ALLEGHANY FUNDS, 497, 2000-02-22

ALLEGHANY FUNDS
497, 2000-02-22

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[ALLEGHANY FUNDS LOGO]

CLASS N SHARES
Prospectus
EQUITY FUNDS

Large-Cap
Alleghany/Montag & Caldwell Growth Fund
Alleghany/Chicago Trust Growth & Income Fund

Mid-Cap
Alleghany/Chicago Trust Talon Fund

Small-Cap
Alleghany/Chicago Trust Small Cap Value Fund
Alleghany/Veredus Aggressive Growth Fund

INTERNATIONAL EQUITY FUNDS

Alleghany/Blairlogie International Developed
Fund
Alleghany/Blairlogie Emerging Markets Fund

BALANCED FUNDS

Alleghany/Montag & Caldwell Balanced Fund
Alleghany/Chicago Trust Balanced Fund

FIXED INCOME FUNDS

Alleghany/Chicago Trust Bond Fund
Alleghany/Chicago Trust Municipal Bond Fund

MONEY MARKET FUND

Alleghany/Chicago Trust Money Market Fund

FEBRUARY 15, 2000

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>

[ALLEGHANY FUNDS LOGO]

Thank you for your interest in Alleghany Funds. Our diversified family of
no-load funds offers you a variety of investment opportunities to help you meet
financial goals such as retirement, homebuying or college funding. Please read
this prospectus carefully and keep it for future reference. For a list of terms
with definitions that you may find helpful as you read this prospectus, please
refer to the "Investment Terms" section.
- ------------------------------
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).
- ------------------------------

TABLE OF CONTENTS

Page

CATEGORIES OF ALLEGHANY FUNDS 3
FUND SUMMARIES
Investment Objectives, Principal Investment
Strategies and Risks
EQUITY FUNDS
Large-Cap 4
Alleghany/Montag & Caldwell Growth Fund 4
Alleghany/Chicago Trust Growth & Income
Fund 5
Mid-Cap 6
Alleghany/Chicago Trust Talon Fund 6
Small-Cap 8
Alleghany/Chicago Trust Small Cap Value
Fund 8
Alleghany/Veredus Aggressive Growth Fund 10
INTERNATIONAL EQUITY FUNDS
Alleghany/Blairlogie International
Developed Fund 12
Alleghany/Blairlogie Emerging Markets Fund 14
BALANCED FUNDS
Alleghany/Montag & Caldwell Balanced Fund 16
Alleghany/Chicago Trust Balanced Fund 18
FIXED INCOME FUNDS
Alleghany/Chicago Trust Bond Fund 20
Alleghany/Chicago Trust Municipal Bond
Fund 22
MONEY MARKET FUND
Alleghany/Chicago Trust Money Market Fund 23
FUND EXPENSES 24
INVESTMENT TERMS 26
MORE ABOUT ALLEGHANY FUNDS
RISK SUMMARY 29
OTHER INVESTMENT STRATEGIES 30
MANAGEMENT OF THE FUNDS
THE ADVISERS
The Chicago Trust Company 32
Montag & Caldwell, Inc. 35
Veredus Asset Management LLC 36
Blairlogie Capital Management 38
SHAREHOLDER INFORMATION
OPENING AN ACCOUNT: BUYING SHARES 39
EXCHANGING SHARES 40
SELLING/REDEEMING SHARES 40
TRANSACTION POLICIES 43
ACCOUNT POLICIES AND DIVIDENDS 44
ADDITIONAL INVESTOR SERVICES 45
DISTRIBUTION PLAN 45
PORTFOLIO TRANSACTIONS AND BROKERAGE
COMMISSIONS 45
DIVIDENDS, DISTRIBUTIONS AND TAXES 46
FINANCIAL HIGHLIGHTS 47
GENERAL INFORMATION Back Cover

Categories of Alleghany Funds

Alleghany Funds is a no-load, open-end management investment company that
consists of twelve separate diversified investment portfolios, including equity,
balanced, fixed income and money market funds.

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 (five 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

FIXED INCOME FUNDS
FIXED INCOME FUNDS invest in corporate and government bonds and other fixed
income securities. These funds provide regular income and the obligations are
generally secured by the assets of the issuer.

WHO MAY WANT TO INVEST IN FIXED INCOME FUNDS Fixed income funds may be
appropriate if you want: - regular income - less volatility than equity funds -
portfolio diversification

Fixed income funds may not be appropriate if you want:
- - capital appreciation

MONEY MARKET FUNDS
MONEY MARKET FUNDS invest in short-term, high quality money market securities.
They provide stable principal and regular income. The income provided by a money
market fund varies with interest rate movements.

WHO MAY WANT TO INVEST IN MONEY MARKET FUNDS
A money market fund may be appropriate if you:
- - want regular income
- - are investing for a short-term objective
- - want an investment that seeks to maintain a stable net asset value - want a
liquid investment that offers a checkwriting privilege (checks may be
written in amounts of $500 or more)

A money market fund may also be appropriate if you want an investment that can
serve as a "holding place" for money awaiting investment in long-term funds or
for money that may be needed for occasional or unexpected expenses.

A money market fund is not appropriate if you want long-term capital
appreciation.

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 achieve its investment objective

3
<PAGE>

EQUITY FUNDS: LARGE-CAP

Alleghany/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 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
- - have strong balance sheets
- - have a sustainable competitive advantage
- - are currently, or have the potential to become, industry leaders - have the
potential to outperform 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. See page 29 for a chart that compares the risks of
investing in this Fund with other Alleghany Funds.

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

[BAR GRAPH]

TOTAL RETURN
------------

1995 38.68
1996 32.72
1997 31.85
1998 31.85
1999 22.51
</TABLE>

Best quarter: 12/98 26.94%
Worst quarter: 9/98 -14.27%

The following table indicates how the Fund's average annual returns for
different calendar periods compared to the returns of the S&P 500 Index and the
Lipper Large-Cap Growth Index.

AVERAGE ANNUAL TOTAL RETURN
(For the periods ended December 31, 1999)

Alleghany/ Lipper
Montag & S&P Large-Cap
Caldwell 500 Growth
Growth Fund Index Index
- -------------------------------------------------------

1 year 22.51% 21.04% 34.82%
- -------------------------------------------------------

5 years 31.42% 28.56% 30.73%
- -------------------------------------------------------

Since
Inception(1) 29.73% 26.94% 28.84%
- -------------------------------------------------------

(1)Fund's inception: November 2, 1994

4
<PAGE>

EQUITY FUNDS: LARGE-CAP

Alleghany/Chicago Trust Growth & Income Fund

INVESTMENT OBJECTIVE
The Fund seeks long-term total return through a combination of capital
appreciation and current income by investing primarily in a combination of
stocks and bonds.

PRINCIPAL INVESTMENT STRATEGIES
The portfolio manager uses a bottom-up approach and invests in a combination of
securities that offer potential for growth and/or income, including primarily
large-cap dividend and non-dividend paying common stocks, preferred stocks and
convertible securities. Companies for possible selection must pass an initial
capitalization screen. The portfolio manager then identifies stocks of companies
with the following characteristics compared to S&P 500 Index averages: - higher
sales and operating earnings growth - more stable earnings growth rates - lower
debt-to-capital ratio - higher return on equity - market capitalization over $1
billion

The portfolio manager also considers the quality of company management and the
strength of the company's position among its competitors. In addition, the
portfolio manager assesses the long-term economic outlook and the risk/return of
securities in allocating investments among industry sectors.

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. 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.

See page 29 for a chart that compares the risks of investing in this Fund with
other Alleghany Funds.

CALENDAR YEAR TOTAL RETURN

[BAR GRAPH]

<TABLE>
<CAPTION>
<S> <C>
TOTAL RETURN
------------

1994 0.50
1995 35.55
1996 25.40
1997 26.74
1998 35.45
1999 23.30
</TABLE>

Best quarter: 12/98 23.68%
Worst quarter: 9/98 -9.03%

The following table indicates how the Fund's average annual returns for
different calendar periods compared to the returns of the S&P 500 Index and the
Lipper Large-Cap Growth Index.

AVERAGE ANNUAL TOTAL RETURN
(For the periods ended December 31, 1999)

Alleghany/
Chicago Trust Lipper
Growth & S&P 500 Large-Cap
Income Fund Index Growth Index
- ------------------------------------------------------------
1 year 23.30% 21.04% 34.82%
- ------------------------------------------------------------

5 years 29.19% 28.56% 30.73%
- ------------------------------------------------------------

Since
Inception(1) 23.97% 23.44% 25.11%
- ------------------------------------------------------------

(1)Fund's inception: December 13, 1993

5
<PAGE>

EQUITY FUNDS: MID-CAP

Alleghany/Chicago Trust Talon Fund

INVESTMENT OBJECTIVE
The Fund seeks long-term total return through capital appreciation by investing
primarily in common and preferred stocks and convertible securities.

PRINCIPAL INVESTMENT STRATEGIES
The portfolio manager invests in stocks of companies that have prospects for
long-term growth. By combining "bottom-up" and "top-down" investment techniques,
the portfolio manager selects stocks based upon a range of financial criteria
including: - attractive price-to-book value, earnings or potential earnings,
cash flow and
dividend yield
- - potential for above average capital appreciation
- - possession of a valuable franchise, competitive market position and
outstanding management

Investments may include the equity securities of small-cap companies with total
market capitalizations of less than $1.5 billion.

VOLATILITY RISK: Although the Fund is a diversified portfolio, it tends to
invest in a fewer number of different stocks than other funds. Consequently, it
may experience larger up and down price swings.

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.

MID-CAP COMPANY RISK: Investments in mid-cap companies entail greater risks than
investments in larger, more established companies. Mid-cap companies generally
have narrower product lines, more limited financial resources and a more limited
trading market for their stocks compared with larger companies. As a result,
their stock prices may experience greater volatility and may decline
significantly in market downturns.

SMALL-CAP COMPANY RISK: Investing in securities of small-cap companies may
involve greater risks than investing in larger, more established issuers.
Small-cap companies generally have limited product lines, markets and financial
resources. Their securities may trade less frequently and in more limited volume
than the securities of larger, more established companies. Also, small-cap
companies are typically subject to greater changes in earnings and business
prospects than larger companies. Consequently, small-cap company stock prices
tend to rise and fall in value more than other stocks.

6
<PAGE>
EQUITY FUNDS: MID-CAP

Alleghany/Chicago Trust Talon Fund (continued)

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.

See page 29 for a chart that compares the risks of investing in this Fund with
other Alleghany Funds.

CALENDAR YEAR TOTAL RETURN

[BAR GRAPH]

<TABLE>
<CAPTION>
<S> <C>
TOTAL RETURN
------------

1995 27.35
1996 26.15
1997 26.46
1998 -5.66
1999 11.44
</TABLE>

Best quarter: 6/99 19.16%
Worst quarter: 9/98 -14.04%

The following table indicates how the Fund's average annual returns for
different calendar periods compare to the returns of the S&P 400 Mid-Cap Index.

AVERAGE ANNUAL TOTAL RETURN
(For the periods ended December 31, 1999)

Alleghany/
Chicago S&P 400
Trust Talon Mid-Cap
Fund Index
- ------------------------------------------------------
1 year 11.44% 14.72%
- ------------------------------------------------------
5 years 16.39% 23.05%
- ------------------------------------------------------
Since Inception(1) 15.84% 21.23%
- ------------------------------------------------------

(1)Fund's inception: September 19, 1994

7
<PAGE>

EQUITY FUNDS: SMALL-CAP

Alleghany/Chicago Trust Small Cap Value Fund

INVESTMENT OBJECTIVE The Fund seeks long-term total return.

PRINCIPAL INVESTMENT STRATEGIES
The Fund invests primarily in value stocks of small-cap U.S. companies and/or
real estate investment trusts (REITs) that the portfolio manager believes have
a: - low price-to-earnings ratio - low relative price-to-book ratio - positive
or improving cash flow - good or improving balance sheet and credit history low
stock price relative to historical levels

The portfolio manager may also invest in securities outside the small-cap range
and in cash-equivalent securities. In the course of implementing its primary
investment strategies, the Fund may experience a relatively high turnover rate
(100% to 160%).

VOLATILITY RISK: Although the Fund is a diversified portfolio, it tends to
invest in a fewer number of different stocks than many other funds.
Consequently, it may experience larger up and down price swings.

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.

8
<PAGE>
EQUITY FUNDS: SMALL-CAP

Alleghany/Chicago Trust Small Cap Value Fund (continued)

VALUE STOCK RISK: Value investing involves buying stocks that are out of favor
and/or undervalued in comparison to their peers or their prospects for growth.
Typically, their valuation levels are lower than growth stocks. The market value
of these stocks tends to be more volatile than large-cap company stocks. Because
different types of stocks go out of favor with investors depending on market and
economic conditions, a fund's return may be adversely affected during market
downturns and when value stocks are out of favor.

PORTFOLIO TURNOVER RISK: Frequent trading of a fund's securities may result in a
higher than average level of capital gains and greater transaction costs of the
portfolio. A higher level of capital gains can result in more frequent
distributions with greater tax consequences.

REIT RISK: Real estate investment trusts (REITs) are publicly traded entities
that invest in office buildings, apartment complexes, industrial facilities,
shopping centers and other commercial spaces. The trusts issue stocks, and most
REIT stocks trade on the major stock exchanges or over-the-counter. They have a
history of larger up and down price swings. A REIT's return may be adversely
affected when interest rates are high or rising.

See page 29 for a chart that compares the risks of investing in this Fund with
other Alleghany Funds.

FUND PERFORMANCE
The bar chart shows the Fund's performance for the period 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

[BAR GRAPH]

<TABLE>
<CAPTION>
<S> <C>
TOTAL RETURN
------------

1999 -7.77
</TABLE>

Best quarter: 6/99 12.22%
Worst quarter: 3/99 -13.28%

The following table indicates how the Fund's average annual returns for
different calendar periods compared to the returns of the Russell 2000 Index,
the Russell 2000 Value Index and the Lipper Small-Cap Value Index.

AVERAGE ANNUAL TOTAL RETURN
(For the periods ended December 31, 1999)

Alleghany/
Chicago
Trust Russell Lipper
Small Cap Russell 2000 Small-Cap
Value 2000 Value Value
Fund Index Index Index
- ------------------------------------------------------------
1 year -7.77% 21.26% -1.49% 1.32%
- ------------------------------------------------------------
Since
Inception(1) -2.89% 29.65% 3.71% 8.05%
- ------------------------------------------------------------

(1)Fund's inception: November 10, 1998

9
<PAGE>

EQUITY FUNDS: SMALL CAP

Alleghany/Veredus Aggressive Growth Fund

INVESTMENT OBJECTIVE
The Fund seeks to provide capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES
The portfolio manager invests primarily in growth stocks of small-cap companies
whose earnings are growing, or are expected to grow, at an accelerated rate. The
portfolio manager looks for inefficiencies in the market caused by inaccurate
expectations (e.g., earnings), focusing on companies that have: - expanding unit
volume growth - increasing profit margins - significant new product development
efforts - returns in excess of their cost of capital

The portfolio manager may also invest in mid-cap equity securities.

To help manage risk, the portfolio management team adheres to a strict sell
discipline. In the course of implementing its primary investment strategies, the
Fund will likely experience a high turnover rate (200% or more).

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.

10
<PAGE>
EQUITY FUNDS: SMALL CAP

Alleghany/Veredus Aggressive Growth Fund (continued)

See page 29 for a chart that compares the risks of investing in this Fund with
other Alleghany Funds.

CALENDAR YEAR TOTAL RETURN

[BAR GRAPH]

<TABLE>
<CAPTION>
<S> <C>
TOTAL RETURN
------------

1999 112.57
</TABLE>

Best quarter: 12/98 34.88%
Worst quarter: 9/98 -22.60%

The following table indicates how the Fund's average annual returns for
different calendar periods compared to the returns of the Russell 2000 Index,
the Russell 2000 Growth Index and the Lipper Small-Cap Growth Index.

AVERAGE ANNUAL TOTAL RETURN
(For the periods ended December 31, 1999)

Lipper
Alleghany/ Russell Small-
Veredus Russell 2000 Cap
Aggressive 2000 Growth Growth
Growth Fund Index Index Index
- ----------------------------------------------------------
One Year 112.57% 21.26% 43.09% 61.17%

Since
Inception(1) 69.89% 8.25% 23.57% 32.06%
- ----------------------------------------------------------

(1)Fund's inception: June 30, 1998

11
<PAGE>

EQUITY FUNDS: INTERNATIONAL

Alleghany/Blairlogie International Developed Fund

INVESTMENT OBJECTIVE
The Fund seeks long-term growth of capital.

PRINCIPAL INVESTMENT STRATEGIES
The Fund invests primarily in a diversified portfolio of international equity
securities of developed markets. In selecting securities, the portfolio manager
combines top-down country selection with bottom-up stock selection to attempt to
maximize returns while controlling risk. In choosing countries, the portfolio
manager uses a model that evaluates five key criteria: - macroeconomics -
monetary issues - earnings momentum - market valuation - technical performance

In choosing stocks, the portfolio manager considers such factors as: - strong
balance sheets - history of earnings growth - performance within a
stock/company's industry - attractive price-to-earnings value and price-to-book
value

The portfolio may include securities that ultimately comprise the MSCI EAFE
Index, but it is not limited to those securities or their weightings in the
Index.

If practicable, the portfolio manager also considers the company's environmental
business practices based on the availability of such information.

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.

Investing in the securities of foreign issuers involves special risks and
considerations not typically associated with investing in U.S. companies. The
following additional risks apply to the Fund.

12
<PAGE>
EQUITY FUNDS: INTERNATIONAL

Alleghany/Blairlogie International Developed Fund (continued)

FOREIGN SECURITIES RISK: The securities of foreign companies may be less liquid
and may fluctuate more widely than those traded in U.S. markets. Foreign
companies and markets may also have less governmental supervision. There may be
difficulty in enforcing contractual obligations and little public information
about the companies. Trades typically take more time to settle and clear, and
the cost of buying and selling foreign securities is generally higher than U.S.
traded securities. Specific risks may include:
- CURRENCY RISK: The value of the securities held by a fund may be affected
by changes in exchange rates or control regulations. If a local currency
gains against the U.S. dollar, the value of the holding increases in U.S.
dollar terms. If a local currency declines against the U.S. dollar, the
value of the holding decreases in U.S. dollar terms.

- POLITICAL/ECONOMIC RISK: Changes in economic, tax or foreign investment
policies, or other political, governmental or economic actions can
adversely affect the value of the securities in a fund.

- REGULATORY RISK: In developed foreign countries, accounting, auditing and
financial reporting standards and other regulatory practices and
requirements are generally different from those of U.S. companies.

See page 29 for a chart that compares the risks of investing in this Fund with
other Alleghany Funds.

CALENDAR YEAR TOTAL RETURN*

[BAR GRAPH]

<TABLE>
<CAPTION>
<S> <C>
TOTAL RETURN
------------

1995 16.87
1996 5.58
1997 1.63
1998 23.41
1999 20.81
</TABLE>

*For 1995-1998, the performance figures reflected are those of a predecessor
fund, PIMCO International Developed Fund.

Best quarter: 3/98 18.85%
Worst quarter: 9/98 -15.87%

The following table indicates how the Fund's average annual returns for
different calendar periods compared to the returns of the MSCI EAFE Index and
the Lipper International Fund
Index.

AVERAGE ANNUAL TOTAL RETURN
(For the periods ended December 31, 1999)

Alleghany/
Blairlogie Lipper
International MSCI International
Developed Fund EAFE Index Fund Index
- --------------------------------------------------------------
1 year 20.81% 27.30% 37.83%
- --------------------------------------------------------------
5 years 13.33% 13.15% 15.96%
- --------------------------------------------------------------
Since
Inception(1) 13.10% 12.75% 15.38%
- --------------------------------------------------------------

(1)Fund's inception: November 30, 1994

13
<PAGE>

EQUITY FUNDS: INTERNATIONAL

Alleghany/Blairlogie Emerging Markets Fund

INVESTMENT OBJECTIVE
The Fund seeks long-term growth of capital.

PRINCIPAL INVESTMENT STRATEGIES
The Fund invests primarily in common stocks of companies located in countries
identified as emerging markets countries. In selecting securities, the portfolio
manager combines top-down country selection with bottom-up stock selection to
attempt to maximize returns while controlling risk. In choosing countries, the
portfolio manager uses a model that evaluates five key criteria: -
macroeconomics - monetary issues - earnings momentum - market valuation -
technical performance

The Fund invests primarily but not exclusively in some or all of the following
emerging market countries:

<TABLE>
<S> <C> <C> <C> <C>
Argentina Greece Jordan Poland Taiwan
Brazil Hong Kong Malaysia Romania Thailand
Chile Hungary Mexico Russia Turkey
China India Pakistan South Africa Venezuela
Colombia Indonesia Peru South Korea Zimbabwe
Czech Israel Philippines Sri Lanka
Republic
</TABLE>

If practicable, the portfolio manager also considers the company's environmental
business practices based on the availability of such information.

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.

14
<PAGE>
EQUITY FUNDS: INTERNATIONAL

Alleghany/Blairlogie Emerging Markets Fund (continued)

Investing in the securities of foreign issuers, and particularly emerging market
issuers, involves special risks and considerations not typically associated with
investing in U.S. companies. Investing in countries that are considered emerging
markets poses additional risks. The following additional risks apply to the
Fund. FOREIGN SECURITIES RISK: The securities of foreign companies may be less
liquid and may fluctuate more widely than those traded in U.S. markets. Foreign
companies and markets may also have less governmental supervision. There may be
difficulty in enforcing contractual obligations and little public information
about the companies. Trades typically take more time to settle and clear, and
the cost of buying and selling foreign securities is generally higher than U.S.
traded securities. Specific risks may include:

- CURRENCY RISK: The value of the securities held by a fund may be affected
by changes in exchange rates or control regulations. If a local currency
gains against the U.S. dollar, the value of the holding increases in U.S.
dollar terms. If a local currency declines against the U.S. dollar, the
value of the holding decreases in U.S. dollar terms.

- POLITICAL/ECONOMIC RISK: Changes in economic, tax or foreign investment
policies, governmental instability or other political, governmental or
economic actions can adversely affect the value of the securities in a
fund.

- REGULATORY RISK: In foreign countries, typically there are little or no
uniform accounting, auditing or financial reporting standards or other
regulatory practices and requirements that are common with U.S.
companies.

EMERGING MARKETS RISK: Emerging market countries typically have economic
structures that are less diverse and mature than those of developed countries.
Their political systems may be less stable, and they may have less developed
legal systems. National policies may restrict foreign investments. The small
size of the securities market can make investments illiquid. The value of the
investments may fluctuate more widely than in developed countries. Special
custody arrangements may also be needed.

See page 29 for a chart that compares the risks of investing in this Fund with
other Alleghany Funds.

CALENDAR YEAR TOTAL RETURN*

[BAR GRAPH]

<TABLE>
<CAPTION>
<S> <C>
TOTAL RETURN
------------

1995 -12.85
1996 4.55
1997 -2.26
1998 -27.65
1999 59.73
</TABLE>

*For 1995-1998, the performance figures
reflected are those of a predecessor fund,
PIMCO Emerging Markets Fund.

Best quarter: 12/99 27.94%
Worst quarter: 9/98 -25.25%

The following table indicates how the Fund's average annual returns for
different calendar periods compared to the returns of the MSCI Emerging Markets
Free Index and the Lipper
Emerging Markets Fund Index.

AVERAGE ANNUAL TOTAL RETURN
(For the periods ended December 31, 1999)

Alleghany/ MSCI Lipper
Blairlogie Emerging Emerging
Emerging Markets Markets
Markets Fund Free Index Fund Index
- ------------------------------------------------------------
1 year 59.73% 66.41% 68.97%
- ------------------------------------------------------------
5 years 0.58% 2.00% 3.02%
- ------------------------------------------------------------
Since
Inception(1) -3.18% -0.73% 0.46%
- ------------------------------------------------------------

(1)Fund's inception: October 20, 1994

15
<PAGE>

EQUITY FUNDS: BALANCED

Alleghany/Montag & Caldwell Balanced Fund

INVESTMENT OBJECTIVE The Fund seeks long-term total return.

PRINCIPAL INVESTMENT STRATEGIES
The Fund invests primarily in a combination of equity, fixed income, and
short-term securities. Generally, between 50% and 70% of the Fund's total assets
will be invested in equity securities, and 25% or more 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 -
are attractively priced, relative to the company's potential for above average
long-term earnings and revenue growth - have strong balance sheets - have a
sustainable competitive advantage
- - are currently, or have the potential to become, industry leaders - have the
potential to outperform during market 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

MANAGER RISK: If a fund manager makes errors in security selection or asset
allocation, a fund may underperform the stock or bond market or its peers. Also,
a fund could fail to meet its investment objective.

16
<PAGE>
EQUITY FUNDS: BALANCED

Alleghany/Montag & Caldwell Balanced Fund (continued)

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.

See page 29 for a chart that compares the risks of investing in this Fund with
other Alleghany Funds.

CALENDAR YEAR TOTAL RETURN

[BAR GRAPH]

<TABLE>
<CAPTION>
<S> <C>
TOTAL RETURN
------------

1995 29.39
1996 20.37
1997 23.49
1998 23.06
1999 12.84
</TABLE>

Best quarter: 12/98 16.94%
Worst quarter: 9/98 -7.61%

The following table indicates how the Fund's average annual returns for
different calendar periods compared to the returns of 60% S&P 500 Index/40%
Lehman Brothers Government Corporate Index and the Lipper Balanced Fund Index.

AVERAGE ANNUAL TOTAL RETURN
(For the periods ended December 31, 1999)

Alleghany/ 60% S&P 500
Montag & Index/40%
Caldwell Lehman Brothers Lipper
Balanced Government Balanced
Fund Corporate Index Fund Index
- ---------------------------------------------------------------
1 year 12.84% 11.40% 8.98%
- ---------------------------------------------------------------
5 years 21.71% 20.03% 16.33%
- ---------------------------------------------------------------
Since
Inception(1) 20.68% 19.14% 15.44%
- ---------------------------------------------------------------

(1)Fund's inception: November 2, 1994

17
<PAGE>

BALANCED FUNDS

Alleghany/Chicago Trust Balanced Fund

INVESTMENT OBJECTIVE
The Fund seeks growth of capital with current income by investing in a
combination of equity and fixed income securities.

PRINCIPAL INVESTMENT STRATEGIES
Generally, between 40% and 70% of the Fund's total assets will be invested in
equity securities, and between 30% and 60% will be invested in fixed income
securities. Although the prices of fixed income securities fluctuate, the steady
income flow they produce helps offset the potentially higher price volatility of
the equity securities in the portfolio. The portfolio manager can invest in
either dividend paying or non-dividend paying equity securities that offer
growth or income potential.

Asset allocation varies according to the portfolio manager's assessment of which
asset class offers the greatest potential for growth. The portfolio manager will
diversify the Fund's investments among a variety of industries.

The portfolio manager uses a bottom-up approach and invests in a combination of
securities that offer potential for growth and/or income, including primarily
large-cap dividend and non-dividend paying common stocks, preferred stocks and
convertible securities. Companies for possible selection must pass an initial
capitalization screen. The portfolio manager then identifies stocks of companies
with the following characteristics compared to S&P 500 Index averages: - higher
sales and operating earnings growth - more stable earnings growth rates - lower
debt-to-capital ratio - higher return on equity - market capitalization over $1
billion

The portfolio manager also considers the quality of company management and the
strength of its position among its competitors. In addition, the portfolio
manager assesses the long-term economic outlook and the risk/return of
securities in allocating investments among industry sectors.

The portfolio manager uses a combination of quantitative and fundamental
research, including risk/reward and credit risk analysis, in choosing investment
grade fixed income securities. The dollar-weighted average maturity of the bonds
in the Fund is normally between three and ten years. Investments may include:
U.S. Government securities - corporate bonds - debentures and convertible
debentures - zero-coupon bonds - mortgage/asset-backed securities - Yankee bonds

18
<PAGE>
BALANCED FUNDS

Alleghany/Chicago Trust Balanced Fund (continued)

BELOW INVESTMENT-GRADE SECURITIES RISK: Bonds and other fixed income securities
are rated by the national ratings agencies. These ratings generally assess the
ability of the issuer to pay principal and interest. There are several
categories of investment grade securities, and those rated in the lower
categories are more risky than those rated in the higher categories.

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.

See page 29 for a chart that compares the risks of investing in this Fund with
other Alleghany Funds.

CALENDAR YEAR TOTAL RETURN

[BAR GRAPH]

<TABLE>
<CAPTION>
<S> <C>
TOTAL RETURN
------------

1996 16.56
1997 20.91
1998 25.13
1999 12.89
</TABLE>

Best quarter: 12/98 14.75%
Worst quarter: 9/98 -4.02%

The following table indicates how the Fund's average annual returns for
different calendar periods compared to the returns of 60% S&P 500 Index/40%
Lehman Brothers Aggregate Bond Index and the Lipper Balanced Fund Index.

AVERAGE ANNUAL TOTAL RETURN
(For the periods ended December 31, 1999)

Alleghany/ 60% S&P
Chicago 500 Index/
Trust Lehman Brothers Lipper
Balanced Aggregate Balanced
Fund Bond Index Fund Index
- -------------------------------------------------------------
1 year 12.89% 12.00% 8.98%
- -------------------------------------------------------------
Since
Inception(1) 18.83% 18.20% 14.56%
- -------------------------------------------------------------

(1)Fund's inception: September 21, 1995

19
<PAGE>

FIXED INCOME FUNDS

Alleghany/Chicago Trust Bond Fund

INVESTMENT OBJECTIVE
The Fund seeks high current income consistent with prudent risk of capital.

PRINCIPAL INVESTMENT STRATEGIES
The Fund invests primarily in a broad range of intermediate-term investment-
grade fixed income securities. The portfolio manager uses a combination of
quantitative and fundamental research, including risk/reward and credit risk
analysis, in choosing securities. The dollar-weighted average maturity of the
bonds in the Fund is normally between three and ten years. Investments may
include: - U.S. Government securities - corporate bonds - debentures and
convertible debentures - zero-coupon bonds - mortgage/asset-backed securities -
Yankee bonds

PRINCIPAL RISKS OF INVESTING IN THIS FUND
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.

PREPAYMENT RISK: Mortgage-backed securities carry prepayment risks. Prices and
yields of mortgage-backed securities assume that the underlying mortgages will
be paid off according to a preset schedule. If the underlying mortgages are paid
off early, such as when homeowners refinance as interest rates decline, the fund
may be forced to reinvest the proceeds in lower yield, higher priced securities.
This may reduce a fund's total return.

MANAGER RISK: If a fund manager makes errors in security selection, a fund may
underperform the bond market or its peers. Also, a fund could fail to meet its
investment objective.

20
<PAGE>
FIXED INCOME FUNDS

Alleghany/Chicago Trust Bond Fund (continued)

See page 29 for a chart that compares the risks of investing in this Fund with
other Alleghany Funds.

CALENDAR YEAR TOTAL RETURN

[BAR GRAPH]

<TABLE>
<CAPTION>
<S> <C>
TOTAL RETURN
------------

1994 -2.83
1995 17.51
1996 3.84
1997 8.98
1998 7.69
1999 -0.43
</TABLE>

Best quarter: 6/95 5.55%
Worst quarter: 3/94 -2.26%

The following table indicates how the Fund's average annual returns for
different calendar periods compared to the returns of the Lehman Brothers
Aggregate Bond Index and the Lipper Intermediate Investment Grade Index.

AVERAGE ANNUAL TOTAL RETURN
(For the periods ended December 31, 1999)

Lipper
Alleghany/ Lehman Brothers Intermediate
Chicago Trust Aggregate Investment
Bond Index Bond Index Grade Index
- ----------------------------------------------------------------
1 year -0.43% -0.82% -0.98%
- ----------------------------------------------------------------
5 years 7.35% 7.73% 7.08%
- ----------------------------------------------------------------
Since
Inception(1) 5.57% 5.89% 5.31%
- ----------------------------------------------------------------

(1)Fund's inception: December 13, 1993

21
<PAGE>

FIXED INCOME FUNDS

Alleghany/Chicago Trust Municipal Bond Fund

INVESTMENT OBJECTIVE
The Fund seeks a high level of current interest income exempt from federal
income tax consistent with preservation of capital by investing primarily in
intermediate-term municipal securities. PRINCIPAL INVESTMENT STRATEGIES To
provide tax-free income for investors, the portfolio manager primarily invests
(80% or more of total assets) in municipal fixed income securities such as
revenue bonds, insured bonds, general obligation bonds and government-
guaranteed escrow bonds. Securities are typically high quality and diversified
among a broad range of states, sectors and issues. The Fund strives to maintain:
- - a dollar-weighted average maturity of between three and ten years - an
intermediate duration (four to eight years) - AA-A average quality

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.

MUNICIPAL SECURITIES RISK: Municipal securities are backed by the entities that
issue them and/or other revenue streams. Like other fixed income securities,
changes in interest rates and the credit rating or financial condition of the
issuer affects securities' prices. Income from these investments is generally
exempt from federal income tax. Some municipal securities are insured and
guarantee the timely payment of interest and repayment of principal.

MANAGER RISK: If a fund manager makes errors in security selection, a fund may
underperform the bond market or its peers. Also, a fund could fail to meet its
investment objective.

See page 29 for a chart that compares the risks of investing in this Fund with
other Alleghany Funds.

CALENDAR YEAR TOTAL RETURN

[BAR GRAPH]

<TABLE>
<CAPTION>
<S> <C>
TOTAL RETURN
------------

1994 -2.24
1995 11.05
1996 3.10
1997 5.50
1998 5.51
1999 -1.75
</TABLE>

Best quarter: 3/95 4.19%
Worst quarter: 3/94 -2.89%

The following table indicates how the Fund's average annual returns for
different calendar periods compare to the returns of the Lehman Brothers
Five-Year General Obligations Index and the Lipper Intermediate Municipal Funds
Index.

AVERAGE ANNUAL TOTAL RETURN
(For the periods ended December 31, 1999)

Alleghany/
Chicago Lipper
Trust Lehman Brothers Intermediate
Municipal Five-Year General Municipal
Bond Fund Obligations Index Funds Index
- ---------------------------------------------------------------
1 year -1.75% 0.71% -1.37%
- ---------------------------------------------------------------
5 years 4.60% 5.80% 5.59%
- ---------------------------------------------------------------
Since
Inception(1) 3.42% 4.57%(2) 4.24%
- ---------------------------------------------------------------

(1)Fund's inception: December 13, 1993
(2)As of closest available date (12/31/93)
22
<PAGE>

MONEY MARKET FUND

Alleghany/Chicago Trust Money Market Fund

INVESTMENT OBJECTIVE
The Fund seeks as high a level of current interest income as is consistent with
maintaining liquidity and stability of principal.

PRINCIPAL INVESTMENT STRATEGIES
The Fund seeks to maintain a stable net asset value of $1.00 per share by
investing in a diversified portfolio of high-quality money market instruments.
The dollar-weighted average maturity of the securities in the Fund is 90 days or
less. The portfolio manager selects securities that: - are denominated in U.S.
dollars - have high credit quality and minimal credit risk - mature in 397 days
or less

In selecting high quality securities with minimal credit risk, the portfolio
manager buys securities with the highest ratings given by national rating
agencies.

PRINCIPAL RISKS OF INVESTING IN THIS FUND
An investment in the Fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation (FDIC) or any other government agency. Although the Fund
seeks to preserve the value of your investment at $1.00 per share and
historically has been able to do so, it is possible to lose money by investing
in the Fund. The Fund's yield will change as a result of movements in short-term
interest rates and market conditions.

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.

MANAGER RISK: If a fund manager makes errors in security selection, a fund may
underperform the bond market or its peers. Also, a fund could fail to meet its
investment objective.

See page 29 for a chart that compares the risks of investing in this Fund with
other Alleghany Funds.

CALENDAR YEAR TOTAL RETURN

[BAR GRAPH]

<TABLE>
<CAPTION>
<S> <C>
TOTAL RETURN
------------

1994 3.91
1995 5.62
1996 5.07
1997 5.22
1998 5.16
1999 4.84
</TABLE>

Best quarter: 6/95 1.42%
Worst quarter: 3/94 0.70%

The following table indicates how the Fund's average annual returns for
different calendar periods compared to the returns of the 91-Day U.S. Treasury
Bill and IBC Donoghue's First Tier Money Market Fund Index.

AVERAGE ANNUAL TOTAL RETURN
(For the periods ended December 31, 1999)

Alleghany/ IBC Donoghue's
Chicago Trust First Tier
Money 91 Day U.S. Money Market
Market Fund Treasury Bill Fund Index
- ----------------------------------------------------------------
1 year 4.84% 4.79% 4.48%
- ----------------------------------------------------------------
5 years 5.18% 5.14% 4.86%
- ----------------------------------------------------------------
Since
Inception(1) 4.96% 4.95% 4.77%
- ----------------------------------------------------------------

(1)Fund's inception: December 14, 1993

23
<PAGE>

Fund Expenses

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, except that a redemption fee of 2.00%
is charged when you redeem shares of ALLEGHANY/BLAIRLOGIE INTERNATIONAL
DEVELOPED FUND or ALLEGHANY/BLAIRLOGIE EMERGING MARKETS FUND within 90 days of
purchase.

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> <C> <C> <C>
TOTAL
NET
MANAGEMENT DISTRIBUTION OTHER EXPENSE FEE
EXPENSE
FUND FEES (12B-1) FEES EXPENSES RATIO WAIVERS
RATIO

Alleghany/Montag & Caldwell Growth(3) 0.67% 0.25% 0.13% 1.05% --
1.05%
Alleghany/Chicago Trust Growth & Income 0.70 0.25 0.11 1.06 --
1.06
Alleghany/Chicago Trust Talon 0.80 0.25 0.45 1.50 (0.20)
1.30(1)
Alleghany/Chicago Trust Small Cap Value 1.00 0.25 0.30 1.55 (0.15)
1.40(1)
Alleghany/Veredus Aggressive Growth 1.00 0.25 0.32 1.57 (0.17)
1.40(1)
Alleghany/Blairlogie International Developed(3) 0.85 0.25 0.31 1.41 (0.06)
1.35(1)
Alleghany/Blairlogie Emerging Markets(3) 0.85 0.25 0.97 2.07 (0.47)
1.60(1)
Alleghany/Montag & Caldwell Balanced(3) 0.75 0.25 0.14 1.14 --
1.14
Alleghany/Chicago Trust Balanced 0.70 0.25 0.11 1.06 --
1.06
Alleghany/Chicago Trust Bond(3) 0.55 0.25 0.13 0.93 (0.19)
0.74(1)
Alleghany/Chicago Trust Municipal Bond 0.60 0.10 0.50 1.20 (1.10)
0.10(2)()
Alleghany/Chicago Trust Money Market 0.40 n/a 0.11 0.51 --
0.51
</TABLE>

(1)The above table reflects a continuation of the Advisers' contractual
undertakings to waive management fees and/or reimburse expenses exceeding the
limits shown. The ratios shown above reflect the expenses incurred during the
fiscal year ended October 31, 1999, except for ALLEGHANY/ VEREDUS AGGRESSIVE
GROWTH FUND and ALLEGHANY/CHICAGO TRUST BOND FUND, which are estimated. The
Advisers are contractually obligated to reimburse expenses for one year at the
rates shown in the table. (2)The above table reflects a continuation of the
Adviser's voluntary undertaking to waive management fees and/or reimburse
expenses exceeding the limit shown. The ratio shown above reflects the expenses
incurred during the fiscal year ended October 31, 1999. (3)ALLEGHANY/MONTAG &
CALDWELL GROWTH FUND, ALLEGHANY/CHICAGO TRUST GROWTH & INCOME FUND,
ALLEGHANY/BLAIRLOGIE INTERNATIONAL DEVELOPED FUND, ALLEGHANY/BLAIRLOGIE EMERGING
MARKETS FUND, ALLEGHANY/MONTAG & CALDWELL BALANCED FUND and ALLEGHANY/CHICAGO
TRUST BOND FUND each offer two classes of shares that invest in the same
portfolio of securities. Shareholders of Class N shares are subject to a 12b-1
distribution plan; therefore, expenses and performance figures will vary between
the classes. The information set forth in the table above and the example below
relates only to Class N shares, which are offered in this prospectus. Class I
shares are offered in a separate prospectus.

24
<PAGE>
Fund Expenses (continued)

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

Alleghany/Montag & Caldwell Growth Fund $107 $334 $ 579
$1,283
Alleghany/Chicago Trust Growth & Income Fund 108 337 585
1,294
Alleghany/Chicago Trust Talon Fund 132 454 800
1,773
Alleghany/Chicago Trust Small Cap Value Fund 143 475 831
1,833
Alleghany/Veredus Aggressive Growth Fund 143 479 839
1,853
Alleghany/Blairlogie International Developed Fund 137 440 765
1,686
Alleghany/Blairlogie Emerging Markets Fund 163 603 1,070
2,363
Alleghany/Montag & Caldwell Balanced Fund 116 362 628
1,386
Alleghany/Chicago Trust Balanced Fund 108 337 585
1,294
Alleghany/Chicago Trust Bond Fund 76 277 496
1,126
Alleghany/Chicago Trust Municipal Bond Fund 122 381 660
1,455
Alleghany/Chicago Trust Money Market Fund 52 164 285
640
</TABLE>

25
<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.

BANK DEPOSITS. Cash, check or drafts deposited in a financial institution for
credit to a customer's account. Banks differentiate between demand deposits
(checking accounts on which the customer may draw) and time deposits, which pay
interest and have a specified maturity or require 30 days' notice before
withdrawal.

BOTTOM-UP INVESTING. An investing approach in which securities are researched
and chosen individually with less consideration given to economic or market
cycles.

COMMERCIAL PAPER. Short-term fixed income securities issued by banks,
corporations and other borrowers.

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.

DEVELOPED MARKETS. Countries that are considered to have a high level of overall
economic and securities market development as well as stable financial and
political policies. Developed countries generally include the United States,
Japan and Western Europe.

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 the bond's price sensitivity to interest rate
changes. The higher the duration number, the greater the risk and reward
potential of the bond.

EMERGING MARKETS. Countries whose economy and securities markets are considered
by the World Bank to be emerging or developing. Emerging market countries may be
located in such regions as Asia, Latin America, the Middle East, Southern
Europe, Eastern Europe and Africa.

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).

FOREIGN DEBT SECURITIES. Securities issued by foreign corporations and
governments. They may include:
- - Eurodollar bonds. Dollar-denominated securities issued outside the U.S. by
foreign corporations and financial institutions and by foreign branches of
U.S. corporations and financial institutions
- - Yankee bonds. Dollar-denominated securities issued in the U.S. by foreign
issuers

GROWTH INVESTING. An investing approach that involves buying stocks of companies
that are generally industry leaders with above-average, sustainable growth
rates. Typically, growth stocks are the stocks of the fastest growing companies
in the most rapidly growing sectors of the economy. Growth stock valuation
levels (e.g., price-to-earnings ratio) will generally be higher than value
stocks.

HIGH YIELD SECURITIES. Lower rated, higher yielding securities issued by
corporations. They are rated below investment-grade by national bond rating
agencies. They are considered speculative and are sometimes called "junk bonds".

IBC DONOGHUE FIRST TIER MONEY MARKET FUND INDEX. An unmanaged index consisting
of non-government funds that hold paper considered to be of the highest credit
quality by at least one nationally recognized statistical rating organization.

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 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.

LEHMAN BROTHERS AGGREGATE BOND INDEX. An unmanaged index representing more than
5,000 taxable government, investment-grade corporate and mortgage-backed
securities.

26
<PAGE>
Investment Terms (continued)

LEHMAN BROTHERS GOVERNMENT CORPORATE INDEX. An unmanaged index that includes
U.S. Government and investment-grade corporate securities with at least one year
to maturity.

LEHMAN BROTHERS MUNICIPAL FIVE-YEAR GENERAL OBLIGATIONS INDEX. An unmanaged
index that tracks the returns of investment-grade tax-exempt general
obligations.

MANAGEMENT FEE. The amount that a mutual fund pays to the investment adviser for
its services.

MID-CAP STOCKS. Stocks issued by mid-sized companies. Alleghany Funds defines a
mid-cap company as one with a market capitalization between $1.5 billion and $5
billion, which is similar to the range of the Standard & Poor's MidCap 400 Index
(S&P 400).

MONEY MARKET SECURITIES. Short-term fixed income securities of federal and local
governments, banks and corporations.

MSCI EAFE INDEX. The Morgan Stanley Capital International Europe, Australasia,
Far East Index, a market-weighted aggregate of 20 individual country
indices/indexes that collectively represent many of the major world markets,
excluding the U.S. and Canada.

MSCI EMERGING MARKETS FREE INDEX. The Morgan Stanley Capital International
Emerging Markets Free Index, a market-capitalization weighted index composed of
26 of the world's developing markets.

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 (pool) of commercial and residential mortgages.

MUNICIPAL SECURITIES. Fixed income obligations of state and local governments.
Investments in municipal securities may support special construction projects,
such as roads or hospitals, in the municipality that issues them. Interest from
municipal bonds is usually exempt from federal taxes and from state taxes only
in the state of issue.

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 (NAV). 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.

RUSSELL 2000 INDEX. An unmanaged index that contains the 2000 smallest common
stocks in the Russell 3000 (which contains the 3000 largest stocks in the U.S.
based on total market capitalization).

SMALL-CAP STOCKS. Stocks issued by smaller companies. Alleghany Funds defines a
small-cap company as one with a market capitalization and/or market float of
less than $1.5 billion, which approximates the size of the largest company in
the Russell 2000 Index. The Russell 2000 is a widely recognized, unmanaged index
of common stocks of the 2,000 smallest companies in the U.S.

STANDARD & POOR'S (S&P) 500 INDEX. An unmanaged index of 500 widely traded
industrial, transportation, financial and public utility stocks.

S&P 400 MIDCAP INDEX. An unmanaged market-value weighted index that consists of
400 domestic stocks chosen for market size, liquidity and industry group
representation.

TOP-DOWN INVESTING. An investing approach in which securities are chosen by
looking at the industry or sector level based on market trends and/or economic
forecasts.

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.

27
<PAGE>
Investment Terms (continued)

12B-1 FEE. A mutual fund fee, named for the SEC rule that permits it, used to
pay for distribution costs, such as advertising and commissions paid to dealers.
If a fund has a 12b-1 fee, it is found in the fee table of its prospectus.

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.

VALUE INVESTING. An investing approach involves buying stocks that are out of
favor and/or undervalued compared to their peers. Generally, value stock
valuation levels are lower than growth stocks.

VARIABLE RATE SECURITIES. Securities that have interest rates that may be
adjusted periodically to reflect changes in interest rates. Interest rate
adjustments can either raise or lower the income generated by the securities.

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.

28
<PAGE>

More About Alleghany Funds

RISK SUMMARY
The following chart compares the principal risks of investing in each Alleghany
Fund.
<TABLE>
<CAPTION>
BELOW CREDIT EMERGING FOREIGN GROWTH INTEREST
ISSUER LIQUIDITY
INVESTMENT MARKETS SECURITIES STOCK RATE
GRADE
SECURITIES

<S> <C> <C> <C> <C> <C> <C>
<C> <C>
Alleghany/Montag & Caldwell Growth Fund X
Alleghany/Chicago Trust Growth & Income Fund X
Alleghany/Chicago Trust Talon
Fund X
Alleghany/Chicago Trust Small Cap Value
Fund X
Alleghany/Veredus Aggressive Growth
Fund X
Alleghany/Blairlogie International Developed Fund
X X
Alleghany/Blairlogie Emerging Markets Fund X
X X
Alleghany/Montag & Caldwell Balanced Fund X X X X
Alleghany/Chicago Trust Balanced Fund X X X X
X X
Alleghany/Chicago Trust Bond Fund X X X
X X
Alleghany/Chicago Trust Municipal Bond Fund X
X X
Alleghany/Chicago Trust Money Market Fund X X

<CAPTION>
Manager Market Mid- Municipal Portfolio Prepayment
Reit Small-
Cap Securities
Turnover Cap

Company Company

<S> <C> <C> <C> <C> <C> <C>
<C> <C>
Alleghany/Montag & Caldwell Growth Fund X X
Alleghany/Chicago Trust Growth & Income Fund X X
Alleghany/Chicago Trust Talon Fund X X
X X
Alleghany/Chicago Trust Small Cap Value Fund X X X X
X X
Alleghany/Veredus Aggressive Growth Fund X X X
X X
Alleghany/Blairlogie International Developed Fund X X
Alleghany/Blairlogie Emerging Markets Fund X X
Alleghany/Montag & Caldwell Balanced Fund X X
Alleghany/Chicago Trust Balanced Fund X X
Alleghany/Chicago Trust Bond Fund X X
Alleghany/Chicago Trust Municipal Bond Fund X X
Alleghany/Chicago Trust Money Market Fund X

<CAPTION>
VALUE VOLATILITY
STOCK

<S> <C> <C>
Alleghany/Montag & Caldwell Growth Fund
Alleghany/Chicago Trust Growth & Income Fund
Alleghany/Chicago Trust Talon Fund X
Alleghany/Chicago Trust Small Cap Value Fund X X
Alleghany/Veredus Aggressive Growth Fund X X
Alleghany/Blairlogie International Developed Fund
Alleghany/Blairlogie Emerging Markets Fund X
Alleghany/Montag & Caldwell Balanced Fund
Alleghany/Chicago Trust Balanced Fund
Alleghany/Chicago Trust Bond Fund
Alleghany/Chicago Trust Municipal Bond Fund
Alleghany/Chicago Trust Money Market Fund
</TABLE>

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.

29
<PAGE>
More About Alleghany Funds (continued)

OTHER INVESTMENT STRATEGIES
In addition to the primary investment strategies described in our fund
summaries, there may be times when Alleghany Funds uses secondary investment
strategies in seeking to achieve investment objectives. These strategies may
involve additional risks.

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.

ALTERNATIVE MINIMUM TAX (AMT) BONDS
ALLEGHANY/CHICAGO TRUST MUNICIPAL BOND FUND can invest in AMT bonds, which are
tax-exempt "private activity" bonds issued after August 7, 1986 whose proceeds
are partially directed to a for-profit organization. While the income from AMT
bonds is exempt from federal taxes, it is a tax preference item for purposes of
the AMT, which applies to a limited number of taxpayers.

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
Except for ALLEGHANY/CHICAGO TRUST SMALL CAP VALUE FUND and ALLEGHANY/CHICAGO
TRUST MONEY MARKET FUND, up to 20% of a Fund's assets can be invested in
derivatives. Derivatives are used to limit risk in a portfolio or enhance
investment return, and they 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
The Equity Funds 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.

TAX-EXEMPT INDUSTRIAL DEVELOPMENT BONDS
ALLEGHANY/CHICAGO TRUST MUNICIPAL BOND FUND can invest in tax-exempt industrial
development bonds, which are usually revenue bonds that are not payable from the
unrestricted revenues of the issuer. Their credit quality is usually directly
related to the credit standing of the user of the facilities being financed.

More information about the risks associated with investing in Alleghany Funds
can also be found in the Statement of Additional Information (SAI).

30
<PAGE>
More About Alleghany Funds (continued)

OTHER INVESTMENT STRATEGIES (CONTINUED)
<TABLE>
<CAPTION>
ADRS/EDRS ASSET/MORTGAGE BELOW CMOS COMMERCIAL CORPORATE
CONVERTIBLE
- INVESTMENT PAPER BONDS
SECURITIES
BACKED GRADE AND
SECURITIES SECURITIES SECURITIES
('JUNK OF
BONDS') OTHER
INVESTMENT
COMPANIES

<S> <C> <C> <C> <C> <C> <C>
<C>
Alleghany/Montag & Caldwell Growth Fund X X
X X P
Alleghany/Chicago Trust Growth & Income Fund X X X X X
X X P
Alleghany/Chicago Trust Talon Fund X X X
X X P
Alleghany/Chicago Trust Small Cap Value Fund X
Alleghany/Veredus Aggressive Growth Fund X
X X
Alleghany/Blairlogie International Developed
Fund X X X
X X
Alleghany/Blairlogie Emerging Markets Fund X X X
X X
Alleghany/Montag & Caldwell Balanced Fund X X X X X
P X P
Alleghany/Chicago Trust Balanced Fund X X P X X X X
P X P
Alleghany/Chicago Trust Bond Fund X P X X X X
P X
Alleghany/Chicago Trust Municipal Bond Fund X X X X
Alleghany/Chicago Trust Money Market Fund X P

<CAPTION>
DEBENTURES DERIVATIVES EQUITY FIXED FOREIGN
PREFERRED REPURCHASE
AND (OPTIONS, SECURITIES INCOME SECURITIES
STOCKS AGREEMENTS
CONVERTIBLE FORWARDS, SECURITIES
DEBENTURES FUTURES,
SWAPS)

<S> <C> <C> <C> <C> <C>
<C> <C>
Alleghany/Montag & Caldwell Growth Fund X X X P X
X X
Alleghany/Chicago Trust Growth & Income Fund X X P X X
P X
Alleghany/Chicago Trust Talon Fund X X P X X
P X
Alleghany/Chicago Trust Small Cap Value Fund X
P X
Alleghany/Veredus Aggressive Growth Fund X X X P
X X
Alleghany/Blairlogie International Developed
Fund X X P X
P X
Alleghany/Blairlogie Emerging Markets Fund X X P X
P X
Alleghany/Montag & Caldwell Balanced Fund X X X P X P X
P X
Alleghany/Chicago Trust Balanced Fund X X X P X P X
P X
Alleghany/Chicago Trust Bond Fund X X X
P X
Alleghany/Chicago Trust Municipal Bond Fund X X
P X
Alleghany/Chicago Trust Money Market Fund X
P X

<CAPTION>
RULE U.S.
144A GOVERNMENT
SECURITIES SECURITIES

<S> <C> <C>
Alleghany/Montag & Caldwell Growth Fund X X
Alleghany/Chicago Trust Growth & Income Fund X X
Alleghany/Chicago Trust Talon Fund X X
Alleghany/Chicago Trust Small Cap Value Fund X X
Alleghany/Veredus Aggressive Growth Fund X X
Alleghany/Blairlogie International Developed
Fund X X
Alleghany/Blairlogie Emerging Markets Fund X X
Alleghany/Montag & Caldwell Balanced Fund X X P
Alleghany/Chicago Trust Balanced Fund X X P
Alleghany/Chicago Trust Bond Fund X X P
Alleghany/Chicago Trust Municipal Bond Fund X X
Alleghany/Chicago Trust Money Market Fund X X
</TABLE>

P = components of a fund's primary investment strategy

31
<PAGE>

Management of the Funds

THE ADVISERS
Each Fund has an Adviser that provides management services. The Adviser is paid
an annual management fee by each Fund for its services based on the average
daily net assets of the Fund. The accompanying information highlights each Fund
and its lead portfolio manager(s) and investment experience and the management
fees paid by each Fund.

THE CHICAGO TRUST COMPANY
Chicago Trust is the Adviser to several Alleghany Funds. Investment management
teams make the investment decisions for each Fund. As of December 31, 1999,
Chicago Trust managed approximately $11.8 billion in assets, consisting
primarily of insurance, pension and profit sharing accounts, as well as accounts
of high net worth individuals and families. Chicago Trust is an indirect and
wholly-owned subsidiary of Alleghany Corporation.

<TABLE>
<CAPTION>
FUND NAME PORTFOLIO MANAGER(S) INVESTMENT EXPERIENCE
<S> <C>
<C>
Alleghany/Chicago Trust Growth Bernard F. Portfolio Manager of the Fund since September 1999;
Senior
& Income Fund Myszkowski Vice President and Chief Equity Officer; associated with
Chicago Trust and its affiliates since 1969. He has
been a
member of the Equity Investment Committee since 1993,
and a
manager of balanced and common stock portfolios for
institutional and private family accounts in 1973. Mr.
Myszkowski received a BS from DePaul University in 1967
and
an MBA from Northwestern University in 1971. He is a
Chartered Financial Analyst.
Richard S. Drake Portfolio Manager of the Fund since February 2000; Vice
President, Director of Equity Research and Portfolio
Manager; associated with Chicago Trust since January
2000.
Mr. Drake has 14 years of investment experience; he
previously held a senior investment management position
with
Duff & Phelps Investment Management, Inc. from
1995-1999.
Prior to that he was a Vice President and Senior
Research
Analyst with Society Asset Management/Key Corp. Mr.
Drake
received his BBA from the University of Cincinnati and
his
MM from the Kellogg Graduate School of Management at
Northwestern University. He is a Chartered Financial
Analyst.
Alleghany/Chicago Trust Talon Terry D. Diamond Portfolio Manager since the Fund's inception in 1994;
Fund Chairman and Chief Executive Officer of Talon Asset
(subadvised by Talon Asset Management since 1984. Mr. Diamond has more than 30
years of
Management) investment management experience. He has a BS from the
University of Michigan
and a JD from the
University of Chicago.
Thyra E. Zerhusen Portfolio Manager since May 1999; Ms. Zerhusen joined
the
investment team of Talon Asset Management in April
1999. Ms.
Zerhusen has 23 years of investment management
experience;
she was previously a Senior Vice President and
Principal at
the Burridge Group, a Senior Investment Analyst at Sears
Investment Management Company and Investment Research
Officer at Harris Trust. She has a Diplom Inginieur
from the
Swiss Federal Institute of Technology and an MA in
Economics
from the University of Illinois.
Alleghany/Chicago Trust Small Patricia A. Portfolio Manager since the Fund's inception in 1998;
joined
Cap Value Fund Falkowski Chicago Trust in 1998 as Managing Director and oversees
the
small cap equity investment area. She was President and
Chief Investment Officer of Fiduciary Management
Associates,
Inc. from 1993-1998. Ms. Falkowski has more than 24
years of
investment management experience. She has a BS, Summa
Cum
Laude, from Rider College and an MBA from the
University of
Chicago.
</TABLE>

32
<PAGE>
Management of the Funds (continued)

<TABLE>
<CAPTION>
FUND NAME PORTFOLIO MANAGER(S) INVESTMENT EXPERIENCE
<S> <C>
<C> <C>
Alleghany/Chicago Trust Bernard F. Portfolio Manager of the Fund since September 1999;
Senior
Balanced Fund Myszkowski Vice President and Chief Equity Officer; associated with
Chicago Trust and its affiliates since 1969. He has
been a
member of the Equity Investment Committee since 1993,
and a
manager of balanced and common stock portfolios for
institutional and private family accounts in 1973. Mr.
Myszkowski received a BS from DePaul University in 1967
and
an MBA from Northwestern University in 1971. He is a
Chartered Financial Analyst.
Thomas J. Marthaler Portfolio Manager since the Fund's inception in 1995 and
Vice President; associated with Chicago Trust and its
affiliates since 1981. He has managed fixed income
investment portfolios since 1984. Mr. Marthaler has a BA
from the University of St. Thomas and an MBA from Loyola
University. He is a Chartered Financial Analyst.
Alleghany/Chicago Trust Bond Thomas J. Marthaler Portfolio Manager since the Fund's inception in 1993 and
Fund Vice President; associated with Chicago Trust and its
affiliates since 1981. He has managed fixed income
investment portfolios since 1984. Mr. Marthaler has a BA
from the University of St. Thomas and an MBA from Loyola
University. He is a Chartered Financial Analyst.
Alleghany/Chicago Trust Dawn Daggy-Mangerson Portfolio Manager of the Fund since February 2000; she
Municipal Bond Fund joined Chicago Trust as Senior Portfolio Manager in
2000 and
specializes in
institutional, mutual
fund, tax-exempt trust
fund and separate
account clients. She
has 12 years of
investment experience.
Most recently she was
a manager of national
tax-exempt fixed
income mutual fund
portfolios at Invesco
Funds Group from 1998
to 2000; a manager of
national and
state-specific
tax-exempt fixed
income mutual and
common funds, national
and state-specified
money market mutual
fund portfolios at
Nationsbank/Tradestreet
Investment from
1995-1998; a manager
of insurance company
portfolios at Stein
Roe & Farnham from
1988-1995. She has a
BS from DePaul
University.
Alleghany/Chicago Trust Money Fred H. Senft, Jr. Portfolio Manager since the Fund's inception in 1993 and
Market Fund Vice President; associated with Chicago Trust and its
affiliates since 1992. He specializes in money market
instruments as well as mortgage-backed securities and
asset-backed securities. Mr. Senft has a BA from Lake
Forest
College. He is a Chartered Financial Analyst.
</TABLE>

<TABLE>
<CAPTION>
FUND NAME MANAGEMENT FEE
<S> <C>
Alleghany/Chicago Trust Growth & Income Fund 0.70%
Alleghany/Chicago Trust Talon Fund 0.80%
Alleghany/Chicago Trust Small Cap Value Fund 1.00%
Alleghany/Chicago Trust Balanced Fund 0.70%
Alleghany/Chicago Trust Bond Fund 0.55%
Alleghany/Chicago Trust Municipal Bond Fund 0.60%
Alleghany/Chicago Trust Money Market Fund 0.40%
</TABLE>

33
<PAGE>
Management of the Funds (continued)

ALLEGHANY/CHICAGO TRUST SMALL CAP VALUE FUND
ALLEGHANY/CHICAGO TRUST SMALL CAP VALUE FUND began operations on November 4,
1998. Patricia A. Falkowski manages the investment program of ALLEGHANY/CHICAGO
TRUST SMALL CAP VALUE FUND and is primarily responsible for the day-to-day
management of the Fund's portfolio. Ms. Falkowski became a managing director at
Chicago Trust on August 24, 1998.

The investment objectives, policies and strategies of the Fund are substantially
similar in all material aspects to the UAM FMA Small Company Portfolio. Ms.
Falkowski had been Chief Investment Officer of Fiduciary Management Associates,
Inc. since 1992 and President since 1993. In that capacity, Ms. Falkowski was
the primary portfolio manager for the UAM FMA Small Company Portfolio with full
discretionary authority over the selection of investments for that fund from
July 1992 through August 1998. The UAM FMA Small Company Portfolio Institutional
Class Shares had net assets of $182.7 million as of June 30, 1998.

AVERAGE ANNUAL RETURNS OF UAM FMA
SMALL COMPANY PORTFOLIO
(For periods ended June 30, 1998)

<TABLE>
<CAPTION>
UAM FMA
Small Russell
Company 2000
Portfolio(1,2) Index(1)
- ------------------------------------------------------------------------------
<S> <C> <C>
One year 23.14% 16.50%
- ------------------------------------------------------------------------------
Three years 25.62% 18.86%
- ------------------------------------------------------------------------------
Five years 19.19% 16.05%
- ------------------------------------------------------------------------------
Since July 1, 1992(4) 21.97% 17.65%
- ------------------------------------------------------------------------------
</TABLE>

(1)Average annual total return reflects changes in share prices and reinvestment
of dividends and distributions and is net of fund expenses. (2)The expense ratio
of UAM FMA Small Company Portfolio was capped at 1.03% from July 1, 1992 through
June 30, 1998. The expense ratio of ALLEGHANY/CHICAGO TRUST SMALL CAP VALUE FUND
is capped at 1.40% through [December 31, 1999]. The returns shown have been
restated to reflect an expense ratio of 1.40% (consistent with the contractual
expense cap of ALLEGHANY/CHICAGO TRUST SMALL CAP VALUE FUND). (3)The Russell
2000 Index is a widely recognized, unmanaged index of common stocks of the 2,000
smallest companies in the Russell 3000 Index. The Russell 3000 Index is
comprised of the 3,000 largest U.S. companies based on total market
capitalization. Each Index is adjusted to reflect reinvestment of dividends.
(4)The inception date of the UAM FMA Small Company Portfolio was July 31, 1991.
Ms. Falkowski began managing the Fund in July 1992.

Although similar to ALLEGHANY/CHICAGO TRUST SMALL CAP VALUE FUND, the UAM FMA
Small Company Portfolio is a separate fund and its historical performance is not
indicative of the future performance of ALLEGHANY/CHICAGO TRUST SMALL CAP VALUE
FUND. Historical performance is not indicative of future performance. Share
prices and investment returns will fluctuate, reflecting market conditions as
well as changes in company-specific fundamentals of portfolio securities.

34
<PAGE>
Management of the Funds (continued)

MONTAG & CALDWELL, INC.
Montag & Caldwell, Inc. is the Adviser to two Alleghany Funds. An investment
management team makes the investment decisions for each Fund. Ronald E.
Canakaris leads the investment management team that manages each Fund. The firm
was founded in 1945 and is an indirect wholly-owned subsidiary of Alleghany
Corporation. As of December 31, 1999, Montag & Caldwell managed approximately
$35.1 billion in assets.

<TABLE>
<CAPTION>
FUND NAME PORTFOLIO MANAGER INVESTMENT EXPERIENCE
<S> <C> <C>
Alleghany/Montag & Caldwell Ronald E. Canakaris Portfolio Manager since the Funds' inceptions in 1994;
Growth Fund Alleghany/ President and Chief Investment Officer of Montag &
Caldwell.
Montag & Caldwell Balanced He has been with the firm since 1972 and is responsible
for
Fund developing the firm's investment process. He has a BS
and BA
from the University of Florida. Mr. Canakaris is a
Chartered
Investment Counselor and a Chartered Financial Analyst.
</TABLE>

<TABLE>
<CAPTION>
FUND NAME MANAGEMENT FEE
<S> <C>
Alleghany/Montag & Caldwell Growth Fund First $800 million0.80%
Over $800 million 0.60%
Alleghany/Montag & Caldwell Balanced Fund 0.75%
</TABLE>

35
<PAGE>
Management of the Funds (continued)

VEREDUS ASSET MANAGEMENT LLC
Veredus Asset Management is the Adviser to ALLEGHANY/ VEREDUS AGGRESSIVE GROWTH
FUND. Veredus was founded in 1998 and is partially owned by Alleghany
Corporation. As of December 31, 1999, Veredus managed approximately $420 million
in assets. The Fund pays Veredus an annual management fee of 1.00% of its
average daily net assets.

<TABLE>
<CAPTION>
FUND NAME PORTFOLIO MANAGER INVESTMENT EXPERIENCE
<S> <C> <C>
Alleghany/Veredus Aggressive B. Anthony Weber Portfolio Manager since the Fund's inception in 1998;
Growth Fund President and Chief Investment Officer of Veredus Asset
Management LLC. He leads the team that is responsible
for
the day-to-day management of the Fund. Mr. Weber was
President and Senior Portfolio Manager of SMC Capital,
Inc.
from 1993-1998. He has 18 years of investment management
experience. He received a BA from Centre College of
Kentucky.
Charles P. McCurdy, Portfolio Manager of the Fund since February 2000;
Executive
Jr. Vice President and Director of Research of Veredus Asset
Management LLC. Formerly employed by SMC Capital, Inc.,
Stock Yards Bank and Trust and Citizens Fidelity Capital
Management. He received his BS from the University of
Louisville in 1984. He is a Chartered Financial Analyst.
</TABLE>

ALLEGHANY/VEREDUS AGGRESSIVE GROWTH FUND
B. Anthony Weber, Portfolio Manager of ALLEGHANY/VEREDUS AGGRESSIVE GROWTH FUND,
was primarily responsible for management of certain accounts as portfolio
manager of Shelby County Trust Bank from July 1989 and as President and Senior
Portfolio Manager of SMC Capital, Inc. from 1993 through June 1998. Those
accounts had investment objectives, policies and strategies substantially
similar to those of ALLEGHANY/ VEREDUS AGGRESSIVE GROWTH FUND.

The following performance information is the performance of a composite of those
equity accounts for which Mr. Weber had primary responsibility for the
day-to-day management from July 1989 through June 1998 (the "Managed Accounts").
As of December 31, 1997, the assets in the Managed Accounts totaled
approximately $36 million. The Managed Accounts do not include performance of
The Shelby Fund, a mutual fund for which Mr. Weber was co-manager but did not
have primary responsibility. The Managed Accounts do include three common trust
funds in operation until July 1994, when those funds merged into The Shelby
Fund. Commencing June 30, 1998, Mr. Weber was portfolio manager for Veredus
Growth Fund, which merged into Alleghany/Veredus Aggressive Growth Fund on
December 7, 1998.

<TABLE>
<CAPTION>
PRIOR PERFORMANCE MANAGED ACCOUNTS S&P 500 INDEX(4) RUSSELL 2000 INDEX(4)
<S> <C> <C> <C>
1998(1) 18.66% 17.71% 4.93%
1997 4.82 33.36 22.36
1996 14.44 22.96 16.50
1995 39.67 37.59 28.44
1994 2.46 1.32 (1.82)
1993 14.70 10.08 18.91
1992 32.98 7.64 18.41
1991 42.80 30.48 46.05
1990 (1.04) (3.12) (19.51)
1989(2) 11.67 12.99 1.47
</TABLE>

36
<PAGE>
Management of the Funds (continued)

<TABLE>
<CAPTION>
AVERAGE ANNUAL RETURNS(3) MANAGED ACCOUNTS S&P 500 INDEX(4) RUSSELL 2000 INDEX(4)
<S> <C> <C> <C>
One year 24.63% 30.16% 16.50%
Five years 16.38 23.08 16.05
Since July 1, 1989 19.32 18.35 13.67
</TABLE>

(1)1998 percentages represent the rates of return for the six-month period ended
June 30, 1998. (2)1989 percentages represent the rates of return for the
six-month period ended December 31, 1989. (3)Average Annual Returns for the
periods ended June 30, 1998, using the Performance Presentation Standards of the
Association for Investment Management and Research (AIMR) calculation of
performance (see below), which differs from the standardized SEC calculation.
(4)The S&P 500 Index is a widely recognized, unmanaged index of market activity
based upon the aggregate performance of a selected portfolio of publicly traded
common stocks, including monthly adjustments to reflect the reinvestment of
dividends and other distributions. The Russell 2000 Index is a widely recognized
index of market activity based on the aggregate performance of small to
mid-sized publicly traded common stocks. Each Index reflects the total return of
securities comprising the Index, including changes in market prices as well as
accrued investment income, which is presumed to be reinvested. Performance
figures for each Index do not reflect deduction of transaction costs or
expenses, including management fees.

From July 1, 1989 through December 31, 1991, the performance information is
based on a quarterly, linked time-weighted rate of return calculation method.
Beginning January 1, 1992, the accounts within the composite allowed
participants to contribute on a monthly basis. Therefore, beginning January 1,
1992, the performance information is based on a monthly, linked time-weighted
rate of return calculation method. The composite rate of return is
market-weighted, reflecting the relative size of each eligible account, at the
beginning of the relevant period. Performance figures reflected are net of
management fees and net of all expenses, including transaction costs and
commissions. Results include the reinvestment of dividends and capital gains.

The investment objectives, policies and strategies of ALLEGHANY/ VEREDUS
AGGRESSIVE GROWTH FUND are substantially similar to those of the Managed
Accounts. The performance of the accounts managed by Veredus does not represent
the historical performance of the Fund and should not be considered indicative
of future performance of the Fund. Results may differ because of, among other
things, differences in brokerage commissions, account expenses, including
management fees (the use of the Fund's expense structure would have lowered the
performance results), the size of positions taken in relation to account size
and diversification of securities, timing of purchases and sales, and
availability of cash for new investments. In addition, the Managed Accounts are
not subject to certain investment limitations, diversification requirements and
other restrictions imposed by the Investment Company Act and the Internal
Revenue Code which, if applicable, may have adversely affected the performance
results of the managed accounts composite. The results for different periods may
vary.

37
<PAGE>
Management of the Funds (continued)

BLAIRLOGIE CAPITAL MANAGEMENT
Blairlogie Capital Management is the Adviser to two Alleghany Funds. Investment
management teams make the investment decisions for each Fund. James G. S. Smith
leads the investment team that manages each Fund. The firm was founded in 1992
and is an indirect subsidiary of Alleghany Corporation. As of December 31, 1999,
Blairlogie managed approximately $1.4 billion in assets, primarily for
institutional clients.

<TABLE>
<CAPTION>
FUND NAME PORTFOLIO MANAGER INVESTMENT EXPERIENCE
<S> <C> <C>
Alleghany/Blairlogie International James G. S. Smith Portfolio Manager of the Funds since their
inception in
Developed Fund 1993; Chief Investment Officer at Blairlogie. He
has been
Alleghany/Blairlogie Emerging with the firm since 1992 and is responsible for
setting
Markets Fund investment policy and determining asset allocation;
he also
manages the investment team. Mr. Smith holds a BSc
in
Economics from London University. He is an
Associate of the
Institute of Investment Management and Research and
a Fellow
of The Chartered Insurance Institute.
</TABLE>

<TABLE>
<CAPTION>
FUND NAME MANAGEMENT FEE
<S> <C>
Alleghany/Blairlogie International Developed Fund 0.85%
Alleghany/Blairlogie Emerging Markets Fund 0.85%
</TABLE>

38
<PAGE>

Shareholder Information

OPENING AN ACCOUNT

- - Read this prospectus carefully.
- - Determine how much you want to invest. The minimum initial investments for
each Alleghany Fund are as follows:
- Regular accounts: $2,500
- Individual Retirement Accounts (IRAs): $500
- Uniform Gift to Minor Accounts/Uniform Transfer to Minor Accounts
(UGMA/UTMA) (custodial accounts for minors): $500
- Automatic Investment Plan (any type of account): We waive the initial
investment minimum to open an account and the monthly investment minimum is
$50.
- - 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>
BUYING SHARES TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT ($50
MINIMUM)
<S> <C> <C>
BY MAIL - Complete and sign your - Return the investment slip from a
statement with your
application. check in the envelope provided and mail to
us at the address
ALLEGHANY FUNDS at the left.
P.O. BOX 5164 - Make your check payable to
WESTBOROUGH, MA 01581 Alleghany Funds and mail to us - We accept checks, bank drafts, money
orders and wires and
at the address at the left. ACH for purchases (see "Other Features" on
p. 42). Checks
must be drawn on U.S. banks. There is a
$20 charge for
- We accept checks, bank drafts returned checks.
and money orders for purchases.
Checks must be drawn on U.S. banks - Give the following wire/ACH information
to your bank:
to avoid any fees or delays in Boston Safe Deposit & Trust
processing your check. ABA #01-10-01234
For: Alleghany Funds
- We do not accept third party A/C 140414
checks, which are checks made FBO "Alleghany
Fund Number" payable to someone other than
"Your Account Number" the Funds.
- We do
not accept
third
party
checks,
which are
checks
made
payable to
someone
other than
the Funds.
BY PHONE - Obtain a fund number and account - Verify that your bank or credit union is
a member of the
by calling Alleghany Funds at the ACH.
800 992-8151 number at the left.
- You should complete the "Bank Account
Information" section
- Instruct your bank (who may on your account application.
charge a fee) to wire or ACH the
amount of your investment. - When you are ready to add to your
account, call Alleghany
Funds and tell the representative the fund
name, account
- Give the following wire/ACH number, the name(s) in which the account
is registered and
information to your bank: the amount of your investment.
Boston Safe Deposit & Trust
ABA #01-10-01234 - Instruct your bank (who may charge a fee)
to wire or ACH
For: Alleghany Funds the amount of your investment.
A/C 140414
FBO "Alleghany Fund Number" - Give the
following wire/ACH information to your bank:
"Your Account Number" Boston Safe Deposit & Trust
ABA #01-10-01234
- Return your completed and signed For: Alleghany Funds
application to: A/C 140414
Alleghany Funds FBO "Alleghany Fund Number"
P.O. Box 5164 "Your Account Number"
Westborough, MA 01581
</TABLE>

39
<PAGE>
Shareholder Information (continued)

<TABLE>
<CAPTION>
BUYING SHARES TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT ($50
MINIMUM)
<S> <C> <C>
BY INTERNET - Download the appropriate account - Verify that your bank or credit union is
a member of the
application(s) from our Web site. ACH.
WWW.ALLEGHANYFUNDS.COM
- Complete and sign the - Complete the "Purchase, Exchange and
Redemption
application(s). Make your check Authorization" section of your account
application.
payable to Alleghany Funds and
mail it to the address under "By - Obtain a Personal Identification Number
(PIN) from
Mail" above. 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
Alleghany
Funds' Web
site and
enter your
purchase
instructions
in the
highly
secure
area for
shareholders
only
called
"Shareholder
Account
Access".
</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 within the same class
of shares. All exchanges to open new accounts must meet the minimum initial
investment requirements. Exchanges may be made by mail or by phone at 800
992-8151 if you chose this option when you opened your account. For tax
purposes, each exchange is treated as a sale and a new purchase.

Alleghany Funds reserves 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>
SELLING SHARES DESIGNED FOR... TO SELL SOME OR ALL OF YOUR SHARES...
<S> <C> <C>
BY MAIL - Accounts of any type - Write and sign a letter of instruction
indicating the fund
name, fund number, your account number, the
name(s) in which
ALLEGHANY FUNDS - Sales or redemptions of any size the account is registered and the dollar
value or number
P.O. BOX 5164 of shares you wish to sell.
WESTBOROUGH, MA 01581
- Include all signatures and any additional
documents that
may be required. (See "Selling Shares in
Writing.")
- Mail to us at the address at the left.
- 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.
- Proceeds may also be sent by wire or ACH
(see "Other
Features" on p. 42).

<CAPTION>
SELLING SHARES
<S> <C>
BY MAIL
ALLEGHANY FUNDS
P.O. BOX 5164
WESTBOROUGH, MA 01581
</TABLE>

40
<PAGE>
Shareholder Information (continued)
<TABLE>
<CAPTION>
SELLING SHARES DESIGNED FOR... TO SELL SOME OR ALL OF YOUR SHARES...
<S> <C> <C>
BY PHONE - Non-retirement accounts - For automated service 24 hours a day
using your touch-tone
phone, call 800 992-8151.
800 992-8151 - Sales of up to $50,000 (for
accounts with telephone account - To place your request with a Shareholder
Service
privileges) Representative, call between 9 am and 7 pm
ET,
Monday - Friday.
- 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.
- Proceeds may also be sent by wire or ACH
(see "Other
Features" on p. 42).
- 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.
WWW.ALLEGHANYFUNDS.COM
- Obtain a Personal Identification Number
(PIN) from
Alleghany Funds (800 992-8151) 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
Alleghany
Funds' Web
site and
enter
your
redemption
instructions
in the
highly
secure
area for
shareholders
only
called
"Shareholder
Account
Access".
A check
for the
proceeds
will be
mailed
to you
at the
address
of
record.
- Proceeds may also be sent by wire or ACH.
(see "Other
Features" on p. 42)
BY MONEY MARKET CHECKWRITING - Regular accounts - Request the free checkwriting privilege
on your
application.
- Alleghany/Chicago Trust Money
Market Fund only - Verify that the shares to be sold were
purchased more than
15 days or earlier or were purchased by
wire.
- You may write unlimited checks, each for
$500 or more. You
cannot close an account by writing a check.
- You continue to earn dividends until
checks are presented
for payment. There is a $30 charge for
returned checks.
- Currently, there is no charge for this
privilege, but the
Fund reserves the right to add one.
- Canceled checks are available upon
request but there is a
fee to receive them.
- The Fund may cancel this privilege at any
time by giving
notice to you.

