 4,500,000
1,200,000 Prudential Funding Corp.
5.5680%, 12/18/97.................................. 1,200,000
400,000 General Electric Capital Corp.
5.5500%, 12/19/97.................................. 400,000
4,100,000 General Motors Acceptance Corp.
5.5722%, 12/19/97.................................. 4,100,000
4,500,000 American General Finance
5.5407%, 12/22/97.................................. 4,500,000
2,000,000 CIT Group Holdings
5.5706%, 12/23/97.................................. 2,000,000
2,500,000 Beneficial Corp.
5.5808%, 12/23/97.................................. 2,500,000
4,500,000 Sears Roebuck Acceptance Corp.
5.5732%, 12/24/97.................................. 4,500,000
4,100,000 American Express Credit Corp.
5.5713%, 12/31/97.................................. 4,100,000
400,000 General Electric Capital Corp.
5.5603%, 12/31/97.................................. 400,000
1,000,000 Commercial Credit Co.
5.6376%, 01/05/98.................................. 1,000,000
3,700,000 Associates Corp. of America
5.6478%, 01/05/98.................................. 3,700,000
4,100,000 General Electric Capital Corp.
5.5807%, 01/09/98.................................. 4,100,000
</TABLE>
See accompanying Notes to Financial Statements.
27
<PAGE> 147
<TABLE>
<CAPTION>
CT&T Funds
Chicago Trust Money Market Fund
Schedule of Investments-continued October 31, 1997
================================================================================
Amortized
Par Value Cost
- --------- ----
<S> <C> <C>
$ 400,000 CIT Group Holdings
5.6113%, 01/09/98....................... $ 400,000
4,500,000 John Deere Capital Corp.
5.6184%, 01/15/98....................... 4,500,000
4,500,000 General Electric Capital Corp.
5.6741%, 01/15/98....................... 4,500,000
4,500,000 Norwest Financial, Inc.
5.6647%, 01/22/98....................... 4,500,000
3,300,000 Heller Financial, Inc.
5.7067%, 01/22/98....................... 3,300,000
-------------
Total Commercial Paper.................. 184,450,478
(Cost $184,450,478) -------------
CERTIFICATES OF DEPOSIT - 5.16%
4,500,000 Old Kent Bank
5.5000%, 11/07/97....................... 4,500,000
3,300,000 Old Kent Bank
5.5600%, 12/18/97....................... 3,300,000
4,500,000 Old Kent Bank
5.5700%, 12/26/97....................... 4,500,000
-------------
Total Certificates of Deposit........... 12,300,000
(Cost $12,300,000) -------------
GIC WITHIN FUNDING AGREEMENT - 4.19%
10,000,000 Allstate Life Funding Agreement GIC
5.7575%, 12/01/97....................... 10,000,000
-------------
Total GIC Within
Funding Agreement....................... 10,000,000
(Cost $10,000,000) -------------
TIME DEPOSITS - 3.77%
$ 4,500,000 Canadian Imperial Bank of Commerce
5.5400%, 12/30/97....................... $ 4,500,000
4,500,000 Canadian Imperial Bank of Commerce
5.5600%, 12/29/97....................... 4,500,000
-------------
Total Time Deposits..................... 9,000,000
(Cost $9,000,000) -------------
REPURCHASE AGREEMENT - 9.52%
22,718,000 First Chicago,
5.6600%, dated 10/31/97 to be repurchased
on 11/03/97 at $22,728,715
(Collateralized by U.S. Treasury Note
8.500%, due 11/15/00;
Total Par $20,785,000).................. 22,718,000
------------
Total Repurchase Agreement.............. 22,718,000
(Cost $22,718,000) ------------
Total Investments - 99.97%...................................... 238,468,478**
------------
Net Other Assets and Liabilities -0.03%......................... 82,996
------------
Net Assets - 100.00%............................................ $238,551,474
</TABLE> ============
- ---------------------------
(A) Annualized yield at time of purchase
** At October 31, 1997 cost is idenitical for book and Federal income tax
purposes.
See accompanying Notes to Financial Statements.
28
<PAGE> 148
CT&T Funds
Statement of Assets and Liabilities OCTOBER 31, 1997
================================================================================
<TABLE>
<CAPTION>
Chicago Trust
Montag & Caldwell Growth & Income Chicago Trust Chicago Trust
Growth Fund Fund Talon Fund Balanced Fund
----------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
ASSETS:
Investments:
Investments at cost.......... $606,867,247 $182,870,419 $24,636,650 $141,457,686
Repurchase agreements........ -- 10,017,000 -- 11,933,000
Net unrealized appreciation.. 147,140,836 77,036,253 4,128,506 33,598,179
------------ ------------ ----------- ------------
Total investments at value... 754,008,083 269,923,672 28,765,156 186,988,865
Cash.......................... 234 1,399 231 --
Receivables:
Dividends and interest....... 502,350 37,066 88,732 1,193,984
Fund shares sold............. 3,895,259 471,113 5,073 263,527
Investments sold............. -- 4,672,930 -- --
Due from Advisor, net........ -- -- -- --
Deferred organization costs... 6,670 5,574 6,277 4,036
Other assets.................. 10,220 31,068 6,158 1,244
------------ ------------ ----------- ------------
Total assets................ 758,422,816 275,142,822 28,871,627 188,451,656
------------ ------------ ----------- ------------
LIABILITIES:
Payables:
Bank overdraft............... -- -- -- 24,283
Dividend distribution........ -- -- -- --
Investments purchased........ 8,311,553 -- 359,975 --
Fund shares redeemed......... 791,859 78,981 -- 90,857
Due to Advisor, net.......... 517,213 167,934 12,747 113,036
Distribution fees............ 130,197 221,436 17,630 180,966
Accrued expenses.............. 253,828 66,564 21,692 49,177
------------ ------------ ----------- ------------
Total liabilities........... 10,004,650 534,915 412,044 458,319
------------ ------------ ----------- ------------
NET ASSETS..................... $748,418,166 $274,607,907 $28,459,583 $187,993,337
============ ============ =========== ============
NET ASSETS consist of:
Capital paid-in............... $593,853,104 $178,423,017 $19,796,414 $142,370,306
Accumulated undistributed
(distribution in excess of)
net investment income (loss). -- -- 37,253 624,636
Accumulated net realized gain
(loss) on investments........ 7,424,226 19,148,637 4,497,410 11,400,216
Net unrealized appreciation
on investments............... 147,140,836 77,036,253 4,128,506 33,598,179
------------ ------------ ----------- ------------
TOTAL NET ASSETS............... $748,418,166 $274,607,907 $28,459,583 $187,993,337
============ ============ =========== ============
Shares of beneficial interest
outstanding................... 32,959,072 13,917,656 1,617,134 16,999,608
NET ASSET VALUE
Offering and redemption price
per share (Net Assets/Shares
outstanding)................. (A) $ 19.73 $ 17.60 $ 11.06
============ ============ =========== ============
</TABLE>
<TABLE>
<CAPTION>
Chicago Trust Chicago Trust
Montag & Caldwell Chicago Trust Municipal Bond Money Market
Balanced Fund Bond Fund Fund Fund
----------------- --------------- -------------- -------------
<S> <S> <C> <C> <C>
ASSETS:
Investments:
Investments at cost.......... $ 71,040,168 $ 112,746,004 $ 11,807,127 $ 215,750,478
Repurchase agreements........ -- 3,281,000 -- 22,718,000
Net unrealized appreciation.. 11,544,063 2,832,228 319,489 --
----------------- --------------- -------------- -------------
Total investments at value... 82,584,231 118,859,232 12,126,616 238,468,478
Cash.......................... -- 7,486 417 --
Receivables:
Dividends and interest....... 589,290 1,755,024 202,811 1,054,958
Fund shares sold............. 206,223 117,111 100,098 168,650
Investments sold............. 355 -- -- --
Due from Advisor, net........ -- -- 105 --
Deferred organization costs... 6,670 5,574 5,574 5,574
Other assets.................. 1,356 1,152 26,647 12,392
----------------- --------------- -------------- -------------
Total assets................ 83,388,125 120,745,579 12,462,268 239,710,052
----------------- --------------- -------------- -------------
LIABILITIES:
Payables:
Bank overdraft............... 397 -- -- 652
Dividend distribution........ 1,345 -- -- 1,029,742
Investments purchased........ 577,478 -- -- --
Fund shares redeemed......... 3,677 3,552 -- 13,230
Due to Advisor, net.......... 52,295 38,587 -- 77,330
Distribution fees............ 2,808 142,791 43,249 --
Accrued expenses.............. 31,072 28,472 39,811 37,624
----------------- --------------- -------------- -------------
Total liabilities........... 669,072 213,402 83,060 1,158,578
----------------- --------------- -------------- -------------
NET ASSETS..................... $ 82,719,053 $ 120,532,177 $ 12,379,208 $ 238,551,474
================= =============== =============== =============
NET ASSETS consist of:
Capital paid-in............... $ 68,927,242 $ 117,272,641 $ 12,123,373 $ 238,551,474
Accumulated undistributed
(distribution in excess of)
net investment income (loss). 185,563 452,597 27,456 --
Accumulated net realized gain
(loss) on investments........ 2,062,185 (25,289) (91,110) --
Net unrealized appreciation
on investments............... 11,544,063 2,832,228 319,489 --
----------------- --------------- --------------- -------------
TOTAL NET ASSETS............... $ 82,719,053 $ 120,532,177 $ 12,379,208 $ 238,551,474
================= =============== =============== =============
Shares of beneficial interest
outstanding................... 5,167,798 11,894,302 1,215,334 238,551,474
NET ASSET VALUE
Offering and redemption price
per share (Net Assets/Shares
outstanding)................. $ 16.01 $ 10.13 $ 10.19 $ 1.00
================= =============== ============== =============
</TABLE>
- ------------------------
(A) Montag & Caldwell Growth Fund Class N (Retail):
Net Asset Value, offering price and redemption price per share (Based on net
assets of $479,557,025 and 21,142,111 shares issued and outstanding) $22.68
Montag & Caldwell Growth Fund Class I (Institutional):
Net Asset Value, offering price and redemption price per share (Based on net
assets of $268,861,141 and 11,816,961 shares issued and outstanding) $22.75
See accompanying Notes to Financial Statements.
29
<PAGE> 149
CT&T Funds
Statement of Operations
For the Year Ended October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CHICAGO TRUST
MONTAG & CALDWELL GROWTH & INCOME CHICAGO TRUST CHICAGO TRUST
GROWTH FUND FUND TALON FUND BALANCED FUND
----------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends................................................ $ 3,062,695 $ 2,616,520 $ 93,313 $ 1,115,889
Interest................................................. 1,035,399 1,054,079 366,033 5,603,622
------------ ----------- ---------- -----------
Total Investment Income................................ 4,098,094 3,670,599 459,346 6,719,511
------------ ----------- ---------- -----------
EXPENSES:
Investment advisory fees................................. 3,800,124 1,734,260 182,742 1,228,508
Distribution expenses.................................... 836,514 619,130 57,092 438,574
Transfer agent fees...................................... 167,566 98,959 53,658 33,312
Administration fees...................................... 242,224 121,926 11,675 85,382
Accounting fees.......................................... 66,037 49,168 18,045 47,067
Registration expenses.................................... 209,681 14,322 10,503 12,499
Custodian fees........................................... 47,481 32,124 13,857 30,396
Professional fees........................................ 48,246 26,954 11,515 22,630
Amortization of organization costs....................... 3,332 4,997 3,332 1,401
Report to shareholder expense............................ 33,756 12,666 1,194 8,709
Trustees fees............................................ 2,703 2,703 2,703 2,703
Other expenses........................................... 8,943 64,777 15,911 66,970
------------ ----------- ---------- -----------
Total expenses......................................... 5,466,607 2,781,986 382,227 1,978,151
------------ ----------- ---------- -----------
Expenses reimbursed.................................... (41,428) (129,857) (85,596) (102,203)
------------ ----------- ---------- -----------
Net expenses........................................... 5,425,179 2,652,129 296,631 1,875,948
------------ ----------- ---------- -----------
NET INVESTMENT INCOME (LOSS).............................. (1,327,085) 1,018,470 162,715 4,843,563
------------ ----------- ---------- -----------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments (including
a net realized (loss) on option transactions of
($169,276) in the Talon Fund)............................ 8,570,687 19,177,699 4,497,850 11,378,927
Net change in unrealized appreciation
on investments (including a net
unrealized appreciation on option transactions of
$137,375 in the Talon Fund).............................. 114,427,550 33,416,450 1,618,377 15,462,457
------------ ----------- ---------- -----------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS...................................... 122,998,237 52,594,149 6,116,227 26,841,384
------------ ----------- ---------- -----------
NET INCREASE IN NET
ASSETS FROM OPERATIONS................................... $121,671,152 $53,612,619 $6,278,942 $31,684,947
============ =========== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
Chicago Trust Chicago Trust
Montag & Caldwell Chicago Trust Municipal Bond Money Market
Balanced Fund Bond Fund Fund Fund
----------------- ------------- -------------- -------------
<S> <S> <C> <C> <C>
INVESTMENT INCOME:
Dividends.......................................... $ 219,468 $ -- $ -- $ --
Interest........................................... 1,399,409 7,043,490 534,204 13,958,204
----------------- ------------- -------------- -------------
Total Investment Income.......................... 1,618,877 7,043,490 534,204 13,958,204
----------------- ------------- -------------- -------------
EXPENSES:
Investment advisory fees........................... 400,868 550,514 69,127 1,004,607
Distribution expenses.............................. 131,861 247,590 28,790 --
Transfer agent fees................................ 47,730 42,264 23,435 54,844
Administration fees................................ 27,230 49,334 5,686 121,794
Accounting fees.................................... 29,879 42,584 17,743 52,303
Registration expenses.............................. 22,362 18,235 6,333 10,426
Custodian fees..................................... 17,386 23,135 7,512 39,465
Professional fees.................................. 14,288 17,723 11,566 27,534
Amortization of organization costs................. 3,332 4,997 4,997 4,997
Report to shareholder expense...................... 3,041 5,111 559 12,374
Trustees fees...................................... 2,703 2,703 2,703 2,703
Other expenses..................................... 10,466 17,298 10,533 68,479
----------------- ------------- -------------- -------------
Total expenses................................... 711,146 1,021,488 188,984 1,399,526
----------------- ------------- -------------- -------------
Expenses reimbursed.............................. (44,973) (221,539) (85,359) (142,332)
----------------- ------------- -------------- -------------
Net expenses..................................... 666,173 799,949 103,625 1,257,194
----------------- ------------- -------------- -------------
NET INVESTMENT INCOME (LOSS)........................ 952,704 6,243,541 430,579 12,701,010
----------------- ------------- -------------- -------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments (including
a net realized (loss) on option transactions of
($169,276) in the Talon Fund)...................... 2,102,297 (36,729) 6,147 --
Net change in unrealized appreciation
on investments (including a net
unrealized appreciation on option transactions of
$137,375 in the Talon Fund)........................ 7,581,239 2,754,254 140,720 --
----------------- ------------- -------------- -------------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS................................ 9,683,536 2,717,525 146,867 --
----------------- ------------- -------------- -------------
NET INCREASE IN NET
ASSETS FROM OPERATIONS............................. $ 10,636,240 $ 8,961,066 $ 577,446 $ 12,701,010
================= ============= ============== =============
</TABLE>
See accompanying Notes to Financial Statements.
30
<PAGE> 150
<TABLE>
<CAPTION>
CT&T FUNDS
Statement of Changes in Net Assets
====================================================================================================================================
Montag & Caldwell Growth Fund Chicago Trust Growth & Income Fund
----------------------------- ----------------------------------
Year Ended Year Ended
October 31, 1997 October 31, 1996* October 31, 1997 October 31, 1996
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
NET ASSETS at beginning of period................. $ 218,649,895 $ 40,355,049 $205,133,317 $172,295,705
------------- ------------ ------------ ------------
Increase in net asset
from operations:
Net investment income (loss).................... (1,327,085) (28,035) 1,018,470 1,451,728
Net realized gain on investments sold
and purchased options transactions............. 8,570,687 2,171,050 19,177,699 4,305,113
Net change in unrealized appreciation
on investments and assets
and liabilities in purchased options........... 114,427,550 26,825,183 33,416,450 39,311,048
------------- ------------ ------------ ------------
Net increase in net assets
from operations................................ 121,671,152 28,968,198 53,612,619 45,067,889
------------- ------------ ------------ ------------
Distributions to shareowners from:
Net investment income:
Retail Class................................. -- (28,975) (1,152,026) (1,444,903)
Institutional Class.......................... (26,630) (45,883) -- --
Net realized gain on investments:
Retail Class................................. (1,466,613) (24,401) (4,334,020) (976,557)
Institutional Class.......................... (412,803) -- -- --
------------- ------------ ------------ ------------
Total distributions.......................... (1,906,046) (99,259) (5,486,046) (2,421,460)
------------- ------------ ------------ ------------
Capital share transactions:
Net proceeds from sales of shares:
Retail Class................................. 339,687,434 118,083,887 50,803,893 43,023,005
Institutional Class.......................... 228,296,239 51,795,147 -- --
Issued to shareowners in reinvestment
of distributions:
Retail Class................................. 1,404,998 53,046 5,404,887 2,391,580
Institutional Class.......................... 396,515 45,883 -- --
Cost of shares repurchased:
Retail Class................................. (115,055,486) (16,878,640) (34,860,763) (55,223,402)
Institutional Class.......................... (44,726,535) (3,673,416) -- --
------------- ------------ ------------ ------------
Net increase (decrease) from capital
share transactions........................ 410,003,165 149,425,907 21,348,017 (9,808,817)
------------- ------------ ------------ ------------
Total increase in net assets............... 529,768,271 178,294,846 69,474,590 32,837,612
------------- ------------ ------------ ------------
NET ASSETS at end of period (including line A).... $ 748,418,166 $218,649,895 $274,607,907 $205,133,317
============= ============ ============ ============
(A) Undistributed (distribution in excess of)
net investment income (loss).................. $ -- $ (73,703) $ -- $ 133,556
------------- ------------ ------------ ------------
OTHER INFORMATION:
Share transactions:
Retail Class:
Sold......................................... 16,692,907 7,779,869 2,806,114 2,994,709
Issued to shareowners in reinvestment
of distributions............................ 79,785 3,770 326,567 170,324
Repurchased.................................. (5,364,133) (1,115,729) (1,902,988) (3,829,976)
Institutional Class:
Sold......................................... 10,833,116 3,302,194 -- --
Issued to shareowners in reinvestment
of distributions............................ 22,316 2,812 -- --
Repurchased.................................. (2,106,489) (236,988) -- --
------------- ------------ ------------ ------------
Net increase (decrease) in shares
outstanding.............................. 20,157,502 9,735,928 1,229,693 (664,943)
============= ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
====================================================================================================================================
CHICAGO TRUST TALON FUND CHICAGO TRUST BALANCED FUND
---------------------------------- ---------------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, 1997 OCTOBER 31, 1996 OCTOBER 31, 1997 OCTOBER 31, 1996
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
NET ASSETS at beginning of period................. $ 17,417,675 $ 10,537,854 $ 156,703,443 $ 152,820,466
--------------- ---------------- ---------------- ----------------
Increase in net asset
from operations:
Net investment income (loss).................... 162,715 42,177 4,843,563 4,547,650
Net realized gain on investments sold
and purchased options transactions............. 4,497,850 1,453,661 11,378,927 2,227,691
Net change in unrealized appreciation
on investments and assets
and liabilities in purchased options........... 1,618,377 1,649,993 15,462,457 17,768,218
--------------- ---------------- ---------------- ----------------
Net increase in net assets
from operations................................ 6,278,942 3,145,831 31,684,947 24,543,559
--------------- ---------------- ---------------- ----------------
Distributions to shareowners from:
Net investment income:
Retail Class................................. (134,407) (35,795) (4,764,936) (4,421,473)
Institutional Class.......................... -- -- -- --
Net realized gain on investments:
Retail Class................................. (1,458,660) (634,240) (2,253,139) (7,294)
Institutional Class.......................... -- -- -- --
--------------- ---------------- ---------------- ----------------
Total distributions.......................... (1,593,067) (670,035) (7,018,075) (4,428,767)
--------------- ---------------- ---------------- ----------------
Capital share transactions:
Net proceeds from sales of shares:
Retail Class................................. 6,345,104 4,424,049 28,395,564 26,178,729
Institutional Class.......................... -- -- -- --
Issued to shareowners in reinvestment
of distributions:
Retail Class................................. 1,577,255 662,762 7,017,789 4,428,767
Institutional Class.......................... -- -- -- --
Cost of shares repurchased:
Retail Class................................. (1,566,326) (682,786) (28,790,331) (46,839,311)
Institutional Class.......................... -- -- -- --
--------------- ---------------- ---------------- ----------------
Net increase (decrease) from capital
share transactions........................ $ 6,356,033 4,404,025 6,623,022 (16,231,815)
--------------- ---------------- ---------------- ----------------
Total increase in net assets............... 11,041,908 6,879,821 31,289,894 3,882,977
--------------- ---------------- ---------------- ----------------
NET ASSETS at end of period (including line A).... $ 28,459,583 $ 17,417,675 $ 187,993,337 $ 156,703,443
=============== ================ ================ ================
(A) Undistributed (distribution in excess of)
net investment income (loss).................. 37,253 $ 8,945 $ 624,636 $ 567,503
--------------- ---------------- ---------------- ----------------
OTHER INFORMATION:
Share transactions:
Retail Class:
Sold......................................... 397,032 336,046 2,757,711 2,932,312
Issued to shareowners in reinvestment
of distributions............................ 107,919 55,106 699,716 495,015
Repurchased.................................. (97,875) (54,225) (2,774,505) (5,245,177)
Institutional Class:
Sold......................................... -- -- -- --
Issued to shareowners in reinvestment
of distributions............................ -- -- -- --
Repurchased.................................. -- -- -- --
Net increase (decrease) in shares
outstanding.............................. 407,076 336,927 682,922 (1,817,850)
=============== ================ ================ ================
</TABLE>
- --------------------------------------------------------------------------------
* Montag & Caldwell Growth Fund Institutional Class commenced investment
operations on June 28, 1996.
See accompanying Notes to Financial Statements.
31
<PAGE> 151
<TABLE>
<CAPTION>
CT&T Funds
Statement of Changes in Net Assets (continued) OCTOBER 31, 1997
====================================================================================================================================
Montag & Caldwell Balanced Fund Chicago Trust Bond Fund
----------------------------------- -----------------------------------
Year Ended Year Ended
October 31, 1997 October 31, 1996 October 31, 1997 October 31, 1996
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
NET ASSETS at beginning of period.................... $ 31,472,671 $ 21,908,174 $ 79,210,728 $ 70,490,335
---------------- ---------------- ---------------- ---------------
Increase in net assets
from operations:
Net investment income.............................. 952,704 562,623 6,243,541 4,684,008
Net realized gain (loss) on investments sold....... 2,102,297 2,720,967 (36,729) (21,824)
Net change in unrealized appreciation
(depreciation) of investments..................... 7,581,239 1,750,771 2,754,254 (427,461)
---------------- ---------------- ---------------- ---------------
Net increase in net assets
from operations................................... 10,636,240 5,034,361 8,961,066 4,234,723
---------------- ---------------- ---------------- ---------------
Distributions to shareowners from:
Net investment income.............................. (837,377) (544,785) (6,043,358) (4,576,113)
Net realized gain on investments................... (2,702,590) -- (16,748) (26,301)
---------------- ---------------- ---------------- ---------------
Total distributions............................. (3,539,967) (544,785) (6,060,106) (4,602,414)
---------------- ---------------- ---------------- ---------------
Capital share transactions:
Net proceeds from sales of shares.................. 58,631,470 17,019,049 46,817,358 18,394,655
Issued to shareowners in
reinvestment of distributions..................... 3,490,623 544,624 4,797,389 4,131,546
Cost of shares repurchased......................... (17,971,984) (12,488,752) (13,194,258) (13,438,117)
---------------- ---------------- ---------------- ---------------
Net increase (decrease) from
capital share transactions..................... 44,150,109 5,074,921 38,420,489 9,088,084
---------------- ---------------- ---------------- ---------------
Total increase (decrease) in net assets......... 51,246,382 9,564,497 41,321,449 8,720,393
---------------- ---------------- ---------------- ---------------
NET ASSETS at end of period (including line A)....... $ 82,719,053 $ 31,472,671 $ 120,532,177 $ 79,210,728
================ ================ ================ ===============
(A) Undistributed (distribution in excess of)
net investment income........................... $ 185,563 $ 70,787 $ 452,597 $ 258,643
---------------- ---------------- ---------------- ---------------
OTHER INFORMATION:
Share transactions:
Sold............................................... 3,939,135 1,269,601 4,734,805 1,866,993
Issued to shareowners in reinvestment
of distributions.................................. 255,726 41,681 485,679 422,144
Repurchased........................................ (1,229,194) (916,526) (1,334,065) (1,373,273)
---------------- ---------------- ---------------- ---------------
Net increase (decrease) in shares outstanding... 2,965,667 394,756 3,886,419 915,864
================ ================ ================ ===============
</TABLE>
<TABLE>
<CAPTION>
====================================================================================================================================
CHICAGO TRUST MUNICIPAL BOND FUND CHICAGO TRUST MONEY MARKET FUND
------------------------------------ -----------------------------------
YEAR ENDED YEAR ENDED
OCTOBER 31, 1997 OCTOBER 31, 1996 OCTOBER 31, 1997 OCTOBER 31, 1996
---------------- ---------------- ---------------- ----------------
<S> <S> <C> <C> <C>
NET ASSETS at beginning of period................... $ 11,186,162 $ 11,679,498 $ 226,535,616 $ 206,075,314
------------- ------------- -------------- -------------
Increase in net assets
from operations:
Net investment income............................. 430,579 421,107 12,701,010 10,298,196
Net realized gain (loss) on investments sold...... 6,147 30,220 -- --
Net change in unrealized appreciation
(depreciation) of investments.................... 140,720 (54,373) -- --
------------- ------------- -------------- -------------
Net increase in net assets
from operations.................................. 577,446 396,954 12,701,010 10,298,196
------------- ------------- -------------- -------------
Distributions to shareowners from:
Net investment income............................. (426,993) (419,021) (12,701,010) (10,298,196)
Net realized gain on investments.................. -- -- -- --
------------- ------------- -------------- -------------
Total distributions............................ (426,993) (419,021) (12,701,010) (10,298,196)
------------- ------------- -------------- -------------
Capital share transactions:
Net proceeds from sales of shares................. 1,375,126 394,557 569,551,234 494,444,216
Issued to shareowners in
reinvestment of distributions.................... 21,748 22,047 434,377 331,446
Cost of shares repurchased........................ (354,281) (887,873) (557,969,753) (474,315,360)
------------- ------------- -------------- -------------
Net increase (decrease) from
capital share transactions.................... 1,042,593 (471,269) 12,015,858 20,460,302
------------- ------------- -------------- -------------
Total increase (decrease) in net assets........ 1,193,046 (493,336) 12,015,858 20,460,302
------------- ------------- -------------- -------------
NET ASSETS at end of period (including line A)...... $ 12,379,208 $ 11,186,162 $ 238,551,474 $ 226,535,616
============= ============= ============== =============
(A) Undistributed (distribution in excess of)
net investment income.......................... $ 27,456 $ 23,870 $ -- $ --
------------- ------------- -------------- -------------
OTHER INFORMATION:
Share transactions:
Sold.............................................. 135,835 39,198 569,551,234 494,444,216
Issued to shareowners in reinvestment
of distributions................................. 2,159 2,203 434,377 331,446
Repurchased....................................... (35,025) (87,989) (557,969,753) (474,315,360)
------------- ------------- -------------- -------------
Net increase (decrease) in shares outstanding.. 102,969 (46,588) 12,015,858 20,460,302
============= ============= ============== =============
</TABLE>
See accompanying Notes to Financial Statements.
32
<PAGE> 152
<TABLE>
<CAPTION>
CT&T FUNDS
Financial Highlights October 31, 1997
=====================================================================================================================
Montag & Caldwell Growth Fund
-----------------------------------------------------------
Retail Class Institutional Class
----------------------------------- ----------------------
Year Year Period Year Period
Ended Ended Ended Ended Ended
10/31/97 10/31/96 10/31/95/(a)/ 10/31/97 10/31/96/(b)/
-------- -------- ------------- -------- -------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................. $ 17.08 $ 13.16 $ 10.00 $ 17.08 $ 15.59
Income from Investment Operations:
Net investment income (loss)....................... (0.05) -- 0.02 -- 0.02
Net realized and unrealized gain
on investments.................................... 5.79 3.93 3.16 5.81 1.49
-------- -------- ------- -------- --------
Total from investment operations.................. 5.74 3.93 3.18 5.81 1.51
-------- -------- ------- -------- --------
Less Distributions:
Distributions from and in excess
of net investment income.......................... -- (0.01) (0.02) -- (0.02)
Distributions from net realized
gain on investments............................... (0.14) -- -- (0.14) --
-------- -------- ------- -------- --------
Total distributions............................. (0.14) (0.01) (0.02) (0.14) (0.02)
-------- -------- ------- -------- --------
Net increase in net asset value...................... 5.60 3.92 3.16 5.67 1.49
-------- -------- ------- -------- --------
Net Asset Value, End of Period....................... $ 22.68 $ 17.08 $ 13.16 $ 22.75 $ 17.08
======== ======== ======= ======== ========
Total Return/1/...................................... 33.82% 29.91% 31.87% 34.26% 9.67%
Ratios/Supplemental Data:
Net Assets, End of Period (in 000's)................. $479,557 $166,243 $40,355 $268,861 $ 52,407
Ratios of expenses to average net assets:
Before reimbursement of expenses
by Advisor/2/...................................... 1.24% 1.32% 1.87% 0.93% 0.98%
After reimbursement of expenses
by Advisor/2/...................................... 1.23% 1.28% 1.30% 0.93% 0.98%
Ratios of net investment income to average net assets:
Before reimbursement of expenses
by Advisor/2/...................................... (0.38)% (0.10)% (0.36)% (0.07)% 0.17%
After reimbursement of expenses
by Advisor/2/...................................... (0.37)% (0.06)% 0.20% (0.06)% 0.17%
Portfolio Turnover................................... 18.65% 26.36% 34.46% 18.65% 26.36%
Average Commission Rate Paid......................... $ 0.0592 $ 0.0639 N/R $ 0.0592 $ 0.0639
</TABLE>
- -----------------------------------------------------------------------------
/1/ Not Annualized.
/2/ Annualized.
(a) Montag & Caldwell Growth Fund Retail Class commenced investment operations
on November 2, 1994.
(b) Montag & Caldwell Growth Fund Institutional Class commenced investment
operations on June 28, 1996.
N/R: Not required.
See accompanying Notes to Financial Statements.
33
<PAGE> 153
CT&T Funds
Financial Highlights October 31, 1997
================================================================================
<TABLE>
<CAPTION>
Chicago Trust Growth & Income Fund
-------------------------------------------------------------------
Year Year Year Period
Ended Ended Ended Ended
10/31/97 10/31/96 10/31/95 10/31/94/(a)/
-------- -------- -------- -------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.......................... $ 16.17 $ 12.90 $ 10.11 $ 10.00
-------- -------- -------- -----------
Income from Investment Operations:
Net investment income....................................... 0.08 0.11 0.09 0.07
Net realized and unrealized gain on investments............. 3.91 3.34 2.79 0.10
-------- -------- -------- -----------
Total from investment operations......................... 3.99 3.45 2.88 0.17
-------- -------- -------- -----------
Less Distributions:
Distributions from and in excess of net investment income... (0.09) (0.11) (0.09) (0.06)
Distributions from net realized gain on investments......... (0.34) (0.07) -- --
-------- -------- -------- -----------
Total distributions...................................... (0.43) (0.18) (0.09) (0.06)
-------- -------- -------- -----------
Net increase in net asset value............................... 3.56 3.27 2.79 0.11
-------- -------- -------- -----------
Net Asset Value, End of Period................................ $ 19.73 $ 16.17 $ 12.90 $ 10.11
======== ======== ======== ===========
Total Return/1/............................................... 25.16% 26.98% 28.66% 1.73%
Ratios/supplemental Data:
Net Assets, End of Period (in 000's).......................... $274,608 $205,133 $172,296 $ 12,282
Ratios of expenses to average net assets:
Before reimbursement of expenses by Advisor/2/............... 1.12% 1.15% 1.50% 2.21%
After reimbursement of expenses by Advisor/2/................ 1.07%/3/ 1.00% 1.09%/4/ 1.20%
Ratios of net investment income to average net assets:
Before reimbursement of expenses by Advisor/2/............... 0.36% 0.62% 0.33% (0.15)%
After reimbursement of expenses by Advisor/2/................ 0.41% 0.77% 0.74% 0.86%
Portfolio Turnover............................................ 30.58% 25.48% 9.00% 37.01%
Average Commission Rate Paid.................................. $ 0.0530 $ 0.0571 N/R N/R
</TABLE>
- ----------------------------------------------------------------------
/1/ Not Annualized.
