[ALLEGHANY FUNDS LOGO]
CLASS I SHARES
Prospectus
ALLEGHANY FUNDS
Montag & Caldwell Balanced 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 Balanced Fund, a member 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.
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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 SUMMARY
Investment Objective, Principal Investment
Strategies and Risks
BALANCED FUND
Montag & Caldwell Balanced Fund 4
FUND EXPENSES 6
INVESTMENT TERMS 7
MORE ABOUT ALLEGHANY FUNDS
OTHER INVESTMENT STRATEGIES 8
MANAGEMENT OF THE FUND
THE ADVISER
Montag & Caldwell, Inc. 10
SHAREHOLDER INFORMATION
OPENING AN ACCOUNT: BUYING SHARES 11
EXCHANGING SHARES 12
SELLING/REDEEMING SHARES 13
TRANSACTION POLICIES 16
ACCOUNT POLICIES AND DIVIDENDS 17
ADDITIONAL INVESTOR SERVICES 17
PORTFOLIO TRANSACTIONS AND BROKERAGE
COMMISSIONS 17
DIVIDENDS, DISTRIBUTIONS AND TAXES 18
FINANCIAL HIGHLIGHTS 19
GENERAL INFORMATION Back Cover
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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
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
- - 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
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
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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
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
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BALANCED FUND
Montag & Caldwell Balanced Fund (continued)
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 or bond market or its peers. Also, a fund could fail to
meet its investment objective.
INTEREST RATE RISK: If interest rates rise, bond prices will fall. The longer
the maturity of a bond, the more sensitive a bond's price will be to changes in
interest rates. In other words, a long-term bond (30-year) will have greater
price sensitivity than a short-term bond (2-year). Short-term and long-term bond
prices and interest rates do not typically move the same amount or for the same
reasons.
CREDIT RISK: Credit risk (also called default risk) is the risk that the issuer
of a security will not be able to make principal and interest payments on a bond
issue.
ISSUER RISK: The price of a bond is affected by the issuer's credit quality.
Changes in an issuer's financial condition and general economic conditions can
affect an issuer's credit quality. Lower quality bonds are generally more
sensitive to these changes than higher quality bonds.
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]
TOTAL RETURN
------------
1999 13.10
Best quarter: 12/99 10.80%
Worst quarter: 9/99 -2.99%
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)
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
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Fund Expenses
As an investor in Alleghany Funds, you pay certain indirect fees and expenses,
which are described in the table below.
SHAREHOLDER FEES
As a benefit of investing with Alleghany Funds, you do not incur any sales
loads, redemption fees or exchange fees.
ANNUAL FUND OPERATING EXPENSES
Operating expenses are the normal costs of operating any mutual fund. These
expenses are not charged directly to investors. They are paid from a fund's
assets and are expressed as an expense ratio, which is a percentage of average
net assets.
TOTAL NET
MANAGEMENT OTHER EXPENSE FEE EXPENSE
FEES EXPENSES RATIO WAIVERS RATIO
Montag & Caldwell Balanced Fund* 0.75% 0.16% 0.91% -- 0.91%
*The Fund offers two classes of shares that invest in the same portfolio of
securities. Shareholders of Class I shares are not subject to a 12b-1
distribution plan; therefore, expenses and performance figures will vary between
the classes. The information set forth in the table above and the example below
relate only to Class I shares, which are offered in this prospectus. Class N
shares are offered in a separate prospectus.
EXAMPLE
This hypothetical example shows the operating expenses you would incur as a
shareholder if you invested $10,000 in the 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. The example is for comparison purposes only and does not represent the
Fund's actual or future expenses and returns.
1 YEAR 3 YEARS 5 YEARS 10 YEARS
Montag & Caldwell Balanced Fund $ 93 $290 $504 $1,120
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Investment Terms
The following is a list of terms with definitions that you may find helpful as
you read this prospectus.
ASSET-BACKED SECURITIES. Securities that represent a participation in, or are
secured by and payable from, payments generated by credit cards, motor vehicle
or trade receivables and the like.
BOTTOM-UP INVESTING. An investing approach in which securities are researched
and chosen individually with less consideration given to economic or market
cycles.
CORPORATE BONDS. Fixed income securities issued by corporations.
DEBENTURES. Bonds or promissory notes that are secured by the general credit of
the issuer, but not secured by specific assets of the issuer.
DIVERSIFICATION. The practice of investing in a broad range of securities to
reduce risk.
