<PAGE>
OCTOBER 31, 1998 ANNUAL REPORT
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
[LOGO] ALLEGHANY FUNDS
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
1 Letter from the Chairman
2 Summary Information
Management Discussion & Analysis:
4 Montag & Caldwell Growth Fund
5 Chicago Trust Growth & Income Fund
6 Chicago Trust Talon Fund
7 Chicago Trust Balanced Fund
8 Montag & Caldwell Balanced Fund
9 Chicago Trust Bond Fund
10 Chicago Trust Municipal Bond Fund
11 Chicago Trust Money Market Fund
Schedule of Investments:
12 Montag & Caldwell Growth Fund
13 Chicago Trust Growth & Income Fund
15 Chicago Trust Talon Fund
16 Chicago Trust Balanced Fund
20 Montag & Caldwell Balanced Fund
23 Chicago Trust Bond Fund
26 Chicago Trust Municipal Bond Fund
29 Chicago Trust Money Market Fund
32 Statement of Assets and Liabilities
34 Statement of Operations
36 Statement of Changes in Net Assets
40 Financial Highlights
49 Notes to Financial Statements
55 Independent Auditors' Report
</TABLE>
[LOGO] ALLEGHANY FUNDS
<PAGE>
Dear Shareowner,
We began our odyssey to build a top quality mutual fund group in November 1993.
As we approach our fifth anniversary, we are pleased with the progress we have
made and are excited with new developments in the Alleghany Fund family.
Our two flagship funds, the Chicago Trust Growth & Income Fund and the Montag &
Caldwell Growth Fund, continue to deliver outstanding investment performance.
Both rank in the top 5 percent of funds in their respective Lipper investment
categories for the three-year period ended October 31, 1998 (see table below).
Our two balanced funds, the Montag & Caldwell Balanced Fund and Chicago Trust
Balanced Fund, also rank in the top quartile among their peers. Among 278
balanced funds monitored by Lipper Analytical Services, the Montag & Caldwell
Fund ranks 9th, and the Chicago Trust Fund 22nd, for the three years ended
October 31, 1998. We have also achieved solid results with Chicago Trust Bond
Fund, Talon Fund and Money Market Fund. All rank in the top third among their
peers in their respective Lipper peer groups for the three years ended October
31, 1998.
We are pleased to announce a new fund, the Alleghany/Chicago Trust SmallCap
Value Fund. The Fund seeks long-term total return by using a risk-averse,
disciplined strategy of investing in smaller companies. It is managed by
Patricia Falkowski, a nationally known institutional specialist in small-cap
management and research. Prior to joining Chicago Trust, she managed UAM FMA's
Small Company Fund, an outstanding performer and a "Money 100" Fund. Subject to
regulatory and shareowner approval, we will soon add a small cap growth fund and
two international funds.
Thank you for your support of Alleghany Funds. We will continue to do all that
we can to meet--and exceed--your long-term expectations.
<TABLE>
<CAPTION>
TOTAL RETURN FOR 3 YEARS ENDED 10/31/98 TOTAL RETURN FOR 1 YEAR ENDED 10/31/98 AVERAGE ANNUAL TOTAL RETURN
RANK AMONG SIMILAR FUNDS (LIPPER) RANK AMONG SIMILAR FUNDS (LIPPER) SINCE INCEPTION AS OF 10/31/98
FOR SAME TIME PERIOD* FOR SAME TIME PERIOD* (INCEPTION DATE)
--------------------------------------- -------------------------------------- ------------------------------
<S> <C> <C> <C>
M&C GROWTH - N CLASS 104.96% 17.90% 28.26%
22 out of 577 227 out of 944 (11/02/94)
Growth Funds GrowthFunds
CT GROWTH & INCOME 99.35% 25.43% 21.72%
18 out of 456 8 out of 725 (12/13/93)
Growth & Income Funds Growth & Income Funds
CT TALON 51.06% -10.54% 15.99%
58 out of 180 251 out of 302 (09/19/94)
Mid-Cap Funds Mid-Cap Funds
CT BALANCED 66.82% 18.50% 18.30%
22 out of 278 9 out of 395 (09/21/95)
Balanced Funds Balanced Funds
M&C BALANCED 71.20% 14.46% 20.68%
9 out of 278 52 out of 395 (11/02/94)
Balanced Funds Balanced Funds
CT BOND 23.93% 7.66% 6.79%
43 out of 158 142 out of 218 (12/13/93)
Intermediate Investment Grade Intermediate Investment Grade
Debt Funds Debt Funds
CT MONEY MARKET 16.37% 5.25% 4.98%
48 out of 265 55 out of 310 (12/14/93)
Money Market Funds Money Market Funds
</TABLE>
Sincerely,
/s/ Stuart D. Bilton
Stuart D. Bilton
Chairman
THE PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE AND IS NO GUARANTEE OF
FUTURE PERFORMANCE.
* Lipper Analytical Services, Inc. (Lipper) is the source of the rankings,
which are based on total return fund performance for the one year ended
October 31, 1998, and the three years ended October 31, 1998, for funds of
similar investment objectives. The Lipper rankings listed include all
classes of multiple-class funds. Certain expenses for all of the ranked
Alleghany Funds were subsidized (by the Chicago Trust Company and Montag &
Caldwell, Inc.) during the ranking period for the one year ended October
31, 1998, and the three years ended October 31, 1998.
The Alleghany Funds are no-load mutual funds distributed by First Data
Distributors, Inc., Westborough, MA 01581. This is not an offer to sell or a
solicitation of an offer to buy shares of any of the Funds described. Investment
return and pricipal of value of an investment will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. This information must be accompanied or preceded by a prospectus.
1
<PAGE>
ALLEGHANY FUNDS
PERFOMANCE FOR THE FISCAL YEAR ENDED OCTOBER 31, 1998
- -------------------------------------------------------------------------------
<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 17.90% 18.24% 25.43%
Three Year
Average Annual 27.02% N/A 25.86%
Average Annual
Since Inception 28.26% 26.77% 21.72%
Value of $10,000 $27,027 $17,409 $26,090
from Inception
Date 11/2/94 6/28/96 12/13/93
</TABLE>
<TABLE>
<CAPTION>
TOP TEN HOLDINGS as of October 31, 1998
<S> <C> <C> <C> <C>
Company and
% of Total Net
Assets
Johnson & Johnson 4.68% Sysco Corp. 3.87%
McDonald's Corp. 4.60% General Electric Co. 3.59%
Bristol-Myers Squibb Co. 4.44% EMC Corp. 3.56%
Pfizer, Inc. 4.43% Walgreen Co. 3.51%
Gillette Co. 4.38% Federal Home Loan Mortgage Corp. 3.39%
Procter & Gamble Co. 4.33% Paychex, Inc. 3.30%
Coca-Cola Co. 3.88% Merck & Co., Inc. 2.97%
Eli Lilly & Co. 3.51% Schwab (Charles) Corp. 2.95%
Medtronic, Inc. 3.41% Cardinal Health, Inc. 2.93%
Intel Corp. 3.38% American International Group, Inc. 2.92%
</TABLE>
<TABLE>
<CAPTION>
CHICAGO TRUST TALON FUND CHICAGO TRUST BALANCED FUND
<S> <C> <C>
Total Returns:
1 Year (10.54)% 18.50%
Three Year
Average Annual 14.74% 18.60%
Average Annual
Since Inception 15.99% 18.30%
Value of $10,000 $18,413 $16,862
from Inception
Date 9/19/94 9/21/95
</TABLE>
<TABLE>
<CAPTION>
TOP TEN HOLDINGS as of October 31, 1998
<S> <C> <C> <C> <C>
Company and
% of Total Net
Assets
Starbucks Corp. 6.39% Federal Home Loan Mortgage Corp. 2.36%
R.R. Donnelley & Sons Co. 6.07% Walgreen Co. 2.22%
Cerner Corp. 5.61% General Electric Co. 2.19%
Corning Inc. 5.59% Cintas Corp. 2.07%
Compaq Computer Corp. 5.57% EMC Corp. 2.05%
St. Paul Bancorp, Inc. 5.26% American International Group, Inc. 2.04%
Mylan Laboratories Inc. 5.15% Paychex, Inc. 2.04%
Teva Pharmaceutical Industries Ltd. 4.34% Pfizer, Inc. 1.96%
U. S. Treasury Bill, 4.196%, 04/15/99 4.32% Sysco Corp. 1.96%
Helmerich & Payne, Inc. 4.09% Illinois Tool Works, Inc. 1.90%
</TABLE>
2
<PAGE>
ALLEGHANY FUNDS
PERFOMANCE FOR THE FISCAL YEAR ENDED OCTOBER 31, 1998
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONTAG & CALDWELL BALANCED FUND CHICAGO TRUST BOND FUND
<S> <C> <C>
Total Returns:
1 Year 14.46% 7.66%
Three Year
Average Annual 19.63% 7.41%
Average Annual
Since Inception 20.68% 6.79%
Value of $10,000 $21,185 $13,778
from Inception
Date 11/2/94 12/13/93
</TABLE>
<TABLE>
<CAPTION>
TOP TEN HOLDINGS as of October 31, 1998
<S> <C> <C> <C> <C>
Company and
% of Total Net
Assets
Johnson & Johnson 3.18% U.S. Treasury Note, 7.250%, 05/15/04 3.89%
Pfizer, Inc. 3.12% U.S. Treasury Bond, 6.250%, 08/15/23 3.84%
Procter & Gamble Co. 3.09% U.S. Treasury Note, 5.750%, 08/15/03 3.63%
McDonald's Corp. 2.96% U.S. Treasury Note, 6.375%, 08/15/02 3.33%
Gillette Co. 2.84% U.S. Treasury Note, 7.125%, 02/29/00 2.26%
Bristol Myers Squibb Co. 2.62% U.S. Treasury Note, 5.500%, 02/28/99 2.19%
Coca-Cola Co. 2.49% U.S. Treasury Note, 6.125%, 08/15/07 2.06%
U.S. Treasury Note, 6.500%, 10/15/06 2.48% U.S. Treasury Bond, 7.125%, 02/15/23 1.92%
General Electric Co. 2.32% DR Investment Corp., 7.450%, 05/15/07 1.72%
Intel Corp. 2.32% U.S. Treasury Note, 7.875%, 08/15/01 1.70%
</TABLE>
<TABLE>
<CAPTION>
CHICAGO TRUST MUNICIPAL BOND FUND
Total Returns:
<S> <C>
1 Year 6.17%
Three Year
Average Annual 4.96%
Average Annual
Since Inception 4.50%
Value of $10,000 $12,393
from Inception
Date 12/13/93
</TABLE>
<TABLE>
<CAPTION>
TOP TEN HOLDINGS as of October 31, 1998
<S> <C> <C> <C> <C>
Company and
% of Total Net
Assets
King County, Washington, Series A, State of New Jersey Transportation Trust Fund
G.O., 5.800%, 01/01/04 3.92% Revenue, Series A, Escrowed to Maturity,
Salt River Project Electric System 5.200%, 12/15/00 2.75%
Revenue, AZ, Refunding, Series A Tulsa, Oklahoma Metropolitan Utility
5.500%, 01/01/05 3.70% Authority Revenue, 5.500%, 07/01/00 2.74%
Texas State Water Development Board, Tooele County, Utah Hazardous Waste
G.O., Escrowed to Maturity, Treatment Revenue, 5.700%, 11/01/26 2.64%
5.000%, 08/01/99 3.46% Intermountain Power Agency, Utah, Power
Commonwealth of Puerto Rico, Series A, Supply Revenue, 6.250%, 07/01/07 2.62%
G.O., 6.500%, 07/01/03 3.39% Clarkston Community Schools, Michigan,
Clark County, Nevada, School District, 5.000%, 05/01/06 2.41%
G.O., 6.400%, 06/15/06 3.00%
</TABLE>
3
<PAGE>
ALLEGHANY FUNDS
MONTAG & CALDWELL GROWTH FUND
MANAGEMENT DISCUSSION & ANALYSIS OCTOBER 31, 1998
- --------------------------------------------------------------------------------
After a sharp correction during the third calendar quarter of 1998, we believe
the stock market has formed a meaningful bottom and that the outlook is
favorable. From a technical standpoint, the stock market at its recent lows
became very oversold and investor sentiment turned cautious, which are among the
ingredients needed to form a bottom. Also, corporate insider activity has shown
a significant pick-up in buying and a fall-off in selling by corporate officers
and directors, suggesting that they view their companies' stocks as attractively
priced.
In the meantime, the fundamental outlook remains encouraging. The economy is
growing at a moderate rate, which should support corporate profits. The
inflation outlook is good, and interest rates are coming down. Importantly, the
Federal Reserve has already moved in a preemptive manner to support economic
growth by lowering interest rates while economic fundamentals are still strong.
Inflation, as measured by an annual increase in the CPI of 1.5%, is at a 32 year
low and the unemployment rate of 4.6% remains near a 28 year low. In fact, with
such strong fundamentals plus a federal budget surplus of nearly $70 billion,
the Federal Reserve is in an excellent position to implement monetary policies
to sustain economic growth. Last but not least, the combination of the decline
in bond yields and stock prices has made equity valuations increasingly
attractive.
PORTFOLIO ALLOCATION BY MARKET SECTOR
[GRAPHIC]
<TABLE>
<S> <C>
Health Care Services 9%
Retail 8%
Finance 6%
Other Common Stocks 17%
Cash and Other 3%
Restaurants 6%
Food and Beverage 4%
Technology 19%
Consumer Non-Durables 17%
Pharmaceuticals 11%
</TABLE>
In terms of stock selection, we continue to favor pharmaceutical and medical
supply stocks, selected technology holdings, certain consumer cyclical growth
issues and high quality consumer non-durable global growth stocks. Going
forward, we believe that as our economy slows, international economies will
either be stabilizing or improving, and that weak foreign currencies will
gain support against the dollar--a trend that has already begun among several
countries' currencies. With the shares of global consumer companies very
attractively priced and discounting the current global weakness, we believe
their stocks present a good opportunity to participate in the favorable
long-term growth that the markets in these faster growing areas of the world
may offer. Also, after this period of adjustment to rapidly changing economic
conditions, the defensive nature of these companies' non-durable consumer
product lines should become increasingly attractive to investors as the world
economy moves ahead at a more gradual pace.
GROWTH OF $10,000 INVESTED IN MONTAG & CALDWELL GROWTH
FUND, S&P 500 INDEX AND THE LIPPER GROWTH FUND INDEX
SINCE FUND'S INCEPTION
[GRAPHIC]
<TABLE>
<CAPTION>
Values/Yrs S&P 500 Index Lipper Growth Fund Index M&G Growth
- ---------- ------------- ------------------------ ----------
<S> <C> <C> <C>
11/94 10000 10000 10000
1/95 10032 9739 10005
4/95 11046 10699 10999
7/95 12142 12075 12630
10/95 12641 12398 13187
1/96 13907 13183 14178
4/96 14380 13789 15065
7/96 14152 13145 14874
10/96 15685 14498 17131
1/97 17568 15915 19367
4/97 17992 15733 19245
7/97 21527 18897 23571
10/97 20720 18617 22925
1/98 22295 19496 24252
4/98 25381 21995 27690
7/98 25680 22142 28200
10/98 25277 21199 27027
</TABLE>
[GRAPHIC]
<TABLE>
<CAPTION>
Values/Yrs S&P 500 Index Lipper Growth Fund Index M&G Growth
- ---------- ------------- ------------------------ ----------
<S> <C> <C> <C>
6/96 10000 10000 10000
10/96 10593 10433 10967
1/97 11865 11453 12087
4/97 12152 11322 12341
7/97 14539 13598 15125
10/97 13994 13397 14724
1/98 15058 14029 15593
4/98 17142 15828 17814
7/98 17344 15934 18147
10/98 17072 15255 17409
</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>
ALLEGHANY FUNDS
CHICAGO TRUST GROWTH & INCOME FUND
MANAGEMENT DISCUSSION & ANALYSIS OCTOBER 31, 1998
- --------------------------------------------------------------------------------
Since the semi-annual review six months ago, the Chicago Trust Growth & Income
Fund's total return was a positive 2.2% compared to declines in both the
Standard & Poor's 500 Index (S&P 500) at negative 0.4% and the Lipper Growth &
Income Fund Index, at negative 6.4%. For the fiscal year ended October 31, 1998,
the Fund returned a strong 25.4%. This compares favorably to both the S&P 500
return of 21.9% and the Lipper Growth & Income Fund Index return of 9.5%. The
Fund ranked eighth out of 725 Lipper growth & income funds for the twelve months
ended October 31, 1998, based on total return. On a three-year basis, the Fund's
25.9% annualized rate of return matched that of the S&P 500 return of 26.0% and
was ahead of the Lipper Growth & Income Fund Index return of 19.4%. The Fund
ranked 18th out of 456 Lipper growth & income funds for this three year time
period based on total return. Please see the Dear Shareowner letter on page 1
for further details on the Lipper rankings.
The year ended October 31, 1998 marked the fourth full fiscal year of operations
for the Fund and was the fourth consecutive year the Fund returned 25% or more
to our shareholders. While the market has, somewhat surprisingly, continued to
show very strong overall returns, the volatility of these returns has been
steadily increasing. This past fiscal year the market experienced wider swings
in returns than during most of this decade. The market has recovered since its
downturn in July and August; issues plaguing the market such as international
economic and political instability, domestic political uncertainty and the
slowing down of our own economy are expected to temper further exuberance.
PORTFOLIO ALLOCATION BY MARKET SECTOR
[GRAPHIC]
<TABLE>
<S> <C>
Retail 5%
Finance 18%
Electrical 4%
Food and Beverage 4%
Other Common Stocks 18%
Cash and Other Net Assets 6%
Consumer Durables 7%
Consumer Non-Durables 11%
Health Care Services 11%
Technology 16%
</TABLE>
The Fund has experienced wide swings in returns as the market's volatility has
increased; yet our careful stock selection process continues to reward with
solid returns. Additionally, individual issue volatility offers opportunities to
add to current positions or initiate new positions. Our disciplined process
emphasizes consistency of earnings growth, which we believe is an important
characteristic, especially in a choppy market. We believe the markets will
continue to be volatile, and we expect to continue our emphasis on high quality
stocks with strong fundamentals.
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
[GRAPHIC]
<TABLE>
<CAPTION>
Lipper Growth and
Values/Yrs S&P 500 Index Income Fund Index CT Growth and Income
- ---------- ------------- ----------------- --------------------
<S> <C> <C> <C>
12/93 10000 10000 10000
4/94 9745 9807 9797
7/94 9979 9993 9945
10/94 10360 10241 10173
1/95 10394 10115 10365
4/95 11444 11036 11231
7/95 12580 12011 12327
10/95 13096 12318 13088
1/96 14408 13448 14350
4/96 14898 14021 14983
7/96 14663 13587 14933
10/96 16250 14953 16619
1/97 18201 16463 18002
4/97 18641 16616 18258
7/97 22303 19584 21812
10/97 21466 19144 20801
1/98 23097 20048 22280
4/98 26293 22412 25536
7/98 26603 21786 26022
10/98 26185 20969 26090
</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>
ALLEGHANY FUNDS
CHICAGO TRUST TALON FUND
MANAGEMENT DISCUSSION & ANALYSIS OCTOBER 31, 1998
- -------------------------------------------------------------------------------
For the twelve months ended October 31, 1998, the Chicago Trust Talon Fund
had a negative total return of 10.54% versus the Standard & Poor's (S&P) 400
Mid-Cap Index which returned a positive 6.68%.