/2/ Annualized.
/3/ The Advisor's expense reimbursement level, which affects the net expense
ratio, changed from 1.00% to 1.10% on February 28, 1997.
/4/ The Advisor's expense reimbursement level, which affects the net expense
ratio, changed from 1.20% to 1.00% on September 21, 1995.
(a) Chicago Trust Growth & Income Fund commenced investment operations on
December 13, 1993.
N/R: Not required.
See accompanying Notes to Financial Statements.
34
<PAGE> 154
CT&T Funds
Financial Highlights October 31, 1997
================================================================================
<TABLE>
<CAPTION>
Chicago Trust Talon Fund
-------------------------------------------------------------------
Year Year Year Period
Ended Ended Ended Ended
10/31/97 10/31/96 10/31/95 10/31/94/(a)/
-------- -------- -------- -------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.......................... $ 14.39 $ 12.07 $ 10.25 $ 10.00
-------- -------- -------- -----------
Income from Investment Operations:
Net investment income....................................... 0.11 0.04 0.09 0.02
Net realized and unrealized gain on investments
and options................................................. 4.38 3.01 1.84 0.23
-------- -------- -------- -----------
Total from investment operations......................... 4.49 3.05 1.93 0.25
-------- -------- -------- -----------
Less Distributions:
Distributions from and in excess of net investment income... (0.09) (0.03) (0.11) --
Distributions from net realized gain on investments......... (1.19) (0.70) -- --
-------- -------- -------- -----------
Total distributions...................................... (1.28) (0.73) (0.11) --
-------- -------- -------- -----------
Net increase in net asset value............................... 3.21 2.32 1.82 0.25
-------- -------- -------- -----------
Net Asset Value, End of Period................................ $ 17.60 $ 14.39 $ 12.07 $ 10.25
======== ======== ======== ===========
Total Return/1/............................................... 33.47% 26.51% 18.92% 2.50%
Ratios/Supplemental Data:
Net Assets, End of Period (in 000's).......................... $ 28,460 $ 17,418 $ 10,538 $ 4,355
Ratios of expenses to average net assets:
Before reimbursement of expenses by Advisor/2/............... 1.67% 1.98% 3.04% 7.82%
After reimbursement of expenses by Advisor/2/................ 1.30% 1.30% 1.30% 1.30%
Ratios of net investment income to average net assets:
Before reimbursement of expenses by Advisor/2/............... 0.34% (0.38)% (0.97)% (4.13)%
After reimbursement of expenses by Advisor/2/................ 0.71% 0.30% 0.77% 2.39%
Portfolio Turnover............................................ 112.72% 126.83% 229.43% 33.66%
Average Commission Rate Paid.................................. $ 0.0591 $ 0.0612 N/R N/R
</TABLE>
- ----------------------------------------------------------------------
/1/ Not Annualized.
/2/ Annualized.
(a) Chicago Trust Talon Fund commenced investment operations on
September 19, 1994.
N/R: Not required.
See accompanying Notes to Financial Statements.
35
<PAGE> 155
CT&T FUNDS
Financial Highlights October 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Chicago Trust Balanced Fund
---------------------------------------
Year Year Period
Ended Ended Ended
10/31/97 10/31/96 10/31/95/(a)/
-------- -------- -------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period......... $ 9.60 $ 8.43 $ 8.34
-------- -------- --------
Income from Investment Operations:
Net investment income.................... 0.28 0.27 0.03
Net realized and unrealized gain on
investments............................. 1.60 1.16 0.06
-------- -------- --------
Total from investment operations....... 1.88 1.43 0.09
-------- -------- --------
Less Distributions:
Distributions from and in excess of net
investment income....................... (0.28) (0.26) --
Distributions from net realized gain on
investments............................. (0.14) -- --
-------- -------- --------
Total distributions.................... (0.42) (0.26) --
-------- -------- --------
Net increase in net asset value.............. 1.46 1.17 0.09
-------- -------- --------
Net Asset Value, End of Period............... $ 11.06 $ 9.60 $ 8.43
======== ======== ========
Total return/1/.............................. 20.10% 17.21% 1.08%
Ratios/Supplemental Data:
Net Assets, End of Period (in 000's)......... $187,993 $156,703 $152,820
Ratios of expenses to average net assets:
Before reimbursement of expenses by
Advisor/2/................................ 1.13% 1.17% 1.19%
After reimbursement of expenses by
Advisor/2/................................ 1.07%/3/ 1.00% 1.00%
Ratios of net investment income to average
net assets:
Before reimbursement of expenses by
Advisor/2/................................ 2.70% 2.79% 2.56%
After reimbursement of expenses by
Advisor/2/................................ 2.76% 2.96% 2.73%
Portfolio Turnover........................... 34.69% 34.29% 0.72%
Average Commission Rate Paid................. $ 0.0576 $ 0.0596 N/R
</TABLE>
- ------------------------------------
/1/ Not Annualized.
/2/ Annualized.
/3/ The Advisor's expense reimbursement level, which affects the net
expense ratio, changed from 1.00% to 1.10% on February 28, 1997.
(a) Chicago Trust Balanced Fund (formerly the Chicago Trust Asset Allocation
Fund) commenced investment operations on September 21, 1995.
N/R: Not Required.
See accompanying Notes to Financial Statements.
36
<PAGE> 156
CT&T Funds
Financial Highlights October 31, 1997
================================================================================
<TABLE>
<CAPTION>
Montag & Caldwell Balanced Fund
----------------------------------------
Year Year Period
Ended Ended Ended
10/31/97 10/31/96 10/31/95/(a)/
-------- -------- -------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period........................... $ 14.29 $ 12.12 $ 10.00
------- ------- -------
Income from Investment Operations:
Net investment income....................................... 0.25 0.27 0.26
Net realized and unrealized gain on investments............. 2.93 2.17 2.09
------- ------- -------
Total from investment operations...................... 3.18 2.44 2.35
------- ------- -------
Less Distributions:
Distributions from and in excess of net investment income... (0.25) (0.27) (0.23)
Distributions from net realized gain on investments......... (1.21) -- --
------- ------- -------
Total distributions................................... (1.46) (0.27) (0.23)
------- ------- -------
Net increase in net asset value................................ 1.72 2.17 2.12
------- ------- -------
Net Asset Value, End of Period................................. $ 16.01 $ 14.29 $ 12.12
======= ======= =======
Total Return/1/................................................ 24.26% 20.37% 23.75%
Ratios/Supplemental Data:
Net Assets, End of Period (in 000's)........................... $82,719 $31,473 $21,908
Ratios of expenses to average net assets:
Before reimbursement of expenses by Advisor/2/............... 1.33% 1.58% 2.50%
After reimbursement of expenses by Advisor/2/................ 1.25% 1.25% 1.25%
Ratios of net investment income to average net assets:
Before reimbursement of expenses by Advisor/2/............... 1.70% 1.83% 1.38%
After reimbursement of expenses by Advisor/2/................ 1.78% 2.16% 2.63%
Portfolio Turnover............................................. 28.13% 43.58% 27.33%
Average Commission Rate Paid................................... $0.0591 $0.0644 N/R
- ----------------------------------------------------------
</TABLE>
/1/ Not Annualized.
/2/ Annualized.
(a) Montag & Caldwell Balanced Fund commenced investment operations on
November 2, 1994.
N/R: Not required.
See accompanying Notes to Financial Statements.
37
<PAGE> 157
CT&T Funds
Financial Highlights October 31, 1997
================================================================================
<TABLE>
<CAPTION>
Chicago Trust Bond Fund
--------------------------------------------------
Year Year Year Period
Ended Ended Ended Ended
10/31/97 10/31/96 10/31/95 10/31/94/(a)/
-------- -------- -------- -------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period....................... $ 9.89 $ 9.94 $ 9.21 $ 10.00
-------- ------- ------- -------
Income from Investment Operations:
Net investment income.................................. 0.61 0.60 0.60 0.50
Net realized and unrealized gain (loss) on investments. 0.23 (0.05) 0.73 (0.82)
-------- ------- ------- -------
Total from investment operations.................. 0.84 0.55 1.33 (0.32)
-------- ------- ------- -------
Less distributions from and in excess
of net investment income................................ (0.60) (0.60) (0.60) (0.47)
-------- ------- ------- -------
Net increase (decrease) in net asset value................. 0.24 (0.05) 0.73 (0.79)
-------- ------- ------- -------
Net Asset Value, End of Period............................. $ 10.13 $ 9.89 $ 9.94 $ 9.21
======== ======= ======= =======
Total Return/1/............................................ 8.84% 5.76% 14.89% (3.23)%
Ratios/Supplemental Data:
Net Assets, End of Period (in 000's)....................... $120,532 $79,211 $70,490 $12,546
Ratios of expenses to average net assets:
Before reimbursement of expenses by Advisor/2/........... 1.02% 1.10% 1.54% 2.02%
After reimbursement of expenses by Advisor/2/............ 0.80% 0.80% 0.80% 0.80%
Ratios of net investment income to average net assets:
Before reimbursement of expenses by Advisor/2/........... 6.02% 5.89% 5.78% 4.83%
After reimbursement of expenses by Advisor/2/............ 6.24% 6.19% 6.52% 6.05%
Portfolio Turnover......................................... 17.76% 41.75% 68.24% 20.73%
- ------------------------------------------------------------------
</TABLE>
/1/ Not Annualized.
/2/ Annualized.
(a) Chicago Trust Bond Fund commenced investment operations on December 13,
1993.
See accompanying Notes to Financial Statements.
38
<PAGE> 158
CT&T FUNDS
Financial Highlights October 31, 1997
===============================================================================
<TABLE>
<CAPTION>
Chicago Trust Municipal Bond Fund
-----------------------------------------------------
Year Year Year Period
Ended Ended Ended Ended
10/31/97 10/31/96 10/31/95 10/31/94/(a)/
--------- -------- -------- -------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period............................. $ 10.06 $ 10.08 $ 9.56 $ 10.00
--------- -------- -------- -------------
Income from Investment Operations:
Net investment income.......................................... 0.38 0.38 0.35 0.27
Net realized and unrealized gain (loss) on investments......... 0.12 (0.02) 0.52 (0.46)
--------- -------- -------- -------------
Total from investment operations............................ 0.50 0.36 0.87 (0.19)
--------- -------- -------- -------------
Less distributions from and in excess
of net investment income..................................... (0.37) (0.38) (0.35) (0.25)
--------- -------- -------- -------------
Net increase (decrease) in net asset value....................... 0.13 (0.02) 0.52 (0.44)
--------- -------- -------- -------------
Net Asset Value, End of Period................................... $ 10.19 $ 10.06 $ 10.08 $ 9.56
========= ======== ======== =============
Total Return/1/.................................................. 5.13% 3.59% 9.29% (1.92)%
Ratios/Supplemental Data:
Net Assets, End of Period (in 000's)............................. $ 12,379 $ 11,186 $ 11,679 $ 10,462
Ratios of expenses to average net assets:
Before reimbursement of expenses by Advisor/2/.................. 1.64% 1.53% 2.16% 2.09%
After reimbursement of expenses by Advisor/2/................... 0.90% 0.90% 0.90% 0.90%
Ratios of net investment income to average net assets:
Before reimbursement of expenses by Advisor/2/.................. 3.00% 3.11% 2.37% 1.90%
After reimbursement of expenses by Advisor/2/................... 3.74% 3.74% 3.63% 3.09%
Portfolio Turnover............................................... 16.19% 27.47% 42.81% 14.85%
</TABLE>
- -----------------------------------------------------------------
/1/ Not Annualized.
/2/ Annualized.
(a) Chicago Trust Municipal Bond Fund commenced investment operations
on December 13, 1993.
See accompanying Notes to Financial Statements.
39
<PAGE> 159
CT&T FUNDS
Financial Highlights October 31, 1997
===============================================================================
<TABLE>
<CAPTION>
Chicago Trust Money Market Fund
--------------------------------------------------
Year Year Year Period
Ended Ended Ended Ended
10/31/97 10/31/96 10/31/95 10/31/94/(a)/
-------- -------- -------- -------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........................ $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------------
Income from Investment Operations:
Net investment income..................................... 0.05 0.05 0.05 0.03
-------- -------- -------- -------------
Less Distributions from net investment income.............. (0.05) (0.05) (0.05) (0.03)
-------- -------- -------- -------------
Net Asset Value, End of Period.............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== =============
Total Return/1/............................................. 5.15% 5.14% 5.56% 3.20%
Ratios/Supplemental Data:
Net Assets, End of Period (in 000's)........................ $238,551 $226,536 $206,075 $ 122,929
Ratios of expenses to average net assets:
Before reimbursement of expenses by Advisor/2/............. 0.56% 0.59% 0.63% 0.64%
After reimbursement of expenses by Advisor/2/.............. 0.50% 0.50% 0.43%/3/ 0.40%
Ratios of net investment income to average net assets:
Before reimbursement of expenses by Advisor/2/............. 5.00% 4.93% 5.24% 3.49%
After reimbursement of expenses by Advisor/2/.............. 5.06% 5.02% 5.44% 3.73%
</TABLE>
- ---------------------------------------------------------------------
/1/ Not Annualized.
/2/ Annualized.
/3/ The Advisor's expenses reimbursement level, which affects the net expenses
ratio, changed from 0.40% to 0.50% on July 12, 1995.
(a) Chicago Trust Money Market Fund commenced investment operations on
December 14, 1993.
See accompanying Notes to Financial Statements.
40
<PAGE> 160
CT&T Funds
Notes to Financial Statements October 31, 1997
================================================================================
Note (A) Significant Accounting Policies: CT&T Funds (the "Company") operates as
a series company currently issuing eight series of shares of beneficial
interest: Montag & Caldwell Growth Fund (the "Growth Fund"), Chicago Trust
Growth & Income Fund (the "Growth & Income Fund"), Chicago Trust Talon Fund (the
"Talon Fund"), Chicago Trust Balanced Fund (formerly Chicago Trust Asset
Allocation Fund) (the "CT Balanced Fund"), Montag & Caldwell Balanced Fund (the
"M&C Balanced Fund"), Chicago Trust Bond Fund (the "Bond Fund"), Chicago Trust
Municipal Bond Fund (the "Municipal Bond Fund"), and Chicago Trust Money Market
Fund (the "Money Market Fund") (each a "Fund" and collectively, the "Funds").
The Company constitutes an open-end management investment company which is
registered under the Investment Company Act of 1940 as amended (the "Act"). The
Company was organized as a Delaware business trust on September 10, 1993.
The 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. Montag & Caldwell, Inc. is the Investment Advisor for the Fund, which
commenced investment operations on November 2, 1994. Effective June 28, 1996,
the Fund offered two classes of shares: Class I (Institutional) shares and Class
N (Retail) shares.
The 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. The
Chicago Trust Company ("Chicago Trust") is the Investment Advisor for the Fund,
which commenced investment operations on December 13, 1993.
The Talon Fund seeks long-term total return through capital appreciation. The
Fund invests primarily in stocks of companies with capitalization levels
believed by Talon Asset Management, Inc. ("Talon") to have prospects for capital
appreciation. The Fund, which commenced investment operations on September 19,
1994, may also invest in preferred stock and debt securities, including those
which may be convertible into common stock. Chicago Trust is the Investment
Advisor for the Fund with Talon as Sub-Investment Advisor.
The CT 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.
Chicago Trust is the Investment Advisor for the Fund, which commenced investment
operations on September 21, 1995 .
The M&C 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 is
placed upon selection of particular investments as opposed to allocation of
assets. Montag & Caldwell, Inc. is the Investment Advisor for the Fund, which
commenced investment operations on November 2, 1994.
The Bond Fund seeks high current income consistent with what Chicago Trust
believes to be prudent risk of capital. The Fund primarily invests 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
is the Investment Advisor for the Fund, which commenced investment operations on
December 13, 1993.
The Municipal Bond Fund seeks a high level of current interest income exempt
from Federal income taxes consistent with the conservation of capital. The Fund
seeks to achieve its objective by investing substantially all of its assets in a
diversified portfolio of primarily intermediate-term municipal debt obligations.
Chicago Trust is the Investment Advisor for the Fund, which commenced investment
operations on December 13, 1993.
The 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. Chicago Trust is the
Investment Advisor for the Fund, which commenced investment operations on
December 14, 1993.
41
<PAGE> 161
CT&T Funds
Notes to Financial Statements - continued October 31, 1997
================================================================================
The following is a summary of the significant accounting policies consistently
followed by each Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
(1) Security Valuation: For the Growth Fund, the Growth & Income Fund, the
Talon Fund, the CT Balanced Fund and the M&C Balanced Fund, equity securities
and index options traded on a national exchange and over-the-counter securities
listed in the NASDAQ National Market System are valued at the last reported
sales price at the close of the respective exchange. Securities for which there
have been no sales on the valuation date are valued at the mean of the last
reported bid and asked prices on their principal exchange. Over-the-counter
securities not listed on the NASDAQ National Market System are valued at the
mean of the current bid and asked prices. For the CT Balanced Fund, the M&C
Balanced Fund, the Bond Fund, and the Municipal Bond Fund, fixed income
securities, except short-term, are valued on the basis of prices provided by a
pricing service when such prices are believed by the Advisor to reflect the
fair market value of such securities. When fair market value quotations are not
readily available, securities and other assets are valued at fair value as
determined in good faith by the Board of Trustees. For all Funds, short-term
investments, that is, those with a remaining maturity of 60 days or less, are
valued at amortized cost, which approximates market value. For the Money Market
Fund, all securities are valued at amortized cost, which approximates market
value. Under the amortized cost method, discounts and premiums are accreted and
amortized ratably to maturity and are included in interest income.
(2) Repurchase Agreements: Each Fund may enter into repurchase agreements with
financial institutions deemed to be credit worthy by the Fund's Advisor,
subject to the seller's agreement to repurchase and the Fund's agreement to
resell such securities at a mutually agreed upon price. Securities purchased
subject to repurchase agreements are deposited with the Fund's custodian and,
pursuant to the terms of the repurchase agreement, must have an aggregate
market value greater than or equal to the repurchase price plus accrued
interest at all times. If the value of the underlying securities falls below
the value of the repurchase price plus accrued interest, the Fund will require
the seller to deposit additional collateral by the next business day. If the
request for additional collateral is not met, or the seller defaults on its
repurchase obligation, the Fund has the right to sell the underlying securities
at market value and may claim any resulting loss against the seller.
(3) Derivative Financial Instruments: A derivative financial instrument in very
general terms refers to a security whose value is "derived" from the value of
an underlying asset, reference rate or index. A Fund has a variety of reasons
to use derivative instruments, such as to attempt to protect the Fund against
possible changes in the market value of its portfolio and to manage the
portfolio's effective yield, maturity and duration. All of a Fund's portfolio
holdings, including derivative instruments, are marked to market each day with
the change in value reflected in the unrealized appreciation/depreciation on
investments. Upon disposition, a realized gain or loss is recognized
accordingly, except for exercised option contracts where the recognition of
gain or loss is postponed until the disposal of the security underlying the
option contract.
An option contract gives the buyer the right, but not the obligation to buy
(call) or sell (put) an underlying item at a fixed exercise price during a
specified period. These contracts are used by a Fund to manage the portfolio's
effective maturity and duration.
Transactions in purchased options for the Talon Fund for the year ended October
31, 1997 were as follows:
<TABLE>
<CAPTION>
Contracts Premium
--------- ---------
<S> <C> <C>
Outstanding at October 31, 1996.................................... 0 $ 0
Options purchased (Net)............................................ 215 (305,450)
Options exercised or terminated in closing transactions (Net)...... (65) 61,450
Options expired (Net).............................................. (100) 123,875
---- ---------
Outstanding at October 31, 1997.................................... 50 $(120,125)
==== =========
</TABLE>
(4) Mortgage Backed Securities: The CT Balanced Fund, the M&C Balanced Fund and
the Bond Fund may invest in Mortgage Backed Securities (MBS), representing
interests in pools of mortgage loans. These securities provide shareholders
with payments consisting of both principal and interest as the mortgages in the
underlying mortgage pools are paid. Most of the securities are guaranteed by
federally sponsored agencies - Government National Mortgage Association (GNMA),
Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage
Corporation (FHLMC). However, some securities may be issued by private,
42
<PAGE> 162
CT&T Funds
Notes to Financial Statements-continued October 31, 1997
================================================================================
non-government corporations. MBS issued by private agencies are not government
securities and are not directly guaranteed by any government agency. They are
secured by the underlying collateral of the private issuer. Yields on privately
issued MBS tend to be higher than those of government backed issues. However,
risk of loss due to default and sensitivity to interest rate fluctuations are
also higher.
The CT Balanced Fund, the M&C Balanced Fund and the Bond Fund may also invest in
Collateralized Mortgage Obligations (CMOs) and Real Estate Mortgage Investment
Conduits (REMICs). A CMO is a bond which is collateralized by a pool of MBS, and
a REMIC is similar in form to a CMO. These MBS pools are divided into classes or
tranches with each class having its own characteristics. The different classes
are retired in sequence as the underlying mortgages are repaid. A Planned
Amortization Class (PAC) is a specific class of mortgages which over its life
will generally have the most stable cash flows and the lowest prepayment risk.
Prepayment may shorten the stated maturity of the CMO and can result in a loss
of premium, if any has been paid.
The CT Balanced Fund and the Bond Fund may utilize Interest Only (IO) securities
to increase the diversification of the portfolio and manage risk. An Interest
Only security is a class of MBS representing ownership in the cash flows of the
interest payments made from a specified pool of MBS. The cash flow on this
instrument decreases as the mortgage principal balance is repaid by the
borrower.
(5) Investment Income And Securities Transactions: Dividend income is recorded
on the ex-dividend date. Interest income is accrued daily. Securities
transactions are accounted for on the date securities are purchased or sold. The
cost of securities sold is determined using the first-in-first-out method.
(6) Federal Income Taxes: The Funds have elected to be treated a "regulated
investment companies" under Sub-chapter M of the Internal Revenue Code and to
distribute substantially all of their respective net taxable income.
Accordingly, no provisions for federal income taxes have been made in the
accompanying financial statements. The Funds intend to utilize provisions of the
federal income tax laws which allow them to carry a realized capital loss
forward for eight years following the year of the loss and offset such losses
against any future realized capital gains. At October 31, 1997, the losses
amounted to $91,110 for the Municipal Bond Fund and $25,289 for the Bond Fund,
which will expire October 31, 2003 and October 31, 2005, respectively.
Net realized gains or losses may differ for financial and tax reporting purposes
for the Talon Fund, the M&C Balanced Fund and the Growth Fund primarily as a
result of losses from wash sales which are not recognized for tax purposes until
the corresponding shares are sold and as a result of gains or losses recognized
for tax purposes on the mark-to-market of open options transactions at October
31, 1997.
(7) Dividends and Distributions: Dividends and distributions to shareowners are
recorded on the ex-dividend date.
(8) Organization Costs: The Funds have reimbursed the Advisors for certain costs
incurred in connection with the Funds' and the Company's organization. The costs
are being amortized on a straight-line basis over five years commencing on
December 13, 1993 for the Growth & Income Fund, Bond Fund and the Municipal Bond
Fund; December 14, 1993 for the Money Market Fund; September 19, 1994 for the
Talon Fund; November 2, 1994 for the Growth Fund and the M&C Balanced Fund; and
September 21, 1995 for the CT Balanced Fund.
(9) Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Note (B) Dividends from Net Investment Income and Distributions of Capital
Gains: With respect to the Growth Fund, the Growth & Income Fund, the Talon
Fund, the CT Balanced Fund and the M&C Balanced Fund, dividends from net
investment income are distributed quarterly and net realized gains from
investment transactions, if any, are distributed to shareowners annually. The
Bond Fund and the Municipal Bond Fund distribute their respective net investment
income to shareowners monthly and capital gains, if any, are distributed
annually. The Money Market Fund declares dividends daily from its net investment
income. The Money Market
43
<PAGE> 163
CT&T Funds
Notes to Financial Statements-continued October 31, 1997
================================================================================
Fund's dividends are payable monthly and are automatically reinvested in
additional Fund shares, at the month-end net asset value, for those shareowners
that have elected the reinvestment option. Differences in dividends per share
between classes of the Growth Fund are due to different class expenses. For the
year ended October 31, 1997, 100.00% of the income distributions made by the
Municipal Bond Fund were exempt from federal income taxes. Additionally during
the period, the Growth Fund, the Growth & Income Fund, the Talon Fund, the CT
Balanced Fund, the M&C Balanced Fund and the Bond Fund paid 28% rate gain
distributions of $1,879,416, $1,444,866, $973,259, $205, $2,336,074 and $16,748,
respectively. In January 1998, the Funds will provide tax information to
shareowners for the 1997 calendar year.
Net investment income and realized gains and losses for federal income tax
purposes may differ from that reported on the financial statements because of
permanent book and tax basis differences. Permanent book and tax differences of
$21,494, $11,440 and $551 were reclassified at October 31, 1997 from accumulated
net realized gain on investments to undistributed net investment income in the
CT Balanced Fund, the Bond Fund and the M&C Balanced Fund, respectively, due to
losses on paydown adjustments from mortgage backed securities. In addition,
permanent book and tax basis differences in the Bond Fund relating to the sale
of interest only securities totaling $5,211 were reclassified from accumulated
net realized gain to undistributed net investment income.
The Growth Fund had a net operating loss for tax purposes, net of short-term
capital gains, of $187,503 for the year ended October 31, 1997. In addition, the
Growth Fund made required distributions of class specific allocations of net
investment income of $26,630 to the institutional class shareowners. These
amounts, along with the distribution in excess as of October 31, 1996 of
$73,703, were reclassified from undistributed net investment income to capital
paid-in as permanent differences at October 31, 1997.
Distributions from net realized gains for book purposes may include short-term
capital gains, which are included as ordinary income for tax purposes.
All of the income dividends paid by each fund were ordinary income for federal
income tax purposes. The percentage of income dividends that were qualifying
dividends for the corporate dividends received deduction were 21%, 70%, 8% and
17%, for the CT Balanced Fund, the Growth & Income Fund, the Talon Fund and the
M&C Balanced Fund, respectively.
Note (C) Shares of Beneficial Interest: Each Fund is authorized to issue an
unlimited number of shares of beneficial interest with no par value. At October
31, 1997, Chicago Trust owned 2,500, 2,500 and 1,002,500 shares of the Growth &
Income Fund, the Bond Fund and the Municipal Bond Fund, respectively.
Note (D) Investment Transactions: Aggregate purchases and proceeds from sales of
investment securities (other than short-term investments) for the year ended
October 31, 1997 were:
<TABLE>
<CAPTION>
Aggregate Proceeds from
Purchases Sales
--------- -------------
<S> <C> <C>
Growth Fund $483,482,033 $84,626,624
Growth & Income Fund 84,712,809 69,309,780
Talon Fund 24,428,453 20,975,822
Ct Balanced Fund 61,644,515 55,976,823
M&C Balanced Fund 61,424,202 14,486,433
Bond Fund 60,725,202 16,480,883
Municipal Bond Fund 2,979,200 1,817,090
</TABLE>
44
<PAGE> 164
CT&T Funds
Notes to Financial Statements-continued October 31, 1997
================================================================================
Note (E) Advisory, Administration and Distribution Services Agreements: Under
various Advisory Agreements with the Funds, each Advisor provides investment
advisory services to the Funds. The Funds will pay advisory fees at the
following annual percentage rates of the average daily net assets of each Fund:
0.80% for the Growth Fund, 0.70% for the Growth & Income Fund, 0.80% for the
Talon Fund, 0.70% for the CT Balanced Fund, 0.75% for the M&C Balanced Fund,
0.55% for the Bond Fund, 0.60% for the Municipal Bond Fund and 0.40% for the
Money Market Fund. These fees are accrued daily and paid monthly. The Advisors
have voluntarily undertaken to reimburse the Growth Fund (Institutional Class
and Retail Class), the Growth & Income Fund, the Talon Fund, the CT Balanced
Fund, the M&C Balanced Fund, the Bond Fund, the Municipal Bond Fund, and the
Money Market Fund for operating expenses which cause total expenses to exceed
0.98%, 1.30%, 1.10%, 1.30%, 1.10%, 1.25%, 0.80%, 0.90% and 0.50%, respectively.
Such expense reimbursements may be terminated at the discretion of the Advisors.
For the year ended October 31, 1997, the Advisors reimbursed expenses of $0 and
$41,428 for the Growth Fund (Institutional Class and Retail Class), $129,857 for
the Growth & Income Fund, $85,596 for the Talon Fund, $102,203 for the CT
Balanced Fund, $44,973 for the M&C Balanced Fund, $221,539 for the Bond Fund,
$85,359 for the Municipal Bond Fund and $142,332 for the Money Market Fund.
Effective June 1, 1997, First Data Investor Services Group, Inc. ("Investor
Services Group") replaced FPS Services, Inc. as sub-administrator of the Funds.
Chicago Trust is the Funds' Administrator. For services provided as the Funds'
Administrator, Chicago Trust receives the following fees, which are paid in
total to Investor Services Group.
<TABLE>
<CAPTION>
Administration Fees Custody Liaison Fees
------------------- --------------------
Fee (% of Funds' aggregate Average Daily Net Assets Annual Fee Average Daily Net Assets
- --------------------------- ------------------------ ---------- ------------------------
daily net assets) (Per Fund) (per Fund)
----------------- ---------- ----------
<S> <C> <C> <C>
0.060 up to $2 billion $10,000 up to $100 million
0.045 $2 billion to $3.5 billion $15,000 $100 million to $500 million
0.040 over $3.5 billion $20,000 over $500 million
</TABLE>
Effective June 1, 1997, First Data Distributors, Inc. replaced FPS Broker
Services, Inc. as principal underwriter and distributor of the Funds' shares.
Pursuant to Rule 12b-1 adopted by the Securities and Exchange Commission under
the Act, the Growth Fund Retail Class, the Growth & Income Fund, the Talon Fund,
the CT Balanced Fund, the M&C Balanced Fund, the Bond Fund, and the Municipal
Bond Fund have adopted a Plan of Distribution (the "Plan"). The Plan permits the
participating Funds to pay certain expenses associated with the distribution of
their shares. Under the Plan, each Fund may pay actual expenses not exceeding,
on an annual basis, 0.25% of each participating Fund's average daily net assets.
The Growth Fund Institutional Class and the Money Market Fund do not have a
distribution plan.
For the year ended October 31, 1997, the class specific expenses of the Growth
Fund were:
<TABLE>
<CAPTION>
Class N (Retail) Class I (Institutional)
<S> <C> <C>
Transfer agent fees..................... $ 158,588 $ 8,978
Registration expenses................... 151,157 58,524
Legal fees.............................. 21,778 8,983
Report to shareowner expense............ 19,597 14,159
</TABLE>
Certain officers and trustees of the Funds are also officers and directors of
Chicago Trust. The Funds do not compensate its officers or affiliated trustees.
Effective January 1, 1997, the Company pays each unaffiliated trustee $1,500 per
Board of Trustees meeting attended and an annual retainer of $1,500.
45
<PAGE> 165
Independent Auditors' Report
The Board of Trustees and Shareowners of CT&T Funds:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of CT&T Funds (comprising, respectively, 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) as of October 31, 1997, and the related statements of operations
for the year then ended, the statements of changes in net assets for each of the
periods presented in the two-year period then ended, and the financial
highlights for each of the periods presented. These financial statements and
financial highlights are the responsibility of CT&T Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1997, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective Funds constituting the CT&T Funds as of October 31, 1997, the
results of their operations for the year then ended, the changes in their net
assets for each of the periods presented in the two-year period then ended, and
the financial highlights for each of the periods presented, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Chicago, Illinois
December 16, 1997
<PAGE> 166
This page left blank intentionally
<PAGE> 167
CT&T Funds
Trustees & Officers
- --------------------------------------------------------------------------------
TRUSTEES OFFICERS
Leonard F. Amari, Trustee* Kenneth C. Anderson
President
Stuart D. Bilton, Chairman David F. Seng
Senior Vice President
Dorothea C. Gilliam, Trustee Gerald F. Dillenburg
Vice President, Secretary and Treasurer
Gregory T. Mutz, Trustee* Thomas J. Adams, III
Vice President
Nathan Shapiro, Trustee* CUSTODIAN
Bankers Trust
One Bankers Trust Place
New York, New York 10001
ADVISORS
The Chicago Trust Company LEGAL COUNSEL
171 North Clark Street Sonnenschein Nath & Rosenthal
Chicago, Illinois 60601-3294 8000 Sears Tower
Chicago, Illinois 60606
Montag & Caldwell, Inc.
1100 Atlanta Financial Center AUDITOR
3343 Peachtree Road, NE KPMG Peat Marwick LLP
Atlanta, GA 30326-1450 303 East Wacker Drive
Chicago, Illinois 60601
SHAREOWNER SERVICES
First Data Investor Services Group, Inc.
4400 Computer Drive
Westborough, MA 01581
DISTRIBUTOR
First Data Distributors, Inc.
