ALLEGHANY FUNDS
Montag & Caldwell Growth Fund
Montag & Caldwell Balanced Fund
Prospectus
Class I Shares
July 12, 1999
As Supplemented
December 9, 1999
The Securities and Exchange Commission has not approved or disapproved these or
any mutual fund's shares or determined if this prospectus is accurate or
complete. Any representation to the contrary is a crime.
<PAGE>
Table of Contents
[SIDEBAR: Thank you for your interest in Alleghany Funds. Alleghany Funds offer
investors a variety of investment opportunities. This prospectus pertains only
to Class I shares of Montag & Caldwell Growth Fund and Montag & Caldwell
Balanced Fund, members of the Alleghany Funds Family.]
[SIDEBAR: For a list of terms with definitions that you may find helpful as you
read this prospectus, please refer to the "Investment Terms" section.]
Page
Fund Categories 3
Fund Summaries
Investment Objectives, Principal Investment Strategies and Risks
Montag & Caldwell Growth Fund 4
Montag & Caldwell Balanced Fund 5
Expense Information 7
Investment Terms 8
More About Alleghany Funds
Other Investment Strategies 10
Additional Risks 10
Risk Summary 11
Management of the Funds 12
Montag & Caldwell, Inc.
Shareholder Information
Opening an Account - Buying Shares 13
Exchanging Shares 14
Selling/Redeeming Shares 15
Transaction Policies 18
Account Policies and Dividends 18
Automatic Investment Plan 19
Alleghany Funds Web Site 19
Portfolio Transactions and Brokerage Commissions 19
Dividends, Distributions and Taxes 20
Financial Highlights 21
General Information Back Cover
Mutual fund shares are not bank deposits and are not guaranteed, endorsed or
insured by any financial institution, government entity or the Federal Deposit
Insurance Corporation (FDIC).
<PAGE>
Fund Categories
Equity Funds
Equity funds invest principally in stocks and other equity securities. Equity
funds have greater growth potential than many other funds, but they also have
greater risk.
Who may want to invest in Equity Funds Equity funds may be appropriate if you:
* have a long-term investment goal (5 years or more)
* can accept higher short-term risk in return for higher long-term return
potential
* want to diversify your investments
Equity funds may not be appropriate if you want:
* a stable share price
* a short-term investment
* regular income
Balanced Funds
Balanced funds invest in a mix of stocks and fixed income securities and combine
the benefits of both types of securities - capital appreciation or growth from
stocks and income from fixed income securities. Like most other mutual funds,
the share price of a balanced fund moves up and down in response to changes in
the stock market and interest rates.
Who may want to invest in Balanced Funds Balanced funds may be appropriate if
you want:
* capital appreciation and current income
* a balanced diversified investment
No single fund is intended to be a complete investment program, but individual
funds can be an important part of a balanced and diversified investment program.
Mutual funds have the following general risks:
* the value of fund shares will rise and fall
* you could lose money
* you cannot be certain that a fund will meet its investment objective
<PAGE>
Montag & Caldwell Growth Fund
Investment Objective
The Fund seeks long-term capital appreciation and, secondarily, current income,
by investing primarily in common stocks and convertible securities.
Principal Investment Strategies
The Fund invests primarily in common stocks and convertible securities. The
portfolio manager uses a bottom-up approach to stock selection and seeks high
quality, well-established large-cap companies that have:
* a strong history of earnings growth
* are attractively priced, relative to the company's potential for above
average long-term earnings and revenue growth
* strong balance sheets
* a sustainable competitive advantage
* the potential to become (or currently are) industry leaders
* the potential to outperform during market downturns
Principal Risks of Investing in this Fund
Market risk: A fund's share price moves up and down over the short term in
response to stock market conditions, changes in the economy and a particular
company's stock price change. An individual stock may decline in value even when
stocks in general are rising. An investor could lose money during market
downturns.
Growth stock risk: As a group, growth stocks tend to go through periodic cycles
of outperforming and underperforming the general stock market. During periods of
growth stock underperformance, a fund's performance may suffer.
Manager risk: If a fund manager makes errors in security selection, a fund may
underperform the stock market or its peers. Also, a fund could fail to meet its
investment objective.
Liquidity risk: When there is no willing buyer and investments cannot be readily
sold at the desired time or price, a fund may have to accept a low price or may
not be able to sell the security at all. An inability to sell securities can
adversely affect a fund's value or prevent a fund from being able to take
advantage of other investment opportunities.
<PAGE>
Fund Performance
The bar chart shows how the Fund's performance has varied from year to year over
the periods shown. This information may help illustrate the risks of investing
in the Fund. As with all mutual funds, past performance does not guarantee
future performance.
Calendar Year Total Return
1997 1998
32.2% 32.3%
Best quarter: 12/98 27.1% Worst quarter: 9/98 (14.2)%
The following table indicates how the Fund's average annual returns for
different calendar periods compare to the returns of the S&P 500 Index and the
Lipper Growth Fund Index.