With the exception of large capitalization growth stocks, stocks have been in a
bear market for over a year. The market decline during the third quarter brought
to the forefront the realization that unbridled speculation can bring the risk
of significant economic loss. Sensibility in lending standards by institutions
and the sobering of unrealistic consumer expectations is constructive. The
unwinding of excessive leverage should cause inevitable pain, yet it also brings
discipline into the marketplace and rewards those who have the liquidity to
opportunistically profit from current market conditions. As leverage unwound,
there was a risk that financial institutions that had been underpricing credit
would go to the opposite extreme. In fact, as they realized the magnitude of
their losses, banks and brokerage firms pulled back on their lending and for all
but the highest quality companies, credit became virtually unavailable. The
Federal Reserve responded admirably by providing liquidity in a measured way.
PORTFOLIO ALLOCATION BY MARKET SECTOR
[GRAPHIC]
<TABLE>
<S> <C>
Other Common Stocks 17%
Preferred Stocks 2%
U.S. Government and Agency Obligations 7%
Printing 6%
Restaurants 6%
Consumer Durables 6%
Cash and Other 3%
Finance 15%
Pharmaceuticals 13%
Health Care Services 9%
Technology 16%
</TABLE>
The market decline enabled us to both utilize our cash reserves by adding to
companies already in the portfolio, like Starbucks, and to reposition the
portfolio into more dominant companies with outstanding franchises at attractive
price levels. We added Corning Inc., MCI WorldCom Inc., Liberty Media Group,
Thomas & Betts Corp. and Tenet Healthcare Corp. We also added Loral Space
Communications Ltd.("Loral") whose stock price was depressed due to general
market pressures as well as the loss of satellites in a launch explosion at
Globalstar Telecommunications Ltd., which is 42% owned by Loral.
During the year, the Fund's performance was particularly hurt by a few small
company investments, notably Robotic Vision Systems, Inc., North American
Vaccine, Inc., Capital Trust, Danielson Holding Corp. and St. Paul Bancorp, Inc.
We believe that as a class, the small-cap sector is significantly undervalued
and should enhance the performance of the Fund in fiscal 1999.
GROWTH OF $10,000 INVESTED IN CHICAGO TRUST TALON FUND AND
THE S&P 400 MID-CAP INDEX SINCE FUND'S INCEPTION
[GRAPHIC]
<TABLE>
<CAPTION>
Values/Yrs S&P 400 Mid-Cap Index Chicago Trust Talon Fund
- ---------- --------------------- ------------------------
<S> <C> <C>
9/94 1000 10000
10/94 9921 10250
1/95 9660 10151
4/98 10551 10766
7/95 11829 12173
10/95 12025 12189
1/96 12701 12762
4/96 13695 14580
7/96 12747 13530
10/96 14111 15420
1/97 15482 18020
4/97 15082 16935
7/97 18531 20074
10/97 18721 20582
1/98 19359 20055
4/98 22307 21320
7/98 20605 19231
10/98 19974 18413
</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>
ALLEGHANY FUNDS
CHICAGO TRUST BALANCED FUND
MANAGEMENT DISCUSSION & ANALYSIS OCTOBER 31, 1998
- --------------------------------------------------------------------------------
The Chicago Trust Balanced Fund had a total return of 18.5% for the fiscal year
ended October 31, 1998. This return compares very favorably with the Lipper
Balanced Fund Index return of 10.8% for the period, and ranks this Fund 9th in
the universe of 395 Lipper balanced funds based on total return. For the
three-year period ended October 31, 1998, the Fund ranks 22nd out of 278 Lipper
balanced funds with an annualized return of 18.6%, versus 15.0% for the Lipper
Balanced Fund Index. Please see the Dear Shareowner letter on page 1 for further
details on the Lipper rankings.
The strong performance of this Fund can be attributed to the long-term focus of
our security selection process, coupled with significant appreciation in both
the stock and bond markets over the last several years. For the Fund's equity
portion, our lower risk approach to investing in growth stocks with superior
earnings consistency and strong fundamental characteristics has been especially
rewarding in the more turbulent stock market environment experienced in 1998.
The fixed income segment has added stability to the portfolio, and thorough
credit analysis has added value in the corporate and mortgage areas of the
market without taking significant interest rate risks. The recent flight to
quality (or flight to liquidity) has widened the interest rate spreads between
U.S. Government bonds and other fixed income securities, offering good
opportunities to add to attractive corporate and mortgage bonds that should help
to provide superior returns in the long term.
PORTFOLIO ALLOCATION BY MARKET SECTOR
[GRAPHIC]
<TABLE>
<S> <C>
Government Trust Certificates 1%
Corporate Notes and Bonds 14%
Asset-Backed Securities 3%
U.S. Government and Agency Obligations 18%
Cash and Other Net Assets 4%
Yankee Bonds 3%
Common Stocks 57%
</TABLE>
This Fund is appropriate for investors who want equity participation, but with
less risk exposure. The three year results show it has produced returns similar
to the Lipper Growth & Income Fund Index while experiencing significantly less
volatility than the average equity fund. While the long term outlook for
financial assets remains bright, the Fund should continue to offer an attractive
alternative to those concerned about the current problems confronting the global
economic landscape.
GROWTH OF $10,000 INVESTED IN CHICAGO TRUST
BALANCED FUND, LEHMAN BROTHERS AGGREGATE BOND
INDEX/S&P 500 INDEX AND THE LIPPER BALANCED
FUND INDEX SINCE FUND'S INCEPTION
[GRAPHIC]
<TABLE>
<CAPTION>
Values/Yrs Lehman/S&P 500 Index Lipper Balanced Fund Index CT Balanced
- ---------- -------------------- -------------------------- -----------
<S> <C> <C> <C>
9/95 10000 10000 10000
10/95 10039 9975 10108
1/96 10752 10635 10796
4/96 10817 10751 10893
7/96 10783 10616 10926
10/96 11625 11420 11847
1/97 12493 12187 12612
4/97 12708 12213 12720
7/97 14481 13874 14438
10/97 14237 13715 14229
1/98 15319 14272 15029
4/98 17439 15399 16362
7/98 17645 15342 16725
10/98 17368 15511 16862
</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>
ALLEGHANY FUNDS
MONTAG & CALDWELL BALANCED FUND
MANAGEMENT DISCUSSION & ANALYSIS OCTOBER 31, 1998
- --------------------------------------------------------------------------------
After a sharp correction during the third calendar quarter of 1998, we believe
the stock market has formed a meaningful bottom and that the outlook is
favorable. From a technical standpoint, the stock market at its recent lows
became very oversold and investor sentiment turned cautious, which are among the
ingredients needed to form a bottom. Also, corporate insider activity has shown
a significant pick-up in buying and a fall-off in selling by corporate officers
and directors, suggesting that they view their companies' stocks as attractively
priced.
In the meantime, the fundamental outlook remains encouraging. The
economy is growing at a moderate rate, which should support corporate profits.
The inflation outlook is good, and interest rates are coming down. Importantly,
the Federal Reserve has already moved in a preemptive manner to support economic
growth by lowering interest rates while economic fundamentals are still strong.
Inflation, as measured by an annual increase in the CPI of 1.5%, is at a 32 year
low and the unemployment rate of 4.6% remains near a 28 year low. In fact, with
such strong fundamentals plus a federal budget surplus of nearly $70 billion,
the Federal Reserve is in an excellent position to implement monetary policies
to sustain economic growth. Last but not least, the combination of the decline
in bond yields and stock prices has made equity valuations increasingly
attractive.
PORTFOLIO ALLOCATION BY MARKET SECTOR
[GRAPHIC]
<TABLE>
<S> <C>
U.S. Government and Agency Obligations 23%
Corporate Notes and Bonds 9%
Asset-Backed Securities 1%
Cash and Other Net Assets 2%
Common Stock 65%
</TABLE>
In terms of stock selection, we continue to favor pharmaceutical and medical
supply stocks, selected technology holdings, certain consumer cyclical growth
issues and high quality consumer non-durable global growth stocks. With the
shares of global consumer companies very attractively priced and discounting the
current global weakness, we believe their stocks present a good opportunity to
participate in the favorable long-term growth that markets in these faster
growing areas of the world may offer. Also, after this period of adjustment to
rapidly changing economic conditions, the defensive nature of these companies'
non-durable consumer product lines should become increasingly attractive to
investors as the world economy moves ahead at a more gradual pace.
We expect near-term volatility in interest rates and continue to maintain the
duration of the Fund's bond holdings close to its targeted benchmark. Longer
term, we believe interest rates may decline further, as the international
financial market turmoil leads to slower domestic growth and continued low
inflation.
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
[GRAPHIC]
<TABLE>
<CAPTION>
Values/Yrs Lehman/S&P 500 Index Lipper Balanced Fund Index M&G Balanced
- ---------- -------------------- -------------------------- ------------
<S> <C> <C> <C>
11/94 10000 10000 10000
1/95 10128 9983 10079
4/95 10891 10652 10817
7/95 11706 11424 11944
10/95 12539 11759 12375
1/96 13040 12537 13172
4/96 13141 12674 13446
7/96 13090 12515 13410
10/96 14881 13462 14895
1/97 15230 14343 16162
4/97 15498 14397 16071
7/97 17717 16355 18635
10/97 17894 16168 18509
1/98 19254 16824 19427
4/98 21919 18153 20979
7/98 22178 18086 21364
10/98 21830 17887 21185
</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>
ALLEGHANY FUNDS
CHICAGO TRUST BOND FUND
MANAGEMENT DISCUSSION & ANALYSIS OCTOBER 31, 1998
- --------------------------------------------------------------------------------
The last twelve months can best be described as a time when investors were
rewarded for hoarding liquidity and avoiding credit risk. U.S. Government
securities generated the highest returns in the fixed income market (see chart).
As we move toward a global economy, U.S. investors are experiencing the close
ties between domestic and international financial market activity known as
financial contagion. Contagion occurs when problems in one country with weak
economic fundamentals spark severe effects on asset prices in other markets with
much stronger fundamentals. A recent chain of economic events originated from an
economic recession in Japan and developed into a global economic slowdown. The
contagion first spread throughout Southeast Asia and then led to the economic
collapse of Russia, finally infecting the U.S. financial markets in the third
quarter. As the flight to quality gained momentum, yields on U.S. Treasury
securities in the third quarter declined to their lowest levels in over 30
years. However, by October some fixed income investors began to recognize value
in other sectors, enticed by the largest incremental returns offered in
corporate, mortgage and asset-backed securities since 1990.
PORTFOLIO ALLOCATION BY MARKET SECTOR
<TABLE>
<S> <C>
U.S. Government and Agency Obligations 51%
Corporate Notes and Bonds 28%
Cash and Other Net Assets 8%
Yankee Bonds 7%
Asset-Backed Securities 6%
</TABLE>
LEHMAN BROTHERS INDEX RETURNS
10/31/97 - 10/31/98
[CHART]
<TABLE>
<S> <C>
U.S. Government 11.28%
Corporate 7.99%
High Yield -0.50%
Mortgage-Backed 7.30%
Asset-Backed 7.35%
Emerging Markets -11.81%
</TABLE>
For the year ended October 31, 1998, the Chicago Trust Bond Fund had a total
return of 7.66% compared to a 7.92% return on the Lipper Intermediate Investment
Grade Index. The portfolio has emphasized corporate, mortgage-backed and
asset-backed securities while under-weighting U.S. Government Obligations. Our
specialization in these sectors allows us to structure a portfolio of core
holdings that we believe represents our best and most developed ideas. Our use
of dynamic quantitative modeling helps us focus on the behavioral
characteristics of these securities that should provide the expected total
returns that we have calculated for these securities as well as meet the Fund's
investment objectives. We remain committed to our disciplined bottom up
investment approach. We believe investors who focus on a long-term investment
horizon will be rewarded with consistent and attractive investment results.
GROWTH OF $10,000 INVESTED IN CHICAGO TRUST BOND FUND, LEHMAN BROTHERS AGGREGATE
BOND INDEX AND THE LIPPER INTERMEDIATE INVESTMENT GRADE DEBT INDEX SINCE FUND'S
INCEPTION
[GRAPH]
<TABLE>
<CAPTION>
Values/Yrs LBAI Lipper Intermed CT Bond
- ---------- ----- --------------- -------
<S> <C> <C> <C>
12/93 10000 10000 10000
4/94 9507 9524 9682
7/94 9674 9640 9768
10/94 9535 9537 9677
1/95 9769 9720 9894
4/95 10203 10121 10307
7/95 10651 10520 10735
10/95 11026 10885 11117
1/96 11424 11267 11507
4/96 11085 10930 11169
7/96 11241 11070 11331
10/96 11671 11465 11758
1/97 11797 11589 11926
4/97 11870 11641 11972
7/97 12451 12191 12555
10/97 12709 12388 12797
1/98 13061 12695 13144
4/98 13164 12771 13211
7/98 13430 13015 13455
10/98 13895 13378 13778
</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.
9
<PAGE>
ALLEGHANY FUNDS
CHICAGO TRUST MUNICIPAL BOND FUND
MANAGEMENT DISCUSSION & ANALYSIS OCTOBER 31, 1998
- --------------------------------------------------------------------------------
During the Chicago Trust Municipal Bond Fund's past fiscal year, municipal bonds
have underperformed their taxable counterparts. A great deal of the municipal
underperformance is directly attributable to the tremendous outperformance of
the U.S. Treasury market. Increasing concern over the economic weakness in
Russia and Asia, and equity market weakness in the third calendar quarter, have
prompted a flight to quality. Investors eagerly purchased U.S. Treasuries,
pushing the 30-year Treasury Bond trading yields below 5% and other yields down
to unprecedented levels.
At October 31, 1998, municipal bonds provided 78% to 96% of Treasury yields from
1- to 30-year maturities - historically high ratios. We took advantage of this
relative cheapness of municipals, especially in the 10- to 20-year maturity
range, by selling shorter maturities and purchasing longer bonds. The average
maturity of the Fund was lengthened to 8.4 years from 5.6 years during the
fiscal year. We also added more revenue bonds to the portfolio, reducing our
weightings in insured and government guaranteed escrowed bonds. Longer term, we
expect these changes to benefit the Fund's total return. Year-to-date, the
Fund's performance matched the 4.81% total return average of 148 intermediate
municipal bond funds, according to Lipper Analytical Services, Inc.
PORTFOLIO ALLOCATION BY QUALITY RATING
[CHART]
<TABLE>
<S> <C>
Aaa 50%
Aa 37%
A 5%
Baa 5%
Not Rated 3%
</TABLE>
GROWTH OF $10,000 INVESTED IN CHICAGO TRUST MUNICIPAL BOND FUND AND THE LEHMAN
BROTHERS FIVE-YEAR GOVERNMENT OBLIGATIONS INDEX SINCE FUND'S INCEPTION
[GRAPH]
<TABLE>
<CAPTION>
Lehman 5 Year
Values/Yrs Government Obligations Index CT Muni Bond
- ---------- ---------------------------- ------------
<S> <C> <C>
12/93 10000 10000
1/94 10094 10106
4/94 9782 9803
7/94 9921 9922
10/94 9838 9808
1/95 9956 9958
4/95 10288 10218
7/95 10669 10518
10/95 10855 10719
1/96 11138 10969
4/96 11025 10811
7/96 11156 10935
10/96 11368 11103
1/97 11540 11230
4/97 11548 11201
7/97 11990 11600
10/97 12107 11673
1/98 12362 11900
4/98 12339 11871
7/98 12570 12089
10/98 12897 12393
</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.
10
<PAGE>
ALLEGHANY FUNDS
CHICAGO TRUST MONEY MARKET FUND
MANAGEMENT DISCUSSION & ANALYSIS OCTOBER 31, 1998
- --------------------------------------------------------------------------------
Recently, financial market participants have been refocused on the Federal
Reserve (the"Fed"). "Fed watching" has become popular again now that the Fed has
lowered the rate three times within the span of seven weeks. Each time the Fed
reduced rates 25 basis points (0.25%), and at October 31, the rate was at 4.75%.
This is the lowest Federal Funds rate since the end of 1994. Also interesting is
the fact that two of the rate reductions were announced at the usual time (just
after the Federal Reserve Open Market Committee met), but one announcement was
made between formal committee meetings. This was generally viewed by many as a
"statement" sent by the Federal Reserve to calm the financial markets. The
markets responded favorably as stocks rallied and liquidity improved in the bond
market. Money market funds, however, were reinvesting maturities at short-term
rates considerably below where they were investing just two months ago. As a
consequence, yields on money market funds have been falling, and should likely
continue to fall over the near term.
While yields are falling, the Chicago Trust Money Market Fund continues to
outperform its peers. For the quarter ended October 31, 1998, it beat its
benchmark, the Donoghue's First Tier Index, by an average of 21 basis points
(0.21%). Coincidentally, for the previous twelve months and year-to-date, the
Fund beat its benchmark by .19% over each of these time periods. While downward
pressure on short-term interest rates may encourage some funds to stretch for
yield so that they can maintain a competitive advantage, this can only be
accomplished by increasing risk. The risk profile of the Fund will not be
compromised, and we continue to adhere to our strict credit review process. We
will attempt to continue to provide solid yields in our high quality money
market fund.
PORTFOLIO ALLOCATION BY MARKET SECTOR
[GRAPHIC]
<TABLE>
<S> <C>
Commercial Paper 95%
GIC within Funding Agreement 4%
Cash and Other Net Assets 1%
</TABLE>
11
<PAGE>
ALLEGHANY FUNDS
MONTAG & CALDWELL GROWTH FUND
SCHEDULE OF INVESTMENTS OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Value
- ------ -----
<S> <C>
COMMON STOCKS - 96.59%
BUSINESS SERVICES - 0.97%
700,000 Manpower, Inc........................... $ 16,887,500
----------------
CONSUMER NON-DURABLES - 16.71%
825,000 Bestfoods............................... 44,962,500
1,700,000 Gillette Co. ........................... 76,393,750
700,000 Interpublic Group of Companies, Inc. ... 40,950,000
1,489,300 Mattel, Inc. ........................... 53,428,638
850,000 Procter & Gamble Co. ................... 75,543,750
----------------
291,278,638
----------------
ELECTRICAL - 3.01%
600,400 General Electric Co. ................... 52,535,000
----------------
ENTERTAINMENT AND LEISURE - 2.94%
1,900,000 The Walt Disney Co. .................... 51,181,250
----------------
FINANCE - 6.22%
600,000 American Express Co. ................... 53,025,000
650,000 American International Group, Inc. ..... 55,412,500
----------------
108,437,500
----------------
FOOD AND BEVERAGE - 3.88%
1,000,000 Coca-Cola Co. .......................... 67,625,000
----------------
HEALTH CARE SERVICES - 9.11%
1,000,000 Johnson & Johnson ...................... 81,500,000
720,000 Pfizer, Inc. .......................... 77,265,000
----------------
158,765,000
----------------
LODGING - 2.17%
1,406,400 Marriott International, Inc., Class A... 37,797,000
----------------
MEDICAL SUPPLIES - 3.41%
914,300 Medtronic, Inc. ........................ 59,429,500
----------------
OIL AND GAS EXTRACTION - 1.83%
608,400 Schlumberger Limited ................... 31,941,000
----------------
PHARMACEUTICALS - 10.85%
700,000 Bristol-Myers Squibb Co. ............... 77,393,750
756,700 Eli Lilly & Co. ........................ 61,245,406
373,700 Merck & Co., Inc. ...................... 50,542,925
----------------
189,182,081
----------------
RESTAURANTS - 5.50%
600,000 Cracker Barrel Old Country Store, Inc... $ 15,525,000
1,200,000 McDonald's Corp. ....................... 80,250,000
----------------
95,775,000
----------------
RETAIL - 8.25%
628,700 Costco Companies., Inc. * .............. 35,678,725
850,000 Gap, Inc. .............................. 51,106,250
1,308,400 Home Depot, Inc. ....................... 56,915,400
----------------
143,700,375
----------------
TECHNOLOGY - 18.81%
950,000 Boston Scientific Corp. * .............. 51,715,625
704,000 Cisco Systems, Inc. * .................. 44,352,000
700,000 Electronic Arts, Inc. * ................ 28,787,500
950,000 Hewlett-Packard Co. .................... 57,178,125
660,000 Intel Corp. ............................ 58,863,750
360,600 Microsoft Corp. * ...................... 38,178,525
850,000 Solectron Corp. * ...................... 48,662,500
----------------
327,738,025
----------------
TELECOMMUNICATIONS - 2.93%
930,000 Tellabs, Inc. * ........................ 51,150,000
----------------
TOTAL COMMON STOCKS .................... 1,683,422,869
(Cost $1,427,074,634) ----------------
INVESTMENT COMPANIES - 4.17%
68,158,260 Bankers Trust Institutional
Cash Management Fund ................... 68,158,260
4,467,844 Bankers Trust Institutional
Treasury Money Fund..................... 4,467,844
----------------
TOTAL INVESTMENT COMPANIES.............. 72,626,104
(Cost $72,626,104) ----------------
TOTAL INVESTMENTS - 100.76%........................... 1,756,048,973
(Cost $1,499,700,738)** ----------------
LIABILITIES NET OF CASH AND OTHER ASSETS - (0.76%).... (13,270,466)
----------------
NET ASSETS - 100.00% ................................. $1,742,778,507
----------------
----------------
</TABLE>
- ---------------------------------------
* Non-income producing security.