4400 Computer Drive
Westborough, MA 01581
*Unaffiliated Trustees
<PAGE> 168
Distributed by First Data Distributors, Inc.
4400 Computer Drive
Westborough, Massachusetts 01581
This report is submitted for general information of the shareowners of the
Funds. It is not authorized for distribution to prospective investors in the
Funds unless preceded or accompanied by an effective Prospectus which includes
details regarding the Fund's objectives, policies, expenses and other
information.
<PAGE> 169
ALLEGHANY FUNDS
FORM N-LA
PART C -- OTHER INFORMATION
Item 24. Financial Statements and Exhibits:
(a) Financial Statements Included in Part A:
Financial Highlights.
Financial Statements Included in Part B:
Annual Report (all Funds) to Shareowners dated October 31, 1997.
(b) EDGAR Exhibits Filed Pursuant to Form N- lA:
(1) Trust Instrument dated September 10, 1993--Incorporated herein by reference
to Registration Statement #33-68666 filed via EDGAR on April 16, 1996.
(2) Copies of existing By-Laws--Incorporated herein by reference to Exhibit No.
to Registration statement No. 33-68666 filed via EDGAR on February 22,
1996.
(3) Copies of any voting trust agreement--Not Applicable.
(4) Copies of all instruments defining the rights of holders of the
securities--Not Applicable.
(5) Copies of all investment advisory contracts:
(a) Investment Advisory Agreements for CT&T Growth & Income Fund, CT&T
Intermediate Fixed Income Fund, CT&T Intermediate Municipal Bond Fund,
and CT&T Money Market Fund with Chicago Title and Trust Company, each
dated November 30, 1993--Incorporated herein by reference to Exhibit
No. (5)(a) to Registration Statement No. 33-68666 filed via EDGAR on
February 22, 1996.
Investment Advisory Agreements for CT&T Talon Fund with Chicago Title
and Trust Company, and Montag & Caldwell Growth Fund and Montag &
Caldwell Balanced Fund with Montag & Caldwell, Inc., each dated August
27, 1994--Incorporated herein by reference to Exhibit No. (5)(a) to
Registration Statement No. 33-68666 filed via EDGAR on February 22,
1996.
Investment Advisory Agreement for CT&T Balanced Fund (formerly known as
"CT&T Asset Allocation Fund" with Chicago Title and Trust Company,
dated March 15, 1995--Incorporated herein by reference to Exhibit No.
(5)(a) to Registration Statement No. 33-68666 filed via EDGAR on
February 22, 1996.
Amendments to Investment Advisory Agreements for each Series, each
dated December 21, 1995, reflecting name changes of Series and
Advisor--Incorporated herein by reference to Exhibit No. (5)(a) to
Registration Statement No. 33-68666 filed via EDGAR on February 22,
1996.
4
<PAGE> 170
Amendments to Investment Advisory Agreements for Montag & Caldwell
Growth Fund and Montag & Caldwell Balanced Fund, each dated December
21, 1995--Incorporated herein by reference to Exhibit No. (5)(a) to
Registration Statement No. 33-68666 filed via EDGAR on April 16, 1996.
(b) Amended and Restated Sub-Investment Advisory Agreement for CT&T Talon
Fund with Talon Asset Management, Inc., dated December 21,
1995--Incorporated herein by reference to Exhibit No. 5(b) to
Registration Statement No. 33-68666 filed via EDGAR on February 27,
1997.
(c) Amended and Restated Guaranty Agreement dated December 23, 1996,
between Chicago Title and Trust Company and CT&T Funds--filed herewith.
(d) Investment Advisory Assignment dated October 30, 1995, between and
among Chicago Title and Trust Company, The Chicago Trust Company, and
CT&T Funds--Incorporated herein by reference to Exhibit No. (5)(d) to
Registration Statement No. 33-68666 filed via EDGAR on February 22,
1996.
(e) Master Services Agreement dated October 30, 1995, between Chicago Title
and Trust Company and certain of its subsidiaries--Incorporated herein
by reference to Exhibit No. (5)(e) to Registration Statement No.
33-68666 filed via EDGAR on February 22, 1996.
(6) Copies of each underwriting or distribution contract:
(a) Underwriting Agreement for all Funds with FPS Broker Services, Inc.,
dated November 30, 1993--Incorporated herein by reference to Exhibit
No. (6)(a) to Registration Statement No. 33-68666 filed via EDGAR on
February 22, 1996.
Amendment dated December 21, 1995 to Underwriting Agreement, reflecting
name changes to certain Series--Incorporated herein by reference to
Exhibit No. (6)(a) to Registration Statement No. 33-68666 filed via
EDGAR on February 22, 1996.
Amendment dated June 13, 1996 to Underwriting Agreement, reflecting
creation of multiple class--Incorporated herein by reference to
Registration Statement No. 33-68666 filed via EDGAR on April 16, 1996.
(b) Underwriter Compensation Agreement for all Funds with FPS Broker
Services, Inc., dated November 30, 1993--Incorporated herein by
reference to Exhibit No. (6)(b) to Registration Statement No. 33-68666
filed via EDGAR on February 22, 1996.
Amendment dated December 21, 1995 to Underwriter Compensation
Agreement, reflecting name changes to certain Series--Incorporated
herein by reference to Exhibit No. (6)(a) to Registration Statement No.
33-68666 filed via EDGAR on February 22, 1996.
(b) Distribution Agreement dated June 1, 1997 between CT&T Funds and First
Data Distributors, Inc.--filed herewith.
(7) Copies of all bonus, profit sharing, pension or other similar
contracts--Not Applicable.
(8) Copies of all custodian agreements:
(a) Custodian Agreement between Bankers Trust Company and CT&T Funds, dated
June 1, 1997--filed herewith.
(b) Custody Administration and Agency Agreement for all CT&T Funds with FPS
Services, Inc., with respect to UMB Bank, N.A., dated December 8,
1994--Incorporated herein by reference to Exhibit (8)(b) to
Registration Statement No. 33-68666 filed via EDGAR on February 22,
1996.
5
<PAGE> 171
Amendment dated December 21, 1995 to Custody Administration and Agency
Agreement, reflecting name changes to certain Series--Incorporated
herein by reference to Exhibit No. (8)(b) to Registration Statement No.
33-68666 filed via EDGAR on February 22, 1996.
Amendment dated June 13, 1996 to Custody Administration and Agency
Agreement, reflecting creation of multiple class--Incorporated herein
by reference to Registration Statement No. 33-68666 filed via EDGAR on
April 16, 1996.
(9) Copies of all other material contracts not made in the ordinary course of
business which are to be performed:
(a) Transfer Agency and Services Agreement between CT&T Funds and First
Data Investor Services Group, Inc., dated June 1, 1997--filed herewith.
(b) Administration Agreement between the Company and Chicago Title and
Trust Company, dated June 15, 1995--Incorporated herein by reference to
Exhibit No. (9)(b) to Registration Statement No. 33-68666 filed via
EDGAR on February 22, 1996.
Amendment dated December 21, 1995 to Administration Agreement,
reflecting name changes of certain Series and the
Administrator--Incorporated herein by reference to Exhibit No. (9)(b)
to Registration Statement No. 33-68666 filed via EDGAR on February 22,
1996.
Amendment dated June 13, 1996 to Administration Agreement, reflecting
creation of multiple class--Incorporated herein by reference to
Registration Statement No. 33-68666 filed via EDGAR on April 16, 1996.
(c) Sub-Administration Agreement between First Data Investor Services
Group, Inc. and The Chicago Trust Company, dated June 1, 1997 --filed
herewith.
(d) Accounting Services Agreement between CT&T Funds and FPS Services,
Inc., dated November 30, 1993--Incorporated herein by reference to
Exhibit No. (9)(c) to Registration Statement No. 33-68666 filed via
EDGAR on February 22, 1996.
Amendment dated December 21, 1995 to Accounting Services Agreement,
reflecting name changes to certain Series--Incorporated herein by
reference to Exhibit No. (9)(c) to Registration Statement No. 33-68666
filed via EDGAR on February 22, 1996.
Amendment dated June 13, 1996 to Accounting Services Agreement,
reflecting creation of multiple class--Incorporated herein by Reference
to Registration Statement No. 33-68666 filed via EDGAR on April 16,
1996.
(10) Consent of Counsel--Not Applicable.
(11) Copies of any other opinions, appraisals or rulings.
(a) Consent of Independent Auditors--filed herewith.
(12) All financial statements omitted from Item 23.--Not Applicable.
(13) Copies of any agreements or understandings made in consideration for
providing the initial capital between or among the Registrant--Not
Applicable.
(14) Copies of the model plan--Not Applicable.
(15) Copies of any plan or agreement entered into by Registrant pursuant to Rule
12b-1:
6
<PAGE> 172
(a) Distribution and Service Plan for all Funds except Chicago Trust Money
Market Fund, with FPS Broker Services, Inc.--Incorporated herein by
reference to Exhibit No. (15)(a) to Registration Statement No. 33-68666
filed via EDGAR on February 22, 1996.
Amendment to Distribution and Service Plan dated December 21, 1995,
reflecting name changes to certain Series--Incorporated herein by
reference to Exhibit No. (15)(a) to Registration Statement No. 33-68666
filed via EDGAR on February 22, 1996.
(b) Servicing Agreement for Distribution Assistance and Shareholder
Administrative Support Services for all Funds except Money Market Fund,
with FPS Broker Services, Inc.--Incorporated herein by reference to
Exhibit No. (15)(b) to Registration Statement No. 33-68666 filed via
EDGAR on February 22, 1996.
Amendment to Servicing Agreement for Distribution Assistance and
Shareholder Administrative Support Services dated December 21, 1995,
reflecting name changes to certain Series--Incorporated herein by
reference to Exhibit No. (15)(b) to Registration Statement No. 33-68666
filed via EDGAR on February 22, 1996.
(16) Schedules for Computations of Performance Quotations--Incorporated herein
by reference to Registration Statement No. 33-68666 filed via EDGAR on
April 16, 1996.
(17) Electronic Filers--Financial Data Schedules attached.
Item 25. Persons Controlled by or under Common Control with Registrant:
None.
Item 26. Number of Holders of Securities as of January 30, 1998:
<TABLE>
<CAPTION>
<S> <C>
-------------------------------------------------------------------
Montag & Caldwell Growth Fund Class N 7,348
-------------------------------------------------------------------
Montag & Caldwell Growth Fund Class I 107
-------------------------------------------------------------------
Chicago Trust Growth & Income Fund 2,563
-------------------------------------------------------------------
Chicago Trust Talon Fund 1,195
-------------------------------------------------------------------
Chicago Trust Balanced Fund 320
-------------------------------------------------------------------
Montag & Caldwell Balanced Fund 923
-------------------------------------------------------------------
Chicago Trust Bond Fund 520
-------------------------------------------------------------------
Chicago Trust Municipal Bond Fund 102
-------------------------------------------------------------------
Chicago Trust Money Market Fund 922
-------------------------------------------------------------------
</TABLE>
Item 27. Indemnification:
Section 10.2 of the Registrant's Trust Instrument provides as follows:
10.2 Indemnification. The Trust shall indemnify each of its
Trustees against all liabilities and expenses (including
amounts paid in satisfaction of judgments, in compromise, as
fines and penalties, and as counsel fees) reasonably incurred
by him in connection with the defense or disposition of any
action, suit or other proceeding, whether civil or criminal,
in which he may be involved or with which he may be
threatened, while as a Trustee or thereafter, by reason of his
being or having been such a Trustee except with respect to any
matter as to which he shall have
7
<PAGE> 173
been adjudicated to have acted in bad faith, willful
misfeasance, gross negligence or reckless disregard of his
duties, provided that as to any matter disposed of by a
compromise payment by such person, pursuant to a consent
decree or otherwise, no indemnification either for said
payment or for any other expenses shall be provided unless the
Trust shall have received a written opinion from independent
legal counsel approved by the Trustees to the effect that if
either the matter of willful misfeasance, gross negligence or
reckless disregard of duty, or the matter of bad faith had
been adjudicated, it would in the opinion of such counsel have
been adjudicated in favor of such person. The rights accruing
to any person under these provisions shall not exclude any
other right to which he may be lawfully entitled, provided
that no person may satisfy any right of indemnity or
reimbursement hereunder except out of the property of the
Trust. The Trustees may make advance payments in connection
with the indemnification under this Section 10.2, provided
that the indemnified person shall have given a written
undertaking to reimburse the Trust in the event it is
subsequently determined that he is not entitled to such
indemnification.
The Trust shall indemnify of fires, and shall have the power
to indemnify representatives and employees of the Trust, to
the same extent that Trustees are entitled to indemnification
pursuant to this Section 10.2.
Insofar as indemnification for liability arising under the 1933 Act may be
permitted to trustees, officers and controlling persons of Registrant
pursuant to the foregoing provisions, or otherwise, Registrant has been
advised that in the opinion of the SEC such indemnification is against
public policy as expressed in that Act and is, therefore, enforceable. In
the event that a claim for indemnification against such liabilities (other
than the payment by Registrant of expenses incurred or paid by a trustee,
officer or controlling person of Registrant in the successful defense of
any action, suit or proceeding) is asserted by such trustee, officer or
controlling person in connection with the securities being registered,
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in that Act and will be governed by the final
adjudication of such issue.
Section 10.3 of the Registrant's Trust Instrument, filed herein as Exhibit
1, also provides for the indemnification of shareholders of the Registrant.
Section 10.3 states as follows:
10.3 Shareholders. In case any Shareholder or former
Shareholder of any Series shall be held to be personally
liable solely by reason of his being or having been a
shareholder of such Series and not because of his acts or
omissions or for some other reason, the Shareholder or former
Shareholder (or his heirs, executors, administrators or other
legal representatives or, in the case of a corporation or
other entity, its corporate or other general successor) shall
be entitled out of the assets belonging to the applicable
Series to be held harmless from and indemnified against all
loss and expense arising from such liability. The Trust, on
behalf of the affected Series, shall, upon request by the
Shareholder, assume the defense of any claim made against the
Shareholder for any act or obligation of the Trust and satisfy
any judgment thereon from the assets of the Series.
In addition, Registrant currently has a trustees' and officers' liability
policy covering certain types of errors and omissions.
Item 28. Business and Other Connections of Advisors and Sub-Advisor:
Chicago Title and Trust Company is engaged in the sale and underwriting of
title insurance through the CT&T Family of Title Insurers, which consists
of Chicago Title Insurance Company, Security Union Title Insurance Company
and Ticor Title Insurance Company and their respective subsidiaries. The
CT&T Family of Title Insurers also offers services related to title
insurance, including abstracting, searches, and escrow,
8
<PAGE> 174
closing and disbursement services in connection with real estate
transactions. Each of these principal title insurance subsidiaries is rated
"A-" by Standard & Poor's Corporation.
The CT&T Family of Title Insurers is the largest title insurance
organization in the world, with more than 200 full-service offices, 8,000
employees and 3,800 policy-issuing agents in 49 states, Puerto Rico, the
Virgin Islands and Canada. Consolidated assets totaled $[ ] billion in
1997.
The Chicago Trust Company conducts a general financial services business
through its Financial Services Group, which comprises four businesses. The
institutional investment management group manages equity and fixed income
institutional assets in excess of $3.0 billion, primarily in employee
benefit plans, foundation accounts and insurance company accounts. The
employee benefits services group offers profit sharing plans, matching
savings plans, money purchase pensions and consulting services, and has
become one of the leading providers of 401 (k) salary deferral plans to
mid-sized companies. The personal trust and investment services group
provides investment management and trust and estate planning primarily for
accounts in the $500,000 to $10 million range. The real estate trust
services group provides the means whereby real estate can be conveyed to a
trustee while reserving to the beneficiaries the full management and
control of the property. This group also facilitates tax-deferred exchanges
of income-producing real property.
Montag & Caldwell's sole business is managing assets primarily for employee
benefit, endowment, charitable, and other institutional clients, as well as
high net worth individuals.
At Talon Asset Management, Mr. Terry Diamond is Chairman and a Director,
Mr. Alan R. Wilson is President and a Director, and Barbara Rumminger,
Secretary, are, respectively, Chairman and a Director, President and a
Director, and Secretary of Talon Securities, Inc., 140 South Dearborn
Street, Chicago, Illinois, a registered broker dealer. Mr. Diamond is also
a director of Amli Realty Company, 125 South Wacker Drive, Chicago
Illinois, a private real estate investment company.
The directors and officers of the Trust's Investment Advisors and Sub-Investment
Advisor are set forth below. To the knowledge of the Registrant, unless so
noted, none of these individuals is or has been at any time during the past two
fiscal years engaged in any other business, profession vocation or employment of
a substantial nature.
9
<PAGE> 175
<TABLE>
<CAPTION>
THE CHICAGO TRUST COMPANY
- ----------------------------------------------------------------------------------------
NAME TITLE/POSITION OTHER BUSINESS
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Richard P. Toft Director Director and Chairman, Chicago Title
and Trust Company; Director, Chairman
and Chief Executive Officer, Alleghany
Asset Management, Inc.; Director of
Chicago Title Insurance Co., Director,
The Chicago Trust Company.
- ----------------------------------------------------------------------------------------
Allan P. Kirby, Jr. Director President, Liberty Square, Inc.;
Director, Alleghany Corporation;
Director, Chicago Title and Trust
Company; Director, Chicago Title
Insurance Company; Director, Kirby
Investments, Inc.; Director, The
Chicago Trust Company.
- ----------------------------------------------------------------------------------------
Anthony Kuklin Director Partner of Paul, Weiss, Rifkind,
Wharton & Garrison; Director, Chicago
Title and Trust Company; Director,
Chicago Title Insurance Company;
Director, The Chicago Trust Company.
- ----------------------------------------------------------------------------------------
M. Leanne Lachman Director Managing Director, Schroder Real Estate
Associates; Director, Chicago Title and
Trust Company; Director, Chicago Title
Insurance Company; Director, The
Chicago Trust Company.
- ----------------------------------------------------------------------------------------
Dana G. Leavitt Director President, Leavitt Management Company;
Director, Chicago Title and Trust
Company; Director, Chicago Title
Insurance Company; Director, The
Chicago Trust Company.
- ----------------------------------------------------------------------------------------
Lawrence F. Levy Director Chairman, The Levy Organization;
Director, Chicago Title and Trust
Company; Director, Chicago Title
Insurance Company; Director, The
Chicago Trust Company.
- ----------------------------------------------------------------------------------------
Robert Riley Director President and Chief Executive Officer
of Leggat McCall Properties; Director,
Chicago Title and Trust Company;
Director, Chicago Title Insurance
Company.
- ----------------------------------------------------------------------------------------
Steven Newman Director Chairman, President and Chief Executive
Officer, URC Holdings Corporation;
Director, Chicago Title and Trust
Company; Director, Chicago Title
Insurance Company.
- ----------------------------------------------------------------------------------------
Margaret P. MacKimm Director Director, Woolworth Corporation;
Director, E.I. DuPont deNemours &
Company; Director, Chicago Title and
Trust Company; Director, Chicago Title
Insurance Company.
- ----------------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 176
<TABLE>
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------
Walter D. Scott Director Professor of Management, J.L. Kellogg
Graduate School of Management,
Northwestern University; Director,
Chicago Title and Trust Company;
Director, Chicago Title Insurance
Company.
- -----------------------------------------------------------------------------------------------------
Earl L. Neal Director Principal Attorney, Earl L. Neal and
Associates; Director, Chicago Title and
Trust Company; Director, Chicago Title
Insurance Company.
- -----------------------------------------------------------------------------------------------------
John J. Rau Director President and Chief Executive Officer,
Chicago Title and Trust Company;
Director, President and Chief Executive
Officer of Chicago Title Insurance
Company and Ticor Title Insurance
Company; Director, Chairman and
President, Security Union Title
Insurance Company; Director, Ticor
Title Guaranty Company.
- -----------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
INSTITUTIONAL INVESTMENT GROUP:
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Charles F. Henderson Executive Vice President
and Chief Investment Officer
- ------------------------------------------------------------------------------------------------------
Carla V. Stracten Senior Vice President
- ------------------------------------------------------------------------------------------------------
Frederick W. Englmann Senior Vice President
- ------------------------------------------------------------------------------------------------------
David J. Cox Vice President
- ------------------------------------------------------------------------------------------------------
Thomas J. Marthaler Vice President
- ------------------------------------------------------------------------------------------------------
Lois A. Pasquale Vice President
- ------------------------------------------------------------------------------------------------------
Bernard F. Myszkowski Vice President
- ------------------------------------------------------------------------------------------------------
Jerold L. Stodden Vice President
- ------------------------------------------------------------------------------------------------------
Fred H. Senft Assistant Vice President
- ------------------------------------------------------------------------------------------------------
Steven A. Rusnak Assistant Vice President
- ------------------------------------------------------------------------------------------------------
Mark Schlossberg Assistant Vice President
- ------------------------------------------------------------------------------------------------------
David E. Zaldivar Assistant Vice President
- ------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
NAME TITLE/POSITION OTHER BUSINESS
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
MUTUAL FUNDS:
- ------------------------------------------------------------------------------------------------------
Kenneth C. Anderson Vice President
- ------------------------------------------------------------------------------------------------------
OPERATIONS AND FINANCIAL PLANNING:
- ------------------------------------------------------------------------------------------------------
Skip Neuman Senior Vice President and Chief
Financial Officer
- ------------------------------------------------------------------------------------------------------
Quentin L. Hardisty Vice President
- ------------------------------------------------------------------------------------------------------
Jack Carroll Assistant Vice President
- ------------------------------------------------------------------------------------------------------
Ahmed Wajid Assistant Vice President
- ------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE> 177
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
PERSONAL TRUST & INVESTMENT SERVICES:
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Paula Addix Harbage Executive Vice President
- ------------------------------------------------------------------------------------------------------
Hubert A. Adams Senior Vice President
- ------------------------------------------------------------------------------------------------------
Alan B. Shidler Senior Vice President
- ------------------------------------------------------------------------------------------------------
Stephen Ferrone Senior Vice President
- ------------------------------------------------------------------------------------------------------
Ann C. Christensen Vice President
- ------------------------------------------------------------------------------------------------------
Joan M. Giardina Vice President
- ------------------------------------------------------------------------------------------------------
Roger A. Meier Vice President
- ------------------------------------------------------------------------------------------------------
Joan M. Perkins Vice President
- ------------------------------------------------------------------------------------------------------
Charles G. Rammelt Vice President
- ------------------------------------------------------------------------------------------------------
George Vanden Vennett Vice President
- ------------------------------------------------------------------------------------------------------
Mike Allaway Assistant Vice President
- ------------------------------------------------------------------------------------------------------
Roger C. Clark Assistant Vice President
- ------------------------------------------------------------------------------------------------------
Thomas G. Corr Assistant Vice President
- ------------------------------------------------------------------------------------------------------
Judith K. French Assistant Vice President
- ------------------------------------------------------------------------------------------------------
John Q. Hinds Assistant Vice President
- ------------------------------------------------------------------------------------------------------
Dawn M. Shaefer Assistant Vice President
- ------------------------------------------------------------------------------------------------------
Jan E. Stone Assistant Vice President
- ------------------------------------------------------------------------------------------------------
David W. Nyberg Assistant Trust Counsel
- ------------------------------------------------------------------------------------------------------
Robert A. Murphy Assistant Vice President
and Senior Portfolio Manager
- ------------------------------------------------------------------------------------------------------
Michael Pollard Assistant Vice President
and Senior Portfolio Manager
- ------------------------------------------------------------------------------------------------------
Denise M. Seminetta Assistant Vice President
and Senior Portfolio Manager
- ------------------------------------------------------------------------------------------------------
Jane Feeny Senior Trust Officer
- ------------------------------------------------------------------------------------------------------
Ingrid Osiecki Senior Trust Officer
- ------------------------------------------------------------------------------------------------------
Nola Bounds Assistant Trust Officer
- ------------------------------------------------------------------------------------------------------
Sharon Harlin Assistant Trust Officer
- ------------------------------------------------------------------------------------------------------
Judy Wheeler Assistant Trust Officer
- ------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
NAME TITLE/POSITION OTHER BUSINESS
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
REAL ESTATE SERVICES:
- ------------------------------------------------------------------------------------------------------
B. Wyckliffe Pattishall, Jr. Executive Vice President
- ------------------------------------------------------------------------------------------------------
James Benson Vice President
- ------------------------------------------------------------------------------------------------------
Naomi Weitzel Vice President
- ------------------------------------------------------------------------------------------------------
Mary Cunningham-Watson Vice President
- ------------------------------------------------------------------------------------------------------
Miriam Golden Assistant Vice President
- ------------------------------------------------------------------------------------------------------
Susan A. Becker Trust Officer
- ------------------------------------------------------------------------------------------------------
Carolyn J. Pampanella Trust Officer
- ------------------------------------------------------------------------------------------------------
Kimberly DiTomaso Trust Officer
- ------------------------------------------------------------------------------------------------------
Laura Szakas Assistant Trust Officer
- ------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE> 178
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
RETIREMENT TRUST RESOURCES:
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Terry L. Zirkle Senior Vice President
- ------------------------------------------------------------------------------------------------------
Mark D. Berman Vice President
- ------------------------------------------------------------------------------------------------------
Daniel R. Joyce Vice President
- ------------------------------------------------------------------------------------------------------
Michael Lambert Vice President
- ------------------------------------------------------------------------------------------------------
Karen Fisher Prange Vice President
- ------------------------------------------------------------------------------------------------------
Ronald S. Quesenberry Vice President
- ------------------------------------------------------------------------------------------------------
Jeanne D. Reder Vice President
- ------------------------------------------------------------------------------------------------------
Robert F. Stuark Vice President
- ------------------------------------------------------------------------------------------------------
William Pappas Senior Trust Officer
- ------------------------------------------------------------------------------------------------------
Pamela Gena Trust Officer
- ------------------------------------------------------------------------------------------------------
Estrella A. San Jose Trust Officer
- ------------------------------------------------------------------------------------------------------
Mark Metz Trust Officer
- ------------------------------------------------------------------------------------------------------
Angela L. Williams Trust Officer
- ------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
MONTAG & CALDWELL, INC.
- ------------------------------------------------------------------------------------------------------
NAME TITLE/POSITION OTHER BUSINESS
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Solon P. Patterson Chairman of the Board, Chief Executive
Officer and Treasurer
- ------------------------------------------------------------------------------------------------------
Stuart D. Bilton Director
- ------------------------------------------------------------------------------------------------------
David B. Cumming Director
- ------------------------------------------------------------------------------------------------------
Ronald E. Canakaris President and Chief Investment Officer
- ------------------------------------------------------------------------------------------------------
David F. Seng Executive Vice President and Chief
Operating Officer
- ------------------------------------------------------------------------------------------------------
Elizabeth C. Chester Vice President and Secretary
- ------------------------------------------------------------------------------------------------------
Homer W. Whitman, Jr. Senior Vice President
- ------------------------------------------------------------------------------------------------------
Janet B. Bunch Vice President
- ------------------------------------------------------------------------------------------------------
Debra Bunde Comsudes Vice President
- ------------------------------------------------------------------------------------------------------
Jane R. Davenport Vice President
- ------------------------------------------------------------------------------------------------------
James L. Deming Vice President
- ------------------------------------------------------------------------------------------------------
Charlotte F. Fox Vice President
- ------------------------------------------------------------------------------------------------------
Brion D. Friedman Vice President
- ------------------------------------------------------------------------------------------------------
Richard W. Haining Vice President
- ------------------------------------------------------------------------------------------------------
Charles Jefferson Hagood Vice President
- ------------------------------------------------------------------------------------------------------
Grover C. Maxwell, III Vice President
- ------------------------------------------------------------------------------------------------------
William A. Vogel Vice President
- ------------------------------------------------------------------------------------------------------
Rebecca M. Keister Vice President
- ------------------------------------------------------------------------------------------------------
M. Scott Thompson Assistant Vice President
- ------------------------------------------------------------------------------------------------------
John S. Whitney, III Second Vice President
- ------------------------------------------------------------------------------------------------------
Brian W. Stahl Assistant Treasurer
- ----------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE> 179
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
TALON ASSET MANAGEMENT, INC.
- -------------------------------------------------------------------------------
NAME TITLE/POSITION OTHER BUSINESS
- -------------------------------------------------------------------------------
<S> <C> <C>
Terry D. Diamond Chairman Director of Amli Realty
- -------------------------------------------------------------------------------
Alan R. Wilson President
- -------------------------------------------------------------------------------
Barbara L. Rumminger Treasurer
- -------------------------------------------------------------------------------
Bernard H. Kailin Vice President
- -------------------------------------------------------------------------------
Sophia A. Erskine Corporate Secretary
- -------------------------------------------------------------------------------
</TABLE>
29. Principal Underwriter:
(a) First Data Distributors, Inc. (the "Distributor"),
the distributor for the Registrant's securities,
currently acts as distributor for:
First Choice Funds Trust
The Galaxy Fund
The Galaxy VIP Fund
Galaxy Fund II
Panorama Trust
Wilshire Target Funds, Inc.
Potomac Funds
Undiscovered Managers Funds
LKCM Funds
The Distributor is registered with the Securities and Exchange Commission as a
broker-dealer and is a member of the National Association of Securities
Dealers. The Distributor is a wholly-owned subsidiary of First Data
Corporation and is located at 4400 Computer Drive, Westborough, MA 01581.
14
<PAGE> 180
(b) The information required by this item 29(b) with respect to each
director, officer, or partner of First Data Distributors, Inc. is incorporated
by reference to Schedule A of Form BD filed by First Data Distributors, Inc.
with the Securities and Exchange Commission pursuant to the Securities Act of
1934 (File No. 8-45467).
(c) Not Applicable.
Item 30. Location of Accounts and Records:
All records described in Section 31(a) of the 1940 Act and the
Rules 17 CFR 270.31a-1 to 31a-31 promulgated thereunder, are
maintained by the Fund's Investment Advisors as listed below,
except for those maintained by the Fund's Custodian, Bankers
Trust Company, 16 Wall Street, New York, NY 10005, and the
Fund's Sub-Administrator, Transfer, Redemption, Dividend
Disbursing and Accounting Agent, First Data Distributors, Inc.
4400 Computer Dr., Westborough, MA 01581.
15
<PAGE> 181
<TABLE>
<S> <C> <C>
The Chicago Trust Company Montag & Caldwell, Inc. Talon Asset Management, Inc.
171 North Clark Street 3343 Peachtree Road, NE One North Franklin
Chicago, IL 60601 Atlanta, GA 30326 Chicago, IL 60606
</TABLE>
Item 31. Management Services:
There are no management-related service contracts not
discussed in Part A or Part B.
Item 32. Undertakings:
(a) Not applicable.
(b) For purposes of providing "Management's Discussion of Fund
Performance", Registrant will furnish a copy of the Company's most recent
Annual Report, upon request and without charge, to every person for
whom a Prospectus is delivered.
16
<PAGE> 182
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Chicago, State of Illinois on the 27th day of
February, 1998.
CT& T FUNDS
-----------
By:/S/ Kenneth C. Anderson
-------------------------------
Kenneth C. Anderson, President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement of CT&T Funds has been signed below by the following person in his or
her capacity and on the 27th day of February, 1998.
Signature Capacity
- --------- --------
/s/ Stuart D. Bilton Chairman, Board of Trustees
Stuart D. Bilton
/s/ Dorothea C. Gilliam Trustee
Dorothea C. Gilliam
/s/ Nathan Shapiro Trustee
Nathan Shapiro
/s/ Gregory T. Mutz Trustee
Gregory T. Mutz
/s/ Leonard F. Amari Trustee
Leonard F. Amari
/s/ Kenneth C. Anderson President
Kenneth C. Anderson
(Principal Executive Officer)
/s/ Gerald F. Dillenburg Secretary, Treasurer and Vice President
Gerald F. Dillenburg
(Principal Accounting & Financial
Officer)
17
<PAGE> 183
CT&T FUNDS
REGISTRATION NO. 33-68666
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
AND
THE SECURITIES ACT OF 1933
ITEM #24 Financial Statements and Exhibits
99.B Index to Exhibits Filed Pursuant to Form N-IA:
(5)(c) Amended and Restated Guaranty Agreement, dated December 23, 1996
(6)(b) Distribution Agreement, dated June 1, 1997
(8)(a) Custodian Agreement, dated June 1, 1997
(9)(a) Transfer Agency and Services Agreement, dated June 1, 1997
(9)(c) Sub-Administration Agreement, dated June 1, 1997
(11)(a) Consent of Independent Auditors
(17) Financial Data Schedules
18
<PAGE> 1
EXHIBIT 99.B5(c)
AMENDED AND RESTATED
GUARANTY AGREEMENT
--------------------
This Guaranty Agreement dated October 30, 1995, and amended and restated
on December 23, 1996 (the "Agreement"), is made between CHICAGO TITLE AND TRUST
COMPANY ("CT&T") and CT&T FUNDS, an open-end series investment company (the
"Trust").