Average Annual Total Return
(For the periods ended December 31, 1998)
1 year Since Inception 1
Montag & Caldwell Growth Fund 32.3% 32.3%
S&P 500 28.6% 29.6%
Lipper Growth Fund Index 25.7% 25.4%2
1 Fund's Inception: June 28, 1996
2 As of closest available date (6/27/96)
<PAGE>
Montag & Caldwell Balanced Fund
Investment Objective
The Fund seeks long-term total return.
Principal Investment Strategies
Generally, between 50% and 70% of the Fund's total assets will be invested in
equity securities, and at least 25% will be invested in fixed income securities
to provide a stable flow of income. The portfolio allocation will vary based
upon the portfolio manager's assessment of the return potential of each asset
class. For equity investments, the portfolio manager uses a bottom-up approach
to stock selection, focusing on high quality, well-established companies that
have:
* a strong history of earnings growth
* attractive prices relative to the company's potential for above average
long-term earnings and revenue growth
* strong balance sheets
* a sustainable competitive advantage
* the potential to become (or currently are) industry leaders
* the potential to outperform the market during downturns
When selecting fixed income securities, the portfolio manager strives to
maximize total return and minimize risk primarily by adjusting the portfolio
duration and sector weightings. The portfolio manager will seek to maintain the
Fund's weighted average duration within 20% of the duration of the Lehman
Brothers Government Corporate Index. Emphasis is also placed on diversification
and credit analysis.
The Fund will invest only in fixed income securities with an "A" or better
rating. Investments will include:
* U.S. Government securities
* corporate bonds
* mortgage/asset-backed securities
* money market securities and repurchase agreements
Principal Risks of Investing in this Fund
Market risk: A fund's share price moves up and down over the short term in
response to stock market conditions, changes in the economy and a particular
company's stock price change. An individual stock may decline in value even when
stocks in general are rising. An investor could lose money during market
downturns.
Growth stock risk: As a group, growth stocks tend to go through periodic cycles
of outperforming and underperforming the general stock market. During periods of
growth stock underperformance, a fund's performance may suffer.
Manager risk: If a fund manager makes errors in security selection, a fund may
underperform the stock or bond market or its peers. Also, a fund could fail to
meet its investment objective.
Interest rate risk: If interest rates rise, bond prices will fall. The longer
the maturity of a bond, the more sensitive a bond's price will be to changes in
interest rates. In other words, a long-term bond (30-year) will have greater
price sensitivity than a short-term bond (2-year). Short-term and long-term bond
prices and interest rates do not typically move the same amount or for the same
reasons.
Credit risk: Credit risk (also called default risk) is the risk that the issuer
of a security will not be able to make principal and interest payments on a bond
issue.
Issuer risk: The price of a bond is affected by the issuer's credit quality.
Changes in an issuer's financial condition and general economic conditions can
affect an issuer's credit quality. Lower quality bonds are generally more
sensitive to these changes than higher quality bonds.
Liquidity risk: When there is no willing buyer and investments cannot be readily
sold at the desired time or price, a fund may have to accept a low price or may
not be able to sell the security at all. An inability to sell securities can
adversely affect a fund's value or prevent a fund from being able to take
advantage of other investment opportunities.
Fund Performance
Class I of the Fund commenced operations on December 31, 1998 and does not have
a full year of performance history. Performance information will be included in
the Fund's next annual or semi-annual report.
<PAGE>
Expense Information
As an investor in the Funds, you pay certain indirect fees and expenses, which
are described in the table below.
Shareholder Fees
As a benefit of investing with Alleghany Funds, you do not incur any sales
loads, redemption fees or exchange fees.
Annual Fund Operating Expenses
Operating expenses are the normal costs of operating any mutual fund. These
expenses are not charged directly to investors. They are paid from a fund's
assets and are expressed as an expense ratio, which is a percentage of average
net assets.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Fund (1) Management Fees Other Expenses Expense Ratio
Montag & Caldwell Growth Fund (2) 0.73% 0.12% 0.85%
Montag & Caldwell Balanced Fund (2) 0.75 0.20 0.95
</TABLE>
(1) For Montag & Caldwell Growth Fund, the ratios shown above reflect the
expenses incurred during the fiscal year ended October 31, 1998. For Montag &
Caldwell Balanced Fund, the expenses are based on estimated amounts for the
current fiscal year.
(2) Montag & Caldwell Growth Fund and Montag & Caldwell
Balanced Fund offer two classes of shares that invest in the same portfolio of
securities. Shareholders of Class I are not subject to a 12b-1 distribution
plan; therefore, expenses and performance figures will vary between the classes.
The information set forth in the table above and the example below relate only
to Class I shares, which are offered in this prospectus. Class N shares are
offered in a separate prospectus.