** Aggregate cost for Federal income tax purposes is $1,499,821,318.
<TABLE>
<S> <C>
Gross unrealized appreciation $ 319,915,145
Gross unrealized depreciation (63,687,490)
-----------------
Net unrealized appreciation $ 256,227,655
-----------------
-----------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
ALLEGHANY FUNDS
CHICAGO TRUST GROWTH & INCOME FUND
SCHEDULE OF INVESTMENTS OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Value
- ------ -----
<S> <C>
COMMON STOCKS - 94.22%
BUSINESS SERVICES - 3.30%
244,000 Paychex , Inc........................... $ 12,139,000
----------------
CAPITAL GOODS - 2.75%
184,000 Pitney Bowes, Inc. ..................... 10,131,500
----------------
CHEMICALS - 1.84%
168,000 Praxair, Inc. .......................... 6,762,000
----------------
COMMERCIAL SERVICE - 2.07%
255,000 Ecolab Inc. ............................ 7,618,125
----------------
CONSUMER DURABLES - 7.13%
191,000 Harley-Davidson, Inc. .................. 7,401,250
167,000 Illinois Tool Works, Inc. .............. 10,708,875
144,000 Johnson Controls, Inc. ................. 8,100,000
----------------
26,210,125
----------------
CONSUMER NON-DURABLES - 11.09%
200,200 Cintas Corp. ........................... 10,710,700
124,250 Lancaster Colony Corp. ................. 3,727,500
265,000 Mattel, Inc. ........................... 9,506,875
170,100 Newell Co. ............................. 7,484,400
105,000 Procter & Gamble Co. ................... 9,331,875
----------------
40,761,350
----------------
ELECTRICAL - 3.59%
150,800 General Electric Co. ................... 13,195,000
----------------
FINANCE - 18.03%
200,000 AFLAC Inc. ............................. 7,625,000
125,962 American International Group, Inc. ..... 10,738,261
133,000 Associates First Capital Corp., Class A 9,376,500
216,600 Federal Home Loan Mortgage Corp. ....... 12,454,500
307,930 MBNA Corp. ............................. 7,024,653
221,200 Norwest Corp. .......................... 8,225,875
226,000 Schwab (Charles) Corp. ................. 10,833,875
----------------
66,278,664
----------------
FOOD AND BEVERAGE - 3.87%
528,000 Sysco Corp. ............................ $ 14,223,000
----------------
HEALTH CARE SERVICES - 10.83%
114,000 Cardinal Health, Inc. .................. 10,780,125
554,062 Health Management
Associates , Inc., Class A *............ 9,869,229
264,000 Omnicare, Inc. ......................... 9,124,500
93,600 Pfizer, Inc. ........................... 10,044,450
----------------
39,818,304
----------------
OIL AND GAS EXTRACTION - 1.43%
100,000 Schlumberger Limited.................... 5,250,000
----------------
PHARMACEUTICALS - 2.97%
80,700 Merck & Co., Inc. ...................... 10,914,675
----------------
RETAIL - 4.83%
102,000 Kohl's Corp. *.......................... 4,876,875
265,000 Walgreen Co. ........................... 12,902,187
----------------
17,779,062
----------------
TECHNOLOGY - 16.41%
144,400 Cisco Systems, Inc. *................... 9,097,200
205,000 Computer Associates International, Inc. 8,071,875
127,200 Computer Sciences Corp.*................ 6,709,800
203,300 EMC Corp. *............................. 13,087,438
354,000 HBO & Co. .............................. 9,292,500
64,800 Microsoft Corp. *....................... 6,860,700
124,000 Sun Microsystems, Inc. *................ 7,223,000
----------------
60,342,513
----------------
TELECOMMUNICATIONS - 2.89%
193,000 Tellabs, Inc. *......................... 10,615,000
----------------
UTILITY - 1.19%
107,000 AES Corp. *............................. 4,380,313
----------------
TOTAL COMMON STOCKS..................... 346,418,631
(Cost $222,034,138) ----------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
13
<PAGE>
ALLEGHANY FUNDS
CHICAGO TRUST GROWTH & INCOME FUND
SCHEDULE OF INVESTMENTS OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Par Value Value
- ---------- ------
<S> <C>
REPURCHASE AGREEMENT - 5.81%
$ 21,355,000 Bank of America
5.300%, dated 10/30/98 to be repurchased
on 11/2/98 at $21,364,432
(Collateralized by U.S. Treasury Note
5.625% due 04/30/00);
Total Par $20,820,000................... $ 21,355,000
----------------
TOTAL REPURCHASE AGREEMENT.............. 21,355,000
(Cost $21,355,000) ----------------
TOTAL INVESTMENTS - 100.03%........................... 367,773,631
(Cost $243,389,138)** ----------------
LIABILITIES NET OF CASH AND OTHER ASSETS - (0.03%).... (107,189)
----------------
NET ASSETS - 100.00%.................................. $ 367,666,442
----------------
----------------
</TABLE>
- ----------------------------------------
* Non-income producing security.
** Aggregate cost for Federal income tax purposes is $243,389,138.
<TABLE>
<S> <C>
Gross unrealized appreciation $ 130,730,412
Gross unrealized depreciation (6,345,919)
----------------
Net unrealized appreciation $ 124,384,493
----------------
----------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
14
<PAGE>
ALLEGHANY FUNDS
CHICAGO TRUST TALON FUND
SCHEDULE OF INVESTMENTS - CONTINUED OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Value
- ------ -----
<S> <C>
COMMON STOCKS - 88.37%
COMMERCIAL SERVICES - 0.92%
50,000 Data Broadcasting Corp. *............... $ 209,375
----------------
CONSUMER DURABLE GOODS - 5.59%
35,000 Corning Inc. ........................... 1,270,937
----------------
ELECTRICAL - 2.95%
15,000 Thomas & Betts Corp. ................... 670,313
----------------
FINANCE - 15.06%
125,000 Capital Trust, Class A *................ 765,625
137,200 Danielson Holdings Corp. *.............. 540,225
58,125 St. Paul Bancorp, Inc. ................. 1,195,195
30,000 Travelers Property Casualty Corp., Class A 920,625
----------------
3,421,670
----------------
HEALTH CARE SERVICES - 9.45%
25,000 Columbia\HCA Healthcare Corp. .......... 525,000
25,000 HCR Manor Care, Inc. *.................. 812,500
29,000 Tenet Healthcare Corp. *................ 810,188
----------------
2,147,688
----------------
OIL AND GAS EXTRACTION - 4.09%
39,000 Helmerich & Payne, Inc. ................ 928,687
----------------
PHARMACEUTICALS - 13.48%
34,000 Mylan Laboratories Inc. ................ 1,170,875
60,000 North American Vaccine, Inc. * ......... 907,500
25,000 Teva Pharmaceutical Industries Ltd., ADR 985,937
----------------
3,064,312
----------------
PRINTING AND PUBLISHING - 6.07%
32,000 R.R. Donnelley & Sons Co. .............. 1,380,000
----------------
REAL ESTATE - 3.28%
31,000 Equity Office Properties Trust, REIT.... 744,000
----------------
RESTAURANTS - 6.39%
33,500 Starbucks Corp. *....................... 1,453,063
----------------
TECHNOLOGY - 15.92%
57,000 Cerner Corp. *.......................... 1,275,375
40,000 Compaq Computer Corp. .................. 1,265,000
200,000 Robotic Vision Systems, Inc. *.......... 725,000
10,000 Sterling Commerce, Inc. *............... 352,500
----------------
3,617,875
----------------
TELECOMMUNICATIONS - 5.17%
20,000 Tele-Communications, Inc.
Liberty Media Group, Series A *........ $ 761,250
7,500 MCI Worldcom, Inc. *.................... 414,375
----------------
1,175,625
----------------
TOTAL COMMON STOCKS..................... 20,083,545
(Cost $18,936,513) ----------------
PREFFERED STOCK - 2.08%
TELECOMMUNICATIONS - 2.08%
25,000 Loral Space & Communications Ltd. *..... 473,438
----------------
TOTAL PREFERRED STOCK................... 473,438
(Cost $353,375) ----------------
Par Value
- ---------
U.S. GOVERNMENT OBLIGATIONS - 6.49%
U.S. TREASURY BILLS - 6.49% (A)
$ 500,000 5.171%, 02/11/99........................ 494,120
1,000,000 4.196%, 04/15/99........................ 980,860
----------------
1,474,980
----------------
TOTAL U.S. GOVERNMENT OBLIGATIONS....... 1,474,980
(Cost $1,474,344) ----------------
Shares
- ------
INVESTMENT COMPANY - 3.08%
699,495 Bankers Trust Institutional
Cash Management Fund.................... 699,495
----------------
TOTAL INVESTMENT COMPANY................ 699,495
(Cost $699,495) ----------------
TOTAL INVESTMENTS - 100.02%........................... 22,731,458
(Cost $21,463,727)** ----------------
LIABILITIES NET OF CASH AND OTHER ASSETS - (0.02%).... (3,766)
----------------
NET ASSETS - 100.00%.................................. $ 22,727,692
----------------
----------------
</TABLE>
- ------------------------------------------
* Non-income producing security.
** Aggregate cost for Federal income tax purposes is $21,460,423.
<TABLE>
<S> <C>
Gross unrealized appreciation $ 3,499,081
Gross unrealized depreciation (2,228,046)
--------------
Net unrealized appreciation $ 1,271,035
--------------
--------------
</TABLE>
(A) Annualized yield at time of purchase.
ADR American Depositary Receipt
REIT Real Estate Investment Trust
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
15
<PAGE>
ALLEGHANY FUNDS
CHICAGO TRUST BALANCED FUND
SCHEDULE OF INVESTMENTS OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Value
- ------ -----
<S> <C>
COMMON STOCKS - 57.11%
BUSINESS SERVICES - 2.04%
90,000 Paychex, Inc. .......................... $ 4,477,500
----------------
CAPITAL GOODS - 1.88%
75,000 Pitney Bowes, Inc. ..................... 4,129,687
----------------
CHEMICALS - 1.01%
55,000 Praxair, Inc. .......................... 2,213,750
----------------
COMMERCIAL SERVICES - 0.95%
70,000 Ecolab Inc. ............................ 2,091,250
----------------
CONSUMER DURABLES - 4.77%
90,000 Harley-Davidson, Inc. .................. 3,487,500
65,000 Illinois Tool Works, Inc. .............. 4,168,125
50,000 Johnson Controls, Inc. ................. 2,812,500
----------------
10,468,125
----------------
CONSUMER NON-DURABLES - 6.84%
85,000 Cintas Corp. ........................... 4,547,500
60,000 Lancaster Colony Corp. ................. 1,800,000
60,000 Mattel, Inc. ........................... 2,152,500
75,000 Newell Co. ............................. 3,300,000
36,000 Procter & Gamble Co. ................... 3,199,500
----------------
14,999,500
----------------
ELECTRICAL - 2.19%
55,000 General Electric Co. ................... 4,812,500
----------------
FINANCE - 11.69%
80,000 AFLAC Inc. ............................. 3,050,000
52,500 American International Group, Inc. ..... 4,475,625
40,000 Associates First Capital Corp., Class A 2,820,000
90,000 Federal Home Loan Mortgage Corp. ....... 5,175,000
112,500 MBNA Corp. ............................. 2,566,406
100,000 Norwest Corp. .......................... 3,718,750
80,000 Schwab (Charles) Corp. ................. 3,835,000
----------------
25,640,781
----------------
FOOD AND BEVERAGE - 1.96%
160,000 Sysco Corp. ............................ 4,310,000
----------------
HEALTH CARE SERVICES - 6.75%
35,000 Cardinal Health, Inc. .................. 3,309,687
210,000 Health Management
Associates, Inc., Class A *............. 3,740,625
100,000 Omnicare, Inc. ......................... 3,456,250
40,000 Pfizer, Inc. ........................... 4,292,500
----------------
14,799,062
----------------
OIL AND GAS EXTRACTION - 0.60%
25,000 Schlumberger Limited.................... $ 1,312,500
----------------
PHARMACEUTICALS - 1.85%
30,000 Merck & Co., Inc. ...................... 4,057,500
----------------
RETAIL - 3.31%
50,000 Kohl's Corp. *.......................... 2,390,625
100,000 Walgreen Co............................. 4,868,750
----------------
7,259,375
----------------
TECHNOLOGY - 9.33%
60,000 Cisco Systems, Inc. *................... 3,780,000
35,000 Computer Associates International, Inc. 1,378,125
50,000 Computer Sciences Corp. ................ 2,637,500
70,000 EMC Corp. *............................. 4,506,250
110,000 HBO & Co. .............................. 2,887,500
25,000 Microsoft Corp. *....................... 2,646,875
45,000 Sun Microsystems, Inc. *................ 2,621,250
----------------
20,457,500
----------------
TELECOMMUNICATIONS -1.38%
55,000 Tellabs, Inc. *......................... 3,025,000
----------------
UTILITY - 0.56%
30,000 AES Corp. *............................. 1,228,125
----------------
TOTAL COMMON STOCKS..................... 125,282,155
(Cost $77,265,467) ----------------
Par Value
- ---------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS -17.62%
U.S. TREASURY NOTES - 5.63%
$ 500,000 5.500%, 02/28/99....................... 501,715
1,000,000 7.125%, 02/29/00....................... 1,035,680
2,000,000 7.875%, 08/15/01....................... 2,182,860
2,000,000 6.375%, 08/15/02....................... 2,136,900
2,000,000 5.750%, 08/15/03....................... 2,120,520
2,000,000 5.875%, 02/15/04....................... 2,140,520
2,000,000 6.500%, 08/15/05....................... 2,233,960
----------------
12,352,155
----------------
U.S. TREASURY BONDS - 1.61%
1,500,000 7.125%, 02/15/23....................... 1,852,320
1,500,000 6.250%, 08/15/23....................... 1,679,550
----------------
3,531,870
----------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
16
<PAGE>
ALLEGHANY FUNDS
CHICAGO TRUST BALANCED FUND
SCHEDULE OF INVESTMENTS OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Par Value Value
- --------- -----
<S> <C>
FEDERAL HOME LOAN
MORTGAGE CORPORATION - 2.65%
$ 1,500,000 5.750%, 07/15/03........................ $ 1,559,220
4,856 5.500%, 08/15/04, CMO................... 4,845
1,000,000 5.850%, 02/21/06, Debenture............. 1,036,530
1,000,000 6.500%, 09/15/07, CMO................... 1,029,720
395,382 7.500%, 04/01/08, Debenture............. 405,882
829,327 6.500%, 06/01/09........................ 842,281
1,000,000 6.000%, 12/15/23, CMO................... 933,610
----------------
5,812,088
----------------
FEDERAL NATIONAL
MORTGAGE ASSOCIATION - 4.10%
2,000,000 5.625%, 03/15/01........................ 2,044,500
691,745 6.900%, 12/25/03, CMO................... 706,161
1,273,647 7.000%, 01/01/13........................ 1,299,909
906,389 7.000%, 03/01/13........................ 925,079
1,671,420 6.000%, 08/01/13........................ 1,678,724
578,608 7.000%, 07/25/17, CMO................... 33,582
322,232 9.000%, 05/01/25........................ 339,552
695,632 6.500%, 02/01/28........................ 701,281
1,248,487 6.500%, 09/01/28........................ 1,258,625
----------------
8,987,413
----------------
GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION - 3.63%
377,591 7.000%, 06/15/08........................ 387,736
538,165 8.000%, 03/15/17........................ 558,513
695,655 8.000%, 06/15/17........................ 721,957
1,416,907 7.000%, 09/15/23........................ 1,451,876
917,299 7.000%, 10/15/23........................ 939,937
682,323 7.000%, 10/15/23........................ 699,163
1,319,371 6.500%, 03/15/26........................ 1,335,032
414,524 7.500%, 06/15/27........................ 427,088
915,231 6.500%, 08/15/27........................ 926,672
498,758 7.500%, 07/15/28........................ 513,876
----------------
7,961,850
----------------
TOTAL U.S. GOVERNMENT
AND AGENCY OBLIGATIONS.................. 38,645,376
(Cost $36,998,686) ----------------
CORPORATE NOTES AND BONDS - 13.67%
CABLE TELEVISION - 0.37%
700,000 Continental Cablevision, Debenture
9.500%, 08/01/13........................ 815,500
----------------
ENERGY - 1.48%
$ 1,700,000 Ashland, Inc., Senior Notes
6.625%, 02/15/08........................ $ 1,748,875
850,000 Thermo Electron Corp.
4.250%, 01/01/03 (A).................... 748,000
750,000 Williams Co., Inc.
5.950%, 02/15/00 (A).................... 754,688
----------------
3,251,563
----------------
FINANCE - 6.17%
1,250,000 Advanta Corp., MTN
7.000%, 05/01/01........................ 1,100,000
750,000 Chelsea GCA Realty Partnership, REIT
7.250%, 10/21/07........................ 747,188
1,000,000 Continental Corp. Notes
7.250%, 03/01/03........................ 1,021,250
1,250,000 Goldman Sachs Group LP, MTN
6.250%, 02/01/03 (A).................... 1,257,813
1,500,000 Heller Financial, Inc.
5.625%, 03/15/00........................ 1,501,875
1,600,000 HSBC America Capital II
8.380%, 05/15/27 (A).................... 1,498,000
1,000,000 Leucadia National Corp.
Senior Subordinated Notes
8.250%, 06/15/05........................ 1,107,500
1,000,000 Leucadia National Corp.
Senior Subordinated Notes
7.875%, 10/15/06........................ 1,040,000
1,500,000 Metropolitan Life Insurance Co.
6.300%, 11/01/03 (A).................... 1,537,500
600,000 Arcadia Financial Ltd.
11.500%, 03/15/07....................... 402,000
1,000,000 Pacific Mutual Life Insurance Co.
7.900%, 12/30/23 (A).................... 1,158,750
1,000,000 Prudential Insurance Co. of America
8.300%, 07/01/25 (A).................... 1,167,500
----------------
13,539,376
----------------
FOOD AND BEVERAGE - 0.46%
1,000,000 Nabisco, Inc.