WITNESSETH
WHEREAS, CT&T is effecting a corporate reorganization on October 30, 1995
pursuant to which its investment management operations will be transferred to
The Chicago Trust Company ("TCTC"), and indirect wholly-owned subsidiary of
CT&T, and
WHEREAS, the Board of Trustees of the Trust has approved the transfer and
assignment of the investment advisory contracts, between the Trust and CT&T,
relating to CT&T Growth & Income Fund, CT&T Asset Allocation Fund, CT&T
Intermediate Fixed Income Fund, CT&T Intermediate Municipal Bond Fund, CT&T
Money Market Fund and CT&T Talon Fund (individually referred to as "Advisory
Contract" and collectively referred to as the "Advisory Contracts") to TCTC,
subject to certain conditions, including the guaranty of the duties and
obligations of TCTC under the Advisory Contracts, and
WHEREAS, CT&T desires to assign its rights, duties and obligations under
the Advisory Contracts to TCTC and enter into this Agreement in connection
therewith.
NOW THEREFORE, in consideration of the agreement to permit the transfer of
the Advisory Contracts, CT&T hereby covenants and guarantees to the Trust as
follows:
Section 1. Unconditional Guaranty. CT&T hereby unconditionally
guarantees to the Trust the prompt performance of all duties and obligations of
TCTC as the investment advisor under the Advisory Contracts and the full and
prompt payment of any liability of TCTC as investment advisor under the
Advisory Contracts when and as the same shall become due. All payments by CT&T
pursuant hereto will be paid in lawful money of the United States of America.
Section 2. Absolute and Unconditional Obligations. The obligations of
CT&T under this Agreement shall be absolute and unconditional and shall remain
in full force and effect during the term of this Agreement as specified in
Section 4.
Section 3. Rights Against CT&T. The Trust may proceed first directly
against CT&T under this Agreement without proceeding against or exhausting
any other remedies which it may have against any other person, firm or
corporation.
Section 4. Terms of Agreement. The obligations of CT&T hereunder shall
arise absolutely and unconditionally upon the transfer of the Advisory
Contracts to TCTC, whenever effective, and the agreements and covenants
contained herein shall terminate with respect to each Advisory Contract upon
termination of each such Advisory Contract or until such Advisory Contract
shall have been approved by the appropriate shareholders of the Trust.
- --------------------------------------------------------------------------------
Investment Advisory Guaranty Agreement
CT&T FUNDS Page 1
<PAGE> 2
Section 5. No Waiver. No delay or omission to exercise any right or
power accruing upon failure of performance hereunder shall impair any such
right or power or shall be construed to be a waiver thereof, but any such right
and power may be exercised from time to time as often as may be deemed
expedient. In order to entitle the Trust to exercise any remedy reserved to it
in this Agreement, it shall not be necessary to give any notice, other than
such notice as may be herein expressly required. In the event any provision
contained in this Agreement should be breached by CT&T and thereafter duly
waived by the Trust, such waiver shall be limited to the particular breach so
waived and shall not be deemed to waive any other breach hereunder. No waiver,
amendment, release or modification of this Agreement shall be established by
conduct, custom or course of dealing, but solely by an instrument in writing
duly executed by the parties hereto.
Section 6. Entire Agreement; Counterparts. This Agreement constitutes
the entire agreement, and supersedes all prior agreements and understandings,
both written and oral, between the parties with respect to the subject matter
hereof and may be executed simultaneously in several counterparts, each of
which shall be deemed an original, and all of which together shall constitute
one and the same instrument.
Section 7. Severability. The invalidity or unenforceability of any one
or more phrases, sentences, clauses or sections in this Agreement shall not
affect the validity or enforceability of the remaining portions of this
Agreement, or any part thereof.
Section 8. Governing Law. This Agreement shall be governed exclusively
by the applicable laws of the State of Illinois.
Section 9. Successors and Assigns. Nothing herein expressed or mentioned
in or to be implied from this Agreement is intended or shall be construed to
give to any person, other than the parties hereto and their legal assigns, any
legal or equitable right, remedy or claim under or in respect of this
Agreement. This Agreement and all of the covenants, conditions and provisions
hereof are intended to be and are for the sole and exclusive benefit of the
parties hereto, and shall inure to the benefit of and bind their respective
successors and assigns.
Section 10. Future Documents. CT&T agrees to execute and deliver all
such further reasonable documents and perform all such other reasonable actions
as may, in the opinion of the Trust, be required to carry out the purpose and
intent of this Agreement.
Section 11. Counterparts. Any consent, approval, direction or other
instrument required by this Agreement to be signed and executed by the Trust
may be in any number of concurrent writings of similar tenor.
- --------------------------------------------------------------------------------
Investment Advisory Guaranty Agreement
CT&T FUNDS Page 2
<PAGE> 3
IN WITNESS WHEREOF, CT&T and the Trust have caused this Agreement to be
executed in their respective corporate names by their respective officers,
thereunto duly authorized, as of the date first above written.
CT&T FUNDS CHICAGO TITLE AND TRUST COMPANY
By: By:
---------------- ----------------------------
Its: Vice President Its: President
--------------- ---------------------------
- --------------------------------------------------------------------------------
Investment Advisory Guaranty Agreement
CT&T FUNDS Page 3
<PAGE> 4
ASSIGNMENT
In consideration of the payment of which is hereby acknowledged, CHICAGO
TITLE AND TRUST COMPANY hereby assigns to THE CHICAGO TRUST COMPANY all its
right, title and interest in and to the contracts and agreements identified in
Appendix A hereto ("Agreements") with full power and authority to collect and
receive any sum or sums due or to become due under the Agreements.
THE CHICAGO TRUST COMPANY agrees with CHICAGO TITLE AND TRUST COMPANY to
assume and faithfully perform and discharge all the terms and obligations
assumed, or to be performed by CHICAGO TITLE AND TRUST COMPANY, under the
Agreements.
IN WITNESS WHEREOF, the parties hereto have entered into this Assignment
on this 30th day of October, 1995.
THE CHICAGO TRUST COMPANY CHICAGO TITLE AND TRUST COMPANY
By: By:
---------------------- ----------------------------
Its: Its:
--------------------- ---------------------------
CONSENT
-------
The undersigned hereby consents to the foregoing assignments of the
agreements identified in Appendix A hereto on the express conditions that
CHICAGO TITLE AND TRUST COMPANY has executed a Guaranty Agreement substantially
in the form attached as Appendix B hereto and that THE CHICAGO TRUST COMPANY
has agreed to perform and discharge all of the terms and obligations assumed or
to be performed under the Agreements.
IN WITNESS WHEREOF, the undersigned has executed this consent on this 30th
day of October, 1995.
CT&T FUNDS
By:
-------------------------
Its:
------------------------
- --------------------------------------------------------------------------------
Investment Advisory Guaranty Agreement
CT&T FUNDS Page 4
<PAGE> 5
APPENDIX A
1. Investment Advisory Agreement, dated November 30, 1993, by and between
Chicago Title and Trust Company and CT&T Funds for CT&T Growth & Income
Fund (now known as Chicago Trust Growth & Income Fund).
2. Investment Advisory Agreement, dated November 30, 1993, by and between
Chicago Title and Trust Company and CT&T Funds for CT&T Intermediate Fixed
Income Fund (now known as Chicago Trust Bond Fund).
3. Investment Advisory Agreement, dated November 30, 1993, by and between
Chicago Title and Trust Company and CT&T Funds for CT&T Intermediate
Municipal Bond Fund (now known as Chicago Trust Municipal Bond Fund).
4. Investment Advisory Agreement, dated November 30, 1993, by and between
Chicago Title and Trust Company and CT&T Funds for CT&T Money Market Fund
(now known as Chicago Trust Money Market Fund).
5. Investment Advisory Agreement, dated August 27, 1994, by and between
Chicago Title and Trust Company and CT&T Funds for CT&T Talon Fund (now
known as Chicago Trust Talon Fund).
6. Investment Advisory Agreement, dated March 15, 1995, by and between
Chicago Title and Trust Company and CT&T Funds for CT&T Asset Allocation
Fund (now known as Chicago Trust Asset Allocation Fund).
7. Administration Agreement, dated June 15, 1995, by and between Chicago
Title and Trust Company and CT&T Funds.
- --------------------------------------------------------------------------------
Investment Advisory Guaranty Agreement
CT&T FUNDS Page 5
<PAGE> 1
EXHIBIT 99.B6(b)
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made as of this 1st day of June, 1997 (the "Agreement")
by and between CT & T Funds, a Delaware business trust (the "Company") and
First Data Distributors, Inc. (the "Distributor"), a Massachusetts corporation.
WHEREAS, the Company is registered as a diversified, open-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and is currently offering units of beneficial interest (such units
of all series are hereinafter called the "Shares"), representing interests in
investment portfolios of the Company identified on Schedule A hereto (the
"Funds") which are registered with the Securities and Exchange Commission (the
"SEC") pursuant to the Company's Registration Statement on Form N-1A (the
"Registration Statement"); and
WHEREAS, the Company desires to retain the Distributor as distributor for
the Funds to provide for the sale and distribution of the Shares of the Funds
identified on Schedule A and for such additional classes or series as the
Company may issue, and the Distributor is prepared to provide such services
commencing on the date first written above.
NOW THEREFORE, in consideration of the premises and mutual covenants set
forth herein and intending to be legally bound hereby the parties hereto agree
as follows:
1. SERVICE AS DISTRIBUTOR
1.1 The Distributor will act on behalf of the Company for the distribution of
the Shares covered by the Registration Statement under the Securities Act
of 1933, as amended (the "1933 Act"). The Distributor will have no
liability for payment for the purchase of Shares sold pursuant to this
Agreement or with respect to redemptions or repurchases of Shares. The
Company can withdraw the offering of Shares at any time and without prior
notice.
1.2 The Distributor agrees to use efforts deemed appropriate by the
Distributor to solicit orders for the sale of the Shares and will
undertake such advertising and promotion as it believes reasonable in
connection with such solicitation; provided, however, that each Fund will
bear the expenses incurred and other payments made in accordance with the
provisions of this Agreement and any plan now or hereafter adopted with
respect to any Fund pursuant to Rule 12b-1 under the 1940 Act (the
"Plans"). To the extent that the Distributor receives shareholder
services fees under any Plan adopted by the Company, the Distributor
agrees to furnish, and/or enter into arrangements with others for the
furnishing of, personal and/or account maintenance services with respect
to the relevant shareholders of the Company as may be required pursuant to
such Plan. The Company understands that the Distributor is now, and may
in the future be, the distributor of the shares of several investment
companies or series (collectively, the "Investment Entities"), including
Investment Entities having investment objectives similar to those of the
Company. The Company further understands that investors and potential
investors in the Company may invest in shares of such other Investment
Entities. The Company agrees that the Distributor's duties to such
Investment Entities shall not be deemed in conflict with its duties to the
Company under this Section 1.2.
<PAGE> 2
1.3 The Distributor shall not utilize any materials in connection with the
sale or offering of Shares except the Company's prospectus and statement
of additional information and such other materials as the Company shall
provide or approve.
1.4 All activities by the Distributor and its employees, as distributor of
the Shares, shall comply with all applicable laws, rules and regulations,
including, without limitation, all rules and regulations made or adopted
by the SEC or the National Association of Securities Dealers, Inc.
1.5 The Distributor will transmit any orders received by it for purchase or
redemption of the Shares to the transfer agent for the Company.
1.6 Whenever in its judgment such action is warranted by unusual market,
economic or political conditions, the Company may decline to accept any
orders for, or make any sales of, the Shares until such time as the
Company deems it advisable to accept such orders and to make such sales.
1.7 The Distributor may enter into selling agreements with selected dealers
or other institutions with respect to the offering of Shares to the
public. Each such selling agreement will provide (a) that all payments
for purchases of Shares will be sent directly from the dealer or such
other institution to the Funds' transfer agent and (b) that, if payment is
not made with respect to purchases of Shares at the customary or required
time for settlement of the transaction, the Distributor will have the
right to cancel the sale of the Shares ordered by the dealer or such other
institution, in which case the dealer or such other institution will be
responsible for any loss suffered by any Fund or the Distributor resulting
from such cancellation. The Distributor may also act as disclosed agent
for a Fund and sell Shares of that Fund to individual investors, such
transactions to be specifically approved by an officer of that Fund.
1.8 The Company agrees at its own expense to execute any and all documents
and to furnish any and all information and otherwise to take all actions
that may be reasonably necessary to allow the sale of the Shares in such
states as the Distributor may designate. The Company shall notify the
Distributor in writing of the states in which the Shares may be sold and
shall notify the Distributor in writing of any changes to the information
contained in the previous notification.
1.9 The Company shall furnish from time to time, for use in connection with
the sale of the Shares, such information with respect to the Company and
the Shares as the Distributor may reasonably request; and the Company
warrants that the statements contained in any such information shall
fairly show or represent what they purport to show or represent. The
Company shall also furnish the Distributor upon request with: (a) audited
annual statements and unaudited semi-annual statements of a Fund's books
and accounts prepared by the Company and (b) from time to time such
additional information regarding the financial condition of the Company as
the Distributor may reasonably request.
1.10 The Company represents to the Distributor that the Registration Statement
and prospectuses filed by the Company with the SEC under the 1933 Act with
respect to the
2
<PAGE> 3
Shares have been prepared in conformity with the requirements of the 1933
Act and the rules and regulations of the SEC thereunder. As used in this
Agreement, the term "Registration Statement" shall mean the Registration
Statement and any prospectus and any statement of additional information
relating to the Company filed with the SEC as in effect from time to time
and any amendments or supplements thereto filed with the SEC. Except as
to information included in the Registration Statement in reliance upon
information provided to the Company by the Distributor or any affiliate of
the Distributor, the Company represents and warrants to the Distributor
that the Registration Statement, when such Registration Statement becomes
effective, will contain statements required to be stated therein in
conformity with the 1933 Act and the rules and regulations of the SEC;
that all statements of fact contained in any such Registration Statement
will be true and correct when such Registration Statement becomes
effective; and that no Registration Statement when such Registration
Statement becomes effective will include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading to a purchaser of the Shares.
The Distributor may but shall not be obligated to propose from time to
time such amendment or amendments to any Registration Statement and such
supplement or supplements to any prospectus as, in the light of future
developments, may, in the opinion of the Distributor's counsel, be
necessary or advisable. The Distributor shall promptly notify the Company
of any advice given to it by its counsel regarding the necessity or
advisability of amending or supplementing such Registration Statement.
The Company shall not file any amendment to any Registration Statement or
supplement to any prospectus without giving the Distributor reasonable
notice thereof in advance; provided, however, that nothing contained in
this Agreement shall in any way limit the Company's right to file at any
time such amendments to any Registration Statements and/or supplements to
any prospectus, of whatever character, as the Company may deem advisable,
such right being in all respects absolute and unconditional.
1.11 The Company authorizes the Distributor to use any prospectus or statement
of additional information in the form furnished from time to time in
connection with the sale of the Shares. The Company agrees to indemnify
and hold harmless the Distributor, its officers, directors, and employees,
and any person who controls the Distributor within the meaning of Section
15 of the 1933 Act, free and harmless from and against any and all claims,
costs, expenses (including reasonable attorneys' fees) losses, damages,
charges, payments and liabilities of any sort or kind which the
Distributor, its officers, directors, employees or any such controlling
person may incur, directly or indirectly, under the 1933 Act, arising out
of or based upon:
(a) any untrue statement of a material fact contained in the Company's
Registration Statement, prospectus, statement of additional information,
or sales literature (including amendments and supplements thereto), or
(b) any omission to state a material fact required to be stated in the
Company's Registration Statement, prospectus, statement of additional
information or sales literature (including amendments or supplements
thereto), necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, provided,
however, that insofar as losses, claims, damages, liabilities or expenses
arise out of or are
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based upon any such untrue statement or omission made in reliance on and
in conformity with information furnished to the Company by the Distributor
or its affiliated persons for use in the Company's Registration Statement,
prospectus, or statement of additional information or sales literature
(including amendments or supplements thereto), such indemnification is
not applicable.
The Company acknowledges and agrees that in the event that the Distributor
is required to give indemnification comparable to that set forth in this
Section 1.11 to any broker-dealer or other entity selling Shares of the
Company and such broker-dealer or other entity shall make a claim for
indemnification against the Distributor, the Distributor shall make a
similar claim for indemnification against the Company.
1.12 The Distributor agrees to indemnify and hold harmless the Company, its
officers, trustees, and employees, and any person who controls the Company
within the meaning of Section 15 of the 1933 Act, free and harmless from
and against any and all claims, costs, expenses (including reasonable
attorneys' fees) losses, damages, charges, payments and liabilities of any
sort or kind which the Company, its officers, trustees, employees or any
such controlling person may incur, directly or indirectly, under the 1933
Act, arising out of or based upon:
(a) any untrue statement of a material fact contained in the Company's
Registration Statement, prospectus, statement of additional information,
or sales literature (including amendments and supplements thereto),
provided that such untrue statement was made in reliance on and in
conformity with information furnished to the Company by the Distributor
for use in the Company's Registration Statement, prospectus, statement of
additional information or sales literature (including any amendments or
supplements), or
(b) any omission to state a material fact required to be stated in the
Company's Registration Statement, prospectus, statement of additional
information or sales literature (including amendments or supplements
thereto), necessary to make the statements therein not misleading,
provided, that such omission to state a material fact was made in reliance
on and in conformity with information furnished to the Company by the for
use in the Company's Registration Statement, prospectus, or statement of
additional information or sales literature (including amendments or
supplements thereto).
1.13 In any case in which one party hereto (the "Indemnifying Party") may be
asked to indemnify or hold the other party hereto (the "Indemnified
Party") harmless, the Indemnified Party will notify the Indemnifying Party
promptly after identifying any situation which it believes presents or
appears likely to present a claim for indemnification (an "Indemnification
Claim") against the Indemnifying Party, although the failure to do so
shall not prevent recovery by the Indemnified Party, and shall keep the
Indemnifying Party advised with respect to all developments concerning
such situation. The Indemnifying Party shall have the option to defend the
Indemnified Party against any Indemnification Claim which may be the
subject of this indemnification, and, in the event that the Indemnifying
Party so elects, such defense shall be conducted by counsel chosen by the
Indemnifying Party and satisfactory to the Indemnified Party, and
thereupon the Indemnifying Party shall take over complete defense of the
Indemnification Claim and the Indemnified Party shall sustain no further
legal or other expenses in respect of such
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Indemnification Claim. The Indemnified Party will not confess any
Indemnification Claim or make any compromise in any case in which the
Indemnifying Party will be asked to provide indemnification, except with
the Indemnifying Party's prior written consent. The obligations of the
parties hereto under this Section 1.12 and Section 3.1 shall survive the
termination of this Agreement.
In the event that the Indemnifying Party does not elect to assume the
defense of any such suit, or in case the Indemnified Party reasonably
does not approve of counsel chosen by the Indemnifying Party, the
Indemnifying Party will reimburse the Indemnified Party, its officers,
directors and employees, or the controlling person or persons named as
defendant or defendants in such suit, for the fees and expenses of any
counsel retained by the Indemnified Party or them. The Indemnifying
Party's indemnification agreement contained in this Section 1.12 and
Section 3.1 and the Indemnifying Party's representations and warranties
in this Agreement shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of the Indemnified
Party, its officers, directors and employees, or any controlling person.
This agreement of indemnity will inure exclusively to the Indemnified
Party's benefit, to the benefit of its several officers, directors and
employees, and their respective estates and to the benefit of the
controlling persons and their successors. The Company agrees promptly to
notify the Distributor of the commencement of any litigation or
proceedings against the Company or any of its officers or affiliates in
connection with the issue and sale of any Shares.
1.14 No Shares shall be offered by either the Distributor or the Company under
any of the provisions of this Agreement and no orders for the purchase or
sale of Shares hereunder shall be accepted by the Company if and so long
as effectiveness of the Registration Statement then in effect or any
necessary amendments thereto shall be suspended under any of the
provisions of the 1933 Act, or if and so long as a current prospectus as
required by Section 5(b)(2) of the 1933 Act is not on file with the SEC;
provided, however, that nothing contained in this Section 1.14 shall in
any way restrict or have any application to or bearing upon the Company's
obligation to redeem Shares tendered for redemption by any shareholder in
accordance with the provisions of the Company's Registration Statement,
Declaration of Trust, bylaws or the 1940 Act.
1.15 The Company agrees to advise the Distributor as soon as reasonably
practical by a notice in writing delivered to the Distributor:
(a) of any request by the SEC for amendments to the Registration
Statement, prospectus or statement of additional information then in
effect;
(b) in the event of the issuance by the SEC of any stop order suspending
the effectiveness of the Registration Statement, prospectus or statement
of additional information then in effect or the initiation by service of
process on the Company of any proceeding for that purpose; and
(c) of the happening of any event that makes untrue any statement of a
material fact made in the Registration Statement, prospectus or statement
of additional information then in effect or that requires the making of a
change in such Registration Statement,
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prospectus or statement of additional information in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading.
1.16 The Distributor agrees to be responsible for implementing and
operating the Plans in accordance with the terms thereof.
2. TERM
2.1 This Agreement shall become effective on the date first written above
and, unless sooner terminated as provided herein, shall continue for an
initial one-year term and thereafter shall be renewed for successive
one-year terms, provided such continuance is specifically approved at
least annually by (i) the Company's Board of Trustees or (ii) by a vote of
a majority (as defined in the 1940 Act and Rule 18f-2 thereunder) of the
outstanding voting securities of the Company, provided that in either
event the continuance is also approved by a majority of the Trustees who
are not parties to this Agreement and who are not interested persons (as
defined in the 1940 Act) of any party to this Agreement, by vote cast in
person at a meeting called for the purpose of voting on such approval.
This Agreement is terminable without penalty, on at least sixty days'
written notice, by the Company's Board of Trustees, by vote of a majority
(as defined in the 1940 Act and Rule 18f-2 thereunder) of the outstanding
voting securities of the Company, or by the Distributor. This Agreement
will also terminate automatically in the event of its assignment (as
defined in the 1940 Act and the rules thereunder).
2.2 In the event a termination notice is given by the Company, all expenses
associated with movement of records and materials and conversion thereof
will be borne by the Company.
3. LIMITATION OF LIABILITY
3.1 The Distributor shall not be liable to the Company for any error of
judgment or mistake of law or for any loss suffered by the Company in
connection with the performance of its obligations and duties under this
Agreement, except a loss resulting from the Distributor's willful
misfeasance, bad faith or negligence in the performance of such
obligations and duties, or by reason of its reckless disregard thereof.
The Company will indemnify the Distributor against and hold it harmless
from any and all claims, costs, expenses (including reasonable attorneys'
fees), losses, damages, charges, payments and liabilities of any sort or
kind which may be asserted against the Distributor for which the
Distributor may be held to be liable in connection with this Agreement or
the Distributor's performance hereunder (a "Section 3.1 Claim"), unless
such Section 3.1 Claim resulted from a negligent act or omission to act,
bad faith or willful misfeasance by the Distributor in the performance of
its duties hereunder. The Distributor will indemnify the Company against
and hold it harmless from any and all claims, costs, expenses (including
reasonable attorneys' fees), losses, damages, charges, payments and
liabilities of any sort or kind which may be asserted against the Company
for which the Company may be held to be liable in connection with this
Agreement or the Distributor's performance hereunder (a "Section 3.1
Claim"), provided that such Section 3.1 Claim resulted from a negligent
act or omission to act, bad faith or willful misfeasance by the
Distributor in the
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performance of its duties hereunder. The obligations of the parties
hereto under this Section 3.1 shall survive termination of this Agreement.
3.2 Neither party may assert any cause of action against the other party
under this Agreement that accrued more than two (2) years prior to the
filing of the suit (or commencement of arbitration proceedings) alleging
such cause of action.
3.3 Each party shall have the duty to mitigate damages for which the other
party may become responsible.
3.4 NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO EVENT
SHALL EITHER PARTY, ITS AFFILIATES OR ANY OF ITS OR THEIR DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS OR SUBCONTRACTORS BE LIABLE FOR CONSEQUENTIAL
DAMAGES.
4. EXCLUSION OF WARRANTIES
THIS IS A SERVICE AGREEMENT. EXCEPT AS EXPRESSLY PROVIDED IN THIS
AGREEMENT, THE DISTRIBUTOR DISCLAIMS ALL OTHER REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED, MADE TO THE COMPANY, A FUND OR ANY OTHER
PERSON, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES REGARDING
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE OF ANY
SERVICES OR ANY GOODS PROVIDED INCIDENTAL TO SERVICES PROVIDED UNDER THIS
AGREEMENT.
5. MODIFICATIONS AND WAIVERS
No change, termination, modification, or waiver of any term or condition
of the Agreement shall be valid unless in writing signed by each party.
No such writing shall be effective as against the Distributor unless said
writing is executed by a Senior Vice President, Executive Vice President
or President of the Distributor. A party's waiver of a breach of any term
or condition in the Agreement shall not be deemed a waiver of any
subsequent breach of the same or another term or condition.
6. NO PRESUMPTION AGAINST DRAFTER
The Distributor and the Company have jointly participated in the
negotiation and drafting of this Agreement. The Agreement shall be
construed as if drafted jointly by the Company and the Distributor, and no
presumptions arise favoring any party by virtue of the authorship of any
provision of this Agreement.
7. PUBLICITY
Neither the Distributor nor the Company shall release or publish news
releases, public announcements, advertising or other publicity relating to
this Agreement or to the transactions contemplated by it without prior
review and written approval of the other party; provided, however, that
either party may make such disclosures as are required by
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legal, accounting or regulatory requirements after making reasonable
efforts in the circumstances to consult in advance with the other party.
8. SEVERABILITY
The parties intend every provision of this Agreement to be severable. If
a court of competent jurisdiction determines that any term or provision
is illegal or invalid for any reason, the illegality or invalidity shall
not affect the validity of the remainder of this Agreement. In such
case, the parties shall in good faith modify or substitute such provision
consistent with the original intent of the parties. Without limiting the
generality of this paragraph, if a court determines that any remedy
stated in this Agreement has failed of its essential purpose, then all
other provisions of this Agreement, including the limitations on
liability and exclusion of damages, shall remain fully effective.
9. FORCE MAJEURE
No party shall be liable for any default or delay in the performance of
its obligations under this Agreement if and to the extent such default or
delay is caused, directly or indirectly, by (i) fire, flood, elements of
nature or other acts of God; (ii) any outbreak or escalation of
hostilities, war, riots or civil disorders in any country, (iii) any act
or omission of the other party or any governmental authority; (iv) any
labor disputes (whether or not the employees' demands are reasonable or
within the party's power to satisfy); or (v) nonperformance by a third
party or any similar cause beyond the reasonable control of such party,
including without limitation, failures or fluctuations in
telecommunications or other equipment. In any such event, the
non-performing party shall be excused from any further performance and
observance of the obligations so affected only for so long as such
circumstances prevail and such party continues to use commercially
reasonable efforts to recommence performance or observance as soon as
practicable.
10. MISCELLANEOUS
10.1 Any notice or other instrument authorized or required by this Agreement
to be given in writing to the Company or the Distributor shall be
sufficiently given if addressed to the party and received by it at its
office set forth below or at such other place as it may from time to time
designate in writing.
To the Company:
CT & T Funds
171 North Clark Street
Chicago, Illinois 60601
To the Distributor:
First Data Distributors, Inc.
4400 Computer Drive
Westboro, Massachusetts 01581
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10.2 The laws of the Commonwealth of Massachusetts, excluding the laws on
conflicts of laws, and the applicable provisions of the 1940 Act shall
govern the interpretation, validity, and enforcement of this Agreement.
To the extent the provisions of Massachusetts law or the provisions hereof
conflict with the 1940 Act, the 1940 Act shall control. All actions
arising from or related to this Agreement shall be brought in the state
and federal courts sitting in the City of Boston, and the Distributor and
the Company hereby submit themselves to the exclusive jurisdiction of
those courts.
10.3 This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original and which collectively shall be
deemed to constitute only one instrument.
10.4 The captions of this Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
10.5 This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and is not intended to
confer upon any other person any rights or remedies hereunder.
10.6 Pursuant to Section 2.10 of the Trust Instrument dated September 8, 1993
as filed with the Secretary of State of the State of Delaware on September
10, 1993, the obligations of the Company stated under this Agreement are
limited to the assets of the Company or the Funds, as the case may be, and
each shareholder of the Company and of each Fund shall not be personally
liable for any debts, liabilities, obligations and expenses arising
hereunder.
11. CONFIDENTIALITY
11.1 The parties agree that the Proprietary Information (defined below) and
Confidential Information as defined in Section 10.3 below (collectively
"Confidential Information") are confidential information of the parties
and their respective licensers. The Company and the Distributor shall
exercise reasonable care to safeguard the confidentiality of the
Confidential Information of the other. The Company and the Distributor
may each use the Confidential Information only to exercise its rights or
perform its duties under this Agreement. Except as may be required by
law, the Company and the Distributor shall not duplicate, sell or disclose
to others the Confidential Information of the other, in whole or in part,
without the prior written permission of the other party. The Company and
the Distributor may, however, disclose Confidential Information to its
employees who have a need to know the Confidential Information to perform
work for the other, provided that each shall use reasonable efforts to
ensure that the Confidential Information is not duplicated or disclosed by
its employees in breach of this Agreement. The Company and the
Distributor may also disclose the Confidential Information to independent
contractors, auditors and professional advisors, if necessary.
Notwithstanding the previous sentence, in no event shall either the
Company or the Distributor disclose the Confidential Information to any
competitor of the other without specific, prior written consent.
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11.2 Proprietary Information means:
(a) any data or information that is competitively sensitive material, and
not generally known to the public, including, but not limited to,
information about product plans, marketing strategies, finance,
operations, customer relationships, customer profiles, sales estimates,
business plans, and internal performance results relating to the past,
present or future business activities of the Company or the Distributor,
their respective subsidiaries and affiliated companies and the customers,
clients and suppliers of any of them;
(b) any scientific or technical information, design, process, procedure,
formula, or improvement that is commercially valuable and secret in the
sense that its confidentiality affords the Company or the Distributor a
competitive advantage over its competitors: and
(c) all confidential or proprietary concepts, documentation, reports,
data, specifications, computer software, source code, object code, flow
charts, databases, inventions, know-how, show-how and trade secrets,
whether or not patentable or copyrightable.
11.3 Confidential Information includes, without limitation, all documents,
inventions, substances, engineering and laboratory notebooks, drawings,
diagrams, specifications, bills of material, equipment, prototypes and
models, and any other tangible manifestation of the foregoing of either
party which now exist or come into the control or possession of the other.
11.4 The Parties acknowledge that breach of the restrictions on use,
dissemination or disclosure of any Confidential Information would result
in immediate and irreparable harm, and money damages would be inadequate
to compensate the other party for that harm. The non-breaching party
shall be entitled to equitable relief, in addition to all other available
remedies, to redress any such breach.
13. ENTIRE AGREEMENT
This Agreement, including all Schedules hereto, constitutes the entire
agreement between the parties with respect to the subject matter hereof
and supersedes all prior and contemporaneous proposals, agreements,
contracts, representations, and understandings, whether written or oral,
between the parties with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
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CT & T FUNDS
By: /s/Kenneth Anderson
Name: Kenneth Anderson
Title: President
FIRST DATA DISTRIBUTORS, INC.
By: /s/Barbara L. Worthen
Name: Barbara L. Worthen
Title: Executive Vice President
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SCHEDULE A
to the Distribution Agreement
between CT & T Funds and
First Data Distributors, Inc.
Name of Funds
Montag & Caldwell Growth Fund
Chicago Trust Growth & Income Fund
Chicago Trust Talon Fund
Chicago Trust Asset Allocation Fund
Montag & Caldwell Balanced Fund
Chicago Trust Bond Fund
Chicago Trust Municipal Bond Fund
Chicago Trust Money Market Fund
A-1
<PAGE> 1
BANKERS TRUST COMPANY EXHIBIT 99.B8(a)
One Bankers Trust Plaza, New York, New York 10006
Mailing Address:
P.O. Box 318, Church Street Station
New York, New York 10008
CUSTODIAN AGREEMENT
AGREEMENT dated as of June 1, 1997, between BANKERS TRUST COMPANY (the
"Custodian") and CT&T FUNDS (the "Customer").
WHEREAS, the Customer may be organized with one or more series of
shares, each of which shall represent an interest in a separate portfolio of
Securities and Cash (each as hereinafter defined) (all such existing and
additional series now or hereafter listed on Exhibit A being hereafter referred
to individually as a "Portfolio" and collectively, as the "Portfolios"); and
WHEREAS, the Customer desires to appoint the Custodian as custodian on
behalf of the Portfolios under the terms and conditions set forth in this
Agreement, and the Custodian has agreed to so act as custodian.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
1. Employment of Custodian. The Customer hereby employs the Custodian
as custodian of all assets of each Portfolio which are delivered to and accepted
by the Custodian or any Subcustodian (as that term is defined in Section 4) (the
"Property") pursuant to the terms and conditions set forth herein. Without
limitation, such Property shall include stocks and other equity interests of
every type, evidences of indebtedness, other instruments representing same or
rights or obligations to receive, purchase, deliver or sell same and other
non-cash investment property of a Portfolio which is acceptable for deposit
("Securities") and cash from any source and in any currency ("Cash"). The
Custodian shall not be responsible for any property of a Portfolio held or
received by the Customer or others and not delivered to the Custodian or any
Subcustodian.