Example
This hypothetical example shows the operating expenses you would incur as a
shareholder if you invested $10,000 in a Fund over the time periods shown,
assuming you reinvested all dividends and distributions and that the average
annual return was 5%. The example assumes that operating expenses remained the
same and includes only contractual fee waivers and reimbursements. The example
is for comparison purposes only and does not represent a Fund's actual or future
expenses and returns.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Fund 1 year 3 years 5 years 10 years
Montag & Caldwell Growth Fund $87 $271 $471 $1,049
Montag & Caldwell Balanced Fund $97 $303 n/a n/a
</TABLE>
<PAGE>
Investment Terms
The following is a list of terms with definitions that you may find helpful as
you read this prospectus.
Asset-backed securities. Securities that represent a participation in, or are
secured by and payable from, payments generated by credit cards, motor vehicle
or trade receivables and the like.
Bottom-up investing. An investing approach in which securities are researched
and chosen individually with less consideration given to economic or market
cycles.
Corporate bonds. Fixed income securities issued by corporations.
Debentures. Bonds or promissory notes that are secured by the general credit of
the issuer, but not secured by specific assets of the issuer.
Diversification. The practice of investing in a broad range of securities to
reduce risk.
Duration. A calculation of the average life of a bond (or portfolio of bonds)
that is a useful measure of a bond's price sensitivity to interest changes. The
higher the duration number, the greater the risk and reward potential of the
bond.
Equity securities. Equity securities include common stocks and preferred stocks
and other securities convertible into common stock.
Expense ratio. A fund's cost of doing business, expressed as a percentage of its
assets and disclosed in a prospectus.
Fixed income securities. Bonds and other securities that are used by issuers to
borrow money from investors. Typically, the issuer pays the investor a fixed,
variable or floating rate of interest and must repay the borrowed amount at a
specified time in the future (maturity).
Investment objective. The goal that an investor and a mutual fund seek together.
Examples include current income, long-term capital growth, etc.
Issuer. The company, municipality or government agency that issues a security,
such as a stock, bond or money market security.
Large-cap stocks. Stocks that are issued by large companies. Alleghany Funds
defines a large-cap company as one with a market capitalization of $5 billion or
more. Typically, large-cap companies are established, well-known companies; some
may be multinationals.
Management fee. The amount that a mutual fund pays to the investment adviser for
its services.
Money market securities. Short-term fixed income securities of federal and local
governments, banks and corporations.
Mortgage-backed securities. Securities backed by the Government National
Mortgage Association (Ginnie Mae), the Federal National Mortgage Association
(Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). These
securities represent collections (pools) of commercial and residential
mortgages.
Mutual fund. An investment company that stands ready to buy back its shares at
their current net asset value, which is the total market value of the fund's
investment portfolio divided by the number of its shares outstanding. Most
mutual funds continuously offer new shares to investors.
Net asset value. The per share value of a mutual fund, found by subtracting the
fund's liabilities from its assets and dividing the number of shares
outstanding. Mutual funds calculate their NAVs at least once a day.
No-load fund. A mutual fund whose shares are sold without a sales charge and
without a 12b-1 fee of more than 0.25% per year.
Repurchase agreements (repos). Transactions in which a security (usually a
government security) is purchased with a simultaneous commitment to sell it back
to the seller (a commercial bank or recognized securities dealer) at an agreed
upon price on an agreed upon date, usually the next day.
Risk/reward trade-off. The principle that an investment must offer higher
potential returns as compensation for the likelihood of increased volatility.
Total return. A measure of a fund's performance that encompasses all elements of
return: dividends, capital gains distributions and changes in net asset value.
Total return is the change in value of an investment over a given period,
assuming reinvestment of dividends and capital gains distributions, expressed as
a percentage of the initial investment.
U.S. Government securities. Fixed income obligations of the U.S. Government and
its various agencies. U.S. Government securities issued by the Treasury (bills,
notes and bonds) are backed by the full faith and credit of the federal
government. Some government securities not issued by the U.S. Treasury also
carry the government's full faith and credit backing on principal or interest
payments. Some securities are backed by the issuer's right to borrow from the
U.S. Treasury and some are backed only by the credit of the issuing
organization. All government securities are considered highly creditworthy.
Yield. A measure of net income (dividends and interest) earned by the securities
in the fund's portfolio, less the fund's expenses, during a specified period. A
fund's yield is expressed as a percentage of the maximum offering price per
share on a specified date.
<PAGE>
More About Alleghany Funds
Other Investment Strategies
In addition to the primary investment strategies described in our Fund
summaries, there may be times when the Funds use secondary investment strategies
in seeking to achieve investment objectives. These strategies may involve
additional risks and apply to each Fund unless otherwise indicated.
ADRs/EDRs
The Funds may invest in foreign securities in the form of depositary receipts.
