<PAGE>
As filed with the Securities and Exchange Commission on September 23, 1997
Registration Nos. 333-___________
811-___________
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
----------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. ___ [ ]
Post-Effective Amendment No. ___ [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. ___ [ ]
(Check appropriate box or boxes.)
----------------------
LaSalle Real Estate Securities Fund, Inc.
(Exact Name of Registrant as Specified in Charter)
100 East Pratt Street
Baltimore, MD 21202
(Address of Principal Executive Office)
Registrant's Telephone Number, including Area Code: (410) 347-0600
William K. Morrill, Jr., President
LaSalle Real Estate Securities Fund, Inc.
100 East Pratt Street
Baltimore, MD 21202
(Name and Address of Agent for Service)
Copies to:
Alan C. Porter, Esq.
Piper & Marbury L.L.P.
1200 Nineteenth Street, N.W.
Washington, DC 20036
Approximate Date of Proposed Offering: As soon as practicable after the
effective date of this Registration Statement.
Declaration Pursuant to Rule 24f-2
The Registrant hereby elects to register an indefinite number of Retail
Class and Institutional Class shares of its Common Stock, par value $.01 per
share, pursuant to Rule 24f-2 under the Investment Company Act of 1940, as
amended. The Registrant is a "feeder" fund within a "master-feeder" fund
structure. The "master" fund within this structure has executed this
Registration Statement.
----------------------
The Registrant hereby amends the Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a),
shall determine.
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<PAGE>
LA SALLE REAL ESTATE SECURITIES FUND, INC.
CONTENTS OF
REGISTRATION STATEMENT
Facing Sheet
Table of Contents
Part A Cross Reference Sheet
Prospectus
Part B Cross Reference Sheet
Statement of Additional Information
Part C
Signature Page
Exhibit Index
<PAGE>
LA SALLE REAL ESTATE SECURITIES FUND, INC.
CROSS REFERENCE SHEET
PART A
<TABLE>
<CAPTION>
Form N-1A Item No. Section in the Prospectus
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<S> <C>
1. Cover Page.................................................... Cover Page
2. Synopsis...................................................... Fees and Expenses
3. Condensed Financial Information............................... Performance Information
4. General Description of Registrant............................. Investment Objectives and
Policies; General Information
5. Management of the Fund........................................ Management
5A. Management's Discussion of Fund Performance................... Not applicable
6. Capital Stock and Other Securities............................ Dividends and Taxes; General
Information
7. Purchase of Securities Being Offered.......................... How To Purchase Shares
8. Redemption or Repurchase...................................... How To Redeem Shares
9. Pending Legal Proceedings..................................... Not applicable
</TABLE>
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER SECURITIES LAWS OF ANY +
+SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION SEPTEMBER 23, 1997
PROSPECTUS
LA SALLE REAL ESTATE SECURITIES FUND, INC.
RETAIL CLASS AND INSTITUTIONAL CLASS SHARES
LaSalle Real Estate Securities Fund, Inc. (the "Fund") is a mutual fund whose
investment objective is total return primarily through investments in U.S. real
estate securities. The Fund seeks to achieve its investment objective by
investing all of its investable assets in LaSalle Master Trust (the "Trust"),
which is a separate mutual fund with an identical investment objective managed
by ABKB/LaSalle Securities Limited. The Fund's investment experience will
correspond directly with the investment experience of the Trust.
This Prospectus relates to Retail Class and Institutional Class shares of the
Fund. Retail Class shares are available through securities dealers and other
financial services firms. Institutional Class shares are offered only to
certain qualified investors. See "How To Purchase Shares."
This Prospectus sets forth basic information that investors should know about
the Fund prior to investing and should be retained for future reference. A
Statement of Additional Information dated [ ], 1997, has been filed with the
Securities and Exchange Commission and is incorporated herein by reference. The
Statement of Additional Information is available upon request and without
charge by calling the Fund at (000) 000-0000.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary.........................................................
Fees and Expenses...............................................
Performance Information.........................................
Investment Objectives and Policies..............................
Risks To Consider...............................................
Investment Restrictions.........................................
Management......................................................
How To Purchase Shares..........................................
How To Redeem Shares............................................
Dividends and Taxes.............................................
General Information.............................................
</TABLE>
THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK. THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THE SHARES INVOLVES RISK, INCLUDING POSSIBLE
LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
[ ], 1997
<PAGE>
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN AS CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE FUND OR THE DISTRIBUTOR. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS
UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION.
SUMMARY
THE FUND
LaSalle Real Estate Securities Fund, Inc. (the "Fund") is an open-end
diversified investment management company. The investment objective of the
Fund is total return primarily through investments in U.S. real estate
securities. The Fund seeks to achieve its investment objective by investing
all of its investable assets in LaSalle Master Trust (the "Trust"), which has
the same investment objective as the Fund. The Fund's investment experience
will correspond directly with the investment experience of the Trust. Under
normal conditions, at least 85% of the Trust's total assets will be invested
in equity securities of real estate investment trusts ("REITs") and other real
estate industry companies that are publicly traded in the United States
securities markets. See "Investment Objectives and Policies."
INVESTMENT MANAGER, DISTRIBUTOR AND ADMINISTRATOR
ABKB/LaSalle Securities Limited (the "Manager") serves as the Trust's
investment manager. Funds Distributor, Inc. (the "Distributor") serves as
principal underwriter and distributor of the Fund's shares. PFPC Inc. serves
as the Fund's administrator, and as transfer agent and dividend disbursing
agent for the Fund's shares. See "Management" and "General Information."
PURCHASE AND REDEMPTION OF SHARES
Investors may purchase shares of the Fund at their net asset value through
securities dealers and other financial services firms. Institutional Class
shares may be purchased only by certain qualified investors. No sales load or
charge is imposed on the purchase of any class of Fund shares. See "How To
Purchase Shares." Shareholders may redeem all or any portion of their shares
at the net asset value next determined after the Fund's transfer agent has
received a redemption request in proper form. See "How To Redeem Shares."
RISKS TO CONSIDER
Because of its policy of concentration in securities of companies in the
real estate industry, the Fund will be subject to risks similar to those
associated with the direct ownership of real estate. These risks include
economic, business or political developments adversely affecting the real
estate industry. In addition, the Fund may be subject to the risks associated
with foreign investments. The Fund's "master/feeder" structure differs from
that of mutual funds which invest directly and manage their own portfolio
securities. See "Risks To Consider."
INVESTOR INQUIRIES
Investors with questions regarding the Fund should contact their dealer or
call the Fund directly at (000) 000-0000.
2
<PAGE>
FEES AND EXPENSES
The following table provides a summary of expenses relating to purchases and
sales of shares of the Fund, and the aggregate annual operating expenses of
the Fund and the Trust, as a percentage of average net assets of the Fund. The
Fund's Board of Directors believes that the aggregate per share expenses of
the Fund and the Trust will be less than or approximately equal to the
expenses that the Fund would incur if the investable assets of the Fund were
invested directly in the types of securities being held by the Trust.
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
RETAIL CLASS INSTITUTIONAL CLASS
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<S> <C> <C>
Sales Load Imposed on Purchases............... None None
Sales Load Imposed on Reinvested Dividends.... None None
Redemption Fee................................ None None
Exchange Fee.................................. None None
</TABLE>
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)/1/
<TABLE>
<CAPTION>
RETAIL CLASS INSTITUTIONAL CLASS
------------ -------------------
<S> <C> <C>
Management Fees.............................. [ ]% [ ]%
12b-1 Fees................................... [ ]% 0.00%
Other Expenses (including shareholder serv-
ices fee)/2/................................ [ ]% [ ]%
Total Fund Operating Expenses/3/............. [ ]% [ ]%
</TABLE>
1. Expenses shown for the Fund include distribution, shareholder services and
administration fees for the Fund and investment management fees and other
expenses for the Trust.
2. Other Expenses are based on estimates for the current fiscal year and
include all expenses, except non-recurring account fees, brokerage
commissions and other capital items, and investment management and 12b-1
fees. Other Expenses for the Retail Class include a shareholder services
fee of [ ]%.
3. The Manager has voluntarily agreed to reimburse Fund expenses (including
the Fund's pro rata share of the Trust's expenses) during its first year of
operations so that Total Fund Operating Expenses will not exceed [ ]%. In
the absence of these reimbursements, Total Fund Operating expenses for the
Retail Class and Institutional Class would be [ ]% and [ ]%,
respectively. For additional information regarding Fund expense
limitations, see "Investment Manager" in the Statement of Additional
Information.
EXAMPLE
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS
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<S> <C> <C>
You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and
(2) redemption at the end of each time period:
Retail Class........................................... $[ ] $[ ]
Institutional Class.................................... $[ ] $[ ]
</TABLE>
The expense table and example above are provided to assist investors in
understanding the expenses they will bear directly or indirectly as a
shareholder in the Fund. For more information with respect to the expenses of
the Fund and the Trust, see "Management." The above example should not be
considered a representation of past or future expenses and actual expenses may
be greater or less than those shown.
3
<PAGE>
PERFORMANCE INFORMATION
The chart below shows the historical performance of institutional private
accounts having substantially the same investment objective as the Fund and
the Trust for which the investment manager is ABKB/LaSalle Securities Limited,
the Trust's investment manager. The data, calculated on an average annual
total return basis, is provided to illustrate the Manager's past performance
in managing accounts in accordance with the same strategy, research and
analytical models utilized for the Trust. These accounts consist of separate
and distinct portfolios and their performance is not indicative of or a
substitute for the past or future performance of the Fund or the Trust. As of
[ ], 1997, the Fund and the Trust had not commenced investment operations
and therefore did not have a performance record of their own.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
-------- -------- ------ ------ ------ ------ ------- ------ ----- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ABKB /LaSalle Securities
Limited Asset Weighted
Rate of Return......... 38.21% 16.28% 6.47% 18.01% 17.12% 35.57% (18.32)% 10.92% 13.91% (1.83)%
Wilshire Real Estate
Securities Index....... 36.87% 13.65% 1.64% 15.23% 7.40% 20.03% (33.46)% 2.37% 24.18% (7.86)%
NAREIT Composite........ 35.75% 18.31% 0.81% 18.55% 12.18% 35.68% (17.35)% (1.81)% 11.36% (10.67)%
NAREIT Equity........... 35.27% 15.27% 3.17% 19.65% 14.59% 35.70% (15.35)% 8.84% 13.49% (3.64)%
Number of portfolios.... 32 27 18 14 16 12 10 8 6 2
Assets, end of period
(millions)............. $2,250.3 $1,346.4 $629.4 $291.5 $144.4 $127.8 $ 84.5 $ 84.3 $74.5 $ 52.3
Percent of real estate
composite securities to
total domestic real
estate securities
portfolios managed by
the firm............... 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
</TABLE>
The composite performance data shown above for the ABKB/LaSalle Asset
Weighted Rate of Return (the "ABKB Composite") was developed from the
aggregate performance of institutional private accounts that are managed on a
basis substantially the same as the Manager employs in managing the assets of
the Trust. The ABKB Composite includes all portfolios invested in U.S. based
publicly traded real estate companies for which the Manager has full
discretionary authority to manage in accordance with the Manager's strategy.
The ABKB Composite excludes for each respective year one portfolio invested in
international real estate securities and one portfolio invested in private
commingled funds. The composite performance data has been calculated in
accordance with recommended standards of the Association for Investment
Management and Research ("AIMR") and the effect of fees has been reflected as
described below.
Custodial fees and expenses have not been deducted from the performance
results, but investment management fees have been deducted. The fees and
expenses deducted from the composite performance data generally are
substantially lower than the expenses incurred by the Fund and the Trust, and
the composite performance figures would have been lower if they had been
subject to the higher fees and expenses incurred by the Fund. In addition, if
the accounts within the composite had been regulated as investment companies
under the federal securities and tax laws, the composite performance might
have been adversely affected by the diversification requirements, tax
restrictions and investment limitations to which the Fund and the Trust are
subject.
PERFORMANCE INFORMATION SHOULD BE CONSIDERED IN LIGHT OF THE FUND'S AND THE
TRUST'S INVESTMENT OBJECTIVE AND POLICIES, AND MARKET CONDITIONS DURING THE
TIME PERIODS FOR WHICH IT IS REPORTED. HISTORICAL PERFORMANCE SHOULD NOT BE
CONSIDERED AS REPRESENTATIVE OF THE FUTURE PERFORMANCE OF THE FUND OR THE
TRUST.
The Fund may quote its yield and total return in advertisements and reports
to shareholders and prospective investors. The Fund's performance may also be
compared to that of other mutual funds with a similar investment
4
<PAGE>
objective and to stock or other relevant indices, such as the S&P 500, that
are referenced in the Statement of Additional Information. Standard total
return results reported by the Fund do not take into account recurring and
non-recurring charges for optional services which only certain shareholders
elect and which involve nominal fees.
The Fund's yield is calculated by dividing the net investment income earned
by the Fund over a specified 30-day period, by the average number of shares
entitled to receive dividends, and expressing the result as an annualized
percentage rate based on the net asset value per share at the end of the 30-
day period. The effective yield is calculated similarly but, when annualized,
the income earned by an investment in the Fund is assumed to be reinvested.
The effective yield will be slightly higher than the yield because of the
compounding effect of this assumed reinvestment.
The Fund's average annual total return is computed by determining the
average annual compounded rate of return for a specific period which, when
applied to a hypothetical $1,000 investment in the Fund at the beginning of
the period, would produce the redeemable value of that investment at the end
of the period, assuming reinvestment of all dividends and distributions during
the period.
Further information concerning the Fund's yield and total return is included
in the Statement of Additional Information.
INVESTMENT OBJECTIVES AND POLICIES
The investment objective of the Fund is total return primarily through
investments in U.S. real estate securities. The Fund seeks to achieve its
investment objective by investing all of its investable assets in the Trust,
which in turn invests in a diversified portfolio of securities. The Trust has
the same investment objective, policies and restrictions as the Fund. The
investment objective of each of the Fund and the Trust is not a fundamental
policy and may be changed upon notice to, but without the approval of, the
Fund's shareholders or the Trust's investors, respectively. There can be no
assurance that either the Fund or the Trust will achieve its investment
objective. The Fund's and the Trust's share prices and investment returns will
fluctuate, and a shareholder's investment in the Fund when redeemed may be
worth more or less than the original cost. See "Risks To Consider."
The Manager expects that, under normal conditions, at least 85% of the
Trust's total assets will be invested in equity securities of real estate
investment trusts ("REITs") and other real estate industry companies that are
publicly traded in the United States securities markets. For this purpose, a
"real estate industry company" is a company that derives at least 50% of its
gross revenues or net profits from the ownership, development, construction,
financing, management or sale of commercial, industrial or residential real
estate. Equity securities of real estate industry companies in which the Trust
will invest consist of common stock, shares of beneficial interest of REITs
and securities with characteristics of common stock, such as preferred stock
and debt securities convertible into common stock. In addition to shares of
REITs, the Manager expects to invest in the securities of real estate
operating companies that acquire or develop real estate to be held for long-
term investment purposes. The Trust may invest up to 10% of its total assets
in foreign securities.
The Manager anticipates that the Trust's investments normally will be
allocated among a number of companies, representing diverse investment
policies and real property holdings, including, for example, certain
securities selected for high current return and others chosen for the
possibility of long-term capital appreciation from their underlying assets.
The Trust seeks to provide investors with a current return from dividends and
distributions received with respect to such securities, and with capital
appreciation resulting from the selection of securities that the Manager
believes are underpriced relative to their underlying intrinsic values. The
Manager has amassed a solid track record in managing institutional accounts
over the last decade by utilizing intensive top-down and bottom-up analysis
that covers industry and market cycle trends as well as individual company
research.
5
<PAGE>
The Manager expects to invest a portion of the Trust's assets in money
market instruments, including repurchase agreements, to provide flexibility in
meeting redemptions and paying expenses of the Trust, and in the timing of new
investments for the Trust's portfolio.
REAL ESTATE INVESTMENT TRUSTS
The Trust may invest without limitation in shares of REITs. REITs pool
investors' funds for investment primarily in income producing real estate or
real estate related loans or interests. A REIT is not taxed on income
distributed to its shareholders if it complies with regulatory requirements
relating to its organization, ownership, assets and income, and with a
regulatory requirement that it distribute to its shareholders at least 95% of
its taxable income for each taxable year. Generally, REITs can be classified
as Equity REITs, Mortgage REITs and Hybrid REITs. Equity REITs invest the
majority of their assets directly in real property and derive their income
primarily from rents. Mortgage REITs invest the majority of their assets in
real estate mortgages and derive their income primarily from interest
payments. Hybrid REITs combine the characteristics of both Equity and Mortgage
REITs. The Manager expects to invest in common stock, preferred stock and
other convertible securities of primarily Equity REITs.
RULE 144A SECURITIES
Subject to the Trust's limitations on investing in illiquid securities, the
Trust may purchase Rule 144A securities. Rule 144A securities are restricted
securities in that they have not been registered under the Securities Act of
1933, but they may be traded between certain qualified institutional
investors, including investment companies. The presence or absence of a
secondary market in these securities may affect their value. The Trust's Board
of Trustees has established guidelines and procedures for determining the
liquidity of Rule 144A securities.
REPURCHASE AGREEMENTS
The Trust may enter into repurchase agreements with respect to U.S. Treasury
securities. In a repurchase agreement, the Trust buys a security and
simultaneously agrees to sell it back at a higher price. In all cases, the
Manager must find the creditworthiness of the other party to the transaction
to be satisfactory. In addition, all repurchase agreements entered into by the
Trust will be fully collateralized and marked to market daily. In the event of
a default by, or bankruptcy proceedings with respect to, the other party to
the repurchase agreement, the Trust could experience delays in recovering its
cash and a loss to the extent that, in the meantime, the value of the
securities repurchased has decreased.
PORTFOLIO TURNOVER
The Trust anticipates that its annual portfolio turnover rate will not
exceed 50%, but the Trust's turnover rate will not be a limiting factor when
the Manager deems portfolio changes appropriate.
RISKS TO CONSIDER
INVESTMENT IN REAL ESTATE SECURITIES
Because of its policy of concentration in securities of companies in the
real estate industry, the Fund will be subject to risks similar to those
associated with the direct ownership of real estate. These risks include
declines in the value of real estate, risks related to general and local
economic conditions, dependency on management skill, heavy cash flow
dependency, possible lack of availability of mortgage funds, overbuilding,
extended vacancies of properties, increased competition, increases in property
taxes and operating expenses, changes in zoning laws, losses due to costs
resulting from the clean-up of environmental problems, liability to third
parties for damages resulting from environmental problems, casualty or
condemnation losses, limitations on rents, changes in neighborhood values and
the appeal of properties to tenants, and changes in interest rates.
6
<PAGE>
Investors in the Fund will also be subject to certain risks associated with
a direct investment in REITs. Equity REITs may be affected by changes in the
value of the underlying properties owned by the REITs, while Mortgage REITs
may be affected by the quality of any credit extended. Further, Equity and
Mortgage REITs are dependent upon management skills and generally may not be
diversified. These REITs are also dependent on the income generated by the
underlying properties to meet operating expenses and are subject to defaults
by borrowers and self-liquidation. In addition, Equity and Mortgage REITs
could possibly fail to qualify for tax-free pass-through of income under the
Internal Revenue Code, or to maintain their exemptions from registration under
the Investment Company Act of 1940. The above factors may also adversely
affect a borrower's or a lessee's ability to meet its obligations to the REIT.
In the event of a default by a borrower or a lessee, the REIT may experience
delays in enforcing its rights as a mortgagee or lessor and may incur
substantial costs associated with protecting its investments.
REITs (especially Mortgage REITs) are also subject to interest rate risk.