<CAPTION>
SELLING SHARES
<S> <C>
BY PHONE
800 992-8151
BY INTERNET
WWW.ALLEGHANYFUNDS.COM
BY MONEY MARKET CHECKWRITING
</TABLE>

41
<PAGE>
Shareholder Information (continued)

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 changed
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) or other than wire or ACH sent
to the bank account of the registered owner

Signature guarantees help ensure that major transactions or changes to your
account are in fact authorized by you. For example, we require a signature
guarantee on written redemption requests for more than $50,000. You can obtain a
signature guarantee for a nominal fee from most banks, brokerage firms and other
financial institutions. A notary public stamp or seal CANNOT be substituted for
a signature guarantee.

<TABLE>
<CAPTION>
SELLER REQUIREMENTS FOR WRITTEN REQUESTS <S> <C> <C> Owners of individual,
joint, sole - Letter of instruction proprietorship, UGMA/UTMA, or general - On
the letter, the signatures and titles of all persons partner accounts authorized
to sign for the account, exactly as the account
is registered
- Signature guarantee, if applicable (see above)
Owners of corporate or association - Letter of instruction
accounts - 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- - Letter of instruction signed by the surviving tenant
tenants are 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, - Call 800 992-8151 for instructions
guardians and other sellers or
account types not listed above
IRA accounts - IRA distribution request form completed and signed. Call
800 992-8151 for a form.
</TABLE>

OTHER FEATURES
The following other features are also available to buy and sell shares of the
Funds.

WIRE. To purchase and sell shares via the Federal Reserve Wire System.
- - You must authorize Alleghany Funds to honor wire instructions before using
this feature. Complete the appropriate section on the application when opening
your account or call 800 992-8151 to add the feature after your account is
opened. Call 800 992-8151 before your first use to verify that this feature is
set up on your account.
- - To sell shares by wire, you must designate the U.S. commercial bank account(s)
into which you wish the redemption proceeds deposited.
- - Please remember that if you request redemptions by wire, $20 will be deducted
from the amount redeemed. Your bank also may charge a fee.

42
<PAGE>
Shareholder Information (continued)

AUTOMATED CLEARING HOUSE (ACH). To transfer money between your bank account and
your Alleghany Funds account(s).
- - You must authorize Alleghany Funds to honor ACH instructions before using this
feature. Complete the appropriate section on the application when opening your
account or call 800 992-8151 to add the feature after your account is opened.
Call 800 992-8151 before your first use to verify that this feature is set up
on your account.
- - Most transfers are complete within three business days of your call.
- - There is no fee to your account for this transaction and generally, no fee
from your bank.

REDEMPTIONS IN KIND
The Funds have elected, under Rule 18f-1 of the Investment Company Act of 1940,
as amended, 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 need to pay certain sales charges related to a
redemption in kind, such as brokerage commissions, when you sell the securities.

INVOLUNTARY REDEMPTIONS
To reduce expenses, we may sell your shares and close your account if the value
of your account falls below $50. We will give you 30 days' notice before we sell
your shares. This gives you an opportunity to purchase enough shares to raise
your account value to the appropriate minimum to avoid closing the account.

TRANSACTION POLICIES
CALCULATING SHARE PRICE
When you buy, exchange or sell shares, the net asset value (NAV) 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 (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 accurate market quotations are not available, securities are
valued at fair value in accordance with guidelines adopted by the Board of
Trustees.

Quotations of foreign securities denominated in foreign currency are converted
to U.S. dollar equivalents using foreign exchange quotations received from
independent dealers. Events affecting the values of portfolio securities that
occur between the time their prices are determined and the close of regular
trading on the NYSE may not be reflected in the calculation of net asset value.
If events materially affecting the value of such securities occur during such
period, then these securities may be valued at fair value as determined by the
Adviser and in accordance with guidelines adopted 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. Under
normal circumstances, purchase orders and redemption requests for
ALLEGHANY/CHICAGO TRUST MONEY MARKET FUND must be received by 1:00 p.m. ET for
same day processing. On days when the Federal Reserve Cash Settlement System
closes earlier than normal, this time may be accelerated. 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.

Alleghany Funds reserves the right to:
- - reject any purchase order
- - suspend the offering of fund shares
- - change the initial and additional investment minimums or waive these minimums
for any investor
- - 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.

MONEY MARKET TRADING
For ALLEGHANY/CHICAGO TRUST MONEY MARKET FUND, your purchase will be processed
at the net asset value calculated after your investment has been converted to
federal funds. On days when the NYSE is open for trading and Federal banks are
closed (currently, Columbus Day and Veterans Day), conversion into federal funds
does not occur until the next business day. If you invest by check or a
non-federal funds wire, you should allow one business day after receipt for
conversion into federal funds. Checks must be made payable to "Alleghany Funds."

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.

REDEMPTION FEES
ALLEGHANY/BLAIRLOGIE INTERNATIONAL DEVELOPED FUND and ALLEGHANY/BLAIRLOGIE
EMERGING MARKETS FUND can experience substantial price fluctuations and are
intended for long-term investors. Short-term "market timers" who engage in
frequent purchases and redemptions can disrupt the Funds' investment programs
and create significant additional transaction costs that are borne by all
shareholders. For these reasons, Alleghany/Blairlogie International Developed
Fund and Alleghany/ Blairlogie Emerging Markets Fund assess a 2% fee on
redemptions (including exchanges) of fund shares held for less than 90 days.

Redemption fees are paid to the respective Fund to help offset transaction costs
and to protect the Funds' long-term shareholders. Each Fund will use the
"first-in, first-out" (FIFO) method to determine the 90-day holding period.
Under this method, the date of the redemption or exchange will be compared to
the earliest purchase date of shares held in the account. If this holding period
is less than 90 days, the fee will be charged. The fee does not apply to any
shares purchased through reinvested distributions (dividends and capital gains).

ACCOUNT POLICIES AND DIVIDENDS
ACCOUNT STATEMENTS
In general, you will receive quarterly account statements. In addition, you will
also receive account statements: - after every transaction that affects your
account balance (except for dividend
reinvestments, automatic investment plans or systematic withdrawal plans)
after any change of name or address of the registered owner(s)

MAILINGS TO SHAREHOLDERS
To help reduce fund expenses and environmental waste, Alleghany Funds combines
mailings for multiple accounts going to a single household by delivering fund
financial reports (annual and semi-annual reports, prospectuses, etc.) in a
single envelope. If you do not want us to continue consolidating your fund
mailings and would prefer to receive separate mailings with multiple copies of
fund reports, please call one of our Shareholder Service Representatives at 800
992-9151. We will continue to distribute reports to you in separate mailings.

DIVIDENDS
The following table shows the Funds' distribution schedule.

DISTRIBUTION SCHEDULE
<TABLE>
<CAPTION>
FUNDS DIVIDENDS
<S> <C>
Equity - Declared and paid quarterly
International Equity - Declared and paid annually
Balanced - Declared and paid quarterly
Fixed Income - Declared and paid monthly
Money Market - Declared daily and paid monthly

<CAPTION>
FUNDS CAPITAL GAINS DISTRIBUTION
<S> <C>
Equity - Distributed at least once a year, in December
International Equity - Distributed at least once a year, in December
Balanced - Distributed at least once a year, in December
Fixed Income - Distributed at least once a year, in December
Money Market - Distributed at least once a year, in 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 payable date. You can
also choose to have a check for your dividends mailed to you by choosing this
option on your account application.

44
<PAGE>
Shareholder Information (continued)

ADDITIONAL INVESTOR SERVICES
AUTOMATIC INVESTMENT PLAN
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: - complete the appropriate sections of the
account application - if you are using the Automatic Investment Plan to open an
account, make a
check ($50 minimum) payable to "Alleghany Funds." Mail your check and
application to Alleghany Funds, P.O. Box 5164, Westborough, MA 01581.

ALLEGHANY FUNDS WEB SITE
Alleghany Funds maintains a Web site located at http://www.AlleghanyFunds.com.
You can purchase, exchange and redeem shares, and access information such as
your account balance and the Funds' NAVs through our Web site. In order to
engage in shareholder transactions on our Web site, you must obtain a Personal
Identification Number (PIN) by calling us at 800 992-8151. One of our
Shareholder Service Representatives will ask a series of questions to verify
your identify and assign a temporary PIN that will allow you to log onto
Shareholder Account Access on our site. You will be prompted to change the
temporary PIN to a new PIN, which will be known only to you, and then you may
access your account information. You may also need to have bank account
information, wire instructions, Automated Clearing House (ACH) instructions or
other options established on your account.

Our Web site is highly secure to prevent unauthorized access to your account
information. The Funds and their agents will not be responsible for any losses
resulting from unauthorized transactions on our Web site when procedures
designed for engaging in such transactions are followed.

SYSTEMATIC WITHDRAWAL PLAN
This plan may be used for periodic withdrawals (at least $50 by check or ACH)
from your account. To take advantage of this feature:
- - you must have at least $50,000 in your account
- - determine the schedule: monthly, quarterly, semi-annually or annually
- - call 800 992-8151 to add a systematic withdrawal plan to your account

RETIREMENT PLANS
Alleghany Funds offers a range of retirement plans, including Traditional, Roth
and Education IRAs, SIMPLE IRAs, SEP IRAs, 401(k) plans, money purchase pension
and profit-sharing plans. Using these plans, you can invest in any Alleghany
Fund with a low minimum investment of $500. There is no annual maintenance fee
for IRAs. To find out more, call Alleghany Funds at 800 992-8151.

DISTRIBUTION PLAN 12B-1 FEES
To pay for the cost of promoting the Funds and servicing your shareholder
account, the Funds, except for ALLEGHANY/CHICAGO TRUST MONEY MARKET FUND, have
adopted a Rule 12b-1 distribution plan. Under this plan, an annual fee of not
more than 0.25% is paid out of each Fund's average daily net assets to reimburse
the distributor for certain expenses associated with the distribution of fund
shares. Over time, these fees may increase the cost of your investment and may
cost more than paying other types of sales charges.

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 Advisers
generally determine in good faith if the commission paid was reasonable in
relation to the brokerage or research 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 and its financial condition. In executing portfolio transactions,
preference may be given to brokers who have sold shares of the Funds.

45
<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 consequence of
investing in the Funds is included in the Statements of Additional Information.

- - 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 are taxable to you as ordinary
income.

- - Distributions of net long-term capital gain (net long-term capital gain less
any net short-term capital loss) are taxable as long-term capital gain
regardless of how long you may have held shares of a fund. In contrast,
distributions of net short-term capital gain (net short-term capital gain less
any long-term capital loss) are taxable as ordinary income regardless of how
long you may have held shares of a 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.

46
<PAGE>

Financial Highlights

These financial highlights tables are 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. The total
returns in the tables represent the rate that an investor would have earned or
lost on an investment in a Fund (assuming reinvestment of all dividends and
distributions). For all Funds for the fiscal year ended October, 31, 1999 (for
Alleghany/Blairlogie International Developed Fund and Alleghany/Blairlogie
Emerging Markets Fund, the period May 1, 1999 through October 31, 1999), this
information has been audited by KPMG LLP, whose report, along with the Funds'
financial statements, is included in the Statement of Additional Information
(SAI), which is available upon request. For Alleghany/Blairlogie International
Developed Fund and Alleghany/Blairlogie Emerging Markets Fund, information prior
to June 30, 1998 has been audited by PricewaterhouseCoopers LLP.

ALLEGHANY/MONTAG & CALDWELL GROWTH FUND

<TABLE>
<CAPTION>
Year Year Year Year Period
Ended Ended Ended Ended Ended
10/31/99 10/31/98 10/31/97 10/31/96 10/31/95*
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $26.49 $22.68 $17.08 $13.16 $10.00
---------- ---------- -------- -------- -------
Income from Investment Operations
Net investment income (loss) (0.04) (0.05) (0.05) -- 0.02
Net realized and unrealized gain on investments 7.64 4.07 5.79 3.93 3.16
---------- ---------- -------- -------- -------
Total from investment operations 7.60 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 (0.94) (0.21) (0.14) -- --
---------- ---------- -------- -------- -------
Total distributions (0.94) (0.21) (0.14) (0.01) (0.02)
---------- ---------- -------- -------- -------
Net increase in net asset value 6.66 3.81 5.60 3.92 3.16
---------- ---------- -------- -------- -------
Net Asset Value, End of Period $33.15 $26.49 $22.68 $17.08 $13.16
========== ========== ======== ======== =======
Total Return 29.34% 17.90% 33.82% 29.91% 31.87%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (in 000's) $1,612,796 $1,004,356 $479,557 $166,243 $40,355
Ratio of expenses to average net assets:
Before reimbursement of expenses by Adviser(1) 1.05% 1.12% 1.24% 1.32% 1.87%
After reimbursement of expenses by Adviser(1) 1.05% 1.12% 1.23% 1.28% 1.30%
Ratio of net investment income to average net assets:
Before reimbursement of expenses by Adviser(1) (0.16)% (0.22)% (0.38)% (0.10)%
(0.36)%
After reimbursement of expenses by Adviser(1) (0.16)% (0.22)% (0.37)% (0.06)% 0.20%
Portfolio Turnover(2) 31.59% 29.81% 18.65% 26.36% 34.46%
</TABLE>

*Alleghany/Montag & Caldwell Growth Fund Class N Shares commenced operations on
November 2, 1994.
(1)Annualized
(2)Not annualized.

47
<PAGE>
Financial Highlights (continued)

ALLEGHANY/CHICAGO TRUST GROWTH & INCOME FUND

<TABLE>
<CAPTION>
Year Year Year Year Year
Ended Ended Ended Ended Ended
10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $23.06 $19.73 $16.17 $12.90 $10.11
-------- -------- -------- -------- --------
Income from Investment Operations
Net investment income (loss) (0.06) (0.02) 0.08 0.11 0.09
Net realized and unrealized gain on investments 6.14 4.73 3.91 3.34 2.79
-------- -------- -------- -------- --------
Total from investment operations 6.08 4.71 3.99 3.45 2.88
-------- -------- -------- -------- --------
Less Distributions
Distributions from and in excess
of net investment income -- (0.01) (0.09) (0.11) (0.09)
Distributions from net realized
gain on investments (1.43) (1.37) (0.34) (0.07) --
-------- -------- -------- -------- --------
Total distributions (1.43) (1.38) (0.43) (0.18) (0.09)
-------- -------- -------- -------- --------
Net increase in net asset value 4.65 3.33 3.56 3.27 2.79
-------- -------- -------- -------- --------
Net Asset Value, End of Period $27.71 $23.06 $19.73 $16.17 $12.90
======== ======== ======== ======== ========
Total Return 27.71% 25.43% 25.16% 26.98% 28.66%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (in 000's) $490,189 $367,666 $274,608 $205,133 $172,296
Ratio of expenses to average net assets:
Before reimbursement of expenses by Adviser(1) 1.06% 1.08% 1.12% 1.15% 1.50%
After reimbursement of expenses by Adviser(1) 1.06% 1.08% 1.07%(2) 1.00%
1.09%(3)
Ratio of net investment income to average net assets:
Before reimbursement of expenses by Adviser(1) (0.25)% (0.11)% 0.36% 0.62% 0.33%
After reimbursement of expenses by Adviser(1) (0.25)% (0.11)% 0.41% 0.77% 0.74%
Portfolio Turnover 28.93% 34.21% 30.58% 25.48% 9.00%
</TABLE>

(1)Annualized
(2)The Adviser's expense reimbursement level, which affects the net expense
ratio, changed from 1.00% to 1.10% on February 28, 1997. (3)The Adviser's
expense reimbursement level, which affects the net expense ratio, changed from
1.20% to 1.00% on September 21, 1995.

48
<PAGE>
Financial Highlights (continued)

ALLEGHANY/CHICAGO TRUST TALON FUND

<TABLE>
<CAPTION>
Year Year Year Year Year
Ended Ended Ended Ended Ended
10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $13.16 $17.60 $14.39 $12.07 $10.25
------- ------- ------- ------- -------
Income from Investment Operations
Net investment income (loss) (0.05) 0.07 0.11 0.04 0.09
Net realized and unrealized gain (loss) on investments 0.34 (1.59) 4.38 3.01 1.84
------- ------- ------- ------- -------
Total from investment operations 0.29 (1.52) 4.49 3.05 1.93
------- ------- ------- ------- -------
Less Distributions
Distributions from and in excess
of net investment income --(a) (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 0.29 (4.44) 3.21 2.32 1.82
------- ------- ------- ------- -------
Net Asset Value, End of Period $13.45 $13.16 $17.60 $14.39 $12.07
======= ======= ======= ======= =======
Total Return 2.32% (10.54)% 33.47% 26.51% 18.92%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (in 000's) $17,856 $22,728 $28,460 $17,418 $10,538
Ratio of expenses to average net assets:
Before reimbursement of expenses by Adviser(1) 1.50% 1.46% 1.67% 1.98% 3.04%
After reimbursement of expenses by Adviser(1) 1.30% 1.30% 1.30% 1.30% 1.30%
Ratio of net investment income to average net assets:
Before reimbursement of expenses by Adviser(1) (0.50)% 0.30% 0.34% (0.38)% (0.97)%
After reimbursement of expenses by Adviser(1) (0.30)% 0.46% 0.71% 0.30% 0.77%
Portfolio Turnover 101.44% 78.33% 112.72% 126.83% 229.43%
</TABLE>

(1)Annualized
(a)Represents less than $0.01 per share

49
<PAGE>
Financial Highlights (continued)

ALLEGHANY/CHICAGO TRUST SMALL CAP VALUE FUND

<TABLE>
<CAPTION>
Period
Ended
10/31/99*
<S> <C>
Net Asset Value, Beginning of Period $10.00
-------
Income from Investment Operations
Net investment income 0.04
Net realized and unrealized loss on investments (0.85)
-------
Total from investment operations (0.81)
-------
Less Distributions
Distributions from and in excess of net investment income (0.01)
Total distributions (0.01)
-------
Net increase (decrease) in net asset value (0.82)
-------
Net Asset Value, End of Period $ 9.18
=======
Total Return(1) (8.07)%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (in 000's) $42,478 Ratio of expenses to average net
assets:
Before reimbursement of expenses by Adviser(2) 1.55%
After reimbursement of expenses by Adviser(2) 1.40%
Ratio of net investment income to average net assets:
Before reimbursement of expenses by Adviser(2) 0.36%
After reimbursement of expenses by Adviser(2) 0.51%
Portfolio Turnover(1) 156.55%
</TABLE>

*The Fund commenced operations on November 10, 1998.
(1)Not Annualized
(2)Annualized

50
<PAGE>
Financial Highlights (continued)

ALLEGHANY/VEREDUS AGGRESSIVE GROWTH FUND

<TABLE>
<CAPTION>
Year Period
Ended Ended
10/31/99 10/31/98*
<S> <C> <C>
Net Asset Value, Beginning of Period $ 8.62 $10.00
------- -------
Income from Investment Operations
Net investment income (loss) (0.08) --(a)
Net realized and unrealized gain (loss) on investments 8.06 (1.38)
------- -------
Total from investment operations 7.98 (1.38)
------- -------
Net Asset Value, End of Period $16.60 $ 8.62
======= =======
Total Return(1) 92.92% (13.80)%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (in 000's) $57,282 $12,674
Ratio of expenses to average net assets:
Before reimbursement of expenses by Adviser(2) 1.58% 1.54%
After reimbursement of expenses by Adviser(2) 1.41%(3) 1.50%
Ratio of net investment income to average net assets:
Before reimbursement of expenses by Adviser(2) 1.05% (0.06)%
After reimbursement of expenses by Adviser(2) (0.88)% (0.02)%
Portfolio Turnover(1) 204.26% 111.52%
</TABLE>

*Alleghany/Veredus Aggressive Growth Fund commenced operations on June 30, 1998.
(1)Not Annualized
(2)Annualized
(3)The Adviser fee, which affects the net expense ratio, changed from 1.50% to
1.00% on December 4, 1998.
(a)Represents less than $0.01 per share.

51
<PAGE>
Financial Highlights (continued)

ALLEGHANY/BLAIRLOGIE INTERNATIONAL DEVELOPED FUND

<TABLE>
<CAPTION>
Six Ten Eight Eleven
Months Months Year Year Months Months
Ended Ended Ended Ended Ended Ended
10/31/99 4/30/99 6/30/98 6/30/97 6/30/96 10/31/95*
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $12.70 $14.30 $13.05 $12.51 $11.73 $11.21
------ ------ ------ ------ ------ ------
Income from Investment Operations
Net investment income (loss) 0.06 (0.02) 0.17 0.06 0.69 0.02
Net realized and unrealized gain on investments 0.61 0.16 1.69 1.09 0.72 1.01
------ ------ ------ ------ ------ ------
Total from investment operations 0.67 0.14 1.86 1.15 1.41 1.03
------ ------ ------ ------ ------ ------
Less Distributions
Distributions from and in excess
of net investment income -- -- (0.03) -- (0.42) (0.08)
Distributions from net realized
gain on investments -- (1.74) (0.58) (0.61) (0.21) (0.43)
------ ------ ------ ------ ------ ------
Total distributions -- (1.74) (0.61) (0.61) (0.63) (0.51)
------ ------ ------ ------ ------ ------
Net increase (decrease) in net asset value 0.67 (1.60) 1.25 0.54 0.78 0.52
------ ------ ------ ------ ------ ------
Net Asset Value, End of Period $13.37 $12.70 $14.30 $13.05 $12.51 $11.73
====== ====== ====== ====== ====== ======
Total Return(1) 5.35% 1.05% 15.33% 9.77% 12.33% 9.61%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (in 000's) $7,516 $5,278(3) $6,299 $2,302 $5,624 $675
Ratio of expenses to average net assets:
Before reimbursement of expenses by Adviser(2) 1.41% 1.41% 1.36% 1.38% 1.35% 1.34%
After reimbursement of expenses by Adviser(2) 1.35% 1.41% 1.36% 1.38% 1.35% 1.34%
Ratio of net investment income (loss) to average net assets:
Before reimbursement of expenses by Adviser(2) 0.95% (0.21)% 1.31% 0.52% 1.04% 0.50%
After reimbursement of expenses by Adviser(2) 1.01% (0.21)% 1.31% 0.52% 1.04% 0.50%
Portfolio Turnover(1) 28.91% 36.00% 60.00% 77.00% 60.00% 58.00%
</TABLE>

(*)The Fund commenced operations on November 30, 1994.
(1)Not Annualized
(2)Annualized
(3)Net assets at end of period do not reflect Class A, B, or C net assets prior
to April 30, 1999.

52
<PAGE>
Financial Highlights (continued)

ALLEGHANY/BLAIRLOGIE EMERGING MARKETS FUND

<TABLE>
<CAPTION>
Six Ten Eight
Months Months Year Year Months Year
Ended Ended Ended Ended Ended Ended
10/31/99 4/30/99 6/30/98 6/30/97 6/30/96 10/31/95

<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.42 $10.14 $13.95 $12.63 $11.24 $16.95
------ ------ ------ ------ ------ ------
Income from Investment Operations
Net investment income 0.05 0.05 0.09 -- 0.02 --
Net realized and unrealized gain (loss)
on investments 0.28 0.23 (3.90) 1.32 1.40 (4.95)
------ ------ ------ ------ ------ ------
Total from investment operations 0.33 0.28 (3.81) 1.32 1.42 (4.95)
------ ------ ------ ------ ------ ------
Less Distributions
Distributions from and in excess
of net investment income -- -- -- -- (0.03) (0.05)
Distributions from net realized
gain on investments -- -- -- -- -- (0.71)
------ ------ ------ ------ ------ ------
Total distributions -- -- -- -- (0.03) (0.76)
------ ------ ------ ------ ------ ------
Net increase (decrease) in net asset value 0.33 0.28 (3.81) 1.32 1.39 (5.71)
------ ------ ------ ------ ------ ------
Net Asset Value, End of Period $10.75 $10.42 $10.14 $13.95 $12.63 $11.24
====== ====== ====== ====== ====== ======
Total Return(1) 3.26% 2.76% (27.31)% 10.45% 12.70% (27.96)%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (in 000's) $1,729 $961(3) $1,339 $117 $368 $830
Ratio of expenses to average net assets:
Before reimbursement of expenses by
Adviser(2) 2.07% 1.68% 1.65% 1.69% 1.61% 1.62%
After reimbursement of expenses by Adviser(2) 1.60% 1.68% 1.65% 1.69% 1.61% 1.62%
Ratio of net investment income to average net assets:
Before reimbursement of expenses by
Adviser(2) 0.41% 0.69% 0.81% 0.02% 0.18% 0.02%
After reimbursement of expenses by Adviser(2) 0.88% 0.69% 0.81% 0.02% 0.18% 0.02%
Portfolio Turnover(1) 46.93% 38.00% 52.00% 74.00% 74.00% 118.00%
</TABLE>

(1)Not Annualized
(2)Annualized
(3)Net assets at end of period do not reflect Class A, B, or C net assets prior
to April 30, 1999.

53
<PAGE>
Financial Highlights (continued)

ALLEGHANY/MONTAG & CALDWELL BALANCED FUND

<TABLE>
<CAPTION>
Year Year Year Year Period
Ended Ended Ended Ended Ended
10/31/99 10/31/98 10/31/97 10/31/96 10/31/95*
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $17.60 $16.01 $14.29 $12.12 $10.00
-------- -------- ------- ------- -------
Income from Investment Operations
Net investment income 0.29 0.27 0.25 0.27 0.26
Net realized and unrealized gain on investments 2.73 1.97 2.93 2.17 2.09
-------- -------- ------- ------- -------
Total from investment operations 3.02 2.24 3.18 2.44 2.35
-------- -------- ------- ------- -------
Less Distributions
Distributions from and in excess
of net investment income (0.27) (0.27) (0.25) (0.27) (0.23)
Distributions from net realized
gain on investments (0.94) (0.38) (1.21) -- --
-------- -------- ------- ------- -------
Total distributions (1.21) (0.65) (1.46) (0.27) (0.23)
-------- -------- ------- ------- -------
Net increase in net asset value 1.81 1.59 1.72 2.17 2.12
-------- -------- ------- ------- -------
Net Asset Value, End of Period $19.41 $17.60 $16.01 $14.29 $12.12
======== ======== ======= ======= =======
Total Return(1) 17.83% 14.46% 24.26% 20.37% 23.75%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (in 000's) $160,286 $158,398 $82,719 $31,473 $21,908
Ratio of expenses to average net assets:
Before reimbursement of expenses by Adviser(2) 1.14% 1.18% 1.33% 1.58% 2.50%
After reimbursement of expenses by Adviser(2) 1.14% 1.18% 1.25% 1.25% 1.25%
Ratio of net investment income to average net assets:
Before reimbursement of expenses by Adviser(2) 1.54% 1.67% 1.70% 1.83% 1.38%
After reimbursement of expenses by Adviser(2) 1.54% 1.67% 1.78% 2.16% 2.63%
Portfolio Turnover(1) 34.79% 59.02% 28.13% 43.58% 27.33%
</TABLE>

*Alleghany/Montag & Caldwell Balanced Fund commenced operations on November 2,
1994.
(1)Not Annualized
(2)Annualized

54
<PAGE>
Financial Highlights (continued)

ALLEGHANY/CHICAGO TRUST BALANCED FUND

<TABLE>
<CAPTION>
Year Year Year Year Period
Ended Ended Ended Ended Ended
10/31/99 10/31/98 10/31/97 10/31/96 10/31/95*
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $12.03 $11.06 $ 9.60 $ 8.43 $8.34
-------- -------- -------- -------- --------
Income from Investment Operations
Net investment income 0.27 0.27 0.28 0.27 0.03
Net realized and unrealized gain on investments 1.71 1.65 1.60 1.16 0.06
-------- -------- -------- -------- --------
Total from investment operations 1.98 1.92 1.88 1.43 0.09
-------- -------- -------- -------- --------
Less Distributions
Distributions from and in excess
of net investment income (0.26) (0.27) (0.28) (0.26) --
Distributions from net realized
gain on investments (0.71) (0.68) (0.14) -- --
-------- -------- -------- -------- --------
Total distributions (0.97) (0.95) (0.42) (0.26) --
-------- -------- -------- -------- --------
Net increase in net asset value 1.01 0.97 1.46 1.17 0.09
-------- -------- -------- -------- --------
Net Asset Value, End of Period $13.04 $12.03 $11.06 $ 9.60 $8.43
======== ======== ======== ======== ========
Total Return(1) 17.26% 18.50% 20.10% 17.21% 1.08%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (in 000's) $294,426 $219,362 $187,993 $156,703 $152,820
Ratio of expenses to average net assets:
Before reimbursement of expenses by Adviser(2) 1.06% 1.08% 1.13% 1.17% 1.19%
After reimbursement of expenses by Adviser(2) 1.06% 1.08% 1.07%(3) 1.00% 1.00%
Ratio of net investment income to average net assets:
Before reimbursement of expenses by Adviser(2) 2.13% 2.30% 2.70% 2.79% 2.56%
After reimbursement of expenses by Adviser(2) 2.13% 2.30% 2.76% 2.96% 2.73%
Portfolio Turnover(1) 25.05% 40.28% 34.69% 34.29% 0.72%
</TABLE>

*Alleghany/Chicago Trust Balanced Fund commenced operations on September 21,
1995.
(1)Not Annualized
(2)Annualized
(3)The Adviser's reimbursement level, which affects the net expense ratio,
changed from 1.00% to 1.10% on February 28, 1997.

55
<PAGE>
Financial Highlights (continued)

ALLEGHANY/CHICAGO TRUST BOND FUND

<TABLE>
<CAPTION>
Year Year Year Year Year
Ended Ended Ended Ended Ended
10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.27 $10.13 $ 9.89 $ 9.94 $ 9.21
-------- -------- -------- ------- -------
Income from Investment Operations
Net investment income 0.61 0.60 0.61 0.60 0.60
Net realized and unrealized gain (loss) on investments (0.51) 0.15 0.23 (0.05) 0.73
-------- -------- -------- ------- -------
Total from investment operations 0.10 0.75 0.84 0.55 1.33
-------- -------- -------- ------- -------
Less Distributions
Distributions from and in excess
of net investment income (0.61) (0.61) (0.60) (0.60) (0.60)
-------- -------- -------- ------- -------
Distributions from net realized
gain on investments (0.05) -- -- -- --
-------- -------- -------- ------- -------
Total distributions (0.66) (0.61) (0.60) (0.60) (0.60)
-------- -------- -------- ------- -------
Net increase (decrease) in net asset value (0.56) 0.14 0.24 (0.05) 0.73
-------- -------- -------- ------- -------
Net Asset Value, End of Period $ 9.71 $10.27 $10.13 $ 9.89 $ 9.94
======== ======== ======== ======= =======
Total Return 1.02% 7.66% 8.84% 5.76% 14.89%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (in 000's) $133,408 $160,561 $120,532 $72,211 $70,490
Ratio of expenses to average net assets:
Before reimbursement of expenses by Adviser(1) 0.93% 0.96% 1.02% 1.10% 1.54%
After reimbursement of expenses by Adviser(1) 0.80% 0.80% 0.80% 0.80% 0.80%
Ratio of net investment income to average net assets:
Before reimbursement of expenses by Adviser(1) 5.91% 5.79% 6.02% 5.89% 5.78%
After reimbursement of expenses by Adviser(1) 6.04% 5.95% 6.24% 6.19% 6.52%
Portfolio Turnover 49.83% 45.29% 17.76% 41.75% 68.24%
</TABLE>

(1)Annualized

56
<PAGE>
Financial Highlights (continued)

ALLEGHANY/CHICAGO TRUST MUNICIPAL BOND FUND

<TABLE>
<CAPTION>
Year Year Year Year Year
Ended Ended Ended Ended Ended
10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.36 $10.19 $10.06 $10.08 $ 9.56
------- ------- ------- ------- -------
Income from Investment Operations
Net investment income 0.46 0.44 0.38 0.38 0.35
Net realized and unrealized gain (loss) on investments (0.63) 0.17 0.12 (0.02) 0.52
------- ------- ------- ------- -------
Total from investment operations (0.17) 0.61 0.50 0.36 0.87
------- ------- ------- ------- -------
Less Distributions
Distributions from and in excess
of net investment income (0.46) (0.44) (0.37) (0.38) (0.35)
------- ------- ------- ------- -------
Total distributions (0.46) (0.44) (0.37) (0.38) (0.35)
------- ------- ------- ------- -------
Net increase (decrease) in net asset value (0.63) 0.17 0.13 (0.02) 0.52
------- ------- ------- ------- -------
Net Asset Value, End of Period $ 9.73 $10.36 $10.19 $10.06 $10.08
======= ======= ======= ======= =======
Total Return (1.77)% 6.17% 5.13% 3.59% 9.29%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (in 000's) $17,219 $13,210 $12,379 $11,186 $11,679
Ratio of expenses to average net assets:
Before reimbursement of expenses by Adviser(1) 1.20% 1.41% 1.64% 1.53% 2.16%
After reimbursement of expenses by Adviser(1) 0.10% 0.35%(2) 0.90% 0.90% 0.90%
Ratio of net investment income to average net assets:
Before reimbursement of expenses by Adviser(1) 3.45% 3.22% 3.00% 3.11% 2.37%
After reimbursement of expenses by Adviser(1) 4.55% 4.28% 3.74% 3.74% 3.63%
Portfolio Turnover 22.83% 34.33% 16.19% 27.47% 42.81%
</TABLE>

(1)Annualized
(2)The Adviser's expense reimbursement level, which reduces the net expense
ratio, changed from 0.90% to 0.10% on February 27, 1998.

57
<PAGE>
Financial Highlights (continued)

ALLEGHANY/CHICAGO TRUST MONEY MARKET FUND

(1)Annualized
(2)Effective February 27, 1998, the Adviser is no longer waiving fees or
reimbursing expenses. (3)The Adviser's expense reimbursement level, which
affects the net expense ration, changed from 0.40% to 0.50% on July 12, 1995.

58
<PAGE>

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. The annual report contains 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
February 15, 2000, 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

Phone: Shareholder Services 800 992-8151
Fund Literature 800 391-2473
Investment Advisor Services 800 597-9704

Web site: www.AlleghanyFunds.com

OBTAINING INFORMATION FROM THE SEC
You can visit the EDGAR Database on 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. To find out
more about the Public Reference Room, you can call the SEC at 202 942-8090.
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. 20549-0102
or by e-mailing the SEC at [email protected].

Investment Company Act File Number: 811-8004

AG01

<PAGE>

[ALLEGHANY FUNDS LOGO]

CLASS I SHARES
Prospectus
ALLEGHANY FUNDS

Montag & Caldwell Growth Fund Alleghany/Chicago
Trust Growth & Income Fund Alleghany/Blairlogie
International Developed Fund
Alleghany/Blairlogie Emerging Markets Fund
Montag & Caldwell Balanced Fund
Alleghany/Chicago Trust Bond Fund

FEBRUARY 15, 2000

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.
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[ALLEGHANY FUNDS LOGO]
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, Alleghany/Chicago Trust Growth & Income
Fund, Alleghany/Blairlogie International Developed Fund, Alleghany/Blairlogie
Emerging Markets Fund, Montag & Caldwell Balanced Fund and Alleghany/Chicago
Trust Bond Fund, members of the Alleghany Funds Family. For a list of terms with
definitions that you may find helpful as you read this prospectus, please refer
to the "Investment Terms" section.
- ------------------------------
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).
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TABLE OF CONTENTS

Page
CATEGORIES OF ALLEGHANY FUNDS 3
FUND SUMMARIES
Investment Objectives, Principal Investment
Strategies and Risks
EQUITY FUNDS
Montag & Caldwell Growth Fund 4
Alleghany/Chicago Trust Growth & Income
Fund 5
INTERNATIONAL EQUITY FUNDS
Alleghany/Blairlogie International
Developed Fund 6
Alleghany/Blairlogie Emerging Markets
Fund 8
BALANCED FUND
Montag & Caldwell Balanced Fund 10
FIXED INCOME FUND
Alleghany/Chicago Trust Bond Fund 12
FUND EXPENSES 14

INVESTMENT TERMS 15
MORE ABOUT ALLEGHANY FUNDS
RISK SUMMARY 17
OTHER INVESTMENT STRATEGIES 18
MANAGEMENT OF THE FUNDS
THE ADVISERS
The Chicago Trust Company 20
Montag & Caldwell, Inc. 21
Blairlogie Capital Management 21
SHAREHOLDER INFORMATION
OPENING AN ACCOUNT: BUYING SHARES 22
EXCHANGING SHARES 23
SELLING/REDEEMING SHARES 24
TRANSACTION POLICIES 27
ACCOUNT POLICIES AND DIVIDENDS 28
ADDITIONAL INVESTOR SERVICES 29
PORTFOLIO TRANSACTIONS AND BROKERAGE
COMMISSIONS 29
DIVIDENDS, DISTRIBUTIONS AND TAXES 30
FINANCIAL HIGHLIGHTS 31
GENERAL INFORMATION Back Cover

Categories of Alleghany Funds

Alleghany Funds is a no-load, open-end management investment company which
consists of twelve separate diversified investment portfolios, including equity,
balanced, fixed income and money market funds.

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 (five 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

WHO MAY WANT TO INVEST IN BALANCED FUNDS Balanced funds may be appropriate if
you want: - capital appreciation and current income - balanced diversified
investment

FIXED INCOME FUNDS
FIXED INCOME FUNDS invest in corporate and government bonds and other fixed
income securities. These funds provide regular income; municipal bond funds
provide federally tax-exempt income. The obligations are generally secured by
the assets of the issuer.

WHO MAY WANT TO INVEST IN FIXED INCOME FUNDS Fixed income funds may be
appropriate if you want: - regular income - less volatility than equity funds -
portfolio diversification

Fixed income funds may not be appropriate if you want:
- - capital appreciation

3
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EQUITY FUNDS: LARGE CAP

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 - have strong balance sheets - have a
sustainable competitive advantage
- - are currently, or have the potential to become, industry leaders - have the
potential to outperform during market downturns

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.

See page 17 for a chart that compares the risks of investing in this Fund with
other Alleghany Funds.

CALENDAR YEAR TOTAL RETURN

[BAR GRAPH]

<TABLE>
<CAPTION>
<S> <C>
TOTAL RETURN
------------

1997 32.17
1998 32.26
1999 22.90
</TABLE>

Best quarter: 12/98 27.08%
Worst quarter: 9/98 -14.24%

The following table indicates how the Fund's average annual returns for
different calendar periods compared to the returns of the S&P 500 and the Lipper
Large-Cap Growth Index.

AVERAGE ANNUAL TOTAL RETURN
(For the periods ended December 31, 1999)

Montag & Lipper
Caldwell S&P 500 Large-Cap
rowth Fund Index Growth Index
- -----------------------------------------------------------
1 year 22.90% 21.04% 34.82%
- -----------------------------------------------------------
Since
Inception(1) 29.55% 27.15% 31.00%
- -----------------------------------------------------------

(1)Fund's Inception: June 28, 1996

4
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EQUITY FUNDS: LARGE CAP

Alleghany/Chicago Trust Growth & Income Fund

INVESTMENT OBJECTIVE
The Fund seeks long-term total return through a combination of capital
appreciation and current income by investing primarily in a combination of
stocks and bonds.

PRINCIPAL INVESTMENT STRATEGIES

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.

See page 17 for a chart that compares the risks of investing in this Fund with
other Alleghany Funds.

FUND PERFORMANCE
Class I shares of the Fund have not commenced operations and do not have any
performance history. Performance information will be included in the Fund's next
annual or semi-annual report.

5
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EQUITY FUNDS: INTERNATIONAL

Alleghany/Blairlogie International Developed Fund

INVESTMENT OBJECTIVE
The Fund seeks long-term growth of capital.

The portfolio may include securities that ultimately comprise the MSCI EAFE
Index, but it is not limited to those securities or their weightings in the
Index.

If practicable, the portfolio manager also considers the company's environmental
business practices based on the availability of such information.

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.

6
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EQUITY FUNDS: INTERNATIONAL

Alleghany/Blairlogie International Developed Fund (continued)

Investing in the securities of foreign issuers involves special risks and
considerations not typically associated with investing in U.S. companies. The
following additional risks apply to the Fund.

- REGULATORY RISK: In developed foreign countries, typically there are
little or no uniform accounting, auditing and financial reporting
standards and other regulatory practices and requirements are generally
different from those of U.S. companies.

See page 17 for a chart that compares the risks of investing in this Fund with
other Alleghany Funds.

CALENDAR YEAR TOTAL RETURN*

[BAR GRAPH]

<TABLE>
<CAPTION>
<S> <C>
TOTAL RETURN
------------

1994 7.05
1995 17.13
1996 5.83
1997 1.92
1998 23.92
1999 21.13
</TABLE>

Best quarter: 3/98 18.96%
Worst quarter: 9/98 -15.85%

*For 1994-1998, the performance figures reflected are those of a predecessor
fund, PIMCO International Developed Fund.

The following table indicates how the Fund's average annual returns for
different calendar periods compared to the returns of the MSCI EAFE Index and
the Lipper International Fund Index.

AVERAGE ANNUAL TOTAL RETURN
(For the periods ended December 31, 1999)

Alleghany/
Blairlogie Lipper
nternational MSCI EAFE International
eveloped Fund Index Fund Index
- ----------------------------------------------------------------
1 year 21.13% 27.30% 37.83%
- ----------------------------------------------------------------
5 years 13.65% 13.15% 15.96%
- ----------------------------------------------------------------
Since
Inception(1) 12.38% 11.81% 14.77%
- ----------------------------------------------------------------

(1)Fund's inception: June 8, 1993

7
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EQUITY FUNDS: INTERNATIONAL

Alleghany/Blairlogie Emerging Markets Fund

INVESTMENT OBJECTIVE
The Fund seeks long-term growth of capital.

The Fund invests primarily but not exclusively in some or all of the following
emerging market countries:

If practicable, the portfolio manager also considers the company's environmental
business practices based on the availability of such information.

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.

8
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EQUITY FUNDS: INTERNATIONAL

Alleghany/Blairlogie Emerging Markets Fund (continued)

VALUE STOCK RISK: Value investing involves buying stocks that are out of favor
and/or undervalued in comparison to their peers or their prospects for growth.
Typically, their valuation levels are lower than growth stocks. The market value
of these stocks tends to be more volatile than large-cap company stocks. They
generally offer greater potential for gain as well as for loss. Because
different types of stocks go out of favor with investors depending on market and
economic conditions, a fund's return may be adversely affected during market
downturns and when value stocks are out of favor.

See page 17 for a chart that compares the risks of investing in this Fund with
other Alleghany Funds.

CALENDAR YEAR TOTAL RETURN*

[BAR GRAPH]
TOTAL RETURN
------------

1994 -7.78
1995 -12.54
1996 4.82
1997 -2.01
1998 -27.39
1999 60.02

*For 1994-1998, the performance figures reflected are those of a predecessor
fund, PIMCO Emerging Markets Fund.

Best quarter: 12/93 33.62%
Worst quarter: 9/98 -25.25%

AVERAGE ANNUAL TOTAL RETURN
(For the periods ended December 31, 1999)

Alleghany/ MSCI Lipper
Blairlogie Emerging Emerging
Emerging Markets Markets
Markets Fund Free Index Fund Index
- ------------------------------------------------------------
1 year 60.02% 66.41% 68.97%
- ------------------------------------------------------------
5 years 0.86% 2.00% 3.02%
- ------------------------------------------------------------
Since
Inception(1) 6.42% 7.51% N/A
- ------------------------------------------------------------

(1)Fund's inception: June 1, 1993

9
<PAGE>

BALANCED FUND

Montag & Caldwell Balanced Fund

INVESTMENT OBJECTIVE The Fund seeks long-term total return.

PRINCIPAL INVESTMENT STRATEGIES
The Fund invests primarily in a combination of equity, fixed income, and
short-term securities.

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
- - are attractively priced, relative to the company's potential for above average
long-term earnings and revenue growth
- - have strong balance sheets
- - have a sustainable competitive advantage
- - are currently, or have the potential to become, industry leaders - have the
potential to outperform during market downturns

10
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BALANCED FUND

Montag & Caldwell Balanced Fund (continued)

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.

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.

See page 17 for a chart that compares the risks of investing in this Fund with
other Alleghany Funds.

CALENDAR YEAR TOTAL RETURN

[BAR GRAPH]

TOTAL RETURN
------------

1999 13.10

Best quarter: 12/99 10.80%
Worst quarter: 9/99 -2.99%

AVERAGE ANNUAL TOTAL RETURN
(For the periods ended December 31, 1999)

60% S&P 500
Index/40%
Lehman Brothers
Montag & Government Lipper
Caldwell Corporate Balanced
Balanced Fund Index Fund Index
- --------------------------------------------------------------
1 year 13.10% 11.40% 8.98%
- --------------------------------------------------------------
Since
Inception(1) 13.10% 11.40% 8.98%
- --------------------------------------------------------------

(1)Fund's Inception: December 31, 1998

11
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FIXED INCOME FUND

Alleghany/Chicago Trust Bond Fund

INVESTMENT OBJECTIVE
The Fund seeks high current income consistent with prudent risk of capital.

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.

12
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FIXED INCOME FUND

Alleghany/Chicago Trust Bond Fund (continued)

MANAGER RISK: If a fund manager makes errors in security selection, a fund may
underperform the bond market or its peers. Also, a fund could fail to meet its
investment objective.

See page 17 for a chart that compares the risks of investing in this Fund with
other Alleghany Funds.

13
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Fund Expenses

As an investor in the Funds, you pay certain indirect fees and expenses, which
are described in the table below.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
TOTAL NET
MANAGEMENT OTHER EXPENSE FEE EXPENSE
FUND(2) FEES EXPENSES RATIO WAIVERS RATIO

Montag & Caldwell Growth Fund 0.67% 0.09% 0.76% -- 0.76%
Alleghany/Chicago Trust Growth & Income Fund 0.70 0.15 0.85 -- 0.85(1)
Alleghany/Blairlogie International Developed Fund 0.85 0.31 1.16 (0.06) 1.10(1)
Alleghany/Blairlogie Emerging Markets Fund 0.85 0.97 1.82 (0.47) 1.35(1)
Montag & Caldwell Balanced Fund 0.75 0.16 0.91 -- 0.91
Alleghany/Chicago Trust Bond Fund 0.55 0.13 0.68 (0.19) 0.49(1)
</TABLE>

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> <C>
FUND 1 YEAR 3 YEARS 5 YEARS 10
YEARS

Montag & Caldwell Growth Fund $ 78 $243 $422 $
942
Alleghany/Chicago Trust Growth & Income Fund 87 271 n/a
n/a
Alleghany/Blairlogie International Developed Fund 112 363 633
1,404
Alleghany/Blairlogie Emerging Markets Fund 137 527 941
2,099
Montag & Caldwell Balanced Fund 93 290 504
1,120
Alleghany/Chicago Trust Bond Fund 50 198 n/a
n/a
</TABLE>

14
<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.

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.

LEHMAN BROTHERS GOVERNMENT CORPORATE INDEX. An unmanaged index that includes
U.S. Government and investment-grade corporate securities with at least one year
to maturity.

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.

MSCI EMERGING MARKETS FREE INDEX. The Morgan Stanley Capital International
Emerging Markets Free Index, a market-capitalization weighted index composed of
26 of the world's developing markets.

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.

15
<PAGE>
Investment Terms (continued)

RISK/REWARD TRADE-OFF. The principle that an investment must offer higher
potential returns as compensation for the likelihood of increased volatility.

STANDARD & POOR'S (S&P) 500 INDEX. An unmanaged index of 500 widely traded
industrial, transportation, financial and public utility stocks.

16
<PAGE>

More About Alleghany Funds

RISK SUMMARY
The following chart compares the principal risks of investing in each Alleghany
Fund.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
<C> <C>
BELOW CREDIT EMERGING FOREIGN GROWTH INTEREST ISSUER LIQUIDITY
MANAGER MARKET
INVESTMENT MARKETS SECURITIES STOCK RATE
GRADE
SECURITIES

Montag & Caldwell Growth Fund X
X X
Alleghany/Chicago Trust Growth &
Income Fund X
X X
Alleghany/Blairlogie International
Developed Fund X X
X X
Alleghany/Blairlogie Emerging
Markets Fund X X X
X X
Montag & Caldwell Balanced Fund X X X X
X X
Alleghany/Chicago Trust Bond Fund X X X X X X

<CAPTION>
MID- MUNICIPAL
CAP SECURITIES
COMPANY

<S> <C> <C>
Montag & Caldwell Growth Fund
Alleghany/Chicago Trust Growth &
Income Fund
Alleghany/Blairlogie International
Developed Fund
Alleghany/Blairlogie Emerging
Markets Fund X
Montag & Caldwell Balanced Fund
Alleghany/Chicago Trust Bond Fund X
</TABLE>

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.

17
<PAGE>
More About Alleghany Funds (continued)

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.

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.

FIXED INCOME SECURITIES
MONTAG & CALDWELL GROWTH FUND and ALLEGHANY/CHICAGO TRUST GROWTH & INCOME 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.

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.

18
<PAGE>
More About Alleghany Funds (continued)

OTHER INVESTMENT STRATEGIES (CONTINUED)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
<C>
ADRS/EDRS ASSET/MORTGAGE BELOW CMOS COMMERCIAL CORPORATE
CONVERTIBLE
- INVESTMENT PAPER BONDS
SECURITIES
BACKED GRADE AND
SECURITIES SECURITIES SECURITIES
('JUNK OF
BONDS') OTHER
INVESTMENT
COMPANIES

Montag & Caldwell Growth Fund X X
X X P
Alleghany/Chicago Trust Growth & Income Fund X X X X X
X X P
Alleghany/Blairlogie International Developed
Fund X X X
X X
Alleghany/Blairlogie Emerging Markets Fund X X X
X X
Montag & Caldwell Balanced Fund X X X X X
P X P
Alleghany/Chicago Trust Bond Fund X P X X X X
P X

<CAPTION>
DEBENTURES DERIVATIVES EQUITY FIXED FOREIGN
PREFERRED REPURCHASE
AND (OPTIONS, SECURITIES INCOME SECURITIES
STOCKS AGREEMENTS
CONVERTIBLE FORWARDS, SECURITIES
DEBENTURES FUTURES,
SWAPS)

<S> <C> <C> <C> <C> <C>
<C> <C>
Montag & Caldwell Growth Fund X X X P X
X X
Alleghany/Chicago Trust Growth & Income Fund X X P X X
P X
Alleghany/Blairlogie International Developed
Fund X X P X
P X
Alleghany/Blairlogie Emerging Markets Fund X X P X
P X
Montag & Caldwell Balanced Fund X X X P X P X
P X
Alleghany/Chicago Trust Bond Fund X X X
P X

<CAPTION>
RULE U.S.
144A GOVERNMENT
SECURITIES SECURITIES

<S> <C> <C>
Montag & Caldwell Growth Fund X X
Alleghany/Chicago Trust Growth & Income Fund X X
Alleghany/Blairlogie International Developed
Fund X X
Alleghany/Blairlogie Emerging Markets Fund X X
Montag & Caldwell Balanced Fund X X P
Alleghany/Chicago Trust Bond Fund X X P
</TABLE>

P = components of a fund's primary investment strategy

19
<PAGE>

Management of the Funds

THE CHICAGO TRUST COMPANY
The Chicago Trust Company is the Adviser to ALLEGHANY/ CHICAGO TRUST GROWTH &
INCOME FUND and ALLEGHANY/ CHICAGO TRUST BOND FUND. As of December 31, 1999,
Chicago Trust managed approximately $11.8 billion in assets, consisting
primarily of insurance, pension and profit sharing accounts, as well as accounts
of high net worth individuals and families. Chicago Trust is an indirect,
wholly-owned subsidiary of Alleghany Corporation.

<TABLE>
<CAPTION>
<S> <C> <C>
FUND NAME PORTFOLIO MANAGER(S) INVESTMENT EXPERIENCE

Alleghany/Chicago Trust Growth Bernard F. Myszkowski Portfolio Manager of the Fund since September 1999;
Senior
& Income Fund Vice President and Chief Equity Officer; associated
with
Chicago Trust and its affiliates since 1969. He has
been a
member of the Equity Investment Committee since 1993,
and a
manager of balanced and common stock portfolios for
institutional and private family accounts in 1973. Mr.
Myszkowski received a BS from DePaul University in
1967 and
an MBA from Northwestern University in 1971. He is a
Chartered Financial Analyst.
Richard S. Drake Portfolio Manager of the Fund since February 2000; Vice
President, Director of Equity Research and Portfolio
Manager; associated with Chicago Trust since January
2000.
Mr. Drake has 14 years of investment experience; he
previously held a senior investment management
position with
Duff & Phelps Investment Management, Inc. from
1995-1999.
Prior to that he was a Vice President and Senior
Research
Analyst with Society Asset Management/Key Corp. Mr.
Drake
received his BBA from the University of Cincinnati and
his
MM from the Kellogg Graduate School of Management at
Northwestern University. He is a Chartered Financial
Analyst.
Alleghany/Chicago Trust Bond Thomas J. Marthaler Portfolio Manager since the Fund's inception in 1993
and
Fund Vice President; associated with Chicago Trust and its
affiliates since 1981. He has managed fixed income
investment portfolios since 1984. Mr. Marthaler has a
BA
from the University of St. Thomas and an MBA from
Loyola
University. He is a Chartered Financial Analyst.
</TABLE>

<TABLE>
<CAPTION>
FUND NAME MANAGEMENT FEE
<S> <C>
Alleghany/Chicago Trust Growth & Income Fund 0.70%
Alleghany/Chicago Trust Bond Fund 0.55%
</TABLE>

20
<PAGE>
Management of the Funds (continued)

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 December 31, 1999,
Montag & Caldwell managed approximately $35.1 billion in assets.

<TABLE>
<CAPTION>
<S> <C> <C>
FUND NAME PORTFOLIO MANAGER INVESTMENT EXPERIENCE

Alleghany/Montag & Caldwell Ronald E. Canakaris Portfolio Manager of the Funds since the Funds'
inceptions
Growth Fund in 1994; President and Chief Investment Officer of
Montag &
Alleghany/Montag & Caldwell Caldwell. He has been with the firm since 1972 and is
Balanced Fund responsible for developing the firm's investment
process. He
has a BS and BA from the University of Florida. Mr.
Canakaris is a Chartered Investment Counselor and a
Chartered Financial Analyst.
</TABLE>

FUND NAME MANAGEMENT FEE

First $800
Alleghany/Montag & Caldwell Growth Fund million 0.80%
Over $800 million 0.60%
Alleghany/Montag & Caldwell Balanced Fund 0.75%

BLAIRLOGIE CAPITAL MANAGEMENT
Blairlogie Capital Management is the Adviser to ALLEGHANY/ BLAIRLOGIE
INTERNATIONAL DEVELOPED FUND and ALLEGHANY/ BLAIRLOGIE EMERGING MARKETS FUND.
The firm was founded in 1992 and is currently an indirect subsidiary of the
Alleghany Corporation. As of December 31, 1999, Blairlogie managed approximately
$1.4 billion in assets, primarily for institutional clients.

<TABLE>
<CAPTION>
<S> <C> <C>
FUND NAME PORTFOLIO MANAGER(S) INVESTMENT EXPERIENCE

Alleghany/Blairlogie James G. S. Smith Portfolio Manager of the Funds since their inception in
International Developed Fund 1993; Chief Investment Officer at Blairlogie. He has
been
Alleghany/Blairlogie Emerging with the firm since 1992 and is responsible for setting
Markets Fund investment policy and determining asset allocation; he
also
manages the investment team. Mr. Smith holds a BSc in
Economics from London University. He is an Associate
of the
Institute of Investment Management and Research and a
Fellow
of The Chartered Insurance Institute.
</TABLE>

FUND NAME MANAGEMENT FEE
Alleghany/Blairlogie International Developed Fund 0.85%
Alleghany/Blairlogie Emerging Markets Fund 0.85%

21
<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 each Fund are as follows:
- Montag & Caldwell Growth Fund: $5 million
- Alleghany/Chicago Trust Growth & Income Fund: $5 million
- Alleghany/Blairlogie International Developed Fund: $1 million
- Alleghany/Blairlogie Emerging Markets Fund: $1 million
- Montag & Caldwell Balanced Fund: $1 million
- Alleghany/Chicago Trust Bond Fund: $2 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 The Chicago Trust Company, Montag & Caldwell,
Blairlogie Capital Management 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>
TO ADD TO AN ACCOUNT (NO MINIMUM FOR
SUBSEQUENT
BUYING SHARES TO OPEN AN ACCOUNT INVESTMENTS)
<S> <C> <C>
BY MAIL - Complete and sign your - Return the investment slip from a
statement with your
application. check in the envelope provided and mail to
us at the address
ALLEGHANY FUNDS at the left.
P.O. BOX 5164 - Make your check payable to
WESTBOROUGH, MA 01581 Alleghany Funds and mail to us - We accept checks, bank drafts, money
orders and wires and
at the address at the left. ACH for purchases (see "Other Features" on
p. 26). Checks
must be drawn on U.S. banks. There is a
$20 charge for
- We accept checks, bank drafts returned checks.
and money orders for purchases.
Checks must be drawn on U.S. banks - Give the following wire/ACH information
to your bank:
to avoid any fees or delays in
processing your check. Boston Safe Deposit & Trust
ABA #01-10-01234
- We do not accept third party For: Alleghany Funds
checks, which are checks made A/C 140414
payable to someone other than FBO "Alleghany Fund Number"
the Funds. "Your Account Number"
- We do not accept third party checks,
which are checks made
payable to someone other than the Funds.
</TABLE>

22
<PAGE>
Shareholder Information (continued)

<TABLE>
<CAPTION>
TO ADD TO AN ACCOUNT
BUYING SHARES TO OPEN AN ACCOUNT (NO MINIMUM FOR SUBSEQUENT
INVESTMENTS)
<S> <C> <C>
BY PHONE - Obtain a fund number and account - Verify that your bank or credit union is
a member of the
by calling Alleghany Funds at the ACH.
800 992-8151 number at the left.
- You should complete the "Bank Account
Information" section
- Instruct your bank (who may on your account application.
charge a fee) to wire or ACH the
amount of your investment. - When you are ready to add to your
account, call Alleghany
Funds and tell the representative the fund
name, account
- Give the following wire/ACH number, the name(s) in which the account
is registered and
information to your bank: the amount of your investment.
Boston Safe Deposit & Trust - Instruct your bank (who may charge a fee)
to wire or ACH
ABA #01-10-01234 the amount of your investment.
For: Alleghany Funds
A/C 140414 - Give the following wire/ACH information
to your bank:
FBO "Alleghany Fund Number"
"Your Account Number" Boston Safe Deposit & Trust
ABA #01-10-01234
- Return your completed and signed For: Alleghany Funds
application to: A/C 140414
FBO "Alleghany Fund Number"
Alleghany Funds "Your Account Number"
P.O. Box 5164
Westborough, MA 01581
BY INTERNET - Download the appropriate account - Verify that your bank or credit union is
a member of the
application(s) from our Web site. ACH.
WWW.ALLEGHANYFUNDS.COM
- Complete and sign the - Complete the "Purchase, Exchange and
Redemption
application(s). Make your check Authorization" section of your account
application.
payable to Alleghany Funds and
mail it to the address under "By - Obtain a Personal Identification Number
(PIN) from
Mail' above. 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 Alleghany Funds' Web site
and enter your
purchase instructions in the highly
secure area for
shareholders only called "Shareholder
Account Access".
</TABLE>

You can exchange shares from one Alleghany Fund to another within the same class
of shares. 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
992-8151 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.

23
<PAGE>
Shareholder Information (continued)

<TABLE>
<CAPTION>
SELLING SHARES DESIGNED FOR... TO SELL SOME OR ALL OF YOUR
SHARES...
<S> <C> <C>
BY MAIL - Accounts of any type - Write and sign a letter of instruction
indicating the fund
name, fund number, your account number, the
name(s) in which
ALLEGHANY FUNDS - Sales or redemptions of any size the account is registered and the dollar
value or number
P.O. BOX 5164 of shares you wish to sell.
WESTBOROUGH, MA 01581
- Include all signatures and any additional
documents that
may be required. (See "Selling Shares in
Writing.")
- Mail to us at the address at the left.
- 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.
- Proceeds may also be sent by wire or ACH
(see "Other
Features" on p. 26).

BY PHONE - Non-retirement accounts - For automated service 24 hours a day
using your touch-tone
phone, call us at the number to the left.
800 992-8151 - Sales of up to $50,000 (for
accounts with telephone account - To place your request with a Shareholder
Service
privileges) Representative, call between 9am and 7pm ET,
Monday - Friday.
- 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.
- Proceeds may also be sent by wire or ACH
(see "Other
Features" on p. 26).
- 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 incur from telephone
requests.
</TABLE>

24
<PAGE>
Shareholder Information (continued)

<TABLE>
<CAPTION>
SELLING SHARES DESIGNED FOR... TO SELL SOME OR ALL OF YOUR
SHARES...
<S> <C> <C>
BY INTERNET - Non-retirement accounts - Complete the "Purchase, Exchange and
Redemption
Authorization" section of your account
application.
WWW.ALLEGHANYFUNDS.COM
- Obtain a Personal Identification Number
(PIN) from
Alleghany Funds (800 992-8151) 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 Alleghany
Funds' Web site and
enter your redemption instructions in the
highly secure
area for shareholders only called
"Shareholder Account
Access". A check for the proceeds will be
mailed to you at
the address of record.
- Proceeds may also be sent by wire or ACH
(see "Other
Features" on p. 26).
</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 changed
within the past 30 days - you are selling more than $50,000 worth of shares
(except for Montag &
Caldwell Growth Fund and Montag & Caldwell Balanced Fund) - you are requesting
payment other than by a check mailed to the address of
record and payable to the registered owner(s) or other than wire or ACH sent
to the bank account of the registered owner

25
<PAGE>
Shareholder Information (continued)

<TABLE>
<CAPTION>
SELLER REQUIREMENTS FOR WRITTEN REQUESTS
<S> <C> <C>
Owners of individual, joint, sole - Letter of instruction
proprietorship, UGMA/UTMA, or general
partner accounts - 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 of corporate or association - Letter of instruction
accounts
- 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- - Letter of instruction signed by the surviving tenant
tenants are decease
- 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, - Call 800 992-8151 for instructions
guardians and other sellers or
account types not listed above
IRA accounts - IRA distribution request form completed and signed. Call
800 992-8151 for a form.
</TABLE>

OTHER FEATURES
The following other features are also available to buy and sell shares of the
Funds.

26
<PAGE>
Shareholder Information (continued)

REDEMPTIONS IN KIND
The Funds have elected, under Rule 18f-1 of the Investment Company Act of 1940,
as amended, 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 (NAV) 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.

Quotations of foreign securities denominated in foreign currency are converted
to U.S. dollar equivalents using foreign exchange quotations received from
independent dealers. Events affecting the values of portfolio securities that
occur between the time their prices are determined and the close of regular
trading on the NYSE may not be reflected in the calculation of net asset value.
If events materially affecting the value of such securities occur during such
period, then these securities may be valued at fair value as determined by the
Adviser and approved in good faith by the Board of Trustees.

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.

REDEMPTION FEES
ALLEGHANY/BLAIRLOGIE INTERNATIONAL DEVELOPED FUND and ALLEGHANY/BLAIRLOGIE
EMERGING MARKETS FUND can experience substantial price fluctuations and are
intended for long-term investors. Short-term "market timers" who engage in
frequent purchases and redemptions can disrupt the Funds' investment programs
and create significant additional transaction costs that are born by all
shareholders. For these reasons, the Alleghany/Blairlogie International
Developed Fund and Alleghany/Blairlogie Emerging Markets Fund assess a 2% fee on
redemptions (including exchanges) of fund shares held for less than 90 days.

Redemption fees are paid to the respective Fund to help offset transaction costs
and to protect the Fund's long-term shareholders. Each Fund will use the
"first-in, first-out" (FIFO) method to determine the 90-day holding period.
Under this method, the date of the redemption or exchange will be compared to
the earliest purchase date of shares held in the account. If this holding period
is less than 90 days, the fee will be charged. The fee does not apply to any
shares purchased through reinvested distributions (dividends and capital gains).

27
<PAGE>
Shareholder Information (continued)

ACCOUNT POLICIES AND DIVIDENDS
ACCOUNT STATEMENTS
In general, you will receive quarterly account statements. In addition, you will
also receive account statements: - after every transaction that affects your
account balance (except for dividend
reinvestments or automatic investment plans)
- - after any change of name or address of the registered owner(s)

DIVIDENDS
The following table shows the Funds' distribution schedule.

DISTRIBUTION SCHEDULE

<TABLE>
<CAPTION>
FUNDS DIVIDENDS CAPITAL GAINS
DISTRIBUTION
<S> <C> <C>
Montag & Caldwell Growth Fund - Declared and paid - Generally distributed at least
once a year in
Alleghany/Chicago Trust Growth & Income Fund quarterly December
Montag & Caldwell Balanced Fund
Alleghany/Blairlogie International Developed - Declared and paid annually - Generally distributed at least
once a year in
Fund December
Alleghany/Blairlogie Emerging Markets Fund
Alleghany/Chicago Trust Bond Fund - Declared and paid monthly - Generally distributed at least
once a year in
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 payable date. You can
also choose to have a check for your dividends mailed to you by choosing this
option on your account application.

28
<PAGE>
Shareholder Information (continued)

ADDITIONAL INVESTOR SERVICES
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
Alleghany Funds maintains a Web site located at http://www.AlleghanyFunds.com.
You can purchase, exchange and redeem shares and access information such as your
account balance and the Funds' NAVs through our Web site. In order to engage in
shareholder transactions on our Web site, you must obtain a Personal
Identification Number (PIN) by calling us at 800 992-8151. One of our
Shareholder Service Representatives will ask a series of questions to verify
your identity and assign a temporary PIN that will allow you to log onto
Shareholder Account Access on our site. You will be prompted to change the
temporary PIN to a new PIN, which will be known only to you, and then you may
access your account information. You may also need to have bank account
information, wire instructions, Automated Clearing House (ACH) instructions or
other options established on your account.

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 availability of research, the quality of its
execution services, its past sales of a Funds shares and its financial
condition.

29
<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 Statement of Additional Information.

- - Distributions of any net investment income are taxable to you as ordinary
income.

- - Distributions of net long-term capital gain (net long-term capital gain less
any net short-term capital loss) are taxable as long-term capital gain
regardless of how long you may have held the shares of a fund. In contrast,
distributions of net short-term capital gain (net short-term capital gain less
any long-term capital loss) are taxable as ordinary income regardless of how
long you have held shares of a fund.

- - Each Fund is obligated by law to withhold 31% of Fund distributions if you do
not provide complete and correct taxpayer identification information.

30
<PAGE>

Financial Highlights

These financial highlights tables are 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. The total
returns in the tables represent the rate that an investor would have earned or
lost on an investment in a Fund (assuming reinvestment of all dividends and
distributions). For all Funds for the fiscal year ended October 31, 1999 (for
Alleghany/Blairlogie International Developed Fund and Alleghany/Blairlogie
Emerging Markets Fund, the period May 1, 1999 through October 31, 1999), this
information has been audited by KPMG LLP, whose report, along with the Funds'
financial statements, is included in the Statement of Additional Information
(SAI), which is available upon request. For Alleghany/Blairlogie International
Developed Fund and Alleghany/Blairlogie Emerging Markets Fund, information prior
to June 30, 1998 has been audited by PricewaterhouseCoopers LLP.

Class I shares of ALLEGHANY/CHICAGO TRUST GROWTH & INCOME FUND and
ALLEGHANY/CHICAGO TRUST BOND FUND had not commenced operations as of October 31,
1999.

MONTAG & CALDWELL GROWTH FUND

<TABLE>
<CAPTION>
Year Year Year Period
Ended Ended Ended Ended
10/31/99 10/31/98 10/31/97
10/31/96*
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $26.65 $22.75 $17.08 $15.59
------ ------ ------ ------
Income from Investment Operations
Net investment income 0.04 0.01 --(a) 0.02
Net realized and unrealized gain on investments 7.71 4.10 5.81 1.49
------ ------ ------ ------
Total from investment operations 7.75 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 (0.94) (0.21) (0.14) 0.00
------ ------ ------ ------
Total distributions (0.94) (0.21) (0.14) (0.02)
------ ------ ------ ------
Net increase in net asset value 6.81 3.90 5.67 1.49
------ ------ ------ ------
Net Asset Value, End of Period $33.46 $26.65 $22.75 $17.08
====== ====== ====== ======
Total Return(1) 29.78% 18.24% 34.26% 9.67%
</TABLE>

<TABLE>
<S> <C> <C> <C> <C>
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (in 000's) $1,369,673 $738,423 $268,861
$52,407
Ratio of expenses to average net assets:
Before reimbursement of expenses by Adviser(2) 0.76% 0.85% 0.93%
0.98%
After reimbursement of expenses by Adviser(2) 0.76% 0.85% 0.93%
0.98%
Ratio of net investment income
to average net assets:
Before reimbursement of expenses by Adviser(2) 0.14% 0.05% (0.07)%
0.17%
After reimbursement of expenses by Adviser(2) 0.14% 0.05% (0.06)%
0.17%
Portfolio Turnover(1) 31.59% 29.81% 18.65%
26.36%
</TABLE>

*Montag & Caldwell Growth Fund Class I shares commenced operations on June 28,
1996.
(1)Not annualized
(2)Annualized
(a) Represents less than $0.01 per share.

31
<PAGE>
Financial Highlights (continued)

ALLEGHANY/BLAIRLOGIE INTERNATIONAL DEVELOPED FUND

<TABLE>
<CAPTION>
Six Ten Eight
Months Months Year Year
Months Year
Ended Ended Ended Ended
Ended Ended
10/31/99 4/30/99 6/30/98 6/30/97
6/30/96 10/31/95
<S> <C> <C> <C> <C>
<C> <C>
Net Asset Value, Beginning of Period $ 12.70 $ 14.32 $ 13.12 $ 12.54 $
11.74 $ 11.86
-------- -------- -------- -------
- ------- -------
Income from Investment Operations
Net investment income 0.08 -- 0.16 0.10
0.72 0.10
Net realized and unrealized gain on
investments 0.62 0.17 1.73 1.09
0.72 0.30
-------- -------- -------- -------
- ------- -------
Total from investment operations 0.70 0.17 1.89 1.19
1.44 0.40
-------- -------- -------- -------
- ------- -------
Less Distributions
Distributions from and in excess
of net investment income -- (0.05) (0.11) --
(0.43) (0.09)
Distributions from net realized
gain on investments -- (1.74) (0.58) (0.61)
(0.21) (0.43)
-------- -------- -------- -------
- ------- -------
Total Distributions -- (1.79) (0.69) (0.61)
(0.64) (0.52)
-------- -------- -------- -------
- ------- -------
Net increase (decrease) in net asset value 0.70 (1.62) 1.20 0.58
0.80 (0.12)
-------- -------- -------- -------
- ------- -------
Net Asset Value, End of Period $ 13.40 $ 12.70 $ 14.32 $ 13.12 $
12.54 $ 11.74
======== ======== ======== =======
======= =======
Total Return(1) 5.51% 1.31% 15.69% 10.07%
12.54% 3.83%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (in 000's) $97,067 $101,084 $122,126 $94,044
$70,207 $63,607
Ratio of expenses to average net assets:
Before reimbursement of expenses by
Adviser(2) 1.16% 1.16% 1.11% 1.13%
1.10% 1.10%
After reimbursement of expenses by
Adviser(2) 1.10% 1.16% 1.11% 1.13%
1.10% 1.10%
Ratio of net investment income to
average net assets:
Before reimbursement of expenses by
Adviser(2) 1.20% 0.04% 1.20% 0.85%
0.81% 1.10%
After reimbursement of expenses by
Adviser(2) 1.26% 0.04% 1.20% 0.85%
0.81% 1.10%
Portfolio Turnover(1) 28.91% 36.00% 60.00% 77.00%
60.00% 63.00%
</TABLE>

(1)Not Annualized
(2)Annualized

32
<PAGE>
Financial Highlights (continued)

ALLEGHANY/BLAIRLOGIE EMERGING MARKETS FUND

<TABLE>
<CAPTION>
Six Ten Eight
Months Months Year Year Months
Year
Ended Ended Ended Ended Ended
Ended
10/31/99 4/30/99 6/30/98 6/30/97 6/30/96
10/31/95
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 10.43 $ 10.18 $ 13.96 $ 12.66 $ 11.27
$16.53
-------- -------- -------- -------- --------
- --------
Income from Investment Operations
Net investment income 0.06 0.06 0.06 0.06
0.03 0.07
Net realized and unrealized gain
(loss) on investments 0.30 0.23 (3.84) 1.30 1.40
(4.55)
-------- -------- -------- -------- --------
- --------
Total from investment operations 0.36 0.29 (3.78) 1.36 1.43
(4.48)
-------- -------- -------- -------- --------
- --------
Less Distributions
Distributions from and in excess
of net investment income -- (0.03) -- (0.06) (0.04)
(0.06)
Distributions from net realized
gain on investments -- -- -- -- --
(0.72)
Return of capital distributions -- (0.01) -- --
- -- --
-------- -------- -------- -------- --------
- --------
Total Distributions -- (0.04) -- (0.06) (0.04)
(0.78)
-------- -------- -------- -------- --------
- --------
Net increase (decrease) in net asset value 0.36 0.25 (3.78) 1.30 1.39
(5.26)
-------- -------- -------- -------- --------
- --------
Net Asset Value, End of Period $ 10.79 $ 10.43 $ 10.18 $ 13.96 $ 12.66
$11.27
======== ======== ======== ======== ========
========
Total Return(1) 3.45% 2.98% (27.08)% 10.85% 12.70%
(27.70)%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (in 000's) $16,579 $18,043 $24,251 $52,703 $80,545
$73,539
Ratio of expenses to average net assets:
Before reimbursement of expenses by Adviser(2) 1.82% 1.43% 1.39% 1.45% 1.35%
1.35%
After reimbursement of expenses by Adviser(2) 1.35% 1.43% 1.39% 1.45% 1.35%
1.35%
Ratio of net investment income
to average net assets:
Before reimbursement of expenses by Adviser(2) 0.66% 0.94% 0.52% 0.45% 0.84%
0.57%
After reimbursement of expenses by Adviser(2) 1.13% 0.94% 0.52% 0.45% 0.84%
0.57%
Portfolio Turnover(1) 46.93% 38.00% 52.00% 74.00% 74.00%
118.00%
</TABLE>

(1)Not Annualized
(2)Annualized

33
<PAGE>
Financial Highlights (continued)

MONTAG & CALDWELL BALANCED FUND

<TABLE>
<CAPTION>
Period
Ended
10/31/99*
<S> <C>
Net Asset Value, Beginning of Period $18.36
--------
Income from Investment Operations
Net investment income 0.25
Net realized and unrealized gain on investments 1.03
--------
Total from investment operations 1.28
--------
Less Distributions
Distributions from and in excess of net investment
income (0.22)
Distributions from net realized gain on investments --
--------
Total distributions (0.22)
--------
Net increase in net asset value 1.06
--------
Net Asset Value, End of Period $19.42
========
Total Return(1) 6.98%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (in 000's) $90,906 Ratio of expenses to average net
assets:
Before reimbursement of expenses by Adviser(2) 0.91%
After reimbursement of expenses by Adviser(2) 0.91%
Ratio of net investment income to average net assets:
Before reimbursement of expenses by Adviser(2) 1.77%
After reimbursement of expenses by Adviser(2) 1.77%
Portfolio Turnover(1) 34.79%
</TABLE>

*Montag & Caldwell Balanced Fund Class I shares commenced operations on December
31, 1998.
(1)Not annualized
(2)Annualized

34
<PAGE>

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. The annual report contains a
discussion of the market conditions and investment strategies that significantly
affected each Fund's performance during its last fiscal year.

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

Phone: Shareholder Services 800 992-8151
Fund Literature 800 391-2473
Investment Advisor Services 800 597-9704

Web site: www.AlleghanyFunds.com

Investment Company Act File Number: 811-8004

<PAGE>

ALLEGHANY FUNDS

Class N Shares
Class I Shares

Alleghany/Montag & Caldwell Growth Fund
Alleghany/Chicago Trust Growth & Income Fund
Alleghany/Chicago Trust Talon Fund
Alleghany/Chicago Trust Small Cap Value Fund
Alleghany/Veredus Aggressive Growth Fund
Alleghany/Blairlogie International Developed Fund
Alleghany/Blairlogie Emerging Markets Fund
Alleghany/Montag & Caldwell Balanced Fund
Alleghany/Chicago Trust Balanced Fund
Alleghany/Chicago Trust Bond Fund
Alleghany/Chicago Trust Municipal Bond Fund
Alleghany/Chicago Trust Money Market Fund

STATEMENT OF ADDITIONAL INFORMATION

February 15, 2000

This Statement of Additional Information provides supplementary
information pertaining to shares representing interests in twelve investment
portfolios of Alleghany Funds (the "Company"): Alleghany/Montag & Caldwell
Growth Fund, Alleghany/Chicago Trust Growth & Income Fund, Alleghany/Chicago
Trust Talon Fund, Alleghany/Chicago Trust Small Cap Value Fund,
Alleghany/Veredus Aggressive Growth Fund, Alleghany/Blairlogie International
Developed Fund, Alleghany/Blairlogie Emerging Markets Fund, Alleghany/Montag &
Caldwell Balanced Fund, Alleghany/Chicago Trust Balanced Fund, Alleghany/Chicago
Trust Bond Fund, Alleghany/Chicago Trust Municipal Bond Fund and
Alleghany/Chicago Trust Money Market Fund (each a "Fund" and collectively, the
"Funds"). Each Fund offers Class N shares for retail investors. Montag &
Caldwell Growth Fund, Alleghany/Blairlogie International Developed Fund,
Alleghany/Blairlogie Emerging Markets Fund, Montag & Caldwell Balanced Fund and
Alleghany/Chicago Trust Bond Fund also offer Class I shares for institutional
investors.

This Statement of Additional Information is not a Prospectus and should
be read only in conjunction with the Prospectus for the Funds dated February 15,
2000 and the Prospectus for Montag & Caldwell Growth Fund, Alleghany/Chicago
Trust Growth & Income Fund, Alleghany/Blairlogie International Developed Fund,
Alleghany/Blairlogie Emerging Markets Fund, Montag & Caldwell Balanced Fund and
Alleghany/Chicago Trust Bond Fund - Class I Shares, dated February 15, 2000
(each a "Prospectus"). No investment in any of the Funds should be made without
first reading the appropriate Prospectus. You may obtain a Prospectus without
charge from the Company at the address and telephone number below.