Depositary receipts represent ownership of securities in foreign companies and
are held in banks and trust companies. They can include American Depositary
Receipts (ADRs), which are traded on U.S. exchanges and are U.S.
dollar-denominated, and European Depositary Receipts (EDRs), which are traded on
European exchanges and may not be denominated in the same currency as the
security they represent. The funds have no intention of investing in unsponsored
ADRs or EDRs.
Collateralized Mortgage Obligations (CMOs)
CMOs are fixed income securities secured by mortgage loans and other
mortgage-backed securities and are generally considered to be derivatives. CMOs
carry general fixed income securities risks and risks associated with
mortgage-backed securities.
Convertible Securities
Convertible securities are fixed income or equity securities that pay interest
or dividends and that may be exchanged on certain terms into common stock of the
same corporation.
Derivatives
Up to 20% of a Fund's assets can be invested in derivatives. Derivatives are
used to enhance investment return or limit risk in a portfolio and have a return
tied to a formula based upon an interest rate, index, price of a security, or
other measurement. Derivatives include options, futures, forward contracts and
related products.
Hedging involves using derivatives to hedge against an opposite position that a
fund holds. Any loss generated by the derivative should be offset by gains in
the hedged investment. While hedging can reduce or eliminate losses, it can also
reduce or eliminate gains. Using derivatives for purposes other than hedging is
speculative.
Fixed Income Securities
Montag & Caldwell Growth Fund may invest in fixed income securities to offset
the volatility of the stock market. Fixed income securities provide a stable
flow of income for a fund.
Preferred Stocks
Preferred stocks are stocks that pay dividends at a specified rate. Dividends
are paid on preferred stocks before they are paid on common stocks. In addition,
preferred stockholders have priority over common stockholders as to the proceeds
from the liquidation of a company's assets.
Rule 144A Securities
Rule 144A securities are restricted securities that can be sold to qualified
institutional buyers under the 1933 Act. Investing in Rule 144A securities may
increase the illiquidity of a Fund's investments in the event that an adequate
trading market does not exist for these securities.
<PAGE>
Additional Risks
Defensive Strategy Risk
There may be times when a fund takes temporary positions that may not achieve
its investment objective or follow its principal investment strategies for
defensive reasons. This includes investing all or a portion of its total assets
in cash or cash equivalents, such as money market securities and repurchase
agreements. Although a fund would do this in seeking to avoid losses, it could
reduce the benefit from any market upswings.
Year 2000
Like other business organizations and individuals around the world, each of the
Funds could be adversely affected if the computer systems used by its Advisers
and other service providers do not properly process and calculate date-related
information from and after January 1, 2000. This is commonly known as the "Year
2000 Problem." While Year 2000 problems could have a negative effect on the
Funds, Alleghany Funds is working to avoid such problems and to obtain assurance
from its service providers that they are taking similar steps. The Year 2000
Problem could also affect the companies in which the Funds invest.
Risk Summary
The following chart compares the risks of investing in each of the Funds.
Montag & Caldwell Montag & Caldwell
Growth Fund Balanced Fund
Credit o
Growth Stock o o
Interest Rate o
Issuer o
Liquidity o o
Manager o o
Market o o
More information about other investment strategies and additional risks
associated with investing in Alleghany Funds can also be found in the Statement
of Additional Information (SAI).
<PAGE>
Management of the Funds
The Adviser
Each Fund has an Adviser that provides management services. The Adviser is paid
an annual management fee by the Fund for its services. The accompanying charts
highlight each Fund and its lead portfolio manager(s) and investment experience.
Montag & Caldwell, Inc.
Montag & Caldwell, Inc. is the Adviser to Montag & Caldwell Growth Fund and
Montag & Caldwell Balanced Fund. The firm was founded in 1945 and is an indirect
wholly owned subsidiary of Alleghany Corporation. As of March 31, 1999, Montag &
Caldwell managed approximately $30.1 billion in assets.
For providing investment advisory services, the Funds have agreed to pay Montag
& Caldwell a monthly fee based on the average daily net assets of each Fund. The
following table shows the breakout of the fees.
Montag & Caldwell Growth Fund
First $800 million 0.80%
Over $800 million 0.60%
Montag & Caldwell Balanced Fund
On all assets 0.75%
Investment management teams at Montag & Caldwell make the investment decisions
for each Fund. Ronald E. Canakaris has managed the investment program of each
Fund since its inception. He has been President and Chief Investment Officer of
Montag & Caldwell since 1984. He has been portfolio manager and Director of
Research at Montag & Caldwell since 1973.
<PAGE>
Shareholder Information
Opening an Account
* Read this prospectus carefully.