When interest rates decline, the value of a REIT's investment in fixed rate
obligations can be expected to rise. Conversely, when interest rates rise, the
value of a REIT's investment in fixed rate obligations can be expected to
decline. In contrast, as interest rates on adjustable rate mortgage loans are
reset periodically, yields on a REIT's investments in such loans will
gradually align themselves to reflect changes in market interest rates,
causing the value of such investments to fluctuate less dramatically in
response to interest rate fluctuations than would investments in fixed rate
obligations.
INVESTMENT IN FOREIGN SECURITIES
Investing in foreign securities involves considerations and possible risks
not typically associated with investing in domestic securities. The values of
foreign investments are affected by changes in currency rates or exchange
control regulations, application of foreign tax laws, including withholding
taxes, changes in governmental administration or economic or monetary policy
(in the United States or abroad) or changed circumstances in dealings between
nations. Costs are incurred in connection with conversions between various
currencies. In addition, foreign brokerage commissions are generally higher
than in the United States, and foreign securities markets may be less liquid,
more volatile and less subject to governmental supervision than in the United
States. Investments in foreign countries could be affected by other factors
not present in the United States, including expropriation, confiscatory
taxation, lack of uniform accounting and auditing standards, potential
difficulties in enforcing contractual obligations and the possibility of
extended settlement periods.
MASTER/FEEDER FUND STRUCTURE
The Fund seeks to achieve its investment objective by investing all of its
assets in the Trust, a separate registered investment company with the same
investment objective as the Fund. Therefore, an investor's interest in the
Trust's securities is indirect. In addition to selling shares of beneficial
interest to the Fund, the Trust may sell shares to other mutual funds or
institutional investors. These investors will invest in the Trust under the
same terms and conditions and will pay a proportionate share of the Trust's
expenses. However, due to variations in distribution arrangements and
operating expenses, the other funds investing in the Trust may sell their
shares at a price which differs from that applicable to shares of the Fund. As
a result, investors in the Fund may experience a return which varies from the
returns experienced by investors in other funds investing in the Trust.
Variations in returns are also experienced by investors in other mutual fund
structures. The Fund is the only investment company investing in the Trust
whose shares are currently being publicly offered in the United States.
Information regarding the availability of other funds investing in the Trust
can be obtained by calling (000) 000-0000.
The Board of Directors of the Fund believes that the "master/feeder" fund
structure offers opportunities for substantial growth in the assets of the
Trust which may enable the Fund to realize economies of scale that could
reduce the Fund's operating expenses. However, the Fund's investment in the
Trust may be adversely affected by the actions of other funds investing in the
Trust. For example, if a large fund withdraws from the Trust, the remaining
funds may experience higher pro rata operating expenses, thereby producing
lower returns
7
<PAGE>
(however, this possibility also exists for traditionally structured funds that
have large institutional investors). Additionally, the Trust may become less
diverse, resulting in increased portfolio risk. Funds with a greater pro rata
ownership in the Trust could have effective voting control of the operations
of the Trust.
Except as permitted by the Securities and Exchange Commission, whenever the
Fund is requested to vote on matters pertaining to the Trust, the Fund will
hold a meeting of its shareholders and will cast all of its votes in the same
proportion as the votes of its shareholders. Shares of the Fund for which
voting instructions have not been received will be voted by management in the
same proportion as the shares voted by shareholders of the Fund.
Certain changes in the Trust's investment objective, policies or
restrictions may require the Fund to withdraw its interest in the Trust. Any
such withdrawal could result in a distribution "in kind" of portfolio
securities (as opposed to a cash distribution) from the Trust. If securities
are distributed, the Fund generally would incur brokerage, tax or other
charges in converting the securities to cash. In addition, the distribution in
kind may result in a less diversified portfolio of investments or adversely
affect the liquidity of the Fund.
The Fund may withdraw its investment from the Trust at any time, if the
Fund's Board of Directors determines that it is in the best interest of the
shareholders of the Fund to do so. Upon any such withdrawal, the Board of
Directors would consider what action might be taken, including continuing to
retain the Manager to manage the Fund's assets directly or investing all the
assets of the Fund in another pooled investment entity having the same
investment objective as the Fund.
INVESTMENT RESTRICTIONS
The Trust's investment program is subject to a number of investment
restrictions that reflect both self-imposed standards and regulatory
limitations. Restrictions (1) and (2) are matters of fundamental policy and
may only be changed with shareholder approval. Restrictions (3) and (4) may be
changed by the Trust's Board of Trustees. The Trust will not:
(1) With respect to 75% of the value of its total assets, purchase the
securities of any issuer (other than securities issued or guaranteed by the
U.S. Government or its agencies or instrumentalities) if, as a result, more
than 5% of the value of the Trust's total assets would be invested in the
securities of such issuer or the Trust would hold more than 10% of the
outstanding voting securities of such issuer.
(2) Concentrate its investments in any one industry (excluding securities
of the U.S. Government and its agencies and instrumentalities), except that
the Trust may invest more than 25% of the value of its total assets in the
real estate industry.
(3) Invest more than 15% of its net assets in illiquid securities,
including repurchase agreements with maturities of greater than seven days.
(4) Invest more than 10% of its net assets foreign securities.
The investment restrictions set forth above are also applicable to the Fund;
restrictions (1) and (2) are matters of fundamental policy and restrictions
(3) and (4) may be changed by the Fund's Board of Directors. No investment
restriction of the Fund prevents the Fund from investing all of its investable
assets in the Trust.
The Fund and the Trust are subject to additional investment restrictions
which are described in the Statement of Additional Information.
MANAGEMENT
The business and affairs of the Fund are managed under the supervision of
its Board of Directors, while the business and affairs of the Trust are
managed under the supervision of its Board of Trustees. The Fund's Board
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<PAGE>
of Directors approves all significant agreements between the Fund and persons
or companies furnishing services to the Fund, including the agreements with
the Fund's manager, distributor, administrator, transfer agent and custodian.
A majority of the Fund's directors are not affiliated with either the manager
or the distributor of the Fund. The management of the Fund's day-to-day
operations is delegated to its officers, manager and administrator, subject
always to the general supervision of the Board of Directors.
INVESTMENT MANAGER
ABKB/LaSalle Securities Limited (the "Manager") serves as manager of the
Fund pursuant to a management agreement with the Fund. Under the agreement,
the Manager is responsible for monitoring the Fund's operations and the
services provided to the Fund by others. The Manager receives no fee for
providing these services and facilities to the Fund.
At the present time, the Fund seeks to achieve its investment objective by
investing all of its investable assets in the Trust. The Manager also serves
as the Trust's investment manager pursuant to an investment management
agreement with the Trust. In the event the Fund's Board of Directors
determines that it is in the best interests of the Fund's shareholders to
withdraw its investment in the Trust, the Manager would become responsible for
directly managing the assets of the Fund. In that event, the Manager would be
entitled to receive an investment management fee from the Fund, accrued daily
and paid monthly, at the annual rate of [ ]% of the Fund's average net assets.
Under its agreement with the Trust, the Manager manages the Trust's
portfolio in accordance with its investment objective, policies and
restrictions, makes investment decisions for the Trust, places orders for the
purchase and sale of securities and other financial instruments on behalf of
the Trust, and employs portfolio managers and securities analysts who provide
research services to the Trust. For providing these services and facilities to
the Trust, the Manager is entitled to receive an investment management fee
from the Trust, computed daily and paid monthly, at the annual rate of [ ]% of
the Trust's average net assets.
The Manager is a registered investment adviser and together with its
affiliates had as of [ ], 1997, approximately $[ ] billion in real
estate securities under management, almost all of which are U.S. real estate
securities. The Manager was formed on November 1, 1994, to acquire a portion
of the real estate securities investment advisory business of Alex. Brown
Kleinwort Benson Realty Advisors Corporation. The Manager, together with its
predecessors, has provided investment advice to pension funds and other
institutional investors with respect to investments in real estate securities
since 1985. The Manager's investment team has more than twelve years of
experience in managing accounts in accordance with the same strategy utilized
for the Trust and is supported by LaSalle Partners' extensive research and
property management organization which consists of nearly [ ] employees in
over [ ] offices across the United States. The Manager utilizes the same
research, analytical models and professional staff in managing the assets of
the Trust.
The Manager is a Maryland limited partnership with its principal office
located at 100 East Pratt Street, Baltimore, Maryland 21202. The Manager is
one of several entities through which LaSalle Partners Incorporated and its
affiliates conduct real estate investment advisory and related businesses.
LaSalle Partners is a leading full-service real estate firm that provides
management services, corporate and financial services and investment
management services to corporations and other real estate owners, users and
investors worldwide.
Officers and employees of the Manager are permitted to engage in personal
securities transactions subject to restrictions and procedures set forth in
the Code of Ethics adopted by the Fund and the Trust.
PORTFOLIO MANAGERS
William K. Morrill, Jr. and Keith R. Pauley, both Managing Directors of the
Manager, share primary responsibility for managing the Trust's assets. Mr.
Morrill has more than 17 years of investment experience and has been a
portfolio manager with the Manager or its predecessors since 1985. Mr. Pauley
has more than ten
9
<PAGE>
years of investment experience and has been a portfolio manager with the
Manager or its predecessors since 1986.
PORTFOLIO TRANSACTIONS
Subject to the general supervision of the Board of Trustees of the Trust,
the Manager is responsible for placing orders for securities transactions.
Transactions involving equity securities will normally be conducted through
broker-dealers who charge a commission for their services. The Trust has no
obligation to enter into securities transactions with any particular broker-
dealer, issuer, underwriter or other entity. In placing orders for the Trust,
it is the policy of the Manager to obtain the most favorable execution. Where
such execution may be obtained from more than one firm, securities
transactions may be directed at higher commission rates to firms that provide
research, statistical and other information to the Manager. If more than one
account managed by the Manager is purchasing or selling the same security, the
orders may be aggregated in the interest of achieving the most favorable
execution.
ADMINISTRATOR
PFPC Inc. (the "Administrator"), 103 Bellevue Parkway, Wilmington, Delaware
19809, serves as administrator of both the Fund and the Trust pursuant to
separate administration agreements. The Administrator provides certain fund
accounting and administrative services to the Fund and the Trust including,
among other services, accounting relating to the Fund and the Trust and their
investment transactions, and computation of the net asset values of the Fund
and Trust. The Administrator does not have any responsibility or authority for
the management of the assets of the Fund or the Trust, the determination of
their investment policies, or for any matter pertaining to the distribution of
their shares.
As compensation for the services and facilities provided by the
Administrator to the Trust, the Trust has agreed to pay a fee, computed daily
and paid monthly, at the annual rate of [ ]% of the first $[ ] million of
the average net assets of the Trust, [ ]% of the next $[ ] million of such
assets, [ ]% of the next $[ ] million of such assets and [ ]% of such assets
in excess of $[ ] million, subject to a minimum monthly fee of $[ ], and
to reimburse the Administrator for its out-of-pocket expenses. In addition, as
compensation for the services and facilities provided by the Administrator to
the Fund, the Fund has agreed to pay a monthly fee of $[ ], and to reimburse
the Administrator for its out-of-pocket expenses.
DISTRIBUTION ARRANGEMENTS
Shares of the Fund are distributed through Funds Distributor, Inc. (the
"Distributor"), the principal underwriter and distributor of the Fund. The
Distributor, located at 60 State Street, Suite 1300, Boston, Massachusetts
02109, is a registered broker-dealer and member firm of the National
Association of Securities Dealers, Inc.
The Fund has adopted a distribution plan for the Retail Class pursuant to
Rule 12b-1 under the Investment Company Act of 1940. The plan provides for the
payment of a distribution fee from the assets of the Retail Class for
activities primarily intended to result in the sale of Retail Class shares,
including advertising, compensation to dealers and the preparation of sales
literature. Distribution fees paid under the plan may not exceed [ ]% annually
of the average net assets of the Retail Class, or such lesser amount as
specified by the Fund's Board of Directors. The Board of Directors has
authorized payment of an annual distribution fee of [ ]%. The distribution fee
is paid to the Distributor and financial services firms who assist in the
distribution of Retail Class shares.
Under a shareholder services plan adopted for the Retail Class, the Fund may
pay shareholder services fees to financial services firms and others who have
entered into shareholder services agreements with the Fund. These fees are
paid for services provided to Retail Class shareholders, including shareholder
assistance and communications, and maintenance of shareholder accounts.
Shareholder services fees paid under the plan may
10
<PAGE>
not exceed [ ]% annually of the average net assets of the Retail Class
attributable to applicable shareholder accounts, or such lesser amount as
specified by the Fund's Board of Directors. The Board of Directors has
authorized payment of an annual shareholder services fee of [ ]%.
The distribution and shareholder services plans apply only to the Retail
Class of the Fund. The fees paid under the plans are subject to the review and
approval by the Fund's directors who are not "interested persons" of the Fund
(as defined in the Investment Company Act of 1940) and who may reduce the fees
or terminate the plans at any time.
HOW TO PURCHASE SHARES
The Fund offers investors two classes of shares -- Retail Class shares and
Institutional Class shares. The different classes represent investments in the
same portfolio of securities but are subject to different expenses and will
likely have different share prices. Shares of the Fund may be purchased at the
net asset value next determined after receipt of an order in proper form.
There is no sales load or charge in connection with the purchase of any class
of the Fund's shares; however, Retail Class shares are subject to distribution
and shareholder services fees.
Purchase orders for Fund shares which are received by the transfer agent in
proper form prior to the close of regular trading hours (normally 4:00 p.m.
Eastern Time) on the New York Stock Exchange (the "NYSE") on any day that the
Fund's net asset value is calculated (a "business day") are priced at the net
asset value per share determined that day. Purchase orders for shares of the
Fund received after the close of the NYSE on a particular business day are
priced as of the time the net asset value per share is next determined.
The Fund and the Distributor reserve the right to reject any purchase order
and to suspend the offering of shares of the Fund. The Fund reserves the right
to vary the initial investment minimums and to impose minimums for additional
investments in any of the classes of the Fund's shares at any time. In
addition, the Fund may waive the minimum initial investment requirement for
any investor.
RETAIL CLASS SHARES
Investors can purchase Retail Class shares of the Fund through any
securities dealer or other financial services firm that has a sales agreement
with the Distributor, or directly through the Fund's transfer agent. The
minimum initial investment for Retail Class shares is $[ ].
The Fund may accept telephone orders for shares from securities dealers and
other financial services firms that have been previously approved by the Fund.
It is the responsibility of these firms to forward purchase orders and
payments for shares promptly. Financial services firms may charge the investor
a transaction fee or other fee for their services at the time of purchase.
These fees would not otherwise be charged if the shares were purchased
directly through the Fund's transfer agent.
Shareholders may purchase additional shares for an existing account by
mailing a check payable to "LaSalle Real Estate Securities Fund, Inc." for the
amount of the investment to the Fund at the following address: [ ] Retail
Class shares may not be purchased with a check issued by a third party and
endorsed over to the Fund.
11
<PAGE>
Retail Class shares may also be purchased for an existing shareholder
account by wiring money to:
PNC Bank, N.A.
Philadelphia, Pennsylvania
ABA #0310-0005-3
For Credit to: LaSalle Real Estate Securities Fund, Inc.
[ ]
Retail Class Shares
Account No.:
Account Name:
The wire instructions must include the account number. An order to purchase
shares by Federal Funds wire will be deemed to have been received on the
business day of the wire, provided that shareholders notify the Fund's
transfer agent at (000) 000-0000 by 12:00 p.m. (Eastern Time) of their
intention to wire money. The Fund currently does not charge shareholders for
the receipt of wire transfers, although your bank may charge you for their
wiring services.
INSTITUTIONAL CLASS SHARES
Institutional Class shares are currently available only to certain qualified
purchasers including, but not limited to, [ ]. The minimum initial
investment for Institutional Class shares is $[ ] ($[ ] for LaSalle
employee investment accounts). For more information contact the Fund at (000)
000-0000.
EMPLOYEE PURCHASE PROGRAM
Current and former directors and officers of the Fund, current and retired
officers, directors and regular employees of LaSalle Partners Incorporated and
its direct and indirect subsidiaries, and their spouses and minor children may
open an employee investment account directly with the Fund by making an
initial investment of $[ ] or more. Institutional Class shares of the Fund
may be purchased for an employee investment account as described under "Buying
Shares Through the Fund" above. To open an employee investment account, call
(000) 000-0000 to request an account application.
TAX-SHELTERED RETIREMENT PLANS
Fund shares are eligible for purchase by retirement plans which offer tax
advantages to individuals. Investors in the Fund can establish an account
under one of several tax-sheltered plans, including Individual Retirement
Accounts (IRAs), which permit investment for retirement and shelter income and
capital gains distributions from current taxes. For more information on
retirement plans and their benefits, provisions and fees, contact your
investment professional.
DETERMINATION OF NET ASSET VALUE
The Fund's net asset value is determined each business day as of the close
of regular trading hours on the NYSE, which is normally 4:00 p.m. (Eastern
Time). The net asset value per share of a class is calculated by valuing its
share of the Fund's assets (i.e., the value of its investment in the Trust and
other assets), deducting all liabilities attributable to that class, and
dividing the resulting amount by the number of shares of the class then
outstanding. For this purpose, the Trust's portfolio securities are valued
primarily on the basis of market quotations or, in the case of securities for
which market values are not available, at their fair values determined in
accordance with procedures established and monitored by the Board of Trustees
of the Trust.
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<PAGE>
HOW TO REDEEM SHARES
Shareholders may redeem all or part of their investment on any business day
by transmitting a redemption order through their dealer or by directly to the
Fund's transfer agent. A redemption order will be effected at the net asset
value per share next determined after its receipt in proper form. Redemption
orders received after 4:00 p.m. (Eastern Time) or the close of regular trading
hours on the NYSE, whichever is earlier, will be effected at the net asset
value per share determined on the next business day. Payment for redeemed
shares will be made by check and will be mailed within seven days after
receipt of a redemption order fully completed and, as applicable, accompanied
by the required documents.
REDEEMING SHARES BY MAIL
Shareholders may redeem Fund shares directly by mail. Written requests for
the redemption of Fund shares must be received in good order by the Fund's
transfer agent to constitute a valid redemption order by mail. Shareholders
redeeming shares by mail must send a letter of instruction, specifying (1) the
shareholder's account number and (2) the number of shares or dollar amount to
be redeemed, to the Fund at the following address: [ ]. The letter of
instruction must be signed by all owners of the shares in the exact names in
which their account is maintained. Additional documentation may be required
for redemptions by corporations, partnerships, trusts or fiduciaries.
To protect shareholders and the Fund against fraud, a signature guarantee
will be required if: (a) the redemption request is for an amount in excess of
$[ ]; (b) redemption proceeds are to be sent to a name and/or address that
differs from the registered name or address of record; or (c) a transfer of
registration is requested. Otherwise, written redemption requests by mail may
be accepted without a signature guarantee. A signature guarantee may be
obtained from domestic banks or trust companies, brokers, dealers, clearing
agencies or savings associations who are participants in a medallion program
recognized by the securities transfer association. Please note that a notary
public stamp or seal is not acceptable.
REDEEMING SHARES BY TELEPHONE
Shareholders who have completed the section of the account application
authorizing telephone transactions may redeem Fund shares in amounts up to
$[ ], by notifying the Fund's transfer agent by telephone at (000) 000-0000.
Payment for the redeemed shares will be made by check mailed to the address of
record.
Neither the Fund nor its transfer agent will be responsible for any loss,
liability, cost or expense for acting upon telephone instructions that it
reasonably believes to be genuine. The Fund and the transfer agent will each
employ reasonable procedures to confirm that instructions communicated by
telephone are genuine. To ensure the authenticity of redemption instructions
received by telephone, the transfer agent examines each shareholder request by
verifying the account number and/or tax identification number at the time the
request is made. The transfer agent subsequently sends confirmations of the
transaction to the shareholder for verification. If reasonable procedures are
not employed, the Fund and the transfer agent may be liable for any losses due
to unauthorized or fraudulent telephone transactions.