Alleghany Funds
P.O. Box 5164
Westborough, MA 01581
800 992-8151

Investment Advisers
THE CHICAGO TRUST COMPANY VEREDUS ASSET MANAGEMENT LLC
171 North Clark Street 6900 Bowling Boulevard, Suite 250
Chicago, IL 60601-3294 Louisville, KY 40207

MONTAG & CALDWELL, INC. BLAIRLOGIE CAPITAL MANAGEMENT
3343 Peachtree Road, NE, Suite 1100 4th Floor, 125 Princes Street
Atlanta, GA 30326-1450 Edinburgh EH2 4AD, Scotland

<PAGE>

TABLE OF CONTENTS
Page

THE FUNDS 3
INVESTMENT POLICIES AND RISK CONSIDERATIONS 3
INVESTMENT RESTRICTIONS 24
TRUSTEES AND OFFICERS 26
PRINCIPAL HOLDERS OF SECURITIES 27
INVESTMENT ADVISORY AND OTHER SERVICES 31
Investment Advisory Agreements 31
The Administrator and Sub-Administrator 34
Distribution Plan 35
PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS 36
NET ASSET VALUE 38
DIVIDENDS 38
TAXES 39
PERFORMANCE INFORMATION 41
OTHER INFORMATION 45
APPENDIX A A-1
APPENDIX B B-1

The Annual Report including Audited Financial
Statements dated October 31, 1999 (Class N
only unless otherwise indicated)

Alleghany/Montag & Caldwell Growth Fund - Class N and
Class I Alleghany/Chicago Trust Growth & Income Fund
Alleghany/Chicago Trust Talon Fund Alleghany/Chicago
Trust Small Cap Value Fund Alleghany/Veredus
Aggressive Growth Fund Alleghany /Blairlogie
International Developed Fund - Class N and Class I
Alleghany/Blairlogie Emerging Markets Fund - Class N
and Class I Alleghany/Montag & Caldwell Balanced Fund
- Class N and Class I Alleghany/Chicago Trust
Balanced Fund Alleghany/Chicago Trust Bond Fund
Alleghany/Chicago Trust Municipal Bond Fund
Alleghany/Chicago Trust Money Market Fund

No person has been authorized to give any information or to make any
representations not contained in this Statement of Additional Information or in
the Prospectus in connection with the offering made by the Prospectus. If given
or made, such information or representations must not be relied upon as having
been authorized by the Company or its distributor. The Prospectus does not
constitute an offering by the Company or the distributor in any jurisdiction in
which such offering may not lawfully be made.

<PAGE>

165

THE FUNDS

Alleghany Funds, 171 North Clark Street, Chicago, Illinois 60601-3294,
is a no-load, open-end management investment company which currently offers
twelve series of shares of beneficial interest representing separate portfolios
of investments: Alleghany/Montag & Caldwell Growth Fund, Alleghany/Chicago Trust
Growth & Income Fund, Alleghany/Chicago Trust Talon Fund, Alleghany/Chicago
Trust Small Cap Value Fund, Alleghany/Veredus Aggressive Growth Fund,
Alleghany/Blairlogie International Developed Fund, Alleghany/Blairlogie Emerging
Markets Fund, Alleghany/Montag & Caldwell Balanced Fund, Alleghany/Chicago Trust
Balanced Fund, Alleghany/Chicago Trust Bond Fund, Alleghany/Chicago Trust
Municipal Bond Fund and Alleghany/Chicago Trust Money Market Fund. The Company
was established as a Delaware business trust on September 10, 1993.

INVESTMENT POLICIES AND RISK CONSIDERATIONS

The following supplements the information contained in the Prospectus
concerning the investment policies of the Funds. Except as otherwise stated
below or in the Prospectus, all Funds may invest in the portfolio investments
included in this section.

The investment practices described below, except for the discussion of
portfolio loan transactions, are not fundamental and may be changed by the Board
of Trustees without the approval of the shareholders.

Certain of the following investment instruments are generally
considered "derivative" in nature and are so noted. While not a fundamental
policy, each Fund that is permitted the use of such instruments will generally
limit its aggregate holdings of such instruments to 20% or less of its total
assets.

RESTRICTED SECURITIES

Each Fund will limit investments in securities of issuers which the
Fund is restricted from selling to the public without registration under the
Securities Act of 1933, as amended (the "1933 Act") to no more than 5% of the
Fund's total assets, excluding restricted securities eligible for resale
pursuant to Rule 144A that have been determined to be liquid by a Fund's
Investment Adviser, pursuant to guidelines adopted by the Company's Board of
Trustees.

CONVERTIBLE SECURITIES

Common stock occupies the most junior position in a company's capital
structure. Convertible securities entitle the holder to exchange the securities
for a specified number of shares of common stock, usually of the same company,
at specified prices within a certain period of time and to receive interest or
dividends until the holder elects to convert. The provisions of any convertible
security determine its ranking in a company's capital structure. In the case of
subordinated convertible debentures, the holder's claims on assets and earnings
are subordinated to the claims of other creditors and are senior to the claims
of preferred and common shareholders. In the case of preferred stock and
convertible preferred stock, the holder's claims on assets and earnings are
subordinated to the claims of all creditors but are senior to the claims of
common shareholders.

MONEY MARKET INSTRUMENTS AND RELATED RISKS

All Funds may invest in money market instruments, including bank
obligations and commercial paper. Money market instruments in which the Funds
may invest include, but are not limited to the following: short-term corporate
obligations, Certificates of Deposit ("CDs"), Eurodollar Certificates of Deposit
("Euro CDs"), Yankee Certificates of Deposit ("Yankee CDs"), foreign bankers'
acceptances, foreign commercial paper, letter of credit-backed commercial paper,
time deposits, loan participations ("LPs"), variable- and floating-rate
instruments, and master demand notes. Bank obligations may include bankers'
acceptances, negotiable certificates of deposit and non-negotiable time deposits
earning a specified return, issued for a definite period of time by a U.S. bank
that is a member of the Federal Reserve System or is insured by the Federal
Deposit Insurance Corporation, or by a savings and loan association or savings
bank that is insured by the Federal Deposit Insurance Corporation. Bank
obligations also include U.S. dollar-denominated obligations of foreign branches
of U.S. banks or of U.S. branches of foreign banks, all of the same type as
domestic bank obligations. Investments in bank obligations are limited to the
obligations of financial institutions having more than $1 billion in total
assets at the time of purchase. Investments by Alleghany/Chicago Trust Money
Market Fund in non-negotiable time deposits are limited to no more than 5% of
its total assets at the time of purchase.

Domestic and foreign banks are subject to extensive but different
government regulations which may limit the amount and types of their loans and
the interest rates that may be charged. In addition, the profitability of the
banking industry is largely dependent upon the availability and cost of funds to
finance lending operations and the quality of underlying bank assets.

Investments in obligations of foreign branches of U.S. banks and of
U.S. branches of foreign banks may subject a Fund to additional investment
risks, including future political and economic developments, the possible
imposition of withholding taxes on interest income, possible seizure or
nationalization of foreign deposits, the possible establishment of exchange
controls, or the adoption of other foreign governmental restrictions which might
adversely affect the payment of principal and interest on such obligations. In
addition, foreign branches of U.S. banks and U.S. branches of foreign banks may
be subject to less stringent reserve requirements and to different accounting,
auditing, reporting and record keeping standards than those applicable to
domestic branches of U.S. banks. Investments in the obligations of U.S. branches
of foreign banks or foreign branches of U.S. banks will be made only when the
Investment Adviser believes that the credit risk with respect to the investment
is minimal.

Euro CDs, Yankee CDs and foreign bankers' acceptances involve risks
that are different from investments in securities of U.S. banks. The major risk,
which is sometimes referred to as "sovereign risk," pertains to possible future
unfavorable political and economic developments, possible withholding taxes,
seizures of foreign deposits, currency controls, interest limitations, or other
governmental restrictions which might affect payment of principal or interest.
Investment in foreign commercial paper also involves risks that are different
from investments in securities of commercial paper issued by U.S. companies.
Non-U.S. securities markets generally are not as developed or efficient as those
in the United States. Such securities may be less liquid and more volatile than
securities of comparable U.S. corporations. Non-U.S. issuers are not generally
subject to uniform accounting and financial reporting standards, practices and
requirements comparable to those applicable to U.S. issuers. In addition, there
may be less public information available about foreign banks, their branches and
other issuers.

Time deposits usually trade at a premium over Treasuries of the same
maturity. Investors regard such deposits as carrying some credit risk, which
Treasuries do not; also, investors regard time deposits as being sufficiently
less liquid than Treasuries; hence, investors demand some extra yield for buying
time deposits rather than Treasuries. The investor in a loan participation has a
dual credit risk to both the borrower and also the selling bank. The second risk
arises because it is the selling bank that collects interest and principal and
sends it to the investor.

Commercial paper may include variable and floating-rate instruments,
which are unsecured instruments that permit the interest on indebtedness
thereunder to vary. Variable-rate instruments provide for periodic adjustments
in the interest rate. Floating-rate instruments provide for automatic adjustment
of the interest rate whenever some other specified interest rate changes. Some
variable and floating-rate obligations are direct lending arrangements between
the purchaser and the issuer and there may be no active secondary market.
However, in the case of variable and floating-rate obligations with the demand
feature, a Fund may demand payment of principal and accrued interest at a time
specified in the instrument or may resell the instrument to a third party. In
the event an issuer of a variable or floating-rate obligation defaulted on its
payment obligation, a Fund might be unable to dispose of the note because of the
absence of a secondary market and could, for this or other reasons, suffer a
loss to the extent of the default. Substantial holdings of variable and
floating-rate instruments could reduce portfolio liquidity.

Variable- and Floating-Rate Instruments and Related Risks

With respect to the variable- and floating-rate instruments that may be
acquired by Alleghany/Montag & Caldwell Balanced Fund, Alleghany/Chicago Trust
Balanced Fund, Alleghany/Chicago Trust Bond Fund or Alleghany/Chicago Trust
Municipal Bond Fund, the Investment Adviser will consider the earning power,
cash flows and other liquidity ratios of the issuers and guarantors of such
instruments and, if the instruments are subject to demand features, will monitor
their financial status with respect to the ability of the issuer to meet its
obligation to make payment on demand. Where necessary to ensure that a variable-
or floating-rate instrument meets a Fund's quality requirements, the issuer's
obligation to pay the principal of the instrument will be backed by an
unconditional bank letter or line of credit, guarantee or commitment to lend.

Because variable and floating-rate instruments are direct lending
arrangements between the lender and the borrower, it is not contemplated that
such instruments will generally be traded, and there is generally no established
secondary market for these obligations, although they are redeemable at face
value. Accordingly, where these obligations are not secured by letters of credit
or other credit support arrangements, the Fund's right to redeem is dependent on
the ability of the borrower to pay principal and interest on demand.

The same credit research must be done for master demand notes as in
accepted names for potential commercial paper issuers to reduce the chances of a
borrower getting into serious financial difficulties.

Loan Participations

All Funds may engage in loan participations ("LPs"). LPs are loans sold
by the lending bank to an investor. The loan participant borrower may be a
company with highly-rated commercial paper that finds it can obtain cheaper
funding through an LP than with commercial paper and can also increase the
company's name recognition in the capital markets. LPs often generate greater
yield than commercial paper.

The borrower of the underlying loan will be deemed to be the issuer
except to the extent the Fund derives its rights from the intermediary bank
which sold the LPs. Because LPs are undivided interests in a loan made by the
issuing bank, the Fund may not have the right to proceed against the LP borrower
without the consent of other holders of the LPs. In addition, LPs will be
treated as illiquid if, in the judgment of the Investment Adviser, they cannot
be sold within seven days.

Foreign Bankers' Acceptances

All Funds may purchase foreign bankers' acceptances, although
Alleghany/Chicago Trust Money Market Fund's purchases are limited by the quality
standards of Rule 2a-7 under the Investment Company Act of 1940 (the "1940
Act"). Foreign bankers' acceptances are short-term (270 days or less),
non-interest-bearing notes sold at a discount and redeemed by the accepting
foreign bank at maturity for full face value and denominated in U.S. dollars.
Foreign bankers' acceptances are the obligations of the foreign bank involved,
to pay a draft drawn on it by a customer. These instruments reflect the
obligation both of the bank and the drawer to pay the face amount of the
instrument upon maturity.

Foreign Commercial Paper

All Funds may purchase foreign commercial paper, although
Alleghany/Chicago Trust Money Market Fund's purchases are limited by the quality
standards of Rule 2a-7 under the 1940 Act. Foreign commercial paper consists of
short-term unsecured promissory notes denominated in U.S. dollars, either issued
directly by a foreign firm in the U.S., or issued by a "domestic shell"
subsidiary of a foreign firm established to raise dollars for the firm's
operations abroad or for its U.S. subsidiary. Like commercial paper issued by
U.S. companies, foreign commercial paper is rated by the rating agencies
(Moody's, S&P) as to the issuer's creditworthiness. Foreign commercial paper can
potentially provide the investor with a greater yield than domestic commercial
paper.

Eurodollar Certificates of Deposit

A Euro CD is a receipt from a bank for funds deposited at that bank for
a specific period of time at some specific rate of return and denominated in
U.S. dollars. It is the liability of a U.S. bank branch or foreign bank located
outside the U.S. Almost all Euro CDs are issued in London.

Yankee Certificates of Deposit

Yankee CDs are certificates of deposit that are issued domestically by
foreign banks. It is a means by which foreign banks may gain access to U.S.
markets through their branches which are located in the United States, typically
in New York. These CDs are treated as domestic securities.

<PAGE>

REPURCHASE AGREEMENTS

All Funds may enter into repurchase agreements pursuant to which a Fund
purchases portfolio assets from a bank or broker-dealer concurrently with an
agreement by the seller to repurchase the same assets from the Fund at a later
date at a fixed price. Repurchase agreements are considered, under the 1940 Act,
to be collateralized loans by a Fund to the seller secured by the securities
transferred to the Fund. Repurchase agreements will be fully collateralized by
securities in which the Fund may invest directly. Such collateral will be
marked-to-market daily. If the seller of the underlying security under the
repurchase agreement should default on its obligation to repurchase the
underlying security, a Fund may experience delay or difficulty in exercising its
right to realize upon the security and, in addition, may incur a loss if the
value of the security should decline, as well as disposition costs in
liquidating the security. A Fund must treat each repurchase agreement as a
security for tax diversification purposes and not as cash, a cash equivalent or
receivable.

The repurchase price generally equals the price paid by a Fund plus
interest negotiated on the basis of current short-term rates (which may be more
or less than the rate on the securities underlying the repurchase agreement).
Repurchase agreements may be considered loans by a Fund under the 1940 Act.

The financial institutions with which a Fund may enter into repurchase
agreements are banks and non-bank dealers of U.S. Government securities that are
listed on the Federal Reserve Bank of New York's list of reporting dealers and
banks, if such banks and non-bank dealers are deemed creditworthy by the
Investment Adviser or Sub-Investment Adviser. The Investment Adviser or
Sub-Investment Adviser will continue to monitor the creditworthiness of the
seller under a repurchase agreement and will require the seller to maintain
during the term of the agreement the value of the securities subject to the
agreement at not less than the repurchase price.

Each Fund will only enter into a repurchase agreement where the market
value of the underlying security, including interest accrued, will be at all
times equal to or exceed the value of the repurchase agreement. The securities
held subject to a repurchase agreement by Alleghany/Chicago Trust Money Market
Fund may have stated maturities exceeding 13 months, provided the repurchase
agreement itself matures in less than 13 months.

REVERSE REPURCHASE AGREEMENTS

All Funds may enter into reverse repurchase agreements with banks and
broker dealers. Reverse repurchase agreements involve the sale of securities
held by a Fund pursuant to a Fund's agreement to repurchase the securities at an
agreed upon price, date and rate of interest. During the reverse repurchase
agreement period, the Fund continues to receive principal and interest payments
on these securities. Such agreements are considered to be borrowings under the
1940 Act and may be entered into only for temporary or emergency purposes. While
reverse repurchase transactions are outstanding, a Fund will maintain in a
segregated account cash, or liquid, securities in an amount at least equal to
the market value of the securities, plus accrued interest, subject to the
agreement. (Liquid securities as used in the prospectus and this Statement of
Additional Information include equity securities and debt securities that are
unencumbered and marked-to-market daily.) Reverse repurchase agreements involve
the risk that the market value of the securities sold by the Fund may decline
below the price at which the Fund is obligated to repurchase such securities.

BORROWING

The Funds may not borrow money or issue senior securities, except as
described in this paragraph. Each Fund may borrow from banks or enter into
reverse repurchase agreements for temporary purposes in amounts up to 10% of the
value of its total assets. The Funds may not mortgage, pledge, or hypothecate
any assets, except that each Fund may do so in connection with borrowings for
temporary purposes in amounts not in excess of the lesser of the dollar amounts
borrowed or 10% of the value of the total assets of the Fund. The Funds may also
borrow money for extraordinary purposes or to facilitate redemptions in amounts
up to 25% of the value of total assets. A Fund will not purchase securities
while its borrowings (including reverse repurchase agreements) exceed 5% of its
total assets. The Funds have no intention of increasing their net income through
borrowing. Any borrowing will be done from a bank with the required asset
coverage of at least 300%. In the event that such asset coverage shall at any
time fall below 300%, the Fund shall, within three days thereafter (not
including Sundays or holidays) or such longer period as the Securities and
Exchange Commission ("SEC") may prescribe by rules and regulations, reduce the
amount of its borrowings to such an extent that the asset coverage of such
borrowings shall be at least 300%.

ILLIQUID SECURITIES

All Funds may invest up to 15% (10% in the case of Alleghany/Chicago
Trust Money Market Fund) of their respective net assets in securities which are
illiquid. Illiquid securities will generally include, but are not limited to:
repurchase agreements and time deposits with notice/termination dates in excess
of seven days; unlisted over-the-counter options; interest rate, currency and
mortgage swap agreements; interest rate caps, floors and collars; and certain
securities which are subject to trading restrictions because they are not
registered under the 1933 Act.

RULE 144A SECURITIES

All Funds may purchase securities which are not registered under the
1933 Act but which can be sold to "qualified institutional buyers" in accordance
with Rule 144A under the 1933 Act. Any such security will not be considered
illiquid so long as it is determined by the Investment Adviser or Sub-Investment
Adviser, under guidelines approved by the Company's Board of Trustees, that an
adequate trading market exists for that security. This investment practice could
have the effect of increasing the level of illiquidity in a Fund during any
period that qualified institutional buyers become uninterested in purchasing
these restricted securities.

SECURITIES LENDING

All Funds may seek additional income at times by lending their
respective portfolio securities to broker-dealers and financial institutions
provided that: (1) the loan is secured by collateral that is continuously
maintained in an amount at least equal to the current market value of the
securities loaned, (2) a Fund may call the loan at any time with proper notice
and receive the securities loaned, (3) a Fund will continue to receive interest
and/or dividends paid on the loaned securities and may simultaneously earn
interest on the investment of any cash collateral, and (4) the aggregate market
value of all securities loaned by a Fund will not at any time exceed 25% of the
total assets of such Fund.

Collateral will normally consist of cash or cash equivalents,
securities issued by the U.S. government or its agencies or instrumentalities or
irrevocable letters of credit. Securities lending by a Fund involves the risk
that the borrower may fail to return the loaned securities or maintain the
proper amount of collateral. Therefore, a Fund will only enter into such lending
after a review by the Investment Adviser of the borrower's financial statements,
reports and other information as may be necessary to evaluate the
creditworthiness of the borrower. Such reviews will be conducted on an ongoing
basis as long as the loan is outstanding.

SECURITIES OF OTHER INVESTMENT COMPANIES

All Funds may invest in securities issued by other investment companies
which invest in securities in which the particular Fund is permitted to invest
and which determine their net asset value per share based on the amortized cost
or penny-rounding method. As a shareholder of another investment company, each
Fund would bear, along with other shareholders, its pro rata portion of the such
investment company's expenses, including advisory fees. These expenses would be
in addition to the advisory and other expenses that a Fund bears directly in
connection with its own operations.

Each Fund intends to limit its investments in securities issued by
other investment companies prescribed by the 1940 Act so that, as determined
immediately after a purchase of such securities is made: (i) not more than 5% of
the value of the Fund's total assets will be invested in the securities of any
one investment company; (ii) not more than 10% of its total assets will be
invested in the aggregate in securities of investment companies as a group; and
(iii) not more than 3% of the outstanding voting stock of any one investment
company will be owned by the Fund as a whole.

SHORT-TERM TRADING

All Funds may engage in short-term trading. Securities may be sold in
anticipation of a market decline or purchased in anticipation of a market rise
and later sold. In addition, a security may be sold and another purchased at
approximately the same time to take advantage of what a Fund believes to be a
temporary disparity in the normal yield relationship between the two securities.
Such trading may be expected to increase a Fund's portfolio turnover rate and
the expenses incurred in connection with such trading.

ZERO COUPON BONDS

All Funds except Alleghany/Montag & Caldwell Growth Fund,
Alleghany/Chicago Trust Talon Fund and Alleghany/Chicago Trust Money Market Fund
may invest in zero coupon securities, which are debt securities issued or sold
at a discount from their face value that do not entitle the holder to any
periodic payment of interest prior to maturity, a specified redemption date or a
cash payment date. The amount of the discount varies depending on the time
remaining until maturity or cash payment date, prevailing interest rates,
liquidity of the security and perceived credit quality of the issuer.

Zero coupon securities also may take the form of debt securities that
have been stripped of their unmatured interest coupons, the coupons themselves
and receipts or certificates representing interests in such stripped debt
obligations and coupons. The market prices of zero coupon securities are
generally more volatile than the market prices of interest-bearing securities
and respond more to changes in interest rates than interest-bearing securities
with similar maturities and credit qualities. The original issue discount on the
zero coupon bonds must be included ratably in the income of the Funds as the
income accrues even though payment has not been received. These Funds
nevertheless intend to distribute an amount of cash equal to the currently
accrued original issue discount, and this may require liquidating securities at
times they might not otherwise do so and may result in capital loss.

LOWER-GRADE DEBT SECURITIES AND RELATED RISKS

Alleghany/Chicago Trust Growth & Income Fund, Alleghany/Chicago Trust
Talon Fund, Alleghany/Chicago Trust Balanced Fund, Alleghany/Chicago Trust Bond
Fund and Alleghany/Chicago Trust Municipal Bond Fund may invest in securities
with high yields and high risks. Alleghany/Chicago Trust Growth & Income Fund
may invest up to 10% of its assets in such securities. Alleghany/Chicago Trust
Balanced Fund, Alleghany/Chicago Trust Bond Fund and Alleghany/Chicago Trust
Municipal Bond Fund may each invest up to 20% of their respective assets in such
securities.

Fixed income securities rated lower than "Baa3" by Moody's or "BBB-" by
S&P, frequently referred to as "junk bonds," are considered to be of poor
standing and predominantly speculative. Such securities are subject to a
substantial degree of credit risk. Such medium- and low-grade bonds held by a
Fund may be issued as a consequence of corporate restructurings, such as
leveraged buy-outs, mergers, acquisitions, debt recapitalizations; or similar
events. Also, high-yield bonds are often issued by smaller, less creditworthy
companies or by highly leveraged firms, which are generally less able than more
financially stable firms to make scheduled payments of interest and principal.
The risks posed by bonds issued under such circumstances are substantial.

Medium- and low-grade bonds may be issued as a consequence of corporate
restructurings, such as leveraged buy-outs, mergers, acquisitions, debt
recapitalizations or similar events. Also, these bonds are often issued by
smaller, less creditworthy companies or by highly leveraged firms which are
generally less able than more financially stable firms to make scheduled
payments of interest and principal. The risks posed by bonds issued under such
circumstances are substantial. Also, during an economic downturn or substantial
period of rising interest rates, highly leveraged issuers may experience
financial stress which would adversely affect their ability to service principal
and interest payment obligations, to meet projected business goals and to obtain
additional financing. Changes by recognized rating agencies in their rating of
any security and in the ability of an issuer to make payments of interest and
principal will also ordinarily have a more dramatic effect on the values of
these investments than on the values of higher-rated securities. Such changes in
value will not affect cash income derived from these securities, unless the
issuers fail to pay interest or dividends when due. Such changes will, however,
affect a Fund's net asset value per share. There can be no assurance that
diversification will protect a Fund from widespread bond defaults brought about
by a sustained economic downturn.

In the past, the high yields from low-grade bonds have more than
compensated for the higher default rates on such securities. However, there can
be no assurance that diversification will protect a Fund from widespread bond
defaults brought about by a sustained economic downturn, or that yields will
continue to offset default rates on high-yield bonds in the future. Issuers of
these securities are often highly leveraged, so that their ability to service
their debt obligations during an economic downturn or during sustained periods
of rising interest rates may be impaired. In addition, such issuers may not have
more traditional methods of financing available to them and may be unable to
repay debt at maturity by refinancing. Further, the recent economic recession
has resulted in default levels with respect to such securities in excess of
historic averages.

The value of lower-rated debt securities will be influenced not only by
changing interest rates, but also by the bond market's perception of credit
quality and the outlook for economic growth. When economic conditions appear to
be deteriorating, low- and medium-rated bonds may decline in market value due to
investors' heightened concern over credit quality, regardless of prevailing
interest rates. Adverse publicity and investor perceptions, whether or not based
on fundamental analysis, may decrease the value and liquidity of lower-rated
securities held by a Fund, especially in a thinly traded market. Illiquid or
restricted securities held by a Fund may involve valuation difficulties.

Especially at such times, trading in the secondary market for
high-yield bonds may become thin and market liquidity may be significantly
reduced. Even under normal conditions, the market for high-yield bonds may be
less liquid than the market for investment-grade corporate bonds. There are
fewer securities dealers in the high-yield market, and purchasers of high-yield
bonds are concentrated among a smaller group of securities dealers and
institutional investors. In periods of reduced market liquidity, high-yield bond
prices may become more volatile.

Youth and Growth of Lower-Rated Securities Market - The recent growth
of the lower-rated securities market has paralleled a long economic expansion,
and it has not weathered a recession in the market's present size and form. An
economic downturn or increase in interest rates is likely to have an adverse
effect on the lower-rated securities market generally (resulting in more
defaults) and on the value of lower-rated securities contained in the portfolios
of the Funds which hold these securities.

Sensitivity to Interest Rate and Economic Changes - The economy and
interest rates can affect lower-rated securities differently from other
securities. For example, the prices of lower-rated securities are more sensitive
to adverse economic changes or individual corporate developments than are the
prices of higher-rated investments. Also, during an economic downturn or
substantial period of rising interest rates, highly leveraged issuers may
experience financial stress which would adversely affect their ability to
service their principal and interest payment obligations, to meet projected
business goals and to obtain additional financing. If the issuer of a
lower-rated security defaulted, a Fund may incur additional expenses to seek
recovery. In addition, periods of economic uncertainty and changes can be
expected to result in increased volatility of market prices of lower-rated
securities and a Fund's net asset values.

Liquidity and Valuation - To the extent that an established secondary
market does not exist and a particular obligation is thinly traded, the
obligation's fair value may be difficult to determine because of the absence of
reliable, objective data. As a result, a Fund's valuation of the obligation and
the price it could obtain upon its disposition could differ.

Credit Ratings - The credit ratings of Moody's and S&P are evaluations
of the safety of principal and interest payments, not market value risk, of
lower-rated securities. Also, credit rating agencies may fail to timely change
the credit ratings to reflect subsequent events. Therefore, in addition to using
recognized rating agencies and other sources, the Investment Adviser or
Sub-Investment Adviser also performs its own analysis of issuers in selecting
investments for the Funds. The Investment Adviser's or Sub-Investment Adviser's
analysis of issuers may include, among other things, historic and current
financial condition, current and anticipated cash flow and borrowing strength of
management, responsiveness to business conditions, credit standing and current
and anticipated results of operations.

Yields and Ratings - The yields on certain obligations are dependent on
a variety of factors, including general market conditions, conditions in the
particular market for the obligation, the financial condition of the issuer, the
size of the offering, the maturity of the obligation and the ratings of the
issue. The ratings of Moody's and S&P represent their respective opinions as to
the quality of the obligations they undertake to rate. Ratings, however, are
general and are not absolute standards of quality. Consequently, obligations
with the same rating, maturity and interest rate may have different market
prices.

While any investment carries some risk, certain risks associated with
lower-rated securities are different from those for investment-grade securities.
The risk of loss through default is greater because lower-rated securities are
usually unsecured and are often subordinate to an issuer's other obligations.
Additionally, the issuers of these securities frequently have high debt levels
and are thus more sensitive to difficult economic conditions, individual
corporate developments and rising interest rates. Consequently, the market price
of these securities may be quite volatile and may result in wider fluctuations
of a Fund's net asset value per share.

DERIVATIVE INVESTMENTS

The term "derivatives" has been used to identify a range and variety of
financial instruments. In general, a derivative is commonly defined as a
financial instrument whose performance and value are derived, at least in part,
from another source, such as the performance of an underlying asset, or a
specific security, or an index of securities. As is the case with other types of
investments, a Fund's derivative instruments may entail various types and
degrees of risk, depending upon the characteristics of a derivative instrument
and the Fund's overall portfolio.

Each Fund permitted the use of derivatives may engage in such practices
for hedging purposes, to maintain liquidity, or in anticipation of changes in
the composition of its portfolio holdings. No Fund will engage in derivative
investments purely for speculative purposes. A Fund will invest in one or more
derivatives only to the extent that the instrument under consideration is judged
by the Investment Adviser to be consistent with the Fund's overall investment
objective and policies. In making such judgment, the potential benefits and
risks will be considered in relation to the Fund's other portfolio investments.

Where not specified, investment limitations with respect to a Fund's
derivative instruments will be consistent with such Fund's existing percentage
limitations with respect to its overall investment policies and restrictions.
While not a fundamental policy, the total of all instruments deemed derivative
in nature by the Investment Adviser will generally not exceed 20% of total
assets for any Fund; however, as this policy is not fundamental, it may be
changed from time to time when deemed appropriate by the Board of Trustees.
Listed below, including risks and policies with respect thereto, are the types
of securities in which certain Funds are permitted to invest which are
considered by the Investment Adviser to be derivative in nature.

Options and Related Risks

All Funds except Alleghany/Chicago Trust Small Cap Value Fund and
Alleghany/Chicago Trust Money Market Fund may buy put and call options and write
covered call and secured put options.

A call option enables the purchaser, in return for the premium paid, to
purchase securities from the writer of the option at an agreed price up to an
agreed date. The advantage is that the purchaser may hedge against an increase
in the price of securities it ultimately wishes to buy or may take advantage of
a rise in a particular index. A Fund will only purchase call options to the
extent premiums paid on all outstanding call options do not exceed 20% of such
Fund's total assets. A Fund will only sell or write call options on a covered
basis (e.g. on securities it holds in its portfolio).

A put option enables the purchaser of the option, in return for the
premium paid, to sell the security underlying the option to the writer at the
exercise price during the option period. The writer of the option has the
obligation to purchase the security from the purchaser of the option. The
advantage is that the purchaser can be protected should the market value of the
security decline or should a particular index decline. A Fund will only purchase
put options to the extent that the premiums on all outstanding put options do
not exceed 20% of a Fund's total assets. A Fund will only purchase put options
on a covered basis and write put options on a secured basis. Cash or other
collateral will be held in a segregated account for such options. A Fund will
receive premium income from writing put options, although it may be required,
when the put is exercised, to purchase securities at higher prices than the
current market price. At the time of purchase, a Fund will receive premium
income from writing call options, which may offset the cost of purchasing put
options and may also contribute to a Fund's total return. A Fund may lose
potential market appreciation if the judgment of its Investment Adviser or
Sub-Investment Adviser is incorrect with respect to interest rates, security
prices or the movement of indices.

An option on a securities index gives the purchaser of the option, in
return for the premium paid, the right to receive cash from the seller equal to
the difference between the closing price of the index and the exercise price of
the option.

Closing transactions essentially let a Fund offset put options or call
options prior to exercise or expiration. If a Fund cannot effect a closing
transaction, it may have to hold a security it would otherwise sell or deliver a
security it might want to hold.

A Fund may use options traded on U.S. exchanges, and to the extent
permitted by law, options traded over-the-counter. It is the position of the SEC
that over-the-counter options are illiquid. Accordingly, a Fund will invest in
such options only to the extent consistent with its 15% limit on investments in
illiquid securities.

These options are generally considered to be derivative securities.
Such options may relate to particular securities, stock indices, or financial
instruments and may or may not be listed on a national securities exchange and
issued by the Options Clearing Corporation. Options trading is a highly
specialized activity which entails greater than ordinary investment risk.
Options on particular securities may be more volatile than the underlying
securities, and, on a percentage basis, an investment in options may be subject
to greater fluctuation than an investment in the underlying securities
themselves.

These Funds will write call options only if they are "covered." In the
case of a call option on a security, the option is "covered" if a Fund owns the
security underlying the call or has an absolute and immediate right to acquire
that security without additional cash consideration (or, if additional cash
consideration is required, cash or liquid securities, in such amount are held in
a segregated account by its custodian) upon conversion or exchange of other
securities held by it. For a call option on an index, the option is covered if a
Fund maintains with its custodian a diversified stock portfolio, or liquid
assets equal to the contract value.

A call option is also covered if a Fund holds a call on the same
security or index as the call written where the exercise price of the call held
is (i) equal to or less than the exercise price of the call written; or (ii)
greater than the exercise price of the call written provided the difference is
maintained by the Fund in cash or liquid securities in a segregated account with
its custodian. The Funds will write put options only if they are "secured" by
liquid assets maintained in a segregated account by the Funds' Custodian in an
amount not less than the exercise price of the option at all times during the
option period.

A Fund's obligation to sell a security subject to a covered call option
written by it, or to purchase a security subject to a secured put option written
by it, may be terminated prior to the expiration date of the option by the
Fund's execution of a closing purchase transaction, which is effected by
purchasing on an exchange an option of the same series as the previously written
option. Such a purchase does not result in the ownership of an option. A closing
purchase transaction will ordinarily be effected to realize a profit on an
outstanding option, to prevent an underlying security from being called, to
permit the sale of the underlying security, or to permit the writing of a new
option containing different terms on such underlying security. The cost of such
a liquidation purchase plus transaction costs may be greater than the premium
received upon the original option, in which event the Fund will have incurred a
loss in the transaction.

There is no assurance that a liquid secondary market will exist for any
particular option. An option writer, unable to effect a closing purchase
transaction, will not be able to sell the underlying security (in the case of a
covered call option) or liquidate the segregated account (in the case of a
secured put option) until the option expires or the optioned security is
delivered upon exercise with the result that the writer in such circumstances
will be subject to the risk of market decline or appreciation in the security
during such period.

Purchasing Call Options - Each of these Funds may purchase call options
to the extent that premiums paid by such Fund do not aggregate more than 20% of
that Fund's total assets. When a Fund purchases a call option, in return for a
premium paid by the Fund to the writer of the option, the Fund obtains the right
to buy the security underlying the option at a specified exercise price at any
time during the term of the option. The writer of the call option, who receives
the premium upon writing the option, has the obligation, upon exercise of the
option, to deliver the underlying security against payment of the exercise
price. The advantage of purchasing call options is that a Fund may alter
portfolio characteristics and modify portfolio maturities without incurring the
cost associated with transactions, except the cost of the option.

A Fund may, following the purchase of a call option, liquidate its
position by effecting a closing sale transaction by selling an option of the
same series as the option previously purchased. The Fund will realize a profit
from a closing sale transaction if the price received on the transaction is more
than the premium paid to purchase the original call option; the Fund will
realize a loss from a closing sale transaction if the price received on the
transaction is less than the premium paid to purchase the original call option.

Although a Fund will generally purchase only those call options for
which there appears to be an active secondary market, there is no assurance that
a liquid secondary market on an exchange will exist for any particular option,
or at any particular time, and for some options no secondary market on an
exchange may exist. In such event, it may not be possible to effect closing
transactions in particular options, with the result that a Fund would have to
exercise its options in order to realize any profit and would incur brokerage
commissions upon the exercise of such options and upon the subsequent
disposition of the underlying securities acquired through the exercise of such
options. Further, unless the price of the underlying security changes
sufficiently, a call option purchased by a Fund may expire without any value to
the Fund, in which event the Fund would realize a capital loss which will be
short-term unless the option was held for more than one year.

Covered Call Writing - Each of these Funds may write covered call
options from time to time on such portions of their portfolios, without limit,
as the Investment Adviser or Sub-Investment Adviser determines is appropriate in
pursuing a Fund's investment objective. The advantage to a Fund of writing
covered calls is that the Fund receives a premium which is additional income.
However, if the security rises in value, the Fund may not fully participate in
the market appreciation.

During the option period, a covered call option writer may be assigned
an exercise notice by the broker-dealer through whom such call option was sold,
requiring the writer to deliver the underlying security against payment of the
exercise price. This obligation is terminated upon the expiration of the option
or upon entering a closing purchase transaction. A closing purchase transaction,
in which a Fund, as writer of an option, terminates its obligation by purchasing
an option of the same series as the option previously written, cannot be
effected with respect to an option once the option writer has received an
exercise notice for such option.

Closing purchase transactions will ordinarily be effected to realize a
profit on an outstanding call option, to prevent an underlying security from
being called, to permit the sale of the underlying security or to enable a Fund
to write another call option on the underlying security with either a different
exercise price or expiration date or both. A Fund may realize a net gain or loss
from a closing purchase transaction depending upon whether the net amount of the
original premium received on the call option is more or less than the cost of
effecting the closing purchase transaction. Any loss incurred in a closing
purchase transaction may be partially or entirely offset by the premium received
from a sale of a different call option on the same underlying security. Such a
loss may also be wholly or partially offset by unrealized appreciation in the
market value of the underlying security. Conversely, a gain resulting from a
closing purchase transaction could be offset in whole or in part by a decline in
the market value of the underlying security.

If a call option expires unexercised, the Fund will realize a
short-term capital gain in the amount of the premium on the option less the
commission paid. Such a gain, however, may be offset by depreciation in the
market value of the underlying security during the option period. If a call
option is exercised, a Fund will realize a gain or loss from the sale of the
underlying security equal to the difference between the cost of the underlying
security and the proceeds of the sale of the security plus the amount of the
premium on the option less the commission paid.

A Fund will write call options only on a covered basis, which means
that a Fund will own the underlying security subject to a call option at all
times during the option period. Unless a closing purchase transaction is
effected, a Fund would be required to continue to hold a security which it might
otherwise wish to sell or deliver a security it would want to hold. The exercise
price of a call option may be below, equal to, or above the current market value
of the underlying security at the time the option is written.

Purchasing Put Options - Each of these Funds may invest up to 20% of
its total assets in the purchase of put options. A Fund will, at all times
during which it holds a put option, own the security covered by such option.
With regard to the writing of put options, each Fund will limit the aggregate
value of the obligations underlying such put options to 50% of its total assets.
The purchase of the put on substantially identical securities held will
constitute a short sale for tax purposes, the effect of which is to create
short-term capital gain on the sale of the security and to suspend running of
its holding period (and treat it as commencing on the date of the closing of the
short sale) or that of a security acquired to cover the same if at the time the
put was acquired, the security had not been held for more than one year.

A put option purchased by a Fund gives it the right to sell one of its
securities for an agreed price up to an agreed date. A Fund would purchase put
options in order to protect against a decline in the market value of the
underlying security below the exercise price less the premium paid for the
option ("protective puts"). The ability to purchase put options allows a Fund to
protect unrealized gains in an appreciated security in their portfolios without
actually selling the security. If the security does not drop in value, a Fund
will lose the value of the premium paid. A Fund may sell a put option which it
has previously purchased prior to the sale of the securities underlying such
option. Such sale will result in a net gain or loss depending on whether the
amount received on the sale is more or less than the premium and other
transaction costs paid on the put option which is sold.

Each of these Funds may sell a put option purchased on individual
portfolio securities. Additionally, a Fund may enter into closing sale
transactions. A closing sale transaction is one in which a Fund, when it is the
holder of an outstanding option, liquidates its position by selling an option of
the same series as the option previously purchased.

Writing Put Options - Each of these Funds may also write put options on
a secured basis which means that a Fund will maintain in a segregated account
with its Custodian, cash or U.S. Government securities in an amount not less
than the exercise price of the option at all times during the option period. The
amount of cash or U.S. Government securities held in the segregated account will
be adjusted on a daily basis to reflect changes in the market value of the
securities covered by the put option written by the Fund. Secured put options
will generally be written in circumstances where the Investment Adviser or
Sub-Investment Adviser wishes to purchase the underlying security for a Fund's
portfolio at a price lower than the current market price of the security. In
such event, that Fund would write a secured put option at an exercise price
which, reduced by the premium received on the option, reflects the lower price
it is willing to pay.

Following the writing of a put option, a Fund may wish to terminate the
obligation to buy the security underlying the option by effecting a closing
purchase transaction. This is accomplished by buying an option of the same
series as the option previously written. The Fund may not, however, effect such
a closing transaction after it has been notified of the exercise of the option.

Foreign Currency Options - Alleghany/Blairlogie International Developed
Fund and Alleghany/Blairlogie Emerging Markets Fund may buy or sell put and call
options on foreign currencies either on exchanges or in the over-the-counter
market. A put option on a foreign currency gives the purchaser of the option the
right to sell a foreign currency at the exercise price until the option expires.
A call option on a foreign currency gives the purchaser of the option the right
to purchase the currency at the exercise price until the option expires.
Currency options traded on U.S. or other exchanges may be subject to position
limits which may limit the ability of a Fund to reduce foreign currency risk
using such options.

Futures Contracts and Related Risks

All Funds except Alleghany/Chicago Trust Small Cap Value Fund,
Alleghany/Veredus Aggressive Growth Fund and Alleghany/Chicago Trust Money
Market Fund may engage in futures contracts and options on futures contracts for
hedging purposes or to maintain liquidity. However, a Fund may not purchase or
sell a futures contract unless immediately after any such transaction the sum of
the aggregate amount of margin deposits on its existing futures positions and
the amount of premiums paid for related options is 5% or less of its total
assets, after taking into account unrealized profits and unrealized losses on
any such contracts. At maturity, a futures contract obligates a Fund to take or
make delivery of certain securities or the cash value of a securities index. A
Fund may sell a futures contract in order to offset a decrease in the market
value of its portfolio securities that might otherwise result from a market
decline. A Fund may do so either to hedge the value of its portfolio of
securities as a whole, or to protect against declines, occurring prior to sales
of securities, in the value of the securities to be sold. Conversely, a Fund may
purchase a futures contract in anticipation of purchases of securities. In
addition, a Fund may utilize futures contracts in anticipation of changes in the
composition of its portfolio holdings.

Any gain derived by a Fund from the use of such instruments will be
treated as a combination of short-term and long-term capital gain and, if not
offset by realized capital losses incurred by the Fund, will be distributed to
shareholders and will be taxable to shareholders as a combination of ordinary
income and long-term capital gain.

A Fund may purchase and sell call and put options on futures contracts
traded on an exchange or board of trade. When a Fund purchases an option on a
futures contract, it has the right to assume a position as a purchaser or seller
of a futures contract at a specified exercise price at any time during the
option period. When a Fund sells an option on a futures contract, it becomes
obligated to purchase or sell a futures contract if the option is exercised. In
anticipation of a market advance, a Fund may purchase call options on futures
contracts as a substitute for the purchase of futures contracts to hedge against
a possible increase in the price of securities which a Fund intends to purchase.
Similarly, if the market is expected to decline, a Fund might purchase put
options or sell call options on futures contracts rather than sell futures
contracts. In connection with a Fund's position in a futures contract or option
thereon, a Fund will create a segregated account of cash or liquid securities,
or will otherwise cover its position in accordance with applicable requirements
of the SEC.

The Funds may enter into contracts for the purchase or sale for future
delivery of securities, including index contracts. Futures contracts are
generally considered to be derivative securities. While futures contracts
provide for the delivery of securities, deliveries usually do not occur.
Contracts are generally terminated by entering into offsetting transactions.

The Funds may enter into such futures contracts to protect against the
adverse effects of fluctuations in security prices, or interest rates without
actually buying or selling the securities. For example, if interest rates are
expected to increase, a Fund might enter into futures contracts for the sale of
debt securities. Such a sale would have much the same effect as selling an
equivalent value of the debt securities owned by the Fund. If interest rates did
increase, the value of the debt securities in the portfolio would decline, but
the value of the futures contracts to the Fund would increase at approximately
the same rate, thereby keeping the net asset value of the Fund from declining as
much as it otherwise would have. Similarly, when it is expected that interest
rates may decline, futures contracts may be purchased to hedge in anticipation
of subsequent purchases of securities at higher prices. Since the fluctuations
in the value of futures contracts should be similar to those of debt securities,
the Fund could take advantage of the anticipated rise in value of debt
securities without actually buying them until the market had stabilized. At that
time, the futures contracts could be liquidated and the Fund could then buy debt
securities on the cash market.

A stock index futures contract obligates the seller to deliver (and the
purchaser to take) an amount of cash equal to a specific dollar amount times the
difference between the value of a specific stock index at the close of the last
trading day of the contract and the price at which the agreement was made. Open
futures contracts are valued on a daily basis and a Fund may be obligated to
provide or receive cash reflecting any decline or increase in the contract's
value. No physical delivery of the underlying stocks in the index is made in the
future.

With respect to options on futures contracts, when a Fund is
temporarily not fully invested, it may purchase a call option on a futures
contract to hedge against a market advance. The purchase of a call option on a
futures contract is similar in some respects to the purchase of a call option on
an individual security. Depending on the pricing of the option compared to
either the price of the futures contract upon which it is based, or the price of
the underlying debt securities, it may or may not be less risky than ownership
of the futures contract or underlying debt securities. As with the purchase of
futures contracts, when a Fund is not fully invested, it may purchase a call
option on a futures contract to hedge against a market advance.

The writing of a call option on a futures contract constitutes a
partial hedge against the declining price of the security or foreign currency
which is deliverable upon exercise of the futures contract. If the futures price
at the expiration of the option is below the exercise price, the Fund will
retain the full amount of the option premium which provides a partial hedge
against any decline that may have occurred in the value of the Fund's portfolio
holdings. The writing of a put option on a futures contract constitutes a
partial hedge against the increasing price of the security or foreign currency
which is deliverable upon exercise of the futures contract. If the futures price
at the expiration of the option is higher than the exercise price, the Fund will
retain the full amount of the option premium which provides a partial hedge
against any increase in the price of securities which the Fund intends to
purchase.

Call and put options on stock index futures are similar to options on
securities except that, rather than the right to purchase or sell stock at a
specified price, options on a stock index future give the holder the right to
receive cash. Upon exercise of the option, the delivery of the futures position
by the writer of the option to the holder of the option will be accompanied by
delivery of the accumulated balance in the writer's futures margin account which
represents the amount by which the market price of the futures contract, at
exercise, exceeds, in the case of a call, or is less than, in the case of a put,
the exercise price of the futures contract. If an option is exercised on the
last trading day prior to the expiration date of the option, the settlement will
be made entirely in cash equal to the difference between the exercise price of
the option and the closing price of the futures contract on the expiration date.

If a put or call option which a Fund has written is exercised, the Fund
may incur a loss which will be reduced by the amount of the premium it received.
Depending on the degree of correlation between changes in the value of its
portfolio securities and changes in the value of its options positions, the
Fund's losses from existing options on futures may, to some extent, be reduced
or increased by changes in the value of portfolio securities. The purchase of a
put option on a futures contract is similar in some respects to the purchase of
protective puts on portfolio securities and for Federal tax purposes, will be
considered a "short sale." For example, a Fund will purchase a put option on a
futures contract to hedge the Fund's portfolio against the risk of rising
interest rates.

To the extent that market prices move in an unexpected direction, a
Fund may not achieve the anticipated benefits of futures contracts or options on
futures contracts or may realize a loss. For example, if the Fund is hedged
against the possibility of an increase in interest rates which would adversely
affect the price of securities held in its portfolio and interest rates decrease
instead, the Fund would lose part or all of the benefit of the increased value
which it has because it would have offsetting losses in its futures position. In
addition, in such situations, if the Fund had insufficient cash, it may be
required to sell securities from its portfolio to meet daily variation margin
requirements. Such sales of securities may, but will not necessarily, be at
increased prices which reflect the rising market. A Fund may be required to sell
securities at a time when it may be disadvantageous to do so.

Options on securities, futures contracts, options on futures contracts,
and options on currencies may be traded on foreign exchanges. Such transactions
may not be regulated as effectively as similar transactions in the United
States; may not involve a clearing mechanism and related guarantees; and are
subject to the risk of governmental actions affecting trading in, or the prices
of, foreign securities. Some foreign exchanges may be principal markets so that
no common clearing facility exists and a trader may look only to the broker for
performance of the contract. The value of such positions also could be adversely
affected by (i) other complex foreign political, legal and economic factors,
(ii) lesser availability than in the United States of data on which to make
trading decision, (iii) delays in the Company's ability to act upon economic
events occurring in foreign markets during non-business hours in the United
States, (iv) the imposition of different exercise and settlement terms and
procedures and margin requirements than in the United States, and (v) lesser
trading volume. In addition, unless a Fund hedges against fluctuations in the
exchange rate between the U.S. dollar and the currencies in which trading is
done on foreign exchanges, any profits that a Fund might realize in trading
could be eliminated by adverse changes in the exchange rate, or the Fund could
incur losses as a result of those changes.

Further, with respect to options on futures contracts, a Fund may seek
to close out an option position by writing or buying an offsetting position
covering the same securities or contracts and have the same exercise price and
expiration date. The ability to establish and close out positions on options
will be subject to the maintenance of a liquid secondary market, which cannot be
assured.

FORWARD COMMITMENTS, WHEN-ISSUED SECURITIES AND DELAYED DELIVERY TRANSACTIONS
AND RELATED RISKS

All Funds except Alleghany/Chicago Trust Small Cap Value Fund and
Alleghany/Chicago Trust Money Market Fund may purchase or sell securities on a
when-issued or delayed-delivery basis and make contracts to purchase or sell
securities for a fixed price at a future date beyond customary settlement time.
Securities purchased or sold on a when-issued, delayed-delivery, or forward
commitment basis involve a risk of loss if the value of the security to be
purchased declines prior to the settlement date. Although a Fund would generally
purchase securities on a when-issued, delayed-delivery, or forward commitment
basis with the intention of acquiring the securities, a Fund may dispose of such
securities prior to settlement if its Investment Adviser or Sub-Investment
Adviser deems it appropriate to do so.

The Funds may dispose of or negotiate a when-issued or forward
commitment after entering into these transactions. Such transactions are
generally considered to be derivative transactions. The Funds will normally
realize a capital gain or loss in connection with these transactions. For
purposes of determining a Fund's average dollar-weighted maturity, the maturity
of when-issued or forward commitment securities will be calculated from the
commitment date.

When a Fund purchases securities on a when-issued, delayed delivery or
forward commitment basis, the Fund's Custodian will maintain in a segregated
account: cash, or liquid securities having a value (determined daily) at least
equal to the amount of the Fund's purchase commitments. In the case of a forward
commitment to sell portfolio securities, the Custodian will hold the portfolio
securities themselves in a segregated account while the commitment is
outstanding. These procedures are designed to ensure that the Fund will maintain
sufficient assets at all times to cover its obligations under when-issued
purchases, forward commitments and delayed delivery transactions.

Swap Agreements. Alleghany/Blairlogie International Developed Fund and
Alleghany/Blairlogie Emerging Markets Fund may enter into equity index swap
agreements for purposes of attempting to gain exposure to the stocks making up
an index of securities in a market without actually purchasing those stocks.
Swap agreements are two-party contracts entered into primarily by institutional
investors for periods ranging from a few weeks to more than one year. In a
standard "swap" transaction, two parties agree to exchange the returns (or
differentials in rates of return) earned or realized on particular predetermined
investments or instruments. The gross returns to be exchanged or "swapped"
between the parties are calculated with respect to a "notional amount," i.e.,
the return on or increase in value of a particular dollar amount invested in a
"basket" of securities representing a particular index.

Most swap agreements entered into by a Fund calculate the obligations
of the parties to the agreement on a "net basis." Consequently, a Fund's current
obligations (or rights) under a swap agreement will generally be equal only to
the net amount to be paid or received under the agreement based on the relative
values of the positions held by each party to the agreement (the "net amount").
A Fund's current obligations under a swap agreement will be accrued daily
(offset against any amounts owing to the Fund) and any accrued but unpaid net
amounts owed to a swap counter party will be covered by the maintenance of a
segregated account consisting of assets determined to be liquid by the
Investment Adviser in accordance with procedures established by the Board of
Trustees, to avoid any potential leveraging of the Fund's portfolio. Obligations
under swap agreements so covered will not be construed to be "senior securities"
for purposes of a Fund's investment restriction concerning senior securities. A
Fund will not enter into a swap agreement with any single party if the net
amount owed or to be received under existing contracts with that party would
exceed 5% of the Fund's assets.

Whether a Fund's use of swap agreements will be successful in
furthering its investment objective will depend on the Investment Adviser's
ability to predict correctly whether certain types of investments are likely to
produce greater returns than other investments. Because they are two-party
contracts and because they may have terms of greater than seven days, swap
agreements may be considered to be illiquid. Moreover, a Fund bears the risk of
loss of the amount expected to be received under a swap agreement in the event
of the default or bankruptcy of a swap agreement counterparty. The Funds will
enter into swap agreements only with counterparties that meet certain standards
of creditworthiness (generally, such counterparties would have to be eligible
counterparties under the terms of the Funds' repurchase agreement guidelines).
Certain restrictions imposed on the Funds by the Internal Revenue Code may limit
the Funds' ability to use swap agreements. The Swaps market is a relatively new
market and is largely unregulated. It is possible that developments in the swaps
market, including potential government regulation, could adversely affect a
Fund's ability to terminate existing swap agreements or to realize amounts to be
received under such agreements.

INTEREST RATE SWAPS AND RELATED RISKS

Only Alleghany/Chicago Trust Balanced Fund, Alleghany/Chicago Trust
Bond Fund and Alleghany/Chicago Trust Municipal Bond Fund, in order to help
enhance the value of their respective portfolios or manage exposure to different
types of investments, may enter into interest rate currency and mortgage swap
agreements and may purchase and sell interest rate "caps," "floors," and
"collars" for hedging purposes and not for speculation. Interest rate swaps are
generally considered to be derivative transactions. In a typical interest rate
swap agreement, one party agrees to make regular payments equal to a floating
interest rate on a specified amount in return for payments equal to a fixed
interest rate on the same amount for a specified period. Swaps involve the
exchange between a Fund and another party of their respective rights to receive
interest, e.g., an exchange of fixed-rate payments for floating-rate payments.
For example, if a Fund holds an interest-paying security whose interest rate is
reset once a year, it may swap the right to receive interest at this fixed-rate
for the right to receive interest at a rate that is reset daily. Such a swap
position would offset changes in the value of the underlying security because of
subsequent changes in interest rates. This would protect a Fund from a decline
in the value of the underlying security due to rising rates, but would also
limit its ability to benefit from falling interest rates. A Fund will enter into
interest rate swaps only on a net basis (i.e. the two payment streams will be
netted out, with the Fund receiving or paying as the case may be, only the net
amount of the two payments). The net amount of the excess, if any, of a Fund's
obligations over its entitlements with respect to each interest rate swap, will
be accrued on a daily basis and an amount of cash or liquid securities having an
aggregate net asset value at least equal to the accrued excess, will be
maintained in a segregated account by the Company's custodian bank.

Interest rate swaps do not involve the delivery of securities or other
underlying assets or principal. Thus, if the other party to an interest rate
swap defaults, a Fund's risk of loss consists of the net amount of interest
payments that the Fund is contractually entitled to receive.

A Fund will typically use interest rate swaps to preserve a return on a
particular investment or portion of its portfolio or to shorten the effective
duration of its portfolio investments. Interest rate swaps involve the exchange
by a Fund with another party of their respective commitments to pay or receive
interest, such as an exchange of fixed-rate payments for floating-rate payments.

A Fund will only enter into interest rate swaps on a net basis, i.e.,
the two payment streams are netted out, with the Fund receiving or paying, as
the case may be, only the net amount of the two payments. Inasmuch as these
transactions are entered into for good faith hedging purposes, the Funds and the
Investment Adviser believe that such obligations do not constitute senior
securities as defined in the 1940 Act and, accordingly, will not treat them as
being subject to the Funds' borrowing restrictions. The net amount of the
excess, if any, of a Fund's obligations over its entitlements with respect to
each interest rate swap will be accrued on a daily basis and an amount of cash
or liquid securities, having an aggregate net asset value at least equal to such
accrued excess will be maintained in a segregated account by the Fund's
Custodian.

In a cap or floor, one party agrees, usually in return for a fee, to
make payments under particular circumstances. For example, the purchaser of an
interest rate cap has the right to receive payments to the extent a specified
interest rate exceeds an agreed level; the purchaser of an interest rate floor
has the right to receive payments to the extent a specified interest rate falls
below an agreed level. A collar entitles the purchaser to receive payments to
the extent a specified interest rate falls outside an agreed range.

Swap agreements may involve leverage and may be highly volatile;
depending on how they are used, they may have a considerable impact on a Fund's
performance. Swap agreements involve risks depending upon the other party's
creditworthiness and ability to perform, as judged by the Investment Adviser as
well as the Fund's ability to terminate its swap agreements or reduce its
exposure through offsetting transactions.

ASSET-BACKED SECURITIES AND RELATED RISKS

All Funds except Alleghany/Montag & Caldwell Growth Fund,
Alleghany/Chicago Trust Talon Fund, Alleghany/Chicago Small Cap Value Fund,
Alleghany/Veredus Aggressive Growth Fund and Alleghany/Chicago Trust Money
Market Fund may invest in asset-backed securities. Asset-backed securities are
securities backed by installment contracts, credit card and other receivables,
or other financial type assets. Asset-backed securities represent interests in
"pools" of assets in which payments of both interest and principal on the
securities are made monthly, thus in effect "passing through" monthly payments
made by the individual borrowers on the assets underlying securities, net of any
fees paid to the issuer or guarantor of the securities. The average life of
asset-backed securities varies with the maturities of the underlying
instruments. An asset-backed security's stated maturity may be shortened, and
the security's total return may be difficult to predict precisely. The risk that
recovery on repossessed collateral might be unavailable or inadequate to support
payments on asset-backed securities is greater than in the case for
mortgage-backed securities. Falling interest rates generally result in an
increase in the rate of prepayments of mortgage loans while rising interest
rates generally decrease the rate of prepayments. An acceleration in prepayments
in response to sharply falling interest rates will shorten the security's
average maturity and limit the potential appreciation in the security's value
relative to a conventional debt security.

MORTGAGE-BACKED SECURITIES AND MORTGAGE PASS-THROUGH SECURITIES AND RELATED
RISKS

All Funds except Alleghany/Montag & Caldwell Growth Fund,
Alleghany/Chicago Trust Talon Fund, Alleghany/Chicago Small Cap Value Fund,
Alleghany/Veredus Aggressive Growth Fund and Alleghany/Chicago Trust Money
Market Fund may invest in mortgage-backed securities. The timely payment of
principal and interest on mortgage-backed securities issued or guaranteed by
Ginnie Mae (formerly known as the Government National Mortgage Association)
("GNMA") is backed by GNMA and the full faith and credit of the U.S. Government.
Also, securities issued by GNMA and other mortgage-backed securities may be
purchased at a premium over the maturity value of the underlying mortgages. This
premium is not guaranteed and would be lost if prepayment occurs.
Mortgage-backed securities issued by U.S. Government agencies or
instrumentalities other than GNMA are not "full faith and credit" obligations.
Certain obligations, such as those issued by the Federal Home Loan Bank are
supported by the issuer's right to borrow from the U.S. Treasury; while others,
such as those issued by the Federal National Mortgage Association ("FNMA"), are
supported only by the credit of the issuer. Unscheduled or early payments on the
underlying mortgages may shorten the securities' effective maturities and reduce
returns. These Funds may agree to purchase or sell these securities with payment
and delivery taking place at a future date.

Other mortgage-backed securities are issued by private issuers,
generally originators of and investors in mortgage loans, including savings
associations, mortgage bankers, commercial banks, investment bankers and special
purpose entities. These private mortgage-backed securities may be supported by
U.S. Government mortgage-backed securities or some form of non-government credit
enhancement. Mortgage-backed securities have either fixed or adjustable interest
rates. The rate of return on mortgage-backed securities may be affected by
prepayments of principal on the underlying loans, which generally increase as
interest rates decline; as a result, when interest rates decline, holders of
these securities normally do not benefit from appreciation in market value to
the same extent as holders of other non-callable debt securities. In addition,
like other debt securities, the values of mortgage-related securities, including
government and government-related mortgage pools, generally will fluctuate in
response to market interest rates.

Mortgage-backed securities have greater market volatility then other
types of securities. In addition, because prepayments often occur at times when
interest rates are low or are declining, the Funds may be unable to reinvest
such funds in securities which offer comparable yields. The yields provided by
these mortgage securities have historically exceeded the yields on other types
of U.S. Government securities with comparable maturities in large measure due to
the risks associated with prepayment features. (See "General Risks of Mortgage
Securities" herein.)

For Federal tax purposes other than diversification under Subchapter M
of the Internal Revenue Code of 1986, as amended (the "Code"), mortgage-backed
securities are not considered to be separate securities but rather "grantor
trusts" conveying to the holder an individual interest in each of the mortgages
constituting the pool.

The mortgage securities which are issued or guaranteed by GNMA, Federal
Home Loan Mortgage Corporation ("FHLMC"), or FNMA ("certificates") are called
pass-through certificates because a pro-rata share of both regular interest and
principal payments (less GNMA's, FHLMC's, or FNMA's fees and any applicable loan
servicing fees), as well as unscheduled early prepayments on the underlying
mortgage pool, are passed through monthly to the holder of the certificate
(i.e., the portfolio).

Each of these Funds may also invest in pass-through certificates issued
by non-governmental issuers. Pools of conventional residential mortgage loans
created by such issuers generally offer a higher rate of interest than
government and government-related pools because there are no direct or indirect
government guarantees of payment. Timely payment of interest and principal of
these pools is, however, generally supported by various forms of insurance or
guarantees, including individual loan, title, pool and hazard insurance. The
insurance and guarantees are issued by government entities, private insurance
and the mortgage poolers. Such insurance and guarantees and the creditworthiness
of the issuers thereof will be considered in determining whether a
mortgage-related security meets the Fund's quality standards. The Fund may buy
mortgage-related securities without insurance or guarantees if through an
examination of the loan experience and practices of the poolers, the investment
manager determines that the securities meet the Fund's quality standards.

COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS"), REAL ESTATE MORTGAGE INVESTMENT
CONDUITS ("REMICS"), MULTI-CLASS PASS-THROUGHS AND RELATED RISKS

All Funds except Alleghany/Montag & Caldwell Growth Fund,
Alleghany/Chicago Trust Talon Fund, Alleghany/Chicago Trust Small Cap Value
Fund, Alleghany/Veredus Aggressive Growth Fund and Alleghany/Chicago Trust Money
Market Fund may also invest in certain debt obligations which are collateralized
by mortgage loans or mortgage pass-through securities. These obligations are
generally considered to be derivative securities. CMOs and REMICs are debt
instruments issued by special-purpose entities which are secured by pools or
mortgage loans or other mortgage-backed securities. Multi-class pass-through
securities are equity interests in a trust composed of mortgage loans or other
mortgage-backed securities. Payments of principal and interest on underlying
collateral provides the funds to pay debt service on the CMO or REMIC or make
scheduled distributions on the multi-class pass-through securities. CMOs, REMICs
and multi-class pass-through securities (collectively, CMOs unless the context
indicates otherwise) may be issued by agencies or instrumentalities of the U.S.
Government or by private organizations.

In a CMO, a series of bonds or certificates is issued in multiple
classes. Each class of CMOs, often referred to as a "tranche," is issued at a
specified coupon rate or adjustable rate tranche (to be discussed in the next
paragraph) and has a stated maturity or final distribution date. Principal
prepayments on collateral underlying a CMO may cause it to be retired
substantially earlier than the stated maturities or final distribution dates.
Interest is paid or accrues on all classes of a CMO on a monthly, quarterly, or
semi-annual basis. The principal and interest on the underlying mortgages may be
allocated among several classes of a series of a CMO in many ways. In a common
structure, payments of principal, including any principal prepayments, on the
underlying mortgages are applied to the classes of a series of a CMO in the
order of their respective stated maturities or final distribution dates, so that
no payment of principal will be made on any class of a CMO until all other
classes having an earlier stated maturity or final distribution date have been
paid in full.

One or more tranches of a CMO may have coupon rates which reset
periodically at a specified increment over an index such as the London Interbank
Offered Rate ("LIBOR"). These adjustable-rate tranches, known as "floating-rate
CMOs," will be considered as adjustable-rate mortgage securities ("ARMs") by the
Funds. Floating-rate CMOs may be backed by fixed-rate or adjustable-rate
mortgages; to date, fixed-rate mortgages have been more commonly utilized for
this purpose. Floating-rate CMOs are typically issued with lifetime "caps" on
the coupon rate thereon. These "caps," similar to the "caps" on adjustable-rate
mortgages, represent a ceiling beyond which the coupon rate on a floating-rate
CMO may not be increased regardless of increases in the interest rate index to
which the floating-rate CMO is geared.

REMICs are private entities formed for the purpose of holding a fixed
pool of mortgages secured by an interest in real property. REMICs are similar to
CMOs in that they issue multiple classes of securities. As with CMOs, the
mortgages which collateralize the REMICs in which the Funds may invest include
mortgages backed by GNMA certificates or other mortgage pass-throughs issued or
guaranteed by the U.S. Government, its agencies or instrumentalities or issued
by private entities, which are not guaranteed by any government agency.

Yields on privately issued CMOs as described above have been
historically higher than the yields on CMOs issued or guaranteed by U.S.
Government agencies. However, the risk of loss due to default on such
instruments is higher since they are not guaranteed by the U.S. Government.
These Funds will not invest in subordinated privately issued CMOs.

Resets - The interest rates paid on the ARMs and CMOs in which these
Funds may invest generally are readjusted at intervals of one year or less to an
increment over some predetermined interest rate index. There are three main
categories of indices: those based on U.S. Treasury securities; those derived
from a calculated measure such as a cost of funds index; or a moving average of
mortgage rates. Commonly utilized indices include: the one-year, three-year and
five-year constant maturity Treasury rates; the three-month Treasury bill rate;
the six-month Treasury bill rate; rates on longer-term Treasury securities; the
11th District Federal Home Loan Bank Cost of Funds; the National Median Cost of
Funds; the one-month, three-month, six-month or one-year LIBOR; the prime rate
of a specific bank; or commercial paper rates. Some indices, such as the
one-year constant maturity Treasury rate, closely mirror changes in market
interest rate levels. Others, such as the 11th District Federal Home Loan Bank
Cost of Funds index, tend to lag behind changes in market rate levels and tend
to be somewhat less volatile.

Caps and Floors - The underlying mortgages which collateralize the ARMs
and CMOs in which these Funds may invest will frequently have caps and floors
which limit the maximum amount by which the loan rate to the residential
borrower may change up or down (1) per reset or adjustment interval and (2) over
the life of the loan. Some residential mortgage loans restrict periodic
adjustments by limiting changes in the borrower's monthly principal and interest
payments rather than limiting interest rate changes. These payment caps may
result in negative amortization.

STRIPPED MORTGAGE SECURITIES AND RELATED RISKS

All Funds except Alleghany/Montag & Caldwell Growth Fund,
Alleghany/Chicago Trust Talon Fund, Alleghany/Chicago Trust Small Cap Value
Fund, Alleghany/Veredus Aggressive Growth Fund and Alleghany/Chicago Trust Money
Market Fund may purchase participations in trusts that hold U.S. Treasury and
agency securities and may also purchase zero coupon U.S. Treasury obligations,
Treasury receipts and other stripped securities that evidence ownership in
either the future interest payments or the future principal payments on U.S.
Government obligations. These participations are issued at a discount to their
face value and may exhibit greater price volatility than ordinary debt
securities because of the manner in which their principal and interest are
returned to investors. The Funds will only invest in government-backed mortgage
securities. The Investment Adviser will consider liquidity needs of a Fund when
any investment in zero coupon obligations is made. The stripped mortgage
securities in which the Funds may invest will only be issued or guaranteed by
the U.S. Government, its agencies or instrumentalities. Stripped mortgage
securities have greater market volatility than other types of mortgage
securities in which the Funds invest.

Stripped mortgage securities are usually structured with two classes
that receive different proportions of the interest and principal distributions
on a pool of mortgage assets. A common type of stripped mortgage security will
have one class receiving some of the interest and most of the principal from the
mortgage assets, while the other class will receive most of the interest and the
remainder of the principal. In the most extreme case, one class will receive all
of the interest (the interest-only or "IO" class), while the other class will
receive all of the principal (the principal-only or "PO" class). The yield to
maturity on an IO class is extremely sensitive not only to changes in prevailing
interest rates but also to the rate of principal payments (including
prepayments) on the related underlying mortgage assets, and a rapid rate of
principal payments may have a material adverse effect on the yield to maturity
of any such IOs held by a Fund. If the underlying mortgage assets experience
greater than anticipated prepayments of principal, the Fund may fail to fully
recoup its initial investment in these securities even if the securities are
rated in the highest rating categories-"Aaa" or "AAA" by Moody's or S&P,
respectively.

Although stripped mortgage securities are purchased and sold by
institutional investors through several investment banking firms acting as
brokers or dealers, these securities were only recently developed. As a result,
established trading markets have not yet been fully developed; accordingly,
certain of these securities may generally be illiquid. The Fund will treat
stripped mortgage securities as illiquid securities except for those securities
which are issued by U.S. Government agencies and instrumentalities and backed by
fixed rate mortgages whose liquidity is monitored by the Investment Adviser,
subject to the supervision of the Board of Trustees. The staff of the SEC has
indicated that it views such securities as illiquid. Until further clarification
of this matter is provided by the staff, a Fund's investment in stripped
mortgage securities will be treated as illiquid and will, together with any
other illiquid investments, not exceed 15% of such Fund's net assets.

OTHER MORTGAGE-BACKED SECURITIES

All Funds except Alleghany/Montag & Caldwell Growth Fund,
Alleghany/Chicago Trust Talon Fund, Alleghany/Chicago Trust Small Cap Value
Fund, Alleghany/Veredus Aggressive Growth Fund and Alleghany/Chicago Trust Money
Market Fund may invest in other mortgage-backed securities. The Investment
Adviser expects that governmental, government-related or private entities may
create mortgage loan pools and other mortgage-related securities offering
mortgage pass-through and mortgage-collateralized investments in addition to
those described above. The mortgages underlying these securities may include
alternative mortgage instruments, that is, mortgage instruments whose principal
or interest payments may vary or whose terms to maturity may differ from
customary long-term fixed-rate mortgages. As new types of mortgage-related
securities are developed and offered to investors, the Investment Adviser will,
consistent with a Fund's investment objective, policies and quality standards,
consider making investments in such new types of mortgage-related securities.

GENERAL RISKS OF MORTGAGE SECURITIES

The mortgage securities in which a Fund invests differ from
conventional bonds in that principal is paid back over the life of the mortgage
security rather than at maturity. As a result, the holder of the mortgage
securities (i.e., the Fund) receives monthly scheduled payments of principal and
interest and may receive unscheduled principal payments representing prepayments
on the underlying mortgages. When the holder reinvests the payments and any
unscheduled prepayments of principal it receives, it may receive a rate of
interest which is lower than the rate on the existing mortgage securities. For
this reason, mortgage securities may be less effective than other types of
securities as a means of "locking in" long-term interest rates.

A decline in interest rates may lead to a faster rate of repayment of
the underlying mortgages and expose a Fund to a lower rate of return upon
reinvestment. To the extent that such mortgage-backed securities are held by a
Fund, the prepayment right of mortgagors may decrease or limit the increase in
net asset value of the Fund because the value of the mortgage-backed securities
held by the Fund may decline more than or may not appreciate as much as the
price of non-callable debt securities. To the extent market interest rates
increase beyond the applicable cap or maximum rate on a mortgage security, the
market value of the mortgage security would likely decline to the same extent as
a conventional fixed-rate security. The volatility of the security would likely
increase, however, because the expected decline in prepayments would lead to
longer effective maturity of the underlying mortgages.

In addition, to the extent mortgage securities are purchased at a
premium, mortgage foreclosures and unscheduled principal prepayments may result
in some loss of the holder's principal investment to the extent of the premium
paid. On the other hand, if mortgage securities are purchased at a discount,
both a scheduled payment of principal and an unscheduled prepayment of principal
will increase current and total returns and will accelerate the recognition of
income which when distributed to shareholders will be taxable as ordinary
income.

With respect to pass-through mortgage pools issued by non-governmental
issuers, there can be no assurance that the private insurers associated with
such securities can meet their obligations under the policies. Although the
market for such non-governmental issued or guaranteed mortgage securities is
becoming increasingly liquid, securities issued by certain private organizations
may not be readily marketable. The purchase of such securities is subject to
each Fund's limit with respect to investment in illiquid securities.

FOREIGN SECURITIES

All Funds except Alleghany/Chicago Trust Small Cap Value Fund,
Alleghany/Veredus Aggressive Growth Fund, Alleghany/Chicago Trust Bond Fund,
Alleghany/Chicago Trust Municipal Bond Fund and Alleghany/Chicago Trust Money
Market Fund may invest in foreign securities. For country allocations, a company
is considered to be located in the country: in which it is domiciled; in which
it is primarily traded; from which it derives a significant portion of its
revenues; or in which a significant portion of its goods or services are
produced.

Alleghany/Blairlogie International Developed Fund and
Alleghany/Blairlogie Emerging Markets Fund may invest directly in foreign equity
securities; U.S. dollar or foreign currency-denominated foreign corporate debt
securities; foreign preferred securities; certificates of deposit, fixed time
deposits and bankers' acceptances issued by foreign banks; obligations of
foreign governments or their subdivisions, agencies and instrumentalities,
international agencies and supranational entities; and securities represented by
ADRs, EDRs, or GDRs. ADRs are dollar-denominated receipts issued generally by
domestic banks and representing the deposit with the bank of a security of a
foreign issuer, and are publicly traded on exchanges or over-the-counter in the
United States and also trade in public or private markets in other countries.

Alleghany/Blairlogie International Developed Fund and
Alleghany/Blairlogie Emerging Markets Fund may invest in World Equity Benchmark
Shares (WEBS) and Optimized Portfolios as Listed Securities (OPALS). These
investments provide investors with access to global equity markets and are
primarily used to facilitate asset allocation switches and to overcome
difficulties in markets with structural peculiarities. WEBS are issued by
Foreign Fund, Inc., an open-end investment company registered under the 1940
Act, in a number of country-specific series. Each series is a diversified,
country-specific index portfolio designed to track a specific Morgan Stanley
Capital International (MSCI) country index. WEBS are listed on the American
Stock Exchange in U.S. dollars and the investment adviser is BZW Barclays Global
Fund Advisors. Each series of OPALS is designed to track the performance of a
given MSCI or local index. OPALS, which are securities offered through Morgan
Stanley Capital, LLC., have a hybrid structure. They have debt characteristics
(fixed redemption and semi-annual interest payments) but performance is equity
driven. There are both industry-specific and country-specific OPALS. Globally,
OPALS are available to gain exposure to developed and emerging markets. OPALS
were established for qualifying U.S. investors and are not listed on any U.S.
exchange. To qualify for purchase, U.S. investors must be (i) qualified
institutional buyers (QIBs), (ii) qualified purchasers (QPs) and (iii) not
subject to ERISA. QIB and QP status is generally conferred on those clients
controlling over $100 million in assets.

Investment in foreign securities is subject to special investment risks
that differ in some respects from those related to investments in securities of
U.S. domestic issuers. Such risks include: political, social or economic
instability in the country of the issuer; the difficulty of predicting
international trade patterns; the possibility of the imposition of exchange
controls; expropriation; limits on removal of currency or other assets;
nationalization of assets; foreign withholding and income taxation; and foreign
trading practices (including higher trading commissions, custodial charges and
delayed settlements). Such securities may be subject to greater fluctuations in
price than securities issued by U.S. corporations or issued or guaranteed by the
U.S. Government, its agencies or instrumentalities. The markets on which such
securities trade may have less volume and liquidity and may be more volatile
than securities markets in the U.S. In addition, there may be less publicly
available information about a foreign company than about a U.S. domiciled
company. Foreign companies generally are not subject to uniform accounting,
auditing and financial reporting standards comparable to those applicable to
U.S. domestic companies. There is generally less government regulation of
securities exchanges, brokers and listed companies abroad than in the U.S.
Confiscatory taxation or diplomatic developments could also affect investment in
those countries.

In addition, foreign branches of U.S. banks, foreign banks and foreign
issuers may be subject to less stringent reserve requirements and to different
accounting, auditing, reporting and record keeping standards than those
applicable to domestic branches of U.S. banks and U.S. domestic issuers.

For many foreign securities, U.S. dollar-denominated ADRs, which are
traded in the United States on exchanges or over-the-counter, are issued by
domestic banks. ADRs represent the right to receive securities of foreign
issuers deposited in a domestic bank or a correspondent bank. ADRs do not
eliminate the risk inherent in investing in the securities of foreign issuers.
However, by investing in ADRs rather than directly in stock of foreign issuers,
a Fund can avoid currency risks during the settlement period for either
purchases or sales. In general, there is a large, liquid market in the United
States for many ADRs. The information available for ADRs is subject to the
accounting, auditing and financial reporting standards of the domestic market or
exchange on which they are traded, which standards are more uniform and more
exacting than those to which many foreign issuers may be subject. The above
Funds may also invest in EDRs, which are receipts evidencing an arrangement with
a European bank similar to that for ADRs and are designed for use in the
European securities markets.

Certain ADRs and EDRs, typically those denominated as unsponsored,
require the holders thereof to bear most of the costs of such facilities while
issuers of sponsored facilities normally pay more of the costs thereof. The
depository of an unsponsored facility frequently is under no obligation to
distribute shareholder communications received from the issuer of the deposited
securities or to pass through the voting rights to facility holders in respect
to the deposited securities, whereas the depository of a sponsored facility
typically distributes shareholder communications and passes through the voting
rights.

The risks of investing in foreign securities are particularly high when
securities of issuers based in developing (or "emerging market") countries are
involved. Investing in emerging market countries involves certain risks not
typically associated with investing in U.S. securities, and imposes risks
greater than, or in addition to, risks of investing in foreign, developed
countries. These risks include: greater risks of nationalization or
expropriation of assets or confiscatory taxation; currency devaluations and
other currency exchange rate fluctuations; greater social economic and political
uncertainty and instability (including the risk of war); more substantial
government involvement in the economy; higher rates of inflation; less
government supervision and regulation of the securities markets and participants
in those markets; controls on foreign investment and limitations on repatriation
of invested capital and on the Fund's ability to exchange local currencies for
U.S. dollars; unavailability of currency hedging techniques in certain emerging
market countries; the fact that companies in emerging market countries may be
smaller, less seasoned and newly organized companies; the difference in, or lack
of, auditing and financial reporting standards, which may result in
unavailability of material information about issuers; the risk that it may be
more difficult to obtain and/or enforce a judgment in a court outside the United
States; and greater price volatility, substantially less liquidity and
significantly smaller market capitalization of securities markets.