* Determine how much you want to invest. The minimum initial investments for
Class I shares of the Funds are as follows:
* Montag & Caldwell Growth Fund: $5 million
* Montag & Caldwell Balanced Fund: $1 million
* Balances can be aggregated to meet the minimum investment requirements
for the accounts of :
* clients of a financial consultant
* immediate family members (i.e., a person's spouse, parents, children,
siblings and in-laws)
* a corporation or other legal entity
* Initial minimum investment requirements may be waived:
* for Trustees and employees of Montag & Caldwell and their affiliated
companies
* with a "letter of intent" - this letter would explain how the
investor/financial consultant would purchase shares over a
Board-approved specified period of time to meet the minimum
investment requirement
* Complete the account application and carefully follow the instructions. If
you have any questions, please call 800-992-8151. Remember to complete the
"Purchase, Exchange and Redemption Authorization" section of the account
application to establish your account privileges. You can avoid the delay
and inconvenience of having to request these in writing at a later date.
* Make your initial investment using the following table as a guideline.
<TABLE>
<CAPTION>
<S> <C> <C>
Buying Shares
To open an account To add to an account (no minimum for
subsequent investments)
By Mail * Complete and sign the * Return the investment slip from a
application. Make your check statement with your check in the
payable to Alleghany Funds and mail envelope provided and mail to:
to: Alleghany Funds
Alleghany Funds P.O. Box 5163
P.O. Box 5164 Westborough, MA 01581
Westborough, MA 01581
* We accept checks, bank drafts and
* We accept checks, bank drafts and money orders for purchases. Checks
money orders for purchases. Checks must be drawn on U.S. banks.
must be drawn on U.S. banks to avoid
any fees or delays in processing * We do not accept third party
your check. checks, which are checks made
payable to someone other than the
* We do not accept third party Funds.
checks, which are checks made
payable to someone other than the
Funds.
By Wire or ACH * Obtain a fund number and account * Instruct your bank (who may charge
number by calling Alleghany Funds at a fee) to wire or ACH the amount of
800-992-8151. your additional investment.
* Instruct your bank (who may charge * Give the following wire
a fee) to wire the amount of your information to your bank:
investment. Boston Safe Deposit & Trust
ABA #01-10-01234
* Give the following wire or ACH For: Alleghany Funds
information to your bank: A/C 140414
Boston Safe Deposit & Trust FBO "Alleghany Fund Number"
ABA #01-10-01234 "Your Account Number"
For: Alleghany Funds
A/C 140414
FBO "Alleghany Fund Number"
"Your Account Number"
* Return your completed application
to:
Alleghany Funds
P.O. Box 5164
Westborough, MA 01581
By Phone See "By Wire or ACH" * When you are ready to add to your
account, call Alleghany Funds and
tell the representative the fund
name, account number, the name(s) in
which the account is registered and
the amount of your investment.
By Internet Not applicable * Verify that your bank or credit
union is a member of the Automated
Clearing House (ACH) system.
* Complete the "Purchase, Exchange
and Redemption Authorization"
section of your account application.
* Obtain a Personal Identification
Number (PIN) from Alleghany
Funds for use on Alleghany Funds'
Web site if you have not already
done so. To obtain a PIN, please
call 800-992-8151.
* When you are ready to add to your
account, access your account through
the Alleghany Funds' Web site and
enter your purchase instructions in
the highly secure area for
shareholders only.
</TABLE>
Exchanging Shares
After you have opened an account with us, you can exchange your shares within
Alleghany Funds to meet your changing investment goals or other needs. This
privilege is not designed for frequent trading and may be difficult to implement
in times of drastic market changes.
You can exchange shares from one Alleghany Fund to another. All exchanges to
open new fund accounts must meet the minimum initial investment requirements.
Exchanges may be made by mail or by phone at 800-922-8151 if you chose this
option when you opened your account. For tax purposes, each exchange is treated
as a sale and a new purchase.
The Funds reserve the right to limit, impose charges upon, terminate or
otherwise modify the exchange privilege by sending written notice to
shareholders.
Selling/Redeeming Shares
Once you have opened an account with us, you can sell your shares to meet your
changing investment goals or other needs. The following table shows guidelines
for selling shares.
<TABLE>
<CAPTION>
<S> <C> <C>
Selling Shares
Designed for... To sell some or all of your shares...
By Mail * Accounts of any type * Write and sign a letter of
instruction indicating the fund
* Sales or redemptions of any size name, fund number, your account
number, the name(s) in which the
account is registered and the dollar
value or number of shares you wish
to sell.
* Include all signatures and any
additional documents that may be
required. (See "Selling Shares in
Writing.")
* Mail to:
Alleghany Funds
P.O. Box 5164
Westborough, MA 01581
* A check will be mailed to the
name(s) and address in which the
account is registered. If you would
like the check mailed to a different
address, you must write a letter of
instruction and have it signature
guaranteed. Usually, your local
bank can provide this service for
you.
By Phone * Non-retirement accounts * For automated service 24 hours a
day using your touch-tone phone,
* Sales of up to $50,000 call 800-992-8151.
* To place your request with a
Shareholder Service Representative,
call between 9am and 7pm ET, Monday
- Friday.