2. Maintenance of Securities and Cash at Custodian and Subcustodian
Locations. Pursuant to Instructions, the Customer shall direct the Custodian to
(a) settle Securities transactions and maintain cash in the country or other
jurisdiction in which the principal trading market for such Securities is
located, where such Securities are to be presented for payment or where such
Securities are acquired and (b) maintain cash and cash equivalents in such
countries in amounts reasonably necessary to effect the Customer's transactions
in such Securities. Instructions to settle Securities transactions in any
country shall be deemed to authorize the holding of such Securities and Cash in
that country.
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3. Custody Account. The Custodian agrees to establish and maintain one
or more custody accounts on its books each in the name of a Portfolio (each, an
"Account") for any and all Property from time to time received and accepted by
the Custodian or any Subcustodian for the account of such Portfolio.
Upon delivery by the Customer to the Custodian of any Property belonging to a
Portfolio, the Customer shall, by Instructions (as hereinafter defined in
Section 14), specifically indicate which Portfolio such Property belongs or if
such Property belongs to more than one Portfolio shall allocate such Property to
the appropriate Portfolio. The Custodian shall allocate such Property to the
Accounts in accordance with the Instructions; provided that the Custodian shall
have the right, in its sole discretion, to refuse to accept any Property that is
not in proper form for deposit for any reason. The Customer on behalf of each
Portfolio, acknowledges its responsibility as a principal for all of its
obligations to the Custodian arising under or in connection with this Agreement,
warrants its authority to deposit in the appropriate Account any Property
received therefor by the Custodian or a Subcustodian and to give, and authorize
others to give, instructions relative thereto. The Custodian may deliver
securities of the same class in place of those deposited in the Account.
The Custodian shall hold, keep safe and protect as custodian for each
Account, on behalf of the Customer, all Property in such Account. All
transactions, including, but not limited to, foreign exchange transactions,
involving the Property shall be executed or settled solely in accordance with
Instructions (which shall specifically reference the Account for which such
transaction is being settled), except that until the Custodian receives
Instructions to the contrary, the Custodian will:
(a) collect all interest and dividends and all other income and
payments, whether paid in cash or in kind, on the Property, as
the same become payable and credit the same to the appropriate
Account;
(b) present for payment all Securities held in an Account which
are called, redeemed or retired or otherwise become payable
and all coupons and other income items which call for payment
upon presentation to the extent that the Custodian or
Subcustodian is actually aware of such opportunities and hold
the cash received in such Account pursuant to this Agreement;
(c) (i) exchange Securities where the exchange is purely
ministerial (including, without limitation, the exchange of
temporary securities for those in definitive form and the
exchange of warrants, or other documents of entitlement to
securities, for the Securities themselves) and (ii) when
notification of a tender or exchange offer (other than
ministerial exchanges described in (i) above) is received for
an Account, endeavor to receive Instructions, provided that if
such Instructions are not received in time for the Custodian
to take timely action, no action shall be taken with respect
thereto;
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(d) whenever notification of a rights entitlement or a fractional
interest resulting from a rights issue, stock dividend or
stock split is received for an Account and such rights
entitlement or fractional interest bears an expiration date,
if after endeavoring to obtain Instructions such Instructions
are not received in time for the Custodian to take timely
action or if actual notice of such actions was received too
late to seek Instructions, sell in the discretion of the
Custodian (which sale the Customer hereby authorizes the
Custodian to make) such rights entitlement or fractional
interest and credit the Account with the net proceeds of such
sale;
(e) execute in the Customer's name for an Account, whenever the
Custodian deems it appropriate, such ownership and other
certificates as may be required to obtain the payment of
income from the Property in such Account;
(f) pay for each Account, any and all taxes and levies in the
nature of taxes imposed on interest, dividends or other
similar income on the Property in such Account by any
governmental authority. In the event there is insufficient
Cash available in such Account to pay such taxes and levies,
the Custodian shall notify the Customer of the amount of the
shortfall and the Customer, at its option, may deposit
additional Cash in such Account or take steps to have
sufficient Cash available. The Customer agrees, when and if
requested by the Custodian and required in connection with the
payment of any such taxes to cooperate with the Custodian in
furnishing information, executing documents or otherwise; and
(g) appoint brokers and agents for any of the ministerial
transactions involving the Securities described in (a) - (f),
including, without limitation, affiliates of the Custodian or
any Subcustodian.
4. Subcustodians and Securities Systems. The Customer authorizes
and instructs the Custodian to hold the Property in each Account in custody
accounts which have been established by the Custodian with (a) one of its U.S.
branches or another U.S. bank or trust company or branch thereof located in the
U.S. which is itself qualified under the Investment Company Act of 1940, as
amended ("1940 Act"), to act as custodian (individually, a "U.S. Subcustodian"),
or a U.S. securities depository or clearing agency or system in which the
Custodian or a U.S. Subcustodian participates (individually, a "U.S. Securities
System") or (b) after the Board of Trustees of the Customer makes the findings
and approvals required under Rule 17f-5 of the 1940 Act ("Rule 17f-5") one of
its non-U.S. branches or majority-owned non-U.S. subsidiaries, a non-U.S. branch
or majority-owned subsidiary of a U.S. bank or a non-U.S. bank or trust company,
acting as custodian (individually, a "non-U.S. Subcustodian"; U.S. Subcustodians
and non-U.S. Subcustodians, collectively, "Subcustodians"), or a non-U.S.
depository or clearing agency or system in which the Custodian or any
Subcustodian participates that complies with the provisions of Rule 17f-4 of the
1940 Act ("Rule 17f-4") (individually, a "non-U.S. Securities System"; U.S.
Securities System and non-U.S. Securities System, collectively, Securities
System"), provided that in each case in which a U.S. Subcustodian or U.S.
Securities System is employed, each such Subcustodian or Securities System shall
have been approved by Instructions; provided further that in each case in which
a non-U.S. Subcustodian or non-U.S. Securities System is employed, (a)
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such Subcustodian or Securities System either is (i) a "qualified U.S. bank" as
defined by Rule 17f-5 or (ii) an "eligible foreign custodian" within the meaning
of Rule 17f-5 or such Subcustodian or Securities System is the subject of an
order granted by the U.S. Securities and Exchange Commission ("SEC") exempting
such agent or the subcustody arrangements thereto from all or part of the
provisions of Rule 17f-5 and (b) the agreement between the Custodian and such
non-U.S. Subcustodian has been approved by Instructions; it being understood
that the Custodian shall have no liability or responsibility for determining
whether the approval of any Subcustodian or Securities System has been proper
under the 1940 Act or any rule or regulation thereunder.
Upon receipt of Instructions, the Custodian agrees to cease the
employment of any Subcustodian or Securities System with respect to the
Customer, and if desirable and practicable, appoint a replacement Subcustodian
or securities system in accordance with the provisions of this Section. In
addition, the Custodian may, at any time in its discretion, upon written
notification to the Customer, terminate the employment of any Subcustodian or
Securities System.
Upon request of the Customer, the Custodian shall deliver to the
Customer annually a certificate stating: (a) the identity of each non-U.S.
Subcustodian and non-U.S. Securities System then acting on behalf of the
Custodian and the name and address of the governmental agency or other
regulatory authority that supervises or regulates such non-U.S Subcustodian and
non-U.S. Securities System; (b) the countries in which each non-U.S.
Subcustodian or non-U.S. Securities System is located; and (c) so long as Rule
17f-5 requires the Customer's Board of Trustees to directly approve its foreign
custody arrangements, such other information relating to such non-U.S.
Subcustodians and non-U.S. Securities Systems as may be requested by the
Customer to ensure compliance with Rule 17f-5. So long as Rule 17f-5 requires
the Customer's Board of Trustees to directly approve its foreign custody
arrangements, the Custodian also shall furnish annually to the Customer
information concerning such non-U.S. Subcustodians and non-U.S. Securities
Systems similar in kind and scope as that furnished to the Customer in
connection with the initial approval of this Agreement. Custodian agrees to
promptly notify the Customer if, in the normal course of its custodial
activities, the Custodian has reason to believe that any non-U.S. Subcustodian
or non-U.S. Securities System has ceased to be a qualified U.S. bank or an
eligible foreign custodian each within the meaning of Rule 17f-5 or has ceased
to be subject to an exemptive order from the SEC.
5. Use of Subcustodian. With respect to Property in an Account which is
maintained by the Custodian in the custody of a Subcustodian employed pursuant
to Section 4:
(a) The Custodian will identify on its books as belonging to the
Customer on behalf of a Portfolio, any Property held by such
Subcustodian.
(b) Any Property in the Account held by a Subcustodian will be
subject only to the instructions of the Custodian or its
agents.
(c) Property deposited with a Subcustodian will be maintained in
an account holding only assets for customers of the Custodian.
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(d) Any agreement the Custodian shall enter into with a non-U.S.
Subcustodian with respect to the holding of Property shall
require that (i) the Account will be adequately indemnified
and its losses adequately insured; (ii) the Property is not
subject to any right, charge, security interest, lien or claim
of any kind in favor of such Subcustodian or its creditors
except a claim for payment in accordance with such agreement
for their safe custody or administration and expenses related
thereto, (iii) beneficial ownership of such Property be freely
transferable without the payment of money or value other than
for safe custody or administration and expenses related
thereto, (iv) adequate records will be maintained identifying
the Property held pursuant to such Agreement as belonging to
the Custodian, on behalf of its Customer, or to the Customer,
(v) officers of or auditors employed by, or other
representatives of or designated by, the Custodian, including
the independent public accountants of or designated by, the
Customer be given access to the books and records of such
Subcustodian relating to its actions under its agreement
pertaining to any Property held by it thereunder or
confirmation of or pertinent information contained in such
books and records be furnished to such persons designated by
the Custodian, and (vi) the Customer will receive periodic
reports with respect to the safekeeping of the Customer's
Property, including but not limited to, notification of any
transfer to or from the Customer's Account.
6. Use of Securities System. With respect to Property in the
Account(s) which are maintained by the Custodian or any Subcustodian in the
custody of a Securities System employed pursuant to Section 4:
(a) The Custodian shall, and the Subcustodian will be required by
its agreement with the Custodian to, identify on its books
such Property as being held for the account of the Custodian
or Subcustodian for its customers.
(b) Any Property held in a Securities System for the account of
the Custodian or a Subcustodian will be subject only to the
instructions of the Custodian or such Subcustodian, as the
case may be.
(c) Property deposited with a Securities System will be maintained
in an account holding only assets for customers of the
Custodian or Subcustodian, as the case may be, unless
precluded by applicable law, rule, or regulation.
(d) The Custodian or Subcustodian shall provide the Customer with
any report obtained by the Custodian on the Securities
System's accounting system, internal accounting control and
procedures for safeguarding securities deposited in the
Securities System.
(e) The Custodian shall send the Customer a confirmation of every
transfer to or from the Account.
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7. Agents. The Custodian may at any time or times in its sole
discretion appoint (or remove) any other U.S. bank or trust company which is
itself qualified under the 1940 Act to act as custodian, as its agent to carry
out such of the provisions of this Agreement as the Custodian may from time to
time direct; provided, however, that the appointment of any agent shall not
relieve the Custodian of its responsibilities or liabilities hereunder.
8. Records, Ownership of Property Statements, Opinions of
Independent Certified Public Accountants.
(a) The ownership of the Property whether Securities, Cash and/or
other property, and whether held by the Custodian or a Subcustodian or in a
Securities System as authorized herein, shall be clearly recorded on the
Custodian's books as belonging to the appropriate Account and not for the
Custodian's own interest. The Custodian shall keep accurate and detailed
accounts of all investments, receipts, disbursements and other transactions for
each Account. All accounts, books and records of the Custodian relating thereto
shall be open to inspection and audit at all reasonable times during normal
business hours by any person designated by the Customer. All such accounts shall
be maintained and preserved in the form reasonably requested by the Customer.
The Custodian will supply to the Customer from time to time, as mutually agreed
upon, a statement in respect to any Property in an Account held by the Custodian
or by a Subcustodian. In the absence of the filing in writing with the Custodian
by the Customer of exceptions or objections to any such statement within sixty
(60) days of the mailing thereof, the Customer shall be deemed to have approved
such statement and in such case or upon written approval of the Customer of any
such statement, such statement shall be presumed to be for all purposes correct
with respect to all information set forth therein.
(b) The Custodian shall take all reasonable action as the Customer
may request to obtain from year to year favorable opinions from the Customer's
independent certified public accountants with respect to the Custodian's
activities hereunder in connection with the preparation of the Customer's Form
N-lA and the Customer's Form N-SAR or other periodic reports to the SEC and with
respect to any other requirements of the SEC.
(c) At the request of the Customer, the Custodian shall deliver
to the Customer a written report prepared by the Custodian's independent
certified public accountants with respect to the services provided by the
Custodian under this Agreement, including, without limitation, the Custodian's
accounting system, internal accounting control and procedures for safeguarding
Cash and Securities, including Cash and Securities deposited and/or maintained
in a Securities System or with a Subcustodian. Such report shall be of
sufficient scope and in sufficient detail as may reasonably be required by the
Customer and as may reasonably be obtained by the Custodian.
(d) The Customer may elect to participate in any of the electronic
on-line service and communications systems offered by the Custodian which can
provide the Customer, on a daily basis, with the ability to view on-line or to
print on hard copy various reports of Account activity and of Securities and/or
Cash being held in any Account. To the extent that such service shall include
market values of Securities in an Account, the Customer hereby acknowledges that
the Custodian now obtains and may in the future obtain information on such
values from outside
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sources that the Custodian considers to be reliable and the Customer agrees that
the Custodian (i) does not verify or represent or warrant either the reliability
of such service nor the accuracy or completeness of any such information
furnished or obtained by or through such service and (ii) shall be without
liability in selecting and utilizing such service or furnishing any information
derived therefrom.
9. Holding of Securities, Nominees; etc. Securities in an Account
which are held by the Custodian or any Subcustodian may be held by such entity
in the name of the Customer, on behalf of a Portfolio, in the Custodian's or
Subcustodian's name, in the name of the Custodian's or Subcustodian's nominee,
or in bearer form. Securities that are held by a Subcustodian or which are
eligible for deposit in a Securities System as provided above shall be
maintained with the Subcustodian or the Securities System in an account for the
Custodian's or Subcustodian's customers, unless prohibited by law, rule, or
regulation. The Custodian or Subcustodian, as the case may be, may combine
certificates representing Securities held in an Account with certificates of the
same issue held by it as fiduciary or as a custodian. In the event that any
Securities in the name of the Custodian or its nominee or held by a Subcustodian
and registered in the name of such Subcustodian or its nominee are called for
partial redemption by the issuer of such Security, the Custodian may, subject to
the rules or regulations pertaining to allocation of any Securities System in
which such Securities have been deposited, allot, or cause to be allotted, the
called portion of the respective beneficial holders of such class of security in
any manner the Custodian deems to be fair and equitable.
10. Proxies, etc. With respect to any proxies, notices, reports or
other communications relative to any of the Securities in any Account, the
Custodian shall perform such services and only such services relative thereto as
are (i) set forth in Section 3 of this Agreement, (ii) described in Exhibit B
attached hereto (as such service therein described may be in effect from time to
time) (the "Proxy Service") and (iii) as may otherwise be agreed upon between
the Custodian and the Customer. The liability and responsibility of the
Custodian in connection with the Proxy Service referred to in (ii) of the
immediately preceding sentence and in connection with any additional services
which the Custodian and the Customer may agree upon as provided in (iii) of the
immediately preceding sentence shall be as set forth in the description of the
Proxy Service and as may be agreed upon by the Custodian and the Customer in
connection with the furnishing of any such additional service and shall not be
affected by any other term of this Agreement. Neither the Custodian nor its
nominees or agents shall vote upon or in respect of any of the Securities in an
Account, execute any form of proxy to vote thereon, or give any consent or take
any action (except as provided in Section 3) with respect thereto except upon
the receipt of Instructions relative thereto.
11. Segregated Account. To assist the Customer in complying with
the requirements of the 1940 Act and the rules and regulations thereunder, the
Custodian shall, upon receipt of Instructions, establish and maintain a
segregated account or accounts on its books for and on behalf of a Portfolio.
12. Settlement Procedures. Securities will be transferred,
exchanged or delivered by the Custodian or a Subcustodian upon receipt by the
Custodian of Instructions which include all
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information required by the Custodian. Settlement and payment for Securities
received for an Account and delivery of Securities out of such Account may be
effected in accordance with the customary or established securities trading or
securities processing practices and procedures in the jurisdiction or market in
which the transaction occurs, including, without limitation, delivering
Securities to the purchaser thereof or to a dealer therefor (or an agent for
such purchaser or dealer) against a receipt with the expectation of receiving
later payment for such Securities from such purchaser or dealer, as such
practices and procedures may be modified or supplemented in accordance with the
standard operating procedures of the Custodian in effect from time to time for
that jurisdiction or market. The Custodian shall not be liable for any loss
which results from effecting transactions in accordance with the customary or
established securities trading or securities processing practices and procedures
in the applicable jurisdiction or market.
Notwithstanding that the Custodian may settle purchases and sales
against, or credit income to, an Account, on a contractual basis, as outlined in
the Global Guide provided to the Customer by the Custodian, the Custodian may,
at its sole option, reverse such credits or debits to the appropriate Account in
the event that the transaction does not settle, or the income is not received in
a timely manner, and the Customer agrees to hold the Custodian harmless from any
losses which may result therefrom.
13. Conditional Credits.
(a) Notwithstanding any other provision of this Agreement, the
Custodian shall not be required to comply with any Instructions to settle the
purchase of any securities for the Account, unless there are sufficient
immediately available funds in the relevant currency in the Account, provided
that, if, after all expenses, debits and withdrawals of Cash in the relevant
currency ("Debits") applicable to the Account have been made and if after all
Conditional Credits, as defined below, applicable to the Account have been made
final entries as set forth in (c) below, the amount of immediately available
funds of the relevant currency in such Account is at least equal to the
aggregate purchase price of all securities for which the Custodian has received
Instructions to settle on that date ("Settlement Date"), the Custodian, upon
settlement, shall credit the Securities to the Account by making a final entry
on its books and records.
(b) Notwithstanding the foregoing, if after all Debits applicable to
the Account have been made, there remains outstanding any Conditional Credit (as
defined below) applicable to the Account or the amount of immediately available
funds in a given currency in such Account are less than the aggregate purchase
price in such currency of all securities for which the Custodian has received
Instructions to settle on the Settlement Date, the Custodian, upon settlement,
may credit the securities to the Account by making a conditional entry on its
books and records ("Conditional Credit"), pending receipt of sufficient
immediately available funds in the relevant currency in the Account.
(c) If, within a reasonable time from the posting of a Conditional
Credit and after all Debits applicable to the Account have been made,
immediately available funds in the relevant currency at least equal to the
aggregate purchase price in such currency of all securities subject to a
Conditional Credit on a Settlement Date are deposited into the Account, the
Custodian shall
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make the Conditional Credit a final entry on its books and records. In such
case, the Customer shall be liable to the Custodian only for late charges at a
rate which the Custodian customarily charges for similar extensions of credit.
(d) If, within a reasonable time from the posting of a Conditional
Credit and after all Debits applicable to the Account have been made,
immediately available funds in the relevant currency at least equal to the
aggregate purchase price in such currency of all securities subject to a
Conditional Credit on a Settlement Date are not deposited into the Account, the
Customer authorizes the Custodian, as agent, to sell the securities and credit
the Account with the proceeds of such sale. In such case, the Customer shall be
liable to the Custodian for any deficiencies, out-of-pocket costs and expenses
associated with the sale of the securities, including but not limited to,
shortfalls in the sales proceeds and the Custodian is hereby authorized to sell
such other securities to the extent necessary to satisfy such shortfalls with
the net proceeds of such sales.
(e) The Customer agrees that it will not use the Account to
facilitate the purchase of securities without sufficient funds in the Account
(which funds shall not include the expected proceeds of the sale of the
purchased securities).
14. Permitted Transactions. The Customer agrees that it will cause
transactions to be made pursuant to this Agreement only upon Instructions in
accordance with Section 15 and only for the purposes listed below.
(a) In connection with the purchase or sale of Securities at prices
as confirmed by Instructions.
(b) When Securities are called, redeemed or retired, or otherwise
become payable.
(c) In exchange for or upon conversion into other securities alone
or other securities and cash pursuant to any plan or merger, consolidation,
reorganization, recapitalization or readjustment.
(d) Upon conversion of Securities pursuant to their terms into other
securities.
(e) Upon exercise of subscription, purchase or other similar rights
represented by Securities.
(f) For the payment of interest, taxes, management or supervisory
fees, distributions or operating expenses.
(g) In connection with any borrowings by the Customer requiring a
pledge of Securities, but only against receipt of amounts borrowed.
(h) In connection with any loans, but only against receipt of
collateral as specified in Instructions which shall reflect any restrictions
applicable to the Customer.
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(i) For the purpose of redeeming shares of the capital stock of the
Customer against delivery of the shares to be redeemed to the Custodian, a
Subcustodian or the Customer's transfer agent.
(j) For the purpose of redeeming in kind shares of the Customer
against delivery of the shares to be redeemed to the Custodian, a Subcustodian
or the Customer's transfer agent.
(k) For delivery in accordance with the provisions of any agreement
among the Customer, on behalf of a Portfolio, the Custodian and a broker-dealer
registered under the Securities Exchange Act of 1934 and a member of the
National Association of Securities Dealers, Inc., relating to compliance with
the rules of The Options Clearing Corporation, the Commodities Futures Trading
Commission and of any registered national securities exchange, or of any similar
organization or organizations, regarding escrow or other arrangements in
connection with transactions by the Customer.
(l) For release of Securities to designated brokers under covered
call options, provided, however, that such Securities shall be released only
upon payment to the Custodian of monies for the premium due and a receipt for
the Securities which are to be held in escrow. Upon exercise of the option, or
at expiration, the Custodian will receive the Securities previously deposited
from broker. The Custodian will act strictly in accordance with Instructions in
the delivery of Securities to be held in escrow and will have no responsibility
or liability for any such Securities which are not returned promptly when due
other than to make proper request for such return.
(m) For spot or forward foreign exchange transactions to facilitate
security trading or receipt of income from Securities related transactions.
(n) Upon the termination of this Agreement as set forth in Section
20.
(o) For other proper purposes.
The Customer agrees that the Custodian shall have no obligation to
verify the purpose for which a transaction is being effected.
15. Instructions. The term "Instructions" means instructions from
the Customer in respect of any of the Custodian's duties hereunder which have
been received by the Custodian at its address set forth in Section 22 below (i)
in writing (including, without limitation, facsimile transmission) or by tested
telex signed or given by such one or more person or persons as the Customer
shall have from time to time authorized in writing to give the particular class
of Instructions in question and whose name and (if applicable) signature and
office address have been filed with the Custodian, or (ii) which have been
transmitted electronically through an electronic on-line service and
communications system offered by the Custodian or other electronic instruction
system acceptable to the Custodian, or (iii) a telephonic or oral communication
by one or more persons as the Customer shall have from time to time authorized
to give the particular
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class of Instructions in question and whose name has been filed with the
Custodian; or (iv) upon receipt of such other form of instructions as the
Customer may from time to time authorize in writing and which the Custodian has
agreed in writing to accept. Instructions in the form of oral communications
shall be confirmed by the Customer by tested telex or writing in the manner set
forth in clause (i) above, but the lack of such confirmation shall in no way
affect any action taken by the Custodian in reliance upon such oral instructions
prior to the Custodian's receipt of such confirmation. Instructions may relate
to specific transactions or to types or classes of transactions, and may be in
the form of standing instructions.
The Custodian shall have the right to assume in the absence of notice
to the contrary from the Customer that any person whose name is on file with the
Custodian pursuant to this Section has been authorized by the Customer to give
the Instructions in question and that such authorization has not been revoked.
The Custodian may act upon and conclusively rely on, without any liability to
the Customer or any other person or entity for any losses resulting therefrom,
any Instructions reasonably believed by it to be furnished by the proper person
or persons as provided above.
16. Standard of Care. The Custodian shall be responsible for the
performance of only such duties as are set forth herein or contained in
Instructions given to the Custodian which are not contrary to the provisions of
this Agreement. The Custodian will use reasonable care with respect to the
safekeeping of Property in each Account and, except as otherwise expressly
provided herein, in carrying out its obligations under this Agreement. So long
as and to the extent that it has exercised reasonable care, the Custodian shall
not be responsible for the title, validity or genuineness of any Property or
other property or evidence of title thereto received by it or delivered by it
pursuant to this Agreement and shall be held harmless in acting upon, and may
conclusively rely on, without liability for any loss resulting therefrom, any
notice, request, consent, certificate or other instrument reasonably believed by
it to be genuine and to be signed or furnished by the proper party or parties,
including, without limitation, Instructions, and shall be indemnified by the
Customer for any losses, damages, costs and expenses (including, without
limitation, the reasonable fees and expenses of counsel) incurred by the
Custodian and arising out of action taken or omitted with reasonable care by the
Custodian hereunder or under any Instructions. The Custodian shall be liable to
the Customer for any act or omission to act of any Subcustodian to the same
extent as if the Custodian committed such act itself. With respect to a
Securities System, the Custodian shall only be responsible or liable for losses
arising from employment of such Securities System caused by the Custodian's own
failure to exercise reasonable care. In the event of any loss to the Customer by
reason of the failure of the Custodian or a Subcustodian to utilize reasonable
care, the Custodian shall be liable to the Customer to the extent of the
Customer's actual damages at the time such loss was discovered without reference
to any special conditions or circumstances. The Customer's actual damages shall
include attorneys" fees incurred by the Customer in connection with recouping
losses as a result of the Custodian's failure to exercise reasonable care. In no
event shall the Custodian be liable for any consequential or special damages.
The Custodian shall be entitled to rely, and may act, on advice of counsel (who
may be counsel for the Customer) on all matters and shall be without liability
for any action reasonably taken or omitted pursuant to such advice.
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In the event the Customer subscribes to an electronic on-line service
and communications system offered by the Custodian, the Customer shall be fully
responsible for the security of the Customer's connecting terminal, access
thereto and the proper and authorized use thereof and the initiation and
application of continuing effective safeguards with respect thereto and agrees
to defend and indemnify the Custodian and hold the Custodian harmless from and
against any and all losses, damages, costs and expenses (including the
reasonable fees and expenses of counsel) incurred by the Custodian as a result
of any improper or unauthorized use of such terminal by the Customer or by any
others.
All collections of funds or other property paid or distributed in
respect of Securities in an Account, including funds involved in third-party
foreign exchange transactions, shall be made at the risk of the Customer.
Subject to the exercise of reasonable care, the Custodian shall have no
liability for any loss occasioned by delay in the actual receipt of notice by
the Custodian or by a Subcustodian of any payment, redemption or other
transaction regarding Securities in each Account in respect of which the
Custodian has agreed to take action as provided in Section 3 hereof. The
Custodian shall not be liable for any loss resulting from, or caused by, or
resulting from acts of governmental authorities (whether de jure or de facto),
including, without limitation, nationalization, expropriation, and the
imposition of currency restrictions; devaluations of or fluctuations in the
value of currencies; changes in laws and regulations applicable to the banking
or securities industry; market conditions that prevent the orderly execution of
securities transactions or affect the value of Property; acts of war, terrorism,
insurrection or revolution; strikes or work stoppages; the inability of a local
clearing and settlement system to settle transactions for reasons beyond the
control of the Custodian; hurricane, cyclone, earthquake, volcanic eruption,
nuclear fusion, fission or radioactivity, or other acts of God.
The Custodian shall have no liability in respect of any loss, damage or
expense suffered by the Customer, insofar as such loss, damage or expense arises
from the performance of the Custodian's duties hereunder by reason of the
Custodian's reliance upon records that were maintained for the Customer by
entities other than the Custodian prior to the Custodian's employment under this
Agreement.
The provisions of this Section shall survive termination of this
Agreement.
17. Investment Limitations and Legal or Contractual Restrictions or
Regulations. The Custodian shall not be liable to the Customer and the Customer
agrees to indemnify the Custodian and its nominees, for any loss, damage or
expense suffered or incurred by the Custodian or its nominees arising out of any
violation of any investment restriction or other restriction or limitation
applicable to the Customer or any Portfolio pursuant to any contract or any law
or regulation. The provisions of this Section shall survive termination of this
Agreement.
18. Fees and Expenses. The Customer agrees to pay to the Custodian
such compensation for its services pursuant to this Agreement as may be mutually
agreed upon in writing from time to time and the Custodian's reasonable
out-of-pocket or incidental expenses in
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connection with the performance of this Agreement, including (but without
limitation) legal fees as described herein and/or deemed necessary in the
judgment of the Custodian to keep safe or protect the Property in the Account.
The initial fee schedule is attached hereto as Exhibit C. The Customer hereby
agrees to hold the Custodian harmless from any liability or loss resulting from
any taxes or other governmental charges, and any expense related thereto, which
may be imposed, or assessed with respect to any Property in an Account and also
agrees to hold the Custodian, its Subcustodians, and their respective nominees
harmless from any liability as a record holder of Property in such Account. The
Custodian is authorized to charge the applicable Account for such items and the
Custodian shall have a lien on the Property in the applicable Account for any
amount payable to the Custodian under this Agreement, including but not limited
to amounts payable pursuant to Section 13 and pursuant to indemnities granted by
the Customer under this Agreement. The provisions of this Section shall survive
the termination of this Agreement.
19. Tax Reclaims. With respect to withholding taxes deducted and
which may be deducted from any income received from any Property in an Account,
the Custodian shall perform such services with respect thereto as are described
in Exhibit D attached hereto and shall in connection therewith be subject to the
standard of care set forth in such Exhibit D. Such standard of care shall not be
affected by any other term of this Agreement.
20. Amendment, Modifications, etc. No provision of this Agreement
may be amended, modified or waived except in a writing signed by the parties
hereto. No waiver of any provision hereto shall be deemed a continuing waiver
unless it is so designated. No failure or delay on the part of either party in
exercising any power or right under this Agreement operates as a waiver, nor
does any single or partial exercise of any power or right preclude any other or
further exercise thereof or the exercise of any other power or right.
21. Termination. (a) Termination of Entire Agreement. This Agreement
may be terminated by the Customer or the Custodian by ninety (90) days' written
notice to the other; provided that notice by the Customer shall specify the
names of the persons to whom the Custodian shall deliver the Securities in each
Account and to whom the Cash in such Account shall be paid. If notice of
termination is given by the Custodian, the Customer shall, within ninety (90)
days following the giving of such notice, deliver to the Custodian a written
notice specifying the names of the persons to whom the Custodian shall deliver
the Securities in each Account and to whom the Cash in such Account shall be
paid. In either case, the Custodian will deliver such Securities and Cash to the
persons so specified, after deducting therefrom any amounts which the Custodian
determines to be owed to it under Sections 13, 18, and 24. In addition, the
Custodian may in its discretion withhold from such delivery such Cash and
Securities as may be necessary to settle transactions pending at the time of
such delivery. The Customer grants to the Custodian a lien and right of setoff
against the Account and all Property held therein from time to time in the full
amount of the foregoing obligations. If within ninety (90) days following the
giving of a notice of termination by the Custodian, the Custodian does not
receive from the Customer a written notice specifying the names of the persons
to whom the Custodian shall deliver the Securities in each Account and to whom
the Cash in such Account shall be paid, the Custodian, at its election, may
deliver such Securities and pay such Cash to a bank or trust company doing
business in the State of New York to be held and disposed of pursuant to the
provisions of this Agreement, or
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may continue to hold such Securities and Cash until a written notice as
aforesaid is delivered to the Custodian, provided that the Custodian's
obligations shall be limited to safekeeping.
(b) Termination as to One or More Portfolios. This Agreement may be
terminated by the Customer or the Custodian as to one or more Portfolios (but
less than all of the Portfolios) by delivery of an amended Exhibit A deleting
such Portfolios, in which case termination as to such deleted Portfolios shall
take effect ninety (90) days after the date of such delivery, or such earlier
time as mutually agreed. The execution and delivery of an amended Exhibit A
which deletes one or more Portfolios shall constitute a termination of this
Agreement only with respect to such deleted Portfolio(s), shall be governed by
the preceding provisions of Section 21 as to the identification of a successor
custodian and the delivery of Cash and Securities of the Portfolio(s) so deleted
to such successor custodian, and shall not affect the obligations of the
Custodian and the Customer hereunder with respect to the other Portfolios set
forth in Exhibit A, as amended from time to time.
22. Notices. Except as otherwise provided in this Agreement, all
requests, demands or other communications between the parties or notices in
connection herewith (a) shall be in writing, hand delivered or sent by
registered mail, telex or facsimile addressed to such other address as shall
have been furnished by the receiving party and (b) shall be deemed effective
when received, or, in the case of a telex, when sent to the proper number and
acknowledged by a proper answerback.