Special Risks of Investing in Russian and Other Eastern European Securities

Alleghany/Blairlogie Emerging Markets Fund may invest a portion of its
assets in securities of issuers located in Russia and in other Eastern European
countries. The political, legal and operational risks of investing in the
securities of Russian and other Eastern European issuers, and of having assets
custodied within these countries, may be particularly acute. Investment in
Eastern European countries may involve acute risks of nationalization,
expropriation and confiscatory taxation. The communist governments of a number
of Eastern European countries expropriated large amounts of private property in
the past, in many cases without adequate compensation, and there can be no
assurance that such expropriation will not occur in the future. Also, certain
Eastern economies, are characterized by an absence of developed legal structures
governing private and foreign investments and private property in European
countries, which do not have market economies, are characterized by an absence
of developed legal structures governing private and foreign investments and
private property.

In addition, governments in certain Eastern European countries may
require that a governmental or quasi-governmental authority act as custodian of
a Fund's assets invested in such country. To the extent such governmental or
quasi-governmental authorities do not satisfy the requirements of the 1940 Act
to act as foreign custodians of the Fund's cash and securities, the Fund's
investment in such countries may be limited or may be required to be effected
through intermediaries. The risk of loss through governmental confiscation may
be increased in such circumstances.

Investments in securities of Russian issuers may involve a particularly
high degree of risk and special considerations not typically associated with
investing in U.S. and other more developed markets, many of which stem from
Russia's continuing political and economic instability and the slow-paced
development of its market economy. Investments in Russian securities should be
considered highly speculative. Such risks and special considerations include:
(a) delays in settling portfolio transactions and the risk of loss arising out
of Russia's system of share registration and custody (see below); (b)
pervasiveness of corruption, insider trading, and crime in the Russian economic
system; (c) difficulties associated in obtaining accurate market valuations of
many Russian securities, based partly on the limited amount of publicly
available information; (d) the general financial condition of Russian companies,
which may involve particularly large amounts of inter-company debt; and (e) the
risk that the Russian tax system will not be reformed to prevent inconsistent,
retroactive and/or exorbitant taxation or, in the alternative, the risk that a
reformed tax system may result in the inconsistent and unpredictable enforcement
of the new tax laws. Also, there is the risk that the government of Russia or
other executive or legislative bodies may decide not to continue to support the
economic reform programs implemented since the dissolution of the Soviet Union
and could follow radically different political and/or economic policies to the
detriment of investors, including non-market-oriented policies such as the
support of certain industries at the expense of other sectors or investors, a
return to the centrally planned economy that existed prior to the dissolution of
the Soviet Union, or the nationalization of privatized enterprises.

A risk of particular note with respect to direct investment in Russian
securities is the way in which ownership of shares of companies is normally
recorded. Ownership of shares (except where shares are held through depositories
that meet the requirements of the 1940 Act) is defined according to entries in
the company's share register and normally evidenced by extracts from the
register or, in certain limited circumstances, by formal share certificates.
However, there is no central registration system for shareholders and these
services are carried out by the companies themselves or by registrars located
throughout Russia. These registrars are not necessarily subject to effective
state supervision nor are they licensed with any governmental entity. It is
possible for a Fund to lose its registration through fraud, negligence or even
mere oversight. While a Fund will strive to ensure that its interest continues
to be appropriately recorded, which may involve a custodian or other agent
inspecting the share register and obtaining extracts of share registers through
regular confirmations, these extracts have no legal enforceability and it is
possible that subsequent illegal amendment or other fraudulent act may deprive
the Fund of its ownership rights or improperly dilute its interests. In
addition, while applicable Russian regulations impose liability on registrars
for losses resulting from their errors, it may be difficult for a Fund to
enforce any rights it may have against the registrar or issuer of the securities
in the event of loss of share registration.

Also, although a Russian public enterprise with more than 3500
shareholders is required by law to contract out the maintenance of its
shareholder register to an independent entity that meets certain criteria, this
regulation has not always been strictly enforced in practice. Because of this
lack of independence, management of a company may be able to exert considerable
influence over who can purchase and sell the company's shares by illegally
instructing the registrar to refuse to record transactions in the share
register. In addition, so-called "financial-industrial groups" have emerged in
recent years that seek to deter outside investors from interfering in the
management of companies they control. These practices may prevent a Fund from
investing in the securities of certain Russian companies deemed suitable by the
Fund's Investment Adviser. Further, this also could cause a delay in the sale of
Russian securities held by a Fund if a potential purchases is deemed unsuitable,
which may expose the Fund to potential loss on the investment.

FOREIGN CURRENCIES

Many of the international equity securities in which
Alleghany/Blairlogie International Developed Fund and Alleghany/Blairlogie
Emerging Markets Fund invest will be traded in foreign currencies. These Funds
may engage in certain foreign currency transactions, such as forward foreign
currency exchange contracts, to guard against fluctuations in currency exchange
rates in relation to the U.S. dollar or to the weighting of particular foreign
currencies. In addition, each Fund may buy and sell foreign currency futures
contracts and options on foreign currencies and foreign currency futures.

A forward foreign currency exchange contract involves an obligation to
purchase or sell a specific currency at a future date, which may be any fixed
number of days from the date of the contract agreed upon by the parties, at a
price set at the time of the contract. By entering into a forward foreign
currency exchange contract, the fund "locks in" the exchange rate between the
currency it will deliver and the currency it will receive for the duration of
the contract. As a result, a Fund reduces its exposure to changes in the value
of the currency it will deliver and increases its exposure to changes in the
value of the currency it will exchange into. Contracts to sell foreign
currencies would limit any potential gain which might be realized by a Fund if
the value of the hedged currency increases. A Fund may enter into these
contracts of the purpose of hedging against foreign exchange risks arising from
the Fund's investment or anticipated investment in securities denominated in
foreign currencies. Such hedging transactions may not be successful and may
eliminate any chance for a Fund to benefit from favorable fluctuations in
relevant foreign currencies.

Each of these Funds may also enter into forward foreign currency
exchange contracts for purposes of increasing exposure to a foreign currency or
to shift exposure to foreign currency fluctuations from one currency to another.
To the extent that they do so, the Funds will be subject to the additional risk
that the relative value of currencies will be different than anticipated by the
particular Fund's Investment Adviser. A Fund may use one currency (or a basket
of currencies) to hedge against adverse changes in the value of another currency
(or a basket of currencies) when exchange rates between the two currencies are
positively correlated. A Fund will segregate assets determined to be liquid by
the Investment Adviser in accordance with procedures established by the Board of
Trustees in a segregated account to cover forward currency contracts entered
into for non-hedging purposes. The Funds may also use foreign currency futures
contracts and related options on currencies for the same reasons for which
forward foreign currency exchange contracts are used.

MUNICIPAL SECURITIES

Alleghany/Chicago Trust Municipal Bond Fund is expected to maintain a
dollar-weighted average maturity of between three and ten years under normal
market conditions. An assessment of a portfolio's dollar-weighted average
maturity requires the consideration of a number of factors, including each
bond's yield, coupon interest payments, final maturity, call and put features
and prepayment exposure. The Fund's computation of its dollar-weighted average
maturity is based upon estimated rather than known factors, and there can be no
assurance that the anticipated average weighted maturity will be attained. In
that regard, a change in interest rates generally will affect a portfolio's
dollar-weighted average maturity.

OTHER INVESTMENTS

The Board of Trustees may, in the future, authorize a Fund to invest in
securities other than those listed here and in the Prospectus, provided that
such investment would be consistent with that Fund's investment objective and
that it would not violate any fundamental investment policies or restrictions
applicable to that Fund.

INVESTMENT RESTRICTIONS

The investment restrictions set forth below are fundamental policies
and may not be changed as to a Fund without the approval of a majority of the
outstanding voting shares (as defined in the 1940 Act) of the Fund. Unless
otherwise indicated, all percentage limitations governing the investments of
each Fund apply only at the time of transaction. Accordingly, if a percentage
restriction is adhered to at the time of investment, a later increase or
decrease in the percentage which results from a relative change in values or
from a change in a Fund's total assets will not be considered a violation.

Except as set forth under "INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT
STRATEGIES AND RISKS" and "OTHER INVESTMENT STRATEGIES" in the Prospectus, each
Fund may not:

(1) As to 75% of the total assets of each Fund, purchase the securities of
any one issuer (other than securities issued by the U.S. Government or
its agencies or instrumentalities) if immediately after such purchase,
more than 5% of the value of the Fund's total assets would be invested
in securities of such issuer;

(2) Purchase or sell real estate (but this restriction shall not prevent
the Funds from investing directly or indirectly in portfolio
instruments secured by real estate or interests therein or acquiring
securities of real estate investment trusts or other issuers that deal
in real estate), interests in oil, gas and/or mineral exploration or
development programs or leases;

(3) Purchase or sell commodities or commodity contracts, except that a Fund
may enter into futures contracts and options thereon in accordance with
such Fund's investment objectives and policies;

(4) Make investments in securities for the purpose of exercising control;

(5) Purchase the securities of any one issuer if, immediately after such
purchase, a Fund would own more than 10% of the outstanding voting
securities of such issuer;

(6) Sell securities short or purchase securities on margin, except such
short-term credits as are necessary for the clearance of transactions.
For this purpose, the deposit or payment by a Fund for initial or
maintenance margin in connection with futures contracts is not
considered to be the purchase or sale of a security on margin;

(7) Make loans, except that this restriction shall not prohibit (a) the
purchase and holding of debt instruments in accordance with a Fund's
investment objectives and policies, (b) the lending of portfolio
securities or (c) entry into repurchase agreements with banks or
broker-dealers;

(8) Borrow money or issue senior securities, except that each Fund may
borrow from banks and enter into reverse repurchase agreements for
temporary purposes in amounts up to one-third of the value of its total
assets at the time of such borrowing; or mortgage, pledge or
hypothecate any assets, except in connection with any such borrowing
and in amounts not in excess of the lesser of the dollar amounts
borrowed or 10% of the value of the total assets of the Fund at the
time of its borrowing. All borrowings will be done from a bank and
asset coverage of at least 300% is required. A Fund will not purchase
securities when borrowings exceed 5% of that Fund's total assets;

(9) Purchase the securities of issuers conducting their principal business
activities in the same industry (other than obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities)
if immediately after such purchase the value of a Fund's investments in
such industry would exceed 25% of the value of the total assets of the
Fund;

(10) Act as an underwriter of securities, except that, in connection with
the disposition of a security, a Fund may be deemed to be an
"underwriter" as that term is defined in the 1933 Act;

(11) Invest in puts, calls, straddles or combinations thereof except to the
extent disclosed in the
Prospectus;

(12) Invest more than 5% of its total assets in securities of companies less
than three years old. Such three-year periods shall include the
operation of any predecessor company or companies.

<PAGE>

TRUSTEES AND OFFICERS

Under Delaware law, the business and affairs of the Company are managed
under the direction of the Board of Trustees. Information pertaining to the
Trustees and Executive Officers of the Company is set forth in the following
table.

POSITION PRINCIPAL OCCUPATION(S)
NAME AGE WITH COMPANY FOR PAST FIVE YEARS

Stuart D. Bilton* 53 Chairman, Board of Mr. Bilton is Chief Executive Officer of The
171 North Clark Street Trustees (Chief Chicago Trust Company and President of Alleghany
Chicago, IL 60601 Executive Officer) Asset Management, Inc. Previously, Mr. Bilton was
an Executive Vice President of Chicago Title and
Trust Company. He is a Director of Alleghany
Asset Management Inc., Montag & Caldwell, Veredus
Asset Management Inc., Baldwin & Lyons, Inc. and
the Boys and Girls Clubs of Chicago.

Leonard F. Amari 57 Trustee Mr. Amari is a Partner at the law offices of
734 North Wells Street Amari & Locallo, a practice confined exclusively
Chicago, IL 60610 to the real estate tax assessment process.

Dorothea C. Gilliam* 46 Trustee** Ms. Gilliam is Vice President of Investments of
171 North Clark Street the Alleghany Corporation, the parent company of
Chicago, IL 60601 Alleghany Asset Management, Inc. Previously, she
was an Assistant Vice President of Chicago Title
and Trust Company and a former Trustee of the
Company. She is a chartered Financial Analyst and
a member of AIMR. She is a Director of Armco Inc.

Robert A. Kushner 64 Trustee** Mr. Kushner was a Vice President, Secretary and
30 Vernon Drive General Counsel at Cyclops Industries, Inc. until
Pittsburgh, PA 15228 his retirement in April 1992. He is currently a
Vice President,
Board Member and
Chairman of
Investment
Committee and
Co-Chairman of
Strategic
Planning
Committee of
Pittsburgh Dance
Council.

Gregory T. Mutz 54 Trustee Mr. Mutz is President and CEO of The UICI
125 South Wacker Drive Companies and Chairman of the Board of Excell
Suite 3100 Global Services. He is also Chairman of the Board
Chicago, IL 60606 of AMLI Residential Properties Trust (a NYSE
Multifamily
REIT) and
Chairman of the
Board of AMLI
Commercial
Properties Trust
LP, both
successor
companies to
AMLI Realty Co.,
which he
co-founded in
1980.

Robert B. Scherer 58 Trustee** Mr. Scherer is President of The Rockridge Group,
10010 Country Club Road Ltd., which provides consulting services to the
Woodstock, IL 60098 title insurance industry. Previously, he was a
Senior Vice President - Strategy and Development
at Chicago Title and Trust Company prior to
October 1994.

<PAGE>

Nathan Shapiro 63 Trustee Mr. Shapiro is the President of SF Investments,
1700 Ridge Inc., a broker/dealer and investment banking
Highland Park, IL 60035 firm. He is President of New Horizons
Corporation, a
consulting firm,
and Senior Vice
President of
Pekin, Singer
and Shapiro, an
investment
advisory firm.
He is a Director
of Baldwin &
Lyons, Inc.

Denis Springer 53 Trustee** Mr. Springer is Senior Vice President and Chief
1673 Balmoral Lane Financial Officer of Burlington Northern Santa Fe
Inverness, IL 60067 Corporation.

Kenneth C. Anderson 36 President Mr. Anderson is President of Alleghany Investment
171 North Clark Street (Chief Operating Services, Inc. and a Senior Vice President of The
Chicago, IL 60601 Officer) Chicago Trust Company and has been an officer
since 1993. He is responsible for all business
activities regarding mutual funds. Mr. Anderson
is a Certified Public Accountant.

<PAGE>

POSITION PRINCIPAL OCCUPATION(S)
NAME AGE WITH COMPANY FOR PAST FIVE YEARS

Gerald F. Dillenburg 33 Vice President, Mr. Dillenburg is a Vice President of
The Chicago 171 North Clark Street Secretary and Treasurer Trust Company and has
been the operations manager Chicago, IL 60601 (Chief Financial Officer and
compliance officer of all mutual funds since
and Compliance
Officer) 1996.
Previously, he
was an audit
manager with
KPMG LLP,
specializing in
investment
services,
including mutual
and trust funds,
broker/dealers
and investment
Advisers. Mr.
Dillenburg is a
Certified Public
Accountant.

Debra Comsudes 36 Vice President Ms. Comsudes is a Vice President of Montag &
1100 Atlanta Financial Caldwell, Inc. since 1996. Previously, she was a
Center Portfolio Manager and Chief Investment Officer at
3343 Peachtree Road, NE Randy Seckman & Associates, Inc., a financial
Atlanta, GA 30326-8151 advisory firm providing asset management primarily
to individual and small businesses. She is a
Chartered Financial Analyst.
</TABLE>

* These Trustees are considered "interested persons" of the Funds as
defined under the 1940 Act.
** These Trustees were elected on June 17, 1999.

The Trustees of the Company who are not "interested persons" of the
Funds receive fees and are reimbursed for out-of-pocket expenses for each
meeting of the Board of Trustees they attend. Effective January 1, 2000, the
Trustees receive $3,500 for each Board Meeting attended and an annual retainer
of $3,500. No officer or employee of The Chicago Trust Company ("Chicago Trust")
or its affiliates receives any compensation from the Funds for acting as a
Trustee of the Company. The officers of the Company receive no compensation
directly from the Funds for performing the duties of their offices.

The table below shows the total fees which were paid to each of the
Trustees who are not "interested persons" during the fiscal year ended October
31, 1999.

Trustee Aggregate Fees Paid by the Company

Leonard F. Amari $ 16,850
Robert A. Kushner $ 7,500
Gregory T. Mutz $ 16,850
Robert B. Scherer $ 7,500
Nathan Shapiro $ 16,850
Denis Springer $ 7,500

As of January 31, 2000, the Trustees and officers of the Company as a
group owned less than 1% of the outstanding shares of any class of each Fund,
except for Stuart D. Bilton, who owned 6.88% of Alleghany/Chicago Trust
Municipal Bond Fund.

PRINCIPAL HOLDERS OF SECURITIES

Listed below are the names and addresses of those shareholders who, as
of January 31, 2000, owned of record or beneficially of 5% or more of the shares
of the Funds. The shares held in the nominee names of Marshall & Ilsley Trust
Co. are owned of record by Chicago Trust. Alleghany Corporation ("Alleghany") is
the owner of Alleghany Asset Management, Inc. ("AAM"), which is the holding
company of Chicago Trust and Montag & Caldwell, Inc. ("Montag & Caldwell") and
currently holds a 40% interest in Veredus Asset Management LLC ("Veredus"), the
Investment Advisers for the Funds. Blairlogie Capital Management ("Blairlogie"),
an indirect subsidiary of Alleghany, is also an Investment Adviser. Shareholders
who have the power to vote a large percentage of shares of a particular Fund can
control the Fund and determine the outcome of a shareholders' meeting.

ALLEGHANY/MONTAG & CALDWELL GROWTH FUND - Class N

..................................... ...................................... ......................................
Shareholders Addresses Percentage Owned
..................................... ...................................... ......................................
..................................... ...................................... ......................................

Charles Schwab & Co., Inc. Special Custody Account for Customers 28.22%
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104

..................................... ...................................... ......................................
..................................... ...................................... ......................................
Miter & Co. c/o M&I Trust Co./Outsourcing 18.89%
P.O. Box 2977
Milwaukee, WI 53201-2977
..................................... ...................................... ......................................

MONTAG & CALDWELL GROWTH FUND - Class I

..................................... ...................................... ......................................
Shareholder Addresses Percentage Owned
..................................... ...................................... ......................................
..................................... ...................................... ......................................

Miter & Co. c/o M&I Trust Co./Outsourcing 12.02%
P.O. Box 2977
Milwaukee, WI 53201-2977
..................................... ...................................... ......................................

ALLEGHANY/CHICAGO TRUST GROWTH & INCOME FUND - Class N

Miter & Co. c/o M&I Trust Co./Outsourcing 74.12%
P.O. Box 2977
Milwaukee, WI 53201-2977

..................................... ...................................... ......................................
..................................... ...................................... ......................................
Charles Schwab & Co., Inc. Special Custody Account for Customers 8.17%
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104-4122
..................................... ...................................... ......................................

ALLEGHANY/CHICAGO TRUST TALON FUND

Miter & Co. c/o M&I Trust Co./Outsourcing 8.42%
Attn: Outsourcing
P.O. Box 2977
Milwaukee, WI 53201-2977

..................................... ...................................... ......................................
..................................... ...................................... ......................................
Pasquale V. Costa and Kathleen A. Joint Tenancy 5.60%
Costa 413 Silver Hill Road
Concord, MA 01742-5336
..................................... ...................................... ......................................

ALLEGHANY/CHICAGO TRUST SMALL CAP VALUE FUND

Miter & Co. c/o M&I Trust Co./Outsourcing 75.38%
P.O. Box 2977
Milwaukee, WI 53201-2977

..................................... ...................................... ......................................
..................................... ...................................... ......................................
Charles Schwab & Co., Inc. Special Custody Account for Customers 11.02%
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104-4122

..................................... ...................................... ......................................
..................................... ...................................... ......................................
Davis & Company c/o Marshall & Ilsley Trust Co. 7.05%
c/o M&I Trust Co./Outsourcing
P.O. Box 2977
Milwaukee, WI 53201-2977
..................................... ...................................... ......................................

<PAGE>

ALLEGHANY/VEREDUS AGGRESSIVE GROWTH FUND

Miter & Co. c/o M&I Trust Co./Outsourcing 20.47%
P.O. Box 2977
Milwaukee, WI 53201-2977

..................................... ...................................... ......................................
..................................... ...................................... ......................................
Charles Schwab & Co., Inc. Special Custody Account for Customers 13.14%
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104-4122
..................................... ...................................... ......................................

ALLEGHANY/BLAIRLOGIE INTERNATIONAL DEVELOPED FUND - Class N

Miter & Co. c/o M&I Trust Co./Outsourcing 50.96%
P.O. Box 2977
Milwaukee, WI 53201-2977
..................................... ...................................... ......................................

ALLEGHANY/BLAIRLOGIE INTERNATIONAL DEVELOPED FUND - Class I

Pacific Mutual Life Insurance Co. Employees Retirement Plan Trust 25.92%
700 Newport Center Drive
Newport Beach, CA 92660-6307

..................................... ...................................... ......................................
..................................... ...................................... ......................................
Wachovia Bank NA TRUSTEE Atlanta Gas Light Co Retirement Plan 17.20%
P.O. Box 3073
301 N. Main Street
Winston-Salem, NC 27150-0001

..................................... ...................................... ......................................
..................................... ...................................... ......................................
Charles Schwab & Co., Inc. Attn: Mutual Funds Dept. 13.69%
101 Montgomery Street
San Francisco, CA 94104-4122
..................................... ...................................... ......................................

ALLEGHANY/BLAIRLOGIE EMERGING MARKETS FUND - Class N

Miter & Co. c/o M&I Trust Co./Outsourcing 58.35%
P.O. Box 2977
Milwaukee, WI 53201-2977

..................................... ...................................... ......................................
..................................... ...................................... ......................................
Davis & Company c/o Marshall & Ilsley Trust Co. 5.81%
c/o M&I Trust Co./Outsourcing
P.O. Box 2977
Milwaukee, WI 53201-2977
..................................... ...................................... ......................................

ALLEGHANY/BLAIRLOGIE EMERGING MARKETS FUND - Class I

Pacific Mutual Life Insurance Co. Employees Retirement Plan Trust 33.91%
700 Newport Center Drive
Newport Beach, CA 92660-6307

..................................... ...................................... ......................................
Charles Schwab & Co., Inc. Attn: Mutual Funds Dept. 31.91%
101 Montgomery Street
San Francisco, CA 94104-4122

..................................... ...................................... ......................................

<PAGE>

ALLEGHANY/BLAIRLOGIE EMERGING MARKETS FUND - Class I (continued)

..................................... ...................................... ......................................
Vincent M. Foglia and Patricia A. 51 Hillburn Ln. 6.20%
Foglia JTWROS N. Barrington, IL 60010-6925

..................................... ...................................... ......................................
..................................... ...................................... ......................................
California Race Track Association P.O. Box 67 5.13%
La Verne, CA 91750-0067
..................................... ...................................... ......................................

ALLEGHANY/MONTAG & CALDWELL BALANCED FUND - Class N

Miter & Co. c/o M&I Trust Co./Outsourcing 55.21%
P.O. Box 2977
Milwaukee, WI 53201-2977

..................................... ...................................... ......................................

MONTAG & CALDWELL BALANCED FUND - Class I

..................................... ...................................... ......................................
DB Alex Brown LLC P.O. Box 1346 19.19%
Baltimore, MD 21203-1346

..................................... ...................................... ......................................
..................................... ...................................... ......................................
PricewaterhouseCoopers LLP Savings Plan for Employees & 16.49%
Partners National Benefits
P.O. Box 30004
Tampa, FL 33630-3004

..................................... ...................................... ......................................
..................................... ...................................... ......................................
American Express Trust Company FBO American Express Trust 12.75%
Retirement Services Plans
Attn: Chris Hunt
P.O. Box 534
Minneapolis, MN 55440-0534

..................................... ...................................... ......................................
Wilbranch & Co. P.O. Box 2887 11.66%
Wilson, NC 27894-2887

..................................... ...................................... ......................................
..................................... ...................................... ......................................
BNY Western Trust Company CUST Columbia River Logscalers Pension 9.39%
Two Union Square, Suite 520
601 Union Street
Seattle, WA 98101-2341

..................................... ...................................... ......................................
Miter & Co. c/o M&I Trust Co./Outsourcing 6.92%
P.O. Box 2977
Milwaukee, WI 53202

..................................... ...................................... ......................................

ALLEGHANY/CHICAGO TRUST BALANCED FUND

Miter & Co. c/o M&I Trust Co./Outsourcing 91.76%
P.O. Box 2977
Milwaukee, WI 53201-2977
..................................... ...................................... ......................................

<PAGE>

ALLEGHANY/CHICAGO TRUST BOND FUND - Class N

Miter & Co. c/o M&I Trust Co./Outsourcing 71.54%
P.O. Box 2977
Milwaukee, WI 53201-2977

..................................... ...................................... ......................................
..................................... ...................................... ......................................
Davis & Company c/o Marshall & Ilsley Trust Co. 13.15%
c/o M&I Trust Co./Outsourcing
P.O. Box 2977
Milwaukee, WI 53201-2977
..................................... ...................................... ......................................

ALLEGHANY/CHICAGO TRUST MUNICIPAL BOND FUND

Davis & Company c/o Marshall & Ilsley Trust Co. 80.14%
c/o M&I Trust Co./Outsourcing
P.O. Box 2977
Milwaukee, WI 53201-2977
..................................... ...................................... ......................................
..................................... ...................................... ......................................
Stuart D. Bilton and Bette E. Bilton Joint Tenancy 6.88%
72 Brinker Road
Barrington, IL 60010-5135
..................................... ...................................... ......................................

ALLEGHANY/CHICAGO TRUST MONEY MARKET FUND

Davis & Company c/o Marshall & Ilsley Trust Co. 87.58%
c/o M&I Trust Co./Outsourcing
P.O. Box 2977
Milwaukee, WI 53201-2977
..................................... ...................................... ......................................

</TABLE>

INVESTMENT ADVISORY AND OTHER SERVICES

Investment Advisory Agreements

The advisory services provided by the Investment Adviser of each Fund
and the fees received by it for such services are described in the Prospectus.

The Investment Adviser for Alleghany/Chicago Trust Talon Fund,
Alleghany/Chicago Trust Small Cap Value Fund, Alleghany/Chicago Trust Bond Fund
- - Class N and Alleghany/Chicago Trust Bond Fund - Class I have entered into
Expense Limitation Agreements with the Company, effective January 1, 2000
(effective February 15, 2000 for Alleghany/Chicago Trust Bond Fund - Class N and
Class I) whereby they have agreed to reimburse the Funds to the extent necessary
to maintain total annual operating expenses at 1.30%, 1.40%, 0.74% and 0.49% of
net assets, respectively.

The Investment Advisers for Alleghany/Montag & Caldwell Growth Fund,
Alleghany/Montag & Caldwell Balanced Fund and Alleghany/Chicago Trust Municipal
Bond Fund may from time to time voluntarily waive a portion of their advisory
fees with respect to the Funds and/or reimburse a portion of the Funds'
expenses.

The Investment Adviser for Alleghany/Veredus Aggressive Growth Fund has
entered into an Expense Limitation Agreement with the Company, effective January
1, 2000, whereby it has agreed to reimburse the Fund to the extent necessary to
maintain total annual operating expenses at 1.40% of net assets.

The investment advisory fees earned and waived by the Investment
Advisers for each Fund, as well as expenses reimbursed, are set forth below.

Fiscal year ended October 31, 1999
Gross Advisory Fees Waived Fees and Net Advisory Fees
Fund Earned by Advisers Reimbursed Expenses After Fee Waivers

Alleghany/Montag & Caldwell Growth Fund $ 16,451,953 $ 0 $ 16,451,953
Alleghany/Chicago Trust Growth & Income Fund $ 3,230,163 $ 0 $ 3,230,163
Alleghany/Chicago Trust Talon Fund $ 164,312 $ 40,814 $ 123,498
Alleghany/Chicago Trust Small Cap Value Fund* $ 358,830 $ 52,755 $ 306,075
Alleghany/Veredus Aggressive Growth Fund** $ 312,271 $ 52,934 $ 259,337
Alleghany/Montag & Caldwell Balanced Fund $ 1,585,840 $ 0 $ 1,585,840
Alleghany/Chicago Trust Balanced Fund $ 1,861,258 $ 0 $ 1,861,258
Alleghany/Chicago Trust Bond Fund $ 840,813 $ 199,795 $ 641,018
Alleghany/Chicago Trust Municipal Bond Fund $ 95,352 $ 174,679 $ 0
Alleghany/Chicago Trust Money Market Fund $ 1,215,190 $ 0 $ 1,215,190

* Alleghany/Chicago Trust Small Cap Value Fund commenced operations on November 10, 1998.
** Alleghany/Veredus Aggressive Growth Fund commenced operations on June 30, 1998.

Fiscal year ended October 31, 1998
Gross Advisory Fees Waived Fees and Net Advisory Fees
Fund Earned by Advisers Reimbursed Expenses After Fee Waivers

Alleghany/Montag & Caldwell Growth Fund $ 9,438,160 $ 0 $ 9,438,160
Alleghany/Chicago Trust Growth & Income Fund $ 2,312,832 $ 0 $ 2,312,832
Alleghany/Chicago Trust Talon Fund $ 224,933 $ 43,706 $ 181,227
Alleghany/Montag & Caldwell Balanced Fund $ 971,351 $ 0 $ 971,351
Alleghany/Chicago Trust Balanced Fund $ 1,453,465 $ 0 $ 1,453,465
Alleghany/Chicago Trust Bond Fund $ 740,845 $ 217,546 $ 523,299
Alleghany/Chicago Trust Municipal Bond Fund $ 78,556 $ 138,689 $ 0
Alleghany/Chicago Trust Money Market Fund $ 1,026,684 $ 24,492* $ 1,002,192

* As of February 27, 1998, the Investment Adviser of Alleghany/Chicago Trust
Money Market Fund no longer waived fees or reimbursed expenses.

Fiscal year ended October 31, 1997
Gross Advisory Fees Waived Fees and Net Advisory Fees
Fund Earned by Advisers Reimbursed Expenses After Fee Waivers

Alleghany/Montag & Caldwell Growth Fund $ 3,800,124 $ 41,428 $ 3,758,696
Alleghany/Chicago Trust Growth & Income Fund $ 1,734,260 $ 129,857 $ 1,604,403
Alleghany/Chicago Trust Talon Fund $ 182,742 $ 85,596 $ 97,146
Alleghany/Montag & Caldwell Balanced Fund $ 400,868 $ 44,973 $ 355,895
Alleghany/Chicago Trust Balanced Fund $ 1,228,508 $ 102,203 $ 1,126,305
Alleghany/Chicago Trust Bond Fund $ 550,514 $ 221,539 $ 328,975
Alleghany/Chicago Trust Municipal Bond Fund $ 69,127 $ 85,359 $ 0
Alleghany/Chicago Trust Money Market Fund $ 1,004,607 $ 142,332 $ 862,275

The Investment Adviser for Alleghany/Blairlogie International Developed
Fund and Alleghany/Blairlogie Emerging Markets Fund has entered into Expense
Limitation Agreements with the Company, effective January 1, 2000, whereby it
has agreed to reimburse the Funds to the extent necessary to maintain total
annual operating expenses at 1.35% and 1.60% of net assets for Class N shares,
respectively, and 1.10% and 1.35% of net assets for Class I shares,
respectively.

Six Months Ended October 31, 1999
Gross Advisory Fees Waived Fees and Net Advisory Fees
Fund Earned by Advisers Reimbursed Expenses After Fee Waivers
Alleghany/Blairlogie International Developed $ 439,792 $ 29,647 $ 410,145
Fund***
Alleghany/Blairlogie Emerging Markets Fund*** $ 78,010 $ 43,536 $ 34,474

Ten Months Ended April 30, 1999
Gross Advisory Fees Waived Fees and Net Advisory Fees
Fund Earned by Advisers Reimbursed Expenses After Fee Waivers
Alleghany/Blairlogie International Developed $ 611,052 $ 0 $ 611,052
Fund***
Alleghany/Blairlogie Emerging Markets Fund*** $ 151,716 $ 0 $ 151,716

<PAGE>

Year Ended June 30, 1998
Gross Advisory Fees Waived Fees and Net Advisory Fees
Fund Earned by Advisers Reimbursed Expenses After Fee Waivers
Alleghany/Blairlogie International Developed $ 653,050 $ 0 $ 653,050
Fund***
Alleghany/Blairlogie Emerging Markets Fund*** $ 349,026 $ 0 $ 349,026

Year Ended June 30, 1997
Gross Advisory Fees Waived Fees and Net Advisory Fees
Fund Earned by Advisers Reimbursed Expenses After Fee Waivers
Alleghany/Blairlogie International Developed $ 525,817 $ 0 $ 525,817
Fund***
Alleghany/Blairlogie Emerging Markets Fund*** $ 568,277 $ 0 $ 568,277
</TABLE>

*** Blairlogie International Developed Fund and Blairlogie Emerging Markets
Fund commenced operations on June 8, 1993 and June 1, 1993, respectively,
as separate portfolios of PIMCO Funds. These Funds were reorganized as new
portfolios of Alleghany Funds on April 30, 1999.

Under the Investment Advisory Agreements, the Investment Adviser of
each Fund is not liable for any error of judgment or mistake of law or for any
loss suffered by the Company or a Fund in connection with the performance of the
Agreement, except a loss resulting from willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from reckless
disregard of its duties and obligations thereunder.

Each Investment Advisory Agreement is terminable with respect to a Fund
by vote of the Board of Trustees or by the holders of a majority of the
outstanding voting securities of the Fund, at any time without penalty, on 60
days' written notice to the Investment Adviser. An Investment Adviser may also
terminate its advisory relationship with respect to a Fund on 60 days' written
notice to the Company. Each Investment Advisory Agreement terminates
automatically in the event of its assignment.

Under each Investment Advisory Agreement, the Fund pays the following
expenses: (1) the fees and expenses of the Company's disinterested directors;
(2) the salaries and expenses of any of the Company's officers or employees who
are not affiliated with the Investment Adviser; (3) interest expenses; (4) taxes
and governmental fees; (5) brokerage commissions and other expenses incurred in
acquiring or disposing of portfolio securities; (6) the expenses of registering
and qualifying shares for sale with the SEC and with various state securities
commissions; (7) accounting and legal costs; (8) insurance premiums; (9) fees
and expenses of the Company's Custodian, Administrator, Sub-Administrator and
Transfer Agent and any related services; (10) expenses of obtaining quotations
of the Funds' portfolio securities and of pricing the Funds' shares; (11)
expenses of maintaining the Company's legal existence and of shareholders'
meetings; (12) expenses of preparation and distribution to existing shareholders
of reports, proxies and prospectuses; and (13) fees and expenses of membership
in industry organizations.

Chicago Title and Trust, 171 North Clark Street, Chicago, Illinois
60601, an Illinois chartered trust company, was previously a wholly-owned
subsidiary of Alleghany. On June 18, 1998, Alleghany spun off Chicago Title and
Trust to its shareholders as of that date. Chicago Title and Trust provided
investment advisory services to certain Funds of the Company since their
respective inception dates through October 30, 1995. As described more fully
below, Chicago Trust, an Illinois corporation, assumed those responsibilities on
October 30, 1995. Such Funds include: Alleghany/Chicago Trust Growth & Income
Fund, Alleghany/Chicago Trust Balanced Fund, Alleghany/Chicago Trust Bond Fund,
Alleghany/Chicago Trust Municipal Bond Fund and Alleghany/Chicago Trust Money
Market Fund.

Chicago Title and Trust formed AAM, a wholly-owned subsidiary, to act
as a holding company for certain of its financial services entities. On October
30, 1995, Chicago Title and Trust transferred substantially all of its fiduciary
business and investment operations to Chicago Trust, a wholly-owned subsidiary
of AAM. As part of such transfer, Chicago Trust assumed all of Chicago Title and
Trust's obligations and liabilities under its existing Investment Advisory
Agreements. Chicago Title and Trust had entered into a Guaranty Agreement with
the Company on behalf of each Fund for which it served as Investment Adviser,
pursuant to which it guaranteed all the obligations and liabilities of Chicago
Trust under such Agreements. Following approval of the Investment Advisory
Agreements by the shareholders of the respective Funds on June 17, 1999, the
Funds are no longer parties to such Guaranty Agreement, which was terminated on
June 17, 1999 with respect to all Funds except for Alleghany/Chicago Trust Talon
Fund for which the Guaranty Agreement remains in force. The investment
management operations with respect to the Company remain unchanged, and those
persons or groups responsible for the investment management of the applicable
Funds of the Company continue to have such responsibility for Chicago Trust.

Chicago Trust managed approximately $11.8 billion in assets as of
December 31, 1999, consisting primarily of pension and profit sharing accounts,
high net worth individuals, families and insurance companies. As part of the
spin-off of Chicago Title and Trust described above, Chicago Trust, an Illinois
corporation, became a direct wholly-owned subsidiary of AAM. AAM, located at
Park Avenue Plaza, New York City, New York 10055, is engaged through its
subsidiaries in the business of title insurance, reinsurance, other financial
services and industrial minerals.

As part of the corporate reorganization described above, Montag &
Caldwell became an indirect wholly-owned subsidiary of AAM. Prior to October 30,
1995, Montag & Caldwell was a wholly-owned subsidiary of Chicago Title and
Trust.

AAM also holds a 40% interest in Veredus, with certain options over the next
eight years to acquire up to a 70% interest.

Blairlogie is registered as an investment adviser with the SEC in the
United States and with the Investment Management Regulatory Organisation in the
United Kingdom. Blairlogie Capital Management Ltd. (now known as Blairlogie
Capital Management) commenced operations in 1992 and is an indirect subsidiary
of Alleghany Corporation.

The Administrator and Sub-Administrator

As Administrator, Chicago Trust, 171 North Clark Street, Chicago,
Illinois 60601, provides certain administrative services to the Company pursuant
to an Administration Agreement. PFPC Inc. (formerly, First Data Investor
Services Group, Inc.), 101 Federal Street, Boston, Massachusetts 02110, provides
certain administrative services for the Funds and Chicago Trust pursuant to a
Sub-Administration Agreement.

Under the Administration Agreement, the Administrator is responsible
for: (1) coordinating with the Custodian and Transfer Agent and monitoring the
services they provide to the Funds; (2) coordinating with and monitoring any
other third parties furnishing services to the Funds; (3) providing the Funds
with necessary office space, telephones and other communications facilities and
personnel competent to perform administrative and clerical functions; (4)
supervising the maintenance by third parties of such books and records of the
Funds as may be required by applicable Federal or state law; (5) preparing or
supervising the preparation by third parties of all Federal, state and local tax
returns and reports of the Funds required by applicable law; (6) preparing and,
after approval by the Funds, filing and arranging for the distribution of proxy
materials and periodic reports to shareholders of the Funds as required by
applicable law; (7) preparing and, after approval by the Company, arranging for
the filing of such registration statements and other documents with the SEC and
other Federal and state regulatory authorities as may be required by applicable
law; (8) reviewing and submitting to the Officers of the Company for their
approval invoices or other requests for payment of the Funds' expenses and
instructing the Custodian to issue checks in payment thereof; and (9) taking
such other action with respect to the Company or the Funds as may be necessary
in the opinion of the Administrator to perform its duties under the Agreement.

As compensation for services performed under the Administration
Agreement, the Administrator receives an administration fee payable monthly at
the annual rate set forth below as a percentage of the average daily net assets
of the Company. The Administrator also receives custody liaison fees as set
forth in the table below.

Administration Fees

Percentage Average Daily Net Assets (Aggregate)

0.06% less than $2 billion
0.05% at least $2 billion but not more than $7 billion
0.045% over $7 billion

Custody Liaison Fees

Fee Average Daily Net Assets (Each Fund)

$10,000 less than $100 million
$15,000 at least $100 million but not more than $500 million
$20,000 over $500 million

The following are the total administrative fees paid to the
Administrator for the three most recent fiscal years:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Administrative Fees

Fund FYE October 31, 1999 FYE October 31, 1998 FYE October 31, 1997
- ---- -------------------- -------------------- --------------------

FPSB First Data
Alleghany/Montag & Caldwell Growth Fund $1,357,663 $ 741,210 $ 76,898 $ 165,326
Alleghany/Chicago Trust Growth & Income Fund $ 254,852 $ 191,695 $ 52,175 $ 69,751
Alleghany/Chicago Trust Talon Fund $ 13,011 $ 18,106 $ 5,005 $ 6,670
Alleghany/Chicago Trust Small Cap Value Fund* $ 22,122 n/a n/a n/a
Alleghany/Veredus Aggressive Growth Fund* $ 18,568 n/a n/a n/a
Alleghany/Montag & Caldwell Balanced Fund $ 122,384 $ 80,312 $ 9,676 $ 17,554
Alleghany/Chicago Trust Balanced Fund $ 157,773 $ 131,063 $ 38,136 $ 47,246
Alleghany/Chicago Trust Bond Fund $ 93,681 $ 87,388 $ 21,291 $ 28,043
Alleghany/Chicago Trust Municipal Bond Fund $ 15,839 $ 12,164 $ 2,679 $ 3,007
Alleghany/Chicago Trust Money Market Fund $ 167,945 $ 148,930 $ 56,421 $ 65,373
</TABLE>

* Alleghany/Chicago Trust Small Cap Value Fund commenced operations on November
10, 1998. Alleghany/Veredus Aggressive Growth Fund commenced operations on
June 30, 1998.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Administrative Fees

Six Months Ended Ten Months Ended Year Ended Year Ended
Fund October 31, 1999 April 30, 1999 June 30, 1998 June 30, 1997
Alleghany/Blairlogie International $ 40,755 $ 522,631 $ 555,314 $ 437,490
Developed Fund**
Alleghany/Blairlogie Emerging Markets $ 17,137 $ 91,107 $ 208,654 $ 312,540
Fund**
</TABLE>

** Blairlogie International Developed Fund and Blairlogie Emerging Markets Fund
commenced operations on June 8, 1993 and June 1, 1993, respectively, as
separate portfolios of PIMCO Funds. These Funds were reorganized as new
portfolios of Alleghany Funds on April 30, 1999.

Prior to June 1, 1997, FPS Broker Services, Inc. ("FPSB"), 3200 Horizon
Drive, King of Prussia, Pennsylvania 19406, acted as an Underwriter of the
Funds' shares for the purpose of facilitating the registration of shares of the
Funds under state securities laws and assisted in sales of shares pursuant to
the Underwriting Agreement approved by the Company's Trustees. Pursuant to its
Underwriter Compensation Agreement with the Company, FPSB was paid an annual
underwriter fee of $2,500 for each Class N Shares Fund and $2,000 for each Class
I Shares Fund ($22,000 per annum total for eight Class N Shares Funds and one
Class I Shares Fund) and certain other registration and transaction fees.

Effective June 1, 1997, First Data Distributors, Inc. replaced FPS Broker
Services, Inc. as principal underwriter and distributor of the Funds' shares.
First Data Distributors, Inc. is located at 4400 Computer Drive, Westborough,
Massachusetts 01581.

On December 1, 1999, PFPC Trust Company, a wholly-owned subsidiary of
PFPC Worldwide Inc. and an indirect wholly-owned subsidiary of PNC Bank Corp.,
acquired all of the outstanding shares of First Data Investor Services Group,
Inc., the Funds' sub-administrator and transfer agent. As a result, First Data
Investor Services Group, Inc. changed its name to PFPC Inc.

Effective December 1, 1999, Provident Distributors, Inc. replaced First Data
Distributors, Inc. as principal underwriter and distributor of the Funds'
shares. Provident Distributors, Inc. is located at Four Falls Corporate Center,
Suite 600, West Conshohocken, Pennsylvania 19428-2961.

Distribution Plan

The Board of Trustees of the Company has adopted a Plan of Distribution
(the "Plan") pursuant to Rule 12b-1 under the 1940 Act, which permits the Class
N shares of each Fund, with the exception of Alleghany/Chicago Trust Money
Market Fund, to pay certain expenses associated with the distribution of its
shares. Under the Plan, each Fund may pay actual expenses not exceeding, on an
annual basis, 0.25% of a Fund's average daily net assets. To the Company's
knowledge, no interested person of the Company, nor any of its Trustees who are
not "interested persons," has a direct or indirect financial interest in the
operation of the Plan. The Company anticipates that each Fund will benefit from
additional shareholders and assets as a result of implementation of the Plan.
Amounts spent on behalf of each Fund pursuant to such Plan during the fiscal
year ended October 31, 1999, are set forth below.

12b-1 Plan Expenses

Distribution Compensation to Compensation to
Fund Printing Services Broker Dealers Sales Personnel

Alleghany/Montag & Caldwell Growth Fund $ 40,712 $ 87,784 $ 2,295,890 $ 34,710
Alleghany/Chicago Trust Growth & Income Fund $ 6,806 $ 33,594 $ 269,621 $ 23,984
Alleghany/Chicago Trust Talon Fund $ 632 $ 2,758 $ 8,866 $ 1,612
Alleghany/Chicago Trust Small Cap Value Fund* $ 970 $ 2,466 $ 26,138 $ 279
Alleghany/Veredus Aggressive Growth Fund* $ 803 $ 1,971 $ 23,818 $ 338
Alleghany/Blairlogie International Developed $ 79 $ 45 $ 2,453 $ 0
Fund**
Alleghany/Blairlogie Emerging Markets Fund** $ 19 $ 11 $ 401 $ 12
Alleghany/Montag & Caldwell Balanced Fund $ 4,681 $ 12,687 $ 181,713 $ 14,175
Alleghany/Chicago Trust Balanced Fund $ 7,967 $ 20,037 $ 157,209 $ 10,927
Alleghany/Chicago Trust Bond Fund $ 4,865 $ 13,307 $ 128,266 $ 9,656
Alleghany/Chicago Trust Municipal Bond Fund $ 427 $ 1,883 $ 6,103 $ 364

Fund Marketing Service Providers Total

Alleghany/Montag & Caldwell Growth Fund $ 748,516 $ 63,445 $ 3,271,008
Alleghany/Chicago Trust Growth & Income Fund $ 773,528 $ 107,572 $ 1,215,104
Alleghany/Chicago Trust Talon Fund $ 42,020 $ 452 $ 56,340
Alleghany/Chicago Trust Small Cap Value Fund* $ 56,325 $ 1,579 $ 87,758
Alleghany/Veredus Aggressive Growth Fund* $ 41,163 $ 470 $ 68,564
Alleghany/Blairlogie International Developed $ 5,032 $ 71 $ 7,680
Fund**
Alleghany/Blairlogie Emerging Markets Fund** $ 1,449 $ 0 $ 1,892
Alleghany/Montag & Caldwell Balanced Fund $ 145,342 $ 16,366 $ 374,964
Alleghany/Chicago Trust Balanced Fund $ 465,231 $ 72,717 $ 734,088
Alleghany/Chicago Trust Bond Fund $ 339,660 $ 34,406 $ 530,157
Alleghany/Chicago Trust Municipal Bond Fund $ 49,551 $ 0 $ 58,327
</TABLE>

* Alleghany/Chicago Trust Small Cap Value Fund commenced operations on November
10, 1998. Alleghany/Veredus Aggressive Growth Fund commenced operations on June
30, 1998.
** Alleghany/Blairlogie Emerging Markets Fund and Alleghany/Blairlogie
International Developed Fund joined Alleghany Funds on April 30, 1999.

PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS

The Investment Adviser or Sub-Adviser is responsible for decisions to
buy and sell securities for the Funds, for the placement of its portfolio
business and the negotiation of commissions, if any, paid on such transactions.
In placing trades for a Fund, the Investment Adviser or Sub-Adviser will follow
the Company's policy of seeking best execution of orders. Securities traded in
the over-the-counter market are generally traded on a net basis. These
securities are generally traded on a net basis with dealers acting as principal
for their own accounts without a stated commission. In over-the-counter
transactions, orders are placed directly with a principal market-maker unless a
better price and execution can be obtained by using a broker. Brokerage
commissions are paid on transactions in listed securities, futures contracts and
options.

The Company will attempt to obtain the best overall price and most
favorable execution of transactions in portfolio securities. However, subject to
policies established by the Board of Trustees of the Company, a Fund may pay a
broker-dealer a commission for effecting a portfolio transaction for a Fund in
excess of the amount of commission another broker-dealer would have charged if
Chicago Trust, Montag & Caldwell, Veredus or Blairlogie, as appropriate,
determines in good faith that the commission paid was reasonable in relation to
the brokerage or research services provided by such broker-dealer, viewed in
terms of that particular transaction or such firm's overall responsibilities
with respect to the clients, including the Fund, as to which it exercises
investment discretion. In selecting and monitoring broker-dealers and
negotiating commissions, consideration will be given to a broker-dealer's
reliability, the quality of its execution services on a continuing basis and its
financial condition. Subject to the foregoing considerations, preference may be
given in executing portfolio transactions for a Fund to brokers which have sold
shares of that Fund.

The Investment Adviser or Sub-Adviser effects portfolio transactions
for other investment companies and advisory accounts. Research services
furnished by broker-dealers through whom the Funds effect securities
transactions may be used by the Investment Adviser or Sub-Adviser, as the case
may be, in servicing all of their respective accounts; not all such services may
be used in connection with the Funds. The Investment Adviser and Sub-Adviser
will attempt to equitably allocate portfolio transactions among the Funds and
others whenever concurrent decisions are made to purchase or sell securities by
the Funds and other accounts. In making such allocations between the Funds and
others, the main factors to be considered are the respective investment
objectives, the relative size of portfolio holdings of the same or comparable
securities, the availability of cash for investment, the size of investment
commitments generally held and the opinions of the persons responsible for
recommending investments to the Funds and the others. In some cases, this
procedure could have an adverse effect on the Funds. In the opinion of the
Investment Adviser or Sub-Adviser, however, the results of such procedures will,
on the whole, be in the best interest of each of the clients.

Amounts spent on behalf of each Fund for brokerage commissions during
each of the last three fiscal years are set forth below.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Brokerage Commissions

Fund FYE October 31, 1999 FYE October 31, 1998 FYE October 31, 1997
---- -------------------- -------------------- --------------------

Alleghany/Montag & Caldwell Growth Fund $ 1,716,450 $ 1,379,506 $ 537,610
Alleghany/Chicago Trust Growth & Income Fund $ 256,176 $ 243,509 $ 130,947
Alleghany/Chicago Trust Talon Fund $ 94,685 $ 69,511 $ 55,212**
Alleghany/Chicago Trust Small Cap Value Fund* $ 285,009 n/a n/a
Alleghany/Veredus Aggressive Growth Fund* $ 52,394 n/a n/a
Alleghany/Montag & Caldwell Balanced Fund $ 103,697 $ 102,195 $ 34,393
Alleghany/Chicago Trust Balanced Fund $ 80,255 $ 86,435 $ 58,087
Alleghany/Chicago Trust Bond Fund n/a n/a n/a
Alleghany/Chicago Trust Municipal Bond Fund n/a n/a n/a
Alleghany/Chicago Trust Money Market Fund n/a n/a n/a
</TABLE>

* Alleghany/Chicago Trust Small Cap Value Fund commenced operations on
November 10, 1998. Alleghany/Veredus Aggressive Growth Fund commenced
operations on June 30, 1998.
** Of this amount, $1,300 was paid to Talon Securities, Inc. ("TSI"), an
affiliate of Talon, the Fund's Sub-Adviser. The amount paid to TSI
represents: (a) 0.20% of the aggregate brokerage commissions received by
TSI from all clients during the fiscal year ended October 31, 1997; and (b)
2.35% of the total commissions paid by Alleghany/Chicago Trust Talon Fund
to all brokers through whom trades were placed during the Fund's fiscal
year ended October 31, 1997.

Brokerage Commissions

Fund Six Months Ended Ten Months Ended Year Ended Year Ended
---- - -
October 31, 1999 April 30, 1999 June 30, 1998 June 30, 1997
---------------- -------------- ------------- -------------
Alleghany/Blairlogie International $ 206,859 $ 261,870 $ 326,193 $ 498,041
Developed Fund**
Alleghany/Blairlogie Emerging $ 62,783 $ 92,726 $ 238,241 $ 591,312
Markets Fund**
</TABLE>

** Alleghany/Blairlogie International Developed Fund and Alleghany/Blairlogie
Emerging Markets Fund joined Alleghany Funds on April 30, 1999.

Portfolio Turnover

The portfolio turnover rate for each of the Funds is calculated by
dividing the lesser of purchases or sales of portfolio investments for the
reporting period by the monthly average value of the portfolio investments owned
during the reporting period. The calculation excludes all securities, including
options, whose maturities or expiration dates at the time of acquisition are one
year or less. Portfolio turnover may vary greatly from year to year as well as
within a particular year and may be affected by cash requirements for redemption
of units and by requirements which enable the Funds to receive favorable tax
treatment. In any event, portfolio turnover is generally not expected to exceed
100% in the Funds, except for Alleghany/Chicago Trust Small Cap Value Fund or
Alleghany/Veredus Aggressive Growth Fund, in which it is not expected to exceed
200%. A high rate of portfolio turnover (i.e., over 100%) may result in the
realization of substantial capital gains and involves correspondingly greater
transaction costs. To the extent that net capital gains are realized,
distributions derived from such gains are treated as ordinary income for Federal
income tax purposes.

The portfolio turnover rates for the Funds for their most recent fiscal
periods may be found under "FINANCIAL HIGHLIGHTS" in the Prospectus.

<PAGE>

NET ASSET VALUE

The net asset value per share of each Fund is computed as of the close
of regular trading on the NYSE on each day the NYSE is open for trading. The
NYSE is closed on New Year's Day, Martin Luther King Jr.'s Birthday, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day.

The net asset value per share is computed by adding the value of all
securities and other assets in the portfolio, deducting any liabilities
(expenses and fees are accrued daily) and dividing by the number of shares
outstanding. The portfolio securities of each Fund listed or traded on a stock
exchange are valued at the latest sale price. If no sale price is reported, the
mean of the latest bid and asked prices is used. Securities traded
over-the-counter are priced at the mean of the latest bid and asked prices. When
market quotations are not readily available, securities and other assets are
valued at fair value as determined in good faith by the Board of Trustees.

Bonds are valued through prices obtained from a commercial pricing
service or at the mean of the most recent bid and asked prices provided by
investment dealers in accordance with procedures established by the Board of
Trustees. Options, futures and options on futures are valued at the settlement
price as determined by the appropriate clearing corporation.

The securities held in the portfolio of Alleghany/Chicago Trust Money
Market Fund, and the debt securities with maturities of sixty days or less held
by the other Funds, are valued at amortized cost. When a security is valued at
amortized cost, it is valued at its cost when purchased, and thereafter by
assuming a constant amortization to maturity of any premium or accretion of
discount, unless de minimis, regardless of the impact of fluctuating interest
rates on the market value of the instrument.

Quotations of foreign securities denominated in foreign currency are
converted to U.S. dollar equivalents using foreign exchange quotations received
from independent dealers. The calculation of the net asset value of each Fund
may not take place contemporaneously with the determination of the prices of
certain portfolio securities of foreign issuers used in such calculation.
Further, under the Company's procedures, the prices of foreign securities are
determined using information derived from pricing services and other sources.
Information that becomes known to the Company or its agents after the time that
net asset value is calculated on any Business Day may be assessed in determining
net asset value per share after the time of receipt of the information, but will
not be used to retroactively adjust the price of the security so determined
earlier or on a prior day. Events affecting the values of portfolio securities
that occur between the time their prices are determined and the close of regular
trading on the NYSE (normally 4:00 p.m., Eastern time) may not be reflected in
the calculation of net asset value. If events materially affecting the value of
such securities occur during such period, then these securities may be valued at
fair value as determined by the Investment Adviser and approved in good faith by
the Board of Trustees.

DIVIDENDS

Income dividends and capital gain distributions are reinvested
automatically in additional shares at net asset value, unless you elect to
receive them in cash. Distribution options may be changed at any time by
requesting a change in writing. Any check in payment of dividends or other
distributions which cannot be delivered by the Post Office or which remains
uncashed for a period of more than one year may be reinvested in the
shareholder's account at the then current net asset value and the dividend
option may be changed from cash to reinvest. Dividends are reinvested on the
exdividend date (the "ex-date") at the net asset value determined at the close
of business on that date. Please note that shares purchased shortly before the
record date for a dividend or distribution may have the effect of returning
capital, although such dividends and distributions are subject to taxes.

Dividends paid by Montag & Caldwell Growth Fund, Alleghany/Chicago
Trust Growth & Income Fund, Montag & Caldwell Balanced Fund, Alleghany/Chicago
Trust Balanced Fund, Alleghany/Blairlogie Emerging Markets Fund,
Alleghany/Blairlogie International Developed Fund and Alleghany/Chicago Trust
Bond Fund with respect to Class I shares are calculated in the same manner and
at the same time. Both Class N and Class I shares of a Fund will share
proportionately in the investment income and general expenses of the Fund,
except that the per share dividends of Class N shares will differ from the per
share dividends of Class I shares as a result of class-specific expenses.

<PAGE>

TAXES

Each Fund intends to qualify or to continue to qualify each year as a
regulated investment company under the Code.

In order to so qualify, a Fund must, among other things, (i) derive at
least 90% of its gross income from dividends, interest, payments with respect to
certain securities loans, gains from the sale of securities or foreign
currencies, or other income (including but not limited to gains from options,
futures or forward contracts) derived with respect to its business of investing
in such stock, securities or currencies; (ii) derive less than 30% of its gross
income from gains from the sale or other disposition of securities or certain
futures and options thereon held for less than three months ("short-short
gains"); (iii) distribute at least 90% of its dividend, interest and certain
other taxable income each year; and (iv) at the end of each fiscal quarter
maintain at least 50% of the value of its total assets in cash, U.S. Government
securities, securities of other regulated investment companies, and other
securities of issuers which represent, with respect to each issuer, no more than
5% of the value of a Fund's total assets and 10% of the outstanding voting
securities of such issuer, and with no more than 25% of its assets invested in
the securities (other than those of the government or other regulated investment
companies) of any one issuer or of two or more issuers which the Fund controls
and which are engaged in the same, similar or related trades and businesses.

To the extent that a Fund qualifies for treatment as a regulated
investment company, it will not be subject to Federal income tax on income paid
to shareholders in the form of dividends or capital gains distributions.

An excise tax at the rate of 4% will be imposed on the excess, if any,
of a Fund's "required distributions" over actual distributions in any calendar
year. Generally, the "required distribution" is 98% of a Fund's ordinary income
for the calendar year plus 98% of its capital gain net income recognized during
the one-year period ending on October 31 plus undistributed amounts from prior
years. The Funds intend to make distributions sufficient to avoid imposition of
the excise tax. For a distribution to qualify as such with respect to a calendar
year under the foregoing rules, it must be declared by a Fund during October,
November or December to shareholders of record during such month and paid by
January 31 of the following year. Such distributions will be taxable in the year
they are declared, rather than the year in which they are received.

When a Fund writes a call or purchases a put option, an amount equal to
the premium received or paid by it is included in the Fund's accounts as an
asset and as an equivalent liability.

In writing a call, the amount of the liability is subsequently
"marked-to-market" to reflect the current market value of the option written.
The current market value of a written option is the last sale price on the
principal exchange on which such option is traded or, in the absence of a sale,
the mean between the last bid and asked prices. If an option which a Fund has
written expires on its stipulated expiration date, the Fund recognizes a
short-term capital gain. If a Fund enters into a closing purchase transaction
with respect to an option which the Fund has written, the Fund realizes a
short-term gain (or loss if the cost of the closing transaction exceeds the
premium received when the option was sold) without regard to any unrealized gain
or loss on the underlying security, and the liability related to such option is
extinguished. If a call option which a Fund has written is exercised, the Fund
realizes a capital gain or loss from the sale of the underlying security and the
proceeds from such sale are increased by the premium originally received.

The premium paid by a Fund for the purchase of a put option is recorded
in the Fund's assets and liabilities as an investment and subsequently adjusted
daily to the current market value of the option. For example, if the current
market value of the option exceeds the premium paid, the excess would be
unrealized appreciation and, conversely, if the premium exceeds the current
market value, such excess would be unrealized depreciation. The current market
value of a purchased option is the last sale price on the principal exchange on
which such option is traded or, in the absence of a sale, the mean between the
last bid and asked prices. If an option which a Fund has purchased expires on
the stipulated expiration date, the Fund realizes a short-term or long-term
capital loss for Federal income tax purposes in the amount of the cost of the
option. If a Fund exercises a put option, it realizes a capital gain or loss
(long-term or short-term, depending on the holding period of the underlying
security) from the sale which will be decreased by the premium originally paid.

The amount of any realized gain or loss on closing out options on
certain stock indices will result in a realized gain or loss for tax purposes.
Such options held by a Fund at the end of each fiscal year on a broad-based
stock index will be required to be "marked-to-market" for Federal income tax
purposes. Sixty percent of any net gain or loss recognized on such deemed sales
or on any actual sales will be treated as long-term capital gain or loss, and
the remainder will be treated as short-term capital gain or loss ("60/40 gain or
loss"). Certain options, futures contracts and options on futures contracts
utilized by the Funds are "Section 1256 contracts." Any gains or losses on
Section 1256 contracts held by a Fund at the end of each taxable year (and on
October 31 of each year for purposes of the 4% excise tax) are
"marked-to-market" with the result that unrealized gains or losses are treated
as though they were realized and the resulting gain or loss is treated as a
60/40 gain or loss.

Shareholders will be subject to Federal income taxes on distributions
made by the Funds whether received in cash or additional shares of the Funds.
Distributions of net investment income and net short-term capital gains, if any,
will be taxable to shareholders as ordinary income. Distributions of net capital
gains (the excess of net capital gains over net short-term capital losses), if
any, will be taxable to shareholders as 28% rate gains or 20% rate gains,
without regard to how long a shareholder has held shares of a Fund. A loss on
the sale of shares held for six months or less will be treated as a long-term
capital loss to the extent of any long-term capital gain dividend paid to the
shareholder with respect to such shares. Dividends paid by a Fund may qualify in
part for the 70% dividends-received deduction for corporations, provided
however, that those shares have been held for at least 45 days.

The Funds will notify shareholders each year of the amount of dividends
and distributions, including the amount of any distribution of 28% rate gains
and 20% rate gains and the portion of its dividends which qualify for the 70%
deduction.

Passive Foreign Investment Companies

Alleghany/Blairlogie International Developed Fund and
Alleghany/Blairlogie Emerging Markets Fund may invest in the stock of foreign
corporations which may be classified under the Code as passive foreign
investment companies ("PFICs"). In general, a foreign corporation is classified
as a PFIC for a taxable year if at least 50% of its assets constitute
investment-type assets or 75% or more of its gross income is investment-type
income. If a Fund receives a so-called "excess distribution" with respect to
PFIC stock, the Fund itself may be subject to tax on a portion of the excess
distribution, whether or not the corresponding income is distributed by the Fund
to stockholders.

In general, under the PFIC rules, an excess distribution is treated as
having been realized ratably over the period during which the Fund held the PFIC
stock. A Fund itself will be subject to a U.S. federal income tax (including
interest) on the portion, if any, of an excess distribution that is so allocated
to prior taxable years. Certain distributions from a PFIC as well as gain from
the sale of PFIC stock are treated as excess distributions. Excess distributions
are characterized as ordinary income even though, absent application of the PFIC
rules, certain excess distributions might have been classified as capital gain.

A Fund may be eligible to elect alternative tax treatment with respect
to PFIC stock. Under an election that currently is available in some
circumstances, a Fund generally would be required to include its share of the
PFIC's income and net capital gain annually, regardless of whether distributions
are received from the PFIC in a given year. If this election were made, the
special rules discussed above relating to the taxation of excess distributions
would not apply. In addition, another election may be available that would
involve marking to market a Fund's PFIC shares at the end of each taxable year
(and on certain other dates prescribed in the Code), with the result that
unrealized gains are treated as though they were realized. If this election were
made, tax at the Fund level under the PFIC rules would generally be eliminated,
but the Fund could, in limited circumstances, incur nondeductible interest
charges. A Fund's intention to qualify annually as a regulated investment
company may limit its elections with respect to PFIC shares.

Because the application of the PFIC rules may affect, among other
things, the character of gains and the amount of gain or loss and the timing of
the recognition of income with respect to PFIC shares, and may subject a Fund
itself to tax on certain income from PFIC shares, the amount that must be
distributed to shareholders and will be taxed to shareholders as ordinary income
or long-term capital gain may be increased or decreased substantially as
compared to a fund that did not invest in PFIC shares.

Foreign Currency Transactions

Under the Code, gains or losses attributable to fluctuations in
exchange rates which occur between the time a Fund accrues income or other
receivables or accrues expenses or other liability denominated in a foreign
currency and the time the Fund actually collects such receivable or pays such
liabilities generally are treated as ordinary income or loss. Similarly, on
disposition of debt securities denominated in a foreign currency and on
disposition of certain other instruments, gains or losses attributable to
fluctuations in the value of the foreign currency between the date of
acquisition of the security or contract and the date of disposition also are
treated as ordinary gain or loss. These gains and losses, referred to under the
Code as "section 988" gains or losses, may increase or decrease the amount of a
Fund's investment company taxable income to be distributed to its shareholders
as ordinary income.

Foreign Taxation

Income received by Alleghany/Blairlogie International Developed Fund
and Alleghany/Blairlogie Emerging Markets Fund from sources within foreign
countries may be subject to withholding and other taxes imposed by such
countries. Tax conventions between certain countries and the U.S. may reduce of
eliminate such taxes. In addition, the Investment Adviser intends to manage the
Funds with the intention of minimizing foreign taxation in cases where it is
deemed prudent to do so. If more than 50% of the value of a Fund's total assets
at the close of its taxable year consists of securities of foreign corporations,
such Fund will be eligible to elect to "pass through" to the Fund's shareholders
the amount of eligible foreign income and similar taxes paid by the Fund. If
this election is made, a shareholder generally subject to tax will be required
to include in gross income (in addition to taxable dividends actually received)
his or her pro rata share of foreign taxes in computing his or her taxable
income or to use it as a foreign tax credit against his or her U.S. federal
income tax liability, subject to certain limitations. In particular,
shareholders must hold their shares (without protection from risk of loss) on
the ex-dividend date and for at least 15 more days during the 30-day period
surrounding the ex-dividend date to be eligible to claim a foreign tax credit
with respect to a gain dividend. No deduction for foreign taxes may be claimed
by a shareholder who does not itemize deductions. Each shareholder will be
notified within 60 days after the close of the Fund's taxable year whether the
foreign taxes paid by the Fund will "pass through" for that year.

Generally, a credit for foreign taxes is subject to the limitation that
it may not exceed the shareholder's U.S. tax attributable to his or her total
foreign source taxable income. For this purpose, if the pass-through election is
made, the source of the electing Fund's income will flow through to shareholders
of the Company. With respect to such Funds, gains from the sale of securities
will be treated as derived from U.S. sources and certain currency fluctuation
gains, including fluctuation gains from foreign currency-denominated debt
securities, receivables and payables will be treated as ordinary income derived
from U.S. sources. The limitation on the foreign tax credit is applied
separately to foreign source passive income, and to certain other types of
income. Shareholders may be unable to claim a credit for the full amount of
their proportionate share of the foreign taxes paid by the Fund. The foreign tax
credit can be used to offset only 90% of the revised alternative minimum tax
imposed on corporations and individuals and foreign taxes generally are not
deductible in computing alternative minimum taxable income.

Dividends and distributions also may be subject to state and local
taxes. Shareowners are urged to consult their tax advisers regarding specific
questions as to Federal, state and local taxes.

The foregoing discussion relates solely to U.S. Federal income tax law.
Non-U.S. investors should consult their tax advisers concerning the tax
consequences of ownership of shares of the Funds, including the possibility that
distributions may be subject to a 30% United States withholding tax (or a
reduced rate of withholding provided by treaty).

PERFORMANCE INFORMATION

In General

From time to time, the Company may include general comparative
information, such as statistical data regarding inflation, securities indices or
the features or performance of alternative investments, in advertisements, sales
literature and reports to shareholders. The Company may also include
calculations, such as hypothetical compounding examples or tax-free compounding
examples, which describe hypothetical investment results in such communications.
Such performance examples will be based on an express set of assumptions and are
not indicative of the performance of any Fund. In addition, the Company may
include charts comparing various tax-free yields versus taxable yield
equivalents at different income levels.

From time to time, the yield and total return of a Fund may be quoted
in advertisements, shareholder reports or other communications to shareholders.

Total Return Calculations

Total return is defined as the change in value of an investment in a
Fund over a particular period, assuming that all distributions have been
reinvested. Thus, total return reflects not only income earned, but also
variations in share prices at the beginning and end of the period. Average
annual total return is determined by computing the annual compound return over a
stated period of time that would have produced a Fund's cumulative total return
over the same period if the Fund's performance had remained constant throughout.

The Funds that compute their average annual total returns do so by
determining the average annual compounded rates of return during specified
periods that equate the initial amount invested to the ending redeemable value
of such investment. This is done by dividing the ending redeemable value of a
hypothetical $1,000 initial payment by $1,000 and raising the quotient to a
power equal to one divided by the number of years (or fractional portion
thereof) covered by the computation and subtracting one from the result. This
calculation can be expressed as follows:
<TABLE>
<CAPTION>
<S> <C>
1
Average Annual Total Return = (ERV) n - 1
---
P

Where: ERV = ending redeemable value at the end of the period covered by the
computation of a hypothetical $1,000 payment made at the beginning of the period
P = hypothetical initial payment of $1,000
n = period covered by the computation, expressed in terms of years
T = average annual total return
</TABLE>

The Funds that compute their aggregate total returns over a specified
period do so by determining the aggregate compounded rate of return during such
specified period that likewise equates over a specified period the initial
amount invested to the ending redeemable value of such investment. The formula
for calculating aggregate total return is as follows:
<TABLE>
<CAPTION>
<S> <C>

Aggregate Annual Total Return = ERV - 1
---
P

The calculations of average annual total return and aggregate total
return assume the reinvestment of all dividends and capital gain distributions
on the reinvestment dates during the period. The ending redeemable value
(variable "ERV" in each formula) is determined by assuming complete redemption
of the hypothetical investment and the deduction of all nonrecurring charges at
the end of the period covered by the computations. Such calculations are not
necessarily indicative of future results and do not take into account Federal,
state and local taxes that shareholders must pay on a current basis.

Since performance will fluctuate, performance data for the Funds should
not be used to compare an investment in the Funds' shares with bank deposits,
savings accounts and similar investment alternatives which often provide an
agreed or guaranteed fixed yield for a stated period of time. Shareholders
should remember that performance is generally a function of the kind and quality
of the instruments held in a portfolio, portfolio maturity, operating expenses
and market conditions.

<PAGE>

The average annual total returns for the Funds that quote such
performance were as follows for the periods shown:
<TABLE>
<CAPTION>
<S> <C> <C>
One Year Ended From Fund Inception
Series 10/31/99 through 10/31/99

Alleghany/Montag & Caldwell Growth Fund - Class N 29.34% 28.48%
Montag & Caldwell Growth Fund - Class I 29.78% 27.67%
Alleghany/Chicago Trust Growth & Income Fund 27.71% 22.71%
Alleghany/Chicago Trust Talon Fund 2.32% 13.18%
Alleghany/Chicago Trust Small Cap Value Fund n/a n/a
Alleghany/Veredus Aggressive Growth Fund 92.92% 46.29%
Alleghany/Blairlogie International Developed Fund - Class N 16.66% 10.84%
Alleghany/Blairlogie International Developed Fund - Class I 17.12% 10.62%
Alleghany/Blairlogie Emerging Markets Fund - Class N 32.68% (7.54)%
Alleghany/Blairlogie Emerging Markets Fund - Class I 33.07% 2.89%
Alleghany/Montag & Caldwell Balanced Fund- Class N 17.83% 20.10%
Montag & Caldwell Balanced Fund - Class I n/a n/a
Alleghany/Chicago Trust Balanced Fund 17.26% 18.04%
Alleghany/Chicago Trust Bond Fund 1.02% 5.78%
Alleghany/Chicago Trust Municipal Bond Fund (1.77)% 3.40%
</TABLE>

Yield and Tax-Equivalent Yield

Yield refers to net income generated by an investment over a particular
period of time, which is annualized (assumed to have been generated for one
year) and expressed as an annual percentage rate. Effective yield is yield
assuming that all distributions are reinvested. Effective yield will be slightly
higher than the yield because of the compounding effect of the assumed
investment. Yield for Alleghany/Chicago Trust Money Market Fund over a seven-day
period is called current yield. For Alleghany/Chicago Trust Bond Fund and
Alleghany/Chicago Trust Municipal Bond Fund, yield is calculated by dividing the
net investment income per share earned during a 30-day period by the maximum
offering price per share on the last day of the period and annualizing the
result.

Yield of Alleghany/Chicago Trust Money Market Fund

The yield of this Fund for a seven-day period (the "base period") will
be computed by determining the net change in value (calculated as set forth
below) of a hypothetical account having a balance of one share at the beginning
of the period, dividing the net change in account value by the value of the
account at the beginning of the base period to obtain the base period return and
multiplying the base period return by 365/7 with the resulting yield figure
carried to the nearest hundredth of one percent. Net changes in value of a
hypothetical account will include the value of additional shares purchased with
dividends from the original share and dividends declared on both the original
share and any such additional shares, but will not include realized gains or
losses or unrealized appreciation or depreciation on portfolio investments.
Yield may also be calculated on a compound basis (the "effective yield") which
assumes that net income is reinvested in shares of the Fund at the same rate as
net income is earned for the base period.

The yield and effective yield of Alleghany/Chicago Trust Money Market
Fund will vary in response to fluctuations in interest rates and in the expenses
of the Fund. For comparative purposes, the current and effective yields should
be compared to current and effective yields offered by competing financial
institutions for the same base period and calculated by the methods described
above. For the seven-day period ended October 31, 1999, Alleghany/Chicago Trust
Money Market Fund had a yield of 4.97% and an effective yield of 5.10%.

Yields of Alleghany/Chicago Trust Bond Fund and Alleghany/Chicago Trust
Municipal Bond Fund

The yield of each of these Funds is calculated by dividing the net
investment income per share (as described below) earned by the Fund during a
30-day (or one month) period by the maximum offering price per share on the last
day of the period and annualizing the result on a semi-annual basis by adding
one to the quotient, raising the sum to the power of six, subtracting one from
the result and then doubling the difference. A Fund's net investment income per
share earned during the period is based on the average daily number of shares
outstanding during the period entitled to receive dividends and includes
dividends and interest earned during the period minus expenses accrued for the
period, net of reimbursements.

<PAGE>

This calculation can be expressed as follows:

YIELD = 2 [(a - b + 1) 6 - 1]
cd
<TABLE>
<CAPTION>
<S> <C>

Where: a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the period that
were entitled to receive dividends
d = maximum offering price per share on the last day of the period
</TABLE>

For the purpose of determining net investment income earned during the
period (variable "a" in the formula), dividend income on equity securities held
by a Fund is recognized by accruing 1/360 of the stated dividend rate of the
security each day that the security is in the Fund. Except as noted below,
interest earned on any debt obligations held by a Fund is calculated by
computing the yield to maturity of each obligation held by that Fund based on
the market value of the obligation (including actual accrued interest) at the
close of business on the last business day of the month, the purchase price
(plus actual accrued interest) and dividing the result by 360 and multiplying
the quotient by the market value of the obligation (including actual accrued
interest) in order to determine the interest income on the obligation for each
day of the subsequent month that the obligation is held by that Fund. For
purposes of this calculation, it is assumed that each month contains 30 days.
The date on which the obligation reasonably may be expected to be called or, if
none, the maturity date. With respect to debt obligations purchased at a
discount or premium, the formula generally calls for amortization of the
discount premium. The amortization schedule will be adjusted monthly to reflect
changes in the market values of such debt obligations.

Expenses accrued for the period (variable "b" in the formula) include
all recurring fees charged by a Fund to all shareholder accounts in proportion
to the length of the base period and the Fund's mean (or median) account size.
Undeclared earned income will be subtracted from the offering price per capital
share (variable "d" in the formula).

Interest earned on tax-exempt obligations that are issued without
original issue discount and have a current market discount is calculated by
using the coupon rate of interest instead of the yield to maturity. In the case
of tax-exempt obligations that are issued with original issue discount but which
have discounts based on current market value that exceed the then-remaining
portion of the original discount (market discount), the yield to maturity is the
imputed rate based on the original issue discount calculation. On the other
hand, in the case of tax-exempt obligations that are issued with original issue
discount but which have discounts based on current market value that are less
than the then-remaining portion of the original discount (market premium), the
yield to maturity is based on the market value.

With respect to mortgage- or other receivables-backed obligations which
are expected to be subject to monthly payments of principal and interest
("pay-downs"): (i) gain or loss attributable to actual monthly pay-downs are
accounted for as an increase or decrease to interest income during the period;
and (ii) each Fund may elect either (a) to amortize the discount and premium on
the remaining security, based on the cost of the security, to the weighted
average maturity date, if such information is available, or to the remaining
term of the security, if any, if the weighted average date is not available or
(b) not to amortize discount or premium on the remaining security.

For the 30-day period ended October 31, 1999, Alleghany/Chicago Trust
Bond Fund had a yield of 6.56%.

For the 30-day period ended October 31, 1999, Alleghany/Chicago Trust
Municipal Bond Fund had a yield of 4.77%.

Tax-Equivalent Yield of Alleghany/Chicago Trust Municipal Bond Fund

The "tax-equivalent yield" of Alleghany/Chicago Trust Municipal Bond
Fund is computed by (a) dividing the portion of the yield (calculated as above)
that is exempt from Federal income tax by one minus a stated Federal income tax
rate and (b) adding to that figure to that portion, if any, of the yield that is
not exempt from Federal income tax.

The tax-equivalent yield of this Fund reflects the taxable yield that
an investor at the stated marginal Federal income tax rate would have to receive
to equal the primarily tax-exempt yield from Alleghany/Chicago Trust Municipal
Bond Fund. Before investing in this Fund, you may want to determine which
investment - tax free or taxable - will result in a higher after-tax yield. To
do this, divided the yield on the tax-free investment by the decimal determined
by subtracting from one the highest Federal tax rate you pay. For example, if
the tax-free yield is 5% and your maximum tax bracket is 36%, the computation
is:

5% Tax-Free Yield / (1.00 - 0.36 Tax Rate) = 5%/0.64 = 7.81% Tax Equivalent
Yield

In this example, your after-tax return would be higher from the 5%
tax-free investment if available taxable yields are below 7.81%. Conversely, the
taxable investment would provide a higher yield when taxable yields exceed
7.81%.

For the 30-day period ended October 31, 1999, Alleghany/Chicago Trust
Municipal Bond Fund had a tax-equivalent yield of 7.45% based on the tax-free
yield of 4.77% shown above, and assuming a shareholder is at the 36% Federal
income tax rate.

OTHER INFORMATION

Statements contained in the Prospectus or in this Statement of
Additional Information as to the contents of any contract or other document
referred to are not necessarily complete. In each instance reference is made to
the copy of such contract or other document filed as an exhibit to the
Registration Statement of which the Prospectus and this Statement of Additional
Information forms a part. Each such statement is qualified in all respects by
such reference.