DURATION. A calculation of the average life of a bond (or portfolio of bonds)
that is a useful measure of a bond's price sensitivity to interest changes. The
higher the duration number, the greater the risk and reward potential of the
bond.
EQUITY SECURITIES. Equity securities include common stocks and preferred stocks
and other securities convertible into common stock.
EXPENSE RATIO. A fund's cost of doing business, expressed as a percentage of its
assets and disclosed in a prospectus.
FIXED INCOME SECURITIES. Bonds and other securities that are used by issuers to
borrow money from investors. Typically, the issuer pays the investor a fixed,
variable or floating rate of interest and must repay the borrowed amount at a
specified time in the future (maturity).
INVESTMENT OBJECTIVE. The goal that an investor and a mutual fund seek together.
Examples include current income, long-term capital growth, etc.
ISSUER. The company, municipality or government agency that issues a security,
such as a stock, bond or money market security.
LARGE-CAP STOCKS. Stocks that are issued by large companies. Alleghany Funds
defines a large-cap company as one with a market capitalization of $5 billion or
more. Typically, large-cap companies are established, well-known companies; some
may be multinationals.
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.
MORTGAGE-BACKED SECURITIES. Securities backed by the Government National
Mortgage Association (Ginnie Mae), the Federal National Mortgage Association
(Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). These
securities represent collections (pools) of commercial and residential
mortgages.
MUTUAL FUND. An investment company that stands ready to buy back its shares at
their current net asset value, which is the total market value of the fund's
investment portfolio divided by the number of its shares outstanding. Most
mutual funds continuously offer new shares to investors.
NET ASSET VALUE (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.
STANDARD & POOR'S (S&P) 500 INDEX. An unmanaged index of 500 widely traded
industrial, transportation, financial and public utility stocks.
TOTAL RETURN. A measure of a fund's performance that encompasses all elements of
return: dividends, capital gains distributions and changes in net asset value.
Total return is the change in value of an investment over a given period,
assuming reinvestment of dividends and capital gains distributions, expressed as
a percentage of the initial investment.
U.S. GOVERNMENT SECURITIES. Fixed income obligations of the U.S. Government and
its various agencies. U.S. Government securities issued by the Treasury (bills,
notes and bonds) are backed by the full faith and credit of the federal
government. Some government securities not issued by the U.S. Treasury also
carry the government's full faith and credit backing on principal or interest
payments. Some securities are backed by the issuer's right to borrow from the
U.S. Treasury and some are backed only by the credit of the issuing
organization. All government securities are considered highly creditworthy.
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Investment Terms (continued)
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.
ADDITIONAL RISKS
DEFENSIVE STRATEGY RISK
There may be times when the 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 the Fund would do this in seeking to avoid losses, it could
reduce the benefit from any market upswings.
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More About Alleghany Funds
OTHER INVESTMENT STRATEGIES
In addition to the primary investment strategies described in our Fund summary,
there may be times when the Fund uses secondary investment strategies in seeking
to achieve its investment objective. These strategies may involve additional
risks.
ADRS/EDRS
The Fund 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 Fund has no intention of investing in unsponsored
ADRs or EDRs.
COLLATERALIZED MORTGAGE OBLIGATIONS (CMOS)
CMOs are fixed income securities secured by mortgage loans and other
mortgage-backed securities and are generally considered to be derivatives. CMOs
carry general fixed income securities risks and risks associated with
mortgage-backed securities.
CONVERTIBLE SECURITIES
Convertible securities are fixed income or equity securities that pay interest
or dividends and that may be exchanged on certain terms into common stock of the
same corporation.
DERIVATIVES
Up to 20% of the Fund's assets can be invested in derivatives. Derivatives are
used to enhance investment return or limit risk in a portfolio and have a return
tied to a formula based upon an interest rate, index, price of a security, or
other measurement. Derivatives include options, futures, forward contracts and
related products.
Hedging involves using derivatives to hedge against an opposite position that
the 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.
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 the Fund's investments in the event that an adequate
trading market does not exist for these securities.
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<CAPTION>
ADRS/EDRS ASSET/MORTGAGE CMOS CORPORATE CONVERTIBLE DEBENTURES DERIVATIVES
- BONDS SECURITIES AND (OPTIONS,
BACKED CONVERTIBLE FORWARDS,
SECURITIES DEBENTURES FUTURES,
SWAPS)
<S> <C> <C> <C> <C> <C> <C> <C>
Montag & Caldwell Balanced Fund X X X X P X P X X
<CAPTION>
EQUITY FIXED PREFERRED REPURCHASE RULE U.S.