REDEEMING SHARES THROUGH YOUR DEALER
The Distributor has made arrangements for securities dealers and other
financial services firms to redeem shares on behalf of their customers. These
firms may charge for this service.
OTHER INFORMATION
The Fund will honor redemption requests of shareholders who recently
purchased shares by check, but will not mail the proceeds until it is
reasonably satisfied that the check for the purchase of Fund shares has
cleared, which may take up to fifteen days from the purchase date.
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<PAGE>
Dividends payable up to the date of the redemption of shares will be paid on
the next dividend payment date. If all of the shares in a shareholder's
account have been redeemed on a dividend payment date, the dividend will be
remitted by check to the shareholder.
The Fund has the power under its charter to redeem the shares in any
shareholder account with a value of less than $[ ] upon 60 days' notice.
Shares will not be redeemed involuntarily as a result of a decline in account
value due solely to a decline in the Fund's net asset value.
DIVIDENDS AND TAXES
DIVIDENDS
The Fund's policy is to make quarterly distributions from its net investment
company taxable income. Net capital gain (net long-term capital gain in excess
of net short-term capital loss), if any, will be distributed at least
annually. The Fund's investment company taxable income consists of all taxable
income other than the excess, if any, of net long-term capital gain over net
short-term capital loss, reduced by deductible expenses of the Fund. The Fund
currently expects that a portion of its dividends will consist of amounts in
excess of investment company taxable income derived from non-taxable
components of the cash flow from the real estate underlying the Trust's
portfolio investments. These amounts will be considered a return of capital
and thus will not be subject to current taxation.
Unless a shareholder elects payment by check, all income dividends and
capital gain distributions, if any, will be reinvested in additional Fund
shares of the same class at net asset value as of the reinvestment date.
Shareholders may elect to terminate automatic reinvestment by giving written
notice to the Fund's transfer agent (at the address listed in this
Prospectus), either directly or through their dealer, at least five days
before the next date on which dividends or distributions will be paid.
TAXES
The Fund and the Trust are treated as separate entities for federal tax
purposes. The Fund intends to qualify for the special tax treatment afforded
regulated investment companies under the Internal Revenue Code so that it will
be relieved of federal income tax on net investment company taxable income and
net capital gain distributed to shareholders. In addition, the Fund expects to
make sufficient distributions prior to the end of each calendar year to avoid
liability for federal excise tax. As a partnership under the Code, the Trust
does not pay federal income or excise taxes.
Dividends from the Fund's net investment company taxable income are taxable
to shareholders as ordinary income (whether received in cash or in additional
shares) to the extent of the Fund's earnings and profits. Distributions of net
capital gain that are designated by the Fund as capital gain dividends are
taxable to shareholders as long-term capital gain, regardless of how long
shareholders have held their shares and regardless of whether the
distributions are received in cash or in additional shares. Only a portion of
the dividends paid by the Fund is expected to qualify for the dividends
received deduction available to corporate shareholders. The Fund provides
shareholders annually with information regarding the federal income tax status
of its dividends and distributions.
The net asset value of the Fund's shares will be reduced by the amount of
any dividend or distribution on the record date for the distribution. An
investor who purchases shares immediately prior to the record date will pay
the full net asset value for the shares and will receive a distribution which,
although in effect a return of capital to that shareholder, will be taxable as
described above.
The sale or redemption of Fund shares is a taxable event for the
shareholder.
Shareholders should consult their tax advisors regarding specific questions
as to federal, state and local income taxes. The Statement of Additional
Information contains additional information regarding taxes.
14
<PAGE>
GENERAL INFORMATION
DESCRIPTION OF SHARES
The Fund is an open-end diversified management investment company
incorporated under the laws of the State of Maryland. Each share of the Fund
has one vote and is entitled to dividends and distributions when and if
declared by the Fund's Board of Directors. In the event of liquidation or
dissolution of the Fund, each share would be entitled to its pro rata portion
of the Fund's assets after all debts and expenses have been paid.
The Board of Directors of the Fund is authorized to establish "series" of
shares of capital stock, each of which would evidence interests in a separate
portfolio of securities, and separate classes of shares of each series.
Different classes of the Fund's shares of any series may be offered to certain
investors. All classes of a particular series share a common investment
objective and portfolio of investments; however, the net asset values per
share of the classes will differ to the extent there are different fees and
expenses applicable to the classes. The shares offered by this Prospectus have
been designated Retail Class and Institutional Class shares of Common Stock.
The Board of Directors of the Fund may add one or more additional series or
classes of shares in the future. Additional information concerning the Fund's
shares may be obtained by calling the Fund at (000) 000-0000.
The Trust, in which all of the investable assets of the Fund will be
invested, is organized as a business trust under the laws of the State of
Delaware. The Trust's Agreement and Declaration of Trust provides that the
Fund and other entities investing in the Trust (e.g., other investment
companies) will be liable for obligations of the Trust. However, the risk of
the Fund incurring financial loss on account of such liability is limited to
circumstances in which both inadequate insurance exists and the Trust itself
is unable to meet its obligations. Accordingly, the Fund's Board of Directors
believes that neither the Fund nor its shareholders will be adversely affected
by reason of the Fund's investing in the Trust.
ANNUAL MEETINGS
Unless required under applicable Maryland law, the Fund does not expect to
hold annual meetings of shareholders. However, shareholders of the Fund retain
the right, under certain circumstances, to request that a meeting of
shareholders be held for the purpose of considering the removal of a director
from office, and if such a request is made, the Fund will assist with the
shareholder communications in connection with the meeting.
SHAREHOLDER REPORTS
The Fund furnishes shareholders with semi-annual reports containing
information about the Fund and its operations, including a list of investments
held in the Trust's portfolio and financial statements. The annual financial
statements will be audited by the Fund's independent accountants, Coopers &
Lybrand L.L.P.
OFFICERS AND DIRECTORS OF THE FUND
* Messrs. [ ] and [ ] are "interested persons" of the Fund within the
meaning of the Investment Company Act of 1940.
CUSTODIAN
PNC Bank, National Association, 200 Stevens Drive, Lester, Pennsylvania
19113, serves as custodian of the Fund's and the Trust's assets consisting of
cash and securities.
15
<PAGE>
TRANSFER AGENT
PFPC Inc., 103 Bellevue Parkway, Wilmington, Delaware 19809, serves as
transfer agent and dividend paying agent for the Fund's shares.
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., 2400 Eleven Penn Center, Philadelphia,
Pennsylvania 19103, has been selected as independent accountants for the Fund
and Coopers & Lybrand L.L.P., George's Quay, Dublin 2, Ireland, has been
selected as independent accountants for the Trust.
LEGAL COUNSEL
Piper & Marbury L.L.P., 36 South Charles Street, Baltimore, Maryland 21201,
serves as counsel to the Fund and the Trust.
INVESTOR INQUIRIES
Investors with questions regarding the Fund should contact their dealer or
call the Fund directly at (000) 000-0000.
ADDITIONAL INFORMATION
The Fund and the Trust have filed with the Securities and Exchange
Commission ("SEC") a Registration Statement with respect to the shares of the
Fund offered hereby. This Prospectus and the Statement of Additional
Information, which constitute part of the Registration Statement, do not
contain all the information set forth in the Registration Statement, and the
exhibits and schedules to the Registration Statement filed with the SEC.
Copies of the Registration Statement, including those items omitted from this
Prospectus, may be examined at the offices of the SEC in Washington, D.C. The
SEC maintains a Web site (http://www.sec.gov) that contains the Registration
Statement and other information regarding the Fund and the Trust.
16
<PAGE>
LA SALLE REAL ESTATE SECURITIES FUND, INC.
CROSS REFERENCE SHEET
Part B
<TABLE>
<CAPTION>
Section in Statement of
Form N-1A Item No. Additional Information
- ------------------ -----------------------
<S> <C> <C>
10. Cover Page.......................................................... Cover Page
11. Table of Contents................................................... Cover Page
12. General Information and History..................................... General Information
13. Investment Objectives and Policies.................................. Investment Policies and Practices, Investment
Restrictions, Portfolio Transactions and Brokerage
14. Management of the Fund.............................................. Management
15. Control Persons and Principal Holders of Securities................. Management
16. Investment Advisory and Other Services.............................. Management; Investment Manager; Administrator;
General Information
17. Brokerage Allocation and Other Practices............................ Portfolio Transactions and Brokerage
18. Capital Stock and Other Securities.................................. Description of Capital Stock
19. Purchase, Redemption and Pricing of Securities Being Offered........ Valuation of Portfolio Securities;
Redemption of Shares
20. Tax Status.......................................................... Taxation
21. Underwriters........................................................ Distribution Arrangements
22. Calculation of Performance Data..................................... Performance Information
23. Financial Statements................................................ General Information
</TABLE>
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This Statement of Additional Information and the related prospectus
shall not constitute an offer to sell or the solicitation of an offer to buy nor
shall there be any sale of these securities in any State in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under securities laws of any such State.
Subject to Completion
September 23, 1997
LaSalle Real Estate Securities Fund, Inc.
STATEMENT OF ADDITIONAL INFORMATION
[_________ __], 1997
This Statement of Additional Information is not a prospectus but
provides additional information that should be read in conjunction with the
Prospectus dated [_______ __], 1997 including any supplements thereto. To
obtain additional copies of the Prospectus, please call (000) 000-0000.
Table of Contents
-----------------
Page
----
General Information
Investment Policies and Practices
Investment Restrictions
Portfolio Transactions and Brokerage
Valuation of Portfolio Securities
Redemption of Shares
Taxation
Management
Investment Manager
Administrator
Distribution Arrangements
Performance Information
Description of Capital Stock
Financial Statements
<PAGE>
GENERAL INFORMATION
LaSalle Real Estate Securities Fund, Inc. (the "Fund") is an open-end
diversified management investment company. The Fund currently offers two classes
of shares: Retail Class shares and Institutional Class shares.
Under the rules and regulations of the Securities and Exchange
Commission (the "SEC"), all mutual funds are required to furnish prospective
investors with certain information regarding the activities of the fund being
considered for investment. Important information concerning the Fund and the
Trust is included in the Prospectus which may be obtained without charge from
the Fund's distributor or securities dealers and other financial institutions
that have a sales agreement with the Fund's distributor. Some of the information
required to be in this Statement of Additional Information is also included in
the Prospectus. To avoid unnecessary repetition, references are made to related
sections of the Prospectus.
As described in the Prospectus, the Fund seeks to achieve its
investment objective by investing all of its investable assets in an open-end
management investment company having the same investment objective as the Fund.
The investment company is LaSalle Master Trust (the "Trust") for which
ABKB/LaSalle Securities Limited (the "Manager") serves as investment manager.
Since the investment characteristics of the Fund will correspond directly to
those of the Trust, the Prospectus and this Statement of Additional Information
include a discussion of the various investments of and techniques employed by
the Trust.
The Fund was incorporated under the laws of the State of Maryland on
September [__], 1997. The Fund filed a registration statement with the SEC
registering as an open-end diversified management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"), and registering an
indefinite number of its Retail Class and Institutional Class shares under the
Securities Act of 1933, as amended (the "1933 Act"). As of the date of this
Statement of Additional Information, the Fund had not yet commenced operations.
INVESTMENT POLICIES AND PRACTICES
The Fund's investment objective is total return primarily through
investments in U.S. real estate securities. As described in the Prospectus, the
Fund will attempt to achieve its objective by investing all of its investable
assets in the Trust. The Trust will invest its assets primarily in equity
securities of real estate investment trusts ("REITs") and other real estate
industry companies that are publicly traded in the United States securities
markets. There can be no assurance that either the Fund or the Trust will
achieve its investment objective. The following information supplements, and
should be read in conjunction with, the discussion in the Prospectus of the
investment objective and policies of the Fund and the Trust.
Real Estate Investment Trusts
Real estate investment trusts ("REITs") pool investors' funds for
investment primarily in income-producing commercial real estate or real estate
related loans. A REIT is not taxed on income distributed to shareholders if it
complies with several requirements relating to its organization, ownership,
assets and income, and a requirement that it distribute to its shareholders at
least 95% of its taxable income (other than net capital gains) for each taxable
year.
REITs can generally be classified as follows:
. Equity REITs, which invest the majority of their assets directly
in real property and derive their income primarily from rents.
Equity REITs can also realize capital gains by selling properties
that have appreciated in value.
B-2
<PAGE>
. Mortgage REITs, which invest the majority of their assets in real
estate mortgages and derive their income primarily from interest
payments.
. Hybrid REITs, which combine the characteristics of both Equity
REITs and Mortgage REITs.
REITs are like closed-end investment companies in that they are
essentially holding companies that rely on professional managers to supervise
their investments.
Illiquid and Restricted Securities
As discussed in the Prospectus, the Trust may invest up to 15% of the
value of its net assets, measured at the time of investment, in illiquid
securities. Both restricted securities (other than Rule 144A securities that are
deemed to be liquid as discussed below), which may not be resold to the public
without registration under the 1933 Act, and securities that, due to their
market or the nature of the security, have no readily available market for their
disposition are considered to be not readily marketable or "illiquid".
Limitations on resale and marketability may have the effect of preventing the
Trust from disposing of a security at the time desired or at a reasonable price.
In addition, in order to resell a restricted security, the Trust might have to
bear the expense and incur the delays associated with registration. In
purchasing illiquid securities, the Trust does not intend to engage in
underwriting activities, except to the extent the Trust may be deemed to be a
statutory underwriter under the 1933 Act in purchasing or selling such
securities. Illiquid securities will be purchased for investment purposes only
and not for the purpose of exercising control or management of other companies.
In recent years, a large institutional market has developed for
certain securities that are not registered under the 1933 Act. Institutional
investors generally will not seek to sell these instruments to the general
public, but instead will often depend on an efficient institutional market in
which such unregistered securities can be readily be resold or on an issuer's
ability to honor a demand for repayment. Therefore, the fact that there are
contractual or legal restrictions on resale to the general public or certain
institutions is not dispositive of the liquidity of these investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the
registration requirements of the 1933 Act for resales of certain securities to
qualified institutional buyers. The Trust may invest in Rule 144A securities
which, as disclosed in the Prospectus, are restricted securities which may or
may not be readily marketable. Rule 144A securities are readily marketable if
institutional markets for the securities develop pursuant to Rule 144A and
provide both readily ascertainable values for the securities and the ability to
liquidate the securities when liquidation is deemed necessary or advisable.
However, an insufficient number of qualified institutional buyers interested in
purchasing a Rule 144A security held by the Fund could affect adversely the
marketability of the security. In such an instance, the Trust might be unable to
dispose of the security promptly or at a reasonable price.
Securities eligible for resale pursuant to Rule 144A will not be
subject to the Trust's limitations on investing in securities that are not
readily marketable, provided that the Manager determines that a liquid market
exists for such securities under guidelines adopted and monitored by the Trust's
Board of Trustees. In making this determination, the Manager will consider the
following factors, among others: (1) the unregistered nature of a Rule 144A
security; (2) the frequency of trades and quotes for the security; (3) the
number of dealers willing to purchase or sell the security and the number of
additional potential purchasers; (4) dealer undertakings to make a market in the
security; and (5) the nature of the security and the nature of market place
trades (e.g., the time needed to dispose of the security, the method of
soliciting offers and the mechanics of transfers).
Money Market Instruments
From time to time the Trust may purchase high quality, short-term debt
securities, commonly known as money market instruments. These securities include
U.S. Government securities, obligations of U.S. commercial banks and commercial
paper.
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U.S. Government securities include direct obligations of the U.S.
Government, which consist of bills, notes and bonds issued by the U.S. Treasury,
and obligations issued by agencies of the U.S. Government which, while not
direct obligations of the U.S. Government, are either backed by the full faith
and credit of the United States or are guaranteed by the U.S. Treasury or
supported by the issuing agency's right to borrow from the U.S. Treasury.
The obligations of U.S. commercial banks include certificates of
deposit and bankers' acceptances. Certificates of deposit are negotiable
interest-bearing instruments with a specific maturity. Certificates of deposit
are issued by banks in exchange for the deposit of funds and normally can be
traded in the secondary market prior to maturity. Bankers' acceptances typically
arise from short-term credit arrangements designed to enable businesses to
obtain funds to finance commercial transactions. Generally, an acceptance is a
time draft drawn on a bank by an exporter or importer to obtain a stated amount
of funds to pay for specific merchandise. The draft is then "accepted" by a bank
that, in effect, unconditionally guarantees to pay the face value of the
instrument on its maturity date. The acceptance may then be held by the
accepting bank as an earning asset or it may be sold in the secondary market at
the going rate of discount for a specific maturity. Although maturities for
acceptances can be as long as 270 days, most acceptances have maturities of six
months or less.
Commercial paper consists of short-term (usually from one to 270 days)
unsecured promissory notes issued by corporations to finance their current
operations. A variable amount master demand note (which is a type commercial
paper) represents a direct borrowing arrangement involving periodically
fluctuating rates of interest under a letter agreement between a commercial
paper issuer and an institutional lender pursuant to which the lender may
determine to invest in varying amounts.
Repurchase Agreements
The Trust may enter into repurchase agreements with financial
institutions, such as banks and broker-dealers, deemed by the Manager to be
creditworthy under criteria established by the Board of Trustees. A repurchase
agreement is a short-term investment in which the purchaser (i.e., the Trust)
acquires ownership of a debt security and the seller agrees to repurchase the
obligation at a future time and set price, usually not more than seven days from
the date of purchase, thereby determining the yield during the purchaser's
holding period. The value of underlying securities will be at least equal at all
times to the total amount of the repurchase obligation, including the interest
factor. The Trust makes payment for such securities only upon physical delivery
or evidence of book-entry transfer to the account of its custodian bank or its
agent. The underlying securities, which in the case of the Trust must be issued
by the U.S. Treasury, may have maturity dates exceeding one year. The Trust does
not bear the risk of a decline in value of the underlying securities unless the
seller defaults under its repurchase obligation. In the event of a bankruptcy or
other default of a seller of a repurchase agreement, the Trust could experience
both delays in liquidating the underlying securities and loss including (a)
possible decline in the value of the underlying security while the Trust seeks
to enforce its rights thereto, (b) possible subnormal levels of income and lack
of access to income during this period and (c) expenses of enforcing its rights.
INVESTMENT RESTRICTIONS
The Fund's and the Trust's investment programs are subject to a number
of restrictions that reflect self-imposed standards as well as regulatory
limitations. The investment restrictions recited below are in addition to those
described in the Prospectus. No investment restriction of the Fund prevents the
Fund from investing all of its investable assets in an open-end investment
company with substantially the same investment objective.
Investment restrictions which are designated as matters of fundamental
policy may only be changed with the approval of a "majority of the outstanding
voting securities" of the Fund or the Trust, as the case may be. Under the 1940
Act, the vote of a majority of the outstanding voting securities of a company
means the vote, at an annual or a special meeting of the security holders of the
company duly called, (i) of 67% or more of the voting securities
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present at such meeting, if the holders of more than 50% of the outstanding
voting securities of such company are present or represented by proxy; or (ii)
of more than 50% of the outstanding voting securities of such company, whichever
is the less.
The Fund and the Trust may not as a matter of fundamental policy:
(1) Issue senior securities, except as permitted under the 1940 Act.
(2) Effect short sales of securities or sell any security which it
does not own unless by virtue of its ownership of other securities it has, at
the time of sale, a right to obtain securities, without payment of further
consideration, equivalent in kind and amount to the securities sold and,
provided that if such right is conditional, the sale is made upon the same
conditions; or purchase securities on margin (but the Fund/Trust may obtain such
short-term credits as may be necessary for the clearance of transactions).
(3) Borrow money, except that the Fund/Trust may borrow money for
temporary or emergency purposes in an amount not exceeding 33 1/3% of the value
of its total assets (including the amount borrowed) less liabilities (other than
borrowings).