Description of Shares

Each Fund is authorized to issue an unlimited number of shares of
beneficial interest without par value. Currently, there is only one class of
shares issued by the Funds of the Company, except for Montag & Caldwell Growth
Fund, Alleghany/Chicago Trust Growth & Income Fund, Alleghany/Blairlogie
International Developed Fund, Alleghany/Blairlogie Emerging Markets Fund, Montag
& Caldwell Balanced Fund and Alleghany/Chicago Trust Bond Fund. These Funds
offers two classes of shares: Class N shares and Class I shares. Since each
class has different expenses, i.e., Class I shares do not pay a distribution
plan fee, performance will vary and it is anticipated that the Class N dividends
will be lower than the Class I dividends. Shares of each Fund represent equal
proportionate interests in the assets of that Fund only and have identical
voting, dividend, redemption, liquidation and other rights except that Class I
shares of Montag & Caldwell Growth Fund, Alleghany/Chicago Trust Growth & Income
Fund, Alleghany/Blairlogie International Developed Fund, Alleghany/Blairlogie
Emerging Markets Fund, Montag & Caldwell Balanced Fund and Alleghany/Chicago
Trust Bond Fund have no rights with respect to that Fund's distribution plan.
All shares issued are fully paid and non-assessable, and shareholders have no
preemptive or other right to subscribe to any additional shares and no
conversion rights. Information about Class I shares is available by calling the
Fund at 800 992-8151.

Class I shares of Montag & Caldwell Growth Fund, Alleghany/Chicago
Trust Growth & Income Fund, Alleghany/Blairlogie International Developed Fund,
Alleghany/Blairlogie Emerging Markets Fund, Montag & Caldwell Balanced Fund and
Alleghany/Chicago Trust Bond Fund may be purchased directly from the Funds at
the net asset value next determined after receipt of the order in proper form.
The minimum initial investment is $5 million for Montag & Caldwell Growth Fund
and Alleghany/Chicago Trust Growth & Income Fund, $2 million for
Alleghany/Chicago Trust Bond Fund and $1 million for Montag & Caldwell Balanced
Fund, Alleghany/Blairlogie International Developed Fund and Alleghany/Blairlogie
Emerging Markets Fund. There is no minimum subsequent investment. For purposes
of the investment minimum, the balances of Fund accounts of clients of a
financial consultant may be aggregated in determining whether the minimum
investment has been met. This aggregation may also be applied to the accounts of
immediate family members (i.e., a person's spouse, parents, children, siblings
and in-laws). In addition, the aggregation may be applied to the related
accounts of a corporation or other legal entity. The Funds may waive the minimum
initial investment by obtaining a letter of intent, evidencing an investor's
intention of meeting the minimum initial investment in a specified period of
time as continually reviewed and approved by the Board. The minimum investment
is waived for Trustees of the Trust and employees of the Investment Adviser and
its affiliates. There is no sales load or charge in connection with the purchase
of shares. The Company reserves the right to reject any purchase order and to
suspend the offering of shares of the Funds. The Funds also reserve the right to
change the initial and subsequent investment minimums.

Voting Rights

Each issued and outstanding full and fractional share of a Fund is
entitled to one full and fractional vote in the Fund. Shares of a Fund
participate equally in regard to dividends, distributions and liquidations with
respect to that Fund subject to preferences (such as Rule 12b-1 distribution
fees), rights or privileges of any share class. Shareholders have equal
non-cumulative voting rights. Class N shares have exclusive voting rights with
respect to the distribution plan. On any matter submitted to a vote of
shareholders, shares of each Fund will vote separately except when a vote of
shareholders in the aggregate is required by law, or when the Trustees have
determined that the matter affects the interests of more than one Fund, in which
case the shareholders of all such Funds shall be entitled to vote thereon.

Shareholder Meetings

The Trustees of the Company do not intend to hold annual meetings of
shareholders of the Funds. The Trustees have undertaken to the SEC, however,
that they will promptly call a meeting for the purpose of voting upon the
question of removal of any Trustee when requested to do so by not less than 10%
of the outstanding shareholders of the Funds. In addition, subject to certain
conditions, shareholders of the Funds may apply to the Company to communicate
with other shareholders to request a shareholders' meeting to vote upon the
removal of a Trustee or Trustees.

Certain Provisions of Trust Instrument

Under Delaware law, the shareholders of the Funds will not be
personally liable for the obligations of any Fund; a shareholder is entitled to
the same limitation of personal liability extended to shareholders of
corporations. To guard against the risk that the Delaware law might not be
applied in other states, the Trust Instrument requires that every written
obligation of the Company or a Fund contain a statement that such obligation may
only be enforced against the assets of the Company or Fund and provides for
indemnification out of Company or Fund property of any shareholder nevertheless
held personally liable for Company or Fund obligations.

Expenses

Expenses attributable to the Company, but not to a particular Fund,
will be allocated to each Fund on the basis of relative net assets. Similarly,
expenses attributable to a particular Fund, but not to a particular class
thereof, will be allocated to each class on the basis of relative net assets.
General Company expenses may include but are not limited to: insurance premiums,
Trustee fees, expenses of maintaining the Company's legal existence, and fees of
industry organizations. General Fund expenses may include but are not limited
to: audit fees, brokerage commissions, registration of Fund shares with the SEC,
notification fees to the various state securities commissions, fees of the
Funds' Custodian, Administrator, Sub-Administrator and Transfer Agent or other
"service providers", costs of obtaining quotations of portfolio securities and
pricing of Fund shares.

Class-specific expenses relating to distribution fee payments
associated with a Rule 12b-1 plan for a particular class of shares and any other
costs relating to implementing or amending such plan (including obtaining
shareholder approval of such plan or any amendment thereto) will be borne solely
by shareholders of such class or classes. Other expense allocations which may
differ between classes, or which are determined by the Trustees to be class
specific, may include but are not limited to: printing and postage expenses
related to preparing and distributing required documents such as shareholder
reports, prospectuses and proxy statements to current shareholders of a specific
class, SEC registration fees and state "blue sky" fees incurred by a specific
class, litigation or other legal expenses relating to a specific class, expenses
incurred as a result of issues relating to a specific class and different
transfer agency fees attributable to a specific class.

Notwithstanding the foregoing, the Investment Advisers or other service
provider may waive or reimburse the expenses of a specific class or classes to
the extent permitted under Rule 18f-3 under the 1940 Act.

<PAGE>

Custodians

Bankers Trust Company ("Bankers Trust"), 16 Wall Street, New York, New
York 10005 serves as Custodian of the Company's assets, pursuant to a Custodian
Agreement, for the following Funds: Alleghany/Montag & Caldwell Growth Fund,
Alleghany/Chicago Trust Growth & Income Fund, Alleghany/Chicago Trust Talon
Fund, Alleghany/Chicago Trust Small Cap Value Fund, Alleghany/Veredus Aggressive
Growth Fund, Alleghany/Montag & Caldwell Balanced Fund, Alleghany/Chicago Trust
Balanced Fund, Alleghany/Chicago Trust Bond Fund, Alleghany/Chicago Trust
Municipal Bond
Fund and Alleghany/Chicago Trust Money Market Fund.

Investors Fiduciary Trust Company ("IFTC"), 801 Pennsylvania Avenue,
Kansas City, Missouri 64105 serves as Custodian of the Company's assets,
pursuant to a Custodian Agreement, for Alleghany/Blairlogie Emerging Markets
Fund and Alleghany/Blairlogie International Developed Fund.

Under such Agreements, Bankers Trust and IFTC each: (i) maintains a
separate account or accounts in the name of each Fund, (ii) holds and transfers
portfolio securities on account of each Fund, (iii) accepts receipts and makes
disbursements of money on behalf of each Fund, (iv) collects and receives all
income and other payments and distributions on account of each Fund's securities
and (v) makes periodic reports to the Board of Trustees concerning each Fund's
operations.

Transfer Agent

PFPC Inc., 4400 Computer Drive, Westborough, Massachusetts 01581 serves as
Transfer Agent for the Company.

Reports to Shareholders

Shareholders will receive unaudited semi-annual reports describing the
Funds' investment operations and annual financial statements audited by the
Funds' independent certified public accountants. Inquiries regarding a Fund may
be directed to the Investment Adviser or the Administrator at 800 992-8151.

KPMG LLP, 303 E. Wacker Drive, Chicago, Illinois is the Company's
independent certified public accountants.

<PAGE>

A-1
APPENDIX A

Debt Ratings

Moody's Investors Service, Inc. describes classifications of corporate bonds as
follows:

"Aaa" - These bonds are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as
"gilt-edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong
position of such issues.

"AA" - These bonds are judged to be of high quality by all standards.
Together with the "Aaa" group they comprise what are generally known as
highgrade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in "Aaa" securities or
fluctuation of protective elements may be of greater amplitude or there
may be other elements present which make the long-term risks appear
somewhat larger than in "Aaa" securities.

"A" - These bonds possess many favorable investment attributes and are to
be considered as upper medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but
elements may be present which suggest a susceptibility to impairment
sometime in the future.

"Baa" - These bonds are considered as medium-grade obligations, i.e., they
are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics
as well.

"Ba" - These bonds are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty
of position characterizes bonds in this class.

"B" - These bonds generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.

"Caa" - These bonds are of poor standing. Such issues may be in default or
there may be present elements of danger with respect to principal or
interest.

"Ca" - These bonds represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked
shortcomings.

"C" - These bonds are the lowest-rated class of bonds and issues so rated
can be regarded as having extremely poor prospects of ever attaining
any real investment standing.

Moody's may modify a rating of "Aa", "A" or "Baa" by adding numerical modifiers
1, 2, 3 to show relative standing within these categories.

<PAGE>

A-2
Standard & Poor's Corporation describes classifications of corporate and
municipal debt as follows:

"AAA" - This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay interest
and repay principal.

"AA" - These bonds also qualify as high-quality debt obligations. Their
capacity to pay interest and repay principal is very strong and differs
from the "AAA" issues only in small degree.

"A" - These bonds have a strong capacity to pay interest and repay
principal, although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt
in higher rated categories.

"BBB" - These bonds are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than for bonds
in the higher rated categories.

"BB", "B", "CCC", "CC", or "C" - These bonds are regarded as having
predominantly speculative characteristics with respect to the issuer's capacity
to pay interest and repay principal. "BB" indicates the lowest degree of
speculation and "C" the highest degree of speculation. While such bonds will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties or major exposures to adverse conditions. Debt rated "BB"
has less near-term vulnerability to default than other speculative issues.
However, it faces major ongoing uncertainties or exposure to adverse business,
financial or economic conditions which could lead to inadequate capacity to meet
timely interest and principal payments. The "BB" rating category is also used
for debt subordinated to senior debt that is assigned an actual or implied
"BBB-" rating. Debt rated "B" has a greater vulnerability to default but
currently has the capacity to meet interest payments and principal repayments.
Debt rated "CCC" has a currently identifiable vulnerability to default and is
dependent upon favorable business, financial and economic conditions to meet
timely payments of interest and repayment of principal. The rating "CC" is
typically applied to debt subordinated to senior debt which is assigned an
actual or implied "CCC" rating. The rating "C" is typically applied to debt
subordinated to senior debt which is assigned an actual or implied "CCC-" debt
rating.

"CI" - This rating is reserved for income bonds on which no interest is being
paid.

"D" - Debt is in default and payment of interest and/or repayment of principal
is in arrears.

PLUS (+) OR MINUS (-) - The ratings from "AA" through "CCC" may be modified by
the addition of a plus or minus sign to show relative standing within the major
rating categories.

<PAGE>

APPENDIX B

FINANCIAL STATEMENTS

for

Fiscal Year Ended
October 31, 1999

ANNUAL REPORT TO SHAREHOLDERS

<PAGE>

A-2
[LOGO] ALLEGHANY FUNDS

ANNUAL REPORT

ALLEGHANY/MONTAG & CALDWELL GROWTH FUND ALLEGHANY/CHICAGO TRUST GROWTH &
INCOME FUND ALLEGHANY/CHICAGO TRUST TALON FUND ALLEGHANY/CHICAGO TRUST SMALL
CAP VALUE FUND ALLEGHANY/VEREDUS AGGRESSIVE GROWTH FUND ALLEGHANY/BLAIRLOGIE
INTERNATIONAL DEVELOPED FUND ALLEGHANY/BLAIRLOGIE EMERGING MARKETS FUND
ALLEGHANY/MONTAG & CALDWELL BALANCED FUND ALLEGHANY/CHICAGO TRUST BALANCED
FUND ALLEGHANY/CHICAGO TRUST BOND FUND ALLEGHANY/CHICAGO TRUST MUNICIPAL BOND
FUND ALLEGHANY/CHICAGO TRUST MONEY MARKET FUND

OCTOBER 31, 1999

<PAGE>

[LOGO] ALLEGHANY FUNDS

Dear Fellow Shareholder,

As 1999 draws to a close, let me take this opportunity to thank you for
entrusting us to meet your investment needs.

This year has brought continued success to Alleghany Funds, both in our
investment returns and in our continuing evolution as a growing mutual fund
family. The addition of our two international funds, Alleghany/Blairlogie
International Developed Fund and Alleghany/Blairlogie Emerging Markets Fund, has
expanded our investment vistas into foreign lands, while Alleghany/Chicago Trust
Small Cap Value Fund and Alleghany/Veredus Aggressive Growth Fund have broadened
our investment options to include the full spectrum of small cap stocks.

In addition, we have completely revamped our Web site, www.AlleghanyFunds.com.
We view our Web site as an ideal way to share information with you, our
shareholders. On the new site, we have included educational resources and
planning tools to help you with your overall investment portfolio, as well as to
provide extensive details on our Funds. We have even included audio interviews
with our Fund managers as another way to provide you with essential information.
We will continue to explore additional ways in which the Internet and other
electronic communications can better serve your needs.

At the time of this writing, assets in Alleghany Funds have topped $5 billion
for the first time. While this landmark certainly owes a lot to the market
environment of the last few years, it also reflects the tremendous confidence
you have placed in us. We achieved this level of success by adhering to our
stated goal of disciplined, institutional investing, and you can be assured that
this goal has not and will not change going forward. Your trust is our most
important asset, and we will continue to strive to earn that trust as we move
forward into the new millennium.

Sincerely,

/s/ Kenneth C. Anderson

Kenneth C. Anderson
President

ALLEGHANY FUNDS ARE NO-LOAD MUTUAL FUNDS DISTRIBUTED BY PROVIDENT DISTRIBUTORS,
INC., WEST CONSHOHOCKEN, PA 19428-2901. 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 PRINCIPAL 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.

Shareholder Services 800 992-8151 www.AlleghanyFunds.com
THE CHICAGO TRUST COMPANY - MONTAG & CALDWELL - VEREDUS ASSET MANAGEMENT -
BLAIRLOGIE CAPITAL MANAGEMENT

<PAGE>
CONTENTS

<TABLE>
<S> <C>
SUMMARY INFORMATION 2
-----------------------------------------------------------------

PORTFOLIO MANAGER COMMENTARY:
-----------------------------------------------------------------

ALLEGHANY/MONTAG & CALDWELL GROWTH FUND 5
-----------------------------------------------------------------

ALLEGHANY/CHICAGO TRUST GROWTH & INCOME FUND 6
-----------------------------------------------------------------

ALLEGHANY/CHICAGO TRUST TALON FUND 7
-----------------------------------------------------------------

ALLEGHANY/CHICAGO TRUST SMALL CAP VALUE FUND 8
-----------------------------------------------------------------

ALLEGHANY/VEREDUS AGGRESSIVE GROWTH FUND 9
-----------------------------------------------------------------

ALLEGHANY/BLAIRLOGIE INTERNATIONAL DEVELOPED FUND 10
-----------------------------------------------------------------

ALLEGHANY/BLAIRLOGIE EMERGING MARKETS FUND 11
-----------------------------------------------------------------

ALLEGHANY/MONTAG & CALDWELL BALANCED FUND 12
-----------------------------------------------------------------

ALLEGHANY/CHICAGO TRUST BALANCED FUND 13
-----------------------------------------------------------------

ALLEGHANY/CHICAGO TRUST BOND FUND 14
-----------------------------------------------------------------

ALLEGHANY/CHICAGO TRUST MUNICIPAL BOND FUND 15
-----------------------------------------------------------------

ALLEGHANY/CHICAGO TRUST MONEY MARKET FUND 16
-----------------------------------------------------------------

SCHEDULE OF INVESTMENTS:
-----------------------------------------------------------------

ALLEGHANY/MONTAG & CALDWELL GROWTH FUND 17
-----------------------------------------------------------------

ALLEGHANY/CHICAGO TRUST GROWTH & INCOME FUND 18
-----------------------------------------------------------------

ALLEGHANY/CHICAGO TRUST TALON FUND 19
-----------------------------------------------------------------

ALLEGHANY/CHICAGO TRUST SMALL CAP VALUE FUND 20
-----------------------------------------------------------------

ALLEGHANY/VEREDUS AGGRESSIVE GROWTH FUND 22
-----------------------------------------------------------------

ALLEGHANY/BLAIRLOGIE INTERNATIONAL DEVELOPED FUND 23
-----------------------------------------------------------------

ALLEGHANY/BLAIRLOGIE EMERGING MARKETS FUND 26
-----------------------------------------------------------------

ALLEGHANY/MONTAG & CALDWELL BALANCED FUND 30
-----------------------------------------------------------------

ALLEGHANY/CHICAGO TRUST BALANCED FUND 33
-----------------------------------------------------------------

ALLEGHANY/CHICAGO TRUST BOND FUND 36
-----------------------------------------------------------------

ALLEGHANY/CHICAGO TRUST MUNICIPAL BOND FUND 38
-----------------------------------------------------------------

ALLEGHANY/CHICAGO TRUST MONEY MARKET FUND 41
-----------------------------------------------------------------

STATEMENT OF ASSETS AND LIABILITIES 44
-----------------------------------------------------------------

STATEMENT OF OPERATIONS 48
-----------------------------------------------------------------

STATEMENT OF CHANGES IN NET ASSETS 52
-----------------------------------------------------------------

FINANCIAL HIGHLIGHTS 58
-----------------------------------------------------------------

NOTES TO FINANCIAL STATEMENTS 73
-----------------------------------------------------------------

INDEPENDENT AUDITORS' REPORT 80
-----------------------------------------------------------------
</TABLE>

THE CHICAGO TRUST COMPANY With roots going back to
1887, Chicago Trust manages portfolios for mutual fund,
institutional and high net worth clients. The firm also
provides investment, trustee and administrative
services for pension, profit sharing and 401(k) plans.

MONTAG & CALDWELL, INC.
Founded in 1945 in Atlanta, Montag & Caldwell is one of
the oldest and most well-respected investment
counseling firms in the Southeast. The firm manages
investments for institutions and retirement plans, as
well as for individual clients.

VEREDUS ASSET MANAGEMENT LLC A specialist in small
company growth stocks, Veredus manages institutional
accounts, individual client accounts and mutual funds
and is based in Louisville, Kentucky. The firm was
founded by B. Anthony Weber, a former principal with
Fred Alger & Co., a well-known New York-based growth
stock research and investment firm.

BLAIRLOGIE CAPITAL MANAGEMENT Based in Edinburgh,
Scotland, Blairlogie specializes in managing
international and emerging market portfolios for
institutions and mutual funds. The firm is a registered
investment advisor in the United States and the United
Kingdom.
<PAGE>
ALLEGHANY FUNDS
- ------------------------------------

PERFORMANCE FOR THE FISCAL YEAR ENDED OCTOBER 31, 1999
SUMMARY INFORMATION

<TABLE>
<CAPTION>
ALLEGHANY/CHICAGO TRUST GROWTH
&
ALLEGHANY/MONTAG & CALDWELL GROWTH FUND INCOME FUND
CLASS N CLASS I
<S> <C> <C> <C>
TOTAL RETURNS:
One Year................ 29.34% 29.78% 27.71%
Three Year
Average Annual........ 26.84% 27.24% 26.10%
Five Year
Average Annual........ N/A N/A 26.78%
Average Annual
Since Inception....... 28.48% 27.67% 22.71%
Date.................... 11/02/94 06/28/96 12/13/93
</TABLE>

TOP TEN HOLDINGS

<TABLE>
<CAPTION>
as of October 31, 1999 as of October 31, 1999
<S> <C> <C> <C>
COMPANY AND % OF TOTAL NET ASSETS
Procter & Gamble Co............... 5.10% Sun Microsystems, Inc............. 4.73%
Pfizer, Inc....................... 4.77% Sysco Corp........................ 4.01%
MCI WorldCom, Inc................. 4.64% EMC Corp.......................... 3.82%
Coca-Cola Co...................... 4.55% Tellabs, Inc...................... 3.74%
Computer Associates International,
Johnson & Johnson................. 4.39% Inc............................... 3.52%
Bristol-Myers Squibb Co........... 4.12% Cisco Systems, Inc................ 3.48%
Home Depot, Inc................... 4.05% Paychex, Inc...................... 3.39%
Gillette Co....................... 3.91% Illinois Tool Works, Inc.......... 2.97%
McDonald's Corp................... 3.87% General Electric Co............... 2.95%
American International Group,
General Electric Co............... 3.64% Inc............................... 2.92%
</TABLE>

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
ALLEGHANY/CHICAGO TRUST TALON FUND ALLEGHANY/CHICAGO TRUST SMALL
CAP VALUE FUND
<S> <C> <C>
TOTAL RETURNS:
One Year................ 2.32% N/A
Three Year
Average Annual........ 6.91% N/A
Five Year
Average Annual........ 12.95% N/A
Average Annual
Since Inception....... 13.18% N/A
Date.................... 09/19/94 11/10/98
</TABLE>

TOP TEN HOLDINGS

<TABLE>
<CAPTION>
as of October 31, 1999 as of October 31, 1999
<S> <C> <C> <C>
COMPANY AND % OF TOTAL NET ASSETS
Manpower, Inc..................... 5.69% Gallagher (Arthur J.) & Co........ 3.55%
American Power Conversion Corp.... 5.61% Meredith Corp..................... 3.18%
True North Communications, Inc.... 5.27% Houghton Mifflin Co............... 3.18%
Sensormatic Electronics Corp...... 5.16% AGCO Corp......................... 2.91%
Mentor Graphics Corp.............. 4.22% Milacron, Inc..................... 2.62%
CNF Transportation, Inc........... 3.57% Newport News Shipbuilding, Inc.... 2.52%
Wallace Computer Services, Inc.... 3.52% Commercial Federal Corp........... 2.51%
Saks, Inc......................... 3.52% Cytec Industries, Inc............. 2.50%
Centex Construction Products,
ACNielsen Corp.................... 3.38% Inc............................... 2.50%
Walden Residential Properties,
Scholastic Corp................... 3.33% Inc............................... 2.48%
</TABLE>

- - 2
<PAGE>

<TABLE>
<CAPTION>
ALLEGHANY/BLAIRLOGIE
INTERNATIONAL
ALLEGHANY/VEREDUS AGGRESSIVE GROWTH FUND (A) DEVELOPED FUND (B)
CLASS N
CLASS I
<S> <C> <C> <C>
TOTAL RETURNS:
One Year................ 92.92% 16.66%
17.12%
Three Year
Average Annual........ N/A 11.21%
11.57%
Five Year
Average Annual........ N/A N/A
9.72%
Average Annual
Since Inception....... 46.29% 10.84%
10.62%
Date.................... 06/30/98 11/30/94
06/08/93
</TABLE>

TOP TEN HOLDINGS

<TABLE>
<CAPTION>
as of October 31, 1999 as of October 31, 1999
<S> <C> <C> <C>
COMPANY AND % OF TOTAL NET ASSETS
JDS Uniphase Corp................. 5.24% WEBS Japan Index Series........... 4.42%
Electroglas, Inc.................. 3.82% Sweden Opal, 18.526%, 04/07/07.... 2.55%
Terayon Communication Systems,
Inc............................. 3.63% Roche Holding AG.................. 1.64%
LaserSight Inc.................... 3.24% Total Fina SA, Class B............ 1.64%
Varian Semiconductor Equipment France Telecom SA................. 1.64%
Associates, Inc................. 3.03% Deutsche Telekom AG............... 1.62%
TriQuint Semiconductor, Inc....... 2.97% Nokia Oyj......................... 1.59%
ANADIGICS, Inc.................... 2.89% Royal Dutch Petroleum Co.......... 1.52%
ANTEC Corp........................ 2.86% Novartis AG....................... 1.50%
Nippon Telegraph & Telephone
PRI Automation, Inc............... 2.72% Corp.............................. 1.39%
Powerwave Technologies, Inc....... 2.72%
</TABLE>

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
ALLEGHANY/BLAIRLOGIE EMERGING
MARKETS FUND (C) ALLEGHANY/MONTAG & CALDWELL BALANCED
FUND
CLASS N CLASS I CLASS N CLASS I
<S> <C> <C> <C> <C>
TOTAL RETURNS:
One Year................ 32.68% 33.07% 17.83% N/A
Three Year
Average Annual........ (2.59)% (2.27)% 18.78% N/A
Five Year
Average Annual........ (7.11)% (6.85)% N/A N/A
Average Annual
Since Inception....... (7.54)% 2.89% 20.10% N/A
Date.................... 10/20/94 06/01/93 11/02/94 12/31/98
</TABLE>

TOP TEN HOLDINGS

<TABLE>
<CAPTION>
as of October 31, 1999 as of October 31, 1999
<S> <C> <C> <C>
COMPANY AND % OF TOTAL NET ASSETS
Telefonos de Mexico SA, SP ADR.... 4.13% Procter & Gamble Co............... 3.26%
Magyar Tavkozlesi, Rights......... 2.86% Coca-Cola Co...................... 2.94%
Samsung Electronics............... 2.84% Pfizer, Inc....................... 2.83%
Taiwan Fund, Inc.................. 2.64% MCI WorldCom, Inc................. 2.76%
Telecomunicacoes Brasileiras SA, Bristol-Myers Squibb Co........... 2.70%
Pfd Block, SP ADR............... 2.18% Johnson & Johnson................. 2.67%
Winbond Electronic Corp., GDR..... 2.04% General Electric Co............... 2.67%
Compania Anonima Nacional
Telefonos McDonald's Corp................... 2.63%
de Venezuela, ADR............... 1.95% Home Depot, Inc................... 2.55%
Korea Electric Power Corp......... 1.90% U.S. Treasury Bond
Korea Fund........................ 1.73% 8.125%, 08/15/19.................. 2.46%
Turkiye Is Bankasi, Class C....... 1.61%
</TABLE>

- ---------------------------------------------------------

<TABLE>
<C> <S>
(a) Prior to December 7, 1999, the performance figures
reflected are those of a predecessor fund, Veredus
Growth Fund.
(b) Prior to May 1, 1999, the performance figures reflected
are those of a predecessor fund, PIMCO International
Developed Fund.
(c) Prior to May 1, 1999, the performance figures reflected
are those of a predecessor fund, PIMCO Emerging Markets
Fund.
</TABLE>

- 3
<PAGE>
ALLEGHANY FUNDS
- ------------------------------------

PERFORMANCE FOR THE FISCAL YEAR ENDED OCTOBER 31, 1999
SUMMARY INFORMATION -- CONTINUED

<TABLE>
<CAPTION>
ALLEGHANY/CHICAGO TRUST BALANCED FUND ALLEGHANY/CHICAGO TRUST
BOND FUND
<S> <C> <C>
TOTAL RETURNS:
One Year................ 17.26% 1.02%
Three Year
Average Annual........ 18.62% 5.79%
Five Year
Average Annual........ N/A 7.54%
Average Annual
Since Inception....... 18.04% 5.78%
Date.................... 09/21/95 12/13/93
</TABLE>

TOP TEN HOLDINGS

<TABLE>
<CAPTION>
as of October 31, 1999 as of October 31, 1999
<S> <C> <C> <C>
COMPANY AND % OF TOTAL NET ASSETS
U.S. Treasury Note, 6.125%,
EMC Corp.......................... 2.98% 08/15/07.......................... 2.98%
Sysco Corp........................ 2.61% Federal National Mortgage Assoc.
Cisco Systems, Inc................ 2.52% 5.625%, 03/15/01.................. 2.98%
U.S. Treasury Note, 5.750%,
Tellabs, Inc...................... 2.36% 08/15/03.......................... 2.97%
General Electric Co............... 2.30% Federal Home Loan Mortgage Corp.
Harley-Davidson, Inc.............. 1.81% 5.750%, 07/15/03.................. 2.94%
U.S. Treasury Bond, 6.000%,
Paychex, Inc...................... 1.81% 02/15/26.......................... 2.84%
U.S. Treasury Note, 6.375%,
Sun Microsystems, Inc............. 1.80% 08/15/02.......................... 2.66%
U.S. Treasury Bond, 6.250%,
Solectron Corp.................... 1.79% 08/15/23.......................... 2.20%
American International Group,
Inc............................. 1.75% Federal National Mortgage Assoc.
Pool# 442329, 6.500%,
10/01/28...................... 2.06%
Federal Home Loan Mortgage Corp.
Gold Pool# E00619, 6.500%,
01/01/14...................... 2.04%
Province of Mendoza
Collateral Oil Royalty Note
10.000%, 07/25/02............... 2.03%
</TABLE>

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
ALLEGHANY/CHICAGO TRUST MUNICIPAL BOND FUND
<S> <C> <C>
TOTAL RETURNS:
One Year................ (1.77)%
Three Year
Average Annual........ 3.11%
Five Year
Average Annual........ 4.42%
Average Annual
Since Inception....... 3.40%
Date.................... 12/13/93
</TABLE>

TOP TEN HOLDINGS

<TABLE>
<CAPTION>
as of October 31, 1999
<S> <C> <C> <C>
COMPANY AND % OF TOTAL NET ASSETS
Green Bay, Series A, G.O. Kentucky State Turnpike Authority
5.100%, 04/01/00................ 2.92% Economic Development Revenue
King County, Series A, G.O. 5.700%, 01/01/03................ 2.10%
5.800%, 01/01/04................ 2.87% State of New Jersey Transportation
Salt River Project Electric System Trust Fund Revenue, Series A
Revenue Refunding, Series A Escrowed to Maturity
5.500%, 01/01/05................ 2.70% 5.200%, 12/15/00.................. 2.06%
San Francisco City & County
Commonwealth of Puerto Rico Airports
Revenue Series A, G.O. Series 23-A
6.500%, 07/01/03................ 2.49% 5.500%, 05/01/10.................. 2.06%
Clark County, Nevada School Utah State Building Ownership
District, G.O. Authority
6.400%, 06/15/06................ 2.21% Lease Revenue, Series A, State
State of Mississippi, Series I Facilities Master Lease PG-C
5.750%, 11/01/09................ 2.12% 5.500%, 05/15/11.................. 2.05%
</TABLE>

- - 4
<PAGE>
ALLEGHANY FUNDS
- --------------------------------
ALLEGHANY/MONTAG & CALDWELL GROWTH FUND
PORTFOLIO MANAGER COMMENTARY OCTOBER 31, 1999

[PHOTO]
RONALD E. CANAKARIS, CFA

Q How has the Fund performed during the last year?

A Despite a volatile economy and rocky market, Alleghany/Montag & Caldwell
Growth Fund, Class N and Class I, showed increases of 29.34% and 29.78%,
respectively, for the 12 months ended October 31, 1999. During this same time
period, the Standard & Poor's-Registered Trademark- 500 Stock Index
(S&P-Registered Trademark- 500 Index) recorded investment returns of 25.67%.
We attribute the Fund's ability to outperform the benchmark to the strength
in the portfolio's technology stocks offsetting weakness in certain consumer
and health care issues.

Q How has the market and economy affected the Fund's performance?

A While the majority of stock prices have been down since the end of March
1999, the large-cap segment of the stock market as measured by the
S&P-Registered Trademark- 500 Index has essentially fluctuated in a trading
range over the past six months. This trading range has been supported by
better than expected corporate profits but held back by higher interest
rates. Until it is evident to investors that the Federal Reserve has
succeeded in slowing the economy to a sustainable and more moderate rate of
growth with continued low inflation, it is likely that this trading range
will persist.

During the year, we continued to favor the shares of consumer global growth
companies, well-positioned pharmaceutical and medical device companies and
high-quality, high-growth technology enterprises that have staying power.
While some of the Fund's holdings in consumer global growth companies
remained weak, we believe a significant pick-up in earnings growth may occur
for these high-quality companies as we head into the new millennium.
Research-driven pharmaceutical and medical device companies should perform
better in the period ahead because they offer an attractive combination of
value and double-digit earnings growth prospects. Selected technology
holdings remain attractive as global industry conditions improve and the
build-out of the Internet further stimulates product demand.

Q What is your outlook?

A We believe the Federal Reserve will be successful in its efforts and that the
stock market will eventually exit the current period of consolidation and
move to higher levels. Meanwhile, we are maintaining some cash reserves and
using them to take advantage of attractive buying opportunities as they
present themselves.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
PORTFOLIO ALLOCATION BY MARKET SECTOR
<S> <C>
Technology 18%
Other Common Stocks 19%
Consumer Non-Durables 15%
Health Care Services 9%
Finance 8%
Retail 8%
Telecommunications 7%
Cash and Other Net Assets 6%
Food and Beverage 5%
Medical Supplies 5%
</TABLE>

ALLEGHANY/MONTAG & CALDWELL
GROWTH FUND--CLASS N
GROWTH OF $10,000

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
S&P-REGISTERED TRADEMARK- 500 INDEX LIPPER GROWTH FUND INDEX ALLEGHANY/MONTAG & CALDWELL
GROWTH FUND CLASS N SHARES
<S> <C> <C> <C>
11/94 $10,000 $10,000 $10,000
4/95 $11,046 $10,699 $10,999
10/95 $12,641 $12,398 $13,187
4/96 $14,380 $13,789 $15,065
10/96 $15,685 $14,498 $17,131
4/97 $17,992 $15,733 $19,245
10/97 $20,720 $18,617 $22,925
4/98 $25,381 $21,995 $27,690
10/98 $25,277 $21,199 $27,027
4/99 $30,916 $26,225 $33,408
10/99 $31,761 $27,416 $34,958
</TABLE>

THIS CHART COMPARES A $10,000 INVESTMENT MADE IN CLASS N SHARES OF THE FUND ON
ITS INCEPTION DATE TO $10,000 INVESTMENTS MADE IN THE INDICES (S&P-REGISTERED
TRADEMARK- 500 INDEX AND LIPPER GROWTH FUND INDEX) 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 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
- ------------------------------------
ALLEGHANY/CHICAGO TRUST GROWTH & INCOME FUND
PORTFOLIO MANAGER COMMENTARY OCTOBER 31, 1999

[PHOTO]
BERNARD F. MYSZKOWSKI, CFA

Q How has the Fund performed over the past year?

A For the fiscal year ended October 31, 1999, Alleghany/Chicago Trust Growth &
Income Fund produced a total return of 27.71%. In comparison, the benchmark
S&P-Registered Trademark- 500 Index returned 25.67%, while our peer group,
the Lipper Multi-Cap Growth Index, returned 39.77%.

Q What were the major influences on Fund performance over the past year?

A The Fund's emphasis on technology had a positive impact on performance during
much of the year. Despite the volatile market, the tech-heavy NASDAQ was a
bright spot. With a large percentage of the Fund in the technology sector, we
were able to offset the weakness in the market as a whole. Our positions in
Cisco Systems, Inc. (3.5% of net assets), EMC Corp. (3.8%), and Sun
Microsystems, Inc. (4.7%) were especially noteworthy.

Carnival Corp. (2.0%), the cruise line, was a new addition to the portfolio.
Our research indicated this was a well-run company with good potential for
growth. The strong economy should lead to increased spending on luxury items
and travel.

Q Were there any sectors that negatively influenced the Fund during the year?

A Because of concerns about the Industry's growth potential and an uncertain
regulatory landscape, the Fund reduced its exposure to the health care
industry. Health Management Associates, Inc. and Omnicare, Inc. were both
fully divested. We sold Omnicare as it came under pressure from all of the
questions in Washington regarding the HMO industry. It also fell below our
market limitation of $2 billion. With both holdings, we were able to divest
before any negative implications affected the Fund.

Q What is your outlook for the end of 1999 and the new millennium?

A As 1999 ends, we continue to be optimistic about the economic climate. We
anticipate S&P-Registered Trademark- 500 companies will post attractive
earnings, giving the market some positive news on which to focus. We believe
the portfolio is in excellent shape to carry us through the rest of this year
and into the 21st century.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
PORTFOLIO ALLOCATION BY MARKET SECTOR
<S> <C>
Other Common Stocks 24%
Technology 23%
Finance 13%
Consumer Durables 8%
Cash and Other Net Assets 8%
Consumer Non-Durables 6%
Telecommunications 6%
Capital Goods 4%
Food and Beverage 4%
Health Care Services 4%
</TABLE>

ALLEGHANY/CHICAGO TRUST
GROWTH & INCOME FUND
GROWTH OF $10,000

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
S&P-REGISTERED TRADEMARK- 500 INDEX LIPPER MULTI-CAP GROWTH INDEX ALLEGHANY/CHICAGO TRUST
GROWTH & INCOME FUND
<S> <C> <C> <C>
12/93 $10,000 $10,000 $10,000
4/94 $9,745 $9,954 $9,797
10/94 $10,360 $10,365 $10,173
4/95 $11,444 $11,009 $11,231
10/95 $13,096 $13,041 $13,088
4/96 $14,898 $14,748 $14,983
10/96 $16,250 $15,253 $16,619
4/97 $18,641 $15,785 $18,258
10/97 $21,466 $19,178 $20,801
4/98 $26,293 $22,465 $25,536
10/98 $26,185 $20,456 $26,090
4/99 $32,026 $26,458 $32,936
10/99 $32,902 $28,592 $33,321
</TABLE>

THIS CHART COMPARES A $10,000 INVESTMENT MADE IN THE FUND ON ITS INCEPTION DATE
TO $10,000 INVESTMENTS MADE IN THE INDICES (S&P-REGISTERED TRADEMARK- 500 INDEX,
LIPPER MULTI-CAP GROWTH FUND INDEX) 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 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
- --------------------------------
ALLEGHANY/CHICAGO TRUST TALON FUND
PORTFOLIO MANAGERS COMMENTARY OCTOBER 31, 1999

[PHOTO]
THYRA ZERHUSEN
[PHOTO]
TERRY D. DIAMOND

Q How did Alleghany/Chicago Trust Talon Fund perform during the fiscal year
ended October 31, 1999?

A The Fund produced a total return of 2.32% versus 21.07% for the Fund's
benchmark, the S&P-Registered Trademark- 400 Mid-Cap Index.

Q What factors affected your performance?

A After performing strongly from November 1, 1998 through June 30, 1999, the
stock market weakened considerably in the third calendar quarter in the midst
of rising interest rates, a weakening U.S. dollar and the approaching
uncertainty surrounding Year 2000. While the mid-cap sector benefited in the
second calendar quarter from investors seeking more reasonable valuations
than what were available in the large-cap area, that trend appeared to
diminish or even reverse in the third calendar quarter.

Given the stock market's negative performance in the third calendar quarter,
it is clear that many stocks in the portfolio declined in value. The retail
sector, for example, was particularly disappointing, as investors became
concerned about the slowing economy and the impact of the Internet on
traditional department stores.

Q What is your stock selection criteria, and what meaningful changes have you
made to the Portfolio over the past year?

A Our investment strategy is a bottom-up approach, looking for companies that
are undervalued and inefficiently priced. For example, we believe that
Newbridge Networks Corp. (2.8% of net assets), a maker of telecommunications
equipment, represents attractive value because of its superior technology for
transmitting voice and data at very high speeds over networks. Another
attractive stock is American Power Conversion Corp. (5.6%), a company that
protects computer users ranging from individuals to large corporations from
losing data due to power outages. Its superior product quality and low
production costs have helped the company to gain market share on a consistent
basis. The company also fits another important stock selection criteria in
that its earnings growth rate exceeds its price/ earnings multiple.

Outside of technology, Manpower, Inc. (5.7%), a stock we purchased in the
second calendar quarter, has excellent revenue growth and is expanding
internationally with a particularly strong foothold in Europe. Manpower
provides outsourcing employment services for large multinational companies,
and also provides consulting on local laws and customs regarding wages and
working conditions. True North Communications, Inc. (5.3%), a holding company
for several recently acquired advertising agencies, is another attractive
stock in the portfolio. The company's margins are improving, and it is
benefiting from the boom in Internet advertising.

Q What is your outlook?

A In general, we believe the recent additions to the portfolio possess the
combination of characteristics that we believe position the portfolio:
dedicated management, quality products or services, above-average revenue and
earnings growth, better-than-average balance sheet strength and favorable
industry trends. The portfolio's current price/earnings ratio is 15.5 times
the next four quarters' earnings, while the earnings growth rate is about
19%. The portfolio's debt as a percentage of total capitalization is 25%,
significantly below the average mid-cap stock and the S&P-Registered
Trademark- 500 Index. Consequently, we believe that the Fund contains an
attractively valued selection of stocks.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
PORTFOLIO ALLOCATION BY MARKET SECTOR
<S> <C>
Other Common Stocks 26%
Technology 16%
Business Services 16%
Pharmaceuticals 8%
Retail 7%
Telecommunications 6%
Cash and Other Net Assets 6%
Advertising 5%
Electronics 5%
U.S. Government Obligation 3%
Preferred Stock 2%
</TABLE>

ALLEGHANY/CHICAGO TRUST
TALON FUND
GROWTH OF $10,000

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
S&P 400 MID-CAP INDEX ALLEGHANY/CHICAGO LIPPER MID-CAP VALUE FUND
TRUST TALON FUND
<S> <C> <C> <C>
9/94 $10,000 $10,000 $10,000
10/94 $9,921 $10,250 $9,968
4/95 $10,551 $10,766 $10,489
10/95 $12,025 $12,189 $11,451
4/96 $13,695 $14,580 $13,174
10/96 $14,111 $15,420 $13,733
4/97 $15,082 $16,935 $14,475
10/97 $18,721 $20,582 $17,579
4/98 $22,307 $21,320 $19,858
10/98 $19,974 $18,413 $16,281
4/99 $23,738 $19,624 $18,145
10/99 $24,180 $18,840 $17,782
</TABLE>

THIS CHART COMPARES A $10,000 INVESTMENT MADE IN THE FUND ON ITS INCEPTION DATE
TO $10,000 INVESTMENTS MADE IN THE INDICES (S&P-REGISTERED TRADEMARK- 400
MID-CAP INDEX, LIPPER MID-CAP VALUE INDEX) 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 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
- ------------------------------------
ALLEGHANY/CHICAGO TRUST SMALL CAP VALUE FUND
PORTFOLIO MANAGER COMMENTARY OCTOBER 31, 1999

[PHOTO]
PATRICIA A. FALKOWSKI

Q How did Alleghany/Chicago Trust Small Cap Value Fund perform during the
fiscal year ended October 31, 1999?

A Because the Fund's inception date was slightly less than one year ago, we are
only able to provide return data on a year-to-date basis. Year-to-date, the
Fund produced a total return of --12.32%. In comparison for the same time
frame, the Russell 2000 Index and the Russell 2000 Value Index returned 2.79%
and --4.92%, respectively. While small-cap value as an investment style had
periods of strength during the fiscal year, it continued to lag the larger
market averages such as the S&P-Registered Trademark- 500 Index, which was up
12.03% on a year-to-date basis.

Q What factors affected your performance?

A The period has been markedly difficult for financial services companies
because of the rising interest rate environment. Banks, in particular, are
not able to increase their lending rates as fast as they must boost rates on
deposits. In addition, the interest rate environment suggests a slowdown in
consumer spending, which diminishes lending demand. However, financial
services companies showed some strength at the end of October as it appeared
that interest rates were easing. In addition, Congress passed banking
de-regulation legislation that would put an end to decades-old restrictions
on banking activities.

There were some bright spots in this environment. The portfolio's energy
component, particularly exploration and production companies, have benefited
from the rise in oil prices and the apparent rebound in global economies,
thus boosting potential demand for energy. The hurricanes and tornadoes of
the third quarter, while creating devastating losses, generated a new
business climate for the insurance industry. Currently, one of our favorite
holdings is A.J. Gallagher & Co. (3.5% of net assets), an insurance broker
that is likely to benefit from improved pricing on property and casualty
insurance policies. Another favorite is Houghton-Mifflin Co. (3.2%), a
textbook publisher that is benefiting from the booming population in
school-age children.

Q What is your investment process?

A We select stocks with value and growth in mind. To be considered, a stock has
to be "value" priced, but we are also looking for companies with accelerating
earnings potential. We look for economic and business cycles in which pricing
environments may be improving.

Typically, technology stocks do not fit within our valuation parameters and
they tend to be extremely volatile. They either sell at price/earnings
multiples that are much too high, or, in the case of many Internet companies,
they have not yet turned a profit. However, we did increase our technology
weighting during the quarter, purchasing a semiconductor company and a
manufacturer of computer peripheral equipment.

Q What is your outlook?

A In this segment of the market, investors are seeking companies with
predictable earnings, not just promises. For instance, our specialty chemical
stocks performed well during the first half of the year when the global
recovery became apparent. However, they were sold off in the third quarter
because companies were not receiving the orders as anticipated.

Because growth stock prices are still very high in relation to earnings, we
believe the market will continue to have no tolerance for earnings
disappointments. Because the price/earnings ratio of the Fund is defensive,
at a relatively modest 18 on 1999 earnings and just 12 on 2000 earnings, we
believe that our portfolio is defensive and is not as vulnerable to such
disappointments.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
PORTFOLIO ALLOCATION BY MARKET SECTOR
<S> <C>
Other Common Stocks 30%
Finance 21%
Oil and Gas Extraction 11%
Industrial 9%
Electronics 7%
Printing and Publishing 6%
Capital Goods 5%
Retail 5%
Building and Construction 4%
Cash and Other Net Assets 2%
</TABLE>

ALLEGHANY/CHICAGO TRUST
SMALL CAP VALUE FUND
GROWTH OF $10,000

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
RUSSELL 2000 INDEX ALLEGHANY/CHICAGO TRUST LIPPER SMALL CAP VALUE INDEX
SMALL-CAP VALUE FUND
<S> <C> <C> <C>
Nov-98 $10,000 $10,000 $10,000
Jan-99 $11,324 $9,944 $10,458
Apr-99 $11,517 $9,854 $10,499
Jul-99 $11,878 $9,975 $11,247
Oct-99 $11,487 $9,193 $10,223
</TABLE>

THIS CHART COMPARES A $10,000 INVESTMENT MADE IN THE FUND ON ITS INCEPTION DATE
TO $10,000 INVESTMENTS MADE IN THE INDICES (RUSSELL 2000 INDEX, LIPPER SMALL-CAP
VALUE INDEX) 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 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
- --------------------------------
ALLEGHANY/VEREDUS AGGRESSIVE GROWTH FUND
PORTFOLIO MANAGER COMMENTARY OCTOBER 31, 1999

[PHOTO]
B. ANTHONY WEBER

Q How did Alleghany/Veredus Aggressive Growth Fund perform during the fiscal
year ended October 31, 1999?

A The Fund produced a total return of 92.92%. In comparison, the benchmark
Russell 2000 Index returned 14.87% while our peer group, the Lipper Mid-Cap
Growth Index, produced a return of 55.15%.

Q What factors affected the Fund's performance?

A The main reason the Fund outperformed its benchmark and peer group was our
emphasis on technology, particularly what we call "Internet-enabling"
companies. These companies are businesses that can expand the bandwidth of
the Internet's infrastructure. Current modem capacity is wholly inadequate to
tap the unlimited potential of the Internet. As a result, we have been
focusing on fiber-optic components companies such as JDS Uniphase Corp. (5.2%
of net assets), Powerwave Technologies, Inc. (2.7%), TranSwitch Corp. (1.7%),
and E-Tek Dynamics, Inc. (2.0%) that are enabling that bandwidth to be
expanded. Such Internet enabling firms can do well, although e-commerce
companies themselves have been extremely volatile during the period.

Another strong area for the Fund was in specialty health care companies such
as Arthrocare Corp. (1.3%), an orthopedic device company, and CYTYC Corp.
(2.3%), which has developed a test for cervical cancer that is gaining
popularity with doctors across the country. Although large capitalization
health care companies have had a difficult time in 1999 because of concerns
about Medicare expansion, niche companies have done well. In general, we try
to find companies with large market shares and high barriers to entry.

In a period of rising interest rates, consumer stocks typically come under
pressure, and this year was no exception. Consequently, retailers such as
Ames Department Stores, Inc., Gadzooks, Inc. and Genesco, Inc. performed
poorly for us.

Q What percentage of the portfolio is invested in technology?

A Close to 50% at October 31, but that includes several unrelated segments
including semiconductors, semiconductor equipment companies, software, fiber
optics components companies, cable-related and another in miscellaneous
technology. We believe that the Internet is going to change the way we do
business in this country, and we have only begun to scratch the surface.
Recently, Cisco Systems, one of the world's best managed companies, indicated
that it saved $250 million in 1998 because of efficiencies achieved through
its e-commerce activities. That tells you that the Internet is a very
disinflationary force.

Q What is your outlook?

A Despite a drop in the overall market at the end of the Fund's fiscal year, we
are pleased with the portfolio's performance. Typically, small-cap growth
stocks lead the market up as well as down. That was certainly true during
1996-1998, when small-cap growth had some false starts but suffered very
large corrections when the overall market turned down. In contrast, our
portfolio reached new highs despite a 10% correction in the S&P-Registered
Trademark- 500 Index late in the summer. We remain optimistic about the
portfolio as long as the Federal Reserve refrains from aggressively raising
short-term interest rates over the next several months.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
PORTFOLIO ALLOCATION BY MARKET SECTOR
<S> <C>
Technology 21%
Electronics 19%
Retail 15%
Computer Software 10%
Communications Equipment 9%
Medical Technologies 7%
Other Common Stocks 7%
Telecommunications 5%
Cash and Other Net Assets 4%
Automotive 3%
</TABLE>

ALLEGHANY/VEREDUS
AGGRESSIVE GROWTH FUND
GROWTH OF $10,000

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
RUSSELL 2000 INDEX ALLEGHANY/VEREDUS LIPPER MID-CAP
AGGRESSIVE GROWTH FUND GROWTH INDEX
<S> <C> <C> <C> <C>
Jun-98 $10,000 $10,000 $10,000
Jul-98 $9,190 $9,190 $9,334
Oct-98 $8,311 $8,620 $8,383
Jan-99 $9,411 $11,090 $10,689
Apr-99 $9,571 $12,710 $10,994
Jul-99 $9,871 $14,310 $11,669
Oct-99 $9,547 $16,630 $13,005
</TABLE>

THIS CHART COMPARES A $10,000 INVESTMENT MADE IN THE FUND ON ITS INCEPTION DATE
TO $10,000 INVESTMENTS MADE IN THE INDICES (RUSSELL 2000 INDEX, LIPPER MID-CAP
GROWTH INDEX) 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 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
- ------------------------------------
ALLEGHANY/BLAIRLOGIE INTERNATIONAL DEVELOPED FUND
PORTFOLIO MANAGER COMMENTARY OCTOBER 31, 1999

[PHOTO]
JAMES SMITH

Q How did the Fund perform during the fiscal year ended October 31, 1999?

A Alleghany/Blairlogie International Developed Fund, Class N and Class I,
returned 16.66% and 17.12%, respectively. In comparison, the MSCI EAFE Index,
the Fund's benchmark, rose 23.03%. The underperformance was primarily due to
the portfolio's heavy weighting in poorly performing European markets.

As of October 31, 1999, about 66.40% of the portfolio was invested in
Continental Europe, versus 65.64% for the EAFE Index. The portfolio's major
overweights within Continental Europe include France, Germany, Norway and
Switzerland as well as the peripheral markets of Ireland and Portugal. While
France and Norway have performed well, Germany and Switzerland have lagged.
However, we believe that these markets will begin to benefit as Europe's
economic growth accelerates.

The peripheral markets such as Ireland and Portugal have been strong in terms
of economic growth and have made large gains from falling interest rates in
Europe as it headed towards the Euro last year. However, Portugal's stock
market, for instance, was negatively associated with Brazil's currency
devaluation. In addition, emerging market fund managers sold their holdings
in Portugal when the country joined the MSCI EAFE Index and was elevated to
developed country status. Yet, we expect gross domestic product growth in
Portugal to be 3% over the next 12 months, while we anticipate corporate
profits may advance by 10%.

Q Where were the bright spots for the portfolio?

A The big gainer was the Japanese stock market, much of which was explained by
the strengthening yen. However, the Japanese authorities are becoming quite
concerned about the rapid appreciation of the yen and have recently tried to
intervene to curb the yen's strength to prevent it from damaging the export
sector. In recent months, the portfolio's holdings increased from 21% to 24%
in Japan, making us slightly overweighted compared to MSCI EAFE. However, we
are concerned that the market may have gotten ahead of itself and are looking
to take some profits and trim our Japanese exposure.

Q Where has the portfolio been underweight?

A One major underweight was in the United Kingdom, where economic growth has
been sluggish. Since the UK has underperformed the rest of Europe, our
underweighting has been a positive for the portfolio.

Q What is the Fund's investment approach?

A The portfolio is highly diversified, holding between 200 and 225 stocks, and
we believe that most of the value that we add comes from being in the right
country, the right currencies and the right sectors. Once those parameters
are established, we will tend to buy the highest quality, most liquid stocks
in that category. Although the advent of Euroland was supposed to create a
focus on bottom-up stock picking, the divergence in returns between countries
such as France and Germany shows that the top down approach is still valid.

Q What is your outlook?

A We believe the international developed markets look quite attractive as the
year comes to an end. Although Europe's stock markets have lagged recently,
partly because investors have shifted their attention to Asia, we believe
that economic growth prospects in Europe are good while Asia has stabilized.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
PORTFOLIO ALLOCATION BY MARKET SECTOR
<S> <C>
All Other Common Stocks 32%
Finance 21%
Telecommunications 9%
Electronics 6%
Medical Supplies 6%
Food and Beverage 6%
Utility 5%
Oil and Gas Extraction 5%
Cash and Cash Equivilants 5%
Foreign Index Securities 4%
Preferred Stock 1%
</TABLE>

ALLEGHANY/BLAIRLOGIE
INTERNATIONAL DEVELOPED FUND--CLASS I
GROWTH OF $1,000,000

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
ALLEGHANY/BLAIRLOGIE MSCI EAFE INDEX LIPPER INTERNATIONAL
INTERNATIONAL DEVELOPED FUND INDEX
FUND CLASS I SHARES
<S> <C> <C> <C>
6/93 $1,000,000 $1,000,000 $1,000,000
10/93 $1,074,047 $1,082,035 $1,127,417
4/94 $1,152,572 $1,142,259 $1,209,665
10/94 $1,199,764 $1,191,257 $1,257,133
4/95 $1,214,386 $1,206,077 $1,195,467
10/95 $1,245,267 $1,186,828 $1,251,259
4/96 $1,423,743 $1,343,626 $1,402,596
10/96 $1,373,453 $1,311,105 $1,409,239
4/97 $1,406,182 $1,331,686 $1,532,211
10/97 $1,424,994 $1,371,801 $1,597,597
4/98 $1,729,755 $1,583,573 $1,861,645
10/98 $1,628,811 $1,504,115 $1,671,815
4/99 $1,807,999 $1,733,935 $1,906,711
10/99 $1,907,653 $1,850,568 $2,057,129
</TABLE>

THIS CHART COMPARES A $1,000,000 INVESTMENT MADE IN CLASS I SHARES OF THE FUND
ON ITS INCEPTION DATE TO $1,000,000 INVESTMENTS MADE IN THE INDICES (MSCI EAFE
INDEX, LIPPER INTERNATIONAL FUND INDEX) 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 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
- --------------------------------
ALLEGHANY/BLAIRLOGIE EMERGING MARKETS FUND
PORTFOLIO MANAGER COMMENTARY OCTOBER 31, 1999

[PHOTO]
JAMES SMITH

Q How did Alleghany/Blairlogie Emerging Markets Fund perform during the fiscal
year ended October 31, 1999?

A For much of 1999, emerging markets performed extremely well, but investors
began taking profits in the summer. In addition, the Federal Reserve raised
short-term interest rates in June and August, which adversely affected world
economies reliant on liquidity. For the 12-month period ended October 31,
1999, Alleghany/ Blairlogie Emerging Markets Fund, Class N and Class I,
produced total returns of 32.68% and 33.07%, respectively. In comparison, the
MSCI Emerging Markets Free Index, the Fund's benchmark, returned 44.63%.

Q How has your investment style performed in the current market?

A We take a top-down investment approach, analyzing the fundamentals of the
country before investing in a specific stock. Because of the tremendous
volatility in emerging markets, we tend to buy the largest, most proven
stocks within that market. However, markets do not always respond to
improving economic fundamentals, such as in Latin America, where the Fund was
overweighted. Although our investments in Mexico performed well, as that
country benefits from its trade relationship with the U.S., some of the
smaller Latin American markets struggled. Even with the sharp rebound in oil
prices, markets in Venezuela and Chile performed poorly. Both markets are now
selling at substantial discounts to the average emerging market.

Q Where have been some recent areas of strong performance?

A Despite a devastating earthquake, Turkey's stock market performed well during
the fiscal year, significantly benefiting the Fund. Investors looked past
this catastrophic event and toward the positive economic developments in the
country, including lower interest rates, the prospect of lower inflation and
government reforms. Greece proved to be another strong market with the
prospect of joining the European Monetary Union and the government's effort
to qualify in part by lowering interest rates.

Q Describe the Asian role in emerging market performance.

A In general, Asian markets rebounded strongly after 1998's Asian-contagion. A
strengthening Japanese yen has helped Asian exports, but the countries remain
volatile. For instance, Malaysia, which was taken out of the emerging markets
index when the government imposed capital controls, fell and then rebounded
sharply once those controls were loosened and MSCI announced that it planned
to reintroduce it to the index. We began to invest in Malaysia in
anticipation of MSCI's actions as well as the country's favorable economic
and stock market fundamentals. However, we are concerned about some of the
better performing Asian markets, not only because stocks have rebounded so
sharply but because last year's reductions in interest rates have bottomed,
suggesting that most of the good news may be behind us.

Q What is your outlook for the remainder of the year and the coming millennium?

A We continue to focus on Latin America, a market that has been out of favor in
1999 as investors rushed to invest in Asian emerging markets. In particular,
Mexico appears attractive, primarily due to its trade connection with the
U.S., as does Venezuela, which is benefiting from rebounding oil prices. In
addition, we believe that Chile is one of the best-run economies in the
region, with corporate profits growing about 20% per year. As a result, we
believe that the value has resurfaced in Latin America, and that the region's
economic troubles are largely behind it.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
PORTFOLIO ALLOCATION BY MARKET SECTOR
<S> <C>
All Other Common Stocks 21%
Utility 16%
Finance 14%
Cash and Cash Equivalents 12%
Preferred Stocks 8%
Electronics 7%
Food and Beverages 6%
Metals and Mining 6%
Telecommunications 5%
Building and Construction 4%
Corporate Bonds 1%
</TABLE>

ALLEGHANY/BLAIRLOGIE
EMERGING MARKETS FUND--CLASS I
GROWTH OF $1,000,000

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
ALLEGHANY/BLAIRLOGIE MSCI EMERGING
EMERGING MARKETS MARKETS FREE
FUND CLASS I SHARES INDEX
<S> <C> <C>
6/93 $1,000,000 $1,000,000
10/93 $1,255,222 $1,294,605
4/94 $1,451,778 $1,404,253
10/94 $1,711,690 $1,674,685
4/95 $1,230,100 $1,336,756
10/95 $1,237,065 $1,349,324
4/96 $1,390,904 $1,528,995
10/96 $1,286,283 $1,436,827
4/97 $1,422,569 $1,594,613
10/97 $1,246,546 $1,314,946
4/98 $1,371,644 $1,362,837
10/98 $902,252 $907,486
4/99 $1,160,550 $1,223,940
10/99 $1,200,607 $1,312,393
</TABLE>

THIS CHART COMPARES A $1,000,000 INVESTMENT MADE IN CLASS I SHARES OF THE FUND
ON ITS INCEPTION DATE AND A $1,000,000 INVESTMENT MADE IN THE INDEX (MSCI
EMERGING MARKETS FREE INDEX) 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 PROSPECTUS AND ELSEWHERE IN THIS
REPORT. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE. INDICES ARE
UNMANAGED AND INVESTORS CANNOT INVEST IN THEM.

- 11
<PAGE>
ALLEGHANY FUNDS
- ------------------------------------
ALLEGHANY/MONTAG & CALDWELL BALANCED FUND
PORTFOLIO MANAGER COMMENTARY OCTOBER 31, 1999

[PHOTO]
RONALD E. CANAKARIS, CFA

Q How did the Fund perform during the fiscal year, ended October 31, 1999?

A Alleghany/Montag & Caldwell Balanced Fund Class N showed an increase of
17.83% for the 12 months ended October 31, 1999, and Class I showed an
increase of 6.98% for the 10 months ended October 31, 1999. For the 12 months
ended October 31, 1999, the Fund's blended Benchmark (60% S&P-Registered
Trademark- 500 Index/40% Lehman Brothers Government Corporate Index) recorded
a return of 14.64%. The Fund outperformed its benchmark index during the
quarter because both its bonds and stocks performed better than their
comparative indices.

Q What factors influenced the Fund's strong performance?

A While the majority of stocks prices have been down since the end of March
1999, the large-cap segment of the stock market as measured by the
S&P-Registered Trademark- 500 Index has essentially fluctuated in a trading
range over the past six months. This trading range is a result of better than
expected corporate profits sending the market higher counterbalanced by
increasing interest rates reversing any market gains. Until it is evident to
investors that the Federal Reserve (the "Fed") has succeeded in slowing the
economy to a sustainable and more moderate rate of growth with continued low
inflation, it is likely that this trading range will persist.

Q What is your outlook for the near-term and into the millennium?

A In this environment, we continue to favor consumer global growth companies,
well-positioned pharmaceutical and medical device companies and high-quality,
high-growth technology enterprises that have staying power. We believe the
Fed will be successful in its efforts to control inflation and that the stock
market will eventually exit the current period of consolidation and move to
higher levels. Meanwhile, we are maintaining some cash reserves and will use
them to take advantage of attractive buying opportunities as they present
themselves.

As we head into the new millennium, we anticipate a significant pick-up in
earnings growth for several of the Fund's consumer global growth company
holdings that remained weak in the third quarter. Research-driven
pharmaceutical and medical device companies should perform better in the
period ahead because they offer an attractive combination of value and
double-digit earnings growth prospects. Selected technology holdings remain
attractive as global industry conditions improve and the build-out of the
Internet further stimulates product demand.

While we believe the yield on the 30-year Treasury bond will continue to be
around 6.00% over the near term, we believe that interest rates will trend
lower over the longer term. Accordingly, we anticipate taking advantage of
any peaks in interest rates to extend the Fund's duration, which is currently
slightly longer than its benchmark index. With the Fed having acted twice
during 1999 to raise short-term interest rates and the bond market doing part
of the Fed's job by raising long-term rates, we anticipate slower domestic
growth in 2000. This, in combination with low rates of inflation, should
allow interest rates to drift lower.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<S> <C>
PORTFOLIO ALLOCATION BY MARKET SECTOR
Common Stocks 62%
U.S. Government and Agency Obligations 22%
Corporate Notes and Bonds 11%
Cash and Other Net Assets 3%
Asset-Backed Securities 2%
</TABLE>

ALLEGHANY/MONTAG & CALDWELL
BALANCED FUND--CLASS N
GROWTH OF $10,000

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
40% LEHMAN BROTHERS AGGREGATE LIPPER BALANCED 40% LEHMAN BROTHERS GOVERNMENT ALLEGHANY/MONTAG &
CALDWELL
BOND INDEX/60% S&P 500 INDEX FUND INDEX CORPORATE INDEX/60% S&P 500 INDEX BALANCED FUND CLASS N
SHARES
<S> <C> <C> <C> <C>
11/94 $10,000 $10,000 $10,000
$10,000
4/95 $10,891 $10,652 $10,909
$10,817
10/95 $12,539 $11,759 $12,229
$12,375
4/96 $13,141 $12,674 $13,228
$13,446
10/96 $14,881 $13,462 $14,238
$14,895
4/97 $15,498 $14,397 $15,561
$16,071
10/97 $17,894 $16,168 $17,469
$18,509
4/98 $21,919 $18,153 $20,055
$20,979
10/98 $21,830 $17,887 $20,519
$21,185
4/99 $24,769 $20,173 $23,209
$24,292
10/99 $25,159 $20,132 $23,537
$24,962
</TABLE>

THIS CHART COMPARES A $10,000 INVESTMENT MADE IN CLASS N SHARES OF THE FUND ON
ITS INCEPTION DATE TO $10,000 INVESTMENTS MADE IN THE INDICES (40% LEHMAN
BROTHERS AGGREGATE BOND INDEX/60% S&P-REGISTERED TRADEMARK- 500 INDEX, 40%
LEHMAN BROTHERS GOVERNMENT BOND INDEX/60% S&P-REGISTERED TRADEMARK- 500 INDEX,
LIPPER BALANCED FUND INDEX) 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 PROSPECTUS AND ELSEWHERE IN THIS
REPORT. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE. INDICES ARE
UNMANAGED AND INVESTORS CANNOT INVEST IN THEM.

THE BENCHMARK FOR ALLEGHANY/MONTAG & CALDWELL BALANCED FUND CHANGED FROM LEHMAN
BROTHERS AGGREGATE BOND INDEX/S&P-REGISTERED TRADEMARK- 500 INDEX TO LEHMAN
BROTHERS GOVERNMENT CORPORATE INDEX/ S&P-REGISTERED TRADEMARK-500 INDEX. THIS
CHANGE WAS MADE BECAUSE THE FUND INVESTS PRIMARILY IN U.S. GOVERNMENT SECURITIES
AND THIS PROVIDES A BETTER COMPARISON.

- - 12
<PAGE>
ALLEGHANY FUNDS
- --------------------------------
ALLEGHANY/CHICAGO TRUST BALANCED FUND
PORTFOLIO MANAGERS COMMENTARY OCTOBER 31, 1999

[PHOTO]
BERNARD F. MYSKKOWSI, CFA
[PHOTO]
THOMAS J. MARTHALER, CFA

Q How did Alleghany/Chicago Trust Balanced Fund perform during the fiscal year
ended October 31, 1999?

A Despite rocky markets during 1999, the Fund's emphasis on stable asset
allocation and prudent security selection produced a return of 17.26%,
besting its peers in the Lipper Balanced Fund Index which returned 12.56% for
the same period. Strong domestic growth, wage pressure concerns, two Federal
Reserve short-term interest rate increases, and uncertainty about Year 2000,
resulted in a very volatile stock and bond market for the much of the fiscal
year. The push earlier in 1999 towards more value-oriented small-cap stocks
fell out of favor as investors sought the stability of the larger well-known
names.

Q To what do you attribute this strong performance?

A For much of the year, our equity focus has been on consumer growth,
pharmaceutical and medical device companies, as well as the high-growth
technology enterprises that we believe have the potential to show strong
earnings growth despite the volatile market. As the Internet continues its
exponential growth, we see opportunities arising in areas of Internet support
and connectivity companies. Medical device and research-driven pharmaceutical
companies are also on our radar screen as we move into 2000.

Overweights in corporate and mortgage securities, which have outperformed
U.S. Treasury bonds for much of the year, has also benefited the portfolio.
These issues can offer substantially higher yields than Treasury bonds.
Corporate bonds and mortgage-backed securities tend to perform better than
Treasury bonds in a stable or improving economic climate.

Q What is your outlook for the remainder of 1999 and the early part of 2000?

A We believe a 60% equity and 40% fixed income asset allocation will provide
investors with attractive returns in the current market environment. We are
optimistic about the equity markets. Companies in the S&P-Registered
Trademark- 500 Index will likely continue to post attractive earnings,
offering positive news. In light of these expectations, we believe the equity
portion of the Fund is structured to carry us into the next century.

We expect the bellwether 30-year Treasury bond yield to hover around 6.00%
over the near term. The Federal Reserve raised short-term interest rates
twice in the past fiscal year. An additional rate increase in November erased
the liquidity boost that was given to the market in 1998. Although the bond
market has been volatile in 1999, we believe that bonds offer attractive
values at current yields and investors can receive a significant premium over
the rate of inflation.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
PORTFOLIO ALLOCATION BY MARKET SECTOR
<S> <C>
Common Stocks 57%
U.S. Government and Agency Obligations 20%
Corporate Notes and Bonds 13%
Cash and Other Net Assets 7%
Asset-Backed Securities 1%
Yankee Bonds 1%
Non-Agency/CMO Mortgage Securities 1%
</TABLE>

ALLEGHANY/CHICAGO TRUST
BALANCED FUND
GROWTH OF $10,000

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
40% LEHMAN BROTHERS AGGREGATE LIPPER BALANCED ALLEGHANY/CHICAGO
BOND INDEX/60% S&P 500 INDEX FUND INDEX TRUST BALANCED FUND
<S> <C> <C> <C>
9/95 $10,000 $10,000 $10,000
4/96 $10,817 $10,751 $10,893
10/96 $11,625 $11,420 $11,847
4/97 $12,708 $12,213 $12,720
10/97 $14,237 $13,715 $14,229
4/98 $17,439 $15,399 $16,362
10/98 $17,368 $15,511 $16,862
4/99 $19,706 $17,494 $19,659
10/99 $20,016 $17,458 $19,772
</TABLE>

THIS CHART COMPARES A $10,000 INVESTMENT MADE IN THE FUND ON ITS INCEPTION DATE
TO $10,000 INVESTMENTS MADE IN THE INDICES (40% LEHMAN BROTHERS AGGREGATE BOND
INDEX/60% S&P-REGISTERED TRADEMARK- 500 INDEX, LIPPER BALANCED FUND INDEX) 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 PROSPECTUS AND ELSEWHERE IN THIS REPORT. PAST PERFORMANCE IS
NOT INDICATIVE OF FUTURE PERFORMANCE. INDICES ARE UNMANAGED AND INVESTORS CANNOT
INVEST IN THEM.

- 13
<PAGE>
ALLEGHANY FUNDS
- ------------------------------------
ALLEGHANY/CHICAGO TRUST BOND FUND
PORTFOLIO MANAGER COMMENTARY OCTOBER 31, 1999

[PHOTO]
THOMAS J. MARTHALER, CFA

Q How did Alleghany/Chicago Trust Bond Fund perform during the fiscal year
ended October 31, 1999?

A For the past 12 months, the Fund's total return was 1.02%. In comparison, the
Lehman Brothers Aggregate Bond Index posted a return of 0.53% for the same
time period while the Fund's peer group, the Lipper Intermediate Investment
Grade Index, produced a total return of 0.29%.

Q To what do you attribute the outperformance during the fiscal year?

A The Fund benefited from having a slightly shorter duration than the
benchmark, which is advantageous in a rising interest rate environment. Since
bond prices move inversely to changes in interest rates, a shorter duration
means that the portfolio is less sensitive to rising interest rates.

In addition, the portfolio has benefited from an overweighting in corporate
and mortgage securities, which have outperformed U.S. Treasury bonds for much
of the fiscal year. Corporates and mortgages offer substantially higher
returns than Treasury bonds. Corporate bonds tend to perform better than U.S.
Treasury bonds in a stable or improving economic climate. In recent months,
which were characterized by mixed signals in the economy, higher quality
bonds such as Motorola, Inc. (1.3% of net assets) and Prudential Insurance
Co. of America (1.2%) performed well, while lower quality bonds such as Kmart
Corp. (1.6%) performed better earlier in 1999 when the economy was
accelerating.

Q What other influences affected the Fund's performance?

A The corporate market was expecting a major increase in issuance during
September in preparation for Year 2000 as companies attempted to get their
financing needs completed before year end. However, issuance was lower than
expected, perhaps because of higher borrowing costs. Mortgages have done well
in a rising interest rate environment because the risk that borrowers will
prepay has diminished.

During the fiscal year, the portfolio's allocation to corporate bonds and
U.S. Treasury bonds increased while mortgages were decreased.

Q What is your outlook?

A We are keenly following the Federal Reserve, which raised short-term interest
rates twice during the fiscal year to 5.25% in an attempt to slow the economy
and reduce inflationary pressures. One further increase in November erased
the liquidity boost that was given to the market in 1998 at the height of the
Asian economic crisis when the Federal Reserve reduced short-term rates three
times to 4.75%. We anticipate yields on the 30-year U.S. Treasury bond to
move in a trading range between 5.75% and 6.25% for the next several months.

Although the bond market was volatile over the last fiscal year, we believe
that bonds offer attractive values at current yields. With U.S. Treasury
bonds offering 6% and high quality corporate bonds and mortgages offering as
much as 7 to 7.5% yields, investors are receiving a significant premium over
the rate of inflation.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
PORTFOLIO ALLOCATION BY MARKET SECTOR
<S> <C>
U.S. Government and Agency Obligations 54%
Corporate Notes and Bonds 32%
Cash and Other Net Assets 5%
Yankee Bonds 4%
Non-Agency/CMO Mortgage Securities 3%
Asset-Backed Securities 2%
</TABLE>

ALLEGHANY/CHICAGO TRUST
BOND FUND
GROWTH OF $10,000

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
LEHMAN BROTHERS LIPPER INTERMEDIATE ALLEGHANY/CHICAGO
AGGREGATE BOND INDEX INVESTMENT GRADE INDEX TRUST BOND FUND
<S> <C> <C> <C>
12/93 $10,000 $10,000 $10,000
4/94 $9,507 $9,524 $9,682
10/94 $9,535 $9,537 $9,677
4/95 $10,203 $10,121 $10,307
10/95 $11,026 $10,885 $11,117
4/96 $11,085 $10,930 $11,169
10/96 $11,671 $11,465 $11,758
4/97 $11,870 $11,641 $11,972
10/97 $12,709 $12,388 $12,797
4/98 $13,164 $12,771 $13,211
10/98 $13,895 $13,378 $13,778
4/99 $13,990 $13,493 $13,985
10/99 $13,969 $13,416 $13,919
</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 (LIPPER INTERMEDIATE INVESTMENT
GRADE INDEX, LEHMAN BROTHERS AGGREGATE BOND INDEX) 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 PROSPECTUS
AND ELSEWHERE IN THIS REPORT. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE
PERFORMANCE. INDICES ARE UNMANAGED AND INVESTORS CANNOT INVEST IN THEM.

<TABLE>
<CAPTION>
LEHMAN BROTHERS AGGREGATE BOND INDEX
RETURNS
10/31/98 - 10/31/99
- -------------------------------------------------------
<S> <C>
U.S. Government.............................. -1.21%
Corporate.................................... 0.61%
High Yield................................... 4.34%
Mortgage-Backed.............................. 2.99%
Asset-Backed................................. 2.94%
Emerging Markets............................. 21.89%
</TABLE>

- - 14
<PAGE>
ALLEGHANY FUNDS
- --------------------------------
ALLEGHANY/CHICAGO TRUST MUNICIPAL BOND FUND
PORTFOLIO MANAGER COMMENTARY OCTOBER 31, 1999

[PHOTO]
LOIS A. PASQUALE, CFA

Q How did Alleghany/Chicago Trust Municipal Bond Fund perform during the fiscal
year ended October 31, 1999?

A Alleghany/Chicago Trust Municipal Bond Fund's total return was -1.77%. In
comparison, the Lehman Five-Year General Obligation Index, the Fund's
unmanaged benchmark, produced returns of 1.09% while the Fund's peer group,
the Lipper Intermediate Municipal Fund Index, produced a total return of
-1.23%.

On the plus side, the Fund's 12-month dividend yield continues to be strong.
Currently, municipal bonds are yielding up to 90% of comparable taxable U.S.
Treasury bonds, which is relatively attractive on a historical basis.

Q What factors affected your performance?

A The interest rate environment continues to be unfavorable for bonds. When
interest rates rise, bond prices fall, a situation that has dominated
throughout the year. The municipal market experienced further deterioration
as many individual municipal bond prices fell to discounts (less than par,
$1000/bond). For buyers of market discount bonds, the difference between par
and the discount is taxable at ordinary tax rates. To offset this additional
expense, and because this tax liability makes market discount municipal bonds
less attractive, their prices move lower than one would initially expect to
afford additional yield to attract buyers.

Over the fiscal year, we had been extending the Fund's duration to match our
Lipper peer group. That has been a disadvantage in a rising interest rate
environment, since a longer duration portfolio is more sensitive to changes
in interest rates. To some extent, we have compensated by holding a larger
than average percentage in cash equivalents.

With yields on 10-year AA general obligation bonds exceeding 5%, municipal
bonds are attractive, particularly for high-income taxpayers. However, a
major player in the municipal market, the property and casualty insurance
industry, has sustained poor earnings. Therefore, these insurance companies
have not been as active in the market, reducing demand particularly in the
area of the market that we have emphasized - the 8- to 12-year maturity
sector.

While demand is down, so is supply. In a rising interest rate environment,
issuers are reluctant to borrow. With the economy strong and state government
budgets in surplus, they do not need to issue debt. As a result, a light
supply of bonds keeps municipal bond prices firmer than they otherwise would
be.

Q What is your current strategy?

A With the sharp increase in interest rates in the past year, we are paying
particular attention to ensure that the portfolio has good call protection.
Almost all of the securities are either noncallable or possess a 10-year call
feature.

In addition, the portfolio's credit quality is very high at AA1, the second
highest rating given by Moody's Investor Service. Many of the bonds that are
insured to AAA even have underlying A ratings. In this environment, we do not
believe that lower-rated bonds offer sufficient extra yield to compensate for
the additional credit risk.

Q What is your outlook?

A We believe the portfolio's duration, structure, credit quality and sector
diversification is appropriate given current market conditions. Therefore,
our strategy is to hold steady with our current portfolio and to maintain
extra liquidity.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
PORTFOLIO ALLOCATION BY QUALITY RATING
<S> <C>
Aaa 43%
Aa 44%
A 7%
Baa 2%
Not Rated 4%
</TABLE>

ALLEGHANY/CHICAGO TRUST
MUNICIPAL BOND FUND
GROWTH OF $10,000

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
LEHMAN BROTHERS FIVE-YEAR ALLEGHANY/CHICAGO LIPPER INTERMEDIATE
GENERAL OBLIGATIONS INDEX TRUST MUNICIPAL BOND FUND MUNICIPAL FUNDS INDEX
<S> <C> <C> <C>
12/93 $10,000 $10,000 $10,000
4/94 $9,782 $9,803 $9,810
10/94 $9,838 $9,808 $9,808
4/95 $10,288 $10,218 $10,316
10/95 $10,855 $10,719 $10,880
4/96 $11,025 $10,811 $10,987
10/96 $11,368 $11,103 $11,369
4/97 $11,548 $11,201 $11,564
10/97 $12,107 $11,673 $12,155
4/98 $12,339 $11,871 $12,419
10/98 $12,897 $12,393 $12,983
4/99 $13,144 $12,561 $13,162
10/99 $13,040 $12,173 $12,823
</TABLE>

THIS CHART COMPARES A $10,000 INVESTMENT MADE IN THE FUND ON ITS INCEPTION DATE
TO $10,000 INVESTMENTS MADE IN THE INDICES (LEHMAN BROTHERS FIVE-YEAR GENERAL
OBLIGATIONS INDEX, LIPPER INTERMEDIATE MUNICIPAL FUNDS INDEX) 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
PROSPECTUS AND ELSEWHERE IN THIS REPORT. PAST PERFORMANCE IS NOT INDICATIVE OF
FUTURE PERFORMANCE. INDICES ARE UNMANAGED AND INVESTORS CANNOT INVEST IN THEM.