6.700%, 06/15/02........................ 1,015,000
----------------
HEALTH CARE SERVICES - 0.99%
1,250,000 HealthSouth Corp., Senior Notes
6.875%, 06/15/05........................ 1,267,188
1,100,000 Hospital Corp. of America, Debenture
8.123%, 06/01/00 (B).................... 908,875
----------------
2,176,063
----------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
17
<PAGE>
ALLEGHANY FUNDS
CHICAGO TRUST BALANCED FUND
SCHEDULE OF INVESTMENTS OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Par Value Value
- --------- -----
<S> <C>
PRINTING AND PUBLISHING - 0.48%
$ 1,000,000 News America Holdings Inc.,
Senior Debenture
7.750%, 02/01/24........................ $ 1,042,500
----------------
RETAIL - 0.45%
1,000,000 Kmart Corp., Debenture
7.950%, 02/01/23........................ 991,250
----------------
TELECOMMUNICATIONS - 0.59%
1,250,000 Worldcom, Inc.
6.950%, 08/15/28........................ 1,287,500
----------------
TRANSPORTATION - 0.21%
413,123 Delta Air Lines Equipment Trust,
Series 1992-A,
8.540%, 01/02/07........................ 452,969
----------------
UTILITIES - 2.47%
1,000,000 CalEnergy Co., Inc.
7.630%, 10/15/07........................ 1,041,250
1,000,000 Gulf States Utilities, First Mortgage,
Series A
8.250%, 04/01/04........................ 1,132,500
1,000,000 Long Island Lighting Co., Debenture
9.000%, 11/01/22........................ 1,190,000
1,000,000 Niagara Mohawk Power Corp.,
First Mortgage
7.625%, 10/01/05........................ 1,033,750
1,000,000 Philadelphia Electric Co.,
First Mortgage
5.625%, 11/01/01........................ 1,018,750
----------------
5,416,250
----------------
TOTAL CORPORATE NOTES AND BONDS......... 29,987,971
(Cost $29,269,440) ----------------
YANKEE BONDS - 3.30%
1,750,000 Chilgener S.A. Yankee (Chile)
6.500%, 01/15/06........................ 1,413,125
1,500,000 DR Investment Corp.
7.450%, 05/15/07 (A).................... 1,657,500
775,000 LG-Caltex Oil Corp.
7.500%, 07/15/07 (A).................... 530,038
25,000 Petroliam Nasional Berhad
7.125%, 10/18/06 (A).................... 17,469
825,000 Petroliam Nasional Berhad
7.625%, 10/15/26 (A).................... 453,750
786,253 Province of Mendoza
Collateral Oil Royalty Note
10.000%, 07/25/02 (A)................... 785,742
YANKEEBONDS (CONTINUED)
$ 1,250,000 Skandinaviska Enskilda,
Subordinated Notes
6.625%, 03/29/49 (A).................... $ 1,257,813
1,250,000 SB Treasury Co. LLC
9.400%, 12/29/49 (A).................... 1,125,000
----------------
TOTAL YANKEE BONDS...................... 7,240,437
(Cost $7,632,540) ----------------
GOVERNMENT TRUST CERTIFICATE - 0.54%
1,127,762 Israel Collateral Trust, Class 1-C
9.250%, 11/15/01........................ 1,181,330
----------------
TOTAL GOVERNMENT TRUST CERTIFICATE...... 1,181,330
(Cost $1,202,264) ----------------
ASSET-BACKED SECURITIES - 2.04%
1,400,000 Chemical Master Credit Card Trust I
Series 1996-1, Class A
5.550%, 09/15/03........................ 1,417,598
1,000,000 Citibank Credit Card Master Trust I
Series 1997-3, Class A
6.839%, 02/10/04........................ 1,029,180
2,000,000 DVI Receivables Corp.
Series 1998-1, Class A2
6.035%, 04/10/06 (A).................... 2,026,875
----------------
TOTAL ASSET-BACKED SECURITIES........... 4,473,653
(Cost $4,373,536) ----------------
CMO/NON-AGENCY MORTGAGE SECURITIES - 1.44%
1,000,000 BA Mortgage Securities, CMO,
REMIC Series 1997-1, Class A4
7.350%, 07/25/26........................ 1,009,531
1,500,000 GE Capital Mortgage Services, Inc., CMO, REMIC
Series 1998-9, Class A15
6.500%, 06/25/28........................ 1,506,563
600,000 Midland Realty Acceptance Corp., CMO
Series 1996-C001, Class A2
7.475%, 08/25/28........................ 642,563
----------------
TOTAL CMO/NON-AGENCY
MORTAGAGE SECURITIES.................. 3,158,657
(Cost $3,111,219) ----------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
18
<PAGE>
ALLEGHANY FUNDS
CHICAGO TRUST BALANCED FUND
SCHEDULE OF INVESTMENTS OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Par Value Value
- ------ -----
<S> <C>
REPURCHASE AGREEMENT - 3.40%
$ 7,454,000 Bank of America
5.300%, dated 10/30/98 to be
repurchased on 11/2/98 at $7,457,292
(Collateralized by U.S. Treasury Note
5.625% due 04/30/00);
Total Par $7,270,000
........................................ $ 7,454,000
----------------
TOTAL REPURCHASE AGREEMENT.............. 7,454,000
(Cost $7,454,000) ----------------
TOTAL INVESTMENTS - 99.12%............................ 217,423,579
(Cost $167,307,152)** ----------------
NET OTHER ASSETS AND LIABILITIES - 0.88%.............. 1,937,963
----------------
NET ASSETS - 100.00%.................................. $ 219,361,542
----------------
----------------
</TABLE>
- ----------------------------------------------
* Non-income producing security.
** Aggregate cost for Federal income tax purposes is $167,334,448.
<TABLE>
<S> <C>
Gross unrealized appreciation $ 52,629,077
Gross unrealized depreciation (2,539,946)
---------------
Net unrealized appreciation $ 50,089,131
---------------
---------------
</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, 1998,
these securities amounted to $15,976,438 or 7.28% of net assets.
(B) Annualized yield at time of purchase
CMO Collateralized Mortgage Obligation
MTN Medium Term Note
REIT Real Estate Investment Trust
REMIC Real Estate Mortgage Investment Conduit
<TABLE>
<CAPTION>
PORTFOLIO COMPOSITION (Moody's Ratings)
<S> <C>
Common Stocks 58%
Repurchase Agreement 3%
U.S. Government Obligations 7%
U.S. Government Agency Obligations 10%
Government Trust Certificate 1%
Corporate Notes and Bonds:
Aaa 3%
A 5%
Baa 8%
Ba 3%
B 1%
NR 1%
-----
100%
-----
-----
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
19
<PAGE>
ALLEGHANY FUNDS
MONTAG & CALDWELL BALANCED FUND
SCHEDULE OF INVESTMENTS OCTOBER 31, 1998
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Value
- ------ --------
<S> <C>
COMMON STOCKS - 65.12%
BUSINESS SERVICES - 0.78%
51,500 Manpower, Inc......................... $ 1,242,437
------------
CONSUMER NON-DURABLES - 11.67%
55,000 Bestfoods............................. 2,997,500
100,000 Gillette Co. ......................... 4,493,750
43,000 Interpublic Group of Companies, Inc... 2,515,500
100,000 Mattel, Inc........................... 3,587,500
55,000 Procter & Gamble Co................... 4,888,125
------------
18,482,375
------------
ELECTRICAL - 2.32%
42,000 General Electric Co................... 3,675,000
------------
ENTERTAINMENT AND LEISURE - 1.96%
115,000 The Walt Disney Co.................... 3,097,812
------------
FINANCE - 4.38%
40,000 American Express Co................... 3,535,000
40,000 American International Group, Inc..... 3,410,000
------------
6,945,000
------------
FOOD AND BEVERAGE - 2.49%
58,300 Coca-Cola Co.......................... 3,942,537
------------
HEALTH CARE SERVICES - 6.30%
61,800 Johnson & Johnson..................... 5,036,700
46,000 Pfizer, Inc........................... 4,936,375
------------
9,973,075
------------
LODGING - 1.40%
82,500 Marriott International, Inc., Class A. 2,217,187
------------
MEDICAL SUPPLIES - 2.02%
49,400 Medtronic, Inc........................ 3,211,000
------------
OIL AND GAS EXTRACTION - 1.27%
38,300 Schlumberger Limited.................. 2,010,750
------------
PHARMACEUTICALS - 6.77%
37,600 Bristol-Myers Squibb Co............... 4,157,150
43,300 Eli Lilly & Co........................ 3,504,594
22,600 Merck & Co., Inc...................... 3,056,650
------------
10,718,394
------------
RESTAURANTS - 3.80%
51,400 Cracker Barrel Old Country Store, Inc. $ 1,329,975
70,000 McDonald's Corp....................... 4,681,250
------------
6,011,225
------------
RETAIL - 5.46%
35,900 Costco Companies, Inc.*............... 2,037,325
50,000 Gap, Inc.............................. 3,006,250
82,700 Home Depot, Inc....................... 3,597,450
------------
8,641,025
------------
TECHNOLOGY - 12.42%
52,000 Boston Scientific Corp.*.............. 2,830,750
41,000 Cisco Systems, Inc.*.................. 2,583,000
44,000 Electronic Arts, Inc.*................ 1,809,500
60,000 Hewlett-Packard Co.................... 3,611,250
41,200 Intel Corp............................ 3,674,525
21,000 Microsoft Corp.*...................... 2,223,375
51,400 Solectron Corp.*...................... 2,942,650
------------
19,675,050
------------
TELECOMMUNICATIONS - 2.08%
60,000 Tellabs, Inc. *....................... 3,300,000
------------
TOTAL COMMON STOCKS................... 103,142,867
(Cost $87,847,141) ------------
Par Value
- ---------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 22.58%
U.S. TREASURY NOTES - 10.90%
$ 2,000,000 6.250%, 04/30/01...................... 2,091,300
2,500,000 6.625%, 04/30/02...................... 2,679,175
3,000,000 5.750%, 08/15/03...................... 3,180,780
1,750,000 7.875%, 11/15/04...................... 2,056,058
3,500,000 6.500%, 10/15/06...................... 3,928,610
3,000,000 6.250%, 02/15/07...................... 3,326,670
------------
17,262,593
------------
U.S. TREASURY BONDS - 4.67%
2,500,000 7.250%, 05/15/16...................... 3,042,450
2,000,000 8.000%, 11/15/21...................... 2,680,680
1,500,000 6.250%, 08/15/23...................... 1,679,550
------------
7,402,680
------------
FEDERAL HOME LOAN BANK - 0.98%
500,000 6.940%, 02/12/04...................... 502,705
1,000,000 5.890%, 06/30/08...................... 1,043,310
------------
1,546,015
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
20
<PAGE>
ALLEGHANY FUNDS
MONTAG & CALDWELL BALANCED FUND
SCHEDULE OF INVESTMENTS - CONTINUED OCTOBER 31, 1998
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Par Value Value
- --------- --------
<S> <C>
FEDERAL HOME LOAN
MORTGAGE CORPORATION - 2.81%
$ 750,000 6.400%, 12/13/06, Debenture........... $ 806,850
1,750,000 6.700%, 01/05/07, Global Bond......... 1,915,515
600,000 7.500%, 03/15/07, CMO, Class J........ 650,502
175,000 6.000%, 04/15/08, CMO, Class K........ 176,192
500,000 6.500%, 07/15/20, CMO, Class F........ 503,350
400,000 6.500%, 11/15/20, CMO, Class H........ 405,380
------------
4,457,789
------------
FEDERAL NATIONAL
MORTGAGE ASSOCIATION - 3.22%
2,500,000 6.250%, 03/20/00...................... 2,554,175
500,000 7.070%, 03/08/11, MTN................. 501,740
2,000,000 7.250%, 01/17/21,
CMO, REMIC............................ 2,043,520
------------
5,099,435
------------
GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION - 0.00% (A)
2,193 8.500%, 06/15/01...................... 2,293
2,008 9.000%, 09/15/08...................... 2,140
------------
4,433
------------
TOTAL U.S. GOVERNMENT
AND AGENCY OBLIGATIONS................ 35,772,945
(Cost $34,054,609) ------------
CORPORATE NOTES AND BONDS - 9.25%
CONSUMER NON-DURABLES - 2.98%
2,000,000 NIKE, Inc.
6.375%, 12/01/03...................... 2,120,000
2,500,000 Warner Lambert Co.
5.750%, 01/15/03...................... 2,590,625
------------
4,710,625
------------
FINANCE - 4.26%
$ 1,500,000 American Express Co., Senior Notes
6.750%, 06/23/04...................... $ 1,614,375
55,000 American General Finance, MTN
7.200%, 07/08/99...................... 55,802
2,500,000 Citicorp, Subordinated Notes
7.125%, 05/15/06...................... 2,575,000
1,000,000 Household Finance Corp.
7.250%, 05/15/06...................... 1,056,250
1,350,000 Household Finance Corp., MTN
7.300%, 07/30/12...................... 1,451,250
------------
6,752,677
------------
RETAIL - 1.68%
500,000 Penney (J.C.) & Co., Debenture
9.750%, 06/15/21...................... 560,000
2,000,000 Sears Roebuck Acceptance Corp.
6.700%, 11/15/06...................... 2,100,000
------------
2,660,000
------------
SECURITY AND COMMODITY BROKERS - 0.33%
500,000 Salomon, Inc.
7.300%, 05/15/02...................... 528,750
------------
TOTAL CORPORATE NOTES AND BONDS....... 14,652,052
(Cost $14,168,500) ------------
ASSET-BACKED SECURITY - 1.14%
1,750,000 First USA Credit Card Master Trust
Series 1997-6, Class A
6.420%, 03/17/05...................... 1,810,095
------------
TOTAL ASSET-BACKED SECURITY ......... 1,810,095
(Cost $1,789,716) ------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
21
<PAGE>
ALLEGHANY FUNDS
MONTAG & CALDWELL BALANCED FUND
SCHEDULE OF INVESTMENTS - CONTINUED OCTOBER 31, 1998
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Par Value Value
- --------- --------
<S> <C>
INVESTMENT COMPANIES - 1.33%
2,104,220 Bankers Trust Institutional
Cash Management Fund.................. $ 2,104,220
3,475 Bankers Trust Institutional
Treasury Money Fund................... 3,475
------------
TOTAL INVESTMENT COMPANIES............ 2,107,695
(Cost $2,107,695) ------------
TOTAL INVESTMENTS - 99.42%.......................... 157,485,654
(Cost $139,967,661)** ------------
NET OTHER ASSETS AND LIABILITIES - 0.58%............ 912,694
------------
NET ASSETS - 100.00%................................ $158,398,348
------------
------------
</TABLE>
- ----------
* Non-income producing security.
** Aggregate cost for Federal income tax purposes is $140,338,149.
<TABLE>
<S> <C>
Gross unrealized appreciation.................. $ 20,706,589
Gross unrealized depreciation.................. (3,559,084)
-------------
Net unrealized appreciation.................... $ 17,147,505
-------------
-------------
</TABLE>
(A) Amount represents less than 0.1%
CMO Collateralized Mortgage Obligation
MTN Medium Term Note
REMIC Real Estate Mortgage Investment Conduit
<TABLE>
<CAPTION>
PORTFOLIO COMPOSITION (Moody's Ratings)
- ---------------------
<S> <C>
Common Stocks .............................. 65%
U.S. Government Obligations ................ 16%
U.S. Government Agency Obligations ......... 7%
Investment Companies ....................... 1%
Corporate Notes and Bonds:
Aaa ........................................ 1%
Aa ......................................... 2%
A .......................................... 8%
-----
100%
-----
-----
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
22
<PAGE>
ALLEGHANY FUNDS
CHICAGO TRUST BOND FUND
SCHEDULE OF INVESTMENTS OCTOBER 31, 1998
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Par Value Value
- --------- --------
<S> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 51.43%
U.S. TREASURY NOTES - 20.70%
$ 3,500,000 5.500%, 02/28/99 ..................... $ 3,512,005
3,500,000 7.125%, 02/29/00 ..................... 3,624,880
2,500,000 7.875%, 08/15/01 ..................... 2,728,575
2,500,000 6.250%, 10/31/01 ..................... 2,632,725
5,000,000 6.375%, 08/15/02 ..................... 5,342,250
5,500,000 5.750%, 08/15/03 ..................... 5,831,430
5,500,000 7.250%, 05/15/04 ..................... 6,248,055
3,000,000 6.125%, 08/15/07 ..................... 3,313,620
------------
33,233,540
------------
U.S. TREASURY BONDS - 7.13%
2,000,000 7.500%, 05/15/02 ..................... 2,202,260
2,500,000 7.125%, 02/15/23 ..................... 3,087,200
5,500,000 6.250%, 08/15/23 ..................... 6,158,350
------------
11,447,810
------------
FEDERAL HOME LOAN
MORTGAGE CORPORATION - 8.61%
2,500,000 5.750%, 07/15/03 ..................... 2,598,700
2,500,000 5.850%, 02/21/06 ..................... 2,591,325
1,000,000 6.500%, 09/15/07, CMO ................ 1,029,720
500,000 5.750%, 01/15/08, CMO ................ 497,860
395,382 7.500%, 04/01/08 ..................... 405,883
1,500,000 6.000%, 03/15/09, CMO ................ 1,553,700
1,105,769 6.500%, 06/01/09 ..................... 1,123,042
1,414,408 6.500%, 01/01/11 ..................... 1,436,501
1,266,730 6.500%, 11/01/11 ..................... 1,286,517
1,400,000 6.000%, 12/15/23, CMO ................ 1,307,054
------------
13,830,302
FEDERAL NATIONAL
MORTGAGE ASSOCIATION - 8.95%
2,500,000 5.625%, 03/15/01 ..................... 2,555,625
922,327 6.900%, 12/25/03, CMO ................ 941,548
1,203,262 7.000%, 05/01/12 ..................... 1,228,073
2,122,745 7.000%, 01/01/13 ..................... 2,166,515
1,359,584 7.000%, 03/01/13 ..................... 1,387,619
2,556,289 6.000%, 08/01/13 ..................... 2,567,460
515,571 9.000%, 05/01/25 ..................... 543,283
958,414 6.500%, 02/01/26 ..................... 966,197
1,997,579 6.500%, 09/01/28 ..................... 2,013,799
------------
14,370,119
------------
GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION - 6.04%
$ 695,655 8.000%, 06/15/17 ..................... $ 721,958
1,194,065 7.000%, 10/15/23 ..................... 1,223,535
1,223,065 7.000%, 10/15/23 ..................... 1,253,250
1,319,371 6.500%, 03/15/26 ..................... 1,335,032
1,340,946 7.000%, 06/15/27 ..................... 1,374,886
1,159,208 7.000%, 08/20/27 ..................... 1,182,751
1,259,890 6.500%, 09/20/27 ..................... 1,269,339
1,296,771 7.500%, 07/15/28 ..................... 1,336,076
------------
9,696,827
------------
TOTAL U.S. GOVERNMENT
AND AGENCY OBLIGATIONS ............... 82,578,598
(Cost $79,937,459) ------------
CORPORATE NOTES AND BONDS - 27.66%
CABLE TELEVISION - 1.09%
1,500,000 Continental Cablevision, Debenture
9.500%, 08/01/13 ..................... 1,747,500
------------
ENERGY - 2.81%
2,000,000 Ashland, Inc.
6.625%, 02/15/08 ..................... 2,057,500
1,350,000 Thermo Electron Corp.
4.250%, 01/01/03 (A) ................. 1,188,000
1,250,000 Williams Co., Inc.