SECURITIES INCOME STOCKS AGREEMENTS 144A GOVERNMENT
SECURITIES SECURITIES SECURITIES
<S> <C> <C> <C> <C> <C> <C>
Montag & Caldwell Balanced Fund X P X P X P X X X P
</TABLE>
P = components of the Fund's primary investment strategy
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Management of the Fund
THE ADVISER
The Fund has an Adviser that provides management services. The Adviser is paid
an annual management fee by the Fund for its services based on the average daily
net assets of the Fund. The accompanying information highlights the Fund and its
lead portfolio manager and investment experience.
MONTAG & CALDWELL, INC.
Montag & Caldwell, Inc. is the Adviser to 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. The Fund pays Montag & Caldwell an annual management
fee of 0.75% of its average daily net assets.
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<CAPTION>
PORTFOLIO MANAGER INVESTMENT EXPERIENCE
<S> <C> <C>
Montag & Caldwell Balanced Ronald E. Canakaris Portfolio Manager of the Fund since the Fund's inception in
Fund 1994; President and Chief Investment Officer of Montag &
Caldwell. He has been with the firm since 1972 and is
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>
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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 Montag & Caldwell Balanced Fund is $1 million.
- - Balances can be aggregated to meet the minimum investment requirements for the
accounts of :
-- clients of a financial consultant
-- immediate family members (i.e., a person's spouse, parents, children,
siblings and in-laws)
-- a corporation or other legal entity
- - The initial minimum investment requirement 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
ALLEGHANY FUNDS - Make your check payable to address at the left.
P.O. BOX 5164 Alleghany Funds and mail to us - We accept checks, bank drafts, money orders and wires and
WESTBOROUGH, MA 01581 at the address at the left. ACH for purchases (see "Other Features" on p. 15). Checks
- We accept checks, bank drafts must be drawn on U.S. banks. There is a $20 charge for
and money orders for purchases. returned checks.
Checks must be drawn on U.S. - Give the following wire/ACH information to your bank:
banks to avoid any fees or
delays in processing your check. Boston Safe Deposit & Trust
- We do not accept third party ABA #01-10-01234
checks, which are checks made For: Alleghany Funds
payable to someone other than A/C 140414
the Fund. FBO "Alleghany Fund Number"
"Your Account Number"
- We do not accept third party checks, which are checks made
payable to someone other than the Fund.
</TABLE>
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Shareholder Information (continued)
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<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 ACH system.
800 992-8151 the 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 - When you are ready to add to your account, call Alleghany
amount of your investment. 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.
- Instruct your bank (who may charge a fee) to wire or ACH
Boston Safe Deposit & Trust the amount of your investment.
ABA #01-10-01234 - Give the following wire/ACH information to your bank:
For: Alleghany Funds
A/C 140414 Boston Safe Deposit & Trust
FBO "Alleghany Fund Number" ABA #01-10-01234
"Your Account Number" For: Alleghany Funds
- Return your completed and signed A/C 140414
application to: FBO "Alleghany Fund Number"
"Your Account Number"
Alleghany Funds
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 ACH system.
WWW.ALLEGHANYFUNDS.COM site. - Complete the "Purchase, Exchange and Redemption
- Complete and sign the Authorization" section of your account application.
application(s). Make your check - Obtain a Personal Identification Number (PIN) from
payable to Alleghany Funds and Alleghany Funds for use on Alleghany Funds' Web site if
mail it to the address under "By you have not already done so. To obtain a PIN, please call
Mail" above. 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 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.
Alleghany Funds reserves the right to limit, impose charges upon, terminate or
otherwise modify the exchange privilege by sending written notice to
shareholders.
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Shareholder Information (continued)
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
- Sales or redemptions of any size name, fund number, your account number, the name(s) in
ALLEGHANY FUNDS which the account is registered and the dollar value or
P.O. BOX 5164 number 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. 15).
BY PHONE - Non-retirement accounts - For automated service 24 hours a day using your touch-tone
- Sales of up to $50,000 (for phone, call us at the number to the left.
800 992-8151 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. 15).
- Alleghany Funds reserves the right to refuse any telephone
sales request and may modify the procedures at any time.
Alleghany Funds makes reasonable attempts to verify that
telephone instructions are genuine, but you are
responsible for any loss that you may incur from telephone
requests.
</TABLE>
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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. 15).