- 15
<PAGE>
ALLEGHANY FUNDS
- ------------------------------------
ALLEGHANY/CHICAGO TRUST MONEY MARKET FUND
PORTFOLIO MANAGER COMMENTARY OCTOBER 31, 1999

[PHOTO]
FRED H. SENFT, JR., CFA

Q How did Alleghany/Chicago Trust Money Market Fund perform during the fiscal
year ended October 31, 1999?

A The Fund generated a 4.76% annual yield for the year, slightly outperforming
its benchmark, IBC Donoghue's First Tier Index, which yielded 4.41%.

Q What factors contributed to the Fund's performance?

A First, we maintained a relatively short average maturity, which allowed us to
quickly reinvest when short-term interest rates rose, which occurred three
times this fiscal year. The Federal Reserve, after lowering interest rates a
total of .75% in 1998 to stimulate the U.S. economy, stayed on the sidelines
while the Asian economy recovered. It was not until June 30, 1999 that the
Fed began increasing short-term interest rates and completely reversed the
decreases of 1998 in an effort to stave off inflation.

Second, the Fund invests primarily in commercial paper issued by blue-chip
corporations such as American Express Credit Corp. (4.5% of net assets), Ford
Motor Credit Corp. (5.2%), and General Electric Capital Corp. (4.8%).
Commercial paper generally offers about a quarter percent more in yield
compared with Treasury bills.

Third, our strategy was to use split-rated securities, securities in which
one credit rating agency assigns the issuer its highest short-term debt rate
while other rating agencies assign their second highest rating. While we
believe that the credit risk is minimal, we pick up another 0.17 percentage
points in yield by doing so. In order to qualify for top-tier status, two of
the four national credit rating services must rank a security at their
highest level.

Q Besides commercial paper, what other securities are in the Fund?

A We have Time Deposits, Funding Agreements, Bank Certificates of Deposit and
Repurchase Agreements.

Q How would you assess the Fund's credit quality?

A We are very confident that the securities that we select pose minimal credit
risk. The portfolio draws from an internal list of approved short-term
issuers from which we purchase securities. Each issuer is thoroughly
researched and analyzed by our experienced investment professionals before
being placed on the approved list. In addition, the portfolio is highly
diversified representing a broad range of financial and industrial companies.

Q What is your current outlook?

A At the fiscal year end, investors were concerned that the Fed would continue
to raise short-term interest rates. Although stock and bond markets are
generally adversely affected by rising interest rates, our portfolio is able
to take advantage of rising interest rates by quickly reinvesting in
securities offering these new higher yields if the Fed were to continue the
pattern of increasing short-term rates to battle inflationary pressures.

As the end of the year approaches, the much-anticipated Year 2000 computer
transition from 1999 to 2000 will take place. While we do not expect the
transition to be a major problem, we are managing the Fund for maximum
liquidity as the year draws to a close.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
PORTFOLIO ALLOCATION BY MARKET SECTOR
<S> <C> <C>
Commercial Paper 85 %
Certificate of Deposits 8 %
GIC Within Funding Agreement 3 %
U.S. Government Obligations 3 %
Cash and Other Net Assets 1 %
</TABLE>

- - 16
<PAGE>
ALLEGHANY FUNDS
- ------------------------------

ALLEGHANY/MONTAG & CALDWELL GROWTH FUND OCTOBER 31, 1999

SCHEDULE OF INVESTMENTS

<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ------ -----
<C> <S> <C>
COMMON STOCKS - 94.50%
COMPUTER SOFTWARE - 3.58%
2,241,600 Oracle Corp.*........................... $ 106,686,150
--------------
CONSUMER NON-DURABLES - 15.20%
1,300,000 Bestfoods............................... 76,375,000
3,223,000 Gillette Co............................. 116,632,312
1,400,000 Interpublic Group of Companies, Inc..... 56,875,000
1,484,300 Newell Rubbermaid, Inc.................. 51,393,888
1,450,000 Procter & Gamble Co..................... 152,068,750
--------------
453,344,950
--------------
ELECTRICAL - 3.64%
800,000 General Electric Co..................... 108,450,000
--------------
ENTERTAINMENT AND LEISURE - 2.12%
867,200 Carnival Corp........................... 38,590,400
933,500 The Walt Disney Co.*.................... 24,621,062
--------------
63,211,462
--------------
FINANCE - 8.40%
591,900 American Express Co..................... 91,152,600
875,000 American International Group, Inc....... 90,070,313
1,450,000 Wells Fargo Co.......................... 69,418,750
--------------
250,641,663
--------------
FOOD AND BEVERAGE - 4.55%
2,300,000 Coca-Cola Co............................ 135,700,000
--------------
HEALTH CARE SERVICES - 9.16%
1,250,000 Johnson & Johnson....................... 130,937,500
3,600,000 Pfizer, Inc............................. 142,200,000
--------------
273,137,500
--------------
LODGING - 1.92%
1,700,000 Marriott International, Inc.,
Class A............................... 57,268,750
--------------
MEDICAL SUPPLIES - 4.91%
3,068,300 Boston Scientific Corp.*................ 61,749,537
2,448,400 Medtronic, Inc.......................... 84,775,850
--------------
146,525,387
--------------
PHARMACEUTICALS - 4.12%
1,600,000 Bristol-Myers Squibb Co................. 122,900,000
--------------
RESTAURANTS - 3.87%
2,800,000 McDonald's Corp......................... 115,500,000
--------------
<CAPTION>
MARKET
SHARES VALUE
- ------ -----
<C> <S> <C>
RETAIL - 8.07%
868,800 Costco Wholesale Corp.*................. $ 69,748,350
1,350,900 Gap, Inc................................ 50,152,162
1,600,000 Home Depot, Inc......................... 120,800,000
--------------
240,700,512
--------------
TECHNOLOGY - 18.20%
900,000 Electronic Arts, Inc.*.................. 72,703,125
1,750,000 Electronic Data Systems Corp............ 102,375,000
858,700 EMC Corp.*.............................. 62,685,100
1,104,500 Hewlett-Packard Co...................... 81,802,031
1,005,700 Intel Corp.............................. 77,847,466
918,800 Microsoft Corp.*........................ 85,046,425
801,000 Solectron Corp.*........................ 60,275,250
--------------
542,734,397
--------------
TELECOMMUNICATIONS - 6.76%
1,613,300 MCI WorldCom, Inc.*..................... 138,390,891
1,000,000 Tellabs, Inc.*.......................... 63,218,750
--------------
201,609,641
--------------
TOTAL COMMON STOCKS..................... 2,818,410,412
--------------
(Cost $2,145,907,426)

INVESTMENT COMPANIES - 4.09%
122,091,658 Bankers Trust Institutional Cash
Management Fund....................... 122,091,658
54,453 Bankers Trust Institutional Treasury
Money Fund............................ 54,453
--------------
TOTAL INVESTMENT COMPANIES.............. 122,146,111
--------------
(Cost $122,146,111)
TOTAL INVESTMENTS - 98.59%........................... 2,940,556,523
--------------
(Cost $2,268,053,537)**
NET OTHER ASSETS AND LIABILITIES - 1.41%............. 41,912,054
--------------
NET ASSETS - 100.00%................................. $2,982,468,577
==============
</TABLE>

- -----------------------------------------------

* Non-income producing security.
** Aggregate cost for Federal income tax purposes is $2,268,053,537.

<S> <C>
Gross unrealized appreciation.......... $757,875,044
Gross unrealized depreciation.......... (85,372,058)
------------
Net unrealized appreciation............ $672,502,986
============
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- 17
<PAGE>
ALLEGHANY FUNDS
- ----------------------------------

ALLEGHANY/CHICAGO TRUST GROWTH & INCOME FUND OCTOBER 31, 1999

SCHEDULE OF INVESTMENTS

<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ------ -----
<C> <S> <C>
COMMON STOCKS - 92.10%
ADVERTISING - 2.78%
154,737 Omnicom Group, Inc...................... $ 13,616,856
------------
BUSINESS SERVICES - 3.39%
421,768 Paychex, Inc............................ 16,620,295
------------
CAPITAL GOODS - 4.16%
247,000 Pitney Bowes, Inc....................... 11,253,938
228,674 Tyco International Ltd.................. 9,132,668
------------
20,386,606
------------
CHEMICALS - 1.86%
194,527 Praxair, Inc............................ 9,094,137
------------
COMMERCIAL SERVICE - 2.03%
294,147 Ecolab, Inc............................. 9,945,845
------------
CONSUMER DURABLES - 7.60%
213,095 Harley-Davidson, Inc.................... 12,639,197
198,948 Illinois Tool Works, Inc................ 14,572,941
165,316 Johnson Controls, Inc................... 10,042,947
------------
37,255,085
------------
CONSUMER NON-DURABLES - 6.29%
222,822 Cintas Corp............................. 13,418,062
221,142 Newell Rubbermaid, Inc.................. 7,657,042
92,842 Procter & Gamble Co..................... 9,736,805
------------
30,811,909
------------
ELECTRICAL - 2.95%
106,813 General Electric Co..................... 14,479,837
------------
ENTERTAINMENT AND LEISURE - 2.01%
222,000 Carnival Corp........................... 9,879,000
------------
FINANCE - 12.80%
203,368 AFLAC Inc............................... 10,397,189
139,221 American International Group, Inc....... 14,331,062
235,200 Associates First Capital Corp.,
Class A............................... 8,584,800
245,811 Federal Home Loan Mortgage Corp......... 13,289,157
272,276 MBNA Corp............................... 7,521,625
221,054 Schwab (Charles) Corp................... 8,607,290
------------
62,731,123
------------
FOOD AND BEVERAGE - 4.01%
511,073 Sysco Corp.............................. 19,644,368
------------
HEALTH CARE SERVICES - 4.02%
229,895 Cardinal Health, Inc.................... 9,914,222
248,287 Pfizer, Inc............................. 9,807,337
------------
19,721,559
------------
MEDICAL SUPPLIES - 2.11%
434,242 Sybron International Corp. *............ 10,340,388
------------
<CAPTION>
MARKET
SHARES VALUE
- ------ -----
<C> <S> <C>
OIL AND GAS EXTRACTION - 1.64%
132,601 Schlumberger Ltd........................ $ 8,030,648
------------
PHARMACEUTICALS - 1.60%
98,502 Merck & Co., Inc........................ 7,837,065
------------
RETAIL - 3.97%
114,948 Kohl's Corp. *.......................... 8,599,547
431,495 Walgreen Co............................. 10,868,280
------------
19,467,827
------------
TECHNOLOGY - 22.72%
230,603 Cisco Systems, Inc. *................... 17,071,828
305,053 Computer Associates
International, Inc.................... 17,235,495
163,580 Computer Sciences Corp.*................ 11,235,901
256,422 EMC Corp. *............................. 18,718,806
114,594 Microsoft Corp. *....................... 10,607,107
176,843 Solectron Corp. *....................... 13,307,436
219,284 Sun Microsystems, Inc. *................ 23,196,136
------------
111,372,709
------------
TELECOMMUNICATIONS - 6.16%
210,443 AES Corp. *............................. 11,876,877
290,021 Tellabs, Inc. *......................... 18,334,765
------------
30,211,642
------------
TOTAL COMMON STOCKS..................... 451,446,899
------------
(Cost $257,704,050)

<CAPTION>
PAR VALUE
- ---------
<C> <S> <C>
REPURCHASE AGREEMENT - 7.72%
$37,861,000 Bank One 4.900%, dated 10/31/99 to be
repurchased on 11/01/99 at $37,876,460
(Collateralized by U.S. Treasury Note
5.375% due 02/15/01; Total Par
$38,379,000).......................... 37,861,000
------------
TOTAL REPURCHASE AGREEMENT.............. 37,861,000
------------
(Cost $37,861,000)
TOTAL INVESTMENTS - 99.82%........................... 489,307,899
------------
(Cost $295,565,050)**
NET OTHER ASSETS AND LIABILITIES - 0.18%............. 880,883
------------
NET ASSETS - 100.00%................................. $490,188,782
============
</TABLE>

- ------------------------------------------------

* Non-income producing security.
** Aggregate cost for Federal income tax purposes is $295,565,050.

<S> <C>
Gross unrealized appreciation.......... $202,994,166
Gross unrealized depreciation.......... (9,251,317)
------------
Net unrealized appreciation............ $193,742,849
============
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- - 18
<PAGE>
ALLEGHANY FUNDS
- ------------------------------

ALLEGHANY/CHICAGO TRUST TALON FUND OCTOBER 31, 1999

SCHEDULE OF INVESTMENTS

<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ------ -----
<C> <S> <C>
COMMON STOCKS - 89.26%
ADVERTISING - 5.27%
23,000 True North Communications, Inc.......... $ 927,187
-----------
AUTOMOTIVE - 2.83%
11,000 Magna International, Inc., Class A...... 498,437
-----------
BUILDING AND CONSTRUCTION - 2.59%
50,000 Champion Enterprises, Inc.*............. 456,250
-----------
BUSINESS SERVICES - 15.52%
27,000 ACNielsen Corp.*........................ 594,000
49,000 Information Resources, Inc.*............ 514,500
28,500 Manpower, Inc........................... 1,001,062
28,000 Wallace Computer Services, Inc.......... 619,500
-----------
2,729,062
-----------
CHEMICALS - 1.62%
10,000 Sigma-Aldrich Corp...................... 284,687
-----------
CONSUMER DURABLE GOODS - 4.26%
5,000 Corning, Inc............................ 393,125
32,000 Ingram Micro, Inc.*..................... 356,000
-----------
749,125
-----------
CONSUMER SERVICES - 1.69%
23,000 Sylvan Learning Systems, Inc.*.......... 296,844
-----------
ELECTRICAL - 2.17%
8,500 Thomas & Betts Corp..................... 381,437
-----------
ELECTRONICS - 5.16%
60,000 Sensormatic Electronics Corp.*.......... 907,500
-----------
FINANCE - 3.97%
66,500 Danielson Holdings Corp.*............... 374,063
9,000 Travelers Property Casualty Corp.,
Class A............................... 324,000
-----------
698,063
-----------
PHARMACEUTICALS - 7.57%
19,000 Elan Corp. plc, SP ADR*................. 489,250
24,000 Mylan Laboratories Inc.................. 430,500
8,500 Teva Pharmaceutical Industries Ltd.,
ADR................................... 410,922
-----------
1,330,672
-----------
PRINTING AND PUBLISHING - 4.14%
5,900 R.R. Donnelley & Sons Co................ 143,075
12,500 Scholastic Corp.*....................... 585,156
-----------
728,231
-----------
RETAIL - 6.07%
12,000 Boise Cascade Office Products Corp.*.... 123,000
25,000 Borders Group, Inc.*.................... 325,000
36,000 Saks, Inc.*............................. 618,750
-----------
1,066,750
-----------
TECHNOLOGY - 15.98%
44,000 American Power Conversion Corp.*........ 985,875
<CAPTION>
MARKET
SHARES VALUE
- ------ -----
<C> <S> <C>
TECHNOLOGY (CONTINUED)
15,000 Comdisco, Inc........................... $ 302,813
16,000 Diebold, Inc............................ 420,000
92,500 Mentor Graphics Corp.*.................. 742,891
69,500 Robotic Vision Systems, Inc.*........... 264,969
5,000 Tech Data Corp.*........................ 93,906
-----------
2,810,454
-----------
TELECOMMUNICATIONS - 6.85%
24,500 Andrew Corp.*........................... 314,672
10,000 AT&T Corp. - Liberty Media Group,
Class A*.............................. 396,875
25,000 Newbridge Networks Corp.*............... 493,750
-----------
1,205,297
-----------
TRANSPORTATION - 3.57%
19,000 CNF Transportation, Inc................. 628,188
-----------
TOTAL COMMON STOCKS..................... 15,698,184
-----------
(Cost $14,266,328)
PREFFERED STOCK - 2.14%
TELECOMMUNICATIONS - 2.14%
25,000 Loral Space & Communications Ltd........ 376,563
-----------
TOTAL PREFERRED STOCK................... 376,563
-----------
(Cost $353,375)
<CAPTION>
PAR VALUE
- ---------
<C> <S> <C>
U.S. GOVERNMENT OBLIGATION - 2.84%
U.S. TREASURY BILL - 2.84%
$500,000 4.320%, 11/12/99 (A).................... 499,340
-----------
TOTAL U.S. GOVERNMENT OBLIGATION........ 499,340
-----------
(Cost $499,340)
<CAPTION>
SHARES
- ------
<C> <S> <C>
INVESTMENT COMPANY - 3.99%
701,228 Bankers Trust Institutional Cash
Management Fund....................... 701,228
-----------
TOTAL INVESTMENT COMPANY................ 701,228
-----------
(Cost $701,228)
TOTAL INVESTMENTS - 98.23%......................... 17,275,315
-----------
(Cost $15,820,271)**
OTHER NET ASSETS AND LIABILITIES - 1.77%........... 310,723
-----------
NET ASSETS - 100.00%............................... $17,586,038
===========
</TABLE>

- -------------------------------------------------

* Non-income producing security.
** Aggregate cost for Federal income tax purposes is $15,820,271.
(A) Annualized yield at time of purchase.

<S> <C>
Gross unrealized appreciation....... $2,509,422
Gross unrealized depreciation....... (1,054,378)
----------
Net unrealized appreciation......... $1,455,044
==========
</TABLE>

ADR American Depositary Receipt
SP Sponsored American Depositary Receipt
ADR

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- 19
<PAGE>
ALLEGHANY FUNDS
- ----------------------------------

ALLEGHANY/CHICAGO TRUST SMALL CAP VALUE FUND OCTOBER 31, 1999

SCHEDULE OF INVESTMENTS

<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ------ -----
<C> <S> <C>
COMMON STOCKS - 98.27%
AEROSPACE AND DEFENSE - 2.52%
35,300 Newport News Shipbuilding, Inc.......... $ 1,072,237
-----------
AUTOMOTIVE - 1.91%
37,600 Hayes Lemmerz International, Inc.*...... 813,100
-----------
BUILDING AND CONSTRUCTION - 4.41%
29,900 Centex Construction Products, Inc....... 1,063,319
24,000 Florida Rock Industries, Inc............ 810,000
-----------
1,873,319
-----------
CAPITAL GOODS - 5.02%
114,900 AGCO Corp............................... 1,235,175
33,900 Terex Corp.*............................ 896,231
-----------
2,131,406
-----------
CHEMICALS - 4.24%
66,100 Olin Corp............................... 913,006
57,100 Schulman (A.), Inc...................... 888,619
-----------
1,801,625
-----------
COMMERCIAL SERVICES - 1.76%
26,600 Bell & Howell Co.*...................... 748,125
-----------
CONSUMER DURABLE GOODS - 2.44%
28,900 The Toro Co............................. 1,036,788
-----------
CONSUMER NON-DURABLES - 4.12%
36,500 Church & Dwight Co., Inc................ 951,281
22,800 Dexter Corp............................. 799,425
-----------
1,750,706
-----------
CONTAINERS AND PACKAGING - 2.14%
46,600 U.S. Can Corp.*......................... 908,700
-----------
ELECTRONICS - 6.70%
16,500 C-Cube Microsystems, Inc.*.............. 735,281
13,100 DuPont Photomasks, Inc.*................ 651,725
21,200 KEMET Corp.*............................ 677,738
19,000 Oak Industries, Inc.*................... 779,000
-----------
2,843,744
-----------
FINANCE - 21.34%
39,000 AMCORE Financial, Inc................... 922,594
54,300 Commercial Federal Corp................. 1,065,637
42,800 Eldorado Bancshares, Inc.*.............. 452,075
51,900 Fidelity National Corp.................. 410,334
43,600 First Charter Corp...................... 831,125
50,200 First Financial Holdings, Inc........... 917,719
29,100 Gallagher (Arthur J.) & Co.............. 1,505,925
23,200 Horrace Mann Educators Corp............. 653,950
31,700 National City Bancorp................... 575,553
84,500 Republic Security Financial Corp........ 710,328
49,200 United Asset Management Corp............ 1,020,900
-----------
9,066,140
-----------
<CAPTION>
MARKET
SHARES VALUE
- ------ -----
<C> <S> <C>
FOOD AND BEVERAGE - 3.31%
53,000 Ruddick Corp............................ $ 904,313
29,900 Smucker (J.M.) Co., Class B............. 502,694
-----------
1,407,007
-----------
HEALTH CARE SERVICES - 0.95%
71,000 Coventry Health Care, Inc.*............. 403,812
-----------
INDUSTRIAL - 9.01%
41,200 Cytec Industries, Inc.*................. 1,063,475
67,800 Milacron, Inc........................... 1,114,462
39,700 Regal-Beloit Corp....................... 863,475
48,400 Robbins & Myers, Inc.................... 783,475
-----------
3,824,887
-----------
OIL AND GAS EXTRACTION - 11.28%
28,200 Cal Dive International, Inc.*........... 941,175
60,800 Marine Drilling Cos., Inc.*............. 984,200
41,500 Rowan Cos., Inc.*....................... 645,844
95,100 Santa Fe Snyder Corp.*.................. 820,238
47,900 Valero Energy Corp...................... 880,163
37,000 Veritas DGC, Inc.*...................... 520,313
-----------
4,791,933
-----------
PRINTING AND PUBLISHING - 6.37%
31,900 Houghton Mifflin Co..................... 1,351,763
37,900 Meredith Corp........................... 1,352,556
-----------
2,704,319
-----------
REAL ESTATE INVESTMENT TRUST (REIT) - 2.48%
49,100 Walden Residential Properties, Inc...... 1,052,581
-----------
RETAIL - 4.94%
22,000 AnnTaylor Stores Corp.*................. 936,375
42,800 Casey's General Stores, Inc............. 549,712
18,300 Michaels Stores, Inc.*.................. 611,334
-----------
2,097,421
-----------
TECHNOLOGY - 1.98%
25,100 Graco, Inc.............................. 840,850
-----------
TRANSPORTATION - 0.35%
16,000 Offshore Logistics, Inc.*............... 148,000
-----------
UTILITY - 1.00%
11,200 Peoples Energy Corp..................... 425,600
-----------
TOTAL COMMON STOCKS..................... 41,742,300
-----------
(Cost $43,590,064)
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- - 20
<PAGE>
ALLEGHANY FUNDS
- ------------------------------

ALLEGHANY/CHICAGO TRUST SMALL CAP VALUE FUND OCTOBER 31, 1999

SCHEDULE OF INVESTMENTS -- CONTINUED
<TABLE>
<CAPTION>
MARKET
PAR VALUE VALUE
- --------- -----
<C> <S> <C>
REPURCHASE AGREEMENT - 0.38%
$ 162,000 Bank One 4.900%, dated 10/29/99 to be
repurchased on 11/01/99 at $162,066
(Collateralized by U.S. Treasury Note
5.625%, due 12/31/02; Total Par
$164,000)............................. $ 162,000
-----------
TOTAL REPURCHASE AGREEMENT.............. 162,000
-----------
(Cost $162,000)
TOTAL INVESTMENTS - 98.65%........................... 41,904,300
-----------
(Cost $43,752,064)**
NET OTHER ASSETS AND LIABILITIES - 1.35%............. 573,964
-----------
NET ASSETS - 100.00%................................. $42,478,264
===========
</TABLE>

- -------------------------------------------------

* Non-income producing security.
** Aggregate cost for Federal income tax purposes is $43,764,134.

<S> <C>
Gross unrealized appreciation............ $ 1,338,012
Gross unrealized depreciation............ (3,197,846)
-----------
Net unrealized appreciation.............. $(1,859,834)
===========
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- 21
<PAGE>
ALLEGHANY FUNDS
- ----------------------------------

ALLEGHANY/VEREDUS AGGRESSIVE GROWTH FUND OCTOBER 31, 1999

SCHEDULE OF INVESTMENTS

<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ------ -----
<C> <S> <C>
COMMON STOCKS - 95.95%
AIRLINES - 1.29%
161,800 AirTran Holdings, Inc.*................. $ 740,741
-----------
AUTOMOTIVE - 2.61%
35,900 Navistar International Corp.*........... 1,496,581
-----------
COMMUNICATION SERVICES - 2.23%
53,900 Insight Communications Co., Inc.*....... 1,275,072
-----------
COMMUNICATIONS EQUIPMENT - 8.74%
33,900 Antec Corp.*............................ 1,640,972
35,400 DSET Corp.*............................. 621,712
23,750 Polycom, Inc.*.......................... 1,186,016
24,100 Powerwave Technologies, Inc.*........... 1,558,216
-----------
5,006,916
-----------
COMPUTER SOFTWARE - 9.60%
97,300 Acclaim Entertainment, Inc.*............ 690,222
16,600 Business Objects, S.A., SP-ADR*......... 1,194,162
21,300 Concentric Network Corp.*............... 546,478
23,600 Daleen Technologies, Inc.*.............. 691,775
73,100 FileNET Corp.*.......................... 1,208,434
126,500 The 3DO Co.*............................ 952,703
12,200 Timberline Software Corp................ 215,787
-----------
5,499,561
-----------
ELECTRONICS - 19.47%
43,200 ANADIGICS, Inc.*........................ 1,656,450
79,200 Electroglas, Inc.*...................... 2,185,425
11,800 Optical Coating Laboratory, Inc......... 1,267,763
23,100 Sawtek, Inc.*........................... 952,875
21,100 TranSwitch Corp.*....................... 992,359
21,300 TriQuint Semiconductor, Inc.*........... 1,699,341
76,800 Varian Semiconductor Equipment
Associates, Inc.*..................... 1,735,200
109,400 Xicor, Inc.*............................ 663,238
-----------
11,152,651
-----------
INDUSTRIAL - 1.35%
26,400 Kulicke & Soffa Industries, Inc.*....... 775,500
-----------
MEDICAL SOFTWARE - 0.80%
29,100 InfoCure Corp.*......................... 461,053
-----------
MEDICAL SUPPLIES - 0.66%
96,200 Isolyser Co., Inc.*..................... 375,781
-----------
MEDICAL TECHNOLOGIES - 6.81%
10,400 AnthroCare Corp.*....................... 748,800
32,400 Cytyc Corp.*............................ 1,293,975
134,800 LaserSight Inc.*........................ 1,857,712
-----------
3,900,487
-----------
RESTAURANTS - 1.33%
35,500 P.F. Chang's China Bistro, Inc.*........ 762,141
-----------
RETAIL - 14.99%
35,800 American Eagle Outfitters, Inc.*........ 1,533,806
38,100 Ames Department Stores, Inc.*........... 1,208,484
28,000 AnnTaylor Stores Corp.*................. 1,191,750
10,000 BEBE Stores, Inc.*...................... 263,438
63,800 Catherines Stores Corp.*................ 837,375
<CAPTION>
MARKET
SHARES VALUE
- ------ -----
<C> <S> <C>
RETAIL (CONTINUED)
27,700 Charlotte Russe Holding, Inc.*.......... $ 388,666
46,700 Charming Shoppes, Inc.*................. 234,230
61,350 Cutter & Buck, Inc.*.................... 1,004,606
115,200 Genesco Inc.*........................... 1,526,400
23,600 Ultimate Electronics, Inc.*............. 396,775
-----------
8,585,530
-----------
TECHNOLOGY - 20.80%
33,200 Asyst Technologies, Inc.*............... 1,282,350
38,900 Ciena Corp.*............................ 1,370,009
94,500 Concurrent Computer Corp.*.............. 1,083,797
14,800 Cymer, Inc.*............................ 546,675
16,800 E-Tek Dynamics, Inc.*................... 1,120,350
14,900 Ibis Technology Corp.*.................. 682,141
18,000 JDS Uniphase Corp.*..................... 3,003,188
6,200 MTI Technology Corp.*................... 105,206
38,800 PRI Automation, Inc.*................... 1,559,275
61,600 Varian, Inc.*........................... 1,158,850
-----------
11,911,841
-----------
TELECOMMUNICATIONS - 5.27%
47,600 Terayon Communication Systems, Inc.*.... 2,079,525
12,800 Tut Systems, Inc.*...................... 427,600
13,800 Verio, Inc.*............................ 512,756
-----------
3,019,881
-----------
TOTAL COMMON STOCKS..................... 54,963,736
-----------
(Cost $44,518,433)
<CAPTION>
PAR VALUE
- ---------
<C> <S> <C>
REPURCHASE AGREEMENT - 5.45%
$3,120,553 Morgan Stanley, Bank of New York
Tri-Party 5.050%, dated 10/29/99 to be
repurchased on 11/01/99 at $3,121,867
(Collateralized by U.S. Treasury Note
4.625%, due 12/31/00; Total Par
$3,149,775)........................... 3,120,553
-----------
TOTAL REPURCHASE AGREEMENT.............. 3,120,553
-----------
(Cost $3,120,553)
TOTAL INVESTMENTS - 101.40%......................... 58,084,289
-----------
(Cost $47,638,986)**
LIABILITIES NET OF CASH AND OTHER ASSETS - (1.40)%.. (802,715)
-----------
NET ASSETS - 100.00%................................ $57,281,574
===========
</TABLE>

- -------------------------------------------------

* Non-income producing security.
** Aggregate cost for Federal income tax purposes is $47,638,986.

<S> <C>
Gross unrealized appreciation...... $11,699,771
Gross unrealized depreciation...... (1,254,468)
-----------
Net unrealized appreciation........ $10,445,303
===========
</TABLE>

SP-ADR Sponsored American Depositary Receipt

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- - 22
<PAGE>
ALLEGHANY FUNDS
- ------------------------------

ALLEGHANY/BLAIRLOGIE INTERNATIONAL DEVELOPED FUND OCTOBER 31, 1999

SCHEDULE OF INVESTMENTS

<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ------ -----
<C> <S> <C>
COMMON STOCKS - 90.60%
AUSTRALIA - 5.40%
60,956 Amcor Ltd............................... $ 266,429
74,310 Broken Hill Proprietary Co. Ltd......... 768,129
117,800 Foster's Brewing Group Ltd.............. 313,154
72,054 Leighton Holdings Ltd................... 261,949
57,400 National Australia Bank Ltd............. 885,955
92,584 News Corp. Ltd.......................... 669,628
28,100 Rio Tinto Ltd........................... 451,764
112,500 Southcorp Ltd........................... 391,051
44,051 TABCORP Holdings Ltd.................... 279,272
139,100 Telstra Corp. Ltd....................... 707,703
101,597 Westpac Banking Corp.................... 652,003
------------
5,647,037
------------
FINLAND - 2.19%
5,900 JOT Automation Group Oyj................ 30,406
15,800 Kemira Oyj.............................. 97,546
14,508 Nokia Oyj............................... 1,660,309
1,928 Okobank, Class A........................ 17,946
3,620 Oy Hartwall AB.......................... 46,411
6,398 Rautaruukki Oyj......................... 41,048
1,540 Sanoma WSOY Oyj, Class B*............... 70,619
4,230 Sonera Group Oyj........................ 127,016
2,663 UPM-Kymmene Oyj......................... 84,024
1,500 Viking Line Oyj......................... 64,683
4,880 YIT-Yhtyma Oyj.......................... 46,706
------------
2,286,714
------------
FRANCE - 12.61%
2,060 Alcatel................................. 321,741
7,190 Axa..................................... 1,014,075
10,560 Banque Nationale de Paris............... 927,391
6,320 Carrefour SA............................ 1,169,883
1,210 Castorama Dubois........................ 362,442
2,700 Compagnie de Saint Gobain............... 468,555
2,800 Compagnie Gen Des Eaux, Warrant* expires
05/02/2001............................ 6,331
8,300 Credit Lyonnais*........................ 250,974
1,610 Danone.................................. 410,630
17,706 France Telecom SA....................... 1,710,457
2,370 Groupe GTM.............................. 259,235
4,470 Hermes International.................... 488,938
1,020 L'OREAL................................. 680,682
2,656 Lafarge SA.............................. 255,601
1,600 Legrand................................. 382,837
2,900 Pinault-Printemps-Redoute SA............ 552,979
7,440 Renault SA.............................. 384,991
10,600 Sanofi-Synthelabo SA*................... 467,682
6,300 Societe BIC SA.......................... 308,110
1,600 Sodexho Alliance........................ 262,517
12,698 Total Fina SA, Class B.................. 1,716,134
10,421 Vivendi................................. 789,689
------------
13,191,874
------------
GERMANY - 10.31%
3,217 Allianz AG.............................. 981,209
13,454 BASF AG................................. 607,753
<CAPTION>
MARKET
SHARES VALUE
- ------ -----
<C> <S> <C>
GERMANY (CONTINUED)
19,591 Bayer AG................................ $ 801,528
9,100 Bayerische Motoren Werke (BMW) AG....... 289,999
12,084 DaimlerChrysler AG...................... 941,763
13,585 Deutsche Bank AG........................ 974,444
36,720 Deutsche Telekom AG..................... 1,693,499
10,253 Dresdner Bank AG........................ 526,239
7,940 HypoVereinsbank......................... 517,756
6,355 Mannesmann AG........................... 999,239
5,160 Metro AG................................ 272,708
2,420 Muenchener Rueckversicherungs-
Gesellschaft AG....................... 546,462
9,246 Siemens AG.............................. 829,985
9,010 Veba AG................................. 492,292
16,380 Viag AG................................. 302,346
------------
10,777,222
------------
IRELAND - 2.18%
59,300 Allied Irish Banks Plc.................. 742,189
7,100 Bank of Ireland......................... 55,409
28,400 CRH Plc................................. 536,161
24,000 eircom Plc*............................. 99,895
29,459 Irish Life & Permanent Plc.............. 300,540
27,000 Kerry Group Plc, Class A................ 333,668
80,800 Smurfit (Jefferson) Group Plc........... 209,904
------------
2,277,766
------------
ITALY - 2.34%
7,475 Assicurazioni Generali.................. 239,786
14,495 Banca Commerciale Italiana.............. 87,202
23,916 Banca Intesa SpA........................ 102,124
16,600 Banca Popolare di Milano................ 111,563
65,400 Benetton Group SpA...................... 144,448
13,100 Burgo (Cartiere) SpA.................... 96,446
80,315 ENI SpA................................. 469,661
5,655 Fiat SpA*............................... 179,024
46,600 Istituto Nazionale delle Assicurazioni
SpA................................... 141,398
83,784 Montedison SpA.......................... 90,675
14,980 San Paolo-IMI SpA....................... 194,104
56,500 Telecom Italia Mobile SpA............... 352,978
27,520 Telecom Italia SpA...................... 237,632
------------
2,447,041
------------
JAPAN - 17.42%
15,800 Aoyamma Trading Co., Ltd................ 483,380
98,000 Asahi Chemical Industry Co., Ltd........ 592,117
73,000 Bank of Tokyo-Mitsubishi, Ltd........... 1,209,782
19,000 Bridgestone Corp........................ 522,969
15,000 Canon, Inc.............................. 424,379
13,700 Fanuc, Ltd.............................. 1,064,256
14,000 Fuji Photo Film......................... 449,794
27,000 Fujisawa Pharmaceutical Co., Ltd........ 675,842
42,000 Hitachi, Ltd............................ 453,956
64,000 Kirin Brewery Co., Ltd.................. 732,867
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- 23
<PAGE>
ALLEGHANY FUNDS
- ----------------------------------

ALLEGHANY/BLAIRLOGIE INTERNATIONAL DEVELOPED FUND OCTOBER 31, 1999

SCHEDULE OF INVESTMENTS -- CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ------ -----
<C> <S> <C>
JAPAN (CONTINUED)
29,000 Matsushita Electric Industrial Co.,
Ltd................................... $ 610,482
166,000 Mitsubishi Heavy Industries, Ltd........ 651,136
9,000 Murata Manufacturing Co., Ltd........... 1,152,297
21,000 NEC Corp................................ 424,954
182,000 Nippon Light Metal Co., Ltd............. 268,802
140,000 Nippon Steel Corp....................... 355,807
95 Nippon Telegraph & Telephone Corp....... 1,457,754
23,000 Sankyo Co., Ltd......................... 655,126
84,000 Sekisui Chemical Co., Ltd............... 413,273
43,000 Sharp Corp.............................. 684,569
35,000 Shiseido Co., Ltd....................... 533,711
4,900 SONY CORP............................... 764,112
31,000 Sumitomo Bank, Ltd...................... 498,878
49,000 Sumitomo Electric Industries............ 658,377
59,000 Tokio Marine & Fire Insurance Co.,
Ltd................................... 772,370
26,700 Tokyo Electric Power Co................. 596,634
32,000 Toyota Motor Corp....................... 1,107,893
------------
18,215,517
------------
NETHERLANDS - 5.24%
14,699 ABN AMRO Holding NV..................... 355,418
4,200 AEGON NV................................ 387,622
4,304 Akzo Nobel NV........................... 185,324
13,150 Elsevier NV............................. 124,890
8,108 Fortis (NL) NV.......................... 279,108
3,400 Heineken NV............................. 173,398
10,911 ING Groep NV............................ 643,554
4,300 Koninklijke Ahold NV.................... 132,058
3,664 Koninklijke (Royal) Philips Electronics
NV.................................... 375,727
5,461 KPN NV.................................. 280,231
26,557 Royal Dutch Petroleum Co................ 1,587,338
5,961 TNT Post Group NV....................... 151,722
8,147 Unilever NV............................. 539,822
4,459 VNU NV.................................. 150,776
3,300 Wolters Kluwer NV....................... 110,266
------------
5,477,254
------------
NEW ZEALAND - 0.90%
419,700 Brierley Investments Ltd.*.............. 95,736
109,400 Carter Holt Harvey Ltd.................. 138,637
15,700 Fisher & Paykel Industries Ltd.......... 47,750
39,200 Fletcher Challenge Energy*.............. 90,411
44,200 Lion Nathan Ltd......................... 95,221
118,000 Telecom Corp. of New Zealand Ltd........ 474,924
------------
942,679
------------
NORWAY - 2.71%
45,820 Christiana Bank Og Kreditkasse.......... 222,957
71,050 Den Norske Bank ASA..................... 275,132
16,800 Hafslund ASA, Class B................... 62,060
11,820 Merkantildata ASA....................... 100,125
26,610 Norsk Hydro ASA......................... 1,060,943
<CAPTION>
MARKET
SHARES VALUE
- ------ -----
<C> <S> <C>
NORWAY (CONTINUED)
5,230 Norske Skogindustrier ASA............... $ 171,213
18,920 Orkla ASA, Class B...................... 262,694
11,510 Petroleum Geo-Services*................. 171,539
32,500 Storebrand ASA*......................... 225,623
11,200 Tandberg Television ASA*................ 132,679
2,920 Tomra Systems ASA....................... 111,585
6,270 Unitor ASA.............................. 39,135
------------
2,835,685
------------
PORTUGAL - 2.42%
12,313 Banco Comercial Portugues, SA,
Class R............................... 346,806
7,910 Banco Espirito Santo e Comercial de
Lisboa, SA............................ 205,654
28,045 BPI-SGPS, SA............................ 112,086
4,231 Brisa-Auto Estradas de Portugal, SA..... 166,651
7,132 Cimpor-Cimentos de Portugal SGPS, SA.... 118,292
41,627 EDP-Electricidade de Portugal, SA....... 647,086
6,944 Jeronimo Martins, SGPS, SA.............. 193,831
14,775 Portugal Telecom SA..................... 658,880
2,418 Sonae Investimentos SPGS, SA............ 80,770
------------
2,530,056
------------
SINGAPORE - 2.07%
29,000 City Developments Ltd................... 149,997
38,379 DBS Group Holdings Ltd.................. 433,948
30,800 Keppel Corp. Ltd........................ 83,729
45,150 Oversea-Chinese Banking Corp. Ltd....... 339,433
23,445 Overseas Union Bank Ltd................. 101,524
22,000 Singapore Airlines Ltd.................. 232,874
19,300 Singapore Press Holdings Ltd............ 330,817
89,000 Singapore Technologies Engineering
Ltd................................... 129,001
94,000 Singapore Telecommunications Ltd........ 178,649
24,200 United Overseas Bank Ltd................ 183,389
------------
2,163,361
------------
SWITZERLAND - 7.51%
4,846 ABB AG.................................. 488,130
6 Ciba Specialty Chemicals AG*............ 446
315 Clariant AG............................. 137,873
4,996 Credit Suisse Group..................... 960,580
192 Holderbank Financiere Glarus AG......... 236,488
480 Nestle SA............................... 926,045
1,045 Novartis AG............................. 1,563,489
143 Roche Holding AG........................ 1,717,239
132 Schindler Holding AG.................... 210,486
1,030 Swisscom AG............................. 313,954
3,150 UBS AG.................................. 916,743
680 Zurich Allied AG........................ 385,091
------------
7,856,564
------------
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- - 24
<PAGE>
ALLEGHANY FUNDS
- ------------------------------

ALLEGHANY/BLAIRLOGIE INTERNATIONAL DEVELOPED FUND OCTOBER 31, 1999

SCHEDULE OF INVESTMENTS -- CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ------ -----
<C> <S> <C>
UNITED KINGDOM - 12.88%
30,422 Abbey National Plc...................... $ 594,410
20,596 AstraZeneca Group Plc................... 928,379
8,900 Barclays Plc............................ 273,055
37,560 Boots Co. Plc........................... 386,382
113,806 BP Amoco Plc............................ 1,105,272
53,100 British Telecommunications Plc.......... 963,778
21,900 Cable & Wireless Plc.................... 256,056
54,300 Cadbury Schweppes Plc................... 354,248
32,934 CGU Plc................................. 480,589
32,300 Diageo Plc.............................. 328,025
27,115 Glaxo Wellcome Plc...................... 800,263
64,816 HSBC Holdings Plc....................... 799,373
31,229 IMI Plc................................. 122,138
69,020 Lloyds TSB Group Plc.................... 953,866
24,400 Marks & Spencer Plc..................... 112,370
37,700 National Power Plc...................... 254,934
41,931 Prudential Corp. Plc.................... 657,700
37,977 Scottish & Newcastle Plc................ 353,539
42,758 ScottishPower Plc....................... 396,290
45,937 Shell Transport & Trading Plc........... 352,152
70,452 SmithKline Beecham Plc.................. 907,666
180,245 Tesco Plc............................... 534,635
56,407 Unilever Plc............................ 523,255
167,500 Vodafone Group Plc...................... 781,717
36,974 Wolsely Plc............................. 251,392
------------
13,471,484
------------
UNITED STATES - 4.42%
311,000 WEBS Japan Index Series................. 4,626,125
------------
TOTAL COMMON STOCKS..................... 94,746,379
------------
(Cost $80,886,194)
<CAPTION>
MARKET
SHARES VALUE
- ------ -----
<C> <S> <C>

FOREIGN INDEX SECURITIES - 3.53%
5,500 MSCI Canadian Opal
0.000%, 04/07/17...................... $ 1,027,895
9,900 Sweden Opal
18.526%, 04/07/07..................... $ 2,666,961
------------
TOTAL FOREIGN INDEX SECURITIES.......... 3,694,856
------------
(Cost $3,172,804)

PREFERRED STOCK - 0.54%
GERMANY - 0.54%
1,305 SAP AG.................................. 563,014
------------
TOTAL PREFERRED STOCK................... 563,014
------------
(Cost $627,042)

<CAPTION>
PAR VALUE
- ---------
<C> <S> <C>
TIME DEPOSIT - 0.93%
$ 973,000 Euro Time Deposit
3.000%, 11/01/99...................... 973,000
------------
TOTAL TIME DEPOSIT...................... 973,000
------------
(Cost $973,000)
TOTAL INVESTMENTS - 95.60%........................... 99,977,249
------------
(Cost $85,659,040)**
NET OTHER ASSETS AND LIABILITIES - 4.40%............. 4,606,117
------------
NET ASSETS - 100.00%................................. $104,583,366
============
</TABLE>

- ------------------------------------------------

* Non-income producing security.
** Aggregate cost for Federal income tax purposes is $85,744,589.

<S> <C>
Gross unrealized appreciation........... $17,883,054
Gross unrealized depreciation........... (3,650,394)
-----------
Net unrealized appreciation............. $14,232,660
===========
</TABLE>

As of October 31, 1999, the Fund has entered into the following forward foreign
currency contracts:

FORWARD FOREIGN CURRENCY CONTRACTS SOLD:

<TABLE>
<CAPTION>
CURRENCY SETTLEMENT CONTRACTS AT IN EXCHANGE UNREALIZED
VALUE CONTRACTS TO DELIVER DATES VALUE FOR U.S. $ DEPRECIATION
----- -------------------- ----- ----- ---------- ------------
<S> <C> <C> <C> <C> <C>
22,374.. EU 11/01/99 $23,534 $23,529 $ (5)
8,697.. EU 11/02/99 9,148 9,084 (64)
------- ------- ----
$32,682 $32,613 $(69)
======= ======= ====
</TABLE>

FORWARD FOREIGN CURRENCY CONTRACTS PURCHASED:

<TABLE>
<CAPTION>
CURRENCY SETTLEMENT CONTRACTS AT IN EXCHANGE UNREALIZED
VALUE CONTRACTS TO RECEIVE DATES VALUE FOR U.S. $ DEPRECIATION
----- -------------------- ----- ----- ---------- ------------
<S> <C> <C> <C> <C> <C>
39,424.. NZ 11/01/99 $19,984 $20,106 $(122)
======= ======= =====
</TABLE>

- ------------------------------------------------

EU European Monetary Unit
NZ New Zealand Dollars

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- 25
<PAGE>
ALLEGHANY FUNDS
- ----------------------------------

ALLEGHANY/BLAIRLOGIE EMERGING MARKETS FUND OCTOBER 31, 1999

SCHEDULE OF INVESTMENTS

<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ------ -----
<C> <S> <C>
COMMON STOCKS - 79.12%
ARGENTINA - 2.43%
8,389 Banco de Galicia y Buenos Aires SA,
Class B............................... $ 44,399
6,420 Banco Frances SA........................ 46,888
729 IRSA Inversiones y Representaciones SA,
SP GDR................................ 22,007
3,876 Molinos Rio de la Plata SA*............. 7,949
4,900 Perez Companc SA, Class B............... 29,757
4,512 Perez Companc SA, SP ADR................ 54,803
11,160 Renault Argentina SA.................... 14,403
1,488 Siderar S.A.I.C., Class A............... 5,597
23,816 Siderca SA.............................. 46,225
5,433 Telefonica de Argentina, SP ADR......... 139,221
19,900 Transportadora de Gas del Sur SA,
Class B............................... 33,846
-----------
445,095
-----------
BRAZIL - 1.37%
547,900 Companhia Paulista de Forca e Luz....... 34,412
3,322,000 Companhia Siderurgica Nacional.......... 88,326
7,500 Souza Cruz SA........................... 42,841
1,634,000 Telecomunicacoes Brasileiras SA
Class A............................... 84,881
-----------
250,460
-----------
CHILE - 5.00%
7,900 Banco Santander Chile, SP ADR........... 129,363
9,851 Cia. Telecomunicaciones de Chile SA, SP
ADR................................... 164,389
3,100 Compania Cervecerias Unidas SA, SP
ADR................................... 67,619
11,272 Empresa Nacional de Electricidad SA, SP
ADR................................... 143,718
5,502 Enersis SA, SP ADR...................... 123,795
5,328 Gener SA, SP ADR........................ 79,254
4,957 Madeco SA, SP ADR....................... 48,950
5,290 Maderas y Sinteticos SA, SP ADR......... 56,206
3,330 Sociedad Quimica y Minera de Chile SA,
SP ADR................................ 96,778
192 Sociedad Quimica y Minera de Chile SA,
SP ADR, Class A....................... 5,304
-----------
915,376
-----------
CHINA - 1.38%
182,000 Beijing Datang Power Generation Co. Ltd.
Class H*.............................. 37,952
50,000 China Southern Airlines Co. Ltd.,
Class H*.............................. 9,976
34,000 Guangdong Kelon Electrical Holdings Co.
Ltd. Class H*......................... 30,198
150,000 Guangshen Railway Co. Ltd., Class H*.... 17,184
122,000 Huaneng Power International, Inc.,
Class H............................... 36,512
164,000 Jiangsu Express Co. Ltd., Class H....... 25,121
92,000 Qingling Motors Co. Ltd., Class H....... 15,040
<CAPTION>
MARKET
SHARES VALUE
- ------ -----
<C> <S> <C>
CHINA (CONTINUED)
140,000 Shanghai Petrochemical Co. Ltd.,
Class H*.............................. $ 28,654
104,000 Shenzhen Expressway Co. Ltd.,
Class H*.............................. 15,529
38,000 Yizheng Chemical Fibre Co. Ltd.,
Class H*.............................. 10,394
174,000 Zhejiang Expressway Co. Ltd.,
Class H............................... 26,429
-----------
252,989
-----------
COLUMBIA - 1.42%
1,000 Banco Ganadero SA, SP ADR............... 15,202
5,200 Banco Ganadero SA, SP ADR, Class C...... 33,991
20,100 Bancolombia, SP ADR..................... 87,309
61,400 Cadenalco SA, SP ADR.................... 122,800
-----------
259,302
-----------
HUNGARY - 5.52%
1,210 Danubius Hotel and Spa, Rights*......... 20,895
1,975 Gedeon Richter, Rights.................. 90,138
89,850 Magyar Tavkozlesi, Rights............... 522,749
10,430 MOL Magyar Olaj-es Gazipari, Rights..... 210,135
3,340 OTP Bank, Rights........................ 151,338
460 Pick Szeged, Rights..................... 15,793
-----------
1,011,048
-----------
INDIA - 2.38%
1,500 Bajaj Auto Ltd., SP GDR................. 16,200
1,700 BSES Ltd., GDR.......................... 20,400
3,380 EIH Ltd., SP GDR........................ 16,055
1,267 Grasim Industries Ltd., SP GDR.......... 16,471
1,800 Gujarat Ambuja Cement Ltd., SP GDR...... 22,095
1,610 Hindalco Industries Ltd., SP GDR........ 34,011
3,530 Indian Hotels Co., Ltd, SP GDR.......... 37,241
4,225 Indian Rayon & Industries Ltd., SP
GDR................................... 6,866
1,180 Larsen & Tourbo Ltd., GDR............... 25,547
6,900 Mahanagar Telephone Nigam Ltd., GDR..... 56,925
4,200 Reliance Industries Ltd., SP GDR (A).... 51,765
3,300 State Bank of India, GDR................ 43,931
4,124 Tata Engineering & Locomotive Co., Ltd.
SP GDR................................ 26,394
3,900 Videsh Sanchar Nigam Ltd., GDR.......... 62,205
-----------

436,106
-----------
INDONESIA - 2.23%
73,000 PT Astra International Tbk*............. 35,941
20,000 PT Gudang Garam Tbk..................... 51,349
150,000 PT Indah Kiat Pulp & Paper Corp. Tbk*... 64,551
60,000 PT Indofood Sukses Makmur Tbk*.......... 70,897
19,000 PT Semen Gresik (Persero) Tbk........... 33,815
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- - 26
<PAGE>
ALLEGHANY FUNDS
- ------------------------------

ALLEGHANY/BLAIRLOGIE EMERGING MARKETS FUND OCTOBER 31, 1999

SCHEDULE OF INVESTMENTS -- CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ------ -----
<C> <S> <C>
INDONESIA (CONTINUED)
17,000 PT Tambang Timah Tbk.................... $ 13,392
293,720 PT Telekomunikasi Indonesia............. 139,255
-----------
409,200
-----------
ISRAEL - 1.42%
13,100 Bank Hapoalim........................... 31,153
13,500 Bank Leumi Le-Israel.................... 23,808
5,500 Bezeq Israeli Telecommunications Corp.
Ltd.*................................. 22,417
1,520 Blue Square Chain Investments and
Properties Ltd........................ 20,865
1,370 ECI Telecom Ltd......................... 39,901
290 Elite Industries Ltd.................... 13,657
590 Formula Systems (1985) Ltd.*............ 14,753
16,500 Israel Chemicals Ltd.................... 15,268
290 Koor Industries Ltd..................... 23,967
7,200 Makhteshim-Agan Industries Ltd.*........ 12,528
850 Teva Pharmaceuticals Industries Ltd..... 41,228
-----------
259,545
-----------
MALAYSIA - 2.08%
9,000 Commerce Asset-Holding Berhad........... 19,895
22,000 Malayan Banking Berhad.................. 74,684
25,000 Malaysia International Shipping Corp.
Berhad................................ 37,500
21,000 Malaysian Airline System Berhad......... 19,784
15,000 Petronas Gas Berhad..................... 31,776
48,000 Public Bank Berhad...................... 50,779
9,000 Resorts World Berhad.................... 25,816
17,000 Telekom Malaysia Berhad................. 52,342
30,000 Tenaga Nasional Berhad.................. 69,079
-----------
381,655
-----------
MEXICO - 13.45%
19,400 Alfa SA de CV........................... 74,072
3 Cemex SA de CV.......................... 13
6,604 Cemex SA de CV, SP ADR*................. 148,590
145,837 Cifra SA de CV, Series V*............... 228,193
46,400 Desc SA de CV, Series B................. 37,943
3,100 Fomento Economico Mexicano, SP ADR...... 101,719
33,900 Grupo Carso SA de CV, Series A1*........ 141,779
40,000 Grupo Financiero Banamex Accival, SA de
CV, Class O*.......................... 99,667
54,673 Grupo Industrial Bimbo SA de CV,
Series A.............................. 100,222
27,110 Grupo Mexico SA, Series B............... 98,574
95,100 Grupo Modelo SA de CV, Series C......... 232,506
4,240 Grupo Televisa SA, SP GDR*.............. 180,200
19,100 Industrias Penoles SA................... 60,209
37,800 Kimberley-Clark de Mexico SA,
Class A............................... 119,551
<CAPTION>
MARKET
SHARES VALUE
- ------ -----
<C> <S> <C>
MEXICO (CONTINUED)
15,500 Savia SA de CV*......................... $ 82,886
8,840 Telefonos de Mexico SA, SP ADR.......... 755,820
-----------
2,461,944
-----------
PERU - 0.88%
9,200 Banco Wiese, SP ADR*.................... 13,225
6,865 Cementos Lima SA........................ 7,951
1,847 Compania de Minas Buenaventura,
Class A............................... 14,948
474 Compania de Minas Buenaventura,
Class B............................... 3,877
2,116 Credicorp Ltd........................... 22,482
6,301 Ferreyros SA............................ 3,424
821 Minsur SA*.............................. 1,740
400 Southern Peru Copper Corp............... 1,945
63,738 Telefonica del Peru SAA, Class B........ 74,734
45,076 Union de Cervecerias Backus y Johnston
SAA................................... 16,629
-----------
160,955
-----------
PHILLIPINES - 1.88%
109,000 Ayala Land, Inc......................... 27,862
11,000 Manila Electric Co., Class B............ 30,174
9,680 Metropolitan Bank & Trust Co............ 72,419
312,000 Petron Corp............................. 26,065
4,400 Phillipine Long Distance Telephone
Co.................................... 91,621
28,000 San Miguel Corp., Class B............... 40,499
312,000 SM Prime Holdings....................... 55,242
-----------
343,882
-----------
POLAND - 1.93%
1,700 Bank Handlowy w Warszawie............... 23,972
1,115 Bank Rozwoju Eksportu SA................ 30,389
510 Bank Slaski SA w Katowicach............. 27,799
7,800 BIG Bank Gdanski SA..................... 15,529
2,130 Debica SA............................... 19,182
3,971 Elektrim Spolka Akcyjna SA*............. 34,350
1,200 Prokom.................................. 25,880
480 Softbank SA............................. 13,537
5,240 Stomil Olsztyn SA....................... 24,464
23,000 Telekomunikacja Polska SA, GDR.......... 117,300
3,558 Wielkopolski Bank Kredytowy SA.......... 20,912
-----------
353,314
-----------
SOUTH AFRICA - 6.62%
5,780 ABSA Group Ltd.......................... 23,572
4,440 Anglo American Platinum Corp. Ltd....... 127,941
910 Anglo American Plc...................... 48,444
1,100 AngloGold Ltd........................... 62,141
13,270 Barlow Ltd.............................. 64,703
9,430 C.G. Smith Ltd.......................... 30,551
5,520 De Beers................................ 150,795
452 Edgars Consolidated Stores Ltd.......... 4,415
63,100 FirstRand Ltd........................... 72,936
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- 27
<PAGE>
ALLEGHANY FUNDS
- ----------------------------------

ALLEGHANY/BLAIRLOGIE EMERGING MARKETS FUND OCTOBER 31, 1999

SCHEDULE OF INVESTMENTS -- CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ------ -----
<C> <S> <C>
SOUTH AFRICA (CONTINUED)
5,100 Gold Fields Ltd......................... $ 24,410
2,832 Imperial Holdings Ltd.*................. 26,280
1,841 Liberty International Plc*.............. 15,345
3,420 Liberty Life Association of Africa
Ltd................................... 31,736
5,700 Naspers Ltd., Class N................... 35,495
4,900 Nedcor Ltd., GDR, Class S............... 95,550
13,640 Rembrandt Group Ltd..................... 102,036
40,900 Sanlam Ltd.............................. 46,943
3,900 Sappi Ltd............................... 32,317
9,200 Sasol Ltd............................... 62,906
12,680 South African Breweries Plc*............ 111,060
3,700 Standard Bank Investment Corp. Ltd...... 12,645
4,300 Woolworths Holdings Ltd., GDR........... 30,100
-----------
1,212,321
-----------
SOUTH KOREA - 9.70%
3,900 Hyundai Motor Co. Ltd.*................. 68,604
8,800 Kookmin Bank............................ 137,191
11,900 Korea Electric Power Corp............... 348,220
2,500 Korea Telecom Corp...................... 168,195
2,983 L.G. Chemical Ltd....................... 90,273
3,100 Pohang Iron & Steel Ltd., SP ADR........ 103,463
1,700 Samsung Display Devices Co.............. 89,287
1,000 Samsung Electro-Mechanics Co............ 48,353
3,119 Samsung Electronics..................... 520,050
5,800 Shinhan Bank............................ 61,409
3,100 SK Corp................................. 59,441
71 SK Telecom Co. Ltd...................... 81,980
-----------
1,776,466
-----------
TAIWAN - 7.98%
8,856 Advanced Semiconductor
Engineering, Inc., GDR*............... 177,120
19,459 Asia Cement Corp., SP GDR............... 174,647
18,900 Asustek Computer, Inc., GDR............. 266,490
13,975 China Steel Corp., SP GDR............... 237,924
14,580 Evergreen Marine Corp., SP GDR.......... 158,193
14,000 Standard Foods Taiwan Ltd., GDR*........ 73,150
20,386 Winbond Electronic Corp., GDR*.......... 374,083
-----------
1,461,607
-----------
THAILAND - 1.87%
3,300 Advanced Info Service Public Co.
Ltd.*................................. 38,467
28,500 Bangkok Bank Public Co. Ltd.*........... 66,442
8,900 Electricity Generating Public Co.
Ltd.*................................. 11,758
8,800 PTT Exploration & Production Public Co.
Ltd.*................................. 64,282
2,000 Siam Cement Public Co. Ltd.*............ 51,807
55,000 TelecomAsia Corp. Public Co. Ltd.*...... 42,384
47,000 Thai Farmers Bank Public Co. Ltd.*...... 66,351
-----------
341,491
-----------
<CAPTION>
MARKET
SHARES VALUE
- ------ -----
<C> <S> <C>
TURKEY - 6.76%
2,216,618 Adana Cimento Sanayii Turk Anomin
Sirketi, Class A...................... $ 46,106
1,977,377 Akbank TAS.............................. 30,847
1,920,000 Arcelik AS.............................. 70,886
431,000 Aygaz AS................................ 41,238
718,000 Brisa Bridgestone Sabanci Lastik San. ve
Tic AS................................ 17,921
5,411,000 Dogan Sirketler Grubu Holdings AS*...... 60,776
1,284,000 Ege Biracilik ve Malt Sanayii AS........ 43,399
2,788,000 Eregli Demir ve Celik Fabrikalari
TAS*.................................. 69,588
1,471,500 Haci Omer Sabanci Holding AS............ 43,615
260,200 Migros Turk TAS......................... 112,302
662,600 Netas Northern Electric Telekomunikasyon
AS.................................... 24,808
4,416,000 Trakya Cam Sanayii AS*.................. 58,786
17,068,700 Turkiye Garanti Bankasi AS*............. 145,562
14,914,900 Turkiye Is Bankasi, Class C............. 294,718
237,000 Vestel Elektronik Sanayi ve Ticaret
AS*................................... 29,085
10,129,479 Yapi ve Kredi Bankasi SA................ 147,485
-----------
1,237,122
-----------
VENEZUELA - 2.82%
6,965 C.A. La Electricidad de Caracas, ADR.... 131,356
13,800 Compania Anonima Nacional Telefonos de
Venezuela, ADR........................ 356,213
8,850 Mavesa SA, SP ADR....................... 28,209
-----------
515,778
-----------
TOTAL COMMON STOCKS..................... 14,485,656
-----------
(Cost $13,609,506)

PREFERRED STOCKS - 7.79%
BRAZIL - 7.79%
23,400 Aracruz Celulose SA, Class B............ 45,913
14,494,507 Banco Bradesco SA....................... 70,913
2,177,000 Banco Itau SA........................... 124,910
13,563,620 Centrais Electricas Brasileiras SA,
Class B............................... 241,115
105,300 Companhia Cervejaria Brahma............. 67,161
3,621,255 Companhia Energetica de Minas Geraus.... 51,573
9,662 Companhia Vale do Rio Doce, Class A*.... 188,439
971,000 Petroleo Brasleiro SA................... 154,454
5,130 Telecomunicacoes Brasileiras SA, Pfd
Block, SP ADR......................... 399,499
3,730 Telecomunicacoes Brasileiras SA, SP
ADR*.................................. 175
22,219 Usinas Siderurgicas de Minas Gerais,
Class A............................... 80,931
-----------
TOTAL PREFERRED STOCKS.................. 1,425,083
-----------
(Cost $1,575,598)
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- - 28
<PAGE>
ALLEGHANY FUNDS
- ------------------------------

ALLEGHANY/BLAIRLOGIE EMERGING MARKETS FUND OCTOBER 31, 1999

SCHEDULE OF INVESTMENTS -- CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ------ -----
<C> <S> <C>
INVESTMENT COMPANIES - 4.36%
24,800 Korea Fund*............................. $ 316,200
27,000 Taiwan Fund, Inc........................ 482,625
-----------
TOTAL INVESTMENT COMPANIES.............. 798,825
-----------
(Cost $572,054)
<CAPTION>
PAR
VALUE
- -----
<C> <S> <C>
CORPORATE NOTES AND BONDS - 0.91%
INDUSTRIAL - 0.91%
$ 36,000 Far East Department Stores 3.000%,
07/06/2001............................ 33,210
52,000 Formosa Chemical & Fibre Corp. 1.750%,
07/19/2001............................ 59,930
57,000 Nan Ya Plastics Corp. Conv 1.750%,
07/19/2001............................ 73,245
-----------
TOTAL CORPORATE NOTES AND BONDS......... 166,385
-----------
(Cost $157,918)
<CAPTION>
PAR MARKET
VALUE VALUE
- ----- -----
<C> <S> <C>
TIME DEPOSIT - 3.14%
$ 575,000 Euro Time Deposit 3.000%, 11/01/99...... $ 575,000
-----------
TOTAL TIME DEPOSIT...................... 575,000
-----------
(Cost $575,000)
TOTAL INVESTMENTS - 95.32%.......................... 17,450,949
-----------
(Cost $16,490,076)**
NET OTHER ASSETS AND LIABILITIES - 4.68%............ 857,223
-----------
NET ASSETS - 100.00%................................ $18,308,172
===========
</TABLE>

- -------------------------------------------------

* Non-income producing security.
** Aggregate cost for Federal income tax purposes is $16,882,360.

<S> <C>
Gross unrealized appreciation...... $ 2,955,914
Gross unrealized depreciation...... (2,387,325)
------------
Net unrealized appreciation........ $ 568,589
============
</TABLE>

(A) Security exempt from registration under Rule 144A of the Securities Act of
1933. This security may only be resold, in transactions exempt from
registration, to qualified institutional buyers. At October 31, 1999, this
security amounted to $51,765 or 0.28% of net assets.
ADR American Depositary Receipt
GDR Global Depositary Receipt
SP Sponsored American Depositary Receipt
ADR
SP Sponsored Global Depositary Receipt
GDR

As of October 31, 1999, the Fund has entered into the following forward foreign
currency contracts:

FORWARD FOREIGN CURRENCY CONTRACTS PURCHASED:

<TABLE>
<CAPTION>
UNREALIZED
CURRENCY CONTRACTS TO SETTLEMENT CONTRACTS AT IN EXCHANGE APPRECIATION
VALUE RECEIVE DATES VALUE FOR U.S. $ (DEPRECIATION)
----- ------- ----- ----- ---------- --------------
<S> <C> <C> <C> <C> <C>
757,582....... HK 11/01/99 $ 97,515 $ 97,498 $ 17
75,108,670.... KR 11/02/99 62,617 62,863 (246)
74,816........ SA 11/02/99 12,176 12,170 6
33,720,188,650.. TU 11/01/99 70,114 70,428 (314)
-------- -------- -----
$242,422 $242,959 $(537)
======== ======== =====
</TABLE>

- -------------------------------------------------

HK Hong Kong Dollars
KR Korean Won
SA South African Rand
TU Turkey Lira

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- 29
<PAGE>
ALLEGHANY FUNDS
- ----------------------------------

ALLEGHANY/MONTAG & CALDWELL BALANCED FUND OCTOBER 31, 1999

SCHEDULE OF INVESTMENTS

<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ------ -----
<C> <S> <C>
COMMON STOCKS - 61.81%
CONSUMER NON-DURABLES - 10.25%
90,000 Bestfoods............................... $ 5,287,500
167,100 Gillette Co............................. 6,046,931
90,400 Interpublic Group of Companies, Inc..... 3,672,500
73,800 Newell Rubbermaid, Inc.................. 2,555,325
78,000 Procter & Gamble Co..................... 8,180,250
------------
25,742,506
------------
ELECTRICAL - 2.67%
49,400 General Electric Co..................... 6,696,788
------------
ENTERTAINMENT AND LEISURE - 1.74%
60,000 Carnival Corp........................... 2,670,000
65,000 The Walt Disney Co...................... 1,714,375
------------
4,384,375
------------
FINANCE - 5.49%
29,600 American Express Co..................... 4,558,400
52,500 American International Group, Inc....... 5,404,218
80,000 Wells Fargo Co.......................... 3,830,000
------------
13,792,618
------------
FOOD AND BEVERAGE - 2.94%
125,000 Coca-Cola Co............................ 7,375,000
------------
HEALTH CARE SERVICES - 5.50%
64,000 Johnson & Johnson....................... 6,704,000
180,000 Pfizer, Inc............................. 7,110,000
------------
13,814,000
------------
LODGING - 1.41%
105,000 Marriott International, Inc., Class A.. 3,537,188
------------
MEDICAL SUPPLIES - 3.29%
180,000 Boston Scientific Corp. *............... 3,622,500
134,400 Medtronic, Inc.......................... 4,653,600
------------
8,276,100
------------
PHARMACEUTICALS - 2.70%
88,200 Bristol-Myers Squibb Co................. 6,774,863
------------
RESTAURANTS - 2.63%
160,000 McDonald's Corp......................... 6,600,000
------------
RETAIL - 4.96%
43,800 Costco Wholesale Corp. *................ 3,516,318
68,250 Gap, Inc................................ 2,533,781
85,000 Home Depot, Inc......................... 6,417,500
------------
12,467,599
------------
TECHNOLOGY - 14.17%
50,000 EMC Corp. *............................. 3,650,000
65,000 Electronic Arts, Inc. *................. 5,250,781
100,000 Electronic Data Systems Corp............ 5,850,000
51,400 Hewlett-Packard Co...................... 3,806,813
52,500 Intel Corp.............................. 4,063,828
47,100 Microsoft Corp. *....................... 4,359,694
<CAPTION>
MARKET
SHARES VALUE
- ------ -----
<C> <S> <C>
TECHNOLOGY (CONTINUED)
115,000 Oracle Systems.......................... $ 5,473,281
41,800 Solectron Corp. *....................... 3,145,450
------------
35,599,847
------------
TELECOMMUNICATIONS - 4.06%
80,700 MCI WorldCom, Inc....................... 6,922,547
52,000 Tellabs, Inc. *......................... 3,287,375
------------
10,209,922
------------
TOTAL COMMON STOCKS..................... 155,270,806
------------
(Cost $119,416,883)
<CAPTION>
PAR VALUE
- ---------
<C> <S> <C>
U.S. GOVERNMENT AND AGENCY
OBLIGATIONS - 21.56%
FEDERAL HOME LOAN BANK - 0.37%
$1,000,000 5.890%, 06/30/08........................ 944,190
------------
FEDERAL HOME LOAN
MORTGAGE CORPORATION - 2.82%
750,000 6.400%, 12/13/06, Debenture............. 739,853
1,750,000 6.700%, 01/05/07, Global Bond........... 1,753,710
600,000 7.500%, 03/15/07, CMO, Class J.......... 600,324
175,000 6.000%, 04/15/08, CMO, Class K.......... 173,372
3,250,000 5.125%, 10/15/08........................ 2,911,318
500,000 6.500%, 07/15/20, CMO, Class F.......... 498,025
400,000 6.500%, 11/15/20, CMO, Class H.......... 395,708
------------
7,072,310
------------
FEDERAL NATIONAL
MORTGAGE ASSOCIATION - 3.37%
2,500,000 6.250%, 03/20/00, MTN................... 2,505,375
4,000,000 5.750%, 04/15/03........................ 3,928,840
2,000,000 7.250%, 01/17/21, CMO, REMIC,
Class P............................... 2,021,680
------------
8,455,895
------------
GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION - 0.00% (A)
1,403 8.500%, 06/15/01........................ 1,457
1,805 9.000%, 09/15/08........................ 1,899
------------
3,356
------------
U.S. TREASURY BONDS - 9.10%
4,175,000 7.250%, 05/15/16........................ 4,498,103
5,250,000 8.125%, 08/15/19........................ 6,184,972
3,550,000 8.000%, 11/15/21........................ 4,168,978
4,400,000 6.250%, 08/15/23........................ 4,303,596
3,500,000 6.875%, 08/15/25........................ 3,694,390
------------
22,850,039
------------
U.S. TREASURY NOTES - 5.90%
5,700,000 6.625%, 04/30/02........................ 5,801,232
2,725,000 5.750%, 08/15/03........................ 2,704,644
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- - 30
<PAGE>
ALLEGHANY FUNDS
- ------------------------------

ALLEGHANY/MONTAG & CALDWELL BALANCED FUND OCTOBER 31, 1999

SCHEDULE OF INVESTMENTS -- CONTINUED
<TABLE>
<CAPTION>
MARKET
PAR VALUE VALUE
- --------- -----
<C> <S> <C>
U.S. TREASURY NOTES (CONTINUED)
$3,650,000 7.875%, 11/15/04........................ $ 3,933,787
2,300,000 6.875%, 05/15/06........................ 2,388,573
------------
14,828,236
------------
TOTAL U.S. GOVERNMENT AND AGENCY
OBLIGATIONS............................. 54,154,026
------------
(Cost $55,932,475)
CORPORATE NOTES AND BONDS - 11.47%
CONSUMER NON-DURABLES - 1.76%
2,000,000 NIKE, Inc.
6.375%, 12/01/03...................... 1,970,000
2,500,000 Warner Lambert Co.
5.750%, 01/15/03...................... 2,450,000
------------
4,420,000
------------
ENERGY - 1.05% 2,750,000 Conoco, Inc.
5.900%, 04/15/04...................... 2,646,875
------------
FINANCE - 5.54%
1,500,000 American Express Co., Senior Notes
6.750%, 06/23/04...................... 1,486,875
2,500,000 Bank of America Corp., Subordinated
Notes
6.875%, 02/15/05...................... 2,481,250
2,500,000 Citicorp, Subordinated Notes
7.125%, 05/15/06...................... 2,490,625
3,000,000 Ford Motor Credit Corp. 7.000%,
09/25/01.............................. 3,022,500
1,350,000 Household Finance Corp., MTN Senior
Notes
7.300%, 07/30/12...................... 1,299,375
3,300,000 National Rural Utilities, Collateral
Trust
6.200%, 02/01/08...................... 3,122,625
------------
13,903,250
------------
MEDICAL PRODUCTS - 0.81%
2,100,000 Amgen, Inc.
6.500%, 12/01/07...................... 2,031,750
------------
RETAIL - 2.11%
500,000 Penney (J.C.) & Co., Debenture
9.750%, 06/15/21...................... 528,125
2,750,000 Sears Roebuck Acceptance Corp.
6.700%, 11/15/06...................... 2,660,625
2,100,000 Wal-Mart Stores, Senior Notes
6.875%, 08/10/09...................... 2,110,500
------------
5,299,250
------------
SECURITY AND COMMODITY BROKERS - 0.20%
500,000 Salomon, Inc.
7.300%, 05/15/02...................... 505,000
------------
TOTAL CORPORATE NOTES AND BONDS......... 28,806,125
------------
(Cost $29,725,624)
<CAPTION>
MARKET
PAR VALUE VALUE
- --------- -----
<C> <S> <C>
ASSET-BACKED SECURITIES - 2.03%
$1,750,000 Discover Card Master Trust 1
Series 1998-7, Class A
5.600%, 05/15/06...................... $ 1,681,969
1,750,000 First USA Credit Card Master Trust
Series 1997-6, Class A
6.420%, 03/17/05...................... 1,746,273
1,750,000 PECO Energy Transition Trust
Series 1999-A, Class A6
6.050%, 03/01/09...................... 1,655,833
------------
TOTAL ASSET-BACKED SECURITIES........... 5,084,075
------------
(Cost $5,180,930)
REPURCHASE AGREEMENT - 2.60%
6,533,000 Bankers Trust 4.880%, dated 10/29/99 to
be repurchased on 11/01/99 at
$6,535,657 (Collateralized by U.S.
Treasury Bill 4.86% due 12/02/99;
Total Par $6,698,000)................. 6,533,000
------------
TOTAL REPURCHASE AGREEMENT.............. 6,533,000
------------
(Cost $6,533,000)
<CAPTION>
SHARES
- ------
<C> <S> <C>
INVESTMENT COMPANIES - 0.04%
90,839 Bankers Trust Institutional Cash
Management Fund....................... 90,839
20,666 Bankers Trust Institutional Treasury
Money Fund............................ 20,666
------------
TOTAL INVESTMENT COMPANIES.............. 111,505
------------
(Cost $111,505)
TOTAL INVESTMENTS - 99.51%.......................... 249,959,537
------------
(Cost $216,900,417)**
NET OTHER ASSETS AND LIABILITIES - 0.49%............ 1,232,512
------------
NET ASSETS - 100.00%................................ $251,192,049
============
</TABLE>

- ------------------------------------------------

* Non-income producing security.
** Aggregate cost for Federal income tax purposes is $217,040,040.