23. Several Obligations of the Portfolios. With respect to any
obligations of the Customer on behalf of each Portfolio and each of its related
Accounts arising out of this Agreement, the Custodian shall look for payment or
satisfaction of any obligation solely to the assets and property of the
Portfolio and such Accounts to which such obligation relates as though the
Customer had separately contracted with the Custodian by separate written
instrument with respect to each Portfolio and its related Accounts.
24. Security for Payment. To secure payment of all obligations due
hereunder, the Customer hereby grants to Custodian a continuing security
interest in and right of setoff against each Account and all Property held
therein from time to time in the full amount of such obligations; provided that,
if there is more than one Account and the obligations secured pursuant to this
Section can be allocated to a specific Account or the Portfolio related to such
Account, such security interest and right of setoff will be limited to Property
held for that Account only and its related Portfolio. Should the Customer fail
to pay promptly any amounts owed hereunder, Custodian shall be entitled to use
available Cash in the Account or applicable Account, as the case may be, and to
dispose of Securities in the Account or such applicable Account as is necessary.
In any such case and without limiting the foregoing, Custodian shall be entitled
to take such other action(s) or exercise such other options, powers and rights
as Custodian now or hereafter has as a secured creditor under the New York
Uniform Commercial Code or any other applicable law.
14
<PAGE> 15
25. Representations and Warranties.
(a) The Customer hereby represents and warrants to the Custodian
that:
(i) the employment of the Custodian and the allocation of
fees, expenses and other charges to any Account as herein provided, is not
prohibited by law or any governing documents or contracts to which the Customer
is subject;
(ii) the terms of this Agreement do not violate any obligation
by which the Customer is bound, whether arising by contract, operation of law or
otherwise;
(iii) this Agreement has been duly authorized by appropriate
action and when executed and delivered will be binding upon the Customer and
each Portfolio in accordance with its terms; and
(iv) the Customer will deliver to the Custodian a duly
executed Secretary's Certificate in the form of Exhibit E hereto or such other
evidence of such authorization as the Custodian may reasonably require, whether
by way of a certified resolution or otherwise.
(b) The Custodian hereby represents and warrants to the Customer
that:
(i) the terms of this Agreement do not violate any obligation
by which the Custodian is bound, whether arising by contract, operation of law
or otherwise;
(ii) this Agreement has been duly authorized by appropriate
action and when executed and delivered will be binding upon the Custodian in
accordance with its terms;
(iii) the Custodian will deliver to the Customer such evidence
of such authorization as the Customer may reasonably require, whether by way of
a certified resolution or otherwise; and
(iv) Custodian is qualified as a custodian under Section 26(a)
of the 1940 Act and warrants that it will remain so qualified or upon ceasing to
be so qualified shall promptly notify the Customer in writing.
26. Governing Law and Successors and Assigns. This Agreement shall
be governed by the law of the State of New York and shall not be assignable by
either party, but shall bind the successors in interest of the Customer and the
Custodian.
27. Publicity. Customer shall furnish to Custodian at its office
referred to in Section 22 above, prior to any distribution thereof, copies of
any material prepared for distribution to any persons who are not parties hereto
that refer in any way to the Custodian. Customer shall not distribute or permit
the distribution of such materials if Custodian reasonably objects in writing
within ten (10) business days of receipt thereof, (or such other time as may be
mutually agreed) after receipt thereof. The foregoing shall not be applicable to
any information that is publicly
15
<PAGE> 16
available when provided or thereafter becomes publicly available other than
through a breach of this Agreement, or that is required or requested to be
disclosed by any bank or other regulatory examiner of the Custodian, Customer,
or any Subcustodian, any auditor of the parties hereto, by judicial or
administrative process or otherwise by applicable law or regulation. The
provisions of this Section shall survive the termination of this Agreement.
28. Representative Capacity and Binding Obligation. A copy of the
Declaration of Trust of the Customer is on file with The Secretary of the State
of Delaware, and notice is hereby given that this Agreement is not executed on
behalf of the Trustees of the Customer as individuals, and the obligations of
this Agreement are not binding upon any of the Trustees, officers or
shareholders of the Customer individually but are binding only upon the assets
and property of the Portfolios.
The Custodian agrees that no shareholder, trustee or officer of the
Customer may be held personally liable or responsible for any obligations of the
Customer arising out of this Agreement.
29. Submission to Jurisdiction. Any suit, action or proceeding
arising out of this Agreement may be instituted in any State or Federal court
sitting in the City of New York, State of New York, United States of America,
and the Customer irrevocably submits to the non-exclusive jurisdiction of any
such court in any such suit, action or proceeding and waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have to the
laying of venue of any such suit, action or proceeding brought in such a court
and any claim that such suit, action or proceeding was brought in an
inconvenient forum.
30. Confidentiality. The parties hereto agree that each shall treat
confidentially the terms and conditions of this Agreement and all information
provided by each party to the other regarding its business and operations. All
confidential information provided by a party hereto shall be used by any other
party hereto solely for the purpose of rendering services pursuant to this
Agreement and, except as may be required in carrying out this Agreement, shall
not be disclosed to any third party without the prior consent of such providing
party. The foregoing shall not be applicable to any information that is publicly
available when provided or thereafter becomes publicly available other than
through a breach of this Agreement, or that is required or requested to be
disclosed by any bank or other regulatory examiner of the Custodian, Customer,
or any Subcustodian, any auditor of the parties hereto, by judicial or
administrative process or otherwise by applicable law or regulation. The
provisions of this Section shall survive the termination of this Agreement.
31. Severability. If any provision of this Agreement is determined
to be invalid or unenforceable, such determination shall not affect the validity
or enforceability of any other provision of this Agreement.
32. Entire Agreement. This Agreement together with any exhibits
attached hereto, contains the entire agreement between the parties relating to
the subject matter hereof and supersedes any oral statements and prior writings
with respect thereto.
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<PAGE> 17
33. Headings. The headings of the paragraphs hereof are included for
convenience of reference only and do not form a part of this Agreement.
34. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original. This Agreement shall
become effective when one or more counterparts have been signed and delivered by
each of the parties hereto.
IN WITNESS WHEREOF, each of the parties has caused its duly authorized
signatories to execute this Agreement as of the date first written above.
CT&T FUNDS
By: /s/Kenneth Anderson
------------------------
Name: Kenneth Anderson
----------------------
Title: President
----------------------
By: /s/Gerald F. Dillenburg
-------------------------
Name: Gerald F. Dillenburg
-----------------------
Title: Vice President
----------------------
BANKERS TRUST COMPANY
By: /s/Richard Quintal
------------------------
Name: Richard Quintal
----------------------
Title: Managing Director
---------------------
17
<PAGE> 18
EXHIBIT A
To Custodian Agreement dated as of June 1, 1997, between Bankers Trust
Company and CT&T Funds.
LIST OF PORTFOLIOS
The following is a list of Portfolios referred to in the first WHEREAS
clause of the above-referred to Custodian Agreement. Terms used herein as
defined terms unless otherwise defined shall have the meanings ascribed to them
in the above-referred to Custodian Agreement.
Chicago Trust Growth and Income Fund
Chicago Trust Bond Fund
Chicago Trust Municipal Bond Fund
Chicago Trust Money Market Fund
Chicago Trust Talon Fund
Montag & Caldwell Balanced Fund
Chicago Trust Asset Allocation Fund
18
<PAGE> 19
Montag & Caldwell Growth Fund
CT&T FUNDS
By: /s/Kenneth Anderson
------------------------
Name: Kenneth Anderson
----------------------
Title: President
---------------------
By: /s/Gerald F. Dillenburg
-------------------------
Name: Gerald F. Dillenburg
-----------------------
Title: Vice President
----------------------
BANKERS TRUST COMPANY
By: /s/Richard Quintal
------------------------
Name: Richard Quintal
----------------------
Title: Managing Director
---------------------
19
<PAGE> 20
EXHIBIT B
To Custodian Agreement dated as of June 1, 1997, between Bankers Trust
Company and CT&T Funds.
PROXY SERVICE
The following is a description of the Proxy Service referred to in
Section 10 of the above referred to Custodian Agreement. Terms used herein as
defined terms shall have the meanings ascribed to them therein unless otherwise
defined below.
The Custodian provides a service, described below, for the transmission
of corporate communications in connection with shareholder meetings relating to
Securities held in the countries specified in the Global Guide. For the United
States and Canada, the term "corporate communications" means the proxy
statements or meeting agenda, proxy cards, annual reports and any other meeting
materials received by the Custodian. For countries other than the United States
and Canada, the term "corporate communications" means the meeting agenda only
and does not include any meeting circulars, proxy statements or any other
corporate communications furnished by the issuer in connection with such
meeting. Non-meeting related corporate communications are not included in the
transmission service to be provided by the Custodian except upon request as
provided below.
The Custodian's process for transmitting and translating meeting
agendas will be as follows:
1) If the meeting agenda is not provided by the issuer in the
English language, and if the language of such agenda is in the
official language of the country in which the related security
is held, the Custodian will as soon as practicable after
receipt of the original meeting agenda by a Subcustodian
provide an English translation prepared by that Subcustodian.
2) If an English translation of the meeting agenda is furnished,
the local language agenda will not be furnished unless
requested.
Translations will be free translations and neither the Custodian nor
any Subcustodian will be liable or held responsible for the accuracy thereof or
any direct or indirect consequences arising therefrom, including without
limitation arising out of any action taken or omitted to be taken based thereon.
If requested, the Custodian will, on a reasonable efforts basis,
endeavor to obtain any additional corporate communication such as annual or
interim reports, proxy statements, meeting circulars, or local language agendas,
and provide them in the form obtained.
20
<PAGE> 21
Timing in the voting process is important and, in that regard, upon
receipt by the Custodian of notice from a Subcustodian, the Custodian will
provide a notice to the Customer indicating the deadline for receipt of its
instructions to enable the voting process to take place effectively and
efficiently. As voting procedures will vary from market to market, attention to
any required procedures will be very important. Upon timely receipt of voting
instructions, the Custodian will promptly forward such instructions to the
applicable Subcustodian. If voting instructions are not timely received, the
Custodian shall have no liability or obligation to take any action.
For Securities held in markets other than those set forth in the first
paragraph, the Custodian will not furnish the material described above or seek
voting instructions. However, if requested to exercise voting rights at a
specific meeting, the Custodian will endeavor to do so on a reasonable efforts
basis without any assurance that such rights will be so exercised at such
meeting.
If the Custodian or any Subcustodian incurs extraordinary expenses in
exercising voting rights related to any Securities pursuant to appropriate
instructions or direction (e.g., by way of illustration only and not by way of
limitation, physical presence is required at a meeting and/or travel expenses
are incurred), such expenses will be reimbursed out of the Account containing
such Securities unless other arrangements have been made for such reimbursement.
It is the intent of the Custodian to expand the Proxy Service to
include jurisdictions which are not currently included as set forth in the
Global Guide. The Custodian will notify the Customer as to the inclusion of
additional countries or deletion of existing countries after their inclusion or
deletion and this Exhibit B will be deemed to be automatically amended to
include or delete such countries as the case may be.
21
<PAGE> 22
EXHIBIT C
To Custodian Agreement dated as of June 1, 1997, between Bankers Trust
Company and CT&T Funds.
DOMESTIC CUSTODY FEE SCHEDULE
ACTIVITY MONTHLY HOLDING CHARGE PER ISSUE
- -------- --------------------------------
DTC $1.00
FBE $1.00
PTC $1.00
Physical $2.40
*Eurobonds Market Value 2.0 Basis Points
Blue Sheet $2.40
Private Placements $2.40
ACTIVITY PER TRANSACTION
- -------- ---------------
Reorg $4.50
DTC $4.50
FBE $6.00
PTC $6.00
Physical $15.00
Euroclear/Cedel $30.00
Wires ( MBS P&I, Privates, etc.) $6.50
22
<PAGE> 23
ACTIVITY MISCELLANEOUS
- -------- -------------
Fed Wire In $3.00
Fed Wire Out $3.00
*2.0 basis points reflects an annualized charge.
This Exhibit C shall be amended upon delivery by the Custodian of a new Exhibit
C to the Customer and acceptance thereof by the Customer and shall be effective
as of the date of acceptance by the Customer or a date agreed upon between the
Custodian and the Customer.
23
<PAGE> 24
EXHIBIT D
To Custodian Agreement dated as of June 1, 1997, between Bankers Trust
Company and CT&T Funds.
TAX RECLAIMS
Pursuant to Section 18 of the above referred to Custodian Agreement,
the Custodian shall perform the following services with respect to withholding
taxes imposed or which may be imposed on income from Property in any Account.
Terms used herein as defined terms shall unless otherwise defined have the
meanings ascribed to them in the above referred to Custodian Agreement.
When withholding tax has been deducted with respect to income from any
Property in an Account, the Custodian will actively pursue on a reasonable
efforts basis the reclaim process, provided that the Custodian shall not be
required to institute any legal or administrative proceeding against any
Subcustodian or other person. The Custodian will provide fully detailed
advices/vouchers to support reclaims submitted to the local authorities by the
Custodian or its designee. In all cases of withholding, the Custodian will
provide full details to the Customer. If exemption from withholding at the
source can be obtained in the future, the Custodian will notify the Customer and
advise what documentation, if any, is required to obtain the exemption. Upon
receipt of such documentation from the Customer, the Custodian will file for
exemption on the Customer's behalf and notify the Customer when it has been
obtained.
In connection with providing the foregoing service, the Custodian shall
be entitled to apply categorical treatment of the Customer according to the
Customer's nationality, the particulars of its organization and other relevant
details that shall be supplied by the Customer. It shall be the duty of the
Customer to inform the Custodian of any change in the organization, domicile or
other relevant fact concerning tax treatment of the Customer and further to
inform the Custodian if the Customer is or becomes the beneficiary of any
special ruling or treatment not applicable to the general nationality and
category or entity of which the Customer is a part under general laws and treaty
provisions. The Custodian may rely on any such information provided by the
Customer.
In connection with providing the foregoing service, the Custodian may
also rely on professional tax services published by a major international
accounting firm and/or advice received from a Subcustodian in the jurisdictions
in question. In addition, the Custodian may seek the advice of counsel or other
professional tax advisers in such jurisdictions. The Custodian is entitled to
rely, and may act, on information set forth in such services and on advice
received from a Subcustodian, counsel or other professional tax advisers and
shall be without liability to the Customer for any action reasonably taken or
omitted pursuant to information contained in such services or such advice.
24
<PAGE> 1
EXHIBIT 99.B9(a)
TRANSFER AGENCY AND SERVICES AGREEMENT
THIS AGREEMENT, dated as of this 1st day of June , 1997 between CT & T
FUNDS (the "Fund"), a Delaware business trust having its principal place of
business at 171 North Clark Street, Chicago, Illinois 60601 and FIRST DATA
INVESTOR SERVICES GROUP, INC. ("FDISG"), a Massachusetts corporation with
principal offices at 4400 Computer Drive, Westboro, Massachusetts 01581.
WITNESSETH
WHEREAS, the Fund is authorized to issue Shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets;
WHEREAS, the Fund initially intends to offer Shares in those
Portfolios identified in the attached Exhibit 1, each such Portfolio, together
with all other Portfolios subsequently established by the Fund shall be subject
to this Agreement in accordance with Article 14;
WHEREAS, the Fund on behalf of the Portfolios, desires to appoint
FDISG as its transfer agent, dividend disbursing agent and agent in connection
with certain other activities and FDISG desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants and promises
hereinafter set forth, the Fund and FDISG agree as follows:
Article 1 Definitions.
1.1 Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
(a) "Articles of Incorporation" shall mean the
Articles of Incorporation, Declaration of Trust, or other similar
organizational document as the case may be, of the Fund as the same
may be amended from time to time.
(b) "Authorized Person" shall be deemed to include (i)
any authorized officer of the Fund; or (ii) any person, whether or not
such person is an officer or employee of the Fund, duly authorized to
give Oral Instructions or Written Instructions on behalf of the Fund
as indicated in writing to FDISG from time to time.
(c) "Board of Directors" shall mean the Board of
Directors or Board of Trustees of the Fund, as the case may be.
(d) "Commission" shall mean the Securities and
Exchange Commission.
<PAGE> 2
(e) "Custodian" refers to any custodian or
subcustodian of securities and other property which the Fund may from
time to time deposit, or cause to be deposited or held under the name
or account of such a custodian pursuant to a Custodian Agreement.
(f) "1934 Act" shall mean the Securities Exchange Act
of 1934 and the rules and regulations promulgated thereunder, all as
amended from time to time.
(g) "1940 Act" shall mean the Investment Company Act
of 1940 and the rules and regulations promulgated thereunder, all as
amended from time to time.
(h) "Oral Instructions" shall mean instructions, other
than Written Instructions, actually received by FDISG from an
Authorized Person;
(i) "Portfolio" shall mean each separate series of
shares offered by the Fund representing interests in a separate
portfolio of securities and other assets;
(j) "Prospectus" shall mean the most recently dated
Fund Prospectus and Statement of Additional Information, including any
supplements thereto, if any, which has become effective under the
Securities Act of 1933 and the 1940 Act.
(k) "Shares" refers collectively to such shares of
capital stock or beneficial interest, as the case may be, or class
thereof, of each respective Portfolio of the Fund as may be issued
from time to time.
(l) "Shareholder" shall mean a record owner of Shares
of each respective Portfolio of the Fund.
(m) "Written Instructions" shall mean a written
communication signed by a person reasonably believed by FDISG to be an
Authorized Person and actually received by FDISG. Written
Instructions shall include manually executed originals and authorized
electronic transmissions, including telefacsimile of a manually
executed original or other process.
Article 2 Appointment of FDISG.
The Fund, on behalf of the Portfolios, hereby appoints and constitutes
FDISG as transfer agent and dividend disbursing agent for Shares of each
respective Portfolio of the Fund and as shareholder servicing agent for the
Fund and FDISG hereby accepts such appointments and agrees to perform the
duties hereinafter set forth.
Article 3 Duties of FDISG.
3.1 FDISG shall be responsible for:
2
<PAGE> 3
(a) Administering and/or performing the customary
services of a transfer agent; acting as service agent in connection
with dividend and distribution functions; and performing shareholder
account and administrative agent functions in connection with the
issuance, transfer and redemption or repurchase (including
coordination with the Custodian) of Shares of each Portfolio, as more
fully described in the written schedule of Duties of FDISG annexed
hereto as Schedule A and incorporated herein, and in accordance with
the terms of the Prospectus of the Fund on behalf of the applicable
Portfolio, applicable law and the procedures established from time to
time between FDISG and the Fund.
(b) Recording the issuance of Shares and maintaining
pursuant to Rule 17Ad-10(e) of the 1934 Act a record of the total
number of Shares of each Portfolio which are authorized, based upon
data provided to it by the Fund, and issued and outstanding. FDISG
shall provide the Fund on a regular basis with the total number of
Shares of each Portfolio which are authorized and issued and
outstanding and shall have no obligation, when recording the issuance
of Shares, to monitor the issuance of such Shares or to take
cognizance of any laws relating to the issue or sale of such Shares,
which functions shall be the sole responsibility of the Fund.
(c) Notwithstanding any of the foregoing provisions of
this Agreement, FDISG shall be under no duty or obligation, except in
connection with its duties under the Sub-Administration Agreement
dated the date hereof between FDISG and The Chicago Trust Company, to
inquire into, and shall not be liable for: (i) the legality of the
issuance or sale of any Shares or the sufficiency of the amount to be
received therefor; (ii) the legality of the redemption of any Shares,
or the propriety of the amount to be paid therefor; (iii) the legality
of the declaration of any dividend by the Board of Directors, or the
legality of the issuance of any Shares in payment of any dividend; or
(iv) the legality of any recapitalization or readjustment of the
Shares.
3.2 The Fund shall (i) identify to FDISG in writing those
transactions and assets to be treated as exempt from blue sky reporting for
each State and (ii) verify the establishment of transactions for each State on
the system prior to activation and thereafter monitor the daily activity for
each State. Except in connection with its duties under the Sub-Administration
Agreement dated the date hereof between FDISG and The Chicago Trust Company,
the responsibility of FDISG for the Fund's blue sky State registration status
is solely limited to the initial establishment of transactions subject to blue
sky compliance by the Fund and the reporting of such transactions to the Fund
as provided above.
3.3 FDISG agrees to provide the services set forth herein in
accordance with the performance standards annexed hereto as Exhibit 1 of
Schedule A and incorporated herein (the "Performance Standards"). Such
Performance Standards may be amended from time to time upon written agreement
of the parties.
3.4 In addition to those services set forth in Schedule, FDISG
agrees to provide certain administrative services with respect to any
Shareholder that has established an Individual
3
<PAGE> 4
Retirement Account ("IRA") with the Fund and in connection therewith has
appointed The Chicago Trust Company as custodian for such IRA, as more fully
described in Exhibit 2 of Schedule A attached hereto and incorporated herein.
3.53 In addition to the duties set forth herein, FDISG shall
perform such other duties and functions, and shall be paid such amounts
therefor, as may from time to time be agreed upon in writing between the Fund
and FDISG.
Article 4 Recordkeeping and Other Information.
4.1 FDISG shall create and maintain all records required of it
pursuant to its duties hereunder and as set forth in Schedule A in accordance
with all applicable laws, rules and regulations, including records required by
Section 31(a) of the 1940 Act. Where applicable, such records shall be
maintained by FDISG for the periods and in the places required by Rule 31a-2
under the 1940 Act.
4.2 To the extent required by Section 31 of the 1940 Act, FDISG
agrees that all such records prepared or maintained by FDISG relating to the
services to be performed by FDISG hereunder are the property of the Fund and
will be preserved, maintained and made available in accordance with such
section, and will be surrendered promptly to the Fund on and in accordance with
the Fund's request.
4.3 In case of any requests or demands for the inspection of
Shareholder records of the Fund, FDISG will endeavor to notify the Fund of such
request and secure Written Instructions as to the handling of such request.
FDISG reserves the right, however, to exhibit the Shareholder records to any
person whenever it is advised by its counsel that it may be held liable for the
failure to comply with such request.
Article 5 Fund Instructions.
5.1 FDISG will have no liability when acting upon Written or Oral
Instructions reasonably believed to have been executed or orally communicated
by an Authorized Person and will not be held to have any notice of any change
of authority of any person until receipt of a Written Instruction thereof from
the Fund. FDISG will also have no liability when processing Share certificates
which it reasonably believes to bear the proper manual or facsimile signatures
of the officers of the Fund and the proper countersignature of FDISG.
5.2 At any time, FDISG may request Written Instructions from the
Fund and may seek advice from legal counsel for the Fund with respect to any
matter arising in connection with this Agreement, and it shall not be liable
for any action taken or not taken or suffered by it in good faith in accordance
with such Written Instructions or in accordance with the written opinion of
counsel for the Fund. Written Instructions requested by FDISG will be provided
by the Fund within a reasonable period of time.
4
<PAGE> 5
5.3 FDISG, its officers, agents or employees, shall accept Oral
Instructions or Written Instructions given to them by any person representing
or acting on behalf of the Fund only if said representative is an Authorized
Person. The Fund agrees that all Oral Instructions shall be followed within
one business day by confirming Written Instructions, and that the Fund's
failure to so confirm shall not impair in any respect FDISG's right to rely on
Oral Instructions.
Article 6 Compensation.
6.1 The Fund on behalf of each of the Portfolios will compensate
FDISG for the performance of its obligations hereunder in accordance with the
fees set forth in the written Fee Schedule annexed hereto as Schedule B and
incorporated herein.
6.2 In addition to those fees set forth in Section 6.1 above, the
Fund on behalf of each of the Portfolios agrees to pay, and will be billed
separately for, reasonable out-of-pocket expenses incurred by FDISG in the
performance of its duties hereunder. Out-of-pocket expenses shall include, but
shall not be limited to, the items specified in the written schedule of
out-of-pocket charges annexed hereto as Schedule C and incorporated herein.
Schedule C may be modified by written agreement between the parties.
Unspecified out-of-pocket expenses shall be limited to those out-of-pocket
expenses reasonably incurred by FDISG in the performance of its obligations
hereunder.
6.3 The Fund on behalf of each of the Portfolios agrees to pay all
fees and out-of-pocket expenses within fifteen (15) days following the receipt
of the respective invoice.
6.4 Any compensation agreed to hereunder may be adjusted from time
to time by attaching to Schedule B, a revised Fee Schedule executed and dated
by the parties hereto.
6.5 The Fund acknowledges that the fees that FDISG charges the
Fund under this Agreement reflect the allocation of risk between the parties,
including the disclaimer of warranties in Section 9.3 and the limitations on
liability and exclusion of remedies in Section 11.2 and Article 12. Modifying
the allocation of risk from what is stated here would affect the fees that
FDISG charges, and in consideration of those fees, the Fund agrees to the
stated allocation of risk.
Article 7 Documents.
In connection with the appointment of FDISG, the Fund shall, on or
before the date this Agreement goes into effect, but in any case within a
reasonable period of time for FDISG to prepare to perform its duties hereunder,
deliver or caused to be delivered to FDISG the documents set forth in the
written schedule of Fund Documents annexed hereto as Schedule D.
Article 8 Transfer Agent System.
8.1 FDISG shall retain title to and ownership of any and all data
bases, computer programs, screen formats, report formats, interactive design
techniques, derivative works, inventions, discoveries, patentable or
copyrightable matters, concepts, expertise, patents,
5
<PAGE> 6
copyrights, trade secrets, and other related legal rights utilized by FDISG in
connection with the services provided by FDISG to the Fund herein (the "FDISG
System").
8.2 FDISG hereby grants to the Fund a limited license to the FDISG
System for the sole and limited purpose of having FDISG provide the services
contemplated hereunder and nothing contained in this Agreement shall be
construed or interpreted otherwise and such license shall immediately terminate
with the termination of this Agreement.
8.3 In the event that the Fund, including any affiliate or agent
of the Fund or any third party acting on behalf of the Fund is provided with
direct access to the FDISG System for either account inquiry or to transmit
transaction information, including but not limited to maintenance, exchanges,
purchases and redemptions, such direct access capability shall be limited to
direct entry to the FDISG System by means of on-line mainframe terminal entry
or PC emulation of such mainframe terminal entry and any other non-conforming
method of transmission of information to the FDISG System is strictly
prohibited without the prior written consent of FDISG.
Article 9 Representations and Warranties.
9.1 FDISG represents and warrants to the Fund that:
(a) it is a corporation duly organized, existing and in good
standing under the laws of the Commonwealth of Massachusetts;
(b) it is empowered under applicable laws and by its Articles
of Incorporation and By-Laws to enter into and perform this Agreement;
(c) all requisite corporate proceedings have been taken to
authorize it to enter into this Agreement;
(d) it is duly registered with its appropriate regulatory
agency as a transfer agent and such registration will remain in effect
for the duration of this Agreement; and
(e) it has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement.
9.2 The Fund represents and warrants to FDISG that:
(a) it is duly organized, existing and in good standing under
the laws of the jurisdiction in which it is organized;
(b) it is empowered under applicable laws and by its
Declaration of Trust and By-Laws to enter into this Agreement;
(c) all corporate proceedings required by said Declaration of
Trust, By-Laws and applicable laws have been taken to authorize it to
enter into this Agreement;
6
<PAGE> 7
(d) a registration statement under the Securities Act of
1933, as amended, and the 1940 Act on behalf of each of the Portfolios
is currently effective and will remain effective, and all appropriate
state securities law filings have been made and will continue to be
made, with respect to all Shares of the Fund being offered for sale;
and
(e) all outstanding Shares are validly issued, fully paid and
non-assessable and when Shares are hereafter issued in accordance with
the terms of the Fund's Articles of Incorporation and its Prospectus
with respect to each Portfolio, such Shares shall be validly issued,
fully paid and non-assessable.
9.3 THIS IS A SERVICE AGREEMENT. EXCEPT AS EXPRESSLY PROVIDED IN
THIS AGREEMENT, FDISG DISCLAIMS ALL OTHER REPRESENTATIONS OR WARRANTIES,
EXPRESS OR IMPLIED, MADE TO THE FUND OR ANY OTHER PERSON, INCLUDING, WITHOUT
LIMITATION, ANY WARRANTIES REGARDING MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE OR OTHERWISE OF ANY SERVICES OR ANY GOODS PROVIDED INCIDENTAL TO
SERVICES PROVIDED UNDER THIS AGREEMENT.
Article 10 Indemnification.
10.1 FDISG shall not be responsible for and the Fund on behalf of
each Portfolio shall indemnify and hold FDISG harmless from and against any and
all claims, costs, expenses (including reasonable attorneys' fees), losses,
damages, charges, payments and liabilities of any sort or kind which may be
asserted against FDISG or for which FDISG may be held to be liable (a "Claim")
arising out of or attributable to any of the following:
(a) any actions of FDISG required to be taken pursuant to
this Agreement unless such Claim resulted from a negligent act or
omission to act, bad faith or willful misfeasance by FDISG in the
performance of its duties hereunder;
(b) FDISG's reasonable reliance on, or reasonable use of
information, data, records and documents (including but not limited to
magnetic tapes, computer printouts, hard copies and microfilm copies)
received by FDISG from the Fund, or any authorized third party acting
on behalf of the Fund, including but not limited to the prior transfer
agent for the Fund, in the performance of FDISG's duties and
obligations hereunder;
(c) the reliance on, or the implementation of, any Written
or Oral Instructions or any other instructions or requests of the Fund
on behalf of the applicable Portfolio;
(d) the offer or sales of shares in violation of any
requirement under the securities laws or regulations of any state that
such shares be registered in such state or in violation of any stop
order or other determination or ruling by any state with respect to
the offer or sale of such shares in such state; and
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<PAGE> 8
(e) the Fund's refusal or failure to comply with the terms
of this Agreement, or any Claim which arises out of the Fund's
negligence or misconduct or the breach of any representation or
warranty of the Fund made herein.
10.2 The Fund shall not be responsible for and FDISG shall indemnify
and hold the Fund harmless from and against any and all claims, costs, expenses
(including reasonable attorneys' fees), losses, damages, charges, payments and
liabilities of any sort or kind which may be asserted against the Fund or for
which the Fund may be held to be liable (a "Claim") arising out of or
attributable to any of the following:
(a) any actions of FDISG required to be taken pursuant to
this Agreement provided that such Claim resulted from a negligent act
or omission to act, bad faith or willful misfeasance by FDISG in the
performance of its duties hereunder; and
(e) FDISG's refusal or failure to comply with the terms of
this Agreement, or any Claim which arises out of the FDISG's
negligence or misconduct or the breach of any representation or
warranty of FDISG made herein.
10.3 In any case in which one party (the "Indemnifying Party") may be
asked to indemnify or hold the other party (the "Indemnified Party") harmless,
the Indemnified Party will notify the Indemnifying Party promptly after
identifying any situation which it believes presents or appears likely to
present a claim for indemnification against the Indemnifying Party and shall
keep the Indemnifying Party advised with respect to all developments concerning
such situation. The Indemnifying Party shall have the option to defend the
Indemnified Party against any Claim which may be the subject of this
indemnification, and, in the event that the Indemnifying Party so elects, such
defense shall be conducted by counsel chosen by the Indemnifying Party and
satisfactory to the Indemnified Party, and thereupon the Indemnifying Party
shall take over complete defense of the Claim and the Indemnified Party shall
sustain no further legal or other expenses in respect of such Claim. The
Indemnified Party will not confess any Claim or make any compromise in any case
in which the Indemnifying Party will be asked to provide indemnification,
except with the Indemnifying Party's prior written consent. The obligations of
the parties hereto under this Article 10 shall survive the termination of this
Agreement.
10.4 Any claim for indemnification under this Agreement must be
made prior to the earlier of:
(a) two years after the affected party becomes aware of the
event for which indemnification is claimed; or
(b) two years after the earlier of the termination of this
Agreement or the expiration of the term of this Agreement.
10.5 Except for remedies that cannot be waived as a matter of law
(and injunctive or provisional relief), the provisions of this Article 10 shall
be FDISG's sole and exclusive remedy
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<PAGE> 9
for claims or other actions or proceedings to which the Fund's indemnification
obligations pursuant to this Article 10 may apply.
Article 11 Standard of Care.
11.1 FDISG shall at all times act in good faith and agrees to use
its best efforts within commercially reasonable limits to ensure the accuracy
of all services performed under this Agreement, but assumes no responsibility
for loss or damage to the Fund unless said errors are caused by FDISG's own
negligence, bad faith or willful misconduct or that of its employees.
11.2 Neither party may assert any cause of action against the other
party under this Agreement that occurred more than two (2) years prior to the
filing of the suit (or commencement of arbitration proceedings) alleging such
cause of action.
11.3 Each party shall have the duty to mitigate damages for which
the other party may become responsible.
Article 12 Consequential Damages.
NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO
EVENT SHALL EITHER PARTY, ITS AFFILIATES OR ANY OF ITS OR THEIR DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS OR SUBCONTRACTORS BE LIABLE FOR CONSEQUENTIAL
DAMAGES.