</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 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. A medallion signature guarantee may be
obtained from a domestic bank or trust company, broker, dealer, clearing agency,
savings association, or other financial institution which is participating in a
medallion program recognized by the Securities Transfer Association. The three
recognized medallion programs are Securities Transfer Agents Medallion Program
(STAMP), Stock Exchanges Medallion Program (SEMP) and New York Stock Exchange,
Inc. Medallion Signature Program (NYSE MSP). Signature guarantees from financial
institutions which are not participating in one of these programs will not be
accepted. A notary public stamp or seal CANNOT be substituted for a signature
guarantee.
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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 - 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 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
Alleghany 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.
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.
15
<PAGE>
Shareholder Information (continued)
REDEMPTIONS IN KIND
The Fund has 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 the 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 the 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.
EXECUTION OF REQUESTS
The Fund is open on each business day that the NYSE is open for trading. The
NYSE is not open on weekends or national holidays. Buy and sell requests are
executed at the NAV next calculated after Alleghany Funds or an authorized
broker or designee receives your mail or telephone request in proper form. Sales
proceeds are normally sent on the next business day, but are always sent within
seven days of receipt of a request in proper form. Brokers and their authorized
designees are responsible for forwarding purchase orders and redemption requests
to the Funds.
Shares of Alleghany Funds can also be purchased through broker-dealers, banks
and trust departments that may charge you a transaction or other fee for their
services. These fees are not charged if you purchase shares directly from
Alleghany Funds. Alleghany Funds reserve the right to reject any purchase order
and to suspend the offering of fund shares. The Funds also reserve the right to
change the initial and additional investment minimums or to waive these minimums
for any investor. Alleghany Funds reserves the right to delay sending you your
sales proceeds for up to 15 days if you purchased shares by check. A minimum $20
charge will be assessed if any check used to purchase shares is returned.
SHORT-TERM TRADING
The Fund is not designed for frequent trading and certain purchase or exchange
requests may be difficult to implement in times of drastic market changes.
Alleghany Funds reserves the right to refuse any purchase or exchange order that
could adversely affect the Fund or its operation. Alleghany Funds also reserves
the right to limit, impose charges upon, terminate or otherwise modify the
exchange privilege by sending written notice to shareholders.
16
<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 AND DISTRIBUTIONS
The Fund declares and pays dividends quarterly. Capital gain distributions are
generally made at least once a year in December.
DIVIDEND AND CAPITAL DISTRIBUTION REINVESTMENTS
Many investors have their dividends and capital gains reinvested in additional
shares of the Fund. If you choose this option, or if you do not indicate a
choice, your dividends and capital gain distributions will be automatically
reinvested on the dividend and capital gain distribution payable date. You can
also choose to have a check for your dividends and capital gain distributions
mailed to you by choosing this option on your account application.
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 Fund. 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 Fund's NAV 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.
Our Web site is highly secure to prevent unauthorized access to your account
information. Alleghany Funds and its 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.
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 Fund shares and its financial condition.
17
<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 Fund is included in the Statement of Additional Information.
- - The Fund pays dividends quarterly and distributes capital gains at least once
a year, usually in December. 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 the shares of the 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 the Fund.
- - When you sell or exchange shares in a non-retirement account, it is considered
a current year taxable event for you. Depending on the purchase price and the
sale price of the shares you sell or exchange, you may have a gain or a loss
on the transaction. You are responsible for any tax liabilities generated by
your transactions.
- - The Fund is obligated by law to withhold 31% of Fund distributions if you do
not provide complete and correct taxpayer identification information.
18
<PAGE>
Financial Highlights
This table contains financial highlights to help you understand the Fund's
financial performance. The following schedules present financial highlights for
one share of the Fund outstanding throughout the period indicated. The total
return in the table represents the rate that an investor would have earned or
lost on an investment in the Fund (assuming reinvestment of all dividends and
distributions). For the period ended October 31, 1999, this information has been
audited by KPMG LLP, whose report, along with the Fund's financial statements,
is included in the annual report, which is available upon request.
MONTAG & CALDWELL BALANCED FUND
Period
Ended
10/31/99*
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%
*Montag & Caldwell Balanced Fund Class I shares commenced operations on December
31, 1998.
(1)Not annualized
(2)Annualized
19
<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 the 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 Alleghany 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 Alleghany 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
Alleghany 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 emailing the SEC at [email protected].
Investment Company Act File Number: 811-8004 AG10