<S> <C>
Gross unrealized appreciation....... $40,535,537
Gross unrealized depreciation....... (7,616,040)
-----------
Net unrealized appreciation......... $32,919,497
===========
</TABLE>

(A) Amount represents less than 0.01%
CMO Collateralized Mortgage Obligation
MTN Medium Term Note
REMIC Real Estate Mortgage Investment Conduit

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- 31
<PAGE>
ALLEGHANY FUNDS
- ----------------------------------

ALLEGHANY/MONTAG & CALDWELL BALANCED FUND OCTOBER 31, 1999

SCHEDULE OF INVESTMENTS -- CONTINUED

<TABLE>
<CAPTION>
PORTFOLIO COMPOSITION (MOODY'S RATINGS)
<S> <C>
Common Stocks..................................... 62%
U.S. Government Obligations....................... 15%
U.S. Government Agency Obligations................ 7%
Repurchase Agreement.............................. 3%
Corporate Notes and Bonds:
Aaa............................................... 2%
Aa................................................ 4%
A................................................. 7%
---
100%
===
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- - 32
<PAGE>
ALLEGHANY FUNDS
- ------------------------------

ALLEGHANY/CHICAGO TRUST BALANCED FUND OCTOBER 31, 1999

SCHEDULE OF INVESTMENTS

<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ------ -----
<C> <S> <C>
COMMON STOCKS - 57.07%
ADVERTISING - 1.49%
50,000 Omnicom Group, Inc...................... $ 4,400,000
------------
BUSINESS SERVICES - 1.81%
135,000 Paychex, Inc............................ 5,319,844
------------
CAPITAL GOODS - 2.25%
75,000 Pitney Bowes, Inc....................... 3,417,188
80,000 Tyco International Ltd.................. 3,195,000
------------
6,612,188
------------
CHEMICALS - 0.87%
55,000 Praxair, Inc............................ 2,571,250
------------
COMMERCIAL SERVICES - 1.15%
100,000 Ecolab, Inc............................. 3,381,250
------------
CONSUMER DURABLES - 4.67%
90,000 Harley-Davidson, Inc.................... 5,338,125
65,000 Illinois Tool Works, Inc................ 4,761,250
60,000 Johnson Controls, Inc................... 3,645,000
------------
13,744,375
------------
CONSUMER NON-DURABLES - 3.66%
70,000 Cintas Corp............................. 4,215,313
80,000 Newell Rubbermaid, Inc.................. 2,770,000
36,000 Procter & Gamble Co..................... 3,775,500
------------
10,760,813
------------
ELECTRICAL - 2.30%
50,000 General Electric Co..................... 6,778,125
------------
ENTERTAINMENT AND LEISURE - 1.28%
85,000 Carnival Corp........................... 3,782,500
------------
FINANCE - 8.71%
80,000 AFLAC Inc............................... 4,090,000
50,000 American International Group, Inc....... 5,146,875
100,000 Associates First Capital Corp.,
Class A............................... 3,650,000
90,000 Federal Home Loan Mortgage Corp......... 4,865,625
145,000 MBNA Corp............................... 4,005,625
100,000 Schwab (Charles) Corp................... 3,893,750
------------
25,651,875
------------
FOOD AND BEVERAGE - 2.61%
200,000 Sysco Corp.............................. 7,687,500
------------
HEALTH CARE SERVICES - 2.16%
65,000 Cardinal Health, Inc.................... 2,803,125
90,000 Pfizer, Inc............................. 3,555,000
------------
6,358,125
------------
MEDICAL SUPPLIES - 1.62%
200,000 Sybron International Corp. *............ 4,762,500
------------
OIL AND GAS EXTRACTION - 1.44%
70,000 Schlumberger Ltd........................ 4,239,375
------------
<CAPTION>
MARKET
SHARES VALUE
- ------ -----
<C> <S> <C>
PHARMACEUTICALS - 0.97%
36,000 Merck & Co., Inc........................ $ 2,864,250
------------
RETAIL - 2.64%
50,000 Kohl's Corp. *.......................... 3,740,625
160,000 Walgreen Co............................. 4,030,000
------------
7,770,625
------------
TECHNOLOGY - 13.54%
100,000 Cisco Systems, Inc. *................... 7,403,125
90,000 Computer Associates
International, Inc.................... 5,085,000
50,000 Computer Sciences Corp. *............... 3,434,375
120,000 EMC Corp. *............................. 8,760,000
50,000 Microsoft Corp. *....................... 4,628,125
70,000 Solectron Corp. *....................... 5,267,500
50,000 Sun Microsystems, Inc. *................ 5,289,062
------------
39,867,187
------------
TELECOMMUNICATIONS - 3.90%
80,000 AES Corp. *............................. 4,515,000
110,000 Tellabs, Inc. *......................... 6,954,062
------------
11,469,062
------------
TOTAL COMMON STOCKS..................... 168,020,844
------------
(Cost $89,664,891)

<CAPTION>
PAR VALUE
- ---------
<C> <S> <C>
U.S. GOVERNMENT AND AGENCY
OBLIGATIONS - 19.86%
FEDERAL HOME LOAN BANK - 0.67%
$ 2,000,000 6.000%, 08/15/02........................ 1,983,640
------------
FEDERAL HOME LOAN
MORTGAGE CORPORATION - 2.87%
3,500,000 5.750%, 07/15/03........................ 3,428,950
1,000,000 5.850%, 02/21/06, Debenture............. 961,730
605,347 7.500%, 04/01/08, Debenture, Gold
Pool # E46250......................... 613,289
639,697 6.500%, 06/01/09, Gold
Pool # E59122......................... 627,703
3,600,000 6.000%, 10/15/11, CMO, Interest Only,
Series 2102, Class TY................. 546,188
2,315,907 6.500%, 01/01/14,
Gold Pool # E00619.................... 2,272,484
------------
8,450,344
------------
FEDERAL NATIONAL
MORTGAGE ASSOCIATION - 4.93%
3,500,000 5.625%, 03/15/01........................ 3,479,945
575,388 6.900%, 12/25/03, CMO,
Pool # 093-70, REMIC.................. 575,630
965,495 7.000%, 01/01/13, Pool # 313966......... 964,588
725,231 7.000%, 03/01/13, Pool # 251572......... 724,549
1,487,883 6.000%, 08/01/13, Pool # 323250......... 1,430,689
265,386 7.000%, 07/25/17, CMO, REMIC,
Pool # 001993, Interest Only.......... 7,800
587,420 7.500%, 02/01/23, Pool # 050706......... 588,889
181,851 9.000%, 05/01/25, Pool # 250239......... 190,375
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- 33
<PAGE>
ALLEGHANY FUNDS
- ----------------------------------

ALLEGHANY/CHICAGO TRUST BALANCED FUND OCTOBER 31, 1999

SCHEDULE OF INVESTMENTS -- CONTINUED
<TABLE>
<CAPTION>
MARKET
PAR VALUE VALUE
- --------- -----
<C> <S> <C>
FEDERAL NATIONAL
MORTGAGE ASSOCIATION (CONTINUED)
$ 1,306,068 6.500%, 12/01/27, Pool # 402846......... $ 1,252,192
592,479 6.500%, 02/01/28, Pool # 398205......... 568,039
2,220,393 7.000%, 08/01/28, Pool # 437140......... 2,181,536
1,185,296 6.500%, 09/01/28, Pool # 430877......... 1,136,403
1,464,195 6.500%, 03/01/29, Pool # 489367......... 1,403,797
------------
14,504,432
------------
GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION - 4.76%
263,994 7.000%, 06/15/08, Pool # 348818......... 263,994
1,783,404 7.000%, 12/15/11, Pool # 781011......... 1,784,510
430,935 8.000%, 03/15/17, Pool # 207880......... 440,630
538,307 8.000%, 06/15/17, Pool # 191897......... 550,419
1,100,518 7.000%, 09/15/23, Pool # 361807......... 1,079,883
546,991 7.000%, 10/15/23, Pool # 345894......... 536,735
731,582 7.000%, 10/15/23, Pool # 370850......... 717,865
2,875,655 7.500%, 07/15/25, Pool # 409561......... 2,884,627
1,156,402 6.500%, 03/15/26, Pool # 422527......... 1,105,439
263,303 7.500%, 06/15/27, Pool # 446811......... 264,124
1,289,750 7.500%, 06/15/27, Pool # 447652......... 1,293,774
804,712 6.500%, 08/15/27, Pool # 780615......... 769,755
400,367 7.500%, 07/15/28, Pool # 464709......... 401,616
1,954,933 7.000%, 03/15/29, Pool # 505567......... 1,918,278
------------
14,011,649
------------
U.S. TREASURY BONDS - 1.89%
1,500,000 7.125%, 02/15/23........................ 1,617,165
2,100,000 6.250%, 08/15/23........................ 2,053,989
2,000,000 6.000%, 02/15/26........................ 1,896,200
------------
5,567,354
------------
U.S. TREASURY NOTES - 4.74%
3,000,000 6.375%, 08/15/02........................ 3,038,100
5,000,000 5.750%, 08/15/03........................ 4,962,650
2,400,000 5.875%, 02/15/04........................ 2,393,904
3,500,000 6.500%, 08/15/05........................ 3,565,275
------------
13,959,929
------------
TOTAL U.S. GOVERNMENT AND AGENCY
OBLIGATIONS............................. 58,477,348
------------
(Cost $59,138,870)
CORPORATE NOTES AND BONDS - 13.21%
ENERGY - 1.43%
2,000,000 Ashland, Inc., Senior Notes 6.625%,
02/15/08.............................. 1,902,500
1,100,000 CMS Energy Corp 7.625%, 11/15/04........ 1,062,875
1,250,000 Williams Co., Inc. 5.950%, 02/15/00
(A)................................... 1,250,000
------------
4,215,375
------------
FINANCE - 4.28%
1,500,000 Advanta Corp., MTN 7.000%, 05/01/01..... 1,406,250
1,250,000 Chelsea GCA Realty Partnership, REIT
7.250%, 10/21/07...................... 1,159,375
<CAPTION>
MARKET
PAR VALUE VALUE
- --------- -----
<C> <S> <C>
FINANCE (CONTINUED)
$ 1,000,000 Continental Corp. 7.250%, 03/01/03...... $ 990,000
625,000 Duke Capital Corp. 7.250%, 10/01/04..... 629,688
1,000,000 DVI, Inc., Senior Notes 9.875%,
02/01/04.............................. 975,000
2,000,000 HSBC America Capital II 8.380%, 05/15/27
(A)................................... 1,932,500
2,000,000 Metropolitan Life Insurance Co. 6.300%,
11/01/03 (A).......................... 1,930,000
1,000,000 Pacific Mutual Life Insurance Co.
7.900%, 12/30/23 (A).................. 1,021,250
1,500,000 Prudential Insurance Co. of America
7.650%, 07/01/07 (A).................. 1,507,500
1,000,000 Prudential Insurance Co. of America
8.300%, 07/01/25 (A).................. 1,041,140
------------
12,592,703
------------
FOOD AND BEVERAGE - 0.58%
1,000,000 Nabisco, Inc. 6.700%, 06/15/02.......... 987,500
750,000 Nabisco, Inc. 6.850%, 06/15/05.......... 724,688
------------
1,712,188
------------
HEALTH CARE SERVICES - 1.47%
1,500,000 HealthSouth Corp., Senior Notes 6.875%,
06/15/05.............................. 1,325,625
1,100,000 Hospital Corp. of America, Debenture
6.049%, 06/01/00 (B).................. 1,044,651
1,800,000 Omnicare, Inc. 5.000%. 12/01/07......... 1,147,500
1,000,000 Tenet Healthcare Corp. Subordinated
Notes 6.000%, 12/01/05................ 798,750
------------
4,316,526
------------
METALS & MINING - 0.59%
1,800,000 Lukens, Inc. 7.625%, 08/01/04........... 1,737,000
------------
PRINTING AND PUBLISHING - 0.64%
2,000,000 News America Holdings Inc. Senior
Debenture 7.750%, 02/01/24............ 1,887,500
------------
RETAIL - 1.15%
2,000,000 Kmart Corp., Debenture 7.950%,
02/01/23.............................. 1,787,500
2,975,000 Pep Boys - Manny, Moe & Jack 3.031%,
09/20/11 (B).......................... 1,595,344
------------
3,382,844
------------
TECHNOLOGY - 1.02%
1,500,000 Motorola, Inc. 6.500%, 11/15/28......... 1,318,125
2,000,000 Thermo Electron Corp. Subordinated
Debenture 4.250%, 01/01/03 (A)........ 1,680,000
------------
2,998,125
------------
TELECOMMUNICATIONS - 0.63%
2,000,000 AT&T Corp. 6.000%, 03/15/09............. 1,852,500
------------
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- - 34
<PAGE>
ALLEGHANY FUNDS
- ------------------------------

ALLEGHANY/CHICAGO TRUST BALANCED FUND OCTOBER 31, 1999

SCHEDULE OF INVESTMENTS -- CONTINUED
<TABLE>
<CAPTION>
MARKET
PAR VALUE VALUE
- --------- -----
<C> <S> <C>
TRANSPORTATION - 0.70%
$ 1,675,000 American Airlines, Inc. 6.855%,
04/15/09.............................. $ 1,662,588
391,034 Delta Air Lines Equipment Trust
Series 1992-A 8.540%, 01/02/07........ 402,100
------------
2,064,688
------------
UTILITIES - 0.72%
1,000,000 Gulf States Utilities, First Mortgage
Series A 8.250%, 04/01/04............. 1,031,250
1,500,000 Niagara Mohawk Power Corp. Series F,
Senior Notes 8.500%, 07/01/10......... 1,096,875
------------
2,128,125
------------
TOTAL CORPORATE NOTES AND BONDS......... 38,887,574
------------
(Cost $40,989,671)
YANKEE BONDS - 1.38%
750,000 Chilgener S.A. (Chile) 6.500%,
01/15/06.............................. 658,125
1,000,000 Petroliam Nasional Berhad 7.625%,
10/15/26 (A).......................... 855,000
1,332,833 Province of Mendoza Collateral Oil
Royalty Note 10.000%, 07/25/02 (A).... 1,322,837
1,250,000 Skandinaviska Enskilda Subordinated
Notes 5.656%, 03/29/49 (A)............ 1,225,000
------------
TOTAL YANKEE BONDS...................... 4,060,962
------------
(Cost $3,915,458)
NON-AGENCY/CMO MORTGAGE SECURITIES - 1.19%
1,500,000 GE Capital Mortgage Services, Inc., CMO,
REMIC Series 1998-9, Class A15
6.500%, 06/25/28 (C).................. 1,489,350
600,000 Midland Realty Acceptance Corp., CMO
Series 1996-C001, Class A2 7.475%,
08/25/28 (C).......................... 608,391
1,000,000 Morgan (J.P.) Commercial Mortgage
Finance Corp. Series 1997-C7,
Class A2, CMO 6.507%, 10/15/35 (C).... 950,469
487,851 Nomura Asset Securities Corp.
Series 1998-D6, Class A1A 6.280%,
03/17/28.............................. 469,630
------------
TOTAL NON-AGENCY/CMO MORTGAGE
SECURITIES.............................. 3,517,840
------------
(Cost $3,603,337)
ASSET-BACKED SECURITIES - 1.12%
2,000,000 Chemical Master Credit Card Trust I
Series 1996-1, Class A 5.550%,
09/15/03.............................. 1,987,660
<CAPTION>
MARKET
PAR VALUE VALUE
- --------- -----
<C> <S> <C>
$ 1,335,538 DVI Receivables Corp. Series 1998-1,
Class A2 6.035%, 04/10/06 (A)......... $ 1,328,860
------------
TOTAL ASSET-BACKED SECURITIES........... 3,316,520
------------
(Cost $3,316,769)
REPURCHASE AGREEMENT - 5.41%
15,920,000 Bank One 4.900%, dated 10/29/99 to be
repurchased on 11/01/99 at $15,926,501
(Collateralized by U.S. Treasury Note
5.625% due 12/31/02; Total Par
$16,081,000).......................... 15,920,000
------------
TOTAL REPURCHASE AGREEMENT.............. 15,920,000
------------
(Cost $15,920,000)
TOTAL INVESTMENTS - 99.24%........................... 292,201,088
------------
(Cost $216,548,996)**
NET OTHER ASSETS AND LIABILITIES - 0.76%............. 2,224,929
------------
NET ASSETS - 100.00%................................. $294,426,017
============
</TABLE>

- ------------------------------------------------

* Non-income producing security.
** Aggregate cost for Federal income tax purposes is $216,548,996.

<S> <C>
Gross unrealized appreciation...... $ 81,190,552
Gross unrealized depreciation...... (5,538,460)
------------
Net unrealized appreciation........ $ 75,652,092
============
</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, 1999, these
securities amounted to $15,094,087 or 5.13% of net assets.
(B) Zero Coupon Bond. Rate shown reflects effective yield to maturity at time
of purchase.
(C) Standard & Poor's-Registered Trademark- (S&P-Registered Trademark-) credit
ratings are used in the absense of a rating by Moody's Investors, Inc.
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.............................. 5%
U.S. Government Obligations....................... 7%
U.S. Government Agency Obligations................ 13%
Corporate Notes and Bonds:
Aaa............................................... 2%
Aa................................................ 1%
A................................................. 4%
Baa............................................... 6%
Ba................................................ 3%
NR................................................ 1%
---
100%
===
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- 35
<PAGE>
ALLEGHANY FUNDS
- ----------------------------------

ALLEGHANY/CHICAGO TRUST BOND FUND OCTOBER 31, 1999

SCHEDULE OF INVESTMENTS

<TABLE>
<CAPTION>
MARKET
PAR VALUE VALUE
- --------- -----
<C> <S> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 54.32%
FEDERAL HOME LOAN BANK - 1.86%
$ 2,500,000 6.000%, 08/15/02........................ $ 2,479,550
------------
FEDERAL HOME LOAN
MORTGAGE CORPORATION - 8.78%
4,000,000 5.750%, 07/15/03........................ 3,918,800
2,500,000 5.850%, 02/21/06, Debenture............. 2,404,325
5,500,000 6.000%, 11/15/10, CMO,
Pool # 002115......................... 646,250
1,065,754 6.500%, 01/01/11, Gold
Pool # E00413......................... 1,045,772
984,449 6.500%, 11/01/11, Gold
Pool # G10607......................... 965,990
2,779,089 6.500%, 01/01/14, Gold
Pool # E00619......................... 2,726,981
------------
11,708,118
------------
FEDERAL NATIONAL
MORTGAGE ASSOCIATION - 15.92%
4,000,000 5.625%, 03/15/01........................ 3,977,080
1,609,159 7.000%, 01/01/13, Pool # 313966......... 1,607,646
1,232,892 7.000%, 03/01/13, Pool # 251572......... 1,231,734
2,689,631 6.000%, 06/01/13, Pool # 429584......... 2,586,241
2,275,586 6.000%, 08/01/13, Pool # 323250......... 2,188,113
1,092,781 7.500%, 07/01/23, Pool # 226065......... 1,095,513
1,365,170 7.500%, 11/01/27, Pool # 402193......... 1,368,583
1,896,474 6.500%, 09/01/28, Pool # 430877......... 1,818,245
2,864,458 6.500%, 10/01/28, Pool # 442329......... 2,746,299
2,616,855 7.500%, 10/01/29, Pool # 252874......... 2,621,762
------------
21,241,216
------------
GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION - 5.74%
957,234 7.000%, 10/15/23, Pool # 345894......... 939,286
1,156,402 6.500%, 03/15/26, Pool # 422527......... 1,105,440
1,085,958 7.000%, 06/15/27, Pool # 780584......... 1,066,270
1,670,413 6.500%, 09/20/27, Pool # 002482......... 1,589,498
1,040,954 7.500%, 07/15/28, Pool # 464709......... 1,044,201
1,954,933 7.000%, 03/15/29, Pool # 505567......... 1,918,278
------------
7,662,973
------------
U.S. TREASURY BONDS - 8.62%
2,000,000 7.500%, 05/15/02........................ 2,075,280
2,500,000 7.125%, 02/15/23........................ 2,695,275
3,000,000 6.250%, 08/15/23........................ 2,934,270
,000,000 6.000%, 02/15/26........................ 3,792,400
------------
11,497,225
------------
U.S. TREASURY NOTES - 13.40%
2,500,000 7.125%, 02/29/00........................ 2,515,650
3,500,000 6.375%, 08/15/02........................ 3,544,450
4,000,000 5.750%, 08/15/03........................ 3,970,120
1,750,000 7.250%, 05/15/04........................ 1,833,598
2,000,000 6.500%, 05/15/05........................ 2,037,040
4,000,000 6.125%, 08/15/07........................ 3,983,640
------------
17,884,498
------------
TOTAL U.S. GOVERNMENT AND AGENCY
OBLIGATIONS............................. 72,473,580
------------
(Cost $75,274,581)
<CAPTION>
MARKET
PAR VALUE VALUE
- --------- -----
<C> <S> <C>
CORPORATE NOTES AND BONDS - 31.58%
ENERGY - 3.13%
$ 1,500,000 Ashland, Inc. 6.625%, 02/15/08.......... $ 1,426,875
1,300,000 CMS Energy Corp 7.625%, 11/15/04........ 1,256,125
1,500,000 Williams Co., Inc. 5.950%, 02/15/00
(A)................................... 1,500,000
------------
4,183,000
------------
FINANCE - 9.85%
2,000,000 Advanta Corp., MTN 7.000%, 05/01/01..... 1,875,000
1,700,000 Chelsea GCA Realty Partnership, REIT
7.250%, 10/21/07...................... 1,576,750
1,000,000 Continental Corp. 7.250%, 03/01/03...... 990,000
1,250,000 Duke Capital Corp. 7.250%, 10/01/04..... 1,259,375
500,000 DVI, Inc., Senior Notes 9.875%,
02/01/04.............................. 487,500
500,000 HSBC America Capital I 7.808%, 12/15/26
(A)................................... 458,750
2,000,000 HSBC America Capital II 8.380%, 05/15/27
(A)................................... 1,932,500
1,500,000 Metropolitan Life Insurance Co. 6.300%,
11/01/03 (A).......................... 1,447,500
1,520,000 Pacific Mutual Life Insurance Co.
7.900%, 12/30/23 (A).................. 1,552,300
1,500,000 Prudential Insurance Co. of America
8.300%, 07/01/25 (A).................. 1,561,710
------------
13,141,385
------------
FOOD AND BEVERAGE - 1.63%
2,250,000 Nabisco, Inc. 6.850%, 06/15/05.......... 2,174,062
------------
HEALTHCARE SERVICES - 3.84%
1,000,000 Columbia Healthcare Corp. 6.125%,
12/15/00.............................. 973,750
2,000,000 HealthSouth Corp., Senior Notes 6.875%,
06/15/05.............................. 1,767,500
1,850,000 Omnicare, Inc. 5.000, 12/01/07.......... 1,179,375
1,500,000 Tenet Healthcare Corp. 6.000%,
12/01/05.............................. 1,198,125
------------
5,118,750
------------
METALS & MINING - 1.59%
2,200,000 Lukens, Inc. 7.625%, 08/01/04........... 2,123,000
------------
PRINTING AND PUBLISHING - 0.71%
1,000,000 News America Holdings 7.750%,
01/20/24.............................. 942,500
------------
RETAIL - 2.39%
2,375,000 Kmart Corp., Debenture 7.950%,
02/01/23.............................. 2,122,656
2,000,000 Pep Boys - Manny, Moe & Jack 3.031%,
09/20/11 (B).......................... 1,072,500
------------
3,195,156
------------
TECHNOLOGY - 2.89%
2,000,000 Motorola, Inc. 6.500%, 11/15/28......... 1,757,500
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- - 36
<PAGE>
ALLEGHANY FUNDS
- ------------------------------

ALLEGHANY/CHICAGO TRUST BOND FUND OCTOBER 31, 1999

SCHEDULE OF INVESTMENTS -- CONTINUED
<TABLE>
<CAPTION>
MARKET
PAR VALUE VALUE
- --------- -----
<C> <S> <C>
TECHNOLOGY (CONTINUED)
$ 2,500,000 Thermo Electron Corp. Subordinated
Debenture 4.250%, 01/01/03 (A)........ $ 2,100,000
------------
3,857,500
------------
TELECOMMUNICATIONS - 1.91%
2,750,000 AT&T Corp. 6.000%, 03/15/09............. 2,547,187
------------
TRANSPORTATION - 1.49%
2,000,000 American Airlines, Inc. 6.855%,
04/15/09.............................. 1,985,180
------------
UTILITIES - 2.15%
1,500,000 Gulf States Utilities, First Mortgage,
Series A 8.250%, 04/01/04............. 1,546,875
1,800,000 Niagara Mohawk Power Series F, Senior
Notes 8.500%, 07/01/10................ 1,316,250
------------
2,863,125
------------
TOTAL CORPORATE NOTES AND BONDS......... 42,130,845
------------
(Cost $43,343,556)
YANKEE BONDS - 4.11%
500,000 Chilgener S.A. Yankee (Chile) 6.500%,
01/15/06.............................. 438,750
1,000,000 Petroliam Nasional Berhad 7.625%,
10/15/26 (A).......................... 855,000
2,734,415 Province of Mendoza Collateral Oil
Royalty Note 10.000%, 07/25/02 (A).... 2,713,908
1,500,000 Skandinaviska Enskilda, Subordinated
Notes 5.656%, 03/29/49 (A)............ 1,470,000
------------
TOTAL YANKEE BONDS...................... 5,477,658
------------
(Cost $5,304,588)
NON-AGENCY/CMO MORTGAGE SECURITIES - 3.41%
1,000,000 First Union - Lehnman Brothers, CMO Series 1997-C2, Class A2
6.600%,
05/18/07.............................. 978,750
1,500,000 GE Capital Mortgage Services, Inc., CMO,
REMIC Series 1998-9, Class A15
6.500%, 06/25/28 (C).................. 1,489,350
875,000 Midland Realty Acceptance Corp., CMO
Series 1996-C001, Class A2 7.475%,
08/25/28 (C).......................... 887,236
,250,000 Morgan (J.P.) Commercial Mortgage
Finance Corp. Series 1997-C7,
Class A2, CMO 6.507%, 10/15/35 (C).... 1,188,086
------------
TOTAL NON-AGENCY/CMO MORTGAGE
SECURITIES.............................. 4,543,422
------------
(Cost $4,641,307)
<CAPTION>
MARKET
PAR VALUE VALUE
- --------- -----
<C> <S> <C>

ASSET-BACKED SECURITIES - 1.86% $ 2,500,000 Chemical Master Credit Card Trust I
Series 1996-1, Class A 5.550%,
09/15/03.............................. $ 2,484,575
------------
TOTAL ASSET-BACKED SECURITIES........... 2,484,575
------------
(Cost $2,455,286)
REPURCHASE AGREEMENT - 2.41%
3,217,000 Bank One 4.900%, dated 10/29/99 to be
repurchased on 11/01/99 at $3,218,314
(Collateralized by U.S. Treasury Note
5.625% due 12/31/02; Total Par
$3,261,000)........................... 3,217,000
------------
TOTAL REPURCHASE AGREEMENT.............. 3,217,000
------------
(Cost 3,217,000)
TOTAL INVESTMENTS - 97.69%........................... 130,327,080
------------
(Cost $134,236,318)*
NET OTHER ASSETS AND LIABILITIES - 2.31%............. 3,081,075
------------
NET ASSETS - 100.00%................................. $133,408,155
============
</TABLE>

- ------------------------------------------------

* Aggregate cost for Federal income tax purposes is $134,302,975.

<S> <C>
Gross unrealized appreciation..................... $ 661,492
Gross unrealized depreciation..................... (4,637,387)
-----------
Net unrealized appreciation....................... $(3,975,895)
===========
</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, 1999, these
securities amounted to $15,591,668 or 11.69% of net assets.
(B) Zero Coupon Bond. Rate shown reflects effective yield to maturity at time
of purchase.
(C) Standard & Poor's (S&P) credit ratings are used in the absense of a rating
by Moody's Investors, Inc.
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................................... 2%
U.S. Government Obligations............................ 33%
U.S. Government Agency Obligations..................... 22%
Corporate Notes and Bonds:
Aaa.................................................... 5%
Aa..................................................... 2%
A...................................................... 10%
Baa.................................................... 15%
Ba..................................................... 7%
B...................................................... 2%
NR..................................................... 2%
---
100%
===
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- 37
<PAGE>
ALLEGHANY FUNDS
- ----------------------------------

ALLEGHANY/CHICAGO TRUST MUNICIPAL BOND FUND OCTOBER 31, 1999

SCHEDULE OF INVESTMENTS

<TABLE>
<CAPTION>
MARKET
PAR VALUE VALUE
- --------- -----
<C> <S> <C>
MUNICIPAL SECURITIES - 96.76%
ALASKA - 1.53%
$280,000 Anchorage, Alaska, G.O. 5.000%,
07/01/13.............................. $ 262,676
-----------
ARIZONA - 5.62%
300,000 Phoenix, Series 1999, G.O. 5.250%,
07/01/12.............................. 296,292
450,000 Salt River Project Electric System
Revenue Refunding, Series A 5.500%,
01/01/05.............................. 464,765
200,000 Tucson, Arizona Water Revenue 5.400%,
07/01/05.............................. 205,932
-----------
966,989
-----------
CALIFORNIA - 2.06%
350,000 San Francisco City & County Airports
Revenue Series-23A 5.500%, 05/01/10
Insured: FGIC......................... 355,159
-----------
FLORIDA - 5.30%
265,000 Dade County, Florida State School
District, G.O. 5.000%, 07/15/02
Insured: MBIA......................... 269,378
250,000 Hillsborough County, G.O. 5.000%,
07/01/11 Insured: MBIA................ 242,775
200,000 Manatee County Pollution Control Revenue
Florida Power & Light Co. Project
3.500%, 09/01/24 (A).................. 200,000
200,000 St. Lucie County Pollution Control
Revenue Florida Power & Light Co.
Project 3.500%, 01/01/26 (A).......... 200,000
-----------
912,153
-----------
GEORGIA - 4.74%
330,000 Atlanta Water and Waste Revenue
Series A 5.000%, 11/01/09 Insured:
FGIC.................................. 325,281
250,000 State of Georgia, Series A, G.O. 6.100%,
03/01/05.............................. 266,472
200,000 State of Georgia, Series D, G.O. 6.700%,
08/01/09.............................. 225,236
-----------
816,989
-----------
ILLINOIS - 4.43%
200,000 Chicago Emergency Telephone System, G.O.
5.250%, 01/01/12 Insured: FGIC........ 193,000
250,000 Cook County, Illinois, Series A, G.O.
5.000%, 11/15/15 Insured: FGIC........ 224,107
350,000 State of Illinois, G.O. 5.000%,
03/01/08.............................. 345,870
-----------
762,977
-----------
KENTUCKY - 2.10%
350,000 Kentucky State Turnpike Authority
Economic Development Revenue 5.700%,
01/01/03.............................. 360,853
-----------
<CAPTION>
MARKET
PAR VALUE VALUE
- --------- -----
<C> <S> <C>
MICHIGAN - 4.71%
$300,000 Clarkston Community Schools 5.000%,
05/01/06 Insured: AMBAC............... $ 301,404
250,000 Michigan State Trunk Line, Series A
5.500%, 11/01/16...................... 242,353
260,000 Utica Community Schools 5.375%, 05/01/04
Insured: FGIC......................... 267,103
-----------
810,860
-----------
MINNESOTA - 3.87%
245,000 Minneapolis & St. Paul Housing Finance
Board Revenue 5.050%, 11/01/07 (B).... 240,389
250,000 Minneapolis & St. Paul Metropolitan
Airport Revenue, Series B 5.250%,
01/01/15 Insured: AMBAC............... 231,825
200,000 Shakopee Independent School District,
G.O. 4.500%, 02/01/06................. 194,828
-----------
667,042
-----------
MISSISSIPPI - 2.12%
350,000 State of Mississippi, Series I 5.750%,
11/01/09 (B).......................... 365,285
-----------
NEBRASKA - 3.69%
200,000 American Public Energy Agency Revenue,
Series A 4.250%, 06/01/06 Insured:
AMBAC................................. 188,600
250,000 American Public Energy Agency Revenue,
Series C 4.300%, 03/01/11 Insured:
AMBAC................................. 219,995
250,000 Nebraska Public Power District Revenue,
Series A 5.000%, 01/01/15 Insured:
MBIA.................................. 227,277
-----------
635,872
-----------
NEVADA - 3.80%
350,000 Clark County, Nevada School District,
G.O. 6.400%, 06/15/06 Insured: FGIC... 380,485
300,000 State of Nevada, G.O. Real Property
Corp. Certificates 4.375%, 07/01/09... 273,975
-----------
654,460
-----------
NEW HAMPSHIRE - 1.39%
250,000 New Hampshire State Housing Finance
Authority Single Family Revenue,
Series B 4.850%, 07/01/08............. 238,975
-----------
NEW JERSEY - 3.53%
250,000 State of New Jersey, G.O. 5.000%,
02/01/06.............................. 252,722
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- - 38
<PAGE>
ALLEGHANY FUNDS
- ------------------------------

ALLEGHANY/CHICAGO TRUST MUNICIPAL BOND FUND OCTOBER 31, 1999

SCHEDULE OF INVESTMENTS -- CONTINUED
<TABLE>
<CAPTION>
MARKET
PAR VALUE VALUE
- --------- -----
<C> <S> <C>
NEW JERSEY (CONTINUED)
$350,000 State of New Jersey Transportation Trust
Fund Revenue, Series A Escrowed to
Maturity 5.200%, 12/15/00 Insured:
AMBAC................................. $ 355,289
-----------
608,011
-----------
NEW YORK - 5.79%
300,000 Municipal Assistance Corporation for NYC
Revenue, Series O 5.250%, 07/01/08.... 302,787
250,000 New York, Series F, G.O. 4.300%,
08/01/08.............................. 227,195
250,000 New York City Municipal Water Finance
Authority Revenue, Series A 5.000%,
06/15/27.............................. 212,383
250,000 New York State Dormitory Authority
Revenue, Series C 5.100%, 05/15/03.... 253,835
-----------
996,200
-----------
NORTH CAROLINA - 1.57%
300,000 Durham, G.O. 4.700%, 04/01/14........... 270,948
-----------
OHIO - 2.64%
250,000 Ohio State Highway Capital Improvement,
Series C, G.O. 5.000%, 05/01/07....... 251,320
200,000 Ohio State Public Facilities Commission
(Higher Education), Series II-A
5.200%, 05/01/01 Insured: AMBAC....... 202,902
-----------
454,222
-----------
PENNSYLVANIA - 1.21%
215,000 Pennsylvania Housing Finance Agency
Single Family Mortgage, Series 47
5.000%, 10/01/09...................... 208,692
-----------
PUERTO RICO - 2.49%
400,000 Commonwealth of Puerto Rico Series A,
G.O. 6.500%, 07/01/03 Insured: MBIA... 428,376
-----------
TENNESSEE - 3.02% 270,000 Johnson City Water and Sewer, G.O.
5.250%, 06/01/10 Insured: FGIC........ 269,879
250,000 Memphis, G.O. General Improvement,
Series B 5.250%, 10/01/10............. 250,092
-----------
519,971
-----------
TEXAS - 6.70%
245,000 Denton Independent School District
Refunding, G.O. 5.000%, 02/15/12...... 233,191
<CAPTION>
MARKET
PAR VALUE VALUE
- --------- -----
<C> <S> <C>
TEXAS (CONTINUED)
$200,000 Humble Independent School District
Refunding, G.O. 5.500%, 02/15/10...... $ 203,046
250,000 Lubbock, G.O. 4.550%, 02/15/12.......... 224,427
280,000 Lubbock Independent School District
Refunding, G.O. 5.000%, 02/15/09...... 277,009
210,000 Tarrant County Health Facilities
Development Corp. Health System
Revenue, Series A 5.500%, 02/15/05
Insured: MBIA......................... 215,158
-----------
1,152,831
-----------
UTAH - 5.69%
300,000 Intermountain Power Agency Power Supply
Revenue 6.250%, 07/01/07 Insured:
FSA................................... 322,344
350,000 Tooele County, Utah Hazardous Waste
Treatment Revenue 5.700%, 11/01/26.... 305,204
350,000 Utah State Building Ownership Authority
Lease Revenue, Series A State
Facilities Master Lease PG-C 5.500%,
05/15/11 Insured: FSA................. 352,520
-----------
980,068
-----------
VIRGINIA - 4.56%
300,000 Newport News, Series B, G.O. 4.750%,
03/01/11.............................. 282,510
250,000 Virginia State Housing Development
Authority Commonwealth Mortgage
Series H 4.750%, 07/01/07............. 241,253
250,000 Virginia State Public School Authority
Revenue 5.500%, 08/01/03.............. 261,780
-----------
785,543
-----------
WASHINGTON - 6.81%
475,000 King County, Series A, G.O. 5.800%,
01/01/04.............................. 494,641
350,000 Seattle, Series B, G.O. 5.000%,
12/01/06.............................. 351,330
320,000 State of Washington, G.O. Motor Vehicle
Fuel, Series R-93C 5.375%,
09/01/07.............................. 326,954
-----------
1,172,925
-----------
WISCONSIN - 7.39% 250,000 Fond Du Lac School District, G.O.
4.500%, 04/01/08 Insured: FGIC........ 234,842
500,000 Green Bay, Series A, G.O. 5.100%,
04/01/00.............................. 502,660
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- 39
<PAGE>
ALLEGHANY FUNDS
- ----------------------------------

ALLEGHANY/CHICAGO TRUST MUNICIPAL BOND FUND OCTOBER 31, 1999

SCHEDULE OF INVESTMENTS -- CONTINUED
<TABLE>
<CAPTION>
MARKET
PAR VALUE VALUE
- --------- -----
<C> <S> <C>
WISCONSIN (CONTINUED)
$250,000 State of Wisconsin, Series A, G.O.
5.750%, 05/01/04...................... $ 260,908
300,000 Wisconsin Housing & Economic Development
Authority Home Ownership Revenue
Series A 5.375%, 09/01/17............. 274,332
-----------
1,272,742
-----------
TOTAL MUNICIPAL SECURITIES.............. 16,660,819
-----------
(Cost $17,258,888)

<CAPTION>
SHARES
- ------
<C> <S> <C>
INVESTMENT COMPANIES - 3.94%
272,001 Goldman Sachs Tax Exempt Fund........... 272,001
407,766 Provident Money Market.................. 407,766
-----------
TOTAL INVESTMENT COMPANIES.............. 679,767
-----------
(Cost $679,767)
TOTAL INVESTMENTS - 100.70%........................ 17,340,586
-----------
(Cost $17,938,655)*
LIABILITIES NET OF CASH AND OTHER ASSETS
- - (0.70)%.......................................... (121,291)
-----------
NET ASSETS - 100.00%............................... $17,219,295
===========
</TABLE>

- -------------------------------------------------

* Aggregate cost for Federal income tax purposes is $17,938,655.

<S> <C>
Gross unrealized appreciation..................... $ 125,279
Gross unrealized depreciation..................... (723,348)
------------
Net unrealized depreciation....................... $ (598,069)
============
</TABLE>

(A) Variable rate bond. The interest rate shown reflects the rate in effect at
October 31, 1999.
(B) Standard & Poor's (S&P) credit ratings are used in the absence of a rating
by Moody's Investors, Inc.
AMBAC American Municipal Board Assurance Corp.
FGIC Federal Guaranty Insurance Corp.
FSA Fund Services Associates
G.O. General Obligation
MBIA Municipal Bond Insurance Corporation

<TABLE>
<CAPTION>
PORTFOLIO COMPOSITION (MOODY'S RATINGS)
<S> <C>
Investment Companies.............................. 4%
Corporate Notes and Bonds:
Aaa............................................... 43%
Aa................................................ 44%
A................................................. 7%
Baa............................................... 2%
---
100%
===
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- - 40
<PAGE>
ALLEGHANY FUNDS
- ------------------------------

ALLEGHANY/CHICAGO TRUST MONEY MARKET FUND OCTOBER 31, 1999

SCHEDULE OF INVESTMENTS

<TABLE>
<CAPTION>
AMORTIZED
PAR VALUE COST
- --------- ----
<C> <S> <C>
COMMERCIAL PAPER - 85.03%
$ 5,600,000 AON Corp. 5.420%, 11/01/99 (A).......... $ 5,600,000
7,000,000 Sears Roebuck Acceptance Corp. 5.352%,
11/01/99.............................. 7,000,000
4,000,000 Toyota Motor Credit Corp. 5.280%,
11/01/99 (A).......................... 4,000,000
6,000,000 American Express Credit Corp. 5.313%,
11/02/99.............................. 6,000,000
11,584,000 AON Corp. 5.400%, 11/02/99 (A).......... 11,582,262
5,000,000 Chevron USA, Inc. 5.321%, 11/02/99...... 5,000,000
6,000,000 CIT Group Holdings 5.311%, 11/03/99..... 6,000,000
5,000,000 Exxon Credit Corp. 5.284%, 11/03/99..... 5,000,000
5,000,000 Toyota Motor Credit Corp. 5.280%,
11/03/99 (A).......................... 4,998,533
7,000,000 Albertson, Inc. 5.290%, 11/04/99 (A).... 6,996,914
5,000,000 Associates First Capital Corp. 5.344%,
11/04/99.............................. 5,000,000
5,800,000 Hertz Corp. 5.332%, 11/04/99............ 5,800,000
4,000,000 American Express Credit Corp. 5.275%,
11/05/99.............................. 4,000,000
6,300,000 Heller Financial, Inc. 5.395%,
11/05/99.............................. 6,300,000
6,800,000 Hertz Corp. 5.294%, 11/05/99............ 6,800,000
7,500,000 Associates First Capital Corp. 5.336%,
11/08/99.............................. 7,500,000
5,000,000 Norwest Financial, Inc. 5.278%,
11/08/99.............................. 5,000,000
9,000,000 Eaton Corp. 5.370%, 11/09/99 (A)........ 8,989,260
6,000,000 Norwest Financial, Inc. 5.317%,
11/09/99.............................. 6,000,000
4,900,000 American Express Credit Corp. 5.251%,
11/10/99.............................. 4,900,000
7,500,000 Daimler Chrysler North American Holdings
5.327%, 11/12/99...................... 7,500,000
8,000,000 Eaton Corp. 5.370%, 11/12/99 (A)........ 7,986,873
6,100,000 Heller Financial, Inc. 5.422%,
11/15/99.............................. 6,100,000
7,000,000 Toyota Motor Credit Corp. 5.280%,
11/15/99 (A).......................... 6,985,627
7,000,000 American General Finance 5.331%,
11/16/99.............................. 7,000,000
4,900,000 Associates Corp. of North America
5.256%, 11/16/99...................... 4,900,000
5,400,000 GTE Corp. 5.330%, 11/17/99 (A).......... 5,387,208
5,000,000 Norwest Financial, Inc. 5.285%,
11/17/99.............................. 5,000,000
7,000,000 General Electric Capital Corp. 5.356%,
11/18/99.............................. 7,000,000
5,200,000 GTE Corp. 5.350%, 11/18/99 (A).......... 5,186,863
4,000,000 Baxter International, Inc. 5.330%,
11/19/99 (A).......................... 3,989,340
5,200,000 Hertz Corp. 5.335%, 11/19/99............ 5,200,000
<CAPTION>
AMORTIZED
PAR VALUE COST
- --------- ----
<C> <S> <C>
$ 6,000,000 Baxter International, Inc. 5.320%,
11/22/99 (A).......................... $ 5,981,380
8,000,000 Sears Roebuck Acceptance Corp. 5.356%,
11/23/99.............................. 8,000,000
6,900,000 CIT Group Holdings 5.303%, 11/24/99..... 6,900,000
6,600,000 General Motors Acceptance Corp. 5.360%,
11/24/99.............................. 6,600,000
6,000,000 General Motors Acceptance Corp. 5.318%,
12/01/99.............................. 6,000,000
6,000,000 American General Finance 5.329%,
12/02/99.............................. 6,000,000
10,000,000 Household Finance Corp. 5.415%,
01/04/00.............................. 10,000,000
6,000,000 Ford Motor Credit Corp. 5.416%,
01/05/00.............................. 6,000,000
5,500,000 Ford Motor Credit Corp. 5.995%,
01/06/00.............................. 5,500,000
6,000,000 Ford Motor Credit Corp. 5.988%,
01/07/00.............................. 6,000,000
4,400,000 Prudential Funding Corp. 5.937%,
01/10/00.............................. 4,400,000
9,000,000 General Electric Capital Corp. 5.924%,
01/18/00.............................. 9,000,000
5,300,000 Daimler Chrysler North American Holdings
6.049%, 01/19/00...................... 5,300,000
4,600,000 Heller Financial, Inc. 6.100%,
01/19/00.............................. 4,600,000
------------
TOTAL COMMERCIAL PAPER.................. 284,984,260
------------
(Cost $284,984,260)

CERTIFICATES OF DEPOSITS - 8.06%
7,000,000 Canadian Imperial Bank 5.310%,
11/10/99.............................. 7,000,000
5,000,000 Toronto Dominion Bank, Yankee 5.330%,
12/27/99.............................. 5,000,000
5,000,000 Toronto Dominion Bank, Yankee 5.330%,
12/28/99.............................. 5,000,000
4,000,000 Canadian Imperial Bank 5.400%,
12/29/99.............................. 4,000,000
6,000,000 Canadian Imperial Bank 5.390%,
12/30/99.............................. 6,000,000
------------
TOTAL CERTIFICATES OF DEPOSITS.......... 27,000,000
------------
(Cost $27,000,000)

GIC WITHIN FUNDING AGREEMENT - 2.98% 10,000,000 Allstate Life Funding Agreement
GIC
5.451%, 12/01/99...................... 10,000,000
------------
TOTAL GIC WITHIN FUNDING AGREEMENT...... 10,000,000
------------
(Cost $10,000,000)
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- 41
<PAGE>
ALLEGHANY FUNDS
- ----------------------------------

ALLEGHANY/CHICAGO TRUST MONEY MARKET FUND OCTOBER 31, 1999

SCHEDULE OF INVESTMENTS -- CONTINUED
<TABLE>
<CAPTION>
AMORTIZED
PAR VALUE COST
- --------- ----
<C> <S> <C>
U.S. GOVERNMENT OBLIGATIONS - 2.96% (A)
U.S. TREASURY BILLS - 2.96%
$ 5,000,000 4.720%, 01/06/00........................ $ 4,956,825
5,000,000 4.710%, 01/13/00........................ 4,952,145
------------
TOTAL U.S. GOVERNMENT OBLIGATIONS....... 9,908,970
------------
(Cost $9,908,970)

REPURCHASE AGREEMENT - 0.36%
1,196,000 Bank One 5.050%, dated 10/29/99 to be
repurchased on 11/01/99 at $1,196,503
(Collateralized by U.S. Treasury Note
5.625%, due 04/30/99; Total Par
$1,186,000)........................... 1,196,000
------------
TOTAL REPURCHASE AGREEMENT.............. 1,196,000
------------
(Cost $1,196,000)
TOTAL INVESTMENTS - 99.39%........................... 333,089,230
------------
(Cost $333,089,230)*
NET OTHER ASSETS AND LIABILITIES - 0.61%............. 2,050,985
------------
NET ASSETS - 100.00%................................. $335,140,215
============
</TABLE>

- ------------------------------------------------

(A) Annualized yield at time of purchase.
* At October 31, 1999, cost is identical for book and Federal income tax
purposes.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- - 42
<PAGE>
This page intentionally left blank.

- 43
<PAGE>
ALLEGHANY FUNDS
- ----------------------------------

OCTOBER 31, 1999

STATEMENT OF ASSETS AND LIABILITIES

<TABLE>
<CAPTION>
ALLEGHANY/MONTAG ALLEGHANY/CHICAGO
& CALDWELL GROWTH TRUST GROWTH & ALLEGHANY/CHICAGO
FUND INCOME FUND TRUST TALON FUND
-------------------- ----------------- -----------------
<S> <C> <C> <C>
ASSETS:
Investments:
Investments at
cost............. $ 2,268,053,537 $ 257,704,050 $ 15,820,271
Repurchase
agreements....... -- 37,861,000 --
Net unrealized
appreciation
(depreciation)... 672,502,986 193,742,849 1,455,044
---------------- -------------- -------------
Total investments
at value......... 2,940,556,523 489,307,899 17,275,315
Cash..................... -- 633 --
Foreign currency (cost
$65,793 and
$147,204).............. -- -- --
Receivables:
Dividends and
interest......... 1,964,940 101,275 2,354
Dividends
reclaim.......... -- -- --
Fund shares sold... 4,211,445 1,567,681 169,120
Investments and
foreign currency
sold............. 44,691,489 -- 1,142,174
Deferred organization
costs.................. -- -- --
Other assets............. 4,034 36,796 25
---------------- -------------- -------------
Total assets..... 2,991,428,431 491,014,284 18,588,988
---------------- -------------- -------------

LIABILITIES:
Payables:
Bank overdraft..... -- -- --
Investments and
foreign currency
purchased........ 3,686,384 -- 940,552
Fund shares
redeemed......... 3,058,945 457,514 --
Due to Adviser,
net.............. 1,571,830 278,293 8,796
Distribution fee... 1,039 -- 24,885
Trustees fees...... 10,830 1,609 60
Accrued expenses and
other payables......... 630,826 88,086 28,657
Forward currency
contracts.............. -- -- --
---------------- -------------- -------------
Total
liabilities.... 8,959,854 825,502 1,002,950
---------------- -------------- -------------
NET ASSETS............... $ 2,982,468,577 $ 490,188,782 $ 17,586,038
================ ============== =============

NET ASSETS CONSIST OF:
Capital paid-in........ $ 2,161,208,216 $ 260,397,998 $ 15,935,746
Accumulated
undistributed net
investment income.... -- -- --
Accumulated net
realized gain (loss)
on investments and
foreign currency
transactions......... 148,757,375 36,047,935 195,248
Net unrealized
appreciation
(depreciation) on
investments and
translation of assets
and liabilities in
foreign currency..... 672,502,986 193,742,849 1,455,044
---------------- -------------- -------------
TOTAL NET ASSETS..... $ 2,982,468,577 $ 490,188,782 $ 17,586,038
================ ============== =============
CLASS N:
Net Assets............. $ 1,612,795,648 $ 490,188,782 $ 17,586,038
Shares of beneficial
interest
outstanding.......... 48,657,984 17,687,623 1,307,041
NET ASSET VALUE
Offering and
redemption price per
share
(Net Assets/Shares
Outstanding)......... $ 33.15 $ 27.71 $ 13.45
================ ============== =============
CLASS I:
Net Assets............. $ 1,369,672,929 N/A N/A
Shares of beneficial
interest
outstanding.......... 40,935,807 N/A N/A
NET ASSET VALUE
Offering and
redemption price per
share
(Net Assets/Shares
Outstanding)......... $ 33.46 N/A N/A
================ ============== =============
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- - 44
<PAGE>

<TABLE>
<CAPTION>
ALLEGHANY/CHICAGO ALLEGHANY/BLAIRLOGIE ALLEGHANY/BLAIRLOGIE
TRUST SMALL CAP ALLEGHANY/VEREDUS INTERNATIONAL EMERGING MARKETS
VALUE FUND AGGRESSIVE GROWTH FUND DEVELOPED FUND FUND
----------------- ---------------------- -------------------- --------------------
<S> <C> <C> <C> <C>
ASSETS:
Investments:
Investments at
cost............. $ 43,590,064 $ 44,518,433 $ 85,659,040 $ 16,490,076
Repurchase
agreements....... 162,000 3,120,553 -- --
Net unrealized
appreciation
(depreciation)... (1,847,764) 10,445,303 14,318,209 960,873
------------- ------------- -------------- --------------
Total investments
at value......... 41,904,300 58,084,289 99,977,249 17,450,949
Cash..................... 258 340,988 926,305 --
Foreign currency (cost
$65,793 and
$147,204).............. -- -- 65,427 147,200
Receivables:
Dividends and
interest......... 12,019 1,801 149,607 19,115
Dividends
reclaim.......... -- -- 119,703 --
Fund shares sold... 436,451 303,902 4,757,202 1,028,034
Investments and
foreign currency
sold............. 312,536 859,987 473,917 101,607
Deferred organization
costs.................. -- 17,635 -- --
Other assets............. 34,599 12,234 -- 883
------------- ------------- -------------- --------------
Total assets..... 42,700,163 59,620,836 106,469,410 18,747,788
------------- ------------- -------------- --------------

LIABILITIES:
Payables:
Bank overdraft..... -- -- -- 59,290
Investments and
foreign currency
purchased........ 87,650 2,194,626 1,717,381 347,455
Fund shares
redeemed......... 81,154 88,277 46,915 63
Due to Adviser,
net.............. 30,530 35,390 68,664 3,793
Distribution fee... 1,866 5,012 1,325 341
Trustees fees...... 155 225 363 60
Accrued expenses and
other payables......... 20,544 15,732 51,205 28,077
Forward currency
contracts.............. -- -- 191 537
------------- ------------- -------------- --------------
Total
liabilities.... 221,899 2,339,262 1,886,044 439,616
------------- ------------- -------------- --------------
NET ASSETS............... $ 42,478,264 $ 57,281,574 $ 104,583,366 $ 18,308,172
============= ============= ============== ==============

NET ASSETS CONSIST OF:
Capital paid-in........ $ 45,463,872 $ 38,858,914 $ 80,998,994 $ 34,859,992
Accumulated
undistributed net
investment income.... 146,540 -- 717,458 45,132
Accumulated net
realized gain (loss)
on investments and
foreign currency
transactions......... (1,284,384) 7,977,357 8,545,089 (17,546,101)
Net unrealized
appreciation
(depreciation) on
investments and
translation of assets
and liabilities in
foreign currency..... (1,847,764) 10,445,303 14,321,825 949,149
------------- ------------- -------------- --------------
TOTAL NET ASSETS..... $ 42,478,264 $ 57,281,574 $ 104,583,366 $ 18,308,172
============= ============= ============== ==============
CLASS N:
Net Assets............. $ 42,478,264 $ 57,281,574 $ 7,516,003 $ 1,728,989
Shares of beneficial
interest
outstanding.......... 4,624,913 3,449,915 562,018 160,832
NET ASSET VALUE
Offering and
redemption price per
share
(Net Assets/Shares
Outstanding)......... $ 9.18 $ 16.60 $ 13.37 $ 10.75
============= ============= ============== ==============
CLASS I:
Net Assets............. N/A N/A $ 97,067,363 $ 16,579,183
Shares of beneficial
interest
outstanding.......... N/A N/A 7,242,933 1,536,876
NET ASSET VALUE
Offering and
redemption price per
share
(Net Assets/Shares
Outstanding)......... N/A N/A $ 13.40 $ 10.79
============= ============= ============== ==============
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- 45
<PAGE>
ALLEGHANY FUNDS
- ----------------------------------

OCTOBER 31, 1999

STATEMENT OF ASSETS AND LIABILITIES -- CONTINUED

<TABLE>
<CAPTION>
ALLEGHANY/MONTAG
& CALDWELL BALANCED ALLEGHANY/CHICAGO
FUND TRUST BALANCED FUND
---------------------- -------------------
<S> <C> <C>
ASSETS:
Investments:
Investments at
cost............. $ 210,367,417 $ 200,628,996
Repurchase
agreements....... 6,533,000 15,920,000
Net unrealized
appreciation
(depreciation)... 33,059,120 75,652,092
-------------- --------------
Total investments
at value......... 249,959,537 292,201,088
Cash..................... -- 70
Receivables:
Dividends and
interest......... 1,746,104 1,459,404
Fund shares sold... 163,190 282,448
Investments and
foreign currency
sold............. 2,865,918 919,859
Due from Adviser,
net.............. -- --
Deferred organization
costs.................. -- 1,232
Other assets............. 335 12,676
-------------- --------------
Total assets..... 254,735,084 294,876,777
-------------- --------------

LIABILITIES:
Payables:
Bank overdraft..... 105 --
Dividend
distribution..... -- --
Investments and
foreign currency
purchased........ 2,572,986 --
Fund shares
redeemed......... 734,016 87,240
Due to Adviser,
net.............. 152,920 171,540
Distribution fee... 268 111,323
Trustees fees...... 921 1,088
Accrued expenses and
other payables......... 81,819 79,569
-------------- --------------
Total
liabilities.... 3,543,035 450,760
-------------- --------------
NET ASSETS............... $ 251,192,049 $ 294,426,017
============== ==============

NET ASSETS CONSIST OF:
Capital paid-in........ $ 205,520,227 $ 209,582,560
Accumulated
undistributed net
investment income
(loss)............... 660,478 976,162
Accumulated net
realized gain (loss)
on investments....... 11,952,224 8,215,203
Net unrealized
appreciation
(depreciation) on
investments.......... 33,059,120 75,652,092
-------------- --------------
TOTAL NET ASSETS..... $ 251,192,049 $ 294,426,017
============== ==============
CLASS N:
Net Assets............. $ 160,285,898 $ 294,426,017
Shares of beneficial
interest
outstanding.......... 8,256,854 22,580,601
NET ASSET VALUE
Offering and
redemption price per
share
(Net Assets/Shares
Outstanding)......... $ 19.41 $ 13.04
============== ==============
CLASS I:
Net Assets............. $ 90,906,151 N/A
Shares of beneficial
interest
outstanding.......... 4,681,242 N/A
NET ASSET VALUE
Offering and
redemption price per
share
(Net Assets/Shares
Outstanding)......... $ 19.42 N/A
============== ==============
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- - 46
<PAGE>

<TABLE>
<CAPTION>
ALLEGHANY/CHICAGO ALLEGHANY/CHICAGO
ALLEGHANY/CHICAGO TRUST MUNICIPAL TRUST MONEY MARKET
TRUST BOND FUND BOND FUND FUND
----------------- ----------------- ------------------
<S> <C> <C> <C>
ASSETS:
Investments:
Investments at
cost............. $ 131,019,318 $ 17,938,655 $ 331,893,230
Repurchase
agreements....... 3,217,000 -- 1,196,000
Net unrealized
appreciation
(depreciation)... (3,909,238) (598,069) --
-------------- ------------- --------------
Total investments
at value......... 130,327,080 17,340,586 333,089,230
Cash..................... 9 218 --
Receivables:
Dividends and
interest......... 1,800,576 268,851 802,732
Fund shares sold... 337,936 -- 2,740,828
Investments and
foreign currency
sold............. 1,137,894 -- --
Due from Adviser,
net.............. -- 6,615 --
Deferred organization
costs.................. -- -- --
Other assets............. 4,081 1,207 486
-------------- ------------- --------------
Total assets..... 133,607,576 17,617,477 336,633,276
-------------- ------------- --------------

LIABILITIES:
Payables:
Bank overdraft..... -- -- 1,594
Dividend
distribution..... -- -- 1,233,893
Investments and
foreign currency
purchased........ -- 365,985 --
Fund shares
redeemed......... 75,592 -- 71,831
Due to Adviser,
net.............. 46,104 -- 116,442
Distribution fee... 51,867 10,027 --
Trustees fees...... 419 66 1,386
Accrued expenses and
other payables......... 25,439 22,104 67,915
-------------- ------------- --------------
Total
liabilities.... 199,421 398,182 1,493,061
-------------- ------------- --------------
NET ASSETS............... $ 133,408,155 $ 17,219,295 $ 335,140,215
============== ============= ==============

NET ASSETS CONSIST OF:
Capital paid-in........ $ 137,342,122 $ 17,789,668 $ 335,140,215
Accumulated
undistributed net
investment income
(loss)............... 426,916 37,926 --
Accumulated net
realized gain (loss)
on investments....... (451,645) (10,230) --
Net unrealized
appreciation
(depreciation) on
investments.......... (3,909,238) (598,069) --
-------------- ------------- --------------
TOTAL NET ASSETS..... $ 133,408,155 $ 17,219,295 $ 335,140,215
============== ============= ==============
CLASS N:
Net Assets............. $ 133,408,155 $ 17,219,295 $ 335,140,215
Shares of beneficial
interest
outstanding.......... 13,736,815 1,769,602 335,140,215
NET ASSET VALUE
Offering and
redemption price per
share
(Net Assets/Shares
Outstanding)......... $ 9.71 $ 9.73 $ 1.00
============== ============= ==============
CLASS I:
Net Assets............. N/A N/A N/A
Shares of beneficial
interest
outstanding.......... N/A N/A N/A
NET ASSET VALUE
Offering and
redemption price per
share
(Net Assets/Shares
Outstanding)......... N/A N/A N/A
============== ============= ==============
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- 47
<PAGE>
ALLEGHANY FUNDS
- ----------------------------------

FOR THE YEAR ENDED OCTOBER 31, 1999

STATEMENT OF OPERATIONS

ALLEGHANY/MONTAG ALLEGHANY/CHICAGO ALLEGHANY/CHICAGO
& CALDWELL GROWTH TRUST GROWTH & ALLEGHANY/CHICAGO TRUST SMALL CAP
FUND INCOME FUND TRUST TALON FUND VALUE FUND(A)
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends............ $ 21,191,768 $ 2,764,146 $ 151,058 $ 537,235
Less foreign taxes... -- -- -- --
Interest............. 951,078 991,694 54,238 147,182
-------------- -------------- ---------- -------------
Total investment
income........... 22,142,846 3,755,840 205,296 684,417
-------------- -------------- ---------- -------------
EXPENSES:
Investment advisory
fees............... 16,451,953 3,230,163 164,312 358,830
Distribution
expenses........... 3,422,774 1,153,630 51,347 89,624
Transfer agent
fees............... 807,503 134,004 28,606 21,807
Administration
fees............... 1,357,663 254,852 13,011 22,122
Registration
expenses........... 272,249 32,220 12,589 25,944
Custodian fees....... 26,479 20,599 13,613 15,544
Professional fees.... 58,465 23,363 16,108 15,310
Amortization of
organization
costs.............. 3,338 577 2,944 --
Reports to
shareholder
expense............ 179,369 32,811 2,092 2,921
Trustees fees........ 72,973 12,729 665 998
Other expenses....... 129,543 2,704 2,461 1,465
-------------- -------------- ---------- -------------
Total operating
expenses......... 22,782,309 4,897,652 307,748 554,565
-------------- -------------- ---------- -------------
Expenses
waived/reimbursed... -- -- (40,814) (52,755)
-------------- -------------- ---------- -------------
Net operating
expenses......... 22,782,309 4,897,652 266,934 501,810

-------------- -------------- ---------- -------------
Bank charges......... -- -- -- --
-------------- -------------- ---------- -------------
Net expenses....... 22,782,309 4,897,652 266,934 501,810
-------------- -------------- ---------- -------------
NET INVESTMENT INCOME
(LOSS)................. (639,463) (1,141,812) (61,638) 182,607
-------------- -------------- ---------- -------------
NET REALIZED AND
UNREALIZED
GAIN (LOSS) ON
INVESTMENTS:
Net realized gain
(loss) on
investments........ 148,878,688 36,048,190 567,265 (1,284,384)
Net realized gain on
futures
contracts.......... -- -- -- --
Net realized gain
(loss) on foreign
currency
transactions....... -- -- -- --
Net change in
unrealized
appreciation
(depreciation) on
investments........ 416,154,751 69,358,356 187,313 (1,847,764)
Net change in
unrealized
appreciation
(depreciation) on
futures
contracts.......... -- -- -- --
Net change in
unrealized
appreciation on
translation of
assets and
liabilities
denominated in
foreign currency... -- -- -- --
-------------- -------------- ---------- -------------
NET REALIZED AND
UNREALIZED
GAIN (LOSS) ON
INVESTMENTS........ 565,033,439 105,406,546 754,578 (3,132,148)
-------------- -------------- ---------- -------------
NET INCREASE
(DECREASE) IN
NET ASSETS FROM
OPERATIONS......... $ 564,393,976 $ 104,264,734 $ 692,940 $ (2,949,541)
============== ============== ========== =============
</TABLE>

- ---------------------------------------------------------

(a) Alleghany/Chicago Trust Small Cap Value Fund commenced investment
operations on November 10, 1998.
(b) Blairlogie International Developed Fund and Blairlogie Emerging Markets
Fund commenced operations on June 8, 1993 and June 1, 1993, respectively,
as separate investment portfolios (the "Predecessor Funds") of PIMCO Funds.
Effective April 30, 1999, the Predecessor Funds were reorganized as new
portfolios of the Alleghany Funds. (See Note A)

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- - 48
<PAGE>
<TABLE>
<CAPTION>
ALLEGHANY/BLAIRLOGIE ALLEGHANY/BLAIRLOGIE
ALLEGHANY/BLAIRLOGIE
INTERNATIONAL INTERNATIONAL EMERGING MARKETS
DEVELOPED FUND DEVELOPED FUND FUND
ALLEGHANY/VEREDUS SIX MONTHS ENDED TEN MONTHS ENDED SIX MONTHS ENDED
AGGRESSIVE GROWTH FUND OCTOBER 31, 1999(B) APRIL 30, 1999(B) OCTOBER 31, 1999(B)
---------------------- -------------------- --------------------
- --------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends............ $ 17,042 $ 1,394,237 $ 1,181,911 $ 233,553
Less foreign taxes... -- (165,999) (150,859) (11,120)
Interest............. 146,038 17,573 187,723 12,597
------------- ------------ ------------ ----------
Total investment
income........... 163,080 1,245,811 1,218,775 235,030
------------- ------------ ------------ ----------
EXPENSES:
Investment advisory
fees............... 312,271 439,792 611,052 78,010
Distribution
expenses........... 73,576 9,005 82,795 2,233
Transfer agent
fees............... 21,538 9,648 -- 4,248
Administration
fees............... 18,568 40,755 522,631 17,137
Registration
expenses........... 19,838 12,500 -- 11,000
Custodian fees....... 12,778 64,399 -- 38,819
Professional fees.... 15,160 16,884 -- 16,157
Amortization of
organization
costs.............. 5,108 -- -- --
Reports to
shareholder
expense............ 2,458 5,170 -- 917
Trustees fees........ 3,889 1,748 9,489 309
Other expenses....... 1,327 7,827 46,231 829
------------- ------------ ------------ ----------
Total operating
expenses......... 486,511 607,728 1,272,198 169,659
------------- ------------ ------------ ----------
Expenses
waived/reimbursed... (52,934) (29,647) -- (43,536)
------------- ------------ ------------ ----------
Net operating
expenses......... 433,577 578,081 1,272,198 126,123
------------- ------------ ------------ ----------
Bank charges......... -- 27,103 -- 7,229
------------- ------------ ------------ ----------
Net expenses....... 433,577 605,184 1,272,198 133,352
------------- ------------ ------------ ----------
NET INVESTMENT INCOME
(LOSS)................. (270,497) 640,627 (53,423) 101,678
------------- ------------ ------------ ----------
NET REALIZED AND
UNREALIZED
GAIN (LOSS) ON
INVESTMENTS:
Net realized gain
(loss) on
investments........ 9,807,382 8,564,739 14,045,047 430,553
Net realized gain on
futures
contracts.......... -- -- 311,306 --
Net realized gain
(loss) on foreign
currency
transactions....... -- 81,307 (1,149,976) (55,545)
Net change in
unrealized
appreciation
(depreciation) on
investments........ 10,248,334 (3,669,570) (9,468,547) 71,758
Net change in
unrealized
appreciation
(depreciation) on
futures
contracts.......... -- -- (117,229) --
Net change in
unrealized
appreciation on
translation of
assets and
liabilities
denominated in
foreign currency... -- 13,316 324,491 9,196
------------- ------------ ------------ ----------
NET REALIZED AND
UNREALIZED
GAIN (LOSS) ON
INVESTMENTS........ 20,055,716 4,989,792 3,945,092 455,962
------------- ------------ ------------ ----------
NET INCREASE
(DECREASE) IN
NET ASSETS FROM
OPERATIONS......... $ 19,785,219 $ 5,630,419 $ 3,891,669 $ 557,640
============= ============ ============ ==========

<CAPTION>
ALLEGHANY/BLAIRLOGIE
EMERGING MARKETS
FUND
TEN MONTHS ENDED
APRIL 30, 1999(B)
--------------------
<S> <C>
INVESTMENT INCOME:
Dividends............ $ 436,911
Less foreign taxes... (48,876)
Interest............. 34,267
-----------
Total investment
income........... 422,302
-----------
EXPENSES:
Investment advisory
fees............... 151,716
Distribution
expenses........... 11,205
Transfer agent
fees............... --
Administration
fees............... 91,107
Registration
expenses........... --
Custodian fees....... --
Professional fees.... --
Amortization of
organization
costs.............. --
Reports to
shareholder
expense............ --
Trustees fees........ 1,739
Other expenses....... 12,773
-----------
Total operating
expenses......... 268,540
-----------
Expenses
waived/reimbursed... --
-----------
Net operating
expenses......... 268,540
-----------
Bank charges......... --
-----------
Net expenses....... 268,540
-----------
NET INVESTMENT INCOME
(LOSS)................. 153,762
-----------
NET REALIZED AND
UNREALIZED
GAIN (LOSS) ON
INVESTMENTS:
Net realized gain
(loss) on
investments........ (4,719,790)
Net realized gain on
futures
contracts.......... --
Net realized gain
(loss) on foreign
currency
transactions....... (68,780)
Net change in
unrealized
appreciation
(depreciation) on
investments........ 3,734,773
Net change in
unrealized
appreciation
(depreciation) on
futures
contracts.......... --
Net change in
unrealized
appreciation on
translation of
assets and
liabilities
denominated in
foreign currency... 392
-----------
NET REALIZED AND
UNREALIZED
GAIN (LOSS) ON
INVESTMENTS........ (1,053,405)
-----------
NET INCREASE
(DECREASE) IN
NET ASSETS FROM
OPERATIONS......... $ (899,643)
===========
</TABLE>

- ---------------------------------------------------------

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- 49
<PAGE>
ALLEGHANY FUNDS
- ----------------------------------

FOR THE YEAR ENDED OCTOBER 31, 1999

STATEMENT OF OPERATIONS -- CONTINUED

<TABLE>
<CAPTION>
ALLEGHANY/MONTAG &
CALDWELL BALANCED ALLEGHANY/CHICAGO
FUND TRUST BALANCED FUND
------------------ -------------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends............ $ 1,086,711 $ 978,084
Interest............. 4,570,459 7,507,338
------------- -------------
Total investment
income........... 5,657,170 8,485,422
------------- -------------

EXPENSES:
Investment advisory
fees............... 1,585,840 1,861,258
Distribution
expenses........... 390,864 664,735
Transfer agent
fees............... 61,360 24,096
Administration
fees............... 122,384 157,773
Registration
expenses........... 47,617 30,011
Custodian fees....... 22,132 24,116
Professional fees.... 20,566 20,385
Amortization of
organization
costs.............. 3,337 1,402
Reports to
shareholder
expense............ 12,703 13,654
Trustees fees........ 5,526 7,107
Other expenses....... 4,866 6,233
------------- -------------
Total expenses..... 2,277,195 2,810,770
------------- -------------
Expenses
waived/reimbursed... -- --
------------- -------------
Net expenses....... 2,277,195 2,810,770
------------- -------------

NET INVESTMENT INCOME
(LOSS)................. 3,379,975 5,674,652
------------- -------------

NET REALIZED AND
UNREALIZED
GAIN (LOSS) ON
INVESTMENTS:
Net realized gain
(loss) on
investments........ 12,323,201 8,203,023
Net change in
unrealized
appreciation
(depreciation) on
investments........ 15,541,127 25,535,665
------------- -------------

NET REALIZED AND
UNREALIZED
GAIN (LOSS) ON
INVESTMENTS........ 27,864,328 33,738,688
------------- -------------

NET INCREASE
(DECREASE) IN
NET ASSETS FROM
OPERATIONS......... $ 31,244,303 $ 39,413,340
============= =============
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- - 50
<PAGE>

<TABLE>
<CAPTION>
ALLEGHANY/CHICAGO ALLEGHANY/CHICAGO
ALLEGHANY/CHICAGO TRUST MUNICIPAL TRUST MONEY MARKET
TRUST BOND FUND BOND FUND FUND
----------------- ----------------- ------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends............ $ -- $ -- $ --
Interest............. 10,459,376 738,625 15,623,979
------------- ------------- -------------
Total investment
income........... 10,459,376 738,625 15,623,979
------------- ------------- -------------

EXPENSES:
Investment advisory
fees............... 840,813 95,352 1,215,190
Distribution
expenses........... 382,188 15,892 --
Transfer agent
fees............... 25,314 17,875 38,908
Administration
fees............... 93,681 15,839 167,945
Registration
expenses........... 19,628 12,340 31,259
Custodian fees....... 22,849 10,894 22,680
Professional fees.... 19,037 16,418 21,180
Amortization of
organization
costs.............. 577 577 577
Reports to
shareholder
expense............ 6,990 860 15,659
Trustees fees........ 3,699 502 8,441
Other expenses....... 8,305 4,023 21,311
------------- ------------- -------------
Total expenses..... 1,423,081 190,572 1,543,150
------------- ------------- -------------
Expenses
waived/reimbursed... (199,795) (174,679) --
------------- ------------- -------------
Net expenses....... 1,223,286 15,893 1,543,150
------------- ------------- -------------

NET INVESTMENT INCOME
(LOSS)................. 9,236,090 722,732 14,080,829
------------- ------------- -------------

NET REALIZED AND
UNREALIZED
GAIN (LOSS) ON
INVESTMENTS:
Net realized gain
(loss) on
investments........ (446,987) 24,495 --
Net change in
unrealized
appreciation
(depreciation) on
investments........ (7,370,531) (1,093,220) --
------------- ------------- -------------

NET REALIZED AND
UNREALIZED
GAIN (LOSS) ON
INVESTMENTS........ (7,817,518) (1,068,725) --
------------- ------------- -------------

NET INCREASE
(DECREASE) IN
NET ASSETS FROM
OPERATIONS......... $ 1,418,572 $ (345,993) $ 14,080,829
============= ============= =============
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- 51
<PAGE>
ALLEGHANY FUNDS
- ----------------------------------

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
ALLEGHANY/MONTAG ALLEGHANY/CHICAGO
& CALDWELL GROWTH TRUST GROWTH &
FUND INCOME FUND
---------------------------------- ------------------------------
YEARS ENDED OCTOBER 31, YEARS ENDED OCTOBER 31,
1999 1998 1999 1998
---------------- ---------------- -------------- --------------
<S> <C> <C> <C> <C>
NET ASSETS AT BEGINNING
OF PERIOD.............. $ 1,742,778,507 $ 748,418,166 $ 367,666,442 $ 274,607,907
---------------- ---------------- -------------- --------------
INCREASE (DECREASE) IN
NET ASSETS FROM
OPERATIONS:
Net investment income
(loss)............... (639,463) (1,422,104) (1,141,812) (347,447)
Net realized gain
(loss) on investments
sold................. 148,878,688 63,978,484 36,048,190 23,413,427
Net change in
unrealized
appreciation
(depreciation) on
investments and
assets and
liabilities.......... 416,154,751 109,207,399 69,358,356 47,348,240
---------------- ---------------- -------------- --------------
Net increase (decrease)
in net assets from
operations........... 564,393,976 171,763,779 104,264,734 70,414,220
---------------- ---------------- -------------- --------------
DISTRIBUTIONS TO
SHAREOWNERS FROM:
Net investment income:
Class N.............. -- -- -- (23,963)
Net realized gain on
investments:
Class N.............. (35,583,495) (4,750,066) (23,278,710) (19,283,609)
Class I.............. (28,418,102) (2,772,360) -- --
Return of Capital
Class N.............. -- -- -- (30,652)
---------------- ---------------- -------------- --------------
Total
distributions...... (64,001,597) (7,522,426) (23,278,710) (19,338,224)
---------------- ---------------- -------------- --------------
CAPITAL SHARE
TRANSACTIONS:
Net proceeds from sales
of shares:
Class N.............. 1,051,011,357 735,037,158 184,622,120 84,420,291
Class I.............. 953,960,617 510,661,778 -- --
Issued to shareowners in reinvestment of distributions:
Class N.............. 33,017,124 4,476,035 22,904,776 19,000,003
Class I.............. 25,234,975 2,260,596 -- --
Cost of shares
repurchased:
Class N.............. (751,465,775) (318,089,688) (165,990,580) (61,437,755)
Class I.............. (572,460,607) (104,226,891) -- --
---------------- ---------------- -------------- --------------
Net increase
(decrease) from
capital share
transactions..... 739,297,691 830,118,988 41,536,316 41,982,539
---------------- ---------------- -------------- --------------
Total increase
(decrease) in net
assets........... 1,239,690,070 994,360,341 122,522,340 93,058,535
---------------- ---------------- -------------- --------------
NET ASSETS AT END OF
PERIOD (INCLUDING LINE
A)..................... $ 2,982,468,577 $ 1,742,778,507 $ 490,188,782 $ 367,666,442
================ ================ ============== ==============
(A) Undistributed net
investment income...... $ -- $ -- $ -- $ --
================ ================ ============== ==============
OTHER INFORMATION:
SHARE TRANSACTIONS:
Class N:
Sold................. 33,562,499 28,902,833 7,050,057 3,911,120
Issued to
shareholders in
reinvestment of
distributions...... 1,195,841 198,582 1,005,045 1,006,991
Repurchased.......... (24,010,343) (12,333,539) (6,314,269) (2,888,977)
Class I:
Sold................. 30,617,406 19,881,332 -- --
Issued to
shareholders in
reinvestment of
distributions...... 903,059 99,938 -- --
Repurchased.......... (18,295,778) (4,087,111) -- --
---------------- ---------------- -------------- --------------
Net increase
(decrease) in
shares
outstanding...... 23,972,684 32,662,035 1,740,833 2,029,134
================ ================ ============== ==============
</TABLE>

- ---------------------------------------------------------

(a) Alleghany/Chicago Trust Small Cap Value Fund commenced operations on
November 10, 1998.
(b) Alleghany/Veredus Aggressive Growth Fund commenced operations on June 30,
1998.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- - 52
<PAGE>

<TABLE>
<CAPTION>
ALLEGHANY/CHICAGO
ALLEGHANY/CHICAGO TRUST SMALL CAP ALLEGHANY/VEREDUS
TRUST TALON FUND VALUE FUND(A) AGGRESSIVE GROWTH FUND(B)
---------------------------- ----------------- ----------------------------
YEARS ENDED OCTOBER 31, PERIOD ENDED YEARS ENDED OCTOBER 31,
1999 1998 OCTOBER 31, 1999 1999 1998
------------- ------------- ----------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
NET ASSETS AT BEGINNING
OF PERIOD.............. $ 22,727,692 $ 28,459,583 $ 10 $ 12,673,539 $ --
------------- ------------- ------------- ------------- -------------
INCREASE (DECREASE) IN
NET ASSETS FROM
OPERATIONS:
Net investment income
(loss)............... (61,638) 129,406 182,607 (270,497) (483)
Net realized gain
(loss) on investments
sold................. 567,265 (152,152) (1,284,384) 9,807,382 (1,575,341)
Net change in
unrealized
appreciation
(depreciation) on
investments and
assets and
liabilities.......... 187,313 (2,860,775) (1,847,764) 10,248,334 196,969
------------- ------------- ------------- ------------- -------------
Net increase (decrease)
in net assets from
operations........... 692,940 (2,883,521) (2,949,541) 19,785,219 (1,378,855)
------------- ------------- ------------- ------------- -------------
DISTRIBUTIONS TO
SHAREOWNERS FROM:
Net investment income:
Class N.............. (8,361) (163,813) (36,178) -- --
Net realized gain on
investments:
Class N.............. -- (4,653,292) -- -- --
Class I.............. -- -- -- -- --
Return of Capital
Class N.............. -- -- -- -- --
------------- ------------- ------------- ------------- -------------
Total
distributions...... (8,361) (4,817,105) (36,178) -- --
------------- ------------- ------------- ------------- -------------
CAPITAL SHARE
TRANSACTIONS:
Net proceeds from sales
of shares:
Class N.............. 2,333,613 6,908,329 52,641,474 34,532,762 14,223,208
Class I.............. -- -- -- --
Issued to shareowners in reinvestment of distributions:
Class N.............. 8,053 4,757,368 36,171 -- --
Class I.............. -- -- -- -- --
Cost of shares
repurchased:
Class N.............. (8,167,899) (9,696,962) (7,213,672) (9,709,946) (170,814)
Class I.............. -- -- -- --
------------- ------------- ------------- ------------- -------------
Net increase
(decrease) from
capital share
transactions..... (5,826,233) 1,968,735 45,463,973 24,822,816 14,052,394
------------- ------------- ------------- ------------- -------------
Total increase
(decrease) in net
assets........... (5,141,654) (5,731,891) 42,478,254 44,608,035 12,673,539
------------- ------------- ------------- ------------- -------------
NET ASSETS AT END OF
PERIOD (INCLUDING LINE
A)..................... $ 17,586,038 $ 22,727,692 $ 42,478,264 $ 57,281,574 $ 12,673,539
============= ============= ============= ============= =============
(A) Undistributed net
investment income...... $ -- $ 3,805 $ 146,540 $ -- $ --
============= ============= ============= ============= =============
OTHER INFORMATION:
SHARE TRANSACTIONS:
Class N:
Sold................. 166,866 451,934 5,361,902 2,693,561 1,490,149
Issued to
shareholders in
reinvestment of
distributions...... 603 318,839 3,661 -- --
Repurchased.......... (587,080) (661,255) (740,651) (713,478) (20,317)
Class I:
Sold................. -- -- -- -- --
Issued to
shareholders in
reinvestment of
distributions...... -- -- -- -- --
Repurchased.......... -- -- -- -- --
------------- ------------- ------------- ------------- -------------
Net increase
(decrease) in
shares
outstanding...... (419,611) 109,518 4,624,912 1,980,083 1,469,832
============= ============= ============= ============= =============
</TABLE>

- ---------------------------------------------------------

(a) Alleghany/Chicago Trust Small Cap Value Fund commenced operations on
November 10, 1998.
(b) Alleghany/Veredus Aggressive Growth Fund commenced operations on June 30,
1998.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- 53
<PAGE>
ALLEGHANY FUNDS
- ----------------------------------