5.950%, 02/15/00 (A) ................. 1,257,813
------------
4,503,313
------------
FINANCE - 10.91%
2,000,000 Advanta Corp., MTN
7.000%, 05/01/01 ..................... 1,760,000
2,000,000 Chelsea GCA Realty Partnership, REIT
7.250%, 10/21/07 ..................... 1,992,500
1,500,000 Continental Corp. Notes
7.250%, 03/01/03 ..................... 1,531,875
500,000 Goldman Sachs Group LP
6.250%, 02/01/03 (A) ................. 503,125
2,200,000 HSBC America Capital II
8.380%, 05/15/27 (A) ................. 2,059,750
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
23
<PAGE>
ALLEGHANY FUNDS
CHICAGO TRUST BOND FUND
SCHEDULE OF INVESTMENTS - CONTINUED OCTOBER 31, 1998
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Par Value Value
- --------- --------
<S> <C>
FINANCE - (CONTINUED)
$ 1,750,000 Heller Financial, Inc.
5.625%, 03/15/00 ..................... $ 1,752,188
1,000,000 Leucadia National Corp.
Senior Subordinated Notes
8.250%, 06/15/05 ..................... 1,107,500
2,000,000 Metropolitan Life Insurance Co.
6.300%, 11/01/03 (A) ................. 2,050,000
1,000,000 Arcadia Financial Ltd.
11.500%, 03/15/07 .................... 670,000
1,520,000 Pacific Mutual Life Insurance Co.
7.900%, 12/30/23 (A) ................. 1,761,300
2,000,000 Prudential Insurance Co. of America
8.300%, 07/01/25 (A) ................. 2,335,000
------------
17,523,238
------------
FOOD AND BEVERAGE - 1.59%
2,500,000 Nabisco, Inc.
6.850%, 06/15/05 ..................... 2,550,000
------------
HEALTHCARE SERVICES - 1.91%
1,300,000 Columbia Healthcare
6.125%, 12/15/00 ..................... 1,285,375
1,750,000 HealthSouth Corp.
6.875%, 06/15/05 ..................... 1,774,063
------------
3,059,438
------------
PRINTING AND PUBLISHING - 0.97%
1,500,000 News America Holdings
7.750%, 01/20/24 ..................... 1,558,125
------------
RETAIL - 0.93%
1,500,000 Kmart Corp., Debenture
7.950%, 02/01/23 ..................... 1,486,875
------------
TELECOMMUNICATIONS - 1.28%
2,000,000 MCI Worldcom, Inc.
6.950%, 08/15/28 ..................... 2,060,000
------------
TRANSPORTATION - 0.42%
413,123 Delta Air Lines, Inc.
Equipment Trust Series 1992A
8.540%, 01/02/07 ..................... 452,969
196,670 Delta Air Lines, Inc.
9.375%, 09/11/07 ..................... 222,187
------------
675,156
------------
UTILITIES - 5.75%
$ 1,825,000 Calenergy Co., Inc.
7.630%, 10/15/07 ..................... $ 1,900,281
2,000,000 Gulf States Utilities, First Mortgage,
Series A
8.250%, 04/01/04 ..................... 2,265,000
1,250,000 Long Island Lighting Co., Debenture
9.000%, 11/01/22 ..................... 1,487,500
1,500,000 Niagara Mohawk Power, First Mortgage
7.625%, 10/01/05 ..................... 1,550,625
2,000,000 Philadelphia Electric Co., First Mortgage
5.625%, 11/01/01 ..................... 2,037,500
------------
9,240,906
------------
TOTAL CORPORATE NOTES AND BONDS....... 44,404,551
(Cost $42,526,570) ------------
YANKEE BONDS - 7.01%
2,250,000 Chilgener S.A. Yankee (Chile)
6.500%, 01/15/06 ..................... 1,816,875
2,500,000 DR Investment Corp.
7.450%, 05/15/07 (A) ................. 2,762,500
1,150,000 LG-Caltex Oil Corp.
7.500%, 07/15/07 (A) ................. 786,507
1,200,000 Petroliam Nasional Berhad
7.625%, 10/15/26 (A) ................. 660,000
1,416,255 Province of Mendoza
Collateral Oil Royalty Note
10.000%, 07/25/02 (A) ................ 1,415,335
2,000,000 Skandinaviska Enskilda, Subordinated Notes
6.625%, 03/29/49 (A) ................. 2,012,500
2,000,000 SB Treasury Co., LLC
9.400%, 12/29/49 (A) ................. 1,800,000
------------
TOTAL YANKEE BONDS ................... 11,253,717
(Cost $12,520,939) ------------
ASSET-BACKED SECURITIES - 3.32%
2,500,000 Chemical Master Credit Card Trust I
Series 1996-1, Class A
5.550%, 09/15/03 ..................... 2,531,425
750,000 Citibank Master Credit Card Trust I
Series 1997-3, Class A
6.839%, 02/10/04 ..................... 771,885
2,000,000 DVI Receivables Corp., Series 1998-1
Class A2
6.035%, 04/10/06 (A) ................. 2,026,875
------------
TOTAL ASSET-BACKED SECURITIES ........ 5,330,185
(Cost $5,193,115) ------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
24
<PAGE>
ALLEGHANY FUNDS
CHICAGO TRUST BOND FUND
SCHEDULE OF INVESTMENTS - CONTINUED OCTOBER 31, 1998
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Par Value Value
- --------- --------
<S> <C>
CMO/NON-AGENCY MORTGAGE SECURITIES - 2.62%
$ 1,750,000 BA Mortgage Securities, CMO, REMIC
Series 1997-1, Class A4
7.350%, 07/25/26 ..................... $ 1,766,680
1,500,000 GE Capital Mortgage Services, Inc., CMO,
REMIC
Series 1998-9, Class A15
6.500%, 06/25/28 ....................... 1,506,563
875,000 Midland Realty Acceptance Corp., CMO
Series 1996-C001, Class A2
7.475%, 08/25/28........................ 937,070
------------
TOTAL CMO/NON-AGENCY
MORTAGAGE SECURITIES ................. 4,210,313
(Cost $4,137,988) ------------
REPURCHASE AGREEMENT - 6.07%
9,753,000 Bank of America
5.300%, dated 10/30/98 to be repurchased
on 11/02/98 at $9,757,308
(Collateralized by U.S. Treasury Note
6.625%, due 04/30/02;
Total Par $9,000,000) .................. 9,753,000
------------
TOTAL REPURCHASE AGREEMENT ............. 9,753,000
(Cost $9,753,000) ------------
TOTAL INVESTMENTS - 98.11% ........................... 157,530,364
(Cost $154,069,071)* ------------
NET OTHER ASSETS AND LIABILITIES - 1.89% ............. 3,030,856
------------
NET ASSETS - 100.00% ................................. $160,561,220
------------
------------
</TABLE>
- ----------
* Aggregage cost for Federal tax purposes is $154,069,071.
<TABLE>
<S> <C>
Gross unrealized appreciation ......... $ 4,854,926
Gross unrealized depreciation ......... (1,393,633)
---------------
Net unrealized appreciation ........... $ 3,461,293
---------------
---------------
</TABLE>
(A) Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold, in transactions exempt from
regisrtation, to qualified institutional buyers. At October 31, 1998,
these securities amounted to $22,618,705 or 14.09% of net assets.
CMO Collateralized Mortgage Obligation
MTN Medium Term Note
REIT Real Estate Investment Trust
REMIC Real Estate Mortgage Investment Conduit
<TABLE>
<CAPTION>
PORTFOLIO COMPOSITION (Moody's Ratings)
- ---------------------
<S> <C>
Repurchase Agreement ...................... 6%
U.S. Government Obligations ............... 28%
U.S. Government Agency Obligations ........ 23%
Corporate Notes and Bonds:
Aaa ....................................... 6%
A ......................................... 8%
Baa ....................................... 18%
Ba ........................................ 6%
B ......................................... 3%
NR ........................................ 2%
-----
100%
-----
-----
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25
<PAGE>
ALLEGHANY FUNDS
CHICAGO TRUST MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS OCTOBER 31, 1998
- ---------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Par Value Value
- --------- --------
<S> <C>
MUNICIPAL SECURITIES - 99.63%
ALASKA - 2.21%
$ 280,000 Anchorage, Alaska, G.O.
5.000%, 07/01/13 ..................... $ 291,987
------------
ARIZONA - 5.34%
450,000 Salt River Project Electric System
Revenue Refunding, Series A
5.500%, 01/01/05 ..................... 488,219
200,000 Tucson, Arizona Water Revenue
5.400%, 07/01/05 ..................... 216,786
------------
705,005
------------
CALIFORNIA - 2.04%
250,000 California State
5.250%, 10/01/10 ..................... 269,687
------------
FLORIDA - 4.11%
265,000 Dade County, Florida State
School District, G.O.
5.000%, 07/15/02
Insured: MBIA ........................ 277,429
250,000 Hillsborough County, Florida, G.O.
5.000%, 07/01/11
Insured: MBIA ........................ 265,060
------------
542,489
------------
GEORGIA - 3.97%
250,000 State of Georgia, Series A, G.O.
6.100%, 03/01/05 ..................... 280,823
200,000 State of Georgia, Series D, G.O.
6.700%, 08/01/09 ..................... 243,762
------------
524,585
------------
ILLINOIS - 1.92%
250,000 Cook County, Illinois, Series A, G.O.
5.000%, 11/15/15
Insured: FGIC ........................ 253,043
------------
MICHIGAN - 6.57%
300,000 Clarkston Community Schools
5.000%, 05/01/06
Insured: AMBAC ....................... 318,381
250,000 Michigan State Trunk Line, Series A
5.500%, 11/01/16 ..................... 270,777
260,000 Utica Community Schools
5.375%, 05/01/04
Insured: FGIC ........................ 278,762
------------
867,920
------------
MINNESOTA - 5.44%
$ 200,000 Shakopee Independent
School District, G.O.
4.500%, 02/01/06 ..................... $ 206,294
245,000 Minneapolis & St. Paul Housing
Finance Board Revenue
5.050%, 11/01/07 ..................... 255,106
250,000 Minneapolis & St. Paul Metropolitan
Airport Revenue, Series B
5.250%, 01/01/15
Insured: AMBAC ....................... 257,115
------------
718,515
------------
NEBRASKA - 3.75%
250,000 American Public Energy Agency
Revenue, Series C
4.300%, 03/01/11
Insured: AMBAC ....................... 242,595
250,000 Nebraska Public Power District
Revenue, Series A
5.000%, 01/01/15
Insured: MBIA ........................ 253,510
------------
496,105
------------
NEVADA - 3.00%
350,000 Clark County, Nevada School District, G.O.
6.400%, 06/15/06
Insured: FGIC ........................ 396,127
------------
NEW HAMPSHIRE - 1.91%
250,000 New Hampshire State Housing Finance
Authority Single Family Revenue, Series B
4.850%, 07/01/08 ..................... 252,310
------------
NEW JERSEY - 2.74%
350,000 State of New Jersey Transportation
Trust Fund Revenue, Series A
Escrowed to Maturity
5.200%, 12/15/00
Insured: AMBAC ....................... 362,627
------------
NEW YORK - 7.85%
250,000 Municipal Assistance Corporation
4.500%, 07/01/01 ..................... 255,763
250,000 New York City Municipal Water Finance
Authority Revenue, Series A
5.000%, 06/15/27 ..................... 245,320
250,000 New York City Transitional Finance
Authority Revenue
5.500%, 08/15/08 ..................... 273,955
250,000 New York State Dormitory Authority
Revenue, Series C
5.100%, 05/15/03 ..................... 262,320
------------
1,037,358
------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26
<PAGE>
ALLEGHANY FUNDS
CHICAGO TRUST MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS - CONTINUED OCTOBER 31, 1998
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Par Value Value
- --------- --------
<S> <C>
OHIO - 3.60%
$ 250,000 Ohio State Highway Capital
Improvement Series C, G.O.
5.000%, 05/01/07 ..................... $ 267,962
200,000 Ohio State Public Facilities Commission
(Higher Education), Series II-A
5.200%, 05/01/01
Insured: AMBAC ....................... 207,812
------------
475,774
------------
OKLAHOMA - 2.74%
350,000 Tulsa, Oklahoma Metropolitan Utilities
Authority Revenue
5.500%, 07/01/00 ..................... 361,785
------------
OREGON - 2.05%
250,000 Portland, Oregon Series A, G.O.
7.000%, 06/01/01 ..................... 271,387
------------
PENNSYLVANIA - 1.66%
215,000 Pennsylvania Housing Finance Agency
Single Family Mortgage, Series 47
5.000%, 10/01/09 ..................... 218,797
------------
PUERTO RICO - 3.39%
400,000 Commonwealth of Puerto Rico
Series A, G.O.
6.500%, 07/01/03
Insured: MBIA ........................ 447,508
------------
TEXAS - 14.22%
245,000 Denton Independent School District
Refunding, G.O.
5.000%, 02/15/12 ..................... 257,515
200,000 Humble Independent School District
Refunding, G.O.
5.500%, 02/15/10 ..................... 220,242
280,000 Lubbock Independent School District
Refunding, G.O.
5.000%, 02/15/09 ..................... 296,982
200,000 Round Rock Independent School District
Refunding, G.O.
4.700%, 08/01/09 ..................... 206,386
210,000 Tarrant County Health Facilities
Development Corp.
Health System Revenue, Series A
5.500%, 02/15/05
Insured: MBIA ........................ 226,325
TEXAS (CONTINUED)
$ 200,000 Texas State Public Finance Authority
Series A, G.O.
5.600%, 10/01/02 ..................... $ 214,077
450,000 Texas State Water
Development Board, G.O.
Escrowed to Maturity
5.000%, 08/01/99 ..................... 456,962
------------
1,878,489
------------
UTAH - 6.86%
300,000 Intermountain Power Agency
Power Supply Revenue
6.250%, 07/01/07
Insured: FSA ......................... 345,813
350,000 Tooele County, Utah Hazardous Waste
Treatment Revenue
5.700%, 11/01/26 ..................... 349,367
200,000 Utah State Building Ownership Authority
Lease Revenue, Series A
5.125%, 05/15/03 ..................... 210,997
------------
906,177
------------
VIRGINIA - 5.96%
250,000 Henrico County, Virginia
Industrial Redevelopment
Authority Revenue
5.300%, 12/01/11 ..................... 263,420
250,000 Virginia State Housing Development
Authority Commonwealth Mortgage
Series H
4.750%, 07/01/07 ..................... 253,892
250,000 Virginia State Public School
Authority Revenue
5.500%, 08/01/03 ..................... 270,095
------------
787,407
------------
WASHINGTON - 3.92%
475,000 King County, Washington, Series A, G.O.
5.800%, 01/01/04 ..................... 517,437
------------
WISCONSIN - 4.38%
300,000 Wisconsin Housing & Economic Development
Authority Home Ownership Revenue
Series A
5.375%, 09/01/17 ..................... 305,904
250,000 State of Wisconsin, Series A, G.O.
5.750%, 05/01/04 ..................... 272,900
------------
578,804
------------
TOTAL MUNICIPAL SECURITIES ........... 13,161,323
(Cost $12,666,172) -------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
27
<PAGE>
ALLEGHANY FUNDS
CHICAGO TRUST MUNICIPAL BOND FUND
SCHEDULE OF INVESTMENTS - CONTINUED OCTOBER 31, 1998
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Par Value Value
- --------- --------
<S> <C>
INVESTMENT COMPANIES - 1.54%
17,819 Goldman Sachs Tax Exempt Fund ........ $ 17,819
185,126 Provident Money Market ............... 185,126
------------
TOTAL INVESTMENT COMPANIES ........... 202,945
(Cost $202,945) ------------
TOTAL INVESTMENTS - 101.17% ........................ 13,364,268
(Cost $12,869,117)* -------------
LIABILITIES NET OF CASH AND OTHER ASSETS - (1.17%) . (154,360)
-------------
NET ASSETS - 100.00% ............................... $13,209,908
-------------
-------------
</TABLE>
- ----------
* Aggregage cost for Federal tax purposes is $12,869,117.
<TABLE>
<S> <C>
Gross unrealized appreciation ...... $ 501,066
Gross unrealized depreciation ...... (5,915)
--------------
Net unrealized appreciation ........ $ 495,151
--------------
--------------
</TABLE>
AMBAC American Municipal Board Assurance Corp.
FGIC Federal Guaranty Insurance Corp.
FSA Fund Services Associates
G.O. General Obligation
MBIA Municipal Bond Insurance Association
<TABLE>
<CAPTION>
PORTFOLIO COMPOSITION (Moody's Ratings)
- ---------------------
<S> <C>
Investment Companies .................. 1%
Corporate Notes and Bonds:
Aaa ................................... 50%
Aa .................................... 37%
A ..................................... 5%
Baa ................................... 5%
NR .................................... 2%
-----
100%
-----
-----
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
28
<PAGE>
ALLEGHANY FUNDS
CHICAGO TRUST MONEY MARKET FUND
SCHEDULE OF INVESTMENTS - CONTINUED OCTOBER 31, 1998
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Amortized
Par Value Cost
- --------- ----
<S> <C>
COMMERCIAL PAPER - 95.48%
$ 5,300,000 Toyota Motor Credit Corp.
5.532%, 11/02/98 (A).......... $ 5,299,193
8,500,000 GTE Corp.
5.352%, 11/03/98 (A).......... 8,497,483
2,400,000 Baxter International, Inc.
5.591%, 11/04/98 (A).......... 2,398,890
5,000,000 Duke Capital Corp.
5.325%, 11/04/98 (A).......... 4,997,783
5,000,000 Commercial Credit Co.
5.404%, 11/05/98.............. 5,000,000
4,310,000 GTE Corp.
5.344%, 11/05/98 (A).......... 4,307,452
3,000,000 AON Corp.
5.466%, 11/06/98 (A).......... 2,997,738
7,000,000 Toys `R' Us, Inc.
5.163%, 11/06/98 (A).......... 6,994,993
4,000,000 AON Corp.
5.571%, 11/09/98 (A).......... 3,995,084
11,000,000 AVCO Financial Sevices, Inc.
5.548%, 11/10/98.............. 11,000,000
9,000,000 CIT Group Holdings
5.519%, 11/12/98.............. 9,000,000
6,500,000 Hertz Corp.
5.286%, 11/13/98 (A).......... 6,488,603
5,000,000 Baxter International, Inc.
5.315%, 11/16/98 (A).......... 4,988,958
5,100,000 Sears Roebuck Acceptance Corp.
5.316%, 11/16/98.............. 5,100,000
6,000,000 Chrysler Financial Corp.
5.398%, 11/17/98 (A).......... 5,985,733
2,500,000 Sears Roebuck Acceptance Corp.
5.194%, 11/17/98.............. 2,500,000
3,500,000 Heller Financial, Inc.
5.549%, 11/18/98.............. 3,500,000
8,000,000 Prudential Funding Corp.
5.450%, 11/18/98.............. 8,000,000
4,000,000 AON Corp.
5.272%, 11/19/98 (A).......... 3,989,500
5,000,000 General Electric Capital Corp.
5.578%, 11/19/98.............. 5,000,000
2,000,000 Sears Roebuck Acceptance Corp.
5.502%, 11/19/98.............. 2,000,000
6,000,000 Duke Capital Corp.
5.593%, 11/20/98 (A).......... 5,982,520
4,000,000 Texaco, Inc.
5.458%, 11/20/98.............. 4,000,000
5,600,000 Transamerica Finance Group
5.581%, 11/23/98 (A).......... 5,581,178
14,000,000 American Home Products Corp.
5.464%, 11/24/98 (A).......... 13,951,521
5,000,000 American General Finance
5.130%, 11/25/98.............. 5,000,000
COMMERCIAL PAPER - (CONTINUED)
$ 6,000,000 Chrysler Financial Corp.