* The Funds reserve the right to
refuse any telephone sales request
and may modify the procedures at any
time. The Funds make reasonable
attempts to verify that telephone
instructions are genuine, but you
are responsible for any loss that
you may bear from telephone
requests.
By Wire or ACH * Requests by letter for sales of * Complete the "Telephone
any amount (accounts of any type) Redemption" privilege section of
your account application.
* Requests by phone for sales up to
$50,000 (accounts with telephone * ACH sales proceeds will be sent on
redemption privileges) the next business day after the sale
(you should allow 3 days to be
received by your bank). There is no
fee to sell shares by ACH.
* Wire sales proceeds will be wired
on the next business day after the
sale (see "Transaction Policies" for
effective sale day). A $20 fee will
be deducted from your account.
* The Funds reserve the right to
refuse any telephone sales request
and may modify the procedures at any
time. The Funds make reasonable
attempts to verify that telephone
instructions are genuine, but you
are responsible for any loss that
you may bear from telephone requests.
By Internet * Non-retirement accounts * Complete the "Purchase, Exchange
and Redemption Authorization"
section of your account application.
* Obtain a Personal Identification
Number (PIN) from Alleghany Funds
for use on Alleghany Funds' Web site
if you have not already done so.
* When you are ready to redeem a
portion of your account, access your
account through the Alleghany Funds'
Web site and enter your redemption
instructions in the highly secure
area for shareholders only. A check
for the proceeds will be mailed to
you.
* If you prefer proceeds to be sent
directly to your bank account,
verify that your bank or credit
union is a member of the Automated
Clearing House (ACH) system.
* ACH sales proceeds will be sent on
the next business day (you should
allow 3 days to be received by your
bank). There is no fee to sell
shares by ACH.
</TABLE>
Selling Shares in Writing In certain circumstances, you must make your request
to sell shares in writing. You may need to include a signature guarantee (which
protects you against fraudulent orders) and additional items with your request,
as shown in the table below. We require signature guarantees if:
* your address of record has change within the past 30 days
* you are selling more than $50,000 worth of shares
* you are requesting payment other than by a check mailed to the address of
record and payable to the registered owner(s)
A signature guarantee must be from a member of the Signature Guarantee Medallion
Program (generally, a bank, trust company, savings and loan association or any
broker or securities dealer) for each person whose name is on the account. We
may refuse any other source. A notary public cannot provide a signature
guarantee.
<TABLE>
<CAPTION>
<S> <C>
Seller Requirements for Written Requests
Owners of individual, joint, sole * Letter of instruction
proprietorship, UGMA/UTMA, or general partner * On the letter, the signatures and titles of all persons
accounts authorized to sign for the account, exactly as the account is
registered
* Signature guarantee, if applicable (see above)
Owners of corporate or association accounts * Letter of instruction
* Corporate resolution certified within the past 12 months
* On the letter, the signatures and titles of all persons
authorized to sign for the account, exactly as the account is
registered
* Signature guarantee, if applicable (see above)
Owners or trustees of trust accounts * Letter of instruction
* On the letter, the signature of the trustee(s)
* If the names of all trustees are not registered on the
account, a copy of the trust document certified within the
past 12 months
* Signature guarantee, if applicable (see above)
Joint tenancy shareholders whose co-tenants are * Letter of instruction signed by the surviving tenant
deceased * Copy of death certificate
* Signature guarantee, if applicable (see above)
Executors of shareholder estates * Letter of instruction signed by executor
* Copy of order appointing executor
* Signature guarantee, if applicable (see above)
Administrators, conservators, guardians and * Call 800-992-8151 for instructions
other sellers or account types not listed above
IRA accounts * IRA distribution request form completed and signed. Call
800-922-8151 for a form.
</TABLE>
Redemptions in Kind
The Funds have elected, under Rule 18f-1 of the 1940 Act, to pay sales proceeds
in cash up to $250,000 or 1% of each Fund's total value during any 90-day period
for any one shareholder, whichever is less. Larger redemptions may be
detrimental to existing shareholders. While we intend to pay all sales proceeds
in cash, we reserve the right to make higher payments to you in the form of
certain marketable securities of the Fund. This is called a "redemption in
kind." You may pay certain sales charges related to a redemption in kind, such
as brokerage commissions, when you sell the securities.
Transaction Policies
Calculating Share Price
When you buy, exchange or sell shares, the net asset value is used to price your
purchase or sale. The NAV for each Fund is determined each business day at the
close of regular trading on the New York Stock Exchange, Inc. (NYSE) (typically
4 p.m. Eastern Time (ET)) by dividing a class's net assets by the number of its
shares outstanding. Generally, market quotes are used to price securities. If
market quotations are not available, securities are valued at fair value as
determined by the Board of Trustees.