STATEMENT OF CHANGES IN NET ASSETS -- CONTINUED

<TABLE>
<CAPTION>
ALLEGHANY/
BLAIRLOGIE INTERNATIONAL
DEVELOPED FUND
-----------------------------------------------------------------
TEN MONTHS
SIX MONTHS ENDED ENDED YEAR ENDED
OCTOBER 31, 1999 APRIL 30, 1999(A) JUNE 30, 1998
----------------- ---------------------------- ----------------
<S> <C> <C> <C>
NET ASSETS AT BEGINNING
OF PERIOD.............. $ 106,362,307 $ 138,750,570 $ 100,313,146
-------------- -------------- --------------
INCREASE (DECREASE) IN
NET ASSETS FROM
OPERATIONS:
Net investment income
(loss)................. 640,627 (53,423) 1,253,862
Net realized gain
(loss) on investments
sold and foreign
currency
transactions......... 8,646,046 13,206,377 1,677,879
Net change in
unrealized
appreciation
(depreciation) on
investments and
translation of assets
and liabilities
denominated in
foreign currency..... (3,656,254) (9,261,285) 16,311,500
-------------- -------------- --------------
Net increase (decrease)
in net assets from
operations........... 5,630,419 3,891,669 19,243,241
-------------- -------------- --------------
DISTRIBUTIONS TO
SHAREOWNERS FROM:
Net investment income:
Class N.............. -- -- (37,910)
Class I.............. -- (461,778) (833,712)
Net realized gain on investments:
Class N.............. -- (948,765) (384,865)
Class I.............. -- (12,721,855) (4,187,682)
Return of Capital
Class N.............. -- -- --
Class I.............. -- -- --
-------------- -------------- --------------
Total
distributions...... -- (14,132,398) (5,444,169)
-------------- -------------- --------------
CAPITAL SHARE
TRANSACTIONS:
Net proceeds from sales
of shares:
Class N.............. 4,019,607 112,028,851 72,268,195
Class I.............. 59,579,527 88,175,722 66,711,810
Issued to shareowners in reinvestment of distributions:
Class N.............. -- 808,014 382,709
Class I.............. -- 12,916,908 4,241,759
Cost of shares
repurchased:
Class N.............. (2,225,372) (123,609,614) (64,166,601)
Class I.............. (68,783,122) (112,467,415) (54,799,520)
-------------- -------------- --------------
Net increase
(decrease) from
capital share
transactions..... (7,409,360) (22,147,534) 24,638,352
-------------- -------------- --------------
Total increase
(decrease) in net
assets........... (1,778,941) (32,388,263) 38,437,424
-------------- -------------- --------------
NET ASSETS AT END OF
PERIOD (INCLUDING LINE
A)..................... $ 104,583,366 $ 106,362,307 $ 138,750,570
============== ============== ==============
(A) Undistributed
(distribution in excess
of) net investment
income (loss).......... $ 717,458 $ (4,476) $ 456,779
============== ============== ==============
OTHER INFORMATION:
SHARE TRANSACTIONS:
Class N:
Sold................. 322,638 8,379,342 5,291,704
Issued to
shareholders in
reinvestment of
distributions...... -- 62,711 32,851
Repurchased.......... (176,179) (9,182,886) (4,642,525)
Class I:
Sold................. 4,694,010 6,455,344 5,096,974
Issued to
shareholders in
reinvestment of
distributions...... -- 1,009,365 366,765
Repurchased.......... (5,409,299) (8,037,843) (4,102,996)
-------------- -------------- --------------
Net increase
(decrease) in
shares
outstanding...... (568,830) (1,313,967) 2,042,773
============== ============== ==============
</TABLE>

- ---------------------------------------------------------

(a) Alleghany/Blairlogie International Developed Fund and Alleghany/Blairlogie
Emerging Markets Fund stub audits for the period July 1, 1998 through April
30, 1999. Share transactions restated to reflect share conversion on April
30, 1999. (See Note A)
(b) Montag & Caldwell Balanced Fund-Class I commenced investment operations on
December 31, 1998.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- - 54
<PAGE>

<TABLE>
<CAPTION>
ALLEGHANY/ ALLEGHANY/
BLAIRLOGIE EMERGING MONTAG & CALDWELL
MARKETS FUND BALANCED FUND(B)
------------------------------------------------------- ------------------------------
SIX MONTHS ENDED TEN MONTHS ENDED YEAR ENDED YEARS ENDED OCTOBER 31,
OCTOBER 31, 1999 APRIL 30, 1999(A) JUNE 30, 1998 1999 1998
----------------- ------------------ ---------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
NET ASSETS AT BEGINNING
OF PERIOD.............. $ 19,004,118 $ 27,569,318 $ 55,175,256 $ 158,398,348 $ 82,719,053
------------- ------------- ------------- -------------- --------------
INCREASE (DECREASE) IN
NET ASSETS FROM
OPERATIONS:
Net investment income
(loss)................. 101,678 153,762 195,456 3,379,975 2,167,560
Net realized gain
(loss) on investments
sold and foreign
currency
transactions......... 375,008 (4,788,570) (3,044,479) 12,323,201 8,565,876
Net change in
unrealized
appreciation
(depreciation) on
investments and
translation of assets
and liabilities
denominated in
foreign currency..... 80,954 3,735,165 (10,784,766) 15,541,127 5,973,930
------------- ------------- ------------- -------------- --------------
Net increase (decrease)
in net assets from
operations........... 557,640 (899,643) (13,633,789) 31,244,303 16,707,366
------------- ------------- ------------- -------------- --------------
DISTRIBUTIONS TO
SHAREOWNERS FROM:
Net investment income:
Class N.............. -- (1,704) -- (2,253,523)
(2,001,366)
Class I.............. -- (81,016) -- (817,375) --
Net realized gain on
investments:
Class N.............. -- -- -- (8,904,043)
(2,095,351)
Class I.............. -- -- -- -- --
Return of Capital
Class N.............. -- (549) -- -- --
Class I.............. -- (26,128) -- -- --
------------- ------------- ------------- -------------- --------------
Total
distributions...... -- (109,397) -- (11,974,941)
(4,096,717)
------------- ------------- ------------- -------------- --------------
CAPITAL SHARE
TRANSACTIONS:
Net proceeds from sales
of shares:
Class N.............. 1,167,427 4,825,690 5,950,664 76,418,226 101,273,482
Class I.............. 4,964,104 23,834,837 23,186,970 97,458,628 --
Issued to shareowners in reinvestment of distributions:
Class N.............. -- 4,501 -- 11,005,944 3,950,066
Class I.............. -- 93,520 -- 817,440 --
Cost of shares
repurchased:
Class N.............. (421,986) (6,805,094) (4,095,422) (101,572,790)
(42,154,902)
Class I.............. (6,963,131) (29,509,614) (39,014,361) (10,603,109) --
------------- ------------- ------------- -------------- --------------
Net increase
(decrease) from
capital share
transactions..... (1,253,586) (7,556,160) (13,972,149) 73,524,339 63,068,646
------------- ------------- ------------- -------------- --------------
Total increase
(decrease) in net
assets........... (695,946) (8,565,200) (27,605,938) 92,793,701 75,679,295
------------- ------------- ------------- -------------- --------------
NET ASSETS AT END OF
PERIOD (INCLUDING LINE
A)..................... $ 18,308,172 $ 19,004,118 $ 27,569,318 $ 251,192,049 $ 158,398,348
============= ============= ============= ============== ==============
(A) Undistributed
(distribution in excess
of) net investment
income (loss).......... $ 45,132 $ (1,001) $ (3,263) $ 660,478 $ 351,445
============= ============= ============= ============== ==============
OTHER INFORMATION:
SHARE TRANSACTIONS:
Class N:
Sold................. 108,246 561,023 497,628 4,064,233 6,029,088
Issued to
shareholders in
reinvestment of
distributions...... -- 159 -- 621,725 244,553
Repurchased.......... (39,603) (795,208) (346,442) (5,426,672)
(2,443,871)
Class I:
Sold................. 454,687 2,801,577 1,946,376 5,199,224 --
Issued to
shareholders in
reinvestment of
distributions...... -- 10,113 -- 43,055 --
Repurchased.......... (647,362) (3,463,865) (3,340,803) (561,037) --
------------- ------------- ------------- -------------- --------------
Net increase
(decrease) in
shares
outstanding...... (124,032) (886,201) (1,243,241) 3,940,528 3,829,770
============= ============= ============= ============== ==============
</TABLE>

- ---------------------------------------------------------

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- 55
<PAGE>
ALLEGHANY FUNDS
- ----------------------------------

STATEMENT OF CHANGES IN NET ASSETS -- CONTINUED

<TABLE>
<CAPTION>
ALLEGHANY/ ALLEGHANY/
CHICAGO TRUST CHICAGO TRUST
BALANCED FUND BOND FUND
-------------------------------------------------------
- --------------------------------------------
YEARS ENDED OCTOBER 31, YEARS ENDED OCTOBER
31,
1999 1998
1999 1998
-------------------------------- --------------------- ---------------------
- ---------------------
<S> <C> <C> <C> <C>
NET ASSETS AT BEGINNING
OF PERIOD.............. $ 219,361,542 $ 187,993,337 $ 160,561,220 $
120,532,177
-------------- -------------- --------------
- --------------
INCREASE (DECREASE) IN
NET ASSETS FROM
OPERATIONS:
Net investment income
(loss)............... 5,674,652 4,770,524
9,236,090 8,011,478
Net realized gain
(loss) on investments
sold................. 8,203,023 13,005,184
(446,987) 720,844
Net change in
unrealized
appreciation
(depreciation) in
investments and
assets and
liabilities.......... 25,535,665 16,518,248
(7,370,531) 629,065
-------------- -------------- --------------
- --------------
Net increase (decrease)
in net assets from
operations........... 39,413,340 34,293,956
1,418,572 9,361,387
-------------- -------------- --------------
- --------------
DISTRIBUTIONS TO
SHAREOWNERS FROM:
Net investment income:
Class N.............. (5,364,029) (4,710,584) (9,226,493)
(8,038,190)
Net realized gain on
investments:
Class N.............. (13,010,618) (11,401,639)
(708,779) --
-------------- -------------- --------------
- --------------
Total
distributions...... (18,374,647) (16,112,223) (9,935,272)
(8,038,190)
-------------- -------------- --------------
- --------------

CAPITAL SHARE
TRANSACTIONS:
Net proceeds from sales
of shares:
Class N.............. 100,719,712 36,882,800 46,629,918
75,297,016
Issued to shareowners in reinvestment of distributions:
Class N.............. 18,361,299 16,106,383
8,833,465 6,689,047
Cost of shares
repurchased:
Class N.............. (65,055,229) (39,802,711) (74,099,748)
(43,280,217)
-------------- -------------- --------------
- --------------
Net increase
(decrease) from
capital share
transactions..... 54,025,782 13,186,472 (18,636,365)
38,705,846
-------------- -------------- --------------
- --------------
Total increase
(decrease) in net
assets........... 75,064,475 31,368,205 (27,153,065)
40,029,043
-------------- -------------- --------------
- --------------
NET ASSETS AT END OF
PERIOD (INCLUDING
LINE A)................ $ 294,426,017 $ 219,361,542 $ 133,408,155 $
160,561,220
============== ============== ==============
==============
(A) Undistributed net
investment income...... $ 976,162 $ 693,191 $ 426,916
$ 412,661
============== ============== ==============
==============
OTHER INFORMATION:
SHARE TRANSACTIONS:
Class N:
Sold................. 7,946,222 3,317,900
4,672,863 7,333,221
Issued to
shareholders in
reinvestment of
distributions...... 1,540,005 1,398,337
869,864 656,919
Repurchased.......... (5,135,906) (3,485,565) (7,442,578)
(4,247,776)
-------------- -------------- --------------
- --------------
Net increase
(decrease) in
shares
outstanding...... 4,350,321 1,230,672
(1,899,851) 3,742,364
============== ============== ==============
==============
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- - 56
<PAGE>

<TABLE>
<CAPTION>
ALLEGHANY/ ALLEGHANY/
CHICAGO TRUST CHICAGO TRUST
MUNICIPAL BOND FUND MONEY MARKET
FUND
-------------------------------------------------------
- ----------------------------------------------
YEARS ENDED OCTOBER 31, YEARS ENDED
OCTOBER 31,
1999 1998
1999 1998
-------------------------------- --------------------- ----------------------
- ----------------------
<S> <C> <C> <C> <C>
NET ASSETS AT BEGINNING
OF PERIOD.............. $ 13,209,908 $ 12,379,208 $ 281,389,294
$ 238,551,474
------------- ------------- --------------
- --------------
INCREASE (DECREASE) IN
NET ASSETS FROM
OPERATIONS:
Net investment income
(loss)............... 722,732 560,590
14,080,829 13,160,425
Net realized gain
(loss) on investments
sold................. 24,495 56,385
- -- --
Net change in
unrealized
appreciation
(depreciation) in
investments and
assets and
liabilities.......... (1,093,220) 175,662
- -- --
------------- ------------- --------------
- --------------
Net increase (decrease)
in net assets from
operations........... (345,993) 792,637
14,080,829 13,160,425
------------- ------------- --------------
- --------------
DISTRIBUTIONS TO
SHAREOWNERS FROM:
Net investment income:
Class N.............. (711,409) (561,443)
(14,080,829) (13,160,425)
Net realized gain on investments:
Class N.............. -- --
- -- --
------------- ------------- --------------
- --------------
Total
distributions...... (711,409) (561,443)
(14,080,829) (13,160,425)
------------- ------------- --------------
- --------------

CAPITAL SHARE
TRANSACTIONS:
Net proceeds from sales
of shares:
Class N.............. 7,470,973 10,749,139
1,295,225,039 720,702,583
Issued to shareowners in reinvestment of distributions:
Class N.............. 126,534 42,390
1,813,603 816,231
Cost of shares
repurchased:
Class N.............. (2,530,718) (10,192,023) (1,243,287,721)
(678,680,994)
------------- ------------- --------------
- --------------
Net increase
(decrease) from
capital share
transactions..... 5,066,789 599,506
53,750,921 42,837,820
------------- ------------- --------------
- --------------
Total increase
(decrease) in net
assets........... 4,009,387 830,700
53,750,921 42,837,820
------------- ------------- --------------
- --------------
NET ASSETS AT END OF
PERIOD (INCLUDING
LINE A)................ $ 17,219,295 $ 13,209,908 $ 335,140,215
$ 281,389,294
============= ============= ==============
==============
(A) Undistributed net
investment income...... $ 37,926 $ 26,603 $ --
$ --
============= ============= ==============
==============
OTHER INFORMATION:
SHARE TRANSACTIONS:
Class N:
Sold................. 731,430 1,049,531
1,295,225,039 720,702,583
Issued to
shareholders in
reinvestment of
distributions...... 12,464 4,135
1,813,603 816,231
Repurchased.......... (249,136) (994,156) (1,243,287,721)
(678,680,994)
------------- ------------- --------------
- --------------
Net increase
(decrease) in
shares
outstanding...... 494,758 59,510
53,750,921 42,837,820
============= ============= ==============
==============
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- 57
<PAGE>
ALLEGHANY FUNDS
- ----------------------------------

ALLEGHANY/MONTAG & CALDWELL GROWTH FUND -- CLASS N OCTOBER 31, 1999

FINANCIAL HIGHLIGHTS

ALLEGHANY/MONTAG & CALDWELL GROWTH FUND -- CLASS N

<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
10/31/99 10/31/98 10/31/97 10/31/96 10/31/95(A)
---------- ---------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period............................. $ 26.49 $ 22.68 $ 17.08 $ 13.16 $ 10.00
---------- ---------- -------- -------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)..... (0.04) (0.05) (0.05) -- 0.02
Net realized and unrealized gain
on investments................. 7.64 4.07 5.79 3.93 3.16
---------- ---------- -------- -------- -------
Total from investment
operations................... 7.60 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............ (0.94) (0.21) (0.14) -- --
---------- ---------- -------- -------- -------
Total distributions............ (0.94) (0.21) (0.14) (0.01) (0.02)
---------- ---------- -------- -------- -------
Net increase in net asset value...... 6.66 3.81 5.60 3.92 3.16
---------- ---------- -------- -------- -------
Net Asset Value, End of Period....... $ 33.15 $ 26.49 $ 22.68 $ 17.08 $ 13.16
========== ========== ======== ======== =======
TOTAL RETURN(1)...................... 29.34% 17.90% 33.82% 29.91% 31.87%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in
000's)........................... $1,612,796 $1,004,356 $479,557 $166,243 $40,355
Ratios of expenses to average net
assets:
Before reimbursement of expenses
by Adviser(2).................. 1.05% 1.12% 1.24% 1.32% 1.87%
After reimbursement of expenses
by Adviser(2).................. 1.05% 1.12% 1.23% 1.28% 1.30%
Ratios of net investment income
(loss) to average net assets:
Before reimbursement of expenses
by Adviser(2).................. (0.16)% (0.22)% (0.38)% (0.10)% (0.36)%
After reimbursement of expenses
by Adviser(2).................. (0.16)% (0.22)% (0.37)% (0.06)% 0.20%
Portfolio Turnover(1).............. 31.59% 29.81% 18.65% 26.36% 34.46%
</TABLE>

- ---------------------------------------------------------

<TABLE>
<C> <S>
(1) Not Annualized.
(2) Annualized.
(a) Alleghany/Montag & Caldwell Growth Fund - Class N
commenced investment operations on November 2, 1994.
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- - 58
<PAGE>
ALLEGHANY FUNDS
- ------------------------------

MONTAG & CALDWELL GROWTH FUND -- CLASS I OCTOBER 31, 1999

FINANCIAL HIGHLIGHTS

MONTAG & CALDWELL GROWTH FUND -- CLASS I

<TABLE>
<CAPTION>
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
10/31/99 10/31/98 10/31/97 10/31/96(A)
---------- -------- -------- -------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period...................... $ 26.65 $ 22.75 $ 17.08 $ 15.59
---------- -------- -------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income..... 0.04 0.01 --(b) 0.02
Net realized and
unrealized gain on
investments............. 7.71 4.10 5.81 1.49
---------- -------- -------- -------
Total from investment
operations............ 7.75 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............. (0.94) (0.21) (0.14) --
---------- -------- -------- -------
Total distributions..... (0.94) (0.21) (0.14) (0.02)
---------- -------- -------- -------
Net increase in net asset
value....................... 6.81 3.90 5.67 1.49
---------- -------- -------- -------
Net Asset Value, End of
Period...................... $ 33.46 $ 26.65 $ 22.75 $ 17.08
========== ======== ======== =======
TOTAL RETURN(1)............... 29.78% 18.24% 34.26% 9.67%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period
(in 000's)................ $1,369,673 $738,423 $268,861 $52,407
Ratios of expenses to
average net assets:
Before reimbursement of
expenses by
Adviser(2).............. 0.76% 0.85% 0.93% 0.98%
After reimbursement of
expenses by
Adviser(2).............. 0.76% 0.85% 0.93% 0.98%
Ratios of net investment
income (loss) to average
net assets:
Before reimbursement of
expenses by
Adviser(2).............. 0.14% 0.05% (0.07)% 0.17%
After reimbursement of
expenses by
Adviser(2).............. 0.14% 0.05% (0.06)% 0.17%
Portfolio Turnover(1)....... 31.59% 29.81% 18.65% 26.36%
</TABLE>

- ---------------------------------------------------------

(1) Not Annualized.
(2) Annualized.
(a) Montag & Caldwell Growth Fund - Class I commenced investment operations on
June 28, 1996.
(b) Represents less than $.01 per share.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- 59
<PAGE>
ALLEGHANY FUNDS
- ----------------------------------

ALLEGHANY/CHICAGO TRUST GROWTH & INCOME FUND OCTOBER 31, 1999

FINANCIAL HIGHLIGHTS

ALLEGHANY/CHICAGO TRUST GROWTH & INCOME FUND

<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period..... $ 23.06 $ 19.73 $ 16.17 $ 12.90 $ 10.11
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)......... (0.06) (0.02) 0.08 0.11 0.09
Net realized and unrealized gain on
investments........................ 6.14 4.73 3.91 3.34 2.79
-------- -------- -------- -------- --------
Total from investment operations... 6.08 4.71 3.99 3.45 2.88
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Distributions from and in excess of
net investment income.............. -- (0.01) (0.09) (0.11) (0.09)
Distributions from net realized gain
on investments..................... (1.43) (1.37) (0.34) (0.07) --
-------- -------- -------- -------- --------
Total distributions................ (1.43) (1.38) (0.43) (0.18) (0.09)
-------- -------- -------- -------- --------
Net increase in net asset value.......... 4.65 3.33 3.56 3.27 2.79
-------- -------- -------- -------- --------
Net Asset Value, End of Period........... $ 27.71 $ 23.06 $ 19.73 $ 16.17 $ 12.90
======== ======== ======== ======== ========
TOTAL RETURN............................. 27.71% 25.43% 25.16% 26.98% 28.66%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000's)... $490,189 $367,666 $274,608 $205,133 $172,296

Ratios of expenses to average net
assets:
Before reimbursement of expenses by
Adviser(1)......................... 1.06% 1.08% 1.12% 1.15% 1.50%
After reimbursement of expenses by
Adviser(1)......................... 1.06% 1.08% 1.07%(2) 1.00%
1.09%(3)
Ratios of net investment income (loss)
to average net assets:
Before reimbursement of expenses by
Adviser(1)......................... (0.25)% (0.11)% 0.36% 0.62% 0.33%
After reimbursement of expenses by
Adviser(1)......................... (0.25)% (0.11)% 0.41% 0.77% 0.74%
Portfolio Turnover..................... 28.93% 34.21% 30.58% 25.48% 9.00%
</TABLE>

- ---------------------------------------------------------

<TABLE>
<C> <S>
(1) Annualized.
(2) The Adviser's expense reimbursement level, which affects
the net expense ratio, changed from 1.00% to 1.10% on
February 28, 1997.
(3) The Adviser's expense reimbursement level, which affects
the net expense ratio, changed from 1.20% to 1.00% on
September 21, 1995.
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- - 60
<PAGE>
ALLEGHANY FUNDS
- ------------------------------

ALLEGHANY/CHICAGO TRUST TALON FUND OCTOBER 31, 1999

FINANCIAL HIGHLIGHTS

ALLEGHANY/CHICAGO TRUST TALON FUND

<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period......... $ 13.16 $ 17.60 $ 14.39 $ 12.07 $ 10.25
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)............. (0.05) 0.07 0.11 0.04 0.09
Net realized and unrealized gain (loss)
on investments......................... 0.34 (1.59) 4.38 3.01 1.84
------- ------- ------- ------- -------
Total from investment operations....... 0.29 (1.52) 4.49 3.05 1.93
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Distributions from and in excess of net
investment income...................... --(a) (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... 0.29 (4.44) 3.21 2.32 1.82
------- ------- ------- ------- -------
Net Asset Value, End of Period............... $ 13.45 $ 13.16 $ 17.60 $ 14.39 $ 12.07
======= ======= ======= ======= =======
TOTAL RETURN................................. 2.32% (10.54)% 33.47% 26.51% 18.92%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000's)....... $17,586 $22,728 $28,460 $17,418 $10,538
Ratios of expenses to average net assets:
Before reimbursement of expenses by
Adviser(1)............................. 1.50% 1.46% 1.67% 1.98% 3.04%
After reimbursement of expenses by
Adviser(1)............................. 1.30% 1.30% 1.30% 1.30% 1.30%
Ratios of net investment income (loss) to
average net assets:
Before reimbursement of expenses by
Adviser(1)............................. (0.50)% 0.30% 0.34% (0.38)% (0.97)%
After reimbursement of expenses by
Adviser(1)............................. (0.30)% 0.46% 0.71% 0.30% 0.77%
Portfolio Turnover......................... 101.44% 78.33% 112.72% 126.83% 229.43%
</TABLE>

- ---------------------------------------------------------

<TABLE>
<C> <S>
(1) Annualized.
(a) Represents less than $.01 per share.
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- 61
<PAGE>
ALLEGHANY FUNDS
- ----------------------------------

ALLEGHANY/CHICAGO TRUST SMALL CAP VALUE FUND OCTOBER 31, 1999

FINANCIAL HIGHLIGHTS

ALLEGHANY/CHICAGO TRUST SMALL CAP VALUE FUND

<TABLE>
<CAPTION>
PERIOD
ENDED
10/31/99(A)
-----------
<S> <C>
Net Asset Value, Beginning of Period........................ $ 10.00
-------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income................................... 0.04
Net realized and unrealized loss on investments......... (0.85)
-------
Total from investment operations...................... (0.81)
-------
LESS DISTRIBUTIONS:
Distributions from and in excess of net investment
income................................................. (0.01)
-------
Total distributions................................... (0.01)
-------
Net decrease in net asset value............................. (0.82)
-------
Net Asset Value, End of Period.............................. $ 9.18
=======
TOTAL RETURN(1)............................................. (8.07)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000's)...................... $42,478
Ratios of expenses to average net assets:
Before reimbursement of expenses by Adviser(2).......... 1.55%
After reimbursement of expenses by Adviser(2)........... 1.40%
Ratios of net investment income to average net assets:
Before reimbursement of expenses by Adviser(2).......... 0.36%
After reimbursement of expenses by Adviser(2)........... 0.51%
Portfolio Turnover(1)..................................... 156.55%
</TABLE>

- ---------------------------------------------------------

<TABLE>
<C> <S>
(1) Not Annualized.
(2) Annualized.
(a) Alleghany/Chicago Trust Small Cap Value Fund commenced
investment operations on November 10, 1998.
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- - 62
<PAGE>
ALLEGHANY FUNDS
- ------------------------------

ALLEGHANY/VEREDUS AGGRESSIVE GROWTH FUND OCTOBER 31, 1999

FINANCIAL HIGHLIGHTS

ALLEGHANY/VEREDUS AGGRESSIVE GROWTH FUND

<TABLE>
<CAPTION>
YEAR PERIOD
ENDED ENDED
10/31/99 10/31/98(A)
-------- -----------
<S> <C> <C>
Net Asset Value, Beginning of Period........................ $ 8.62 $ 10.00
------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)............................ (0.08) --(b)
Net realized and unrealized gain (loss) on
investments........................................... 8.06 (1.38)
------- -------
Total from investment operations...................... 7.98 (1.38)
------- -------
Net Asset Value, End of Period.............................. $ 16.60 $ 8.62
======= =======
TOTAL RETURN(1)............................................. 92.92% (13.80)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000's)...................... $57,282 $12,674
Ratios of expenses to average net assets:
Before reimbursement of expenses by Adviser(2).......... 1.58% 1.54%
After reimbursement of expenses by Adviser(2)........... 1.41%(3) 1.50%
Ratios of net investment loss to average net assets:
Before reimbursement of expenses by Adviser(2).......... (1.05)% (0.06)%
After reimbursement of expenses by Adviser(2)........... (0.88)% (0.02)%
Portfolio Turnover(1)..................................... 204.26% 111.52%
</TABLE>

- ---------------------------------------------------------

<TABLE>
<C> <S>
(1) Not Annualized.
(2) Annualized.
(3) The Adviser fee, which affects the net expense ratio,
changed from 1.50% to 1.00% on December 4, 1998.
(a) Alleghany/Veredus Aggressive Growth Fund commenced
investment operations on June 30, 1998.
(b) Represents less than $0.01 per share.
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- 63
<PAGE>
ALLEGHANY FUNDS
- ----------------------------------

ALLEGHANY/BLAIRLOGIE INTERNATIONAL DEVELOPED FUND -- CLASS N OCTOBER 31, 1999

FINANCIAL HIGHLIGHTS

ALLEGHANY/BLAIRLOGIE INTERNATIONAL DEVELOPED FUND -- CLASS N

<TABLE>
<CAPTION>
SIX TEN EIGHT ELEVEN
MONTHS MONTHS YEAR YEAR MONTHS MONTHS
ENDED ENDED ENDED ENDED ENDED ENDED
10/31/99 04/30/99 06/30/98 06/30/97 06/30/96 10/31/95(A)
-------- -------- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period............................ $12.70 $14.30 $13.05 $12.51 $11.73 $11.21
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss).... 0.06 (0.02) 0.17 0.06 0.69 0.02
Net realized and unrealized gain
on investments................ 0.61 0.16 1.69 1.09 0.72 1.01
------ ------ ------ ------ ------ ------
Total from investment
operations.................. 0.67 0.14 1.86 1.15 1.41 1.03
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Distributions from and in excess
of net investment income...... -- -- (0.03) -- (0.42) (0.08)
Distributions from net realized
gain on investments........... -- (1.74) (0.58) (0.61) (0.21) (0.43)
------ ------ ------ ------ ------ ------
Total distributions........... -- (1.74) (0.61) (0.61) (0.63) (0.51)
------ ------ ------ ------ ------ ------
Net increase (decrease) in net asset
value............................. 0.67 (1.60) 1.25 0.54 0.78 0.52
------ ------ ------ ------ ------ ------
Net Asset Value, End of Period...... $13.37 $12.70 $14.30 $13.05 $12.51 $11.73
====== ====== ====== ====== ====== ======
TOTAL RETURN(1)..................... 5.35% 1.05% 15.33% 9.77% 12.33% 9.61%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in
000's).......................... $7,516 $5,278(3) $6,299 $2,302 $5,624 $ 675
Ratios of expenses to average net
assets:
Before reimbursement of expenses
by Adviser(2)................. 1.41% 1.41% 1.36% 1.38% 1.35% 1.34%
After reimbursement of expenses
by Adviser(2)................. 1.35% 1.41% 1.36% 1.38% 1.35% 1.34%
Ratios of net investment income
(loss) to average net assets:
Before reimbursement of expenses
by Adviser(2)................. 0.95% (0.21)% 1.31% 0.52% 1.04% 0.50%
After reimbursement of expenses
by Adviser(2)................. 1.01% (0.21)% 1.31% 0.52% 1.04% 0.50%
Portfolio Turnover(1)............. 28.91% 36.00% 60.00% 77.00% 60.00% 58.00%
</TABLE>

- ---------------------------------------------------------

<TABLE>
<C> <S>
(1) Not Annualized.
(2) Annualized.
(3) Net Assets at end of period do not reflect Class A, B,
or C net assets prior to April 30, 1999.
(a) Alleghany/Blairlogie International Developed Fund -
Class N commenced investment operations on November 30,
1994.
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- - 64
<PAGE>
ALLEGHANY FUNDS
- ------------------------------

ALLEGHANY/BLAIRLOGIE INTERNATIONAL DEVELOPED FUND -- CLASS I OCTOBER 31, 1999

FINANCIAL HIGHLIGHTS

ALLEGHANY/BLAIRLOGIE INTERNATIONAL DEVELOPED FUND -- CLASS I

<TABLE>
<CAPTION>
SIX TEN EIGHT
MONTHS MONTHS YEAR YEAR MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
10/31/99 04/30/99 06/30/98 06/30/97 06/30/96 10/31/95
-------- --------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period........................... $ 12.70 $ 14.32 $ 13.12 $ 12.54 $ 11.74 $ 11.86
------- -------- -------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.......... 0.08 -- 0.16 0.10 0.72 0.10
Net realized and unrealized
gain on investments.......... 0.62 0.17 1.73 1.09 0.72 0.30
------- -------- -------- ------- ------- -------
Total from investment
operations................. 0.70 0.17 1.89 1.19 1.44 0.40
------- -------- -------- ------- ------- -------
LESS DISTRIBUTIONS:
Distributions from and in
excess of net investment
income....................... -- (0.05) (0.11) -- (0.43) (0.09)
Distributions from net realized
gain on investments.......... -- (1.74) (0.58) (0.61) (0.21) (0.43)
------- -------- -------- ------- ------- -------
Total distributions.......... -- (1.79) (0.69) (0.61) (0.64) (0.52)
------- -------- -------- ------- ------- -------
Net increase (decrease) in net
asset value...................... 0.70 (1.62) 1.20 0.58 0.80 (0.12)
------- -------- -------- ------- ------- -------
Net Asset Value, End of Period..... $ 13.40 $ 12.70 $ 14.32 $ 13.12 $ 12.54 $ 11.74
======= ======== ======== ======= ======= =======
TOTAL RETURN(1).................... 5.51% 1.31% 15.69% 10.07% 12.54% 3.83%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in
000's)......................... $97,067 $101,084 $122,126 $94,044 $70,207 $63,607
Ratios of expenses to average net
assets:
Before reimbursement of
expenses by Adviser(2)....... 1.16% 1.16% 1.11% 1.13% 1.10% 1.10%
After reimbursement of expenses
by Adviser(2)................ 1.10% 1.16% 1.11% 1.13% 1.10% 1.10%
Ratios of net investment income
to average net assets:
Before reimbursement of
expenses by Adviser(2)....... 1.20% 0.04% 1.20% 0.85% 0.81% 1.10%
After reimbursement of expenses
by Adviser(2)................ 1.26% 0.04% 1.20% 0.85% 0.81% 1.10%
Portfolio Turnover(1)............ 28.91% 36.00% 60.00% 77.00% 60.00% 63.00%
</TABLE>

- ---------------------------------------------------------

<TABLE>
<C> <S>
(1) Not Annualized.
(2) Annualized.
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- 65
<PAGE>
ALLEGHANY FUNDS
- ----------------------------------

ALLEGHANY/BLAIRLOGIE EMERGING MARKETS FUND -- CLASS N OCTOBER 31, 1999

FINANCIAL HIGHLIGHTS

ALLEGHANY/BLAIRLOGIE EMERGING MARKETS FUND -- CLASS N

<TABLE>
<CAPTION>
SIX TEN EIGHT
MONTHS MONTHS YEAR YEAR MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
10/31/99 04/30/99 06/30/98 06/30/97 06/30/96 10/31/95
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period........................... $10.42 $10.14 $ 13.95 $12.63 $11.24 $ 16.95
------ ------ ------- ------ ------ -------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.......... 0.05 0.05 0.09 -- 0.02 --
Net realized and unrealized
gain (loss) on investments... 0.28 0.23 (3.90) 1.32 1.40 (4.95)
------ ------ ------- ------ ------ -------
Total from investment
operations................. 0.33 0.28 (3.81) 1.32 1.42 (4.95)
------ ------ ------- ------ ------ -------
LESS DISTRIBUTIONS:
Distributions from and in
excess of net investment
income....................... -- -- -- -- (0.03) (0.05)
Distributions from net realized
gain on investments.......... -- -- -- -- -- (0.71)
------ ------ ------- ------ ------ -------
Total distributions.......... -- -- -- -- (0.03) (0.76)
------ ------ ------- ------ ------ -------
Net increase (decrease) in net
asset value...................... 0.33 0.28 (3.81) 1.32 1.39 (5.71)
------ ------ ------- ------ ------ -------
Net Asset Value, End of Period..... $10.75 $10.42 $ 10.14 $13.95 $12.63 $ 11.24
====== ====== ======= ====== ====== =======
TOTAL RETURN(1).................... 3.26% 2.76% (27.31)% 10.45% 12.70% (27.96)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in
000's)......................... $1,729 $ 961(3) $ 1,339 $ 117 $ 368 $ 830
Ratios of expenses to average net
assets:
Before reimbursement of
expenses by Adviser(2)....... 2.07% 1.68% 1.65% 1.69% 1.61% 1.62%
After reimbursement of expenses
by Adviser(2)................ 1.60% 1.68% 1.65% 1.69% 1.61% 1.62%
Ratios of net investment income
to average net assets:
Before reimbursement of
expenses by Adviser(2)....... 0.41% 0.69% 0.81% 0.02% 0.18% 0.02%
After reimbursement of expenses
by Adviser(2)................ 0.88% 0.69% 0.81% 0.02% 0.18% 0.02%
Portfolio Turnover(1)............ 46.93% 38.00% 52.00% 74.00% 74.00% 118.00%
</TABLE>

- ---------------------------------------------------------

<TABLE>
<C> <S>
(1) Not Annualized.
(2) Annualized.
(3) Net Assets at end of period do not reflect Class A, B,
or C net assets prior to April 30, 1999.
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- - 66
<PAGE>
ALLEGHANY FUNDS
- ------------------------------

ALLEGHANY/BLAIRLOGIE EMERGING MARKETS FUND -- CLASS I OCTOBER 31, 1999

FINANCIAL HIGHLIGHTS

ALLEGHANY/BLAIRLOGIE EMERGING MARKETS FUND -- CLASS I

<TABLE>
<CAPTION>
SIX TEN EIGHT
MONTHS MONTHS YEAR YEAR MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
10/31/99 04/30/99 06/30/98 06/30/97 06/30/96 10/31/95
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period........................... $ 10.43 $ 10.18 $ 13.96 $ 12.66 $ 11.27 $ 16.53
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.......... 0.06 0.06 0.06 0.06 0.03 0.07
Net realized and unrealized
gain (loss).................. 0.30 0.23 (3.84) 1.30 1.40 (4.55)
------- ------- ------- ------- ------- -------
Total from investment
operations................. 0.36 0.29 (3.78) 1.36 1.43 (4.48)
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Distributions from and in
excess of net investment
income....................... -- (0.03) -- (0.06) (0.04) (0.06)
Distributions from net realized
gain on investments.......... -- -- -- -- -- (0.72)
Return of capital
distributions................ -- (0.01) -- -- -- --
------- ------- ------- ------- ------- -------
Total distributions.......... -- (0.04) -- (0.06) (0.04) (0.78)
------- ------- ------- ------- ------- -------
Net increase (decrease) in net
asset value...................... 0.36 0.25 (3.78) 1.30 1.39 (5.26)
------- ------- ------- ------- ------- -------
Net Asset Value, End of Period..... $ 10.79 $ 10.43 $ 10.18 $ 13.96 $ 12.66 $ 11.27
======= ======= ======= ======= ======= =======
TOTAL RETURN(1).................... 3.45% 2.98% (27.08)% 10.85% 12.70% (27.70)%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in
000's)......................... $16,579 $18,043 $24,251 $52,703 $80,545 $73,539
Ratios of expenses to average net
assets:
Before reimbursement of
expenses by Adviser(2)....... 1.82% 1.43% 1.39% 1.45% 1.35% 1.35%
After reimbursement of expenses
by Adviser(2)................ 1.35% 1.43% 1.39% 1.45% 1.35% 1.35%
Ratios of net investment income
to average net assets:
Before reimbursement of expenses
by Adviser(2).................. 0.66% 0.94% 0.52% 0.45% 0.84% 0.57%
After reimbursement of expenses
by Adviser(2).................. 1.13% 0.94% 0.52% 0.45% 0.84% 0.57%
Portfolio Turnover(1).............. 46.93% 38.00% 52.00% 74.00% 74.00% 118.00%
</TABLE>

- ---------------------------------------------------------

<TABLE>
<C> <S>
(1) Not Annualized.
(2) Annualized.
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- 67
<PAGE>
ALLEGHANY FUNDS
- ----------------------------------

ALLEGHANY/MONTAG & CALDWELL BALANCED FUND OCTOBER 31, 1999

FINANCIAL HIGHLIGHTS

ALLEGHANY/MONTAG & CALDWELL BALANCED FUND

<TABLE>
<CAPTION>
CLASS N
CLASS I
---------------------------------------------------------
- -----------
YEAR YEAR YEAR YEAR PERIOD
PERIOD
ENDED ENDED ENDED ENDED ENDED
ENDED
10/31/99 10/31/98 10/31/97 10/31/96 10/31/95(A)
10/31/99(B)
--------- --------- -------- -------- -----------
- -----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period..... $ 17.60 $ 16.01 $ 14.29 $ 12.12 $ 10.00 $
18.36
-------- -------- ------- ------- -------
- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income................ 0.29 0.27 0.25 0.27 0.26
0.25
Net realized and unrealized gain on
investments........................ 2.73 1.97 2.93 2.17 2.09
1.03
-------- -------- ------- ------- -------
- -------
Total from investment operations... 3.02 2.24 3.18 2.44 2.35
1.28
-------- -------- ------- ------- -------
- -------
LESS DISTRIBUTIONS:
Distributions from and in excess of
net investment income.............. (0.27) (0.27) (0.25) (0.27) (0.23)
(0.22)
Distributions from net realized gain
on investments..................... (0.94) (0.38) (1.21) --
- -- --
-------- -------- ------- ------- -------
- -------
Total distributions.................. (1.21) (0.65) (1.46) (0.27) (0.23)
(0.22)
-------- -------- ------- ------- -------
- -------
Net increase in net asset value.......... 1.81 1.59 1.72 2.17 2.12
1.06
-------- -------- ------- ------- -------
- -------
Net Asset Value, End of Period........... $ 19.41 $ 17.60 $ 16.01 $ 14.29 $ 12.12 $
19.42
======== ======== ======= ======= =======
=======
TOTAL RETURN(1).......................... 17.83% 14.46% 24.26% 20.37% 23.75%
6.98%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000's)... $160,286 $158,398 $82,719 $31,473 $21,908
$90,906
Ratios of expenses to average net
assets:
Before reimbursement of expenses by
Adviser(2)......................... 1.14% 1.18% 1.33% 1.58% 2.50%
0.91%
After reimbursement of expenses by
Adviser(2)......................... 1.14% 1.18% 1.25% 1.25% 1.25%
0.91%
Ratios of net investment income to
average net assets:
Before reimbursement of expenses by
Adviser(2)......................... 1.54% 1.67% 1.70% 1.83% 1.38%
1.77%
After reimbursement of expenses by
Adviser(2)......................... 1.54% 1.67% 1.78% 2.16% 2.63%
1.77%
Portfolio Turnover(1).................. 34.79% 59.02% 28.13% 43.58% 27.33%
34.79%
</TABLE>

- ---------------------------------------------------------

<TABLE>
<C> <S>
(1) Not Annualized.
(2) Annualized.
(a) Alleghany/Montag & Caldwell Balanced Fund - Class N
commenced investment operations on November 2, 1994.
(b) Montag & Caldwell Balanced Fund - Class I commenced
investment operations on December 31, 1998.
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- - 68
<PAGE>
ALLEGHANY FUNDS
- ------------------------------

ALLEGHANY/CHICAGO TRUST BALANCED FUND OCTOBER 31, 1999

FINANCIAL HIGHLIGHTS

ALLEGHANY/CHICAGO TRUST BALANCED FUND

<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
10/31/99 10/31/98 10/31/97 10/31/96 10/31/95(A)
-------- -------- -------- -------- -------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 12.03 $ 11.06 $ 9.60 $ 8.43 $ 8.34
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment
income............. 0.27 0.27 0.28 0.27 0.03
Net realized and
unrealized gain on
investments........ 1.71 1.65 1.60 1.16 0.06
-------- -------- -------- -------- --------
Total from
investment
operations....... 1.98 1.92 1.88 1.43 0.09
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Distributions from
and in excess of
net investment
income............. (0.26) (0.27) (0.28) (0.26) --
Distributions from
net realized gain
on investments..... (0.71) (0.68) (0.14) --
-------- -------- -------- -------- --------
Total
distributions.... (0.97) (0.95) (0.42) (0.26) --
-------- -------- -------- -------- --------
Net increase in net asset
value.................. 1.01 0.97 1.46 1.17 0.09
-------- -------- -------- -------- --------
Net Asset Value, End of
Period................. $ 13.04 $ 12.03 $ 11.06 $ 9.60 $ 8.43
======== ======== ======== ======== ========
TOTAL RETURN(1).......... 17.26% 18.50% 20.10% 17.21% 1.08%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of
Period (in 000's).... $294,426 $219,362 $187,993 $156,703 $152,820
Ratios of expenses to
average net assets:
Before reimbursement
of expenses by
Adviser(2)......... 1.06% 1.08% 1.13% 1.17% 1.19%
After reimbursement
of expenses by
Adviser(2)......... 1.06% 1.08% 1.07%(3) 1.00% 1.00%
Ratios of net
investment income to
average net assets:
Before reimbursement
of expenses by
Adviser(2)......... 2.13% 2.30% 2.70% 2.79% 2.56%
After reimbursement
of expenses by
Adviser(2)......... 2.13% 2.30% 2.76% 2.96% 2.73%
Portfolio
Turnover(1).......... 25.05% 40.28% 34.69% 34.29% 0.72%
</TABLE>

- ---------------------------------------------------------

(1) Not Annualized.
(2) Annualized.
(3) The Adviser's expense reimbursement level, which affects the net expense
ratio, changed from 1.00% to 1.10% on February 28, 1997.
(a) Alleghany/Chicago Trust Balanced Fund (formerly the Chicago Trust Asset
Allocation Fund)-Class N commenced investment operations on September 21,
1995.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- 69
<PAGE>
ALLEGHANY FUNDS
- ----------------------------------

ALLEGHANY/CHICAGO TRUST BOND FUND OCTOBER 31, 1999

FINANCIAL HIGHLIGHTS

ALLEGHANY/CHICAGO TRUST BOND FUND

<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
--------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period......... $ 10.27 $ 10.13 $ 9.89 $ 9.94 $ 9.21
-------- -------- -------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................... 0.61 0.60 0.61 0.60 0.60
Net realized and unrealized gain (loss)
on investments......................... (0.51) 0.15 0.23 (0.05) 0.73
-------- -------- -------- ------- -------
Total from investment operations....... 0.10 0.75 0.84 0.55 1.33
-------- -------- -------- ------- -------
LESS DISTRIBUTIONS:
Distributions from and in excess of net
investment income...................... (0.61) (0.61) (0.60) (0.60) (0.60)
Distributions from net realized gain on
investments............................ (0.05) -- -- -- --
-------- -------- -------- ------- -------
Total distributions.................... (0.66) (0.61) (0.60) (0.60) (0.60)
-------- -------- -------- ------- -------
Net increase (decrease) in net asset value... (0.56) 0.14 0.24 (0.05) 0.73
-------- -------- -------- ------- -------
Net Asset Value, End of Period............... $ 9.71 $ 10.27 $ 10.13 $ 9.89 $ 9.94
======== ======== ======== ======= =======
TOTAL RETURN................................. 1.02% 7.66% 8.84% 5.76% 14.89%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000's)....... $133,408 $160,561 $120,532 $79,211 $70,490
Ratios of expenses to average net assets:
Before reimbursement of expenses by
Adviser(1)............................. 0.93% 0.96% 1.02% 1.10% 1.54%
After reimbursement of expenses by
Adviser(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
Adviser(1)............................. 5.91% 5.79% 6.02% 5.89% 5.78%
After reimbursement of expenses by
Adviser(1)............................. 6.04% 5.95% 6.24% 6.19% 6.52%
Portfolio Turnover......................... 49.83% 45.29% 17.76% 41.75% 68.24%
</TABLE>

- ---------------------------------------------------------

<TABLE>
<C> <S>
(1) Annualized.
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- - 70
<PAGE>
ALLEGHANY FUNDS
- ------------------------------

ALLEGHANY/CHICAGO TRUST MUNICIPAL BOND FUND OCTOBER 31, 1999

FINANCIAL HIGHLIGHTS

ALLEGHANY/CHICAGO TRUST MUNICIPAL BOND FUND

<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........... $ 10.36 $ 10.19 $ 10.06 $ 10.08 $ 9.56
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income...................... 0.46 0.44 0.38 0.38 0.35
Net realized and unrealized gain (loss) on
investments.............................. (0.63) 0.17 0.12 (0.02) 0.52
------- ------- ------- ------- -------
Total from investment operations......... (0.17) 0.61 0.50 0.36 0.87
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Distributions from and in excess of net
investment income........................ (0.46) (0.44) (0.37) (0.38) (0.35)
------- ------- ------- ------- -------
Total distributions...................... (0.46) (0.44) (0.37) (0.38) (0.35)
------- ------- ------- ------- -------
Net increase (decrease) in net asset value..... (0.63) 0.17 0.13 (0.02) 0.52
------- ------- ------- ------- -------
Net Asset Value, End of Period................. $ 9.73 $ 10.36 $ 10.19 $ 10.06 $ 10.08
======= ======= ======= ======= =======
TOTAL RETURN................................... (1.77)% 6.17% 5.13% 3.59% 9.29%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000's)......... $17,219 $13,210 $12,379 $11,186 $11,679
Ratios of expenses to average net assets:
Before reimbursement of expenses by
Adviser(1)............................... 1.20% 1.41% 1.64% 1.53% 2.16%
After reimbursement of expenses by
Adviser(1)............................... 0.10% 0.35%(2) 0.90% 0.90% 0.90%
Ratios of net investment income to average
net assets:
Before reimbursement of expenses by
Adviser(1)............................... 3.45% 3.22% 3.00% 3.11% 2.37%
After reimbursement of expenses by
Adviser(1)............................... 4.55% 4.28% 3.74% 3.74% 3.63%
Portfolio Turnover........................... 22.83% 34.33% 16.19% 27.47% 42.81%
</TABLE>

- ---------------------------------------------------------

<TABLE>
<C> <S>
(1) Annualized.
(2) The Adviser's expense reimbursement level, which affects
the net expense ratio, changed from 0.90% to 0.10% on
February 27, 1998.
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- 71
<PAGE>
ALLEGHANY FUNDS
- ----------------------------------

ALLEGHANY/CHICAGO TRUST MONEY MARKET FUND OCTOBER 31, 1999

FINANCIAL HIGHLIGHTS

ALLEGHANY/CHICAGO TRUST MONEY MARKET FUND

<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
10/31/99 10/31/98 10/31/97 10/31/96 10/31/95
--------- --------- --------- --------- ---------
<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............................... 4.76% 5.24% 5.15% 5.14% 5.56%
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (in 000's)..... $335,140 $281,389 $238,551 $225,536 $206,075
Ratios of expenses to average net assets:
Before reimbursement of expenses by
Adviser(1)........................... 0.51% 0.52% 0.56% 0.59% 0.63%
After reimbursement of expenses by
Adviser(1)........................... 0.51% 0.51%(3) 0.50% 0.50%
0.43%(2)
Ratios of net investment income to
average net assets:
Before reimbursement of expenses by
Adviser(1)........................... 4.63% 5.13% 5.00% 4.93% 5.24%
After reimbursement of expenses by
Adviser(1)........................... 4.63% 5.14% 5.06% 5.02% 5.44%
</TABLE>

- ---------------------------------------------------------

<TABLE>
<C> <S>
(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 Adviser no longer waived
fees or reimbursed expenses.
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

- - 72
<PAGE>
ALLEGHANY FUNDS
- --------------------------------

OCTOBER 31, 1999
NOTES TO FINANCIAL STATEMENTS

NOTE (A) SIGNIFICANT ACCOUNTING POLICIES: Alleghany Funds (the "Company")
operates as a series company, twelve series of which are covered by these
financial statements: Alleghany/ Montag & Caldwell Growth Fund (the "Growth
Fund"), Alleghany/Chicago Trust Growth & Income Fund (the "Growth & Income
Fund"), Alleghany/Chicago Trust Talon Fund (the "Talon Fund"), Alleghany/Chicago
Trust Small Cap Value Fund (the "Small Cap Value Fund"), Alleghany/Veredus
Aggressive Growth Fund (the "Aggressive Growth Fund"), Alleghany/ Blairlogie
International Developed Fund (the "International Developed Fund"),
Alleghany/Blairlogie Emerging Markets Fund (the "Emerging Markets Fund"),
Alleghany/Montag & Caldwell Balanced Fund (the "M&C Balanced Fund"),
Alleghany/Chicago Trust Balanced Fund (the "CT Balanced Fund"),
Alleghany/Chicago Trust Bond Fund (the "Bond Fund"), Alleghany/Chicago Trust
Municipal Bond Fund (the "Municipal Bond Fund") and Alleghany/Chicago Trust
Money Market Fund (the "Money Market Fund") (each a "Fund" and collectively, the
"Funds"). The Company is an open-end management investment company 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.

After the close of business on April 30, 1999, pursuant to an agreement and plan
of reorganization in a tax-free business combination, the assets and liabilities
of PIMCO Emerging Markets Fund and PIMCO International Developed Fund (the
"Acquired Funds") were transferred to the newly formed series of the Company,
Alleghany/Blairlogie Emerging Markets Fund and Alleghany/Blairlogie
International Developed Fund (the "Acquiring Funds"), in exchange for shares of
the Acquiring Funds. Holders of the Institutional class of shares of the
Acquired Funds received Class I Shares of the corresponding Acquiring Fund and
holders of the Administrative Class of the Acquired Fund received Class N Shares
of the corresponding Acquiring Fund. In addition, at the date of transfer for
Alleghany/ Blairlogie Emerging Markets Fund, 39,668 Class A Shares, 21,554 Class
B Shares and 31,837 Class C Shares converted to 39,559, 21,149 and 31,255 Class
N Shares of the Acquiring Fund at conversion rates of 0.99724, 0.98121 and
0.98170, respectively. At the date of transfer for Alleghany/Blairlogie
International Developed Fund, 75,505 Class A Shares, 122,227 Class B Shares and
221,270 Class C Shares converted to 75,200, 119,741 and 216,942 Class N Shares
of the Acquiring Fund at conversion rates of 0.99597, 0.97966 and 0.98044,
respectively. Prior year share information has been restated to reflect the
share conversions at April 30, 1999.

The Growth Fund seeks long-term capital appreciation consistent with investments
primarily in a combination of equity and convertible securities. Capital
appreciation is emphasized, and generation of income is secondary. Montag &
Caldwell, Inc. ("Montag & Caldwell") is the Adviser for the Fund, which
commenced investment operations on November 2, 1994. Effective June 28, 1996,
the Fund offers 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 and
convertible securities. The Chicago Trust Company ("Chicago Trust") is the
Adviser 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 believed by Talon Asset
Management, Inc. ("Talon") to have prospects for long-term growth. 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 Adviser for the Fund and Talon is the
Sub-Adviser.

The Small Cap Value Fund seeks long-term total return by investing primarily in
common stocks of small U.S. companies and/or real estate investment trusts
(REITs). Chicago Trust is the Adviser for the Fund, which commenced investment
operations on November 10, 1998.

The Aggressive Growth Fund seeks to provide capital appreciation by investing
primarily in equity securities of companies with accelerating earnings. Veredus
Asset Management LLC is the Adviser for the Fund, which commenced investment
operations on June 30, 1998.

The International Developed Fund seeks long-term growth of capital through
investment primarily in a diversified portfolio of international equity
securities. Blairlogie Capital Management ("Blairlogie") is the Adviser for the
Fund, which commenced investment operations on June 8, 1993. The Fund offers two
classes of shares: Class I (Institutional) Shares and Class N (Retail) Shares.

The Emerging Markets Fund seeks long-term growth of capital with investments
primarily in common stocks of companies located in emerging market countries.
Blairlogie is the Adviser for the Fund, which commenced investment operations on
June 1, 1993. The Fund offers two classes of shares: Class I (Institutional)
Shares and Class N (Retail) Shares.

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

- 73
<PAGE>
ALLEGHANY FUNDS

OCTOBER 31, 1999
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
may vary 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 is the Adviser for the Fund,
which commenced investment operations on November 2, 1994. Effective December
31, 1998, the Fund offers two classes of shares: Class I (Institutional) Shares
and Class N (Retail) Shares.

The CT Balanced Fund seeks growth of capital with current income. The Fund seeks
to achieve this objective by holding a combination of equity and fixed income
securities, including 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 Adviser for the Fund, which
commenced investment operations on September 21, 1995.

The Bond Fund seeks high current income consistent with 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 Adviser 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
Adviser 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
Adviser for the Fund, which commenced investment operations on December 14,
1993.

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 Small Cap Value Fund, the Aggressive Growth Fund, the International
Developed Fund, the Emerging Markets Fund, the M&C Balanced Fund and the CT
Balanced Fund, equity securities and index options traded on a national exchange
and over-the-counter securities listed on 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 M&C
Balanced Fund, the CT Balanced Fund, the Bond Fund and the Municipal Bond Fund,
fixed income securities, except short-term investments, are valued on the basis
of prices provided by a pricing service when such prices are believed by the
Adviser 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 in accordance with guidelines adopted 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. Foreign securities are converted to United States dollars using
exchange rates at the close of the New York Stock Exchange. 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 creditworthy by the Fund's Adviser, 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: The Growth Fund, the Growth & Income Fund,
the Talon Fund, the Aggressive Growth Fund, the International Developed Fund,
the Emerging Markets Fund, the M&C Balanced Fund, the CT Balanced Fund, the Bond
Fund and the Municipal Bond Fund are authorized to utilize 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

- - 74
<PAGE>
ALLEGHANY FUNDS

OCTOBER 31, 1999
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
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. Summarized in 4 and 5 below are specific
derivative financial instruments used by the Funds listed above.

(4) FUTURES AND OPTIONS: A Fund may use futures contracts to manage its exposure
to the markets or to movements in interest rates and currency values. The
primary risks associated with the use of futures contracts and options are
imperfect correlation between the change in market value of the securities held
by a Fund and the prices of futures contracts and options, the possibility of an
illiquid market and the inability of the counterparty to meet the terms of the
contract. Futures contracts and purchased options are valued based upon their
quoted daily settlement prices. The premium received for a written option is
recorded as an asset with an equal liability which is marked to market based on
the option's quoted daily settlement price. Fluctuations in the value of such
instruments are recorded as unrealized appreciation (depreciation) until
terminated, at which time realized gains and losses are recognized.

(5) FORWARD CURRENCY TRANSACTIONS: Forward foreign exchange contracts are used
to hedge against foreign exchange risk arising from the Fund's investment or
anticipated investment in securities denominated in foreign currencies. A Fund
may also enter into these contracts for purposes of increasing exposure to a
foreign currency or to shift exposure to foreign currency fluctuations from one
country to another. All commitments are marked to market daily at the applicable
translation rates and any resulting unrealized gains or losses are recorded.
Realized gains or losses are recorded at the time the forward contract matures
or by delivery of the currency. Risks may arise upon entering these contracts
from the potential inability of counterparties to meet the terms of their
contracts and from unanticipated movements in the value of a foreign currency
relative to the U.S. dollar.

(6) MORTGAGE BACKED SECURITIES: The Growth & Income Fund, the International
Developed Fund, the Emerging Markets Fund, the M&C Balanced Fund, the CT
Balanced Fund, the Bond Fund and the Municipal 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 such as 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, 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 Growth & Income Fund, the Aggressive Growth Fund, the International
Developed Fund, the Emerging Markets Fund, the M&C Balanced Fund, the CT
Balanced Fund, the Bond Fund and the Municipal 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.

(7) INVESTMENT INCOME AND SECURITIES TRANSACTIONS: Dividend income is recorded
on the ex-dividend date, except for certain dividends from foreign securities
where the ex-dividend date may have passed, which are recorded as soon as a Fund
is informed of 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 primarily determined using the first-in,
first-out method.

(8) FOREIGN CURRENCY: Foreign currencies, investments and other assets and
liabilities are translated into U.S. dollars at the exchange rates prevailing at
the end of the period. Fluctuations in the value of these assets and liabilities
resulting from changes in exchange rates are recorded as unrealized foreign
currency gains (losses). Realized gains (losses) and unrealized appreciation
(depreciation) on investment securities and income and

- 75
<PAGE>
ALLEGHANY FUNDS

OCTOBER 31, 1999
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
expenses are translated on the respective dates of such transactions. The effect
of changes in foreign currency exchange rates on investments in securities are
not segregated in the statement of operations from the effects of changes in
market prices of those securities, but are included with the net realized and
unrealized gain or loss on investment securities.

(9) 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, 1999, the losses
amounted to $1,272,314 for the Small Cap Value Fund, which will expire October
31, 2007, $791,465 for the Aggressive Growth Fund, which will expire October 31,
2006, $17,153,823 for the Emerging Markets Fund, which will expire between
October 31, 2002 and October 31, 2006, $384,988 for the Bond Fund, which will
expire October 31, 2007 and $10,230 for the Municipal Bond Fund, which will
expire October 31, 2003.

Net realized gains or losses may differ for financial and tax reporting purposes
for the Small Cap Value Fund, the Aggressive Growth Fund, the International
Developed Fund, the Emerging Markets Fund, the M&C Balanced Fund and the Bond
Fund, primarily as a result of losses from wash sales which are not recognized
for tax purposes until the corresponding shares are sold.

(10) DIVIDENDS AND DISTRIBUTIONS: Dividends and distributions to shareholders
are recorded on the ex-dividend date.

(11) MULTICLASS OPERATIONS: With respect to the Growth Fund, the International
Developed Fund, the Emerging Markets Fund and the M&C Balanced Fund, each class
offered by these funds has equal rights as to assets. Income, non-class specific
expenses and realized and unrealized capital gains and losses are allocated to
each class of shares based on the relative net assets of each class.

(12) ORGANIZATION COSTS: The Funds have reimbursed the Advisers for certain
costs incurred in connection with the Funds' and the Company's organization. The
costs were 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;
September 21, 1995 for the CT Balanced Fund; and June 30, 1998 for the
Aggressive Growth Fund.

(13) 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 Small Cap Value Fund, the Aggressive Growth Fund, the M&C Balanced
Fund and the CT Balanced Fund, dividends from net investment income are
distributed quarterly and net realized gains from investment transactions, if
any, are distributed to shareholders annually. With respect to the International
Developed Fund and the Emerging Markets Fund, dividends from net investment
income and net realized gains from investment transactions, if any, are declared
and paid at least annually to shareholders of record. The Bond Fund and the
Municipal Bond Fund distribute their respective net investment income to
shareholders 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 shareholders that have elected the reinvestment option. Differences in
dividends per share between classes of the Growth Fund, the Growth & Income
Fund, the International Developed Fund, the Emerging Markets Fund and the M&C
Balanced Fund are due to class specific expenses.

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
$44, $27,652 and $4,658 were reclassified at October 31, 1999 between
accumulated net realized gain on investments and undistributed net investment
income in the M&C Balanced Fund, the CT Balanced Fund and the Bond Fund,
respectively, due to gains and losses on paydown adjustments from
mortgage-backed securities. In addition, permanent book and tax differences in
the Small Cap Value Fund relating to the recognition of expenses which are not
deductible for tax purposes totaling $111 were reclassified between
undistributed net investment income and capital paid-in. Also, in the Talon
Fund, permanent book and tax differences relating to the sale of real estate
investment trusts totaling

- - 76
<PAGE>
ALLEGHANY FUNDS

OCTOBER 31, 1999
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
$5,135 were reclassified between accumulated net realized gain and undistributed
net investment income and permanent book and tax differences relating to return
of capital distributions for the fiscal year October 31, 1998 totaling $1,339
were reclassified between undistributed net investment income and capital
paid-in. For the International Developed Fund and the Emerging Markets Fund,
permanent book and tax differences relating to net currency gains and losses
totaling $81,307 and $55,545, respectively, were reclassified between
accumulated net realized gain and undistributed net investment income. Also, for
the International Developed Fund, permanent book and tax differences relating to
equalization debits in the amount of $166,524 and corporate actions in the
amount of $75,000 were reclassified between accumulated net realized gain and
capital paid-in.

The Growth Fund and the Growth & Income Fund had net operating losses for tax
purposes, net of short-term gains of $639,463 and $1,141,812, respectively, for
the year ended October 31, 1999 which were reclassified between undistributed
net investment income and capital paid-in as permanent differences. The Talon
Fund and the Aggressive Growth Fund had net operating losses for tax purposes of
$62,169 and $254,684, respectively, which were offset by short-term capital
gains and were reclassified between undistributed net investment income and
accumulated net realized gain.

Distributions from net realized gains for book purposes may include short-term
capital gains, which are included as ordinary income for tax purposes.

For the year ended October 31, 1999, 100% 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 M&C Balanced
Fund, the CT Balanced Fund and the Bond Fund paid long term capital gain
distributions of $64,001,597, $23,278,710, $8,904,043, $13,010,618 and $708,951,
respectively. In January 2000, the Funds will provide tax information to
shareholders for the 1999 calendar year.

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 deductions were 100%, 31.53% and
17.11% for the Talon Fund, the M&C Balanced Fund and the CT 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, 1999, Alleghany Asset Management, Inc. owned one share of the Small Cap
Value Fund, one share of the Aggressive Growth Fund and 152 shares of the CT
Balanced Fund.

NOTE (D) INVESTMENT TRANSACTIONS: Aggregate purchases and proceeds from sales of
investment securities (other than short-term investments) for the period ended
October 31, 1999 were:

<TABLE>
<CAPTION>
AGGREGATE PURCHASES PROCEEDS FROM SALES
------------------- -------------------
U.S. GOVERNMENT OTHER U.S. GOVERNMENT OTHER
--------------- ----- --------------- -----
<S> <C> <C> <C> <C>
Growth Fund.......... $ -- $1,305,997,104 $ -- $736,042,970
Growth & Income
Fund............. -- 127,891,040 -- 128,269,317
Talon Fund........... -- 19,775,222 -- 25,016,861
Small Cap Value
Fund............. -- 95,302,097 -- 50,427,649
Aggressive Growth
Fund............. -- 81,366,876 -- 58,458,722
International
Developed Fund... -- 29,193,128 -- 42,445,081
Emerging Markets
Fund............. -- 8,127,846 -- 9,524,176
M&C Balanced Fund.... 29,281,332 99,936,682 13,416,867 55,748,697
CT Balanced Fund..... 11,976,178 83,500,353 6,738,070 56,464,362
Bond Fund............ 15,254,512 57,019,811 28,425,823 57,004,009
Municipal Bond
Fund............. -- 8,127,938 -- 3,508,386
</TABLE>

NOTE (E) ADVISORY, ADMINISTRATION AND DISTRIBUTION SERVICES AGREEMENTS: Under
various Advisory Agreements with the Funds, each Adviser provides investment
advisory services to the Funds. The Funds 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 for the Growth Fund; 0.70% for the Growth & Income
Fund; 0.80% for the Talon Fund; 1.00% for the Small Cap Value Fund; 1.00% for
the Aggressive Growth Fund; 0.85% for the International Developed Fund; 0.85%
for the Emerging Markets Fund; 0.75% for the M&C Balanced Fund; 0.70% for the CT
Balanced Fund; 0.55% for the Bond Fund; 0.60% for the Municipal Bond Fund; and
0.40% for the Money Market Fund. These fees are accrued daily and paid monthly.

For the period ended October 31, 1999, the Advisers contractually undertook to
reimburse the Talon Fund, the Small Cap Value Fund, the Aggressive Growth Fund,
the International Developed Fund (Class I and Class N), the Emerging Markets
Fund (Class I and Class N) and the Bond Fund for operating expenses which caused
total expenses to exceed 1.30%, 1.40%, 1.40%, 1.10%, 1.35%, 1.35%, 1.60%, and
0.80%, respectively. The Advisers voluntarily undertook to reimburse the Growth
Fund (Class I and Class N), the Growth & Income Fund, the M&C Balanced Fund
(Class I and Class N), the CT Balanced Fund and the Municipal Bond Fund for
operating expenses which caused total expenses to exceed 0.98%, 1.30%, 1.10%,
1.00%, 1.25%, 1.10%, and 0.10% respectively. The voluntary expense
reimbursements may be terminated at the discretion of the Advisers.

- 77
<PAGE>
ALLEGHANY FUNDS

OCTOBER 31, 1999
NOTES TO FINANCIAL STATEMENTS -- CONTINUED

For the period ended October 31, 1999, the Advisers waived/ reimbursed expenses
of $40,814 for the Talon Fund, $52,755 for the Small Cap Value Fund, $52,934 for
the Aggressive Growth Fund, $29,647 for the International Developed Fund,
$43,536 for the Emerging Markets Fund, $199,795 for the Bond Fund and $174,679
for the Municipal Bond Fund.

Chicago Trust serves as Administrator of the Funds. Prior to December 17, 1998,
Chicago Trust received fees equivalent to the sub-administration fee schedule.
Effective December 17, 1998, the administration fee schedule is as follows:

<TABLE>
<CAPTION>
ADMINISTRATION FEES
-------------------
FEE (% OF FUNDS' AGGREGATE DAILY NET ASSETS) AVERAGE DAILY NET ASSETS
- -------------------------------------------- ------------------------
<S> <C>
0.060.................................................. up to $2 billion
0.050.................................................. $2 billion to $7 billion
0.045.................................................. over $7 billion
</TABLE>

First Data Investor Services Group, Inc. (now known as PFPC Inc.) serves as
Sub-Administrator of the Funds and receives the following fees, which are paid
to the Sub-Administrator by the Administrator.

<TABLE>
<CAPTION>
SUB-ADMINISTRATION FEES CUSTODY LIAISON FEES
----------------------- --------------------
AVERAGE
FEE (% OF FUNDS' AGGREGATE DAILY NET ANNUAL FEE AVERAGE DAILY NET ASSETS
DAILY NET ASSETS) ASSETS (PER FUND) (PER FUND)
----------------- ------ ---------- ----------
<S> <C> <C> <C>
up to $2
0.060 billion $10,000 up to $100 million
$2 billion
to $3.5
0.045 billion $15,000 $100 million to $500 million
over $3.5
0.040 billion $20,000 over $500 million
</TABLE>

First Data Distributors, Inc. served as principal underwriter and distributor of
the Funds' shares until December 1, 1999. Pursuant to a Rule 12b-1 distribution
plan (the "Plan") adopted by the Funds with respect to Class N Shares, the
Growth Fund, the Growth & Income Fund, the Talon Fund, the Small Cap Value Fund,
the Aggressive Growth Fund, the International Developed Fund, the Emerging
Markets Fund, the M&C Balanced Fund, the CT Balanced Fund, the Bond Fund and the
Municipal Bond Fund 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
Class I Shares of the Growth Fund, the International Developed Fund, the
Emerging Markets Fund and the M&C Balanced Fund and the Class N Shares of the
Money Market Fund do not have distribution plans.

For the year ended October 31, 1999, the class specific expenses were:

<TABLE>
<CAPTION>
REPORTS TO
TRANSFER AGENT FEES SHAREHOLDER EXPENSE
------------------- -------------------
CLASS N CLASS I CLASS N CLASS I
------- ------- ------- -------
<S> <C> <C> <C> <C>
Growth Fund....................... $407,092 $ -- $131,598 $47,771
International Developed Fund...... -- -- 357 4,813
Emerging Markets Fund............. -- -- 89 828
M&C Balanced Fund................. 7,520 -- 9,959 2,744
</TABLE>

Certain officers and Trustees of the Company are also officers and directors of
Chicago Trust. The Company does not compensate its officers or affiliated
Trustees. Effective January 1, 1999, the Company pays each unaffiliated Trustee
$3,000 per Board of Trustees' meeting attended and an annual retainer of $3,000
and reimburses each unaffiliated Trustee for out-of-pocket expenses.

NOTE (F) YEAR 2000 COMPLIANCE (UNAUDITED): The Company 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, the Company 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." The
Company has completed its assessment of all mission critical systems. All
mission critical hardware and software systems utilized by the Company in its
business have been certified as Year 2000 compliant by the appropriate vendor.
The Company has completed validation testing and has not detected any Year 2000
compatibility issues in the hardware and software systems under their control.
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.

NOTE (G) SUBSEQUENT EVENTS (UNAUDITED): The Company anticipates offering Class I
shares of the CT Bond Fund to the public in the first quarter 2000.

On December 1, 1999, Provident Distributors, Inc. became the Distributor of the
shares of the Funds.

- - 78
<PAGE>
ALLEGHANY FUNDS

OCTOBER 31, 1999
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
the Funds' sub-administrator and transfer agent. As a result, First Data
Investor Services Group, Inc. changed its name to PFPC Inc.

SHAREHOLDER VOTING RESULTS (UNAUDITED): At a Special Meeting of the
Shareholders held on June 17, 1999:

(i) Four additional Trustees (three non-affiliated and one affiliated) were
elected, with each receiving at least 97% of the shares voting.

<TABLE>
<CAPTION>
AFFIRMATIVE WITHHOLD TOTAL
----------- -------- -----
<S> <C> <C> <C>
Dorethea C. Gilliam........................ 362,001,955 1,799,393 363,801,348
Robert Kushner............................. 362,196,970 1,604,378 363,801,348
Robert Scherer............................. 361,951,668 1,849,680 363,801,348
Denis Springer............................. 361,940,022 1,861,326 363,801,348
</TABLE>

Stuart D. Bilton, Leonard F. Amari, Gregory T. Mutz, and Nathan Shapiro are also
Trustees of the Company.

(ii) Amendments to the investment objectives for the Small Cap Value Fund, the
Aggressive Growth Fund, the M&C Balanced Fund and the Bond Fund were approved by
the Shareholders as follows:

<TABLE>
<CAPTION>
FOR AGAINST ABSTAINED TOTAL
--- ------- --------- -----
<S> <C> <C> <C> <C>
Small Cap Value Fund.................. 3,185,094 15,863 103 3,201,060
Aggressive Growth Fund................ 1,423,479 -- 57,716 1,481,195
M&C Balanced Fund..................... 5,519,458 946,192 105,659 6,571,309
Bond Fund............................. 8,427,257 17,947 3,380,490 11,825,694
</TABLE>

(iii) Investment advisory contracts, with respect to an Amended and Restated
Guaranty Agreement, between the Chicago Trust Company and the Growth & Income
Fund, the CT Balanced Fund, the Bond Fund, the Municipal Bond Fund and the Money
Market Fund were approved as follows:

<TABLE>
<CAPTION>
FOR AGAINST ABSTAINED TOTAL
--- ------- --------- -----
<S> <C> <C> <C> <C>
Growth & Income Fund............... 15,683,221 376,319 115,114 16,174,654
CT Balanced Fund................... 10,276,799 150,644 167,285 10,594,728
Bond Fund.......................... 11,852,316 9,928 88,278 11,950,522
Municipal Bond Fund................ 1,310,473 -- -- 1,310,473
Money Market Fund.................. 261,743,645 294,639 450,153 262,488,437
</TABLE>

- 79
<PAGE>
ALLEGHANY FUNDS
- ------------------------------------

INDEPENDENT AUDITORS' REPORT

The Board of Trustees and Shareholders of Alleghany Funds:

We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of Alleghany Funds (comprising, respectively,
Alleghany/Montag & Caldwell Growth Fund, Alleghany/Chicago Trust Growth & Income
Fund, Alleghany/Chicago Trust Talon Fund, Alleghany/Chicago Trust Small Cap
Value Fund, Alleghany/Veredus Aggressive Growth Fund, Alleghany/Montag &
Caldwell Balanced Fund, Alleghany/Chicago Trust Balanced Fund, Alleghany/Chicago
Trust Bond Fund, Alleghany/Chicago Trust Municipal Bond Fund, and
Alleghany/Chicago Trust Money Market Fund) as of October 31, 1999, and the
related statements of operations for each of the periods presented in 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. We have also audited the accompanying statements
of assets and liabilities, including the schedules of investments, of
Alleghany/Blairlogie International Developed Fund and Alleghany/Blairlogie
Emerging Markets Fund of Alleghany Funds as of October 31, 1999, and the related
statements of operations, statements of changes in net assets and financial
highlights for the six-month period then ended and the ten-month period ended
April 30, 1999. 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. The accompanying Alleghany/Blairlogie International Developed Fund and
Alleghany/Blairlogie Emerging Markets Fund statement of changes in net assets
for the year ended June 30, 1998, and financial highlights for each of the
periods presented through June 30, 1998 were audited by other auditors whose
report thereon, dated August 17, 1998, expressed an unqualified opinion.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1999, by correspondence with the custodian and brokers and by the
application of alternative auditing procedures where broker replies were not
received. 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, 1999,
the results of their operations for each of the periods presented in the year
then ended, the changes in their net assets for each of the periods presented in
the two-year period then ended, and the financial highlights for each of the
periods presented, in conformity with generally accepted accounting principles.

[LOGO]

Chicago, Illinois
December 16, 1999

- - 80
<PAGE>

GUIDE TO SHAREHOLDER BENEFITS

We're delighted to offer all Alleghany Funds shareholders a variety of
services and convenient options. To receive more information about any of
these benefits, simply call a Shareholder Services Representative Monday
through Friday, 9 a.m. - 7 p.m. ET.

THE EASY WAY TO GROW YOUR ACCOUNT: START AN AUTOMATIC INVESTMENT PLAN(1)

Systematic investing is an easy, effortless way to help reach any investment
goal. Just choose a fixed amount, and we'll automatically deduct it from your
checking or savings account on a regular schedule and invest it in your
Alleghany Funds account. The service is free, and the minimum monthly investment
is $50.

COMPOUND YOUR EARNINGS WITH AUTOMATIC DIVIDEND REINVESTMENT

By automatically reinvesting dividends into your Alleghany Funds account, your
profits can mount. Monthly and quarterly dividends and annual capital gain
distributions are reinvested at no charge.

FREE, FLEXIBLE EXCHANGE PRIVILEGES

As your personal needs change, so can your Alleghany Funds investment. Transfers
between our funds are free of charge, and it only takes a telephone call.

LOW MINIMUM INITIAL INVESTMENTS

The minimum initial investment for all Alleghany Funds is just $2,500 ($500 for
IRAs). And subsequent investments can be as low as $50.

FREE CHECK WRITING SERVICES AVAILABLE

If you are an investor in Alleghany/Chicago Trust Money Market Fund, you can
take advantage of free check writing privileges. Checks must be written for $500
or more.

ACCESS INFORMATION AND MAKE TRANSACTIONS ONLINE AT OUR WEB SITE

You can access account balances, obtain fund information and make transactions
online 24 hours a day, 7 days a week -- in complete security. Alleghany Funds
was among the first mutual fund companies to provide these capabilities.

(1) Periodic investment plans involve continuous investments in securities
regardless of price. You should consider your financial ability to continue to
purchase shares through periods of both high and low price levels.

www.AlleghanyFunds.com

Our Shareholder Services Line is at Your Service 24 Hours a Day
- ---------------
800 992-8151

Shareholder Services Representatives are available to assist you Monday - Friday
9 a.m. to 7 p.m., ET. Or, call any time, day or night, for automated account
information to make exchanges or check fund performance.

<PAGE>

[LOGO] ALLEGHANY FUNDS

TRUSTEES
Leonard F. Amari*
Stuart D. Bilton, Chairman
Dorothea C. Gilliam
Robert Kushner*
Gregory T. Mutz*
Robert Scherer*
Nathan Shapiro*
Denis Springer*

*Unaffiliated Trustee

ADVISERS
The Chicago Trust Company
171 North Clark Street
Chicago, IL 60601

Montag & Caldwell, Inc.
3455 Peachtree Road, NE, Suite 1200
Atlanta, GA 30326

Veredus Asset Management LLC
6900 Bowling Boulevard, Suite 250
Louisville, KY 40207

Blairlogie Capital Management
125 Princes Street
Edinburgh EH2 4AD
Scotland

SHAREHOLDER SERVICES
PFPC Inc.
4400 Computer Drive
Westborough, MA 01581

DISTRIBUTOR
Provident Distributors, Inc.
Four Falls Corporate Center
Suite 600
West Conshohocken, PA 19428-2961

OFFICERS
Kenneth C. Anderson, President
Debra Bunde Comsudes, Vice President
Gerald F. Dillenburg, Vice President,
Secretary and Treasurer
Laura M. Hlade, Assistant Treasurer

CUSTODIAN
Bankers Trust
One Bankers Trust Place
New York, NY 10001

Investors Fiduciary Trust Co.
801 Pennsylvania Avenue
Kansas City, MO 64105

LEGAL COUNSEL
Sonnenschein Noth & Rosenthal
8000 Sears Tower
Chicago, IL 60606

AUDITOR
KPMG LLP
303 East Wacker Drive
Chicago, IL 60601

THIS REPORT IS SUBMITTED FOR GENERAL INFORMATION TO THE SHAREHOLDERS 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 FUNDS' OBJECTIVES, POLICIES, EXPENSES AND OTHER
INFORMATION.

AG07 12/31/99