(4) Act as an underwriter of securities within the meaning of the
U.S. federal securities laws, except insofar as it might be deemed to be an
underwriter upon disposition of certain portfolio securities acquired within the
limitation on purchases of illiquid securities.
(5) Purchase or sell real estate, provided that the Fund/Trust may
invest in securities of companies in the real estate industry and may purchase
securities secured or otherwise supported by interests in real estate.
(6) Purchase or sell commodities or commodities contracts, provided
that the Fund/Trust may invest in financial futures and options on such futures.
(7) Make loans, except that the Fund/Trust may lend portfolio
securities in accordance with its investment policies and may enter into,
purchase or invest in repurchase agreements, debt instruments or other
securities, whether or not the purchase is made upon the original issuance of
the securities.
The Trust will invest more than 25% of its total assets in securities
issued by companies in the real estate industry. Except as noted in the previous
sentence, it is a fundamental policy of the Fund and the Trust not to
concentrate its investments in securities of companies in any particular
industry. Following the current opinion of the staff of the SEC, investments are
concentrated in a particular industry if such investments (but not investments
in U.S. Government securities) aggregate more than 25% of the Fund's/Trust's
total assets.
The Trust does not intend to invest in or to enter into financial
futures contracts or purchase options on such futures or to lend portfolio
securities during the current fiscal year.
The following investment restrictions are not fundamental policies and
may be changed by the Fund's Board of Directors or by the Trust's Board of
Trustees without shareholder approval. The Fund and the Trust will not as a
matter of operating policy:
(1) Borrow money, except that the Fund/Trust may borrow money for
temporary or emergency purposes in an amount not exceeding 10% of the value of
its total assets at the time of such borrowing, provided that, while borrowings
by the Fund/Trust equaling 5% or more of its total assets are outstanding, the
Fund/Trust will not purchase securities for investment.
(2) Invest in shares of any other investment company registered under
the 1940 Act, except as permitted by federal law.
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(3) Invest for the purpose of exercising control or management.
(4) Invest more than 10% of the Fund's total assets in foreign
securities.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The Manager is responsible for decisions to buy and sell securities
for the Trust, for the selection of brokers and dealers to execute securities
transactions and for negotiation of commission rates. Purchases and sales of
securities on a securities exchange will be effected through broker-dealers
which charge a commission for their services. The Manager may direct purchase
and sale orders to any registered broker-dealer. In the over-the-counter market,
transactions are effected on a "net" basis with dealers acting as principal for
their own accounts without charging a stated commission, although the price of
the security usually includes a profit to the dealer based on the spread between
the bid and asked price for the security. The prices of securities purchased
from underwriters include a commission or concession paid by the issuer to the
underwriter. On occasion, certain money market instruments may be purchased
directly from an issuer without payment of a commission or concession.
The Manager's primary consideration in effecting securities
transactions is to obtain the most favorable execution of orders on an overall
basis. As described below, the Manager may, in its discretion, effect agency
transactions with broker-dealers that furnish statistical, research or other
information or services that are deemed by the Manager to be beneficial to the
Trust's investment program. Certain research services furnished by broker-
dealers may be useful to the Manager with clients other than the Trust.
Similarly, any research services received by the Manager through placement of
portfolio transactions of other clients may be of value to the Manager in
fulfilling its obligations to the Trust. No specific value can be determined for
research and statistical services furnished without cost to the Manager by a
broker-dealer. The Manager is of the opinion that because the material must be
analyzed and reviewed by its staff, its receipt does not tend to reduce
expenses, but may be beneficial in supplementing the Manager's research and
analysis. Therefore, it may tend to benefit the Trust by improving the Manager's
investment advice.
The Manager's policy is to pay a broker-dealer commissions for
particular transactions that are higher than might be charged if a different
broker-dealer had been chosen when, in the Manager's opinion, this policy
furthers the overall objective of obtaining the most favorable execution. The
Manager is also authorized to pay broker-dealers higher commissions on brokerage
transactions for the Trust in order to secure research and investment services
described above.
The Manager manages other investment accounts. It is possible that,
at times, identical securities will be acceptable for the Trust and one or more
of such other accounts; however, the position of each account in the securities
of the same issuer may vary and the length of time that each account may choose
to hold its investment in such securities may likewise vary. The timing and
amount of purchase by each account will also be determined by its cash position.
If the purchase or sale of securities consistent with the investment policies of
the Trust or one or more of these accounts is considered at or about the same
time, transactions in such securities will be allocated among the accounts in a
manner deemed equitable by the Manager.
The allocation of orders among broker-dealers and the commission rates
paid by the Trust will be reviewed periodically by the Board of Trustees. The
foregoing policy under which the Trust may pay higher commissions to certain
broker-dealers in the case of agency transactions does not apply to transactions
effected on a principal basis.
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VALUATION OF PORTFOLIO SECURITIES
The Fund's net asset value per share is determined daily as of the
close of regular trading hours on the New York Stock Exchange (the "NYSE"),
which is normally 4:00 p.m. (Eastern Time), each day on which the NYSE is
open for business (a "business day"). The NYSE is open for business on all
weekdays except for the following holidays: New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day.
Portfolio securities traded on a national exchange on the valuation
date are valued at the last quoted sale price. Exchange traded securities
for which there have been no reported sales on the valuation date and
securities traded primarily in the over-the-counter market are valued at
the last quoted bid prices. Securities or other assets for which market
quotations are not readily available are valued at their fair value as
determined in good faith under procedures established and monitored by the
Trust's Board of Trustees. These procedures may include the use of an
independent pricing service which calculates prices based upon yields or
prices of securities of comparable quality, coupon, maturity and type;
indications as to value from dealers; and general market conditions. Debt
obligations with maturities of 60 days or less are valued at amortized
cost. The net asset values of the Retail Class shares and Institutional
Class shares will differ to the extent different fees and expenses are
applicable to each class.
REDEMPTION OF SHARES
The Fund may suspend the right of redemption or postpone the date of
payment during any period when (a) trading on the NYSE is restricted by
applicable rules and regulations of the SEC; (b) the NYSE is closed for
other than customary weekend and holiday closings; (c) the SEC has by order
permitted such suspension; or (d) an emergency exists as determined by the
SEC so that valuation of the net assets of the Fund is not reasonably
practicable.
Under normal circumstances, the Fund will redeem shares by check as
described in the Prospectus. However, if the Board of Directors determines
that it would be in the best interests of the remaining shareholders to
make payment of the redemption price in whole or in part by a distribution
in kind of portfolio securities in lieu of cash, in conformity with
applicable rules of the SEC, the Fund will make such distributions in kind.
If shares are redeemed in kind, the redeeming shareholder will incur
brokerage costs in later converting the assets into cash. The method of
valuing portfolio securities is described under "Valuation of Portfolio
Securities" and such valuation will be made as of the same time the
redemption price is determined. The Fund and the Trust have elected to be
governed by Rule 18f-1 under the 1940 Act pursuant to which the Fund and
the Trust are each obligated to redeem shares solely in cash up to the
lesser of $250,000 or 1% of the net asset value of the Fund/Trust during
any 90-day period for any one shareholder.
The Trust has agreed to make a redemption in kind to the Fund whenever
the Fund wishes to make redemption in kind and therefore shareholders of
the Fund that receive redemptions in kind will receive portfolio securities
of the Trust, and in no case will a redeeming shareholder of the Fund
receive a security issued by the Trust.
The Board of Directors of the Fund may cause the redemption of a
Retail Class share account with a balance of less than $[_____], or an
Institutional Class share account with a balance of less than $[_____],
provided (1) the value of the account has been reduced for reasons other
than market action below the minimum initial investment in such shares at
the time the account was established, (2) the account has remained below
the minimum level for six months, and (3) 60 days' prior written notice of
the proposed redemption has been sent to the shareholder. Shares will be
redeemed at the net asset value on the date fixed for redemption by the
Board of Directors. Prompt payment will be made by mail to the last known
address of the shareholder.
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TAXATION
The following is only a summary of certain additional federal income
tax considerations generally affecting the Fund and its shareholders. No
attempt is made to present a detailed explanation of the federal, state or
local tax treatment of the Fund or its shareholders, and the discussion
here and in the Fund's Prospectus is not intended as a substitute for
careful tax planning.
The following discussion of federal income tax consequences is based
on the Internal Revenue Code of 1986, as amended (the "Code"), and the
regulations issued thereunder as in effect on the date of this Statement of
Additional Information. New legislation, as well as administrative changes
or court decisions, may significantly change the conclusions expressed
herein, and may have a retroactive effect with respect to the transactions
contemplated herein.
The Fund expects to qualify as a regulated investment company ("RIC")
under Subchapter M of the Code. In order to qualify as a RIC for any
taxable year, the Fund must derive at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans and
gains from the sale or other disposition of stock, securities or foreign
currencies and 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 (the "Income
Requirement"). In addition, at the close of each quarter of the Fund's
taxable year, (1) at least 50% of the value of its assets must consist of
cash and cash items, U.S. Government securities, securities of other RICs,
and securities of other issuers (as to which the Fund has not invested more
than 5% of the value of its total assets in securities of such issuer and
as to which the Fund does not hold more than 10% of the outstanding voting
securities of such issuer), and (2) no more than 25% of the value of its
total assets may be invested in the securities of any one issuer (other
than U.S. Government securities and securities of other RICs), or in two or
more issuers that the Fund controls and that are engaged in the same or
similar trades or businesses or related trades or businesses (the "Asset
Diversification Test"). Generally, the Fund will not lose its status as a
RIC if it fails to meet the Asset Diversification Test solely as a result
of a fluctuation in value of portfolio assets not attributable to a
purchase.
Under Subchapter M of the Code, the Fund is exempt from federal income
tax on its taxable net investment income and net capital gains that it
distributes to shareholders, provided generally that it distributes at
least 90% of its investment company taxable income (net investment income
and the excess of net short-term capital gains over net long-term capital
loss) for the year (the "Distribution Requirement") and complies with the
other requirements of the Code described above. The Distribution
Requirement for any year may be waived if a RIC establishes to the
satisfaction of the Internal Revenue Service that it is unable to satisfy
the Distribution Requirement by reason of distributions previously made for
the purpose of avoiding liability for federal excise tax (discussed below).
If for any taxable year the Fund does not qualify as a RIC, all of its
taxable income will be subject to tax at regular corporate rates without
any deduction for distributions to shareholders, and such distributions
generally will be taxable as ordinary dividends to the extent of the Fund's
current and accumulated earnings and profits. However, in the case of
corporate shareholders, such distributions generally will be eligible for
the 70% dividends received deduction for "qualifying dividends".
The Code imposes a nondeductible 4% excise tax on RICs that do not
distribute in each calendar year an amount equal to 98% of their ordinary
income for the calendar year plus 98% of their capital gains net income for
the one-year period ending on October 31 of such calendar year. The
balance of such income must be distributed during the next calendar year.
For the foregoing purposes, a RIC will include in the amount distributed
any amount taxed to the RIC as investment company taxable income or capital
gains for any taxable year ending in such calendar year. The Fund intends
to make sufficient distributions of its ordinary income and capital gains
net income prior to the end of each calendar year to avoid liability for
excise tax. However, the Fund may in certain circumstances be required to
liquidate portfolio investments in order to make sufficient distributions
to avoid excise tax liability.
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The Fund will invest all of its investable assets in the Trust. As a
partnership, the Trust will not be subject to federal income or excise
taxes under the Code. Instead, the Fund and other investors in the Trust
must take into account, in computing their federal tax liability, their
proportionate share of the Trust's income, gain, losses, deductions,
credits and tax preference items, without regard to whether they have
received any cash distributions from the Trust. In addition, the Fund will
be deemed to own a proportionate share of the Trust's assets and income for
the purpose of determining whether the Fund qualifies as a regulated
investment company. Accordingly, the Trust intends to conduct its
operations so that the Fund will be able to satisfy applicable tax
requirements.
If the Trust acquires stock in certain non-U.S. corporations ("passive
foreign investment companies" or "PFICs") that receive at least 75% of
their annual gross income from passive sources (such as interest,
dividends, rents, royalties or capital gains) or at least 50% of whose
average assets produce or are held for the production of such passive
income, the Fund indirectly through its interest in the Trust could be
subject to federal income tax and additional interest charges on "excess
distributions" received from such companies or gain from the sale of stock
in such companies, even if the Fund distributes its share of the PFIC
income as a taxable dividend to its shareholders. A certain election
(treating the PFIC as a "qualified electing fund") filed with the Fund's
federal income tax return may, if available, ameliorate these adverse tax
consequences, but any such election would require the Fund to recognize
ordinary taxable income and net capital gain of the PFIC without the
corresponding receipt of cash which may need to be distributed by the Fund
to satisfy the Distribution Requirement.
Pursuant to proposed regulations, open-end regulated investment
companies such as the Fund would be entitled to avoid the tax consequences
described in the preceding paragraph by electing to mark-to-market their
stock in certain PFICs. Marking to market in this context means
recognizing as gain for each taxable year the excess, as of the end of that
year, of the fair market value of each PFIC's stock over the owner's
adjusted basis in that stock (including mark-to-market gains of a prior
year for which an election was in effect). Making the election could
result in the recognition of gain without the corresponding receipt of cash
which may need to be distributed by the Fund to satisfy the Distribution
Requirement.
Distributions received by the Fund from the Trust generally will not
result in the Fund recognizing any gain or loss for federal income tax
purposes, except that (i) gain will be recognized to the extent that any
cash distributed exceeds the Fund's basis in its interest in the Trust
prior to the distribution; (ii) income or gain may be realized if the
distribution is made in liquidation of the Fund's entire interest in the
Trust and includes a disproportionate share of any unrealized receivables
held by the Trust; and (iii) loss may be recognized if the distribution is
made in liquidation of the Fund's entire interest in the Trust and consists
solely of cash and/or unrealized receivables. The Fund's basis in its
interest in the Trust generally will equal the amount of cash and the basis
of any property which the Fund invests in the Trust, increased by the
Fund's share of income from the Trust, and decreased by the amount of any
cash distributions and the basis of any property distributed from the
Trust.
Distributions of net long-term capital gains, if any, are taxable to
shareholders as long-term capital gains regardless of how long the
shareholder has held the Fund's shares and regardless of whether the
distribution is received in additional shares or in cash. Capital gains
distributions are not eligible for the dividends received deduction. It is
expected that the Treasury will issue regulations or other guidance to
permit shareholders to take into account their proportionate share of the
Fund's capital gains distributions that will be subject to a reduced tax
rate under the Taxpayer Relief Act of 1997. The Taxpayer Relief Act
reduces the maximum tax on long-term capital gains from 28% to 20%;
however, it also generally lengthens the holding period required to obtain
the lower rate from more than one year to more than 18 months. The lower
rates do not apply to collectibles and certain other assets. Additionally,
the maximum capital gain rate for assets that are held more than five years
and that are acquired after December 31, 2000 is 18%. Distributions of
earnings and profits of the Fund other than distributions of net long-term
capital gains are taxable to shareholders as ordinary income.
If capital gain distributions have been made with respect to shares of
the Fund that are sold at a loss after being held for six months or less,
then the loss is treated as a long-term capital loss to the extent of the
capital gain
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distributions. Any gain or loss recognized on a sale or redemption of
shares of the Fund by a shareholder who is not a dealer in securities
generally will be treated as a long-term capital gain or loss if the shares
have been held for more than twelve months and otherwise generally will be
treated as a short-term capital gain or loss.
The Fund will be required in certain cases to withhold and remit to
the U.S. Treasury 31% of distributions payable to any shareholder who (i)
has provided the Fund either an incorrect tax identification number or no
number at all, (ii) is subject to backup withholding by the Internal
Revenue Service for failure to properly report payments of interest or
dividends, or (iii) has failed to certify to the Fund that such shareholder
is not subject to backup withholding.
Rules of state and local taxation of dividend and capital gains
distributions from RICs often differ from the rules for federal income
taxation described above. Shareholders are urged to consult their tax
advisors as to the consequences of these and other state and local tax
rules affecting an investment in the Fund and also as to the application of
the rules set forth above to a shareholder's particular circumstances.
MANAGEMENT
Directors and Officers of the Fund
The Board of Directors of the Fund consists of five directors. The
directors and officers of the Fund, their ages and their principal
occupations during the last five years are set forth below. Unless
otherwise indicated, the business address of each is 100 East Pratt Street,
Baltimore, Maryland 21202.
Principal Occupation(s)
Name and Age Positions Held with the Fund During Past Five Years
The Fund's Articles of Incorporation require the Fund to indemnify its
directors and officers to the full extent permitted by Maryland law.
Nothing in the charter or bylaws of the Fund protects any director or
officer against any liability to the Fund or its shareholders to which he
or she would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his or her office.
The officers and directors of the Fund who are "interested persons" of
the Fund within the meaning of the 1940 Act do not receive compensation
directly from the Fund for serving in the capacities described above.
However, those officers and directors who are affiliated with the Manager
may receive remuneration indirectly from the Fund for services provided in
their respective capacities with the Manager. Each of the non-interested
directors is expected to receive for his service on the Board of Directors
an annual and "per meeting" fee, plus reimbursement for out-of-pocket
expenses incurred in connection with attendance at board meetings. The
following table sets forth the information concerning the compensation
anticipated to be paid by the Fund to directors in the current fiscal year.
Neither the Fund nor any investment company in the Fund Complex offers any
pension or retirement benefits to its directors or trustees.
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Aggregate Compensation Total Compensation from the
Name of Director from the Fund (1) Fund and Fund Complex (1)(2)
---------------- ----------------- ---------------------------
$ $
$ $
$ $
$ $
$ $
(1) The Fund commenced operations in [____], 1997. The amounts indicated
are estimates of the compensation expected to be paid to directors of
the Fund during the Fund's first fiscal year ending [_____].
(2) As of the date hereof, the "Fund Complex" consisted of the Fund, the
Trust (which also commenced operations in [_____], 1997) and LaSalle
U.S. Public Real Estate Securities Fund, L.P.
As of the date of this Statement of Additional Information, the
officers, directors and trustees of the Fund and the Trust, as a group,
owned of record and beneficially less than 1% of the outstanding shares of
the Fund.
Trustees and Officers of the Trust
The Board of Trustees of the Trust consists of [___] trustees. The
trustees and officers of the Trust, their ages and their principal
occupations during the last five years are set forth below. Unless
otherwise indicated, the business address of each is [__________].
Principal Occupation(s)
Name and Age Positions Held with the Trust During Past Five Years
Code of Ethics
The Board of Directors of the Fund and the Board of Trustees of the
Trust have adopted a Code of Ethics pursuant to Rule 17j-1 under the 1940
Act. The Code of Ethics applies to the personal investing activities of
all directors/trustees and officers of the Fund and the Trust, as well as
to designated officers, directors and employees of the Manager and the
Distributor. As described below, the Code of Ethics imposes significant
restrictions on the Manager's investment personnel, including the portfolio
managers and employees who execute or help execute a portfolio manager's
decisions or who obtain contemporaneous information regarding the purchase
or sale of a security by the Trust.
The Code of Ethics requires that covered employees of the Manager,
certain directors or officers of the Distributor, and all Fund directors
and Trust trustees who are "interested persons", preclear personal
securities investments (with certain exceptions, such as non-volitional
purchases or purchases that are part of an automatic dividend reinvestment
plan). The preclearance requirement and associated procedures are designed
to identify any substantive prohibition or limitation applicable to the
proposed investment. The substantive restrictions applicable to investment
personnel include a ban on acquiring any securities in an initial public
offering, a prohibition from profiting on short-term trading in securities
and special preclearance of the acquisition of securities in private
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placements. Furthermore, the Code of Ethics provides for trading "blackout
periods" that prohibit trading by investment personnel and certain other
employees within periods of trading by the Trust in the same security.
Officers, directors and employees of the Manager and the Distributor may
comply with codes instituted by those entities so long as they contain
similar requirements and restrictions.