Execution of Requests
Each Fund is open on each business day that the NYSE is open for trading. The
NYSE is not open on weekends or national holidays. Buy and sell requests are
executed at the NAV next calculated after Alleghany Funds or an authorized
broker or designee receives your mail or telephone request in proper form. Sales
proceeds are normally sent on the next business day, but are always sent within
seven days of receipt of a request in proper form. Brokers and their authorized
designees are responsible for forwarding purchase orders and redemption requests
to the Funds.
Shares of Alleghany Funds can also be purchased through broker-dealers, banks
and trust departments that may charge you a transaction or other fee for their
services. These fees are not charged if you purchase shares directly from
Alleghany Funds. Alleghany Funds reserve the right to reject any purchase order
and to suspend the offering of fund shares. The Funds also reserve the right to
change the initial and additional investment minimums or to waive these minimums
for any investor. Alleghany Funds reserves the right to delay sending you your
sales proceeds for up to 15 days if you purchased shares by check. A minimum $20
charge will be assessed if any check used to purchase shares is returned.
Short-Term Trading
The Funds are not designed for frequent trading and certain purchase or exchange
requests may be difficult to implement in times of drastic market changes. The
Funds reserve the right to refuse any purchase or exchange order that could
adversely affect the Funds or their operations. The Funds also reserve to right
to limit, impose charges upon, terminate or otherwise modify the exchange
privilege by sending written notice to shareholders.
Account Policies and Dividends
Account Statements
In general, you will receive account statements:
after every transaction that affects your account balance (except a
dividend reinvestment) after any change of name or address of the
registered owner(s) in all other circumstances, every quarter
Dividends
The following table shows the Funds' distribution schedule.
Distribution Schedule
<TABLE>
<CAPTION>
<S> <C> <C>
Fund Dividends Capital Gains Distribution
Montag & Caldwell Growth Fund
* Declared and paid * Generally distributed at least once a year in
Montag & Caldwell Balanced Fund quarterly December
</TABLE>
Dividend Reinvestments
Many investors have their dividends reinvested in additional shares of the same
fund. If you choose this option, or if you do not indicate a choice, your
dividends will be automatically reinvested on the dividend record date. You can
also choose to have a check for your dividends mailed to you by choosing this
option on your account application.
<PAGE>
Automatic Investment Plan
After meeting the standard minimum initial investment of the Fund, the Automatic
Investment Plan allows you to set up a regular transfer of funds from your bank
account to the Alleghany Fund(s) of your choice. You determine the amount of
your investment, and you can terminate the program at any time. To take
advantage of this feature:
* Write and sign a letter of instruction including the fund name, fund
number, your account number, the name(s) in which the account is
registered, the dollar value of shares you wish to purchase each month and
the date each month for which the automatic investment is to be made.
* Include a voided check.
* Mail to:
Alleghany Funds
P.O. Box 5164
Westborough, MA 01581
Alleghany Funds Web Site
Our Web site is highly secure to prevent unauthorized access to your account
information. To access your account, you must provide verification by providing
your Social Security Number (or Tax Identification Number) and your Personal
Identification Number (PIN). To obtain a PIN, please call 800-992-8151. A
customer service representative will ask a series of questions to verify your
identity and assign a temporary PIN. The temporary PIN will allow you to log on
to the Account Access area of our site. You will be prompted to change the
temporary PIN to a new PIN, which will be known only to you.
By logging into our Web site with your Social Security number and PIN, you can
inquire about your current share balances and their current value, exchange or
transfer assets between your accounts within our fund family, and redeem shares
from your account and have your proceeds mailed to you by check.
If you would like to purchase shares electronically or have redemption proceeds
sent directly to your bank account, you must make arrangements for electronic
funds transfer using Automated Clearing House (ACH) procedures. This requires
that you have certain bank account information on file with us so that funds can
be transferred electronically between your mutual fund and bank accounts.
Portfolio Transactions and Brokerage Commissions
Alleghany Funds attempts to obtain the best possible price and most favorable
execution of transactions in its portfolio securities. Under policies
established by the Board of Trustees, there may be times when Alleghany Funds
may pay one broker-dealer a commission that is greater than the amount that
another broker-dealer may charge for the same transaction. The Adviser generally
determines in good faith if the commission paid was reasonable in relation to
the services provided by the broker-dealer. In selecting and monitoring
broker-dealers and negotiating commissions, Alleghany Funds considers a
broker-dealer's reliability, the quality of its execution services, its past
sales of a Funds shares and its financial condition.
<PAGE>
Dividends, Distributions and Taxes
Certain tax considerations may apply to your investment in Alleghany Funds. If
you have any tax-related questions relating to your own investments, please
consult your tax adviser. Further information regarding the tax consequences of
investing in the Funds is included in the SAI.
* The Funds pay dividends and distribute capital gains at different intervals. A
dividend is a payment of net investment income to investors who hold shares in a
mutual fund. A distribution is the payment of income and/or capital gain from a
mutual fund's earnings. All dividends and distributions are automatically
reinvested at NAV unless you choose to receive them in a cash payment. You can
change your payment options at any time by writing to us.