5.583%, 11/30/98 (A).......... $ 5,973,417
4,000,000 General Electric Capital Corp.
5.266%, 12/01/98.............. 4,000,000
5,800,000 Heller Financial, Inc.
5.617%, 12/02/98.............. 5,800,000
4,000,000 Associates First Capital Corp.
5.277%, 12/03/98.............. 4,000,000
4,000,000 Toys `R' Us, Inc.
5.239%, 12/04/98 (A).......... 3,980,933
4,000,000 Norwest Financial, Inc.
5.261%, 12/07/98.............. 4,000,000
4,000,000 General Electric Capital Corp.
5.272%, 12/08/98.............. 4,000,000
4,000,000 Associates First Capital Corp.
5.282%, 12/09/98.............. 4,000,000
5,000,000 Prudential Funding Corp.
5.095%, 12/09/98.............. 5,000,000
4,000,000 International Lease Finance Corp.
5.244%, 12/10/98 (A).......... 3,977,467
5,000,000 American General Finance
5.106%, 12/11/98.............. 5,000,000
4,000,000 Household Finance Corp.
5.250%, 12/11/98.............. 4,000,000
5,000,000 Norwest Financial, Inc.
5.163%, 12/14/98.............. 5,000,000
5,000,000 American Express Credit Corp.
5.085%, 12/15/98.............. 5,000,000
7,400,000 General Motors Acceptance Corp.
5.112%, 01/04/99.............. 7,400,000
6,000,000 Baxter International, Inc.
5.313%, 01/05/99 (A).......... 5,943,125
4,300,000 Hertz Corp.
5.148%, 01/07/99 (A).......... 4,259,266
3,280,000 International Lease Finance Corp.
5.390%, 01/08/99 (A).......... 3,247,164
7,700,000 Toyota Motor Credit Corp.
5.110%, 01/08/99 (A).......... 7,626,551
9,000,000 Household Finance Corp.
5.113%, 01/13/99.............. 9,000,000
7,000,000 General Motors Acceptance Corp.
5.104%, 01/14/99.............. 7,000,000
4,400,000 Heller Financial, Inc.
5.316%, 01/15/99.............. 4,400,000
3,600,000 Hertz Corp.
5.144%, 01/19/99 (A).......... 3,559,868
6,000,000 International Lease Finance Corp.
5.076%, 01/22/99 (A).......... 5,931,530
-----------
TOTAL COMMERCIAL PAPER 268,655,950
(Cost $268,655,950) -----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
29
<PAGE>
ALLEGHANY FUNDS
CHICAGO TRUST MONEY MARKET FUND
SCHEDULE OF INVESTMENTS - CONTINUED OCTOBER 31, 1998
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Amortized
Par Value Cost
- --------- ----
<S> <C>
GIC WITHIN FUNDING AGREEMENT - 3.55%
$ 10,000,000 Allstate Life Funding Agreement GIC
5.757%, 12/01/98................... $ 10,000,000
-------------
TOTAL GIC WITHIN
FUNDING AGREEMENT.................. 10,000,000
(Cost $10,000,000) -------------
REPURCHASE AGREEMENT - 1.15%
3,236,000 First Chicago
5.200%, dated 10/30/98 to be repurchased
on 11/02/98 at $3,237,402
(Collateralized by U.S. Treasury Bill
4.000%, due 10/14/99)
Total Par $3,435,000.................. 3,236,000
-------------
TOTAL REPURCHASE AGREEMENT............ 3,236,000
(Cost $3,236,000) -------------
TOTAL INVESTMENTS - 100.18%......................... 281,891,950
(Cost $281,891,950)* -------------
LIABILITIES NET OF CASH AND OTHER ASSETS - (0.18%).. (502,656)
-------------
NET ASSETS - 100.00% $281,389,294
-------------
-------------
</TABLE>
- ----------
(A) Annualized yield at time of purchase
* At October 31, 1998, cost is identical for book and Federal income tax
purposes.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
30
<PAGE>
This page intentionally left blank.
31
<PAGE>
ALLEGHANY FUNDS
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1998
- ----------------------------------------------------------------------------
<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......................... $ 1,499,700,738 $ 222,034,138 $ 21,463,727 $ 159,853,152
Repurchase agreements....................... -- 21,355,000 -- 7,454,000
Net unrealized appreciation................. 256,348,235 124,384,493 1,267,731 50,116,427
------------------ ------------------ ------------------ ------------------
Total investments at value.................. 1,756,048,973 367,773,631 22,731,458 217,423,579
Cash.......................................... -- 33,107 -- --
Receivables:
Dividends and interest...................... 1,260,078 113,725 13,365 1,224,485
Fund shares sold............................ 4,223,821 200,767 42,271 117,155
Investments sold............................ -- -- -- 1,073,465
Due from Advisor, net....................... -- -- -- --
Deferred organization costs................... 3,338 577 2,944 2,634
Other assets.................................. 36,191 35,860 86 559
------------------ ------------------ ------------------ ------------------
Total assets.............................. 1,761,572,401 368,157,667 22,790,124 219,841,877
------------------ ------------------ ------------------ ------------------
LIABILITIES:
Payables:
Bank overdraft.............................. 63,164 -- 10 2,400
Dividend distribution ...................... -- -- -- --
Investments purchased....................... 16,556,586 -- -- --
Fund shares redeemed........................ 983,007 160,645 88 115,467
Due to Advisor, net......................... 793,778 200,937 10,525 124,534
Distribution fee............................ -- 60,189 29,878 180,676
Trustees fee................................ 3,616 1,454 911 1,221
Accrued expenses and other payables........... 393,743 68,000 21,020 56,037
------------------ ------------------ ------------------ ------------------
Total liabilities......................... 18,793,894 491,225 62,432 480,335
------------------ ------------------ ------------------ ------------------
NET ASSETS....................................... $ 1,742,778,507 $ 367,666,442 $ 22,727,692 $ 219,361,542
------------------ ------------------ ------------------ ------------------
------------------ ------------------ ------------------ ------------------
NET ASSETS CONSIST OF:
Capital paid-in............................... $ 1,422,549,988 $ 220,003,494 $ 21,765,149 $ 155,556,778
Accumulated undistributed (distribution
in excess of) net investment income (loss).. -- -- 3,805 693,191
Accumulated net realized gain (loss)
on investments.............................. 63,880,284 23,278,455 (308,993) 12,995,146
Net unrealized appreciation
on investments.............................. 256,348,235 124,384,493 1,267,731 50,116,427
------------------ ------------------ ------------------ ------------------
TOTAL NET ASSETS................................. $ 1,742,778,507 $ 367,666,442 $ 22,727,692 $ 219,361,542
------------------ ------------------ ------------------ ------------------
------------------ ------------------ ------------------ ------------------
SHARES OF BENEFICIAL INTEREST OUTSTANDING........ 65,621,107 15,946,790 1,726,652 18,230,280
NET ASSET VALUE
Offering and redemption price per share
(Net Assets/Shares Outstanding)............... (A) $ 23.06 $ 13.16 $ 12.03
------------------ ------------------ ------------------ ------------------
------------------ ------------------ ------------------ ------------------
</TABLE>
- ----------
(A) Montag & Caldwell Growth Fund Class N (Retail):
Net Asset Value, offering price and redemption price per share (Based on
net assets of $1,004,355,405 and 37,909,987 shares issued and outstanding)
$26.49
Montag & Caldwell Growth Fund Class I (Institutional):
Net Asset Value, offering price and redemption price per share (Based on
net assets of $738,423,102 and 27,711,120 shares issued and outstanding)
$26.65
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
32
<PAGE>
<TABLE>
<CAPTION>
CHICAGO TRUST CHICAGO TRUST
MONTAG & CALDWELL CHICAGO TRUST MUNICIPAL BOND MONEY MARKET
BALANCED FUND BOND FUND FUND FUND
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C>
$ 139,967,661 $ 144,316,071 $ 12,869,117 $ 278,655,950
-- 9,753,000 -- 3,236,000
17,517,993 3,461,293 495,151 --
------------------ ------------------ ------------------ ------------------
157,485,654 157,530,364 13,364,268 281,891,950
531 -- 504 1,015
1,056,695 2,182,183 204,791 613,221
192,364 201,533 -- 98,504
-- 1,073,465 -- --
-- -- 7,051 --
3,337 577 577 577
260 381 37 754
------------------ ------------------ ------------------ ------------------
158,738,841 160,988,503 13,577,228 282,606,021
------------------ ------------------ ------------------ ------------------
-- 3,403 -- --
-- -- -- 1,065,122
-- -- 298,499 --
200,606 143,379 -- 20,126
80,549 54,171 -- 94,551
-- 199,836 52,462 --
1,124 1,128 896 1,318
58,214 25,366 15,463 35,610
------------------ ------------------ ------------------ ------------------
340,493 427,283 367,320 1,216,727
------------------ ------------------ ------------------ ------------------
$ 158,398,348 $ 160,561,220 $ 13,209,908 $ 281,389,294
------------------ ------------------ ------------------ ------------------
------------------ ------------------ ------------------ ------------------
$ 131,995,888 $ 155,978,487 $ 12,722,879 $ 281,389,294
351,445 412,661 26,603 --
8,533,022 708,779 (34,725) --
17,517,993 3,461,293 495,151 --
------------------ ------------------ ------------------ ------------------
$ 158,398,348 $ 160,561,220 $ 13,209,908 $ 281,389,294
------------------ ------------------ ------------------ ------------------
------------------ ------------------ ------------------ ------------------
8,997,568 15,636,666 1,274,844 281,389,294
$ 17.60 $ 10.27 $ 10.36 $ 1.00
------------------ ------------------ ------------------ ------------------
------------------ ------------------ ------------------ ------------------
</TABLE>
33
<PAGE>
ALLEGHANY FUNDS
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<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................................... $ 9,082,746 $ 2,460,911 $ 178,745 $ 979,385
Interest.................................... 2,602,662 757,761 316,698 6,034,686
----------------- ------------------ ------------------ ------------------
Total investment income................... 11,685,408 3,218,672 495,443 7,014,071
----------------- ------------------ ------------------ ------------------
EXPENSES:
Investment advisory fees.................... 9,438,160 2,312,832 224,933 1,453,465
Distribution expenses....................... 1,942,143 826,012 70,291 519,095
Transfer agent fees......................... 336,495 89,857 37,304 22,245
Administration fees......................... 741,210 191,695 18,106 131,063
Registration expenses....................... 311,084 29,781 15,326 18,569
Custodian fees.............................. 23,727 19,795 12,594 22,983
Professional fees........................... 72,728 27,943 17,009 24,340
Amortization of organization costs.......... 3,332 4,997 3,333 1,402
Reports to shareowner expense............... 53,172 15,357 1,247 9,714
Trustees fees............................... 6,663 4,501 3,958 4,268
Other expenses.............................. 178,798 43,349 5,642 36,403
----------------- ------------------ ------------------ ------------------
Total expenses............................ 13,107,512 3,566,119 409,743 2,243,547
----------------- ------------------ ------------------ ------------------
Expenses waived/reimbursed................ -- -- (43,706) --
----------------- ------------------ ------------------ ------------------
Net expenses.............................. 13,107,512 3,566,119 366,037 2,243,547
----------------- ------------------ ------------------ ------------------
NET INVESTMENT INCOME (LOSS).................. (1,422,104) (347,447) 129,406 4,770,524
----------------- ------------------ ------------------ ------------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS :
Net realized gain (loss) on investments
(including a net realized (loss) on option
transactions of ($96,126) in the Talon Fund) 63,978,484 23,413,427 (152,152) 13,005,184
Net change in unrealized appreciation
(depreciation) on investments............. 109,207,399 47,348,240 (2,860,775) 16,518,248
----------------- ------------------ ------------------ ------------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS................ 173,185,883 70,761,667 (3,012,927) 29,523,432
----------------- ------------------ ------------------ ------------------
NET INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS...................... $ 171,763,779 $ 70,414,220 $ (2,883,521) $ 34,293,956
----------------- ------------------ ------------------ ------------------
----------------- ------------------ ------------------ ------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
34
<PAGE>
<TABLE>
<CAPTION>
CHICAGO TRUST CHICAGO TRUST
MONTAG & CALDWELL CHICAGO TRUST MUNICIPAL BOND MONEY MARKET
BALANCED FUND BOND FUND FUND FUND
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C>
$ 578,855 $ -- $ -- $ --
3,119,261 9,088,167 606,663 14,477,508
------------------ ------------------ ------------------ ------------------
3,698,116 9,088,167 606,663 14,477,508
------------------ ------------------ ------------------ ------------------
971,351 740,845 78,556 1,026,684
323,784 336,748 19,294 --
33,951 24,946 19,247 34,677
80,312 87,388 12,164 148,930
36,201 26,149 15,116 28,724
19,054 21,980 10,770 21,898
21,522 21,935 17,624 27,124
3,332 4,997 4,997 4,997
6,324 6,816 621 13,176
4,171 4,175 3,943 4,365
30,554 18,256 2,430 31,000
------------------ ------------------ ------------------ ------------------
1,530,556 1,294,235 184,762 1,341,575
------------------ ------------------ ------------------ ------------------
-- (217,546) (138,689) (24,492)
------------------ ------------------ ------------------ ------------------
1,530,556 1,076,689 46,073 1,317,083
------------------ ------------------ ------------------ ------------------
2,167,560 8,011,478 560,590 13,160,425
------------------ ------------------ ------------------ ------------------
8,565,876 720,844 56,385 --
5,973,930 629,065 175,662 --
------------------ ------------------ ------------------ ------------------
14,539,806 1,349,909 232,047 --
------------------ ------------------ ------------------ ------------------
$ 16,707,366 $ 9,361,387 $ 792,637 $ 13,160,425
------------------ ------------------ ------------------ ------------------
------------------ ------------------ ------------------ ------------------
</TABLE>
35
<PAGE>
ALLEGHANY FUNDS
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONTAG & CALDWELL CHICAGO TRUST
GROWTH FUND GROWTH & INCOME FUND
--------------------------------- ---------------------------------
YEARS ENDED OCTOBER 31, YEARS ENDED OCTOBER 31,
1998 1997 1998 1997
---------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C>
NET ASSETS AT BEGINNING OF PERIOD $ 748,418,166 $ 218,649,895 $ 274,607,907 $ 205,133,317
---------------- --------------- --------------- ----------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) (1,422,104) (1,327,085) (347,447) 1,018,470
Net realized gain (loss) on investments sold
and purchased options transactions 63,978,484 8,570,687 23,413,427 19,177,699
Net change in unrealized appreciation (depreciation)
on investments and assets
and liabilities in purchased options 109,207,399 114,427,550 47,348,240 33,416,450
---------------- --------------- --------------- ----------------
Net increase (decrease) in net assets
from operations 171,763,779 121,671,152 70,414,220 53,612,619
---------------- --------------- --------------- ----------------
DISTRIBUTIONS TO SHAREOWNERS:
From and in excess of net investment income:
Retail Class -- -- (23,963) (1,152,026)
Institutional Class -- (26,630) -- --
From realized gain on investments:
Retail Class (4,750,066) (1,466,613) (19,283,609) (4,334,020)
Institutional Class (2,772,360) (412,803) -- --
Return of Capital -- -- (30,652) --
---------------- --------------- --------------- ----------------
Total distributions (7,522,426) (1,906,046) (19,338,224) (5,486,046)
---------------- --------------- --------------- ----------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares:
Retail Class 735,037,158 339,687,434 84,420,291 50,803,893
Institutional Class 510,661,778 228,296,239 -- --
Issued to shareowners in reinvestment of distributions:
Retail Class 4,476,035 1,404,998 19,000,003 5,404,887
Institutional Class 2,260,596 396,515 -- --
Cost of shares repurchased:
Retail Class (318,089,688) (115,055,486) (61,437,755) (34,860,763)
Institutional Class (104,226,891) (44,726,535) -- --
---------------- --------------- --------------- ----------------
Net increase from capital
share transactions 830,118,988 410,003,165 41,982,539 21,348,017
---------------- --------------- --------------- ----------------
Total increase (decrease) in net assets 994,360,341 529,768,271 93,058,535 69,474,590
---------------- --------------- --------------- ----------------
NET ASSETS AT END OF PERIOD (INCLUDING LINE A) $ 1,742,778,507 $ 748,418,166 $ 367,666,442 $ 274,607,907
---------------- --------------- --------------- ----------------
---------------- --------------- --------------- ----------------
(A) Undistributed net investment income $ -- $ -- $ -- $ --
---------------- --------------- --------------- ----------------
OTHER INFORMATION:
SHARE TRANSACTIONS:
Retail Class:
Sold 28,902,833 16,692,907 3,911,120 2,806,114
Issued to shareowner in reinvestment
of distributions 198,582 79,785 1,006,991 326,567
Repurchased (12,333,539) (5,364,133) (2,888,977) (1,902,988)
Institutional Class:
Sold 19,881,332 10,833,116 -- --
Issued to shareowner in reinvestment
of distributions 99,938 22,316 -- --
Repurchased (4,087,111) (2,106,489) -- --
---------------- --------------- --------------- ----------------
Net increase in shares outstanding 32,662,035 20,157,502 2,029,134 1,229,693
---------------- --------------- --------------- ----------------
---------------- --------------- --------------- ----------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
36
<PAGE>
<TABLE>
<CAPTION>
CHICAGO TRUST CHICAGO TRUST
TALON FUND BALANCED FUND
--------------------------------- ---------------------------------
YEARS ENDED OCTOBER 31, YEARS ENDED OCTOBER 31,
1998 1997 1998 1997
--------------- ---------------- ---------------- ---------------
<S> <C> <C> <C>
$ 28,459,583 $ 17,417,675 $ 187,993,337 $ 156,703,443
--------------- ---------------- ---------------- ---------------
129,406 162,715 4,770,524 4,843,563
(152,152) 4,497,850 13,005,184 11,378,927
(2,860,775) 1,618,377 16,518,248 15,462,457
--------------- ---------------- ---------------- ---------------
(2,883,521) 6,278,942 34,293,956 31,684,947
--------------- ---------------- ---------------- ---------------
(163,813) (134,407) (4,710,584) (4,764,936)
-- -- -- --
(4,653,292) (1,458,660) (11,401,639) (2,253,139)
-- -- -- --
-- -- -- --
--------------- ---------------- ---------------- ---------------
(4,817,105) (1,593,067) (16,112,223) (7,018,075)
--------------- ---------------- ---------------- ---------------
6,908,329 6,345,104 36,882,800 28,395,564
-- -- -- --
4,757,368 1,577,255 16,106,383 7,017,789
-- -- -- --
(9,696,962) (1,566,326) (39,802,711) (28,790,331)
-- -- -- --
--------------- ---------------- ---------------- ---------------
1,968,735 6,356,033 13,186,472 6,623,022
--------------- ---------------- ---------------- ---------------
(5,731,891) 11,041,908 31,368,205 31,289,894
--------------- ---------------- ---------------- ---------------
$ 22,727,692 $ 28,459,583 $ 219,361,542 $ 187,993,337
--------------- ---------------- ---------------- ---------------
--------------- ---------------- ---------------- ---------------
$ 3,805 $ 37,253 $ 693,191 $ 624,636
--------------- ---------------- ---------------- ---------------
451,934 397,032 3,317,900 2,757,711
318,839 107,919 1,398,337 699,716
(661,255) (97,875) (3,485,565) (2,774,505)
-- -- -- --
-- -- -- --
-- -- -- --
--------------- ---------------- ---------------- ---------------
109,518 407,076 1,230,672 682,922
--------------- ---------------- ---------------- ---------------
--------------- ---------------- ---------------- ---------------
</TABLE>
37
<PAGE>
ALLEGHANY FUNDS
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED) OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONTAG & CALDWELL CHICAGO TRUST
BALANCED FUND BOND FUND
--------------------------------- ---------------------------------
YEARS ENDED OCTOBER 31, YEARS ENDED OCTOBER 31,
1998 1997 1998 1997
---------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C>
NET ASSETS AT BEGINNING OF PERIOD................. $ 82,719,053 $ 31,472,671 $ 120,532,177 $ 79,210,728
---------------- --------------- --------------- ----------------