INVESTMENT MANAGER
The Board of Trustees of the Trust has approved a Management Agreement
between the Fund and the Manager. Under the agreement, the Manager
monitors the operations of the Fund. The Manager receives no fee for
providing these monitoring services. In the event the Fund's Board of
Directors determines that it is in the best interests of the Fund's
shareholders to withdraw its investment in the Trust, the Manager would
become responsible for directly managing the assets of the Fund. In such
event, the Manager would be entitled to receive an investment management
fee, accrued daily and paid monthly, at the annual rate of [__]% of the
Fund's average net assets.
The Management Agreement will remain in effect for two years from the
date of its initial execution and from year to year thereafter, so long as
such continuance is specifically approved at least annually by the Board of
Directors of the Fund or by vote of a majority of the outstanding voting
securities of the Fund (as defined in the 1940 Act) and by the vote of a
majority of the directors who are not parties to the agreement or
"interested persons" of any such party (as defined in the 1940 Act), cast
in person at a meeting called for the purpose of voting on such approval.
The Management Agreement may be terminated by either the Fund or the
Manager on 60 days' written notice. It will terminate automatically in the
event of its assignment (as defined by the 1940 Act).
The Manager has voluntarily agreed to reimburse the Fund during the
first year of operations for its operating expenses (and its pro rata share
of operating expenses of the Trust), exclusive of taxes, interest,
brokerage commissions, distribution and shareholder services fees, and
extraordinary expenses which in the aggregate exceed [__]% of the Fund's
average net assets. Voluntary payments of Fund expenses by the Manager may
be made subject to reimbursement by the Fund, at the Manager's discretion,
within the two-year period following payment to the extent permissible
under applicable law and provided that the Fund is able to effect
reimbursement and remain in compliance with applicable expense limitations.
The Manager serves as the Trust's investment manager pursuant to an
Investment Management Agreement with the Trust. Under the agreement, the
Manager manages the Trust's investments subject to the supervision and
direction of the Board of Trustees of the Trust. The Manager is
responsible for providing a continuous investment program for the Trust,
including the provision of investment research and management with respect
to all securities and investments and cash equivalents purchased, sold or
held in the Trust and the selection of brokers-dealers through which
securities transactions for the Trust will be executed. In carrying out
its responsibilities, the Manager is required to act in conformance with
the Trust's Agreement and Declaration of Trust, the 1940 Act and the
Investment Advisers Act of 1940, as amended.
The Manager bears all expenses in connection with the performance of
services under its agreements with the Fund and the Trust. Each of the
Fund and the Trust bear certain other expenses incurred in its operation,
including: (i) the charges and expenses of any registrar, share transfer
or dividend disbursing agent, custodian or depository appointed for the
safekeeping of the Trust's cash, portfolio securities and other property;
(ii) the charges and expenses of auditors; (iii) brokerage commissions for
transactions in the portfolio securities of the Trust; (iv) all taxes,
including issuance and transfer taxes, and fees payable by the Fund/Trust
to federal, state or other governmental agencies; (v) the cost of share
certificates representing shares of the Fund/Trust, (vi) fees involved in
registering and maintaining registrations of the Fund/Trust and of the
Fund's shares with the SEC and various states and other jurisdictions;
(vii) all expenses of shareholders' and directors'/trustees' meetings and
of preparing, printing and mailing proxy statements, semi-annual and annual
reports, and other communications (including prospectuses) to existing
shareholders; (viii) compensation and travel expenses of directors/trustees
who are not "interested persons" within the meaning of the 1940 Act; (ix)
the expense of furnishing or causing to be furnished to each
B-12
<PAGE>
shareholder a statement of account, including the expense of mailing; (x)
charges and expenses of legal counsel in connection with matters relating
to the Fund/Trust; (xi) membership or association dues for the Investment
Company Institute or similar organizations; (xii) interest payable on
Fund/Trust borrowings; and (xiii) postage.
ADMINISTRATOR
PFPC Inc. (the "Administrator"), 103 Bellevue Parkway, Wilmington,
Delaware 19809, a Delaware corporation which is an indirect wholly-owned
subsidiary of PNC Financial Corp., serves as the administrator for both the
Fund and the Trust. Pursuant to Administration Agreements between the
Administrator and the Fund and the Trust, respectively, the Administrator
has agreed to provide certain fund accounting and administrative services
to the Fund and the Trust, including among other services, accounting
relating to the Fund and the Trust and the investment transactions of the
foregoing; computing daily net asset values; monitoring the investments and
income of the Fund and the Trust for compliance with applicable tax laws;
preparing for execution and filing federal and state tax returns, and semi-
annual and annual shareholder reports; preparing monthly financial
statements including a schedule of investments; assisting in the
preparation of registration statements and other filings related to the
registration of shares; coordinating contractual relationships and
communications between the Manager and the Fund's and the Trust's
custodian; preparing and maintaining the Fund's and the Trust's books of
account, records of securities transactions, and all other books and
records in accordance with applicable laws, rules and regulations
(including, but not limited to, those records required to be kept pursuant
to the 1940 Act); and performing such other duties related to the
administration of the Company and the Trust as may be agreed upon in
writing by the parties to the respective agreements.
Compensation for the services and facilities provided by the
Administration Agreements includes payment of the Administrator's out-of-
pocket expenses. The Administrator's reimbursable out-of-pocket expenses
include, but are not limited to, postage and mailing, telephone, telex,
Federal Express, independent pricing service charges and record
retention/storage.
Because the Fund commenced operations in [_______] and the Trust
commenced operations in [______], neither the Fund nor the Trust have paid
any fees to the Administrator as of [______]. The Administration
Agreements will continue in effect until terminated by either party on 60
days' prior written notice to the other party.
DISTRIBUTION ARRANGEMENTS
Distributor
Funds Distributor, Inc. (the "Distributor"), located at 60 State
Street, Suite 1300, Boston, Massachusetts 02109, serves as the principal
underwriter and distributor for the Fund's shares pursuant to a
Distribution Agreement with the Fund. The Distribution Agreement was
initially approved by the Board of Directors of the Fund. The Distributor
is a registered broker-dealer and a member of the National Association of
Securities Dealers, Inc. The Distributor is an indirect wholly-owned
subsidiary of Boston Institutional Group, Inc., a holding company all of
whose outstanding shares are owned by key employees.
The Distributor offers shares of the Fund continuously and has agreed
to use its best efforts to solicit purchase orders for shares. Retail
Class shares are sold by securities dealers and other financial services
firms which have executed sales agreements with the Distributor. The
Distributor is not obligated to sell any specific amount of shares of the
Fund. The Distributor bears all expenses of providing services pursuant to
the Distribution Agreement. The Fund bears the expenses of registering its
shares with the SEC and with applicable state regulatory authorities.
B-13
<PAGE>
The Distribution Agreement will remain in effect for two years from
the date of its initial execution and from year to year thereafter, so long
as such continuance is specifically approved at least annually by the Board
of Directors of the Fund or by vote of a majority of the outstanding voting
securities of the Fund (as defined in the 1940 Act), and by the vote of a
majority of the directors who are not parties to the agreement or
"interested persons" of any such party (as defined in the 1940 Act), cast
in person at a meeting called for the purpose of voting on such approval.
The Distribution Agreement may be terminated by either the Fund or the
Distributor on 60 days' written notice. It will terminate automatically in
the event of its assignment (as defined by the 1940 Act).
Distribution Plan
The Fund has adopted a Distribution Plan for the Retail Class (the
"Plan") pursuant to Rule 12b-1 under the 1940 Act. The Plan provides for
the payment of a distribution fee from the assets of the Retail Class for
activities primarily intended to result in the sale of Retail Class shares,
including advertising, compensation to dealers and the preparation of sales
literature. Distribution fees paid under the Plan may not exceed [__]%
annually of the average net assets of the Retail Class, or such lesser
amount as may be specified by the Fund's Board of Directors. The Board of
Directors has authorized payment of an annual distribution fee of [__]% to
the Distributor and participating dealers who assist in the distribution of
Retail Class shares. The Distributor may use the fees paid under the Plan
and its other resources to pay expenses associated with activities
primarily intended to result in the sale of Retail Class shares. Under the
terms of the Plan, the Board of Directors of the Fund receives a quarterly
written report of the amounts expended pursuant to the Plan and the
purposes for which such expenditures were made.
The Plan has been approved by the Board of Directors, including the
majority of the directors who are not "interested persons" of the Fund (as
defined in the 1940 Act) and who do not have any direct or indirect
financial interest in the operation of the Plan. In approving the Plan,
the directors identified and considered a number of potential benefits
which the Plan may provide and determined that there is a reasonable
likelihood that the Plan will benefit the Retail Class and its
shareholders.
The Plan is a compensation plan because the Distributor is paid a
fixed fee and is given discretion concerning what expenses are payable
under the Plan. The Distributor may spend more for marketing and
distribution than it receives in fees from the Retail Class. However, to
the extent fees received exceed expenses, including indirect expenses such
as overhead, the Distributor could be said to have received a profit. For
example, if the Distributor pays $1 for distribution related expenses and
receives $2 under the Plan, the $1 difference could be said to be a profit
for the Distributor. If after payments by the Distributor for marketing
and distribution there are any remaining fees which have been paid under
the Plan, they may be used as the Distributor may elect. Since the amounts
payable under the Plan will be commingled with the Distributor's general
funds, including the revenues it receives in the conduct of its business,
it is possible that certain of the Distributor's overhead expenses will be
paid out of distribution fees and that these expenses may include the costs
of leases, depreciation, communications, salaries, training and supplies.
The Plan will remain in effect from year to year only so long as such
continuance is specifically approved at least annually by a vote of the
Board of Directors of the Fund, and of the directors who are not
"interested persons" of the Fund (as defined in the 1940 Act) and have no
direct or indirect financial interest in the operation of the Plan or in
any agreements related to the Plan, cast in person at a meeting called for
the purpose of voting on the Plan or such agreements. The Plan may be
terminated at any time by vote of a majority of the directors who are not
"interested persons" of the Fund (as defined in the 1940 Act) and have no
direct or indirect financial interest in the operation of the Plan or in
any agreements related to the Plan, or by vote of a majority of the
outstanding voting securities of the Fund.
The Fund commenced operations in [_____] and, as of the date of this
Statement of Additional Information, no fees have been paid under the Plan.
B-14
<PAGE>
Shareholder Services Plan
The Fund has adopted a Shareholder Services Plan for the Retail Class
to compensate qualified recipients for individual shareholder services and
account maintenance. These functions include, but are not limited to,
answering shareholder questions and handling correspondence, assisting
customers, and account record keeping and maintenance. For these services,
the Fund may pay a qualified recipient a shareholder services fee at an
annual rate not exceeding [__]% of average net assets of the Retail Class
attributable to its shareholder accounts, or such lesser amount as may be
specified by the Fund's Board of Directors. The Board of Directors has
authorized payment of an annual shareholder services fee of [__]%.
PERFORMANCE INFORMATION
The Fund may compare its performance to other funds or to relevant
indices, such as the Wilshire Real Estate Index, the NAREIT Equity Index,
the S&P 500, the Russell 2000, the S&P Utilities Index and the Lehman
Brothers Fixed Income Index.
For purposes of quoting and comparing the performance of the Fund to
that of other open-end diversified management investment companies and to
stock or other relevant indices or averages in advertisements or in certain
reports to shareholders, performance will generally be stated both in terms
of total return and in terms of yield. However, the Fund may also from
time to time state the performance of the Fund solely in terms of total
return.
Total Return Calculations
The total return quotations, under the rules of the SEC, must be
calculated according to the following formula:
P(1 + T)(n) = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years (1, 5 or 10)
ERV = ending redeemable value of the hypothetical
$1,000 payment made at the beginning of the
designated period (or fractional portion
thereof)
Under the foregoing formula, the time periods used in advertising will
be based on rolling calendar quarters, updated to the last day of the most
recent quarter prior to submission of the advertising for publication, and
will cover one-, five-, and ten-year periods or a shorter period dating
from the effectiveness of the Fund's registration statement (or the later
commencement of operations of the series or class). In calculating the
ending redeemable value for the Fund's shares, all dividends and
distributions by the Fund are assumed to have been reinvested at net asset
value as described in the Prospectus on the reinvestment dates during the
period. "T" in the formula above is calculated by finding the average
annual compounded rate of return over the period that would equate an
assumed initial payment of $1,000 to the ending redeemable value. Any
sales loads that might in the future be made applicable at the time to
investments or reinvestments would be included as would any recurring
account charges that might be imposed by the Fund.
The Fund may also from time to time include in such advertising total
return figures that are not calculated according to the formulate set forth
above to compare more accurately the Fund's performance with other measures
of investment return. For example, in comparing the Fund's total return
with data published by Lipper Analytical
B-15
<PAGE>
Services, Inc., CDA/Weisenberger or Morningstar Inc., the Fund calculates
its aggregate and average annual total return for the specified periods of
time by assuming the investment of $10,000 in shares and assuming the
reinvestment of each dividend or other distribution at net asset value on
the reinvestment date.
Alternative total return information will be given no greater
prominence in such advertising than the information prescribed under SEC
rules, and all advertisements containing performance data will include a
legend disclosing that such performance data represent past performance and
that the 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.
Yield Calculations
The yield of a class of Fund shares is computed by dividing the
class's net investment income per share during a base period of 30 days, or
one month, by the maximum offering price per share of the class on the last
day of such base period in accordance with the following formula:
YIELD = 2 [ (a - b + 1)/6/ - 1 ]
-----
cd
Where: a = net investment income earned during the period
attributable to the subject class
b = net expenses accrued for the period attributable
to the subject class
c = the average daily number of shares of the
subject class outstanding during the period that
were entitled to receive dividends
d = the maximum offering price per share of the
subject class
Net investment income will be determined in accordance with rules
established by the SEC.
DESCRIPTION OF CAPITAL STOCK
The Fund is authorized to issue [_________] Retail Class shares and
[_______] Institutional Class shares of Common Stock, par value $.01 per
share. The Board of Directors may increase or decrease the number of
authorized shares without shareholder approval.
The Fund's Articles of Incorporation provide for the establishment of
separate series and separate classes of shares by the Board of Directors at
any time. The Board has designated two classes of shares: Retail Class
shares and Institutional Class shares. In the event separate series are
established, each series would be managed separately and shareholders of
each series would have an undivided interest in the net assets of that
series. For tax purposes, the series would be treated as separate
entities. Generally, each class of shares issued by a particular series
would be identical to every other class and expenses of the Fund (other
than any applicable distribution or shareholder services fees) would be
prorated between all classes of a series based upon the relative net assets
of that class.
All shares of the Fund, regardless of series or class, have equal
rights with respect to voting, except that the holders of a particular
series or class of shares are not entitled to vote on any matter which does
not affect any interest of that class or series. All classes and series
vote together as a single class, except as otherwise required by applicable
law. Shareholders of the Fund do not have cumulative voting rights, and
therefore the holders of more than 50% of the outstanding shares voting
together for election of directors may elect all the members of the Board
of Directors of the Fund. In such event, the remaining holders cannot
elect any members of the Board of Directors.
B-16
<PAGE>
There are no preemptive, conversion or exchange rights applicable to
any shares of the Fund. The outstanding shares are fully paid and non-
assessable. In the event of liquidation or dissolution of the Fund, each
share is entitled to its portion of the Fund's assets (or the assets
allocated to a separate series of shares if there is more than one series)
after all debts and expenses have been paid.
B-17
<PAGE>
FINANCIAL STATEMENTS
[To be filed by amendment.]
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial statements:
Included in Parts A and B:
Statement of Net Assets of the Registrant at [_______ __],
1997.
Notes to Statement of Net Assets.
Report of Independent Accountants.
Statement of Net Assets of LaSalle Master Trust at [_______
__], 1997.
Notes to Statement of Net Assets.
Report of Independent Accountants.
Included in Pact C:
Consent of Independent Accounts.
All other financial statements, schedules and historical financial
information are omitted because the conditions requiring their filing do not
exist.
(b) Exhibits:
(1) Articles of Incorporation of the Registrant.
(2) By-Laws of the Registrant.
(3) Not applicable.
(4) Not applicable.
(5) Management Agreement between the Registrant and
ABKB/LaSalle Securities Limited.*
(6) Distribution Agreement between the Registrant and Funds
Distributor, Inc.*
(7) Not applicable.
(8) Custodian Services Agreement between the Registrant and
PNC Bank, National Association.*
(9) (a) Administration and Accounting Services Agreement between
the Registrant and PFPC Inc.*
(b) Transfer Agency Services Agreement between the Registrant
and PFPC Inc.*
(10) Opinion and Consent of Piper & Marbury L.L.P.*
<PAGE>
(11) Consent of Independent Accountants.*
(12) Not applicable.
(13) Subscription and Investment Agreement.*
(14) Not applicable.
(15) (a) Distribution Plan.*
(b) Shareholder Services Plan.*
(16) Not applicable.
(17) Not applicable.
(18) Multiple Class Plan.*
* To be filed by amendment.
Item 25. Persons Controlled by or Under Common Control with Registrant
The Registrant invests all of its investable assets in LaSalle Master
Trust (the "Trust"), a separate investment company registered under the
Investment Company Act of 1940 and may be deemed to control the Trust. The
Registrant is not under common control with any person.
Item 26. Number of Holders of Securities
Title of Class Number of Record Holders*
-------------- ------------------------
Retail Class of Common Stock 0
Institutional Class of Common Stock 0
* As of September 23, 1997.
Item 27. Indemnification
Reference is made to Article Eighth, Section 5 of the Articles of
Incorporation and Article VII of the By-Laws of the Registrant filed as Exhibits
1 and 2, respectively.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
C-2
<PAGE>
Item 28. Business and Other Connections of Investment Adviser
A description of the directors and officers of the Registrant's investment
adviser and other required information is incorporated herein by reference to
the Form ADV and schedules thereto of ABKB/LaSalle Securities Limited, as
amended, filed (File No. 801-48201) with the Securities and Exchange Commission
under the Investment Advisers Act of 1940.
Item 29. Principal Underwriters
(a) Funds Distributor, Inc. services as principal underwriter and
distributor for shares of the Registrant. Funds Distributor, Inc. also acts as
distributor for:
BJB Investment Funds
Burridge Funds
The Brinson Funds
Fremont Mutual Funds, Inc.
Harris Insight Funds Trust
HT Insight Funds, Inc., d/b/a Harris Insight Funds
The JPM Advisor Funds
The JPM Institutional Funds
The JPM Pierpont Funds
The JPM Series Trust
The JPM Series Trust II
LKCM Fund
Monetta Fund, Inc.
Monetta Trust
The Montgomery Funds
The Montgomery Funds II
The Munder Framlington Funds Trust
The Munder Funds Trust
The Munder Funds, Inc.
Orbitex Group of Funds
The PanAgora Institutional Funds
RCM Capital Funds, Inc.
RCM Equity Funds, Inc.
St. Clair Funds, Inc.
The Skyline Funds
Waterhouse Investors Cash Management Fund, Inc.
WEBS Index Fund, Inc.
(b) The executive officers and directors of Funds Distributor, Inc.
are as follows:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with the Registrant
- --------------------------- ---------------------------- ---------------------
<S> <C> <C>
Marie E. Connolly Director, President and None
Chief Executive Officer
Richard W. Ingram Executive Vice President None
Donald R. Roberson Executive Vice President None
John E. Pelletier Senior Vice President, None
General Counsel, Secretary
and Clerk
</TABLE>
C-3
<PAGE>
Michael S. Petrucelli Senior Vice President None
Joseph F. Tower, III Director, Senior Vice None
President, Treasurer and
Chief Financial Officer
Paula R. David Senior Vice President None
Bernard A. Whalen Senior Vice President None
William J. Nutt Director None
* 60 State Street, Suite 1300, Boston, Massachusetts 02109.