* The tax treatment of dividends and distributions is the same whether you
reinvest the distributions or elect to receive them in cash. You will receive a
statement with the tax status of your dividends and distributions for the prior
year by January 31.
* Distributions of any net investment income and of any net realized short-term
capital gain are taxable to you as ordinary income. Distributions of net capital
gain (net long-term capital gain less any net short-term capital loss) are
taxable as ordinary income regardless of how long you may have held the shares
of the Fund.
* When you sell or exchange shares in a non-retirement account, it is considered
a current year taxable event for you. Depending on the purchase price and the
sale price of the shares you sell or exchange, you may have a gain or a loss on
the transaction. You are responsible for any tax liabilities generated by your
transactions.
* Each Fund is obligated by law to withhold 31% of Fund distributions if you do
not provide complete and correct taxpayer identification information.
<PAGE>
Financial Highlights
These financial highlights tables are intended to help you understand the Funds'
financial performance. The following schedules present financial highlights for
one share of the Funds outstanding throughout the periods indicated. Except
where indicated, this information has been audited by KPMG LLP, whose report,
along with the Funds' financial statements, is included in the SAI.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Montag & Caldwell Growth Fund
Year Ended 10/31/98 Year Ended Period Ended
10/31/97 10/31/96*
--------------------- ------------------ --------------------
Net Asset Value, Beginning of Period $22.75 $17.08 $15.59
------ ------ ------
Income from Investment Operations
Net investment income (loss) 0.01 0.00 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 0.00 0.00 (0.02)
income
Distributions from net realized gain on investments (0.21) (0.14) 0.00
------ ------ ----
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
Ratio of expenses to average net assets:
Before reimbursement of expenses by Adviser (1) 0.85% 0.93% 0.98%
After reimbursement of expenses by Adviser (1) 0.85% 0.93% 0.98%
Ratio of net investment income to average net assets:
Before reimbursement of expenses by Adviser (1) 0.05% (0.07)% 0.17%
After reimbursement of expenses by Adviser (1) 0.05% (0.06)% 0.17%
Portfolio Turnover (1) 29.81% 18.65% 26.36%
* Montag & Caldwell Growth Fund Class I shares commenced operations on June 28, 1996.
(1) Annualized
</TABLE>
<PAGE>
Montag & Caldwell Balanced Fund
Period
Ended 4/30/99*
(Unaudited)
Net Asset Value, Beginning of Period $18.36
------
Income from Investment Operations
Net investment income 0.07
Net realized and unrealized gain on investments 0.65
----
Total from investment operations 0.72
----
Less Distributions
Distributions from and in excess of net investment income (0.05)
Distributions from net realized gain on investments -----
Total distributions (0.05)
------
Net increase in net asset value 0.67
Net Asset Value, End of Period $19.03
Total Return (1) 3.94%
Ratios/Supplemental Data
Net Assets, End of Period (in 000's) $79,496
Ratio of expenses to average net
assets:
Before reimbursement of expenses by Adviser (2) 0.96%
After reimbursement of expenses by Adviser (2) 0.96%
Ratio of net investment income to average net assets:
Before reimbursement of expenses by Adviser (2) 1.49%
After reimbursement of expenses by Adviser (2) 1.49%
Portfolio Turnover (1) 16.28%
* Montag & Caldwell Balanced Fund Class I shares commenced operations on
December 31, 1998 and therefore do not have a full year of performance.
(1) Not annualized
(2) Annualized
<PAGE>
(Outside Back Cover)
General Information
If you wish to know more about Alleghany Funds, you will find additional
information in the following documents:
Shareholder Reports
You will receive Semi-Annual Reports dated April 30 and Annual Reports, audited
by independent accountants, dated October 31. These reports contain a discussion
of the market conditions and investment strategies that significantly affected
each Fund's performance during its last fiscal year.
Statement of Additional Information (SAI)
The SAI, which is incorporated into this prospectus by reference and dated July
12, 1999, is available to you without charge. It contains more detailed
information about the Funds.
How to Obtain Reports
Contacting Alleghany Funds
You can get free copies of the reports and SAI, request other
information and discuss your questions about the Funds by contacting:
Address: Alleghany Funds
P.O. Box 5164
Westborough, MA 01581
Shareholder Services: 800-992-8151
Investment Adviser Services: 800-597-9704
Web site: www.alleghanyfunds.com
Obtaining Information from the SEC
You can visit the SEC's Web site at http://www.sec.gov to view the SAI
and other information. You can also view and copy information about the
Funds at the SEC's Public Reference Room in Washington D.C. Also, you
can obtain copies of this information by sending your request and
duplication fee to the SEC's Public Reference Room, Washington D.C.
20549-6009. To find out more about the Public Reference Room, you can
call the SEC at 1-800-SEC-0330.
Investment Company Act File Number: 811-8004