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income.......................... 2,167,560 952,704 8,011,478 6,243,541
Net realized gain (loss) on investments sold... 8,565,876 2,102,297 720,844 (36,729)
Net change in unrealized appreciation
of investments............................... 5,973,930 7,581,239 629,065 2,754,254
---------------- --------------- --------------- ----------------
Net increase in net assets
from operations.............................. 16,707,366 10,636,240 9,361,387 8,961,066
---------------- --------------- --------------- ----------------
DISTRIBUTIONS TO SHAREOWNERS FROM:
Net investment income.......................... (2,001,366) (837,377) (8,038,190) (6,043,358)
Net realized gain on investments............... (2,095,351) (2,702,590) -- (16,748)
---------------- --------------- --------------- ----------------
Total distributions.......................... (4,096,717) (3,539,967) (8,038,190) (6,060,106)
---------------- --------------- --------------- ----------------
CAPITAL SHARE TRANSACTIONS:
Net proceeds from sales of shares.............. 101,273,482 58,631,470 75,297,016 46,817,358
Issued to shareowners in
reinvestment of distributions................ 3,950,066 3,490,623 6,689,047 4,797,389
Cost of shares repurchased..................... (42,154,902) (17,971,984) (43,280,217) (13,194,258)
---------------- --------------- --------------- ----------------
Net increase from
capital share transactions................ 63,068,646 44,150,109 38,705,846 38,420,489
---------------- --------------- --------------- ----------------
Total increase in net assets............... 75,679,295 51,246,382 40,029,043 41,321,449
---------------- --------------- --------------- ----------------
NET ASSETS AT END OF PERIOD (INCLUDING LINE A).... $ 158,398,348 $ 82,719,053 $ 160,561,220 $ 120,532,177
---------------- --------------- --------------- ----------------
---------------- --------------- --------------- ----------------
(A) Undistributed net investment income........... $ 351,445 $ 185,563 $ 412,661 $ 452,597
---------------- --------------- --------------- ----------------
OTHER INFORMATION:
SHARE TRANSACTIONS:
Sold......................................... 6,029,088 3,939,135 7,333,221 4,734,805
Issued to shareholders in reinvestment
of distributions........................... 244,553 255,726 656,919 485,679
Repurchased.................................. (2,443,871) (1,229,194) (4,247,776) (1,334,065)
---------------- --------------- --------------- ----------------
Net increase in shares outstanding......... 3,829,770 2,965,667 3,742,364 3,886,419
---------------- --------------- --------------- ----------------
---------------- --------------- --------------- ----------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
38
<PAGE>
<TABLE>
<CAPTION>
CHICAGO TRUST CHICAGO TRUST
MUNICIPAL BOND FUND MONEY MARKET FUND
--------------------------------- ---------------------------------
Years Ended October 31, Years Ended October 31,
1998 1997 1998 1997
--------------- ---------------- ---------------- ---------------
<S> <C> <C> <C>
$ 12,379,208 $ 11,186,162 $ 238,551,474 $ 226,535,616
--------------- ---------------- ---------------- ---------------
560,590 430,579 13,160,425 12,701,010
56,385 6,147 -- --
175,662 140,720 -- --
--------------- ---------------- ---------------- ---------------
792,637 577,446 13,160,425 12,701,010
--------------- ---------------- ---------------- ---------------
(561,443) (426,993) (13,160,425) (12,701,010)
-- -- -- --
--------------- ---------------- ---------------- ---------------
(561,443) (426,993) (13,160,425) (12,701,010)
--------------- ---------------- ---------------- ---------------
10,749,139 1,375,126 720,702,583 569,551,234
42,390 21,748 816,231 434,377
(10,192,023) (354,281) (678,680,994) (557,969,753)
--------------- ---------------- ---------------- ---------------
599,506 1,042,593 42,837,820 12,015,858
--------------- ---------------- ---------------- ---------------
830,700 1,193,046 42,837,820 12,015,858
--------------- ---------------- ---------------- ---------------
$ 13,209,908 $ 12,379,208 $ 281,389,294 $ 238,551,474
--------------- ---------------- ---------------- ---------------
--------------- ---------------- ---------------- ---------------
$ 26,603 $ 27,456 $ -- $ --
--------------- ---------------- ---------------- ---------------
1,049,531 135,835 720,702,583 569,551,234
4,135 2,159 816,231 434,377
(994,156) (35,025) (678,680,994) (557,969,753)
--------------- ---------------- ---------------- ---------------
59,510 102,969 42,837,820 12,015,858
--------------- ---------------- ---------------- ---------------
--------------- ---------------- ---------------- ---------------
</TABLE>
39
<PAGE>
ALLEGHANY FUNDS
FINANCIAL HIGHLIGHTS OCTOBER 31, 1998
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONTAG & CALDWELL GROWTH FUND
---------------------------------------------------------------------
RETAIL CLASS
---------------------------------------------------------------------
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
10/31/98 10/31/97 10/31/96 10/31/95(a)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ................. $ 22.68 $ 17.08 $ 13.16 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .................... (0.05) (0.05) -- 0.02
Net realized and unrealized gain
on investments ................................ 4.07 5.79 3.93 3.16
---------------- ------------ ----------- -----------
Total from investment operations .............. 4.02 5.74 3.93 3.18
---------------- ------------ ----------- -----------
LESS DISTRIBUTIONS:
Distributions from and in excess
of net investment income ...................... -- -- (0.01) (0.02)
Distributions from net realized
gain on investments ........................... (0.21) (0.14) -- --
---------------- ------------ ----------- -----------
Total distributions ........................... (0.21) (0.14) (0.01) (0.02)
---------------- ------------ ----------- -----------
Net increase in net asset value ...................... 3.81 5.60 3.92 3.16
---------------- ------------ ----------- -----------
Net Asset Value, End of Period ....................... $ 26.49 $ 22.68 $ 17.08 $ 13.16
---------------- ------------ ----------- -----------
---------------- ------------ ----------- -----------
TOTAL RETURN ......................................... 17.90% 33.82% 29.91% 31.87%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000's) ................. $ 1,004,356 $ 479,557 $ 166,243 $ 40,355
Ratios of expenses to average net assets:
Before reimbursement of expenses
by Advisor(1)..................................... 1.12% 1.24% 1.32% 1.87%
After reimbursement of expenses
by Advisor(1)..................................... 1.12% 1.23% 1.28% 1.30%
Ratios of net investment income to average net assets:
Before reimbursement of expenses
by Advisor(1)..................................... (0.22)% (0.38)% (0.10)% (0.36)%
After reimbursement of expenses
by Advisor(1)..................................... (0.22)% (0.37)% (0.06)% 0.20%
Portfolio Turnover(1).................................. 29.81% 18.65% 26.36% 34.46%
</TABLE>
- ---------------------------------------------------
(1) Annualized.
(a) Montag & Caldwell Growth Fund Retail Class commenced investment operations
on November 2, 1994.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
40
<PAGE>
ALLEGHANY FUNDS
FINANCIAL HIGHLIGHTS OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONTAG & CALDWELL GROWTH FUND
-----------------------------------------------------------
INSTITUTIONAL CLASS
-----------------------------------------------------------
YEAR YEAR PERIOD
ENDED ENDED ENDED
10/31/98 10/31/97 10/31/96(a)
-------------- -------------- --------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period.............. $ 22.75 $ 17.08 $ 15.59
INCOME FROM INVESTMENT OPERATIONS:
Net investment income........................ 0.01 -- 0.02
Net realized and unrealized gain
on investments............................. 4.10 5.81 1.49
-------------- ---------------- -----------------
Total from investment operations........... 4.11 5.81 1.51
-------------- ---------------- -----------------
LESS DISTRIBUTIONS:
Distributions from and in excess
of net investment income................... -- -- (0.02)
Distributions from net realized
gain on investments........................ (0.21) (0.14) --
-------------- ---------------- -----------------
Total distributions...................... (0.21) (0.14) (0.02)
-------------- ---------------- -----------------
Net increase in net asset value................... 3.90 5.67 1.49
-------------- ---------------- -----------------
Net Asset Value, End of Period.................... $ 26.65 $ 22.75 $ 17.08
-------------- ---------------- -----------------
-------------- ---------------- -----------------
TOTAL RETURN...................................... 18.24% 34.26% 9.67%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000's).............. $ 738,423 $ 268,861 $ 52,407
Ratios of expenses to average net assets:
Before reimbursement of expenses
by Advisor(1)................................ 0.85% 0.93% 0.98%
After reimbursement of expenses
by Advisor(1)................................ 0.85% 0.93% 0.98%
Ratios of net investment income to average net assets:
Before reimbursement of expenses
by Advisor(1)................................ 0.05% (0.07)% 0.17%
After reimbursement of expenses
by Advisor(1)................................ 0.05% (0.06)% 0.17%
Portfolio Turnover(1)............................. 29.81% 18.65% 26.36%
</TABLE>
- ----------------------------------------------------
(1) Annualized.
(a) Montag & Caldwell Growth Fund Institutional Class commenced investment
operations on June 28, 1996.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
41
<PAGE>
ALLEGHANY FUNDS
FINANCIAL HIGHLIGHTS OCTOBER 31, 1998
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CHICAGO TRUST GROWTH & INCOME FUND
--------------------------------------------------------------------------
YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
10/31/98 10/31/97 10/31/96 10/31/95 10/31/94(a)
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ................... $ 19.73 $ 16.17 $ 12.90 $ 10.11 $ 10.00
INCOME FROM INVESTMENT OPERATIONS: ----------- ----------- ----------- ----------- -----------
Net investment income (loss) ...................... (0.02) 0.08 0.11 0.09 0.07
Net realized and unrealized gain
on investments .................................. 4.73 3.91 3.34 2.79 0.10
----------- ----------- ----------- ----------- ------------
Total from investment operations .............. 4.71 3.99 3.45 2.88 0.17
----------- ----------- ----------- ----------- ------------
LESS DISTRIBUTIONS:
Distributions from and in excess of net
investment income ............................... (0.01) (0.09) (0.11) (0.09) (0.06)
Distributions from net realized gain on investments (1.37) (0.34) (0.07) -- --
----------- ----------- ----------- ----------- ------------
Total distributions ........................... (1.38) (0.43) (0.18) (0.09) (0.06)
----------- ----------- ----------- ----------- ------------
Net increase in net asset value ........................ 3.33 3.56 3.27 2.79 0.11
----------- ----------- ----------- ----------- ------------
Net Asset Value, End of Period ......................... $ 23.06 $ 19.73 $ 16.17 $ 12.90 $ 10.11
----------- ----------- ----------- ----------- ------------
----------- ----------- ----------- ----------- ------------
TOTAL RETURN ........................................... 25.43% 25.16% 26.98% 28.66% 1.73%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000's).................... $ 367,666 $ 274,608 $ 205,133 $ 172,296 $ 12,282
Ratios of expenses to average net assets:
Before reimbursement of expenses
by Advisor(1)....................................... 1.08% 1.12% 1.15% 1.50% 2.21%
After reimbursement of expenses
by Advisor(1)....................................... 1.08% 1.07%(2) 1.00% 1.09%(3) 1.20%
Ratios of net investment income to average net assets:
Before reimbursement of expenses
by Advisor(1)....................................... (0.11)% 0.36% 0.62% 0.33% (0.15)%
After reimbursement of expenses
by Advisor(1)....................................... (0.11)% 0.41% 0.77% 0.74% 0.86%
Portfolio Turnover(1)................................... 34.21% 30.58% 25.48% 9.00% 37.01%
</TABLE>
- -------------------------------------------
(1) Annualized.
(2) The Advisor's expense reimbursement level, which affects the net expense
ratio, changed from 1.00% to 1.10% on February 28, 1997.
(3) 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.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
42
<PAGE>
ALLEGHANY FUNDS
FINANCIAL HIGHLIGHTS OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CHICAGO TRUST TALON FUND
-------------------------------------------------------------------
YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
10/31/98 10/31/97 10/31/96 10/31/95 10/31/94(a)
------------ ---------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 17.60 $ 14.39 $ 12.07 $ 10.25 $ 10.00
INCOME FROM INVESTMENT OPERATIONS: ------------ ---------- --------- --------- ---------
Net investment income ............................. 0.07 0.11 0.04 0.09 0.02
Net realized and unrealized gain (loss)
on investments and options ...................... (1.59) 4.38 3.01 1.84 0.23
------------ ---------- --------- --------- ---------
Total from investment operations .............. (1.52) 4.49 3.05 1.93 0.25
------------ ---------- --------- --------- ---------
LESS DISTRIBUTIONS:
Distributions from and in excess of net
investment income and options ................... (0.09) (0.09) (0.03) (0.11) --
Distributions from net realized gain on investments (2.83) (1.19) (0.70) -- --
------------ ---------- --------- --------- ---------
Total distributions ........................... (2.92) (1.28) (0.73) (0.11) --
------------ ---------- --------- --------- ---------
Net increase (decrease) in net asset value ............. (4.44) 3.21 2.32 1.82 0.25
------------ ---------- --------- --------- ---------
Net Asset Value, End of Period.......................... $ 13.16 $ 17.60 $ 14.39 $ 12.07 $ 10.25
------------ ---------- --------- --------- ---------
------------ ---------- --------- --------- ---------
TOTAL RETURN............................................ (10.54)% 33.47% 26.51% 18.92% 2.50%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000's).................... $ 22,728 $ 28,460 $ 17,418 $ 10,538 $ 4,355
Ratios of expenses to average net assets:
Before reimbursement of expenses
by Advisor(1)....................................... 1.46% 1.67% 1.98% 3.04% 7.82%
After reimbursement of expenses
by Advisor(1)....................................... 1.30% 1.30% 1.30% 1.30% 1.30%
Ratios of net investment income to average net assets:
Before reimbursement of expenses
by Advisor(1)....................................... 0.30% 0.34% (0.38)% (0.97)% (4.13)%
After reimbursement of expenses
by Advisor(1)....................................... 0.46% 0.71% 0.30% 0.77% 2.39%
Portfolio Turnover(1)................................... 78.33% 112.72% 126.83% 229.43% 33.66%
</TABLE>
- --------------------------------------------------------------
(1) Annualized.
(a) Chicago Trust Talon Fund commenced investment operations on September 19,
1994.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
43
<PAGE>
ALLEGHANY FUNDS
FINANCIAL HIGHLIGHTS OCTOBER 31, 1998
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CHICAGO TRUST BALANCED FUND
----------------------------------------------------------------
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
10/31/98 10/31/97 10/31/96 10/31/95(a)
------------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ................. $ 11.06 $ 9.60 $ 8.43 $ 8.34
----------- ---------- ----------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ........................... 0.27 0.28 0.27 0.03
Net realized and unrealized gain
on investments ................................ 1.65 1.60 1.16 0.06
----------- ---------- ----------- ----------
Total from investment operations ............ 1.92 1.88 1.43 0.09
----------- ---------- ----------- ----------
LESS DISTRIBUTIONS:
Distributions from and in excess of net
investment income ............................. (0.27) (0.28) (0.26) --
Distributions from net realized gain on
investments ................................... (0.68) (0.14) -- --
----------- ---------- ----------- ----------
Total distributions ......................... (0.95) (0.42) (0.26) --
----------- ---------- ----------- ----------
Net increase in net asset value ...................... 0.97 1.46 1.17 0.09
----------- ---------- ----------- ----------
Net Asset Value, End of Period ....................... $ 12.03 $ 11.06 $ 9.60 $ 8.43
----------- ---------- ----------- ----------
TOTAL RETURN ......................................... 18.50% 20.10% 17.21% 1.08%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000's) ................. $ 219,362 $ 187,993 $ 156,703 $ 152,820
Ratios of expenses to average net assets:
Before reimbursement of expenses
by Advisor(1)..................................... 1.08% 1.13% 1.17% 1.19%
After reimbursement of expenses
by Advisor(1)..................................... 1.08% 1.07%(2) 1.00% 1.00%
Ratios of net investment income to average net assets:
Before reimbursement of expenses
by Advisor(1)..................................... 2.30% 2.70% 2.79% 2.56%
After reimbursement of expenses
by Advisor(1)..................................... 2.30% 2.76% 2.96% 2.73%
Portfolio Turnover(1)................................. 40.28% 34.69% 34.29% 0.72%
</TABLE>
- --------------------------------------------------
(1) Annualized.
(2) 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.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
44
<PAGE>
ALLEGHANY FUNDS
FINANCIAL HIGHLIGHTS OCTOBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONTAG & CALDWELL BALANCED FUND
--------------------------------------------------------------------
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
10/31/98 10/31/97 10/31/96 10/31/95(a)
---------- -------- ---------- ------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.............. $ 16.01 $ 14.29 $ 12.12 $ 10.00
-------------- -------------- -------------- --------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income........................ 0.27 0.25 0.27 0.26
Net realized and unrealized gain
on investments............................. 1.97 2.93 2.17 2.09
-------------- -------------- -------------- --------------
Total from investment operations......... 2.24 3.18 2.44 2.35
-------------- -------------- -------------- --------------
LESS DISTRIBUTIONS:
Distributions from and in excess of net
investment income.......................... (0.27) (0.25) (0.27) (0.23)
Distributions from net realized gain on
investments................................ (0.38) (1.21) -- --
-------------- -------------- -------------- --------------
Total distributions...................... (0.65) (1.46) (0.27) (0.23)
-------------- -------------- -------------- --------------
Net increase in net asset value................... 1.59 1.72 2.17 2.12
-------------- -------------- -------------- --------------
Net Asset Value, End of Period.................... $ 17.60 $ 16.01 $ 14.29 $ 12.12
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
TOTAL RETURN...................................... 14.46% 24.26% 20.37% 23.75%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000's).............. $ 158,398 $ 82,719 $ 31,473 $ 21,908
Ratios of expenses to average net assets:
Before reimbursement of expenses
by Advisor(1)................................. 1.18% 1.33% 1.58% 2.50%
After reimbursement of expenses
by Advisor(1)................................. 1.18% 1.25% 1.25% 1.25%
Ratios of net investment income to average net assets:
Before reimbursement of expenses
by Advisor(1)................................. 1.67% 1.70% 1.83% 1.38%
After reimbursement of expenses
by Advisor(1)................................. 1.67% 1.78% 2.16% 2.63%
Portfolio Turnover(1)............................. 59.02% 28.13% 43.58% 27.33%
</TABLE>
- ------------------------------------------------------------------
(1) Annualized.