(c) Not applicable.
Item 30. Location of Accounts and Records
The Registrant maintains the records required by Section 31(a) of
the Investment Company Act of 1940, as amended, and Rules 31a-1, 31a-2 and 31a-3
thereunder at its principal office located at 100 East Pratt Street, Baltimore,
Maryland 21202. Certain records, including records relating to the Registrant's
shareholders, may be maintained pursuant to Rule 31a-3 at the offices of the
Registrant's transfer agent, PFPC Inc., located at 103 Bellevue Parkway,
Wilmington, Delaware 19809. Certain records relating to the physical possession
of the Registrant's securities may be maintained at the offices of the
Registrant's custodian, PNC Bank, National Association, located at 200 Stevens
Drive, Lester, Pennsylvania 19113.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) Not applicable.
(b) The Registrant undertakes to file a post-effective amendment,
including financial statements which need not be audited, within
four to six months from the effective date of this Registration
Statement.
(c) The Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of its latest annual report to
shareholders upon request and without charge if the Registrant
includes the information called for by Item 5A of Form N-1A in such
annual report.
C-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, hereunto duly
authorized, in the City of Baltimore, and State of Maryland, on the 22nd day of
September, 1997.
LA SALLE REAL ESTATE SECURITIES FUND, INC.
By: /s/ William K. Morrill, Jr.
---------------------------------
William K. Morrill, Jr.
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ William K. Morrill, Jr. President (principal executive officer) September 22, 1997
- --------------------------- and Director
William K. Morrill, Jr.
/s/ William E. Sullivan Treasurer (principal financial and September 22, 1997
- --------------------------- accounting officer)
William E. Sullivan
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, LaSalle Master
Trust has duly caused this Registration Statement to be signed on its behalf by
the undersigned, hereunto duly authorized, in the City of Baltimore, and State
of Maryland, on the 22nd day of September, 1997.
LA SALLE MASTER TRUST
By: /s/ William K. Morrill, Jr.
-------------------------------
William K. Morrill, Jr.
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities with LaSalle Master Trust and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ William K. Morrill, Jr.
- --------------------------- President (principal executive officer) September 22, 1997
William K. Morrill, Jr. and Trustee
/s/ William E. Sullivan
- --------------------------- Treasurer (principal financial and September 22, 1997
William E. Sullivan accounting officer)
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit No. Description Numbered Page
- ----------- ----------- -------------
<S> <C> <C>
(1) Articles of Incorporation
(2) By-Laws
(5) Management Agreement*
(6) Distribution Agreement*
(8) Custodian Services Agreement*
(9) (a) Administration and Accounting Services Agreement*
(b) Transfer Agency Services Agreement*
(10) Opinion and Consent of Piper & Marbury L.L.P.*
(11) Consent of Independent Accountants*
(13) Subscription and Investment Agreement*
(15) (a) Distribution Plan*
(b) Shareholder Services Plan*
(18) Multiple Class Plan*
</TABLE>
* To be filed by amendment.
<PAGE>
Exhibit 1
LA SALLE REAL ESTATE SECURITIES FUND, INC.
ARTICLES OF INCORPORATION
FIRST: The undersigned, Stephen J. Bolin, whose address is 36 South Charles
Street, Baltimore, Maryland 21201, being at least eighteen years of age, acting
as incorporator, does hereby form a corporation under the General Laws of the
State of Maryland.
SECOND: The name of the corporation (which is hereinafter called the
"Corporation") is:
LA SALLE REAL ESTATE SECURITIES FUND, INC.
THIRD: (a) The purposes for which the Corporation is formed and the business
and objects to be carried on and promoted by it are:
(1) To engage primarily in the business of investing,
reinvesting or trading in securities as an investment company classified
under the Investment Company Act of 1940, as amended (together with the
rules and regulations promulgated thereunder, the "1940 Act") as an open-
end, management company.
(2) To engage in any one or more businesses or transactions, or
to acquire all or any portion of any entity engaged in any one or more
businesses or transactions which the Board of Directors may from time to
time authorize or approve, whether or not related to the business described
elsewhere in this Article or to any other business at the time or
theretofore engaged in by the Corporation.
(b) The foregoing enumerated purposes and objects shall be in
no way limited or restricted by reference to, or inference from, the terms of
any other clause of this or any other Article of the Charter of the Corporation,
and each shall be regarded as independent; and they are intended to be and shall
be construed as powers as well as purposes and objects of the Corporation and
shall be in addition to and not in limitation of the general powers of
corporations under the General Laws of the State of Maryland.
FOURTH: The present address of the principal office of the Corporation in
this State is c/o The Corporation Trust Incorporated, 32 South Street,
Baltimore, Maryland 21202.
FIFTH: The name and address of the resident agent of the Corporation in
this State are The Corporation Trust Incorporated, 32 South Street, Baltimore,
Maryland 21202. Said resident agent is a Maryland corporation.
SIXTH: (a) The total number of shares of stock which the Corporation has
authority to issue is 100,000,000 shares of capital stock (par value $.01 per
share), amounting in aggregate
<PAGE>
par value to $1,000,000. All of such shares are initially classified as a single
series of "Common Stock", which shall initially have two classes of shares,
designated Institutional Class and Retail Class, consisting, until further
changed, of 50,000,000 Institutional Class shares and 50,000,000 Retail Class
shares. The Board of Directors may classify and reclassify any unissued shares
of capital stock by setting or changing in any one or more respects the
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications, or terms or conditions of
redemption of such shares of stock.
(b) Unless otherwise prohibited by law, so long as the Corporation is
registered as an open-end company under the Investment Company Act of 1940, the
Board of Directors shall have the power and authority, without the approval of
the holders of any outstanding shares, to increase or decrease the number of
shares of capital stock, or the number of shares of capital stock of any class
or series, that the Corporation has authority to issue.
(c) The following is a description of the preferences, conversion and
other rights, voting powers, restrictions, limitations as to dividends,
qualifications, and terms and conditions of redemption of the Common Stock of
any series and of the Institutional Class and Retail Class shares of any series
Common Stock of the Corporation (unless otherwise provided in the articles
supplementary or other charter document classifying or reclassifying such
shares):
(1) All consideration received by the Corporation from the issue
or sale of shares of a particular series of Common Stock, together with all
assets in which such consideration is invested or reinvested, all income,
earnings, profits and proceeds thereof, including any proceeds derived from
the sale, exchange or liquidation of such assets, and any funds or payments
derived from any investment or reinvestment of such proceeds in whatever
form the same may be, shall irrevocably belong to that series for all
purposes and shall be so recorded upon the books of account of the
Corporation. Such consideration, assets, income, earnings, profits and
proceeds, together with any items allocated as provided in the following
sentence, are hereinafter referred to collectively as the "assets belonging
to" that series. In the event that there are any assets, income, earnings,
profits or proceeds which are not identifiable as belonging to a particular
series of Common Stock, such items shall be allocated by or under the
supervision of the Board of Directors to and among one or more of the
series of Common Stock from time to time classified or reclassified, in
such manner and on such basis as the Board of Directors, in its sole
discretion, deems fair and equitable. Each such allocation shall be
conclusive and binding for all purposes. No holder of a particular series
of Common Stock shall have any right or claim against the assets belonging
to any other series, except as a holder of the shares of such other series.
(2) The assets belonging to each series of Common Stock shall be
charged with the liabilities of the Corporation in respect of that series
and all expenses, costs, charges and reserves attributable to that series.
Any liabilities, expenses, costs, charges or reserves of the Corporation
which are attributable to more than one series of Common
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<PAGE>
Stock, or are not identifiable as pertaining to any series, shall be
allocated and charged by or under the supervision of the Board of Directors
to and among one or more of the series of Common Stock from time to time
classified or reclassified, in such manner and on such basis as the Board
of Directors, in its sole discretion, deems fair and equitable. Each such
allocation shall be conclusive and binding for all purposes. The
liabilities, expenses, costs, charges and reserves charged to a series of
Common Stock are hereinafter referred to collectively as the "liabilities
of" that series. All persons who have extended credit with respect to, or
who have a claim or contract in respect of, a particular series of Common
Stock shall look only to the assets belonging to that series for payment or
satisfaction of such credit, claim or contract.
(3) The net asset value per share of a particular series of
Common Stock shall be the quotient obtained by dividing the value of the
net assets of that series (being the value of the assets belonging to that
series less the liabilities of that series) by the total number of shares
of that series outstanding, all as determined by or under the direction of
the Board of Directors in accordance with generally accepted accounting
principles and the 1940 Act. Subject to the applicable provisions of the
1940 Act, the Board of Directors, in its sole discretion, may prescribe and
shall set forth in the By-Laws of the Corporation, or in a duly adopted
resolution of the Board of Directors, such bases and times for determining
the net asset value per share of each series of Common Stock, and the net
income attributable to such series, as the Board of Directors deems
necessary or desirable. The Board of Directors shall have full discretion,
to the extent not inconsistent with the Maryland General Corporation Law
and the 1940 Act, to determine whether any moneys or other assets received
by the Corporation shall be treated as income or capital and whether any
item of expense shall be charged to income or capital, and each such
determination shall be conclusive and binding for all purposes.
(4) Subject to the provisions of law and any preferences of any
class or series of stock from time to time classified or reclassified,
dividends, including dividends payable in shares of another class or series
of the Corporation's capital stock, may be paid on a particular class or
series of Common Stock of the Corporation at such time and in such amounts
as the Board of Directors may deem advisable. Dividends and other
distributions on the shares of a particular series of Common Stock shall be
paid only out of the assets belonging to that series after providing for
the liabilities of that series.
(5) Each share of Common Stock shall have one vote, irrespective
of the class or series thereof, and the exclusive voting power for all
purposes shall be vested in the holders of the Common Stock. All classes
and series of Common Stock shall vote together as a single class; provided,
however, that as to any matter with respect to which a separate vote of a
particular class or series is required by the 1940 Act or the Maryland
General Corporation Law, such requirement shall apply and, in that event,
the other classes and series entitled to vote on the matter shall vote
together as a single class; and provided, further, that the holders of a
particular class or series of Common Stock shall
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<PAGE>
not be entitled to vote on any matter which does not affect any interest of
that class or series, including liquidation of another class or series,
except as otherwise required by the 1940 Act or the Maryland General
Corporation Law.
(6) Each holder of Common Stock shall have the right to require
the Corporation to redeem all or any part of his shares of any class or
series at a redemption price equal to the net asset value per share of that
class or series which is next computed after receipt of a tender of such
shares for redemption, less such redemption fee or deferred sales charge,
if any, as the Board of Directors may from time to time establish in
accordance with the 1940 Act and the Conduct Rules adopted by the National
Association of Securities Dealers, Inc. Payment of the redemption price
shall be made by the Corporation only from the assets belonging to the
series whose shares are being redeemed. The redemption price shall be paid
in cash; provided, however, that if the Board of Directors determines,
which determination shall be conclusive, that conditions exist which make
payment wholly in cash unwise or undesirable, the Corporation may, to the
extent and in the manner permitted by law, make payment wholly or partly in
securities or other assets, at the value of such securities or other assets
used in such determination of current net asset value. Notwithstanding the
foregoing, the Corporation may suspend the right of holders of any series
of Common Stock to require the Corporation to redeem their shares during
any period or at any time when and to the extent permitted under the 1940
Act.
(7) To the extent and in the manner permitted by the 1940 Act
and the Maryland General Corporation Law, the Board of Directors may cause
the Corporation to redeem, at their current net asset value, the shares of
any series of Common Stock held in the account of any stockholder having,
because of redemptions or exchanges, an aggregate net asset value specified
by the Board of Directors from time to time in its sole discretion which is
less than the minimum initial investment specified by the Board of
Directors from time to time in its sole discretion.
(8) In the event of any liquidation, dissolution or winding up
of the Corporation, whether voluntary or involuntary, or of the liquidation
of a particular series of Common Stock, the holders of each series that is
being liquidated shall be entitled, after payment or provision for payment
of the liabilities of that series and the amount to which the holders of
any class of that series shall be entitled, as a class, to share ratably in
the remaining assets belonging to the series. The holders of shares of any
particular series shall not be entitled thereby to any distribution upon
the liquidation of any other series. The liquidation of any series of
Common Stock of which there are shares then outstanding shall be approved
by the vote of a majority (as defined in the 1940 Act) of the outstanding
shares of that series, and without the vote of the holders of shares of any
other series of Common Stock.
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<PAGE>
(9) Subject to compliance with the 1940 Act, the Board of
Directors shall have authority to provide that holders of the Common Stock
of any series and class shall have the right to exchange their shares for
shares of one or more other series and classes in accordance with such
requirements and procedures as may be established by the Board of
Directors.
(10) Except to the extent provided otherwise by the Charter of
the Corporation, the Institutional Class and Retail Class shares of each
series of Common Stock shall represent an equal proportionate interest in
the assets belonging to that series (subject to the liabilities of that
series) and each share of a particular series shall have identical voting,
dividend, liquidation and other rights; provided, however, that
notwithstanding anything in the Charter of the Corporation to the contrary:
(i) The Institutional Class and Retail Class shares may be
issued and sold subject to different sales loads or charges, whether
initial, deferred or contingent, or any combination thereof, as may
from time to time be established in accordance with the 1940 Act and
the Conduct Rules adopted by the National Association of Securities
Dealers, Inc.
(ii) Expenses, costs and charges which are determined by or
under the supervision of the Board of Directors to be attributable to
the Institutional Class or the Retail Class, as the case may be, may
be charged to that class and appropriately reflected in the net asset
value of, or dividends payable on, the shares of that class.
(iii) The Institutional Class and Retail Class shares of a
particular series may have such different exchange rights as the Board
of Directors shall provide in compliance with the 1940 Act.
(d) The Corporation may issue and sell fractions of shares of capital
stock having pro rata all the rights of full shares, including, without
limitation, the right to vote and to receive dividends, and wherever the words
"share" or "shares" are used in the Charter or By-Laws of the Corporation, they
shall be deemed to include fractions of shares where the context does not
clearly indicate that only full shares are intended.
(e) The Corporation shall not be obligated to issue certificates
representing shares of capital stock. At the time of issue or transfer of
shares without certificates, the Corporation shall provide the stockholder with
such information as may be required under the Maryland General Corporation Law
and the Maryland Uniform Commercial Code - Investment Securities.
SEVENTH: The number of directors of the Corporation shall be five, which
number may be increased or decreased pursuant to the By-Laws of the Corporation,
but shall never be less
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<PAGE>
than the minimum number permitted by the General Laws of the State of Maryland
now or hereafter in force. The names of the directors who will serve until the
first annual meeting and until their successors are elected and qualify are as
follows:
William K. Morrill, Jr.
EIGHTH: (a) The following provisions are hereby adopted for the purpose
of defining, limiting and regulating the powers of the Corporation and of the
directors and stockholders:
(1) The Board of Directors is hereby empowered to authorize the
issuance from time to time of shares of its capital stock, whether now or
hereafter authorized, or securities convertible into shares of its capital
stock, whether now or hereafter authorized, for such consideration as may
be deemed advisable by the Board of Directors and without any action by the
stockholders.
(2) No holder of any capital stock or any other securities of
the Corporation, whether now or hereafter authorized, shall have any
preemptive right to subscribe for or purchase any capital stock or any
other securities of the Corporation other than such, if any, as the Board
of Directors, in its sole discretion, may determine and at such price or
prices and upon such other terms as the Board of Directors, in its sole
discretion, may fix; and any capital stock or other securities which the
Board of Directors may determine to offer for subscription may, as the
Board of Directors in its sole discretion shall determine, be offered to
the holders of any capital stock or other securities at the time
outstanding to the exclusion of the holders of any or all other capital
stock or other securities at the time outstanding.
(3) The Board of Directors of the Corporation shall, consistent
with applicable law (including, without limitation, the 1940 Act), have
power in its sole discretion to determine from time to time in accordance
with sound accounting practice or other reasonable valuation methods what
constitutes annual or other net profits, earnings, surplus or net assets in
excess of capital, net asset value or net asset value per share; to
determine that retained earnings or surplus shall remain in the hands of
the Corporation; to set apart out of any funds of the Corporation such
reserve or reserves in such amount or amounts and for such proper purpose
or purposes as it shall determine and to abolish any such reserve or any
part thereof; to distribute and pay distributions or dividends in stock,
cash or other securities or property, out of surplus or any other funds or
amounts legally available therefor, at such times and to the stockholders
of record on such dates as it may, from time to time, determine; and to
determine whether and to what extent and at what times and places and under
what conditions and regulations the books, accounts and documents of the
Corporation, or any of them, shall be open to the inspection of
stockholders, except as otherwise provided by statute or the By-Laws of the
Corporation, and, except as so provided, no stockholder shall have any
right to inspect
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<PAGE>
any book, account or document of the Corporation unless authorized to do so
by resolution of the Board of Directors.
(4) Notwithstanding any provision of law requiring the
authorization of any action by a greater proportion than a majority of the
total number of shares of capital stock, such action shall be valid and
effective if authorized by the affirmative vote of the holders of a
majority of the total number of shares outstanding and entitled to vote
thereon, except as otherwise provided in the Charter of the Corporation.
(5) The Corporation shall indemnify (i) its directors and
officers, whether serving the Corporation or at its request any other
entity, to the full extent required or permitted by the General Laws of the
State of Maryland now or hereafter in force (as limited by the 1940 Act),
including the advance of expenses under the procedures and to the full
extent permitted by law, and (ii) other employees and agents to such extent
as shall be authorized by the Board of Directors or the Corporation's By-
Laws and be permitted by law. The foregoing rights of indemnification
shall not be exclusive of any other rights to which those seeking
indemnification may be entitled. The Board of Directors may take such
action as is necessary to carry out these indemnification provisions and is
expressly empowered to adopt, approve and amend from time to time such
bylaws, resolutions or contracts implementing such provisions or such
further indemnification arrangements as may be permitted by law. No
amendment of the Charter of the Corporation or repeal of any of its
provisions shall limit or eliminate the right to indemnification provided
hereunder with respect to acts or omissions occurring prior to such
amendment or repeal.
(6) To the fullest extent permitted by Maryland statutory or
decisional law, as amended or interpreted (as limited by the 1940 Act now
or hereafter in force), no director or officer of the Corporation shall be
personally liable to the Corporation or its stockholders for money damages.
No amendment of the Charter of the Corporation or repeal of any of its
provisions shall limit or eliminate the limitation on liability provided to
directors and officers hereunder with respect to any act or omission
occurring prior to such amendment or repeal.
(7) The Corporation reserves the right from time to time to make
any amendments of its Charter which may now or hereafter be authorized by
law, including any amendments changing the terms or contract rights, as
expressly set forth in its Charter, of any of its outstanding capital
stock.
(8) For any stockholder proposal to be presented in connection
with an annual meeting of stockholders of the Corporation, including any
proposal relating to the nomination of a director to be elected to the
Board of Directors of the Corporation, the stockholders must have given
timely written notice thereof in writing to the Secretary of the
Corporation in the manner and containing the information required by the
By-Laws
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<PAGE>
of the Corporation. Stockholder proposals to be presented in connection
with a special meeting of stockholders will be presented by the Corporation
only to the extent required by Section 2-502 of the Maryland General
Corporation Law and the By-Laws of the Corporation.
(b) The enumeration and definition of particular powers of the Board
of Directors included in the foregoing shall in no way be limited or restricted
by reference to or inference from the terms of any other clause of this or any
other Article of the Charter of the Corporation, or construed as or deemed by
inference or otherwise in any manner to exclude or limit any powers conferred
upon the Board of Directors under the General Laws of the State of Maryland now
or hereafter in force.
NINTH: The duration of the Corporation shall be perpetual.
IN WITNESS WHEREOF, I have signed these Articles of Incorporation,
acknowledging the same to be my act, on this 19th day of September, 1997.