Article 13 Term and Termination.
13.1 This Agreement shall be effective on the date first written
above and shall continue for a period of three (3) years (the "Initial Term"),
unless earlier terminated pursuant to the terms of this Agreement. Thereafter,
this Agreement shall be renewed for successive terms of three (3) years
("Renewal Terms") each, provided that the Fund shall provide FDISG with written
notice of its intent to renew not less than ninety (90) days nor more than one
hundred-eighty (180) days prior to the expiration of the Initial Term or any
Renewal Term.
13.2 FDISG may terminate this Agreement at the end of the Initial
Term or at the end of any subsequent Renewal Term upon not than less than
ninety (90) days or more than one hundred-eighty (180) days prior written
notice to the Administrator.
13.3 This Agreement may be terminated by the Fund prior to the
expiration of the Initial Term or any Renewal Term in the event FDISG has
failed to meet the Performance Standards, as set forth in Exhibit 1 to Schedule
A, in four months of any rolling six month period. The Fund will provide FDISG
with 60 days' notice in writing after the fourth month of FDISG's failure to
meet the Performance Standards if the Fund intends to exercise this option
under this Section 13.3. Notwithstanding the foregoing, the Fund's right under
this Section 13.3 shall not become effective until ninety (90) days after FDISG
has begun providing services under this Agreement.
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<PAGE> 10
13.4 In the event a termination notice is given by the Fund, all
expenses associated with movement of records and materials and conversion
thereof to a successor transfer agent will be borne by the Fund.
13.5 If a party hereto is guilty of a material failure to perform
its duties and obligations hereunder (a "Defaulting Party") the other party
(the "Non-Defaulting Party") may give written notice thereof to the Defaulting
Party, and if such material breach shall not have been remedied within thirty
(30) days after such written notice is given, then the Non-Defaulting Party may
terminate this Agreement by giving thirty (30) days written notice of such
termination to the Defaulting Party. If FDISG is the Non-Defaulting Party, its
termination of this Agreement shall not constitute a waiver of any other rights
or remedies of FDISG with respect to services performed prior to such
termination or rights of FDISG to be reimbursed for out-of-pocket expenses. In
all cases, termination by the Non-Defaulting Party shall not constitute a
waiver by the Non-Defaulting Party of any other rights it might have under this
Agreement or otherwise against the Defaulting Party.
Article 14 Additional Portfolios.
In the event that the Fund establishes one or more Portfolios in
addition to those identified in Exhibit 1, with respect to which the Fund
desires to have FDISG render services as transfer agent under the terms hereof,
the Fund shall so notify FDISG in writing, and if FDISG agrees in writing to
provide such services, Exhibit 1 shall be amended to include such additional
Portfolios.
Article 15 Confidentiality.
15.1 The parties agree that the Proprietary Information (defined
below) and Confidential Information as defined in Section 15.3 below
(collectively "Confidential Information") are confidential information of the
parties and their respective licensors. The Fund and FDISG shall exercise at
least the same degree of care, but not less than reasonable care, to safeguard
the confidentiality of the Confidential Information of the other as it would
exercise to protect its own confidential information of a similar nature.
Except as may be required by law, the Fund and FDISG shall not duplicate, sell
or disclose to others the Confidential Information of the other, in whole or in
part, without the prior written permission of the other party. The Fund and
FDISG may, however, disclose Confidential Information to their respective
parent corporation, their respective affiliates, their subsidiaries and
affiliated companies and employees, provided that each shall use reasonable
efforts to ensure that the Confidential Information is not duplicated or
disclosed in breach of this Agreement. The Fund and FDISG may also disclose
the Confidential Information to independent contractors, auditors, and
professional advisors, if necessary. Notwithstanding the previous sentence, in
no event shall either the Fund or FDISG disclose the Confidential Information
to any competitor of the other without specific, prior written consent.
15.2 Proprietary Information means:
(a) any data or information that is competitively sensitive
material, and not generally known to the public, including, but not
limited to, information about product
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<PAGE> 11
plans, marketing strategies, finance, operations, customer
relationships, customer profiles, sales estimates, business plans, and
internal performance results relating to the past, present or future
business activities of the Fund or FDISG, their respective
subsidiaries and affiliated companies and the customers, clients and
suppliers of any of them;
(b) any scientific or technical information, design,
process, procedure, formula, or improvement that is commercially
valuable and secret in the sense that its confidentiality affords the
Fund or FDISG a competitive advantage over its competitors; and
(c) all confidential or proprietary concepts,
documentation, reports, data, specifications, computer software,
source code, object code, flow charts, databases, inventions,
know-how, show-how and trade secrets, whether or not patentable or
copyrightable.
15.3 Confidential Information includes, without limitation, all
documents, inventions, substances, engineering and laboratory notebooks,
drawings, diagrams, specifications, bills of material, equipment, prototypes
and models, and any other tangible manifestation of the foregoing of either
party which now exist or come into the control or possession of the other.
Article 16 Force Majeure.
No party shall be liable for any default or delay in the performance
of its obligations under this Agreement if and to the extent such default or
delay is caused, directly or indirectly, by (i) fire, flood, elements of nature
or other acts of God; (ii) any outbreak or escalation of hostilities, war,
riots or civil disorders in any country, (iii) any act or omission of the other
party or any governmental authority; (iv) any labor disputes (whether or not
the employees' demands are reasonable or within the party's power to satisfy);
or (v) nonperformance by a third party or any similar cause beyond the
reasonable control of such party, including without limitation, failures or
fluctuations in telecommunications or other equipment. In any such event, the
non-performing party shall be excused from any further performance and
observance of the obligations so affected only for as long as such
circumstances prevail and such party continues to use commercially reasonable
efforts to recommence performance or observance as soon as practicable.
Article 17 Assignment and Subcontracting.
This Agreement, its benefits and obligations shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. This Agreement may not be assigned or otherwise transferred
by either party hereto, without the prior written consent of the other party,
which consent shall not be unreasonably withheld; provided, however, that FDISG
may, in its sole discretion, assign all its right, title and interest in this
Agreement to an affiliate, parent or subsidiary, or to the purchaser of
substantially all of its business. FDISG may, in its sole discretion, engage
subcontractors to perform any of the obligations contained in this Agreement to
be performed by FDISG. FDISG shall provide the Fund with written notice of the
engagement of any subcontractor to perform substantially all of the obligations
contained in this Agreement to be performed by FDISG.
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Article 18 Arbitration.
18.1 Any claim or controversy arising out of or relating to this
Agreement, or breach hereof, shall be settled by arbitration administered by
the American Arbitration Association in Boston, Massachusetts in accordance
with its applicable rules, except that the Federal Rules of Evidence and the
Federal Rules of Civil Procedure with respect to the discovery process shall
apply.
18.2 The parties hereby agree that judgment upon the award rendered
by the arbitrator may be entered in any court having jurisdiction.
18.3 The parties acknowledge and agree that the performance of the
obligations under this Agreement necessitates the use of instrumentalities of
interstate commerce and, notwithstanding other general choice of law provisions
in this Agreement, the parties agree that the Federal Arbitration Act shall
govern and control with respect to the provisions of this Article 18.
Article 19 Notice.
Any notice or other instrument authorized or required by this
Agreement to be given in writing to the Fund or FDISG, shall be sufficiently
given if addressed to that party and received by it at its office set forth
below or at such other place as it may from time to time designate in writing.
To the Fund:
CT & T Funds
171 North Clark Street
Chicago, Illinois 60601
Attention: President
To FDISG:
First Data Investor Services Group, Inc.
4400 Computer Drive
Westboro, Massachusetts 01581
Attention: President
with a copy to FDISG's General Counsel
Article 20 Governing Law/Venue.
The laws of the Commonwealth of Massachusetts, excluding the laws on
conflicts of laws, shall govern the interpretation, validity, and enforcement
of this agreement. All actions arising
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<PAGE> 13
from or related to this Agreement shall be brought in the state and federal
courts sitting in the City of Boston, and FDISG and Client hereby submit
themselves to the exclusive jurisdiction of those courts.
Article 21 Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original; but such counterparts shall, together,
constitute only one instrument.
Article 22 Captions.
The captions of this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
Article 23 Publicity.
Neither FDISG nor the Fund shall release or publish news releases,
public announcements, advertising or other publicity relating to this Agreement
or to the transactions contemplated by it without the prior review and written
approval of the other party; provided, however, that either party may make such
disclosures as are required by legal, accounting or regulatory requirements
after making reasonable efforts in the circumstances to consult in advance with
the other party.
Article 24 Relationship of Parties/Non-Solicitation.
24.1 The parties agree that they are independent contractors and
not partners or co-venturers and nothing contained herein shall be interpreted
or construed otherwise.
24.2 During the term of this Agreement and for one (1) year
afterward, the Fund shall not recruit, solicit, employ or engage, for the Fund
or others, FDISG's employees.
Article 25 Entire Agreement; Severability.
25.1 This Agreement, including Schedules, Addenda, and Exhibits
hereto, constitutes the entire Agreement between the parties with respect to
the subject matter hereof and supersedes all prior and contemporaneous
proposals, agreements, contracts, representations, and understandings, whether
written or oral, between the parties with respect to the subject matter hereof.
No change, termination, modification, or waiver of any term or condition of the
Agreement shall be valid unless in writing signed by each party. No such
writing shall be effective as against FDISG unless said writing is executed by
a Senior Vice President, Executive Vice President, or President of FDISG. A
party's waiver of a breach of any term or condition in the Agreement shall not
be deemed a waiver of any subsequent breach of the same or another term or
condition.
25.2 The parties intend every provision of this Agreement to be
severable. If a court of competent jurisdiction determines that any term or
provision is illegal or invalid for any reason,
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<PAGE> 14
the illegality or invalidity shall not affect the validity of the remainder of
this Agreement. In such case, the parties shall in good faith modify or
substitute such provision consistent with the original intent of the parties.
Without limiting the generality of this paragraph, if a court determines that
any remedy stated in this Agreement has failed of its essential purpose, then
all other provisions of this Agreement, including the limitations on liability
and exclusion of damages, shall remain fully effective.
Article 26 Obligations of the Fund
Pursuant to Section 2.10 of the Trust Instrument dated September 8,
1993, and as filed with the Secretary of State of the State of Delaware on
September 10, 1993, the obligations of the Fund stated under this Agreement are
limited to the assets of the Fund or Portfolios, as the case may be, and each
shareholder of the Fund and of each Portfolio shall not be personally liable
for any debts, liabilities, obligations and expenses arising hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers, as of the day and year first
above written.
CT & T FUNDS
By: /s/Kenneth Anderson
-----------------------
Title: President
FIRST DATA INVESTOR SERVICES GROUP, INC.
By: /s/Barbara L. Worthen
-----------------------
Title: Executive Vice President
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Exhibit 1
LIST OF PORTFOLIOS
Montag & Caldwell Growth Fund
Chicago Trust Growth & Income Fund
Chicago Trust Talon Fund
Chicago Trust Asset Allocation Fund
Montag & Caldwell Balanced Fund
Chicago Trust Bond Fund
Chicago Trust Municipal Bond Fund
Chicago Trust Money Market Fund
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Schedule A
DUTIES OF FDISG
1. Shareholder Information. FDISG shall maintain a record of
the number of Shares held by each Shareholder of record which shall include
name, address, taxpayer identification and which shall indicate whether such
Shares are held in certificates or uncertificated form.
2. Shareholder Services. FDISG shall respond as appropriate to
all inquiries and communications from Shareholders relating to Shareholder
accounts with respect to its duties hereunder and as may be from time to time
mutually agreed upon between FDISG and the Fund.
3. Share Certificates.
(a) At the expense of the Fund, the Fund shall supply FDISG
with an adequate supply of blank share certificates to meet FDISG requirements
therefor. Such Share certificates shall be properly signed by facsimile. The
Fund agrees that, notwithstanding the death, resignation, or removal of any
officer of the Fund whose signature appears on such certificates, FDISG or its
agent may continue to countersign certificates which bear such signatures until
otherwise directed by Written Instructions.
(b) FDISG shall issue replacement Share certificates in lieu
of certificates which have been lost, stolen or destroyed, upon receipt by
FDISG of properly executed affidavits and lost certificate bonds, in form
satisfactory to FDISG, with the Fund and FDISG as obligees under the bond.
(c) FDISG shall also maintain a record of each certificate
issued, the number of Shares represented thereby and the Shareholder of record.
With respect to Shares held in open accounts or uncertificated form (i.e., no
certificate being issued with respect thereto) FDISG shall maintain comparable
records of the Shareholders thereof, including their names, addresses and
taxpayer identification. FDISG shall further maintain a stop transfer record
on lost and/or replaced certificates.
4. Mailing Communications to Shareholders; Proxy Materials.
FDISG will address and mail to Shareholders of the Fund, all reports to
Shareholders, dividend and distribution notices and proxy material for the
Fund's meetings of Shareholders. In connection with meetings of Shareholders,
FDISG will prepare Shareholder lists, mail and certify as to the mailing of
proxy materials, process and tabulate returned proxy cards, report on proxies
voted prior to meetings, act as inspector of election at meetings and certify
Shares voted at meetings.
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5. Sales of Shares
(a) FDISG shall not be required to issue any Shares of the
Fund where it has received a Written Instruction from the Fund or official
notice from any appropriate authority that the sale of the Shares of the Fund
has been suspended or discontinued. The existence of such Written Instructions
or such official notice shall be conclusive evidence of the right of FDISG to
rely on such Written Instructions or official notice.
(b) In the event that any check or other order for the
payment of money is returned unpaid for any reason, FDISG will endeavor to:
(i) give prompt notice of such return to the Fund or its designee; (ii) place a
stop transfer order against all Shares issued as a result of such check or
order; and (iii) take such actions as FDISG may from time to time deem
appropriate.
6. Transfer and Repurchase
(a) FDISG shall process all requests to transfer or redeem
Shares in accordance with the transfer or repurchase procedures set forth in
the Fund's Prospectus.
(b) FDISG will transfer or repurchase Shares upon receipt of
Oral or Written Instructions or otherwise pursuant to the Prospectus and Share
certificates, if any, properly endorsed for transfer or redemption, accompanied
by such documents as FDISG reasonably may deem necessary.
(c) FDISG reserves the right to refuse to transfer or
repurchase Shares until it is satisfied that the endorsement on the
instructions is valid and genuine. FDISG also reserves the right to refuse to
transfer or repurchase Shares until it is satisfied that the requested transfer
or repurchase is legally authorized, and it shall incur no liability for the
refusal, in good faith, to make transfers or repurchases which FDISG, in its
good judgment, deems improper or unauthorized, or until it is reasonably
satisfied that there is no basis to any claims adverse to such transfer or
repurchase.
(d) When Shares are redeemed, FDISG shall, upon receipt of
the instructions and documents in proper form, deliver to the Custodian and the
Fund or its designee a notification setting forth the number of Shares to be
repurchased. Such repurchased shares shall be reflected on appropriate
accounts maintained by FDISG reflecting outstanding Shares of the Fund and
Shares attributed to individual accounts.
(e) FDISG, upon receipt of the monies provided to it by the
Custodian for the repurchase of Shares, pay such monies as are received from
the Custodian, all in accordance with the procedures described in the written
instruction received by FDISG from the Fund.
(f) FDISG shall not process or effect any repurchase with
respect to Shares of the Fund after receipt by FDISG or its agent of
notification of the suspension of the determination of the net asset value of
the Fund.
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7. Dividends
(a) Upon the declaration of each dividend and each capital
gains distribution by the Board of Trustees of the Fund with respect to Shares
of the Fund, the Fund shall furnish or cause to be furnished to FDISG Written
Instructions setting forth the date of the declaration of such dividend or
distribution, the ex-dividend date, the date of payment thereof, the record
date as of which Shareholders entitled to payment shall be determined, the
amount payable per Share to the Shareholders of record as of that date, the
total amount payable on the payment date and whether such dividend or
distribution is to be paid in Shares at net asset value.
(b) On or before the payment date specified in such
resolution of the Board of Directors, the Fund will provide FDISG with
sufficient cash to make payment to the Shareholders of record as of such
payment date.
(c) If FDISG does not receive sufficient cash from the Fund
to make total dividend and/or distribution payments to all Shareholders of the
Fund as of the record date, FDISG will, upon notifying the Fund, withhold
payment to all Shareholders of record as of the record date until sufficient
cash is provided to FDISG.
8. In addition to and neither in lieu nor in contravention
of the services set forth above, FDISG shall: (i) perform all the customary
services of a transfer agent, registrar, dividend disbursing agent and agent of
the dividend reinvestment and cash purchase plan as described herein consistent
with those requirements in effect as at the date of this Agreement. The
detailed definition, frequency, limitations and associated costs (if any) set
out in the attached fee schedule, include but are not limited to: maintaining
all Shareholder accounts, preparing Shareholder meeting lists, mailing proxies,
tabulating proxies, mailing Shareholder reports to current Shareholders,
withholding taxes on U.S. resident and non-resident alien accounts where
applicable, preparing and filing U.S. Treasury Department Forms 1099 and other
appropriate forms required with respect to dividends and distributions by
federal authorities for all Shareholders.
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Exhibit 2 of Schedule A
INDIVIDUAL RETIREMENT ACCOUNT ADMINISTRATIVE SERVICES
* Process new accounts, verify completeness of application forms;
establish new account records with standard abbreviations and
registration formats, including proper account identification codes.
* Examine and process contributions and invest monies received in
accordance with the written instructions of the Shareholder.
* Process transactions upon receipt of proper documentation and in
accordance with the terms of the IRA documentation.
* Reinvest income dividends and capital gains distributions.
* Send a confirmation to the proper person(s) with respect to each
transaction in the account.
* Examine and process requests for distributions, subject to receipt of
required legal documents; verify eligibility of the recipient and make
payments.
* Establish a record of types and reasons for distributions (i.e.,
attainment of age 59-1/2, disability, death, return of excess
contributions, etc.).
* Record method of distribution requested and/or made.
* Distribute the account in the event of death as required in writing by
the Shareholder/Beneficiary, subject to receipt of required legal
documents.
* Receive and process designation of the beneficiary forms.
* Examine and process requests for direct transfers between
custodians/trustees, transfer and pay over to the successor assets in
the account and records pertaining thereto as requested;
* Send to each Shareholder/Beneficiary/Employer notices, prospectuses,
account statements, proxies and other documents or communications
relating to Fund shares; send such other notices, documents or other
communications to Shareholders/Beneficiaries/Employers as the Fund may
direct FDISG to deliver.
* Maintain records of contributions, distributions, and other
transactions.
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* Prepare any annual reports or returns required to be prepared and/or
filed by a custodian of a Plan, including, but not limited to, an
annual fair market value report, Forms 1099R and 5498 and file with
the IRS and provide to Shareholder/Beneficiary.
* Send Shareholder/Beneficiaries an annual TEFRA notice regarding
required federal tax withholding.
* Answer Shareholder/Beneficiary telephone, written or other inquiries
concerning the IRA.
* Process requested changes to account information.
* Retain original source documents, such as applications and
correspondence, microfilm original source documents, as required.
* Respond to research inquiries from Fund or as requested by Custodian
if Custodian is directed by the Fund.
* Perform applicable withholding for accounts.
* Purge "closed" accounts as directed by the Fund.
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Schedule B
FEE SCHEDULE
I. TRANSFER AGENCY FEES
Open Account Fees: $18.00 per account per year
Closed Account Fees: $2.00 per account per year
Per Class Annual Minimum: $16,800 per class
II. FULFILLMENT FEES
Initial Set Up Charge: $10,000
Monthly Administration Charge: $2,500
Per Piece Charges: Miscellaneous
III. PRINT/MAIL FEES
Daily Confirmations: $50/day minimum (charged on days with
activity)
Daily Checks: $50/day minimum (charged on days with
activity)
Statements: $50 minimum
IV. IRA ADMINISTRATIVE SERVICES
Shareholder Account Fees: $15.00 per account per year
Provided that the account fee shall be waived for accounts which
maintain a balance of $50,000.
These fees may be adjusted from time to time in the event of FDISG's
failure to meet the Performance Standards outlined in Exhibit 1 to Schedule A
to this Agreement.
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Schedule C
OUT-OF-POCKET EXPENSES
The Fund shall reimburse FDISG monthly for applicable out-of-pocket
expenses, including, but not limited to the following items:
- - Microfiche/microfilm production
- - Magnetic media tapes and freight
- - Printing costs, including certificates, envelopes, checks and
stationery
- - Postage (bulk, pre-sort, ZIP+4, barcoding, first class) direct pass
through to the Fund
- - Due diligence mailings
- - Telephone and telecommunication costs, including all lease,
maintenance and line costs
- - Ad hoc reports
- - Proxy solicitations, mailings and tabulations
- - Daily & Distribution advice mailings
- - Shipping, Certified and Overnight mail and insurance
- - Year-end form production and mailings
- - Terminals, communication lines, printers and other equipment and any
expenses incurred in connection with such terminals and lines
- - Duplicating services
- - Courier services
- - Incoming and outgoing wire charges
- - Federal Reserve charges for check clearance
- - Overtime, as approved by the Fund
- - Temporary staff, as approved by the Fund
- - Travel and entertainment, as approved by the Fund
- - Record retention, retrieval and destruction costs, including, but not
limited to exit fees charged by third party record keeping vendors
- - Third party audit reviews
- - Ad hoc SQL time
- - All Systems enhancements after the conversion at the rate of $100.00
per hour
- - Such other miscellaneous expenses reasonably incurred by FDISG in
performing its duties and responsibilities under this Agreement.
The Fund agrees that postage and mailing expenses will be paid on the
day of or prior to mailing as agreed with FDISG. In addition, the Fund will
promptly reimburse FDISG for any other unscheduled expenses incurred by FDISG
whenever the Fund and FDISG mutually agree that such expenses are not otherwise
properly borne by FDISG as part of its duties and obligations under the
Agreement.
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Schedule D
FUND DOCUMENTS
- - Certified copy of the Declaration of Trust of the Fund, as amended
- - Certified copy of the By-laws of the Fund, as amended,
- - Copy of the resolution of the Board of Directors authorizing the
execution and delivery of this Agreement
- - Specimens of the certificates for Shares of the Fund, if applicable,
in the form approved by the Board of Directors of the Fund, with a
certificate of the Secretary of the Fund as to such approval
- - All account application forms and other documents relating to
Shareholder accounts or to any plan, program or service offered by the
Fund
- - Certified list of Shareholders of the Fund with the name, address and
taxpayer identification number of each Shareholder, and the number of
Shares of the Fund held by each, certificate numbers and denominations
(if any certificates have been issued), lists of any accounts against
which stop transfer orders have been placed, together with the reasons
therefore, and the number of Shares redeemed by the Fund
- - All notices issued by the Fund with respect to the Shares in
accordance with and pursuant to the Declaration of Trust or By-laws of
the Fund or as required by law and shall perform such other specific
duties as are set forth in the Articles of Incorporation including the
giving of notice of any special or annual meetings of shareholders and
any other notices required thereby.
23
<PAGE> 1
EXHIBIT 99.B9(c)
SUB-ADMINISTRATION AGREEMENT
THIS SUB-ADMINISTRATION AGREEMENT is made as of June 1, 1997 (the
"Agreement"), by and between FIRST DATA INVESTOR SERVICES GROUP, INC., a
Massachusetts corporation ("FDISG"), and THE CHICAGO TRUST COMPANY, an Illinois
corporation (the "Administrator").
WHEREAS, the Administrator has entered into an Administration Agreement
with CT & T Funds (the "Company") pursuant to which the Administrator has
agreed to provide certain administrative services to the Company;
WHEREAS, the Company is registered as a diversified open-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Administrator desires to retain FDISG to render certain
administrative services with respect to each investment portfolio of the
Company listed in Schedule A hereto, as the same may be amended from time to
time by the parties hereto (collectively, the "Funds"), and FDISG is willing to
render such services;
WITNESSETH:
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Administrator hereby appoints FDISG to act as
Sub-Administrator of the Company on the terms set forth in this Agreement.
FDISG accepts such appointment and agrees to render the services herein set
forth for the compensation herein provided to the Funds listed on Schedule A.
In the event that the Administrator decides to retain FDISG to act as
Sub-Administrator hereunder with respect to one or more portfolios other than
the Funds, the Administrator shall notify FDISG in writing. If FDISG is
willing to render such services, it shall notify the Administrator in writing
whereupon such portfolio shall become a Fund hereunder.
2. Delivery of Documents. The Administrator has furnished FDISG with
copies properly certified or authenticated of each of the following:
(a) Resolutions of the Company's Board of Trustees authorizing the
appointment of the Administrator as administrator of the Company and the
Administrator's appointment of FDISG to provide certain administrative services
required by the Company for each Fund and approving this Agreement;
(b) The Company's Declaration of Trust (the "Declaration of
Trust") filed with the State of Delaware and all amendments thereto;
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<PAGE> 2
(c) The Company's By-Laws and all amendments thereto (the "By-Laws");
(d) The Investment Advisory Agreements between the Company and The
Chicago Trust Company and Montag & Caldwell, Inc. and the Sub-Investment
Advisory Agreement between the Company and Talon Asset Management, Inc. (the
"Advisors") and all amendments thereto (the "Advisory Agreements");
(e) The Custody Agreement between Bankers Trust (the "Custodian") and
the Company dated as of June 1, 1997 and all amendments thereto (the "Custody
Agreement");
(f) The Transfer Agency and Services Agreement between First Data
Investor Services Group, Inc. (the "Transfer Agent") and the Company dated as
of June 1, 1997 and all amendments thereto;
(g) The Distribution Agreement between First Data Distributors, Inc.
(the "Distributor") and the Company dated as of June 1, 1997 and all amendments
thereto (the "Distribution Agreement");
(h) The Company's most recent Post-Effective Amendment to its
Registration Statement on Form N-1A (the "Registration Statement") under the
Securities Act of 1933 and under the 1940 Act (File Nos. ________ and
________), relating to shares of the Company's beneficial interest, $.___ par
value per share, and all amendments thereto;
(i) Each Fund's most recent prospectus and Statement of Additional
Information and all amendments and supplements thereto (collectively, the
"Prospectuses"); and
(j) The Administration Agreement between the Administrator and the Company
dated as of June 15, 1995, and all amendments thereto (the "Administration
Agreement").
The Administrator will furnish FDISG from time to time with copies,
properly certified or authenticated, of all amendments of or supplements to the
foregoing. Furthermore, the Administrator will provide FDISG with any other
documents that FDISG may reasonably request and will notify FDISG as soon as
possible of any matter materially affecting the performance of FDISG of its
services under this Agreement.
3. Duties as Sub-Administrator. Subject to the supervision and direction
of the Administrator of the Company, FDISG, as Sub-Administrator, will assist
in supervising various aspects of the Company's administrative operations and
undertakes to perform the following specific services:
(a) Maintaining office facilities (which may be in the offices of FDISG or
a corporate affiliate) and furnishing corporate officers for the Company;
(b) Performing the functions ordinarily performed by a mutual fund group's
internal legal department as described in Schedule D to this Agreement,
furnishing data processing
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<PAGE> 3
services, clerical services, and executive and administrative services and
standard stationery and office supplies in connection with the foregoing;
(c) Accounting and bookkeeping services (including the maintenance of such
accounts, books and records of the Company as may be required by Section 31(a)
of the 1940 Act and the rules thereunder);
(d) Internal auditing;
(e) Performing all functions ordinarily performed by the office of a
corporate treasurer, and furnishing the services and facilities ordinarily
incident thereto, including calculating the net asset value of the shares in
conformity with the fund(s) prospectus;
(f) Preparing reports to the Company's shareholders of record and the SEC
including, but not necessarily limited to, Annual Reports and Semi-Annual
Reports on Form N-SAR;
(g) Preparing and filing various reports or other documents required by
federal, state and other applicable laws and regulations, other than those
filed or required to be filed by the Advisors or Transfer Agent;
(h) Preparing and filing the Company's tax returns;
(i) Assisting the Advisors, at the Advisors' request, in monitoring and
developing compliance procedures for the Company which will include, among
other matters, procedures to assist the Advisor in monitoring compliance with
each Fund's investment objective, policies, restrictions, tax matters and
applicable laws and regulations;
(j) Performing all functions ordinarily performed by the office of a
corporate secretary, and furnishing the services and facilities incident
thereto, including all functions pertaining to matters organic to the
organization, existence and maintenance of the corporate franchise of the
Company, including preparation for, conduct of, and recording trustees'
meetings and shareholder meetings. Trustees' meetings in excess of five in any
calendar year and shareholder meetings in excess of one in any two year period
shall be for an additional reasonable charge as may be agreed upon by the
Company and FDISG;
(k) Performing "Blue Sky" compliance functions, including maintaining
notice filings or registrations in all U.S. jurisdictions requested by the
Company, monitoring sales of shares in all such jurisdictions and filing such
additional notice or applying for such additional or amended registrations as
may be reasonably anticipated to be necessary to permit continuous sales of the
shares of the Funds in all such jurisdictions, filing sales literature and
advertising materials to the extent required, with such Blue Sky authorities,
and making and filing all other applications, reports, notices, documents and
exhibits in connection with the foregoing;
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<PAGE> 4
(l) Performing custody liaison operations, including maintaining the
day-to-day operational contact with the Custodian, calculating daily cash
availability, authorizing and monitoring cash movements, processing corporate
actions, supporting income and security settlements processed by the Custodian
and recorded by FDISG;
(m) Furnishing all other services identified on Schedule D annexed hereto
and incorporated herein which are not otherwise specifically set forth above;
and
(n) FDISG agrees to provide the services set forth herein in accordance
with the Performance Standards annexed hereto as Exhibit 1 of Schedule D and
incorporated herein (the "Performance Standards"). Such Performance Standards
may be amended from time to time upon written agreement by the parties.
In performing its duties under this Agreement, FDISG: (a) will act in
accordance with the Declaration of Trust, By-Laws, Prospectuses, Statements of
Additional Information and with the instructions and directions of the Company
and will conform to and comply with the requirements of the 1940 Act and all
other applicable federal or state laws and regulations; and (b) will consult
with legal counsel to the Company, as necessary and appropriate. Furthermore,
FDISG shall not have or be required to have any authority to supervise the
investment or reinvestment of the securities or other properties which comprise
the assets of the Company or any of its Funds and shall not provide any
investment advisory services to the Company or any of its Funds.
4. Compensation and Allocation of Expenses. FDISG shall bear all expenses
in connection with the performance of its services under this Agreement, except
as indicated below.
(a) FDISG will from time to time employ or associate with itself such
person or persons as FDISG may believe to be particularly suited to assist it
in performing services under this Agreement. Such person or persons may be
officers and employees who are employed by both FDISG and the Company. The
compensation of such person or persons shall be paid by FDISG and no obligation
shall be incurred on behalf of the Company in such respect.
(b) FDISG shall not be required to pay any of the following expenses
incurred by the Company: membership dues in the Investment Company Institute
or any similar organization; investment advisory expenses; costs of printing
and mailing stock certificates, prospectuses, reports and notices; interest on
borrowed money; brokerage commissions; stock exchange listing fees; taxes and
fees payable to Federal, state and other governmental agencies; fees of
Trustees of the Company who are not affiliated with FDISG; outside auditing
expenses; outside legal expenses; or other expenses not specified in this
Section 4 which may be properly payable by the Company.
(c) The Administrator on behalf of each of the Funds will compensate FDISG
for the performance of its obligations hereunder in accordance with the fees
set forth in the written Fee Schedule annexed hereto as Schedule B and
incorporated herein. Schedule B may be
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<PAGE> 5
amended to add fee schedules for any additional Funds for which FDISG has been
retained as Sub-Administrator.
(d) The Administrator will compensate FDISG for its services rendered
pursuant to this Agreement in accordance with the fees set forth above. Such
fees do not include reasonable out-of-pocket disbursements of FDISG for which
FDISG shall be entitled to bill separately. Out-of-pocket disbursements shall
include, but shall not be limited to, the items specified in Schedule C,
annexed hereto and incorporated herein, which schedule may be modified by FDISG
upon not less than thirty days' prior written notice to the Administrator and
the Special Projects outlined in Schedule D hereto.
(e) FDISG will bill the Administrator as soon as practicable after the end
of each calendar month, and said billings will be detailed in accordance with
the out-of-pocket schedule.
(f) The payment of all fees and expenses shall be due within 45 days of
receipt of invoice. FDISG may charge a service fee equal to the lesser of (i)
one and one half percent (1-1/2%) per month or (ii) the highest interest rate
legally permitted on any fees not paid within 45 days of receipt of invoice.
(g) The Administrator acknowledges that the fees that FDISG charges the
Administrator under this Agreement reflect the allocation of risk between the
parties, including the disclaimer of warranties in Section 7 and the
limitations on liability in Section 5. Modifying the allocation of risk from
what is stated here would affect the fees that FDISG charges, and in
consideration of those fees, the Administrator agrees to the stated allocation
of risk.