(a) Montag & Caldwell Balanced Fund commenced investment operations on November
2, 1994.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
45
<PAGE>
ALLEGHANY FUNDS
FINANCIAL HIGHLIGHTS OCTOBER 31, 1998
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CHICAGO TRUST BOND FUND
-----------------------------------------------------------------------
YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
10/31/98 10/31/97 10/31/96 10/31/95 10/31/94(a)
----------- ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ................. $ 10.13 $ 9.89 $ 9.94 $ 9.21 $ 10.00
----------- ----------- ------------ ------------ -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ........................... 0.60 0.61 0.60 0.60 0.50
Net realized and unrealized gain (loss)
on investments ................................ 0.15 0.23 (0.05) 0.73 (082)
----------- ----------- ------------ ------------ -----------
Total from investment operations ............ 0.75 0.84 0.55 1.33 (0.32)
----------- ----------- ------------ ------------ -----------
LESS DISTRIBUTIONS FROM AND IN EXCESS
OF NET INVESTMENT INCOME ........................ (0.61) (0.60) (0.60) (0.60) (0.47)
----------- ----------- ------------ ------------ -----------
Net increase (decrease) in net asset value ........... 0.14 0.24 (0.05) 0.73 (0.79)
----------- ----------- ------------ ------------ -----------
Net Asset Value, End of Period ....................... $ 10.27 $10.13 $9.89 $9.94 $ 9.21
----------- ----------- ------------ ------------ -----------
----------- ----------- ------------ ------------ -----------
TOTAL RETURN ......................................... 7.66% 8.84% 5.76% 14.89% (3.23)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000's) ................. $ 160,561 $ 120,532 $ 79,211 $ 70,490 $ 12,546
Ratios of expenses to average net assets:
Before reimbursement of expenses
by Advisor(1)..................................... 0.96% 1.02% 1.10% 1.54% 2.02%
After reimbursement of expenses
by Advisor(1)..................................... 0.80% 0.80% 0.80% 0.80% 0.80%
Ratios of net investment income to average net assets:
Before reimbursement of expenses
by Advisor(1)..................................... 5.79% 6.02% 5.89% 5.78% 4.83%
After reimbursement of expenses
by Advisor(1)..................................... 5.95% 6.24% 6.19% 6.52% 6.05%
Portfolio Turnover(1)................................. 45.29% 17.76% 41.75% 68.24% 20.73%
</TABLE>
- --------------------------------------------------
(1) Annualized.
(a) Chicago Trust Bond Fund commenced investment operations on December 13,
1993.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
46
<PAGE>
ALLEGHANY FUNDS
FINANCIAL HIGHLIGHTS OCTOBER 31, 1998
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CHICAGO TRUST MUNICIPAL BOND FUND
---------------------------------------------------------------------------
YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
10/31/98 10/31/97 10/31/96 10/31/95 10/31/94(a)
--------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ................. $ 10.19 $ 10.06 $ 10.08 $ 9.56 $ 10.00
------------- ----------- ------------- ---------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ........................... 0.44 0.38 0.38 0.35 0.27
Net realized and unrealized gain (loss)
on investments ................................ 0.17 0.12 (0.02) 0.52 (0.46)
------------- ----------- ------------- ---------- -----------
Total from investment operations ............ 0.61 0.50 0.36 0.87 (0.19)
------------- ----------- ------------- ---------- -----------
LESS DISTRIBUTIONS FROM AND IN EXCESS
OF NET INVESTMENT INCOME ........................ (0.44) (0.37) (0.38) (0.35) (0.25)
------------- ----------- ------------- ---------- -----------
Net increase (decrease) in net asset value ........... 0.17 0.13 (0.02) 0.52 (0.44)
------------- ----------- ------------- ---------- -----------
Net Asset Value, End of Period ....................... $ 10.36 $ 10.19 $ 10.06 $ 10.08 $ 9.56
------------- ----------- ------------- ---------- -----------
------------- ----------- ------------- ---------- -----------
TOTAL RETURN ......................................... 6.17% 5.13% 3.59% 9.29% (1.92)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000's) ................. $ 13,210 $ 12,379 $ 11,186 $ 11,679 $ 10,462
Ratios of expenses to average net assets:
Before reimbursement of expenses
by Advisor(1)..................................... 1.41% 1.64% 1.53% 2.16% 2.09%
After reimbursement of expenses
by Advisor(1)..................................... 0.35%(2) 0.90% 0.90% 0.90% 0.90%
Ratios of net investment income to average net assets:
Before reimbursement of expenses
by Advisor(1)..................................... 3.22% 3.00% 3.11% 2.37% 1.90%
After reimbursement of expenses
by Advisor(1)..................................... 4.28% 3.74% 3.74% 3.63% 3.09%
Portfolio Turnover(1)................................. 34.33% 16.19% 27.47% 42.81% 14.85%
</TABLE>
- --------------------------------------------------------------------------------
(1) Annualized.
(2) The Advisor's expense reimbursement level, which affects the net expense
ratio, changed from 0.90% to 0.10% on February 27, 1998.
(a) Chicago Trust Municipal Bond Fund commenced investment operations on
December 13, 1993.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
47
<PAGE>
ALLEGHANY FUNDS
FINANCIAL HIGHLIGHTS OCTOBER 31, 1998
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CHICAGO TRUST MONEY MARKET FUND
-----------------------------------------------------------------------
YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
10/31/98 10/31/97 10/31/96 10/31/95 10/31/94(a)
---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ........................... 0.05 0.05 0.05 0.05 0.03
---------- ---------- ---------- ---------- -----------
LESS DISTRIBUTIONS FROM NET INVESTMENT INCOME ..... (0.05) (0.05) (0.05) (0.05) (0.03)
---------- ---------- ---------- ---------- -----------
Net Asset Value, End of Period ....................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- -----------
---------- ---------- ---------- ---------- -----------
TOTAL RETURN ......................................... 5.24% 5.15% 5.14% 5.56% 3.20%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000's) ................. $ 281,389 $ 238,551 $ 226,536 $ 206,075 $ 122,929
Ratios of expenses to average net assets:
Before reimbursement of expenses
by Advisor(1)..................................... 0.52% 0.56% 0.59% 0.63% 0.64%
After reimbursement of expenses
by Advisor(1)..................................... 0.51%(3) 0.50% 0.50% 0.43%(2) 0.40%
Ratios of net investment income to average net assets:
Before reimbursement of expenses
by Advisor(1)..................................... 5.13% 5.00% 4.93% 5.24% 3.49%
After reimbursement of expenses
by Advisor(1)..................................... 5.14% 5.06% 5.02% 5.44% 3.73%
</TABLE>
- --------------------------------------------------
(1) Annualized.
(2) The Advisor's expense reimbursement level, which affects the net expense
ratio, changed from 0.40% to 0.50% on July 12, 1995.
(3) As of February 27, 1998, the Advisor is no longer waiving fees or
reimbursing expenses.
(a) Chicago Trust Money Market Fund commenced investment operations on December
14, 1993.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
48
<PAGE>
ALLEGHANY FUNDS
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1998
- --------------------------------------------------------------------------------
NOTE (A) SIGNIFICANT ACCOUNTING POLICIES: The Alleghany Funds (formerly CT&T
Funds) (the "Company") operate 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 (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 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.
49
<PAGE>
ALLEGHANY FUNDS
NOTES TO FINANCIAL STATEMENTS--CONTINUED OCTOBER 31, 1998
- --------------------------------------------------------------------------------
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, 1998 were as follows:
<TABLE>
<CAPTION>
CONTRACTS PREMIUM
--------- ----------
<S> <C> <C>
Outstanding at October 31, 1997 ............................. 50 $(120,125)
Options purchased (Net) ..................................... -- --
Options exercised or terminated in closing transactions (Net) (50) 120,125
Options expired (Net) ....................................... -- --
--------- ----------
Outstanding at October 31, 1998 ............................. -- $ --
--------- ----------
--------- ----------
</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,
50
<PAGE>
ALLEGHANY FUNDS
NOTES TO FINANCIAL STATEMENTS--CONTINUED OCTOBER 31, 1998
- --------------------------------------------------------------------------------
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 IO 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 as "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, 1998, the losses
amounted to $306,661 for the Talon Fund and $34,725 for the Municipal Bond
Fund, which will expire October 31, 2006 and October 31, 2003, respectively.
Net realized gains or losses may differ for financial and tax reporting
purposes for the M&C Growth Fund, the CT Balanced Fund and the M&C Balanced
Fund primarily as a result of losses from wash sales which are not recognized
for tax purposes until the corresponding shares are sold.
(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 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
51
<PAGE>
ALLEGHANY FUNDS
NOTES TO FINANCIAL STATEMENTS--CONTINUED OCTOBER 31, 1998
- --------------------------------------------------------------------------------
are due to different class expenses. For the year ended October 31, 1998,
100.00% of the income distributions made by the Municipal Bond Fund were exempt
from federal income taxes. Additionally during the year, the Growth Fund, the
Growth & Income Fund, the Talon Fund, the CT Balanced Fund and the M&C Balanced
Fund paid 28% rate gain distributions of $555,907, $2,931,736, $1,211,558,
$1,151,566 and $1,080,213 and 20% rate gain distributions of $6,966,519,
$16,217,422, $1,544,488, $10,250,073 and $730,402, respectively. In January
1999, the Funds will provide tax information to shareowners for the 1998
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
$2,511, $312 and $13,224 were reclassified at October 31, 1998 from accumulated
net realized gain on investments to undistributed net investment income in the
CT Balanced Fund, the M&C Balanced Fund and the Bond Fund, respectively, due to
losses on paydown adjustments from mortgage backed securities. In addition,
permanent book and tax differences in the CT Balanced Fund relating to the sale
of IO securities totaling $11,126 were reclassified from accumulated net
realized gain to undistributed net investment income. Also, permanent book and
tax differences in the Talon Fund relating to the sale of real estate investment
trusts totaling $959 were reclassified from undistributed net investment income
to accumulated net realized gain.
The Growth Fund and the Growth & Income Fund had net operating losses for tax
purposes, net of short-term capital gains, of $1,422,104 and $347,447,
respectively, for the year ended October 31, 1998. In addition, the Growth &
Income Fund made excise tax distributions of $54,615 in December 1997 which
included a return of capital of $30,652. These amounts were reclassified from
undistributed net investment income to capital paid-in as permanent differences
at October 31, 1998.
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 10.50%, 20.84% and
24.86% for the Talon Fund, the CT Balanced 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, 1998, Chicago Trust and its affiliates owned 2,500 shares of the Growth &
Income Fund, 2,500 shares of the Bond Fund and 2,500 shares of the Municipal
Bond Fund.
NOTE (D) INVESTMENT TRANSACTIONS: Aggregate purchases and proceeds from sales of
investment securities (other than short-term investments) for the year ended
October 31, 1998 were:
<TABLE>
<CAPTION>
AGGREGATE PROCEEDS FROM
PURCHASES SALES
--------------- --------------
<S> <C> <C>
GROWTH FUND $ 1,148,411,078 $ 367,441,899
GROWTH & INCOME FUND 123,331,121 107,580,829
TALON FUND 18,040,090 18,786,408
CT BALANCED FUND 85,176,321 79,848,334
M&C BALANCED FUND 134,224,898 73,007,945
BOND FUND 88,481,054 57,769,611
MUNICIPAL BOND FUND 5,258,949 4,335,798
</TABLE>
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% on the first $800,000,000 of average daily net assets and 0.60% of average
daily net assets over $800,000,000 (effective February 27, 1998) 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
52
<PAGE>
ALLEGHANY FUNDS
NOTES TO FINANCIAL STATEMENTS--CONTINUED OCTOBER 31, 1998
- --------------------------------------------------------------------------------
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, and the Municipal Bond Fund for operating expenses which cause total
expenses to exceed 0.98%, 1.30%, 1.10%, 1.30%, 1.10%, 1.25%, 0.80%, and 0.10%,
respectively. Effective February 27, 1998, the expense reimbursement level for
the Municipal Bond Fund changed from 0.90% to 0.10% and the Advisor for the
Money Market Fund will no longer waive fees or reimburse expenses. Expense
reimbursements may be terminated at the discretion of the Advisors. For the year
ended October 31, 1998, the Advisor waived/reimbursed expenses of $43,706 for
the Talon Fund, $217,546 for the Bond Fund, $138,689 for the Municipal Bond Fund
and $24,492 for the Money Market Fund.
First Data Investor Services Group, Inc. ("Investor Services Group") serves 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 ANNUAL FEE AVERAGE DAILY NET ASSETS
DAILY NET ASSETS) AVERAGE 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>
First Data Distributors, Inc. serves 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% (currently, the
Municipal Bond Fund's Rule 12b-1 fee is reduced to 0.10%) of each participating
Fund's average daily net assets. The Growth Fund Institutional Class and the
Money Market Fund do not have distribution plans.
For the year ended October 31, 1998, the class specific expenses of the Growth
Fund were:
<TABLE>
<CAPTION>
CLASS N (RETAIL) CLASS I (INSTITUTIONAL)
---------------- -----------------------
<S> <C> <C>
Transfer agent fees $ 317,202 $ 19,293
Registration expenses 160,248 150,836
Legal fees 26,417 27,811
Reports to shareowner expenses 37,388 15,784
</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, 1998, the Company pays each unaffiliated Trustee $2,000 per
Board of Trustees' meeting attended and an annual retainer of $2,000.
NOTE (F) YEAR 2000 COMPLIANCE (UNAUDITED):
Alleghany Funds (Alleghany) utilizes a number of computer programs across its
entire operation relying on both internal software systems as well as external
software systems provided by third parties. Like other businesses around the
world, Alleghany could be adversely affected if these or other systems are
unable to perform their intended functions effectively after 1999 because of the
systems' inability to distinguish the year 2000 from the year 1900. This is
commonly known as the "Year 2000 problem." Alleghany is taking the steps that it
believes are reasonably designed to address this potential Year 2000 problem and
to obtain satisfactory assurances that comparable steps are being taken by the
Funds' other major service providers. There can be no assurance, however, that
these steps will be sufficient to avoid any adverse impact on the Funds' from
this problem, but we do not anticipate that the move to Year 2000 will have a
material impact on the Funds.
53
<PAGE>
ALLEGHANY FUNDS
NOTES TO FINANCIAL STATEMENTS--CONTINUED OCTOBER 31, 1998
- --------------------------------------------------------------------------------
NOTE (G) SUBSEQUENT EVENTS:
The Company filed a Post-Effective Amendment on August 21, 1998 for the purpose
of adding two new Series to the Trust, Alleghany/Chicago Trust SmallCap Value
Fund and Alleghany/Veredus Aggressive Growth Fund. The filing was effective on
November 4, 1998 and Alleghany/Chicago Trust SmallCap Value Fund commenced
operations on November 10, 1998.
On December 4, 1998, pursuant to an Agreement and Plan of Reorganization, the
assets and liabilities of the Veredus Aggressive Growth Fund (the "Acquired
Fund") were transferred to a newly formed portfolio of the Trust,
Alleghany/Veredus Aggressive Growth Fund (the "Acquiring Fund"), in exchange for
shares of the Acquiring Fund. The Acquiring Fund commenced operations on
December 7, 1998.
The Company filed a Post-Effective Amendment on November 11, 1998 for the
purpose of adding Class I shares to the Montag & Caldwell Balanced Fund and
Chicago Trust Bond Fund. Class I shares are expected to be offered to the public
after January 1, 1999.
As of December 17, 1998, the following name changes are effective for certain
Series of the Alleghany Funds:
Alleghany/Montag & Caldwell Growth Fund
Alleghany/Chicago Trust Growth & Income Fund
Alleghany/Chicago Trust Talon Fund
Alleghany/Chicago Trust Balanced Fund
Alleghany/Montag & Caldwell Balanced Fund
Alleghany/Chicago Trust Bond Fund
Alleghany/Chicago Trust Municipal Bond Fund
Alleghany/Chicago Trust Money Market Fund
The Company filed a Post-Effective Amendment on November 25, 1998 to add two new
international funds, Alleghany/Blairlogie Emerging Markets Fund and
Alleghany/Blairlogie International Developed Fund. A Special Meeting of
Shareholders will be held to consider an Agreement and Plan of Reorganization
relative to the two new Series.
Effective December 17, 1998, the Administration fees paid to the Funds'
Administrator will be as follows:
.06% of less than $2 billion of the aggregate average daily net assets of
the Funds; and
.05% of aggregate average daily net assets of the Funds of at least $2
billion but not more than $7 billion; and
.045% of the Funds' aggregate average daily net assets over $7 billion.
The custody liaison and the fees paid to Investor Services Group as
sub-administrator of the Funds remain the same.
Effective December 17, 1998, the Advisor will reimburse each Fund to the extent
necessary to maintain its total ordinary operating expenses at the following
percentages of net assets, as computed on an annual basis:
<TABLE>
<CAPTION>
CLASS N
<S> <C>
Alleghany/Chicago Trust Talon Fund 1.30%
Alleghany/Chicago Trust Bond Fund 0.80%
</TABLE>
54
<PAGE>
Independent Auditors' Report
THE BOARD OF TRUSTEES AND SHAREOWNERS OF ALLEGHANY FUNDS:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of the Alleghany 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, 1998, 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 Alleghany 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 securites owned as of
October 31, 1998, 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 Alleghany Funds as of October 31, 1998,
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 comformity
with generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
Chicago, Illinois
December 17, 1998
55
<PAGE>
This page intentionally left blank.
<PAGE>
ENJOY A FULL RANGE OF
SHAREOWNER BENEFITS
GROW YOUR ACCOUNT THE EASY WAY
WITH AN AUTOMATIC INVESTMENT PLAN.(1)
Alleghany Funds makes systematic investing easy and effortless--to help you
reach any investment goal. Simply choose a fixed amount, and we'll automatically
invest it in your Alleghany Funds account on a regular schedule from your
checking or savings account. The service is free, and the minimum investment is
only $50 per month.
AUTOMATIC DIVIDEND REINVESTMENT
COMPOUNDS YOUR EARNINGS.
Monthly and quarterly dividends, and annual capital gain distributions, can
be automatically reinvested into your Alleghany Funds account, at no charge
which may significantly increase your investment earnings.
FREE, FLEXIBLE EXCHANGE PRIVILEGES.
As your personal needs change, so can your Alleghany Funds investments.
Exchanges between our funds are free of charge, and it only takes a telephone
call or a visit to our web site.
ACCESS INFORMATION AND MAKE
TRANSACTIONS ONLINE WITH OUR
NEW INVESTOR WEB SITE.
24 hours a day, 7 days a week, you can access account balances, obtain fund
information and make transactions online--in complete security. Alleghany Funds
was among the first mutual fund companies to provide these capabilities.
WWW.ALLEGHANYFUNDS.COM
AT YOUR SERVICE 24 HOURS A DAY ...
OUR SHAREOWNER SERVICES LINE.
Shareowner Services Representatives are available to assist you Monday -
Friday 8:00 a.m. to 7:00 p.m., EST. Or, call any time, day or night, for
automated account information, to make exchanges or check fund performance.
1-800-992-8151
- ----------
(1) Periodic investment plans involve continuous investments in securities
regardless of price. You should consider your financial ability to continue
to purchase during low price levels.
<PAGE>
TRUSTEES
Leonard F. Amari*
Stuard D. Bilton, Chairman
Dorothea C. Gilliam
Gregory T. Mutz*
Nathan Shapiro*
*Unafilliated Trustee
ADVISORS
The Chicago Trust Company
171 North Clark Street
Chicago, IL 60601-3294
Montag & Caldwell, Inc.
3343 Peachtree Road, NE, Suite 1100
Atlanta, GA 30326-1022
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
OFFICERS
Kenneth C. Anderson, President
David F. Seng, Senior Vice President
Gerald F. Dillenburg, Vice President,
Secretary and Treasurer
CUSTODIAN
Bankers Trust
One Bankers Trust Place
New York, NY 10001
LEGAL COUNSEL
Sonnenschein Nath & Rosenthal
8000 Sears Tower
Chicago, IL 60606
AUDITOR
KPMG Peat Marwick LLP
303 East Wacker Drive
Chicago, IL 60601
[LOGO] ALLEGHANY FUNDS
Distributed by First Data Distributors, Inc., 4400 Computer Drive, Westborough,
Massachusetts 01581, 1/99
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.