Witness:
/s/ Jason C. Harmon /s/ Stephen J. Bolin
- --------------------------- ---------------------------
Stephen J. Bolin
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<PAGE>
Exhibit 2
LA SALLE REAL ESTATE SECURITIES FUND, INC.
BY-LAWS
ARTICLE I.
STOCKHOLDERS
SECTION 1.01. Annual Meeting. The Corporation is not required to hold an
---------------
annual meeting of its stockholders in any year in which the election of
directors is not required to be acted upon under the Investment Company Act of
1940, as amended (the "1940 Act"). If the Corporation is required by the 1940
Act to hold a meeting of stockholders to elect directors, such meeting shall be
held at a date and time set by the Board of Directors in accordance with the
1940 Act and no later than 120 days after the occurrence of the event requiring
the meeting. Any stockholders' meeting held in accordance with the preceding
sentence shall for all purposes constitute the annual meeting of stockholders
for the fiscal year of the Corporation in which the meeting is held. Except as
the Charter or statute provides otherwise, any business may be considered at an
annual meeting without the purpose of the meeting having been specified in the
notice. Failure to hold an annual meeting does not invalidate the Corporation's
existence or affect any otherwise valid corporate acts.
SECTION 1.02. Special Meeting. At any time in the interval between annual
----------------
meetings, a special meeting of stockholders may be called by the Chairman or the
President or by a majority of the Board of Directors by vote at a meeting or in
writing (addressed to the Secretary of the Corporation) with or without a
meeting. Special meetings of the stockholders shall be called by the Secretary
at the request of stockholders only on the written request of stockholders
entitled to cast at least 25 percent of all the votes entitled to be cast at the
meeting. A request for a special meeting shall state the purpose of the meeting
and the matters proposed to be acted on at it. The Secretary shall inform the
stockholders who make the request of the reasonably estimated costs of preparing
and mailing a notice of the meeting and, on payment of these costs to the
Corporation, notify each stockholder entitled to notice of the meeting. Unless
requested by stockholders entitled to cast a majority of all the votes entitled
to be cast at the meeting, a special meeting need not be called to consider any
matter which is substantially the same as a matter voted on at any special
meeting of stockholders held in the preceding 12 months.
SECTION 1.03. Place of Meetings. Meetings of stockholders shall be held
------------------
at such place in the United States as is set from time to time by the Board of
Directors.
SECTION 1.04. Notice of Meetings; Waiver of Notice. Not less than ten nor
-------------------------------------
more than 90 days before each stockholders' meeting, the Secretary shall give
written notice of the meeting to each stockholder entitled to vote at the
meeting and each other stockholder entitled to notice of the meeting. The
notice shall state the time and place of the meeting and, if the meeting is a
special meeting or notice of the purpose is required by statute, the purpose of
the meeting.
<PAGE>
Notice is given to a stockholder when it is personally delivered to him or her,
left at his or her residence or usual place of business, or mailed to him or her
at his or her address as it appears on the records of the Corporation.
Notwithstanding the foregoing provisions, each person who is entitled to notice
waives notice if he or she before or after the meeting signs a waiver of the
notice which is filed with the records of stockholders' meetings, or is present
at the meeting in person or by proxy.
SECTION 1.05. Quorum; Voting. Unless statute or the Charter provides
---------------
otherwise, at a meeting of stockholders the presence in person or by proxy of
stockholders entitled to cast a majority of all the votes entitled to be cast at
the meeting constitutes a quorum, and a majority of all the votes cast at a
meeting at which a quorum is present is sufficient to approve any matter which
properly comes before the meeting, except that a plurality of all the votes cast
at a meeting at which a quorum is present is sufficient to elect a director.
SECTION 1.06. Adjournments. Whether or not a quorum is present, a meeting
-------------
of stockholders convened on the date for which it was called may be adjourned
from time to time without further notice by a majority vote of the stockholders
present in person or by proxy to a date not more than 120 days after the
original record date. Any business which might have been transacted at the
meeting as originally notified may be deferred and transacted at any such
adjourned meeting at which a quorum shall be present.
SECTION 1.07. General Right to Vote; Proxies. Unless the Charter provides
-------------------------------
for a greater or lesser number of votes per share or limits or denies voting
rights, each outstanding share of stock is entitled to one vote on each matter
submitted to a vote at a meeting of stockholders. In all elections for
directors, each share of stock may be voted for as many individuals as there are
directors to be elected and for whose election the share is entitled to be
voted, and cumulative voting in the election of directors is not permitted. A
stockholder may vote the stock the stockholder owns of record either in person
or by proxy. A stockholder may sign a writing authorizing another person to act
as proxy. Signing may be accomplished by the stockholder or the stockholder's
authorized agent signing the writing or causing the stockholder's signature to
be affixed to the writing by any reasonable means, including facsimile
signature. A stockholder may authorize another person to act as proxy by
transmitting, or authorizing the transmission of, a telegram, cablegram,
datagram, or other means of electronic transmission to the person authorized to
act as proxy or to a proxy solicitation firm, proxy support service
organization, or other person authorized by the person who will act as proxy to
receive the transmission. Unless a proxy provides otherwise, it is not valid
more than 11 months after its date. A proxy is revocable by a stockholder at
any time without condition or qualification unless the proxy states that it is
irrevocable and the proxy is coupled with an interest. A proxy may be made
irrevocable for so long as it is coupled with an interest. The interest with
which a proxy may be coupled includes an interest in the stock to be voted under
the proxy or another general interest in the Corporation or its assets or
liabilities.
SECTION 1.08. List of Stockholders. At each meeting of stockholders, a
---------------------
full, true and complete list of all stockholders entitled to vote at such
meeting, showing the number of shares
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<PAGE>
held by each and certified by the transfer agent or by the Secretary, shall be
furnished by the Secretary.
SECTION 1.09. Conduct of Business. Nominations of persons for election to
--------------------
the Board of Directors and the proposal of business to be considered by the
stockholders may be made at an annual meeting of stockholders (a) pursuant to
the Corporation's notice of meeting, (b) by or at the direction of the Board of
Directors or (c) by any stockholder of the Corporation who was a stockholder of
record at the time of giving notice provided for in Section 1.11, who is
entitled to vote at the meeting and who complied with the notice procedures set
forth in Section 1.11. The chairman of the meeting shall have the power and
duty to determine whether a nomination or any business proposed to be brought
before the meeting was made in accordance with the procedures set forth in this
Section and Section 1.11 and, if any proposed nomination or business is not in
compliance with this Section and Section 1.11, to declare that such defective
nomination or proposal be disregarded.
SECTION 1.10. Conduct of Voting. At all meetings of stockholders, unless
------------------
the voting is conducted by inspectors, the proxies and ballots shall be
received, and all questions touching the qualification of voters and the
validity of proxies, the acceptance or rejection of votes and procedures for the
conduct of business not otherwise specified by these By-Laws, the Charter or
law, shall be decided or determined by the chairman of the meeting. If demanded
by stockholders, present in person or by proxy, entitled to cast 10 percent in
number of votes entitled to be cast, or if ordered by the chairman, the vote
upon any election or question shall be taken by ballot and, upon like demand or
order, the voting shall be conducted by two inspectors, in which event the
proxies and ballots shall be received, and all questions touching the
qualification of voters and the validity of proxies and the acceptance or
rejection of votes shall be decided, by such inspectors. Unless so demanded or
ordered, no vote need be by ballot and voting need not be conducted by
inspectors. The stockholders at any meeting may choose an inspector or
inspectors to act at such meeting, and in default of such election the chairman
of the meeting may appoint an inspector or inspectors. No candidate for
election as a director at a meeting shall serve as an inspector thereat.
SECTION 1.11. Stockholder Proposals. For any stockholder proposal to be
----------------------
presented in connection with an annual meeting of stockholders of the
Corporation (other than proposals made under Rule 14a-8 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), including any proposal
relating to the nomination of a director to be elected to the Board of Directors
of the Corporation, the stockholders must have given timely notice thereof in
writing to the Secretary of the Corporation. To be timely, a stockholder's
notice shall be delivered to the Secretary at the principal executive offices of
the Corporation not later than 10 days following the day on which public
announcement of the date of such meeting is first made. Such stockholder's
notice shall set forth (a) as to each person whom the stockholder proposes to
nominate for election or reelection as a director all information relating to
such person that is required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Exchange Act (including such person's written consent
to being named in the proxy statement as a nominee and to serving as a
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<PAGE>
director if elected); (b) as to any other business that the stockholder proposes
to bring before the meeting, a brief description of the business desired to be
brought before the meeting, the reasons for conducting such business at the
meeting and any material interest in such business of such stockholder and of
the beneficial owner, if any, on whose behalf the proposal is made; and (c) as
to the stockholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination or proposal is made, (i) the name and address of such
stockholder, as they appear on the Corporation's books, and of such beneficial
owner and (ii) the number of shares of stock of the Corporation which are owned
beneficially and of record by such stockholder and such beneficial owner.
ARTICLE II.
BOARD OF DIRECTORS
SECTION 2.01. Function of Directors. The business and affairs of the
----------------------
Corporation shall be managed under the direction of its Board of Directors. All
powers of the Corporation may be exercised by or under authority of the Board of
Directors, except as conferred on or reserved to the stockholders by statute or
by the Charter or By-Laws. The Board may delegate the duty of management of the
assets and the administration of the day-to-day operations of the Corporation to
one or more entities or individuals pursuant to a written contract or contracts
which have obtained the approvals, including the approval of renewals thereof,
required by the 1940 Act.
SECTION 2.02. Number of Directors. The Corporation shall have at least
--------------------
three directors; provided that, if there is no stock outstanding, the number of
directors may be less than three but not less than one, and, if there is stock
outstanding and so long as there are less than three stockholders, the number of
directors may be less than three but not less than the number of stockholders.
The Corporation shall have the number of directors provided in the Charter until
changed as herein provided. A majority of the entire Board of Directors may
alter the number of directors set by the Charter to not exceeding 15 nor less
than the minimum number then permitted herein, but the action may not affect the
tenure of office of any director.
SECTION 2.03. Election and Tenure of Directors. At each annual meeting,
---------------------------------
the stockholders shall elect directors to hold office until the next annual
meeting and until their successors are elected and qualify.
SECTION 2.04. Removal of Director. Unless statute or the Charter provides
--------------------
otherwise, the stockholders may remove any director, with or without cause, by
the affirmative vote of a majority of all the votes entitled to be cast for the
election of directors.
SECTION 2.05. Vacancy on Board. The stockholders may elect a successor to
-----------------
fill a vacancy on the Board of Directors which results from the removal of a
director. A director elected by the stockholders to fill a vacancy which
results from the removal of a director serves for the balance of the term of the
removed director. A majority of the remaining directors,
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<PAGE>
whether or not sufficient to constitute a quorum, may fill a vacancy on the
Board of Directors which results from any cause except an increase in the number
of directors; provided, however, that no vacancy shall be so filled unless
immediately thereafter at least two-thirds of the directors then holding office
shall have been elected to such office by the stockholders; and, provided
further, that if at any time (other than prior to the first annual meeting of
stockholders) less than a majority of the directors holding office at that time
were elected by the stockholders, a meeting of the stockholders shall be held
promptly and in any event within 60 days for the purpose of electing directors
to fill any existing vacancy in the Board of Directors, unless the Securities
and Exchange Commission (the "Commission") shall by order extend such period
under the authority granted by Section 16(a) of the 1940 Act. The Board of
Directors may not fill a vacancy which results from an increase in the number of
directors. A director elected by the Board of Directors to fill a vacancy serves
until the next annual meeting of stockholders and until his or her successor is
elected and qualifies.
SECTION 2.06. Regular Meetings. After each meeting of stockholders at
-----------------
which directors shall have been elected, the Board of Directors shall meet as
soon as practicable for the purpose of organization and the transaction of other
business. In the event that no other time and place are specified by resolution
of the Board, the President or the Chairman, with notice in accordance with
Section 2.08, the Board of Directors shall meet immediately following the close
of, and at the place of, such stockholders' meeting. Any other regular meeting
of the Board of Directors shall be held on such date and at any place as may be
designated from time to time by the Board of Directors.
SECTION 2.07. Special Meetings. Special meetings of the Board of
-----------------
Directors may be called at any time by the Chairman or the President or by a
majority of the Board of Directors by vote at a meeting, or in writing with or
without a meeting. A special meeting of the Board of Directors shall be held on
such date and at any place as may be designated from time to time by the Board
of Directors. In the absence of designation such meeting shall be held at such
place as may be designated in the call.
SECTION 2.08. Notice of Meeting. Except as provided in Section 2.06, the
------------------
Secretary shall give notice to each director of each regular and special meeting
of the Board of Directors. The notice shall state the time and place of the
meeting. Notice is given to a director when it is delivered personally to him
or her, left at his or her residence or usual place of business, or sent by
telegraph, facsimile transmission or telephone, at least 24 hours before the
time of the meeting or, in the alternative by mail to his or her address as it
shall appear on the records of the Corporation, at least 72 hours before the
time of the meeting. Unless these By-Laws or a resolution of the Board of
Directors provides otherwise, the notice need not state the business to be
transacted at or the purposes of any regular or special meeting of the Board of
Directors. No notice of any meeting of the Board of Directors need be given to
any director who attends except where a director attends a meeting for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened, or to any director who, in writing
executed and filed with the records of the meeting either before or after the
holding thereof, waives such notice. Any meeting of the Board of Directors,
regular or special, may
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adjourn from time to time to reconvene at the same or some other place, and no
notice need be given of any such adjourned meeting other than by announcement.
SECTION 2.09. Quorum; Action by Directors. A majority of the entire Board
----------------------------
of Directors shall constitute a quorum for the transaction of business. In the
absence of a quorum, the directors present by majority vote and without notice
other than by announcement may adjourn the meeting from time to time until a
quorum shall attend. At any such adjourned meeting at which a quorum shall be
present, any business may be transacted which might have been transacted at the
meeting as originally notified. Unless statute or the Charter or By-Laws
requires a greater proportion, the action of a majority of the directors present
at a meeting at which a quorum is present is action of the Board of Directors.
Any action required or permitted to be taken at a meeting of the Board of
Directors may be taken without a meeting, if an unanimous written consent which
sets forth the action is signed by each member of the Board and filed with the
minutes of proceedings of the Board.
SECTION 2.10. Meeting by Conference Telephone. Members of the Board of
--------------------------------
Directors may participate in a meeting by means of a conference telephone or
similar communications equipment if all persons participating in the meeting can
hear each other at the same time. Participation in a meeting by these means
constitutes presence in person at a meeting.
SECTION 2.11. Compensation. By resolution of the Board of Directors a
-------------
fixed sum and expenses, if any, for attendance at each regular or special
meeting of the Board of Directors or of committees thereof, and other
compensation for their services as such or on committees of the Board of
Directors, may be paid to directors. Directors who are affiliates of any entity
serving as investment adviser or administrator of the Corporation need not be
paid for attendance at meetings of the board or committees thereof for which
fees are paid to other directors. A director who serves the Corporation in any
other capacity also may receive compensation for such other services, pursuant
to a resolution of the directors.
SECTION 2.12. Resignation. Any director may resign at any time by sending
------------
a written notice of such resignation to the home office of the Corporation
addressed to the Chairman of the Board or the President. Unless otherwise
specified therein such resignation shall take effect upon receipt thereof by the
Chairman of the Board or the President.
SECTION 2.13. Presumption of Assent. A director of the Corporation who is
----------------------
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his or her dissent or abstention shall be entered in the minutes of the meeting
or unless he or she shall file his or her written dissent to such action with
the person acting as the secretary of the meeting before the adjournment thereof
or shall forward such dissent by registered mail to the Secretary of the
Corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a director who votes in favor of such action.
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ARTICLE III.
COMMITTEES
SECTION 3.01. Committees. The Board of Directors may appoint from among
-----------
its members an Executive Committee, an Audit Committee, and other committees
composed of one or more directors and delegate to these committees any of the
powers of the Board of Directors, except the power to authorize dividends on
stock, elect directors, issue stock other than as provided in the next sentence,
recommend to the stockholders any action which requires stockholder approval,
amend these By-Laws, or approve any merger or share exchange which does not
require stockholder approval. If the Board of Directors has given general
authorization for the issuance of stock providing for or establishing a method
or procedure for determining the maximum number of shares to be issued, a
committee of the Board, in accordance with that general authorization or any
stock option or other plan or program adopted by the Board of Directors, may
authorize the terms on which any stock may be issued, including all terms and
conditions required or permitted to be established or authorized by the Board of
Directors.
SECTION 3.02. Committee Procedure. Each committee may fix rules of
--------------------
procedure for its business. A majority of the members of a committee shall
constitute a quorum for the transaction of business and the act of a majority of
those present at a meeting at which a quorum is present shall be the act of the
committee. The members of a committee present at any meeting, whether or not
they constitute a quorum, may appoint a director to act in the place of an
absent member. Any action required or permitted to be taken at a meeting of a
committee may be taken without a meeting, if an unanimous written consent which
sets forth the action is signed by each member of the committee and filed with
the minutes of the committee. The members of a committee may conduct any
meeting thereof by conference telephone in accordance with the provisions of
Section 2.10.
SECTION 3.03. Emergency. In the event of a state of disaster of
----------
sufficient severity to prevent the conduct and management of the affairs and
business of the Corporation by its directors and officers as contemplated by the
Charter and these By-Laws, any two or more available members of the then
incumbent Executive Committee shall constitute a quorum of that Committee for
the full conduct and management of the affairs and business of the Corporation
in accordance with the provisions of Section 3.01. In the event of the
unavailability, at such time, of a minimum of two members of the then incumbent
Executive Committee, the available directors shall elect an Executive Committee
consisting of any two members of the Board of Directors, whether or not they be
officers of the Corporation, which two members shall constitute the Executive
Committee for the full conduct and management of the affairs of the Corporation
in accordance with the foregoing provisions of this Section. This Section shall
be subject to implementation by resolution of the Board of Directors passed from
time to time for that purpose, and any provisions of these By-Laws (other than
this Section) and any resolutions which are contrary to the provisions of this
Section or to the provisions of any such implementary resolutions shall be
suspended until it shall be determined by any interim Executive Committee acting
under this Section that it shall be to the advantage of the
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Corporation to resume the conduct and management of its affairs and business
under all the other provisions of these By-Laws.
ARTICLE IV.
OFFICERS
SECTION 4.01. Executive and Other Officers. The Corporation shall have a
-----------------------------
President, a Secretary, and a Treasurer. The Corporation may also have a
Chairman. The Board of Directors shall designate who shall serve as chief
executive officer, who shall have general supervision of the business and
affairs of the Corporation, and may designate a chief operating officer, who
shall have supervision of the operations of the Corporation. In the absence of
any designation by the Board of Directors, the Chairman, if one is elected,
shall serve as chief executive officer, and the President shall serve as chief
operating officer. In the absence of the Chairman, or if a Chairman is not
elected, the President shall be the chief executive officer. The same person
may hold both offices. The Corporation may also have one or more Vice-
Presidents, assistant officers, and subordinate officers as may be established
by the Board of Directors. A person may hold more than one office in the
Corporation except that no person may serve concurrently as both President and
Vice-President of the Corporation. The Chairman shall be a director, and the
other officers may be directors.
SECTION 4.02. Chairman. The Chairman shall preside at all meetings of the
---------
Board of Directors and of the stockholders at which he or she shall be present.
Unless otherwise specified by the Board of Directors, he or she shall be the
chief executive officer of the Corporation. In general, he or she shall perform
such duties as are customarily performed by the chief executive officer of a
corporation and may perform any duties of the President and shall perform such
other duties and have such other powers as are from time to time assigned to him
or her by the Board of Directors.