5. Limitation of Liability.
(a) FDISG shall not be liable for any error of judgment or mistake of law
or for any loss suffered by the Administrator or the Company in connection with
the performance of its obligations and duties under this Agreement, except a
loss resulting from FDISG's willful misfeasance, bad faith or negligence in the
performance of such obligations and duties, or by reason of its reckless
disregard thereof.
(b) Neither party may assert any cause of action against the other party
under this Agreement that occurred more than two (2) years prior to the filing
of the suit (or commencement of arbitration proceedings) alleging such cause of
action.
(c) Each party shall have the duty to mitigate damages for which the other
party may become responsible.
(d) NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO
EVENT SHALL EITHER PARTY, ITS AFFILIATES OR ANY OF ITS OR THEIR DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS OR SUBCONTRACTORS BE LIABLE FOR CONSEQUENTIAL
DAMAGES
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<PAGE> 6
6. Indemnification.
(a) The Administrator shall indemnify and hold FDISG harmless from and
against any and all claims, costs, expenses (including reasonable attorneys'
fees), losses, damages, charges, payments and liabilities of any sort or kind
which may be asserted against FDISG or for which FDISG may be held to be liable
in connection with this Agreement or FDISG's performance hereunder (a "Claim"),
unless such Claim resulted from a negligent act or omission to act, bad faith
or willful misfeasance by FDISG in the performance of its duties hereunder.
(b) FDISG shall indemnify and hold the Administrator harmless from and
against any and all claims, costs, expenses (including reasonable attorneys'
fees), losses, damages, charges, payments and liabilities of any sort or kind
which may be asserted against the Administrator or for which the Administrator
may be held to be liable in connection with this Agreement (a "Claim"),
provided that such Claim resulted from a negligent act or omission to act, bad
faith or willful misfeasance by FDISG in the performance of its duties
hereunder.
(c) In any case in which the one party hereto (the "Indemnifying Party")
may be asked to indemnify or hold the other party (the "Indemnified Party")
harmless, the Indemnified Party will notify the Administrator promptly after
identifying any situation which it believes presents or appears likely to
present a claim for indemnification against the Indemnifying Party and shall
keep the Indemnifying Party advised with respect to all developments concerning
such situation. The Indemnifying Party shall have the option to defend the
Indemnified Party against any Claim which may be the subject of this
indemnification, and, in the event that the Indemnifying Party so elects, such
defense shall be conducted by counsel chosen by the Indemnifying Party and
satisfactory to the Indemnified Party, and thereupon the Indemnifying Party
shall take over complete defense of the Claim and the Indemnified Party shall
sustain no further legal or other expenses in respect of such Claim. The
Indemnified Party will not confess any Claim or make any compromise in any case
in which the Indemnifying Party will be asked to provide indemnification,
except with the Indemnifying Party's prior written consent. The obligations of
the parties hereto under this Section 6 shall survive the termination of this
Agreement.
7. EXCLUSION OF WARRANTIES. THIS IS A SERVICE AGREEMENT. EXCEPT AS
EXPRESSLY PROVIDED IN THIS AGREEMENT, FDISG DISCLAIMS ALL OTHER REPRESENTATIONS
OR WARRANTIES, EXPRESS OR IMPLIED, MADE TO THE FUND OR ANY OTHER PERSON,
INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES REGARDING MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE OF ANY SERVICES OR ANY GOODS
PROVIDED INCIDENTAL TO SERVICES PROVIDED UNDER THIS AGREEMENT.
8. Termination of Agreement.
(a) This Agreement shall be effective on the date first written above and
shall continue for a period of three (3) years (the "Initial Term"), unless
earlier terminated pursuant to the terms of this Agreement or the termination
of the Administration Agreement. Thereafter, this
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<PAGE> 7
Agreement shall be renewed for successive terms of three (3) years ("Renewal
Terms") each, provided that the Administrator shall provide FDISG with written
notice of its intent to renew not less than ninety (90) days nor more than one
hundred-eighty (180) days prior to the expiration of the Initial Term or any
Renewal Term.
(b) FDISG may terminate this Agreement at the end of the Initial Term or
at the end of any subsequent Renewal Term upon not than less than ninety (90)
days or more than one hundred-eighty (180) days prior written notice to the
Administrator.
(c) This Agreement may be terminated by the Administrator prior to the
expiration of the Initial Term or any Renewal Term in the event FDISG has
failed to meet the Performance Standards, as set forth in Exhibit 1 to Schedule
D, in four months of any rolling six month period. The Administrator will
provide FDISG with 60 days' notice in writing after the fourth month of FDISG's
failure to meet the Performance Standards if the Administrator intends to
exercise this option under this Section 8(c). Notwithstanding the foregoing,
the Administrator's right under this Section 8(c) shall not commence until
ninety (90) days after FDISG has begun providing services under this Agreement.
(d) In the event a termination notice is given by the Administrator, all
reasonable expenses associated with movement of records and materials and
conversion thereof will be borne by the Administrator.
(e) If a party hereto is guilty of a material failure to perform its
duties and obligations hereunder (a "Defaulting Party") resulting in a material
loss to the other party, such other party (the "Non-Defaulting Party") may give
written notice thereof to the Defaulting Party, and if such material breach
shall not have been remedied within thirty (30) days after such written notice
is given, then the Non-Defaulting Party may terminate this Agreement by giving
thirty (30) days written notice of such termination to the Defaulting Party.
If FDISG is the Non-Defaulting Party, its termination of this Agreement shall
not constitute a waiver of any other rights or remedies of FDISG with respect
to services performed prior to such termination or rights of FDISG to be
reimbursed for out-of-pocket expenses. In all cases, termination by the
Non-Defaulting Party shall not constitute a waiver by the Non-Defaulting Party
of any other rights it might have under this Agreement or otherwise against the
Defaulting Party.
9. Modifications and Waivers. No change, termination, modification, or
waiver of any term or condition of the Agreement shall be valid unless in
writing signed by each party. No such writing shall be effective as against
FDISG unless said writing is executed by a Senior Vice President, Executive
Vice President or President of FDISG. A party's waiver of a breach of any term
or condition in the Agreement shall not be deemed a waiver of any subsequent
breach of the same or another term or condition.
10. No Presumption Against Drafter. FDISG and the Administrator have
jointly participated in the negotiation and drafting of this Agreement. The
Agreement shall be construed as if drafted jointly by the Administrator and
FDISG, and no presumptions arise favoring any party by virtue of the authorship
of any provision of this Agreement.
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<PAGE> 8
11. Publicity. Neither FDISG nor the Administrator shall release or
publish news releases, public announcements, advertising or other publicity
relating to this Agreement or to the transactions contemplated by it without
prior review and written approval of the other party; provided, however, that
either party may make such disclosures as are required by legal, accounting or
regulatory requirements after making reasonable efforts in the circumstances to
consult in advance with the other party.
12. Severability. The parties intend every provision of this Agreement to
be severable. If a court of competent jurisdiction determines that any term or
provision is illegal or invalid for any reason, the illegality or invalidity
shall not affect the validity of the remainder of this Agreement. In such
case, the parties shall in good faith modify or substitute such provision
consistent with the original intent of the parties. Without limiting the
generality of this paragraph, if a court determines that any remedy stated in
this Agreement has failed of its essential purpose, then all other provisions
of this Agreement, including the limitations on liability and exclusion of
damages, shall remain fully effective.
13. Miscellaneous.
(a) Any notice or other instrument authorized or required by this
Agreement to be given in writing to the Administrator or FDISG shall be
sufficiently given if addressed to the party and received by it at its office
set forth below or at such other place as it may from time to time designate in
writing.
To the Administrator:
The Chicago Trust Company
171 North Clark Street
Chicago, Illinois 60601
Attention: President - CT&T Funds
To FDISG:
First Data Investor Services Group, Inc.
4400 Computer Drive
Westborough, Massachusetts 01581
Attention: President
with a copy to FDISG's General Counsel
(b) This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns and is not
intended to confer upon any other person any rights or remedies hereunder.
This Agreement may not be assigned or otherwise transferred by either party
hereto, without the prior written consent of the other party, which consent
shall not be unreasonably withheld; provided, however, that FDISG may, in its
sole discretion, assign all its right, title and interest in this Agreement to
an affiliate, parent or subsidiary, or to the purchaser of substantially all of
its business. FDISG may, in its sole
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<PAGE> 9
discretion, engage subcontractors to perform any of the obligations contained
in this Agreement to be performed by FDISG. FDISG shall provide the Company
with written notice of the engagement of any subcontractor to perform
substantially all of the obligations contained in this Agreement to be
performed by FDISG.
(c) The laws of the Commonwealth of Massachusetts, excluding the laws on
conflicts of laws, shall govern the interpretation, validity, and enforcement
of this Agreement. All actions arising from or related to this Agreement shall
be brought in the state and federal courts sitting in the City of Boston, and
FDISG and the Administrator hereby submit themselves to the exclusive
jurisdiction of those courts.
(d) This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and which
collectively shall be deemed to constitute only one instrument.
(e) The captions of this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
14. Confidentiality.
(a) The parties agree that the Proprietary Information (defined below)
(collectively "Confidential Information") are confidential information of the
parties and their respective licensers. The Administrator and FDISG shall
exercise reasonable care to safeguard the confidentiality of the Confidential
Information of the other. The Administrator and FDISG may each use the
Confidential Information only to exercise its rights or perform its duties
under this Agreement. Except as may be required by law, the Administrator and
FDISG shall not duplicate, sell or disclose to others the Confidential
Information of the other, in whole or in part, without the prior written
permission of the other party. The Administrator and FDISG may, however,
disclose Confidential Information to its employees who have a need to know the
Confidential Information to perform work for the other, provided that each
shall use reasonable efforts to ensure that the Confidential Information is not
duplicated or disclosed by its employees in breach of this Agreement. The
Administrator and FDISG may also disclose the Confidential Information to
independent contractors, auditors and professional advisors, if necessary.
Notwithstanding the previous sentence, in no event shall either the
Administrator or FDISG disclose the Confidential Information to any competitor
of the other without specific, prior written consent.
(b) Proprietary Information means:
(i) any data or information that is competitively sensitive
material, and not generally known to the public, including, but not
limited to, information about product plans, marketing strategies,
finance, operations, customer relationships, customer profiles, sales
estimates, business plans, and internal performance results relating to
the past, present or future
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<PAGE> 10
business activities of the Administrator or FDISG, their respective
subsidiaries and affiliated companies and the customers, clients and suppliers
of any of them;
(ii) any scientific or technical information, design, process,
procedure, formula, or improvement that is commercially valuable and
secret in the sense that its confidentiality affords the
Administrator or FDISG a competitive advantage over its competitors;
and
(iii) all confidential or proprietary concepts, documentation,
reports, data, specifications, computer software, source code,
object code, flow charts, databases, inventions, know-how, show-how
and trade secrets, whether or not patentable or copyrightable.
(c) Confidential Information includes, without limitation, all
documents, inventions, substances, engineering and laboratory
notebooks, drawings, diagrams, specifications, bills of material,
equipment, prototypes and models, and any other tangible manifestation
of the foregoing of either party which now exist or come into the
control or possession of the other.
(d) The Administrator acknowledges that breach of the
restrictions on use, dissemination or disclosure of any Confidential
Information would result in immediate and irreparable harm, and money
damages would be inadequate to compensate FDISG for that harm. FDISG
shall be entitled to equitable relief, in addition to all other
available remedies, to redress any such breach.
15. Force Majeure. No party shall be liable for any default or delay in
the performance of its obligations under this Agreement if and to the extent
such default or delay is caused, directly or indirectly, by (i) fire, flood,
elements of nature or other acts of God; (ii) any outbreak or escalation of
hostilities, war, riots or civil disorders in any country, (iii) any act or
omission of the other party or any governmental authority; (iv) any labor
disputes (whether or not the employees' demands are reasonable or within the
party's power to satisfy); or (v) nonperformance by a third party or any
similar cause beyond the reasonable control of such party, including without
limitation, failures or fluctuations in telecommunications or other equipment.
In any such event, the non-performing party shall be excused from any further
performance and observance of the obligations so affected only for so long as
such circumstances prevail and such party continues to use commercially
reasonable efforts to recommence performance or observance as soon as
practicable.
16. Entire Agreement. This Agreement, including all Schedules hereto,
constitutes the entire Agreement between the parties with respect to the
subject matter hereof and supersedes all prior and contemporaneous proposals,
agreements, contracts, representations, and understandings, whether written or
oral, between the parties with respect to the subject matter hereof.
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<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
duly executed and delivered by their duly authorized officers as of the date
first written above.
FIRST DATA INVESTOR SERVICES GROUP, INC.
By: /s/Barbara L. Worthen
-----------------------
Name: Barbara L. Worthen
Title: Executive Vice President
THE CHICAGO TRUST COMPANY
By: /s/Stuart Bilton
-----------------------
Name: Stuart Bilton
Title: CEO
ACKNOWLEDGED AND AGREED TO:
CT & T FUNDS
By: /s/Kenneth Anderson
---------------------
Name: Kenneth Anderson
-------------------
Title: President
------------------
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SCHEDULE A
LIST OF FUNDS
Montag & Caldwell Growth Fund
Chicago Trust Growth & Income Fund
Chicago Trust Talon Fund
Chicago Trust Asset Allocation Fund
Montag & Caldwell Balanced Fund
Chicago Trust Bond Fund
Chicago Trust Municipal Bond Fund
Chicago Trust Money Market Fund
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SCHEDULE B
FEE SCHEDULE
The Administrator, on behalf of each Fund, will pay FDISG on the first
business day of each month a fee for the previous month at the rates listed
below. The fee for the period from the effective date of this Agreement to the
end of such month shall be prorated according to the proportion that such
period bears to the full monthly period. Upon any termination of this
Agreement before the end of any month, the fee for such part of a month shall
be prorated according to the proportion which such period bears to the full
monthly period and shall be payable upon the date of termination of this
Agreement.
I. ADMINISTRATION FEES:
.06% of less than $2 billion of the aggregate average daily net assets
of the Funds; and
.045% of aggregate average daily net assets of the Funds of at least
$2 billion but not more than $3.5 billion; and
.04% of the Funds' aggregate average daily net assets over $3.5
billion.
II. CUSTODY LIAISON FEES:
$10,000 for average daily net assets of a Fund less than $100
million; and
$15,000 for average daily net assets of a Fund of at least $100
million but not more than $500 million; and
$20,000 for average daily net assets of a Fund over $500 million.
III. OUT-OF POCKET EXPENSES:
FDISG shall be entitled to collect all out-of-pocket fees
described in Schedule C.
These fees may be adjusted from time to time in the event of FDISG's
failure to meet the Performance Standards outlined in Exhibit 1 to Schedule D
to this Agreement.
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SCHEDULE C
OUT-OF-POCKET EXPENSES
Out-of-pocket expenses include, but are not limited to, the following:
- - Postage of Board meeting materials and other materials to the Company's
Board members and service providers (including overnight or other courier
services)
- - Telecommunications charges (including FAX) with respect to
communications with the Company's trustees, officers and service
providers
- - Duplicating charges with respect to filings with federal and state
authorities and Board meeting materials
- - Courier services
- - Pricing services
- - Forms and supplies for the preparation of Board meetings and other
materials for the Company of the Administrator
- - Vendor set-up charges for Blue Sky services
- - Customized programming requests
- - Such other expenses as are agreed to by FDISG and the Administrator
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SCHEDULE D
FUND ACCOUNTING AND ADMINISTRATIVE SERVICES
ROUTINE PROJECTS
- - Daily, Weekly, and Monthly Reporting
- - Portfolio and General Ledger Accounting
- - Daily Pricing of all Securities
- - Daily Valuation and NAV Calculation
- - Comparison of NAV to market movement
- - Review of price tolerance/fluctuation report
- - Research items appearing on the price exception report
- - Weekly cost monitoring along with market-to-market valuations in
accordance with Rule 2a7
- - Preparation of monthly ex-dividend monitor
- - Daily cash reconciliation with the custodian bank
- - Daily updating of price and rate information to the Transfer
Agent/Insurance Agent
- - Daily support and report delivery to Portfolio Management
- - Daily calculation of fund advisor fees and waivers
- - Daily calculation of distribution rates
- - Daily maintenance of each fund's general ledger including expense
accruals
- - Daily price notification to other vendors as required
- - Calculation of 30-day adjusted SEC yields
- - Preparation of month-end reconciliation package
- - Monthly reconciliation of fund expense records
- - Preparation of monthly pay down gain/loss summaries
- - Preparation of all annual and semi-annual audit work papers
- - Preparation and Printing of Financial Statements
- - Providing Shareholder Tax Information to Transfer Agent
- - Producing Drafts of IRS and State Tax Returns
- - Treasury Services including:
Provide Officer for the Company
Expense Accrual Monitoring
Determination of Dividends
Prepare materials for review by the board, e.g., 2a-7, 10f-3,
17a-7, 17e-1, Rule 144a
Tax and Financial Counsel
- - Monthly Compliance Testing including Section 817H
-15-
<PAGE> 16
DISTRIBUTION AND LEGAL, REGULATORY AND BOARD OF TRUSTEES SUPPORT
<TABLE>
<S> <C>
ROUTINE PROJECTS
- - Provide 1940 Act Attorney to assist in organization
- - Prepare agenda and background materials for legal approval at Board Meetings; make
presentations where appropriate; prepare minutes; follow up on issues
- - Review and filing of Form N-SAR
- - Review and filing of Annual and Semi-Annual Financial Reports
- - Assistance in Preparation of Fund Registration Statements
- - Review of all Sales Material and Advertising
- - Coordinate all aspects of the printing and mailing process with outside printers for all
shareholder publications
- - Support for all quarterly board meetings
- - Preparation of proxy materials for one meeting per two year period
- - Annual update Post-Effective Amendment (PEA)
- - Prospectus supplements as needed
- - Consultations regarding legal issues as needed
- - SEC audit report
- - Arrange insurance and fidelity bond coverage
- - Support for one special board meeting per year and consent votes where needed
- - One additional PEA (other than annual update)
- - One exemptive order application
- - Assist with marketing strategy and product development
SPECIAL PROJECTS*
- - Proxy material preparation for additional meetings beyond one per two year period
- - N-14 preparation (merger document)
- - Additional PEAs beyond two per year
- - Prospectus simplification
- - Additional exemptive order applications beyond one per year
- - Extraordinary non-recurring projects - e.g., arranging CDSC financing programs
- - Basic sales, mutual funds, and product training to branch and sales representatives
*Charged on a project-by-project basis.
</TABLE>
-16-
<PAGE> 1
CONSENT OF INDEPENDENT AUDITORS
The Board of Trustees and Shareowners
of Alleghany Funds:
We consent to the use of our report included in the Statement of Additional
Information which is incorporated by reference into the Prospectuses and to the
references to our Firm under the headings "Reports to Shareowners" in the
Statement of Additional Information and "Financial Highlights" in the
Prospectuses.
/s/KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Chicago, Illinois
February 24, 1998
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 61
<NAME> MONTAG & CALDWELL GROWTH FUND-CLASS N
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 606,867,247
<INVESTMENTS-AT-VALUE> 754,008,083
<RECEIVABLES> 4,397,609
<ASSETS-OTHER> 10,454
<OTHER-ITEMS-ASSETS> 6,670
<TOTAL-ASSETS> 758,422,816
<PAYABLE-FOR-SECURITIES> 8,311,553
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,693,097
<TOTAL-LIABILITIES> 10,004,650
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 593,853,104
<SHARES-COMMON-STOCK> 21,142,111
<SHARES-COMMON-PRIOR> 9,733,552
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 7,424,226
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 147,140,836
<NET-ASSETS> 748,418,166
<DIVIDEND-INCOME> 3,062,695
<INTEREST-INCOME> 1,035,399
<OTHER-INCOME> 0
<EXPENSES-NET> 5,425,179
<NET-INVESTMENT-INCOME> (1,327,085)
<REALIZED-GAINS-CURRENT> 8,570,687
<APPREC-INCREASE-CURRENT> 114,427,550
<NET-CHANGE-FROM-OPS> 121,671,152
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 1,466,613
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 339,687,434
<NUMBER-OF-SHARES-REDEEMED> 115,055,486
<SHARES-REINVESTED> 1,404,998
<NET-CHANGE-IN-ASSETS> 529,768,271
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1,872,537
<OVERDISTRIB-NII-PRIOR> 73,703
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,800,124
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,466,607
<AVERAGE-NET-ASSETS> 334,540,586
<PER-SHARE-NAV-BEGIN> 17.08
<PER-SHARE-NII> (0.05)
<PER-SHARE-GAIN-APPREC> 5.79
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.14)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 22.68
<EXPENSE-RATIO> 1.23
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 62
<NAME> MONTAG & CALDWELL GROWTH FUND-CLASS I
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 606,867,247
<INVESTMENTS-AT-VALUE> 754,008,083
<RECEIVABLES> 4,397,609
<ASSETS-OTHER> 10,454
<OTHER-ITEMS-ASSETS> 6,670
<TOTAL-ASSETS> 758,422,816
<PAYABLE-FOR-SECURITIES> 8,311,553
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,693,097
<TOTAL-LIABILITIES> 10,004,650
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 593,853,104
<SHARES-COMMON-STOCK> 11,816,961
<SHARES-COMMON-PRIOR> 3,068,018
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 7,424,226
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 147,140,836
<NET-ASSETS> 748,418,166
<DIVIDEND-INCOME> 3,062,695
<INTEREST-INCOME> 1,035,399
<OTHER-INCOME> 0
<EXPENSES-NET> 5,425,179
<NET-INVESTMENT-INCOME> (1,327,085)
<REALIZED-GAINS-CURRENT> 8,570,687
<APPREC-INCREASE-CURRENT> 114,427,550
<NET-CHANGE-FROM-OPS> 121,671,152
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 26,630
<DISTRIBUTIONS-OF-GAINS> 412,803
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 228,296,239
<NUMBER-OF-SHARES-REDEEMED> 44,726,535
<SHARES-REINVESTED> 396,515
<NET-CHANGE-IN-ASSETS> 529,768,271
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1,872,537
<OVERDISTRIB-NII-PRIOR> 73,703
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3,800,124
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 5,466,607
<AVERAGE-NET-ASSETS> 140,474,958
<PER-SHARE-NAV-BEGIN> 17.08
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 5.81
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (0.14)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 22.75
<EXPENSE-RATIO> 0.93
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> CHICAGO TRUST GROWTH & INCOME FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 192,887,419
<INVESTMENTS-AT-VALUE> 269,923,672
<RECEIVABLES> 5,181,109
<ASSETS-OTHER> 32,467
<OTHER-ITEMS-ASSETS> 5,574
<TOTAL-ASSETS> 275,142,822
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 534,915
<TOTAL-LIABILITIES> 534,915
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 178,423,017
<SHARES-COMMON-STOCK> 13,917,656
<SHARES-COMMON-PRIOR> 12,687,963
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 19,148,637
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 77,036,253
<NET-ASSETS> 274,607,907
<DIVIDEND-INCOME> 2,616,520
<INTEREST-INCOME> 1,054,079
<OTHER-INCOME> 0
<EXPENSES-NET> 2,652,129
<NET-INVESTMENT-INCOME> 1,018,470
<REALIZED-GAINS-CURRENT> 19,177,699
<APPREC-INCREASE-CURRENT> 33,416,450
<NET-CHANGE-FROM-OPS> 53,612,619
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,152,026
<DISTRIBUTIONS-OF-GAINS> 4,334,020
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 50,803,893
<NUMBER-OF-SHARES-REDEEMED> 34,860,763
<SHARES-REINVESTED> 5,404,887
<NET-CHANGE-IN-ASSETS> 69,474,590
<ACCUMULATED-NII-PRIOR> 133,556
<ACCUMULATED-GAINS-PRIOR> 4,304,958
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,734,260
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,781,986
<AVERAGE-NET-ASSETS> 247,751,449
<PER-SHARE-NAV-BEGIN> 16.17
<PER-SHARE-NII> 0.08
<PER-SHARE-GAIN-APPREC> 3.91
<PER-SHARE-DIVIDEND> (0.09)
<PER-SHARE-DISTRIBUTIONS> (0.34)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 19.73
<EXPENSE-RATIO> 1.07
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 5
<NAME> CHICAGO TRUST TALON FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 24,636,650
<INVESTMENTS-AT-VALUE> 28,765,156
<RECEIVABLES> 93,805
<ASSETS-OTHER> 6,389
<OTHER-ITEMS-ASSETS> 6,277
<TOTAL-ASSETS> 28,871,627
<PAYABLE-FOR-SECURITIES> 359,975
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 52,069
<TOTAL-LIABILITIES> 412,044
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 19,796,414
<SHARES-COMMON-STOCK> 1,617,134
<SHARES-COMMON-PRIOR> 1,210,058
<ACCUMULATED-NII-CURRENT> 37,253
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 4,497,410
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,128,506
<NET-ASSETS> 28,459,583
<DIVIDEND-INCOME> 93,313
<INTEREST-INCOME> 366,033
<OTHER-INCOME> 0
<EXPENSES-NET> 296,631
<NET-INVESTMENT-INCOME> 162,715
<REALIZED-GAINS-CURRENT> 4,497,850
<APPREC-INCREASE-CURRENT> 1,618,377
<NET-CHANGE-FROM-OPS> 6,278,942
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 134,407
<DISTRIBUTIONS-OF-GAINS> 1,458,660
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,345,104
<NUMBER-OF-SHARES-REDEEMED> 1,566,326
<SHARES-REINVESTED> 1,577,255
<NET-CHANGE-IN-ASSETS> 11,041,908
<ACCUMULATED-NII-PRIOR> 8,945
<ACCUMULATED-GAINS-PRIOR> 1,458,220
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 182,742
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 382,227
<AVERAGE-NET-ASSETS> 22,842,703
<PER-SHARE-NAV-BEGIN> 14.39
<PER-SHARE-NII> 0.11
<PER-SHARE-GAIN-APPREC> 4.38
<PER-SHARE-DIVIDEND> (0.09)
<PER-SHARE-DISTRIBUTIONS> (1.19)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.60
<EXPENSE-RATIO> 1.30
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 8
<NAME> CHICAGO TRUST BALANCED FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 153,390,686
<INVESTMENTS-AT-VALUE> 186,988,865
<RECEIVABLES> 1,457,511
<ASSETS-OTHER> 1,244
<OTHER-ITEMS-ASSETS> 4,036
<TOTAL-ASSETS> 188,451,656
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 458,319
<TOTAL-LIABILITIES> 458,319
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 142,370,306
<SHARES-COMMON-STOCK> 16,999,608
<SHARES-COMMON-PRIOR> 16,316,686
<ACCUMULATED-NII-CURRENT> 624,636
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 11,400,216
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 33,598,179
<NET-ASSETS> 187,993,337
<DIVIDEND-INCOME> 1,115,889
<INTEREST-INCOME> 5,603,622
<OTHER-INCOME> 0
<EXPENSES-NET> 1,875,948
<NET-INVESTMENT-INCOME> 4,843,563
<REALIZED-GAINS-CURRENT> 11,378,927
<APPREC-INCREASE-CURRENT> 15,462,457
<NET-CHANGE-FROM-OPS> 31,684,947
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4,764,936
<DISTRIBUTIONS-OF-GAINS> 2,253,139
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 28,395,564
<NUMBER-OF-SHARES-REDEEMED> 28,790,331
<SHARES-REINVESTED> 7,017,789
<NET-CHANGE-IN-ASSETS> 31,289,894
<ACCUMULATED-NII-PRIOR> 567,503
<ACCUMULATED-GAINS-PRIOR> 2,252,934
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,228,508
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,978,151
<AVERAGE-NET-ASSETS> 175,501,161
<PER-SHARE-NAV-BEGIN> 9.60
<PER-SHARE-NII> 0.28
<PER-SHARE-GAIN-APPREC> 1.60
<PER-SHARE-DIVIDEND> (0.28)
<PER-SHARE-DISTRIBUTIONS> (0.14)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.06
<EXPENSE-RATIO> 1.07
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 7
<NAME> MONTAG & CALDWELL BALANCED FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 71,040,168
<INVESTMENTS-AT-VALUE> 82,584,231
<RECEIVABLES> 795,868
<ASSETS-OTHER> 1,356
<OTHER-ITEMS-ASSETS> 6,670
<TOTAL-ASSETS> 83,388,125
<PAYABLE-FOR-SECURITIES> 577,478
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 91,594
<TOTAL-LIABILITIES> 669,072
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 68,927,242
<SHARES-COMMON-STOCK> 5,167,798
<SHARES-COMMON-PRIOR> 2,202,131
<ACCUMULATED-NII-CURRENT> 185,563
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,062,185
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 11,544,063
<NET-ASSETS> 82,719,053
<DIVIDEND-INCOME> 219,468
<INTEREST-INCOME> 1,399,409
<OTHER-INCOME> 0
<EXPENSES-NET> 666,173
<NET-INVESTMENT-INCOME> 952,704
<REALIZED-GAINS-CURRENT> 2,102,297
<APPREC-INCREASE-CURRENT> 7,581,239
<NET-CHANGE-FROM-OPS> 10,636,240
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 837,377
<DISTRIBUTIONS-OF-GAINS> 2,702,590
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 58,631,470
<NUMBER-OF-SHARES-REDEEMED> 17,971,984
<SHARES-REINVESTED> 3,490,623
<NET-CHANGE-IN-ASSETS> 51,246,382
<ACCUMULATED-NII-PRIOR> 70,787
<ACCUMULATED-GAINS-PRIOR> 2,661,927
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 400,868
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 711,146
<AVERAGE-NET-ASSETS> 53,449,048
<PER-SHARE-NAV-BEGIN> 14.29
<PER-SHARE-NII> 0.25
<PER-SHARE-GAIN-APPREC> 2.93
<PER-SHARE-DIVIDEND> (0.25)
<PER-SHARE-DISTRIBUTIONS> (1.21)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.01
<EXPENSE-RATIO> 1.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> CHICAGO TRUST BOND FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 116,027,004
<INVESTMENTS-AT-VALUE> 118,859,232
<RECEIVABLES> 1,872,135
<ASSETS-OTHER> 8,638
<OTHER-ITEMS-ASSETS> 5,574
<TOTAL-ASSETS> 120,745,579
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 213,402
<TOTAL-LIABILITIES> 213,402
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 117,272,641
<SHARES-COMMON-STOCK> 11,894,302
<SHARES-COMMON-PRIOR> 8,007,883
<ACCUMULATED-NII-CURRENT> 452,597
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 25,289
<ACCUM-APPREC-OR-DEPREC> 2,832,228
<NET-ASSETS> 120,532,177
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 7,043,490
<OTHER-INCOME> 0
<EXPENSES-NET> 799,949
<NET-INVESTMENT-INCOME> 6,243,541
<REALIZED-GAINS-CURRENT> (36,729)
<APPREC-INCREASE-CURRENT> 2,754,254
<NET-CHANGE-FROM-OPS> 8,961,066
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6,043,358
<DISTRIBUTIONS-OF-GAINS> 16,748
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 46,817,358
<NUMBER-OF-SHARES-REDEEMED> 13,194,258
<SHARES-REINVESTED> 4,797,389
<NET-CHANGE-IN-ASSETS> 41,321,449
<ACCUMULATED-NII-PRIOR> 258,643
<ACCUMULATED-GAINS-PRIOR> 21,959
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 550,514
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,021,488
<AVERAGE-NET-ASSETS> 100,093,407
<PER-SHARE-NAV-BEGIN> 9.89
<PER-SHARE-NII> 0.61
<PER-SHARE-GAIN-APPREC> 0.23
<PER-SHARE-DIVIDEND> (0.60)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.13
<EXPENSE-RATIO> 0.80
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> CHICAGO TRUST MUNICIPAL BOND FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 11,807,127
<INVESTMENTS-AT-VALUE> 12,126,616
<RECEIVABLES> 303,014
<ASSETS-OTHER> 27,064
<OTHER-ITEMS-ASSETS> 5,574
<TOTAL-ASSETS> 12,462,268
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 83,060
<TOTAL-LIABILITIES> 83,060
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 12,123,373
<SHARES-COMMON-STOCK> 1,215,334
<SHARES-COMMON-PRIOR> 1,112,365
<ACCUMULATED-NII-CURRENT> 27,456
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 91,110
<ACCUM-APPREC-OR-DEPREC> 319,489
<NET-ASSETS> 12,379,208
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 534,204
<OTHER-INCOME> 0
<EXPENSES-NET> 103,625
<NET-INVESTMENT-INCOME> 430,579
<REALIZED-GAINS-CURRENT> 6,147
<APPREC-INCREASE-CURRENT> 140,720
<NET-CHANGE-FROM-OPS> 577,446
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 426,993
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,375,126
<NUMBER-OF-SHARES-REDEEMED> 354,281
<SHARES-REINVESTED> 21,748
<NET-CHANGE-IN-ASSETS> 1,193,046
<ACCUMULATED-NII-PRIOR> 23,870
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 97,257
<GROSS-ADVISORY-FEES> 69,127
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 188,984
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<NAME> CHICAGO TRUST MONEY MARKET FUND
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