SECTION 4.03. President. Unless otherwise provided by resolution of the
----------
Board of Directors, the President, in the absence of the Chairman, shall preside
at all meetings of the Board of Directors and of the stockholders at which he or
she shall be present. Unless otherwise specified by the Board of Directors, the
President shall be the chief operating officer of the Corporation and perform
the duties customarily performed by chief operating officers. He or she may
execute, in the name of the Corporation, all authorized deeds, mortgages, bonds,
contracts or other instruments, except in cases in which the signing and
execution thereof shall have been expressly delegated to some other officer or
agent of the Corporation. In general, he or she shall perform such other duties
customarily performed by a president of a corporation and shall perform such
other duties and have such other powers as are from time to time assigned to him
or her by the Board of Directors or the chief executive officer of the
Corporation.
SECTION 4.04. Vice-Presidents. The Vice-President or Vice-Presidents, at
----------------
the request of the chief executive officer or the President, or in the
President's absence or during his or her
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inability to act, shall perform the duties and exercise the functions of the
President, and when so acting shall have the powers of the President. If there
be more than one Vice-President, the Board of Directors may determine which one
or more of the Vice-Presidents shall perform any of such duties or exercise any
of such functions, or if such determination is not made by the Board of
Directors, the chief executive officer, or the President may make such
determination; otherwise any of the Vice-Presidents may perform any of such
duties or exercise any of such functions. Each Vice-President shall perform such
other duties and have such other powers, and have such additional descriptive
designations in their titles (if any), as are from time to time assigned to them
by the Board of Directors, the chief executive officer, or the President.
SECTION 4.05. Secretary. The Secretary shall keep the minutes of the
----------
meetings of the stockholders, of the Board of Directors and of any committees,
in books provided for the purpose; he or she shall see that all notices are duly
given in accordance with the provisions of these By-Laws or as required by law;
he or she shall be custodian of the records of the Corporation; he or she may
witness any document on behalf of the Corporation, the execution of which is
duly authorized, see that the corporate seal is affixed where such document is
required or desired to be under its seal, and, when so affixed, may attest the
same. In general, he or she shall perform such other duties customarily
performed by a secretary of a corporation, and shall perform such other duties
and have such other powers as are from time to time assigned to him or her by
the Board of Directors, the chief executive officer, or the President.
SECTION 4.06. Treasurer. The Treasurer shall have charge of and be
----------
responsible for all funds, securities, receipts and disbursements of the
Corporation, and shall deposit, or cause to be deposited, in the name of the
Corporation, all moneys or other valuable effects in such banks, trust companies
or other depositories as shall, from time to time, be selected by the Board of
Directors; he or she shall render to the President and to the Board of
Directors, whenever requested, an account of the financial condition of the
Corporation. In general, he or she shall perform such other duties customarily
performed by a treasurer of a corporation, and shall perform such other duties
and have such other powers as are from time to time assigned to him or her by
the Board of Directors, the chief executive officer, or the President.
SECTION 4.07. Assistant and Subordinate Officers. The assistant and
-----------------------------------
subordinate officers of the Corporation are all officers below the office of
Vice-President, Secretary, or Treasurer. The assistant or subordinate officers
shall have such duties as are from time to time assigned to them by the Board of
Directors, the chief executive officer, or the President.
SECTION 4.08. Election, Tenure and Removal of Officers. The Board of
-----------------------------------------
Directors shall elect the officers of the Corporation. The Board of Directors
may from time to time authorize any committee or officer to appoint assistant
and subordinate officers. Election or appointment of an officer, employee or
agent shall not of itself create contract rights. All officers shall be
appointed to hold their offices, respectively, during the pleasure of the Board.
The Board of Directors (or, as to any assistant or subordinate
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<PAGE>
officer, any committee or officer authorized by the Board) may remove an officer
at any time. The removal of an officer does not prejudice any of his or her
contract rights. The Board of Directors (or, as to any assistant or subordinate
officer, any committee or officer authorized by the Board) may fill a vacancy
which occurs in any office for the unexpired portion of the term.
SECTION 4.09. Compensation. The Board of Directors shall have power to
-------------
fix the salaries and other compensation and remuneration, of whatever kind, of
all officers of the Corporation. No officer shall be prevented from receiving
such salary by reason of the fact that he or she is also a director of the
Corporation. The Board of Directors may authorize any committee or officer,
upon whom the power of appointing assistant and subordinate officers may have
been conferred, to fix the salaries, compensation and remuneration of such
assistant and subordinate officers.
ARTICLE V.
STOCK
SECTION 5.01. Certificates for Stock. The Board of Directors may
-----------------------
determine to issue certificated or uncertificated shares of capital stock and
other securities of the Corporation. For certificated stock, each stockholder
is entitled to certificates which represent and certify the shares of stock he
or she holds in the Corporation. Each stock certificate shall include on its
face the name of the Corporation, the name of the stockholder or other person to
whom it is issued, and the class of stock and number of shares it represents.
It shall also include on its face or back (a) a statement of any restrictions on
transferability and (b) a statement which provides in substance that the
Corporation will furnish to any stockholder on request and without charge a full
statement of the designations and any preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends, qualifications, and
terms and conditions of redemption of the stock of each class which the
Corporation is authorized to issue, of the differences in the relative rights
and preferences between the shares of each series of a preferred or special
class in series which the Corporation is authorized to issue, to the extent they
have been set, and of the authority of the Board of Directors to set the
relative rights and preferences of subsequent series of a preferred or special
class of stock and any restrictions on transferability. Such request may be
made to the Secretary or to its transfer agent. Upon the issuance of
uncertificated shares of capital stock, the Corporation shall send the
stockholder a written statement of the same information required above on the
certificate and by the Maryland Uniform Commercial Code - Investment Securities.
It shall be in such form, not inconsistent with law or with the Charter, as
shall be approved by the Board of Directors or any officer or officers
designated for such purpose by resolution of the Board of Directors. Each stock
certificate shall be signed by the Chairman, the President, or a Vice-President,
and countersigned by the Secretary, an Assistant Secretary, the Treasurer, or an
Assistant Treasurer. Each certificate may be sealed with the actual corporate
seal or a facsimile of it or in any other form and the signatures may be either
manual or facsimile signatures. A certificate is valid and may be issued
whether or not an officer who signed it is still an officer when it is issued.
A certificate may not be issued until the stock represented by it is fully paid,
except in the case of stock
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<PAGE>
purchased under a plan, agreement, or transaction as provided by law and with
such statement on future payments as required by law.
SECTION 5.02. Transfers. The Board of Directors shall have power and
----------
authority to make such rules and regulations as it may deem expedient concerning
the issue, transfer and registration of stock; and may appoint transfer agents
and registrars thereof. The duties of transfer agent and registrar may be
combined.
SECTION 5.03. Record Dates or Closing of Transfer Books. The Board of
------------------------------------------
Directors may set a record date or direct that the stock transfer books be
closed for a stated period for the purpose of making any proper determination
with respect to stockholders, including which stockholders are entitled to
notice of a meeting, vote at a meeting, receive a dividend, or be allotted other
rights. The record date may not be prior to the close of business on the day
the record date is fixed nor, subject to Section 1.06, more than 90 days before
the date on which the action requiring the determination will be taken; the
transfer books may not be closed for a period longer than 20 days; and, in the
case of a meeting of stockholders, the record date or the closing of the
transfer books shall be at least ten days before the date of the meeting.
SECTION 5.04. Stock Ledger. The Corporation shall maintain a stock ledger
-------------
which contains the name and address of each stockholder and the number of shares
of stock which the stockholder holds. The stock ledger may be in written form
or in any other form which can be converted within a reasonable time into
written form for visual inspection. The original or a duplicate of the stock
ledger shall be kept at the offices of a transfer agent, or, if none, at the
principal office in the State of Maryland or the principal executive offices of
the Corporation.
SECTION 5.05. Lost Stock Certificates. The Board of Directors of the
------------------------
Corporation may determine the conditions for issuing a new stock certificate in
place of one which is alleged to have been lost, stolen, or destroyed, or the
Board of Directors may delegate such power to any officer or officers of the
Corporation. In their discretion, the Board of Directors or such officer or
officers may require the owner of the certificate to give bond, with sufficient
surety, to indemnify the Corporation against any loss or claim arising as a
result of the issuance of a new certificate. In their discretion, the Board of
Directors or such officer or officers may refuse to issue such new certificate
save upon the order of some court having jurisdiction in the premises.
ARTICLE VI.
FINANCE
SECTION 6.01. Checks, Drafts, Etc. All checks, drafts and orders for the
--------------------
payment of money, notes and other evidences of indebtedness, issued in the name
of the Corporation, shall, unless otherwise provided by resolution of the Board
of Directors, be signed by any two of the Chairman, the President, a Vice-
President, an Assistant Vice-President, the Treasurer, an Assistant Treasurer,
the Secretary or an Assistant Secretary.
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SECTION 6.02. Annual Statement of Affairs. The President or chief
----------------------------
accounting officer shall prepare annually a full and correct statement of the
affairs of the Corporation, to include a balance sheet and a financial statement
of operations for the preceding fiscal year. The statement of affairs shall be
placed on file at the Corporation's principal office within 120 days after the
end of the fiscal year.
SECTION 6.03. Fiscal Year. The fiscal year of the Corporation shall be
------------
the 12 calendar month period ending December 31 in each year, unless otherwise
provided by the Board of Directors.
SECTION 6.04. Dividends. If declared by the Board of Directors at any
----------
meeting thereof, the Corporation may pay dividends on its shares in cash,
property, or in shares of the capital stock of the Corporation, unless such
dividend is contrary to law or to a restriction contained in the Charter.
ARTICLE VII.
INDEMNIFICATION
SECTION 7.02. Procedure. Any indemnification by the Corporation for a
----------
specific action, suit or proceeding shall (unless ordered by a court) be made by
the Corporation only upon (a) a final decision on the merits by a court or other
body before whom the action, suit or proceeding was brought that a person
permitted by the Charter to seek indemnification (the "Covered Person") was not
liable by reason of Disabling Conduct (hereafter defined), (b) dismissal of the
proceeding against the Covered Person for insufficiency of evidence of any
Disabling Conduct, or (c) a reasonable determination, based upon a review of the
facts, by a majority of a quorum of the directors who are neither "interested
persons" of the Corporation as defined in the 1940 Act nor parties to the
proceeding ("Disinterested, Non-Party Directors"), or an independent legal
counsel in a written opinion, that the Covered Person was not liable by reason
of Disabling Conduct. Disabling Conduct includes (a) liability in connection
with any proceeding in which it is determined that (i) the act or omission of
the Covered Person was material to the matter giving rise to the proceeding, and
was committed in bad faith or was the result of active and deliberate
dishonesty, or (ii) the Covered Person actually received an improper personal
benefit in money, property or services, or (iii) in the case of any criminal
proceeding, the Covered Person had reasonable cause to believe that the act or
omission was unlawful, and (b) liability to the Corporation or its stockholders
to which the Covered Person would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office. The termination of any proceeding
by judgment, order or settlement shall not create a presumption that the Covered
Person did not meet the required standard of conduct; the termination of any
proceeding by conviction, or a plea of nolo contendere or its equivalent, or an
entry of an order of probation prior to judgment, shall create a rebuttable
presumption that the Covered Person did not meet the required standard of
conduct. Any determination pursuant to this Section 7.01 shall not prevent
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recovery from any Covered Person of any amount paid to him in accordance with
this By-Law as indemnification if such Covered Person is subsequently
adjudicated by a court of competent jurisdiction to be liable by reason of
Disabling Conduct.
SECTION 7.02. Enforcement of Indemnification Right. Any indemnification,
-------------------------------------
or payment of expenses in advance of the final disposition of any action, suit
or proceeding, shall be made promptly, and in any event within 60 days, upon the
written request of the Covered Person. The right to indemnification and
advances hereunder shall be enforceable by the Covered Person in any court of
competent jurisdiction, if (i) the Corporation denies such request, in whole or
in part, or (ii) no disposition thereof is made within 60 days. The Covered
Person's costs and expenses incurred in connection with successfully
establishing his or her right to indemnification, in whole or in part, in any
such action shall also be reimbursed by the Corporation. It shall be a defense
to any action for advance for expenses that (a) a determination has been made
that the facts then known to those making the determination would preclude
indemnification or (b) the Corporation has not received both (i) an undertaking
as required by law to repay such advances in the event it shall ultimately be
determined that the standard of conduct has not been met and (ii) a written
affirmation by the Covered Person of such Covered Person's good faith belief
that the standard of conduct necessary for indemnification by the Corporation
has been met.
SECTION 7.03. Advance Payment of Expenses. Reasonable expenses (including
----------------------------
attorney's fees) incurred by a Covered Person may be paid or reimbursed by the
Corporation in advance of the final disposition of an action, suit or proceeding
upon receipt by the Corporation of (a) a written affirmation by the Covered
Person of his or her good faith belief that the standard of conduct necessary
for indemnification under this By-Law has been met and (b) a written undertaking
by or on behalf of the Covered Person to repay the amount if it is ultimately
determined that such standard of conduct has not been met, so long as either (i)
the Covered Person has provided a security for his or her undertaking, (ii) the
Corporation is insured against losses arising by reason of any lawful advances,
or (iii) a majority of a quorum of the Disinterested, Non-Party Directors or an
independent legal counsel in a written opinion has determined, based on a review
of readily available facts (as opposed to a full trial-type inquiry), that there
is reason to believe that the Covered Person ultimately will be found entitled
to indemnification.
SECTION 7.04. Insurance. The Corporation may purchase and maintain
----------
insurance on behalf of any Covered Person against any liability asserted against
him and incurred by him in any such capacity, or arising out of his or her
status as such; provided, however, that the Corporation shall not purchase
insurance to indemnify any Covered Person against liability for Disabling
Conduct.
SECTION 7.05. Exclusivity, Etc. The indemnification and advance of
-----------------
expenses provided by the Charter and this By-Law shall not be deemed exclusive
of any other rights to which a Covered Person seeking indemnification or advance
of expenses may be entitled under any law (common or statutory), or any
agreement, vote of stockholders or disinterested directors,
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or other provision that is consistent with law, both as to action in an official
capacity and as to action in another capacity while holding office or while
employed by or acting as agent for the Corporation, shall continue in respect of
all events occurring while the Covered Person was a director or officer after
such Covered Person has ceased to be a director or officer, and shall inure to
the benefit of the estate, heirs, executors and administrators of such Covered
Person. The Corporation shall not be liable for any payment under this By-Law in
connection with a claim made by a director or officer to the extent such
director or officer has otherwise actually received payment under an insurance
policy, agreement, vote or otherwise, of the amounts otherwise indemnifiable
hereunder. All rights to indemnification and advance of expenses under the
Charter and hereunder shall be deemed to be a contract between the Corporation
and each director or officer of the Corporation who serves or served in such
capacity at any time while this By-Law is in effect. Nothing herein shall
prevent the amendment of this By-Law, provided that no such amendment shall
diminish the rights of any Covered Person hereunder with respect to events
occurring or claims made before its adoption or as to claims made after its
adoption in respect of events occurring before its adoption. Any repeal or
modification of this By-Law shall not in any way diminish any rights to
indemnification or advance of expenses of a Covered Person or the obligations of
the Corporation arising hereunder with respect to events occurring, or claims
made, while this By-Law or any provision hereof is in force.
SECTION 7.06. Severability; Definitions. The invalidity or
--------------------------
unenforceability of any provision of this Article VII shall not affect the
validity or enforceability of any other provision hereof. The phrase "this By-
Law" in this Article VII means this Article VII in its entirety.
ARTICLE VIII.
SUNDRY PROVISIONS
SECTION 8.01. Books and Records. The Corporation shall keep correct and
------------------
complete books and records of its accounts and transactions and minutes of the
proceedings of its stockholders and Board of Directors and of any executive or
other committee when exercising any of the powers of the Board of Directors.
The books and records of the Corporation may be in written form or in any other
form which can be converted within a reasonable time into written form for
visual inspection. Minutes shall be recorded in written form but may be
maintained in the form of a reproduction. The original or a certified copy of
these By-Laws shall be kept at the principal office of the Corporation.
SECTION 8.02. Corporate Seal. The Board of Directors shall provide a
---------------
suitable seal, bearing the name of the Corporation, which shall be in the charge
of the Secretary. The Board of Directors may authorize one or more duplicate
seals and provide for the custody thereof. If the Corporation is required to
place its corporate seal to a document, it is sufficient to meet the requirement
of any law, rule, or regulation relating to a corporate seal to place the word
"(seal)" adjacent to the signature of the person authorized to sign the document
on behalf of the Corporation.
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SECTION 8.03. Bonds. The Board of Directors may require any officer,
------
agent or employee of the Corporation to give a bond to the Corporation,
conditioned upon the faithful discharge of his or her duties, with one or more
sureties and in such amount as may be satisfactory to the Board of Directors.
SECTION 8.04. Voting Stock in Other Corporations. Stock of other
-----------------------------------
corporations or associations, registered in the name of the Corporation, may be
voted by the Chairman, the President, a Vice-President, the Treasurer or a proxy
appointed by any of them. The Board of Directors, however, may by resolution
appoint some other person to vote such shares, in which case such person shall
be entitled to vote such shares upon the production of a certified copy of such
resolution.
SECTION 8.05. Mail. Any notice or other document which is required by
-----
these By-Laws to be mailed shall be deposited in the United States mails,
postage prepaid.
SECTION 8.06. Contracts and Agreements. To the extent permitted by
-------------------------
applicable law, and except as otherwise prescribed by the Charter or these By-
Laws, the Board of Directors may authorize any officer, employee or agent of the
Corporation to enter into any contract or execute and deliver any instrument in
the name of and on behalf of the Corporation. Such authority may be general or
confined to specific instances. A person who holds more than one office in the
Corporation may not act in more than one capacity to execute, acknowledge, or
verify an instrument required by law to be executed, acknowledged, or verified
by more than one officer.
SECTION 8.07. Reliance. Each director, officer, employee and agent of the
---------
Corporation shall, in the performance of his or her duties with respect to the
Corporation, be fully justified and protected with regard to any act or failure
to act in reliance in good faith upon the books of account or other records of
the Corporation, upon an opinion of counsel or upon reports made to the
Corporation by any of its officers or employees or by the adviser, accountants,
appraisers or other experts or consultants selected by the Board of Directors or
officers of the Corporation, regardless of whether such counsel or expert may
also be a director.
SECTION 8.08. Certain Rights of Directors, Officers, Employees and Agents.
-----------------------------------------------------------
The directors shall have no responsibility to devote their full time to the
affairs of the Corporation. Any director or officer, employee or agent of the
Corporation, in his or her personal capacity or in a capacity as an affiliate,
employee, or agent of any other person, or otherwise, may have business
interests and engage in business activities similar to or in addition to those
of or relating to the Corporation.
SECTION 8.09. Employment of Custodian. The Corporation shall place and
------------------------
maintain its securities and similar investments in the custody of one or more
custodians meeting the requirements of the 1940 Act, or may serve as its own
custodian in accordance with such rules and regulations or orders as the
Commission may from time to time prescribe for the protection of investors.
Securities held by a custodian may be registered in the name of the Corporation
or any such custodian, or the nominee of either of them. Subject to such rules,
regulations, and
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orders as the Commission may adopt as necessary or appropriate for the
protection of investors, the Corporation or any custodian, with the consent of
the Corporation, may deposit all or any part of the securities owned by the
Corporation in a system for the central handling of securities, pursuant to
which system all securities of a particular class or series of any issuer
deposited within the system are treated as fungible and may be transferred or
pledged by bookkeeping entry without physical delivery of such securities.
SECTION 8.10. Amendments. Subject to the special provisions of Section
-----------
2.02, (a) any and all provisions of these By-Laws may be altered or repealed and
new by-laws may be adopted at any annual meeting of the stockholders, or at any
special meeting called for that purpose, and (b) the Board of Directors shall
have the power, at any regular or special meeting thereof, to make and adopt new
by-laws, or to amend, alter or repeal any of these By-Laws of the Corporation.
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